Skip to main content

Full text of "Federal Reporter (F1), Volume 188"

See other formats 


This volume was donated to LLMC 

to enrich its on-line offerings and 

for purposes of long-term préservation by 

Northwestern University School of Law 



National Reporter System— >Pnited State» Série» 

THE 

FEDERAL REPORTER 

WITH KEY-NUMBER ANNOTATIONS 



VOLUME 188 

PERMANENT EDITION 
CASES ARGUED AND DETERMINED IN THE 

CIRCUIT COURTS OF APPEALS, CIRCUIT 

AND DISTRICT COURTS, AND COMMERCE 

COURT OF THE UNITED STATES 



WITH TABLE OF CASES IN WHICH REHEARINGS HAVE BEEN 
GRANTED OR DENIED 



AUGUST— OCTOBER, 1911 



ST. PAUL 

WEST PUBLISHING CO. 

1911 



' ! OOPTBIGHT, 1911 ' \ ' 

■■ fiY ■ 

> WEST PUBLiSHINb COMPANY ; 
(188 FED.) 



RULES 

O» THB 

UNITED STATES 
CIRCUIT COURT OF APPEALS 

FUR THS 

EIGHTH CIRCUIT 



ADOPTED MARCH 30, 1911 



UMITED STATEvS CIRCUIT COURT OP APPEALS 
FOR THE EIGHTH CIRCUIT. 

Thursday, March 30, 1911. 

It is now hère ordered that the following rules be and the same are 
hereby adopted as the rules of practice of this court, to be in force 
and effect from and after this date. 

It is further ordered that where the District Court is specif- 
ically named in any rule, the provisions thereof shall also apply 
to the Circuit Court, so far as the same may be applicable, until 
such Circuit Courts shall be abolished by opération of law. 

Said rules are in the words and figures following, to-wit: 



RULES^ 

1. 

NAME. 

The court adopts "United States Circuit Court of Appeals for 
the Eighth Circuit" as the title of the court. 

2. 

SEAL. 

The seal shall contain the words, "United States," on the upper 
part of the outer edge; and the words, "Circuit Court of Appeals," 

ï For rules as originally adopted, see 150 Fed. xxy. 
188 F. (V) 



VI 188 FEDERAL REPORTER 

on the lower part of the outer edge, running from left to right; 
•and the words, "Eighth Circuit" in two lines, in the center, with 
a dash beneath. (See spécimen of seal below.) 




3. 

TBRMS. 

1. Three terms of this court will be held annually, one at the 
city of St. Paul on the fîrst Monday of May, one at the city of 
Denvef on the first Monday of September and orie at the city of 
St. Louis on the first Monday of December. 

2. Cases from Minnesota, North Dakota, South Dakota, Ne- 
braska, lowa, Kansas, Missouri, Arkansas and Oklahoma in which 
transeripts to be printed vinder the supervision of the clerk of this 
court are filed, or transeripts printed before certification by the 
clerk of the lower court and proof by affidavit or admission that 
three copies of the printed transeripts hâve been served on the 
défendants in error or appellees, or their counsel, are filed on or 
before the Ist day of April, and cases from Colorado, Utah, Wy- 
oming and New Mexico in which transeripts to be printed under 
the supervision of the clerk of this court are filed, or transeripts 
printed before certification by the clerk of the lower court and 
proof by affidavit or admission that three copies of the printed 
transeripts hâve been served on the défendants in error or appel- 
lees, or their counsel, and stipulations of the parties for their hear- 
ing at the May term in St. Paul are filed on or before the Ist day 
of April, and those only, will be heard at the succeeding May term 
of the court in St. Paul. 

■ 3.' Gases f rota Colorado, Wyoming, Utah afid New Mexico in 
which transeripts to be printed under the supervision of the clerk 
of this court are filed, or transeripts printed before certification by 
the clerk of the lower court and proof by affidavit or admission 
that three copies of the printed transeripts hâve been served on 
the défendants in error or appellees, or their counsel, are filed on 
or before the Ist day of July and cases from the remainder of the 
circuit in which transeripts to be printed under the supervision of 
the clerk of this court are filed, or transeripts printed before cer- 
tification by the clerk of the lower court and proof by affidavit or 



COURT EULBS Vli' 

admission that three copies of the printed transcripts hâve been 
served on the défendants in error or appellees, or their counsel, , 
and stipulations of the parties for their hearing at the September 
term in Denver are filed on or before the Ist day of July, and those 
only, will be heard at the succeeding September term in Denver. 
■ 4. Cases from Minnesota, North Dakota, South Dakota, Ne- 
braska, lowa, Kansas, Missouri, Arkansas and Oklahoma in which 
transcripts to be printed under the supervision of the clerk of this 
court are filed, or transcripts printed before certification by the' 
clerk of the lower court and proof by affidavit or admission that 
three copies of the printed transcripts hâve been served on the de- 
fendants in error or appellees, or their counsel, are filed on or be- 
fore the Ist day of October, and cases from Colorado, Wyomhig, 
Utah and New Mexico in which transcripts to be printed under 
the supervision of the clerk of this court are filed, or transcripts' 
printed before certification by the clerk of the lower court and- 
proof by affidavit or admission that three copies of the printed' 
transcripts hâve been served on the défendants in error or appel- 
lees, or their counsel, and stipulations of the parties for their hear- 
ing at the December term in St. Louis are filed on or before the 
Ist day of October, and those only, will be heard at the succeeding 
December term in St. Louis. 

5. Thèse terms of the court may be adjourned to such times ahd 
places as the court may from time to time designate. 



4. 

QUORUM. i 

1. If, at any term, a quorum does not attend on any day ap-' 
pointed for holding it, any judge who does attend may adjourn the 
court from time to time, or, in the absence of any judge, the clerk: 
may adjourn the court from day to day. If, during a term after^ 
a quorum has assembled, less than that number attend on any day,' 
any judge attending may adjourn the court from day to day until- 
there is a quorum, or may adjourn without day. 

2. Any judge attending when less than a quorum is présent may> 
make ail necessary orders touching any suit, proceeding or process' 
depending in or returned to the court, preparatory to hearing, trial, 
or décision thereof. : 



CLERK. 

1. The clerk's office shall be kept at the place designâted in the 
act creating the court, at which a term shall be held annually. 

2. The clerk shall not practice, either as attorney or counsellor, 
in this court or in any other court while he shall continue to be 
clerk of this court. 

3. He shall, before he enters on the exécution of his office, take 
an oath in the form prescribed by section 794 ôf the Revised Stat-' 



yill 188 FEDERAL REPORTER 

utes, and shall give bond in a sum to be fixed. and with sureties 
to be approved by the court, faithfuUy to discharge the duties of 
1iis office and seasonably to record the decrees, judgments and dé- 
terminations of the court. A copy of such bond shall be entered 
on the journal of the court, and the bond shall be deposited for 
safe-keeping as the court may direct. 

4. He shall not permit any original record or paper to be taken 
frpm the court room or from the office, without an order f rom 
the court. 

6. 

MARSHAL, CRIER, ANÏ) OTHER OPFIOBRS. 

1. The marshal of the district in which a term or session of the 
court is held and the crier shall be in attendance during the ses- 
sions of the court, with such number of bailififs and messengers as 
the court may, from time to time, order. 



ATTORNEYS AND COUNSELLORS. 

1. Ail attorneys and counsellors, admitted to practice in the Suprême 
Court of the United States or in any Circuit Court or District Court 
of the United States, or in the Suprême Court of any state in this cir- 
cuit, may, upon motion of some member of the bar of this court, be 
admitted as attorneys and counsellors in this court on taking an oath 
or affirmation in the form prescribed by rule 2 of the Suprême Court 
of the United States, and on subscribing the roll ; but no fee shall be 
charged therefor. 

2. And any attorney and counsellor admitted to practice in the 
Suprême Court of the United States or in the Suprême Court of 
any state or in the District or Circuit Courts of the United States 
for this circuit, may be admitted by order of this court to practice 
and may be enroUed as an attorney and counsellor of this court, 
thirty days after he furnishes to the clerk of this court a ceriiiicate 
of a clerk or judge of any one of the courts named that the appli- 
cant is an attorney of any one of said courts ; and upon subscrib- 
ing and forwarding to the clerk the foUowing oath : "I do solemnly 
swear (or affirm) that I will demean myself as an attorney and 
counsellor of the Circuit Court of Appeals for the Eighth Circuit, 
uprightly and according to law ; and that I will support the Con- 
stitution of the United States. So help me God." 



8. 

PRACTICE. 

The practice shall be the same as in the Suprême Court of the 
United States, as far as the same shall be applicable. 



COURT EULBS IX 

9. 

PROCESS. 

AU process of this court shall be in the name of the Président 
of the United States, and shall be in like form and tested m the 
same manner as process of the Suprême Court. 



10. 
BILL OF EXCEPTIONS. 

The judges of the District Courts shall not allow any bill of 
exceptions which shall contain the charge of the court at large 
to the jury in trials at common law, upon any gênerai exception 
to the whole of such charge. But the party excepting shall be re- 
quired to state distinctly the several matters of law in such charge 
to which he excepts ; and those matters of law, and those only, 
shall be inserted in the bill of exceptions and allowed by the court. 



11. 

ASSIGNMENÏ OF ERRORS. 

The plaintiff in error or appellant shall file with the clerk of 
the court below, with his pétition for the writ of error or appeal, 
an assignment of errors, which shall set out separately and par- 
ticularly each error asserted and intended to be urged. No writ 
of error or appeàl shall be allowed until such assignment of er- 
rors shall hâve been filed. When the error alleged is to the ad- 
mission or to the rejection of évidence, the assignment of errors 
shall quote the full substance of the évidence admitted or reject- 
ed. When the error alleged is to the charge of the court, the as- 
signment of errors shall set out the part referred to totidem ver- 
bis, whether it be in instructions given or in instructions refused. 
Such assignment of errors shall form part of the transcript of the 
record and be printed with it. When this is not donc, counsel will 
not be hsard, except at the request of the court; and errors not 
assigned according to this rule will be disregarded; but the court, 
at its option, may notice a plain error not assigned. 

12. 

OBJECTIONS TO EVIDENCE IN THE RECOUD. 

In ail cases of equity or admiralty jurisdiction, heard in this 
court, no objection shall be allowed to be taken to the admissi- 
bility of any déposition, deed, grant, exhibit or translation found 
in the record as évidence, unless objection was taken thereto in 
the court below and entered of record: but the same shall other- 
wise be deemed to hâve been admitted by consent. 



X 188 FEDERAL REPORTEE 

13. 

SUPERSEDBAS AND COST BONDS. 

1. Supersedeas bonds in the District Courts must be taken, with 
good and sufficient security, that the plaintiff in error or appel- 
lant shall prosecute his writ or appeal to eiïect, and answer ail 
damages and costs if he fail to make his plea good. Such indem- 
nity, where the judgment or decree is for the recovery of money 
not otherwise secured, must be for the whole amount of the judg- 
ment or decree, including just damages for delay, and costs and 
interest on the appeal; but in ail suits where the property in 
controversy necessarily follows the suit, as in real actions and re- 
plevin, and in suits on mortgages, or where the property is in 
the custody of the marshal under admiralty process, or where the 
proceeds thereof, or a bond for the value thereof, is in the cus- 
tody of the courty indemnity in ail such cases will be required 
only in an amount sufficient to secure the sum recovered for the 
use and détention of the property, and the costs of the suit and 
just damages for delay, and costs and interest on the appeal. 

2. On ail appeals from any interlocutory order or decree of a 
district court, or a judge thereof, granting, continuing, refusing, 
dissolving or refusing to dissolve an injunction or appointing a re- 
ceiver, the appellant shall, at the time of the allowance of said 
appeal, file with the clerk of such district court a bond to the op- 
posite party in such sum as such court shall direct, to answer ail 
costs if he shall fail to sustain his appeal. ("The Judicial Code," 
section 128, Act of March 3, 1911.) 

14. 

WRITS OF ERROR, APPEALS. RETURN, AND RECORD. 

1. The clerk of the court to which any writ of error may be directed 
shall make a return of the same by transmitting a true copy of the rec- 
ord, bill of exceptions, assignment of errors, and ail proceedings in 
the case, under his hand and the seal of the court. 

2. In ail cases brought to this court, by writ of error or appeal, to 
review any judgment or decree, the clerk of the court "by which such 
judgment or decree was rendered shall annex to and transmit with the 
record a copy of the opinion or opinions filed in the case, and in cases 
at law a complète copy of the charge of the court to the jury. 

3. Nd case will be heard until twenty-five copies of the printed 
transcript of the record, containing in themselves, and not by réf- 
érence, ail the papers, exhibits, dépositions, sketches, drawings, 
photographs, maps, blue prints and other proceedings, which are 
necessary to the hearing in this court, printed title pages in the 
form prescribed in section five of rule 26, chronological printed in- 
dexes of each and every item of their contents specifying the pag- 
es where évidence, testimony and exhibits including those in the 
body of any pleading, order or bill of exceptions may be found 



COURT KULES XI 

and briefly naming or describing each exhibit in addition to its 
number together with a statement of the numbers, names and dates 
of issue of any patents, shall hâve been filed in this court. 

4. Whenever it shall be necessary or proper, in the opinion of 
the presiding judge in any district court, that original papers of 
any kind should be inspected in this court upon writ of error or 
appeal, such presiding judge may make such rule or order for the 
safe-keeping, transporting and return of such original papers as 
to him may seem proper; and this court will receive and consid- 
er such original papers in connection with the transcript of the 
proceedings. 

5. AU appeals, writs of error, and citations must be made returnable 
net exceeding sixty days f rom the day of signing the citation, whether 
the return day fall in vacation or in term time, and be served before 
the return day. 

6. The record in cases of admiralty and maritime jurisdiction shall 
be made up as provided in gênerai admiralty rule No. 52 of the Su- 
prême Court. 

15. 

TRANSLATIONS. 

Whenever any transcript transmitted to this court upon a writ, 
of error or appeal shall contain any document, paper, testimo-, 
ny or other proceeding in a foreign language, and the transcript 
does not also contain a translation of such document, paper, tes- 
timony or other proceeding made under the authority of the in- 
ferior court, or admitted to be correct, the transcript shall not be, 
printed ; but the case shall be reported to this court by the clerk, 
and the court will thereupon remand it back to the inferior court, 
and if the record is to be printed in the court below, it shall be 
reported to that court by its clerk, in order that a translation may 
be there supplied and inserted in the record. 



16. 

DOOKETING CASES. 

1. It shall be the duty of the plaintifï in error or appellant to 
docket the case and file the record thereof with the clerk of this 
court by or before the return day, whether in vacation or in term 
time. But for good cause shown the justice or judge who signed 
the citation, or any judge of this court, may enlarge the time 
by or before its expiration, the order of enlargement to be filed 
with the. clerk of this court. If the plaintifï in error or appellant 
shall fail to comply with this rule, the défendant in error or ap- 
pellee may hâve the cause docketed and dismissed upon producing 
a certificate, whether in term time or vacation, from the clerk of 
the court wherein the judgment or decree was rendered, stating 
the case and certifying that such writ of error or appeal has been 
duly sued out or allowed. And in no case shall the plaintifï in er- 



Xii 188 FEDERAL KEPOETBE 

ror or appellant be entitled to docket the case and file the record 
after the same shall hâve been docketed and dismissed under this 
ruie, unless by order of the court. 

2. But the défendant in error or appellee, may, at his option, 
docket the case and file a copy of the lecord with the clerk of 
this court; and if the case is docketed and a copy of the record 
filed with the clerk of this court by the plaintifï in error or ap- 
pellant within the period of time above limited and prescribed by 
this rule, or by the défendant in error or appellee at any time 
thereafter, the case shall stand for argument at the term. 

3. Upon the filing of the transcript of a record brought up by 
writ of error or appeal, the appearance of the counsel for the party 
docketing the case shall be entered. 

Note. — A deposlt of thlrty-flve dollars to secure clerk's costs is required be- 
fore tbe record in a cause is flled and docketed. 



17. 

DOCKET. 

The clerk shall enter upon a docket ail cases brought to and 
pending in the court in their proper chronological order, and such 
docket shall be called at every term, or adjourned term, except cas- 
es from the districts of Colorado, Utah, Wyoming and New Mex- 
ico which cases shall only be called at the September term unless 
counsel otherwise stipulate as provided in rule 3; and if a case 
is called for hearing at two terms successively, and upon the 
call at the second term neither party is prepared to argue it, it 
will be dismissed at the cost of the plaintifï in error or appellant, 
unless sufficient cause is shown for further postponement. 



18. 

CEETIORARI. 

No certiorari for diminution of the record will be awarded in any 
case, unless a motion therefor shall be made in writing, and the facts 
on which the same is founded shall, if not admitted by the other party, 
be verified by affidavit. And ail motions for such certiorari must be 
made at the first term of the entry of the case; otherwise the same 
will not be granted, unless upon spécial cause shown to the court, ac- 
counting satisfactorily for the delay. 

19. 

DEATH OF A PARTY. 

Whenever, pending a writ of error or appeal in this court, ei- 
ther party shall die, the proper représentatives in the personalty 
or realty of the deceased party, according to the nature of the case, 
may yoluntarily come in and be admitted parties to the suit, and 



COXJET RULES Xlll 

thereupori the case shall be heard and determihed as in other cas- 
es ; and if such représentatives shall not voluntarily become par- 
ties, then the other party may suggest the death on the record, and 
thereupon, on motion, obtain an order that unless such représen- 
tatives shall be come parties within sixty days, the party moving 
for such order, if défendant in error, shall be entitled to hâve the 
writ of error or appeal dismissed, and if the party so moving shall 
be plaintifif in error, he shall be entitled to open the record, and, 
on hearing, hâve the judgment or decree reversed, if it be erro- 
neous: Provided, however, that a copy of every such order shall 
be personally served on said représentatives at least thirty days 
before the expiration of such sixty days. 

2. When the death of a party is suggested, and the représen- 
tatives of the deceased do not appear within ten days after the 
expiration of such sixty days, and no measures are taken by the 
opposite party within that time to compel their appearance, the 
case shall abate. 

3. When either party to a suit in a District Court of the Unit- 
ed States shall désire to prosecute a writ of error or appeal to this 
court, from any final judgment or decree rendered in the District 
Court, and at the time of suing out such writ of error or appeal, 
the other party to the suit shall be dead and hâve no proper rep- 
résentative within the jurisdiction of the court which rendered 
such final judgment or decree, so that the suit cannot be revived 
in that court, but shall hâve a proper représentative in some state 
or territory of the United States, or in the District of Columbia, 
the party desiring such writ of error or appeal may procure the 
same, and may hâve proceedings on such judgment or decree su- 
perseded or stayed in the same manner as is now allowed by law 
in other cases, and shall thereupon proceed with such writ of er- 
ror or appeal as in other cases. And within thirty days after the 
filing of the record in this court the plaintifif in error or appellant 
shall make a suggestion to the court, supported by afîlidavit, that 
the said party was dead when the writ of error or appeal was 
taken or sued out, and had no proper représentative within the 
jurisdiction of the court which rendered such judgment or de- 
cree, so that the suit could not be revived in that court, and that 
said party had a proper représentative in some state or territory 
of the United States, or in the District of Columbia, and stating 
therein the name and character of such représentative, and the 
state or territory or district in which such représentative résides ; 
and upon such suggestion he may on motion obtain an order that, 
unless such représentative shall make himself a party within 
ninety days, the plaintifï in error or appellant shall be entitled to 
open the record, and, on hearing, hâve the judgment or decree re- 
versed if the same be erroneous : Provided, however, that a prop- 
er citation reciting the substance of such order shall be served up- 
on such représentative, either personally, or by being left at his 
résidence, at least thirty days before the expiration of such ninety 
days : Provided, also, that in every such case, if the représenta- 



XIT 188 FEDERAL EEPORTEK 

tive of the deeeased party does not appear within ten days after 
the expiration of such ninety days, and the measures above pro- 
vided to compel the appearance of such représentative hâve not 
been taken within the time as above required, by the opposite par- 
ty, the case shall abate: And provided, also, That the said repré- 
sentative may at any time before or after said suggestion come in 
and be made a party to the suit, and thereupon the case shall pro- 
ceed and be heard and determined as in other cases. 



20. 

DISMISSING CASES. 

Whenever the plaintiff and défendant in a writ of error pending 
m this court, or the appellant and appellee in an appeal, shall by 
their attorneys of record, sign and file with the clerk an agree- 
ment in writing directing the case to be dismissed, and specifying 
the terms on which it is to be dismissed, as to costs, and shall pay 
to the clerk any fées that may be due to him, it shall be the du- 
ty of the clerk seasonably to présent such agreement to the court 
for its considération and détermination. 



21. 

MOTIONS. 

1. Ail motions to the court shall be reduced to writing, and 
shall contain a brief statement of the facts and objects of the mo- 
tion. 

2. One hour on each side shall be allowed to the argument of a 
motion, and no more, without spécial leave of the court, granted 
before the argument begins. 

3. No motion to dismiss, except on spécial assignment by the 
court, shall be heard, unless previous notice has been given to the 
adverse party, or the counsel or attorney of such party. 



22. 

PARTIES NOT READT. 

1. Where no counsel appears, and no brief has been filed for the 
plaintifï in error or appellant, when the case is called for trial, the 
défendant may hâve the plaintifï in error or appellant called and the 
writ of error or appeal dismissed. 

2. Where the défendant in error or appellee fails to appear when 
the case is called for trial, the court may proceed to hear an argument 
on the part of the plaintifï in error or appellant, and to give judgment 
according to the right of the case. 

3. When a case is reached in the regular call of the docket, and 
there is no appearance for either party, the case shall be dismissed at 
the cost of the plaintifï in error or appellant. 



CODET BXJLES XV 

23. 

PRINTING RECORDS. 

1. In cases brought to this court in which the plaintiff in error 
or appellant elects to waive the printing of the record under the 
provisions of the act of Congress, entitled "An act to diminish the 
expense of proceedings on appeal and writ of error or of certio- 
rari," approved February 13, 1911, and file a typew^ritten or manu- 
script transcript of the record in this court, such plaintiff in error 
or appellant may within twenty days from and after the date of 
the filing and docketing of the record in this court, serve on the 
adverse party a copy of a statement of the parts of the record 
which he thinks necessary for the considération of the errors as- 
signed, and file the same, with proof of service thereof, with the 
clerk of this court; the adverse party, within twenty days there- 
after, may designate in writing and file with the clerk additional 
parts of the record which he thinks material, and, if he shall not 
do so, he shall be held to hâve consented to a hearing on the parts 
designated by the plaintiff in error or appellant. If parts of the 
record shall be so designated by one or both of the parties, the 
clerk shall print those parts only; and the court will consider 
nothing but those parts of the record in determining the questions 
raised by the errors assigned. If at the hearing it shall appear 
that any material part of the record has not been printed, the 
writ of error or appeal may be dismissed, or such other order 
made as the circumstances may appear to the court to require. If 
the défendant in error or appellee shall hâve caused unnecessary 
parts of the record to be printed, such order as to costs may be 
made as the court shall think proper. 

2. On the filing of the transcript in every such case the clerk 
shall cause thirty copies of the same, or the parts thereof desig- 
nated under this rule, to be printed, and such additional number 
of copies as counsel for either of the parties may direct, and shall 
furnish three copies of the record so printed to each party at least 
sixty days before the argument. 

3. In cases brought to this court in which the record has been print- 
ed and used upon the hearing in the court below, and which substantially 
conform to the printed records in this court, the plaintiff in error or 
appellant upon application to and by leave of this court, may furnish 
to the clerk twenty-five copies of such record, used on the hearing in 
the court below, to be used in the préparation of the printed record in 
this court; and the clerk's fee for preparing the record for the printer, 
indexing same, supervising the printing and distributing the copies, 
shall be computed as if said record so furnished had been printed un- 
der his supervision. 

4. The clerk shall be entitled to demand of the plaintiff in error or 
appellant the cost of printing the record before ordering the same to be 
donc. 



XVI 188 FEDERAL BEPOBTBK 

5. If the record shall not hâve been printed when the case îs reach- 
ed for argument, for failure of the party to advance the costs of print- 
ing, the case may be dismissed. 

6. In case of reversai, affirmance or dismissal with costs, the amount 
paid for printing the record shall be taxed against the party against 
whom costs are given. 

. 7. In any cause brought to this court, in which the record has 
been printed, in which a writ of certiorari shall be granted under 
the provision of rule 18 of this court the return to such writ of 
certiorari shall be printed in the same manner as the record was. 
8. If in any cause in which the record or a portion thereof has 
been printed it shall be made to appear to this court that the 
printed transcript does not substantially conform to the require- 
ments of the rules of this court, it may be rejected and stricken 
from the files and such order relative thereto may be entered as 
the court shall deem proper. 

24. 

BKIBFS. 

1. The counsel for the plaintiff in error or appellant shall file with 
the clerk of this court, at least forty days before the case is called 
for argument, twenty copies of a printed brief, one of which shall, 
on application, be furnished to each of the counsel engaged upon the 
opposite side. 

2. This brief shall be printed on unglazed paper, and it and ail 
quotations contained therein shall be in substantial conformity 
with the size and type prescribed by rule 26 for the printing of 
records and shall contain, in order hère stated — 

First. A concise abstract, or statement of the case, presenting suc- 
cinctly the questions involved, in the manner in which they are raised. 

Second. A spécification of the errors relied upon, which, in cases 
brought up by writ of error, shall set out separately and particularly 
eàch error asserted and intended to be urged ; and in cases brought up 
by appeal the spécification shall state, as particularly as may be, in what 
the decree is alleged to be erroneous. When the error alleged is 
to the admission or to the rej action ôf évidence, the spécification shall 
quote the full substance of the évidence admitted or rejected. When 
the error alleged is to the charge of the court, the spécification shall 
set out the part referred to totidem verbis, whethér it be in instruc- 
tions given or in instructions refused. When the error alleged is to a 
ruling upon the report of a master the spécification shall state the ex- 
ception to the report and the action of the court upon it. 

Third. A brief of the argument exhibiting a clear statement of the 
points of law or fact to be discussed, with a référence to the pages of 
the record and the authorities relied upon in support of each point. 
When a statute of a state is cited, so much thereof as may be deemed 
ilècéssary to the décision o£ the case shall be printed at length. 

■3; The counsel for a défendant in error or an appellee shall file 
with the clerk twenty copies of his brief printed on unglazed pa- 
per and in substantial conformity with the size and type prescrib- 



COURT EXILES XVll 

ed by ruie 26 for the printing of records, at least ten days before 
the case is called for hearing. His brief shall be of a like char- 
acter with that required of the plaintiff in error or appellant, ex- 
cept that no spécification of errors shall be required, and no state- 
ment of the case, unless that presented by the plaintifï in error or 
appellant is controverted. 

4. When there is no assignaient of errors, as required by section 997 
of the Revised Statutes, counsel will not be heard, except at the request 
of the court; and errors not specified according to this rule will be 
disregarded ; but the court, at its option, may notice a plain error not 
assigned or specified. 

5. When, according to this rule, a plaintifï in error or an appellant 
is in default, the case may be dismissed on motion ; and when a de- 
fendant in error or an appellee is in default, he will not be heard ex- 
cept on consent of his adversary, and by request of the court. 

6. When no counsel appears for one of the parties, and no printed 
brief or argument is filed, only one counsel will be heard for the ad- 
verse party; but if a printed brief or argument is fîled, the adverse 
party will be entitled to be heard by two counsel. 



25. 

ORAL AR(;UMENTS. 

1. The plaintifï in error or appellant in this court shall be enti- 
tled to open and conclude the argument of the case. But when 
there are cross-appeals they shall be argued tqgether as one case, 
and the plaintiflf in the court below shall be entitled to open and 
conclude the argument. 

2. Only two counsel will be heard for each party on the argu- 
ment of a case. 

3. Two hours on each side will be allowed for the argument and 
no more, without spécial leave of the court, granted before the ar- 
gument begins. The time thus allowed may be apportioned be- 
tween the counsel on the same side at their discrétion ; provided, 
always, that a fair opening of the case shall be made by the party 
having the opening and closing arguments. 



26. 

FORM OF PRINTED RECORDS, ARGUMENTS, AND BRIEFS 

1. Ail transcripts of record, arguments and briefs for the use of 
this court, except in patent causes as hereinafter provided, shall 
be printed on unglazed paper not less than 614 inches in width by 
9^ inches in length, including a sufificient margin so that they 
can be conveniently trimmed and bound in volumes. The pa- 
per should equal a weight of 80 pounds per ream on basis of size 
of sheet 25. by 38 inches. 
188 F.— b 



XVUl 188 FEDBEAL EEPORTBB 

2. Ail records and briefs in patent causes may be printed on 
unglazed paper, of the weight as provided in section one_ of this 
rule, of such size that copies of letters patent may be inserted 
therein without folding, but the size of such records and briefs in 
patent causes shall not be less than 7i^ inches wide and 9y2 mches 
long so that the records and briefs can be conveniently trimmed 
and bound in volumes. 

3. Ail records, briefs, supplemental transcripts and returns to 
writs of certiorari shall be printed in clear eleven point or small 
pica type (never smaller than ten point), of 26 pica or 28 small 
pica ems to a line and 52 lines, including running head, solid, per 
printed page, containing substantially 1400 small pica ems. Where 
testimony or dépositions by question and answer are printed the 
answer shall follow on same line as the question whenever the 
same can be done. 

4. Ail indexes to records and tabular exhibits, which from their 
nature require smaller type, may be printed in eight point or 
breviér type. 

5. Ail covers for records shall be printed in a neat and work- 
manlike manner on substantial paper equal to a weight of 96 
pounds per ream on the basis of a sheet 25 by 40 inches, and shall 
contain in conspicuous type the following matter, viz. : 



TRANSCRIPT OF RECORD. 
First. 

Second, 

UNITED STATES CIRCUIT COURT OF APPEALS 
EIGHTH CIRCUIT. 

Third. The abbreviation for number "No." followed by a blank line 
?4 of an inch in length. 

Fourth. The title of the cause as it will be docketed in this court, 
viz.: 

, Appellant (or Plaintiff in Error) as the case may 

be, vs , Appellee (or Défendant in Error). 

Fifth. The words "In Error to" (or "Appeal from") as the nature 
of the case may require, followed by the correct title of the trial court. 

6. Unless otherwise expressly directed by counsel, the fuU ti- 
tles of the court and cause once correctly shown in the printed 
transcript shall not be repeated when unchanged. There shall be 
placed at the head of each subséquent pleading, etc., a brief désig- 
nation of its character. 

Unless otherwise expressly directed by counsel, the indorse- 
ments on pleadings, etc., shall not be printed in full; it shall be 

Safficiênt to print : "Filed in the Court on " giving 

the correct date and name of the court. 

The date of ail orders and decrees and the name of the judge 
or judges making them shall always appear. 



COURT RULBS HX 

In printed transcripts the pleadings, orders, testimony of wit- 
nesses etc., shall be separated by a face rule three inches long. 
The clerk shall indicate to the printer the appropriate places there- 
for. 

When inserts are folded several times to conform to the size 
of the printed record, stubs should be inserted at the binding side 
oî the record to equalize the space occupied by the folds. Un- 
mounted photographs should be used when copies of such are re- 
quired in printed records. 

As this rule is intended primarily for the guidance of the printer 
his attention should be directed thereto before the record or brief 
is printed. 

A sample copy of a printed record will be furnished by the clerk 
of this court on application therefor. 

Records and briefs not printed in substantial conformity with 
the provisions of this rule will not be accepted or filed. 



27. 

COPIES OF RECORDS AND BRIEFS. 

The clerk shall cause to be bound in volumes in a substantial 
manner and shall carefully préserve in his office one copy of the 
printed record in every case submitted to the court for its consid- 
ération, and of ail printed motions, briefs, and arguments filed 
therein. 

28. 

OPINIONS OF THE COURT. 

1. AU opinions deliveréd by the court shall, immediately up- 
on the delivery thereof, be handed to the clerk to be recorded. 

2. The original opinions of the court shall be filed with the clerk 
of this court for préservation. 

3. Opinions printed or prepared under the supervision of the 
judge delivering the same need not be copied by the clerk into a 
book of records; but at the end of each term the clerk shall cause 
such printed or original opinions to be bound in a substantial man- 
ner into one or more volumes, and when so bound they shall be 
deemed to hâve been recorded within the meaning of this rule. 



29. 

RBHEARING. 

1. A pétition for rehearing may be presented and filed within 
sixty days after the date of the judgment or decree, and jurisdic- 
tion to hear and décide the questions presented thereby is reserved, 
notwithstanding the lapse of the term within the sixty days. 

2. Such pétition for rehearing must be printed and twenty copies 



XX 188 FEDERAL BBPOETBB 

thereof filed with the clerk and must briefly and distinctly state its 
grounds, and be supported by a certificate of counsel, and will not be 
granted or permitted to be argued, unless a judge who concurred in 
the judgment desires it, and a majority of the court so détermines. 



30. 

INTEREST. 

1. In cases where a writ of error is prosecuted in this court, 
and the judgment of the inferior court is affirmed, the interest 
shall be calculated and levied, from the date of the judgment be- 
low until the same is paid, at the same rate that similar judg- 
ments bear interest in the courts of the state or territory where 
such judgment was rendered. 

2. In ail cases where a writ of error shall delay the proceedings 
on the judgment of the inferior court, and shall appear to hâve 
been sued out merely for delay, damages at a rate not exceeding 
ten per cent., in addition to interest, shall be awarded upon the 
amount of the judgment. 

3. The same rule shall be applied to decrees for the pa)^ment of 
money in cases in equity, unless otherwise ordered by this court. 

4- In cases in admiralty, damages and interest may be allowed, 
if specially directed by the court. 



31. 

COSTS. 

1. In ail cases where any suit shall be dismissed in this court, costs 
shall be allowed to the défendant in error or appellee, unless otherwise 
agreed by the parties. 

2. In ail cases of affirmance of any judgment or decree in this court, 
costs shall be allowed to the défendant in error or appellee, unless other- 
wise ordered by the court. 

3. In cases of reversai of any judgment or decree in this court, 
costs shall be allowed to the plaintiff in error or appellant, unless 
otherwise ordered by the court. Where the record has been print- 
ed in this court under the provisions of sections one and two of 
rule 23, the cost of printing thirty copies of the transcript of rec- 
ord from the court below shall be taxed as costs in the case, unless 
otherwise ordered by this court, but no allowance shall be made 
for the amount paid to the clerk of the court below for the writ- 
ten or typewritten transcript of the record. Where the record has 
been printed in the court below and a copy of such printed record 
certified to this court the cost of printing twenty-five copies of 
such record or portion thereof shall be taxable as costîs in the case 
in the court below, unless otherwise ordered by this court. 

4. Neither of the foregoing sections shall apply to cases where the 
United States are a party; but in such cases no costs shall be allowed 
in this court for or against the United States. 



COURT EULBS XXl 

5. When costs are allowed in this court, it shall be the duty of the 
clerk to insert the amount thereof in the body of the mandate, or other 
proper process, sent to the court below, and annex to the same the bill 
of items taxed in détail. 

6. In ail cases certified to the Suprême Court or removed there- 
to by certiorari or otherwise, the fées of the clerk of this court 
shall be paid before a transcript of the record shall be transmitted 
to the Suprême Court, except that no fee shall be charged or 
collected for any printed record or portion thereof, required by 
law to be usedby the clerk in the préparation of such transcript of 
the record. 

32. 

MANDATE. 

In ail cases fînally determined in this court, a mandate or other prop- 
er process in the nature of a procedendo shall be issued on the order of 
this court, to the court below, for the purpose of informing such court 
of the proceedings in this court, so that further proceedings may be had 
in such court as to law and justice may appertain. 

[Note. — By an order entered Mareh 30, 1911, the clerk Is directed to Issue 
a mandate or other proper process, to the court below. In ail cases, 60 days 
after the final disposition thereof, except in cases where it shall be otherwise 
expressly ordered.] 



33. 

CUSTODÏ OF PRISONEES ON HA^EAS CORPUS. 

1. Pending an appeal from the final décision of any court or 
judge declining td grant the writ of habeas corpus, the custody of 
the prisoner shall not be disturbed. 

2. Pending an appeal from the final décision of any court or 
judge discharging the writ after it has been issued, the prisoner 
shall be remanded to the custody from which he was taken by 
the writ, or shall, for good cause shown, be detained in custody of 
the court or judge, or be enlarged upon recognizance, as herein- 
after provided. 

3. Pending an appeal from the final décision of any court or 
judge discharging the prisoner, he shall be enlarged upon recog- 
nizance, with surety, for appearance to answer the judgment of 
the appellate court, except where, for spécial reasons, sureties 
ought not to be required. 

34. 
MODELS, DIAGEAMS, AND EXHIBIÏS OF MATERIAI* 

1. Models, diagrams and exhibits of material forming part of the 
évidence taken in the court below, in any case pending in this court, 
on writ of error or appeal, shall be placed in the custody of the mar- 
shal of this court at least ten days before the case is heard or submitted. 



XXii 188 FEDBHAL REPORTEE 

2. AU models, diagrams and exhibits of materiâl placed in the cus- 
tody of the marshal for the inspection of the court on the hearing of a 
case, must be taken away by the parties within one month after the 
case is decided. When this is net done, it shall be the duty of the mar- 
shal to nôtify the counsel in the case, by mail or otherwise, of the re- 
quirements of this rule; and, if the articles are not removed within a 
reasonable time after the notice is given, he shall destroy them, or 
make such other disposition of them as to him may seem best. 



35. 

WRITS OF ERROR IN CRIMINAL CASES. 

1. Writs of error to review criminal cases tried in any District 
Court of the United States within this circuit, which may be re- 
viewed under the provisions of "The Judicial Code," approved 
March 3, 1911, may be allowed in term time or in vacation by the 
Circuit Justice assigned to this circuit, or by either of the Circuit 
Judges within the circuit, or by any District Judge within his 
district, and the proper security be taken, and the citation signed 
by him, and he may also grant a supersedeas and stay of ex- 
écution or proceedings, pending the détermination of such writ of 
error. 

2. Where such writ of error is allowed in the criminal cases 
aforesaid, the District Court before which the accused was tried, 
or the District Judge of the district wherein he was tried, within 
the district, or the Circuit Justice assigned to the circuit, or ei- 
ther of the Circuit Judges within the circuit, shall hâve, the" pow- 
er, after the citation has been duly served, to admit the accused 
to bail in such amount as may be fixed, such bail bond to be, as 
near as may be, in the form prescribed in the appendix to thèse 
rules. 

36. 

PETITIONS TO REVISE. 

A pétition to revise, under the provisions of section 24b, of 
the bankruptcy law, approved July 1, 1898, shall be filed and 
docketed as an original action in this court, and be entitled 

" Petitioner, v. , Respondent," and shall 

specifically designate the respondent or respondents upon whom 
the petitioner desires notice to be served, and a sufficient number 
of copies of such pétition shall be furnished the clerk at the time of 
filing so that a copy may be served upon each of the respondents. 



37. 

ORDER OP COURT. 

1. Before the filing of a pétition to revise, the same shall be pre- 
sented to the court, or one of the circuit judges, for leave to file 



COURT RDLES XIIU 

same and for an order fixîng the return day to the notice required 
by law. 

2. When such pétition is accompanied by a written consent that 
the pétition to revise may be filed and a waiver by the respondent 
or respondents, or their counsel, of such notice, no notice will be 
issued. In such cases the case will be docketed by the clerk. 



38. 

NOTICE. 

The notice to be given, as provided by law, shall be issued by 
the clerk of this court, under the seal thereof, and shall be ad- 
dressed to the respondent or respondents and be served by the 
marshal, unless an acknowledgment or acceptance of service 
thereof is made by the respondent or respondents, or their counsel. 



39. 

BESPONSB. 

The response to the pétition, when the respondent elects to make 
a. written response, shall be filed within thirty days after the serv- 
ice of the notice or the filing of a waiver thereof. 

40. 

PEINTING OF RECORD. 

1. The clerk shall cause the pétition and exhibits thereto, if any, 
and the order, notice and response, if any, to be printed as soon as 
convenient after the response is filed or the time for filing such 
response has expired and shall distribute the printed copies of same 
to counsel for the respective parties, as soon as the same are 
printed. 

41. 

BRIEFS AND ARGUMENTS. 

Twenty copies of the brief and argument in behalf of petitioner 
shall be printed and filed twenty days before the day set for the 
hearing and twenty copies of the brief and argument for the re- 
spondent or respondents shall be printed and filed eight days be- 
fore the day of hearing. , 

42. 

HEARING. 

1. Pétitions to revise filed in vacation, shall be assigned by the 
clerk for hearing in their regular order at the next session or term 



XXW 188 FEDERAL EEPORTEE 

of the court în the same manner as appeals and writs of error in 
other cases. 

2. Pétitions to revise filed during a session of the court, when a 
sufficient showing of urgency is presented, may be set for hear- 
ing at that term and upon such terms and conditions as the court 
may direct. 

3. Pétitions to revise assigned by the clerk in their regular order 
as provided in section one of this rule, when such assignment is 
for a day near the close of the session, may be advanced by order 
of the court and set for an earlier day, upon good cause shown 
therefor by either of the parties. 



43. 

COSTS. 

1. The costs and fées now proVided by law in cases upon appeal 
or writ of error, shall, so far as the same are applicable, be taxed 
on pétitions to revise. 

2'. Upon the détermination of a pétition to revise such order as 
to coSts will be made as the court may deem necessary. 



44. 

PROCEDENDO. 

1. In ail cases on a pétition to revise whereîn the action or de- 
cree of the district court, complained of, is disapproved by this 
court, the clerk shall, at the expiration of thirty days from and 
after the date of entering the decree in this court, issue process in 
the nature of a procedendo to the said district Court for the purpose 
of informing such court of the proceedings in this court, so that 
further proceedings may be had in such district court in confornî- 
ity with the decree of this court. 

2. In ail cases on pétition to revise, wherein the action or decree 
of the district court, complained of, is approved and confirmed, or 
said pétition dismissed, by this court the clerk shall, at the expira- 
tion of thirty days certify a copy of such decree to the district 
court. 

45. 

APPEALS AND WRITS OF ERROE IN BANKRUPTCT CASES. 

1. The appeals and writs of error provided for by section 23 of 
the bankruptcy law, approved July 1, 1898, shall be governed by the 
same rules and régulations as to costs and procédure as are provided 
by this court for appeals and writs of error in other cases. 



COUBT EULES XXV 



ADDENDA. 



[Form of Wrlt of Error for Use in the United States Circuit Court of 
Appeals, Eighth Orcuit.] 

United States df America, ss. 

The Président of the United States of America, 

To the Honorable Judges of the (1) 

Greeting : 

Because, in the records and proceedings, as also in the rendition of 

the judgment of a plea which is in the said Court, before 

you, at the Term, 19. . ., thereof, between (2) 

a manifest error hath happened, to the great damage of the said (3). . . . 
as by 

complaint appears. 

We being willing that error, if any hath been, should be duly cor- 
rected, and full and speedy justice done to the parties aforesaid in this 
behalf, do command you, if judgment be therein given, that then, un- 
der your seal, distinctly and openly, you send the record and pro- 
ceedings aforesaid, with ail things concerning the same, to the United 
States Circuit Court of Appeals, for the Eighth Circuit, together with 
this writ, so that you hâve the said record and proceedings aforesaid 
at the City of St. Louis, Missouri, and filed in the office of the Clerk 
of the United States Circuit Court of Appeals, for the Eighth Circuit, 

on or before the (4) day of 19 ... , 

to the end that the record and proceedings aforesaid being inspected, 
the United States Circuit Court of Appeals may cause further to be 
done therein to correct that error, what of right, and accprding to 
the laws and customs of the United States, should be done. 

Witness, the Honorable EDWARD D. WHITE, Chief Justice of 

the United States, this day of 

in the year of our Lord one thousand nine 

hundred. 



Issued at office in with the 

seal of the (5) 

and dated as aforesaid. 



Allowed by 



Clerk of. 



.Judge. 

rsed on Writ of 
ich the Writ is A 

United States of America, 



[Form of Retum to be Endorsed on Writ of Error by the Clerk of the 
Court to Which the Writ is Addressed.] 



-SS. 



In obédience to the command of the within Writ, I herewith trans- 
mit to the United States Circuit Court of Appeals, a duly certified trans- 



XXVI 188 FEDERAL REPORTER 

script of the record and proceedings in the within entitled case, with ail 
things concerning the same. 

In Witness Whereof, I hereto subscribe my name and affix the seal 
of (6) 



Clerk of. 



Notes. — (1) Hère Insert correct name of the court to whlch the writ is ad- 
dressed and whose judgment is to be reviewed. 

(2) Hère insert correct style of cause showing who was plaintiff and who dé- 
fendant in court below. 

(3) Hère Insert name of party who sues out writ of error. 

(4) Rule XIV, subdivision 5, requlres writs of error and appeals to be made 
returnable slxty days af ter citation Is signed. 

This blank must be fllled accordingly, naming a day not more than sixty 
days after the date of the citation. 

(5) This blank should be so fiUed as to show whether the writ is issued by 
the clerk of a United States District Court or by the clérk of the Circuit 
Court of Appeals. 

(6) Hère deseribe the court to which the writ is addressed. 

[Form of Citation.] 
United States of America, 

To Greeting: 

You are hereby cited and admonished to be and appear in the United 
States Circuit Court of Appeals for the Eighth Circuit, at the City of 
St. Louis, Missouri, sixty days from and after the day this citation 

bears date, pursuant to (1) filed in the Clerk's Office of 

the (2) wherein is (3) 

and you are (4) , to show cause, if any there be, why the 

(5) rendered against the said (6) as in 

said (7). mentioned should not be corrected, and why 

speedy justice should not be donc the parties in that behalf. 

Witness, the Honorable 

Judge of this day of 

A. D. 19.... 



Judge of. 



Notes. — (1) Insert (a writ of error) or (an appeal allowed and). 

(2) Insert name of court to which writ of error is addressed, or from which 
appeal is allowed. 

(3) Insert plaintiff In error or appellant 

(4) Insert défendant in error or appellee. 

(5) Insert judgment or decree. 

(6) Insert plaintiff in error or appellant 

(7) Insert writ of error or appeal. 

[Form of Supersedeas or Cost Bond.] 
Know Ali Men By Thèse Présents, 

That we 

are held and firmly bound unto 

in the full and just sum of '. to be 

paid to the said , hoirs, 

executors, administrators, successors or assigns, to which payaient 
welland truly to be made, we bind ourselves, our heirs, executors and 



CODKT EULES XXVil 

admînistrators, successors or assigns, jointly and severally by thèse 

présents. Sealed with our seals, and dated this day 

of ., in the year of our Lord one thousand nine hun- 

dred 

Whereas, lately at the term of the 

•. in a suit depending in said Court 

between , plaintiff, and 

, défendant, was rendered 

against the said and the said 

has obtained 

of the said Court to reverse the in the aforesaid suit, 

and a citation directed to the said citing 

and admonishing to be and appear in the United States 

Circuit Court of Appeals for the Eighth Circuit, at the City of St. 
Louis, Missouri, sixty days from and after the date of said citation. 

Now, the condition of the above obligation is such, that if the said 

shall prosecute said. 

to eflfect, and answer ail damages and costs if 

fail to make good plea, then the above 

obligation to be void, else to remain in full force and virtue. 
Sealed and delivered in présence of 

[Seal.] 

[Seal.] 

[Seal.] 

Approved by 



[The foregoing bond and citation Is adapted for appeals in equity cases as 
well as in cases of writs of error in actions at law.] 

[Fonn of Appearance Bond on Writ of Error In Criminal Cases.] 

Know Ail Men By Thèse Présents, 
That we, 

as principal, and 

as sureties, are held and firmly bound unto the United States of Ameri- 
ca in the full and just sum of Dollars, to be 

paid to the United States of America, to which payment well and truly 
to be made we bind ourselves, our heirs, executors and administrators 
jointly and severally by thèse présents. 

Sealed with our seals and dated this day of 

in the year of our Lord, One Thousand Nine Hundred 

Whereas, lately at the Term, A. D. 190 , of the 

Court of the United States for the District 

of , in a suit depending in said Court between 

the United States of America, plaintiff, and 

. •_ défendant. . . ., 

a judgment and sentence was rendered against the said 

and the said 

ha obtained a writ of error from the United States Circuit Court of 

Appeals for the Eighth Circuit, to reverse the judgment and sentenc 
in the aforesaid suit, and a citation directed to the said United States 



XXVilî 188 FEDERAL REPORTER 

of America, citing and admonishing the United States of America to 
be and appear in the United States Circuit Court of Appëals for the 
Eighth Circuit, at the City of St. Louis, Missouri, sixty days from and 
after the date of said citation, which citation has been duly served. 

Now the condition of the above obligation is such that if the 
said ...... é *.....■ 

shall appear either in person or by attorney in the United States Circuit 
Court of Appeals for the Eighth Circuit on such day or days as may be 
appointed for the hearing of said cause in said Court and prosecute 
his said writ of error and shall abide by and obey ail orders made by 
the United States Circuit Court of Appeals for the Eighth Circuit in 
said cause, and shall surrender himself in exécution of the judgment 
and sentence appealed from as said Court may direct, if the judgment 
and sentence against him shall be affirmed or the writ of error or 

appeal is dismissed; and if he shall appear for trial in the 

Court of the United States 

for the District of 

on such day or days as may be appointed for a retrial by said. 

..Court and abide by and obey ail orders made by saîd 

Court provided the Judgment and sentence against him shall be re- 
versed by the United States Circuit Court of Appeals for the Eighth 
Circuit; then the above obligation to be void, otherwise to remain in 
full force, virtue and effect. 

[Seal. 

[Seal.^ 

[Seal.; 

Approved: 

....... ......^ •.•«•»•......«*••••••••••••.•.*...«.••...•. 

Judge of the 



FEDERAL REPORTER, VOLUME 188 



JUDGES 



OF THB 



UNITED STATES CIRCUIT COURTS OF APPEALS 

THE CIRCUIT AND DISTRICT COURTS, AND 

THE COMMERCE COURT 



FIRST CIRCUIT 



Hon. OLIVER WBNDBLL HOLMES, Circuit Justice Washington, D. 0. 

Hon. LÉ BAKON B. COLT, Circuit Judge » Providence, H. T. 

Hon. WILLIAM L. PUTNAM, Circuit Judge Portland, Me. 

Hon. WILLIAM SCHOFIBLD, Circuit Judge Malden, Mass. 

Hon. CLARBNCB HALB, District Judge, Maine Portland, Me. 

Hon. FREDERIC DODGE, District Judge, Massachusetts Boston, Mass. 

Hon. BDGAR ALDRICH, District Judge, New Hampshire Littleton, N. H. 

Hon. ARTHUR h. BROWN, District Judge, Rhode Island Providence, B. I. 



SECOND CIRCUIT 



Hon. CHARLES B. HUGHES, Circuit Justice Washington, D. 0. 

Hon. B. HENRY LACOMBB, Circuit Judge New York, N. Y. 

Hon. ALFRED C. COXE, Circuit Judge Utioa, N. Y. 

Hon. HENRY G. WARD, Circuit Judge New York, N. Y. 

Hon. WALTBR C. NOYES, Circuit Judge New Haven, Conn. 

Hon. MARTIN A. KNAPP, Circuit Judge' Washington, D. C. 

Hon. JAMES P. PLATT, District Judge, Connecticut Hartlord, Conn. 

Hon. THOMAS L CHATPIELD, District Judge, E. D. New York Brooklyn, N. Y. 

Hon. VAN VBCHTBN VEBDER, District Judge, E. D. New York Brooklyn, N. Y. 

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

Hon. GEORGE B. ADAMS, District Judge, S. D. New York New York, N. Y. 

Hon. GEORGEC. HOLT, District Judge, S. D. New York New York, N. Y. 

Hon. CHARLES M. HOTJGH, District Judge, S. D. New York New York, N. Y. 

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

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

Hon. JAMES L. MARTIN, District Judge, Vermont Brattleboro, Vt. 

THIRD CIRCUIT 

Hon. HOKACB H. LURTON, Circuit Justice Washington, D. C. 

Hon. WILLIAM M. LANNINO, Circuit Judge Trenton, N. J. 

Hon. GEORGE GRAY, Circuit Judge. Wllmlngton, Del. 

Hon. JOSEPH BUPPINGTON, Circuit Judge Pittsburg, Pa. 

Hon. ROBERT WODROW ARCHBALD, Circuit Judge* Washington, D. a 

' Appointed December 20, ISIO. Deslgnated to serve flve years In Commerce Court. 
* Appointed JanttU7 H, UU. Deslgnated to serve tour years In Commerça Court. 

1£8F. (xxixl 



XÏX 188 FEDERAL BEPOBTBB 

Hon. EDWARD O. BRADFORD, District Judge, Delaware 'WllmlngtOB, Drt. 

Hoa. JOHN EELLSTAB, District Judge, New Jersey Trenton, N. J. 

Hon. JOSEPH CROSS, District Judge, New Jersey..... Elizabeth. N. J. 

Hon. JOHN B. McPHERSON, District Judge, B. D. Pennsylvania PhiladelpWa, Pa. 

Hon. JAMES B. HOLLAND, District Judge, B. D. Pennsylvania Philadelphla, Pa. 

Hou. CHAS. B. WITMBR, District Judge, M. D. Pennsylvania Sunbury, Pa. 

Hon. JAMES S. TOUNG, District Judge, W. D. Pennsylvania Pittsburg, Pa. 

Hon. CHARLES P. ORR, District Judge, W. D. Pennsylvania Pittsburg, Pa. 



FOURTH CIRCUIT - 

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

Hon. NATHAN GOPF, Circuit Judge .......Clarlcsburg, W. Va. 

Hon. JETER C. PRITCHARD, Circuit Judge Asheviile, N. C. 

Hon. THOMAS J. MORRIS, District Judge, Maryland Baltimore, Md. 

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

Hon. HENRY G. CONNOR, District Judge, E. D. Nortb CaroUna Wilson, N. C. 

Hon. JAMES B. BOYD, District Judge, W. D. Nortb Carolina Greensboro, N. C. 

Hon. HENRY A. MIDDLBTON SMITH, District Judge, B. and W. D. S. C.Charleston, S. C. 

Hon. EDMCND WADDILL, Jr., District Judge, B. D. \irginia Richmond, Va. 

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

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

Hon. BENJAMIN P. KELLER, District Judgo, S. D. West Virginia Charleston, W. Va. 



FIFTH CIRCUIT 

Hon. JOSEPH R. LAMAR, Circuit Justice ..t Washington, D. C. 

Hon. DON A. PARDEE, Circuit Judge Atlanta, Ga. 

Hon. A. P. MoCORMICK, Circuit Judge... Dallas, Tex. 

Hon. DAVID D. SHELBY, Circuit Judge. Huntsville, Ala. 

Hon. THOMAS G. JONES, District Judge", N. and M. D. Alabama ..Montgomery, Ala. 

Hon. Wm. L GRUBB, District Judge, N. D. Alabama ..JBlrmingham, Ala. 

Hon. HARRY T. TOULMIN, District Judge, S. D. Alabama... Mobile, Ala. 

Hon. WM. B. SHEPPARD, District Judge, N. D. Plorlda ..Pensacola, Fia. 

Hon. JAMES W. LOCKE, District Judge, S. D. Fiorida Jacksonvllle, Fia. 

Hon. WILLIAM T. NBWMAN, District Judge, N. D. Georgla Atlanta, Ga. 

Hon. EMORY SPEER, District Judge, S. D. Georgla ..Maçon, Ga. 

Hon. RUFUS B. FOSTBR, District Judge, E. D. Louisiana ....New Orléans, La. 

Hon. ALBCK BOARMAN, District Judge, W. D. Louisiana Shreveport, La. 

Hon. HENRY C. NILES, District Judge, N. and S. D. Mississippi... Kosciusko, Miss. 

Hon. GORDON RUSSELL, District Judge, B. D. Texas ..Sherman, Tex. 

Hon. EDWARD R. MEBK, District Judge, N. D. Texas Dallas, Tex. 

Hon. WALLER T. BURNS, District Judge, S. D. Texas Houston, Tex. 

Hon, THOMAS S. MAXEY, District Judge, W. D. Texas Austin, Tex. 



SIXTH CIRCUIT 



Hon. JOHN M. HARLAN, Circuit Justice.,.;.... Washington, D. 0. 

Hon, HENRY P. SBVBRENS, Circuit Judge' Kalamazoo, Mich. 

Hon, ARTHUR C. DBNISON, Circuit Judge* ....Kàlamaxoo, Mlch. 

Hon, JOHN W. WARRINGTON, Circuit Judge Cincinnati, Ohio. 

Hon. LOYAL E. KNAPPEN, Circuit Judge Grand Rapida, Mich. 



* Resigned to take ellect October 3, 19U. 

♦Appointed Circuit Judge to take effeot October î, 19U, in place, ot Henry F. Severen», 
Circuit Judse. 



JtrbGES OF THE COURTS XXXÎ 

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

Hon. WALTER EVANS, District Juige, W. D..Kentucky LoulavilU, Ky. 

Hon. ALEXIS C. ANGBLL, District Judge, B. D. Michlgan Détroit, Mlch. 

Hon. ARTHUR C. DENISON, District Judge, W. D. Michlgan* Grand Raplds, Mlch. 

Hon. CLARENCE W. SESSIONS, District Jadge, W. D. Michlgan' Muskegon, Mlch. 

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

Hon. WM. L. DAY, District Judge, N. D. Ohio Cleveland, Ohio. 

Hon. HOWARD C..HOLLISTER, District Judge, S. D. Ohio Cincinnati, Ohio. 

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

Hon. EDWARD T. SANPORD, District Judge, E. and M. D. Tennessee.. ..Knoxville, Tenu, 
Hon. JOHN E. McCALU District Judge, W. D. Tennessee Memphia, Tenn. 

SEVENTH CIRCUIT 

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

Hon. PETER S. GROSSCUP, Circuit Judge Chicago, 111. 

Hon. FRANCIS E. BAKER, Circuit .Tudge Indianapolis, Ind. 

Hon. WILLIAM H. SEAMAN, Circuit Judge Sheboygan, Wis. 

Hon. CHRISTIAN C. KOHLSAAT, Circuit Judge Chicago, lU. 

Hon. JULIAN W. MACK, Circuit Judge" Washington, D. C. 

Hon. KENBSAW M. LANDIS, District Judge, N. D. Illinois Chicago, 111. 

Hon, GEORGE A. CARPENTER, District Judge, N. D. Illinois Chicago, 111. 

Hon. FRANCIS M. WRIGHT, District Judge, B. D. Illinois Urbana, III. 

Hon. J. OTIS HUMPRHEY, District Judge, S. D. Illinois Springfleld, 111. 

Hon. ALBERT B. ANDERSON, District Judge, Indlana Indianapolia, Ind. 

Hon. JOSEPH V. QUARLES, District Judge, E. D. Wlsconsin Milwaukee, Wls. 

Hon. ARTHUR L. SANBORN, District Judge, W. D. Wlsconsin Madlsou, Wls. 

EIGHTH CIRCUIT 

Hon. WILLIS VAN DBVANTBR, Circuit Justice Washington, D. 0. 

Hon. WALTER H. SANBORN, Circuit Judge St. Paul, Mlnn. 

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

Hon. BLMER B. ADAMS, Circuit Judge St. Louis, Mo. 

Hon. WALTER L SMITH, Circuit Judge Councll Bluffs, lowa. 

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

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

Hon. F. A. YOUMANS, District Judge, W. D. Arkansas ..Ft. Smith, Ark. 

Hon. ROBERT E. LEWIS, District Judge, Colorado Denver, Colo. 

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

Hon. SMITH McPHERSON, District Judge, S, D. lowa Red Oak, lowa. 

Hoh. JOHN C. POLLÔCK, District Judge, Ksnsas Topeka, Kan. 

Hon. CHAS. A. WILLARD, District Judge, Minnesota Minneapolis, Minn. 

Hon. PAGB'MORRIS, District Judge, Minnesota Duluth, Mlnn. 

Hon. DAVID P. DYBR, District Judge, E. D. Missouri St. Louis, Mo. 

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

Hon. W. H. MUNGER, District Judge, Nebraska Omaha, Neb. 

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

Hon. CHARLES F. AMIDON, District Judge, North Dakota Fargo, N. D. 

Hon. RALPH E. CAMPBELL, District Judge, E. Oklahoma Muskogee, Okl. 

Hon. JOHN H. COTTBRAL, District Judge, W. Oklahoma Guthrle, Okl. 

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

Hon. JOHN A. MARSHALL, District Judge, Utah Sait Lake City, Utah. 

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



<Appolnted Circuit Judge to take effeot October 3, 1911, in place of Henry F. Severens, 
Circuit Judge. 

• Appolntment effective October 3, 1911, In place of Arthur C. Denlson, District Judge. 

* Appolnted January 31, 1911. Deslgnated to serve one year In Commerce Court. 

' Appolnted January 81, 1911. Deslgnated to serve two years In Commerce Court 



iXXXii ,1S8 FEDERAL EEPOKTBB 



NINTH CIRCUIT 

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

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

Hon. ERSKINB M. ROSS, Circuit Judge... ..; Los Angeles, Cal. 

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

Hon. WILLIAM H. HUNT, Circuit Judge» .Washington, D. C. 

Hon. CORNELIUS H. HANFORD, District Judge, W. D. Washington Seattle, Wash, 

Hon. OLIN WELLBORN, District Judge, S. D. Californla Loa Angeles, Cal. 

Hon. JOHN J. DE HAVBN, District Judge, N. D. Californla San Francisco, Cal. 

Hon. FRANK H. RUDKIN, District Judge, B. D. Washington SpoUane, Wash. 

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

Hon. EDWARD S. PARRINGTON, District Judge, Nevada Carson City, Nev. 

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

Hon. WM. C. VAN FLBBT, District Judge, N. D. Californla San Francisco, Cal. 

Hon. ROBERT S. BEAN, District Judge, Oregon .'. Portland, Or. 

Hon. GEORGE DONWORTH, District Judge, W. D. Washington Seattle, Wash. 

Hon. CABL RÀSCH, District Judge, Montana*............ Helena, Uont 



COMMERCE COURT 



Hon. MARTIN A. KNAPP, Presidlng Judge Washington, D. C. 

Hon. ROBERT W. ARÇHBALD, Assoclate Judge Washington, D. 0. 

Mon. WILLIAM H. HUNT, AsBOOlate Judge Washington, D. C. 

Hon. JOHN B. CARLAND, Assoclate Judge Washington, D. C. 

Hon. JXTLIAN W. MACK, Assoclate Judge „ Washington, D. C. 



* Appointes Januanr SI, Wl. Designated to serre three Tear» In Commerce Court. 
■ Résignation eftectlve October 16, 1911. 



CASES REPORTED 



Page 

A. C. Cheney, The (C. C. A.) 49 

Acme Acétylène Appliance Co., Commercial 

Acétylène Co. v. (C. C.) 89 

Alsop T. Conway (C. C. A.) 568 

American Carbolite Co., Union Carbide Co. 

V. (C. C.) 334 

American Graphophone Co. v. Victor Talk- 

ing Mach. Co. (C. C. A.) 428 

American Graphophone Co. v. Victor ïalk- 

ing Mach. Co. (C. C.) 431 

American Mfg. Co. v. Bigelow (C. C. A.) 34 
American Pin Co. v. Berg Bros. (C. C). . 083 
American Stoker Co. v. Ûnderîeed Stoker 

Co. o£ America (C. C. A.) 314 

American Thermo-Ware Co., Cover v. (C. 

C.) 6T0 

American Woolen Co. of New York, Lud- 

vigh V. (C C. A.) 30 

Anargyros, Ludington Cigarette Mach. Co. 

V. (C. C. A.) 318 

Anderson Land & Stock Co. v. McConnell 

(G. C.) 818 

Andrews v. Ladd (C. C. A.) 313 

Arden, In re (D. C.) 47.5 

Arnold Print Works. Weiss v. (C. C.) 688 

Atchison, T. & S. F. R. Co. v. Interstate 

Commerce Commission (Com. C.) 229 

Atchison. T. & S. F. R. Co. t. Interstate 

Commerce Commission (Com. C.) 929 

Atlantic Transport Co., tlnited States v. 

(C. C. A.) 42 

Avakian, Ex parte (D. C.) 68S 

A. & J. M. E-smark, In re (D. C.) 6S7 

Baker- Whiteley Coal Co. v. Baltimore & 0. 

R. Co. (C. C. A.) 405 

Baltimore & O. R. Co., Baker- Whiteley 

Coal Co. V. (C. C. A.) 405 

Baltimore & O. R. Co. v. Evans (C. C. A.) 6 
Baltimore & O. R. Co. v. Evans (C. C. A.) 8 
Baltimore & O. R.. Co. v. Thorntou (O. 

C. A.) 868 

Barthier, In re (D. C.) 304 

Bav State Gas Co. of Delaware, Burton v. 

(C. C. A.) 161 

Béatrice Cemetery Ass'n, Townsend v. (C. 

C. A.) 1 

Beckwith v. Clark (C. O. A.) 171 

Berg Bros., American Pin Co. v. (G. C."i . . . 683 
Bernard Gloekler Co., Walker Patent Piv- 

oted Bin Co. V. (C. C.) 435 

Bethlehem Steel Co. v. United States (C. 

C. A.) 879 

Bigelow, American Mfg. Co. v. (C. C. A.) 34 

Bishop, Vanderbilt v. (C. C.) 971 

Blackman, McClellan y. (C. C.) 934 

Blake, Parlett v. (C. 0. A.) 200 

Blond, Inre (D. C.) 452 

188 P.— c (xxxiii) 



Page 
Board of Directors of St. Francis Levée 

Dist. V. Webb (C. C. A.) 67 

Bodek, In re (D. C.) 817 

Borden's Condensed Milk Co., Fellows v. 

(C. C.) 803 

Borgf eldt & Co.. Lesser v. (O. C.) 8M 

Bowles V. H. J. Heinz Co. (O. C.) 937 

iirainard v. Chicago Terminal Transfer R. 

Co. (C. C. A.) 292 

Bryant, In re (D. C.) 530 

Bullock, Dixie Cotton Picker Co. v. (C. C.) 021 

lîuriis, Havens v. (C. C.) 441 

Burtis, In re (D. C.) 527 

Burton v. Bay State Gas Co. of Delaware 

(G. C. A.) 161 



R. Co. (O. C.) 
Green (C. C. 



516 



Campbell v. Spokanc & I. E, 
Capewell Horse Nail Co. v. 
A.) 

Carpenter v. Knolhvood Cemetery (C. C.) 
Catterall Printing Co., Kamenicky v., two 

cases (C. C.) 

Cheney, The A. C. (0. C. A^ 

Chicago Electric Traction Co., Manhattan 

Trust Co. V. (C. C.) 1000 

Chicngo Terminal Transfer B. Co., Brain- 

ard V. (C. C. A.) 

Chicago Terminal Transfer R. Co., United 

States Trust Co. of New ïork v. (C. 0. 

A) 

C:-' -go & K. W. R. Co., Jessup v. (C. C.) 
Citizens' Nat. Bank of Norfolk, Neb., 

First Nat. Bank v. (C. C. A.) 

City and County of Denver, Metz v. (C. C. 

A.) 

City Investing Co., James v. (C. C.) 

Citv of Des Moines, lowa, v. AVelsbach 

Street Lighting Co. of Delaware (C. C. A.) 
C. J. Huebel Co. v. Leaper (0. O. A.).... 

Clark, Beckwith v. (C. C. A.) 

Clark V. Norwalk Steel & Iron Co. (C. C.) 
Clyde Mach. Works Co., Elliott Co. v. (C. 

C.J 

Coane v. Netter (C. C.) 081 

Cohrs, Mayer v. (C. C.) 443 

Commercial Acétylène Co. v. Acme Acéty- 
lène Appliance Co. (C. C.) 

Commercial Acétylène Co. v. Searcblight 

Gas Co. (C. C.) 

Confectioners' Machinery & Mfg. Co. v. 

Panoualias (C. C. A.) 

Connccticut Co., Phelps v. (C. C.) 

Continental & Commercial Trust & Savings 

Bank v. McCarty (C. C. A.) 

Conn ay, Alsop v. (C. C. A.) 

Conway, Robertson v. (C. C. A.) 

Cook V. Moran Towing & Transnortation 

Co. (D. C.) 



20 

856 

400 
49 



292 



292 
931 

427 

187 
513 

90f! 
709 
171 
009 

217 



89 



211 
765 



568 
579 

840 



xxxiv 



188 FEDERAL REPORTER 



Page 
Cooper, Physieians' Défense Co. v. (0. C.) 832 
Corenman v. United States (O. C. A.)-... 424 

Counort, Ex parte (C. C.) 398 

Cover V. American Thermo-Ware Co. 

(C. C.) ..• 670 

Cumberland Gasiight Co. v. West Virginia 

& Maryland Gas Co. (C. C. A.) 585 

Cummiugs, In re (D. C.) TOT 

Danciger v. Stone (C. C.) 510 

Daterson Pub. Co., In re (C. C. A.) 04 

Davis, United States v. (C. C.) 383 

Dayton Coal & Iron Co. v. Dodd (C. C. A.) 597 
Delaware, L. & W. R. Co., Royce v. (0. C. 

Delaware & "HudVon' Co." v! Dix' là'. C.' A.) 901 

De Long Fumitnre Ce, In re (D. C.) 686 

Dempsey, United States v. (D. C.) 450 

Dineliart, Ex parte (C C.) 858 

Dix, Delaware & Hudson Co. v. (0. C. A.) 901 
Dixie Cotton Piclser Co. v. Bullocli; (C. CJ 921 
Dr. Voorhees Awning Hood Ce, In re (C. 

C. A.) : : 425 

Dodd, Dayton Coal & Iron Co. v. (C. C. A.) 597 
Dodds V. Palmer Mountain Tunnel Co. 

(O. C.) 447 

Dodge V. North Hudson (0. C.) 489 

Donnelly. In re (D. C.) 1001 

Draper Co. v. Stafford Co. (C. C.) 811 

Du Pont De Nemours & Co., United States 

V. (C. C). 127 

Eagle White Lead Co. v. Interstate Com- 
merce Commission (Com. C.) 256 

Eaton, Higgins v. (C. C.) 938 

Edison v. Ira M. Smith. Mercantile Co. 

(C. C.) 925 

E. I. Du Pont De Nemours & Co., United 

States V. (C. C.) 127 

11,150 Pounds of Butter, United States v. 

(D. 0.) 157 

EUiott Co. Y. Clyde Mach. Worlîs Co. (0. 

C.) 217 

Emerson & Norris Oo. v. Simpson Bros. 

Corp. (a C.) 808 

Emerson & Norris Co. v. Structural Cernent 

Stone Co. (C. C.) 808 

Emil Grossman Co., Rajah Auto Supply 

Co. V. (C. C. A.) 73 

Empire Trust Co. v. Hudson (C. C. A.). . . . 630 

Ericlîson, United States v. (D. C.) 747 

Esmark, In re (D. 0.) 687 

Evans, Baltimore & O. R. Co. v. (C. C. A.) 6 
Evans, Baltimore & O. R. Co. v. (C. C. A.) 8 
Evans, Knickerhocker Trust Co. v. (C. C. 
A.) 549 

Famham, Waterproofing Co. t. (C. C.) . . . 679 
Farr v. Hobe-Peters Land Co. (C. C. A.) 10 

P. D. McKinniss Oo., Hills v. (D. C.) 1012 

Fellows V. Borden's Condensed Milk Co. 

(0. O.) 863 

Ferreri, In re (D. C^ 675 

Fidelitv Trust Oo., Robinson v. (0. C. A.) 37 
First Nat. Bank v. Citizens' Nat. Bank of 

Norfolk, Neb. (C. C. A.) 42î 

Fîsher Hydraulic Stone & Machinery Oo. 

V. Warner (0. C.) 465 

Fithian v. St. Louis & S. F. R. Co. (C. C.) 842 

Fitzgerald, In re (D. C.) 763 

Fogelman, In re (D. C.) 755 



Page 
Fort, Hubbard V. (C. C.) 987 

Foster v. United States (C. C. A.) 805 

Fred W. Wolf Co., Mt. Vernon Refrigerat- 
ing Co. V. (C. C. A.) 164 

Gale, Harris v. (C. C.) 712 

Gay, In re (D. C.) 392 

Geer Co., Ross v. (C. C.) 731 

Gehris-Herbine Co., In re (D. C.) 502 

General Electric Co. v. Winona Interurb- 

an R. Co. (C. C. A.) 77 

Geneva Mfg. Co. v. National Furniture Co. 

(C. C.) 662 

George Borgfeldt & Co., Lesser v. (C. C.) . 864 
Germatiia Sav. Bank & Trust Co. v. Loeb 

(C. C. A.) 285 

Gibscn, United States v. (D. C.) 396 

Gloekler Co., Walker Patent Pivoted Bin 

Co. V. (C. C.) 435 

Golden Cycle Min. Co. v. Rapson Coal Min. 

Co. (C. O. A.) 179 

Graham v. United States (C. C. A.) 651 

Green, Ca,pewell Horse Nail Co. v. (C. 0. 

A.) 20 

Griffin, In re (D. C.) 889 

Grossman Co., Rajah Auto Supply Co. v. 

(C. 0. A.) 73 

Guernsey v. Impérial Bank of Canada (C. 

C. A.) 300 

GufiEey, The J. M. (C. C. A.) 66 

Hammond. In re (D. C.) 1020 

Handy Things Co. v. Tucker & Dorsey 

Mfg. Co. (C. C. A.) 68 

Hanley, Hoye Co., Johnson v. (D. C.) 752 

Ilanson, New Orléans Terminal Co. v. (C. 

C. A.) 638 

Harris v. Gale CC. C.) 712 

Harrisburg, Tlie (D. C.) 721 

Harsha, United States v. (0. C.) 759 

Hart, The Merrill O. (C. C. A.) 49 

Havens v. Burns (C. C.) 441 

HazJett v. Pollack Stogie Oo. (C. 0.) 494 

Heide v. Panoulias (0. C. A.) 914 

Heinz Co., Bowles v. (C. O.) ." 937 

Pliffgins V. Eaton (C. C.) 938 

Bill V. Pullman Co. (0. C.) 497 

Hills V. F. D. McKinniss Co. fD. C.) 1012 

H. J. Heinz Co., Bowles v. (C. 0.) 937 

Hobe-Petei-s Land Oo., Farr v. (C. C. A.) 10 
Hooker v. Interstate Commerce Commis- 
sion (Oom. O.) 242 

Hooper, Jackson v. (0. C.) 509 

Hoschke, Victor Talking Mach. Co. v. (C. C. 

A.) 326 

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

H. S. Geer Co., Ross v. (C. 0.) 731 

Hubbard v. Fort (C. C.) 987 

Hudson, Empire Trust Co. v. (0. C. A.) . . . 630 
Hudson V. New York & Albany Transp. 

Co. (C. C. A.) 6.30 

Huebel Co. v. Leaper (0. C. A.) 769 

Hunter v. Illinois Cent. R. Oo. (C. O. A.) 645 
Flurst, In re (D. C.) 707 

Illinois Cent. R. Co., Hunter v. (C. C. A.) 645 
Impérial Bank of Canada, Guernsey v. (C. 

C. A.) 300 

International Banking Corp. v. Payne (0. 

C. A.) 40 



CASES EEPOETED 



XXXV 



Page 
Interstate Commerce Commission, Atchi- 

son, T. & S. F. R. Co. v. (Corn. C.) 229 

Interstate Commerce Commission, Atchison, 

T. & S. F. R. Co. V. (Oom. O.) 929 

Interstate Commerce Commission, Eagle 

White Lead Co. v. (Corn. C.) 25G 

Interstate Commerce Commission, Hoolîer 

V. (Corn. C.) 242 

Interstate Commerce Commission, Southern 

Pao. Co. V. (Corn. C.) 241 

Ira M. Smith Merchantile Co., Thomas A. 

Edison V. (C. C.) 925 

I. Rheinstrom Sons Co., Kaufman v. (C. 

C.) 544 

Isidore Newmau & Son, Lovell v. (C. C). . 534 

Jaclîson V. Hooper (C. C.) 509 

Jackson v. White (C. C. A.) 775 

James v. City Investing Co. (C. 0.) 513 

Jem Yuen, In re (D. 0.) 350 

Jes.snp V. Chicago & X. W. R. Co. (C. C). . 931 

J. M. Guffey, ïhe (C. C. A.) 66 

John Kitchen, Jr., Co. v. Levison (C. O. A.) 658 

Johnson v. Hanley. Hoye Co. (D. C.) 752 

J. T. Jlorgan Lumber Co., West Kentucliy 

Coal Co. V. (C. C. A.) 26 

Judson, In re (D. C.) 702 

Kamenicky v. Catterall Printing Co., two 

cases (C. C.) 400 

Kaprielian. Ex parte (D. C.) 004 

Kaufman v. I. Rheinstrom Sons Co. (C. C.) 544 

Kerr, Vanderbilt v. (C. C.) 537 

Kitchen. Jr.. Co. v. Levison (C. C. A.) 658 

Kniclierbocif er Trust Co., In re (D. C.) . . 445 
Knickerbocker Trust Co. v. Evans (C. 

C. A.) 549 

KnoUwood Cemetery, Carpenter v. (C. C.) 856 

Ladd, Andrews v. (C. C. A.) 313 

Leach v. Scarff (C. C.) 446 

Leaper, C. J. Huebel Co. v. (C. C. A.) . . . . 760 

Lehigh Val. R Co., Najlor & Co. v. (C. C.) 860 
Lehigh Val. R. Co. v. United States (C. 

C. A.) 879 

Lehtohner v. New York, N. H. & H. R. 

Co. (C. C. A.) 59 

Lesser v. George Borgfeldt & Co. (G. G.) . . 864 
Levison, John Kitchen, Jr., Co. v. (C. C. 

A.) 658 

Little, The R. B. (C. C. A.) 205 

Livermore & Knight Co., Postal Telegraph- 

Cable Co. v. (G. C.) 696 

Loeb, Germania Sav. Bank & Trust Co. v. 

(C. C. A.) 285 

Louisville & N. R. Co. v. Wilson (C. C. A.) 417 

Lovell v. Isidore Newman & Son (C. C.) . . . 534 
Ludington Cigarette Mach. Co. v. Anar- 

gyros (G. G. A.) 318 

Ludvigh V. American Woolen Co. of New 

York (C. C. A.) 30 

McCartney, In re (D. C.) 815 

McCarty, Continental & Commercial Trust 

& Savings Bank v. (C. G. A.) 273 

MeClellan v. Blackman (C. C.) 934 

MeConnell, Anderson Land & Stock Co. v. 

(C. G.) 818 

McKinniss Go., Hills v. (D. G.) 1032 

Madden, Star Co. v. (C. C. A.) 010 

Malloy, In re (C. C. A.) 788 



Page 

Manhattan Trust Co. v. Chicago Electric 

Traction Co. (C. C.) 1006 

.Marks v. Merrill P<ipcr Mfg. Co. (C. C.) . . 850 
Massachusetts Coal & Power Co., Slade v. 

(C. 0.) 369 

Matthews, In re (D. C.) 445 

Mayer v. Cohrs (C. C.) 443 

Merrill C. Hart, The (C. C. A.) 49 

Merrill Paper Mfg. Go., Marks y. (C. C). .. 850 

Metropolitan Exp. Co., In re (0. C.) 339 

Metz V. Denver (C. 0. A.) 187 

Michèle, Ex parte (D. G.) 449 

Mitchell, S. S. White Dental Mfg. Co. v. (O. 

C.) ...1017 

Mollison Co. v. O'Brien (C. G.) 539 

Moran Towing & Transport.'ttion Co., Cook 

V. (D. C.) 846 

Morgan Lumber Co., West Kentucky Coal 

Co. V. (C. C. A.) 26 

Motion Picture Patents Co. v. Steiner (C. 

C.) 338 

Motion Picture Patents Go. y. Yankee 

Film Co. (G. C.) 338 

Mt. Vernon Refrigerating Co. v. Fred W. 

Wolf Co. (G. C. A.; 164 

M. T. Mollison Co. v. O'Brien (C. C.) 539 

Murrell, The (D. C.) 727 

Myers Co. v. Tuttle (C. C.) 532 

Nassau, The (C. C. A.) 46 

Nalional Conduit & Gable Co., In re (C. C.) 343 
National Furniture Co., Geneva Mfg. Co. v. 

(C. C.) 602 

Naylor & Co. v. I>ehigh Val. R. O. (C. C.) 860 
NeaL Famham, Waterproofing Co. v. (C. 

C.) 679 

Nelson v. Ohio Cultivator Go. (G. C. A.).. 620 

Netter, Coane v. (G. C.) 681 

Newman & Son, Lovell v. (G. G.) 534 

New Orléans Terminal Co. v. Hanson (C. 

C. A.) 638 

New York City R. Go., In re (G. C.) 339 

New York City R. Co., Pennsylvania Steel 

Co. V. (C. C.) 343 

New York City R. Co., Pennsylvania Steel 

Co. V. (C. C.) 680 

New York Métal Ceiling Co., Sanitary Mét- 
al Tile Co. V. (C. G.) 441 

New York, N. H. & H. R. Co., Lehtohner v. 

(G. G. A.) 59 

New York Trust Go., Reynolds v. (C. C. A.) 611 
New York & Albauy Transp. Co., Hudson 

V. (G. G. A.) 630 

Nichol.s-Gliisliolm Lumber Co., United 

States V. (C. C.) 383 

Norfolk & Portsmouth Traction Go. v. Re- 

phan (G. G. A.) 276 

Northern Pac. R. Co., Odhner v. (C. G.). .. 507 
Norton, United States v., seven ca.^es (D. 

G.) 250 

Norton v. Whiteside (C. G.) HM 

Norwalk Steel & Iron Co., Clark y. (C. C.) 999 

O'Brien, M. T. Mollison Go. v. (C. C.) 539 

Oceanic Steam Nav. Co. v. Watkins (C. 

C. A.) 909 

Odhner v. Northern P.ac. R. Co. (C. C.) 507 

Ohio Cultivator Co., Nelson v. (C. C. A.).. 620 

Ommen v. Talcott (G. 0. A.) 401 

One Car Load of Como Horse and Mule 

Feed, United States v. (D. C.) 453 



XXXVl 



188 FEDERAL REPORTER 



Page 
100 Barrels of Vinegaï, United States v. 

(D. O.) 471 

One Stradivarius Violin, United States v. 

(D. C.) 542 

Ontai V. Uuited States (C. C. A.) 310 

Oregon-Washingtoû R. & Nav. Co. v. Wil- 

kinson (0. C.) 363 

Palmer Mountain Tunnel Co., Dodds v. (C. 

O.) 447 

Panoualias, Coûfectloners' Mac'Jiinery & 

Mfg. Co. V, (C. 0. A.) 211 

Panoulias, Heide v. (C. C. A.) 914 

Park Land Co., United States v. (0. C). . . 383 

Parlett V. Blake (C. C. A.) 200 

Payne, International Banking Corp. v. (O. 

G. A.) : 40 

Pel-Ata-Yakot v. United States (C. 0.) . . . 387 
Peninsula Bark & Lumber Co., Wilson v. 

(O. C. A.} 52 

Pennsylvania Steel Co. v. New York City 

K. Co. (C. C.) 343 

Pennsylvania Steel Co. v. New York City 

R. Co. (C. C.) 680 

People's Coal Co., Second Pool Ooal Co. 

V. (C. 0. A.) 892 

Phelps V. Connecticut Co. (C. C.) 765 

Philadelphia & K. R. Co., United States 

V. (D. C.) 484 

Philadplpliia & R. B. Co. v. United States 

(C. C. A.) 876 

Physicians' Défense Co. v. Cooper (C. C.). . S32 

Pollack Stogie Co., Hazlett v. (C. 0.) 494 

Postal Telegraph-Cable Co. v. Livermore & 

Kniffht Co. (C. C.) 690 

Potter, Wells Fargo & Co. v. (C. C. A.) .... 888 
Procter & Gamble Co. v. United States 

(Com. C.) 221 

Pullman Co., Hill v. (C. C.) 497 

Rajah Auto Supply Co. v. Emil Grossman 

Co. (C. C. A.) : 73 

Rambo & Regar, Standard Mach. Co. v. (C. 

C. A.) 323 

Rapson Coal Min. Co., Golden Cycle Min. 

Go. r. {C. C. A.) 179 

R. B. Little, The (C. C. A.) 203 

Rephan, Norfolk Si Portsmor.th Traction 

Co. V. (C. C. A.) 276 

Reynolds v. New York Trust Co. (C. C. A.) 611 
Rheinstrom Sons Co., Kaufman v. (C. C.) . . 544 

Robertson v. Conway (C. G. A.) 570 

Robertson v. Territoi-y of Arizona (C. C. 

A.) 783 

Robinson v. Fidelity Trust Co. (C. O. A.) 37 

Rose, Slade v. (C. C.) 749 

Ross, In re (C. C.) •. 083 

Ross V. H. S. Geer Co. (G. C.) 733 

Royce v. Delaware, L. & W. R. Co. (C. 

C. A.) 65 

Rydberg V. Smith (C. C. A.) 100 

Ryder v. Townsend (C. C.) 792 

St. Louis Merchants' Bridée Terminal R. 

Co. V. United States (C. G. A.) 191 

St. Louis Southwestern R. Co. v. Stutt- 
gart & R. B. R. Co. (0. G.) 374 

St. Louis & S. F. R. Co., Fîthian v. (C. C.) 842 

Salvator Brewing Co., In re (D. G.) 522 

Sanitary Métal Tile Co. v. New York Mét- 
al Ceiling Co. (C. C.) 441 



Page 

Satellite. The (D. C) 717 

Scartf, Leach v. (C. C.) 44(1 

Scheièr, In re (D. C.) 744 

Schmertz Wire Glass Co. v. Western Glass 

Co. (C. G,)...., 436 

Searchlight Gaâ Co., Commercial Acétylène 

Co. V. (C. C). . . 85 

Second Pool Coal Co. v. People's Coal Co. 

, (C. C. A.) 892 

Seminole, The (C. 0. A.) 49 

S. F. Myers Co. v. Tuttle (C. G.) 532 

Shear. In re (D. C.) 677 

Shredded Wheat Co. v. Williams Biscuit 

Co. (C, G;). 213 

Simpson BroS. Corp., Emerson & Norris Co. 

V. (0. G.) 808 

Slade V. Massachusetts Coal & Power Co. 

(C C ) 36!) 

Slade V. ' itisè * (C.' G.) .' '. .',."!.'!.'!.'!!.'!."!! .' 74!) 
Slentz, Western Bank Note & Engraving 

Co. V. (G. 0. A.) 57 

Sloss-Sheffleld Steel & Iron Co., Tacony 

Iron Co. V. (C. 0. A.) 896 

Smith, Rydherç v. (O. C. A.) 196 

Smith Mercantile Co., Thomas A. Edison v. 

(C. C.) 925 

Sondheim, United States v. (D. C.) 378 

Sonora Phonograph Co., Victor Talking 

Mach. Co. V. (C. C.) 330 

Southern Pac. Go. v. Interstate Commerce 

Commission , (Com. C.) 241 

gpencei- v. The Dalles P. & A. Nav. Co. 

(C. C. A.) ., 865 

Spiegel V. Zuekerinaii (C. C. A.) 63 

Spolcane & I. E. R. Co., Campbell v. (C. C.) 516 

Spot Cash Hooper Go.. In re (D. C.) SGI 

S. S. White Dental Mfg. Co. v. Mitchell 

(C. C.) lOlT 

Stafford Co.. Draper Co. v. (C. 0.) 811 

Standard Mach. Co. v. Rambo & Regar 

(G. C. A.) 323 

Star Co. V. Madden (G. C. A.) 910 

Stciner, Motion Picture Patents Co. v. (O. 

G.) 338 

Stone, Danciger v. (C. C.) 510 

Stone, United States v. (D. C.) 836 

Structural Cernent Stone Co., Emerson & 

Norris Co. v. (C. C.) 808 

Sturtevant, In re (G. C. A.) 196 

Stuttgart & R. B. R. Co., St Louis South- 
western R. Co. V. (C. C.) 374 

Sutton. Williams v. (C. C.) 439 

Swift, United States v., three cases (D. 0.) 92 

Tacony Iron Co. v. Sloss-Sheffield Steel & 

Iron Co. (G. G. A.) 896 

Talcott, Ommen v. (C. C. A.) 401 

Taylor, In re (D. C.) . . .' 479 

Teaser, The (D. C.) 721 

Territory of Arizona, Robertson v. (C. C. 

A.) 783 

The Dalles, P. & A. Nav. Co., Spencer v. 

(C. C. A.) 865 

Thomas A. Edison v. Ira M. Smith Mer- 
cantile Co. (C. C.) 92.') 

Thornton, Baltimore & O. R. Co. v. (C. C. 

A.) 868 

Torchia. In re (C. C. A.) 207 

Town of North Hudson, Dodge v. (0. C). . 489 
Townsend v. Béatrice Cemetery Ass'n (0, 
C. A.) 1 



CASES REPORTBD 



XXXVll 



Page 

Townsend, Ryder v. (C. C.) 792 

a?ransfer No. 18, The (C. C. A.) 210 

Tucker, United States v. (D. 0.) 741 

Tucker & Dorsey Mfg. Co., Handy Things 

Co. V. (C. C. A.) es 

Tuttle V. S. F. Myers Co. (0. C.) 532 

Underfeed Stoker Co. of America, Ameri- 
can Stoker Co. v. (C. C. A.) 314 

Underwood Typewriter Co. v. Victor 

Typewriter Co. (C. C. A.) 82 

Union Carbide Co. v. American Carbolite 

Co. (G. Cl 3.34 

Union Pac. li. Co., United States v. (C. C.) 102 
United States v. Atlantic Transport Co. 

(C. C. A.) 42 

United States, Betblehem Steel Co. v. (0. O. 

A.) 879 

United States. Corenman t. (C. 0. A.) 424 

United States v. Davis (C. C.) 383 

United States v. Dempsev (D. C.) 450 

United States v. B. I. Du Pont De Ne- 
mours & Co. (C. C.) 127 

United States v. 11,150 Pounds of Butter 

(D. C.) 157 

"nited States v. Erickson (D. C). ...... . 747 

United State, Foster v. (C. C. A.) 305 

luited States \: Gibson (D. C.) 3!m 

United States, Graham v. (C. C. A.) 651 

'nited States v. Ilarsha (C. C.) 759 

United States, Lehigh Val. R. Co. v. (C. C. 

A.) 879 

United States v. Nieliols-Cliisholm Lum- 

ber Co. (C. C.) 383 

[Jnited States v. Norton, seven cases (D. C.) 256 
United States v. One Car Lroad of Corno 

Horse and Mule Feed (D. C.) 453 

United States v. 100 Barrels of Vinegar 

(D. C.) 471 

United States v. One Stradivarius Violin 

(D. C.) 542 

United States, Ontai v. (C. C. A.) 310 

Tnited States v. Park Land Co. (0. C.).. 383 

l'nited States. Pel-Ata-Yakot v. (C. C.) 387 

United States v. Philadelphia & R. R. Co. 

(D. C.) 484 

United States, Philadelphia & R. R. Co. v. 

(0. C. A.) 879 

United States, Procter & Gamble Cb. v. 

(Cora. C.) 221 

United States, St. Louis Merehants' Bridge 

Terminai li. Co. v. (C. C. A.) 191 

l'nited States v. Sondheim (D. C.) 378 

United States v. Stone (D. C.) 836 

United States v. Swift, three cases (D. 

C.) 92 

''nited States v. Tucker (D. C.) 741 

United Statos v. Union Pac. R. Co. (C. C.) 102 

L'nited States v. Waldman (O. 0.) 524 

i 'nited States v. Warner (C. C.) fiS2 

United States v. 'R'hitmire (C. C. A.) 422 

(•nited States. Wilson Coal Co. v. two cases 

(C. C. A.).. 545 

United States Trust Co. of New York v. 

Chicago Terminal Transfer R. Co. (C. C. 

A.) 292 

Urzua, In re (G. C.) 540 

Vanderbilt v. Bishop (C. C.) 971 



Pag» 

Vanderbilt v. Kerr (C. C.) 537 

Varley & Bauman Clothing Ce, In re 

(D. C.) 761 

Victor Talking Mach. Co., American Graph- 

ophone Co. v. (0. C. A.) '. 428 

Victor Talking Mach. Co., American Graph- 

ophone Co. v. (C. C.) 431 

Victor Talking Mach. Co. v. Hoschke (C. 

C. A.) 826 

Victor Talking Mach. Co. v. Sonora Phono- 

graph Co. (C. C.) 330 

Victor Typewriter Co., TJnderwood Type- 
writer Co. y. (C. C. A.) 82 

Vogt. In re (D. C.) 764 

Voorhees Awning Hood Co., In re (C. C. 

A.) ;.,... 425 

Waldman, United States v. (C. C.) 524 

Walker Patent Pivoted Bin Co. v. Ber- 
nard Gloekler Co. (C. C.) 435 

Warner, Fisher Hydraulic Stone & Machin- 

ery Co. v. (C. C.) 465 

Warner, United States v. (C. C.) 682 

Waterproofing Co. v. Neal Farnham (0. CO 679 
Watkins, Oceanic Steam Nav. Co. v. (C. C. 

A.) 909 

Webb, Board of Directors of St. Francis 

Levée Dist. v. (C. C. A.) 67 

Weiss V. Arnold Print Works (C. C.) 688 

Wells Fargo & Co. v. Potter (C. C. A.) 888 

Welsbach Street Lighting Co. of Delaware, 

City of Des Moines, lowa, v. (C. C. A.) . . 906 
Western Bank Note & Engraving Co. v. 

Slentz (C. C. A.) 57 

Western Glass Co., Schmertz Wire Glass 

Oo. V. (C. C.) 436 

West Kentucky Coal Co. v. J. T. Morgan 

Lumber Co. (C. C. A.) 26 

West Virginia & Marjdand Gas Co., Cum- 

berland Gaslight Oo. v. (C. C. A.) 585 

White, Jackson v. (C. 0. A.) 775 

White Dental Mfg. Co. v. Mitchell (C. C). .1017 

Whiteside, Norton v. (C. C.) 356 

Whitraire, United States v. (0. C. A.) 422 

Wiedmann, In re (D. C.) 684 

Wiesebrock, In re (I). C.) 757 

Wilcke, In re (C. C.) 10O6 

Wilkinson, Oregon-Washington R, & Nav. 

Co. V. (C. C.) 363 

Williams v. Sutton (C. C.) 439 

Williams Biscuit Co., Shredded Wheat Co. 

y /rj p 't 213 

Wiison,' Ixi'uisviilV & N. 'r. 'Co.' v.' (G. 'o.' A.) 417 
Wilson v. Peninsula Bark & Lumber Co. 

(C. C. A.) 52 

Wilson Coal Co. v. United States, two 

cases (C. C. A.) 545 

Winona Interurban R. Co., General Electric 

Co. V. (C. C. A.) 77 

Wolf, In re (C. C.) 519 

Wolf Co., Jlt. VernoD Refrigerating Co. v. 

(O. C. A.) 164 

Yankee Film Co., Motion Picture Patents 

Co. V. rc. C.) ' 338 

York Silk Mfg. Co., In re (D. C.) 735 

Zeutner, Ex pnrte (D. C.) 344 

Zuckerman, Spiegel v. (C. C. A.) 63 



CASES ON REHEARING 

Cases in the United States Cieoxjit Courts op Appeals in which 

REIÏEARISGS HAVE BEEN GRANTED OE DENIED 



THIKD CIRCUIT. 
Lorain Steel Co. v. New York Switch & Crossing Co 184 Fed. 301 

Rehearing denied March 7, 1911. 

Pflugh V. Eagle White Lead Co 185 Fed. 769 

Rehearing denied May 3, 1911. 

FIFTH OIECUIT. 
Dyar v. United States ISG Fed. 614 

Eeliearing denied Oct. 2, 1911. 

Eegister v. United States 186 Fed. 624 

Rehearing denied Oct. 2, 1911. 

Williams v. City Banlv & Trust Co 186 Fed. 419 

Rehearing denied Oct. 2, 1911. 

EIGHTH CIRCUIT. 

Atchison, T. & S. F. R. Co. v. United States 172 Fed. 1021 

Rehearing denied Oct. 2, 1911. 

Bail V. German Bank of Carroll County, lowa 187 Fed. 750 

Rehearing denied Oct. 2, 1911. 

Blank V. Aronson 187 Fed. 241 

Rehearing denied Sept. 18, 1911. 

City & County of Denver v. New York Trust Co 187 Fed. 890 

Rehearing denied Oct. 16, 1911. 

Denver & R. G. R. Co. v. Baer Bros. Mercantile Co 187 Fed. 485 

Rehearing denied Oct. 9, 1911. 

Equitable Life Assurance Society of United States v. Miller 185 -Fed. 98 

Rehearing denied Sept. 13, 1911. 

Jacksbu V. Mutual Life Ins. Co. of New York 186 Fed. 447 

Rehearing denied Sept. 4, 1911. 

Morris v. United States 185 Fed. 73 

Rehearing denied Sept. 4, 1911. 

NINTH CIRCUIT. 

Amalgamated Sugar Co. v. United States Nat. Bank of Port- 

iand, Or 187 Fed. 746 

Rehearing denied Sept. 5, 1911. 

Matsumura v. Iliggins 187 Fed. 601 

Rehearing denied Sept. 5, 1911. 

Suzuki V. Higgins 187 Fed. 603 

Rehearing denied Sept. 5, 1911. 

ISS F. (xxxix)t 



CASES 

ARGUED AND DETERMINED 



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



TOWNSEND V. BEATRICE CEMETERT ASS'N. 

(Circuit Court ot Appeals, Bightli Circuit. June 20, 1911.) 

No. 2,932. 

Cemetebies (§ 5*) — ^AssETS Exempt from Execution— Pubchase of LiANd— 

PUECHASE PBICE— TrANSFEE OF DEBT— EfFECT. 

Cobbey's Ann. St. Neb. 190T, § 4227, déclares that land appropriated 
for a cemetery shall be exempt from exécution, and section 4223 pro- 
rides that, after paylng for such land, ail future receipts and inconie 
shall be devoted exclusively to improving the cemetery, that no debts 
shall be contracted In anticipation of future receipts except for originally 
purchaslng, laylng ont, ineloslng, and embellishlng the grounds and ave- 
nues and erectlng buildings, etc., for which debts may be contracted not 
exceedlng $35,000 in the whole to be pald ont of future receipts. Held 
that, under such sections, the receipts from sales of lots were flrst sub- 
ject to the payment of any debt contracted for the purchase prlce of the 
cemetery property, and hence where a cemetery association borrowed 
money from plalntiff wlth which to take up purchase-money notes, ex- 
ecuted to Its vendor of the cemetery land, and the money so borrowed 
was used for that purpose, the liablllty of the receipts followed the debt, 
and plalntlfC was entltled to hâve them applied to the payment of his 
notes. 

[ISd. Note. — For other cases, see Cemeterles, Dec. Dlg. § 5.*] 

In Error to the Circuit Court of the United States for the District 
of Nebraska. 

Action by W. J. Townsend against the Béatrice Cemetery Associa- 
tion. Judgment for défendant, and plaintifï brings error. Reversed. 

Richard S. Horton (Hugh J. Dobbs, on the brief), for plaintiff in 
error. 

E. O. Kretsinger, for défendant in error. 

Before VAN DEVANTER and ADAMS, Circuit Judges, and 
RINER, District Judge. 

RINER, District Judge. The parties are arranged in this court as 
they were in the court below, the plaintiff in error being the plaintifï 
in the Circuit Court, and the défendant in error being the défendant 

•For other cases see same toplo & i numbbh in Dec. & Am. Dlgs. 1907 to date, & Eep'r Indexes 
188 F.— 1 



2 188 FEDERAL EEPOETEE 

in the Circuit Court, and they will hereafter be referred to as plaiii- 
tiff and défendant, respectively. 

March 20, 1889, the plaintiff recove.red a judgment in the Circuit 
Court for the District of Nebraska against the défendant for the sum 
of $5,082.66 upon a promissory note executed by the défendant and 
by it delivered to the plaintiff. An exécution was issued upon the 
judgment and returned "unsatisfied for want of property whereon to 
levy." Subsequently the plaintiff, as authorized by section 916 of the 
Revised Statutes of the United States (U. S. Comp. St. 1901, p. 684), 
instituted, pursuant to the laws of Nebraska, proceedings in aid of 
exécution in the Circuit Court. A jury was waived by stipulation in 
writing, and upon issue framed the case was tried to the court, result- 
ing in a judgment dismissing the proceedings in aid of exécution at 
plaintiff's cost. The présent writ of error challenges the correctness of 
that judgment. 

The record discloses that the défendant is a corporation organized 
under the laws of Nebraska as a cemetery association ; that as such 
corporation it became the owner, by conveyance to it in fee, of two 
tracts of land near the city of Béatrice, Neb., one containing 6 acres, 
the other 80 acres. Thèse tracts of land were surveyed, platted, and 
dedicated to the public use as cemeteries, and hâve since been devoted 
to such use. 

The 80-acre tract was purchased in April, 1887, from the heirs of 
Hugh N. Cross. The association, in addition to a cash payment at 
the time of the purchase, executed two promissory notes to A. W. 
Cross, representing the heirs of Hugh N. Cross, for the balance of 
the purchase price. Two years later, thèse notes were renewed. Au- 
gust 14, 1891, the association took up thèse renewal notes held by 
Cross; the money for that purpose having been procured from the 
plaintiff. The association at the same time executed and delivered to 
the plaintiff the promissory note upon which the judgment was ob- 
tained. 

By the laws of Nebraska (Cobbey's Annotated Statutes 1907, § 
4227), it is declared that lands appropriated and set apart for burial 
grounds shall not be subject to sale on exécution. Another statute of 
that State (Cobbey's Annotated Statutes 1907, § 4223), relating to the 
formation and powers of cemetery associations, déclares: 

"Such associations shall be authorized to purchase or take, by gift or de- 
vise, and hold lands exempt from exécution and from any appropriation to 
public purposes, for the sole purpose of a cemetery, not exceeding three hun- 
dred and twenty (320) acres, which shall be exempt from taxation if used ex- 
clusively for burial purposes, and in no wlse with a vIew to profit. After 
paying for such land, ail the future receipts and income of such association, 
whether from the sale of lots, from donations, or otherwlse, shall be applied 
exelusively to laying out, protectlng, preserving and embellishlng the cemetery 
and the avenues leading thereto, and to the érection of such building or build- 
ings, vault or vaults, as may be necessary for the cemetery purposes, and to 
paying the necessary expenses of the association. No debts shall be contracted 
in the anticipation of future receipts except for originally purehasing, laying 
out, incloslng and embellishing the grounds and avenues and erecting build- 
ings and vaults for which a debt or debts may be contracted, not exceeding 
thirty-flve ($35,000.00) thousand dollars in the whole, to be paid out of future 
receipts." 



TOWNSEND V. BEATRICE CEMETEKT ASS'N 3 

The défendant contends that the money in its possession received 
from the sale of lots is exempt under the statutes above referred to, 
and cannot be taken under exécution or by proceedings in aid of exé- 
cution. The court made spécial findings of fact, and, as the case is 
hère presented, the question to be decided is whether the f acts specially 
found by the court supported the judgment. 

Without repeating the findings at length, it is suiïïcient to say that 
the matters admitted in the pleadings, and those specially found by 
the court, présent a case where the cemetery association, as it was au- 
thorized to do, bought land for a cemetery and gave its notes for the 
purchase price ; that the cemetery is used solely as such, and in no wise 
with a view to profit. As proceeds of lots sold, there is now in the 
hands of the association a fund amounting to the sum of $2.209.22. 

The sole controversy relates to the right of Townsend to hâve the 
proceeds of sales of lots in the cemetery applied to the satisfaction of 
his judgment, for the lands themselves are clearly exempt under the 
statute above mentioned. If the statute contained no provision upon 
the subject, it might perhaps be argued that the proceeds of the sale 
of lots would 30 far stand in the place of land as to be exempt. The 
statute, however, does not leave the matter to implication, but makes 
direct and complète provision in regard to the disposition to be made 
of ail future receipts. Following the déclaration that the land should 
be exempt, the statute contains two closely associated provisions. The 
first of thèse provisions is that, "after paying for such lands," ail the 
future receipts, whether from the sale of lots or otherwise, "shall be 
applied exclusively" to the improvement and embellishment of the 
cemetery, etc. We think it entirely clear that thèse provisions con- 
template that the first or preferred call upon the receipts shall be the 
payment for the land. . In other words, it crystallizes into law two 
Sound business principles: One, that, as the acquisition of land for a 
cemetery comes before its improvement and embellishment, the cost 
of this acquisition comes before the cost of improving and embellish- 
ing; and, the other, that, after the land is paid for, the receipts from 
the sale of lots shall be applied exclusively to paying for improve- 
ments and embellishment — that is to say, shall be exempt from ail 
other application. 

The next closely associated provision déclares that no debts shall 
be contracted in anticipation of future receipts, "except for originally 
purchasing," improvement, and embellishment, "for which a debt or 
debts may be contracted not exceeding $35,000.00 in the whole, to be 
paid out of future receipts." This is plainly a limitation upon the 
power of the association to contract debts except for the purposes 
named, and is also a grant of power to contract debts for those pur- 
poses, and to do so in anticipation of future receipts, and to pay such 
debts out of those receipts. Taking the two provisions together, it is 
quite clear, we think, that the receipts from the sale of lots, unlike 
the land itself, are not wholly exempt, but are to be applied in paying 
debts contracted for the purposes named in the statute. The ques- 
tion, therefore, is: Is the debt hère in question one of those winch 
the statute contemplâtes shall be paid out of the receipts? It is in- 



4 188 FEDERAL KEPOKTES 

sisted that, as the money secured from Townsend was received and 
used by the association to pay the purchase price notes for the land, 
the debt to him is a purchase price debt within the meaning of the 
statute, and therefore is one which is payable out of the receipts. 
There can be no doubt, we think, that Cross, the original purchase 
price creditor, could hâve compelled the satisfaction of his clàim out 
of the proceeds of the sale of lots. Nor can there be any question that 
an assignée of that claim would hâve the same right. As already sug- 
gested, the statute clearly makes the payment of the purchase price 
a lawful call, and a first call, upon the receipts, and, in our view, this 
incident of the debt is one which would pass with it to whomsoever 
succeeded to its ownership. 

If Cross, the owner of the land, had refused to sell it otherwise than 
for cash, and the association had borrowed the necessary purchase 
money from Townsend, and therewith made the purchase price, there 
can be no doubt that such debt would be one contracted for the pur- 
chase price within the meaning of the statute, and would be payable 
out of future receipts in like manner as if the owner of the land had 
sold it on crédit. When it is recalled that such an association has no 
capital stock, is not maintained for profit, and can acquire and hold 
property only for cemetery purposes, it would seem that the authority 
to contract debts for the purchase of the site and for its improvement 
and embellishment ought to be so interpreted as reasonably to admit 
of the accomplishment of thèse purposes. We may reasonably assume 
that the Législature must hâve been cognizant of the fact that own- 
ers of land are sometimes unwilling to sell on crédit, and are some- 
times unable to do so by reason of having immédiate use for the 
purchase price. The Législature also must hâve known that material- 
men and laborers would not infrequently be unwilling or unable to en- 
gage in the work of improvement or embellishment of a cemetery if 
they had to wait for their money. In the light, therefore, of the char- 
acter of such an association, and its probable original lack of funds, 
and in the light of the object to be attained, we think the provision 
respecting the contracting of debts, when properly construed, includes 
the borrowing of money to pay the purchase price, or to pay for im- 
provements quite as much as it does the incurring of obligations di- 
rectly to the seller, materialmen, and laborers. And, if this be so, 
then where notes, duebills, or kindred obligations are at fïrst given to 
the vendor, the materialmen, or the laborers, and the association is 
unable to meet them when due, why may it not borrow money to pay 
them in like manner as it could hâve done in the first instance? Is it 
not in substance and effect dealing with the same matter and in sub- 
stantially the same way? Is its situation or its duty to the public, or 
to the owners of lots, affected injuriously because it arranges to hâve 
its lawful obligations carried by one instead of another, or by one in- 
stead of many? Or because it relieves itself from the immédiate ap- 
plication of receipts for payment of existing obligations where there 
is need for the use of such receipts in the proper care, préservation, 
and improvement of the cemetery? And, in this case, had Cross 
chosen so to do, he doubtless could hâve enforced the payment of his 



TOWN8END V. BEATRICE CEMETERT ASS'» 5 

purchase price notes out of the receipts of the sale of lots; but, had 
he donc so, the improvement of the property would necessarily hâve 
been suspended altogether, or at least greatly delayed. We hâve al- 
ready seen that the purchase price debt, under the statute, is given 
the first call upon the receipts. That being true, is it reasonable to 
hold that the Législature meant to say, if Cross was unwilling or un- 
able to carry the debt after it became due, that the association could 
not arrange with another to carry the debt until it could be paid, with- 
out injury to the cemetery or the lot holders? It is not at ail likely 
that such an arrangement could be made, if the one whose aid was 
sought would hâve no right to enforce his claim, and it seems to us 
an unwarranted construction of the statute to hold that the caretaker 
could enforce payment out of the receipts of the sale of lots of his 
pay for the last month, or year, but that one who advanced the nioney 
to tide the matter over for another month, or year, in order that nec- 
essary improvements might be made, should be without right to se- 
cure its repayment out of the receipts. As we view it, the position 
insisted upon by the association, that the receipts cannot be subjected 
to the payment of such a debt, would defeat the very object of its 
existence, or, in any event, greatly imperil or impair the attainment 
of that object. 

But it is insisted that Townsend did not furnish the money for the 
distinct purpose of paying Cross' demand, and that there was no ar- 
rangement that it should be so applied. The spécial finding does not 
so state. On the contrary, it does state, not only that the money ob- 
tained from Townsend's note was so used by the association on the 
very day that it was borrowed and the note given, but also that in the 
judgment on the note it was expressly found and adjudicated that 
such proceeds were received by the association for that purpose, as 
well as actually used therefor. Such a finding, in an action where the 
validity of the note was necessarily in question, reasonably means that 
the money was solicited and obtained for that purpose. Moreover, 
that judgment stands as a conclusive adjudication that that was a law- 
ful purpose within the meaning of the statute, and, if it was a lawful 
purpose within the restrictions of the statute, it is payable out of the 
receipts from the sale of lots. 

We do not think the doctrine of subrogation need be hère invoked, 
because, as we view it, the debt in question is a "purchase price" debt 
within the meaning of the statute ; that is, it is entirely founded upon 
the original purchase of the land, and is, in substance and effect, a 
prolongation of the obligation then incurred. In morals it stands upon 
the same footing, in law it ought to do so, and in our view the statute 
so déclares when it is interpreted in a way which is essential to the 
attainment of its object. 

The judgment of the Circuit Court must be reversed. 



6 188 FEDERAL REPORTER 

BALTIMORE & O. R. CO. v. EVANS. 

(Circuit Court of Appeals, Third Circuit. June 9, 1931.) 

No. 11. 

L ExBCUTORS AND Administeatoes (§ 518*) — Pbimart Administration— 
. Domicile of Décèdent. 

A domiclliary administration is the primary and controlling one, and 
any other is treated as anclllary, and generally subordinate tliereto. 

[Ed. Note. — For otlier cases, see Executors and Administrators, Cent. 
Dig. §§ 2299-2309 ; Dec. Dig. § 518.*] 

2. Death (§ 31*) — BiGHT OF Action foe Wecnsful Death— West Virginia 
Statute— Relkase bt Ancillary Admiristeatoe. 

Under Code W. Va. 1906, c. 103, § 6, which provides ttiat an action for 
wrongful death "shall be. brought by and in the name of the personal 
représentative of such deceased person, and the amount recovered in ev- 
ery such action shall be dlstributed to the parties and in the proportion 
provlded hy law In relation to the distribution of Personal estate left by 
persons dying intestate," the administrator in such an action is a mère 
formai party, suing on behalf of the real parties in Interest, who are the 
wldow and children of the deceased ; and when an administrator has 
been appolnted in another state, where décèdent has his domicile, the 
right of action vests In him, and cannot be defeated by a release exe- 
cuted by an administrator subsequently appolnted In West Virginia. 

[Ed. Note.— For other cases, see Death, Cent Dig. §§ 38, 39 ; Dec. Dig. 
§ 31.*] 

In Error to the Circuit Court of the United States for the Western 
District of Pennsylvania. 

Action at law by Bertha M. Evans, administratrix, against the 
Baltimore & Ohio Raiiroad Company. Judgment for plaintifï, and 
défendant brings error. Affirmed. 

McCleave & Cecil, for plaintiff in error. 

Frank W. Guffey and J. M. Stoner, for défendant in error. 

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges. 

BUFFINGTON, Circuit Judge._ In the court below Mrs. Bertha 
M. Evans, administratrix of Daniel D. Evans, recovered a verdict 
against the Baltimore & Ohio Raiiroad Company for damages caused 
by the latter's négligence, whereby the décèdent was killed. On entry 
of judgment thereon, the raiiroad sued eut this writ. 

The décèdent, while working for the défendant, on December 22, 
1906, vi^as killed in the state of West Virginia. By virtue of a statute 
of that state (Code of 1906, c. 103, § 6), the right of action herein 
sued upon was created. That statute provided : 

"Bvery such action shall be brought by and in the name of the personal 
représentative of such deceased person ; and the amount recovered in ever.v 
such action shall be dlstributed to the parties and In the proportion provided 
by law in relation to the distribution of Personal estate left by persons dy- 
ing intestate." 

Evans left to survive him a widow and three minor children. His 
domicile was in Fayette county, Pa., and on January 7, 1907, letters of 

♦For other cases see same topic & § numbek In Dec. & Am. Digs. 1807 to date, & Rep'r Indexes 



BALTIMORE & O. R. CO, V. EVANS 7 

administration upon his estate were duly granted by the register of that 
county to the plaintiff. On the trial of the cause the plaintiff gave évi- 
dence tending to show that the négligence of the défendant caused the 
decedent's death while he was working for it in West Virginia, his 
earning capacity, and that he had left a widow and miner children. 
The défendant on its part sought to defeat the action, inter alia, by 
virtue of a release of the right of action, executed by one M. H. Zinn, 
as administrator of the décèdent, who was appointed such on February 
25, 1907, by the county court of Marion county, W. Va. At the 
close of the testimony the court refused the defendant's third point, 
which asked the court to charge : 

"That [M. H. Zinn], the said personal représentative of D. D. Evans, de- 
ceased, by virtue of his appointment, was invested with full power to prose- 
cute, compromise, release, or refuse to prosecute the alleged clalm against 
the Baltimore & Ohlo Railroad Company on behalf of the widow and children 
of said décèdent upon such terms or as he might deem best, and his act In 
compromising or releasing or refusing to prosecute the alleged claim against 
the Baltimore & Ohio Railroad Company on account of the death of the 
said décèdent is binding upon the benefleiaries of such claim until by ap- 
propriate judicial proceedings and upon sufficient ground such release, com- 
promise, or settlement of said claim is annulled and made void " 

and its fifth point, asking for binding instructions in its favor. Sub- 
sequently the court denied defendant's motion for judgment non 
obstante veredicto, and its action in so doing is assigned for error. 

After argument and due considération, we think the court commit- 
ted no error. As we hâve seen, the statute of West Virginia which 
created the rîght of action did not confer its benefits upon Daniel 
Evans' estate, but on his widow and minor children. The domicile 
of Evans being in Pennsylvania, and letters of administration being 
duly granted therein to the plaintiff, a right of action for the enforce- 
ment of the liability created by the West Virginia statute was vested 
in the Pennsylvania administratrix. Dennick v. Railroad Company, 
103 U. S. 11, 26 L. Ed. 439. But toward a suit brought by an ad- 
ministrator to enforce this statutory right it will be observed such 
administrator bas a différent status from that of an administrator 
who is suing as représentative of an estate. In the former case he 
is a mère formai party, and the real parties in interest are the widow 
and minor children. Thus, under a statute of New Jersey substan- 
tially the same as that of West Virginia it bas been held by the courts 
of the former state — Pisano v. Shanley, 66 N. J. Law, 1, 48 Atl. 618— 
that the statutory suit is brought — 

"for the beneflt of the widow and next of kin, and is a suit wholly for the 
beueflt of those persons. C-ooper v. Shore Electric Company, 63 N. J. Law, 
558, 44 Atl. 633. The administrator upon the record, whoever he is, is a 
formai party for the maintenance of the action." 

[1] Now, the formai requirements of the act having been complied 
with by the widow and heirs, causing a suit to be brought in their 
interests by an administrator duly appointed in the decedent's domicile, 
the pertinent question arises: What authority had an administrator, 
appointed in West Virginia after the domiciliary appointment in 
Pennsylvania, to release the claim of such widow and children and 



8 188 FEDERAL REPORTEE 

deîeat their action? That a domiciliary administration îs the prîmary 
and controlling one, and that any other is treated as ancillary and gen- 
erally subordinate thereto, is a recognized principle. Woerner on 
Executors and Administrators, p. 360; Wilkins v. Ellett, Adm'r, 76 
U. S. 740, 19 L. Ed. 586; Luce v. Railroad, 63 N. H. 588, 3 Atl. 618; 
Pisano V. Shanley, supra; Harvey v. Richards, 1 Mason, 381, Fed. 
Cas. No. 6,184. Indeed, in a late case arising under the New Jersey 
statute it was held by the Suprême Court of Pennsylvania — Boulden 
V. Penna. R. R. Co., 205 Pa. 264, 54 Atl. 906— that a domiciliary ad- 
ministrator appointed in New Jersey could maintain such an action 
in Pennsylvania and the appointment of an ancillary administrator 
was not necessary. 

[2] The right of action in the présent case being vested in the 
domiciliary administrator, and the parties in interest being the widow 
and minor children of the décèdent, it follows that the release of the 
right of action by an administrator subsequently appointed in West 
Virginia cannot avail to extinguish such right. The court below, 
therefore, rightiy held that such release of the ancillary West Virginia 
administrator would not avail to defeat an action brought by the 
domiciliary administrator. 

This conclusion renders unnecessary a discussion in this opinion of 
the question involved in an equity case (infra) wherein the court be- 
low set aside such release, and which we décide simultaneously with 
the présent case. 

The judgment of the court below in the présent action is affirmed. 



BALTIMORE & O. E. CO. V. EVANS. 

(Circuit Court of Appeals, Thlrd Circuit June 9, 1911.) 

Ko. 12. 

Oahcellation of Instruments (§ 4*) — Rioht to Cancellation— Release. 

A release of ail claims arising out of the death of a railroad employé, 
glven to the railroad company and signed by the widow of such employé 
and an ancillary administrator, for which no considération was recelved, 
held properly canceled at suit of the widow. 

[Ed. Note. — ^For other cases, see Caneellation of Instruments, Dec. Dig. 
! 4.*] 

Appeal from the Circuit Court of the United States for the Western 
District of Pennsylvania. 

Suit in equity by Bertha M. Evans against the Baltimore & Ohio 
Railroad Company. Decree for complainant, and défendant appeals. 
AfRrmed. 

McCleave & Cecil (William B. Linn, of counsel), for appellant. 
Frank W. Guffey and J. M. Stoner, for appellee. 

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges. 

BUFFINGTON, Circuit Judge._ In the court below Mrs. Bertha 
M. Evans, a citizen of Pennsylvania, filed a bill in equity against the 

•For other cases see same toplc & § numbeh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



BALTIMORE & O. B. CO. V. BVANS 9 

Baltimore & Ohio Railroad Company, a corporation of Maryland, 
praying to set aside, as to her, a certain instrument of release signed 
by her and by M. H. Zinn, administrator of Daniel D. Evans by ap- 
pointment in West Virginia. On hearing the court below decreed 
cancellation as prayed for, whereupon the railroad appealed to this 
court. 

The gênerai facts pertinent to the case are recited in an opinion 
simultaneously filed in an action at law between Bertha M. Evans, ad- 
ministrator of Daniel D. Evans, and the Baltimore & Ohio Railroad 
Company, at No. 11, March term, 1911, and to which référence is 
made. 188 Fed. 6. In the présent case it appears that Daniel D. 
Evans, a brakenian in the employ of the railroad, was killed in its 
service. He was a contributor to the relief fund of that railroad, 
and on his death his widow, Mrs. Bertha M. Evans, became entitled 
as his sole beneficiary to receive $1,000 from such fund. Mrs. Evans 
took out letters of administration in Fayette county, Pa., but for some 
reason the railroad required that additional letters be taken out in 
West Virginia, wheré Evans had been killed, and that the release in 
question, which had been signed by Mrs. Evans, the beneficiary, should 
also be executed by the West Virginia administrator. Mrs. Evans 
seems to hâve acceded to that request, and went to West Virginia to 
herself take out such letters, although she expressly insisted at the 
time, under the advice of counsel, that under the provisions of the 
employer's liability act, which had not yet been held unconstitutional 
by the Suprême Court, she intended to bring suit for damages, and 
that the release desired would not preclude her from so doing. When 
she went to West Virginia, it was found that letters could not be is- 
sued to a nonresident. Letters were therefore taken out there by one 
Zinn, an employé of the railroad. 

While Mrs. Evans had signed the release, not as administratrix, 
but as widow and beneficiary, and it was in possession of the railroad, 
she has received no part of the $1,000 of relief funds. Subséquent to 
the appointment of Zinn as administrator, he signed the release in 
question, by which he not only receipted for and released the $1,000 
under the relief fund, but acknowledged its receipt as "in full satis- 
faction and discharge of ail claims or demands on account of or aris- 
ing from the death of said deceased." At the time of executing said 
instrument Zinn received no considération for decedent's estate, or 
for the widow or minor children of the décèdent, who, under the West 
Virginia statute, were the beneficiaries in a claim for damages against 
the railroad for négligence in causing the death of Daniel Evans. 
Mrs. Evans, as domiciliary administrator, brought suit on such claim, 
and, having thereafter learned that Zinn had signed this release as 
administrator, tendered to the railroad the funeral expenses of her 
husband, which the railroad had voluntarily paid, and which it seems. 
Mrs. Evans was to reimburse from the relief fund. She then filed 
the bill to cancel the release as to her. On final hearing the court 
decreed such cancellation. 

The bill was evidently filed as a precautionary measure, lest the 
release might defeat her action at law. Such, however, was not its 



10 188 FEDERAL REPORTER 

effect, as we hâve shown in the opinion in that case. The question in 
this equity case, therefore, becomes académie; for its disposition can 
in no way affect the rights of the parties. Treating the case, how- 
ever, as one material to the détermination of the rights of the parties, 
we are not satisfied the court committed any error in the conclusion 
it reached. 

In view of the fact that the question has nowbecome of no moment 
in determining the. law case, we refrain from a discussion of the 
grounds leading to that conclusion, and content ourselves with simply 
stating our conclusion, which is that the decree below should be af- 
fîrmed. 



FARR et al. V. HOBE-PBTBRS LAND CO. 

(Circuit Court of Appeals, Seventh Circuit. October 18, 1910. Eeliearlng 

Denled April 11, 1911.) 

No. 1,634. 

1. CouETS (§ 312*) — JuKiSDiCTiON OF Fedebal Coubts— Suits bt Assignée. 

A suit to quiet title to land and for the cancellatlon of tax deeds under 
whleh defeudants clalm, where eomplalnant sues as assignée of a mort- 
gage and of a certifieate of purehase in foreclosure proeeedlngs ttiere- 
under whlch admittedly has not ripened Into the légal title, Is a suit to 
recover the contents of sueh Instruments as choses in action, and under 
Act Aug. 13, 1888, c. 86C, § 1, 25 Stat. 433 (U. S. Comp. St. 1901, p. 508), 
cannot be malntalned in â fédéral Circuit Court, unless a suit might hâve 
been prosçcuted théreon In such court if no assignment had been made. 

[Ed. Note. — For other cases, see Courts, Cent. Dlg. §§ 865-875; Dec. 
Dig. § 312.»] 

2. Courts (§ 312*) — Jubisuiction of Fedeeal Cottkts— Suits bt AssigîSee. 

Under Act Aug. 13, 1888, c. 866, § 1, 25 Stat. 433 (U. S. Comp. St. 1901, 
p. 508), which provides that a fédéral court shall not "hâve cognizance of 
any suit * * * to recover the contents of any promissory note or 
other chose In action In favor of any assignée, or of any subséquent hold- 
er * * * unless such suit might hâve been prosecuted in such court 
to recover the said contents If no assignment or transfer had been made,'' 
the limitation does not extend to intermediate assignées, and it is sufii- 
clent to sustain jurisdictlon where It is shown that the original holder of 
thé chose In action, as well as plaintlff and his Immédiate assigner, 
might hâve prosecuted the suit In that court. 

[Ed. Note.— For other cases, see Courts, Cent. Dlg. §§ 865-875; Dec. 
Dlg. § 312.*] 

3. Courts (§ 263*)— Fédérai, Courts— Equitt JuRiSDiCTroN— Remédies Given 

Br State Statutes. 

A State statute authorlzlng the maintenance of a suit to quiet title, al- 
though the plaintifC is out of possession, is an enlargement of équitable 
rights whlch may be admlnlstered by a fédéral court, and, having juris- 
dictlon to entertaln such an action, the fédéral court may détermine any 
question arising therein which could be determlned by any state court. 

[Ed. Note. — For other cases, see Courts, Cent. Dlg. §§ 799, 800; Dec. 
Dlg. § 263.* 

Jurisdictlon of fédéral courts as affected by state laws, see note to 
Barllng v. Banl£ of British North America, 1 O. C. A. 513.] 

*For other cases see same toplo & § mumbeb In Dec. & Am. Digs. 19U7 to date, & Rep'r Indexes 



FAKR V. HOBK-PETEE8 LAND 00. 11 

4. JuDGMENT (§ 683*) — Pebsons Concluded— Tax Fobeclosuke Suit— Wis- 

CONSIN STATUTE. 

Under St. Wis. 1898, §§ 1197-1210, providlng for suits to foreclose tax 
deeds, and which provides (section 120G) that tbe judgment shall forever 
bar tlie défendants and ail others claiming under them after the flling of 
the lis pendons notice from ail rlght, title, and interest in the lands, aud 
tlie gênerai lis pendens statute (St. Wis. 1898, § 3187), which under the 
décisions of the state Suprême Court is also applicable to such tax fore- 
closure suits, and provides that the filing of a lis pendens shall be con- 
structive notice to a purchaser or incuuibrancer afCected by the .suit, and 
that "every purchaser or incumbrancer vf hose conveyance or iucumbrance 
Is not recorded or tiled shall be deemed a subséquent purchaser or incum- 
brancer and shall be bound by the proeeedings to the same extent and in 
the same manner as if he were a party thereto," the judgraent in a tax 
foreclosure suit to which a mortgagee was made a party ooncludes an 
assignée of the mortgage, although hls assignment antedated the suit, 
where it was not recorded, at least where the plaintiff had no notice of 
the assignment. 

[Ed. Note.— For other cases, see Judgment, Cent. Dig. § 1206 ; Dec. Dig. 
§ 683.*] 

5. Judgment (§ 957*) — Persons Concluded — Tax Foeeclosuee Suit. 

Evidence consldered, and held insufflcient to charge the plaintiff in a 
suit to foreclose tax deeds under St. Wis. 1898, §§ 1197-1210, wlth notice 
of an unrecorded assignment of a mortgage on the lands so as to render 
the judgment impeachable by a subse<iuent assignée where the mortgagee 
was made a party. 

[Ed. Note. — For other cases, see Judgment, Dec. Dig. § 957.*] 

Appeal from the Circuit Court of the United States for the West- 
ern District of Wisconsin. 

Suit in equity by the Hobe-Peters Land Company against J. R. 
Farr, Victoria Farr, Daniel Bjorklund, Emma Bjoriîlund, E. A. 
Westlin, H. A. Lunt, Fred Bolander, Fred Andersen, Nels Dahl, Her- 
man Dahl, and Mrs. Fred Bolander. Decree for complainant (170 
Fed. 644), and défendants appeal. Reversed. 

The decree of the Circuit Court from which this appeal is brought, grants 
relief in equity in favor of Hobe-Peters Land Company, complainant, and 
agalnst the appellants, défendants therein, pursuant to a bill flled, to estab- 
lish title in the complainant to numerous tracts of land in Wisconsin, and 
"cancel and annul of record" varions tax deeds, together with a judgment 
thereunder rendered in a state court, held by the appellants, as clalmants of 
title to the lands in controversy. The appellee-complainant is a Minnesota 
corporation, and Its alleged interest in the lands is that of mortgagee, derived 
through varions asslgnments of such interest In succession (Including an 
unperfected statutory foreclosure), without possession of any portion of such 
lands ; and the appellants are citizens of Wisconsin, In possession (respec- 
tively) of certain of the lands and having made improvements ttereon, while 
the remainlng lands in suit are "vacant and unoccupied." Other facts which 
are deemed reviewable are stated in the opinion. 

James Wickham and Frank R. Farr, for appellants. 
Edwrard M. Smart and R. N. Van Doren, for appellee. 

Before GROSSCUP, BAKER, and SEAMAN, Circuit Judges. 

SEAMAN, Circuit Judge (after stating the facts as above). This 
case proceeded to final hearing and decree, upon the issues raised by 
the pleadings as to the merits of the respective claims of title, involv- 

•For other cases see same topio & § numbbe in Dec. <S Sm. Digs. 1307 to date, & Rep'r Indexes 



12 188 FEDERAL REPORTES 

ing varions complications both of law and fact, and volumînous évi- 
dence; and the main controversy thereunder, as discussed bpth in the 
opinions filed by the trial court and in the arguments on the appeal, 
relates to the sufïîciency and efïect of a judgment obtained by the 
appellant Farr, in the circuit court of Price county, Wis., January 
21, 1901, which purports to bar, not only the mortgagor, under whom 
the appellee claims title, but the Minnesota Lumber Company, mort- 
gagee and original assigner thereof, "from any and ail right, title and 
interest in and to the lands" in suit. The proceedings resulting in 
such judgment were instituted under the Wisconsin statute (Wis. 
Stat. 1898, §§ 1197-1210), when no assignment of the mortgage 
in question appeared of record; and in such event it is conceded 
in the opinion filed below (as revised before entry of the decree) to 
be the established rule under the statute — and undoubtedly so settled 
in Warner v. Trow, 36 Wis. 195, 200 — that any assignée or holders 
thereof were bound by such proceedings. Thus the decree upon the 
merits rests on the two-fold assumption, that the prima facie force 
of the judgment in the state court was not only impeachable in an- 
other suit and forum, but was so impeached in référence to the ap- 
pellee's claim, through oral testimony which was received as tending 
to prove that the judgment-plaintiflf was then chargeable with notice 
of the unrecorded assignment. 

Error is assigned as' well for want of équitable jurisdiction to 
quiet title, as sought in the bill and granted by the decree — whether 
the above-mentioned conclusion as to notice in fact were either sup- 
ported or unsupported by the testimony — contending in substance: 

(a) That such relief, in favor of the appellee having no possession 
of the lands in suit, is beyond the chancery powers of a fédéral court, 
and that the provisions of the state statute (section 3186, Wis. Stat.) 
vesting in state courts equity powers to that end are inoperative for 
extension of the fédéral powers; and if so applicable in any sensé, 

(b) that the trial court was bound by the established law of Wiscon- 
sin, in référence to the above-mentioned tax title judgment of the 
state court, which limits applications by third parties for relief from 
its prima facie force, to the court wherein the judgment was obtained. 

Jurisdiction of the case, however, is challenged upon another 
ground — ^plainly presented, both by bill and évidence and by the as- 
signments of error and arguments upon the appeal — raising the fun- 
damental inquiry, whether the complainant, as assignée of the claim 
in controversy, can sue for its enforcement in the fédéral court. The 
solution is not free from difficulty under the seeming conflict in vari- 
ons opinions to be mentioned, but we must be prepared to overrule 
this objection before either of the other questions is open to review. 

1. The bill is for équitable relief, founded alone upon complain- 
ant's alleged equities in the lands, as assignée of a mortgage interest, 
derived through a succession of assignments from the original mort- 
gagee, including (as averred) unperfected foreclosure proceedings by 
one of its assignors; and the relief sought and granted was to have^ 
title adjudicated in its favor, as against the défendants, and to clear 
the title of adverse claims recorded in favor of the défendants. Fed- 



FARR V. HOBE-PETERS LAND CO. 13 

eral cognizance of the suit is invoked solely on the ground of diversity 
of citizenship under the averments (a) that both the complainant and 
the original mortgagee were and are citizens of Minnesota ; (b) com- 
plainant's immédiate assigner is a citizen of lUinois; and (c) the de- 
fendants are ail citizens of Wisconsin. But the bill further avers that 
one of the assignées of the mortgage, through whom the complain- 
ant dérives title (alleged to be an assignment in trust), is and was a 
citizen of Wisconsin; and the évidence proves another intermediate 
holder of the mortgage to be a Wiscoflsin corporation. Thus the 
question directly arises : Can the suit be entertained under the limi- 
tation imposed by the présent statute — section 629 and amendments — - 
as carried forward from the eleventh section of the judiciary act of 
1789? Omitting exceptions not involved hère, this provision reads 
that the fédéral court shall not "hâve cognizance of any suit * * * 
to recover the contents of any promissory note or other chose in ac- 
tion in favor of any assignée, or of any subséquent holder * * * 
unless such suit might hâve been prosecuted in such court to recover 
the said contents if no assignment or transfer had been made." 

The facts in référence to the source of the complainant's interest 
in the mortgage are as follows: In 1892, one Holmes (whose cit- 
izenship does not appear) executed a mortgage covering about 7,000 
acres of land in Wisconsin, owned by him, in favor of Minnesota 
Lumber Company, a Minnesota corporation, as mortgagee, securing 
notes made by Holmes. In 1899, one Murphy completed a purchase 
of the notes and mortgage for himself and one Craig, and the mortgagee 
indorsed on the mortgage an assignment in blank, leaving the name 
of the assignées tp be inserted at their option ; and it was agreed be- 
tween Murphy and Craig — citizens, respectively, of Colorado and Illi- 
nois, as alleged in the bill — that Craig, who advanced the purchase 
money, should hâve one half of the mortgage interest and hold the 
other half as security for payment of Murphy's half interest, and that 
Murphy was to act for both in selling the lands. Murphy held the 
instruments, contracted to sell to Ogema Lumber Company, a Wis- 
consin corporation, a portion of the lands, and subsequently, without 
notice to Craig, delivered the notes and mortgage to that corporation, 
to secure both his personal indebtedness to it and the contract of sale 
above mentioned. In 1901 Craig and Ogema Lumber Company 
joined in an agreement (which fixed their interests respectively) to 
hâve the mortgage assigned to one Barry, a citizen of Wisconsin, in 
trust for foreclosure and sale and to make division of such interests. 
Murphy then stipulated that Craig's name be inserted in the blank 
assignment as the assignée, and upon such insertion the assignment 
was recorded; and Craig executed an assignment to Barry, which 
was also recorded. Barry commenced foreclosure by advertisement, 
as assignée, made purported sale of the lands to Craig as purchaser, 
and delivered his certificate of such sale December 23, 1901. On 
February 20, 1902, Craig quitclaimed to Hobe-Peters Land Company, 
the complainant, and the présent bill was fîled May 15, 1902, while the 
statutory period for rédemption from the alleged foreclosure extended 
one year from the sale. 



14 188 FEDERAL REPORTEE 

[1] Thus no légal title to the lands had vested thereunder — wheth- 
er the foreclosure was of prima fade validity, or was void for want 
of the statutory notice, as contended respectively — but the complain- 
ant had acquired, as assignée thereunder, ail equities which then ex- 
isted under the mortgage, without other rights in the premises ; and 
it is unquestionable that the suit is for the enforcement of alleged 
rights conferred by the instruments referred to, as choses in action, 
and is subject to the foregoing jurisdictional provision, as uniformly 
construed by the authorities. Corbin v. County of Black Hawk, 105 
U. S. 659, 665, 26 L. Ed. 1136; Shoecraft v. Bloxham, 124 U. S. 
730, 735, 8 Sup. Ct. 686, 31 L. Ed. 574; Plant Inv. Co. v. Kev West 
Ry., 152 U. S. 71, 16, 14 Sup. Ct. 483, 38 L. Ed. 358; New Orléans 
V. Benjamin, 153 U. S. 411, 432, 14 Sup. Ct. 905, 38 L. Ed. 764; 
Kolze V. Hoadley, 200 U. S. 76, 83, 26 Sup. Ct. 220, 50 L. Ed. 377. 

[2] The test of limitation, therefore, rests on the interprétation of 
the clause against suit by the assignée, unless it "might hâve been 
prosecuted in such court * * * if no assignment or transfer had 
been made." Both the mortgagee and the ultimate assignée, Craig, 
who transferred the interest to complainant, were citizens of another 
state and entitled to sue in the fédéral court, so the test is narrowed 
to the inquiry whether the restriction includes, as well, the intervening 
assignées, through whom title is traced. If such assignées are in- 
cluded, no doubt is entertainable that both of the above-mentioned 
Wisconsin holders of the mortgage must be so designated. The fact 
bhat the assignment to Barry was in trust cannot prevent its applica- 
tion (as contended), for the reason that the citizenship of a trustée 
is alike controlling of the right to sue (Dodge v. Tulleys, 144 U. S. 
451, 455, 12 Sup. Ct. 728, 36 L. Ed. 501 ; 1 Foster, Fed. Frac. § 19) ; 
and the transfer to the Ogema Lumber Company of the instruments 
(inclusive of the blank assignment) was not only operative as the as- 
signment of an interest in the mortgage, but was expressly so recog- 
nized by ail other parties in interest, under the arrangement with 
Barry. 

Décisions of the Suprême Court are numerous in the interprétation 
of varions phases of this provision, and sorae of the cases hâve in- 
volved construction of the terms above quoted, but we believe no dé- 
cision of that tribunal, cited by counsel or examined in our research, 
settles the answer to the présent inquiry; nor does aid thereto appear 
in any ruling of a Circuit Court of Appeals brought to our attention. 
The cases, however, may well be classified under two différent Unes 
of définition — one applying the limitation alone to the original payée 
or assigner and the other to subséquent assignments of the bill or 
chose in action — and we are of opinion that neither line of cases in 
the Suprême Court can be considered décisive of the présent inquiry, 
so that its solution thereunder remains at large. 

The cases relied upon to defeat jurisdiction are: Mollan v. Tor- 
rance, 9 Wheat. 537, '538, 6 L. Ed. 154; Morgan's Exécuter v. Gav, 
19 Wali 81, 82, 22 L. Ed. 100; Metcalf v. Watertown, 128 U. S. 586, 
588, 9 Sup. Ct. 173, 32 L. Ed. 543. In Mollan v. Torrance jurisdic- 
tion was denied of suit by New York plaintiffs, holders of a promis- 



PARE V. HOBB-PETEE8 LAND CO. 15 

sory note, agaînst a Mississippi défendant, as "remote indorser" 
thereof, for recovery upon the indorsement; and the opinion by Chief 
Justice Marshall states the ground of such ruling to be that plaintiffs 
"trace their title through an intermediate indorser, without showing 
that this intermediate indorser could hâve sustained his action against 
the défendant in the courts of the United States." It distinguishes 
the case from Young v. Bryan, 6 Wheat. 146, 5 L. Ed. 228, uphold- 
ing like suit against an immédiate indorser, as "a new contract entered 
into between indorser and indorsee" and "not a claim through an 
assignment," and refers only to the fact that the déclaration is "silent 
respecting the citizenship or résidence of Lowrie, the immédiate in- 
dorser" of plaintiffs. Moreover, the opinion states that Turner v. 
Bank of North America, 4 Dali. 8, 1 L,. Ed. 718, had decided against 
jurisdiction, while that case does not appear to be directly applicable. 
Its ruling, however, is plainly limited, both by facts and language, to 
the failure to show right of suit in plaintiffs' "immédiate indorser," 
while the instant case meets that requirement in the averment and 
proof that its assigner, Craig, was an Illinois citizen. 

In Morgan's Executor v. Gay the suit was by the holder of three 
bills of exchange for recovery against the executor of the maker. 
"Two of the bills were indorsed by the payées, and the third by its 
payée and by other indorsers." The plaintiff alleged that he was a 
citizen of Kentucky, and that the défendant was a citizen of Louisi- 
ana, where suit was brought in the fédéral court, "but said nothing 
about the citizenship of the payées of the bills, nor, in the case of 
that one indorsed by subséquent indorsers, of the citizenship of thèse." 
On review of the judgment in favor of plaintiff, the opinion, by Mr. 
Justice Strong, states: "There is no averment of the citizenship of 
the payées of the bills, ,or of the citizenship of the subséquent indors- 
ers," and "for aught that appears in the record, they may ail be citi- 
zens of Louisiana" ; that Turner v. Bank of North America, 4 Dali. 
8, 1 L. Ed. 718, and other cases, require not only averments of citizen- 
ship of "the parties to the suit, but also the citizenship of the payée 
and the indorser" to confer jurisdiction. Reversai was ordered, ac- 
cordingly, with permission to amend the pleadings if jurisdictional 
facts could be shown. The requirement to aver the citizenship of the 
payée conforms to ail the authorities, and the opinion mentions only 
"the indorser" as a further requirement, so that the ruling does not 
extend beyond that of Mollan v. Torrance, supra. 

The case of Metcalf v. Watertown was the suit of an Ohio plain- 
tiff, as assignée, to recover the amount of a judgment obtained by one 
Wright against the city of Watertown, in the same (Wisconsin) féd- 
éral court. The opinion by Mr. Justice Harlan states that the plain- 
tiff is "assignée of certain named persons who became, under assign- 
ments from Wright in 1873, the owners, in différent portions, of that 
judgment" ; that the trial court dismissed the action as barred by the 
Wisconsin statute of limitation ; and that a question of jurisdiction 
arose from the record, although not pressed by counsel, and must be 
determined. Thereupon jurisdiction was denied, under the above 
provision, as stated in the opinion, "because it nowhere appears in 



16 188 FEDERAL BEPOETEB 

the record of what state the plaintiff's assignors were cîtizens when 
this action was commencée!; indeed, it is consistent with the record 
that they were, at that time, citizens of the same state with the de- 
fendant." The question whether it could be maintained as a suit aris- 
ing under the fédéral Constitution or laws was also discussed and 
overruled; and judgment was reversed with further showing of ju- 
risdictional facts left open through amendments. Froni the statement 
above quoted, no assignments appear between that of the judgment- 
plaintiff to his respective assignées and their assignment to the plain- 
tiff in suit, and the language imports that none intervened. The fact 
that the judgment was assigned in parcels to the several assignors of 
the plaintiff accounts for the requirement to show citizenship of 
"plaintiff's assignors." Alike with both of the foregoing citations, 
the case is authority for such requirement, but not for including 
mesne assignées. 

Another case may be referred to, as in line with the above (and one 
of the most récent expressions of the Suprême Court) Kolze v. Hoad- 
ley, 200 U. S. 76, 82, 26 Sup. Ct. 220, 50 L. Ed. 377. The opinion 
States the gênerai rules of interprétation settled by the authorities, 
with citations for each, and in référence to one of the contentions in 
support of jurisdiction remarks that it is immaterial whether the 
plaintiff derived title directly from the mortgagee, or from the alleged 
assigner of plaintiff, as both were citizens of the state where suit was 
brought, "and the inhibition of the statute would apply in either case." 

The other lone line of interprétations — commencing with the initial 
cases under the Act of 1789 (Turner v. Bank of North America, 4 
Dali. 8, 1 h. Ed. 718; Montalet v. Murray, 4 Cranch, 46, 2 L. Ed. 
545; Gibson v. Chew, 16 Pet. 315, 10 L,. Ed. 977) and including ex- 
tended reviews in Coffee v. Planters' Bank. 13 How. 183, 187, 14 L 
Ed. 105, Parker v. Ormsby, 141 U. S. 81, 83, 11 Sup. Ct. 912, 35 L 
Ed. 654, and Emsheimer v. New Orléans, 186 U. S. 33, 42, 45, 22 
Sup. Ct. 770, 46 h. Ed. 1042 — marks the limitation only as applicable, 
respectively, either to the original parties to the instrument, the orig- 
inal payée, or the original assigner; and it is not deemed needful to 
give further citations in that line, nor review of the cases. The last- 
mentioned case, however (Emsheimer v. New Orléans), is noteworthy, 
for the reason that it was there contended that jurisdiction failed for 
want of averment in the bill showing the citizenship of "intermediate 
assignées" of the chose in action ; and while décision was placed upon 
the ground that title was not so traced, but came directly from the 
original payées, the opinion cites and reviews, in référence to the 
above contention, the îollowing pertinent cases at circuit as holding 
that intermediate assignées were not included in the statutory require- 
ment, namely: Milledollar v. Bell, 2 Wall., Jr., 334, Fed. Cas. No. 
9,549, opinion by Mr Justice Grier; Wilson v. Fisher, Bald. 133, 
Fed. Cas. No. 17,803; Portage City Water Co. v. Portage (C. C.) 102 
Fed. 769. 

We are of opinion, therefore, that thèse authorities do not extend 
the limitation to intermediate assignées, and that their utmost re- 
quirements are satisfied by the averments and proof that both mort- 



FAKB V. HOBE-PETERS LAND CO, 17 

gagée and the immédiate assigner of complaînant were entitled to sue 
in the fédéral court; tiiat neither the language of the provision nor 
its apparent purpose requires like qualification on the part of the in- 
termediate assignées, in the absence of évidence (under another provi- 
sion) that subséquent assignments were merely colorable for évasion 
of the limitation ; and that jurisdiction of the suit was rightly upheld. 

[3] 2. The objection that the bill was not entertainable to admin- 
ister the équitable relief authorized by the state statute is plainly un- 
tenable under the authorities. Bardon v. Land & River Imp. Co., 
157 U. S. 327, 330, 15 Sup. Ct. 650, 39 L. Ed. 719; Gormley v. 
Clark, 134 U. S. 338, 348, 10 Sup. Ct. 554, 33 L. Ed. 909; 11 Notes 
U. S. Rep. 940. While it is well settled that the state cannot exer- 
cise control over the chancery powers of the fédéral court, neverthe- 
less "an enlargement of équitable rights by state statute may be ad- 
ministered" by such court "as well as by the courts of the state." 
Gormley v. Clark, supra. Thus having complète équitable jurisdiction 
over the controversy, we believe it to be equally clear that administra- 
tion thereof embraces the inhérent right to détermine the effect, as 
between the parties to the bill, of the state court judgment described 
in the pleadings, subject only to its interprétation in conformity with 
the settled law of the state as to the force of such proceedings and 
judgment, and irrespective of any rule of state practice as to the 
spécial forum for that inquiry. 

[4] 3. We come, accordingly, to the question on which the decree 
against the appellants hinges, namely: Whether the judgment of the 
state court, barring the claims and interest of the mortgagee and of 
ail persons claiming thereunder, is without force against the com- 
plainant, under the évidence received, as tending to prove that the 
judgment-plaintiiï (appellant) proceeded in such suit with notice of 
the unrecorded assignments of the mortgagee. 

The mortgagee, Minnesota Lumber Company, was properly made 
a party vvith due service of process, as we believe, under the author- 
ities applicable to the proceeding; and the statutory notice of lis 
pendens was filed, so that the judgment on the face of the record be- 
came binding against the assignées. No assignment of the mortgage 
was recorded until long after the entry of judgment; nor was the 
purported assignment by the mortgagee then completed, by naming 
the assignée, to entitle the instrument to be entered of record. The 
statute (section 1206, Wis. Stat.) expressly provides that the "judg- 
ment shall forever bar such défendants and ail others claiming under 
them," after the filing of the lis pendens notice, "from ail right, title 
or interest in said lands"; and the gênerai statute (section 3187) in 
référence to lis pendens notice, likewise provides, that a purchaser 
or incumbrancer whose instrument is not recorded "shall be deemed 
a subséquent purchaser" and "shall be bound by the proceedings in the 
action to the same extent and in the same manner as if he were a 
party thereto." In Warner v. Trow, 36 Wis. 195, 200, thèse provi- 
sions were upheld as concurrent and applicable to tax foreclosure 
proceedings and judgment; and the efïect of the latter provision is 
well and pertinently stated and applied in Cutler v. James, 64 Wis. 
188 F.— 2 



18 188 FEDERAL BEPOKTEB 

173, 175, 24 N. W. 874, 54 Am. Rep. 603; Prahl v. Rogers, 127 Wis. 
•^53, 359, 106 N. W. 287; Siedschlag v. Griffin, 132 Wis. 106, 112, 
112 N. W. 18. 

[5] The facts relied upon as notice to the appellant Farr of the unre- 
corded assignment are, in substance, as foUows: Prior to the as- 
signment of the mortgage by Minnesota Lumber Company — but, as 
elsewhere appears, after its purchase was agreed upon — Murphy had 
a brief conversation with Farr about purchase of tax certificates held 
by the latter on the lands, mentioned as "Holmes lands," and after 
the date of the assignment correspondence between them is in évi- 
dence upon the same subject, without either statement or suggestion 
by Murphy that he had purchased the mortgage ; nor was the mort- 
gage mentioned between them. Farr sent Murphy a list of the 
"Holmes lands" on which he held certificates and tax deeds, with an 
ofïer to sell at the "cost of rédemption with a small excess," and in- 
ferred (as he admits) that Murphy was interested in some way in the 
lands; but only a few certificates were taken by him on what were 
mentioned as "Ogema lands." Farr was then informed that Murphy 
intended to operate the "Ogema mill," and subsequently knew that 
Ogema Lumber Company, Murphy's corporation, was operating the 
mill, which was on lands embraced in the mortgage, but not embraced 
in the présent controversy. In December, 190O, however, Mr. Barry 
was serving as attorney for Farr, intending to commence proceedings 
for foreclosure of the tax deeds, and had correspondence (in évi- 
dence) with Engstand & Lofquist, who were operating the "Ogema 
mill," as successor to Murphy, in référence to "the whereabouts of 
the Minnesota Lumber Co." (mortgagee), and with the Ogema Lum- 
ber Company, in référence to their claims. It appears therefrom: 
That the address of the mortgagee was stated to be "at Polo, 111." 
That Barry wrote to Ogema Lumber Company that he had "set an 
action going" to foreclose Farr's tax deeds on "the Holmes lands." 
That their name did not apcear of record, "otherwise you would 
hâve been made a party to the action," and then inquired : 

"What mortgage hâve you? I( you hâve the mortgage held by Minnesota 
Lumber Company, you had better put your assignment upon record, and you 
can eome Into thls action If you désire. We hâve not yet served tuis last 
named Company, but expeet to very soon. Let us hear from you as to thls." 

That such letter was written in référence to one from the Ogema 
Lumber Company to another party, stating: 

"We hold the mortgage on ail Holmes land, but hâve not done anything 
yet to clear title." 

That Ogema Lumber Company replied to the foregoing Barry letter : 

"Yes, we hold the mortgage of the Minnesota Lumber Co., as stated in last 
letter, but hâve not corne to a conclusion vs^hat to do yet" 

— and then requested Farr's address. To this letter Barry replied, 
giving Farr's address, and stating: 

"You had better put your assignment on record and corne Into thls action. 
See your attorney at once, as if you corne in we need not serve on Minnesota 
Lumber Co. If you do not, we shall proceed in the absence of any record of 
transfer." 



FARE V. H0BE-PETEK8 LAND 00. 19 

The Ogema Company neither tendered the instruments — which 
appear from the évidence, as before stated, to hâve been in its cus- 
tody, with the blank assignment only — nor communicated with Farr, 
nor answered thèse requests in any form ; and Barry, after reasona- 
able delay, proceeded to obtain service on the mortgagee of record, 
maising an amendment and additional expense needful. 

We believe the ruling of the trial court, in effect setting aside the 
judgment in such proceedings as inoperative against this complain- 
ant, to be unsupported by the above facts, irrespective of other ques- 
tions raised as to its impeachabihty in the case at bar. Whatever 
may hâve been the equities of Murphy, as between himself and Craig 
or Ogema Lumber Company, no disclosure thereof was either made 
or intimated in his transactions with Farr, to charge Farr with no- 
tice of such equities. Moreover, it further appears from the évidence 
that Farr wrote to Murphy, prior to the suit, stating that no interest 
in his favor appeared of record, and requesting that he record or 
show any daim he held, but no answer was received; that Farr had 
no information, in any form, either of the nature or fact of Murphy's 
interest," and that Murphy had then, as he states in his testimony, 
abandoned ail interest or claim in the premises. So the transactions 
with Murphy are without force as notice to defeat the effect of the 
judgment, in either aspect of the case. In référence to the notifica- 
tion on the part of Ogema Lumber Company, that "we hold the mort- 
gage of the Minnesota Lumber Co.," it may well be conceded that 
good practice would hâve justified, if not required, making such 
claimant a party défendant with the mortgagee of record, to assure 
foreclosure of any claim it might hâve. But the bill neither sets up 
any interest or title derived from or through the Ogema Lumber Com- 
pany, nor that Farr had notice of any such claim, resting the com^ 
plainant's title on the assignment by the Minnesota Lumber Com- 
pany, as above described, which was subsequently completed and re- 
xorded in favor of Craig, and averring that Farr had notice thereof. 
Thus the question is not presented, whether an application on behalf 
of the Ogema Lumber Company, or under its claim, would be enter- 
tainable in equity, either under the circumstances above stated of ex- 
press notice of the suit, or without légal assignment of the mortgage, 
or subsisting interest (légal or équitable) in the lands described in the 
judgment. 

In the course of the oral argument, it was further contended that 
sufficient occupancy appears of the lands in suit to constitute notice 
of claim under the mortgage, but we believe this contention to be un- 
supported by the testimony. Whatever of actual possession is in évi- 
dence, directly or indirectly, at the date of Farr's suit, was in the 
Ogema Lumber Company, extending only over the so-called "Ogema 
lands," not included in the tax deed or judgment in favor of Farr ; 
and it is neither proven nor claimed that any portion of the lands in 
suit were continuously occupied by anv claimant for logging pur- 
poses or otherwise. Craig (assignée of the mortgage) testifies that 
he viewed the lands in 1898 and "there was no land but what the 
best timber was eut off" ; that they were "ail cut-over land." It is 



20 188 FEDERAL EEPOETBB 

stated in gênerai terms, by one or more witnesses, that timber was 
taken in their opérations from the "Holmes lands," and that there 
were "logging roads over différent portions" which were "used in the 
winter," but no testimony appears which fixes such use of any tract 
in controversy, either at the date of Farr's suit, or during the season 
immediately prior thereto. So the question is not presented whether 
actual use of roadways across the lands for logging or other pur- 
poses would serve as notice that the user was assignée of the mort- 
gage. 

The proof is undisputed that neither Farr nor his attorney had in- 
formation or suspicion that Craig or Murphy, or either of them, had 
purchased the mortgagre held by Minnesota Lumber Company, or 
claimed interest therein in any f orm ; and we believe it clearly ap- 
pears throughout the testimony that reasonable effort was made to 
ascertain whether the mortgage had been assigned in fact without 
record thereof for the purpose of making any owner thereof party 
to the suit, and that the proceedings were conducted to that end in 
good faith, with neither notice nor grounds for belief that Craig or 
Murphy held or claimed the mortgage or interest thereunder. 

The case, therefore, is in no sensé within the rule of Coe v. Man- 
seau, 62 Wis. 81, 90, 91, 22 N. W. 155, cited in the opinion of the 
trial court and in the argument of counsel as governing the inquiry, 
and we believe no authority appears for the decree under any rule 
cited in the argument. 

Other propositions urged in favor of the decree hâve received con- 
sidération, including the contention that the above-stated provisions 
as to the effect of lis pendens notice, if construed to "bind unrecorded 
claimants," violate "the principle of due process of law" and are un- 
constitutional, but we believe neither to be tenable, and that further 
extension of this opinion for their discussion is unnecessary. 

The decree of the Circuit Court is reversed accordingly, with di- 
rection to dismiss the bill for want of equity. 



OAPEWELL HORSB NAIL CO. v. GRBEN et aL 
(Circuit Court of Appeals, Second Circuit May 8, 1911.) 

No. 268. 

1, TbADE-MABK8 and TBADE-NAMES (§ 58*) — INFBINGBMBNT— HOHSESHOE 

Nails. 

Complalnant, a maker of horseshoe nalls, many years ago adopted a 
trade-mark, conslsting of a check figure formed by Interseetlng Unes, 
which was Impressed on the bevel face of the beads of the nalls, con- 
formlBg to the shape of and practlcally covering such face. Défendant 
commenced the use of a siœllar check figure on one grade of its nails ; 
the only material différence being that a trlangular space In the center, 
having Its base at the bottom of the face, was left plain. Held, that de- 
fendant's mark sufllclently resembled complainant's to decelve purchas- 
ers and to Indlcate an intention to do so, and constituted an infrlnge- 
ment. 

TEd. Note. — ror other cases, see Trade-Marks and Trade-Names, Cent 
Dig. §§ 66, 67; Dec. Dig. § 58.*] 

•For other cases see same topic & | numbbb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



capewell hok8b nail co. v. gbeen 21 

2. Tbade-Mabks and Trade-Names (§ 93*) — Suit tob Infringement— Es- 

TOPPEL— Lâches. 

In a suit to restrain Infringement of a trade-mark, évidence held in- 
sufBclent to sustaln defendant's burden of proving an acquiescence by 
complainant, creating an estoppel, or to show lâches which would defeat 
the suit. 

[Ed. Note. — ror other cases, see Trade-Marks and Trade-Names, Dec. 
Dig. § 93.*] 

3. Tbade-Mabks and Teade-Names (§ 97*) — Infringement— Form of In- 

junction. 

A writ of injunction against infringement of a trade-mark. In addition 
to enjoining the précise design found to infringe, may properly include 
aîiy mark "so similar to complainant's * * * as to be likely to de- 
celve purchasers." 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Dec. 
Dig. § 97.*] 

4. Trade-Mabks and Trade-Names (§ 98*) — Suit eob Infringement— De- 

OBEE. 

Where the manufacturer and sellers of an article were joined as de- 
fendants in a suit for infringement of a trade-mark, and défendants ail 
answered and went to trial, on a flnding of Infringement, the court prop- 
erly granted complète relief in the one suit, by awarding to complainant 
ail the profits which défendants jointly and severally made from theîr 
Infringement. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Dec. 
Dig. § 98.*] 

Appeal from the Circuit Court of the United States for the North- 
ern District of New York. 

Suit in equity by the Capewell Horse Nail Company against Edward 
M. Green and another. Decree for complainant (182 Fed. 404), and 
défendants appeal. Affirmed. 

This cause cornes hère upon appeal from an interlocutory decree 
for injunction and accounting, entered against the défendants in the 
Northern District of New York. The suit was for infringement of 
trade-mark. 

Robert W. Hardie, for appellants. 

Edmund Wetmore and Oscar W. Jeffery, for appellee. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

LACOMBE, Circuit Judge. The complainant has been engaged in 
the manufacture of horseshoe nails since 1881. Up to 1892 its nails 
were made with a smooth head. During that year it changed one of 
the heading dies in its machines, so as to produce a nail with small 
checks on the front face of the head. It has since then continuously 
used that mark. It makes three grades of nail, called, respectively, 
the "Capewell," the "Alligator," and the "Black Prince." The last 
named, a dark blue-black nail, is the lowest grade. The Capewell, a 
polished nail, is the highest grade, and has borne this mark on the 
front face of the head for very many years. 

In 1905 it brought suit in Massachusetts against the Putnam Nail 
Company, alleging ownership of a common-law trade-mark, and 

•For other casas see same topic & S number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



22 188 FEDERAL EEPORTEB 

charging défendant with infringement. The cause was tried before 
Judge Coït, who dismissed the bill because of failure to prove that the 
mark had become associated in the public mind and among purchasers 
and users of nails with complainant's nail. Capewell Horse Nail 
Co. V. Putnam Nail Co. (C. C.) 140 Fed. 670. 

In July, 1907, complainant brought another suit against one Mooney 
in the Northern district of New York, who was making and selling 
nails with a check mark which was a Chinese copy of complainant's. 
Much testimony was taken, and complainant prevailed. 167 Fed. 
(C. C.) 575. Upon appeal to this court the decree below was affirmed 
August 20, 1909. 172 Fed. 826, 97 C. C. A. 248. We found that the 
testimony which was lacking in the Putnam Nail Case had been 
abundantly supplied ; that before 1892 various marks had been placed 
on the front face of nail heads, by others— initiais, etc., including a 
globe with intersecting meridian lines (readily distinguishable from 
complainant's mark), but that complainant was the first to use the 
mark it claimed. We further found that such check mark had corne 
to be generally known to the public as complainant's trade-mark, and 
that goods bearing such mark had come to be publicly known and 
distinguished as those of complainant's make. We held, therefore, 
afSrming Judge Ray, that complainant had a common-law trade- 
mark, and that Mooney had infringed it. 

In the case at bar the decree recites that complainant — 
"Is and slnce 1892 bas been the owner of tlie trade-mark consisting of a 
pattern of small checks stamped upon the front face of the head of its horse- 
shoe nails, commonly called a 'eheck mark,' and as heretofore used cov- 
ering substantlally such front of the head of the nail and generally eoii- 
forming to the shape of such face, and because of the shape of the hend 
(and face) having four sides, the upper and lower sldes being parallel, but 
unequal In length, the upper being the longer; the right and left sides 
being of equal length, substantlally but not parallel, and having withln 
such boundaries thus conforming to the shape of such face of the head of 
the nail a pattern of small, but uniform, checks made by Unes crossing each 
other at right angles or diagonally." 

The évidence abundantly sustains this finding. To discuss that 
branch of the case would be merely to repeat what was said in the 
two opinions in the Mooney Case. 

In the early part of 1907, more than 10 years after complainant's 
Capewell nail, with the check mark on its face, became known to 
the trade, the défendant Hoopeston Company placed upon the market 
a horse nail which it called the "Peerless." It already had a high- 
grade nail known as the "Hoopeston," with a distinctive mark of its 
own on the front face of the head. The "Peerless" was a lower 
grade of nail, and it was marked with a check mark on the front 
face, substantlally the same as those of complainant and of Mooney ; 
the only différence being that the tiny checks were squares, instead of 
diamonds. Suit being threatened, it altered the mark on its "Peer- 
less" nails by cutting out a triangular pièce from the bottom. At 
the same time it sent to its customers a card, giving illustrations of 
both forms of marking and containing this statement: 

"It having been repeatedly brought to our attention that inferior nails 
were being substltuted for our Peerless becajise of similar marking under 



CAPEWELL HOKSE NAIL OO. V. GREEN 



23 



the head, we hâve changea our mark to make It more distlnctlve, that our 
numerous customers may be protected in gettlng the best." 

Inspection of the two illustrations shows that défendant company 
still retained the check mark with which it had sought to associate 
its "Peerless," merely cutting out a portion of it. It was to restrain 
the use of this second design that this suit was brought. 

[1] As we hâve seen, Judge Ray held, quite properly, that com- 
plainant was not entitled to ail check marks of every shape, form, 
and description ; there being some which would be so unlike its own 
as not to mislead any one. For that reason the decree describes the 
mark with such particularity, but it does not foUow that identity must 
be shown in order to establish infringement. Before taking up this 
branch of the case, référence may be had to the foUowing illustrations. 
Being taken from différent sources, ail are not drawn to the same 
scale; but it should be understood that the nails thus marked are of 
the standard sizes. No. 3 is a rough sketch from a nail marked as 
an exhibit, no drawing of it being found in the record. 





No. 1 is the old "globe" mark whîch antedated complainant's. No. 
2 is complainant's. Mooney's was the same. No. 3 is defendant's 
high-grade "Hoopeston" nail, which it used before it marked its 
"Peerless" nails in the manner indicated, and which it still uses. No. 
4 is the mark défendant put on its "Peerless" nails for a few months 
in 1907, and No. 5 is the modified mark in use when this suit was 
brought. 

Passing upon the question of infringement Judge Ray says: 

"Knowing the Capewell trade-mark and looking at the defendant's nail, 
a purchaser or user would assume It to be a Capewell nail, unless specifically 
informed that nails with a check mark on the beveled slde of the head, such 
check mark being formed of three triangular spaces, two check marked and 
the third one Interposed plain, were not Capewell nails, but those of the 



24 ISS FBDBRAL REPOBTŒB 

Hoopeston Company. Such a close copy and Imitation !s an Infrlngement. 
It tends to confusion and déception. The reseiublance Is such as to deceive 
an ordlnary purcliaser glving such attention to the nails and the marks 
thereon as such a purchaser ordinatily gives, and cause him to purchase one 
supposing It to be the other. But it is sald that defendant's nails are put 
up in packages, boxes, or cartons, with the name of the dealer thereon, and 
that one purchasing a package, box or carton is Informed by the name on 
the package that the nails are not Capewell's. ♦ * • So soon as the 
package is open and the nails displayed In store and shop, they at once pass 
for or are easily passed ojï as Capewell nails. Mlstake, déception, and fraud 
are easy. * * » Purchasers and users understand that the names on 
packages do not necessarily indicate the maker, but also understand that the 
trade-mark or name on the articles themselves do." 

In our former opinion it was stated that the évidence showed : 

"That [flve-pound] packages are frequently broken up, and the contents 
sold to users by the pound, and that users are accustomed to look to mark- 
Ings on the nall Itself as Identifying the maker." 

There is similar testimony in this case. 

We concur in the conclusion that both of defendant's "Peerless" 
marks infringe. As frequently happens in thèse cases, the visual 
comparison of the various marks is persuasive. The actual nails, 
with the marks on them, look more alike than the drawings do. 
Moreover, as often happens, the défendant unconsciously contributes 
évidence to the same effect. He is presumably well informed as to 
the conditions of trade in the articles he makes, and what measure 
of attention ultimate consumers of those articles are likely to give 
to their identifying marks. If it is apparant that he is undertaking 
closely to approach to a well-known mark, it is generally a pretty 
safe assumption that he thinks the différences are not sufficiently 
great to prevent confusion. Fairbank v. Bell, 77 Fed. 870, 23 C. C. 
A. 554. Undoubtedly, as appellant contends, the question of intent 
does not enter into a suit on a trade-mark, as it does in one for unfair 
compétition; but it is often illuminative on the question of infringe- 
ment. 

When infringement began in 1907, défendant had a mark of its 
own (No. 3, supra), highly_ distinctive, and which could by no pos- 
sibility be confused with complaiïiant's. That mark was impressed 
on their best model nails, which, as the record seems to indicate, 
are of excellent standard and favorably known. That mark is still 
retained. It it were thought well to indicate that the "Peerless" 
nails were also the product of the Hoopeston Company, it would 
surely hâve been easy to impress them with some modification of its 
own distinctive mark. The addition of a single curve would hâve 
changed the H in a shield which denoted the Hoopeston high grade 
nail to an HP in a shield to dénote the Hoopeston "Peerless." We 
cannot escape the conviction that design No. 4 was adopted because 
defendant's officer supposed it would lead some persons to think the 
"Peerless" nails were "Capewells," and that No. 5 was adopted be- 
cause he supposed th'at, although there were différences to argue about, 
the resemblance between No. 5 and No. 2 was still strong enough to 
induce some confusion. 

[2] Défendants also contend that this suit cannot be maintained, 
because complainant at one time âcquiesced in the use by défendant 



OAPEWELL HOESE NAIL CO. V. GKEEN 25 

of design No. 5, and is therefore estopped from now insisting that 
it be abandoned. This is a question of fact, on which défendant has 
the burden of proof. The acquiescence is alleged to hâve taken 
place during a conversation between two persons, no one else being 
présent. Their testimony as to what was said is diametrically op- 
posed — oath against oath. We concur with the Circuit Court in the 
conclusion that défendants hâve not established their proposition by 
a fair prépondérance of proof, and do not think it necessary to add 
anything to the discussion of the testimony, which is found in the 
opinion. 

It is also contended that, because of lâches on complainant's part, 
the bill should hâve been dismissed. It appears that, very shortly 
after défendant began putting Peerless nails on the market Vi^ith 
design No. 4, complainant threatened suit, whereupon the use of this 
design was stopped. The next design. No. 5, was not put on the 
market till September, 1907, and there is no proof in the record (out- 
side of the disputed testimony touching the interview which took 
place between Taylor and Williams) that complainant was informed 
of this design until January, 1908. But that is not material. Two 
months before this design was issued, complainant had begun the 
suit against Mooney, in which, with the handicap of the adverse 
décision in the Putnam Nail Case, it had to establish its ownership 
of a valid trade-màrk. The Mooney Case did not terminate until 
our décision was filed August 20, 1909, and about a month later writ- 
ten notice was sent to the Hoopeston Company demanding that it 
cease infringement. Under thèse circumstances lâches is certainly 
not made out. Timolat v. Franklin Boiler Works Co., 122 Fed. 
69, 58 C. C. A. 405. 

Some minor matters which hâve been referred to in argument 
may be briefîy disposed of . 

[3] It is insisted that the writ of injunction is erroneous, because 
it enjoins, not only the précise design found to infringe (No. 5), but 
also nails — 

"bearlng any mark bo slmllar to complainant's said trade-mark as to be 
likely to deceive purehasers and the public and from Infringing In any way 
complainant's exclusive rlght In said trade-mark." 

This is in the usual form. Without some such gênerai prohibition, 
défendants might put complainant to the trouble and expense of a 
new suit, merely by changing the position of the triangular nick 
they hâve eut out of the original check mark, or by changing its shape 
from a triangle to a square or circle of the same area — manifestly 
colorable changes, which would equally infringe the original mark. 
We fînd no force in the suggestion that the writ does not describe 
the trade-mark as fully as the decree of injunction does. That is 
immaterial. It is the decree, and not the writ, which must be looked 
to in order to ascertain what the trade-mark is to which complainant 
has established title. 

It is next assigned as error that the decree enjoins the défendant 
Company from making infringing nails, as well as from selling them 
,when made. The theory àdvanced is that it is necessary to hâve 



26 188 FEDERAL HEPORTHE 

knurling of some sort on one of the head dies; otherwise, the nail 
would slip while being rolled. The check mark, impressed by this die 
could be afterwards removed before selling, if it infringed a trade- 
mark; but it is vehemently contended that the injunction as it stands 
would necessarily be violated as a mère incident of manufacture. It 
is a suspicions circumstance that défendant company is so insistent 
upon being allowed to make nails with an infringing mark on them, 
which it will afterwards hâve to obliterate by some further process of 
manufacture. This very insistence indicates the propriety of the com- 
prehensive language used in the decree. The argument in support of 
defendant's contention may be briefly answered. We had this same 
question as to tiie necessity of using a die which would grip the nail 
when passing through the rollers in the Mooney Case, and held that 
such necessity had not been established by a fair prépondérance of 
proof . But as we said in our former opinion : 

"If it was necessary to hâve a gripplng surface on the roller, It was not 
necessary to use the only one of many which would produce on the face of 
the nail head the counterpart of complalnant's dlstinguishing mark." 

That statement is proved in this case. Défendant has had no diffi- 
culty in making a first-class grade of nail which did not slip in the 
process of rolling, being gripped by a pattern eut on die or roller, but 
which left on the nail face a mark in no way resembling complain- 
ant's. A glance at the "Hoopeston" nail No. 3 with the capital H in 
a shield shows how fallacious is the argument hère advanced. 

[4] It is also contended that the decree is erroneous, because not 
limited to the joint infringèment of the three défendants. This, of 
course, refers only to the provisions as to profits and damages. The 
Hoopeston Company is a résident of Illinois. Green and Sanford are 
résidents of the Northern district of New York. They sold nails 
which the company had manufactured. Ail three were sued, and the 
défendant company appeared generally, answered, and conducted 
the défense. The bill is framed to recover jointly and severally 
against ail three défendants for separate infringements. It was not 
demurred to, and the case went to final hearing under that issue. Con- 
tinuing infringements were proved, and the court properly granted 
complète relief in the one suit, by awarding ail the profits which the 
défendants jointly and severally hâve made from their infringèment. 

The decree is affirmed, with costs. 



WEST KENTtrCKY COAL CO. v. J. T. MORGAN LUMBER CO. 
(Circuit Court of Appeals, SIxth Circuit. May 2, 1911.) 

No. 2,087. 

TowAGE (§ 12*) — Injuby to Tow— Eault of Owner of Tow. 

The master of a towing tug is under' no such absolute duty to follow 
his own judgment as to the management of the tow that he may not 
yield his Judgment on the express demand of the owner of the tow, where 
neither life nor the property of others is imperiled ; and where he does 



•For other cases see same toplc & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



WEST KENTDOKY COAL CO. V. J. T. MORGAN LUMBER CO. 27 

so, and injury to the tow results, the owner la estopped to charge the tug 
with fault. 

[Ed. Note.— For other cases, see Towage, Cent. Dig. §§ 24-26, 29 ; Dec. 
Dig. « 12.*] 

Appeal from the District Court of the United States for the West- 
ern District of Kentucky. 

Suit in admiralty by the J. T. Morgan Lumber Company against the 
West Kentucky Coal Company. Decree for libelant for half damages, 
and respondent appeals. Reversed. 

For opinion below, see 181 Fed. 271. 

Wheeler & Hughes, for appellant. 

Bagby & Martin and Campbell & Campbell, for appellee. 

Before SEVERENS and KNAPPEN, Circuit Judges, and SATER, 
District Judge. 

SEVERENS, Circuit Judge. This îs a suit in admiralty brought 
by the fihng of a libel by the lumber company against the respondent, 
the coal company in personam. It was a suit • to recover damages 
arising from the alleged négligence of the coal company in performing 
a contract for towage of a raft of logs from Paducah, Ky., across the 
Ohio river to Brookport, on the opposite side of the Ohio in Illinois, 
where the libelant had mills for the sawing of logs into lumber. The 
raft of logs was moored at the bank a little way up the Tennessee river, 
which falls into the Ohio at Paducah. From heavy rains the Ten- 
nessee river was flooded, and the water rose to such a height as to 
endanger the logs where they were moored. The libelant thereupon 
hired the respondent to take its steamer Harth, which it was using for 
navigating the rivers in that locality, to tow the raft across the Ohio to 
its mills on the Illinois side, where, the water being not so high, it was 
supposed by the libelant the logs could be safely secured. The re- 
spondent undertook to make the towage with the Harth at the price 
of $2.50 per hour for the time employed. The steamer had its own 
crew and started out with the tow to go across. In the Ohio river be- 
tween Paducah and Brookport there is a long island running up and 
down the stream, and the question first to be disposed of was liow the 
raft should be handled by the steamer. The respondent was of the 
opinion that the best way was to put the raft in front and the steamer 
behind it, and go up the river and around the eastern end of the island, 
instead of going down the Kentucky side of the Ohio, where the water 
was in a more turbulent condition, and presented more danger, and 
going thence around the western end of the island to Brookport. 
There was a heavy wind blowing from the Illinois shore, and the Harth 
encountered difficulty in thèse conditions in pushing the raft before 
her up the stream, and thereupon the respondent brought another 
vessel and the two together, pushing the raft, managed to take it safely 
around the eastern end of the island. On going around, and when 
approaching the Illinois shore, it appeared, or seemed to the captains 
of the steamers, to be a difficult and dangerous undertaking to attempt 
to take the raft down to Brookport and secure it there. Accordingly 
the two captains united in informing the président of the libelant, 

•For other cases see same topio & § numbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



28 188 FEDERAL EEPOETEB 

who was on the Harth and accompanied the tow, that, as the wînd 
was blowing hard from the Illinois shore, and it was late in the day, 
it would not be safe on that day to attempt to make a landing at 
Brookport, and that it would be better and safer to put the raft into 
the "Pocket," as it was called, on the Illinois shore, a place above 
and sheltered by a row of piles which had been driven out from the 
Illinois shore into the river for the purposes of a railroad which had 
a ferry across the Ohio river at that point, and the captains urged 
that the raft would be safe up there in the "Pocket," and insisted that 
this course should be pursued. The président of the libelant refused 
to agrée to this, and, stating that he would take the responsibility, 
directed the landing to be made at Brookport on that day, saying 
hat he would get aboard the libelant's gasoHne launch, which was 
then approaching from Brookport, and would go ahead and make ail 
necessary arrangements for cables and ropes, of which he declared 
there was an abundant supply at libelant's mills at Brookport. The 
président of the libelant then left with the launch and went to Brook- 
port to get cables and ropes. The captains of the steamers yielded to 
thèse directions of the président and attempted to land the tow at 
Brookport, but they were unable to do so on account of the heavy 
wind. They got near enough to extend the long ropes to the raft 
which the libelant brought out for that purpose, but, on being attached, 
it was found that the ropes were made of wire and were not elastic, as 
ropes ordinarily used for such purposes are, and the ropes would not 
"give," but pulled the raft apart, and a large proportion of the legs 
were carried down the river and lost. The libelant, at considérable 
expense and by the use of other boats and men, secured many of the 
logs which had escaped. The suit was brought to recover the value 
of the logs lost and the expense of recovering those saved. 

It does not appear that there was any négligence on the part of 
the respondent, unless it be that it did not exercise reasonable judg- 
ment in going up the river and around the eastern end of the island, or 
else — and this is the gravamen of the plaintiff's case as it now stands 
• — that it was négligent in taking the logs down to Brookport, instead 
of putting them in the "Pocket," as good judgment would indicate 
would be much the safer course, and where it is likely the raft could 
hâve been preserved. The contract being one for towage merely, the 
respondent was not an insurer, but was responsible for the exercise 
of reasonable care in the exécution of the duty it undertook. The 
judge made a finding of facts upon the évidence adduced, which 
is in substance embodied in the finding, and the statement of his 
conclusions of law. With regard to the négligence imputed to the 
respondent in not taking the raft downstream and around the 
western end of the island, the court canvassed the évidence and the 
arguments of counsel, but could not or did not, find that the négli- 
gence of défendant, alleged on that score, was made out. The court 
seems to hâve thought it unimportant, in view of its conclusion upon 
the other point. We find no sufficient ground for charging the re- 
spondent with fault in making the choice to take the raft around the 
eastern end of the island. The master of the Harth was a man of 
long expérience in his calling, and he says, in giving testimony, that 



WEST KENTUCKT COAL CO. V. J. T. MORGAN LDMBER CO. 29 

he took what he thought was the safest course. The reasons adduced 
for a contrary conclusion do not impress us with conviction that he 
failed to exercise a reasonable degree of skill and judgment. 

But upon the question whether the respondent was at fault in taking 
the tow down to Brookport and attempting to land it there the court 
took the view that both parties were at fault — the libelant, in requiring 
the raft to be taken to Brookport that day, instead of taking it into 
the "Pocket" until the storm abated, and supplying ropes at Brookport 
which were not suitable for the use intended ; and the respondent, in 
not disregarding the requirement of the président of the libelant and 
in not taking the raft to the place indicated by it for shelter overnight. 
Upon thèse findings it was held that the damages should be divided, 
and a decree to that effect was entered. In this we think the court 
erred. The taking the raft to Brookport after rounding the east end 
of the island was against the judgment and choice of the respondent, 
and was donc only upon the express requirement of the président 
of the libelant, and the assumption of ail liability for the consé- 
quences; and his authority is not disputed. The respondent ought 
not to be charged with the conséquences of the mistakes made upon 
the demand of the libelant, or the fault of not providing proper cables 
for landing the raft at Brookport, as the respondent had reason to 
expect from the assurance of the libelant's président. The conditions 
upon which a court of admiralty dividCs the damages between two 
parties, both of whom are at fault, did not exist. The libelant was 
estopped by its own act from claiming that it be a fault of the re- 
spondent which was donc upon its demand. We know of no rule of 
admiralty law which precludes the application of this gênerai and 
fundamental rule governing the conduct of contracting parties. If 
there was a departure from the mode of exécution of the contract 
as originally made (a thing which is not at ail obvious), it was but a 
substitution of another mode of executing it. It cannot be doubted 
that such a substitution may be made upon the agreement or consent 
of the parties. 

The court seems to hâve assumed that the master of the steamer, 
from the control which he possesses over the management of the 
tow, is bound to exercise it according to his own judgment, and 
is not to be swerved from that duty even by the demand of the 
owner. There may be cases where this right of the master should 
be admitted and enforced, as when the lives or safety of other parties 
or their property, to whom the master owes a duty, are concerned, and 
which could not otherwise be protected. But this was not such a case. 
The court in its opinion refers to the case of Transportation Line v. 
Hope, 95 U. S. 297, 24 L. Ed. 477, as if it supported the application 
to this case of the rule respecting the absolute duty of the master. 
But we are unable to see how such an inference can be drawn from that 
case. In our view, the faults complained of by the libelant are sub- 
ject to the maxim, "Volenti non fit injuria," and that the libel ought 
to hâve been dismissed. 

The decree of the District Court must be reversed, and the libel 
dismissed. The appellant is entitled to recover costs in this court, 
as well as in the court below. 



30 188 FEDERAL EEPOETBB 

LUDVIGH V. AMERICAN WOOLEN CO. OF NEW YORK et aL 

(Circuit Court of Appeals, Second Circuit May 8, 1911.) 

No. 194. 

Bankbuptcy (§ 140*) — Peopebty Passins to Teustee— Goods Delivebed to 
Bankkupi— Sale ob Bailment. 

By the contract between a woolen company and a corporation organ- 
Ized for the purpose, whicli virtually represented bankrupts, who were 
dealers in woolens, it was agreed that the company should deliver goods 
to the corporation, title to remain in the company untll they were sold. 
The corporation agreed to sell the same, collect the proceeds, and pay 
the same over to the company at once, less the différence betweeu the in- 
voice and selling price. By a following clause it further agreed to pay 
the invojce price for any- goods not "accouuted for" under the preceding 
clause. Held, that such agreement did not bind it to pay for goods un- 
sold, but only such as were sold and the proceeds not paid over or ac- 
counted for; that the contract was not one of sale, by which the tltle 
passed to the bankrupts, and .later to thelr trustée, but of consignment 
or factorage, or at most of conditional sale, whlch was valid as agalnst 
the creditors of the bankrupts. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 140.*] 

Lacombe, Circuit Judge, dlssenting. 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Bill by Clifford J. Ludvigh, trustée, against the American Woolen 
Company of New York and the Niagara Woolen Company. Decree 
(176 Fed. 145) for complainant and défendants appeal. Reversed. 

Hays, Hershfield & Wolf (Daniel P. Hays, of counsel), for appel- 
lants. 

James, Schell & Elkus (A. I. Elkus, Garrard Glenn, and James N. 
Rosenburg, of counsel), for appellee. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

WARD, Circuit Judge. November 15, 1901, P. Horowitz & Co. 
entered into a written contract with the American Woolen Company, 
to run to December 1, 1902, wheréby the Woolen Company agreed to 
consign goods to Horowitz & Ce, the title to the goods or their pro- 
ceeds to remain in the Woolen Company until fully accounted for, ail 
bills for the consigned goods to be made payable to the Woolen Com- 
pany, and Horowitz & Co. to receive as their compensation the différ- 
ence between the invoice and selling prices (which were not to be 
less than the invoice) and to be allowed a drawing account of $1,200 
a month to be deducted from their profits. They were also to give 
security by way of a lien upon real estate to protect the Woolen Com- 
pany against loss by reason of any failure on their part to observe 
the agreement. It was also provided that Horowitz & Co. were not 
to buy woolens of any one but the Woolen Company. This word, 
read in connection with the whole agreement, must be understood as 
meaning to deal with no one else. If it be given the literal construc- 

*For other cases see same topic & § humbeb in Dec. & Am. Blgs. 1S07 to date, & Rep'r Indexes 



LTJDVIGH V. AMERICAN WOOLEN CO. 31 

tion of purchasing, then the sale to them was not an absolute, but a 
conditional, sale. 

The Woolen Company, apparently because it entertained suspicions 
of Horowitz & Ce, and perhaps, also, because its counsel misunder- 
stood the décision of this court in Re Garcewich, 115 Fed. 87, 53 C. 
C. A. 510, declined to continue the contract and required that the 
business should be done thereafter through a corporation. Such a 
corporation was formed under the name of the Niagara Woolen Com- 
pany "to contract and deal with the American Woolen Company of 
New York and to deal in fabrics received therefrom." November 25, 
1902, an agreement was executed between the American Woolen 
Company and the Niagara Woolen Company whereby the former 
agreed to consign goods to the latter for one year on substantially 
the same terms as contained in the agreement of November 15, 1901, 
with Horowitz & Co. The capital of the company was $20,000, in 
200 shai:es, of $100 each, 195 of which were issued to Philip Horowitz 
in considération of a mortgage of $19,500 on certain real estate, being 
the same security mentioned in the former agreement. 

On the same day an agreement was executed by the American 
Woolen Company, of the first part, Horowitz & Co., of the second 
part, and J. P. Murphy, of thé third part, whereby Horowitz & Co. 
guaranteed the faithful performance of the contract by the Niagara 
Company, and Philip Horowitz as security transferred 195 shares of 
that company's stock to Murphy, in trust to vote the same for such 
person as président of the Niagara Company as Horowitz & Co. should 
designate, and in case of f ailure of the Niagara Company or of Horo- 
witz & Co. to perform their covenants, respectively, to transfer the 
stock to the American Woolen Company. The American Woolen 
Company elected Joseph Horowitz président and one of its own em- 
ployés treasurer of the Niagara Company and a by-law was adopted 
requiring ail checks on the funds of the company to be signed by the 
président and treasurer jointly. The Niagara Cornpany had an of- 
fice on the premises of Horowitz & Co. and a sign on the outside door. 
Subsequently the American Woolen Company also employed a book- 
keeper, who kept an account of ail its goods billed to the Niagara 
Company and of ail sales and payments reported by the Horowitzes. 
The goods were sold in the name of the Niagara Woolen Company 
and the proceeds of sale deposited in its bank account. 

The business was carried on strictly in accordance with the agree- 
ment of November 25, 1902, until May, 1904, when Joseph Horowitz 
withdrew from ail participation in the business of Horowitz & Co., 
which was continued by Philip Horowitz, who also became président 
of the Niagara Company. He soon began to embezzle the funds of 
the Niagara Company by indorsing checks received by him to its order 
in its name and depositing them in the bank account of Horowitz & 
Co. October 26th a very suspicions fire occurred on the premises, 
Philip Horowitz fled the country, and has not been heard of since. 
On or about October 26th the American Woolen Company removed 
from the premises of Horowitz & Co. 760 pièces of goods consigned 
to the Niagara Company. October 31st a pétition in bankruptcy was 



32 188 FEDERAL EBPOETBB 

filed against Horowitz & Co., followed January 26, 1905, by an ad- 
judication. 

July 17, 1907, the trustée in bankruptcy filed this bill in the District 
Court against the American Woolen Company and the Niagara 
Woolen Company, praying that the agreements of November 25, 
1902, above mentioned, and the removal of the said goods, might be 
declared void under the bankruptcy act as in fraud of the creditors 
of Horowitz & Co., and that the défendants might be decreed to de- 
liver the woolens removed by the American Woolen Company, or their 
value, $39,685.27, to him, and also to pay over to him the proceeds 
of woolens sold, to the amount of $25,000, paid to the American 
Woolen Company within four months of the filing of the pétition in 
bankruptcy, with interest from October 26, 1904. 

A demurrer to the bill having been overruled, the défendants an- 
swered, denying ail the charges of fraud, and praying that the bill be 
dismissed, with costs. The learned judge below found that there 
was no actual fraud on the part of any one connected with the agree- 
ments; that they were made under the advice of counsel to protect 
the American Woolen Company against danger in doing business with 
Philip Horowitz, and were good inter partes. But he held that the 
American Woolen Company was at the same time trying to get the 
privilèges of a bailor and the rights of a vendee, and that the contract 
must be treated as against the creditors of Horowitz & Co. as an ab- 
solute sale. He disregarded the Niagara Woolen Company entirely. 
His conclusion that the transaction was a sale is in large part founded 
on the following clauses in thé agreement between the American 
Woolen Company, of the first part, and the Niagara Woolen Com- 
pany, of the second part : 

"T//. Sald party of the second part agrées to sell such merehandise to such 
pe?son or persons as they shall judge to be of good crédit and business stand- 
ityg, and to collect for and In behalf of the party of the first part ail bills and 
accounts for the merchandlse so sold, and to Immedlately pay over to the said 
party of the first part any amount eollected as aforesald Immedlately upon 
Its collection, minus, however, the différence between the prlce at which said 
merchandlse so eollected for has been Invoiced to the party of the second part 
and the prlce at which said merchandise has been sold as aforesaid by the 
party of the second part 

"V. Said party of the second part hereby guarantee the payment of ail 
bills and accounts for merchandlse, possession of which Is delivered to it un- 
der thls agreement; and It hereby agrées, in case any merchandise delivered 
under the provisions of this agreement by the party of the first part to the 
party of the second part Is not accounted for to the party of the flrst part, 
under the provisions of clause IV of thls agreement, to pay to the party of 
the flrst part the invoice priée of said merchandise, and therenpon title to 
sald merchandise, or the proceeds thereof, so pald for shall pass to the 
party of the second part, and shall then be exempted from the provisions of 
this agreement." 

Upon this subject he says: 

"It Is to be observed that thls document requires the Niagara Company to 
pay the invoice priée of the merchandlse delivered to It unless it accounts 
for the same 'under the provisions of clause 4' ; but clause 4 contains, as 
above set forth, a spécifie agreement on the part of the Niagara Company to 
sell the merchandlse and pay over to the Woolen Company the sale price 
thereof, less the différence between such price and the invoice value. It fol- 



LDDTIGH T. AMERICAN WOOLEN CO. 33 

lows that, If the Niagara Company could not account to the Woolen Company 
for money by selling the goods, it was nevertheless bound to pay tlie invoice 
priée, and (continues the written agreement) 'thereupon tltle to said merchan- 
dise * * * so paid for shall pass to the Niagara Company.' " 

But clause IV plainly refers to accounting for goods sold by the 
Niagara Company, and we think the merchandise "not accounted for 
to the party of the first part under the provisions of clause IV" means 
merchandise sold. Merchandise on hand would be accounted for by 
the fact that it was on hand. This appears clearly f rom the provisions 
of clause VIII : 

"VIII. This agreement shall continue for one year. If, for any reason, thls 
agreement terminâtes, ail of the merchandise, possession of which is held by 
the party of the second part under this agreement, shall at said termination 
be Immediately returned tp the possession of the party of the first part." 

The purpose of this clumsy interposition of the Niagara Company 
was, as counsel for the American Woolen Company points out, that 
it should be a sort of cash box for the Woolen Company and check 
on the transactions of Horowitz & Co. Though there are some in- 
consistencies in the language of the agreements and in the correspond- 
ence between the parties, we are clearly of the opinion that it was 
their purpose honestly to make a consignment or f actorage agreement. 
The goods were to be sold by Horowitz & Co. at not les s than the in- 
voice price, and the proceeds were to be turned over at once to the 
American Woolen Company. The transaction, regarded either as a 
consignment or as a conditional sale of Horowitz & Co., was entirely 
légal as against their creditors. Such agreements are valid notwith- 
standing that crédit may sometimes be given to a factor or to a con- 
ditional vendee because of his apparent ownership of property in his 
possession, though in this case there is no évidence whatever of any 
such thing. Contracts of sale under which title is to remain in the 
vendor, although the vendee may consume the goods or sell them and 
apply the proceeds to his own use, are fraudulent as to creditors, be- 
cause the stipulation that title is to remain in the vendor is entirely 
inconsistent with the purpose of the contract. In re Garcewich, su- 
pra ; In re Penny & Anderson (D. C.) 176 Fed. 141. 

The agreements which we hâve had under considération are contracts 
of an entirely différent character and contain elaborate provisions to 
prevent tlie consignée from consuming the goods or selling them and 
applying the proceeds to their own use. 

The decree is reversed, with costs out of the estate, but not against 
the trustée personally. 

LACOMBE, Circuit Judge (dissenting). The construction of 
clauses. IV and V adopted by the District Judge seems to me to be 
the correct one, and, concurring in his reasoning and conclusion, I 
dissent from the opinion of the majority of this court. 
188 F.— 3 



34 188 FEDERAL REPORTES 

AMERICAN MFG. CO. v. BIGELOW. 

(Circuit Court of Appeals, Second Circuit. May 8, 1911.) 

No. 228. 

1. Masteb and Servant (§ 284*) — Action fob Injuby to Servant— Ques- 

tions FOB JUBY. 

An action by an employé against ttie master to recover for a Personal 
Injury was properly submltted to the jury where the testlmony as to the 
material facts was in direct conflict; the question of prépondérance be- 
ing for the jury. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 
1000-1132 ; Dec. Dig. § 284.*] 

2. Mastbb and Sebvant (f 267*) — ^Action fob Injuet to Sebvant. 

In an action for an injury to plaintiff caused by the startlng up of a 
loom which she had stopped whlle cleaning It, a motion to strike out her 
testimony that defendant's superintendant started up the machine was 
properly overruled, although she admitted that she did not see him move 
the lever whlch started the machine, where she stated that she did 
see him standing by it, and that no one else was near. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. § 911; 
Dec. Dig. § 287.»] 

3. Masteb and Servant (§ 1801^*) — Masteb's Liability fob Injubt to 

Sebvant— "AcT of Superintkndence." 

The action of the superlntendent of a faetory in startlng up a loom 
whlch the operator had stopped for the purpose of cleaning it was an act 
of superintendence for whlch his principal was responslble to the oper- 
ator, who was injured thereby under New York Employer's Liability Act 
(Consol. Laws N. Y. 1909, e. 31) § 200. 

[Ed. Note. — For other cases, see Master and Servant, Dec. Dig. § 
180%.*] 

4. Appeal and Eeeob (§ 1050*) — Eeview— Habmless Eeeob— Admission of 

Evidence. 

Where the only préjudice whlch could hâve resulted from the admis- 
sion of immaterlal testlmony was posslbly to increase the amount of 
damages awarded to plaintiff, the réduction of the verdict by the court to 
a sum clearly reasonable suffidently corrected the error to remove any 
ground for reversai. 

[Ed. Note.— For other cases, see Appeal and Error, Cent Dig. § 4154; 
Dec. Dig. § 1050.*] 

6. Evidence (§ 123*) — Competenct- Res Gest^;. 

Where plaintiff was injured by the startlng up of a loom whlch she 
was operating In defendant's faetory, and which she had stopped and was 
cleaning, a statement made by defendant's superlntendent whlle carry- 
Ing plaintlfC from the room immediately after the injury in answer to 
her charge that he had caused it was admissible as a part of the res 
gestse. 

[Ed. Note. — For other cases, see Evidence, Cent Dig. |§ 351-368; Dec. 
Dig. § 123.*] 

In Error to the Circuit Court of the United States for the Eastern 
District of New York. 

Action at law by Clara Bigelow against the American Manufac- 
turing Company. Judgment for plaintiff, and défendant brings er- 
ror. Affirmed. 

•For other cases see same topic & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



AMEEICAN MFG. CO. V. BIGELOW 35 

This cause cornes hère upon writ of error to review a judgment 
of the Circuit Court, Eastern District of New York, entered upon 
a verdict in favor of défendant in error, who was plaintiff below. 

J. F. Carew and Thomas F. Magner, for plaintiff in error. 
F. W. Sparks, for défendant in error. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

LACOMBE, Circuit Judge. [1] The action was brought under 
the employers' liability act (section 200 of chapter 31 of the Consol- 
idated Laws of New York) to recover for injuries sustained from 
having plaintiff's fingers caught in the gear wheels of a spinning 
frame. The plaintiff's story was to the effect that she was a "back- 
tender" at the frame in question, and was on her knees at the back 
of the machine cleaning it from fluff and dirt, an opération which 
was perf ormed every Wednesday ; that the machine had been stopped 
or "doffed" to enable her to do so, a rule of the company forbidding 
ail employés from cleaning or repairing machinery when in motion. 
When stopped, it could be started only by moving a bar at the front 
of the machine. While thus employed, the superintendent, Devine, 
came along, let out an oath, and wanted to know what it was laying 
off for. She replied that she was cleaning it, whereupon he mumbled 
something about getting back to work and walked around to the front 
of the machine, which thereupon immediately started up; Devine at 
the time being the only person in front of the machine and near 
enough to it to move the starting bar. Defendant's story was that 
Devine did not pass or speak to plaintiff while she was cleaning, but 
was himself busy, also on his knees, making some repairs to another 
machine which was located immediately in front of plaintiff's; that 
he did not start her machine, but stopped it as soon as he heard her 
scream; that when she began cleaning her machine was running and 
continued to run until the accident happened. Since there was évi- 
dence in support of each of the stories, there was manifestly no error 
in denying defendant's motion at the close of the case to direct a 
verdict in its favor on the ground that "the overwhelming prépondér- 
ance of évidence (was) in favor of défendant." It was for the jury, 
not the court, to décide ail disputed questions of fact. 

[2] The next error assigned is the déniai of defendant's motion 
to strike out ail the testimony given by plaintiff "as to the way the 
machine started up, by Devine starting it up" as "purely spéculative 
on her part." She had stated when fîrst giving her narrative of what 
took place that Devine "turned it on," but later she stated that she 
did not see him actually start it, did not see his hand on the bar, but 
that, after the brief conversation with him, he mumbled something 
about getting back to work and passed around to the front of the ma- 
chine ; that looking under the machine towards the front she could see 
him there. There was some obstruction to the view due to the prés- 
ence of bobbins' at the front end, but nevertheless she could see that 
he was there, and that no one else was there and the machine then 
started. From this she inferred that he must hâve started it and the 
jury evidently drew the same inference, a reasonable one if the facts 



36 188 FEDERAL REPORTEE 

were as she stated them. There was no error in sending to the jury 
the entire évidence of plaintifif without striking out any of it on the 
ground stated. 

[3] It is next contended that, even if Devine did start the machine, 
his doing so vsras not an act of superintendence, but was mère manual 
labor. Reliance is placed on Guilmartin v. Solway Process Co., 189 
N. Y. 490, 82 N. E. 725. The cases are not parallel. Devine was 
not engaged in a manual détail of work as an incident or resuit of 
which the machine started. He, if he did what plaintiff contends he 
did, determined as a matter of superintendence that at that précise 
time that particular machine should be set going, and, having thus de- 
termined, it is immaterial whether it was actually started by the hand 
of a subordinate obeying his spoken order or by his own hand obeying 
the exercise of his own will. 

[4] Error is also assigned to the refusai to strike out some testi- 
mony given by plaintiff. She had testified that immediately follow- 
ing her scream Devine, who, concededly, was only a few feet away, 
came to her and carried her to the dressing room. She then added: 
"When he was carrying me out, he was letting out oaths and sayin^; 
I should keep quiet, and I says, if it wasn't for him I would hâve 
my fingers now. 'Well,' he says, 'it is too late.' " The court having 
ruled that he would let the évidence stand, defendant's counsel said, 
"I except, and I ask to hâve it stricken out." To which the court 
replied: "I will reserve the ruling until I see if it has any bearing." 
We do not find it stated anywhere in the record that the matter was 
again brought to the attention of the trial judge. But, waiving any 
question as to whether the defendant's counsel should hâve brought 
up the subject again, we find no réversible error in the refusai to 
strike out. The first part of the statement, that Devine was "letting 
out oaths and saying she should keep quiet," was irrelevant and im- 
material. Butler V. Manhattan Railway Co., 143 N. Y. 422, 38 N. 
E. 454, 26 L. R. A. 46, 42 Am. St. Rep. 738, a closely parallel case. 
It could not be sustained as part of the res gestse because it had no 
référence at ail to the accident. Quite likely it may hâve operated to 
induce the jury to enlarge their verdict, but since the trial judge, on 
motion for a new trial, reduced the verdict from $5,000 to $3,000, 
which is certainly not an excessive sum for the injuries sustained, we 
are satisfied that such réduction sufficiently corrects the error. 

[ S ] The remaining portion of the statement, that to plaintiff's state- 
ment that his act had caused her injuries, his sole response was, "Well, 
it is too late now," is within the principle of res gestse. It took place 
immediately after the accident, while the excitement produced by 
plaintiff's screams and the sight of her mangled fingers might well 
be supposed to be still operative. The statement manifestly referred 
to the accident itself. The authorities on this branch of the law of 
évidence are légion. In Wigmore on Evidence, § 1747, the exposi- 
tion of the rule set forthin U. S. y. King (C. C.) 34 Fed. 314 (E. 
Dist. of New York), is cited as satisfactory. It reads: 

"The déclarations of an Individual made at the moment of a particular oc- 
currence, when the eircumstances are such that we may assume that his 
mlnd is controUed by the event, may be received In évidence, because tliey 



EOBINSON T. FIDELIXr TRUST 00. 37 

are supposed to be expressions Involuntarily forced out of him by the partlc- 
ular event, and ttius hâve an élément of truthfulness they mlglit otherwise 
not iiave." 

It must appear that the statement "was made at a time when it was 
forced out as the utterance of a truth, forced out against his will, or 
without his will, and at a period of time so closely connected with 
the transaction that there has been no opportunity for subséquent re- 
flection or détermination as to what it might, or might not, be wise 
for him to say." 

Wigmore himself (section 1749) thus states it: 

"In the stress of nervous excitement the reflective" facultles may be stilled 
and the utterance may become the unreflecting and sincère expression of 
one's actual impression and belief." 

Whether Devine did make the statement attributed to him was dis- 
puted on the proof, but, if he did, the jury might well hâve found that 
his mind was still dominated by the excitement of the catastrophe. 

■ The authorities cited on defendant's brief do not applv to the facts 
of this case. In Waldele's Case, 95 N. Y. 274, 47 Am.' Rep. 41, the 
statement was that of the injured party, a deaf mute, made in the sign 
language to his brother half an hour after the accident. In Luby v. 
Hudson River Railroad, 17 N. Y. 131, the statement was made by the 
driver of the horse-drawn railroad car which caused the injuries, 
after he had got off the car, been arrested by a policeman and taken 
out of the surrounding crowd. To the policeman's inquiry he said 
that the reason he did not stop the car was because the brakes were 
out of order. Apparently his mental processes were not controlled by 
the nervous excitement of the event; as the Court of Appeals said 
"he was manifestly excusing himself and throwing the blâme on his 
principals." In Furst v. Second Ave. R. R., 72 N. Y. 542, the state- 
ment was by the conductor of the car, after the accident, that "if the 
driver had beén looking he would not hâve run over the child." But 
the conductor was on the rear platform where he could not see the boy 
nor the driver, and knew nothing at ail about the circumstances un- 
der which the accident happened. His guesses as to its avoidance 
were admissible on no conceivable theory. 

There is nothing in the other assignments of error which hâve been 
argued hère that calls for discussion. 

The judgment is affirmed. 



ROBINSON V. PTDELITY TRUST CO. 
(Circuit Court of Appeals, Eighth Circuit May 15, 1911.) 

" No. 3,445. 

1. GtlAEANTT (§ 6*) — REQUISITES AND VaLIDITT— NOTICE OF ACCEPTANCE. 

Where, after negotiations, a hank prepared an agreement of guaranty 
of the présent and future indebtedness of a corporation, and sent it to 
the président of the corporation, with a request that he sign and return 

•For other cases see samé topic & § numbee in Dec. & Am. Dtgs. 1907 to date, & Eep'r Indexes 



38 188 FEDERAL REPORTER 

It, whlch was done, no further act of acceptance on the part of thc bank 
was reqiilslte to render It effective wlth respect to future loans. 

[Ed. Note.— For other cases, see Guaranty, Cent. Dig. § 8; Dec. EHg. 
|6.*J 

2. GuAEANTX (§ 16*) — Considération— SuFFiciENCT. 

An agreement by a bank to extend the term of crédit of a corporation 
whicb Is Indebted to It, by renewal of its notes as they mature, is a suffl- 
cient considération for a guaranty of the indebtedness, both présent and 
future, by the président of the corporation. 

[Ed. Note. — For other cases, see Guaranty, Cent Dlg. §§ 14-17; Dec. 
Dig. § 16.*] 

3. Guaranty (§ 17*) — Failuee op Considération. 

Where a bank agreed to carry the indebtedness of a corporation to It 
for a further tlme on condition of a guaranty of the same by the prési- 
dent, wlth a proviso that, if flnancial conditions should change, so that 
it could not continue to carry the amount, It would notify him, so he 
could pay it down, there was no failure of considération for the guaranty 
because of any change in flnancial conditions, where the bank continued 
to fulfill its agreement by renewing or extending the notes of the corpo- 
ration wlthout objection. 

[Ed. Note. — For other cases, see Guaranty, Cent. Dlg. § 19; Dec. Dig. 
S 17.*] 

Appeal from the District Court of the United States for the Dis- 
trict of Minnesota. 

In the matter of Josiah L. Robinson, bankrupt. From an order 
allowing a claim in f avor of the Fidelity Trust Company, the bankrupt 
appeals. Affirmed. 

See, also, 179 Fed. 724. 

W. L. Converse (W. A. McDowell and D. L. Grannis, on the 
brief), for appellant. 
Justin D. Bowersock (Lister M. Hall, on the brief), for appellee. 

Before HOOK, Circuit Judge, and RINER and W. H. MUNGER, 
District Judges. 

HOOK, Circuit Judge. The Fidelity Trust Company, a banking 
institution of Kansas City, Mo., secured an allowance of a demand 
against the estate of Josiah L,. Robinson, a bankrupt, and the latter 
prosecuted this appeal. The demand arose in this way: Early in 
October, 1907, a corporation of which Robinson was président owed 
the trust company on promissory notes about $50,000, and he desired 
the line of crédit for that amount extended for another year. After 
negotiations, oral and written, the trust company prepared and mailed 
to Robinson, October 23, 1907, a form of agreement containing, after 
preliminary récitals of the situation, a guaranty by him of the présent 
and future indebtedness of the corporation, not exceeding in ail the 
specified maximum and interest. He signed and returned it. Robin- 
son was adjudged bankrupt April 10, 1908. The demand allowed 
against his estate was upon the guaranty of the notes. 

[1] It is contended by Robinson that, as the guaranty was in part 
prospective, to that extent it required acceptance by the trust company 
before it became effective, and there was none. But acceptance ap- 

•For other cases see same toplc & S ncmbbr in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



EOBINSON V. FIDELITT TKUST CO. 39 

peared from the very course of the transaction. The trust company 
sought the guaranty, and prepared the agreement and mailed it to 
Robinson with request that he sign and return it. Moreover, with 
respect to future loans, it was provided in the agreement that each 
transaction with the principal debtor should, without notice to Robin- 
son, constitute an acceptance of his guaranty thereof. Again, but 
one of the notes was discounted af ter Robinson had agreed to guaran- 
tee them, and that was accepted by the trust company on the faith 
of his statement that he would sign the written agreement when it 
was prepared and sent to him. 

[2] It is also contended there was no considération for the guar- 
anty. In contracts of guaranty, as in other contracts, a promise for 
a promise is enough, and the promise of the créditer may be for the 
benefit, not of the guarantor, but of the third party who owes the 
principal debt. In the case hère Robinson's corporation owed the 
trust company. An extension of the line of crédit for another year 
was desired. To secure it Robinson promised to guarantee the exist- 
ing indebtedness and future renewals and replacements. In turn the 
trust company promised so to extend the crédit. That was the round 
transaction in its completeness, and there was sufficient considération 
for the guaranty of both existing and future indebtedness. The 
promise of the trust company appears by necessary implication from 
its conduct, the course of the transaction, and the provisions of the 
agreement which it required, prepared, caused the guarantor to sign, 
and retained in its possession. It could not hâve been heard to say 
it did not agrée to carry the debtor corporation for the amount and 
period specified. The agreement recites the existing conditions, the 
désire for a continuance of the crédit to enable the corporation to 
carry on its business, the request of Robinson that it be granted, and 
then his agreement of guaranty to accomplish the purpose set forth 
in the preambles. Before the year expired, Robinson's company went 
into the hands of a receiver, and Robinson himself, while insolvent, 
committed an act of bankruptcy. The trust company was then at 
liberty to proceed upon its claim. 

[3] In the course of the negotiations referred to the trust company 
wrote Robinson October 8, 1907, that if he would guarantee the loans 
it would extend the crédit for the year provided the financial condi- 
tions did not materially change from what they were then, and that 
if they did change, so that it could not continue to carry so large a sum, 
it would advise him in time so he could pay it down. It is claimed 
by Robinson in this connection that conditions did change materially, 
and that the financial panic of that year came to a crisis the latter part 
of October, its full influence being felt in Kansas City when the agree- 
ment of guaranty was signed, and theref ore the event guarded against 
by the trust company came to pass, it was released from its obligation, 
and the considération for his guaranty f ailed. The final written agree- 
ment contained no such condition as in the letter of October 8th, but 
a différent conclusion would not resuit from bringing the letter and 
the other negotiations forward as part of it. On October 23d a note 
for $5,000, a part of the old indebtedness, was renewed at the instance 



40 188 FEDERAL REPORTER 

of an officer of the debtor corporation, and Robinson was advîsed of 
it on the 23d in the letter which transmitted the agreement of guar- 
anty for exécution. The trust company at no time claimed the finan- 
cial conditions were such as to modify or lessen the full extent of its 
obHgation. It gave no notice to that effect to Robinson or to his cor- 
poration, and at no time declined to renew or extend the old notes 
or take others in their place. Nor did the évidence show that the con- 
dition specified in the letter arose. The financial change which oc- 
curred affected the circulation of money rather than the renewal of 
loans previously made. Robinson's corporation had drawn out its 
crédit balance, and a renewal of its notes would more naturally hâve 
required payments to the trust company than disbursements by it. 
About the middle of November, 1907, the debtor corporation was put 
in the hands of a receiver in a stockholders' suit, and there is no con- 
tention that before this occurred the trust company did net stand ready 
to fulfill its agreement. 
The order is affirmed. 



INTERNATIONAL BANKING CORPORATION r. PAYNB. 

(Circuit Court of Appeals, Second Circuit. May 8, lyii.) 

No. 163. 

1. TEIAI. (S 260*) REVIEW— iKSTRUCTIONa. 

The refusai of a requested instruction Is not reversiWe errer, where 
It was substantially covered by the charge given. 

[Ed. Note.— For other cases, see Trial, Cent. Dig. §§ 651-659 ; Dec. Dig. 
§ 260.*] 

2. Feaud (i 64*): — Questions fob Jukt. 

T\Tiere plalntifE charged that défendant procured the delivery to him 
of foreign drafts, to be paid ïor later, by means of misrepresentatlou 
and without the ability or intention of paying for the same, it was compé- 
tent for the jury to détermine whether the grounds given by défendant 
for hls asserted belief at the time that he could pay for the drafts were 
reasonable or not 

[Ed. Note. — For other cases, see Fraud, Dec. Dig. § 64.*] 

In Errer to the Circuit Court of the United States for the Southern 
District of New York. 

Action at law by the International Banking Corporation agâinst 
Henry C. Payne. Judgment for défendant, and plaintifï brings error. 
Affirmed. 

W. C. Prime, for plaintiff in error. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

LA COMBE, Circuit Judge. Plaintifï was engaged in the business 
of buying and selling foreign exchange. Défendant, who was a buyer 
of foreign exchange and had theretofore bought drafts from plain- 
tifï, applied to it on October 22, 1907, for two drafts on London, 
amounting to upwards of $15,000. They were drawn and sold to 

•For otlier cases see same toplc & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



INTERNATIONAL BANKING CORPORATION V. PATNB il 

him upon an agreement that he would on the same day give his t^eck 
for them. The answer avers that it was further agreed that the cpieck 
should not be presented for payment until the foUowing day, but we 
find no testimony in the record to support such averment. It appears 
that there was a custom of the business whereby, for convenience, 
drafts would be actually delivered to a purchaser the day before that 
on which the steamer which was to carry them sailed ; the purchaser 
to pay the day after delivery, but the transaction to be considered by 
both parties as a cash transaction. Some prior purchases of défend- 
ant had been made on this basis, but a few weeks before the one in 
suit plaintiff had insisted that thereafter he must pay on the same day 
the draft was deHvered to him, and he did so pay in each case there- 
after, except that for the two drafts sold on October 22, 1907, he has 
never paid anything. 

The theory of the complaint is that, when défendant applied for 
the drafts, he did not hâve sufficient funds tb pay for them and had 
no grounds to expect that he would come into possession of sufficient 
funds, and that he obtained the drafts from plaintiff with intent to 
negotiate them without payment for them and to defraud the plain- 
tiff of the amount of the drafts. It is further averred that he made 
représentations to plaintiff as to his business, on which it relied in sell- 
ing and delivering the drafts, which représentations were untrue, were 
known to défendant to be untrue, and were made by him with intent 
to deceive and defraud the plaintiff and to induce the sale of the drafts. 

Considérable testimony was taken on the îssues raised by the plead- 
ings, the case took over a day to try, no request to direct a verdict was 
made by either side, it was sent to the jury, and a verdict was ren- 
dered in favor of défendant. With the weight of the testimony, or 
the propriety of the verdict, this court is in no way concerned. By 
not requesting a direction in its favor plaintiff conceded that there 
were disputed questions for the jury to pass upon. No error in the 
admission or exclusion of testimony is assigned. The court, in charg- 
ing the jury, first read, and charged, certain requests which each side 
had submitted, and then further instructed the jury colloquially. No 
objection was taken and no exception reserved to any part of the 
charge. Thereafter, and before the jury retired, plaintiff's counsel 
asked the court to charge : 

"Défendant is presumed to Intend the natural conséquences of his acts. 
The Jury were not to décide whether defendant's grounds were reasonable 
or not." 

[1] To a refusai to entertain and charge this request, plaintiff ex- 
cepted. The first half of it is correct as a proposition of law ; but it 
would not be error to refuse to charge it in the language of the re- 
quest, if the subject-matter had been sufficiently cçvered in the charge. 
The jury had already been instructed that if, whén défendant ordered 
and received the drafts, he had no présent means of paying for them, 
no reasonable expectation of securing means to pay for them, and that 
he knew that he would not be able to pay for them, it is not enough 
for him to testify, generally, that he intended to pay for them. It is 
for the jury to find his intent. Also that if the jury should find as 



42 188 FBDBEAL REPORTER 

factts that défendant made the représentations charged, which he knew 
were untrue, in order to deceive plaintiff and induce it to sell him 
drafts, being utterly without means for paying plaintiff and intending 
to use the drafts without paying for them, the jury may from thèse 
facts, if found, infer fraud on defendant's part. They were also in- 
structed that: 

"The plaintiff cannot show, nor can any other person or persons show, 
to you the processes of defendant's mlnd nor the processes of anybody's mind 
In the same way that there can be shown the existence and the terms o( 
thèse drafts or pièces of paper that haVe been submitted to you. It is only 
by mference from tohat a man does that what Jie tMnTcs oan 6e determin-ed. 
* * * From this testimony as to what was done, it is for you to décide 
on your oaths what tcas the intent of défendant in domg what he did." 

This certainly seems a sufficiently full statement of the proposition 
that the jury were not to be concluded by defendant's statement of 
what he intended, but might présume what his intention was from a 
considération of what he did. It is contended that the jury should 
hâve been instructed as requested, because the court elsewhere in the 
charge said : , 

"It is, I thliik, a falr question, on the testimony of the défendant himself, 
whether this was a loan." 

This instruction was not excepted to and refers to another part of 
the case. Défendant did testify that he "considered it a loan." He 
may hâve had as little reason for this as he would hâve for consid- 
ering the transaction to be the taking eut of a policy of insurance; 
but the jury could not hâve been in any doubt that it was for them 
to détermine what the real intention was from the proved facts, ir- 
respective of defendant's protestations as to what he thought. 

[2] The last half of the request, viz,, that "the jury were not to 
décide whether defendant's grounds were reasonable or not" was not 
a correct statement of the law of the case; on the contrary, if the 
jury were satisfied that the grounds for defendant's asserted behef 
that he could pay for the bills when delivered were wholly unreason- 
able artd without any rational foundation, they were warranted in 
finding a verdict for the plaintiff. 

We find no error. The judgment is affirmed. 



UNITED STATES v. ATLANTIC TRANSPORT 00. 

(Circuit Court of Appeals, Second Circuit May 8, 1911.) 

No. 253. 

1. AxjENs (§ 54%,* New, vol. 12, Key No. Séries) — Immigeation Acts— Con- 
struction^"Seamén." 

Horsemen, signed for service on a vessel in carlng for horses during a 
voyage, are "seamen," for the purpose of detennlning the application to 
them of the immigration acts. 

[Ed. Note. — For other définitions, see Words and Phrases, vol. 7, pp. 
6374, 6375.] 

•For other cases see same topio & § numbbk In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. ATLANTIC TRANSPORT CO. 43 

2. Aliens (§ MVs,* New, vol. 12, Key No. Séries) — Construction or Immi- 

GBATION ACT— HEAD TaX— SEAMEN. 

Immigration Act Feb. 20, 1907, c. 1134, I 1, 34 Stat. 898 (U. S. Comp. 
St. Supp. 1909, p. 447), whlch requires the levy and collection of a head 
tax of $4 "for every alien entering the United States," sucli tax to be 
pald by the master, agent, owner, or consignée of the vessel or trans- 
portation Une, applies to seamen who are signed by a vessel for a voyage 
to a port of the United States, but not for the return voyage, and who, 
in aceordanee with the contract and intention of the parties, are dis- 
charged on the arrivai of the vessel and enter the United States. 

Ward, Circuit Judge, dissenting. 

In Error to the District Court of the United States for the South- 
ern District of New York. 

Action at law by the United States against the Atlantic Transport 
Company. Judgment for défendant, and the United States brings 
error. Reversed. 

This cause cornes hère upon appeal from a judgment sustaining demurrer 
to the complaint in an action brought by the United States to collect from 
défendant head tax levied by the coUector of the port of New York, under 
the provisions of section 1 of the immigration act of February 20, 1907, on 
three persons whom défendant brought hère on its steamshlp MInneapolls. 
The persons in question are allons. They were employed on the ship in the 
capacity of "horsemen"; that is, "to care for herses carried upon said ship 
on sai3 voyage." They were pald regular wages and signed on the ship's 
articles for the voyage to the United States, but not for the return voyage. 
Upon arrivai they were duly discharged by the captain, and entered the 
United States with hls knowledge and consent, and hâve not since returned 
to the ship. The collector levied upon défendant a tax of $4 for each of them. 
Payment thereof has been demanded and refused. 

Henry A. Wise, U. S. Atty., and A. S. Pratt, Asst. U. S. Atty. 
Burlingham, Montgomery & Beecher (W. S. Montgomery, of coun- 
sel), for défendant in error. 

Before LACOMBE, WARD, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge. [1] Thèse "horsemen," like ail others 
who sign a ship's articles for a voyage or succession of voyages, being 
part of the ship's company, may be considered as seamen, so far as 
the immigration acts are concerned. 

Section 1 of the act of February 20, 1907, provides: 

"That there shall be levied, coUeeted and paid a tax of four dollars for 
every allen entering the United States. The said tax shall be paid to the 
collector of customs of the port or customs district to which said allen shall 
corne, * * * by the master, agent, owner or consignée of the vessel, 
trausportation Une or other conveyance or vehicle bringing such allen to the 
United States. * * * The tax imposed by this section shall be a lien upon 
the vessel * * * and shall be a debt in favor of the United States against 
the owner or owners of such vessel," etc. 

Earlier statutes had imposed a head tax "for each and every pas- 
senger not a citizen of the United States Avho shall come by steam or 
sail vessel from a foreign port to any port within the United States." 
Act Aug. 3, 1882, c. 376, 22 Stat. 214 (U. S. Comp. St. 1901, p. 1288) ; 
Act Aug. 18, 1894, c. 301, 28. Stat. 391 (U. S. Comp. St. 1901, p. 

•For other cases see same topic & i numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



H 188 FEDERAL EEPOETBR 

2459); Act March 3, 1903, c. 1012, 32 Stat. 1213. The suggestive 
changes made by the later statute are the imposition of the tax upon 
ail aliens, whether they corne hère as "passengers" or not, and the 
substitution for the phrase "corne by yessel from a foreign port to 
any port within the United States" of the phrase "entering the United 
States." A person may properly be said to "come to" this port if he 
arrives hère in a vessel, even though he intends to remain on board 
and départ with the vessel when she sails ; but the phrase "entering 
the United States" would seem to signify a permanent séparation 
from the vessel. 

[2] Aliens who arrive hère as did the three referred to in the com- 
plaint, themselves and the master of the vessel both intending that 
upon arrivai they shall sever their connection with the vessel and 
enter the United States, are certainly within the enumeration of sec- 
tion 1, supra. The sole contention of the défendant is that alien sea- 
men are not within the immigration act for any purpose. 

In a former décision (Taylor v. U. S., 152 Féd. 1, 81 C. C. A. 197) 
we discussed the successive immigration acts at some length and set 
forth the reasons why a majority of this court were of the opinion 
that ail alien seamen were included in its provisions. That case went 
to the Suprême Court on certiorari, and it was there contended that 
the act of 1903 and its several provisions were not intended to apply 
to bona fiide seamen. The alien seaman in that case had signed for 
the return voyage, and it was the intention of the master that he 
should remain on the ship and sail with her. The section (18) under 
considération was one making it the duty of owners and officers of 
vessels "bringing any alien to the United States to prevent the landing 
of such alien at any time or place other than such as the immigration 
officers might designate." The alien seaman had deserted while the 
ship lay at her wharf, which was not such a designated place, and the 
master was prosecuted for violation of section 18. The Suprême 
Court did not sustain the contention of the plaintifï in error. Ail that 
it held was that section 18 did "not apply to the ordinary case of a 
sailor deserting while on shore leave." The court said: 

"The section does not apply to sailors carrled to an American port with a 
bona flde Intent to take tïïem ont again when the ship goes on, when not 
only was there no ground for supposing that they were making the voyage 
a pretext to get hère, désert, and get in, but there Is no évidence that they 
were dolng so In fact. Wtiether this resuit Is reached by the interprétation 
of the words (in section 18) tringlng an alien to the United States' that has 
been suggested, or on the ground that the statute cannot hâve intended to 
apply to the ordinary and necessary landlng of seamen, even If the words 
of the section embrace it, as in Church of the Holy Trlnity v. United States, 
143 U. S. 457, 12 Sup. Ct. 511, 36 D. Ed. 226, does not matter for this case." 

In the subséquent case which was before this court (U. S. v. In- 
ternational Mercantile Marine Co., 171 Fed._ 841, 96 C. C. A. 420), 
the alien was a seaman who had sîgned articles for the round voy- 
age, hère and return, and had deserted while the vessel was in this 

P^'"*- . . . ( 

There being no question hère of any désertion, but a conceded in- 
tention of ail parties that on arrivai he should leave the ship perma- 



UNITED STATES V. ATLANTIC TRANSPORT CO. 45 

nently and enter the United States, the case is not within the excep- 
tion declared by the Suprême Court, and tiie provisions of section 
1 of the act of 1907 apply. 
The judgment is reversed. 

WARD, Circuit Judge (dissenting). If the substitution of the word 
"alien," in the first section of the act of February 20, 1907, for the 
word "passenger," used in the former acts, were the only change made 
in the îaw, the argument founded on it would be stronger. But the 
Word "alien" was substituted throughout the act for the words "ahen 
immigrants" or "immigrants" used in former laws. The horsemen in 
question were seamen on the British steamship Minneapolis. This 
would be so by statute as to American vessels (Rev. Stat. U. S. 4612 
[U. S. Comp. St. 1901, p. 3120] ; see, also, The Mjnna [D. C] 11 Fed 
759), and is so as to British vessels by chapter 60, 57 & 58 Vict. 742. 
There is no évidence that they were shipped for the purpose of evad- 
ing the immigration Iaw. Though it happens that the persons now 
under considération are horsemen and the particular provision of the 
immigration Iaw involved is the head tax, it seems to me to follow 
from the décision that ail alien seamen who are paid ofï under their 
articles in this country fall within the définition of aliens throughout 
the immigration Iaw. The word literally covers seamen, but I can- 
not believe it was the intention of Congress to include them. Holy 
Trinity Church v. United States, 143 U. S. 457, 12 Sup. Ct. 511, 36 
L. Ed. 226. They belong to an ambulatory class. There is no pre- 
sumption that when they are paid oiï hère they will stay hère. If 
there be any presumption, it is to the contrary — that .they will continue 
to follow their calling on the sea. The complaint does not charge that 
the seamen in question intended to remain in the United States, al- 
though they were paid ofï. Rule 22, subd. "d," of the Bureau of Im- 
migration and Naturalization, enacted after the passage of the présent 
Iaw, provides that no head tax is due on such seamen. It is as fol- 
lows : 

"Head tax shall not be assessed on account of bona flde seamen landing in 
the pursult of their calling. On account of such as are discharged with the 
Intent to remain in the United States, and on account of those who are found 
or shown to hâve deserted and remalned in the United States, the head tas 
shall be assessed." 

It is true that the cases of Taylor v. United States, 207 U. S. 120, 
28 Sup. Ct. 53, 52 L. Ed. 130, and United States v. International Mer- 
cantile Marine Co., 171 F. 841, 96 C. C. A. 420, concerned deserting 
seamen; but it does not necessarily follow from what was said in 
them that seamen who are paid off at the termination of their agree- 
ments hère must be held to be within the immigration Iaw. 

For thèse reasons, I feel compelled to dissent from the opinion of 
the court. 



46 188 FEDERAL EEPORTBB 

THE NASSAU. 

(Circuit CJourt of Appeals, Second Circuit May 8, 1911.) 

No. 241. 

1. Feebies (§ 29*) — REGULATION— Statute Peohibiting Cabriage or Dan- 

GERous Articles on "Steamer." 

A steam ferryboat carrying passengers is a "steamer," and subject to 
the provisions of Rev. St. § 4472 (U. S. Comp. St. 1901, p. 3050), wtiicli 
prohibits any steamer carrying passengers from carrying certain danger- 
ous articles as freight or stores. 

[Ed. Note. — For other cases, see Ferries, Cent. Dig. § 76; Dec. Dig. § 
29.* 

For other définitions, see Words and Phrases, vol. 7, p. 6655.] 

2. WoEDs AND Phrases— "Freight." 

The Word "freight" has two meanlngs, belng used to dénote the com- 
pensation pald to a carrier of goods and also the property earrled. 

[Ed. Note. — For other définitions, see Words and Phrases, vol. 4, pp. 
2973-2976.] 

S. Ferries (§ 29*) — Régulation— Statdte Peohibiting Carhiage dp Dan- 
gerous Articles. 

A ferryboat plylng between Manhattan and Broolilyn, carrying both 
passengers and vehicles, and charglng différent rates for loaded and 
empty vehicles, transported a truek loaded wlth barrels of lierosene of 
such grade that it v?ould net Ignite at a température of 110 degrees Fah- 
renheit. Held, that such carriage was a violation of Rev. St. § 4472, as 
amended by Act Feb. 27, 1877, c. 69, § 1, 19 Stat. 252 (U. S. Comp. St. 
1901, p. 3050), and by Act March 3, 1905, c. 1457, § 8, 33 Stat. 1031 (U. S. 
Comp. St. Supp. 1909, p. 1117), which prohibits steamers carrying passen- 
gers from carrying such article as freight, except "upon routes where 
there Is no othqr practlcable mode of transportlng it." 

[Ed. Note. — For other cases, see Ferries, Cent. Dig. § 76; Dec. Dig. § 
29.*] 

4. Ferries (§ 27*) — Power to Regulate on Navigable Watebs— Fédéral 
Statutes. 

Tt Is wlthln the maritime powers of Congress to Impose régulations 
on steam ferryboats for the protection of thelr passengers and crews, 
although they are operated whoUy wlthln a state, where they navlgate 
waters of the United States whlch are common hlghvvays of commerce. 

[Ed. Note. — For other cases, see Ferries, Cent. Dig. § 74 ; , Dec. Dig. § 
27.*] 

Appeal from the District Court of the United States for the Eastem 
District of New York. 

Proceeding in admiralty by the United States against the ferryboat 
Nassau; the City of New York, claimant. Decree for respondent 
(182 Fed. 696), and the United States appeals. Reversed. 

This cause cornes hère upon appeal from a decree dismissing a libel 
fîled by the United States for a violation of section 4472, Rev. Stat. 
U. S. (U. S. Comp. St. 1901, p. 3050) which provides, amongst 
other things, thàt: 

"No loose hay, loose cotton or loose hemp, camphene, nitroglycérine, naph- 
tha, benzine, benzole, coal oll, crude or refined. petroleum or other explosive 
burning flulds or Uke dangerous articles, shall be carried as freight or used as 
stores on any steamer carrying passengers. * * * Refined petroleum 

•For other cases see same toplo & § numbbr in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



THE NASSAU • 47 

wWeh will not îgnlte at a température of less than 110 degrees of Fahren- 
heit thermometer may be carried on board such steamers upon routes where 
there ia no other practicable mode of transporting it, and under such régu- 
lations as shall be prescribed by the board of supervising Inspectors with the 
approval of the Secretary of Commerce and Labor." 

This section was amended in 1905 (Act March 3, 1905, c. 1457, § 8, 
33 Stat. 1031 [U. S. Comp. St. Supp. 1909, p. 1117]) by the addition 
of the following clause : 

"Nothing in the foregoing or following sections of this act shall prohibit 
the transportation of gasoline or any of the products of petroleum when car- 
ried by motor vehicles (commonly known as automobiles) using the same as 
a source of motive power. Provlded, however, that ail lire, if any, in such 
vehicles or automobiles be extinguished Immediately after entering the said 
vessel, and that the same be not relighted until immediately before said 
vehicle shall leave the vessel." 

It does not appear that the board of supervising inspectors hâve 
made any régulations covering the particular transportation with which 
this case is concerned. 

William J. Youngs, U. S. Atty. (W. A. Moore, Asst. U. S. Atty., of 
counsel), for appellant. 

Archibald R. Watson, Corp. Counsel (Théodore Connoly and G. P. 
Nicholson, of counsel), for appellee. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge (after stating the facts as above). The 
claimant appellee opérâtes a ferry from the foot of Whitehall street, 
Manhattan, to the foot of Thirty-Ninth street, Brooklyn, and owns the 
steam ferryboat Nassau, which is used in the ferry service. Farc is 
charged those using the ferryboats, the rate varying with the use made 
— so much for a foot passenger, so much for vehicles of specified 
kinds and sizes, différent rates being charged for loaded and for empty 
vehicles, and varying also with the number of horses drawing such 
vehicles. There are also specified rates for automobiles, for led horses 
or cattle, etc. On March 6, 1909, while on one of her daily trips with 
25 passengers aboard, the Nassau carrier a truck, with driver, which 
contained 10 barrels of refined petroleum which would not ignite at 
a température of 110 degrees Fahrenheit. 

The single question presented is whether this was a violation of 
the section quoted. 

[1] The Nassau, being a vessel propelled in whole by steam, is man- 
ifestly a steam vessel, or "steamer." The circumstance that it is, as 
défendant suggests, what is commonly known as the "double-end type 
of steamboat," or that it bas no hold or underdeck, does not make it 
any less a steamer or steamboat. It belongs, however, to the particu- 
lar class of steamers which are known as "ferryboats," and it is con- 
tended that, although Congress used the comprehensive word "steam- 
er," it did not intend to include this particular class of steamers. Con- 
sidering the manifest object of the act, which seeks to secure the 
safety of passengers on steamers, there is no apparent reason why 
this particular class should hâve been excluded. Passengers on a steam 



48 .188 FEDERAL KIÏPORTBB 

ferryboat, which is carrying such things as camphene, naphtha, nîtro- 
■ glycérine and the others enumerated, are apparently as much exposed 
to risk and as much entitled to protection as if the steamer were going 
a few miles up the Hudson river or down the Sound. Nor is it im- 
portant that, when discussing various rights and duties, courts hâve 
frequently referred to ferryboats as "substantially a continuance of 
the public highway." They are steamers carrying passengers just the 
■ same. 

[2, 3] It is next contended that the statute does not apply to steam 
ferryboats, because it is, by its terms restricted to steamers on which 
the enumerated articles are "carried as freight," it being argued that 
the truck load of petroleum was not so carried. Many authorities are 
cited on the brief ; but upon examination they are ail found to relate 
to the Word "freight," when used to indicate the compensation paid 
for the service rendered. That word, however, has another meaning. 
It includes the articles carried, as well as the compensation paid for 
carrying them. Whether the money paid for the transportation is 
called "freight," or "toll," or "fare," or what not, articles belonging 
to one person which are transported by another person for pay, on a 
vessel owned by him or- it, are properly described by the phrase "arti- 
cles carried as freight." Undoubtedly thèse barrels of petroleum were 
carried for pay. The rate of fare charged for an empty truck was 
mcreased, because the barrels were on the truck. Moreover, the 
intent of Congress not to exclude ferryboats from the class "any 
steamers carrying passengers" is quite clearly indicated by the amend- 
ment of 1905. This amendmcnt itself amended an earlier amendment 
of 1901 (Act Feb. 20, 1901, c. 386, 31 Stat. 799 [U. S. Comp. St. 1901, 
p. 3050]), also relating to automobiles. The first amendment pro- 
vided that ail fire in such vehicles must be extinguished before entering 
the steam vessel and not relighted until after leaving the vessel. In 
conséquence they would hâve to be hauled on board and hauled off, a 
matter of much inconvenience, if the steam vessel were a ferryboat, 
but immaterial if automobiles were being shipped for long distances 
by other steam vessels. If Congress had not intended by the original 
statute to keep gasoline and similar d^ngerous explosives off steam 
ferryboats carrying passengers, it would not hâve found it necessary 
to amend the statute twice in order to except gasoline when carried 
by motor vehicles. 

The évidence does not show that there was, in the language of the 
statute, "no other practicable mode of transporting" the ten barrels of 
refined petroleum. Manifestly the -truck carrying them could hâve 
been driven over one of the bridges to Brooklyn, or they could hâve 
been transported by some vessel not carrying passengers. Such modes 
of transportation would merely hâve been more inconvénient and ex- 
pensive. 

[4] It is further contended that the maritime powers of Congress 
do not apply to ferryboats not engaged in interstate commerce, al- 
though they are steam vessels navigating waters of the United States 
which are common highways of commerce, and the législation is pri- 
marily for the purpose of protecting their passengers and crews. On 



THE MEKEILL 0. HAET 49 

this branch of the case we concur with the District Judge.în the con- 
clusion that the contention is unsound, and do not think it necessary to 
add anything to his discussion. 

Since, however, we do not concur in his conclusion that Congress 
did not intend to compel f erryboats to adopt the précautions with rela- 
tion to the carriage of gasoline, petroleum, etc., which tney required 
of other steam vessels carrying passengers, the judgment is reversed, 
and cause remanded, with instructions to decree in conformity with 
the views expressed in this opinion. 



THE MERRILL O. HART. THE A. C. OHBNET. THE SEilINOLB. 
(Circuit Court of Appeals, Second Circuit. May 8, 1911.) 

Nos. 242-244. 

1. CoiLisioN (I 75*) — LtQHTS— Sailing Vessels in Tow Alongside. 

Rule 11 of the pilot rules, relatlng to tlie llghts to be carried by barges 
and canal boats when towed alongside, does not apply to saillug vessels, 
which are governed by article 5 of the statutory rules for rivers aud 
harbors, in Act June 7, 1S97, c. 4, § 1, 30 Stat. 97 (U. S. Comp. St. 1901, 
p. 2877), which requires them to carry the régulation colored side lights. 

[Ed. Note. — For other cases, see Collision, Cent. Dig. §§ 105-121; Dec 
Dig. § 75.*] 

2. Collision (§ 95*) — Yacht and Stationabt Tua with Tow Alongside— 

Lights. 

A collision near the center of the North River, about opposite Thlrty- 
Second street, in the evenlng, between a yacht going down at a speed of 
about 12 knots and a tug and a schooner In tow on her starboard side. 
which were statlonary, held due to the fault of ail three vessels; the 
yacht belng in fault for navigating without due eare and for eotning too 
close to the other vessels, which sUe supposed she was overtaking, with- 
out signaling, and the tug and tow because of the failure of the schooner 
to carry the side lights required by the rules. which misled the yacht, 
and the lights of the tug being ohscured by the schooner and her deck 
load. 

[Ed. Note.--For other cases, see Collision, Cent. Dig. §§ 200-202; Dec 
Dig. § 95.*] 

Appeals from the District Court of the United States for the South- 
ern District of New York. 

Suits in admiralty for collision by John N. Robins, owner of the 
yacht Seminole, against the schooner Merrill C. Hart, Richard Dunn 
and others, claimants, and the steam tug A. C. Cheney, the Cornell 
Steamboat Company, claimant, and cross-libels by claimants of the 
Hart and Cheney against the Seminole. Decree against ail three ves- 
sels, and cross-libelants appeal. Affirmed. 

The controversies arose from a collision of the steam yacht Semi- 
nole with the schooner Merrill C. Hart and the tug A. C. Cheney. 
which had the schooner in tow. The collision occurred about 9:30 
p. m. on August 5, 1907, near the center of the North River and about 
off Thirty-Second street, New York. The court below held ail three 
vessels at fault and entered decrees accordingly. Appeals were taken 

•For other cases see same topic & § numbbe in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
188 F.— 4 



50 188 FEDERAL EEPORTEB 

by the claîmants of tug and schooner. The opinion of the District 
Judge will be found in 162 Fed. 371. 

Ainos Van Etten, for appellant Cornell Steamboat Co. 
James Forrester, for appellants Dunn and others. 
C. S. Haight, for appellee. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge (after stating the facts as above). [1] 
The opinion of the District Judge fully sets forth the détails of the 
pleadings and the évidence. They need not be repeated hère. The 
Cheney took the Hart in tow from anchorage at a place within an- 
chorage limits somewhat above a point opposite Fourteenth street, then 
went down river a little, turning to the eastward below a stakeboat, the 
North. She had the schooner on her starboard side, and continued 
on a turning course till they again reached the anchorage grounds at 
a point not far from another stakeboat, the Eurêka, where it was in- 
tended to make up the fiotilla of which the Hart would form a part. 
At that time the tugboat Cordts Vi^ith a long tovsr was maneuvering 
near the Eurêka preparatory to turning and proceeding up the river. 
To give the Cordts time to move out of the v/ay, the Cheney stopped 
in the water and waited several minutes — apparently at least 10 min- 
utes. She and the Hart were then heading towards the Jersey shore, 
about N. W. Either while they were still lying there, or just as they 
started to move forward behind the Cordts' tow, then under way, 
the Seminole came into collision with the starboard bow of the Hart, 
and thereafter with the Cheney. The Seminole had corne down the 
river from Nyack, had passed to the eastward of some war vessels 
at anchor oflf the lower part of Riverside Drive, and had then crossed 
over to the westward, with the intention of keeping on down the 
right-hand side of the channel. When about Fiftieth street she saw 
a vessel with two staff lights (the Cheney), but no other lights exhib- 
ited. As she drew nearer she assumed the vessel exhibiting thèse 
lights was a tug with a tow bound in her own direction, down the 
river. When she was very close, apparently this vessel turned across 
the course of the Seminole, which was expecting to overtake and pass 
her on the Seminole's port side. In reality the Cheney and Hart made 
no such tum, having, during the time the Seminole was coming diago- 
nally down from a position off Fiftieth street, been lying with their 
starboard side turned towards her. No one on the Hart or the Cheney 
seems to hâve discovered the présence of the Seminole till she was 
almost in collision with them. 

The Cheney's side lights were set and burning. The Hart had a 
white light in her rigging while at anchor, which she took down when 
picked up by the Cheney. Her sidelights were not lit at any time be- 
fore collision. The District Judgé held her in fault for not exhibiting 
them, and held the Cheney in fault for not seeing to it that she did so. 
Frorn this décision the claimants of thèse two vessels appeal. 

Article 5 of the rules enacted by Congress provides that: 

"Sailing vessels under way or being towed sball carry the same lights as 
ire prescribed by article 2 for a steam vessel under way, with the exception 
of the white lights mentioued thereln, which they shall never carry." 



THE MEKRILL 0. HART 51 

Article 2 provides for the régulation colored lights. Manifestly the 
Hart failed to comply with this rule. This failure is sought to be 
excused by référence to the foUowing rule of the board of supervising 
inspectors, approved by the Secretary of Commerce and Labor: 

"Barges or canal boats towed alongside a steam vessel, if on the starboard 
side of said steam vessel, shall display a white light on her own starboard bow ; 
and if on the port side of said steam vessel, shall display a white light on 
her own port bow." 

[2] Since the Hart was neither a barge nor a canal boat, she was not 
covered by the provisions of this rule. We cannot find that her failure 
to comply with article 5 did not in any way contribute to the collision. 
On the contrary, we think it was one of the direct causes thereof. 
The schooner had a deck load about eight feet high. Including her 
freeboard and her furled sails, she formed an obstruction which ef- 
fectually shut off the tug's starboard light from the view of vessels 
approaching on her starboard side. We do not doubt that if the 
schooner had displayed her green light, as the article required, the 
Seminole would hâve discovered that she and the Cheney were head- 
ing across the Seminole's course, instead of downstream, long before 
she did, and may assume that her navigation would hâve been modi- 
fied accordingly. We concur, therefore, with the District Judge in the 
conclusion that the Hart was in fault for not displaying her colored 
lights, and that the Cheney was in fault for not directing her to do 
so. It was the master of the Cheney who ordered the Hart to take 
the white anchor light out of the rigging and put it on the starboard 
bow. 

Without considering the other charges of fault against the Seminole, 
which the District Judge sustained, we fully concur in this excerpt 
from his opinion: 

"The theory of the Seminole was that the Cheney and tow were at flrst 
bound down the river, and then suddenly changed to the westward and across 
the Seminole's bow, thns bringing about the collision. The Seminole's man- 
euvers, however, were not in conformity with such a theory. If the Seminole 
was an overtaking vessel and desired to pass, it was her duty to signal the 
Cheney and obtain an assent to such passing, but no signais were given." 

We are satisfied that, misled by the failure of tug or tow to exhibit 
the proper light, the Seminole did believe she was overtaking a vessel 
bound in her own direction. Manifestly, however, she approached so 
close to the vessel she supposed she was overtaking that a sudden 
change of course by the latter would bring about a collision. But she 
should not hâve corne so close to an overtaken vessel without signal. 
The overtaken vessel is not required to look behind before she changes 
her course, however abruptly. The rule which requires a signal from 
the overtaking vessel and assent from the other is intended to avoid 
just what, on the Seminole's theory, happened on this occasion. More- 
over, we agrée with the District Judge in the conclusion that her 
"navigation was not marked by the degree of caution that a fast vessel 
under the circumstances should hâve observed." 

The decrees are affirmed, with interest and costs. 



52 188 FEDERAL EEPOKTEE 

WILSGN et al. v. PENINSULA BARK & LUMBER CO. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,105. 

Shippinq (§ 51*) — Chaetee— Action fob Bkeach. 

Libelant chartered respondent's vessel to carry a number of cargoes of 
tlmber, to be loaded from the water alongside. Qn reporting for tlie flrst 
load the quantity on tiand was insufflcient to make a fuU cargo, owing to 
the closeness of inspection by a purcliaser from libelant. Tbe master 
flnished loading what there was on Sunday moming. Monday was a 
holiday, and libelant bad a large quantity of the timber near by wbich 
could hâve been delivered at the vessel by Tuesday moming, which was 
the next loading day under the charter, but the master refused to wait 
and sailed wlth the amount then on board, and respondent refused to re- 
tum or further carry out the charter. Held, that such action was not 
Justîfled, and was a breach of the charter, for wtilch libelant was enti- 
tled to reeover damages. 

[Ed. Note.— For other cases, see Shipping, Cent Dig. §§ 203-210; Dec. 
Dig. § 51.*] 

Appeal from the District Court of the United States for the West- 
ern District of Michigan. 

Suit in admiralty by the Peninsula Bark & Lumber Company against 
the steamer Mathew Wilson, Mathew Wilson, and others, claimants. 
Decree for libelant, and claimants appeal. Afifàrmed. 

William Carpenter, for appellants. 
E. S. B. Sutton, for appellee. 

Before KNAPPEN, Circuit Judge, and McCALL and SATER, 
District Judges, 

McCALL, District Judge. This case is hère on an appeal from the 
United States District Court for the Western District of Michigan. 
It is a proceeding in admiralty. The libelant, the Peninsula Bark & 
Lumber Company, a corporation, with its main office at Sault Ste. 
Marie, on October 2, 1908, filed its libel against the steamer Mathew 
Wilson and its owners, alleging a breach of contract and praying for 
the issuance of an attachment and for the recovery of $1,500 as dam- 
ages. Process was issued as prayed for. The libelees answered and 
filed a cross-libel. 

At the hearing much évidence was introduced. The court below 
decreed in favor of the libelant for $1,008, and dismissed the cross- 
libel, except $75 was allowed cross-libelant as demurrage for one day's 
delay while loading the vessel. Judgment in favor of libelant for the 
net amount of $997.53 and eight-tenths of its costs was rendered. 
From which decree and judgment the libelees appealed. 

The controlling facts disclosed by the testimony are substantially as 
follows : The libelant had contracted to furnish certain hemlock tim- 
bers at the government's locks in Sault Ste. Marie. It had purchased 
thèse timbers from the Worcester Company under a contract which 

•For other cases see same topic & ; nvmbbb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



WIL30N V. PENINSULA BAEK « LUMBEE CO. 53 

required the latter company to deliver the timbers to the libelant, "f. 
o. b. water, delivered alongside boat at Chassell." It was necessary 
for the libelant to transport or cause to be transported the timber f rom 
Chassell to Sault Ste. Marie for delivery. For this purpose, on July 
25, 1908, the libelees entered into the following contract with the libel- 
ant: 

"On the part of the owners of the steamer 'Mathew Wilson,' we hereby 
agrée to carry approxlmately one million feet of 12-12 hemlock timbers from 
Cliassell, Mich., to Sault Ste. Marie, Mich. ; sald timbers to be delivered on 
or before November 15, 1908. ïhe commencement of sald delivery to be at 
your eall in about ten days. 

"The priée for dellvering said tîmber to be $1.50 per M. 

"Said timber to be received in suffieient water alongside of boat, either in 
rafts or cribs, and to be delivered at Sanlt Ste. Marie on dock as far away 
from the boat as the boom will reach; you to care for the timber as soon as 
it is cast from the boom." 

The first notice that timber was ready for transportation, and the 
first call for the vessel was given and made by the charterer August 
18, 1908, as appears from the following telegram, addressed to Wil- 
liam Wilson: 

"We chartered steamer Mathew Wilson some time ago, Chassell to Soo, 
Miehigan, haul timber. No word since. Want to Isnow at once when we can 
expect It. Three loads ready. Wlre answer." 

In response to this call, the vessel àrrived at Chassell on Thursday, 
September 3d. After the hold was filled with certain lumber destined 
to Muskegon, which the vessel was at the time also engaged in trans- 
pbrting, they proceeded on Friday, September 4th, in the afternoon 
to load the hemlock timbers on the deck of the vessel. The notice of 
August 18th stated that the charterer had "three loads ready" yet 
because of the close inspection made by the représentative of the gov- 
ernment as the timbers were being put aboard the vessel, and perhaps 
from some other causes not important, it resulted that there were only 
about 153,000 feet of timber then actually at Chassell ready for trans- 
portation. The timbers were put aboard Friday afternoon, Saturday, 
and Sunday morning up to 9 o'clock. A short time thereafter, and 
without demanding any additional timber to complète the cargo, the 
vessel sailed for the Sault. 

In point of f act, there were no other available timbers in the wa- 
ter at Chassell; but at Lake Linden and Baraga, some miles away, 
there were large quantîties of hemlock timber ready to be delivered by 
the Worcester Company to libelant at Chassell, and to be transported 
thence by the libelees to Sault Ste. Marie under the contract in ques- 
tion. The owners did not on their own motion send the vessel back 
to Chassell for any more of the hemlock timber, and refused to do so 
when again called by the charterer. 

The cause assigned for this course of conduct is in substance that 
the vessel, when first called by libelant and notified that three loads 
were ready, responded and on arrivai at Chassell found only a small 
portion of that amount of timber ready, and, because the libelant failed 
to f urnish suffieient timber, it was compelled to sail with a short cargo. 



54 188 FEDERAL EEPORTEB 

greatly to îts damage, that this was a breach of the contract on the 
part of the libelant, and that it was therefore relieved from further 
performance thereunder, and was justified in canceling the charter. 

The libelant, upon the other hand, insists that it had more than 
enough timber at Chassell to make a full cargo when the Wilson ar- 
rived, but that by reason of the close inspection made thereof a greater 
par cent, of it was rejected than it had any reason to anticipate. That 
it had large quantîtles of the timber at Baraga and Lake Linden, a 
few miles away, and had the captain of the Wilson demanded addi- 
tional cargo, whe?î it was apparent that there was not enough at Chas- 
sell for the purposx, it could hâve put alongside the vessel within a 
few hours timbers in quantity more than sufficient to hâve completed 
the cargo, and that too by the time that it could hâve been legally re- 
quired so to do. 

This is based upon the facts that the Wilson finished loading on 
Sunday morning, and the Monday following was a légal holiday, and 
therefore the captain of the vessel could not of right hâve demanded 
more timber to be loaded earlier than Tuesday morning, and that, be- 
fore that time arrived, libelant could and would hâve had timbers 
alongside the vessel more than enough to hâve completed the cargo, if 
more cargo had been demanded. This, in brief, présents the conten- 
tions of the parties. It would be useless to review hère the testimony 
of the witnesses. We are satisfipd with the conclusion reached by the 
trial judge. Whether or not it was determined not to return to Chas- 
sell for the remainder of the timber at the time the vessel sailed, or on 
or after its arrivai at the Soo, sure it is that the shortness of cargo was 
the excuse for such détermination. Under the contract and facts in 
this case, we are of the opinion that that was not sufficient to reheve 
libelees from their obligation under the charter party. 

The charterer was only obligated to put the timber alongside the 
vessel for loading. This could not be done until the vessel was at 
Chassell. That there were no more timbers in sight on the Sunday 
morning when the Wilson sailed with a short cargo did not warrant 
the conclusion that the charterer would not hâve had timber alongside 
ready for loading on Tuesday morning, the earliest time that the cap- 
tain of the Wilson could hâve legally demanded that more timber be 
placed alongside to complète the cargo. 

Had he desired more cargo, he should hâve waited at Chassell un- 
til Tuesday morning. That he sailed with a short cargo rather than 
waît until the time when he could legally demand timber to complète 
his cargo (although he might be entitled to relief in a proper proceed- 
ing) did not warrant him either in refusing to return to Chassell for 
the remainder of the timbef when called upon to do so, if called within 
the life of the contract, or to cancel the charter. 

We do not interpret the correspondence as containing demand by 
libelant that the vessel go to Lake Linden for cargo. 

There are otlier questions raised and discussed in this record, but 
we deem them unimportant. 

The decree of the court below will be affirmed, with costs. 



& W. E. 00. 55 

ROYCE V. DEIjAWARE, L. & W. R. CO. 

(Circuit Court of Appeals, Second Circuit May 25, 1911.) 

No. 275. 

1, Masteb and Servant (§ 286*) — Action foe Injubt to Servant— Ques- 

tions FOB JUEY. 

A rule of défendant railroad company required conductors to report 
at once to the superintendent any Injury to or defects in engine or cars, 
but sucli rule was not observed; the report being made instead to the 
chlef train dispatcher, who gave orders in place of the superintendent. 
A crosshead guide on one side of an engine was lost en route. The con- 
ductor reported the fact to the dispatcher, and asked for a pusher, which 
was sent, and the train proceeded with the disabled engine. ïhat side 
could hâve been disconnected, but was not, and the driving rod became 
dlsconnected, and struck the cab, in which plalntifC, who was a brake- 
man, was rlding, and he was injured. Belâ that, the defect having been 
reported in aceordance with the recognized practiee, the responsibillty of 
proceeding with the disabled engine, without disconnecting it, was that of 
défendant, those in charge, whether the dispatcher or the conductor and 
englneer, belng its représentatives as master, and that whether reason- 
able care was exercised in so dolng was a question for the jury. 

FEd. Note. — For other cases, see Master and Servant, Cent. Dig. |§ 
1010-1050 ; Dec. Dlg. § 286.*] 

2. Master and Servant (% 289*) — Action for Injubt to Servant— Ques- 

tions FOR JUEY— CoNTKIBUTORT NEGLIGENCE. 

In an action by a brakeman to recover for an injury reeelved whlle he 
was ridlng in the cab of the engine, whether he was there in violation of 
a rule which required him to be on top of the cars at the time în the 
course of his duty, and, if so, whether hls belng there was contrlbutory 
négligence, were questions for the jury. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 
1089-1132 ; Dec. Dig. § 289.*] 

In Error to the Circuit Court of the United States for the South- 
ern District of New York., 

Action at law by Joseph M. Royce against the Delaware, Lacka- 
wanna & Western Railroad Company. Judgment for défendant, and 
plaintifï brings error. Reversed. 

See, also, 180 Fed. 879. 

Hatch & Clute ( Edward S. Hatch and Vincent P. Donihee, of coun- 
sel), for plainti'ff in error. 

Frederick W. Thomson, for défendant in error. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

WARD, Circuit Judge. [1] This is a writ of error to a judgment 
on a verdict directed by the court in favor of the défendant. 180 Fed. 
879. On a former writ we reversed the judgment entered on a ver- 
dict of a jury in favor of the plaintiff, because we found no négli- 
gence on the defendant's part as master. 176 Fed. 331. It had pre- 
scribed reasonable rules, which required conductors to report defects 
in cars or engines to the superintendent. But the conductor, who was 
the plaintifï's fellow servant, reported to the chief train dispatcher, 

•For other cases see same topic & § numbbb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



56 188 FBDBEAL EBPOBTBB 

asking merely for a pusher to help the train in, whîch was sent. The 
chief train dispatcher's duties under the rules concerned only the 
movement of trains and distribution of cars. Therefore we held that 
the master, having no notice whatever of the accident en route to an 
engine which started out after sufficient inspection, was net guilty of 
any failure of duty to the plaintiff in respect to it. That was the 
ground of the décision. On this trial, however, the plaintiff proved 
that the rule requiring such defects to be reported to the superintend- 
ent was never observed. It was the practice, on the contrary, to re- 
port to the chief train dispatcher, who, by the regular course of busi- 
ness, whether he consulted him or not, acted in the place of the su- 
perintendent. Accordingly the situation now is as if the défendant 
had allowed the engine to start on a trip in a disabled condition, or 
as if the superintendent himself had donc en route exactly what the 
conductor and engineer did. It was therefore clearly for the jury to 
say whether letting the disabled engine proceed with the train was 
reasonable care on the part of the défendant as master or on the part 
of those who stood in its place. It is no défense that the chief train 
dispatcher, when acting for the superintendent as alter ego of the 
master, may hâve supposed that the engineer had disconnected the dis- 
abled side of the engine, because the failure to do so, if négligence, 
would be the négligence of the défendant as master, and not the nég- 
ligence of the engineer as the plaintiff's fellow servant. 

[2] It is sought to sustain the judgment on the ground that the 
plaintiff should not hâve been in the cab of the engine at the time of 
the accident, but should hâve been on the top of the cars, as required 
by rule 17, which reads : 

"17. Tralmnen must be on top of train golng In and out of yards, nearing 
rallroad crossings at grade, drawbridges, water stations, and on descending 
grades where, If air brakes fail, tlie engineer may not be able to eontrol the 
train. Upon "heavy aseending grades trainmen must be careful to prevent 
detached portions from runnlng back, In case of ■ train parting, by prompt ap- 
plication of hand brakes." 

It is a matter of dispute whether the train was going into the yard 
when the accident occurred, and the plaintiff testifies that he was at 
the time just leaving the cab to go on the cars. Thèse were questions 
of fact for the jury, and so, to state it most favorably for the défend- 
ant, we think it was for them to say whether, if he did fail to obey 
rule 17, such failure was contributory négligence. The plaintiff's be- 
ing in the cab at the time of the accident, though a necessary condition 
of his injuries, had nothing whatever to do with them causally. Rule 
17 was not prescribed with référence to the cab as a dangerous place, 
or for the plaintiff's safety. On the contrary, he had a right to be 
there, except when rule 17 required him, for purposes in no way con- 
nected with the engine or cab, to be on the top of the cars. 

The judgment is reversed, with costs. 



WESTERN BANK NOTE & ENGBAVING CO. V. SLENTZ 57 

WERTERN BANK NOTE & ENGRAVING CO. v. SLENTZ. 

(Circuit Court of Appeals, Third Circuit. June 13, 1911.1 

No. 18. 

1. Appeal and Errob (§ 1178*) — Reversai,— Foem of Mandate. 

Where a judgmeut entered non obstante veredlcto under the Pennsyl- 
vania practice is reversed by the appellate court, ttiat court bas power, 
on an alternative request by the défendant in error, to grant a new 
trial, whereby resort to a second writ of error may be avoided. 

[Ed. Note. — For other cases, see Appeal and Error, Cent Dig. §§ 4604- 
4620; Dec. Dig. § 1178.*] 

2. Appeal and Erbob (§ 1053*) — Review— Habmless Erkoe. 

ïhe admission ot testimony, vfliich was clearly made Immaterial by 
the charge of the court, was not réversible error. 

[Ed. Note. — For other cases, see Appeal and Error, Cent Dig. §§ 4178- 
4184; Dec. Dig. § 1053.*] 

3. Appeal and Ebbob (§ 1058*) — Beview— Harmless Eeeoe. 

The overruling of an objection to testimony, if error, was wlthout préj- 
udice, where the witness had twice before testlfled to the same thing 
without objection. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4195- 
4206; Dec. Dig. § 1058.*] 

In Error to the Circuit Court of the United States for the Western 
District of Pennsylvania. 

Action at law by Andrew Slentz against the Western Bank Note 
& Engraving Company. Judgment for plaintiff, and défendant brings 
error. Affirmed. 

See, also, 180 Fed. 389, 103 C. C. A. 535. 

Reed, Smith, Shaw & Beal and Edwin W. Smith, for plaintifï in 
error. 

T. M. & R. P. Marshall, Oliver K. Eaton, and Meredith R. Mar- 
shall, for défendant in error. 

Before BUFFINGTON and LANNING, Circuit Judges, and Mc- 
PHERSON, District Judge. 

BUFFINGTON, Circuit Judge. In the court below Andrew Slentz, 
a citizen of Pennsylvania, brought suit and recovered a verdict against 
the Western Bank Note & Engraving Company, a corporation of 
Illinois, for damages sustained by him through its négligence in oper- 
ating an elevator. Thereupon the défendant, in accordance with the 
Pennsylvania statute of April 22, 1905 (P. L. 286), moved the court 
to enter judgment in its favor non obstante veredicto. This motion 
was subsequently granted, and to the entry of judgment the pîaintiïï 
sued out a writ of error to this court. Thereafter this court, in an 
opinion reported at 180 Fed. 389, reversed the lower court and issued 
its mandate, directing that— 

"judgment be entered for the plaintiff In accordance with the verdict ren- 
dered by the jury, and that the said plaintiff in error, Andrew Slentz, re- 

•For other cases see same topic & § numbeb In Dec. & Ara. Dlgs. 1907 to date, & Rep'r Indexes 



58 188 FEDERAL EEPOETEB 

cover agalnst the sald défendant In error, the Western Bank Note Company, 
the sum of $183.90 for hls costs berein expended and bave exécution there- 
for." 

In accordance with said mandate the lower court entered said judg- 
ment. Later the défendant sued out a writ of error, on which it as- 
signa for error the ruling of the court in admitting over its objection 
certain testimony on behalf of the plaintiff. 

[1] When it reversed this case on the former writ of error, this 
court had power, on an alternative request in this court, as indicated. 
by the Suprême Court of Pennsylvania in Hughes v. Miller, 192 Pa. 
368, 43 Atl. 976, to direct a new trial. This practice commends it- 
self to our judgment, and should be followed hereafter by counsel 
in this court, for thereby resort to a second writ of error may be 
avoided. 

[2] The assignments of error concern the admission of certain tes- 
timony over the defendant's objection. The facts of the case are fully 
set forth in our former opinion, and need not be hère repeated. In 
one assignment the testimony complained of bore upon the practice 
of the elevator man for two days in detaining the elevator at the 
floor to which he had carried freight until the workmen who removed 
it had finished placing such freight on the floor and were ready to 
descend. In view, however, of the charge of the court that, to sustaîn 
a verdict, the jury must find there was an express promise by the 
elevator man to the plaintiff to wait for him on the lower floor, the 
évidence admitted, which bore on the practice of the elevator man, 
became inconsequential, and manifestly had no part in determining 
the issue. 

[3] As to the assignment in référence to the testimony of the plain- 
tiff that he believed the elevator was still on the first floor level when 
he stepped into the shaft, we are of opinion no error îs involved 
which should lead to a reversai. The plaintiff twice before and with- 
out objection had testified he thought such was the case. And 
while the court at a later stage overruled the objection when such 
belief was testified to for a third time, yet the matter was of such 
inconséquence that the ruling was not even made a ground for a new 
trial. Without, therefore, entering upon a discussion of whether the 
évidence was admissible, we are clearly of opinion that it should not 
be held réversible error. Common sensé teaches us that the man 
would not hâve .stepped into the open elevator shaft, unless in the 
belief the elevator was there. The verdict of the jury is predicated 
on that fact; otherwise, he was guilty of contributory négligence. 

It follows, therefore, that the évidence was merely cumulative and 
inconsequential, and not ground for reversai. As said in National 
Association v. Dolph, 94 Fed. 743, 38 C. C. A. 1 : 

"The court wIU not reverse for error which has done no injury to the 
party complalnlng" — cltlng Ohase \. Hubbard, 99 Pa. 226, and Galbraitb v. 
Zlmmerman, 100 Pa. 374. 



LEHTOHNEH V. NEW TOEK, N. H. & H. E. CO. 69 

LBHTOHNER v. NEW YORK, N. H. & H. R. 00. 

(Circuit Court of Appeals, Second Circuit. May 8, 1911.) 

No. 278. 

Railkoads (I 350*) — Injubt to Pebsons on Teack— Conteibxjtokt Négli- 
gence. 

Where plaintiflf's intestate was killed on a dark and foggy uight, in 
front of a station on defendant's railroad, by an angine runnlng wltliout 
a lieadlight, and wtiicli sounded no wliistle and rang no bell, tlie décèdent 
having reached a point opposite ttie station by a patli in constant dally 
use without objection by the railroad company, and where there was évi- 
dence tending to show that he was crossing the track to the station plat- 
form, and that he stopped and looked and listened, the question of bis 
contributory négligence was one for the jury. 

[Ed. Note.— For other cases, see Rallroads, Cent DIg. §§ 1166-1192; 
Dec. Dig. § 350.*] 

In Error to the Circuit Court of the United States for the South- 
ern District of New York. 

Action at law by Eva Lehtohner, administratrix, against the 
New York, New Haven & Hartford Railroad Company. Judgment 
for défendant, and plaintiiï brings error. Reversed. 

The action was brought to recover damages for the death of 
plaintiff's intestate who was killed by a locomotive operated by 
défendant. The occurrence took place in front of or near West 
Farms station. At the close of the plaintiff's case verdict was di- 
rected by the court in favor of défendant. 

T. J. O'Neill (L. F. Fish, of counsel), for plaintifï in error. 
C. M. Sheafe, Jr. (CM. Corwin, on the brief), for défendant in 
error. 

Before LACOMBE, WARD and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge. The accident happened about half 
past 6 in the morning of December 21st. It was foggy and very 
dark. The locomotive, which was running without a headlight, 
sounded no whistle and rang no bell. The West Farms station, 
with its platform, was on the northerly side of the track. Wheth- 
er or not there was a platform opposite to it on the southerly side 
is not entirely clear. To the station there was a public highway. 
There was no such approach from the south, but for years there 
had been a well-trodden pathway across private property from 
the subway station at 177th street to a point opposite or near the 
West Farms station. This pathway was in constant use by per- 
sons wishing to take New Haven Railroad trains at that station. 
Having reached the end of the pathway, they, of course, had to, 
cross the track. It did not appear that any fence or barrier had 
been put up to keep persons from approaching the station from 
this -direction, nor that any notice or warning not to use such ap- 
proach had ever been posted. 

*For other cases see same topio & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Inflexes 



60 188 FBDBEAL REPORTER 

The trial judge directed a verdict for the défendant, because of 
contributory négligence on the part of deceased, on the ground 
that at the time he was struck he was walking along on the rail- 
road track, instead of walking along outside of the track, without 
any reason, but simply for his own convenience, manifestly a reck- 
less thing to do at night. 

The difficulty with sustaining this disposition of the case, how- 
ever, is the testimony as it stands in the record. The witnesses 
were foreigners, unfamiliar with the use of English, and the in- 
terpréter who translated for sortie of them seems not to hâve 
known much more of it than they did. The photograph (Exhibit 
I) does not elucidate the testimony, because, although there are 
pencil marks and letters on it, there is no statement as to what 
such marks and letters represent. Thèse witnesses were walking 
with deceased at the time, some before and some behind him, and 
their narratives leave us in some uncertainty on several points. 
Enough can be found in them to sustain the summary given in 
the last paragraph; but the jury might, on the other hand, hâve 
found from the proof that deceased, having reached a point oppo- 
site the station, possibly a station platform on the southerly side 
of the tracks, was undertaking to cross from one side to the oth- 
er when he was struck. If that were so, we are unwilling to hold 
as matter of law that a person is guilty of such négligence as will 
bar hii recovery for injuries caused by négligence of a railroad Com- 
pany, when the person injured reaches a platform opposite a station 
by a path in constant daily use without objection by the rail- 
road, and then undertakes to cross from the one platform to the 
other, even at night, provided he takes the usual précautions of 
stopping, looking, and listening — of which there seems to hâve, 
been some évidence in the case. Upon such a showing, the ques- 
tion whether or not he was négligent is one for the détermina- 
tion of the jury, after they hâve determined frorn the testimony 
precisely what the facts were as to the movements of the injured 
person. 

The authority cited in appellee's brief (Keller v. Erie R. R., 183 
N. Y. 67, 75 N. E. 965), might seem to require such a construction 
of the statute forbidding the use of railroad tracks by pedestrians 
(Laws of 1892, c. 676, § 53) as would prevent a recovery on either 
theory of what actually took place. But a later décision of the 
same court, which is not on either brief (Lamphear v. N. Y. C. & 
H. R. R. R., 194 N. Y. 172, 86 N. E. 1115), indicates that the Keller 
opinion was not intended to apply to usual and well-recognized 
crossings, where the pedestrian did not intrude upon a railroad 
track, except for the purpose of crossing it. 

The judgment is reversed. 



HOS8FELD V. HOSSFELD 61 

HOSSFELD V. HOSSFELD. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,096. 

HUSBAND AND WlFE (§ 335*) ACTION FOE ALIENATION OF AFFECTIONS— PBE" 

SUMPTIONS AiSD BUEDEN OF PKOOF— ACTION AOAINSI PARENT. 

In an action by a wife against lier husband's luotber for aliénation of 
his affections, where évidence was introduced by botli parties on ail sub- 
stantial issues, an instruction to the jurj' that défendant had the riglit 
to advlse ber son in good faitb and from proper parental regard, and 
that, if they found that she did interfère to induce him to separate from 
plaintiff, a clear case of want of justification on her part must be shown 
to warrant a reeovery, was not erroneous, either as a statement of the 
law or as placing the burden of proof upon the issue on plaintifC; the 
presumption being in such case that défendant acted in good faith. 

[Ed. Note. — For other cases, see Husband and Wife, Cent. Dig. § 1126 ; 
Dec. Dlg. § 335.*] 

In Error to the Circuit Court of the United States for the Southern 
District of Ohio. 

Action at law by Pearl Hossfeld against Ida Hossfeld. Judgment 
for défendant, and plaintiff brings error. Affirmed. 

M. C. Lykins, for plaintiff in error. 

Allen Andrews (M. O. Burns and Andrews, Harlan & Andrews, on 
the brief), for défendant in error. 

Before SEVERENS and KNAPPEN, Circuit Judges, and DENI- 
SON, District Judge. 

SEVERENS, Circuit Judge. This was an action brought by th^ 
plaintiff to recover damages from the défendant for the aliénation by 
her of the affections of her husband, Albert Hossfeld, who was a son 
of the défendant. To reverse the judgment entered upon it, the plain- 
tiff sued out this writ of error. 

The évidence, which is contained in a bill of exceptions, tended to 
show that the conditions upon which the conduct of the défendant was 
to be judged were substantially thèse: The plaintiff had made her 
home at Covington, Ky. She had been twice married before she mar- 
ried Albert Hossfeld. By her first husband, who was dead, she had 
two children, who were liviilg. From her second husband she had 
been divorced. In September, 1907, Hossfeld, who was résident and 
engaged in business at Hamilton, Ohio, met her at a house in Lexing- 
ton, Ky. Relations there commenced were continued for nearly a year, 
when on August 30, 1908, they were privately married. The fact of 
the marriage was not for a time revealed to his mother, who was a 
widow, also Hving at Hamilton. But in October following the son 
took the wife to Hamilton, intending to establish a home there, and 
introduced hêr to his mother as his wife. The mother was greatly 
distressed and bewailed the marriage. In a day or two after she had 
a private interview with her son. What he disclosed to her does not 
appear. But apparently enough was told to confirm her opposition. 

•For other cases see same topic & S nijmber in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



62 188 FEDKBAL REPORTER 

At length the son put the wife away, announcing his intention to sep- 
arate from her, and to give her $5,000, which she refused. A sister 
of the plaintiff intervened to induce the mother to withdraw her ob- 
jections and to recognize the plaintiff as the wife of her son, but to 
no purpose. The mother's insistence was that the son's continuance 
of his relations to the plaintiff would be injurious to him and destruc- 
tive of his f amily relations and of the mother's and his sister's happi- 
ness. Enough appears to justify the conclusion that the defendant's 
remonstrances with the son led to the séparation from his wife. 

The j'udge instructed with référence to the lawful privilège of a 
mother in such circumstances in a manner not now complained of, ex- 
cept in the particular presently to be noted. He said : 

"TBe reciprocal relations of parent and chlld continue through life. Theie 
Is a rlght, with proper limitations, of the parent to advise the child, and the 
rlght Is to be protected the same as the rlght of husband and wife. So, as I 
say, If you should find from the évidence that the défendant did anything 
to bring about a séparation of thèse two parties, the question is, Was that 
done with malice or from proper parental regard? The défendant had a right 
to advise her son. If she did so in good falth, within proper limitations and 
the proper motive and was not a mère Intermeddler. A clear case of want 
of Justifleatlon on her part should be shown, before you can return a ver- 
dict against her, if you should flnd that she did Interfère to produce a 
séparation between thèse people." 

To the first paragraph there was no separate exception. Counsel 
for plaintiff, however, excepted "to so much of the charge as refers to 
want of justification." But thq counsel excepted to the whole of the 
second paragraph, and the contention hère made is that this second 
paragraph would lead the jury to understand that the burden of prov- 
ing a want of justification rested upon the plaintiff, whereas, it is urged, 
it was a matter of défense and the burden rested upon the défendant. 
It is more than doubtful whether the exception taken was sufficient to 
îndicate that it was leveled at any such objection as one resting upon 
the question of the burden of proof. It might f^irly be said that the 
attention of the court was not called to the point which counsel now 
raise in support of this assignment of error. But, aside from this, we 
think the exception, even if it were construed to be as spécifie as is now 
claimed, could not be sustained. In a case where there is no évidence 
to support a material factor to the plaintiff's cause of action, or of the 
defendant's défense, the question of the burden of proof is often im- 
portant, but when, as hère, évidence bas been given by both parties 
upon ail the substantial facts in controversy, it is of little conséquence 
by what witnesses, whether of the plaintiff or défendant, the évidence 
has been given. It is ail before the jury for what it is worth, and 
the question upon whom the burden of proof rested is not of so much 
account as where there is an entire lack of évidence upon an essen- 
tial fact. Moreover, there is a presuniption of good faith on the part 
of the parent in such cases which would be sufficient to support the 
défense in the absence of proof to the contrary, and it would hâve been 
erroneous to hâve told the jury that the défendant must affirmatively 
hâve proven that she acted in good faith. The presumption of fact 
stood in the place of évidence. Hutcheson v. Peck, 5 Johns. (N. Y.) 
196, Tucker v. Tucker, 74 Miss. 93, 19 South. 955. 32 L. R. A. 623. 



SFIEOEL V. ZUCKEEMA» 63 

Huling V. Huling, 32 111. App. 522, Rice v. Rice, 104 Mich. 371, 62 
N. W. 833, and 21 Cyc. 1619, 1620, where the law on this subject is 
fully stated. The law difïers in this respect f rom that in the case of 
an action against a stranger. 

In tliis instance, when the case was finally submitted, the court said 
to the jury: 

"If you should flnd that the mother In this case dld Interfère as between 
the son and his wlfe, and that the motive of sueh Interférence was not the 
protection and welfare of her son, but was wrongful or founded on hatred 
and ill wlll toward the plalntlCf, then, if the séparation was produced by 
sueh Interférence, the plainti£f Is entltled to recover." 

This instruction is not complained of , and we think it stated the al- 
ternative of the issue on which the plaintiff would be entitled to re- 
cover, in a manner which substantially fulfilled ail légal requirements. 

As this question of the burden of proof is the only one of any sub- 
stantial conséquence now pressed, we hâve no occasion to consider 
others. 

The judgment must be affirmed, with costs. 



SPIEG12L et al. v. ZUCKERMAN et al. 

(Circuit Court of Appeals, Second Circuit. May 25, 1911.) 

No. 272. 

Tbade-Mabes and Teade-Names (§ 21*) — Pebsons Entitled— Peiobitt op 
Use. 

Complalnants held not to hâve acquired the right by registration under 
the statute to the exclusive use of the word "Princess" as a trade-mark 
for shirt waists, on évidence showlng an extensive use of the word in 
connection with shirt waists by others throughout the country for sev- 
eral years prier to the earliest date of its use by complainants. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Dec. 
Dig. i 21.*] 

Appeal from the Circuit Court of the United States for the 
Southern District of New York. 

Suit in equity by Hyman Spiegel and Conrad Prehs, copartners, 
against Louis Zuckerman and others. Decree for défendants, and 
complainants appeal. Affirmed. 

This cause comes hère upon appeal from a decree dismissing a 
bill for infringement of trade-mark. The trade-mark is alleged to 
be the word "Princess," used in connection with the sale of women's 
shirt waists. The opinion of the Circuit Court will be found in 175 
Fed. 978. It sets forth the facts with sueh fullness that they need 
not be restated hère. 

James E. Bennet (C. G. Hensley, of counsel), for appellants. 
Samuel I. Frankenstein ( S. I. Frankenstein, of counsel), for appel- 
lees. 

Before LACOMBE, COXE, and WARP, Circuit Judges. 

•For other cases see same toplc & § ndmbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



64 188 FE3DERAL REPORTER 

LACOMBE, Circuit Judge. No question of unfair trading or of 
infringement of a common-law trade-mark is presented by this appeal. 
The parties are ail résidents of the state of New York, and the 
fédéral courts hâve no jurisdiction of any such controversy. 

On April 8, 1907, complainants, alleged to be the successors of H. 
Kottler & Co., filed a statement and déclaration under the provisions 
of the trade-mark act of February 20, 1905 (33 Stat. 724, c. 592 
[U. S. Comp. St. Supp. 1909, p. 1275]), and certificate of registra- 
tion was duly issued under date of October 22, 1907. By the terms of 
the statute (section 16) such certificate is made prima facie proof of 
ownership of the trade-mark; but such prima facie proof may be 
overcome, if it be made to appear that the applicant was not entitled 
to the particular trade-mark which he sought to appropriate. The 
testimony shows an extensive use of the word "Princess" in connec- 
tion with shirt waists, going back for several years — indeed, prior to 
the date named in the application (January 1, 1901), and prior to 
the earliest date to which complainants hâve been able to show their 
own use of it, by persuasive testimony. Many différent persons 
used it, in many différent places. It is not necessary to find that any 
one of thèse has used the word as a trade-mark so long and so con- 
tinuously that he, rather than complainants, is entitled to exclusive 
ownership. It is quite sufficient to dispose of this appeal to find, as we 
do and as the Circuit Court found, that in and prior to 1901 the 
word "Princess" was being used by so many différent persons in 
connection with the sale of shirt waists and similar garments, and had 
been so used for so long a time, that complainants could not, by 
adopting it as a mark for their own goods, acquire any exclusive 
right to its use as such mark. 

The decree is affirmed, with costs. 



In re DATERSON PUB. CO. 

(Circuit Court of Appeals, ïhlrd Circuit June 5, 1911.) 

No. 50. 

Bankeuftct (§ 140*) — Claims against Trustée— Use of Propeett Held un- 

DEE CONDITIONAL SALE OONTRACTS. 

Where machines in possession of a banlcrupt under contracta of condi- 
tlonal sale, whlcti required monthly payments from ttie banl^rupt, called 
rental In the contracts, were reclaimed by the vendors after the bank- 
riiptcy, they eannot recover such coutract rentals for the time the ma- 
cUnes remained in possession of the trustée during the détermination of 
their rights; but, if the trustée used the machines without their con- 
sent, the extent of their right is, on proof, to recover the reasonable 
, value of such use. 

[Ed. Note. — For other cases, see Banliruptcy, Dec. Dig. § 140.*] 

Pétition for Revision of Order of the District Court of the United 
States for the Western District of Pennsylvania. 

In the matter of the Daterson Publishing Company, bankrupt. On 
pétition to revise order of District Court. Order affirmed. 

•For other cases see same topic & | number in Dec. & Am. Digs. 1907 to date, & Kep'r Indexes 



IN RE DATEHSON PUB. CO, 65 

Magnus Pflaum, for petitioners. 

Clarence R. Bissel and McKee, Mitchell & Alter, for trustée. 

Before GRAY and BUFFINGTON, Circuit Judges, andi Mc- 
PHERSON, District Judge. 

BUFFINGTON, Circuit Judge. In the course of the proceedings 
in bankruptcy in the court below in Re the Daterson PubHshing Com- 
pany, the Dexter Folder Company and the Whitlock Printing Press 
Manufacturing Company, the petitioners in this court for review, pre- 
sented, the former a claim of $1,050, being for 7 months' alleged rental 
at $150 per month for a folder and feeder and the latter a daim of 
$875, being for 7 months' alleged rental at $125 per month for a 
printing press. Thèse rentals were respectively based on rates of pay- 
ment termed rentals in certain contracts of conditional sale under 
which the bankrupt held the machinery under bailment at the time of 
bankruptcy. The référée disallowed the claims, and on certificate 
the court below approved bis action. To review the order of disal- 
lowance by the court, this proceeding in review is brought. 

We hâve had the benefit of an able and forcef ul argument by coun- 
sel for the petitioners that a trustée in bankruptcy, accepting for the 
estate and in pursuance of the contract the articles in question, would 
be bound by the stipulations of the contract ; but the difficulty is that 
the trustée never elected to take thèse articles as belonging to the 
estate, nor were the vendors willing he should. On the contrary, the 
vendors claimed, retained, and were decreed to hâve the title to the 
property in themselves. They contend, however, that while the ques- 
tion of their title was being determined by the court the machines 
remained in the possession of the trustée, and that for such period the 
estate should pay at the rental rate fixed by the contract. But this is 
a non sequitur. If during such period the trustée used the machines, 
he could hâve been prevented from doing so on- complaint to the 
court; for its gênerai order permitting him to continue the business 
for a limited period did not authorize him in doing so to use other 
people's property without their consent. Or, if he used it without 
formai permission of the owner, the court would no doubt, on a proper 
showing, hâve directed him to pay a proper sum for such use and 
occupation. But, whatever might hâve been the rights of the peti- 
tioners, no such relief was sought, nor hâve we before us proof of 
facts which would enable us to take any such action. 

Reaching the conclusion, therefore, as we do, that the parties to 
thèse contracts did not, after bankruptcy, elect to continue them as 
sales, and there being no proof of the extent or value of the trustee's 
use of the machines during the intérim of determining the question 
of petitioners' title, the pétition for review must be denied, and the 
order of the court below disallowing their claims affirmed. Lest by 
silence we should appear to sanction thèse two petitioners joining in 
a single pétition to review, we may say we hâve not raised or decided 
that question. 
188 F.— 6 



66 ^ 188 FEnBRAL REPOBTEB 

THE J. M. GUFFBT. 
(Circuit Court of Appeals, Second Circuit May 8, 1911.) 

No. 249. 

SHIPPING (§ 84*) — LiABILITT OF Vessel— Injuky to Wokkman. 

An oil tank steamer heU Uable for an Injury to a pipe fltter In the em- 
ploy of a contractor engaged in making repairs on tlie vessel In dry dock, 
causeû by an explosion of gas while he and others were at work with 
open torches In a tank, on the ground that it was the duty of her ofB- 
cers to render the place safe for the work, or, If that were impossible, 
to warn the men of the danger and furnlsh them with electric torches, 
which were kept for the use of the crew. 

[Ed. Note.— For other cases, see Shipping, Cent. DIg. §§ 349-351 ; Dec. 
Dlg. § 84.*] 

Appeal from the District Court of the United States for the Eastern 
District of New York. 

Suit in admiralty by James W. Dalton against the steamship J. M. 
Gufïey; the J. M. Guffey Petroleum Company, claimant. Decree 
for libelant, and claimant appeals. AfSrmed. 

This cause comes hère upon appeal from a decree holding the ship 
responsible for injuries received by libelant, a steamfitter employed by 
contractors who were making repairs and altering the position of an ■ 
oil pump; the vessel being a tank steamer. 

J. J. Mahoney (M. J. Wright, of counsel), for appellant. 
Hirsh & Rasquin (Hugo Hirsh, of counsel), for appellee. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

PER CURIAM. The facts are fully set forth in Judge Chatfield's 
opinion. 180 Fed. 611. We do not think it necessary to repeat them, 
since we fully concur with him. The ship had not been turned over 
to the contractors, but was under the control of her officers. Al- 
though efforts had been made to remove ail accumulations of gas 
from her interior, the resuit shows that the pump 'and pump con- 
nections had not been made safe. Exactly what had been donc to 
that end was known to the ship's officers, who had conducted the 
opérations, but not to the contractors or their employés. If it is the 
fact, as claimant's principal witness on this branch of the case testified, 
that in spite of ail précautions there will sometimes remain little 
"pockets" of gas, which are liable to explode in the présence of heated 
rivets or any open flame, then warning should hâve been given to the 
men, who specifically asked, as to the ship's condition, "whether it 
was safe or not," before going to work in a dark place under the 
pump, that they ought not to use an open flame light, but should use 
only electric lights, such as the electric flame torches which were al- 
ways kept on board the ship for use by her officers or crew whenever 
they were "going around and working any dangerous place." The 
two permanent signs, "No Smoking," which the chief officer testified 
were displayed, one on the break of the forecastle head, were not suffi- 

*For other cases see same topic & § nbmbbe ia Dec. & Am. Digs. 1907 to date, & Eep'r Indexes 



BOAED OF DIEECTORS OF ST. FBANCIS LEVEE DISTRICT V. WEBB 67 

cient ; nor would they hâve been if they had been lettered, as libelant 
had seen them on other vessels, "No Naked Lights to be Used," be- 
cause it might be supposed that they were intended as warning only 
when the ship was in commission, and did not refer to a time when 
she had been cleansed and put in dry dock. 
The decree is affirmed, with interest and costs. 



BOARD OF DIEECTORS OF ST. FRANCIS LEVEE DISTRICT v. WEBB. 

(Circuit Court of Appeals, Blghth Circuit April 24, 1911.) 

No. 3,451. 

Eminent Domain (§ 69*) — Condemnation Proceedings— Damages. 

On an appeal from an award of damages made in proceedings to con- 
demn land for levée purposes, the landowner was entitled to an award 
of damages In money, and the court properly refused to withdraw from 
the jury the question of damage from obstruction of drainage, on an offer 
by the district to eut drains through an old levée to obvlate such damage. 
[Ed. Note. — For other cases, see Eminent Domain, Cent. Dig. §§ 171- 
179 ; Dec. Dlg. § 60.*] 

In Error to the Circuit Court of the United States for the Eastern 
District of Arkansas. 

Proceedings by the Board of Directors of St. Francis Levée Dis- 
trict against George T. Webb. From a judgment awarding damages 
to défendant, plaintiiï brings error. Aiîfîrmed. 

H. F. Roleson, for plaintiiï in error. 
Percy & Hughes, for défendant in error. 

Before HOOK and ADAM S, Circuit Judges, and RINER, Dis- 
trict Judge. 

HOOK, Circuit Judge. The board of directors of St. Francis levée 
district instituted in a state court of Arkansas proceedings to condemn 
a right of way for a levée over the lands of George T. Webb on the 
west bank of the Mississippi river. Appraisers w^ere appointed as 
provided by local statute, and they subsequently filed their report and 
award of the value of land taken and the damages. The landowner 
filed exceptions to the report, and then removed the cause to the Cir- 
cuit Court of the United States for the Eastern District of Arkansas, 
where it was tried to a jury. The trial court submitted to the Jury 
spécial questions covering the varions items of damage, and also the 
market values of the entire tract of land before and after the appro- 
priation. The value of the land taken and the damages shown by the 
spécial verdict aggregated $5,000, and judgment was rendered in 
favor of the landowner for that sum. It appeared that $2,000 of the 
award was for obstruction to the natural drainage of that part of the 
land which was between the line of the new levée and an old levée 
nearer the river built some years before. The controversy hère is over 
that item. 

•For other cases see same topic & § numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



B8 188 FEDERAL EEPOKTER 

At the close of the évidence the levée district filed in open court 
a written offer and agreement to eut the old levée next to the river, so 
as to make the drainage claimed to hâve been obstructed as effective 
as it was before the new levée was built, that the court might make 
appropriate orders directing and requiring the work to be donc, and 
that if it was inadéquate when completed the judgment in the présent 
case should not bar a future action by the landowner for damages. It 
then asked the court to instruct the jury that no damage should be 
found for obstructed drainage, except the cost of artificial drainage ; 
also that the offer and agreement referred to eliminated f rom consid- 
ération ail question of damage by such obstruction. The instructions 
were refused. The court also withdrcw from the questions to be 
answered by the jury one as to whether the land between the levées 
' could be drained artificially and made as good as before, and, if so, at 
what cost. 

We think the trial court was right, regardless of an Arkansas stat- 
ute relating to damages whîch the landowner claims is contrary to 
the State Constitution. This being so, the validity of the statute need 
not be determined. The controversy at the trial was whether the nat- 
ural flow of the surface waters was obstructed and the land thereby 
damaged, not whether artificial means of drainage were practicable; 
and there was no évidence whatever as to the cost of such means even 
if they were practicable. Again, there was évidence that formerly the 
surface waters naturally ran off the land westward towards the new 
levée, 'and it was not claimed at the trial that that levée could safely 
be opened to permit their escape. The offer of the levée district was 
properly disregarded. It does not appear that the plan according to 
which the condemnation proceeded and the levée was built specified 
as part thereof permanent means of draining the land. The condemna- 
tion was not qualified or limited in that way. When the case was 
tried the landowner was entitled to an assessment of his damages in 
money, not in obligations or promises possibly productive of future 
litigation. Of course, when the matter is under the control of the 
owner of the property, the cost of adjusting it to changed conditions, 
or of alleviating or preventing the damage, is proper évidence; but 
that was not the case hère, as the levée was a public structure, and, 
besides, as already noted, there was no évidence of such cost. 

The judgment is afïirmed. 



HANDY THINGS CO. et al. v. TUCKER & DORSEY MFG. CO. 

(Circuit Court of Appeals, Seventh Circuit. January 10, 1911. Rehearlng 
Denied Aprll 11, 1911.) 

No. 1,667. 

Patents (§ 828*) — Peiob Public Use— Vegktable and Fruit Slice and 
Slioer. 

Tho Kegnier patents, No. 678,514, for a vegetalsle or fruit slice and 
method of mailing tlie same, the slice being corrugated on both sides in 
such nianner that numerous perforations are made without waste of ma- 

•For other cases see same toplc & § numbbb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Inflexes 



HANDT THINGS CO. V. TUCKEK <b DORSET MFG. CO. 69 

terial, and No. 744.107, for a slicer to produce such slices, are both void 
for prior public use for more tban two years prior to tbe applications. 

Appeal from the Circuit Court of the United States for the Dis- 
trict of Indiana. 

Suit in equity by the Handy Things Company, Eugène S. Régnier, 
and Louisa M. Richards against the Tucker & Dorsey Manufacturing 
Company. Decree for défendant, and complainants appeal. Affirmed. 

The decree from which this appeal Is brought dismisses (for want of equity) 
the appellants' bill, cbarging infringement of two patents, Nos. 678,514 and 
744,107, issued for alleged inventions of the appellent B. S. Régnier. 

No. 678,514 was granted July 16, 1901, on an application filed October 11, 
1900, for "improvements in vegetable, fruit, or other slice and metbod of mak- 
ing the same." The spécification and drawings show the "apparatus for pro- 
ducing the slices," together with views of the products, as slices corrugated 
on both sides with perforations at varions places ; and the invention is thus 
described : 

"1 produce an entirely new product, which is novel, ornaniental, and use- 
ful, which will not pack nor mat with other slices, which may be used for 
making salads from vegetables or fruits, or making Saratoga chips from po- 
tatoes, glving to the. slice a very large area for the action of the hot'grease, 
which makes a very crisp chip. This resuit is also brought about without 
wasting any of the material, because the material eut out of the holes in each 
slice simply forms a part of the next slice eut and is not eut out and wasted." 

The claims are: 

"1. The method of making perforated vegetable or other slices, which con- 
slsts in eutting in the opposite sides of the slice intersecting corrugations, the 
corrugations in one side being disposed at an angle to the corrugations in the 
other, substantially as described. 

"2. The method of making perforated vegetable or other slices, which con- 
sists in successively subjeeting the vegetable to the action of a corrugated 
cutter and partially rotating the vegetatsle about an axis perpendicular to the 
gênerai plane of sald cutter after each eutting opération, whereby successive 
slices are produced, said slices having in their opposite sides intersecting cor- 
rugations disposed at an angle to each other, substantially as described. 

"3. The method of making corrugated vegetable or other slices, which con- 
sista in first subjeeting the vegetable to the action of a corrugated cutter, 
whereby the face of the vegetable Is corrugated, then partially rotating the 
vegetable about an axis perpendicular to the gênerai plane of its corrugated 
face, and then again subjeeting the vegetable to the action of the cutter, and 
thereby producing a slice having in its opposite sides intersection corruga- 
tions resulting in perforations, substantially as described. 

"4. As a new product, a vegetable or fruit slice having corrugations or 
flûtes in the opposite faces thereof extending at an angle to each other, said 
corrugations Intersecting each other, so as to form perforations in the slices, 
substantially as described." 

No. 744,107 was granted November 17, 190.3. on application filed February 
10, 1900. for "Improvements in sllcers," with the apparatus described as in 
the foregoing patent. Tt eonsists of a corrugated knife and a guide-board 
mounted between the side-bars of a fra menthe guide-board corrugated on one 
side and plaln on the otber face, and pivoted. so that it may be inverted as 
desired and clamped in place. The spécification states: 

"This invention relates to improvements In that class of devices especially 
designed for slicing vegetables, fruits, etc., such as potatoes, c-ucumbers, ap- 
ples, and the like; but it is especially adapted for slicing potatoes into novel 
forms for frying or for making 'Saratoga chips,' whereby a new product of 
both domestic and commercial value is produced. 

"The primary object of this invention is to enable the production of a slice, 
whether of vegetable or fruit, that will be novel and ornaniental In appear- 
ance, that will expose the maximum superficial area, whether it be intended 
for cooking or drying, and that will not pack or mat wbile cooking or drying, 
whereby it insures the thorough cooking or drying of each slice of a batch 



70 188 FEDEKAL EEPOBTEB 

and the production of a product novel both In shape and appearance, as well 
as in charaeteristlcs. 

"Another object of my Invention Is to enable the production of either per- 
forated or imperforate, fluted, or corrugated slices, as may be deslred, at the 
same cost both of time and material, with no loss of the vegetable or fruit 
being sliced and with no more labor or sklU than is involved in the produc- 
tion of plain slices by the slieers now commonly employed. 

"Another object is the ready production of corrugated or fluted imperforate 
slices having their opposite faces parallel or perforated slices having their 
opposite faces corrugated or fluted at an angle to each other, manipulatlng 
the vegetable upon the slicer In one or another of two ways, as hereinafter 
described." 

And the clalms are: 

"1. In a slicer, the comblaation of a cutter, having longitudinal corruga- 
tions and a guide-board, said cutter and guide-board being so dlsposed with 
relation to each other that the plane of the working surface of the guide- 
board and a second plane touching the lowest points of the corrugations at 
the cuttlng edge of the cutter, are separated by a distance which is less than 
the depth of said corrugations, substantlally as described. 

"2. In a slicer, the combinatlon of a cutter, having longitudinal corruga- 
tions and a guide-board, having a flat working surface, said cutter and guide- 
board being so dlsposed with relation to each other that the plane of the 
working surface of the guide-board and a second parallel plane touching the 
lowest points of the corrugations at the cuttlng edge of the cutter, are sep- 
arated by a distance which is less than the depth of said corrugations, sub- 
stantlally as described. 

"3. In a slicer, the combinatlon of a cutter, having longitudinal corruga- 
tions and having also parallel upper and lower surfaces, and a guide-board. 
having a flat working surface, said cutter and guide-board being so dlsposed 
that the plane of the working surface of the guide-board and a second plane 
parallel therewith and with the cutter and touching the lowest points of the 
corrugations, are separated by a distance which is less than the depth of said 
corrugations, substantlally as described. 

"4. In a slicer, the combinatlon of a cutter, having longitudinal corruga- 
tions, a cutter-board on which said cutter is mounted, said cutter-board hav- 
ing corrugations corresponding with and fltting in the corrugations of the 
cutter, the end of the cutter being extended sonie distance beyond the cutter- 
board and the cutter and guide-board being so disposed with relation to each 
other that the plane of the working surface of the guide-board and a second 
parallel plane touching the lowest points of the corrugations at the cutting 
edge of the cutter are separated by a distance which is less than the depth 
of said corrugations, substantlally as described. 

"5. In a slicer, the combinatlon of a cutter having longitudinal corruga- 
tions, an tnvertible guide-board disposed in operative relation thereto. said 
guide-board having one of its faces plain and its opposite face corrugated, 
and means for flxing the guide-board with either of its faces uppermost, sub- 
stantlally as described." 

Other facts bearing upon the issues are stated in the opinion. 

L. M. Hopkins and Frank T. Brown, for appellants. 
Arthur M. Hood and Chester Bradford, for appellee. 

Before GROSSCUP, BAKER, and SEAMAN, Circuit Judges. 

SEAMAN, Circuit Judge (after stating the facts as above). The 
two patents in suit rest on an alleged invention of Régnier for slicing 
potatoes (and other vegetables or fruit), to produce a slice corrugated 
on both sides, in such manner that numerous perforations are made 
as well, without waste of material ; and the utility of means and prod- 
uct is undoubted. Patent No. 678,514 is aptly referred to as "the 
method and product patent" — having three so-called "method" claims 
and one for "a new product" — and No. 744,107 is for the apparatus 



HANDY THINGS CO. V. TUCKKK 4 DOKSET MJf(i. OO 71 

or "slicer." The slicer consists of a corrugated knife and guide- 
board, mounted in a f rame for use as a hand slicer ; with tht guide- 
board having one face plain and the other corrugated, se pivoted that 
one or the other face can be turned up, adjusted, and clamped for 
différent uses. For its main use, in producing the above-mentioned 
slices, the plain face of the guide-board is employed and properly 
adjusted in front of the knife; the operator holding the potato for 
slicing on the board. When the first eut is made, the operator turns 
the potato (say a quarter turn) to make the second eut at another 
angle, so that the corrugations left by the first eut are perforated in 
their valleys, and each slice in such method becomes both corrugated 
and perforated, with its integrity preserved. 

The défenses raised by answer and évidence were: (1) Want of 
patentable invention, either for anticipations or prior public use; and 
(2) noninfringement by the appellee of the patent device. It does 
not appear in the transcript which défense was upheld for dismissal 
of the bill ; but it may well be assumed that the trial court was con- 
vinced, under the established facts, that neither patent was valid. 
Thèse twofold issues are plainly presented, with no complications of 
fact in the way of their solution: (a) Whether either spécification 
discloses an improvement of patentable novelty in the vegetable 
slicing art — in product, or means, or both — and, if so, (b) whether 
either patent is valid, under the undisputed évidence of prior public 
use; and the appellee's contention that its device is not substantially 
identical with that of the patent, does not appear to be tenable. For 
the tests of patentability, we believe extended discussion to be un- 
necessary of the two grants and sets of claims separately, in référ- 
ence to the évidence, for the reason that both branches thereof are 
applicable to the "method and product" patent, No. 678,514, under 
any admissible interprétation of the claims, if it be assumed that such 
claims are otherwise valid, for the opération or function of the ap- 
paratus of No. 744,107. 

Slicers for vegetables and fruit, either for rough or fancy slicing, 
are old, well-known means, and, among the patent appliances in évi- 
dence, pertinent références are: No. 118,944, James & Currier (1871), 
for vegetable slicers; No. 184,471, Iske (1876), for vegetable cutter 
and slicer; No. 446,379, Dana (1891), for fruit and vegetable cutter; 
No. 527,253, Struble & Turner (1894), for potato slicer; No. 597,- 
009, Mabbett (1898), for cutting and slicing vegetables, etc.; design 
No. 30,366, Hill (1899), for corrugated blade of vegetable cutter; 
German patents: No. 236,644, of Podlipsky (1883), and No. 90,072, 
of Rassmus (1895), for beet cutters. Use of the corrugated cutter, 
when corrugated slices were required, was not only well known, but 
appears in several of thèse patents, framed with a guide-board, where- 
of the face is plain in instances and corrugated in others. Mabbett 
(No. 597,009) shows a corrugated cutter, with two interchangeable 
guide-boards, one plain and the other corrugated. So the apparatus 
device of the appellants' patent, Vi'ith its corrugated knife and adjusta- 
ble guide-board mounted in j frame, is not differentiated (in the sensé 
of the patent law) from Mabbett and other références, unless inven- 



72 -, 188 FEDERAL KEPORTEB 

tion may rest, as appellants contend, on thèse f eatures : (a) Its single 
guide-board, having one face plain and the other corrugated, pivoted 
to make it réversible for alternative use, instead of two adjustable 
guide-boards shown by Mabbett for like use; and (b) adjustment 
disclosed of the guide-board to the knife (as described in appellants' 
brief) making the space between them "less than the depth of the 
corrugations," so that perforations resuit from successive cuts when 
the potato is turned by hand. 

We are not impressed with either of thèse éléments thus introduced 
as involving patentable invention in the apparatus, but that each was 
an obvious expédient, without substantial departure from the prior 
conceptions. Whenever perforation of the lirst corrugations was de- 
sired, the adjustment and change in angle of the eut was within the 
ready adaptability of such means ; and this, irrespective of .the actual 
adaptation by Hill, to be considered in another phase. Thus the 
claims of invention therein, were, as we believe, rightly rejected by 
the primary examiner, in the Patent Office (as exhibited in the file 
wrapper) on the références mentioned. 

The independent device and use of the witness Hill, however, as 
clearly defined by the convincing and uncontroverted testimony, we 
believe must defeat both of appellants' patents, under the facts in 
évidence of procrastination and public use on the part of the patentée, 
although it be assumed for such considération that Regnier's concep- 
tion was both meritorious and prior. 

The original application of Régnier was filed February 10, 1900, 
while Hill completed his means, substantially identical, in the "fall 
of 1898," and filed his apphcation for a design patent on his form 
of corrugated knife therein February 6, 1899. From the completion 
in 1898, it is not open to question that Hill's combined means of knife, 
guide-board, and frame were in public use, producing the corrugated 
and perforated potato slice described in Regnier's subséquent patents. 
The appellants' testimony tends to prove completion by Régnier of 
an earlier slicer in 1897, with which he successfully and repeatedly 
made the form of slice described in patent No. 678,514. This slicer, 
however (as explained by the witness and shown by an exhibit device), 
did not hâve the improvements on which the présent claim of patenta- 
bility rests; otherwise, the conceded facts would leave slight ground 
for the contention that use of the device was expérimental only. It 
was submitted to a solicitor, with application for a patent in view, 
but no action appears to hâve been taken by such solicitor (now de- 
ceased) beyond approval of the device and attempts to procure its 
adoption by manufacturers. Régnier testifies that he proceeded to 
work out improvement, and perfected the patent apparatus about June, 
1898, thus anticipating Hill, and that he frequently operated it, with 
complète success throughout, although no application for patent was 
made until long after, in 1900. 

The évidence throughout impresses us to furnish no reasonable 
excuse for this delay and intermediate (conceded) use of the per- 
fected device, to préserve the right to a patent for any supposed 
invention therein, Simplicity of means and complote opération, as 



EAJAH AUTO SUPPLT CO. V. EMIL GEOSSMAN CO. 73 

alleged, in June, 1898, leave no excuse open for expérimentation dur- 
ing such intervais, eitlier in means or use ; and the admitted f requen*! 
use — on the part of Régnier, members of his family, and others — in 
producing potato slices of undoubted value for domestic irtility, 
plainly infers public use. Thus, if the above-mentioned device and 
use of Hill were anticipated in date by Régnier, they became public 
property through Hill's independent disclosure and dedication, pending 
such conduct of Régnier indicative of abandonment, and we believe 
any (assumed) invention therein on the. part of Régnier must be 
treated as abandoned and unpatentable, under the settled policy of 
the patent law. Kendell v. Winsor, 21 How. 322, 329, 16 L. Ed. 
165 ; 5 Notes U. S. Rep. 850. 

In référence to the method and product patent (No. 678,514), the 
production by the patentée in 1897, as stated, is deemed sufficient to 
establish public use for more than two years prior to the application, 
and excludes patentability, if otherwise allowable. 

The decree of the Circuit Court, therefore, is affîrmed. 



EAJAH AUTO SUPPLY CO. v. EMIL GROSSMAN CO. 

(Circuit Court of Appeals, Second Circuit. May 26, 1911.) 

No. 283. 

Patents (§ 328*) — Validity and Infbinqement— Spaek-Plug. 

The Mills patent, No, 825,856, for an împroved spark-plug, the essen- 
tial feature of which is a bushing having a lower edge of soft métal so 
thin and pliable that, when it is screwed down upon the shoulder, It will 
upset and hug the Insnlating material wlthout breaking it, was not an- 
ticipated, and discloses patentable invention; also held Infringed. 

Appeal from the Circuit Court of the United States for the South- 
ern District of New York. 

Suit in equity by the Rajah Auto Supply Company against the 
Emil Grossman Company. Decree for complainant, holding valid 
and infringed claims 3 and 6 of letters patent No. 825,856, granted 
to David B. Mills for an improvement in spark-plugs, and défendant 
appeals. Affirmed. 

Joseph L. Levy, for appellant. 
Emerson R. Newell, for appellee. 

Before COXE, WARD, and NOYES, Circuit Judges. 

COXE, Circuit Judge. The patent in question relates to a combi- 
nation in a spark-plug composed of the following éléments: 

1. A socket having a screw-thread and a shoulder. 

2. A shank of insulating material having thereon an enlargement adapted 
to rest on said shoulder and tapering upvvard from said enlargement. 

3. A threaded bushing surrounding said tapered portion, screvving upon 
said socket and adapted to press against said tapered portion, the lower edge 
of said bushing being sharpened and formed of soft métal and adapted to be 
upset when screwed down upon said tapered portion. 

The invention résides in the third élément — the bushing. Mills was 
the first to produce a spark-plug bushing having a lower edge of soft 

•For other cases see same topic & § numebb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



74 188 FEDERAL EBPOETER 

/netal so thin and pliable that when it is screwed down upon the shoul- 
der it will be upset and hug the insulating material without breaking it. 

When an unyielding bushing is screwed down upon a shank made 
of porcelain or similar material, the expansion of the shank when 
heated or the pressure of the bushing when screwed down too tight, 
will cause the shank to crack. The lower edge of the Mills bushing 
being of beveled soft métal prevents this danger of breaking and also 
obviâtes the necessity of a gasket between the collar of the shank and 
the bushing. It is not pretended that the invention as thus stated is 
anticipated by any prior patent and we agrée with the judge of the 
Circuit Court in thinking that invention is not negatived by the disclo- 
sures of the prior art. The defendant's best référence is the patent to 
Mosler, but it is clear that this patent does not show the beveled edge 
of soft métal adapted to be upset when screwed down, which, as be- 
fore stated, is the new feature of the Mills patent. 

The other prior devices and patents principally relied on by the 
défendant are discussed in the opinion below and we agrée with what 
is there said regarding them. 

The invention is, of course, a narrow one, but it belongs to that 
large class where the courts hâve sustained improvements over the 
prior art, which produce a new and bénéficiai resuit that materially 
advances the art to which they belong. When a défendant persists in 
using such an improvement in préférence to prior devices which he 
insists are equally efficacious, he tacitly concèdes its superiority. It 
is difficult to reconcile his persistent use, even though it involves him 
in an infringement suit, with the contention that other devices which 
he is free to use are equally good. 

Infringement is clear. The defendant's bushing is an exact coun- 
terpart of the patented structure except that the bevel of the lower 
or sharpened edge is not so pronounced, more force being required to 
produce the outward pressure, or upsetting, when the bushing is 
screwed down. That the lower edge is upset and performs the identi- 
cal function of the bushing of the patent is too plain for argument. 
The hugging contact is there, only in a less degree. 

The decree is affirmed. 

NOTE. — The followlng Is the opinion of Hazel, District Judge, in the court 
below. 

HAZEL, District Judge. The David B. Mills patent, No. 825,856, dated 
July 10, 1906, relates to Improvements In a spark-plug, which is used to ig- 
nlte the gaseous discharges In the cylinder of Internai combustion englnes, 
and the défendant company Is chargea In the blll with infringement of daims 
3 and 6 of said patent. The spécification explalnlng the object of the inven- 
tion says: 

"It has been found that where an earthenware shank — such, for example, 
as porcelain — Is used with an unyielding bushing screwing down upon a col- 
lar on the same, there has been great danger of cracking the shank, because 
the pressure when the bushing was screwed down too tlght or the expansion 
of the shank when heated would cause the porcelain to crack, even when a 
packing material Is used. The embodlment of my invention lUustrated avoids 
both thèse objections, and also avoids the necessity of provldlng a gasket be- 
tween the bushing and the collar of the shanks." 

The proofs show that in prior spark-plugs there was difflculty In keepiug 
the porcelain shank from cracking when the bushing was screwed down or 
clamped tight against the gasket on the shoulder to prevent the escape of 



EAJAH AUTO 8UPPLT CO. V. EMIL GBOSSMAN OO. 75 

gas. Indeed, that the Ui5e of asbestos gaskets was objectlonable, In that tbey 
would not hold tlghtly against the explosive forces wlthout flrst tightenlng 
the parts, appears clearly from the patent to Mosler, No. 738,831, dated Sep- 
tember 15, 1903, vvhicb evidently was designed to remedy sald defect, but 
wlthout success. In the Mills patent, in suit, a ring gasliet is placed In the 
shoulder between the lower edge of the bushing and the enlarged portion of 
the tapered shank to obtain a yieldlng pressure, while Mosler Inserted the 
packlng gasket between the porcelain shank and the socket. The bushing 
used by the patentée is preferably made of soft brass, and' may be screwed 
down tlghtly upon the porcelain shank to make an absolute joint, and owlng 
to Its sharpened or beveled edge yields to any slight irregularities of form 
in such porcelain shank. The claims are for a combination, and the thlrd 
and sixth only are In controversy. They read: 

"3. In a spark-plug in combination, a soclvet having a screw-thread and a 
shoulder, a shank of Insulating material having thereon an enlargement 
adapted to rest on said shoulder and tapering upward from sald enlargement, 
and a threaded bushljig surroundlng sald tapered portion and screwing upon 
said socket and adapted to press against sald tapered portion ; the lower 
edge of said bushing belng sharpened and formed of soft métal and adapted 
to be upset when screwed down upon sald tapered portion." 

"6. In a spark-plug In combination, a socket having a screw-thread and a 
shoulder, a shank of insulating material having thereon an enlargement 
adapted to rest on said shoulder and tapering upward from sald enlarge- 
ment, and a threaded bushing surrounding said tapered portion and screw- 
ing upon sald socket and adapted to press against said tapered portion ; the 
lower portion of sald bushing below the threads thereon belng smaller In 
diameter than said threads and formed of soft métal and adapted to be 
upset when screwed down upon sald tapered portion." 

The éléments of claim 3 are: (a) A socket with a screw-thread and shoul- 
der ; (b) a shank which Is provided with an enlargement adapted to rest on 
the shoulder and departing outward from said shoulder; (c) a threaded 
bushing surroundlng the tapered portion and screwed in a socket and adapted 
to press upon the tapered portion ; the lower edge of sald bushing belng 
sharpened and formed of soft métal, so that it wlll be upset when screwed 
down upon the tapered portion. Claim 6 is not unlike claim 3, except that 
it emphasizes that the bushing below the thread shall be of smaller diam- 
eter than the threads and formed of soft métal. The principal défenses are 
want of patentability and noninfringement. 

The défendant contends that the claims do not clearly express the nature 
of the improvement. In that they are open to the impression that the lower 
edge of the bushing Is of différent métal than the body of the bushing. The 
spécification and proofs, however, sufficiently disclose the intention of the 
patentée to provide a bushing of soft material, preferably soft brass, which, 
at its lower edge, shall be sharpened for upsetting when screwed down tight 
on a porcelain shank. It was of the utmost importance to secure a unlformly 
distributed pressure on the porcelain shank, which was easily ruined or 
cracked from pressure, and that such object was aehieved by the means 
adapted to upset or expand the bushing is thought clearly establlshed. It is 
a gênerai rule of patent law that, when the claims are amblguous or uncer- 
tain, a construction should be placed upbn them which sustains the contract 
with the government rather than one which destroys it. National Hollow 
Brake-Beam Co. v. Interchangeable Brake-Beam Co., 106 Fed. 093, 45 0. C. 
A. 544. 

I thlnk the Mills invention may be falrly regarded as an Improvement 
which progressed the art. None of the prior patents for spark-plugs — the 
Mosler patents. Nos. 698,042 and 738,831; patents to Jacobson, No. 774,432; 
to Herz, No. 790,571 ; to Ross, No. 829,545 — disclose the combination of 
claims 3 or 6. The Mosler and Jacobson bushlngs were of the unyielding 
type, and could not be upset or expanded to make a tight fit on the tapered 
shank. In the Ross patent (which, however, according to the évidence was 
applled for subséquent to the completion of the Mills Invention, In March, 
1904), the lower edge of the bushing is threaded, and the edge cannot be up- 
set or expanded. Manifestly none of the patents specified solved the problem 
of overcoming the defects which the simple, though important, modlflcatloa 



76 188 FEDERAL KEPORTBB 

made by the patentée solved. It Is true It was not new to make a bushlng 
of brass, nor was It new to make a métal bushing which had an outside 
thread. Indeed, the patentée was not the first to design a bushing below the 
screw-thread of a less dlameter than above It, or at the point where It was 
threaded, or tapering or beveling it at or near the edge. His altered con- 
struction, however, had never before been comblned wlth the éléments of the 
claims in suit, and he was the first to adapt a bushing made of soft brass 
or métal with the lower edge sharpened to fit a tapered porcelain shank of 
a spark-plug. In my opinion, it required more than mère mechanical skill 
to make such Improvement. While it is true the separate éléments of the 
claims are not new — they are found in prior inventions for spark-plugs and 
in another art — yet when assembled as they are by the patentée and made 
of soft meta! a new and useful resuit was attained. It is invention vvithout 
doubt to combine old éléments by whlch a new and useful resuit is producçd, 
and, moreover, a combination of éléments may be patentable, if an old resnlt 
is secured "in a more facile, economical, and efficient way." National Hol- 
low Brake-Beam Co. v. Interchangeable Brake-Beam Co., supra. 

Considérable stress is placed by the défendant upon the steel and Iron bush- 
ings described in the patents to Abbott and to Cooke — bushings whlch, owing 
to cutting or sharpenlng the edge, are of less diameter at the edge than at 
the threaded portion and are used to form a joint. But such patents are 
found In an art far removed from the 51111s Invention, and. In my opinion, 
are not entltled to be considered to anticipate or llmit the cîaîms under con- 
sidération. The bushing in the Abbott patent was deslgned for joinlng or 
çoupling Iron pipe and upsetting the end of it so as to make a tight connec- 
tion, wliile In the patent to Oooke the bushing was designed to fasten togeth- 
er hose so that it could not be separated. The patentée could scarcely bave 
assumed that the bushing of Abbott or Cooke, when made of soft métal or 
brass, might with success hâve been used as a substitute for the Mosler bush- 
ing. The fragile nature of the porcelain shank, Its tapered shape, and the 
pecullar use to whlch It was put presented a problem whlch required sklll 
and a falr amount of Inventive ingenulty to solve. It was not niera substi- 
tution of an old bushing In a new environment. Its use in connection with a 
porcelain shank was not so analogous to the bushing known to the art as to 
become In its new use an obvious expédient or a case of double use. 

In Mast, Foos & Co. v. Stover Manufacturing Co., 177 U. S. 485, 20 Sup. 
et. 708, 44 h. Ed. 856, upon which case the défendant relies to substantiate 
the claim of double use, the patentée provided a particular kind of spur 
wheel to his windmill to reduce the strain caused by alternative motion. 
Many other mechanisms disclosed contrivances to couvert a rotary into a 
reciprocating motion. In fact the combination of the Martin patent, w^bich 
was there In controversy, had been previously used in wludmllls, although 
not to convert rotary into reciprocating motion, and the question before the 
Suprême Court was whether It Involved Invention to substitute the same com- 
bination to so change the motion. It was held that no new function had been 
discovered, and that It was a mère application of an old élément to a new 
puriwse. The faets of the case were wide apart from those in thls case, and 
the enunclated principle is therefore inapplicable. So, also, Is Bradley v. 
Eecles, 143 Fed. 521, 74 G. C. A. 478, readily distingulshable from the présent 
case, as wlll be noticed on reading the headnote of the opinion of the Circuit 
Court of Appeals. 

Does tbe défendant corporation Infringe the claims? The évidence dis- 
closes that the défendant, in its construction of a spark-plug, embodies the 
subject-matter of claim 3 In suit, and the varions parts are assembled in the 
same way, and the précise resuit of the patent in suit Is attained. Its porce- 
lain shank is substantlally formed and tapered as in eomplainant's device, 
and its bushing of soft métal is threaded and adapted to be serewed upon 
the socket and upset agalnst the tapered portion of the porcelain shank. The 
défendant sharpens the bushing at Its lower end, and thus reduces its diam- 
eter below the threads, and hence also Infrlnges claim 6. 

My conclusion is that the claims are valld and patentable as an Improve-- 
ment in spark-plugs, and complainant is entltled to its exclusive use, and 
hence may hâve a decree for an Injunction as prayed for In the bill, with 
çosts. 



GENERAL ELECTRIC CO. V. WINONA INTEKUEBAN RY. CO. 7T 

GENERAL, ELECTKIC CO. v. WINONA INTERURBAN RT. CO. 

(Circuit Court of Appeals, Seventh Circuit. April 11, 1911.) 

No. 1,741. 

Patents (§ 328*) — Invention— Régulation of Electsic Cubeents. 

The Steinmetz patent, No. 594,144, for an improvement in régulation 
of alternating current Systems, is void for lack of patentable invention 
in view of the prier art. 

Appeal from the Circuit Court of the United States for the District 
of Indiana. 

Suit in equity by the General Electric Company against the Winona 
Interurban Railvvay Company. Decree for défendant, and complain- 
ant appeals. Affirmed. 

The appeal is from a decree dismissing the bill for w.ant of equity. 
The bill was to restrain infringement of letters patent No. 594,144, 
issued November 23, 1897, to Charles P. Steinmetz, assigner to ap- 
pellant, for an Improvement in Régulation of Alternating-Current 
Systems. 

The claims of the patent sued upon are as follows: 

1. The combination in an alternating-current System, of a source of out- 
of-phase waves of current Qr electromotive force between the feeding-mains 
and a working subelrcuit or braneh of the System, and a phase-modifler in 
such subcircuit. 

2. The combination In an alternating-current System, of a regulable phase- 
modifier In a subcircuit or braneh of the system, and a localizer restricting 
the influence of the phase-modifler from other portions of the System, as 
set forth. 

3. The combination In an alternating-current system, of a phase-modifier 
in a working subcircuit or braneh of the system, and an inductance localiz- 
ing the action of such phase-modifler, as set forth. 

5. The combination In an alternating-current System, of a source of ont- 
of-phase waves of current or electromotive force between the mains and a 
subeircuit of the system, wlth an electrodynamlc phase-modifler eomprising 
a conductor movable relatively to a magnetic fleld, and means for regulating 
the phase-modifler, as set forth. 

6. The combination in an alternating-current system, of an Inductance for 
localizlng a subcircuit or portion of such System, and an electrodynamlc 
phase-modifler eomprising a conductor movable relatively to a magnetic fleld 
for modifying the relation of curreut and electromotive force in such reg- 
ulated portion of the System and means for regulating the phase-modifler 
so as to cause the current to lead or lag, as set forth. 

T. The combination is an alternating-current system, of an electrodynamlc 
phase-modifler of the synehronous type regulable for modifying the phase 
relation as desired in a subcircuit or portion of the System, and an inductance 
serving as a localizer for restricting the Influence of the phase-modifler, as 
set forth. 

12. The combination in an alternating-current system, of an artificial in- 
ductance, a phase-modifler and means for regulating the phase-modifier so 
as to cause the current to lag or lead as desired. 

18. The method of regulating an alternating-current-distribution system 
which consists in modifying the phase relation between current and electro- 
motive force in a subcircuit or portion of such system requiring régulation, 
and localizing the influence of such phase modification from other portions 
of the System, as set forth. 

*Por other cases Bee same topic & § number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



T8 



188 FEDERAL REPORTER 



22. The method of loealizlng a subcircuit supplied from altematlng mains, 
which consists in adjusting tàe relative value of the self-induction and of 
displacement of phase of electromotive force and carrent in such portions 
to give the desired relation between the subcircuit and the mains. 



The drawing in the patent is as f ollows 




In the application for the patent, the prier art is referred to as 
follows : 

In other applications for Letters Patent I hâve shown that the phase re- 
lation between curreut and flectromotive force in an alternating-current 
circuit may be modifled by electro-dynamie phase-modiflers resembllng in 
gênerai construction the synchronous machines now used for motors and 
other purposes by properly regulating the fleld strength of the phase-modifler 
or otherwise. I hâve also shown that in thls manner the evil efCects of self- 
induction In an altematlng circuit may be overcome or eompensated and 
that constant potential or constant current may be malntained in the regu- 
lated circuit, together with other desired ends. 

The présent invention relates to the same subject of phase modification, 
and the phase-modiflers prevlously described are made a part of the inven- 
tion in certain new combinations. 

Other patents cited are the following: 

No. 372,330, E. W. Eice, Jr., Nov. 1, 1887. 

No. 383,662. O. B. Shallenberger, May 29. 1888. 

No. 392,370, Sellon & Mordev, Nov. 6, 1888. 

No. 508,638, E. W. Kice, Jr., Nov. 14, 1893. 

No. 508,887, J. F. Kelly, Nov. 14, 1893. 

Tîo. 543,907, C P. Steinmetz, Aug. 6, 1895. 

No. 548,511, P. Boucherot, Oct. 22, 1895. 

No. 582,131, B. G. Lamme, May 4, 1897. 

No. 832,852, W. MacN. Falrfax, Oct. 9, 1906. 

Further facts are stated in the opinion. 



OKNEBAL ELKCTKIO 00. V. WINONA INTËKURBAN HT. 00. 79 

Parker W. Page and Thomas B. Kerr, for appellant. 
C. V. Edwards, Thomas F. Sheridan, and Lawrence K. Sager, for 
appellee. 

Before GROSSCUP and KOHLSAAT, Circuit Judges, and CAR- 
PENTER, District Judge. 

GROSSCUP, Circuit Judge, after stating the facts as above, de- 
livered the opinion : 

The gênerai nature and purpose of the Steinmetz invention, from 
the' point of view of the appellant, is stated in the brief of the appel- 
lant as follows : 

"The invention of the patent in suit is an improvement In Systems for the 
distribution of alternating currents of electricity from a central power sta- 
tion over a main Une or circuit running therefrom to a number of independ- 
ent sub-circuits, the object being to so organlze the System that each of the 
sub-clrcuits, whatever Its Individual requirements, will at ail times in the 
opération of the System, expérience the proper eleetric pressure or potential 
and reçoive the proper current for the opération of the translating devlces 
connected with it, wlthout référence to or disturbance of the conditions on 
elther the main Une or any of the other sub-circuits. 

"In order to make this matter perfectly clear, assume that in the City of 
IndJanapolis there Is installed a large central generatlng station or power 
house at which is developed alternating current for the opération of eleetric 
llghts, motors or other translating devlces in a number of out-lying and 
isolated towns. A main Une transmission circuit runs from the central sta- 
tion to such towns, and current is delivered to it at high tension or pressure. 
At each town a portion of thls current is tapped or drawn ofC from the 
transmission llue, lowered In pressure by means of statlc transformera, and 
fed into the local or sub-eircult mains exteuding through the town. It is 
évident that one of such sub-circuits may habitually carry a heavier load, 
that is to say, may supply more lamps or motors than the others, or that at 
given times one of such sub-circuits may be called upon to run more or less" 
lamps or motors than another, and that, in gênerai, the character and the 
amount of the load on each sub-clrcuIt will be constantly varied. 

"The greater the load on any given circuit, the greater the amount of 
current that must be delivered to that circuit to perform the work, but the 
conditions and amount of load on a circuit resuit in a variation of the pres- 
sure or potential that causes the current to flow therein, just as the pres- 
sure in the branch water pipes of a building is varied in each, according to 
the number of faucets opened or closed at différent points in the building at 
the same time. Therefore, if with a given normal main Une pressure or 
potential, the number of translating devlces on a sub-circuit be Increased or 
reduced, the potential on that sub-circuit varies accordingly, tending to pro- 
duce a greater flow of current than required when the load is light, and a 
lesser proportlonate flow when it is heavy. 

"Manlfestly, from the above considérations. If a heavy load be suddenly 
thrown on one of the sub-circuits of a System of distribution, such as that 
under présent considération, It would not be practicable to adjust the gen- 
erator or generators at the central power station to raise the potential on 
the transmission Une to meet the demands for higher pressure in that par- 
ticular sub-circuit which such increased load Imposes, for the adjoining or 
some other sub-circuit of the System may at that moment be carrying an 
abnormally light load and call for a lower potential. Thus, any variation 
of the main line potential might throw the whole System out of balance, 
and it would do so unless it should so possibly happen that the requirements 
of ail the sub-circuits as to potential and current were at ail times precise- 
ly the same. Again, it may happen that conditions arise in one or more of 
the sub-circuits that tend to vm-y the pressure or potential on that circuit, 
while the best conditions of opération require a constant pressure, or finally, 
the main line pressure may vary, while it is désirable to maintain a constant 



80 188 FEDERAL KBPORTBE 

pressure In the several sub-clreuits or pressures varylng In a manner dif- 
férent from that wàicà the main Une pressure undergoes. 

"It is, therefore, essentlal to the proper opération of such a System that 
the régulation of each of the several sub-circuits should not only be inde- 
pendent of that of the main Une, tut also of every other suh-circuit, from 
which it follows that the introduction into one or more of the sub-circuits 
of such a distribution System, of a device, the sole function of which is 
that of régulation of potential, would not only fall far short of solviug the 
problem with which the patent in suit deals, but might defeat the very pur- 
pose of the patent, for whatever efl'ect such a device produced in a sub- 
cireuit would be felt throughout the whole System. If, in other words, a 
device Introduced into any one of the sub-circuits, should operate to raise 
or lower the potential in that portion of the System, It would raise or lower 
it ail the way back to the generator, and thus affiect ail the other sub-cir- 
cuits, for ail being dépendent parts of one System, they become in efCect a 
unit, and what aft'ects a part affects the whole. 

"This explanation will sufllce to illustrate the well established proposition 
In electrical engineering that In any sysftem of distribution Including a main 
supply circuit and two or more Independent sub-circuits, the régulation of 
current and potential in each sub-circuit may be effected Independently and 
In such manner as not appreclably to influence the conditions in respect to 
thèse factors In either the main circuit or in any of the other sub-circuits,. 
or to put it otherwise, so that the main circuit potential may be maintained 
uniform or may be varied, but each sub-circuit will taUe care of itself and 
its potential varied, maintained uniform, or in gênerai, regulated in any de- 
sired manner. 

"It would be possible to accomplish this resuit by means well known In 
the art and which, at the date of the patent In suit, would bave at once sug- 
gested themselves to an electrical engineer. For example, instead of simply 
drawing off current from the main liue and delivering it directly or through 
static transformera to the sub-circuits, the current taken from the line at 
any given point, mlght be used to operate a motor, and tMs in turn used to 
drive an Independent generator, feeding current Into the sub-circuit, and this 
_ latter generator, by ordinary and well known means, might be regulated to 
■ give in the local or sub-circuit any current or potential that might be re- 
quired. This plan, however, Involves the usé of two separate machines in 
addition to the static transformer for each sub-circuit, namely, a motor, and 
a generator, which obviously adds enormously to the complication and ex- 
pense of the System. 

"What Dr. Steinmetz undertook to do and accomplish by the invention 
of the patent in suit, was to produce a practical means of distributing cur- 
rent from a transmission line directly over any number of sub-circuits, and, 
while securing In each of the sub-circuits any deslred régulation of the poten- 
tial or current therein according to need, to restriet or lirait the efCects of 
such régulation to th<e BvA)-aircuît wUere it occurs, and thus to make the 
worklng conditions In each of the sub-circuits Independent of those In the 
main or transmission line. 

"He accomplished this by uslng In each sub-circuit two instrumentallties 
in combinatlon or co-operative relation, one of which he désignâtes in the 
patent In suit as a 'dynamic phase modifier' and the other as a 'localizer.' 
Nelther of thèse devices was in Itself new, but though known In the art 
prior to the date of the patent In suit, the two had never been associated 
as Stelnmetz discovered they conid be, nor used for any such purpose as he 
applied them. As a fuU appréciation of the invention as a whole requires 
a clear understanding of the nature of thèse devices, we dévote space at this 
point to a somewhat detailed explanation thereof, and to définitions of 
ternis used In the patent considering them." 

Appellant's dynamic "phase modifier," just as it appears in the 
patent, is found in the prior act, performing the same function as in 
the patent. The "localizer" appears also in the prior art as a self 
induction coil, being used, as hère, to produce synchronism between 



GENERAL ELECTRIC CO. V. WINONA INTERUEBAN RT. 00. 81 

tlie current and the electromotive force. And the relation of thèse 
two agencies to each other, reciprocally acting upon each othei to 
produce synchronism, was known in the prior art. 

With thèse facts in mind, counsel for appellant, at the oral argu- 
ment, in reply to an inquiry from the Court, stated that were thèse 
two agencies to be used in a single circuit — that is to say, were the 
relation of sub-circuits to the main line to be eliminated — such use 
would not be covered by this patent. Indced, there would be no 
occasion for such use in a single circuit, for the function of the Oy- 
namic phase modifier could be performed by the generator. 

Counsel for appellant also stated, in answer to an inquiry from the 
Court, that were the self induction coil "I," in the Steinmetz patent 
(the "localizer"), to be omitted, the dynamic phase modifier would 
remain operative, with the effect, however, that its automatic action, 
in bringing about synchronism within the sub-circuits, might be re- 
flected back into the main circuit, and thereby disturb conditions that 
ought not to be disturbed. The alleged new thing, therefore, that 
makes the Steinmetz combination patentable invention, if it be patent- 
able invention at ail, is the interposition of this self induction coil, for 
this purpose, into the sub-circuit. Is that, in view of the prior art, 
patentable invention? 

We are of the opinion that it is not. The concept, as a mère concept, 
of bringing about synchronism in the sub-circuits, does not seem to 
us, in view of what electrical inventors and engineers were then think- 
ing and doing, to hâve been invention. Not every advance is inven- 
tion. Coming, as successive advances do, in the évolution of electrical 
uses, many such advances disclose nothing beyond good electrical en- 
gineering. To bring synchronism in the sub-circuits, when the sub- 
circuits had come, must hâve been within the thought of every elec- 
trical engineer; and to bring it about, independently of the main cir- 
cuit, could not hâve escaped the thought of mère engineers. The con- 
cept présent, Steinmetz had at hand, in the prior art, everything 
necessary to the concept except a means of cutting off the reflection 
back. And the self induction coil, as such means, appears to us, in 
view of the prior art, so obvions a means that its sélection is not 
invention. That the use of the dynamic phase modifier might, unless 
something was interposed, refiect back upon the main line, must hâve 
been in the thought of electrical engineers; and to eut it off by the 
interposition of the well-known self induction coil, was almost as 
obvious as the interposition of résistance coils, where résistance coils 
are needed. To pronounce each adaptation of this kind patentable 
invention, would be to so encumber the electrical field with m.onopoly, 
that mère engineers would hâve no room to give to the art the benefit 
of their knowledge. 

The decree appealed from is affirmed. 
ISS F.— 6 



82 188 FEDERAL BEFORTEB 

DNDERWOOD TYPEWRITEK CO. v. VICTOR TTPEWRITEE 00. 

(Circuit Court of Appeals, Second Circuit May 16, 1911.) 

No. 264. 

Paients (§ 328*) — Valtdity and Infbingement— Ttpewbitinq Machine. 

The Wagner patent, No. 559,345, for an Improvement in typewritlng 
macliines, clalm 2, the essential feature of wlilch Is a lifting spring to 
assist the shif t-lœy in lifting the platen to receive impressions f rom upper 
case type, is void for lack of Invention, in view of the prior art. Olaim 
3, conceding its validity because of an additional élément, held not in- 
frlnged. 

Appeal from the Circuit Court of the United States for the South- 
ern District of New York. 

Suit in equity by the Underwood Typewriter Company against 
the Victor Typewriter Company. Decree for défendant, and com- 
plainant appeals. Affirmed. 

Arthur v. Briesen and Eugène Eble, for appellant. 

Knight Bros. (Henry C. Workman and Harry E. Knight, of coun- 
sel), for appellee. 

Before LACOMBE, WARD, and NOYES, Circuit Judges. 

NOYES, Circuit Judge. This is a suit to restrain the alleged in- 
fringement of letters patent No. 559,345 issued to Franz X. Wagner, 
assignée, on April 28, 1906, for an improvement in typewriting ma- 
chines. The complainant is the présent owner of the patent. 

The défenses are: 

(1) Invahdity. 

(2) Noninfringement. 

The patent relates to "front-strike" typewriters having movable 
carriages in which are mounted platens or paper rollers traveling 
therewith to receive the impact of type-bars at proper intefvals under 
the control of an escapement mechanism. In a typewriter of this kind 
the type-bars carry two différent characters, generally a capital above 
and a small letter below, so that it is necessary that the platen should 
occupy two vertical positions in order to receive the impact of ail the 
characters. As the small letters or lower case characters are more 
frequently used, the lower position of the platen — which receives the 
impact of those characters — is the normal one, and it is maintained 
in that position by gravity. To bring the platen so that it will re- 
ceive the impact of the capital letters, a shift-lever is provided which 
lifts it to the upper position. 

As the upwardly shifting opération of the platen is opposed to 
the force of gravity and as the parts to be lifted hâve considérable 
weight, the strain upon the operator's finger in continually lifting 
the platen becomes burdensome when a shift-key alone is used, and 
a feature of the claims of the patent now in issue is the employment 
of a lifting-spring to co-operate with and supplément the action of 
the shift-key. 

•For other cases see same topic & S numbeh lu Dec. & Am. Digs. 1907 to dat», & Rep'r Indexes 



tJNPERWOOD TTPEWRITER CO. V. VICTOR TTPEWRITER CO. 83 

The principal claim hère involved is the second, which is as fol- 
lows : 

"A carrlage, comblned wltli a platen or paper roller, swlnging arnis con- 
nectée! to said roller, a shaft for said arnis, a lifting-spring for the roller 
coiled about said shaft, and a flnger-key made to eo-operate with the spring 
for lifting the roller, substantially as described.i 

While the complainant urges that the réduction of the muscular 
power required to Hft the platen by the employment of the lifting- 
spring is a most important feature of the claim, it dénies that that is 
the only purpose of the mechanism provided. It insists that, while the 
spring acts on the platen through the swlnging arms to counterbalance 
the excess weight, yet that the swlnging arms themselves fulfill an 
important function by so supporting the platen that it remains in 
parallelism to the printing line, whether in upper or lower case posi- 
tion, and so préserve proper alignment. 

The défendant, on the other hand, while denying invention and 
novelty, contends that, if they are to be found at ail, they must be 
looked for in the counterbalancing spring élément of the claim; 
that the other éléments, separately or in combination, were old, and 
were, in effect, conceded to be so by the patentée in the Patent Office. 

The file wrapper shows — as the défendant contends — that, when 
the claim corresponding to the claim aforesaid was rejected by the 
Patent Office, the arguments advanced by the patentée against such 
rejection related altogether to the spring. He insisted that the pat- 
ents cited against the claim did not show counterbalancing springs. 
Moreover, the first claim of the application as originally presented 
was for a combination of a carriage and a platen made shiftable in- 
dependently thereof to bring the paper to the printing points of the 
various types. This was rejected by the Patent Oifice on various 
citations. The patentée then amended the claim by inserting the 
words, "and swinging arms made to connect the platen and the 
carriage." Again the claim was rejected, and the patentée filed a 
new and distinct claim which contained the spring élément. 

It therefore seems clear that the patentée acquiesced in the ruling 
that there was nothing novel in the combination of a carriage with 
a platen, swinging arms connected thereto, a shaft for said arms, and 
a finger-key for raising the platen. Furthermore, we are satisfied 
from our examination of the prior art as shown in the record that 
there was in fact nothing novel in such a combination. The platen 
travels upon the carriage and must hâve some connection thereto, 

1 Claim 3 Is also in issue and reads as follows: 

"A carriage, combined with a paper-roller, swinging arms comiecled to 
said roller, a shaft to which said arms are flxed, a spring coiled about the 
shaft, a tooth collar loosely mounted on the shaft and engaged by the spring, 
and a second toothed collar fixed to the shaft and engaged by the loose collar 
substantially as described." 

It will be observed that this claim Is substantially the same as the second, 
with the exception of the tootbed collars for regulatlng the spring. So far as 
the claim may be reeiarded apart from this élément, that which is said in the 
opinion regarding claim 2 is applicable to it. The effect of the présence of 
this élément will be eonsidered whem claim 3 is separately taken up near the 
conclusion of the opinion. 



84 188 FEDERAL EEPORTEB 

and we think that connections by swînging arms were old in the prior 
art. Thus, for example, the Kidder patent, No. 471,794, had a rock- 
shaft and pinions serving substantially the purpose of the swinging 
arms of the claims. 

It must also be observed that it is by no means clear that the 
swinging arms of the claims, acting by themselves, do fulfill the func- 
tion of preserving the alignment as the complainant contends. The 
complainant urges in its brief and présents drawings to show that 
the swinging arms of the defendant's machine — which it asserts 
come within the claim — will not hold the platen in proper ahgnment, 
and that guides are needed for such purpose. Besides this, the com- 
plainant's experts point out a pin and slot arangement in the drawings 
of the patent in suit for keeping the platen plumb. 

We are therefore of the opinion that the défendant is correct in 
its contention that without the spring élément there is nothing new 
in the claim, and that invention and novelty must be found, if at ail, 
in the lifting-spring. 

Now it is entirely clear that the structure of the claim is operative 
without the lifting-spring. The complainant's witnesses who used 
the alleged infringing machine testify that it would work, but less 
easily, with the lifting-spring disconnected. The only différence was 
that there was more of a load to lift. It is also manifest that the 
connection of the spring to the other éléments involves no new method 
of opération in the éléments separately or in the combination. The 
platen is raised by the shift-lever, whether the spring is présent or 
absent. The spring itself performs the same function it would per- 
form if used elsewhere. The claim is invalid without the spring, 
and the bringing into the combination of the spring — concededly old 
in itself — and leaving it and the other éléments to perform their old 
functions in the old way, would seem to produce little more than an 
aggregation. 

It is unnecessary, however, to hold the claim invalid as a mère 
aggregation. We may take judicial notice that it was old in the 
art to provide counterbalances for readily lifting heavy parts of 
machines. Such counterbalances by weights were in gênerai use, and 
counterbalancing springs were not uncommon. They were employed 
in typewriters. Thus the Spiro patent. No. 464,398, calls for a flat 
or leaf form spring for the purpose of lifting the carriage. The 
spécification of this patent says: 

"A spring, H», Is secured to the upper surface of the bed and implnges 
against the under surface of the track, se as to merely counterbalance the 
welght of the carriage and track, in order to reduce the power required to 
lift said earrriage." 

As stated, this spring was to be used for lifting the carriage, and 
not for lifting the platen alone ; but it indicated the use of a counter- 
balancing spring in a typewriter to assist in raising a more or less 
heavy part. The Kidder patent, No. 471,794, shows a vertical 
shifting platen moving independently of a carriage and provided with 
a counterbalancing spring. In this machine the spring which as- 
sists in Hfting the roller also retards its dépression to receive a third 
type; but, so far as it relates to the lifting opération, it indicates the 



COMMERCIAL ACETYLENE CO. V. 8EARCHLIGHT GAS CO. 85 

use of a lifting spring to assist the key lever in raising the platen 
to receive the impact of the type-bar. Other old patents show the use 
cf reciprocating springs in connection with différent parts of type- 
writers. While it may be that none of the structures of thèse patents 
constitutes an anticipation of the structure of the claim, yet with them 
in the prior art we think it did not involve invention to employ a lift- 
ing-spring in the manner stated. We think that it should hâve been 
obvious to any person , skilled in the art, who f ound that the platen 
lifted with difficulty by the use of the key-lever alone, to apply 
in some form a lifting-spring to assist the lever. Nor do we think 
that it involved invention to sélect the old coiled spring upon a rock- 
shaft as the particular form. 

For thèse reasons, it is our opinion that the second claim of the 
patent is invalid for want of invention in view of the prior art. 

The third claim of the patent — as we hâve seen — is substantially 
the same as the second, except that it embraces means for adjusting 
the coiled spring on the shaft. Assuming that the claim is valid be- 
cause it embraces the additional élément, it is obvious that it is of 
the most narrow nature and must be confined substantially to the 
means indicated. Thèse means are the two toothed collars — one 
loosely mounted on the shaft, and the other fixed thereto. In the 
defendant's structure, however, there is no collar loosely mounted 
on the shaft, and we think that the screws, which pass through the 
single collar and bite on the shaft, are not within any range of équiv- 
alents to which such a narrow claim is entitled. 

The decree of the Circuit Court is affirmed, with costs. 



COMMERCIAL ACETYLENE CO. et al. v. SEARCHLIGHT GAS CO. et al. 

(Circuit Court, N. D. Illinois, E. D. Aprll 25, 1911.) 

No. 30,301. 

1. Patents (§ 132*) — Term— Limitation by Foeeign Patent. 

In determining whether the invention cl: a United States patentée was 
previously patented in a foreign country within the meaning of Rev. St. 
§ 4887 (U. S. Comp. St 1901, p. 3382), so that its term is limited by such 
foreign patent, the court must look through the mère form of phraseol- 
ogy and détermine what was the essence of the Invention laid open to the 
public by the foreign patent 

[Ed. Note.— For other cases, see Patents, Cent. Dig. §§ 188^-191 ; Dec 
Dig. § 132.*] 

2. Patents (§ 328*) — Term— Foeeign Patent— Acétylène Tanks. 

The Claude and Hess patent, No. 664,383, for an Improvement in ap- 
paratus for storlng and distributing acétylène gas, is limited as to term 
by the British patent No. 29,750 of 1896, granted to the same inventors 
for an Improved method of storing acétylène for lighting and other pur- 
poses, and which expired by limitation June 30, 1910. 

In Equity. Suit by the Commercial Acétylène Company and the 
Prest-0-Lite Company against the Searchlight Gas Company and 
others. On motion for preliminary injunction. Motion denied. 

*For other cases see same topic & § numeee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



86 188 FEDERAL REPORTER 

Matthew Mills, Elmer D. Brothers, John P. Bartlett, Clarence Win- 
ter, and Keyes Winter, for complainants. 

Robert H. Parkinson (John S. Miller and Merritt Starr, of counsel), 
for défendants. 

George A. Miller and W. K. Mcintosh, for certain défendants, 

KOHLSAAT, Circuit Judge. Complainants hâve filed their bill 
herein to restrain infringement of claims 1, 2, and 5 of patent No. 
664,383, granted to Claude and Hess on December 25, 1900, upon ap- 
plication filed March 1, 1897, for improvement in apparatus for storing 
and distributing acétylène gas. The cause is now before the court 
on motion for a preliminary injunction. The patent, as well as the in- 
fringement thereof hère involved, were adjudicated by Judge Quarles 
on January 13, 1909, in Commercial Acétylène Company v. Avery Port- 
able Lighting Company (C. C.) 166 Fed. 907, in favor of the présent 
complainant. That décision is broad enough to bind the défendant 
herein upon ail the questions now involved save one. British letters 
patent No. 29,750, issued to said Claude and Hess, upon application 
filed June 30, 1896, which patent expired under the English law in 14 
years, or on June 30, 1910, provided ail requirements were observed. 
As a matter of fact, so défendant asserts, the English patent expired 
on June 30, 1900, by reason of patentee's failure to comply with the 
requirements of the laws of Great Britain. 

Assuming the fact to be that at the date of the prior adjudication 
the English patent was still in force, it is apparent that the questions 
hère presented would not hâve been pertinent. They were neither 
présent nor considered, and are now presented for the first time. This 
suit was instituted on February 1, 1911, or more than seven months 
after the expiration of the British patent. By the terms of section 
4887 of the Revised Statutes (U. S. Comp.St. 1901, p. 3382), it is pro- 
vided that where a patentée has caused his invention to be first patented 
in a foreign country and afterwards takes out an American patent on 
the same subject-matter, the American patent shall be so limited as to 
expire at the same time with the foreign patent. The several amend- 
ments to the act hâve no bearing upon the présent litigation. Thus, 
if it appears that the subject-matter of the claims in suit is substan- 
tially the same as that involved in the British patent, then the claims 
in suit constituted no cause of action at the time the suit was insti- 
tuted, and this suit could not be maintained. 

The three claims hère involved read as follows: 

"(1) A elosed vessel contaiiiing a supersaturated solution of acétylène pro- 
duced by forcing acétylène Into a solvant under pressure, sald vessel liaving 
an outlet for the acétylène gas which escapes from the solvent when the pres- 
sure is released or reduced, and means for controUing sald outlet whereby 
the gas may escape therethrough at substantlally uniform pressure, substan- 
tially as deserlbed. 

"(2) A prepared paeliage consisting of a tlght shell or vessel ; a solvent 
of acétylène contained wlthin said vessel ; and acétylène dissolved in and 
held by said solvent under pressure and constituting therewith a supersat- 
urated solution, the package being provided at a point above the solvent v^ith 
a reducing-valve, substantlally as and for the purpose set forth." 

"(5) As a new article ol: manufacture, a gas-package comprising a holder 
or tight vessel; a contained charge of acétone; a volume or body of gas 



COMMERCIAL ACETYLENE CO. V. SEAECHLlGHT GAS OO, 87 

dlssolved by and compressed and contained withln the solvent ; and a redue- 
ing-valve applied to an opening extendlng to the interior of the holder above 
the level of the solvent, substautially as set forth." 

The court in Acétylène Company v. Avery Portable Lighting Co., 
supra; held that the means for maintaining uniform pressure of claim 
1, the reducing valves of the claims 2 and 5, together with the outlets 
in said claims severally described, f ound their équivalent in the needle 
valve of défendants in that case. The valve hère involved is likewise 
a needle valve. 

Complainant no longer employs the reducing valve shown in the 
drawings. It is défendants' contention that the subject-matter of the 
British patent is substantially that of the patent in suit. It will be 
noticed that the British patent calls for "an improved method of storing 
acétylène for lighting and other purposes," while that in suit is entitled, 
"Improvement in apparatus for storing and distributing acétylène gas." 
The court held in the case above cited that "Claude and Hess were the 
first to discover a practical and safe method of storing and trans- 
porting" acétylène and acétone, although the claims in suit called for 
an apparatus ; i. e., a "closed vessel," "a prepared package consisting 
o£ a tight shell or vessel," and "a gas package comprising a holder or 
tight vessel." The claims are for a combination, one élément of 
which is a supersaturated solution caused by forcing acétylène into 
acétone or other solvent under pressure. This was suggested by the 
board of examiners. In summing up the invention, the court, in the 
case above cited, says : 

"By equipplng the gas package wlth acétone as a solvent, they (Claude and 
Hess) hâve enormonsly Increased the storing oapacity of the tank, rendering 
it possible to store under moderate pressure 300 times as much acétylène gas 
as would otherwlse be compressed thereln ; second, they hâve disclosed the 
Chemical changes that take place In both gas and llquid when so combined, 
which render both Innocuous and capable of safe transportation. Thèse two 
features of the dlscovery clearly entitle the inventer to protection. * • * " 

Both of thèse accompli shments, it will be seen, go to the use of 
acétylène and acétone under pressure. It does not appear from the 
record that the British so-called method patent was ever called to the 
attention of the court. It discloses very specifically the method of 
storing acétylène by compression in connection with certain liquids, 
particularly acétones. It follows that at the time this suit was brought 
this method of reducing acétylène to a greatly reduced volume for 
purposes of storage, transportation, and utilization was public prop- 
erty, but it might still, although public, become an élément of a valid 
combination patent, so that, in order to hold that the patent in suit 
expired with the British patent, it must appear for the purposes of 
this hearing that the latter disclosed the combination. Claims 6 and 
7 of the Brtish patent read as follows, viz. : 

"The employment of a receiver containing a liquld chargea with acétylène 
umder pressure and from which the acétylène is evolved when required (or 
use as speclfied. 

"The herein described method of storing acétylène gas in a small volume 
for lighting or other puriwses, which conslsts in dlssolving the acétylène gas 
under pressure in a suitable llquid solvent such as described from which It 
can be evolved when required for use." 



88 ISS FEDERAL, REPORTER 

It wîll be seen that, while ostensibly describing a method, tliese 
claims describe the device of the patent in suit as construed by the 
Wisconsin court. 

[1] In determining the meaning of the word "patented" in section 
4887, the courts hâve not confined themselves to its narrow sensé as 
applying to what is specifically covered by the claims. Such a con- 
struction would manifestly lead to absurdity; for, if nothing less than 
a literal copy of the foreign patent could be held the same invention, 
it would not be difficult for the skillful patent sohcitor to defeat the 
intent of the statute by mère colorable changes in the spécification 
and claims. It is very clear that the court must look through mère 
form and phraseology and détermine what was the essence of the in- 
vention laid open to the public by the foreign patent, and base its dé- 
cision upon matters of substance rather than those of form. Com- 
mercial Mfg. Co. V. Fairbank Co., 135 U. S. 176, 10 Sup; Ct. 718, 34 
L. Ed. 88; Siemen v. Sellers, 123 U. S. 276, 8 Sup. Ct. 117, 31 L. Ed. 
153; Western Electric Co. v. Citizens' Téléphone Co. (C. C.) 106 
Fed. 215; Electric Accumulatof Co. v. Julien Electric Co. (C. C.) 38 
Fed. 117, 143; Sawyer Spindle Co. v. Carpenter (C. C.) 133 Fed. 
238, 240, 241, and 143 Fed. 976, 75 C. C. A. 162; Miller v. Eagle 
Mfg. Co., 151 U. S. 186, 14 Sup. Ct. 310, 38 L. Ed. 121. 

[2] The patentées conceded before the officiais of the Patent Of- 
fice that the closed vessel with its two valves and containing acéty- 
lène gas involved no patentability, and it was only by the use of the 
acétylène gas in connection with the acétone, both under pressure, 
that a patent was granted. Therefore there is no patentable novelty 
in the form of receiver or closed vessel alone. When, therefore, the 
British patent calls for the employment of a receiver containing a 
liquid charged with acétylène under pressure and from which the 
acétylène is evolved when required for use as specified, it must be 
held to hâve contemplated the common forms of receiver, among 
which is that of the patent in suit, or the one used by the parties 
hereto, thus disclosing every step in the claims in suit. With this 
construction the spécification is in full accord. It reads in part as fol- 
lows : 

"With a pressure of about equal to that used In a soda-water syphon, we 
are able to store a considérable volume of acétylène in a receiver of relatively 
small dimensions. With a liquid dissolvin^ m times its volume of acétylène, 
we ean thus store at equal pressure about m times more gas than If it were 
simply compressed wlthout being dlssolved in a liquid which is the principle 
of our invention. 

"When gas is withdrawn from a receiver containing a solution of acétylène 
under pressure, the pressure necessarily falls constantly, and to obtaln a reg- 
ular supply of gas we provide the vessel vrtth a pressure regulator. ïhe pro- 
cess may be carried out as follows, for Instance, although subject to modifi- 
cations. 

"The acétylène is dlssolved In the liquid chosen, for instance by the means 
ordinarily employed in making soda-water, the solution of the gas being fa- 
cilitated by agitation under pressure in contact with the liquid. The solu- 
tion under pressure, however obtained, Is filled into a receiver of métal or of 
glass (such as used for soda-water) capable of resisting the pressure em- 
ployed. The receiver bas a cocli and the necessary adjuncts for connection 
directly or through an expansion ehamber, with the applianees In which the 



COMMERCIAL ACETYLENE CO. V. ACME ACETYLENE A. CO. 89 

gas is i3sed by the consumer, the substitution of charged for empty receivcrs 
being readily effected. 

"The storage receivers may vary in dimensions from a small portable, to 
a large fixed, gas-holder." 

As the record now stands, the receiver or package is nothing more 
than a mère réceptacle with a needle valve outlet régulation, one of 
the commonest trade means of storing an article for transportation. 
It is difficult to understand how, given the liquid acétylène as an 
article free to ail, its monopo'y can be further prolonged by claiming 
it in combination with an ordinary tank or other réceptacle for trans- 
portation as a combination patent. Had the two patents been granted 
in this country, there would seem to be little doubt but that the 
patent in suit, under the présent record, must be held void, under the 
rule laid down in cases of double patenting. It is therefore held for 
the purposes of this hearing that the patent in suit expired on June 
30, 1910, with the English patent. 

The motion for an injunction in limine is therefore denied. 



COMMERCIAL ACETYLENE CO. et al. v. ACME ACETYLENE APPLI- 

ANCE CO. et al. 

(Circuit Court, E. D. Mlchigan, S. D. April 26, 1911. On Motion for 
Eehearlng, May 11, 1911.) 

No. 4,104. 

1. Patents (§ 107*) — Validitt— Abandonment— Method and Appabatus Ap- 

plications. 

A method and the apparatus for praetlcing such method are distinct 
things, and may be the subjects of separate Inventions and covered by 
separate patents ; and, where separate applications are made for each 
by the same Inventer, hls vpithdraveal or abandonment of one does not 
affect the valldity of a patent granted for the other. 

[Ed. Note. — For other cases, see Patents, Cent. Blg. § 150; Dec. Dlg. 
§ 107.*] 

2. Patents (§ 1,32*) — Validitt— Invention Previotjslt Patented in Foe- 

EIGN CoUNTEY. 

A foreign patent for a method Is not for the same Invention as an ap- 
plication for a United States patent for an apparatus for practicing that 
method so as to brlng the case withln Rev. St. § 4887 (U. S. Comp. St. 
1901, p. 3382), and invalidate a patent granted on such application. 

[Ed. Note.— For other cases, see Patents, Cent. Dig. §§ 188%-191 ; Dec. 
Dlg. § 132.*] 

8. Patents (§ 307*) — Suit fob Infbingement— Pbeliminaby Injunction— 
Secukitt on Granting. 

On the granting of a prelimlnary injunction agalnst Infrlngement of a 
patent which will necessarily close down a business belng established by 
défendant with good prospects, the actual damages which will resuit if 
the injunction Is erroneously issued will necessarily be incapable of even 
approximate ascertainment, and the ordinary bond for payment of such 
damages will afford inadéquate protection, and in such case it should be 
conditloned for the payment of a flxed sum estimated by the court as the 
fair value of the business to be destroyed. 

[Ed. Note. — For other cases, see Patents, Cent. Dig. §§ 502, 503; Dec. 
Dlg. § 307.*] 

•For other cases see same topic & 9 numbeb in Dec. & Am. Blgs. 1907 to date, & Rep'r Indexes 



90 188 FEDERAL EEPOETEB 

In Equity. Suit by the Commercial Acétylène Company and the 
Prest-0-Lite Company against the Acme Acétylène Appliance Com- 
pany and others. On motion for preliminary injunction on patent No. 
664,383. Motion granted. 

Bartlett, Brownell & Mitchell and Winter & Winter, for complain- 
ants. 
Day, Calfee & Fogg, for défendants. 

On Motion for Preliminary Injunction on Patent No. 664,383. 

DENISON, District Judge. Under the settled rules which govern 
such motions and giving due force to the previous décisions upon 
this patent, this motion should be granted, unless the new évidence 
now presented by défendants is so forceful as to indicate that it 
would hâve defeated complainant if it had been presented in the 
former hearings. This new évidence is (1) the record of the applica- 
tion for the method patent, and (2) the prior British patent to the same 
patentées. 

( 1) The Method Application. 

[1] The two applications on apparatus and on method vv^ere filed 
together. They were complementary to each other. The inventions 
were corrélative. One sought to patent an apparatus which em- 
ployed the method, and the other sought to patent the method which 
employed the apparatus. Passing by various distinctions which de- 
veloped, and assuming for the présent that they remained perfectly 
corrélative, it resulted that the apparatus application was granted and 
ripened into the patent in suit, and that the method application after 
rejection was abandoned. It is now urged that thereby the main 
idea, the "soûl of the invention," was abandoned to the public. 

I do not so understand the rule. The two things, method and 
apparatus, are distinct inventions. They may be patented by sepa- 
rate patents. The apparatus applicant may apply for the method, 
or he may not, as he chooses. If he applies for both in separate appli- 
cations, he may change his mind, and withdraw or abandon either 
without affecting the other. The doctrine of the cases upon which 
défendants rely is that acquiescence in the rejection of a claim and 
acceptance of a grant with other claims estop the grantee from con- 
struing the grant as if it contained the claim rejected. This doctrine 
cannot apply to negotiations which did not mature into the grant of 
anything. The références and arguments which had more or less 
effect in inducing the abandonment are now important, not as an 
estoppel, but only on their merits ; and on their merits they hâve been 
considered in the former décisions. 

(2) The British Patent (No. 29,750 of 1896). 

[2] The full term of this patent expired at the latest in December, 
1910, and I assume (without considération), that it waynot affected by 
article 4 bis of the Brussels Convention. Was it for the same m- 
vention as the patent in suit, so as to invoke section 4887, Rev. St. (U. 
S. Comp. St. 1901, p. 3382)? 



COMMERCIAL ACETYLENE CO. V. ACME ACETYLENE A. CO. 91 

The Leeds & Catlin Case, 213 U. S. 301, 29 Sup. Ct. 495, 53 L. Ed. 
805, décides, as I read it, that a foreign patent for a method and a 
United States patent for an apparatus for practicing that method do 
not make a case under section 4887. The British patent, now in- 
volved, I think was a patent for the method. True, it discloses an ap- 
paratus, but so must a method patent usually do. Even claim 6 is 
not in terms of means. It is in terms of use, "the employment of, 
etc.," and, taking title, description, and claims together, I call it a 
patent, for the method or process. 

[3] It follows that the injunction should be granted. However, 
the questions now raised are at least partly new to this Htigation. The 
Court of Appeals or this court on final hearing may take a différent 
view; and complainant should give security. In such a case, vvhere 
an injunction closes down a business which is being estabhshed and 
which has good prospects but no long-settled basis, a bond, con- 
ditioned in the common form to pay such damages as défendants 
may suffer by the issue of the injunction, is not a real protection. The 
damages in such a case are likely to be serions and genuine, but 
largely or wholly incapable of proof. In such case the condition 
should be to pay a fixed sum which can fairly be estimated as the 
value of the îjusiness which is destroyed. An injunction hère will 
continue for several months. It will destroy the défendants' expected 
business for the current season, and make their investment largely 
worthless. I think it can fairly be anticipated that their damages by 
the issue of the injunction, if the injunction turns out to be wrong- 
ful, will be $5,000. Therefore the condition of the bond will be: 

"That if it shall. In such cause, be flnally déterminée! elther that the pat- 
ent sued upon was invalid or that the défendants were not acting In Infringe- 
ment thereof, the complainants will pay to the défendants the sum of flve 
thousand dollars as and for liquldated damages caused by the issuing of such 
prellminary Injunction ; and also such damages, if any, caused thereby in 
excess of flve thousand dollars as may be assessed by the court in this cause 
in favor of the défendants and against the complainants on account of the 
issuing of such injunction, such damages both liquidated and assessed excess 
to be subject to be ordered to be paid in the final decree In thia cause, or by 
proceedings herein at the foot of the decree." 

On Motion for Rehearîng. 

Défendants ask a reconsideration, and présent a turther argument 
upon the point that the patent in suit expired with the British patent. 
They call my attention to the décision of Judge Kohlsaat in the 
Searchlight Company Case, 188 Fed. 85, which décision, upon the 
former argument, either was not mentioned or escaped my notice. 

The argument presented is the same which I considered in the 
mémorandum opinion already filed. With the greatest déférence to 
the opinion of Judge Kohlsaat, I am, upon further considération, 
satisfîed that my former conclusion is correct. The contrary argu- 
ment seems to me to overlook the rule of the Leeds & Catlin Case that 
patents for a process and for the apparatus, although, in a vague sensé, 
really for the same invention, are not within and are not covered 
by section 4887. Further examination confîrms me also in the opinion 
that the British patent is really and essentially a patent for the method. 



92 188 FEDERAL EEPOKTEB 

atid that to consider it as an apparatus patent does violence to îts 
structure. 

In the présent status of the matter, it is to be assumed that the 
patent in suit is for an invention very useful to the pubHc. It was 
granted in 1900 for 17 years. The Patent Office did not require it to 
be limited on its face, although the British patent was of record in the 
United States Patent Office. Now to shorten the 17-year term into 
a 10-year term, is a step that I think should not be taken unless the 
statute is clearly appHcable. 

Let an order be entered denying the application for rehearing. 



UNITED STATES v. SWIFT et al. (three cases). 

(District Court, N. D. Illinois, B. D. May 12, 1911.) 

Nos. 4,509, 4,510, 4,511. 

L CouBTS (§ 91*) — Peevious Décisions— Sheem:a.n Anti-Tkust Act— Valid- 
ITY or Ceiminal Pbovisions. 

Sherman Anti-Trust Act July 2, 1890, c. 647, 26 Stat. 209 (tL S. Comp. 
St 1901, p. 3200), Is prlmarily a criminal statute, prohiblting certain acts 
as unlawful restraints and monopolies of Interstate trade and commerce 
and prescribing the punishment therefor, the jurisdictlon conferred on. 
Circuit Courts as courts of equity by section 4 to "prevent and restrain 
violations of this act" being made dépendent on the preceding criminal 
sections and coniined to preventing the carrying out of that which is de- 
clared in the prior sections to be criminal. Therefore every décision of 
the courts sustaining an injunction granted under such section has nec- 
essarily determined that the preceding sections are valid, and that the 
things enjoined were crimes, and In view of tlie numerous décisions of 
the Suprême Court upholding such Injunctions the validity of the crim- 
inal sections is no longer open to question in the inferlor courts. 

lEd. Note. — For other cases, see Courts, Cent. Dig. § 325 ; Dec. Dig. J 
91.*] 

2. Indiotment and Information (i 125*) — Duplicitt— Combinations in Re- 

STBAINT OF INTERSTATE COMMEBCE. 

An indictment charging a combination in restraint of Interstate com- 
merce in violation of Anti-Trust Act July 2, 1890, c. 647, § 1, 26 Stat. 209 
(U. S. Comp. St 1901, p. 3200), is not bad for duplicity because it charges 
and enumerates différent means adopted or différent things done to ac- 
complish the object of the combination. 

[Ed. Note. — For other cases, see Indictment and Information, Cent. Dig. 
§§ 350-371; Dec. Dig. § 125.*] 

3. Monopolies (§ 31*) — Combination in Restkaint of Interstate Commeecœ 

— Cbiminal Peosecdtions — Indictment. 

An indictment for a combination in restraint of Interstate commerce 
In violation of Anti-Trust Act July 2, 1890, c 647, § 1, 26 Stat. 209 (U. S. 
Comp. St. 1901, p. 3200), between défendants as représentatives of three 
différent packing concerns, which charges that each concern was repre- 
sented by certain Indivlduals, each one of whom was authorized to act for 
the others of his "group" and that the word "group" as used therein is 
Intended to apply to any or ail of the membere of the particular group, Is 
sufïiciently spécifie where it charges that acts were done by a particular 
group without averring that each particular member of such group indi- 
vldually took part therein. 

[Ed. Note. — For other ca:ses, see Monopolies, Cent. Dig. | 20 ; Dec. Dig. 
§ 31.*] 

•For other cases see same topie & § numbee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



TTNITED STATES V. SWIFT 93 

4. Monopolies (§ 31*)— Combination in Restraint of Interstate Commerce. 

An indictmeiit for a combination in restraint of Interstate commerce in 
violation of Anti-Trust Act July 2, 1890, c. 647, § 1, 26 Stat. 209 (D. S. 
Comp. St. 1901, p. 3200), wliieh cliarges that défendants were ofHcers of 
certain corporations which they managed and controlled, directing tbe 
corporate action, and that the groups of défendants representing the sev- 
eral corporations comblned together to do tlie illégal acts, sufficiently 
charges défendants as individuals. 

[Ed. Note. — For other cases, see Monopolies, Cent. Dig. § 20 ; Dec. Dig. 
1 31.*] 

5. Monopolies (§ 31*) — Violation of Anti-Trust Act— Indictment. 

An indictment which charges acts constituting a contract, combination, 
or conspiracy in restraint of interstai,e commerce in violation of Anti- 
Trust Act July 2, 1890, c. 647, § 1, 26 Stat. 209 (U. S. Comp. St. 1901, p. 
3200), is good whether such acts are alleged to constitute a contract, com- 
bination or conspiracy. 

[Ed. Note. — For other cases, see Monopolies, Cent. Dig. § 20 ; Dec. Dig. 
§ 31:*] 

6. Indictment and Information (§ 59*) — Eequisites and Sufficienct of 

Accusation. 

An indictment is sufflcient when it contains a substantial accusation of 
crime and its statements furnish the accused with such a description of 
the charge against him as will enable him to make his défense and avail 
himself of his conviction or acquittai for protection against further prose- 
cution for the same offense, and when from It the court can détermine 
that the facts chargea are sufficient in law to support a conviction. 

[Ed. Note. — For other cases, see Indictment and Information, Cent. Dig. 
§ 180 ; Dec. Dig. § 59.*] 

7. Monopolibs (§ 31*) — Anti-Tbust Act— Offenses. 

An indictment alleging facts which show that défendants oontrol three 
extensive packiug concerns doiug an Interstate business and controlllng 
the larger part of the business in the states in which they operate ; that 
they hâve comblned together in a plan to eliminate compétition between 
such concerns by an agreement not to bid against each other for llve 
stock, but to bid exaetly the same amounts for like grades, and by fixing 
a uniform selllng price to be charçed by each, and apportloning among 
themselves the total business done accordlng to the flnancial Interest of 
each — charges a contract combination or conspiracy in restraint of Inter- 
state commerce in violation of Sherman Anti-Trust Act July 2, 1890, c. 
647, § 1, 26 Stat 209 (U. S. Comp. St. 1901, p. 3200). 

[Ed. Note. — For other cases, see Monopolies, Cent. Dig. § 20 ; Dec. Dig. 
§ 31.*] 

Proceedings by indictments against Louis F. Swift and others. On 
demurrers to indictments. Overruled. 
See, also, 186 Fed. 1002. 

Geo. W. Wickersham, Atty. Gen., Edwin W. Sims, U. S. Atty., 
Wm. S. Kenyon, James H. Wilkerson, Pierce Butler, James M. 
Sheean, Oliver E. Pagan, Elwood G. Godman, and Barton Corneau, 
for the United States. 

John S. Miller, Moritz Rosenthal, Levy Mayer, George T. Buck- 
ingham, M. W. Borders, Albert Veeder, Henry Veeder, Alfred R. 
Urion, and Ralph Crews, for défendants. 

CARPENTER, District Judge. First I will dispose of the conten- 
tion that the provisions of the Sherman act (Act July 2, 1890, c. 647, 

•For other cases see same topic & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



94 188 FEDERAL REPORTEE 

26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]) are "too indefinite and 
uncertain in defining the éléments or constituents of the crime to 
justify the indictments, and punishment thereunder by imprisonment 
or fine." 

[1] In this connection I may say that great skill and ability hâve 
been exhibited by the counsel for the défendants in analyzing the 
various décisions of the Suprême Court of the United States which 
hâve passed upon the Sherman act. In the view which I take of 
those décisions, it will not be necessary for me to détermine whether 
the Congress of the United States meant exactiy vi^hat it said in pass- 
ing that act, or whether its meaning was to dépend upon judicial con- 
struction. If the matter had corne to me as an original proposition, 
I would be obhged to say, having due regard to the three independent 
branches of our government, that the sole power to make the law 
rested with the législative branch, and that the sole power of the , 
courts, being satisfied that the législative body had not exceeded its 
constitutional authority, was to interpret and enforce the law as made ; 
that the power of the courts is to interpret, rather than to create, a 
law. This statute defines the acts declared to be unlawfui in simple 
English. The purpose of the act, when ascertained from the language 
used, is as clear as may be. The législative purpose inspiring its pas- 
sage is interesting as a matter of history, but in the absence of am- 
biguity or uncertainty in the words or phrases used, is, legally speak- 
ing, at least unimportant. Canons of construction and means used 
commonly by the courts to détermine législative intent serve only to 
confuse when that intent is clearly expressed. Rules of construction 
serve no .good purpose when there is nothing to construe. Courts 
ought not to interpret that which has no need of interprétation, and, 
when the words of a statute hâve a definite and précise meaning, to 
go elsewhere in search of conjecture in order to restrict or extend 
the meaning. Statutes and contracts should be read and understood 
according to the natural and most obvions import of the language, 
without resorting to subtle and forced construction for the purpose 
either of limiting or extending their opération. Beardstown v. Vir- 
ginia, 76 111. 40. Courts are not concerned with the advisability of 
législation, viewed either from a political or economical standpoint; 
and it would seem unnecessary to observe that, acting within the 
limits of the Constitution, the Congress of the United States is su- 
prême and independent. Its enactments represent the law until they 
are repealed. 

However that may be, the statute now under considération has been 
the subject of décision for 20 years. The Suprême Court of the 
United States many times has sustained decrees which restrained 
violations of it. The individual justices of that court hâve diflfered, 
not on the constitutional power of Congress to pass a pénal statute 
relating to Interstate commerce, but as to whether- or not a given case 
has corne within its condemnation. In four cases at least a decree or 
judgment based upon that statute was sustained by that court, and 
without dissent. Montagne v. Lowry, 193 U. S- 38, 24 Sup. Ct. 307, 
48 L. Ed. 608; Loewe v. Lawlor, 208 U. S. 274, 28 Sup. Ct. 301, 52 



UNITED STATES V. SWIFT 95 

L. Ed. 488; Addyston Pipe & Steel Co. v. United States, 175 U. S. 
211, 20 Sup. Ct. 96, 44 L. Ed. 136; Swift & Co. v. United States, 
196 U. S. 375, 25 Sup. Ct. 276, 49 L. Ed. 518. 

The Sherman act is entitled "An act to protect trade and commerce 
against unlawful restraints and monopolies." It is essentially a pénal 
statute. Sections 1, 2, and 3 déclare what is illégal, and provide for 
punishment in case of violation. Section 4 déclares that: 

"The several Circuit Courts of the United States are Invested wlth juris- 
dictlon to prevent and restraln violations of this act, and It shall be the duty 
of the several district attorneys of the United States, In their respective dis- 
tricts, under the direction of the Attorney General, to institute proceedings in 
equity to prevent and restraln such violations. * * * " 

Section 7 provides: 

"Any person who shall be injured in his business or property by any other 
person or eoriKtratlon by reason of anything forbidden or declared to be un- 
lawful by this act, may sue in any Circuit Court of the United States • * * 
and shall recover threefold damages by hlm sustalned, and the costs of suit, 
Including a reasonable attorney's fee." 

Congress aimed effectually to prevent restraint of trade in inter- 
state commerce. It had constitutional power to accomplish this pur- 
pose by making restraints of trade criminal acts; or, without making 
them criminal, by empowering the United States, as complainant, to 
secure injunctions against acts which constitute restraints of trade, 
or by doing both. By passing the Sherman act if did both. The 
resuit could hâve been accomplished in several ways. Congress could 
hâve enacted two separate statutes, the one providing that acts done 
in restraint of trade should be criminal and punished as such; the 
other providing that the condemned acts should, on the application of 
the government, be enjoined in the civil courts. It could hâve passed 
one statute instead of two, and provided in one section that the varions 
acts in restraint of trade should be criminal, and punished, and in the 
second section hâve declared that the same acts in restraint of trade 
could, on the application of the government, be enjoined. 

If it had passed two separate statutes, then clearly, and if it had 
passed one statute, then possibly, the two statutes and the two sec- 
tions respectively would be construed independently of each other. 
As to the two statutes, this requires no discussion. As to the single 
statute, if it combined both remédies it could not be called primarily 
a criminal statute or primarily a civil statute. The two essential ob- 
jects obviously would be distinct, and each would be tested by its own 
language in determining its constitutionality. In that event it could 
be argued that the criminal section, worded broadly as in the Sher- 
man act, was not spécifie enough; that it did not déclare the exact 
nature of the offense, and that no one could know in advance what 
the law condemned, and therefore no indictment, or at any rate no 
indictment in the language of the statute, would be valid. And this, 
notwithstanding the fact that the civil statute would not be, for the 
purpose of an injunction, subject to the same objection. If sxich a 
statute had been passed, and if under it the Suprême Court had up- 
held the constitutionality of the act in equity cases, such décisions 



96 188 FEDEEAL RBPORTBB 

would not absolve this court froni the obligation of considering the 
constitutionality and validity of the criminal section. 

Such, however, is not the act which was passed by Congress. The 
Sherman act is primarily a criminal statute. Its title announces its 
purpose. Sections 1, 2, and 3 déclare certain things to be illégal, and 
prescribe punishment for their doing. The équitable remedy pro- 
vided by section 4 does not authorize the Circuit Courts of the United 
States to enjoin restraints of trade, as such; it does not subject to 
the processes of a court of chancery, contracts, combinations in the 
form of trusts or otherwise, or conspiracies or monopolies, in re- 
straint of trade, either definitely or indefinitely. On the contrary, it 
invests the Circuit Courts of the United States with jurisdiction to 
prevent and restrain "violations of this act"; and it is a well-known 
fact that the courts of the United States hâve no jurisdiction, except 
such as is conferred upon them by Congress. Hère the jurisdiction 
of the equity courts is made dépendent upon the criminal sections. If 
sections 1, 2, and 3 were repealed by Congress, there would be nothing 
left of the law to which sections 4 and 7 could apply. It is impossible 
to give effect to the equity sections without référence being had to the 
criminal section. It authorizes the processes of the Chancery Court 
to be used only to prevent the carrying out of that which is declared 
in the prior sections to be criminal. It follows, therefore, that unless 
that which is sought to be enjoined is a violation of the act under 
one of the preceding sections, in other words, that, unless that which 
is sought to be enjomed is a crime, it cannot be enjoined, because it 
is only that which is made a crime by the statute which is subject to 
the equity jurisdiction. Therefore, if injunctions heretofore hâve been 
upheld by the Suprême Court, the Suprême Court in upholdmg them 
necessarily has determined that the things which. were enjoined were 
crimes, as defined by one at least of the first three sections of the 
act. If, however, as is contended, the first three sections of the act 
are void, there could be no "violation of this act" susceptible ot bemg 
enjoined. Whether or not there is any merit in the argument on be- 
half of the défendants is not a matter for this court at this time even 
to consider, in view of the fact that în the judgment of this court the 
décisions of the Suprême Court up holding injunctions necessarily in- 
volve the proposition that certain things are made criminal by the 
statute, and that therefore the criminal sections of the statute neces- 
sarily must be valid. 

The same is true as to the jurisdiction under section 7. Recoveries 
hâve been sustained by the Suprême Court under that section. Mon- 
tagne V. Lowry, supra; Loewe v. Lawlor, supra. And yet the only 
authority there vested in the Circuit Court was to award threefold 
the damages snstained by any individual "by reason of anything for- 
bidden or declared to be unlawful by this act." Nothing is forbidden 
in terms. Many things are declared to be unlawful. Unless they were 
unlawful, as defined in the criminal sections, no relief could hâve been 
given under section 7. It might be said, of course, that the Suprême 
Court, in passing upon thèse civil cases, acted without considération 
of the logical extension of the exercise of the civil jurisdiction, and 



UNITED STATES V. SWIFT 97 

without argument as to the possible invalidity of the first three sec- 
tions as a criminal statute, and that a décision even of the Suprême 
Court holding the civil section valid, although logically necessarily 
involving a holding that the first three sections are also valid as pénal 
sections, should not be deemed binding upon this court. This argu- 
ment, however, is inapplicable, because it vvas pressed strongly upon 
the Suprême Court in the Northern Securities Case, 193 U. S. 197, 
24 Sup. Ct. 436, 48 L. Ed. 679, that the criminal sections were invalid 
for the reasons urged hère, and that for that reason the equity sec- 
tions could not be enforced. Argument of Young, Northern Sec. 
Case, 193 U. S. 262, 264, 24 Sup. Ct. 436. 48 L. Ed. 679, Argument 
of Johnson, 193 U. S. 270, 24 Sup. Ct. 438, 48 E. Ed. 679, Argument 
of Griggs, 193 U. S. 279, 24 Sup. Ct. 439, 48 L. Ed. 679, Argument 
of Grover, 193 U. S. 285, 24 Sup. Ct. 442, 48 L. Ed. 679, Argument of 
Stetson, 193 U. S. 292, 24 Sup. Ct. 443, 48 L. Ed. 679, where he 
said: 

"ïhis act is a criminal statnte pure and simple, and Its meaning and effect 
as now determlned must also be its meaning and effect when made the basis 
of a criminal proceeding." 

The contention, however strongly urged, did not afïect the conclu- 
sion of the court. I am of the opinion, therefore, that the Suprême 
Court of the United States bas determined that sections 1, 2, and 3 
of the Sherman act define with sufficient accuracv the offenses therein 
enumerated. 

[2] It is urged also that the first and second counts of indictment 
No. 4,509 are bad for duplicity, because they charge a combination in 
restraint of trade in the purchase of live stock, and also in the sale of 
fresh méat. The objection is not sound. The crime charged is a 
combination in restraint of trade. Such a combination may design to 
accomplish its object in many différent ways, and the enumeration of 
the varions means adopted does not render the indictment bad for 
duplicity. Duplicity in an indictment means the charging of more 
than one offense, not the charging of a single offense committed in 
■<nore than one way. Duplic'tv may be applied onlv to the rp=îiilt 
charged, and not to the method of its attainment. Anderson v. United 
States, 171 U. S. 604, 19 Sup. Ct. 50, 43 L. Ed. 300: Connors v. 
United States, 158 U. S. 408, 15 Sup. Ct. 951, 39 L. Ed. 1033. 

[3] Counsel for défendants also contend that counts 1, 2, and 3 
of indictment No. 4,509, and indictments Nos. 4,510 and 4,511, are 
fatally defective by reason of the use of the word "groups" as des- 
ignating the défendants representing the Armour, Swift, and Morris 
concerns. The indictments show that the Armour, Swift, and Morris 
interests were represented each by certain individuals, and the in- 
dividuals composing each class are designated as "the Swift group, 
the Armour group, and the Morris group." This is followed by the 
charge that each member of each group had full authority to act for 
his group, and that whenever the word "group" is used it is intended 
to apply to any or ail of the members of each group. In other words, 
the charge against a group is to be taken to mean that whatever vv^as 
done was done by one of the members of the group in behalf and by 
188 ï\— 7 



98 188 FEDERAL EEPORTBE 

authority of ail. In this connection it is argued, "first, that not ail of 
the défendants are charged with the commission of acts; and, second, 
that those charged and those not charged cannot be separated from 
each other under the averments." Grand jurors are required to state 
their charge with as much certainty, and no more, as the circumstances 
of the case will permit. In this case the jurors knew the men engaged 
in the matter under their investigation ; knew with which of the three 
great concerns (Armour, Swift, or Morris) each one was associated; 
believed that they were of one mind as to the plan of opération of 
their business. It was not known, and probably could not hâve been 
discovered, what part in the gênerai programme was assigned to each 
individual. The practical way, and probably the only possible way, 
was for the jury to charge as it did that the combination was entered 
into by the separate groups of men, and that the action of each group 
was with the consent, knowledge, and design of each constituent 
member. The indictments charge an unlawful combination, conspiracy 
and monopoly as a resuit of joint action, and it is not necessary, to 
sustain those charges, that each one of the individual participants 
should hâve been doing the same thing at the same time. United States 
V. MacAndrews (C. C.) 149 Fed. at page 832. It is quite consistent 
with a charge of combination or conspiracy or monopoly that the in- 
dividuals concerned therein should each hâve been assigned to différ- 
ent tasks, aimed to bring about the resuit planned by ail. The indict- 
ments charge the ultimate plan, the spécifie acts by which it was carried 
out; and, further, that those spécifie acts were planned and executed 
by the three groups of individuals, each member of each group acting 
for himself and every other member of the group. I do not see how 
the grand jury could hâve made the charge more definite, and believe 
that it is sufficiently spécifie to satisfy the substantive law. 

[4] The point is made against the counts of indictment No. 4,509 
that they fail to charge properly the défendants with responsibility for 
the acts done ; that it appears that the défendants were officers of cor- 
porations, and that they could not be liable for corporate doings un- 
less it appeared clearly that they knew of, connived at and directed the 
things done. The answer to this is found in the indictment, which 
charges, not that the corporations, but that the groups of individual 
défendants, did what was alleged to be unlawful; and further, that 
the défendants managed and controUed the varions corporations, and 
directed the corporate action. More was not necessary. 

[5] Much stress is laid upon the proposition that indictment No. 
4,509 is bad as describing a conspiracy or a contract in restraint of 
trade, and calling it a combination. The obvions answer to this is that 
it makes no différence what the grand jury labeled the offense. The 
question is. Do the facts as stated amount in law to any offense? If 
the acts charged in this indictment constitute a contract, combination 
in the form of trust or otherwise, or a conspiracy in restraint of trade 
or commerce, it is a valid indictment, so far as this objection is con- 
cerned. 

[6] It is apparent that the foregoing objections to the indictment 
go to matters of form rather than to matters of substance. An in- 



' TTNITED STATES V. SWIFT 99 

dictment îs well enough that states facts which constîtute a crime, 
and in language which leaves no doubt in the minds of the défendants 
of what they are accused. It is true that a défendant should be in- 
formed clearly by the indictment of the exact and full charge made 
against him, yet'the manner in which the information is given is un- 
important. An indictment is sufficient when it contains a substantial 
accusation of crime, and its statements furnish the accused with such 
a description of the charge against him as will enable him to make 
his défense, and avail himself of his conviction or acquittai for pro- 
tection against further prosecution for the same offense, and when, 
from it, the court can détermine that the facts charged are sufficient 
in law to support a conviction. Hume v. United States, 418 Fed. 689, 
55 C. C. A. 407. The présent indictments fulfill ail of thèse require- 
ments. Alorcover, section 1025 of the Revised Statutes (U. S. Comp. 
St. 1901, p. 720) provides: 

"No indictment found and presented by a grand jury In any District or 
Circuit 'or other court of the United States shall be deemed insufflcient, nor 
shall the trial, judgment or other proceedlng thereon be affected by reason of 
any defect or imperfection In matter of form only, which shall not tend to the 
préjudice of the défendant." 

[7] This brings us to the question whether or not the indictments 
charge facts sufHcient in law to support a conviction under the Sher- 
man act, and for answer we must look to the facts stated, and not to 
any conclusion drawn from those facts by the grand jury. The indict- 
ment in case No. 4,509 charges in substance that there has been car- 
ried on from Chicago (and other named cities in différent states) an 
extensive industry involving (1) the purchase of live stock; (2) the 
slaughter of such stock ; and (3) the f urnishing of f resh méats to the 
people in certain named states ; that 85 per cent, of ail fresh méats 
consumed in the named states has been slaughtered in those cities 
in designated proportions ; that 70 per cent, of this 85 per cent, "has 
been carried on, directed and controlled" by the défendants; that 
the Armour group had branch houses in 317 différent towns and 
cities in différent states; the Swift group 280; and the Morris group 
82; that the défendants, divided into three groups representing cer- 
tain corporations or interests, managed, controlled, and directed by 
them, entered into an agreement: First, that they would not compete 
in the purchase of live stock, and would make uniform bids for ani- 
mais of like grade. Second, that the three groups by agreement 
adopted a uniform system of determining the sale price of dressed 
beef by adding to the cost of the animal on the hoof certain fîxed and 
excessive charges to cover operating expenses, and by deducting 
certain inadéquate allowances for by-products. Third, that each group 
would direct its sales agents to sell at the prices figured according to 
the agreement, or, if not at that price, at a certain other price also 
agreed upon. That by agreeing on the amounts to be paid for the 
live stock, and upon the amounts to be added for operating charges, 
and the amounts to be deducted for by-products, and in reaching a 
uniform sale price they hâve eliminated ail compétition in the fresh 
méat industry between the three groups of défendants. That they 



100 188 FEDERAL KEPORTBB ' 

were large operators în interstate commerce, and by a combînation 
among themselves they hâve agreed upon a system which restricted 
the business of each individual group. The médium through which 
ail groups coUected information and operated was the National Pack- 
ing Company, organizëd, owned, and directed by the groups collec- 
tively. Its office furnished a common meeting ground, and there the 
total business done by ail the défendants, by agreement, would be 
equalized from time to tirrie, each being permitted to share according 
to its financial interest, and prices were kept up by increasing or de- 
creasing shipments to particular territories according to market con- 
ditions. The whole plan, from its inception, appears plainly to be 
one to eliminate compétition as a factor in fixing prices among the 
three groups of défendants, beginning with the agreement not to bid 
against each other, and in fact to bid exactly the same amounts for 
like grades of live stock, determining a uniform selHng price, and 
ending with fixing a uniform sale price and an apportionment among 
themselves of the total business done. 

Indictments Nos. 4,510 and 4,511 charge substantially the same facts 
(1) resulting from a conspiracy, and (2) creating a monopoly. 

The défendants urge that three great concerns operating side by 
side, and conducted by men of great business skill, might arrive at 
the same system of doing business (the tendency to introduce effi- 
ciency methods into our industries might indicate such a possibility) ; 
and that ail the indictments charge is that the défendants adopted a 
uniform system of doing business. It need not be disputed that given 
the same ability, facilities, and capital invested, thèse three groups of 
individuals might arrive at very nearly the same method of determin- 
ing the sale prices of their articles, and that they would endeavor, 
so far as possible, to obtain such price. The adoption by the défend- 
ants of such a System might be accidentai or a mère coïncidence, but 
the difficulty with the argument is that the ofifense charged is not the 
accidentai adoption of a uniform System of doing business, resulting 
in the fixing of prices, but a system which is the resuit of concerted 
action — the resuit of a combination, conspiracy, or a positive agree- 
ment. The law says there may be no contract, combination, or con- 
spiracy in restraint of trade. It is not aimed against accidentai re- 
straints of trade. The défendants could not be held for a moment 
had each group, acting in its own interest, arrived at the identical 
System of doing business, under which, it is charged, they were oper- 
ating. It is the maintaining of that system by agreement or com- 
bination which constitutes the offense defined by the Sherman act, 
provided it résulta in a restraint of trade, and such a resuit in this 
case is direct and inévitable. The aim of the parties is the same, al- 
though reached by différent means, as that in the Addyston Pipe Case, 
where the agreement was that the low bid would be made by one con- 
cern, and that the other concerns would make a somewhat higher bid, 
and that ultimately ail would share in the profit. 

I am of the opinion that the facts stated in the indictments show 
clearly a plan or schenie organizëd and put in opération by the défend- 
ants, the ultimate purpose of which was to control the production. 



UNITED STATES V. SWIFT 101 

sale, and distribution of fresh méat throughout a large section of this 
country ; and, as incidental to that control, to lower priées to the pro- 
ducer of the raw material, and raise priées to tire consumer of the 
finished product. While the facts do not disclose an absolute mo- 
nopoly, yet the large percentage of the business which they control 
indicates that they intended to acquire at least a commercial monopoly. 
As Judge Hough said in United States v. MacAndrews (C. C.) 149 
Fed. at page 833 : 

"Commerce among the states Is not a teeluilcal légal conception, but a prac- 
tical one drawu from the coiirse of business. The criterion as to whether any 
given business seheme falls within the prohibition of the statute is its effeet 
upon Interstate commerce, which need not be a total suppression of trade nor, 
a complète monopoly ; it is enough if its necessary opération tends to restrain 
Interstate commerce, and to deprive the public of the advantages flowing from 
free compétition." 

The indictments show an agreement, combination, conspiracy and 
monopoly directly restraining interstate trade. My reading of the in- 
dictments is confirmed by the record in the présent cases, and has 
received the sanction of the Suprême Court of the United States. 

On May 10, 1902, the district attorney for the Northern District of 
Illinois filed in the Circuit Court of the United States, in this Circuit, 
a bill or pétition in chancery (case No. 26,291), against thèse défend- 
ants and various corporations and other persons. That action was 
brought under section 4 of the Sherman act, and charged the défend- 
ants with substantially the same matters and things charged in thèse 
indictments. A final decree was entered restraining the défendants 
from — 

"entering Into, taking part in or performing any contraet, combination or con- 
spiracy, the purpose or efCect of which will be, as to trade and commerce in 
fresh raeats between the several states and territories and the District o£ 
Columbia, a restraint of trade, etther by directing or requiring their respec- 
tive agents to refrain from bidding against each other in the purchase of live 
stock, or collusively and by agreement to refrain from bidding against each 
other at the sales of live stock ; or by combination, conspiracy or contraet 
raising or lowering the priées, or flxing uniform priées at which said méats 
will be sold, either directly or through their respective agents, or by curtail- 
ing the quantity of such méats shipped to such markets and agents. * * * " 

On May 26, 1903, a new pétition was filed, setting out a contin- 
uance by the défendants of the matters stated in the original bill. 

On December 6, 1910, the défendants in the présent proceedings 
filed their sworn pétition, setting out the pleadings and orders in 
chancery suit No. 26,291, and moved this court for an indefinite stay 
of proceedings. On page 64 of that sworn pétition, at paragraph num- 
bered "eighth" it is stated : 

"The contemplated acts and transactions of thèse petltloners restrained and 
enjoined by said original decree, and the supposed acts and transactions of 
thèse petitioners alleged, charged and complained of in said new pétition, 
are the same acts and transactions and are identieal in substance and effeet." 

That same pétition then charges, on page 65, in paragraph num- 
bered "ninth" that the grand jurors returned indictment No. 4,509 in 
which the petitioners were charged with certain offenses, and then 
continues : 



102 188 FEDERAL EEPORTEB 

"The alleged acts and transactions of thèse petltloners chargea In and by 
sald indlctment to hâve constituted such eombination in restraint of trade and 
Buch violation of said anti-trust act are the same identlcal acts and transac- 
tions which are alleged and charged in said new pétition against thèse petl- 
tloners." 

And on page 66: 

"The partleular supposed acts and transactions alleged In said indictmënt 
No. 4,.510 as constituting said illégal conspiracy and said violation of sald 
anti-trust act are the same idontical acts and transactions, and not others, 
vehich are alleged In sald new pétition." 

And f urther, on the same page : 

, "The supposed acts and transactions alleged In sald Indlctment No. 4,511 
as constituting the said alleged monopoly are the same Identlcal acts and 
transactions, and not others, as those charged and alleged against thèse petl- 
tloners In and by said new pétition." 

The same counsel represented the défendants then as represent them 
on this demurrer, and even if there were doubt (and I believe there is 
not) as to whether the bill in chancery charged the same facts as are 
charged in thèse indictnients, we hâve the judgment of the défendants 
themselves that the facts are substantially the same. Thèse indict- 
ments were spécifie enough to warrant the défendants in stating this 
under oath. 

The decree of the Circuit Court in the chancery case was reviewed in 
the Suprême Court of the United States, and in ail essential particu- 
lars was sustained, Mr. Justice Holmes delivering the opinion, and ail 
the other members of the court concurring. Swift & Co. v. United 
States, 196 U. S. 375, 25 Sup. Ct. 276, 49 L. Ed. 518. The court 
there said: 

"The scheme, as a whole, seems to us to be wlthin reach of the law." 

In the light of that décision, and upon principle, it follows that the 
indictments in this case state facts which amount in law to a violation 
of the Sherman act. 

The demurrers will be overruled. 



iUNITED STATES v. UNION PAC. R. CO. et al. 

(Circuit Court, D. Utah. June 24, 1911.) 

No. 993. 

1. Monopolies (§ 12*) — Anti-Teust Act— Conteaots ob Combinatio^^s Pro- 

HIBITED. 

To bring any transaction within the condemnation of Anti-Trust Act 
July 2, 1890, c. 647, § 1, 26 Stat. 209 (U. S. Comp. St. 1901, p. 3200), it 
must be a contract, eombination, or conspiracy in restraint of interna- 
tional or Interstate commerce, and this restraint must be substantial lu 
character and the direct and Immédiate efCect of the transaction com- 
plalned of. 

[Ed. Note. — For other cases, see Monopolies, Cent. DIg. § 10 ; Dec. Dig. 
S 12.*] 

•For other caseï see same toplc & i numbsb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. UNION PAC. E. CO. 103 

2. Caeriers (§ 33*) — Throtjgh Joint Rates— Option of Careiebs to Estab- 

LISH. 

Prlor to the passage of the Hepburn act (Act June 29, 1906, c. 3591, 34 
Stat. 584 [U. S. Comp. St. Supp. 1909, p. 1149]), in 1906, Connecting rail- 
roads were free ta adopt or refuse to adopt joint through tarifE rates, 
and tliis freedom was not abridged, as between the Union Pacific Rail- 
road Company and the Central Pacific Eailroad Company, by either sec- 
tion 12 of Act July 1, 1862, c. 120, 12 Stat. 495, requlring the roads of 
such companies to be operated as one continuons line, so far as the pub- 
lic or the government are concerned, or section 15 of Act July 2, 1864, 
c. 216, 13 Stat. 362, which requires them to afCord and secure to each 
equal advantages and facllities as to rates, time, and transportation, 
wlthout discrimination. 

[Ed. Note. — For other cases, see Carriers, Cent. Dig. §§ 86-90; Dec. 
Dig. § 33.*] 

3. MoNOPOLiES (§ 16*) — Anti-Teust Acr— Competinq Bailroad Lines— 

Uniting Conteol. 

In 1901 the Union Pacific Railroad Company bought stock of the South- 
ern Pacific Company, which gave it practically a controUing interest, and 
the United States brought suit to enjoin the voting of such stock, on the 
ground that its acquisition was for the purpose of suppressing compéti- 
tion between the two companies in Interstate commerce, and of monopo- 
lizing such commerce or a part thereof, in violation of Anti-Trust Act 
July 2, 1890, c. 647, §§ 1, 2, 26 Stat. 209 (U. S. Comp. St. 1901, p. 3200). 
At that time the Southern Pacific Company owned and operated a steam- 
ship line between New York and New Orléans, and rail Unes from the 
latter place to the Pacific Coast, and by way of San Francisco to Port- 
land. Or. It also owned and operated the Une of the Central Pacific 
Railroad Company between San Francisco and Ogden, Utah, from which 
point it connected eastward wlth the Une of the Union Pacific and also 
with another competing Une. The main line of the Union Pacific ex- 
tended from Omaha to Ogden, with a branch from Kansas City west- 
ward to a connection with the main Une. It also, through subsidiary 
companies, owned and operated a line from a connection with its main 
line to Portland, and from there operated steamship Unes to the Orient 
and to San Francisco. For through freight for the Pacific Coast orig- 
Inating east of its Missouri river terminais it was dépendent on other 
roads, with which it there connected, and practically ail of such freight 
for San Francisco was forwarded from Ogden over the Central Pacific 
line, 800 miles long, for which the Southern Pacific received about four- 
tenths of ail the freight from Omaha or Kansas City westward. The rail 
and water Une of the Union Pacific from Ogden to San Francisco by 
way of Portland was 1,700 miles long, its steamer service was Irregular, 
and the amount of freight sent that way was negliglble. The two com- 
panies were competitors to a small estent for Oriental business, for busi- 
ness from the Atlantic seaboard to Portland and vicinity, and also, 
through branches and Connecting Unes to and from other conimon points ; 
but the total amount of such compétitive business done by the Southern 
Pacifie during the year ending in 1901 amounted to only 0.88 per cent, 
of Its entire tonnage, and that done by the Union Pacific but 3.10 per 
cent, of its entire tonnage. While the Union Pacific maintained agents 
in the East to solicit business, it was chiefly from Connecting carriers, 
and it received llttle more in freights for such business than did the 
Southern Pacific. lleTd, that the two roads were not substantial com- 
petitors for Interstate or foreign business, in such sensé that the pur- 
chase of the stock by the Union Pacific, for the purpose of giving it an 
assured connection with San Francisco, which it could control, consti- 
tuted a direct restraint upon such commerce, in violation of the act. 

[Ed. Note. — For other cases, see Monopolies, Cent. Dig. § 12 ; Dec. Dig. 
§ 16.*] 

•For other cases see same toplc & § nximeek in Dec. & Am. Dlgs. 1907 to date, & Rep'r Inflexes 



104 188 fedeeal reporter 

4. Monopolies (§ 24*) — ^Anti-Trust Act— Suit fou Violation. 

The purchase by an Interstate rallroad company of a majorlty of the 
stock of another company operating a competing line affords no ground 
(or the granting of an injunction under Anti-Trust Act July 2, 1890, c. 
647, § 4, 26 Stat. 209 (TJ. S. Comp. St 1901, p. 3201), where such stock 
was sold prior to the suit. 

[Ed. Note. — ^For otber cases, see Monopolies, Cent Dlg. § 17 ; Dec. Dig. 
«24.»] 

5. MoNopouEs (§ 16*) — Anti-Tbust Act— Violation. 

The purchase by an interstate railroad company of stock of another 
company operating a competing line, where it was insufticient in amount 
to ^ve control of its competitor, and no attempt was made to exercise 
such control, does not efCect a combinatiou in restraint of interstate com- 
merce, in violation of Anti-Trust Act July 2, 1890, c. 647, 26 Stat. 209 
^U. S. Comp. St. 1901, p. 3200). 

[Ed. Note. — For other cases, see Monopolies, Cent. Dig. § 12; Dec. Dig. 
§ 16.*] 

6. Monopolies (§ 16*) — Anti-Tkust Act— Contbacts Pkohibited. 

A contract to strangle a threatened compétition, by preventing the con- 
struction of an Immediately projected line of railway, which, if cou- 
structed, would naturally and substantially compete with an existing 
Une for interstate traffic, is one in restraint of interstate commerce, and 
In violation of Anti-Trust Act July 2, 1890, c. 647, § 1, 26 Stat. 209 (U. S. 
Comp. St. 1901, p. 3200). 

[Ed. Note. — For other cases, see MonopoUes, Cent. Dig. § 12 ; Dec. Dig. 
i 16.*] 

7. MoNOPOLiES (§ 16*)— Anti-Teust Act— Contkact Between Eaileoad Com- 

PANIES. 

The Union Pacifie Railroad Company, through a subsidiary company, 
had projected and partly built a line of road between Sait Lake City aiid 
Los Angeles, when a controversy arose over a portion of the right of way 
through the mountains between that company and another, which also 
desired to build a road between the same points, which was finally set- 
tled by an agreement to unité and build a road in which each party 
should own a half interest, with a further agreement respecting rates on 
through business. The Union Pacific Company at that tinie owned a 
controUing interest in the Southern Pacific Company, which owned and 
operated a line through Los Angeles to San Francisco, and one from 
there to Ogden, near Sait Lake City. Held, that the new Une, which 
was direct, and much more servlceable and conrenient for the public, was 
not a natural competitor of the Southern Pacific Company with respect 
to business between Los Angeles and Sait Lake City in such sensé as to 
. constltuté the agreement under which it was built a combination in re- 
straint of Interstate commerce, in violation of Anti-Trust Act Julv 2, 
1890, c. 647, § 1, 26 Stat. 209 (U. S. Comp. St. 1901, p. 3200), nor was it 
unlawful thereunder, on the ground that it prevented the building of two 
Unes, Instead of one, It appearing that there was but one practicable 
route through the mountains, over which it was not fcasible to constvuet 
two Unes, nor because of the minor and incidental provisions relating to 
the exchange of business. 

[Ed. Note. — For other cases, see Monopolieg, Cent. Dig. § 12; Dec. Dig. 
§ 16.*] 

8. MoNOPOLiES (§ 24*) — Anti-Teust Act— Combinations ob Oonspleacies in 

Kesteaint of Interstate Commeece. 

Contracts entered into by a railroad company, not in themselves un- 
lawful as in restraint of Interstate commerce, in violation of Anti-Trust 
Act July 2, 1890, c. 647, § 1, 26 Stat. 209 (U. S. Comp. St. 1901, p. 3200), 

•For other cases see same topic & § ndmbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. UNION PAC. R. CO. 105 

held not to évidence a comblnatlon or conspiracy to restraln such eom- 
ineroe, in view of évidence showlng that they dld not hâve such effect 

[Ed. Note. — For other cases, ses Monopolies, Dec. Dlg. § 24.*] 

Hook, Circuit Judge, dissenting. 

In Equity. Suit by the United States against the Union Pacific 
Railroad Company, the Oregon Short Line Railroad Company, the 
Oregon Railroad & Navigation Company, the San Pedro, Los Angeles 
& Sait Lake Railroad Company, the Atchison, Topeka & Santa Fé 
Raiiway Company, the Southern Pacific Company, the Northern Pa- 
cific Railway Company, the Great Northern Raiiway Company, the 
Farmers' Loan & Trust Company, Edward H. Harriman, Jacob H. 
Schiff, Otto H. Kahn, James Stillman, Henry H. Rogers, Henry C. 
Frick, and William A. Clark. Decree for défendants. 

This suit is grounded upon the anti-trust law of Congress approved July 2, 
1890 (26 Stat. 209), to dissolve an alleged contract, combinatlon, or conspiracy 
in restraint and monopoly of Interstate and foreign trade between the Union 
Pacific Kaiiroad Company, the Oregon Short Line Railroad Company, and ihe 
Oregon Railroad & Navigation Company on the one hand, and the Southern 
Pacific Company, the Northern Pacific Eailvi^ay Company, the San Pedro, 
Los Angeles & Sait Lake Railroad Company, and the Atchison, Topeka & 
Santa Fé Raiiway Company on the other hand. Edward H. Harriman, Ja- 
cob H. Schiff, Otto H. Kahn, James Stillman, Henry H. Rogers, Henry C. 
Frick, and William A. Clark, through whom it is averred the combinatlon 
was "created or is maintalned, are also made défendants. 

The spécifie charges are: That in 1901 and subsequently the Union Pacific 
Company, acting by itself or through a subsidiary corporation owned and 
controlled by it, acquired a controUing interest in the capital stock of the 
Soiithern Pacific Company, for the purpose of directing its opérations and 
suppresslng compétition theretofore existing between the two in Interstate 
and foreign commerce and monopolizing the same; that in the same year it, 
with like purpose, acquired a majorlty of ail the stock of the Northern Pa- 
cific Raiiway Company, and subseouently iuduced the San Pedro, Los An- 
geles & Sait Lake Railroad Company and its promoters, the défendant Wil- 
liam A. Clark and his associâtes, to desist from constructing an independent 
line of railroad between San Pedro, Cal., and Sait Lake City, Utah; that in 
1004 the défendants Harriman, Schiff, Kahn, Stillman, Rogers, and Frick 
purchased stock of the Atchison. Topeka & Santa Fé Raiiway Company, of 
the face value of $30,000,000, and thereby secured the élection of Frick and 
Rogers, who were directors of the Union Pacific Company, as members of the 
board of directors of the Santa Fé Company, and later, in the year 1906, the 
Union Pacific Company, through the Oregon Short Line, purchased stock of 
the Santa F6 Company, of the face value of .$10,000,000; and that thèse pur- 
chases were so made for the purpose of ellminating compétition of the Santa 
Fé Company and monopolizing for the Union Pacific Company Interstate and 
foreign commerce. Thèse and some other minor charges, which will -be re- 
ferred to later, are relled upon to establish conspiracies in violation of the 
act. The prayer Is that the défendants, who purchased the stocks, be en- 
joined from voting or otberwise acting as owner of them, and the other cor- 
porate défendants be enjoined from permitting them to vote the stocks or 
paying dividends upon the same, and for gênerai relief. 

The answer puts in issue ail the material averments of the Mil, and the 
cause is submitted to the court for a final decree on the pleadings and proof. 
The essential facts are thèse: 

Prior to 1901 the Union Pacific Company owned and operated a main line 
of railroad, extendiug from Omaha on the east to Ogden on the west, with a 
branch extending from Kansas City on the east, through Denver, to a con- 
nection with its main line at Cheyenne ; owned the capital stock of the Ore- 

•For other cases see same toplc & § numeeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



106 188 FEDERAL REPORTER 

gon Short Une Company, which operated a railroad extending from the main 
Une at Granger, Wyo., to Huntington, Or. ; and owned or controlled the cap- 
ital stock of the Oregon Kailroad & Navigation Company, which operated a 
line of railway extending from Huntington to Portiand, where it connected 
with Unes of steamships operated by it, runniug to some Oriental ports and 
to San Francisco. The steamship line across the sea had just been organized, 
and had not engaged in business until 1900 or 1901. It was neither organ- 
ized nor equlpped for gênerai traffic, but only for trausporting grain and 
flour originàting on the Une of the Oregon Eailroad & Navigation Company 
in compétition with the Northern Pacifie and Great Northern Railroads. Its 
sailings vrere scheduled every 30 days, but were in f act irregular and uncer- 
taln. The tonnage of Oriental traffic over this line was infinitésimal com- 
pared to the total tonnage of the System, being only .083 of 1 per cent, of it. 
The steamship line from Portiand to San Francisco was likewise an inadé- 
quate provision for any regular traffic and particularly transcontinental traf- 
fic. Its sailings were irregular and unreliahle, so that the Union Pacific Com- 
pany had under its ownership, or control through subsidlary Unes, a trans- 
portation route, as just deseribed, from Omaha and Kansas City to some 
Oriental ports and to San Francisco, by way of Portiand. 

The Union Pacifie had connections at Omaha with the Chicago, Milwaukee 
& St. Paul, the Chicago & Northwestern, the Chicago, Burlington & Qtiincy, 
and other rallways leadlng to Chicago, and Connecting at that point with 
many, if not ail, the great trunk Unes leading to New York and Intervenlng 
points. It also had connections at Kansas City with the Missouri Pacific, 
Wabash, Chicago & Alton, and other rallways leading to St. Louis, and Con- 
necting there with trunk Unes extending to New York and intervenlng points. 
It also had divers Important feeding-in or branch Unes along its route. 

In 1901 the Southern Pacifiée Company ovmed or controlled a line of steam- 
ships operating between New York and New Orléans, and a line of railway 
extending from New Orléans, through Louisiana, Texas, New Mexico, Ari- 
zona, and California, to San Francisco, and thenee through Oregon to Port- 
iand, with several branch Unes along its route extending Into tributary ter- 
ritory. It also owned ail the capital stock of the Central Pacific Railroad 
Company, which owned the Une of railway extending between San Francisco 
and Ogden and had a majorlty of the stock of the Pacific Mail & Steamship 
Company, which operated Unes of steamships between San Francisco to and 
from Panama and Oriental ports ; so that the Southern Pacifie Company had 
a transportation route over land and sea extending from New York, via San 
Francisco, to two terminal points, Ogden, Utah, and Portiand, Or. It also 
connected at New Orléans with the Illinois Central, Louisville & Nashville, 
Queen & Crescent, and other roads, which opened up to it the traffic of the 
Middle states, and owned a line of railway extending from New Orléans to 
Ft. Worth, Tex., and to connections there with roads leading to Colorado and 
Utah common points. 

The Atchison, Toijeka & Santa Fé Railway Company In 1901 owned or con- 
trolled a main Une of railway extending from Chicago, through Illinois, Mis- 
souri, Kansas, Colorado, New Mexico, Arizona, and California, to San Fran- 
cisco. 

The Northern Pacific Railway Company in 1901 owned a line of railway 
extending from Lake Superlor and St. Paul, through Minnesota, North Da- 
kota, Montana, Idaho. Washington, and Oregon, to Seattle and the Pacific 
Coast, and through ownership of a controlUng Interest in the capital stock of 
the Chicago, Burlington & Quincy Railroad Company, which operated Unes 
of road in Minnesota, South Dakota, lowa, Illinois, Wisconsin, Missouri, Ne- 
braska, Kansas, California, and Wyoming, It controlled the transportation 
of that Company. The last-named company connected at several points with 
the Union Pacific, and was a natural and important feeder for it. 

The San Pedro, Los Angeles & Sait Lake Railroad Company was organized 
in 1902 for the purpose of constructing a line of railway extending from San 
Pedro, Cal., across the states of California and Nevada In a northeasterly 
course, to Sait Lake City. 

From El Paso, Tex., on the Southern Pacifie line, the Texas & Pacific Rail- 
road ran across the state of Texas to Texarkana, and there connected with 



UNITEP STATES V. UNION PAC. E. CO. 107 

the rails of the St. Louis, Iron Mountain & Southern Rallroad, whîch ex- 
tended to St. Louis. At St. Louis the last-named road connected with the 
Wabash, for the Bast, and the Missouri Pacifie, for Pueblo, Colo., and there 
connected with the Denver & Rio Grande Railroad, which ran to Ogden. 
Thèse last-mentioned roads constituted what is known as the Gould System, 
and, operating under one gênerai management, swung around from a point on 
the Southern Pacifie at El Paso to another point on the Southern Pacific at 
Ogden. The last-named eompany constituted its only connection into Cali- 
fornia, and afforded its only opportunity for participation in transcontinental 
business. 

In 1898 the Union Pacific Company, whlch had been in the hands of a re- 
oeiver sinee 1893, was reorganized, and Mr. Harrinmn and hls associâtes 
came into control. They soon adopted and put into exécution plans of a stu- 
pendous character for the réhabilitation and reconstruction of the road, In- 
volving an expenditure of many millions of dollars. Apart from possible 
rights conferred by the aets of Congress approved July 1, 18C2 (12 Stat. 489), 
.July 2, 1864 (13 Stat. 356), and June 20, 1874 (18 Stat. 111 [U. S. Comp. St. 
1901, p. 3577]), known as the "Pacific Eailroad Acts," the Union Pacific Com- 
pany had no Independent right of co-operation by through route or joint 
rates with the Southern Pacific for the Pacific Coast trade, and in fact no 
other direct connection was open to It for that trade except the Southern 
Pacific road itself. The Rio Grande and its allied Unes and connections with 
trunk Unes from the east at St. Louis was available to the Southern Pacific 
as a connection at Ogden for business for the Atlantic seaboard and Middle 
States. To meet a menace occasioned t)y this situation and secure a reliable 
and permanent arrangement for Pacific Coast business, Mr. Harrlman, actlng 
for the Union Pacific Company, first trled to purchase from the Southern 
Pacific Company the old Central Pacific Une, extending between Ogden and 
San Francisco, and, failing in thIs, entered into negotlatlons with C. P. Hunt- 
Ington In hls lifetime for the purchase of a large block of the capital stock 
of that Company, owned by hlm. Béing unsuecessfui In this, he renewed his 
efforts to secure that stock from Mr. Huntington's heirs and devisees after 
his death, in 1900. In this effort he had a competltor in George Gould, act- 
lng foi- the Gould interests. It resulted. In 1901 and 1902, In the purchase for 
the Union Pacific Company of 900,000 shares, and thèse, with the shares of 
some preferred stock afterwards issued and taken by It, made a holding of a 
little over 46 per cent, of the total outstandlng issue of Southern Pacific 
stock. This was a holding sufRcIent, according to the usual conduct of cor- 
porate affairs, to insure to the Union Pacific Company control in the man- 
agement of the Southern Pacific Company. 

In 1901 the Northern Pacifie Company acquired a eontrolling Interest in 
the Chicago, Burlington & Quincy Railroad, whlch was a natural and aetual 
feeder to the Union Pacific Company. After an unsuecessfui effort to secure 
from Mr. Hill, who acted for the Northern Pacific Company, a partial interest 
In that purchase, In order to insure a continuation of the fair and équitable 
relations whieh had theretofore existed between the Union Pacific and the 
Burlington roads, Mr. Harriman purchased for the Union Pacific Company 
a majorlty of the capital stock of the Northern Pacific Company, including 
In his purchase more of the preferred than of the common stock. The pre- 
ferred. by action of the board of directors of the latter eompany, was soon 
retlred. The Northern Securlties Company was afterwards organized, and 
the corhmon stock transferred to it. Upou its dissolution In 1905, the Union 
Pacific Company was requlred to accept a part of the stock of the Great 
Northern Rallway Company in lieu of some of Its former holdings in the 
common stock of the Northern Pacifie Company. Harrlman v. Northern Se- 
curlties Co., 197 U. S. 244, 25 Sup. Ct. 493, 49 L. Ed. 739. If the Union Pa- 
cific Company acquired any eontrolling or influential Interest in the manage- 
ment of the Northern Pacific Company, thèse things resulted In the loss there- 
of. Flnally, in the yenrs 1908 and 1909. holdings of the Union Pacific Com- 
pany in Northern Pacific or Great Northern stock entirely ceased. 

In 1904 the défendants Harriman, Rogers, Stillman, Frick, Kahn, and 
Schiff purchased for themselves as individuals ^30,000,000 in par value of the 
common stock of the Atchison, Topeka & Santa Fê Eailway Company, and 



108 188 FBDBEAL EEPOETEB 

later In 1906 the Union Paciflc Company Invested $10,000,000 of Its Idle 
money lu the preferred stock of that company. Tbé iudivlduals who pur- 
chased and owned the common stock secured the élection of two of their 
syndicate, the défendants Frick and Rogers, as members of the hoard of di- 
rectors of the Santa Fé Company. They were at that time also members of 
the board.of directors of the Union Pacific Company. The holding of the 
last-mentioned company of $10,000,000 in the preferred stock of the Santa 
Fé Company was about 5 per cent, of the total outstanding stock of the lat- 
ter company. This was ail disposed of in 1909. 

Some time after the acquisition by the "Union Paciflc Company of the 
Southern Pacific stoclc, the latter company became involved in a controversy 
with the Phœnix & Eastern Railroad Company, the owners of a short line 
of road in Arizona. Litigation ensued, and resulted in the sale of the Phœ- 
nix & Eastern Railroad to the Southern Pacific Company. About that time 
there was a consolidation of a short line of road (about 90 miles) in the north- 
western part of California with the Southern Railway Company. This con- 
solidation was made pursuant to the laws of the state of California. 

Prier to 1890 the Union Pacific Company through its subsidiary company, 
the Oregon Short Line, constructed a line of railroad extending from Sait 
Lake City In a southwesterly direction to Milford, a point near the state line 
between Utah and Nevada, a distance of about 206 miles, and plans were 
made for an extension of the road further sonthwestwardly and ultimately 
to Los Angeles. Grading had been done at a heavy cost on this extension for 
a further distance of 117 miles, a part of the way being through a rugged 
and narrow défile in the mountain, when, on account of flnancial embarrass- 
ments culmlnating in the receivership of the Union Pacific and Oregon Short 
Line Companies, worlt had to be abandoned. In the meantime a tax deed 
purporting to convey title to the graded road had been secured by défendant 
Clark and hls associâtes, who sought to construct a part of a line of railway 
projected by them between Sait Lake City and Los Angeles over it. This 
provoked proceedlngs in the Land Department and courts by the Oregon 
Short Line to assert Its rights, which resulted favorably to its contention. 
Utah N. & C. B. Co. v. Utah & O. By. Co. (0. C.) 110 Fed. 879. 

Pending suhsequent controversies between the parties, an ad.lustmerft was 
reached whereby the two promoters, the Oregon Short Line and the Clark 
Interests, proceeded joîntly to construct and operate a single line, each taking 
one-half interest In the stock of the San Pedro, Los Angeles & Sait Lake 
Company, which owned and operated it. It was not completed, and no com- 
merce passed over it, until 1905. In the further adjustment of their différ- 
ences, certain permanent provisions relating to joint, through, and local rates 
were made, favorahle to the interests of the Union Pacific Company and its 
allied roads as a System. 

Prlor to 1901 agents of the Union Pacific, Southern Pacific, and Santa Fé 
roads were actively engaged In New York and elsewhere in securing busi- 
ness between New York, Pittsburg, and interlor points to the Pacific Coast. 
The Union Pacifie Company, ha vin g no through route, had to dépend upon 
connections with other roads at either end of its line, and to share with them 
the revenue resulting from the traffic secured in such proportions that ont 
of the through rate it received but a minor part; for instance: 

On trafiic from New York to San Francisco, via Omaha and Og- 

den, it received of the through rate only 34.4% 

Its connections east of Omaha received 35.5% 

And the Southern Pacifie, from Ogden to destination, received.... 30.1% 

On trafic from New York to San Francisco, via Kansas City and 

(Jgden, it received of the through rate only 30.5% 

Its connections east of Kansas City received 38.6% 

And the Southern Paciflc, from Ogden to destination, received. ... 30.9% 

On trafic from Cincinnati to San B^ancisco, via Omaha and Og- j 

den, It received 40.4% 

Its connections east of Omaha received 24.4% 

And the Southern Pacific, from Ogden to destination, received. . . 35.2% 



UNITED STATES V. UNION PAC. K. CO. 109 

On trafflc from Chicago to San Francisco, via Kansas City and 

Ogden, It received of the through rate only 43.6% 

Its connections east of Kansas City received 14.2% 

And the Southern Pacific, from Ogden to destination, received... 42.2% 

From thèse fairly lllustrative instances it appears that, on transcontinent- 
al traffic from New York and important interior points by way of the Union 
Pacifie road to San Francisco, the connections of the last-mentioned road on 
hoth ends received practleally two-thlrds of the total freight rate; the 
Southern Pacific itself recelvlug about the same proportion of It as the Union 
Pacific dld. On the other hand, the Southern Pacific received on freight 
from New York common points to San Francisco by way of New Orléans on 
its own route ail the through rate, and on freight from Cincinnati, Chicago, 
and other interior points to San Francisco via New Orléans the total through 
rate less the small portion requlred by the initial carriers for transportation 
from point of origin to New Orléans. 

Many wltnesses testified generally that the Union Pacific and Southern Pa- 
cifie were prior to 1901 competlng Unes for transcontinental business and had 
separate solicitlng agents in New York and elsewhere. The proof amply 
shows that they were active in securing routlngs of freight and passengers 
to Californla, but that they dld it in two ways: One by direct solicltatlon of 
shippers and passengers, and the other by securing and fosterlng friendly re- 
lations with the Initial carriers at the points of origin of the traffic. The 
initial carrier commonly was able to and did détermine the routlng of ail 
trafllc. Notwithstandlng the right of the shipper In the abstract to do so, 
the initial carrier practleally settled the question so as best to serve its own 
interest. 

In so far, however, as the Initial carrier was influenced by the shippers 
and they by the solicitlng agents, the resuit was thls: As between the South- 
ern Pacific and the Union Pacific, the agents of the former exercised their in- 
fluence in favor of their through route by way of New Orléans ; but, as be- 
tween the Union Pacifie and the Santa F6, the agents of the Southern Pacific 
exercised their influence in favor of the Union Pacifie route, as It thereby 
secured for itself a haul of 800 miles over its own road from Ogden to San 
Francisco, the last Connecting link into California. 

The actuatlng intent and pvirpose of the Union Pacific Company In acquir- 
ing the Huntington stock was to secure a permanent and rellable connection 
at Ogden for through traffic over the Central Pacific line to the Pacific Coast, 
and thereby to save the necessity for constructing a road of its own from 
Ogden to San Francisco. 

The facts relating to less important compétition (1) between the Atlantic 
seaboard and interior points on the one hand and Portland, Or., on the other, 

(2) between the Atlantic seaboard and Colorado and Utah common points, 

(3) between Portland and Utah, Colorado, and Nevada common points, (4) be- 
tween San Francisco and Portland, (5) between San Francisco and Montana 
and ïdaho common points, and (6) between New York and interior common 
points and the Orient, will be specifically referred to so far as necessary in 
the opinion. 

Frank B. Kellogg and Cordenio A. Severance (George W. Wicker- 
sham, Atty. Gen., on the brief), for the United States. 

N. H. Loomis, P. F. Dunne, and D. T. Watson (H. F. Stambaugh 
and John M. Freeman, on the brîef), for défendants. 

Before SANBORN, VAN DEVANTER, HOOK, and ADAMS, 
Circuit Judges. 

1 

ADAMS, Circuit Judge (after stating the facts as above). [1] 
To bring any transaction within the condemnation of the first section 
of the anti-trust law, it must be a contract, combination, or conspiracy 
in restraint of interstate or international commerce. This restraint 



110 188 FEDERAL EBPOETEH 

must be substantial in character and the direct and immédiate effect 
of the transaction complained of. Addyston Pipe & Steel Co. v. 
United States, 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136, and 
cases cited. The most important feature of the complaint in this case, 
and the one chiefly relied upon by counsel for the government in sup- 
port of their contentions, is the purchase in 1901 by the Union Pacific 
Company of a controlling interest in the capital stock of the Southern 
Pacific Company. Its conséquences are alleged to hâve been the de- 
struction or restriction of free compétition in transcontinental com- 
merce. Whether such conséquences followed dépends upon whether 
thèse companies were or could hâve been independent and substantial 
competitors before the transaction in question occurred. Kimball v. 
Atchison, T. & S. F. R. Co. (C. C.) 46 Fed. 888. Most pbviously, if 
they were not and could not then hâve been such competitors, the se- 
curing of control of both by one did not destroy or stifle compétition. 
Northern Securities Co. v. United States, 193 U. S. 197, 331, 24 Sup. 
Ct. 436, 48 L. Ed. 679. 

The question then is : Was the line of the Union Pacific Company, 
extending only from Omaha and Kansas City on the east to Ogden 
on the west a competing line prior to 1901 for transcontinental busi- 
ness with the Southern Pacific Company, whose line extended from 
Newr York on the east over the sea to New Orléans, and thence by 
rail to San Francisco and Portland on the west ? The question is not 
whether it constituted a continuous line over which traffic might pos- 
sibly be moved from the Atlantic seaboard or interior to the Pacific 
Coast, but whether it constituted a feasible route over which it could 
enter naturally and profitably into compétition with the Southern Pa- 
cific route for that traffic. 

Claim is not made that it was such a competitor for any business 
originating on or near to its main line, but only for business orig- 
inating in New York or Pittsburg common points, 1,000 or more 
miles away from its line. Its traffic between New York and interior 
points, on the one hand, and Portland, Or., on the other, was of 
trifling importance, amounting for the fiscal year preceding the pur- 
chase of the Huntington stock to only 0.46 per cent, of its total ton- 
nage. Accordingly its compétitive relation to the Southern Pacific 
route with respect to traffic in and out of San Francisco, the chief 
gateway for transcontinental business, will first be considered. 

It had a connection at Oranger with its subsidiary lines, the Oregon 
Short Line and the Oregon Railroad & Navigation Line, extending to 
Portland, and there with a line of steamboats irregularly and infre- 
quently running between that port and San Francisco. But this de- 
tour through Portland and over the sea was long, unreliable, and un- 
satisfactory, and afforded no opportunity for fair and remimerative 
compétition with the Southern Pacific for San Francisco trade. It 
was about 1,700 miles in length, as against 800 miles in direct line 
from Ogden to San Francisco. In fact, prior to 1901 it had never 
been employed in any substantial way as an outlet for the Union Pa- 
cific's west-bound freight into San Francisco. It is inconceivable, there- 
fore, that the Huntington stock was purchased to prevent, or had the 



UNITED STATES V. UNION PAC. K. CO, 111 

effect of preventing, in any substantial way, free compétition with 
so devious and impracticable a route. 

We shall accordingly dismiss it from further considération so far 
as transcontinental business is concerned, and pass to the important 
question upon which argument was concentrated : Whether the right, 
privilège, or practice, whatever it may hâve been, of Connecting with 
the rails of the Southern Pacific at Ogden and of using that compa- 
ny's line between Ogden and San Francisco, together with the right, 
privilège, or practice of Connecting at Omaha and Kansas City with 
the lines of other railroads, which by themselves and by successive 
connections led to the points of origin of the traffic, constituted the 
Union Pacific a competitor of the Southern Pacific for that traffic. 
It is certain the Union Pacific by itself could do none of that business. 
It extended neither to its origin nor destination. It depended for 
success upon its connections with other railroads at the east and with 
its alleged competitor at the west end of its own line. 

[2] Prior to the enactment of the provisions of the fourth section 
of the act of June 29, 1906 (34 Stat. pt. 1, p. 590 [U. S. Comp. St. 
Supp. 1909, p. 1159]) known as the "Hepburn Act," there was no 
way of coercing railroad companies into establishing through routes 
or joint rates with each other. In Southern Pacific v. Interstate Com. 
Com., 200 U. S. 536, 553, 26 Sup. Ct. 330, 334, 50 L. Ed. 585, the 
Suprême Court speaking of a time antedating the Hepburn act, said : 

"It is conceded that the différent railroads forming a continuous Une o£ 
road are free to adopt or refuse to adopt joint through tariff rates. The 
commerce act recognizes such right, and provides for the fillng with tlie com- 
mission of the through tarife rates, as agreed upon between the companies. 
The whole question of joint through tarilï rates, under the provisions of the 
act, Is one of agreement between the companies, and they may, or may not, 
enter into it, as they may thlnk their interests demand. And it is equally 
plain that an initial carrier may agrée upon joint through rates with one or 
several Connecting carriers, who between each other might be regarded as 
competing roads. It is also undoubted that the common carrier need not 
contract to carry beyond its own Une, but may there deliver to the next suc- 
eeeding carrier, and thus end its responsibility, and charge its local rate for 
the transportation. If it agrée to transport beyond its own line, it may do 
so by such lines as it chooses." 

Whether, therefore, .the great Eastern lines and their connections, 
which gathered up the west-bound freight, should favor the Union 
Pacific, the Southern Pacific, or the Santa Fé routes, as their final 
connection into San Francisco, was optional with them. If they fa- 
vored the Union Pacific, the terms of their arrangement, whether for 
a reasonable participation by each in the through rates, or on the 
basis of local rates for the service of each, or otherwise, were not 
within the power of the Union Pacific itself to détermine, or of the 
courts, in the absence of législative authority, to enforce. If, per- 
chance, the Union Pacific had for a time a voluntary arrangement with 
the Chicago, Milwaukee & St. Paul, the Michigan Central, and the 
New York Central for a through route and joint rates on traffic des- 
tined from New York common points to Ogden and thence to San 
Francisco, can it be true that that fact by itself would hâve consti- 
tuted the Michigan Central a competitor of the Southern Pacific for 



112 188 FEDBEAL REPORTER 

that traffic within the intent and meaning of the anti-trust law? If 
not, it does not seem to us that the Union Pacific Company, another 
intermediate link, like it, in the same temporary through route, could 
hâve been such a competitor. But we do not rest our conclusion on 
this feature of the case alone. 

[3] In view of the fact that the Southern Pacific owned and oper- 
ated the road from Ogden to San Francisco, with which alone (ex- 
cept for the circuitous and impracticable route via Portland and the 
sea to San Francisco) the Union Pacific could hâve connected, and 
over which alone it could hâve carried its traffic into San Francisco, 
we are unable to understand how the Union Pacific could hâve been 
an independent competitor with the Southern Pacific for business over 
that i-oad into San Francisco. While the Union Pacific was entirely 
dépendent upon the Southern Pacific for its connection westward, the 
Southern Pacific was not at ail dépendent upon the Union Pacific for 
its connection eastward. The Denver & Rio Grande Company and its 
allied lines under one control had a through route extending from 
Ogden, through Denver, Kansas City, and St. Louis, to Chicago and 
other interior points, and thence by many available connections to 
New York and the seaboard. This was obviously a most attractive 
and powerful rival of the Union Pacific Company, and a constant 
menace to its success. The latter was in no position to coerce any 
action by the Southern Pacific. Its hands were tied. 

But, it is argued, it could retaliate by using its influence to induce 
initial carriers or shippers to route transcontinental freight by way of 
Portland and the sea to San Francisco. This being such a long and 
unreliable route, little success could hâve been reasonably expected 
in such retaliation. If the Rio Grande should hâve been favored by 
the Southern Pacific as its Eastern connection, the Union Pacific, in 
the language of the witnesses, would hâve been practically bottled up 
at Ogden. With the advantage possessed by the Southern Pacific as 
an initial carrier to deflect ail east-bound trafiic to another line at 
Ogden, and with the right to exact on ail east or west bound traffic 
local rates, instead of a fair and just proportion of an established 
through rate, the Southern Paci'fic would easily hâve put a quick and 
décisive ending to any hostile rivalry or compétition, if such had been 
hazarded by the Union Pacific. This absolute dependence by the 
latter upon the Southern Pacific for a distance of 800 miles of its 
only through route, to say nothing of its dependence upon the volun- 
tary action of its Eastern connections already pointed out, in our 
opinion, rendered any equal or profitable compétition between them 
impossible. No real rivalry in the nature of things could hâve sub- 
sisted as long as the success of one was dépendent upon the consent 
or favor of the other. Instead of the situation being compétitive, the 
two roads really acted together and co-operated between themselves 
and with their connections in securing as much of the transcontinental 
traffic, each for the other, according to their respective facilities, as 
they could get, and participated in the total revenue on a basis of 
comparative service rendered. Their relations were like those of a 
limited partnership, rather than those of hostile competitorship. 



UNITED STATES V. UNION PAC. K. CO. 113 

But it is said the Pacific Railroad acts, supra, obligated the Union 
Pacific and Central Pacific (the predecessor in right of the Southern 
Pacific so far as the road from Ogden to San Francisco is concerned) 
to the establishment of through routes and maintenance of joint rates, 
and take thèse roads ont of the opération of the rule announced in 
the case of Southern Pacific Company v. Interstate Com. Com., 
supra. But we do not so interpret them. Thosc acts required the 
two roads, the one from Ogden east to Omaha and Kansas City, and 
the other from Ogden west to San Francisco, or their predecessors, to 
be "operated and used for ail purposes of communication, travel 
and transportation so far as the public and government are concerned, 
as one continuons line" (section 12, Act July 2, 1862, 12 Stat. 495), 
and also required them in such opération and use "to afford and se- 
cure to each equal advantages and facilities as to rates, time, transpor- 
tation, without any discrimination of any kind in favor of the road 
or business of any or either of said companies, or adverse to the road 
or business of any or either of the others * * *" (section 15. 
Act July 2, 1864, 13 Stat. 362). 

The act of 1862 not only provided for the continuous opération 
of the roads, but empowered them to consolidate (section 16) ; and 
so likewise did the act of 1864 (section 16). Thèse acts were ob- 
viously intended to secure a permanent physical connection between 
the roads and to provide generally for equal accommodations to 
the public on the basis of independent carriers;, but we discover in 
them no provisions or machinery by which the Southern Pacific, as 
successor to one of them, could hâve been compelled by the courts or 
otherwise to make agreements governing interchange of traffic or 
through rates, or fixing the division of such through rates between 
the two roads. Section 15 of the act of 1864 is not substantially dif- 
férent, so far as the matter under considération is concerned, from 
section 3 of the interstate commerce act of 1887 (24 Stat. 380). They 
both forbid discrimination in rates between Connecting lines. Section 
3 has been held by the Interstate Commerce Commission and by the 
Court of Appeals of this circuit not to invest the commission or the 
courts with power to compel carriers to make contracts or agree- 
ments for through billing of freight or for joint rates. On the 
contrary, it was held that such matters are left to the voluntary dé- 
termination of the interested carriers. L. R. & Mem. R. R. Co. v. 
E. Tenn., etc., Co., 3 Interst. Com. R. 1 ; Little Rock & M. R. Co. 
V. St. Louis & S. W. Ry. Co., 63 Fed. 775, HCC. A. 417. See, also, 
to the same effect, Oregon Sliort Line, etc., v. Northern Pacific R. Co. 
(C. C.) 51 Fed. 465, 474, and Chicago & N. W. Ry. Co. v. Osborne, 
52 Fed. 912, 914, 3 C. C. A. 347. 

The voluminous évidence of officers, agents, and shippers to the 
eflfect that active compétition existed between the Union Pacific and 
Southern Pacific roads prior to 1901 must be considered in the light 
of the légal and physical relations of the roads to each other and of 
other related facts. Whether there was compétition or not, in view 
of ail thèse things, is a mixed question of law and fact, and not 
susceptible of détermination by the prépondérance of proof as an 
issue of fact only. Without doubt there was active compétition, but 
388 F.— 8 



114 188 FEDERAL REPORTER 

it was chiefly in co-operation with initial lines, which had the routings 
of freight, and for the benefit of such initial lines and their connec- 
tions to Omaha or Kansas City, as well as for the benefit of the 
Union Pacific Company itself. Even so far as it was for the benefit 
of the latter company, it operated necessarily for the benefit of the 
Southern Pacific to an extent of about eight-twentieths of the haul 
after the Union Pacific took it at Omaha or Kansas City. In this 
condition of things, the opinions of any number of witnesses as to 
whether the two were competing lines within the meaning of the 
law is of little aid, and the gênerai statement of those witnesses that 
the two roads had separate soliciting agents throws little, if any, 
light upon the ultimate issue. 

The immédiate and actuating intent and purpose of the Union 
Pacific Company in acquiring the Huntington stock, and thereby the 
control of the opérations of the Southern Pacific line, were, ac- 
cording to the proof, to secure a permanent working and reliable 
connection at Ogden over an existing road for its through trafiic; 
a connection not dépendent upon the grâce of a dominant copartner, 
but one within its own control. We recognize the proposition that, 
if the necessary and direct resuit of the purchase of the Huntington 
stock was to destroy or substantially suppress free and natural com- 
pétition, before then existing between the two companies, or if that 
purchase put it within the power of the Union Pacific Company to 
destroy or suppress such compétition, the latter-named company would 
undoubtedly be held to hâve intended the natural and reasonable con- 
séquences of its act, and, notwithstanding the dominant purpose just 
mentioned, would hâve violated the anti-trust law. Addyston Pipe 
& Steel Co. V. United States, 175 U. S. 211, 234, 20 Sup. Ct. 96, 44 
L. Ed. 136; Northern Securities Co. v. United States, 193 U. S. 197, 
328, 332, 357, 24 Sup. Ct. 436, 48 U. Ed. 679. 

Our conclusion is that ail the facts of this case, considered in their 
natural, reasonable, and practical aspect, and given their appropriate 
relative signification, do not make the Union Pacific a substantial 
competitor for transcontinental business with the Southern Pacific 
in or prior to the year 1901. We therefore pass to a considération 
of some less important matters relied upon by the govemment to es- 
tablish destruction of compétition between those companies. 

It is contended that it was destroyed or suppressed in transcon- 
tinental business between the Atlantic seaboard and Middle states, 
on the one hand, and Portland and Willamette Valley common points, 
on the other hand. The route of the Southern Pacific for this busi- 
ness was by its own line via New Orléans and San Francisco to 
Portland, and that of the Union Pacific was by its own line from 
Omaha and Kansas City to Ogden, together with its connections and 
subconnections eastward from Omaha and Kansas City,, and its 
subsidiary lines, the Oregon Short Line and Oregon Railroad & Navi- 
gation Company running northwestwardly into Portland and the 
Valley. The geographical relation of thèse routes to each other, and 
the dependence of one of them, at least, upon voluntary arrange- 
ments with other lines, would seem to render natural and fair compé- 
tition between them for the Portland trade impossible; but the 



UNITED STATES Y. UNION PAC. E. CO. 115 

slight volume of the traffic hère involved affords a controlling and 
décisive considération. For the year ending June 30, 1900, the ton- 
nage of the Southern Pacific Company in this trade was only 0.10 
per cent, of its total tonnage. For the same year the tonnage of the 
Union Pacific Company in this trade was only 0.46 per cent, of its 
total tonnage. 

Again, it is contended that the control of the Southern Pacific 
Company acquired by the Union Pacific Company suppressed free 
compétition between them for business between the Atlantic seaboard 
and Colorado and Utah common points. The route of the Southern 
Pacific available for this traffic was from New York to New Orléans 
or Galveston by sea ; thence over its own fine to Ft. Worth, Tex. ; 
thence over its connection, the Colorado & Southern, to Denver* 
thence over another connection, the Denver & Rio Grande, into Utah. 

The route of the Union Pacific Company available for it was its 
own line from Kansas City and Omaha to Denver and Ogden, with 
its numerous initial connections and subconnections, and also a line 
by sea from New York to Newport News and Savannah; thence by 
connections at those places with such railroads as would favor them 
through the interior of the country to the beginning of its own rails 
at Kansas City or Omaha. 

Physically and practically speaking, in view of the circuity of the 
route of the Southern Pacific and of the necessary dependence of both 
companies upon volunteer connections, real rivalry between them for 
this traffic does not seem to hâve been possible ; but hère again the 
traffic itself was of little volume and comparatively unimportant. 
For the year ending January 30, 1900, the tonnage of the Southern 
Pacific in this business was only 0.19 per cent, of its total tonnage. 
For the same year the tonnage of the Union Pacific in this traffic was 
only 0.47 per cent, of its total tonnage. . 

A like contention is made concerning the traffic between San Fran- 
cisco, on the one hand, and Portland and points in the Willamette 
Valley, on the other hand; but this traffic was also small. For the 
year ending June 30, 1901, the tonnage of the Southern Pacific in this 
traffic was only 0.36 per cent, of its total tonnage, and the tonnage of 
the Union Pacific Company in it for the same period was only 1.27 
per cent, of its total tonnage. 

A similar contention is made concerning the traffic from Portland 
and Willamette Valley common points, on the one hand, and Ogden 
and its common points, on the other. The route of the Southern 
Pacific Company for this business was by the so-called Shasta route 
from Portland to Sacramento, and thence via the old Central Pacific 
route to Ogden. This was a long and circuitous route, compared to 
that of the Union Pacific Company from Portland via Oregon Rail- 
road & Navigation Company and Oregon Short Line to Ogden. Not 
only is this so, but the business was trifling. For the year ending 
June 30, 1901, the tonnage of the Southern Pacific in it was only 0.01 
per cent, of its total tonnage, while that of the Union Pacific was only 
0.35 per cent, of its total tonnage. 

A like contention is made concerning traffic from San Francisco, on 
the one hand, and points in Montana, Idaho, Eastern Oregon, and 



116 188 FEDERAL REPORTER 

Washington, on the other hand, Without commenting upon the un- 
competitive character of those routes for this business, it suffices to 
call attention to the insignificance of the traffic itself. For the year 
ending June 30, 1900, the tonnage of the Southern Pacific Company 
in it was only 0.02 per cent, of its total tonnage, while that of the 
Union Pacific Company for the same time was only 0.23 per cent, of 
its total tonnage. 

Claim is also made that the control which the Union Pacific Com- 
pany acquired by the purchase of the Pluntington stock suppressed 
free compétition between them for the Oriental traffic. Many con- 
sidérations arising out of the relations of the two roads to the trans- 
pacific steamship lines which carried the traffic from the coast hâve 
conduced to the conclusion reached ; but bearing in mind that we are 
net considering this case in view of the présent Oriental traffic, but in 
view of what it was 10 years ago, when the transaction complained of 
occurred, we find adéquate reason for it in the small amount of this 
business also. For the year ending January 30, 1901, the tonnage 
of the Southern Pacific in handling it was only 0.20 per cent, of its 
total tonnage, while that of the Union Pacific both through San Fran- 
cisco and Portland gateways was only 0.41 per cent, of its total ton- 
nage. 

The aggregate of ail the business donc by the Union Pacific and 
Southern Pacific Companies over ail thèse routes for the years spec- 
ified, which we believe fairly represent the gênerai conditions prevail- 
ing at or before the Huntington stock was purchased, was for the 
Southern Pacific Company 0.88 per cent, of the entire tonnage of that 
System, and for the Union Pacific Company 3.10 per cent, of its aggre- 
gate tonnage. Tables in évidence also disclose that the total revenue 
derived from the traffic over thèse minor routes by the Southern 
Pacific Company for the year preceding the year of the Huntington 
purchase amounted to only 1.25 per cent, of the total revenue of that 
System. 

Certainly the désire to appropriate the trifling business done by the 
Southern Pacific Company on thèse minor lines, or to suppress a 
compétition in traffic which was in the aggregate of such small pro- 
portions, could not hâve been the inspiration of the vast outlay in- 
volved in the purchase of the Huntington stock. Neither was the 
suppression of compétition in this infinitesimally small proportion of 
the business of both companies a substantial or natural conséquence 
of that important transaction. It did not amount to a direct and 
substantial restraint of either interstate or international commerce. 
It was at best only contingently, incidentally, and infinitesimally af- 
fected by it. This is not suificient to bring it within the condamna- 
tion of the anti-trust law. United States v. Joint Traffic Association, 
171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 2S9; Anderson v. United 
States, 171 U. S. 604, 19 Sup. Ct. 50, 43 L. Ed. 300; Field v. Barber 
Asphalt Co., 194 U. S. 618, 24 Sup. Ct. 784, 48 L. Ed. 1142; North- 
ern Securities Co. v. United States, supra; Cincinnati Packet Co. v. 
Bay, 200 U. S. 179, 26 Sup. Ct. 208, 50 T-. Ed. 428; PhilHps v. lola 
Portland Cernent Ce, 61 C. C. A. 19, 12„ Fed. 593; Arkansas Bro- 
kerage Co. v. Dunn & Powell, 97 C. C. A. 454, 173 Fed. 899; United 



UNITED STATES V. UNION PAC. B. CO. 117 

States V. Standard Oil Company (C. C.) 173 Fed. 177, and cases 
cited. 

[4] This concludes considération of the effect of the transaction 
chiefly relied upon by the government in this case. But it is con- 
tended that the purchase by the Union Pacific of a controhing inter- 
est in the stock of the Northern Pacific Company was also violative 
of the anti-trust law. Without dwelling on the reason for the pur- 
chase of this stock, disclosed in the preceding statement of facts, it 
is sufiicient to say that, if any controhing interest was thereby ac- 
quired, it was lost some time before this suit was instituted, and that 
none of that stock is now held by or for the Union Pacific Company. 
As there is no showing of any Hke ambitions project in this respect 
for the future, we fail to discover any opportunity or reason for the 
injunctive relief on this account. 

[5] The transaction of 1904, by which a syndicate of men inter- 
ested in the Union Pacific Company purchased for their individual 
account $30,000,000 in face value of the stock of the Santa Fé Com- 
pany, and the investment in 1906 of $10,000,000 by the Union Pacific 
in acquiring 5 per cent, of that stock are not claimed to hâve conferred 
any actual power of control upon the Union Pacific over opérations 
of the Santa Fé Company. The proof does not disclose that any such 
control was acquired or attempted to be exercised. Even if the motive 
of the purchasers was to gain some inside information concerning the 
opérations of the great competitor of the Union Pacific Company, 
they chose an entirely lawful way for doing it, and their acts afford 
no reason for judicial condemnation. 

[6] Much of the argument relating to the construction of the San 
Pedro route is addressed to the proposition that, because the San 
Pedro line was not completed at the time the Huntington stock was 
purchased, and because there was no compétition then existing be- 
tween the roads in question, there could hâve been no contract, com- 
bination, or conspiracy in restraint of it. The contention of the gov- 
ernment in this particular, that a contract to strangle a threatened 
compétition by preventing the construction of an immediately pro- 
jected line of railway, which, if constructed, would naturally and sub- 
stantially compete with an existing line for Interstate trafïïc, would 
be in violation of the anti-trust law, may well be conceded. United 
States V. Patterson (C. C.) 59 Fed. 280; Interstate Com. Com. v. 
Philadelphia & R. Ry. Co. (C. C.) 123 Fed. 969 ; Thomsen v. Union 
Castle Mail S. S. Co., 92 C. C. A. 315, 166 Fed. 251 ; Pennsylvania R. 
Co. V. Commonwealth, 3 Sadler (Pa. Sup. Ct. Cases) 83, 91, 7 Atl. 
374. 

[7] But this concession does not settle the question before us. The 
San Pedro line, as originally projected and as ultimately constructed, 
does not appear to hâve been naturally compétitive with the Union 
Pacific, Southern Pacific, or any of the subsidiary lines. It is prac- 
tically a continuation of the Union Pacific or Oregon Short Line 
southwardly, and, generally speaking, its course is at right angles, 
rather than parallel with, either the Union Pacific or Southern Pacific 
line. If it, as an existing route, had been acquired by the Union Pa- 
cific, it would hâve served rather as a short eut from Los Angeles to 



118 188 FEDERAL REPORTEE 

Sait Lake City, to avoid the circuitous route between those points via 
San Francisco, than as a natural competitor for any of the business 
of that route. While it was calculated to deprive the Southern Pacific 
of a long haul on traffic destined between Los Angeles and Sait Lake 
City and beyond, it would be unfortunate indeed if that fact should 
hâve prevented its construction, especially when it was practically at 
right angles with the Southern line, and much shorter and much bet- 
ter adapted to serve the public. In thèse circumstances it, as projected 
and built, was not, in our opinion, naturally compétitive with the 
Southern Pacific line, as alleged in the bill. 

It is however, contended that in the adjustment of différences be- 
tween the Union Pacific and its allied or subsidiary companies with 
the Clark interests, resulting in the construction of one line between 
Sait Lake City and Los Angeles, instead of two, as projected, there 
was a suppression of compétition which would hâve existed between the 
two, if they had built separately. We, however, are unable to dis- 
cover anything in the transaction except a laudable purpose to adjust 
différences and construct a line of railroad between the two points 
which would serve their joint interests as well as those of the public. 
The évidence discloses that it was not feasible to construct two lines 
of road over the only practicable route through the canyon in the 
mountains, known as "Meadow Valley Wash." This, with other rea- 
sons of a practical nature, fuUy justified the abandonment of the pro- 
ject of constructing two lines and the consolidation of them into one. 

Some minor agreements fixing the relations between the new San 
Pedro line and the other lines composing the System of the Union 
Pacific, as well as the provisions for fixing through and local rates, 
were made; but thèse are so incidental to the main transaction, al- 
ready found not to hâve violated the Interstate commerce act, as to 
warrant no further considération. If it be trùe, as already pointed 
out, that the San Pedro line was not naturally compétitive with the 
Union Pacific or Southern Pacific lines, none of thèse incidental things 
would disturb legitimate compétition within the purview of the anti- 
trust law. 

The évidence discloses certain transactions between the Southern 
Pacific Company, on the one hand, and the Phœnix & Eastern and 
the California & Northwestern Railroad Companies, on the other 
hand, which are claimed to hâve been in restraint of compétition be- 
tween them ; but as they affect local transportation only, and are not 
complained of in the bill as substantive wrongs, and as neither of the 
two last-mentioned companies are made parties to this action, it is not 
perceived how any independent relief with respect to them can be 
granted. We therefore refrain from considering them, except in so 
far as they afiford relevant évidence on issues joined in the case. 

[8] Having now found that the several contracts or transactions 
specifically camplained of in this case did not ofïend against the anti- 
trust law, it seems hardly necessary to discuss the claim, little debated 
by counsel, that they evidenced a combination or conspiracy to do so. 
In determining whether a combination or conspiracy in violation of 
the first section of the anti-trust act, namely, to restrict compétition 
and thereby restrain commerce, was entered into, the facts already 



UNITED STATES V. UNION PAC. E. CO. 119 

found may properly be supplemented by référence to actual consé- 
quences and results. Thèse often reflect the original meaning and 
purpose of preceding transactions. The proof shows that after 1901, 
as well as before, the rates for transcontinental traffic were the same 
over both the Union Pacific and Southern Pacific Unes, and that there 
has since then been with respect to either of thèse lines no impairment 
of service, no détérioration of the physical properties, no discon- 
tinuance of efforts to satisfy the public, and no complaints of shippers 
of any inferior or inadéquate service. 

The large number of initial carriers striving for that traffic hâve 
continued their active solicitation for business over the line which 
assured them the longest haul or otherwise benefited them most, 
and although some agents of the two roads, which before 1901 were 
separate, are now joint, they hâve continued to exercise their influence 
to secure business for either road according to its availability, and al- 
ways in opposition to other active competitors, like the Santa Fé and 
Denver & Rio Grande roads. A substantial majority of the stock of 
the Southern Pacific Company has been held by parties other than 
the Union Pacific Company; but we fail to find any complaint by 
such holders of any discrimination against their road or of any failure 
to properly promote its welfare. None of the minor points charged 
to hâve been deprived of compétitive opportunities by the Huntington 
purchase are shown to hâve sufïered as a resuit of that purchase. On 
the contrary, hundreds of millions of dollars bave since 1901 been 
expended on thèse roads. Their physical condition has been vastly 
improved, and their efficiency for public service as well as for private 
profit has been greatly enhanced. The whole proof, taken together, 
we think, fails to disclose any conspiracy to restrain interstate or for- 
eign commerce, in violation of the first section of the act. 

The same considérations lead to the conclusion that no combina- 
tion or conspiracy to monopolize or attempt to monopolize trade or 
commerce among the states or with foreign nations was entered into. 
Moreover, the fact that the Union Pacific Company did not secure 
or undertake to secure the control of the Santa Fé road, a thoroughly 
sufficient, well-equipped, and powerful rival for transcontinental busi- 
ness, or the Denver & Rio Grande road, a potential, and later an 
actual, powerful rival for the same business, afifords additional and 
conclusive évidence of no such combination or conspiracy. The pur- 
chase by the Union Pacific Company, soon after acquiring the Hunt- 
ington stock, of a majority of the capital stock of the Northern 
Pacific Company, tends to the opposite conclusion; but, in view of 
the main reason for its acquisition and its disposition by the Union 
Pacific Company, we.are indisposed to give to that purchase ^lone any 
considérable significance. 

The conclusions of fact already stated dispose of this case without 
the necessity of determining the question, much debated in brief and 
argument, whether securing control of the Southern Pacific Company 
by purchasing stock of individual owners could in any view of the 
case hâve contravened the anti-trust law. On the facts of this case, 
with ail their reasonable and fair inferences, we conclude that the 
government has failed to substantiate the averments of its bill. 



120 188 FEDERAL EEPORTEB 

Mr. Justice VAN DEVANTER, while a Circuit Judge, partici- 
pated- in the hearing, délibération, and conclusion in this case, and he 
now concurs in this opinion. 

The bill must be dismissed, and a decree will be entered to that 
effect. 

SANBORN, Circuit Judge, concurs. 

HOOK, Circuit Judge (dissenting). Briefly stated, the décision of 
the court, in which I am unable to concur, is that the Union Pacific 
and Southern Pacific Railroads, universally regarded as parallel in 
a broad geographical and légal sensé, for about 2,000 miles, were not 
competitors in 1901 for transcontinental or other traffic, and there- 
fore their merger in that year was not contrary to the Sherman anti- 
trust act. I agrée with the court upon the minor features of the case, 
including, in a gênerai way, that of the control of the San Pedro line 
by the Union Pacific Company. The latter is much as if a railroad 
Company, with a line from the west through Omaha or Kansas City 
to Chicago, should obtain control of a branch from Omaha or Kansas 
City to St. Louis. In the absence of a more direct compétitive re- 
lation than appears hère, the Sherman act should not be held to cover 
such tangential acquisitions. 

But the chief complaint of the government is of an unlawful con- 
tract or combination in restraint of trade and commerce, by which 
the Union Pacific and Southern Pacific transportation Systems are 
held under a single control, and compétition between them is sup- 
pressed or destroyed. The combination was effected through the 
purchase by the Union Pacific of part of the capital stock of the 
Southern Pacific. Upon this two important questions arise. The 
first, which is one of law, is whether the purchase by one railroad 
Company of corporate stock of another, less than the majority, but 
sufficient in amount according to the practical expérience of men to 
enable the purchaser to dominate or control the policies and opéra- 
tions of the other, is a form of combination within the prohibitions of 
the Sherman act. The conclusion of the court being against the 
government on another ground, it was unnecessary to détermine this 
question; but as I do not assent to the conclusion, and as the ques- 
tion lies at the threshold of the government's case, I should briefly 
express my view concerning it. 

There is no substantial différence between the holding of the cor- 
porate stocks of two companies by a third, such as was condemned in 
the Northern Securities Case, 193 U. S. 197, 24 Sup. Ct. 436, 48 L. 
Ed. 679,. and the holding by one of those two of the stock of the 
other. The form is somewhat différent, but the eiïect, which is the 
chief concern of the law, is the same. If prior compétition disap- 
pears as a direct and natural resuit, trade and commerce are re- 
strained. If it is unlawful in the one case, it must be so in the other. 
It would be idle to hold that, while two competing railroad. companies 
cannot lawfully submit to a common control through a separate stock- 
holding organization, they may do so by dispensing with that médium. 
That would be regarding shadows and letting the substance go. The 



UNITED STATES V. DNION PAO. R. CO. 121 

language of the Sherman act in this particular is broad. It covers 
every contract and combination in restraint of interstate and foreign 
trade or commerce, whether in the forin of trust or otherwise. The 
essential, eflfective character of the arrangement is to be regarded, 
rather than its casual vestiture; the substance, rather than the form. 
In Harriman v. Northern Securities Ce, 197 U. S. 244, 297, 25 Sup. 
Ct. 493, 49 L. Ed. 739, it was assumed that the act could be violated 
by the direct holding of stock of a competing corporation. 

I grant it is a serions thing to disturb a great business transaction 
like that shown in the case at bar; but, given the power of Congress 
to legislate, and clear words to express what a judge conceives to 
hâve been its purpose, his duty is plain, whatever he may think of 
the wisdom of the law. Even if public régulation is believed to be 
a wiser solution of the important économie problem than enforced 
compétition, with its necessary wastes and burdens, nevertheless his 
judgment of a law embodying the latter policy should proceed as 
with distinct approval of its sélection. It is quite clear that, with the 
growth and development of governmental régulation of common car- 
riers engaged in interstate commerce, there is decreasing reason for 
holding them subject to the Sherman act, and it may be that as re- 
gards rates of transportation the Interstate Commerce Commission 
could perform its duties with equal justice to the public and greater 
justice to the railroads if they were released. But certainly that is for 
Congress, not the courts. The judicial function is properly exercised 
when the Sherman act is construed and applied as though it were 
the only législative remedy on the statute bocks. 

The other question in the case is decided by the court against the 
government. It is whether the two great transportation Systems, the 
Union Pacific and the Southern Pacific, were in a substantial sensé 
competitors in interstate and foreign commerce. This question in- 
volves the relative location of their lines on land and sea, and not 
only the parts they actually performed, but also those they were 
naturally capable of performing, in the movement of traffic. Albeit 
in part within the domain of judicial knowledge, this seems to me to 
be a pure question of fact. Some hundreds of witnesses, practical 
railroad men and shippers of wide expérience, testified upon it, and a 
great mass of évidence was taken, showing almost without dispute 
that, using the term "compétition" as business men understand and 
use it, there was active, vigorous, and substantial compétition be- 
tween the Union Pacific and the Southern Pacific before the former 
obtained control of the latter. But the court holds the question of 
compétition to be one of mixed law and fact, not determinable by the 
évidence alone, and as such it is answered against the government. 

Roughly stated, the situation was this: In 1901, when the stock 
purchase was made, the Union Pacific had lines of railroad from the 
Missouri river, at Council Blufifs, lowa, and Kansas City, Mo., to 
Cheyenne, Wyo. ; thence a line through Ogden, Utah, to Portland, 
Or,, lines of steamers from Portland to San Francisco, Cal., and from 
San Francisco and Portland to Oriental ports; also certain rights un- 
der an act of Congress (13 Stat. 356) with respect to the Central 
Pacific Railroad, which was controUed by the Southern Pacific, from 



122 188 FEDERAL REPORTEE 

Ogden to San Francisco. At the Missouri river the Union Pacific 
had many connections with the principal cities of the country and the 
Atlantic seaboard by the roads of other companies directly interested 
in routing west-bound traffic by its Une as against the Sunset Route, 
so-called, of the Southern Pacific. On the other hand, the Southern 
Pacific had a steamship Une from New York to New Orléans, La., 
thence a railroad to Southern California and up through San Fran- 
cisco to Portland, the above-mentioned railroad from Ogden to San 
Francisco, a steamship Une from San Francisco to the' Orient, and 
a steamship Une from San Francisco to Panama, being the Pa- 
cific link of the Panama rail and water route from New York to 
San Francisco. The Southern Pacific also had at New Orléans con- 
nections similar to those of the Union Pacific by the roads of other 
companies directly interested in routing west-bound trafïic by its Une 
as against that of the Union Pacific. The most important compéti- 
tion, so termed by railroad men and shippers, between the two com- 
panies, was for transcontinental business. There was also active com- 
pétition at intermediate points, where considérable traffic originated. 
The two companies were distinct in control, management, and opéra- 
tion, with separate officers, directors, traffic and operating officiais, 
commercial agencies, and soliciting agents. Since the combination 
common officers and directors of traffic and opération were elected or 
appointed, compétitive commercial agencies were Consolidated or 
abolished, the activities of the two Systems hâve been in close har- 
mony, not in rivalry, and compétition bas disappeared. 

Reduced to the simplest terms the conclusion of the court that the 
two companies were not competitors and the Sherman act was not 
violated is based on thèse two grounds: (1) Trade and commerce 
were not restrained, because before the combination the compétitive 
Interstate and foreign traffic of the two railroad companies was not 
a substantial percentage of their total traffic, including in such total 
the traffic entirely within the several states, over which Congres s 
had no control. (2) Trade and commerce were not restrained be- 
cause before the combination one of the Unes of railroad, the Union 
Pacific, was an intermediate one in a through route, and depended 
for compétitive traffic upon the business interests of Connecting car- 
riers, and therefore could not by itself alone, unaided by the con- 
currence of its natural allies, make a joint through rate over the 
entire route. In other words, each party to a contract or combina- 
tion between railroad companies, which the government assails as 
being contrary to the Sherman act, must hâve owned or controlled 
an entire through route over which compétitive traffic moved. That 
it may hâve performed an essential part, or bave been a necessary 
factor, in the transportation, is insufficient. That Connecting car- 
riers may bave voluntarily joined it in making through rates for 
the traffic is immaterial. 

With the greatest déférence to my Brothers, I am so profoundly im- 
pressed with the conviction that thèse conditions are without substan- 
tial relevance to the question before us that I am constrained to 
dissent from the opinion of the court. Moreover, their introduction 
so greatly narrows the act of Congress, which, hovv'ever it may be 



UNITED 8TATKS V. UNION PAO. R. CO. 123 

regarded, is tlie law of the land, that very little is left of it when 
applied to railroads. Under one or both of those tests, the Union 
Pacific coidd probably hâve laivfully purchased contrat of ail the 
great parallel railroad Systems in the United States. It could doubt- 
less hâve been shown in most instances that the interstate and foreign 
trafific of each, for which it competed with the Union Pacific or with 
any of the others, was but a small percentage of its total traffic of 
ail kinds, and we know that ail of them depended upon Connecting 
lines at least for transcontinental and much other traffic, and could 
not, unaided, hâve made joint through rates with respect to it. Nor 
is it clear that what could hâve been done in 1901 might not as vvell 
be done to-day. It is suggested that by the passage of the Hepburn 
act (June 29, 1906) Congress empowered the Interstate Commarce 
Commission to prescribe through routes and joint rates where Con- 
necting carrier^ hâve refused, and therefore a différent ruie respect- 
ing compétition has since prevailed. I am wholly unable to perceive 
the material pertinence of that act, much less its controlling effect. 
The matter of compulsory joint rates is purely adventitious, except 
as business may be facilitated over a conibined route. A joint through 
rate merely implies a single charge, less than the aggregate of the 
locals, for a continuity of transportation over two or more Connecting 
lines. Carriers always had the power to make such rates, and com- 
monly did so vi^ith allies of their own sélection; but virhether the 
traffic movement was under joint rates or combinations of local rates 
does not seem to me to détermine the existence or nonexistence of 
compétition. If rival lines or routes contended for the traffic, and 
it moved, by single line or by combination of Connecting lines, there 
was compétition. If not, it must be that until 1906, when the Hep- 
burn act was passed, the Southern Pacific, with its through water 
and rail route from New York to San Francisco, never had a com- 
petitor for transcontinental traffic in any of the great railroad Systems 
in the United States or in ail combined. 

The traffic for which the Union Pacific and Southern Pacific com- 
peted in 1901, and which one or the other secured, was of enormous 
volume when considered by itself . It ran into millions of dollars, and 
with the natural development of the country and the growth of com- 
merce, reasonably to hâve been foreseen, it has since then greatly in- 
creased. The compétition was direct, not incidental, and the business 
for which they strove was appréciable or substantial, not insignificant. 
But tables of figures are given by défendants from which it appears 
that the interstate and foreign traffic between compétitive points se- 
cured by each was but a small percentage of the tonnage of its entire 
System, and it is therefore argued that the compétition to which the 
act of Congress applies was relatively so small there could hâve been 
no restraint or suppression in a substantial sensé, and hence no intent 
to restrain or suppress it. The comparisons being with the total ton- 
nage of the railroads, obviously an élément is included which is 
wholly beyond the power of Congress, namely, the traffic local to the 
States. The logical conclusion from this view must be that the Sher- 
man act is not violated whenever the trade or commerce within its 
opération, affected by the contract or combination, however great in 



124' 188 FEDERAL REPORTEE 

volume, fs oversliâdowed by that exclusively witliin the jurisdiction 
of the States. In other words, though substantial compétition in in- 
terstate or foreign commerce bas been actually suppressed, it must be 
held there was no intention to suppress it. The magnitude of the 
traffic shown by the proofs was too great, and the compétition for it 
too earnest and active, to dismiss it as merely incidental to the princi- 
pal business of the companies, and as not furnishing a motive for 
the merger or combination. A contention somewhat similar was 
made by défendants in the Northern Securities Case. It was there 
argued (193 U. S. 261, 262, 24 Sup. Ct. 436, 48 L. Ed. 679) that the 
entire interstate commerce of the two railroads, the Great Northern 
and the Northern Pacific, the rates on which could be controlled by 
them without other compétition or consent of Connecting Unes, was 
less than 3 per cent, of their total interstate commerce, and that the 
restraint could not in any event affect more than that per cent, of 
their commerce of that character. The argument, however, was 
without avail. 

In a broad and substantial sensé, in the sensé in which the terms 
are used in constitutions and statutes and in railroad and business cir- 
cles, the Union Pacific and Southern Pacific lines were parallel and 
competing. That they were so regarded by practical men having to 
do with transportation in its varions phases is .shown, I think, by an 
overwhelming mass of évidence. But, had no witness testified regard- 
ing it, we should come to the same conclusion. There are occasions 
when courts in the exercise of their judicial functions are entitled to 
look out into the world of afïairs to observe whether there is not a 
common knowledge of the subject before them, so universal and per- 
vading as not to admit of testimonial controversy. That is termed 
"judicial notice," and it proceeds upon the assumption that a judge 
should not be blind to what ail others see and understand. It embraces 
the great currents of trade and commerce in his country — the gênerai 
movements of products and manufactures — as completely as it does 
the important features of its physical geography, the location of the 
cities, the ports, the navigable waters, and the lines of railroad. 

The question whether a combination of two transportation lines is 
contrary to the Sherman act is not always to be reduced to a close 
considération of the number of tons of compétitive freight they car- 
ried within a given period, much less the précise relation of the com- 
pétitive tonnage to their total business of ail kinds. Were they, at 
the time of the combination, in a substantial degree compétitive f actors 
in interstate and foreign commerce? Were they so laid upon land 
and sea as inherently to possess a substantial compétitive capacity for 
the movement of such traffic? It is not merely the extent to which 
that capacity was utilized yesterday, but the extent to which the trans- 
portation facilities were naturally capable of being utilized ; and rea- 
sonable, not spéculative, regard should be had for the developments 
of to-morrow. Were it otherwise, Congress in the making of laws 
would be denied that ordinary foresight which men engagea in busi- 
ness commonly possess and practice. Compétition, as the antithesis 
of monopoly, is the influence which those in the same line of business 
hâve on each other, and that influence may as well be manifested in 



ONITED STATES V. DKION PAC. K. CO. 125 

an existing capacity and preparedness as in the degree of active ex- 
ercise. A moment's reflection vvill show this is old doctrine in the 
judicial construction and application of laws against monopolies and 
restraint of trade. A railroad company may hâve great, if not con- 
trolling, influence on compétition, regardless of the amount of the 
traffic it actually carries at the time. With a line of railroad scarcely 
less permanent tlian a navigable waterway, it stands equipped and 
ready to do the business when conditions arise, and the duty to do it 
comes from the vei^y character of its corporate being and the source 
of its powers and franchises. It may at once bç both a curb and a 
spur to other lines — a curb as regards rates, and a spur as regards 
quality of service, which are the two great points at which transporta- 
tion touches the public interest. The influence of the Mississippi river 
and its navigable tributaries upon the trade and commerce of St. Louis 
is well known, yet of the enormous freight tonnage into afid out of 
that city, largely interstate, scarcely one-half of 1 per cent, moves by 
water. To be more exact, of the total rail and river trafific in 1910, 
nearly 52,000,000 tons, but thirty-six hundredths of 1 per cent., was 
transported by water; in 1909, but sixty-seven hundredths of 1 per 
cent, of that year's tonnage. But who would contend that if the rivers 
were the subject of private ownership, instead of being common high- 
ways for the use of ail, their control by a railroad company could not 
restrain trade or commerce because, as measured by relative percent- 
ages, the compétition appeared to be so slight? 

When the argument was made at the hearing that, because the 
Union Pacific was an intermediate, not a through line, it was not a 
competitor for traffic moving over it and its connections for which 
it could. not hâve made a joint through rate, counsel admitted that the 
rule contended for would hâve made it lawful under the Sherman 
act for ail intermediate lines in transcontinental transportation, such 
as the Chicago, Rock Island & Pacific from Chicago to El Paso, the 
Atchison, Topeka & Santa Fé from Chicago to Mojave (before it 
gained entrance to San Francisco), the Missouri, Kansas & Texas 
from St. Louis and Kansas City to Texas points, the St. Louis & 
San Francisco from St. Louis and Kansas City to the Southwest, the 
Missouri Pacific with the Denver & Rio Grande from St. Louis to 
Ogden, and the Union Pacific to bave combined and agreed among 
themselves, as was done in the Trans-Missouri Freight Association 
Case, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007, "if they confined 
their combination to transcontinental traffic ; in other words that 
those intermediate railroads could not be competitors for the traiific, 
and a confédération with respect thereto could not be unlawful. It 
seems to me that a statement of the contention shows its unsoundness. 
Anything that affects the rate over a substantial part of a transporta- 
tion route is calculated to affect the charge as an entirety ; and so of 
the other features of railroad compétition. The compétition of the 
all-water route by the Atlantic and Pacific Océans with the all-rail 
transcontinental routes in the United States is so fully recognized that 
it is safe to say almost every car load rate to the Pacific coast from 
the territory between the Missouri river and the Atlantic seaboard ex- 
hibits a récognition of its influence. And yet it is contended that the 



126 188 FEDERAL EEPOEXER 

Union Pacific in the direct line of traffic movement, with 1,000 miles 
of railroad from the Missouri river to Ogden, and nearly 900 miles 
thence to Portland, with its steamship lines, is not a competitor for 
transcontinental traffic. 

The practical aspect of the question is shown by the cases in which 
railroad companies hâve asserted the existence of compétition from 
rival lines or routes of transportation as evidencing conditions justify- 
ing discriminations and préférences under the Interstate commerce act 
— that the rates objected to as discriminative were controlled by com- 
pétition, and if they abandoned the rates they would lose the busi- 
ness. An instance of this appears in Texas & Pacific Railway v. In- 
terstate Commerce Commission, 162 U. S. 197, 16 Sup. Ct. 666, 40 L. 
Ed. 940. The Texas & Pacific Railroad from New Orléans to El 
Paso, Tex., and the Southern Pacific Railroad thence to San Fran- 
cisco, formed a through route over which traffic, both foreign and 
domestic, moved. The Texas & Pacific Company successfuUy de- 
fended its right to charge and receive more for its proportion of the 
through rate on traffic originating in New Orléans than it charged and 
received on import traffic originating in London and Liverpool and 
billed through New Orléans over the same route to San Francisco, 
and it did so on the ground asserted that the rate from the English 
cities to San Francisco was determined by compétition with the fol- 
lowing routes: By vessel around the Horn; by vessel and by rail 
across the Isthmus of Panama; and (162 U. S. 216, 16 Sup. Ct. 674, 
40 L. Ed. 946) by vessel and by rail across Canada. Were ail those 
transportation agencies subject to the laws of the United States, could 
it with reason be urged thàt a contract or combination between them, 
suppressing a compétition which actually existed, would not contra- 
vene the Sherman act, because ail but one of them were composed of 
Connecting links severally owned or controlled? If that which men 
engaged in transportation recognize as substantial compétition in shap- 
ing their policies and their conduct is not so regarded in the courts, 
the statute will not hâve the opération intended by its enactment. 
Laws are generally framed to apply to the everyday afïairs of men, 
who are not given to the study of nice différences and distinctions, 
and that should always be borne in mind in determining their meaning. 

But it is said there was no compétition, because the Union Pacific 
depended upon the Southern Pacific line from Ogden to San Fran- 
cisco. It is true that much of the transcontinental traffic of the Union 
Pacific went that way; but it is not unusual for railroad Systems to 
connect at points and interchange business, though they are active 
competitors in other respects. In fact, a large proportion of them are 
so related. Compétition, within the laws which seek to préserve it, 
does not imply absolute nonintercourse, as between hostile armies, 
which exchange no prisoners and give no quarter. Moreover, the use 
of the Ogden line was neither a necessity to the Union Pacific nor a 
pure favor or concession by the Southern Pacific. Aside from the 
mutual benefits from the interchange of traffic, the former had its own 
line from Ogden, by way of Portland, which, though not as désirable, 
was more than an important stratégie advantage necessary to be reck- 
oned with. But were ail this otherwise, the undeniable fact remains, 



UNITED STATES V. B. I. DU PONT DE NEMOUKS <fc CO. 127 

after stripping the case of ail debatable considérations, that the Union 
Pacific secured this west-bound traffic by active compétition, and had 
transported it as compétitive for 1,000 miles before it reached Ogden. 
I think that upon the main feature of the case the government is 
entitled to a decree. 



UNITED STATES v. E. I. DU PONT DE NEMOURS & CO. et al. 

(Circuit Court D. Delaware. June 21, 1911.) 

No. 280. 

1. Monopolies (§ 24*) — Anti-Texist Act— Suit fob Injunction. 

A member of a combination in restralnt of Interstate commerce, In vio- 
lation of Sherman Anti-Trust Act July 2, 1890, c. 647, § 1, 26 Stat. 209 
(U. S. Comp. St. 1901, p. 3200), who bas in good faith witbdrawn from 
such combination, is not subject to a suit for injunction under section 4 
of the act; nor, if such member is a corporation, Is the fact that a 
minority part of its stock is owned by members of the combination suffi- 
cient to sustaln such a suit, In the absence of proof that such ownership 
Is employed to aid the combination. 

[Ed. Note. — For other cases, see Monopolles, Dec. Dig. § 24.*] 

2. Monopolies (§ 24*) — Anti-Tbust Act— Injunction. 

A minority stockholder In a corporation, who is not an ofHcer and 
takes no part In the management of Its business, is not subject to a suit 
for injunction under Anti-Trust Act July 2, 1890, c. 647, § 4, 26 Stat. 209 
eu. S. Comp. St. 1901, p. 3201), because the corporation may be a party 
to a contract or combination to restrain or monopolize mterstate com- 
merce. 

[Ed. Note. — For other cases, see Monopolies, Dec. Dig. § 24.*] 

3. MoNOPOLiEs (§ 20*) — Anti-Tkust Act— Constbuotion— "Combination in 

Restbaint of Tbade." 

The provisions of Anti-Trust Act July 2, 1890, c. 647, §§ 1, 2, 26 Stat. 
209 (U. S. Comp. St. 1901, p. 3200), making unlawful any combination "in 
restraint of trade or commerce among the several states" or to monopo- 
lize any part of such trade or commerce, do not make every combination 
in restraint of compétition Jn Interstate trade unlawful, but there may 
be a restraint of compétition tbat does not amount to a restralnt of 
trade within the meaning of the act. On the other hand, a combination 
cannot escape the condemnation of the act nierely because of the form 
it assumes, and a single corporation, If it arbitrarily uses its power to 
force weaker eompetltors out of business, or to coerce them into a sale 
to or union with such corporation, puts a restraint on Interstate com- 
merce, and monopolizes or attempts to monopolize a part of such com- 
merce, in a sensé that violâtes the act. 

[Ed. Note. — For other cases, see Monopolles, Dec. Dig. § 20.* 
For other définitions, see Words and Phrases, vol. 2, pp. 1275, 1276; 
vol. 8, p. 7606.] 

4. Monopolies (§ 20*) — Combination in Restraint of Interstate Com- 

merce. 

In 1872 seven of thelargest manufacturers of powder and other explo- 
sives in the United States organized what was called the "Gunpowder 
Trade Association," which, at its meetings and through committees, flxed 
priées wMch the constituent members wererequired to observe under pen- 
alty of fines. It also apportioned territory between its members, author- 
ized ihe cutting of priées in partioular localities in order to drive conipeti- 
tors out of the market or force them to corne into the association, and ap- 
portioned the losses, if any, from such priée cutting, between the members. 
Subsequently other compuuies were taken into the association, until 
there were 17 members ; and it was continued with some changes in the 

•For other cases see same topic & § numeer in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



128 188 FEDERAL EEPORTEB 

fundamental agreement, but none in Its purposes or methods, until 1902. 
At that time B. I. du Pont de Nemours & Co., then the most iufluential 
member of the association, passed under a new management, was reor- 
ganized into tlie B. 1. du Pont de Nemours Company, and its controlling 
stockliolders and offlcers inaugurated tlie pollcy of acquiring the assets 
of other corporations and vesting ownership of their plants and the con- 
trol of thelr business in their own compauy. So successfully was this 
policy carried out, by the use of the uiethods of the association, that 
within fiye years such company had acquired the stock of and caused to 
be dissolved 64 corporations eiigaged in the manufacture of powder and 
other explosives, and controlled from C4 to 100 per cent, of the trade of 
the United States in the différent kinds of explosives sold, and also, di- 
rectly or through subsidlary corporations, as stockholders, controlled ail 
■ of the other members of the association which was then dissolved. Ileld, 
that the formation of' such a coriwration and its subsidiaries and the 
adoption of the new policy was merely the continuance in a différent 
îorm of the illégal association, and that it constituted a eombinatiou in 
restraint of Interstate commerce and to monopolize a part of the same, 
which was xinlawful under Anti-Trust Act July 2, 1890, c. 647, §§ 1, 2, 
26 Stat. 209 (U. S. Comp. St. 1001, p. 3200). 

[Bd. Note. — For other cases, see Monopolies, Dec. Dig. § 20.*] 

5. Monopolies (§ 26*) — Suit to Restbain undeb Anti-Tbust Act— Relief. 

Where an existing conibination in corporate form has been adjudged 
unlawful, as in violation of Anti-Trust Act July 2, 1890, c. 647. §§ 1. 2, 
26 Stat. 209 (U. S. Comp. St. 1901, p. 3200), and to hâve monopolized and 
to be monopolizing a large part of the Interstate trade in a particular 
commodity, it Is the duty of the court, under the power conferred by 
section 4 of the act to "prevent and restrain" its violation, not only to 
enjoin furtber violation of the act, but to render Its decree effective by 
dissolving the illégal combination. 

[Ed. Note. — For other cases, see Monopolies, Dec. DIg. § 26.*] 

6. MoNOPOLiES (§ 24*) — Suit fob Injunction undeb Anti-Tbust Act— Par- 

ties. 

To a suit under Anti-Trust Act July 2, 1890, c. 647, § 4, 20 Stat. 209 
(U. S. Comp. St. 1901, p. 3201), to restrain violation of the act by corpo- 
rations alleged to constltute a combination in restraint of or to monopo- 
lize interstate commerce, mortgagees of such corporations are not noces- 
sary parties, but may be brought ta If it appears that their interests will 
be affected by the decree. 

[Ed. Note. — For other cases, see Monopolies, Dec. DIg. § 24.*] 

In Equity. Suit by the United States against E. I. du Pont de Ne- 
mours & Co. and others. Decree of dismissal as to certain défend- 
ants, and for the United States as to ail others. 

John P. Nields, U. S. Atty., George W. Wickersham, Atty. Gen., 
William S. Kenyon, Asst. Atty. Gen., and James Scarlet and William 
A. Glasgow, Jr., Sp. Asst. Attys. Gen., for the United States. 

Frédéric Ullmann, for défendants American Powder Mills, Miami 
Powder Co., and ^tna Powder Co. 

M. B. & H. H. Johnson, for défendant Austin Powder Co. 

Frederick Seymour, for défendant Equitable Powder Mfg. Co. 

David T. Marvel and David T. Watson, for défendant Henry A. 
du Pont. 

Burton B. Tuttle, for défendant King Powder Co. 

John C. Spooner, James M. Townsend, George S. Graham, William 
S. Hilles, and William H. Button, for remaining défendants. 

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges. 

•For other cases see same topio & § ndmbeb in Dec. & Am. Digs. 1907 to date, & Rop'r Indexes 



UNITED STATES V. B. I. DU FONT DE NEMOURS & CO. 129 

lyANNING, Circuit Judge. This is a suit in equity instituted by 
the United States under the Sherman anti-trust act against 43 cor- 
porate and individual défendants for the purpose of obtaining a de- 
cree adjudging the défendants guilty of maintaining a combination or 
conspiracy in restraint of interstate commerce and of monopolizing 
or attempting to monopolize such commerce, or a part thereof, and 
awarding an injunction to prevent and restrain further violations of 
the act. Thirty-six answers hâve been filed by 41 of the défendants. 
Two of the défendants — Austin Powder Company and MetropoHtan 
Povvder Company — hâve fîled no answers. The pétition and answers 
fîll a volume of over 500 pages. We do not deem it necessary to pré- 
sent a detailed statement of the facts alleged in the pleadings. The 
pétition is so admirably framed and the answers meet the allégations 
of the pétition so fairly that there is no difficulty in determining the 
issues of fact or of law. Then, too, while the proofs fill a dozen vol- 
umes, we hâve had such valuable aid from counsel in their briefs and 
their oral arguments that we hâve easily reached the conclusion that 
there is no serions controversy as to the essential facts. 

The case, as we view it, is to be decided upon évidence about which 
there is practically no dispute. Our task is by a study of unimpeached 
documentary and other évidence to ascertain (1) what were the rela- 
tions of the défendants when this suit was commenced; (2) whether 
those relations are inimical to the law ; and, if so, (3) what the re- 
lief shall be. That task will be simplified if, in the fîrst place, we 
détermine which of the défendants are clearly shown to hâve had- no 
connection at the time of the commencement of this suit with any 
combination or conspiracy of the nature described in the pétition ; for, 
as the only relief we can grant in this proceeding is injunctive, the 
pétition must be dismissed as to any défendant who was not violating 
the law, or threatening to violate it, when the suit was commenced. 
One may be indicted for a former connection with a combination or 
conspiracy violative of the anti-trust act; but, after he bas in good 
faith withdrawn from such a combination or conspiracy. he is no 
longer a subject of the injunctive power of a court of equity. 

^tna Powder Company of Indjana, Miami Powder Company of 
Ohio, and American Powder Mills of Massachusetts hâve filed a joint 
and several answer, in which they deny that they were parties to any 
of the agreements mentioned in the pétition when this suit was com- 
menced, and aver that, at the time of the commencement of the suit, 
none of them had any shares of capital stock or other interest in any 
of the other défendant companies ; that, as between themselves, they 
were not competitors, since one of them was a manufacturer of gun- 
powder for sporting purposes only, another of black powder for blast- 
ing purposes only, and the remaining one of dynamite and fuses only ; 
and that they hâve not sold and do not sell any of their commodities 
at prices fîxed or dictated by any of the other défendants. The proofs 
amply support the averments of the answer, and establish the fact to 
be that, although ail of thèse companies did in former years enter with 
others of the défendants into certain trade agreements to be more 
188 F.— 9 



130 188 FEDEEAL EEPOETEB 

particularly referred to hereafter, they withdrew therefrom in 1905, 
and that for at least seven months before the commencement of this 
suit none of them had any connection, direct or indirect with any of 
the alleged unlawful combinations set forth in the pétition. 

It is charged that the Equitable Powder Manufacturing Company 
was incorporated in January, 1892; that E. I. du Pont de Nemours 
& Co., a partnership then existing in Delaware, acquired 49 per cent, 
of its capital stock ; that the stock is now held by one of the défend- 
ants ; that shortly after its incorporation the Equitable constructed a 
powder mill in Illinois, where it has ever since manuf actured and sold 
in interstate trade gunpowder and other high explosives; that evei 
since its organization compétition in the shipment and sale of gun- 
powder and other explosives between that company and others of the 
défendants has been suppressed and eliminated ; that the priées for its 
commodities hâve been fixed by the parties to the alleged combination ; 
that E. I. du Pont de Nemours & Co., the partnership referred to, 
and its successors, hâve ever since dominated and controlled the Eq- 
uitable by virtue of the ownership of 49 per cent, of its capital stock ; 
and that the Equitable has been and now is a party to the alleged 
combination. The answer of the Equitable admits that the partner- 
ship referred to purchased 49 per cent, of its capital stock, but says 
the purchase was made from certain of its stockholders four years 
after its incorporation, and dénies that it was a party to the purchase, 
or that compétition between it and other parties had been suppressed 
or eliminated, or that its priées hâve been fixed by any other parties 
to this proceeding, or that its business has been dominated or con- 
trolled by the partnership referred to or its successors, or that it has 
been, or is, a party to any combination or conspiracy. It also avers 
that it has not been a member of any trade association since July 1, 
1903, that it is not, and for a long time before the comrnencement of 
this proceeding had not been, a stockholder in any other powder com- 
pany, and that its business has long been carried on in compétition 
with that of the other défendants and other manufacturers and ven- 
dors of black gunpowder and black blasting powder. The évidence of 
Mr. F. W. Olin, the président of the Equitable, who was called as a 
witness for the government, establishes the truth of the averments of 
the answer. There is no doubt that the Equitable withdrew from the 
Gunpowder Trade Association four years before this suit was com- 
menced, and that it now has no connection whatever with any combi- 
nation of vendors of explosives. It is true that 490 of its 1,000 shares 
of capital stock are owned by one or more of the défendant compa- 
nies; but the averment of the government's pétition that the business 
of the Equitable is dominated and controlled by any combination is not 
shown to be the fact. A business is not necessarily controlled by the 
,mere purchase of a minority interest in it; nor is there any proof that 
the Equitable has at any time since July 1, 1903, directly or indirectly 
aided any of the défendants in efforts to control the trade in explo- 
sives, or submitted or been subjected to external coercion of any kind. 
We are not at liberty, by the extraordinary writ of injunction, to in- 
terfère with the ownership of the 490 shares of the Equitable, in the 



UNITED STATES V. E. I. DU PONT DE NEMOUKS & CO. 131 

absence of proof that that ownership is employed to aid the conibina- 
tion described in the govemment's pétition. 

Previous to 1897 Austin Powder Company, of Cleveland, Ohio, 
was a party to several contracts alleged by the United States to hâve 
been violative of the anti-trust act; but the only fact affecting that 
Company, alleged in the pétition or proved, that existed at the com- 
mencement of this suit, is the ownership by one of the other défend- 
ant corporations of 266 of the 800 shares of its capital stock. There 
is no proof that the ownership of this minority interest in the capital 
stock of the Austin has been used for any unlawful purpose. While 
the Austin has filed no answer, it appears that, by an agreement with 
counsel for the government, it reserved the right to move to dismiss 
the pétition as to it. 

King Powder Company, of Cincinnati, Ohio, Marcellus Powder 
Company, of Marcellus, N. Y., and Ohio Powder Company, of Youngs- 
town, Ohio, were incorporated in 1878 and 1881. They erected mills 
in New York and Ohio, and it is charged that members of the Gun- 
powder Trade Association waged against them such a destructive 
warfare that between 1883 and 1886 the priées of explosives within 
their fîelds of compétition were reduced below the cost of manufac- 
ture, that the owners of the capital stocks of the Marcellus and the 
Ohio companies were compelled to sell their stocks to certain mem- 
bers of the Gunpowder Trade Association, that those two companies 
were subsequently dissolved, and that King Powder Company was 
forced into an agreement by which its business was controUed by the 
Gunpowder Trade Association, which association was formed under 
an agreement dated April 29, 1872, and continued under other agree- 
ments dated August 23, 1886, December 19, 1889, and July 1, 1896. 
King Powder Company was a party to ail thèse agreements, but we 
need not hère consider their effect, since it conclusively appears that 
on September 5, 1898, it refused longer to adhère to any "schedule on 
paper," and declared it should thereafter be guided "by the market 
price set by our competitors." It appears, also, that on January 29, 
1901, King Powder Company entered into a contract by which it 
agreed to sell to E. I. du Pont de Nemours & Co. of 1899 (a corpora- 
tion of Delaware which succeeded the partnership of the same name) 
and Laflin & Rand Powder Company the whole of its output, except 
what should be used by a certain other company, for the period of 
25 years; and it is charged that in April, 1901, thèse two vendees 
caused King Mercantile Company to be organized, acquired a majority 
of its capital stock, and used it as an instrumentality for controlling 
the output of King Powder Company and eliminating the latter com- 
pany as a competitor. But it is also unnecessary to inquire into the 
legality of thèse transactions, for on December 21, 1906, the agree- 
ment of January 29, 1901, was formally rescinded by mutual consent 
of ail the interested parties. There is no proof that King Powder 
Company, after December 21, 1906, was a party to any trade agree- 
ment concerning the manufacture or sale of gunpowder or other ex- 
plosives. On the contrary, the uncontradicted proof is that for seven 
months before this suit was commenced King Powder Company was 



132 188 FEDERAL EEPORTEB 

absolutely independent in the conduct of its business, and during that 
time neither did anything, nor threatened to do anything, in any wise 
violative of the anti-trust act. 

The plant of Anthony Powder Company, Limited, a partnership 
association of Michigan, was destroyed in 1906 by an explosion. 
On June 26, 1907, it issued a call for a stockholders' meeting to 
convene on July 30, 1907, for the purpose of considering the ques- 
tion of dissolving the association and distributing its assets. On 
the date last mentioned a resolution to dissolve was adopted. The 
proceedings to dissolve were in progress when this suit was com- 
menced. It was then doing no business, but was proceeding accord- 
ing to law to wind up its afïairs. 

The American E. C. & Schultze Gunpowder Company, a corporation 
of Great Britain, had established, prior to November, 1903, at Oak- 
land, N. J., a plant where it was manufacturing and selling smoke- 
less sporting powder. On November 9, 1903, by a written instrument, 
it leased its plant to E. I. du Pont de Nemours Powder Company of 
Delaware for 99 years, at an annual rental of i3,750. sterling, with 
an option of purchase to the lessee. In 1906 the lease was assigned to 
the E. I. du Pont de Nemours Powder Company of New Jersey 
(incorporated under the laws of New Jersey in 1903), which company 
has elected to purchase the plant, and has already paid a part of the 
purchase money therefor. We find nothing in thèse facts, so far as 
the British company is concerned, violative of the anti-trust act. 

The Peyton Chemical Company, a corporation of California, does 
not appear to hâve been, at the time of the commencement of this 
suit or at any other time, engaged in manufacturing or selHng ex- 
plosives of any kind, or to hâve taken any part in fixing the priées 
of explosives, or had connection with any scheme for controlling any 
part of the trade in explosives. It does appear that 3,000 of its 6,350 
shares of stock are owned by one of the principal défendants, but 
that alone is insufficient to warrant injunctive relief as against Peyton 
Chemical Company. 

Henry A. du Pont is one of the individual défendants. Previous 
to 1902 he had frequently represented E. I. du Pont de Nemours & 
Co. at the meetings of the Gunpowder Trade Association. In 1902 
he sold the major part of his interest in that company to other mem- 
bers of the du Pont family, though he acted for a time thereafter as 
an oiificer of two of the du Pont corporations. In June, 1906, more 
than a year before this suit was begun, he resigned ail his officiai 
positions in the défendant corporations, and since that time has had 
neither real nor nominal connection with the management of any of 
the défendant corporations, or with any trade agreement or combina- 
tion concerning the manufacture or sale of explosives of any kind. 
His stockholdings in the défendant corporation, after February, 1902, 
were comparatively small, and as, after June 8, 1906, he was not a di- 
rector or ofHcer in any of them, and took no part in the management 
of any of them, he cannot be held individually responsible for the 
unlawful acts, if any there were, of any corporation of which he was 
a stockholder. It was impossible for him alone to dominate the busi- 



UNITED STATES V. E. I. DU PONT DE NEMOUBS & OO. 133 

ness of any of the défendant corporations. There is no évidence that 
he attempted to do so, or that, after June 8, 1905, he had any con- 
nection, direct or indirect, with the shaping of policies or the manage- 
ment of the business of any of them. At the time of commencing 
this suit he was doing nothing, nor was he threatening to do anything, 
which furnishes the subject-matter of injunctive relief as against him. 

Henry F. Baldwin is another individual défendant, who, it is alleged 
by the United States, was, at the time of the filing of the pétition, a 
director of one of the du Pont companies and one of the managers 
of its business. By his answer Baldwin avers that he was a director 
of the Company mentioned for some time previous to June 14, 1907, 
but that on that day he resigned, and has not since been a director 
of, or in any way interested in the management or control of, any of 
the défendant corporations. There is no proof that his answer is in- 
correct, or that any injunction should be granted as against him. 

Before this suit was commenced the capital stocks and properties 
of other défendant corporations had been acquired by one of the du 
Pont companies, and they had been dissolved and were no longer 
in existence. Thèse were the California Powder Works of California, 
the proceedings to dissolve which were practically completed when 
this suit was commenced; the Conemaugh Powder Company of 
Pennsylvania, dissolved April 30, 1906; the Metropolitan Powder 
Company of California, which has filed no answer and was dissolved 
September 21, 1905; and the E. I. du Pont Company, incorporated 
August 1, 1903, under the laws of Delaware, and dissolved July 1, 
1907. 

For the reasons stated, we think it is clear that the pétition should 
be dismissed as to the following fifteen défendants: Mtnz Powder 
Company, Miami Powder Company, American Powder Mills, Equi- 
table Powder Manufacturing Company, Austin Powder Company, 
King Powder Company, Anthony Powder Company, Limited, Ameri- 
can E. C. & Schultze Gunpowder Company, Peyton Chemical Com- 
pany, Henry A. du Pont, Henry F. Baldwin, California Powder 
Works,' Conemaugh Powder Company, Metropolitan Powder Com- 
pany, and E. I. du Pont Company of August 1, 1903. 

The remaining défendants are: (1) Hazard Powder Company, a 
corporation of Connecticut; (2) Laflin & Rand Powder Company, a 
corporation of New York; (3) Eastern Dynamite Company, a cor- 
poration of New Jersey ; (4) Fairmont Powder Company, a corpora- 
tion of West Virginia; (S) International Smokeless Powder & 
Chemical Company, a corporation of New Jersey; (6) Judson Dy- 
namite & Powder Company, a corporation of California; (7) Dela- 
ware Securities Company, incorporated September 20, 1902, under 
the laws of Delaware ; (8) Delaware Investment Company, incor- 
porated September 20, 1902, under the laws of Delaware; (9) Cali- 
fornia Investment Company, incorporated April 7, 1903, under the 
laws of Delaware ; (10) E. I. du Pont de Nemours & Co. of Pen'nsyl- 
vania, .incorporated September 11, 1903, under the laws of Pennsyl- 
vania; (11) du Pont International Powder Company, incorporated 
December 14, 1903, under the laws of Delaware ; { 12) E. I. du Pont 



134 188 FEDERAL REPOETEB 

de Nemours Powder Company, incorporated May 19, 1903, under 
the laws of New Jersey; (13) É. I. du Pont de Nemours & Co., in- 
corporated February 26, 1902, under the laws of Delaware ; (14) 
Thomas Coleman du Pont; (15) Pierre S. du Pont; (16) Alexis I. 
du Pont; (17) Alfred I. du Pont; (18) Eugène du Pont; (19) Eu- 
gène E. du Pont; (20) Henry F. du Pont; (21) Irenee ,du Pont; 
(22) Francis I. du Pont; (23) Victor du Pont, Jr. ; (24) Jonathan 
A. Haskell; (25) Arthur J. Moxham; (26) -Hamilton M. Barks- 
dale ; (27) Edmond G. Buckner ; and (28) Frank L. Connable. 

By its pétition the United States considered the combination which 
it allèges the défendants hâve maintained with référence to six periods, 
extending from the year 1872 until the commencement of this suit. 
We shall consider it with référence to two periods, the fîrst extending 
from 1872 to February, 1902, and the second from February, 1902, 
to the commencement of this suit, which was July 30, 1907. We 
make this division for the reason that in February, 1902, as we shall 
presently see, there was a very important change in the management 
of the companies in which the du Pont family had been and then was 
interested. Tracing the history of interstate commerce in gunpowder 
and other explosives through thèse two periods, we shall be able to 
answer the first of the three questions before us, which is : 

[1, 2] First. What were the relations of the £8 défendants last 
above named when this suit was commenced? 

Much of the first of the two periods antedates July 2, 1890, when 
the anti-trust act became a law. We are not debarred, however, from 
considering the methods by which interstate commerce in explosives 
may hâve been controlled before the enactment of that law, for it 
may be that an examination of those methods will disclose -f acts which 
will materially aid us in determining the purpose of the trade agree- 
ments and the incorporations that followed the enactment of the law 
and the real relations of the défendants when this suit was com- 
menced. Standard Oil Co. v. United States, 221 U. S. 1, 31 Sup. 

Ct. 502, 55 L. Ed. , decided May 15, 1911. We shall, therefore, 

in the fîrst place, sketch as briefly as clarity of statement will permit, 
the history of the interstate commerce in explosives from 1872 to 
February, 1902. 

On April 29, 1872, at a meeting of manufacturers of gunpowder in 
New York City, there was organized the "Gunpowder Trade Associa- 
tion." Its members, seven in number, were Hazard Powder Company 
of Connecticut, Laflin & Rand Powder Company of New York, E. I. 
du Pont de Nemours & Co. (a partnership then existing in Delr 'are), 
Oriental Powder Mills of Maine, Austin Powder Company of Ohio, 
American Powder Company of Massachusetts, and Miami Powder 
Company of Ohio. Articles of association were adopted providing 
that the association should be composed of ail manufacturers of gun- 
powder in the United States who were then or might thereafter be ad- 
mitte'd thereto ; that of its seven members the Hazard Company, the 
Laflin & Rand Company, and the du Pont partnership should at ail 
meetings of the association be entitled each to ten votes, the Oriental 



UNITED STATES T. E. I. DU PONT DE NE5IOURS & CO. 13a 

to six votes, and each of the other three companies to three votes ; 
that the association should meet quarterly for the purpose of estab- 
lishing priées, if need be, and hearing and deciding appeals, and deter- 
mining ail questions relative to the trade that might be submitted to 
it ; that a council of five persons should be elected ; that the council 
should meet weekly for the considération and décision of infractions 
of agreements and questions of discrepancy and .déviations f rom priées 
in the différent home markets; that appeals from the council should 
be determined and the minimum priées for powder of the varions 
sorts should be fixed by the association ; and that f unds necessary for 
carrying eut the provisions of the articles should be assessed in 
proportion to the votes to which the members, under the terms of 
the articles, were respectively entitled. 

On February 11, 1875, at a regular quarterly meeting of the 
Gunpowder Trade Association in New York City, représentatives 
of ail seven of its members being présent, a committee was ap- 
pointed to consult with the California Powder Works in the mat- 
ter of its entrance into the markets of the Eastern states. At an 
adjourned meeting on March 17, 1875, the committee reported that 
an agreement had been made with the California Powder Works 
regulating the trade of both of the parties, that it was thought best 
to préserve the agreement amongst the confidential records of the 
association, and that, in accordance with the terms of the agree- 
ment, the association should adopt a séries of rules regulating sales 
and priées of powder in what was called the "neutral ground," be- 
ing Utah, Montana, Wyoming, Colorado, and New Mexico. By 
thèse rules, which the association immediately adopted, certain 
agents of the companies constituting the Gunpowder Trade Asso- 
ciation fixed the priées of powder delivered in the states and terri- 
tories composing the "neutral ground," the California Powder 
Works became bound thereby, and a fine was prescribed for every 
violation of the rules. On May 3, 1876, the committee of the Gun- 
powder Trade Association previously appointed to confer with the 
Sycamore Manufacturing Company reported that that company 
had promised to observe the rates fixed by the association. On 
August 2, 1876, the absociation amended the agreement of April 
29, 1872, by authorizing fines to be imposed upon its members for 
violations of the agreement and prescribing a method of procédure 
for the trial of alleged oiïenders before the association and thé 
collection of the fines. On February 11, 1880, the California Pow- 
der Works and the seven companies composing the Gunpowder 
Trade Association entered into a new agreement, in lieu of the 
one dated February 11, 1875, restricting the right of the members 
of the association to carry on their trade in certain of the Pacific 
states and territories, and the right of the California Powder 
Works to trade in any part of the United States east of the "neutral 
ground," regulating sales within the neutral territory, and fixing 
the fines to be paid by those who should violate the terms of the 
agreement. As illustrations of the power exercised by the associa- 
tion under the agreement of April 29, 1872, out of many that might 



138 188 FEDERAL EBPOKTBE 

be mentioned, we refer to some excerpts from the proofs repro- 
duced in the margin. ^ 

Previous to August 23, 1886, the Gunpowder Trade Association, 
composed of the seven members above mentioned, heard and dis- 
posed of several hundred complaints of violations of the agree- 
ments above referred to and imposed many fines. Other compa- 
nies, not parties to those agreements, had for some years been 
waging a warfare with the members of the Gunpowder Trade As- 
sociation. Among thèse were the Sycamore Manufacturing Com- 
pany of Tennessee, the Lake Superior Powder Company of Mich- 
igan, the King's Great Western Powder Company (whose name 
was subsequently changed to the King Powder Company) of Ohio, 
the Ohio Powder Company of Ohio, and the Marcellus Povi'der 
Company of New York. On the date last mentioned (August 23, 
1886) thèse fîve companies united with the seven companies who 
had formerly constituted the Gunpowder Trade Association in a 
new trade agreement the purpose of which, as expressed in its lan- 
guage, was to regulate the business of the parties thereto, includ- 
ing the prices at which powder should be sold, to the end that the 
parties might avoid unnecessary loss by "ill-regulated or unau- 

lAt a spécial meeting of the Gunpowder Trade Association on October 18, 
1876, the foUowing resolutions were adopted: 

"Whereas, the reduced prices for blasting powder recently made by certain 
parties in the coal flelds of Ohio, Illinois, and lowa not only tend to de- 
morallze the gênerai trade but to impair the proper interests of thls Asso- 
ciation: It is therefore deemed advisable to adopt the followlng: 

"Kesolved — That the priée of blasting powder in the Youngstown district, 
which includes the counties of Tnimbull and Mahoning, Ohio, and Jlercer 
and Lawrence, Penn., also the Akron and Massilon districts, comprlslng the 
coal flelds of Summit, Medlna, Wayue, Starlî, Tuscarawas couiities, Ohio, 
be flxed at $2.50 per kog— car load lots at $2.40 per keg. 

"Resolved — That the prlce of blasting powder in the coal districts of Illi- 
nois and lowa be $2.60 per keg, car load lots $2.50 per keg. 

"Eesolved — That the foregoing resolutions apply to the consumption in 
the coal flelds only in the states mentioned, that they are passed in self- 
defense for mutual protection, and to the Intent that each associate may be 
enabled to hold his own trade. 

"Kesolved — That the Ilazard Powder Company be permitted to sell blast- 
ing powder as low as $2.00 per keg in the Middlefleld district. 

"Kesolved — That the eommittee on prices be authorized in tbeir .iudgment 
to revise and regulate prices at ail points where cuts are made or attempted 
by any outslde parties — notice of such change in prices to be wired to each 
associate not less than twenty-four hours before the same goes Into effiect." 

At the stated meeting of the association on February 5, 1879, the follow- 
lng was adopted: 

"On motion of Col. du Pont, that prices at Memphls, Nashville, and such 
other points as are afifected by the prices of King's powder, be modified as 
the priée eommittee shall décide." 

The compendium of rules of June 1, 1881, contalned the following: 

"Associates not already in the enjoyment of trade in the Lake Superior 
district shall refrain from selling powder thereln, or to go to that district. 
Lake Superior Powder Co. to confine its sales of powder to consumers within 
Us proper district" 

On August 3, 1881, the association adopted the followlng: 

"On motion, that each associate shall instruet lu writing his représentative 
agent at Denver not to sell any powder to agents of the Glant Powder Oo. 
at any price." 



UNITED STATES V. B. I. D0 PONT DE NEMOURS * CD. 137 

thorized" compétition. The agreement excepted from ils opéra- 
tion trade with foreign countries, with the government of the 
United States, and with parties within the anthracite régions* of 
the State of Pennsylvania, apportioned amongst its twelve parties 
the maximum yearly trade allowed to them respectively, provided 
for a supplementary agreement with the California Powder Works 
concerning sales in the Pacific statt? and the "neutral territory," 
provided for sworn statements of sales to be delivered annually by 
each of the twelve parties to designated représentatives, created 
a board of arbitration to settle disputes between the parties, pro- 
vided for the exécution of supplementary agreements relating to 
priées to be maintained for the sales of powder and the gênerai 
harmonious arrangement of the powder .trade, and also provided, 
finally, that since the Lafîin & Rand Powder .Company, one of the 
twelve parties to the agreement, owned a majority of the capital 
stock of the Schaghticoke Powder Company the former company 
would guarantee that the latter company would respect and com- 
ply with the provisions of the agreement as though it were a par- 
ty thereto, and that ail sales by the Schaghticoke Powder Compa- 
ny should be considered as sales of the Laflin & Rand Powder 
Company. Supplementary agreements were subsequently entered 
into with the California Powder Works and by the agents of the 
parties to the agreement of August 23, 1886, for the régulation of 
the powder trade in particular localities. New Orléans, Louisville, 
Cincinnati, and Chattanooga, especially, were affected by such 
supplementary agreements. It is not improbable that there were 
other supplementary agreements affecting other places, for it ap- 

Çears that the agreements were furnished in printed blank forms. 
'heir purpose was to regulate the trade by establishing and main- 
taining uniform priées and giving effect to the principal agreement 
of August 23, 1886. 

The agreement of August 23, 1886, expired by its own terms on 
December 31, 1889. In anticipation of its expiration the same 
twelve parties who had executed it, on December 19, 1889, executed 
a new agreement, called the "Fundamental Agreement," for a term 
beginning January 1, 1890, and ending June 30, 1895, with an 
added provision that it should continue thereafter from year to 
year unless terminated in the manner therein provided for. As 
this Fundamental Agreement continued to be observed with more 
or less fîdelity by the parties to it, not only before but for several 
years after the enactment of the anti-trust act, its provisions are 
of especial interest. Its principal parties were the copartnership, 
E. I. du Pont de Nemours & Co., and the corporations, Hazard 
Powder Company and Laflin & Rand Powder Company. Thèse 
thfee parties were, in some of the provisions of the agreement, 
grouped as one collective party and called the "Three Companies." 
The agreement recited that the twelve parties made and sold gun- 
powder for blasting or sporting purposes, or both, and declared 
its purpose to be to regulate in a convenient and désirable manner 
the business of the parties thereto, to avoid unnecessary loss in the 



138 188 FEDERAL REPORTER 

sale and disposition of their powder by "ill-regulated or unauthor- 
ized compétition and underbidding of the agents of the parties" 
thareto, and to protect consumers and the public from unjust fluc- 
tuations in prices and from unjust discriminations. It excepted 
from its opération trade with foreign countries, trade with the 
government of the United States, and trade in blasting powder in 
the anthracite régions of Pennsylvania. The portion of the Unit- 
ed States subject to the opération of the agreement was divided 
into seven districts, within each of which, it was declared, uniform 
prices should generally prevail. Yearly allotments of trade were 
made to the "Three Companies" as one collective party, and tp 
each of the other nine parties. The trade in the "neutral belt" and 
in certain of the Pacific states was to be regulated by a supplemen- 
tary agreement with the California Powder Works. Periods for 
settlements in the division of trade were fixed, and sworn state- 
ments of sales were required to be furnished by each of the par- 
ties (the "Three Companies" being considered as one party) to 
the board of trade, a body established by the agreement, whose 
duty it was, inter alia, to adjust the différences in sales according to 
the money values permitted to each party in the division of trade, 
and to require payment into the treasury of the association by the 
debtor parties and make distribution thereof amongst ail parties 
according to their rights under the agreement. The board of 
trade consisted of five members, who were elected by the parties 
to the agreement at their annual meetings. The board was re- 
quired to meet quarterly, and was authorized to fix prices, to 
vary or change the same at any time and for any place, to meet 
contingencies for the protection of the common interests of the 
parties to the agreement, to enforce rules and régulations adopted 
by the parties by any measure it might deem necessary, and to 
hear and adjudge cases of grievances. General meetings of the 
parties to the agreement were provided for, and the association at 
any of its gênerai meetings was authorized to review or reverse 
the acts of the board of trade and to instruct it upon any matter. 
It was also provided that any party to the agreement who should 
suffer excessive loss by an overt act of the board of trade — as by 
the réduction of a price at a place in treatment of a "local disturb- 
ance of trade" — should receive such compensation for the damage 
sustained by it as might be recommended by the board of trade 
and agreed to at a gênerai meeting. Supplementary agreements 
by the parties were authorized relating to the fixing of prices and 
the control of the trade. It was further agreed that sales by the 
Schaghticoké Powder Company should be considered as sales of 
the Laflin & Rand Powder Company and the latter company guar- 
anteed compliahce with the provisions of the agreement by the 
Schaghticoké Company. 

In 1895 the copartnership, E. I. du Pont de Nemours & Co., and 
the Laflin & Rand Powder Company, who then owned a majority 
of the capital stocks of the Repauno Chemical Company and the 
Hercules Powder Company, decided to consolidate those two com- 



UNITED STATES T. E. I. DU PONT DE NEMOURS & CO. 139 

panies and the Atlantic Dynamite Company in one corporation, 
called the Eastern Dynamite Company, which they caused to be 
organized under the laws of New Jersey with an authorized cap- 
ital stock of $2,000,000 (200,000 shares), ail of which was issued to 
the stockholders of the three companies thns brought into subsid- 
iary relations to the Eastern Dynamite Company. By ' this amal- 
gamation of interests centralization of control of the dynamite 
business previously carried on by the three companies was se- 
cured. Later the Eastern Dynamite Company purchased the stocks 
of a large number of other powdcr, dynamite, and chemical com- 
panies, and thereby obtained control of them. 

Previous to July 1, 1896, the Chattanooga Powder Company, 
with mills in Tennessee, the Equitable Powder Manufacturing 
Company, of New Jersey, with a plant in Illinois, the Southern 
Powder Company, having mills in Georgia, and the Phœnix Pow- 
der Manufacturing Company, of West Virginia, with mills in New 
Jersey, West Virginia, and Illinois, developed competing busi- 
nesses with one another and with the parties to the Fundamental 
Agreement of December 19, 1889. Against them, the Hazard, the 
du Pont, and the Sycamore companies carried on a sharp contest. 
Negotiations with their représentatives, in May, 1896, resulted in 
allotments of the trade to them, and on August 20, 1896, thèse 
four companies, with the California Powder Works and the twelve 
parties to the Fundamental Agreement of December 19, 1889, be- 
ing seventeen parties in ail, entered into another Fundamental 
Agreement concerning the manufacture and sale of powder for 
blasting and sporting purposes, which was dated July 1, 1896, and 
was in its gênerai terms not unlike the agreement of December 19, 
1889. Some time between August 20 and September 24, 1896, how- 
ever, the board of trade was supplanted by what was thereafter known 
as the "advisory committee." 

On October 26, 1897, an agreement was entered into by ten Amer- 
ican manufacturers, eight of whom were parties to the agreement of 
July 1, 1896, and two European manufacturers, which related to ex- 
plosives of ail kinds, provided that the European parties should not com- 
plète works then building in New Jersey, and that the American partiçs 
should bear ail expenses theretofore incurred in connection therewith, 
contained mutually restraining provisions as to the érection of fac- 
tories in the United States and Europe, divided the trade of the world 
territorially between the American and the European parties, con- 
tained provisions for fixing priées, provided a fund for the purpose 
of protecting the common interest against outside compétition, fixed 
fines and penalties for breaches of the agreement, and contained sundry 
other provisions for the régulation and control of the trade. This 
agreement was in existence throughout the period of the war with 
Spain and until 1906. 

On October 21, 1899, the E. I. du Pont de Nemours & Co. was 
incorporated under the laws of Delaware with an authorized capital 
stock of $2,000,000. The incorporators of this company were the 
members of the previous copartnership of the same name — Eugène 



140 188 FEDERAL REPORTEE 

du Pont, Francis G. du Pont, Henry A. du Pont, Alexis I. du Pont, 
Charles I. du Pont, and Alfred I. du Pont. The business and prop- 
erty of the copartnership were sold to the corporation, and each part- 
ner received a proportion of the capital stock equal to his interest in 
the copartnership. Eugène du Pont had been the manager ot the 
partnership» business for 10 years. He naturally became the président 
of the corporation. He was also a member of the advisory commit- 
tee of the associated manufacturers for years prior to January, 1902, 
in which month he died. Upon ' Eugene's death the remaining stock- 
holders, excepting Alfred, were strongly disposed to sell out to the 
Laflin & Rand Powder Company. Alfred solicited the interest of 
Thomas Coleman du Pont and Pierre S. du Pont, neither of whom 
had theretofore been interested in the business, and thèse three per- 
sons — Alfred, Thomas, and Pierre du Pont — made to the stockholders 
an offer to purchase, which was accepted. Thus was it that in Febru- 
ary, 1902, the du Pont powder industry passed into the control of those 
who at présent dominate it. For 30 years trade agreements had been 
in existence, in every one of which the du Ponts were active parties. 
There were times when the parties to thèse agreements broke away 
from and disregarded them, but usually the fines and penalties im- 
posed on the violators preserved the integrity of the organization. The 
association of manufacturers of powder and other explosives had 
probably never been stronger than it was in February, 1902, when 
the change in the management of the du Pont works took place. It 
had for years arbitrarily fixed priées in the dififerent parts of the 
United States, waging a disastrous warfare against competitors untii 
they were coerced into terms satisfactory to the association or brought 
into the association. In express language, the trade agreements dis- 
closed the purpose of fixing priées, and at the meetings of the associa- 
tion, and of its council, board of arbitration, board of trade, and ad- 
visory committee, measures were often devised to îimit the output of 
the members of the association and to crush compétition by manu- 
facturers not members of the association. When Thomas Coleman du 
Pont, Pierre S. du Pont, and Alfred I. du Pont purchased the du 
Pont business, they came into possession of a business that had been 
developed under trade agreements which the learned counsel for the 
défendants admit contravene at least the first section of the anti-trust 
act. One of thèse agreements— the one dated July 1, 1896 — was still 
in force, and it is important to know how the associated parties con- 
ducted their business afïairs after the death of Eugène du Pont in 
January, 1902. 

On February 26, 1902, Thomas Coleman, Pierre S., and Alfred I. 
du Pont caused to be organized, under the laws of Delaware, a new 
corporation, called E. I. du Pont de Nemours Company with an au- 
thorized capital stock of $20,000,000. This new company (hereafter 
called the du Pont Company of 1902) then issued its promissory notes 
for the sum of $12,000,000 and 119,970 shares of its capital stock, 
whose par value was $11,997,000, to E. I. du Pont de Nemours &) 
Co. of 1899 for the property, assets, and good will of the latter com- 
pany, excepting certain parcels of its real estate, and the stockholders 



UNITED STATES V. E. I. DU PONT DE NEMOUE8 & CO. 141 

of the latter company amongst whom the notes and stock of the new 
Company had been distributed in proportion to their holdings of stock 
in the company of 1899, caused 89,400 shares of the stock of the new 
Company to be transferred to Thomas Coleman, Pierre S., and Alfred 
I. du Pont. The stock so transferred to thèse three gentlemen gave 
them the control of the du Pont Company of 1902, and that control 
they hâve ever since had. About 40 per cent, of the property acquired 
from the corporation of 1899 by the du Pont Company of 1902 con- 
sisted of five plants used in manufacturing and selling the du Pont 
explosives, namely, one at Wilmington, Del., one at Sycamore, Tenn., 
one at Mooar, lowa, one at Carney's Point, N. J., and one in the 
anthracite région of Pennsylvania. About 60 per cent, consisted of 
stocks in other corporations which manufactured and sold explosives 
of various kinds. It owned ail of the stock of the Hazard Powder 
Company, consisting of 10,000 shares, which company had but one 
operating plant; the greater part of its assets consisting of stocks in 
other companies. The du Pont Company of 1902 was therefore at 
first both a holding and an operating company. Its interest as a hold- 
ing company exceeded its interest as an operating company. Indeed, 
its interest as an operating company continued but little over a year, 
for by October 1, 1903, it had conveyed ail its tangible assets to other 
corporations for the stocks of those corporations. On April 2, 1902, 
Thomas Coleman du Pont, président of the du Pont Company of 
1902, was elected a member of the advisory committee of the associa- 
tion organized under the trade agreement of July 1, 1896. On Octo- 
ber 2, 1902, at the annual gênerai meeting of the manufacturers' as- 
sociation, Mr. T. C. du Pont being in the chair, a revised compendium 
of rules was recommended to the advisory committee for adoption 
and on Noverriber 7th that committee adopted the compendium. It 
authorized the advisory committee to appoint a spécial committee 
which should hâve authority, between the meetings of the advisory 
committee, to increase rebates on existing contracts for blasting pow- 
der and to recommend sales below the schedule priées to buyers un- 
der contract, ând contained other drastic provisions for eliminating 
compétition and controlling the trade. Mr. T. C. du Pont was a mem- 
ber of this spécial committee. At this time the du Pont Company of 
1902 owned stocks in the Austin Powder Company, Birmingham Pow- 
der Company, California Powder Works, Chattanooga Powder Com- 
pany, Consumers Powder Company. Eastern Dynamite Company, En- 
terprise Powder Company, Equitable Powder Manufacturing Com- 
pany, Fairmont Powder Company, Indiana Powder Company, Lafîin 
Powder Manufacturing Company, Lake Superior Powder Company, 
Mahoning Powder Company, Northwestern Powder Company, Ohio 
Powder Company, Oriental Powder Mills, and Phœnix Powder Man- 
ufacturing Company. It owned, as above stated, ail the capital stock 
of the Hazard Powder Company, and that company owned stocks in 
the Eastern Dynamite Company, Hecla Powder Company, Lake Su- 
perior Powder Company, Ohio Powder Company, Oriental Powder 
Mills, and Phœnix Powder Manufacturing Company. Of thèse com- 
panies the du Pont Company of 1902 controlled only the Fairmont 



142 188 FEDERAL REPORTEE 

and the Oriental. Pierre S. du Pont says that he and his associâtes 
felt, at the time they took over the property of the du Pont Company 
of 1899, that they commanded but little of the business of thèse other 
corporations. In the course of their investigations they discovered 
that the Laflin & Rand Powder Company was largely interested by 
reason of its stockholdings in many of thèse other corporations, and 
that the du Pont Company of 1902 and the Laflin & Rand Company, 
together, could control them. He déclares that their plants were 
pretty thoroughly scattered about the country and were well located, 
that freights on explosives are very high, so that it is impossible to 
ship them to any great distance without undue expense, and that the 
plants were désirable ones to control. The plan was then conceived 
of purchasing the capital stock of the Laflin & Rand Powder Com- 
pany, consisting of 10,000 shares, which company, it will be remem- 
bered, had been a party to each of the trade agreements of April 29, 
1872, August 23, 1886, December 19, 1889, and July 1, 1896, arid had 
participated in the enforcement of the methods of the association of 
manufacturers for the élimination of compétition and the control of 
the trade. If the du Pont Company of 1902 and the Hazard and the 
Laflin & Rand companies could be united in corporate form it was 
as apparent then as it is now that the advantages that had been ob- 
tained under the trade agreements could be more firmly and more cer- 
tainly retained. Accordingly, the following plan for securing control 
of the Laflin & Rand Company was devised : 

On September 20, 1902, under the laws of Delaware, there were 
organized the Delaware Securities Company, with an authorized cap- 
ital stock of $8,000,000, and the Delaware Investment Company, with 
an authorized capital stock of $2,500,000. Of certain persons, who 
held 5,524 shares, or a majority, of the stock of the Laflin & Rand 
Company, a part also held 950 shares of the stock of the Moosic Pow- 
der Company. That part refused to sell their holdings in the Laflin 
& Rand Company unless the purchaser would also take the 950 shares 
of the Moosic stock. Accordingly, T. C. du Pont obtained an option 
on the majority of the stock of the Laflin & Rand Company and on 
the 950 shares of the Moosic stock. In payment for the 5,524 shares 
of the Laflin & Rand stock and for his services T. C. du Pont, who, 
under his option, had acquired the 5,524 shares of the Laflin & Rand 
stock, received f rom the Delaware Securities Company $3,998,000 
(par value) of its stock and $2,209,600 of its bonds ; that is to say, 
over $1,100 in such stock and bonds for each share of the stock of 
■the Laflin & Rand Company. Much the larger part of the stock of 
the Delaware Securities Company, and therefore the control of that 
company, was transferred to the du Pont Company of 1902. In pay- 
ment for the 950 shares of the Moosic stock and for his services T. C. 
du Pont, who, under his option, had acquired that stock also, received 
from the Delaware Investment Company $2,498,000 (par value) of 
its stock and $2,500,000 of its bonds, of which stock much the larger 
part, and therefore the control, was transferred to the du Pont Com- 
pany of 1902. The bonds of the Delaware Securities Company and 
the Delaware Investment Company were secured by the Laflin & Rand 
stock and the Moosic stock so purchased, and by stock of the E^st- 



UNITED STATES T. E. I. DU PONT ÛB NEMOUES & CO. 143 

ern Dynamite Company, the Hazard Powder Company, and the du 
Pont Company of 1902, loaned for that purpose by T. C. du Pont. 
By this arrangement it will be observed the Laflin & Rand Company 
was controUed by the Delaware Securities Company, and the Dela- 
ware Securities Company by the du Pont Company of 1902. At the 
time of this purchase the Lafîin & Rand Company ovvned 1,410 of 
the 3,000 shares of the Moosic; consequently, the acquisition of the 
additional 950 shares of the Moosic, whose par value was $95,000, 
and for vvhich was paid stock and bonds of the par value of $4,998,000, 
gave to the du Pont Company of 1902 control, also, of the Moosic 
Powder Company. This was a seemingly excessive price to pay for 
such control, and is strong évidence of a purpose to destroy compéti- 
tion and promote monopoly; for in less than a year afterward the 
whole of the capital stock of the Moosic Powder Company ($300,000) 
was transferred to E. I. du Pont de Nemours & Co. of Pennsylvania 
for $889,458.95 of the stock of the holding company. 

Some time previous to 1902 the Fairmont Powder Company had 
been organized under the laws of West Virginia. The combination 
then existing under the trade agreement of July 1, 1896, instituted 
a contest against the Fairmont. Priées were reduced and in the year 
1902 the du Pont Company of 1902 obtained the Fairmont's stock. 
Thèse transactions were completed in October, 1902; that is, in the 
same month in which the revised compendium of rules for the gov- 
ernment of the associated companies, above referred to, went into 
efifect. Mr. T. C. du Pont, one of the purchasers of the du Pont busi- 
ness in February, 1902, without previous expérience in the powder 
or explosives business, but with an ability that commands high admira- 
tion, succeeded, within the period of six months after bis élection as 
a member of the advisory committee of the associated companies, in 
cementing the principal parties to the trade association in a union 
much more able to cope with competitors and to secure control of the 
trade in powder and other explosives than any of the associations 
that had preceded it. The efïects of the consolidation were soon évi- 
dent. In December, 1902, Mr. Arthur J. Moxham, then président of 
the Hazard Powder Company, delivered an address at a gênerai 
meeting of the associated companies in which, after reviewing the 
history of the explosives trade for some years and concluding that 
the advance in priées f rom 1896 to 1902 had been too small, he said : 

"It does not sufflce to say that at to-day's priées there is a fair mar- 
gin of profit, because the faet is that at to-day's priées there ought to be 
something more tlian a fair margin. There should be a heavy margin of 
profit, and in the fact that there is not we see a menaee to the future of the 
business. The présent phénoménal prosperity cannot last. If past history Is 
to guide us, we must assume that it will be followed by a period of reaction. 
During this period of reaction the price of powder must eome down heavily. 
When the demand comes from our customers to reduce the price when every- 
thing else is belng reduced, it will be no answer to say that we did not ad- 
vance it when we could. During periods of dépression the purchaser, not 
the seller, Is in control of the market, and the irrésistible logic of ail past 
history shows that his control Is absolute. In a country of such trade Irreg- 
ularities as that of the United States, it is only by a high profit during periods 
of prosperity that a fair return to capital ean be maintained in face of the 
minimum that follows the period of trade distress." 



lii 188 FEDERAL KEPOETKE 

His recommendation, therefore, was that priées should be advanced, 
and they were advanced immediately in nearly the whole of the United 
States, thus showing the confidence of the associated companies in 
their abiHty to control the explosives business in this country. 

In 1903 the Consumers' Powder Company, the Enterprise Powder 
Manufacturing Company, the Moosic Powder Company, and the 
Oliver Powder Company, ail corporations of Pennsylvania, were 
merged into E. I. du Pont de Nemours & Co. of Pennsylvania, the 
capital stock of the last-mentioned company having been increascd for 
that purpose from $20,000 to $2,000,000 and a majority of it being 
now owned by the next-mentioned company. On May 19, 1903, the 
E. I. du Pont de Nemours Powder Company (hereafter called the du 
Pont Company of 1903) was organized under the laws of New Jer- 
sey, with an authorized capital of $50,000,000 of preferred and com- 
mon stock. Thereupon the du Pont Company ,of 1902 assigned ail 
its stockholdings in other companies (about 35 of them) to the du 
Pont Company of 1903, and took in exchange therefor $30,200,000 
(a majority) of the preferred and common stock of the du Pont Com- 
pany of 1903. In 1903, also, the California Investment Company was 
organized under the laws of Delaware with an authorized capital 
stock of $400,000, the majority of which stock is now owned by the 
du Pont Company of 1903, and through it the du Pont Company of 
1903 obtained control of the Judson Dynamite & Powder Company, a 
corporation of California, with its authorized capital stock of $2,000,- 
000. In December, 1903, the du Pont International Powder Company 
was organized, under the laws of Delaware, with an authorized capital 
stock, preferred and common, of .$10,000,0(X), the majority of which is 
owned by the du Pont Company of 1903. Through the du Pont In- 
ternational Company the du Pont Company of 1903 acquired control 
of the International Smokeless Powder & Chemical Company with its 
issued preferred and common stock of $9,600,000, which acquisition 
gave it control of ail the trade in military smokeless and ordnance 
smokeless powders except the part of the trade due to certain powders 
manufactured by the United States government. 

The advisory and spécial committees of the trade association held 
numerous meetings between September 24, 1896, and June 30, 1904. 
Eugène du Pont had been one of the members of the advisory com- 
mittee and had participated in its clearly revealed policy of acquiring 
control of the explosives trade under the trade association agreement 
of July 1, 1896 — an agreement which, as previously stated, counsel 
for the défendants hâve frankly conceded violated the anti-trust act. 
There was no diminution of effort to perfect such control after Eu- 
gène du Pont's death. On the contrary, after Thomas Coleman, 
Pierre S., and Alfred I. du Pont had come into the management of 
the du Pont business, and Thomas Coleman du Pont had been elected 
as the successor of Eugène in the advisory committee, and become a 
member of the spécial committee, the advisory and spécial committees, 
as above stated, continued their meetings and fixed spécial priées and 
spécial rebates in multitudes of cases and apportioned the trade in 
explosives amongst the members of the trade association. In a letter 



UNITED STATES V. E. I. DU PONT DE NEMOUES & OO. 145 

from the secretary of the spécial committee to the secretary of the 
advisory committee, dated as late as June 16, 1904, it appears that 
the former committee recommended spécial priées for certain con- 
tracts entered into by one of the du Pont companies, and by the Haz- 
ard, Laflin & Rand, Oriental, Ohio, Birmingham, Miami, Chattanooga, 
Phœnix, and Indiana Powder companies, with varying allowances for 
rebates from the prices so fixed. This poUcy of fixing priées in partic- 
ular cases, aflfecting particular localities, was one which the independ- 
ent manufacturers of explosives could not easily cope with. The évi- 
dence shows that in October, 1905, a committee of independent pow- 
der and dynamite manufacturers met Mr. Jonathan A. Haskell, prési- 
dent of the Laflin & Rand Powder Company and vice président of the 
du Pont Company of 1903, and Mr. Charles Patterson, director of 
sales for the du Pont Company of 1903, for a conférence concerning 
the low prices at that time prevailing. Mr. Koller, one of the mem- 
bers of the committee of the independents, says that at the conférence 
Mr. Haskell declared that in the past the policy of the interests repre- 
sented by him had been to buy up plants, but that in the future the 
"survival of the fittest" would détermine who should hâve the trade. 
Mr. Haskell admits that he informed this committee that the interests 
represented by him had discontinued the practice of making agree- 
ments to fix prices, and he adds in his testimony that the change in 
policy was made in 1904. 

After the incorporation of the du Pont Company of 1903, a sales 
board was created. This board, composed of a director of sales and 
assistant directors, coexisted with the advisory and spécial committees 
until June 30, 1904, when the committees were superseded by the 
sales board, which thereafter exercised the power of fixing prices and 
policies for the corporations that had, by the methods already out- 
îined, been brought together under one corporate management. In 
July, 1904, there was no further need of advisory or spécial com- 
mittees, or of the trade association formed under the agreement of 
July 1, 1896. Ail the advantages of the trade association agreement 
were now much better secured by the séries of corporate transmuta- 
tions that had followed the introduction of T. C. du Pont and Pierre 
S. du Pont into the explosives business. Between 1902 and the com- 
mencement of this suit in July, 1907, many of the corporations whose 
property and business had been acquired by the above-mentioned 
methods were dissolved, ana thereby the relations of the combined 
companies were simplified and the assurances of the perpetuity of their 
power were increased. We hâve verified the tabulated statement con- 
tained in the brief for the government, and we find that in 1907 the 
du Pont Company of 1902, through its subsidiary corporation, con- 
trolled in the United States of the trade in — 

Black blasting powder 64 per cent. 

Saltpeter blasting powder 72 " " 

Dynamite 72 " " 

Black sporting powder 73 " " 

Smokeless sporting powder 64 " " 

Smokeless military and ordnance powder, exclusive of what 

the TJ. S. government Itself made 100 " " 

18S F.— 10 



146 188 FEDERAL EEPOETEK 

Certain exhibits furnisKed by the défendants show that previous to 
September 22, 1907, the du Pont Company of 1903 and the Eastern 
Dynamite Company had acquired control of 64 différent corporations 
which between April 30, 1904, and September 22, 1907, they caused to 
be disçolved. The names of thèse corporations, with the dates when 
they were respectively dissolved, are stated in the margin.^ The péti- 
tion of the government charges that the poHcy of acquiring the assets 
of other CQrporations and then dissolving them was for the purpose of 
establishing a monopoly in one corporation. The du Pont Company 
of 1902, the du Pont Company of 1903, Thomas Coleman du Pont 
and Pierre S. du Pont admit, by their joint and several answer, that 
their policy was eventually to vest absolute ownership of ail the 
plants, manufactories and tangible property acquired by the meth- 
ods above mentioned in one corporation, and then to dissolve the 
subsidiary corporations. They say, further, that as soon as they 
can legally do so it is their purpose to dissolve the Laflin & Rand 
Powder Company, the Hazard Powder Company, the Eastern 
Dynamite Company, the Delaware Securities Company, and the 
Delaware Investment Company. It is perfectly clear that in 1902 
the plan was originated of bringing under one corporate control as 
many as possible of the corporations engaged in the explosives busi- 
ness. The achievement of the object was the easier because of the 

2 The following Is a llst of corporations, controUed by the du Pont Com- 
pany of 1903 and the Eastern Dynamite Company, wlth the dates when they 
were dissolved. The llst Is extracted from Government Exhibits 391 and 
392, which the défendants prepared: 

Blue RIdge Powder Co Dissolved April 30, 1904. 

U. S. Dynamite Co 

Laflin Powder Mfg. Co " May 2, 

Hudson River Powder Co " June 3, 

Acme Powder Co " " 30, 

Columbla Powder Co 

Dlttmar Powder & Chemical Co " " 

Mt. Wolf Dynamite Co " 

Rock Glycérine Co " " 

Sterling Dynamite Co " " " 

Atlantic Dynamite Co. of N. J " 

Hecla Dynamite Co " " 

Hercules Powder Co " " " 

Repauuo Chemical Co " " " 

Repauno Mfg. Co " 

Clinton Dynamite Co " July 1, 

A. Kirk & Son Co 

Roblna Fuse Co " 

Weldy Dynamite Co 

Oliver Dynamite Co " " " 

Monarch Powder Co " Aug. 1, 

Porcite Powder Co. of N. J " Jan. 1, 1905. 

" " " " N. Y " " " 

New York Powder Co. oî TSl'.' ï.'.'.'.'.'.'. .... .'.'.'.'.'.'.'.'. 

tt (I .t ti ** 'M y ** *' " 

Electric Powder Co " Jan. 31, 

Joplln Powder Co " March 1, 

Shenandoah Powder Co " " " 

Brooklyn Glyc. Mfg. & Réf. Co " April 30, 



UNITED STATES T. E. I. DU PONT DE NEMOUKS & CO. 



14T 



conditions created by the existence from July 1; 1896 of the trade 
association formed under the agreement of that date. Before 1902 
the plan was to destroy compétition and obtain a monopoly by the 
enforcement of drastic provisions in trade agreements, and from 1902 
to 1907 it was to achieve the same ends by substituting corporate forms 
and powers for trade agreements. The success of'the plan is évident. 
Pierre S. du Pont, in his testimony given October 21, 1909, said that 
the du Pont Company of 1903 had then paid dividends amounting 
to $11,000,000 and had a surplus in its treasury of $12,000,000 or 
$13,000,000. It is true that many of the corporations brought into 
the combination were not large. A considérable number of them, 
possibly, did little, if any, interstate trade. It is not denied, however, 
that many of them carried on an extensive commerce among the states. 
Indeed, it conclusively appears that it is a common practice for manu- . 
facturers of explosives to ship their products, dangerous and expensive 
as the business is, from state to state, and for a manufacturer in one 
part of the country to ship his products to, and sell them in, other 
parts in compétition with manufacturers there. Shipments by the 
Hazard Powder Company from Connecticut to Georgia and Alabama 
to compete there with the Chattanooga and other powder companies 
are examples of interstate trade disclosed by the évidence. 



Pennsylvania Torpédo Co Dlssolved 

A. S. Speece Powder Mfg. Co " 

Glant Mfg. Co 

Standard Bxp. Co., Limited " 

Metropolitan Powder Co " 

Cllmas; Powder Mfg. Co " 

Explosives Supply Co " 

American Stor. & Deliv. Co " 

Atlantic Mfg. Co 

Hudson River Wood Pulp Mfg. Co 

National Torpédo Co " 

Producers Powder Co " 

Chattanooga Powder Co " 

Lake Superior Powder Co " 

Otiio Powder Co. . . : " 

American Forclte Powder Mfg. Co " 

Hecla Powder Co " 

Anthracite Powder Co " 

Globe Powder Co " 

Marcellus Powder Co " 

H. Jullus Smith Elec. Fuse Co 

James Macbeth & Co ; " 

Phœnlx Powder Mfg. Co " 

Conemaugh Powder Co " 

Enterprise Hlgh Explosive Co " 

Schaghtlcoke Powder Co " 

Callfornla Vig. Powder Co ; . . " ' 

Californla Powder Works " 

Western Torpédo Co " 

Oliver Powder Co " 

Thompson Torpédo Co " 

E. I. du Pont Co 

King Mercantile Co " 

Mahonlng Powder Co " 



ApTll 30, 


1905. 

tt 


June 30, 

<4 *1 




Sept. 21, 
22, 


H 

tt 



30, 



Dec. 31, 



Aprll 30, 


1906. 


July 1, 


i* 


Nov. 1, 


<( 


" 28, 


tï 


Jan. 1, 


1907. 


March 25, 


(( 


Aprll 27, 


*i 


July 1, 


tt 



Sept 22, 



148 188 FEDERAL EEPOETBR 

Summarizîng the facts as to the relations of the 28 défendants, 
which are the subject of our présent inquiry, we find that : 

The Hazard Powder Company has issued 10,000 shares, ail of 
which are owned by the du Pont Company of 1903. 

The Laflin & Rand Powder Company has issued 10,000 shares, of 
which at least 5,524 shares are owned by the Delaware Securities Com- 
pany, and almost the whole of the stock of the latter company is owned 
by the du Pont Company of 1903. 

The Eastern Dynamite Company has issued 20,000 shares, of which 
the majority is owned by the Hazard, the Laflin & Rand, and the du 
Pont Company of 1903. 

The Fairmont Powder Company has issued 750 shares, of which the 
majority is owned by the du Pont Company of 1903. 

The International Smokeless Powder & Chemical Company has 
issued preferred and common stock to the amount of $9,600,000, the 
majority of which, through the du Pont International Powder Com- 
pany, is controlled by the du Pont Company of 1903. 

The Judson Dynamite & Powder Company has issued 20,000 shares 
which are owned by the California Investment Company. The stock 
of this latter company is owned by the du Pont Company of 1903. 

The Delaware Securities Company, created for the acquisition of 
stock of the Laflin & Rand Powder Company, has an authorized cap- 
ital stock of 80,000 shares, of which a majority is owned by the du 
Pont Company of 1903. 

The Delaware Investment Company, created for the acquisition of 
950 shares of the Moosic Powder Company, has an authorized capital 
stock of 25,000 shares, of which the majority is owned by the du 
Pont Company of 1903. 

The California Investment Company, created for the acquisition of 
the stock of the Judson Dynamite & Powder Company, has an au- 
thorized capital stock of 4,000 shares, a majority of which is owned 
by the du Pont Company of 1903. 

E. I. du Pont de Nemours & Co. of Pennsylvania has an authorized 
capital stock of 20,000 shares, the majority of which was issued for 
stocks in subsidiary corporations in Pennsylvania, and passed ulti- 
mately into the control of the du Pont Company of 1902 and then into 
the control of the du Pont Company of 1903. 

The du Pont International Powder Company has an authorized 
capital stock of $10,000,000, preferred and common, a majority of 
which is owned by the du Pont Company of 1903. 

The du Pont Company of 1903 is the owner of the capital stocks, 
or a majority of the capital stocks, of the corporations above men- 
tioned. 

The du Pont Company of 1902 is the owner of the capital stock 
of the du Pont Company of 1903, and therefore controls ail twelve of 
the above-mentioned corporations as its subsidiaries. 

The défendants Thomas Coleman du Pont, Pierre S. du Pont, 
Alexis I. du Pont, Alfred I. du Pont, Eugène du Pont, Eugène E. 
du Pont, Henry F. du Pont, Irenee du Pont, Francis I. du Pont, Victor 
du Pont, Jr., Jonathan A. Haskell, Arthur J. Moxham, Harailton M. 



UNITED STATES V. E. I. DU PONT DE NEMOURS & CD. 14'J 

Barksdale, and Frank L. Connable are each directors of the du Pont 
companies of 1902 and 1903, or of one of them. Thomas Coleman 
du Pont is also président of both of them. Edmond G. Buckner is 
an active director of the International Smokeless Powder & Chemical 
Company. 

It is clear that thèse 28 défendants are associated in a combination 
for carrying on interstate commerce in powder and other explosives. 

[3] We come, therefore, to the considération of the second ques- 
tion, which is: 

Second. Is the combination which we hâve found to exist one that 
is obnoxious to the provisions of the anti-trust act? 

The act déclares that every combination, in the form of a trust or 
otherwise, in restraint of trade or commerce among the several states, 
is illégal, and that it is a crime for any person to monopolize, or at- 
tempt to monopoHze, or combine •wiûi others to monopolize, any part 
of such trade or commerce. From early times it has been a rule of 
the courts not to construe a législative act in a literal manner, where 
it is clear that by such construction the législative purpose will be de- 
f eated. A statute which treats of "deans^ prebendaries, parsons, vic- 
ars, and others having spiritual promotion," if literally construed 
would apply to bishops; but by the application of the "rule of rea- 
son" bishops are excluded from the terms of such an act because, 
being of a higher order than any of the functionaries specifically men- 
tioned, it is concluded that the législative purpose does not extend to 
bishops. "If an act of Parliament gives a man power to try ail causes 
that arise in his manor of Dale, yet if a cause should arise in which 
he himself is party, the act is construed not to extend to that, because 
it is unreasonable that any man should détermine his own quarrel." 
1 Black. Corn. 91. In Holy Trinity Church v. United States, 143 U. 
S. 457, 12 Sup. et. 511, 36 L. Ed. 226, the Suprême Court had before 
it the construction of the act which déclares it to be — 

"unlawful for any person, company, partnershlp or corporation, In any man- 
ner whatsoever, to prepay the transportatlon, or lu any way assist or encour- 
age the importation or migration of any alien or allens, foreigner or for- 
eigners, Into the United States, Its territorles, or the District of Columbia, 
under contract or agreement, paroi or spécial, express or Implied, made pre- 
vious to the Importation or migration of such alien or allens, foreigner or 
foreigners, to perform labor or service of any kind in the United States, its 
territories, or the District of Columbia." 

The question was whether the act was applicable to a contract be- 
tween Holy Trinity Church and an alien, by which the alien agreed 
to remove from England to New York and enter into the service of 
the church as its rector and pastor. Mr. Justice Brewer, speaking for 
the court, said: 

"It must be conceded that the act of the corporation is within the letter 
of this section, for the relation of rector to his church is one of service, and 
implles labor on the one side wlth compensation on the other. Not only are the 
gênerai words 'labor' aud 'service' both used, but also, as it were to guard 
against any narrow Interprétation and emphasize a breadth of meaning, to 
them is added 'of any lilnd,' and, further, as noticed by the Circuit Judge 
in hls opinion, the flfth section, which maltes spécifie exceptions, among them 
professional actors, artists, lecturers, singers, and domestic servants. 



150 188 FEDERAL EBPOETEB 

strengthens the Idea that every other klnd of labor and service was intended 
to be reached by the first section. While there Is great force to thls reason- 
Ing, we cannot tbink Congress Intended to denounee wlth penalties a trans- 
action llke that' In the présent case. It is a familiar rule that a thlng may 
be wlthln the letter of.the statnte, and yet not within the statute, because net 
withln its spirit, nor wlthln the intention of its makers. This bas been often 
asserted, and the reports are full of cases illustratlng Its application. This 
is not the substitution of the will of the judge for that of the legislator, for 
frequently words of gênerai meaning are used in a statute, words broad 
enough to Include an act in question, and yet a considération of the whole 
législation, or of the circumstances surroundlng Its enactment, or of the 
absurd results which foUow from glvlng such broad meaning to the words, 
makes it unreasonable to believe that the legislator Intended to Include the 
particular act." 

A number of Taills were introduced in the Fiftieth Congress (in Au- 
gust and September, 1888), designed to make unlawful every combina- 
tion "to prevent compétition" and "to prevent full and free. compéti- 
tion" in the sales of articles transported from one state to another. ■ 
None of them was enacted into law. On December 4, 1889, Mr. Sher- 
man introduced into the Senate of the Fifty-First Congress a bill 
which declared unlawful every combination "to prevent full and free 
compétition" in such sales. After much debate the bill was, on March 
27, 1890, referred to the committee on judiciary, and on April 2, 1890, 
that committee reported it back to the Senate with an amendment strik- 
ing out ail after its enacting clause and substituting therefor the act as 
we now hâve it. As enacted, it does not condemn every combination "to 
prevent compétition." What it condemns is every combination in re- 
straint of trade or commerce among the several statea, etc. When the 
bill went from the Senate to the House, the latter body amended it by 
inserting a provision extending the scope of the act to ail agreements 
entered into for the purpose of "preventing compétition" eithep in the 
purchase or sale of commodities ; but the amendment was disagreed to. 
While there is a "gênerai acquiescence in the doctrine that debates in 
Congress are not appropriate sources of information from which to dis- 
cover the meaning of the language of a statute passed by that body" 
(United States v. Freight Association, 166 U. S. 318, 17 Sup. Ct. 
540, 41 L. Ed. 1007), that rule "in the nature of things is not violated 
by resorting to debates as a means of ascertaining the environment at 
the time of the enactment of a particular law ; that is, the history of 
the period when it was adopted" (Standard Oil Co. v. United States, 
221 U. S. 50, 31 Sup. Ct. 512, 55 L. Ed. , decided May 15, 1911). 

There is a distinction between restraint of compétition and restraint 
of trade. The latter expression had, when the anti-trust act was 
passed, a definite légal signification. Not every combination in re- 
straint of compétition was, in a légal sensé, in restraint of trade. Two 
men in the same town engaged in the same business as competitors 
may unité in a copartnership, and thereafter, as between themselves, 
substitute co-operation for compétition. Their combination restrains 
compétition, and if their town is located near the line between two 
States, and each has been trading in both states, their combination re- 
strains competifion in interstate trade. But it does not necessarily 
follow that such restraint of compétition is a restraint of interstate 



UNITED STATES T. E. I. DU PONT DE NEMOURS 4 CO. 151 

trade ancl commerce. The détermination of whether it be so must dé- 
pend upon the facts and circumstances of each individual case. It ia 
undoubtedly the policy of the statute that compétitive conditions in 
interstate trade should be maintained wherever their abolition would 
tend to suppress or diminish such trade. But this being true does not 
read into the statute a denunciation of ail agreements that may re- 
strain compétition without regard to their purpose or direct effect to 
restrain "trade or commerce among the several states." To what ex- 
tent the anti-trust act condemns combinations that restrain full and 
free compétition in interstate trade is a question that bas been much 
debated. For a dozen years, at least, it has been settled that it does 
not condemn combinations which only indirectly, remotely, or inci- 
dentally restrain interstate trade. 

The récent décisions of the Suprême Court in Standard Oil Ce. v. 
United States, and American Tobacco Co. v. United States, 221 U. 

S. 106, 31 Sup. Ct. 632, 55 L. Ed. , make it quite clear that the 

language of the anti-trust act is not to receive that literal construc- 
tion which will impair rather than enhance freedom of interstate com- 
merce. As we read those décisions, restraint of interstate trade and 
restraînt of compétition in interstate trade are not interchangeable 
expressions. There may be, under the anti-trust act, restraint of com- 
pétition that does not amount to restraint of interstate trade, just as 
before the passage of the act there might hâve been restraint of com- 
pétition that dîd not amount to a common-law restraint of trade. This 
fact was plainly recognized in United States v. Joint Traffic Associa- 
tion, 171 U. S. 505, 56?; 19 Sup. Ct. 25, 31, 43 L. Ed. 259, where Mr. 
Justice Peckham said : 

"We mlght say that the formation of corporations for business or manu- 
facturing purposes has never, to our knowledge, been regarcled In the nature 
of a contract In restraint of trade or commerce. The same may be said of 
the contract of partnersblp. It might also be difficult to show that the 
appointment by two or more producers of the same person to sell their goods 
on commission was a matter in any degree in restraint of trade. We are not 
aware that it has ever been claimed that a lease or purohase by a farmer, 
a manufacturer, or merchant of an additlonal farm, manufactory, or shop, or 
the withdrawal from business of any farmer, merchant, or manufacturer, 
restrained commerce or trade within the légal définition of that term." 

While ail thFs is true, the récent décisions of the Suprême Court 
make it equally clear that a combination cannot escape the condemna- 
tion of the anti-trust act merely by the form it assumes or by the dress 
it wears. It matters not whether the combination be "in the form of 
a trust or otherwise," whether it be in the form of a trade association 
or a corporation, if it arbitrarily uses its power to force weaker com- 
petitors out of business, or to coerce them into a sale to or union with 
the combination, it puts a restraint upon interstate commerce, and 
monopolizes or attempts to monopolize a part of that commerce, in 
a sensé that violâtes the anti-trust act. 

[4] The record of the case now before us shows that from 1872 to 
1902, a period of 30 years, the purpose of the trade associations had 
been to dominate the powder and explosives trade in the United States, 
by fixing priées, not according to any law of supply and demand, for 
they arbitrarily limited the output of each member, but according to 



152 188 FEDERAL EEPORTBB 

the wil] of their managers. It appears, further, that although thèse 
associations were net always strong enough to control absolutely the 
priées of explosives, their purpose to do so was never abandoned. Un- 
der the last of the trade association agreements — the one dated July 
1, 1896, and which was in force until June 30, 1904 — the control of 
the combination was firnier than it had before been. Succeeding the 
death of Eugène du Pont in January, 1902, and the advent of Thomas 
Coleman du Pont and Pierre S. Du Pont, the attempt was made to 
continue the restraint upon interstate commerce and the monopoly 
then existing by vesting, in a few corporations, the title to the assets 
of ail the corporations affiliated with the trade association, then dis- 
solving the corporations whose assets had been so acquired, and bind- 
ing the few corporations owning the operating plants in one holding 
Company, which should be able to prescribe policies and control the 
business of ail the subsidiaries without the uncertainties attendant 
upon a combinaiton in the nature of a trade association. That at- 
tempt resulted in complète success. 

Much the larger part of the trade in black and smokeless powder 
and dynamite in the United States is now under the control of the 
combination supported by the 28 défendants above named. That com- 
bination is the successor of the combination in existence from 1896 to 
June 30, 1904. It is a significant fact that the trade association, or- 
ganized under the agreement of July 1, 1896, was not dissolved until 
June 30, l'904. It had been utilized until that date by Thomas Cole- 
man du Pont, Pierre S. du Pont, and Alfre4 I. du Pont in suppress- 
ing compétition and thereby building up a monopoly. Between Feb- 
ruary, 1902, and June, 1904, the combination had been so completely 
transmuted into a corporate form that the trade association was no 
longer necessary. Consequently the trade association was dissolved, 
and the process of dissolving the corporations whose capital stocks 
had been acquired, and concentrating their physical assets in one great 
corporation, was begun. Before the plan had been fully carried out 
this suit was commenced. The proof s satisfy us that the présent form 
of the combination is no less obnoxious to the law than was the com- 
bination under the trade association agreement, which was dissolved 
on June 30, 1904. The 28 défendants are associated in a combina- 
tion which, whether the individual défendants were aware of the tact 
or not, has violated and still plans to violate both section 1 and section 
2 of the anti-trust act. We conclude that it is our plain duty to grant 
such a decree as will prevent and restrain further violations of the 
act. 

[5] Third. The third and last question therefore is: What shall be 
the nature of the decree? 

It must be one of dismissal of the pétition as to ail of the défend- 
ants except the 28 who are found to be interested in and supporters 
of the unlawful combination. 

It is contended by counsel for the défendants that there can be no 
decree against the 28 défendants, for the reason that the title to the 
property held by the défendant corporations cannot be impaired by 
any decree of this court. "The most that the government in any event 
can claim," say the counsel, "is that prior to the organization oi the 



UNITED STATES V. E. I. DU PONT DE NEMOURS * CO. 103 

présent défendant companies there did exist contracts and combina- 
tions in restraint of trade, and possibly a monopoly of tlie explosives 
industry in the United States, and tliat such combinations and mo- 
nopoly were participated in by some of the corporations which were 
later purchased by the présent défendants, and possibly that some of 
the properties that were owned by the corporations that were pur- 
chased by the présent défendants had been acquired by such corpo- 
rations as a resuit of such combinations and monopoly. * * * 
Even so, the corporations had title to such properties, and if such com- 
binations and monopolies no longer exist the title to such property 
must be good in subséquent purchasers thereof ." To support this ar- 
gument Brooks V. Martin, 2 Wall. 71, 17 L. Ed. 732, and other cases, 
are ref erred to. 

But we hâve found that the corporations organized after the advent 
into the explosives business of Thomas Coleman du Pont and Pierre 
S. du Pont are a part of an existing combination in restraint of inter- 
state trade. The du Pont Company of 1902 co-operated with the ad- 
visory and spécial committees of the trade association from April 2, 
1902, to June 30, 1904, in fixing priées, apportioning trade amongst 
the members of the association, allowing rebates, and forcing competi- 
tors to submit to their rule. The du Pont Company of 1903 was 
created to aid the combination in concentrating its power and fastening 
its hold on the monopoly which it had sedulously built up, and which 
brought to its members in the short period of six years the enormous 
profit of $11,000,000 in dividends and $12,000,000 or $13,000,000 in its 
surplus account. We do not propose by our 'decree to deal with titles 
to property. Our power is defined in the fourth section of the anti- 
trust act. That section invests us "with jurisdiction to prevent and 
restrain violations" of the act. The same section provides that the 
pétition may contain a prayer that the violation of law therein alleged 
"shall be enjoined or otherwise prohibited." It is our purpose, as it 
is our duty, to exert the power thus conferred on us to the extent 
necessary to "prevent and restrain" further violations of the act. In 
other words, the relief we can give in this proceeding is préventive 
and injunctive only. If our decree, limited to that purpose, shall 
necessitate a discontinuance of présent business methods, it is only 
because those methods are illégal. The incidental results of a sweep- 
ing injunction may be serious to the parties immediately concerned; 
but, in carrying out the command of the statute, which is as obligatory 
upon this court as it is upon the parties to this suit, such results should 
not stay our hand. They should only challenge our care that our de- 
cree be no more drastic than the facts of the case and the law demand. 

The dissolution of more than 60 corporations since the advent of 
the new management in 1902, and the conséquent impossibility of re- 
storing original conditions in the explosives trade, narrows the field 
of opération of any decree we may make. It should not make the 
decree any the less effective, however. In the Standard Oil Case Mr. 
Chief Justice White said: 

"It may be conceded that ordinarily, where it was found that acts had 
been done in violation of the statute, adéquate measure of relief would resuit 
from restraining the doing of such acts in the future. Swift v. United States, 



154 188 FEDERAL EEPORTEB 

196 U. S. 375, 25 Sup. Ct. 276, 49 L. Ed. 518. But In a case Uke this, where 
the condition which bas been brought about In violation of tlie statute. In 
and of itself, is not only a contlnued attempt to monopolize, but also a mo- 
nopolization, the duty to enforce the statute requires the application of broad- 
er and more eontrolUng remédies. As penalties whlch are not authorized by 
law may not be inflleted by judlcial authorlty, it follows that to meet the 
situation with whlch we are confronted the application of remédies twofold 
in character becomes essentlal: (1) To forbld the dolng in the future of acts 
like those which we hâve found to hâve been done in the past whlch would 
be violative of the statute; (2) the exertlon of such measure of relief as 
wlll effectually dissolve the comblnation found to exlst in violation of the 
statute, and thus neutralize the extension and contlnually operating force 
whlch the possession of the power unlawf ully obtalned has brought and wlll 
continue to bring about." 

Both of thèse remédies are as clearly demandée! in the présent case 
as they were in the Standard Oil Case. The existing combination in 
the explosives trade is one in restraint of interstate commerce. Its 
sales board fixes priées and exercises powers which Mr. Haskell, its 
chairman, admits are even more extended in their scope than were the 
powers of the advisory and spécial committees which the sales board 
superseded on June 30, 1904, after co-operating with them from July, 
1903. It has also attempted to monopolize and is attempting to mo- 
nopolize, and has monopolized, and is now in the possession of a mo- 
nopoly of, a large part of the explosives trade in the United States 
Our decree must therefore be one which will forbid future acts viola- 
tive of the law and compel a dissolution of the combination existing 
in violation of the law. To stop the business of the combination im- 
mediately, however, might be attended with very disastrous consé- 
quences. The défendants, or some of them, for example, furnish mili- 
tary and ordnance powders to the United States government. We 
understand, also, that they furnish explosives used in the construction 
of the Panama Canal. Their ability to continue so to do should not 
be destroyed before the expiration of a reasonable time for adjusting 
their business to the changed conditions. In the Standard Oil and 
American Tobacco Cases six months were allowed for making the 
changes necessitated by the decrees entered therein. What time should 
be allowed in tlîe case now in hand, and what other détails should be 
embodied in the final decree, we cannot now détermine. 

The présent decree will therefore be interlocutory. It will adjudge 
that the 28 défendants are maintaining a combination in restraint of 
interstate commerce in powder and other explosives in violation of 
section 1 of the anti-trust act, that they hâve attempted to monopolize 
and hâve monopolized a part of such commerce in violation of section 
2 of that act, that they shall be enjoined from continuing said combi- 
nation, and that the combination shall be dissolved. The interlocutory 
decree will further adjudge that this court, in order to obtain such 
further information as shall enable it to frame a final decree which 
shall give effective force to its adjudication, will hear the petitioner 
and the défendants on the 16th day of October next as to the nature 
of the injunction which shall be granted herein and as to any plan for 
dissolving said combination which shall be submitted by the petitioner 
and the défendants, or any of them, to the end that this court may 
ascertain and détermine upon a plan or method for such dissolution 



UNITED STATES V. E. I. DU PONT DE NEMOUKS & CO. 155 

which will not deprive the défendants of the opportunity to re-create, 
ont of the éléments now composing said combination, a new condition 
which shall be h'onestly in harmony with and not répugnant to the law. 
The interlocutory decree will further adjudge that both parties shall 
hâve leave to take such additional proofs as they may deem proper to 
be used at the hearing aforesaid. It is not to be inferred, however, 
that this court will sanction or supervise any new condition that de- 
fendants may re-create, or perform any other act which shall be 
merely administrative in its nature. Hayburn's Case, 2 Dali. 409, 1 L. 
Ed. 436 ; United States v. Ferreira, 13 How. 40, 14 L. Ed. 42 ; Gor- 
don V. United States, 117 U. S. 702, appendix. 

[6] We hâve not overlooked the motion of the défendants to dis- 
miss the pétition for want of necessary parties. It appears that cer- 
tain of the défendant corporations hâve outstanding bonds secured by 
mortgages or trust deeds, hel'd by trust companies who are not défend- 
ants. As already stated, this suit is not designed, primarily, to deal 
with or dispose of property rights. We see no reason for bringing in 
mortgage or other creditors. If, hereafter, it becomes necessary to 
safeguard their rights, appropriate action can then be taken. 

Interlocutory Decree. 

This cause comîng on to be heard before the three Circuit Judges 
of the Third judicial circuit in the Circuit Court of the United States 
for the District of Delaware, under the provisions of the expediting 
act of February 11, 1903, in the présence of George W. Wickersham, 
Attorney General of the United States, William S. Kenyon, assist- 
ant to said Attorney General, and James Scarlet and William A. 
Glasgow, Jr., spécial assistants to said Attorney General, and Fréd- 
éric Ullmann for the défendants the American Powder Mills, the 
Miami Powder Company, and the JEtna. Powder Company, M. B. 
& H. H. Johnson, for the défendant the Austin Powder Company, 
Frederick Seymour, for the défendant the Equitable Powder Manu- 
facturing Company, David T. Marvel and David T. Watson, for the 
défendant Henry A. du Pont, Burton B. Tuttle, for the défendant 
the King Powder Company, and John C. Spooner, James M. Towns- 
end, George S. Graham, William S. Hilles, and William H. But- 
ton, for the remaining défendants, and the court having read the 
pleadings and proofs and heard the argument of counsel, and du- 
ly considered the same; and it appearing to the court that the 
petitioner, the United States of America, is entitled to the relief 
hereinafter mentioned: 

It is thereupon, on this 21st day of June, A. D. 1911, ordered, ad- 
judged, and decreed, and this court, by virtue of the power and 
authority duly conferred on it by law, does hereby order, adjudge, 
and decree as follows, to wit : 

1. That the pétition be dismissed as to the foUowing défendants, 
namely: .^tna Powder Company, Miami Powder Company, Amer- 
ican Powder Mills, Equitable Powder Manufacturing Company, 
Austin Powder Company, King Powder Company, Anthony Pow- 
der Company, Limited, American E. C. & Schultze Gunpowder 



156 188 FEDERAL REPORTEE 

Company, Peyton Chemical Company, Henry A. du Pont, Henry 
F. Baldwin, California Powder Works, Conemaugh Powder Com- 
pany, Metropolitan Powder Company, and E. I. du Pont Company 
of August 1, 1903. 

2. That the remaining 28 défendants, namely, Hazard Powder 
Company, Laflin & Rand Powder Company, Eastern Dynamite 
Company, Fairmont Powder Company, International Smokeless 
Powder & Chemical Company, Judson Dynamite & Powder Com- 
pany, Delaware Securities Company, Delaware Investment Com- 
pany, California Investment Company, E. I. du Pont de Nemours 
& Co. of Pennsylvania, du Pont International Powder Company, 
E. I. du Pont de Nemours Powder Company, E. I. du Pont de 
Nemours & Co., Thomas Coleman du Pont, Pierre S. du Pont, 
Alexis I. du Pont, Alfred I. du Pont, Eugène du Pont, Eugène E. 
du Pont, Plenry F. du Pont, Irenee du Pont, Francis I. du Pont, 
Victor du Pont, Jr., Jonathan A. Haskell, Arthur J. Moxham, 
Hamilton M. Barksdale, Edmond G. Buckner, and Frank L. Con- 
nable, are maintaining a combination in restraint of interstate 
commerce in powder and other explosives in violation of section 1 
of the act entitled "An act to protect trade and commerce against 
unlawful restraints and monopolies," approved July 2, 1890, that 
they hâve attempted to monopolize and hâve monopolized a part 
of such commerce in violation of section 2 of that act, that they 
shall be enjoined from continuing said combination, and that the 
combination shall be dissolved. 

3. That this court, in order to obtain such further information 
as shall enable it to frame a final decree which shall give effective 
force to its adjudication, will hear the petitioner and the défend- 
ants on the 16th day of October next as to the nature of the in- 
junction which shall be granted herein and as to any plan for dis- 
solving said combination which shall be submitted by the peti- 
tioner and the défendants, or any of them, to the end that this 
court may ascertain and détermine upon a plan or method for 
such dissolution which will not deprive the défendants of the op- 
portunity to re-create, out of the éléments now composing said 
combination, a new condition which shall be honestly in harmony 
with and not répugnant to the law. 

4. That both parties hâve leave to take such additional proofs 
as they may deem proper to be used at the hearing aforesaid. 

5. That, until the entry of final decree herein, said 28 défendants 
hereinabove last named are, and each of them is, and the agents 
and servants of them are jointly and severally hereby enjoined 
from doing any acts or act which shall in any wise further extend 
or enlarge the field of opérations or the power of the aforesaid 
combination. 

[Signed] GEO. GRAY, 

JOS. BUFFINGTON, 
W. M. LANNING, 
Circuit Judges of the Third Judicial Circuit 



UNITED STATES V. 11,150 POUNDS OF BUTTER 157 

UNITED STATES v. 11,150 POUNDS OF BUTTER. 
(District Ctourt, D. Minnesota, Thlrd Division. June T, 1911.) 

Food (§ 24*) — Régulation— Standard— Secbetaey of Agbiculture— Powees. 

Thougli Act Cong. Aug. 2, 1888, c. 840, 24 Stat. 209 (U. S. Comp. St. 
1901, p. 2228), autborized the Secretary of the Treasury to prescrite rules 
and régulations for carrying It Into effect, it did not autliorize him to 
promulgate a rule construing Act Jlay 9, 1902, c. 784, § 4, 32 Stat. 194 
(U. S. Comp. St. Supp. 1909, p. 865), declaring that butter should be con- 
flscated If it contained an abnormal quantity of moisture, by provlding 
tliat it stiould be conflscated if it contained niore moisture tban 16 per 
cent. 

[Ed. Note. — For other cases, see Food, Dec. Dig. § 24.*] 

Action by the United States against 11,150 Pounds of Butter. Dis- 
missed. 

At the close of the testimony on the part of the government, counsel 
for défendant moved to dismiss the action on the ground that the 
government had failed to make out a case, and that there is no évi- 
dence as to what constitutes an abnormal quantity of water, milk, or 
cream. 

C. C. Houpt, U. S. Dist. Atty. 
Lightner & Young, for défendant. 

WILIyARD, District Judge (orally). As I hâve said before in the 
discussion of this motion, I entertain no doubt concerning the power 
of Congress to confer upon the Secretary authority to make a rule or 
régulation fixing a standard; but the question in this case is: Did 
Congress confer such power upon the Secretary? It is conceded that 
such power is not conferred in any express terms, and that, if it is 
conferred at ail, it is conferred by that clause of the act which gives 
the Secretary power to make rules and régulations to carry the act 
into effect. Act Aug. 2, 1886, c. 840, 24 Stat. 209 (U. S. Comp. St. 
Supp. 1901, p. 2228). 

The validity of rules and régulations made by secretaries of de- 
partments under similar statutes has been before the Suprême Court 
in quite a large number of cases. The latest décision, filed on the Ist 
day of May of this year, is found in the case of the United States v. 

Grimaud et al., 220 U. S. 506, 31 Sup. Ct. 483, 55 L. Ed. , where 

the court said: 

"From the beginning of the government varions aets hâve been passed 
conferring upon executive officers power to make rules and régulations — ^not 
for the government of thelr departments, but for administering the laws 
which did govern. None of thèse statutes could confer législative power. 
But, when Congress had legislated and indicated its will, it could glve to those 
who were to act under such gênerai provisions 'power to fill up the détails' 
hy the establishment of administrative rules and régulations, the violation 
of which could be punished by fine or imprlsonment fixed by Congress, or by 
penalties fixed by Congress or measured by the injury done. 

"Thus It is unlawful to charge unreasonable rates or to dlscrimlnate be- 
tween shippers, and the Interstate Commerce Commission has been given au- 
thority to make reasonable rates and to administer the law against dlscrimina- 

*For other cases see same topic & ! numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



158 188 FHDERAIi REPORTEE 

tion. Interstate Commerce Commission v. 111. Cent. E. R., 215 U. S. 452 [30 Sup. 
et. 155, 54 L. Ed. 280] ; Interstate Commerce Commission v. Chicago, Rock Is- 
land, etc., R. R., 218 U. S. 88 [30 Sup. Ct. 651, 54 L. Ed. 946]. Congress pro- 
vided that after a given date oiily cars with drawbars of uniform lieight 
should be used In Interstate commerce, and then constitutionally left to tlie 
Commission the administrative duty of flxing a uniform standard. St. 
Louis & Iron Mountain R. R. v. Taylor, 210 U. S. 287 [28 Sup. Ct. 616, 52 L. 
Ed. 1061]. In Union Bridge Co. v. United States, 204 U. S. 364 [27 Sup. Ct. 
367, 51 L. Ed. 523], In re Kollock, 165 U. S. 526 [17 Sup. Ct. 444, 41 L. Ed. 
813], and Buttfleld v. Stranahan, 192 U. S. 470 [24 Sup. Ct. 349, 48 L. Ed. 
525], it appeared from the statutes involved that Congress had either express- 
ly or by necessary implication made it unlawful, if not criminal, to obstruct 
navigable streams, to sell unbrauded oleomargarine, or to import unwholesome 
teas. With this unlawfulness as a predicate, the executive officers were au- 
thorized to make rules and régulations appropriate to the several matters 
covered by the varions acts. A violation of thèse rules was then made an 
offense punishahle as prescrlbed by Congress. But In making thèse régula- 
tions the officers did not legislate. They did not go ontside of the circle of 
that u'hich the act itself had affirmatively required to be done, or treated as 
unlawful if done. But, conflning themselves within the field covered by the 
statute, they could adopt the régulations of the nature they had thus heen 
generally authorized to make, In order to administer the law and carry the 
statute Into effect." 

That case related to a régulation made by the Secretary of Agricul- 
ture with regard to forest reserves. The régulation was siistained, 
but thc' authority given to the Secretary was much more broad and 
explicit in that case than in this case. By various statutes he was 
authorized to — 

"make provision for the protection against destruction by flre and dépréda- 
tions upon the public f orests and forest réservations ; * * * and he may 
make such rules and régulations and establish such service as will insure 
the objects of such réservation, namely, to regulate their occupaney and use, 
and to préserve the forests thereon from destruction." 

This is something more than a mère statement that the Secretary 
may make rules and régulations for the purpose of carrying the law 
into effect. 

The court, speaking of the régulations there in question, further 
said: 

"As to those hère Involved, they ail relate to matters clearly indicated and 
authorized by Congress. The subjects as to vchlch the Secretary can regulate 
are deflned. The lands are set a part as a forest reserve. He is required to 
make provision to protect them from déprédations and from harmful uses. 
He Is authorized 'to regulate the occupaney and use and to préserve the 
forests from destruction.' " 

In re Kollock, 165 U. S. 526, on page 533, 17 Sup. Ct. 444, on page 
446 (41 L. Ed. 813), had to do particularly with section 6 of the Oleo- 
margarine Act of August 2, 1886. That section expressly conferred 
upon the Commissioner of Internai Revenue power to prescribe the 
stamps and brands to be affixed to the packages. The court said : 

"The criminal offense is fully and completely deflned by the act, and tlie 
désignation by the Commissioner of the particular marks and brands to be 
used was a mère matter of détail. The régulation was In exécution of, or 
supplementary to, but not In conflict with, the law itself, and was specifleally 
authorized thereby in effectuation of the législation wMch created the of- 
fense." 



TJNITED STATES T. 11,150 POUNDS OF BUTTER 159 

The law under considération in Buttfield v. Stranahan, 192 U. S. 
470, 24 Sup. Ct. 349, 48 L. Ed. 525, expressly authorized the Secretary 
of the Treasury "to fix and establish uniform standards of purity, 
quality, and fitness for consumption of ail kinds of teas imported hito 
the United States." 

In Union Bridge Co. v. United States, 204 U. S. 364, 27 Sup. Ct. 
267, 51 L. Ed. 523, and in Hannibal Bridge Co. v. United States, 221 

U. S. 194, 31 Sup. Ct. 603, 55 L. Ed. (May 15, 1911), the court 

discussed section 18 of the River & Harbor Act of March 3, 1899, 
c. 425, 30 Stat. 1153 (U. S. Comp. St. 1901, p. 3545). That act ex- 
pressly authorized the Secretary of War to détermine whether any 
railroad or other bridge over navigable waterways was an unreason- 
able obstruction to navigation. It was not held in those and other 
bridge cases that a law authorizing the Secretary to make rules and 
régulations to carry into eflfect acts of Congress relating to his depart- 
ment would justify him in making a gênerai rule relating to ail bridg- 
es, declaring what should be considered as an unreasonable obstruc- 
tion to navigation. 

In St. Louis & Iron Mountain Ry. Co. v. Taylor, 210 U. S. 281, 28 
Sup. Ct. 616, 52 L. Ed. 1061, the law involved was the Safety Appli- 
ance Act of March 2, 1893, c. 196, 27 Stat. 531 (U. S. Comp. St. 1901, 
p. 3174). 

"Briefly stated, the statute enacted that after a date named only cars wlth 
drawbars of uniform height should be used In Interstate commerce." 

Section 5 of the act expressly authorized the Interstate Commerce 
Commission to détermine the standard height of drawbars for f reight 
C3.rs 

In Roughton v. Knight, 219 U. S. 537, 31 Sup. Ct. 297, 55 L. Ed. 
(February 20, 1911), the court said: 

"But the act did not prescribe the method by which one so situated might 
avait hlrnself of the proposai. It was therefore compétent for the Land De- 
partment to adopt rules and régulations for the administration of the act in 
thls particular, and thls was done, and thèse rules are found in 24 Lrfind Dec. 
Dep. Int. 592, 593." 

In Baltimore & Ohio R. Co. v. Interstate Commerce Commission, 
220 U. S. 94, 31 Sup. Ct. 621, 55 L. Ed. — (May 29, 1911), there 
was under discussion an order of the Commission requiring the rail- 
road companies to make certain reports connected with the Act of 
March 4, 1907, c. 2939, 34 Stat. 1415 (U. S. Comp. St. Supp. 1909, p. 
1170), relative to labor of employés. The order was held valid because 
Congress had given to the Commission not only authority to exécute 
the act, but express authority to require reports. 

Referring again to the Grimaud Case, the court said that the Sec- 
retary of Agriculture could not make rules and régulations for any 
and every purpose, and cited the case of Williamson v. United States, 
207 U. S. 462, 28 Sup. Ct. 163, 52 L. Ed. 278. That was a case relat- 
ing to the land laws. The Secretary of the Interior had made a rég- 
ulation pfescribing a form, according to which upon final proof under 
the timber and stone act the applicant was required to state under oath 
that he had not alienated the land or made any contract to alieiir.te it. 



160 188 FEDERAL REPORTEE 

The law itself required him to make such an afHdavît when he entered 
the land ; but the court held that there was nothing in the law which 
required him to make such an affidavit upon final proof, held that the 
Secretary of the Interior had no power by régulation to add any- 
thing to the law, or to require anything which the law itself did not 
require, and declared the régulation void. 

The régulation in this case impresses me as being of the same char- 
acter. Act Cong. May 9, 1902, c. 784, § 4, 32 Stat. 194 (U. S. Comp. 
St. Supp. 1909, p. 865), said that butter should be confiscated if it 
contained an abnormal quantity of moisture; the Secretary says that 
it shall be confiscated it if contains more than 16 per cent. The Sec- 
retary has stricken out the word "abnormal," and has inserted the 
words "more than l'ô per cent." To my mind this is not a régulation 
for the purpose of carrying the law into efïect ; it is rather a rule for 
the construction of the law. It is a change in the law ; it is fixing a 
standard which Congress never intended that the Secretary should 
hâve the power to fix. While the exécution of the law must be given 
to the administrative department, its construction must be left with the 
courts. Could the Secretary by rule define the meaning of the word 
"absorption"? There is a variety of words in this law, the défini- 
tion of each one of which must be left to the courts as questions arise 
thereunder, and the décisions of the courts upon thèse questions can- 
not be foreclosed by a régulation of the department declaring that 
certain words must be construed in a manner previously determined by 
it, unless Congress has given to the Secretary express power to define 
them. No such power is found anywhere in this law. 

The government has introduced no évidence to show that the quan- 
tity of moisture in this butter was abnormal. The only évidence which 
it has presented tends to show that the quantity exceeded 16 per cent., 
and the claim of the government is that such évidence conclusively 
shows a case for confiscation. If the régulation fixing the standard is 
not conclusive, the district attorney makes no claim that it is prima 
facie évidence of what an abnormal quantity of moisture is, and does 
not ask to go to the jury upon that theory of the rule. 

The motion is granted, and the case is dismissed, without préjudice. 



BUETON V. BAT STATE GAS CO. 161 

BUETON V. BAY STATE GAS CO. OF DELA W ARE. 

(Circuit Court of Appeals, First Circuit June 22, 1911.) 

No. 919. 

CoBPOBATiONS (§ 559*)— Receivebship— Effect as Terminating Contbact 

OF E-MPLOYMENT. 

Primary and ancillary decrees appointing a receiver for a corporation 
with full powers to exercise ail of the rights pertaining to the corpora- 
tion and its officers relating to the management of its business and prop- 
erty, and enjoining it and its officers and directors from transferring its 
money or property, liad the effect of terminating a contract previously 
made by the corporation employing a gênerai counsel at a yearly salary, 
which was terminable at wlll, and no action or notice by its officers or di- 
rectors was necessary to effect such termination; thelr powers having 
been suspended. 

[Ed. Note.— For other cases, see Corporations, Cent. Dlg. §§ 2241-2252 ; 
Dec. Dlg. § 559.*] 

Appeal from the Circuit Court of the United States for the District 
of Massachusetts. 

In Equity. Appeal by Richard J. Burton, executor of Parker C. 
Chandler, deceased, intervener, from an order disallowing a claim 
against the Bay State Gas Company of Delaware, défendant. Af- 
fîrmed. 

W. K. Barton, for appellant. 

Homer Albers (Orvil W. Smith, on the brief), for appellee. 

Before COLT, Circuit Judge, and ALDRICH and BROWN, Dis- 
trict Judges. 

BROWN, District Judge. The appellant is executor of the will of 
the late Parker C. Chandler, Esquire, formerly counsel for the appel- 
lee. The executor appeals from a decree of the Circuit Court to the 
effect that a contract between the Bay State Gas Company of Dela- 
ware and said Chandler, whereby said Chandler was employed as gên- 
erai counsel at $5,000 a year, with an allowance of $3,000 a year for 
expenses, was terminated by receivership proceedings, and was not in 
force after July 1, 1903. 

The executor contends that this contract was continuously in force 
during the period from April 15, 1903, to December 26, 1907 (when 
it was terminated by notice of the élection of a successor), and that 
for this entire period compensation is due at the rate agreed. 

The Circuit Court allowed the claim for services and expenses to 
July 1, 1903, and disallowed the claim for the period thereafter. 

The principal question upon this appeal is whether after July 1, 
1903, there was still in force a contract for the services of Mr. Chand- 
ler as gênerai counsel, at the above rate of compensation. 

At a meeting of the board of directors of the appellee on Novem- 
ber 18, 1902, Mr. Chandler was elected "as gênerai counsel for the 
Company," and he was paid at the above-named rate up to April 15, 
1903. The term for which he was appointed was not specifically 
named. 

•For other cases see same topic & § numbeb in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 
188 F.— 11 



162 188 FMDEEAL REPORTEE 

The appellant contends: 

"The employment of Mr. Chandler as gênerai counsel speclfled no term of 
service and was for an indefinite period." 

For our présent purposes this contention may be accepted. Whether 
the appointment was for an indefinite period, or, in view of former 
dealings, for the period of a year unless sooner terminated at the will 
of either party, or for the entire period of a year, we need not discuss. 

The appellant has made no claim on quantum meruit or for breach 
of a contract for a year's services, but has deliberately chosen his 
ground. 

Having established the existence of a contractual relation between 
the parties, whiçh was recognized by the Gas Company in its payment 
of April 15, 1903, and in the decree of the Circuit Court by the al- 
lowance oî the claim to July 1, 1903, the burden is upon the appel- 
lant to show that this relation continued after July 1, 1903. The 
Circuit Court found that it was terminated by the appointment of a 
receiver. 

A receiver for the company was appointed May 26, 1903, in the dis- 
trict of Delaware. On June 8, 1903, an ancillary receiver was ap- 
pointed in the district of Massachusetts, and on July 1, 1903, an ancil- 
lary receiver was appointed in the Southern district of New York. 

It is conceded by the appellant that Mr. Chandler's contract with 

the Company could be terminated at will either by himself or by the 

company. In other words, the termination of the contract by the vol- 

untary act of the company would hâve impaired no obligation and de- 

' stroyed no right vested in Mr. Chandler. 

The decrees in this district and in the Southern district of New York 
were assented to by Mr. Chandler as counsel for the appellee, the Gas 
Company. 

Furthermore, it is apparent that, if through proceedings in equity 
and through a receivership the corporation was involuntarily deprived 
of its powers to make further contracts or to deal further with its 
property, a decree to this efïect would impair no right of Mr. Chand- 
ler. A contract at will could subsist only so long as each party was 
of ability to contract. If the intervention of third parties through pro- 
ceedings in equity destroyed or impaired to a substantial degree the 
power of the Gas Company to continue the same relations with Mr. 
Chandler, this infringed none of his rights. 

That the decrees whereby primary and ancillary receivers were ap- 
pointed divested the corporation and its directors of ail powers to in- 
stitute suits, and conferred such power upon the receiver, is conceded 
by the appellant's brief. Hère alone is such a limitation of the ability 
of the corporation to contract in respect to légal service as is incon- 
sistent with the former relation b«tween the corporation and its coun- 
sel. 

Furthermore, the decree appoints a receiver of ail the property of 
thé corporation to hold the said property and income under and pur- 
suant to the orders of the court. 

It is évident that no power remained in the corporation to impose 
a continuons charge upon this property without the consent of the 



BUKTON V. BAT STATE GAS CO. 163 

court or of the receiver. Granting that the appointment of a receiver 
was not for the purposes of dissolution and winding up, but a "lit- 
igating receivership," for defined purposes and temporary in its char- 
acter, and that the corporation could still be sued upon its contracts, 
and that légal services might be necessary for the corporation itself 
pending the receivership, it does not follow that its ability to maintain 
during the receivership the former contractual relation was preserved. 

The receivership so changed the subject-matter of the contract be- 
tween the company and its counsel that, even if there still remained 
the opportunity for Mr. Chandler to perform some services, and if 
some services were in fact rendered, there cannot be implied from 
thîs alone a continuing agreement to pay for thèse limited services the 
same rate of compensation that was agreed upon, while the corpo- 
ration was of full légal capacity, as a just compensation for its gên- 
erai counsel. 

The argument that the contract once made continued in force until 
formai notice was given by the officers of the corporation of its de- 
sire to terminate it we cannot accept. Full notice of the légal inabil- 
ity of the corporation to avail itself of hîs services as before was given 
by the decrees, two of which were assented to by the corporation 
through Mr. Chandler himself . 

The master made the following findings: 

"(12) That the decrees, prlmary and anclllary, appolnting the receiver pro- 
vlde. * » • 

"And it Is further ordered that the sald défendant and its officers, agents, 
directors, and employés are hereby enjolned from exercislng any of the fran- 
chises or rights of the sald défendant or from eolleeting, transferrlng, or as- 
signlng any of Its assets, moneys, or funds to any person other than the sald 
receiver until thls court shall otherwise order. 

"And it is further ordered that the receiver shall, In the flrst Instance, 
hâve full power to employ and diseharge, and to flx the compensation of such 
officers, agents, attomeys, and employés as he may deem necessary to aid 
hlm in the discharge of his duties. * * * 

"And it is further ordered that the said receiver Is hereby Invested wlth 
full power to do and perform ail acts expédient and necessary to carry the 
above powers Into efCect and wlth ail the powers vested in reeelvers in lilie 
cases wlth full power to exercise ail of the rights of and pertalnlng to the 
défendant the Bay State Gas Company (of Delaware), or to Its officers, agents, 
directors, and employés, wlth and in respect to stocks of other corporations 
belonging to said défendant." 

"(5) And it is further ordered that the défendant, and Its officers, agents. 
directors, and employés, are hereby enjolned from Interfering wlth said re- 
ceiver in the performance of the trust hereby committed to him, or from 
transferrlng or Intermeddling with any of the funds or property of défend- 
ant." 

"(13) I flnd that sald Parker 0. Chandler, as counsel for the Eay State 
Gas Company of Delaware, was présent at the hearlng at which the anclllary 
receiver was appolnted In this jurlsdlctîon, June 8, 1903, and as such coun- 
sel assented to such appointment, and also that he was présent and assented 
to the appointment of the anclllary receiver in the Southern district of New 
York on July 1, 1903. 

"(14) I further flnd that the receiver of the Bay State Gas Company of 
Delaware neither employed nor authorized hls counsel, Mr. Whlpple, to em- 
ploy said Parker C. CThandler.'' 

After the entry of injunctive orders of such breadth, the failure of 
the directors or other officers of the corporation to notify their gen- 



164 188 FEDERAL REPORTER 

eral counsel of their désire to terminate or restrict the scope of his 
former employment is of no significance. 

In this case we are not required to consider the effect of a receiver- 
ship upon an existing contract for a spécifie term extending beyond 
the date of the receivership. The question is merely as to the date 
of the termination of a contract at will to pay àt a given rate for spec- 
ified services. 

Mutual assent, express or implied, is as necessary for the continu- 
ance of such a contract as for its inception, and assent of the corpo- 
ration cannot bë impHed after the hmitation of its powers by the de- 
crees. Nor is a question of the right of the corporation to be repre- 
sented by counsel pending the receivership, or of its ability to employ 
and agrée, with or without the consent of the court, to compensate 
counsel for services, during the receivership, involved in this case. 
There is a distinct disclaimer of ail claim for the value of such serv- 
ices as were actually rendered. The case is rested solely upon the 
ground that the same contractual relation that existed before the re- 
ceivership was continued by the assent of- parties after the decree ap- 
pointing a receiver, regardless of the limitation of the powers of the 
corporation, its directors, officers and agents, by the injunctive orders 
contained in said decree. 

We are of the opinion that this contention is erroneous. Whether the 
contract terminated earlier than July 1, 1903, we are not called upon 
to consider. The conclusion of the Circuit Court that it was not in 
force after July 1, 1903, and the disallowance of the claim for com- 
pensation and allowances after July 1, 1903, at the former rate are 
in our opinion right. 

The judgment of the Circuit Court is affirmed, the appellee to re- 
cover costs in this court. 



MT. VERNON REFEIGERATING CO. v. FRED W. WOLF CO. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,086. 

1. Appeal and Ekeoe (§ 1009*) — Eeview— Findings in BqxJity Cases. 

The rule obtaining on writs of error that, when there is any material 
évidence tending to support the verdict of a jury, the appellate court 
wIU not review the évidence, does not obtain in favor of flndings in 
equity cases whieh corne up on a broad appeal, especially when it ap- 
pears that ail the évidence was in the shape of dépositions, and not giv- 
en orally before the court. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 3970- 
S97S ; Dec. Dig. § 1009.*] 

2. CoNTEACTS (§ 155*) — Construction— CoNSTETJCTioN Againbt Party Pee- 

PAEiNG Contract. 

Where a contract was on a regular printed form prepared and used 
generally by one of the parties, and there is any doubt as to its meaning, 
it should be construeù most strongly against such party. 

[Ed. Note. — For other cases, see Contracts, Cent. Dig. § 736; Dec. Dig. 
§ 155.*] 

•For other cases see same toplc & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



MT. VEKNON EEFKIGEHATING CO. V. FREB W. WOLF CO. 165 

3. COÎÎTRACTS (§ 143*) — CONSTETJCTION— CONSTBUING PROVISIONS TOGETHEB. 

In construing a contract that Is ambiguous, its varlous provisions are 
to be construed together, and in the light of the situation of tlie parties, 
lieeping in mind the object that was sought to be attained. 

[Ed. Note. — For other cases, see Contracts, Cent. Dig. § 723 ; Dec. Dig. 
§ 143.*] 

4. Sales (§ 119*) — Construction— Conteact fob Pubchasb or Machine— 

Beeach. 

Défendant was building an ice-making plant, and after It had pur- 
chased two gas engines, which was known to complalnant, the latter sub- 
mitted a wrltten proposai, which was accepted, to sell to défendant an 
ice machine, and also a certain make of drive chaln to connect the ma- 
chine "with the gas engines furnished by the purchaser." The machine 
was to be installed and tested under the supervision of complainant for 
30 days, during which time it was guaranteed to produce 50 tons per 
day of merehantable ice, and at the end of that time was to be accepted 
by défendant if satisfactory, and, if not, rejected. The drive chains 
called for were equipped with a spring compensating device, but com- 
plainant induced défendant to accept a différent kind without such de- 
vice, to which it agreed only on condition that the maker would guarantee 
It to give perfect satisfaction. Such guaranty was not giveu, but de- 
fendant was not informed of the fact When the plant was started, It 
was found that the ctiain whipped to such an estent as to be dangerous, 
and it was stopped, no Ice having been made. Complainant refused to 
fumish a différent chain, insisting that défendant furnish différent or 
more efficient Power. Défendant then gave notice to proceed with the 
test, which was not done, and at the end of 30 days re.iected the plant, 
and complainant brought suit to foreelose a mortgage glven to secure 
notes for the price of the plant. Held that, under the facts shown, com- 
plainant made the substitution of chains at its own risk, and should hâve 
furnished the one called for by the contract before it could charge the 
failure upon the engines, which It knew were to be used when the con- 
tract was made, and which, as the preliminary test showed, produced 
sufflcient power ; that, having failed to do so or to proceed with the 
test, défendant was Justifled In rejecting the plant, and could not be 
held liable therefor. 

[Ed. Note.— For other cases, see Sales, Cent Dig. § 293; Dec Dig. $ 
119.*] 

Appeal from the Circuit Court of the United States for the South- 
ern District of Ohio. 

Suit in equity by the Fred W. Wolf Company against the Mt. Ver- 
non Refrigerating Company. Decree for complainant, and défendant 
appeals. Reversed. 

Prlor to January 4, 1906, the Mt. Vemon Refrigeratlng Company, appel- 
lant (hereinafter referred to as the Ice Company), purchased of the Elyria 
Gas Engine Company two gas engines of 100 horse power each. On January 
4, 1906, the Fred W. Wolf Company, appellee (hereinafter referred to as the 
Wolf Company), submitted on one of its regular printed forms a proposition 
to the Ice Company to furnish it one block ice plant of 50 tons Ice-maklng 
capaclty dally, to be driven from power furnished by the Ice Company, 
which was known to be two 100 horse power gas engines, the machinery and 
material, terms and conditions being speclfled in détail. The proposition 
was on .Tanuary 7th accepted by the Ice Company and in that form made the 
contract between the parties. This contract was on Mareh 24th annulled by 
mutual consent, and on the same day a second contract, also on a like printed 
form, was entered into between the parties, differing only from the flrst in 
respect to the security to be given by the Ice Company. 

•For other cases see same topic & 5 numbee in Dec. & Am. Digs. 1S07 to date, & Rep'r Indexes 



166 188 FEDERAL REPORTEE 

The contract of March 24th Is the basis of thls suit, and provides, among 
many other things not necessary to mention, tbe followlng: 

That the Wolf Company was "to furnish, f. o. b. cars at Mt. Vernon, Oblo, 
In complète shipping order and condition, one bîocli ice plant of fifty tons ite- 
making capacity daily, consisting of the following machinery and mateiial. 
* « « 

"Two double acting No. 16 A Wolf-Line Compressors of 14 in. bore x 30 lu. 
stroke. * * » 

"Compressors to be driven from power furnlshed by purchaser [Ice Com- 
pany]. 

"For drlvlng the two compressors * * * we propose to furnish Renold 
sllent Chain drives, whlch will Inelude necessary sprocket wheels, bearinss. 
Chain, etc., to connect the gas engines furnished by purchaser. * * * 

"The machinery herein specifled, when operated continuously and in ac- 
cordance with our Instructions, will produce flfty tons of merchantable ice 
per day of twenty-four hours. • * * 

"It is understood purehasers will furnish the required power for operating 
the machinery and will also furnish an ample supply of condensing water at 
a température not above 60 degrees F. * * * 

"After the plant Is started, we will furnish an englneer to hâve charge of 
Its opération for thlrty days, durlng which time we will do the work and 
produce the guaranteed results herein speclfïed. * * * At the end of the 
above-mentioned 30 days you shall accept or réject the plant, it being under- 
stood, however, that if It shall meet the requlrements of thls proposition, it 
shall be accepted. If rejected, you shall notify us in writing thereof and 
hereby permit us to enter the premises and remove our equipment wlthout 
charge to you and upon refunding to you whatever money has been paid us. 
An acceptance after the above-mentioned period shall be in full discharge of 
agreements herelnbefore contalned. It Is understood we are to furnish one 
compétent man to superintend and assist In the érection of the machinery 
herein mentloned, and that the purehasers wlU supply ail other skilled and 
common labor In sufflcient quantity and competency to Install the apparatus 
In a thorough manner. • * * 

"It Is especlally agreed that there are no promises, agreements, or under- 
standings not embodied In thls contract." 

Four days after the first contract was made, and on January 11, 1906, the 
Wolf Company entered into correspondence with Morse Chain Company witli 
the vIew of obtaining Information which it subsequently used to induce tlie 
Ice Company to agrée to substitute the Morse chain power transmission for 
the Renold sllent chain drive provided for in the contract. After much cor- 
respondence between the Wolf Company and Morse Company, and between 
the Wolf Company and the Ice Company, the Wolf Company sucreeded in 
Induclng the Ice Company on February 19. 1906, to agrée to the change upon 
the condition that the Morse people guarantee their chain to run and give 
perfect satisfaction. 

The estent of the guaranty given by the Morse Company is contained in 
its letter of February 25th to the Wolf Company, whlch, after acknowledg- 
Ing receipt of the order for the chain drives, adds: "The above drives would. 
we think, prove both efficient and durable ànd would be glad to make our 
usual guaranty on same to replace ail defects in workmanship or material 
and keep in opération for a period of one year after date of Installation." 
The estent of thls guaranty was not communicated to the Ice Company. The 
Benold chfîin was equipped with a spring compensatlng device, and the Morse 
chain, substituted for it, was not. This device Is intended to neutralize or 
absorb the variation in the speed of the engines. 

The gas engines and the ice machinery had been set by June 15th under 
the supervision of the Wolf Company, and the Morse chain device was in- 
stalled for transmitting the power to the ice machinery. On June 19th tbe 
eondensors vvere subjected to the air test before being chargea with ammonia, 
as required by the contract, and proved satisfactory, the engines sending 
the pressure up to 300 pounds. On June 26th the ammonia test was begun 
under the supervision of the Wolf Company. During this test it was dis- 
covered that five or six of the spokes of the sprocket wheel on the compres- 



MT. VERNON REFRIGEEATING 00. V. FRED W. WOLF CO. 167 

sors were broken. The test was suspended to afiford the représentative of 
the Wolf Company an opportunity to correspond with the Company, whlch 
resulted in sending withln a few days to the plant an additional représenta- 
tive of the Wolf Company and also one from the Morse Chain Company. At 
the joint request of thèse two représentatives, the engines and machinery 
were again started. Thèse tests developed that the Morse Povi'er Transmis- 
sion Chain whlpped to such an extent that It was dangerous, if not impos- 
sible, to operate the machinery with it. It is fairly elear that the spokes of 
the sprocket wheel were brolien by this whipping of the chain. The resuit 
of this test was unsatisfactory and the experiment admittedly unsuecessful. 

From about July lOth, the tlme it was diseovered that the sprocket wheel 
was broken and that the chain drive whlpped to such an extent as to render 
it dangerous to operate the plant with it, to August Ist, nothing was done 
by either party toward running the plant. Each was busy in an effort to 
place upon the other the responsibility of the failure of the machinery to 
make Ice in quantities sufBcient to meet the guaranty of the Wolf Company; 
the Ice Company Insisting that the Morse drive chain caused the failure, and 
that the Wolf Company should provide a différent and efficient device for 
power transmission, and the Wolf Company insisting that the failure was 
due to the inefflciency of the gas engines, and that the Ice Company should 
remedy this by either substltuting a difCerent power or by fumishing a 
larger fiywheel, or a différent power transmission device. 

There was évidence on complainant's part that a heavier fiywheel would 
hâve overcome the variation in the speed of the engine. The manufacturer» 
of the engines, however, declared it impossible to put on flywheels heavy 
enough to accomplish the required régulation. On August Ist the Ice Com- 
pany notifled in wrltlng the Wolf Company that the 30 days' test of the ice 
plant would begin August 2d, and that 30 days from that date the Ice Com- 
pany would accept or re.ieet the plant according to the terms of the contract. 
The Ice Company ran its engines 12 hours a day for 30 days from August 
2d, but not connected with the ice machinery. The Wolf Company made no 
effort during this time to manufacture ice with this plant, and at the ex- 
piration of the 30 days the Ice Company notifled the Wolf Company that it 
rejected the ice manufacturing machinery. 

It should be stated that for this Ice manufacturing machinery the Ice Comt 
pany at the time of making the contract paid in cash $6.250, and exeouted its 
three promissory notes for $6,250 each for the deferred payments to the 
Wolf Company, due, respectively, on November 1, 1906, and on June and 
November 1, 1907, with interest at 6 per cent, per annum from date. 

Thèse notes were secured by a mortgage on certain real estate and also on 
certain machinery, goods, and chattels. Under the terms of the notes and 
mortgages, the notes ail matured, and the bill in this case was filed to fore- 
close the mortgage and apply the proceeds of the property to the satisfac- 
tion of the notes with Interest, etc. 

J. B. Waight and Murray Seasongood (Waight & Moore, Paxton, 
Warrington & Seasongood, and Ewalt & Ewing, on the brief), for ap- 
pellant. 

John E. Mac Leish ( Booth, Keating, Peters & Pomerene and Scott, 
Bancroft & Stephens, on the brief), for appellee. 

Before SEVERENS and KNAPPEN, Circuit Judges, and Mc- 
CALL, District Judge. 

McCALL, District Judge (after stating the facts as above). This 
case is before the court on an appeal by the défendant from a decree 
against it of the United States Circuit Court for the Southern Dis- 
trict of Ohio. 

It is a case in equity, and ail the évidence was presented in the form 
of dépositions and exhibits. 



168 188 FBDEEAIi EEPOETBU 

The first question to which the attention of tlie court îs challenged 
relates to the extent that an appellate court will review the évidence in 
passing upon the findings of fact by the trial court. 

[1] The rule obtaining on writs of error that, when there is any 
material évidence tending to support the verdict of a jury, the appel- 
late court will not review the évidence, does not obtain in equity cases 
which corne up on a broad appeal. Especially is this so when it ap- 
pears that ail the évidence introduced before the trial court was in 
the shape of dépositions, and not given before the court orally. Rid- 
ings V. Johnson, 128 U. S. 218, 9 Sup. Ct. 72, 32 L. Ed. 401 ; John- 
son V. Harmon, 94 U. S. 371, 24 h. Ed. 271 ; Garsed v. Beall et al, 
92 U. S. 684, 23 h. Ed. 686 ; The Santa Rita, 176 Fed. 890, 100 C. 
C. A. 360, 30 L. R. A. (N. S.) 1210; Waterloo Min. Co. v. Doe, 82 
Fed. 51, 27 C. C. A. 50. 

There is practically no controversy as to the material facts in the 
case. The Wolf Company guaranteed the machinery sold by it to pro- 
duce 50 tons of merchantable ice daily, when the plant was installed 
and operated under its direction and management, according to the 
terms of the contract. The plant was installed under its supervision, 
and not only failed to produce the guaranteed daily output, but it 
failed to produce a pound of ice. The nub of the controversy is 
whether this failure is attributable to the fault of the appellant or the 
appellee. Was the contract breached by the one or the other of the 
parties to it ? A correct answer to this question dépends upon a proper 
construction of the contract. 

[2] As has been stated, the contract entered into was upon a regu- 
lar printed form of proposai, prepared and generally used by the Wolf 
Company in the sale of its ice manufacturing machinery, and, if there 
is doubt as to the true meaning of the contract, it should be construed 
most strongly against the Wolf Company. 

In Christian v. First Nat. Bank (8th Circuit) 155 Fed._709, 84 C. 
C. A. 57, Judge Van Devanter, speaking for the court, said: 

"The language of the agreement is that of the plalntiff and his codeposi- 
tors, and, if there be any doubt as to its true meaning, it is both just and 
reasonable that It should be construed most strongly against them. Noonan 
V. Bradley, 9 Wall. 394, 407, 19 L. Ed. 757 ; Texas & Pacific By. Co. v. Reiss, 
183 V. S. 621, 628, 22 Sup. Ct 253, 46 L. Ed. 358 ; Osborne v. Stringham, 4 
S. D. ■593, 57 N. W. 776. 

"Of course, effect must be glven to the Intention of the parties, and, if 
that is made plain and certain by the agreement, every part of it being duly 
considered, the considérations and rules of Interprétation to which we hâve 
referred are without application." 

[3] Not only so, but in construing a contract that is ambiguous its 
various provisions are to be considered together, and in the Hght of 
the situation of the parties, keeping in mind the object that is sought 
to be attained. McKell v. C. & O. Ry. Co., 175 Fed. 321, 99 C. C. 
A. 109; Hull Coal Co. v. Empire Coal Co., 113 Fed. 256, 51 C. C. 
A, 213. 

[4] Turning now to the contract, we find the facts to be that the 
Ice Company had purchased two 100 horse power gas engines for the 
purpose of using them to furnish the power for operating an ice plant 



MT. VERNON EEFRIGERATING CO. V. FBED W. WOLF CO. 169 

which it proposée! to establish. The Wolf Company manufactured and 
sold ice manufacturing machinery, and it submitted a proposition to 
the Ice Company to sell to and install for it ice manufacturing ma- 
chinery, which, when connected with the gas engines according to the 
terms of the proposition, and operated by it, was guaranteed to pro- 
duce 50 tons of ice daily. The purpose of the parties was to install 
an ice plant of 50 tons daily capacity. 

Gas engines were to be used as the motive power, and this was 
known to the Wolf Company as is evidenced by the terms of the con- 
tract, as follows: 

(1) "For driving the two eompressors * * * we propose to fumish 
Reiiokl silent chain drive • ♦ * to connect to the gas engines furnished 
by purchaser." 

2. The Wolf Company recognized the réservation of the title of 
the Elyria Gas Engine Company to the two gas engines as per its con- 
tract with the Ice Company, dated December 22, 1905. 

That the Wolf Company had this information before making the 
contract is also clearly established by the évidence in the case. 

In the light oî ail the évidence, we think the proper construction of 
the contract is that the Wolf Company agreed to furnish the Ice Com- 
pany machinery to manufacture ice to be driven with the power pro- 
duced by the two gas engines that the Ice Company had purchased, 
when connected therewith by means of the Renold silent chain drive, 
and that the Wolf Company contracted to make this connection. 

The engines, when tested, produced 300 pounds pressure, which 
was more than sufficient to drive the machinery. 

But it is urged that the speed of the engines was irregular, and 
that this produced a whipping of the drive chain. If that be true, 
then the defect was not in the quantity of power produced by the gas 
engines, but in its quality. 

The Wolf Company had been engaged for years in manufacturing 
ice-making machinery and installing it. This was the first effort that 
it had made to drive its ice machinery with gas engines. Fred W. 
Wolf, président of the Wolf Company, expressed grave doubts if it 
could be successfully done. 

Those composing the Ice Company were novices at the business. 
They had purchased gas engines because natural gas was abundant 
and cheap in their section, and for that reason they preferred to use 
it as a fuel. 

This was explained to Mr. Wolf, when he expressed a doubt as to 
the sufficiency of the gas engines, and suggested that steam power be 
substituted. Nevertheless, the Wolf Company contracted to sell to 
the Ice Company and install an ice plant to be operated or driven by 
the Ice Company's gas engines by means of a chain, and guaranteed 
that it would produce 50 tons of ice daily. That the experiment was 
a failure is not more than Mr. Wolf had predicted. The failure was 
not because the gas engines did not produce sufficient power. It was 
because the power was not uniform, and caused the chain drive to 
whip. 



170 188 FEDBEAL BBPORTBB 

This characteristic in the power produced by gas engines was known 
to the Wolf Company, and also, perhaps, to the Ice Company. The 
latter company had intended to overcome or neutralize this irregularity 
by the use of a spring compensating device in connection with the 
Renold chain. This is what it purchased under the contract. For 
some reason not very clear, but hkely because the Morse chain was 
cheaper than the Renold chain, the Wolf Company pressed upon the 
Ice Company the proposition to allow it (the Wolf Company) to sub- 
stitute the Morse for the Renold chain. This the Ice Company, after 
much correspondence, finally consented to, upon condition that the 
Morse chain was as good as the Renold chain with the spring com- 
pensating device, and that the Morse Company would guarantee its 
chain to run and give perfect satisfaction. The Ice Company had no 
communication with the Morse Company, but relied upon the Wolf 
Company to furnish the machinery bought of it, or something guar- 
anteed to be equally as good and to give perfect satisfaction. 

The Morse Company made no such guaranty of its chain to Wolf 
as was required to be done by the Ice Company as a condition to its 
consent to make the substitution, but the Wolf Company made the 
substitution notwithstanding. This, we think, it did at its own risk. 

The Wolf Company, having made the substitution of the Morse 
chain, without the spring device, for the Renold chain with it, and 
that toc in the absence of the guarantee required by the Ice Company, 
without informing the Ice Company, when it developed that the ice 
plant could not be run because of the whipping of the Morse chain, 
should, in good conscience and equity, at least, hâve applied the 
spring compensating device and further tested it. This it did not do. 
Indeed, we think that under the contract and the évidence in this case 
that before the Wolf Company could be entitled to the relief sought 
in its bill, if the Morse chain both with and without the spring device 
had been tried and failed, it should hâve then furnished the Renold 
silent chain drive, as originally contracted for. 

In view of this record, we are not called upon to détermine the 
question of fact whether a heavier fîywheel would hâve accomplished 
the required régulation of speed, nor, in case the Renold chain had 
been tried and found inefïective, what defendant's duty would hâve 
been with respect to trying such heavier fîywheel. 

It is urged that the Ice Company contracted to furnish the required 
power to operate the plant, and that, if the power furnished by it was 
insufificient in quantity, that it was the duty of the Ice Company to 
furnish a différent motive power that was sufficient, or, if it was dé- 
ficient in quality, it was the Ice Company's duty to remedy that by 
furnishing a means of power transmission that would correct the 
fault. This insistence is based upon the provision "to furnish the 
required power" used in the contract, and there would be much force 
in it if the contract contained only that provision in relation to this 
subject. This is not the case, however. And that provision must be 
construed in the light of ail the other provisions therein. The words 
"required power" are limited and defined by the words, which also 
appear in the contract, "the gas engines furnished by the purchaser," 



BECKWITH V. CLARK 171 

that being the motive power aiready provided when the contract was 
made, and it is a most reasonable conclusion that that was the motive 
power the parties understood was to be used in operating the plant. 

Meager référence is made in the brief of counsel for appellee to 
the allowance of its counterclaim. Counsel for appellant state in their 
brief that: 

"The flemurrer of appellee was sustained to the cross-blll of appellant and 
the croiîs-bill was dismissed. * • * No error is assigned in this court to 
the action of the trial court in sustainlng appellee's demuri'er." 

There is nothing in the record that warrants us in expressing an 
opinion as to the validity of the counterclaim, nor as to the action of 
the trial court in sustaining a demurrer to a cross-bill, since the record 
does not show any issue joined on the cross-bill, nor is there any 
assignment which can properly be construed as relating thereto. 

From what has been said, it follows that we are of the opinion that 
the Wolf Company breached its contract with the Ice Manufacturing 
Company, and that the Ice Company was justified in refusing the 
machinery, and the decree of the court below will therefore be re- 
versed and the bill dismissed, with costs. 



BECKWITH et al. v. CLARK. 

(Circuit Court of Appeals, Bighth Circuit. May 31, 1911.) 

No. 3,351. 

(Syllabus ly the Court.) 

1. FEAUD8, StATTJTE OP (§ 103*) — CONTKACT OF SaLE OF IiAND BT LETTEES AD- 

DEESSED TO CONTEACTING PAETIES Nof ESSENTIAL. 

A contract to sell and convey land valid under the statute of frauds 
of Kansas may be made by letters connected by direct références to each 
of them, one of which Is sisned by the party to be charged. 

It is not indispensable that such letters should be addressed to one 
of the contraeting parties, and an agreement may be sustained which 
consists of letters of the vendor addressed to a third party who conveys 
to the vendee the messages they contain, and who writes over his own 
signature to the vendor the messages the vendee glves hlm In reply. 

[Ed. Note. — For other cases, see Frauds, Statute of, Cent. Dig. g 199; 
Dec. Dig. § 103.»] 

2. Specific Peefoemance (§ 117*)— Pleading — Immateeial Vaeiance Be- 

TWEEN AvEBMENTS AND PeOOFS. 

A complaint in a bill for spécifie performance alleged that the contract 
of sale of the land was made by three letters, the last of which was 
dated June 25, 1906. The decree rested on proof that the contract was 
made by one telegram and five letters, the last of which was dated June 
80, 1906. 

Hekl, the variance was immaterlal. 

[Ed. Note. — For other cases, see Spécifie Performance, Cent. Dig. §§ 
377-.581 ; Dec. Dig. § 117.*] 

3. CouBTS (§ 367*) — Fedeeal Couets— State Rules of Peopbett Peevail In. 

Rules or property established by the construction by the highest judi- 
cial tribunal of a state of its Constitution or statutes prevail in the 
national courts where no question of right under the Constitution or 

•For other cases see same topic & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



172 188 FEDERAL REPORTER 

laws of the nation and no question of gênerai or commercial law Is in- 
volved. 

[M. Note.— For other cases, see Courts, Cent. Dig. §§ 958, 959; Dec. 
Dig. § 367.» 

Conclusiveness of Judgment between fédéral and state courts. See 
notes to Kansas City, Ft. S. & M. R. Co. v. Morgan, 21 C. C. A. 478 ; Union 
& Planter's Bank v. Cttty of Memphls, 49 O. 0. A. 468.] 

4. FBAuns, Statute of (§ 115*) — Oonteacts in Kansas— Signature of Pae- 

TY TO BB CHABGED ALONE ESSENTIAL. 

The signature of the party to be charged without the signature of 
the other contracting party is sufflcient to sustain the validity of a con- 
tract of sale of land under the statute of frauds of Kansas. G eu. Stat. 
Kan. 1909, e. 45, § 3838. 

[Ed. Note. — For other cases, see Frauds, Statutes of. Cent. Dig. §§ 
242-250; Dec. Dig. § 115.*] 

5. Vendob and Ptjkchaseb (§.§ 188, 172, 196*) — Accotjntinq fob Rents and 

Profits and Interbst— Exception Where Pubohase Price Kept Ready. 

The gênerai rule is that from the time when a contract of sale of land 
should be performed the land is In equity the property of the vendee held 
by the vendor In trust for him, and the purchase prlce is the property of 
the vendor held In trust for hlm by the vendee, and that upon spécifie 
performance the vendor is liable to account for the rents and profits 
and the vendee for the interest on the purchase price. 

There is this exception to the rule: That where the vendor fails or 
refuses to convey at the time for performance, and the vendee, to the 
knowledge of the vendor, deposlts and keeps the purchase price subject 
to the order of the vendor upon his delivery of his deed, and dérives no 
beneflt from it, the vendor must account to the vendee for the rents and 
profits of the land, but the vendee Is not liable to account for the inter- 
est on the purchase prlce. 

[Ed. Note. — For other cases, see Vendor and Purchaser, Cent Dig. §§ 
376, 349-351, 404-406; Dec. Dig. §§ 188, 172, 196.*] 

Appeal from the Circuit Court of the United States for the District 
of Kansas. 

Bill by David O. Clark against Putnam Beckwith and Herbert H. 
Beckwith, trustées. Decree for complainant, and défendants appeal. 
Affirmed. 

Winslow Evans (John M. Cleary, on the brief), for appellants, 
E. C. Sweet (R. R. Rees, on the brief), for appellee. 

Before SANBORN and VAN DEVANTER, Circuit Judges, and 
REED, District Judge. 

SANBORN, Circuit Judge. This îs an appeal from a decree for 
the spécifie performance of a contract to sell and convey land which 
was evidenced by letters. The alleged vendor was Edwin Gaylora of 
Pontiac in the state of Illinois, who has since died and to whose in- 
terest in the land and in this litigation the appellants hâve succeeded 
as trustées under his will. The vendee was David O. Clark of Cloud 
county, Kan., who brought this suit against Gaylord before his death. 
The issues in the suit were whether or not Gaylord made a contract 
of sale of the land that was valid under the statute of frauds of Kan- 
sas, and whether or not Clark performed his part of the agreement. 
The case was referred to a spécial master to hear the évidence, find ' 

•Foi other cases see same topio & § numbee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



BECKWITH V. OLAEK 173 

the facts, and recommend a decree. He found the facts alleged by the 
complainant, and recommended a decree in his favor. Upon a hear- 
ing upon exceptions to the master's report the court below confirmed 
it with the modification that the purchaser should not be required to 
pay interest upon the purchase price o£ the property and rendered a 
decree for the complainant accordingly. 

The first reason urged by counsel for the appellants for a reversai 
of this decree is that the name of the vendee did not appear in the 
three letters which they contend the complainant alleged in his bill 
constituted the agreement. The master found that this agreement 
rested upon 13 letters, each oi which was marked at the hearing with 
one of the first 13 letters of the alphabet. In his bill the complainant 
averred that prior to June 22, 1906, Gaylord had by means of letters 
requested Garrett Davidson of Glasco, Kan., to make it known that he 
was willing to sell ail that part of his land in section 24 in a certain 
township in Cloud county, Kan., east of the railroad and the public 
highway through it; that Davidson informed the complainant of that 
fact, and the latter through Davidson, on June 22, 1906, made a writ- 
ten ofïer to Gaylord to buy the land and pay $55 per acre for it, Gay- 
lord to retain the landlord's share of the wlieat and Clark to bave the 
landlord's share of the corn raised upon it in 1906; that Gaylord on 
June 25, 1906, replied in writing to that ofïer accepting it; that by 
means of subséquent letters they agreed that the county surveyor 
should ascertain the number of acres of the land and its description ; 
that the surveyor did so, the complainant deposited $16,500, which was 
more than the amount of the purchase price, with the First National 
Bank of Glasco, with instructions to pay the purchase price to Gaylord 
out of this deposit on receipt of his deed ; that the complainant asked 
Gaylord to exécute the deed, and notified him that the purchase price 
was on deposit with the bank subject to his order on receipt of the 
deed, but Gaylord refused to perform the contract. 

The master found that Garrett Davidson was a farmer in Cloud 
county, Kan., where the land was situated, in no manner connected 
with Gaylord or Clark, except in a f riendly way ; that he received no 
compensation from either party, but acted for each when requested; 
that at the instance of Gaylord he mentioned the fact that the land 
was for sale, and at the instance of Clark he made the oiïer of $55 
per acre which Gaylord accepted. Appellants specify this finding as 
error, but the record amply sustains it. The letters clearly disclose 
the fact that Davidson stood in much the same relation to the con- 
tracting parties that the post office bears to correspondents through it. 
He was the agent of the sender of each message for the purpose of 
conveying it to the other contracting party. He carried the message 
of Gaylord that he was willing to sell his land, a message which was 
contained in a letter from Gaylord to himself, to Clark, and for Clark 
he sent the latter's message to Gaylord in a letter he wrote himself 
that he (Clark) would give $55 per acre for the land. When Gaylord 
answered in a letter to Davidson that he accepted this offer, Davidson 
carried this message to Clark, and for the latter he wrote to Gaylord 
that Clark was the purchaser. The letter he wrote in answer to Gay- 



174 188 FEDERAL EEPOETER 

lord's acceptance demonstrated his agency to bear messages for each. 
He wrote: 

"In my telegram I said make deed to David O. Clark. He is the man to 
whom I hâve sold It. We (evidently he and Clark), will be satisfied with 
anythlng' that Is right In regard to the fence and the mlU." 

In this State of the case each of the letters which is connected by 
direct référence with the other letters that treat of the sale is compé- 
tent évidence to prove the contract. 

[1] It is not essential to a valid agreement by means of letters un- 
der the statute of frauds that they should be addressed by one con- 
tracting party to the other. Pomeroy on Contracts, § 84; Hollis v. 
Burgess, 37 Kan. 487, 494, 15 Pac. 536. 

We return to the letters. The first one was written by Gaylord to 
Davidson, was dated May 19, 1906, and in it he wrote Davidson that 
he was willing to sell the land in question and asked him to let him 
know if he was acquainted with any one that was likely to want to 
buy it. The second letter is Davidson's answer. It is dated June 22, 
1906, and in it he writes to Gaylord that he hàd shown his letter to 
many, but never had an ofFer until that day, that he then had an offer 
of $55 per acre, Gaylord to hâve the landlord's share of the wheat 
crop and the purchaser the landlord's share of the corn crop for the 
year 1906. The third letter is addressed to Davidson, is dated June 

25, 1906, is signed by Gaylord, and in it he writes that he accepts the 
offer made tô him in the letter of June 22, 1906. The fourth letter is 
Davidson's answer to the letter of June 25, 1906. It is dated June 

26, 1906, and in it he writes to Gaylord that he has received his letter 
of June 25th, accepting his proposition, and that David O. Clark is the 
man to whom he has sold the land, and to whom Gaylord should make 
the deed. There was also in évidence a telegram from Davidson to 
Gaylord dated June 27, 1906, to make the deed to David O. Clark, and 
a letter dated June 30, 1906, in which Gaylord wrote to Davidson that 
he had received the latter's letter of June 26, 1906, that his tenant, 
Palmer, would get the description of the land east of the railroad from 
the county surveyor and the number of acres in the tract as soon as 
he could and would forward it to him, and that then he would make 
the deed. The letters which hâve been recited disclosed the name 
of the vendee and the letter of June 30, 1906, which was signed by 
Gaylord, together with the letters going before it evidenced an agree- 
ment, after the name of Clark had appeared in the letter of June 26, 
1906, as the purchaser, to sell the land and to make the deed. 

[2] Now, the contention of counsel for the appellants hère is that 
the complainant averred in his bill that the agreement was conclu ded 
by the letter of June 25, 1906, that no contract was consummated by 
that letter or at that time because the name of the vendee had not then 
appeared in the correspondence, and that, although the évidence proved 
a valid agreement which disclosed the name of the purchaser con- 
cluded by the letter of June 30, 1S06, five days later, the decree cannot 
stand because the proof does not correspond with the averments of 
the bill. The argument is too subtle to be sound. It is true that one 
may not plead one cause of action and recover upon another, and that 



BECKWITH V. CLAKK 175 

it îs as essential that the pleadings as that the proof shall correspond 
with and sustain the decree. But this rule relates to the substantial 
averments of a pleading which state the cause of action and to those 
only. It does not require that the decree or the proof shall correspond 
with every immaterial détail of the évidence that may be set forth in 
a pleading. The cause of action hère was the breach by Gaylord of 
his contract to sell and convey this land, and that is the cause of ac- 
tion that was pleaded in the bill and the cause upon which the decree 
is founded. The essential averments of that cause were those which 
showed that Gaylord made the agreement to convey the land by means 
of letters physically or by direct référence to each other connected 
together, one of which was signed by him, and that he had refused 
to perform it. It was not material that he consummated his contract 
on June 25, 1906, by his letter of that date rather than on June 30, 
1906, by his letter dated on that day, and this variance between the 
pleading, and the proof upon which this decree is based présents no 
ground for its reversai. 

Nor was there any error in the receipt in évidence and the consid- 
ération of the other letters and telegrams sent subséquent to June 25, 
1906, relating to the performance of the contract, because they were 
material to the question whether or not Gaylord committed a breach 
of the contract, and even if there had been error in their receipt it is 
not reviewable now, because no exception to the rulings which admit- 
ted them appears in the record. 

The next objection to the decree is that none of the letters was 
signed by Clark, that he was not bound to buy and pay for the land, 
and that there was no mutuality in the contract. This is an agreement 
regardmg title to real property in the state of Kansas, and it is gov- 
erned by the law of that state. Rules of property established by the 
construction by the highest judicial tribunal of a state of its Constitu- 
tion or statutes prevail in the fédéral courts where no question of 
right under the Constitution or laws of the nation and no question of 
gênerai or commercial law is involved. Traer v. Fowler, 75 C. C. A. 
540, 542, 144 Fed. 810, 812; Hoge v. Magnes, 29 C. C. A. 564, 566, 
85 Fed. 355, 357. 

[4] The statute of frauds of Kansas provides that: 

"No action shall be brought » • • upon any contract for the sale 
of lands * * * unless the agreement upon which such action shall be 
brought, or some note or mémorandum thereof shall be in writing and signed 
by the party to be chargea therewath, or some other person tbereunto by 
him or her lawfuUy authorized in writing." General Statutes of Kansas 
1909, c. 45, § 3838. 

In Guthrie v. Anderson, 47 Kan. 383, 386, 28 Pac. 164, Anderson 
brought an action on a contract for the sale of certain land to Guthrie 
for $2,000, $200 in cash and $1,800 in three months, which Anderson 
and his wife had signed and Guthrie had not, to recover the deferred 
payment of $1,800 after Guthrie had paid $200, and the Suprême 
Court held that he could not recover because Guthrie was the party to 
be charged and he had not signed the agreement. That court pro- 
ceeded to say : 



176 188 FEDERAL EEPORTEE. 

"If the Andersons deslred that Mr. Gutbrle should be charged by the 
writing or mémorandum, ttiey should hâve reQuired hlm or hls agent to bave 
signed tbe same. The Andersons, wbo signed the writing or mémorandum, 
are bouud thereby, and could not set up tbe statute in bar. Mr. Guthrie is 
net bound, because neither he nor hls agent signed, and therefore be can 
plead tbe statute. At one time it was a serious question wbetber the courts 
would speciâcally exécute a writing or mémorandum concerning lands, wbere 
one party only was bound ; that is, wbere only one party bad signed. It was 
held by some of the courts that in sucb a case, the writing or mémorandum 
not being mutually binding, one party ought not to be at liberty to enforce 
at bis pleasure an agreement whlch the other was not entitled to clalm. But 
the authorities now agrée that where an action is brought upon a writing 
or mémorandum for or concerning the sale of land, if the party sought to 
be charged in the action signed the same by himself or agent, be is liable 
thereon, and he cannot successfully plead as a défense that the plaintlff bas 
not signed. To the party sought to be charged, who bas signed, the statute 
is no défense. Hawkins v. Holmes, 1 P. Wms. 770; Clason v. Bailey, 14 
Jobns. [N. Y.] 484-489; Justice v. Lang, 42 N. Y. 493 [1 Am. Rep. 576]; 
Fry, Spec. Perf. § 497; Waterman, Spec. Ferf. § 239; Rogers v. Saunders, 
16 Me. 92 [33 Am. Dec. 635] ; Sams v. Fripp, 10 Rlcb. Eq. [S. 0.] 447." 

The theory of the rule hère declared is that a paroi agreement to 
sell and to pay for the land is not made void by the statute, and there- 
fore there is no lack of mutuality in it, but the only efïect of the stat- 
ute is to prevent any proof of it against a party to be charged who 
has not signed it. Under this rule of property of the state of Kansas, 
therefore, conceding that Clark made no written agreement to buy 
the land, he made à paroi promise so to do which was sufficient to give 
mutuality to the contract and the statute permitted proof of it against 
Gaylord who was the party to be charged and had signed it. Neither 
Clark nor his successors in interest could be heard to say that the con- 
tract was void because the complainant f ailed to sign it, for he 'was not 
the party to be charged. Schneider v. Anderson, 75 Kan. 11, 17, 88 
Pac. 525, 121 Am. St. Rep. 356. 

Another argument of the appellants is that the minds of the par- 
ties never met because Gaylord supplemented his letter of acceptance 
of June 25, 1906, by another of the same date in which he wrote that 
the wind pump and fence belonged to Palmer, the tenant, and David- 
son answered for Clark, "We will be satisfied with anything that is 
right in regard to fence and mill." But Gaylord could not sell what 
he did not own, and, after this information was given to Clark, both 
parties reaffirmed the contract, Gaylord by written promise to make 
the deed and Clark by depositing the purchase price in the bafik pay- 
able to the order of Gaylord upon the delivery of the deed. Counsel 
say their minds never met because there never was any agreement be- 
tween them relative to the place of payment of the purchase price. 

The proved facts regarding this matter were thèse: On June 26, 
1906, before the number of acres in the tract was ascertained, Clark 
gave his check for $16,500 payable to G. H. Bernard, cashier, certified 
by Bernard's bank, the First National of Glasco, Kan., and directed 
him to use it to pay for the land bought from Gaylord at the rate of 
$55 par acre, and Davidson and the bank then notified Gaylord that 
this money was at his disposai as soon as his deed of the land was re- 
ceived. On June 27, 1906, Gaylord wrote Davidson that, after he re- 
ceived the purchaser's name, he would hâve his deed executed, leave it 



BECKWITH V. CLABK 177 

with D. C. Eylar, président of the Pontiac Bank, that the buyer could 
get his banker at Glasco to send a draft to the Pontiac Bank for the 
purchase price with instructions to hold it until he was satisfied that 
the deed was good, and after the draft was accepted forward the deed 
to the purchaser. On June 30, 1906, after Gaylord had received Da- 
vidson's letter of June 26, 1906, which disclosed the purchaser's name, 
he vvrote to Davidson that he had employed Eylar, the président of 
the Bank of Pontiac, to help him fix up the deal, and that Eylar would 
correspond with the officers of the Glasco Bank. He did so. He 
wrote that he had seen the telegram that $16,500 was in that bank 
at the disposai of Gaylord as soon as a good deed was received prop- 
erly signed, and that he understood that, as soon as Gaylord and his 
wife made a good deed, the Glasco Bank was to remit to the Pontiac 
Bank $16,500 net to Gaylord there without any exchange costs or 
charges. Bernard, the cashier of the Glasco Bank, wrote in answer 
to this letter that the Glasco Bank had $16,500 in its hands to be used 
to pay for the land bought by Clark which was to be surveyed and 
measured "so that correct description can be given and the exact 
amount of land in the tract ascertained," and that the Glasco Bank 
was to remit for Clark for the crédit of Gaylord out of this money 
on deposit with it a sufficient amount to pay $55 per acre for the land 
as soon as the deed was properly executed and in its hands. On July 
3, 1906, Eylar wrote in reply that Bernard's letter had been read to 
Gaylord, that Gaylord "understands the same as you that Mr. Clark 
is to pay $55 per acre for what number of acres the tract to be con- 
veyed by Dr. Gaylord and wife contains. * * * I am instructed 
by Dr. Gaylord to say that whatever number of acres the survey shows 
he is to hâve $55 per acre for, the same to be net to him hère, without 
any charges or déductions, the same as stated in my former letter." 
On July 6, 1906, Bernard wrote the Pontiac Bank, inclosed in his let- 
ter a description of the land which he had obtained from the surveyor 
and a form of deed, asked that Gaylord exécute the deed and send it 
to the Glasco Bank with instructions as to dehVery, and declared that 
immediately upon its receipt the Glasco Bank would forward its draft 
for the purchase price for the number of acres shown by the descrip- 
tion. On July 14, 1906, Eylar wrote that Gaylord had informed the 
Pontiac Bank that circumstances were then such that he could not 
consummate the sale, and that the Glasco Bank was at liberty to re- 
lease the money which it had on deposit to the party to whom it be- 
longed. Hère the correspondence ended, and in our opinion it not 
only discloses no disagreement, but évidences a perfect concord of the 
minds of the parties in relation to the time, the place and the manner 
of the payment, the delivery of the deed, and the performance of the 
contract to sell. Counsel also contend that the minds of the contract- 
ing parties never met upon the number of acres in the tract, and that 
they never agreed that the county surveyor should ascertain it. The 
proof is, however, that each party through his agent employed the 
county surveyor to ascertain and report the number of acres and the 
description of the land; that he made his first report to Gaylord's 
agent and informed him that it was not accurate because he had lacked 
188 F.— 12 



178 188 FEDERAL KEPORTER 

time to make it so; that he subsequently took the time to make it 
accurate and reported the accurate description and number of acres 
to Bernard, he sent that description and number to the Pontiac Bank 
in his letter of July 6, 1906; and that no objection was ever made by 
Gaylord to the number of acres so reported, but he absolutely refused 
to perform his contract. That contract was valid without any agree- 
ment upon the number of acres in the tract, for that is certain which 
can be made certain and the évidence satisfies that the parties did in 
fact agrée upon the number of acres which the surveyor finally found. 
There was no error in the finding of the master and the court that 
Gaylord made a valid contract for the sale of this land, and then re- 
fused to perform it. 

It is assigned as error that, while the decree charges the vendor with 
the rents and profits of the land from 1906 until the rendition of the 
decree, it fails to charge the vendee with interest on the purchase price 
from July 6, 1906, when the contract should hâve been performed, 
until the decree was rendered. But the proof is plenary that by means 
of the certified check which has been described and Clark's direction 
to Bernard and the Glasco Bank he deposited in that bank before 
July 6, 1906, and kept there from that time until the hearing the pur- 
chase price of this land payable to the vendor, or his successors in 
interest, on the single condition that he or they deliver to Bernard or 
the bank the deed to which he was entitled ; that he and the bank which 
held the money notified Gaylord in June, 1906, that this money was 
on deposit in the bank for this purpose subject to his order; and that 
Clark never used this money for any other purpose or derived any 
benefit from it, but always kept it ready to pay for the land. The 
reason for and the purpose of the spécifie performance of a contract 
is to place the parties as near as may be in the same situation that 
they would hâve occupied if they had voluntarily performed it. The 
compulsory performance of it and the terms of the decree therefore 
rest in the sound judicial discrétion of the chancellor which should 
be exercised to attaifi this object. AU the rules which hâve been 
established for the molding of decrees hâve been framed and fol- 
lowed and ail the exceptions to them hâve come into being to accom- 
plish this purpose and are subordinate to its attainment. 

[5] One of thèse rules is that from the time when the contract 
should be performed the land is in equity the property of the vendee 
held by the vendor in trust for him, and the purchase money is in 
equity the property of the vendor held by the vendee in trust for him, 
and that, when a decree for spécifie performance is rendered, the ven- 
dor is liable to account for the rents and profits of the land and the 
vendee for the interest on the purchase price. The application of this 
rule of accounting is generally just and équitable, because between the 
due date of performance and the decree the vendor usually receives 
the rents and profits and the vendee usually retains and has the use 
of the money requisite to pay the purchase price. But where, as in 
the case at bar, the purchaser does not retain or dérive any benefit 
from the money required to pay the purchase price, but places and 
keeps it, to the knowledge of the vendor, subject to his order upon his 



GOLDEN CYCLE MINING CO. V. RAPSON COAL MINING CO. 179 

delivery of his deed, the application of this rule would be inéquitable. 
It would reward the vendor for his own wrong. It would enable him 
by simply refusing to perform his contract to deprive the vendee of 
the possession and use of property which might yield no rents or 
profits and at the same time to mulet the vendee to the extent of inter- 
est on the amount of the purchase priée which he does not receive. 
Thèse considérations hâve brought forth the exception to the gênerai 
rule. It is that where in an action for the spécifie performance of a 
contract to sell and convey land the vendor fails or refuses to convey 
and the vendee, to the knowledge of the vendor, sets apart and keeps 
the purchase price subject to the order of the vendor upon his delivery 
of the deed and dérives no benefit from it, the vendor must account 
for the rents and profits of the land he retains, but the vendee is not 
liable to account for the interest on the purchase price. 36 Cyc. 754 
(3d) ; Bostwick v. Beach, 103 N. Y. 414, 424, 9 N. E. 41 ; Worrall v. 
Munn, 38 N. Y. 137, 142, 146; Hart v. Brand, 1 A. K. Marsh. (Ky.) 
159, 10 Am. Dec. 715; Bass & Carter v. Gilliland's Heirs, 5 Ala. 761, 
766; Fry on Spécifie Performance, § 1383; Hayes v. Elmsley, 23 
Can. Sup. et. 623, 627; Kershaw v. Kershaw, 21 L. T. R. N. S. 651, 
652 ; Regent's Canal Company v. Ware, 23 Beavan, 575 ; Howland v. 
Norris, 1 Cox, 59, 60, 62 ; Leggott v. Metropolitan Railway Company, 
5.L. R. Chan. App. 716, 719. 
The decree below was right, and it is affirmed. 



GOLDEN CYCLE MINING CO. v. RAPSON COAL MINING CO. et al. 

(Circuit Court of Appeals, Eiglitli Circuit. May 1, 1911.) 

No. 3,342. 

1. CoNTEACTS (§ 313*) — Eenunciation— Remédies of Injuked Paett. 

After the renunciation of a continuing contract by one party, ttie other' 
may at his option conslder Mmself absolved from any future perform- 
ance of it, and may sue at once for any damages he has suffered from 
the breach of it, or he may watt until performance should hâve beeu 
completed, still holding it as prospectively binding for the exercise of 
this option. 

[Ed. Note. — For other cases, see Contracts, Cent. Dlg. § 1279; Dec 
Dig. § 313.*] 

2. CONTBACTS (i 10*) VAIIDITT— MUTUALITY OF OBLIGATION— "MaT USE." 

An agreement by one party to fumish and by the other party to pur- 
chase ail the coal of a stated kind the second party "may use" in the 
opération of a mine and réduction works durlng a limited time Is valid, 
and binds the purchaser to take from the seller ail the coal that may be 
needed or required in the conduct of such business during the time speci- 
fied. 

[Ed. Note. — For other cases, see Contracts, Cent. Dlg. i§ 21-40; Dec. 
Dig. § 10.* 

For other définitions, see Words and Phrases, vol. 8, pp. 7228-7237; 
vol. 8, p. 7825.] 

3. Contracts (§ 217*) — Construction— Option to Teeminate. 

tTnder a contract to furnish to a mining company ail the coal it should 
require in its business durlng a stated time, which gave it the option, in 

•For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



180 188 FEDERAL REPORTER 

the event It should acquire a substantlal interest in a coal mine, as own- 
er, lessee, or stockholder, whereby It secured the control of the opération 
of such mine, to termina te the contract by givlng 90 days' wrltten notice, 
to entitle it to exercise such option, It must at the tlme of giving such 
notice hâve acqulred the interest stated in a coal mine and the giving of 
the notice vi^lthout having previously acquired such interest was iuef- 
fectlve to terminate the contract, although such interest was afterward 
acquired. 

[Ed. Note.— For other cases, see Contracts, Cent Dig. §§ 1006-1009; 
Dec. Dlg. § 217.*] 

4. Evidence (§ 244*) — Admissions. 

In an action by corporations to recover damages for breach of a con- 
tract which défendant had the option to terminate by notice under cer- 
tain conditions but not otherwise, and which it clalmed had been so ter- 
mlnated, it was not error to exclude testimony as to a conversation be- 
tween the président of plalntifïs and the agent who served the notice, 
tendiug to show that such président recognlzed the right of défendant to 
terminate the contract, especially where it was not shown that he had 
any knowledge at the time as to whether the facts existed which author- 
Ized such terminatlon and which was essential to establlsh a waiver of 
the conditions or an acqulescence in the cancellatlon of the contract. 

[Ed. Note.— For other cases, see Evidence, Cent. Dig. §§ 916-936 ; Dec. 
Dig. § 244.*] 

In Error to the Circuit Court of the United States for the District 
of Colorado. 

Action at law by the Rapson Coal Mining Company and the Curtis 
Coal Mining Company against the Golden Cycle Mining Company. 
Judgment for plaintiffs, and défendant brings error. Affirmed. 

Tyson S. Dines, for plaintiff in error. 

Henry McAllister, Jr. (Joël F. Vaile and William N. Vaile, on the 
brief), for défendants in error. 

Before VAN DEVANTER and HOOK, Circuit Judges, and CAR- 
LAND, District Judge. 

PER CURIAM. On the llth day of July, 1906, the Golden Cycle 
Mining Company, plaintiff in error, made and entered into a contract 
with the Rapson Coal Mining Company and the Curtis Coal Mining 
Company, défendants in error, which, so far as is material to the 
questions raised upon this record, was in the following language: 

"Thls agreement, made and entered Into this llth day of July, 1906, by 
and between the Golden Cycle Mining Company, a West Virginia corporation 
doing business In the state of Colorado, and hereinafter called the Mining 
Company, party of the flrst part, and the Rapson Coal Mining Company and 
the Curtis Ooal Mining Company, both Colorado corporations, hereinafter 
called the Coal Companles, parties of the second part, witnesseth: 

"Whereas the mining company is now operating one or more metalliferous 
mines In the Cripple Creek mining district in Teller county, Colorado, and 
Intends In the near future to begln the opération of Its ore réduction vyorks 
near Colorado City, El Paso county, Colorado, and desires to seeure a con- 
tinuons supply of coal for use in the opération of its sald mines and réduc- 
tion Works, and any other mines or réduction plants It may hereafter ac- 
quire in the same vicinity, and 

"Whereas, the Coal Companles are engaged in the business of mining lig- 
nite coal in and upon the coal mines whlch they control for such purposes 

*For other cases see same toplo & § number In Dec. & Am. Diga. 1307 to data, & Rep'r Indexes 



GOLDEN CYCLE MINING GO. V. BAPSON COAL MINING CO. 181 

near Colorado Springs, Colorado, and mines of bltumltious coal near Rugby 
in Las Animas county, Colorado, and are désirons of enlarging tlieir' market 
for the outiiut of coal from said mines: 

"Now Therefore, the parties hereto bave agreed as follows: 

"(1) During the period beginning with the date hereof and ending Decem- 
ber SI, 1910, the Mining Company agrées to purchase from the Coal Com- 
panies ail the lignite coal it may use in the opération of its said mines and 
réduction works, and also ail the bituminous coal it may use so long as the 
Coal Companies are able to furnish a good quality of the same at as favor- 
able prices and under as favorable conditions for delivery as other coal mine 
operators may be wllling to furnish the same. 

"(2) During said period of time the Coal Companies agrée to supply to the 
Mining Company ail of said coal that it may désire to purchase and use for 
the purposes aforesaid, and make such prompt delivery of the same as the 
necessities of the Mining Company may require. * * * 

"(11) It is agreed that in the event the Mining Company shall acquire a 
substantial interest in a coal mine as owner, lessee or stoekholder whereby It 
secures the control of the opération of such mine, then the Mining Company 
may, at its option, déclare this contract terminated upou giving the Coal 
Company ninety (90) days' written notice of its intention to do so." 

Immediately upon the exécution and delivery of the contract from 
which the above excerpts are taken, the Coal Companies commenced 
the performance of said contract and at ail times thereafter until the 
13th day of May, A. D. 1908, did fully perform ail the obligations and ■ 
agreements of said contract by them or either of them to be per- 
formed, and did sell and deliver to the Mining Company and said 
Mining Company did receive and purchase ail the lignite coal required 
and used by it in the opération of its mines in the Cripple Creek Mm- 
ing district, Teller county, Colo., and its réduction works near Colo- 
rado City, El Paso county, Colo., and said Mining Company did pay 
to the Coal Companies the contract price therefor. 

On the 13th day of May, A. D. 1908, above mentioned, the Mining 
Company refused to purchase or receive from the Coal Companies 
any more lignite coal under the contract herein mentioned. July 1, 
1908, the Coal Companies commenced this action against the Min- 
ing Company to recover damages for the alleged breach of the terms 
of the contract herein mentioned by the Mining Company in refusing 
to purchase or receive any more lignite coal under said contract after 
May 13, 1908. The Mining Company appeared in the action and after 
a trial in the court below a verdict was rendered in favor of the Coal 
Companies and against the Mining Company upon which final judg- 
ment was rendered in favor of the Coal Companies for the sum of 
$21,250, besides costs and disbursements. The Mining Company has 
removed the case to this court by writ of error. 

The damages claimed by the Coal Companies and for which they re- 
covered judgment was for the fair and reasonable profits which would 
hâve accrued to them by the performance of the contract mentioned 
by the Mining Company from May 13, 1908, to December 31, 1910. 
On February 13, 1908, the Mining Company served the following 
notice on Charles H. Curtis, président and gênerai manager of the 
Coal Companies: 

"Colorado Springs, Colorado, February 13th, 1908. 

"The Rapson Coal Mining Company and The Curtis Coal Mining Company, 
Both Ctolorado Corporations, Colorado Springs, Colorado — Gentlemen: You 



183 188 FEDERAL REPOKTBB 

are hereby notlfled that thls company bas acquired a substantlal interest In 
a coal mine as stockholder, whereby it bas secured control of the opération 
of sucli mine, and tàat this company hereby avails itseif of tlie option con- 
tained In paragrapli 11 of the contract now pendlng between your companies 
and tlils company for the sale and purchase of lignite coal, and hereby in ac- 
cordance with a provision of said contract, contained in said paragraph 11 
thereof, notifies you that said contract shall terminale at the expiration of 
90 days from date of the receipt of this communication by you. 

"Yours tnily, The Golden Cycle Mining Company, 

"By Jno. T. Milllken, Président." 

On May 13, 1908, the Coal Companies served the following notice 
on the Mining Company: 

"Colorado Springs, Colo., May 13, 1908. 
'"the Golden Cycle Mining Company, City — Gentlemen: You are hereby 
notlfled that we décline to release you from your obligations under the con- 
tract between us, dated July 11, 1906, and that we deny that said contract 
has been terminated by reason oif any notice heretofore served on us by you. 
;We insist that said contract Is still binding and obligatory upon you, as well 
as upon us, and we are now ready, willing and able, and hereby offer to com- 
ply with each and every provision thereof, requiring the performance of any 
aet or thing by us. We hereby offer to continue to deliver to you the coal 
mentioned in said contract at the time and place therein mentioned, whieh 
coal under said contract you are required to purchase from us, and we re- 
quest you to notlfy us forthwith whether you will accept the delivery of said 
coal, according to the terms of said contract. You are further notlfled that 
we daim that you had not on February 13, 1908, at the time when you at- 
tempted to give us notice of the termination of said contract, placed yourself 
in such a position as to become vested with any right, under Paragraph 11 
of said contract, to elect to terminate the same, or to give us notice of such 
élection. In the event j'ou persiat in your détermination to violate said con- 
tract, we will hold you liable for ail damages whlch we may sustain by rea- 
son of such conduct on your part. 

"Yours very truly, The Rapson Coal Mining Company. 

"By C. H. Curtis. Président. 
"The Curtis Coal Mining Company. 

"By C. H. Curtis, Président." 

[1] The rule that a contract may be broken by the renunciation of 
liability under it in the course of performance, and that suit may be 
immediately instituted for the recovery of damages based as far as 
possible on the ascertainment of what the injured party would hâve 
suffered by the continued breach of the other party down to the time 
of the complète performance, less any abatement by reason of cir- 
cumstances of which the injured party ought reasonably to hâve 
availed himself, is firmly established by the case of Roehm v. Horst, 
178 U. S. 1, 20 Sup. et. 780, 44 L. Ed. 953. 

After a careful review of ail the cases, American and English, the 
Suprême Court in the case last cited déclares that after the renuncia- 
tion of a continuing agreement by one party the other party is at lib- 
erty to consider himself absolved from any future performance of 
it, retaining his right to sue for any damages he has suffered from 
the breach of it, but that an option should be allowed to the injured 
party either to sue immediately, or to wait until the time when the 
act was to be done still holding it as prospectively binding for the 
exercise of this option. 

[2] In order to reverse the judgment below, counsel for plaintiff 
in error urges the proposition that the contract sued on is not en- 



GOLDEN CYCLE MINING CO. V. EAPSON COAL MINING CO. 183 

forceable, because the respective promises made by the parties consti- 
tuting the only considération supporting the same are not mutually 
binding, and that the contract is nudum pactum. We think the word 
"use" in the language of the contract is équivalent to the words 
"needed, required," or "consumed," and brings the agreement of the 
parties wîthin the rule enunciated by this court in the case of Cold 
Blast Transportation Co. v. Kansas City Boit & Nut Co., 114 Fed. 81, 
52 C. C. A. 25, 57 L. R. A. 696. It is said in the case last cited that : 

"An accepted offer to furnlsh or deliver such articles of Personal property 
as shall be needed, required, or consumed by the established business of the 
accepter during a limited time Is binding, and may be euforced, because it 
contains the implied agreement of the accepter to purchase ail the articles 
that shall be required in conductlng his business during this time from the 
party who makes the ofCer " 

The court cited in support of said rule Wells v. Alexandre, 130 N. 
Y. 642, 29 N. E. 142, 15 h. R. A. 218; Minnesota Lumber Co. v. 
Whitebreast Coal Ce, 160 111. 85, 43 N. E. 774, 31 L. R. A. 529; 
Parker v. Pettit, 43 N. J. Law, 512. This rule was also approved in 
the case of A. Santaella & Co. v. Otto F. Lange Co. et al., 155 Fed. 
719, 84 C. C. A. 145, also decided by this court. We therefore are 
of the opinion that the agreement above set forth constituted a valid 
contract on the part of the Mining Company to purchase and on the 
part of the Coal Companies to supply ail the lignite coal needed or 
required by the Mining Company in the opération of its mines and 
réduction works during the time specified in the contract. 

[3] It is also contended that under and by virtue of the terms of 
section 11 of the contract herein quoted the Mining Company ter- 
minated the contract on May. 13, 1908, by giving the notice hereiu- 
before quoted to the Coal Companies, and which the Mining Company 
claims it had the right to give by reason of the existence of the req- 
uisite facts at the time the notice was given. This renders it nec- 
essary to examine somewhat carefully the provisions of said section. 
We think that the meaning of section 11 is plain, and that it appears 
therefrom that it was the intention and agreement of the parties to 
the contract that if the Mining Company should acquire a substan- 
tial interest in a coal mine as owner, lessee, or stockholder, whereby 
it should secure the control of the opération of such mine, then the 
Mining Company at its option could déclare the contract terminated 
upon giving the Coal Companies 90 days' notice in writing of its in- 
tention to do so. In other words, the section means just what it says. 
By the insertion of this clause in the contract, the Mining Company 
was providing for the termination of the contract to buy coal from 
the Coal Companies in the event the Mining Company should acquire 
such a substantial interest in a coal mine as owner, lessee, or stock- 
holder as would secure to it the control of the opération of such 
mine. It conclusively appears from the language used that two things 
should exist in order to give the Mining Company the right to ter- 
minate the contract: First, it was necessary that the Mining Com- 
pany should acquire a substantial interest in a coal mine as owner, 
lessee, or stockholder whereby it should secure the control of the 
opération of such mine ; second, if such f act existed then the Mining 



184 1S8 FEDSBAL HEFORTSIB 

Company, at îts option, could déclare the contract terminated by giv- 
ing ninety days' written notice of its intention to do so. The acquir- 
ing of a substantial interest in a coal mine as owner, lessee, or stock- 
holder whereby the Mining Company should secure the control of 
the opération of such mine, standing alone, was not enough ; neither 
was the giving of 90 days' notice in writing, standing alone, enough 
to terminate the contract; but the acquirement of the substantial in- 
terest above mentioned and also the giving of the notice must coexist 
in order that the contract might be terminated by the Mining Com- 
pany. The Mining Company might acquire the substantial interest 
above mentioned and not exercise its option to terminate the contract 
by giving the vi^ritten notice, or, if it gave the virritten notice without 
having acquired such substantial interest, then there would be no 
right in the Mining Company to terminate the contract. It is admitted 
that the virritten notice of February 13, 1908, was given according to 
the terms of the contract. It is claimed, however, by counsel for the 
Coal Companies that at the time said notice was given the Mining 
Company had not acquired a substantial interest in a coal mine as 
required by the terms of the contract. Without detailing ail the évi- 
dence in the record touching upon the question as to whether the 
Mining Company had so acquired a substantial interest in a coal mine 
within the requirements of section 11 of the contract, we may state 
that said évidence has been carefully read, and we agrée with the 
trial court that the évidence wholly fails to show that at the time of 
the giving of the notice, February 13, 1908, the Mining Company 
had acquired a substantial interest in a coal mine as owner, lessee, or 
stockholder whereby it had secured the control of the opération of 
such' mine, and we are further of the opinion that the trial court did 
not err in refusing to submit to the jury the question as to whether 
the Mining Company had so acquired a coal mine. 

In view of what we hâve heretofore said, it foUows that the mère 
giving of the notice without having a right so to do had no effect in 
terminating the contract. 

It is further contended by counsel for the Mining Company that it 
appears from the record that it did on July 20, 1909, acquire a sub- 
stantial interest in a coal mine as owner, lessee, or stockholder within 
the meaning of section 11. This contention is based upon a stipula- 
tion made between the parties at the trial of the case in the court be- 
low, paragraph 3 of which reads as follows: 

"That the books of the Plkes Peak Fuel Company show that Its capital 
stock is and since Deeember 29th, 1906, has beau 500,000 dollars, of whIch 
$50,000 is preferred and $450,000 is common stock, par value of shares being 
$10.00 each. On Jul.y 20th, 1909, certifleate No. 30 for 2,500 shares, or $25,- 
000, of the preferred stock of said company was Issued to the Golden Cycle 
Mining Company, and upon the same date certifleate No. 98 for 22,550 shares, 
or $225,500 of the common stock was issued to the said the Golden Cycle 
Mining Company." 

Counsel for the Coal Companies reserved the right of objection to 
the introduction of this stipulation in évidence as irrelevant and im- 
material, and did insist at the trial that it was irrelevant and imma- 
terial for the reason that said paragraph 3 does not show that the 



GOLDEN CYCLE MINING CO. V. RAFSON COAL MINING CO. 185 

Mining Company, on July 20, 1909, acquired such an interest as is 
specified in section 11 of the contract and which would authorize the 
Mining Company to give the written notice of the termination of the 
contract. We do not think that it is necessary to discuss the ques- 
tion as to whether the facts appearing f rom paragraph 3 of the stipula- 
tion show that the Mining Company did thereby acquire, on July 20, 
1909, a substantial interest in a coal mine whereby it secured the con- 
trol of the opération of the mine within the requirements of section 
11, for the reason that we are clearly of the opinion that, even if the 
Mining Company by virtue of the transaction detailed in paragraph 3 
of the stipulation did so acquire such substantial interest, it never ex- 
ercised its option with référence thereto by giving 90 days' written no- 
tice of its intention to terminate the contract because it had so ac- 
quired such substantial interest. As we hâve heretofore explained, the 
acquiring of the substantial interest, standing alone, did not terminate 
the contract, nor did the giving of the notice on February 13, 1908, 
nearly one year and a half before it acquired the interest in the Pikes 
Peak Fuel Company, hâve any force or validity to terminate the con- 
tract because of the acquirement of the substantial interest on July 20, 
1909. The Mining Company could not give the notice until the condi- 
tions existed which the contract required should exist before the right 
to give the notice should arise. We do not say that the notice must 
hâve been given at the exact time of the acquirement of the substan- 
tial interest— it might hâve been subséquent thereto, but not before, 
especially not such a long time before. 

[4] Counsel for the Mining Company also insists that the trial court 
committed error in excluding the offer of its counsel to prove certain 
facts by the witness Vickroy. Vickroy was the auditor of the Min- 
ing Company and served or delivered to Curtis on February 13, 1908, 
the notice of intention to terminate the contract. It appears from the 
record that while Vickroy was upon the stand counsel for the Mining 
Company asked the following question: 

"Q. Hâve any conversation with him (meaning Curtis) at the time you 
served It (notice of February 13, 190S)? A. Tes, sir. 

"Q. What did you say to him? (Plaintiffs object to the question for the 
reason that it is incompétent aud immaterial.)" 

Whereupon, Mr. Cunningham, counsel for the Mining Company, 
made the following ofïer: 

"We now offer to prove by the witness Vickroy now on the stand that at 
the time he (Vlclcroy) seryed the notice upon Curtis, Curtis said to Vickroy, 
in substance: 'That we (meaning plaintlCf companies) regret to lose you 
(meaning défendant Company), but we (meaning plaintlff companies) recognize 
your (defendant's) right to cancel the contract, and it (defendant's action) is 
ail right That said Curtis further s.iid at said time in substance that he 
(Curtis) thought it (meaning défendant company) was making a mistake, 
would flnd that it was making a mistake (meaning in business policy), that 
it (défendant company) would so flnd; and would again give them (plalntiff 
companies) its (defendant's) coal purchases." 

The offer was again objected to by counsel for the Coal Companies 
on the ground that it was incompétent and immaterial, and had no 
bearing upon the issues in the case. The ofifer was made for the pur 



186 188 FEDERAL EBPOETBE 

pose of showing that Curtis, as président and gênerai manager of the 
Coal Companies, acquiesced in and recognized the right of the de- 
fendant Company to cancel the contract, and for the further purpose 
of showing that the Coal Companies did not at that time regard their 
contract with the Mining Company as so valuable as they appeared to 
think it was at the time of the trial. The court below sustained the 
objection of counsel for the Coal Companies, and we think committed 
no error in so doing. It subsequently appeared in the testimony of 
Curtis that he had no such conversation, but, assuming as we must 
do for the purpose of determining the correctness of the ruling of the 
court below that the conversation took place as detailed in the offer, 
we do not see how the language claimed to hâve been used by Curtis 
could in any way détermine the rights of the Coal Companies under 
the contract. It is not shown that Curtis had any knowledge of any 
facts which would entitle the Mining Company to terminate the con- 
tract under and by virtue of its terms, and the language detailed, if 
used, might hâve been entirely consistent with the assumption on the 
part of Curtis that such facts did exist as would authorize the ter- 
mination of the contract by the Mining Company. Again, it does not 
appear that Vickroy at the time he served the notice had any authority 
from the Mining Company or stood in such relation to it as to be a 
person with whom Curtis could make any agreement in regard to 
waiving the Coal Companies' rights under the contract, and the ques- 
tion of waiving rights under the contract was not the business the par- 
ties were engaged in. In Bennecke v. Insurance Co., 105 U. S. 359, 
26 L. Ed. 990, the Suprême Court used the foUowing language: 

"A waiver of a stipulation In an agreement must, to be effectuai, not only 
be made Intentlonally, but with knowledge of the eircumstanees. This is the 
rule when there is a direct and précise agreement to walve the stipulation. 
A fortiori is this the mie when there Is no agreement either verbal or in 
writing to waive the stipulation, but where it it sought to deduce a waiver 
from the conduct of the party. Thus, where a wrltten agreement exists. and 
one of the parties sets up an arrangement of a différent nature, allegmg con- 
duct on the other side amounting to a substitution of this arrangement for 
a wrltten agreement, he must clearly show not merely hls own understand- 
ing, but that the other party had the same understandlng." 

Numerous other errors are discussed in brief of counsel for plain- 
tif! in error, but an examination of the record convinces us that they 
are wholly without merit, and, without further discussion, we are of 
the opinion that the judgment of the court below should be affirmed ; 
and it is so ordered. 



METZ V. CITr AND CQUNTT OF DENVEB 187 

METZ et al. V. CITY AND COUNTY OF DENVER et al. 

(Circuit Court of Appeals, Eightli Circuit. May 31, 1911.) 

No. 3,104. 

(Si/lldbus ty the Court.) 
Municipal Corpokations (§ 985*) — Paek Commission oï Denvee— Pbo- 

CEEDS OF GENEBAL TAXATION IN ANY DISTRICT. 

The charter of the eity and county of Denver empovvers its park com- 
mission to expend the moneys collected by gênerai taxation and appro- 
priated by the charter to the maintenance and improvement of parles and 
parkways, wherever in the eity and county In thelr judgment the needs 
of the respective park districts require its expenditure. 

The commission is not required to expend such moneys in the respec- 
tive park districts whence thèse moneys were derived by means of the 
taxation of the property therein. 

[Ed. Note. — For other cases, see Municipal Corporations, Dec. Dig. § 
985.*] 

Appeal from the Circuit Court of the United States for the District 
of Colorado. 

Bill by Louis Metz and others against the City and County of Den- 
ver and others. From a decree dismissing the bill, complainants appeal. 
Affirmed. 

Albert L. Vogl and Carie Whitehead, for appellants. 
F. W. Sanborn (H. A. Lindsley and Geo. Q. Richmond, on the 
brief), for appellees. 

Before SANBORN and VAN DEVANTER, Circuit Judges, and 
WILLIAM H. MUNGER, District Judge. 

SANBORN, Circuit Judge. This is an appeal from a decree which 
sustained a demurrer to and dismissed the bill of Louis Metz and 
other owners of real estate in the Highland Park district in the eity 
and county of Denver, to enjoin the corporation, its mayor and the 
members of its park commission from using the moneys collected by 
gênerai taxation of the property in that district for the maintenance 
and improvement of parks and parkways in other districts and to re- 
quire them to take out of the moneys that shall be collected for the 
maintenance and improvement of parks and parkways by gênerai tax- 
ation of the property in other districts, and to expend in the Highland 
Park district about $89,000, an amount which they hâve heretofore 
taken out of the moneys collected from the latter district, and hâve 
expended for the maintenance and improvement of parks in other 
districts. The question presented is, Hâve the mayor and park com- 
mission of the eity and county of Denver the power to expend for 
the purpose of maintaining and improving parks and parkways the 
moneys collected by the gênerai taxation of the property of one park 
district in the other park districts of that municipal corporation ? The 
answer must be found in the Constitution of Colorado and the charter 
of the eity and county of Denver. The'-people of the state of Colorado 
by the twentieth article of their Constitution conferred upon the eity 

•For other cases see eame topic & § numbeb In Dec. & Am. Dlga. 1907 to date, & Eep'r Indexas 



183 188 FEDERAL KEPORTEE 

and county of Denver the exclusive power to make, alter, revise or 
amena the charter of that municipal corporation (section 4) and be- 
stovved upon the people of Denver every power possessed by the Lég- 
islature over that subject. People v. Sours, 31 Colo. 369, 387, 74 Pac. 
167, 102 Am. St. Rep. 34; People v. Johnson, 34 Colo. 143, 159, 86 
Pac. 233 ; Denver v. Hallett, 34 Colo._ 393, 398, 83 Pac. 1066. In 
the exercise of the power thus vested in them the people of Denver 
on February 6, 1904, adopted their charter and thèse are the provisions 
of it that are material to the question hère at issue: 

Section 323 : The city and county of Denver is divided into four 
park districts, one of which is the Highland Park district. 

Section 97 : The park commission and the mayor bave complète and 
exclusive power to expend (1) ail sums of money that may be raised 
by gênerai taxation for park purposes ; (2) ail sums of money appro- 
priated by the council from the gênerai revenues for the same pur- 
poses; (3) ail moneys realized by the commission from the sale of 
privilèges in or near the parks of the city and county of Denver; (4) 
ail money realized from the sale of the gênerai bonds of the city and 
county and set apart for park purposes; and (5) ail money realized 
from the sale of park district bonds. 

.Section 103: No moneys levied or appropriated by the council or 
the charter for park purposes remaining unexpended at the end of any 
fiscal year shall be converted into the gênerai fund or be subject to 
appropriation for gênerai purposes. 

Section 105: (1) The proceeds of any bonded indebtedness of the 
city and county incurred for the purpose of acquiring lands for parks 
or parkways shall be used in acquiring lands in the several park dis- 
tricts in proportion to the assessed value of the real estate in each dis- 
trict; (2) the council shall annually assess and collect upon each 
dollar of taxable property within the city and county at least one and 
one-third mills, the proceeds of which shall be set apart and shall con- 
stitute an improvement and maintenance fund for park purposes; (3) 
"ail moneys collected as taxes levied for the maintenance and improve- 
ment of parks and parkways shall be expended by the commission as 
in their judgment the needs of the several park districts require." 

Section 324: In addition to the power of the commission to ac- 
quire lands for park purposes by the sale of gênerai bonds of the city 
the commission may, with the approval of the mayor, acquire parks 
and parkways in each district to be paid for by spécial assessments 
upon ail the other real estate in the district, except parks, parkways, 
and streets. 

Section 325 : The commission may acquire real estate for parks 
and parkways by the exercise of the power of eminent domain. 

Section 326 : Parks and parkways so established or such part there- 
of as may be determined by the mayor and the park commission shall 
be paid for by the gênerai bonds of the city and county. 

Section 327 : Whenever the cost of any such park site can be def- 
initely ascertained, bonds may he issued and sold therefor, the proceeds 
thereof may be used exclu sively in the purchase or condamnation of 
park sites and parkways. The bonds so issued shall be paid by spécial 
assessments upon ail the other real estate in the district and "shall be 
paid only out of the moneys collected from said assessments." 



METZ V. CITY AND COUNTT OF DENVER 189 

Sections 327 and 328 describe the methôd of making and collecting 
thèse spécial assessments. 

Section. 329: "No moneys received from any source for any parle 
district shall be expended in or for any other park district." 

The contention of counsel for the complainants below is that the 
section last cited prohibits the use by the commission and mayor 
of any of the moneys collected by means of the gênerai taxation of 
the property in any park district for park purposes in any other 
district. In support of this position they call attention to the fact 
alleged in the bill that the Highland Park district is separated from 
the other districts of the city by the Flatte river, by railroads and 
warehouses, and they argue that parks are improvements local to 
their respective districts; that the division of the city into park 
districts by the charter is conclusive évidence of this fact; that 
benefits to taxpayers must bear some reasonable relation to the 
taxes they are required to pay; that the property of ow^ners cannot 
be taken from them by taxation and then be expended for the ex- 
clusive benefît of third persons; and that the provision of section 
105 that the proceeds of the gênerai bonds of the city and county 
shall be used for acquiring lands in the several park districts for 
parks and parkways in proportion to the assessed value of the real 
estate in each district, and the prohibition in section 103 of the use 
of moneys appropriated for park purposes for any other purpose, 
sustain their contention. Thèse facts and arguments are not with- 
out persuasive power. But there are others as v^rell worthy of con- 
sidération. While parks and parkways in cities are doubtiess of 
more benefit to the résidents and the property in their immédiate 
neighborhoods respectively than to the more remote résidents and 
property in the municipalities, yet they are by the consensus of the 
opinions and acts of the denizens of cities of material benefit to ail 
the citizens and to ail the property within the respective municipal- 
ities. Witness the universal practice of the owners of property in 
cities to tax themselves to acquire and maintain them. They are 
not improvements exclusively local; nor are they improvements ex- 
clusively gênerai. They are both gênerai and local improvements, 
improvements of such gênerai benefit as to sustain gênerai taxation 
of the property within a city to acquire and maintain them, and of 
such local benefit as to sustain spécial assessments upon the prop- 
erty in their respective neighborhoods for the same purpose. Ail 
the sections of the charter of the city and county of Denver must 
be read and construed together to ascertain the true meaning and 
purpose of the enactments therein upon this subject, and each pro- 
vision of the charter must, if possible, be given full force and efïect. 
L,et us read the material provisions of the charter upon this subject 
in the light of thèse established canons of interprétation. Section 
103 merely prohibits the use of moneys, already appropriated for 
park purposes, for any other purpose and it is neither determinative 
nor indicative of the proper décision of the question before us. The 
provision of section 105 that the proceeds of city bonds issued to 
acquire parks and parkways must be used in acquiring lands in the 
several park districts in proportion to the assessed value of the real 



190 188 FEDERAL EEPOBTBK 

estate in each district might be persuasive if it stood alone and, if 
the charter contained nothing more on the subject, that provision and 
section 329 might be conclusive. But section 97 discloses the f act that 
there were five sources from which moneys might be derived for 
park purposes, (1) from gênerai taxation, (2) from appropriations 
from the gênerai revenue by the city council, (3) from the sale of 
privilèges, (4) from the sale of gênerai city bonds, (5) from the sale 
of park district bonds, and it empowers the mayor and the park com- 
mission to expend the moneys derived from each of thèse sources. 
Then comes section 105 which singles out the proceeds from the 
fourth source and requires that part of thèse proceeds derived from 
any indebtedness of the city for the acquisition of parks and parkways 
to be used to acquire them in the respective park districts in propor- 
tion to the valuation of real estate in each district, but leaves the 
commission free to use 'the moneys derived from the other four 
sources wherever their judgment dictâtes. Nor is this ail. That 
identical section authorizes and requires the levy annually of a gên- 
erai tax upon ail the property within 'the city and county, of at 
least one and one-third mills for "an improvement and maintenance 
fund for park purposes" and provides that ail moneys "collected as 
taxes for the maintenance and improvement of parks and parkways 
shall be expended by the commission as in their judgment the needs 
of the several park districts require." Note that the proceeds of the 
city indebtedness for acquiring parks is to be used in the respective 
park districts in proportion to the assessed valuations of real estate 
therein, and that the proceeds of the gênerai taxation of the property 
in the city and county for the maintenance and improvement of the 
parks and parkways is to be expended by the commission wherever 
in their judgment -the needs of the several park districts require that 
expenditure. Now turn to section 329, on which counsel for the com- 
plainants chiefly rely. That section is found in another portion of the 
charter. It foUows sections 324 to 328, which provide a method of 
acquiring parks and parkways by spécial assessments upon the prop- 
erty in the respective districts in which they are situated and by the 
issue and sale of park district city bonds. It déclares that no moneys 
received from any source for any park district shall be expended for 
any other park district. What moneys are received from any source 
under this charter for any park district? The proceeds of spécial 
assessments for the acquisition of parks and parkways, the proceeds 
of park district bonds issued for that purpose and the proceeds of 
city bonds issued for that purpose appropriated by section 105 to the 
respective park districts in proportion to the assessed valuation of 
the real estate in each district. But ail sums of money raised by 
gênerai taxation for the maintenance and improvement of parks and 
parkways are received, not for any park district, but for the entire 
city and county of Denver, and by the express provision of section 
105 the commission is empowered to expend thèse moneys in any park 
district in the city where in their judgment the needs of the several 
park districts require its expenditure. There was no error in the 
decree below and it is affirmed. 



ST. LOUIS MERCHANTS' BEIDGE T. RT. CO. V. VNITED STATES 191 



ST. LOUIS MERCHANTS' BRIDGE TERMINAL RY. CO. V. 

UNITED STATES. 

(Circuit Court of Appeals, Eighth Circuit May 18, 1911.) 

No. 3,337. 

(Syllahus hy the Court.) 

1. ANISfAI-S (§ 34*) — CONTAGIOUS DiSEASES— TRANSPORTATION— ReSTBICTIONS. 

The receipt outside a quarantine district and subséquent trausporta- 
tlon by a rallroad company of live stock that was received for transpor- 
tation, and was trausported by a prevlous carrier from a quarantined 
district in one state into another state, is not an offense under the act 
relating to quarantine districts of March 3, 1905 (chapter 1496, 33 Stat 
12G4 [U. S. Oomp. St. Supp. 1909, p. 1185]). 

[Ed. Note. — For other cases, see Animais, Dec. Dig. g 34.*] 

2. Statutes (§§ 241, 263*) — Pénal Statute Not ïîxtended bt Construction 

TO Parties or Aots Not Denounced. 

A pénal statute plain in Its ternis which créâtes and denounces a new 
offense should be strictly construed. 

It may not be extended by construction to those who are not within 
the class of parties denounced by it, nor to acts whlch are not by tbe 
expressed wlU of the législative department clearly made offenses under 
It, although such parties or acts may in the opinion of a court be as 
Tlcious as those within Its terms. 

Ex post facto construction is as perniclous as ex post facto législation. 

[Ed. Note.— For other cases, see Statutes, Cent Dig. §§ 322, 323, 344; 
Dec. Dig. i§ 241, 263.*] 

3. Animals (§ 34*) — Régulations of Executive Offices Ineffeciivb xo 

Add Offenses to Law. 

Régulations of the Secretary of Agriculture under section 3 of the 
quarantine act of March 3, 1905 (chapter 1496, 33 Stat. 1265 [U. S. Comp. 
St. Supp. 1909, p. 1186]), are Ineffective to add to the class of rallroad 
companies or to the acts denounced by that statute and rallroad com- 
panies that In violation of such régulations receive and transport outside 
a quarantined district Uve stock which bas been received for transporta- 
tion, and has been transported by a prevlous carrier from the quaran- 
tined district in one state Into another state, are not punlshable therefor. 

[Ed. Note. — For other cases, see Animals, Dec. Dig. § 34.*] 

4. CONSTITUTIONAL LaW (| 66*) — REGULATIONS OF EXECUTIVE OfFICER— 

DELEGATION OF POWERS. 

A législative body may delegate to an executive or administrative of- 
fieer the power to flnd some faet or situation on which the opération of 
a law Is conditioned, or to make and enforce régulations for the exécu- 
tion of a statute according to its terms. 

[Ed. Note. — For other cases, see Constltutlonal Law, Cent. Dig. §§ 115, 
117-122 ; Dec. Dig. § 66.*] 

5. CONSTITUTIONAL LaW (§ 60*) — DELEGATION OF LEGISLATIVE POWEE. 

A législative body cannot, however, deleeate its lawmaking power, Its 
power to exercise the indispensable discrétion to make, to add to, to 
take from, or to modify a statute. 

It cannot delegate Its power to add parties or acts to those punlsh- 
able under a statute. 

[Ed. Note. — For other cases, see Constltutlonal Law, Cent. Dig. §S 89, 
90, 93 ; Dec. Dig. § 60.*] 

In Error to the District Court of the United States for the Eastem 
District of Missouri. 

•For other cases «ee same topic & S numbeh In Dec. & Am. Dlga. 1907 to date, &. Rep'r Indexe» 



192 188 FEDERAL REPORTER 

The St. Louis Merchants' Bridge Terminal Raiiway Company was 
convicted of failing to placard the cars and to stamp the waybills of 
cattle in quarantined districts, and brings error. Reversed and re- 
manded. 

Tyson S. Dines (J. L. Howell, on the brief), for plaintiff in error. 
Truman P. Young, Asst. U. S. Atty. (Charles A. Houts, U. S. 
Atty.j on the brief), for the United States. 

Before SANBORN and VAN DEVANTER, Circuit Judges, and 
REED, District Judge. 

SANBORN, Circuit Judge. The St. Louis Merchants' Bridge 
Terminal Raiiway Company complains that it has been convicted and 
fined for failing to placard the cars and to stamp the waybills of cer- 
tain cattle and sheep which had been received by previous carriers in 
quarantined districts in Texas without certificates of inspection and 
had been transported to St. Louis by previous carriers where they 
were delivered to it and whence they were carried by it to the national 
stockyards in Illinois. The ground of its complaint is that its receipt 
of the cattle and sheep and its failure to placard the cars and stamp 
the waybills constituted no violation of any law of the United States. 
Counsel for the government, on the other hand, contend that thèse 
acts are punishable under Act March 3, 1905, c. 1496, § 1, 33 Stat. 
1264 (U. S. Comp. St. Supp. 1909, p. 1185). The question is whether 
or not that statute includes in the class subject to its penalties a carrier 
that neither receives the live stock for transportation in nor transports 
it out of the quarantined district. The provisions of that act which 
condition the answer to this question are thèse : 

By section 1 the Secretary of Agriculture is authorized to quarantine 
any district when he finds that live stock therein are afïected with any 
contagious or infectious disease and is directed to give notice of his 
action — 

"to the proper offlcers of railroad, steamboat or other transportation com- 
panies doing business In or through any quarantined state or territory, or the 
District of Columbia, and to publlsh in such newspapers In the quarantined 
State or territory, or the District of Columbia, as the Secretary of Agriculture 
may sélect, notice of the establishment of quarantine." 

Section 2 provides : 

"That no railroad company • » * shall recelve for transportation or 
transport from any quarantined state * * * or from the quarantined 
portion of any state ♦ * * into any other state ♦ » • any cattle or 
other live stock, except as hereinafter provided." 

Section 3 empowers the Secretary of Agriculture to make régula- 
tions to — 

"govern the Inspection, disinfection, certification, treatment, handiing and 
method and manner of delivery and shlpnient of cattle or other live stock 
from a quarantined state * • * and from the quarantined portion of a 
state * * * into any other state, * * • and the Secretary of Agri- 
culture shall give notice of such rules and régulations in the manner pro- 
vided in section 2 (one) of this act for notice of establishment of quarantine." 



ST. LOUIS MERCHANTS' BRIDGE T. UT. CO. V. UNITED STATES 193 

Section 4 déclares that live stock — 

"may be moved from a quarantined state * * • or from the quarantined 
iwrtion of a state * * * into any other state * • * under and in 
compliance wlth the ruies and régulations of tlie Secretary of Agriculture 
made and promulgated in pursuance of the provisions of section 3 of this 
act ; but it shall be unlawful to move, or to allow to be moved, any cattle or 
other live stock from any quarantined state * * • or from the quaran- 
tined portion of any state * ♦ * into any other state * * • In man- 
ner or method or under conditions other than those prescribed by the Secre- 
tary of Agriculture." 

The provisions of section 5 hâve no relevancy to the issue under 
considération. 

Section 6 provides that any person, company, or corporation "vio- 
lating the provisions of sections 2 or 4" shall be punished by fine or 
imprisonment, or both. 

The Secretary of Agriculture made régulations under section 3 to 
the effect that, when cattle or sheep of the character of those carried 
in the case at bar were shipped from a quarantined district, thetrans- 
portation company should aiifix a descriptive placard to each side of 
each car carrying them, and should stamp the waybills with descrip- 
tive words such as "uninspected exposed cattle" and "exposed sheep 
for slaughter," and that: 

"Wlienever such shipments are transferred to another transportation com- 
pany or into other cars or into other boats, or are rebilled or reconsigned to 
a point other than the original destination, the cars into which said cattle 
or sheep are transferred and the new waybills • * * shall be marked as 
herein specifled for cars first carrying said cattle or sheep and for the billing, 
etc., covering the same. If for any reason the placards required by the régu- 
lations are removed from the car, or are destroyed or rendered illegible, 
they shall be immediately replaced by the transportation company or its 
agents, the Intention being that legible placards shall be maintained on the 
cars from the time of shipment until they arrive at destination and the dis- 
position of the cars is indicated by an inspecter of the Bureau of Animal In- 
dustry," 

[2] A pénal statute vifhich créâtes and denounces a new offense, and 
the act under considération is such a statute, should be strictiy con- 
strued. A man ought not to be punished unless he f ails plainly within 
the class of persons specifled as punishable by such a law. The défini- 
tion of oflfenses and the classification of ofïenders are législative and 
not judicial functions, and where, as in the case at bar, a pénal statute 
is plain and unambiguous, the courts may not lawfully extend it to a 
class of persons who are excluded from its effect by its terms, nor by 
interpolation or construction after their commission make acts offenses 
which were not clearly such by the expressed will of the législative de- 
partment. The création of an offense by ex post facto construction is 
as pernicious as its création by an ex post facto law. United States 
V. Wiltberger, 5 Wheat. 76, 96, 5 L. Ed. 37 ; United States v. Ninety- 
Nine Diamonds, 72 C. C. A. 9, 12, 13, 139 Fed. 961, 964, 965, 2 L. 
R. A. (N. S.) 185; United States v. Clayton, Fed. Cas. No. 14,814; 
In re McDonough (D. C.) 49 Fed. 360; Maxwell v. State, 40 Md. 
293; Alexander v. Worthington, 5 Md. 472; Smith v. State, 66 Md. 
215, 7 Atl. 49; Tyman v. Walker, 35 Cal. 634, 95 Am. Dec. 152; 
188 F.— 13 



1.94 188 FEDERAL REPORTEE 

Lake County v. Rollins, 130 U. S. 662, 670, 9 Sup. Ct. 651, 32 L. Ed. 
1060; Swarts v. Siegel, 54 C. C. A. 399, 117 Fed. 13. 

In United States v. Wiltberger, S Wheat. 96, 5 L. Ed. 37, Chief 
Justice Marshall said: 

"The case must be a strong one, Indeed, whlch would justlfy a court in 
departlng from the plaln meaning of words, especially, in a pénal act, in 
search of an intention whleh the words themselves did net suggest. To dé- 
termine that a case is wlthin the intention of a statute, Its language must 
authorize us to say so. It would be dangerous, indeed, to carry the prineiple 
that a case, whlch is wlthin the reason or mischlef of a statute, is withln its 
provisions, so far as to punish a crime not enumerated in the statute, be- 
cause it is of equal atrocity, or of klndred character, with those whlch are 
enumerated." 

[1] There is no ambiguity in the terms of the act under which the 
plaintifï in error has been fined, there is no uncertainty in the class, 
or in the limits of the class of railroad companies punishable under 
this law. That class consists of railroad companies "doing business 
in or through any quarantined state or territory," to whom alone 
notice of the establishment of quarantine and of the rules and régu- 
lations of the secretary is required to be given by sections 1 and 3, 
that "shall receive for transportation or transport from any quar- 
antined state or territory, or the District of Columbia, or from the 
quarantined portion of any state or territory, or the District of 
Columbia, into any other state or territory, or the District of Colum- 
bia, any cattle or live stock, except as hereinafter provided" (section 
2), or that shall "move or allow to be moved any cattle or other live 
stock from any quarantined state or territory, or the District of 
Columbia, or from the quarantined portion of any state or territory, or 
the District of Columbia, into any other state or territory, or the Dis- 
trict of Columbia, in manner or method or under conditions other 
than those prescribed by the Secretary of Agriculture" (section 4). 

The terminal company was not charged in the information filed 
against it or proved at the trial to hâve been a member of this class. 
It owned and operated railroads in the immédiate vicinity of the city 
of St. Louis and performed only the usual functions of a terminal 
Company. The quarantined districts were in the state of Texas. It 
was not "doing business in or through" any of those districts. It 
never "received for transportation or transported" any live stock or 
"moved" any live stock "from any quarantined state" or "the quar- 
antined portion of any state" into any other state or territory in man- 
ner or method or under conditions other than those prescribed by the 
Secretary of Agriculture. If any offense was ever committed under 
the act of March 3, 1905, in the receipt for transportation, carn'age, 
or movement of the cattle or sheep that the défendant below hauled 
from St. Louis to Illinois, that offense had been committed and com- 
pleted long before that company received them, by some earlier car- 
rier that took them for transportation and carried them from the 
quarantined district in Texas into some other state. There is no pro- 
vision or permissible construction of the statute under considération 
that can add to or include in the class of railroads punishable there- 
under transportation companies that receive and carry live stock that 



ST. LO0IS MERCHANTS' BKIDGE T. RT. CO. V. UNITED STATES 195 

has already been taken out of the quarantined district by other com- 
panies in violation of that law. 

[3] Counsel say, however, that the Secretary was authorized to 
make rules and régulations for the inspection, handling, delivery, and 
shipment of the hve stock under section 3 of the act, that he made 
such régulations for their handling- by every railroad company that 
received them from the time they started out of the quarantined dis- 
trict until they reached their destination, whether those companies 
received them within and transported them out of the quarantined 
district or received them after they had been taken out of that dis- 
trict and subsequently transported them, and that the terminal company 
received this stock at St. Louis and carried them to Illinois on their 
way from the quarantined district to their destination in Illinois and 
thus violated the rules. But it is a principle of criminal law that an 
offense which may be the subject of criminal procédure must be an 
act committed or omitted, "in violation ôf a public law either forbid- 
ding or commanding it." 4 Blackstone's Comm. 5. The acts charged 
and proved against the terminal company were not violative of any 
such law. The Congress did not in fact delegate, and it could not 
delegate, to the Secretary of Agriculture, or to any other executive 
officer the power to add to the class of railroad companies or to the 
acts punishable under this statute such others as in his judgment ought 
to be punishable thereunder. 

[4] A législative body may delegate the power to find some fact or 
situation on which the opération of a law is conditioned, or to make and 
enforce régulations for the exécution of a statute according to its 
terms. Union Bridge Co. v. United States, 204 U. S. 364, 386, 27 Sup. 
Ct. 367, 51 L. Ed. 523; Marshall Field & Co. v. Clark, 143 U. S. 
649, 677, 693, 694, 12 Sup. Ct. 495, 36 L. Ed. 294; Caha v. United 
States, 152 U. S. 211, 218, 219, 14 Sup. Ct. 513, 38 L. Ed. 415; St. 
Louis & L M. Ry. v. Taylor, 210 U. S. 281, 287, 28 Sup. Ct. 616, 52 
L. Ed. 1061 ; Coopersville Co-operative Creamery Co. v. Lemon, 163 
Fed. 145, 147, 89 C. C. A. 595. 

[5] But it cannot delegate its législative power, its power to ex- 
ercise the indispensable discrétion to make, to add to, to take from, 
or to modify the law. "The true distinction," said Judge Ranney for 
the Suprême Court of Ohio in Cincinnati, Wilmington & Zanesville R. 
R. Co. v. Commissioners, 1 Ohio St. 77, 88, in a déclaration which has 
been repeatedly approved by the Suprême Court, "is between the délé- 
gation of power to make the law, which necessarily involves a dis- 
crétion as to what it shall be, and conferring authority or discrétion as 
to its exécution, to be exercised under and in pursuance of the law. 
The fïrst cannot be done. To the latter no valid objection can be 
made." Marshall Field & Co. v. Clark, 143 U. S. 649, 693, 12 Sup. 
Ct. 495, 36 L. Ed. 294; Union Bridge Co. v. United States, 204 U. S. 
364, 382, 27 Sup. Ct. 367, 51 L. Ed. 523; Morrill v. Jones, 106 U. 
S. 466, 467, 1 Sup. Ct. 423, 27 L. Ed. 267; United States v. Eaton, 
144 U. S. 677, 687, 688, 12 Sup. Ct. 764, m L. Ed. 591 ; United 
States v. Maid (D. C.) 116 Fed. 650; United States v. Blaslingame 
(D. C.) 116 Fed, 654; United States v. Hoover (D. C.) 133 Fed. 



196 188 FEDERAL REPORTER 

950, 952 ; United States v, Moody (D. C.) 164 Fed. 269, 271 ; Locke's 
Appeal, 72 Pa. 491, 498, 13 Am. Rep. 716. 

The attempt of the Secretary of Agriculture to add by his régula- 
tions to the class of railroad companies and to the acts punishable 
under the quarantine act of March 3, 1905, other railroad companies 
and other acts was unauthorized and inefïective. No offense was 
charged in the information or proved against the défendant below, 
the judgment is reversed, and the case is remanded to the court be- 
low, with directions to sustain the demurrer to the information and to 
discharge the terminal company. 



In re STURTBVANT et al. 

RXDBEKG V. SMITH. 

(Circuit Court of Appeals, Seventà Circuit April 11, 1911.) 

No. 1,755. 

Bankeuptcy (§ 161*) — Peepekence— Delat in Recoedinq Chattbl Moet- 

GAGE. 

Under Bankr. Act July 1, 1898, c. 541, § 60a, 30 Stat. 562 (U. S. Comp. 
St. 1901, p. 3445), as amended by Act Feb. 5, 1903, c. 487, § 13, 32 Stat. 
799 (U. S. Comp. St. Supp. 1909, p. 1314), which provides that a transfer 
by a debtor, being Insolvent, within four montlis prier to liis bankruptcy, 
by which one créditer will obtain a greater percentage of his debt than 
others of the same class, shall constitute a préférence, and that, where 
the préférence consists in a transfer, the four-month period shall not ex- 
pire untll four months after the date of the reoording of the transfer if 
by law such recording is required, a chattel mortgage given by a bank- 
rupt when solvent, in good faith and for a présent considération, does 
not become a préférence because not recorded until within four months 
prier to the bankruptcy, where, under the state law as construed by its 
Suprême Court, the failure to record does not afCect the validity of the 
mortgage as between the parties nor as against gênerai creditors of the 
mortgagor, and it takes efCect as of the date of its exécution. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. DIg. §§ 261-263; 
Dec. Dig. § 161.*] 

Appeal from the District Court of the United States for the West- 
ern Division of the Northern District of Illinois. 

In the matter of Alva G. Sturtevant and Esther Nygren, copartners 
as Nygren & Co., bankrupts. John Z. Rydberg, exécuter of the estate 
of John Blomberg, deceased, appeals from an order of the District 
Court. Reversed. 

Appellant appeals from the order of the District Court disallowing ail 
rlghts and beneflts asserted under a certain chattel mortgage securing the 
claim of his testator against the bankrupts. 

The facts are stipulated into the record as follows, viz.: That on Aprll 30, 
1907, the bankrupts duly executed and delivered to sald testator, John Blom- 
berg, In his lifetlme, their promlssory note for $2,000 due on or before three 
years after date, together with their chattel mortgage securing payment 
thereof, covering certain chattel property consisting of a building sltuate in 
the city of Rockf ord, 111. ; that said note and mortgage were given for a 
then présent and valid considération of $2,000, paid over to said bankrupts ; 
that sald mortgage was not recorded until October 5, 1909, 15 days prier to 

♦For other cases see same topic & § numbbb in Dec- & Am. Dlgs. 1907 to date, & Rep'r Indexes 



IN EE STUETEVANT 197 

tlie fillng of the pétition In bankruptcy ; that Blomberg had been pressing the 
bankrupts for tbe payment of overdue iuterest, but had been able to colîect 
only a small portion thereof ; tbat practicaUy ail tlie liabilities scheduled by 
the bankrupt had accrued slnce Aprll 30, 1907, and prior to the flling of the 
inortgage ; that the creditors had no knowledge of the existence of the mort- 
gage uutil it was flled for record ; that no fraud is claimed other than the 
withholding of said mortgage from record ; and that said bankrupts were not 
insolvent at the time of the exécution and delivery of said note and mortgage. 
It was further stipulated that the trustée should sell said building for $800, 
which sum should stand in lieu of the building and abide the court's adjudi- 
cation of Blomberg's rights. 

Subsequently to the entry of the order of the court disallowlng the claim 
of said Blomberg to the security and benefit of said mortgage he, said Blom- 
berg, departed this life testate, and his said executor was substituted herein. 
The référée held that the filing of the mortgage for record wlthin the four 
months period created a préférence, and disallowed the same, but allowed the 
note as a gênerai clalm against the bankrupts' estate. This order, on pétition 
for review, the District Court approved and conflrmed. 

The only question presented is whether the recording of the chattel mort- 
gage wlthin the four-mooth period, under the circumstances of this case, 
created a préférence wlthin the meaning of section 60a of the bankruptcy 
aet. Section 60a reads as foUows, viz.: "A person shall be deemed to hâve 
given a préférence, if, being Insolvent, he bas, wlthin four months of the filing 
of the pétition, or after the flling of the pétition, and before the adjudication, 
procured or suffered a judgnient to be entered against hlmself In favor of 
any person, or made a transfer of any of his property, and the effect of the 
enforcement of such judgment or transfer will be to enable any one of his 
creditors to otitain a greater percentage of his debts, than any other of such 
creditors of the same class. Where the préférence consists in a transfer, such 
period of four months shall not expire until four months after the date of the 
recording or registering of the transfer, If by law such recording or register- 
Ing is required.'' See, also, section 3b of the act. 

The Illinois statute covering chattel mortgages (Hurd's Statutes 1908, c. 
95, § 1) provides: "That no mortgage, trust deed or other conveyance of Per- 
sonal property, having the effect of a mortgage or lien upon such property, 
shall be valid as against the rights and Interests of any third person, unless 
possession thereof shall be delivered to and remain with the grantee or the 
Instrument shall provide for the possession of the property to remain with 
the grantor and the Instrument is acknowledged and recorded as hereinafter 
directed. And every such instrument shall for the purpose of thls act be 
deemed a chattel mortgige." 

G. E. Johnson, for appellant. 
Richard F. Locke, for appellees. 

Before GROSSCUP, BAKER, and KOHLSAAT, Circuit Judges. 

KOHLSAAT, Circuit Judge (after stating the facts as above). Un- 
der the Illinois statute, a chattel mortgage is good as against the 
mortgagor and those representing him, even though unacknowledged 
(McDowell V. Stewart, 83 111. 538), or unrecorded (Barchard v. Kohn, 
157 111. 579, 41 N. E. 902, 29 L. R. A. 803). As against creditors 
and third parties, an unrecorded mortgage prevails over ail claimants 
not armed with an exécution or writ of attachment or other process 
of the courts, subséquent incumbrancers, purchasers in possession, or 
other adverse possession based upon some lien. Sumner v. McKey, 89 
m. 127; Union Trust Co. v. Trumbull et al, 137 111. 146, 27 N. E. 24; 
Hooven v. Burdette, 153 111. 672, 39 N. E. 1107; Grafe v. Schoen- 
hof en Brewing Company, 78 111. App. 570 ; Allcock v. Loy, 100 111. 
App. 574; Hansen v. Bruckman, 152 111. App. 18; Hock v. Mager- 



198 188 FEDERAL EEPOETBR 

stadt, 124 111. App. 140. In re Antigo Screen Door. Co., 123 Fed. 249, 
59 C. C. A. 248. 

There can be no doubt but that, under the Illinois statute, Blomberg 
perfected his lien as against the gênerai creditors of the bankrupts 
by causing his mortgage to be recorded before any subséquent title 
attached. Assuming, then, as is hère conceded, that the original ex- 
écution and delivery of the note and chattel mortgage were made in 
good faith, that the makers were solvent at the date of the transaction, 
that there was no fraudulent withholding of the mortgage froin rec- 
ord, and that the whole transaction was had in good faith, did the 
recording of the mortgage within the four-month period bring the 
subject-matter within the disabilities of section 60a? The référée 
held that it did, basing his opinion upon First National Bank of Buch- 
anan Co. v. John A. Connett, Trustée, etc., 142 Fed. 33, 73 C. C. A. 
219, 5 L. R. A. (N. S.) 148, and Loeser, Trustée, etc., v. Savings 
Deposit Bank & Trust Co., 148 Fed. 975, 78 C. C. A. 597. The case 
first named came to the Circuit Court of Appeals for the Eighth Cir- 
cuit from the Western District of Missouri. The décision of the 
Court of Appeals is based upon the construction of the Missouri stat- 
ute by the Missouri courts, given before the amendment of 1903 to 
section 60a. "If," says the court, "one (a mortgage) is given before 
(the four months period) but is recorded within that period, and, un- 
der the local law, the fiction of relation back to the date of exécution 
is not indulged in, but, on the contrary, the instrument is deemed to 
hâve first corne into existence as a mortgage, when recorded, the trus- 
tée may likewise defeat it if the condition of a voidable préférence 
appear." The Illinois Suprême Court in Dean v. Plane, 195 111. 500, 
63 N. E. 274, has held that a transfer takes place as of the date of 
the exécution and delivery of the note and mortgage. 

The facts in Loeser v. Savings Deposit & Trust Co., supra, so far 
as material hère, were conceded by the holder of the mortgage to be 
as f ollows, viz. : 

"That at the tlme the chattel mortgage was executed by Cassie L. Chad- 
wlek, to wit, Aprll 27, 1904, and delivered to J. 0. Hill, its président, that 
said Cassie L. Chadwlck was Insolvent and that said J. C. Hill as président 
of said bank had reasonable cause to believe at that tlme that she was In- 
solvent, and that such condition exlsted on the 22d day of November, 1904," 
(The date when possession was taken and the mortgage recorded.) 

Manifestly, this case comes within the language and meaning of 
section 60a. Neither of the two, however, are hère in point upon the 
facts. We do not concur in the construction given to section 60a by 
the référée and sustained by the District Court as applied to the 
présent case. That section applies to cases "where a préférence con- 
sists in a transfer." Hère the transfer when made constituted no 
préférence. If the word "required" of section 60a is to be construed 
as referring to a transaction which would be invalid for ail purposes, 
then it does not apply to the case in hand, for the recording of the 
mortgage is not required in that sensé under the Illinois statute. The 
recording laws are only for the purpose of notice. Dean v. Plane, 
195 111. 495-500, 63 N. E. 274. This construction of section 60a does 
not strike at the object sought to be attained by the amendments of 



IN RE 8TURTETANT 199 

1903. It would formerly hâve been an easy matter to make a prefer- 
ential transfer prior to the beginning of the four-month period, and 
withhold the transfer instrument from record until after the period 
had begun to run, thus defeating the benefit contemplated by the créa- 
tion of that period. Manifestly Congress must hâve construed the 
law as it then stood as making the transfer to date from the time it 
was actually made, without regard to the date of fiUng for record. 
Therefore a transfer, though fraudulent, could not hâve been attacked, 
even though the instrument evidencing the transfer were recorded 
within the four months. In order to cure this, the amendment was 
added, so that no fraudulent transfer constituting a préférence could 
escape the four-month provision unless the recording was effected 
prior to that period. 

In Eppstein v. Wilson, 149 Fed. 197, 79 C. C. A. 155, the Circuit 
Court of Appeals for the Fifth Circuit sustained the lien of an un- 
registered chattel mortgage given only six days before the pétition 
in bankruptcy was filed to secure an existing debt, on the ground that : 

"The référée does not find that the bankrupt was insolvent at the time the 
mortgage was executed, or that there was any fraud in the inception or ex- 
écution of the mortgage." 

This involved the Texas statute which is, so far as the question 
hère involved, substantially like that of Illinois as interpreted by the 
Illinois courts. 

In Meyer Bros. Drug Co. v. Pitkin Drug Co., 136 Fed. 396, 69 
C. C. A. 240, the same court held that under the Texas statute a chat- 
tel mortgage made and delivered more than six months before the 
filing of the pétition in bankruptcy, but recorded only 22 days before 
such filing, was a valid lien, there being no proof of insolvency or 
fraud at the time the transfer was made. "We think," says the court, 
"it follows that the chattel mortgage in this case was valid between 
the bankrupt and the holders thereof, and as to ail parties shown to 
be interested in the bankrupt's estate, whether the said mortgage 
was recorded or not. It cannot be said, therefore, that the mortgage 
was one required to be registered or recorded under section 3328 of 
the Revised Statutes of Texas of 1895, nor that the granting of said 
mortgage constituted a préférence within the four months under 
section 60a of the bankrupt law." 

To the same effect is In re Doran, 154 Fed. 467, 83 C. C. A. 265, 
decided by the Circuit Court of Appeals for the Sixth Circuit in 1907 
construing the Kentucky law, which in substance is the same as that 
of Illinois. 

In re Beckhaus, 177 Fed. 141, 100 C. C. A. 561, relied upon by the 
trustée herein, is not in point. In that case one Rasmussen sought to 
recover certain personal property from the trustée claiming the same 
under and by virtue of a certain unrecorded preferential agreement 
or conveyance made when the bankrupt was insolvent, which prop- 
erty was never reduced to possession by Rasmussen. 

The eiïect of the amendment to section 60a upon the record within 
the four-month period and prior to the filing of the pétition in bank- 
ruptcy of a transfer valid when made was not before or considered by 



200 188 FEDERAL REPORTER 

the court. It was there held that the trustée, under the f acts of that 
case had sufficient title to refuse to recognize the transf er, foUcwing, 
in substance, the décision of this court in Re Bernent, 172 Fed. 98, 96 
C. C. A. 412. 

While there may be found in the reports cases which seem to hold 
contrary to the foregoing, an examination of each case will disclose 
that the décisions in such cases are based upon construction of the 
several state'statutes by the local or state courts. 

The order of the District Court appealed from is reversed, with 
directions to proceed further in accordance herewith. 



PARLETT et al. v. BLAKE. 

(Circuit Court of Appeals, Eighth Circuit May 18, 1911.) 

No. 3,400. 

Bankbuptcy (§ 140*) — AssETS— Bailment and Sai,e. 

Where certain agency contracts appointed the ibankrupt agent for the 
sale of manufacturera' furniture and carpets for a perlod ending July 1, 
1899, the contraet providing that the bankrupt, on final termination of 
the agreement, agreed "to buy and pay for at the then current priées 
and on the regular terms, such goods as might be then on hand," the 
contraet was not executory as to the goods remalning at the termination 
of the contraet, but, as to such goods, constituted a sale, so that the 
title to the goods so remalning passed to the bankrupt's trustée. 

[Ed. Note. — For other cases, see Banliruptcy, Cent. Dig. § 225; Dec. 
Dig. § 140.*] 

Appeal from the District Court of the United States for the 
Western District of Missouri. 

In Bankruptcy. Pétition by George F. Parlett and another to 
recover possession of certain furniture against Daniel F. Blake, 
trustée in bankruptcy of Hallack-Deamer Carpet Company. From 
an order dismissing the pétition, affirmed by the District Court, 
petitioners appeal. Affirmed. 

On June 19, 1908, the Hallack-Deamer Carpet Company, the bankrupt, made 
a written contraet with the Coppes, Zook & Mutschler Company of Nappanuee, 
Ind., as follows: "This agreement entered into this 19th day of June, 1908, 
between the Coppes, Zook & Mutschler Co., of Nappanuee, Indiana, party of 
the flrst part, and the Hallack-Deamer Carpet Co., of Kansas City, Missouri, 
party of the second part, witnesseth: That for the period of one year, ending 
July 1, 1909, said party of the second part hereby agrées to act as the agent 
of the party of the first part in efflecting sales of furniture manufactured by 
said flrst party » * * to the furniture trade in the following terrltories, 
vlz.: The state of Kansas and the western part of Missouri, after the follow- 
ing gênerai manner, to wit: Said second party agrées to maintain a représent- 
ative line of samples of the furniture manufactured by the said flrst party 
on the floor in their store in Kansas City for use in solicitlng trade from 
vislting buyers, also solicit trade from the furniture dealers in the aforesaid 
territory by means of their traveling salesmen, catalogs, and other usual means 
of advertising. Said second party further agrées that ail sales made under this 
agreement shall be made at the priées as directed by the party of the flrst 
part. * • * Said party of the second part further agrées to make report 
daily to said flrst party of ail sales effected on aceount of said flrst party, 

*For other cases see same toplc & § nxjmber In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



PAELETT V. BLAKE 201 

together with ail terms and agreements relative to sald sales. • • • It 
Is further agreed that the said flrst party shall, for themselves, détermine 
upon the orders to be by them accepted and the amount of crédit to he ex- 
tended, and In the event ttiat sales hâve been made and goods delivered by 
Baid second party before said flrst party bas expressed their approval of said 
sale, then it shall be at the option of sald flrst party to charge sald sale to 
the account of the Hallacli-Deamer Carpet Co., at the regular terms and so 
notify them promptly. 

"ïo the end that business may be expedited and goods promptly delivered 
to the trade in Kansas City and nearby points, the said party of the flrst 
part agrées to l^eep on hand, on consignment with the Hallack-Deamer Carpet 
Co., snch goods as may be necessary to supply the needs of the business re- 
sulting under this agreement, and to replenish such stoclc from time to time 
upon the order of the party of the second part, and further to make their 
best endeavor to ship promptly such goods as are ordered to be shipped di- 
rect to the trade, or in mixed cars from Nappannee, Indiana. 

"The party of the second part agrées to furnish suitable warehouses In 
which to store the aforesaid goods and to keep them insured against loss or 
damage, by flre or vrater, to the amount of 90 per cent, of their value, for and 
on account of the Coppes, Zook & Mutschler Co. Also to do ail necessary 
labor in handling, caring for, packing, transferring and shipping said goods, 
and at the final termlnation of this agreement to buy and pay for at the 
then current priées and the regular terms such goods as may be then on hand. 
• * * 

"It Is further agreed that the regular terms of sale shall be sixty days net 
or two per cent, discount for cash witbin thirty days, and that in the event 
that goods are to be shipped to Chicago or other nearby points for loading In 
mixed cars, that the freight charges to such points shall be prepaid by the 
party of the first part. * * * In considération of the aforesaid agree- 
ment and that the party of the second part shall at ail times make their best 
endeavor to effect said sales, to reliable and responsible trade and to care for 
the delivery in a thoroughly satisfactory manner such goods as are earried 
by them on consignment under this agreement, the party of the flrst part 
agrées to pay, and the party of the second part agrées to recelve in full pay- 
ment for ail services rendered, a commission fee of 10 per cent, of the gross 
amount of the sales accepted and shipped. Said commission to be due and 
payable on the lOth day of each month, upon ail business transacted during 
the previous calendar month." 

On July S, 1908, the Carpet Company made a lilte contract with the Lincoln 
Upholstering Company of Lincoln, Nebraska, for a like period ending July 1, 
1909. ïhese contracts were not acknowledged cr recorded. Under them the 
Zook Cempany and the Lincoln Company each shipped goods to the Carpet 
Company. Tags were attached to thèse goods Indicating from whom they 
were shipped. Separate accounts were Ivcpt shovi'ing the sales made from tnem 
respectively. After May, 1909, the business of the Carpet Company became 
dull and remittances to the consignors became irregular but business went 
on as before and continued with no material change until August 3, 1909, 
when a représentative of the Coppes, Zook Company went to Kansas City, 
examined into the condition of things and determined to remove the goods 
then on hand consigned by bis company from the Carpet Company's store; 
was abont to do so when Mr. Deamer, the président of the Carpet Company, 
suggested that it would hurt bis business if a large amount of goods should 
be removed and asked if some arrangement could not be made by which the 
goods could be left in the store. It was finally determined that they should 
be turned over to Mr. George F. Parlett, who was then an employé of the 
Carpet Company, to be disposed of for account of the Coppes, Zook Company. 
A similar arrangement was made by the Lincoln Upholstering Company with 
respect to goods shipped by it to the Carpet Company then on hand. 

Pétition was filed on August 30, 1909, in the court below by the creditors 
of the Carpet Company seeking its adjudication in bankruptcy. The adjudi- 
cation followed on October 7, 1909. Later Parlett (and his wife who seems 
to hâve become jointly interested with him in his project) flled an intervenlng 
pétition clalming as against the trustée of the Carpet Company In bankruptcy 



202 188 FEDERAL REPORTER 

the ownership and possession of the goods turned over to them by the two 
consigner companies. Thelr claim was denled by the court below and the 
case Is brought hère by appeal. 

Otto Basye (Chas. W. Webster, on the brief), for appellants. 
Albert R. Strother, for appellee. 

Before SANBORN and ADAMS, Circuit Judges, and WM. H. 
MUNGER, District Judge, 

ADAMS, Circuit Judge (after stating the facts as above). In the 
view we take.of this case it is unimportant to dwell upon the arrange- 
ment between George F. Parlett and his wife, Anna B. Parlett, in- 
terveners hère, and the two consigner companies. Suffice it to 
say the évidence shows that the Carpet Company was at the time 
of the transfer insolvent, and that the Parletts paid no considéra- 
tion to that Company for the goods transferred to them. If, there- 
fore, the goods belonged to the Carpet Company the transfer was 
without considération and in fraud of the rights of its creditors. If 
they belonged to the consignors the transférées stand in their shoes 
and acquired their rights of property only. 

The question then is whether the title to the goods on hand at 
the end of the contract period, July 1, 1909, passed to the Carpet 
Company or remained in the consignors. If the latter be the case, 
the trustée in bankruptcy had no concern with them. If the former, 
he is their owner, and the interveners were properly nonsuited. 

The contracts in question were primarily contracts of agency for 
the sale of the consignors' goods for a period ending July 1, 1909. 
Goods were to be intrusted to the agent by them for sale and any 
that were actually sold prior to that time were the goods of the 
principals, and the proceeds less the commission reserved belonged 
to them and had to be accounted for. Whether this relation of 
agency ceased on July 1, 1909, dépends upon the true interprétation 
of this clause of the contract : 

"The party of the second "part [the agent] agrées ♦ * ♦ at the final 
termlnatlon of this agreement to buy and pay for at the then current priées 
and the regular terms such goods as may be then on hand." 

In Sturm v. Boker, 150 U. S. 312, 329, 14 Sup. Ct. 99 (37 L. Ed. 
1043), it is said: 

"The recognlzed distinction between ballment and sale Is that when the 
Identleal article Is to be returned in the same or in some altered form, the 
contract Is one of ballment, and the tltle Is not changed. On the other hand, 
when there is no obligation t» return the spécifie article, and the receiver Is 
at llberty to return another thlng of value, he becomes a debtor to make the 
return, and the tltle to the property Is changed; the transaction Is a sale." 

In Re Columbus Buggy Co., 74 C. C. A. 611, 143 Fed. 859, 861, 
this court said: 

"The power to requlre the restoratlon of the subjeet of the agreement Is 
an Indellble Incident of a contract of ballment." 

The contracts before us, disclosing no obligation or right in the 
agent to return the undisppsed of goods to the consignors but the 
contrary and inconsistent obligation "to buy and pay for them," are, 



PAELETT V. BLAKE 203 

therefore, in our opinion, not contracts of bailment. They stand on a 
différent footing f rom the goods received and sold before the expira- 
tion of the contract period. Thèse undoubtedly were bailments, and 
it is equally clear, we think, that the goods remaining undisposed of 
on July Ist, became by virtue of the provisions of the contracts, the 
property of the erstwhile bailees. 

It is suggested that the clause of the contracts under considération 
is executory, imposing an obligation to do something in the future 
rather than constituting a conclusive and final sale of such goods as 
might remain undisposed of at the end of the contract period. 

If the clause had read: 

"The party of the second part" (the agent) "agrées * • ♦ at the 
final termlnatlon of this agreement to pay for" (instead of "to buy and.pay 
for") "* ♦ • such goods as may be then on hand" — 

we think it could not be successfully claimed that the obligation to 
keep and pay for the goods was executory. A written obligation to 
"buy and pay for" goods in one's possession at a given fixed time does 
not seem essentially différent from an obligation "to pay for" them 
at that time; and when we are striving to ascertain the intention of 
practical men in the language employed in a business contract, it is 
difficult to imagine that such minds would regard the two obligations 
thus expressed as at ail différent. Let us suppose the goods had been 
destroyed by fire while in the possession of the agent charged as it 
was with the obligation "to buy and pay for them" ; can it be doubted 
that the consignors could hâve recovered from the agent the price 
which it had agreed to pay for them ? We think not. 

The contracts in their main and substantial aspect were, as already 
stated, agency contracts for a year's period. The object obviously 
was to dispose of as much merchandise as possible during that period. 
What would promote that object more than an obligation imposed 
upon the agent to keep and pay for such goods as it did not sell? It 
was, we think, in this natural and serviceable sensé that the words of 
the contract in question creating the obligation "to buy and pay for" 
were employed. By requiring the agent to keep and pay for such 
goods as it did not sell to the trade during the year the business would 
naturally be promoted and the agency could be at once automatically 
and effectually wound up at the end of the year. This, in our opinion, 
was the clear intent and meaning of the parties in using the words 
"to buy and pay for," and under well-recognized rules of construction 
we should recognize and enforce it if possible. Moreover, there does 
not appear to hâve been any scope for the opération of an executory 
promise to buy. 

Before the end of the year goods had been delivered to the Carpet 
Company for two purposes ; some to be sold to the trade for account 
of the consignors, and the remainder to be paid for by the Carpet Com- 
pany at current priées. Those that remained undisposed of at the 
end of the year were the subject of ready identification and thereby 
became the definite and certain subject of sale. The consignors had 
nothing to do but accept the purchase price. They had no option to 
take the goods or légal right to get them. The Carpet Company had 



204 188 FEDERAL EEPOETBE 

no légal rîght to return them. Its right as well as its obligation was to 
pay for them and that was ail. 

In view of thèse facts, we fail to discover any occasion or oppor- 
tunity for further bargaining. The contracts as originally made op- 
erated proprio vigore upon a subject of sale which was to become and 
had become definite and. certain. 

It is said in Mechem on Sales, vol. 1, § 2: 

"There may be an agreement whose légal efïect Is that the tltle shall not 
pass until a future time, elther because, in the case of an ascertalned chat- 
tel, something remains to happen or be perforined which the parties hâve 
treated as précèdent, or because the particular chattel whose title Is to be so 
transferred has not yet been ascertalned. This is an agreement to sell, called 
often, for purposes of further distinction, 'an executory sale.' It does not 
become a sale until the précèdent event has happened or the condition bas 
been performed. It then becomes a sale by force of the présent agreement 
aided or completed by the happening of that event or the performance of 
that condition." 

This is our view of the présent case. The original contracts, on 
July 1, 1909, operated upon the undisposed of goods, and by force 
of their provisions transferred the title at once and unconditionally 
to the Carpet Company, on the terms specifled. This, we think, ex- 
presses the intention of the contracting parties as manifested by the 
whole instruments, the objects to be accomplished and the conduct 
of the parties. 

Counsel for intervenors invoke the doctrine of the following cases 
in support of their claim to the property in question : In re Galt, 56 
C. C. A. 470, 120 Fed. 64, John Deere Plow Co. v. McDavid, 70 C. C. 
A. 422, 137 Fed. 802, In re Columbus Buggy Company, 74 C. C. A. 
611. 143 Fed. 859, and In re Pierce, 85 C. C. A. 14, 157 Fed. 757, 
and other like cases, but we fail to see how that doctrine has any 
application to this case. Those cases decided that the contracts in- 
volved in them when properly construed were contracts of bailment 
or agency as distinguished from conditional sales, and as a resuit that 
the consignor's title to property which had been delivered to the bailee 
or agent was good as against the trustée in bankruptcy of the estate 
of the agent. This case on the contrary concerns property held by 
the Carpet Company with no option or right to return to the consignor 
and, therefore, not as a bailee or agent but with a duty and obligation 
to take and pay for it and, therefore, as the owner. 

A patient investigation of authorities fails to disclose any adjudica- 
tion upon the exact facts disclosed in this case. But we think the prin- 
ciples announced in the following cases dealing with very similar state 
of facts as those now before us lead unerringly to the conclusion we 
hâve reached. Conable v. Lynch, 45 lowa, 84; Norton v. Fisher, 113 
lowa, 595 ;i Fish v. Benedict, 74 N. Y. 613; ^tna Powder Co. v. 
Hildebrand, 137 Ind. 462, 37 N. E. 136, 45 Am. St. Rep. 194; Ar- 
buckle v. Gates & Brown, 95 Va. 802, 30 S. E. 496; Mack v. Drum- 
mond Tobacco Co., 48 Neb. 397, 67 N. W. 174, 58 Am. St. Rep. 691 ; 
O'Neal V. Stone, 79 Mo. App. 279; Potter v. Mt. Vernon Roller Mill 
Co.,.101 Mo. App. 581, 73 S. W. 1005. j 

The court below rightly held that the interveners were not entitled 
to the relief soueht, and its decree is affirmed. 

• 86 N. w. 801. 



THE R. B. LITTLB 205 

THE R. B. LITTLB, 

(Crcult Court of Appeals, Second Circuit. May 8, 1911.) 

No. 271. 

TowAGE (I 11*) — Injuby to Tow— Liabilitt of Tus. 

A barge in tow alongside of a tug and drawing 12i^ feet, while navl- 
gating the Harlem River at low water, struck some obstruction, wliich 
made a liole in her Dottom and sunk lier. Tlie river was constantly navi- 
gated at the place with safety by boats of such draft, and no obstruction 
was known or found afterward ; whatever caused the injury having ap- 
parently been forced into tlie mud by the vessel, Held, tbsxt the facts did 
not charge the tug with any négligence which rendered her llable for the 
injury. 

[Ed. Note. — For other cases, see Towage, Cent. Dig. | 17; Dec. Dig. 
§ 11.*] 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Suit in admiralty by John W. Livingston, owner of the barge 
Serviss, against the steam tug R. B. Little; John Rugge, Jr., and 
another, claimants. Decree for respondents, and libelant appeals. 
Affirmed. 

The foUowing is the opinion of Hough, District Judge, in the Dis- 
trict Court: 

It Is not doubted that libelant's coal boat Serviss, while in tow of the 
Little and properly fastened to the tug's port side, took the bottom in the 
Harlem River near Spuyteu Duyvil Bridge with such severity tbat she 
shortly after sank. On being raised, there was a hole in her bottom on her 
starboard side about 10 feet from her bow and a scratch or scar exteuding 
aft therefrom, gradually diminlshing in depth toward the stem. At the time 
the Serviss was drawing about 12% feet aft and 12 feet forward. The Little 
was drawing 12 feet or a little more aft, and about 11 feet forward. 

Verj' little help in solving the question presented by the évidence is derived 
from the pleadings herein. The libel allèges that the coal boat was run 
upon an obstruction "well known to navigators" ; "said obstruction being 
a very short distance from what is known as 'Johnson's Dock' in the Har- 
lem River." Thèse allégations are plalnly not true, for thé obstruction 
was carefuUy searched for and not found, and although there is much évi- 
dence as to lack of water at the place where the Serviss was injured, no 
one testifies to a well-known rocky obstruction, and, further, whatever it 
was that did the Serviss injury, it was not near Johnson's Dock. The answer 
allèges that the river at the place of accident was about 400 feet wide, and 
that the tug and tow "proceeded up the middle * • • and when 500 or 
600 feet past (Spuyten Duyvil Bridge), and while navigating in tlie middle" 
of the river the Serviss struck an unknown obstruction. "Thèse statements 
are not true, for by ail accounts from the claimant the place of stranding 
is considerably further from Spuyten Duyvil Bridge than is alleged, and 
no witness from either side bas asserted that the Little was navigating 
In the middle of the river at the time of disaster. This condition of the 
pleadings compels the court to niake such flndings from the évidence as it 
may ; it being in my judgment impossible to test or judge the évidence sub- 
mitted by the pleadings of either party. 

Some fundamental propositions regardlng the relations of tug and tow 
must peculiarly be borne in mind in a case of thls sort. The tug is not 
an insurer. It is only bound to the exercise of ordlnary care. The mère 
happening of an accident is not in and of Itself proof of négligence (The 

•For other cases see same topic & § numbeh in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



206 188 FEDERAL EEPOETEB 

Winnie, 147 Fed. T25, 79 C. C. A. 431), and those engagea In the towing 
business are entitled to rely upon maps and charts of accredited authority 
(The A^athan Haie, 99 Ped. 462, 39 C. C. A. 604). This last proposition is 
much relied upon by claimant, yet It must be noted that the charts sub- 
mitted in this case are very unsatisfactory. ïhey are two in number: The 
Coast Survey chart, of an ancient date and on a very small scale, and a 
War Department engineer's survey of 1905, with no date given for the soiind- 
Ings njarked thereon, and obvlously Intended, not as an aid to navigators, 
but to show the (as yet wholly theoretieal) pier and bulkhead Unes approved 
by the Secretary of War in 1890. Auy effort to rely upon thèse maps (or 
any other map) is rendered more dlfflcult by the obvious unfamiliarlty of 
every witness produced, vfith charts of ail kinds. It was even plalner in 
this case than It usually Is that most harbor boatmen hâve no acquaintance 
wlth the chart, never study a chart, and do not transact their business by 
any chart. They work by tradition and rule of thumb. 

It Is, I think, clearly establlshed that the Serviss did strike some hard 
object when vFlthin 70 or 80 feet of the Manhattan shore and about the 
same distance to the westward of a bend In the Harlem River knov?n as 
"Point of Woods." The ordlnary bottom of the Harlem River In that région 
is mud, and it is, I think, a démonstration that the vveight of the Serviss 
must hâve pressed that hard something whieh injured her into the mud as 
she passed over It; for othervi^ise I am vyholly unable to understand hovr 
a serions break in the planking forward eould hâve become a trlfling scratch 
aft when the boat was loaded about 6 Inches by the stern. The question 
presented by the évidence becomes, therefore, this: Was the person in 
charge of the navigation of the Llttle bound to know that navigation on a 
12% foot draught at low water was dangerous witliin about 100 feet of the 
Point of Woods? The distance of 100 feet Is stated, because the Llttle her- 
self is about 17 feet wide, and she was inside the Serviss (1. e., between 
the Serviss and the Manhattan shore) at the time of in.iury, and was ber- 
self uninjured. This shows that there was no gênerai lack of water at the 
tIme and place. 

On the question thus presented there Is an absohite conflict of testimony. 
Men apparently of equal sklll and equal opportunities of knowledge testify, 
some that they habitually take 12 feet of water within 15 or 20 feet of the 
Point of Woods, and others that they never navlgate on that slde of the 
chaunel at ail, but keep nearer the Bronx shore, because they hâve always 
regarded the Point of Woods as dangerous. In this condition of the évidence 
reconrse may be had to the charts, and wlthout attempting to deseribe what 
any one may see at a glanée on looklng at the chart I am convinced that 
accordlng to a survey, certalnly not later than 190.5 (and this accident hajv 
pened in 1907), the water on the Manhattan slde of the river off the Point 
of Woods is "better than that near the Bronx slde, and the whole river at 
this point Is within the 15-foot contour Unes, except a very narrow passage 
about 110 feet off the Point of Woods. 

It Is therefore to me entlrely plain that the libelant bas not sustalned 
the bnrden of proof. He bas shown an in.iury. but has not shown what 
caused the injury. He has not shown any permanent obstruction to naviga- 
tion at the point where confessedly he was In.iured, and has not shown 
by a falr prépondérance of évidence that the place where the Injury occurred 
was known or even commonly believed to be dangerous. 

For thèse reasons, the libel must be dismissed, with costs. 

James J. Macklin (De Lagnel Berier, of counsel), for appellant. 
Carpenter & Park (Samuel Park, of connsel), for appellees. 

Before LACOMBE, WARD and NOYES, Circuit Judges. 

WARD, Circuit Judge. The barge Serviss, while iii tow on the 
port side of the tug R. B. Little, bound from Fifty-Eighth street, 
North River, to Kingsbridge, Harlem River, was run upon a rock 
and sunk. This happened in broad daylight in waters constant- 



IN EE TOECHU 207 

ly used with safety by vessels drawing as much as the Serviss. 
The District Judge dismissed the libel. 

The record is most unsatisfactory. The pleadings of both par- 
ties are concededly untrue as to the place of the accident and in 
other material allégations. The witnesses are inaccurate, entirely 
unacquainted with charts and in unusual disagreement. The mas- 
ter of the tug is especially blameworthy for failure to report the 
accident to the steamboat inspectors, as he was bound by law to 
do. Inspectors' Rule V (23). 

The facts stated make out a prima facie case in favor of the 
barge and put the burden of explanation on the tug. The Ellen 
McGovern (D. C.) 27 Fed. 869; The Resolute (D. C.) 149 Fed. 
1005, afifirmed 160 Fed. 659, 88 C. C. A. 17. But the finding of the 
District Judge as to the facts amounts to an explanation which 
frees the tug of fault, and therefore the decree is affirmed, with 
costs. 



In re TORCHIA. 

(Circuit Court of Appeals, Third Circuit. June 20, 1911.) 

No. 49 (1,517). 

1. Bankeuptctt (§ 267*) — Bxpenses of Administration— Use of Peocebds of 

Peopeety Subject to Liens— Waiveb of Objection. 

Holders of liens on realty of a bankrupt, who, with knowledge of pro- 
ceedings by the trustée for the sale of the same free from liens, permit 
such proceedlngs to continue without objection and the proceeds of the 
property to be used in the payuient of expenses of administration, by 
necessary implication assent to the same and cannot afterward object to 
such proper expenditures. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 371, 380; 
Dec. Dig. § 267.*] 

2. Bankruptcy (§ 205*) — Rights of Lienholdees— Rents Collected After 

Bankbuptct. 

Under the law of Pennsylvania, rents collected by a trustée from 
property of a bankrupt which la subject to valid liens belongs to the 
llenholders and not to the gênerai estate. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 234, 303; 
Dec. Dig. § 205.*] 

3. Banketjptct (§ 205*) — Rights of Lienholders— Damages for Injury to 

Property. 

Judgment creditors of a bankrupt, whose judgments were liens upon 
real estate, are not entitled to a sum awarded as damages to such real 
estate resulting from a change of street grade, where their liens were 
obtained after such change, although the damages were not paid untll 
after the bankruptcy. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dig. §§ 234, 303; 
Dec. Dig. § 205.*] 

Pétition for Review of Order of the District Court of the United 
States for the Western District of Pennsylvania. 

In the matter of Frank Torchia, bankrupt. On pétition by Hen- 
holders to revise an order of distribution. Reversed in part. 

•For other cases see same topic & § ndmbeb In Bec. & Am. Diga. 1907 to date, & Rep'r Indexes 



208 188 FEDERAL EEPOETEB 

James T. Buchanan, John E. McCalmont, Thomas H. Hasson, and 
Lyon & Hunter, for petitioner. 
Charles A. Woods and James L. Wehn, for respondent. 

Before BUFFINGTON and LANNING, Circuit Judges, and Mc- 
PHERSON, District Judge. 

J. B. McPHERSON, District Judge. The fund distributed by the 
District Court was too small to pay more than part of the judgment 
lien belonging to one of the petitioners, or to pay anything upon the 
four judgment liens imrtiediately succeeding. Thèse five lienholders 
assert that by reason of improper allowances and awards the fund 
that would otherwise hâve been available for their liens has been 
diverted, and they hâve therefore presented this pétition to revise. 

[1] The allowances complained of are for commissions to the trus- 
tée (the South Side Trust Company) and compensation to its counsel, 
for commissions to the référée, for compensation to the receiver and 
to its counsel, and for compensation to the counsel for the bankrupt. 
No objection is made to the amount of any of thèse charges — if, 
indeed, such objection could be made on this pétition, a question that 
need not now be decided — but the single ground of attack is that no 
allowance on account of any of the foregoing items should hâve been 
made, because the fund is solely derived from real estate upon which 
the judgments of the petitioners were liens at the date of bankruptcy. 
The récent décision of this court in Re Vulcan Foundry Co., 180 Fed. 
671, 103 C. C. A. 637, is referred to in support of this position. There 
is, hovvever, an essential différence between the présent situation and 
the situation that was there passed upon. Not only did the petitioners 
now before the court hâve ample notice that the référée was being 
asked for an order to sell the bankrupt's real estate discharged of 
liens, but they made no objection thereto; and, after the order had 
been made, they not only took no steps to hâve it reviewed by the 
■District Court, but they permitted the trustée to go on for months in 
the graduai exécution of the order and in the distribution from time 
to time of the proceeds. To use a phrase of the Vulcan Foundry Case, 
they consented by "necessary implication" to ail that was donc, and 
their belated objections cannot now be regarded with favor. The 
objection to the commissions of the trustée and of the référée, and 
to the compensation of counsel for the trustée, the receiver, and the 
bankrupt, and the objection also to certain expenditures for the neces- 
sary care and préservation of the real estate, must be overruled. 

[2] But we are compelled to disagree with the District Court on 
the subject of the rents. In our opinion this question has been de- 
cided by the Suprême Court of Pennsylvania in Bausman's Appeal, 90 
Pa. 178, and in Wolf's Appeal, 106 Pa. 545, and we are disposed to 
foUow thèse rulings. It was there determined that, after insolvency 
has taken the debtor's real estate out of his hands, its income or product 
belongs to the lien creditors, who hâve thus become its virtual owners, 
and we can see no sufficient reason why the same rule should not 
apply to real estate in a court of bankruptcy. It has already been so 
applied in this circuit (Re Industrial Stoi-age Co. [D. C] 163 Fed. 



IN KE TOECHIA 209 

390), and tKe case may perhaps be referred to although it was decided 
by the writer oi this opinion. 

[3] Another subject of controversy is the money, $6,300, that was 
paid by the city of Pittsburgh on account of the damage done to one 
of the bankrupt's houses by a change of grade in an abutting street. 
When the actual physical change of grade was begun, the bankrupt 
was still the owner and was still in possession. The pétition in bank- 
ruptcy was not filed until several months afterwards, but aUhough, 
by reason of delay in the settlement with the city, the money was paid 
into the hands of the trustée, the right to the damages was the bank- 
rupt's right, and is to be so treated. It therefore passed to the trustée 
with the same restriction that qualified it in the bankrupt's own hands. 
He himself would not hâve been permitted to receive the money if the 
rights of his lien creditors would thereby hâve been injuriously af- 
fected. Woods Run Ave., 43 Pa. Super. Ct. 475. But the petitioners 
themselves had no lien at the time the damages accrued, and the 
difficulty about their position is that they must work out the equity they 
now assert through the rights of the creditors that did hâve liens at 
that time and might themselves hâve been able to assert a claim to 
thèse damages if they would hâve been injured by payment to the 
bankrupt. Thèse creditors owned certain mortgages and mechanics' 
liens; but it appears clearly that they would hâve suffered no injury 
at ail, even if the bankrupt himself had been paid the money, for the 
mortgagees had still an ample margin in the injured property and hâve 
since been paid in full out of the fund it produced ; and the mechanics' 
lien creditors never had a claim on the damages, for their rights arose 
by reason of work done with fuH notice of the proposed change of 
grade, and upon the crédit of the property in its injured condition. 
As neither the mortgagees nor the mechanics' lien creditors were in a 
position to establish any claim upon the damages, there seems to be 
no ground to apply the doctrine of marshaling assets in favor of thèse 
subséquent judgment creditors. And this we think is especially true, 
because, as already stated, the présent petitioners had no lien upon the 
injured property until after the actual change of grade had been be- 
gun, and after the bankrupt's right to the damages had accrued. 

We are satisfied with the ruling of the District Court on 'Jie subject 
referred to in the fifth assignment of error — attorneys' commissions 
stipulated for in certain securities — and do not find it necessary to 
discuss the sixth assignment on the subject of interest, because it is 
not referred to in the briefs of petitioners' counsel, and does not seem 
to be insisted upon. 

In a word, we agrée with the distribution made by the District 
Court, except the part that deals with the rents; but, as we disagree 
about that item, we are obliged to reverse the decree in order that a 
new distribution may be made in accordance with this opinion. It is 
therefore so ordered; but no costs in this court will be aîlowed to the 
petitioners. 
ma F.— 14 



210 188 FEDERAL REPORTEE 

THH TKANSFBR NO. 18. 
(Circuit Court of Appeals, Second Circuit May 24, 1911.) 

No. 283. 

Collision (§ 95*) — Tuas with Tows— Fault of Tugs. 

A transfer tug which moved out of her slip on the New Jersey slde of 
North river with a car float on her side and a tug with a tow passing up 
the river both held In fault for a collision between thelr tows, the trans- 
fer for coming out wlthout soundlng the slip whistle requlred by article 
18, rule 5, of the inland rules (30 Stat. 100 [U. S. Comp. St. 1901, p. 
2882]), when she was ready to corne out, and the other tug for falling 
to keep a proper lookout which might hâve avoided a collision. 
[Ed. Note. — For other cases, see Collision, Dec. Dig. § 95.* 
Collision with or between towing vessels and vessels in tow, see note 
to The John Englis, 100 C. C. A. 581.] 

Appeal from the District Court of the United States for the South- 
ern District of New York. 

Suit in admiralty by the Lehigh Valley Transportation Company 
against the steam tug Transfer No. 18, the New York, New Haven 
& Hartford Railroad Company, claimant. Decree holding two tugs 
liable for collision between their tows, and libelant appeals. Affirmed. 

Charles M. Sheafe, Jr. (J. T. Kilbreth, of counsel), for appellant. 
Harrington, Bigham & Englar (Howard S. Harrington and D. R. 
Englar, of counsel), for appellee. 
Before LACOMBE, COXE, and WARD, Circuit Judges. 

PER CURIAM. The collision happened at night in the North 
River near the Jersey shore ofï Communipaw ferry. We concur with 
the District Judge. Article 18, rule 5, of the inland rules provides that 
steam vessels, shall give the long blast "bend" or "slip" whistle signal 
"when (they) are moved from their docks or berths." Conceding that 
Transfer No. 18 did give one long whistle, and there is a conflict of 
testimony as to that, she gave it, not when she moved from her dock, 
but some time before she moved. How long that time was it is diffi- 
cult to détermine. Certainly she waited till the tug W. V. R. Smith 
had moved out of her way, and, when she gave it, the Superior and 
her tow were still so far away that the master of Transfer No. 18 
could not make out what they were. We cannot find that, had she 
repeated her signal when the Smith had got out of the way and she 
herself was about to move from the dock, it would not hâve challenged 
the attention of the lookouts on the flotilla, and the collision would 
not hâve been avoided. 

It is also manifest that, when the Transfer began to move from the 
dock, the Superior was still below her. Had she been merely past the 
dock at that time, she would hâve been safely beyond it before the Trans- 
fer could hâve backed out and made the turn she did before collision. 
Had the lookouts been attentive, they would hâve seen the Transfer 
backing out towards their own course, and it seems reasonable to con- 

•Por other cases see Bame toplc & i NnMBSB In Dec. & Am. Dlga. 1907 to date, & Rep'r Indexe» 



MFG. CO. T. PAN0UALIA8 211 

clude that the master of the Superior thus warned of the Transfer's 
approach could hâve avoided the collision. 

The decree is affirtned, with interest and costs. 



CONFECTTONERS' MACHINERT & MFG. CO. v. PANOUALTAa 

(Circuit Court of Appeals, Second Circuit. May 8, 1911.) 

No. 248. 

Patents (§ 328*) — Infringement — Candt-Coating Machine. 

A judgment based on the verdict of a Jury flnding Infringement of the 
Panoualias patent. No. 685,790. for a candy-coating macliine, affirmed. 

In Error to the Circuit Court of the United States for the South- 
ern District of New York. 

Action at law by Panayiotis Panoualias against the Confectioners* 
Machinery & Manufacturing Company. Judgment for plaintiff, and 
défendant brings error. Affirmed. 

William Quinby and Marcus B. May, for plaintiff in error. 
Ferdinand E. M. Bullowa (Emilie M. BuUowa, of counsel), for de- 
fendant in error. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 

WARD, Circuit Judge. The plaintiff sues at law to recover dam- 
ages for infringement of claims 27, 28, 37, and 38 of United States 
letters patent No. 685,790 issued to him November 5, 1901, for a 
candy-coating machine. The only issue involved is infringement. The 
jury rendered a verdict for $1 in favor of the plaintiiï. The défend- 
ant sues out a writ of error from the judgment entered thereon. 

The art of coating candies is old, and is of two kinds, viz., dipping 
and flooding. By the first the candy cores to be coated are dipped into 
a tank of hot chocolaté and then lifted out. By the second the choc- 
olaté is poured over the cores. In either case the surplus chocolaté 
must be shaken off, and there are varions devices for doing so. The 
machines of the plaintiff and of the défendant belong to the flooding 
class. The claims involved are as follows: 

"27. In a machine for coating candies, a chocolaté réceptacle, a hopper 
provided with a transverse screen, means for conveying the chocolaté from 
said réceptacle Into sald hopper, au agitator frame mounted in front of and 
beneath sald hopper, a basket or dipping frame adapted to receive candies 
to be coated, and also adapted to be placed over said agitator frame, and 
devices for conveying chocolaté from said hopper, and distributing it over 
sald basket or dipping frame, substantially as shown and described. 

"28. In a machine for coating candies, a chocolaté réceptacle, a hopper 
mounted over said réceptacle, means for conveying chocolaté over said récep- 
tacle into said hopper, an agitator frame mounted in front of and beneath 
said hopper, and provided with a screen, a basket or dipping frame adapted 
to be placed on sald agitator frame and adapted to hold candies to be coated, 
devices for conveying chocolaté from said hopper and distributing the same 
over said basket or dipping frame and the candies held therein, and a chute 

«For other cases see sam« toplc & S numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexas 



212 188 FEDERAL REPORTER 

placed Beneath the agltator frame and communlcatlng wlth the chocolaté 
réceptacle, substantially as shown and descrited." 

"37. In a machine for coating candies, a chocolaté réceptacle, an agitator 
frame mounted In front of and above said réceptacle and provided with a 
screen, a basket or dipping frame adapted to receive candies and to be placed 
over said aeitator frame, and devices for conveying the chocolaté from the 
chocolaté réceptacle, and for distributing the same over the basket or dlpplnj; 
frame and over the candies therein, substantially as shown and descrlbed. 

"38. In a machine for coating candies, a chocolaté réceptacle, an agitator 
frame mounted in front of and above said réceptacle and provided with a 
screen, a bast^et or dipping frame adapted to receive candies and to be placed 
over said agitator frame, and devices for conveying the chocolaté from the 
chocolaté réceptacle, and for distributing the same over the basket or dipping 
frame and over the candies therein, and a chute supported beneath the agita- 
tor frame and in communication with the chocolaté réceptacle, substantially 
as shown and described." 

It will be noticed that the claims are for a combination and that the 
means for conveying the chocolaté from a réceptacle into the hopper 
and for conveying the chocolaté from the hopper onto the cores is 
not specifically described. The plaintiff contends that the chief value 
of his invention consists in the élément of the combination described 
as "an agitator frame mounted in front of and beneath said hopper 
(or alternatively in front of and above the chocolaté réceptacle) and 
provided with a screen, a basket or dipping frame adapted to be placed 
on said agitator and adapted to hold candies to be coated." He al- 
lèges that the défendant employs an équivalent of his agitator frame 
in its belt-tapping device. 

Agitation was old in the art, but previous devices had agitated the 
cores only after the flooding. The plaintifï was the first person to 
construct a machine which shook the cores while the chocolaté was 
passing over them, as well as af terwards. And there is testimony that 
this makes a much better coated candy. The plaintiff places the cores 
in a wire tray, which is agitated while the chocolaté falls upon them 
from a hopper above and behind. The défendant, on the other hand, 
carries the cores on a wire-traveling belt to, through, and beyond a 
stream of chocolaté, and agitâtes the belt by a device under it called 
a belt tapper. 

The defendant's machine did not infringe claims 27 and 28, because 
both of them include as an élément "devices for conveying the choc- 
olaté from [the] hopper and distributing it over [the] basket or dip- 
ping frame." There are no such devices in defendant's machine. 
The chocolaté falls directly upon the traveling belt through holes in 
the hopper. Défendant, however, asked for no separate instruction 
as to thèse claims. His request wa's for an instruction "that the scope 
of the claims sued, or any of them, cannot be extended to embrace 
defendant's structure." Claims 37 and 38 do not include devices for 
conveying from the hopper, but only "devices for conveying the choc- 
olaté from the chocolaté réceptacle and for distributing the same over 
the basket." Such devices are présent in defendant's machine. There 
was much testimony as to the practicability of the plaintiff's patent 
and as to the equivalency of the defendant's belt tapper with the plain- 
tiff's agitator frame and whether the belt tapper was intended to do 
and did do what the agitator frame does. The verdict of the jury 
solved thèse questions in the plaintiff's favor. 



8HREDDED WHEAT CO. V. WIIXIAM8 BISCniT CO. 213 

The assigTiments of error are ail to the effect that the court should. 
construing the claims with référence to the prior art and to the pro- 
ceedings in the Patent Office, hâve held as matter of law that they did 
not cover the defendant's structure, and therefore hâve directed a 
verdict for défendant. We think he was right in refusing to do so. 
No exceptions were taken to his instructions to the jury, and, they 
having rendered a verdict in favor of the plaintifï, the judgment is 
affirmed. 



SHREDDED WHEAT CO. v. WILLIAMS BISCUIT CO. et aL 

(Circuit Court, N. D. Illinois, B. D. Marcli 8, 1911.) 

No. 29,623. 

1. Patents (§ 828*) — Validitt and Infbingement — Machine fob Making 

SlIBEDDED WHEAT. 

The Perky & Ford patent, No. 502.378, for a machine for the prépara- 
tion of cereala for food, the novel feature of which is the combination 
with a pair of oompressing relis, one or both of whlch are grooved, of 
a comb-llke scraper, the teeth of which are arrangea to fit said grooves 
and the spaces between the teeth to fit the cylindrical faces of the rolls 
between the grooves, diseloses a true combination and invention. Claims 
1 and 2 also held infrlnged. 

2. Patents (§ 290*) — Suit fob Infeingement— Pabties. 

Where one man conceived, built up, patented in part, and managed the 
business of a corporation, he may properly be joined with it in a suit 
for infringement of a patent In the conduct of such businses. 

[Ed. Note. — For other cases, see Patents, Cent. Dig. §§ 470-472; Dec. 
Dig. ! 290.*] 

In Equity. Suit by the Shredded Wheat Company against the Wil- 
liartis Biscuit Company, Matthew R. D. Owings, Alonzo H. Benn, and 
William E. Williams. Decree for complainant. 

Ofïield, Towle, Graves & Offield and Edward W. Anderson (Charles 
K. Offield and Frederick I. Allen, of counsel), for complainant. 
W. E. Williams, for défendants. 

KOHLSAAT, Circuit Judge. This cause is now before the court 
on final hearing upon bill filed to restrain infringement of claims 1 and 
2 of patent No. 502,378, granted to complainant's assignors August 1, 
1893, for a machine for the préparation of cereals for food. Défend- 
ants insist that the bill limits infringement to claim 1. While clause 
6 of the bill makes spécial référence to claim 1, claim 2 is sufficiently 
covered by other clauses of the bill. This contention is not observed 
either in the answer or the évidence, and seems to be limited to the 
argument. It is not justified by the record. 

[ 1 ] The claims read as f ollows, viz. : 

"1. In a machine for the préparation of cereals for food, the combination 
with a pair of compressing relis, one of which is provided with circuruferen- 
tial grooves, of a comb-like scraper the teeth of which are arranged to fit said 

•For other cases see same topic & S numeek In Dec. & Am. Digs. 1907 to date, & Rep'r Indeiea 



214 188 FEDERAL REPORTER 

grooves, the spaces between sald teeth belng arrangea to fit the cyllndrleal 
faces of the divisions separatlng sald grooves, substantially as speclfied. 

"2. In a machine for the préparation of cereals for food, the comblnation 
of a pair of clrcumferentially grooved rolls, the comb-Uke scraper therefor, 
the conveyer beit, and the splndle II hung In slotted bearlngs, over sald 
belt, substantially as speclfied." 

It will be seen that claim 2 differs from claim 1, in that (1) both 
compresing rolls are grooved; (2) the addition of means for deliver- 
ing the product to and for shaping by the belt and spindle. 

Défendants contest the validity of the patent on the prior art, the 
proceedings in the Patent Office, and on the ground that the devices 
of the daims are mère aggregations. The last named may be quickly 
disposed oï, as it is plainly seen from the patent that ail of the élé- 
ments operate to produce in claim 1 the unshaped cereal food product, 
and in claim 2 the finished commercial article. 

The proceedings in the Patent Office show that on December 31, 
1892, the examiner rejected claim 1 of the amended claims filed De- 
cember 29, 1892, upon patents to Carew Nos. 423,593, granted March 
18, 1890, for machine for applying adhesive material to the surface 
of paper, etc., and 475,535, granted May 24, 1892, for a like purpose, 
and patent No. 176,176 for a granulating machine granted to A. R. 
Guilder, April 18, 1876, and allowed amended claims 2 (the présent 
claim 1), 3, and 5, filed December 29, 1892. A comparison of said 
amended claims 1 and 2 discloses no substantial différence between 
the two, other than the statements in amended claim 2 that the spaces 
between the teeth of the scraper are arranged to fit the cylindrical 
faces of the divisions separating said groove, and the substitution in 
claim 2 (présent claim one) of one grooved and one smooth compres- 
sion roll for the two-grooved rolls of claim 1. 

The spécification, lines 24 and 25, p. 1, says: 

"B and B' are two rolls, one or both of which are to be grooved clrcum- 
ferentially." 

The two grooved compression rolls are included ïn claim 2 as al- 
lowed. It can hardly be that invention could be predicated upon the 
belt and spindle éléments of claim 2 in combination without other 
novel features. That claim ends with the words, "substantially as 
speclfied." The spécification, lines 34 to 37, p. 1, says: 

"D is a scraper having teeth so formed as to fit In the grooves in roll B 
and between the teeth the said scraper is to fit the cylindrical faces of the 
divisions separating said grooves." 

Did not the patentée acquiesce in the conclusion of the Patent Of- 
fice to the effect that the feature which differentiated his invention 
from the prior art lay in the adaptation of the scraper to both the 
grooves and the division spaces between the grooves? This seems a 
fair conclusion. 

Complainant's expert, Wilson, says: 

"I thlnlî that a scraper would not fall wlthln the language of the patent 
in suit and claim 1 to which your question refers, unless such scraper had 
teeth arranged to fit In the grooves of the roller. and the spaces iietween the- 
teeth arranged to fit the cylindrical faces or lands, the same constituting the 
clivisioiis separating such grooves." 



8HREDDED WHEAT OO. V. WILLIAMS BISCUIT CO. 215 

The défendants set up a number of patents of which patent No. 
210,927, granteJ to E. Durand, December 17, 1878, for a machine for 
cutting or chopping tobacco leaf for manufacturing "picadura" and 
cigarettes, and the like, also the two Carew patents above described 
for a device for applying adhesive material to the surface of paper, 
the above set out Guilder patent for a granulating machine, patent No. 
485,483, granted to A. Abojador, November 1, 1892, for a machine 
for reducing and comminuting tobacco for cigarettes and the like, 
patent No. 146,304, granted to J. Baumgartner, January 13, 1874, for 
a machine for making noodles, and patent No. 378,516, granted to P. 
A. Oliver, February 28, 1888, for a device for pressing and graining 
gunpowder, fairly represent the state of the prior art. None of thèse 
can be said to anticipate the two claims in suit. The very objects set 
out in the several patents disclose substantial différences between 
them and the patent in suit. As appHed to the shredded wheat art, 
claims 1 and 2 seem to be impressed with some little degree of novelty, 
and are entitled to be ranked as invention. This, together with the 
presumptions growing out of the grant of the patent, justify the court 
in holding them to be valid. 

"Défendants' rolls are assembled in a machine, two roUs in a pair, 
with five pairs mounted one above the other (defendatit's record, p. 
22), the grain entering the first set as grain and passing down through 
the five sets is delivered as finished shreds from the bottom." It is 
then taken by a carrier belt which delivers it to the hopper of a cup- 
ping machine from which it is fed into revolving cups shown in fig. 
17 of patent No. 949,013, granted to W. E. Williams on February 15, 
1910, having a cone-shaped central projection in its bottom around 
and over which the shreds are placed in an interlacing manner. Over 
this cone-shaped projection a plunger having a cavity corresponding 
to the cône is forced down upon the shredded product, forming it 
into a cup or other desired shape. 

In complainant's device the prepared cereal is delivered to the com- 
pression rolls by which it is reduced to "threads, lace, or ribbons, or 
sheets, etc. (the form of which depending on the contact or proximity 
of rolls B and B')," and then removed by a scraper and received by a 
belt and carried to the spindle around which it is wound by the fric- 
tional action of the belt against the product. "If desired, the product 
may be conveyed without winding upon the spindle to any convenient 
réceptacle." 

Défendants' compressing rolls are provided of necessity with scrap- 
ers. Without thèse the rolls clog. According to défendant Williams' 
testimony, the défendants first used a scraper composed of a séries of 
needles clamped into a box and held in such a manner that the needles 
entered the grooves. In August, 1907, they substituted (according to 
Williams) a flat pièce of steel having V-shaped saw teeth which fitted 
into the groove registering with the bottom of the groove. Thèse, the 
same witness (as well as complainant's witness Hutzen) claims, would 
become heated so that they were quickly abraded by contact with the 
grooves of the rolls to such an extent that they covered the spaces 
between the grooves, and become for ail practical purposes the scraper 
of the patent in suit. Thereafter the witness says défendants used a 



216 188 FŒDBBAL REPOBTEIB 

straight-Haded scraper, which, after 10 or 15 minutes' opération of the 
roUs, never fails to fit itself to the rolls sufïïciently for commercial pur- 
poses. The witness insists that there is no advantage in scraping the 
faces of the division walls between the grooves, as removal of the 
dough from the grooves answers ail purposes. 

Complainant's witness Hutzen, who formerly worked for défend- 
ant corporation, dénies that the straight-edge scraper blade scraped 
the shreds out of the rolls at the start. Complainant's expert Wilson 
corroborâtes Williams as to the wearing away of the straight edge by 
use so as to pro'duce a scraper substantially like that of the patent in 
suit. In order to do this, the straight edge must be filed or otherwise 
produced to a beveled edge, so as to respond to the friction or grind- 
ing of the rolls. If the use of a scraper which fits the grooves of the 
rolls and at the same time acts upon and cleans the faces of the di- 
visions between the grooves constitutes infringement of claim 1, then, 
manifestly, the use of any other scraper, which, by reason of its con- 
struction must, on frictional contact with the grooved roU, be reduced 
to an infringing device, would also be an infringement. 

Complainant's expert, Wilson, says : 

"Of course, If the bar upon which the teeth are formed was made thlcker, 
the teeth would be more strongly supported at their bases, and such teeth 
would probably disengage the shreds from the grooves of the rolls, but such 
a scraping device would be disslmllar from defendant's exhlbits to which 
you hâve called attention, because the spaces between the teeth would not 
engage the cylindrlcal faces of the rollers between the grooves." 

It would probably be open to défendant to use thèse as well as the 
needle scraper first used by them. 

It is évident that the question of infringement îs a very close one, 
as is that of validity. However, considérable property interests hâve 
accrued to complainant based upon its opération under the patent in 
suit, and the court cannot say it has not been the resuit of the pecu- 
liar construction of its scraper. This feature of the patent is the 
basis of the patentable novelty of both claims in suit, so that both are 
infringed. 

[2] With référence to défendants' motion to dismiss as to the in- 
dividual défendant, it appears that the défendants' business, and par- 
ticularly that which is complained of, has been conceived, built up, 
patented in part, and managed by the défendant Williams, who is also 
expert witness and counsel in this proceeding. He is properly made 
a défendant. As to the other individual défendants, the bill is dis- 
missed. The injunction may go as to the use of the form of scraper 
as abovft intimated. 



ELLIOTT eO. V. CLTDE MACH. WOKKS CO. 217 

ELLIOTT CO. V. CLTDE MACH. WORKS 00. 

(Circuit Court, N. D. Iliinois, E. D. Marcli 8, 1911.) 

No. 30,258. 

Patents (§ 328*) — Infeingement— Tube-Cleaneb fob Boilers. 

The Elllott patent, No. 641,092, for a tul)e-cleaner for water-tube boil- 
ers, held not so clearly infringed on the sliowing made as to warrant tlie 
grantlng of a preliminary injunctlon. 

In Equity. Suit by the Elliott Company against the Clyde Machine 
Works Company. On motion for preliminary injunction. Motion de- 
nied. 

Linthicum, Belt & Fuller and Bakewell & Byrnes, for complainant. 
OfEeld, Towle, Graves & Offield, for défendant. 

KOHLSAAT, Circuit Judge. This cause is now before the court 
on motion for a preliminary injunction. 

The bill allèges infringement of ail the claims of patent No. 641,- 
092, granted to W. S. Elliott on January 9, 1900, for a tube-cleaner 
for removing scales from the interior of the tubes of water-tube boil- 
ers. The claims read as f ollows, viz. : 

"1. A rotatory tube-cleaner havlng freely-swlnging arms, the planes of 
movement of the arms being longitudinal of the axis of the tool, and cuttlng- 
dlsks secured to the arms and lying in planes transverse to the axes of said 
arms ; substantially as described. 

"2. A rotatory tube-cleaner, having freely-swinglng arms moving In planes 
longitudinal of the axis of the tool, each arm carrying a séries of toothed 
disks lying In planes transverse to the axes of said arms; substantially as 
described. 

"3. A rotatory tube-cleaner having a head provlded with an uninterrupted 
cross-slot and freely-swinging arms having thelr ends mounted in the slot 
and closely adjacent to each other, said arms projecting beyond the head and 
provided at their free outer ends with cutters; substantially as described. 

"4. A rotatory tube-cleaner ha\ing a head provided with a phirality of 
uninterrupted eross-slots arrangea at opposlng angles, and sets of arms hav- 
ing their pivotai ends mounted in the slots closely adjacent to each other, 
one set of such arms being In advance of the other; substantially as de- 
scribed. 

"5. A rotatory tube-cleaner, having freely-swinging arms moving în planes 
longitudinal of the axis of the tool, said arms carrying cuttlng-disks lying 
In planes transverse to the axes of the arms, the cutters upon one arm be- 
ing in advance of those upon the other; substantially as described. 

"6. A rotatory tube-cleaner, having plvoted thereto freely-swlnelng arms 
with free outer ends, said arms moving in planes longitudinal of the axes of 
the tool, and cutting-disks rotatably mounted upon the arms near their outer 
ends and lying in planes transverse of said arms ; substantially as described." 

The spécification (column 1, p. 1) states that the device "is par- 
ticularly designed to be used in combination with a turbine-wheel mo- 
tor or other similar fluid-actuated prime mover," and adds (column 2, 
p. 1, and column 1, p. 2), "any other operating mechanism may be 
substituted for the turbine wheel, and, if desired, the tool may be op- 
erated by hand through proper shaft connections." 

•For other cases see same topic & § numbeb lu Dec. & Am. Bigs. 1907 to date, & Rep'r Indexes 



218 188 FEDERAL RBPOETBB 

The bill allèges (page 3) that claims 1, 2, 5, and 6 were sustained by 
Judge Buffington in Liberty Mfg. Co. v. American Brewing Co. (C. 
C.) 155 Fed. 900, hereinafter termed the "Brewery Case." A référ- 
ence to that authority would seem to indicate that ail the claims were 
sustained, but only claims 1, 2, 5, and 6 held to be infringed. The 
issues mainly involved in that suit, as stated by the opinion, were: 
(1) Was EUiott the inventor, or was it the joint invention of ElHott 
and another ; (2) certain prior uses. The court says, however : 

"Much testlmony has been taken. Narrowed down, It discloses no patent 
which so resembles Blliott's device as to warrant présent discussion." 

Both points as to joint invention and prior use were overruled. A 
large number of patents from the prior art were introduced in that 
record. But few seem to hâve been discussed. However, the suit 
seems to hâve been fairly litigated, and the adjudication of validity 
is deemed to be entitled to the considération required by the courts for 
the purposes of injunctional relief in limine as to validity only. 

It is apparent from an examination of the prior art that Elliott was 
by no means a pioneer in the art. The prior patents are so numerous 
and close that it requires a careful scrutiny thereof in order to ascer- 
tain just how broad a construction should be given to the patent in 
suit. 

The Howlett tubular boiler cleaner of patent No. 598,249, granted 
February 1, 1898, discloses a circular, cone-shaped head 35 at the end 
of a lever, 32, projecting beyond the end of the block, 12, and having 
considérable play through the outwardly flaring opening, 29. By 
means of the steam-operated piston, 25, the lever and head are made 
to rapidly strike the inner walls of the boiler pipe. They are revolved 
by means of a hand-operated wheel, 48, thus striking the whole inner 
surface of the boiler pipe. The scale is removed by the exhaust steam. 
In this device centrifugal action is not employed. 

The Rast patent, No. 386,848, dated July 31, 1888,'covers a hand- 
operated device for cleaning boiler tubes. The carrying block is pro- 
vided with slots which receive the arms that carry two serrated and 
one plain revolving cutters, having inclined teeth, and which extend 
beyond the block. Thèse arms and the cutters are adjustable to dif- 
férent diameter pipes by means of a rod and disk. Apparently centri- 
fugal force would throw thèse cutters out to a limited degree. Being 
operated by hand, it may be doubted whether sufRcient velocity could 
be attained for that purpose. The idea of the patent is that they shall 
be held in contact with the walls to be cleaned by means of manual 
adjustment. Provision is made for the prévention of injury to the 
wall of the boiler pipe. The opération is that of grinding rather than 
hammering. 

The device of the patent to Krueger, No. 597,421, is especially de- 
signed for use with the curved tubes of the Stirling boiler; this also 
being the particular advantage claimed by the patent in suit. The 
arms carrying the cutters are under spring tension. There seems to 
be no doubt but that thèse would, when subjected to rapid révolution, 
yield to centrifugal force, though they may not be termed the free 
swinging and hammering cutting disks of the patent in suit. 



EXLIOTT CO. V. CLTDE MACH. WORKS CO. 219 

In patent No. 595,159, granted to W. D. Forsyth on December 7, 
1897, and in the several Forsyth and Bell patents, is shown a means 
for burnishing the inside of pipes which opérâtes by centrifugal force. 
The cutters are mounted upon pivoted arms which readily swing ont 
against the walls of the boiler tube or other pipe. Thèse cutters are 
free swinging and hâve a hammering effect upon the inside of the 
tube ; but, being so arranged that they swing at practically right angles 
to the carrying head, their stroke is not so long, and consequently not 
so heavy or effective as that of the patent in suit. So far as this de- 
vice goes, it suggests the means and object better covered by Elliott. 

Bradley's patent. No. 608,418, granted August 21, 1898, shows a 
turbine-operated boiler tube cleaner having four freely swinging arms 
moving longitudinally of the head. The arms carry cutters or knives 
and are thrown out centrifugally against the walls of the boiler tubes. 
The spécification says varions forms of knives or cutters may be em- 
ployée. It seems clear that thèse swinging arms must hâve a hammer- 
ing or swiping impact upon the inner periphery of the tube. The 
court in the Brewery Case notes the différence between Bradley's cut- 
ters and Elliott's revoluble cutters. 

The foregoing, ail of which, except the Howlett patent, No. 598,- 
249, seem to hâve been set up in the American Brewing Co. Case, 
supra, suffice to show fairly well the condition of the prior art. The 
record does not disclose just what the infringing device in that case 
consisted of. Nor does it appear whether complainant relied upon its 
original or a modified form of its cleaner, which latter it seems to rest 
upon hère, while defendant's expert Gillson identifies the cleaner of 
the patent. There appears to be a considérable departure from the 
drawings in the construction of the modified form. The carrying 
arms of the latter are set in much larger slot guides than those dis- 
closed in the drawings, so much so that the head may not be described ' 
as a skeleton head, as in the patent, and it can hardly be said of the 
cutter arms that they now hâve a hammering effect or act with a side- 
wise or swiping blow, as described in the Brewery Case, or a rapid 
succession of blows. It employs no slots eut clear through the head. 
The contrast between the action of Gillson, Exhibit B (the cleaner 
of the drawings), and that of the modified form in this respect, is 
very marked. The whole principle of the freely-swinging arms mov- 
ing "longitudinal of the axis of the tool" seems to hâve been clearly 
outlined in the Bradley patent. As before stated, the court in the 
Brewery Case found the différence between the two to consist mainly 
in the formation of the cutting devices. 

It is apparent that whatever of invention there is in the patent in 
suit must be narrow. In paper 10 of the file wrapper the examiner 
indicates that any claim allowed must be spécifie. The cutters work 
in différent sections ; that is, one pair in advance of the other.' This 
is also true of the Forsyth patent. Rotably mounted cutting disks 
are also old in the art. Thèse also appear in the Forsyth devices. The 
patentée disavows any intention of claiming the disclosures of the 
Schumandt, Rast, and Forsyth & Bell patents, and says none of thèse 



220 188 FEDERAL EBPOBTBB 

show his invention. It is not évident how his statement in regard to 
thèse patents affects the construction to be placed on the claims in 
suit. To the eye defendant's cleaner and the modified form of the 
complainant's cleaner are almost identical, the only observable dif- 
férence being in the length of the cutter-bearing arms, which in the 
alleged infringing device are shorter than those in suit. As a matter 
of fact, however, defendant's cutter-carrying arms are locked together 
by a séries of interconne-rting lugs, so that they move in unison, ail 
four at once, niaking allowance for a small amount of play. Compar- 
ing the latter with the drawings of the patent in suit, the former seem 
to lack the free swinging features of the latter. The play of the arms 
is curtailed by the long slots, the four-in-hand harnessing thereof, and 
the différence in diameter of the carrying heads of the two. Thèse 
features seem to set at naught the underlying idea of Elliott's inven- 
tion, viz., the long, lightly guided, swinging, cutter-carrying arms, 
with their hammering and swiping blows. There is more grinding in 
the opération of defendant's cleaner than hammering or swiping. It 
seems to more closely resemble Forsyth & Bell than Elliott's, so far 
as this record discloses. 

I am unable to say upon this record that défendant so clearly in- 
fringes as to warrant the issuance of an injunction in limine. The 
delay shown in commencing'that suit would hardly justify the court 
in treating it as a waiver by complainant of its rights; but it may be 
considered in determining the question of emergency. 

Ail things considered, a preliminary injunction should not be grant- 
ed at this time, and the motion is denied. 



PKOOTEtî A GAMBLE OO. V. UNITED STATES 221 

PROCTER & GAIVIBLE CO. v. UNITED STATES et aL 

(Commerce Court. July 20, 1911.) 

No. 9. 

1. Commerce (§ 92*) — United States Commerce Coitet— Jueisdiction— Oedeb 

Eefusinq Relief— "Oedeb." 

Act Cong. June 18, 1910, c. 809, 36 Stat. 539, confers on the Commerce 
Court jurisdlction previously possessed by the Circuit Courts of tlie Unit- 
ed States of cases brought to enjoin, set aside, annul, or suspend any 
"order" of tlie Interstate Commerce Commission, also authorizing the 
Commerce Court to exercise any and ail powers of the Circuit Court of 
the United States so far as may be appropriate to the effective exercise of 
the jurisdlction conferred, and that nothing contalned in the act shall be 
construed as enlarging the jurisdiction previously possessed by the courts 
thereby transferred to and vested in the Commerce Court ; the jurisdic- 
tion so far as conferred, however, being exclusive, and so far as not con- 
ferred being reserved. Held, that slnce capacity to sue in the Commerce 
Court dépends on the gênerai equity practlce in force in the Circuit 
Courts, and prior to the création of the Commerce Court a shipper claim- 
ing to be Injured by a ruling of the Interstate Commerce Commission re- 
fusing to annul a prlvate car demurrage rule could bave sued in the Cir- 
cuit Court to set aslde the commission's ruling, such ruling, though 
grantlng no affirmative relief, should be construed as an "order" of the 
commission which the Commerce Court had jurisdiction to review on 
pétition of the person conceiving himself injured thereby. 
[Ed. Note. — For other cases, see Commerce, I>ec. Dig. § 92.* 
For other définitions, see Words and Phrases, vol. 6, pp. 5017-5023; 
vol. 8, p. 7739.] 

2. CoMMEECE (§ 92*) — United States CoitMEBCE Couet— Jurisdiction. 

In determining whether the Commerce Court had jurisdiction of a 
pétition to annul a ruling of the Interstate Commerce Commission sus- 
taining a carrier's demurrage rule, it was not materlal that sults in that 
court to enjoln, set aslde, annul, or suspend any order of the commission 
are required to be brought against the United States, nor that under the 
law as it previously stood the venue of suits in the Circuit Courts of the 
United States against the commission to vacate its orders was flxed in 
each case in the district where the carrier against vrhich the order was 
made had Its principal operating office. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 92.*] 

S. Commerce (§ 92*) — Inteestate Commerce— Rulings of Commission. 

Though It was proper, if not necessary, for a shipper objecting to a 
carrier's demurrage rule to apply flrst to the Interstate Commerce Com- 
mission for relief, the fact that the commission merely dlsmissed the 
pétition without granting any affirmative relief did not render its action 
conclusive, so as to deprive the shipper of the right thereafter to proceed 
to bave the commission's ruling revlewed by the Commerce Court on the 
ground that the demurrage rule was conflscatory as to the shipper, and, 
if sustalned, would deprive it of its property without due process of law. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 92.*] 

4. Caeeiees (§ 26*) — Demuebage— Peivate Tank Caes. 

Slnce carriers engagea in Interstate commerce are entitled to Impose, 
as a condition to hauling private cars, such terms as hâve a reasonable 
relation to the transportation service in whleh they are employed, and 
may adopt such rules as will tend to provide a reasonably dependable 
Bupply of equlpment and prevent the wlthdrawal of such cars at will, to 
serve the prlvate purposes of the owners and as will keep them in active 

•For other cases see same toplc & § numbeb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



222 188 FEDEiRAL REPORTBB 

and steady use, a rule Imposlng a reasonable demurrage charge on snch 
cars whlle standing on prlvate tracks and whlle returned unloaded untll 
the lading ia removed and the cars released, Is reasonable ^ad not vio- 
lative of the owner's rights. 

[Ed. Note. — For other cases, see Carriers, Dec. Dlg. § 26.*] 

Pétition by the Procter & Gamble Company against the United 
States and others to set aside an order of the Interstate Commerce 
Commission (19 Interst. Com. R. 556) refusing to annul a provision 
of the Uniform Demurrage Code, requiring privately owned cars 
while standing on private tracks to pay demurrage under certain cir- 
cumstances. Pétition dismissed. 

George H. Warrington, for petitioner. 

P. J. Farrell, for Interstate Commerce Commission.! 

Blackbum E'=terline, for United States. 

Edward Barton, for respondent railroads. 

Before KNAPP, Presiding Judge, and ARCHBALD, HUNT. 
CARLAND, and MACK, Associate Judges. 

ARCHBALD, Judge. The Procter & Gamble Company, the pe- 
titioner, is engaged in the manufacture of soap, and the refining of 
cotton seed and other oils, and owns large industrial establishments 
at Ivorydale, Ohio, Port Ivory, N. Y., and Kansas City, Kan. In ail 
its plants it has and maintains private railroad tracks, for the purpose 
of receiving cars from the interchange tracks which connect it with 
the respondent railroads. At two of the places named it owns and 
employs its own locomotives and itself performs the entire switching 
of cars, and at the other the switching is performed by the railroads 
under contract, which is paid for separate and apart from the trans- 
portation charges. In every instance the tracks are owned by the Com- 
pany and are on its own land, and the railroads hâve no interest or 
control over them. 

The Procter & Gamble Company is also the owner of 532 oil-tank 
cars, which it has purchased at a cost of about $500,000. Thèse cars 
are necessary for the transportation of the oils, grease, and other like 
commodities used by the company in its business, and were purchased 
by it in relief of the railroads, which were and are not prepared to 
furnish them. Thèse tank cars, when loaded by the petitioner at its 
several establishments, are tendered to the cc^necting railroads for 
shipment, and are hauled to their various destinations at the regular 
pubHshed rates for the respective commodities with which they are 
loaded. The use of thèse cars is confined to the petitioner's business, 
and in considération of the petitioner furnishing them an allowance is 
made by the railroads of three-quarters of a cent a mile per car for 
each mile that it is hauled ; this allowance being in accordance with the 
published tariflFs of the railroads with respect to the movement of ail 
private tank cars. 

Until the adoption of the rule set forth below, no demurrage was 
ever charged by any of the respondent railroads for delay in unload- 

*For other cases see same topic & J numbb:r In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe* 



PEOCTEK ic GAMBLE CO. V. UNITED STATES 223 

ing private tank cars while standing on the private tracks of the 
owner. But beginning in February, 1910, and following that, the 
railroads bave published, as part of their so-called "Uniform Demur- 
rage Code," the following rule, which is the subject of this contro- 
versy : 

"Private cars while In rallroad service, whether on the carrier's or private 
tracks, are subject to thèse demurrage rules to the same extent as cars of 
rallroad ownership. 

"Empty private cars are In rallroad service from the tlme they are placed 
by the carrier for loading, or tendered for loading on the orders of the 
shipper. 

"Private cars under lading are in rallroad service untll the lading Is re- 
moved and the cars are regularly released. 

"Cars whlch belong to an industry performlng its ovm svi'itehlng service 
are in rallroad service from the time they are placed by the Industry upon 
designated interchange tracks, and thereby tendered to the carrier for move- 
ment. If such cars are subsequently returned empty, they are eut of service 
when wlthdrawn by the industry from the interchange; if returned under 
load, rallroad service is not at an end until the lading Is duly removed." 

ï'he demurrage rules, of which this is a part, were prepared by a 
committee of the National Association of Railway Commissioners, 
composed of a représentative from each state having a railroad com- 
mission, and a member of the Interstate Commerce Commission ; and 
were adopted by the association in convention and later approved, al- 
though not prescribed, by the Interstate Commerce Commission. 

After the publication of the rule in controversy, but before it had 
gone into effect, the Procter & Gamble Company made complaint to 
the Interstate Commerce Commission, and sought to hâve the rule 
set aside, in so far as it permitted the railroads to make a demurrage 
charge against the private cars of the company after they had been 
delivered to it and were standing on its own private tracks. But 
after a due hearing the commission dismissed the complaint, and the 
respondent railroads are now exacting demurrage charges in accord- 
ance with the provisions of the rule. 

[ 1 ] The proceedings in this. court are brought to set aside the or- 
der of the commission dismissing the complaint and refusing relief; 
the allégation being made that the rule, in so far as it provides that 
privately owned cars under lading on private tracks are in railroad 
service, and so subject to a demurrage charge until the lading is re- 
moved, is unjust and unreasonable and deprives the company of the 
right to use its private cars on its private tracks for its own purposes 
unless demurrage is paid therefor, thereby permitting the respondent 
railroads to deprive the company of its property without due process 
of law, in violation of the fifth amendment to the Constitution and 
the acts regulating Interstate commerce. The prayer of the pétition 
is that the order of the commission dismissing the complaint may be 
annulled and the respondent railroads enjoined from coUecting the 
demurrage charge,' and that they may be further required to repay to 
the petitioner the sums which they hâve wrongfuUy collected from it 
under the rule. 

The United States moves to dismiss the pétition on the ground that 
this court has no jurisdiction in the premises; or that, if it has, no 



224 188 FEDERAL REPOETHB 

cause of action is made out which entitles the petitioner to relief. 
And in this motion the Interstate Commerce Commission and the sev- 
eral railroads which hâve been summoned as respondents joirt. 

The jurisdiction of this court is denied on the ground that the 
petitioner is a shipper, and the Interstate Commerce Commission hav- 
ing merely dismissed the complaint which was made to it, and granted 
no affirmative relief, that there is nothing in the order of dismissal 
which it entered that afïords any basis for action hère. Or, in other 
words, that it is only the carrier against which an order is made in 
favor of the shipper that can bring the case for review into this court ; 
the shipper being concluded by the action of the commission, what- 
ever it may chance to be. This is a serions question, which merits 
careful considération and is not altogether easy to solve. 

By the act by which the Commerce Court was created (Act June 
18, 1910, c. 309, 36 Stat. 539), it was given "the jurisdiction now pos- 
sessed by Circuit Courts of the United States and the judges thereof" 
of, inter aHa, "cases brought to enjoin, set aside, annul, or suspend 
in whole or in part any order of the Interstate Commerce Commis- 
sion." It was also therein further provided that "in ail cases. within 
its jurisdiction the Commerce Court and each of the judges assigned 
thereto shall respectively hâve and may exercise any and ail the pow- 
ers of a Circuit Court of the United States, and of the judges of said 
court respectively, so far as the same may be appropriate to the effec- 
tive exercise of the jurisdiction hereby conferred"; and, conversely, 
that nothing in the act should be construed as enlarging the jurisdic- 
tion at the time possessed by said Circuit Courts, or the judges there- 
of, thereby transferred to and vested in the Commerce Court; the 
jurisdiction, however, so far as conferred, to be exclusive, and so far 
as not conferred being reserved. The question, then, is whether 
upon any recognized ground of equity practice the présent petitioner, 
under the law as it previously stood, would hâve had the right to ap- 
ply by bill to a Circuit Court of the United States to set aside the ac- 
tion of the Interstate Commerce Commission dismissing its com- 
plaint, and to enjoin the enforcement by the railroads of the demur- 
rage charge which in effect was thereby approved. 

[2] It is of no significance in this connection, nor of any assistance 
in the solution of the question, that suits in this court to enjoin, set 
aside, anul, or suspend any order of the commission are required to 
be brought against the United States. It is just as consistent that the 
United States should be the respondent in cases brought for this pur- 
pose by the shipper as in cases brought by the carrier; the govern- 
ment in each case standing for the order of the commission which it 
is thus appointed to justify and défend. 

Neither does it detract from the jurisdiction of this court that, un- 
der the law as it previously stood, the venue of suits brought in the 
Circuit Courts of the United States against the commission to set 
aside its orders was fixed in each case in the district where the car- 
rier against which the order was made had its principal operating of- 
fice; jurisdiction to hear and détermine such suits being in terms 
vested in the courts of such district. Act June 29, 1906, c. 3591, § 



PROCTEK & GAMBLK CO. V. UNITED STATES 225 

16, 34 Stat. 592 (U. S. Comp. St. Supp. 1909, p. 1162). This was a 
favor to the carrier adversely affected by the order. And, according 
to the law at the time, the commission being the respondent, provision 
had to be made for jurisdiction over it by the courts of the various 
districts throughout the country where it was liable to be summoned. 
It was to meet this situation that jurisdiction was given in terms over 
suits of the character mentioned to the courts of the district where 
the carrier against which the order was made had its principal office. 
Nothing more was intended, and nothing more is to be made out of 
this provision of the law. Certainly nothing adverse to possible suits 
by others than the carrier is to be thereby implied. 

The real argument against the right of suit, where the complaint 
of a shipper has been dismissed, is that the déniai of relief by the 
commission is not an order of which the courts can lay hold. Such 
an order, it is urged, must be one specifically requiring that some- 
thing shall or shall not be done before this is the case. In Peavey v. 
Union Pacific Railroad (C. C.) 176 Fed. 409, it is said : 

"A careful search of the Interstate commerce aet discloses no limitation of 
the parties who may maintain suits to enjoin, set aside, annul, or suspend au 
order of the commission, to those who were parties to the proceedings before 
it, upon which the order was based. The proceeding in court is not an ap- 
peal ; it is a plenary suit in equity. * * * The détermination of the ques- 
tion what parties may maintain such suits is left by the * * * act to the 
gênerai rules and practice in equity, and under them any party whose rlghts 
or property are in danger of irréparable injury from an unauthorized order 
of the commission may appeal to a fédéral court of equity for relief." 

There was an order of the commission in that case, however, which 
prohibited the railroads from paying to complainants, and others who 
were owners of elevators located upon their lines, any compensation 
for the élévation of grain in transit, so that the law was unquestion- 
ably met so far as there being an order is concerned; and the case 
therefore decided nothing more than that the right to resort to the 
courts is not confined to the carrier, but extends to every one injuri- 
ously affected by the order of the commission, even tiiough not a 
party to the proceedings before it in which the order was made. To 
that extent, but no f urther, it is pertinent hère. 

[3] Putting aside, however, for the moment, the provisions of the 
statute, and considering the case as though it had not been passed, it is 
clear that a shipper would hâve been entitled, in one f orm or another, 
to redress in court against an unjust and unlawful charge or practice 
imposed by a carrier, such as the one hère is alleged to be. And it 
would hâve been permissible, therefore, for the Procter & Gamble 
Company, denying the right of the carrier to make this demurrage 
charge, to hâve refused to pay it and compel the carriers to bring suit 
therefor ; or, in view of the complications to which this would give 
rise, to say nothing of the multiplicity of suits with difïerent carriers 
which would be likely to ensue, and in order to settle the matter as to 
ail parties once for ail, it would hâve had the undoubted right to go 
into a court of equity by bill and hâve the legality of the practice 
tested, and, if found to be unjustified, enjoined. Donovan v. Pennsyl- 
188 F.— 15 



226 188 FEDERAL EBPOETEB 

vania Co.,_199 U. S. 279, 26 Sup. Ct. 91, 50 L. Ed. 192. Indeed, the 
only question would seem to be whether this was not the course which 
the Company, even considering the provisions of the statute, was re- 
quired to pursue ; the legality of the demurrage charge being the only 
thing involved, and that being a matter for the courts and not for the 
commission to décide. Hite v. Central Railroad of New Jersev, 171 
Fed. 370, 96 C. C. A. 326. See, also, Danciger v. Wells Fargo & Co. 
(C. C.) 154 Fed. 379, and Langdon v. Pennsylvania R. R. (C. C.) 186 
Fed. 237. It was decided, however, in Texas & Pacific Railway 
Co. V. Abilene Cotton Oil Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 
L. Ed. 553, that redress by a carrier against an unjust and unrea- 
sonable rate must be sought in the first instance by proceedings be- 
fore the commission, and that only after that could an action be main- 
tained against the carrier for réparation based on the resuit. This 
conclusion was reached, and the common-law right of action other- 
wise existiiig held to be abrogated by implication, in view of the Sys- 
tem established by the enactments with regard to rate régulation by 
the Interstate Commerce Commission, and as necessary to the ef- 
ficiency of that system, which otherwise would be subverted and made 
nugatory. And this was repeated in Baltimore & Ohio Railroad v. 
Pitcairn Coal Co., 215 U. S. 481, 30 Sup. Ct. 164, 54_L. _Ed._292, where 
it was held that, for the correction of an unequal distribution of cars, 
a shipper was similarly required to go to the commission, and could 
not in advance of its action seek to remedy by mandamus the discrim- 
ination alleged. And Morrisdale Coal Co. v. Pennsylvania Railroad, 
183 Fed. 929, 106 C. C. A. 269, also, is to the same efïect. But, if 
that be so, there can be no serions question as to the propriety, if not 
the necessity, for the présent petitioner going first to the commission 
to hâve determined whether the demurrage charge in controversy was 
a just and reasonable requirement. And it cannot be that the implica- 
tion by which this is brought about is to be carried so far as to make 
the action of the commission conclusive where relief is denied. There 
is no such compelling necessity in order to save the System ; nor is the 
statute to be construed as requiring exclusive resort to a tribunal where 
the rights of the party can be only partially determined at the sacrifice 
of other rights which the courts of the land are appointed to consider 
and défend. This is not to deny that in questions of fact, or where 
judgment or expediency is involved, the action of the commission in 
denying relief, the same as in granting it, may not be final. But where, 
as hère, it is not the amount that is in dispute — $1 a day per car being 
recognized as reasonable if there is to be any charge — but the right of 
the carrier, under the circumstances, to make any charge at ail, it is 
not to be implied, unless there is no escape from it, that the décision 
of the commission adverse to the shipper is to foreclose the question. 
And while the dismissal of a complaint by the commission in a case 
like the présent one may not in strictness be an order, in that it does 
not require or prohibit that anything shall or shall not be done, it 
is so in substance and effect, in that, by réfusing to interfère with 
the practice or the charge complained of, it virtually approves it and 
makes it operative. If it was required by the act to hold that a court 



PEOCTER & GAMBLE CO. V. UNITED STATES 227 

could not interfère with such an order however confiscatory to the 
shipper it might be, the shipper being thus without légal redress, the 
act might well be declared unconstitutional as wanting in due process 
of law. 

The action of the commission, if to be given any force, having thus 
the effect of an adverse décision with respect to the question in- 
volved, must be regarded, even though négative in character, as an 
order within the meaning of the statu te, which the courts may enjoin 
or set aside if légal or équitable grounds for doing so are found to 
exist. The petitioner therefore correctly came into this court, as it 
could previously hâve gone into a Circuit Court of the United States 
— the requisite amount being involved and the case being one aris- 
ing under the fédéral law — to hâve the action of the commission dis- 
missing its complaint set aside and the demurrage charge disallowed, 
if that should be the conclusion reached with regard to it, either by 
direct decree or by remanding the case to the commission with direc- 
tions to sustain the complaint. 

[4] But, while the jurisdiction of this court in the premises is thus 
sustained, we are forced to conclude, upon a considération of the mer- 
its, that the demurrage charge in controversy was lawfully imposed, 
and that the petitioner therefore has no just ground for complaint. 
The argument against the charge proceeds upon a misconception. 
Baldly put, as an exaction for the use by the shipper of his own cars 
while standing on his own private tracks, the right to it might well be 
questioned. Neither is it to be sustained as compensation to the 
carrier for an additional service not covered by the transportation 
charge, that is to say, for the storage of the freight with which the 
cars are loaded, that storage being in the cars and on the tracks of the 
shipper and not in or on anything which the carrier has supplied. 
In re Demurrage on Private Tank Cars, 13 Interst. Com. R. 378, 
381. It is difficult also to see how the imposition of demurrage on 
private cars for delay in unloading is necessary to prevent unjust dis- 
crimination; the shipper who is able to provide such cars having an 
advantage over those who cannot, which this régulation is supposed to 
correct. The ability to own private cars is a mère matter of capital 
which the undue withholding or the prompt unloading and releasing of 
them can hardly affect, and the différence in financial circumstances is 
an advantage, which the law cannot undertake in this way to over- 
come. Peavey v. Union Pacific Railroad (C. C.) 176 Fed. 409, 419. It 
may not be consistent also with the exaction of this charge that, pro- 
vided only the cars are unloaded within the free time allowed, they 
may be reloaded and retained by the shipper indefinitely without any 
claim being made for demurrage. If this, which is the practical con- 
struction of the rule, is to be accepted as the correct one, it throws 
serious doubt on its validity, the real ground on which the charge is 
to be sustained being the right of the carrier to hâve the cars promptly 
returned into service, which this has the effect to undo. Nor is the 
condition of the cars, once they hâve been delivered to the shipper, 
whether loaded or unloaded, of any concern to the carrier, except as 
an end to getting them back into use again. And there is also an ap- 



228 188 FEDBEAIV REPORTER 

parent înconsistency în holding inbound cars liable to demurrage after 
they hâve been delivered and are on the tracks of the owner until 
they are unloaded, barring the free days, and yet in imposing it on 
outbound cars without regard to when they are loaded, only from the 
time they are placed on the interchange tracks. The justification of 
the rule is therefore to be sought in something outside of ail this, 
upon a détermination of the real principle involved. 

It is not necessary to décide whether a railroad can refuse or be 
required to haul private cars. Whatever may be its duty in this re- 
gard, it is coftceded that such terms may be imposed as a condition 
to hauling them as hâve a reasonable relation to the transportation 
service in which they are employed. And this concession neces- 
sarily sustains the présent charge. In using thèse cars, whether as 
supplementary to or in place of their own, the railroads are entitied 
to require that there shaîl be a reasonably dependable supply, and that 
such cars shall not be withdrawn at will to serve the private purposes 
of the owners, but shall be kept in active and steady use, and to that 
end that they shall be put on a footing in this respect with other 
cars. The interest of the carrier that this should be the case is clear. 
For the time being thèse cars become a part of the rolling stock of 
the road, taking the place of those which the carrier would otherwise 
be called upon to supply. Cf. State v. Cin. N. O. & T. P. R. R., 47 
Ohio St. 130, 23 N. E. 928. It may be that there are some kinds of 
thèse cars, such as the tank cars hère, which the railroads do not keep 
on hand, but rely on each shipper furnishing his own. But that does 
not change the principle involved. In one form or another, the car- 
rier is bound to supply the necessary transportation facilities for 
handling every kind of freight. And this, not to one shipper only, 
but equally and without discrimination to ail. And it is put at a dis- 
advantage and an extra burden upon it imposed if it cannot be as- 
sured with regard to the supply of cars on which it can d'epend, but 
is liable to run short or be in excess, according as private cars are 
released or withheld. This the demurrage charge which is complained 
of is calculated to overcome, and therefore may justly be imposed. 
The purpose of demurrage is to force the cars back into use. Delay 
is made expensive, so that it may be an object to the shipper which 
he cannot afford to disregard. Its exaction from private cars, the 
same as others, is therefore neither arbitrary nor unjust. 

Nor is it violative of the owner's rights. It is simply a condi- 
tion to the acceptance of his cars, which, for the reasons given, the 
carriers hâve found it necessary to impose, and with which, therefore, 
he must expect to comply. Presumably the use of thèse cars opérâtes 
to his advantage, or he would not be at the expense of supplying 
them. But he cannot expect that the advantage shall be ail on one 
side. And it having been found by expérience that demurrage on 
private, the same as on public, cars is a necessary transportation régu- 
lation, which is justified on principle, the carriers were within their 
rights in imposing it by the rule in question, and it must therefore be 
sustained. 

The pétition will be dismissed on the merits. with costs. 



ATCHISON, T. & S. F. ET. CO. V. INTE RSTATB COMMERCE COM. 229 

KNAPP, Presiding Judge (concurring). The conclusion reached in 
this case is undoubtedly correct, and I disagree with the foregoing 
opinion only so far as it questions the right to enforce the demurrage 
rule in controversy for the purpose or in aid of preventing undue préf- 
érence and advantage to the owners of private cars. The commission 
based its décision in part on this ground and, in my judgment, was 
right in so doing. 

Note on Constitution of Court bt Judge Abchbald. 

The United States Commerce Court was created by Act of Congress June 
18, 1910, 36 Stat. 539; Its principal jurlsdictlon being to revlew tlie orders 
of the Interstate Commerce Commission. It Is composed of five Circuit Judg- 
es, four of whom are necessary to constltute a quorum. The Président was 
authorlzed to appoint the first incumbents, who, by the provisions of the stat- 
ute, were to serve for flve, four, three, two, and one year, respectively ; and 
in accordance wlth this Presldsnt Taft, on December 12, 1910, appointed Hon. 
Martin A. Knapp, Chairman of the Interstate Commerce Commission, to be 
the Presiding Judge, to serve for the term of flve years ; Hon. R. W. Arch- 
bald, United States District Judge of the Middle District of Pennsylvania, to 
serve for four years; Hon. William H. Hunf, United States District Judge 
of Montana, to serve for three years ; Hon. John E. Carland, United States 
District Judge of South Dalîota, to serve for two years ; and Hon. Julian W, 
Maek, of the Illinois Court of Appeals, to serve for one year. Thèse appoint- 
ées were afterwards GOnfirmed by the Senate. With regard to the subséquent 
membershlp of the court, it is provided that, on the termlnation of the period 
for wblch any of the judges is deslgnated to serve, the Chief Justice of the 
United States shall designate hls successor from among the Circuit Judges 
in commission ; the judges as deslgnated above being compétent to be redes- 
Ignated, so far as thelr terms do not extend heyond the year 1914, after 
which at least a year Is requlred to Intervene before there can be a redeslg- 
nation. 

The judges above named met and organlzed the Commerce Court at Wash- 
ington, D. C, on February 8, 1911, and flxed on February 15th as the time 
when It would be opened for business. The first regular term was held, and 
the first cases were heard and argued, on Aprll 3d following, and the above 
is the first opinion rendered. 



ATCHISON, T. & S. F. EX. CO. et al. v. INTERSTATE COMMERCE COM- 
MISSION et al. 

(Commerce Court. July 20, 1911.) 

1. Cabbiebb (i 84*) — Delivebt of Frbight— What Constitutes. 

The common-law rule that, in the absence of a spécial contract or usage 
to the contrary, common carriers by land are hound to dellver or tender 
goods to the consignée at hls résidence or place of business, bas never 
been applled to rallroads, whlch are exempt from the duty of Personal 
dellvery, and are bound only to carry the goods to fehe dépôt or station 
to which they are de,stined, and there hold or place them In a warehouse 
ready for dellvery on demand of the consignée after notifying hlm of 
thelr readlness to dellver. 

[Ed. Note.— For other cases, soe Carriers, Cent. Dlg. §§ 290-298; Dec. 
Dig. § 84.*] 

2. Commerce (§ 95*)— Rates— Switching Charge— Findings of Interstate 

Commerce Commission — Review. 

A finding by the Interstate Commerce Commission that a carrler's 
charge for deliverlng and receiving car load freight to and from Industry 

•For other cases see same topic & § ndmbee in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexée 



230 188 FEDERAL EEPORTEK 

tracks when such frelght was moving In Interstate commerce was a mère 
Incident to a system-line haul, and was m violation of the Interstate com- 
merce aet (Act June 18, 1910, c. 309, 36 Stat. 539), was a conclusion ot 
law and open to Inqulry by the Commerce Court. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 95.*] 

3. Commerce (§ 91*) — Intebstate Commekoe— Commerce Couet— Rulings of 

INTEESTATE COMMEIiCE COMMISSION— ReVIEW. 

' The Commerce Court, In examlning the report of the Interstate Com- 
merce Commission, to ascertaln the partleular provisions of the Interstate 
commerce act (Act June 18, 1910, c. 309, 36 Stat. 539), relied on to sustain 
a partleular order, Is Umited to the report of the majority of the Commis- 
sion, the views of the minority not belng open to considération. 
[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 91.*] 

4. Commerce (§ 95*) — Interstate Commerce— Rulings of Commission— Re- 

VIEW. 

Where a rule of the Interstate Commerce Commission that a carrler's 
charge for receiving and deliverlng car load frelght to and from industry 
traclis was Illégal and unjust was based on findlngs on admltted facts, 
that the Industry track was a terminal facility of the railroad, and that 
thé service was the same service as that whlch the carrier performed in 
deliverlng frelght at Its dépôt or team tracks, such rullng was not con- 
cluslve on the Commerce Court, which had power to form an independent 
judgment on the facts admltted. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 95.*] 

5. Caeriers (§ 26*) — Pkeight— Rates— SwirCHiNQ Charge. 

Transportation of cars and frelght Intended for Interstate commerce 
to and from Industrial plants loeated from one-flfth of a mile to seven 
miles from the main track of the carrier is not the same service which 
the carrier performs when It delivers frelght at Its dépôt or team tracks, 
the carrier being bound to perform such Industrial track service. In the 
absence of statute, only under an arrangement with the owner of the 
Industrial plant, for which it may charge a reasonable compensation. 

[IM. Note. — For other cases, see Carriers, Dec. Dig. § 26.*] 

6. Caeeiees (§ 26*) — Interstate Feeight— Traffic Rates — Deliveey Charge. 

tlnder the facts in this case the gênerai traffic rate for Interstate 
frelght does not Include dellvery to an Industrial plant of tlie consignée 
or tfie transportatlon of the cars from the industrial plant of the shipper 
to the carrler's yard or main Une over a distance varying from one-flfth 
of a mile to seven miles, but the carrier performing such service is en- 
tltled to exact a reasonable charge therefor. 

[Ed. Note. — For other cases, see Carriers, Dec. Dig. § 26.*] 

Mack, Judge, dlssenting. 

Bill by the Atchison, Topeka & Santa Fé Railway Company and 
others against the Interstate Commerce Commission and another. On 
motion for a temporary injunction against the enforcement of an or- 
der of the Interstate Commerce Commission, prohibiting a charge for 
switching service on cars delivered on industry tracks. Motion to 
dismiss bill denied, and temporary injunction granted. 

Robert Dunlap, T. J. Norton, F. C. Dillard, H. A. Scandrett, and 
C. W. Durbrow (Gardner Lathrop and W. F. Herrin, of counsel), 
for petitioners. 

J. A. Fowler, Asst. Atty. Gen., Blackburn Esterline, Sp. Asst. Atty. 
Gen., and P. J. Farrell, for respondent Interstate Commerce Commis- 
sion. 

Seth Mann, for interveners. 

•For other cases see same topio & § numbeb In Dec & Am. Digs. 1907 to date, & Rep'r Indexes 



ATCHISON, T. <b S. F. RT. 00. V. INTERSTATE COMMERCE OOM. 231 

Before KNAPP, Presiding Judge, and ARCHBALD, HUNT, 
CARLAND, and MACK, Associate Judges. 

CARLAND, Judge. This case has been submitted upon a mo- 
tion for a temporary injunction made by the petitioners, and upon 
a motion to dismiss made by the United States and the Interstate Com- 
merce Commission. The motion to dismiss is made by virtue of the 
provisions of section 1 of the act to create a Commerce Court (Act 
June 18, 1910, c. 309, 36 Stat. 539), which allows such a motion to be 
made where it is claimed the pétition does not set forth a cause of ac- 
tion. As determinative of thèse motions, our view is necessarily lim- 
ited to the facts which are well pleaded in the pétition. Thèse facts, 
as they appear in the pétition, are substantially as f ollows : 

"The petitioners are railroad corporations, organized under the laws 
of the States of Kansas, Kentucky, and Utah, respectively. At ail 
times each of said petitioners, and their respective predecessors in in- 
terest hâve maintained and do now maintain public f reight dépôt build- 
ings theretofore, respectively, established by them in said city of Los 
Angeles upon or adjacent to their respective tracks Connecting with 
their respective main tracks in said city, where freight in less than 
car lo:.d lots is and has been received for transportation for shippers 
in said city, destined to various points upon their respective lines of 
railroad or points upon Connecting lines of railroad in the United 
States, and where such freight transported from various points to Los 
Angeles is delivered to the owners or consignées thereof. 

Each of said petitioners and their respective predecessors in interest 
hâve also located and established and hâve maintained and do now 
maintain what are known as "team tracks" and freight sheds con- 
nected with their respective main tracks in said city of Los Angeles 
where cars are set for the accommodation of the public in gênerai for 
the loading therein of car load freight for transportation to various 
points upon their respective lines of railroad in the United States, and 
where, also, is set and placed for the unloading thereof by consignées 
or owners in said city, who hâve not been favored with the private 
or spécial side-track facilities hereinafter mentioned, car load freight 
consigned and transported from various points on their respective lines 
of railroad or points on other lines of railroad in the United States 
or elsewhere to such owners or consignées in said city of Los Angeles ; 
and said team tracks and freight sheds are so connected with the re- 
spective main line tracks of the petitioners in said city that cars loaded, 
with car load freight may be readily transferred from said main Ime 
tracks to said team tracks and sheds, and where empty cars intended to 
be loaded with car load f reis'ht for transportation may be set and read- 
ily transferred when loaded from said places to the tracks upon which 
trains are made up; and the said team tracks and freight sheds con- 
stitute and bave constituted the places where the respective petition- 
ers receive and hâve heretofore received and hâve delivered and do, 
now make deliveries of car load freight from and to the public in gên- 
erai in the said city of Los Angeles ; and the same are and hâve been 



232. 188 FEDERAL EEPOKTEK 

in ail respects sufficient and adéquate for and f ully accommodate tliose 
desiring such service. 

Said main tracks, team tracks, sheds, and buildings above shown 
cdnstitute the places established as dépôts or stations by each of the 
petitioners in said city of Los Angeles for the receipt» handling, and 
delivery of car load and less than car load freight intrastate and Inter- 
state. Said facilities so established and maintained for the receipt, 
handling, and delivery of less than car load freight are sufficient for 
the handling of double the amount of such freight that has been ten- 
dered, is tendered, or at any day can be tendered. The freight sheds 
and team tracks, established and maintained for the receipt, handling, 
and delivery of car load freight, are sufficient to handle ail the car 
load freight coming into or shipped from said city, either for delivery 
on said team tracks or for delivery on any of the industrial tracks. 
Said sheds and team tracks so maintained and established are suffi- 
cient to handle more than double the number of car loads of freight 
coming into or going eut of Los Angeles, whether originating on or 
destined to said team tracks, or originating at or destined to the indus- 
trial tracks hereinafter referred to; and on said team tracks and at 
said sheds without inconvenience to them more than double the amount 
of ail car load freight can be received, handled, and delivered. In 
addition to this, each of petitioners has in connection with its said de- 
pots or stations a considérable amount of vacant land upon which it 
can and will as the requirements of the public may demand place other 
sheds and team tracks ; so that there is no necessity in the proper con- 
duct of petitioners' business or in the rendering of proper service to 
shippers in said city to hâve or maintain the industrial tracks herein- 
after referred to. But for the accommodation of certain shippers and 
for their benefit in loading and unloading, shipping and receiving 
freight, and to save them the expense of cartage which they otherwise 
would hâve to pay, and which is paid by the public not favored with 
industrial tracks, industrial tracks hâve been built as hereinafter more 
fully set forth. 

Each of the petitioners, as well as their respective predecessors in 
interest, hâve heretofore severally or individually entered into con- 
tracts or agreements with certain individual shippers in Los Angeles 
or with parties who had constructed or were contemplating the con- 
struction and opération of plants or industries in said city, for the 
construction of spur tracks from the respective plant or industry in 
said city to and Connecting with the yard tracks of the respective pe- 
titioners in said city where trains of cars are made up or distributed, 
a part of the cost of such spur track being generally borne by the rail- 
way Company and a part of such shipper. But such tracks were con- 
structed especially to accommodate the plant or industry in question 
and to relieve the owner or operator thereof from the necessity of re- 
ceiving at or delivering to the team tracks of the respective petition- 
ers car load freight consigned to or shipped by the owner or opera- 
tor of said plant, and therefrom and thereby the owner or operator of 
such plant or industry located upon such spur or side track was re- 



ATCHISON, T. 4 8. F. BT. CO. V. INTERSTATE COMMERCE COU. 233 

lieved from the necessity of transferring car load freight to and from 
said team tracks and from or to such plant or industry by dray or 
wagon at a higher cost and greater risk ; and that the shipper at such 
industry or plant by reason of such side-track facilities is given or 
accorded a decided advantage over other shippers in Los Angeles who 
were not favored with such spur tracks. 

In such contracts it was generally stated that at the request of the 
shipper or owner of the proposed plant the railway company would 
construct and maintain for a limited number of years, usually less 
than five, a spur track to connect such plant or industry with the rail- 
road of the railway company. But in such contracts it was generally 
provided that while the railway company might make use of the pro- 
posed track for its incidental purposes such use should not interfère 
with the movement or use thereon of cars switched to or from such 
plant or industry, but that the traffic to and from such plant or indus- 
try should be given a preferential right in the use of such tracks. 

In the contracts made by the Southern- Pacific Company covering the 
construction and maintenance of such industrial or spur tracks it 
was generally provided, among other things, as f ollows : 

"(1) Undersigned (shipper) will pay cost of constructing above-described 
track (rails, splices, bolts, switches, f rogs, switch stands, and connections to be 
furnisbed Ijy and at the cost of Southern Pacific Company), whether such 
cost may be more or less than amount of foregoing approximate estimate. 

"(2) Said track shall be under full control of Southern Pacific Company 
and may be used at discrétion of said company for shipments or delivery 
of any freight, but the busicess of the undersigned shall always hâve préf- 
érence. 

"(3) Ail material In said track furnished at expense of Southern Pacific 
Company, whether In original construction or by any way of replacements 
or repairs, shall be and remain exclusive property of Southern Pacific Com- 
pany, and said Southern Pacific Company shall keep said track in repair. 

"(4) In case said track shall not be used by undersigned for period of one 
yoar, said Southern Pacifie Company may, at its option, remove said track. 

"(5) Ail goods shipped from or to said track by rail, routing of which Is 
controUed. or may be reasonably held to be controlled, by or through under- 
signed, shall, when forwarded, be over such railroads as may be selected 
by Southern Pacific Company, provided rate of charge shall be as low as that 
from or to point in question by any other rail route." 

The contracts made for such purposes by the Atchison, Topeka & 
Santa Fé Railway Company contained araong other things the follow- 
ing provisions: 

"The title to said track, and to ail the rails, tles, bolts, switches, fasten- 
Ings, and fixtures connected therewith, and to ail other property which may 
be furnished by the railway company in the maintenance of said track, shall 
at ail times be and remain In said railway company, and said railway com- 
pany may use the same for other purposes than the delivery of freight to 
or the receipt of freight from the second party, provided that such use shall 
inconvenience the business of the second party as little as possible consist- 
ent therewith ; and at any time after the termination of thls contract or 
the obligation of the railway company, as herein provided, to maintain such 
track, the railway company shall hâve the right to remove said track and 
every part thereof." 

The contracts made by the San Pedro, Los Angeles & Sait Lake 
Railroad Company covering the cost and maintenance of such spur 



234 188 FBDBKAL BBPOETBB 

or industrial tracks contàined provisions similar to those of the' South- 
ern Pacific Company above set forth. 

Industries or plants in said city of Los Angeles located upon spur 
tracks heretofore constructed under contract, as aforesaid, by the At- 
chison, Topeka & Santa Fé Railway Company, or its predecessors in 
interest, in said city of Los Angeles, are distant from its main track 
in said city anywhere from one-fifth to one and a half miles, and in 
order to receive a car load of freight from such plant or industry it 
will be as it has been necessary to switch from the main track or yards 
of the said petitioner an empty car and set the same at such industry 
where the same can be conveniently loaded by the shipper, and such 
car when loaded must then be switched over such spur track and to 
the yard tracks to be placed in an appropriate train for transporta- 
tion to destination; and where a car load of freight is consigned to 
the operator of such plant or industry it is and has been necessary to 
switch the same from the yards of said petitioner over said spur to 
the industry or plant in question and to place the same conveniently 
thereat for unloading, and in many instances the empty car is required 
to be switched or transf erred in being retumed from such plant to the 
gênerai yards of petitioner. 

Industries or plants in the said city of Los Angeles located upon the 
spur tracks heretofore constructed under contract as aforesaid by the 
Southern Pacific Company or its predecessor in interest in said city 
of Los Angeles are distant from its main track in said city anywhere 
from 200 feet to 7 miles, and in order to receive a car load of freight 
from such plant or industry it will be as it has been necessary to switch 
from the main track or yards of said petitioner any empty car and 
set the same at such industry where the same can be conveniently 
loaded by the shipper, and such car when loaded must then be switched 
over such spur track and to the yard tracks to be placed in an appro- 
priate train for transportation to destination; and where a car load 
of freight is consigned to the operator of such plant or industry it is 
and has been necessary to switch the same from the yards of said pe- 
titioner over said spur to the industry or plant in question and to place 
the same conveniently thereat for unloading, and in many instances 
the empty car is required to be switched or transferred in being re- 
turned from such plant to the gênerai yards of petitioner. 

Industries or plants in said city of Los Angeles located upon spur 
tracks heretofore constructed under contract as aforesaid by the San 
Pedro, Los Angeles & Sait Lake Railroad Company in said city are 
distant from its main track in said city anywhere from one-fifth to 
four miles, and in order to receive a car load of freight from said plant 
or industry it will be as it has been necessary to switch from the main 
track or yards of said petitioner an empty car and set the same at 
such industry where the same can be conveniently loaded by the ship- 
per, and such car when loaded must then be switched over such spur 
track and to the yard tracks to be placed in an appropriate train for 
transportation to destination ; and where a car load of freight is con- 
signed to the operator of such plant or industry it is and has been 
necessary tô switch the same from the yards of said petitioner over 



ATCHISON, T. & S. P. ET. CO. V. INTERSTATE COMMERCE COM. 235 

said spur track to the industry or plant in question, and to place the 
same convenient thereat for unloading, and in many instances the 
empty car is required to be switched or transferred in being returned 
from such plant to the gênerai yards of petitioner. 

In such contracts governing the construction and maintenance of 
such industrial tracks no spécifie sum was fixed or prescribed in case 
the railway company should perform the aforesaid spécial service of 
receiving or delivering f reight at the plant or industry in question, but 
at the time of executing such contract the usual charge separately and 
specially set forth in the respective tariffs of petitioners for making 
such spécial deliveries or such spécial receipt of such car load f reight, 
involving the switching service to and from such plant or industry 
from and to the yards of respective petitioners where trains are made 
or broken up, had been generally established by each petitioner at the 
sum or price of $2.50 per car, and had for many years and since the 
installation of industry tracks in said city been paid by the shippers 
using such tracks, and at the time of making such spécial agreements 
shippers entering into the same understood and willingly consented 
that if the railway company performed such spécial service a charge 
therefor in addition to the freight rate from and to Los Angeles would 
be made, and such charge of $2.50 per car bas generally been made, 
maintained, and collected from said shippers in Los Angeles for said 
spécial service as aforesaid. 

The aforesaid service heretofore rendered by the respective railway 
companies of receiving car load freight at said industries or delivering 
the same to such industries or plants instead of at the team tracks or 
sheds is of great value to the owners or operators of such industries or 
plants, and is worth much more than the sum of $2.50 per car, inas- 
much as a great saving is made by such industries by reason of being 
"relieved of the necessity of paying drayage or other charges which 
would be involved in the receipt or delivery of car load freight at the 
team tracks or sheds, and risk of damage to such freight is materially 
lessened, and shippers who bave been thus favored by the construc- 
tion under spécial agreement of such spur tracks to and from their 
industries and by the receipt and delivery of freight thereat are greatly 
favored and are and hâve been accorded a decided advantage over 
other shippers in said city with whom such contracts bave not been 
made or entered into. The gênerai or prevailing charge for drayage 
in Los Angeles is 50 cents a ton, which makes the cost to the consignée 
$7.50 on a car load of 15 tons, $10 on a car load of 20 tons, $15 on 
a car load of 30 tons, $20 on a car load of 40 tons, $25 on a car load 
of 50 tons, and so on, as against the charge of $2.50 imposed by pe-; 
titioners for delivering the consignment to or receiving the shipment 
at the door of the consignee's or shipper's warehouse. 

In performing said spécial switching service involved in the receipt 
and delivery of car load freight at such industry or plant, petitioners 
are put to a much greater expense than if such freight was received 
or delivered on its team tracks or at its freight sheds. 

Each of petitioners bas made and established its rates of transpor- 
tation to and from said city of Los Angeles from and to such points 



iiS6 188 FEDERAL REPORTER 

on their respective lines, and in many instances joint rates from and 
to points on many other railroads in the United States; they hâve 
duly published and filed with the Interstate Commerce Commission 
and posted in their respective stations where f reight is received their 
respective schedules or tariffs of rates governing or concerning Inter- 
state transportation of freight in which rates are prescribed For less 
than car load lots and for car load freight ; and in respect to less than 
car load freight the rates hâve been established and made to cover the 
receipt or delivery of such freight at the freight station of the respec- 
tive railway company in said city; and in respect to car load freight 
rates established for the public in gênerai contemplate receipt or de- 
livery thereof upon or at the team tracks or sheds of the respective 
railway company ; and in said tariffs it has been and is distinctly and 
separately provided and stated that where car load freight is received 
at or delivered to private industries located upon such industry tracks 
in said city of Los Angeles an additional charge — that is, a charge in 
addition to the rate fixed to and from Los Angeles, amounting to $2.50 
per car — will be charged and collected for said spécial service of mak- 
ing delivery or receipt of car load freight to or at said plants or indus- 
tries located in said city of Los Angeles upon such spécial industry 
tracks. 

On account of water and other compétition the rates of transporta- 
tion to and from Los Angeles hâve been forced to an exceedingly low 
basis so that petitioners do not receive for such transportation sums 
which they are justly entitled to and which they would otherwise be 
able to charge and collect. 

On or about April 5, 1910, the Interstate Commerce Commission, 
having investigated the complaint of the Associated Jobbers of Los 
Angeles against petitioners wherein said charge of $2.50 per car was 
claimed to be unjust and illégal, made the folio wing order: 

"This case belng at issue oa complaint aud answers on flle and liaving 
been duly heard and submitted by the parties, and full investigation of tlie 
matters and things involved having been had, and the commission having, 
on the date hereof, made and flled a report contalning its flndings of fact 
and conclusions thereon, which said report Is hereby referred to and made 
a part hereof, and having found that the présent charge of $2.50 per car 
exacted by the several défendants for delivering and receiving car load 
freight to and from Industries located upon spurs and side tracks within 
their respective switching limita at Los Angeles, Cal., when such car load 
freight is moving in Interstate commerce incidentally to a system-line haul, 
is in violation of the act to regulate commerce: 

"It Is ordered that said défendants be, and they are hereby, notifled and 
required to cease and desist, on or before the Ist day of July, 1910, and for 
a period of not less than two years thereafter abstaln, from exacting their 
présent charge of $2.50 per car for delivering and receiving car load freight 
to and from industries located upon spurs and side tracks within their respec- 
tive switching limlts in the said city of Los Angeles, Cal., when such car 
load freight is moving in Interstate commerce Incidentally to a system-line 
haul. 

"It is further ordered that sald défendants be, and they are hereby, noti- 
fled and required to cease and desist, on or before the Ist day of July, 1910, 
and for a period of not less than two years thereafter abstain, from exact- j 
ing any charge whatever, other than the charge for transportation from ' 
points of origin to destination, for delivering or receiving car load freight to 
or from industries located upon spurs or side tracks within their respectlva 



ATOHISON, T. A S. F. ET. CO. V. INTERSTATE COMMEKCE COM. 237 

switching limits In the said city of Los Angeles, Cal., when such car load 
freiglit Is moving in Interstate commerce incideutally to a system-line Imul.' 

Petitioners complain that said order deprives them of ail compen- 
sation for the said spécial services so rendered by them respectively, 
and that said ordèr is by reason thereof illégal and void. The péti- 
tion prays that said order be annuUed and that the Interstate Com- 
merce Commission be perpetually enjoined from the enforcement 
thereof. 

[1] Whether or not the facts stated in the pétition constitute a cause 
of action dépends upon the question whether the petitioners hâve the 
lawful right to make the charge of $2.50 per car for the industrial 
track service mentioned. In the absence of spécial contract or usage 
to the contrary, under the common lav*r carriers by land are bound to 
deliver or tender goods to the consignée at his résidence or place of 
business, and until this is done they are not relieved from responsi- 
bility as carriers. This rule, however, never was applied to raiiroads. 
They are exempt from the duty of personal delivery, and bound only 
to carry the goods to the dépôt or station to which they are destined 
and there hold or place them in a w^arehouse ready for delivery when- 
ever the consignée or owner calls for them, after notifying the con- 
signée or owner of their readiness to deliver. Fenner v. Buffalo, etc., 
R. Co., 44 N. Y. 505, 4 Am. Rep. 709; Witbeck v. Rolland, 45 N. 
Y. 13, 6 Am. Rep. 23; Chalk v. Charlotte, etc., R. Co., 85 N. C. 423; 
South, etc., Alabama R. Co. v. Wood, 66 Ala. 167, 41 Am. Rep. 749 ; 
New Orléans, etc., R. Co. v. Tyson, 46 Miss. 729 ; State v. Republi- 
can Valley R. Co., 17 Neb. 647, 24 N. W. 329, 52 Am. Rep. 424; 
Francis v. Dubuque, etc., R. Co., 25 lowa, 60, 95 Am. Dec. 769 ; Ever- 
shed v. London, etc., R. Co., 2 Q. B. Div. 254. 

The order of the Interstate Commerce Commission complained of 
tnakes the report of the commission a part thereof and as said order 
is set out in the pétition the report also becomes a part of sâid pétition. 

[2] It is found in the order of the commission that the charge of 
$2.50 per car exacted by the several petitioners for delivering and re- 
ceiving car load f reight to and from industries located upon spurs and 
side tracks within their respective switching limits at Los Angeles, Cal., 
when such car load freight is moving in interstate commerce inci- 
dentally to a system-line haul is in violation of the act to regulate 
commerce. This conclusion is a conclusion of law, and of course is 
open to inquiry in this court. It is not stated in the order itself what 
particular section of the act to regulate commerce the charge of $2.50 
per car for the services rendered by petitioners violâtes, but as the 
report of the commission is made a part of the order we are at liberty 
to examine said report with a view of ascertaining the views of the 
commission as to what particular provision of the act to regulate com- 
merce the practice or charge of petitioners violâtes. 

[3] In this examination we are limited to the report or opinion of 
the majority of the commission, the views of the minority not being 
open to considération. Interstate Commerce Commission v. Delaware, 
Iv. &. W. R. R. Co., 220 U. S. 235, 31 Sup. Ct. 392, 55 L. Ed. — . 



238 188 FEDERAL REPORTER 

In the report of the commission we find the f ollowing language 

(18 Interst. Corn. R. 310): 

"The basic theory of the complalnant's case is that thèse Industry spurs 
are part of the receiving and deliverlng Systems of the carriers, which the- 
ory Is met by the défendants with the proposition that thèse spurs are essen- 
tially plant facilities constructed for the convenience of the shipper rather 
than that of the carrier. In a senee and within proper limitations both of 
thèse contentions are sound." 

Again, it is said in the report as f ollows : 

"We are fully convinced that the complalnant's view of the nature of thèse 
tracks Is correct, and that they are portions of the terminal facilities of the 
carrier with whose Unes they connect, and, together with the team tracks and 
other yards, form the terminal facilities of thèse carriers." 

It is also stated in said report: 

"We do net find in the record sufflclent data upon which to base a flndlng 
as to the reasonableness of the amount of this charge of §2.50 for Interline 
swltehing to thèse industrial tracks, and for the purpose of this présent order 
will assume it to be reasonable." 

Again, quoting from the report: 

"The service hère under considération, however, Is a delivery service and 
nothlng more; the delivery belng made at one of the carrier's tracks which 
is removed at a greater or less distance from its public yards. Spur track 
delivery is a substitute service, a service which it has solicited the right to 
glve, as the évidence hère shows, a service which costs the industry for the 
installation of the track and the use of its property as a railway terminal. 
It is a service over the carrier's own rails to a point where it yields posses- 
sion of the property transported and which Involves no greater expense than 
would team track delivery. It relieves the carrier's team tracks and sheds, 
neeessltating less outlay for expense of yards In a crowded clty, promotes 
the speedy release of equlpment, and vastly aids in conducting a commerce 
which Is greater than the carrier's own facilities eould freely, adequately, 
and economically handle." 

The commission condemned the charge of $2.50 per car made by 
the petitioners for dehvering and receiving interstate car load freight 
to and frOm industries located upon spurs or side tracks within their 
respective switching limita when such car load freight was moving 
incidentally to a system-line haul as illégal and unjust. As the com- 
mission did not find the charge of $2.50 to be excessive in and of 
itself, we conclude that the commission found that the charge violated 
section 1 of the act to regulate commerce, the charge being unjust 
because on the theory of the report of the commission the carrier 
had already been paid for this service by payment of the regular tariff 
from point of origin to destination. 

[4] It is claimed by counsel for the United States, under the déci- 
sions of the Suprême Court in Interstate Commerce Commission v. 
Illinois Central R. R. Co., 215 U. S. 452, 30 Sup. Ct. 155, 54 L. Ed. 
280, Baltimore & Ohio R. R. Co. v. Pitcairn, 215 U. S. 481, 30 Sup. 
Ct. 164, 54 L. Ed. 292 , and Interstate Commerce Commission -v. Del- 

aware, L. & W. Ry. Co., 220 U. S. 235, 31 Sup. Ct. 392, 55 L.Ed. , 

that the findings thus made by the commission are conclusive upon' 
this court, and that thèse findings forming a part of the pétition, it 



AT0HI8ON, T. & S. F. RY. CO. V. INTERSTATE COMMERCE COM. 239 

conclusively appears therefrom that no cause of action has been stated 
which would warrant this court, taking ail the allégations of the péti- 
tion as true, in granting the relief prayed for. We are not unmindful 
of the rulings of the Suprême Court in the cases mentioned in regard 
to' the force and effect to be giveri to the findings of the commission 
and hâve no disposition in any way to avoid the binding force of such 
rulings. We think that it is fair to say that the conclusion of the 
commission that the charge of $2.50 per car for the service named was 
illégal and unjust was based upon two findings: First, that the in- 
dustrial track upon which the service was rendered is a terminal facil- 
ity of the railroad and not a plant facility of the industry to which it 
leads; and, second, that the service for which the charge is made is 
the same service as that which is performed by the carrier in deliver- 
ing f reight at its dépôt or team tracks. 

We do not think that whether the industrial track is a plant facility 
or a terminal facility of the railroad necessarily détermines the legal- 
ity of the charge. The commission, in one part of its report, found 
that the contentions of both parties within certain limits were sound. 
, The real question presented is, "Is the carrier lawfully entitled to 
charge the sum of $2.50 per car for the service performed upon the 
industrial tracks?" and we do not think that question can be deter- 
mined alone by the considération whether the industrial track is a 
plant facility or a terminal facility of the railroad, for the reason that 
it is the service which is performed upon the industrial track that is 
the question, regardless of the ownership of the track. 

So far as the finding of the commission that the industrial track 
service is the same as the team track or dépôt service is concerned, 
we are constrained to hold that it is not a finding which precludes 
this court from coming to a différent conclusion upon the présent 
record. In cases where there is a substantial conflict in the évidence 
or testimony upon which a finding of the commission ié based, we 
would feel bound by the finding unless clearly and palpably against 
the weight of the testimony; but we do not think that this court is 
concluded by a finding of the commission based upon admitted facts 
which in no wise tend to sustain the conclusion reached. In other 
words, as in this case, where ail the facts are undisputed, we do not 
think that the commission can by an ultimate finding based upon 
the undisputed facts preclude this court from reaching a conclusion 
of its own upon such undisputed and admitted facts. Where the 
facts are undisputed there is no occasion for facts to be found, and 
the ultimate conclusion of the commission is a mixed question of 
law and fact which certainly ought not to be held to be conclusive 
upon this court. 

[5] To say that the transportation of cars and f reight to and from 
industrial plants located from one-fifth of a mile to seven miles from 
the main track of the carrier is the same service which the carrier per- 
forms and for which it is paid by the gênerai tariff charge when it de- 
livers freight at its dépôt in Los Angeles, or at the team tracks, is so 
contrary to the admitted physical facts as to be wholly untenable. It 



240 188 FEDERAL REPORTEE 

seems clear to us that in the absence of statute the carriers in the 
présent case are not bound to perform this industrial track service 
and if they voluntarily perform it under an arrangement with the 
owner of the industrial plant, we see no reason why they may not 
charge a reasonable price therefor; and the charge in question is con- 
ceded to be reasonable. 

[6] We are not at liberty to view the case at this time except as it 
appears from the pétition, and we are wholly unable to corne to the 
conclusion from the facts therein stated, which are to be taken as 
admitted for the purpose of this motion, that the industrial or spur 
track service is the same service that the carrier performs by delivery 
to the team track or at the dépôt, and therefore are unable to say 
that the gênerai tariflf charge on f reight shipped to Los Angeles from 
points of origin would include a delivery at the industrial plant. 
Nor are we able to see how it can be said that the gênerai tariff charge 
includes a delivery at the industrial plant. When it is said that the 
gênerai tariff charge for the transportation of freight to Los Angeles 
pays for the delivery of such freight at the industrial plant, upon what 
authority is this déclaration made? Who is to say that it pays for 
delivery at the industrial plant? The carrier, in the first instance, is 
entitled to fix its tariff charges for the transportation of freight, and 
in this instance has fixed a certain tariflf for the delivery of freight to 
Los Angeles. At the same time that it fixed this gênerai tariff it fixed 
a tariff, which it filed with the Interstate Commerce Conimission, for 
this industrial track service, so that the only party in the first instance 
that had anything to say about what the gênerai tariff charge should be 
was the carrier, and it has said that the gênerai tariff charge only car^ 
ries the freight to the dépôt or the team tracks. There is no évidence 
whatever that the carrier ever waived in any way its right to charge for 
the spécial service on the industrial tracks. There may be conditions 
under which the carrier may waive its right to make a charge for 
terminal service, as was said in Interstate Commerce Commission v. 
Stickney, 215 U. S. 105, 30 Sup. Ct. 67 (54 L. Ed. 112): 

"The carrier is under no obligation to cliarge for terminal services. Busi- 
ness interests may .l'ustify it In waiving any such charge, and it will be eon- 
sidered to hâve waived It unless it makes plain to both shlpper and com- 
mission that it is insisting upon it." 

The pétition in the présent case shows that before thèse tracks were 
constructed this charge was contained in the gênerai tariffs of peti- 
tioners and that said charge for industrial track service was known to 
the différent proprietors and owners of industrial plants, and that they 
consented to such charge. It is admitted of course that such consent 
or implied contract on the part of the industrial plant owners would. 
be avoided if it was in conflict with any law of Congress regulating 
Interstate commerce. If the carrier is not bound by law to deliver 
freight at the industrial plant, and it cannot be successfully contended 
that it is, then it follows as a necessary conséquence that this industrial 
track service is a spécial service and is not a service which the carrier 
is bound to perform for the gênerai tariff charge for the transporta- 
tion of freight destined to Los Angeles. 



80UTHEKN PAO. OO. V. INTERSTATE OOMMEBCE COMMISSION 241 

The commission made no finding that the charge of $2.50 in con- 
nection with the transportation of cars to and from mdustrial plants 
constituted an undue préférence or advantage or was discrimmatory 
in any way, and thèse questions if they exist at ail will not be discussed, 

From what has been stated in this opinion as the views of this court, 
it necessarily results that the motion to dismiss must be denied, and an 
order will be granted suspending the order of the Interstate Commerce 
Commission complained of until the f urther order of this court. 

MACK, Judge, dissents. See 188 Fed. 929. 



SOUTHERN PAO. CO. et al. v. INTERSTATE COMMERCE COMMISSION 

et al. 

(Commerce Court. July 20, 1911.) 

No. 1. 

Bill by the Southern Pacific Company and another against the Interstate 
Commerce Commission and another. Application for a temporary Injunetion. 
Application granted, and motion to dismiss denied. 

Robert Dunlap, T. J. Norton, F. C. Dillard, H. A. Scandrett, and C. W. Dur- 
brow (Gardiner Lathrop and W. F. Herrin, of counsel), for petitioners. 

J. A. Fowler, Asst. Atty. Gen., Blackburn Esterline, Sp. Asst. Atty. Gen., 
and P. J. Farrell) for respondent Interstate Commerce Commission. 

Seth Mann, for Interveners. 

Before KNAPP, Presiding Judge, and ARCHBALD, HUNT, CARLAND. 
and MACK, Associate Judges. 

CARDAND, Judge. The biU in this case was filed for the same purpose 
as the bill in case No. 2, Atchison, Topeka & Santa Fé Railway Co. South- 
ern PaciQc Co., and San Pedro, Los Angeles & Sait Labe Railroad Co., v. 
Interstate Commerce Commission and United States, 188 Fed. 229, except 
that the switching service for which a charge is claimed Is performed at the 
clty of San Francisco, Cal. 

For the reasons stated in the opinion filed in case No. 2, above mentioned, 
the motion for a temporary injunetion made by the petitioners Is granted, 
and the motion to dismlss made by the United States and the Interstate Com- 
merce Commission Is denied. 

MACK, Judge, dlssenting. See 188 Fed. 92a. 
188 F.— 16 



24S 188 FEDERAL BBPORTBB 

HOOKER et al. V. INTERSTATE COMMEROB COMMISSION et al. 

(Commerce Court. July 20, 1911.) 

No. 6. 

1. CoMMEECE (§ 95*) — Interstate Commeece-JRates— Jueisdiction to Fis. 

Power to establlsh reasouable and just rates for tàe future trausyorta- 
tion of Interstate commerce by common carriers Is vested in the Inter- 
state Commerce Commission, and not in the Commerce Court 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 95.*] 

2. Constitutional Law (§ 298*) — Interstate Commeecb — Rates — Consti- 

tutional Rate. 

It Is no answer to a shipper's right to contest the validity of a freight 
rate Imposed for the transportation of Interstate commerce, on the ground 
that it is so high as to operate as a taking of hls property without due 
process of law and without full compensation, that if he is not willing 
to pay the rate he Is not obllged to ship. 

[Ed. Note.— For other cases, see Constitutional Law, Dec. DIg. § 298.* 
Régulations as to transportation of property as interférence with In- 
terstate commerce, see note to Rupert v. United States, 104 C 0. A. 
2590 

3. Caebiers (î 26*) — Interstate Commerce— Reasonable Rates. 

In determlnlng the reasonableness of a freight rate between specified 
points, the Interstate Commerce Commission Is nof llmlted to the re- 
qulrements of a partlcular carrier or to the question, whether a lesser 
rate would be remuneratlve to a partlcular carrier, but should. in addi- 
tion, çonsider the rates In the partlcular terrltory to he afCected by a 
changé of a rate or rates In question. 

[Ed. Note. — For other cases, see Carriers, Ctent. Dig. S§ 67-82; Dec. 
Dig. f 26.*] 

4. Evidence (§ 20*) — Judicial Notice— Interstate Freight Rates. 

The Commerce Court wlll talie Judicial notice that Interstate rates 
prescribed for the transportation of freight by a common carrier must 
be more or less Interdependent, or at least be so related wlth each other 
that the rate-maklng power will not, simply beeause It has the power, 
flx a rate on a single llne of railroad which wlll necessarlly dlsorganize 
reasonable rates on other railroads In the same terrltory. 

[Ed. Note. — For other cases, see Evidence, Cent. DIg. § 24 ; Dec. Dig. § 
20.*] 

5. Evidence (§ 83*) — Interstate Freight Rates— Peestjmption. 

Ali Interstate freight rates established In accordance with law are 
presumed to be Just and reasonable. 

[Ed. Note. — For other cases, see Evidence, Cent. Dlg. § 105 ; Dec. Dig. 
I 83.*] 

6. Commerce (§ 91*) — Freight Rates— Establishment bt Interstate Com- 

merce Commission— Review. 

SInce the flxing of a schedule of Interstate rates by the Interstate 
Commerce Commission Is a législative act, such schedule cannot be dis- 
turbed by the commerce court on complalnt of a shipper as uneonstitu- 
tionally hlgh unless it clearly appears that the rates so flxed are so higb 
as to be violative of the shipper's constitutional rlghts, guaranteed by the 
flfth amendment to the fédéral Constitution. 

[Ed. Note.^For other cases, see Commerce, Dec. Dig. § 91.*] 
*For other cases see same topic & S numbbb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



HOOKER V. INTERSTATE COMMERCE COMMISSION 243 

7. CoNSTiTUTioNAL Law (§ 298*) — Intebstate Rates— Validity. 

Interstate Commerce Commission order February 17, 1910, establishina 
a maximum flrst-class rate of 70 cents per hundredweight between Cin- 
cinnati and Chattanooga, and proportionate rates for otlier classes, held 
not so unreasonably higti as to constitute a deprivation of shippers' prop- 
erty wlthout compensation, etc., when considered In accordance with the 
earning power of ail the carriers serving such territory. 

[Ed. Note. — For other cases, see Constitutional Law, Cent. Dlg. § 847; 
Dec. Dlg. § 298.* 

■\A'hat constitntes an unlawful préférence or discrimination by a car- 
rier under Interstate commerce régulations, see note to Gamble Robinson 
Co. V. Chicago & N. W. Ry. Co., 94 C. C. A. 230.] 

Arehbald and Mack, Judges, disseuting. 

Bill by James J. Hooker and others, officers of the Receivers' & 
Shippers' Association, against the Interstate Commerce Commission 
and others to compel the annulment of class rates fixed by the Inter- 
state Commerce Commission between Cincinnati, Ohio, and Chatta- 
nooga, Tenn. Dismissed. 

Francis B. James, for petitioner. 

R. Walton Moore and Frank W. Gwathmey, for Cincinnati, N. O. 
& T. P. Ry. Co. 

J. A. Fowler, Asst. Atty. Gen., and Blackburn Esterline, Sp. Asst. 
Atty. Gen., for United States. 

P. J. Farrell, for Interstate Commerce Commission. 

Before KNAPP, Presiding Judge, and ARCHBALD, HUNT, 
CARLAND, and MACK, Associate Judges. 

CARLAND, Judge. In this opinion, for the sake of brevity, the 
Cincinnati, New Orléans & Texas Pacific Railway Company will be 
abbreviated C, N. O. & T. P., the Interstate Commerce Commis- 
sion will be abbreviated Commission, the LouisviUe & Nashville Rail- 
way Company will be abbreviated L. & N., and the Nashville, Chat- 
tanooga & St. Louis Railway Company will be abbreviated N., C. & 
St. L. _ _ . 

Petitioners are firms, partnerships, and corporations engaged in va- 
rions kinds of mercantile, commercial, industrial, and manufacturing 
pursuits in Hamilton county, Ohio, and manufacture and produce 
goods, wares, and merchandise, and sell annually large quantities 
thereof of great value, alleged in the bill to be several hundred thou- 
sand dollars, to purchasers located at Chattanooga, Tenn., which said 
goods, wares, and merchandise are enumerated in the freight tarifïs 
and classifications governing the same of the respondent C, N. O. & 
T. P. Said petitioners hâve invested in building up and maintaining 
their respective lines of business an amount exceeding the sum of 
$25,000,000. 

The C, N. O. & T. P. is a corporation duly organized under the 
laws of the state of Ohio, and is a common carrier engaged in the 
transportation of goods, wares, and merchandise by railroad from the 
city of Cincinnati, Ohio, to the city of Chattanooga, Tenn., the north- 

♦For other cases see same topic & § numbee in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



244 188 FEDERAL REPORTER 

ern terminus of said C., N. O. & T. P. being at Cincinnati and the 
southern at Chattanooga. 

On the 14th day of July, 1910, petitioners filed their bill of com- 
plaint in the Circuit Court of the United States for the Southern Dis- 
trict of Ohio, Western Division, for the purpose of obtaining a judg-- 
ment of that court setting aside and annulhng an order of the Com- 
mission dated February 17, 1910, but in fact rendered May 24, 1910, 
and which order is in the following language: 

"Thls case being at issue upon complaint and answers on file, and having 
been duly heard and submitted by the parties, and full investigation of the 
matters and things involved having been had, and the Commission having ou 
the date hereof made and flied a report containing its findings of fact and 
conclusions thereon, which said report is hereby referred to and made a part 
liereof, and having found that the présent rates of défendant the Cincinnati, 
New Orléans & Texas Pacific Railway Company (lessee of the Cincinnati 
Southern Railway) for the transportation of articles in the numbered classes 
of the Southern Classification from Cincinnati, Ohio, to Chattanooga, Tenu., 
are, to the extent that said rates exceed the rates named in paragraph 3 here- 
of, unjust and unreasonable. 

"(2) It is ordered, that said défendant be, and it is hereby, notifled and 
required to cease and deslst, on or before the 15th day of July, 1910, and for 
a period of net less than two years thereafter abstain, from exaeting its 
présent rates for the transportation of articles in the numbered classes of the 
Southern Classiflcatlon from Cincinnati, Ohio, to Chattanooga, Tenn. 

"(3) It Is further ordered, that said défendant be, and it is hereby, notified 
and required to establish, on or before the 15th day of July, 1910, and maiu- 
taln In force thereafter during a period of not less than two years, rates for 
the transportation of articles in the numbered classes of the Southern Classi- 
fication from Cincinnati, Ohio, to Chattanooga, Tenn., which shall not exceed 
the following, in cents par 100 pounds, to wit: 
Class 1 2 3 4 5 6 



Rate 70 60 53 44 38 29" 

The C, N. O. & T. P. and the Commission filed demurrers to the 
bill. Subsequently the case was transferred to this court under the 
provisions of section 6 of the act to create a Commerce Court and to 
amend the act entitled "An act to regulate commerce (Act June 18, 
1910, c. 309, 36 Stat, 544)," and the cause has now been submitted for 
décision upon the bill and demurrers. 

The bill of complaint is quite voluminous, consisting, exclusive of 
exhibits, of 66 printed pages. The material allégations, however, 
which in our judgment are necessary to be considered in order to dis- 
pose of the case, may be stated briefîy as follows : 

In 1894 the Commission decided the cases of Cincinnati Freight 
Bureau v. C, N. O. & T. P., and Chicago Freight Bureau v. L. & N. 
et al., 6 Interst. Com. R. 195. Thèse proceedings had been instituted 
by the commercial interests of Cincinnati and Chicago for the pur- 
pose of correcting an alleged discrimination in rates upon the num- 
bered classes from points of origin in the Central West as compared 
with rates from points of origin in the East, to southern territory. 
The complaint of the Chicago Freight Bureau alleged that the rates 
for the transportation of freight from western to southern points 
upon the numbered classes from Cincinnati and other Ohio river 
crossings to southern points of destination were excessive, and that 



HOOKER V. INTERSTATE COMMERCE COMMISSION 245 

the rates from Chicago were even more excessive. Under this allé- 
gation the Commission held that it might inquire into the inhérent 
reasonableness of thèse rates, and proceeded to dispose of the case 
upon that ground. The Commission held that the rates from Cincin- 
nati were too high and should be materially reduced. The following 
are the rates then in effect from Cincinnati to Chattanooga and those 
ordered by the Commission, showing the réductions made: 
Classes 1 2 S 4 5 6 

Rates in effect 76 65 57 47 40 30 

Reduced rates 60 54 40 30 24 22 

Reduttlons 16 11 17 17 16 8 

The order of the Commission, made in pursnance of this décision, 
was not complied with by the carriers, and the Commission thereupon 
instituted proceedings in the Circuit Court for the Southern District 
of Oliio to enforce obédience to its requirements. Such proceedings 
were had in that suit that the Suprême Court of the United States 
finally directed a dismissal of the bill of complaint upon the ground 
that the act to regulate commerce as it then stood conferred no au- ' 
thority upon the Commission to establish a rate for the future ; that 
this order was in effect the fixing of a future rate, and therefore 
without warrant of law, and void. I, C. C. v. C, N. O. & T. P., 
167 U. S. 479, 17 Sup. Ct. 896, 42 L. Ed. 243. 

When the interstate commerce law was amended in 1906 by giving 
to the Commission power to fix and establish a rate for the future, 
the Receivers' & Shippers' Association of Cincinnati commenced pro- 
ceedings before the Commission and against the C, N. O. & T. P. and 
the Southern Railway Co. for the purpose of obtaining the benefit of 
the holding of the Commission in the former case. As a resuit of a 
hearing had by the Commission in the proceedings last mentioned, the 
order complained of in this action was made. 

It is claimed by the petitioners that the maximum rate fixed by said 
order is much too high and is extortionate, so much so that the Com- 
mission in making the order violated the fifth amendment to the Con- 
stitution of the United States, which prohibits the taking of private 
property without due process of law or without just compensation. 
While said order of the Commission was in full force and unsuspend- 
ed in any way, the C, N. O. & T. P. put into effect a schedule of rates 
for the transportation of freight between Cincinnati, Ohio, and Chatta- 
nooga, Tenn., in accordance with the maximum fixed by the Commis- 
sion, and said rates are still in force. 

In the report of the Commission, which is made a part of said order, 
it is f ound as f ollows : 

"If It is our duty to talie this railroad by Itself and to détermine the rea- 
sonableness of thèse rates by référence to cost of construction, cost of main- 
tenance, and profit upon the Investment, we think the eomplainants hâve es- 
tablished thelr case and that thèse rates onght fairly to he reduced by as great 
an amount as was formerly found reasonable by this Commission." 

This language of the report refers to the finding made by the Com- 
mission in 1894, and the réductions made then by the Commission ap- 
pear in the table heretofore mentioned in this opinion. 



246 188 FEDERAL, REPORTEE 

rThe bill in this case also allèges that if the schedule of rates fixed 
by the Commission in 1894 had been in force or had been applied 
during the years 1903 to 1908, both inclusive, the yearly average net 
profit of the C, N. O. & T. P. would hâve been 40.66 per cent. It 
also appears from the bill of complaint that the city of Cincinnati 
owns the line of railroad between the city of Cincinnati, Ohio, and 
the city of Chattanooga, Tenn., which is commonly known as the Cin- 
cinnati Southern, and now and during the times mentioned in the bill 
operated by the C, N. O. & T. P. The road originally cost the city 
of Cincinnati $18,000,000, and the citv subsequently spent for term- 
inal facilities $2,500,000, making a total cost of the Cincinnati South- 
ern to the city of Cincinnati of $20,500,000. The C, N. O. & T. P. 
leased this property, and is still leasing it, and the basis of rental 
returned to the city of Cincinnati prior to 1906 was 6 per cent., and 5 
per cent, subséquent to that date. The C, N. O. & T. P. owns its 
own equipment and never did hâve any interest in the Cincinnati 
Southern beyond the right to use the property under the terms of the 
leasehold. The capital stock of the C, N. O. & T. P. for the years 
1903 to 1908, both inclusive, was $5,000,000, divided into $3,000,000 
of common stock and $2,000,000 of preferred stock, and about the 
year 1908 it increased its capital stock by adding $500,000 of prefer- 
red stock, making its entire issued capital stock for 1908 $5,500,000. 
The value of the property of the C, N. O. & T. P. between the vears 
1903 and 1908, both inclusive, was $5,000,000, and after 1908" was 
$5,500,000, and was ail the property of the C, N. O. & T. P. devoted 
to and employed in the public service and use and for the public con- 
venience. 

The C, N. O. & T. P. is a single-track railroad from Cincinnati to 
Chattanooga, a distance of 336 miles, without branches, and has an 
average gross earning per mile of $26,082.66. The L. & N. runs from 
Cincinnati to Louisville, and from Louisville to Nashville, the dis- 
tance from Cincinnati to Louisville being 114 miles and the distance 
from Louisville to Nashville being 185.9 miles. The distance from 
Cincinnati to Nashville via the L. & N. is thus shown to be 299.9 
miles. Nashville is connected with Chattanooga by the N., C. & St. 
L., the distance from Nashville to Chattanooga being 151 miles, mak- 
ing the distance from Cincinnati to Chattanooga, via the L. & N. from 
Cincinnati to Louisville and Louisville to Nashville, and from Nash- 
ville to Chattanooga over the N., C. & St. L., 450.9 miles. The di- 
rect haul from Cincinnati to Chattanooga via the C, N. O. & T. P. 
is thus 114.9, miles shorter than the indirect haul via the L. & N. and 
the N., C. & St. L. by way of Louisville and Nashville. The average 
gross earnings, per mile, between Cincinnati and Chattanooga via the 
L. & N. and the N., C. & St. L. is $25,593.40. 

[1] In view of the finding of the Commission heretofore men- 
tioned, it pecessarily foHows that its order ought to hâve followed its 
findings, unless the reasôns stated by the Commission for not doing 
so are valid. In this connection.it must be remembered, however. 
that the power to establish reasonable and just rates for the future 



HOOKER V. INTERSTATE COMMERCE COMMISSION 247 

for the transportation of f reight by common carriers is vested by law 
in the Commission and no part thereof is vested in this court, and 
this court may not disturb the order complained of unless it can be 
clearly found that it conflicts with the provisions of the fifth amend- 
ment to the Constitution of the United States, providing the power 
conferred has been regularly exercised. The order of the Commis- 
sion itself does not fix a schedule of rates to be put in effect by the 
C, N. O. & T. P., but simply fixes a maximum rate beyond which the 
railroad may not go. The railroad, however, upon the making of 
this order established the schedule of rates as high as the order would 
permit, and therefore it may be truly said that the schedule of rates 
put in effect by the railway company is the schedule of rates made 
by the Commission or at least authorized by it. Ail that this court 
could do if it found the maximum schedule fixed by the Commission 
violated the constitutional rights of shippers over the C, N. O. & T. 
P. wotdd be to set aside the order ; but as the rates prescribed thereby 
hâve already gone into efïect, and as this court has no authority or 
power to establish rates or to order that any particular rate be put 
in efïect, it necessarily results that the rates now in effect on the C, 
N. O. & T. P. would continue in efïect unless changed by the carrier 
or. the Commission. The carrier could change its rates if the order 
was set aside and even make them higher than they are now. The 
Commission could again investigate the matter and fix a new schedule 
of rates. So that it appears that ail the shippers would gain in this 
litigation would be the vacation of the order, and if the court held 
that the rates permitted were so'high as to be violative in a consti- 
tutional sensé of the rights of the shippers then no doubt the Com- 
mission would not again establish such a high schedule of .rates. But 
in any event if we should set aside the order on constitutional grounds 
the shippers would be obliged to go again to the Commission for re- 
lief. At first we were inclined to think that the resuit which would 
be obtained by a successful termination of this suit in behalf of the 
shippers would be so inconsequential as to render it unnecessary for 
this Court to take jurisdiction over the case, but upon further re- 
flection it would seem that the shippers hâve the right to a judgment 
of this court as to whether or not the schedule of rates contained in 
the order complained of is so high as to be violative of the fifth 
amendment to the Constitution as to the différence between what the 
Commission found would be reasonable if they considered the C, N. 
O. & T. P. by itself and the maximum rates that were fixed. Then 
if the shippers again went before the Commission they would hâve the 
benefit of the judgment of this court upon that subject. And in that 
view we proceed to consider the question as to whether the reasons 
given by the Commission for not reducing the schedule of rates for 
the classes mentioned to the sums which the Commission found would 
be reasonable if the C, N. O. & T. P. should be considered by itself 
are valid. 

It is claimed by the petitioners that the Commission, having found 
that the so-called 60-cent schedule would be reasonable for the C, 



248 188 FEDERAL REPORTES 

N. O. & T. P. considered by itself, was bound to establïsh such sched- 
ule as the resuit of its finding, and that the Commission's establish- 
ing a higher schedule for the reasons mentioned in its report, while 
seemingly within its power to fix a reasonable rate, was really and in 
fact beyond its power, as the Commission had no right to take into 
considération in fixing a higher schedule the matters which induced 
it to make the order which it did. 

There are two questions which are presented to this court for déci- 
sion : First. Are the reasons given by the Commission for the estab- 
lishment of the schedule mentioned in the order valid, or are they 
so outside and beyond the power of the Commission to fix a reason- 
able rate as to corne within the rule that prohibits the Commission 
from fixing a rate for reasons which the Commission is not author- 
ized to consider? Southern Pacific Co. v. I. C. C, 219 U. S. 433, 31 
Sup. Ct. 288, 55 L. Ed. . Second. Is it shown, beyond reasona- 
ble question, by the présent record that the schedule of rates con- 
tained in the order of the Commission complained of clearly violâtes 
the fifth amendment to the Constitution of the United States by tak- 
ing the property of petitioners without due process of law or without 
just compensation if the taking is for a public purpose? 

[2] It seems to hâve been decided in the case of Board of Railroad 
Commissioners of the State of Kansas v. Symms Grocery Co. et al., 
53 Kan. 207, 35 Pac. 217, that the shipper cannot invoke thèse consti- 
tutional provisions for the reason that he is not obliged to ship; that 
he may utilize the rate prescribed or he may not. We are not im- 
pressed with the soundness of this décision. The logical resuit of 
such a holding as applied to the facts in the présent case would be 
équivalent' to saying to the shipper, '"You may pay an unconstitutional 
rate or go out of business ;" and we do not think that the protection 
of the Constitution is held on any such condition. 

In stating the reasons which in the jùdgment of the Commission 
compelled it to take into account in fixing the schedule of rates which 
it did other considérations and other railroads than the C, N. O. & 
T. P., we can do no better than to quote from the report of the Com- 
mission, as follows: 

"The défendants also contend that thèse rates should be fixed not only with 
référence to the flnancial results and the flnancial necessitles of the Cincin- 
nati, New Orléans & Texas Pacific Company, but also with référence to other 
companies whose rates are necessarily affected by thèse; otherwise stated, 
the Commission should establish rates which are just and reasona'ble for the 
section in which they prevail. If a particular Company is so situated that 
it can make a handsome profit under such rates, that is the good fortune of 
that Company, just as it would be the misfortune of some other company if 
it could not show as favorable earnlngs. 

"The rate from Cincinnati and Louisville to Chattanooga bas been the same 
for the last 28 years. The distance is substantially the same^ and this re- 
lation In rates will undoubtedly be maintained in the future. Whatever ré- 
duction is made from Cincinnati will be met by corresponding réductions 
from other Ohio river crossings. Rates from Memphis to Chattanooga are 
lower by a fixed dlfiferential than from the Ohio River, and this relation would 
undoubtedly be preserved, and perhaps ought to be, since the distance is 300 
miles as against 336 miles from Cincinnati. 



HOOKBR V. INTERSTATE COMMERCE COMMISSION 249 

"In the original case the Commission ordered réductions to many other 
points besides Chattanooga. Whlle Chattanooga is ttie only southern point 
of destination referred to in thèse complaints, It is franlvly stated tliat tlif 
purpose is to obtain a gênerai réduction to tliis soutlieastern territory ; and 
no reason is apparent why, if the Commission adlieres to its former décision 
In case of Chattanooga, it ought not to do the same in case of other local ities 
In this territory. It wlU be remembered that in 1905 certain réductions were 
made from the Ohio river to Atlanta without any corresponding réductions 
to Chattanooga. Originally, the same rate had been made to Atlanta from 
Louisvllle as was made from Baltimore. After the opening of the Cincinnati 
Southern thls same rate was applled from Oincinnati to Atlanta, and the 
rate from Cincinnati to Chattanooga was constructed by using the same rate 
per mile, although the distance was shorter. At the présent time the rate 
per mile is greater In case of Chattanooga than in case of Atlanta. The de- 
fendants say that the présent rate is constructed upon the proper basis, and 
that the réductions made to Atlanta could not be applled to Chattanooga 
without undolng what was accompllshed at that time, for the foUowlng rea- 
Eons: 

"The réductions of 1905 grew ont of the claim upon the part of Atlanta 
that its rates from the north were too high in comparison with Birmingham 
and Montgomery. By that read,1ustment Atîanta was made the same as 
Montgomery, and the différence between Atlanta and Birmingham reduced. 

"The distance from Memphls to Birmingham is 251 miles, from Memphis to 
Chattanooga 300 miles, from Cincinnati to Chattanooga 336 miles. The rat6 
from Memphis to Chattanooga has always been somewhat less than that from 
Cincinnati, In récognition of the shorter distance, and the St. Louis & San 
Francisco Railway insists that the rate from Memphis to Birmingham shall 
not materlally exceed the rate from Memphis to Chattanooga, which seems 
reasonabîe in view of the faet that the distance is 50 miles shorter. If, now, 
thls rate from Cincinnati to Chattanooga is reduced, that will in ail probabil- 
Ity carry wlth it a réduction from Memphis to Chattanooga, which will in- 
volve a corresponding réduction from Memphis to Birmingham, and this will 
create the same discrimination out of which the réduction of 1905 came. 
Thls would mean a reopenlng of that contest. 

"It must also be remembered that any réduction from the north to Atlanta 
and corresponding territory would undoubtedly be followed by slmilar ré- 
ductions from the East as was the case in 1905. 

"It Is apparent, therefore, to make any considérable change in this rate 
from Cincinnati to Chattanooga will work a lowering in rates throughout this 
entire southern territory, or will produce a change in the relation of those 
rates which now seem to be adjusted upon a basis fairly satisfactory to that 
territory. How far are we at liberty to conslder ail thls in flxlng a reasonabîe 
rate over the Cincinnati, New Orléans & Texas Pacific? Tt shoiild be noted 
that Chattanooga Is not complalnlng of unfalr treatment as compared with 
other southern points. 

"Some indignation was expressed by several witnesses upon the part of 
the city of Cincinnati because after that community had expended this euor- 
mous amount of money in the construction of the Cincinnati Southern Rail- 
road that property was not more devoted to the interests of the city of Cin- 
cinnati. If that city, under proper législative authority, had seen fit to op- 
erate its railroad, it might hâve established to Chattanooga whatever rates 
ît saw fit, and if the results of municipal opération had been as favorable as 
the présent, It could hâve materlally reduced those rates and still obtained 
a fair retum upon its investment. Sueh a réduction would hâve cheapened 
the cost of this freight to the dealer and probably in a degree to the consumer, 
and so might hâve benefited the ultlmate consuming public. It is doubtful 
if it would hâve benefited the interests of Cincinnati, since the rates esta'b- 
llshed by it would hâve been met by carriers serving rival eommunlties, and 
the relation of rates would* hâve continned the same. However this may be, 
the city has parted wlth Its right to operate this property, and the matter 
stands exactly as though this road had been built by prlvate capital. 
. "In the Matter of Froposed Advances in Freight Rates, 9 Interst. Corn. E. 



250 188 FEDERAL REPORTER 

382, the Commission, havlng under considération the rates on grain from Chi- 
cago to the Atlantic seaboard, announced that the interests of ail eompetlng 
Unes must be considered in determlnlng the reasonableness of those rates-, 
and not merely that line which could handle the business the cheapest. lu 
the Spoiiane Case, 15 Interst. Com. R. 376, the same subject was considered 
and the same conclusion reaehed. The last affirmance o,f this doctrine is 
found iù Kindel v. N. Y.. N. H. & H. li. R. Go.. 15 Interst. Com. R. 555, in 
whlch the rule Is stated by Clark, Oommissloner, as follows: 

" 'In the Spokane Case (15 Interst Com. R. 376) we held that the reason- 
ableness or !i rate lietween two points, served by two or more carriers, could 
not be determined by considération alone of that Une whlch is shortest and 
most favorably situated as to opération, earnlngs, etc., but that the entlre 
situation must be considered. • • • 

" 'As before suggested, we cannot, in determlnlng compétitive rates, sélect 
that rallroad whlch is the shortest or most advantageously situated, and 
llmlt the rate to what would allow that property falr earnlngs. We must 
conslder the entire situation, and détermine a reasonable rate not merely 
wlth référence to the Union Pacific, but wlth référence to ail Unes serving 
thèse Colorado points by reasonably direct llnes.' 

"We hâve no doubt as to the correctness of thls prlnclple and believe it 
must be applled hère within proper llmlts. 

"The Cincinnati Southern Rallroad Is a single trunk line wlthout branches, 
runnlng from Cincinnati to Chattanooga. The main line of the Lioulsvllle 
& Nashville extends from Cincinnati to Louisvllle, and from Louisville to 
Nashvllle. Trafflc from Louisvllle to Chattanooga passes through Nashville, 
and over the Nashville, Chattanooga & St. Louis to Chattanooga. For the 
year 1907 the gross earnlngs per mile of the Cincinnati Southern were, as 
already stated, over $26,000 per mile, those of the Louisvllle & Nashville 
about $11,000 per mile, and of the Nashvllle, Chattanooga & St. I^ouis less 
than $10,000 per mile. The same year the earnlngs of that portion of the 
Une of the Louisvllle & Nashvllle between Cincinnati and Louisvllle were $25,- 
000 per mile; between Louisvllle and Nashville $30,000 per mile; those of 
the Nashville, Chattanooga & St. Louis between Hickman and Chattanooga, 
a distance of 320 miles, over $20,000 per mile. Now, in adjustlng the rates 
of the Louisvllle & Nashvllle, or the Nashville, Chattanooga & St. Louis, shall 
the Commission conslder each section of the road by Itself, or shall It estab- 
Ush a common rate for the whole? 

"Commission rates are usually the same for ail llnes, both main line and 
branches. It Is falr that the main Une should in a degree contribute to the 
support of the branch Une, for the branch-llne business when It reaches the 
main Une Is surplus trafflc, from which a larger profit Is made. It is in the 
public Interest that rates shall be so adjusted that population and Industries 
may freely diffuse themselves. It hardly seems proper to fix the rates upon 
the Cincinnati Southern, whlch Is really a main line, without any référence 
to the branch llnes whlch contribute to It. 

"Thls should ibe further borne In mlnd. Of the entlre trafflc handled by the 
Cincinnati, New Orléans & Texas Pacific In the year 1907 over two-thirds of 
the tonnage was delivered to It by Its connections and most of It hauled as 
a through transaction from Cincinnati to Chattanooga or the reverse. Com- 
paratlvely llttle trafflc orlginates upon thls rallroad between thèse two 
termlni. The présent large earnlngs may be due to the f act that the Southern 
Rallway Is able to tum onto thls road large amounts of trafflc whlch it wonld 
exchange wlth some other rallroad but for its Interest in the Oincinnatl 
Southern. If the city of Cincinnati were operating thls property itself, it is 
by no means certain that the apparently undue profits of to-day might not be 
a déficit. 

"The complainants urge that the Cincinnati Southern Is really a part of 
the Southern Rallway System. If It were so considered, the gross earnings 
per mile of the entlre System would be less than those of elther the Louis- 
ville & Nashvllle or the Nashville, Chattanooga & St. Louis. 

"If thèse rates are to be establlshed wlth référence to other rates In the 
vicinlty, it becomes pertinent tQ Inquire how the présent rates compare with 



HOOKER T. INTERSTATE COMMERCE COMMISSION 251 

other rates for similar distances în the South. Extensive tables haye been 
fumlshed by the défendants instituting sueh comparisons, and thèse tables 
hâve been to some extent crlticised and replied to by the coniplainants. 

"It fairly appears that the rates now In effect from Cincinnati to Clmtta- 
nooga upon the nunibered classes are lower than siniilar rates prescribed by 
the Railroad Commissions of niost states in the South. They are as low and 
usually lower than the Interstate rates made by southern roads for similar 
distances. 

"The complainants call our attention to rates from Cincinnati to Nashville. 
The distance Is 300 miles, and the rates are materially lower than those from 
Cincinnati to Chattanooga, belng, flrst class, 53 cents as against 7G cents, 
and, sixth class, 23 cents as against 30 cents. But this Commission bas 
found (Chamber of Commerce of Ghattanooga v. Southern Ry. Co., 10 Interst. 
Com. R. 111), and the fédéral courts bave found (East Tenu., Va. & Ga. Ry. 
Co. V. I. C. C, 181 U. S. 1, 21 Sup. et 516, 45 I^ Ed. 719), that water com- 
pétition Influences thèse rates to Nashville. The rate from Cincinnati to an 
intermediate point where there is no water compétition is higher in pro- 
portion to distance than those to Ohattanooga. Thus the first-class rate from 
Cincinnati to Gallatin, 20 miles north of Nashville, Is 78 cents. 

"The complainant also refers to rates from Virginia cities to Atlanta 
whlch are less per ton mile than those In question. But it Is well under- 
stood that thèse rates are materially afCected by water compétition, and 
ordinarily the long-distance rate would be less per ton mile than the rate for 
the shorter distance. T,f rates from Virginia cities south for distances of 
from 300 to 350 miles are examined, It wlU be found that they usually equal 
or exceed the Chattanooga rates. 

"The complainants urge that the volume of trafBc In thIs terrltory bas In- 
creased and is increaslng, ail of which should make for lower rates — and thls 
is certalnly true; but it must also be borne In mind that the cost of opéra- 
tion is advancing. In the past, rallways hâve been able to Introduce varions 
économies in the handling of their business, which hâve tended to offset the 
added cost of la'bor and supplies, so that the net resuit has been that the 
Increase in the cost of transporting a ton of freight one mile has but sllghtly. 
If at ail, Increased. It Is doubtful If In future similar économies can keep 
pace with advancing priées. 

"We hesitate at this time to make wldespread and far-reaching réductions 
In rates where there Is no spécial occasion for it and where the rates them- 
selves are not clearly excessive." 

[3] It appears from the findings of the Commission that it has al- 
ways refused in the considération of the reasonableness of a rate or 
rates to consider only the particular carrier making the same by itself, 
but on the contrary has always considered the rates in a particular 
territory or the rates of other carriers to be affected by the change of 
the particular rate or rates in question; and we think it fair to say 
that, so far as the Commission is concerned, there has been a uniform 
policy, public policy if you please, because the Commission represents 
the United States in so far as it acts within the scope of its dele- 
gated authority in the establishment of reasonable and just rates, to 
the effect that it will not fix rates or détermine their reasonableness 
solely upon a considération of the particular carrier whose rates are 
directly involved. 

[4] We think this court may take judicial knowledge of the fact 
that the interstate rates prescribed for the transportation of freight by 
common carrier must necessarily be more or less interdependent, or at 
least be so related to each other that the rate-making power will not, 
simply because it has the power, fix a rate upon a single line of rail- 



252 188 FEDE3EAL EBPOETEB 

roads which will necessarily disorganize established and reasonable 
rates on other railroads in the same territory. 

[5] Ail rates established in accordance with law are presumed to 
be just and reasonable. It is for this reason that the rates for the 
transportation of freight of other carriers in the same territory may 
be looked into as évidence of what should be a just and reasonable 
rate, providing conditions are similar. We cannot as a court not vest- 
ed with the power to fix rates say, beyond question, that the éléments 
which the Commission took into considération in fixing the schedule 
complained of were improper for the Commission to consider, and 
therefore cannot conclude that the Commission based a schedule of 
rates upon improper grounds. 

It was said by the Suprême Court in Texas & Pacific Railway v. 
I. C. C, 162 U. S. 233, 16 Sup. Ct. 680, 40 L. Ed. 940: 

"That the purpose of the act is to promote and facilitate commerce by the 
adoption of régulations to malîe charges for transportation just and reason- 
able, and to forbid undue and unreasonable préférences or discriminations; 
that, in passing upon questions arising under the act, the tribunal appolnted 
to enforce its provisions, whether the Commission or the courts, is empowered 
to fully consider ail the clrcumstances and conditions that reasonably apply 
to the situation, and that, in the exercise of Its jurisdiction, the tribunal may 
and should consider the legitimate interests as well of the carrying companies 
as of the traders and shippers. • * • " 

[6] Under the second proposition we cannot disturb the order of 
the Commission on the theory that it fixed rates so high as to be vio- 
lative of the fifth amendment to the Constitution, unless it shall 
clearly appear to us that the constitutional rights of the shippers were 
invaded thereby. The fixing of the schedule of rates complained of 
was a législative act. Munn v. Illinois, 94 U. S. 113, 24 t,. Ed. 77; 
Peil V. Chicago N. W. Ry. Co., 94 U. S. 164, 24 L. Ed. 97; Express 
Cases, 117 U. S. 1, 6 Sup. Ct. 542, 628, 29 L. Ed. 791; C, M., etc., 
Ry. V. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 702, 33 L. Ed. 970; 
Reagan v. Farmers' Loan & T. Co., 154 U. S. 362, 14 Sup. Ct. 1047, 
38 E. Ed. 1014; St. L. & S. F. Ry. Co'. v. Gill, 156 U. S. 649, 15 Sup. 
Ct. 484, 39 L. Ed. 567; C, N. O. & T. P. Ry. Co. v. I. C. C, 162 U. 
S. 184, 16 Sup. Ct. 700, 40 L. Ed. 935 ; T. & P. Ry. v. I. C. C, 162 
U. S. 197, 16 Sup. Ct. 666, 40 L. Ed. 940; I. C. C. v. Cincinnati Ry. 
Co., 167 U. S. 479, 17 Sup. Ct. 896, 42 L. Ed. 243; Railroad Com- 
mission Cases, 116 U. S. 307, 6 Sup. Ct. 334, 388, 1191, 29 L. Ed. 
636; Smyth v. Ames, 169 U. S. 515, 18 Sup. Ct. 418, 42 L- Ed. 819; 
McChord V. L. & N. R. R. Ce, 183 U. S. 483, 22 Sup. Ct. 165, 46 
L. Ed. 289; Alpers v. City of San Francisco (C. C.) 32 Fed. 503; So. 
Pac. Co. v. R. R. Commissioners (C. C.) 78 Fed. 236; New Orléans 
Water Works Co. v. New Orléans, 164 U. S. 471, 1/ Sup. Ct. 161, 
41 L. Ed. 518; Atlantic Coast Line v. North Carolina Corporation 
Com., 206 U. S. 1, 27 Sup. Ct. 585, 51 E. Ed. 933. 

[7] And while we are of the opinion that our power to review the 
order of the Commission fixing a schedule of rates is coextensive with 
the limits of the protecting shield of the Constitution, still it must 
clearly appear that such protection in some degree has been taken 



HOOKER V. INTERSTATE COMMERCE COMMISSION 253 

away. The Commission found that the rates complained of were 
net clearly excessive. Much less are we able to find that the rates au- 
thorized by the Commission in the order complained of and which 
were a réduction of the former rates are clearly excessive. In mak- 
ing this statement we are fully aware of the allégation of the bill as 
to the net earnings of the C, N. O. & T. P., and the whole case as 
to the excessive feature of the rates fixed by the Commission is al- 
most entirely based upon the earnings of the C., N. O. & T. P. While 
earnings may be considered in the fixing of a reasonable rate to be 
charged by a carrier for the transportation of freight, rates neces- 
sarily cannot be based upon earnings alone. This is made clearly to 
appear when we consider that a just and reasonable rate is one which 
is just to the carrier and to the shipper. It is a rate which yields to 
the carrier a fair return upon the value of the property employed in 
the public service, and it is a rate which is fair to the shipper for the 
service rendered ; and when this rate is estabHshed, if it results in 
large profits to the carrier, the carrier is fortunate in its business, and 
if it results in a loss of earning power so that the business of the 
carrier is unprofitable the carrier is unfortunate. But the rate may 
not be lowered or raised merely upon the ground that the carrier is 
either making or losing money, providing always the rate is a reason- 
able and just rate. Indeed, it has been held that the earning power 
of the rate is one of the least considérations in fixing a just and rea- 
sonable rate. Canada Northern R. R. Co. v. International Bridge Co., 
L. R. 8 App. Cases, 723; Board of Railroad Comm. v. I. C. R. R. 
Co., 20 Interst. Com. R. 181. 

Being satisfied that the Commission did not err in taking into con- 
sidération the grounds they did in fix-ing their schedule of rates, and 
not being clearly satisfied that the rates themselves are so high as to 
violate the constitutional rights of the shippers, we are of the opinion 
that the bill must be dismissed. 

And it is so ordered. 

ARCHBALD, Judge (dissenting). There can be no serious ques- 
tion as to the conclusion which would hâve been reached by the Com- 
mission had they confined themselves to the détermination of what 
was a just and reasonable rate from Cincinnati to Chattanooga by 
the Cincinnati Southern, without regard to the effect upon other roads. 
This was gone into at length in 1894, and the 60-cent schedule, 
which is now contended for, sustained. Freight Bureau v. Cin., N. 
O. & T. P. R. R., 6 Interst. Com. R. 195. But as the law then 
stood there was no authority in the Commission to fix future rates, 
and its action was therefore held of no effect. Inter. Com. Com. v. 
Cin., N. O. & T. P. R. R., 167 U. S. 479, 17 Sup. Ct. 896, 42 L. Ed. 
243. But even with the lapse of time and the change of conditions, the 
issue as is recognized by the Commission is the same, and the same 
conclusion would confessedly hâve been reached except as they were 
influenced by a regard for the necessities of other roads. "If it is our 
duty," says Commissioner Prouty in the report, "to take this railroad 



254 188 FEDERAL REPORTER 

by itself, and to détermine the reasonableness pf thèse rates, by réf- 
érence to cost of construction, cost of maintenance, and profit upon 
the investment, we think the complainants hâve established their case, 
and that thèse rates ought fairly to be reduced by as great an amount 
as was formerly found reasonable by this Commission." Unfortu- 
nately, however, for the complainants, this view did not prevail. It 
was contended by the railroad company that the rates should be fixed 
not only with référence to the final results to itself and its own finan- 
cial necessities, but also with référence to other companies whose rates 
were necessarily affected thereby; or, in other words, that the Com- 
mission should estabhsh rates which would be just and reasonable 
for the whole section of territory in issue, and that if a particular car- 
rier was so situated that it could make a handsome profit it was to be 
recognized as a pièce of good fortune with which the Commission was 
not to interfère. Adopting this view, which had also been foUowed 
in other cases (In re Proposed Advance in Freight Rates, 9 Interst. 
Com. R. 382; Spokane v. North Pac. R. R., 15 Interst. Com. R. 376; 
Kindel v. New York, New Haven & Hartford R. R., 15 Interst. Com. 
R. 555), it was accordingly held that the reasonableness of the rate 
between points served by two or more lines could not be determined 
by référence to that line alone which was shortest and most favora- 
bly situated with respect to opération and earnings, and the rate lim- 
ited thereby; but that the entire situation was to be considered, and 
a rate fixed which would be reasonable with respect to ail the lines di- 
rectly serving the points involved. That rates for similar distances 
on other lines similarly conditioned may be referred to, to assist in de- 
termining what is fair and reasonable in any case, is clear. And it is 
no doubt proper, also, to take into account the effect on rates upon 
freight moving to and from other points beyond those immediately in 
view. But that, in my judgment, is as far as it is permissible to go. 
There is no right, as I look at it, to consider the effect of the rate or 
rates to be established on those of other roads, between the same 
points, or to maintain such rates at a figure which is necessary to 
meet the needs of those roads. And so far as the order of the Com- 
mission was induced by any such idea, it cannot be sustained. 

If the Cincinnati Southern was the only line from Cincinnati to 
Chattanooga the rate, of course, so far as it was not a joint rate, would 
be fixed with référence to that road alone. And if it was a line that 
was costly to build, or that could not be economically run, this would 
operate to increase the rates, and the shipper would hâve to pay, to 
correspond. But, on the other hand, if the reverse of this was true, 
and the road was neither an expensive one to construct, maintain, or 
run, the shipper would clearly be entitled to the benefit of thèse con- 
ditions and to the lower rates necessarily to ensue. So, also, if this 
favored road was the first in the field, and other roads had corne in 
after it was built, it certainly would not be contended that with the 
introduction of new and additional facilities the lower rates prevail- 
ing on the more favored line could be raised to meet the necessities 
of others not so well placed. It is not to be thought of that the con- 
struction of a second or third road should be made the basis for higher 



HOOKEB V. INTERSTATE COMMERCE COMMISSION 255 

rates. The standard would be that of the original and most favored 
line. But what différence does it make whether the road which can 
afford the best rate is the first or the last to be built? It is the condi- 
tion at the time the rate is fixed that controls. The shipper is entitled 
to the benefit of any advance in transportation facilrties that may be 
made, and is not to be tied down to the unprogressive and outdistanced 
past. The supposed advantage in competing Unes between the Same 
points becomes a détriment if rates are to be kept up to help the weak- 
est road. 

The Cincinnati Southern extends in a short and direct route due 
south from Cincinnati to Chattanooga without branches 336 miles. 
It was expensive to build, and the cost of opération and maintenance 
is high. But its net earnings are nevertheless large, amounting to 
some 44 per cent, on the capital stock. The route between the same 
points by way of the Louisville & Nash ville and the Nashville, Chatta- 
nooga & St. Louis roads is a third longer, or 450 miles, and both of 
thèse roads hâve more or less unremunerative branch lines. And yet 
the Commission hâve not only put the two routes on an equality, but 
hâve even considered the influence of unprofitable branches, which 
hâve to be taken care of , fixing a rate which shall be fair for the whole 
System, and not simply for the immédiate section of road which is 
involved. This, in my judgment, they had no right to do. The ship- 
per is entitled to a just and reasonable rate, having regard to the serv- 
ice which is to be rendered by the carrier that is to perform. And 
this service is largely to be measured by the facilities for econom- 
ically rendering it, which are possessed by that particular road. It 
is not to be augmented or kept up, beyond what is fair and just, by 
the considération of what some other road, not so f avorably situated, 
may need. 

The order of the Commission, being based upon mistaken and erro- 
neous grounds, is theref ore invalid and should be so declared. South- 
ern Railway v. St. Louis Hay & Grain Co., 214 U. S. 297, 29 Sup. 
Ct. 678, 53 L. Ed. 1004; Inter. Corn. Corn. v. Stickney, 215 U. S. 98, 
30 Sup. Ct. 66, 54 L. Ed. 112; Southern Pacific Railway v. Inter. 
Com. Com., 219 U. S. 498, 31 Sup. Ct. 279, 55 L. Ed. _ — . And the 
case should be remanded in conséquence to the Commission in order 
that a rate may be fixed which shall be just and reasonable as respects 
the respondent carrier, by whom the services are to be performed. 
This does not take from the Commission the right to say what that 
rate shall be. Much less does it involve the détermination of the rate 
by the court. It merely disposes of the rate which has been mistakenly 
made, as preliminary to a new considération of it by the Commission 
upon correct and proper grounds. Cin., N. O. & T. P. R. R. v. Inter. 
Com. Com., 162 U. S. 184, 238, 239, 16 Sup, Ct. 700, 40 L. Ed. 935 ; 
Southern Railway v. St. Louis Hay & Grain Co., 214 U. S. 297, 29 
Sup. Ct. 678, 53 L. Ed. 1004. 

I therefore dissent from the judgment of the court sustaining the 
demurrer and dismissing the bill. 

MACK, Judge, concurs in the above dissent. 



256 188 FBDEBAL EEPORTEB 



mAGLB WHITE LEAD CO. et al. v. INTERSTATE COMMERCE COMMIS- 
SION et al. 

(Commerce Court. July 20, 1911.) 

No. 6. 

Bill by the Eagle White Lead Company and others agalnst the Interstate 
Commerce Commission and others. Dismissed. 

Francis B. James, for petitloner. 

E. Walton Moore and Frank W. Gwathmey, for Cincinnati, N. O. & T. P. 
By. Co. 

J. A. Fowler, Asst. Atty. Gen., and Blackbum Esterline, Sp. Asst. Atty. Gea., 
for United States. 

P. J. Farrell, for Interstate Commerce Commission. 

Befi-vre KNAPP. Presiding Judge, and ARCHBALD, HUNT, CARLAND, 
and MACK, Assoclate Judges. 

CARLAND, Judge. The bill In thls case Is, for ail practical purposes, 
the same as the bill in case No. 5, Receivers' & Shippers' Association of Cin- 
cinnati V. Interstate Commerce Commission and the Cincinnati, New Orléans 
& Texas Pacific Railway Co., 188 Fed. 242, and was flied for the same pur- 
pose. The cases were submltted together upon bill and demurrer. 

For the reasons stated in the opinion flled in case No. 5, tlie demurrer in 
thls case must be sustained and the bill dismissed- 

ARCHBALD and MACK, Judges, dissenting. 



UNITED STATES v. NORTON (seven cases). 
(District Court, E. D. Oklahoma. June 5, 1911.) 
■ Nos. 515-521. 

1. Banks anp Bankino (S 256*) — Indictmbnt and Infobmation (§ 125*)— 

National Banks— Offenses bt Officees. 

Under Rev. St § 5209 (U. S. Comp. St. 1901, p. 3497), which makes It 
a crlmlnal olïense for any offlcer or agent of a national bank to make any 
false entry In any book, report, or statement of the association, witli in- 
tent "to injure or defraud the association, ♦ • * or to deceive any 
ofticer of the association, or any agent appointed to examine the affairs 
of any such association," the making of a false entry, accompanied by an 
Intent elther to "injure or defraud" or to "deceive," as defîned by the sec- 
tion, constitutes an offense; and a count of an indictment which charges 
that such a false entry was made with intent to injure or defraud, and 
also with Intent to deceive, charges two offenses, and is bad for duplicity. 

[Ed. Note. — For other cases, see Banks and Banking, Cent. Dlg. §§ 958- 
964; Dec. Dig. § 256;* Indictment and Information, Cent. Dlg. §§ 334- 
400; Dec. Dig. § 125.*] 

2. Banks and Banking (§ 257*) — National Banks— Offenses bt Officebs 

— misapplication op funds. 

An indictment under Rev. St. § 5209 (U. S. Comp. St. 1901, p. 3497), 
which charges that défendant, while an officer of a national bank, with 
Intent to injure or defraud the bank, unlavvfully and willfully misappliod 
and converted to his own use funds of the bank, by withdrawing money 
therefrom upon a charge ticket, pursuant to which the amount was 
chargea to his accouut, is insufHcient to charge an offense, in the absence 
of averments showing that the banlc was in fact defrauded, or a probabil- 

•For other cases see same toplc & S numbbb In Dec. & Am. Dlgs. 10Û7 to date, & Rep'r Indexas 



UNITED STATES V. NORTON 257 

Ity that It would be defrauded, thereby, as that défendant was insolvent, 
and that the overdraft was not paid. 

[Ed. Note.— For other cases, see Banks and Banking, Cent. Dig. § 973 ; 
Dec. Dig. § 257.*] 

3. Banks and Banking (§ 257*) — National Banks— Offenses bt Officebs 

— misapplicàtion of funds. 

An indictment under Rev. St. §■ 5209 (U. S. Comp. St. 1901, p. 3497), 
which cliarges that défendant, while président of a national bank, with 
intent to injure and defraud the bank, unlawfully and willfully misap- 
plied and converted to his own use, by paying to himself the amount of 
a draft drawn by a eustomer on a third party to whom the bank was not 
Indebted, does not charge an offense; there being no averment that the 
drawee was not solvent, or of other facts showing that the draft which 
défendant caused the bank to cash was not collectible. 

[Ed. Note. — For other cases, see Banks and Banking, Cent. Dig. § 973 ; 
Dec. Dig. § 257.*] 

4. Banks and Banking (§ 256*) — National Banks— Offenses et Officers 

—misapplication of funds, 

The fact alone that an officer of a national bank causes it to pay over- 
drafts, drawn by himself or other customers of the bank, or makes a 
loan wlthout security, does not constitute an offense, under Rev. St. § 
5209 (U. S. Comp. St. 1901, p. 3497) ; nor does an indictment averring 
such facts charge an offense, because it further avers an intent to injure 
' and defraud the bank. 

[Ed. Note. — For other cases, see Banks and Banking, Cent. Dig. §§ 958- 
964; Dec. Dig. § 256.*] 

Criminal prosecutions by the United States against William L,. 
Norton. On motions to quash indictments. Motions sustained in part, 
and overruled in part. 

William J. Gregg, U. S. Atty., and Frank Lee, Asst. U. S. Atty. 
Veasey & Rowland and Haff, Meservey, German & Michaels, for 
défendant. 

CAMPBELL, District Judge. In each of the 7 above-numbered 
cases an indictment has been returned against the défendant, William 
L. Norton, the several indictments aggregating 42 counts, ail re- 
lating to offenses under section 5209 of the Revised Statutes (U. S. 
Comp. St. 1901, p. 3497), covering offenses by officers and agents of 
national banks. Each count relates either to an alleged false entry, 
or misapplication or abstraction of the moneys, funds, and crédits of 
the association. The indictments and counts which allège false entries 
are No. 515, ail 3 counts; No. 516, the first 2 counts; No. 517, ail 
6 counts; No. 518, 7 counts; No. 519, first 2 counts; No. 521, first 
2 counts. And those indictments and counts which allège misapplica- 
tion are No. 516, the third count; No. 518, eighth and ninth counts; 
No. 520, ail 10 counts; No. 521, the third count. Those which al- 
leged abstraction are No. 521, fourth and fifth counts. _ Motions to 
quash hâve been filed in each case, attacking on varions grounds each 
count of the respective indictments. 

[1] We will first consider the motions as they relate to the false 
entry charges. The ground of the motions in this respect most stren- 
uously urged by counsel for the défendant appears in the fourth para- 

♦For other cases see same topic & § ntjmbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 
188 F.— 17 



258 188 FEDEEAL REPORTER 

graph of the motion filed in No. 515, and may be taken as typical of 
similar contentions set up in the other motions, and is as f ollows : 

"That said indictment, and eaeh and every count thereof, is détective and 
bad for dupllcity, in tliat it pui-ports to cliarge tvvo or more offenses In eacli 
count ; that Is to say, said Indictment allèges in eaeh count that a false entry 
was made in a certain report to the Comptroller of the Curreney by the de- 
fendant, with the intent on hls part to injure and defraud the American Na- 
tional Bank of Bartlesville, and al«o that a false entry was made by the de- 
fendant In such report with the Intent to deceive the board of dlrectors and 
other offlcers of said banking association and any agent appointed and des- 
igtiated by the Comptroller of the Curreney to examine Into the afCairs of 
said banking association, and also that a false entry was made by the de- 
fendant in such report with the Intent to injure and defraud and deceive the 
offlcers of sald banking association and any agent appplnted and designated 
by the Comptroller of the Curreney to examine Into the afifairs of sald bank- 
ing association, whereby the défendant is not advised of the offense with 
whlch he Is sought to be charged." 

In eaeh of the false entry counts, it is charged that the false entry 
învolved was made — 

"with the intent to Injure and defraud the said banking association, and 
with the Intent to deceive the board of dlrectors and other officers of said 
banking association, and with the intent to deceive any agent appointed and 
designated or thereafter to be appointed and designated by the Comptroller 
of the Curreney to examine into the affalrs of said banking association." 

Section 5209 pro vides as f ollows: 

"Every président, dlrector, cashier, teller, clerk, or agent of any associa- 
tion, who embezzles, abstracts, or willfuUy misapplles any of the moneys. 
funds, or crédits of the association, or who, without authority from the dl- 
rectors, issues or puts in circulation any of the notes of the association, or 
who, without such authority, issues or puts forth any certificate of deposit, 
draws any order or bill of exchange, makes any acceptance, asslgns any note, 
bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes 
any false entry in any book, report, or statement of the association, with in- 
tent. In elther case, to injure or defraud the association or any other Com- 
pany, body politlc or eorporate, or any indlvldual person, or to deceive any 
officer of the association, or any agent appointed to examine the affalrs of 
any such association, and every person who with like intent alds or abets any 
officer, clerk, or agent In any violation of this section, shall be deemed guilty 
of a mlsdemeanor, and shall be Imprlsoned not less than flve years nor more 
than ten." 

The persons coming within the purview of the statute are the of- 
ficers and agents of national banks. Any one of those who either em- 
bezzles, abstracts, or willfully misapplies any of the moneys, funds, 
or crédits of the bank, with intent to injure or defraud the association, 
or any other company, corporation, or individual, or with intent to 
deceive any of the officers of the bank, or any agent appointed to ex- 
amine the affairs of the bank, offends against the statute. The em- 
bezzlement, abstraction, and misapplication condemned are eaeh sep- 
arate and distinct acts, which, when committed with either the intent 
to injure or defraud, or with the intent to deceive, mentioned in the 
statute, become separate and distinct offenses under its terms. The 
fourth act, which may become an offense under the statute, when 
coupled with either one of the intenta mentioned, is that of issuing or 
putting in circulation any of the notes of the association without 



UNITED STATES V. NORTON 25P 

authorîty from the directors. The fifth is the îssuîng or putting 
forth, without such authority, any certificate of deposit; sixth, the 
drawing of any order or bill of exchange without such authority ; sev- 
enth, the making of any acceptance without such authority; eighth, 
signing any note, bond, etc., without such authority ; ninth, the making 
of any false entry in any book, report, or statement of the association, 
with either of the intents mentioned. 

It is therefore seen that there are nine distinct acts, each of which, 
when coupled with the intent to injure or defraud, or with the intent 
to deceive, mentioned in the statute, becomes a separate and distinct 
offense. The making of the false entry is not in itself what the stat- 
ute condemns; but it is the making of it with any one of the several 
intents mentioned therein. The gravamen of the offense is not the 
mère making of the false entry; but coupled with the act there 
must be one of the intents condemned by the statute. A false entry 
made by mistake, or one knowingly made, but with no intent to in- 
jure, defraud, or deceive in any of the respects condemned by the 
statute, would not be an offense against the statute. "A statute 
will not generally make an act criminal, however broad may be its 
language, unless the offender-'s intent concurred with his act, because 
the common law does not." Bishop on Stat. Crimes, § 132. As, 
therefore, it is not every false entry, even when knowingly made, 
but only such as is concurrent with some particular intent named in 
the statute, which is condemned, it may, I think, be properly said 
that the criminal intent is the gravamen of each offense contemplated 
by section 5209. Evans v. United States, 153 U. S., loc. cit. 594, 14 
Sup. Ct. 934, 38 L. Ed. 830. 

It is an elementary rule of pleading that an indictment or informa- 
tion must not in the same count charge the défendant with two or 
more distinct and substantive offenses, and in case it doeS so it is 
bad for duplicity if the offenses are inherently répugnant, or are not 
différent stages in one transaction, or involve différent punishments. 
22 Cyc. 376, and cases cited. It follows that an indictment which in 
one and the same count charges an officer or agent of the bank with 
embezzling and abstracting its funds, or with abstracting and mis- 
applying its funds, or with embezzling its funds and making a false 
entry in a book or report of the association, or combining in the same 
count the charge of the doing of any two or more of the nine distinct 
acts mentioned, would clearly be duplicitous, and on a proper and 
timely objection would hâve to be quashed. But in the counts now 
under considération there is but the single act of false entry charged. 
This act, however, as we hâve seen, is not condemned by the statute, 
except it be coupled with the concurrent intent either to injure or 
defraud or to deceive in the respects mentioned. The pleader, there- 
fore, must charge, not only the act, but the intent. In this case he 
charges that the act was done both with intent to injure and defraud 
and to deceive, either one of which intents, coupled concurrently with 
the act, makes the act an offense. It is insisted by the défendant that 
this amounts to the joining of two distinct, substantive offenses in 
the same count, and, therefore, is duplicitous. 



260 188 FEDERAL REPORTER 

In the case of Billingsley v. United States (8th Circuit) 178 Fed., 
loc. cit. 659, 101 C. C. A. 471, it is said: 

"There are apparently two separate intents contemplated by this section, 
elther of whlch, when accompanying a forbidden act, constltutes an offense. 
One of them is the Intent to 'injure or defraud,' and the other the intent to 
'decelve.' The contention that there can be no offense in maklng a false en- 
try with the Intent to decelve an agent appointed to examine the afCairs of 
the association, unless there be also the coexistlng intent to injure or defraud 
the association, etc., seems to Ignore the grammatical structure of the statute 
and the natural meanlng of the language employed. Elther the intent to In- 
jure or defraud, or the Intent to deceive when accompanying the dolng of the 
substantive act to whlch they appropriately pertaln seem, accordlng t(5 the 
language employed, to constltute an offense. Any other construction would. 
In our opinion, give practical Immunity to the maklng of a false entry with 
the Intent to decelve, etc. [Cltlng U. S. v. Corbett, 215 U. S. 233, 30 Sup. Ct. 
81, 54 11. Ed. 173.] If It constitutes no offense to make a false entry with 
intent to decelve an examiner, unless an Intent aetually exlsts to injure or 
defraud somebody, it would seem that much of the corrective purpose of the 
law can be thwarted." 

Without reciting the authorities further, it is sufficient to say that 
the Billingsley Case, just cited, détermines for this district that one 
and the same false entry may constitute two distinct and separate 
offenses; one when made with intent to injure and defraud, men- 
tioned in the statute, and the other when made with intent to de- 
ceive, mentioned therein. And it will be noted that it is the intent, 
rather than the act, which the court considers the gravamen of the 
offense, for it says : 

"There are apparently two separate intents contemplated by this section, 
either of whlch, when accompanying a forbidden act, constitutes an offense." 

In other words, the intent, when accompanied by the act, constitutes 
an offense. This is clear when it is remembered that the offense in no 
way dépends upon whether the act (the false entry) aetually efïects the 
in jury, fraud, or déception intended. 

It follows that one and the same false entry may give rise to two 
distinct offenses, according as it may accompany either of the two 
concurrent intents mentioned, and when in one count of the indict- 
ment a false entry is charged as having been donc with the intent 
to injure or defraud and with the intent to deceive, condemned by 
the statute, does it not clearly combine two distinct and separate of- 
fenses? That they might properly be pleaded in separate counts, 
each count reciting the same false entry as accompanying a différent 
one of the intents, cannot be doubted. No case is cited by counsel 
where this question had been directly raised by demurrer on motion 
before trial, and as it has been held by the Circuit Court of Appeals 
for this circuit that it is too late to raise the question in arrest of 
judgment, after verdict (Morgan v. United States, 148 Fed. 189, 78 
C. C. A. 323), expressions of the courts on the question in passing 
upon such motions cannot be said to be directly in point. 

Counsel for the government says: 

"It would Tse a new departure in crlmlnal Jurisprudence if the several In- 
tents with whlch an act was committed could each be subdlvided and peual- 



UNITED STATES T. NORTON 261 

Ized, especially when, as stated by Judge Sanborn In the above opinion, sucb 
several intenta are ail presumed upon the commission of an act." 

But we hâve seen in the BilHngsley Case, above cited, that, whether 
or not it be a "departure," it is the estabhshed construction of this 
section, so far as this circuit is concerned, so that the contention that 
the existence of the several intents constitutes but one offense, where 
there is but the one act, is not sound. Counsel for the government in 
his brief déclares that he makes no contention that two distinct, in- 
dependent offenses can be preferred in one count of an indictment, 
but admits that they cannot be so charged. In view of the construc- 
tion of this statute, Just noted, it would seem that this admission 
would, in effect, concède the defendant's contention. 

It is contended for the government, however, that the pleading at- 
tacked has been approved and sustained by a long Hne of décisions. 
The case of United States v. Corbett, 215 U. S. 233, 30 Sup. Ct. 
81, 54 L. Ed. 173, is relied upon, for the reason that it appears from 
the opinion that it vi^as charged that the false entry involved was 
mflde with the double intent to injure and defraud and to deceive. 
It is not clearly stated whether this double intent was pleaded in one 
and the same count, or separately stated in différent counts; but it 
is clear that, however that may hâve been, the question of duplicity 
now under considération was neither raised by the motion nor the 
demurrer filed in that case, and it will not do to say, because the 
court may hâve passed without comment a feature of the pleading to 
which no objection was raised, that it therefore approved it, especially 
when, as said in the Morgan Case, supra, such question can only be 
raised before trial. And in this Corbett Case Justice White an- 
nounces the doctrine that the construction of a statute in regard to 
which no question was raised will not prevent the détermination, as 
an original question, as to how the statute should be construed in 
that particular when controverted in a subséquent case. 

The récent case of United States v. Morse (C. C. A.) 174 Fed. 539, 
is cited. In the false entry counts in this case, as in the case at bar, 
the double intent to injure and defraud and to deceive was charged; 
but there is nothing in the case to indicate that this pleading was ever 
questioned prior to the trial, by motion or demurrer, and it is passed 
by the court without comment. So that, like the Corbett Case, supra, 
it cannot be taken as authority directly sustaining the pleading. It 
is further noted in this Morse Case that the court treated the act of 
misapplication charged in some of the counts, when accompanying 
the intent to injure and defraud the bank, as a separate and distinct 
offense from one wherein the same act of misapplication might ac- 
company an intent to deceive the officers of the bank, etc. The 
court says: 

"The allégation Is plainly one cliargliig tbe défendants witti misapplication 
with intent to injure and defraud the banlt, and the proof tended to estab- 
lish the truth of the allégation, and not the intent 'to deceive any officer of 
the association or any agent appointed to examine the afCairs of any such 
association.' " 



262 188 FEDERAL KEPOETBR 

The court, in its charge to the jury, told them ît was necessary, in 
order to complète the crime of willful misapplication, that it should 
hâve been made with an intent on the part of the défendants to injure 
or defraud the bank, or any other person, or to deceive any ofUcer of 
the bank, etc. This instruction was challenged by the défendant, 
because, as stated, it was neither charged nor proven that the mis- 
appHcation was made with intent to deceive. The court then point 
out the fact that this instruction was given to the jury when the 
court was explaining generally the meaning of the statute, and that 
the language quoted was a correct statement of its provisions, and 
that later, when dealing with the spécifie charges of misappHcation, 
the court charged that the intent must be to injure or defraud the 
bank'. But while the court was for. this reason inchned to the beHef 
that the instructions, taken altogether, had not misled the jury, it ex- 
presses a lingering doubt upon the subject, for it says: 

, "Per contra, we cannot wholly dlvest ourselves of the appréhension that 
the -jury may hâve obtalned a mistaken notion of the essentials of the offense, 
and may posslbly hâve convicted the défendant upon the theory that the 
funds of the bank were misapplied with intent to deceive an offlcer of the 
banlî or an agent of the government, and not with intent to injure and de- 
fraud, as alleged in the Indictment. In a civil cause a theory restlng upon 
a foundation so insubstantlal eould not be malntained ; but where the llberty 
pf a citizen Is at stake the court should be clearly convinced that he bas not 
been convicted under a mistaken interprétation' of the law. If the language 
above quoted were the only portion of the charge upon which the défend- 
ants argument is based, It would not be dlfflcult to disregard it ; but later 
on, when the court was explaining the misapplication counts relatlng to the 
Ice transactions, he charged, after stating that, If the jury believed that the 
Ice stock was purchased at grossly excessive priées, they mlght flnd that the 
amount pald In exeess of the real values of sald stock was a willful misap- 
plication thereof, providing they also found 'that such misapplication was 
with the Intent denounced by the statute.' It would bave been more accu- 
rate had he sald, 'with the Intent charged in the indictment.' The intent de- 
nounced In the statute, as prevlously explalned by the court, was (1) elther 
to Injure or defraud the bank, or (2) to deceive any offlcer of the bank or any 
agent appointed to examine Its affalrs. Is It not possible that the .lury may 
bave convicted the défendant, upon the counts In question, of an intent not 
charged against hlm In the Indictment?" 

The court then passes to a considération of the false entry counts, 
and, finding them sufficient to sustain the conviction, regardless of 
the misappHcation counts, the possible error of the court as to the 
latter counts is not regarded as having worked any substantial in- 
justice to the défendant. But it is évident from the opinion that, 
had the error in the charge of the court as to the intents connected 
with the misapplication counts not been rendered negligible by the fact 
that the conviction was properly sustained on the false entry counts, 
the judgment would probably hâve been reversed. 

United States v. JHarper (C. C.) 33 Fed. 473, being the charge of 
Judge Jackson to the jury, is cited by the government as indicating 
that in this case the double intent to injure and defraud and to de- 
ceive is charged in each count. But an examination of a certified 
copy of the indictment, now before me, develops that the pleader in 
each false entry count only charged there the intent to defraud or 



UNITED STATES V. NORTON 263 

the intent to deceive, outlined in the statute, in no instance charging 
both in the same count. 

Greenleaf on Evidence (13th Ed.) 18, is cited to the effect that: 

"If several intents are comprised in one allégation in the Indictment, any 
one of which, being consummated by the principal fact, would constitute the 
crime, the allégation is divisible ; and proof of either of the intents, together 
with the act done, is sufficient." 

It may be conceded that, had this question not been raised before 
trial, the jury would hâve been warranted in returning a verdict on 
any false entry count as to which the évidence showed the défendant 
knowingly made a false entry with any one of the several intents 
charged. It would not be necessary to prove ail the intents charged. 
McKnight V. United States, 97 Fed. 216, 38 C. C. A. 115. But hère 
the question is raised by a timely objection, a situation, so far as the 
court is informed, not heretofore presented by any reported case^ 
The fact, as has been said, that in a number of cases where no timely 
objection was made the courts hâve passed such pleading without 
comment, cannot be relied upon as establishing its correctness, now 
that it is challenged. In a number of others, it appears the several 
intents were stated in separate counts. What, then, is the situation? 
The intent to injure and defraud and the intent to deceive are sepa- 
rate and distinct intents, either of which, when accompanying a 
forbidden act, constitutes an offense. .The same act may accompany 
each intent, and thus the same act may give rise to several distinct 
offenses. It is conceded that two or more offenses should not be 
joined in one count. That is sought to be done hère, and the motion 
to quash raises the question. 

The case of Crain v. United States, 162 U. S. 625, 16 Sup. Ct. 952, 
40 L. Ed. 1097, is cited as authority for this pleading. This casé 
involved that section of the Revised Statutes prohibiting the false 
making, altering, forging, or counterfeiting, or causing to be made, 
etc., any deed, power of attorney, order, certifùcate, receipt, or other 
writing, for the purpose of obtaining or enabling another to obtain 
from the United States any sum of raoney. By the statute it is also 
prohibited to any person to knowingly transmit to or présent at, or 
cause or procure to be transmitted or presented to any office or any 
officer of the government any of the writings mentioned in support of 
or in relation to any account or claim against the government, with 
intent to defraud it. The second count of the indictment charged, 
not only that the défendant did the things, and each of them, the 
doing of which, or either of which, the statute prohibited, but alsô 
that he caused the doing of such things and each of them. The ques- 
tion was raised in motion in arrest of judgment, and the court says: 

"Was the count thus drawn so détective as to require the judgment upon it 
to be arrested?" 

After discussing the question, the court say: 

"We are of opinion that the objection to the second count upon the ground 
of duplicity was properly overruled. The evil that Congress intended to 
reach was the obtainiug of money from the United States by means of fraud- 



264; 188 FEDERAL BEPOETBR 

vient deeds, powers of attorney, orders, certiflcates, recelptsj or other wrlt- 
ings. The statute was direct ed against certain defljied modes for accomplish- 
ing a gênerai object, and deelared that tbe dolng of either one Of several 
specifled things, each havlng référence to that object, should be punished by 
imprisonment at hard labor for a period of not less than fîve years uor more 
than ten years, or by imprisonment for not more than flve years and a fine 
of not more than 31,000. We perçoive no sound reason why the doing of the 
prohibited thing, in each and ail of the prohiblted modes, may not be charged 
in one count, so that there may be a verdict of guilty upon proof that the ac- 
cused had done any one of the things constitutiug a substantive crime under 
the statute. And this is a view altogether favorable to an accused, who 
pleads not guilty to the charge contained in a single count; for a judgment 
on a gênerai verdict of guilty upon that count will be a bar to any further 
prosecution in respect of any of the matters embraced by it." 

Aside from the fact that the question was raised after trial, when 
objections for duplicity are too late, it is established by a long line 
of authorities that a charge of the doing of a thing and causing it 
to be done may properly be combined in one count. As said by the 
court : 

"The evil that Congress Intended to reach was the obtaining of money from 
the United States by means of fraudulent or forged writings and the statute 
was directed against certain defined modes of aecomplishing this, either one 
of whlch, having the unlawful object in view, constituted a substantive crime 
under the statute." 

Now the making or causing to be made of a forged or prohibited 
writing, and its utterance or piàblication as true, and its transmission 
or présentation to an oflScer of the government, may ail be successive 
phases in one transaction by one person, as they were, in fact, in the 
Crain Case. In such case it is well established that the various suc- 
cessive acts may be charged in one count. But in the case at bar it 
cannot be said that the intent to injure or defraud the bank is in any 
way related to the intent to deceive. They may both exist in the mind 
of the accused when the false entry is made, but they are not succes- 
sive phases or stages of one transaction. A false entry may be made 
to deceive any agent appointed to examine the aiïairs of the bank, 
without any intention to injure or defraud the bank, and in fact may 
be made under such circum.stances as not to be in any way calculated 
to do so. The same entry may be made with the intent to injure and 
defraud the bank, and with no intent to deceive any officer appointed 
to examine the affairs of the bank, and under such circumstances as 
not to be in any way calculated to do so, 

State V. Goodwin, 33 Kan. 538, 6 Pac. 899, involves the following 
statute : 

"Every person who shall take away any female under the âge of eighteen 
years from her father, mother, guardian or other person having lésai charge 
of her person, withput their consent, either for the purpose of prostitution or 
concubinage, shall upon conviction thereof, be punished by confinement and 
hard labor for the term of not exceeding five years." 

The court said: 

"The information charges that the female, Nannie Lawson, was taken away 
for prostitution and concubinage. In the information there is a joinder of 
two distinct félonies lu oue count. If the appellant took away the female 



UNITED STATES V. NORTON 265 

for the purpose of prostitution, under the cireumstances alleged In the infor- 
mation, he would be guilty of one offense; but if he took her away for tlie 
purpose of concubinage, but not for prostitution, he would be guilty of an- 
other offense. If tbie appellant took the female away for the purjwse of pros- 
titution, he did so for the purpose of devoting her to Infamous purposes; 
that is, of ofCering her body to indlscrimlnate intercourse with men. If he 
took her away for concubinage only, then bis purpose was to cohabit with 
her In sexual commerce, without the authority of law or a légal marrlage. 
Now, two or more offenses may, under proper cireumstances, be joined in one 
information ; but it niust be in separate eounts. Each count, as a gênerai 
thing, should embrace one complète statement of a cause of action, and one 
c-ount should not include distinct offenses — at least, distinct félonies. There 
are many prominent exceptions to this rule, but, as this case is not within 
the exceptions, thev need not be noted. Wharton's Cr. PI. and Pr. pp. 244- 
254 ; 1 Bishop on Cr. Pro. pp. 4.33-440." 

To the same efifect is State v. Gibson, 111 Mo. 92, 19 S. W. 980; 
Slocum V. People, 90 111. 274; Henderson v. People, 124 111. 607, 17 
N. E. 68, 7 Am. St. Rep. 391. 

Section 1024 of the Revised Statutes of the United States provides : 

"When there are several charges against any person for the same act or 
transaction, or for two or more acts or transactions connected together or 
for two or more acts or transactions of the same class of crimes or offenses, 
whieh may be properly joined, instead of bavlng several indictments, the 
whole may be joined In one indictment in separate eounts." U. S. Comp. St. 
1901, p. 720. 

Hère are two charges against the défendant for the same act, the 
false entry; each distinct intent charged constituting a separate of- 
fense. Billingsley Case, supra. Such charges may be joined under 
the statute in one indictment, but in separate eounts. 

Because no reported case is brought to the attention of the court, 
where, as to section 5209, this question has been raised before trial, 
as is donc in the case at bar, it is considered at greater length than 
otherwise it would hâve been. It is conclu ded that the charges in the 
indictments under considération are duplicitous, in that they each 
plead two separate and distinct offenses, and that the motion to quash 
as to' such eounts is therefore well taken. 

The suggestion made by counsel for the government that to so hold 
is imposing an impossible standard of pleading upon the government is 
not Sound, nor is it requiring such détail of pleading as is impractica- 
ble of proof. It is just as easy to plead the intent to injure or defraud 
in one count and the intent to deceive in another, both relating to the 
same act, and is a practice, in fact, commended by the authorities. In 
State v. Bailey, 50 Ohio St. 636, 36 N. E. 233, it is said: 

"The authorities are quite unlform In maintaining the right of the prose- 
cutor, where a single offense has been committed, to include a number of 
eounts in one Indictment, variously framed to meet possible contingencies 
that may arise In the Introduction of évidence. Upon this subject, the fol- 
lowing pertinent language is used by Wharton: 'Every cautions pleader wUl 
insert as many eounts as wlll be necessary to provide for every possible con- 
tingency In the évidence, and this the law permits.' Beasley v. People, 89 
m. 571 ; Corn. v. Andrews. 1.32 Mass. 263 ; State v. Smith, 24 W. Va. 814 ; 
State V Flye, 26 Me. 312. The law permits this multiplication of the eounts 
in an Indictment, where each states, though with variations of détail, the 
same offense, to prevent that failure of justice whicb mlght foUow if the 



266 188 FEDERAL RBPOETBB 

prosecutlon should be conflned to a single count, and the proof should vary 
frQm the allégations of that count in some essential particular. Upon tlie 
same principle, It would seem that where two similar and closely allied of- 
fenses arise from the same transaction, and each must be established, if at 
ail, by substantially the same évidence, each should be permitted to be set 
forth, in separate counts, in the same indictment. People v. Sandman, 12 
Hun (N. T.) 167 ; State v. Hogan, R M. Charlt. (Ga.) 474 ; State v. Fisher, 
37 Kan. 404, 15 Pac. 606 ; Com. v. Ismahl, 134 Mass. 201 ; State v. Scott, 15 
S. C. 434 ; Ker v. People, 110 111. 627 [51 Am. Rep. 706] ; People v. Sweeuey, 
55 Mich. 586, 22 N. W. 50 ; Armstrong v. People, 70 N. Y. 38." 

The foUowing excerpts from reported cases controUing this court 
will aid in the détermination of the questions hère presented as to 
the misapplication and abstraction counts : 

In United States v. Britton, 107 U. S. 668, 2 Sup. Ct. 523, 27 L. Ed. 
520, it is said : 

"It is true that it is possible for an offlcer of a banklng association, with 
intent to defraud It, to misappropriate its funds in the purchase for its use 
of its own stock; but the count whlch avers such an act should also make 
other averments to show that the application was not merely the use of the 
money for the benefit of the association, forbidden by law, but a criminal 
misapplication by whlch it was possible that the association could be de- 
frauded." 

In the same case it is also said : 

"The words 'willfully misapplied' are, so far as we know, new in statutes 
creating offenses, and they are not used in describing any offense at common 
law. They hâve no settled technical meaning, like the word 'embezzle,' as 
used in the statute, or the words 'steal, take, and carry away,' as used at 
common law. They do not, therefore, of themselves fully and clearly set 
forth every élément of the offense eharged. It would not be sufficient simply 
to aver that the défendant 'willfully misapplied' the funds of the association. 
That is well settled by the authorlties we hâve already cited. There must 
be an averment to show how the application was made, and that it was an 
unlawful one." 

In the case of Evans v. United States, 153 U. S., loc. cit. 587, 14 

Sup. Ct. 936 (38 L. Ed. 830) it was said: 

"Bven in the cases of misdemeanors, the Indictment must be free from ail 
ambiguity, and leave no doubt in the minds of the accused and the court of 
the exact offense intended to be eharged, not only that the former may know 
what he is called upon to meet, but that upon a plea of former acquittai or 
conviction the record may show with accuracy the exact offense to which the 
plea relates." 

The Circuit Court of Appeals for this circuit, in Dow v. United 
States, 82 Fed. 904, 27 C. C. A. 140, criticising an instruction given 
by the trial court, said : 

•"From this broad statement upon the subject, given without restrictions 
or qualifications, the jury mlght well understand that in ail cases the draw- 
ing of a check, when at the tlme the drawer had no funds to meet it, would 
be a fraud on part of the drawer, and the récognition of the check by the 
bank officiais, by crediting it to the account of the holder, would constitute 
a criminal misapplication of the funds of the bank, yet it is apparent that 
in many cases such acts would not be justly open to the charge of fraud, and ■ 
in no case could they constitute a criminal misapplication of the funds of the 
bank, unless the funds of the bank had been lessened thereby. In nearly ail 
cases wherein overdrafts oecur, checks are drawn on the bank when in fact 
the drawer at the time has no funds on deposit to meet the check; and yet 



UNITED STATES V. NOETOH 267 

not ail overdrafts are frauds, nor do the offieers of the bank necessarîly be- 
come participants in a fraud simply because they give récognition to cbeclcs 
drawn by their customers whieh are in fact overdrafts, because drawn upon 
the bank when the drawer had not fuuds therein to meet the ehecks. Of 
course, frauds and criminal misappllcations of bank fuuds by the officiais 
thereof may be eommitted by the récognition or payment of ehecks drawn on 
the bank when there are not funds to meet the same; but the criminal 
wrong, including the intent, must appear from ail the facts surrounding the 
transaction, and cannot be inferred, as a matter of law, ffom the mère fact 
that when the check was drawn there were not funds on deposit to meet the 
eheck ; and the charge given the jury In thls case on this subject must be 
held misleading and erroneous, because it is so broadly stated as to justify 
the jury in believing that the mère drawing of a check creating an over- 
draft is a fraud on the part of the drawer, and the payment thereof by the 
bank offieers of necessity constitutes a fraudulent misapplication of the funds 
of the bank." 

In the same case, discussing section 5209, the Circuit Court of Ap- 
peals said: 

"ïhe statute thus referred to, being section 5209 of the Revised Statutes, 
was before the Suprême Court for construction in the cases of U. S. v. Brlt- 
ton, 107 U. S. 655, 2 Sup. Ct. 512 [27 L. Ed. 520], and U. S. v. Northway, 120 
U. S. 327, 7 Sup. Ct. 580 [30 L. Ed. 634], and it was therein held 'to be of the 
essence of the crimlnality of the misapplication that there should be a con- 
version of the funds to the use of the défendant, or some person other than 
the association, with intent to injure and defraud the association, or some 
other body corporate or natural person.' In the several counts in the indict- 
ments charging a misapplication of the funds of the Commercial National 
Bank it is averred that the misapplication was made with the intent to in- 
jure and defraud the association, meaning the national bank, and it Is clear, 
under the ruling of the Suprême Court in the cases just cited, that the charg- 
es of misapplication contained in thèse indictments could not be made out 
unless it appeared that the fuDds of the bank had been depleted, withdrawn, 
or dlminished in some form by reason of the action of Dow, aided and abet- 
ted by McClurken and Miller. The jury were instructed that the fact that 
Miller received crédit in his aceount on the books of the bank for ehecks 
drawn on that bank or on other banks eonstituted a flagrant misapplication 
of the funds of the Commercial Bank, wlthin the meaning of section .5209 ; 
yet it is apparent that merely giving crédit to Miller on the books of the bank 
for the amount of the ehecks did not lessen the funds held by the bank, nor 
in fact defraud the association, in any form. To complète a misapplication 
of the funds of the bank, it was necessary that some portion thereof should 
be withdrawn from the possession or control of the bank, or a conversion in 
some form should be made thereof, so that the bank would be deprived of the 
benefit thereof. It Is not necessary in ail cases that the money should be 
actually withdrawn from the. bank. Thus if, by eonnîvance between a bank 
officiai and a customer of the bank, the latter is allowed to draw ehecks on 
the bank, when the drawer has not the funds to meet the ehecks, and tlie 
same are given by the drawer to third parties, Instead of getting the cash 
on the ehecks, bave them credited up to their accounts in the bank, this com- 
plètes the misapplication of the funds of the bank, because the bank has be- 
come bound for the payment of the sums thus credited to the third parties ; 
and the resuit is just the same as though the holders of the ehecks had ob- 
tained tSe money thereon, and had subsequently deposited it to their crédit. 
In such cases the funds of the bank vi^ould be lessened, and thereby the crim- 
inal misapplication might be completed. If, however, the customer présents 
the ehecks himself, and has the same credited on his aceount, the crime of 
misapplication is not completed thereby, because the bank is not under légal 
obligation to pay out any of the amounts wrongfully credited to the custom- 
er, and may refuse to pay ehecks drawn against the inflated aceount, and 
may at any time charge back against the customer the amounts of the ehecks 



268 188 FEDERAL EBPOETER 

upon whlch nothing was In fact reallzed by the bank. To complète the crlm- 
Inal misapplleation of the bank funds in the supposed case, some sum must 
be paià by the bank to the custouier, or to third parties on his order, or must 
be credited to thlrd parties under such circumstances that the bank becomes 
bound for the payment thereof." 

Now, taking up the misapplication counts: Without prolonging 
this opinion by reciting in détail the several particulars in which it is 
charged the third count in indictment No. 516 is bad, on a careful ex- 
amination of it, in the light of the objections raised, I conclude that it 
substantially states a misapplication under section 5209. 

[2] As to indictment No. 518: The eighth count of this indict- 
ment charges that on February 9, 1908, the défendant, as président 
of the association, with the intent to injure and defraud the asso- 
ciation, and without the knowledge and consent of the board of di- 
rectors, unlawfully, willfully, etc., misapplied and converted to his' 
own use moneys, funds, and crédits of the association in the sum 
of $8,000, by means of a charge ticket, which is set forth in full, 
from which it appears the défendant was charged upon the books of 
the association with $8,000 cash; that the payment to him was un- 
lawful, in that the association was not indebted to him, and had no 
accbunt with him, on which such payment was entitled to be made; 
that the repayment thereof was not secured, and that défendant had 
no right, title, or authority to the same, ail of which he well knew. 
The effect of the transaction charged in this indictment is the same 
as if the défendant had permitted himself, or some other person, to 
whom the association was not indebted, to draw out of the funds, 
moneys, and crédits of the association the sum of $8,000, in the shape 
of an overdraft, and charge the person so drawing it out therewith on 
the books of the bank. Presumably, in the absence of a charge to the 
contrary, the défendant is solvent and able to repay the $8,000 for 
which he stands indebted on the books of the bank. So far as the 
indictment shows, this amount may hâve been repaid to the associa- 
tion upon demand. How, then, can it be said that it appears from 
the facts alleged that it was likely, or even probable, that the bank 
would be injured or defrauded by the transaction? In the absence 
of such averments, the mère statement that the défendant intended to 
injure or defraud tiae bank is not sufficient. 

It might be further suggested, also, that if the averment of thig 
count were sufficient to bring the transaction within the condemna- 
tion of the statute, it probably would be more in the nature of an 
abstraction than a misapplication. 

In the ninth count of indictment No. 518 it is charged that the de- 
fendant, without the consent of the board of directors, and with in- 
tent to injure and defraud the association, willfully misapplied $8,- 
000 of the moneys, funds, and crédits of the association by means of 
a charge ticket, from which it appears that he procured from the 
association three drafts, each to the order of a différent oil company, 
aggregating the above amount, which was charged to his "escrow" 
account. Like the preceding count, no averment is made from which 
it appears how it is possible or probable that the bank will lose, nor 



UNITED STATES V. NORTON 26!) 

does it appear that the drafts were ever paid. Dow Case, supra; 
United States v. Martindale (D. C.) 146 Fed., loc. cit. 282. 

[3] Taking up indictment No. 520, the first count of this indict- 
ment is unintelligible, as the mère reading of it shows, because of the 
confusion of the name of the défendant with that of the American 
National Bank of Bartlesville, and this confusion, occurring as it 
does at the beginning of the count, is carried through the entire count, 
by référence from time to time relating back to this defective begin- 
ning. For this reason, if no other, this count is subject to the motion 
to quash. 

The second count charges that the défendant was président of the 
association, and that on October 13, 1908, while acting as such prési- 
dent, with intent to injure and defraud the association, and without 
its knowledge or consent, or that of its board of directors, he unlaw- 
fully, fraudulently, knowingly, willfully, and feloniously converted 
and appropriated to his own use, and to the use of the Oklahoma In- 
vestment Company, the moneys, funds, and crédits of the association, 
in the sum of $500, by means of a certain customer's draft set out 
in the indictment. It is dated October 7, 1908, drawn by one R. M. 
Conway, to the order of the Farmers' State Bank, and is drawn 
upon the Oklahoma Investment Company. It is charged that upon 
this paper the défendant paid to himself, out of the moneys, funds, 
and crédits of the association, the said sum, and that said payment 
was unlawful, in that the association was not then indebted to the in- 
vestment Company, had no account with it upon which such payment 
was due and payable, and that the repayment of the said sum was in 
no way secured; that the défendant had no right, title, or authority 
in and to such moneys, funds, and crédits, ail of which he then and 
there well knew. Now, while it does not appear how the défendant 
came in possession of the draft, it may reasonably be inferred from 
the indictment that he presented it to the association, and received 
it for the association, in exchange for the moneys, funds, and crédits 
he is charged with having misapplied. The draft was originally pay- 
able to the order of the Farmers' State Bank. It is not charged that 
the défendant was wrongfully in possession of the paper, so that 
it must be assumed that he was entitled to présent it to the Oklahoma 
Investment Company, upon whom it was drawn, and collect $500. 
But, instead of that, he passes it through the association, whether 
by indorsement, or for collection, or how, does not appear. It does 
appear that he received for it $500 of the moneys, funds, and crédits 
of the association. Now, it is charged that this was unlawful, in 
that the association was not indebted to the Oklahoma Investment 
Company, and the repayment of said moneys, funds, and crédits was 
not secured, and that the défendant was not entitled to the said mon- 
eys, funds, and crédits. But as the bank holds the paper, which is in 
itself a crédit against the Oklahoma Investment Company, and as it 
does not appear that the Oklahoma Investment Company was insol- 
vent, and as no other reason appears why the paper is uncollectible, it 
must be assumed that upon présentation by the association to the Ok- 
lahoma Investment Company it will be paid. If, so, then it does not 



370 188 FBDBEAL EBPORTBB 

appear that the bank loses anything by the transaction. It is not ma-^ 
terially différent f rom the defendant's having received for the bank and 
discounted the note of the Oklahoma Investment Company, and taken 
the proceeds himself. In such case, unless it appeared that the in- 
vestment Company was insolvent, or that for some other reason 
the paper was uncollectible, the mère charge that it was donc by the 
défendant to injure and defraud the bank would not be sufifîcient to 
make criminal a state of facts which fails to show oh its face that 
injury or fraud would probably resuit. United States v. Britton, 
supra. 

[4] In the third court the défendant is charged with having mis- 
applied $250 of the moneys, funds, and crédits of the association, 
by means of a draft drawn by the Oklahoma Investment Company, by 
its treasurer, upon the associations payable to the order of J. W- 
Jenkins, agent. It is charged the Oklahoma Investment Company 
has no account with the association upon which the draft may be 
drawn, but no charge of insolvency is made against it. It amounts 
to no more than the permitting of an overdraft by the Oklahoma In- 
vestment Company. It is not charged that the Oklahoma Investment 
Company had no account with the association, but that it had no ac- 
count upon which the amount was due and payable. There being no 
allégation from which it can be inferred that the association cannot 
or did not coUect this overdraft from the Oklahoma Investment Com- 
pany, which, so far as appears, was a solvent concern, no offense of 
misappropriation is stated. 

The fourth count is very similar to the third, and is subject to the 
same criticisms. 

The fîfth count charges a misapplication by the défendant of 
$9,204.90 with intent to injure and defraud the association, and with- 
out the knowledge and consent of the board of directors, by means of 
a draft dated January 28, 1909, drawn by the défendant to the order 
of Columbia Bank & Trust Company upon the Oklahoma Investment 
Company, charged to hâve been unlawful, in that the investment 
Company had no account with the association upon which said amount 
was due, and that the association did not owe said sum to the invest- 
ment Company. It is not alleged that the investment company was insol- 
vent, nor that the draft was for any reason uncollectible. This count 
is therefore defective, for the reasons stated as to the second count 
of this indictment. 

The sixth count sets forth a transaction involving a customer's 
draft, drawn by the Columbia Bank & Trust Company upon the 
Oklahoma Investment Company, to the order of the Southwestern 
Mortgage Company, for $3,087.50. It does not appear that the 
Oklahoma Investment Company is insolvent, or that the draft upon 
it was for any reason uncollectible. 

The seventh count charges that on January 15, 1909, the défendant, 
as président of the association, with intent to injure and defraud it, 
and without the knowledge and consent of the board of directors, 
unlawfully, etc., misapplied and converted to the use and benefit of 
himself, one Davis, and the Columbia Bank & Trust Company moneys. 



UNITED STATES V. NORTON 271 

etc., of the association in the sum of $2,500, by means of certain 
checks, drafts, and charge tickets, a more particular description of 
which the grand jury is' unable to give, and by further means and 
methods to the grand jury unknown ; that this payment was unlaw- 
ful, in that the association was not indebted to défendant, nor to the 
said Davis, nor the Columbia Bank & Trust Company, in any sum 
entitling them to such payment, and the repayment of said moneys, 
funds, and crédits was in no way secured, ail of which was known to 
the défendants. For the reasons set forth as to the foregoing counts, 
it will be seen the facts averred as constituting the means by which 
the alleged misapplication was effected do not amount to an unlawful 
misapplication under the statute. Nor do they apprise the défendant 
of the particular charge against him with such definiteness of détail 
as enables him to make a défense, or plead it in bar of another 
prosecution, in case of acquittai or conviction. 

The eighth, ninth, and tenth counts of this indictment are substan- 
tially the same as the seventh in the manner in which the alleged mis- 
application is pleaded. 

Taking up the charges in the fourth, and fifth counts of indictment 
No. 521 : The fourth count charges that the défendant, as président 
of the association, on the 15th day of December, 1908, with intent 
to injure and defraud the association, and without the knowledge and 
consent of the board of directors, unlawfuUy, willfully, etc., ab- 
stracted and converted to his own use and to the use of the Bartles- 
ville State Bank moneys, funds, and crédits of the association in the 
sum of $4,000, by means of a certain charge ticket set forth in the 
indictment; that said sum was not lawfully paid, in that the asso- 
ciation was not indebted to the Bartlesville Bank, and it had no funds 
on deposit with the association, and no valid subsisting account upon 
which the payment was due, or entitled to be paid ; and it is then 
charged that the repayment of "said customer's draft" was not in 
any way secured, and that the défendant and the said bank had no 
right, title, or authority in and to said moneys, funds, and crédits, 
ail of which the défendant well knew. The référence to "said cus- 
tomer's draft" must be an error in drafting the indictment, for in no 
other place in this count is any customer's draft mentioned. It ap- 
pears from this count that the défendant, without knowledge and 
consent of the board of directors, paid out of the moneys, funds, and 
crédits of the association the sum of $4,000 to the Bartlesville Bank, 
which amount was charged to that bank, as shown by the charge 
ticket, and that no security was given for the repayment of this 
money, other than the crédit of the Bartlesville Bank; but in place 
of such moneys, funds, and crédits the association has a charge 
against the Bartlesville Bank for the same amount. If the latter 
bank was solvent, as must be presumed in the absence of an allégation 
to the contrary, then the association can lose nothing by reason of 
the transaction; for it must be presumed that a solvent bank will 
repay this amount when called upon, whether it be treated as a loan 
or an overdraft. As it is neither charged that the Bartlesville Bank 
is insolvent nor that this indebtedness to the association was not re- 



272 188 FEDERAL REPORTEE 

paid upon demand, ail the facts charged in the îndîctment might be 
admitted or proven, and still there would be nothing from which the 
jury could infer the unlawful intent charged. 

In the fifth count it is charged that on December 9, 1908, the de- 
fendant, as président of the association, with the intent to injure 
and defraud it, and without the consent and knowledge of the board 
of directors, willfully and unlawfully abstracted and converted to 
the use of himself and the Bartlesville State Bank moneys, funds, 
and crédits of the association, in the sum of $9,000, by means of a 
customer's draft, drawn by the cashier of the latter bank, payable 
on demand to the order of the association, said moneys, funds, and 
crédits having been paid to the latter bank by the .association upon 
said draft; that the payment was unlawful, in that the association 
was not indebted to the said bank; that it had no funds on deposit 
with the association, and no valid subsisting account with the asso- 
ciation upon which said payment was due, and the repayment thereof 
was not secured. From this it appears that for the said moneys, 
funds, and crédits the association held the demand draft of the 
Bartlesville Bank for the same amount. No insolvency of the latter 
bank is charged, so it was presumably solvent. Nor is it charged 
that upon demand the draft was not paid. So that, presumably, it 
was; it not appearing that the amount was lost to the bank. For 
reasons stated as to other counts, this count fails to state a case 
of unlawful abstraction, as contemplated by the statute. 

As to ail the false entry counts in the several indictments, the mo- 
tions to quash will be sustained, because said counts are duplicitous; 
each combining in one count two distinct offenses. 

The several motions to quash, so far as they relate to counts in 
the respective indictments charging misappropriation, will be sus- 
tained, for the reasons heretofore stated, except as to the third count 
of indictment No. 516, as to which count the motion will be overruled. 
So far as they relate to the counts charging abstraction, the said 
motions will be sustained, 

So ordered. 



CONTINENTAL <b COMMERCIAL T. & S. BANK V. m'cAETT 273 

CONTINENTAL & COMMERCIAL TRUST & SAVINGS BANK v. McOARTT. 

(Circuit Court of Appeals, Ninth Circuit. July 3, 1911.) 

No. 1,943. 

Waters and Wateb CotTKSES (§ 252*) — Stockholders— SuppLT or Watee— 
Construction of Conteact. 

Défendant, who had purchased land within an irrigation System being 
constructed under a contract with the state, bougtit stock in the corpo- 
ration organized to maintain and operate such System wliicli eutitled 
him to water for irrigation of his land, entering into a contract by whicti 
he made an initial payment and agreed to pay the remainder in annual 
installments. The contract provided that he should pay the first iustall- 
nient, wlth interest on ail, November Ist foHowing, but further, in aceord- 
ance with the requirement of the contract wlth the state for construction 
of the System, that interest should be payable from April Ist if water was 
available for Irrigation of the land during the irrigation season, but, 
if not, to commence when sueh water was available; that "no payment 
other than the Initial payment, and no interest shall be required to be 
paid under this contract untll the water Is available * * * and such 
water must be available at the beginnlng of the irrigation season in order 
to make such payments become due, and ail payments and interest 
* * * shall be advanced In time according to the delay in the delivery 
of the said water." The contract was secured by a lien on the land and 
with other like contracts, and, as provided thereln, was assigned to a 
trustée to secure bonds of the corporation. The irrigation season extend- 
ed from Aprll Ist to November Ist, and water was not available for de- 
fendant's land untll May 14th. Held that, under such contract, no pay- 
ment of interest or principal became due or collectible by the assignée 
until one year from the Ist of the ensning November, and that interest 
commenced to run from the Ist of April of the next season. 

[Ed. Note. — For other cases, see Waters and Water Courses, Dec. Dig. 
§ 252.*] 

Appeal from the Circuit Court of the United States for the District 
of Idaho. 

Suit in equity by the Continental & Commercial Trust & Savings 
Bank against Charles W. McCarty. Decree for défendant, and com- 
plainant appeals. Affirmed. 

The appellant, as trustée under a deed of trust, brought a suit for the fore- 
closure of a lien created by a contract assigned to it as security for an issue 
of bonds. The lien was executed by the appellee, and it covers certain lands 
situate in the state of Idaho, together with a certificate of stock represent- 
ing water rights for the irrigation of land. The court below sustained a 
demurrer to the bill, and dismissed the same. The facts set forth in the 
bill are in substance the foUowing: That on May 1, 1908, the Kings Hill 
Irrigation & Power. Company, a corporation, entered into a contract wlth the 
state of Idaho for the construction of an irrigation System for the réclama- 
tion and Irrigation of several thousand acres of land which had been segre- 
gated from the public domain under the act of Congress known as the "Carey 
Act" (Act Aug. 18, 1894, c. 301, 28 Stat. 372). The contract provided that, 
betore the land should be thrown open for entry, a corporation to be known 
as the Glenn's Ferry Canal Company should be organized for the purpose of 
mainta'ining and operating the Irrigation System ; that it should hâve a capi- 
tal stock of 25,000 shares, each share to represent an undlvided interest in 
the System based upon the number of shares finally sold ; that each share 
should represent suffleient water for the irrigation of one acre of land ; that 
the entire capital stock should be issued to the Kings Hill Irrigation & Power 
Company in full payment for the irrigation System ; and that said stock 

•For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
188 F.— 18 



274 188 FEDERAL REPORTER 

should be sold to persons who desired to enfer thè land, and to owners of 
otlier lands susceptible of Irrigation from ttie System. Payments for said 
stocli were to be made as follows: $6.50 per share at the tlme of purcbasé, 
and the remalnder in nine equal annual deferred payments witb interest at 
6 per cent, per annum. Tbe Irrigation & Power Company having coustructed 
the irrigation worlis, the appellee desired to enter certain parts of said land, 
and, with that end in view, purchased 42.97 shares of the capital stock of 
the Glenn's Ferry Canal Company, sufflcieut to irrigate 42.97 acres of land 
vvhich the appellee filed upon under the Carey act. In purchaslng his stock 
the appellee entered into a contract with the Irrigation «Se Power Company 
whereby the latter was given a first lien on the land on which the appellee 
filed for the amount due it In nine deferred annual payments of $279.31 each. 
The appellee under his contract agreed to pay the irrigation company his 
flrst deferred payment on November 1, 1909, and agreed to pay interest on 
ail deferred payments on said date, the interest to be computed from April 1, 
1909, at 6 per cent, per annum. The contract contained, however, the follovv- 
ing qualifying clause: "Interest from April 1, 1909, at six per cent, per 
annum may be chargea if water Is available from said Irrigation System for 
use during the irrigation season o* 1909, and, if not available for said season, 
Interest shall commence when such water is available. But It Is further 
understood and agreed that no payment other than the initial payment, and 
nô interest shall be required to be paid under this contract until the water 
Is available for distribution from said irrigation System -at a point withln 
one-half mile of each légal subdivision of one hundred sixty acres, and such 
water must be available at the beglnning of the irrigation season in order to 
make such payments become due, and ail payments and interest provided in 
this contract shall be advanced in tlme aecording to the delay tn the delivery 
of the said water as aforesaid." The following provision was also contained 
in the contract: "This contract is made pursuant to and subject to the con- 
tract between the company and the state of Idaho, and the existing laws of 
said State, and is to be construed In conjunction with said contract and said 
laws." The contract between the state and the Irrigation company contained 
the following provision: "It is further agreed that no payment other than 
the initial payment, and no interest shall be required under any contract, 
elther for Carey act lands or state or private lands, until the water for the 
said land is available from said canal for distribution at a point within a half 
mile of each légal subdivision of one hundred sixty (160) acres of the said land, 
and such water must be available at the beglnning of the irrigation season in 
order to make such payments become due, and ail payments and Interest pro- 
vided in said contract shall be advanced In time aecording to the delay in 
the delivery of said water as aforesaid." In the Eevlsed Codes of Idaho, 
section 3306 provides that owners or persons In control of any ditch, canal. 
or conduit used for irrigation purposes shall malntain the same In good 
order and repalr ready to deliver water by the Ist of April In each year. 
In the blll it was alleged upon Information and bellef that the Irrigation 
System described in the contract between the appellee and the appellant was 
so far completed on May 14, 1909, that water on said date became available, 
and ever since bas been available, for the Irrigation of the lands described 
In the contract. 

Richards & Haga, for appellant. 
B. S. Crow, for appellee. 

Before GILBERT and MORROW, Circuit Judges, and WOLVER- 
TON, District Judge. 

GILBERT, Circuit Judge (after stating the facts as above). 'i'he 
single question presented by the demurrer is whether a cause of suit 
has arisen in favor of the appellant. The contract provides that the 
appellee shall pay on November 1, 1909, the first deferred payment and 
interest on ail deferred payments from April 1, 1909, but it proceeds 



CONTINENTAL & COMMEROIAl, T. & 8. BANK V. m'cARTT 275 

in the next paragraph to provide that the interest may be chargedif 
water is available f rom the irrigation system for use during the irriga- 
tion season of 1909, and that, if not available for said season, the in- 
terest shall commence when such water is available, and that no pay- 
ment, other than the initial payment, and no interest shall be required 
to be paid under the contract until the water is available, and that such 
water must be available at the beginning of the irrigation season in 
order to make such payments become due, and that ail payments and 
interest provided in the contract shall be advanced in time "according 
to the delay in the delivery of the water as aforesaid." The appel- 
lant contends that the paragraph is ambiguous, the ambiguity arising 
from the phrase, "and, if not available for said season, interest shall 
commence when such water is available." But that sentence is con- 
trolled by the provision which follows: "And such water must be 
available at the beginning of the irrigation season in order to make 
such payments become due." The contract was made upon a printed 
form presented to the appellee for his signature, and, if there is am- 
biguity in it, doubtful terms are to be construed favorably to the ap- 
pellee. But we find no substantial difficulty in the way of construing 
the contract as a whole. 

It is not disputed that the irrigation season in the locality of the 
appellee's lands is the period between April Ist and November Ist. 
The contract, when ail its terms are considered, makes it clear that, if 
water for irrigation is not available at the beginning of the first irriga- 
tion season, no payment either of principal or interest is to be made un- 
til the end of the next ensuing season at the beginning of which the wa- 
ter shall be available for use. Counsel for the appellant argue that 
such a construction is unreasonable and unjust; that the water might 
be available on the 2d of April, 1909, and the appellee might hâve ail 
the benefit thereof for the season, and yet, under the construction so 
adopted, no compensation could be collected for the use thereof. But 
that argument does not meet the case presented by the bill. It is not 
therein alleged that the water was available for substantially the whole 
of the irrigation season of 1909. It is alleged that it was available on 
May 14th. The use of the water from May 14th to the end of the 
season may or may not hâve been of considérable value to the appel- 
lee. Of that we need not inquire. The parties saw fit to contract for 
the use of the water for the irrigation season as a whole. They made 
clear their intention that if the use of the water was delayed until 
after the beginning of the first irrigation season, so that the appellee 
could not receive substantially what he contractée! for for that season, 
ail payments of principal and interest should be advanced one year. 
The construction contended for by the appellant that interest began 
to run from May 14th, the day when the water was in fact available, 
would involve the unjust and unreasonable conclusion that if the wa- 
ter had been furnished on the Ist of October, which was practically 
at the end of the irrigation season, interest would hâve run from that 
date. 

The contention is made that the delay in furnishing the water for 
the irrigation season of 1909 cannot affect the right of the appellant 



276 188 FEDERAL REPORTER 

to sue upon the bonds for the reason that it îs the assignée thereof, 
that by the contract the appellee agreed to make the payments to the 
assignée and to look to the irrigation company for the performance of 
its covenants, and that the stipulation that the contract might be as- 
signed is a waiver of the right of set-off or recoupment. But the ap- 
pellee does not base his défense upon any claim of equities as against 
the irrigation company. He asserts no equities or set-off, and seeks 
no recoupment. His défense rests solely upon the nonperformance 
of the conditions of the contract, and the single question is presented 
whether the contract has been performed according to its terms so 
that a right of action has accrued to the appellant. That question is 
in no way affected by the assignment or by the stipulation that an as- 
signment might be made. 
The decree is affirmed. 



NORFOLK & PORTSMOUTH TEAOTION 00. v. REPHAN. 

(Circuit Court of Appeals, Fourth Circuit. May 2, 1911.) 

No. 990. 

1. Courts (§ 347*) — Fédéral Courts— Rulings on Pleadings— What Law 

GOVERNS. 

Under the conformity act, fédéral courts In determining a demurrer 
to a déclaration In an action at law will be governed by tbe décisions of 
the highest court of the state. 

[Éd. Note. — For other cases, see Courts, Cent. Dig. § 921; Dec. Dig. § 
847.* 

Conformity of practice In common-law actions to that of state court, 
see notes to 5 C. C. A. 594, 27 G. C. A. 392.] 

2. Street Railroads (i 110*) — Injuries to Travelers—Pleading— Déclara- 

tion. 

Where, In an action for injuries to a pedestrian at a street railway 
Crossing, plaintifï's whole case was based on the alleged négligence of 
the motorman in operating the car by whlch she was struek, and her 
déclaration was divided Into three counts, the flrst charging that the in- 
jury was the resuit of the motorman's négligence In operating the car 
at the point where she was hurt, the second, that It was due to his nég- 
ligence in falllng to keep a proper lookout, and the third, to a négligent 
fallure to warn, the flrst count was not demurrable under the Virginia 
practice as indefinlte and uncertain for fallure to allège in what particu- 
lar the opération of the car was négligent. 

[Ed. Note.-^For other cases, see Street Railroads, Dec. Dig. § 110.*] 

3. Trial (§ 330*) — Verdict— Responsiveness to Pleading. 

Where neither of the three counts of a déclaration were demurrable, 
a gênerai verdict for plaintiffl was not objectionable as not sustained 
thereby. 

[Ed. Note. — For other cases, see Trial, Cent. Dig. §§ 777-781i^ ; Dec. 
Dig. i 330.*] 

4 Pleading (i 53*) — Déclaration— Counts— Instructions. 

Where plaintiff's whole demand is founded on a single transaction, and 
her relative rights and those of the défendant are well established, tho 
issues consisting of négligence and contributory négligence, the entiie 
déclaration, though divided into counts under the Virginia practice, may 
be considered in passing on the question whether one of the counts is 

*For other cases see same topic & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r In'îexes 



NOKFOLK & PORTSMOUTH TKACTIOK CO. V. REPHAN 277 

sufficiently deflnite to inform défendant as to the nature of the cause 
of action pleaded. 

[Ed. Note.— For other cases, see Pleading, Cent Dig. §§ H4-117; Dec. 
Dig. § 53.*] 

5. Trial (§ 169*) — Dibection of Verdict— Duty of Coukt. 

It is tbe duty of a trial judge to direct a verdict for défendant in a 
civil action, when plaintifï's testimony, assuniing it to be true, and glv- 
iug it that weight and effect which necessarily follow.s or may be rea- 
sonably inferred from it, fails to establish a cause of action. 

[Ed. Note.— For otlier cases, see Trial, Cent. Dig. §§ 381-389 ; Dec. Dig- 
§ 169.*] 

6. Stkbet Raileoads (§ 117*)— Injueies to Pedestrian — Crossing Accidenï 

— Négligence — Contribuiory Négligence — Peoximaie Causï: — Ques- 
tion FOB Jury. 

In an action for injuries to plalntiff by belng struck by a street car at 
a Street crosslng as she was attempting to cross the street In a rainstorm, 
évidence held to require submission to the jury of the questions of négli- 
gence and contributory négligence. 

[Ed. Note. — For other cases, see Street Bailroads, Cent. Dig. §§ 239- 
257 ; Dec. Dig. § 117.*] 

7. Négligence (§ 136*) — Question of Law oe Fact. 

Négligence only becomes a question of law to be determined T)y the 
court when the facts are such that falr-mlnded men eau only draw from 
them the inference that there was no négligence, and if such mlght hon- 
estly difCer on the question it must be submltted to a jury. 

[Ed. Note. — For other cases, see Négligence, Cent. Dig. §§ 277-353 ; 
Dec. Dig. § 136.*] 

8. Teial (§ 260*) — Instructions— Request to Charge- Refusal. 

Where the court's charge covered the entire case, and was ail that was 
necessary to give the jury an intelligent understanding of the law ap- 
plicable to the facts they might find from the testimony, it was not er- 
ror to refuse requests to charge. 

[Ed. Note.— For other cases, see Trial, Dec. Dig. § 260.*] 

In Error to the Circuit Court of the United States for the Eastern 
District of Virginia, at Norfolk. 

Action by Mamie Rephan by Harry Rephan, her next friend, 
against the Norfolk & Portsmouth Traction Company. Judgment for 
plaintifï, and défendant brings error. Affirmed. 

W. H. Venable and Henry W. Anderson (J. R. Tucker, on the 
brief ) for plaintifï in error. 

S. M. Brandt, for défendant in error. 

Before PRITCHARD, Circuit Judge, and BOYD and ROSE, Dis- 
trict Judges. 

BOYD, District Judge. The défendant in error, Mamie Rephan, 
who for convenience will hereafter be called the plaintifï, is a citizen 
and résident of the city of Charleston, S. C, and is under 21 years of 
âge. The plaintiff in error hère, which was the défendant below, and 
will hereafter be called the défendant, is a corporation under the laws 
of the State of Virginia, and owns and opérâtes a street railway in 
the city of Norfolk, and a part of its line is along Granby street, which 
in its course intersects with another street called Collège place. On 
the 14th of November, 1908, between 7 and 8 o'clock in the evening, 

*For other cases see same topic & § numbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



278 188 FBDBEAL REPORTEE 

during a rainstorm, the plàintiiï undertook to cross Granby street at 
Collège place, when she was run over by a car operated upon the Une 
of the défendant, and so injured that it resulted in the amputation of 
her left leg above the knee. She brought this suit by her next friend, 
Harry Rephan, against the défendant to recover damages, alleging 
that the injury to her was caused by the servant of the défendant in 
the négligent opération of the car. The case was tried in the circuit 
court at Norfolk, the jury returning a verdict for $15,000 in favor of 
the plaintifï, which, by consent of her counsel, was reduced to $10,- 
000 by the presiding judge, and judgment for that amount rendered 
against the défendant. The case is hère by writ of error sued out by 
the défendant, and is presented to us upon three propositions : First, 
exception to the action of the court in overruling a demurrer to the 
déclaration; second, for error assigned on the refusai of the court 
to direct a verdict for the défendant; and, third, assignments of er- 
ror for instructions requested by défendant and refused by the court, 
and exceptions to and error assigned upon instructions as given by 
the court to the jury. 

[2] With this gênerai statement of the case, we will proceed to 
consider the several points which arise, and will in the course of our 
discussion revert to such facts in the record as may be necessary to 
elucidate the questions presented. The first question to be passed 
upon is the demurrer. The déclaration consists of three several 
counts. In order to dispose of the légal propositions raised by the de- 
murrer we do not deem it necessary to reproduce the entire déclara- 
tion, but only the substantîal parts of the first count, in which, after 
alleg^ing that the plaintifï is an infant under the âge of 21 years, and 
a citizen and résident of the city of Charleston, S. C, and that she 
sues by her next friend, Harry Rephan, and that the défendant is a 
corporation under the laws of the state of Virginia, operating an eîec- 
tric Street railway in the city of Norfolk, in said last-named state, the 
déclaration goes on to allège : 

"Tiiat on ttie 14tJi of November, 1908, the défendant, by and througli its 
then servant and agent, was operating, running, and propelling cne of its 
said cars upon, along, and over its said track, which was then laid upon 
Granby street as aforesaid, from a point at or near the Intersection of a cer- 
tain other street in the city of Norfolk, to wlt, Collège place, en route to the 
intersection of Main and Granby streets, in the city of Norfolk, Va., and 
which said car was then operated, run, and propelled, by and through tiie 
said servant and agent of the said défendant, upon and along said Granby 
street ; that on the day and year aforesaid the said plalntift was walking 
along, upon, and across said Granby street, from the east side thereof to the 
west side thereof, as was her right; and thereupon it becanie, and was the 
duty of said défendant, by and through its then servant and agent, who was 
then running and operating said car, 'by means of electrieity, to use due and 
reasonable care to prevent injury to persons using said Granby street, and 
particularly to use due and reasonable care to prevent running down and 
against the said plalntifC; and to so run, oporate, govern, and control its said 
car, which was then being run and operated by and through its then servant 
as aforesaid to prevent injury to persons using sàid Granby street, and par- 
ticularly to prevent running upon, against, and down the plaintiff. Yet the 
said défendant, wholly disregarding its duty in this behalf, when it, the said 
défendant, by its then servant and agent, who was in charge of and oper- 
ating said car, knew or by the use of reasonable care, could hâve known, that 
danger of collision, with the said plaintiff was imminent, so negligently, care- 



NORFOLK & PORTSMOtJTH TRACTION OO. V. REPHAN 279 

lessly, and improperly ran and operated îts sald car; that by reason of the 
négligence, carelessness, and improper conduct of the sald défendant in the 
running, management, opération, government, and contfol of sald car, by and 
through its then servant and agent, the motorman of sald car, when it, the 
said défendant, knew, or by the use of reasonable care could hâve known that 
danger of collision with persons at, upon or near its tracks, and partlcularly 
collision wlth the plalntlH was probable, ran down, upon and against the 
sald plaintifï and the said plalntiff was knocked down, run down and was 
dragged, wounded, lacerated and malmed, and so greatly injured and wounded, 
that by reason whereof, it became necessary to amputate the left leg of the 
said plaintifC above the knee, and that by reason of the négligence, careless- 
ness, and improper conduct of the said défendant, the said plalntiff was so 
greatly Injured and wounded, that she was conflned to her bed for a long 
period, to wit, ten weeks, an'd was, and is, maimed, dlsflgured, and disabled 
for, and during the term of her natural llfe, and suffered great physical pain 
and tnental anguish, and doth still suffer great physical pain and mental 
anguish, and always will suffer great physical pain and mental anguish, and 
hath been obliged to pay and expend great sums of money, in and about the 
endeavor to get healed and cured of her injuries as aforesaid, to wit, one 
thousand dollars, and will be eompelled to pay and expend further sums of 
money, in and about the endeavor to get healed and cured of her injuries as 
aforesaid, by reason of the négligence, carelessness and Improper conduct 
of the sald défendant, by and through its then servant and agent to the dam- 
age of the said plalntiff thirty thousand dollars. And therefore she brings 
her suit," etc. 

The second count is in substantially the same language except it 
charges specifically that the négligence consisted in the f ailure of the ' 
motorman to keep the proper lookout at, upon, or near the tracks of 
the défendant, and the third count charges the négligence to consist 
in the failure of the motorman to give warning as he approached this 
Crossing wïth the car that he was operating. The defendant's counsel 
has net argued the demurrer at length, either orally or in the brief, 
but relies upon some décisions of the Virginia Court of Appeals to 
sustain the view that the déclaration is insufficient. The sole objec- 
tion to the déclaration as a whole is set out in the demurrer as fol- 
lows: 

"Thls déclaration, and each oount thereof, discloses on its face such con- 
trlbutory négligence on the part of the plaintifC as would bar her recovery." 

The counsel, however, hâve not seen proper to discuss this gênerai 
objection, but hâve confined the argument, both oral and in the brief, 
to the demurrer to the first count, which is as f ollows : 

"The first count of the said déclaration is so vague, uncertain, and Indef- 
Inite, in that it does not set out what the alleged négligence of the défendant 
consisted of, and the défendant cannot properly concert its défense thereof." 

[1] We concède the proposition that the practice, pleading, forms, 
and mode of proceeding in civil causes other than equity and admi- 
ralty causes in the fédéral Circuit and District Courts are required to 
conform as near as may be to the practice, pleading, forms, and modes 
of proceeding existing at the time in like causes in courts of record of 
the State in which such Circuit and District Courts are held. This is 
the law enacted by Congress, and it is incumbent upon the fédéral 
courts to comply with its requirements as near as possible. There- 
fore, we think that we should hâve regard for the décisions of the 
Court of Appeals of the state of Virginia relative to the sufïiciency of 



280 188 FEDERAL EEPOETER 

the déclaration in passing upon the question hère involved upon this 
demurrer, but we do net think the first count of the déclaration, con- 
sidered in connection with the circumstances of this case, is bad for 
want of sufficient particularity. Plaintiff's whole case is founded 
upon thé alleged négligence of the motorman in operating the car 
which he had in charge. The leading Virginia case, which is cited 
by both parties in the argument, is that of Hortenstein v. Virginia- 
Carolina Raiiway Company, 102 Va. 914, 47 S. E. 996. In that case 
the Virginia Court of Appeals says, speaking of the requirements in 
the déclaration, that the déclaration should be sufficiently spécifie to 
inform the adverse party of the ground of the complaint; that the 
plaintifF is presumed to hâve knowledge of the facts upon which his 
action is founded, and if he is in doubt as to the précise nature cîf the 
évidence, he may frame his déclaration with différent counts, varying 
his statements to meet every possible phase of the testimony. It seems 
to us that this is precisely what the plaintiff did in this case, basing 
her cause as we hâve said solely upon the alleged négligence of the 
motorman. She has divided her déclaration into three several counts ; 
the first charges the injury to her as the resuit of the négligence of 
the motorman in operating the car at the point where she was hurt, 
the second count is his alleged négligence in the failure to keep â 
proper lookout so as to guard against collision with her, and in the 
third count is the négligent failure to give a warning of his approach 
to the place of the collision in order that she might be on the lookout. 
The Virginia Court of Appeals has said in the case of Chesapeake & 
Ohio Raiiway Company v. Hunter, 109 Va. 343, 64 S. E. 45, that : 

"This court has not laid down, nor does It propose to establish, aiiy un- 
reasonable rules with regard to particularity of averment in déclarations ia 
Personal injury cases. Ail that the rule requires Is that the déclaration shall 
contain a concise statement of the niaterlal facts on which a recovery is cle- 
ïnanded. Of course, the évidence relled on to sustain the averments of the 
déclaration need not be pleaded." 

In the argument, hpwever, défendant lays stress on the fact that 
the verdict was a gênerai one, and it being insisted that the first count 
is bad, therefore, the judgment of the Circuit Court should be re- 
versed; and in support of this view the Hunter Case, supra, is cited 
again and our attention is directed to the following quotation there- 
f rom : 

"The verdict of the jury beIng gênerai, the court cannot say whether It 
rests upon the case stated in the first count of the déclaration or upon that 
alleged in the second and third counts, which are bad. In this situation, the 
judgment complained of must be reversed, for the error of the court in not 
sustaining the demurrer to the second and third counts of the déclaration," 
etc. 

[3] We do not think that this rule applies in the case in hand, for 
in our opinion the first count is not bad because the injury to plain- 
tifif is charged to hâve occurred at a crossing, and the négligence is 
alleged to be that of the motorman who was operating the car, and 
who had the entire control of the opération of the car, at least, whilst 
it was moving. The plaintiff was attempting to cross the track of the 
défendant at a point where she had the right to cross, and at a point 



NORFOLK & PORTSMOUTH TRACTION CO. V. REPHAN 281 

where certain well-defined duties are prescribed by the law as de- 
volving both upon the person attempting to cross the track, and upon 
the servant of the railway Company operating cars along its Hne. So 
then, this déclaration, in our opinion, meets fully the requirements laid 
down by the Virginia Court of Appeals in the case of Hortenstein v. 
Virginia-Carolina Railway Company, supra, wherein the court said: 

"The déclaration, and each count thereof, shows the relation between the 
plalntiff and the défendant, the duty of défendant to plaintifC, the failure of 
défendant to discharge that duty, and the resulting injury to the plaintifC. 
The déclaration clearly Informs the défendant of the nature of the demand 
against it, and states such facts as would enable the court to say, If the 
facts were proven, as alleged, that they estahlished a good cause of action. 
Under such circumstances, the cause of action Is stated with sufEclent par- 
tlcularlty." 

[4] Measured by this rule we see no error in the refusai of the 
trial court to sustain a demurrer to the first count of this déclaration, 
and we go further to say that whilst under the Virginia practice it 
seems that the several counts separately stated in the déclaration are 
treated as distinct causes of action, yet in a case like this where the 
whole demand is founded upon a single transaction where the injury 
complained of occurred at a place which is particularly described in 
the déclaration, and where the relative rights of the plaintifï, and of 
the défendant, are well established, and where, in the trial upon the 
pleadings the plaintifï was depending ttpon the alleged négligence of 
the défendant as her ground of recovery, and défendant was relying 
upon the alleged contributory négligence on the part of the plaintiff 
to defeat her recovery, the entire déclaration may be considered in 
passing upon the question as to whether or not the défendant is suf- 
ficiently informed as to the nature of the cause of action to enable it 
to intelligently défend. We, therefore, dismiss this part of the case 
without further discussion with the conclusion that there was no er- 
ror in the action of the court upon the demurrer. 

[5, 6] The next question presented is that raised by the defendant's 
assignment of error based upon exception to the action of the trial 
court in refusing to direct a verdict for the défendant, first at the 
close of plaintiff's testimony, and then at the close of ail the testimony. 
The law is well settled that it is not only the province, but the duty, 
of a trial judge to direct a verdict for a défendant in a civil action 
when conditions are such as to warrant this course, but this authority 
is confined to cases in which the testimony ofïered by the plaintifï, 
assuming it to be true, and giving it that weight and effect which nec- 
essarily follows or may be reasonably inferred from it, fails to make 
out a case. Such, in our opinion, is not the situation hère. The plain- 
tiff allèges that she was crossing a public street in the city of Norfolk 
at a place where she had a right to cross, and that she was taking due 
précautions for her safety; that it was in the nighttime and during 
a rainstorm, and that the défendant negligently, through its agent, so 
operated a car along the street she was crossing as to run upon her 
and cause her injury, and she charges specifically that the négligence 
consisted in the failure of the motorman to keep a proper lookout at 
that point for persons crossing the street, and also his failure to give 



2S2 188 FEDERAL EBPORTBR 

warning of the approach of the car so as to put such persons on guard, 
and her testimony, as well as that of other witnesses, tended to sup- 
port thèse allégations. On the other hand, the défendant contends 
that the car was operated properly ; that the crossing was approàched 
cautiously; that the motorman was on the lookout, and that he gave 
the ùsual and necessary warning; that the in jury to plaintifF was due 
to the fact that she attempted to cross the street in a rainstorm with- 
out taking any précautions to avoid the danger of approaching cars, 
and that with an umbrella drawn down closely over her head obscur- 
ing her vision she heedlessly ran against the car as it was passing 
along, and the défendant introduced some testimony to sustain thèse 
contentions. So the issue of fact is distinctly drawn as to whether the 
défendant was guilty of négligence which caused the injury, and as 
to whether the plaintiff was guilty of contributory négligence on the 
occasion. If it was shown };hat both the plaintiff and the défendant 
omitted to take-due care, or to exercise that précaution which de- 
volved upon them, or either of them at the time of the occurrence, 
and the injury resulted, it then became a question for the jury on the 
testimony to détermine whose négligence was the immédiate or proxi- 
mate cause of the injury. 

It is évident that this serious injury to the plaintiff was the resuit 
of the want of due care on her part, or on the part of the défendant, 
and we think that the testimony relating to this question pro and con 
is such that reasonable men may fairly differ as to what was the prox- 
imate cause of the injury. This court, in the case of Baltimore & 
Ohio Railroad Company v. White, 176 Fed. 900, 100 C. C. A. 370, 
reiterated the established doctrine with référence to the directing of 
verdicts when it said: 

"For it bas also become a recognlzed principle in the administration of the 
law of négligence that where the facts and clrcumstances accompanying and 
surrounding an alleged négligent act are such that reasonahle men may fairly 
differ as to whether there was négligence or not, the Issue is for the jury, 
and it should be so suhmitted." 

Railroad Company v. Ives, 144 U. S. 408, 12 Sup. Ct. 679, 36 L. 
Ed. 485, clearly lays down the law upon the last-mentioned principle, 
and is a leading authority on that subject. We call attention also to 
the case of McDermott v. Severe, 202 U. S. 600, 26 Sup. Ct. 709, 50 
Iv. Ed. 1 162, in which Mr. Justice Day, in delivering the opinion, says : 

[7] "Négligence only becomes a question of law to be taken from the jury 
when the facts are such that falr-minded men can only draw from them the 
inference that there was no négligence. If fair-minded men, from the facts 
admitted, or conflicting testimony, may honestly draw différent conclusions 
as to the négligence charged, the question is not one of law, but of fact, and 
to be settled by the jury under proper instructions. Railroad Company v. 
Powers, 149 U. S. 43 [13 Sup. Ct. T48, 37 L. Ed. 642] ; Eailroad Company v. 
Everett, 153 U. S. 107 [14 Sup. Ct. 474, 38 I>. Ed. 373]." 

However, we do not deem it necessary to discuss this question fur- 
ther, because it seems to us clearly that the trial ju'dge properly sub- 
mitted the issue to the jury. 

[8] We come now to the last question which arises upon defend- 
ant's requests for instructions to the jury, which were refused by the 



NORFOLK & PORTSMOOTH TRACTION CD. T. EEPHAN 283 

court, and also to the assignments of error based upon exceptions to 
the instructions as given by the court. We will not refer severally to 
the defendant's requests for instructions, wliich were 17 in number, 
nor to the exceptions to the particular parts of the charge as given, 
because upon an examination of the charge we are of the opinion that 
it covered the entire case, and the principles of law laid down by the 
learned judge are those which were pertinent to the issue being tried, 
and are ail that were required to give the jury an intelligent under- 
standing of the law which should be applied to the facts which they 
might find from the testimony. We hâve heretofore in discussing this 
case given an outline of the contentions of the parties, and the char- 
acter of testimony relied upon by each, and thèse, with the gênerai 
statement of facts, disclose the nature of the case and lead to an un- 
derstanding of the issue which was being tried. The instructions of 
the court to the jury were as follows: 

"TMs Is a suit for damages alleged to bave been sustalned by tbe plaintiiï 
by reason of the négligence of the défendant company, while crossing one of 
the tracks of the said défendant, on Granby street, in the city of Norfolk, 
and near the intersection of Granby street and City Hall Avenue. The plain- 
tifC is uot entitled to recover merely because of having sustained the injury 
complained of, but you must be satistied from a prépondérance of the évi- 
dence, to enable her to recover, that she sustained the injury sued for be- 
cause of the négligence of the défendant company, or its agents and em- 
ployés, without .legligence on her part proximately contributing to the acci- 
dent. 

"Second Paragraph. That the injury having occurred to the plaintiiï while 
passlng along a street of the city, upon and over the tracks of the défendant 
company, also lawfully upon said street, that you must take into account in 
determining the question of négligence on the occasion in question the rela- 
tive duties and obligations due by the parties one to the other, in the exer- 
cise of their right to use the said street; which the court charges you is as 
follows: That they each had an equal right to the use of said street, the ob- 
ligation and duty Imposed upon them one to the other being corrélative in 
that they should each hâve proper regard to the rights of the other, and each 
shouin use reasonable care to avoid collision with and injury to the other In 
passing upon and over said street. 

"Thlrd Paragraph. That it was the duty of the plaintifiC before attempting 
to cross the street at the point in question to look out and listen for approach- 
ing cars, and to exercise reasonable care In approaching and crossing de- 
fendant's tracks, to avoid eoming into collision with moving cars while cross- 
ing the street If you believe from the évidence that she failed to perforra 
thèse obligations, or either of them, on her part, on the occasion in question, 
and as a conséquence sustained the injuries sued for, she cannot recover in 
this action, unless you further believe from the évidence that the défendant 
observed the position of péril in which she had placed herself, or by the ex- 
ercise of proper care might hâve obser\'ed the same, the défendant neglected 
to exercise reasonable care on its part, in the opération of, or in stopping its 
car, and as a conséquence the injury sued for was sustained by the plaintiff 
while in the exercise of proper care on her part, then and in that event the 
plalntiîf may recover. 

"Pourth Paragraph. That it was the duty of the défendant company in 
operating its cars, propelled by electriclty over and upon the streets of the 
city, at the time the plaintiff sustained the Injury sued for, to exercise rea- 
sonable care on Its part to avoid collisions with persons lawfully using said 
street, and passlng over said tracks ; that is to say, by and through its offl- 
cers and employés, to exercise reasonable care in the movement of its said 
car, and In looking out for and observing persons lawfully using said street, 
and passing upon and over said tracks, and to give due and timely signal and 
warning of the approach- of said cars. And if you believe from the testimony 



284 188 FEDBEAL REPORTER 

that thé défendant, by and through Its servants and employés, failed and 
neglected to perform its duty in either of tbe respects mentioned, and as a 
conséquence the plaintiff, In the exercise of proper care on lier part as here- 
Inbefore stated, received tlie iujury sued for, then you should flnd for tbe 
plaintiff. 

"Fifth Paragraph. The court furtber cbarges you tbat the plaintiff, in at- 
tempting to cross the tracks of the défendant company, and the servants of 
the défendant company in operating its cars at the point of the accident, each 
had the l'ight to assume that the other vi'ould exercise ordinary care ; the 
motorman that the plaintiff would not unduly thrust herself in a position of 
danger, and the plaintiff that the motorman would properly operate his car 
so as not to expose her to uuusual danger and péril ; and if the jury believe 
from the évidence tbat the plaintiff was gullty of négligence in the particnlar 
mentioned, by negligently thrusting herself in front of, under or agaiiist the 
moving car, at a finie when the motorman had the right to assume that she 
would not do so, and as a conséquence sustained the Injury sued for, then she 
cannot recover in this action ; and, on the other hand, if you believe from the 
évidence that while the plaintiff in the exercise of reasonable care on her 
part, was attemptlng to cross the tracks of the défendant company, that the 
servants and employés of said défendant company either at the time of see- 
ing, or when by the exercise of ordinary care they could hâve seen and ob- 
served the movements of the plaintiff, failed to exercise reasonable care in 
the opération of its said car for her protection, and as a conséquence negli- 
gently ran over, upon or against her causing her to sustain the injury sued 
for, then the défendant is liable, and, in that event, you should find for the 
plaintiff. 

"Sixth Paragraph. You are further charged that if the défendant relies 
npon the plaintlffs contributory négligence to defeat her right of recovery in 
this case, ,the hurden to establish such contributory négligence is upon the 
défendant, unless the existence of the same sufïiciently appear from the testi- 
mony offered by the plaintiff. 

"Seventh Paragraph. You are further charged that négligence as meant 
in this charge, is the failure to do what reasonably prudent persons would 
ordinarily bave done in like circumstanees, having due regard to the proper 
protection of the life and limb of tbemselves and others. 

"Eighth Paragraph. You are further charged that by reasonable care is 
meant the exercise of that degree of prudence, care, caution, and foresight 
that ordinarily a prudent person nnder like circumstanees and conditions 
would exercise for his or thelr own protection. 

"Nlnth Paragraph. You are further charged that in determlning the qncL 
tien of whether or not the injury eomplained of was the direct resuit of the 
plaintiff's owu négligence, or whether It resulted from the direct négligence 
of the motorman of the défendant In running and operating his car on the 
occasion in question, you can take Into considération ail the facts and cir- 
cumstanees as proved by the évidence to hâve existed at the time when, and 
place where, the injury occurred, and give to such facts and circumstanees, 
and to the testimony of each witness, such weight only as you deem such 
fact or circumstance or testimony entitled to in connection with ail the facts 
of the case ; and that this being a civil case, It is incumbent upon the parties 
respectively, to establish thelr several contentions by a prépondérance of the 
testimony. 

"Tenth Paragraph. You are further charged that If you flnd the défendant 
is liable, then you should give the plaintiff such damages as she bas proved 
in this case, not to exceed $30,000 ; and in estimating such damages you 
should take into considération: First. Any permanent injury to the plaintiff. 
Second. Àny shock to her System. Third. Any pain and anguish suffered by 
her." 

The duty of the trial judge with respect to instructions to the jury 
is fully discharged when the law as laid down by him covers the en- 
tire case, and it is not error under such circumstanees to refuse to 
give spécifie requests in the language of counsel. Iron Silver Mining 



GEHMANIA SAVING8 BANK & TRUST CO. V. LOEB 285 

Company v. Cheesman, 116 U. S. 529, 6 Sup. Ct. 481, 29 L. Ed. 712. 

In this case the court holds that : 

"When the court instructs the jury in a manner sufficiently clear and sound 
as to tbe rules applicable to the case, it is not bound to give other instructions 
asked by counsel on the same subject, whether they are correct or not." 

We think in the présent case that the instructions given met thèse 
requirements. 

There is no error, and the judgment of the Circuit Court is affirmed. 
Affirmed. 



GERMANIA SAVINGS BANK & TRUST CO. v. LOEB. 

(Circuit Court of Appeals, Sixth Circuit May 2, 19H.) 

No. 2,081. 

1. Bankruptct (I 154*) — Claims— Set-Offs. 

The right of a bank, which is a créditer of a bankriipt, to apply on Its 
debt as a set-ofC a balance remainlng to the crédit of the bankrupt in 
its current account on the date of the bankruptcy, under Bankr. Act 
July 1, 1898, c. 541, § 6Sa, 30 Stat. 565 (U. S. Comp. St. 1901, p. 3450), Is 
not affected by the fact that the debt to the bank was not due. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 451-455; 
Dec. Dlg. § 154.*] 

2. Bankeuptct (§ 166*) — Set-Offs— Deposits in Ceeditob Bank. 

A mercantile Company, a short time before its bankruptcy and while 
in fact insolvent, procured a loan from claimant bank. On reports of 
the company's condition, at the banlt's instance, a conférence was held 
Ibetween their attorneys In respect to the bank's claim. An inventory 
and examination of the company's books was then being made, and its 
attorney, who did not know of its insolvency, requested that the bank 
wait until it was completed, and agreed that the Company should with- 
draw from the bank no more than it should subsequtntly deposit No 
express agreement was made that the company should be permitted to 
withdraw the amount of such subséquent deposits, but the bank waited 
until It becarae certain that the company was insolvent, when it refused 
to pay further checks, and applied the deposit on its note. Helâ, that the 
arrangement with respect to the money on denosit at the timp of the con- 
férence appeared to hâve been made in good falth, and did not constl- 
tute a préférence in favor of the bank ; nor was there any waiver by tlie 
banlî of its rights as to subséquent deposits, and, since they were made 
by the company withont any intention of givlng a préférence, no préfér- 
ence resulted, and the bank was entitled to the entire deposit In its hands 
at the time of the bankruptcy as a set-off. 

[Ed: Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 250-258 ; 
Dec. Dig. § 166.*] 

8. Bankruptct (§ 154*) — "Debt." 

The word "debt," as used in Bankr. Act July 1, 1S98, c. 541. § 68a, 30 
Stat. 565 (U. S. Comp. St. 1901, p. 3450), relating to the setting off of 
debts against a bankrupt, includes any debt provable in bankruptcy ; and 
a debt is provable, whether due or not at the time of bankruptcy. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 451-455; 
Dec. Dig. § 154.* 

For other définitions, see Words and Phrases, vol. 2, pp. 1864-1886; 
vol. 8, p. 7628.] 

*For other cases see same topic & § ntimbeb 1d Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



28& 188 FEDERAL BBPOETER 

Appeal from the District Court of the United States for the West- 
ern District of Tennessee. 

In the matter of the Block Mercantile Company, bankrupt ; Henry 
G. Loeb, trustée. The Germania Savings Bank & Trust Company 
appeals from an order requiring it to return a certain sum as a préf- 
érence as a condition to proving its claim. Reversed. 

This is an appeal from an order of the District Court dlsallowing the claim 
of appellant agalnst the bankrupt's estate lu default of the performance of 
certain conditions hereafter stated. The proof of claim alleged an iudebted- 
ness of the bankrupt to the bank of $10,387.39. The proof was construed a a 
claimlng that amount as a balance remaining of $20,000 loaned by the bank, 
less $9,612.61 deposited by the bankrupt In the bank and applied by the lat- 
ter as an offset agalnst the original indebtedness. It is alleged in such proof, 
with référence to the origin of the debt, that on or about January 30, 1908, 
the bankrupt secured from clalmant $20,000, upon représentations that the 
Company had a paid-In capital stock of $80,000; that it was a successful 
corporation, and had made profits In excess of $30.000; that on February 
13th claimant first leamed of the falsity of said représentations, and there- 
upon demanded back its money. The trustée excepted to the claim upon the 
grounds, first, that the bank had received a préférence of a large amount 
within four months before the bankruptcy, whlle the Mercantile Company 
was Insolvent; and, second, that a large amount of the bank deposits were 
made nnder an agreement, betvveen the représentatives of the bankrupt and 
the bank respectively, that they should be held as a spécial deposit, and that 
no rlght of offset existed as to such amount. 

The référée reported, in substance sufflcient for this opinion, the fact of 
the maklng of the loan of $20,000 about January 28, 1908 ; that about Feb- 
ruary Ist foUowing it becanie known to the officers of the Mercantile Com- 
pany that one of its ofiicers was short in his accounts about $4,000, and had 
forged $6,000 of the stock of the company ; that at least one of the ofiicers 
of the Mercantile Company knew that as much as $35,000 of the capital stock 
of the Company had not been pald for; that part of this forged stock had 
been hypothecated with appellant; that In order to avoid trouble with oue 
of the stockholders, who had become dissatisfled, the président of the Mer- 
cantile Company had bought his stock, giving In part payment therefor the 
check of the Mercantile Company upon the appellant bank ; that, for the 
purpose of ascertainlng the exact condition of the company, its attorney had 
ordered an Inventory taken ; that on February 5, 1908, the ofiicers and agents 
of the appellant bank knew of certain of the irregularities before stated, 
were advised of the order for taking an inventory, and that the books of tbe 
Mercantile Company were being audited, and had sufflcient information to 
put them upon inquiry respecting the Insolvency of the Mercantile Company ; 
that the latter was at the time actually insolvent, and that its ofiicers knew 
it; that on February 5tli a conférence was had between the respective attor- 
neys of the bank and the bankrupt — the former having sent for the président 
of the Mercantile Company, and the attorney appearing in his stead, on ac- 
count of the alleged lUness of the président; that both attorneys realised 
that the Mercantile Company was in a critieal condition; that the bank's 
attorney desired to protect its Interests, and that the attorney of the bank- 
rupt "realized that it would be dangerous at that time for any action to be 
started agalnst the company, and was willlng to do anything reasonable to 
prevent litigation" ; that the bankrupt had at the time on deposit in the bank 
$5,970.23; that the bankrupt's attorney thought that, unless the bank could 
at once be satlsfled, it would refuse to cash checks for the money then on 
deposit ; that the bankrupt's attorney did not then know that his client was 
insolvent, and stated that he was informed and believed that it was solvent, 
that It owed not more than $05,000 and had $100,000 of assets, but that the 
exact condition could not be known until the examlnatlon of the books and 
taking of inventory were completed, and stated that if the bank were to take 
steps at that time to protect its interests the coUapse of the bankrupt's busi- 
ness would resuit, and asked that no action be taken by the bank, but that 



GERMANIA 8AVING8 BANK A TRUST CO. V. LOEB 287 

mattera "remaln as they are," under an arrangement that the Mercantile 
Company should draw ont no more than It should subsequently deposit — thus 
always leavlng a balance equal to the exlstlng balance, and thus the bank be 
not prejudlced in case the Mercantile Company should prove Insolvent; but 
tbat, whlle the évidence dld not show whether the bank's attorney repUed 
to thls proposition, no objection was made to It, and that, the bank havlng 
accepted subséquent deposits, the Mercantile Oompany's attorney understand- 
ing the proposition was satisfactory, the former was bound by the transac- 
tion. 

It appeared tbat on February llth the aeoountlng of the Mercantile Com- 
pany's affaira was completed, showing that it owed upwards of $138,000, in- 
stead of not more than $65,000, as belle ved by Its attorney at the time of the 
conférence of February 5th; that but $28,000 of the $80,000 capital stock 
subscribed had actually been pald for ; and that the Inventorled assets 
amounted, at the valuatlon placed upon them, to but slightly more than the 
amount of the debts. The bank, upon learning thls situation, on February 
llth or 12th, refused to honor further checks of the Mercantile Company, 
and its checks to the amount of more than $6,000 drawn, and in part issued, 
for current expenses or eurrent debts, were accordlngly either dishonored by 
the bank or withheld from dellvery, by reason of sueh notification frotn the 
bank. On February 13th the latter demanded from the Mercantile Company 
the retum of the $20,000 borrowed, together with check for the balance of 
the latter's bank deposit, with notice that the bank had already applied the 
same upon said indebtedness. The credltors' pétition for bankruptcy was 
flled the next day. 

The référée held that the arrangement by which the money then on de- 
posit should not be checked against dld not constltute a préférence under the 
circumstances of the case, including the fact that the bankrupt's attorneis' 
knew that if any of the représentations made to the bank, on which the $20,- 
000 was borrowed, were untrue, the latter could repossess itself of the money 
then on deposit, and that he also must bave known that In case of insolvency 
proceedings the bank would hâve the right to offset the money then on de- 
posit, and accordlngly held that the bank was entitled to offset the balance 
on deposit February 5, 1908, against the bankrupt's Indebtedness. The 
amounts deposited in the bank after February 5th and until February 13th, 
less the amount of the checks cashed between those dates, was $4,514.08. 
The référée held that the Mercantile Company had the right to control its 
deposits made after February 5th, and that in view of the talk between the 
attorneys "the bank must receive the deposits as suggested, or décline them" ; 
that it was the intention of the attorney and other offlcers of the Mercantile 
Company that the rights of both parties should be fixed on February 5th ; 
and that the subséquent deposits were made by the agents of the Mercantile 
Company "with the understandlng that they were not to be molested by the 
bank and that they would hâve the right to wlthdraw them as they saw fit" ; 
and that as the Mercantile Company's affairs were being conducted by sub- 
ordinate agents, who were strivlng to préserve the assets and protect the 
Interests of ail credltors alike until the exact condition of the business could 
be ascertained, the deposits made after February 5th were not made in the 
ordinary business way, but In such way as to create a trust relation, and 
thus to preelude a right on the part of the bank to offset them against the 
Mercantile Company's debt. It was accordlngly ordered that upon the pay- 
ment of the latter balance ($4,514.08), deposited after February 5th, the bank 
might prove its claim for what remalned after making the offset of the bal- 
ance prevlous to that date, together with Its claim for the $4,514.08 so to be 
paid in, and that in default of such payment the entire claim should be dis- 
ail owed. 

The referee's order was revlewed by the District Judge, upon pétitions 
therefor by both the bank and the trustée. The .1udge agreed with the réf- 
érée as to the faets relating to the deposit balance of February 5th. but was 
of opinion that the agreement and understanding that the bank should with- 
hold the taking of légal proceedings against the bankrupt until Invoices 
should be taken and the exact condition of the Mercantile Company ascer- 
tained, and that the latter should not check against thls balance. In conneo- 



288 188 FEDERAL KEPORTEK 

tlon with the arrangement for further deposlts to be checked agalnst, 
amounted to the giving of a préférence to the bank, under section 60 of the 
act, and aecordingly held that the bank had no right to offset the balance of 
February 5th against the bankrupt's debt. As to the balance of deposlts 
made after February 5th, the judge approved the action of the référée In 
holding that such balance was a trust fund, and, while not In formai terms 
conflrming the referee's conclusions of fact, in effect did so, holding that the 
bank's refusai to honor cbecks that were drawu by the bankrupt against this 
subséquent balance, and its attempt to apply the same to the Indebtedness 
which the bankrupt owed the bank, amounted to a conversion. An order was 
aecordingly entered denying the offset of $5,970.23, but providlng that upon 
the payment of that sum to the trustée the bank might prove its claim for 
the en tire amount of the debt, and that in default of such payment the en- 
tire claim be disallowed, but adjudglng that the bank is a debtor to the es- 
tate of the bankrupt In the amount of $4,514.08, and rendering judgment in 
favor of the trustée aecordingly, with Interest from February 5, 1908, with 
provision for the withholding of dividends upon the bank's claim until the 
last-named sum, with interest, be paid, as well as for issue of exécution 
a.gainst the bank for any balance thereof in case the item of $5,970.23, with 
Interest, should not be paid, or in case the dividends did not amount to 
$4,514.08, with Interest. The costs of the proceedings for review were ad- 
iudged against the bank. It is coneeded by appellee that the proper balance 
on deposit February 5, 1908, was $5,098.53, Instead of $5,970.23, as found by 
the référée. 

Joseph Hirsh, Léo. Goodman, and W. A. Percy, for appellant. 
J. C. Wilson and J. W. Apperson (D. E. Myers and K. D. Mc- 
Kellar, on the brief), for appellee. 

Before SEVERENS and KNAPPEN, Circuit Judges, and SAN- 
FORD, District Judge. 

KNAPPEN, Circuit Judge (after stating the facts as above). 
[1] The first question presented is whether the agreement of Febru- 
ary Sth between the Mercantile Company and the bank created, as 
to the then existing deposit balance of $5,098.53, a preferential trans- 
fer within the meaning of the bankruptcy act. Section 60a of the 
act provides that : 

"A person shall be deemed to hâve glven a préférence, if, being insolvent, 
he bas, wlthin four months before the filing of the pétition » * * made a 
transf er of any of his property, and the effect of the enf orcement of such 
* * * transfer will be to ensable any one of his credltors to obtain a great- 
er percentage of his debt than any other of such credltors of the same class." 

Section 68a provides that : 

"In ail cases of mutual debts or multial crédits between the estate of a 
bankrupt and a créditer tlie account shall be stated and one debt shall be set 
off against the other, and the balance ouly shall be allowed or paid." 

It has been authoritatively decided by the Suprême Court, in con- 
sidering thèse two sections, that the balance of a regular bank ac- 
count at the time of filing the pétition is a debt due to the bankrupt 
from the bank, and in the absence of fraud or. collusion between the 
bank and the bankrupt, with the view of creating a preferential trans- 
fer, the bank need not surrender such balance, but may set it ofï 
against notes of the bankrupt held by it, and may prove its claim for 
the amount remaining due on the notes. N. Y. County'National Bank 
V. Massey, 192 U. S. 138, 24 Sup. Ct. 199, 48 L. Ed. 380. 



GEEMASIA SAVIKGS BANK & TRUST CO. V. LOEB 289 

The Massey Case is décisive of the question we are considering, un- 
less the case before us is distinguishable either by the fact that the 
notes hère in question were not due at the time of the bankruptcy, or 
because of the existence of fraud or collusion between the bank and 
the Mercantile Company, with the view of creating-a preferential 
transfer. 

As to the nonmaturity of the notes : 

[3] The word "debt," as used in section 68a includes any debt prov- 
able in bankruptcy. Bankr. Act 1898, § 1, cl. 11; Loveland on Bank- 
ruptcy (3d Ed.) p. 359. And a debt is provable, whether due or 
not at the time of bankruptcy. Bankr. Act 1898, § 63a (1). It is thus 
immaterial to the application of section 68a whether or not the notes 
were due. Collier on Bankruptcy (8th Ed.) p. 793; Loveland on 
Bankruptcy (3d Ed.) p. 372; Moch v. Market St. National Bank 
(3d Circuit), 107 Fed. 897, 47 C. C. A. 49; In re Semmer Glass Co. 
(2d Circuit), 135 Eed. 77, 67 C. C. A. 551. 

[2] A careful considération of the record constrains us to the opin- 
ion that there was no fraud or collusion between the bank and the 
bankrupt for the purpose of creating a preferential transfer with re- 
spect to the deposit balance in question. It is not, and could not be, 
contended that there was any collusion in respect to creating this bal- 
ance. If collusion existed, it must be found in the agreement between 
thé bank and the Mercantile Company that the deposit should remain 
in the bank during the investigation of the solvençy of the Mercan- 
tile Company, and for the purpose of permitting the bank to appiy 
this balance upon its notes in case the Mercantile Company should 
turn out to be insolvent. This question must be answered in the light 
of existing conditions. The suggestion that the balance be not drawn 
upon came from the Mercantile Company's attorney, because he 
thought such arrangement only fair to the bank as preventing préju- 
dice to it, through its failure to take action to protect its interests, in- 
cluding the possible répudiation of the crédit as obtained by misrepre- 
sentation. The Mercantile Company was at the time actually insol- 
vent. The bank had the power (as distinguished from the right) to 
refuse checks upon its deposit balance. If the Mercantile Company 
proved insolvent, or the crédit turned out to hâve been ' obtained by 
fraudulent misrepresentations, the bank had the right to so refuse. 
Such refusai would naturally hâve tended to precipitate hostile action 
by the creditors of the Mercantile Company, and when the condition 
of the Company was actually learned would naturally hâve brought 
about bankruptcy proceedings. It was, to our minds, entirely proper 
that the Mercantile Company should, in thèse circumstances, arrange 
for a continuance of the existing status, which, should the Mercantile 
Company prove solvent, would be of benefit to it, and, should it prove 
insolvent, would merely give the bank the same rights as it would hâve 
if then existing insolvency were recognized. The transaction in no 
sensé amounted to a hypothecation of this balance, as suggested by ap- 
pellee's counsel. The fact that the bank had reason to believe the 
Mercantile Company was insolvent did not afifect its right to set-off. 
In the Massey Case a portion of the deposits held applicable by way 
188 F.— 19 



290 188 FEDERAL BBPOETER 

of set-ofï were made after the bank had knowledge of the debtor'3 
insolvency. The testimony of the attorney of the Mercantile Com- 
pany, in our opinion, distinctly repels the inference of an intent to 
give the bank a préférence. We think the bank should hâve been al- 
lowed to offset the deposit balance of February Sth upon the bank's 
notes. 
As to the balance of deposits made after February Sth : 
If the bank held thèse deposits as trustée for the Mercantile Com- 
pany, the right to set off the same against the latter's notes did not ex- 
ist. Under the authority of Western Tie & Timber Co. v. Brown, 196 
U. S. 502, 25 Sup. et. 339, 49 L. Ed. 571, the bank was entitled to 
prove its debt with the set-off in question eliminated, but remained a 
debtor to the bankrupt for the amount of the deposits; and if such 
trust relation existed, the action taken by the court in protection of 
the bankrupt's estate, with respect to dividends on the bank's claim, 
in case of the latter's f ailure to make payment of the trust f und, was 
proper, unless as regards the award of exécution for balance not 
covered by dividends, as to which question we do not find it necessary 
to express an opinion. 

The alleged trust relation, including the conversion recognized by 
the District Judge, rests upon the existence of an understanding be- 
tween the bank and the Mercantile Company that the latter should 
be at liberty to withdraw the entire amount oif its deposits made after 
February 5th, and that the bank should not be at liberty to set off 
against the Mercantile Company's notes any balance that should not 
be so drawn out, and that such deposits were not made in the ordinary 
course of business, but became in fact a spécial deposit. Upon a care- 
ful examination of the record, we are constrained to hold that the évi- 
dence does not warrant such conclusion. The référée bas not found 
as a fact that there was any agreement to that effect between the 
parties, or even an understanding to that effect on the part of the bank. 
As we read the record, there is no direct testimony of any express 
agreement or mutual understanding to that effect. There is nothing 
in the testimony of the bank's attorney which, in our opinion, war- 
rants such inference. On the other hand, the attorney for the Mercan- 
tile Company, while testifying to the statement to the bank's attorney 
that he would see that the Mercantile Company should not make with- 
drawals in excess of the new deposits, does not state that the bank was 
even asked to agrée that ail the new deposits might be checked against. 
The substance of the testimony of the Mercantile Company's attorney 
on this point is that he was anxious to hâve the banking relations con- 
tinued without hostile steps upon the part of the bank, and that in or- 
der to induce the latter to continue such relations he agreed that the 
bank's status should not be impaired by an attempt on the part of the 
Mercantile Company to withdraw more than it should deposit. It is 
true that the Mercantile Company's attorney testified that his "idea 
was that the proposition was that the Block Mercantile Company 
should be absolutely free to withdraw every cent that it deposited after 
that date," and that "if there had been any scheme on the part of the 
bank, or anything that would hâve kept us f rom using the money dur- 



GERMANIA SAVING8 BANK & TRUST CO. V. LOEB 291 

ing this investigation, I would hâve had to make some other arrange- 
ment and found another place to deposit," and that if he had under- 
stood in his own mind that his clients could not withdraw against sub- 
séquent deposits he would not hâve advised them to make their de- 
posits in the same bank. To the definite question as to the bank's ac- 
ceptance or rejection of the suggestion he replied: 

"1 vvant to say this: That Mr. Hirsh [the bank's attorney] was pressing 
me for Information which I dld not hâve, and I was holding hlm up untll I 
could get It, so it looked to me llke a fair proposition. New, as to whether 
that was accepted or rejected, In this way it must hâve been that I thought 
it was going to go through. I mean by that certainly I would be permitted 
to withdraw against deposits, or I never would hâve done it" 

And again: 

"I hâve stated repeatedly In this examlnation that I could not remember 
what answer that Mr. Hirsh made to my suggestion, as to continuing prés- 
ent deposits Intact and the subséquent deposits to be withdrawn." 

This testimony, in our opinion, falls short of evidencing a contract 
or understanding whereby the Mercantile Company should, under any 
and ail circumstances, hâve the right to draw out ail the new deposits, 
or whereby the new deposits should be held in any way as a spécial 
deposit differing from the ordinary bank deposit. The attorney of the 
Mercantile Company seems not unnaturally to hâve assumed that so 
long as the Mercantile Company was continuing to do business in -the 
usual way, and in advance of a development of its insolvency, checks 
on the bank account would be honored. But we find no agreement or 
mutual understanding to that effect. Such course was in fact taken; 
for it was not until after the accounting of the Mercantile Company's 
afïairs was completed, showing that its financial condition was nmch 
worse than believed by its attorney on February 5th, and suggesting 
probable insolvency, and indicating that a portion at least of the crédit 
extended to the Mercantile Company was procured by false représen- 
tations, that the bank refused to honor further checks. In our opin- 
ion there was, to say the least, no room for finding an understand- 
ing between the bank and the bankrupt that the bank waived its right 
of set off on account of any balance that might remain after such sit- 
uation was found to exist. Nor do we think that the fact that the 
bankrupt's business was during the examination of its affairs beini; 
managed by subordinates, rather than by its usual officers, changed the 
nature of the deposits from the ordinary relation. 

Did the application upon the bankrupt's notes of the amount of the 
bank deposits made after February 5th amount to an unlawful préfér- 
ence under the bankruptcy act? Neither the référée nor the judge so 
found, nor are we able to so find. It is true that on and after the 5th 
of February the bank had reason to believe that the Mercantile Com- 
pany was insolvent. It is also true that the application upon the Dank'.s 
debt of this balance of deposits, accumulated after notice of possible 
insolvency of the Mercantile Company, in fact enables the bank to ob- 
tain a greater dividend on its claim than creditors generally obtained. 
But, unless it was the intention of the parties to so accumulate depos 
its for the purpose of preferring the bank, the transaction did not 



292 188 FEDERAL REPORTER 

create a préférence under the bankrupt act. This view is supported 
by the case of New York County Bank v. Massey, supra. As before 
remarked, a considérable portion of the deposits allowed as a set-off 
in that case was made after actual knowledge on the part of the bank 
of the insolvency of its customer. As said in that case, speaking of a 
deposit of money to one's crédit in a bank : 

"It Is true that It créâtes a debt, which, if the créditer may set it off under 
section 68, amounts to permitting a créditer of that class to obtain more froin 
the bankrupt's estate than creditors who are not In the same situation, and 
do not hold any debts of the bankrupt subject to set-off. But this does not, 
In our opinion, operate to enlarge the scope of the statute defining préfér- 
ences so as to prevent set-off in cases coming wlthin the terms of section 68a. 
If this argument were to prevail, it would in cases of Insolvency defeat the 
rlght of set-off recognized and enforced In the law, as every créditer of the 
bankrupt holding a claim against the estate subject to réduction to thé full 
amount of a debt due the bankrupt recelves a préférence In the fact that to 
the extent of the set-off he Is pald In full." 

We not only find nothing in the record to sustain an inference that 
it was the intention of the parties to give a préférence to the bank, but, 
on the other hand, the testimony of the bankrupt's attorney emphati- 
cally négatives such intention. He says : 

"There was no arrangement made by whlch the Block Mercantile Company 
were to make deposits for the purpose of exceeding its withdrawals." 

And again, in reply to a question whether there was any suggestion, 
direct or indirect, that the deposits of the Mercantile Company should 
be made so that the bank's debt would be paid in the event of bank- 
ruptcy, he said : 

"There was no such arrangement, and there was nothing said at that tlme 
or in that conversation that even savored of such an arrangement. At that 
tlme I had no Idea that there would ever be a bankruptcy proceeding." 

For thèse reasons we are constrained to hold that there was error 
in not allowing the set-off as to the deposits made after February 5th, 
as well as the balance existing on that date. It follows, from the 
views we hâve expressed, that the order of the District Court should 
be reversed, with directions to allow the balance claimed in full after 
the application thereon, by way of set-off, of the entire amount of 
bankrupt's deposit balance in the bank. 



UNITED STATES TRUST CO. OF NEW YORK et al. v. CHICAGO TERMI- 
NAL TRANSFER R. CO. et al. 

BRAINARD et al. v. SAME. 

(Circuit Court of Appeals, Seventh Circuit. April 11, 1911.) 

No. 1,693. 

1. EQUITY (§ 114*) — iNl-EEVENTION — NaTUEE OF RiGHT TO INTERVENE. 

Applications for leave to intervene are of two klnds: In one the ap- 
pllcant has other means of redress open to him, and it is wltliin the 
court's discrétion to refuse to incumber the main case with collatéral 

•For other cases see same topio & S ndmebr in Dec. & Am. Dlgs. 1307 to date, & Rep'r Indexes 



UNITED STATES TRUST CO. V. CHICAGO TEEMINAL T. R. CO. 29'S 

inquiries; In the other, the applicant's clalm of rlght Is such that he can 
never obtain relief unless it be granted him on intervention in the pend- 
Ing cause, and in sucli case the right to intervene is absolute, and the 
rejection of the pétition is a final adjudication, and therefore appealable. 

[Ed. Note.— For other cases, see Equity, Cent. Dig. §§ 275-279; Dec. 
Dig. § 114.*] 

2. Equity (§ 114*)— Fbaud (§ 31*) — Intekvention — Right to Intebvene— 

Election of Remédies. 

One whose property rights bave been Injured by a fraud may elect to 
accept the situation created by the fraud and seek to recover his dam- 
ages, or he may elect to repudiate the transaction and seeli to be plaeed 
in statu quo; but the law should not make the élection for him, and, if 
he elects to repudiate and recover his property, and such recovery can- 
not be had except by intervention in a pendlng suit, his right to intervene 
is not destroyed by the fact that he had an élection of remédies. 

[Ed. Note.— For other cases, see Equity, Cent. Dig. §§ 275, 279; Dec. 
Dig. § 114;* Fraud, Cent. Dig. § 27; Dec. Dig. § 31.*] 

3. Equity (§ 114*) — Intervention— CoNSTEtrCTioN of Consent Ordeb. 

After entry of a decree of foreelosure against a terminal railroad Com- 
pany, a lessee company asked for and obtained an order permitting it to 
redeem f rom the decree and be subrogated to the rights of the complain- 
ant therein. The stockholders of the terminal company, through a com- 
mittee appeared by counsel and consented to the order, although clalm- 
Ing orally that the lease was fraudulent. The order recited that it was 
without préjudice to the right of the mortgagor or Its stockholders to 
contest the validity of the lease and should not be held to détermine 
such validity, but that no subséquent decree between the parties should 
affpct or ininnir the suîirogation or the right of the lessee to coUect the 
amount of the decree "in the same manner and with the same rights as 
the original Londholders would bave had." Held, that under the pro- 
visions of such order the stockholders of the terminal company were not 
entitled to intervene in the foreelosure suit for the purpose of attacklng 
the decree as well as the lease on the ground that the latter was fraudu- 
lent and brought about the default and foreelosure, but that they were 
limited to a proceeding in some proper forum to hold the lessee liable In 
damages. 

[Ed. Note. — For other cases, see Equity, Dec. Dig. § 114.*] 

4. Equity (§ 71*) — Lâches— Intervention to Attack Decree. 

Where, after the entry of a decree of foreelosure against a terminal 
railroad company on a mortgage securing its bonds, a lessee of its prop- 
erty obtained an order authorizing it to redeein from the decree and be 
subrogated to ail the rights of the complainant thereunder, with the 
knowledge of the stockholders of the company, who, however, then 
claimed that the lease was fraudulent and made pursuant to a eonspiracy 
to bring about the foreelosure, it was then incumbent on them, if they 
deslred to contest the validity of the decree and seek a cancellation of 
the lease and a reinstatement of the company as a going concern, to take 
prompt action to that end, and a delay of two years before pressing for 
a considération of their aïleged rights constituted such lâches as author- 
Ized the court in Its discrétion to deny them leave to intervene in the 
foreelosure suit for that purpose. 

[Ed. Note. — For other cases, see Equity, Dec. Dig. § 71.*] 

6. Appeal and Eeror (§ 95*) — Equity (§ 114*) — Appealable Ordebs— Inter- 
vention— Effect OF Denial of Pétition. 

An order denying a pétition to intervene in a pending cause, if peti- 
tioners were entitled to intervene as a uiatter of right, was a final order 
and appealable, and in any event until it is set aside, either by the court 

•For other cases see same toplc & $ numeee ia Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



294 188 FEDERAL EEPOB,rBB 

whlch entered It or by an appellate court, petltioners are not entltled to 
a hearing on a second pétition based on the same grounds. 

[Ed. Note. — For other cases, see Appeal and Error, Cent Dlg. § 652; 
Dec. Dlg. § 95 ;♦ Equity, Dec. Dig. § 114.*] 

Appeal from the Circuit Court of the United States for the Eastern 
Division of the Northern District of Illinois. 

Suit in equity by the United States Trust Company of New York 
and John A. Stewart, trustées, against the Chicago Terminal Trans- 
fer Railroad Company and others. Frank Brainard, James H. Ralph, 
Arthur E. Friswell, and others, stockholders of défendant company, 
appeal from an order denying their pétition for leave to intervene, 
and from an order denying a motion to vacate a sale of defendant's 
property. Affirmed. 

Charles S. Holt and George Welwood Murray, for appellants. 
Herbert R. Preston, William J. Calhoun, and James M. Sheean, for 
appellees. 

Before GROSSCUP, BAKER, and SEAMAN, Circuit Judges. 

BAKER, Circuit Judge. Two appeals are presented in the one rec- 
ord. 

I. The first predicates error on the court's refusai to allow appel- 
lants as owners and représentatives of common stock in the Terminal 
Company to intervene after foreclosure decree in the suit of the Trust 
Company, mortgagee, against the Terminal Company, mortgagor, the 
Baltimore & Ohio Railroad Company, lessee of part of the mortgaged 
premises, and others. 

Default in paying interest on the $15,140,000 of bonds occurred in 
January, 1905 ; suit was begun in February, 1906 ; a receiver was 
appointée in April, 1906; and the foreclosure decree was entered in 
February, 1907. The decree provided that the purchaser should hâve 
six months in which to elect whether or not he would adopt the Bal- 
timore & Ohio and other leases. 

: In March, 1907, the Baltimore & Ohio filed its pétition for leave to 
redeem as lessee and to be subrogated to the rights of complainant. 
The stockholders had knowledge of this pétition, appeared in court 
by counsel, and (though stating orally that the lease was fraudulent and 
had greatly damaged the Terminal Company) agreed to the entry of 
an order on April 16, 1907, that the Baltimore & Ohio Company might 
redeem by the payment of the amount theretofore decreed, with sub- 
sequently accruing interest, and that upon such payment the Com- 
pany should become entitled to ail the légal and équitable rights of the 
bondholders. The order, however, contained the following proviso: 

"This order Is expressly made without préjudice to the rights of the Chi- 
cago Terminal Transfeir Kailroad Company, or the receiver of sàid company, 
or any stocliholder of said company hereafter permitted by the court so to 
do, to coiltest the validity or effect of the lease of April 1, 1003, between the 
Chicago Terminal Transfer Railroad Company and the Baltimore & Ohio 
and Chicago Railroad Company and the Baltimore & Ohio Railroad Com- 
pany, as fully and freely In ail resi>ects as if this order had not been made. 
Nor shall the entry of this order be held at any time or in any proceedings 

•For other cases see same topic & § numbeh in Dec. &. Am. Cîgs. 1907 to date, & Rep'r Indexes 



tJNITED STATES TRUST 00. V. CHICAGO TERMINAL T. R. CO. 295 

hereafter, as determining the vaUdity or effect of sald lease, and is expressly 
made without préjudice to the right of the company or the receiver of the 
Company or the stockholders of the company to lltigate ail questions raised 
by the answer of the Chicago Terminal Trausfer Railroad Company. The 
entry of this order shall not be held as a détermination by the court as to 
whether said amount of money so to be paid by the sald Railroad Company 
shall be payment or as a rédemption. But no decree hereafter entered in adju- 
dicating any controversy between the Chicago Terminal Transfer Railroad 
Company, its receiver or stockholders, and the Baltimore & Ohio and Chicago 
Railroad Company and the Baltimore & Ohlo Railroad Company shall affect 
or impair the subrogation under thls order of the sald railroad companies 
or the one making payment hereunder to the rights of the bondholders of 
the Chicago Terminal Transfer Railroad Company or thelr or its rlght to col- 
lect the amount of the decree heretofore entered in this cause with interest 
thereon, in the same manner and with the same rights as the original bond- 
holders would hâve had." 

On May 16, 1907, the Baltimore & Ohio filed a pétition that the 
foreclosure decree be amended so that the sale should be subject to 
their lease instead of giving the purchaser a six months right of élec- 
tion. 

On June 24, 1907, représentatives of the stockholders' protective 
committee filed a pétition for leave to intervene for the purpose of 
setting forth the f raud in connection with the Baltimore & Ohio lease. 
This pétition is not copied in the record, but is referred to in the prés- 
ent pétition as being of the nature just stated. It was never called 
up for action. The excuse is given that negotiations were pending 
between the Baltimore & Ohio and the committee for the purchase of 
the stock controlled by the committee. But référence to the exhibit 
attached to the présent pétition shows that the negotiations (which 
were later consummated) related only to the purchase of preferred 
stock. 

Claiming that the Baltimore & Ohio's purchase of their preferred 
stock was only a "partial settlement" and that the situation required 
or justified an abandonment of their fîrst pétition, the stockholders 
filed a second pétition on February 3, 1909. The court entered an or- 
der on April 17, 1909, denying them leave to intervene. This péti- 
tion set forth a conspiracy, alleged to hâve originated with Harriman 
and associâtes, to ruin the Terminal Company. The charge was that 
the conspirators obtained control of the management of the Terminal 
and Baltimore & Ohio Companies, and with great profit and advan- 
tage to themselves, caused the Terminal Company to make the lease 
in question to the Baltimore & Ohio at a shockingly inadéquate rental ; 
that the conspirators intended that the insolvency of the Terminal 
Company should resuit ; that the Terminal Company had consequently 
suffered not only loss of rental but ail the damages that flowed from 
the default and foreclosure. One paragraph from this second péti- 
tion will illustrate its scope and object: 

"That the Baltimore & Ohio, belng party to said fraud and conspiracy 
immedlately and directly resulting in the default on the bonds and in tlie 
foreclosure suit, which bonds are now owned by the Baltimore & Ohio, is 
by reason of such fraud and conspiracy not entltled to further prosecute 
said foreclosure proceedings in a court of equity until it has purged itself 
of sald fraud and conspiracy and accounted and paid to the Terminal Com- 
pany the damages which hâve been suffered by the Terminal Company as 



296 188 FEDERAL EEPOETEB 

the resuit of sald fraud and conspiracy ; that tMs honorable court, however, 
should retaln jurisdiction of the subjeet-matter, ascertain the damages suf- 
fered by the Terminal Company, direct the payment thereof to the Terminal 
Company or its reeeiver, and permit the Terminal Company or its receiver 
to pay the Baltimore & Ohio the overdue Interest on the bonds and reinstate 
the bonds and mortgage to their original position, as the resuit of which 
the Terminal Company will be again solvent, able to conduct its public 
functions and duties and to promptly meet the interest thereafter accruing 
upon its mortgage debt." 

On October 27, 1909, the Baltimore & Ohio filed a motion for leave 
to withdraw its pétition of May 16, 1907, to modify the decree, and 
for directions to the master to sell under the decree as it stood. This 
motion was granted the next day. 

On October 6, 1909, the stockholders had moved for leave to file 
another intervening pétition. The hearing of this motion was set for 
November 9, 1909. What the form of the proposed pétition was does 
not appear from the record. After the Baltimore & Ohio's action of 
October 27, 1909, the pétition was tendered in its présent form, and 
leave to intervene was denied on January 5, 1910, by the order now 
on review. Outside of averments of the change in attitude of the 
Baltimore & Ohio on October 27, 1909, this pétition, on comparison 
with the second, is found to be the same in substance and effect. It 
counts on the same fraud and conspiracy and likewise seeks to vacate 
the foreclosure decree, cancel the lease, wipe out the default by means 
of an accounting of damages, and restore the status which the Ter- 
minal Company prior to the conspiracy had enjoyed as a going con- 
cern. It admits that the stockholders were aware of the fraudulent 
transactions therein set forth ever since the beginning of the fore- 
closure proceedings in February, 1906. 

[1] Applications for leave to intervene are of two kinds. In one 
the applicant has other means of redress open to him, and it is within 
the court's discrétion to refuse to incumber the main case with col- 
latéral inquiries. In the other the applicant's claim of right is such that 
he can never obtain relief unless it be granted him on intervention in 
the pending cause. In this latter class the right to intervene is ab- 
solute, and the rejection of the pétition is a final adjudication and 
therefore appealable. Crédits Commutation Co. v. United States, 177 
U. S. 311, 20 Sup. et. 636, 44 h. Ed. 782; Minot v. Mastin, 95 Fed. 
734, 37 C. C. A. 234; United States v. Philips, 107 Fed. 824, 46 C. 
C. A. 660; In re Columbia Real Estate Co., 112 Fed. 643, 50 C. C. 
A. 406; Thomasson v. Guaranty Trust Co., 159 Fed. 126, 86 C. C. 
A. 514. 

[2] Remedy for the wrong done to the Terminal Company (on 
whose right of action the stockholders must stand) has two aspects. A 
victim whose property rights hâve been injured by a fraud may elect 
to accept the situation created by the fraud and seek to recover his dam- 
ages ; or he may elect to repudiate the transaction and seek to be placed 
in statu quo. But the law should not make the victim's élection for 
him. If he chooses to repudiate the transaction and recover his prop- 
erty, and if such a recovery cannot be had except by intervention in a 
pending suit, we think his right to intervene is not destroyed by the 



UNITBD STATES TRUST CO. V. CHICAGO TERMINAL T. H. CO. 297 

fact that it was open for him to accept the situation and sue for dam- 
ages. 

Conceding for the purposes of this décision that the stockholders' 
final pétition made a sufficient showing of their right to redress the 
injuries put upon the Terminal Company, and of the Terminal Com- 
pany's right to rescission, accounting, and restoration of prior status, 
we are nevertheless constrained to afîirm the order on account of the 
following considérations disclosed by the pétition and the record in 
connection therewith. 

[3] 1. Shortly after the decree was entered, the Baltimore & Ohio 
petitioned for leave to pay for the bonds and to be subrogated to ail 
the rights of the complainant. The stockholders, with notice of this 
pétition, and with full knowledge of the f raudulent transactions which 
would prevent the Baltimore & Ohio from availing itself of the de- 
cree and which would require a court of equity to open up the de- 
cree in the hands of the Baltimore & Ohio and compel it to account, 
wipe out the default, and restore the Terminal Company to a live con- 
dition, appeared in court and agreed to the order of April 16, 1907. 
This order, apart from the proviso, put the decree into the hands of 
the Baltimore & Ohio as free from assault as it was in the hands of 
the complainant. The proviso contains apparently conflicting state- 
ments. On the one side are the expressions that the order of subroga- 
tion was without préjudice to the right of the Terminal Company (or 
its stockholders if permitted to intervene in its behalf) to contest the 
validity or effect of the Baltimore & Ohio lease, and that the order 
should not be held determinative of the validity or efifect of the lease 
or the character of the Baltimore & Ohio's payment for the bonds. 
On the other is the déclaration that no decree thereafter entered in 
adjudicating any controversy between the Terminal Company (or its 
stockholders) and the Baltimore & Ohio should impair the subroga- 
tion of the Baltimore & Ohio to the rights of the bondholders or its 
right to enforce the decree "in the same manner and with the same 
rights as the original bondholders would hâve had." If the réserva- 
tions in the proviso in favor of the Terminal Company and its stock- 
holders were to be taken as authorizing a subséquent vacation of the 
foreclosure decree with the view of canceling the Baltimore & Ohio 
lease, avoiding the default on the bonds, and restoring the Terminal 
Company to the condition of a going concern, they would not only 
destroy the order itself, but would be in irreconcilable confîict with 
the final and explicit terms explanatory of the total effect of the or- 
der and proviso. The only way by which the varions conditions of 
the proviso can be harmonized, and eiïect thereby be given to ail of 
them and to the order itself, is by seeing that the court eut off the 
right of the Terminal Company and the stockholders (then before it) 
to attack the foreclosure decree and the right of sale thereunder, and 
preserved the right of the Terminal Company and the stockholders 
to hold the Baltimore & Ohio answerable, in any proper forum and 
by any proper procédure, for ail the damages caused by the fraud 
and conspiracy to which it was a party, without the possibility of the 
Baltimore & Ohio's successful use of the foreclosure decree, the order 



298 188 FEDERAL EHPORTBB 

of subrogation, its payment for the bonds whether as purchaser or 
redemptor, and a sale in fulfillment of the foreclosure decree and sub- 
rogation order, as means of obstructing or embarrassing the contro- 
versy. Whether the demand for damages should be prosecuted by 
original déclaration, or original bill, or through a discretionary inter- 
vention in the pending cause (and it is obvious that the keeping open 
of the cause for such a purpose would not affect the foreclosure de- 
cree or delay its exécution), in no event was the position of the Bal- 
timore & Ohio as owner of the decree and as successor to the com- 
plainant's right to enforce the decree to be assailed by an intervention. 
Such was the construction put upon the subrogation order and pro- 
viso by the circuit judge, who, finding that "the petitioners, under the 
guise of attacking the lease, seek to annul the decree," denied leave 
to intervene for such a purpose. 

[4] 2. Order of subrogation was entered on April 16, 1907. On 
May 2d the Baltimore & Ohio acted thereon and paid complainant 
$16,990,631.92 for the decree. On the 16th the Baltimore & Ohio pe- 
titioned that the property be sold subject to its lease. Assuming that 
the subrogation order left the stockholders free to seek a vacation of 
the decree, a cancellation of the lease, and a restoration of the pre- 
vious status, we think that equity would require prompt action. The 
stockholders had had knowledge of the alleged fraud for more than 
a year. Such an attack would cause a heavy cloud to hang over a 
seemingly impervious final decree and would delay an important cause 
that was ready to be closed and put ofï the docket by a sale in exécu- 
tion of the decree. The stockholders did begin with sufficient prompt- 
ness. They filed their pétition on June 27, 1907. But they tpok no 
further steps in court until February 3, 1909. They never pressed 
for action upon this pétition and finally abandoned it. Two excuses 
are offered. 

The first is that the Baltimore & Ohio had pending its pétition that 
the property be sold subject to the lease. Whether the sale should be 
subject to the lease or subject to the purchaser's right to reject or 
adopt the lease was a question that did not touch the stockholders' 
standing as intervenors of right and not of grâce. To be intervenors 
of right they had to stand on the impossibility of their obtaining, ex- 
cept by intervention, the necessary relief by a vacation of the foreclo- 
sure, a cancellation of the lease, and a restoration of the prior status. 
The necessity and the facts to support it were known to the stock- 
holders, and the situation in that respect was not aiïected by the Bal- 
timore & Ohio's pétition to hâve the sale made subject to the lease. 

The other excuse is that delay was justified by the Baltimore & 
Ohio's negotiations with them respecting the purchase of their stock. 
This would be good if there had been any negotiations looking to the 
purchase of their common stock. But the exhibit puts the fact be- 
yond cavil that the only negotiations related to preferred stock. This 
was notice that the Baltimore & Ohio intended to ignore their intei- 
ests as common stockholders ; interests having a différent origin and 
a différent standing from their interests as preferred stockholders. 
When the Baltimore & Ohio purchased their preferred stock at less 



UNITED STATES TRUST CO. V. CHICAGO TERMINAL T. H. CO. 299 

than a quarter of its face value, there was not a "partial settlement," 
but a full settlement, of ail matters in negotiation. And the agreed 
value put by thèse adversaries upon the preferred stock might possi- 
bly be taken as a mutual récognition that the common stock had noth- 
ing but a maneuvering value. 

On February 3, 1909, the stockholders filed a second pétition. 
There was no showing that any facts of fraud antedating the iînal 
decree had corne to their knovvledge within the three years preceding 
the filing of this pétition. The excuses for delay on the first pétition 
hâve been found to be without color. The filing of a second pétition, 
without any change afïecting the situation, without any suggestion of 
insufficiency or excusable omissions in the first pétition, should not re- 
store a lapsed diligence. 

The order denying leave to intervene on the second pétition was en- 
tered on April 17, 1909. On October 6, 1909, the stockholders asked 
leave to file a third intervening pétition. Counsel for the stockhold- 
ers do not show wherein the second pétition was insufficient. Our 
comparison leads to the conclusion that the second states just as good 
a cause of action as the third for relief by vacation of the decree, can- 
cellation of the lease, and restoration of the prior status. The only 
excuse offered for the additional delay on the part of the stockhold- 
ers and a further attempt in the Circuit Court after the déniai in 
April is the change of situation produced by the Baltimore & Ohio's 
withdrawal of its pétition for a sale subject to the lease. But, as al- 
ready stated, this had nothing to do with the attack on the decree. 
Both pétitions were challenges of the right of the Baltimore & Ohio 
to avail itself of the decree through any kind of sale, by reason of the 
fraud in the lease and the conspiracy to ruin the Terminal Com- 
pany, or to hâve any benefit from its purchase of the bonds except 
on an accounting for ail the damages occasioned by the fraud and 
conspiracy. Thèse various moves do not impress us as being the acts 
of a suitor in equity who is conscious that he has a substantial inter- 
est and a substantial ground for asserting that interest, and who is 
anxious to prosecute his substantial rights with ail reasonable diligence 
and without unnecessarily obstructing the course of litigation of other 
issues to which he is not a party. 

[5] 3. If the order of January 5, 1910, denying leave to int,ervene, 
is appealable, it is so because it is a final order or decree against ap- 
pellants. If so, the order of April 17, 1909, denying leave to inter- 
vene, was equally a final order or decree. If, prior to April 17, 1909, 
the stockholders had an absolute right to intervene on the cause of 
action stated, they had as perfect a right to file their pétition and be 
heard as they would hâve to file their original bill or déclaration on 
any cause of action and be heard. Suppose a suitor should file an 
original bill, and the court should décline to hear him and should enter 
a final decree dismissing the bill for lack of merit on its face. Gould 
such a suitor require the court to hear the same cause of action on a 
second bill which disclosed the former proceedings and adjudication? 
We are of opinion that the answer applies to the présent case. No 
inadvertence or mistake, as ground for amendment of the second pe- 



300 188 FEDERAL EEPOETBR 

titioii, was advanced. If there -had been ground for amendment, the 
amendment should hâve been made before the final order was entered. 
If the ground was not known until afterwards, an application to va- 
cate the final order or a pétition for review should hâve been made 
in the Circuit Court. Without getting rid of that final order by pro- 
ceedings either in the Circuit Court or on appeal, the stockholders 
could not thereafter compel a hearing of the same com plaint. If that 
is not so, then appellants might also hâve ignored the final order of 
January 5, 1910, and hâve renewed their application as many times 
as they pleased. 

IL The second appeal is from an order overruling appellants' mo- 
tion to vacate the sale. The court fixed the minimum selling price at 
$15,140,000. The Baltimore & Ohio bid in the property at $16,000,- 
000. Appellants' motion was grounded on the Baltimore & Ohio's 
alleged suppression of compétition in bidding, whereby the property 
was sold at an inadéquate price. Appellants' highest valuation, an un- 
supported averment, is $30,000,000. As this is less than the sum of 
the mortgage debt, some $19,000,000 at the time of the sale, and the 
$17,000,000 of preferred stock, it is apparent that a resale could not 
benefit the common stockholders. 

The orders appealed from are affirmed. 



GUERNSBT v. IMPERIAL BANK OF CANADA- 

(Circuit Court of Appeals, Eightli Circuit. May 31, 1911.) 

No. 2,907. 

(Syllabus by the Court.) 

1. CouETs (§ 372*) — Fedeeal Coubts— Followino State Décisions— Com- 

mercial Law. 

It Is a duty whlch the fédéral courts may not renounce to form inde- 
pendent opinions and render indépendant décisions upon questions of 
commercial or gênerai law and of rlght under the Constitution and laws 
of the nation of which they hâve jurisdiction, and the décisions of the 
Btate courts are not controlling, but persuasive thereon. 

[Ed. Note.— For other cases, see Courts, Cent. Dig. §§ 977-979; Dec. 
Dig, § 372.* 

Concluslveness of judgment tietween fédéral and state courts, see 
notes to Kansas Oîty, Ft. S. & M. R. Oo. v. Morgan, 21 O. O. A. 478; 
Union & Planters' Bank v. City of Memphis, 49 C. C. A. 468.] 

2. BiLLS and Notes (§ 386*) — Conflict of Laws— Indobsement— Notice of 

DisnoNOB Govebned bt Law of Place Whebe Note Payable. 

The manner of giving and the suffieiency of a notice of dishonor, in a 
case where commercial paper is indorsed in one Jurisdiction and is pay- 
able in another, is governed by the law of the place where it is payable. 

[Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. §§ 1051- 
1054 ; Dec. Dig. § 386.*] 

8. Bills and Notes (§§ 224, 386*) — Indobsement— Validity and Exient ob 
CONTEACT Govebned bt Law of Place of Indobsement. 

The laws of the place where the Indorsement is signed or is delivered 
so that It becomes a contract govern the validity and extent of the con-' 

•For other cases see same topic & § numbee in Dec. & Am. Dlgs. 1907 to date, & Eep 'r Indexes 



GUEKNSET V. IMPERIAL BANK OF CANADA 301 

tract, and therefore the neeesslty of some presentment, demand, protest, 
and notice of dishonor. 

[Ed. Note. — For other cas'es, see Bills and Notes, Cent. Dig. §§ 52G, 
1051-1054; Dec. Dig. §§ 224, 386.*] 
4. Bills and Notes (§§ 117, 38G*)— Indobsement— Law or Place Whebe 
Payable Govekns Method of Pbotest and Notice. 

The law of the place where commercial paper is payable governs the 
days of grâce, the time and the manner of making the presentment, the 
demand, and the protest, and of glving the notice of dishonor. 

[Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. §§ 248-254, 
1051-1054 ; Dec. Dig. §§ 117, 386.*] 

In Error to the Circuit Court of the United States for the District 
of Wyoming. 

iVction by Impérial Bank of Canada against Charles A. Guernsey. 
Judgment for plaintifï, and défendant brings error. Afïirmed. 

John D. Clark (Gibson Clark and William A. Riner, on the brief), 
for plaintiff in error. 

Edgar M. Morsman, Jr. (Charles W. Burdick, on the brief), for 
défendant in error. 

Before SANBORN and VAN DEVANTER, Circuit Judges, and 
WILLIAM H. MUNGER, District Judge. 

SANBORN, Circuit Judge. This is an action by the owner of a 
promissory note payable in Canada made and indorsed in Illinois to 
recover the amount due upon the note from the indorser. Present- 
ment, demand, and protest were made, and notice of dishonor was 
given in compliance with the law of Canada, but the indorser claims, 
and it is conceded, but neither admitted nor decided, that the notice 
would hâve been insufïicient to charge the indorser if the note had been 
payable in Illinois. The court below held that the notice was good 
and rendered a judgment against the indorser. The latter's counsel 
insist that this ruling is error on the ground that the sufficiency of 
the notice is governed by the law of the place of indorsement and not 
by the law of the place of payment. To this contention there is a short 
and conclusive answer. The place of the indorsement was the state of 
Illinois. The law of that state was, when the indorsement was made, 
and it still is, that when commercial paper is indorsed in one juris- 
diction and is payable in another the law of the place where it is pay- 
able governs the time and mode of presentment for payment, the man- 
ner of protest, and the time and manner of giving notice of dishonor, 
and the law of the place of indorsement is inapplicable to them. 
Wooley V. Lyon, 117 111. 248, 250, 6 N. E. 885, 886, 57 Am. Rep. 867. 
If, therefore, as counsel contend, the law of the place where the in- 
dorsement was made, the law of Illinois, governs the sufficiency of the 
notice of dishonor in this case, that notice was good, for it was suffi- 
cient under the law of Canada where the note was payable, and the 
law of Illinois was that in a case of this character the law of the piace 
where the note was payable governed the time and manner of giving 
the notice of dishonor. 

•For other cases see same topic & § numbek in Dec. & Am. Dlga. 1907 to date, & Rep'r Indexes 



302 188 FEDERAL REPORTER 

There is another reason why the position of counsel for the indorser 
is not Sound. The rule that the manner of giving and the sufficiency 
of the notice of dishonor are governed by the law of the place of in- 
dorsement is impractical, unfair, and unjust because the notary at 
the place of payment must give the notice, and it is often impossible 
in the time allowed to him by the law for him to find out where each 
indorsement was made and what the law of the place of each indorse- 
ment is upon the subject of notice of dishonor. On the other hand, 
commercial paper shows on its face where it is payable. Each in- 
dorser, when it is presented to him for his indorsement, has time and 
opportunity before he signs it to learn where it is payable to ascer- 
tain if he desires the law of that place, and to décide for himself with 
full knowledge and upon due considération whether or not he will 
agrée to pay the amount specified therein if the maker fails to do so 
and the paper is presented, the payment is demanded, the protest is 
made, and the notice of dishonor is given according to that law. In 
the décisions upon this question there is a direct and irreconcilable 
conflict. The established rule in England, the rule in Illinois, and the 
stronger and better reasons are that, where an indorsement is made in 
one jurisdiction, and the commercial paper is payable in another, the 
manner of giving notice of dishonor and the sufficiency thereof are 
governed by the law of the place where the paper is payable. Roths- 
child V. Currie, 1 Q. B. 43, 49, 50; Roquette v. Overman, L. R. 10 Q. 
B. 525; Hirschfeld v. Smith, L. R. 1 C. P. 340, 350, 352; Wiseman 
V. Chiappella, 23 How. 368, 380, 16 L. Ed. 466 ; Pierce v. Indseth, 
106 U. S. 546, 550, 1 Sup. Ct. 418, 27 L. Ed. 254; Wooley v. Lyon, 
117 111. 248, 250, 6 N. E. 885, 886, 57 Am. Rep. 867; Union National 
Bank v. Chapman, 16? N. Y. 538, 543, 62 N. E. 672, 57 L..R. A. 513, 
88 Am. St. Rep. 614. This rule commends itself to the judgments 
of the writers of the text-books; they approve it and urs:e its main- 
tenance in préférence to its opposite. Wood's Byles on Bills & Notes 
(8th Ed.) 404, 405; 2 Parsons on Notes & Bills (2d Ed.) 344, 345; 
1 Daniel on Negotiable Instruments (5th Ed.) § 901, There are, how- 
ever, many authorities to the contrary. Aymar v. Sheldon, 12 Wend. 
(N. Y.) 439, 444, 27 Am. Dec. 137; Huse v. HambHn, 29 lowa, SOI, 
504, 4 Am. Rep. 244; Allen v. Merchants' Bank, 22 Wend. (N. Y.) 
215, 34 Am. Dec. 289; Carrolï v. Upton, 2 Sandf. (N. Y.) 171 ; Snow 
V. Perkins, 2 Mich. 238, 241. 

[1] But the question is one of commercial law upon which the dé- 
cisions of the State courts, though persuasive, are not controUing, in 
the national courts. It is a duty of the fédéral courts which they may 
not renounce to form independent opinions and to render independ- 
ent judgments upon questions of commercial law, of gênerai law, and 
of right under the Constitution and laws of the nation. Every citizen 
of the United States, who has the right to prosecute his suit in a féd- 
éral court, has also the right to the independent opinion and décision 
of that court upon every determining question of commercial or gên- 
erai law which he présents for its considération. Independent School 
Dist. V. Rew, 49 C. C. A. 198, 208, 111 Fed. 1, 11, 55 L. R. A. 364; 
Raiiroad Company v. Lockwood, 17 Wall. 357, 368, 21 L. Ed. 627; 



GUEKNSET T. IMPBEIAL BANK OF CANADA 303 

Swift V. Tyson, 16 Pet. 1, 10, 10 h. Ed. 865 ; Burgess v. Seligman, 
107 U. S. 20, 33, 2 Sup. Ct. 10, 27 L. Ed. 359. 

Upon the question in hand the décisions of the state courts are in, 
conflict. The décisions of the Suprême Court tend toward the adop- 
tion of the more reasonable and practical rule. In Musson v. Lake, 4 
How. 262, 278, 11 L. Ed. 967, cited by counsel for the plaintiff in 
error, the only question presented for décision was whether or not the 
certificate of a notary of New Orléans that he had there protested a 
note payable in that city but indorsed in Mississippi was évidence in 
a Mississippi court of the presentment of the note when the certificate 
failed to mention the presentment, and the court held that it was not 
such évidence. It is true that there is a statement in the opinion in 
that case that the contract of indorsement was made and was to be 
performed in Mississippi, and that the construction of the contract 
and the diligence necessary to be used by the plaintifïs to entitle them 
to a recovery must be governed by the law of that state. But this 
remark was unnecessary to the décision of the case, and, if it refer- 
red to the manner of charging the indorser by protest and notice of 
dishonor, it has been overruled by the subséquent décisions of that 
court. Thus in Wiseman v. Chiappella, 23 How. 368, 380, 16 L. Ed. 
466, in an action by the holder of an acceptance drawn by Durden & 
Co. in Mississippi payable in New Orléans and indorsed by the payées, 
against the notary for négligence in presenting the paper and demand- 
ing its payment, the Suprême Court said : 

"There has always been a requirement in both countries, and everywhere 
acknowledged In the United States, which protects the défendant in this suit 
from any responsibility to the plaintiff. The requirement is this: That the 
protest was made in this case in conformity wlth the practice and law of 
Loulslana where the bill was payable." 

And the court cited, in support of this proposition, Rothschild v. 
Caine, 1 Adol. & Eli. 43 (which is the same case cited above as Roths- 
child V. Currie, 1 Q. B. 43, wherein the Court of Queen's Bench held 
that the manner of giving and the sufficiency of the notice of dishonor 
of a bill of exchange indorsed in England payable in France was 
governed by the law of France); Chew v. Read, 11 Smedes & M. 
(Miss.) 182. 

In Pierce v. Indseth, 106 U. S. 546, 550, 1 Sup. Ct. 418, 27 L. Ed. 
254, an acceptance drawn in Minnesota on a bank in Norway payable 
in Norway was presented and protested according to the law of Nor- 
way, and the Suprême Court decided that the law of the place where 
the bill was payable, and not the law of the place where it was drawn, 
governed the time and manner of the présentation of the bill and of 
its protest, and added: 

"It sometimes happens that the several parties to a bill, as drawers or 
Indorsers, réside in différent countries, and much embarrassment might arise 
in such cases If the protest was required to conform to the laws of each of 
the countries. One protest Is sufflcient, and that must be in accordance with 
the laws of the place where the bill is payable." 

[2] For the same reasons one manner of giving notice of dishonor, 
and that in accordance with the laws of the place where the bill is 
payable, is sufficient, and notices in the différent methods prescribed 



304 188 FEDERAL REPORTER 

by ail the laws of ail the countries and states in which drawers or în- 
dorsers may happen to sign bills or notes are not required to charge 
, them with their intended liability. The conclusion is that, where a 
bill is drawn or a note is indorsed in one jurisdiction and is payable in 
another, the laws of the place where it is payable govern the manner 
of giving, and the sufficiency of, the notice of dishonor, the time and 
manner of the présentation and demand, and the manner of the pro- 
test thereof. 

The argument for the opposite rule is based on the conceded fact 
that the indorsement is an independent contract that, on condition that 
the paper is presented, demanded, and protested, and notice of dis- 
honor is given, the drawer or indorser will pay the note if the drawee 
or the maker fails so to do. The next step in the argument is the as- 
sertion which is sustained by many and respectable authorities that the 
indorser does not agrée to pay the note where it is payable, but at 
the place where he signs or delivers it. Daniel on Negotiable Instru- 
ments (5th Ed.) § 899. From this statement, without more, the ar- 
gument jumps to the conclusion that the manner of giving and the 
sufficiency of the notice of dishonor is governed by the law of the 
place of the making or of the delivery of the indorsement. It is not 
easy, however, to find in the contract of indorsement an agreement not 
to pay at the place where the note is payable, or at any other place, 
except at the place where the indorsement happens to be signed and 
delivered. Take the case in hand. This note was payable on its face 
at the bank in Canada and the indorser must hâve known it when he 
signed it. He resided in Wyoming, he made his indorsement in Chi- 
cago, he did not write into his contract of indorsement any limitation 
to the e'fifect that he would pay the note where he signed it but would 
not pay it where it was payable, and no sound reason occurs to us why 
his contract was not to pay the note in Canada where it was payable 
by its plain terms if the maker failed to do so and he was properly 
charged as indorser. The purpose of an indorsement is the promise 
to do what the maker undertakes to do if the latter fails, and that is 
to pay the note where it is payable. After the maker failed to pay 
this note and the protest had been made and the notice had been given, 
it was not necessary to the maintenance of an action against the in- 
dorser to présent this note or to demand payment of it in the state 
of Illinois. An action against hira could hâve been maintained im- 
mediately wherever process could hâve been served upon him, in Can- 
ada, in Illinois, or in Wyoming. For thèse reasons the position that 
the indorser agrées to pay the note where he happens to sign or de- 
liver it, and not where it is payable, when the note is a contract of 
the maker to pay it at the specified place, does not commend itself to 
our judgment. If, however, that were the import of the indorsement, 
it would not follow that the manner of giving and the sufficiency of 
the notice of dishonor are governed by the law of the place of indorse- 
ment, and not by the law of the place where the note is payable. The 
authorities which relate to the laws applicable to the validity and ex- 
tent of indorsements, the necessity of presentment, demand, protest, 
and notice of dishonor, and the manner of making the presentment de- 



F08TER V. UNITED STATES 305 

mand, and protest and of giving the notice, are too numerous for re- 
view ; but f rom the stronger and bëtter reasons and from thèse déci- 
sions thèse rules may be safely deduced. 

[3] The laws of the place where the indorsement is signed or is de- 
livered so that it becomes a contract govern the validity and extent of 
the contract and therefore the necessity of some presentment, protest^ 
and notice of dishonor. Aymar v. Sheldon, 12 Wend. (N. Y.) 439, 27 
Am. Dec. 137. It is a curious fact that the remark in the opinion in 
this case that notice of dishonor is governed by the law of the place 
of indorsement, which is the real foundation of that doctrine an- 
nounced in subséquent cases, was an obiter dictum. The question did 
not arise in the case at ail. Story's Conflict of Laws (7th Ed.) § 360 ; 
Musson V. Lake, 4 How. 262, 11 L. Ed. 967; Columbia Finance & 
Trust Co. V. Purcell (C. C) 142 Fed. 984; Hatcher v. McMorine, 15 
N. C. 122; Raymond v. Holmes, 11 Tex. 54; Briggs v. Latham, 36 
Kan. 2-55, 259, 13 Pac. 393, 59 Am. Rep. 546; Williams v. Wade, 1 
Metc. (Mass.) 82; Amsinck v. Rogers, 189 N. Y. 252, 257, 82 N. E. 
134, 12 L. R. A. (N. S.) 875, 121 Am. St. Rep. 858; Givens & Hern- 
don V. Western Bank, 2 Ala. 397, 400; Holbrook v. Vibbard, 3 111. 
465, 468 ; Artisan's Bank v. Park Bank, 41 Barb. (N. Y.) 599 ; Com- 
mercial Nat. Bank v. Simpson, 90 N. C. 467, 471 ; Douglas v. Bank of 
Commerce, 97 Tenn. 133, 36 S. W. 874. 

[4] But the law of the place where the note is payable governs the 
days of grâce, the time and the manner of making the presentment, the 
demand and the protest, and the time and manner of giving the notice 
of dishonor. Rothschild v. Currie, 1 Q. B. 43, 49, 50, 1 Adol. & EU. 
(N. S.) 43; Roquette v. Overman, L. R. 10 Q. B. 525; Hirschfeld 
V. Smith, L. R. 1 C. P. 350; Wiseman v. Chiappella, 23 How. 368, 
380, 16 L. Ed. 466; Pierce v. Indseth, 106 U. S. 546, 550, 1 Sup. Ct. 
418, 27 E. Ed. 254; Woolev v. Lyon, 117 111. 248, 250, 6 N. E. 885. 
886, 57 Am. Rep. 867; Union Nat. Bank of Chicago v. Chapman, 169 
N. Y. 538, 543, 62 N. E. 672, 57 L. R. A. 513, 88 Am. St. Rep. 614. 

Other questions were presented and argued in this case but the 
conclusion which has been reached renders them ail immaterial, and 
the judgment below must be afRrmed. 

It is so ordered. 



FOSTER V. UNITED STATES. 

(Orcult Court of Appeals, Fourth Circuit. June 14, 1911.) 

No. 1.012. 

Oeiminal Law (§§ 762, 863*) — TriaI/— Insteuctions Invadino Pbovince of 
Jury— Opinion as to GriLT of Défendant. 

Although the trial .iudge in a fédéral court raay express an opinion as 
to the weight of évidence in civil cases and as to the guilt of a défend- 
ant in criminal cases, yet the greatest caution should be used in the ex- 
ercise of this power, and the .1ury should be left free and untrammeled 
In the détermination of questions of fact which are to be passed on by 
them; and in no instance should the .iud.se express an opinion as to the 

•For other cases see same topio & § numeee In Dec. & ^m. Digs. 1907 to date, & Rep'r Indexes 
188 P.— 20 



306 188 FEDERAL REPORTER 

gullt of a défendant after the case bas been submitted to the jury, and 
they hav'e reported their inahillty to agrée. 

[Ed. Note. — For other cases, see Orlminal Law, Cent. Dig. §§ 1731, 
2065-2067; Dec. Dlg. §§ 762, 863.*] 

In Error to the District Court of the United States for the Western 
District of Virginia, at Roanoke. 

J. D. Foster was convicted of a criminal offense, and brings error. 
Reversed. 

For opinion below, see 183 Fed. 626. 

The plaintiff in error (défendant below) was Indicted at the April, 1910, 
term of the United States District Court for the Western District of Vir- 
ginia, at Danville, Va., under an indictmeut In pursuance of section 3296 of 
the Revised Statutes (TJ. S. Comp. St. 1901, p. 2136), wMch indictment con- 
tained two eounts ; the flrst charging that the défendant removed, aided and 
abetted in the removal of, certain distilled spirits to a place other than the 
dlstillery warehouse provided by law, and the second count charged that the 
défendant unlawfully concealed, and aided and abetted in the concealment 
of, certain distUled spirits. The défendant was also indicted at the same 
time under sections 3258, 3279, 3281, and 3242 of the Revised Statutes (pages 
2112, 2126, 2127, 2094), charging him with illicit distilling. On this indict- 
ment, however, a verdict of not guilty was rendered by direction of the court. 
The 3efendant was tried upon the indictment under section 3296, and con- 
victed on the flrst couut thereof, whieh count charged removing, aiding and 
abetting In the removal of, distilled spirits. The évidence upon whieh this 
conviction was obtalned was as follows: Shortly before Christmas of the 
year 1909, B. F. Stultz, deputy marshal, Floyd Gray, deputy collecter, J. S. 
Shacfcelïord, and T. J. Burnett left Martinsville In Henry County. Va., In a 
covered wagon and went in the direction of Patrick county for the purpose 
of making a raid. They passed the home of J. D. Foster, whieh is located 
in Henry county, and drove several miles further west towards the Patrick 
county Une and continued untll about dark, when they stopped by the side 
of the road and "took up camp." Stultz, Gray, and Burnett remained in the 
wagon, whieh had been stopped by the side of the road, and had a lighted 
lantern In the wagon at the time. Soon after they stopped, hearing a wagon 
coming from the rear, they tumed the lantern down and J. D. Foster drove 
up in a one-horse wagon and stopped. As soon as he stopped he began a 
conversation with J. S. Shaekelford, who had started a flre by the side of 
the road, In whieh Foster sald to Shaekelford: "I am a blockader, and I 
suppose you are," and further stated to Shaekelford In the conversation: 
"I am going up In' the mountalns to get some whisky for Christmas, but will 
bave none to sell ; what l'il hâve will not be a drop in the bucket for niy 
customers, but If you are hère when I return I will give you a drink." Im- 
mediately after this conversation Foster drove on toward Patrick county and 
Stultz and Gray followed him. After following in the direction whieh Fos- 
ter had gone for about tbree miles, Stultz and Gray found Foster's horse and 
the one-horse wagon standing tied in or near the road. They waited at the 
wagon for some time for Foster to retum. In a short while they saw .Tebu 
Scott and Frank Halrston coming tbrough the brush toward the road carry- 
ing an unstamped barrel of whisky, the barrel being tied to a pôle, Scott 
carrying one end of the pôle and Halrston. the other. Foster was wall-;ing 
behind the two. saying "gee and haw" as they were coming along. The bar- 
rel of whislî:y was placed by the side of the road and at that time Foster 
asked Scott and Halrston how much vrhisky they had made and If they were 
going to make any more. Aftervvards Foster untied bis horse and wagon 
and turned around In the road and brought it back to where the barrel of 
whisky had been placed. Foster got up in the wagon and was leaning over 
in the act of receiving the barrel into the wagon as Scott and Halrston were 
lifting It up when Offlcers Stultz and Gray ran up and made the arrests. 
Foster admltted that he had a conversation with Shaekelford. Among other 

♦For other cases see same toplc & | number in Dec. & Am. Dig3, 1907 to date, & Rep'r Indexes 



FOSTER V. UNITED STATES 307 

thiugs, he also testified: "That Jehu Scott and Frank Hairston ovmed a 
blockade distillery, and that he had no hiterest in it; that on his way lie 
met Jehu Scott and Jehu told him that he had some whisky, and told hlm 
that he would give him his Christmas 'dram' if he would carry the whisky 
home for him, and he (Foster) agreed to do it. Then he drove on a half mile 
or more, and drove out on the slde of the road and tied his horse, and took 
the runlet out and set it down near the wagon, and then I went with Scott 
to the distillery. Pretty soon Scott and Frank Hairston came along with a 
keg of whisky on a pôle and carried it out to the road, within 30 or 40 feet 
from where the wagon was. I turned my wagon around and drove it near 
the barrel. We were talking about the whisky, and I was standing up in the 
wagon holding the horse. I was going to haul the harrel. Frank and Jehu 
were out on the side of the road in the dark where the whisky was. I think 
they were in the act of taking it up, but I couldn't exactly well see what 
they were doing. About that time the officers ran up and arrested us. I had 
nothing whatever to do with the whisky, and had not touched or carried it 
at ail." The défendant was found guilty on the count charging him with re- 
moving, alding and abetting in the removal of, distilled spirits or untax-paid 
whisky, and the judgment of the court was pronounced, ^nd from this judg- 
ment this case cornes hère on writ of error. 

R. H. Willis (Hairston, Hairston & Willis, on the brief), for plain- 
tiff in error. 

Barnes Gillespie, U. S. Atty. (Thomas J. Muncey, Asst. U. S. Atty., 
on the brief), for the United States. 

Before PRITCHARD, Circuit Judge, and DAYTON and CON- 
NOR, District Judges. 

PRITCHARD, Circuit Judge (after stating the facts as above). 
There are several assignments of error, but we think that the fourth 
assignaient is perhaps the most important, involving, as it does, the 
question as to the extent to which the court should go in expressing an 
opinion as to the weight of évidence, and also the further question as 
to whether, under any circumstances, the court should express an opin- 
ion as to the defendant's guilt after the jury has had under considéra- 
tion the évidence, and at a time when they hâve failed to agrée as to 
their verdict. In the case of Starr v. United States, 153 U. S. 624, 14 
Sup. et. 923 (38 L. Ed. 841) Chief Justice Fuller, in speaking for the 
court, said: 

"It is true that In the fédéral courts the rule that obtains is slmilar to that 
in the Engllsh courts, and the presiding judge may, If In his discrétion he 
thinks proper, sum up tlTe facts to the jury ; and If no rule of law Is Incor- 
rectly stated, and the matters of fact are ultimately submitted to the jury, it 
has been held that an expression of opinion upon the facts is not reviewable 
on error. Rucker v. Wheeler, 127 U. S. 85. 93 [8 Sup. Ct. 1142, 32 L. Ed. 
102] ; Lovejoy v. United States, 128 U. S. 171, 173 [9 Sup. Ct. 57, 32 L. Ed. 
389]. But he should take care to separate the law from the facts, and leave 
the latter in unequivocal terms to the judgment of the jury as their true and 
peculiar province. McLanahan v. Universal Insurance Company, 1 Pet. 170, 
182 [7 K Ed. 98]. As the jurors are the triers of facts, expressions of opin- 
ion by the court should be so guarded as to leave the jury free in the exer- 
cise of their own judgments. They should be made distinctly to understand 
that the instruction is not given as to a point of law by which they are to 
be governed, but as a mère opinion as to the facts to which they should give 
no more weight than it was entitled to. Tracy v. Swartwout, 10 Pet. 80, 96 
[9 L. Ed. 354] ; Games v. Stiles, 14 Pet. 322 [10 L. Ed. 476]. The same rule 
prevails in the courts of many of the states, and in the charge in Conimon- 
wealth V. Selfridge, referred to hy the court below, thèse views were ex- 



308 188 FEDERAL EEPORTBB 

pressed upon the subject: 'As to the évidence, I hâve no Intention to Inter- 
fère with its just and naturel opération upon your mlnds. I hold it tbe priv- 
ilège of tlie jury to ascertain the facts and that of the court to déclare the 
law to be distinct and Independent. Should I Interfère with my opinion 
with the testimony in order to Influence your mlnds to incline either way. T 
should eertainly step ont of the province of the Judge Into that of the advo- 
cate. Ali that I can see necessary and proper for me to do in this part of 
the cause is to call your attention to the points or facts on vsrhich the cause 
may turn, state the prominent testimony in the case whieh tends to estab- 
lish or disprove thèse points, give you some rules by whieh you are to weigh 
the testimony, if a contrariety should hâve occurred, and leave you to form 
a décision according to your best Judgment, without glving you to uiider- 
stand, If it can be avoided, what my opinion of the subject is. Where the in- 
qulry is merely Into matters of fact, or where the facts and law can be clear- 
ly discriminated, I should always wish the jury to leave the stand without 
being able to ascertain what the opinion of the court as to those facts niay 
be, that their minds may be left entlrely unprejudiced to weigh the testi- 
mony and settle the merits of the cause.' So the Suprême Court of P( nn- 
sylvania says: 'Whpn there is sufîiclent évidence upon a given point to go to 
the Jury, it is the duty of the judge to submit it calmly and impartially. And 
if the expression of an opinion upon such évidence becomes a matter of duty 
under the circumstances of the peculiar case, great care should be exercised 
that such expression should be so given as not to mislead, and especially that 
It should not be one-sided. The évidence, if stated at ail, should be stated ac- 
curately, as well that whieh makes In favor of a party as that whieh makes 
against hlm ; déductions and théories not warranted by the évidence should 
be studiously avoided. They can hardly fail to mislead the jury and work 
injustice.' Burke v. Maxwell, 81 Pa. St. 189, 153. See, also, 2 Thompson ou 
Trials, §§ 2293, 2294, and cases cited. It Is obvions that under any System of 
jury trials the influence of the trial judge on the jury is necessarily and prop- 
erly oî great weight, and that his lightest word or intimation is received 
with déférence and may prove controllins. Hicks v. United States, 150 U. S. 
442, 452 [14 Sup. Ct. 144, 37 L. Ed. 1137]. The circumstances of this case 
apparently aroused the indignation of the learned judge in an uncommon de- 
gree, and that Indignation was expressed in terms whieh were not consistent 
with due regard to the right and duty of the jury to exercise an independent 
judgment In the promises, or with the circumspection and caution whieh 
should characterize Judicial utterances." 

While the décision of the lower court în the foregoing case was 
reversed because there was an abuse of this power by the court belovv, 
yet the court in that instance announced the rule that although while 
a judge of a fédéral court may, under proper conditions, express an 
opinion as to the guilt of a défendant, yet in the exercise of this power 
he should give a fuU and complète review of the évidence both for and 
against the défendant, and should be very careful not to say anything 
calculated to exert a controlling influence upon the minds of the jury 
in ultimately determining the facts whieh are alone to be passed upon 
by them. 

In the case of United States v. Garst (C. C. A.) 180 Fed. 339, the 
question arose as to whether a judge after the jurv had retired and had 
failed to agrée could properly express an opinion as to the defendant's 
guilt. In that case Judge Keller, speaking for this court, said : 

"That in the fédéral courts the judge may express hls opinion as to the 
guilt or innocence of the accused, if such an expression of opinion is given 
to the jury with proper explanatlon that it bas no binding force whatever, 
is well established, and we should be very reluctant to say that an expression 
of opinion so guarded was error. Yet at the same tlme we are of opinion that 
ordinarlly, if It is thougbt proper in a given case to give the jury the beuefit 



FOSTER V. UNITED STATES 309 

et Ihe court's opinion for what It may be worth, there would seem to tie no 
good reason why such opinion sliould net be given In connection with tbe 
cliarge of tbe court and the instructions submitted, so tliat tbere should be 
no possible danger of its malving more of an impression upon the mind of 
tlie jury than the court desired, or that it properly should make. If given 
in such a way and at such a time, we are persuaded that it could hâve no 
more weight with the Jury than that properly accorded to the views of an 
intelligent, unprejudiced man, learned in the law and attentive to the évidence, 
and so given would never be accorded undue weight ; but it is entirely possi- 
ble that if that same Jury has been considering the case patiently and has been 
unable to agrée, and they are then called in by the Judge of the court and 
told that he has reflected upon the case, and that in his opinion the défend- 
ant is guilty, and he marshals the reasons for his opinion, there is some 
danger that his opinion will exercise an influence which would not hâve been 
accorded to it had it been expressed along with the submission of the légal 
instructions and immediately in connection with the arguments of counsel ; 
and this may, and, Indeed, under such circumstances, is quite likely to be 
true, even though the court carefully endeavors to keep its influence within 
the bounds assigned to it by the approved practice of the fédéral courts." 

We endeavored in that case to make it clear that under no circum- 
stances should the trial judge express an opinion as to the guilt of 
the défendant after the jury had retired and at a time when they had 
failed to agrée as to their verdict. In this case it appears from the 
def endant's bill of exceptions No. 5 that : 

"After the Jury had returned Into the courtroom and stated to the court 
their inabillty to agrée, and had been further instructed by the court, as set 
forth in defendant's bill of exceptions No. 4, and had again returned to their 
room to consider their verdict, the Jury again returned to the courtroom and 
stated to the court that they were unable to agrée." 

Whereupon the court made the f ollowing statement to the jury : 

"The practice in the fédéral courts permits the court to express to the 
Jury his opinion of the guilt or innocence of the défendant. Tou are caution- 
ed, however, that you are not bound by the opinion of the court, and that tbe 
ultimate décision of the case is for you. I am of the opinion that the évi- 
dence in this case shows that the défendant, Foster, after having agreed to 
haul Ihe whisky, turned his wagon around for the purpose of receiving untax- 
paid whisky, with the intent to remove the same, as charged in the indict- 
ment, and for this reason I am of the opinion that the évidence shows the 
défendant guilty in the count of the indictment eharging him with aiding 
and abetting in the removal of untax-paid whisky, but you are again caution- 
ed that you are not bound by the opinion of the court, and this is submitted 
to you for what you may think it worth." 

After the foregoing statement, it appears that the jury retired to 
their room and in a short time brought in a verdict of "guilty." While 
it is true that the learned judge stated to the jury that they were not 
bound by any opinion he had expressed, yet we cannot escape the con- 
clusion that, had it not been for the fact that the judge gave it as his 
opinion that the défendant was guilty, the jury would not hâve agreed 
and there would hâve been a mistrial. Once a jury has retired, as 
in this instance, and upon considération of the facts the jurors are un- 
able to agrée as to their verdict, the slightest expression from the pre- 
siding judge as to the guilt or innocence of the défendant must neces- 
sarily hâve a controlling influence .upon the minds of the jury; and 
this, in our judgment, is precisely what occurred in this case. 



310 188 FEDERAL EEPOETER 

It should be borne in mind that the judges of the various state courts 
in this circuit are not permitted to express an opinion as to the weight 
of testimony, nor are they permitted to express an opinion as to the 
guilt of a défendant. Our people hâve become accustomed to this Sys- 
tem, and as a conséquence jurors attach great importance to any ex- 
pression coming from the presiding judge, feeUng, as they do, that it 
is only in exceptional cases that he expresses an opinion as to any mat- 
ter that may be submitted to them, and when he does they feel that 
they are bound by the same. Under thèse circumstances an expres- 
sion of opinion from a fédéral judge in this circuit necessarily carries 
more weight than would the opinion of a fédéral judge in a circuit 
where a différent rule prevails in the state courts. While the learned 
judge who heard this case below employed language that clearly in- 
formed the jury that they were not bound by any expression that he 
may hâve made, nevertheless the circumstances surrounding the trial 
of this case are such as to impel us to the conclusion that the jury was 
influenced in a large measure by the opinion of the court. It may be 
that in many instances jurors refuse to find défendants guilty notwith- 
standing the fact that the évidence is such as to justify them in do- 
ing so, and thus permit those who are guilty to escape punishment. 
While this is to be deplored, yet the rule which leaves ail questions of 
fact to be passed upon by the jury should never be relaxed or modified 
if the rights and liberties of the citizen are to be preserved. Notwith- 
standing the trial judge may express an opinion as to the weight of 
évidence in civil cases and as to the guilt of a prisoner in criminal 
cases, the greatest caution should be used in the exercise of this power, 
and the jury should be left free and untrammeled in the détermination 
of questions of fact which are to be passed upon by them, and in no 
instance should the trial judge express an opinion as to the guilt of the 
défendant after the case has been submitted to the jury and at a time 
when they hâve failed to agrée as to their verdict. 

For the reasons stated, the judgment of the lower court is reversed, 
a new trial granted, and the case reirtanded, with instructions to pro- 
ceed in accordance with the views herein expressed. Reversed. 



ONTAI V. UNITED STATES. 

(Circuit Court of Appeals, Nlnth Circuit July 3, 1911.) 

No. 1,929. 

1. Aemy and Navt (§ 40*) — Offenses by Civilians— Pubchasing Pboperty 
FEOM SoLDiER— "Public Pboperty." 

Olothing furnished to a soldier by tlie United States Under a clothing 
allowance does not become his private property wliich he has a right tO 
dispose of while in the service, but is "public property" within section 
35 of the Pénal Code (Act March 4, 1909, c. 321, 35 Stat. 1095 [U. S. Comp. 
St. Supp. 1909, p. 1401]), which makes It a criminal offense to knowingly 
purchase or receive In pledge from any soldier "any arms, equipmeuts, 
ammunitlon, clothes, military stores, or other public property, whether 
furnished to the soldier * * • . under a clothing allowance or other- 



•For other cases see same topic & § numbee lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



ONTAI V. UNITED STATES 311 

wîse, such soldler * ♦ • not havlng the lawful rlght to pledge or 
sell the same." 

[Ed. Note. — For other cases, see Army and Navy, Cent. Dig. §§ 83-87; 
Dec. Dig. § 40.* 

For other définitions, see Words and Phrases, vol. 6, p. 5815; vol. 8, 
p. 7773.] 

2. Aemy and Navy (§ 40*)— Constitutional Law (§ 258*)— Criminal Law 
(§ 1213*) — Offenses bt Civiliaxs— Constitutionality of Statute. 

Section 35 of the Pénal Code (Act March 4, 1909, c. 321, 35 Stat. 1095 
[U. S. Comp. St. Supp. 1909, p. 1401]), which authorizes the imposition 
of a maximum fine of $500 and imprisonment for not more than two 
years upon a civilian for linovs^ingly purchasing or receiving in pledge 
any publie property from a soldier, is not unconstitutional as providing 
for an excessive fine or a cruel and unusual punishment, nor as providing 
for the taking of property without due process of lav?-. 

[Ed. Note.' — For other cases, see Army and Navy, Dec. Dig. § 40;* 
Constitutional Law. Cent. Dig. § 748; Dec. Dig. § 258;* Crimlnal Law, 
Cent. Dig. §§ 3304-3309; Dec. Dig. § 1213.*] 

In Error to the District Court of tlie United States for the Ter- 
ritory of Hawaii. 

Criminal prosecution against Cari Ontai. Judgment of conviction, 
and défendant brings errer. Affirmed. 

The plaintlfC In error was convlcted under an indictment which charged 
that he "did feloniously, willfuUy, and knowingly purchase from Wyatt L. 
Olay, then and there being a soldler employed in the military service of the 
United States, he, the said Wyatt L. Clay, not having the lawful right to 
sell the same, certain public property of the said United States of America, 
to wit, one shirt, of the value of $2.50." The évidence on the trial showed 
that the plaintiff lu error knowingly purchased a certain shirt from Wyatt 
D. Clay, who was then and there a soldier in the military service of the 
United States, as was known to the plaintiff in error, and that the shirt had 
been issued to such soldier under the laws of the United States and the rég- 
ulations of the War Department as a clothing allowance. The statute under 
which the plaintiff in error was Indieted and convlcted is section 35 of the 
Pénal Code of the United States, the latter portion of which reads as follows: 
"Whoever shall knowingly purchase or recelve in pledge for any obligation 
or indebtedness from any soldier, ofBcer, sailor, or other person called Into 
or employed in the military or naval service, any arms, equipments, ammunl- 
tlon, clothes, military stores, or other public property, whether furnished to 
the soldier, sailor, officer, or person under a clothing allowance or otherwise, 
such soldier. sailor, ofiicer, or other person not having the lawful right to 
pledge or sell the same, shall be fined not more than flve hundred dollars and 
Imprisoned not more than two years." 

Philip L. Weaver, for plaintiff in error. 

Robt. T. Devlin, U. S. Atty., Robert W. Breckons, U. S. Atty., and 
William T. Rawlins and Earl H. Fier, Asst. U. S. Attys. 

Before GILBERT and MORROW, Circuit Judges, and WOLVER- 
TON, District Judge. 

GILBERT, Circuit Judge (after stating the facts as above). [1] 
Error is assigned to the refusai of the court to instruct the jury to ac- 
quit the plaintiff in error on the ground that the property which he 
purchased of the soldier had been allowed to the latter under a cloth- 
ing allowance, whereby it became his individual private property, held 

•For other cases see same toplc & § numbee In Dec. & Am. Dlgs. 1307 to date, & Rep'r Indexes 



312 188 FEDERAL EBPOETEB 

by him subject only to hîs contract with the United States not to dis- 
pose of the same, but with a tenure which permitted another to pur- 
chase the same without incurring any penalty for violation of the stat- 
ute, and it is contended that the indictment having charged the pnr- 
chase of public property of the United States, and the proof having 
shown that the purchase was an article of clothing vi^hich had been 
allowed to a soldier, the variance between the indictment and proof 
was fatal. The plaintiff in error cites United States v. Michael (D. 
C.) 153 Fed. 609, a case in which the court, in construing section 5438 
of the Revised Statutes (U. S. Comp. St. 1901, p. 3674), held that a 
civilian did not commit a pénal offense in purchasing from a soldier 
clothing issued to the latter during the term of his enlistment, and 
that clothing when issued to an énlisted soldier under the rules of the 
War Department was no longer public property, but was the soldier's 
private property. That décision, however, in our opinion is not sus- 
tained by reason or by authority. The contrary was held in United 
States v. Hart (D. C.) 146 Fed. 202 ; United States v. Koplik (C. C.) 
155 Fed. 919; United States v. Smith (C. C.) 156 Fed. 859. It is 
true that one of the promises held out to the soldier about to enlist 
is the payment to him of a certain sum of money, and the allowance to 
him of certain specified clothing. But the clothing which he receives 
is held by a différent tenure from the money. The latter is the sol- 
dier's to spend at his will. The clothing is part of his equipment for 
services which he is to render to the United States. He gets no prop- 
erty right in it other than the right to wear it. It is as much a por- 
tion of his equipment as is his gun or his ammunition. It remains 
public property of the United States. Section 1242 of the Revised 
Statutes (U. S. Comp. St. 1901, p. 876) déclares that the clothing fur- 
nished by the United States to any soldier shall not be sold, bartered, 
or exchanged, pledged, loaned or given away. Section 3748 (U. S. 
Comp. St. 1901, p. 2527) provides for the seizure of such public prop- 
erty which has been sold or bartered, pledged, loaned, or given away. 
The décisions above cited were ail rendered prior to the enactment of 
the présent statute as it is expressed in section 35 of the Pénal Code. 
By that section the intention of Congress is made clear beyond ques- 
tion to déclare ail property secured by a soldier under his clothing al- 
lowance to be public property of the United States. That statute spéc- 
ifies "any" arms, equipment, ammunition, clothing, etc., "or other 
public property," and then follows the words : "whether furnished to 
the soldier, sailor, officer or person under a clothing allowance or oth- 
erwise" — thus expressing the will of Congress that a soldier shall ac- 
quire no right in any such property, and that one who, knowing him 
to be a soldier, shall purchase the same, shall incur the penalty de- 
nounced by the act. 

[2] We find no merit in the contention that section 35 is unconsti- 
tutional as providing for an excessive fine or cruel and unusual pun- 
ishment prohibited by the eighth amendment. The statute provides 
for a maximum punishment of imprisonmcnt for two years, and a fine 
of $500. It vests in the trial court discrétion to adjust the punishment 
to the offense. It is conceivable that offenses might be committed 



ANDREWS V. LADD 313 

under the statute which would deserve the full measure of punishmenl 
permitted thereby. The contention that the act is unconstitutional 
as providing for the taking of property without due process of law 
assumes that the property belongs to the soldier, anassumption which 
we hâve already considered and discussed. 
The judgmenfis affirmed. 



ANDREWS V. LADB. 

(Circuit Court of Appeals, Ninth Circuit. July 3, 1911.) 

No. 1,912. 

Mines and Mineeals (§ 112*) — Minées' Liens— Alaska Statute. 

Carter's Ann. Civ. Code, Alaska, § 262, giving a lien for work done in 
the development of a mine, does not glve a lien to a miner for work on 
a placer claim, such as sluicing and taking ont the gold. 

[Ed. Note. — For other cases, see Mines and Minerais, Cent. Dig. §§ 233- 
235 ; Dec. Dig. § 112.*] 

Appeal from the District Court of the United States for the Sec- 
ond Division of the District of Alaska. 

Suit in equity by Henry Ladd against J. R. Andrews. Decree for 
complainant, and défendant appeals. Reversed. 

James B. Kinne and James W. Bell, for appellant. 
Before GILBERT and MORROW, Circuit Judges, and WOLVER- 
TON, District Judge. 

GILBERT, Circuit Judge. The appellee brought a suit to foreclose 
laborers' liens on the Corning claim, on Bourbon creek, in the Cape 
Nome mining and recording district of Alaska, one of which liens, it 
was alleged, had accrued in his own behalf, and the others on behalf 
of other claimants, who had assigned to him. The court below allowed 
four of the claims, and entered a decree enforcing the same against the 
mining claim. 

The complaint alleged that the work was done in developing the 
claim, and the lien notices also contained the statement that the work 
was done in developing the claim. The appellant in his answer de- 
nied substantially ail of the averments of the complaint, including the 
allégation that the work was done in developing the mining claim. 
The bill of exceptions shows that no proof whatever was offered in 
the court below that the work done by the lien claimants was devel- 
opment work. One of them testified that he worked for the lessees 
of the claim, that they were operating the claim and taking out gold, 
and that his work was gênerai mining work. The others testified that 
they "worked on the claim," stating the time during which they 
worked, and the wages they were to receive. There was other évi- 
dence showing that the work performed by the lien claimants was gên- 
erai mining work, done for the lessees of the mining claim, and not 
development work. For ordinary work upon a placer mining claim, 

•For other cases see same topic & § NnMBER in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



314 188 FEDERAL REPORTER 

such as sluicing and taking out the gold, the statute of Alaska, as we 
hâve construed it in Pioneer Mining Co. et al. v. Delamotte et al. (C. 
C. A.) 185 Fed. 752, affords no lien to the miner. 

For the error of the court below in allowing and enforcing the liens, 
in view of the issues and the évidence, the decree must be reversed, 
and the cause remanded for a new trial. 



AMERICAN STOKER CO. V. UNDERPEED STOKER CO. OF AMERICA 

et al. 

(Circuit Court ol Appeals, Thlrd Circuit. June 12, 1911.) 

No. 1,474. 

Patents (§ 328*) — Infringement— Undeefeed Fubnace. 

The Garden patent, No. 648,251, for an underfeed furnaee, Is of nar- 
row scope and Is not infrlnged by the furnaee of the Daley patent, No. 
644,664, which, although it employs the single novel feature of the Gar- 
den patent, employs a différent comblnatlon of éléments to accomplish 
a différent purpose. 

Appeal from the Circuit Court of the United States for the West- 
ern District of Pennsylvania. 

Suit in equity by the American Stoker Company against the Under- 
feed Stoker Company of America and David Hunter, Jr. Decree (182 
Fed. 642) for défendants, and complainant appeals. Affirmed. 

H. C. Ix>rd, for appellant. 

Frederick P. Fish, Walter H. Chamberlin, and J. L. Stackpole, for 
appellees. 

Before BUFFINGTON and LANNING, Circuit Tudges, and Mc- 
PHERSON, District Judge. 

LANNING, Circuit Judge. The complainant, American Stoker 
Company, owner of the James Garden patent. No. 648,251, for im- 
provements in furnaces, charges the défendants with infringement of 
the patent. The défenses are the usual ones of invalidity of the 
patent and noninfringement. In its opinion the Circuit Court held 
the patent valid but not infringed. 182 Fed. 642. The decree, how- 
ever, simply dismissed the bill without stating the reason therefor. It 
is not difficult to point out substantial différences between the furnaee 
described in the Garden patent and the furnaee made by the défend- 
ants. 

Garden, in the spécification of his patent, shows that he has on each 
side of his fuel conduit an elongated box or pipe for conveying com- 
pressed air to the combustion chamber into which the air is forced 
through tuyère openings in the box or pipe. As the air is thus forced 
into the combustion chamber, a pressure is produced sufficient to drive 
gases down through an ordinary grate into the furnaee room. This 
créâtes a dangerous condition for workmen and also speedily destroys 
the grate. In order to overcome this evil, Garden says he dispenses 

•For other cases eee same topio & § numbbk in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe? 



AMEEICAN 8TOKER CO. V. TTNDERFEED STOKKR CO. 315 

with the usual grate and substitutes therefor dead-plates of cast iron, 
removing the ashes through suitable doors in the front of the furnace 
upon a level with the dead-plates. He further says that: 

"In lieu of the cast-metal dead-plates, the bottom of the furnace may be 
built up solidly with fire brick, except the air passages leading to the tuyères, 
thus leaving no opening corresponding to the usual ash pit beneath." 

Thus is the primary object of the patent made clear, which, to 
quote the words of the patent, is "to so construct a furnace, in com- 
bination with an underfeed mechanical stoker, that the air may be 
supplied to the furnace at the point of combustion, while at the same 
time the gases formed may be prevented from returning or escaping 
otherwise than through the flue or stack designed therefor." It was 
not new to supply air at the point of combustion, but Garden claimed 
that it was new to prevent the downflow of noxious gases by substitut- 
ing dead-plates for an open grate. The three claims of his patent are 
as follows: 

"1. A sealed or grateless underfeed furnace in which Is combined a fuel 
conduit adapted to feed the fuel from beneath, means for introducing the 
fuel thereto, air openings within or in operative proximity to said conduit, 
means for forcing air into the furnace through said openings, laterally- 
projecting sealed or alr-tight ledges over which the fuel may spread and 
be consumed when forced upwardly through the conduit, and means for 
preventing the admission of air except through said air openings within or 
adjacent to the conduit, whereby air may be Introduced under pressure, a 
backflow of gases prevented, and combustion Insured, substantially as de- 
scribed. 

•'2. The eomblnation with a fumaee of the class described, of an under- 
feed conduit, means for introducing fuel thereto, means for introducing a 
blast of air to openings adjacent to the conduit and dead-plates forming 
laterally-projecting air-tight ledges for the réception and support of the fuel, 
substantially as set forth. 

"3. The combinatlon with a furnace of an underfeed conduit, means for 
Introducing fuel thereto, means for introducing a blast of air to openings 
adjacent to the conduit; the bottom of said furnace being entirely closed 
adjacent to the sldes of said conduit." 

The fuel conduit, the means for introducing the fuel thereto, the 
air openings adjacent to the conduit, and the means for forcing air 
into the furnace through the openings, mentioned in thèse claims, were 
ail old éléments in a furnace. By the sealed or air-tight ledges of the 
first claim, the dead-plates of the second claim, and the closing of the 
bottom of the furnace adjacent to the sides of the conduit mentioned in 
the third claim, the downflow of gases is prevented. 

The défendants' furnace is a very différent structure, and it pos- 
sesses features not found in Garden's furnace. It has the fuel conduit, 
the means for introducing the fuel thereto, the air openings adjacent 
to the conduit, and the means for forcing air into the furnace through 
the openings, just as Garden and others hâve them. It also has the 
air-tight ledges of Garden's first claim, the dead-plates of his second 
claim, and the bottom combustion chamber adjacent to the sides of the 
fuel conduit is closed as in Garden's third claim. But Garden's claims 
are combination claims each "having means for supplying air to the 
furnace at the point of combustion and designed also to prevent the 
downflow of gases into the furnace room. The défendants' structure 



316 188 FEDERAL BEPOETER 

possesses no elongated box or pipe for conveying compressed air to 
the combustion chamber. The bottom of their furnace cannot be built 
up solidly with fire brick. In the défendants' furnace, the dead-plates 
form both a bottom for the combustion chamber and a roof for the 
compressed air chamber. Ail the space beneath the dead-plates is 
filled with compressed air, which is forced into the combustion cham- 
ber through the openings along the sides of the fuel conduit. As the 
air is forced into the air chamber, it circulâtes there and extracts heat 
from the dead-plates, thereby preserving them, and is itself heated be- 
fore it is forced into the combustion chamber, thereby aiding com- 
bustion 

The prior state of the art is such thatthe Garden patent, if valid at 
ail, must be a narrow one. In the Evan W. Jones patent, No. 470,052, 
dated March 1, 1892— more than two years before the appHcation for 
the Garden patent was filed — it was expressly stated that the grate was 
not depended on for the supply of air to carry on combustion, and 
that the ashes and other débris might be allowed to pile up on the 
grate to any reasonable depth. A layer of ashes and débris over a 
grate sufficient to prevent the passage of air upwards through the 
grate into the combustion chamber would probably retard, if not pre- 
vent, the passage of the gases downwards through the grate from the 
combustion chamber. It is shown, however, that there was at times 
in the Jones furnace a very objectionable downflow of gases. To 
overcome that defect, plates were placed over the portions of the grate 
adjoining the sides of the fuel conduit. This seems to hâve been donc 
in Chicago as early as the spring of 1893, Indeed, there is testimony 
that it was done in Portland, Or., in 1891. In any event, assuming 
the Garden patent to be valid, its claims cannot be broadened by con- 
struction beyond what is reasonably necessary to accomplish the 
stated primary object of the patent. Garden never conceived the 
object of the défendants' combination. That efïect is not even re- 
motely hinted at in the Garden patent or suggested by it. It is set 
forth in the Fred A. Daley patent, No. 644,664, dated March 6, 1900, 
under which it is alleged the défendants' furnace is constructed. In 
that patent Daley déclares that theretofore air had been conveyed 
through the tuyère openings from tuyère boxes. In furnaces of that 
character, says he, it had been proposed to provide means for closing 
the ash'pit to prevent the backflow of gases and for other purposes; 
said means usually being in the form of iron dead-plates located along 
the sides of the fuel retort or conduit. Thèse dead-plates, he further 
says, were soon destroyed because of the excessive heat to which they 
were subjected. 

"My invention " says he In hla spécification, "bas for its object, flrst, ttie 
provision of improved means for conveying air under pressure tbrough the 
tuyère openings, whereby the expensive tuyère boxes heretofore employed 
for this purpose may be dispensed with, and, second, In so constructing fur- 
naces employing dead-plates that the dead-plates may be eooled by the In- 
coming air under pressure before the air is directed upon the burning fuel, 
so that the life of the dead-plates may be greatly Increased ; and it is in 
connection with furnaces employing dead-plates that my invention bas Its 
greatest utllity. » ♦ * Thèse tuyère openings, Instead of communicat- 
Ing with tuyère boxes through which air Is conveyed under pressure, as waa 



AMERICAN STOKEE 00. V. TJNDERFEED STOKER CO. 317 

lieretofore the case, eommunlcate dlrectly wltli the iiiclosed space beneath 
the flre box, to which inclosed space air is supplled under pressure, which 
by Corning in contact with the dividlng vvalls or parts between the fire box 
and the space beneath the same is heated somewhat before it is passed 
through the tuyère openings, whereby the combustion is promoted to a great- 
er extent than where the cold air is forced through tuyère boxes whose walls 
were not subjected to the lieat from the fire box above. * * * In a fur- 
nace constructed in accordance with my invention, the undersides of tlie 
dead-plates are constantly exposed to the incoming air, which counteracts 
the heat from above. I thus avoid the necesslty of so fréquent renewal of 
the dead-plates, and by dispensing with the tuyère boxes as heretofore used 
there is secured a saving in complication and expeuse. The air, being ad- 
mitted flrst to the space beneath the fire box, becomes heated before It is 
driven into the fire box. This results in a better and more complète com- 
bustion than is obtained when the air is introduced to the retort at a lower 
température." 

The claims of Garden's patent, it must be remembered, are combina- 
tion claims. Each of them has for its object the very limited one set 
forth in the spécification of the patent. The défendants do not employ 
the same combination of éléments, and they secure a resuit not dream- 
ed of by Garden. To quote a passage from the brief for the appellees, 
"the essence of Daley's invention lies in thèse features — dispensing 
with the Jones tuyère pipes, and the use of the ash pit as an air cham- 
ber through which the air is supplied to the fîre." For Garden's pur- 
pose, the ash pit could be solidly built up with fîre brick, for he makes 
no use of it. While the dead-plates are an élément in the Garden 
combination and also in the combination of the défendants, the com- 
binations are, by reason of other varying éléments, widely dififerent, 
and they hâve totally différent purposes and secure totally différent re- 
sults. 

But the complainant contends that the défendants, by their answer, 
hâve admitted inf ringement. We do not think the answer should be so 
construed. In the fifteenth paragraph infringement is expressly 
denied. The fourteenth paragraph, in which the complainant insists 
the admission of infringement is to be found, is inartistically drawn. 
The former part of it contains statements from which, if they be 
read without référence to the latter part, one would be obliged to infer 
admission of infringement; but, when the paragraph is read as a 
whole, it seems that the former part is intended to lay the ground for 
the charge of lâches in the latter part. At ail events, it is clear that 
the défendants did not intend to make an unqualified admission of in- 
fringement, and the record of the, case furnishes abundant proof that 
the complainant has not understood that such an admission was intend- 
ed to be made, and that it has been in no way misled or embarrassed in 
the prosecution of its case by the badly drawn paragraph. 

Nor do we think the history of the Daley patent, while it was 
pending in the Patent Office, discloses any infirmity in that patent or 
requires it to be construed as a mère improvement of the Garden patent. 
It is true that Daley, in the spécification of his patent, expressly dis- 
claims the invention described in claim 3 of the Garden patent; but 
that does not mean that Daley may not use a combination of éléments 
différent from the combination described in claim 3 of Garden. The 
basic conceptions of Garden and Daley difïer so materially that it is 



318 188 FEDERAL REPOETEK 

impossible to sustaîn Garden's claim to the Daley combination. We are 
quite in accord with what the learned judge of the Circuit Court has 
said on this subject, and we think, with him, that the complainant has 
failed to show infringement. This conclusion renders it unnecessary 
for us to express any opinion on the question of the validity of the 
Garden patent. 

The decree of the Circuit Court will be affirmed, with costs. 



LUDINGTON CIGARETTE MACH. CO., Inc., v. ANARGYROS et al. 
(Circuit Court of Appeals, Second Circuit Jxme 26, 1911.) 

No. 284. 

Patents (§ 328*) — VAi-iDiTy and Infbingement— Machine and Process fok 
Making Cigarettes. 

The Ludington patents, No. 711,986 for a machine, and No. 711,987 
for a process, for maliing cigarettes from continuons cigarette rods, vvere 
not anticipated, and disclose patentable invention. Claim 1 of the ma- 
chine patent and claim 3 of the process patent held infringed by the 
machine and process of the Lavvless patents, Nos. 779,430 and 779,431. 

Appeal from the Circuit Court of the United States for the South- 
ern District of New York. 

Suit in equity by the Ludington Cigarette Machine Company, In- 
corporated, against S. Anargyros and the American Tobacco Com- 
pany. Decree for complainant, and défendants appeal. Modified and 
affirmed. 

FoUowing is the opinion of the Circuit Court by Hazel, District 
Judge : 

The complainant Is the owner by assignment of patents numbered 711,986 
and 711,987, both dated October 28, 1902, and issued to Frank J. Ludington, 
inventor. The défendants, S. Anargyros and the American Tobacco Company, 
the former, as alleged in the bill, being under the control of the latter, are 
jointly charged with conjoint infringement of said patents, which respectively 
relate to the machinery and the process of making cigarettes of oval shape 
from so-called continuons cigarette rods. To make cigarettes automatically 
by continuons Aller machines, in whieh machines the tobacco is drawn through 
a smoother by an endless tape, upon which the filler rests, was an old art at 
the date of the Invention in suit, and the patentée does not claim to be a 
pioneer in this fleld of invention. Indeed, he himself, as had others before 
him, had invented and previously secnred patents for cigarette machines of 
this type. Originally, In cigarette machines the cigarette rod was made 
from ribbon paper as it unroUed from a spool ; one edge of the paper passing 
over a paste wheel and traveUng along into a trough, from whence it was 
gradually drawn into a tube correspondlng to the curvature of the trough, 
and there formed into a Aller. The edges of the wrapping paper, havlng 
curved upward in its movements, were brought together and pasted, and the 
Aller upon leaving the trough was eut into cigarettes. Bonsack Machine Co. 
v. Elliott, 69 Fed. 335, 16 C. C. A. 250. The earlier machines were not com- 
mercially suceessful, for the reason that the wrapping paper was drawn 
through the trough and tubular métal by a nipper device, and was strained 
and torn through frictlonal contact. Afterwards, In 1879, a patent was is- 
sued to Emery (No. 216,164) which was designed to overcome the difficulties 
in the pioneer invention. In his machine the tobacco after leaving the feed- 

*For other cases see same topio & § ndmeer In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



liUDINGTON CIGARETTE MACH. CO. V. ANAKGTE08 319 

Ing device was formed Into a Aller rod, and smoothed and pressed by concave 
wheels and roUers, and the edges -cî the wrapper were pasted ; the paste be- 
ing applied by sultable apparatus. The instrumentalitles for making the Aller 
rod were contalned at one part of the machine, and by a separate device it was 
laid upon the wrapping paper at another part thereof. After the cigarette 
rod was formed, the Aller rod belt passed under the table, and reappeared, 
to aet as a carrier of the Aller after the wrapping paper was wound around 
it. As the wrapping paper gradually enveloped the rod in its movements 
through the metalllc tube, corresponding in diameter to the thickness of the 
Aller rod, it was pasted and pressed to form the cigarette. Other patents 
to Emery and other patentées were subsequently granted for improvements, 
and at the date of the patents In suit cigarettes having broad seams and a 
round shape were made automatically by machines in large quantifies. The 
Bonsack machine was a marked improvement of the Emery patent for making 
round cigarettes, as dlstinguished from flattened or oval-shaped cigarettes. 
In the year 1900 Turkish cigarettes of oval shape came into extensîve use. 
In this elass of cigarettes the corners and seams were narrow, the paper 
wrappers were Anely flnished, the Allers smooth and regular, and, as they 
were made by hand, they obtalned a réputation for superiority of style and 
workmanship. None of the continuous cigarette making machines known to 
the art were adapted to successfully malte the Turkish cigarette of approved 
symmetry. There were in e.'ïlstence, it is true, machines which made ciga- 
rettes in imitation of Turkish handniade cigarettes, but the patentée clalms 
that such machines were defective, and dld not embody his central idea of a 
smoother combined with the folders and heating cap. In the Ludington, as 
in prior machines, the tobacco is shredded, and runs from a hopper to a feed- 
ing device by means of pulleys and belts, and then onto a traveling surface, 
where the Aller is formed, and the nnderlylng wrapping paper is wound 
around the Aller as It travels on a feed guide. In the Ludington machine the 
Aller is continuously drawn through a smoothing device of trough shape by 
an endless tape, and In its progress the Aller and wrapper encounters a fold- 
er, which turns up one edge of the paper over the tape of the Aller, and paste 
is Immediately applied by a paste wheel to the other edge, and thereupon both 
edges are brought to adhère by a second folder, and the seam Is pressed down 
tlght by the tube part of the métal channel as the Aller moves onward in its 
path. The upper part of the channel, which is constructed in one pièce, has 
an extension, which forms the heating cap. The novelty of the invention is 
claimed to réside in the application of the smoother to the Aller and pressure 
of a curved heated métal part directly upon the pasted seam, which has the 
double functlon of simultaneously drying and smoothing it before it reaches 
the knife for cutting into proper slze. The patentée dispensed wlth the 
famlliar concave wheels and rollers which were used to smooth and press the 
Aller, and substituted conspicuously new instrumentalitles, i. e., a smoothing 
device In combination with folders and a heating cap, jîositioned in the path of 
the Aller, for heating the open seam of the cigarette rod. To impart the de- 
sired efCect of the heater directly on the seam, it was necessary to expose the 
seam, and this was accomplished by the action of the tape, which, owing to 
the expansion of the Aller, drops lïack, leavlng the seam open for ironing. 
The speciAcation, speaking of objections and defects in prior machines that 
prevented giving the Aller the deslred symmetry, says: "In the machines re- 
ferred to in making Turkish cigarettes with narrow lap it has been found 
that the mechanical pasting of the seam wrinkled the p.aper along the Une 
of the seam, and the Aller, not having been smoothed before wrapping, left 
indentations or pits on the surface of the Anished cigarette, and that such 
wrinkled seam and indented or pitted surface plainly betrayed the machine 
make of the article. To produee such a seam of absolutely perfect character, 
I provide in the présent invention a heated ironing device, which presses up- 
on the seam for a considérable length of time after it is pasted, and opérâtes 
to simultaneously dry and smooth the seam, and to remove ail wrinkles in 
the surface of the wrapper." The said objection was attributed by the paten- 
tée to the concave wheels, between which thé tobacco moved too rapidly, and 
vi'hich Interfered with properly or permanently compressing it, together with 
the fallure of such prior machines to properly smooth and dry the Aller after 



320 188 FEDERAL REPORTES 

the edges of the wrapper were pasted together. The évidence supports the 
claim of the indicated inefflciencles of the prior machines for manufacturing 
Turkish cigarettes. The improvement in suit, whlch came into the market 
In 1902, was generally approved by the trade, and recognized as satisfactorily 
fulfilliiig the requirements and overcoming the objections and defects hereln- 
before mentioned. The claims alleged to be infringed in patent No. 711,986 
are 1, 2, 3, 12, 13, 18, 19, 21, and 22. Claim 1 reads as follows: "(1) In a 
continuons cigarette machine, the combina tlon, with means for formlng and 
propelling a continuous cigarette with seamed paper wrapper, of a trough- 
shaped guide to support the cigarette, a cap arranged and operated to press 
upon the seam of the wrapper, and means for heating the cap to smooth and 
iron the seam, substantlally as horeln set forth." Claim 1 broadly iucludes 
the means for formlng and propelling a cigarette with seamed paper wrapper. 
Such cJaim, however, cannot be given its llteral Import, and must be nar- 
rowed to include the spécifie combination. Claim 2 is limlted to formlng an 
oval cigarette in machines of the style In controversy. Claim 3 is for a com- 
bination with means for feeding the tobacco to the wrapper. Claim 12 em- 
phasizes the "endless tape adapted to carry a paper wrapper." Claim 13 dé- 
tails the means for heating the heater cap. Claim 18 spécifies the smoother, 
f, for equalizing the tobacco and the feature of the flrst folder. Claim 19 
spécifies the heater cap attached removably to the guide and heating means. 
claims 21 and 22 cover the combination of the smoothing tongue with the 
foldlng surfaces and the guides arranged to permit the tobacco to expand as 
It passes from one to another. 

The défendants, to antlcipate the claims, or, at least, to llmit them, contend 
that the feature of simultaneous heating and pressure is found In the prier 
art. None of the prier patents, however, embody the central idea of complain- 
ant's invention. Means for drying a continuous cigarette and imparting to 
it a finish, It is true, is suggested in the Emery patent, No. 216,164, but it 
certainly does not dlselose how a heated iron may be directly applied on a 
moist seam to smooth and iron It. Bonsack, who improved the Emery ma- 
chine, as a resuit of which it achieved commercial success, was apparently 
unaware of its heating jacket mentioned in the spécification, for he never 
used it to perform simultaneous heating and smoothing. The Emery patent 
does not describe the jacket, nor how it was heated, and if In thls respect it 
was of any practlcal use the évidence does not show It. Nor is the Chappell 
patent, No. 542,974, entltled to materlal welght, for in the structure therein 
descrlbed the tube inclosing the heating jacket was deslgned to dry the ciga- 
rette after pastlng the seam. His drler had no pressing or smoothing action, 
and therefore does not antlcipate the patent of complalnant. There was mueh 
évidence given on both sldes in relation to the Chappell patent; It being 
clalmed by the défendants that the diameter of the drler was such as to 
impart to the cigarette while being dried a smoothing action. The drawlng 
of the drler aceompanying the spécification, however, In connection with Mr. 
Dorsey's testimony, shows that the patentée never contemplated that hls 
drier would also act as a smoothing or pressing device, and, aside from thls, 
I do not thlnk there was a disclosure in sald patent of the heating means in 
suit or as constructed that It was capable of drying and pressing the seam by 
simultaneous application of the tube or channel. The Ludlngton appliance 
patent possesses merlt, and the application of the doctrine of a fair range 
of équivalents is thought justlfled. Agaln It Is claimed that the essence of the 
invention slmply eonslsted in dlspensiiig with the wheels and roUers for press- 
ing the tobacco Aller. There is a wide différence of opinion between counsel 
as to the construction of the claims and as to the inanner in which the de- 
fendants' machines operate. As the spécification and claims emphasize the 
means by whlch the oval form of the cigarette is attained — i. e., the concave 
smoother, the expansion of the tobacco as It travels to the heating cap, the 
exposure of the seam for Ironing, drying. etc. — the patent is entltled, I thlnk, 
to a broader construction than contended by défendants. It certainly is not 
limlted to the substltuted means of a feed and harrel guide, and it was shown 
that the Invention was entltled to cover machines which retaln rotary agen- 
cies for compressing the tobacco. The controver.sy, therefore, more directly 
concerns the partlcular appliances and the process which follow or corne after 



LUDINGTON CIGARETTE MACH. CO. V. ANAEQTROS 32] 

the feeding device. The défendants hâve endeavored to évade the merits of 
the invention by Introducing into their machine various altérations and 
changes of form, sucli altérations being described In letters patent to Lawless, 
Nos. 7Ti7,430 and 779,431, an employé of the défendant the American Tobacco 
Company; but I am satisfled that such altérations and changes of form do 
not vary the prlnciple of complainant's combination. The changes and mod- 
ifications made by the patentée In machines of thls type were not obvions, and 
as he was the first to make them, the claims must be given a reasonable 
construction and such range as will préserve to him the fruits of hls discovery. 
The défendants use in their factorles tvfo forms of machines, and it Is 
fairly deducible from the évidence that they embody the combinations in suit. 
Omitting mention of the hopper and rollers for the delivery of the tobacco 
and the smoothing tongue, the so-called Jordan and Anargyros machines em- 
ploy the usual endless tape, which carries the Aller and wrapping paper 
through the Aller devlce and thence to a smoothing device, which presses dl- 
rectly on the Aller. One edge of the wrapper is turned down vyhile the other 
Is pasted. and then also turned down over the other edge. The cigarette rod 
In défendants' machines travels under a so-called "setting channel," and from 
thence under a heated iron rlb, which Is constructed to press dlrectly on the 
moist seam, closing it, and to smooth and dry it. The distinction between the 
heating cap and the Ironlng rlb is that the heating cap is molded to embrace 
the cigarette, and to iron it on ail sides as it raoves in the channel, while the 
Ironlng rib or bar of défendants' structure presses against the wrapper and 
seam as the cigarette rod émerges from the setting channel. Such channel 
Is thought to perform the same function as the groove or guide In the Luding- 
ton heater cap. Both forms operate to heat or dry and smooth the cigarette 
rod. Moreover, there is some merit in the suggestion of Mr. Orane, expert 
for complainant, that the défendants' cigarette rod while in contact with the 
ironlng rib is slightly compressed at the top of the pulley, which is used at 
the Anargyros factory, and which apparently supports the cigarette rod at 
that point. Nor is there anything in the feature of the spring pressure 
contained in défendants' machine to cause the court to believe that the es- 
sential éléments of complainant's invention bas been departed from. Thls 
was also an altération of form in.lected into the machine to escape, if possible, 
the charge of infringement. Such changes and altérations were the équiva- 
lents for the concave smoother, fillers, and heating cap of the complainant's 
machine. The défendants cannot be permitted to avoid infringement by 
leaving out one élément of the combination and substituting another, which 
Bubstantially assists to attaln the précise results of the claims in suit. There 
Is, of course, no restriction on their using the old éléments of the Ludington 
combination, but to use such éléments in combination with those that are 
new renders them liable for appropriation. In view of the scope to which I 
think the claims in controversy are entitled, it is unnecessary to discuss them 
with more particularity, or to point out at greater length the infringing dé- 
tails of défendants' machines. 

The Process Patent. 

It will be sufficient to set forth claim 3 of patent No. 711,987, which de- 
Bcribes and spécifies the steps of the process. It reads: "(3) The process of 
making and flnishing a continuons cigarette rod, which consists in forming a 
contiQuous Aller, seeuring a wrapper thereon with a pasted seam, contlnuously 
propelling the cigarette rod thus formed, and simultaneously applying heat 
and a smoothing pressure to the seam upon the moving cigarette, to dry and 
smooth the same." Claims 1 and 2 are substantially the same as clalm 3, 
eave that in the first it is stated that the pressing iron is to permanently set 
the cigarette rod, and in the second to permanently set the eontinuous fil 1er 
and wrapper into desired shape. Claims 4 and 5 include the additional fea- 
ture of gradually increasing the pressure on the cigarette rod. It is shown 
that the increasing pressure comes from the expansion of the cigarette rod 
ftfter the wrapping paper has been pasted, and as the filler moves under the 
tapered heating cap, where it contacts with the heated surface. The essence 
of the invention consists of the required steps to propel the cigarette rod con- 
liiniously, and to simultaneously smooth, press, and set the seam by the heat- 
188 P.— 21 



322 188 FEDERAL REPORTER 

ing and pressing Instrumentallties. By following the process the seam of the 
cigarette rod becomes permanent and without wrlnkles therein. This was 
the accomplishment of a new and useful resuit. The law is well settled that, 
even though the éléments of the process elaim were not new, if the combiua- 
tlon was new, and a new and useful resuit was produeed, the patentée Is en- 
titled to the protection of his process. Coehrane v. Deener, 94 U. S. 780, 24 
L. Ed. 139. Bxpanded Métal Co. v. Bradforci, 214 U. S. 366, 29 Sup. Ct. 652, 
53 L. Ed. 1034. It will be understood from what has heretofore been said in 
connection with the appliance patent that in complainant's preferred method 
a heating channel surrounds the cigarette, whlle the défendants use a heated 
rib or bar, which, in my judgment, is the équivalent of complainant's heating 
cap for drying and smoothing the moist seam. The claims are entitled to a 
construction of sufflcient scope as to Include as an essential step in the pro- 
cess the spécifie means adapted to simultaneously Iron and press the seam. 
The patents to Denny and to White, upon whleh défendants lay stress to 
anticipate or limlt the claims, relate to devices in a différent art from that 
under considération; but, even wlth such structures before hlm, I thinb the 
patentée made a step forward, and solved the problem of simultaneously 
heating and pressing a damp seam on the cigarette rod, as a resuit of which 
the appearance of the cigarette was imgroved and the seam securely sealed. 
While in the light of the Ludlngton dlsclosures the skilled mechanic mlght 
now be able to modify and malie changes in the prier art to successfuUy malse 
oval cigarettes and permanently set the seam, yet at thls stage of the art 
it cannot be claimed that the invention is devoid of patentable invention, for 
the prier patents are only entitled to considération for what they actually 
made known to the public. Badische Anilin & Soda Fabrik v. Kalle & Oo. 
104 Fed. 802, 44 C. O. A. 201. In vlew of the construction hereln given the 
claims, no question of infrlngement arises. 

In my judgment Ludlngton made a substantial mechanlcal Improvement in 
the continuons cigarette making art, and, his patent for achieving the resuit 
being valid, it follows that the complainant Is entitled to a deeree, with eostp, 
as prayed for In the bill. 

Appeal from a deeree of the Circuit Court, Southern District of New York, 
In favor of the complainant In a suit to restrain the alleged infrlngement of 
two patents. The flrst patent (the machine patent) is No. 711,986, and was 
grauted on October 28, 1902, to Frank J. Ludlngton, assigner of the complain- 
ant, for an improvement in Cigarette formlng, wrapping, and ironing appll- 
anees. The second patent (the process patent) is No. 711,987, and was granted 
upon the same day to the same inventer for an improvement in the process 
of making cigarettes from contlnuous cigarette rods. Claims 1, 2, 3, 12, 13, 
18, 39, 2]. and 22 of the machine patent (No. 711,986) were in suit, and were 
heia by the Circuit Court to be valid and InCringed. Ail of the claims of the 
process patent (No. 711,987) were in issue, and were likewise held valid 
and infringed. Clalm 1 is the broadest claim in the machine patent. Ail the 
other claims contain éléments not to be found In that claim. In respect of 
the défendants' process, claim 3 Is the broadest claim in the process patent. 
Olaims 4 and 5 of that patent require an additional step, and claims 1 and 2 
speclfy a différent purpose. 

J. Q. Rice, for appellants. 
D. W. Brown, for appellee. 

Before LACOMBE, WARD, and NOYES, Circuit Judges. 

PER CURIAM. The opinion of Judge Hazel is especially directed 
toward the validity and infringement of the broadest claims of the 
two patents, viz., claim 1 of the machine patent and claim 3 of the 
process patent, and, upon that opinion we affirm the deeree appealed 
from so far as it relates to such claims. Upon careful considération, 
however, we are not entirely satisfied that the défendants infringe 
the other claims in issue, and consequently the scope of the deeree 
must be curtailed. 



STANDARD MACH. CO. V. EAMBO & KEGAB 323 

The decree of the Circuit Court is modified by limiting its applica- 
tion to claim 1 of patent No. 711,986 and to daim 3 of patent No. 
711,987, and as so modified is affirmed, with costs. 



STANDARD MACH. CO. v. RAMBO & REGAE, Inc. 

(Circuit Court of Appeals, Tliird Circuit. June 27, 1911.) 

No. 47 (1,427). 

1. Patents (§ 328*) — Infeinqement— Cieculab Knitting Machine. 

The Houseman patent, No. 774,473, for a circular knitting machine, 
claim 22, conceding its validity because of the peculiar construction of 
the cam-roller, is limited to sueh construction. As so limited, held not 
infringed. 

2. Patents (§ 328*) — Infeingement— Cieculak Knitting Machine. 

The Wilcomb patent. No. 645,676, for a circular knitting machine, 
claims 4 and 8, conceding their validity, are limited by the prior art to 
a construction in whlch the thread-engaging device is substantially of 
the form descrlbed. As so limited, hreld not infringed. 

Appeal from the Circuit Court of the United States for the Eastern 
District of Pennsylvania. 

Suit in equity by the Standard Machine Company against Rambo & 
Regar, Incorporated. Decree (181 Fed. 157) for défendant, and com- 
plainant appeals. Aiïirmed. 

Frank S. Busser and George J. Harding, for appellant. 
Wilmarth H. Thurston, for appellee. 

Before GRAY and LANNING, Circuit Judges, and McPHER- 
SON, District Judge, 

LANNING, Circuit Judge. This appeal brings before us the de- 
cree of the Circuit Court dismissing the bill of the Standard Machine 
Company, the complainant below and the appellant hère. The de- 
cree is silent as to the cause of the dismissal, but by the opinion on 
which it was entered (see [C. C] 181 Fed. 158) we learn that the 
Circuit Court considered claims 4 and 8 of the Frank Wilcomb patent 
No. 645,676, of March 20, 1900, and claim 22 of the Harry A. House- 
man patent, No. 774,473, of November 8, 1904, which are the only 
claims involved in this suit invalid. Each of the patents is declared to 
be for improvements in circular knitting machines. 

[1] The opinion of the Circuit Court was to the effect that the 
prior art disclosed especially by Coburn, No. 395,314, of January 31, 
1889, Stewart, No. 529,508 of November 20, 1894, Hemphill, No. 629,- 
503, of July 25, 1899, and Jones, No. 284,860, dating back as far as 
1883, limited the patentable invention of Houseman within narrower 
compass than that set forth in claim 22 of his patent. Comparing 
claim 22 with the prior art and with claim 23 of the patent, the 
conclusion was reached that the latter claim, which is narrower than 
claim 22, afïords complète protection for the only invention disclosed 

•For other c&>:es see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



324 188 FEDERAL REPORTES 

by either of those daims. Accordingly, it was decided tliat claim 22 
is invalid. The nature of the two claims and the différence between 
them is shown by the following quotation, where by omitting the por- 
tion within the brackets we bave claim 22 and by including what is 
within the brackets we bave claim 23 : 

"In a circular knitting machine, in combination, a needle-cylinder, sup- 
ported so as to be vertically movable, a relier having a portion thereof eut 
away, a pièce inserted therein eccentric with the reiuainder of the roller and 
adjustable thereon [in a Une at right angles to a Une from the juncture of 
the inserted pièce and main portion of the roUer at the periphery of the 
center], means to rotate said roller and connection between said roller and 
the needle-cylinder support." 

We do not find it necessary to déclare that claim 22 is invalid. It 
may be that it possesses substantial merits not found either in the 
prior art or in claim 23. Whatever may be the correct conclusion on 
that point, we are satisfied that, even if valid, the prior art does com- 
pel so narrow a construction of claim 22 that there is no inf ringement 
by the défendant. The prior art discloses combinations in which there 
are vertically movable needle-cylinders, rotary cam-rollers, and con- 
nections between the cam-rollers and the supports of the needle-cylin- 
ders. The prior patents above mentioned show such combinations. 
But the prior art does not show a cam-roller with a portion thereof eut 
away and a pièce inserted therein eccentric with the remainder of the 
roller and adjustable thereon. The greater portion of the periphery 
of the cam-roller of claim 22 is concentric with its axis. It is the in- 
serted pièce that makes the remaining part of the periphery eccentric. 
The concentric portion of the periphery secures uniformity in the 
length of the stitches and in the diameter of a stocking leg. The ec- 
centric portion secures a graduai lengthening of the stitches and a 
graduai increase in the diameter of a stocking leg from the ankle to 
the calf of the leg. For the purposes of this case, we may assume that 
claim 22 is valid because its combined concentric and eccentric f eatures 
are secured by cutting away a portion of the face of the cam-roller 
and inserting in the recess thus created an adjustable pièce having a 
surface eccentric to the circular periphery of the roller itself. If the 
claim is valid at ail, it is so because of the peculiar construction above 
mentioned. When so limited, the défendant does not infringe, for the 
combination it uses does not contain a cam-roller "having a portion 
thereof eut away" and "a pièce inserted therein eccentric with the 
remainder of the roller and adjustable thereon." 

[2] Claims 4 and 8 of the Wilcomb patent are as follows: 

"4. In combination with a circular knitting machine having multiple feed 
devices, a thread-engaging device inside the needle row to guide and hold 
the inactive floating threads extencling from the fabric to the feed ont of en- 
gagement with the needles and adapted to release the thread when it is 
introdueed to the needles again, substantially as described." 

"8. In a circular knitting machine, in combination, a plurality of thread- 
carriers, and means to move one or more of said thread-carriers in and out 
of operative position, and a deviee within the needle-cylinder adapted to 
catch and retaln the thread to the carrier out of operative position." 

The Circuit Court concluded that thèse claims, too, are anticipated 
in the prior art, and that, for that reason, they are invalid. Apple- 



STANDARD MACH. CO. V. KAMBO & KEGAB 325 

ton's patent, No. 425,362 of April 8, 1890, is mentioned in the opin- 
ion as an anticipatory patent. There are clear différences between 
the improvement describcd in Wilcomb's patent and that described 
in Appleton or in any of the other patents of the prior art to which 
Dur attention has been drawn. But the question is, Do the différences 
disclose such an advance in the art by Wilcomb that claims 4 and 8 
should give to the complainant, the présent owner of the patent, a 
property right in anytliing that the défendant is making or using? 
While the pohcy of our law is to encourage inventions, we should in 
this âge of rapid and marvelous improvements in mechanical appli- 
ances, when dealing with patents, be careful to distinguish between 
those improvements which do and those which do not involve real in- 
ventive genius. The mechanical art should not be burdened with pat- 
ents for those improvements which involve only the skill of the me- 
chanic. 

The opinion of the Circuit Court contains quotations from the spéc- 
ification of the Wilcomb patent showing its object, its construction, 
and its method of opération. We shall not repeat those quotations 
hère. Taken with the claims, they make it clear that Wilcomb's con- 
ception is embodied in the thread-engaging device of claims 4 and 8. 
As to claim 8, we agrée with the defendant's expert, Mr. Livermore, 
that it may be as well read upon the British patent of August 12, 1874, 
No. 2,774, granted to Thomas James Smith, as upon the construction 
shown and described in the Wilcomb patent. 

The élément of the combination of claim 4 described as "a thread- 
engaging device inside the needle row to guide and hold the inactive 
floating threads extending from the fabric to the feed out of engage- 
ment with the needles," and the élément of the combination of claim 
8 described as "a device within the needle-cylinder adapted to catch 
and retain the thread to the carrier out of operative position," are the 
same. Claim 4 mentions a function of this device not mentioned in 
claim 8, saying that, besides holding the inactive threads out of en- 
gagement with the needles, it is "adapted to release the thread when 
it is introduced to the needles again." We understand that none of 
the thread-engaging devices of the prior art possesses this latter func- 
tional capacity. But, whatever may be the value of the combinations 
described in thèse two claims, and assuming their validity, we think 
that hère, too, the prior art has such a limiting effect that the de- 
fendant's device is not covered by them. The combination in a cir- 
cular knitting machine of multiple feed devices, or a plurality 'of 
thread carriers, with a thread-engaging device inside the needle row 
or needle-cylinder, was not new with Wilcomb. To sustain his claims 
4 and 8, it is necessary to lirait them in construction to a combina- 
tion in which the thread-engaging device is substantially of the form 
described in his patent. When so limited, the défendant does not in- 
fringe. 

We do not deem it necessary to discuss in détail the patents of ttie 
prior art. They hâve been carefully considered, and we are satished 
that they compel such a restricted construction of each of the patents 
in suit that it is impossible to hold the défendant an infringer. We 



326 188 FBDHRAL KEPOETEE 

therefore affirm the decree of the Circuit Court, not because the claims 
are invalid, for on that question we express no opinion, but because the 
défendant does not infringe. 
The decree is afRrmed, with costs. 



VICTOR TALKING MACH. CO. et al. v. HOSCHKE et al. 

(Circuit Court of Appeals, Second Circuit. May 26, 1911.) 

No. 257. 

1. Appeal and Ebbob (§ 1145*) — Scope of Décision— Affirmance Withotjt 

Opinion— "On the Opinion Below"— "Affikmed." 

Where a Circuit Court of Appeals affirms a declslen "on the opinion 
below," It approves the reasonlng, adopts the findings, and concnrs in 
the conclusions of the court below; but, where the décision below is 
merely "afflrmed," such approval and concurrence are not to be Inferred, 
but, on the contrary, It Is to be understood that for some reason the ap- 
pellate court prefers not to adopt the opinion below. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4444- 
4657; Dec. Dig. § 1145.» 

For other définitions, see Words and Phrases, vol. 1, pp. 247, 248.] 

2. Patents (§ 328*) — TErm— Ijmitation to Tebm or Pbiob Fobeiqn Patent— 

IDENTITY op Invention— Gbamophone. 

The Suess Canadian patent. No. 41,901, for a talking machine, is not 
for the same Invention as that covered by the United States patent to 
Berllner, No. 534,543, claims 5 and 35, and the llfe of the Berliner patent 
Is not dépendent on the term of the Suess patent. 

Appeal from the Circuit Court of the United States for the Southern 
District of New York. 

Suit in equity by the Victor Talking Machine Company and another 
against WilHam H. Hoschke and the Sonora Phonograph Company. 
Decree for défendants (188 Fed. 330), and complainants appeal. Re- 
versed. 

This cause cornes hère upon appeal from a decree of the Circuit 
Court dismissing the bill in a suit for infringement of United States 
patent No. 534,543, issued February 19, 1895, to Emil Berliner, for a 
gramophone. 

Horace Pettit, for appellants. 

Waldo G. Morse (Frank Cochrane and Emery, Booth, Janney & 
V^rney, of counsel), for appellees. 

Before LACOMBE, WARD, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge. The patent in question is the well- 
known Berliner patent, which has been frequentîy before the courts. 
Its two claims. Nos. 5 and 35, are basic, and hâve been held vaHd by 
the Suprême Court. Leeds & Catlin v. Victor Talking Machine Com- 
pany, 213 U. S. 301, 29 Sup. Ct. 495, 53 L. Ed. 805; Talk-0-Phone 
Company v. Same, 213 U. S. 325, 29 Sup. Ct. 503, 53 L. Ed. 816. 

The single défense in this suit is that the Berliner patent expired 

*For other cases see s&me toplc h i numbeb In Dec. & Âm. Digs. 1907 to date, &. Rep'r Indexes 



VICTOR TALKING MACH. CO. V. HOSCHKB 327 

with the expiration of the original term of a Canadian patent granted 
to Werner Suess, assignor to Emil Berliner, the term of which Cana- 
dian patent expired on February 11, 1911. The normal life of the 
Berliner patent, if not curtailed by the expiration of some foreign pat- 
ent, would extend until February 19, 1912. Suess was an employé 
of Berliner at the time the patents were taken out. 
The two claims of Berliner read as follows : 

"5. The method of reproducing Sound from a record of the same which 
consista in vlljrating a stylus and propelling the same along the record by 
and in accordance with the said record, substantially as descrlbed." 

"35. In a sound reproducing apparatus conslsting of a traveling tablet hav- 
Ing a Sound record formed thereon and a reproducing stylus shaped for en- 
gagement with said record and free to be vibrated and propelled by the same, 
substantially as descrlbed." 

The three claims of the Suess Canadian patent to which défendants 
ref er as indicating identity of invention are as follows : 

"5. In an apparatus for reproducing sounds from a record tablet, the eom- 
bination with a reproducer mechanlsm conslsting of a sound conveying tube 
and a dlaphragm and stylus mounted at one end of the tube, of a freely 
swinging supporting frame for the said reproducer mechanlsm, substantially 
as descrlbed." 

"7. In an apparatus for reproducing sounds from a record tablet, the com- 
bination with a reproducer mechanlsm conslsting of a sound conveyer, and 
a dlaphragm and stylus mounted at one end tbereof, of a supporting frame 
for the said reproducer, loosely plvoted to swing freely both laterally and 
vertically, substantially as descrlbed." 

"11. In an apparatus for reproducing sounds from a rotating record tablet, 
a reproducing stylus mounted to hâve a free movement over the surface of 
the record tablet, substantially as descrlbed." 

The following review of the history of litigation in this circuit on 
the Berliner patent is essential to an understanding of the questions 
now presented: 

In September, 1905, the validity of thèse two claims was sustained 
by Judge Hazel and infringement found in Victor Talking Machine 
Company v. American Graphophone Co. (C. C.) 140 Fed. 860. That 
décision was affirmed by this court for reasons stated in April, 1906. 
145 Fed. 350, 76 C. C. A. 180. In the same month, April, 1906, and 
in a suit against other défendants, application was made to Judge 
Townsend upon affidavits for a preliminary injunction against alleged 
infringement of thèse same claims. In opposition to that application 
it was contended that the Suess Canadian patent covered the invention 
claimed by Berliner; that by reason of a failure to pay certain fées 
on the Canadian patent its normal term was shortened, and it expired 
February 11, 1899; and that the Berliner United States patent expired 
on the same day, seven years before the application for the injunction. 
Victor Talking Machine Company v. Leeds & Catlin (C. C.) 146 Fed. 
534. Judge Townsend, after disposing of several other questions 
which arose in the case, held that the Canadian patent described and 
claimed the broad generic invention of Berliner, covered by his United 
States patent, and further held that the latter patent was not limited 
by any lapse of the Canadian patent occurring prior to the expiration 
of the original term of such Canadian patent. He granted a prelim- 
inary injunction. 



328 188 PBDHEAIi EBPORTEB 

Appeal was taken f rom Judge Townsend's order to this court, which, 
without writing any opinion, affirmed such order in open court. 148 
Fed. 1022, 79 C. C. A. 536. A certiorari to review this décision was 
issued by the Suprême Court, and the decree was affirmed (213 U. S. 
301, 325, 29 Sup. Ct. 495, 503, 53 L. Ed. 805, 816) ;_ the court holding 
that the duration of a United States patent is not limited by any lapsing 
or forfeiture of any portion of the term of a foreign patent for the 
same invention by means of the opération of a condition subséquent. 
In a suit brought against the Sonora Phonograph Company a decree 
for injunction during the lifetime of the Beriiner patent was entered 
December 15, 1910. An application was subsequently (February, 
1911) made to Judge Hough to limrt said injunction, so as not to ex- 
tend beyond February U, 1911, upon the ground that the full term of 
the Canadian patent expired on that day. He held that the identity 
of the two patents was already determined in prior litigations, aiul 
modified the decree as prayed. Victor Talking Machine Company v. 
Sonora Company, 188 Fed. 330. 

The case at bar came on for hearing before Judge Hazel; much 
testimony having been taken as to the issuance of the two patents and 
bearing upon the construction hereof. Judge Hazel concurred in 
Judge Hough's opinion and entered a decree dismissing the bill March 
1, 1911. It is from such decree that the pending appeal is taken. It 
is argued hère that the only question in the case has been disposed of 
by former décisions and that the decree of dismissal should be affirmed. 

We find no constraining décision. Judge Townsend, at circuit, had 
before him some affidavits and documents, and the question was pre- 
sented to him whether or not the inventions were identical. He neecl 
not hâve answered it; but he chose to do so, and made findings and 
expressed a conclusion thereon. When the same question subsequently 
comes before another judge at circuit on substantially the same évi- 
dence, if is to be expected that he will follow Judge Townsend's find- 
ings and conclusion. But, if the évidence is materially différent, so 
that he feels convinced that upon the new record Judge Townsend 
would hâve decided differently, we do not understand that he is so 
constrained. 

[1] As to this court, when an order is "affirmed on the opinion of 
the court below," it approves the reasoning, adopts the findings, and 
concurs in the conclusions of the court below. When, itself writing 
nothing, making no record of its findings as a court of appeals, it 
merely announces, "Order affirmed," it is to be understood that for 
some reason it prefers not to adopt the opinion of the court below, 
either that it has reached the conclusion by a totally différent process 
of reasoning, or that, while in the main approving the opinion, therc 
is something in it which the appellate court does not wish to approve. 

In the case at bar ail that this court has donc has been to affirm 
Judge Townsend's conclusion that by reason of the nonpayment of 
dues on the Suess Canadian patent, the United States Beriiner did 
not expire 12 years ago ; and that décision, on the record then present- 
ed, did not necessarily involve a finding as to the identity of the 



VICTOR TAIiKING MACH. CO. T. HOSCHKB 329 

inventions claîmed in the two patents. The syllogism submîtted to 
Judge Townsend was : 

Major premise : When an invention which is protected by a United 
States patent bas also been protected by a Canadian patent, and be- 
fore the expiration of its normal term the Canadian patent lapses be- 
cause of nonpayment «jf dues, the United States patent will expire 
at the same time. 

Minor premise: The invention protected by the Berliner United 
States patent was also protected by the Suess Canadian patent. 

This court and the Suprême Court both held that the major premise 
was unsound, and therefore inquired no further. 

[2] The question whether or not the two patents cover the same 
invention has been argued by both sides at great length. It is much 
simplified if we bear in mind the object of the statute, which was to 
provide that when an inventer had secured a monopoly in a foreign 
country by taking out a patent therein, in addition to the monopoly 
he had secured hère, and the monopoly abroad terminated by expira- 
tion of the patent there, the people of this country should also be free 
to make and sell the patented invention. It is apparent that the real 
question to be considered is, not what information is given to the world 
by spécifications, but what is the invention which the claims protect 
and of which they secure the monopoly. In other words, what is the 
correct construction of the claims of the two patents; the language 
in which they are expressed not being identical. Claims 5 and 35 of 
the Berliner United States patent hâve been repeatedly construed by 
the courts in this country and found to cover a broad, basic invention. 
The three claims of the Suess Canadian patent bave not been con- 
strued by the courts of that country, so we do not know authoritatively 
what invention it was which those claims secured to the patentée in 
Canada. But the Suess application expressly states that bis invention 
has référence only "to improvements in the reproducing apparatus 
adapted for use in the method of recording and reproducing sounds 
heretofore invented and published by Emil Berliner." 

Subsequently to its issue the Canadian Patent Office granted a pat- 
ent to Berliner himself undoubtedly covering his broad invention and 
containing the very claims 5 and 35 of his United States patent. In 
view of thèse circumstances, we bave no doubt that if, at any time 
during its lifetime, the Suess patent had corne before the Canadian 
courts to be construed, it would bave been found not to protect the 
broad invention of Berliner, but only the spécifie and detailed form of 
improvement which Suess contributed to the art. This being so, it is 
immaterial whether or not, in the spécifications of the Canadian patent, 
there is contained sufficient information to indicate what the broad 
invention was. We are satisfied that the inventions covered by the 
claims of the two patents are not identical, and that the life of the 
Berliner United States patent is not dépendent on the term of the 
Suess Canadian patent. 

The decree is reversed, with costs, and cause remanded, with in- 
structions to decree in conformity with the views expressed in this 
opinion. 



330 188 FEDERAL REPORTER 

VICTOR TALKING MACH. 00. et al. v. SONORA PHONOGRAPH CO. 
(Circuit Court, S. D. New York. February 25, 1911.) 

Patents (§ 327*) — Patent Suiïs— Éffect of Prior Décisions. 

Where a Circuit Court on pleadings propcrly raising tlie issue bas de- 
termined tliat the invention of a United States patent and of a prior 
foreisn patent were identieal, and tliat the United States patent would 
therefore expire by force of Eev. St. § 4887 (U. S. Comp. St. 1901, p. 
3382), with tbe term of tlie foreign patent, altliougti sueh détermination 
was not essential to tlie décision of ttie matter before it, and sucli déci- 
sion bas been afflrmed by tlie Circuit Court of Appeals, It will be foUowed 
by another Circuit Court In tbe same circuit. 

[Ed. Note. — For otber cases, see Patents, Cent. Dig. §§ 620-625; Dec. 
Dig. § 327.*] 

In Equity. Suit by the Victor Talking Machine Company and an- 
other against the Sonora Phonograph Company. On motion to mod- 
ify injunction. Motion granted. 

Upon a final hearing in this cause decree was entered the 15tb day of De- 
cember, 1910, 183 Fed. 849. The suit Is upon Berliner patent. No. 534,543, 
which by its terms expires on tbe 19th of February, 1912. Tbe injunction 
aforesaid being in force, a motion Is made to limlt or modify tbe same upon 
the grôund that it appears from the records of this court that tbe invention 
of tbe patent In suit has been adjudicated to be tbe same as that secured in 
the Dominion of Canada by letters patent No. 41,901, issued to the same Ber- 
liner (as assignée of Suess) on February 11, 1893, and therefore explring un- 
der Canadlan law on February 11, 1911. Motion heard upon the entlre rec- 
ord hereln, upon affldavits and exhlbits flled for the motion, and référence 
was also had to tbe original records of the various causes resulting in dé- 
cisions hereinaf ter referred to. 

Horace Pettit, for complainant. 

Waldo G. Morse, for défendant. 

Emery, Booth, Janney & Varney, amici curiae. 

HOUGH, District Judge (after stating the facts as above). The 
only contention of défendant needing considération is that, so far as 
the claims of the BerUner patent hère relied npon are concerned 
(Nos. 5 and 35), it is in the courts of this circuit, if not in ail the 
courts of the United States, res adjudicata that the patent in suit 
expires by force of section 4887, Rev. Stat. (U. S. Comp. St. 1901, p. 
3382), with the Suess Canadian patent above mentioned. 

The inquiry whether the matter is res adjudicata will be made with- 
out any expression of opinion on my part as to the merits of the 
question as originally presented in previous litigations. 

The point has been stated in the language of counsel, though it is 
certainly true that, even if defendant's contention be correct, the 
status of the Berliner patent in respect to the Suess patent is not and 
cannot be res adjudicata in the sensé in which that phrase is often used 
(as by Lamar, J., in Lyon v. Perin Mfg. Co., 125 U. S. 700, 8 Sup. Ct. 
1024, 31 L. Ed. 839), because the person and parties in and to this 
action are not identieal with those of the litigations on which défend- 
ant relies. 

Yet the rule invoked is stronger than that of stare decisis, for, 
"where questions affect titles (to land), it is of great importance to 

•For other cases see same toplc & % numbee In Dec. & Am. DIgs. 1907 to date, & Rep'r Indexes 



VICTOB TALKING MACH. CO. V. SONOKA PHONOGRAPH CO. 331 

the public that, when they are once decided, they shbuld no longer 
be considered open— such décisions become rules oî property and 
many titles may be injuriously affected by their change." Minnesota 
Co. V. National Co., 3' Wall. 334 (18 L. Ed. 42). The duration of a 
patent being the lirait set to a lawful monopoiy, certainty concerning 
it is quite as important as the title to land, and is indeed a species of 
title, for that which the patentée has not shown a clear right to is 
theproperty of the public. 

The real proposition of défendant is that, since "a judgment is con- 
clusive upon a matter legitimately within the issue and necessarily 
involved in the décision" (McCall v. Carpenter, '18 How. at 302, 15 h. 
Ed. 389), it has been settled and solemnly decreed in an action brought 
by thi? complainant against another défendant that the patent right 
which was the basis of the former suit and is the basis of tliis termi- 
nated on February 11, 1911, and that this resuit was declared in a 
litigation wherein the issue was presented by the pleadings, and was 
in the opinion of the courts of this circuit necessary to the judgment 
then made and still in full force and effect. 

If thèse assertions be true, the question is not an open one in this 
court. Florida Central R. R. Co. v. Schutte, 103 U. S. 118, 26 L. Ed. 
327; Union Pacific R. R. Co. v. Mason City & Ft. Dodge R. R. Co., 
199 U. S. 160, 26 Sup. Ct. 19, 50 L. Ed. 134. 

The Berliner patent was first adjudicated and the rights of thèse 
complainants therein first declared in Victor Talking Mach. Co. v. 
American Graphophone Co. (C. C.) 140 Fed. 860, and the decree 
there directed was affirmed in 145 Fed. 350, 76 C. C. A. 180. The 
Appellate Court said that they did not "find it necessary to add any- 
thing to the 'careful and exhaustive discussion of the issues" made 
by the court below, with one exception. That exception bears no rela- 
tion to this controversy, so that in efïect the opinion of the trial court 
became that of the higher court. 

An examination of the record shows that the Suess Canadian patent 
was not pleaded nor was any allusion to it made in that cause. The 
défendants, however, did plead the Suess American patent 427,279, 
and introduced the same in évidence, and of this patent Hazel, J., said 
that the spécification thereof stated that : 

"The invention related to Improvements in the reproducing apparatus of 
Berliner and that the construction and mounting of the stylus formed no 
part of the invention." 

Wherefore it was held that "the improvement of Suess is not an- 
ticipation." 

This finding being based on appropriate pleadings and évidence, and 
having been adopted by the Circuit Court of Appeals, amounts to a 
decree of that court that the Suess American patent was not for the 
same invention as that contained in the Berliner patent. ' 

If the two Suess patents (Canadian and American) be compared, 
it is so obvions as to need no discussion that the spécifications and' 
diagrams reveal the same invention. The diagrams are identical and 
the spécifications identical in every material point. When the claims, 
however, of the two patents are compared, they are quite diflEerent. 



332 188 FEDERAL REPORTER 

Those of the American patent are appropriate to tlie invention that 
Suess had in mind, namely, a particular forni of swinging arm ; but 
the claims of the Canadian patent, and especially daims 5, 7, and 11, 
are much broader, and undoubtedly raise the questions whether (1) 
they are or are not the équivalents of the claims of Berliner as stated 
in the patent in suit and supported by the décisions above referred to, 
and (2) whether the claims so stated (if construed as équivalent to 
Berliner's claims 5 and 35 or either of them) are supported by the 
révélations of the spécification and diagrams. 

This question was squarely raised in the next case brought on 
the Berliner patent and heard on motion for preliminary injunction by 
Townsend, J., in Victor Talking Mach. Co. v. Talk-o-phone Co. (C. C.) 
146 Fed. 534. An examination of the record therein shows that the 
Suess Canadian patent was distinctly pleaded, not only as a référence, 
but specifically as a bar under section 4887, Rev. Stat., on the ground 
that it had been granted on February 11, 1893, for a term of six years 
only and had therefore expired before answer filed. Two questions 
relating to this Canadian patent were therefore presented, and neces- 
sarily presented for the décision of the court in that case: (1) Did 
the Canadian patent cover the identical invention of BerHner? (2) 
Had the Canadian patent expired with the end of the six-year term? 
Obviously both thèse inquiries had to be answered in the affirmative 
in order to benefit défendants — a négative answer to either was enough 
for the complainants. 

I see nothing in the pleadings or the logic of the matter compelling 
the court to answer one question before the other, or preventing it 
from considering both. Both were in issue, and both presented jus- 
ticiable matter. Townsend, J., chose to answer both, and definitely 
found, as he had a right to, that "the Canadian patent in terms de- 
scribes and claims the broad generic invention of Berliner covered 
by the claims hère in suit (5 and 35)," and added that "if this (Cana- 
dian) patent expired as claimed in 1899 the patent in suit expired at 
the same time." 

Having thus answered the first query, he was bound to respond to 
the second, and that he answered in the négative, finding that the 
life of the Canadian patent for purposes of section 4887 was the 
18-year period which the défendants in this case rely upon. 

An appeal having been taken, the défendants assigned for error so 
much of the holding of the court below as was against them, saying 
that the court erred "in not holding (that this patent) expired February 
11, 1899, with the expiration of the term of six years for which the 
prior Canadian patent No. 41,901 of February 11, 1893, was granted." 
Record, p. 536. 

In the higher court this matter was elaborately considered by coun- 
sel (page 130 et seq. of brief contained in record of Circuit Court of 
Appeals), and it was specifically urged that: 

"This Canadian patent was not intended for any broader invention than the 
Suess (American) patent, and did not describe any broader Invention than 
that patent." ' 



VICTOR TALKING MACH. CO. V. SONORA PHOXOGKAPH CO. 333 

The language of the earlier case as to the Suess American patent 
was quoted, and the point urged that: 

"Townsend, J., in the court below was rlght in granting tbe preliminary 
Injunctlon, though he was apparently mlstaken in his conclusion whore lie 
stated tliat the Canadian patent in terms describes and claims tbe broad 
generic invention of Berliner covered by the claims hère in suit." Id., pp. 
134, 135. 

On such a record and such arguments the décision of Townsend, J., 
was affirmed in open court (Victor Talking Mach. Co. v. Leeds & 
Catlin Co., 148 Fed. 1022, 79 C. C. A. 536), and, when brought up on 
certiorari to the Suprême Court, again affirmed in 213 U. S. 301, 29 
Sup. et. 495, 53 L. Ed. 805. 

I think it apparent from the foregoing résumé that the only prop- 
osition left for argument on defendant's part is that Townsend, J., 
erred in holding on a point plainly pleaded that the Canadian patent 
covered the same invention as the patent in suit; and complainants' 
counsel with his usual frankness has admitted as much. But, if such 
error was committed, both appellate tribunals also erred in failing to 
correct a wrong finding on an issuable fact. It is, of course, possible 
(and complainant has donc it) to point out that the Circuit Court need 
not hâve answered the query as to identity of invention, and the déci- 
sions on appeal do not specifically approve the finding so made. This 
species of hair splitting may be left to appellate tribunals which find 
themselves embarrassed by their own décisions. This court can only 
follow the apparent effect of préviens authoritative rulings. 

It is not overlooked that complainant has introduced on this mo- 
tion considérable testimony tending to show that in the opinion of ex- 
perts, and of Messrs. Berliner and Suess, the Canadian Suess patent 
is for the same invention as that described in the Suess American pat- 
ent; and it is claimed that had Townsend, J., had before him what is 
now before the court he would not hâve held as he did. But his dé- 
cision was that, admitting similarity in spécifications and drawings, the 
claims being différent, the broader claims were justified by the anté- 
cédent description. 

Perhaps this was wrong, but, if so, it was error not arising from 
lack of évidence, or misleading évidence, but from an erroneous infer- 
ence drawn from a comparison of two documents both in évidence be- 
fore him and before me. The documents hâve not changed, and no 
amount of évidence can change their language or the meaning thereof. 

It is five years since Judge Townsend's décision, it has become 
widely known, and investments hâve been made on faith of it; in 
short, a better instance could not be found of the importance of not 
lightly disturbing a matter once authoritatively settled. 

The motion is granted, order to be settled in accordance with the 
practice indicated by De Klorez v. Reynolds (C. C.) 8 Fed. 434, and 
Westinghouse v. Carpenter (C. C.) 43 Fed. 894. 

This order was not appealed from; but Victor Talking Machine Co. v. 
Hoschke, infra, shortly came on for final hearing before Hazel, District Judge, 
and, the same noint being involved, the foregoing opinion was followed, and 
Injunction refused. From the decree so entered an appeal was taken by com- 
plainant. 



334 188 FEDERAL REPORTER 

UNION CARBIDE CO. v. AMERICAN CARBOLITE CO. 

(Circuit Court, N. D. Illinois, E. D. March 8, 1911.) 
No. 29,320. 

1. Patents (§ 328*) — Constbuction and Infiîingement— "Ceystalline Cal- 

cium Carbide." 

The Willson patent, No. 541,138, for "crystalline calcium carblde, ex- 
Isting as niasses of aggregate crystils," held, on a motion for prelim- 
Inary injunction, to cover calcium carbide existing as a mass of crystal 
grains, devoid of their characteristic forms and closely packed toarcther, 
termed a "crystalline aggregate," If not crystalline calcium carbide In 
any form, and an injunction granted. 

2. WoBDS and Phrases— "Amoephous." 

Calcium carbide In an "amorpàous" condition is without definite form, 
or uncrystallized. 

In Equity. Suit by the Union Carbide Company against the Amer- 
ican Carbolite Company. On motion for preliminary injunction. Mo- 
tion grànted. 

Offield, Towle & Linthicum and Sears, Meagber & Whitney (James 
F. Meagher and Charles K. Offield, of counsel), for complainant. 

Robert H. Parkinson, for défendant. 

KOHLSAAT, Circuit Judge. This suit was brought to restrain de- 
fendant from infringing product patent No. 541,138, granted to 
Thomas h. Willson on June 18, 1895, for crystalline calcium carbide, 
existing as masses of aggregated crystals. Subsequently, by supple- 
mental bill complainant seeks to restrain infringement of patent No. 
708,921, granted to Roberts on September 9, 1902. The cause is now 
before the court on motion for preliminary injunction upon the bill, 
supplemental bill, and affidavits of complainant and the answers and 
reply affidavits of défendant. The original patent was sustained by 
the United States Circuit Court of Appeals for the Second Circuit 
in Union Carbide Company v. American Carbide Company, 181 Fed. 
104—110, and an accounting ordered. Under the facts hereof and the 
rule of law prevailing in such a case, the adjudication in the second 
circuit must be accepted as final upon the question of validity for the 
purposes of this hearing. Electric Mfg. Co. v. Edison Electric Co., 
61 Fed. 834, 10 C. C. A. 106. The one claim of the patent reads, as 
above stated, viz. : 

"As a new product, crystalline calcium carbide existing as masses of aggre- 
gate crystals, aubstantially as described." 

The court for the second circuit states in its opinion that the prés- 
ence of crystals in defendant's carbide was admitted. Hère its ex- 
istence in defendant's carbolite is denied. Whether or not the two 
products, i. e. that of the second circuit court and this, are identical, 
is a matter of dispute hère. The défenses raised on this motion, so far 
as it is deemed necessary to consider them, may be summarized as 
follows, viz. : (1) That complainant has been guilty of lâches in bring- 
ing suit. (2) The défendant does not infringe the patent when prop- 

•For otler canes see same topic & | numbee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



UNION CARBIDE CO. V. AMERICAN CARBOLITE CO. 235 

erly construed. (3) That the validity of letters patent No. 708,921 has 
never been adjudicated. 

It appears from the record that défendant and its predecessor hâve 
been manufacturing and marketing their article of carbolite for about 
seven years with the full knowledge of complainant; that on about 
June, 1906, complainant brought suit in the Circuit Court of the 
United States for the Northern District of New York against the 
Nichols Gas Company, a gas company located in a small New York 
town, a customer of defendant's predecessor, for infringement of the 
complainant's patent. Defendant's predecessor conducted the défense 
of this suit in order to protect itself. An answer was filed, a large 
amount of évidence was taken at great expense and effort, covering 
the period from June, 1906, to May, 1909, when défendant '— d rested 
its défense and was awaiting the close of rebuttal testimon\ , on which 
latter date complainant dismissed its said suit over defendant's pro- 
test, and thereupon proceeded to press the American Carbide Com- 
pany Case, above cited, the décision in which is relied on as establish- 
ing'the validity of the patent herein. It appears that défendant in 
that case was not in any way connected with this défendant, nor did 
this défendant participate in that défense. Afterwards, défendant 
unsuccessfully solicited complainant to bring a new suit against it, 
offering to enter its appearance in the proper district, admit the manu- 
facture of the alleged infringing product, stipulate the évidence of 
the dismissed suit into the record, and hâve the court settle the whole 
matter on the merits, which offer was rejected. 

From the foregoing facts, it is apparent that complainant must hâve 
discovered the necessity for relief in limine quite recently. 

[1] With regard to the scope of the patent, it appears from the 
file wrapper and contents in évidence that on March 4, 1895, the pat- 
entée herein filed his application in the patent office for the allowance 
of a claim reading : 

"(1) As a new product, crystalUne calcium carbIde, having a bluish irl- 
descence, substantially as described." 

The examiner rejected the claim, citing patent No. 492,377, granted 
February 21, 1893, to the same patentée as in the patent in suit, and 
certain publications described as "Comptes rendus, vol. 119, p. 16, July 
2, 1894," and "Roscoe & Schorlemmer's Treatise on Chemistry, vol. 
III, part II," in the former of which publications calcium carbide is 
referred to as "crystalline." 

Complainant thereupon amended said claim 1 by inserting after the 
Word "carbide" the words, "existing as masses of aggregated crystals," 
and added a second claim, reading identically with the claim in suit. 
Being then advised by the examiner that there was no patentable dif- 
férence between the two, and that he must elect which one he would 
rely upon, he selected claim 2, the présent only claim of the patent 
in suit, whereby the existence of masses of aggregated crystals in the 
product claimed became the essential distinguishing feature of the pat- 
ent in suit. No form of crystalline calcium carbide which does not 
exist as masses of aggregate crystals would come within the claim. 

Whether or not crystalline calcium carbide as a new product, hav- 



33G 188 FEDERAL KEPOKTER 

ing a bluish iridescence, substantially as described in the spécifica- 
tion, is the product of the patent in suit is beside the mark. Undoubt- 
edly, the further language of the claim, viz., "existing as masses of 
dggregated crystals, substantially as described," was added in order 
to satisfy the examiner and avoid the prier art, which the patent says 
was limited to an amorphous product. If it does avoid the prior art, 
it must appear that it contains or exists as masses of aggregated crys- 
tals. It must, défendant insists, be more than mère crystalline cal- 
cmm carbide. That product, it is contended, complainant has aban- 
doned to the public. It can hardly be urged, so far as appears from 
the présent record, that every crystalline calcium carbide of necessity 
exists as masses of aggregated crystals. The objection of the examiner 
did not consist in mère matter of description, but went to the sub- 
stance itself. According to Williams' Eléments of Crystallography, 
p. 16: 

"The union of two or more erystal individuals produces a crystal aggre- 
gate, while a mass of crystal grains, devoid of their charaeteristic forms and 
elosely paeked together, may be termed a 'crystalline aggregate.' " 

In the American Carbide Co. Case, supra, the court says : 

"It Is said that the phrase 'masses of aggregated crystals' has a spécifie 
and limited meaning, 1. e., it means 'crystal aggregate,' which is a union of 
two or more fully developed crystals, as dlstinguished from 'crystalline ag- 
gregate,' which is a mass of crystal grains devoid of their charaeteristic 
forms and elosely paeked together." 

This distinction the court deemed unwarranted in that case, espe- 
cially in view of the spécification, and held that the claim in suit 
"covers crystalline carbide when the crystals are aggregated in masses, 
whether such crystals be perfect or imperfect," and adds, "and, as it 
is admitted that there are crystals in the defendant's carbide, and 
as those crystals are so aggregated, we think that tb° product of the 
défendant infringes," and thereupon reversed the Ciixuit Court. 

As above said, défendant herein dénies that its product exists as a 
mass of aggregated crystals, whether the crystals be described as per- 
fect or imperfect, and contends that there are no crystals in its car- 
bide ; and that "what are termed crj'stalline grains or crystalline cleav- 
age faces are not crystals, and do not respond to the définition of crys- 
tals, whether perfect or imperfect." Thus it will be seen that the 
issues hère involved differ from that stated by the court in the Amer- 
ican Carbide Company's Case, supra. Undoubtedly, the term "masses 
of aggregated crystals," as applied to calcium carbide, would include 
imperfect crystals. But does it cover the mass of crystal grains, de- 
void of their charaeteristic forms and elosely paeked together, termed 
a crystalline aggregate ? Is the term "mass of crystal grains" as above 
qualified comprehended within the language, "masses of aggregated 
crystals?" 

[2] Defendant's expert, Walker, testifies he has produced masses 
of crystals of calcium carbide as dlstinguished from a crystalline 
mass ; that thèse hâve no practical or commercial value, and that their 
formation dépends upon slow cooling of large masses. The spécifi- 
cation was not changed at the time the original daims were amended. 



UNION CAKBIDE CO. T. AMERICAN CAEBOLITE CO. 337 

It calls for a new product, existing in the form of crystalline calcium 
carbide. "Calcium carbide," says Willson (spécification, line 11, p. 1) 
"bas existed in an amorphous condition, due either to the method of 
its préparation or to the impurities contained in it." By "amorphous" 
he meant without definite form, or uncrystallized, having mainly in 
mind the calcium carbide disclosed by Woehler in Liebig's Annalen 
der Chemie und Pharmacie, vol. 124, p. 220, published in 1862. 
Several expert chemists, testifying for défendant, dépose that they hâve 
made calcium carbide according to Woehler's formula, and that the 
resuit bas been a hard compact crystalline mass. If this be so, it 
was not amorphous. Woehler's calcium carbide was, so far as ap- 
pears hère, the resuit of a laboratory experiment, and was never 
brought out as an article of commerce. At the time it was announced, 
there was no adéquate method of producing it so as to make it such, 
quantity, quality, and cost considered. Only by the use of electricity 
has it become at ail available. Indeed, this ally was not enlisted in 
its production until some considérable time after the methods em- 
ployed in its manufacture had become generally known in the ré- 
duction of refractory compounds. Calcium carbide is the basis of 
acétylène gas, an article which is largely in demand for purposes of 
illumination. It is a matter of common knowledge that this industry 
has developed greatly within the last 20 years. It undoubtedly gave 
an impetus to the appropriation of the Woehler disclosure. Owing 
to the use of electricity cheaply attained, it became possible to make 
it purer and in great quantities. As said by the court in the Amer- 
ican Calcium Carbide Company Case : 

"A new article of commerce Is not necessarily a new article patentable as 
such. But patentable novelty in a case like the présent may be founded upon 
superior efficiency ; upon superior durability, including the abillty to retain 
a permanent form when exposed to the atmosphère ; upon a lesser tendency 
to breakage and loss ; upon purlty ; and, in connection with other thlngs, 
upon comparative cheapness. So, as supplementing other considérations, 
commercial success may properly be compared with mère laboratory ex- 
perimeuts." 

In Kuehmsted v. Farbenfabriken of Eberfeld Company, 179 Fed. 
701, 103 C. C. A. 243, it is said: 

"And it makes no différence, so far as patentabllity Is concerned, that the 
medicine thus produced is lifted out of a mass that contained chemically the 
compound ; for, though the différence between Hoffman & Kraut be one of 
purification only, strictly marklng the line, however, where one is therapeutlc- 
ally unavailable, patentabllity would foUow. In the one case the mass is 
made to yield something to the useful arts ; In the other case what Is ylelded 
Is chiefly interesting as a fact In chemical learnlng." 

Therefore, unless complainant's grantor surrendered crystalline 
calcium carbide to the public, the injunction should issue in limine, since 
there is no doubt of defendant's infringement of that article. As 
above noted, there is a wide and irreconcilable divergence between 
the witnesses as to what complainant surrendered, if anything. The 
New York court granted an injunction against the manufacture of 
crystalline calcium carbide. In the judgment of the court upon the 
présent record the complainant's product is nothing more than crys- 
18S F.— 22 



338 188 FEDERAL REPOETBB 

talline calcium carbide. If the course pursued by ît worked a fraud 
upon the examiner, that must be shown beyond doubt. Had Will- 
son stood bis ground and abided by his first claim, there is little 
doubt, as the matter now stands, he would hâve been entitled to its 
allowance. Was he justified in putting some disguises upon it in 
order to overcome the Patent Office objections? I think it quite prob- 
able as the évidence stands that the mass of crystal grains, devoid of 
their characteristic forms and closely packed together, which con- 
stitute a crystaUine aggregate, would come within the language of 
the claim. This opinion may be changed on final hearing. I feel, 
however, that I shall be doing substantial justice in so holding now. 
The preliminary injunction may go as to patent No. 541,138. As to 
the other patent (No. 708,921), it never having been adjudicated, no 
relief is granted. In view, however, of the condition of the record 
and the delay of complainant in commencing suit, as well as in con- 
sidération of the damage which may resuit to défendant should the 
court not sustain the patent or infringement thereof on final hearing, 
the injunctional order will stand suspended upon the deposit by the 
défendant with the clerk of this court as téndered at the hearing of 
the sum of $50,000 until the final disposition of the case, or until the 
further order of the court. 



MOTION PICTURE PATENTS CO. v. YANKEE FILM CO. 

SAMB V. STEINER. 

(Circuit Court, S. D. New York. June 13, 1911.) 

Patents (§ 326*) — Violation op Injunction— Punishment. 

A motion to punlsh défendants for contempt for delay In dellverlng 
caméras, Impounded as Infringements of complalnant's patent, denied. 

[Eld. Note.— For other cases, see Patents, Cent. Dlg. §§ 613-619; Dec. 
Dlg. § 326.»] 

In Equity. Suits by the Motion Picture Patents Company against 
the Yankee Film Company and against William Steiner. On motion 
to punish défendants for contempt. Motion denied. 

See, also, 187 Fed. 1007. 

Philip Farnsworth (J. Edgar Bull, of counsel), for complaint. 
Seward Davis, for défendant. 

LACOMBE, Circuit Judge. Under the récent décision of the Su- 
prême Court in ;the Gompers Case, 221 U. S. 418, 31 Sup. Ct. 492, 

55 L. Ed. , the motion to punish for a contempt in delaying the 

delivery of caméras to be impounded must be denied. But on the 
record as it stands there should be further inquiry. 

The défendants, or some of them, on the motion for injunction, 
undoubtedly gave testimony calculated to give the court the impres- 
sion that, as to two designated caméras, they could not state positively 
what was the internai construction, because such caméras were op- 

*For other cases see aame topic & S numbbb In Dec. & Am. Dlgs. 1907 to date, & Bep'r Indexei 



IN RE NEW TORK CITT RT. 00. 339 

erated by their owners, who refused to allow défendants to see the 
interior of the box containing them. It is now admitted as to one 
of them that the operator was net the owner, but that défendants had 
obtained it from an outside party, and apparently had every oppor- 
tunity to see how it was constructed. It would be improper to refer 
now to the détails of the testimony. The court remembers distinctly 
that the effect produced by the case presented.by défendants was that 
practically the real question presented was whether défendants were 
justified in having pictures taken by a man who owned a caméra, 
and assured them, without exhibiting bis caméra, that it was nonin- 
fringing. This man bas now testified, and, if he is to be beHeved,. 
the court was imposed upon. 

It may be that we bave hère a case of contempt, not by the disobe- 
dience of an order, but by misbehavior in the présence of the court, or 
so near thereto as to obstruct the administration of justice. Section 
725, U. S. Rev. Stat. (U. S. Comp. St. 1901, p. 583). In order that 
the question may be tried eut in an orderly manner, plaintiffs should 
lay ail the facts before the United States Attorney for this district, 
who will, if a prima facie case is made out, institute proceedings on 
the criminal side of the court for such alleged contempt. 

The suggestion by one of defendant's counsel that, before taking 
furthe;- action, the court should be advised of some matters outside the 
record, need not be considered, because there is nothing in the record 
which aiïects counsel in any way, nothing which would indicate that 
he was not fully justified in accepting bis client's statement as truthful 
— as, indeed, the event may prove it to be — and acting on that as- 
sumption 



In re NEW YORK CITY RY. CO. et al. 

In re METROPOLITAN EXPRESS CO. 

(Circuit Court, S. D. New York. June 27, 1911.) 

CORPOBATIONS (§ 56o*)^lNSOLVENCT AND RECEIVERS— ClAIMS FBOVABLE. 

Wliere an executory contract made by a corporation is terminated by 
its receivers on its insolvency, a elaim by the other party for damages 
for loss of expected future profits is not provable against ttie insolvent 
estate. 

[Ed. Note. — For ottier cases, see Corporations, Cent. Dig. § 2282 ; Dec. 
nig. § 565.*] 

In the matter of the receivership of the New York City Railway 
Company and the Metropolitan Street Railway Company. On ex- 
ceptions to report of spécial master, disallowing claira of the Met- 
ropolitan Express Company. Report confirmed. 

This cause comes hère upon exception to report of the spécial 
master disallowing a claim of the Metropolitan Express Company 
against the Metropolitan Street Railway Company for damages 
resulting from' the failure to carry out a contract, which the re- 
ceivers repudiated. The damages sought to be proved were ex- 
pected future profits. 

•For other cases see same toplc & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



340 188 FEDERAL REPORTEE 

The f oUowing is the report of Spécial Mastei W. L. Turner : 

On the 4th of March, 1901, the express company entered into a contract 
with the Metropolitan Street Eailway Cîompany by which the latter gave the 
former the exclusive right of moving express matter over its tracks in the 
boroughs of Manhattan and the Bronx for a period of 20 years from the date 
named, agreeing among other things to furnish the necessary cars for that 
purpose, in considération of which the express company was to pay on the 
20th of each month durlpg the term 20 per cent, of the gross recelpts as 
deflned In the agreement for the préviens calendar month. 

On February 14, 1902, the railway company leased ail its property, includ- 
Ing thls contract, to the Xew York City Railway Company, and thereafter, 
on July 15, 1904, the express company assigned the said contract to the 
American Express Company ; its provisions being faithfully carrled ont by 
lessee and assignée, respectively, until recelvers vs'ere appointed on Septem- 
ber 23, 1907, of the property of the New York City Company. Thereafter, 
and on October 1, 1907, the same receivers were appointed of the Metropoli- 
tan Street Railway Company, and the contract with the express company was 
continued until February 28, 1908, when the receivers by a letter of that date, 
headed "New York City Railway Company, Lessee Metropolitan Street Rail- 
way System," addressed to the American Express Company and signed by 
them as receivers,- without further words of description, notifled the Ameri- 
can Express Company that thls contract of March 4, 1901, to which they as 
receivers and the company addressed had succeeded as parties in interest, was 
not one for the advantage of the receivership to continue, as It showed little 
or no profit to the receivership, and interfered with the proper handling of 
passenger traffic, and named March 15, 1908, as the date when they would 
discontinue the opération of express cars. Thereupon the American Company 
terminated the contract of assignment to it, as by its terms it had the right 
to do, and the claimant flled its claim for the spéculative damages which it 
insists are results of the breach. 

Up to the receipt of thls letter there had been no breach of the contract 
by either express company, and none by either railway company, unless, as 
is now contended, the f aet that both thèse latter admitted the charge of 
insolvency contained in the creditors' bill of complaint in the suits in equity 
begun in this court in which thèse receivers were appointed constituted such 
a breach. The receivers were, of course, well within their rights in taking 
the very reasonable time that they did take before refusing to adopt the 
contract, and did not by that refusai in any way subject the estate or property 
of either company to a claim for damages as for a breach. U. S. Trust Co. • 
V. Wabash Railway Co., 150 U. S. 299, 14 Sup. Ct. 86, 37 L. Ed. 1085 ; Wells 
V. Hartford Manilla Co., 76 Conn. 27, 55 Atl. 599. 

It is clear that both on September 23, and October 1, 1907, the dates of the 
appointments of the receivers, the contract for breach of the provisions of 
which this claim is flled was executory on both s'îdes, and I think, notwith- 
standing the confusion respecting the matter in which the mind is left after 
reading the décisions In the reports, fédéral and state, that the welght of 
authority supports the rule that, where there has been no breach of an exec- 
utory contract up to the date of an involuntary adjudication of insolvency, 
damages resultlng from that fact, or from any later breach, cannot be proven 
as against other creditors whose claims are then absolute, and that, quite 
independent of any express statutory provision, such as the bankruptcy act, 
thls rule applles to the administration in equity of the property and estate of 
an insolvent corporation. Fidelity Safe Deposlt Co. v. Armstrong (C. C.) 35 
Fed. 567 ; Malcomson v. Wappoo Mills (C. C.) 88 Fed. 680 ; Gay Mfg. Co. v. 
Gittîngs, 53 Fed. 45. 3 C. O. A. 422 : N. T. Sec. & Trust Co. v. Lombard Ins. 
Co. (C. C.) 73 Fed. 537 ; Wells v. Hartford Manilla Co., 76 Conn. 27, 55 Atl. 
599 ; People v. Globe Mutual L. Ins. Co., 91 N. Y. 174 ; Matter of Hevenor, 
144 N. Y. 272, 39 N. E. 393 ; Deane v. Caldwell, 127 Mass. 242. 

Tlie cases eited are varied, do not arise under the banki-uptcy àcts, and 
suggest claims for rent not accrued, for damages for subséquent breaches 
of outstandlng contracts, both for the sale and the purchase of goods, for 
claims on guaranties which had not ripened Into fixed liabUlties at the date 



IN KE NEW YORK CITY RY. 00. 341 

oî the adjudication of Insolvency, and for claims arising ont of contracts 
for Personal services. They do net Include cases either in the Suprême Court 
or in the Circuit Court of Appeals in this circuit, and I hâve been referred 
to none; but the prineiple is, I think, distinctly recognized in décisions of 
both tribumals under the récent bankruptcy act as a gênerai doctrine of 
equity, and applicable, not only generally, but even under sta'tutes so broad 
in their terms as to authorize the allowance of contingent claims. Dunbar 
V. Lmnbar, 190 U. S. 340, 23 Sup. Ot. 757, 47 L. Ed. 1084 ; In re Roth & Appel, 
181 Fed. 667, 104 C. C. A. 649. In the latter case it is pointed out that under 
the bankruptcy acts of 1841 (Act Aug. 19, 1841, c. 9, 5 Stat. 440) and 1867 
(Act March 2, 1867, c. 176, 14 Stat. 517), which expressly permitted the proof of 
contingent claims, claims were held not provable for rent unaccrued at the 
time of filing the pétition, because both the existence and amount were then 
contingent upon uncertain events ; and in the former case it was said that 
under the présent act permitting claims to be proved, absolutely owing at 
such time, even if unliquidated, when llquidated pursuant to the direction 
of the court, it was not "intended to permit proof of contingent debts or 
liabilities or demands the valuation or estimation of which it was substan- 
tially impossible to prove." 

So in a case just decided by the Suprême Court, holding that secured cred- 
itors, selling their securities after the flling of the pétition in bankruptcy 
and flnding the proceeds not enough to pay the whole amount of their claim, 
cannot hâve the proceeds applied, flrst to interest, and then to principal, 
leaving the balance to be proved, but must hâve such proceeds applied to 
principal, thus preventlng them from practically securing an allowance of 
Interest after the pétition is filed, Judge Holmes says: "For more than a een- 
tury and a half the theory of the English bankruptcy System bas been that 
everything stops at a certain date. Interest was not computed beyond the 
date of the commission. * * » The rule was not laid down hecause of 
the words of the statute, 'but as a fundamental prvivciple. We take our bank- 
ruptcy System from England, and we naturally assumé that the fundamental 
prlnciples upon which it was administered were adopted by us when we 
oopied the System, somewhat as the established construction of a law goes 
with the words where they are copied bv another state." Sexton as Trustée 
V. Dreyfus, 219 U. S. 339, 31 Sup. Ct. 256, 55 L. Ed. — . The prineiple assert- 
ed is, I thlnk, among the fundamental principles thus adopted in the admin- 
istration of estâtes of insolvents, individual or eorporate, in the absence of 
express statutory command or prohibition, and the cases cited, with othérs 
that the books contain, fédéral and state, not necessary to refer to, are illus- 
trations of its application. 

Counsel for the claimants, in the brief flled, urges that, apart from the 
cases referred to under the bankruptcy act, which he rejects as inapplica- 
ble, but which hâve, I think, the relevancy indicated, the contention of the 
receivers is based solely on the authority of People v. Globe Mutual Insur- 
ance Co., supra, since the single fédéral case not arising under bankruptcy 
acts cited by them (Malcomson v. Wappoo Mills, supra) rested on that case, 
and that that case is clearly dlstingulshable from the claim under exami- 
nation. The only ground of distinction that need be noticed is suggested by 
the fact that the railway Company admitted its insolvency in the creditors' 
suit in which receivers were appointed, from which it is argued that. having 
by its own acts put It out of its power to perform, a hreach resulted which 
justifies the contention that on the appointment of the receivers the liability 
was flxed and subsisting, leaving only the damages, if any, to be llquidated. 
It is, of course, an estahlished prineiple of law that, where one of the parties 
to an executory contract does that which puts it out of his power to perform, 
the other may sue wlthout waiting for a deflnite breach ; but I do not think 
that such a right results from the single fact of the insolvency of such 
party. Certalnly neither the cases cited above nor the Globe Case hold this, 
for they would then hâve been decided otherwlse. and the Globe Case, as 
I read the opinion, meeting just this contention, holds that there can be no 
presumption, from the mère fact of insolvency in the absence of other évi- 
dence— and there is none hère— that such condition resulted from deflnite 
acts or omissions of the party which put performance out of question ; the 



342 188 FEDERAL EEPOETBR 

presumptlon, If any, belng that It was due to causes over which such party 
had no control. ■ 

ïhe claimant further insists that the faets of People v. National Trust 
Ce, 82 N. Y. 283, which is cited with approval and distinguished in tlic 
Globe Insurance Case, are se nearly on ail fours with those of the claim 
hère involved as to require Its liquidation and allowance as an open and sub- 
sistlng engagement of the corporation at the time of the appointment of 
receivers, in aecordance with the principle there appUed. There a lessor 
insisted on a right to hâve a claim for rent enforced by peremptory order for 
the full amount, without regard to the claims of the other creditors, eut of 
assets of a corporation in receiver's hands, which were more than sufficlent 
to meet the outstandlng corporate engagements of every character, and to 
Jeave a surplus of $900,000 for distribution among the stockholders. His 
jlaim was for rent accruing in fixed amounts for the remainder of a term 
of flve years. One year and seven months, during which the quarterly rent 
reserved had been paid, had elapsed when the receiver was appointed, and 
he occupled for thirteen months more, when he vacated, tendering a surren- 
der, which was refused, but paying ail rent then due, and the claim urged 
was for the next quarter of the remainder of the term. The sole answer 
was that, as in an action for ouster by the state a judgment of dissolution 
had been entered, the corporate life had been terminated and with it the 
lease and obligation thereunder, and it was on this question that the court 
passed, refuslng as unnecessary to consider the question of priority, and 
holding, as the Court of Appeals in this circuit in Eoth & Appel, supra, bas 
recently held under the bankruptcy act, that where the receiver does not 
elect to adopt the lease, the lessee's obligation to pay rent in the future Is 
not dlscharged and that Ms llability survives, but allowing its proof with 
those of other creditors, doubtiess because there were sufficient funds. It 
is obvions that in this case, unlike the case at bar, or any of the cases I bave 
cited, the controversy was, not between a créditer claimant and other credi- 
tors, but between the créditer claiming and a receiver representing the 
stockholders, whose surplus would hâve been diminished, had the daim been 
allowed. I do not regard it as determining that the law of this state is con- 
clusive against receivers representing gênerai creditors who are protesting, 
as hère, against the allowance on an equality with such creditors of a elain» 
contingent at the date of their appointment for damages llkewise contingent 
and uneertain, slnce that question was not there présent. 

Treating the contract in the claim at bar, as claimant insists it should be 
treated, as a lease, the lessee, not the lessor, as in this National Trust Co. 
Case, claims, not for fixed sums accruing at intervais under an outstandlng 
lease, as there, but for contingent damages in the nature of spéculative 
profits flowlng and to flow as f rom an éviction subséquent to the receivers' 
appointment, Insisting that the amount of such profits, if any, when deter- 
mined, is provable on an equality with the claims of gênerai creditors based 
on absolute liabilities calllng at the date of the receivership for the payment 
of sums, ascertained or capable of ascertainment, matured or to mature 
against a fund, not, as in the National Trust Co. Case, sufficient to meet ail 
outstandlng claims contingent and absolute, but insufflcient to meet even 
thèse latter. I do not thlnk that the National Trust Co. Case establisbes 
that the rule for New York state is that such a claim may be thus proved : 
but. If it do, It would be at variance, not only with later décisions of tbe same 
court (see People v. St. Nicholas Bank, 151 N. Y. 597. 45 N. E. 1129, and 
Matter of Hevenor, 144 N. Y. 271, 39 N. E. 393), but with the rule followed 
in this as well as other fédéral jurisdictlong, and in other states as well. 
which rule, I assume, controls hère. 

As originally filed, the claimant's demand was for $129,704..S2, belng at 
the rate of |10,000 per annum for the unexpired 12 years and odd of the terni 
■ of 20 years ; such annual sum belng the amount promised it for the priv- 
ilège for that period by its assignée, the American Express Company. Ac- 
quiescing In the contention that this dld not furnish the proper measure 
of damages, It sought to establish such damages by proof of what tbe Amer- 
ican Express had accomplished while operating, coupled with some opinion 
évidence as to the probability of claimant's accomplishing simllar results 



PENNSTLVANIA STEEL CO. V. NEW YORK CITT RT. CO. 343 

in the future. The évidence adduced is attaclced as wliolly insufficient to 
base a finding on ; but it is unnecessary to pass on tlie qbjection, as I con- 
clude tliat it is not provable against gênerai creditors. 

The receivers hâve until March 15, 1911, to flle with me and serve a pro- 
posed report containing findings and conclusions in accordance with the 
foregoing; the claimant to hâve flve days thereafter to flle its objections. 

Page, Crawford & Tuska (G. H. Crawford, of counsel), for claim- 
ant. 

Masten & Nichols (William M. Chadbourne, of counsel), for re- 
ceivers of Metropolitan St. Ry. Co. 

O'Brien, Boardman & Platt (George N. Hamlin, of counsel), for 
contract creditors' committee. 

Charles Benner (Benjamin S. Catchings, of counsel), for tort 
creditors' committee. 

Geller, Rolston & Horan (Charles T. Payne, of counsel), for 
Farmers' Loan & Trust Co., as trustée, successor of Morton Trust 
Co., as trustée. 

LACOMBE, Circuit Judge. While fully concurring in the opin- 
ion of the spécial master as to the nature of this claim, and in his 
reasons for disallowing it, I am also clearly of the opinion that 
there was not sufïïcient évidence before him to détermine wheth- 
er the claimant would bave made any profits at ail, had it taken 
over the contract itself and undertaken to carry it out. 

The exceptions are overruled, and report of spécial master con- 
firmed. 



PENNSTLVANIA STEEL CO. et al. v. NEW YORK CITY RT. CO. et al. 

In re NATIONAL CONDUIT & CABLE CO. 

(Circuit Court, S. D. New Tork. June 27, 1911.) 

In Equity. Suit by ttie Pennsylvania Steel Company and another against 
the New York City Railway Company and another. In the matter of claim 
of the National Conduit & Cable Company. On exceptions to report of spé- 
cial master. Report eonfirmed. 

The foUowing is the report of Spécial Master W. L. Turner: 
On May 10, 1907, the claimant proposed to défendant named to manufac- 
ture and deliver certain transmission cables at priées stated. On May 11, 
1907, the proposai was accepted, with modifications assented to on May 13, 
1907, which were that the railway company reserved the right to specify be- 
tween May 11, 1907, and July 1, 1908, the length of cable it deslred to hâve 
manufactured, and the point of installation, and that deliveries mlght be de- 
ferred accordingly, if it so elected. No payment was to be made for cable 
not delivered under such cireumstances, and it agreed to pay 90 per cent, of 
the contract priée for ail cable delivered in accordance with instructions 
within 30 days after dellvery. 

Receivers were appointed of the railway company on September 24, 1907. 
The copper and lead required in the manufacture of the cable was purchased 
by claimant prier to such appointment; but it is conceded by the claimant 
that there was no breach of the contract until the appointment of the receiv- 
ers. Thèse elected on January 17, 1908, not to adopt it, and refused to spec- 
ify in accordance with its terms. The parties agreed that on the market price 
of cable specifled in the contract the claimant would hâve sustained on Sep- 



M4i 188 FEDBRAL REPORTES 

tember 24, 1907, a loss of $44,232.20, and on January 17, 1908, based on the 
tlien market priée, damage would be $64,974.20. 

This is the case of an executory contract not broken at the date of the ap- 
pointaient of the recelvers, and, as It is not to be distinguished from the 
claim of the Metropolitan Express Company against the Metropolitan receiv- 
ership (188 Fed. 339), to the mémorandum as to which counsel Is referred, the 
same disposition will be made of it. As he bas cited a case not relied upon 
therein, it may be proper to point out that in that case (In re Stern, 116 Fed. 
604, 54 0. C. A. 60), as the opinion of Judge Townsend shows, the executory 
contracts there involved had been broken before the pétition had beeii filed, 
and that thelr breach furnished the reason that the creditors had for forcing 
the debtor into bankruptcy. 

The receiver may flle and serve a proposed report on Mareh 15, 1911, em- 
bodying flndlngs and conclusions accordlngly ; the elaimant to hâve flve days 
thereafter to file Its objections thereto. 

Johnson & Galston (Clarenee Galston, of counsel), for elaimant 

Dexter, Osborn & Fleming (Matthew C. Fleming, of counsel), for receiver 
of New York City Ry. Co. 

Charles Benner (Benjamin S. Catchings, of counsel), for tort creditors' 
committee. 

O'Brien, Boardman & Platt (George N. Hamlin, of counsel), for contract 
creditors' committee. 

Geller, Rolston & Horan (Charles T. Payne, of counsel), for Farmers' Loan 
& Trust Co., as trustée, successor of Morton Trust Co., as trustée. 

LACOMBB, Circuit Judge. I concur in the conclusion of the spécial master 
that this claim is not to be distinguished from that of the Metropolitan Ex- 
press, 188 Fed. 339, in which opinion is filed to-day. 

The exceptions are overruled, and spécial master's report is confirmed. 



Ex parte ZENTNEE. 

(District Court, D. Massachusetts. May 12, 1910.) 

No. 298. 

1. Extradition (§ 11*) — International— Complatnt—Foroebt. 

Where a complaint in proceedlngs to extradite accused for forgery set 
forth the offense with sufficient particularlty to advise him of the olïense 
wherewith he was charged, it was not defective for failure to set forth 
copies of the instrument alleged to hâve been forged ; the particularity 
of an indictment not being requlred in such a complaint If a crime with- 
In the extradition treaty is substantially charged. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 12; Dec. DIg. 
§ 11.*] 

2. EXTKADITION (§ 14*)— DEPOSITIONS— TRANSLATION. 

Where certain dépositions attached to extradition papers were in the 
German language, and the translater testified before the commissioner 
that he had dictated the translation to a typewriter, that he had examin- 
ed and compared it as written out, and that the translation was correct, 
there being no claim by petitioner that the translation was in any respect 
Inaceurate, it was no objection to the translation that the typewriter did 
not also testify with référence thereto. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 16; Dec. 
Dig. § 14.*] 

•For other cases see same topie & § numbhe In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexas 



EX PARTE ZENTNEB 345 

8. EXTEADITION (§ 10*) — Peoceedings— Demand bt Fobeign Goveenmext. 

No prior demand by a foreign government is necessary before tàe ar- 
rest ot a fugitive from the justice of sucb government in extradition pro 
ceedings. 

[Ed. Note. — For other cases, see Extradition, Cent. IMg. § 11 ; Dec. Dig. 
§ 10.*] 
4. Habeas Corpus (§ 92*) — Scope of Inqxjikt — Exteadition — Evidence— 
Stjfficiency. 

À fugitive from the justice of a foreign government Is not entitled to 
his discharge from arrest in extradition proceedings on habeas corpus 
for insufflclency of évidence, if the commlssioner before whom he vs^as 
examined- had iDefore him compétent légal évidence on vifhlch to exercise 
his judgment, whether the facts shov?n sufflciently establish petitioner's 
criminality, for purposes of extradition. 

[Ed. Note. — For other cases, see Habeas Corpus, Dec. Dlg. § 92.*] 

6. Extradition (§ 14*)— Evidence— Foegekt. 

Evidence offered before a commissioner in extradition proceedings for 
forgery alleged to hâve been committed in a foreign country hcld suffi- 
clent to justify petitioner's return. 
• [Ed. Note. — For other cases, see Extradition, Cent. Dlg. § 16 ; Dec. Dlg. 
8 14.*] 

6. Extradition (§ 11*) — Vaeiance— Materialitt. 

In proceedings to extradite petltloner for forgery alleged to hâve been 
committed in a foreign country, a variance between the complaint and 
the évidence as to the dates of the Instruments alleged to bave been forg- 
ed was immaterial. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 12 ; Dec. Dlg. 
S 11.*] 

7. Extradition (§ 14*) — Foeqeet— Featjdulent Intent. 

Where in proceedings to extradite petitioner for forgery, there was 
évidence that he raised two aceeptances beyond the amounts named in 
figures on them at the tlme they were glven him, and then put them in 
circulation without the acceptor's knowledge or consent, such proof was 
sufflcient évidence of a fraudulent intent for purposes of extradition. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 16 ; Dec. Dlg. 
8 14.*] 

8. Habeas Corpus (§ 85*) — Evidence— Extradition. 

In habeas corpus proceedings to secure petitioner's release from arrest 
In extradition for alleged forgery committed in a foreign country, évi- 
dence that, by reason of business relations between petitioner and the 
persons claimed to bave been defrauded, they were not entitled to claim 
that petitioner's act amounted to more than a breach of trust, was im- 
material. 

[Ed. Note. — For other cases, see Habeas Corpus, Cent. Dig. §§ 77, 78; 
Dec. Dlg. § 85.*] 

9. Extradition (§ 14*) — Nature of Peoceedings— Attitude of Complain- 

ANTS. 

Where extradition proceedings for forgery were in the name of the 
German government nnder treaty with the United States, the attitude 
or motives of the persons alleged to hâve been defrauded were Immaterial. 

[Ed. Note. — For other cases, see Extradition, Cent. Dlg. § 15 ; Dec. Dig. 
« 14.*] 

10. Extradition (§ 5*) — Treaty— Offense— Foegert. 

Treaty wlth Bavaria, Sept. 12, 1853, art. 1, 10 Stat. 1022, authorlzing 
extradition of persons chargea with forgery or utteranee of forged papers, 
was applicable where It appeared that written instruments had been 
falsely uttered by accused for fraud and deceit, and that the instruments 

•For otlier caaea see same topio & § numeek In Dec. & Am. Diga. 1307 to date, & Rep'r Indexes 



346 188 FEDERAL EEPOETBB 

were of such a description that they mlght defraud or decelve if issued 
wlth such Intent. 

[Ed. Note. — ^For other cases, see Extradition, Cent. Dig. § 6; Dec. Dig. 
§ 5.*] 

Pétition by Heinrich Zentner for habeas corpus to pbtain his dis- 
charge from custody and extradition proceedings. Denied. 

Eyges, Wyner & Freedman, for petitioner. 

E. Mark Sullivan, Asst. U. S. Atty., for U. S. Marshal. 

Théodore H. Tyndale, for German Consul. 

DODGE, District Judge. On May 4, 1910, a warrant for the 
commitment of this petitioner, under Rev. St. § 5270 (U. S. Comp. 
St. 1901, p. 3591), was issued by William A. Hayes 2d, a United 
States conuçissioner duly authorized by this court to issue warrants 
for the arrest of fugitives from justice of foreign governments between 
which and the United States there are treaties and conventions of ex- 
tradition. The petitioner is in the custody of the United States mar- 
shal under that warrant. Upon the présent pétition, filed May 4, 1910, 
the marshal was ordered to show cause why a writ of habeas corpus 
should not issue. The pétition, besides praying for the issuance of the 
writ of habeas corpus, asked that a writ of certiorari might issue to 
the commissioner, directing him "to certify to the court the record 
by which the cause of your petitioner's commitment may be examined 
and its legality investigated." A writ of certiorari was issued accord- 
ingly, and the record of the proceedings before the commissioner, sub- 
mitted by him as directed, was before the court at the hearing upon the 
order to show cause, and has been duly considered. 

A treaty for extradition between the United States of America and 
the King of Bavaria was concluded September 12, 1853, ratified No- 
vember 1, 1854, and proclaimed November 18, 1854. Bavaria has since 
become a part of the German Empire. The treaty is now in force. 
10 Stat. 1022. By article 1 of the treaty both governments agreed 
to deliver up upon réquisition ail persons who being charged, among 
other crimes specified, with the crime of forgery or the utterancé of 
forged papers, committed within the jurisdiction of either, should seek 
an asylum or be found within the territory of the other. Article 1 
further provides that this should only be done upon such évidence of 
criminality as, according to the laws of the place where the fugitive 
or person so charged should be found, would justify his appréhension 
and commitment for trial if the crime or offense had been there com- 
mitted. There is no dispute as to thèse facts. The commissioner's rec- 
ord in the case shows that on March 31, 1910, there was filed before 
him a complaint, sworn to by the Impérial German Consul at Boston, 
wherein were set forth charges against Heinrich Zentner, the prés- 
ent petitioner, which may be summarized as follows: That he (1) 
on October 10, 1907, forged a draft accepted by C. H. Arnold, the 
drawee, by increasing the amount thereof from 2,184 marks 79 d. to 
12,184 marks 79 d.; (2) on October 10, 1907, forged a draft accepted 
by said Arnold by increasing its amount from 2,973 marks 73 d. to 

•For other caseg see same topic & § number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



EX PAKTE ZENTNEB 347 

12,973 marks 73 d.; and (3) on October 30, 1907, being authorized 
by the firm of J. F. Meier to issue four drafts accepted by them for 
20,000 marks in ail, forged said four drafts by increasing their 
amounts to the total amount of 30,229 marks 1 d. It further appears 
by the commissioner's record that he issued his warrant for Zentner's 
appréhension, that Zentner was apprehended and brought before him, 
and that évidence of Zentner's criminality was by, him thereupon heard 
and considered. It also appears that he deemed the évidence sufiS- 
cient to sustain the charge under the provisions of the treaty or con- 
vention referred to, that he has accordingly issued his warrant for 
Zentner's commitment to the proper jail to await the action of the 
executive department, and that this is the warrant under which Zent- 
ner is now held. Upon it the marshal relies, as justifying him in 
holding Zentner, and as cause why the writ should not issue. In his 
présent pétition for habeas corpus Zentner allèges that his détention 
is illégal, upon grounds which are hereinafter separately considered. 

[1] 1. It is claimed that the complaint is defective because it does 
not set forth copies of the instruments alleged to hâve been forged. 
The commissioner ruled, and with his ruling I agrée, that the com- 
plaint, which appears in full in his record, sets forth the offense with 
sufficient particularity to advise the accused of the offense wherewith 
he is charged. The amounts of the drafts are stated in it, and they 
are alleged to hâve been accepted by the drawees before the altéra- 
tions charged were made. The particularity of an indictment is not 
required if a crime within the treaty is substantially charged. U. S. 
V. Herskovitz (D. C.) 136 Fed. 713; Grin v. Shine, 187 U. S.. 181, 
23 Sup. Ct. 98, 47 L. Ed. 130; Yordi v. Nolte, 215 U. S. 227, 30 Sup. 
et. 90, 54 L. Ed. 170. 

[2] 2. Certain dépositions accompanied by papers or copies of pa- 
pers therein referred to, ail. in the German language, purporting to 
be properly and legally authenticated, so as to entitle them to be 
received by the German tribunals as évidence of Zentner's criminality, 
were introduced before the commissioner. They form part of his 
record, as does also what purports to be an English translation of 
them. The authentication of the papers themselves is not questioned. 
The translation was typewritten. The translater testiiled before the 
commissioner that he had dictated the translation to a typewriter, 
that he had examined and compared it as written out by her, and 
that it is correct. The petitioner objects that the typewriter did 
not also testify with référence to it. But he has not claimed that 
the translation is in any respect inaccurate, although the German 
original, as the commissioner has certified, was read to him in open 
court. I. agrée with the commissioner's ruling that he was warranted 
in accepting the translation as correct without any évidence from the 
typewriter. 

[3] 3. The petitioner objects that no demand by the foreign gov- 
ernment for his return has been shown prior to the institution of 
the proceedings before the commissioner. The commissioner ruled 
that no such demand need be shown. With this ruling I agrée. Ne 
such prior demand is now held to be necessary to the validity of 



348 188 FEDERAL REPORTER 

proceedings like thèse. Benson v. McMahon, 127 U. S. 457, 460, 
8 Sup. et. 1240, 32 L. Ed. 234; Grin v. Shine, 187 U. S. 181, 193-195, 
23 Slip. Ct. 98, 47 L. Ed. 30; Re Schlippenbach (D. C.) 164 Fed. 783. 

[4] 4. The remaining objections urged dispute the sufficiency of the 
évidence before the commissioner to sustain the charges made in the 
complaint. If the commissioner had before him compétent légal évi- 
dence on which to exercise his judgment whether the facts shown 
sufiSciently estabHsh Zentner's criminahty for the purposes of extra- 
dition, the court cannot . review his décision on habeas corpus. Re 
Luis Oteiza, 136 U. S. 330, 10 Sup. Ct. 1031, 34 h. Ed. 464; Ornel- 
as V. Ruiz, 161 U. S. 502, 16 Sup. Ct. 689, 40 h. Ed. 787; Terlinden 
V. Ames, 184 U. S. 270, 22 Sup. Ct. 484, 46 h. Ed. 534. I am 
only to inquire, therefore, whether or not there was any compétent 
évidence tending to support the charges made in the complaint, be- 
fore the commissioner. If there was, it is not open to the petitioner to 
argue that a différent conclusion ought to hâve been reached on the 
évidence as a whole. This considération is important in the présent 
case, because the petitioner testified in his own behalf before the 
commissioner, and gave évidence tending to contradict or explain the 
written évidence relied on by the foreign government. 

[5] The petitioner himself, however, admitted before the commis- 
sioner that, having received . from Dietenhofer, who does business 
under the name of C. H. Arnold, the draft referred to in the foreign 
évidence as "Exhibit 1," bearing when he received it Arnold's ac- 
ceptance, the amount 2,184 in figures, and the due date, he inserted 
the figure 1 before the figures ,2,184 and wrote in everything else 
which now appears on the draft, making it thereby appear to be an 
accepted draft for 12,184 marks 79 d., and signed it. He further 
admitted that, having received from Arnold the draft marked "Ex- 
hibit 2," bearing Arnold's acceptance, the figures 2,973, and the due 
date, he inserted the figure 1 before 2,973, filled in everything else 
now appearing on the draft and .signed it, so as to make it appear 
to be an accepted draft for 12,973 marks 73 d. It was also his 
own testimony that, having received four drafts .accepted in blank 
by J. F. Meier, being Exhibits 5, 6, 7, and 8, he filled in the blanks 
above the acceptances, or caused them to be filled, so as to make the 
drafts read as the exhibits now show, that is, as accepted drafts for 
30,229 marks 1 d. in ail. His testimony also was, it is true, that 
nothing had been said between Meier and himself as to the amounts 
to be filled into the, four acceptances last mentioned, and that Meier 
never objected when he learned the amounts which had been filled in. 
But on this point there is a conflict between him and Meier, whose 
évidence in the dépositions transmitted is, that 20,000 marks had been 
expressly agreed as to the total amount for which the four drafts 
should be made out, and that he not only remonstrated but demanded 
the retum of 10,000 marks as soon as he , learned that Zentner had 
filled them out for more than 30,000 marks. Dietenhofer's évidence, 
also in the transmitted dépositions, is expressly to.the effect that the 
filling out of the Arnold acceptances (Exhibits 1 and 2) for 10,000 
marks more than the sum originally indicated by.the figures on each 



EX PARTE ZENTNEE 349 

was wholly without his knowledge, and that he not only remonstrated 
but threatened Zentner with légal proceedings unless the altered ac- 
ceptances were returned. As to thèse two acceptances, at least, there 
was, therefore, uncontradicted évidence of fraudulent altération. 
There was . uncontradicted évidence to show that Zentner negotiated 
the drafts filled eut as above, obtained the proceeds, and soon after 
fied from Germany to this country, having been declared bankrupt. 
If his own évidence and the other évidence abové summarized had 
been ail the évidence before the commissioner, I think it would hâve 
been compétent légal évidence suffîcient to warrant him in finding 
Zentner's criminality established for the purposes of extradition. The 
commissioner, however, had also before him a considérable amount 
of other évidence tending strongly to confîrm that which I hâve cited. 

It was urged on the petitioner's behalf that the dépositions trans- 
mitted contain much of what is calied with us "hearsay" or "opinion" 
évidence. It seems to me, however, that, if every statement in the 
foreign dépositions fairly open to this objection be disregarded, the 
efifect of what remains will be substantially as indicated above. 

[6] It was urged that the évidence shows the Arnold drafts to hâve 
been filled in on October 17, 1907, instead of on October lOth, as 
the complaint allèges ; also that the évidence f ails to show the date 
on which the Meier drafts were filled in,- the complaint alleging Octo- 
ber 30, 1907, as the date. . The Arnold drafts are dated October lOth. 
The Meier drafts bear the dates September 2.Sth and October 5th, 
but Meier's évidence is that he gave them in blank to Zentner at the 
end of October. If there can be said to be a variance between the 
complaint and the évidence in the matter of dates, I agrée with the 
commissioner that it is immaterial. 

[7] It was urged that the évidence showed no fraudulent purpose 
on Zentner's part. It tended to show, however, as cannot be denied, 
that Zentner at least raised the two Arnold acceptances beyond thé 
amount named in figures upon them when given him, and then put 
them in circulation, without the acceptor's knowledge or consent. This, 
as the commissioner rightly ruled and found, was sufficient évidence 
of a fraudulent purpose on Zentner's part for the purpose of the 
proceedings before him. 

[8] It was urged that previous commercial relations and dealings 
in regard to acceptances between Dietenhofer and Zentner or be- 
tween Meier and Zentner appear from the évidence, and that author- 
ity given Zentner to fill in the Meier . drafts also appears, such as 
prevents Zentner's dealings with any of the acceptances from being 
regarded as criminal, and required them to be treated as amounting to 
breaches of trust at the most. However strong an argument might 
be made elsewhere to this effect upon ail the évidence, it is not an 
argument entitled to any weight for the purposes of this décision, it 
not hâving prevailed with the commissioner, who had before him at 
least some compétent évidence of the commission of the criminal acts 
charged. 

[9] It was urged that Meier and Dietenhofer do not appear by the 
évidence to hâve taken any steps to restrain the circulation of the 



350 188 FEDBRAL BKFOBTBB 

drafts after learning the amounts for which Zentner filled them out; 
that they do appear by the évidence to have.compromised and settled 
claims made against them, as acceptors of the drafts, by paying part 
of the total amounts thereof as. filled out, whereas if the drafts were 
forged they were under no liability; that there is no évidence of 
any criminal prosecution against Zentner in the German courts be- 
fore January, 1910, and none that Zentner's whereabouts bas been 
unknown since Ndvember, 1907 ; and that there is thus indicated want 
of good faith in the institution of the présent proceedings, and the 
conclusion warranted that they hâve been taken "in pursuance of civil 
remedy." But the fact that the proceedings are in the name of the 
German government under the treaty obviously excludes any inquiry 
into the attitude or motives of Meier or Dietenhofer. 

[10] It was urged that no offense under the German pénal code is 
set forth in the complaint or appears from the évidence, and that 
there is nothing in either to show any acts on Zentner's part amount- 
ing to forgery as under stood by the laws of the United States. The 
commissioner ruled that the treaty provisions were applicable if it 
appeared that written instruments had been falsely altered by Zent- 
ner for the purpose of fraud or deceit, and that the drafts referred 
to were instruments of such a description that they mis^ht defraud or 
deceive if issued with that intent. I am unable to doubt that thèse 
rulings were right, or that there was a sufficient charge of forgery 
within the meaning of the treaty and compétent évidence in support 
of the charge. 

This resuit requires me to décline to issue the writ, and would 
require me to do so even if I saw reason to doubt, as I do not, that 
the commissioner was right ,in holding that the évidence as a whole 
was sufficient to sustain the charge. 

The pétition is denied. 



In re JEM YUEN. 

(District Court, D. Massachusetts. July 2, 1910. On Motion to Admit 
to Bail, August 9, 1910.) 

No. 322. 

1. Haeeas Corpus (f 76*) — Retuen— Chinese Depoetatioht. 

A eommissloner's return to a writ of habeas corpus to détermine tlie 
legality of ttie arrest of a Chlnese person in déportation proceedings, 
averring tliat sucli person was detained for déportation as a Chinese per- 
son not entltled to enter tlie United States, by vlrtue of an order of tlie 
Secretary of Commerce and Labor made July 11, 1910, wliich was set 
forth, and which purported to affirm an excluding décision of the com- 
missioner, and directed the person's déportation, showed a sufficient jus- 
tification for his détention. 

[Ed. Note. — For other cases, see Habeas Corpus, Cent. Dig. § 67; Dec. 
Dig. i 76.»] 

2. Aliens (§ 32*) — Chinese— Depobtation Proceedings— Habeas Cobptts. 

Where the détention of a Chinese person in déportation proceedings 
undor a warrant was claimed to be illégal, on habeas corpus, because 

*For other cases see same toplc & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'T Indexes 



IN RE JEM T0EN 351 

such person was the mlnor son of petltioner, who was a Chinese merchant 
lawfully wltMn the country, such question of fact was for the détermina- 
tion of the Immigration Commissioner, whose décision was not review- 
able on habeas corpus provlded the hearing before the commissioner, 
however summary, was in good falth and not arbitrary. 

[Ed. Note.— For other cases, see Allens, Cent. Dig. §§ 93-95; Dec. Dlg. 
I 32.*] 

3. ALIENS (§ 32*) DEPORTATION OF Chinese— Habeas Cobpus. 

Déniai of a fair hearing before immigration authorities prlor to the 
rendition of a déportation warrant is the only foundation for jurlsdlc- 
tlon of a fédéral court to review the proceedings on habeas corpus. 

[Ed. Note. — For other cases, see Allens, Dec. Dig. § 32.*] 

4. Aliens (§ 32*) — Depobtation Pboceedings— Evidence. 

Immigration officers in déportation proceedings are not bound by the 
rules of criminal procédure or by the rules of évidence applied in court, 
nor Is it enough for review of thelr décision on habeas corpus, that there 
was no sworn testlmony taken or no record of the testlmony or of the 
décision; no formai complaint or pleadings being required. 

[Ed. Note. — For other cases, see Aliens, Dec. Dlg. § 32,*] 

5. Aliens (§ 32*) — Immigration Proceedings— Evidence— Recobds. 

In déportation proceedings, the immigration authorities properly con- 
sldered a record of slmilar proceedings previously conducted purportlng 
to show that the immigrant had then attempted to enter the country and 
was excluded after a hearing and the exclusion afflrmed on appeal. 

[Ed. Note. — For other cases, see Aliens, Dec. Dig. § 32.*] 

6. Aliens (§ 32*) — Déportation Proceedings— Appeal— Record. 

Where an appeal was taken to the Seeretary of Commerce and Labor 
from a déportation order, the fact that a "mémorandum for the actlng 
seeretary," slgnod by the Commissioner General, was added to the record 
before it was acted on, and contained remaries on the évidence and a 
recommendatlon that the décision he afflrmed. was Immaterial. and did 
not, indlcate that the ofHcer whose duty it was to détermine the appeal 
did not do so hlmself. 

[Ed. Note. — For other cases, see Allens, Dec. Dig. § 32.*] 

T. Aliens (§ 32*) — Déportation— Appeal— Hearing. 

Where an appeal from a déportation order was heard and decided by 
the acting Seeretary of Commerce and Labor, it vvould be presumed, the 
contrary not appearlng, that the acting seeretary was at the time, law- 
fully exerclslng the secretary's powers, as he was authorlzed to do by 
Rev. St. §§ 177, 178 (U. S. Comp. St. 1901, p. 90). 

[Ed. Note. — For other cases, see Aliens, Dec. Dig. § 32.*] 

On Motion to Admit to Bail. 

8. Aliens (§ 32*) — Chinese- Déportation Proceedings— Appeal— Bail. 

Act Nov. 3, 1893, c. 14, § 2, 28 Stat. 7 (U. S. Comp. St. 1901, p. 1322) dé- 
clares that pending the exécution of an order for the déportation of cer- 
tain Chinese persons they shall not be admltted to bail. Act May 5, 1892, 
c. 60, § 5, 27 Stat. 25 (U. S. Comp. St. 1901, p. 1320) provides that on an 
application to any .1udge or court of the United States "in the flrst in- 
stance" for a writ of habeas corpus, by a Chinese person seeklng to land 
in the United States, to whom that privilège bas been denied, no bail 
shall be allowed. Held. that the words "in the flrst instance" in section 
6 did not render the prohibition against bail any less applicable after the 
court had made its décision than before, and hence where a Chinese per- 
son had been ordered deported and writ of habeas corpus dlsmlssed, the 
alien was not entltled to bail pending appeal. 

[Ed. Note.— For other cases, see Aliens, Dec. Dlg. § 32.*] 

•For other cases see same topio & § ntjmeek in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe» 



352 188 FEDEEAL EEPORTBB 

Habeas corpus on pétition of Chin Ying Don to obtain the release 
of his alleged minor son, Jem Yuen, from custody under déportation 
warrant. Denied. 

Warren O. Kyle, for petitioiier and Jem Yuen, 
William H. Garland, Asst. U. S. Atty. 

DODGE, District Judge. The petitioner complains that his minor 
son, Jem Yuen, is unlawfully detained by George B. Billings, United 
States Commissioner of Immigration at this port. 

[1] The commissioner's return on the writ avers that Jem Yuen 
is detained for déportation as an alien Chinese person, not entitled to 
enter the United States, by virtue of an order of the Secretary of Com- 
merce and Labor on July 11, 1910, which is set forth. The order pur- 
ports to afifirm an excluding décision of the commissioner in Jem 
Yuen's case, and to direct that he be deported. The petitioner has 
filed an answer to the return, in which ail the averments thereof are 
denied, and it is also denied that any such order has been issued, or 
that Jem Yuen is detained by virtue of any order of the Secretary 
of Commerce and Labor. The answer further sets up that Jem Yuen 
was denied a fair hearing and was denied appeal to the secretary, and 
that the pretended hearing on appeal was before an officer not author- 
ized to act, and not upon a proper record ; that Jem Yuen is not an 
alien belonging to any excluded class, and is the minor son of a dom- 
iciled Chinese merchant. At the hearing a motion was filed to dis- 
charge Jem Yuen from custody, because the return upon the writ 
showed no sufïîcient justification for holding him. This motion I over- 
ruled. The commissioner then offered, in proof of the averments in 
his return, a record of the proceedings in the case to which the. alleged 
order of the secretary refers, duly certified, which is marked "A," and 
may be referred to in connection herewith. There is no dispute that 
Jem Yuen is an alien and a Chinese person. The record shows that 
he sought to enter the country in April last, coming by steamer from 
Halifax to the port of Boston. His daim of right to enter was based 
on allégations that he was the petitioner's minor son and that the pe- 
titioner was a Chinese merchant lawfully within the country. Whether 
thèse allégations were true or not was to be decided in the first in- 
stance by the immigration commissioner hère. That the petitioner 
is a Chinese merchant lawfully within the country was finally, though 
not at first, conceded by the authorities. The allégations that Jem 
Yuen was his son and a minor were held not to hâve been sustained, 
and admission' was therefore refused. The hearing before the immi- 
gration authorities hère was on May 6, 1910, the décision on May 
28th. The petitioner was duly notified of the décision and his right 
to appeal therefrom. Appeal was claimed May 28th, and the time for 
preparing it extended, at the petitioner's request, from time to time 
until June 25th. Under date of June 29th the record on appeal was 
transmitted by the commissioner hère to the Immigration Bureau of 
the Department of Commerce and Labor at Washington. Under date 
of July llth the commissioner hère was notified by the bureau that his 
décision was affirmed, in the form set forth in the return to this writ. 



IN RE JEM T0EN 353 

[2] The petitioner then offered to show before me that Jem Yuen 
is a minor son of a Chinese merchant, and is net otherwise excluded 
under the laws and régulations relating to immigration. I excluded 
the proof offered, on the ground that the questions raised appear by 
the record to hâve been determined by the proper authorities and not 
to be reviewable by the court. There was no further évidence offered 
by either side. Upon the questions whether Jem Yuen was the peti- 
tioner's son and whether he was a minor, the courts hâve no juris- 
diction to review décisions made by the immigration authorities, pro- 
vided the hearing before them, however summary its form, has been 
in good faith and their action not merely arbitrary. This is true even 
when the applicant claims to be a citizen, as Jem Yuen does not. 

[3] The déniai of a fair hearing is the only foundation for any ju- 
risdiction in the court to interfère on habeas corpus. Chin Yow v. 
U. S., 208 U. S. 8, 28 Sup. Ct. 201, 52 L. Ed. 369. "If a fair, full 
hearing was given and had, full opportunity to présent évidence, and 
a question of fact was presented and decided, and the action taken 
was not arbitrary, then the décision of the inspector, affirmed by the 
department, is final." Ex parte Lung Foot, 174 Fed. 70. Whether 
there was a fair hearing or not in the présent case must be determined 
by the record, and the record, according to the petitioner's contention, 
shows that a fair hearing has been denied. The hearing at Boston is 
said to hâve been unfair because inadmissible évidence was consid- 
ered. The hearing on appeal is said to hâve been unfair because of 
alleged improper additions made to the record submitted at Washing- 
ton, and because the Secretary of Commerce and Labor does not ap- 
pear to hâve himself considered or decided it. As to the hearing at 
Boston there is no complaint that the applicant was in any way hin- 
dered in submitting such évidence as he desired, or of any refusai to 
hear what was submitted. The complaint is that a record of proceed- 
ings of similar character at Richford, Vt., in October, 1908, and be- 
fore the department on appeal, was considered. This record purport- 
ed to show that Jem Yuen then and there attempted to enter the coun- 
try, was excluded after a hearing, and the exclusion was affirmed on 
appeal. Whether such a record was admissible or not according to the 
rules of évidence observed elsewhere is immaterial. 

[4] It is well settled that officers of the government, to whom the 
détermination of questions of this kind is entrusted under statutes like 
those governing thèse proceedings, are not bound by the rules of crim- 
inal procédure, nor by rules of évidence applied in courts. It is not 
enough for a review of their décision on habeas corpus that there was 
no sworn testimony, or no record of the testimony or of the décision. 
No formai complaint or pleadings are required. Thealien's oppor- 
tunity to be heard need not be upon any regular set occasion, nor ac- 
cording to the forms of judicial procédure ; it may be such as will 
secure the prompt, vigorous action contemplated by Congress and ap- 
propriate to the nature of the case. See Nishimura Ekiu v. United 
States, 142 U. S. 651, 663, 12 Sup. Ct. 336, 35 L. Ed. 1146; Kong 
Yue Ting v. United States, 149 U. S. 698, 729, 13 Sup. Ct. 1016, 37 
188 F.— 23 



354 188 FEDERAL REPORTER 

L. Ed. 905 ; The Japanese Immigrant Case, 189 U. S. 86, 101, 23 Sup. 
et. 611, 47 L. Ed. 721. 

[5] I am unable to believe that the duty of the officers to give a 
fair hearing required them to shut their eyes to the contents of this 
former record, or to do so without formai or indépendant proof of 
its contents. The same considérations apply to a letter considered at 
the hearing from the Commissioner of Immigration at San Francisco, 
giving the resnlt of a search of the records of departure and arrivai 
at that port kept in his office. 

[B] As to the hearing on appeal, one complaint is that a "mém- 
orandum for the acting secretary," dated July 7, 1910, and signed 
"Daniel J. Keefe, Commissioner General," was added to the papers 
frôm Boston before they were acted upon at Washington. The mém- 
orandum contains remarks upon the évidence, and a recommendation 
that the Boston décision be afifirmed. So far as its contents relate to 
the questions presented for décision, they are to the same effect as what 
is said in the letter dated June 29th from the acting commissioner at 
Boston, transmitting the record. I do not see how it can be contended 
that anything material to the décision, and not previously presented 
and discussed at the hearing, was brought into the case for the first 
time either by the mémorandum or by the letter referred to. Nor do 
I think that the mémorandum can be considered as indicating in any 
way that the officer whose duty it was to hear and détermine the ap- 
peal did not hear and détermine it himself. It cannot be said that the 
head or the acting head of a department, charged with such a duty, 
is forbidden to hâve a subordinate make a preliminary report on it for 
his guidance. 

[7] Lastly it is complained that the Secretary of Commerce and 
Labor is not shown by the record to hâve heard and decided the ap- 
peal. I must regard the record as sufficiently showing, in the absence 
of any évidence to the contrary, that the appeal was heard and decided 
by the acting secretary. That being the case, I am justified in assum- 
ing, until the contrary appears, that the acting secretary was at the 
time lawfully exercising the secretary's powers. Rev. St. §§ 177, 178, 
(U. S. Comp. St. 1901, p. 90) ; Keyser v. Hitz, 133 U. S. 138, 145, 10 
Sup. Ct. 290, 33 L. Ed. 531. 

The case appears to me to hâve been fully and fairly heard, consid- 
ered, and decided by the proper ofiRcials. No arbitrary action or abuse 
of discrétion on their part in regard to it is in my opinion shown. 
The writ must therefore be discharged, and Jem Yuen remanded to 
the custody of Commissioner Billings. 

On Motion to Admit to Bail. 
The writ prayed for by the petitioner having issued, and due hearing 
having been had thereon, the court held on July 21, 1910, that Jem 
Yuen, an alien and a Chinese person seeking to enter the country, to 
whom the immigration authorities had refused admittance and whom 
the commissioner of immigration was holding under an order of dé- 
portation, was lawfully detained by the commissioner for that pur- 
pose. The writ was therefore discharged, and Jem Yuen remanded to 
the commissioner's custody. 



IN EE JEM TtTEN 355 

[8] On August 4, 1910, the petitioner and Jem Yuen filed a motion 
that "pending the appeal from the décision of this court discharging 
the writ, Jem Yuen may be enlarged upon recognizance with surety 
for appearance to answer the judgment of this court upon mandate 
from the Suprême Court of the United States." This motion was op- 
posed by the commissioner. After due hearing upon the motion, I 
am unable to believe that the court has the power to grant it. Section 
2 of the act of November 3, 1893, c. 14, 28 Stat. 7 (U. S. Comp. St. 
1901, p. 1322), provides as to orders for the déportation of certain 
Chinese persons to be executed by the United States marshal, that, 
pending the exécution of such order, such Chinese persons shall re- 
main in the custody of the marshal and shall not be admitted to bail. 
This section was considered in November, 1903, in this court, by Judge 
Lowell, who held that the court had inhérent power to admit an alien 
to bail pending an appeal to this court from the order of a United 
States commissioner that he be deported. In re Ah Tai, 125 Fed. 
795. It was said that the prohibition against admitting to bail 
applied only where the order of déportation was final, and was in- 
applicable while an appeal from the décision of the commissioner was 
pending. In the présent case the order of déportation is final so far 
as this court is concerned, and no appeal to this court is pending. The 
prohibition referred to, enacted in 1893, appears from its context to 
apply only in cases where a Chinese laborer within the limits of the 
United States is adjudged to be unlawfuUy in the country, or per- 
haps also to cases where a Chinese alien applies for admission on the 
ground that he was formerly in business in this country as a merchant. 
It does not appear to cover a case like this. Ah Tai's Case was a case 
of the kind first mentioned. The présent case belongs to neither of 
the kinds mentioned. Jem Yuen's application to enter is on the ground 
that he is the son of a Chinese merchant lawfully within the country. 
To it section 5 of the act of May 5, 1892, c. 60, 27 Stat. 25 (U. S. 
Comp. St. 1901, p. 1320) is applicable. This section provides that: 

"On an application to any judge or court of tlie United States In the flrst 
Instance for a writ of habeas corpus, by a Chinese person seeliing to land in 
the United States, to whom that privilège has been denied, no bail shall be 
allowed." 

This section was considered by the Circuit Court in the Southern 
District of New York in December, 1894, in Re Chin Yuen Sing, 65 
Fed. 788. Judge Lacombe said that it was unnecessary to décide 
whether or not the court was expressly forbidden by the section to 
allow bail pending appeal from its décision dismissing a writ of ha- 
beas corpus, because it would be a singular exercise of discrétion to 
allow bail after the court had decided that the alien should not be 
permitted to enter the country, when there was no dispute that the 
statute prohibits his release on bail before the court has so decided, 
and while there is still a possibility that its décision might admit him. 
The fact that in a case like this it is impossible for the court to al- 
low bail, without thereby admitting into the country a person whose 
admission it holds to be prohibited by law, forbids me to believe that 
the words "in the first instance," as used in section 5 of the act of 



356 188 PBDÉEAL REPORTER 

1892, are intended to render the prohibition against allowing bail any 
less applicable after the court has made its décision than before. There 
is no doubt, however, that the practice has not been uniform in cases 
which bave involved this section and section 2 of the act of 1893. 
See U. S. V. Fah Chung, 132 Fed. 109. See, also, the argument of the 
Solicitor General in Ah How v. U. S., 193 U. S. 65, 74, 24 Sup. Ct. 
357, 48 L. Ed. 619, to which Judge Speer refers in deciding U. S. 
V. Fah Chung. A certified copy of a récent order by the district 
court in Vermont, admitting to bail a Chinese alien debarred from 
entry by the immigration officers, pending final détermination by the 
court upon a writ of habeas corpus sued eut by him, has been shown 
me. The order recites that the admission to bail was by the consent 
of ail parties concerned. In Ah How v. U. S., above cited, the Su- 
prême Court was asked to express its opinion as to the right of Chi- 
nese aliens, arrested for déportation within the country, to give bail 
pending their appeal. It declined to do so, considering the question a 
moot point only as then presented. 193 U. S. 78, 24 Sup. Ct. 359 
(48 L. Ed. 619). U. S. v. Fah Chung was, like the case before the 
Suprême Court just referred to, a case in which the déportation of 
an alien Chinese had been ordered because he was found within the 
country contrary to law. In such cases, as Judge Speer held (132 
Fed. 110), the order of déportation "is not made in an ordinary jus- 
ticiable case, and does not deal with légal rights as that expression 
is generally understood." This applies with still greater force, as it 
seems to me, when the question is whether or not the alien Chinese 
is a person allowed by our laws to enter the country at ail. As to 
such cases I am unable to doubt that Congress intended to forbid ad- 
mission to the country upon bail. Judge Speer refused to allow bail 
in the case before him, but while holding that the alien in such cases is 
not entitled to bail as a matter of right, thought he might nevertheless 
be admitted to bail, under spécial circumstances, in the sound discrétion 
of the court. He relied upon an ancient jurisdiction in the court, in- 
dependently of statute, existing by the rules of the common law. 132 
Fed. 112, 113. There are in the présent case no spécial circumstances 
of the kind indicated by the learned judge in his opinion. I should 
not consider myself justified in granting this application, even if sat- 
isfied that I hâve the power to grant it by an exercise of discrétion. 
The application is denied. 



NORTON V. WHITESIDB et al. 

(Circuit C!ourt, D. Minnesota. February 24, 1911.) 

1. States (§ 12*) — Boundaeieb— Rivées— Change of Ciiannel. 

Where the channel of a navigable river constitutes the boundary be- 
tween two states, such boundary shifts with the shifting of the chan- 
nel, whether by natural or artlflcial causes. 

[Ed. Note. — For other cases, see States, Cent. Dlg. §§ 6-11; Dec. Dig. 
§ 12.*] 

•For other cases see same topio & § numbbk In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



NORTON V. WHITESIDB 357 

2. Navigable Watees (§ 42*) — Islands— Kight to Use. 

The riglit or title to use or occupy an island in a navigable stream 
arises from the right or tltle to use or occupy tlie submerged land on 
which It is formed ; the character and extent of the title remalning the 
saine. 

[Ed. Note. — For other cases, see Navigable Waters, Cent. Dig. §§ 253- 
255; Dec. Dig. § 42.*] 

5. Navigable Waters (§ 42*) — Submeeged Land— Islands— Title. 

Whlle the right either to submerged land or to an Island formed there- 
on in a navigable river Is a property right, and may be severed from the 
shore land by the owner thereof, it is a right arising ont of and existing 
by virtue of riparian proprJetorship, and its nature continues the same 
whether severed from the riparian proprietorship or not. 

[Ed. Note. — For other cases, see Navigable Waters, Cent. Dig. §i 253- 
255; Dec. Dig. §42.*] 

4. Navigable Waters (§ 37*) — Rivebs— Soil tjndee Wateb— Kight of Ripa- 

EIAN PbOPRIETOB. 

A grantee from the government of lands bounded by a navigable stream 
takes an absolute title in fee to the water's edge, and tlie state acquires 
a right or title to the soll or land nnder the water between the edge of 
the stream and the mlddlé tîiread of the main navigable ehannel, in trust 
to préserve and improve the public right of navigation. Such right or 
title of the state, though paramount, Is not proprletary, the riparian ovyn- 
er having a proprietary, though limited, title or ownership of such soil 
or bed to the thread of the navigable ehannel subject to the public navi- 
gation right. 

[Ed. Note. — For other cases, see Navigable Waters, Dec. Dig. § 37.*] 

6. Navigable Waters (§ 42*) — Islands— Owneeship— Change of Qhannel. 

Where the government, in the exercise of Its right to improve the navi- 
gation of a river, changea the ehannel to the opposite side of an island 
formed on and rising from the bed of the stream, such change trans- 
ferred title to the island to the opposite riparian proprietor. 

[Ed. Note. — For other cases, see Navigable Waters, Cent. Dig. §§ 253- 
255 ; Dec. Dig. § 42.*] 

6. QuiETiNG Title (§ 49*) — Relief— Rights of Third Pebson. 

In a suit batween riparian proprietors to quiet title to an island In a 
navigable stream the court was without jurisdiction In equity to déter- 
mine the rights of a third person in actual possession of the island, which 
rights could only be determined by an action at law. 

[Ed. Note. — For other cases, see Qnieting Title, Dec. Dig. § 49.*] 

In Equity. Suit by George W. Norton, as executor and trustée of 
the estate of George W. Norton, deceased, against Robert W. White- 
side and others. Decree for complainant as against défendants White- 
side and E. P. Alexander, and dismissed as to défendant Andrew J. 
Tallas. 

Complainant alleged: "That défendant Andrew J. Tallas, some tlme since, 
without authority of law and without any right whatsoever so to do, entered 
upon the said low marshy island, and has pretended to occupy the same in 
some manner, and has placed thereon a small shack or cabin under.the be- 
lief, as this plaintifC has been informed and believes, that such island was 
government land, and with the iutent and expectation, as plaintifC Is in- 
formed and believes, that by so doing he could obtain some rights to the 
eame, or to enter and secure the same from the government of the United 
States or from the state of Minnesota or the state of Wisconsin, but your 
orator avers that the said défendant Tallas has not now nor has he ever had 
any right, title, or Interest or valid claiin whatsoever In the said Island or 

*For other casea aee same topic & S nvubeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe! 



358 , 188 FEDERAL REPORTER 

any part thereof, or In or to any part of the bed of such waters. That in the 
making of such improvements the government of the United States has de- 
posited material from its dredglng work near to the said so-called island, and 
has fllled up the shallow waters therevvith, and that by reason thereof and 
of the action of the waters in connection therewith, and by reason of the 
said improvement, that part of the original deep water channel through the 
said waters in front of plaiutitï's lands has hecome fllled up and is no longer 
navigable, and by reason thereof there is now more land appearlng above the 
water in the locallty of the said low marshy island than appeared formerly, 
and that part of said island is lafger than it formerly was, and the said de- 
fendant Tallas has so placed hls said cabin that by reason thereof, aiid of 
the matters and thlngs hereinbefore set forth, he now intervenes between the 
said improved navigable and navlgated channel of the said waters and the 
shore of the plalntiff's said lands, and between the said established harbor 
or dock line on the Minnesota side In front of plaintiff's lands and the shore 
of said lands, and therefore is infringing upon the riparlan rights and privi- 
lèges of your orator, which are incidental and appartenant to his said lands 
and estate, and which, therefore, if persisted in, may operate to destroy val- 
uable property rights of the plaintiff." 

J. L. Washburn, for complainant. 

L. C- Harris and Jacques & Hudson, for défendant Whiteside. 

Daniel Cash and J. B. Richards, for défendant Tallas. 

MORRIS, District Judge (orally, after stating the facts as above). 
After the careful, able, and exhaustive arguments of counsel in this 
case, and the complète threshing out and sifting of the questions hère 
involved in nearly eight days of discussion by counsel, and between 
court and counsel, and of the cases bearing thereon, it seems to me that 
I am now able to form as correct a judgment on those questions, and 
to décide them coVrectly, as I can ever be. I do not think, therefore, 
that it vyill be necessary for me to take this case under advisement, 
but that I had better décide it now, and put you gentlemen at once 
upon the road to the Court of Appeals, to which court I apprehend it 
must go, no matter what may be my décision. I shall not attempt to 
review in détail the cases which hâve been so ably discussed by counsel, 
but shall only state the conclusions to which I hâve corne as a resuit 
of the discussion. 

Mr. Washburn in his argument has expressed a désire that I make 
a finding on the question of fact as to whether or not. the waters hère 
involved, lying between the shore line of the plaintiff on the one side 
and of the défendants Whiteside and Alexander on the other, are wa- 
ters of a bay or arm of Lake Superior, that is, waters of.Lake Su- 
perior, or waters of the St. Louis river. I do not think it necessary 
to do this, because in my view the resuit must be the same in either 
case. But I will say that it seems to me that the river certainly extends 
to a point below the waters hère involved. And indeed, although thèse 
waters are designated on the maps of the government surveys as "St. 
Louis Bay,",yet, in view of the language used in the enabling act (sec- 
tion 1) as to the northerly and northwesterly boundary of the state of 
Wisconsin, and in view of the map therein referred to (Nicollet's 
map), a copy of which is hère in évidence, I would feel obliged to find 
that the St. Louis river extends to what is commonly known as the 
"Wisconsin entry," between Minnesota Point and Wisconsin Point, and 



NORTON V. WHITESIDE 359 

that its mouth is there. But, as I hâve before said, I do not think 
for the purposes of this case a finding on that question is necessary, 
because the resuit, as I view it, must be the same whether thèse waters 
are river waters or waters of an arm of Lake Superior. Whatever the 
character of thèse waters, the boundary Hne between Wisconsin and 
Minnesota as defined by this enabling- act would, in my opinion, under 
the décisions read and commented upon by Mr. Harris, follow the 
main navigable channel between Big Island and the Minnesota shore; 
that is. between the shore Une of the plaintiff on the one side and the 
shore line of the défendants Whiteside and Alexander on the other. 

The first question arising hère is the question of the jurisdiction of 
this court to entertain this suit as between the plaintiff and the défend- 
ant Whiteside (as I understand it, it bas been stipulated by counsel foi 
Alexander that the décision as to Whiteside shall be binding as to Alex- 
ander), and that question dépends upon whether or not the locus in 
quo hère involved — that is, the land under water and the island formed 
thereon, opposite Norton's shore line, lying between the improved or 
government channel and what was formerly the natural channel — is 
now in the state of Wisconsin or in the state of Minnesota. I hâve 
no doubt that prior to the making of this improved or government 
channel this land was in Wisconsin, and the question is, Has it by the 
construction of this improved or government channel, under the para- 
mount authority of the gênerai government to control thèse waters 
and to improve the same (of which there can be no doubt) been trans- 
ferred from the state of Wisconsin to the state of Minnesota? 

[1] I think there can be no doubt, under the décisions, that if the 
original or natural channel had been shifted or changed by natural 
causes so that this land would now lie on the Minnesota side of said 
natural channel, such change or shifting of the channel would hâve 
transferred it to the state of Minnesota, and it seems to me that the 
principles underlying those décisions and their reasoning, so far as it 
is logical and correct, would cause the same resuit to follow from the 
government improvement. It should always be remembered that this 
channel made by the government is an improvement of the natural 
channel, under the paramount authority of the government to protect, 
préserve, and improve the navigation of ail thèse waters. A glance.at 
the maps will show that while portions of the natural channel remain, 
and that such portions are still navigable by boats of heavy draught, 
still this channel no longer exists as a continuons channel, and such 
portions are mère offshoots, or spurs, or pockets, diverging from the 
improved channel ; as, for instance, the portion of the former natural 
channel now lying behind the island at the locus in quo and between it 
and the Minnesota shore. In other words, the improved or government 
channel has been made in lieu of or as a substitute for the natural 
channel, and for the purpose of improving the navigation of that chan- 
nel. The old or natural channel has been in effect straightened and 
rendered more suitable for the purposes of navigation by craft of ail 
descriptions and sizes, and thus the improvement cornes fairly and 
justly within the power of the government. I can see no valid or just 
reason why the same resuit as to the boundary between the states 



360 18? FEDERAL REPORTEE 

should not follow from the making of this improved channel as would 
hâve followed if the change had been brought about by natural causes. 
So that I think this question of jurisdiction must be answered in the 
affirmative. 

That being determined, the next question is, To whom does the right 
to use, occupy, and improve the locus in quo belong — to the plaintiff 
Norton, or to the défendant Whiteside ? The answer to this question 
must, in my opinion, be the same as to this island which has been 
formed as it would hâve been if the land had remained under water, 
as it was at the time of the government survey. 

[2] The right or title to use and occupy the island arises from the 
right or title to use and occupy the submerged land on which it is 
formed, and the character and extent of that right or title always re- 
mains the same. As to this right, I think the décisions in Minnesota 
and Wisconsin are in practical efïect the same. 

[3] While this right, either as to the submerged land or an island 
formed thereon, is a property right, a valuable right, and a right which 
can be severed from the shore land by the owner thereof and deeded 
away to others, yet it is a right arising out of and existing by virtue 
of the riparian proprietorship, and its nature always continues the same, 
whether severed from the riparian proprietorship or not. In the brief 
of Mr. Washburn a case is cited, Scranton v. Wheeler, 179 U. S. 141, 
21 Sup. Ct. 48, 45 L. Ed. 126, in which Mr. Justice Harlan, speaking 
of the rule in Michigan, uses the f oUowing language : 

"But it is equally well settled In tliat state tbat the rights of the riparian 
owner are subject to the public easement or servitude of navigation [citlug 
cases]. So that whether the title to the submerged lands of navigable wa- 
ters is In the state or in the riparian owners, it was acquired subject to the 
rights which the public hâve In the navigation of such waters. The primary 
use of the waters and the lands under them is for purposes of navigation, 
and the érection of piers In them to improve navigation for the public is en- 
tirely consistent with such use, and infringes no right of the riparian owner. 
Whatever the nature of the interest of a riparian owner in the submerged 
lands In front of his upland borderlng on a public navigable river, bis title 
Is not as full and complète as his title to the fast land, which has no direct 
connection with the navigation of such water. It is a gualified title, a bare 
technical title, not at his absolute disposai, as is bis upland, but to be held 
at ail times subordinate to such use of the submerged lands and of the wa- 
ters flowing over them as may be consistent with or demanded by the publie 
right of navigation." 

This is clear language, and, while it is now settled that grants of 
public lands bounded by streams or other waters must be construed 
as to their efïect according to the décisions of the state in which the 
lands lie, it throws, to my mind, light upon ail the state décisions. The 
confusion in thèse décisions, where any confusion or doubt may seem 
to exist, arises, I think, from what Judge Jaques has aptly called the 
terminology of the décisions. I do not know but that I may thus hâve 
caused some confusion or doubt in the décision in Hobart v. Hall (C. 
C.) 174 Fed. 433. Judge Jaques, as I understood him, claimed in 
his argument that the décisions in Minnesota and Wisconsin were in 
practical accord on the questions hère involved, and I think in this he 



NORTON V. WHITESIDK 361 

was correct. I thînk the resuit of those décisions may fairly be sum- 
marized as f ollows : 

[4] That a grantee from the government of lands bounded by a 
stream navigable in fact takes the absolute title in fee to the water's 
edge; that the state has title to the soil or land under the water be- 
tween the edge of the stream and the middle thread of the main navi- 
gable channel thereof in its sovereign capacity, in trust for the purpose 
of protecting, preserving, and improving the public right of naviga- 
tion; that such right, title, or ownership, whatever we may call it, of 
the state is paramount, but not proprietary, or one under which it can 
alienate or convey any portion of said soil or land under water to a 
stranger, but, while paramount, is a limited title or ownership, limited 
to that purpose, and extending no further ; that the riparian owner has 
also a right or title to such soil or land under water opposite his shore 
land, between the edge of the stream and the middle thread of the main 
navigable channel thereof, which, though subject and subordinate to 
this title of the state, is proprietary, and exclusive as to ail others than 
the state or the gênerai government, and even as to the state or gênerai 
government exclusive, except as they may act by their properly consti- 
tuted authorities in protecting, preserving, or improving the public right, 
and which he can convey to another either in whole or in part; that 
the limit to this private right, so long as it exists, is imposed by the 
public right and by that only, and the private right, so long as it exists, 
exists to the extent beyond which it would be inconsistent with the 
public right and with that only ; that under this right, title, or owner- 
ship, whatever we may call it, the riparian owner or his grantee has 
the exclusive right to reclaim, occupy, and use for any purpose not 
inconsistent with the public right such soil or land under water or any 
part thereof out to the main navigable channel, subject only to such 
paramount right of the state or of the gênerai government; and that 
the same right or title would exist as to any island between the shore 
line of the riparian proprietor and the main navigable channel of the 
stream, whether such island exists at the time of the survey and is 
omitted theref rom in good faith and without palpable mistake as a neg- 
ligible fraction, or is afterwards formed by the graduai action of the 
waters. But, as said by Mr. Justice Harlan, jthis is a qualified right 
or title, if we may call it a title. It is not an indefeasible right or title. 

It is one which, while it may be granted to another, and which, 
while it exists, is exclusive and will support an action of ejectment, may 
yet be terminated and defeated even against the will of the riparian 
proprietor or his grantee. It may be defeated by a change in the chan- 
nel of the river either from natural causes or by the action of the state 
in the exercise of its paramount authority. And over and above, and 
paramount to, this right or title of the state and this right or title of 
the riparian proprietor is the right of the gênerai government on Inter- 
state waters, such as those hère in question, to protect, préserve, and 
improve the navigation of those waters. 

[5] I think there can be no doubt that prior to the construction 
of this improved channel by the government Whiteside had this right 
on the south side and up to the natural navigable channel, which would 



362, 188 FEDERAL REPORTER 

include the locus in quo, and that Norton's right extended only to this 
natural navigable channel on the north side. But I think that under the 
principles of the décisions and the reasoning thereof, if this natural 
navigable channel had been changed or shifted by natural causes so 
as to throw the locus in quo to the north side of said channel, that 
Whiteside's right would hâve ceased or been defeated, and that then 
this right would hâve belonged to Norton by virtue of his riparian pro- 
prietorship on the north or Minnesota side. In other words, that by 
the shif ting of the channel the right or title, call it whàt you may, would 
hâve shifted; and this whether the locus in quo still remained land 
under water or had become in whole or in part an island. I think, too, 
that under the principles and reasoning of the adjudicated cases the 
same resuit would follow from the change in the channel by the gov- 
ernment improvement thereof, made, as it was, under the paramount 
authority of the government. The holder of this right, arising from and 
existing by virtue of riparian proprietorship, holds it always .with 
knowledge and notice of this paramount authority in the government ; 
and whatever he may do, or whatever improvement he may make, will 
be done in the face of this knowledge and notice, and, having this 
knowledge and notice, he has no just right to complain. 

A différent question might arise, and the principle of estoppel might 
be invoked against the state or gênerai government, if prior to the 
making of an improvement by the shore owner or his grantee, in the 
■ exercise of this right of use and occupancy, a harbor or dock line had 
been established by proper governmental authority. But that question 
does not arise hère. 

It seems to me that the foregoing conclusions solve equitably and 
without substantial injustice to any one the questions hère involved, 
and will solve ail similar questions which may arise on thèse waters, 
and will prevent innumerable complications which might otherwise ex- 
ist. I think they are fully and f airly supported by the principles laid 
down in the décisions and the reasoning thereof, and if in doubt I 
would so hold in the absence of direct and controlling judicial author- 
ity. It seems to me, therefore, that the relief asked for in the bill by 
the complainant as against the défendants Whiteside and Alexander 
should be granted. 

[6] As to the défendant Tallas, it appearing by the évidence that 
he is in the actual possession of the locus in quo or a part of it, it seems 
to me that, under the décisions cited and read by Mr. Richards, the 
court is without jurisdiction to détermine those rights in this suit, but 
that they must be determined in an action at law. As to him, there- 
fore, it seems to me that the bill will hâve to be dismissed. 

Counsel for complainant will prépare a decree in accordance with 
the foregoing views, and the terms of that decree can be hereafter 
settled by the court, upon notice to ail the counsel. 



OEEGON-WASHINGTON B. & N. CO. V. WILKINSON 363 

OREGON-WASHINGTON R. & NAVIGATION CO. v. WILKINSON et al. 
(SPOKANE, P. & S. RY. CO., Intervener). 

(Circuit Court, E. D. Washington, E. D, May 6, 1911.) 

No. 1,379. 

L Eminent Domain (§ 194*) — Pétition— Requisites. 

Under Rem. & Bal. Code Wasli. § 9i:i, pvoviding that a condemnation 
pétition sUall set forth, among other tliiiigs, tbe object for whicli tlie laud 
Is sought to be appropriated, failure of tlie pétition to sufflciently allège 
sucb object is not a jurisdictional defeet, but is curable by ameudment. 

[Ed. Note. — For other cases, see Eminent Domain, Cent. Dig. § 523; 
Dec. Dig. § 194.*] 
2. Eminent Domain (§ 178%*) — Abatement of Pkocbedings — Teansfee of 
Inteeest. 

Under Rem. & Bal. Code Wash. § 193, providing that no action shall 
abate by the death or disability of a party or by a transfer of any interest 
in the action if the cause of action survives, a transfer of the property 
of a railroad company to another did not abate condemnation proceed- 
ings instituted by the transferring company. 

[Ed. Note. — For other cases, see Eminent Domain, Cent. Dig. § 486; 
Dec. Dig. § 178%.*] 

8. Emirent Domain (§ 185*) — Appeaeance— Jurisdiction. 

Where intervener appeared in condemnation proceedings and Invoked 
the jurisdlction of the court ^n a district other than that in which It re- 
sided, he could not thereafter object to the court's jurisdlction because 
there had been a change in the name of the petitioner wlthout otherwise 
Impalring or affecting the court's jurisdlction. 

[Ed. Note.— For other cases, see Eminent Domain, Cent. Dig. § 499 ; 
Dec. Dig. § 185.*] 

4. Monopolies (§ 21*) — Rights and Liabilities— Condemnation oe Land. 

The State having reserved to itself the right to détermine when and 
under what eircumstances a consolidation between railroads shall be per- 
mitted by Laws Wash. 1909, c. 196, It was no défense to proceedings to 
condemn land for a railroad rlght of way that petitioner was an Illégal 
consolidation of two other railroads in violation of section 1 of that act 

[Ed. Note. — For other cases, see Monopolles. Cent. Dig. § 15 ; Dec. Dig. 
S 21.*] 

5. Eminent Domain (S 56*) — Railroad Right of Way— Condemnation— Ne- 

CESSITY. 

Where a railroad company authorized to condemn land seeks to cou- 
demn particnlar property for a right of way for terminal facilities, It 
was no answer, in the absence of fraud or bad falth. that there was no 
necessity for condemnlng the particnlar property because some other lo- 
cation mlght be made or some other property obtained by agreement 
which would answer petitloner's purpose. 

[Ed. Note. — For other cases, see Eminent Domain, Cent. Dig. §§ 147-160 ; 
Dec. Dig. I 56.*] 

6. Eminent Domain (§ 55*) — Right of Wat— Docation. 

A rallroad's rlght to condemn land for terminal facilities dates from 
the location and adoption of the land by the railroad company for that 
purpose. 

[Ed. Note.— For other cases, see Eminent Domain, Cent. Dig. § 135; 
Dec. Dig. § 55.*] 

7. Eminent Domain (§ 55*) — Right of Way — ^Tebminal Facilities— Use oi; 

IiAND. 

Where, at the time petitloner's prédecessor locatèd and adopted certain 
land in controversy for terminal facilities, the land was the private prop- 

*For other cases see same topic & i numbsb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



364 188 FEDERAL RBPOETEB 

erty of another railroad company, but was not then devoted to any pub- 
lie use and had not been during 10 or 12 years preceding, and there was 
oothing to Indicate that tbe company owning tbe land Intended to use it 
for public purposes at any tlme in the immédiate future, if at ail, the 
land was sul)ject to petitioner's rlgJit to condemn as against the rights of 
another corporation attaching more than a year thereafter. 

[Kd. Note. — For other cases, see Eminent Domain, Cent. Dig. § 135; 
Dec. Dig. § 55.*] 

Condemnation proceedings on pétition of the Oregon-Washington 
Railroad & Navigation Company, substituted for the North Coast 
Railroad Company, against Randolph A. Wilkinson, the St. Paul, Min- 
neapolis & Manitoba Railway Company, the Great Northern Railway 
Company, and the Spokane, Portland & Seattle Railway Company, in- 
tervener. Decree for petitioner. 

Danson & Williams and Hamblen & Gilbert, for petitioner. 
F. V. Brown and Edward J. Cannon, for respondents. 
Carey & Kerr, for intervener. 

RUDKIN, District Judge. This îs a proceeding to condemn cer- 
tain real property for railroad purposes. The tract sought to be con- 
demned lies immediately south of Ide avenue, in the city of Spokane, 
is approximately 1,100 feet in length, east and west, by 400 feet in 
width, north and south, and contains 11 ^Y^"" acres. Ide avenue is 
a public Street of the city, 50 feet in width, running south of and par- 
allel with the tracks of the Great Northern Railway Company and 
about 100 feet distant therefrom, with a tier of lots used principally 
for warehouse purposes intervening. This tract, together with other 
lands, was acquired by the Great Northern Railway Company, or for 
its use and benefit, in the year 1896 or 1897 ; the date of the convey- 
ance or the description of the other lands acquired not appearing in 
the record. It appears from the testimony, in a gênerai way, that the 
land was originally acquired for Great Northern terminais in the city 
of Spokane; but, from the date of its acquisition until conveyed to 
the Spokane, Portland & Seattle Railway Company 11 or 12 years 
later, it was never used by the Great Northern Company for any pub- 
lic purpose, nor is there any testimony tending to show that that com- 
pany intended to so use it within any reasonable period in the future, 
if at ail. 

In the year 1905 the Great Northern Railway Company and the 
Northern Pacific Railway Company organized the Spokane, Portland 
& Seattle Railway Company to construct a line of railway from the 
city of Spokane to the city of Portland by way of the Columbia river, 
for the purpose of relieving the congestion of traffic on the two old 
lines over the Cascade Mountains between Eastern and Western 
Washington. One-half of the stock in the new company is owned by 
each of the old companies, and the new company since its organiza- 
tion has been, and is now, under the joint management and control 
of the two parent companies. The new line to Portland was opened 
in the fall of 1908, and on or about the llth day of November of that 
year the président of the Great Northern Railway Company and the j 
président of the Northern Pacific Railway Company took up the ques- 

*For other caaes see game toplc & i numbbb lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexai 



OREGON-WASHINOTON K. & N. CO. V. WILKINSON 365 

tion of acquiring terminais for the new company in the city of Spo- 
kane. It was at that time agreed that the land in controversy should 
be conveyed by the Great Northern Railway Company, or its then 
holder, to the Spokane, Portland & Seattle Railway Company, for ter- 
minal purposes in the city of Spokane; but the considération was not 
agreed upon until later, and the deed was not executed until the 17th 
day of November foUowing. 

In the early part of the year 1906, the North Coast Railroad Com- 
pany was incorporated for the purpose of constructing a line of rail- 
road between the cities of Spokane and Seattle, as well as branch 
lines between other points in the state of Washington. Some time 
prior to the 23d day of May, 1907, the tract in controversy was sur- 
veyed by the North Coast Railroad Company as a part of its termi- 
nais in the city of Spokane, and on the last-named date this survey 
was adopted by the board of trustées, and the proper officers of the 
company were authorized to acquire the land by purchase or condem- 
nation. On the 24th day of September, 1907, the président of the 
North Coast Railroad Company informed the président of the Great 
Northern Railway Company oif the sélection of this tract, by letter, 
and took up with him the question of its purchase. On December 20, 

1907, the président of the Great Northern Railway Company rephed 
as follows: 

"On September twenty-fourth last you wrote me a letter regarding some» 
property in Spokane. I held your letter until I could make an effort to as- 
certain something definlte as to tbe North Coast Railroad. Having been 
west and not having satisfled myseif as to what interests you represent, I do 
not care to enter into any negotiations regarding any property. I always 
like to know what interests I am dealing with." 

On the 24th day of September, 1908, the président of the North 
Coast Railroad Company again informed the président of the Great 
Northern Railway Company that his company was ready to take up the 
question of the purchase of this property, and asked him to fîx the 
price at an early day. He was informed by the président of the Great 
Northern Railway Company in reply, under date of October 1, 1908, 
that the matter had been referred to Mr. Gilman, one of the company's 
attorneys at Seattle. The matter was then taken up with Mr. Gil- 
man, but nothing was accomplished through thèse negotiations. The 
présent prpceeding was thereupon commenced in the superior court of 
Spokane county on the 14th day of November, 1908, by the filing of 
a pétition and a notice of lis pendens. On the 19th day of December, 

1908, the proceeding was removed to this court on the pétition of the 
défendants, because of a diversity of citizenship. On the 8th day of 
March, 1909, the Spokane, Portland & Seattle Railway Company fîled 
its pétition in intervention in this court as the successor in interest to 
the Great Northern Railway Company, and asserted its right to re- 
tain the property by reason of its purchase from the Great Northern 
Railway Company and its subséquent adoption for railroad terminais 
in the city of Spokane. 

Testimony was taken before Judge Whitson during April and Maj' 
of 1909, and before the master in chancery during August of 1909; 
but no further steps seem to hâve been taken in the proceeding until 



366 188 FEDERAL REPORTEE 

February of this year. In the meantime the North Coast Railroad 
Company and the Oregon Railroad & Navigation Company Consoli- 
dated their lines and proposed lines in the state of Washington, under 
the name of Oregon- Washington Railroad & Navigation Company. 
The two consolidating companies conveyed ail their property and prop- 
erty rights to the new company, and the new company was authorized 
by its board of directors to prosecute to final judgment ail pending 
condemnation suits. Since the consolidation the old Oregon Railroad 
& Navigation Company lines hâve been known as the "First Division" 
and the old North Coast lines as the "Third Division" of the Oregon- 
Washington Railroad & Navigation Company. As soon as thèse con- 
veyances became a matter of record, the intervener moved to dismiss 
the condemnation proceeding, on the ground that the petitioning com- 
pany had parted with ail interest in its former holdings, for virant of 
prosecution, and on the further ground that the intervener had its 
principal place of business at Vancouver, in the Western district of 
Washington, and not at Spokane, in the Eastern district. On the 
other hand, the Oregon- Washington Railroad & Navigation Company 
moved that it be substituted as petitioner for and in the place of the 
original petitioner and as its successor in interest. The motion to dis- 
miss was denied, leave to substitute was granted, and further testi- 
mony was taken on the questions of public use and public necessity. 
The caseis now before the court for final détermination on thèse pre- 
liminary questions. 

Before taking up the merits of the case, however, I will advert 
briefly to some of the preHminary motions and objections interposed 
and to the rulings thereon. 

[1] At the inception of the hearing before Judge Whitson an ob- 
jection was interposed to the pétition on the ground that it did not al- 
lège or show that the property was sought to be taken for a public 
use. This objection was sustained; but the petitioner was granted 
leave to amend, and the amendment was accordingly made. There was 
no error in this ruling. 

Section 921, Rem. & Bal. Code, provides that any corporation au- 
thorized by law to appropriate land, real estate, premises, or other 
property, for right of way or any other corporate purposes, may pré- 
sent its pétition to the superior court of the proper county, in which 
the land, real estate premises, or other property sought to be appro- 
priated shâll be described with reasonable certainty, setting forth the 
names of each and every owner, incumbrancer, or other person or 
party interested in the same, or any part thereof, so far as the same 
can be ascertained from the public records, the object for which the 
land is sought to be appropriated, and praying that a jury be impan- 
eled to ascertain and détermine the compensation to be made in money. 
The pétition in this case alleged that the petitioner was authorized by 
law to appropriate lands, real estate premises, and other property, for 
corporate purposes, described the land sought to be taken with rea- 
sonable certainty, set forth the names of the owners and parties in in- 
terest as required, and the object for which the land was sought to be 
appropriated. If it be conceded that the statement of the object for 



OEEGON- WASHINGTON B. & N. 00. V. WILKINSON 367 

which the lahd was sought to be appropriated was déficient, the. de- 
fect was not jurisdictional and was curable by amendment. Rem. & 
Bal. Code, § 303 ; State ex rel. Merriam v. Superior Court, 55 Wash. 
64, 104 Pac. 148. 

[2] Nor did the action abate by reason of the transfer made by 
the original petitioner to the Oregon- Washington Railroad & Naviga- 
tion Company while the action was pending. Section 193, Rem. & 
Bal. Code, provides that: 

"No action shall abate by.the death, luarriage, or other disability of the 
party, or by the transfer of any iuterest therein, if the cause of action sur- 
vive or continue ; but the court may at any time within one year thereafter, 
on motion, allovv the action to be continued by or against his représentatives 
or successors in interest." 

This section has been construed to extend to and include condem- 
nation proceedings. California Central R. R. Co. v. Hooper, 76 Cal. 
404, 18 Pac. 599; Bradley v. Northern Pac. Ry. Co., 38 Minn. 234, 36 
N. W. 345. 

[3] The motion to dismiss for want of prosecution was not urged 
in argument, and the motion based on the résidence or place of busi- 
ness of the intervener is not well taken. The intervener appeared in 
the Eastern district and invoked the jurisdiction of the court, and is 
now in no position to object to that jurisdiction simply because there 
has been a change in the name of the petitioner without otherwise im- 
pairing or afifecting the jurisdiction of the fédéral court. 

[4] On the final argument of the case it was urged that the con- 
solidation of the properties of the Oregon Railroad & Navigation 
Company, and the North Coast Railroad Company, violâtes section 16 
of article 12 of the state Constitution, which déclares that "no railroad 
corporation shall consolidate its stock, property or franchises with any 
other railroad corporation owning a competing Une," and section 1 
of the act of March 18, 1909 (Laws of Washington 1909, p. 698), 
which contains a similar prohibition. I doubt very much whether 
thèse two companies owned competing lines, within the meaning of 
thèse provisions; but upon that question I express no opinion, for I 
am satisfied that the question of their violation cannot be raised by 
a private property owner in a condemnation proceeding. The section 
of the act of 1909, above cited, provides, among other things, that "any 
such consolidation shall be approved by the State Railroad Commis- 
sion." The state thus reserved to itself the right to détermine when 
and under what circumstances a consolidation should be permitted, 
and did not leave the question of the enforcement of the Constitution 
or the statute to private individuals or rival corporations. Leaven- 
worth County v. Chicago, etc., Co., 134 U. S. 688. 10 Sup. Ct. 708. 
33 L. Ed. 1064; Rogers v. Nashville, etc., Co., 91 Fed. 299, 33 C 
C. A. 517; Jones v. Missouri, etc., Co. (C. C-) 135 Fed. 153; Weed 
v. Gainesville, etc., Co., 119 Ga. 576, 46 S. E. 885; Phinizy v. Au- 
gusta, etc., Co. (C. C.) 62 Fed. 678; Bell v. Pennsylvania, etc., R. Co. 
(N. T.) 10 Atl. 741. 

In Thomas v. Railroad Co., 101 U. S. 71, 25 L. Ed. 950, Oregon 
Ry. Co. V. Oregonian Ry. Co., 130 U. S. 1, 9 Sup. Ct. 409, 32 L. Ed. 



368 188 FEDERAL REPORTEE 

837, Central Transportation Co. v. Pullman's Car Co., 139 U. S. 24, 
11 Sup. Ct. 478, 35 L. Ed. 55, and East St. Louis Connecting Ry. 
Co. V. Jarvis, 92 Fed. 735, 34 C. C. A. 639, cited by the intervener, 
the actions were brought on written contracts or leases, the considér- 
ation for which was a void or illégal transfer or lease, and of course 
it was open to the défendants to challenge the legality or validity of 
the contract in suit. Thèse cases are no authority for the broad prop- 
osition that a stranger to such a contract may raise the objection in 
a collatéral proceeding. 

[5] The final question in the case is: Is the petitioning company 
entitled to appropriate this land at ail, and, if so, is it so entitled 
against the claims of the intervener. The testimony on this branch of 
the case covers a wide range, and I hâve neither the time nor the 
disposition to review it at length. As I view the law, much of it re- 
lates to matters which are not proper subjects for judicial cognizance 
— at least, in the absence of fraud or bad faith. Whether there is 
need for anotljer railroad in the territory traversed by the old North 
Coast lines ; whether a railroad company should maintain its make-up 
and break-up yards within or without the city limits ; whether it should 
hâve one or two freight terminais or freight yards; and whether its 
terminais and freight yards should be connected or disconnected — are 
ail questions which the company must ordinarily détermine for itself, 
for, if a private individual or another railroad corporation whose prop- 
erty is sought to be taken be permitted to détermine thèse questions 
for it, nothing but confusion can follow, and railroad construction will 
become well-nigh impossible. 

"It may be objected that there is no necessity for condemnlng the partic- 
ular property, becatise some other location might be made or some other 
property obtained by agreemeut. But this objection is unavailing. Except 
as specially restricted by the Législature, those invested with the power of 
eminent domain for a public purpose can make their own location according 
to their own vievvs of what is best or expédient, and this discrétion cannot 
be controlled by the courts." 1 Lewis on Eminent Domain, § 393. 

This rule prevails in this state, notwithstanding the fact that the 
question of necessity is submitted to and determined by the courts 
under the state statutes. Samish River Boom Co. v. Union Boom 
Co., 32 Wash. 600, 73 Pac. 670; State ex rel. Kent Lumber Co. v. 
Superior Court, 46 Wash. 520, 90 Pac. 663 ; State ex rel. Milwaukee 
Terminal Co. v. Superior Court, 54 Wash. 365. 103 Pac. 469, 104 Pac. 
175. 

I will say in conclusion that I find from the testimony that there 
is reasonable necessity for the condemnation and appropriation of 
this property on the part of the petitioning company, and that the prop- 
erty is not exempt from condemnation by reason of anything con- 
tained in the pétition in intervention or in the proofs ofïered in its sup- 
port. 

[6] The North Coast Railroad Company located and adopted the 
land for terminal purposes in May, 1907, and its claim or right relates 
back to that date. Nicomen Boom Co. v. North Shore, etc., Co., 40 
Wash. 315, 82 Pac. 412: Columbia Valley R. R. Co. v. Portland & 
Seattle R. Co., 49 Wash. 88, 92, 94 Pac. 918; State ex rel. Kettle 



SLADE V. MASSACHUSETTS COAL A POWER CO. 369 

Falls, etc., Co., v. Superior Court, 46 Wash. 500, 506, 90 Pac. 650; 
State ex rel. Cascade, etc., Corp. v. Superior Court, 53 Wash. 321, 
101 Pac. 1094; Mills, Eminent Domain (2d Ed.) § 4. 

[7] At that time the property sought to be taken was the private 
property of the Great Northern Raiiway Company. It was not then 
devoted to any public use, had not been during the 10 or 12 years 
preceding, and, as heretofore stated, there is nothing in the testimony 
to indicàte that that company intended to use it for public purposes 
at any time in the immédiate or near future, if at ail. In fact, the 
testimony indicates rather the contrary. The rights of the interven- 
ing company did not attach until as late as November 11, 1908. The 
property cannot be used by both corporations for the same purpose. 
There is no controlling necessity which would warrant the court in 
taking the property from the company having the prior right and 
awarding it to the other. And the prayer of the pétition should there- 
fore be granted. 

Let an order be entered accordingly. 



SLADB V. MASSACHUSï:TTS COAL & POWER 00. 

(Circuit Court, D. Massachusetts. May 4, 1911.) 

No. 800. 

1. Receivees (§ 174*) — Action Against— Leave of Court— Foeecloshke. 

Where a recelver had been appointed for a corporation morlgagor, the 
mortgagee could not take auy step towards foreclosing the mortgage after 
default while the receivership continued, without ohtaining permission 
of the court in which the receivership proceedings are pending. 

[Ed. Note.— For other cases, see Receivers, Cent. Dig. §§ 333-343 ; Dec. 
DIg. § 174.*] 

2. COEPOEATIONS (§ 481*) — MORTGAGE FOEECI.OSUEB— INJUNCTION. 

Where mortgagees wlth notice of receivership proceedings against the 
corporation mortgagor Instituted foreelosure proceedings without per- 
mission of the court in which the proceedings were instituted, sueh pro- 
ceedings will be enjoined. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 481.*] 

3. COEPOEATIONS (§ 481*) INSOLVENCT— RECEIVEES— MOETGAGE FOHECLOSUEE. 

Where a corporation purchased property having an assessed value of 
$1,720 for $4,200. paylng its grantor $3,200 in cash, and giving a pur- 
chase money mortgage for the remalnlng $1,000, and at the time of in- 
soivency only the principal and six months interest remained due. It 
being probable that the corporation had a valuable equity In the prop- 
erty, and the receiver having appUed for leave to sell ail the property, 
the mortgagee would not be permitted to sell on foreelosure pending a 
recelver's sale ; there being nothing to justlfy appréhension of loss to 
the mortgagee by such delay. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 481.*] 

In Equity. Suit by Edward Slade against the Massachusetts Coal & 
Power Company. Application by a receiver for an injunction restrain- 
ing Harmon Carlson and another from selling certain land belonging 
to défendant company under mortgage foreelosure. Granted. 

•For other cases see same toplc & 8 numeeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
18S F.— 24 



370 188 FEDERAL REPORTEE 

C. A. Barnes for mortgagee. 

Warren, Garfield, Whiteside & Lamson, for receivers. 

DODGE, District Judge. The bill in this case, filed October 24, 
1910, is brought by a créditer of the défendant company on behalf 
of himself and ail other creditors and stockholders. It represents that 
the défendant owns lands of considérable extent in the town of Mans- 
field, supposed to contain coal and to be valuable for the purpose of 
mining the coal. It further represents that some of the real estate is 
subject to mortgages, a Hst of which is given, with the names of the 
mortgagees or holders and the amounts secured, amounting in ail to 
almost $17,000. It goes on to state that the company owes upward 
of $18,000 in addition to the amounts secured by mortg-age. It then 
allèges that the company has no money or assets readily convertible 
into money with which to meet its obligations and operating expenses, 
but that the true value of its assets is believed to be in excess of ail 
its debts ; that légal proceedings and foreclosures are threatened, which 
will resuit in a loss to the unsecured creditors of any equity which 
may exist in the mortgaged premises, and in waste, dépréciation, and 
loss of so much of the company's assets as is not subject to mortgage. 
The bill prays in the usual way for the appointment of a receiver 
vested with the usual powers, the administration by the court of the 
company's assets, the enforcement of the liens and rights of ail cred- 
itors as finally ascertained, and for a sale of the assets and distribution 
of the proceeds whenever this can be accomplished without undue sac- 
rifice. The défendant company having answered the bill and raising 
no objection, a receiver was appointed October 25, 1910. From a pre- 
liminary report filed by him November 3d it appears that the company 
owns about 1,700 acres of land in ail, about one-third thereof being 
subject to the mortgages referred to above, which hâve cost the com- 
pany about $70,000 in ail. Among the mortgages on the company's 
property specified in the bill appears a mortgage for $1,000 upon 35 
acres of land to Harmon Carlson of Mansfield. The company acquired 
this 35 acres, as is not disputed, from said Carlson for the agreed 
price of $4,200, paying him $3,200 at the time of purchase, and giving 
this mortgage for the remaining $1,000. The mortgage is dated Au- 
gust 27, 1909, bears interest at 5 per cent., payable semiannually, and 
became due February 27, 1911, upon which date the amount of the 
mortgage, with six months' interest thereon, was due, ail previous in- 
• terest having been paid. The mortgagee has failed to pay the taxes 
levied upon the property for the year 1910, which amount to $29. On 
December 31, 1910, the court ordered ail creditors of the company to 
make proof of their claims before the receiver on or before January 
28, 1911, or to be forever barred from asâerting the same. Due notice 
was given of the order, and in compliance with it Harmon Carlson 
presented to the receiver a proof of daim, sworn to before him Janu- 
ary 10, 1911, setting forth that the company owed him $1,000, the con- 
sidération being the outstanding mortgage given him August 27, 1909. 
The receiver had previously (November 3, 1910) written Carlson re- 
ferring to his récent appointment, assuring him that nothing was in- 



8LADE V, MASSACHUSETTS COAL & POWER CO. 371 

tended which would affect the lien of the mortgage, asking for partic- 
ulars of the dates when interest would be due and of the payments 
on account to date, and stating that for the présent it would be im- 
possible to meet promptly the interest as it accrued. Carlson commu- 
nicated the particulars requested in a letter dated November 7, 1910, 
acknowledged by the receiver November 15, 1910. Six months' in- 
terest on tlie Carlson mortgage became due February 28, 1911. Ail 
previous interest had been paid. It is not disputed that shortly after 
February 28, 1911, Carlson published an advertisement of a foreclosure 
sale to take place under the mortgage April 3, 1911. There has been, 
however, as yet no entry to foreclose. On March 29, 1911, the re- 
ceiver filed the présent pétition, in which he set forth that the Carlsons 
as mortgagees were intending to foreclose and sell ; . that they had 
advertised the sale as above ; that the mortgaged property was assessed 
for $1,720; that though the défendant had not paid taxes on the prop- 
erty for 1910, amounting to $20, there would be no tax sale for several 
months; that unsecured claims had been proved to the amount of 
$19,617.31 ; and that the Carlsons as secured creditors had proved a 
claim for $1,000, and that they had no authority from the court to 
foreclose or advertise sale. The receiver prayed that they be restrained 
from selling or taking possession. After summons to show cause 
why the prayer of this pétition should not be granted, the Carlsons 
filed an answer, which sets forth that the receiver had been notified that 
principal and interest would be insisted upon when they became due 
February 28, 1911; that the decree entered October 25, 1910, though 
it appointed a receiver and forbade every one to interfère with the 
performance of his duties, was made upon a représentation that the 
property was to be operated and developed, whereas there had been no 
development and development work had been entirely stopped, so that 
the occasion for the order had passed. The answer further sets up 
that as farm property, in the présent state of the market, the mort- 
gaged premises are not worth more than the face of the mortgage, with 
taxes and costs of foreclosure. 

[1] The mortgagees admit that they hâve published notice of sale 
as alleged by the receiver. They cannot be allowed to take any step 
toward a foreclosure of their mortgage while the receivership continues, 
without first obtaining the permission of the court. This is too well 
settled to admit of any doubt. Wiswall v. Sampson, 14 How. 52, 66, 
14 L. Ed. 322; In re Tyler, 149 U. S. 164, 181. 13 Sup. Ct. 785, 
37 L. Ed. 689; Hitz v. Jenks, 185 U. S. 155, 166-169, 22 Sup. Ct. 598, 
46 L. Ed. 851. Therefore, the restraining order now in force was 
properly issued, and the mortgagees must be enjoined, as prayed for 
by the receiver, from selling the mortgaged property or interfering 
in any way with his possession of it until they hâve obtained the court's 
permission. If the publication of their notice was in any sensé in vio- 
lation of the decree appointing the receiver, it is unnecessary to take 
further notice of the fact; no attempt having been made to proceed 
with their proposed sale. 

[2] In the mortgagees' answer to the receiver's pétition alleged 
facts are set up which might be relied on for the purpose of inducing: 



372 188 FEDEEAL KEPOEÏEE 

the court to allow them to realize on their security after Iiaving prop- 
erly appeared for that purpose in the receivership suit. The answer 
concludes with a prayer for permission to "continue foreclosure pro- 
ceedings as speedily as possible." If foreclosure proceedings hâve 
been begun, they hâve been begun without right. Thèse mortgagees 
would be in any case chargeable with notice ot the decree establishing 
the receivership, and, having appeared as secured creditors in the suit, 
they cannot deny actual notice. No continuance of proceedings already 
commenced can be allowed. 

[3] Disregarding ail informalities, however, is the case one in which 
the court is bound to permit thèse mortgagees to realize on their secu- 
rity without f urther delay, under the circumstances presented ? While 
the custody of. the property is at présent in the court, and not to be 
disturbed except by order of the court, it is retained for the benefit of 
ail parties interested in the property according to their respectiye in- 
terests. Thèse mortgagees hâve a vested contract lien, which the court 
will not disturb. No such exceptional circumstances appear as might 
justify the court in refusing it priority over ail other claims which 
might reduce the amount of the mortgagees' security. If the property 
is insufficient or not more than sufficient to cover the claims secured, 
no delay in allowing the mortgagees to deal with it according to the 
terms of their mortgage can be justifîed. They are in that case the 
only parties whose interest in this parcel of the company's,land has any 
claim to considération, and this is none the less true because of the 
fact, which appears from affidavits and a plan submitted by the re- 
ceiver, that the mortgaged parcel of land, by reason of its .situation 
near one of the défendant company's shafts and surrounded by its 
other land, is peculiarly important .to any future continuance of its 
mining enterprise as a whole. The unsecured creditors and stock- 
holders cannot ask upon thèse grounds that the mortgagees' interest 
be sacrificed for their benefit. Gay v. Hudson River, etc., Co. (C. C. 
A.) 184 Fed. 689. But there is strong reason to believe that a substan- 
tial and valuable equity exists in the parcel ref erred to over and above 
the $1,000, with interest from February 27, 1911, which the mortgage 
secures. Although the mortgagees' answer states that "as farm prop- 
erty, in the présent state of the market for farms in Mansfield, said 
property is not worth more than the face of said mortgage, taxes, and 
costs of foreclosure," they produce no disinterested évidence to that 
eflfect, while on the other hand the aiîfidavit!of Hall, a person experi- 
enced in Mansfield land values, estimâtes the value at $2,500 at least, 
the tax collector's affidavit shows its assessed. value to be $1,720, and, 
as has been stated, the mortgagees received $3,200 for it from the de- 
fendant company in addition to the $1,000, secured upon it. To the 
extent of the excess of value above the mortgagees' daim, there is an 
interest available to other parties in the proceedings which it is part 
of the court's duty to protect, so far as this may be donc without un- 
justly disregarding the mortgagees' rights. The extent to which the 
court can go in this direction is obviously limited, but I am satisfied 
that it is'not bound at ail events to let the mortgagees sell at once, 
regardless of the effect upon the value of the equity in the property. 



8LADE V. MASSACHUSETTS COAL & POWER CO. 373 

Thèse proceedings hâve for their object the liquidation of the com- 
pany's afïairs and the distribution of the proceeds of its property among 
its creditors. That they cannot ail be paid in full appears to be the 
probable resuit. The receiver, after an attempt to an-ange for the 
further development of the mining. opérations undertaken by the Com- 
pany, has now asked for leave to sell ail its property, and notice of the 
hearing upon this application has been given for May 8, 1911. The 
further proceedings to be taken in the case will therefore be analogous 
in their nature to bankruptcy proceedings. This court, or the bank- 
ruptcy court exercising its powers as a court of equity, might, for the 
purposes of such proceedings, sell this parcel or any of the company's 
land freed from incumbrances, transferring the mortgagees' lien to the 
proceeds, as declared by the Court of Appeals for this circuit in Re 
New England Piano Co., 122 Fed. 937, 59 C. C. A. 461. In doing this, 
though it would afford the mortgagees' prior rights every possible pro- 
tection, it would not be bound to sell at the time insisted on by the 
mortgagees. It may, therefore — and the bankruptcy court not infre- 
quently does — restrain a mortgagee for a reasonable time from com- 
meiicing foreclosure proceedings. Re Pittelkow (D. C.) 92 Fed. 901, 
904. When this is done, it is donc for the purpose of preventing a 
sacrifice of the value of the equity, but avoiding at the same time any 
real détriment to the mortgagee. If this parcel of land is sold at once, 
it will hâve to be sold apart from the other lands and property of the 
Company, in connection with which there is reason to believe that it pos- 
sesses a value lost when it is disconnected from them. The receiver, 
in the présent situation, cannot be expected to protect the value of 
the company's interest at such a sale. At the receiver's sale of this par- 
ce!, subject to the mortgage, made in connection with his sale, under 
the court's order, of ail the other lands and property belonging to the 
Company, it seems to me reasonable to expect that a materially higher 
value may be obtained for the company's interest. The additional in- 
terest which will accrue upon the mortgage before the sale can take 
place will be inconsiderable in amount. There is nothing before me to 
justify the appréhension of loss to the mortgagees by merely delaying 
their foreclosure until after the receiver's sale. The time for that sale 
will be fixed within a few days, and in fixing it the interests of ail 
parties will hâve to be considérée! and will prevent any long postpone- 
ment. Under ail the circumstances, I think I am justified in declining 
to allow any application for an immédiate foreclosure. 

The restraining order now in force, enjoining the mortgagees, as 
prayed for by the receiver, is to continue in force until the further 
order of the court. 



374 188 FBDÇRAL REPORTER 



ST. LOUIS SOUTHWESTERN RT. CO. v. STUTTGART & R. B. R. 00. et al. 

(Circuit Court, B. D. Arkansas, W. D. May 4, 1911.) 

No. 1,733. 

1. Eminent Domain (§ 275*) — Raileoad Cbossinq— Adéquate Remedt at 

Law. 

Complalnant had no complète and adéquate remedy at law which woiilcl 
preclude an injunetion restraining défendant from constructing a rail- 
road Crossing over cotnplalnant's line at a speclfled point, wliere, in ae- 
cordance with the proceedlngs talien for such crossing, it would be com- 
pleted and the Injury done before a hearing eould be had In defendant's 
proceedlngs to condemn a right to cross. 

[Ed. Note.— For other cases, see Eminent Domain, Cent. 01g. §§ 769- 
773 ; Dec. Dlg. S 275.*] 

2. INJTJNCTION (§ 16*)— ADEQUATE RBMEDÏ AT LAW. 

To prevent a court of equlty from Interfering by Injunetion It Is not 
sufflcient that there Is a remedy at law, but such remedy must be plain 
and adéquate, and as practical and efficient to the ends of justice and Its 
prompt administration as the remedy in equlty. 

[Ed. Note. — For other cases, see Injunetion, Cent. Dlg. § 15; Dec. Dlg. 
S 16.*] 

3. Eminent Domain (§ 76*) — Ckossing oveb Railboads— Right to Ceoss— 

Détermination— JuEisDiCTioN. 

Klrby's Dig. Ark. §§ 2955, 2956, provides that, where the détermination 
of the questions In controversy In condeœi»atlon proceedlngs Is Ilkely to 
retard the progress of the work of the petitlonlng railroad, the court or 
judge In vacation shall designate an amount of money to be deposited 
by the eompany subject to tlie order of the court, and, on the deposlt be- 
Ing made, may order that It shall be lawful for the eompany to enter on' 
tfie lands and proceed with its work prior to the assessment and payment 
of damages for the use and right to be determined. Section 2962 au- 
thorlzes one railroad to cross the tracks of another, and section 2963 
provides that. If the corporations cannot agrée upon the ainount of com- 
pensation to be made or the points or manner of crossing, the same shall 
be ascertained and determined by a "court of compétent jurisdiction" 
In the same manner as provided for the ascertainment of damages for a 
right of way for railroads. Held that, where the points or manner of 
crossing by one railroad over the tracks of another are in dispute, such 
disputé can only be determined after trial to a jury; and hence the 
court in vacation had no jurisdiction to anthorize the petitlonlng eom- 
pany to cross complainant's railroad at à disputed point on depositing 
a specifled sum for the payment of damages, to be subsequently ascer- 
tained, 

[Ed. Note. — For other cases, see Eminent Domain, Cent. Dlg. |§ 200- 
203; Dec. Dlg. § 76.*] 

In Equity. Suit by the St. Louis Squthwestern Railway Company 
against the Stuttgart & Rice Belt Railroad Company and others, to 
restrain défendant railroad eompany from crossing complainant's rail- 
road at a specified point until there could be a hearing on said defend- 
ant's pétition for condemnation of a right to cross at such place. On 
motion to dissolve a temporary injunetion. Denied. 

On January 27, 1911, the défendant, a railway corporation existlng under 
the laws of the state of Arkansas, flled its pétition in the state circuit court 
of Arkansas county for condemnation of a right to cross the railroad of tlie 
complainants herein naar the clty of Stuttgart, in thls state. The writ was 
made returnahle to the flrst suceeeding term of that court, which was April 
3, 1911. The court not being in session, the défendant on January 28, 1911, 
applied to the judge of the court in vacation for an order authorizing it to 

* «For othe? cases «ee same topio & i ndmber In Dec. & Am. Dlgs. 1907 lo date, & Rep'r Indexes 



ST. LOUIS S. W. ET. 00. V. STUTTGART <fe E. B. R. CO. 375 

cross the tracks of the complainant coinpany with its tracks at the place set 
out in the pétition. The jiidge on the saine day made an order in cont'ormity 
with the pray'er of the pétition granting the défendant the right to cross com- 
plainant's railroad at the place designated In the pétition, and requii'ed it to 
deposit the sum of $500 for the purpose of making compensation therefor. 
On Fehruary 16, 1911, the complainant filed with the clerk of the circuit court 
of Arkansas county, the court being still in vacation, its pétition and bond for 
removal of the cause to this court, upon the ground that there was a diversity 
of citlzenship, and that the amount in controversy exceeded in value the sum 
of $2,000. The pétition and hond are in proper form, but. the court not being 
in session, the order of removal was not made until the fîrst day of the April 
term of said court, when the court made an order for removal, and thereupon 
the transcript was lodged in this court in due time. On February 17th, after 
the pétition for removal had been filed in the state court, complainant flled 
its bill of complaint in this court, and asked for a temporary injunction un- 
til there could he a hearing had on the pétition of the défendant for the con- 
demnatlon of the right to cross complainant's tracks at the place designated. 
A hearing on the pétition for the temporary injunction was had on Feb- 
ruary 23, 1911, when the parties consented that a temporary restraining or- 
der as prayed in the bill might be granted, with leave to défendant to move 
to dissolve it upon notice. Défendant now moves for such a dissolution upon 
the ground that the court is without jurlsdiction, that there is no equity 
in the bill, and that the remedy at law is complète and adéquate. The 
grounds upon which the aid of this court is invoked by complainant, after 
setting out the great Injury complainant wlll suflfer by reason of this cross- 
ing at the place authorized, are that the hearing of the condemnation péti- 
tion and that for removal to this court could not be had imtil the meeting 
of the stat'e circuit court in April : that in the meantime the défendants 
would cross the road and practically prevent complainant from doing the 
switching of its freight trains without cutting them in two : that the place 
of the contemplated crossing is practically within the yard limits of com- 
plainant in the city of Stuttgart, a t'own of several thousand inhabitants, 
and to Bave the crossing there would be very dangerous to human life if 
permitted on grade, and withOut an interlocking plant or some other safety 
device; that the water tank of complainant is near that place, and freight 
trains taklng water at this tank are necessarily corapelled to hâve a part of 
their cars on that part of the track where défendant seeks to cross; that to 
protect the lives of its employés and passengers, and aiso to protect its prop- 
erty, it will be necessary to install an interlocking plant there at great ex- 
pense, and maintain and operate it at great expense ; that by changing its Une 
1,000 feet east of the proposed track ail of this eould be avolded to a great 
extent. It is also charged that the act of the judge in making the order 
in vacation was without authority of law, and therefore it is wholly void. 
They being remedlless at law, there being no court which could act on the con- 
demnation pétition or the pétition to remove until April, the intervention of 
this court as a court of equity is necessary to prevent Irréparable injury. 

Bridges & Wooldridge, for complainant. 
Thomas S. Buzbee, for défendants. 

TRIEBER, District Judge (after stating the facts as above). [1] 
That there is no complète and adéquate remedy at law is too clear 
for argument, for before a hearing can be had in the condemnation 
proceeding the crossing will 'hâve been completed and the mischief 
done. That courts of equity hâve power to grant at least temporary 
relief until there can be a détermination of the right of the défendant 
to cross is undoubted. Montana C. Ry. Co. v. H. & R. M. Ry. Ce, 6 
Mont. 416, 12 Pac. 916; Railway Co. v. Railway Co., 91 lowa, 16, 
58 N. W. 918 ; Atchison Street R. R. Co. v. Missouri Pacific Ry. Co., 
31 Kan. 66, 3 Pac. 284; National Docks, etc., Ry. Co. v. State, 53 N. 



376 188 FEDERAL BEPORTBB 

J. Law, 217, 2.1 Atl. 570, 26 Am. St. Rep. 421 ; 3 Elliott on Railroads 
(2d Ed.) § 1125. As stated in Colorado, etc., R. Ce. v. Chicago, etc., 
Ry. Ce, 141 Fed. 898, 7Z C. C. A. 132: 

"The ald of such a bill is recognized in courts of equity, and at times is 
Ughly remédiai and proper to maintain tiie status quo and stay the hand of 
the alteged wrongful intruder from doing further acts upon the Invaded prem- 
ises, which If not wholly irréparable would likely produce complications, and 
Inflict' injuries diffleult to reuiedy." 

That injunction may lie in cases of this nature has been expressly 
determined by the Suprême Court of Arkansas in Niemeyer & Dar- 
ragh V. Little Rock Junction Ry. Co., 43 Ark. 111, and Mountain Park 
Terminal Co. v. Field, 76 Ark. 239, 88 S. W. 897. 

[2] To prevent a court of equity from interfering it is not suffi- 
cient that there is a remedy at law. It must be plain and adéquate, 
as practical and eiiScient to the ends of justice and its prompt admin- 
istration as the remedy in equity. Watson v. Sutherland, 5 Wall. 74, 
78, 18 E. Ed. 580; Ex parte Young, 209 U. S. 123, 28 Sup. Ct. 441, 
52 E. Ed. 714, 13 L. R. A. (N. S.) 932 ; Arthur v. Oakes, 63 Fed. 
310, 11 C. C. A. 209, 25 L. R. A. 414; Twin City Power Co. v. Bar- 
rett, 126 Fed. 302, 61 C. C. A. 288; Castle Creek Water Co. v. As- 
pen, 146 Fed. 8, 76 C. C. A. 516; Butler Brothers Shoe Co. v. United 
States Rubber Co., 156 Fed. 1, 84 C. C. A. 167. 

Without determining ail the questions raised during the argument, 
there is one matter which in the opinion of the court is conclusive. 
By the act of the Législature of the state approved April 28, 1873, 
provision was made for the exercise of the right of eminent domain 
by railroads. The act is digested in Kirby's Digest of the Statutes 
of Arkansas as sections 2947 to 2958. Sections 2955 and 2956 pro- 
vide: 

"Sec. 2955. Where the détermination of questions in controversy in such 
proeeedings is likely to retard the progress of work or the business of such 
railroad compary, the court, or Judge In vacation, shall designate an amount 
of moiiey to be deposited by such eompany, subject to the order of the court, 
and for the purpose of making such compensation when the amount thereof 
shall hâve been assessed as aforesaid, and said judge shall designate the 
place of snch deposit. 

"Sec. 2956. Whenever such deposit shall hâve been made in compliance 
with the order of the court or judge, It shall be lawful for such eompany to 
enter upon such land and proceed with thelr work through and over the lands 
in controversy prior to the assessment and payment of damages for the use 
and right to be determined as aforesaid." 

By an act approved March 20, 1883, digested as sections 2962 and 
2963 of Kirby's Digest, provision was made for one railroad to obtain 
the right to cross the tracks of another railroad. Thèse sections are 
as follows: 

"Sec. 2962. Every railroad corporation created and organized under the 
laws of this state, or created and organized under the laws of any other state 
or the United States, and operating a railroad In this state, shall hâve the 
power to cross, intersect, join or unité its railroad with any other railroad 
now constructed, or that may hereafter be constructed, at any point on its 
route and upon the grounds and right of way of such other railroad eompany, 
with the necessary turn-outs, sidings and switehes and other conveniences 
in furtheranee of the object of its construction. And every railroad eompany 



ST. LOUIS S. W, ET. CO. V. STDTTGAKT & R. B. R. 00. 377 

whose railroad Is or shall be erossed, joined or Intersected by any new raii 
road shall unité with the owners and corporation of sucb new railroad in 
forming sucb crossing, intersection and connection, and shall grant to siich 
railroads so crossing, intersecting or uniting ail the necessary facillties for 
that purpose as aforesaid. 

"Sec. 2963. If the two corporations cannot agrée upon the amount of com- 
pensation to be made for the purposes set forth in the foregoing section, or 
the points or manner of such crossing, junctions or intersections, the same 
shall he ascertained and determined by a court of compétent jurisdiction in 
the same manner as provided for the ascertainment of damages for rlght of 
way for railroads." 

It will be noticed that while section 2955 expresssly authorizes a 
judge in vacation to make an order authorizing a railroad to enter up- 
on lands required for the right of way, section 2963 only confers the 
power to make an order to cross another railroad on "courts of com- 
pétent jurisdiction." The order under section 2955 can be made by 
a judge in vacation, as ail he is required to do is to designate the 
amount of money to be deposited, but that détermination is not final, 
but must be ascertained upon final hearing by the court and a jury. 
The constitutionality of that section was upheld by the Suprême Court 
solely upon the ground that it is but an interlocutory order, and the 
final assessment has to be made by a jury, as prescribed by the Con- 
stitution. Reynolds, Ex parte, 52 Ark. 330, 12 S. W. 570. 

[3] But if it is attempted to cross the tracks of another railroad un- 
der section 2963, if the points or manner of such crossing are in dis- 
pute, the statute provides that the same shall be ascertained and deter- 
mined by a court of compétent jurisdiction in the same manner as 
provided for the ascertainment of damages for rights of way of rail- 
roads. Under the latter section a very important matter has to be 
determined in addition to the compensation. The court must détermine 
the point and manner of such crossing. Besides, a power in a judge 
to act in vacation in a matter of this nature is not only in dérogation 
of the common law, but may prove very detrimental to the rights of 
the senior railway, and for this reason such a statute should be strict- 
ly construed; and, unless it clearly appêars to hâve been the intention 
of the Législature as expressed in the act to grant that power to 
the judges in vacation, judges would not be justified to assume it by 
implication. The détermination of the place and manner of such cross- 
ing is of great importance, and, having been once granted and exer- 
cised by the railway company, that question would be disposed of, and 
the only question left for détermination at the final trial by the jury 
would be that of compensation. 

In Denver & Rio Grande Ry. Co. v. Denver Railway Co. (C. C.) 
17 Fed. 867, 869, it was contended, as in the case at bar, that it is 
compétent for the court to allow the défendant to go on constructing 
its road subject to such disposition as may be held proper at the final 
hearing. But the court overruled this contention, saying : 

"It would be manifestly unjust to the défendant itself to countenance the 
building of the road now, when it may be that the court will afterwards 
change its mlnd in respect to this matter, and require the road to be removed 
and built somewhere else. What would be said if we should now and hère give 
the défendant permission to go on and build its road as it shall ehoose, and 



378 188 FEDERAL KEPORTBR 

in six months from tMs tlme, on final hearing, déclare ail of It to be wrong, 
a mlstake from the flrst, and that it would be tbe duty of tbe défendant to 
take up Its track and put it somewhere else. I do net think that any court 
can go on in tliat way. This is a matter for final décision and détermination, 
and as sucli there are questions whicb can only be considered upon final 
hearing." 

In the opinion of the court a judge in vacation under the statutes 
of this State possesses no such power, and the order made authoriz- 
ing the défendant to cross complainant's tracks at the place designatea 
is therefore coram non judice and absolutely void. To maintain the 
status que it is proper that the temporary injunction should remain, 
but, in order that no injustice may be donc, the hearing on the péti- 
tion pending on the law side of this court to cross will be speeded 
and set down for trial on May 15, 1911. 



UNITED STATES, for Beneflt of O'BRIEN, v. SONDHEIM et al. 

(District Court, D. Massachusetts. Aug. 8, 1910.) 

No. 249. 

1. DiSMISSAL AND NONSTJIT (§ 53*) MoTION — CONTENTS— GKOUNDS. 

A motion to dismiss should be based on grounds appearing from the 
writ and déclaration, and cannot in strictness set up additional facts 
of record In the court. 

[Ed. Note. — For other cases, see Dismissal and Nonsuit, Cent. Dig. § 
107 ; Dec. Dlg. § 53.*] 

2. Banketjptct (§ 387*) — Composition— Confirmation— ErFEOT—"DisMissED." 

Bankruptcy Act July 1, 1898, c. 541, § 12e, 30 Stat. 550 (U. S. Comp. St. 
1901, p. 3427) déclares that on confirmation of a composition the considéra- 
tion shall be distrlbuted as the judge shall direct and the case dismissed. 
Beld, that "dismissed" as so used meant only that the court should 
proceed no further with the administration of the estate under the bank- 
ruptcy act, and not that no further proceedings in the case should be 
taken to terminate the same, and hence did not deprive the référée of 
jurlsdiction conferred by section 22a(l) to thereafter pass on the accounts 
of the trustée, and, after allowing the same, direct that the trustée be 
discharged and the estate closed. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. | 616; Dec. 
Dlg. § 387.* 

For other définitions, see Words and Phrases, vol. 3, pp. 2104, 2105.] 

3. Bankbuptcy (§ 373*) — Dischabge of Teustee — Effect — Liability on 

Bond. 

Where after confirmation of a bankrupt's composition, the référée en- 
tertained an application to settle and allow the trustee's account, and 
allowed the same and discharged the trustée without any objection or 
appeal by the bankrupt, he could not thereafter disregard or dispute such 
allowance in a suit on the trustee's bond to recover the amount in his 
hands at the time the composition was confirmed. 

[Ed. Note.— -For other cases, see Bankruptcy, Dec. Dig. § ,373.*] 

4. Bankruptcy (§ 373*) — Tbustee's Account— Allowance — Conclusiveness. 

Where a bankrupt did not object to the allowance of the trustee's ac- 
count showing that $895 in the trustee's hands at the date of confirma- 
tion of a composition had been lawfully expended during the bankruptcy 

•For other cases see same topic & § numbeh In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. SONDHEIM 379 

administration, and did not appeal from the order allowing It, he could 
not suceessfully claim In a suit on tlie trustées bond that tlie amouut 
so expeuded by the trustée was the bankrupt's property, aud should hâve 
been returned to him on a confirmation of the composition. 
[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 373.*] 

5. Bankruptcy (§ 373*) — Action on Trusteb's Bond — Pkerequisites — Ao- 
counting. 

Where a banlcrupt's trustée had not absconded without settling his 
accounts, but his account rendered had been allowed, showing the expend- 
iture of the amount demanded by the bankrupt In the administration 
of the estate, an order directing that the trustée should account, was a 
necessary prerequisite to an action on his bond to recover property be- 
louging to the estate. 

[Ed. Note.— For other cases, see Bankruptcy, Dec. Dig. § 373.*] 

Action by the United States, for tlie benefit of Dennis J. O'Brien, 
against Philip J. Sondheim and the American Surety Company. On 
motion to dismiss. Granted. 

Joseph P. Lyons, for plaintiff. 
A. K. Cohen, for défendants. 

DODGE, District Judge. Dennis J. G'Brien was adjudged bank- 
rupt in this court July 27, 1907. The défendant Sondheim was ap- 
pointed and qualified as trustée of his estate August 6, 1907. The 
présent suit is brought against him and the surety company upon his 
bond as trustée. The déclaration allèges that certain property came 
into the defendant's hands as trustée of the estate, which he sold for 
$895 ; that an offer of composition was confirmed by the court on Oc- 
tober 6, 1908 ; that the bankrupt thereupon became entitled to the $895 
received by the défendant as above ; that he has demanded it from the 
défendant, who refuses to pay it; and that the amount is now due 
the bankrupt from the défendants because of a breach of the con- 
ditions of their bond. The records in the bankruptcy case show, be- 
sides his appointment and qualification as above, that the défendant 
Sondheim filed a final account as trustée before the référée on Octo- 
ber 12, 1908. This was after the confirmation of the composition of- 
fer, which was on October 6th, as alleged, but the creditors' final meet- 
ing, duly notified for October 2, 1908, was still pending, having been 
on that day adjourned to Jahuary 22, 1909. There was a further ad- 
journment of the final meeting to May 11, 1909, on which day the 
trustee's account was approved and allowed, the trustée discharged, the 
meeting closed, and the case concluded. There was no attempt to 
review the order of the référée allowing the trustee's account, and the 
time has expired within which such a review might hâve been had. 
The account purports to show that the $895 had alï of it been devoted 
by the trustée to expenses of administration. 

[1] The defendant's motion to dismiss sets up the above facts, 
which are facts of record in this court in the bankruptcy case referred 
to. Strictly speaking, it might be said that they do not support a 
motion to dismiss, which is only to be allowed upon grounds appear- 
ing from the writ and déclaration. What the défendant hère relies 

*For other cases see same topic & § mumbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



380 188 FEDERAL REPORTER 

on does not so appear, but is established otherwise, namely by the 
records of the bankruptcy case. The plaintiff, however, has not ob- 
jected on this ground, and both parties hâve argued the question 
whether the facts relied on, which are undisputed, require the dis- 
missal of the plaintiff's action. I therefore consider that question 
without regard to the form in which it is raised. The bond sued on 
follows officiai form No. 25, and is conditioned that the défendant 
as trustée — 

"shall obey such ordçrs as said court may make in relation to said trust, 
and shall faithfuUy and truly account for ail the moneys, assets, and effects 
of the estate of said bankrupt which shall corne into his hands and possession, 
and shall in ail respects ïaithfully perform ail his officiai duties as said 
trustée." 

The only requirement in the bankruptcy act regarding the form of 
bonds to be given by trustées is that their bonds shall be "conditioned 
for the faithful performance of their officiai duties." Bankruptcy Act, 
§ 50b. 

[2] The plaintifï contends that section 12e of the act, providing 
that "upon confirmation of the composition the considération shall be 
distributed as the judge shall direct, and the case dismissed," and sec- 
tion 70f, which provides that upon confirmation of a composition of- 
fer by a bankrupt "the title to his property shall thereupon revest in 
him," hâve the efifect of making the trustée unconditionally and im- 
mediately liable to the bankrupt for ail property of the estate in his 
hands at the moment of the confirmation, so that there has been a 
breach of the bond if the trustée has failed to pay or deliver to the 
bankrupt any such property upon demand. According to the plain- 
tiff's contention, the confirmation of the composition on October 6, 
1908, rendered ail the subséquent proceedings before the référée null 
and void. Confirmation of a composition implies and conclusively es- 
tablishes, according to this view, a previous final and complète settle- 
ment of ail claims by the trustée upon the estate, so that he cannot 
thereafter be heard to assert any claim, lien, or charge to or upon it 
or any part of it. It seems to me clear that section 12e does not mean 
that after confirming a composition the court has lost ail further 
power over the case except to distribute the considération. The case 
is to be dismissed, but "dismissed" in this connection can mean no 
more than that the court is not to proceed further with its adminis- 
tration of the estate under the bankruptcy act. It does not mean that 
there is to be no longer any case before the court, as if the pétition 
or the proceedings had been dismissed under sections 3c, 18d, 18e, 
58a (8), or 59d, 59g. Since the considération must in every case re- 
main to be distributed, and since compositions are not infrequently 
confirmed within the year allowed for proving claims, the court must 
retain jurisdiction for thèse purposes at least. Immédiate dismissal is 
neither directed nor intended. Collier, Bankruptcy (7th Ed.) 243. 
Dismissal is to be when everything remaining for the court to do has 
been donc, and not before, and until that time has arrived I do not 
see any -sufficient grounds for saying that the référée has lost ail power 
to act in the case for any purpose. A gênerai référence like this, made 



UNITED STATES V. 80NDHKIM 381 

under section 22a (1), authorizes the référée "to take such further pro- 
ceedings as are required" by the act. Presumably, therefore, it con- 
tinues in force until no such proceedings are any longer required. 
Section 38a (4) excepts from the referee's jurisdiction ail questions 
arising out of the application for composition, but there may obviously 
be further proceedings required after a composition bas been confirmed 
which involve no such question. No such question would be involved 
in the receipt and allowance or disallowance of a creditor's claim not 
barred by section 57n, even if presented after the confirmation; and 
it is therefore not clear to me why the référée, if he has not closed 
the case, may not receive and allow or disallow such a claim. No 
such question would be necessarily involved in holding or closing the 
creditors' final meeting, nor in settling the trustee's final account at 
that meeting, and if any of thèse proceedings hâve not been had when 
the composition is confirmed, they are still proceedings required by 
the bankruptcy laws. When ail thèse things hâve been donc, and not 
before, can the référée, according to section 39, "perfect and transmit 
to the clerk" the records he is required to keep "when the case is con- 
cluded." I do not think a proper interprétation of the act requires 
confirmation of a composition to be regarded as superseding such fur- 
ther proceedings before the référée or rendering them impossible; 
provided, of course, that no further step be taken in the administra- 
tion of the estate, which must stop with the confirmation of the com- 
position. It may well be that steps previously taken will hâve raised 
questions which ought not to be left pending and undetermined, and 
the act can hardly hâve been intended to require that they must be 
so left for want of any authority to détermine them. Section 2 (8) 
seems to contemplate approval of the trustee's accounts and his dis- 
charge as essential to the closing of an estate when it has been fully 
administered. For the purposes of this clause, confirmation of a com- 
position may well bave been intended as the équivalent of full ad- 
ministration, but there is difficulty in supposing it intended to divest 
the court at once of ail jurisdiction to close the estate in the manner 
provided. If this is the right view, section 55f would seem to require 
or contemplate a final meeting when the affairs of the estate are ready 
to be closed, no less in cases terminated by composition than in oth- 
ers. A discharge, moreover, may well be a matter of importance to 
the trustée, and there is a further difficulty in supposing the act to 
intend that after confirming a composition the court shall be without 
power to ordei any discharge. In a récent case the trustée was ordered 
by the court to satisfy a judgment rendered against him after con- 
firmation of a composition, in a suit, the défense of which he had un- 
dertaken before composition. The trustée, it was said, was still ame- 
nable to the orders of the court, as he had not been discharged. In re 
Cadenas & Coe (D. C.) 178 Fed. 158. And, if there is still jurisdic- 
tion in the court over the trustée, his final account, and his discharge, 
I think there is still jurisdiction in the référée, to whom such mat- 
ters properly belong under the original order of référence, and under 
Gen. Order 17, 89 Fed. xxxvi, 32 C. C. A. ix. 



382 188 FEDERAL REPORTEE 

[3] I must ruie, therefore, that the proceedings before the référée 
after confirmation of the composition were valid and the bankrupt 
bound by their resuit. If they were valid as regards jurisdiction, he 
cànnot claim that he had not due notice of them. Not only had the 
iinal meeting been notified for October 2, 1908, four days before the 
composition was confirmed, but the first meeting and examination, 
as the records show were still pending, had also been adjoumed to 
October 2, 1908, and were thereafter successively adjourned, with the 
final meeting, to January 22 and May 11, 1909. If there was any- 
thing in the fact that thèse meetings were still pending and the trus- 
tee's final account not yet settled which made it improper or undesir- 
able to confirm the composition on October 6th, I cannot see that the 
trustée was any more to blâme than the bankrupt for omitting to 
represent the state of the case to the court. If there was anything 
in the composition offer or the referee's report thereon upon which the 
court acted on October 6th, constituting an objection to the allowance 
of the trustee's final account, the bankrupt should hâve raised the ob- 
jection before the référée. Having neither opposed nor appealed f rom 
the allowance of the account, he cannot now disregard it nor be heard 
to dispute it. 

[4] If, as tjie trustee's account purported to show, the $895 de- 
manded by the déclaration had ail been lawf ully expended by the trus- 
tée during the bankruptcy administration, it was not the bankrupt's 
property in the trustee's hands, and confirmation of the composition 
could not revest him with any title to it. The plaintiflf cannot be heard 
to allège, now that the trustee's account has been settled and he has 
been discharged, that the amount referred to was his property in the 
trustee's hands, or that he became entitled to it when the composi- 
tion was confirmed. 

■ [ 5 ] When a trustée has absconded without settling his accounts and 
cannot be found, an order directing him to account has been held not 
a necessary prerequisite to an action on his bond to recover property 
belonging to the estate. Scofield v. U. S., 174 Fed. 1, 3, 98 C. C. A. 
39. But, as said in that case, such an order might and probably would 
be proper where such a proceeding is practicable. The déclaration 
does not allège that this trustée has failed to obey any order of the 
court or to account for the estate in his hands. Since what is alleged 
cannot be said, in view of the record, to constitute a failure in the 
faithful performance of his officiai duties, it cannot constitute a 
breach of his bond. 

The motion to dismiss is granted. 



UNITED STATES V. PABK LAND CO. 383 

UNITED STATES v. PARK LAN0 CO. 

SAME V. NICHOLS-CHISHOLM LUMBBR CO. et al. 

SAMB V. DAVIS. 

(Circuit Court, D. Minnesota, Slxth Division. February 14, 1911.) 

1. Indians (§ 18*) — Indian Lands— Allotment— Desoent. 

Under Act Feb. 8, 1887, c. 119, 24 Stat. 3SS, providing for the allotment 
of Indian réservation lands to fuU or mlxed blood Indians, under trust 
patents, as amended by Act Jan. 14, 1889, c. 24, 25 Stat. 642, providing 
that the lav? of descent and partition In force In the state or terrltory 
where the lands are sltuated shall apply thereto, where the allottee of 
land In Minnesota dles after his trust patent has issued, hls allotment 
descends to his heirs, as provlded by the laws of that state, to be ascer- 
talnçd by the probate court of the county in whlch the lands are located. 

[Ed. Note. — For other cases, see Indians, Cent. Dig. § 49; Dec. Dlg. § 
18.*] 

2. Indians (§ 15*) — Indian Lands— Allotment — Teansfeb— Statutes. 

Act Cong. Feb. 8, 1887, c. 119, 24 Stat. 388, provided for the allotment 
of Indian lands to full and mlxed blood Indians, and for the issuance of 
trust patents restralning transfer. By Act May 27, 1902, c. 888, § 7, 32 
Stat. 275, Congress provlded that the adult helrs of any deceased Indian, 
to v^hom a trust or other patent containing restrictions on aliénation had 
been or should be Issued, might convey the land Inherlted, but that In 
case of mlnors such conveyances could be made only under an order of 
court upon an application made by a guardian duly appointed; ail con- 
veyances belng subject to the approval of the Secretary of the Interlor. 
Thereafter Act 1902 was' amended by Act 1907 (Act March 1, 1907, c. 
2285, 84 Stat. 10.34), providing that ail restrictions as to the sale, In- 
cumbrance, or taxation of allotmenfs In the Whlte Earth Réservation 
In Minnesota held by adult mixed-blood Indians were removed, and that 
the restrictions should be removed as to full -blood Indians when the Sec- 
retary of the Tnterior was satlsfled that tbey were compétent to handle 
their own afPalrs. Hcld, that by such amendment ail adult mlxed-blood 
Indians acquired the right to transfer their allotments wlttout restric- 
tion, whether they had acqnlred the same by sélection or by Inheritance 
from a full or mlxed blood adult or minor, and that ail such restrictions 
were also removed as to full-blood Indians on their belng able to satlsfy 
the Secretary of Interlor that they are able to manage their own affairs. 

[Ed. Note.— For other cases, see Indians, Cent. Dlg. §§ 17, 29, 37-44; 
Dec. Dlg. § 15.*] 

Actions by the United States against Park Land Company, and 
against Nichols-Chisholm Lumber Company and others, and against 
W. B. Davis. On exceptions to défendants' answer. Overruled. 

Chas. C. Houpt, U. S. Atty., M. C. Burch, Asst. Atty. Gen., and 
W. A. Norton and Arthur M. Seekell, Sp. Asst. Attys. Gen., for the 
United States. 

R, J. Powell and C. 'M. Johnston, for défendants. 

MORRIS, District Judge (orally). In 1887 Congress passed the 
gênerai allotment act (Act Feb. 8, 1887, c. 119, 24 Stat. 388). Under 
that act whoever received an allotment, whether a full-blood or a 
mixed-blood Indian, received from the government one of the 25 year 
trust patents provided for therein. In other' words, Congress in effect 

•For other cases see same topic & S nvmbbb In Dec. & Am. Diga. 1907 to date, & Rep'r Inâezei 



384 188 FEDERAL REPORTEE 

said, whoever may be permitted to take an allotment under this act 
on any of thèse Indian réservations, whether he be a full blood or a 
mixed blood, upon him the government . shall keep its hand and exer- 
cise a restraining influence. We are providing for the allotment of 
thèse lands for the purpose of leading him toward the habits of civil- 
ized lif e, and, in order to prevent him from being despoiled and to give 
time for him to acquire those habits, we intend that a restraining in- 
fluence shall be placed upon hîm. We intend that the allottee shall 
go upon his allotment and, abandoning his Indian habits, live upon it 
and use it as a white man would, and we do not in tend to permit him 
to part with it until a period of 25 years bas elapsed, and not even then 
if the Président shall deem it wise to further extend the period. That 
was the act of 1887, applying to Indian réservations generally. 

In 1889 Senator Nelson framed and had passed what bas ever since 
been known as the "Nelson Law" (Act Jan. 14, 1889, c. 24, 25 Stat. 
642). That act provides for the removal of the Chippewa Indians hère 
in Minnesota — the Indians up hère in the northern part of our state — 
to the White Earth Indian Réservation, and for allotments to them 
on that réservation; or, if any of them preferred to stay on the rés- 
ervations on which they then were, for allotments to them on those 
réservations. It provided that those allotments should be made in con- 
formity with the gênerai allotment act of 1887, and that the allotments 
should hâve the same effect, that is, be held in the same way, as I 
understand it. The allotments, therefore, made to Indians on the 
White Earth Indian Réservation hère in Minnesota stood exactly as 
allotments made to Indians on any other réservation under the gên- 
erai allotment act. Now, in that gênerai allotment act, after prescrib- 
ing the method of making the allotments, and how the title should be 
held, that is, under the trust patents, with the restriction upon aliéna- 
tion provided for in the act, Congress provided: 

"That the law of deseent and partition in force In the state or territory 
where such lands are situate shall apply thereto [that is, to thèse allotments] 
after patents therefor hâve been executed and delivered, except as herein 
otherwise provided." 

I do not understand there is any dispute as to Mr. Powell being cor- 
rect when he says there is nothing "otherwise provided." So that the 
law of deseent and partition in force in the state of Minnesota applies 
to thèse White Earth allotments after patents therefor — after thèse 
trust patents therefor — bave been executed and delivered. Beam v. 
U. S., 162 Fed. 260, 88 C. C. A. 240. 

[ 1 ] As I understand the law, and I think that is the f air construc- 
tion of it, if any allottee dies after his trust patent bas issued, 
whether full blood or mixed blood, his allotment descends to his heirs, 
as provided by the laws of the state of Minnesota. And the only way ' 
that I know of that we can ascertain who his heirs are and what 
portion of the allotment those heirs are respectively entitled to would 
be by proceedings in the probate court. So that, it seems to me to 
be compétent for the probate court of Becker county, where this rés- 
ervation is, in case of the death of any allottee, whether full blood or 
mixed blood, to ascertain and déclare who his heirs are and in what 



UNITED STATES V. PARK LAND CO. 385 

proportions they inherit his allotment. I think it is an inheritable 
estate, governed by the law of descent and partition in the state of 
Minnesota. And I do îiot see why, if necessary, the proper proceed- 
ings might not be had to partition that allotment amongst the heirs of 
the deceased allottee. Now, we get down that far. That is the sit- 
uation after the passage of the Nelson act in référence to allotments 
on the White Earth Indian Réservation. I understand the Steener- 
son act does nothing more than enlarge the Nelson allowance of 80 
acres to 160 acres. 

[2] Now, in 1902 — I do not think I need to notice any other acts — 
in 1902 Congress passed this act of May 27, 1902. I forgot to say 
that those allotments evidenced by trust patents, under the act of 1887, 
and under the Nelson act, were not aliénable even by the consent of 
the Secretary of the Interior, as I understand it. (Addressing coun- 
sel) : Is that right ? 

One of Counsel : That is right. 

The Court: Such allotment could not be conveyed even with the 
consent of the Secretary of the Interior. Now, in the act of May 27, 
1902, c. 888, 32 Stat. 275, Congress removes to some extent the re- 
strictions which it had theretofore imposed upon the sale and convey- 
ance of thèse allotments, by providing in section 7 that : 

"The adult heirs of any deceased Indian to whom a trust or other patent 
containing restrictions upon aliénation has been or shall he issued for lands 
allotted to Mm may sell and convey the lands inherited from such décèdent, 
but in case of minor heirs their interests shall be sold only by a guardian 
duly appointed by the proper court upon the order of such court, made upon 
pétition flled by the guardian, but ail such conveyances shall be subject to 
the approval of the Secretary of the Interior, and when so approved shall 
convey a full title to the purchaser, the same as if a final patent without re- 
striction upon the aliénation had been Issued to the allottee." 

Adult heirs could themselves sell and convey the land inherited from 
such décèdent; but in the case of minor heirs their interest could be 
sold and conveyed only by a guardian duly appointed by the proper 
court, upon the order of such court. Adult heirs could sell and con- 
vey. Minor heirs could sell and convey by guardian, after the ap- 
pointment of a guardian, and an order of court allowing it made upon 
pétition filed by the guardian. But ail conveyances, whether of an 
adult's interest or of a minor's interest, should be subject to the ap- 
proval of the Secretary of the Interior. Now, there is a withdrawai, 
as it were, a going back — or a going forward, as to some it may seem 
to be — from the former position, the original position. Under the 
original law, the law as it was prior to this act, there could be no con- 
veyance of that land with anybody's consent, by allottee or heir of 
allottee, whether he be adult heir or minor heir, until the expiration 
of the 25-year period. That was the situation then. This law allows 
the interest of the heir, whether he be adult or minor, to be sold and 
conveyed, if the Secretary of the Interior approves the transaction, 
and the conveyance then carries complète title, without any restriction 
whatever, just as if that trust patent had been an unrestricted patent. 
I do not know what the reason for this departure from the original 
188 F.— 25 



386 188 FEDERAL REPORTER 

law was, uniess ît was upon this idea : That the allottee, the original 
allottee, coming out of the tribal relationship and going into separate 
ownership, would not be supposed to hâve the same discrétion and 
business judgment that his heirs would hâve after they had for some 
time been brought up in the atmosphère of separate ownership. 

That was in 1902. Now, going on f rom that : Senator Clapp, act- 
ing as the représentative of this state in the Senate of the United 
States, representing not only the white people of the state but also 
the Indians of the state, occupying now (I do not know whether he did 
then or not) the high position of chairman of the committee on In- 
dian affairs of the United States Senate, and being acquainted with 
the conditions existing hère in the state of Minnesota, saw fit to hâve 
put upon the statute books this so-called Clapp amendment. First in 
1906. Afterwards, in 1907 (Act March 1, 1907, c. 2285, 34 Stat. 1034), 
he seems to hâve made a slight change in the language. I shall only 
consider the 1907 act. This is the amendment: 

"That ail restrictions as to the sale, Incumbrance, or taxation for allotments 
within the White Earth Réservation in the state of Minnesota, ieretofore or 
hereafter held by adult mixed-blood Indians, are hereby removed, and the 
trust deeds heretofore or hereafter executed by the department for such al- 
lotments are hereby deelared to pass the title In fee simple, or such mixed 
bloods upon application shall be entitled to recelve a patent In fee simple for 
such allotments." 

The restrictions of the trust patent are removed as to adult mixed 
bloods, and, if any such mixed blood wished to hâve a fee-simple 
patent, he could get it upon application. The statute then goes on : 

"And as to full bloods, said restrictions shall be removed when the Secre- 
tary of the Interior Is satisfled that sald adult fuU-blood Indians are com- 
pétent to handle their own affairs, and in such case the Secretary of the In- 
terior shall issue to such Indian allottee a patent in fee simple upon appli- 
cation." 

Now, as I construe this Clapp amendment — I take its language as 
I find it — ail restrictions as to the sale, and so forth, for allotments 
within this réservation heretofore or hereafter held by adult mixed- 
blood Indians are removed. AU restrictions are removed. And the 
"trust deeds" (of course "trust patents" is meant) heretofore or here- 
after issued by the department for such allotments are deelared to 
pass the title in fee simple. It seems to me, gentlemen, that the conten- 
tion of Mr. Powell is sound, and that the amendment means just what 
it says, that ail restrictions are removed as to thèse allotments held 
— no matter how héià—held by adult mixed bloods. That, it seems 
to me, is what it means. That is the only way I can read it — no mat- 
ter how held. Therefore, no matter how the adult mixed blood bas 
corne to be the holder or owner of an allotment, or part of an allot- 
ment, whether by sélection, that is, as the original allottee, or by in- 
heritance from a full blood, or by inheritance from an adult mixed 
blood, or by inheritance from a minor mixed blood, or by inheritance 
from a full-blood minor — if there can be such an inheritance as that 
— ail restrictions are removed as to the aliénation of such allotment, or 
any part of it, held by any adult mixed blood. The trust patent is 
deelared to convey to him, or vest in him — "pass" to him — if he is an 



PEL-ATA-YAKOT V. UNITED STATES 387 

adult, or as soon as he becomes an adult, the fee-simple title, and he 
lias the right to sell it without restriction. That is the way I construe 
that so-called Clapp amendment. 

Now, let us see if we can find any reason for the policy of it. The 
act of 1902 removed the restriction on ahenation as to any heir of a 
deceased Indian, whether mixed blood or full blood, and whether the 
heir be adult or minor, to the extent of allowing a sale and convey- 
ance of an inherited allotment, in case of an adult heir by himself and 
in case of a minor heir by his guardian, with the approval or consent 
of the Secretary of the Interior. This on the assumption, as it seems 
to me, as I hâve heretofore explained, that the heirs of one to -wjhom 
an allotment has been issued, and who has been put on the path of 
separate citizenship, and separate ownership, and separate responsi- 
bility in the struggle of life, would be more compétent in many cases 
to manage their own affairs than would the original allottee hâve been ; 
and that the Secretary of the Interior should be the judge as to 
whether that condition has corne about. Then, coming down to the 
so-called Clapp amendment, it seems to go a step further and say 
that, when a mixed blood has come to be an adult, he is compétent 
to handle his own afïairs, and is therefore compétent to sell without 
heing swindled, to make a proper bargain for his land, and to use the 
money that he gets out of it judiciously. And the act seems to put 
his coming to the condition of an adult as the time when that com- 
petency has come about. Not so, however, with the full-blood adult. 
As to him, Congress still retains the restriction as to selling, incum- 
brancing, etc. ; but, even as to him, the restriction is removed if the 
Secretary of the Interior is satisfîed that he is compétent to manage 
his own affairs. In other words, it seems to me that by the- Clapp 
amendment Congress meant to say that it is to be conclusively pre- 
sumed that an adult mixed blood is compétent to go ahead and manage 
his own afïairs, and therefore removes from him ail restrictions on 
the sale of any allotment, or interest in any allotment, that he holds, 
no matter how it has come to him. And, as to an adult full blood, 
Congress means to say that, while he may also be compétent to man- 
age his own affairs, yet we will leave it to the Secretary of the In- 
terior to say whether he is or not. 

I think the exceptions to the answer should be overruled. 
• Mr. Houpt: The court will allow us an exception to the ruling. 

The Court: Certainly. 



PEL-ATA-YAKOT v. UNITED STATES et al. 

(Circuit Court, D. Idaho, N. D. January 12, 1911.) 

Indians (i 13*) — Indian Lands—Heibship— Détermination— Jueisdiction— 
Statutes — Eepeal. 

Act June 25, 1910, c. 431, 36 Stat. 855, eonferring on the Secretary of 
the Interior exclusive jurisdiction to détermine heirship of Indian allot- 
tees, repealed Act Feb. 6, 1901, c. 217, 31 Stat. 760, amending Act Aug. 

•For other cases see same toplc & § numbek in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



388 188 FEDERAL EEPOETBE 

15, 1894, c. 290, 28 Stat. 286, in go far as the same might be construed 
to confer sucli jurisdiction on fédéral courts. 
[Ed. Note. — For other cases, see Indians, Dec. Dlg. § 13.*] 

Action by Jane Pel-ata-yakot against the United States and Mary 
Types. On demurrer to bill. Sustained. 

Clay McNamee and James L. Harn, for complainant. 
C. H. Lingenfelter, U. S. Atty., for défendants. 

DIETRICH, District Judge. From the bill it appears that the 
complainant is a Nez Perce Indian woman, and was the wife of one 
Benjamin Types, a Nez Perce Indian, at the time of his death, which 
occurred on JFebruary 7, 1899. It further appears that, pursuant to 
treaty stipulations, and under authority of certain acts of Congress 
ratifying the same, certain lands embraced in what is known as the 
Nez Perce Indian réservation, in Nez Perce county, Idaho, were al- 
lotted to Benjamin Types in 1893 ; the title, however, being held by 
the United States in trust for 20 years, subject to the provisions of the 
treaty and the gênerai allotment act Feb. 8, 1887, c. 119, 24 Stat. 388. 
The complainant avers that after the death of Benjamin Types the 
several superintendents of the Nez Perce Indian agency, at Lapwai, 
Idaho, recognized her and one James Types, the son of the deceased 
by a former wife, as the sole heirs of the deceased, but that since the 
month of October, 1909, the superintendents hâve wrongfuUy and un- 
lawfully refused longer to recognize her as one of the heirs, and hâve 
declined to pay over to her any share of the rents and profits arising 
from the lands embraced in the allotment ; but, upon the other hand, 
they hâve recognized the défendant Mary Types as an heir, paying 
over to her the share of the rents which rightfully belongs to the plain- 
tiflf, and that the défendant Mary Types has been unlawfully in pos- 
session of the allotment since October, 1909. The complainant prays 
lor a decree declaring that she and James Types are the only lawful 
heirs of the deceased Benjamin Types, and requiring the défendant 
Mary Types to account for the rents, issues, and profits wrongfully re- 
ceived from the agents of the government. The bill was filed June 
16, 1910. The case is submitted upon an amended demurrer inter- 
posed by the défendants, by which the question of jurisdiction is raised. 

The suit, like several others of a similar nature heretofore brough't 
in this court, was doubtless instituted under the provisions of Act Feb. 
6, 1901, c. 217, 31 Stat. 760, amending Act Aug. 15, 1894, c. 290, 28 
Stat. 286. I hâve never been fully satisfied that by thèse acts Con- 
gress intended to confer upon the courts jurisdiction to détermine con- 
troversies involving the question of heirship to allotted lands ; but the 
objection has never been raised and in a number of cases jurisdiction 
has been exercised. McKay v. Kalyton, 204 U. S. 458, 27 Sup. Ct. 
346, 51 L. Ed. 566. For the présent purposes it may be assumed that 
under the provisions of thèse acts the court had jurisdiction to enter- 
tain this suit at the time it was commenced; but, by an Act of Con- 
gress approved June 25, 1910 (36 Stat. 855, c. 431), it is declared: 

•For other cases see same topio & i numbeh In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN RE GRIFFIN 389 

"That when any Indîan to whom an allotment of land bas been made, or 
may hereafter be made, dies before the expiratloii of the trust period and be- 
fore the issuance of a fee simple patent, wlthout having made a will dispos- 
Ing of sald allotment as hereiuafter provided, the Secretary of tlie Interior, 
upon notice and hearing, under such rules as he may prescribe, shall ascertain 
tbe légal helrs of such décèdent, and his décision thereon shall be final and 
conclusive. If the Secretary of the Interior décides the heir or heirs of such 
décèdent compétent to manage their own affairs, he shall issue to such heir 
or heirs a patent in fee for the allotment of such décèdent; if he shall dé- 
cide one or more of the heirs to be Incompétent he may, in his discrétion, 
cause such lands to be sold: Provided, that if the Secretary of the Interior 
shall find that the lands of the décèdent are capable of partition to the ad- 
vantage of the heirs, he may cause the shares of such as are compétent, upon 
their pétition, to be set aside and patents in fee to be Issued to them there- 
for." 

The provision is comprehensive, and clearly évinces the intention 
of Congress to confer exclusive jurisdiction to décide such contro- 
versies upon the Secretary of the Interior. That being true, it must 
be held that by implication the existing act conferring jurisdiction upon 
the courts was repealed. United States v. Tynen, 11 Wall. 88, 20 L. 
Ed. 153. The repeal thus effected being without any réservation as to 
pending cases, the présent case, althought commenced prior to the pas- 
sage of the repealing act, must fall with the act upon which it rested. 
Railroad Co. v. Grant, 98 U. S. 398, 25 L. Ed. 231. Precisely the 
same question was involved in Bond v. United States (C. C.) 181 Fed. 
613, and with the conclusion there reached I am in accord. 

The demurrer will be sustained, and the bill dismissed for want of 
jurisdiction. 



In re GRIFFIN. 
pistrict Court, D. Massachusetts. July 2, 1910.) 
No. 12,624. 

1. Banketjptct (§ 330*) — Claims^Sufficienct. 

Where at the time an executrix became a bankrupt she was holding 
the share of her husband's estate bequeathed to his daughter, to b« paid 
to the daughter when she became 30 years of âge, such time not having 
arrived, a claim filed by the daughter's guardian, charging that the bank- 
rupt was indebted for the daughter's share of her father's estate in the 
sum of $20,650, but whieh stated no facts to show that the claim was 
based on négligence of the bankrupt in managing the funds, was insufS- 
cient to justify an allowance of the claim on the theory that funds be- 
longing to the daughter, or in which she was entitled to share, had been 
lost by the bankrupt's négligence. 

[I3d. Note. — For other cases, see Bankruptcy, Dec. Dig. § 330.*] 

2. Bankbuptcy (I 320*) — Claims— Liquidation. 

Where a bankrupt was entitled to the sole management and control 
of the residue of the estate of which she was executrix, including the 
share bequeathed to testator's daughter, until she became 30 years of 
âge, which time had not arrived when the executrix became bankrupt, 
the daughter being entitled on attaining that âge to an equal share of 
the residue of the estate, a claim filed against the bankrupt's estate for 

•For other cases see same topic & § numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



390 18S FEDERAL REPORTER 

the daughter's share so bequeathed, on the theory that the iDankrupt had 
been guilty of négligence and mlsmanagement, was unliquidated, and 
could only be allovred after liquidation. 

[Ed. Note.— For otber cases, see Bankruptcy, Dec. Dlg. § 320.*] 

'■ In the matter of bankruptcy proceedings of Jennie M. Griffin. On 
pétition to review a referee's order disallowing a claim presented by 
Florence M. Griffin. Affirmed. 

Charles M. Thayer, for trustée. 

Vaughan, Esty & Clark, for Florence M. Griffin, creditor. 

DODGE, District Judge. The proof of claim which the référée 
has disallowed is subscribed and sworn to by George McAleer as 
guardian of Florence M. Griffin. It sets forth that the bankrupt is 
indebted to the déponent in the sum of $20,650, and that the consid- 
ération of said debt is "share of estate of John J. Griffin." Annexed 
to the proof is the following: 

Jennle M. Grlffln Dr. to Florence IL Grlffln, by George McAleer, Guardian. 

Sbare in estate of J. J. Griffin, deceased, not includlng real estate, 
over whIch estate Jennie M. Grlffln was appointed executrix March 
1, 1906. $17,500 

Int. at 6 percent from March 1, 1906 3,150 

$20,650 

There is no dispute that the bankrupt is the executrix of the will 
of John J. Griffin, appointed by the probate court for Worcester 
county, March 1, 1904, nor as to the following facts. She is the widow 
of the testator, and Florence M. Griffin is his daughter. By the fourth 
clause of the will the residue of the testator's estate was left to the 
bankrupt and Florence M. Griffin in equal shares. The testator di- 
rected, however, in the same article, that his wife should bave the sole 
control and management of the residue until his daughter should reach 
the âge of 21, and be entitled meantime to the entire income for her 
sole use after making suitable provision for the daughter's support; 
that, his wife should continue to hold, manage, and control the daugh- 
ter's share until the daughter should reach the âge of 30, paying to 
the daughter the income of her share from the time she should be- 
come 21 until the time she should become 30, with authority to pay 
pver ail or part of the daughter's share to her during the last-men- 
tioned period; and that after reaching the âge of 30 the daughter 
should hold her share f ree from control and for her sole and separate 
use. The testator's widow and executrix was authorized by the fifth 
article to carry on his business as long as she should deem it advisable. 
It was carried on after the probate of the will for a time by a spécial 
administrator, but after the bankrupt's appointment as executrix, 
which was on March 1, 1904, it was carried on by her. In April, 
1907, she made a gênerai assignment for the benefit of creditors, which 
resulted in her being adjudged bankrupt in thèse proceedings on June 
29, 1908. There was an appeal from the adjudication, but it was af- 
firmed by the court of appeals. See Griffin v. Dutton, 165 Fed. 626, 

♦For other cases see same topio & S numbek in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



IN EE GEIFFIN 391 

91 C. C. A. 614. Florence M. Griffin is still a minor, and George Mc- 
Aleer is her guardian, duly appointed. The referee's présent report, 
in connection with his former report on adjudication, filed June 5, 
1908, to which his présent report makes référence, shows that he 
had before him no évidence sufficient to support a finding that one- 
half the residue of John J. Griffin's estate was recoverable when thé 
pétition in this case was filed by or on behalf of Florence M. Griffin, 
as her legacy, from the executrix of the will, nor any évidence from 
which the amount of her share, if then due, could hâve been ascer- 
tained. The referee's finding, that so far as the claim is in contract 
it has no foundation, does not seem to be disputed except in the sensé 
hereinafter stated. 

[ 1 ] It is contended on Florence M. Griffin's behalf, as set forth in 
lier pétition for review, that her claim "is a mixed claim of either con- 
tract or tort arising out of fiduciary relation between your petitioner 
and the bankrupt, which was set forth in the will"; "that the bank- 
rupt * * * -viras guilty of culpable négligence in the management" 
of the funds of the estate, and "allowed them to depreciate to such 
an extent that thé estate is now bankrupt" ; also, that "the trustée 
has taken and sold the assets of the bankrupt owned in her individ- 
ual capacity, together with the assets of the estate and the property 
held in trust by said bankrupt, regardless of the légal title to the 
same." 

Admitting it to be true in some cases, as urged in the petitioner's 
brief, that "claims ex delicto are provable if the tort can be waived 
and recovery had quasi ex contractu," I find nothing in the proof of 
claim as presented to show whether this principle can be applied in the 
présent case or not. In the proof of claim nothing whatever is said 
about any négligence on the bankrupt's part in managing funds in her 
care by virtue of the will. It is left to be discovered through other 
sources, if at ail, that the claim is founded upon such négligence. 
While strict rules of pleading do not apply, it is nevertheless neces- 
sary that the claim and its considération should be so set forth as to 
enable the trustée and the creditors to make proper investigation as to 
its fairness and legality without undue trouble or inconvenience. In 
re Scott (D. C.) 93 Fed. 418; In re Stevens (D. C.) 107 Fed. 243; In 
re Coventry, etc., Co. (D. C.) 166 Fed. 517, 523. If the claim is really 
such a claim as would appear from the pétition for review, I do not 
think the proof can be said to comply with thèse requirements. The 
référée had before him no statement under oath that funds in which 
Florence M. Griffin has a right to share hâve been lost by the bank- 
rupt's négligence or mismanagement. There is nothing in the facts 
found by him which, so far as I can discover, would warrant a find- 
ing that such funds hâve been so lost. It seems clear, therefore, that 
no ground is shown for overruling the referee's disallowance of the 
claim as presented. 

[2] It appears from the referee's report that suits hâve been 
brought on Florence M. Griffin's behalf in the superior court for 
Worcester county to recover damages from the bankrupt, that one 
of thèse suits is against the bankrupt individually and the other against 



392 188 FEDERAL REPORTER 

her as executrîx of the will, and that the déclarations contaîn, in each 
suit, a count for money received by the défendant for the plaintiflf's 
use, with a count for loss of property held under the will by her nég- 
ligence and gross mismanagement. Thèse facts, of course, hâve no 
tendency to prove that the petitioner for review has a claim allow- 
able in thèse proceedings. But conceding that the proof of claim as 
presented might be supported, if no objection were taken to its form, 
by proof of négligence and mismanagement such as has been alleged 
in the pending suits referred to, I agrée with the référée in thinking 
that it must be regarded at présent as an unliquidated claim, only to 
be proved and allowed against the estate after being liquidated in such 
manner as the court may upon application direct, and that prosecution 
to judgment of the suits referred to would in this instance be the 
proper method of liquidation. 

If it be true, as alleged in the pétition for review, that the trustée 
in bankruptcy has possession both of the bankrupt's individual as- 
sets and of the assets belonging to her husband's estate, or the pro- 
ceeds of assets of either class, I do not see that any question involving 
those facts has been raised before or decided by the référée. 

The referee's order is approved and affirmed. 



Id re GAY et al. 
(District Court, D. Massachusetts. November 19, 1910.) 
No. 14,188. 

BANKKtTPTCT (§ 348*) — CLAIMS— PHrOKITY— "Teavei-inq Salesman"— Salart. 

Plaintlffl was employed by the bankrupts as a bond salesman at the 
rate of $3,000 per year, payable monthly. His contract provided that he 
should dévote his entire time to the bankrupts' business in the territory 
over which he was to work, which would be prlncipally in the state of 
Maine; the bankrupts agreeing to pay ail travellng expenses while trav- 
eling In the bankrupts' business. The bankrupts malntained a branch 
office at Portland, of which complainant had charge. He also went from 
place to place in Maine to sell bonds, and conducted correspondence from 
such branch office on the bankrupts' letter heads and in thelr name. He 
had a junior salesman under him, and received bulletins Issued by the 
bankrupts sent to managers of branch offices. Eeld, that everything done 
by plaintiff as the manager of the Portland office was subordinate to the 
worjî he did as traveling salesman, and that he was therefore entitled 
to pfiority as a "traveling salesman," within Bankruptcy Act July 1, 1898, 
c. 541, § 64b (4), 30 Stat. 563 (U. S. Comp. St. 1901, p. 3447) for the amount 
due for his services earned within three months prior to the date of bank- 
ruptcy proceedings. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 536; Dec. 
Dig. § 348.* 

For other définitions, see Words and Phrases, vol. 8, pp. 7082, 7083; 
vol. 8, p. 7820.] 

In the matter of bankruptcy proceedings of E. H. Gay and oth- 
ers. On pétition to review a referee's order denying priority to the 
claim of George F. Stetson. Reversed. 

•For otlier cases see same toplc & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN RE GAT 893 

Tyler & Young, for trustée. 

Currier, Rollins, Young & Pillsbury, for George F. Stetson, créd- 
iter. 

DODGE, District Judge, The bankrupts were engaged in the busi- 
ness of selling securities. They do not appear to hâve been stock- 
brokers in the ordinary sensé, but to hâve confined themselves mainly 
to dealing in bonds of pubHc service corporations. This creditor 
was employed by them, and it is not disputed that they owed him 
$437.50 for services rendered after December 1, 1907, when thèse 
proceedings were commenced on October 17, 1908. The petitioner's 
employment was under a contract in writing dated March 1, 1907, 
from which it appears that he was employed as a bond salesman at 
the rate of $3,000 per year, payable monthly, the employment to con- 
tinue until December 1, 1909. If, as he contends, what remains due 
him for services was wages due him as a traveling or city salesman, 
$266.66 thereof was earned within three months before the date of 
the commencement of thèse proceedings, and is, therefore, to hâve pri- 
ority under section 64b (4) of the bankruptcy act, according to a stip- 
ulation of the parties filed hère November 18, 1910, since the referee's 
order was made. 

The trustée contends that the évidence does not show the creditor 
to hâve been a traveling or city salesman within the meaning of the 
section referred to, and dénies his right to priority. The référée has 
adopted this view. There is no dispute that, as has been stated, the 
contract of employment was for services as a bond salesman, nor that 
by the contract he was to travel in rendering thèse services. The lan- 
guage of the contract is: 

"It is understood that you are to dévote your entire tiaie to the business 
of the undersigned, and the territory over which you are to work wlll be 
principally in the state of Maine. We will pay ail traveling expenses Incùrred 
by you when avvay from home and traveling on the business of the under- 
signed." 

The above undisputed facts, standing by themselves, would, in my 
opinion, entitle this creditor to rank as a traveling salesman, within 
the meaning of section 64b (4). It cannot be said, in view of In re 
Dexter, 158 Fed. 788, decided by the Court of Appeals for this Cir- 
cuit in 1907, that he is any the less within the meaning of the section 
referred to because he was receiving a salary of $3,000 a year, instead 
of receiving a comparatively small compensation for his services, and, 
therefore, presumably dépendent upon his earnings for présent sup- 
port. The trustée relies upon the facts disclosed by the creditor's own 
évidence, which is not contradicted, that the bankrupts, whose prin- 
cipal office was in Boston, also maintained an office at Portland, of 
which he had charge, besides going from place to place in Maine to 
sell bonds; that he conducted correspondence from that office on the 
bankrupts' letter head and in their name; that he had a junior sales- 
man under him; that he received bulletins from the bankrupts, such 
as they issued to the managers of ail their branch offices; that they 
recognized him in correspondence as manager of the Portland office; 



Wi 188 FEDERAL EBPORTEK 

andthat în his letter of résignation, dated August, 19, 1910, he hîm- 
^elf tendered his résignation "as manager of the Portland office." I 
am unable, however, to believe that any of thèse things are sufficient 
to prevent him from being a "traveling salesman," within the meaning 
of the act. It seems to me, on the évidence, that everything donc by 
him as the manager of the Portland office vvas subotdinate to the 
Work he did as traveUng salesman, and inconsiderable in comparison 
with that portion of his work. Circumstances somewhat similar were 
relied upon for the same purpose in Re Dexter, above cited, and the 
court held that they did not "change in any material way the real 
c:haracter of the service" for which the salesman was employed. I 
must, therefore, overrule the order denying priority altogether to this 
daim, and direct that the créditer be allowed priority as to $266.66 
thereof. 



In re BARTHIEE. 

(District Court, D. Massachusetts. December 31, 1910.) 

No. 15,970. 

Banketjptcy (i 409*) — Discharge— Objections— Omission to Keep Bocks. 
Where the hankrupt sold pianos, some for cash and others on lease or 
condltional sale, and his books showed ail receipts from customers who 
had taken pianos under leases or condltional sales but not receipts from 
purchasers for cash, though from his stockbook and checkbook ail money 
taken in or expended except $965 was f ully aceounted for, and he testlfled 
that he did not show receipts for pianos sold for cash because he did not 
want his salesmen to know that he was selling pianos at cost for cash, 
the facts did not show that he failed to keep proper books with intent 
to conceal his flnancial condition, under the rule that such concealment 
can exist only when it obtains with référence to persons entitled to know 
the facts. 

■ [Ed. Note. — ^For other cases, see Bankruptcy, Cent. Dig. §§ 739, 752- 
757 ; Dec. Dlg. § 409.*] 

In the matter of bankruptcy proceedings against Louis N. Barthier. 
On objections to discharge. Overruled. 

Knight & Brewster, for objecting creditor. 
James G. Dunning, for bankrupt. 

DODGE, District Judge. This bankrupt was a dealer în pianos în 
Springfield, adjudged bankrupt on his own pétition, filed iVpril 25, 
1910. The creditor who opposes his discharge allèges omissions from 
his books of account intended to conceal his financial condition. The 
referee's report sustains this ground of objection. The referee's re- 
port of the facts is mainly taken from a statement of them agreed on 
before him by the parties. The bankrupt had done business on his 
pwn account since August, 1907. Some pianos he sold for cash, oth- 
ers he disposed of by leases or sales upon condition involving pay- 
ments in installments. In a book called a cashbook he entered ail re- 
ceipts from customers who had taken pianos under leases or condi- 

•Por other oaees see same toplo & § ntjmber In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN KE BARTHIEB 395 

tional sales, but not receipts from purchasers for cash. Thèse he did 
not enter as such upon any book, and he kept no record of the priées' 
received for pianos so sold. From his sales for cash between October 
1, 1909, and the time of filing his pétition, he received in ail about 
$6,250. Thèse sales were niade for approximately what the pianos had 
cost. A stockbook was kept, showing ail the pianos bought and sold, 
on whatever terms, by name and number. In the cases of the sales 
for cash the word "cash" in red ink appeared opposite the name and 
number. A checkbook was kept which shovved amounts deposited in 
the bank, but not the sources from which the money came; also the 
amount of each check and the purpose for which it was drawn. Very 
nearly ail the bankrupt's receipts were deposited in this bank account, 
whether from cash sales or other sources, and from the checkbook, 
therefore, could be ascertained what he had done with nearly ail the 
money he had received; but a small proportion of his receipts from 
sales for cash was paid out by him in cash for salaries and livjng ex- 
penses. Of this part of his receipts and its disbursement by him no 
record was preserved. Other books were kept, which do not requirè 
spécial mention hère. As to his intent in not recording thèse sales of 
pianos for cash there was no direct testimony but his own. He said it 
was done in order to prevent his salesmen from knowing that he was 
selling pianos at cost. He could not, according to his évidence, con- 
veniently prevent them from having access to the books, and he feared 
that if they knew he was "pinched," so as to bave to sell a piano at 
cost in order to meet an obligation, they might try to sell at cost, or 
might "tell it ail over the city," customers to whom he had sold at 
higher priées might become dissatisfied in conséquence, pianos sold on 
lease or installments might be returned, and his business might thus 
be injured. 

The référée has found that there was apparently no intent on the 
bankrupt's part to work any fraud upon his creditors, and has reported 
that the refusai of discharge would be in his opinion harsh, and not 
within the gênerai spirit of the bankruptcy act. He has, however, felt 
obliged to report in favor of refusai by the décision of the Court of 
Appeals for the Second Circuit in Re Hanna, 168 Fed. 238, 93 C 
C. A. 452. In that case the bankrupt failed to enter on his books a 
loan considérable in proportion to the amount of his assets, and had 
done so in order to conceal his real financial condition from his con- 
fidential manager. In this case, while the bankrupt's exact iînancial 
condition was not ascertainable from his unexplained books, it is^ not 
clear that there was not enough on his books to show in substance how 
his assets and liabilities compared with each other. At any rate, the 
mère failure to make spécifie entries of receipts from cash sales ànd 
spécifie entries regarding the application of such receipts does not seem' 
to bave been enough to prevent them from doing so, and the cred- 
itor's spécification of objections is expressly liniited to thèse omissions. 
The stockbook showed which pianos had and which had not been sold, 
and the checkbook showed, out of $24,880 total receipts during the 
last six months, what he had done with ail but $965, and the évidence 
is at most that what he wanted to conceal was a temporary lack of 



396 188 FEDERAL EEPOKTEB 

ready money. There is nothing to show that he was insolvent before 
the filing of his pétition. But supposing the case to hâve been that 
he was insolvent when he omitted the entries referred to, his sales- 
men had no such right to know that fact as a confidential manager 
would hâve. Concealment, it would seem, can only be from persons 
entitled to know. 

The court said in Re Hanna, 168 Fed. 240, 93 C. C. A. 454, that 
"a provision intended to insure the keeping of correct and complète 
accounts should be rigidly enforced, especially one whose opération is 
made to dépend upon intention, excluding mistake or neglect." With 
this I fuUy agrée, and in view of the décision I reach a conclusion op- 
posed to that of the référée with considérable hésitation. I think, how- 
ever, that the facts in this case do not on the whole require, as the 
facts in Re Hanna did, the conclusion that there was an intent on the 
bankrupt's part to "conceal his financial condition," within the mean- 
ing of section 14b (2) of Act July 1, 1898, c.' 541, 30 Stat. 550 (U. 
S. Comp. St. 1901, p. 3427), as amended in 1903 by Act Feb. 5, 1903, 
c. 487, § 4, 32 Stat. 797 (U. S. Comp. St. Supp. 1909, p. 1310). 

I therefore grant the discharge applied for. 



UNITED STATES v. GIBSON et al. 
(District Court, S. D. Georgla, W. D. May 16, 1911.) 

1. Courts (§ 356*) — Appeal—Supersedeas— Discrétion of Court. 

It is within the discrétion of the United States court in the trial of a 
crlminal case to grant or refuse a supersedeas, when informed by counsel 
for a convicted person that he purposed to sue out a writ of error or 
take an appeal. 

[Ed. Note. — For other cases, see Courts, Cent. Dig. § 937; Dec. Dig. § 
356.*] 

2. Courts (§ 353*)^New Tsial— Practice in Fédéral Court. 

It is within the discrétion of the United States judge In a crlminal 
case to refuse a new trial, though under the state practice of Georgia he 
would hâve been obliged to entertain the motion therefor. 

[Ed. Note. — For other cases, see Courts, Cent. Dig. § 933; Dec. Dig. § 
353.*] 

3. Courts (§ 356*) — Appeal— Review— Discrétion op Trial Court. 

The discrétion of the United States judge as to the grant of a new 
trial in a criminal case is not revlewable. 

[Ed. Note. — For other cases, see Courts, Cent. Dig. § 937; Dec. Dig. § 
356.*] 

John P. Gibson and others were convicted of burglary of a post 
office. Pétition for appeal and supersedeas. Application for super- 
sedeas denied. 

Aléxander Akerman, Asst. U. S. Atty. 
W. D. McNeil, for défendants. 

SPEER, District Judge (orally). [1] I am very much obliged to 
Mr. McNeil for his thorough examination of the authorities on this 

'For otlior causes see same topio & S ndmbee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. GIBSON 397 

important question of practice. His examination confirms the im- 
pression of the court, and that is-that it would be difficult to find any 
obligatory rule that the United States court should grant a super- 
sedeas when informed by counsel for convicted persons that he pur- 
posed to sue out a writ of error or take an appeal. The authorities 
ail sustain the proposition 'that the matter is one entirely in the dis- 
crétion of the trial court. Nor is it true that there are no précédents 
where the courts hâve refused a supersedeas. In one of the greatest, 
and perhaps the most tragic case ever tried in this court, that of con- 
spiracy and murder on the part of Luther A. Hall, Lancaster, and 
others, the victim being Capt. John Forsyth, a supersedeas was re- 
fused after the court had given counsel some time in which to prépare 
for an appeal. It was complained that the court did not give the 
prisoners a chance to bid their familles good-bye. It was remarked 
by some one that the prisoners did not give Capt. Forsyth, the mur- 
dered man, a chance to tell his family good-bye. 

The section of the Code of Georgia which has been cited is one of 
thefruitful causes of delays in the administration of criminal justice 
in Georgia. That and perhaps the provision known as the "dumb 
act," which prevents the court from stating what has been proven, 
even though it may not be in the slightest dispute, from intimating 
an opinion as to the facts, whether they are in dispute or not, are 
perhaps of ail others the most fruitful reasons why the condition of 
our State is so lamentable in so far as the criminal laws are involved, 
and perhaps explains why every year there are many more murders 
in the state of Georgia, with its less than 3,000,000 population, than 
there are in Great Britain and Ireland with more than 45,000,000 
population. 

[2, 3] Now, thèse men, in the opinion of the court, are clearly guilty. 
Notwithstanding the very able efforts of Mr. McNeil to acquit them, 
the jury did not hesitate to find them guilty. The court declined 
promptly, when the question was presented, to grant the motion for 
new trial. That is in the discrétion of the United States judge. 
Under the state practice he would hâve been obliged to entertain the 
motion for new trial. It is otherwise hère, nor is that discrétion re- 
viewable. The prisoners are confined in the jail hère, none too se- 
cure, perhaps; there hâve been escapes from it. They are profes- 
sional criminals in the opinion of the court, of the most skillful and 
desperate character — safe blowers and determined burglars. In its 
expérience the court has never seen a tougher lot. I regret that the 
talented young kinsman of the presiding judge did not hâve a bet- 
ter chance for a défense of innocent men. I am very sure that I 
was proud of his efforts, and proud that we are descended from the 
same revolutionary sire. Even though I was generally obliged to rule 
against him, when I observed his original and vigorous exertions, my 
émotions are not unlike those of Mrs. Whackles, who had determined 
to turn down Mr. Richard Swivellèr, who, as we are told in the "Old 
Curiosity Shop," was suing for the hand of her daughter. Miss Sophie. 
Notwithstanding his jealous rage for his successful rival, Cheggs, Mr. 



398 188 FEDERAL EBPOETER 

Swiveller danced with such skill and agility, and executed -such re- 
markable évolutions on the floor and in the air, that Mrs. Whackles 
felt after ail that it might be a great honor to hâve such a,dancer in 
the family. 

For the reasons stated, I shall hâve to décline the application for 
supersedeas. Thèse peripatetic burglars will be much more comfort- 
able in the United States penitentiary in Atlanta than in the jail hère, 
where the accommodations were not originally designed for gentlemen 
so eminent in their profession. Also more comf ortable will be the com- 
munity. In that great prison Mr. McNeil's clients will hâve every 
possible sanitary attention, and ail reasonable luxuries. Their food 
will be most appetizing, indeed, more nourishing than that they could 
obtain in any hôtel in Georgia. Besides, they would be serving their 
terms, and will get crédit for every day they will continue to réside 
there. 

Let order be taken accordingly. 



Ex parte COUNORT. 
(Circuit Court, E. D. Washington, E. D. Marcli 6, 1911.) 

Habeas Cobpus (§ 45*) — Fédéral Couets— Comity. 

A writ of liabeas corpus would not he granted by a fédéral court to 
review a petitioner's restraiut under a conviction for neglecting or re- 
fuslng to cause cWldren to attend scliool, in violation of the state stat- 
ute, on the ground that the information did not charge a crime, was not 
properly verifled, and that the statute did not conform to the state Con- 
stitution ; such questions being purely of local law, on which the déci- 
sion of the state courts would be conclusive. 

[Ed. Note. — For other cases, see Habeas Corpus, Cent. Dig. §§ 38^5 ; 
Dec. DIg. § 45 ;* Courts, Cent. Dig. §§ 1096, 1376-1385. 

Jurisdiction of fédéral courts, see note to In re Huse, 25 C C. A. 4.] 

Application of F. B. Counort for a writ of habeas corpus. Denied. 

Moye Wicks, for petitioner. 

Lovejoy & Jesseph, for Spokane County. 

RUDKIN, District Judge. On the 27th day of February, 1911, the 
petitioner, Counort, was convicted before the superior court of Spo- 
kane County of the crime of neglecting and refusing to cause his chil- 
dren to attend school, in violation of section 1 of subdivision 16 of the 
Code of Public Instruction of the state of Washington (Laws of 1909, 
p. 364), and was committed to the keeper of the county jail in default 
of payment of the fine and costs imposed. Hé now applies to this 
court for writ of habeas corpus, claiming that his restraint and impris- 
onment are illégal, in this : First, because the information under which 
the conviction was had fails to négative certain exceptions contained 
in the enacting clause of the statute ; second, because the information 
was verified by the deputy prosecuting attorney instead of by the at- 
tendance officer or county superintendent, as required by law; and. 

•For other cases see saroe topio & § numeek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



EX PARTE COUNOET 399 

third, because the subject of the act under which the conviction was 
had is not expressed in the title, as required by section 19 of article 
2 of the State Constitution. 

Manifestly, the iinal judgment of a state court of compétent juris- 
diction cannot be reversed or annulled by a fédéral court on any such 
grounds or for any such reasons. In Urquhart v. Brown, 205 U. S. 
179, 27 Sup. Ct. 459, 51 L. Ed. 760, a writ of habeas corpus was sued 
out on the ground that the state statute under which the prisoner was 
held, as construed by the highest court of the state, violated the na- 
tional Constitution; but in reversing a judgment discharging the pris- 
oner the court said : 

"It is the settled doctrine of ttiis court that although the Circuit Courts of 
the United States, and the several justices and judges thereof, hâve author- 
ity, under existing statutes, to discharge, upon habeas corpus, one held In cus- 
tody by state authority in violation of the Constitution or of any treaty or 
lavr of the United States, the court, justice, or judge has a discrétion as to the 
time and mode in which the power so conferred shall be exerted, and that in 
View of the relations existing, under our system of government, between the 
judicial tribunals of the Union and of the several states, a fédéral court or 
a fédéral judge will not ordinarlly interfère by habeas corpus with the regu- 
lar course of procédure under state authority, but will leave the applicant 
for the writ of habeas corpus to exhaust the remédies afforded hy the state 
for determining whether he Is illegally restrained of his liberty. After the 
highest court of the state, compétent under the state law to dispose of the 
matter, has finally acted, the case can be brought to this court for re-exam- 
Ination. The exceptional cases in which a fédéral court or judge may some- 
times appropriately interfère by habeas corpus in advance of final action by 
the authorities of the state are those of great urgency, that require to be 
promptly disposed of, such, for instance, as cases 'involving the authority and 
opérations of the gênerai government, or the obligations of this country to, 
or its relations with, foreign nations.' The présent case is not within any of 
the exceptions recognized in our former décisions. If the applicant felt that 
the décision, upon habeas corpus, in the Suprême Court of the state, was in 
violation of his rights under the Constitution or laws of the United States, 
he could hâve brought the case by writ of error directly from that court to 
this court. In Reid v. Jones, 187 U. S. 153 [2.3 Sup. Ct. 89, 47 L. Ed. 116], It 
was said that one convicted for an alleged violation of the criminal statutes 
of a state, and who contended that he was held in violation of the Constitu- 
ïion of the United States, 'must ordinarlly first take his case to the highest 
court of the state, in which the judgment could be reviewed, and thence bring 
it, if unsuccessful there, to this court by writ of error ; that only in certain 
exceptional cases, of which the présent is not one, will a Circuit Court of the 
United States, or this court upon appeal from a Circuit Court, Intervene by 
writ of habeas corpus in advance of the final action by the highest court of 
the state.' So, in the récent case of Drury v. Lewis, 200 U. S. 1 [26 Sup. Ct. 
229, 50 L. Ed. 343], it was said that, In cases of the custody by state author- 
ities of one chargea with crime, the settled and proper procédure was for a 
Circuit Court of the United States not to interfère by habeas corpus, 'unless 
in cases of peculiar urgency, and that Instoad of discharging they will leave 
the prisoner to be dealt with by the courts of the state; that, after a final 
détermination of the case by the state court, the fédéral courts will even then 
generally leave the petitioner to his remedy by writ of error from this court. 
The reason for this course is apparent. It is an exceedingly délicate jurisdic- 
tlon given to the fédéral courts by which a person under an indictment In a 
state court and subject to Its laws may, by the décision of a single judge of 
the fédéral court, upon a writ of habeas corpus, be taken out of the custody 
of the offlcers of the state and finally discharged therefrom." 

The Brown Case presented stronger grounds for fédéral interfér- 
ence than does the case at bar, for in that case it was claimed that the 



400 188 FEDERAL KEPORTEB 

act under which the prisoner was restrained of his lîberty violated the 
fédéral Constitution, whereas this case présents questions of local law 
only. Whether the information charges a crime or is prbperly veri- 
fied, or whether the state statute conforms to the state Constitution, 
présents questions of local law only upon which the décision of the 
state courts is binding on the fédéral courts. Should this court dis- 
charge the prisoner for any of the reasons stated the Suprême Court 
of the state may hereafter sustaih both the information and the stat- 
ute and the condition thus brought about would be intolérable. In the 
exercise of its acknowledged iurisdiction a fédéral court must some- 
times construe and apply a state statute in advance of the state tribu- 
nals, but it will not do so on an application of this kind. 
The writ is therefore denied. 



KAMENICKY V. OATTERALL PRINTING CO. (two cases). 
(Circuit Court, S. D. New York. June 13, 1911.) 

Ehîmoval of Causes (§ 102*) — Divebsb Citizenship— Aliens— Jueisdiciioit. 

Where actions were instituted in a state court of New York, by an 
alien residing tliere, against a corporation organized and resldiug in 
New Jersey, and were removed by défendant to tlie Circuit Court for tlie 
Southern District of New York, tlie fédéral court's jurisdlction was 
doubtful, and the cases for that reason would be remanded. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dlg. § 220 ; 
Dec. Dig. § 102.*] 

At Law. Actions by Anna Kamenicky against the Catterall Print- 
ing Company. On motions to remand. Granted. 

R. M. Overlander, for plaintiff. 
Wheeler, Cortis & Haight, for défendant. 

LACOMBE, Circuit Judge. Plaintiff is an alien, résident in this 
state; défendant, a corporation organized and résident in the state 
of New Jersey. The actions were brought in the state court (New 
York), and summons served hère. Défendant has removed the causes, 
and motion is made to remand them. 

Since plaintiff is an alien, the action, if brought in a fédéral court, 
could hâve been maintained only in the district of the résidence of de- 
fendant. It is contended, therefore, that the removal is not into the 
"proper district," agreeably to the requirement of the statute. It is 
not necessary to discuss the question. The effect of the varions dé- 
cisions referred to by counsel is to leave the question a doubtful one. 
When there is any doubt about jurisdiction of the fédéral court, it 
is the practice in this circuit to remand the cause. Plant v. Harrison 
(C. C.) 101 Fed. 307. 

Motions granted. 

♦For other cases see same topic & § ndmbeb in Dec. & Am. Digs. 1907 to date, & Eep 'r Indexes 



OMMKN V. TALCOTT 401 

OMMEN V. TALCOTT. 

(Circuit Court of Appeals, Second Circuit. July 10, 1911.) 

No. 234. 

1. Factobs (§ 1*)— Définition— "Selling Agent"— "Commission Mkiîchant." 

A "selling agent," "factor," or "commission merchant" is one who sells 

goods which another person tas delivered to hlm for that purpose and 

receives compensation for his services by a commission or otlierwise. 

[Ed. Note. — ï"or other cases, see Factors, Cent. Dig. § 1 ; Dec. Dig. § 1.* 

For other définitions, see Words and Phrases, vol. 2, p. 1305; vol. 3, 

pp. 2640-2642 ; vol. 8, p. 7660.] 

2. Bankkuptoy (§ 303*) — Psefeee.vce—Recoveet— Evidence of Lien. 

In a suit to reeover a preferential transfer of property by a bankrupt. 
In whicb the défendant elaimed a factor's lien, évidence held not to show • 
that défendant or any one in his behalf was ever in the physical posses- 
sion, custody, and control of the property. 

LEd. Note. — For other cases, see Bankruptcy, Dec. Dig. § 303.*] 
S. Factors (§ 47*) — Lien— Possession. 

It is absolutely essentlal to the validity of a factor's lien for advances 
that the property consigned be delivered by the consigner to consignée. 

[Ed. Note. — For other cases, see Factors, Cent. Dig. §§ 65-71; Dec. 
Dig. § 47.*] 

4. Bankkuptct (§ 188*) — Peei;eeewces—Recoveby— Evidence — Liens. 

In a suit to reeover a preferential transfer of property by a bankrupt, 
In vfhich défendant elaimed a factor's lien for advances made to the 
bankrupt, it appeared that the bankrupt and défendant had entered into 
a contract by which ail sales of consigned goods should be in tbe name 
of défendant and Invoiced to the purchasers in the naine of défendant 
followed by the name of the bankrupt corporation, and, while défendant 
made no sales, the goods were invoiced to customers as "bought of J. A. 
T.," défendant, wlth the name of the bankrupt corporation on a lower 
Une. The contract provided that certain accounts, where advances had 
been made on the goods about to be sold, should pass to défendant. Held 
that, in cases where the purchaser was notified by the Invoice that he 
owed the money to défendant, thls was an assignment of that account, 
and, where made before défendant had reasonable cause to helieve that 
a préférence was intended, was not obnoxlous to the provisions of the 
bankrupt act. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 188.*] 

Appeals from the District Court of the United States for the 
Southern District of New York. 

Suit by Alfred E. Ommen, as trustée in bankruptcy of the John A. 
Baker Notion Company, against James Talcott. From a final decree 
of the District Court (175 Fed. 261), both parties appeal. Reversed 
and remanded. 

See, also, 180 Fed. 925. 

This cause comes hère upon appeal Trom a final decree of the District 
Court, Southern District of New York, in favor of complainant, for some- 
thlng over $23,000, The decree further provided that complainant should 
make certain payments to the spécial master and others, and should pay 
$43 taxable costs to défendant. 

The action was brought to reeover a preferential transfer of property 
by the bankrupt to défendant, made shortly before bankruptcy. Upon the 
trial Judge Holt held complainant entitled to reeover for certain goods and 

•For other cases see same topic & § numbek in Dec. & Am. Digs- 1907 to date, & Rep'r Indexes 
188 F.— 26 



40-2 188 FEDEBAL REPORTER 

also for certain accounts current ■vrhlch défendant had collected, and or- 
dered an accountlng. After the aeuounting tlie case came, upon report of 
the spécial master, before Judge Hand, vvhose opinion will be found in 175 
Fed. 261. 

Fried & Czaki (P. M. Czaki, of counsel), for complainant. 
Rounds, Schurman & Dwight (G. W. Schurman & Augustus L. 
Richards, of counsel), for défendant. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge (after stating the facts as above). De- 
fendant claims that he was the factor of the bankrupt, having a 
factor's Hen upon the goods which the bankrupt had purchased. 
Finding that failure was imminent, he removed such goods on Decem- 
. ber 15, 1902 (the day before pétition was filed), from No. 394 Broad- 
way, where the bankrupt had its place of business, to the premises or 
place of business of défendant at No. 110 Franklin street. The 
goods so removed were, concededly, the property of the bankrupt, and 
such removal was a transfer of that property, the efïect of which if 
enforced would be to enable défendant to obtain a greater percentage 
of his demand than any dther creditor of the same class. Conced- 
edly, too, at the time of removal, defendant's agents had reason- 
able cause to believe that it would hâve such efïect. The sole 
question to be determined is whether défendant had a Hen upon 
the goods which warranted his taking them as stated and dis- 
posing of them to obtain the repayment of his advances. The suit 
is brought under sections 60a and 60b of the bankrupt act (Act July 
1, 1898, c. 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445)], and un- 
der the amendments of 1903 (Act Feb. 5, 1903, c. 487, 32 Stat. 797 
[U.S. Comp St. Supp. 1909, p. 1308]) the District Court had juris- 
diction. This suit was not a "bankruptcy case pending" when the 
amendments were passed, and therefore not afifected by the exception 
in section 19 of the amending act. 

The bankrupt is a corporation, which for about a year prior to 
December 6, 1901, had been engaged in the notion and small ware 
(dry goods) business at 114 Franklin street. Défendant has for many 
years been engaged in the drj^ goods business; his place of busi-^ 
ness during the period in question being at 108 and 110 Franklin 
street. Défendant and the bankrupt on December 6, 1901, entered 
into a written agreement, which contained the following provisions: 

"The John A. Baker Notion Company herewith constitute and appoint 
Jaraes Talcott its sole factor, superviser and selllng agent and agrée 
to consign to him during the continuance of thls agreement, the entire 
stock of goods now or hereafter owned by them, or purchased by them, for 
sale upon commission. AH sales of the consigned goods shall be in the 
name of James ïalcott, and Invoiced to the purchasers in the name of 
James Talcott, John A. Baker Notion Company Department" 

2. The Baker Company is to assign to défendant ail its out- 
standing accounts and to notify customers of such assignment. 

3. Talcott is to employ and pay a bookkeeper who shall keep 
the book of accounts at his main store, 108-110 Franklin street, Tal- 
cott is to "attend to the collection of accounts and ail questions as to 



OMMEN V. TALCOTT 403 

crédit shall be decided by him and he shall own and pay for ail books 
of accounts used in the business of said agency." 

4. The Baker Company is to pay ail other expansés incurred in 
the said business, including rent, salary of salesmen, or other em- 
ployés, stationery, postage, telegrams, packing, cartage and storage,, 
incidental expenses, and the premium of insurance; insurance to be 
in the name of and payable to Talcott. 

6. Talcott "shall hâve the exclusive possession and control of said 
consigned goods, together with the accounts arising from the sale 
thereof and ail remittances, checks, bills payable and proceeds of 
sales, shall be the exclusive property of James Talcott." 

7. Talcott agrées to advance a certain percentage on the accounts 
assigned to him, with certain déductions. 

8. He "may advance in his discrétion an amount which shall be 
satisfactory to him upon the merchandise which may be consigned 
from time to time." It is agreed that the consigned merchandise 
be held by him as additional security for his advances upon the out- 
standing accounts. 

He is to receive certain specified commissions for his services. 

The Baker Company agrées to assign to Talcott the lease of any 
premises occupied by them, and he "shall bave the exclusive control 
of said premises." Upon the expiration of the agreement by expira- 
tion of time or otherwise the Baker Company agrées to accept the 
reassignment of the lease for its unexpired term. 

11. A sign is to be placed at the entrance of the building at which 
this business shall be conducted which shall read as foUows: James 
Talcott, Annex John A. Baker Nption Company Department. 

Talcott shall not guarantee the payment of sales and ail the sales 
shall be made at the risk of the Baker Company. 

The Baker Company, subject to the approval of Talcott, may 
designate the persons on and about the sale of the said goods and 
in and about the said agency. Talcott shall not be responsible 
for acts or omissions of persons so designated. 

The agreement is to last for a year and to continue thereafter sub- 
ject to termination by either party on 30 days' notice. 

[1,2] A selling agent, factor, or commission marchant is one who 
sells goods which another person has delivered to him for that 
purpose and receives compensation for his services by a commission 
or otherwise. Notwithstanding the statements contained in the 
agreement, we cannot find ont that défendant ever sold a dollar's 
worth of the bankrupt's goods. Ail sales were made by salesmen 
whom défendant employed and paid; with such sales Talcott was 
in no way concerned. Defendant's brief contains the statement 
that the goods were sold as well as invoiced to customers in his name. 
The parts of the record referred to do not indicate that the sale 
was made in his name; the goods, however, were invoiced to cus- 
tomers as: "Bought of James A. Talcott," with the words, "John 
A. Baker Notion Co. Department," on a lower hne. The Baker 
Company kept on buying goods just as it had before, taking them 
into its custody and control, handling, holding, and disposing of 



404 188 FEDERAL KBPORTER 

them by its own employés whom it selected and paid. The most 
conspicuous sign, stretching across the front of the building, re- 
mained, as before, "John A. Baker Notion Company." The same 
title also appeared on smaller signs at the entrance door and at 
the head of the stairs, accompanied with the words, "James Talcott 
Annex." This would be a net inappropriate désignation of premises 
where the Baker Company conducted its business, and where Tal- 
cott also had quarters for the transaction of some business of his 
own. Four witnesses, called by défendant, ail commission mer- 
chants, testified that according to their understanding and the cus- 
tom of their trade the présence of such an annex sign would indi- 
cate that the person whose name immediately preceded the word 
"annex" was financing the business and had a lien on the goods of 
the person whose name followed the word "annex." On cross-exam- 
ination at least one of them admitted that the latter might also 
hâve goods of his own there for sale on which advances had not 
been made and on which no lien was claimed. The Baker Company, 
as we hâve seen, bought goods solely on its own crédit, paying with 
its own checks; it also paid the duties, rent, and ail business ex- 
penses. The goods it bought were delivered by the sellers to it at 
114 Franklin street and afterwards at 394 Broadway, where they 
were received and cared for by its employés. When the company 
wanted an advance, it made out upon a blank furnished by the de- 
fendant a so-called "consignment invoice," which contained a list of 
goods with date of purchase, name of seller, amount, and (if im- 
ported) amount of duty. Upon the receipt of this invoice défendant 
made an advance to the extent stipulated in the agreement; occa- 
sionally he would make advances before the consignment invoice was 
made out. When such invoice was delivered, no change was made 
in. the situation or condition of the goods, nor were any marks in- 
dicating a delivery to Talcott placed upon them. They remained 
where they had been on the premises where the Baker Company con- 
ducted its business and in the possession and control of its employés. 
There were three sets of keys of the premises, one carried by the 
vice président, one by the secretary and treasurer, and one by a 
minor employé. When each lease was assigned (covering 314 Frank- 
lin Street and 394 Broadway), an employé of Talcott asked Shute, 
the secretarj' and treasurer, for his set. Immediately upon receiving 
them he returned them asking him to carry the keys for Talcott. 
There is nothing to show that défendant or any one in his behalf was 
ever in the physical possession, custody, and control of any of the 
property of the company at its premises until just before the bank- 
ruptcy. 

[3J It is absolutely esseritial to the validity of a factor's lien for 
advances that the property consigned shall be delivered by consigner 
to consignée. We cannot find upon this record that there was ever a 
change of possession, custody, and control from consigner or con- 
signée. 

I concur fully with Judge Holt's conclusion that this is "one of 
the innumerable schemes by which merchants hâve attempted to cre- 



BAKER-WHITELET COAL CO. V. BALTIMORE & O. R. CO. 405 

ate liens on their goods, which shall be unknown to their creditors 
and shall not afifect their crédit, but which shall be enforceable if 
bankruptcy occurs. They are ail based on the idea of giving notice 
enough to satisfy the law and not enough to inform the creditors." 

A lien cannot be sustained on any theory of a mortgage. There 
was no mortgage in fact, nor was there any attempt to create one. 
Nor was there an attempt to create any lien other than a factor's lien 
on a consignment of merchandise for sale on commission. This 
attempt was made with such solicitude to conceal the facts from per- 
sons with whom the bankrupt was dealing on its own crédit that it 
failed of accomplishment. We see no reason why the court should 
be astute to discover some équitable lien which the parties did not 
imdertake to create. So much of the decree as covers the goods re- 
moved is afiirmed. 

[4] The accounts, or bills receivable for goods sold as described 
above, stand on a différent footing. The contract in substance pro- 
vided that certain of such accounts— those where advances had been 
made on the goods about to be sold — should pass to James Talcott. 
In ail cases where the purchaser was notified by the invoice that 
he owed the money to Talcott, this was a complète assignment of 
that account. Judge Holt held that there is no satisfactory proof 
that défendant had reasonable cause to believe that a préférence 
was intended before December 15, 1902. We see no reason to re- 
verse such fînding. Therefore as to ail accounts, invoiced as above 
indicated prior to December 15, 1902, the transfer to défendant is 
not obnoxious to the provisions of the bankrupt act. So much of the 
decree therefore as requires défendant to account for thèse items 
should be reversed. 

Several points were raised upon the accounting, which are fully 
treated in Judge Hand's opinion. We concur in his conclusions and , 
do not think it necessary to discuss them. 

The decree is reversed, and cause remanded, with instructions 
to enter a new decree in conformity with this opinion. Since 
both sides appealed and each has prevailed in part only, there will 
be no costs of this appeal to either side. 



BAKER-WHITELEY COAL CO. v BALT15I0RE & O. E. CO. 

(Circuit Court of Appeals, Fourth Circuit. May 16, 1911.) 

No. 974. 

1. Monopolies (§ 16*) — Validitt— Pibr Constitutino Raileoad Station— 
Gbant of Exclusive Dooking Pbivileges to Tua Ownee. 

Défendant railroad company, wlilcli was a large Interstate carrier of 
coal from the mines to tlie seacoast at Baltimore, built at Curtis Bay 
near there a pier, extending into the navigable water, for the handling 
of coal intended for transshipment by water. It did not undertake to 
carry coal beyond its own railroad line, but by its flled and published 
traffic schedules it made such pier a public terminal station, at which it 
undertook to deliver ail coal so consigued by the blll of ladlng to "what- 



*For other cases see same topic & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



406 188 FEDERAL REPORTEE 

ever vessel orvessels the shipper or consignées of the sald coal may dés- 
igna te." Held tliat, whlle défendant had tlie right to make and enforce 
such régulations as were reasonaWy necessary for the use of the pier 
by shippers and consignées, it could net lawfully grant to a single tug 
owner the exclusive right to dock and undock vessels at such pier ; it 
heing withln the rights of sliippers and consignées to employ such tugs 
as they chose, and the right of such tugs to use the navigable waters 
surrounding the pier in the performance of such service. 

[Ed. Note. — For other cases, see Monopolies, Dec. Dig. § 16.*] 

2. iNJUNCTioN (§55*) — Pbopbkty Eights Pbotected— Injubt to Business. 

A tug owner having contracts with steamshlp companies to do ail tow- 
ing for their vessels at a certain port, which was prevented trom doeking 
and undocking such vessels at a pier by an unlawful order of the owner, 
was thereby deprivéd of a property right, and entitled to maintain a 
suit in equity to enjoin enforeement of such order. 

[Wâ. Note. — For other cases, see Injunction, Cent. Dig. §§ 108, 109; 
Dec. Dig. § 55.*] 

Appeal from the Circuit Court of the United States for the District 
of Maryland, at Baltimore. 

Suit in equity by the Baker-Whiteley Coal Company against the 
Baltimore & Ohio Railroad Company. Decree for défendant (176 
Fed. 632), and complainant appeals. Reversed. 

J. C. McLanahan and Joseph C. France, for appellant. 
R. Marsden Smith and H. R. Preston, for appellee. 

Before PRITCHARD, Circuit Judge, and BRAWLEY and DAY- 
TON, District Judges. 

BRAWLEY, District Judge. [1] This case cornes up on appeal 
from the decree of the court below dismissing on final hearing a bill 
of complaint upon which a restraining order had been granted. The 
•Baker-Whiteley Coal Company is a corporation of West Virginia own- 
ing a number of tug boats, and doing an extensive towing business 
with steamship Unes trading to the port of Baltimore. ■ It does a con- 
sidérable business in supplying the steamships handled by it with 
bunker coal for their own consumption, which coal is bought from 
owners of mines on the Hne of the défendant company, and delivered 
by the railroad at the Curtis Bay pier. The défendant is a railroad 
company, a Maryland corporation, engaged in Interstate commerce. 
The complainant, about the middle of June, 1908, had a contract with 
the owners or charterers of the Norwegian steamship Horda to tow 
her to the pier and to load her bunkers with coal, and the steamship 
was taken to the Curtis Bay coal pier by one of the complainant's 
tugs. The défendant refused to allow the Horda to make her lines 
fast to the pier, cast off those lines when they were made ïast, and 
pushed the steamer ofif into the stream. This was in pursuance of an 
order of the défendant company, which was as f oUows : 

"The Baltimore & Ohio Railroad Company. 

•'On and af ter June 15, 1908, doeking and undocking of ail classes of ves- 
sels at this company's coal pier, Curtis Bay, must be done by the tu-^s of ("apt. 
R. M. Spedden. By O. H. Hobbs, Superlnteurli'iil." 

*For other cases see same topic &. § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



BAKER-WHITELET COAL CO. V. BALTIMORE & O. H. CO. 407 

The bill of complaint was filed June 19, 1908, a preliminary injunc- 
tion was prayed, and a restraining order passed, preventing the rail- 
road Company from putting this order into effect. The défendant 
Company answered, testimony was taken, and upon final hearing the 
court below decreed, February 9, 1910, that the restraining order be 
rescinded and annulled, and the bill of complaint dismissed, and the 
case is hère upon appeal from that decree. 

Prior to 1900 coal brought to Baltimore by the défendant company 
was delivered by the railroad either at its own pier at Locust Point, 
or at varions private piers owned by shippers and dealers in coal. 
Baltimore has long had a large trade in coal, and most of it is brought 
by the défendant company. The Curtis- Bay coal pier was constructed 
about the year last named. It is about 800 f cet long and about 60 f eet 
wide, extending out into the navigable waters of the bay. To facili- 
tate the business the United States government spent a considérable 
sum of money in dredging a deep channel from the main ship channel 
to a point a short distance from the pier, where, in part from natural 
causes, and in part from the dredging done by the railroad, there was 
a sufficient depth of water at the pier, and it appears from the testi- 
mony that practically ail of the coal brought to Baltimore by the de- 
fendant company and intended for transshipment by water to points 
beyond the capes of the Chesapeake is now and has since the year 
1901 been delivered at the Curtis Bay coal pier. The Curtis Bay coal 
pier is named in the freight tariffs of the défendant company filed with 
the Interstate Commerce Commission as a station of the railroad com- 
pany, which company does not undertake to further transport coal 
brought by it to said pier, nor enter into contracts with the owners 
of vessels for the transportation of coal beyond the said Curtis Bay 
coal pier, but it undertakes to deliver ail coal which is shipped over 
its road under a bill of lading designating said pier as the place to 
which said coal is to be carried, upon the arrivai of said coal at said 
pier, to whatever vessel or vessels the shippers or consignées of the 
same may designate. The testimony shows that when the pier was 
first opened, five or six tug boat owners competed for the business of 
docking and undocking vessels at the pier. The railroad company 
from the beginning had some arrangement with R. M. Spedden for 
the docking and undocking of vessels there. The exact terms of this 
contract do not appear in the record, but there is testimony tending 
to show that from the beginning the officiais of the railroad company 
adopted a policy of throwing obstacles in the way of some of the own- 
ers of tug boats, the resuit being that for several years prior to the 
commencement of the proceedings in this case only two tug boat own- 
ers hâve ever docked and undocked vessels at this pier, one of them 
being Spedden, and the other the complainant hère; Spedden having 
practically a monopoly of the docking and undocking of sailing and 
other craft not propelled by steam, and the complainant having a large 
business in the docking and undocking of steamships. ' The complain- 
ant company had been in the towing business for many years. It had 
powerful and well equipped tugs, and had built up a large and prosper- 
ous business. It had been in the habit annually for many years of 



408 188 FEDERAL EBPORTEB 

making contracts with différent steamship Unes trading to the port of 
Baltimore. By thèse contracts it agreed to do ail the towage required 
by thèse steamship Unes in and about the harbor of Baltimore, in- 
cluding ail docking and undocking of steamers. It met thèse steam- 
ships on arrivai, did many small services such as putting their officers 
and crews on and off ships, for ail of which they chargea a definitely 
fixed sum. Its towage business, amounting to from $90,000 to $100,- 
000 a year, is from 50 to 60 per cent, of ail the towage business in 
Baltimore harbor. Its receipts for the work of docking and undock- 
ing steamers at the Curtis Bay coal pier amounts to something over 
$7,000 a year, and this business seems to hâve been done with skill and 
energy. It appears from the ' testimony that for some years prior to 
1908 the officiais of the railroad in charge of the opérations at the pier 
were dissatisfied with existing conditions, and desired to correct them. 
They claimed that delays in docking and undocking of vessels limited 
the capacity of the pier, created confusion and delay at the pier and 
yards, and prevented quick dispatch. On the part of the complainant 
testimony was offered tending to show that such delays as were proved 
were not properly imputable to it. An examination and careful con- 
sidération of ail the testimony on both sides fails to convince us that 
the complainant is properly chargeable with dereliction in the docking 
and undocking of vessels, or fault as to any preventable delays. The 
railroad company would be clearly within its right in making ail proper 
régulations for the use of this pier. It could provide for the time and 
method of docking and undocking vessels, and make charges for de- 
murrage in ail cases where delays occured from inefficiency or other 
hindrances to the most rapid and economical use of its pier. It could 
hâve reserved the Curtis Bay pier for its own exclusive use, or for 
the use of such spécial transportation lines with which it made con- 
tracts for transshipment, as was the case in Louisville & Nashville 
Railroad Co. v. West Coast Company, 198 U. S. 494, 25 Sup. Ct. 745, 
49 L. Ed. 1135. It could hâve constructed a wharf for its private use, 
as was decided in Weems Steamboat Company v. Peoples Company, 
214 U. S. 345, 29 Sup. Ct. 661, 53 L. Ed. 1024. Thèse two cases are 
cited in the opinion of the learned judge below, but the principles which 
should govern the use of the Curtis Bay pier differ entirely from those 
in the two cases cited, in neither of which was the wharf held out as 
a public wharf. In the agreed statement of facts and in the testimony 
this wharf is held out as a station of the défendant company, which 
made and published rates to it as to an ordinary railway freight sta- 
tion. In every sensé it was a public terminal station for the delivery 
of coal to the consignées of ail vessels which would corne there for it. 
In the tariff schedules which appear in the record as exhibits there is 
no notice or réservation of any régulation for the exclusive handling 
of any coal deHvered at that pier, but, on the contrary, "it undertakes 
to deliver ail coal which is shipped over its road under a bill of lading 
designating said pier as the place to which said coal is to be carried up- 
on the arrivai of said coal at said pier to whatever vessel or vessels the 
shippers or consignées of the said coal may designate." The principles 
of law, therefore. applicable must be those which govern in the case 



BAKER-WHITELET COAL CO. V. BALTIMORE 4 O. E. CO. 409 

of an ordinary railway freight station. The real reasons vvhich seem 
to hâve led to the adoption of the rule which gives rise to this contro- 
versy seem to be thèse: The Curtis Bay pier is beyond the jurisdic- 
tion of the city iîre boat, and it is greatly to the advantage of the owner 
of the pier that it should hâve a tug constantly at hand for the pré- 
vention of fires. Such a tug is also needed for the breaking of ice in 
severe seasons, and it is greatly to the convenience of the pier owner 
that a tug should be always there. The ordinary tug boat which docks 
a vessel does not usually remain at the pier while the vessel is being 
loaded. It goes back to the city and seeks other employment, com- 
munication with it is not always prompt, and delays are thereby occa- 
sioned. Obviously it is of advantage to the owners of the pier to 
hâve a tug boat constantly at their command, and it appears from the 
testimony that in the contract with Spedden prior to 1908 it was stip- 
ulated that he shuld hâve a tug boat always at the pier, and it also 
appears that he kept a tug there, but that it was not an efficient one, 
and one of the witnesses in the employ of the défendant company 
stated : 

"That Capt. Spedden could not keep a sufflelently large tioat there because 
the business did not justify hlm to do so, and we had to do somethlng else; 
either we would bave to do the towing ourselves, or we would hâve to glve it 
to one concern that had a good equipment." 

This is probably the explanation of the reasons for the rule in ques- 
tion, and that it was an advantage and convenience to the railroad com- 
pany to hâve an efficient tug boat always at hand must be conceded. 
It may also be conceded that the railroad company would hâve had the 
right to hire such a tug and include the expense of it as part of its 
terminal charges. Whether it can secure such advantage by the ex- 
clusive contract with Spedden, and at the expense of complainant, by 
excluding it from ail participation in a business which it had built up 
and long enjoyed, is another question. 

Some point is made in the argument that the contract with Spedden 
was not the resuit of fair compétition. We cannot say that the testi- 
mony supports the inference that there was a preconceived intention 
on the part of the railroad company to give the contract to Spedden 
in any event. This is of no conséquence, for if it had the right to make 
an exclusive contract, the method by which it accomplished it is imma- 
terial, nor do we deem it necessary to consider in détail the contro- 
verted question whether the new régulation results in increased cost 
to vessels doing business at the port of Baltimore. The cost of dock- 
ing and undocking merely has not been increased. That it is of great 
convenience to owners of steamships to hâve contracts with only one 
firm of tug boat owners to do ail the work required for ships is obvions 
and it may be that, if such iîrm had charge of ail the towing of the ves- 
sels while in port, there might be some saving ; but the cost of a change 
from the old to the new condition is a matter that concerns mainly the 
shippers and consignées of the cargoes of coal, and they are not hère 
to complain. The rule requiring every vessel taking coal at this pier 
to employ Spedden's tug has a tendency to give him a monopoly, which 



410 188 FEDERAL REPORTER 

may be most hurtful to the public interest. The railroad company may 
fix a maximum rate of charges for the docking and undocking of ves- 
sels, but it cannot effectively enforce the payment of such maximum 
rates. Spedden may give rebates upon such maximum charges for the 
securing of the other towage business, and the monopoly at this pier 
gives him an unfair advantage over his competitors, furnishes a lev- 
erage by which he can take away the towing business of his rivais. 
Free compétition in the docking and undocking of vessels would more 
effectively prevent the establishing of an abhorent System of rebates 
than the fiixing of maximum charges for such services. We need not 
pursue this line of discussion, as it might lead farther than is required 
for a décision of the précise question before us. 

It is well established that the tracks and stations o^ railroad compa- 
nies continue to be private property, although devoted to public uses, 
and that they may make such rules and régulations for the use thereof 
as may be reasonably necessary and suitable for the accommodation of 
passengers and shippers, and cannot be restrained f rom using it to the 
best advantage of itself and -of the public. A wharf or pier devoted to 
the public uses, as was the Curtis Bay pier, is a public station for the 
shipment of coal, and the railroad company is entirely within its rights 
in making rules and régulations for its use by shippers and consignées 
and their vessels ; and inasmuch as in présent conditions tugs are nec- 
essary for the docking and undocking of vessels, the owners of a pier 
may make such reasonable rules and régulations as to the time and 
manner of such use as may be necessary. It may prescribe how and 
when the pier shall be approached, and charge demurrage for any de- 
lays which may be injurious to its business. As its structure is liable 
to injury by the inefficient handling of vessels placed alongside of it, it 
may prescribe that none but tugs of power proportionate to the size 
of the vessels handled should be allowed to use it, but the complaint 
hère is not as to the reasonableness of the régulations for the use of 
the pier, but of the rule which excludes from any use of it whatever, 
except by the tugs of a single owner ; in f act the complainant hère is 
not seeking to use the pier at ail, the immédiate occasion of this litiga- 
tion being that a steamship which had the right to receive a cargo of 
coal at the pier was not allowed to be moored alongside of it, because 
it was brought there by the complainant's tug. Having a contract for 
the towing of such steamship, it was not allowed to use the public nav- 
igable waters of the United States near the pier for the purposè of 
performing its contract. 

In support of this rule the argument of the-appellee hère is that tug 
boats are not within the class to whom it owes any duty whatsoever, 
and, while conceding that it is necessary that patrons of the railroad 
should hâve their vessels docked by a tug boat, the railroad has the 
right to choose the particulàr tug boat, so long as the service rendered 
by that tug is adéquate, and sanction for the rule is sought in the Ex- 
press cases, 117 U. S. 1, 6 Sup. Ct. 542, 628, 29 L. Ed. 791, and the 
Pullman Cases, 139 U. S. 59, U Sup. Ct. 489, 35 L- Ed. 69. The fol- 
lowing citation from the case first named is in the brief : 



BAKER-WHITELET GOAL CO. V. BALTIMORE & O. R. CO. 41] 

"So long as the public are served to thelr reasonable satisfaction, It Is a 
matter of no importance who serves them. The railroad performs its whole 
duty to the public at large and to each indivldual when it affords the public 
ail reasonable express accommodations. If this is done the railroad owes no 
<Juty to the public as to the particular agencles it shall sélect for that pur- 
pose. The public require the carriage, but the company niay choose its own 
approprlate means of carriage, always provided they are such as to Insure 
reasonable promptness and seeurity." 

The question in both those cases involves the use of the actual prop- 
erty of the railroad company, its tracks and stations, and the décision 
in the Express Cases was that railroad companies are not required 
to transport the traffic of independent express comp'anies over their 
lines, or to furnish them equal facilities for doing an express business 
upon their passenger trains. 

"The real question," says the court, on page 20 of 117 U. S., on page 552 
of 6 Sup. et. (29 L. Ed. 791) of the opinion, "is not whether the railroad com- 
panies are authorized by law to do an express business themselves ; nor 
whether they must carry express matter for the public on their passenger 
trains in the immédiate charge of some person especially appointed for that 
purpose, nor whether they shall carry express frelghts for express companies 
as they carry lilie freights for the gênerai public, but whether it is their duty 
to furnish the Adams Company or the Southern Company facilities for doing 
an express business upon their roads the same in ail respects as those they 
provide for themselves or afford any other express company." 

In the Pullman Car Cases it was decided that it was the duty of the 
railroad company as the carrier of passengers to make suitable provi- 
sion for their comfort and safety, that it was a matter of indifférence 
to the public who owned the drawing-room or sleeping cars so long 
as it was supplied with the requisite number, and, instead of furnishing 
its own cars, as it might hâve done, it was within its right to employ 
the Pullman Company, whose spécial business it was to provide cars of 
that character, to supply as many as were necessary to meet the re- 
quirements of travel. 

The principles established in thèse cases do not seem to us to touch 
the real issue hère. They relate to the use by the railroads of their 
own property. In the nature of things railroads are entitled to an ex- 
clusive use of their tracks. In the case before us the complainant 
claims no right to any use of the defendant's property. His tugs do 
not even touch that property. They approach it upon the public navi- 
gable waters, which he is as free to use as is the public free to use the 
public streets in approaching the public freight stations for the deliv- 
ery there of merchandise for transportation. The exclusive profits leg- 
islatively granted by rhost of the states to corporations for the building 
and opération of railroads are of necessity monopolies, for the trans- 
portation of passengers and freight, upon a fixed metallic rail, the sub- 
stitution of steam for horse power, and the large expenditures neces- 
sary required the granting of exclusive privilèges, while the efficient 
handling of the traffic nécessitâtes the control by the railroad compa- 
nies of ail the opérations directed to that end, where a divided contro! 
of locomotive power was found inadmissible, from the expérience in 
the early years of railroads, where they were considered more as public 
highways. Such monopolies are granted because it is believed that 



412 188 FEDEBAL KEPORTEB 

the public receives équivalent benefits, and the exclusive powers granted 
are applicable to those privilèges only with which there is no available 
compétition, for the very nature of the mode of conveyance forbids 
free compétition. It was for a time a controverted question whether 
the monopoly could be extended to what the courts hâve called "the 
accessorial business," that is, the business of collecting freights at the 
doors of consignors, and making deliveries at the doors of consignées. 
Chief Justice Erle in England long maintained that a railroad company 
as a recompense for its large outlays had the légal right not only to 
a monopoly of the carriage of goods upon the line of the road itself, 
but also the accessorial carriage performable off its line. He stood 
almost alone in this opinion for many years, but after a full considéra- 
tion both in the Exchequer Chamber and in the House of Lords this 
opinion was definitely rejected. We are not concerned hère with this 
question particularly, as the railroad company is not claiming the right 
to this accessorial business, but, conceding the rightfulness of such 
claim, there is no reason why it should be monopolized. Such a mo- 
nopoly was permitted in Louisville & Nashville Railroad Case, 198 U. 
S., 25 Sup. Ct., 49 L,. Ed. already referred to, but the ground upon 
which that décision rests is that the wharf there in question was not 
a public station or terminal, the railroad company published no rates 
to the wharf, and it was not held eut by the conjpany owning it as a 
public wharf. Monopolies are void by the common law as discourag- 
ing labor and industry, and being against the f reedom of trade. While 
tolerated and sanctioned by législative grants within definite limitations, 
they are never permitted to be extended beyond the limits which ne- 
cessitate them. They dépend wholly upon this necessity, and cannot 
be extended beyond this exigency. As to ail accessorial business, there 
is no such necessity, and if the railroads as common carriers cannot 
monopolize it for their own profit, can they promote the monopoly of 
it by any one else, or give preferential advantages for conducting it 
to any other person ? That is the précise question hère, or rather, the 
question is : Can the railroad company, under the guise of régulations 
for the use of its wharf, limit the right to approach it to a single per- 
son, give to him the monopoly of the free and navigable waters of the 
United States, so that no vessel seeking a cargo of coal at this public 
wharf can approach it or départ from it unless carried to or from it 
by the tugs of one person ? That a railroad company has the right to 
keep a pier for its own use, and for the use of such transportation 
lines as hâve contracts with it for transshipment, cannot be denied, 
provided it affords to the public reasonable facilities elsewhere at equal 
rates for the receipt of coal shipped over its road to Baltimore to be 
there transshipped ; but this it not such a pier. By the agreed state- 
ment of facts found in the record (pages 50, 51) the Curtïs Bay pier 
is referred to as "a station of said respondent," and it undertakes to 
deliver ail coal which is shipped over its road under a bill of lading des- 
ignating said pier as the place to which said coal is to be shipped, upon 
the arrivai of said coal at said pier, to whatever vessel or vessels the 
shippers or consignées of the said coal may designate. 



BAKER-WHITELET COAL CO. V. BALTIMORE Se O. R. CO. 41S 

"As a railroad company, the défendant owes a duty to the publie to operate 
Its rallway and malntain stations for the convenience of ail who require 
transportation over it. It eannot with due regard to the character of its Une 
as a quasi public highway interfère with the oomlng or going of its patrons 
to or from any of its stations by whatsoever vessels or vehicles may be em- 
ployed for ^he purpose : nor can any vessel or vehicle offering to serve 
the public by earrylng passengers or freight to and from a rallway station be 
diserimlnated against by being excluded from sharing privilèges allowed to 
others wlthout depriving the people in gênerai of conveniences and facilities 
which they hâve a right to enjoy." Judge Hanford in Oregon Short Llne & 
U. N. R. Co. V. Ilwaco R. & Nav. Co. (C. C.) 51 Fed. 612. 

"Undoubtedly the mooring of vessels at public wharves is a well recognized 
right, and ought to be protected by the law as that of navigation itself." 
Judge Acheson In the St. Lawrence (D. C.) 19 Fed. 330. 

An instructive discussion of the rights and duties of railroad com- 
panies with respect to accessorial business may be found in the opin- 
ion of Judge Cadwalader in the case of Camblos v. R. R. Co., 4 Fed. 
Cas. 1104 et seq., where, among other things, it is said: 

"Conceding the rightfulness of such accessorial business beyond the rails, 
there can be no reason that it should be monopolized. * * * a railroad 
Company, as it eannot encounter compétition upon the rails, may bave con- 
séquent inséparable advantages in conductlng the accessorial business. * * * 
This gives peculiar force to the reasons that the company should be restrain- 
ed in the latter business from assuming preferential facilities to itself or ex- 
tending them to any one else. Railroad companies hâve in this respect an 
Immense power, whose abuse eannot easlly be prevented. On ail questions 
under this head, therefore, to guard against the danger of eneroachment on 
the rights of the public the charters of the eompanies are construed strictly 
against themselves and Ilberally in favor of the public. • * * Arbltrary 
discrimination Is of course illégal, and so is discrimination for the advautage 
or disadvantage of one person or of a sélect few. There can be no ahatement 
for the advantage, direct or Indirect, of the company itself, or of its man- 
agers or ofEcers or agents or servants or friends." 

The case chiefly reHed on in support of the rule is Donovan v. Penn- 
sylvania Co., 199 U. S. 279, 26 Sup. Ct. 91, 50 L. Ed. 192, and de- 
mands critical examination. It came before the Suprême Court on a 
certiorari to the Circuit Court of Appeals of the Seventh Circuit. The 
Pennsylvania Company was the owner in Chicago of a passenger sta- 
tion, and had made a contract with the Parmalee Transfer Company, 
under which two agents of the transfer company are stationed within 
the dépôt building to solicit the custom of passengers. The appellants, 
who were hackmen, continuously asserted the right, over appellee's 
repeated objections, to hâve two of their number enter the building to 
solicit custom, and the main question in the case was as to the right of 
the hackmen to solicit business within the station over appellee's pro- 
test. The décision of the court, that although its functions are public, 
a railroad company holds the légal title to the property employed in 
the discharge of its duties, and to that end may make reasonable rules 
and régulations for the use of its property, consistent with the purposes 
for which it is created, and may make arrangements with and -grant 
spécial privilèges to a single concern to supply its passengers arriving 
at its terminais with hacks and cabs, and is not bound to accord similar 
privilèges to other persons, is not and eannot be controverted. The 
court held that : 



414 188 FEDERAL BEPOETEB 

"Ite property Is to be deemed In every légal sensé prlvate property as be- 
tween It and those of the gênerai public wbo bave no occasion toi use it for 
purposes of transportation ; that it was its right, if not its légal duty, to 
erect and maintain a passenger station, and to so manage it as to subserve 
prlmarily tbe convenience, comfort, and safety of passeugers and wants of 
sbippers. It was tberefore its duty to see to it tbat passengers were not an- 
noyed, disturbed, or obstructed in the use eitbjer of its station bouse or of 
tbe grounds over wbicb said passengers, wbetber arrlving or departing, would 
pass ; tbat it was easy to see how in a great city, and in a constantly crowd- 
ed railway station, such an arrangement as tbat complained of migbt pro- 
mote tbe comfort and convenience of passengers arrlving and departing, as 
well as the efficient conduct of the company's business; tbat the baekmen 
only sought to use the property of tbe railroad company to make profit for 
tbemselves, and that such hackmen, in no wise connected witb tbe railroad 
Company, cannot of rigbt, and against tbe objections of tbe company, go upon 
its ground or into its station or cars for the purpose simply of soliciting the 
cusiom of passengers." 

No such right is claimed by the complainant in this case. He does 
not ask to be allowed to go upon the pier or other property of the de- 
fendant, or to make any use of it for the purpose of soliciting busi- 
ness, or otherwise, as claimed by the hackmen, and it follows that the 
décision upon the main branch of that case does not touch the rights 
claimed hère ; but there is a branch of the case which is relevant, and 
that relates to so much of the injunction of the court below as re- 
strained the appellants — 

"from congregating upon the sidewalk In front of, adjacent to, or about 
the entrances of appellee's passenger station In Chicago, and from there so- 
liciting the custom of passengers, so as to interfère with the Ingress and 
egress of passengers and employés." 

It will be observed that the words above quoted are carefuUy 
guarded. They are from the decree of the Circuit Court of Appeals, 
which modified the injunction of the court below that enjoined the ap- 
pellants "from congregating on the sidewalk in front of, adjacent to, 
or about the entrances, and there soliciting the custom of passengers." 
"This injunction," said the Court of Appeals, "was too broad ; the 
congregating that may be restrained in this suit is only such as inter- 
fères with the ingress and egress of passengers and employés"; and, 
inasmuch as the decree by its terms was not limited to protecting ap- 
pellee's private right of property, it was ordered that it should be modi- 
fied. The opinion of the Circuit Court of Appeals appears in Donovan 
V. Pennsylvania Co., 120 Fed. 215, and on page 219, 57 C. C. A. 362, 
on page 366 (61 L. R. A. 140), the relevant f acts are thus stated : 

"The main entrance to the station comprises three doorways, each flve feet 
wide. Most of tbe thlrty-odd thousand passengers a day go througb this en- 
trance. Tbe building abuts upon the street. In the street, in front of the 
building, some distance from the entrance, is the haek stand establisbed by 
the city ordlnance. From 10 to 20 hackmen througbout each day bave per- 
sisted In congregating about the entrance, to tbe material interférence with 
the ingress and egress of passengers and railroad employés. The number bas 
been -swelled by the présence of baggagemen, botel runners, and Parmalee 
agents. Tbe Parmalee Company bas no greater rights in the street and on 
the sidewalk tban the others, and appellee bas not undertaken to give it any. 
Every one who bas an existing contract to deliver or reçoive a passenger bas, 
througb the passenger, the right of access and entry to serve tbe passenger. 
This the appellee concèdes. The title and the right of control of tbe streets 



BAKER-WHITELET COAL CO. V. BALTIMORE & O. E. OO. 415 

for Street purposes are In the eity. If the streets are obstructed, the cî^ty 
should clear them. Appellee may not take upou itself the vindication of the 
city's or the public's rights, but to bave a free and unobstructed entrance is 
a property right and easement appurtenant to the abutting realty." 

It will be seen that neither in this opinion nor in the opinion of the 
Suprême Court is there any discussion of what are called "accessorial 
privilèges," that is, the privilège of bringing passengers to or taking 
them from the station. The exclusion of the hackmen from the sta- 
tion itself is put upon the ground that the station is private property. 
The injunction, in so far as it affects the sidewalk and streets, rests 
upon the ground that the railroad company as owner of the station 
has an easement in the sidewalk and streets appurtenant to the abutting 
realty, and free and unobstructed entrance is a property right, and it 
is only such congregating there as interfères with the ingress and egress 
of passengers and employés that is enjoined. The right of hackmen 
to bring passengers to the station from the public streets is nowhere 
sought to be interfered with; on the contrary, it is asserted in the 
opinion of the Suprême Court : 

■'L/icensed hackmen and cabmen, nnleçs forbidden by valid local régulations, 
may within reasonable limits use the public side-walk in prosecuting their 
calling, provided sucb use Is not materially obstructive In its nature; that 
is, of such exclusive character as in a substantial sensé to prevent others from 
also using it upon equal terms for legitimate purposes. Generally speaklng, 
public sidewalks and streets are for the use by ail, upon equal terms, for any 
purpose consistent with the object for which such sidewalks and streets are 
established, subject, of course, to such valid régulations as may be preseribed 
by the constituted authorities for the public convenience ; thls to the end that 
as far as possible the rights of ail may be conserved wlthout undue discrimi- 
nation." 

And there is quoted from the oninion of Pennsylvania Company v. 

Chicago, 181 m. 289, 54 N. E. 825, 53 L. R. A. 223, as follows: 

"Tbe clty has no power or authority to grant the exclusive use of Its 
streets to any private person or for any private purposes." 

Elsewhere in the opinion of the Suprême Court appears the fol- 
lowing : 

"A hackman in no wlse connected with the railroad company cannot of 
right and against the objections of the company go upon its grounds or into its 
station or cars for the purpose simply of soliciting the custom of passengers, 
but of course passengers upon arriving at the station in whatever vehicle is 
entitled to hâve such facllities for his entering the company's dépôt as may 
be necessary. When, therefore, licensed hackmen and cabmen bave at appro- 
priate times placed their vehicles in the public streets next to the sidewalk 
In front of the company's passenger house, they did not violate the régula- 
tions established by tbe city councll, nor, so far as the plaintifl: is concerned, 
did they violate such régulations when, leavlng their vehicles in the publie 
streets at the appointed place, they stood near by them for a reasonable time, 
upon the sidewalk, awaiting the coming of passengers from the station house ; 
but what they could not legally do— what the final decree properly forbade 
them to do — was to congregate upon the sidewalk in front of, adjacent to, 
or about the passenger house, so as to interfère with the Ingress and egress of 
passengers." 

In so far as attempt is made to justify the rule on the ground that 
it is necessary in order to prevent delays in the loading of vessels at 
the pier, we may repeat that such delays as occurred under the old 



416 188 FEDERAL KBPOKXBB 

System are not proved to hâve been due to complainant, and otHer 
means to prevent such delays may readily be adopted. If it be true, 
as charged, and as seems not improbable, that the real reason for the 
adoption of the rule is the désire and interest of the railroad company 
to hâve a powerful tug always at the pier for varions purposes of its 
own, such as protection from fire, the breaking of ice, for messenger 
service, and the like, it should hire and pay for such tug, and not seek 
to secure it under the guise of a régulation for the use of the pier. 
Much less can it, under the guise of régulations for the use of its own 
property, adopt a rule not of régulation, but of exclusion, which, in 
efïect, forbids approach to the pier on the public navigable waters of 
the United States. The railroad company by public advertisemeat of- 
fers to deliver coal at this pier to whatever vessels the shippers or con- 
signées of the coal may designate. The tug boat is the instrumental- 
ity by which the vessels approach the pier, and it therefore has the 
right of the vessel. The public waters are f ree to its use, as the public 
streets are for passengers and vehicles approaching a public station. 
It was so expressly held in the Donovan Case, for it is said that : 

"Of course a passenger upon arriving at the station in whatever vehicle Is 
entitled to hâve such facilîties for his entering the company's dépôt as may be 
neeessary." 

And again: 

"Passengers may therefore In thelr own right, as well as In right of the 
company, use the sldewalk In order to gain access to the dépôt grounds and 
station, or to reach the public street when leaving the station." 

And in that case so much of the decree as related to the public 
streets and sidewalks was sustained, solely upon the ground that con- 
gregating in large numbers on the sidewalk tended to obstruct the free 
ingress and egress of passengers and employés. There is no attempt 
hère to support this rule upon any such ground. 

[2] Another point pressed in the argument needs only brief atten- 
tion. It does not seem to hâve been made in the court below, or at 
least is not referred to in the opinion, that is, that complainant has no 
standing in court. It is not disputed that if this rule goes into opéra- 
tion a large and profitable business of the complainant is destroyed. 
This is a property right, which it is the duty of courts to protect. 
The complainant has through its contracts with the owners of vessels 
and consignées of coal a considérable property interest in their towage, 
and, as we hâve held, it has through thèse vessels the right of access 
and entry to the pier, which, like any other station of the railroad, is 
impressed with the public use, and open to ail having contractual rela- 
tions with the consignées of coal to be delivered there. The disregard 
of thèse rights to its in jury gives complainant a standing in court 
which by a bill in equity seeks to prevent a multiplicity of suits and 
circuity of action. 

The decree of the court below is reversed. 

Reversed. 



LOOISVILLE A S. K. CO. T, WILSON 417 

LOUISVILLE & N. R. CO. t. WILSON. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,110. 

1. Masteb and Servant (§§ 286, 289*) — Action fob Injurt to Servant — 

Questions for Juet. 

PlaintlÉTs intestate was a frelght conductor on defendant's railroad, 
and on feeling a sudden shock while rlding in the caboose rushed upon 
the platform to look ahead, when the two parts of the train, which had 
separated, came together with such force that he was thrown to the 
track and killed. The séparation of the train was due to the opening of 
a coupler on a car which had been taken into the train at the station 
las* passed, which came uncoupled again a short time later. There was 
évidence tendlng to show that the pin which held the two parts of the 
coupler In place was worn and fltted loosely and mlght hâve been thrown 
up by the movement of the cars. Beld, that the question of defendant's 
négligence in permitting the continued use of a coupler so defeetive from 
wearing, and also the question of the contrlbutory négligence of deeeas- 
ed in going upon the platform, were both properly submitted to the jury. 

[Ed. Note.— F'or other cases, see Master and Servant, Cent. Dlg. §{ 
1010-1050, 1089-1132; Dec. Dlg. §§ 286, 289.»] 

2. Masteb and Servant (§ 246*) — Action fob Injuey to Servant— Oonteib- 

UTORT Négligence. 

A master through whose négligence a servant has been plaeed In sud- 
den péril cannot requlre of the servant the same measure of prudence 
and care which one having time for reflection mlght be expected to ex- 
ercise. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dlg. §§ 789- 
794; Dec. Dig. § 246.*] 

3. Master and Servant (§ 289*) — Masteb's Liabilitt fob Injtjet to Serv- 

ant — CONTRIBUTOET NEGLIGENCE. 

A rule of a railroad company, requlrlng conductors to "examine cou- 
plings, wheels, journals and brakes of the cars in their trains whIle on the 
road as often as their duties will permit," did not Impose on the conduc- 
tor of a frelght train such an absolute duty to Inspect the couplers of a 
car taken into his train at a way station as to charge hlm as a matter of 
law with contrlbutory négligence which would preclude a recovery for 
his death beeause he falled to discover an obscure defeet In one of such 
couplers, in conséquence of which hia train broke in two and he was 
klIled. 

[Ed. Note.— For other cases, see Master and Servant, Cent Dig. §§ 
1089-1132; Dec. Dig. § 289.*] 

4. Master and Servant (S 288*) — Masteb's Liabilitt fob Injubt to Serv- 

ant— Assumption oï: Eisk. 

A conductor of a frelght train cannot be held as matter of law to hâve 
assumed the risk from a defeetive coupler which it was the duty of the 
railroad company to maintain in good order, where the defeet was not 
obvious. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dlg. §§ 
1068-1088 ; Dec. Dlg. § 288.* 

Assumption of rlsk Incident to employment, see note to Chesapeake & 
O. R. Co. V. Hennessey, 38 C. C. A. 314.] 

5. Master and Servant (§ 264*)— Action fob Injubt to Servant— Pleadino 

— Variance. 

Where the déclaration. In an action against a railroad company to re- 
cover for the death of a conductor, alleged'that he was thrown "out of 

•For other cases see same topic & i numbsr In Dec. & Am. Dlga. 1907 to date, & Rep'r Index» 
188 F.— 27 



418 188 FEDERAL REPORTER 

the caboose In whieh he was rldlng, évidence that he was thrown from 
the platform of the caboose dld not constitute a material variance. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 861- 
876 ; Dec. Dig. § 264.*] 

In Error to the Circuit Court of the United States for the Western 
District of Tennessee. 

Action by Nell Moore Wilson against the Louisville & Nashyille 
Railroad Company. Judgment for plaintiff, and défendant brings 
error. Affirmed. 

Albert W. Biggs and John B. Keeble, for plaintifï in error. 

Jere Home, for défendant in error. 

Before SEVERENS and KNAPPEN, Circuit Judges, and SAN- 
FORD, District Judge. 

SEVERENS, Circuit Judge. The défendant in error brought 
this suit in a court of the state of Tennessee, from whence it was 
removed into the Circuit Court of the United States for the West- 
ern District of Tennessee upon the pétition of the railroad company. 
Its object was to recover damages alleged to hâve been sustained 
by her in conséquence of the death of her husband through the nég- 
ligence of the railroad company, and is f ounded upon a statute of 
that State givihg such a remedy. 

Charles Wilson, the husband, was at the time of the accident which 
caused his dteath in the employment of the railroad company as a 
<:onductor of a freight train running between Paris, Tenn., and Guth- 
rie, Ky. Proceeding from Paris on February 7, 1907, he stopped 
at a minor station called Erin and took a freight car standing there 
into his train. When the train was connected up for its further jour- 
ney, this car was in the midst, ahead by several other cars of the ca- 
boose which was at the rear end of the train. After the train had pro- 
ceeded three or four miles, Wilson, who was having a lunch in the 
caboose with Porter, an assistant trainmaster of the company, and 
Brown, a flagman, experiencedl a sudden shock which startled them. 
They surmised that the train had broken in two. Wilson rushed to 
the forward platform of the caboose and looked around the cars 
ahead to see what had happened. A curve in the road prevented his 
sight. He turned to the other end of the platform where he would 
hâve a better view. At about this moment, the rear section of the 
train came into violent collision with the forward part, Wilson was 
thrown down upon the track, where he was fatally injured by the 
passing wheels, andi shortly after died. On examination, it appeared 
that the train had fallen apart from the opening of the coupler on 
one end of the car taken in at Erin. By the impact of the collision 
the coupler had been closed again. The train got under way, and, 
after going a f ew miles further, the train parted again by the opening 
of the same coupler. Thereupon the parts of the coupler were se- 
cured together by wires, and the rest of the journey was made with- 
out accident. Shortly thereafter this coupler was taken apart and 

*For other cases see same toplc & § humbek in Dec. & Am. Digs. 1907 to date, & Eep'r Indexes 



LOUISVILLE & N. B. CO. V. WILSON 419 

carefully examined by the company's experts. The substance of 
their testimony was that they could find no particular defect and that 
they were unable to account for its coming apart, unless it happened 
from the becoming loose of the pin or block which normally drops 
down into a space in the inside of the arms of the coupler when closed 
and secures them in that position. The coupler is unlocked by rais- 
ing the pin out of the space between the arms. The pin was found 
to be worn and it fitted loosely in its place. From the évidence in 
the record, it would seem that the jury would probably turn to thèse 
facts and conclude that the accidtent happened from the loose and ini- 
perfect co-operation of the pin and the arms of the coupler, by rea- 
son of which the pin might be thrown up by the agitating movement 
of the cars. 

Upon the trial of the case before a jury the défendant, after the 
testimony was in, moved the court to instruct the jury to find a ver- 
dict in its favor. This was refused, and the case was submitted. 
The plaintiff recovered a verdict for $10,000. Thére was a motion 
for a new trial, which was denied. Thereupon a judgment was en- 
tered in conformity with the verdict. 

It should be noted that the déclaration founded the plaintiff's right 
to recover upon the principles of the common law. Subsequently, 
the plaintifï obtained) leave to amend, and thereupon an amended 
déclaration was filed in which was included a charge that the défend- 
ant was négligent, in that while it was engaged in interstate com- 
merce it failed to comply with the requirements of the fédéral safety 
appliance acts in respect to the couplings. But, when the case came 
on for trial, the défendant moved that the amendment be stricken out, 
and, the plaintiflf consenting thereto, the court granted the motion, and 
the cause proceeded to trial upon the original déclaration. Upôn 
the hearing in this court, thèse conditions hâve been observed, and 
no référence has been made to the question whether the défendant was 
at the time engaged in interstate commerce, or to the obligations as- 
sumed by a railroad Company in respect to the couplings of its cars 
when so engaged. 

Three leading propositions were involved in the issues and were 
controverted before the jury: 

First, was the défendant négligent in permitting the car to be used 
while in a defective and dangerous condition? 

Second, was the plaintiff's deceased husband guilty of négligence 
in failing to properly inspect the couplings of the car when he took 
it into his train at Erin ? 

Third, whether, as contended by the défendant, the deceased hus- 
band assumed the risk of conditions such as existed in the couplings 
of the car in question. 

[1] Upon ail thèse questions the court stated to the jury correctly 
the gênerai rules of law pertaining to the relative duties of the em- 
ployer and the employé in such cases. We are of opinion that the 
court properly submitted the case to the jury, instead of assuming the 
material facts to be incontestable. First, the jury might not unrea- 
sonably hâve found that the coupling was defective and dangerous 



i20 188 FEDBEAL RBPOETBR 

from the uncontradicted facts that ît opened while in ordinary use 
and opened a second time in the same circumstances soon after, and 
the further testimony concerning the worn and) loose condition in 
which the parts were found on subséquent examination. Thèse 
facts would tend also to indicate that the defects had existed for 
some time — long enough to hâve been discovered by proper inspec- 
tion. 

[2] Second, upon the question whether the deceased conductor 
was guilty of contributory négligence in rushing out upon the plat- 
form of the caboose to find out what was the trouble with his train, 
instead of remaining in the caboose until the danger was passed 
or going up into the lookout, a place of comparative safety, to ob- 
tain a view, the jury might well hâve thought that the exciting cliar- 
acter of the circumstances in which he was placed ought to excuse 
him from that degree of prudence and regard for his own welfare 
which a man would exercise upon délibération in cooler moments, 
and that the employer whose négligence had led to the péril ought 
not to be heard to require of its servant that measure of prudence 
which one having an opportunity for reflection would be expected 
to exercise. Such is the gênerai rule of law applicable to the conduct 
of men in emergencies not resulting from their own fault. Labatt 
on Master & Servant, § 358; Kane v. Northern Cent. R. Co., 128 
U. S. 91, 9 Sup. Ct. 16, 32 L. Ed. 339; Union Pac. R. Co. v. Mc- 
Donald, 152 U. S. 262, 14 Sup. Ct. 619, 38 L. Ed. 434 ; Killien v. 
Hyde (D. C.) 63 Fed. 172; Marande v. Texas & Pac. R. Co., 102 
Fed. 246, 42 C. C. A. 317; and 29 Cyc. 521, where many cases are 
citedl. 

[3] It is urged for the défendant that the plaintiflf was also guilty 
o€ contributory négligence, in this, that there was a rule of the Com- 
pany which required the conductor, when taking in freight cars at 
stations where there was no inspecter, to see that they are in a safe 
condition, and that this duty extended to an inspection of its cou- 
plings. And it is contended that, it not appearing that Wilson made 
such an inspection, he should be held guilty of such contributory nég- 
ligence as to prevent a recovery. This is assigned as a reason why 
the court should hâve directed a verdict. The testimony incorporated 
in the bill of exceptions concerning the supposed rule leaves the sub- 
ject in doubt. The testimony of officers of the company was to the 
effect that there was such a rule, and one of them produced on 
cross-examination a printed book of rules, and among them there 
was found this: 

"Conductors must examine coupllngs, wheels, journals and brakes of the 
cars in their train whlle on the road as often as their duties will permit." 

And this rule was put in évidence. It is fairly inferable, and the 
jury might hâve understood that the witnesses just mentioned, when 
they testified about the duties of conductors, were giving their opin- 
ions of what this rule required. The jury were not bound to accept 
this interprétation of the rule. Indeed, it is proper to say that it is 
not fairly susceptible of a construction which absolutely imposed the 
particular duty of inspecting the coupler of this car taken in by Wil- 



liOUISVILLE * N. B. CO. V. WILSOW 421 

son at Erin. And no other ruie of the company concerning this 
subject was produced. ' It might properly hâve been inferred, from 
the failure to produce it, that in fact there was no other. Moreover, 
the testimony offered by the company to exonerate itself from fault 
in using this coupler tended to show that,- upon a careful and pains- 
taking examination of the coupler made after the accident, no defect 
was discovered which should hâve caused the accident. Yet it is now 
urged that the defect was so obvious that the conductor, occupied 
with the whole care of the train, ought to hâve observed it. Between 
thèse inconsistent propositions, the jury might find a middle ground 
and say that the defect was grave enough to show a failure to give 
proper inspection on the part of the company, but not so grave as to 
be obvious to such inspection as the conductor would be bound) to 
make under a duty to examine the cars in his train "as often as his 
duty will permit." The defect in the coupler was not apparent to ob- 
servation of external indications, but would be likely to require a some- 
what critical examination of its interior parts. 

[4] Third. Did the conductor assume the risk of this coupler being, 
or becoming, out of order? The duty of maintaining it in order was 
a duty of the company. The conductor assumed only those risks which 
were obvious or which would hâve been ascertained by a proper diis- 
charge of his duty. What we hâve said upon the subject of his con- 
tributory négligence applies equally to this of his alleged assumed risk. 
Though not the same, they are often closely related défenses, especial- 
ly when the alleged négligence consists in not discovering that the 
master has not performed his duty in making safe the conditions in 
which the employé is required to perform his service. The principles 
of law applicable to the case are familiar. The questions of fact 
were for the jury, and it is impossible to say upon this record that, 
as matter of law, the jury manifestly erred in its conclusion upon any 
of the substantive facts which would entitle the plaintiff to recover. 

[5] It remains only to notice that the défendant proposed cer- 
tain spécifie instructions, five in number, which were ail refused. There 
was a gênerai exception. In order to make the exception available, 
it must appear that ail of the requested instructions ought to hâve 
been given. Some of them had been substantially covered by the in- 
structions already given. One of thèse spécifie instructions requested 
was this : 

"It is alleged In the déclaration that the deceased, Chas. Wllson, was thrown 
out of the caboose In which he was riding as conductor, and which was bis 
post of duty, etc. PlalntlfTs évidence shows that he was not In the caboose, 
but on the platform of the same immediately before his injury. Therefore 
there can be no recovery under this déclaration." 

The supposed variance was not material, and should bave been 
disregarded. To hâve required the jury to make their verdict tum 
on so nice a distinction as this might hâve led to a miscarriage of 
justice. 

There are no other questions of sufïicient merit to require further 
discussion. 

The judgment must be affirmed, with costs. 



422 188 FEDERAL REPORTEE 

UNITED STATES v. WHITMIRB et al. 

(Circuit Court of Appeals, Eighth Circuit. May 20, 19H.) 

No. 3,354. 

1. Equitt (§ 419*) — Decbee Pko Confesso— Powee to Vacate. 

TJnder equîty rule 19 a fédéral court of equity is authori^ed, on motion 
and a showing, to vacate an order pro confesso taken against a défendant 
and enlarge the time for flling an answer. 

[ira. Note.— î\)r other cases, see Equity, Cent. Dig. §§ 972-985; Dec. 
Dlg. § 419.*] 

2. INDIAKS (§ 13*) AtLOTMENT OF LaND— CANCELLATION OF CEETIFjIOATE— 

Appointmert on OouRT'a OwN Motion. 

In a suit by the United States to caneel a certiflcate of allotmeut of In- 
dlan land, in whlch the material allégations of the bill were denied, and 
the court denied a motion' by complainant for a temporary injunction 
against défendant, who was in possession of the land, It was within its 
discrétion to appoint a recelver therefor ; it appearing that oil was being 
produced thereon. 

[Ed. Note. — For other cases, see Indians, Dec. Dig. § 13.*] 

Appeal from the Circuit Court of the United States for the East- 
em District of Oklahoma. 

Suit in equity by the United States against Albert Whitmire and 
John R. Greenlees. From an order appointing a receiver, the United 
States appeal. Affirmed. 

J. C. Denton, Asst. U. S. Atty. (William J. Gregg, U. S. Atty., 
on the brief), for the United States. 
W. A. Chase and W. H. Kornegay, for appellee Greenlees. 

Before VAN DEVANTER and HOOK, Circuit Judges, and CAR- 
LAND, District Judge. 

HOOK, Circuit Judge. This is an appeal from an ordier of the 
Circuit Court appointing a receiver. The suit was commenced by 
the United States against Albert Whitmire and John R. Greenlees 
to caneel a certificate of allotment to Whitmire of a tract of land 
and his deed thereof to Greenlees, and otherwise to clear the title 
and to establish its right to possession, to the end that the provisions 
of the acts of Congress respecting the disposition of the land may 
be complied with. Greenlees is the real défendant in interest. The 
case presented in the amended bill of the government is as follows : 

Whitmire, who was an enrolledi freedman of the Cherokee Tribe 
of Indians and entitled to an allotment of tribal lands, was not en- 
titled to sélect the particular tract in question ; but he secured an 
allotment of it to himself by false and fraudulent représentations 
respecting his ownership of the improvements. On the same day he 
made the deed to Greenlees, who took with notice. Under an act 
of Congress the allotment was open to contest for nine months. 
Within that period a contest was instituted, and it resulted in a déci- 
sion, afhrmed by the Secretary of the Interior, annuUing the allot- 
ment to Whitmire. The land was then allotted to another. It is also 

•For other cases see same toplo & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



XJNITED STATES V. WHITMIEE 4^3 

averred that Greenlees appeared and participated in the contest and 
is concluded by the final détermination thereof. Greenlees obtained 
a decree in a suit in a state court that he was the owner and enti- 
tled to the possession of the land; but it is claimed neither the gov- 
ernment nor the Cherokee Nation were parties thereto, and are not 
affected by it, also that the court was without jurisdiction of the 
subject-matter. The theory of the bill is that the_ acts of Whitmire 
and Greenlees and the decree of the state court interfère with and 
obstruct the performance of the duties respecting the allotment and 
distribution of the Indian lands imposed by the acts of Congress upon 
the Department of the Interior and subordinate agencies, which are 
constituted spécial tribunals for such purposes and given exclusive 
cognizance. 

An order pro confesse was taken against Greenlees for failure to 
answer the amended bill in time. The government filed a motion, 
stating that "ireenlees had wrongfully taken possession of the prop- 
erty, and asking that he be required to restore it and be enjoined 
from further interférence. Greenlees moved that the order pro con- 
fesso be set aside, and that he be allowed to answer the amended 
bill. After hearing the motions the court entered an order by which 
it vacated the order pro confesso, granted Greenlees leave to an- 
swer, and denied the temporary injunction. As part of the order the 
court of its own motion appointée a receiver to take charge of the 
land. Greenlees filed his answer on the same day, specifically deny- 
ing the averments of the amended bill essential to the government's 
recovery. It appears from the briefs, though not from the plead- 
ings, that the land was oil producing, which probably accounts for 
the importance of possession during the pendency of the suit. 

As already stated, the appeal of the government is from the ap- 
pointment of the receiver; but we will assume that it brings up the 
entire interlocutory order for review. See Smith v. Vulcan Iron 
Works, 165 U. S. 518, 524,17 Sup. Ct. 407, 41 L. Ed. 810. The order 
pro confesso was merely nisi, and upon motion, and the showing that 
was made, the court was fully authorized by equity rule 19 to vacate 
it and enlarge the time for answer. The requirement of the rule as 
to costs, which does not appear to hâve been observed, can be at- 
tended to by the court at any stage of the case without reversai of 
the order. The averments of fact in the amended bill upon which 
the government relied were controverted, and the case had not suffi- 
ciently progressed to show clearly that it was entitled to a decree or 
would likely receive one. When the trial court acted, the land was 
in the possession of Greenlees ; but it took it out of his possession, 
and put it in the hands of its own officer pending the suit. Greenlees 
is not complaining of this, and under the circumstances we do not 
think the government has just cause for complaint. There was no 
showing to move the court's discrétion toward a temporary injunc- 
tion, which would hâve the efifect of putting it into possession. True, 
the government did not seek a receiver; but it was benefited, not 
prejudiced, by the appointment of one. 

The order is affirmed. 



424 188 FEDERAL REPORTER 

CORENMAN v. UNITED STATES. 

(Circuit Court of Appeals, Second Circuit. June 6, 1911.) 

No. 277. 

1, Cbiuinai. Law (§ 1134*) — Appeal and Ebbor— Questions Reviewable. 

In the fédéral courts, the déniai of a motion for a new trial in a crim- 
Inal case Is not reviewable by an appellate court 

[Ed. Note. — For other cases, see Criminal Law, Dec. Dig. § 1134.*] 

2, Cbiminai Law (§ 829*) — Teiai/— Instructions. 

In a prosecutlon of a bankrupt for fraudulently eoncealing property 
from his trustée, where the jury were instructed that to convict they 
must flnd certain facts, from wbich a fraudulent Intent must be Inferred 
as matter of law, a spécifie instruction that such intent must be found 
was not required. 

[Ed. Note. — For other cases, see Criminal Law, Cent. Dig. § 2011 ; Dec. 
Dig. § 829.*] 

3, Bankruptct (§ 485*) — Criminal OrFENSEis bt Bankeupt— Fraudulent 

CONCEALMENT OF PEOPERTY. 

That a bankrupt used a part of the proceeds of property concealed 
from hls trustée in the payment of debts does not négative a fraudulent 
intent In such concealment. 

[Ed. Note.— For other cases, see Bankruptcy, Dec. Dig. § 485.*] 

In Error to the Circuit Court of the United States for the South- 
ern District of New York. 

Zindil Corenman was convicted of a criminal offense, and brings 
error. Affirmed. 

H. W. Unger (Abraham Levy, on the brief), for plaintiff in error. 
Henry A. Wise, U. S. Atty. (A. S. Pratt, Asst. U. S. Atty., of coun- 
sel), for the United States. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

PER CURIAM. We hâve carefully considered ail of the conten- 
tions made in behalf of the défendant. In view, however, of the 
large number of assignments of error, and of their nature, we deem 
it unnecessary to state the facts or review the contentions in any 
further détail than is required to explain the following conclusions 
reached : 

(1) l'he évidence tending to establish the guilt of the défendant 
was quite sufficient to warrant the trial court in submitting the case 
to the jury.. The motions to dismiss the indictment and to advise 
the jury to acquit were properly denied. 

[1] (2) The action of the trial court in denying a motion for a 
new trial is not reviewable in this court. 

[2] (3) There was no error in the charge with respect to th? 
fraudulent intent of the défendant. The facts which the trial court 
instructed the jury that they must find in order to convict the de- 
fendant were facts from which the inference of a fraudulent in- 
tent followed as a matter of law. If they found such facts, it was not 
only the right, but the duty, of the jury to find the intent alleged. 

•For other cases see same topic & § numbek in Dec. & Am. Digs. 1D07 to date. & Rep'r Indexes 



IN RK DR. yOOKHEES AWNING HOOD CO. 42fi 

[3] (4) The défendant was not entitled to an instruction that the 
jury could find a want of fraudulent intent from the mère fact 
that he used a part of the proceeds of the check to pay debts with. 
After bankruptcy the check belonged to the bankrupt's estate, and 
not to him, and it was for the trustée to distribute it. The re- 
quest to charge itself assumed that only $300 of the proceeds had 
been used for debts. The question of the bona fide apphcation of 
moneys alleged to hâve been concealed was not fairly raised. 

(5) We find no error in any other portions of the charge. 

(6) The date of the fihng of the pétition in bankruptcy was clearly 
estabhshed by the stamped indorsement thereon, supplemented by 
the testimony of the witness Cohen. 

(7) We think it the better view that the testimony concerning 
the $300 check was admissible as a part of the res gestse. It tended 
to show the date of the transaction. But, if the testimony were 
immaterial, we think that there was no such error in receiving it 
as would require a reversai of the judgment. 

(8) The testimony regarding the second check was probably im- 
material, but we fail to see that the défendant was prejudiced by 
it. The offense was completed when he fraudulently concealed 
the first check, and it could not hâve materially afïected him to 
show what was subsequently donc with it. Moreover, there was 
testimony that the défendant participated in the matter of the 
substitution of the checks. 

(9) The trial court properly excluded the question put to the trus- 
tée in bankruptcy upon cross-examination with respect to his efforts 
to collect the check. The question related to an irrelevant and 
immaterial matter. The question was whether the bankrupt had 
concealed property, not whether the trustée had donc his duty with 
respect thereto. 

(10) We find no réversible error in any of the other rulings upon 
évidence. 

The judgment of the Circuit Court îs afïirmed. 



In re DR. VOORHEES AWNING HOOD 00. 

(Circuit Court ot Appeals, Third Circuit. May 31, 1911.) 

No. 35. 

BANKET7PTCT (§ 342%*) CLAIMS—REVIEW— EVIDENCE. 

On a referee's certiflcate to revlew ttie partial allowance of a clalm 
agalnst a bankrupt, It was error for the court to increase the allowance 
for alleged "damages for breach of a patent license agreement, $1,000," 
where there was no évidence in the case that damages in any amount 
had been proved by breach of sueh agreement. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 342%.*] 

Pétition for Revision and Appeal from the District Court of the 
United States for the Middle District of Pennsylvania. 

In the matter of the bankruptcy proceedings of the Dr. Voorhees 

•For other cases see aame topic & S numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r ladexes 



i2G 188 FEDERAL KEPOETEK 

Awning Hood Co. On pétition to revise an order încreasîng the 
amount allowed on a claim presented by Samuel H. Voorhees (187 
Fed. 611). Reversed. 

Watson, Diehl & Watson, for trustée. 

Before BUFFINGTON and LANNING, Circuit Judges, and Mc- 
PHERSON, District Judge. 

BUFFINGTON, Circuit Judge. In the course of the proceedings 
in bankruptcy of the Dr. Voorhees Awning Hood Company, a claim 
against the bankrupt estate for $14,687.84 was presented by Samuel H. 
Voorhees. After hearing, the référée allowed the claim to the extent 
of $625.83. The court below, on the matter being certified at the re- 
quest of the claimant, entered a decree that in addition to $625.58, al- 
lowed by the référée, and two items aggregating $85, to ail of which 
no objections are hère made, a further allowance be made, viz. : 
"Damages for breach of license agreement, $1,000." To review the 
court's action in allowing this $1,000, the présent pétition to review 
and appeal are brought, and the assignment of error is that : 

"In the findlngs of fact made by the référée, there is no flnding, nor Is 
there any évidence in the case that damages In any amount hâve been proved, 
and there is no flnding of fact, nor is there any évidence in the case, upon 
which the order of the court allowing damages in the sum of $1,000 is based." 

We bave carefuUy examined the testimony before the référée, and 
we find no testimony whatever bearing on the question of damages 
and on which this allowance of damages could hâve been supported. 
We hâve not had the benefit of a brief or argument on behalf of the 
claimant, and it is possible that the court below was led, by the then 
attitude of counsel, to allow such sum, f eeling it would end the con- 
troversy ; but, whatever may bave been the inducing cause, it is clear 
to us that there was no proof to support the allowance of the $1,000 
in question. This underlying fact détermines the case and renders it 
needless on our part to discuss the question whether the bankruptcy 
of the Company did not terminale the patent license and whether, in 
any event, the patentée, by resuming control of the patent and working 
thereunder, had not precluded himself from claiming for the use of a 
monopoly he was himself enjoying. 

The decree below must theref ore be reversed at the appellee's cost, 
and the case remitted to the court below, with instructions to enter a 
decree in favor of the claimant for $710.58. 



FIRST NAT. BANK V. CITIZENS' NAT. BANK 427 



FIRST NAT. BANK OF MERCEE, PA., v. CITIZENS' NAT. BANK OF 
NORFOLK, NEB., et al. 

(Circuit Court of Appeals, Eiglith Circuit. May 29, 1911.) 

No. 3,494. 

Ohattel Mortqages (§ 177*) — Moktgaqed Oattle— Sale— Evidence. 

In an action against a bank for conversion of mortgaged eattle, évi- 
dence Jield insufficient to justify a verdict for plaintiff. 

[Ed. Note. — For other cases, see Chattel Mortgages, Dec. Dlg. § 177.*] 

In Error to the Circuit Court of the United States for the District 
of Nebraska. 

Action by the First National Bank of Mercer, Pa., against the Citi- 
zens' National Bank of Norfolk, Neb., and others. Judgment for de- 
fendants and' plaintiff brings error. Affirmed. 

H. C. Brome and Clinton Brome, for plaintiff in error. 
M. D. Tyler and John P. Breen, for défendants in error. 

Before ADAMS and SMITH, Circuit Judges, and AMIDON, Dis- 
trict Judge. 

ADAMS, Circuit Judge. This suit was instituted by the plaintiff 
in error, who was plaintiff belovv, to recover from the défendants in 
error, défendants below, the value of 85 eattle, which had been mort- 
gaged to plaintiff by one S. W. Deuel to secure thepayment of a debt 
of $3,000 due from him to the plaintiff. It was alleged in the pétition 
that the défendants, with full knowledge of the existence of plaintiff's 
mortgage, caused the eattle mortgaged to be sold and disposed of, and 
appropriated the proceeds thereof to their own use. Issue having been 
joined on this allégation, the cause went to trial, and resulted in an in- 
structed verdict for the défendants. 

A careful review of the évidence fails to disclose that the défendants 
had anything to do with the sale or disposition of the eattle in question. 
They were sold by the mortgagor of his own motion, without even 
the knowledge, so far as this record discloses, of either of the défend- 
ants. The fact that Deuel at the time in question owed the banks some 
money was made the occasion of a searching examination of their offi- 
cers by counsel for the plaintiff, in an attempt to show that some part 
or ail of the purchase priée of the eattle was appropriated to the pay- 
ment or réduction of Deuel's debt to the banks ; but this examination 
proved ineffectuai. It failed to disclose, with any degree of definite- 
ness, that either of the banks received any of the proceeds of the sale 
of the eattle; and certainly there is no substantial évidence of knowl- 
edge on the part of either of the défendants that they were receiving 
such proceeds. The trial court characterized the évidence as too uncer- 
tain and conjectural to establish the right of recovery under the plead- 
ings in the case. 

This we think was right, and the judgment is affirmed. 

•For other cases see same topic & | numbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



438 188 FEDERAL REPORTER 

AMERICAN GRAPHOPHONE CO. v. VICTOR TALKING MACH. CO. et al. 

(Circuit Court of Appeals, Thlrd Circuit June 13, 1911.) 

No. 24. 

CotTETs (§ 290*) — JuEiSDiCTiON OF Fedebal Cottets— Suits Aeising undeb 
Patent Laws. 

A fédéral court Is wlthout jurisdiction of a suit as one for infringe- 
ment arising under the patent laws, wliere ttie bill shows that défendant 
entered on tlie use of tlie invention under a license contract wliich has 
not fceen rescinded nor abrogated by agreement of ttie parties or tbe de- 
cree of a court, and that the real question involved Is one of contract 
rigbts. 

[Ed. Note.— For other cases, see Courts, C«nt. Dig. § 832; Dec. Dig. § 
290.» 

Jurisdiction of fédéral courts in suits relating to patents, see note to 
Bailey v. Mosher, 11 O. O. A. 313.] 

Appeal from the Circuit Court of the United States for the District 
of New Jersey. 

Suit in equity by the American Graphophone Company against the 
Victor Talking Machine Company and Eldridge R. Johnson. Decree 
(188 Fed. 431) for défendants, and complainant appeals. Affirmed. 

C. A. L. Massie, John W. Griggs, and Philip Mauro, for appellant. 

Horace Pettit, for appellees. 

Before BUFFINGTON and LANNING, Circuit Judges, and 
YOUNG, District Judge. 

BUFFINGTON, Circuit Judge. In the court below the American 
Graphophone Company filed a bill in equity charging the Victor Talk- 
ing Machine Company and Eldridge R. Johnson with infringing pat- 
ent No. 688,739, granted December 10, 1901, to Joseph W. Jones. The 
bill further states that "complainant by contracts, copies of which are 
attached to the bill, granted to respondents a license under said pat- 
ent, and that respondents are using said license and claim to do so 
under said contracts. The bill charges, however, that respondents hâve 
forfeited said contracts by denying the validity of said patent. To 
this bill the respondents demurred, and the court below in an opinion 
reported at 188 Fed. 431, sustained the second ground of demurrer, 
viz.: 

"That the complainant has not in and by Its said bill of complaint made or 
stated a case such as entitles it in a court of equity to any relief from or 
against this défendant, touching the matter contained in said bill of com- 
plaint or any other matter." 

To avoid répétition, we note especially and quote two parts of the 
opinion of the court below, which call attention to features on which 
in our judgment this case turns. Those statements are : 

"Recurring again to the bill of complaint it wlU be found it contains no 
allégation that the above-mentioned agreement has been rescinded or broken, 
nor any prayer for a decree to that efCect So far as thereby dlsclosed, the 
agreemaut In ail its provisions is in full force and effect and binding upon 
the parties thereto, except, as already mentioned, it is alleged that the de- 

•For other cases see same topic & i numbeb in Dec. & Atn. Digs. 1907 to date, & Rep'r Indexes 



AMERICAN GKAPHOPHONE CO. V. VICTOR TALKING MACH. CO. 429 

fendants by thelr conduct, as set out in the above quoted paragraphs, bave 
renounced and repudiated tbe license to manufacture under the Jones pat- 
ent." 

And this: 

"I might add, however, that In my judgment, in view of the character of 
this contract, even If the power to elect to abrogate or rescind it were ad- 
mitted, it could not elect to abrogate or rescind a part only and retain the 
balance of the contract, since, as already stated, by its terms it provides for 
an exchange of licenses. The covenants are mutual and interdependent and 
constitute the considération of the contract. To treat as rescinded or ab- 
rogated a single license formiug but a small part of the intermingled sub- 
ject-matter of the contract, and at the same time, impliedly at least, retain 
the balance, did not lie in the power of the complainant." 

From thèse extracts, it will appear that the présent bill, while 
brought as a patent case, and therefore falHng within the purvievv of 
R. S. § 629 (U. S. Comp. St. 1901, p. 503), in fact involves a ques- 
tion, not of patents, but of contract. The pertinent questions embodied 
in the statements are : Are there existing contracta between thèse 
parties? Has the conduct of the respondents been such ag to preclude 
them from availing themselves of the license granted by said con- 
tracts? Does the law give the complainant a right to ignore the con- 
tracts and enforce the monopoly of its patent? Stripped of ail verbi- 
age and extraneous matter, the question to which this case would ul- 
timately come is one of contract rights. Indeed, of this case it may be 
said, as it was in Wilson v. Sandford, 10 How. 99, 13 L. Ed. 344: 

"The dispute in this case does not arise under any act of Congress, nor 
does the décision dépend upon the construction of any law in relation to 
patents. It arises out of the contract stated in the bill, and there is no act. 
of Congress providing for or regulating eontracts of this kind. The rights 
of the parties dépend. altogether upon common law and equity principles." 

And, as to it, it may be pertinently inquired, as it was in Hartell v. 
Tilghman, 99 U. S. 547, 25 L. Ed. 357: 

"What is there hère arising under the patent laws of the United States? 
iWhat controversy that requires for its décision a référence to those laws or 
a construction of them? There Is no déniai of the force or validity of plain- 
tifC's patent, nor of his right to the monopoly which It gives hlm, exeept as 
he has parted wlth that right by contract" 

This case, it seems to us, is governed by Hartell v. Tilghman, supra. 
In that case it vk^as ably contended by Judge Bradley, representing a 
strong minority, that a dispute over a license right was a défense 
proper to a suit for infringement, and was not a subject-matter of a 
bill that goes to the jurisdiction of the court, but his dissent shows that 
this view was at variance with that of the majority. The significance 
of the décision in Hartell v. Tilghman may be seen in the court's 
opinion showing what was common between that case and Wilson v. 
Sandford. Thus, speaking of the latter case, the Hartell v. Tilghman 
opinion says : ' 

"In that case a contract was made under which the défendant entered on 
the use of the invention. This is also true of the case before us. In that 
case it is charged that an act to be performed by the défendant and licensee 
under the contract was not performed, to wit, payment of the notes. In 
the case before us it is alleged in lilse manner that the défendants failed to 
perform part of the contract, to wit, to sign a license. In that case the 



430 188 FEDERAL REPORTES 

eomplalnant asserted, as In tMs, that ail rlght under the contract had ceased, 
and he was remitted to his original rights under the patent, and could, 
theref ore, sue in the fédéral court under the statute ; but the court held 
thls to be erroneous, and that the rights of the parties depended on the con- 
tract, and not on the statute." 

Now the same tlîings mày be said of the présent case, for in it also 
"a contract was made under which the défendant (the Victor Com- 
pany) entered on the use of the patent." In it "it is charged that an 
act to be performed by the défendant and lîcensee under the contract 
was not performed, to wit," loyalty of the Ucensee to the licensor's 
patent. Hère, too, as there complainant asserted "that ail right under 
the contract had ceased, and he was remitted to his original rights un- 
der the patent, and could, therefore, sue in the fédéral court under 
the statute," for hère, to quote f rom the bill, the allégation is that the 
Victor Company, "in disregard of their contract obligations, under- 
took to adduce, and over your orator's objections and protests did ad- 
duce, évidence. * * * And your orator charges that such conduct 
on the part of the défendants herein * * * is a violation of their 
contract obligations, * * * ^nd that such conduct on the part of 
the défendants herein amounts in law to a renunciation and répudi- 
ation by them of said license." From this it seems clear that Hartell 
V. Tilghman, supra, is conclusive of the case in hand, unless the prin- 
ciple of that case is aiïected by later décisions, and it is said this is 
done by White v. Rankin, 144 U. S. 635, 12 Sup. Ct. 768, 36 L. Ed. 
569, where the bill was sustained. But, without stating the complï- 
cated facts of that case, we' content ourselves with saying that a study 
of them shows the case was decided as it was because it involved noth- 
ing but patents, for the opinion, after showing that the real signifi- 
cance of Hartell v. Tilghman was that it involved a case of alleged 
license, "while the présent case (White v. Rankin) stated by the bill 
arises on the patents. There is no suggestion in the bill that there 
ever was any contract or agreement or attempt to make one between 
the plaintiff and défendant thereupon, or that either the plaintiff or 
défendant claim anything under any contract." It is clear from this 
that White v. Rankin, where there was no contract, in no way qual- 
ifies Hartell v. Tilghman, where there was a contract. The présent 
case therefore falls under the Hartell Case, as involving a question 
of contract, and is governed by its principle. This view is in accord 
with McMullen v. Bowers, 102 Fed. 494, 42 C. C. A. 470 ; American 
Co. V. Jones (C. C.) 122 Fed. 803 ; White v. Lee (C. C.) 3 Fed. 222 ; 
Adams v. Mevrose (C. C.) 7 Fed. 208; and Standard Co. v. National 
Co. (C. C.) 95 Fed. 291, decided in this circuit. 

The court below, therefore, rightly sustained the second ground of 
demurrer quoted above, and its decree dismissing the bill is sustained 
without préjudice to the enforcement of other remédies. 



AMERICAN GEAPHOPHONE 00. V. VICTOR TALKING MACH. CD. 431 

AMERICAN GRAPIIOPHONE CO. v. VICTOR TALKING MACH. CO. et al. 
(Circuit Court, D. New Jersey. January 3, 1911.) 

1. Patents (§§ 214, 265*) — Suit for Infbingement— Etfect of License. 

A license under a patent for a stated term cannot lie terminated before 
the expiration of such term except by mutual agreement of the parties 
on the adjudication of a court, and the licensor cannot by himself de- 
claring a forfaiture maintain a suit under the patent laws for infringe- 
ment against the licensee. 

[Ed. Note.— For other cases, see Patents, Cent. Dig. §§ 321-32T, 40T- 
409; Dec. Dig. §§ 214, 265.*] 

2. Patents (§ 214*) — License— Revocation. 

Where a contract provides for an exchange of llcenses to manufacture 
under specifled patents severally owned by the respective parties, the 
considération belng such mutual agreements, one party cannot ele'ct to 
abrogate or rescind it with respect to a single license while retainlng it 
in effect as to the others. 

[Ed. Note.— For other cases, see Patents, Cent Dig. §§ 321-327; Dec. 
Dig. § 214.*] 

In Equity. Suit by the American Graphophone Company 
against the Victor Talking Machine Company and Eldridge R. 
Johnson. On demurrer to bill. Demurrer sustained. 

Affirmed in 188 Fed. 428. 

John W. Griggs, C. A. L. Massie, and PhiHp Mauro, for com- 
plainant. 

Horace Pettit, for défendants. 

CROSS, District Judge. The complainant has filed its bill of com- 
plaint against the Victor Talking Machine Company and Eldridge 
R. Johnson, alleging that they hâve infringed patent No. 688,739, 
issued to one Jones, December 10, 1901, and duly assigned to the 
complainant, and praying for an injunction and an accounting of 
profits and damages in the usual form in such cases. It further 
appears by the allégations of the bill that the patent in suit has 
been upheld by the adjudications of several Circuit Courts of Ap- 
peals ; also, that the défendants held the complainant's written li- 
cense to manufacture under the patent from December 8, 1903, to 
June 3, 1907, when that license was annulled and canceled by an- 
other of the latter date which was substituted in its place. Both 
of the above-mentioned licenses are referred to in the bill of com- 
plaint and made a part thereof, and copies are annexed thereto as 
Exhibits B and C. The bill further allèges that on or about May 
11, 1907, the défendants renounced and repudiated said license of 
June 3, 1907, and their obligations thereunder, notwithstanding 
which they hâve continued to use, and are still using, the process 
set forth in, and claimed by, the said Jones patent. The alléga- 
tions upon which said renunciation and répudiation are predicated 
are set forth in the foUowing paragraphs of the bill : 

"(18) More particularly, your orator shows that said défendants Victor 
Talking Machine Company and Eldridge R. Johnson did on or about May 
11, 1907, file or cause to be filed in the United States Patent Office certain 

•For other caees see same topic & i numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



432 188 FEDERAL REPORTER 

affldavîts and amendments and clalms and arguments, whîeh were by them 
intended to hâve, and did hâve, the légal elïeet of elaiming for said Johnson, 
on behalf of said Victor Talking Machine Company, as his assignée, the very 
invention previously awarded to your orator as assignée of said Joseph W. 
Jones, by the adjudication of said Court of Appeals in said suit against said 
Universal Talking Machine Manufacturlng Company to vphich suit said John- 
son and said Victor Talking Machine Company were privies as aforesaid; 
that subsequently said Johnson and said Victor Talking Machine Company 
did procure the issuance on August 11, 1908, to the latter as assignée of the 
former of United States letters patent No. 896,059, with claims substantially 
identical in scope and légal effect with the two claims of your orator's said 
Jones patent hère in suit; that thereaftar, on or about October 4, 1909, said 
Victor Talking Machine Company (with the approval and ratification, as 
your orator believes and charges, of said Eldridge R. Johnson) did file its bill 
of complaint in the United States Circuit Court for the Southern District of 
New York, charging your orator with infringement of said Johnson patent 
No. 896,059, last referred to; and In support of its charge did show and 
prove that your orator was practicing the very process already disclosed and 
patented to your orator by your orator's said Jones patent. 

"(19) And still more particularly your orator shows that when your orator 
by its proofs in opposition to the suit last referred to on said Johnson patent 
had established that the claims of said Johnson patent were substantially 
identical with the claims of your orator's Jones patent aforesaid, and were 
anticipated by the latter — thereupon said Johnson and said Victor Talking 
Machine Company introduced further adéquate proof that the invention of 
the défendants' said Johnson patent is substantially identical with the in- 
vention of your oratxjr's said Jones patent, and thereafter, in rebuttal proofs. 
the said Johnson and said Victor 'Talking Machine Company, in défiance of 
the prior adjudication and in disregard of their contract-obligations, under- 
took to adduce, and over your orator's objections and protests did adduce, év- 
idence intended by said Johnson and said Victor Talking Machine Company to 
prove that said Johnson had anticipated said Jones in the production of said 
invention, and that said Jones was not the true and first inventer of the pro- 
cess patented in and by your orator's said Jones patent — which, if true, 
would hâve the légal efCect of invalidating your orator's said Jones patent, 
and thereafter said Johnson and said Victor Talking Machine Company bave 
persisted in attemptlng to prove said invention to bave been made by said 
Johnson and not by said Jones, and to prove that your orator in practicing 
its own patented Jones process is Infringing said Victor Talking Machine 
Company's said Johnson patent." 

The défendants hâve separately demurred to the bill of com- 
plaint, assigning various causes therefor, which, however, need not 
be specifically set forth. It is sufhcient to say that they fairly 
raise the question to be considered later. An examination of the 
license agreement of June 3, 1907, shows that it was to continue 
in force until October 9, 1923. No royalties, however, were to be 
paid upon any patent therein mentioned subséquent to its expira- 
tion or declared invalidity. The agreement in substance provided 
for a mutual exchange of licenses to manufacture under certain 
spécifie patents severally owned by the respective parties thereto. 
The considération of the agreement was manifestly the mutual 
agreement and undertakings of the parties, each to allow the other 
the right to use its patents upon the therein prescribed terms and 
conditions. The agreement contained no clause of forfeiture nor 
any provision whereby one party could terminate it, either in whole 
or in part, without the consent of the other. It was, however, ex- 
pressly provided therein that no royalties should accrue or be pay- 
able by the Victor Company to the Graphophone Company for the 



AMERICAN GRAPHOPHONE CO. V. VICTOR TALKING MACH. CO. 433 

right to manufacttire under the Jones patent, until the expiration 
of the Berliner -patent. No. 534,543, which date of expiration, it was 
further stipulated, should not be construed to be earlier than Feb- 
ruary 11, 1911. Recurring again to the bill of complaint, it will 
be found to contain no allégation that the above-mentioned agree- 
ment has been rescinded or broken, nor any prayer for a decree to 
that effect. So far as thereby disclosed, the agreement in ail its 
provisions is in full force and effect, and binding upon the parties 
thereto, except, as aiready mentioned, it is alleged that the défend- 
ants by their conduct, as set out in the above quoted paragraphs, 
hâve renounced and repudiated the Hcense to manufacture under 
the Jones patent. 

[1] Under the circumstances, the bill of complaint, considered 
as a whole, does not state such a breach or rescission of the li- 
cense as entitles the complainant to the reHef it seeks. The con- 
tract of license under which the défendants are manufacturing has 
not been abrogated or annulled either by the decree of any court, 
the act of the parties, or by virtue of any provision therein con- 
tained. Its alleged renunciation or répudiation by the défendants 
rests merely upon the complainant's assertion. Whether the de- 
fendants by their conduct hâve afforded légal ground for its rescis- 
sion at the instance of the complainant, the courts upon proper 
application will détermine. It does not, however, lie in the mouth 
of one of the parties to détermine the question and thereupon act 
in a manner which would only be justifiable in case it has been 
judicially determined. Before the défendants can be held as in- 
fringers of the patent in suit, the license in question must be dis- 
posed of, and that constitutes an independent question which must 
be determined by itself before this court will entertain a bill under 
the patent laws for its infringement. The rule thus stated is sup- 
ported by the case of Comptograph Co. v. Burroughs Adding Ma- 
chine Co. (C. C.) 175 Fed. 787, decided by Judges Kohlsaat and 
Sanborn, which presented a situation very like the présent. The 
défendant in that case was a licensee under a patent and as such 
was guilty of conduct which the complainant insisted amounted to 
a répudiation of the license. The conduct referred to was described 
by the court in its opinion as follows: 

"There can be no reasonable doubt ttiat défendant by Its counsel assumed 
a hostile position to complainant in sald test suit before the Court of Ap- 
peals. It asserted varions hostile positions, some of which were not insisted 
on by the then défendant. It set up tltle in itself to the Pike patent, No. 
595,864, an alleged infringer of the Felt patent in suit. It asserted the 
Feit patent to be an abandoned experiinent. It substantially sided with the 
original défendant. It charged varions acts calculated to invalidate the 
patent in suit, such as delay, abandonment, the Pike patent as an anticipa- 
tion, Felt's misrepresentatlon to the Patent Office — ail this in face of the 
well-known doctrine that a licensee may not be heard to contest the validity 
of his licensor's patent. 'A licensor,' says our Court of Appeals in Indiana 
Mfg. Company v. 3. I. Case Threshing Machine Company, 154 Fed. 365 [83 
C. C. A. 343], 'has the right * * * to appellee's (the licensee's) silence 
respecting the validity and prima facie scope of the patent.' It further ap- 
pears that it was to defendant's advantage to hâve the patent declared in- 
valid, slnce large paymeuts were thereby avoided. Complainant insists that 
188 F.— 28 



434 188 FEDERAL REPORTER 

thfe defendant's course in the former case amounted to both a breach and 
répudiation of the Ucense contract ; that défendant, after .said décision, pro- 
ceeded to ally itself with another infringer and entered upon ottier alleged 
infringements ; that it has by Its silence apparently acquiesced in the an- 
nulment of the contract by complainant up to the time of bringing this suit 
(i. e., more than 18 months) ; that it has made no attempt to pay royalty, 
has made no reports, nor has it marked its machines under the patent in 
suit. 

"Ail and each of the foregolng allégations are deemed to be fairly estab- 
llshed by the record." 

The court in disposing of the question says : 

"It is a famlliar rule that a party may not enter Into a contract to do or 
pay something upon the happening of a certain event, and then proceed to 
make the happening of the condition impossible, and such a course is held 
to be ground for the cancellation of a contract; but, in the absence of a 
spécial condition of the contract to that effect, a licensor cannot by his own 
act revoke and terminale a licenso contract. He may file his bill for a rescis- 
sion, but cannot terminate It by his own déclaration, especially when soine 
part of It has been performed. 'The law does not arm one party to a con- 
tract,' says Judge Gray in Standard Dental Mfg. Co. v. National Tooth Co. 
(C. O.) 95 Fed. 291, 'with the power to détermine in his own favor à condi- 
tion of this kind, and thus produce for the other party to the contract ail 
the disabllities and conséquences that would follow a forfeiture legally as- 
certained and declared. Even where the contract provides that the failure 
to pay shall render it null and void, the défendant has a right to be heard 
as to the facts upon whieh such annulment is made to dépend. Forfeitures 
are not favored in equity, and the best-considered décisions hold that even 
licenses containing express stipulations for their forfeitures are not, ipso 
facto, forfeited upon conditions broken, but remain operative and pleadable 
until resclnded by a court of equlty.' 

"In Hartell v. Tilghman, 99 TJ. S. 547, 25 L. Ed. 357, the court says; 
' * ♦ * We do not agrée that either party can of his own volition déclare 
the contract rescinded, and proceed precisely as if nothing had been done 
under it. If it is to be rescinded, 'it can be done only by a mutual agree- 
ment, or by the decree of a court of justice.' 

"The same rule is held to in Wilson v. Sanford, 10 How. 99, 13 L. Ed. 
344, and in Hanifen v. Lupton (C. C.) 95 Fed. 465, and McMullen v. Bowers, 
102 Fed. 494, 42 C. C. A. 470. 

"We hold, therefore, that the license contract was not made void by the 
severai acts of the parties thereto as above recited, that it is still in force, 
and that the plea which is hereby held to constituée a valid défense to the 
hill should be and is sustalned." 

Ag-ain, in American Street Car Advertising Co. v. Jones et al. 
(C. C.) 122 Fed. 803, Judge Ray says : 

"This action can be maintained in equity because the license was granted, 
went into effect, and both parties recognized and acted under It. It could 
not be revoked or ended except by mutual consent. The défendants hâve 
never consented to Its revocation. True, they say, the patent was in valid, 
but this is not an assent to a revocation of the license." 

Thèse authorities are in point and control this case. 

[2] I might add, however, that in my judgment, in view of the 
character of this contract, even if the power of the complainant to 
elect to abrogate or rescind it were admitted, it could not elect to 
abrogate or rescind a part only and retain the balance of the con- 
tract, since, as already stated, by its terms it provides for an ex- 
change of licenses. The covenants are mutual and interdepend- 
ent, and constitute the considération of the contract. To treat as 



WALKEE PAT. PIVOTED BIN CO. V. BERNARD GLOEKLER CO. 435 

rescindée! or abrogated a single license forming but a small part 
of the intermingled subject-matter o£ the contract, and at the same 
time, impliedly at least, retain the balance, did not lie in the power 
of the complainant. The demurrers must be sustained, with costs. 

This conclusion disposes of the rule to show cause why a prelim- 
inary injunction should not issue, which was argued with the de- 
murrers. 

That rule will be discharged, with costs. 



WALKER PATENT PIVOTED BIN CO. y. BEŒINAR0 GLOEKLER CO. 

(Circuit Court, W. B. Pennsylvania. August 3, 1909.) 

No. 31. 

1. Patents (§ 328*) — Infringement— Tilting Bin. 

Tlie Walker patent, No. 614,279, for a tlltlng bin, held valid and In- 
frlnged on a motion for prellminary Injunction. 

2. Patents (§ 297*) — Suit for Infringement— Pkeliminaky Injunction. 

■HTiere a patent has been sustained on final liearlng by a Circuit Court 
and aiso by the Circuit Court of Appeals, a preliminary injunction agalnst 
its infringement should not ordinarily be denled by another court in the 
same circuit on affidavits attacking its validity. 

[Ed. Note. — For other cases, see Patents, Cent. Dig. §§ 481-488; Dec. 
Dig. § 297.* 

Grounds for déniai of preliminary injunctions in patent infringement 
suits, see note to Johnson y. Foos Mfg. Co., 72 G. C. A. 123.] 

In Equity. Suit by the Walker Patent Pivoted Bin Company 
against the Bernard Gloekler Company. On motion for preliminary 
injunction. Motion granted. 

Ernest Howard Hunter and J. P. Sproul, for plaintiflf. 
J. M. Nesbit and W. G. Doolittle, for défendant. 

ORR, District Judge. The patent in this suit was considered and 
sustained by the Circuit Court for the Eastern District of Pennsyl- 
vania in the suit of Walker Patent Pivoted Bin Co. v. Brown et al. 
(C. C.) 110 Fed. 649, and again by the same court in Walker Patent 
Pivoted Bin Co. v. Miller et al. (C. C.) 132 Fed. 823, which last déci- 
sion was affirmed on appeal. Miller et al. v. Walker Patent Pivoted 
Bin Co., 139 Fed. 134, 71 C. C. A. 398. 

[1] This is a bill fîled for an infringement of the same patent in 
which the défendants again attack the validity of claim 1, notwith- 
standing the careful considération given to such claim by Judge Arch- 
bald, who decided both the cases in the court below, and whose opin- 
ion was adopted in the Court of Appeals in the case last cited. 

Claim 1 in the letters patent which were granted to Edwin J. 
Walker, November 15, 1898, No. 614,279, reads as foUows: 

"The combination with a casing, comprising a bin chamber, of a bin tilt- 
ably mounted in said chamber and of depth substantially equal thereto, the 
axis of oscillation of said bin being at the front edge of said casing, and a 

•For other cases see same topic & { nvmbeb in Dec. & Am. Dlgs. tàOl to date, & Rep'r ludexet 



436 188 FEDERAL REPORTER 

counterbalance front for sald bln projecting forward of sâld axis, substan- 
tially as and for the purpose set forth." 

It is well shown in those cases that the novelty of complainant's bin 
is the location of the axis at the front edge of the casing and the for- 
mation of the counter-balancing swell front beyond that axis. In- 
fringement is denied on the ground that the defendant's bin is simply 
a box projecting out of the bin casing and allowed to assume a tilted 
position. The bottom of defendant's bin back of the axis of oscillation 
lies in the same plane with the bottom of the swell front. In f act that 
portion of the bottom of defendant's bin extending in front of the 
bin casing and Connecting with the front of said bin makes a counter- 
balance swell front for said bin projecting forward of said axis. The 
most important feature of the Walker patent .is clearly seen in the 
defendant's bin. Se far as I can see there is nothing in the defend- 
ant's case which would justify refusing to the complainant the relief 
which it asks for. 

[2] The affidavits presented by the défendant for the purpose of 
furnishing new évidence in respect to anticipation are uncertain, if 
not evasive, and therefore insufficiently convincing. Were they oth- 
erwise, because the patent has been sustained in other suits, a prehm- 
inary injunction would not be denied. Armât Moving Picture Co. 
V. Edison Mfg. Co. (C. C.) 121 Fed. 559; American Graphophone 
Co. V. International Record Co. (C. C.) 155 Fed. 427; Consolidated 
Fastener Co. v. Hays (C. C.) 100 Fed. 984; New York Filter Mfg. 
Co. V. Niagara Falls Water Works Co., 80 Fed. 924, 26 C. C. A. 252 ; 
American Bell Téléphone Co. v. Cushman (C. C.) 57 Fed. 843 ; Mac- 
beth V. Braddock Glass Co. (C. C.) 54 Fed. 173 ; Brush Electric Co. 
V. Accumulator Co. (C. C.) 50 Fed. 833. 

Again, defendant's résistance to the motion on the ground of com- 
plainant's lâches should not be seriously considered. The litigation 
complainant was put to by other infringers was sufEcient reason for 
delaying proceedings against the défendant. 

A preliminary injunction should issue. Let an order be drawn ac- 
cordingly. 



SCHMEETZ WIRE GLASS CO. et al. v. WESTERN GLASS CO. 

(Circuit Court, N. D. Illinois, B. D. May 13, 1911.) 

No. 30,345. 

Patents (§ 328*) — Infbingement— Peocess of Making Wire Glass. 

The Sclimertz reissue patent, No. 12,443 (original No. 791,216), for an 
apparatus and process for making wire glass, held not infringed by a 
process which is in effect the three-step process of the prior art. 

In Equity. Suit by the Schmertz Wire Glass Company and the 
Mississippi Wire Glass Company against the Western Glass Com- 
pany. Decree for défendant. 

Arthur J. Baldwin and Drury W. Cooper, for complainants. 
Offield, Towle, Graves & Offield, for défendant. 

•For other cases see same topio & § ndmbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



SCHMERTZ WIRB GLA8S CO. V. WESTBEN GLAS8 CO. 437 

SANBORN, District Judfee. Bill filed March 22, 1911, for in- 
fringement of the Schmertz reissue patent. No. 12,443, of January 
30, 1906. During the hearing on the accounting under interlocutory 
decree in the former suit (178 Fed. 977, affirmed 185 Fed. 788), it 
was found that défendant had modified its process after«the former 
injunction took effect, February 10, 1910, by dispensing with the ten- 
sion wire-feed described in 178 Fed. 979, and by completing the first 
layer of glass before the wire is introduced. During the accounting 
complainants applied to the court to direct the master to take testi- 
mony as to this modified process. At that time I thought it was best, 
and more convenient, to let the master take testimony as to this pro- 
cess, which is now known as defendant's regular one, and the dam- 
ages and profits, so that a new suit, or a supplemental bill, would not 
be necessary. Complainants, however, decided to file a new suit. Ail 
the évidence was adduced at the hearing, and the case is now to be 
decided. A view was had of the defendant's process, but by misun- 
derstanding complainants' counsel and experts were not présent. 

The apparatus and process may be thus described: There is a 
movable cast-iron table, kept cool by a constant supply of water, 
two water-cooled roUs, a wire chute or carriage, and long strips 
of iron-called trangs, a qùarter inch thick. The table and rolls are 
driven by either a steam engine or electric motor, as may be most 
convenient. Rolls and table move at the same relative speed, con- 
troUed by a friction clutch, so that the speed may be increased and 
diiminished at will. The table is run on a railroad, from a point 
near the lehr, where the glass is annealed, in a southerly direction. 
The wire chute is similar to the Schmertz apparatus and is run on 
a track laid slightly above the southerly half of the table track. 

The first step is to lay a sheet of wire mesh on the chute, and ad- 
just it parallel to the table by movable collars sliding on the frame- 
work of the chute. Two ladles of molten glass are then taken from 
the furnace, one after another, and the first is poured on the table 
on the north side of the south roll. Immediately the machinery is 
started, the table moves south, and the first pour is rolled down into 
a flat sheet by the south roll, whereupon the power is turned off, 
and the bottom layer, a quarter inch thick, lies on the table, directly 
undier the wire mesh. The lehr foreman then takes a stick or iron 
rod, and pulls the north end of the wire to the north until it is over 
the north end of the bottom layer, and close to the south side of the 
other or north roll. The end of the wire falls or rests upon the glass 
sheet and is gripped by the hot layer and firmly held. When the 
lower layer bas cooled ofï a little, the second pour is made, on the 
south side of the north roll, upon the north end of the bottom layer 
and upon the same end of the wire resting thereon. Two workmen 
then pull the wire carriage quickly backward, towards the south, al- 
lowing the wire sheet to fall prone upon the lower sheet, which is 
now sufiiciently cooled oflf so that it will not grip or hold the wire. 
While thèse steps hâve been going on, the quarter-inch trangs hâve 
been so adjusted that the collars of the north or second roll run 
thereon, and the surface of the roll itself is brought a half inch from 



438 188 FEDERAL REPORTER 

the table, and a quarterinch from the lower sheet. The machinery is 
now given a reverse motion, the table runs north, towards the lehr, 
and the second pour is spread over the first, and the wire, until the 
end of the sheet is reached, and the table is stopped at its extrême 
north limit.» While the upper layer is being rolled, the wire squirms 
and crawls upon the bottom layer, but adijusts itself properly, be- 
cause the latter is cool enough not to grip or hold it. A few seconds 
after the upper layer is completed, the lehr foreman seizes a corner 
of the completed sheet with a pair of tongs, and pulls it upon a table 
situated north of the operating table, so as to bring, it in front of 
the lehr. A few seconds later the sheet is pushed into the first lehr 
furnace, and by successive steps it is moved into diminishingly heated 
chambers for three hours, when the annealing process is complète, . 
and the glass is ready for polishing. The process of completing a 
sheet ready for the lehr takes from 30 to 60 seconds. 

Some of the steps described may be modified without aiïecting the 
resuit. The wire carriage may be left out, and the wire laid on rods 
having collars to adjust the wire sheet longitudinally. The stick or 
rod for pulling the front end of the wire toward the north may be 
dispensed with, and the north end of the wire sheet allowed to fall on 
the bottom layer and be gripped thereby. The carriage or wire sup- 
ports may be allowed to remain in place; the wire being pulled off 
by the movement of the table, as in the Schmertz process. And the 
wire may be coiled in a roU and supported by rods instead of being 
laid out on the chute or other supports. Finally, one roll may be 
used instead of two; the pours being on its respective sides. 

The question is whether this process infringes. Complainants' posi- 
tion is that it simply avoids the terms of the patent while embodying 
their substance. They also urge that the process reads almost ex- 
actly on claims 2 and 6, reading as follows: 

"2. An apparatus for making sheets of glass with wire inclosed thereln, 
consisting of a table, a leading roll to roll a layer of glass, means to support 
and Introduce wire to the said layer, a second roll, behind the leading roll, to 
form a layer of glass on the first or underneath layer, the periphery of the 
second roll being higher above the table than that of the leading roll, and 
the two rolls being far enough apart to allow the glass for the second or 
upper layer to be poui-ed between them." 

"6. An improvement in the process of manufacturing wire glass whieh con- 
sists in rolling a sheet of glass of less thickness than the ultimate produce 
required, simultaneously forcing wire upon said sheet and forming a second 
sheet of glass upon said first sheet." 

On the other hand, défendant insists that they are using the old 
European three-step process, by first rolling a sheet of glass, placing 
wire thereon, and rolling a second! sheet over the first; the only dif- 
férence being that by improved mechanical and manual skill the old 
difficulty of a too rapid cooling is entirely overcome. In f act, it ap- 
pears that the thing can be done so quickly as to injure the quality 
of the glass, and that the wire can be placed on, the bottom layer 
while it is too hot, resulting in gripping the wire surface and spoiling 
the sheet ; so that the process has to be slowed instead of hastened. 

I was at first inclined to think that defendant's process was in 
reality simply a variation of Schmertz, a substantial use of his in- 



WILLIAMS V. SUTTO» 439 

vention ; that he showed the way to avoid his own discovery, in terms, 
or in form, by a process virtually his own, in practical effect. But a 
careful re-reading of the opinion of the Circuit Court of Appeals in 
the former case has convinced me to the contrary. Judge Baker says : 

"In the ante-Sctimertz method there were three steps, separately taken. 
The cooling of the first layer before the sandwich could be flnished prevented 
the making of large sheets." "The practice and publications regarding the 
three-step sandwich prevented Schmertz from claiming the sandwich method 
generically." 

As suggested by Judge Gray in the Highland Case, 178 Fed. 944, 
962, 102 C. C. A. 316, défendant has by skill and manual dexterity 
so perfected the European process as to be able to accompHsh each 
of the three steps separately, and entirely overcome the necessity of 
their being simultaneous. 

Bill dismissed. 



WILLIAMS V. SUTTON et al. 

(Circuit Court, N. D. IlUnols, E. D. Augiist 4, 1911.) 

No. 29,236. 

Patents (§ 328*) — ^Anticipation— Means bob Producing Xeeial Gtmnastic 
Pebfoemances. 

The Williams patent, No. 847,139, for means for prodncing aerial gym- 
nastlc performances, held void on évidence of prior publie use of sub- 
stantially the same combination of éléments, ail of which were old. 

In Equity. Suit by Joseph J. Williams against John H. Sutton 
and others. Decree for défendants. 

James H. Griffin and John G. EHiott, for complainant. 
Banning & Banning, for défendants. 

KOHLSAAT, Circuit Judge. Complainant brings suit to en- 
join infringement of claims 1, 2, 4, 5, 6, and 7 of patent No. 847,139, 
for means for producing aerial gymnastic performances, issued to 
Joseph John Williams on March 12, 1907. Claim 6 f airly sets out the 
matter in issue. It reads as follows, viz. : 

"In a device for the purpose described, a horizontal bar, means for raising, 
lowering, and suspending sald bar in mid-alr, a drum connected with said 
bar, means for actuating said drum and revolving the bar horizontally about 
a vertical axis, of suspending devices attached at or near the opposite ends 
of said bars, and depending below the same, and means whereby performers 
may suspend themselves by their mouth in mid-air therefrom, substantially as 
described." 

The bar is sustainedby a rope which passes through a swivel from 
which it dépends, the ends whereof are respectively made fast on 
the bar at points at the bar ends, thus forming a triangle in appear- 
ance, of which the bar is the base. Near its upper angle the revolving 
device or drum is located. From each end- of the bar dépends a 
rope, provided with a mouthpiece, adapted to be held in and by the 

*For otber cases aee same topic & i nvmbes in Bec. & Am. Digs. 1907 ta date, & Rep'r Indexes 



4*0 188 FEDERAL REPORTER 

mouth in such a manner as to enable the performer to support her 
or his body with no other means or aid. The whole device may be 
raised or lowered by the use of pulleys. When lifted into the air the 
device is revolved by means of the drum, with the usual centrifugal 
effects. Both the patent and the évidence are engaged more partic- 
ularly with the methods employed in producing scenic effects than 
with the mechanical arrangement of the device. What with the at- 
tractive accessories disclosed in the record and the silence perforée 
of the performers, a fairly popular spectacnlar act is produced. 

No one of the éléments of the device of the claims is new, and 
unless there is patentable novelty in the combination, as applied to 
the use to which it is put, there seems to be little invention in the 
combination. It was not new to lift performers into the air by 
means of pulleys and ropes. It was not new to provide means for 
revolving any kind of an object in the air. It was not new to suspend 
oneself or others by means of a mouthpiece. It was not new to 
adjust a suspended rope so that a performer might wind the rope up 
and then untwist in such a manner as to whirl himself through the 
air. Ail thèse are old, and a part of every lively boy's expérience, 
and the means for doing thèse stunts were always attainable, though 
somewhat crude. It was not new to support the ends of the bar. The 
prior art does not disclose the device of the patent in suit in connec- 
tion with the suspension of performers by the mouth holds, thus 
enabling the free use of the rest of the body for other purposes. 
Nor is there any évidence that the bar, drum, suspension ropes, and 
mouth supports were ever used in combination before. This fact, 
together with the presumption arising from the grant of the patent 
and the favor with which the âerial acts produced upon it hâve been 
received by the public, might, in the absence of the évidence as to 
the prior art hereinafter referred to, be conceded that the device 
of the patent contains some degree of novelty of the patentable char- 
acter, but at the best that must be deemed very slight. 

The alleged infringing device is in ail substantial respects the same 
as that of the patent in suit. It is claimed by défendant that he 
first used a large wheel, the original wheel being produced as an 
exhibit; that the mouth straps were fastened to the rim of the w:heel; 
that the rim was provided with extensions constituting a groove in 
which the revolving rope was held ; that performances were given on 
this wheel as early as 1901 and 1902 in China, Japan, the Philippines, 
Hawaii, and San Francisco, and also in other places. Numerous 
newspaper clippings are in évidence, taken from the newspapers in 
thèse varions places, praising the performance of Miss Aimée Tasma, 
"when she revolves on an âerial wheel, holding by the teeth only." 
The original wheel also bears upon it the stamp of its place of manu- 
facture; i. e., "Sydney." There is no reasonable doubt of the truth 
of this prior use. The évidence clearly establishes the above facts 
beyond a reasonable doubt. Défendant John H. Sutton himself has 
furnished the only évidence which casts doubt on the défense. His 
letters to his witness Steinburg are of a character to awake suspicion 
in the mind of one who reads them. He cautions his witness to avoid 



H AVENS V. BUEN8 ^41 

calling attention to several features of his device. Notwîth standing, 
however, his devious course, the évidence aliunde is convincing. The 
subséquent adding of a bar under the wheel required no invention. 
The idea is the same. Either method keeps the bodies of the per- 
formers apart and performs the same services. The prior use being 
established, this suit must fail. 
The cause is dismissed for want of equity. 



SANITARY METAL TILB CO. v. NEW YORK METAL CEILING CO. 

(Circuit Court, S. D. New York. November 7, 1910.) 

Patents (§ 310*) — Infeingeiient— Biut-Demubher. 

A demurrer will net be sustained to a bill for patent Infrlngement on 
the ground tbat the patent shows no patentable Invention, except in the 
plalnest cases, and when there is no room for doubt. 

[Ed. Note. — For other cases, see Patents, Cent DIg. § 508; Dec. Dig. 
i 310.*] 

In Equity. Bill by the Sanitary Métal Tile Company against the 
New York Métal Ceiling Company for infringement of letters Patent 
No. 851,579, granted to Whitney and Weyand April 23, 1907, for a 
facing for walls and other surfaces, to which défendant demurred on 
the ground that the patent on its face showed no patentable invention. 
Overruled. 

James H. Griffin, for complainant. 
Henry D. Williams, for défendant. 

COXE, Circuit Judge. I hâve delayed action în this cause to await 
the décision of the Circuit Court of Appeals in Stillwell v. McPherson, 
183 Fed. 586, 106 C. C. A. 354, which bas just been handed down 
and which, in my judgment, requires a décision hère overruling the 
demurrer. The rule in this circuit is to the effect that it is only in 
the plainest cases that a demurrer to a bill founded on letters patent 
will be sustained and that if there be any doubt, it must be resolved 
in favor of the patent. 

It is enough to say that, tested by this rule, I am unable, at this 
stage. of the litigation, to say that the patent is invalid. 

Demurrer overruled, the défendant to answer within thirty days. 



HAVENS et al. v. BTTRNS. 
(Circuit Court, E. D. Pennsylvanla. June 13, 1911.) 

No. 635. 

1. Patents (§ 285*) — Causes or Action— Joikdeb—Infbingement dp Patent 
— Unfaib Compétition. 

Where there was requisîte diversity of citizenship sufficient to glve a 
fédéral court jurisdiction, it was proper to joln in one bill a cause of ac- 

•For other cases see same topic & ] ntimbbb In Dec. & Am. Dlgs. 1507 to date, & Rep'r Indexes 



442 188 FBDSRAIi KBFOBTEB 

tlon for Infringement of a design patent and for nnfalr compétition In 
trade. 

[Ed. Note. — For other cases, see Patents, Cent. Dlg, { 445 ; Dec. Dig. i 
285.»] 
2. Equitt (S 149*) — ^MULTnrABiousNKSS— CoMPLAiNANTS — Intkrbst — Demub- 

BEB. 

Possible laek of title or Interest In the subject-matter of a suit, so far as 
one of the complalnants Is concerned, whlch could not injurlously affect 
the défense, cannot be determined on demurrer to the blU on the ground 
of multifariousness of parties. 

[Ed. Note. — For other cases, see Bqulty, Dec. Dlg. | 149. ♦] 

In Equity. Suit by Morton Havens, Jr., and another, against 
James F. Burns. On demurrer to bill. Ôverruled. 

Parsons, Hall & Bodell, for complainants. 
Howson & Howson, for défendant. 

J. B. McPHERSON, District Judge. [1] It is clear, I think, that 
infringement of the trade-mark "Condulet" is not charged, and is 
therefore not before the court. The bill rests on two grounds only, 
infringement of a design patent and unfair compétition in trade, 
and I see advantage rather than objection in dealing with such 
controversies in one suit, where the parties are the same and the 
controversies are really only différent aspects of the same facts. In 
the pending cause the Circuit Court has undoubted jurisdiction to 
hear both disputes, because the bill discloses the necessary diversity 
of citizenship. 

[2] Whether Havens has transferred the whole of his interest 
in the patent to the other plaintiff, and whether he has any interest 
in the trade that is alleged to be interfered with, need not be de- 
termined now. It is not apparent that his possible lack of title or 
of interest can injuriously affect the défense, and the final décision 
of thèse questions may therefore stand over for the présent. Where 
it is clear that one or more of several défendants hâve been errone- 
ously included, it may be proper to grant relief on demurrer ; but 
if it be a plaintiff's standing that is doubtful, ordinarily no harm 
is donc by awaiting further light on that subject. This objection 
of multifariousness, either of subject-matter or of parties, can 
scarcely ever be determined by hard and fast rules. In the case 
before the court I see no serions objection to the bill as it stands. 
Much of the defendant's ingénions argument amounted in essence 
either to an attack on the validity of the patent, or to a défense of the 
defendant's design on the ground that it does not infringe, although 
his brief admits for présent purposes the validity of the patent, 
and although I think it clear that the infringing character of a de- 
fendant's device can rarely be determined with safety at this stage of 
a suit. 

The demurrer is ôverruled, and the défendant is directed to an- 
swer within 20 days. 

«For other cases see samé toplc & i numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



JIATER y. COHBS 443 

MATER 7. COHRS. 
(Clrcnît Cîourt, E. D. Washington, B. D. March 29, 1911.) 
No. 1,489. 

L Courts (5§ 311, 322, 329*) — Fédéral Courts— Jurisdictiott—Citizenship. 

In a suit by a bankmpt's trustée, Jurlsdiction of the Circuit Court dé- 
pends on the citlzenship of the bankrupt, and net on the citizenshlp of 
the trustée, and the requisite diversity of citizenship, as well as the req- 
uisite amount or value of the matter in dispute, must appear on the face 
of the record. 

[Ed. Note.— For other cases, see Courts, Cent. Dig. §§ 858, 876-887, 897 ; 
Dec. Dig. §§ 311, 322, 329.* 

Diverse citlzenship as a ground of fédéral jurlsdiction, see notes to 
Shipp V. Williams, 10 C. C. A. 249 ; Mason v. Dullagham, 27 C. C A. 298.] 

2. Courts (§ 322*) — Fédéral Courts— Diversitt of Citizenship. 

An averment that one of the parties to a suit in the fédéral court Is 
a "résident" of a certain town and county in another state was not équiv- 
alent to an avermeut that he was a citizen of that state, required to show 
jurlsdiction on the ground of diversity of citizenship. 

[Ed. Note.— For other cases, see Courts, Cent Dig. §§ 870-887; Dec. 
Dig. « 322.*] 

8. Courts (§ 329*) — Fédéral Courts — Juribdiction — Amount in Contro- 
vbrst. 

A suit by a bankrupt's trustée in the fédéral court, alleglng that, by 
reason of defendaat's failure to complète a certain contract and by rea- 
Bon of the conséquent loss of the value of their bargain, the bankrupts 
and plaintlfC hâve been damaged in a large sum of money, to wit, the 
value of certain jewelry and rallroad Inspection business agreed to be 
Bold and transferred to défendant, the value of whlch was peculiarly 
withln defendant's knowledge, was Insufficlent to show that the matter 
In dispute exceeded the sum or value of $2,000, so as to confer fédéral 
jurlsdiction. 

[Ed. Note. — For other cases, see Courts, Cent Dig. § 897; Dec. Dig. | 
329.* 

Jurlsdiction of Circuit Courts as determined by the amount in contro- 
versy, see notes to Auer v. Lombard, 19 C. C. A. 75; Tennent-Strlbling 
Shoe Co. V. Roper, 36 C. C. A. 459 ; O. J. Lewis Mercantile Co. v. Klep- 
ner, 100 a C. A. 288.] 

In Equity. Suit by Joseph Mayer, as trustée of the property of 
George O. Buhn, Sr., bankrupt, and as trustée of the property of 
George O. Buhn, Jr., and Edward H. Buhn, doing business as Buhn 
Bros., bankrupts, against Ccorge F. Cohrs. On demurrer to bill. Sus- 
tained, 

McBurney & Cummings and Lester P. Edge, for plaintiff. 
E. V. Kuykendall, for défendant 

RUDKIN, District Judge. This is a bill in equity by the complain- 
ant, Mayer, as trustée of George O. Buhn, Sr., a, bankrupt, and also 
as trustée of George O. Buhn, Jr., and Edward H. Buhn, copartners 
as Buhn Bros., bankrupts, for an accounting. The bill is based upon 
or grows out of a certain contract entered into between the copartner- 
sliip of Buhn Bros, and the défendant, Cohrs, prior to the adjudica- 

•For other cases see same topic & S numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



444 J88 FEDERAL REPOETEK 

tions in bankruptcy; the copartnership acting for the firm and as 
agents for George O. Buhn,,Sr. The défendant has interposed a de- 
murrer to the bill of complaint, on the ground, araong others, that the 
court has no jurisdiction of the subject-matter of the suit or of the 
parties thereto. 

[1] The demurrer must be sustained. The complainant sues as a 
trustée in bankruptcy, and in such cases, with certain exceptions not 
material hère, the jurisdiction of the Circuit Court dépends upon the 
citizenship of the bankrupt, and not upon the citizenship of the trus- 
tée; and the requisite diversity of citizenship, as well as the requisite 
amount or value of the matter in dispute, must appear on the face of 
the record. 

[2] The bill under considération does not aver the citizenship of 
any of the parties to the suit, nor does it aver the amount or value of 
the matter in dispute. The averment that George O. Buhn, Sr., is 
a résident of the town of Crookston, county of Polk, state of Minne- 
sota, is not the équivalent of an averment that he is a citizen of that 
State. Robertson v. Cease, 97 U. S. 646, 24 L. Ed. 1057; Grâce v. 
American Central Ins. Co., 109 U. S. 278, 3 Sup. Ct. 207, 27 L. Ed. 
932. And the same is true of the averment that the défendant, Cohrs, 
is a résident of Spokane, state of Washington. 

[3] The only référence to the sum or value of the matter in dispute 
is contained in the averments : 

"That by reason of the fallure, neglect, and refusai of sald défendant to 
complète sald contract as aforesald, and by reason of the conséquent loss of 
the value of thelr sald bargaln, sald George O. Buhn, Sr., George 0. Buhn, 
Jr., and Edward H. Buhn, plalntiflf has been damaged In a large sum of mon- 
ey, to wit, the value of sald jewelry and rallroad Inspection agreed to be 
sold and transferred as aforesald." 

"That the faets relatlng to the sale or other disposition of sald jevrelry 
and rallroad Inspection business, and of sald goods, wares, and merchandise, 
and the involee value of sald goods, wares, and merchandise In sald store at 
Pomeroy, and the value of sald Jewelry business and rallroad Inspection busi- 
ness at the tlme set for performlng the aforesald agreement, are peculiarly 
wlthln the knowledge of the défendant." 

And such averments fail to show that the jurisdictional amount is 
involved. In any event, under the averments of the bill, the bank- 
mpts, George O. Buhn, Jr., and Edward H. Buhn, had a substantial 
interest in the matter in controversy, and would be necessary parties 
to the suit, were it not for the adjudications in bankruptcy, and they 
are both résidents of the same state as the défendant. 

It not appearing that the matter in dispute exceeds the sum or value 
of $2,000, or that the requisite diversity of citizenship exista, this 
court is without jurisdiction, and the demurrer is sustained. 



IN EE MATTHEWS 445 

In re MATTHEWS, Inc. 

In re KNIC3KERB0CKER TRUST CO. 

(District Court, S. D. New Tork. May 17, 1911.) 

1. Bankruptct (§ 214*) — Claims—Securitt— Collatéral— Sale. 

Where bonds depositeri as collatéral to a eorporation's note were simple 
promises to pay, not secured, and had never l)een issued by the bankrupt 
until delivered to secure the bankrupt's note, the créditer was not en- 
titled to sel] the bonds to reallze funds with which to pay the note ; slnce 
to do so would slniply increase the eorporation's Indebtedness, to the préj- 
udice of other creditors. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dlg. §§ 320-327; 
Dec. Dig. § 214.*] 

2. Bankruptcy (§ 214*) — Pledged Collaterals— Sale of Eqttitt— Effect. 

Where a eorporation's obligations in the form of unsecured bonds were 
originally pledged by the corporation as secnrity for its note, the fact 
that the eorporation's equity in certain of the pledged notes was sold to 
others did not afCect the rlghts of the corporation and the pledgee, nor 
the rights of other creditors of the corporation, with référence to the 
debt evidenced by the bonds, on the corporation becoming bankrupt. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 320-327; 
Dec. Dlg. i 214.»] 

In the matter of bankruptcy proceedings of John Matthews, In- 
corporated. Claim of Knickerbocker Trust Company. On motion to 
modify an injunction so far as to grant the trust company leave to 
sell certain debenture bonds issued by the bankrupt as collatéral for 
the bankrupt's note. Motion denied. 

Davies, Auerbach, Cornell & Barry (Herbert Barry, of counsel), for 
petitioner. 

Thomas & Oppenheimer (Léo Oppenheimer, of counsel), for re- 
ceiver. 

HOLT, District Judge. ,This is a motion by the Knickerbocker 
Trust Company to modify an injunction issued in this proceeding,' so 
far as to grant the trust company leave to sell certain debenture bonds 
issued by the bankrupt for $29,000, and held by the trust company as 
collatéral for a note of the bankrupt for $16,693.20. The bonds in 
question are in form simply promises to pay money. They are not 
«ecured by any mortgage or other security. They never were issued 
by the bankrupt until they were delivered to the trust company as 
security for its note. The trust company now proposes to sell thèse 
bonds. It claims to hold them as collatéral security for the note, and 
to hâve the right to sell the bonds, apply the proceeds on the note, and 
then prove as an unsecured créditer for the balance of the note. In 
this way an indebtedness of $16,000 might easily be increased to an in- 
debtedness of about ,$45,000. In my opinion, the delivery of thèse 
bonds to the Knickerbocker Trust Company added nothing to the se- 
curity of their note. Their note was a promise to pay about $16,000. 
That was the sole indebtedness due to the trust company from the 
bankrupt. By delivering to it debenture bonds for $30,000 more, no 

*For other cases see same topic & § nui^ibeb lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



446 188 FEDERAL EBPOETEK 

additional securîty was given, but simply another promise of the bank- 
rupt to pay money. The amount due was the amount stated in the 
note. When that amount is paid, the trust company's daim will be 
satisfied. After bankruptcy, it would be unjust to the other cred- 
itors to permit the trust Company, by selling thèse bonds, to apparently 
estabUsh a large additional indebtedness, for which there was no con- 
sidération. No precisely similar case is cited by either side upon the 
question, but the principle involved is illustrated in Re Waterloo Or- 
gan Ce, 20 Am. Bankr. Rep. 110, 159 Fed. 426, 86 C. C. A. 406. The 
question is itself novel, but in my opinion the true position of the 
trust Company is that of an unsecured creditor. It is entitled to prove 
for the amount of the note, but is not entitled to sell the bonds, and 
thereby create an additional indebtedness. 

I do nbt perceive any valid distinction between the 6 bonds, the 
equity in which is alleged to hâve been sold to George and John H. 
Matthews, and the remaining 23 bonds. Ail were admittedly orig- 
inally issued and delivered by the bankrupt to the trust company simply 
as collatéral to the bankrupt's note. The fact that the equity in 6 
of them was afterwards formally sold does not, in my opinion, affect 
the rights of the original parties or of the creditors of the bankrupt. 

The motion to modify the injunction is therefore denied. 



LEACH V. SCARFF. 

(Circuit Court, N. D. Illinois, E. D. August 4, 1911.) 

No. 28,540. 

Tbade-Maeks and Tradb-Names (§ 85*) — Infrinsement— Right to Relief. 
Complalnant Is not entitled to enjoln use by a competitor of such 
names as "Oil of Fine," "Virgin 011 of Plne (Pure)," or "Virgin 011 of 
Fine Compound (Pure)," though conaplalnant's use of the names is orig- 
^Inal and fanciful as appUed to hls compound, where he Is in the position 
* of either perpetratlng a f raud on the public by falsely clalmlng the prés- 
ence of oU of plne as an ingrédient, or clalmlng a trade-name in a mère 
proper pharmaceutlcal désignation of the drug he seeks to protect. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent. 
Dig. § 94; Dec. Dig. § 85.*] 

In Equity. Suit by Sue S. Leach, as administratrix of W. A. Leach, 
against Fred W. Scarfï. Judgment for défendant. 

Buell & Abbey and EUis B. Gregg, for complainant. 
Wm. R. Rummler, for défendant. 

KOHLSAAT, Circuit Judge. Complainant's intestate brought this 
suit to restrain unfair compétition and inf ringement of a trade-name. 
Pending the suit, W. A. Leach died, and the cause was duly revived. 
The bill allèges that Leach had in his lifetime, and for about 20 years 
before his death, prepared and sold a certain alleged remedy for vari- 
ous ills, such as coughs, colds, and affections of the mucous surface, 
under the name of "Oil of Fine," which name he claimed was origi- 

•For otlidr ctses see same topio & § numbbe in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



DODD8 V. PALMER MOUNTAIN TUNNEL CO. 447 

nal and fancîfui; that in 1905 he changed the name to "Virgin Oil 
of Pine (Pure)"; that in 1906 he further changed the name to "Virgin 
Oil of Pine Compound (Pure)" ; that he advertised his remedy exten- 
sively under thèse names at great cost; that he did not use his own 
name, but only that of the compound ; that he has acquired an exclu- 
sive right to. use the said names as trade-names, and under the same 
has built up a large business. 

It appears from the record that there is such an article as oil of pine, 
that complainant's article has no appréciable amount of any oil of pine 
in it, and that it is mainly liquified resin. It further appears that com- 
plainant has misrepresented as to his qualifications to prescribe for 
the ills for which he proclaims his compound a spécifie ; that he was 
not a physician, as implied in the use of the term "Dr. Leach" in con- 
nection with his advertising; that his "camp for consumptives in the 
pine woods of Maine" was a pure fiction; and that the remedy was 
advertised ingenuously as reading matter, conveying the idea of some 
new discovery. 

While complainant's use of the name is undoubtedly original and 
fanciful as applied to his compound, it yet describes an actual phar- 
maceutical article of trade, and is therefore descriptive. This being 
so, complainant confronts the dilemma either of perpetrating a fraud 
on the public by claiming the présence of any oil of pine as an ingré- 
dient on the one hand, or, on the other hand, of claiming a trade- 
name in the mère proper pharmaceutical désignation of the drug or 
compound he seeks to protect. In either case, a court of equity is not 
open to him, nor is it to his administratrix, and the suit must be dis- 
missed for want of equity. 

The infringement complained of is plain and palpable, and does not 
commend itself to the court. Under the facts of the case, as now pre- 
sented, however, the court can grant no relief. 



DODDS V. PALMER MOUKTAIN TUNNEL CO. 
(Circuit Court, E. D. Washington, E. D. Marcli 27, 1911.) 

No. 1,533. 

1. EeCEIVEBS (§ 9*) APPOINTMENT— JURISDICTION. 

While a receiver should not be appointed In a fédéral court at the In- 
stance of a simple contract créditer, the absence of a judguient or other 
lien does not defeat the court's jurlsdiction to appoint. 

[Ed. Note. — For other cases, see Keceivers, Cent. Dlg. § 15; Dec. Dlg. 
§ 9.*] 

2. CoTJETS (§ 508*) — INJUNCTION Peoceedings IN State Cotjrt— Comitt. 

Where a state court of compétent Jurlsdiction had acquired jurlsdic- 
tion over certain property long prier to an application to the fédéral 
court for the appointment of a receiver, any attempt by the fédéral court 
to restraln or interfère wlth the enforeement of the state court's judgment 
would be a violation of comity, and a violation of Rev. St. § 720 (U. S. 
Comp. St. 1901, p. 581), providing that injunction shall not be grant ed by 
any fédéral court to stay proeeedings in any state court, except in cases 

•For other cases see same toplc & § numbbh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



448 188 FEDERAL BEPOBTBB 

where such Injunctlon may be authorized by any law relatlng to proceed- 
ings 1d bankruptcy. 

[Ed. Note. — For other cases, see Courts, Cent Dig. §§ 1418-1430; Dea 
Hig. § 508.»] 

Action by Fabian B. Dodds against the Palmer Mountain Tu inel 
Company. On motion to dissolve a restraining order against the sher- 
iff of Okanogan county restraining an exécution sale under mortgage 
foreclosure. Granted. ■ 

A. G. Elston, for plaintiff. 

F. W. Dewart, for receiver. 

S'kuse & Morrill, for défendant 

W. W. Tolman, for Fred Thorp, sheriff pf Okanogan county. 

RUDKIN, District Judge. On the 17th day of February, 1911, a 
receiver was appointed in this action at the suit of a simple contract 
créditer of the défendant, by and with its consent. On the same date 
a temporary restraining order was granted on the pétition of the re- 
ceiver, restraining the sherifï of Okanogan county from selling cer- 
tain property belonging to the défendant at exécution sale under a 
judgment of foreclosure theretofore rendered and entered in the su- 
perior court of Okanogan county. The sheriff has appeared in obédi- 
ence to a show cause order, and now moves the court to dissolve the 
restraining order on two grounds: First, because the order appoint- 
ing the receiver and the restraining order are null and void, by rea- 
son of the fact that the receiver was appointed at the suit of a simple 
contract créditer, and the court was therefore without jurisdiction ; 
and, second, because the restraining order was issued in violation of 
section 720 of the Revised Statutes of the United States (U. S. Comp. 
St. 1901, p. 581), which provides that: 

"The wrlt of Injunctlon shall not be granted by any court of the United 
States to stay proceedings in any court of a state, except in cases where such 
Injunctlon may be authorized by any law relating to proceedings in bank- 
ruptcy." 

[ 1 ] The order appoiating the receiver and the restraining order are 
not void for the first reason assigned, and cannot be collaterally at- 
tacked in this manner. While I am of opinion that a receiver should 
not be appointed in a fédéral court at the instance of a simple con- 
tract créditer (Morrow Shoe Mfg. Co. v. New England Shoe Co., 
60 Fed. 341, 8 C. C. A. 652, 24 L. R. A. 417; Hollins v. Brierfield 
Coal & Iron Co., 150 U. S. 371, 14 Sup. Ct. 127, 37 L. Ed. 1113), nev- 
ertheless the absence of a judgment or other lien does not defeat the 
jurisdiction of the court (Brown v. Lake Superior Iron Co., 134 
U. S. 531, 10 Sup. Ct. 604, 33 L. Ed. 1021; Hollins v. Brierfield 
Coal & Iron Co., supra). 

[2] On the second ground, however, the motion to dissolve must be 
sustained. A state court of compétent jurisdiction acquired jurisdic- 
tion over this property long prior to the appUcation for the appoint- 
ment of a receiver in this court and any attempt on the part of this 

*For otber cases see same toplc & i ndmbeb lu Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



KX PARTE MICHELE Ï49 

court to restrain or interfère with the enforcement of its judgment is 
a palpable violation of the above section of the Revised Statutes, and 
is also in violation of the rule of comity which universally obtains 
between courts of concurrent jurisdiction. 

The matter of the allowance of costs will be déterminée when the 
order is presented for signature. 



Ex parte MICHELE. 
(District Court, E. D. Washington, S. D. Aprll 17, 1911.) 

Aliens (§ 54*)^Depoetation— Warrants. 

A déportation warrant charged that the alien was a member of the ex- 
cluded classes, in that he was a contract laborer and had been Induced 
to migrate by an offer or promise of employment under an agreement to 
perform manual labor In the United States. Held, that the charge was 
sufflciently set forth In the warrant. 

[Ed. Note. — For other cases, see Allens, Cent. Dlg. 5 112; Dec. Dlg. 
J 54.» 

Importation of contract labor, see note to United States v. Parsons, 
66 C. G. A. 133.] 

In the matter of the application of Bughi Michèle for a vk^rit of ha- 
beas corpus. Petitioner remanded. 

Dunphy, Evans & Garrecht, for petitioner. 

Oscar Gain, U. S. Atty., and E. C. Macdonald, Asst. U. S. Atty., 
for inspecter. 

RUDKIN, District Judge. This v^ras a pétition for a writ of habeas 
corpus, upon which the writ was issued by my predecessor in office 
to E. L. Wells, immigrant inspecter of the Department of Commerce 
and L,abor, in whose custody the petitioner was held. The officer to 
whom the writ was directed has made return that he is holding the pe- 
titioner under a warrant of déportation issued by the Secretary of 
Gommerce and Labor, based on a hearing had before the immigrant 
inspecter at Walla Walla, and the déportation warrant and the report 
of the hearing before the inspecter are made a part of the return. The 
déportation warrant charges : 

"That the sald allen Is a member of one of the excluded classes, in that he 
is a contract laborer, and was Induced or solicited to migrate to this country 
by an ofïer or promise of employment or In conséquence of an agreement, 
oral, written. prlnted, express, or Implied, to perform manual labor in the 
United States." 

The report accompanying the warrant sets forth an affidavit of Re- 
galia Piètre, taken before the immigrant inspecter on June 28, 1910, 
an affidavit of the petitioner, taken before the same officer on the 2d 
day of July, 1910, the testimony of the petitioner and his employer, 
Guiseppi Fausti, taken at a hearing had before the commissioner in 
Walla Walla on the 6th day of July, 1910, at which the petitioner 
was présent and was informed of the charge against him, of his right 
to hâve an attorney, and was given a full opportunity to be heard, and 

•For other cases soe same topie & S numbkb in Dec & Am. Dlgs. 1907 to date, & Eep'r Indexe» 
188 E.— 29 



450 188 FEDERAL REPORTER 

a further affidavit of his employer, taken on the same day, but at a 
différent time and place. The petitioner has demurred to the return. 
and its légal sufficiency to justify his détention is the only question 
presented for considération. 

He objects to the sufficiency of the déportation warrant on the 
ground that it does not specify the nature of the charge against him, 
and to the hearing had on the ground that he was not présent and was 
given no opportunity to conf ront or cross-examine the witnesses. The 
charge against the petitioner is sufEciently set forth in the warrant. 
Ex parte George (D. C.) 180 Fed. 785. This case differs widely from 
the case of United States v. Sibray (C. C.) 178 Fed. 150, where the 
alien was charged with having committed a f elony or misdemeanor in- 
volving moral turpitude. 

It appears from the return that the petitioner was given a fuU hear- 
ing, with an opportunity to produce witnesses and to be heard in his 
défense. Ignoring the ex parte affidavits taken at other times and 
places, I am fully convinced from the testimony taken at such hearing 
that the petitioner is within the excluded class called "contract labor- 
ers," and is subject to déportation under the laws of Congress. 

The writ of habeas corpus is therefore discharged, and the petitioner 
is remanded for déportation, pursuant to the warrant of the Secre- 
tary of Commerce and Labor. 



UNITED STATES v. DEMPSBT. 
(District Court, B. D. Arkansas N. D. May 26, 1911.) 

No. 489. 

1. PosT Offici; (§ 31*) — Nonmailable Mattee— Stattites. 

Pen. Code 1 211 (U. S. Comp. St. Supp. 1909, p. 1453), prohiblts the mail- 
ing of every obscène, lewd, or lascivious, and every filthy book, pamphlet. 
plcture, paper, or other publication. Held, that such act was not limited 
to publications and writings relating to sexuallty, but extended to other 
publications and communications wMch were within the définition of 
the term "filthy." 

[Ed. Note. — For other cases, see Post Office, Cent Dlg. §§ 50, 52 ; Dec. 
Dlg. § 31.*] 

2. Post Office (§ 50*) — Nokmailable Matter— Filtht Publication— Ques- 

tion FOR JUBY. 

In a prosecutlon for mailing an alleged nonmailable letter, whether the 
letter was fllthy, wfthln the ordinary acceptance of that term as used in 
Pen. Code, § 211 (U. S. Comp. St. Supp. 1909, p. 1453), held for the jury. 

[Ed. Note. — For other cases, see Post Office, Cent Dlg. §§ 87-89; Dec. 
Dlg. § 50.* 

Nonmailable matter, see note to Timmons v. United States, 30 0. C. A. 
79.] 

Marcus Dempsey was indicted for sending nonmailable matter 
through the mails, and demurs to the indictment. Demurrer overruled. 

W. G. Whipple, U. S'. Atty., and Powell Clayton, Asst. U. S. Atty. 
Lyman F. Reeder, for défendant. 

•For other cases see same topic & § humeee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. DEMPSET 451 

TRIEBER, District Judge. The défendant, havîng been îndicted 
for sending through the mails an obscène letter in violation of section 
211 of the fédéral Pénal Code (U. S. Comp. St. Supp. 1909, p. 1453), 
has demurred to the indictment upon the ground that the contents of 
the letter were not of the character prohibited by that .section of the 
Pénal Code. The letter vvas mailed in this district and addressed to 
a young' lady in the state of Mississippi, and was as follows : 

"Do it a little Club. I kiss and hug ail the girls when they get inltiated. 
Need no light In hall. Président. Professional hand-holder. Nights only." 

Assuming, without deciding, that the contents of the letter were not 
of that character which would make it nonmailable, in view of the 
construction of section 3893, R. S. (U. S. Comp. St. 1901, p. 2658), 
in Swearingen v. United States, 161 U. S. 446, 451, 16 Sup. Ct. 562, 
40 L,. Ed. 765, that would still not be conclusive of this case, as the 
Pénal Code amends that statute very materially, by adding, after the 
words "every obscène, lewd, and lascivious," the words "and every 
filthy" book, pamphlet, picture, or letter. 

[1] In the Swearingen Case the court held that the words "ob- 
scène," "lewd, and lascivious," as used in section 3893, R. S., "sig- 
nify that form of immorality which has relation to sexual impurity, 
and has the same meaning as was given them at common law in pros- 
ecutions for obscène libel." If the intention of Congress had been to 
confine that statute to the offense as defined by the Suprême Court in 
that case, it would not hâve amended it by adding the words "and 
every filthy." This clearly demonstrates that in the opinion of Con- 
gress the use of the mails should be prohibited, not only to such lèt- 
ters, books, and pictures which are lewd and lascivious, but also to 
every filthy communication, book, or picture. 

[2] It is next claimed that the contents of the letter, while objec- 
tionable, are not obscène or filthy, within the meaning of the law. 
The law, as it has been settled by numerous décisions, and especially 
by the Circuit Court of Appeals for the Eighth Circuit, is that, while 
in prosecutions under this statute there is a preliminary question for 
the court to détermine whether the writing could by any reasonable 
judgment be held to corne within the prohibition of the law, when- 
ever the character of the matter mailed is of such a nature that rea- 
sonable minds might reach différent conclusions, it is the duty of the 
court to submit the question to the jury. Knowles v. United States, 
170 Fed. 409, 95 C. C. A. 579. 

While the court will not express any opinion as to whether the lan- 
guage used in the letter is clearly within the prohibition of the act of 
Congress as amended by section 211 of the Pénal Code, it does not 
feel justified tô say that the language is such that reasonable minds 
might not reach différent conclusions as to its character. That being 
the case, it is the duty of the court to submit the question to a jury 
to détermine under proper instructions from the court whether the lan- 
guage is such as to make it within the prohibition of the act of Con- 
gress. 

For thèse reasons the demurrer to the indictment is overruled. 



452 188 FEDERAL RËPOETEB 

In re BLOND. 
(District Court, D. Massachusetts. December 29, 1910.) 
No. 14,546. 

BA.NKEOT'TCY (§ 328*) — ClAIMS— PROOFr-TlME. 

Sînee Bankruptcy Act July 1, 1898, e. 541, § 57n, 30 Stat. 561 (U. S. 
Comp. St. 1901, p. 3444), requiring claims to be proved within a year from 
adjudication, is protilbitory, leaving tbe court no discrétion to extend ttie 
time, a creditor who failed to prove bis claim within such time, though it 
was scheduled, was not entitled, against the bankrupt's objection, to prove 
it afterward and thus reçoive a dlvidend on it out of the amount depos- 
ited by the bankrupt to carry out a composition, though the deposit made 
was of sufficient amount to pay the dividend on the claim objected to, as 
well as on the claims proved. 

[Ed. Note. — For other cases, see Bankruptcy, Cent DIg. § 518; Dec. 
Dig. § 328.*] 

In the matter of bankruptcy proceedings of Morris Blond. On 
pétition to review a referee's order disallowing the claim of the James 
A. Houston Company. Afïîrmed. 

Daniel B. Beard, for bankrupt. 

Jacobs & Jacobs, for James A. Houston Co. 

DODGE, District Judge. Adjudication was ordered in this case 
on February 23, 1909. The petitioner for review appeared as a 
creditor in the schedules filed. Thirty claims having been proved 
and allowed before the référée at varions times within the year fol- 
lowing adjudication, the bankrupt made a composition offer on April 
2, 1910, which was in due course confirmed by the court. After the 
composition offer but before the referee's report on it, three more 
claims, duly presented but suspended, were allowed. The petitioner 
for. review did not présent any claim for allowance until June 6, 1910. 
On November 22, 1910, the référée disallowed it, because not proved 
within the year allowed for proof by section 57n of the bankruptcy act. 
The deposit made for the purpose of the composition was of an 
amount sufficient to cover ail the scheduled claims, including this claim, 
as rule 8 of this court requires. The only opposition to allowance 
comes from the bankrupt, and it is contended on the creditor's be- 
half that the court should permit the claim to be allowed rather than 
let the deposited dividend upon it go back to the bankrupt. I held in 
Re French (D. C.) 181 Fed. 583, that a claim barred by section S7n 
has no standing before the bankruptcy court in composition proceed.- 
ings, and I am now unable to see any reason for doubting the correct- 
ness of the ruling. That section 57n is prohibitory,' and leaves the 
court no discrétion to extend the time, has been often held. A very 
récent décision to that effect is In re Meyer (D. C.) 181 Fed. 904. 
No reason for the failure to prove this claim in time, other than 
forgetfulness on the creditor's part, is suggested. If the bankrupt 
had asked to be excused from depositing a dividend on this claim, on 
the ground that it had become barred, I do not see how his request 

•For other cases see same topic & § number in Dec. & Am. Digs. 19Û7 to date, & Rep'r Indexes 



UKITED STATES V. ONE CAR LOAD OF COKNO H. AND M. FEED 453 

could have been refused. This creditor would hâve had no standing 
to oppose it. The fact that the deposit made covered this daim I am 
unable to regard as avoiding the prohibition of section 57n in its favor, 
or as enlarging the court's discrétion. 

The referee's order is therefore approved and affirmed. 



UNITED STATES v. ONB CAH LOAD OF CORNO HORSE AND MULE 

FBED. 

(District Court, M. D. Alabama, N. D. May 31, 1911.) 

1. Food (§ 2*) — Définition— Food and Drugs Act. 

Tlie term "food," as used in the food and drugs act (Act Cong. June 
30, 1906, c. 3915, 34 Stat. 768 [U. S. Comp. St. Supp. 1909, p. 1187]), in- 
cludes ail articles used as food by man or other animais, whether simple, 
mixed, or compound. 

[Ed. Note. — For other cases, see Food, Dec. Dig. § 2.* 

For other définitions, see Words and Phrases, vol. 3, p. 2856.] 

2. FoOD (§ 14*) — "AdULTEEATED"— COMPOUNDS— HOESE AND MULE FEED. 

The food and drugs act (Act Cong. June 30, 1906, c. 3915, 34 Stat. 768 
[U. S. Comp. St. Supp. 1900, p. 1187]) provides that food shall be deemed 
adulterated if any substance bas been mixed with it to lower or Injuri- 
ously affect its quality or strength, or if it contains any added poisons 
or deleterious ingrédient whieh may render the article injurions to 
health, or if it consista wholly or In part of a filthy, decomposed, or pu- 
trid animal or vegetable substance. Section 8 contains a proviso that 
food vsrhich does not eontain any added or deleterious ingrédients shall 
not be deemed adulterated, and If in the case of mixtures or compounds, 
known as articles of food by their own distinctive name, such name shall 
he aceompanied on the same label or brand with a statement of the place 
where the article has been manufactured or produced, and in the case 
of articles labeled, branded, or tagged so as to plainly indicate that they 
are compounds and the word "compound," "imitation," or "blend," as the 
case may be, Is plainly stated on the package in which It is offered for sale. 
Held, that where a substance sold under the name "Corno Horse and 
Mule Feed" was contained in a package branded: "Corno Horse and Mule 
Feed. Mixture of ground alfalfa, oats, corn, flax bran, oat and hominy 
feeds, made by the Corno Mills (Company, East St. Louis, Illinois" — fol- 
lowed by a guaranteed analysis, such substance, being a compound and 
so descrihed on the package, was not adulterated, because it contained 
a quantity of oat hulls mixed and packed therewith In excess of the 
amount normally présent in oat feed consisting of whole ground oats. 
[Ed. Note. — For other cases, see Food, Dec. Dig. § 14.* 
For other définitions, see Words and Phrases, vol. 1, pp. 210-212.] 

3. Evidence (§ 51») — Judicial Notice— Meaning of Tebms— Sources of In- 

^ F0EMATI0N. 

Where a court Is required to take judicial notice of the meaning of a 
term as a matter of law. it mny resort to any authoritative sources of 
Information to enlighten its judgment 

[Ed. Note. — For other cuBes, see Evidence, Cent. Dig. § 72; Dec. Dig. 
§ 51.*] 

4. Food (§ 15*) — Misbeandng— "Oat Feed." 

Since the term "oat feed" in its ordinary acceptation does not mean the 
whole oat .grain, either crushed or ground, but instead means th^t part 
of the grain which remains after the railler subtracts the portions use- 
ful for human food, consisting of nubbins, middlings, hulls, and oat dust, 

Vor other cases see same topic & § numbee in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



454 188 FEDERAL EEPOETBK 

a compound substance sold in packages under the name "Corno Horse and 
Mule Feed," and descrlbed on the package as a "mixture of ground alfal- 
fa, oats, corn, alfalfa, oat and homlny feeds," with the name of the man- 
ufacturer and place of manufacture, followed by an analysis of its con- 
tents, was not misbranded in violation of the food and drugs act (Act 
Cong. June 30, 1906, c. 3915, 34 Stat. 768 [U. S. Comp. St. Supp. 1900, p. 
1187]), because it contained an excess of oat hulls in compound and not 
the whole ground oats. 

[Ed. Note. — For other cases, see Food, Cent. Dig. § 14; Dec. DIg. § 15.*] 

5. WoRDS AND Phrases— "Langtjage." 

"Language" is the expression of thought by means of spoken or written 
words which are but slgns of ideas. 

[Ed. Note. — For other définitions, see Words and Phrases, vol. 5, p. 
3990.] 

6. FooD (§ 5*) — FooD AND Dbugs Act— Compotjnds. 

Under the food and drugs act (Act Cong. June 30, 1906, c. 3915, 34 Stat. 
7C8 [U. S. Comp. St. Supp. 1909, p. 1187]), relating to the sale of com- 
pounds, compounds knowu as articles of food can be sold under their 
own distinctlve name so long as no deleterious matter is put into the 
product and the label states where It is manufactured and it is not an 
Imitation sold under the distinctlve name of another article. 
[Ed. Note. — For other cases, see Food, Dec. Dig. § 5.* 
What constitutes a violation of pure food régulations, see note to Brina 
V. United States, 105 0. C. A. 539.] 

Information by the United States against One Car Load of Corno 
Horse and Mule Feed. Libel dismissed. 

Thls is an information exhibited against one car load of "Corno Horse and 
Mule Feed," praying a seizure and eondenmation for confiscation, under sec- 
tion 10 of the food and drugs act approved June 30, 1906 (Act June 30, 1906, 
c. 3915, 34 Stat. 771 [U. S. Comp. St. Supp. 1909, p. 1193]). 
The libel as amended is based on the folio wing grounds: 
"First, for that sald food is adulterated in this, that the same purports to 
be, and is so labeled and branded, 'a mixture of ground alfalfa, oats, corn, 
flax bran, oat and homlny feeds,' when in fact and in truth the same is mix- 
éd and packed with a foreign substance, to wit, oat hulls, so as to reduee 
and ln,1uriously afCect its quality and strength. Second, for that said food is 
adulterated In that a large quantity of the substance, to wit, oat hulls, has 
been mixed and packed with the same so as to reduce or lower or injuriously 
affect its quality or strength. Third, for that said original packages are mis- 
branded in violation of section 8 of said food and drugs act, in thls, that they 
purport to contaln a mixture of ground alfalfa, oats, corn, and flax bran, oat 
and homlny feed, which label or brand is false or misleadlng, in that the con- 
tents of said packages contain a foreign substance, to wit, a quantity of oat 
hulls mixed and packed therewith in excess of the amount normally présent 
in oat feed, one of the constituent parts named in the brand on said pack- 
age." 

The usual process havlng issued, a seizure was made, and Hudson and 
Thompson claimed the property and answered the libel, denylng that the Cor- 
no horse and mule feed was adulterated or misbranded, but admitting the In- 
terstate eharacter of the shipment, the description of the brands thereon, etc. 
A jury trial was waived. 
Subsequently, fbe parties agreed on a statement of facts, as foUows: 
"That the car load of Corno horse and mule feed against which this libel 
Is filed was contained in original bags or sacks of about 100 pounds and of 
about 175 pounds each, and that each of said original packages, being said 
sacks or bags, was branded: 'Corno Horse and Mule Feed. Mixture of 
ground alfalfa, oats, corn, flax bran, oat and hominy feeds, made by the Cor- 
no Mills Company, East St. Txiuis, Illinois. Guaranteed analysis: Protein 

•For other cases see same topio & | numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. ONE CAR LOAD OF CORNO H. AND M. FEED 455 

10% ; sugar and starch, 58.5% ; fat, 3.5% ; flber, 12%.' Sald brand being 
contalned on each sack and label conneeted therewith. That the sald Corno 
horse and mule feed is an article of food witbin the meaning of the food 
and drugs act. That on Pebruary 8, 1909, the above-described bags or sacks 
of Corno horse and mule feed were received In the clty of Montgomery, 
in the state of Alabama, by Hudson and Thompson, claimants herein, a 
partnership eomposed of W. M. Hudson and J. A. Thompson, and that 
the car load of Corno horse and mule feed, aforesaid, was shipped to 
said Hudson and Thompson on or about, to wit, February 4, 1909, from 
the City of East St. Louis, in the state of Illinois, by the Corno Mills 
Company of sald city of East St. Louis, and that said car load or a large 
portion thereof of the Corno horse and mule feed, aforesaid, at the time of 
the filing of this libel, was in the original unbroken packages and in the 
possession of said Hudson and Thompson, in the clty of Montgomery, state 
of Alabama, in the Northern division of the Middle district of Alabama, 
and wlthin the jurisdietion of this court. It is further admitted that there 
was présent in the Corno horse and mule feed, aforesaid, seized under the 
libel herein, a quantity of oat hulls In excess of the amount that would 
hâve been naturally and normally présent in Case whole ground oats had 
been used in lieu of the same amount of oat feed — using the term 'oat 
feed' hère according to the construction contended for by the claimants 
herein, namely, as a by-product consisting of the oatmeal or roUed oat 
factory, said by-product consisting of the entire residue of the oats after 
the manufacture of the oats Into food for human consumption, and con- 
sisting of the middlings, nubbins, oat dust, and hulls. By this admission 
is meant that there was used in the Corno horse and mule feed aforesaid 
a quantity of the by-product of the rolled oat mlU consisting of the oat 
hulls, middlings, nubbins, and dust as above described." 

The défense also admitted that "oat feed" contains less of proteln and 
more of hulls than an equal amount of whole ground oats. A great volume 
of the testimony was taken from manufacturers, millers, middlemen, bro- 
kers, and consumers as to the meaning of the term "oat feed," and how 
it was used and understood in commerce and trade and among the people 
generally. 

Warren S. Reese, U. S. Atty. 

Carter, Collins, Jones & Barker and J. Manly Foster, for claimant. 

JONES, District Judge (after stating the facts as above). [1] The 
term "food," as used in the food and drugs act, includes ail articles 
used for food by men or other animais, whether simple, mixed, or 
compound. 

[2] An "article of food" is deemed to be adulterated, "if any sub- 
stance has been mixed or packed with it so as to reduce or lower or 
injuriously affect its quality or strength," or "if any substance has 
been substituted, wholly or in part, for the article," or "if any valu- 
able constituent of the article has been, wholly or in part, abstracted," 
or "if it contains any added poisonous or other added deleterious 
ingrédient which may render such article injurions to health," or "if 
it be mixed, colored, powdered, coated or stained whereby damage 
or inferiority is concealed," or "if it consists, wholly or in part, of a 
filthy, decomposed or putrid animal or vegetable substance," etc. 

An article of food is "misbranded," within the meaning of the stat- 
ute, if it be "an imitation of, or ofifered for sale under the distinctive 
name of another article," or, "if it be labeled or branded so as to de- 
ceive or mislead the purchaser," or "if in package form and the con- 
tents are stated in terms of weight and measure they are not plainly 
and correctly stated on the outside of the package," or "if the pack- 



456 188 FBPERAL EEPOETBB 

âge or label containing it shall bear any statement, desîgn or device 
regarding the substances or ingrédients contained therein, which state- 
ment, design or device shall be false or misleading in any particular." 
Section 8 contains a proviso: 

"That an article ot food which does not contain any added poisonous 
or deleterious ingrédient, shall not be deemed to be adulterated or mis- 
branded in the folio wing cases: First. In the case of mixtures or com- 
pounds which may be now or from time to time hereat'ter known as articles 
of food under their own distinctive name, and not an imitation of or offered 
for sale under the distinctive name of another article, if the name be 
accompanied on the same label or brand with a statement of the place 
where said article has been manufactured or produced. Second. In the 
case of articles labeled, branded or tagged so as to plainly indieate that 
they are compounds, imitations or blends, and the words 'compound,' 'imi- 
tation' or 'blend,' as the case may be, is plainly stated on the package aud 
the package in which It Is ofCered for sale." 

The manufacturer, without violating any of the provisions of the 
statute against adultération, may mix any number of constituents 
in his compound, so long as thèse constituents are not poisonous or 
deleterious to health and he gives the compound a distinctive name 
and States where it is manufactured. The matter thus produced is 
"the article of food" whose quality and strength the statute seeks to 
préserve, and the nature of the product in thèse respects is fixed and 
determined by the éléments which enter into it. How is it possible 
chemically, or in the eye of the law, to "lower or injuriously affect" 
the quality or strength of the particular "article of food," whose char- 
acteristics are thus produced, and safeguarded by the law as thus 
produced, under its own distinctive name, by mixing in the compound 
anything which may be lawfully incorporated therein? Putting in a 
mixture things which may be lawfully blended therein cannot amount 
to adultération of the blend, since, other things aside, the statute 
déclares, its other conditions being complied with, the blend shall not 
thereby "be deemed to be adulterated." 

Corno horse and mule feed is a compound, sold under its own dis- 
tinctive name. One of the constituent éléments which fix and déter- 
mine the quality and strength of that blend is "oat feed." The in- 
corporation of "oat feed" in the blend, unless it be noxious or delete- 
rious to health, cannot adulterate the blend which has its own stand- 
ard, quality, and strength, made up in part of "oat feed." To make 
a case of adultération it must be shown that "oat feed" contains nox- 
ious qualifies, as described in the statute. Otherwise, it is manifest 
that the incorporation of "oat feed" in the blend has not mixed or 
packed any substance with the blend — "Corno horse and mule feed" — ■ 
so as to reduce or lower or injuriously affect its quality or strength," 
or that "any valuable constituent of the article of food has, wholly or 
in part, been substracted from the blend, or that any substance has 
been substituted, wholly or in part," for the "article of food." Corno 
horse and mule feed is not an imitation of, or offered for sale under 
the distinctive name of, another article, but is sold under its own 
distinctive name, and the label or brand contains a statement which 
shows that it is a mixture, and truthfuUy states its constituents and 
the place where the article was manufactured or produced. There 



UNITED STATES V. ONE OAE LOAD OF COKNO H. AND M. FEED 457 

is no charge of removal of any part of the contents of the package 
as originally put up. It is not claimed or proved that the matter of 
which the "oat feed" consists is deleterious in any way to man or 
other animal, or charged that the provisions of the statute against 
adultération hâve been violated in any way, save by putting "oat feed" 
on the label. The libel must fail as to the charges of adultération. 

The label hère does not contain any design or device of any kind, 
and whether there has been a misbranding within the meaning of the 
statute must dépend on the words employed in the label to describe 
the Corno horse and mule feed. Save by the déclaration in the stat- 
ute as to what a label shall not contain, no standards are prescribed 
for brands or labels, or the minuteness or particularity in which they 
must indulge in describing an article of food. The statute should be 
liberally construed to efifect its beneficent purposes; but no rule of 
construction permiis us to so construe its language that the statute 
shall operate as a snare or trap to the honest manufacturer or pro- 
ducer, who brands or labels his products in descriptive words or de- 
vices, which fairly inform the purchaser of the nature and ingrédients 
of the product offered for sale, and are not so framed as to deceive 
or mislead the ordinary purchaser. 

The parties hâve deemed it important to introduce a vast mass of 
testimony as to the meaning of the term "oat feed." As the court is 
sitting both as trier of the law and the facts, it is deemed unneces- 
sary to détermine whether the meaning of the term "oat feed," as hère 
used, is a matter of pure law, or whether it is a question of fact, to 
be ascertained as by a jury from the whole évidence. 

[3] If it be a matter of law of which the court must take judicial 
notice, the court may nevertheless resort to any authoritative sources 
of information to enlighten its judgment, and, on the other hand, if 
it be a question of fact, the judge sitting as a jury may well déter- 
mine the meaning of the words hère as a question of fact, according 
to the weight of the évidence. 

[4] The government daims that "oat feed" means the whole grain 
of the oat, either crushed or ground, and that the ordinary purchaser 
of the blend so understands the term "oat feed" used in the label, 
though it admits the manufacturer gives a différent meaning to it. 
The manufacturer claims, on the contrary, that "oat feed" means the 
by-product of the rolled oat or oatmeal mills; that part of the grain 
which remains after the miller subtracts from it the portions useful 
for human food, consisting of nubbins, middlings, hulls, and oat dust, 
the entire residue of the grain after the oat is prepared by the manu- 
facturer for human consumption; and that the term has long been 
so understood in commerce and trade and by the public at large. 

The whole trend of the évidence is that in nearly ail by-products 
the word "feed," when connected with a grain, is used to dénote the 
by-product from that grain, meaning the residue of the grain after 
it is manufactured into food for human consumption, and that, when 
it is intended to designate the whole grain or the crushed grain en- 
tering into articles of food for man, the thing is spoken of as "food" 
and not "feed." 



458 188 FEDERAL RBPOETEB 

The government admits that the words "hominy feed" mean the 
by-product f rom the hominy mills and are so used, known, and under- 
stood. It admits that other terms are used in the same way to dénote 
other products. The évidence leaves no doubt that the terms "barley 
feed," "rye feed," "wheat feed," buckwheat feed," "mixed feed," and 
other similar terms, are used to designate those by-products, and are 
popularly known and understood as such. It shows that "oat feed" 
is différent from whole ground oats or crushed oats, and that the dif- 
férence is clearly apparent to the naked eye, and that at ail times the 
price of "oat feed" is considerably lower than that of the ground oats. 
It further shows that "oat feed" seldom reaches the consumer as a 
separate commodity, but is most generally oiïered for sale as an in- 
grédient of a mixed feed, or, as it is denominated in many of the state 
laws, "concentrated feed stufî." It also shows that the term "ground 
oats" is universally used to designate that product, and that likewise 
"crushed oats" is used to designate the oats when they are crushed, 
and that "chopped oats" or "oat chops" is used to designate the chopped 
oats, and there is no évidence to show that any of the products hâve 
ever been designated or understood to mean the same thing as "oat 
feed." Many of the states hâve recognized "oat feed" as a by-product 
of the oat, in their food laws, notably New York, Maine, Louisiana, 
lowa, Wisconsin, Virginia, New Hampshire, New Jersey, Texas, 
Florida, Connecticut, Illinios, Michigan, Massachusetts, Maryland, and 
Tennessee. -Bulletins from various state agricultural experiment sta- 
tions were oiïered in évidence, showing that "oat feed" is recognized 
as a by-product in New Jersey, Georgia, Ohio, Tennessee, and Vir- 
ginia. 

Among other évidence introduced by the défense was a letter of 
January 27, 1910, from the board of food and drug inspection, con- 
curred in by ail its members, and addressed to counsel in this case. 
It is given in full because it shows the government was by no means 
certain as to the correctness of its contention as to the meaning of 
"oat feed." It indicates that its inquiries tended to show that "oat 
feed" in fact means the by-product of the oat mill, but that its opin- 
ion was that it should not be known as "oat feed," which the board 
thought should include ground oats only. In this particular, it is 
aside the issue, for the question is what "oat feed" describes in our 
language, and not what it ought to describe. Neither the Secretary 
of Agriculture nor any officiai intrusted with the administration of 
the food and drugs act has any authority to change the meaning of 
words. The letter, omitting address and signature, is as follows : 

"Your letter of January 15, 1910, In référence to the cases reported to 
the Department of Justice agalnst the Oorno Mills Company of East St. 
Louis, 111., for prosecutlon under the food and drugs act, has reoeived care- 
ful considération. Your statement Is noted that you are of the opinion 
that unless the Department of Agriculture has changed its view as to the 
meaning of the term 'oat feed' the proceedlngs agalnst the shipment of 
Corno horse and mule feed seized at Valdosta, Georgia, should not be 
dismissed, in view of the promise of this department of an early judicial 
construction of the meaning of the term and the completion of your ar- 
rangements for the taklng of ail necessary évidence. 



UNITED STATES V. ONE CAR LOAD OF CORNO H. AND M. FEED 459 

"You are advlsed In reply that the records of the board do not show that 
a promise has been made by the board that the meaning of the term 'oat 
feed shall be construed by the courts at an early date. As you are 
aware, such promise, even if made by the board, would be ineffective. The 
duties of the board of food and drug inspection end with the collection 
of évidence and the préparation of reports of violations of the food and 
drugs act. When the évidence is complète and the circumstances of the 
violations appear to the Secretary of Agriculture to warrant such action, 
the cases are reported to the Department of Justice for prosecution, and 
the time when a particular case may corne on for trial rests with the 
Department of Justice. After cases are so reported, whenever additional 
évidence bearing on the questions involved cornes to the knowledge of 
the board, such évidence is also brought to the attention of the Secretary 
of Agriculture for considération whether the same should be transmitted 
to the Department of Justice. 

"When the question was presented to the board whether proceedings 
should be instituted agalnst the shipment seized at Valdosta, Georgia, such 
action was recommended on the statement of the Bureau of Chemistry 
that the term 'oat feed' properly Includes only ground whole oats, and the 
amount of oat hulls found on examination of samples ta be présent in 
the product was considerably In excess of the amount which normally 
would be présent in a product containing ground whole oats. Analysts 
of the Bureau of Chemistry were of the opinion that the term 'oat feed' 
as applied to oat-ofCal or by-products of the oatmeal, is misleading, and 
the Bureau of Chemistry has in its possession affldavits of dealers in 
cattle feed and grain who express the opinion that the product sold in the 
trade as 'oat feed,' which consists largely of oat hulls, should not be known 
as 'oat feed,' and that the term 'oat feed' should include ground oats only. 

"Inasmuch as the foregoing vlews of the Bureau of Chemistry were ear- 
nestly controverted by the Corno Mills Company and other manufacturers 
of cattle feeds and many dealers in cereal products, letters of Inquiry 
were addressed by the solicitor of this department to représentative manu- 
facturers and dealers, and replies were received iridicating that 'oat feed' is 
generally understood among the trade to be the by-product of the oatmeal 
mill and consisting of oat hulls, oat nubbins, oat dust and middlings. It 
further appears from thèse replies that screenings from oat elevators are 
also known and sold as 'oat feed' and that ground whole oats are never 
sold as 'oat feed' but as ground oats. 

"In View of the différence of opinion as to the signlflcance of the term 
'oat feed,' as set forth above, the crop technologist in charge of grain 
standardization in the Bureau of Plant Industry in this Department, who 
has a thorough knowledge of the grain industry in this country, was con- 
sulted. The crop technologist stated, so far as he is informed, the term 
'oat feed' in the grain trade means the by-products of the oat mill, in- 
cluding oat hulls, oat nubbins, oat dust, middlings, and screenings from 
oat elevators ; he further stated that ground whole oats are not designated 
as 'oat feed' because ground whole oats ai'e a superior product and com- 
mand a higher price in the market than oat feed. 

"When, therefore, the United States attorney in charge of tbe proceedings 
against the seizure at Valdosta requested the opinion of the Department 
of Agriculture concerning the disposa! of the case, in vlew of the stipula- 
tion which had been entered Info with the défendants for the taking of 
testimony, he was informed by the solicitor of ail the facts hereinbefore 
related in référence to the meaning of the term 'oat feed' and was advised 
that the Department of Agriculture was satisfied to leave to his discrétion 
the question whether the case should be prosecuted or dismissed. After 
considération of the matter, the United States attorney decided to dismiss 
the case. 

"When the department was advised of this action of the United States 
attorney, it was deemed advisable to inform the United States attorneys 
at Montgomery, Alabama, and Danville, Illinois, to whom cases involving 
the same question had been referred for prosecution, of ail the facts 
wlthin the knowledge of the Department of Agriculture concerning the 



460 188 FEDERAL REPORTER 

meanlng of the term 'oat feed.' They hâve been Informed accordlngly, and 
hâve been requested to advlse the solicitor of this department whether, after 
considération thereof, they are of the opinion that the cases pendlng in 
their respective districts based on shipments of Corno horse and mule 
feed, Bhould be prosecuted or dismlssed. The department is net yet in 
receipt of the opinions of the United States attorneys. Pending tiie 
décision of the United States attorney at Montgomery, Alabama, and the 
United States attorney at Banville, lillinois, whether cases can be main- 
talned under the food and drugs act which are based on the signiflcance 
applied to the term 'oat feed' by the Bureau of Chemistry, the board of food 
and drug inspection has not determined whether cases shall be reported 
for prosecution in the future In which the s'ame issue is presented. When 
the replies of the United States attorneys, are received, however, the board 
wlll consider and détermine what attitude shall be taken in this particular, 
and when a décision has been reached you will be informed accordlngly." 

The testimony introduced on behalf of the défense was from manu- 
facturers, middlemen, wholesalers, retailers, and consumers, and cov- 
ered not only the United States, but two foreign countries as well, 
and showed that in them for a great many years the term "oat feed" 
has been used and understood not only by the manufacturer and ail 
classes of middlemen, but also by the ultimate consumer, to mean the 
by-product of the rolled oat or oatmeal mills, in the same way that 
other by-products hâve been known by similar names. No witnesses, 
except Mr. Brown, testified that he ever heard the term "oat feed" 
applied to whole, ground, or crushed oats. Dr. Vorhees, of the New 
Jersey Experiment Station, and Mr. Fuller, of the Indiana Experi- 
ment Station, showed very clearly from their examinations and ex- 
périence the term "oat feed" in commercial usage and wherever used 
in trade and commerce is known and understood to be the by-product 
of the oat mill. 

The défense also introduced Bulletin No. 108, issued by the De- 
partment of Agriculture, April 2, 1908, regarding the "Commercial 
Feeding Stufïs of the United States." This is a very valuable paper 
prepared by Dr. J. K. Haywood, Chief of the Miscellaneous Labo- 
ratory, and one of the principal witnesses for the government in this 
case, Mr. Warner, the Chief Chemist, and Mr. Howard, Chief of the 
Microchemical Laboratory. The paper is the resuit of chemical ex- 
aminations of the various stock foods, their methods of manufacture 
and analyses of commercial feeding stuffs conducted at a number of 
the State experiment stations. Table 17 of "Oat Feed" deals with 
the contents of seven différent samples of "oat feed." The bulletin 
says, on page 12: 

"The main source of oat feed Is the breakfast food factories. In many 
cases they are composed almost entirely of the oat huUs and light oats left 
as waste from oat meal manufacture." 

It distinguishes between oatmeal and ground whole oats. In Farm- 
ers' Bulletin No. 170, issued by the Department of Agriculture, it is 
shown that "oat feed" is recognized by the department as a by-prod- 
uct of oats. 

The government offered testimony of a considérable number of 
witnesses, consumers and dealers in feeding stuffs, near Washington, 
St. Louis, Knoxville, Kansas City, and Montgomery, Almost with- 



UNITED STATES V. ONE CAR LOAD OF CORNO H, AND M. FEED 461 

out exception, the resuit of the testimony of thèse witnesses when 
analyzed amounted to no more than their expression of opinion as 
to what the term "oat feed" should mean, not disclosing any knowl- 
edge of its actual meaning as understood by customers familiar with 
the product. Dr. Haywood, chemist of the board of food and drug 
inspection, Mr. Lynch, inspector, and Hon. L. F. Brown, of New 
York, gave the strongest testimony for the government as to what 
"oat feed" meant. Upon cross-examination, Dr. Haywood testified 
that without first telling the person that "oat feed" was a part of the 
label describing a compound commodity, or asking whether he was 
acquainted with the commodity, he would ask him what he would ex- 
pect to get if he were buying oat feed. That practically nobody 
whom he interviewed had ever heard of that particular com.modity, 
which counsel for the défense called "oat feed," and, when questioned 
by Dr. Haywood about the term "oat feed," the persons questioned 
would immediately answer, "Yes, ground oats." Dr. Haywood fur- 
ther testified on cross-examination that, at the time of his inquiries, 
a year or two before this proceeding was instituted, he had never 
heard the term "oat feed" used to designate ground oats, and that in 
his opinion the term "oat feed" meant ground oats, and that such was 
the resuit of his investigations. He further testified, on cross-examina- 
tion, that he had never heard of the term "oat feed" being used to 
designate ground whole oats; but that "ground oats" is a term vcell 
understood throughout the length and breadth of the country; that 
ground oats means the oats ground up, without anything added or 
subtracted, the whole grain with nothing taken away or added; that 
he had never heard of anybody offering ground oats, crushed oats, 
or chopped oats or oat chops under the name "oat feed." 

Mr. Brown, the Chief of the New York State Department of 
Agriculture, testified that the meaning of the term "oat feed" with 
the New York State Department of Agriculture was ground oats, 
either crushed, whole, or ground oats, from which nothing had been 
taken away or added, and that the term was so understood throughout 
the State. His practical expérience, however, was limited to Coble- 
skill, a town of about 2,500 inhabitants, some 15 years ago. His testi- 
mony on this point is directly opposite to that of the numerous wit- 
nesses called by the défense as to the understanding of the term "oat 
feed" in New York state, and its weight is destroyed by the fact that 
the laws of the state of New York, relative to feed stuffs, recognize 
the distinction between oats and oat feed, classing the latter among 
the by-products. It is not unlikely that Mr. Brown's expérience at 
Cobleskill was a confusion of the expression "feed of oats" with the 
commodity term "oat feed." 

Mr. Lynch, the inspector, conducted his investigations along the 
same lines as Dr. Haywood. He would show the person of \vhom he 
inquired a copy of the label and ask what meaning it conveyed; and, 
if the answer should be ground oats, crushed oats, or whole oats, he 
would ask the person if he found out, in purchasing feed thus labeled, 
that he had gotten the oat refuse or by-product of an oatmeal mill, 
would he consider that he had been deceived? That he did not first 



462 188 FEDERAL REPORTER 

ascertain from the person, of whom he inquired, wliether he had any 
knowledge of the commodity "oat feed." In most instances the per- 
son, of whom the inquiry was made, had Uttle, if any, knowledge of 
by-products or any feeding stuffs except hay and in some instances 
wheat by-products, and they were the ones who were asked to give 
their opinions as to the meaning of the term "oat feed" in the Corno 
horse and mule feed label. Lynch states that he interviewed about 
200 people in the différent Southern states, and, almost without excep- 
tion, they would expect to get ground or crushed oats, from looking 
at the term "oat feed" on the label. 

The issue, however, is not what such persons with such lack of 
familiarity with the product would understand "oat feed" meant, but 
what idea the term ought to convey to persons of ordinary intelli- 
gence, who are conversant with our language. The power of Con- 
gress to pass the statute is derived solely from its authority to regu- 
late commerce, and it must hâve unif orm opération throughout the 
United States. It deals with articles of food which enter into Inter- 
state commerce. It would be unthinkable that Congress intended that 
a product could be seized in one district and not in another for a mis- 
leading brand, according or not as the generality of persons in those 
districts understood or were deceived by the brand on the particular 
product. 

[5] Language is "the expression of thought by means of spoken 
or written words," and words are but signs of ideas. If a person does 
not know English, he cannot understand the idea or conception or 
sign meant to be conveyed by a word. So as to a commodity term ; 
people unfamiliar with the term or its meaning, seeing on a label the 
Word which stands for a commodity term, would not know what it 
meant, and numbers of them would state, quite honestly, that, seeing 
the Word "oat feed" on the label, they were deceived as to what it 
meant and thought "oat feed" meant to describe the grain of the oat, 
rolled, crushed, or chopped. 

Ail words in the beginning were arbitrary signs. They became part 
of the language only by common usage among the people after they 
had generally been accepted or taken to express or stand for a partic- 
ular thought or idea. When a word obtains such currency or gênerai 
acceptation, the people use it to convey that particular idea to the 
persons to whom it is addressed, and the word continues to hâve that 
meaning and function in the language until common usage among the 
people accords another and différent meaning to it. Language grows 
and changes with the growth and changes in social and économie con- 
ditions, and expressions creep into the language by a graduai process 
of évolution wrought by the necessity for more précise expressions 
and greater convenience in depicting old ideas or new conditions and 
things. .'Words are thus being constantly coined and put in circula- 
tion, and, their meaning being generally understood among the people, 
they become accepted parts of our speech, sometimes for years, beforé 
they are formally acknowledged and incorporated in standard diction- 
aries. A century ago no one would hâve understood what idea was 
meant to be conveyed by the words "chloroform," "téléphone," "tele- 



UNITED STATES 7. OÎÎE CAR LOAD OF CORNO H. AND M. FEED 463 

graph," "aéroplane," "automobile," "X-rays," and the like. Now they 
are common nouns, parts of common speech, and understood by ail 
who speak our language. 

The évidence satisfies the court, if that be the only means by which 
it can ascertain the fact, that when our people speak of the products 
of a particular grain or vegetable, and use the word by which that 
grain or vegetable is commonly called, and add the suffix "feed," they 
mean to convey the idea that the substance described is the by-product 
of that grain or vegetable — the residue after subtracting from the 
grain or vegetable those parts which are useful for human food. The 
évidence shows that this meaning bas so long been understood in the 
dealings between persons who buy and sell feed stufïs, and from the 
désignation given the product, in laws, trade journals, market reports, 
in the newspapers, and in officiai publications in référence to food for 
man or other animais, that the term "oat feed," and other like terms, 
hâve become common nouns in our vernacular, and describe by-prod- 
ucts, and therefore ought not to lead any one, who understands Eng- 
lish and reads the label, to reach the conclusion that the term "oat 
feed" means the whole, ground, or crushed grain ; especially when the 
term "oat feed" is used in juxtaposition with the word "oats" on the 
label, and inevitably implies that the "oat feed" contained in the mix- 
ture is something différent from the "oats" therein. 

The term "oat feed" on the label is not false, but truthfuUy désig- 
nâtes that portion of the constituents of the blend which consists of 
the "oat feed" and is correctly described by those words. The pur- 
chaser buys the product for cattle food and knows it is put upon the 
market for that purpose. On the label hère, after giving ail the élé- 
ments which enter into the blend, follows a plain statement of the 
qualifies and nutritive values of the combined product for cattle food. 
After naming the éléments put in the blend, the purchaser is told of 
the proportions of protein, sugar, starch, fat, and fiber, thus giving 
him additional means of ascertaining and judging of the nutritive 
properties and values of the product for cattle food. Ail who interest 
themselves in food supplies know, for instance, that protein serves 
to build up new tissues, replace broken down cells, and may also serve 
as a source of beat and energy, and so of the properties of sugar and 
starch, fat, and fiber, and their relative nutritive values. It might as 
well be said that the stated analysis of the product in thèse respects 
was misleading, because the manufacturer did not particularly define, 
in the statement in référence thereto, the offices which the différent 
éléments performed in lowering or increasing the nutritive properties 
of a particular product — as to the charge that the use qi the word 
"oat feed" was misleading, because it did not go further and descend 
to minuteness of particulars and description of the thing of which 
"oat feed" consists and state on this label, descriptive of stock food, 
that it consisted of the residue of the grain after the most valuable 
parts of the oat had been subtracted by the manufacturer for human 
food. 

The great object of the statute is to prevent in jury to health and 
déception by putting words or devices on the label which may natu- 



464 188 FEDERAL REPORTER 

rally lead the purcliaser to believe that he is gettîng one thing when 
in reality he is getting another. Certainly the manufacturer meets ail 
thèse requirements when he truthfylly describes the éléments of his 
product by the use of common nouns which fairly describe the things 
which enter into it, according to the English vocabulary and adds, as 
he is not required to do by the fédéral statutes, an analysis of the 
life-giving properties of the différent éléments, thus affording addi- 
tional means of judging of the real value of the blend for cattle food, 
the use for which it is manufactured and put upon the market. 

Of course, if "oat feed" meant the whole grain of the oat, either 
crushed, ground, or roUed, and oat hulls were packed in the blend "in 
excess of the amount normally présent" in whole, ground or crushed 
oats, the label would be misleading; but there is no ground 
for such charge when it is ascertained that "oat feed" does not mean 
the whole grain of the oat in some form, but only the by-product of 
the oat — "oat feed." The admission as to the quantity of oat hulls 
"naturally and normally présent" in "oat feed" relates, only to the 
whole grain of the oats, and not to the "oat feed," which is a mère 
by-product, which the term on the label correctly described. If there 
were a greater quantity of oat hulls in the by-product, sold under this 
label as "oat feed," than in such feed as generally sold, the brand 
"oat feed" might be misleading in that respect; but no such conten- 
tion was made, and, if it had been, the proof would not sustain it. 
The admission of the parties as to the quantity of "oat hulls" "natu- 
rally and normally présent" in "oat feed" is an admission to that ex- 
tent, only in case the whole ground oats had been used in lieu of the 
same amount of "oat feed." 

[6] Under the statute compounds known as articles of food can be 
sold under their own distinctive names, so long as no deleterious mat- 
ter is put in the product, and the label states where the product is 
manufactured, and it is not an imitation sold under the distinctive 
name of another article. The manufacturer hère would hâve fully 
obeyed the statute if he had put nothing on his product but the name 
"Corno Horse and Mule Feed," complying with its requirements in 
other respects. Such a brand would not give purchasers the hun- 
dredth part of the information of the éléments and value of the prod- 
uct which is imparted by the more elaborate brand which was put 
upon the product. It would be a very harsh construction of the stat- 
ute to hold that it required the forfeiture of the product on the ground 
that the label was misleading, because some person, unfamiliar with 
the commodity and the common use of language in designating it, 
might believe he was buying the whole oat when he was getting only 
the by-product, in conséquence of the label, which truthfully described 
the product as "oat feed," not descending into greater minuteness of 
description and telling the particulars wherein "oat feed" differs from 
oats. 
Let the libel be dismissed. 



riSHER HTDRAULIO STONE <b MACHINERT CO. V. WARNER 465 

FISHER HTDRAULIO STONB & MACHINERY CO. v. WARNER, 
(Circuit Court, N. D. New York. .Tune 22, 1911.) 

1. Sales (§ 153*) — Contract to Purohase— Bkeacii— Tender bt Selles. 

Where a contract for the sale of certain patented machinery and fit- 
tings provided tliat défendant should order shipinent before October 1, 
1908, and that plalntiff should thereupon deliver the machinery, and dé- 
fendant should hâve an opportunity for inspection, defendaut's failure 
and refusai to order shipinent wlthin the tinie prescribed constituted a 
breach of contract and entitled plaintifE to sue therefor without shipping 
the machinery to destination and teudering inspection and delivery there. 

[Ed. Note. — For other cases, see Sales, Cent. Dig. § 363; Dec. Dig. § 
153.*] 

2. Sales (§ 384*) — Breach or Contract— Measurb of Damages. 

Plalntiff contracted to sell défendant certain patented machinery with 
a license to operate the same under the patent within a specifled terri- 
tory. Défendant agreed, but falled and refused to order shipment of the 
machinery within the time prescribed. The contract provided that plaln- 
tiff should retaln title to the machinery until paid for, and the machinery 
was such that it had only a limited market value. HeUÎ, that the meas- 
nre of plaintiff's damages was the différence between the cost of manu- 
facturing the machinery and its actual value at the time and place of 
delivery, and, In the absence of proof of either, plalntiff was only en- 
titled to recover nominal damages. 
[Ed. Note.— For other cases, see Sales, Cent. Dig. §§ 1098-1107; Dec. Dig. 
f 384.*] 

At Law. Action by the Fisher Hydraulic Stone & Machinery Com- 
pany against Henry I^. Warner on written contract to recover damages 
for breach of a contract to purchase certain concrète machinery and 
fittings at the price of $5,630, less $500, paid on the exécution of the 
contract. Findings and judgment for plaintifï for nominal damages. 

Costello, Burden, Cooney & Walters, for plaintiff. 
King, Waters & Page, for défendant. 

RAY, District Judge. On the 16th day of March, 1908, the plain- 
tiff, as party of the first part, a corporation organized and doing busi- 
ness under the laws of the state of Maryland, by W. H. Fisher, its 
président, entered into a written contract with 'the défendant, Henry 
P. Warner, party of the second part, of Syracuse. N. Y., whereby it 
was agreed as follows: 

The plaintiff agreed : 

(1) To sell to the défendant the concrète machinery and fittings 
described in Schedule A annexed to such contract for the sum of 
$5,630; same "to be sold f. o. b. cars Mt. Gilead, Ohio." Later we 
find this language : 

"Said machinery and fittings is sold for the sum of $5,630, and upon the 
foUowing terms." 

(2) Said machinery and fittings were to be put up and installed 
under the supervision of the party of the first part or its représentative, 
without charge, except for hôtel bill of superintendent at the city of 
Syracuse, N. Y. 

•For ather easps see same topic & § numbeb in Dec. & Am. Digs. 1907 to date, & Eep'r Inflexe»^ 
188 F.— 30 



466 188 FEDERAL EEPOETEB 

(3) It was mutually agreed by the parties : 

"That the machlnery and appliances hereln mentioned and referred to (in 
the contract) shall be ordered by the party of the second part ou or before 
October first, 1908, and the party of the first part will make shipment of 
said machinéry within thirty days from and after receipt of said order." 

Payment was to be made as follows : 

(1) A payment of $500 on the exécution of the agreement. This 
payment was made. 

(2) Fifty per cent, of the balance on the receipt of a bill of lading 
for the completed outfit of machinéry and fittings mentioned in said 
Schedule A "upon the arrivai of such outfit in the city of Syracuse, 
N. Y.," provided that second party was to hâve the privilège of ex- 
amining the same on arrivai in Syracuse to see if ail the articles had 
been shipped. 

(3) The balance of the purchase price was to be paid in 90 days 
after the receipt of such machinéry, etc., in Syracuse. 

While the défendant paid the $500 on the exécution of the agree- 
ment as provided, he never ordered the machinéry or fittings, or any 
part of same, ignoring ail communication by letter on the subject, and 
the plaintiff did not put the machinéry or fittings. Or any part of same, 
on the cars at Mt. Gilead, Ohio, or at any other place, or ship or 
deliver same to pr at Syracuse, N. Y. 

The plaintifï, under objection, was allowed to show and, I think, 
did show, that it caused to be made and had ready for shipment on 
or before October 1, 1908, the machinéry, etc., in question at Mt. 
Gilead, Ohio, and still has same in store. It appeared that the 
machinéry and fixtures were not made at the time the contract was 
entered into, but were made and completed as early as September of 
that year. This was not an agreement to manufacture the machinéry 
and fittings for the défendant and deliver same to him, but an ex- 
ecutory contract to sell and to deliver on an order being received ; the 
défendant agreeing to order by a certain date, and the plaintifï agree- 
ing to ship or deliver within 30 days thereafter. 

The défendant, in his answer, says: 

"Fifth. Défendant in, further answerlng allèges that the plaintiff in this 
action has never shipped the machinéry, which is the subjeçt-matter of said 
contract, to this défendant, and that said plaintiff has never sent to this 
défendant any Mil of lading for such machinéry, and that such machinéry 
has never arrived in the city of Syracuse, N. Y., and that this défendant 
has never had the opportunity of examining such machinéry and of deter- 
minlng that the whole of the articles contracted for hâve been dellvered in 
Syracuse, N. Y., and that said plaintiff has never installed the said machinéry, 
never set up the same, and that said machinéry has never been in success- 
f ul opération for any time ; and that by reason of ail the f acts last herein- 
before set forth this défendant has never become liable to pay to the said 
plaintiff any sum whatever umder and by virtue of the said contract referred 
to in said cpmplaint or otherwise, except said sum of $500 already paid, and 
that this défendant has never become further liable to pay any part of the 
purchase price of said machinéry under or by virtue of the terms of the said 
contract or otherwise." 

He also says he has fully performed on his part, but that the plain- 
tifï has not performed on its part, in that it has never shipped the 
machinéry, etc., to Syracuse; that it has not come there and the de- 



FISHER HTDHAULIC 8TONE * MACHINERT CO. V. WARNER 467 

fendant has had no opportunity of examining same ; that it has never 
been installed or in successful opération. The coraplaint was silent, 
as was the contract, on the subject of making the machinery. 

[1] I think the agreement clearly, in effect, provides that the 
machinery and fixtures were not to be put on the cars or shipped to 
Syracuse until ordered shipped out by the défendant, which défend- 
ant agreed to do on or before October 1, 1908. He never gave the 
order. In that regard the défendant did not perform. The plaintiff 
kept urging the défendant to perform by ordering the property, and 
défendant made the excuse that his plant was not ready for the 
machinery. There was some talk of an extension, but no extension 
was in fact agreed on. An extension to January 1, 1909, was drawn 
up; but the défendant did not exécute or deUver it. However, if 
there was such an extension, the défendant did not order the property 
shipped and remained in default. 

The agreement provided that title to the property should remain in 
the party of the first part until fully paid for. It also contained the 
f ollowing : 

"The second party agrées to receive such. machinery and equipment; to 
pay ail freight damage and other such expenses ; to erect and equip a plant 
to obtain the best results in working said machinery and equipment." 

It is true, of course, that défendant did not hâve an opportunity 
at Syracuse to examine the property, etc.; but he did not order it 
shipped or sent on. 

I do not think the plaintifï was obligated to put the goods on the 
cars or send them to Syracuse until ordered so to do by the défendant. 
Clearly the défendant was guilty of -a breach of his contract. He 
agreed to purchase the property and pay for it and to order it shipped 
by October Ist. This he failed and, in effect, refused to do. However, 
the plaintiff did not put the machinery, etc., in the cars, and hence 
never delivered them. The title was to remain in the plaintiff until 
the machinery and fittings were paid for, and as a resuit the title 
never passed to the défendant. The law does not demand idle céré- 
monies, and it was unnecessary for the plaintiff to put this property 
on the cars. It had 30 days in which to assemble and ship it after 
the order to ship was given. He was not to put it on the cars until 
ordered so to do. Not having ordered it shipped to Syracuse as he 
agreed to do, I do not see how the défendant can complain that he had 
no opportunity to examine. 

[2] The question is one of damages simply. Can plaintiff recover 
the balance of the purchase price as damages, or is the measure of 
damages the différence between the price agreed to be paid on de- 
livery and acceptance — that is, the contract price — and the market 
value of the articles at the time and place of delivery? There is no 
évidence in this case that thèse articles had any market value at the 
place of delivery or at any place. There is no évidence in this case of 
the actual value or cost of making this machinery. It appears from 
the agreement that thèse articles were made under a patent, and the 
agreement to sell also conferred the right to use such machinery in 
certain territory mentioned. Patented machinery for making concrète 



468 188 FEDERAL REPORTER 

blocks is not a stapk article of commerce like cloth, clothing, food, 
groceries, ordinary implements, and the like. Still it would hâve a 
certain kind of market value undoubtedly, but limited. Connected with 
a limited right to use and operate in a circumscribed territory, it can- 
not be said to hâve the ordinary market value of articles of commerce. 
In Van Brocklen v. Smeallie, 140 N. Y. 70, 75, 35 N. E. 415, 416, 
the court held : 

"In this court the rule of damages for a breach by the bnyer of a contrnct 
for the sale of Personal property is perfectly well settled. Dustan v. Mc- 
Audrew, 44 N. Y. 78; Hayden v. Démets, 53 N. Y. 42G. In eaeh of thèse 
cases It was ruled that the vendor of Personal property has three remédies 
against the vendee in default. The seller may store the property for the 
buyer and sue for the purchase priée; or may sell the property as agent for 
the vendee and recover any deflciency resulting; or may keep the property 
as his own and recover the différence between the contract priée and the 
market priée at the time and place of delivery. In the second of the décisions 
last cited, It was further held that the rule applied, not only to cases where 
the title passed at once, but also to cases where the contract was executory 
but there had been a valid tender and refusai." 

Assuming this to be the correct rule where the agreement is one of 
sale and purchase in prsesenti, one question is whether the clause in 
the contract retaining title to the machinery in the vendor until paid 
for opérâtes as an élection on the part of the vendor to retain the prop- 
erty as its own (in case of a breach by the vendee) and, as damages in 
case of failure to perform, rely on the différence between the contract 
price and the market price at the time and place of delivery or the 
profit that would hâve accrued if the machinery had been accepted. 
Crédit for a part of the purchase price was contemplated and provided 
for. The clause for rétention .of title was in the nature of security 
for the payment of the purchase price. This provision was not in- 
tended to hâve any relation to the measure of damages in case of re- 
fusai to perform by the vendee. 

In National Cash Register Co. v. Schmidt, 48 App. Div. 472, 62 
N. Y. Supp. 952, the court, per Willard Bartiett, J. (now of the Court 
of Appeals), held that, where a person agreed to purchase a cash 
register, the title not to pass until the purchase price was paid in full, 
but countermanded the order and refused to accept the register, that 
the vendor's only remedy was an action to recover damages for the 
vendee's refusai to accept, and that the vendor's measure of damages 
was the différence between the contract price and the market value 
of the register at the time and place of delivery, and that in the ab- 
sence of proof of any such différence the vendor was entitled to only 
nominal damages. But in that case it is quite apparent that the cash 
register had a market value. In the case at bar the machinery was to 
be ordered shipped before shipment and on or before October 1, 
1908; it was to be sold f. o. b. on the cars at Mt. Gilead, Ohio. In 
fact, it was not in existence. It was a spécial order of, I assume, 
spécial machinery. The plaintiff holds it in storage ready for de- 
livery and shipment at the place agreed. 

In Gray v. Booth, 64 App. Div. 231, 237, 71 N. Y. Supp. 1015, 
the authority of the case of National Cash Register Co. v. Schmidt 
is questioned and its holding is not foUowed. 



FISHER HYDRA0LIO STONE A MACHINEET CO. V. WAKNER 469 

In Hayden v. Démets, 53 N, Y. 426, and Dustan v. McAndrew, 44 
N. Y. 78, the question was one of damages recoverable by the vendoi 
on refusai of the vendee to accept according to the contract, and 
vvhile the court laid down the rule that, where the purchaser under a 
contract of sale refuses to accept and pay for the property, the vendor 
has three remédies: (1) To hold the property for the purchaser 
and recover of him the entire purchase price ; (2) to sell it after notice 
to the purchaser, as his agent for the purpose, and recover the dif- 
férence between the contract price and that realized on the sale ; and 
(3) to retain it as his own and recover the différence between the con- 
tract price and the market price at the time and place of delivery — the 
facts stated show that in each case there was a sale in praîsenti, and 
that, while a future delivery was provided for, payment was to be made 
on deliver}», and the possession as well as title was to vest absolutely 
in the vendee. In short, it was a sale and not an agreement to sell 
in the future, title expressly retained in the meantime and until full 
payment of the purchase price. 

In Todd V. Gamble, 148 N. Y. 382, 42 N. E. 982, 52 L. R. A. 225, 
the subject of the contract was silicate of soda to be manufactured 
and delivered from time to time during a year and paid for as de- 
livered. It appeared that the article was perishable in its nature and 
had no real gênerai market value ; there being but a limited demand, 
and it being an article usually manufactured in quantities on orders 
by consumers. The vendee having received a part and refused to 
accept the remainder of the quantity bargained for, it was held the 
vendor could recover as damages the différence between what it would 
cost him to manufacture and deliver the article under the contract and 
the contract price. It was not suggested that the measure of damages 
was the contract price of the article ; but the silicate of soda to fill the 
contract was not in fact made and hence tender could not be made 
and the property held in store for the vendee. 

In the case at bar the machinery, etc., was in fact manufactured or 
caused to be manufactured by the vendor. Where there is a présent 
absolute agreement of purchase by the one and an absolute agreement 
of sale by the other at a fixed price, delivery and payment to be made 
at a future day, it seems reasonable and just that, on tender by the 
vendor at the time and place of delivery and refusai by the vendee to 
accept, the vendor may store the property so sold and purchased for 
the vendee and recover the price agreed to be paid. But where there 
is an agreement to sell in the future and an agreement to purchase in 
the future, the vendor retaining title until the whole purchase price 
is paid, certain crédit for a part of the purchase price forming a part 
of the agreement to purchase, we hâve a différent case. The vendor 
hère has retained the title, and the vendee refuses to order; that is, 
purchase the property as he agreed to do. The vendor has it on his 
hands. In this case it was a spécial order of spécifie machinery which, 
I think it fair to assume, had no gênerai or real market value. The 
vendee has not actually purchased the property ; he has only agreed 
to purchase. He refuses to purchase. He agreed to pay a specified 
sum for the property, and this he refuses to do. 



470 188 FEDERAL REPORTER 

In Todd V. Gamble, supra, the court quoted with approval the 
language of Baron Alderson in Hadley v. Baxendale, 9 Exch. 341, viz. : 

"Where two parties hâve made a contract, which one of them bas broken, 
the damages whlch the other party oTight to receive, In respect of such breach 
of contract, should be such as may fairly and reasouably be considered either 
arising naturally, i. e., according to the usual course of things, from such 
breach of contract itself, or such as may reasonably be supposed to hâve 
been In the contemplation of both parties at the time they made the con- 
tract, as the probable result of the breach of It." 

I think this a reasonable and a sensible rule, but the difficulty is 
how to apply it in this case. As the évidence shows this was a spécial 
order according to certain plans and spécifications, and défendant 
agreed to order it on or before a certain day, and it was clearly con- 
templated, although not written in the contract, that it was to be made 
to fill the order of shipment to be given at a future day, and défendant 
agreed to order and pay a certain price, and plaintiff actually made the 
machinery and has it for the défendant, who has refused to order it 
and in effect refused to take it, may we not say that the damages for 
the defendant's breach contemplated by the parties was the value of 
the property as fixed by their agreement? 

In 2 }oyce on Damages, § 1654, it is said : 

"The measure of damages for refusai of the purchaser to accept and pay 
for goods under a contract of sale is the différence between the contract 
priée and market price or value of the goods at the time and place of de- 
livery; or on the day stipulated for delivery, or at the time of the breach, 
or at the time of the seller's ofCér to deliver them, or at the time and place 
of refusai to accept, or at the time of commencing suit, or the profit which 
would hâve been made had the goods been taken and pald for according to 
contract and not the balance of the purchase money, or the différence be- 
tvveen the contract price and the actual value at the time. And the above 
rules exclude the recovery of the full contract price upon the breach. But 
the measure of damages is not necessarily the différence between the con- 
tract price and the actual value of the property. Again, the rule may be 
stated in another form as foUows: The measure of damages in an action 
for nonacceptance of property sold or contracted for is the amount of the 
actual injury sustained by the plaintiff in conséquence of such nonaccept- 
ance, whlch is ordinarily the différence between the price agreed to be 
paid for it and its value where such price exceeds Its value ; but, where the 
property is utterly worthless in the hands of the plaintiff, the whole priée 
agreed to be paid should be recovered." 

On this last proposition Allen v. Jarvis, 20 Conn. 38, is cited. 

In Tufts V. Bennett, 163 Mass. 398, 40 N. E. 172, it was held that : 

"Wlhere the seller sues the purchaser for the contract price of goods he 
has refused to accept, which goods were to be paid for by installnients. anfl 
the title to which was not to pass until the contract price was fuUy paid. the 
measure of damages is the différence between the market value at the time 
and place of delivery and the contract price, and, no évidence haviiis biisii 
introduced of that différence, the court can award nominal damages only." 

In view of the authorities cited, the authority of which Joyce in 
his work accepts, I am constrained to hold that the damages prop- 
erly recoverable in this case would be the différence between the cost 
of making the machinery and its actual value at the time and place of 
delivery. We hâve no proof of the actual value at that time and place 
or at any time, except as we assume the agreed price to be évidence 



XJNITED STATES V. ONE HUNDRED BARRELS OF VINEGAR 471 

of its value, and we hâve no évidence of the cost of makin.îj, or of the 
material and labor put into it. I confess that I see equities on both 
sides of the question and am not at ail sure of the accuracy of my 
conclusions. I am pointed to no case like this in some of its important 
features; for instance, the limitation on use to a prescribed territory 
and the agreement to order in the future with the statement in the 
contract, in èffect, that the property is "to be sold," not delivered f. 
o. b. on cars at Mt. Gilead, Ohio, and ordered at a future day. To 
give judgment for the entire purchase priée in the absence of an out 
and out sale wrould seem like enforcing in a way the spécifie perform- 
ance of an agreement to purchase personal property in a case where 
the vendor on receiving payment for the property is to do certain 
things. It is true that words importing a présent sale appear in some 
parts of this agreement, but it is to be taken altogether and read as 
one whole. We find the following: 

"Said machinery and fittings Is sold for the sum of," etc. 

Also the words: 

"And upou the payment of ail such purchase money, Includlng ail notes 
and renewals of notes that may be given as a part of the purchase priée, 
the tltle to said machinery and equipment and the rlght to use and operate 
the same In said territory will at once vest in said second party, hls hoirs," 
etc. 

The contract also restricts the right to assign the contract and rights 
under it until payment of the full purchase priée. 

On the whole, I am compelled to hold that, while there has been a 
clear breach of the contract by défendant, the true measure of damages 
is not the price agreed to be paid, and that plaintiff is entitled to re- 
cover under the proofs in the case nominal damages only 

There will be iindings and a judgment accordingly. 



UNITED STATES v. ONE HUNDRED BARRELS OF VINEGAR. 
(District Court, D. Minnesota. Fourth Division. July 14, 1911.) 

1. Food (§ 24*) — Adultération— Misbkanding— Test. 

In a libel for forfeiture of alleged adulterated vinegar, the government 
Is not limited to the standards mentioned in Agricultural Department 
bulletin No. 65 and circular 19, nor to methods of analysis adopted under 
régulation No. 4, but may make use of any accurate test 

[Ed. Note. — For other cases, see Food, Dec. Dlg. § 24.* 

What constltutes a violation of pure food régulations, see note to Brina 
V. United States, 105 C. C. A. 559.] 

2. Food (§ 24*) — Adulteeation— Vinegar— Gltcebin Test— Acctjbact— Evi- 

dence. 

Evidence held to establîsh the accuracy of the glyeerin test for the 
détermination of pure cider vinegar. 

[Ed. Note. — For other cases, see Food, Dec. Dlg. § 24.*] 
•For other cases see same topic & § nxtmbbe In Dec. & Am. Diga. 1907 to date. & Rep'r Indexer 



472 188 FEDBEAL EEPOBTB"a 

8. Food (§ 10*)— Cideb Vinegae— Aditlteeation. . , , «i ♦„ 

Where saniples ot alleged pure cider vinegar showed only irom .11 m 
J.6 glycerln, It was adulterated. 

[Ed. Note.— For otber cases, see Food, Cent. Dig. § 11 ; Dec. Dig. 10. ] 
4. Food (§ 24*)— Fobfeiture— Pbocebdings befoee Secretabt of, Ageicul- 

Investigation provided for by food and drugs act (Act June 30, 1906, e 
S915 §4. 34 Stat. 769 [U. S. Comp. St. Supp. 1909, p. llSOD.-refers to cases. 
In w'hich tbere Is to be a prosecutlon under section 5 for ttie enforcement 
of penalties prescrlbed by section 2, and not to cases where forteiture 
proceedings are coutemplated for condeumatlon, as autlionzed by section 
10, so that It was no objection to forfeiture proceedings tliat no pnor 
proceedings had been instituted before tlie secretary, nnder section 4. 

[Ed. Note.— For other cases, see Food, Dec. Dig. § 24.»] 
B. Food (§ 24*)— Adot-tekation-tFoefeiture— SeiztjRe. ..,,„/, „„ 

It is not ground for dismissal of a libel to forfeit adulterated food nn- 
der food and druss act (Act June 30, 1906, c. 39lo, § 10, 34 Stat. ni IV. 
S. Comp. St. Supp. 1909, p. 1191]), that tlie property was not seized be- 
fore the libel was flled. 

[Ed. Note.— For other cases, see Food, Dec. Dig. § 24.*] 

6. FOOD (§ 24*) ADULTERATION— FORFEITtlRE—SHIPPED FOK SALB. 

Where adulterated vinegar was proceeded against under the food and 
drugs act (Act June 30, 1906, c. 3915. 34 Stat. 768 [U. S. Comp. St. Supp. 
1909, p. 11871), and it appeared that It had been the subject of Interstate 
commerce and was seized while stored In the original unhroken packages, 
It was not material that the évidence showed that it had been shipped in 
Interstate commerce for consumption, and not for sale in such unbroiien 
pacliages. 

[Ed. Note. — For other cases, see Food, Dec. Dlg. § 24.*] 

Libel by the United States against One Hundred Barrels of Vine- 
gar. Judgment of forfeiture. 

C. C. Houpt, U. S. Dist. Atty. 

Thomas E. Lannen and Frank C. Brooks, for claimant. 

WILLARD, District Judge. Bulletin No. 65 of the Department of 
Agriculture, Bureau of Chemistry, entitled "Provisional Methods for 
the Analysis of Foods, adopted by the Association of Officiai Agri- 
cultural Chemists, November 14-16, 1901," contains a statement by 
William Frear relating to the détermination of the source of a vine- 
gar, and gives some tests by which the genuineness of cider vinegar 
can be known. Circular No. 19 of the Department of Agriculture, 
issued on June 26, 1906, establi.shes a standard for vinegar. The évi- 
dence of the claimant in the case as well as that of the government es- 
tablishes the fact that a coinpound one half of which is pure cider 
vinegar, and the other half something else, will answer the tests men- 
tioned in bulletin No. 65 and meet the requirements of circular No. 19. 
Such an adulterated article which would not be pure cider vinegar 
would nevertheless hâve to be pronounced such if thèse tests and stand- 
ards are the only ones to be applied. The tests and standards contain- 
ed in other literature upon the subject published prior to 1906 are sub- 
stantially those stated in the bulletin and in the circular. The testi- 
mony of the ciaimant's experts is based on such tests and standards. 

•For oUter cases see same toplc & S kumbbb la Dec. & Am. Diga. 1907 to date, & Gepr ludezos 



UNITED STATES V. ONE HUNDRED BAEEELS OF VINEGAR 473 

It being proved that thèse are worthless, it follows that the opinions of 
such experts based on such standards to the effect that this article 
is pure cider vinegar are entitled to no great weight. 

[ 1 ] Is there any évidence in the case which shows some other test 
by référence to which the gennineness of this vinegar can be deter- 
mined? The government is not Hmited to the standards mentioned in 
the bulletin and circulât above referred to. In the trial of litigated 
cases the government is not even limited to methods of analysis which 
may be adopted under régulation No. 4. The question in this case be- 
ing whether or not the article is pure cider vinegar, the government 
can make use of any test which is an accurate one for decidirig that 
question. Whether it is an accurate one or not must be decided by the 
court from ail the évidence in the case. The testimony shows that 
practically ail commercial vinegar is now made by the generator pro- 
cess. This process, however, is of récent origin, so récent that there 
is no literature on the subject. Most of the literature relating to cider 
vinegar has référence to other forms of production. 

[2] Does the évidence disclose any accurate test for the détermina- 
tion of pure cider vinegar made by the generator process? It is 
claimed by the government that the testimony of the witnesses Bender 
and Goodnow, supplemented by that of Doolittle, does show such a 
test. Without discussing this évidence in détail it may be said that 
Bender, while in the employ of the government, operated commercial 
cider vinegar factories for several months in New Jersey, Massachu- 
setts, and New York. He was there for the purpose of determining 
the constituents of cider vinegar. He made analyses every day of the 
cider stock before it entered the generator, and of the vinegar which 
came from the generator. Goodnow as an employé of the government 
was at generator factories in Michigan, New York, and New Jersey. 
His purpose was the same as that of Bender, and he made daily analy- 
ses extending over months, as Bender did. The resuit of thèse ex- 
periments was, so far as glycerin is concerned, as follows : The maxi- 
mum quantity of glycerin found by Goodnow in any sample in Mich- 
igan was .46, the minimum .24; in New York .31 and .25. Bender's 
results in New Jersey were maximum .45 and minimum .32. Thèse 
experiments, extended through several months in hundreds of sam- 
ples, show no sample with less than .24 or more than .46 of glycerin. 

Glycerin is not mentioned in any way, either in the bulletin or in 
the circular above referred to. The government, with thèse experi- 
ments as a basis, claims that it has discovered a new test, the accuracy 
of which has been established by the évidence. This contention is 
sustained. That glycerin exists in cider stock is not denied by the 
claimant, though one of its experts claims that it was practically de- 
stroyed in the generator process. That claim is not in any way sub- 
stantiated by the évidence nor by the literature relating to wine vine- 
gar. The évidence in fact shows that but little glycerin is lost by 
passing the cider through the generator and converting it into vine- 
;gar. 

/ The claimant's objections to this test are various. It says that no 
such test had ever been heard of before, and that there is nothing in 



474 188 FEDERAL REPORTER 

the literature upon the subject of cider vinegar which în any way re- 
fers to such a test. If such an objection were to prevail it would pre- 
vent the application of any new test, no matter how thoroughly its 
accuracy might be established. Objections to the knowledge which 
Bender and Goodnow had as to the character of the stock, to the 
manner in which they made their experiments, and the seasons of the 
year when they were made, hâve ail been considered, but they are not 
deemed sufficient to destroy the value of such experiments. 

[3] The évidence having established the glycerin test as an accu- 
rate one for the détermination of the purity of cider vinegar, it is now 
to be applied to the vinegar hère in question. Samples B, C, and D, 
were taken on February 1, 1911. The smallest amount of glycerin 
found in any of Bender's or Goodnow's experiments being .24, thèse 
samples show respectively .13, .11, and .13. Samples E and F, known 
as the composite samples, were taken May 15, 1911. They are a mix- 
ture of equal quantities taken from six barrels. Thèse samples show 
respectively .14 and .16 of glycerin. 

The claimant objected to the method pursued in determining the 
amount of glycerin, and its experts characterized that method as en- 
tirely inaccurate. Such évidence does not substantially weaken that 
of the government chemists who testified to its accuracy. Moreover, 
the fact remains that using the same method in ail thèse experiments, 
they always found a substance which they call glycerin. Applying 
precisely the same method to claimant's product, they found precisely 
the same substance, but in only one-half of the minimum quantity. 

Claimant points out that the analyses of Bender and Goodnow were 
made as the vinegar came from the generator, while the samples in 
this case were analyzed some of them six weeks after the vinegar was 
received in barrels in Saint Paul, some ten weeks afterwards and 
some six months afterwards; but the évidence does not show that 
thèse lapses of time would materially affect the character of the vine- 
gar stored in closed barrels. The daim that the character of that vine- 
gar was materially changed during that time by the formation of 
mother in it is not borne dut by the évidence. No serious objection 
can be made to the manner in which the samples were taken. Even if 
the barrel had contained solid matter at the bottom of it, and if it 
had been shaken so as to mix this solid matter with the whole mass, the 
sample then drawn off would hâve been filtered before analysis, in or- 
der to get rid of that matter. The experts of the government basing 
their opinion upon the application of the glycerin test, and upon other 
facts which appear in the analyses, particularly the high ratio between 
the ash and the nonsugar solids, testify that the claimant's product is 
not pure cider vinegar, but is a compound of about one-half cider vine- 
gar and the other half distilled vinegar or diluted acetic acid, with the 
addition of other substances, the identity of which they could not dé- 
termine. The opinion of the claimant's experts being based, as has 
been said, upon inadéquate standards cannot outweigh the testimony 
of the government. 

It may be worthy of remark that the évidence shows that the claim- 
ant has a cider vinegar factory in Michigan, and a distilled vinegar 



IN RE AEDEN 475 

f actory in Chicago ; ît also may be noted that the claimant presented 
no évidence to show whether it bought this vinegar, or manufactured 
it, and if it manufactured it, out of what substances it was made. 

[4] The motion of the claimant at the close of the évidence to dis- 
miss the libel, because no proceedings were instituted by the Secretary 
of Agriculture prior to the filing of the libel, such as are provided 
for in section 4 of the food and drugs act is denied. The investiga- 
tion provided for in section 4 seems to refer to cases in which there 
is to be a prosecution under section 5 for the enforcement of pen- 
alties referred to in section 2. It has no référence to proceedings for 
condemnation under section 10. 

The amendment to régulation No. 5, issued February 6, 1911, evi- 
dently is based upon this construction of the law, for that provides 
that notice shall be given in every case to the party or parties against 
v^fhom prosecution lies under this act. Moreover, the necessities of 
the proceedings under section 10 could not abide the delay caused by 
an investigation such as is prescribed by section 4. While that in- 
vestigation is being carried on the property might disappear, or the 
packages be broken and become part of the gênerai property of the 
State. 

[5] The motion of the claimant made at the close of the testimony 
to dismiss the libel, because the property was not seized before the 
libel was filed, is denied. United States v. Two Barrels of Desiccated 
Eggs (D. C.) 185 Fed. 302; United States v. George Spraul & Co. 
<C. C. A.) 185 Fed. 405. 

[6] The motion of the claimant made at the close of the testimony 
to dismiss the libel, on the ground that it does not appear that the vine- 
gar seized hère was shipped in Interstate commerce for sale in the 
original unbroken packages, is denied. Hipolite Egg Co. v. United 
States, 220 U. S. 45, 31 Sup. Ct. 364, 55 L. Ed. — . 

The motions made by the claimant at the close of the testimony for 
a gênerai finding in its favor and for spécial findings in its f avor, are 
denied. 

I make a gênerai finding in this case in favor of the government, 
and find that the vinegar seized under this libel, to wit, 70 barrels, 
was both adulterated and misbranded. 

Let judgment of condemnation and for the costs be entered against 
the 70 barrels of vinegar seized in this proceeding, as prayed for in the 
libel. 



In re AB.DEN. 

(District Court, E. D. New York. June 9, 1911.) 

1. Bankextptct (§ 161*) — ^LiENS— Judgment— Recovert— -Time. 

Where a jndgment recovered against a banlîrupt and clalmed to he a 
lien on the bankrupt's remainder interest in certain real estate was enter- 
ed more than four monttis before the filing of the bankruptcy pétition, it 
■was not affected by Bankr. Act Juiy 1, 1898, c. 541, § 67, 30 Stat. 564 (U. 
S. Comp. St. 1901, p. 3449), vacating liens acquired within that period, 

•For otber cases see same topic & S numbhb in Dec. & Am. DIgs. 1907 to date, & Rep'r Indexes 



476 188 FEDERAL EEPORTEB 

though the bankruptcy court bad jurisdietion to control the disposition of 
tlie property subject to tlie lien In the interest on the entire estate. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dlg. §§ 261-263; 
Dec. Dig. § 161.*] 

2. Bankbuptcy (§ 206*) — Assets— Remainder Intekest in Land— Sale. 

Under Bankr. Aet July 1, 1898, c. 541, § 2, 30 Stat. 545 (U. S. Comp. St. 
1901, p. 3421), regulating the jurisdietion of the bankruptcy court, such 
court bas jurisdietion to sell a remainder Interest of tbe bankrupt in cer- 
tain real property, and pay o£f a judgment lien tbereon if tbe proceeds be 
sufliclent for tbat purpose, in order to préserve the equity in the proper- 
ty for the beneflt of gênerai creditors, but tbe, judgment lien and ail 
rights accruing therefrom must be respected. 

[Ed. Note.— For other cases, see Bankruptcy, Dec. Dig. § 206.*] 

3. Bankbuptcy (§ 217*) — ^Peopebtt Subject to Ljens— Sale— Stat— Vaca- 

tion. 

Wbiere a bankrupt owned a remainder Interest In certain real property 
In the hands of trustées subject to a valid judgment lien on the bankrupt's 
interest, and It did not appear tbat tlie trustée could obtain a sufficient 
amount for the- bankrupt's rights In the estate in remainder to justify a 
direction tbat the trustée attempt to sell such rights and pay ofiC the undis- 
puted lien of the judgment ereditor, a stay precluding the créditer from 
proceeding to enforee tbe judgment against such remainder would be 
vacated subject to the rigbt of the trustée to join in any proceeding taken 
by the ereditor, or to protect any equity wbich mlght arise. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 217.*] 

In the matter of bankruptcy proceedings of John L,. Arden. Appli- 
cation of judgment ereditor to vacate a stay of proceedings to sub- 
ject the bankrupt's remainder interest in certain real estate. Motion 
granted. 

Gray & Hiscox (James A. Gray, of counsel), for judgment ereditor, 
Walter E. Cooke, for trustée. 
George N. Hamlin, for bankrupt. 

CHATFIELD, District Judge. The bankrupt îs the grandson of 
one Margaretta H. Ward, who devised by will a considérable estate to 
trustées, with provision that thèse trustées should divide the estate 
into shares at her death, and hold one of thèse shares in trust to the 
use for life of each of her daughters, with power of appointment to 
each daughter over her share. Of thèse daughters it is necessary to 
consider but two, Margaretta M. and Emily B. Ward. Margaretta M. 
Ward died some time since, and in her will exercised the power of ap- 
pointment over the estate held in trust for her use during life, by giv- 
ing, devising, and bequeathing her personal property and any property 
over which she had power of disposition to her executors in trust to 
hold, invest, etc., and to apply the income to the use of Emily B. 
Ward for life ; and : 

"Upon her deatb to divide sald property between my nephews Thomas B. 
Arden and John Lorlllard Arden in equal shares. If at the expiration of 
said trust either of my sald nephews be deceased leaving issue who survive 
my said sister, tbe share intended for my nephew so deceased shall be di- 
vided by the Trustées then In office among such issue in equal shares per 
stirpes. But if either of my nephews die in tbe lifetime of my sister with- 
out leaving issue who survive her, ail said property shall go and belong to 

•For other cases see aame topio & § numeek in Dec. & Am. Digs. 1907 to date. & Rep'r Indexe» 



m RE AEDEN 477 

the other of my said nephews, or If he be deceased, to his Issue In equal 
shares per stlrpes to be divided amoiig them by said Trustées." 

John L. Arden and Thomas B. Arden were the sons of another 
daughter of Margaretta H. Ward, and both of thèse men were living 
at the time of their grandmother's death, as well as at the time of the 
death of their aunt, Margaretta M. Ward. Their aunt, Emily B. 
Ward, who is the life benefîciary of the particular property in ques- 
tion hère, is still Hving, but is stated to be incompétent. The shares of 
the différent individuals, in other portions of the estate and in the Per- 
sonal property, are so involved that they need not be considered on this 
motion, inasmuch as they do not at ail affect the particular question 
which is raised by a judgment entered and docketed on the 27th day of 
April, 1910, for $3,638.90 in favor of one Jacob Fishel against John 
L. Arden. This judgment resulted in an attempt to examine John 
h- Arden in supplementary proceedings, and upon the 6th day of De- 
cember, 1910, he filed a voluntary pétition in bankruptcy scheduling 
this judgment among his debts, but making no mention in the sched- 
ules of any interest in the estate devised under the will of his grand- 
mother, nor under the will of his aunt Margaretta M. Ward, by 
whom he was given, as we hâve previously seen, a remainder interest, 
subject to the life use of the aunt Emily B. Ward. 

[1] This remainder was an interest in real estate, and the creditor 
claims that the lien of his judgment attached thereto. This judgment 
was entered more than four months before the fîling of the pétition in 
bankruptcy, and is not aflfected by the provisions of section 67 of the 
bankruptcy law vacating liens acquired within that period. The juris- 
diction of the bankruptcy statute, however, controls the gênerai dispo- 
sition of the estate of the bankrupt now vested in a trustée, and this 
court has assumed jurisdiction over ail the parties and temporarily re- 
strained the judgment creditor from proceeding except in bankruptcy, 
until it can be determined whether or not the trustée has title to prop- 
erty (including this remainder) which can be sold for the benefit of 
the estate generally so as to be more than sufficient to pay off the lien 
of the particular creditor who has secured that lien. The property in 
question is in the hands of the trustées under the will of Margaretta 
M. Ward, and the remainder interest, of whatever nature it may be, 
cannot be reduced to possession. No action has been instituted in the 
State courts in which jurisdiction over the rights and persons of the 
various parties and over the property itself has been acquired, such as 
existed in Metcalf v. Barker, 187 U. S. 165, 23 Sup. Ct. 67. 47 L. Ed. 
122, and yet under the state laws the creditor has rights which cannot 
be taken away. 

[2] This court may, under section 2 of the bankruptcy statute, sell 
an interest such as a remainder in real property, and pay off a judg- 
ment or mortgage lien on said interest, if the proceeds ht suiïîcient for 
that purpose, in order to préserve the equity in the property for the 
benefit of gênerai creditors, but the lien and ail rights accruing there- 
from must be respected by the bankruptcy court. In the présent in- 
stance it is asserted that the interest of the bankrupt, if aliénable and 
capable of présent sale, should bring much more than the amount of 



478 188 FEDERAL REPORTER 

this judgment, or even than his scheduled debts, and neîther the judg- 
ment créditer nor the estate would be benefited by proceeding with a 
sale under exécution if the property be salable in bankruptcy so as to 
create a surplus and if the judgment creditor's lien be admitted as valid 
against that property. Under thèse circumstances the judgment créd- 
iter bas applied to this court to vacate the order temporarily restrain- 
ing him from proceeding to collect his judgment, other than in a 
bankruptcy proceeding, until further order of this court, and in the 
meantime the trustée in bankruptcy has applied for a direction to the 
bankrupt to convey to him whatever interest the bankrupt may hâve 
under the devise in question, with the purpose of attempting to sell 
that interest for the benefit of the creditors, and to pay off the judg- 
ment upen which exécution has been levied. 

[3] A construction of this particular will cannot be conclusively 
had on this motion. Whether the remainder interest be vested or con- 
tingent and assuming that the creditors through the trustée bave title 
such that they will ultimately obtain the remainder interest if the bank- 
rupt survives and that the property can be sold fer the benefit of those 
creditors whose claims shall hâve been proven or who were in the 
possession of liens which were superior to the effects of a discharge in 
bankruptcy, nevertheless we bave the problem of dealing with a claim 
against real property in the hands of trustées who are not parties to 
the présent motion and who, in so far as their position is shown, claim 
a title adverse to that of the bankrupt estate. The trustée in bank- 
ruptcy can certainly not now reduce this Hfe interest to possession. 
An action to construe the will might give a judicial détermination of 
the exact meaning of the devise. The trustée might attempt to sell 
his alleged claim to the remainder rights of the bankrupt in the estate, 
subject to the judgment lien above referred to and subject to the 
chance of survivorship if the creditors require^ him to do so. But inas- 
much as there has been an adjudication and as the aliénable rights of 
the bankrupt, if any, bave passed to the trustée by dévolution ef law, 
ne conveyance from the bankrupt is needed. The question is rather 
to détermine what the trustée can do with the rights which be has, if 
any. On the other hand, there is nothing in the motion papers to indi- 
cate that the trustée can obtain a sufficient amount for the bankrupt's 
rights in the estate in remainder to justify a direction that the trustée 
attempt to sell thèse rights and pay ofï the undisputed lien of the 
judgment créditer. The judgment créditer is anxious to proceed to 
enforce his lien, admitting that his claim against the bankrupt estate 
or the bankrupt will be terminated by a discharge, and that if he does 
not appear in the bankruptcy proceedings, he can never obtain more 
than what is secured by the lien which he now contends exists. 

The trustée in bankruptcy may apply for leave to join in any such 
action, if it seems advisable. He should submit to creditors, if neces- 
sary, the question of assisting the judgment créditer to enforce his lien 
and to follow up any equity or surplus which may resuit if the lien be 
paid, or the creditors may pay off the lien and defer the sale. There 
is no reason why this court should restrain the judgment créditer from 
attempting to collect his judgment, if he wishes so te do. If the re- 



IN EE TATLOB 479 

mainder interest is not such that in the state courts the judgment créd- 
iter can enforce his lien thereupon, then surely the bankruptcy court 
should not enjoin the judgment creditor from making the attempt, at 
his own péril, nor from foregoing whatever rights he-may hâve in 
bankruptcy for the opportunity to pursue what, in his opinion, is a 
more profitable right. If the judgment creditor can enforce his hen, 
then the trustée in bankruptcy can protect the creditors' interest in the 
equity or can arrange with the creditors to pay off the lien of the judg- 
ment and dispose of the property for the estate. But under no theory 
can the bankruptcy court protect (for the bankrupt, and against his 
creditors and estate) property which the bankrupt has not surrendered 
and does not admit is a part of his estate, which property, if a part 
of the estate, should be available for creditors, but which must be 
disposed of by lïtigation, which cannot be as advantageously conducted 
by the estate as by the judgment creditor himself. 

The motion to vacate the stay will be granted on such conditions 
as will allow the trustée an opportunity to join in the proceedings 
taken by the judgment creditor or to protect any equity which may be 
created. 



In re TAYLOR. 



(District Court, N. D. Alabama, E. D. May 8, 1911. On Application for 
Eehearing, May 18, 1911.) 

No. 196. 

1. Bankruptcy (§ 415*) — Courts ot' Bankbuptct— Application fcb Dis- 

charge— Référée— Jubisdiction. 

Under Banljr. Act July 1, 1898, c. 541, § 14, 30 Stat. 550 (U. S. Comp. 
St. 1901, p. 3427) providing that an application for a bankrupt's dis- 
charge shall be filed in the court of bankruptcy in which the proceedings 
are pending, and section 1, suhd. 7, defining courts of bankruptcy as the 
courts in which the proceedings are pending and may Include the réf- 
érée, a référée has no jurisdiction to liear applications for discharge 
except on référence to him as spécial master as provided by section 38, 
subd. 4, and gênerai order 12, subd. 3 (89 Fed. vil, 32 C. C. A. xvi). 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dlg. §§ 698-728; 
Dec. Dig. § 415.*] 

2. Bankkuptcy (§ 415*) — ^Application foe Dischabgb— Nature of Proceed- 

ings. 

An application for a bankrupt's diseharge is in the nature of a sepa- 
rate proceeding from the original cause, so that the référence of the orig- 
inal cause confers no jurisdiction on the référée over the application for 
diseharge. 

[Ed. Note. — For other cases, see Bankruptcy, Cent Dig. §§ 698-728; 
Dec. Dig. § 415.*] 

3. Bankruptcy (§ 411*) — Application for Disciiarge— Filing. 

Under Bankr. Act July 1, 1898, c. 541, § 14, 30 Stat. 550 (U. S. Comp. 
St. 1901, p. 3427) providing that an application for a bankrupt's dis- 
ciiarge shall be filed in a court of bankruptcy, such application must be 
flled with the clerk of court and not with the référée. 

[Ed. Note. — For other cases, see Banlsruptcy, Cent. Dig. §§ 692--708; 
Dec. Dig. § 411.*] 

•For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



480 188 FEDERAL REPOETEB 

On Application for Rehearing. 

4. Bankbtjptct (§ 411*) — ^AprucATioN for Dischargej— Filing— Time. 

Wbere an application for a bankrupt's discharge, though erroneously 
flled with the référée Instead of the elerk, was, witli the other proceed- 
Ings thereori before the référée, flled with the clerk wlthin a year after 
adjudication, and no objection had been taken by the objecting creditor 
to the improper original flling with the référée, the pétition would be re- 
garded as properly flled. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dig. §§ 692-708; 
Dec. Dig. § 411.*] 

5. BANKEtrpTCT (§ 411*) — Application pob Dischaegb — Vérification — 

"Plkading." 

Au application for a bankrupt's discliarge should be consldered a plead- 
ing within Bankr. Act July 1, 1898, c. 541, § 18c, 30 Stat. 551 (U. S. 
Comp. St. 1901, p. 3429), providing that ail pleadings setting up matters 
of fact shall be verifled under oath. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dig. §§ 692-708 ; 
Dec. Dig. § 411.* 

For other deiînitions, see Words and Phrases, vol. 6, pp. 5409-5411; 
vol. 8, p. 7756.] 

6. Bankruptcy (§ 411*) — Application for Discharge— Vérification. 

Where no objection to want of vérification of a pétition for a bank- 
rupt's discharge was made until after the évidence on the application 
was heard before the référée, it was too late. 

[Ed. Note. — For other cases, see Bankruptcy, Cent Dig. §§ 692-708; 
Dec. Dig. § 411.*] 

7. Bankruptcy (§ 407*) — Dischargeî— Objections— Pueposb or Proceedi>'gs. 

That a bankruptcy pétition was flled to defeat the clalms of a judg- 
ment of an objecting creditor against the bankrupt was no ground for 
denying a discharge. 

[Ed. Note.— For other cases, see Bankruptcy, Cent Dig. §§ 729-761; 
Dec. Dig § 407.*] 

8. Bankruptcy (§ 414*) — Discharge— Objections— Ooncealed Assets— Evi- 

dence. 

Evidence Jield insuflicient to warrant a déniai of a bankrupt's dis- 
charge on the ground that he had concealed an interest In property, and 
on his examination bad falsely testified that he had no property. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dig. §§ 720-722; 
Dec. Dig. § 414.*] 

9. Bankbuptct (§ 414*) — Discharge— Concealment of Assets— Falsb Oath. 

Objection to a hankrupt's discharge because of fraudulent concealmeiit 
of assets or false oath must be established by clear and convincing proof, 
and Is not the subjeet of mère suspicion of inference. 

[Ed. Note.— For other cases, see Bankruptcy, Cent Dig. §§ 720-722; 
Dec. Dig. § 414.*] 

In Bankruptcy. In the matter of bankruptcy proceedings of H. 
M. Taylor. On application for discharge. Granted on rehearing. 

Knox, Acker, Dixon & Sims, for objecting creditor. 
Whitson & Harrison, for bankrupt 

GRUBB, District Judge. This matter cornes on for hearing upon 
the application of the bankrupt for his discharge. The bankrupt was 
adjudicated on November 10, 1906. The case was closed by the réf- 
érée June .7, 1907. On December 28, 1906, an application was filed by 
the bankrupt with the référée, to whom the case was reierred, for 

•For other cases see same topio & § numeee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



IN KK TATLOB 481 

his discharge. On this application notice was given and proceedings 
were had before the référée pursuant to District Court Rule No. 7. 
The application for discharge was never filed with the clerk, nor was 
it called to the attention of the judge until early in the year 1911. 
The question presented on the threshold is as to whether the appli- 
cation was made within the 12 months during which, alone, the court 
has jurisdiction to entertain and act upon the application. 

[.1 ] Section 14 of the Act of 1898 provides that the application for 
a discharge shall be filed "in the court of bankruptcy in which the 
proceedings are pending." Courts of bankruptcy are defined by the 
act (section 1, subd. 7) as the courts in which the proceedings are 
pending and "may include the référée." "Clerk" is defîned as "the 
clerk of a court of bankruptcy." Section 1, subd. 5. The référée 
has no jurisdiction to hear applications for discharge except upon 
référence to him, as spécial master, Section 38, 'Subd. 4, and General 
Order 12, subd. 3 (89 Fed. vii, 32 C. C. A. xvi). 

[2] Applications for discharge are in the nature of a separate pro- 
ceeding from the original cause which is closed upon the final dis- 
tribution of the assets of the estate. Over them the référence to 
the référée of the original cause confers no jurisdiction, since the 
act itself excepts from the jurisdiction of the référée the matter of 
hearing and granting discharges. The cases in which the court "may 
include the référée" are not inclusive of the matter of discharges. 

[3] The act requiring the application to be filed in the court, and 
the court so far as discharges are concerned bein^ exclusive of the 
référée, a filing with the référée is not a filing with the court, and 
does not confer on it jurisdiction. The application should be fîled 
with the clerk in order to be filed with the court. Appearance of the 
objecting creditor before the référée, in référence to an application 
with him filed, might be a waiver of the improper filing, but consent 
cannot confer jurisdiction, after the expiration of the 12 months, 
without ■ action on the part of the court, for after that period the 
court loses jurisdiction of the subject-matter of the discharge. Col- 
lier on Bankruptcy, p. 260 (8th Ed.), says: 

"Ail pétitions (for discharge) should be filed with the clerk. and not with 
the ludKe or référée" — citing In re Sykes (D. C.) 6 Am. Baukr! Rep. 264, 106 
Fed. 669. 

In the case of In re Pincus (D. C.) 17 Am. Bankr. Rep. 331, 147 
Fed. 621, the court said: 

"Thèse bankrupts filed with the référée In charge, and a bout flve months 
after ad.indication, the pétition under review. No action by the court was 
taken thereon, until more than a year after adjudication, and the objecting 
creditors now contend that the filing with the référée was insufficient to con- 
fer jurisdiction and the pétition should be dismissed as not having iieen pre- 
ferred within the statutory year. It is true that the référée as 'référée' has 
no power to consider the pétition. But within this district and by force of 
District Court Rule ii in bankruptcy the office of the référée Is the office of 
the court." 

In this district no such rule is in force. The clerk's office is the 
office .of the bankrupt court in this district. Rule 3 of this district 
limits the jurisdiction of the référée over referred cases, as does the 
188 F.— SI 



482 188 FEDERAL REPORTER 

act, excepting from it "granting discharges, as to which the jurisdic- 
tion of the judge is exclusive." Rule 7 pro vides that upon the fil- 
ing of a pétition for discharge the référée shall perform certain pre- 
liminary acts looking to the préparation of the application for hear- 
ing before the judge, and opérâtes to dispense with a spécial référ- 
ence in each case so far as authority to perform suqh preliminaries is 
conferred on the référée by the rule. It does not authorize the fil- 
ing of the pétition for discharge with the référée, but makes his ju- 
risdiction to do the acts specified conditional upon a proper filing, viz., 
a filing in the bankruptcy court, i. e., with the clerk. The applica- 
tion, not having been filed with the clerk or called to the attention of 
the judge, until more than four years from the date of adjudication, 
came too late. 

The application should be denied for the additional reason that it 
is a pleading, required by General Order xxxi to "state concisely in 
accordance with the provisions of the act and the orders of the court 
the proceedings in the case and the acts of the bankrupt," and there- 
fore is a pleading setting up matters of fact, which section 18, subd. 
"c" requires to be verifîed. The case of In re Brown, 7 Am. Bankr. 
Rep. 252, 112 Fed. 49, 50 C. C. A. 118, decided by the Circuit Court 
of Appeàls for this circuit, is in point. It is important that the bank- 
rupt should be required to state under oath that he has surrendered 
ail his property to his trustée and has complied with fully the act 
(Form 57 [89 Fed. Ivii, 32 C. C. A. Ixxxi]) as a condition to obtain- 
ing his discharge, especially as his discharge follows as a matter of 
course and withotft the offer of proof of thèse facts by him, unless 
objecting creditors enter appearances and file spécifications of objec- 
tions. 

The application for discharge is for thèse reasons denied at the 
cost of the bankrupt. 

On Application for Rehearing. 

[4] Upon application for rehearing, the court's attention has been 
called to the fact that the application for discharge, together with ail 
proceedings thereon before the référée, was filed with the clerk of 
the court on June 11, 1907, and within a year of the adjudication. 
No objection to the original filing with the référée was interposed by 
the objecting creditor. On the contrary, he joined in the proceedings 
before the référée and first made the point on this hearing. As the 
filing with the clerk within the 12 months was in time to préserve the 
court's jurisdiction of the application, the acquiescence of the object- 
ing creditor in the proceedings under the pétition filed with the référée 
was a waiver of any irregularity in the filing. 

[5] The only requirement of vérification is section 18c, which re- 
quires that "ail pleadings setting up matters of fact shall be verified 
under oath." If the application for discharge is a pleading setting up 
matters of fact it should be verified, otherwise not. It seems to be 
settled by 'authority that spécifications of objection to discharge are 
pleadings setting up matters of fact and are required to be verified. 
In re Brown, 112 Fed. 49, 50 C. C. A. 118; in re Glass (D. C.) 119 Fed. 
509; Collier (8th Ed.) p. 622. It is said that the application is not 



IN EE TATLOR 483 

a pleading- but a mère motion because the bankrupt is called upon to 
answer the objecting creditor's spécifications of objection, and this is 
his first pleading of fact. The law is in a state of uncertainty in this 
respect. Collier intimâtes that a vérification is necessary; Loveland 
that none is required ; and Remington that it is a matter of doubt. 
Collier (8th Ed.) p. 260; Loveland (3d Ed.) § 273, p. 788; Reming- 
ton, § 2430, p. 1468. The case of In re Glass, supra, contains an obiter 
that the application should be verified. The absence of a form of véri- 
fication in the officiai form is without significance, as is stated by Rem- 
ington, since the officiai form for spécifications of objection bas no 
form for vérification, and yet it seems well settled that it is a plead- 
ing of fact which must be verified. Inasmuch as the officiai form of 
application for discharge contains the averment that the bankrupt has 
duly surrendered ail his property and rights of property, and has fully 
complied with ail the requirements of the act and the orders of the 
court touching his bankruptcy, and inasmuch as this averment, with- 
out further proof, in the absence of objections filed, entitles the bank- 
rupt to his discharge, it seems to me it should be considered a plead- 
ing pi fact requiring vérification. 

[6] Objection to want of vérification was not made until after the 
évidence on the application was heard before the référée, and comes 
too late for that reason. Eailure to make a timely objection on that 
ground amounts to a waiver. In re Samuel Baerncopf (D. C.) 9 Am. 
Bankr. Rep. 133, 117 Fed. 975; In re Robinson (D. C.) 10 Am. Bankr. 
Rep. 477, 123 Fed. 844; Godshalk Co. v. Sterling, 12 Am. Bankr. 
Rep. 302, 129 Fed. 580, 64 C. C. A. 184. 

In view of the fact that the application for discharge was filed in 
the office of the clerk before the expiration of 12 months from the 
date of the adjudication, the question as to whether it may be prop- 
erly filed with the référée is not material. The safer practice would 
be to file it with the clerk, whose duty it would be to transmit it to the 
référée for him to proceed under District Court Rule No. 7. Both 
parties having impliedly consented to the course pursued in this case, 
by appearing before the référée and hearing the matter without objec- 
tion either to the filing or the want of vérification, the filing with the 
clerk thereafter and within the year, together with the acquiescence 
of the objecting créditer in proceeding under such an application, 
cures whatever infirmities may exist in it. 

[7] Coming to the considération of the application upon the merits, 
it seems clear that the pétition in bankruptcy was filed to defeat the 
collection of the judgment of the objecting creditor against the bank- 
rupt, which, in view of the réduction to judgment must be held to be 
a just claim against him. Conceding this to be true, it affords no 
ground for denying to the bankrupt his disch^rge. 

[8] The other grounds of objection are that the bankrupt concealed 
an interest in property, and on his examination falsely testified that 
he had no property. The interest alluded to was an interest in certain 
mules and horses, purchased by the bankrupt in Atlanta, and his in- 
terest in or claim against the firm of Lane & Taylor, based on serv- 
ices rendered by him. The évidence, without conflict, shows that 



*84 , 188 FEDERAL REPORTER 

Taylor's mother, early in January of the year 1906, sold property for 
vvhich she received $7,500 in money, and immediately thereafter gave 
the bankrupt power of attorney to manage her business, and that the 
bankrupt had no means of his own. In February, the évidence tends 
to sliow that a partnership betv^^een Lane and Taylor's mother was 
formed upon terms not satisfactorily shoMrn by the évidence but 
which, in a gênerai way, provided that the partners were each to con- 
tribute money and services and to share the profits proportionately. 
The bankrupt was to represent his mother in the firm, under power 
of attorney, and his services were to stand in lieu of hers. His serv- 
ices were to be paid for by his mother to him and not by the firm to 
him. The understanding between his mother and himself as to how, 
when, and in what amount he was to be compensated for such serv- 
ices was so vague as to justify the conclusion that the purpose of 
the arrangement was to put the bankrupt's earnings beyond reach 
of his creditors. The évidence, in the record, does not, however, 
satisfactorily show either (1) that the bankrupt ever put any money 
in the business and owned any interest in it or its assets, or (2) that 
the firm or Mrs. Taylor herself owed the bankrupt at the time of the 
filing of the pétition any wages. To establish the charge of conceal- 
ing assets or of false déniais of owning assets, the objecting créditer 
was bound to offer évidence of at least one of thèse propositions. The 
conduct and déclarations of the bankrupt while handling the firm's 
business were not so inconsistent with his alleged représentative capac- 
ity as to supply the place of such évidence, nor are the facts attendant 
upon the purchase of the mules and horses in Atlanta by the bank- 
rupt so inconsistent with the contention that they were purchased by 
him for the partnership as to justify a déniai of the discharge on that 
ground. 

[9] The déniai of the discharge because of fraudulent concealment 
of assets or of a false oath by the bankrupt must be made out by clear 
and convincing proof, and is not the subject of mère suspicion or 
inference. 

The order denying the discharge is revoked, and an order granting 
it will be entered. 



UNITED STATES v. PTJILADBI-PHIA & R. RY. CO, 

(District Court, B. D. Pennsylvania. May 24, 1911.) 

No. 17. 

COMMEBCE (§ 33*) — Interstate Commerce— Continuous Shipment— Violation 
OF Elkins Act. 

The Elkins act (Act Eeb. 19, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. 
Supp. 1909_, p. 1138]), eoncerning Interstate commerce, does not apply to 
a cargo shipped from Hamburg, Germany, destined, as stated in tlie bill 
of lading, to Pblladelphia, for transportation in bond to Alberta, Canada, 
and taken to its destination by continuons and uninterrupted transpor- 
tation at the hands of successive carriers; there being no dellvery or 

•For other cases see same toplc & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



UNITED STATES Y. PHILADELl'IIIA & R. HY. CO. 485 

Change of tltle, but the différent carriers merely assisting lu a contin- 
uous transportatlon from one foreign country to another. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 33.*] 

The Philadelphia & Reading Railway. Company was indicted for vio- 
lation o£ the Elkins act. Stipulation concerning facts submitted to 
the court, and verdict directed for défendant. 

John C. Swartley, Asst. U. S. Dist. Atty., and J. Whitaker Thomp- 
son, U. S. Dist. Atty. 

James F. Campbell and John G. L,amb, for défendant. 

J. B. McPHERSON, District Judge (charging jury). The par- 
ties to this criminal proceeding hâve entered into a stipulation con- 
cerning the facts, and are agreed that a controUing question of law is 
presented thereby. They submit it for the court to décide, but I may 
say a few words to you in explanation of the décision. I shall not 
read the stipulation, as it is long, and the détails might be difficult to 
follow; but the légal question may be stated thus: Does the Elkins 
act concerning interstate commerce apply to the continuons transpor- 
tation of goods from a foreign country to a foreign country, if such 
goods are merely carried in bond across two or more states of the 
Union? In the case now on trial a cargo of sugar was shipped from 
Hamburg, Germany, destined, as the bill of lading states, "to Phil- 
adelphia for transportatlon in bond to Raymond, Alberta," Canada, 
and it was taken to its destination by continuous and uninterrupted 
transportation at the hands of successive carriers. A steamship Com- 
pany carried it across the Atlantic Océan to Philadelphia. Hère, it 
was loaded in bond upon railway cars and was transported over the 
Connecting Unes of successive carriers until it reached Alberta, the 
point of ultimate destination. The Philadelphia & Reading Railway 
Company carried it over part of the route at a less rate than would 
hâve been lawful if the shipment had originated at Philadelphia, and 
it is the charging of this rate that is alleged to be a criminal offense. 
In my opinion the offense has not been proved. This was an unbroken 
séries of continuous acts of transportation, beginning at Hamburg and 
ending at Alberta, by which the sugar was merely moved across the 
United States in its transit between two foreign countries, and the 
Elkins act as I read it does not attempt to regulate such a transaction 
at ail. Under the facts before the court, therefore, the défendant 
cannot be convicted of an offense under this indictment for taking 
part in the carriage. As I understand the stipulation, nothing in the 
facts agreed upon casts any doubt upon the entire good faith of the 
transaction^and especially there is nothing to justify the conclusion 
that when the sugar reached Philadelphia it had reached a point of 
destination in the proper sensé of that word. Philadelphia was merely 
a way-station on the journey, where it became necessary to substitute 
inland carriage for carriage across the océan, and the transportation 
was only halted long enough to enable the sugar to be loaded upon the 
cars and the requirements of the revenue laws to be complied with. 
As it seems to me, the truth and reality of this somewhat complicated 

•For other cases see same topic & § numbeh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



486 188 FEDERAL REPORTER 

transaciton is not în doubt. Ail the parties from the beginning to 
the end intended to assist in a continuous transportation from one 
foreign country to another, and this intention was carried ont in good 
faith and without interruption. As I hâve already said, the Elkins 
act does not regulate such shipments at ail, and, as the indictment is 
preferred under that statute, a verdict in favor of the défendant must 
be rendered. 

I may add a few words about a décision relied upon by the gov- 
ernment. In my opinion, that case (Gulf, etc., Railway Co. v. Texas, 
204 U. S. 403, 27 Sup. Ct. 360, 51 L. Ed. 540) rests upon a différent 
State of facts. The corn there in question did not belong to the ship- 
per, the Hardin Company, at ail until it was delivered at Texarkana 
in the state of Texas. The previous owner of the corn had shipped 
it from South Dakota to Texarkana in order to deliver it there to the 
Hardin Company, and when the delivery was made the Interstate 
shipment came to an end, and for the first time the Hardin Company 
became the owner of the corn. The corn was then in Texas, and the 
Hardin Company was not concerned with the previous transporta- 
tion. Its right under the contract with the former owner was to hâve 
certain corn delivered to it at Texarkana, and it had no interest in 
the previous carriage. But, having received the corn in Texas, it 
thereupon assumed dominion over the property and proceeded to 
make a new contract concerning further shipment. The previous 
owner had only agreed to bring the corn to Texarkana, and, having 
fulfiUed that obligation, stepped out of the transaction altogether. The 
new owner of the property — which was then upon the soil of Texas 
^-the Hardin Company, and the railway company also, were each 
bound by the law of Texas thereafter, so far as further carriage in- 
side the state was concerned. But hère there are no such controlling 
facts. The sugar started in Germany, and was then and always there- 
after destined, not for Philadelphia, but for Canada. The title never 
changed; the sugar was never delivered, but only passed along; in- 
deed, the place of delivery was not within the United States at ail, 
but in Canada; and whatever happened along the route was merely 
the carrying out by successive steps of the original contract made in 
Hamburg. The précise date when the Reading Railway Company 
came into the transaction does not seem to be vital. Whenever it 
came in, its purpose (like the purpose of ail the other carriers) was 
to aid in carrying out a contract of through shipment from Germany 
to Canada, and in my opinion there was no violation of the Elkins 
act in so doing. So far as appears, such a transaction is not within 
the mischief which the act was intended to remedy, and it certainly 
does not seem to be within the language of thé statute. 

You will render a verdict for the défendant. 

The Indictment set out a departure from the légal rate of charge, a 
failure to observe the tariff filed with the commission, a giving and granting 
of a concession from the lawful rate, and a charging of less compensation 
t'han such rate. The stipulation was as follows: 

"(1) That at ail tlmes mentloned in the said bill of indictment, as well 
before as afterwards, the Philadelphia & Reading Railway Company was 
and still is a eommon carrier by rallroad from Philadelphia to Newberry 
Junction, in the state of Pennsylvania ; the New York Central & Hudson 



UNITED STATES V. PHILADELPHIA & H. KT. CO. 487 

River Rallroad Company was and still is a common carrier by railroad 
f rom Newberry Junction to Corning, in the state of New York ; the Brie 
Railroad Company was and still Is a common carrier by railroad from 
Corning to Buffalo, In tbe state of New York; the Mutual Transit Company 
was and still is a common carrier by water from BufCalo to Superior, in 
the state of Wiseonsin, and in connection with the aforesaid common car- 
riers by rallroad was and still is a common carrier partly by railroad and 
partly by water under a common management, arrangement, or control 
from Philadelphia to Superior ; the Great Northern Railway Company was 
and still is a common carrier by railroad from Superior to Sweet Grass, 
in the state of Montana; and the Alberta Railway & Irrigation Company 
was and still is a common carrier by rallroad from Sweet Grass to Raymond, 
in the Province of Alberta, Canada, and the route of the said respective 
carriers formed a Connecting continuons through route from Philadelphia 
to Raymond, Alberta. 

"(2) That at ail the tlmes mentioned in said bill of indictment, the said 
Philadelphia & Reading Railway Company, the said New York Central Rail- 
road Company, the said Erie Rallroad Company and the said Mutual Transit 
Company, Connecting carriers as aforesaid, had jointly establlshed and pub- 
llshed and flled, according to law, a joint tariff of rates, in connection with 
the officiai classification In force at such times, on freight, or property 
originating at Philadelphia and destined to Superior, Wis. The rate or 
charge in effect at said times on shipments of beet sugar between such 
points in accordance with such flled and published rates and classiflcatlons, 
being 26 cents per hundred pounds, in car load lots. 

"(3) That at ail the times mentioned in the said bill of indictment, the 
said Great Northern Railway Company and the said Alberta Railway & 
Irrigation Company had establlshed, and published and flled according to 
law, a joint tarife or rates in connection with the officiai classification in 
force at such times, on shipments from Superior, Wis., to Raymond, Al- 
berta. The rate or charge in effect at said times on shipments of beet 
sugar between such points in accordance with such flled and published 
rates and classification being $1.06 for each 100 pounds in car load lots. 

"(4) That ujpon the 5th day of September, A. D. 1908, the Waaren-Commis- 
sions-Bank at Hamburg, Germany, did enter into a contract, commonly 
called a 'through bill of lading,' with the Oceanic Transit Company, for the 
transportation and shipment of l,11.3,8fiO pounds of beet sugar, from the city 
of Hamburg, Germany, on the steamshi]) 'Albano,' bound to the port of Phila- 
delphia, and thence in care of the Great Northern Railway Company of Amer- 
ica, 'per railroad or other conveyance,' to the town of Raymond, in the 
province of Alberta, in the Dominion of Canada, there to be delivered to the 
order of the Bank of Montréal, at a through rate or charge from the said 
city of Hamburg, Germany, to the said town of Raymond, Alberta, of 65 cents 
for each 100 pounds thereof. 

"That upon said 5th day of September, 1908, the said Oceanic Transit Com. 
pany, through its agent in Hamburg, John Heckemann, received for ship- 
ment and did ship upon the said steamship 'Albano' the said quantity of beet 
sugar, to be delivered at said port of Philadelphia by said steamship unto 
the order of one W. R. Huntington, of the city of New York, the agent of 
Wells-Fargo & Co., who were the agents of the said Oceanic Transit Company 
for immédiate transportation, in bond to the said town of Raymond, Canada. 

"(5) That on September 8, 1908, the said Oceanic Transit Company, at 
its chief office, sltuated at London, Engliind, did issue a through waybiîl for 
the shipment and transportation of the said quantity of beet sugar, in which 
It is recited, inter alla, that said shipment of sugar was to be transported 
from Hamburg, Germany, to Philadelphia by the said steamship 'Albano,' 
and from Philadelphia to Raymond, Canada, by railroad and water route 
over the Unes of transportation of the said Philadelphia & Reading Railway 
Company, Erle Railroad Company, Mutual Transit Company, and Great 
Northern Railway Company, the route from Philadelphia to Raymond, Al- 
berta, being the same route as set out in paragraph 1, and delivered to the 
order of Bank of Montréal, at said town of Raymond, Canada, at the through 
rate or charge of 65 cents for each 100 pounds thereof in car load lots. 

"That upon September 11, 1908, the said Philadelphia & Reading Railway 



488 188 FEDERAL EBPORTEK 

Company did at Phlladelphla, In the said Eastem district of Pennsylvanla 
(at least 17 days before the arrivai of said steamship 'Albano') then and 
tbere, in accordance wlth the aforesaid through bill of ladlng and waybill, 
Issued by the said Oceanie Transit Company, agrée with the said W. E. 
Hnntingtou, agent of Wells-Fargo & Co., the aforesaid agent of the Oceanie 
Transit Company, for the shipment and transportatlon of the said quantity 
of beet sugar over the aforesaid continuons line or route of railroad and 
water line from Philadelphia to Raymond, Canada, as set ont in paragraph 1 
hereof, at a rate or charge of 55 cents for each 100 pounds thereof in car 
load lots ; the remaining portion of the through rate of 65 cents being paid 
to the steamship 'Albano' as its proportion of the through rate for car- 
rlage from Hamburg to Philadelphia. 

"(6) That upon September 22, 1908, Wàlliam 0. Hempstead, trading as 
O. G. Hempstead & Son, custom house brokers in the city of Philadelphia, act- 
ing for the said W. R. Huntington of Wells-Fargo & Co., the aforesaid agents , 
of the Oceanie Transit Company, made entry of said shipment of beet sugar 
in the United States Custom House at the said port of I>hiladelphia, for 
immédiate transportatlon and exportation in bond, from Philadelphia to 
Raymond, Canada, and he, the said William O. Hempstead, trading as O. G. 
Hempstead & Son, custom house brokers, did then and there enter into a 
bond in accordance with law, and the régulations of the Treasury Depart- 
ment in such cases made and provided, for the immédiate transportatlon and 
exportation of the said quantity of beet sugar as aforesaid from Philadelphia 
to Raymond, Canada, in accordance with the through waybill and bill of 
lading issued by the said Oceanie Transit Company, as aforesaid. 

"(7) That in accordance with the agreement wlth said W. R. Huntington, 
of Wells-ï'argo & Co., aforesaid, agents of the Oceanie Transit Company, 
and the aforesaid through bill of ladnig and waybill issued by the said 
Oceanie Transit Company, the said Philadelphia & Reading Eailway Com- 
pany, did at Philadelphia, in the said Eastern district of Pennsylvanla, on 
September 29, 1908, recelve at the said port of Philadelphia, from the said 
steamship 'Albano' (which said steamship arrived at the port of Phila- 
delphia on the 28th day of September, 1908), through the said William O. 
Hempstead, trading as O. G. Hempstead & Son, custom house brokers, 
the said quantity of beet sugar for shipment and transportatlon by the 
said common carriers as aforesaid over the continuons line or route as 
set forth in paragraph 1 from Philadelphia to Raymond, Canada, and did 
load the same on its freight cars and freight cars lu its possession and under 
its control, and the same was thereupon transported by the common car- 
riers aforesaid from Philadelphia to Raymond, Canada, by the said con- 
tinuous line and steamship route as aforesaid from Philadelphia to Ray- 
mond, Canada, and through the Eastern district of Pennsylvanla, at the rate 
or charge of 55 cents for each 100 pounds thereof, which was then and there 
the inland proportion of the through rate from Hamburg, Germany, afore- 
said to the town of Raymond, Canada, aforesaid. 

"(8) That the following papers may be ofCered in évidence at the trial 
without proof of exécution: 

"(a) Certlfied copy of Hamburg-American Line original bill of lading, dated 
Hamburg, September 5, 1908, recording the shipment by John Heckemann 
of the Oceanie Transit Company on the steamship 'Albano' of 4,996 bags of 
raw sugar, bound for the port of Philadelphia under the order of W. R. 
Huntington, New York, for transportatlon in bond to Raymond, Alberta, etc. 

"(b) Certlfied copy of the original entry of the said cargo of sugar at 
the port of Philadelphia, dated September 22, 1908, by D. B. Hempstead, 
of O. G. Hempstead & Son, showing the date of importation September 23, 
1908, and having a record thereon that the said cargo was laden under the 
supervision of Harry N. Mills, inspecter, on board the Philadelphia & Read- 
ing Railway Company cars at Philadelphia, Pa. 

"(c) Duplicate original records of carriers' manifest of merchandlse in 
bond, starting with the Philadelphia & Reading Railway Company at the 
port of Philadelphia for transportatlon to the town of Raymond, in the 
province of Alberta, in the Dominion of Canada, by way of Buffalo, Dulnth, 
and Sweet Grass, Mont, being 20 in nnmber, and each bearing the entry No. 



DODGE T. TOWN OF NORTH HUD80N 489 

15,579, eontaining a record of the Initiais of the cars, as well as ttie numbers 
thereof, and eontaining aiso a record of the Inspectors of customs at the 
ports of Philadelphia, Buffalo, Superior, and Sweet Grass, Mont. 

"(d) Copies of original Philadelphia & Reading Rallway joint through mer- 
chandise waybills showing car initiais and numbers, and description of the 
sald cargo of raw sugar, the shipper, consignée, and destination, and the 
rate of freight and pro rata division of the freight between the several 
rallroads transporting the said cargo, as set forth in the sald copies of 
the said original joint through waybills. 

"(e) Shipping order O. G. Hempstead & Son to Philadelphia & Reading 
Railway Company, dated Port Richmond Station, September 29, 1908, con- 
signée, order of W. R. Huntington, destination, Raymond, Alberta, Canada, 
giving a description of the articles, to wit, the 1,113,800 pounds of sugar, 
and the mémorandum copy of the Philadelphia & Reading Company ship- 
ping reeelpt issued to O. G. Hempstead dated September 29, 1908, and 
slgned by O. H. Hagerman, agent of the Philadelphia & Reading Railway 
Company. 

"(f) Copy of letter dated Philadelphia, September 21, 1908, George Ziegler, 
controller, to O. H. Hagerman, shipping and freight agent. 

"(g) Copy of letter R. L. Russell, assistant freight agent, to O. H. Hager- 
man, shipping and freight agent. Port Richmond, dated Philadelphia, Septem- 
ber 21, 1908, In relation to the waybill of the sald shlpment of sugar at a 
through rate of 55 cents per 100 pounds. 

"(h) Copy of statement of advance charges at Port Richmond, Philadelphia, 
due O. G. Hempstead & Son, dated September 29, 1908, form 75. 

"(I) Copy of report of charges of freight between the Philadelphia & Read- 
ing Rallway Company and O. G. Hempstead & Son, dated September 29, 
1908, In relation to the transporta tlon of the said sugar from Philadelphia 
to Raymond, Alberta, form 178. 

"(3) Copy of letter O. H. Hagerman to George Ziegler, controller, dated 
October 1, 1908. 

"(k) Voucher No. S. P. 1,190, Auditor's bill No. 7,650, dated October 9, 
1908, Philadelphia & Reading Railway Company to O. G. Hempstead & Son, 
for advanced freight charges. 

"(1) Copy of voucher Philadelphia & Reading Rallway Company to O. G. 
Hempstead & Son, dated October 9, 1908, for $1,113.93. 

"(m) Letter George Ziegler, controller, to O. H. Hagerman, dated Phila- 
delphia, November 2, 1908, in relation to crédit for $6,126.2'3, for account of 
blll of O. G. Hempstead. 

"(n) Certifled copy of certificate of inspection at frontier port, Sweet 
Grass, Mont., dated November 14, 3908, showing that the said 4,996 bags of 
raw suga-r had been inspected out of the United States. 

"(o) Through bill of lading issued by Oceanic Transit Company. 

"(p) Through waybill issued by Oceanic Transit Company. 

"(q) Custom house régulations of 1908. 

"It Is agreed that for the purposes of a motion in arrest of judgment, and 
ail subséquent proceedings thereon, the facts set out and papers referred 
to in the foregoing agreement be considered as part of the record in the 
case with the same force and eflfect as though fully set out therein." 



DODGE V. TOWN OF NORTH HUDSON. 
(Circuit Court, N. D. New York. June 26, 1911.) 

1. EXECUTOES AND ADMINISTBATORS (§ 524*) FOEEIGN AdMINISTRATOB— RiGHT 

10 Sue— Ancillaky Letters. 

A foreign admlnistrator cannot sue in the courts of New York for the 
alleged wrongful killlng of her intestate wlthout obtalning ancUlary let- 
ters of administration in New York, 

[Ed. Note. — For other cases, see Executors and Administrators, Cent. 
DIg. § 2380 ; Dec. Dig. § 524.*] 

•For other oasea see same topic & § ntjmbbb In Dec. & Aro. Dlgs. 1907 to date, & Rep'r Indexes 



490 188 FEDERAL REPOETEE 

2. ExECUTOES AND Administeatoks (§ 524*) — Action— Ancillaet Letters— 

New Action. 

Where a demurrer was sustained to a foreign administrator's com- 
plaint In an action for wrongful deatt because of failure to allège the 
obtaining of ancillary letters of administration in the state where the 
suit was brought, the administrator on obtaining ancillary letters was 
not required to commence a new suit, but was entltled to set up such 
fact by amendment. 

lEd. Note. — For other cases, see Exeeutors and Administrators, Dec. 
Dig. § 524.*] 

3. HiGHWATS (§ 203*) INJUEIES FROM DeFECIS— ACTION— ANCIIiAET ADMIN- 

iSTKATioN— Notice. 

Code Clv. Proc. N. Y. § 1902, provides that the exécuter or administra- 
tor of a décèdent who bas left bim or her surviving a husband, wife, or 
next of kin, may maintain an action for wrongful deatb, and section 1903 
déclares that the damages shall be exclusively for the benefit of decedent's 
husband, wife, or next of kin, and when coUected shall be distributed by 
the plaintiffl as If they were unbequeathed assets left after payment of 
ail debts and expenses of administration. Highway Law (Laws N. Y. 
1890, c. 568) § 16, provides that every town shall be liable for damages to 
persons sustained by defeets In Its highways, but that no action shall be 
malntalned therefor unless a verlfied statement shall hâve been presented 
to the supervlsor withln six months after tbe cause of action acerued. 
etc. Held, that since the statute is silent as to the place of appointment 
of the executor or administrator authorlzed to sue for wrongful death, 
and, but for the rule requiring ancillary letters in order to authorize a 
suit by a foreign administrator in New York, an action for wrongful 
death might be malntained there by a foreign administrator, where plain- 
tlfC, after belng appointed domiclllary administrator of her husband's es- 
tate, gave notice to défendant town of a claim for wrongful death of her 
husband 'because of alleged defeets In its highways, the fact that she had 
not obtained ancillary letters at that time did not Invalidate the notice 
or require her to give a new notice on obtaining ancillary letters. 

[Ed. Note. — For other cases, see Highways, Oent. Dig. §§ 510-518 ; Dec. 
Dig. § 203.*] 

At Law. Action by Joséphine M. Dodge, as administratrix of the 
estate of James E. Dodge, deceased, against the Town of North Hud- 
son. On demurrer to complaint for want of facts. Overruled. 

See, also, 177 Fed. 986. 

Miller & Matterson, for plaintiff. 
Salisbury & Rowe, for défendant. 

RAY, District Judge. For the purposes of this case on this de- 
murrer, the facts are as follows; On the 26th day of July, 1908, 
James E. Dodge, a résident and citizen of the state of Massachusetts, 
was rightfully traveHng in his automobile upon one of the highways 
of the town of North Hudson, one of the towns of the county of 
Essex, N. Y. By reason of defeets in its said highway and a bridge 
or its approaches forming a part of said highway existing because of 
the neglect of the commissioner of highways of said town, the plain- 
tifï's intestate, James E. Dodge, with his vehicle, was thrown out of the 
beaten track and down an embankment, and Dodge was killed and his 
automobile substantially ruined. There were damages to both person 
and property sustained by reason of such defeets existing by reason 
of such négligence in excess of the sum of $2,000 exclusive of interest 

•For other cases see same topic & § ndmbek In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



DODGE V. TOWN OF NOKTH HUDSON 491 

and costs as to each cause of action. The cause of action in thèse 
regards is pleaded with ail necessary particularity. 

Shortly thereafter, Joséphine M. Dodge, the widow of said deceased, 
was duly appointed administratrix of the estate, etc., of said James E. 
Dodge by the proper probate court of the state of Massachusetts, and 
on or about the 9th day of January, 1909, she, as such administratrix, 
caused a definite and particular verified statement of the facts, cause 
of action, to be served on and presented to the superviser of said town 
of North Hudson, and after the lapse of 15 days commenced the above 
action in this court to recover such damages under the statute of the 
State of New York permitting a recovery in such cases. 

[1] The défendant demurred to the complaint on the ground, with 
others, that, not having taken out ancillary letters of administration in 
the State of New York, she could not maintain the action in this juris- 
diction, the United States Circuit Court for the Northern District of 
New York. This court sustained the demurrer on that ground— that 
an executor or administrator appointed by the probate court of one 
State cannot maintain an action upon a cause of action existing in 
favor of the estate she represents in the courts, state or fédéral, of 
another state without taking ancillary letters in the state where the 
action is brought. 177 Fed. 986. This court followed J. B. & J. M. 
Cornell Co. v. Ward, 168 Fed. 51, 52, 93 C. C. A. 473; Van Doren 
V. Pennsylvania R. Co., 93 Fed. 260, 35 C. C. A. 282; Hodges v. 
Kimball et al., 91 Fed. 845, 34 C. C. A. 103 ; and Stewart v. Baltimore 
& Ohio Railway Co., 168 U. S. 445, 449, 18 Sup. Ct. 105, 106, 42 L. 
Ed. 537. 

[2] Following the cases mentioned, this court also held that a new 
action was not necessary, and permitted an amendment to the complaint 
after ancillary letters should be obtained. The plaintifï then took out 
ancillary letters of administration in the state of New York and amend- 
ed her complaint by alleging the grant thereof in the state of New 
York, but, we infer, did not serve a new or amended notice of claim 
as none is alleged. The défendant claims that such a cause of action 
accrues when the notice of claim is presented to the superviser of the 
town, and that in this case no one could serve or présent the claim 
except an administratrix of the estate of said James E. Dodge appointed 
by the probate or surrogate's court of one of the counties of the state 
of New York to whom and to whom alone the cause of action is given; 
that the complaint does not allège the présentation of any such claim 
to the superviser of the défendant town or to any one, but, on the other 
hand, shows the présentation of a claim by the administratrix appointed 
by the Massachusetts court long before the issue of such ancillary 
letters, and that such notice of claim is void and wholly ineffectuai. 
The défendant also claims that, as the cause of action could not accrue 
until the présentation of a claim by the ancillary administratrix to 
whom alone the right of action is given, and she could not présent 
same before her appointment, and no suit could be commenced until 
15 days after the présentation of a légal statemicnt or claim by the 
proper person, no cause of action is stated and no cause of action bas 
accrued. 



'192 188 FEDERAL EEPORTEB 

[3] The statute in force at the time Dodge was killed provided 
(Highway Law, c. 568, § 16, Laws 1890) as f ollows : 

"Bvery town shall be llable for ail damages to person or property, sus- 
talned by reason of any defect in its highways or bridges, existing because 
of the neglect of any eommissioner of highways of such town. No action 
shall be maintalned agalnst any town to recover such damages, unless a 
verifled statement of the cause of action shall hâve been presented to the 
• superviser of the town, within six months af ter the cause of action acerued ; 
and no such action shall be commenced until fifteen days after the service 
of such statement." 

This statute required the présentation of the claim "within six 
months after the cause ôf action acerued." I think the cause of 
action "acerued" when Dodge was killed and his property was dam- 
aged. It cannot be that a party injured by such négligence may wait 
10 or 20 years before fîling the claim. I think the purpose of the 
statute was to give speedy information to the town of the accident, 
injury, and conséquent damage and intention to make a claim against 
the town. My opinion is that the présentation of the claim relates to 
procédure and the mode and manner of enforcing the remedy and the 
time within which notice shall be given after the injury. The cause 
of action for damages for the death is perfect and accrues, when 
death occurs; but the liability imposed by the first part of the section 
quoted cannot be enforced until the notice is given, and then suit can- 
not be brought until 15 days hâve elapsed so as to afford suitable time 
for investigation by the officers of the town. In case of death caused 
by such négligence, the right of action is conferred or the common-law 
obstacle to recovery is removed by sections 1902 and 1903 of the New 
York Code of Civil Procédure, which read as f ollows : 

"Sec. 1902. Action for death by négligence. The exécuter or administra- 
tor of a décèdent, who bas left, hlm or her surviving, a husband, wife, or 
next ol kin, may maintain an action to recover damages for a wrongful act, 
neglect, or default, by which the decedent's death was caused, against a 
natural person who, or a corporation which, would hâve been liable to an 
action la favor of the décèdent, by reason thereof, if death had not ensued. 
Such an action must be commenced within two years after the decedent's 
death. 

"Sec. 1903. For whose beneflt recovery had. The damages recovered in an 
action, brought as prescribed in tlie last section, are exclusively for the 
beneflt of the decedent's husband or wife, and next of kin; and, when they 
are collected, they must be dlstributed by the plamtifE, as if they were 
unbequeathed assets, left in his hands, after payment of ail debts, and ex- 
penses of administration. But the plaintiff may deduct therefrom the ex- 
penses of the action, and his commissions upon the residue; which must 
be allowed by the surrogate, upon notice, given in such a manner and to 
such persons, as the surrogate deems proper." 

The recovery is for the benefît of the widow, children, etc. ; but the 
action is prosecuted by the executor or administrator of the deceased. 
The statute is silent as to the place of appointment of such executor 
or administrator, and but for the rule that only ancillary adminis- 
trators appointed in the state where the action is to be prosecuted, if 
such action is not prosecuted in the state of principal administration, 
are recognized, the right to prosecute the action would vest in the 
administrator appointed by the probate court of the decedent's domicile. 
The administrator as such has no interest in the recovery. It is not 



DOEGE V. TCWK CF NOETH HUDSON 493 

necessary that the action in such cases be brought by the person named 
in the statute as the one who is to bring it, as the plaintiff is but 
a nominal plaintiff. Stewart v. Baltimore & Ohio Raiiroad Co., 168 
U. S. 445, 449, 18 Sup. Ct. 105, 106, 42 h. Ed. 537. 

"This statute is a remédiai one enacted for tJie purpose of compelling those 
who negllgently cause the death of persons to compensate the surviving hus- 
band, widow, or next of kin of the person se killed, and, like ail such stat- 
utes, should be so construed as to give instead of withholding the remedy in- 
tended to be provided. Lamphear v. Buckingham, 33 Oonn. 237; Haggerty 
V. Central R. Co., 31 N. J. Law, 349. The important portion of the section 
is that whieh gives a right of action, and not that part which provides -who 
may enforce it ; the latter is an incidental provision." Lang v. Houston, etc., 
R. Co., 75 Hun, 151, 27 N. ï. Supp. 90, affirmed 144 N. Y. 717, 39 N. B. 858. 

See, also Hodges v. Kimball, 91 Fed. 847, 34 C. C. A. 103. 

Hère the défendant had due and spécifie notice and information of 
the négligence, time, and place of in jury and conséquences, and of 
the claim made. It was presented by Joséphine M. Dodge, the widow 
of the deceased and one of the persons for whose benefit recovery 
may be had. She was administratrix of the estate of the deceased and 
gave the notice as such. She could not sue in New York as such and 
prosecute the action until she took ancillary letters, but this was 
technical, and subsequently she did take such letters. I think it too 
technical to say that a new notice or claim was essential. I think a 
substantial compliance with the statute, one which fully answers its 
purpose, is sufhcient. In the Stewart Case, supra, the statute giving 
the right of action, or, more properly speaking, removing the common- 
law obstacle to recovery, the action being to recover for the tort or 
négligence, required the action to be brought in the name of the state 
of Maryland ; but it was brought in the District of Columbia in the 
name of the personal représentative, and this was sustained by the Su- 
prême Court. I might cite a multitude of cases bearing on the ques- 
tion, but think Sheehy v. City of New York, 160 N. Y. 139, 143, 54 
N. E. 749, and Missano v. Mayor, 160 N. Y. 133, 54 N. E._744, suffi- 
cient. The défendant had a full and a spécifie notice in writing f rom 
the actual administratrix of the estate of the deceased, later the an- 
cillary administratrix, and a répétition of such notice would hâve been 
entirely unnecessary so far as serving the purpose of the statute was 
concerned. 

The cases decided in the Circuit Court of Appeals, one in this circuit 
and the others cited and approved by it, hold that this action was not 
prematurely or even improperly brought; that ancillary letters sub- 
sequently issued to the same person who obtained principal administra- 
tion entitles such person to continue and prosecute the action already 
brought by the domiciliary administrator in the foreign state. This 
is équivalent to holding that the cause of action had accrued when the 
action was commenced. 

Demurrer overruled, with costs. Défendant may answer within 
30 days on payment of such costs. 



494 188 FEDERAL EEPOETEB 

HAZLETT V. POLLACK STOGIE CO. et al. 
(Circuit Court, W. D. Pennsylvania. June 20, 1911.) 

1. rBADE-MABKS AND TbADE-NAMES (§ 85*) INFKINGEMENT— RiGHT TO SUB— 

Deceit or Public. 

Décèdent diiring his llfetime had built up a large and profitable busi- 
ness in stogies, wiiich were sold under his name and became known as 
"Pollack's Stogies" ; the word "Pollack" alone becoming generally con- 
nected with cigars made by liim. Ainong other distlnctlve marks useci 
on his packages was a guaranty signed in script over his reproduced sig- 
nature and the factory certiflcate which also stated that décèdent was 
the manufacturer, and on the front of his factory, which constituted his 
principal trade-mark, was decedent's name as manufacturer. Two years 
after his death, complainant, who succeeded him, sent out a letter to the 
trade printed in script and psrported to be signed by décèdent, calling 
attention to the development of the business and soliciting continued fa- 
vorable considération ; the business belng continued by complainant as 
agent of decedent's wlfe and chlldren. Held, that complainant's contin- 
uance of the use of decedent's trade-marks and dress of package, with- 
out anything to show that the goods were no longer made under the 
Personal snpetvlsion of décèdent, tended to mislead the public, and there- 
fore precluded him from maintaining a bill for infrlngement. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent. 
DIg. i 94 ; Dec. Dig. § 85.*] . 

2. Teadb-Marks and Tradb-Names (§ 101*) — Complaint— Dismissal— -Costs. 

Where complainant's bill to restrain infrlngement of certain trade- 
marks was dismissed because complainant's use of the trade-marks was 
calculated to deceive the public, but the proof showed a flagrant antf 
shameless case of plrating on défendants' part, no costs would be al- 
lowed. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent 
Dlg. § 115 ; Dec. Dig. § 101.*] 

In Equity. Bill by Howard Flazlett, as administrator of Au!,mstiis 
Pollack, deceased, against the Pollack Stogie Company and others to 
restrain alleged infrlngement of complainant's trade-marks and for 
unfair compétition. Bill dismissed. 

Brown & Stewart, for plaintiflf. 

Ivory, Kiskaddon &; Moore (Frank F. Reed and Edward S. Rogers 
of counsel), for défendants. 

BUFFINGTON, Circuit Judg-e. This is a bill in equity 'brought 
by Howard Hazlett, administrator of Augustus Pollack, deceased. 
against the Pollack Stogie Company and others. It is alleged re- 
spondents infringe complainant's trade-marks and charges them with 
unfair compétition. The case is on final hearing. 

f1] The proofs show that for some 35 years prior to his death, in 
1906,_ Augustus Pollack, the décèdent, had built up a large and profit- 
able interstate trade in a species of cigars called "stogies." He used 
high-grade tobacco and placed on the packages containing his goods 
marks and labels that gave them a distinct and recognizable dress and 
appearance. Indeed, so extensively and favorably did his goods be- 
come known that the name "Pollack's Stogies," and indeed the word 
"Pollack" alone, came to be generally connected with the cigars made 
by him. Among other distinctive marks was his guaranty. sip-ned in 

•For otlier cases see same topic & S numbke In Dec. & Am. Dlgs. 1907 to date. & Rep'r Indexes 



HAZLETT V. POLLACK STOGIE CO. 495 

script over hîs reproduced signature, viz., "The best and largest nat- 
ural leaf handmade long Havana seed filler cigar in the world at the 
price. Each cigar guaranteed perfect by." Then foUows the script 
signature, "Augustus Pollack." The manufacturer's factory certifi- 
cate on the package aiso stated that Augustus Pollack was the manu- 
facturer in factory No. 88, First district, state of West Virginia, and 
on the front of his factory, which constituted his principal trade- 
mark, was the name of Augustus Pollack as manufacturer. The 
proofs in testimony, correspondence, etc., undoubtedly show that the 
personality of Pollack, his thorough knowledge of his business, his 
deep Personal interest in it, and his integrity of purpose in a careful 
and scrupulous use of high-grade material were the important factors 
in creating and maintaining the trade good will of his product. So 
thoroughly were the name and personal guaranty of Pollack recog- 
nized that those who succeeded him in business and who bring this 
présent suit, in 1908, two years after his death, sent out to the trade 
a letter, printed in script and purporting to be signed by Augustus 
Pollack, in which, after calling attention to the development of his 
business, Mr. Pollack is made to say that he "gratefully acknowledges 
his indebtedness to American encouragement, and requesting a contin- 
uance of approval and favorable considération, avails himself of this 
occasion to tender his assurance of appréciation and high esteem. 
Yours truly. Augustus Pollack." 

It will thus be seen that the personality of Pollack was a factor in 
the création and the rétention of the trade good will which his prod- 
uct enjoyed. The fact, however, is that after the death of Mr. Pol- 
lack, and up to the fihng of this bill, thèse marks, labels, and state- 
ments as made by Mr. Pollack were used on the packages in precisely 
the same way they had been used by him. in his lifetime and in spite of 
the fact that his business was being carried on by Howard Hazlett, as 
the agent of his wife and chiidren, and not for the benefit of his estate 
or in pursuance of the usual duties of an administrator, as noted 
below. 

The will of Augustus Pollack was inoperative because not properly 
executed. Letters of administration on his estate were granted How- 
ard Hazlett, the complainant. By written agreement of Mr. Pollack's 
wife and chiidren, approved and confirmed in a chancery proceeding 
in the circuit court of Ohio county, W. Va., brought by Howard Haz- 
lett, administrator, against the estate, the widow and chiidren agreed 
the administrator should carry out the will, with certain exceptions, 
as though such will were in force, and by such instrument they fur- 
ther empowered Mr. Hazlett to conduct the business of Mr. Pollack, 
not for the benefit of the estate, but for themselves by thèse provi- 
sions, inter alia: 

"That the said complainant, as administrator aforesaid, Is empowered to 
continue the business for a limited time under the testator's name. * * * 
It is further adjudged, ordered, and decreed that the capital and property 
used in such business are not to be included in the semianuual divisions to 
be made by the said complainant as direeted in said will, but the whole of 
such capital and property used in such business are to remain in the said 
business until the end of the last-mentioned period of 10 years and then be 



496 188 FEDERAL REPORTER 

dlstrlbuted. * * • It Is further adjudged, ordered, and decreed that, un- 
der the twenty-flfth section of the sald will, the said complainant, as admin- 
istrator as aforesaid, is empowered to sell and dispose of the factories, good 
will, equipments, and materials and stock on hand, and that in doing se lie 
is not to co"Dsider or be controlled in any way by the provisions in the said 
twenty-flfth section of the will relating to the integrity of the firm name and 
of the product and the récognition of organized labor and the wage scale." 

The public by such unchanged marking of the goods was led to 
believe that the goods were being made and guaranteed by Mr. Pollack. 
It is true that sometime after this bill was filed an inconspicuous 
label was placed on packages stating the goods were made by Pol- 
lack's administrator ; but even this statement continued still to be ac- 
companied by prominent labels stating: "None genuine without imy 
signature. Augustus Pollack." And that the goods are "manufac- 
tured of sélect air cured and fermented Pennsylvania tobaccos and 
packed in good shipping order by Augustus Pollack, Wheeling, W. 
Va." 

In view of thèse facts, can the présent bill be maintained by the 
complainant? Without imputing to complainant any bad faith or in- 
tent to deceive the public, we are of opinion that under the facts stated 
the law forbids the maintenance of his bill. One of the essentials of 
an enforceable trade-mark right is that the goods it represents shall 
in no way mislead the public. When a manufacturer has by his per- 
sonal skill or character built up a réputation or good will for his goods 
which gives them a higher value than those of other makers, it is 
quite clear that he cannot transfer to others the right to affix his name 
to those goods when he has ceased to manufacture them, and his 
transférée mislead the public into the belief that the skill and char- 
acter which gave the product distinctive merit still continue to do so. 
Under such circumstances, fairness to the public demands that he 
who succeeds to the manufacture of a product of earned personal re- 
pute must in some appropriate manner apprise the public of the 
changed condition. Thus in Manhattan Co. v. Wood, 108 U. S. 223, 
2 Sup. Ct. 439 (27 L. Ed. 706), it is said: 

"The object of the trade-mark being to indlcate, by its meanlng or associa- 
tion, the origln or ownership of the article, it would seem that when a right 
to Its use Is transferred to others, elther by act of the original manufacturer 
or by opération of law, the fact of transfer should be stated in connection 
with its use ; otherwise a déception would be practiced upon the public, and 
the very fraud accompli shed, to prevent which courts of equity interfère to 
protect the exclusive right of the original manufacturer. If one affix to goods 
of his own manufacture signs or marks which indlcate that they are the 
manufacture of others, he Is deceiving the public and attemptlng to pass upon 
them goods as possesslng a quality and merit which another's skill has giveu 
to similar articles, and which his own manufacture does not possess in the 
estimation of purchasers. To put forth a statement, therefore, in the form 
of a circular or label attached to an article, that it is manufactured in a par- 
ticular place, by a person whose manufacture there had acquired a great rép- 
utation, when, in fact, it is manufactured by a différent person at a différent 
place, is a fraud Ujpon the public which no court of equity will countenance." 

So, also, in Leather Co. v. American Company, postea, it is said: 

"When the owner of the trade-mark applies for an injunction to restrain 
the défendant from injuring his property by making false représentations to 
the public, it is esseutial that the plaintifC should not in his trade-mark, or 



HILL V. PTJLLMAN OO. 497 

In the business connected wltli It, be hlmself gnilty of any false or mlsleadlng 
représentation; for, If the plaintlff makes any material false statement In 
connection with the property he seeks to protect, he loses, and very justly, 
his right to claim the assistance of a court of equity. * • * Where a sym- 
bol or label, claimed as a trade-mark, Is se constructed or worded as to make 
or contain a distinct assertion which Is false, I thlnk no property can be 
claimed in it, or, In other words, the right to the exclusive use of It cannot 
be maintalned." 

The facts of the présent case bring it within thèse rulings. The 
right of Augustus Pollack has been transferred by opération of law 
to his wife and children, and they hâve empowered Hazlett as their 
représentative to continue the business. But unfortunately it has been 
continued, not according to existing facts and conditions and with 
appropriate notice of the succession, but precisely as if the personal 
service and skill of Augustus Pollack were still directing it, and in- 
deed his name and signature hâve been actively used as if he were 
still living. On the authority of thèse cases, and in view of the facts 
ref erred to, it is clear that this bill cannot be sustained. 

[2] We deem it proper to expressly say that the absence of con- 
ditions to warrant sustaining the complainant's bill, and not the exist- 
ence of any merit on the part of respondents' case, leads to our dis- 
missal ; for it should be added that the proofs of the case show such 
a flagrant and shameless case of pirating an established business that, 
in dismissing the bill, we follow the course pursued in the Leather 
Cloth Co. V. American Leather Cloth Co., 4 De G., J. & S. 137, 
afïirmed in 11 H. L. C. 521, where Lord Chancellor Westbury said: 

"As I do not approve of the conduet of the défendants, I dismiss it wlthout 
costs." 

Let a decree be prepared accordingly. 



HILL V. PULLMAN CO. 

(arcult Court, E. D. Pennsylvanla. June 13, 1911.) 

No. 1,274. 

1. Cakeiers (§ 413*) — Sleeping Cabs— Theft teom Pàssenger. 

A pàssenger on a sleeping car may recover damages for money and Per- 
sonal effects stolen from him through the négligence of the sleeping car 
Company In failing to keep such constant watch over passengers asleep 
as wIU protect them from robbery or unwarranted Intrusion. 

[Ed. Note.— For other cases, see Carriers, Cent. Dig. §§ 158.3-1588 ; Dec. 
Dig. § 413.» 

Duties and liabllitles of sleeping car companles, see notes to Duval v. 
Pullman Palace Car Co., 10 C. C. A. 335; Edmunson v. Pullman Palace 
Car Co., 34 C. C. A. 386 ; Bacon v. Pullman Co., 89 C. O. A. 10.] 

2. Careiebs (§ 417*) — Sleeping Caes— Theft feom Pàssenger— Evidence. 

In an action against a sleeping car compaiiy for theft of a passenger's 
Personal property whlle sleeping in a car, évidence lield to sustain a find- 
Ing that the company was négligent In failing to keep a sufflcient watch 
to secure passengers against Intrusion. 

[Ed. Note. — For other cases, see Carriers, Dec. Dig. § 417.*] 

*For other cases see same topio & § nombbk in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
ISS F.— 32 



498 188 FEDERAL KEPOBTBB 

3. Caeriees (§ 411*) — Sleeping Car Passengebs—Robbebt—Assault— Per- 

sonal INJUBT. 

Sinee violence Is often a concomitant of sneak thieving or robbery of 
a sleeping victim, a sleeping car company bound to keep watch over its 
passengers to prevent robbery was bound to take notice of the fact tbat 
violence vras liable to accompany the robbery of passengers while asleep, 
and hence the company was liable for Personal injuries to a passenger 
caused by a robber inflicting a blow on him vi'hile he was asleep in order 
to efCect the robbery, ail of which was due to the sleeping car company's 
négligence in failing to keep a sufflcient watch. 

[Ed. Note.— For otber cases, see Carriers, Cent Dig. §§ 1579, 1581 ; Dec. 
Dlg. î 411.*] 

4. Evidence (§ 244*) — Déclarations of Servant. 

Where a sleeping car porter was the sole agent and représentative of 
the sleeping car company and was in charge of the car in which plaintiff 
was ridlng at the time he was assaulted and rohbed, the porter's déclara- 
tions were admissible against the company. 

[Ed. Note.— For other cases, see Evidence, Cent. Dlg. §§ 916-936 ; Dec. 
Dig. § 244.*] 

At Law. Action by Chester L. Hill against the Pullman Company. 
Verdict for plaintiff. On motion for new trial and for judgment non 
obstante veredicto. Denied. 

S. R. Zimmerman, Henry P. Brown, and W. U. Hensel, for plain- 
tiff. 

Faunce & Andrade, for défendant. 

BUFFINGTON, Circuit Judge. In this case Chester L. Hill brought 
suit against the Pullman Company to recover damages for allegedi 
négligence of the latter while he was occupying a berth oh one of its 
sleeping cars. The jury rendered a verdict in his favor for $180, 
being for money and personal effects stolen from him while asleep 
in the berth, and for $1,200 damages for personal injuries inflicted 
on him by the robber who struck him while thus asleep and rendered 
him unconscious in order to effect the robbery. The défendant now 
moves for a new trial and for judgment non obstante veredicto. 

In support of the motion for a new trial, five reasons are set forth, 
which we now dispose of seriatim. The first reason, "because the 
verdict was against the law" ; the second, "because the verdict was 
against the évidence" ; the third, "because the verdict was against the 
weight of the évidence" ; and the fourth, "because the verdict was 
excessive" — we answer by saying that under the law as laid down by 
the court the jury were warranted in finding a verdict in favor of 
the plaintiff, that a verdict in favor of the plaintiff was justified by the 
weight of the évidence, and that the damages were not excessive. Fur- 
thermore, being of opinion, as stated hereafter in our refusai of the 
defendiant's motion for judgment non obstante veredicto, that its 
third point was rightfully denied, we are of opinion that its fifth reason 
for a new trial, "because the learned judge erred in refusing the de- 
fendant's third point, which was as follows, 'Under ail the évidence 
your verdict must be for the défendant,' " is without merit, its motion 
for a new trial is refused. 

'For other cases see same toplc & i numbbk In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



HILL V. PULLMAN CO. 49& 

It remains, therefore, to dispose of the motion for judgment non 
obstante veredicto. That motion is in effect a demurrer to the évi- 
dence, and, as the motion questions the verdict as a whole and in no 
way seeks to differentiate the part based on personal injuries from 
that based on loss of money and personal effects, it would seem that, 
if a recovery for the latter items was warranted, the defendant's motion 
for judgment non obstante veredicto should be dehied. 

[ 1 ] The question of whether a passenger on a sleeping car can re- 
cover damages for money and personal efïects stolen from him through 
the négligence of the sleeping car company is too flrmly established to 
be questioned. It suffices to refer to Pullman v. Gardner, 3 Penny. 
(Pa.) 81; Carpenter v. Railroad, 124 N. Y. 53, 26 N. E. 277, 11 L. 
R. A. 759, 21 Am. St. Rep 644; Blum v. Southern Co., Fed. Cas. 
No. 1,574; Lewis v. Sleeping Car Co., 143 Mass. 267, 9 N. E. 615, 
58 Am. Rep. 135; Campbell v. Pullman Co. (C._ C.) 42 Fed. 484; 
2 Cooley on Torts, 1380; Hutchinson on Carriers, § 60, note 2. 
Thèse citations in effect hold that a sleeping car company invites 
passengers to pay it for the opportunity of enjoying rest and sleep, 
and that its berths are so unprotected that a sleeping car company 
must keep such a constant watch over them as will protect the sleeper 
from robbery and unwarranted intrusion. Thus in Campbell v. Pull- 
man Co., supra, a verdict was sustained for a criminal assault by a 
porter on a female passenger, and in Lewis v. Sleeping Car Co., supra, 
for négligence in a porter failing to keep watch, whereby thieves got 
access to a sleeping passenger's vest under his pillow and slit open 
with a knife an inside pocket in which he had sewed up his money. 
Indeed, in an early and leading case on the subject. Pullman v. Gard- 
ner, supra, decided in 1883, it was assigned for error that the trial 
court had charged: 

"If he (the porter) went out of that aisle, even for a very few minutes, and 
durlng that time thls robbery oecurred, and the jury belleve that if he had 
been in his place of observation it would not and could not hâve oecurred 
without détection, the company is liable, because he failed to do his duty to 
that extent that it allowed this robbery to be done." 

But the Suprême Court of Pennsylvania affirmed the judgment, 

saying : 

"Unless a watchman be kept constantly in view of the center aisle of the 
car, larceny from a sleeping passenger may be committed without the thief 
being deteeted in the act." 

In 1891 the Court of Appeals of New York, în Carpenter v. Rail- 
road Co., supra, follo>ving the Gardner Case, said: 

"The négligence complalned of Is that none of the defendant's employés 
were continually on guard in the car in a position to observe the movements 
of ail persons in the passageway between the sections. A corporation engaged 
in running sleeping coaches with sections separated from the aisle only by 
curtains Is bound to hâve an employé charged with the duty of earefuUy and 
continually watching the interior of the car while berths are occupied by 
sleepers. Pullman Car Co. v. Gardner, 3 Penny. [Pa.] 78. Thèse cars are used 
by both sexes of ail âges, by the experienced and inexperlenced, by the honest 
and dishonest, which is understood by the carriers, and, though such com- 
panies are not Insurers, they must exercise vigilance to protect thelr sleeping 
customers from robbery. A traveler who pays for a berth is invited and bas 



500 188 FEDERAL REPORTER 

the rlght to sleep, and both parties to the eontract know that he Is to beeome 
powerless to défend hls property f rom thleves, or his persons f rom insuit, and 
the Company is bound to use a degree of eare commensurate wlth the danger 
to which passengers are exposed. Considering the compensation received for 
such services and the hazards to which unguarded and sieeping passengers 
are exposed, the rule of diligence above deciared is not too onerous." 

[2] Now the facts in the présent case tended to show the défend- 
ant company's négligence. The car in question ran on a slow night 
train from Philadelphia to New York. The car behind it was the 
last one on the train, was an empty baggage car, and was not visited 
by the regular trainmen. Thèse were ail circumstances known to the 
représentatives of the défendant and were proper to be considered 
by a jury in determining whether a due watch was maintained. And 
it was shown the porter was not keeping watch, but was otherwise 
engaged at a place in the forward end of the car from which he could 
not see the aisle. The jury was therefore justified in finding the de- 
fendant Company was négligent in failing to keep a proper watch 
over the car, andi that plaintiff's property was lost as a direct resuit 
of that négligence. We are satisfied the verdict, in so far as the 
Personal property — which was such only as a traveler ordinarily 
carries — ^must be sustained. 

[3] It remains to consider whether the company was liable for the 
injury to the plaintifï's person. On behalf of the Pullman Company, 
it is contended an assault is an injury of such an unusual and unex- 
pected nature that a sieeping car company is not bound to provide 
against it. Touching the alleged unusual character of the injury, it 
will be observed the finding of the jury takes it out of that category, 
for it was charged as follows: 

"Now, I may say to you, gentlemen, that the duty of the Pullman Company 
towards the sieeping occupants of its cars consists in taking due care on its 
part to prevent injuries which, in the ordinary expérience of travelers, are 
liaWe to happen, and which, therefore, the company is bound to guard against. 
As we stated hère in the argument on thèse law points, If a man should take 
a pistol and shoot another person in the car, we would at once see that the 
company is not bound to foresee the likelihood of any such thlng as that, and 
they are not, therefore, bound to protect against it. I only instance that as 
indicating the things whleh a sieeping car company is not bound to anticipate, 
and, therefore, is not bound to guard against. It is only bound to exercise 
care against those things, which, in the ordinary course of travel, as things 
happen on trains situated such as this, mlght happen to a person who is 
sieeping on one of its cars. It will therefore be for you to détermine, gentle- 
men, whether, under ail the circumstances of this case, the proofs of the case, 
the character of the train, stopping at stations along the road, the rear car 
door being unsecured, and access to the sieeping persons being simply through 
curtalns — no doors to protect them — whether the injury that happened to Mr. 
Hill was one which the company, exercising due care and due précautions 
and due observation of care on its part, had reason to and was bound to an- 
ticipate might happen, and which it was bound to protect him against. If 
you flnd that that was so, that this -was a danger of that character, and that 
the Pullman Company, either through the failure to bave a proper fastening 
on the door or through the inattention of the porter, if there was inattention, 
or from his lack of care in any respect in that way — if the Pullman Company 
was guilty of a lack of care in any of those respects, and the resuit of it was 
the injury to the plalntiff, tben he is entitled to recover in this case. If 
this accident was one which was so unusual in its character that the Pullman 
Company had no reason to anticipate it, then the plaintiflf would not be en- 



HILL V. PULLMAN CO. 501 

titled to recover, beeause the Pullman Company would not be bound to pro 
tect agalnst Injuries of that character." 

But, apart from such finding by the jury, we think the court could 
not, as a question of law, hâve ïnstructed the jury that the car company 
was not answerable in damages for this assault. It will be observed 
that the duty of the car company was to maintain a vigilant watch 
in the car. If it had done so by its porter, or if it had even provided 
a lock on the rear door, the plaintiff could not hâve been stealthily 
robbed, for it will be observed this is a case of sneak thieving, and not 
of open, overpowering violence. The sleeping car company's nég- 
ligence, therefore, made the robbery possible in failing to keep watch. 
Such being the fact, can it be said as a matter of law that personal 
violence is so unusual and foreign even to stealthy robbery as to be 
wholly disassociated therefrom? On the contrary, expérience shows 
that violence is often a concomitant of that character of robbery; 
that it is an incident to it; that if necessary to overcome a victim to 
accomplish the theft, to prevent outcry and alarm, and to efifect escape, 
violence is the usual accompaniment of theft. A thief who would make 
his way to the bedside of a sleeper to rob, and who did not hâve an 
instrument of violence at hand to silence the sleeper if necessary to 
perpetuate the crime, would be a tyro in his line. And so correlated 
and coupled in the eyes of the law are robbery and personal injury 
that, if one in attempting to rob should undesignedly kill his victim, 
he is held guilty of murder. "If one intends to do another felony and 
undesignedly kills a man, this also is murder." 4 Blackstone, 200. 
If the criminal law has thus coupled violence even to the point of 
murder with robbery, how can it be contended that this car company, 
which kept such a négligent watch that a robbery accompanied by 
violence was efïected in its car without its knowledge, was not bound 
to foresee that violence might accompany such robbery? When the 
criminal side of the law couples murder as a conséquence to robbery, 
should not the civil side at least refrain from saying, as a matter of 
law, that they are so remote that one who is bound to keep watch 
against robbery can shut his eyes to the possibility of violence ac- 
companying that robbery ? 

We hâve not overlôoked Connell v. Railroad, 93 Va. 44, 24 S. E. 
467, 32 L. R. A. 792, 57 Am. St. Rep. 786. There the question decided 
was based wholly on the pleadings, and we hâve been able to get no 
report of the case showing the facts and circumstances. In our case 
we hâve the facts, and they show that robbery was not only intended, 
but committed, and that the violence committed was a means to efïect 
the theft, and the two were blended in the one act of robbery, which 
act was only possible through the négligence of the Pullman Company. 
When such is the case, and where, as hçre, the act is brought about by 
the négligence of a sleeping car company, the law should hold it to a 
due measure of responsibility. Its duty is plain. It is simply one of 
watchful oversight of a long, straight aisle. The safety of the sleeping 
passengers from dangers of fire, an attendant at hand to answer their 
summons, a person alert and prepared to render assistance in case of 
collision or sudden emergencies, are ail matters which naturally call 



502 188 FEDERAL BBPORTBH 

for the présence of some company servant on the car, and, if to this 
we superadd the légal duty to watch the aisle and prevent either theft 
of property and the protection of women on the cars, we are not hold- 
ing the sleeping car company to any higher standard of duty than com- 
mon sensé, reason, and security demand. We believe an enforcement 
of this judgment and holding the company to this measure of re- 
sponsibility will tend to the comfort, safety, and peace of mind of the 
traveling public, which pays a sleeping car company for thèse things. 

[4] It remains to notice another assignment, which is not, however, 
made grounds for a new trial, namely, that the déclarations of the 
porter, who was in charge of the car, were not admissible. We fail 
to see why they were not. The porter was the sole agent and rep- 
résentative of the company and was in charge of the car. The déc- 
larations of conductors and porters in such cases seem to hâve been 
given without objectio:: in several of the cases cited, notably in Pull- 
man Co. V. Gardner and Lewis v. New York Sleeping Car Co. Ob- 
viously they are admissible on the ground that they were made by the 
agent of the company in charge of the car. 

On the whole, therefore, we are of opinion the defendant's motion 
for judgment non obstante veredicto should be refused, and judgment 
entered for the plaintiff on the verdict. It is therefore so ordered. 



In re GEHRIS-HERBINB CO. 

(District Court, B. D. Pennsylvania. July 1, 1911.) 

No. 3,844. 

1. BANKRTJPTCT (§ 140*) CONDITIONAX Sale— Validitt— What Law Gov- 

EBNS. 

WTiere a bankrupt In operating a knitting mill In Pennsylvania pur- 
chased certain knitting macMnes from claimant, a Ehode Island corpo- 
ration, pursuant to a cbntract of cond'tional sale In the form of a lease 
reserving title in claimant untll the machines were paid for, whether 
such contract, though made in Rhode Island, was valld as against the 
bankrupt's trustée, was to he determiued by the law of Pennsylvania. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 140.*] 

2. Bankruptcy (§ 140*) — Property Vestinq in Trustée— Conditional Sale 

OR Bailmeni»— Construction of Conteact. 

A bankrupt operated a knitting mill in Penpsylvania, and for tliis pur- 
pose purchased certain knitting machines from claimant, to be paid for 
one-third cash 30 days from date of shipmeut, and the balance iii three 
notes payable three, six, and nine months from date at 6 per cent. Prior 
to the delivery of the machines, the bankrupt executed an agreement in 
the form of a lease, reciting that It had leased the machines from claim- 
ant and agreed to pay for the use and rental of the machines $1,903.20, 
$654.40 In cash, and the balance in subséquent installments. It also 
agreed to keep the machines insured for claimant's beneflt, and not to 
remove or suffer them to be attached, mortgaged, or damaged, and, in 
case they were, the bankrupt should forfeit ail rights to the macliines 
and to the further use and possession thereof with the rîght to the cluiii!- 
ant to enter the promises and remove the machines on default. Nothiiig 
was ever pald on the machines, and the bankrupt did not keep them in- 
sured. Hearing that tlie bankrupt was in failing circumstances, claini- 

•Fof other cases see same topic & § kumbbk in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



IN EE QEHEI8-HERBINE CO. 503 

ant procured a déclaration from it that the machines sliould remain tem- 
porarily in storage on tlie bankrupt's promises as the seller's property. 
Beld, that such arrangement constituted a conditional sale and not a 
bailment of the machines which under the Pennsylvania law was Invalid 
as against exécution ereditors of the huyer and was therefore invalid as 
against the bankrupt's trustée under Bankruptcv Act July 1, 1898, c. 
541, § 47a (2), 30 Stat 557 (U. S. Oomp. St. 1901, p. 3438), as amended by 
Act June 25, 1910, c. 412, § 8, 36 Stat. 840, giving to the trustée ail rights, 
remédies, and powers of a judgment créditer holding an exécution re- 
turned unsatisfied. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 140.*] 

In Bankruptcy. In the matter of bankruptcy proceedings of Geh- 
ris-Herbine Company. On certificate of référée for review of an 
order denying pétition to reclaim property. AfErmed. 

John H. Bridenbaugh, for trustée. 

Isaac Hiester, for Jenckes Knitting Machine Co. 

J. B. McPHERSON, District Judge. [1] The pétition and ad- 
judication in this case were filed and entered in September, 1910, 
and therefore the right of the trustée to the property now in ques- 
tion is governed by section 8 of the amending act of June 25, 1910 
(chapter 412, 36 Stat. 840), which provides that: 

"Trustées * ♦ * as to ail property not in the custody of the bankruptcy 
court shall be deemed vested with ail the rights, remédies, and powers oJ 
a judgment creditor holding an exécution duly returned unsatisfied." 

Décisions holding that a trustée has no other right than belongc" 
to the bankrupt are no longer controlHng. It seems also to be con- 
ceded by the claimant, the Jenckes Knitting Machine Company, that, 
although the contract may hâve been made in Rhode Island, the right 
of the trustée is to be tested by the law of Pennsylvania. 

[2] Tested therefore by that law, what is the true character of the 
contract in question? Is it a bailment, or a conditional sale? If it 
is really and in good faith a bailment, it is valid not only between the 
parties but against ereditors also; for a man does not lose the title 
to his property by hiring it to another, although he may hâve parted 
with the possession and the other may hâve acquired it. But, if he 
has really sold it and has also parted with the possession, he will 
find in numerous jurisdictions — in Pennsylvania, for example — that 
he cannot en force against exécution ereditors a condition that he is 
to retain the title until the price is paid. Thèse rules are too well 
knowii to need the support of citation. The facts of the présent case, 
as set forth in the careful report of the learned référée, are in sub- 
stance as f ollows : 

The bankrupt manufactured hosiery in Reading, Pa., and the 
claimant manufactures knitting machines in Pawtucket, R. I. In 
March, 1910, the claimant's Pennsylvania agent visited Reading in 
the effort to sell machines. The best terms the bankrupt would oflfer 
were one-third cash in 30 days from shipment, and two-thirds in 
notes at three, six, and nine months, respectively. The agent and 
the bankrupt agreed upon thèse terms, but the bankrupt also agreed 
to sign the contract hereinafter set forth, of which a copy was then 

*For other cases see same topic & § numbek io Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



504 188 FEDERAL REPORTEE 

shown and read. Thereupon two orders were signed by the bank- 
rupt; one being as follows: 

Jenckes Knitting Machine Co., Pawtucket, R. I. 

Reading, March 24, 1910. 
Order No. 226. 
For Gehrls-Herblne Co. 

City, Reading, Pa Street, Pearl & Kerper. 

State, Penna. 

SLip via Reading Ry. 

No. Machines, 10. 

(Then follows teehnlcal description of machines.) 
Priée, $100.00 F. O. B. Pawtucket, B. I. 
Terms, % Cash 30 days from date of shipment 
Balance in 3 notes, 3-6-9-month notes. 
Date, from date of shlpment at 6%. 
Deliveries, as soon as possible on recelpt of this order. 

Remarks: Want thèse machines as soon as possible to go In the new mlll and 
will pay $30.00 additional for 3-0 attachment if perfected, &c. 

[Signed] The Gehris-Herbine Co., 

L. Howard Gehris, Sec. & Treas. 

The claîmant acknowledged receipt o£ thèse orders in the follow- 
ing letter: 

Pawtucket, R. I., March 29, 1910. 
Gehris-Herbine Co., 45 Reed St., Reading, Pa. — Gentlemen: 

We beg to acknowledge receipt through our Mr. Morningstar of your order 
for machlnery, and hâve entered same for ten 200 needle SV^ Invincible Ma- 
chines, &c., at $150.00 each, and ten 220 needle 3% Invincible Machines, &c., 
at $181.50 each, f. o. b. Pawtucket ; terms, one-thlrd cash 30 days from date 
of shipment, balance In three equal notes of three, six, and nlne months from 
date of shipment, to bear interest at 6%. 

Thèse machines to be on our lease plan. 

We thank you for the order and will do ail we can to hurry the machines 
along to you. 

Very truly yours, Jenckes Knitting Mach. Co. 

The machines were shipped in May and June, 1910, but were not 
put to use until the notes and two agreements or leases were signed. 
A sample note is as follows : 
$436.25 Reading, Pa., May 28, 1910. 

For value received, wlthout défalcation three months after date we promise 
to pay to the order of the Jenckes Knitting Machine Co., four liundred and 
thlrty-slx and 25/i„„ dollars. 

The considération of this and other notes Is the rent of the folîowing de- 
scribed Invincible Knitting Machines, 7519-7528, 7114-7115, which we hâve 
received and hlred of the Jenckes Knitting Machine Co., who shall hâve the 
rlght in case of nonpayment at œaturity of any of said notes, wlthout proeess 
of law, to enter and retake, and may enter and retake immédiate possession 
of the said property wherever it may be, and remove the same. Référence 
belug made for détails to the lease by the Jenckes Knitting Machine Co. to us 
of said machines. 

Payable at R. I. Hospital Trust Ca, Providence, R. I. 
Due wlth int. at 6%. The Gehris-Herbine Co., Inc. 

Chas. W. Herbine, Président 
h. Howard Gehris, Treasurer. 

At the same time the following agreement was signed (the other 
being of similar ténor) : 

This is to certify that the Gehris-Herbine Co. of Reading, Pennsylvania, 
bas this day hlred and received of the Jenckes Knitting Machine Company, 



IN RE GEHRIS-HERBINE CO. 505 

a corporation duly Incorporated under the laws of the state of Rbode Island, 
and loeated and doiug business in the city of Pawtucket, county of Provi- 
dence in said state, twelve Invincible Automatic Knitting Machines Nos. 7510- 
7528, 7114-7115 valued at nineteen hundred sixty-three & so/^^o dollars ($1,- 
963.20) delivered by said Jencljes Knitting Machine Company to sald the 
Gebris-Herbine Co., f, o. b. at said Pawtucket; said machines to be used 
at their mill in Reading, county of Berks, state of Penua., and net to be 
removed therefrom without permission of said Jenckes Knitting Machine 
Company in writlng first obtained, and hereby agrée to pay said Jenckes 
Knitting Machine Company as foliows: Six hundred flfty-four & "«/loo dol- 
lars ($(J54.40) in cash on June 28th, 1910, and three notes, ail dated May 
28th, 1910, payable at R. I. Hospital Trust Co., Providence, R. I., with iu- 
terest at 6%, as foliows: two due 3 & 6 months for four hundred thirty-six 
& 2 6/ioo dollars ($430.25) each and one due 9 months for four hundred thirty- 
six & 3o/ioo dollars (1436.30) for the use and rental of said machines until 
the sum so paid for use and rental as aforesaid shall equal said sum of 
nineteen hundred sixty-three and 2i>/ioo dollars ($1,963.20) and to keep said 
machines insured to the full amount of nineteen hundred sixty-three & ^^i/mo 
dollars ($1,963.20) and to deliver the insarauce policy to said Jenckes Knit- 
ting Machine Company, and to keep said machines in good repair during the 
continuance of this lease, and that if we fail to pay said rent as above stipu- 
lated, or if we remove said machines from one place to another without writ- 
ten permission of said Jenckes Knitting Machine Company flrst obtained or 
sell or suffer sald machines to be attached, mortgaged, damaged or injured or 
fail to keep sald machines insured to tUe full value of nineteen hundred sixty- 
three dollars & 20/100 ($1,963.20), we hereby forfelt ail rlght to said machines 
and to the further use and possession of the same, and to ail moneys paid 
by us hereunder. 

And further agrée and consent that said Jenckes Knitting Machine Com- 
pany, its agents and servants, may at any and ail times enter upon any prom- 
ises or into any building or room occupied by us or any tenant under us and 
View and examine said machines and to remove the same without notice or 
demand for any violation of this agreement, and without beiug deemed gullty 
of any trespass or wrong; and in case of such removal, said Jeuckes Knitting 
Machine Company may sell and appropriate sald machines as it may see fit, 
and in case it sells and appropriâtes such machines it may apply the proceeds, 
after the payment of ail costs and expenses of recovery iucluding the ex- 
pense of shipping sald machines back to sald Jenckes Knitting Machine Com- 
pany at said Pawtucket, and ail costs of keeping and selling said machines to 
the payment of any moneys or rent due said Jenckes Knitting Machine Com- 
pany under this lease, and in case such net proceeds are not sufflclent to 
pay sald Jenckes Knitting Machine Company ail rents or money due hereunder, 
we remain iiable for such balance or sums still remaining due, and hereby 
promise and agrée to pay such balance to the said Jenckes Knitting Machine 
Company. 

And it Is expressly understood and agreed that the tltle to said machines 
shall be and remain in said Jenckes Knitting Machine Company, until the 
full sum aforesaid shall be paid ; and that upon such payment in full, to- 
gether with ail the expenses, sald Jenckes Knitting Machine Company will 
thereupon release aU title and ownership in said machine to the Gehris- 
Herbine Co. 

In witness whereof sald parties lessor and lessee, hâve hereunto set their 
hands and seals at Reading this 17th day of June A. D. 1910. 

Jenckes Knitting Machine Co., J. W. Baker, Secy., Lessor. 
The Gehris-Herblne Ce, Inc., L. Howard Gehris, Treasurer, Lessee. 
Witness: 

A. T. Burns. 

R. J. Morningstar. 

The notes were antedated, to correspond with the dates of ship- 
ment. The machines were then set up, and went into opération. 
Nothing was paid either of the first installment or on the notes, 
and the bankrupt did not keep the machines insured. Hearing that 



506 188 FEDERAL REPORTEE 

the bankrupt was in failing circumstances, the claimant notified the 
bankrupt in August to stop using the machines, and this notice seems 
to hâve been complied with. The claimant's agent also demanded 
either money, the retum of the machines, or the signing of some 
paper showing to whom the machines belonged, and obtained the 
following déclaration: 

Articles of agreement made and concluded this 22d day of August, 1910, be- 
tween the Jenckes Knitting Machine Company of Rhode Island, hereinafter 
called the lessor, and the Gehris-Herbine Company of Readlng, Pennsylvania, 
hereinafter called the lessee: 

Whereas by lease dated June 17, 1910, the lessor leased to the lessee twelve 
(12) Invincible Automatic Knitting Machines Nos. 7519, 7520, 7521, 7522, 7523, 
7524, 7525, 7526, 7527, 7528, 7114, 7115, and by lease dated June 29th, 1910, 
eight (8) Invincible Automatic Knitting Machines Nos. 7529, 7530, 7531, 7532, 
7533, 7534, 7535, 7536, according to the terms and conditions contained in 
said leases, It being expressly understood and agreed therein that the title 
to said machines should be and remain in the lessor. 

And whereas the lessee is in failing circumstances and may shortly become 
insolvent or bankrupt, or be obliged to make an assignment for the benefit 
of creditors, and the said twenty (20) knitting machines are now on the prom- 
ises occupled by the lessee: 

Now In considération of the premises and of other mutually valuable con- 
sidérations it is hereby agreed between the lessor and the lessee that the 
said twenty (20) machines shall remain temporarily in storage on the said 
premises as the property of the lessor, subject to the right of removal there- 
by at any time withoult notice, without payment of storage or any other 
charge whatever by the lessor; and It is expressly understood and agreed 
between the parties hereto that the lessor shall retaln ail its rights under said 
leases of June 17th, 1910, and June 29th, 1910, and shall waive no rights there- 
under whatever on account of this agreement. 

In witness whereof we hâve hereunto set our hands and seals this 22d day 
of August, 1910. The Gehrls-Herblne Co., Inc. [Seal.] 

II. Howard Gehris, Treasurer [Seal.] 

Signed, sealed and delivered In the présence of : 
R. J. Morningstar, Witness. 

This being the situation, a pétition in bankruptcy was filed on Sep- 
tember 2d, and adjudication followed three weeks later. A trustée 
was afterwards elected and took possession of the machines. In 
November the claimant filed the pétition now before the court. 

Upon thèse facts the référée decided the transaction to be a con- 
ditional sale, and refused the pétition to reclaim. I agrée with this 
conclusion. If the claimant had really hired its machines to the 
bankrupt, it would not hâve transferred its ownership; but it chose 
to sell, attempting to retain the title as security, and it makes no 
différence therefore (except as the language used may throw some 
light on the real intention of the parties) that in some of its terms 
the transaction may bear the prima facie aspect of a bailment. In 
truth, however, it was in my opinion a sale with, a condition as to 
title annexée; and, if this construction be correct, the controversy 
.is at an end, for the Pennsylvania law refuses to enforce such a 
condition against exécution creditors. The numerous cases in this 
state are concerned mainly with the effort to décide what the parties 
really intended. As soon as this intention is discovered, one con- 
clusion or the other inevitably foUows. 

The order of the référée is affirmed. 



ODHNEK T. NORTHERN PAO. RY. CO. 507 

ODHNER V. NORTHERN PAC. RT. OO. 
(Circuit Court, S. D. New York. Novemfcer 11, 1910.) 

Hkmoval of Causes (§ 11*) — Fédéral Cotjkts—Jurisdiction— Parties. 

Plaintiff, an alien reslding in New York, sued défendant, a Wisconsin 
corporation, In tlie Suprême Court of New York on a cause of action 
which arose in Minnesota. Held that, since plaintiff could not bave 
brought tlie action originally in the Circuit Court for the Southern Dis- 
trict of New York, défendant was not entitled to remove the cause to such 
court over plaintifC's objectlcpn. 

[Ed. Note. — For other cases, see Removal of Causes, Dec. Dig. § 11.*] 

At Law. Action by Victor Odhner against the Northern Pacific 
Railway Company. Motion to remand. Granted. 

Robert H. Griffin, for plaintiff. 

Stetson, Jennings & Russell, for défendant. 

COXE, Circuit Judge. This action was brought in the Suprême 
Court of the state of New York, the venue being laid in the county 
of New York. 

The défendant removed it to this court on the ground of diversity 
of citizenship. The plaintiff moves to remand. The plaintiff résides 
in New York, but is an alien and a subject of the King of Sweden. 
The défendant is a Wisconsin corporation. 

The action is to recover damages alleged to hâve been sustained by 
the plaintiff at Minneapolis, Minnesota. We hâve, then, in the South- 
ern District of New York, an action brought by an alien against a 
Wisconsin corporation upon a cause of action which arose in Min- 
nesota. 

The défendant concèdes as follows: 

"It follows, therefore, that while the alien plaintiff in the présent suit could 
not originally hâve brought and maintained this suit In this court against the 
objection of the citizen défendant, nevertheless such right of the défendant 
to object was a Personal privilège which might be waived by the défendant, 
and was in fact waived by removing the cause to this court." 

But the plaintiff has waived none of his rights and has never con- 
sented to présent his controversy to this court. 

Has this court jurisdiction? In ex parte Wisner, 203 U. S. 449, 
27 Sup. et. 150, 51 L. Ed. 264, the Suprême Court in December, 
1906 granted a writ of mandamus directing the Circuit Court to re- 
mand to the state court an action brought therein by a citizen of an- 
other state against a non-resident défendant who was a citizen of a 
state other than that of the plaintiff. The cause was elaborately ar- 
gued and the Chief Justice delivered a carefuUy prepared opinion 
dealing with ail the questions involved. He says, inter alia, 

"And it is settled that no suit is removable under section 2 [Act March 3. 
1875, c. 137, 18 Stat. 470 (U. S. Comp. St. 1901, p. 509)] unless it be one 
that plaintiff could hâve brought originally in the circuit court. * * * In 
the présent case neither of the parties was a citizen of the state of Missouri, 
in which state the suit was brought, and, therefore, it could not hâve been 
brought in the circuit court in the flrst instance. • • • When, then, 

•For otlier cases see same topic & § ntjmekh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



508 188 FEDERAL REPORTER 

Beardsîey flled hls pétition for removal, he sought affirmative relief in an- 
other district than his own. But plaintiff, In resisting the application and 
niovlng to remand denied the jurisdiction of the circuit court. * * * Our 
conclusion is that the case should hâve been remanded, and as the circuit 
court had no Jurisdiction to proceed, that mandamus is the proper remedy." 

In the Matter of Moore, 209 U. S. 490, 28 Sup. Ct. 585, 706, 52 L. 
Ed. 904, Mr. Justice Brewer adopts the syllabus of the Wisner Case 
as a concise statement of tîie conclusion of the court and says: 

"It was held in Ex parte Wisner, 203 U. S. 449, 27 Sup. Ct. 150, 51 L. Ed. 
264, that: 'ITnder sections 1, 2, 3 of the act of March 3, 1875, c. 137, 18 Stat. 
470, 471, as amended by the act of March 1, 1887, c. 373, § 1, 24 Stat. 552. 553, 
corrected by the act of August 13, 1888, c. S6C, § 1, 25 Stat. 433-435 [U. S. 
Corup. St. 1901, pp. 508-510] an action commenced in a state court, by a citizen 
of another state, against a nonresident défendant, who is a citizen of a state 
other than that of the plaintiff, cannot be removed by the défendant into the 
Circuit Court of the United States.' * * * But in that case the plaintiff 
never consented to accept the jurisdiction of the United States court, while 
in this case it is contended that both parties did so consent, and that there- 
fore the décision in that case is not controlling." 

The court then holds that both parties did consent, the défendant 
by filing a pétition for removal, and the plaintiff by filing an amended 
pétition in the United States Circuit Court and giving time, by stipu- 
lation, to the défendant to answer. 

I cannot avoid the conclusion that the Wisner décision disposes of 
the case at bar. The only important distinction upon the facts is that 
the plaintiff in the Wisner Case was a citizen and in this case he is an 
alien — a fact which certainly does not help the contention that this 
court has jurisdiction. 

In the Matter of Tobin, 214 U. S. 508, 29 Sup. Ct. 702, 53 L. Ed. 
1061, the Suprême Court, in May, 1909, denied a motion for leave to 
file a pétition for a mandamus directing the circuit court to remand a 
cause to the state court, the plaintiff being an alien and the défendant 
a New Jersey corporation. The défendant removed the cause to the 
United States Circuit Court for, the District of Minnesota and the 
plaintiff moved to remand to the state court, which was denied. 

The writ was refused by the Suprême Court without a word of 
comment. What reason operated upon the mind of the court can only 
be conjectured. The facts, as in the Wisner Case, are similar to those 
in the case at bar. But we must assume that the court was thorough'y 
familiar with the facts in the Wisner Case and that had they intended 
to overrule it they would hâve given their reasons at length.. It is in- 
conceivable that upon such an important question they would hâve 
made so radical a décision without a word of explanation. 

The décisions of the circuit courts are diametrically opposed to each 
other on this question. The view of the law which I am inclined to 
think is the correct one is clearly stated in Mahopoulus v. Chicago R. 
R. Co. (C. C.) 167 Fed. 165. It may be conceded that a question which 
has provoked so much discussion and upon which the courts are di- 
vided is not free from doubt. In such circumstances, however, the 
safer course is to leave the controversy in a tribunal regarding whose 
jurisdiction there can be no question. I cannot believe that it was 
the intention of Congress to require this court to take cognizance of 



JACKSON V. HOOPEB 609 

an action between an alien and a Wisconsin corporation. If the plain- 
tiff were a citizen of New York the défendant might, at least theoret- 
ically, hâve some cause to apprehend that local influences might favor 
the citizen, but surely a domestic corporation has nothing to dread 
from an alien in this regard. In other words, the reasons which in- 
duced the removal act are wholly inapplicable to the case in hand. 
Again, there can be no doubt as to the jurisdiction of the state court, 
there is doubt as to the jurisdiction of the Circuit Court and to retain 
the cause hère may lead to the unfortunate resuit illustrated by New- 
comb V. Burbank, 181 Fed. 334, 104 C. G. A. 164, and cases cited. 
The motion to remand is granted. 



JACKSON V. HOOPEIÎ, 
(Circuit Court, S. D. New York. January 4, 1911.) 

Removai, of Causes (§ 11*) — Jueisdiction— Fedebal Coueis— Résidence. 

Plaintiff, a citizen of Massachusetts, sued défendant, a citizen ot New 
York, In tlie New York Suprême Court, wiiereupon défendant removed tlie 
suit to the Circuit Court for the Southern District of New York. Held 
that, slnce neither plaintiff nor défendant had a résidence in the United 
States, both being résidents of England, the jurisdiction of the Circuit 
Court was doubtful, and hence the case would be remanded to the state 
court. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. S| 29- 
31 ; Dec. Dig. § 11.*] 

In Equity. Bill by Walter Montgomery Jackson against Horace 
Everett Hooper. On motion to remand to state court. Granted. 

Joseph H. Choate, Jr., for plaintiff. 

Samuel Untermyer (Abraham Benedict, on the brief), for défend- 
ant. 

COXE, Circuit Judge. This action is based upon an alleged agree- 
ment between the parties. The relief demanded is — First, for spécifie 
performance. Second, for an injunction in the meantime. Third. 
that the défendant return certain sums of money which it is alleged 
he has received. Fourth, that if spécifie performance be not decreed 
the défendant pay to the plaintiff $1,2S0,CC)0 as damages. 

The action was commenced October 3, 1910, in the Suprême Court 
of the state of New York by service of the summons upon the défend- 
ant within the state. The défendant appeared and the complaint was 
served upon his attorney November 9, 1910. An answer has not as 
yet been interposed. 

The action was removed to this court by the défendant upon the 
ground that the amount in dispute exceeds the sum of $2,000 and that 
the controversy is wholly between citizens of différent states, the plain- 
tiff being a citizen of Massachusetts and the défendant a citizen of 
New York. The plaintiff now moves to remand on the ground that 
this court has no jurisdiction of the action. It appears that at the 
time the action was commenced and long prior thereto, both parties 
were résidents of England. 

•For oUisr caseï see same topic & i ndmbeb in Dec. & Am. Diga. 1907 to date, & Kep'r Indexe* 



510 188 FEDERAL EBPOBTEB 

We hâve, then, an action in the Circuit Court for the Southern Dis- 
trict of New York between a citizen of Massachusetts and a citizen of 
New York, both of them residing in England and neither having a 
résidence in the United States. The question is — has this court juris- 
diction ? 

It must be conceded that the question of jurisdiction is, at least, 
doubtful. In such circumstances, the safer course for ail parties con- 
cerned is to remand the cause to the state court, which unquestion- 
ably has jurisdiction. If a citizen of Massachusetts is willing to pré- 
sent his controversy to the courts of New York, a citizen of New 
York should not complain. 

Under section 5 of the act of March 3, 1875, c. 137, 18 Stat. 472 
(U. S. Comp. St. 1901, p. 511), it is made the duty of the court to 
dismiss the cause at any time if it appears that it does not involve a 
controversy properly within its jurisdiction. The unfortunate results 
which follow the rétention of a cause in a court where the jurisdiction 
is not clear are well illustrated by the case of Newcomb v. Burbank, 
181 Fed. 334, 104 C. C. A. 164, decided by the Circuit Court of Ap- 
peals on June 14, 1910, and the case of Rubber Tire Co. v. Ferguson, 
183 Fed. 756, decided December 12, 1910. 

The case at bar is sui generis because, so far as I am informed, it 
présents for the first time a controversy where the parties are citizens 
but neither résides in the United States. The venue could not bave 
been laid either in the district of the résidence of the plaintiff or de- 
fendant for neither had such a résidence. Being citizens of the United 
States, it may be that the parties could consent to jurisdiction in this 
court, but there is no prêteuse that the plaintiiï has consented to the 
jurisdiction; on the contrary, he has protested against it. I think the 
case is ruled by Ex parte Wisner, 203 U. S. 449, 27 Sup. Ct. 150, 51 
L. Ed. 264, and Matter of Moore, 209 U. S. 490, 28 Sup. Ct. 585, 706, 
52 L- Ed. 904. This court has occasion to examine thèse cases in 
Odhner v. Northern Pacific Co., 188 Fed. 507, décision filed Novem- 
ber 11. 1910. 

The motion to remand is granted. 



DANCIGER et al. v. STONE et al. 
(Circuit Court, E. D. Oklahoma. January 18, 1910.) 
No. 1,232. 

1. INTOXICATINO LiQUOES (§ 147*) — SaLE— PLACE OF COMMERCE. 

Where complalnants, liqnor dealers In Missouri, received orders for 
Uquor by mail froin customers in Oklahoma and delivered the liquor to 
carriers In Missouri for transportatlon to the purchasers receiving a bill 
of ladlng which was thereupon forwarded to a bank or other collectiug 
agent in the place where the customer resided, who collected the pur- 
chase priée and then delivered the bill of lading to the purchaser, who 
obtained the liquor from the carrier, such transaction constituted a sale 

•For other cases see same topio & § number In Dec. & Am. DIgs. 1907 to date, & Eep'r Indexes 



DAWCIGEB V. STONS 511 

of Tlquor In Mlssonrl, and the transportatlon thereof Interstate commerce, 
and was not therefore a violation of the Oklahoma prohibltory law. 

lEd. Note. — For other cases, see Intoxicating Llquors, Cent. Dlg. I 162 ; 
Dec. Dig. § 147.*] 

2. Intoxicating Liquobs (§ 138*) — Tbanspoetation— Collecting Agent fob 

Act March 4, 1909, c. 321, i 239, 35 Stat 1136, i provides that any rall- 
road Company, express company, or other common carrier or any other 
person, who. In connection with the transportatlon of llquors from one 
State to another, shall collect the purchase price or any part thereof 
before, on, or after delivery, from the consignée or from any other per- 
son, or shall In any manner act as the agent of the buyer or seller of any 
ench llquor, save only In the actnal transportatlon and delivery thereof 
VFill be flned. Held, that the acts referred to were condemned only when 
connected with the Interstate transportatlon of liquor, and that the act 
of a bank in collectlng a draft attached to a bill of ladlng for liquor 
transported In Interstate commerce from the purchaser was not in con- 
nection with the Interstate transportatlon of the liquor, and it was there- 
fore not within the statute. 

[Ed. Note. — For other cases, see Intoxicating Llquors, Cent. Dlg. S 
148; Dec. Dlg. § 138.*] 

In Equity. Bill by Dan Danciger and others against S. W. Stone 
and others. On demurrer to complainants' application for temporary 
application and temporary injunction. Demurrer overruled, and in- 
junction granted. 

See, also, 187 Fed. 853. 

E. H. Busiek, for complainants. 
Fred S. Caldwell, for respondents. 

CAMPBELL, District Judge. At the hearing, respondent's demurrer 
and the complainant's application for temporary injunction were heard 
together. At the completion of the hearing, the court announced that, 
unless the demurrer should be sustained, the complainants were entP 
tled to the temporary injunction prayed for, upon the showing made; 
it appearing that, since the décision of this court in a former case 
( 187 Fed. 853) in which they were complainants, they hâve not solicited 
the purchase of liquors within this district, and are not now doing so. 
The demurrer was taken under advisement, and the parties given time 
within which to file briefs in support of their respective contentions, 
which they hâve now donc. 

The complainants allège in their bill that their principal method and 
custom of making shipments into other states, including the state of 
Oklahoma, is to receive mail orders for shipments from customers out- 
side of the state of Missouri for sales and shipments of liquors to be 
made in Missouri, and directed to other states; that, after said orders 
are accepted by complainants, the liquors are delivered at Kansas City, 
Mo., to varions railroad companies and other common carriers, trans- 
porting freight from said state of Missouri to such other states; that 
in ail cases where goods are sold and dehvered to the carrier in Kan- 
sas City, Mo., the said sales are made outside of the state of Oklahoma, 
and the goods are delivered to the carrier for the purpose of making 

•For other cases see same topio & | kumeer in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
» U. S. Comp. St. Supp. 1909, p. 1464. 



512 188 FEDERAL REPORTEE 

delivery to the consignée only. Complainànts furtlier allège: That 
after delivering said liquors to carriers for shipment, as aforesaid, in 
the State of Missouri, they receive from the carrier a bill of lading and 
forward said bill of lading to a bank, or some responsible person, at 
the home of the consignée, attached to which is a sight draft for the 
purchase price of the liquor. The customer pays the draft and re- 
ceives the bill of lading, and présents the same to the railroad Com- 
pany and receives the shipment. That this method is what is known to 
the railroad, and to the public generally, as "shipper's order," "order 
notify," or "sight draft and bill of lading" method. 

[1] Respondents contend that complainants are hot entitled to the 
protection of the commerce clause of the Constitution, for the reason 
that their method of business, as stated in their bill, amounts to a sale 
of liquor within the state of Oklahoma, and is, therefore, a violation 
of the state prohibitory law. In the opinion of the court, this question 
is determined adverse to respondent's contention by the ruling of the 
Suprême Court of the United States in American Express Co. v. lowa, 
196 U. S. 133, 25 Sup. Ct. 182, 49 L. Ed. 417. 

[2] It is furthér and especially urged by respondents that complain- 
ants cannot invoke the aid of a court of equity because it appears from 
their bill that their business is carried on and conducted in direct vio- 
lation of section 239 of an act of Congress approved March 4, 1909, 
c. 321, 35 Stat. 1136, which reads as follows: 

"Any railroad Company, express company, or other common carrier, or any 
other persou who, in connection witli the transportation of any spirituous, 
vinous, malted, fermented, or other Intoxicating liquor of any kind, from oue 
state, terrltory, or district of the United States, or place noncontiguous to 
but subject to the jurisdiction thereof, into any other state, territory, or dis- 
trict of the United States, or place noncontiguous to but subject to the juris- 
diction thereof, or from any foreign country into any state, terrltory, or dis- 
trict of the United States, or place noncontiguous to but subject to the juris- 
diction thereof, shall collect the purchase price or any part thereof, before, 
on, or after delivery, from the consignée, or from any other person, or shall 
in any maamer act as the agent of the buyer or seller of any such liquor, for 
the purpose of buying or selling or completing the sale thereof, saving only 
in the actual transportation and delivery of the same, shall be fined not 
more than flve thousand dollars.?' 

It is urged that under this statute any bank which collects one of 
complainant's drafts with bill of lading attached violâtes the foregoing 
statute, and that, as complainant confesses that it is procuring banks 
so to do, it is not in position to seek aid of this court of equity. Un- 
less under this statute a bank in this state may be criminally prose- 
cuted for collecting one of the complainant's drafts, there is no force 
in respondent's contention. Let us analyze the statute and see against 
whom it is directed. The law applies to "any railroad company, ex- 
press Company, or other common carrier, or any other person" whose 
acts shall bring him within its terms. The acts at which the statute is 
leveled are: First, the collection of the purchase price, or any part 
thereof befu'e, on, or after delivery, from the consignée, or from any 
other person ; and, second, in any manner acting as the agent of the 
buyer, or seller, of any such liquor, for the purpose of buying or sell- 
ing or completing the sale thereof, saving only in the actual transpor- 



JAMES V. CITT INVE8TING CO. 513 

tation and delivery of the same. But such acts are only condemned 
by this section when they are committed in connection with the inter- 
state transportation of such liquor. It is true the bank, when it col- 
lects the draft, coUects the purchase price of the Hquor ; but can such 
collection be said to be in any way in connection with the interstate 
transportation of the same? The transportation is effected by the 
railroad company, or other common carrier, entirely independent of 
the bank. The transportation of the liquor and the collection of the 
draft are two separate and distinct acts, pérformed by separate and 
distinct individuals or corporations, and the fact that the carrier, un- 
der its contract, cannot deliver the shipment until the consignée first 
goes to the bank and pays the draft, to secure the biU of lading, and 
then présents it to the carrier, cannot be said to in any way connect 
the bank with the transportation. Its act cannot therefore be said to 
be in violation of the terms of the statute. To my mind, there is 
nothing obscure about this section of the statute. Its manifest pur- 
pose is to provide that common carriers, or any other persons, engaged 
in or connected with the interstate transportation of intoxicating liq- 
uors, shall confine themselves wholly to such carriage and transporta- 
tion, and shall not act as agent of the buyer or seller of liquor, for the 
purposes of the collection of the purchase price, or for any other pur- 
pose, "saving only in the actual transportation and delivery of the 
same." This construction of the statute is clearly sustained by the 
report of the congressiona' committee, relative to this législation while 
the same was pending in Congress, an extract of which is quoted in 
complainant's brief , and reads as follows : 

"The principal cause of difficulty in restrlcting the liquor trafiic in the 
States prohiblting such trafflc, has been the misuse of the facilities furnlshed 
by railroad companies, express companies, and other common carriers in 
bringing in liquors from outside states to be paid for on delivery. To meet 
this evil, your committee report the substitute. 

"By the proposed substitute, if it be enacted into law, Congress will, under 
Its constltutional authorlty, bring its power to bear direotly upon the com- 
mon carriers, prohiblting them from acting as agents of the vendors of liq- 
uors in other states. Further, by requiring that ail interstate shipments of 
liquors shall be plainly marlied as to their contents, the substitute hereby 
submitted will enable the several states to trace and to control the disposition 
and use of such liquors under their own police powers." 

It follows that the demurrer must be overruled, and the temporary 
injunction granted. 



JAMES et al. V. CITY INVESTING CO. et aL 
(Circuit Court, S. D. New Xorli. May. 4, 1911.) 

1. Equity (§ 148*) — Pleading— Bill— MuLTiFARiousNEss. 

A bill to set aside deeds by eomplainants on the grounds that they were 
obtained by fraud and are forgeries in whole or in part, and to set aside 
subséquent couveyances by the grantee as clouds on the title of complaln- 
ant, is not multifarious. 

[Ed. Note.— For other cases, see Equity, Cent. Dig. §§ 341-367; Dec. 
Dig. i 148.*] 

•For other cases see same topic & § kumbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 
18S F.— 33 



514 188 federal reporter 

2. Cancellatiow of Insteuments (§ 37*) — Pleadiwo—IDemubreb— Spécial 
Demubbeb. 

On spécial demurrer to a blU to set aslde conveyances on the ground 
that they were obtained by fraud and are forgeries In whole or In part, 
the complainant will be reqnired to make the blll more deflnite and cer- 
tain by showing whether the fraudulent représentations or forgery is re- 
lled on, and, if forgery, whether forgery of the Instrument as a whole, or 
of the signature, or of what particular part of the body of the instru- 
ment. 

[Ed. Note. — For other cases, see Cancellatlon of Instruments, Dec. Dlg. 
§ 37.*] 

In Equity. Bill by Cornelia A. James and another against the City 
Investing Company and others. Heard on amended bill and spécial 
demurrer thereto. Demurrer sustained, with leave to amend the bill. 

Atwater & Cruikshank, for complainant. 
Philip S. Dean, for défendants City Investing Co. and others. 
Blandy, Mooney & Shipman, for défendant Morgenthau & Mor- 
genthau Co. 

COXE, Circuit Judge. [1] The amended bill is filed to hâve a deed 
made by complainants to one Charles H. Dow and an alleged ratifi- 
cation thereof made, respectively, September 1, 1903, and October 30, 
1903, declared null and void. The bill also prays that subséquent con- 
veyances to the défendants be declared invalid as clouds upon the com- 
plainants' title. The deeds in question cover the property at the cor- 
ner of Fifty-Sixth street and Broadway known as the "Rockingham" 
property and purport to cover the two-thirds interest of the complain- 
ants therein. Thèse deeds hâve been put on record and the property 
has been conveyed several times since and is now claimed by the de- 
fendants, who succeeded to the title conveyed to said Dow. The com- 
plainants contend that the conveyances by them to Dow were obtained 
by fraud and are forgeries in whole or in part. It is not pretended 
that the défendants, other than Dow, had any knowledge of the fraud 
and it was stated on the argument that Dow had disappeared. The 
bill is not multifarious. 

[2] The principal object of the spécial demurrer is to hâve para- 
graphs viii, x and xiii of the bill made more definite and certain. 
As the testimony in equity actions in the fédéral courts is usually taken 
out of court with fréquent adjournments for the convenience of par- 
ties, it is altogether probable that the défendants will be informed fully 
as to the précise nature of the complainants' contention long before 
they will be required to produce their testimony. No great hardship 
would follow, therefore, if the défendants were to join issue on the 
bill in its présent fo'rm. However, they are entitled to definite in- 
formation as to the nature of the complainants' cause of action in or- 
der that they may meet it by their answers and proof s. It is said that 
the complainants are advanced in âge and it may well be that their 
memories are defective as to the conversations and transactions with 
Dow and the inducements held out by him which resulted in the ex- 
écution of the deeds. But, on the other hand, they are not, for this 

*For other càse> aee same lopic & i iiumbeb in Dec. & Am. Dl£s. 1907 to date, & Rep'r Indexes 



JAMES V. CITT INVKSTING CO. 513 

reason, relîeved of the obligation to présent a more definite statement 
of the cause or causes of action than appears by the bill in its présent 
form. The allégations are inconsistent, indefinite and contradictory, 
If the complainants' nanies were forged to the deeds a précise aver- 
ment to that effect should be made. If the signatures are genuine and 
the contents of the deeds was altered or the description of the "Rock- 
ingham" property subsequently added, thèse facts should be stated. 
If, on the other hand, the complainants were induced to sign the deeds 
by the false représentations of Dow as to their contents or the pur- 
poses for which they were to be used, the bill should state this cause 
of action with clearness and précision. 

It is manifest that there are alleged at least three separate grounds 
for avoiding the deeds, each proceeding upon a distinct theory. I 
think it is not too much to require the complainants to détermine upon 
what theory they intend to attack the deeds. If upon the ground that 
thèse instruments are forgeries, in toto, a simple allégation to that 
effect will, probably, make further averments unnecessary. If it be 
contended that parts of the instruments are genuine and other parts 
forged, ti'ie bill should point out what is genuine and what is spurious. 
If the theory of forgery be abandoned and the complainants décide 
to proceed upon the theory that the deeds were obtained by fraud, 
they should allège what the fraudulent représentations were which 
induced them to sign the deeds and what artifices, pretenses and de- 
vices were practised upon them by Dow to produce this resuit. The 
défendants should also be informed whether Dow fraudulently con- 
cealed from the complainants the fact that the deeds contained a de- 
scription of the "Rockingham" property or whether he fraudulently 
misrepresented the purpose of the instruments which he induced the 
complainants to sign. 

I do not, of course, intend to intimate that the pleader should state 
his évidence, but he should make his cause of action so plain that the 
défendants can answer and prépare for trial intelligently. 

It will not, I think, be necessary to set out in détail the amendments 
required, as the complainants' counsel will, no doubt, be able to make 
the bill definite and certain in the particulars mentioned, without spé- 
cifie directions. 

The preliminary statement in the brief for the complainants makes 
clear the theory upon which they rely. Though some of the allégations 
are broad enough to justify the contention that the complainants in- 
tend to prove that the deeds, including the signatures and acknowl- 
edgments, are forgeries, I do not understand this to be the theory of 
their action. It seems to me sufficiently clear that they propose to 
show that Dow, who at the time had the entire confidence of the com- 
plainants, presented the instruments to them and induced them to sign 
by representing that they related to property other than the "Rocking- 
ham" property and that they signed them relying upon this informa- 
tion. 

It is also their contention that if the deeds did contain such a de- 
scription, it was concealed from the complainants and if it did not, 
then the description was fraudulently inserted afterwards by Dow. If 



516 188 FEDERAL REPOETEB 

the foregoing be a correct statement of the cause of action, there 
should be no difficulty in making it definite and certain in the bill. 

The demurrers are sustained with costs (consisting of a single 
docket fee of $20) and the necessary disbursements to which the de- 
fendants hâve been subjected by reason thereof. The complainants 
hâve leave on paying said $20 and disbursements to amend their bill 
within twenty days from the date of the order to be entered. 



CAMPBELL V. SPOKANB & I. E. R. CO. 

(Circuit Court, E. D. Washington. AprU 17, 1911.) 

No. 1,471. 

1. Masteb and Sebvant (§ 111*) — Injuet to Servant— Electric Bailwat 

Cars. 

Independent of statute, an electric railway company Is not bound to 
supply drawbars, heavy base framework, or buffers on tlie front end of 
Its motors on the same Une to protect motormen from injury by colli- 
sions. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. !§ 
215-217; Dec. Dig. § 111.*] 

2. Master and Servant (§ 94*) — Statutes— Violation— Négligence Fer Se. 

Where a statute Is designed to protect a partlcular class of servants 
against a partic-uiar class of Injuries, a violation of the statute is négli- 
gence par se only when one of the proteeted class is injured from a cause 
against which the statute VFas designed to protect him. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. § 159; 
Dec. Dig. § 94.*] 

3. Master and Servant (§ 111*) — Injuries to Servant— Electric Bailwat 

Motobman— Safety Appliance Act. 

Safety Appliance Act March 2, 1893, c, 196, 27 Stat. 531 (U. S. Oomp. 
St. 1901, p. 3174), and acts amendatory thereoif requiring ail cars used in 
Interstate commerce to be equipped with certain safety appllances, so 
that they could be coupled automatically by impact wlthout the neces- 
sity of men going between them, was not intended to protect and did not 
protect employés from Injuries received as the resuit of collision. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 
215-217; Dec. Dig. § 111.» 

Duty of railroad companles to furnlsh safe appllances, see note to Fel- 
ton V. Bullard, 37 O. C. A. 8.] 

4. Master and Servant (§ 111*) — Injuries to Sehvant-^Electkic Cars. 

An electric railway company is under no obligation to maintaln draw- 
bars, heavy base frameworls, or bufCers on the front end of its motors or 
cars unless It intends to couple or uncouple cars to that end. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 
215-217; Dec. Dig. § 111.*] 

5. Master and Servant (§ 210*) — Injuries to SiasvANi— Motokmen— As- 

SUMED RlSK. 

Where an electric railway motorman was Injured In a collision, he as- 
sumed the rlsli of danger arising from the fact that the car he was oper- 
ating was old and of an antlquated type, and that It was so full of pas- 

•For other cases see same toplc & § numbbh in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



CAMPBELL V. 8POKANE & I. E. B. CO. 517 

sengers that no avenue of escape was open to hlm when collision became 
imminent. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dlg. §§ 
5.54-556 ; Dec. Dig. § 210.* 

Assumption of rislî incident to employment, see note to CLesapeake & 
O. R. Co. V. Hennessey, 38 G. C. A. 314.] 

6. MiSTBB AND Servant (§ 111*) — Injukies to Sebvani>-Eailboads— Colli- 

sion— Wat OF Escape. 

An electric railway company Is net bound to provide a spécial avenue 
of escape for motormen in the event of a collision. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dlg. §§ 
215-217; Dec. Dlg. § 111.*] 

7. Master and Sebvant (§ 258*) — Injuries to Servant— Pleading. 

In an action for Injuries to an electric railway motorman in a collision, 
plaintilï was required to state in hls complalnt the particular act or acts 
of négligence relied on. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. |§ 
816-836 ; Dec. Dig. § 258.*] 

At L^w. Action by Edgar E. Campbell against the Spokane & In- 
land Electric Railroad Company. On exceptions to the complaint. 
Motion to strike and to make more definite and certain granted, 

Belden & Losey, for plaintiff. 
Graves, Kizer & Graves, for défendant. 

RUDKIN, District Judge. The défendant company owns and op- 
érâtes a line of electric railway between the city of Spokïfne, in the 
State of Washington, and the city of Coeur d'AIene, in the state of 
Idaho, and at the time of receiving the injury complained of in this 
action the plaintiff was a motorman in its employ. While the plaintiff 
was thus employed, on the 31st day of July, 1909, his train collided 
with another train operated by the défendant company over the same 
line, and running in the opposite direction, causing the injuries for 
which a recovery is hère sought. The third and seventh paragraphs 
of the complaint allège that the drawbars on the front end of the mo- 
tor car operated by the plaintiff, and the heavy base framework to 
which the drawbars are attached, were six inches lower than the like 
appliances on the front end of the motor car with which the plaintiff's 
car collided, and that the accident would not hâve happened had the 
drawbars and heavy framework on the two colliding cars been of the 
same height. 

[1] Independently of statute, an electric railway company is under 
no obligation to supply drawbars, heavy base framework, or buffers, 
on the front end of its motors to guard and protect the motormen 
against injuries resulting from collisions with other cars or trains on 
the same line or track. Durkee v. Hudson Valley Ry. Co., 193 N. Y. 
555, 86 N. E. 537; Filbert v. New York, N. H. Business Hr. Co., 
95 App. Div. 199, 88 N. Y. Supp. 438. 

[2] Nor does the complaint charge any violation of the safety ap- 
pliance act of March 2, 1893, c. 196, 27 Stat. 531 (U. S. Comp. St. 
1901, p. 3174), and the acts amendatory thereof, of which the plaintiff 
can complain. When a statute is designed to protect a particular class 

•For other cases see same topic & § numbee In Dec. & A m. Dlgs. 1907 to date, & Rep'r Indexes 



518 188 FEDEBAL EEPOETEB 

of persons agaînst a particular class of injuries, a violation of the 
statutory duty constitutes négligence per se, whenever one of the pro- 
tected class is injured from a cause against which the statute was de- 
signed to protect him. [3] The purpose of the safety appliance act 
was to require ail cars, regularly used on any railroad engaged in 
interstate commerce, and ail other cars used in connection therewith, 
to couple automatically by impact and to be coupled and uncoupled 
without the necessity of men going between them, whether they are 
loaded or empty, and although not actually engaged in such commerce 
at the time. Hohenleitner v. Southern Pac. Co. (C. C.) 177 Fed. 796. 
The design of the act was, therefore, to protect employés from inju- 
ries received in going between cars to couple or uncouple them, not 
from injuries received in collisions. 

Waiving the question whether the défendant violated the act by 
maintaining drawbars on its différent cars at différent heights, as be- 
tween itself and the government, the plaintiff in this case has no 
ground of complaint, because he was not injured from the use of the 
defective drawbars, but as the resuit of a collision. 

[4] A railway company is under no obligation to maintain draw- 
bars, framework, or buffers on the front end of its engines or electric 
cars, unless it intends to couple or uncouple cars to that end; and 
if it is not required to supply such appliances at ail, it is not responsi- 
ble for the kind supplied, unless an employé is injured through their 
use. The third and seventh paragraphs of the complaint will therefore 
be stricken. 

The ninth paragraph of the complaint allèges, in substance, that the 
motor car upon which the plaintiff was employed was of an old and 
ahtiquated type; that there was but one way of ingress and egress to 
and from the motorman's department, and that the car was so crowded 
with passengers that no avenue of escape was open to the plaintiff 
when the collision became imminent. 

[5] The make of the car and its crowded condition were fully 
known to the plaintiff, and he assumed ail risk arising from thèse 
causes. 

[G] Furthermore, I am not aware that it is the duty of an electric 
railway company to provide any spécial avenue of escape for the 
motorman in the event of a collision, or that it violâtes any of its légal 
duties if it fails so to do. This paragraph will also be stricken. 

[7] The défendant has further moved the court to require the plain- 
tiff to make his complaint more definite and certain in certain particu- 
lars. The complaint allèges that the défendant disregarded its rules, 
gave improper orders, and so forth, but thèse charges are entirely too 
gênerai in their nature. If the plaintiff has a cause of action he should 
be afforded every opportunity to prove it, but the défendant should 
likewise be afforded every opportunity to défend against it. This col- 
lision was doubtless caused by négligence on the part of some ofiicer 
or employé of the défendant company, but the particular act of négli- 
gence nowhere appears in the complaint. The collision must hâve re- 
sulted from one of three causes. JPirst, the giving of improper orders 
to the crew of one or both of the colliding trains; or, second, the 



IN HE WOLF 519 

failure to gîve proper orders to the crew of oné or both of the colliding 
trains ; or, third, disobedience of orders by one or both of such crews. 
If the collision resulted from one or more of thèse acts of négligence 
the plaintiff should set them forth in ordinary and concise language so 
that the défendant and the court may know the particular act of nég- 
ligence relied on. 

The foregoing, I apprehend, will be a sufficient guidance to the plain- 
tifif in drafting an amended complaint, which he is permitted to file un- 
der the rules. 

The motion to strike and the motion to make more definite and cer- 
tain are granted. 



In re WOLF. 
(Circuit Court, M. D. Tennessee, Nashville Division. April 13, 1911.) 

1. Aliens (§ 67*) — Nattjbalization— "CouETs OF Commun -Law Jubisdic- 

TION." 

A court of common-law Jurisdietlon autUorized by Rev. St. § 2165 (U. 
S. Comp. St. 1901, p. 1329), to admit allens as citizens, need not possess 
a gênerai common-law jurisdietlon, but If any part of Its jurisdietlon an- 
swers that désignation It Is sufficient. Courts wlth thls jurisdietlon are 
those which hâve the power to punish offenses, enforce rights, or redress 
wrongs recognlzed by the common law, or which, in the détermination 
of the causes they décide, are governed by the prlnciples, rules, and 
usages of that law. The term "having common-law jurisdietlon" is used 
to distlnguish thèse courts from those which hâve no jurisdietlon save in 
equity, admiralty, or in matters not involving offenses or rights under the 
common law. Wlthin thls meaning and under the décisions of the state 
of Tennessee the county courts of that state are not "courts of common- 
law jurisdietlon," having authority to admit allens to citizenship. 

[Ed. Note.— For other cases, see Allens, Cent. Dlg. §§ 131-137; Dec. 
Dlg. i 67.*] 

2. Aliens (§ 68*) — Naturalization— Pboceedings. 

A pétition for naturalization not verified by affidavlts of two citizens 
will be dlsmissed, wlth eosts, but without préjudice to the rlght of the 
petitloner to file a new application. 

[Ed. Note. — For othei cases, see Allens, Cent. Dlg. § 142; Dec. Dlg. 
§ 68.*] 

Application by ]\lax Wolf for naturalization. Dismissed, without 
préjudice. 

A. M. Tillman, U. S. Atty., for the United States. 
On Final Hearing. 

SANFORD, District Judge. The petitioner appears to be a person 
of good moral character and otherwise qualified to be admitted as a 
citizen of the United States, but the government insists that while 
this is true he is yet not entitled to naturalization because one of the 
two affiants who verified his pétition for naturalization is not, it is 
urged, a citizen of the United States. 

Section 4 of the naturalization act of June 29, 1906, c. 3592, 34 Stat. 

■•For other cases see same topic & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



520 188 FEDBEAL REPORTER 

596 (U._ S. Comp. St. Supp. 1909, p. 479), requires that the pétition for 
naturalization "be verified by the affidavits of at least two crédible 
witnesses, who are citizens of the United States." The objection 
raised is that one of thèse affilants, the witness Goldstein, is shown not 
to be a citizen of the United States, because he is alien born and has 
not, as the government insists, become a naturalized citizen of the 
United States. It appears from the proof that this witness was natu- 
ralized before the passage of the act of 1906 by the county court of Da- 
vidson county ; and the contention is that the said county court was not 
a court which was authorized to naturalize aliens under the law as it 
then existed. 

By section 2165 of the Revised Statutes (U. S. Comp. St. 1901, p. 
1329), which was in force at the time thèse naturalization proceedings 
were had in the county court, it was provided that aliens might be 
admitted as citizens of the United States by "a court of record of any 
of the States having common-law jurisdiction, and a seal and clerk." 
The government contends that the county court of Davidson county, 
while a court of record having a seal and clerk, is not a court of 
"common-law jurisdiction" within the meaning of this statute, and 
hence had no jurisdiction to naturalize the witness. 

[1] It is well settled that to constitute a court one of common-law 
jurisdiction within the meaning of this section of the Revised Stat- 
utes, it is not necessary that it should be one possessing a gênerai com- 
mon-law jurisdiction, but that if any part of its jurisdiction answers 
that désignation the requirement of the statute is fulfilled. United 
States v. Power, 14 Blatchf. 223, Fed. Cas. No. 16.080; Ex parte 
Tweedy (D. C, W. D. Tenu.) 22 Fed. 84; United States v. Lehman 
(D. C.) 39 Fed. 49; Levin v. United States (8th Circuit) 128 Fed. 826, 
63 C. C. A. 476. In the last-named case the Circuit Court of Appeals 
for the Eighth Circuit said : 

"Courts having common-law jurisdiction, within the meaning of this sec- 
tion, are those which hâve the power to punish offenses, to enforce rights, 
or to redress wrongs recognized by the common law, or which, in the déter- 
mination of the causes which they décide, are governed by the principles, 
rules, and usages of that law. The term 'having common-law jurisdiction' is 
used to distinguish thèse courts from those whleh hâve no jurisdiction save 
in equity, in admiralty, or in matters not Involving offenses or rights under 
the common law. U. S. v. Lehman (D. C.) .39 Fed. 49, 50; Parsons v. Bed- 
ford, 3 Pet. 446, 447, 7 L. Ed. 732 ; In the Mat ter of Martin Conner, 39 Cal. 
98, 101, 2 Am. Eep. 427; People ex tel. v. McGowan, 77 111. 644, 20 Am. Rep. 
254. Courts which hâve some commou-Iaw jurisdiction are courts having 
common-law jurisdiction. and it is not indispensable to the qualification of a 
court under this act of Congress that it should hâve ail the common-law ju- 
risdiction, or even that it should hâve gênerai common-law jurisdiction. Ex 
parte Tweedy, 22 Fed. 84 ; In the BTatter of Martin Conner, 39 Cal. 98, 101, 
2 Am. Rep. 427; U. S. v. Power. 14 Blatchf. 223, Fed. Cas. No. 16,080, 27 Fed. 
Cas. 607, 608 ; Ex parte Gladhill, 8 Metc. (Mass.) 108, 170." 

Applying this test to the jurisdiction of the county court of David- 
son county, I am of the opinion that it cannot properly be said to be a 
court of common-law jurisdiction. 

It is well settled that in Tennessee the county court is one of very 
limited jurisdiction, restricted to the express provisions of the stat- 
utes. Young V. Shumate, 3 Sneed, 369; Dean v. Snelling, 2 Heisk. 



IN RE WOLP 521 

484. Without setting out ail the powers conf erred ty statute upon the 
county court — under which it is given original jurisdiction in the pro- 
bate of wills, the granting of letters testamentary and of adminis- 
tration, the appointment and removal of guardians, the allotment of 
dower and over bastardy and bastards, and other matters, and concur- 
rent jurisdiction with the circuit and chancery courts in the partition 
and distribution of the estâtes of decedents and the settlenient of iji- 
solvent estâtes (Code, § 4201, Shannon's [Tenu.] § 6027) — it may be 
said, generally, that none of the matters in which it is given jurisdic- 
tion are matters coming within the jurisdiction of common-law courts 
as they existed at the comnion law, and, f urther, that in the exercise of 
its jurisdiction in thèse matters it does not foUow the common-law 
procédure, but proceeds as a court of equity. 

In Young v. Shumate, supra (3 Sneed, 369, 371) the Suprême Court 
of Tennessee stated that the jurisdiction of the county court was very 
limited in its extent and "of an équitable nature" ; this statement being 
cited with approval in Dean v. Snelling, supra (2 Heisk. 484, 487). 
And in Caruthers' History of a Lawsuit (4th Ed.) 11, it is said that 
the county court in Tennessee "is not a court of common*law jurisdic- 
tion," andi "can only exercise such jurisdictional powers as are ex- 
pressly given by statute." 

In Ex parte Tweedy, supra ( [D. C] 84 Fed. 84), it was held by 
Judge Hammond that the probate court of Shelby county, Tenn., al- 
though having jurisdiction to allot dower and partition estâtes and 
over bastardy and bastards, was not a court having common-law ju- 
risdiction within the meaning of section 2165 of the Revised Statutes. 
And while in the matter of Martin Conner, supra (39 Cal. 98, 2 Am. 
Rep. 427), it was held that the county courts of California were courts 
of common-law jurisdiction within the meaning of the naturalization 
acts, this décision is inapplicable to the présent case, since under the 
statutes of California the county courts were specifically given juris- 
diction in various matters of common-law cognizance, both of a civil 
and criminal nature. 

Under thèse authorities, and for thèse reasons, I am therefore con- 
strained to hold that the county court of Davidson county is not a 
court of common-law jurisdiction, within the meaning of section 2165 
of the Revised Statutes, and that hence the naturalization of the wit- 
ness Goldstein was void for want of jurisdiction in the court. 

[2] It therefore follows that the pétition for naturalization in this 
case was not verified by the affidavits of two citizens of the United 
States, as required by the naturalization act, and must therefore be dis- 
missed, with costs; but this dismissal will be without préjudice to the 
right of the petitioner to file a new application for naturalization. 



522 188 FEDERAL REPORTER 

In re SALVATOE BREWING CO. 

(District Court, S. D. New York, April 22, 1911.) 

No. 10,631. 

1. Bankbuptct (§ 331*)— Claims—Pkooï— Trusts. 

Directors of a corporation in order to furnish money for S. Indorsed 
two notes wliich were discounted at a bank. The corporation executed 
an assignaient of certain securities to M., one of tlie directors, to be held 
by him as trustée for ail, as seeurity for tbe indorsements. Tbe corpora- 
tion became a bankrupt, before the notes matured, and on maturity the 
directors equally contributed an amount necessary to pay the notes, and 
delivered it to M., paid the notes, and then claimed to hold the securities 
as trustée for the directors. The instrument by which the securities 
were transferred to M. in terms authorlzed him to do whatever was nec- 
essary to make the securities available. Beld, that M. was thereby au- 
thorlzed to take any steps necessary to reimburse the directors ont of the 
assets of the bankrupt, and his claim to the securities having failed he 
was authorlzed to flie proof of claim on the indorsements as trustée for 
the contributlng directors. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dlg. § 520; Dec. 
Dig. § 831.*] 

2. Bankeuptct (§ 328*) — Claims— Filing— Time— "Liquidated by Litiga- 

TION." 

The term "liquidated by litigation," as used In Bankr. Act July 1, 1898. 
e. 541, § 57n, 30 Stat. 561 (U. S. Comp. St. 1901, p. 3444), permlttlng proof 
of claims after a year if liquidated by litigation, applies to a case where 
the creditor has claimed to hold seeurity, and has lltigated that question 
and been defeated and thereafter attempts to prove as a gênerai cred- 
itor. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 518; Dec. 
Dig. § 328.* 

For other définitions, see Words and Phrases, vol. 5, p. 4175.] 

3. Bankruptcy (§ 336*)— Proof of Claim— Amendment. 

Where a director of a bankrupt corporation as trustée for himself and 
other contributlng directors, unsuccessfully prosecuted his claim to cer- 
tain seeurity for notes paid by such directors as indorsers, the évidence 
given in such proceeding amounted substantially to proof of the indors- 
ers' claim against the bankrupt's estate, and was sufflcient to sustain an 
amendment by adding the formai proofs of claim by the directors as 
gênerai creditors after the expiration of a year from adjudication. 

[ËB. Note. — For other cases, see Bankruptcy, Cent. Dlg. §§ 523, 524; 
Dec. Dig. § 336.*] 

In the matter of bankruptcy proceedings of the Salvator Brewing 
Company. On pétition of John H. Meyer to review a referee's order 
denying a motion for leave to amend proof of claim. Reversed, and 
claim allowed. 

See, also, 183 Fed. 910. 

Holm, Whitlock & Scarff (Victor E. Whitlock, of counsel), for 
claimant John H. Meyer. 

Henry A. Rubino, for trustée. 

HOLT, District Judge. This is a pétition to review an order 'of 
the référée denying a motion for leave to amend a proof of claim. 
The bankrupt company had nine directors, among whom was John 

*Por other cases see same toplc & § numbek iu Dec. & Am. Digs. 1907 to date, & Rep'r Indexas 



IN EE SALVATOR BREWING CO. 523 

H. Meyer. Before the bankruptcy each of the directors indorsed two 
notes, one for $4,500, and one for $18,000, which were discounted 
at a bank. At the same time, the Company executed an assignment to 
Meyer of certain securities owned by the company, to be held by 
Meyer, as trustée for ail the directors, as security for the indorse- 
ments. The notes came due after the bankruptcy, and were paid by 
Meyer, the money for such payment having been contributed equally 
by the nine directors. The trustée in bankruptcy having contested the 
validity of the assignment of the securities, a référence was ordered 
to pass upon that question. In that proceeding it was held that the 
assignment was invalid. Evidence was given in that proceeding prov- 
ing the indorsements by the nine directors and the payment of the 
notes, which évidence was not contradicted, and which clearly showed 
the validity of the claim of the indorsers for reimbursement. No 
formai proof of claim, however, was filed. After the termination of 
the litigation in respect to the validity of the assignment of the securi- 
tîes, a formai proof of claim was filed by Meyer, as trustée for the 
directors, for the amount which had been paid upon the indorse- 
ments. The proof of claim was objected to on the ground that it had 
not been filed within a year, and the claim was disallowed by the réf- 
érée on that ground. Thereupon this motion was made, on the ground 
that the évidence given in the proceeding to establish the validity of 
the assignment amounted to a proof of claim, and that it could be 
amended by annexing to it the formai proof of claim subsequently 
filed. This motion was denied by the référée, and from that order 
this review is taken. 

[1] The claim which is attempted to be proved in this case is en- 
tirely just. The company needed money. The directors obtained it 
by their individual indorsements. It increased by so much the.assets 
of the brewery, and there is no just reason why the directors should 
not be permitted as gênerai creditors to share in the distribution of 
the assets of the bankrupt. The sole grounds upon which their claim 
has been disallowed are (1) that Meyer could only prove for the one- 
ninth of the money paid which he contributed individually, and (2) 
that more than a year having passed after the adjudication, no proof 
of any kind could be filed. The trustée claims that Meyer, when he 
paid the notes, was a mère messenger to carry the money contributed 
by the nine directors; but the nine directors had previously, by an 
instrument of assignment, created him their trustée in respect to the 
securities transferred for their protection under their indorsements. 
Under this instrument Meyer was in terms authorized to do whatever 
was necessary to make the security available, and that authority car- 
ried with it, in my opinion, by implication, authority to Meyer to take 
any steps which might bring about the reimbursement of the directors 
out of the assets of the bankrupt for their payments as indorsers of 
the bankrupt's paper. When the notes came due, Meyer obtained the 
contributions of money from the indorsers, and was the person who 
paid the notes, and I think he paid them under bis authority as trus- 
tée of the securities. The notes having been paid, he claimed to hold 
the securities for the reimbursement of the directors. That claim 



524 188 FEDERAL REPORTER 

failed, but the fact that the court held that the transfer of the securi- 
ties was invalid did net affect the position of the directors as gênerai 
creditors, and admittedly they had a right to share in dividends. Hav- 
ing that right, in my opinion, in view of the formai création of Meyer 
as trustée under the instrument of assignment, and of his having acted 
in behalf of his fellow directors in making the payment of the notes, 
he was entitled to file proof of claim as trustée for such directors. 

[2] But it is claimed that the proof cannot be allowed because it 
was not filed within a year. But in the first place the provision of the 
Bankrupt Act July 1, 1898, c. 541, § 57n, 30 Stat. 561 (U. S. Comp. 
St. 1901, p. 3444) permits claims to be proved after a year if they are 
liquidated by litigation. This provision has been held to apply to a 
case where a creditor has claimed to hold security, and has litigated 
that question and been defeated. It is held that in such a case the 
creditor may thereafter prove as a gênerai creditor. In re Keyes (D. 
C.) 20 Am. Bankr. Rep. 183, 160 Fed. 763 ; In re Strobel (D. C.) 20 
Am. Bankr. Rep. 884, 163 Fed. 787; Keppel v. Tiffin Savings Bank, 
197 U. S. 356, 25 Sup. Ct. 443, 49 L. Ed. 790; Page v. Rogers, 211 
U. S. 575, 29 Sup. Ct. 159, 53 L. Ed. 332. 

[3] It is also claimed in this case that the évidence given on the 
hearing, in relation to the validity of the assignment of the securities, 
amounted substantially to a proof of the claim. Such évidence, of 
course, is not what is commonly known as a formai proof of claim, 
but it did prove facts which were essential to establish the claim, and 
indeed it was necessary, as a part of the claimant's proof in that pro- 
ceeding, to estabhsh that the notes had been paid by the indorsers, 
in order to show any ground for claiming to enforce the securities. 
I think, under the authorities, that the claim was proved in that pro- 
ceedipg, and that the motion made to amend the proof by adding the 
formai proofs of claim should be allowed. Buckingham v. Estes, 128 
Fed. 584, 63 C. C. A. 20; Matter of Roeber, 127 Fed. 122, 62 C. C. 
A. 122. 

My conclusion îs that the order under review should be reversed, 
and the claim of Meyer as trustée be allowed. 



UNITED STATES v. WALDMAN et al. 

(Circuit Court, S. D. New York. May 15, 1911.) 

1. Bankbuptct (§ 485*) — Offenses— CoNSPiRACT—CoNCEALED Assets. 

Bankr. Act July 1, 1S98, c. 541, § 29b, 30 Stat. 554 (U. S. Comp. St. 1901, 
p. 3434), makes it a criminal offense for a person to hâve knowingly and 
fraudulently concealed while a bankrupt, or after liis discharge, from 
the trustée, any of his property belonging to his estate in bankruptcy. 
Held that, slnce the act does not make it a criminal offense for a person 
not a bankrupt to conceal the bankrupt's property from the trustée, an 
indictment charging that défendants, who were in no manner officially 
connected either as directors or stockholders with the bankrupt corpora- 
tion, conspired to conceal assets of the corporation from the trustée in 
bankruptcy, and in pursuance of such conspiracy they removed the corpo- 

•For other cases see same topic & § numbek în Dec. & Am. Digs. 1S07 to date, & Rep'r Indexes 



UNITED STATES V. WALDMAN 525 

ratlon's stock of goods froïn its place of business and caused the same to 
be sold and coneealed the proceeds, did not state an offense. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 906-908; 
Dec. Dig. § 485.*] 
2. Bankeuptct (§ 494*) — Offenses— Indiciment. 

Where an indictment for conspiracy to conceal the assets of a bank- 
rupt corporation from its trustées alleged as the overt act, that défend- 
ants removed and sold the bankrupt's stock of goods and coneealed the 
proceeds from the bankrupt's receiver and trustée, but did not allège any 
of the circumstances under whlch the goods were removed, so as to show 
that such removal was illégal, and not under légal process, it vvas in- 
BufEcient. 

[Ed. Note. — For other ci.ses, see Bankruptcy, Cent. Dig. g 911; Dec. 
Dig. § 494.*] 

8. Bankeuptcy (§ 494*) — Ofi^enses— Indictment— Cebtaintt— F alse Oaths 
IN Bankruptcy Proceedings. 

An indictment charging conspiracy to give false oaths in a bankruptcy 
proceeding which failed to allège what false oaths were to be given, or 
what the subject of the oaths was, with such reasonable particularity as 
would advise défendant of the charge against him, was insufïicient. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 911; Dec. 
Dig. § 494.*] 

Philip Waldman and others were indicted for conspiracy to induce 
a bankrupt corporation to knowingly conceal its assets from its cred- 
itors, and they demur. Sustained. 

Henry A. Wise, U. S. Atty., and Isaac H. Levy, Asst. U. S. Atty. 

Charles L- Hoffman (Ernest E. Baldwin, of counsel), for défendants 
Waldman, Kline and Ordover. 

Archibald Palmer, for défendants Kopelman, Finkelstein, and Ru- 
bin. 

HOLT, District Judge. This îs a demurrer to an indictment 
against Philip Waldman, Barnett Kopelman, Sam Kline, Paul Finkel- 
stein, Morris Ordover and Morris Rubin. The indictment contains 
two counts. 

[1] The first count charges that on December 26, 1910, S. Fine- 
man Company was a corporation dealing in dry goods at New York ; 
that it had belonging to it a stock of merchandise of the value of 
about $8,000; that on said date the défendants "did contemplate, an- 
ticipate, and expect that the said S. Fineman Company should be there- 
after adjudged a bankrupt," and that a trustée of the estate would be 
elected; that on DecemlDer 26, 1910, application was duly made to 
this court to hâve S. Fineman Company adjudged a bankrupt; that 
it was so adjudged on January 20, 1911, and that on March 28, 1911, 
a trustée was duly elected and qualified; that the défendants on 
December 26, 1910, and thence continuously on ail other days to April 
5, 1911, conspired together to commit an offense against the United 
States, "the said offense being the concealment, knowingly and f raud- 
ulently, by S. Fineman Company, while the said S. Fineman Com- 
pany was a bankrupt, from the trustée in bankruptcy of the said S. 
Fineman Company, of property belonging to the estate in bankruptcy 
of the said corporation" ; that in pursuance of the conspiracy the de- 

*For other cases see same topic & § numbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



526 188 FEDERAL REPORTEE 

fendants on Decemter 27, 1910, removed from the place of business 
of S. Fineman Company the entire stock of goods, and thereafter 
caused the merchandise to be sold, and did willfully and wrongfully 
conceal the proceeds and the books of account from the receiver and 
trustée in bankruptcy of the said corporation. The second count 
charges the same preliminary facts, and, as an overt act, that the 
défendants conspired to make false oaths in the said bankruptcy pro- 
ceedings, and to testify falsely concerning the amount, location and 
disposition of the property of the corporation, and that the de- 
fendant Waldman did, on January 12, 1911, pursuant to the conspir- 
acy, testify falsely under oath concerning the acts, conduct, and prop- 
erty of the said S. Fineman Company before a Commissioner duly 
appointed to take the testimony on oath of the said Philip Waldman 
and other persons. 

There is no allégation in this indictment that any of the défendants 
were officers of or connected in any way with the corporation of S. 
Fineman Company. The allégation is, in substance, that the défend- 
ants conspired together to hâve the bankrupt conceal from its trustée, 
when he was appointed, its property. By section 29b of the bank- 
ruptcy act it is made a criminal offense for a person to hâve know- 
ingly and fraudulently concealed, while a bankrupt, or after bis dis- 
charge, from bis trustée, any of the property belonging to his estate 
in bankruptcy. The bankrupt act does not make it a criminal offense 
for a person who is not a bankrupt to conceal the bankrupt's property 
from the trustée. The charge, therefore, in this case is that persons 
who were not the bankrupt, and who are not alleged to hâve been con- 
nected in any way with the bankrupt, or to sustain any such relation 
to the bankrupt as to confer upon them any authority over the bank- 
rupt, conspired to bave the bankrupt conceal its property; but pre- 
sumably they had no power to carry out the object of the conspiracy. 
They were not the bankrupt, or ofEcers of the bankrupt. They might 
conspire as much as they chose, but there is nothing to indicate that 
they could thereby compel or induce the bankrupt to conceal its prop- 
erty, and there can be no presumption that a bankrupt would com- 
mit a crime simply because outside parties conspired to bave it donc. 
If the indictment alleged that the défendants conspired with the of- 
ficers of the bankrupt or with stockholders or any persons able to in- 
fluence the officers of the bankrupt, a différent question would be pre- 
sented ; _ but, in my opinion, the conspiracy alleged in the first count 
of the indictment bas nothing to feed on, to use the expression of 
Judge Dillon in the case of United States v. Crafton, 4 Dill. 145, Fed. 
Cas. No. 14,881. 

[2] The overt act in aid of the conspiracy alleged in the first count 
is that the défendants removed and sold the bankrupt's stock of goods 
and concealed the proceeds from the receiver and trustée. There is 
no allégation of the circumstances under which the goods were re- 
moved. It may bave been under légal process issued in a suit on a 
just claim, or under légal process in a suit on an unjust claim, or the 
goods may bave been removed by force without authority under cir- 
cumstances constituting conversion or larceny. Whatever may bave 



IN EE BURTIS 527 

been the circumstances under which the goods were removed, if the 
trustée is entitled to recover them, there are appropriate légal proceed- 
ings for that purpose; but, in my opinion, an indictment of the per- 
sons removing them, on the theory that they had conspired to make 
the bankrupt conceal the goods or their proceeds from the trustée, is 
not an appropriate proceeding for that purpose. The fact that the 
bankrupt's goods were removed by persons having no connection with 
the bankrupt has no tendency to show a conspiracy to induce the bank- 
rupt to conceal the goods from the trustée. The two things inherently 
hâve no connection. The circumstances of the transaction, if stated, 
might show some connection; but, unless stated, no connection is ap- 
parent. 

[3] The second count charges a conspiracy to give false oaths in 
the bankruptcy proceeding. This is an offense if committed by per- 
sons other than the bankrupt. But the trouble with the second count 
is that it does not state what false oaths were to be given, or what 
the subject of the false oaths was, with any such reasonable particu- 
larity as would apprise the défendants of the nature of the charge 
against them. Without requiring extrême détail in the allégations, it 
is not enough to allège that the défendants conspired to give false 
oaths, which is, in substance, ail that the second count allèges. 

In my opinion, both counts of the indictment are bad, and the de- 
murrer to the entire indictment should be sustained. 



In re BURTIS. 
(District Court, E. D. New York. June 9, 1911.) 

BANKEttPTCT (i 143*) ASSETS— ANNUITY— RlGHTS OF TRUSTEE— STATTTTES. 

The bankrupt's liusband bequeathed to ter the Income from a trust 
fund to be created by the executors to amount to .$600 per annum In lieu 
of dower, etc. This the widow rejected, and settled her dower and other 
claims against the estate by an agreement with the other beneflciaries, 
by which they agreed to pay to ner $300 a quarter so long as she re- 
maîued a widow and unmarried, and $150 a quarter for life in case of 
remarriage. The annuity was paid to her untll bankruptcy intervened. 
Held, that the wldow's annuity was a right which she could asslgn and 
which could hâve been followed by credltors ; and hence her trustée in 
bankruptcy was entitled to sell the bankrupt's right for Its présent value 
or coUect 10 per cent of the excess over .$12 a week under Code Civ. 
Proc. § 1391, as amended by Laws 1908, c. 148, providing for a continuing 
exécution against income from trust funds or profits to become due to a 
judgment debtor to the amount of $12 or more a week for the collection 
of 10 per cent, of such Income. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 143.*] 

In the matter of bankruptcy proceedings of Fannie Betts Burtis. 
On pétition to review a referee's détermination as to the right of the 
trustée to an annuity belonging to the bankrupt. 

William G. Phlippeau, for petitioner. 
Oscar A. Lewis, for bankrupt. 

•For other cases see same topic & § humbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexer 



528 188 FEDERAL KEPOETEU 

CHATFIELD, District Judge. The barikrupt filed a voluntary 
pétition on October 14, 1910, with schedules showing daims of less 
than $2,500, of which one for $469.76 is based upon a judgment 
docketedi a few days previous to the bankruptcy pétition. 

The bankrupt is a widow, who by the will of her late husband, 
probated October 29, 1896, was given an income from a trust fund 
to be created by the executors, of $600 per annum, in Heu of dower 
and ail claims against the estate. 

This was rejected by the widow, who, on January 6, 1897, settled 
her dower and other claims against the estate upon the exécution of 
an agreement secured by a mortgage on real estate for $24,000, by 
which agreement the heirs of the deceasedi husband undertook to pay 
to a trustée for the use of the widbw $300 per quarter, so long as she 
remained a widow and unmarried, and $150 a quarter during her hfe 
in case of her remarriage. 

Thèse payments were made until 1907, when a partition suit of the 
mortgaged property caused the substitution and deposit of $24,000 
in the place of said mortgage, as security for the payment of the an- 
nuity previously agreed upon. 

The bankrupt claims the annuity to be "the right of a beneficiary 
of an express trust to receive rents and profits of real estate/' and 
hence to be unassignable under section 103 of the real propertv law 
(chapter 52, Laws of 1909 of New York [Consol. Laws 1909, c.'SO]), 
citing Lent v. Howard, 89 N. Y. 169; Cuthbert v. Chauvet, 136 N. 
Y. 326, 32 N. E. 1088, 18 h. R. A. 745, andi other cases. 

In order to meet the suggestion that under the agreement refer- 
red to the income provided for the bankrupt for life was to be the 
proceeds of a trust of personal property rather than real estate, the 
bankrupt calls attention to section 15, c. 45, Laws 1909 (Consol, 
Laws 1909, c. 41), making the right to compel the performance of a 
trust to apply income from personal property to the use of a person 
untransferable, and under this section cites Gréer v. Chester, 62 Hun, 
329, 17 N. Y. Supp. 238, affirmed 131 N. Y. 629, 30 N. E. 863, and 
WilHams v. Thorn, 70 N. Y. 270, to the effect that an income of this 
nature cannot be applied to the payment of debts, unless it bas been 
affirmatively shown that the income is more than sufficient for the 
fair support of the beneficiary or that there is a surplus. 

It must be held that, whether or not such a trust in real estate as 
was created by the will referred to could hâve been assigned, the 
widow did hâve the right to assign her rights as widow if the trust 
were not actually carried into effect. Her dower rights would hâve 
been liable for her debts, and her statutory share in her husband's 
estate would also hâve been liable for the payment of her debts. It 
must foUow, therefore, that when Mrs. Burtis refused to accept the 
beneficiary interest under the trust, and compelled the transfer to 
her of rights by which she received an income of $1,200 from certain 
individuals, the payment of which was secured by a mortgage, she 
did not rely upon an inaliénable trust, but insisted and agreedl upon re- 
ceiving for her support the proceeds of a larger amount of property 



IN BK BURTI8 529 

than would hâve been secured to her, beyond the power of attack by 
her creditors, under the provisions of the will. 

It would also follow, therefore, that the income to be paid by thèse 
individuals to Mrs. Burtis and secured first by a mortgage and then 
by the deposit of money with the Hamilton Trust Company, can be 
reached by creditors of Mrs. Burtis to the same extent (andl no more) 
that any such income or annuity could hâve been followed up by her 
creditors, if she had created the trust fund herself from cash paid to 
her in release of her dovi^er rights. The income is an annuity and not 
a trust of realty or personalty. 

Her creditors, under the cases previously cited, and under such 
authorities as Wetmore v. Wetmore, 149 N. Y. 520, 44 N. E. 169, 
33 L. R. A. 708, 52 Am. St. Rep. 752, and Mills v. _Husson,_ 140 N. 
Y. 99, 35 N. E. 422, might avail themselves of any rights which they 
can hâve against an income in the form of an annuity purchased by the 
annuitant herself. 

It has been held in the case of In re Tiffany_(D. C.) 133 Fed. 799, 
that a trustée in bankruptcy may bring a suit in equlty to obtain the 
surplus of income from a trust fund, if that income be more than 
sufficient for the support of the bankrupt. Section 1391 of the Code 
of Civil Procédure of New York, as amended by chapter 148 of the 
Laws of 1908, provides for the levying of a continuing exécution 
against wages, debt, earnings, salary, income from trust funds, or 
profits, to thereafter become due to a judgment debtor to the amount 
of $12 or more a week, and for the collection of 10 per cent, of such 
income under the continuing exécution. 

Inasmuch as it has been held herein that the quarterly payment to 
the bankrupt is not paid from the proceeds of a trust fund, it would 
not seem to corne within the provisions of section 1391 unless the an- 
nuity be considered as a contract debt coming due and owing to the 
bankrupt quarterly as long as she shall live. 

It is apparent that $1,200 per annum is more than $12 a week, and 
it also appears from the record that the judgment créditer, inasmuch 
as his judgment was obtained within less than four months prior to 
the filing of pétition, cannot maintain his lien upon the fund against 
the gênerai creditors. Hence the trustée in bankruptcy, if exécution be 
levied and any collection made, would be entitled to the proceeds of 
the levy, that is, 10 per cent, of the debt or of the income, if it be 
an income of that nature, until the judgment be paid. On the other 
hand, the trustée in bankruptcy might proceed in equity against the 
annuity or income, if he has no remedy at law; but it would seem 
that neither the garnishee proceeding nor the bill in equity is neces- 
sary. The bankrupt has purchased for herself the right to receive 
a certain sum of money at regular intervais. The considération for 
this was the relinquishment of rights in her deceased husband's estate. 
The amount of money deposited as security does not form in any 
way a part of the considération for the annuity, and the annuity is 
the property of the bankrupt just as much as if she had paid a cer- 
tain amount in cash to an authorized company and purchased there- 
188 F.— 34 



530 • 188 FEDERAL REPORTER 

with an out-and-out annuity, which would be subject at any time to 
levy and sale for the payment of debts. 

In the présent instance the trustée has the right to sell the property 
which the bankrupt had capable of transfer and not exempt from 
levy upon the day of filing her pétition, and a part of that property 
would be the présent value, as of that date, of the future rights to 
the annuity or fixed payment which she had contracted for. Whether 
the trustée will attempt to collect 10 per cent, of the obligation from 
time to time by an application under the Code, or whether he will 
attempt to hâve sold at public auction the right to receive the annuity, 
cannot be determined upon this motion; but, so far as the bankrupt 
and the Hamilton Trust Company are concerned, the estate in bank- 
ruptcy is entitled to the interest of the bankrupt in this fund as of 
the date of the pétition. 



In re BKTANT. 

(District Court, M. D. Pennsylvanla. July 7, 1911.) 
No. 1,575. 

1. Bankeuptcy (§ 236*) — Examination of Bankrupt— Effect of Adjotjen- 

ment— fuetheb examination. 

Under Bankr. Act July 1, 1898, c. 541, § 7 (9), 30 Stat. 548 (U. S. Comp. 
St. 1901, p. 3425), providing that a bankrupt, when présent at the flrst 
meeting of hls creditors and at sueh other tlmes as the court shall order, 
will submlt to an examination, and under section 21a, providing that a 
court of bankruptcy may requlre any designated person, including the 
bankrupt and his wlfe, to be examined, it Is Intended to require the bank- 
rupt to submlt freely to examination, and applications may be granted 
at any time before final disposition of the case, and the fact that an ad- 
journment at an examination was without day does not prevent granting 
of an application for further examination. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 236.*] 

2. Bankbuptcy (§ 235*) — Examination of Bankeupt — Foem of Application. 

The application of a trustée to be allowed an examination of a bank- 
rupt to ascertaln whether he had made a full diselosure of assets need 
not set forth the nature and character of the testimony intended to be 
adduced. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 235.*] 

In the matter of Jonas B. Bryant, bankrupt. On exceptions to or- 
der of référée allowing further examination of the bankrupt. Ex- 
ceptions overruled, and order affirmed. 

Abram Salsburg, for bankrupt. 
Wm. S. McLean, for trustée. 

WITMER, District Judge. The proceedings in this case arose upon 
an application of the trustée to be allowed to hâve an examination 
of the bankrupt to ascertain whether he had made a full diselosure 
of his assets. It appears that the first meeting of creditors was held 
February 7, 1911, which the bankrupt did not attend. The hearing 
was adjourned to February 15th, and again to the 17th, and again to 

•For other cases see same topic & § nwmbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Inflexes 



IN EE BRTANT 531 

May 23d, when the bankrupt appeared and was examîned. No other 
witnesses were examined, and the adjournment was without a day. 
On June 19th the trustée presented a pétition to the référée, alleging 
that "certain assets belonging to the bankrupt had been concealed and 
not included in the schedules filed by the bankrupt, and that for the 
purpose of recovering the same it will be necessary to examine the 
bankrupt, his wife," and certain other witnesses named, requesting 
an order to that efifect. The bankrupt demurred to the pétition of the 
trustée, and assigns for reasons that, when the bankrupt was exam- 
ined, "no request having been made for his further examination, or 
any other witnesses, the meeting adjourned" without a day for such 
further examination; "that the pétition, being in the nature of a re- 
quest to turn over alleged concealed assets, fails to disclose what as- 
sets, if any, are concealed, the cause of such belief, or any facts which 
justify the taking of testimony." The référée having overruled the 
demurrer of the bankrupt and granted the order, to which the latter 
excepted, the matter was certified for review. 

[1] The right to examine- the bankrupt fully and whenever it ap- 
pears necessary is very essential to the due administration of the law. 
The right of examination of the bankrupt bas come down to us with 
the bankrupt law from the early English practice. It is provided for 
in the law under which we operate, first in section 7 (9) of the act, 
as follows: 

"The bankrupt when présent at the flrst meeting of his creditors, and at 
such other tlmes as the court shall order, shall submlt to an examination con- 
cerning the conducting of his business, the cause of his banliruptcy, his deal- 
ings with his creditors and other persons, the amount, liind, and whereabouts 
of his property, and in addition ail mattera which may afCect the ad- 
ministration and settlement of his estate." 

The intent of the subdivision seems to be that creditors may hâve 
an examination of the bankrupt at any time during the pendency of 
the proceedings. If it should be argued that the bankrupt, having 
been examined as provided, without adjournment, could not again be 
called for further examination under this provision, to which we by 
no means assent, the other and further provision of the act afïords the 
remedy in section 21a, to wit: 

"A court of hankruptcy may, upon application et any officer, bankrupt, or 
creditor, by order require any deslgnated person, including the banlirupt 
and his wife, to appear In court or before a référée or the judge of any state 
court, to be examined eoncerning the acts, conduef, or property of a bank- 
rupt whose estate is in process of administration under thls act." 

Collier says that: 

"Where the flrst meetings are kept allve by continuances, as is customary, 
his examination can be had or resumed so long as the meeting lasts. If the 
meeting had been adjourned, an examination can, under section 7 (9), stlU be 
had at such times as the court shall order, or it can be required uuder sec- 
tion 21a." 

That it is the intention of the law to require a bankrupt to submit 
freely to examination concerning his estate is very apparent. Appli- 
cations may be granted at any time before final disposition of the es- 
. tate, in the exercise of a sound discrétion of the judge or his référée.. 



532 188 FEDERAL EEPORTBB 

Surely the bankrupt should not be unnecessarily harassed, vexed, or 
annoyed ; but where it appears that the creditors may be benefited by 
further examination, or for aiiy other good reason appearing, the or- 
der should be allowed. The vigorous and skillful use of examinations 
of insolvent bankrupts is often the only means by which creditors are 
enabled to prevent the bankruptcy act being turned into a shield for 
dishonesty. If hardship and inconvenience résulta from such exami- 
nation, as it sometimes may, it should be remembered that a discharge 
of the bankrupt from his debts is a great privilège and a prize that 
will reward the honest debtor amply for such inconvenience. 

[2] Nor was the trustée required to set forth the nature and char- 
acter of the testimony in détail intended to be adduced. The very 
purpose of an examination under section 21a is to discover property 
of the bankrupt, or to learn of its whereabouts, and as to the acts of 
the bankrupt with respect thereto. Such an examination is in its very 
nature an investigation intended to satisfy the minds of the suspicious, 
whose judgment, it is true, is frequently not well founded, by which 
the honest debtor has ail to gain. 

It does not appear that the discrétion vested in the référée has not 
been soundly exercised in the granting of the order; hence the ex- 
ceptions are overruled, and the order of the référée is affirmed. 



S. F. MÏEBS CO. r. TUTTLB. 

TUTTLE V. S. F. MTERS 00. 

(Circuit Court, S. D. New York. June 14, 1911.) 

1. Good Will (§ 6*) — Doing Business in Individual Name — Puechase or 

Good Will. 

ThougU an Individual cannot be prevented from carrying on business 
In his own name, and the purchase of the good will of the business ear- 
ried on in the name of an individual will not in gênerai prevent the 
Individual from carrying on business in his own name thereafter, yet, 
If he does so, his business must be conducted In such a way as not to 
produce confusion with the business the good will of which has been sold. 

[Ed. Note.— For other cases, see Good Will, Cent. Dlg. §§ 2-5; Dec. 
Dfg. § 6.»] 

2. Bankkuptct (§ 268*) — Sale of Assets — Coepoeate Name — ^Right to Use. 

The S. F. Myers Company, doing a mail order jewelry business, became 
bankrupt, and its assets, Including its good will and corporate name, 
were purchased by T. Thereafter the sons of Myers formed a corpo- 
ration called the "S. F. Myers' Sons' Company," and undertook to earry 
on a similar business at the same place, oceupled by the bankrupt corpo- 
ration. This was enjoined at the suit of T. and the new corporation 
ordered either to change its name, so as not to produce confusion, or 
change its place of business; it being also enjoined from interfering 
with the business carried on by T. under the name of the old corporation. 
Eeld, that the old corporation, having obtained a discharge in bankruptcy 
but having no assets, was not entltled to enjoln T. from continuing to 
use the name of the old corporation ; but such corporation could be 
restrained from Interfering with the business of T. which he was carrj'ing 
on under such name. ' 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 268.*] 

•For other cases see same toplc & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



8. p. MTER8 CO. V. TUTTLB 533 

In Equity. Suits by the S. F. Myers Company, complaînant, against 
Arthur W. Tuttle, défendant, and by Arthur W. Tuttle, cross-com- 
plainant, against the S. F. Myers Company, cross-defendant. Ap- 
plication by the S. F. Myers Company to enjoin Tuttle from doing 
business under its name, and motion by Tuttle to restrain the S- F. 
Myers Company from interfering with the business which he is con- 
ducting. under such name. Motion of défendant Tuttle granted, and 
motion of the S. F. Myers Company denied. 

See, also, 183 Fed. 235. 

Samuel J. Siegel (Martin A. Ryan, of counsel), for S. F. Myers 
Co. 

Martin Charles Ansorge and Elbert C. Ferguson (Richard J. Cronan, 
of counsel), for Arthur W. Tuttle. 

HOLT, District Judge. Thèse are two motions. One is made by 
the S. F. Myers Company, in its suit against Arthur W. Tuttle, for 
an injunction restraining the défendant from doing business under the 
corporate name of the complainant, or, in the alternative, restraining 
the défendant from using the complainant's name except in conjunc- 
tion with his own name and the words "successor to," or other words 
properly indicating that the défendant is the successor to the business 
of the complainant. The other is a motion in the suit of Tuttle against 
S. F. Myers Company for an injunction restraining the Myers Com- 
pany from interfering with the good will of the bankrupt S. F. Myers 
Company, purchased by Tuttle, or from using its name in its business. 
The S. F. Myers Company became a bankrupt. A sale of its assets, 
including its good will and corporate name, was ordered by this court. 
Upon such sale, a large portion of such assets and the good will and 
corporate name were purchased by Arthur W. Tuttle for a large sum 
of money. Thereafter the sons of S. F. Myers, who had originally 
founded the business which was incorporated under the name of the 
S. F. Myers Company, formed a corporation called "S. F. Myers' 
Sons' Co.," and undertook to carry on, at the same place, a similar 
business to that which had theretofore been carried on in the name of 
the S. F. Myers Company. This court enjoined S. F. Myers' Sons' 
Company from carrying on a similar business at the same place, and 
ordered that it either change its name, so as not to produce confusion, 
or change its place of doing business, and enjoined it from inter- 
fering with the business carried on by Mr. Tuttle under the name of 
the S. F. Myers Company. Thereafter the S. F. Myers Company ap- 
pHed for and received a discharge in bankruptcy, and now makes a 
motion to enjoin Tuttle from doing business under its name, on 
the ground that, having received a discharge in bankruptcy, it has a 
right to résume business under its original name, and Mr. Tuttle 
moves to restrain it from interfering with the business which he is 
carrying on under the same name. 

[1] It is well settled that an individual cannot be prevented from 
carrying on business in his own name, and that a purchase of the good 
will of a business carried on in the name of an individual will not, as 
a gênerai rule, prevent that individual from carrying on business in 



534 188 FEDERAL REPORTER 

bis own name thereafter. But in such a case the courts usually require 
that the later business should be carried on in such a way as net to 
produce confusion with the business the good will of which has been 
sold. 

[2] It is urged that the situation of this corporation is analogous to 
that of an individual bankrupt who has received a discharge; but in 
my opinion it is not. This is an ordinary business corporation, or- 
ganized by filing a certificate. Its assets in bankruptcy are only 
enough to pay about 25 per cent, on its indebtedness. Although it 
has received its discharge in bankruptcy, it has no assets, and never 
will hâve any unless its stockholders contribute further cash. The in- 
stances are very rare in which corporations take the trouble to apply 
for a discharge under such circumstances. I hâve no doubt that the 
application was made in this case for the purpose of making this mo- 
tion, and of endeavoring, by a sort of trick, to évade the injunction 
previously issued. In my opinion, the scheme should not be permitted 
to succeed. Mr. Tuttle bought the good will and the trade-name of 
this business, and gave for it a large amount of cash. It is the duty 
of this court to protect him in the ownership of his property. If the 
Myerses want to engage in the mail order business by means of a cor- 
poration, they can organize a new corporation under a différent name 
by simply filing a certificate. They ought not to be permitted, by using 
the old corporate name, to interfère with the business being conducted 
by Mr. Tuttle. 

The motion made by Tuttle is granted, and the motion made by S. 
F, Myers Co. is denied. 



LOVELL V. ISIDOEB NEWMAN & SON. 

(Circuit Court, E. D. Louislana. June 27, 1911.) 

No. 13,839. 

Bankeuptot (i 140*) — Sau: of Pbopebty — Application — Forged Bills oiî 
Ladinq — Deliveby of Pbopebty Undeb Genuine Law. 

Bankrupts, havlng sold a quantity of cotton through thelr broker to 
varlous Itallan spinners, forged certain bills of lading purporting to show 
shipment of the entire quantity to be carried to New Orléans and thence 
to Genoa by the line specifled in the contract, consigned to the shlppers' 
order, with Instructions to notify the broker. They then drew drafts for 
the value of the cotton at the priée for which it had been sold, and an- 
nexed the fraudulent bills of lading, together with the Insurance certifl- 
cates and Involces, the whole apparently in strict conformity to the con- 
tract, discounted the drafts, and received the money. The spinners 
ultimately paid the drafts. More than two months after the tlme the 
cotton should hâve been delivered under the contract, the bankrupts did 
ship an identical quantity of cotton, consigned according to the forged 
bills, and after obtaining bills of lading for this cotton held the same in 
their hands, but, before the cotton had cleared the port, bankruptcy in- 
tervened, and a quantity of It was clalmed by the receivers from the 
steamship on which it had been placed. Held that, the contracts of sale 
being valid, they were fulfllled and became executed when the cotton was 
actually delivered to the carriers, the stipulations as to time of delivery, 

•For other cases see same toplc & § ndmbbe in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



LOVELL V. ISIBORE NEWMAN A 80H 535 

time and manner of payment being accidentai merely, acd that the bank- 
rupts and their trustée were estopped to deny that tbe cotton shipped 
belonged to the buyers. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 140.*] 

Action by W. S. Lovell, as trustée in bankruptcy of Knight, Yancey 
& Co., against Isidore Newman & Son. Judgment for défendants. 

Dufour & Dufour and Percy, Benners & Burr, for plaintiff. 

Dart, Kernan & Dart and Wheeler, Cortis & Haight, for défend- 
ants. 

POSTER, District Judge. This suit is by W. S. Lovell, trustée of 
Knight, Yancey & Co., bankrupts, against Isidore Newman & Son, 
sureties on a bond given by the master of the steamship Ingelfingen. 
Certain parties in interest hâve intervened and joined the défendant, 
setting up the same défense. 

The parties by stipulation hâve waived the jury and submitted the 
matter to me on an agreed statement of facts. 

It appears that between December 15, 1909, and January 29, 1910, 
Knight, Yancey & Co., through their agent at Genoa, Gino Gavarati, 
entered into eight written contracts for the sale of 1,400 baies of 
cotton to various Italian spinners; the contracts reading substantially 
as follows: 

Messrs. 

We beg to conflrm that we hâve sold to you to-day for the account o£ 
Messrs. Knight, Yancey & Compahy, Decatur (Alabama) 
quantity, 200 baies (two hundred) 

quallty, fuUy low middllng white number 8 type, sealed. 
prlce, T.50 per pound (seven pence and flfty-one-hundredths) 
terms, C. 1. f. & 6% Genoa. AUowance on weight 1%. 
Shipment, January/February (by Catonlera Line) 
Conférence blll. Contract — Arbitration Llverpool. 

Relmbursement 90 days slght draft Banca Commerciale Italiana, Milan, 
payable In London. Gino Gavarati. 

[Translated.] 

During January and February, 1910, without shipping any cotton 
at ail, Knight, Yancey & Co. counterfeited and forged 13 bills of lad- 
ing, purporting to show the receipt of 1,400 baies of cotton by the 
Southern Railway at points in Alabama, to be carried by the said rail- 
way to New Orléans and thence to Genoa by the Catoniera Line, con- 
signed to their own order, with instructions to notify Gino Gavarati. 
They then drew drafts for the value of the cotton at the price for 
which they had sold it and, annexing the fraudulent bills of lading. 
together with insurance certificates and invoices, the whole apparently 
in strict conformity to the contract, discounted the drafts and obtained 
the money. The spinners ultimately paid the drafts. 

Thereafter, on March 16 and 17 and April 1, 6, 7, and 11, 1910, 
Knight, Yancey & Co. did ship 1,400 baies of cotton precisely as they 
had pretended by the forged bills of lading; the grade, weights, and 
marks of the cotton, the points of shipment and destination, the car- 
riers, the form of the bill of lading, and everything to the most minute 
particular being exactly as shown by the said documents. 

*For other cases see same topic & i numbbb In Dec. & Am. Digs, 1907 to date, & Rep'r Indexai 



536 188 FEDERAL EEPOETEE 

On April 20, 1910, Knight, Yancey & Co. were adjudicated bank- 
rupts, and receivers were appointed to take charge of their assets. 
The cotton had been transported to New Orléans. 89 baies had gone 
forward, but 1,311 baies were then on board the steamship Ingelfingen. 
Before the Ingelfingen cleared, the receivers proceeded against her in 
the district court of this district, and, claiming the cotton, asked for an 
injunction to prevent its removal out of the United States pending the 
suit. The injunction issued, but the vessel was permitted to give bond 
and sail with the cotton. The condition of the bond is that the trus- 
tée shall establish his right, title, and interest in and to the said cotton, 
or any part thereof, and it stipulâtes that suit may be brought against 
the surety alone. 

Knight, Yancey & Co. had the genuine bills of lading in their pos- 
session when adjudicated bankrupts, and plaintilif relies upon his pos- 
session of them, indorsed over to him by the bankrupts, and claims 
the absolute title to the cotton, disclaiming any intention to avoid a 
préférence. 

Défendants contend that Knight, Yancey & Co., by marking the 
exact amount of cotton, of the right grade, identically as shown in 
the forged bills of lading and other documents, and shipping it by 
the same carriers in the same way, appropriated it to the said contracts ; 
that delivery to the railroad was delivery to them ; that Knight, Yancey 
& Co. had no intention to retain title in themselves, but intended to 
suppress the genuine bills of lading and permit the cotton to be claimed 
by the spinners on the forged bills of lading ; that the trustée is es- 
topped to contest their ownership of the cotton or the genuineness of 
the forged bills of lading. 

To this plaintif! responds that the contracts called for January and 
February delivery, which was not complied with; that, as the buyer 
could not hâve been compelled to accept delivery, there was no ap- 
propriation; that delivery could only be made by indorsing and turn- 
ing over the bills of lading; that Knight, Yancey & Co., by holding 
the genuine bills of lading, to their own order, retained the légal own- 
ership of the cotton, and it passed to him on their adjudication as 
bankrupts and his élection as trustée; and that, as trustée, there is no 
estoppel against him. 

The able arguments and exhaustive citations of authority by both 
sides hâve been of great aid, and I regret that I hâve not the time to 
discuss them fully. However, in my opinion, the problem hère pre- 
sented is readily solved by the application of well-settled principles of 
law ; the ultimate facts, which I am bound to find f rom the évidence 
before me, being once determined. 

It is certain that Knight, Yancey & Co. and the spinners entered 
into valid contracts of sale, and thereby Knight, Yancey & Co. ob- 
ligated themselves to deliver the goods, and the spinners to pay the 
price. By the contract, Knight, Yancey & Co. were to make delivery 
not later than February 28, 1910, to a carrier at such point in the 
United States as they might sélect; the goods to be transported from 
the United States to Genoa by the Catoniera Line. They were also 
obligated to insure the goods for the benefit of the purchasers and 



VANDEKBILT V. KEKR 537 

to allow for the freight to destination. The purchasers were oblîgated 
to accept drafts when presented with bills of lading and other docu- 
ments attached, showing compliance as to delivery, and to ultimately 
pay the drafts. I understand this to be the well-settled meaning given 
to the contracts by commercial usage, and, even if this were not so, 
it is certainly the interprétation of the parties. 

By false représentations Knight, Yancey & Co. obtained payment 
before it was due, as they made no delivery, but they did subsequently 
make delivery of the cotton in exactly the manner contemplated. The 
delivery was accepted by the spinners, and the contracts thereby be- 
came executed, as each j-arty had discharged his obligation. This was 
before bankruptcy. 

The stipulations as to the time of delivery, time and manner of pay- 
ment, et cetera, were merely accidentai, and the parties for whose bene- 
fit they were inserted could waive them without affecting the contract. 
Delivery was complète when the cotton was given into the custody of 
the carrier, and it belonged to the buyer, subject, of course, to the lien 
of the bona fide holder of the bill of lading. Necessarily it was appro- 
priated to the contract before delivery. The bill of lading to the order 
of Knight, Yancey & Co. was solely to enable them to collect the pur- 
chase price as if a cash transaction, according to the usage of the trade. 
When they had received payment in advance, no matter how, their 
rétention of the bill of lading gave them no right in or control over the 
cotton as against thèse défendants. No doubt, Knight, Yancey & Co. 
intended to suppress the genuine bills of lading and to let the cotton be 
claimed on the forged ones; but it is useless to speculate as to what 
their intentions were, or what they might or could hâve done in the 
premises, as the fact is that after receiving the bills of lading they 
did nothing, and no rights of innocent third persons are involved. At 
the moment of adjudication, the cotton formed no part of the assets 
of Knight, Yancey & Co., and they had no lien on it or right to re- 
tain the bills of lading. The trustée stands in no better position 
towards thèse défendants than did the bankrupts. He is subject to 
any equity that would bave estopped them. It is clear that Knight, 
Yancey & Co. could hâve asserted no claim to this cotton as against 
the buyers. 

There will be judgment for the défendants and interveners, reject- 
ing the plaintiff's demand. And for costs. 



VANDERBILT v. KERR et al. 

(Circuit Court, S. D. New York. April 7, 1911.) 

1. Removal of Causes (§ 19*) — Natube of Conteoveesy— Cases Akisino tjn- 
deb federal constitution. 

That, In a suit by tbe owner of bonds against trustées, who were to 
hold seeurities In trust for the beneflt of the owners of said bonds, a re- 
ceiver appointed by United States court had begun a suit against the de- 
fendants, was not ground for removal, as presenting a contre versy aris- 
ing under the Constitution and laws of the United States; the reeeiver 

•For other cases ses same topio & § numbeh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe» 



538 188 FEDERAL EEPORTEK 

not belng a party, no relief beîng demanded agalnst hlm, and the princi- 
pal relief demanded being the removal of défendants and the appoint- 
ment of another trustée. 

[Ed. Note. — For other cases, see Kemoval of Causes, Cent. Dig. §§ 37- 
46 ; Dec. Dig. § 19.*] 

2. Removal of Causes (§ 107*) — Motion to Remand— Heaeing. 

Where, on a motion to remand a cause to the state court, the jurisdlc- 
tion of the fédéral court is doubtful, the verdict should be resolved In 
favor of the state court havlng jurisdlctlon. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. §§ 225- 
234 ; Dec. Dig. § 107.*] 

In Equity. Suit by Edmund A. Vanderbilt agaînst Lawrence R. 
Kerr and another. On motion to remand to the New York Suprême 
Court, County of New York. Motion granted. 

J. .Noble Emley, for plaintifF. 
Shattuck & Glenn, for défendants. 

COXE, Circuit Judge. The asserted jurisdiction of this court rests 
solely upon the contention that the cause of action arises under the 
constitution and laws of the United States. 

The plaintifï, who is the owner of four $100 bonds of the Intercity 
Realty Company, brings this action on behalf of himself and ail other 
bondholders, alleging the misconduct of the défendants and askîng 
for their removal as trustées under a trust agreement pursuant to 
which they were to hold securities in trust for the benefit of the 
owners of the said bonds. The complaint also demands judgment for 
an accounting and that the défendants turn over the property in their 
hànds to a substituted trustée, and for other similar relief. 

In short, the bill seeks the removal of the défendants as trustées, 
for alleged misconduct, and the appointment of another trustée in 
their place, to whom the property in their hands is, after an account- 
ing, to be turned over. 

It appears by the bill that in a statement of assets and liabilities 
made by the défendants September 1, 1910, there is a cash item of 
$127,804 which is in dispute, and that the receiver appointed in an 
equity suit in the United States Circuit Court bas begun an action 
against the défendants herein for the recovery of the said $127,804. 

Based upon thèse allégations of the complaint the défendants as- 
sume that the controversy in this suit "centers around" this cash item. 
On this assumption they contend that a "fédéral question" is presented. 

[1] I am not at ail persuaded that this assumption, limiting the 
controversy to the item aforesaid, is correct, but assuming that it is, 
it by no means foUows that this suit présents a controversy arising 
under the constitution and laws of the United States. The fact 
that a receiver appointed by a United States court has begun a suit 
against thèse défendants does not raise a fédéral question in this ac- 
tion in which the principal relief demanded is the removal of the de- 
fendants for alleged misconduct and the appointment of another trus- 
tée in their place. 

*For other cases see same toplc & S numbbb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



M. T. MOLLISON CO. V. o'bRIEN 539 

[2] The United States receiver is not a party to this action and 
no relief is demanded against him. The only défendants are the two 
persons whom the plaintiff seeks to remove as trustées. I am not 
convinced by the défendants' argument, but in the most favorable 
view which can be taken of their contention, it must be conceded that 
the question is involved in doubt and that this doubt should be re- 
solved in favor of a court which unquestionably bas jurisdiction. 

The lack of jurisdiction can be raised at any stage of the litigation 
and it is for the interest of both parties that after their controversy 
has proceeded to trial the action shall not be thrown out of court and 
the labor, perhaps of years, be rendered nugatory. 

Motion granted. 



M. T. MOLMSON CO. v. O'BRIEN et al. 

(Circuit Court, D. Connectlcut. May 11, 1911.) 

No. 767. 

1. CONTRACTS (§ 332*) — Breach— Pleading. 

A complalnt charglng that plaintiff and défendants contracted that 
plalntlffi should do certain work, for which it was to recelve a speclfied 
prlce, and was to do certain other work for a reasonable compensation, 
that plaintiff performed ail the agreements on its part to be performed, 
so far as It was possible to perform them, and was ready and wllling to 
perform ail its agreements under the contract, but was prevented by the 
défendants without just reason, who by so doing breached the contract, 
stated a cause of action. 

[Ed. Note.— For other cases, see Contracts, Cent. Dlg. §§ 161&-1639; 
Dec. Dig. § 332.*] 

2. Action (§ 38*) — Joindee— Toet and Coîïtract. 

Where a complaint for breach of contract alleged that plaintiff was to 
furnish labor, materials, tools, and appliances In the construction of a 
certain building at agreed and reasonable priées, and that after plain- 
tiff had performed a part of the work défendants broke the contract by 
preventing plaintiff f rom proceeding without just, reason, and converted to 
his own use plaintiff's materials and appliances, the complaint was not 
demurrable because of joinder of a cause of action for breach of con- 
tract and for tort in a single count. 

[Ed. Note. — For other cases, see Action, Cent Dig. § 549; Dec. Dig. 
8 38.*] 

At Law. Action by M. T. Mollison Company against Dennis 
O'Brien and others. On demurrer by défendant O'Brien to the com- 
plaint. Overruled. 

G. B. Carlson, for plaintiff. 

F. D. Haines, for défendant Wadsworth. 

W. U. Pearne, for défendant O'Brien. 

PLATT, District Judge. The complaint in this action is almost as 
voluminous as the moral law ; but, after digestion, the issues are f airly 
simple. 

The causes of demurrer are not made as spécifie as they ought to 
be, and might be disposed of on that ground; but such action would 

•For other cases see same topic & § nombeb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



540 188 FEDERAL EBPORTER 

probably lead to amendments, and it may be better, if I can under- 
stand the situation from the arguments, to décide them on the merits. 

The most serious ground of criticism is that the action is prema- 
turely brought, and that the décision of any issues which can now be 
framed would embarrass later causes of action which might resuit 
favorably to the demurrant. 

[1 ] The complaint, in a gênerai way, shows that the plaintiff and de- 
fendants entered into a contract, set forth as Exhibit A, under which 
certain work was performed by the plaintiff, for which he was to re- 
ceive compensation at a price specified, and for certain things to be 
donc a reasonable compensation; that the plaintiff performed ail the 
agreements on its part to be performed, so far as it was possible to per- 
form them ; that it was ready and willing to perf orm ail its agreements 
unde» the contract, but was prevented by the défendants without just 
reason, who by so doing breached their contract. This seems to be 
the statement of a good cause of action. 

[2] Another criticism is that the complaint joins causes of action 
on contract and tort in one count. The complaint sets forth that un- 
der the contract plaintiff was to furnish labor, materials, tools, and ap- 
pliances in the construction of a certain building at agreed and rea- 
sonable priées, and that after plaintiff had gone part way, and done 
what it could, the défendants broke the contract by preventing, with- 
out just reason, the plaintiff from going on, and converted to its own 
use plaintiff's materials and appliances. That is good pleading under 
our practice act as construed by our highest state court. 

As to the criticism presented in the last cause of demurrer, that the 
complaint leaves it uncertain whether it is intended to hold défendants 
jointly liable, or to hold one or both of défendants separately, it is 
understood that the plaintiff expects to drop Wadsworth, which will 
leave the défendants free from doubt in that respect. 

Let the demurrer be overruled. Plaintiff should then drop Wads- 
worth, and défendant O'Brien should proceed in the usual way. 



In re URZUA. 
(Circuit Court, S. D. New York. June 20, 1911.) 

1. Extradition (§ 14*) — Réquisition— Certifjkd Copy— Failurb to Peo- 

DUCE— CURING EEROR. 

Failure to produce a certlfled copy of a réquisition from a forelgn 
country before the commissloner in extradition proceedlngs was cured, 
where a properly certlfled copy of the réquisition on file In the office of 
the Seeretary of State was submitted to the court at the hearing of a 
writ of habeas corpus. 

[Ed. Note. — ^For other cases, see Extradition, Dec. Dig. § 14.*] 

2. Habeas Corpus (§ 112*) — Dismissal— Oedee— Oaption. 

It was no objection to an order dismissing a writ of habeas corpus 
that it was entitled in the Cdrcult Court of the Southern District of New 
York, without naming any particular term in the caption; the court be- 
Ing always open to issue and dispose of such writs. 

[Ed. Note. — For other cases, see Habeas Corpus, Cent. Dig. § 101 ; Dec. 
Dig. § 112.*] 

•For other cases see same topio & § numbek in Dec. & Am. Diga. 1907 to date, & Rep 'r Indexes 



IN BR UEZUA 641 

8. Extradition (§ 14*) — ^Wabbant of Aeeest— Peooï. 

Where, in extradition proceedings on a réquisition from Mexico, dép- 
ositions, properly authenticated, stated that sufticient évidence tiaving 
been forthcoming to proceed against petitioner as tlie presumed slayer of 
E. in accordance witli specifled articles of tlie Code of Pénal Procédure, 
ttiat ttie order he issued from headquarters, signed, and affirmed, etc., 
and that on the same day witli the above decree tlie order of arrest was 
issued in accordance witli tlie provisions of the decree duly signed, there 
was sufHcient proof of the issuance of a warrant of arrest to sustain the 
proceedings. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 16 ; Dec. Dig. 
8 14.*] 

4. EXTEADITION (§ 14*) COMMISSION OF OlTENSE— EVIDENCE. 

Where, in extradition proceedings for murder, the évidence, though 
circumstantial, was so strong that, if produced before a coiuinitting mag- 
istrate In the state where petitioner was arrested and applied for habeas 
corpus, as proof of an assassination committed there, it would hâve been 
the commissioner's duty to hold accused to await subséquent proceedings, 
it was suflacient to sustain an order for his return. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. S 16 ; Dec. Dig. 
î 14.*] 

In the matter of application for extradition of Roberto Urzua, alias 
Deinhart. Habeas corpus and certiorari to review the action of the 
United States commissioner in holding petitioner for extradition to 
Mexico on charge of murder. Finding of commissioner affirmed, and 
habeas corpus dismissed. 

See, aiso, Ex parte Dinehart, 188 Fed. 858. 

Henry A. Wise, U. S. Atty. 
Richard Krause, for petitioner. 
Edward L,. Tinker, for Mexican Consul. 

LAGOMBE, Circuit Judge. [1] The first point raised is that there 
was not produced before the commissioner a certified copy of the réq- 
uisition from the republic of Mexico which is on file in the office of 
the Secretary of State. It is not necessary to discuss the effect of the 
letter of the Mexican ambassador, which was submitted as proof of 
the making of the réquisition, because a copy of the original docu- 
ment, duly certified by the State Department, bas been submitted to 
this court. The objection is technical merely, and the production hère 
of the proper document sufficiently cures it. 

[2] 2. The objection that an earlier proceeding by habeas corpus 
had not terminated is not well taken. The order dismissing the writ 
was entitled in the Circuit Court of the Southern District of New 
York, and is manifestly a court order. It was not necessary to name 
any particular term in the caption. For the purposes of issuing and 
disposing of writs of habeas corpus the court is always open. 

[3] 3. As to issuing of a warrant of arrest as a perquisite to a réq- 
uisition, it is not necessary to discuss section 5270 of the Revised Stat- 
utes (U. S. Comp. St. 1901, p. 3591), nor Grin v. Shine, 187 U. S. 
181, 23 Sup. Ct. 98, 47 L. Ed. 130. The dépositions from Mexico, 
properly authenticated, state that; 

"Sufflcient évidence having been forthcoming to proceed against Roberto 
Urzua as the presumed slayer of José Ruesga, in accordance with articles 244, 

*For other cases see same toplc & { numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



542 188 FEDERAL REPORTEE 

245, and 246, subsec. 4, of the Code of Pénal Procédure, let the order be Is- 
sued from headguarters. The Judge of the Third crlminal district so decrees. 

"[Signed] Francisco S. Palafox. 
"C. Gonzalez Madrid. 
"Afl3rmed by the Public Mialster. 

"[Signed] José A. Aguyo. 

"C. Gonzalez Madrid. 
"On the same day with the above decree the order of arrest was issued in 
aceordance with the provisions of that decree. 

"[Signed] Gonzalez Madrid." 

This was sufficient proof of the issuance of a warrant of arrest. 
The days when fédéral courts were astute to defeat réquisitions, where 
the évidence indicated quite clearly that an extraditable offense had 
been committed, on highly technical grounds, hâve long since passed, 
and the earlier authorities on the procédure in extradition are not as 
persuasive as they once were. 

4. There is no force in the contention that the réquisition charges 
petitioner, not with murder, but with homicide. Référence to the 
treaty, whose clauses are printed in parallel columns in English and 
Spanish, shows that the word "homocidio" was considered by the two 
govemments as the équivalent of "murder," including among other 
crimes "asesinato," or "assassination." The proof s show that it is 
that variety of "homicidio" which is known as "asesinato" with which 
petitioner is charged. 

[4] 5. It is unnecessary to discuss the évidence. Although circum- 
stantial, it is so strong that, were it produced before a committing mag- 
istrale in this State as proof of an assassination committed hère, it 
would be his duty to hold the accused by imprisonment or under bail 
to await subséquent proceedirigs. Ex parte Glaser, 176 Fed. 702, 100 
C. C. A. 254. 

The findings of the United States commissioner are afSrmed, and 
the writ of habeas corpus is dismissed. 



UNITED STATES v. ONE STRADIVARIUS VIOLIN. 

(District Court, S. D. New Yorlî. May 8, 1911.) 

CtrsTOMS DuTiEs (§ 133*) — Weongful Importation— Fobfeiture— Limitation 

— "CONCEALKENT. " 

H., in January 1906, purchaeed a vlolin In London, to be dellvered in 
New ïork or Boston free of ail expense. It was delivered shortly there- 
after wlthout duty beîng pald thereon. H. thereafter habitually kept it 
In his drawiug-room where it was used, displayed and admired by vari- 
ons artists at Sunday afternoon concerts held by H. It was never ab- 
sent but always présent in the house of H., though the revenue offlcers 
acquired no information concerning its wrongful importation untll July, 
1910. Held, that such lack of information by government offlcers, and 
the îact that H. knew or liad reason to believe the instrument had been 
Imported wlthout paying duty, did not constltute "concealment" so as to 
bar limitations prescribed by Act Cong. June 22, 1874, c. 391, § 22, 18 
Stat. 190 (U. S. Comp. St 1901, p. 2023), requiring an action to forfeit 
merchandlse unlawfully imported, wfthin three years, provided that the 

*For other cases see same topic & § number In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



UNITED STATES V. ONE STRADIVARIUS TIOLIN 543 

Orne of the absence from the United States or concealment ot property 

Bball not be a part of the period of limitation. 

[Ed. Note. — For other cases, see Customs Duties, Dec. Dig. § 133.* 
For other définitions, see Words and Phrases, vol. 2, pp. 1377-1384.] 

Information by the United States against one Stradivarius violin. 
On claimant's demurrer to information. Sustained. 

Henry A. Wise, U. S. Atty., and Addison S. Pratt and Cari E. 
Whitney, Asst. U. S. Attys. 

Parsons, Closson & Mcllvaine (H. B. Closson, of counsel), for 
claimants. 

HOLT, District Judge. This is an information filed to obtain the 
forfeiture of a violin on the ground that it was imported into this 
country without payment of the duty. The violin was made by the 
great violin maker Antonio Stradivari early in the eighteenth century. 
It was at one time owned by Kiesewetter, a celebrated player, and is 
known as the Kiesewetter Stradivarius. It was purchased in January, 
1906, by Mr. Henry O. Havemeyer from George Hart, of Hart & 
Son, violin dealers in London, for £1,550, to be delivered in New 
York or Boston, free of ail expense whatever. The coUector, having 
received information about July, 1910, that the violin had been 
brought into this country without payment of duty, seized the violin 
as forfeited upon that ground, in August, 1910. The substantial 
question in this case is whether the suit is barred by the statute of 
limitations. It is conceded by the counsel in the case that section 
22 of the act of June 22, 1874, c. 391, 18 Stat. 190 (U. S. Comp. St. 
1901, p. 2023), is the statute which applies. That statute is as fol- 
lows: 

"That no suit or action to recover any pecuniary penalty or forfaiture to 
property aecrulng under the Oustoms Revenue Laws of the United States 
shall be Instituted unless such suit or action shall be commenced wlthin three 
years after the time when such penalty or forfeiture shall bave accrued ; pro- 
vided, that the time of the absence from the United States of the person sub- 
ject to such penalty or forfeiture, or of any concealment or absence of the 
property, shall not be reekoned wlthin this period of limitation." 

This action was not commenced within three years of the time 
the penalty of forfeiture accrued, and the sole question, therefore, 
in this case is whether there was any concealment or absence of the 
property within the meaning of the act, which would prevent the 
application of the statute. The government claims that there is évi- 
dence tending to show that Mr. Havemeyer knew or had reason 
to believe that the violin was imported without the payment of duty. 
I think the évidence is insufficient to establish such claim; but the 
question is immaterial, because, if the défense of the statute of limi- 
tations is valid, it is immaterial whether he knew or suspected that 
the duty had not been paid. 

The évidence shows that the violin in question is one of unusual 
celebrity; that after Mr. Havemeyer purchased it he kept it habitu- 
ally in his drawing-room ; that he was accustomed to give musical 

•For other cases see same topic & § ndmbek In Dec. & Am. Digs. 1907 to date, £ Rep'r Indexes 



544 188 FEDERAL EEPOETEB 

parties at his résidence on Sunday afternoons, at which large numbers 
of persons were usually présent; that on such occasions the violin 
was frequently examined and was generally an object of interest to 
musicians as a famous spécimen of a great violin maker's art. It 
was on one occasion played on at a public concert, and it was habitu- 
ally played on by différent artists at Mr. Havemeyer's Sunday after- 
noon musical parties. Not only is there no évidence of any conceal- 
ment or absence of the property, but the évidence shows that it was 
always kept in Mr. Havemeyer's drawing-room, and was shown to 
and known by musicians and ail people interested in music, to an un- 
usual extent. 

Counsel for the government argues that, as the collector did not 
know that it had been imported without the payment of duty until 
the summe- of 1910, it was concealed during that period within the 
meaning of the statute. But it seems to me that this suggestion is 
entirely iintenable. This violin was never absent; it was always 
présent at the owner's house. It was never concealed. A conceal- 
ment of property implies some active intention on the part of some- 
body to secrète it. If the govemment's contention in this case is 
Sound, any purchaser of property which had been imported, having 
no knowledge or ground for suspicion that there had been any viola- 
tion of.the customs laws in its importation, would be liable to hâve 
the property seized 20 or 30 years after its purchase. I think that 
the statute of limitations is a complète bar to this suit, and I direct 
a verdict for the claimants, dismissing the information on the merits. 



KAUFMAN V. I. EHEINSTROM SONS CO, 

(Circuit Court, S. D. New York. January 4, 1911.) 

Removal or Causes (5 72*) — Fedeeal Courts— Jueisdiction—Amount in 

CONTBOVEEST. 

Under the fédéral statute authorizing removal of a case involving an 
amount which exceeds $2,000, a suit involving exactly $2,000 is not re- 
movable. 

[Ed. Note. — For other cases, see RemoTal of Causes, Dec. Dig. § 72.*] 
Action by Henry F. Kaufman against I. Rheinstrom Sons Com- 
pany. Motion to remand. Granted. 

Nathan G. Goldberger, for plaintifï. 
Harry M. Lewy, for défendant. 

COXE, Circuit Judge. The question hère involved is an exceed- 
ingly simple one. The fédéral statute provides that a suit may be 
removed to this court when the amount involved exceeds $2,000. 
The amount hère involved is exactly $2,000. Such a suit cannot be 
removed to this court for the obvions reason that the amount does not 
exceed (is not more than) $2,000. To assert that $2,000 is more than 
$2,000 is an absurdity. 

The motion to remand is granted. 

•Far other cases see same topic & i numbsb lu Dec. & Am. Dlgs. 1907 to date, & Rep'r Indei^es 



WILSON CGAL CO. V. tJNITED STATES B4S 

WILSON COAL CO. v. UNITED STATES et al; (2 cases). 

(Circuit Court of Appeals, Ninth Circuit. July 3, 1911.) 

Nos. 1,935, 1,936. 

1. Public Lands (§ 120*) — Suit bt United States foe Canceixation or 

Patents— Fraudulent Entet of Coal Lands. 

Where a number of persons joined In a conspiracy to obtain title for 
tlie beneflt of themselves as an association to public coal lands in excess 
of tlie quantity allowed by law, by means of individual entries, and 
united with others in forming a corporation to wbich it was agreed the 
title should be conveyed by the entrymen when obtained from tbe govern- 
ment, tbe transaction was not purged of its fraudulent character by tbe 
fact that, after using the funds of the corporation to pay for the lands, 
the entrymen repudiated the agreement and retained tbe title in them- 
selves, and the United States may main tain a suit to cancel the patents 
for such lands. 

[Ed. Note.— For other cases, see Public Lands, Dec. Dig. § 120.*] 

2. Public Lands (§ 120*) — Suit bt United States fob Cancbllation of 

Patents— Defj;nses—Bona Fide Pukchasek. 

Where one who has notice of the inflrinity of his own title to laud ob- 
tained from the goveiinment unités with others to form a corporation and 
subscribes for nearly ail of the stock, conveying the land in payment of 
his subscription, the corporation is afifected with notice of the circum- 
stances impairing the title and cannot claini protection agalnst a suit for 
cancellation of the patents as a bona flde purchaser without notice. 
[Ed. Note. — For other cases, see Public Lands, Dec. Dig. § 120.* 
Bona flde purchasers of public lands, see note to United States v. Dé- 
troit Timber & Lumber Co., 67 C. C. A. 13.] 

8. Public Lands (§ 120*) — Suit by United States foe Cancellation or 
Patents— DEFENSES by Coeporation. 

A corporation, which has taken land obtained by entry from the United 
States with notice of fraud in Its acquisition, cannot défend a suit by the 
government for cancellation of tbe patents by showing that stockholders 
purchased its stock in good faith and in ignorance of the defect in the 
title to the land. 

[Ed. Note. — For other cases, see Public Lands, Dec, Dig. § 120.*] 

In Error to the Circuit Court of the United States for the Western 
Division of the Western District of Washington. 

Suit in equity by the United States against the Wilson Coal Com- 
pany, Watson Allen and Jane Doe Allen, his wife, Helen Pack Wilson, 
and the Sterling Coal Company. Same against the Wilson Coal Com- 
pany, Watson Allen and Jane Doe Allen, his wife, Minn Marie Wil- 
son, Virgil R. Wilson and Malvina Benton Wilson, his wife, Helen 
Pack Wilson, Sterling Coal Company, and Medardo Garcia and 
Charles IVTcGinni. Decrees for complainant, and défendant Wilson 
Coal Company brings error. Affirmed. 

In February, 1905, the United States brought two suits for the purpose of 
setting aside and canceling two patents for coal lands, one issued to Helen 
Pack Wilson and the othei» two to Virgil R. Wilson. The facts in the case, as 
stipulated by the parties to the appeal, are substantially tbe following; In 
February and March, 1901, fllings were made by Helen Pack Wilson, Katie 
Roberts Wilson, Minn Marie Wilson, James R. Winston, and Solomon Laurid- 
sen on certaiQ public coal lands situate in Lewis county, Wash. In making 
their declaratory statements and in doing the assessment work on said lands, 

•For other cases see same topic & § nombee In Dec. & Am. Digs. 1907 to date. & Rep'r Indexes 
188 F.— 35 



546 188 FEDERAL REPORTER 

thèse persons acted In concert for the purpose of acqulring for themselves as 
an association 1,040 acres of sald coal lands. E. A. Wilson was the author 
of the seheme. Helen Pack Wilson and Mlnn Marie Wilson were his daugh- 
ters. Keither E. A. Wilson nor any of his associâtes had sufflcient means to 
make payment for the land at the Land Office, or to provide for the develop- 
ment work. For that purpose, E. A. Wilson Induced P. C. Richardson to ad- 
vance $8,300 and organized a company, known as the Sterling Coal Company, 
In whlch the tltle of the coal lands was to vest after issuance of the patents 
therefor. Helen Pack Wilson and her father defrauded the Sterling Coal 
Company of ail the money in the treasury, and with $3,200 thereof Helen 
Pack Wilson paid for her coal clalm, and the deed which she had previous to 
her entry executed and delivered conveying the land to the Sterling Coal 
Company, afterwards coming Into her possession, was destroyed. Virgil Wil- 
son was to make an entry on the southwest quiarter of section 10, and turn 
the same over to the Sterling Coal Company or to E. A. Wilson and his as- 
sociâtes for a considération of $500. His clalm was paid for by $3,200 of 
money which had been so placed In the treasury of the Sterling Coal Company, 
and on the day of maklng his final proof he deeded the property to Mlnn 
Marie Wilson. In the meantime the offlcers of the Sterling Coal Company en- 
deavored to recover the money that had been thus diverted from the treasury, 
and brought a civil action for that purpose. Patent was issued to Helen 
Pack Wilson on June 26, 1903, and a patent was issued to Virgil E. Wilson 
on September 26, 1902. Nelther of the patentées ever conveyed to the Ster- 
ling Coal Company the title so acqulred. On September 15, 1903, the Ster- 
ling Coal Company brought a suit in equity against the patentées and the 
holders thereunder, to obtain a conveyance of the lands to the Sterling Coal 
Company; but the bill was dismissed for want of equity on the ground that 
the plaintifl was party to a fraudulent seheme to obtain land of the United 
States. The tltle which Virgil E. Wilson conveyed to Minn Marie Wilson 
thereafter was conveyed to Helen Pack Wilson so that early in the year 
1904 tltle to both claims was vested in her. Upon the issues and the testi- 
mony the court found that the patents were obtained as the resuit of fraudu- 
lent consplracy made and carried out with the intent to évade the provisions 
of the statutes of the United States and to obtain tltle to coal lands contrary 
to law, and ordered that the patents be canceled and set aside. 

J. B. Bridges, James B. Murphy, Théo. B. Bruener, and Murphy & 
Winders, for plaintifï in error. 
Elmer E. Todd, U, S. Atty., and W. G. McLaren, Asst. U. S. Atty. 

Before GILBERT and MORROW, Circuit Judges, and WOLV- 
ERTON, District Judge. 

GILBERT, Circuit Judge (after stating the facts as above). [1] It 
is contended that the évidence in the case contains no proof of fraud 
against the government by either Helen Pack Wilson or Virgil R. Wil- 
son; that, although thèse persons were involved in the unlawful con- 
spiracy and entered into the seheme to obtain thèse lands in violation 
of the law, yet at the last moment they abandoned the seheme, re- 
pudiated their co-conspirators, and entered the land and paid for the 
same for their own use and benefit. And it is urged that, at the 
time when this was done, there is no évidence that the entrymen were 
actuated by unlawful motives, and that the government was not de- 
frauded inasmuch as the entriès were not made for the use and benefit 
of the Sterling Coal Company, but solely for the use and benefit of 
the entrymen. The bill allèges, and the évidence proves, a conspiracy 
to obtain for an association coal lands in excess of the amount per- 
mitted by law, an agreement between ail the entrymen on the one part, 
and R. A. Wilson and George D. Wilson on the other, whereby the 



WILSON COAL CO. T. UNITED STATES 547 

latter were to hâve an interest in the lands when acquîred and the 
right to require that ail the lands or an interest therein be conveyed 
to such person or corporation as might be induced to furnish the pur- 
chase priée therefor. In carrying ont this unlawful agreement, Virgil 
Wilson promptly conveyed his land to Minn Marie Wilson. The stip- 
ulation as to the facts contains the following: 

"Thèse several persons in makiiig their declaratory statements and In do- 
ing the assessment work in said lands ail acted in concert for the purpose 
of acquiring for themselves as an association said 1,040 acres of coal lands, 
and R. A. Wilson was thelr joint représentative and the author of the scheiue 
to aequire thèse coal lands." 

The scheme thus admittedly had its inception in fraud. At what 
point in the proceedings was the transaction purged of the fraud? It 
was not purged of fraud by the fact that the Sterling Coal Company 
was unable to recover front the entrymen money which the latter 
had fraudulently diverted for the purchase of the lands, nor was it 
relieved of its fraudulent character by the fact that the government 
received for the lands the purchase price at which ail coal lands are 
oflfered for sale. The government does not offer its coal lands for the 
purpose of selling them for money, but for the purpose of adminis- 
tering a trust, and carrying ont its policy for the benefit of its citi- 
zens. The restrictions in the statutes which provide for the sale of 
the coal lands of the United States are for the purpose of preventing 
monopolies in such lands. Undoubtedly those who aequire coal lands 
in pursuance of the statute and obtain patents therefor are at liberty 
thereafter to dispose of the same as they may see fit. But in the prés- 
ent case it is clear that the lands were not obtained in compliance with 
the statutfes. United States v. Trinidad Coal Company, 137 U. S. 160, 
11 Sup. Ct. 57, 34 L. Ed. 640; United States v. Keitel, 211 U. S. 370, 
20 Sup. et. 123, 53 L. Ed. 230. 

[2] It is earnestly contended that the title of the Wilson Coal Com- 
pany should be protected as that of an innocent purchaser for value 
without notice. In August, 1904, one Kirkpatrick, with a view to in- 
vesting in the lands, obtained from Helen Pack Wilson and Minn 
Marie Wilson an option, whereby it was provided that, upon his form- 
ing a corporation to take over the lands and obtaining bona fide sub- 
scriptions of stock of a certain amount thereto, the owners of the lands 
would convey the same to the corporation and receive certain amounts 
of capital stock in payment therefor. Kirkpatrick organized the cor- 
poration on September 21, 1904. The capital stock was $65,000, con- 
sisting of 6,500 shares. Helen Pack Wilson subscribed for ail the 
stock except four shares. She transferred the coal lands to the corpo- 
ration for a stated considération of $64,960, and thereby paid her stock 
subscription. She was one of the incorporators of the company. She 
placed 2,500 shares of the capital stock in the treasury, to be the 
property of the corporation, and to be used to raise money to develop 
the mines and carry on the coal business. The stock book was not 
offered in évidence; but there was testimony to show that before the 
commencement of the suit one subscriber to stock paid $1,000 for 100 
shares, and another subscribed to 50 shares, for which he was to pay 
in work for the company, and that thereafter 200 shares were issued 



548 188 FKDEEAL REPORTER 

in part payment for a road which was constructed for the company. 
But, at the time when the suit was brought, Helen Pack Wilson was 
the holder of more than nine-tenths of the stock. It has been held 
that where one who has notice of the infirmity of his own title to land 
unités with others to form a corporation to which he subscribes for 
nearly ail of the stock, and to which corporation he conveys the land 
in payment of his subscription to stock, the corporation is afifected 
with notice of the circumstances impairing the title, and cannot claim 
to be a bona fide purchaser without notice. 10 Cyc. 1059; Hoffman 
Steam Coal Co. v. Cumberland Coal Co., 16 Md. 456, 17 Am. Dec. 
311 ; Simmons Creek Coal Company v. Doran, 142 U. S. 417, 12 Sup. 
Ct. 239, 35 L. Ed. 1063; Cahfornia Consol. Min. Co. v. Manley, 10 
Idaho, 786, 81 Pac. 50; McCaskiU Co. v. United States, 216 U. S. 
504, 30 Sup. Ct. 386, 54 L. Ed. 590. 

In Simmons Creek Coal Company v. Doran, where the incorpora- 
tors subscribed to the stock, and through the incorporators the com- 
pany claimed title, the record disclosing that one of them became its 
président, the court said: 

"Associated together to carry forward a common enterprlse, the knowledge 
or actual notice of ail thèse corporators and the président was the knowl- 
edge or notice of the company, and, if coustructive notice bouud them, it 
bound the company." 

Helen Pack Wilson, as we hâve seen, subscribed to ail of the cap- 
ital stock of the appellant company, leaving only four shares to be 
held by others in order to qualify them to act as directors, and she 
paid for her subscription by conveying the real estate. Kirkpatrick, 
who was an active promotor of the corporation, and who subsequently 
furnished money therefor and became a stockholder, had, before the 
corporation was formed and before investing money therein, actual 
notice of the suit of the Sterling Coal Company, and knew the ground 
on which that company sought the recovery of the land. He was also 
informed by Richardson, who had furnished the money which had 
been used for the purchase of the lands, of his claim of right in the 
premises. Thèse facts, which came to his notice before he invested 
his money in the lands or in the corporation, were sufficient to put 
him upon notice to ascertain the nature and the disposition of the 
Sterling Company's suit. Had he pursued the inquiry, he would hâve 
learned that the suit was dismissed on the ground that the coal lands 
had been obtained as the resuit of a conspiracy to defraud the United 
States. Those who subscribed to the stock of the new corporation and 
paid for the same must be held to stand in no better position than 
the persons through whose original subscription their stock was sub- 
sequently acquired. Cases are cited which hold that knowledge pos- 
sessed by an officer of a corporation who is selling property to the 
corporation is not imputed to the corporation itself ; but they are 
cases where the officer does not act as the agent of the corporation 
in making the sale, but where the corporation is represented by oth- 
ers. Shareholders are not co-owners of the property in any sensé. 
The title to the property rests in the légal entity called the corpora- 
tion. 



KNICKERBOCKER TRUST CO. V. EVANS 549 

[3] It has never been held, so far as we know, and we think it 
not sustainable on principle, that a corporation which has taken prop- 
erty with notice of defects of title can défend an action to recover 
it by showing that its stockholders subscribed to or purchased their 
stock in good faith and in ignorance of the defect 

The decree is affirmed. 



KNICKERBOCKER TRUST 00. v. EVANS. 
■(Circuit Court of Appeals, First Circuit. May 19, 1911.) 

Nos. 388-893. 

1. COEPOBATIONS (§ 77*) — CONSTEUCnON OF SUBSCBIPTION — PbINCIPAL OB 
GUAKANTOB. 

To enable a silk company to take over certain other corporations and 
properties, a syndicate was formed to which tbe promoter and défendants 
were parties. Syndicate managers were appointed, and an underwrlting 
agreement entered into, by which each of défendants agreed to pay a 
certain surn, for which he was to recelve common and preferred stock 
from a new issue aggregating a larger amount at par value. The amount 
was to be paid in part in cash, a furtlier amount on call of the managers, 
and payment of the remainder, with interest at 6 per cent., was to be 
deferred for one year or more. To raise the cash necessary to purchase 
the properties, it was provided that the managers and the promoter might 
borrow money and pledge the subscriptions and stock as collatéral secur- 
Ity therefor, provided that the loan should be for one year or more and 
the interest with which the subscribers should be chargeable should not 
exeeed 6 per cent, per annum. The agreement further provided that "In 
the event that any such loan is made each of the subscribers whose sub- 
scription is pledged as security therefor, for himself only and not for 
any or elther of the others hereby guarantees to the lender » • * the 
payment of such proportion of the principal and interest of sald loan as 
the unpaid part of.his subscription hereto shall bear to the aggregate 
amount remaining due upon ail of the subscriptions pledged ; * * * 
and each of the subscribers hereby agrées that the lender shall hâve the 
. right to proceed against the subscribers severally at once uiwn default to 
recover the several sums hereby guaranteed as aforesaid * • * with- 
out recourse to any other party and wlthout recourse to any collatéral 
security being flrst had or required." On the faith of such agreement, 
plaintifC lent a sum In exeess of $800,000, taklng the note of the pro- 
moter and the underwriting agreement and certifiicates for the stock 
ealled for thereby as security. The note was for one year, but called 
for 6 per cent. Interest payable semiannually, and provided that it should 
beconie due and payable at once in case the maker became bankrupt 
or made an asslgnment. Held that, notwithstanding the use of the 
term "guarantee" In the agreement, the subscribers were in a substan- 
tial sensé the principals, for whose purposes the loan was made, and 
not guarantors, the syndicate managers and the promoters being their 
agents to procure it ; that the rights of plaintifï against them were 
not based on the note, but were measured by the agreement, of whose 
terms plaintiff was fully advised. and its right to recover against them 
thereon was not. therefore, affected by the fart that there was some 
vnriance between the terms of the note and the asrreement with re- 
spect to the rate of interest and for the maturity of the note in certain 
events before the expiration of a year; and that, défendants' obligation 

*For other cases ses same topic & § numbeb in Dec. & Âm. Dlgs. 1907 to date, & Rep'r Indexes 



550 188 FEDERAL REPORTBB 

belng prîmary and not that of sureties or guarantors, no notice by plaln- 
tiffi to them of the loan contract was necessary to blnd tbem. 

[Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 210-212, 
219-243 ; Dec. Dig. § 77.*] 
2. Appeal and Brkoe (§ 1053*) — Admission of Immateeial Evidence— Ef- 

FECT OF WITHDEAWAL. 

The repeated admission, throughout a long trial, of évidence ofCered 
by the défendant tendlng to establisb a conspiracy to which plaintlff was 
a party as alleged in the answer, although such issue had been previously 
eliminated from tbe case by the action taken on one count of the déclara- 
tion, was error of so prejudicial a character that it was not cured by 
the withdrawal of s\ich évidence from the jury at the close of the trial. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig, §§ 4178- 
4184 ; Dec. Dig. § 1053.*] 

In Error to the Circuit Court of the United States for the District 
of Massachusetts. 

Actions at law by the Knickerbocker Trust Company against Maria 
A. Evans, executrix, against Stephen M. Weld, against Theophilus 
Parsons, against Albert S. Bigelow, against WilHam M. Conant, and 
against Russell S. Codman. Judgment for défendant in each case, 
and plaintiff brings error. Reversed. 

John G. Milburn and Julien T. Davies (Julien T. Davies, Jr., Harold 
McCollom, Davies, Stone & Auerbach, and Gaston, Snow & Salton- 
stall, on the brief), for plaintiff in error. 

Félix Rackemann and H. E. Bolles (George L. Huntress, C. A. 
Tyler, O. D. Young, and Samuel C. Bennett, on the brief), for défend- 
ants in error. 

Before COLT and PUTNAM, Circuit Judges, and ALDRICH, 
District Judge. 

ALDRICH, District Judge. Hère are six writs of error to review 
six judgments of the Circuit Court for the District of Massachusetts. 
The six cases were tried by jury, practically as one case, under the 
direction or order of the Circuit Court to that end. This course was 
adopted by the court on its own motion; but no question is raised 
against the validity or propriety of such trial. The issues are the same 
in ail the cases, and the same considérations and principles apply to 
them ail. The cases were argued together in this court as one case, 
and will be dealt with accordingly; and it is understood that consid- 
ération givén to the questions involved, and the resuit reached as 
well, apply to each of the particular cases. 

[1] The questions involved concern a situation in which the défend- 
ants became subscribers for certain shares of preferred and common 
stock in the American Silk Company, which was about to increase its 
capital stock and to take over certain other corporations and proper- 
ties. In order to launch and carry through the business proposition, 
it was necessary to raise money with which to pay for the properties 
to be acquired and turned irto the American Silk Company; and the 
necessary working cash capital was sought to be obtained through 
marketing for cash enough of the preferred and common stock to pay 

•For other cases see same toplo & § numeeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



KNICKERBOCKER TRUST CO. V. EVANS 551 

for the properties which were to become assets of the enlarged silk 
Company. 

To advance the enterprise, there was created what is called an "un- 
derwriting agreement," which undertook to set eut the purposes of 
the parties interested in the gênerai enterprise, and to establish certain 
rights and limitations in respect to the interests of the parties con- 
cerned. The underwriting agreement contemplated and provided for 
syndicate managers as a necessary and important working instrumen- 
tality. The promoters, the Bennett Company, the subscribers, and the 
syndicate managers, so called, were parties to the agreement. 

It will become important to inquire whether the relations of the 
stock subscribers to the gênerai enterprise were such as to make them 
principals, and thus bring them within the rules of làw which govern 
primary obligations, or whether their relations were those of guaran- 
tors with collatéral and secondary liability; in other words, whether 
their contracts or agreements, to which we hâve alluded in a gênerai 
way, had référence to what was in substance their own indebtedness, 
or original undertakings, or to a situation in which their agreements 
made them simply guarantors of the indebtedness of others. 

Under the view which will be stated more fully later on, we look 
upon the solution of this question as in effect controlling ; and this 
is so because, if the subscribers were guarantors merely, with only 
secondary liability in respect to the obligations of others, they are en- 
titled, at least on certain phases of the questions, to invoke the rules 
strictissimi juris; while, if they were in substance and effect princi- 
pals, and their obligations primary, their rights would be ascertained 
and established on less technical rules and considérations. 

The first count of the amended déclarations proceeded upon the 
idea of direct liability of the subscriber created by the underwriting 
agreement in favor of whoever should make the contemplated loan. 

The second count of the amended déclarations was upon an assign- 
ment to the lender of the rights created in behalf of the Bennett Com- 
pany by the underwriting agreement. 

The loan contemplated by the enterprise at its inception and pro- 
vided for by the underwriting agreement, and which as claimed 
amounted to a sum in the neighborhood of $850,000, was made by 
the Knickerbocker Trust Company, the plaintiff. 

As the trial upon the first count terminated, there remained no ques- 
tion of fraud or bad faith on the part of the trust company which 
loaned the money; indeed, good faith was conceded, so far as con- 
cerned the trial upon the first count. There was, therefore, as a resuit 
of this, no question of fraud to be submitted to the jury under the 
first count, because the alleged fraud of the Bennett Company was 
inadmissible as a défense against the theory of direct liability f rom the 
subscribers to the trust company, acting in good faith. 

At the conclusion of the plaintiff's case, or soon after, the court 
directed a verdict for the défendants on the first count, upon the 
ground that the loan was not such a loan as the défendants had agreed 
to guarantee. We understand the order directing the verdict was 
because of a supposed variance between the agreement of the sub- 



552 188 FEDERAL EBPORTBB 

scribers and thé proofs in respect to the terms of the loan aâ dis- 
closed by the loan agreement and the note ; and it would seem f rom 
the record that, upon the question of variance, the court considered 
the agreement simply a guaranty, or "a conditional agreement to pay 
somebody else's debt." , 

The supposed variance upon which the défendants rely is based 
upon certain provisions in the agreement which are urged as safe- 
guards inserted for the protection of the subscritferS with respect to 
the contemplated time loan. 

The agreement provided for the pa^Tnent of S par cent, of the par 
value of the preferred stock at the time the agreement was executed, 
and 15 per cent, on call of the syndicate managers on five days' notice. 
It also provided that : 

"Payment of the remaiuder with interest at 6 per cent, shall be deferred 
for one year or more from the date flxed for the payment of the 15 per cent. 
Installment" 

Again, and what îs perhaps more pertinent, the following: 

"Proviaed that each such loan shall be for the period of one year or more, 
and provided the Interest witi\ which the subscribers are chargeable shall not 
exceed the rate of 6 per cent, per annum." 

A note dated April 11, 1907, for $843,050, signed by the Bennett 
Company, and payable to the Knickerbocker Trust Company, with 
interest at the rate of 6 per cent, per annum, payable semiannually, 
which referred to certificates of prefçrred stock, amounting to $1,- 
211,500 par value, and common stock, amounting to $605,800 par 
value, and the underwriting agreement, which were deposited as col- 
latéral security, was introduced in évidence in connection with the 
transactions in question. The note in terms was expressly made pay- 
able "one year after date," but it contains the following provision : 

"In case the tinderslgned shall be adjudged a bankrupt, or shall flle a vol- 
untary pétition in bankruptcy, or shall make a gênerai asslgnment for the 
beneflt of ereditors, this note shall become forthwith due and payable." 

The supposed variance -is based upon the idea that interest, being 
payable semiannually, ofïends that part of the agreement which pro- 
vides that interest shall not exceed the rate of 6 per cent, per annum ; 
that the déduction of a commission upon the loan puts the amount ac- 
tually received by the syndicate managers and the Bennett Company 
at variance with the amount of the note; the more substantial con- 
tention being that the note, though on one year's time, was at variance 
with the agreement of the subscribers, because, in a certain contin- 
gency, that of bankruptcy or gênerai assignment, it might "become 
forthwith due and payable." 

Apparently the learned judge at the trial looked at the question of 
variance as one not founded upon substance, but as one involving a 
technical departure, not to be looked upon with favor, because, as ap- 
pears by the record, he characterized the point as one based upon "a 
very small hole," and, f urther remarking in respect to it, said : 

"Therefore, without niakiiig the slightest reflectlon on any défendant, I say 
that, so far as this particular point is coucenied, I hâve labored hard to see 
if I could reach a décision favorable to the plaintiff, because, so far as the 
case is now presented to me, the justice of the case is with the plaintiff." 



KNICKERBOCKER TRUST CO. V. EVATfS 553 

Seemîngly the question of variance was dealt with and disposed 
of upon such considérations and upon such strict rules as would 
doubtiess properly apply to situations which involve the strict and 
ordinary relations of guarantor or surety to the obligations of another. 
If the défendants sustained the relationship of guarantors in the sensé 
in which that légal obligation is ordinarily accepted, the variance, al- 
tho'ugh technical, and one more of the letter than of the substance of 
the agreement, would perhaps be fatal to the trust company's right 
of recovery. It is true that the terms "guaranty" or "guarantees" 
were used in the provision of the agreement in respect to the obliga- 
tions of the- stock subscribers; and it is quite natural, in a jury trial, 
where questions of law are imperfectly presented, that it should hâve 
been accepted as properly describing their relations to the transac- 
tions involved ; but upon a more complète présentation through the 
formai and elalDOrate arguments of counsel before us we are persuaded 
that, in substance and effect, the relationship of the subscribers to the 
enterprise was not at ail that of either sureties or guarantors, because, 
aside from the fact that the Bennett Company was more actively pro- 
moting an enlargement of the American Silk Company through bring- 
ing about an increase of its capital stock and the taking over of out- 
side properties, the subscribers were equally principals, or originals, 
in the joint enterprise of securing a certain business resuit. The very 
object of securing the advance subscription was to so far capitalize 
the enterprise, at its inception, as to make it feasible; and, by joining 
in the gênerai scheme for the purpose of giving it financial aid and of 
making it successful, and for the purpose of securing certain ground- 
floor advantages, not using the expression ofïensively, the stock sub- 
scribers became principals in every substantial sensé of becoming an 
original part of the enterprise. Without characterizing the enterprise 
as involving unwarrantable methods, by furnishing the necessary sin- 
ews the subscribers were securing to themselves certain pecuniary 
advantages, because, by thus joining in the enterprise and giving it 
aid, they became entitled to the profits on the stock of the silk company 
which would resuit through the increase of stock and the acquisition 
of new properties, and which would give them $150 in fully paid stock 
for each $90 actually paid in. 

The exact status of the rights of the subscribers, in respect to the 
benefits which they were to realize by reason of thus originally becom- 
ing part of the enterprise and liable to the lender of necessary capital, 
is particularly established by the underwriting agreement in the words 
f ollowing : 

"Each payment of forty-five thousand dollars ($45,000) to be made hy the 
subscrlber shall entltle the subscriber to receive fifty thousand dollars ($50,- 
000) of the par value of preferred stock, and twenty-five thousand dollars 
($25,000) of the par value of common stock of the American Silk Company." 

Although the words "agrée and undertake" were also used in the 
agreement, the use of the words "guaranty" and "guarantee" was 
quite inapt as describing the actual substantial relations ; because, dis- 
associated frorn the actual situation, it would suggest, of course, the 
rule strictissimi juris ; but, after ail, we must look beyond the words 



554 188 FEDERAL REPORTEE 

to the real cha'racter of the obligation. The Word or the letter does 
not necessarily describe the true relation. This idea is aptly illustrated 
by Judge Sanborn in Watson v. Merrill, 136 Fed. 359, 362, 69 C. C. 
A. 185, 188 (69 L. R. A. 719), in a bankruptcy case, where it was a 
question whether the daim was one for rents or damages; it making 
a; différence in respect to the provable status of the claim whether it 
was rent or damages, and where the learned judge said : 

"The application to it of the title of a claim for damages for a breach of 
the lease neither changes its nature, nor makes it more provable than it would 
hâve been if its real character had been described by its name." 

So it is that the true relations of thèse défendants to the transaction 
in question must be ascertained by référence to the situation of the 
property and the real character of the enterprise. This is important, 
because a slight variance may relieve one who stands as a guarantor 
of the debts or obligations of another, but a slight variance does not 
always operate to relieve a principal who undertakes to stipulate for 
performance of bis own primary obligations. 

In interpreting such words as "agrées," "undertakings," "guar- 
antees," "guaranteed," and "guaranty," used in the agreement in con- 
nection with the undertakings of the subscribers, with a view of 
ascertaining whether they were mère guarantors or, in substance and 
effect, principals, référence must necessarily be had to the gênerai 
purposes of the enterprise, its real character and scope, to the situa- 
tion of the property, and to the real interests of the différent parties 
concerned in carrying the enterprise forward to success. 

To ail substantial intents and purposes this was an enterprise in 
which the subscribers assumed to make good their undertaking, which 
was to furnish capital which the enterprise necessarily required in its 
incipient stages; and, while in their agreement they in a certain way 
safeguarded themselves in respect to time loans, they also said, by 
virtue of the same agreement, and for the purpose of making the func- 
tions of the syndicate managers operative, that : 

"Each subscriber hereby assents to ail the terms of this agreement, and 
agrées to be bound by any action of the syndicate managers taken under this 
agreement, and agrées to perforni ail his undertakings hereunder upon call 
of the syndicate managers to the fuU extent set opposite his signature." 

Thus in broad language the subscribers conferred upon the syndicate 
manager agency authority in respect to the gênerai purpose sought — 
that of effectuating the success of the enterprise. 

It is quite true that the gênerai authority and the agreement to be 
bound by any action of the syndicate managers should be read with 
reasonable regard for the words of limitation contained in the same 
instrument; but the scope of authority and limitations thereon are 
to be ascertained under gênerai rules of construction as contra- 
distinguished from rules of strict construction, because there was a 
gênerai purpose to carry forward a business proposition, through the 
instrumentality of syndicate managers, in which the subscribers were 
principals in a very substantial sensé, and in connection with which 
they were undertaking to make themselves directly liable to whoever 
should make a loan necessary to the success of the proposition; and 



KNICKERBOCKER TRUST CO. V. EVANS 555 

it is because they were thus promoting action in respect to an enter- 
prise in which they were primarily interested, and in which they were 
primarily associated with the promoters, and others, in carrying it 
forward, that the obligation should be regarded as primary obhgation 
governed by substantive rules of right, rather than as secondary ob- 
hgation from which they may be reHeved under rules of strict con- 
struction, or technical rules of right. 

It is doubtless true, under such a situation as the one involved hère, 
that action of the agents or the syndicate managers might be so far 
outside the authority and the purpose, especially where the lender had 
notice of the purpose of the enterprise and the limitations upon the 
authority of the agent, as to discharge the obligation altogether upon 
the ground that the departure was so complète as to operate in sub- 
stantial dérogation and fraud of the rights of the subscribers. But 
hère the agreement necessarily contemplated certain détails through 
syndicate manager instrumentality. The détails of the loan were 
necessarily to be arranged by the syndicate managers ; as, for instance, 
the agreement in no sensé contemplated a note from the subscribers 
for the loan. The Bennett Company and the syndicate managers were 
in a broad sensé agents of the subscribers, and in a very substantial 
sensé they were principals with them— agents in a way in respect to 
the loan, and perhaps other phases, and jointly interested as principals 
in respect to the gênerai purpose and scope of the enterprise, and 
sustaining such relations to the transactions, so far as they acted within 
the gênerai purpose and scope, as would bind the subscribers in respect 
to the loan contemplated; but, in dealing with the Knjckerbocker 
Trust Company, and so far as they acted in their own behalf in 
negotiating the loan, upon their own note, for the benefit of the sub- 
scribers and the gênerai enterprise, and so far as they exceeded their 
authority under the terms of the written agreement, it would be a 
matter of adjustment between the Knickerbocker Company, the 
Bennett Company, and the syndicate managers. This is so because the 
original agreement which contemplated a loan and which created 
syndicate managers for the purpose, among other things, of negotiating 
a loan, in order to enable the vendors to realize upon the deferred 
stock payments of the subscribers, further provided that the sub- 
scription agreements of the subscribers should be delivered to ' the 
lender in pledge, etc. 

The record shows that the subscription agreements, together with 
the stock, were deposited with the Knickerbocker Trust Company in 
connection with the loan transaction. It would thus resuit that they 
had full notice of ail the limitations upon the authority of the Bennett 
Company and the syndicate managers. 

In view of the whole situation, we think it entirely reasonable to 
say that the terms of the note create no rights in behalf of the trust 
company, or the lender, which could operate in any substantial way 
upon the rights of the subscribers in respect to time and interest and 
commissions, because the trust company, having notice of the limita- 
tions in this "respect, would be charged with notice of the departures 
from the terms of the agreement, and, so far as those incidental and 



556 188 FEDERAL KEPOBTEB 

technîcal departures are concerned, it is a matter entirely between the 
Bennett Company, the syndicate managers, and the trust company- 

The subscribers are not bound by the particular terms of the note, 
neither are they bound by it as a note showing a cause of action and 
ground of recovery against them by the Knickerbocker Company. 
The note is only important in the case as a pièce of évidence tending 
to show a loan which, in a substantial way, answered to the loan orig- 
inally contemplated and described in the agreement. Thèse suits are 
not at ail based upon the note. Apparently in loaning, there was no 
purpose on the part of the trust company to look to the subscribers as 
a party to the loan note as such, because the loan agreement between 
the Knickerbocker Company and the Bennett Company expressly 
recognizes the limitations in respect to the loan and the stock sub- 
scriber safeguards of the original agreement, and the transaction pro- 
ceeded upon the idea that the Bennett Company was the borrower, and 
that the loan was to be for one year upon the securities contemplated 
by the original agreement, "together with the collatéral note si^ned by 
the borrower in the customary form used by the trust company." 

This seems to be a transaction in which the note of the Bennett 
Company was collatéral to the actual loan and real security. But, 
however that may be, if the terms of the note, in respect to semi- 
annual interest rather than annual, and in respect to the contingency 
of bankruptcy or gênerai assignment, involved a departure from the 
terms of the original agreement, they in no way affected the rights 
of the subscribers, because the lender was chargeable with notice of 
ail the ternjs of the agreement in respect to the liability of the sub- 
scribers, and knew the exact status of liability which the subscribers 
created in its behalf. 

The note signed by the Bennett Company was a mère collatéral 
incident of the loan and of the syndicate and Bennett Company agency. 
The act of executing the note with a semiannual interest and bank- 
ruptcy provision was an act quite likely beyond the letter of their 
authority, and would quite likely render them responsible, in a way, 
to the Knickerbocker Company; but we do not view it as an act in 
any way affecting the liability or the substantial rights of the stock 
subscribers. The note not only could not be set up by the Knicker- 
bocker Company as a ground of recovery, but as the Knickerbocker 
Company knew not only the exact status of the liability of the sub- 
scribers, but the terms upon which the subscription agreements and 
the preferred and common stock could be pledged as security for the 
contemplated loan, the rights of the subscribers in respect to the 
collatéral stock security could in no way be abrid^ed or controlled by 
the terms of the note, and any possible questions as to the rights of the 
Knickerbocker Company as against the Bennett Company in respect 
to the bankruptcy provision in the note, or in respect to the semiannual 
interest provision, would relate to entirely immaterial issues so far as 
concerns the substantive rights of the stock subscribers under theii 
subscription agreements which established the terms and conditions 
upon which the collatéral security for the loan might be tield. 

Under the circumstances the note as a note, in and of itself, neither 



KNICKERBOCKER TRUST CO. V. EVANS 557 

créâtes the liability of the stock subscribers, nor limits nor enlarges 
their liability as created by the subscription agreements. The note 
neither controls the right of action under the agreements, nor the 
measure of damages based upon the right. The right is established by 
the agreement, and it runs direct from the subscribers as principals, 
in substance, to whoever should lend the necessary capital, and the 
lender's right of recovery is what the original agreement contemplâtes 
and déclares, which is that: 

"In tHe event that any such loan is made, each of the subscribers whose 
nabscription is pledged as securlty therefor, for himself only and not for any 
or either of the others, hereby guarantees to the lender with whom this agree- 
ment shall be pledged and hls or its assigns the payment of such a propor- 
tion of the principal and interest of said loan as the unpaid part of his sub- 
scription hereto shall bear to the aggregate amount remaining due upon ail 
the subscriptlons pledged as securlty for sùch loan ; and each of the subscrib- 
ers hereby agrées that the lender shall hâve the right to proceed against the 
subscribers severally at once upon default to recover the several sums here- 
by respectively guaranteed as aforesaid, until the fuU amount of the principal 
and interest of said loan, with costs, shall hâve been recovered by the lender, 
without recourse to any other party and without recourse to any collatéral 
securlty being first had or required." 

Under this agreement, running direct to the lender, the subscriber's 
liability is to pay his proportion of the actual loan, not to pay according 
to the terms of any collatéral note given by the agent. 

The lender, the plaintiff, in its déclaration, refers to the date of the 
loan, and it is true that the date of the loan was the same as the date 
of the note ; but, in no substantial or technical sensé are thèse actions 
based upon the note, because the right upon which the déclaration 
founds its cause of action is, after ail, based upon the underwriting 
agreement, and, such being the foundation of the right, the recovery 
must hâve référence to it, and not to the note, whicli was incident to 
the loan, and which on its face may be little more than the measure 
of damages properly ref érable to the original undertaking; and it 
results, reasonably enough, that the recovery may be less than that 
claimed, and such as may be based upon the agreement, and such as 
the actual loan is shown to be, regardless of semiannual interest and 
commissions, items not contemplated by the agreement which estab- 
lished the liability. 

The agreement of the stock subscriber was to pay his proportion of 
the actual loan, and it thus results, as stated, that the right of recovery 
is founded upon the agreement rather than upon the note, which, in 
a certain technical sensé, may be said to be outside the agreement, and 
therefore beyond the authority of the agents. The right of recovery, 
created by the agreement, is in effect limited to the amount to become 
due under the agreement, and the right runs direct from the stock 
subscriber to the lender, and is not extended or affected, at ail, by the 
unauthorized feature of the note given by the Bennett Company. The 
liability and the terms upon which the contemplated loan was to be 
made were both expressly described in the agreement which the lender 
holds as something establishing and limiting its rights. 

If the note had been expressly declared upon as an instrument 
creating liability, which was something not done, other questions 



558 188 FEDERAL EEPOETEB 

might présent themselves; but, as the déclaration îs based upon the 
original undertaking of the stock subscriber, the measure of recovery 
might be for a less sum than that stated in the note, which was only 
a pièce of évidence, provided the stock subscribers' proportion of the 
principal of the actual loan and interest at 6 per cent, per annum is 
less than that indicated by the note, which contains a semiannnal 
interest provision, and, as is claimed, certain commissions. 

Thus, as is seen, the rights of the lender in respect to recovery are 
measured by the actual loan and interest at 6 per cent, per annum, 
rather than by the amount stated in the note, and the rights of the 
subscribers in respect to stock deposited as collatéral security for the 
loan wevt fuUy protected by the terms of the agreement in respect 
to time, and it results, therefore, that the subscribers were in no way 
harmed by the unauthorized terms of the note given by the Bennett 
Company to the lender. 

The déclaration aptl)'' sets out what the obligation of the subscriber 
was; that of agreeing or , guaranteeing "to the lender with whom 
his said agreement should so be pledged, as aforesaid, the payment of 
such a proportion of the principal and interest of said loan as the un- 
paid part of his subscription under his said pledged agreement should 
bear to the aggregate amount remaining due upon ail the subscrip- 
tions so pledged as security for such loan." It is also set out that 
each subscriber agreed that the lender should hâve the right to pro- 
ceed against the subscribers severally at once. It is also alleged that 
the Knickerbocker Trust Compajiy, acting upon the faith of a cer- 
tificate of the syndicate managers and such agreements, loaned to the 
H. W. Bennett Company, for the period of one year, the sum of 
$843,050, payable at the end of a year; that the loan was made in 
pursuance of the terms of the agreement dated April 11, 1907, and 
the sum sought in each case is each subscriber's unpaid part of his 
subscription, to be ascertained by calculations made as of April 11, 
1907, upon the amount of $843,050, and such unpaid part is what the 
plaintiff claims it is entitled to recover in each case ; and it is alleged 
that a demand bas been made, and that payment bas not been made. 

Thus it is seen that the plaintiff not at ail, eitlier in a substantial or 
technical sensé, based its déclaration upon the note as an instrument 
establishing a right, but upon the supposed right of action created 
by the original underwriting agreement, alleging that the loan was 
made in reliance upon such agreement and in pursuance of its terms. 

Even if the H. W. Bennett Company's collatéral note to the trust 
Company, which is in évidence, includes items or éléments not con- 
templated by the subscription agreement, and éléments and items which 
the subscribers did not agrée to stand for, we see no reason why 
the note should be accepted as afïecting at ail the trust company's 
just right, in the absence of bad faith, to recover each stock subscrib- 
er's contractual unpaid part of the actual money loan in reliance upon 
the underwriting agreement, although the same may be less than what 
would resuit from a calculation made upon the note. 

It is quite true that some of the reasonings in respect to the rules 
which govern the essential question of liability would not apply to 



KNICKERBOCKEE TRUST CO. V. EVAKS 559 

situations of strict guaranty where the obligation is relieved upon 
grounds of technical and slight departure, and might net perhaps 
apply to supposed controversies between the stock subscribers and 
tiieir agents. But accepting the obligation of the stock subscribers 
as primary, in respect to a loan made in good faith for their benefit, 
and upon their agreement, we think gênerai and substantial principles 
of right render technical and harmless departures, by their agents, 
inadmissible as a ground of défense in their behalf and against a meri- 
torious loan. 

The trust company in good faith, so far as the record shows, let 
its money go out for the use of the stock subscribers, who hâve re- 
ceived its benefits, and hâve in no way been injured by the acts of 
their agents in respect to détails and technical departures from the 
letter of authority; and, having in no way sufïered, the trust com- 
pany should not suffer through an application of strict rules of con- 
struction in order to make the technical and harmless departure of 
the subscribers' own agents operate to defeat the restoration of a meri- 
torious loan. 

Instead of being guarantors for the indebtedness of another, the 
subscribers as principals, in substance, made the Bennett Company 
and the syndicate managers their agents to carry forward an enter- 
prise with which they had embarked; and, especially so far as con- 
cerns money loans necessary to advance their own interests, it results 
that they are not entitled to invoke strict rules of variance, but are 
bound by such acts of their agents, at least so far as they are not 
expressly limited and so far as they operate in accordance with the 
gênerai purposes and in respect to transactions necessary to accom- 
plish the gênerai resuit contemplated. 

Judge Putnam, speaking for this court in Fullerton v. Bigelow, 177 
Fed. 359, 362, 101 C. C. A. 445, 448, in respec); to a trust which re- 
quired that property should be purchased "at the lowest figure ob- 
tainable at public sale," said that the phraseology was so spécifie as 
to entitle the principal to hâve the bid at the lowest figure obtainable 
at a public sale, but, as an addendum substantially changed the nature 
and the characteristics of the requirement in respec? to public sale 
as the test of authority, that the remaining obligation was to proceed 
in a prudent manner to secure an arrangement such as might ordi- 
narily hâve been accomplished. 

It has been said that the ultra vires doctrine, as a strict rule against 
contracts, is generally looked upon with disfavor by the courts of 
this country; but it does not seem necessary to invoke any such ex- 
trem.e view in respect to thèse cases, because the situation hère is one 
where the gênerai scheme was intrusted to syndicate managers ; and, 
in the event of success, the principals would reap certain pecuniary 
advantages; and the pecuniary advantages were dépendent upon the 
success of the enterprise in wliich they had embarked ; and we think 
the gênerai authority of the syndicate managers and the Bennett Com- 
pany was such that it was within the reasonable and necessary scope 
of their power to negotiate a loan accompanied with collatéral upon 
the express Ofie year's time stipulated, and that it was reasonable for 



560 188 FEDERAL EEPOETEK 

the agents in their own right though not within their express author- 
ity, to give their own note with a bankruptcy contingency, because, 
while the note was not the foundation of the loan, it was a necessary 
incident as between the syndicale managers, the Bennett Company, 
and the lender, and it was not unreasonable because it was a contm- 
gency which in no way would operate to abridge the rights of the 
stock subscribers. 

The Bennett Company and the syndicale managers had their own 
interests to advance in connection with the enterprise, as well as the 
interests of the stock subscribers, and much depended upon nego- 
tiating the necessary loan and capitalizing the enterprise, and doubt- 
less they might well enough, in their own right, incur personal liabil- 
ity as to necessary incidental matters, and in doing this, so far as the 
particular departures disclosed hère are concerned, the status of right 
between the stock subscribers and the lender under the underwriting 
agreement was in no way changed. 

We do not conceive it to be at ail necessary or material to consider 
whether thèse departures f rom what might perhaps be called the strict 
letter of authority would operate to relieve the liability of a guarantor ; 
because, as we hâve already said, the relationship of thèse défendants 
to the loan was not that of guarantors of the debt of another, but 
in substance that of parties who had guaranteed as principals to see 
that their own undertakings are carried out; and, if their agents or 
instrumentalities varied a little in respect to things not of harmful 
substance, they are not relieved. 

The authorities cited by the défendants in error to sustain the prop- 
osition of fatal variance between the authority to negotiate a loan 
and the terms of the loan actually negotiated, with few exceptions, 
if any, relate to situations in which the guarantor or suretyship ob- 
ligation was collatéral and secondary to the debt or undertakings of 
others in respect to their own affairs, where the rules strictissimi 
juris apply, and hâve very little, if any, pertinent bearing upon ques- 
tions of primary and original obligation like that which exists on the 
part of the stock subscribers in the cases at bar. 

Without going very far into the question of distinguishing the 
nature o.f the obligation in the cases relied upon by the défendants in 
error, from the nature of the obligation existing in the cases under 
considération, we will refer to a few of them. 

The Peru Plow Company Case (Peru Plow & Wheel Co. v. Ward, 
■■ Kan. App. 6, 41 Pac. 64), which is relied upon by the défendant as 
a case almost exactly in point to the one at bar, was, in fact, a case 
of strict surety where the party sought to be held made his agree- 
ment in respect to the debt and business of another; and in Page v. 
Krekey, 137 N. Y. 307, 33 N. E. 311, 21 L. R. A. 409, 33 Am. St. 
Rep. 731, though the facts are not very clearly stated, it would seem 
that the guarantor was not in any broad and substantial sensé the 
principal. Flynn, Executor, v. Mudd & Hughes, 27 111. 323, was a 
case about a negotiable promissory note, in which the surety was in 
no sensé the principal debtor; and in Foederer v. Moors, 91 Fed. 
476, 33 C. C. A. 641, the parties sought to be charged were not 



KNICKEEBOCKEB TRUST CO. V. ÏTAN8 561 

principals in the sensé of having created original liability. In Miller 
V. Stewart, 9 Wheat. 681, 6 h. Ed. 189, there was a contract of surety 
for the faithful performance of the duties of an officer, where, of 
course, the obligation was not original; and in Guardian Trust Com- 
pany V. Peabody, with a divided court ( 122 App. Div. 648, 107 N. Y. 
Supp. 515), the undertaking was not original, in the sensé of creating 
direct liability to a lender based upon the guarantors' unpaid balance 
of their own existing indebtedness, but a guaranty liability to be 
subsequently created by notes nominated in the agreement, and of a 
kind particularly described and required by the agreement, where 
the party, in whose favor the guaranty was made, participated in the 
act of déviation from the substantial and particular requirements of 
the guaranty. The case of Lynn Safe Deposit & Trust Company v. 
Andrews, 180 Mass. 527, 62 N. E. 1061, was one of strict guaranty 
of the debt of another under conditions which would make the lia- 
bility of the guarantor secondary and one governed by strict rules of 
law ; and Walrath v. Thompson, 6 Hill, 540, was a guaranty of the 
payment of a debt of another in which the guarantor was not in- 
terested as a primary party to the obligation. 

We see no occasion to further pursue cases involving guaranties 
where the obligation is secondary, because if the obligation of the 
subscribers in the case at bar was primary they bave no pertinent 
bearing. 

As we view the obligation of the défendant subscribers as orig- 
inal, and in substance upon theif own existing indebtedness or under- 
taking, and as running directly from themselves to the lender, rather 
than a guaranty of the agreements and undertakings of the Bennett 
Company, we do not perceive that there are any questions in respect 
to notice from the lender to the subscribers such as is required in 
situations of suretyship and guaranty liabilities with respect to negoti- 
able notes of others, and perhaps in other situations of collatéral and 
secondary liability. 

After the trial of the cases under considération had proceeded several 
diays, upon both counts, upon motion, which the Circuit Court treated 
as in substance made, a verdict was directed for the défendants on the 
first count. The Circuit Court apparently viewed the situation and 
referred to it as one in which the Knickerbocker Company "meant to 
loan that money under the terms of the underwriting agreement," and 
as one not showing anything contradictory between the loan agreement 
and the note, but one in which inconsistency "lies between the loan 
agreement and the underwriting agreement," and accepting the strict 
rules of law, which govern in respect to guarantors and sureties where 
a lender seeks to hold them under "a conditional agreement to pay 
somebody else's debt," upon forcible observations which clearly indi- 
cate that the learned judge's sensé of justice was strongly offended by 
the opération of strict rules upon the obligation in question, directed 
a verdict for the défendants on the first count, and the trial thereafter 
proceeded upon the second count alone. 

As we hold that the liability of the stock subscribers was original, 
and a liability in respect to their own undertakings, and that se far 
188 F.— 36 



562 188 FEDERAL EEPORTEB 

as variance exîsts between the loan agreement and the note on the one 
side, and the underwriting agreement Upon the other, that it was a 
matter between the lender and the Bennett Company and the syndicate 
managers, in no way affecting the liability estabHshed by the under- 
writing agreement in which the obhgation runs direct from the sub- 
scriber to the lender— and therefore a harmiess variance so far "as 
concerns the rights under the original undertaking — it results that the 
judgments below must be reversed. 

In the defendant's brief filed in this court, the grounds of défense to 
the first count are formally set out as f ollows : 

"(1) Tbe défendants never guaranteed any speclfied loan, but agreed wlth 
the Bennett Company to guarantee a particular kind of loan to the Bennett 
Company If any such should be thereafter made, and that none such was 
made. 

"(2) The condition of the offer of guarantee was that the loan should be 
for a year or more. The loan was In fact made for a year or less. 

"(3) The agreements of the défendants were with the Bennett Company and 
were merely offers to guarantee whlch required aeceptance by some lender, 
and notice of such aeceptance, to complète any contract and establlsh any 
liability, and that there was neither aeceptance of the offer as made, nor any 
notice of aeceptance whatever, nor even attempt to notify." 

Under the interprétation and construction given to the underwrit- 
ing agreement, and under the view taken as to the principles and rules 
of law which govern the obligation of the subscribers, none of the 
grounds stated in the brief and nothing in the record discloses any 
défense to theif liability ; but it still remains that the answer sets up 
bad faith and conspiracy as a ground of défense. 

It is true that after verdicts for the défendants had been directed 
upon the ground of variance, and after the trial had proceeded several 
days upon the second count, the question of the lender's bad faith was 
not understood to be longer an issue as against the Knickerbocker 
Company either under the first or the second count* and ail questions 
of bad faith were withdrawn, as is shown by the following colloquy, 
which appears in the record : 

"Plaintiff's Counsel: The Knickerbocker Trust Company is chargea with 
being a party to a conspiracy. 

"The Court: I don't understand that the Knickerbocker Trust Company 
Is now charged wlth participation in fraud as an issue in thls case; but, If 
counsel wlU be kInd enough to say that is so, I don't think we need go any 
further. 

"Defendant's Counsel: I thlnk what we say is thls: In view of the ruling 
of the court upon the flrst count, It Is unnecessary for us, on the second count, 
to ofCer any évidence on that. I don't mean to say we hâve withdrawn what 
we stated. I don't understand that that allégation Is legally Involved upon 
the issue upon the second count. 

"Plalntlffs Counsel: Then, I understand, there Is no further claim, cer- 
tainly, in thls suit, at this time, that the Knickerbocker Trust Company was 
a party to any conspiracy? 

"The Court: As the case now stands on the second count there Is no such 
Issue to be passed upon by the jury. 

"Defendant's Counsel: T don't désire to be understood as retractlng any- 
thlng whlch I hâve charged In regard to the conspiracy. I don't understand 
that since the flrst count has dropped out that It Is neeessary for us to show 
any such thlng as to the Knickerbocker Trust Company ; the suit being now 
the suit of the Bennett and not of the Knickerbocker Trust Company. 

"The Court. The Issue of conspiracy, so far as the Knickerbocker Trust 



KNICKERBOCKER TEU8T CO. V. EVANS 563 

Company Is concerned, I don't understand the défendants now contend îs an 
issue in this case. 

'•PlaintifC's Counsel: And the Issue of any eliarge of fraud agalnst the 
Kniclcerboclîer Trust Company Is net in issue at this time in this case. That 
is what they say. 

"The Court: That is what I understand. I understand that as a fact it 
is not in issue in the présent trial, which is proceeding solely under the second 
count." 

Notwithstanding such withdrawal, as the rights of the parties under 
the first count were turned solely upon the ground of variance in the 
court below, and as the order directing the verdict was made at a 
stage of the trial before the défendants had closed their case, and as 
the withdrawal of the question of bad faith was under such qualifying 
conditions as to probably leave that question open to the défendants 
upon a subséquent trial under the first count, the situation, though the 
record as it now stands shows no défense, is not one which would 
warrant the direction of a gênerai verdict for the plaintiff, and, while 
the judgments should be set aside, there should be leave for further 
proceedings in the Circuit Court not inconsistent with the theory of 
this opinion. 

If the rights between the lender and the subscribers are finally 
established under the first count, upon a subséquent trial, in accord- 
ance with the theory of this opinion, the questions as to the former 
trial and verdicts upon the second count would beconie wholly im- 
material, and we see no reason, upon that view, why ail questions 
relating to the trial and the verdict upon that count might not be held 
in abeyance and unconsidered for the présent at least. 

If the obligation is primary, any trial upon the second count would 
be a mistrial and wholly immaterial, because no verdict based upon the 
kind of liability allégea in the second count could be made ref érable 
to and become the basis of a judgment against a liability which runs 
direct from the subscriber to the lender. So long, therefore, as our 
holding stands in respect to primary liability in thèse cases, no verdict 
for the défendant upon the second count could operate to defeat the 
plaintifif's primary right, and for that reason any subséquent trial upon 
that count, while the status of such liability remains, would be upon 
altogether immaterial and fictitious issues. 

If the obligation is primary, as we hâve held, the only possible dé- 
fense is fraud, with which the lender was tainted. In any trial upon 
such an issue the plaintiff would hâve as broad a scope in respect to 
questions of fraud as it could possibly hâve under the second count, 
and, if it should fail, it would hâve had one trial upon that issue, and 
it would therefore hâve no interest, and perhaps no right, to try the 
question over again under the second count; but if, upon a trial under 
the first count, the plaintifï should prevail upon the question of fact 
as to fraud, and fail upon the ground that as a matter of law and con- 
struction the liability was not primary, then it might become material 
to the plaintifFs rights to hâve a trial upon the second count. 

Under the view which we hold as to the nature of the obligation, 
k would not be practical or consistent to try the first and second 
counts together, because the moment the trial judge should rule in 



564 188 FEDERAL EBPORTEB 

accordance with what we hold in respect to primary oWigation, ail 
questions under the second count would become immaterial, because 
in no way germane to that kind of liability. 

If the défendants prevail in a trial of the issue of fraud under the 
first count, recourse to the verdict on the second count would not be 
required in order to establish their rights, and, if they should fail, a 
verdict upon the second count could not under any circumstance avail 
them as a défense to their primary liability. Thus under the view we 
take, as to the nature of the liability, it is quite inconceivable that the 
pending exceptions and the verdict in respect to the second count are 
at présent material, or can become so, except in the event of the 
plaintiff's prevailing upon the issue of fraud in a trial upon the first 
count, and failing to establish its rights upon the ground that the 
liability of the subscribers was not primary, but that of guarantors. If 
this should resuit, the second count verdict would become material, 
and the plaintif! is therefore entitled to hâve pending exceptions in 
respect to that part of the trial considered and determined. 

The exceptions taken in the course of the trial upon the second count 
hâve référence to the refusai of the court to instruct, and to its instruc^ 
tions; but the substantial prejudicial matter is the admission of im- 
proper évidence. 

[2] At a very late stage of the trial it was determined that a large 
part of the évidence introduced to the jury was inadmissible, as far 
as the issue to be submitted to the jury was concerned, and the court 
undertook to withdraw it from the minds of the jury; and the ques- 
tion for us to détermine is whether the withdrawal, under the particu- 
lar circumstances of this case, must be accepted as being so far effec- 
tive as to remove ail préjudice and thereby render the trial a fair trial 
within the meaning of the law. 

Much évidence was admitted, subject to exception, which, as we 
hâve said, was wholly immaterial ; and the question is whether it can 
reasonably be accepted as harmless under the particular circumstances 
of the trial in question. So far as the évidence was supposed to hâve 
been prejudicial, it groups about the tenth paragraph of the défendants' 
answer, as foUows: 

"(10) That on or about the Ist day of December, 1906, in and about the 
clty and state of New York, the plaintiff company, together with its then 
président, Charles T. Bamey, and its then vice président or first vice prési- 
dent, Frederick L. Eldridge, together with Harry W. Bennett and one Mat- 
thew G. Collins (said Eldridge, Bennett, and Collins being the persons re- 
ferred to in the agreement attached to plaintiff's déclaration), for the purpose 
of making and obtaining for themselves secret and unlawful profits, and the 
obtaining of secret, unlawful, and fraudulent gains and advantages, conspired 
and arrangea together for the formation and promotion of the American 
Silk Company, referred to In plaintiff's déclaration; that said Bamey was 
then the président of the Knickerboeker Trust Company, plaintiff; that said 
Eldridge was then its vice président, sometlmes called its 'first vice président' ; 
that said Harry W. Bennett was then carrying on business as a promoter un- 
der the name 'H. W. Bennett & Co.' with offices on Broad Street in the city of 
New York ; that said Collins was then Interested as a stockholder and ofiicer 
and otherwise in the York Sllk Manufacturing Company (Pennsylvanla cor- 
poration), and being the corporation of that name referred to in the agreement 
annexed as 'Bxhibit A' In plaintiff's déclaration; that said York Sllk Manu- 
facturing Company was at that tlme Indebted to the said Knickerboeker Com- 



KNICKEEBOCKER TRUST CO. V. EVANS 565 

pany, and had been so indebted on a demand note originally given In August, 
1905, in the suni of $495,000 ; that said H. W. Bennett & Co., the partnership 
above mentioned, was at the time and had for a long time theretofore been 
heavily indebted to the said Kniclierbocker Trust Company, plaiutiff, on ac- 
count of or in connection with other large promotion schemes for corporate 
enterprises, in which the said plaintifC company and said Bennett & Company 
had co-operated ; and that said Knickerbocker Company was aiso, or had also 
recently theretofore been, mortgagee of the said York Silk Manufacturing 
Company under a mortgage or deed of trust for $500,000." 

Other paragraphs in the answer relate to the détails of the alleged 
f raudulent scheme ref erred to in the paragraph which we hâve quoted ; 
and specifically to obtaining secret profits to be used for the advantage 
of the parties to the alleged conspiracy, including the Knickerbocker 
Trust Company ; to the use of a certain alleged false prospectus ; to 
an alleged fraudulent scheme through which Bennett should secure 
the subscriptions to the stock of the American Silk Company, which 
are the basis of the suits, and assign them to the Knickerbocker Trust 
Company at illégal rates of interest ; and to an alleged purpose to form 
a sham corporation known as the H. W. Bennett Company for working 
eut their dishonest intentions. The answer at great length describes 
the alleged fraudulent conspiracy between the parties, including the 
solicitors of the Knickerbocker Trust Company, as the active authority 
in the conspiracy and in directing and guiding ail the détails. The 
paragraph in respect to the solicitors in effect charges them with 
organizing the corporation without any honest intention of its being in 
good faith a corporation, or for any "purpose or object beyond the 
participation in the fraudulent plan and scheme herein set forth." 
By and large, the plaintiff corporation and its attorneys were pictured 
as being from the beginning in the conspiracy with Bennett, CoUins, 
and Eldredge. The plaintiff corporation was charged with being a party 
to the conspiracy as a whole. The charges in this respect were very 
severe and of a prejudicial nature. 

Under the severe characterizations of the allégations in respect to 
the misrepresentations of Bennett and CoUins and Eldredge, and in 
respect to an alleged conspiracy, évidence was admitted as tending to 
show a step in the direction of conspiracy, upon the assumption that 
subséquent évidence would connect the Knickerbocker Trust Company 
with the conspiracy, and as having made the advances as a part of the 
program of the conspirators. Under the allégation of conspiracy it 
was doubtless legitimate for the court to admit the évidence, post- 
poning final action in regard to it until a later stage of the trial ; but, 
when the first count was withdrawn from the jury, the claim of con- 
spiracy went with it, and from that time forward évidence of the 
character complained of should hâve been treated as altogether out of 
the case. 

After the first count had been withdrawn, together with the allé- 
gation that the Knickerbocker Company was in a conspiracy as to the 
matters in question, and as the plaintiff in respect to the second count 
stood as an assignée of the rights of the Bennett Company under the 
underwriting agreement, the only issue, under that count, was whether 
Bennett, who controlled the subscriptions for stock, had obtained them 
by misrepresentations. Yet, notwithstanding the fact that the ex- 



566 188 FEDERAL REPORTER 

pressed views of the court were against it, the défendants insisted on 
introducing évidence on the issue of conspiracy. 

The case was on trial from March 30th to April 17th. The ruling 
on the first count to which we hâve referred was very early in the 
trial ; so early that, while only 40 printed pages of the record preceded 
it, 351 printed pages succeeded it. It is not proposed to deal specif- 
ically with the prejudicial effect of spécial instances of inadmissible 
évidence, but with the effect of the gênerai whole under the circum- 
stances of this particular trial. The record is permeated with preju- 
dicial évidence objected to by the plaintifif, ail tending to show close 
relations between the Knickerbocker Trust Company and the members 
bî the syndicale which promoted the organization of the American 
Silk Company, of which Bennett, CoHins, and Eldredge were mem- 
bers. The court again and again expressed its views that sucli testi- 
mony was not admissible, but concluded to admit it at the risk of the 
défendants, with a view of determining at the end of the trial whether 
or not he should strike it out. The défendants in substance admit this 
because they say : 

"It is to be remembered that the answer set up the défenses, conspiracy and 
false représentations. 

"The évidence which the plaintiff now complains of was offered by the de- 
fendants in support of the charge of conspiracy. It is true that It was ail 
rejected by the trial court at the close of the trial, but it must be apparent 
that when the several separate bits of this évidence were offered the trial 
court properly admltted them as being compétent on the question of the con- 
spiracy ; that Is, havlng some falr probative force and value in that direction. 

"The court received the évidence of conspiracy de bene as appears in sev- 
eral places in the record." 

The proposition that évidence of conspiracy might hâve been re- 
ceived by the trial court de bene, up to the time when the court ruled 
out the first count, affords no excuse for the persistent efforts by which 
it was brought before the jury after the first count was thus ruled out. 

Among the expressions of the court as to this class of évidence is 
the following: 

"I am golng to allow defendant's counsel to put in pretty much everythiiig 
they want, subject to the exceptions of plaintiflC's counsel. That wlU protect 
the plaintiff, and I think we will save time." 

This remark was made, as the record shows, in response to the 

plaintiff's strenuous objections. 
Again : 

"The Court: Yes. I do not believe that the évidence is material ; but I hâve 
gone a great way in lettlng ail this in, Indlcating to the jury that I might 
hâve occasion to rule it out later. I will admit it subject to your exeeptiou 
for the présent, and the jury wUl bear in mind that I may hâve occasion to 
exclude a large part of this testlmony from their considération hereafter." 

More positive expressions, however, are found in another part of 
the record, where the following colloquy is shown : 

"The Court: When we corne to the discussion of questions of law, the court 
may hâve some views. 

"Plaintiff's Counsel: Yes, but in the meantime this great mass of testlmony 
bas got before this jury, and it is golng to be very difflcult, It seems to me, 



KNICKEEBOCKER TRUST 00. V. ETANS 567 

for them, ont of tbe enormous record, to pick eut the small amount of testi- 
mony that really bears upon the actual issues of this case. 

"The Court: I think there is much in your objection, and it may be that 
things will be let in which can't afterwards be excluded, and it will be so 
prejudicial as to deprive, practically deprlve, the other side of any advantage 
they may get therefrom. But, at the same tlme, were I to undertake to con- 
sider each of thèse objections at the présent tinie and rule upon them, it is 
clear the case would never end, and I think, on the whole, this is a safer pro- 
ceeding. There are objections, and I don't désire to minimize their effect. 
I think, on the whole, this Is the safer proceeding." 

Single instances, or several instances, of wrongful admission, and 
a subséquent withdrawal of évidence, are often treated as harmless ; 
but hère there are many instances. They permeate the record ; and 
while particular instances standing alone might be harmless, standing 
as a whole, as they did hère, through the course of a long trial, they 
make such a mass of suggestion and évidence of intimacy between 
the plaintiff and its ofHcers and Bennett that the situation must be ac- 
cepted as necessarily and naturally imbuing the mind of the jury with 
hostile impressions quite impossible to eradicate. The plaintifï's po- 
sition upon this phase of the case is stated as f ollows : 

"Réversible error was commltted by the learned trial court in permitting 
défendants' counsel to thrust before the jury a mass of évidence concernlng 
the profits of Bennett and ColUns, the subséquent history of the sllk company, 
and of Its constituent conipanies and Collins' part in their management, thus 
tendlng to discrédit the plaintifC's assignor; and also In permitting défend- 
ants' counsel to préjudice the jury, directly, whether dellberately or not, 
agalnst the Knickerbocker Trust Company by charges and Insinuations of 
conspiracy sought to be drawn from Immaterlal évidence, ail of which mat- 
ters were in no way relevant to the issues upon the second count, and which 
charges and insinuations the défendants' counsel refused to retract before 
the jury." 

The conclusion is irrésistible that the mass of testimony shown by 
the record, which was whoUy irrelevant after the court's ruling on the 
fîrst count, must hâve prejudiced the jury beyond the possibility of 
cure through a gênerai withdrawal. 

It results that the judgments and the verdicts in ail the cases should 
be set aside. 

In each case the judgment will be : 

The judgment of the Circuit Court is reversed; the verdict is set 
aside ; the case is remanded to that court for further proceedings not 
inconsistent with the opinion passed down this day ; and the plaintiff 
in error recovers its costs of appeal. 



6Q3 188 FBDBRAL RŒPORTSS 



ALSOP T. CONWAT et al. 

(Circuit Court of Appeals, Sixth Circuit. May 2, 1911J 

No. 2,073. 

1. Appeal and Erbob (§ 323*) — Nkcessaet Pabties— Several Judgment ob 

Decbee. 

Tlie rule wtileh requirea the parties to a judgment or decree to join 5n 
an appeal or writ of error or tliat their présence be dispensed wlth 
through summons and severance applies only to joint judgments or de- 
crees, and a défendant agalnst whom a several decree is entered, whicli 
does not affect liis codefendants, may appeal from such portion of tûe 
decree without joining them. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. § 1800; 
Dec. Dig. § 323.»] 

2. Banks and Banking (§ 49*) — Double Liabilitt of Stockholdees— 

KiGHT TO ENFOECE— KENTTJCKT StATUTE. 

Ky. St. § 616 (Russell's St. § 2256), authorizes the appointaient of a 
receiver for an insolvent bank or corporation wtio shall, uniler the direc- 
tion of the court, take possession of the "assets of every description" of 
such bank or corporation and collect or dispose of the debts due it and 
sell ail of its property. Section 547 (section 2131) provides that stock- 
holders in corporations "shall be liable to creditors" only for the unpaid 
part of their stock, "except stockholders in banks, trust companies 
• * * shall be liable equally and ratably, and not one for the other, 
for ail con tracts and liabilities of such corporations to the extent of the 
amount of their stock at par value, in addition to tlie amount of such 
Btock." Held, under the décisions of the Court of Appeals of the state, 
that the double liabllity of stockholders in a bank or trust company is 
not an asset of the corporation and cannot be enforced by a receiver ap- 
pointed under section 616, but the rlght of action therefor remains in the 
creditors. 

[Ed. Note. — For other cases, see Banks and Banking, Dec. Dig. § 49.*] 

8. Courts (§ 493*) — Conflicting Jubisdiction— Fbdebal and State Courts 
— Priobity op Jubisdiction. 

The appolntment of a receiver for an insolvent trust company by a 
State court under Ky. St. § 616 (Russell's St. § 2256), to take possession 
of and administer the assets of the corporation, dld not give such court 
Jurlsdictlon over the enforcement of the double liabillty of the stock- 
holders, imposed by statute, whlch rlght of action is In the creditors and 
not in the corporation, nor dld a pétition filed by the receiver asking in- 
structions as to hls dutles in respect to the enforcement of such liabillty, 
to whlch the stockholders were not made parties, and on whlch no ac- 
tion was taken, deprive a fédéral court of jurlsdictlon to entertain a suit 
by creditors subsequently brought in that court to enforce such liabillty. 
[Ed. Note. — For other cases, see Courts, Dec. Dig. § 493.* 
Conflict of jurlsdictlon of fédéral courts with state courts, see note to 
Louisville Trust Co. v. City of Cincinnati, 22 C. C. A. 356.] 

4. Banks and Banking (§ 49*) — Double Liabilitt of Stockholders— EN' 
forcement in Equitt. 

Under Ky. St. § 547 (Russell's St. § 2131), whlch makes stockholders In 
banks and trust companies liable for an amount equal to the par value 
of their stock "equally and ratably and not one for the other for ail con- 
tracts and liabilities of such corporations," the amounts recovered on ac- 
count of such double liabillty from the stockholders of an Insolvent bank 
or trust company constitutes a trust fund to be ratably distributed among 
the creditors, and such liabillty is properly enforced by a suit in equity 
brought In behalf of ail creditors agalnst ail stockholders, who also hâve 
a common interest in the ascertainment of the amount of stock, assets, 

"For other cases see same topic & 5 numbbb In Dec. & Am. Dlgs. 1907 to date, £ Rep'r Indexei 



AL80P V. CONWAT B69 

and Indebtedness of the corporation, in wblch suit such questions ean be 
determined and tbe fund coUected and administered. 

[Ed. Note. — For other cases, see Banks and Banking, Dec. Dlg. S 49.*] 

5. Courts (§ 328*) — Jukisdiction of Fedeeal Couets— Amount in Contbo- 

VEKST. 

In a suit In a fédéral court by creditors of an Insolvent corporation In 
bebalf of themselves and ail other creditors to enforce tbe double liabil- 
Ity of stockbolders, In tbe absence of a demurrer tbe court did not lose 
Jurisdiction because at tbe time of fillng the bill no one of complalnants 
had a matured clalm amounting to $2,000, nor because not ail of the 
claims equalled that amount. 

[Ed. Note.— For otber cases, see Courts, Cent. Dig. §§ 890-896; Dec. 
Dig. § 328.» 

Jurisdiction of Circuit Courts as determined by the amount in contro- 
▼ersy, see notes to Auer v. Lombard, 19 0. C. A. 75; Tennent-Strlbllng 
Shoe Co. V. Boper, 36 O. C. A. 459; O. J. Lewis Mercantile Oo. v. Klep- 
ner, 100 C. C. A. 288.] 

6. Courts (§ 308*) — Jurisdiction or Fédéral Courts— Divehsitt of Cm- 

ZENSHIP. 

In a suit in a fédéral court by creditors of an Insolvent corporation to 
enforce the double liablUty of stockbolders on behalf of ail creditors, 
where Jurisdiction was based on dlversity of eltizenshlp, tbe court was 
not ousted of Jurisdiction because some of the creditors were cltizens of 
the same state as défendants. 

[Ed. Note. — For otber cases, see Courts, Cent Dig. §§ 855, 856; Dec. 
Dîg. § 308.* 

Diverse eltizenshlp as a ground of fédéral jurisdiction, see notes to 
Shipp V. Williams, 10 C. O. A. 249 ; Mason v. Dullagham, 27 C. C. A. 298.] 

T. Corporations (§ 243*) — Stockholders— Action to Enforce Statutobt 
LiABiLiTT— Défenses. 

A stockholder In a corporation, wno retained bis stock and recelved 
dividends thereon for more than two years and untU insolvency proceed- 
Ings agalnst the corporation, cannot then resclnd and avoid bis statutory 
Uabillty to creditors on the ground that he was Induced to purchase the 
stock from the corporation by tbe fraud and mlsrepreséntatlon of its offl- 
cers. 

[Ed. Note. — For otber cases, see Corporations, Cent. Dig. | 958; Dec. 
Dig. § 243.*] 

8. Banks and Banking (§ 49*) — Stockholders— Action to Enforce Stat- 
utory LiABiLiTT— Evidence of Ownership. 

In a suit to charge défendant as a stockholder In an insolvent banking 
corporation with double liability under the statute, where It was shown 
that certiflcates of stock, issued in bis name, were in bis safety deposlt 
box at the time of the failure, and that he had been credited on his bank 
book with two dividends thereon, tbe presumption Is that he was the 
owner of such stock, and the burden rested on hlm to prove the con- 
trary. 

[Ed. Note. — For other cases, see Banks and Banking, Dec. Dig. § 49.* 
Stockbolders' liability to creditors in equlty, see notes^ to Rickerson 
Roller-MUl Co. v. Farrell Foundry & M. Co., 23 C. C. A. 315; Scott v. 
Latlmer, 33 C. C. A. 23.] 

8. Corporations (§ 273*) — Stockholders— Action to Enforce Statutory Li- 
ability— Intekest. 

On recovery in a suit to enforce the double liability of stockholders in 
an insolvent corporation, it was proper to allow Interest from the com- 
mencement of the suit. 

[Ed. Note. — For other cases, see Corporations, Cent. Dig. | 1165; Dec. 
Dig. § 273.*] 

*For other cases see same toplc & | nvmber in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



570 188 FEDERAL REPORTES 

Appeal froni the Circuit Court of the United States for the West- 
ern District of Kentucky. 

Suit in equity by John Conway, Amelia Simpers, E. L. Dupuy, and 
M. B. Dupuy against the Owensboro Savings Bank & Trust Com- 
pany, T. A. Pedley, its receiver. J. N. Alsop, and others. Decree for 
complainants, and défendant Alsop appeals. Affirmed. 

The appellees, four in number, ail being cltizens of states other than Ken- 
tucky, on behalf of themselves and ail otfier credltors of the Owensboro Sav- 
ings Bank & Trust Company (hereafter called the bank) who might choose 
to become parties to the suit and contrlbute to the expansé thereof, flled 
their bill In the court below against the bank, T. A. Pedley, receiver of said 
bank, and a large nùmber of individual holders of the capital stock of the 
same, ineluding appellant (the défendants being ail cltizens of the state of 
Kentucky), for the purpose of enforeing against the individual défendants the 
so-called "double llabllity" imposed by the Kentucky Statutes upon stock- 
holders in banks and trust companles organized under the laws of that state. 
The suit proceeded to final decree in favor of complainants. The appeal is 
from so much of the decree as required payment by appellant of the sum of 
$9,000, being the face value of stock in the bank alleged to be ovmed by hlm, 
with interest thereon from the commencement of this suit. The materlal 
facts are thèse: 

The Owensboro Savings Bank & Trust Company was organized with a cap- 
ital stock of $100,000. On December 9, 1905, its capital stock was increased 
to $200,000, vlz., 2,000 shares of $100 each. On April 24, 1908, the bank having 
become insolvent, T. A. Pedley was appointed (and soon afterwards qualifled) 
as receiver of the bank, by order of the circuit court for Davies county, Ky., 
by virtue of section 616 of the Kentucky Statutes (Russell's St. § 2256) which 
provides that: 

"The Secretary of State, upon becoming satisfied that any bank or corpora- 
tion has become insolvent, or that its capital has become, and is permitted 
to remain, impaired, or that it has violated any of the provisions of the law 
under which it was organized, may, with the approval of the Attorney Gen- 
eral, apply to the circuit court, or judge thereof in vacation, of the county in 
which the bank or corporation is locatéd, for tlie appointment of a receiver, 
who, under th«» direction of the court or judge, shall take possession of bocks, 
papers, and assets of every description, and ail business of the bank or corpo- 
ration, and collect ail coUectable debts and demands, and sell or compound, 
under the order of the court, ail bad debts, and sell ail the real and personal 
property of the bank or corporation, on such terms as the court may direct." 

Section 547 of the Kentucky Statutes (Russell's St. § 2131) pro vides that: 

"The stockholders of each corporation shall be liable to credltors for the 
fuU amount of the unpaid part of stock subscribed for by them, and no stock- 
holder shall be liable because of being a stockholder, for any sum more than 
to the amount of the unpaid part of stock held by such stockholder of any 
Company, except stockholders in banks, trust companles, guaranty companles, 
investment companles and Insurance companles, shall be liable equally and 
ratably, and not one for the other, for ail contracts and liabilities of such 
corporation to the extent of the amount of their stock at par value, In addi- 
tion to the amount of such stock. * • * " 

Section 595 (section 2184) provides that: 

"The stockholders of each bank organized under this article shall be individ- 
ually responsible, equally and ratably, and not one for the other, for ail cou- • 
tracts and liabilities of such bank to the extent of the amount of their stock at 
par value In addition to the amount of such stock." 

The state permits the formation of corporations for the purpose of conduct- 
ing both a banking and trust company business in counties of the population 
of that in which the bank in question was located; and under section 613 
(section 225.5) the stockholders of each trust company are made "individually 
responsible, equally and ratably, and not one for the other, for ail contracts 
and liabilities of such corporation to the amount of their stock at par value, 
in addition to the amount of such stock. • • * " 



ALSOP V, CONWAT 571 

The order of the state court appoîntlng the receiver dîreeted fhe latter to 
"take possession of ail the books, papers and assets of every description, and 
ail the business of the défendant, Owensboro Savings Bank & Trust Company, 
and collect ail coUectable debts and demands of sald bank and trust company", 
and sell or compound, under the orders of this court, ail bad debts, and sell ail 
the real and Personal property of said bank and trust Company, on such terms 
as this court shall direct," etc. The receiver so appointed, on May 12, 1908, 
flled his pétition in the Davies county circuit court in equity, against the bank 
and certain of its creditors, the pétition contalnlng the stat'ement that, "in 
order to pay in fuU creditors of said (bank), includlng its depositors and other 
creditors, it wlll be necessary to resort to the double liabillty of the stock- 
holders of said (bank) in aid of its property and assets, and he asks to be 
advised by the court as to his duties with référence to the enforcement of said 
liabllity." He asked that each of the creditors of the bank be enjoined froni 
assertlng claims or liens upon any of its property aud from Interfering with 
the administration of his trust as receiver except in aud through the pro- 
ceeding referred to, and asked the advice and direction of the court with 
respect to his duties in the winding up and administration of the aiîairs of the 
hank, as well as "for équitable and proper relief." Injunction was issued 
accordingly. 

On Hay 19, 1908, appellees flled their blll in this cause, alleglng (In sub- 
stance sufHcient for the purposes of this opinion) that they were respectively 
creditors of the bank as holders of Interest-hearlng certificates of deposit 
therein, amounting in the aggregate to $5,770; alleged the insolvency of the 
bank, the double liability of its stockholders under section 595 of the Kentucliy 
statutes, the fact that its assets were not more than one-half of its liabilities, 
and the necessity of assessing each stockholder a sum equal to the par value 
of his stock for the beneflt of the bank's creditors, such assessment belng 
alleged to be insufficient to pay the liabilities of the bank; alleged the ap- 
pointment and qualification of Pedley as receiver, under tlie proceedings In 
the State court, and the receiver's possession of "ail the assets, property, etc., 
of the défendant" bank ; that the défendant Pedley, as receiver of the bank, 
"has no authority to enforce said statutory liability as such receiver, either 
In law or in equity, said statutory liability being a liability enforceable only 
hy the creditors of the défendant" bank ; alleged that the creditors of the 
bank who hâve a eommon and gênerai interest in enforcing the double liability 
of stockholders are more than 2,000 in number, and so numerous as to make 
It impracticable to bring ail of them before the court in a reasonable time. 
The Mil asked an order permitting complainants to sue "for and in behalf 
of ail the creditors of défendant bank who will unité with them In this suit," 
prayed judgment against the bank upon complaînant's demands; that ail 
other creditors be enjolned from prosecuting any action against the stock- 
holders for their double liability except by unlting in this suit; that "the 
liability of ail stockholders be fully determined and adjudicated ; that each 
défendant stockholder herein be assessed for the benefit of the creditors herein 
an amount equal to the par value of his stock"; for judgment against the 
individual défendants for the amounts of their stockholdlngs ; "that ail said 
sums be ordered pald Into court; and that same be distributed under order 
of court, and if necessary a receiver be appointed to collect and enforce the 
judgment of the court and distribute the funds under order of court," and 
for gênerai relief. 

Upon the flling of this blll, Pedley, the receiver appointed by the state court, 
was appointed receiver under the blll In this cause "to receive and hold, subject 
to the orders of the court, ail funds collected herein and ail funds brought in 
by Teason of said statutory liability herein relied upon and to do ail things 
that may be hereinafter ordered by the court." The appellant hère demurred 
to the blll: First, for lack of jurisdiction of the subiect-matter. on the ground 
that complainants had an adéquate remedy at law and that matters of 
équitable cognizance are not alleged; second, that the blll relates to several 
distinct and Independent matters In which défendant is not interested ; third, 
that the bill is wlthout equity ; and, fourth, that the court is wlthout juris- 
diction of the parties, in that the bill does not show that the parties for whom 
the complainants are suing are cltlzens of states other than Kentucky, or 



572 188 FEDERAL HBPOETEB 

tliat thélr respective clalms exeeed $2,000. Thls demurrer was overruled. 
Appellaut answered, alleging (in substance sufladent for the piirposes of tbis 
opinion) tliat be was never the owner of but 10 shares of the capital stock 
of the bank ; that be purchased this block from the bank, as part ol' it-j 
increased capltalization and by reason of false and fraudulent representati(i.ns 
made by the bank's officers as to the flnancial condition and solvency of tte 
bank ; that be was never the owner of the remaining 80 shares of the capital 
stock on account of which it was sought to charge him ; that said 80 shares 
belonged to one Parrish ; that after the failure of the bank he learned of 
the transfer of said shares to him under an alleged contract therefor, aud at 
once repudiated the same and returned to the receiver the dividends which 
had been eredited to bis bank account upon said shares ; that, if he ever 
contracted to purchase said shares, he was induced to do so by the false and 
fraudulent représentations of said Parrish as to the value thereof and the 
respousibillty and solvency of the bank. Both blocks of stock were, by the 
answer, tendered back. The answer set up, in bar of this suit, the appblnt- 
ment of the receiver in the state court, the suit by the latter against appellant 
and others for the settlement of the affairs of the bank and the collectlng in 
of its property and asset's, the Injunction before referred to, and the fa et 
that the complainants had not requested the receiver appointed in the state 
court to sue for the statutory double liability. The amount of the bank's 
indebtedness, shown by the master's report as proven before him, was $778,- 
134.85. It appeared by the testimony of the receiver that the assets of the 
bank would realize gross from $175.000 to $225,000; thèse figures taking no 
account of the statutory double liability of stoekholders. The final decree 
requlred (so far as necessary to be sfated hère) payments of the statutory 
liability from a large number of stoekholders, as to some of whom the bill 
was taken as confessed ; the decree requiring such payments into the registry 
of the court or to the receiver, and, In case exécution should be Issued, pay- 
ment Into the registry of tte court. As already stated, the appellant was re- 
qulred to pay the sum of $9,000 with interest from May 19, 1908, the date 
of the filing of the bill. By the decree the court reserved full control over 
ail other and further proceedings necessary for the collection and administra- 
tion of the fund ereated by said statutory liability. 

George W. Jolly and Alexander Pope Humphrey, for appellant 
C. M. Finn and Sweeney, Ellis & Sweeney, for appellees. 

Before SEVERENS and KNAPPEN, Circuit Judges, and SAN- 
FORD, District Judge. 

KNAPPEN, Circuit Judge (after stating the facts as above). [1] 
A preliminary question arises upon the motion of the appellee to dis- 
miss the appeal on the ground that the parties interested in the ap- 
peal are not before the court, or their présence dispensed with through 
summons and severance. The rule invoked by appellee relates only 
to joint judgments. Ayers v. Polsdorfer (Sixth Circuit) 105 Fed. 739, 
45 C. C. A. 24; Giimian v. McKee, 159 U. S. 303, 312, 16 Sup. Ct. 
6, 40 E. Ed. 161 ; and cases cited ; Winters v. United States, 207 
U. S. 564, 574, 28 Sup. Ct. 207, 52 L. Ed. 340. That portion of the 
decree from which the appeal is taken is clearly several as to the de- 
fendant Alsop. It is true that such provision has the efifect to deny 
the right of recovery by the bank and its receiver in the state court 
proceeding ; but that does not make the judgment joint. Moreover, 
the receiver appointed by the state court is not aggrieved, as he is also 
the receiver in the fédéral court, and the bank's rights are represented 
by the receiver. Indeed, it is stated in appellee's brief that the bill in 
this cause was taken as confessed by both the bank and the receiver. 



. ALSOP V. CONWAT 573 

The appellants attack the decree below upon several grounds, which 
will be separately considered: 

[2] 1. That the double liability of the stockholders in a bank or- 
ganized under the laws of Kentucky is enforceable by the receiver pro- 
vided for by the laws of that state, and not by the creditors of the 
insolvent corporation. 

Sections 547, 595, 613, and 616 are ail contained in chapter 32 
of the Kentucky Statutes (Russell's St. c. 11), relating to private cor- 
porations, section 547 being found in article 1, which contains gênerai 
provisions relating to such corporations ; section 595 being in article ■ 
2, relating to banks; and sections 613 and 616 being found in ar- 
ticle 3, which relates generally to trust companies. It will be noted 
that, while section 547 expressly déclares that stockholders "shall be 
liable to creditors" for the recovery in question, the words last quoted 
are omitted from sections 595 and 613, and the words "individually 
responsible" substituted. It is argued from this fact that the sections 
relating to banks and trust companies are to be distinguished in the 
respect referred to from the section relating to corporations generally. 
We think this point is not well taken. By section 538 (section 2121), 
which is the opening section of the chapter relating to private corpo- 
rations, the gênerai provisions of the article are made applicable to 
banks, trust companies, and certain other named corporations so far 
as "not inconsistent with the laws relating specially to them." We 
find no inconsistency between the gênerai provisions cited and the 
spécial provisions relating to banks and trust companies. Moreover, 
the double liability of stockholders in banks, trust companies, and cer- 
tain other corporations is expressly declared by section 547. It is 
clear that, if the Hability in question is directly from the stockholder 
to the creditor, the latter only, and not the corporation or its receiver, 
are the persons entitled to enforce it. The claim in such case is not 
an asset of the corporation, and so would not pass to the receiver 
appointed under the state law, who, under section 616, acquires only 
property, rights, and assets of the corporation. See Mechanics' Sav- 
ings Bank v. Fidelity Ins. Co. (C. C.) 87 Fed. 113, 116; 1 Cook on 
Corporations (6th Ed.) § 218. We think the question we are con- 
sidering is ruled by Tiger Shoe Mfg. Co.'s Trustée v. Shanklin, 125 
Ky. 715, 102 S. W. 295, where it was held, construing section 547 
of the Kentucky Statutes, that, while an assignée in bankruptcy of 
a mercantile corporation could maintain an action for unpaid subscrip- 
tions, he could not maintain an action against stockholders to enforce 
the statutory double liability. We find nothing in the other décisions 
of the Court of Appeals of Kentucky (viz., Senn v. Levy, 111 Ky. 
318, 63 S. W. 776; Covington Co. v. Rosedale, 76 S. W. 506, 25 Ky. 
Law Rep. 964; Bracken v. Nicol, 124 Ky. 628. 99 S. W. 920, 11 L. R. 
A. [N. S.] 818; Weakley v. McClarty, 136 Ky. 838, 125 S. W. 265, 
136 Am. St. Rep. 279; Ky. Mutual Ins. Co.'s Assignée v. Schaefer, 
120 Ky. 227, 85 S. W. 1098; Gamewell, etc., Co. v. Pire & Police 
Tel. Co., 116 Ky. 759, 76 S. W. 862) in conflict with Tiger Shoe 
Mfg. Co.'s Trustée v. Shanklin. It is true that in the Gamevi'ell Case 
the stockholders' liability is spoken of as an asset of the corporation. 



Ô74i 188 FEDERAL REPORTEE 

But this remark is purely obiter, for the action there was on the part 
of creditors, and did not involve the rights of a receiver under the 
State statute. Moreover, it is not in harmony with the later case of 
Tiger Shoe Mfg. Co.'s Trustée v. Shanklin. In our opinion, the right 
of action for the double liability of stockholders in the bank did not 
pass by virtue of the Kentucky statutes to the receiver appointed un- 
der those statutes, but remained in the creditors. 

[3] 2. It is urged that the state court, by virtue of the proceed- 
ings taken by the receiver appointed by that court, acquired exclu- 
sive jurisdiction over the administration of the estate of the insolvent 
bank, including the enforcement of the stockholders' double liability. 

It may be conceded that, if the state court has acquired jurisdic- 
tion over the enforcement of the stockholders' double liability, the 
court below had no jurisdiction over that subject. As already stated, 
however, the receiver obtained by virtue of the Kentucky statute no 
authority to recover on account of this liability. The order appoint- 
ing the receiver did not attempt or purport to pass such right as an 
asset- of the bank. If, therefore, the state court obtained exclusive 
jurisdiction over the subject-matter of this controversy, it must hâve 
done so by virtue of the proceedings taken in that court for such re- 
covery. But the proceedings there had cannot be so construed. The 
pétition filed by the receiver in the state court did not make stock- 
holders of the bank parties défendant. The pétition showed that, in 
order to pay the bank's creditors in full, it would be necessary to re- 
sort to the double liability of stockholders ; but as to this subject the 
receiver merely asked to be advised by the court as to his duties. He 
sought no such recovery in that action. It would hâve been entirely 
compétent for the state court, had the receiver been thought entitled 
to maintain suit for such liability, to authorize the institution of pro- 
ceedings either in the state or the fédéral court; but the record does 
îiot indicate that such coui-se was taken, or that the state court paid 
any attention to the request for instructions referred to. So far as 
may be inferred from this record, the state court has proceeded with 
the administration of the bank's affairs entirely irrespective of the 
matter of double liability, and the fédéral court is proceeding to col- 
lect and administer the funds arising from that liability. The same 
person is acting as receiver of both courts. In thèse circumstances, 
no conflict of jurisdiction is apparent. It should go without saying 
that, if the court below has jurisdiction, it is not because of any spé- 
cial jurisdiction over the subject-matter, but because of the asserted 
diversity of citizenship of the parties, which subject will be considered 
later. In our opinion, there is nothing in the proceedings in the state 
court to interfère with the exercise of jurisdiction as actually exer- 
cised by the court below. 

[4] 3. It is earnestly contended that there is no equity in the bill, 
for the reason that each stockholder is liable equally and ratably, and 
not one for the other ; that it is necessary to collect the whole amount 
of the double liability from each stockholder ; and that the suit should 
thus be at law. The argument is that the liability of each stockholder 
présents a separate légal question in which that stockholder alone is 



ALSOP V. CONWAT 575 

concerned, and that there is thus no basis for învokîng equity to pre- 
vent multiplicity of suits. 

The détermination of this question involves a considération of the 
nature of this suit. While section 547 of the Kentucky Statutes pro- 
vides that stockholders "shall be liable to creditors," that section, so 
far as it relates to banks and trust companies, as well as sections 595 
and 613, limit such liability to "ail contracts and liabilities" of the 
bank or corporation. Under thèse statutes it is clear that a proceed- 
ing for the enforcement of the equal and ratable liability imposed by 
statute can be maintained only by one or more creditors on behalf 
of ail, and not by one créditer to secure payment of his own debt to 
the exclusion of others. Pollard v. Bailey, 20 Wall. 520, 22 L. Ed. 
376; Terry v. Tubman, 92 U. S. 156, 161, 23 L. Ed. 537; Terry v. 
Little, 101 U. S. 216, 25 L. Ed. 864; Handley v. Stutz, 137 U. S. 
366, and cases cited at page 369, 11 Sup. Ct. 117, 34 L. Ed. 706. 
The amounts recovered on account of such double liability thus be- 
come a trust fund, properly administered in equity and distributed 
among creditors who by the bill are brought before the court and are 
made parties to the proceeding. Story's Equity Jurisprudence, § 
1252; Cook on Corporations (4th Ed.) vol. 1, § 222. There is in 
such case a question, common to ail stockholders, of the amount of the 
bank's indebtedness as compared with its assets, and thus of any lia- 
bility on the part of stockholders. Not only are ail creditors directly 
interested in the collection and distribution, but the stockholders are 
likewise interested, not only as respects the amount to be recovered 
for the benefit of creditors, but also of the amount of outstanding 
stock ; for the reason that, although it is alleged in the bill that the 
entire liability is necessary to be enforced in order to enable payment 
in full to creditors, every stockholder is at liberty to contest this al- 
légation. The suit below was thus essentially a proceeding for the 
collection, administration, and distribution of the trust fund. Such 
proceeding is properly brought in equity. Pollard v. Bailey, supra; 
Terry v. Tubman, supra; Johnson v. Waters, 111 U. S. 640, 4 Sup. 
Ct. 619, 28 L. Ed. 547; Handley v. Stutz, supra. See, also, Bailey 
V. Tillinghast (Sixth Circuit) 99 Fed. 801, 805, 806, 40 C. C. A. 93; 
In re Jassoy Co. (Second Circuit) 178 Fed. 515, 101 C. C. A. 641 ; 
Hornor v. Henning, 93 U. S. 228, 23 L. Ed. 879. 

We hâve not overlooked the settled course of décisions that actions 
for the recovery of the full statutory liability under the national bank- 
ing act must be had at law. Casey v. Gallï, 94 U. S. 673. 24 L. Ed. 
168; United States v. Knox, 102 Û. S. 422, 26 L. Ed. 216. But suits 
for collection under the national banking act differ from the proceed- 
ings before us in two important respects: First, that under the na- 
tional banking act the question whether the assessments shall be for 
100 per cent, or less than the full statutory liability rests entirely in 
the discrétion of the comptroller (Kennedy v. Gibson, 8 Wall. 498, 
19 L. Ed. 476 ; Casey v. Galli, supra) ; and, second, the administra- 
tion and distribution of the funds collected is not had in the suit in- 
stituted for their collection, but is carried on by the comptroller inde- 
pendently of judicial proceedings. But notwithstanding thèse distinc- 



576 188 FEDERAL EEPOETER 

tions, where a suît'by a receiver under the national bankîng act îs for 
less than the full liability, the proceeding is not neCessarily at law. A 
suit in equity may, in proper cases, be maintained on the ground not 
only that a trust fund is sought to be recovered, and that there is a 
complication of interest in the questions and matters involved, but for 
the purpose of avoiding multiplicity of suits. Bailey v. Tillinghast, 
supra. We find nothing in Haie v. Allinson, 188 U. S. 56, 23 Sup. 
Ct. 244, 47 L. Ed. 380, opposed to the views we hâve expressed, for 
there the suit was merely to recover, by suit in Pennsylvania, the lia- 
bility of stockholders of a Minnesota corporation whose afifairs vvere 
being administered in a suit instituted in that state. There was plainly 
no reason why separate suit should not hâve been brought against 
each stockholder, and at law. In our opinion, the suit before us was 
properly brought in equity, and against ail the stockholders. 

[5] 4. It is objected that the court acquired no jurisdiction under 
the bill, for the reason that at the time of its filing none of complain- 
ants' claims were due except one (that of Conway), and that this was 
for the sum of $2,000, exclusive of interest. It is urged that matured 
claims exceeding $2,000 must be alleged. 

It is unnecessary to détermine whether, in this proceeding for ad- 
ministering a trust fund, there must be claims actually mature amount- 
ing to $2,000, exclusive of interest, for this question is not presented 
by any assignment of error, nor was it raised in the court below. It 
is clear that the Circuit Court did not lose jurisdiction over the case, 
independently of demurrer, by reason of the nonmaturity of sufficient 
claims to give the court statutory jurisdiction. Schunk v. Moline, etc., 
Co., 147 U. S. 500, 13 Sup. Ct. 416, 37 L. Ed. 255. Apart from the 
question of the maturity of the claims, the fact that the claims of some 
of the complainants did not exceed $2,000 does not affect the jurisdic- 
tion of the court in a proceeding of this nature. Handley v. Stutz, 
supra. 

[6] 5. The fact that there are creditors of the bank who were cit- 
izens of the state of Kentucky, and who were in a sensé represented 
by complainants, does not, in our opinion, oust the court of jurisdic- 
tion on the ground of diversity of citizenship between the parties. 
Stewart v. Dunham, 115 U. S. 61, 5 Sup. Ct. 1163, 29 L. Ed. 329. 

[7] 6. Finally, it is alleged that upon the merits apoellant is not 
subject to the statutory liability upon either the $1,000 stock pur- 
chased from the bank or the $8,000 of stock transferred to défendant 
by Parrish. 

First, as to the $1,000 of stock purchased from the bank: This was 
bought January 10, 1906. This stock remained in defendant's owner- 
ship and possession until after the insolvency proceedings, and with- 
out any attempt to repudiate the purchase. During this time he re- 
ceived four semiannual dividends of 5 per cent. each. The rule 
adopted by the courts of the United States with respect to stockhold- 
ers' liability under the national banking act is thus stated by Mr. Jus- 
tice Harlan in Scott v. Deweese, 181 U. S. at page 213, 21 Sup. Ct. 
at page 589 (45 L- Ed. 822) : 

"If the subscriber became a shareholder in conséquence of frauds practiced 
upon him by others, whether they be offlcers of the bank or offlcers of the 



ALSOP V. CONWAT 577 

govemment, he must look to fhem for suctt redress as the law authorizes, and 
is estopped, as against creditors, to deny that he Is a shareholder, wlthin the 
meaniiig of section 5151 [U. S. Comp. St. 1901, p. 3405], if at tlie time the 
rights of creditors accrued he occupied and was accorded the rights appertaln- 
ing to that position." 

See, also, Lantry v. Wallace, 182 U. S. 536, 21 Sup. Ct. 878, 45 L. 
Ed. 1218; Scott V. Abbott (Eighth Circuit) 160 Fed. 573, 583, 87 C. 
C. A. 475. 

The décisions of the Circuit Court of Appeals of Kentucky upon the 
common-law right of rescission are net binding on this court. How- 
ever, we find nothing in the décisions of that court to sustain the right 
of rescission sought to be exercised hère. It is true that in Ky. Mu- 
tual Inv. Co.'s Assignée v. Schaefer, supra, it was held that where a 
subscriber for stock is not in -fault, but is himself the innocent victim 
of a fraud which he did not and could not discover before the perpe- 
trator of the fraud failed, he is entitled, as against the assignée for 
the benefit of creditors, to make any défense which he could make 
against the assignor. But in the later case of Reid v. Owensboro Sav- 
ings Bank & Trust Co., 132 S. W. 1026, the Court of Appeals of Ken- 
tucky, in passing upon the liability of a holder of the same issue of 
stock as that held by défendant hère, in a suit for dividends paid there- 
on sought to be recovered back by the receiver, held that when a stock- 
holder has been induced by false and fraudulent représentations of 
the officers of a corporation to purchase his stock, if the corporation 
is insolvent when the action for rescission or other relief is brought, 
or if proceedings hâve been instituted to liquidate its afifairs on the 
ground of insolvency, or rights of creditors will be affected, the share- 
holder who has been induced by fraud or misrepresentation to pur- 
chase stock cannot obtain relief unless he became a shareholder so 
shortly before the insolvency as not to hâve had reasonable time or 
opportunity to investigate its afïairs and discover the fraud, nor un- 
less upon discovery he without delay asserts his right to appropriate 
relief. Upon the facts in the Reid Case, which are similar to those 
hère, it was held that the shareholder was not entitled to rescind. We 
think it is clear that défendant was properly held subject to the double 
liability on the $1,000 of stock bought from the bank. 

[8] The question of liability on account of the $8,000 of stock 
bought from Parrish is not so easy of solution. As to the fact of the 
alleged purchase there is a sharp conflict of testimony betvi'een the de- 
fendant and Parrish. The former claims that he never even bargained 
for the stock; that Parrish owed him $12,000 for some Alsop Pro- 
cess Company stock sold by défendant to Parrish; that the latter, in 
April, 1907, offered him $8,000 of the bank stock in payment of the 
debt, which was refused ; that, although the stock was in defendant's 
safety deposit box at the time of the failure of the bank, he did not 
know of its présence there until after that time ; that he was out of 
the country much of the time during the period of the transactions in 
question, part of his business being transacted by Parrish and per- 
haps other officers of the bank. There were also credited to défend- 
antes bank account two semiannual dividends of S per cent, each ( July 
5, 1907, and January 30, 1908) on the entire $9,000 of stock standing 
388 F.— 37 



578 188 FEDERAL REPORTER 

in defendant's name. Défendant testifies that he did not know of 
thèse payments, and had not noticed the entries on his passbook un- 
til af ter the f ailure of the bank ; the entries having been made by one 
of the officers of the bank, pursuant to custom by which the bank book 
remained at the bank for receiving crédits for payments and collec- 
tions. Parrish, on the other hand, testifies that the défendant pur- 
chased the stock January 7, 1907, in exchange for the Process Com- 
pany stock referred to; that Parrish being unable to turn over the 
bank stock on that date by reason of its being in pledge, and until 
money could be borrowed on the Process Company stock, it was ar- 
ranged that the bank stock should be later transferred to défendant; 
that three certificates aggregating 80 shares were, on three several 
dates between March 7 and April 19, 1907, placed by Parrish in de- 
fendant's safety deposit box according to previous arrangement; that 
défendant soon thereafter knew and approved of the delivery of thèse 
certificates; that défendant also had and consulted his bank book 
not long after the payments of the dividends were made ; and that it 
was not until after the failure of the bank that défendant sought to 
be relieved of the transaction. 

From the conflicting testimony of thèse two witnesses, but for the 
presumption of defendant's ownership of the stock and the one item 
of évidence to which we shall presently refer, it would be difficult, 
if not impossible, to satisfactorily détermine the question of defend- 
ant's actual purchase of the stock. We think, however, that the bur- 
den is upon défendant to show that he did not purchase it. He is 
presumed to be the oWner of it if his name appears upon the books 
of the bank as such owner, and the burden is upon hira to show the 
contrary. Webster v. Upton, 91 U. S. 65, 72, 23 L. Ed. 384; Turn- 
bull V. Payson, 95 U. S. 418, 24 L. Ed. 437; Finn v. Brown, 142 U. 
S. 56, 67, 12 Sup. Ct. 136, 35 h. Ed. 936. The Kentucky statute re- 
quires every corporation to keep in its principal office a book in which 
shall be entered the name, post office address, the number of shares 
of stock held by such stockholder, and the time when each person be- 
came such stockholder ; also ail transfers of stock, stating when and 
the number of shares transferred, and by and to whom. 'This book is 
required to be subject to the inspection of ail stockholders and persons 
doing business with the corporation. The receiver testified that he 
never found "the particular book of that description," but stated, how- 
ever, "that ail the information as required by that statute is on the 
stubs pf the stock books before me." It seems to be taken for granted, 
although there may be no express testimony to that effect, that the 
stubs of the bank stock certificate book show the issue to défendant of 
the certificates in question. As already said, however, there is no 
doubt, as we understand the record, that the certificates were actually 
issued, and were outstanding in defendant's name, and were in his 
safety deposit box at the time the bank failed. We think thèse facts 
prima facie show his ownership of the stock. 

The item of évidence to which we hâve referred is contained in the • 
following written instrument : 

"I hereby bargain. sell and eonvey to A. L. Parrish ($4,000) four thousand 
par value of stock In the Alsop Process Company, St. Louis, Mo., for which 



BOBERTSOM V. CONWAT 679 

sald A. li. Parrlsh agrées to transfer and deliver ($8,000.00) eîght thousaud 
dollars par value stock in the Owensboro Savlngs Bank & Trust Company, 
Owensboro, Ky., on or before April 1, 1907. Said stock is to be fully paid 
and unincumbered. This trade and excbange made and entered into on the 
Tth January, 1907, and signed by both parties." 

The instrument bears the signature of Parrish and the purported 
signature of défendant, who does not deny the signature but is unable 
to account for it, unless that he signed it without reading it and in 
ignorance of its contents. We think the évidence satisfactorily shows 
that défendant did actually sign this instrument. The burden of proof 
is, in thèse circumstances, upon him to show that his signature was 
obtained by misrepresentation or fraud. This we think he has failed 
to do ; and in view of the presumption of his ownership of the stock, 
and the burden which is thrown upon him by the production of the 
written instrument, we are constrained to the opinion that défendant 
must be held to hâve purchased the stock in April, 1907. If défend- 
ant actually and knowingly bought the stock at that time, we think 
that, under the authorities to which we hâve referred, he must be held 
subject to the statutory Hability, and that the decree of the Circuit 
Court which so adjudged was right. . He had held the stock for a full 
year, had received two substantial dividends upon it, and for a year 
previous had had other stock in the bank. He had abundant opportun- 
ity to investigate and ascertain the truth or falsity of the représenta- 
tions made to him, and thus the question of the solvency or insolvency 
of the bank. 

[9] It was proper to allow interest from the date of the commence- 
ment of suit. Kaufman v. Tredway, 195 U. S. 271, 25 Sup. Ct. 33, 
49 L. Ed. 190; Senn v. Levy, 111 Ky. 318, 63 S. W. 776. 

The judgment of the Circuit Court will be affirmed. 



IlOBERTSON T. CONWAY et al. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.)' 

No. 2,104. 

1. Banks and Banking (§ 49*) — Stockholders— Action to Eneokck Stat- 

TJTOBY Double liiABiLiTT— Défenses. 

In a suit in equity on behalf of the creditors of an insolvent banklng 
corporation against the stockholders to enforce thelr double llablllty, un- 
der Ky. St. S 547 (Russell's St. § 2131), where a défendant retained his 
stock for two years, and untll after the corporation became insolvent, 
■without objection, it is not a défense that he then brought a suit against 
the corporation to resclnd his subscription on the ground of fraud, nor 
that he gave notes for the stock, which are unpaid, and has not received 
the certificate; nor is he entitled to any réduction of his statutory Ha- 
bility because he paid a premium for the stock. 

[Ed. Note.— For other cases, see Banks and Banking, Dec. Dig. § 49.*] 

2. Courts (§ 328*) — Jueisdiction or Fedbbal Courts— Suit Against Stock- 

holders. 

Under Ky. St § 547 (Russell's St. § 2131), which makes stockholders 
In banks and trust companies "individually responsible, equally and rata- 

•For other case» see same topic & S NimBBB lu Dec. £ Am. Dig». 1907 to date, & Eep'r IndexM 



580' 188 FEDERAL REPORTES 

My, and not one for the other, for ail contracts and îlàbilltifis of such 
corporation to the extent of the amouiit of their stock at par value in 
addition to fhe amount of such stock," the amount to be recovered on ae- 
couct of the liability of the stockholders of such a corporation beiiig 
sought to be administered in equity in a suit brought in behalf of ail 
creditors against ail stockholders who are within the jurisdiction, and 
where the amounfs due from the corporation to complainants exceed 
$2,000, and the amounts due from some of the défendants exceed such 
suni, and the requisite diversity of citizenship exists, such suit may be 
brought in a fédéral court, and such court, having acquired jurisdiction 
generally to administer the trust, may, as ancillary to such jurisdiction, 
decree against a stockholder, although hls liability Is less than $2,000, 
either under an ancillary bill or in the original case. 
[Ed. Note. — For other cases, see Courts, Dec. Dig. § 328.* 
Jurisdiction of fédéral court as affected by state laws, see note to 
Barling v. Bank of British North America, 1 0. C. A. 513.] 

Appeal from the Circuit Court of the United States for the West- 
ern District of Kentucky. 

Suit in equity by John Conway and others against H. N. Robertson 
and others. Decree for complainants, and défendant Robertson ap- 
peals. Afïirmed. 

BrOwn & Nuckols (Eli H. Brown, of counsel), for appellant 
William T. EUis, James J. Sweeney, and Clarence M. Finn, for 
appellees. 

Before SEVERENS and KNAPPEN, Circuit Judges, and SA- 
TER, District Judge. 

KNAPPEN, Circuit Judge. This is an appeal from a decree of 
the Circuit Court requiring appellant to pay to complainants, for the 
benefit of themselves and other creditors, the sum of $1,000 and in- 
terest as the full "double liability" of appellant as stockholder in the 
Owensboro Savings Bank & Trust Company under the statutes of 
Kentucky. Ky. St. § 547 (Russell's St. § 2131). The decree appealed 
from is the same decree considered by this court in the case of Alsop 
V. Conway, 188 Fed. 568, decided May 2, 1911, in which the case gen- 
erally and its history are fully stated. It was there held ( 1) that the 
motion to dismiss- the appeal on the ground that the parties interested 
therein are not before the court was not well taken; (2) that the 
stockholders' double liability under the statute in question belongs to 
the creditors, and is not an asset of the receiver provided for by the 
Kentucky statute relating to the administration of the affairs of in- 
solvent banks; (3) that there is nothing in the receivership proceed- 
ings in the state court to interfère with the exercise o^ jurisdiction as 
actually exercised in this case by the court below; (4) that this suit 
was properly brought in equity and against ail the stockholders made 
parties; (5) that the Circuit Court did not lose jurisdiction over the 
case by reason of the nonmaturity of claims exceedin^^ $2,000, nor by 
the fact that the claims of some of the complainants did not exceed 
that amount ; and (6) that the fact that certain creditors of the bank, 
not parties upon the record, were citizens of Kentucky did not oust 
the court of jurisdiction on the ground of diversity of citizenship be- 

•For other cases see same toplc & § numeeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



EOBERTSON V. CONWAT 581 

tween the original parties. This case differs from the case of Alsop 
V. Conway in but two important respects : First, the défense is made 
that the matter in dispute was but $1,000 exclusive of interest, and 
that the Circuit Court had thus no jurisdiction as to this appellant; 
and, second, Robertson's stock consisted only of 10 shares, of the par 
value of $100 each, of the increased capital stock of the bank, author- 
ized December 9, 1905, and issued about January, 1906. 

[1] In addition to the défense upon the merits urged in the Alsop 
Case, that the purchase of this stock was induced by fraudulent rep- 
résentations by officers of the bank as to its financial condition, the 
further défense is made that the increased stock sold appellant was 
"invalid, fictitiousj and void" under the laws of Kentucky, and the 
sale not binding on appellant, for the reason that bona fide subscrip- 
tions for the entire authorized amount of such increase were not made 
within one year from the date of such authorization ; that but a small 
portion of such stock was paid for in cash, the purchasers of the larger 
part thereof having paid therefor by executing and delivering their 
promissory notes, the certificates thereof being retained by the bank 
as collatéral security for such notes; that appellant gave his prom- 
issory note (with surety in part) for the entire amount of such stock 
purchase; that said notes hâve not been paid; and that an action is 
pending in one of the state courts of Kentucky for the cancellation of 
said stock subscription. It is further urged that, if appellant is sub- 
ject to any part of the statutory double liability, he can equitably be 
charged with only 50 per cent, thereof, on account of having paid a 
premium of 50 per cent, on the stock purchase. 

In disposing of this défense upon the merits, little need be said in 
addition to the considérations stated in tiie Alsop Case with respect 
to the liability on account of the increased stock there in question. 
Appellant purchased his stock about two years before the failure of 
the bank. He made no attempt to rescind until after such failure. 
His right to rescind by reason of the false représentations as to the 
financial condition of the bank is concluded by the considérations ex- 
pressed in the Alsop Case. The défense that the increased stock was 
fictitious is not supported by any proof in the record before us. It 
is, however, without merit as against the creditors. Bailey v. Til- 
linghast (6th Circuit), 99 Fed. 801, 40 C. C. A. 93. Nor is there any 
merit in the défense that another suit is pending for the cancellation 
of the stock subscription. Not only is there no assertion, either in 
pleading or proof, that such suit was pending at the time of the insti- 
tution of the présent suit, but there is neither allégation nor proof that 
any one authorized to represent creditors with respect to the statutory 
double liability is a party to such suit in the state court. As pointed 
out in the Alsop Case, the liability in question is to creditors, and not 
to the bank or its receiver appointed under the insolvency proceedings 
in the state court. It is too clear for argument, that the premium 
paid for the purchase of the stock cannot be oiïset against tlae statu- 
tory liability in question. The fact that appellant did not pay for his 
stock in money, nor receive possession of the certificates therefor, is 
not, in our opinion, material by way of défense to this statutory ac- 
tion, in f avor of creditors. In view of thèse considérations, and upon 



582 188 FEDSBAL BSPOBTBB 

the autliorîty of tlie Alsop Case, we are constraîned to Hold that the 
défense made as to the merits cannot be sustained. 

[2] We are thus brought to the question of law peculiâr to this 
appeal, viz., whether the fact that the amount claimed against appel- 
lant is but $1,000, exclusive of interest and costs, deprived the Circuit 
Court of jurisdiction over him. 

It is the gênerai rule that, in a suit in equity brought in the Cir- 
cuit Court by two or more persons on several and distinct demands, 
a défendant cannot be joined against whom the sum demanded does 
not exceed $2,000. In that class of cases the amount in controversy 
as to such défendant is merely the amount claimed from him. Thus 
in Walter v. Northeastern R. Co., 147 U. S. 370, 374, 13 Sup. Ct. 348, 
37 L. Ed. 206, it was held that the Circuit Court had no jurisdiction 
over a bill to enjoin the collection of taxes from a railroad company 
ùnder distinct assessments, in separate counties, no one of which 
amounts to more than $2,000. In Citizens Bank of Louisiana v. Can- 
non, 164 U. S. 319, 17 Sup. Ct. 89, 41 L. Ed. 451, it was held that 
separate assessments were not sufRcient to give jurisdiction to a bill 
to enjoin the collection of taxes in several parishes by joining against 
différent collectors. And under sta tûtes limiting the appellate juris- 
diction of the Suprême Court to cases where the amount in contro- 
versy exceeds a certain sum, it is the rule that, where suit in equity is 
brought by two or more persons on several and distinct demands, the 
défendant can appeal as to those complainants only to each of whom 
the jurisdictional amount is decreed. The rule is also well settled that 
distinct decrees against distinct parties on distinct causes of action, 
or on a .single cause of action in which there are distinct liabilities, 
cannot be joined to give the Suprême Court jurisdiction on appeal. 
Ex parte Phœnix Ins. Co., 117 U. S. 367, 369, 6 Sup. Ct. 772, 29 L. 
Ed. 923; Paving Co. v. Mulford, 100 U. S. 147, 25 L. Ed. 591; 
Stratton v. Jarvis, 8 Pet. 4, 8 L. Ed. 846 ; Henderson v. Wadsworth, 
115 U. S. 264, 274-277, 6 Sup. Ct. 140, 29 L. Ed. 377; Chamberlin 
v. Browning, 177 U. S. 605, 20 Sup.Ct. 820, 44 L- Ed. 906. 
■ On the other hand, where the liabilities of the défendant are joint, 
or dépend upon the same state of facts, the aggregate liability is held to 
be the amount in dispute, with respect to the jurisdiction of the Circuit 
Court. Thus, in McDaniel v. Traylor, 196 U. S. 415, 25 Sup. Ct. 369, 
49 L. Ed. 533, the Circuit Court was held to hâve jurisdiction of a bill 
by heirs to set aside recoveries in favor of each of several défendants 
alleged to hâve fraudulently combined to procure orders of the pro- 
bate court allowing the claims, the claim of each défendant being less 
than $2,000, the aggregate amount, however, exceeding $2,000 and 
the undivided interest in the real estate of each exceeding $2,000. 
In Virginia, etc., Chemical Co. v. Insurance Co. (4th Circuit), 113 
Fed. 1, 5, 6, 51 C. C. A. 21, where a bill was filed by several Insur- 
ance companies, each of whom separately issued policies on the same 
property, providing for proportional liability only and where the same 
défense was interposed, the Circuit Court was held to hâve jurisdic- 
tion to enjoin the prosecution of the actions at law, although one in- 
volved less than $2,000. The same distinction is recognized with re- 
spect to the appellate jurisdiction of the Suprême Court. Thus,, in 



EOBERTSON V. CONWAT 583' 

Marshall v. Holmes, 141 U. S. 589, 595, 12 Sup. Ct. 62, 35 L. Ed.. 
870, where several judgments, each less than $500 but aggregating 
more than $3,000 were rendered in a state court in favor of the same 
party and against the same défendant, the case was held removable; 
the validity of the judgments depending upon the same facts. In New 
Orléans, etc., Ry. Co. v. Parker, 143 U. S. 42, 51, 12 Sup. Ct._ 364, 36 
L. Ed. 66, where several plaintiffs claimed under the same title, and 
the judgments necessarily involved the validity of that title, the Su- 
prême Court was held to hâve jurisdiction, although the individual 
claims of none exceeded $5,000. 

While in this case the liability of the défendants was not joint, nor 
did they, as respects the spécial défenses set up by certain of the de- 
fendants (including the appellant hère), dépend upon the same state 
of facts, yet the liability of the défendants is by the bill predicated 
upon the same state of facts. The statute invoked makes ail stock- 
holders "individually responsible, equally and ratably, and not one for 
the other, for ail contracts and liabilities of such bank to the extent 
of the amount of their stock at par value in addition to the amount 
of such stock." Under the bill in question there were thus necessarily 
involved certain fundamental questions common to ail stockholders, 
viz., the amount, if anything, by which the debts of the bank ex- 
ceeded its assets, and the amount of the outstanding stock. As pointed 
out in the opinion in the Alsop Case, the amounts recovered on ac- 
count of the stockholders' liability in question constitute a trust fund, 
properly administered in equity, and the suit below was essentially a, 
proceeding for the collection, administration, and distribution of this 
trust fund. As held by this court in the Alsop Case, suit to enforce 
such liability could not be brought by one creditor to secure the pay- 
ment of his own debt to the exclusion of others, and this suit was 
properly brought in equity. Of course, no question of fédéral juris- 
diction over any individual stockholder was involved in the Alsop 
Case. It is peculiarly requisite to the effectiveness of the administra- 
tion of such trust that ail stockholders within the jurisdiction of the 
court should, so far as practicable, be brought before it. As said in 
Pollard v. Bailey, 20 Wall, at page 525, 22 L. Ed. 376 : 

"Bvery stockholder, when called upon to perforrn his obligations, bas the 
right to require that the extent thereof shall be determlned once for ail, as 
well that which he is under to his associate stockholders as that to the ered- 
itors." 

The question of liability of the défendant stockholder to his associ- 
ate stockholders is not, perhaps, strictly speaking, involved in this 
proceeding ; but there is always involved the question of the aggregate 
amount of the statutory liability and the extent of the outstanding 
stock. If thèse questions are not settled in the original suit for the 
administration of the trust, they are open to contest in every case 
thereafter brought to enforce the stockholders' liability. In view of 
the nature of this suit, as one for the collection, administration, and 
distribution of the trust fund, jurisdiction as to the amount in con- 
troversy was, in our opinion, as expressed in the Alsop Case, con- 
ferred upon the Circuit Court by the fact that the aggregate amounts 



584 188 FEDEEAL REPORTEE 

due to complainants exceeded the jurisdictional minimum. As said in 
Handley v. Stutz,_137 U. S. 366, 369, 11 Sup. Ct. 117, 118 (34 L. Ed. 
706), in considering a bill in equity by some in behalf of ail of the 
creditors of a corporation against the corporation and the holders of 
stock therein : 

"The sums alleged to be due from the corporation to the original plaintiffs 
amountlng to more tlian $2,000, the Circuit Court had jurlsdiction of the 
case, and authorlty to adminlster and distribute the amonnts due from the 
indivldual défendants to the corporation for unpald subscriptions to stock as 
a trust fund for the beneflt of ail the creditors of the corporation, and for 
that purpose to permit creditors, who had not originally joined in the bill, 
to corne in and prove their claims before a master." > 

The jurisdiction of the Circuit Court is alone involved hère. It is 
clear that the Circuit Court obtained by the fihng of the bill jurisdic- 
tion generally to administer the trust in question; there being the 
requisite diversity of citizenship of the parties, the amount claiined 
by complainants being in excess of $2,000, and the amounts claimed 
against certain of the défendant stockholders being likewise in excesâ 
of that sum. The only question which could arise is over the right to 
include as a défendant a stockholder against whom a recovery less 
than the jurisdictional amount was claimed. There is one considéra- 
tion upon which, in our opinion, the jurisdiction of the Circuit Court 
over this appellant may safely be asserted; and we prefer to rest 
the jurisdiction on this ground, without deciding whether such j'.i- 
risdiction would exist independently of such considération. It is 
clear that the court, having acquired jurisdiction over the administra- 
tion of the trust connected with the collection and distribution of the 
fund in question, could by an ancillary proceeding hâve brotight in 
the appellant hère, and thus hâve adjudicated as to him ail the ques- 
tions involved in the original suit. Stewart v. Dunham, 115 U. S. 
61, 64, 5 Sup. Ct. 1163, 1164 (29 L. Ed. 329); White v. Ewing, 159 
U. S. 36, 15 Sup. Ct. 1018, 40 L. Ed. 67. In Stewart v. Dunham. in 
which jurisdiction was obtained by diversity of citizenship, the Su- 
prême Court, in holding that the jurisdiction of the Circuit Court was 
not ousted by admitting in that court as coplaintiffs other parties 
who were citizens of the same state as défendants, said : 

"ïhe right of the court to proceed to decree between the appellants and 
the new parties dld not dépend upon différence of citizenship ; because, the 
bill having been flled by the original complainants on behalf of themselves 
and ail other creditors choosing to eome in and share the expenses of the 
litigation, the court, in exercising jurisdiction between the parties, could In- 
cldentally decree In favor of ail other creditors comlng In under the bill. 
Such a proceeding would be ancillary to the jurisdiction acquired between 
the original parties, and it would be merely a matter of form whether the 
new parties should come in as co-eomplainants, or before a master, under a 
decree ordering a référence to prove the claims of ail persons entltled to the 
benefit of the decree. If the latter course had been adopted, no question of 
jurisdiction could bave arisen. The adoption of the alternative is, in sub- 
stance, the same thing." 

In White v. Ewing it was held that a Circuit Court of the United 
States has "jurisdiction, in a gênerai creditors' suit properly pending 
therein for the collection, administration, and distribution of the as- 
sets of an insolvent corporation, to hear and détermine an ancillary 



CTJMBEKLAND GASLIGHT CO. V. WEST VIKGINIA & M. GAS CO. 585 

suit instituted in the same cause by its receiver in accordance with its 
order against debtors of such corporation, so far as in said suit the 
receiver claims the right to recover from any one debtor a sum not 
exceeding $2,000." The suit before us must be held to be a gênerai 
creditors' suit for the purpose of administering the trust fund in 
auestion. We thinlc that, under the ruling in Stewart v. Dunhani, it 
would be merely a matter of forra whether the appellant were made 
a défendant to the original bill or brought in under an ancillary pro- 
ceeding; for in the latter case the same questions would be open to 
litigation, and would require settlement, as in the original case. 

It is true that in Handley v. Stutz only stockholders charged with 
liability within the appellate jurisdiction of the Suprême Court ap- 
pealed. It is also true that in Stewart v. Dunham the Suprême Court 
dismissed the appeals as to ail creditors except those in whose favor 
decrees for the jurisdictional amount on appeal had been rendered. 
The holding in that respect is not, in our opinion, opposed to the con- 
clusion we bave reached in this case as to the jurisdiction of the Cir- 
cuit Court over the appellant. 

It results from thèse views that the decree of the Circuit Court, so 
far as appealed from, should be affirmed. 



CTJMBERLAND GASLIGHT CO. v. WEST VIRGINIA & MARTLAND 

GAS CO. 
(Circuit Court of Appeals, Fourtb Circuit. May 4, 1911.) 

No. 1,018. 

1. SiATtiTEs (§ 238*)— CoNSTHucTioN— Législative Gkants. 

Législative acts granting franchises to private corporations are to be 
eonstrued strictly, and the grantees take nothing by implication either 
as against the power making the grant or as against other corporations 
or indlviduals. 

[Ed. Note. — For other cases, see Statutes, Cent. Dig. § 319; Dec. Dig. 
§ 238.*] 

2. Gas (§ 7*) — Gas Companies— "Rights in Steeets— Competing Companies 

— Natdeal and Manufactueed Gas. 

Natural gas is not a competitor of manufactured gas in such strict 
légal sensé that a corporation having an exclusive franchise to use the 
streets and ways of a city for its pipes for conveying manufactured gas 
for lightlng purposes only may exclude another company from the rlght 
to use such streets and ways, with the municipal consent, for pipes to 
convey natural gas for both fuel and lightiug purposes. 

[Ed. Note. — For other cases, see Gas, Cent. Dig. § 2 ; Dec. Dig. § 7.*] 

8. Evidence (§ 80*) — Pbesumption— Fokeign Coepoeations— Right to Do 
Business in Otheb Statks. 

In the absence of législation on the subject, It is presumed, under the 
rule of comity, that the law of a state permits corjwrations of other 
States to conduct thereln the business for which they were chartered if 
such business is not in conflict with its laws or public policy, and afCords 
them the equal protection of its laws with domestlc corjtorations. 

[Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 101; Dec. Dig. 
I 80 ;* Common Law, Cent. Dig. §§ 14-16. 

Foreign corporations dolng business In state, see notes to Wagner v. 
J. & G. Meakln, 33 C. C. A. 585 ; Ammons v. Brunswick-Balke-Collender 
Co., 72 C. C. A. 622.] 

•For other cases see same topio & § numeee în Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



586 188 FEDERAL EEPORTBIt 

4. Gas (§ 7*)— FoEEioN Corporations— RiGHT to Question Powebs. 

Under section 93 of the gênerai incorporation law of Rlaryland (I/awa 
1868, c 471), as amended by Aet April 7, 1876 (Laws 1876, c. 349), wMch 
authorizes any gaslight corporation organized thereunder to furnish gas 
in any clty or town for the lighting of streets or public or priva te build- 
ings and to lay pipes in the streets and ways wlth the consent of the 
municipality, an ordinance of a clty having gênerai power to legislate 
for the gênerai welfare and for providing proper and suitable llghts for 
the streets, etc., granting the rlght to a foreign corporation to lay pipes 
In Its streets to supply the clty and its inhabitants wlth natural gas for 
fuel and lighting purposes, is not subject to attaclc by another gas coin- ' 
pany having a franchise to use such streets ; that belng a matter for the 
State alone. 

[Ed. Note. — For other cases, see Gas, Dec. Dig. § 7.*] 

6. CONSTITUTIONAL LAW (§ 207*) "CiTIZEN." 

A foreign corporation is not a "citizen" vsrithin the meaning of article 
4, § 2, Const. U. S. entitlihg them "to ail privilèges and immunities" as 
such "in the several states." 

[Ed. Note. — For other cases, see Constitutional Law, Cent. Dig. § 634; 
Dec. Dig. § 207.* 

For other définitions, see Words and Phrases, vol. 2, pp. 1164-1174; 
vol. 8, pp. 7602, 7603. 

Status of foreign corporations, see note to Bepublican Mountain Silver 
Mines v. Brown, 7 C. C. A. 419.] 

GofC, Circuit Judge, dissenting. 

In Error to the Circuit Court of the United States for the District 
of Maryland, at Baltimore. 

Action at law by the Cumberland Gaslight Company against the 
West Virginia & Maryland Gas Company. Judgment for défendant, 
and plaintiff brings error. Affirmed. 

For opinion below, see 182 Fed. 667. 

The plaintiff in error flled its original and amended déclaration In the Cir- 
cuit Court of the United States for the District of Maryland, alleging itself 
to hâve been Incorporated by a spécial actiof the Législature of Maryland, 
whereby it was fuUy and legally empowered to lay gas pipes in and along any 
of the streets, lanes, or alleys of the clty of Cumberland, and to sell and dis- 
tribute gas to this clty and its inhabitants provided the mayor and clty coun- 
cil should assent thereto ; that the mayor and city council dld assent thereto ; 
that, under and by virtue of said act of assembly and the said assent of the 
mayor and city council, it became and was and is now vested with the exclu- 
sive franchisé and rlght to lay pipes for the transmission and distribution of 
gas in said city, and no other person or corporation under the lav?s of Mary- 
land bas such right ; that it has exercised such rlght since its incorporation, 
engagea thereby in the distribution and sale of its manufactured gas to the 
city of Cumberland and its inhabitants for heating, lighting, cooking, and 
other purposes ; and that said franchise was a valuable one and a source of 
aunual profit to it. It is further alleged that the défendant in error is a 
West Virginia corporation, engaged in business in Maryland, and in the city 
of Cumberland, to wit, the business of distributing and selling natural gas 
to the inhabitants of said city ; that it was Its duty to refrain from laylng 
pipes, for the distribution and sale of gas, in the streets, lanes, and alleys 
of Cumberland, which duty It has disregarded, and without légal authority 
has dug up certain of said streets, lanes, and alleys and laid pipes therein 
for the distribution of natural gas and has engaged In the business of dis- 
tributing natural gas through such pipes to the city of Coimberland and its 
inhabitants for lighting, heating, cooking, and other purposes, thereby caus- 

*For other cases see same topic & § numbbb In Dec. & Am. Digs. 1907 ta date & Rep'r Indexes 



CTJMBEELAND GA8LIGHT CO. V. WEST VIRGINIA <b M. GAS CO. 587 

tng plaliitiff In error a great loss of customers, and to Its damage $100,000. 
A demurrer to tlie déclaration as amended was eutered, and It was by writ- 
ten stipulation of counsel agreed that the ordlnance of tbe mayor and city 
council of Cumberland granting to défendant in error tbe rigbt to lay, oper- 
ate, etc., natural gas mains in tbe streets of the city and dlstribute natural 
gas, should be read and considered by tbe court in determining sucb de- 
murrer. The court below sustained tbe demurrer, and, the plaintiff electing 
to stand upon its déclaration and not asking leave to further amend, dis- 
mlssed tbe action with costs. And to review this judgment tbis writ of error 
bas been sued out. 

Wm. L. Marbury and W. C. Devecmon, for plaintiff in error. 
Ferdinand Williams and Benjamin A. Richmond, for défendant in 
error. 

Before GOFF and PRITCHARD, Circuit Judges, and DAYTON, 
District Judge. 

DAYTON, District Judge (after stating the facts as above). The 
plaintiff corporation was duly incorporated under a spécial act of the 
Maryland Législature of 1853 (chapter 221), section 6 of which pro- 
vides: 

"That tbe président and direetors shall bave full power and autborlty to 
purchase or lease property, and to erect thereon the necessary buildings and 
Works of the said company, and sball bave power to manufacture gas of any 
material they may think best, and to dispose of tbe same for tbe llgbting of 
tbe city of Cumberland, or the streets thereof, or any buildings, manufac-' 
tories, or bouses therein situated, and to effect this object, shall hâve power 
to lay pipes in and along any of tbe streets, lanes or alleys of said city ; pro- 
vided, that in so doing, they sball not injure the same; provided, bowever, 
that the mayor and city council assent to the same." 

Section 7 of the act provides : 

"That If any person or persons shall willfully do or cause to be done any 
act or acts whereby the works of said corporation or any part thereof shall 
be in any way injured or obstructed, the person or persons so offending shall 
forfelt and pay to the said corporation tbe amount of damages sustained by 
means of said offense or injury, to be recovered, wltb costs of suit, in thei 
name of said corporation, before any court having cognizance of the same." 

Section 9 of the act provides : 

"That the Législature reserves to itself the rigbt to alter or repeal this àct 
at pleasure." 

In 1868 by chapter 471 the Législature enacted a gênerai incorpora- 
tion law which provided for, among other things (section 30, Class 
17), "the formation of gaslight companies," and by section 93 : 

"That any gaslight corporation formed under this act shall bave full power 
to manufacture and sell, and to furnish sucb quantities of gas as may be re- 
quired in tbe city or town where the same may be located, for ligbting thé 
streets and public and private buildings and for cther purposes; and sucb 
corporation shall bave power to lay conductors for conducting gas tbrougli 
the streets, lanès, alleys aud squares in sucb city or town with the consent 
of tbe municipal autborities of said city or town, and under sucb reasonable 
régulations as they may prescribe." 

Section SI of this act provides: 

"That no corporation sball possess or exercise any corporate powers, except 
sucb as are conferred by law, and such as sball be necessary to tbe exercise 
of tbe powers so acquired." 



588 188 FEDERAL KEPOETEB 

By an act, approved April 7, 1876, chapter 349, the above-cited sec- 
tion 93 was repealed and the f ollowing substituted : 

"Sec. 93. That any gasllght corporation formed under thls act shall hâve 
full power to manufacture and sell, and to furnish such quantities of gas as 
may be requlred in any city, town or county of this state, in whicii or ad- 
joining which tlie same may be located, for ligbting the streets, roads, aud 
public and private buildings, and for other purposes ; and such corporation 
Is hereby authorlzed and empowered to iay eouductors or pipes, for the trans- 
mission of gas, in any city, town or county, under the streets, squares, lanes, 
alleys, and roads thereof, paved or unpaved, and to connect the same wlth 
any manufactory, public or private building, lamp or other structure or oh- 
jeet, and with the place of supply, subject, however, to any law or ordinance 
that may be passed by the municipal authorities of the city or town, or the 
county commissioners having jurisdiction, for the filling up and repaving any 
Street, square, lane or alley cr road under which the said pipes may be laid." 

By Other acts embodied in article 23, §§ 137 and 138, and article 
81, § 164, of the "Public General Laws of Maryland," provisions are 
made for the doing business of foreign corporations in the state upon 
complying with certain conditions and in cases of electric construction 
companies and gas companies paying a state tax of one and a half per 
centum of their annual gross receipts. 

Finally the Législature in 1910 (chapter 55, § 142a, p. 72) enacted : 

"Any gasllght corporation formed under thls article shall bave full power 
to manufacture artiflcial gas and to sell and furnish such quantities of gas 
both natural and artiflcial, as may be required in any city, town or county of 
this state, in whleh or adjoining which the same may be located, for lighting 
the streets, roads, and public or private buildings, or for other purposes, and 
such corporation is hereby authorlzed and empowered to lay conductors or 
pipes for the transmission of gas, both natural and artiflcial, in any city, 
town or county, under the streets, squares, lanes, alleys, and roads thereof, 
paved or unpaved, and to connect the same with any manufactory, public or. 
private building, lamp, or other structure, or object, and with the place of 
supply, after first seeuring the proper assent of the municipal authorities of 
said city or town, or of the county commissioners of said county, under such 
reasonable and proper régulations and conditions that may be prescribed by 
them, subject, however, also to any law or ordinance that may be passed by 
the municipal authorities of the city or town or the county commissioners 
having jurisdiction, for the filling up and repaving of any street, lane or al- 
ley or road under which the said pipes may be laid." 

The charter of Cumberland, at the time this controversy originated, 
conferred upon thé municipality the power to pass ail such ordinances, 
not contrary to the Constitution and laws of the state, as it may deem 
necessary for the good government of the city, for the protection and 
préservation of the city's property, rights, and privilèges, for the pro- 
tection of the health, comfort, and convenience of the citizens, for 
providing proper and suitable lights upon the public streets, to au- 
thorize and require the inspection of gas pipes, water pipes, plumbing, 
drainage, and electric lines or wires on private property or elsewhere, 
to regulate private connections with sewer, gas, and water pipes, and 
prohibited it granting to any corporation or individual any franchise, 
"unless notice of the same shall hâve been first published for at least 
two weeks in two newspapers in the city of Cumberland, and no fran- 
chise, right or privilège in relation to any highways, avenues, streets, 
lanes oi' alleys, either on, above or below the surface of the same 
* * * for a longer period than twenty-fîve years." 



ODMBEELAND GASLTGHT CO. V. WEST VIRGINIA <fe M. GAS CO. 589 

[1] In the solution of the question before us it seems to us first 
necessary to ascertain the status of the plaintiff corporation and define 
its rights and privilèges under its charter and the several subséquent 
acts hereinabove quoted. In doing so we must remember that it is 
elementary law that législative acts granting franchises to private cor- 
porations are to be construed strictly according to their terms. Cran- 
tées in such acts take nothing by implication, either as against the 
power making the grant, or against other corporations or individuals. 

The reasons for this settled rule are set forth by the court in the 
leading case of Charles River Bridge v. Warren Bridge, 11 Pet. 420, 
9 L,. Ed. 77Z, where it is said by Chief Justice Taney : 

"The object and the end of ail govemment is to promote the happiness and 
prosperlty of the community by which it is established, and it ean never be 
assumed that the government intended to diminish its power of accomplish- 
Ing the end for which it was created ; and in a country like ours, free, active 
and enterprising, continually advancing in numhers and weaith, new chan- 
neis of communication are daily found necessary both for travel and trade, 
and are essential to the comfort, convenience, and prosperlty of the people. 
* * * The continued existence of a government would be of no great value, 
If, by Implications and presumptions, It was disarmed of the powers neces- 
sary to accomplish the ends of its création, and the functlons it was designed 
to perform, transferred to the hands of privlleged corporations. The rule of 
construction announced by the court was not eonfined to the taxlng power, 
tior is It so llmited in the opinion delivered. On the contrary, it was dis- 
tinctly placed on the ground that the interests of the community were con- 
cerned in preserving, undiminished, the power then In question ; and when- 
ever any power of the state is said to be surrendered or diminished, whether 
It be the taxing power, or any other affecting the public interest, the same 
principle applies, and the rule of construction must be the same." 

In Rose's Notes on this case (volume 3, p. 681) it is said, touching 
this rule: 

"It may be questioned whether the Suprême Court has ever laid down a 
more salutary doctrine than the principle hère announced, and the citing 
cases which foUow show how flrmly It has become imbedded In our Juris- 
prudence." 

And more than 100 cases, from substantially ail the courts of this 
country, in support of this statement are cited. 
With this rule to govern us, we note: 

(a) That this franchise was granted in 1853, 58 years ago. 

(b) That it was not an exclusive one as that term is ordinarily used 
in connection with such franchises. 

(c) That it was one at the will of the Législature expressly reserv- 
ing its right to alter or repeal it any time. 

(d) That it was in express terms eonfined to the right to purchase 
or lease property, erect thereon the necessary buildings and works, 
manufacture gas of any material it may think best, and sell and dis- 
pose of the same for the lighting of the city of Cumberland, and the 
streets, buildings, manufactories, and houses therein. 

(e) That to efïect this object, and as an incident thereto, it was 
given power to lay pipes in and along any of the streets, lanes, or al- 
leys of the city, but without injury thereto, provided that the mayor 
and city council assented. 



590 188 FEDERAL REPORTER 

(f) That, in case any one should willfully do any act injuring or 
obstructing its works, the corporation should be entitled to recover 
f rom such person the résultant damage theref or. 

There is absolutely nothing in this charter conferring upon the 
plaintiff the exclusive monopoly of furnishing light to this city or its 
inhabitants. It is conceded that the Législature of Maryland could, 
at any time, hâve granted similar franchises to any number of com- 
panies to enter the city and compete with it in furnishing such Iighting 
facilities. There is nothing in this charter that authorized it to furnish 
other than gas of its own manufacture. There is nothing that au- 
thorized it to furnish such manufactured gas for fuel or for any other 
purpose than that of Iighting. By no possible implication can it be 
said to hâve excluded electricity or natural gas for combined heating 
and Iighting purposes or either. Coal and wood at the time were en- 
tirely too cheap and plentiful to permit gas to be contemplated as a 
rival to either as a fuel, for it is to be remembered that 58 years ago, 
when this charter was granted, the use of manufactured gas was 
comparatively a few years old. It was not until 1798 that William 
Murdock, the Scot, demonstrated that gas distilled from coal could be 
put to practical use, and a short time thereafter Lebon, the French- 
man, ascertained it could be distilled from wood, and it was not until 
1820, only 33 years before this charter was granted, that Neilson of 
Glasgow discovered the principle of the flat burner which afforded 
the means for the practical use of distilled gas for Iighting purposes. 
Nor can it be assumed for a moment that the right under this charter 
should cpver the supplying by plaintiff of either natural gas or elec- 
tricity to this city, for petroleum was not discovered in this country 
until 1845 near Pittsburgh, and the commercial use of natural gas, 
found in connection with it, was not utilized until long after this 
charter was granted ; and, as to electricity, it was not until 1863 that 
Nollet originated the magneto-electric battery whereby an illuminating 
current was generated. Thé electric lamp known as the "Jablochkoff 
Candie," the invention of a Russian military officer, came only in 1876, 
and it was still several years after before Edison perfected the incan- 
descent lamp, whereby electric Iighting was made practical. See Wil- 
liams' History of Science, vol. 6, p. 201 et seq. 

But it is contended that ail this is immaterial because this déclara- 
tion as amended is not based upon the exclusive right to furnish gas, 
but upon the violation of plaintiff's franchise authorizing it to lay 
gas pipes in and along the streets, lanes, or alleys of the city, or any 
of them, for the purpose of selling its gas to the city and its inhabit- 
ants. 

[2] There can be no question that this power to lay pipe lines is a 
part of plaintiff's franchise; but it is a qualified right and, like ail 
other grants of this character, must be strictly construed according 
to its very terms and subject to ail its limitations. In this connection 
we note that by thèse terms and conditions it was empowered (a) to 
lay thèse pipes in thèse streets only after the assent of the mayor and 
council had been obtained. So far as its pipes are now laid, assuming 
that such assent has been obtained, it bas a vested right to kecp and 
maintain them, and, if any one shall willfully injure or destroy them, 



CUMBERLAND GASLIGHT CO. V. WEST VIRGINIA <fe M. GAS 00. 591 

it has right to recover damages for the résultant loss under section 7 
of the charter act as above quoted; but (b) as to laying any further 
pipe lines in the streets where now laid, or in other or additional 
streets, it is a contingent right wholly dépendent upon the will and 
consent of the mayor and city council; (c) that its sole right to lay 
such lines is for the purpose of conveying its manufactured gas from 
its Works to the city and its customers therein. It cannot lay thèse 
pipes to convey oil, water, or any other substance, and it can only con- 
vey its gas through them so long as it exercises its franchise right to 
manufacture and furnish gas. If it shall abandon exercise of this 
last obligation, the right to maintain the pipe lines would immediately 
cease. It has no right to object to the laying of pipe lines through 
this city for the purpose of conveying oil or water except so far as 
the laying thereof might physically injure or destroy its own. No 
more has it right to complain because of the laying of pipe lines to 
convey natural gas into the city, if natural gas must be held, in a légal 
sensé, not to be a competitor of its manufactured gas, and the sale 
of which, notwithstanding it may, like the sale of electricity, reduce 
or destroy its profits, does not conflict with its right, strictly construed, 
to furnish its manufactured gas for lighting purposes. Is natural gas 
a competitor in this strict légal sensé of manufactured gas limited to 
lighting purposes? 

Without taking time for original discussion of this proposition, it 
would seem to be sufficient to say that the use of natural gas both for 
fuel and lighting purposes originated in Pennsylvania, and this state 
and the two adjoining ones of Ohio and West Virginia may be con- 
sidered possibly the largest producers of such gas of any of the states 
of the Union. We may, therefore, well look to the décisions of the 
courts of thèse states, where the question would be one of peculiar 
local interest and would receive at the hands of such courts careful 
thought and considération for their views upon this matter. In 1903 
the Suprême Court of Ohio (69 Ohio St. 259, 69 N. E. 436) decided 
the case of Circleville Light & Power Co. v. Buckeye Gas Co. et al., 
after elaborate argument. In this case the plaintiff had a franchise 
to furnish manufactured gas and electricity to the city of Circleville 
and its citizens for illuminating purposes and sought to enjoin the de- 
fendant from furnishing natural gas thereto under an ordinance of 
the city, which it claimed was invalid because it had not been ratified 
by a vote of the qualified voters of the city as required by a statute 
of the state which authorized a city's authorities to contract with any 
gas or water company for supplying gas or water for the city, but that 
no such company should go into opération in any city or village where 
such corporation had been formed, until after the question of author- 
izing such opération had been submitted to the qualified voters of the 
city or village, and authorized by ordinance. It was this authoriza- 
tion by vote it was alleged the défendant company had not obtained 
and was therefore furnishing natural gas to the city for illuminating 
purposes unlawfully and to plaintifï's loss of business and in jury, for 
which reason an injunction was prayed. Upon demurrer to the bill, 
this question as to whether natural gas was a competitor of manu- 
factured gas in a légal sensé such as to warrant plaintifï relief was 



592 188 FEDERAL KEPOETBE 

the principal one învolved. The court held that ît was not and sus- 
tained the demurrer because: (a) The statute requiring the ratifica- 
tion by vote had been passed before natural gas for commercial use 
was known in the state, and could not therefore hâve been contem- 
plated by it. (b) Because, while the word "gas" may be in one sensé 
a generic term, it is quite plain that, as used in the statute, it does not 
embrace every species of gas discovered or manufactured in modem 
times. There are numerous gases manufactured or generated, used in 
the arts and manufactures, not contemplated by the statute. (c) Be- 
cause the gas manufactured by the plaintiff was a substance produced 
by hiiman skill and art, while natural gas comes from the great lab- 
oratory of nature, ail ready for the immédiate use of man when let 
to the surface of the earth. (d) Because the plaintiff in efïect was 
claiming a monopoly in supplying gas to this city, and ail doubt about 
the extent of plaintifï's monopoly must be resolved against it. Citing 
Justice Gordon on Appeal of the Scranton Electric Light & Heating 
Co., 122 Pa. 154, 15 Atl. 446, 1 L. R. A. 285, 9 Am. St. Rep. 19, 
wherè it is said : 

"Monopolies are favorites neither wlth courts nor people. They operate in 
restraint of compétition, and are hence as a rule detrimental to the public 
welfare; nor are ttiey at ail allowable except where the résultant advantage 
Is in favor of the public, as, for instance, where a water or gas company 
could not exist except as a monopoly." 

AIso Justice Brewer in Omaha Horse Ry. Co. v. Cable Tramway 
Ce, 30 Fed. (C. C.) 324-328, where it is said : 

"He who says that the state bas given him a franchise, a right to do that 
which without that franchise he could not do, will be compelled to show that 
the franchise, the right claimed, is within the terms of his grant. Much 
more strenuous must be the demand upon him for clear and explicit language 
in his grant when he claims that a part of it is not merely the franchise, the 
right to do, but also the right to exclude ail others of the public from exer- 
cising the sanie right, and the state, as the représentative of the public, from 
according the same right to another." 

In the case we are considering, another important reason can be 
given. It is common knowledge that natural gas is now mainly util- 
ized for fuel purposes; that its cheapness, coupled with its cleanli- 
ness and easy method of manipulation, enables it successfully to com- 
pete with wood and coal as such fuel, even more so, under existing 
conditions, than electricity can do, and it appears from the city ordi- 
nance, which by consent of parties herein is to be considered and read 
in this connection, that part of the considération moving its adoption 
was the supplying this natural gas free to the city for heating pur- 
poses for the city hall, station house, ail fire engine houses, the office 
buildings of the water commissioners, and ail other buildings now or 
hereafter owned or occupied by the mayor and city council. On the 
other hand, it is undeniable that under its charter the plaintifï can 
alone supply manufactured gas for illuminating purposes. Can 
it be said that the city must, by reason of this restricted franchise 
of plaintifï's, which can only supply its lighting, be estopped from 
providing for itself and its citizens the better and more économie fuel? 
In 1887 the Suprême Court of Appeals of West Virginia decided the 



CUMBEKLANI» GASLIGHT OO. V. WEST VIRGINIA <b M. GA8 CO. 593 

case of Parkersburg Gas Co. v. City of Parkersburg, 30 W. Va. 435, 
4 S. E. 650. There the city had, by ordinance, granted in 1864 to 
the plaintiff company "the exclusive privilège of using the streets, 
alleys and public grounds of said city for the purpose of laying down 
pipes for the conveyance of gas in and through the city, for the use 
of said city and its inhabitants." Afterwards the city made a contract 
with the Sunlight & Vapor Stove Company to supply certain of its 
streets with gasoline liglîts upon posts similar to those used by the 
gas Company. Still later it authorized an electric light company to 
erect a plant and furnish electric lighting to the city and its inhabit- 
ants. The gas company brought its bill against this electric light 
company, the Sunlight & Vapor Company, and the city of Parkers- 
burg, praying an injunction, which was granted by the court below. 
In reversing the case and directing the dismissal of the bill, the Su- 
prême Court of Appeals does so upon two grounds: First, because 
it ascertained .he powers of the city under its charter from the state 
did not warrant it to grant the exclusive franchise to plaintiff; and, 
second, because the plaintiff's franchise was a monopoly, not favored, 
to be strictly construed, and when so strictly construed not identical 
with those of the Vapor and Electric Companies. The court cites in 
this case approvingly Emerson v. Commonwealth, 108 Pa. 111, where 
it was held that the franchise of two charters — the one, the Fuel Gas 
Company, incorporated for the purpose of supplying "beat to the 
public from gas within the city of Pittsburg," and the other, the 
Pennsylvania Fuel Company, incorporated for the purpose of "sup- 
plying heat to the public within the city of Pittsburg by means of nat- 
ural gas, conveyed from such adjoining counties as may be conven- 
ient" — were not identical and therefore not necessarily hostile to each 
other, the effect of which décision was construed to be that the grant 
of an exclusive right to one company to supply the city of Pittsburg 
with manufacturée gas is not infringed by the grant of the right to 
another company to supply the city with nahiral gas. This décision 
in Emerson v. Commonwealth, 108 Pa. 111, decided in 1884, so ap- 
proved by the West Virginia court, was the first, touching this ques- 
tion, rendered by the Suprême Court of Pennsylvania. It was a battle 
royal between counsel; some of the ablest lawyers on both sides that 
the state affords having been engaged. It was an action of quo war- 
ranto involving the construction to be given a statute authorizing the 
création of corporations for the manufacture and supply of gas, and 
the supply of light or heat by other means, enacted in 1874 by the 
Pennsylvania Législature. On January 19, 1882, the Fuel Gas Com- 
pany had been chartered under this act to "supply heat to the public 
from gas within the city of Pittsburg." On February 22, 1882, a 
month following, the Pennsylvania Fuel Company was chartered "for 
the purpose of supplying heat to the public within the city of Pitts- 
burg by means of natural gas conveyed from such adjoining counties 
as may be convenient." The first company contended that its fran- 
chise was exclusive, that the two franchises were identical, and the 
'ntter in conséquence was void. The lower court so held, and judg- 
ttient of ouster was entered. This judgment was reversed and venire 
188 P.--38 



594 188 FEDERAL HEPOKTEE 

de novo awarded; the appellate court holding that the franchises 
were net identical. It was stated in argument that the first charter 
granted in Pennsylvania for the purpose of utilizing natural gas was 
not until 1879. 

This case was subsequently cited and approved in Scranton Elec- 
tric h. & H. Co. V. Scranton III. H. & P. Co., 122 Pa. 154, 15 Atl. 
446, 1 L. R. A. 285, 9 Am. St. Rep. 79, decided in 1888. Finally, in 
1894 the same court decided the case of Warren Gaslight Co. v. 
Pennsylvania Gas Co., 161 Pa. 510, 29 Atl. 101, involving exactly 
the question under discussion hère. The Warren Company was 
chartered by spécial législative act in 1869 having exclusive right to 
supply Warren with gas, to erect buildings for its manufacture, and to 
lay pipes for its transmission in the streets. The Pennsylvania Com- 
pany was subsequently chartered for the purpose of supplying this 
borough of Warren with natural gas. Plaintiff Company applied for 
injunction, which was denied, and the bill dismissed. In this case dis- 
tinction is made between franchises to furnish natural gas and those 
to furnish manufactured gas, the two are held not to be identical, 
and the two gases are held not to be in a légal sensé competitors. 
The case is of further interest because there, as hère, the relief sought 
was based upon plaintiff's franchise to lay pipes in the streets. 
Touching this contention, the court says : 

"It is contended by the sollcltors for the plaintiff that the plaintiff's fran- 
chise, gives It the exclusive right to lay pipes in the streets, and that the 
right to lay pipes in the streets is the franchise which the plaintiff received 
from the commonwealth, and that the défendant should be restrained from 
laylng pipes In the streets. TVe cannot so view the case. Of course, If de- 
fendant could be restrained from the use of thè streets for laying pipes, the 
whole purpose of the plaintiff would be accomplished thereby, for there is 
no bnown nieans of conveying gas except by pipes, and pipes in a town or 
city could only be laid in tlie streets. The laying of pipes for the transpor- 
tation of gas is a mère incident to the business and not the business itself. 
The business was the delivering and sale of natural gas for ligbt and beat; 
the transportation is Incidental thereto. The same is also true of water com- 
panies; they produce, store, and supply to customers water. Transportation 
by pipes is the mèans of delivering and is a mère Incident of the business." 

We might wel! base the décision of this question upon thèse au- 
thorities alone; but because of the importance of the case, and the 
fact that a différent ground appeals more strongly to the judgment 
of one of our number, we propose to consider the further proposition 
as to whether the mayor and city council of Cumberland was author- 
ized and empowered legally to pass the ordinance complained of au- 
thorizing the défendant to furnish its natural gas to the city and its 
inhabitants and to lay its pipes in the streets for the purpose. While 
municipal charters are not to be construed so strictly as franchises 
granted to private corporations creating monopolies, yet, as regards 
them; the gênerai rule holds good that every statute which takes 
from Législature its power will always be construed most strongly 
in favor of the state. The rules of construction obtaining as to thèse 
municipal corporations are aptly stated by Dillon when he says: 

"It is a gênerai and undisputed proposition of law that a municipal corpo- 
ration possesses and can exercise the folio wing powers, and noothers: First, 
those granted in express words; second, those necessarily or fairly Implied 



CUMBEELAND GASLIGHT CO. V. WEST VIKGINIA & M. 6A8 CO. 595 

In or Incident to the powers expressly granted; third, those essentlal to the 
declared objecta and purposes of the corporation — not simply eonvenient, but 
indispensable. Any fair, reasonable doubt concerning the existence of power 
is resolved by the courts agaiust the corporation, and the power is denied. 
Of every municipal corporation, the charter or statute by which it is created 
is its organic aet Nelther the corporation nor Its offlcers can do any act, or 
make any contract, or incur any liability, not authorized thereby, or by some 
législative aet applicable thereto. AU acts beyond the scope of the powers 
granted are void. Much less can any power be exercised, or any act done, 
whloh is forbidden by charter or statute. Thèse prlnciples are of transcend- 
ent importance and lie at the foundation of the law of municipal corpora- 
tions." Dillon on Munie. Corp. (4th Ed.) § 89 (55), p. 145. 

It is most earnestly contended by counsel for plaintiff that the 
charter of Cumberland, examined by thèse rules, cannot be held to 
be broad enough to permit the passage by its council of this ordinance 
ùnder its gênerai welfare clauses: (a) Because gas and other light- 
ing companies are not mentioned therein ; and (b) because the power 
to use the public streets to distribute gas for private use is not in- 
dispensable for either "the good government of the city," the "pro- 
tection and préservation of peace and good order and securing per- 
sons and property from violence, danger or destruction," or the "pro- 
tection of the health, comfort and convenience of the city," and di- 
rect authority (Abbott on Mun. Corp. vol. 3, 2092, § 890; EHiott, 
Mun. Corp. 84, § 72) is cited. On the other hand, Dillon, in the his- 
torical review introductory to his great work (section 3a), after call- 
ing attention to the similar conditions existing in ancient Rome and 
our modem cities, says : 

' "In a most important partlcular, however, Eome suffers by comparison 
with modem cities: Its puWc places ivere not Uyhted. AU business closed 
with the dayllght. The streets at night were dangerous. Property was in- 
secure. No attempt at public illumination was made. The idea does not 
seem to hâve occurred to them. Persons who ventured abroad on dark nights 
weve dîmly lighted by lanterns and torches. Its condition was similar to that 
of London, 200 years ago, so graphically described by Macaulay. • * * 
No more foreible illustration of the necessity and advantages of Hghting a 
city can be given than the pictures drawn by Lanciani and Macaulay of the 
State of a great city buried in the darkness of night ; and they shoio how 
clearly the power ta provide for this is essentially and particularly one per- 
taining to municipal rule and régulation." 

And further on (section 692), speaking of a gênerai grant to a 
municipal corporation to light its streets, such as is contained in this 
charter to Cumberland, he says: 

"A gênerai grant, while It carries with it, by implication, ail such powers 
as are clearly necessary for the proper and eonvenient exercise of the au- 
thority conferred, such as using the streets for mains and for placlng lamp 
posts, and making contracts or adopting ordinauces proper to the exécution 
of the power, does not authorize the city council to grant to any person or 
corporation an eoeclusive right to use tJie streets for the purpose of laying 
down gas pipes for a term of years, and thereafter until the work shall be 
purchased from the grantee by the city. The court admitted that the power 
to light the city would authorize the council to contract for gas, and to grant 
the contracting party the use of the streets, but denied its authority to make 
such use exclusive for a determinate future period" — citing State v. Cinc. 
Gasl. & G. Co., 18 Ohio St. 262 ; Indianapolis v. IndianapoUs Gasl. & C. Co., 
66 Ind. 396 ; Parkersburg Gas. Co. v. Parkersburg, 30 W. Va. 435, 4 S. E. 650. 



596 188 FEDERAL EBPOKTEB 

But the question need not be discussed further becâuse it îs decî- 
sively determined by another fact found hère. In the rules of con- 
struction of municipal charters which we hâve quoted, it is stated such 
corporations cannot "do any act, or make any contract, or incur any 
liability not authorized thereby (its charter) or by some législative 
act applicable thereto," and we hâve already called attention to the 
fact that the Législature of Maryland, in 1868, incorporated in a gên- 
erai incorporation law (section 93) full power to gas companies to 
manufacture and sell and to furnish gas to any and ail cities and 
towns and to their inhabitants in the state, and to that end fully em- 
powered such companies to lay pipes in the streets of such cities and 
towns with the assent of the municipal authorities. This section vvas 
re-enacted and broadened in its terms by the Législature in 1876, 
and there can be no question that it empowered the companies char- 
tered and operating under it to occupy the streets of Cumberland 
for the purpose of furnishing gas for lighting purposes after the 
assent of the mayor and city council had been obtained. The sug- 
gestion that this act nowhere empowers such companies to furnish 
,gas for fuel purposes may be hère dismissed at once. The plaintiff 
cannot possibly be concerned in it, simply because its own charter 
never conferred upon it any right to furnish gas for any such pur- 
pose or for any other purpose than for illumination. 

The question then narrows itself down to whether the défendant 
Company was one authorized under this gênerai incorporation law to 
engage in this business, It is true that the terms of the act say "any 
gaslight corporation formed under this act," and it is admitted that 
défendant company was not formed under it, but is a foreign corpora- 
tion existing under the laws of West Virginia. 

[3] Since Bank v. Earle, 13 Pet. 519, 10 L. Ed. 274, was decided, 
it is well settled: 

"That a corporation can hâve no légal existence out of the boundaries of 
the sovereignty by which it Is created. It exists only in contemplation of 
law, and, where that law eeases to operate and is no longer obligatory, a cor- 
poration can hâve no existence. It must dwell In the place of its création 
and cannot migrate to another sovereignty." 

[5] Such corporations are not "citizens" wîthin the meaning of 
article 4, § 2, of the fédéral Constitution, entitling them "to ail priv- 
ilèges and immunities" as such "in the several states," nor do they 
corne under the protection of section 1 of the fourteenth amendment, 
prohibiting the abridgment of such privilèges and immunities, but 
under this amendment they cannot be denied "the equal protection of 
the laws." 

See Kirven v. Va.-Car. Chem. Co., 76 C. C. A. (4th Ct.) 172, 145 
Fed. 288. 

But, while ail this is true, it by no means foUows that a corpora- 
tion will not be recognized in states other than that of its création. 
Its résidence in one place créâtes no insuperable objection to its power 
to contract in another. Under the well-recognized principle of com- 
ity, a foreign corporation may transact in the domestic state such 
business as its charter authorizes, and may make ail contracts in the 



DATTON COAL A IRON CO. V. DODD 597 

course of its business there, not in violation of the laws and public 
policy of the domestic state. And this comity, forming, as it does, 
the basis of récognition of foreign corporations, is binding on the 
courts as being part of the common law of the state. It must be pre- 
sumed to exist, and does exist, until a state expresses an intention 
to the contrary in some affirmative way, that is, by direct enactments 
on the subject, or by its settled public policy deduced from the gên- 
erai course of législation or the settled adjudication of its courts of 
last resort. An intention to prohibit a foreign corporation from trans- 
acting business in the domestic state cannot be inferred from the fact 
that its Législature bas made no provision for the formation of sim- 
ilar corporations, or allows corporations to be formed onlv by gênerai 
law. Bank v. Earle, 13 Pet. 590, 10 L. Ed. 274; Christian Union 
V. Yount, 101 U. S. 352, 25 L. Ed. 888; Runyan v. Coster, 14 Pet. 
122, 10 L. Ed. 382; Cowell v. Col. Springs Co., 100 U. S. 55, 25 
L. Ed. 547; Kennebec Co. v. Augustine Ins. Co., 6 Grav (Mass.) 
204; Stoney v. Am. L. Ins. Ce, 11 Paige (N. Y.) 635; Thompson 
v. Waters, 25 Mich. 224, 12 Am. Rep. 243 ; Story, Conflict of Laws, 
§ 36; 13 Am. & Eng. Enc. Law (2d Ed.) 838. 

And the Court of Appeals of Maryland has fully recognized and 
approved thèse principles in Lycoming F. Ins. Co. v. Langley, 62 
Md. 196. 

[4] How far such comity shall be extended, within what limits it 
shall be restricted, are purely matters for the décision of the sover- 
eign state, which alone can extend or limit its opération or refuse 
wholly its exercise. This has been well held by the Suprême Court 
of North Carolina in Tobacco Co. v. Tobacco Co., 145 N. C. 367, 
59 S. E. 123, in an able and well-considered opinion by Judge Con- 
nor, now an associate of ours on the fédéral bench. 

For the reasons stated, we are convinced that the court below 
did not err in the conclusion that plaintiff could not maintain its ac- 
tion; and therefore its order sustaining the demurrer to the déclara- 
tion must be affirmed. 

GOFF, Circuit Judge. I dissent. In my judgment the déclaration 
States a cause of action, and I think that the court below erred in 
not overruling the demurrer. 



DATTON COAL & IRON CO., Limited, v. DODD. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,066. 

1. iExEcnTOES AND Administeatoks (§ 29*) — Appointment— JuEisDiCTiON or 

COTIBT. 

Where a court has gênerai jurisdiction over the appointment of admin- 
Istrators, every possible intendment will be given effect in support of 
an appointment, and only jurisdictional defects appearlng on the face of 
the record can be attacked coUaterally. 

[ETd. Note. — For other cases, see Bxecutors and Adminlstrators, Cent. 
Dlg. §§ 178-182 ; Dec. Dig. § 29.*] 

•For other cases see same topic & § numbeh in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



598 188 FED£}aAIi BEPORTEB 

2. EXECUTOBS AND ADMINISTBATOES (i 20*) — APPOINTMENT— JUBISDICTION OF 

COTJET. 

Shannon's Code Tenn. § 6023, provldes that the county court shall hâve 
its regular sessions on the flrst Monday of each month, and the court 
Bhall slt from day to day so long as the business thereof may require. 
An order appointing an admlnistrator recited that "a quorum court was 
■ opened and held * * * on the 2d day of July, 1907, when the follow- 
Ing business was had and entered of record." Held, tliat the order was 
not to be construed as stating that the regular session of the court was 
begun on that day, and that it did not show lack of Jurisdiction to make 
the order. 

[Ed. Note. — For other cases, see Bxecutors and Admlnlstrators, Dec. 
Dlg. § 20.*] 

3. Mastee and Seevant (§ 191*) — Masteb's Liabilitt for Injtjbt to Serv- 

ant— Fellow Servant. 

It Is the rule In the fédéral courts that an employer Is not liable for 
an injury to an employa occasioned by the négligence of another employé 
engaged In the same gênerai undertaklng; both performing duties tend- 
Ing to accomplish the same gênerai purpose, although they may be in 
différent departments. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 
475-479; Dec. Dig. § 191.*] 

4. Mastee and Servant (§ 194*) — Master's IiiABii.iTT roR Injtjrt to Serv- 

ant— Fellow Servants— Employés Being Cakeied to and from Wobk. 

Employés, while being carried free by the employer as a part of their 
contract of service to and from their place of work, are fellow servants 
of other employés, and not passengers, and It Is Immaterial that the car- 
rlage Is after the honrs of work or under an implied term of the contract 
of employment giving the employé the privilège of riding at his option, 
but not requiring It as a neeessary part of the service. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 383, 
884 ; Dec. Dig. § 194.* 

Who are fellow servants, see notes to Northern Pac. R. Co. v. Smith, 
8 C. C. A. 668 ; Plippin v. Kimball, 31 C. C. A. 286.] 

6. Masteb and Servant (§ 194*) — Master's Liabilitt foe Injurt to Serv- 
ant— Fellow Servants. 

Défendant operated iron furnaces, and also coal mines and coke ovens 
some three miles from its plant, to which the coal and coke were trans- 
ported by means of a private railroad. Plaintiffs intestate was a coal 
miner in defendant's employ. The most of the miners resided at a dis- 
tance from the mine on the line of railroad and were glven the privilège 
o* riding free, in coal and coke cars, on defendant's trains to and from 
their work If they deslred. While plaintiff's intestate was so riding to 
his home, with other miners, after completing his day's work, cars which 
had been standing on a branch track were permitted to run onto the 
main track causing a collision in which he and others were killed. Held, 
that deceased was not a passenger at the tlme, but his relation to de- 
fendant was that of an employé', and that there could be no reeovery for 
his death on the ground that it was caused by the négligence of other 
employés in handling the standing cars ; they being his fellow servants. 
[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. §§ 383, 
384 ; Dec. Dig. § 194.*] 

6. Mastee and Servant (§ 286*) — ^Action tob Injubt to Servant— Ques- 
tions FOE Jubt. 

Plaintiff's intestate, an employé of défendant, while riding from his 
work on one of defendant's trains, was killed In a collision with run- 
away cars which escaped from a branch track upon the main track. De- 
fendant had Installed a derailing swltch on the branch to prevent sucb 
escape, which had been used untll a few days prior to the collision, when 

•For other cases see same topic & { nUmbbr lu Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



DATION COAL & lEON CO. V. DODD 599 

a new head brakeman had been employed, and tbere was évidence that 
he had not been Instructed as to Its use. Held, that tbe question of de- 
Cendant's liability for failing In Its duty as master to give such instruc- 
tions was properly submitted to tbe jury. 

[Ed. Kote. — For other cases, see Master and Servant, Cent. Dig. §§ 
1044-1050 ; Dec. Dig. § 286.*] 

7. Mastee and Servant (§§ 293, 295*) — Action foe Injubt to Sebvakt— In- 
structions. 

Instructions considered and approved In an action against a master 
for the death of an employé while riding on a train on a private railroad 
operated by défendant; sucti instructions relating to the care required 
of défendant and the assumption of risk by the deceased. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig, §§ 
1148-1161, 1168-1171 ; Dec. Dig. §§ 293, 295.*] 

In Error to the Circuit Court of the United States for the Eastern 
District of Tennessee. 

Action at law by J. J. Dodd, administrator of EHjah Huff, deceased, 
against the Dayton Coal & Iron Company, Limited. Judgment for 
plaintifï, and défendant brings error. Reversed. 

W. B. Miller and Paxton, Warrington & Seasongood, for plaintifï 
in error. 

Fostor V. Brown, Frank Spurlock, and Joe Brown, for défendant 
in error. 

Before SEVERENS and KNAPPEN, Circuit Judges, and 
SATER, District Judge. 

KNAPPEN, Circuit Judge. The writ of error is brought in this 
case to review a judgment in favor of défendant in error for personal 
injuries to plaintift's intestate, resulting in death. The prominent 
f acts are thèse : 

The plaintifï in error (hereinafter called the défendant) was at the 
time of the accident engaged in operating a fumace at Dayton, Tenn., 
for the manufacture of pig iron, purchasing the ore used for that pur- 
pose, also maintaining coal mines and coke ovens about three miles 
from Dayton, together with a small railroad System, consisting of a 
Une from the Dayton yards to the coal mines, and another, about two 
miles long, from the Dayton yards to the river, and Connecting with 
trafHc thereon. There was also connection at Dayton with the tracks 
of the Cincinnati Southern Raiiway. The operating of the furnaces 
(which was the principal business), the railroad, the mines, and coke 
ovens (coke being required in the manufacture of pig iron), consti- 
tuted one business, over which there was a gênerai superintendent ; 
there being also a yardmaster, or foreman of the railroad department. 
The train running between Dayton and the mines was manned by a lo- 
comotive engineer, a fireman, a head brakeman, and an assistant brake- 
man; there being no conductor. The business of this railroad was 
largely the hauling of coal and coke from the mines to Dayton, and the 
hauling of empty coal and coke cars, as well as supplies of various 
kmds, from Dayton to the mines and ovens. Day and night train 
shifts were maintained. The first train which left Dayton at 6 o'clock 
in the morning, and was the iirst run of the day shift, was called the 

•For other cases see same topic & | numbbb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



600 188 FEDERAL EEPORTEE 

"miners' train." It consisted largely of empty coal and coke cars to be 
fiUed at the mines and ovens, and in which coal and coke cars the 
miners rode to the mines; supplies being sometimes carried in the 
train. The company had houses at Dayton, Morgantovvn, and else- 
where along the railroad, which it rented to its employés. Some of 
the latter, including deceased, did not rent company houses. The 
greater part of the miners lived at Dayton and at Morgantown; the 
latter being a mile or less f rom the mines. The miners were allowed 
to ride on this train free, and most of them did so ride; the wages 
being the same whether they rode or not. They were not, however, 
required to ride. 

The whistle was blown at Dayton as a notice to the miners that the 
train was about to start. Those living at Morgantown took the train 
at a certain customary meeting point. At about 4 :30 in the af ternoon, 
after the last blast, the miners took the train at Hanging Rock for the 
return home; that run being the last made by the day shift, and this 
return train consisting largely, but not always exclusively, of empty 
coal and coke cars. The miners had nothing to do with either the 
opération of the morning or the evening train ; their actual work hav- 
ing ended when the last blast was fired. The railroad was entirely 
a private road, and did no commercial business whatever. It carried 
no passengers, unless the miners are to be regarded such. No pas- 
senger cars were carried. From a point at or near Hanging Rock on 
the main track (where the miners left the train), a spur or tail track, 
about 300 feet in length, extended to the coal tipple. This tail track 
had been extended several months before the accident, and in con- 
nection therewith a derailing switch put in, in order to throw oiï the 
track any runaway car which might escape from the vicinity of the 
tipple, and thus prevent the car running upon the main track. Until 
a few weeks before the accident in question it had been customary to 
operate the derailing switch in connection with trains passing over 
it. A few weeks before the accident, however, a new head brakeman 
was installed. He was not instructed to use the derailing switch, and 
did not make a practice of doing so during his employment, which 
covered the time of the accident to the deceased. On the evening in 
question thé train brought in from Dayton two cars (one fully, the 
other partly, loaded) which it left at the coal tipple, in connection 
with a third car standing thereat. On leaving thèse cars the train 
passed over the tail track and onto the main track ; the derailing switch 
not having been set after the passage of the train. The miners (be- 
tween 200 and 400) boarded the train at Hanging Rock. A few min- 
utes after the train left, the stable boss at the mines, who was also 
engaged that day in loading coal cars, in company with another em- 
ployé, pinched two of the cars at the tipple apart from the third, in 
order to make room for the passage of the mules between the mines 
and the stables, with the resuit that the two cars referred to became 
unmanageable and ran away down the incline of the tail track and 
upon the main track, overtaking and colliding with the miners' train, 
killing the plaintiff's intestate and several others. Had the derailing 
switch been set, the accident could not hâve happened. The plaintiff 



DAYTON COAL <fc lEON CO. V. DODD 601 

relied upon several grounds of négligence, not necessary to be hère 
stated in addition to those subn;itted to the jury. Upon the trial the 
défendant contended that the relation between défendant and de- 
ceased was that of master and servant. The plaintiff contended tliat 
the def endant's, relation was that of a carrier of passengers. The trial 
court held that the défendant was, as concernée! the deceased, not a 
common carrier of passengers, but a private carrier, bound only to 
"exercise such a degree of care and skill in the management and run- 
ning of its train as a prudent, cautions man, experienced in the busi- 
ness would be expected to use under the circumstances ; that is to 
say, in référence to the means of transportation employed and the 
character of the train being operated." The court submitted to the 
jury three alleged grounds of négligence : First, the failure of the 
defendant's superior ofhcers or agents to "instruct the brakeman in 
référence to the use or opération of the derailing switch ; that is, the 
alleged failure to see that the use of that derailing switch was kept 
up by the train crew." Second, the alleged négligence of the head 
brakeman in failing to set the derailing switch. And, third, the al- 
leged négligence of the employés in se handling the cars at the tipple 
as to permit them to run away and coUide with the miners' train. 
At the close of the testimony the défendant moved for peremptory in- 
struction, which was denied. 

1. A preliminary question arises over the authority of the adminis- 
trator appointed by the county court of Rhea county, Tenn. Section 
6023 of Shannon's Code of Tennessee provides that: 

"The county court to be held by the county judge, shall bave its regular 
sessions on the flrst Monday of each month." 

The order appointing the administrator was made on July 2, 1907. 
The caption of the order of appointment is as follows: 

"Be It remembered that a quorum court was opened and held for Rhea 
county, at the courthouse in the city of Dayton, Tennesisee, on tlie 2d day 
of July, 1907, • * » when the foUowing business was had and entered of 
record." 

[1] It seems to be conceded that the 2d of July, 1907, was Tues- 
day, and it is urged that the order thus shows upon its face a lack of 
jurisdiction. The section of the Code above quoted contains, how- 
ever, this provision : 

"And the court shall sit from day to day so long as the business thereof 
may reçiuire." 

The county court being one of gênerai jurisdiction over the ap- 
pointment of administrators, ail possible intendments will be made in 
support of the order of appointment, and only jurisdictional defects 
appearing on the face of the record can be attacked collaterally. 
Brien v. Hart, 6 Humph. (Tenn.) 131; State v. Anderson, 16 Lea 
(Tenn.) 321; Curtis v. Charlevoix County Supervisors, 154 Mich. 
646, 656, 118 N. W. 618. 

[2] To exclude an intendment that the regular session was opened 
on Monday, July Ist, and continued on Tuesday, July 2d, as the stat- 
ute permits, it is necessary to construe the language "a quorum court 



602 188 FEDERAL REPORTEE 

was opened and held" as if it read "a regular session of the quorum 
court was begun and opened" ; for only thus would the lack of juris- 
diction appear upon the face of the record. It is clear, to our minds, 
that the language of the order should not be so construed, and that 
lack of jurisdiction does not appear upon the face of the order. 

[3] 2. The fundamental question presented is whether the relation 
of the deceased to the défendant, while on the train in question, waa 
that of a passenger or servant. This question gains spécial impor- 
tance from the fact that two of the grounds of liability submitted to 
the jury relate to négligence of employés of défendant who, it is in- 
sisted, were f ellow servants of the deceased ; it being the settled rule 
in the fédéral courts that an employer is not liable for an injury to 
an employé occasioned by the négligence of another employé engaged 
in the same gênerai undertaking, and that it is not necessary to the 
application of this rule that the employés should be engaged in the 
same opération or particular work; it being sufficient if the two 
are in the employment of the same master and engaged in the same 
common enterprise, both performing duties tending to accomplish the 
same gênerai purpose, although they may be in différent departments. 
Steamship Co. v. Merchant, 133 U. S. 375, 10 Sup. Ct. 397, 33 L. Ed. 
656; Railroad Co. v. Hambly, 154 U. S. 349, 14 Sup. Ct. 983, 38 L. 
Ed. 1009; Railroad Co. v. Conroy, 175 U. S. 323, 20 Sup. Ct. 85, 
44 h. Ed. 181 ; Louisville & N. Ry. Co. v. Stuber (Sixth Circuit) 
108 Fed. 934, 938, 48 C. C. A. 149, 54 L. R. A. 696; Illinois Central 
R. Co. V. Hart (Sixth Circuit) 176 Fed. 245, 247, 100 C. C. A. 49. 
That défendant was not a commercial carrier, or a carrier of passen- 
gers for hire, is clear; and the Circuit Court was right in so holding. 
Taenzer v. C, R. I. & P. R. Co., 170 Fed. 240, 95 C. C. A. 436; Day- 
ton V. Coal & Iron Co., 99 Tenn. 578, 42 S. W. 444. The spécifie 
question is whether the defendant's relation to deceased was that of a 
private carrier, or whether the riding of the deceased on the train in 
question from the mine to his home was an incident of the employ- 
ment, to the extent that the relation of employer and employé con- 
tinued during such carriage. 

[4] The gênerai rule is, in our opinion, settled by the weight of 
authority that employés, while being carried as part of their contract 
of service to and from their place of work, are fellow servants and 
not passengers. This is the gênerai rule even as to railway employés, 
and the application of this rule does not necessarily fail from the mère 
fact that the carriage is hadafter the day's work has ceased. Nor is 
it necessary that the agreement for such carriage be expressed. It 
is sufficient if it be an implied term of the contract of employment, 
or conteniplated thereby, as an incident thereof and a privilège con- 
nected therewith, for the sole purpose of facilitating the work of the 
employer and the employé. Nor is the mère fact that it is not neces- 
sary that the employé ride upon the train controlling of his status 
as employé. This rule is supported by a long Une of authorities, in- 
cluding the following: Gillshannon v. Railroad, 10 Cush. (Mass.) 
228; Seaver v. Boston & Maine R. Co., 14 Gray (Mass.) 466; Gil- 
man v. Eastern Railroad Corporation, 10 Allen (Mass.) 233, 87 Am. 



DAYTON COAL & IRON CO. V. DODD 603 

Dec. 635; McGuirk v. Shattuck, 160 Mass. 45, 35 N. E. 110, 39 
Am. St. Rep. 454; Kilduff v. Boston Elev. Ry. Ce, 195 Mass. 307, 
81 N. E. 191, 9 L. R. A. (N. S.) 873; Kansas Pacific Ry. Co. v. Sal- 
mon, 11 Kan. 83; Bowles v. Indiana Ry. Co., 27 Ind. App. 672, 
62 N. E. 94, 87 Am. St. Rep. 279; lonnone v. N. Y., N. H. & H. 
R. R. Co., 21 R. I. 452, 44 Atl. 592, 46 L. R. A. 730, 79 Am. St. Rep. 
812; Vick v. N. Y. C. & H. R. R. Ce, 95 N. Y. 267, 274, 47 Am. 
Rep.' 36; Cicalese v. Lehigh Valley R. Co., 75 N. J. Law, 897, 900, 
69 Atl. 166; Wright v. Railroad, 122 N. C. 852, 29 S. E. 100; Ro- 
land V. Tift, 131 Ga. 683, 63 S. E. 133, 20 E. R. A. (N. S.) 354; 
Tunney v. Midland Ry. Co., L. R. 1 C. P. 291 ; Cremins v. Guest, 
etc., Ltd., L. R. 1 K. B. Div. 469; Gane v. Colliery Co., L. R. 2 K. 
B. Div. 539; Birmingham Ry., etc., Co. v. Sawyer, 156 Ala. 199, 
47 South. 67. 

In Gillshannon v. Railroad, a common laborer on a railroad, while 
riding on a gravel train to his place of labor, was injured by a col- 
lision. It was held that the relation of niaster and servant existed be- 
tween the plaintiff and the railroad company ; the court saying : r 

"If the plaintiff was by tlie contract of service to be carried by tbe défend- 
ants to the place for his labor, then the injurj' was received while engaged 
in the service for whlch he was employed. * * * If it be not properly 
inferable from évidence that the contract between the parties actually em- 
braced this transportation to the place of labor, it leaves the case to stand as 
a permissive privilège granted to the plaintiff, of whieh he availed himself, 
to facilltate his labors and service, and is equally connected with it, and the 
relation of master and servant, and therefore furnishes no ground for maln- 
talning this action." 

In Seaver v. Boston & Maine R. Co., a carpenter eraployed by the 
day by a railroad corporation to work on the Une of its road, and car- 
ried on its cars to the place of such work without any fare, was held 
not entitled to maintain an action against the corporation for injuries 
occasioned to him, while being so carried, by the négligence of those 
managing the train or charged with the duty of keeping in repair the 
equipment of the train. 

In Gilman v. Eastern Railroad Corporation, where the railroad 
<:ompany was held not responsible to a person employed by it to re- 
pair its cars for a personal injury arising from the négligence of a 
switchman upon a track over which he is carried by the company 
free of charge, between his home and the place of his work. Justice 
Gray, speaking of the Gillshannon and Seaver Cases, said: 

"In each of those two, as in this, the plaintiffs work did not begin untll his 
arrivai at his destination ; and in this, as In those, the work was upon the 
structures, meàns, or instruments with which the défendants were to carry 
on their business of common carriers, the workman paid nothing for his 
passage, and the object of the défendants in carrying him was to get him 
to his place of work." 

In McGuirk v. Shattuck, a woman who was employed by a person 
as a laundress, and who was being conveyed either gratuitously or 
as a part of a contract of employment, from her horhe to that of her 
employer in his wagon, was held to be in the service of the em- 
ployer. 



604 188 FEDERAL EBPOETEB 

In Kilduff V. Boston Elev. Ry. Co., a workman employed by a 
itreet railway compàny as a laborer in the construction of a new line 
of traek was killed while being transported with othér workmen back 
f rom the place of work ; after his day's work was finished. Mr. Jus- 
tice Morton said: 

"Although at tlie tiiue of the accident the plaintiff's intestate had finished 
his work for the day, and he was under no obligation to do any more worlî for 
the défendant on that day, It seems to us plain that he was being transported 
by the défendant as an Incident of his employment, and that the relation 
between bim and the défendant was therefore that of inaster and servant and 
not that of carrier and passeiiger. The car was a spécial car in which only 
the laborers who wero working on that particular Job were allowed to ride, 
and was furnished for the mutual accommodation of the company and the 
laborers. and the plaintiffs intestate paid no fare. The portion of the track 
where the accident oecurred was not open to the public, and transportation 
over that and the rest of the route was plainly furnished by the défendant to 
the deceased as a laborer in its employment and not as a passenger. It 
cannot reasonably be referred to any other relation." 

In lonnone v. N. Y., N. H. & H. R. Co., where an employé of the 
défendant railroad company upon the completion of his work was 
invited to ride in the def endant's car to a point near his home, the 
carriage being gratuitous, it was said: 

"The carrying of the deceased, after his day's work was done, to a point 
near his home, is, we think, to be regarded not as creating the relation of a 
passenger, but rather as a privilège Incidental to his contract of service, 
granted to hlm by the défendant, of which he availed himself to facilitate his 
return to his home, and that it was a privilège accorded to bim merely by 
reason of his contract of service." 

In Bowles v. Indiana Ry. Co., it is said : . 

"Tfie gênerai rule may be said to be that, where an employé Is beîng car- 
rled by his employer in the conveyance of the latter to and from the work 
for which the former is employed, be is regarded not as a passenger, but as 
an employé ; though if he is being carried merely for his own couvenience, 
pleasure, or business, he is a passenger." 

In Kansas Pacific Ry. Co. v. Salmon, the rule of master and serv- 
ant was applied to the casa of a person in the employ of the railroad 
company riding from his nome to his employment in the caboose car 
attached to a freight train, without paying fare, according to.the cus- 
tom and understanding of the parties, from which cars and trains 
ail persons except the employés /of the company were excluded. 

In Wright v. Railroad Co., the rule was applied to the case of a 
section master, who, after his day's work, rode on a train to his 
lodging place without paying or being expected to pay.his fare. In 
ail or nearly ail of the cases we hâve thus far cited, one or more of 
the Massachusetts cases referred to are cited vi^ith approval. 

In Birmingham Ry. Co. v. Sawyer, it was held that a section hand, 
injured while riding back and forth to work on a car, without charge, 
pursuant to a rule of the company, is not a passenger, but is in the 
exercise of a mère privilège connected with his employment. 

In Tunney v. Midland Ry. Co., the rule was applied to the case of 
a laborer employed by a railway company to assist in loading a "pickup 
train" with materials left by plate layers and others upon the line ; 



DATTON COAL & IRON CO. V, DODD 605 

cme of the terms of his employment being that he should be carried 
frotn his home to the place at which his work for the day was to 
be donc by the train, and to be brought back to his home at the end 
of each day. 

Cremins v. Guest, etc., Ltd., and Gane v. Colhery Company, in- 
volved awards under the workmen's compensation act, and in both the 
question whether plaintiff was in the course of his employment was 
mvolved. The Cremins Case turned upon an impHed agreement with 
tlie coUiery company that he should hâve the right to travel between 
his home and the colliery free of charge. In the Gane Case, among 
tlie acts enumerated as within the contract of employment, was "tak- 
iug a train, which he (the collier) is entitled to use by virtue of his 
contract of service." 

The Suprême Court of the United States has not passed upon the 
spécifie question ïnvolved hère, although some of its décisions bave 
more or less bearing thereon. 

In Martin v. Atchison, T. & S. F. R. Co., 166 U. S. 399, 17 Sup. 
Ct. 603, 41 L. Ed. 1051, the fellow-servant rule was applied to the 
case of a common laborer who was injured by being run into by a 
t'ain while on a hand car on the road proceeding to his place of work. 

In Texas & Pacific Ry. Co. v. Bourman, 212 U. S. 536, 29 Sup. 
Ct. 319, 53 L. Ed. 641, the fellow-servant rule was applied to a -sec- 
tion hand who, after being engaged in clearing up a wreck, was taken 
aboard an express train to be conveyed to the station at which he 
lived, and being injured while on the train by the alleged négligence 
of the engineer of the' train and his own foreman. 

In 4 Elliott on Railroads, § 15 78a, it is said: 

"As to whether an employé riding on a train Is a passenger there Is some 
conflict; but the rule seems to be that if he is being carried to and from his 
worliing place he is not a passenger, but if he is carried for his own conven- 
ience or business he is a passenger." 

See, also, L,abatt on Master & Servant, § 624. 

Several cases are cited in support of the contention that the de- 
ceased occupied the relation of passenger. Ail but one of thèse cases 
are distinguishable in their facts from the case presented hère, and 
nearly ail are reconcilable with the authorities we hâve cited. For 
example : 

In Whitney v. N. Y., N. H. & H. R. R. Co. (First Circuit) 102 
Fed. 850, 43 C. C. A. 19, 50 h. R. A. 615, in which the employé was 
lield a passenger, it was said: 

"He (the emplojé) stipulated, not only for an Increase of wages, but also 
for free transportation to Boston from the clty where he was to be employed, 
for his own convenieu(;e, and not in connection with going to or from his 
work. He was injured while on one of thèse trips to Boston and while not 
going to and from his work, and while he was not employed ; that is to say, 
durlng the hours when he was free for récréation or to visit his family, or 
to use his tlme for any purpose of his own." 

Philadelphia & Reading R. Co. v. Derby, 14 How. 468, 14 L. Ed. 
502, does not involve the status of an employé while riding gratui- 
tously. 



606 188 FEDERAL REPORTER 

; The case of Steamboat New World v. King, 16 How. 469, 14 L. 
Ed. 1019, involved the case of one accepted as a passenger under a 
custom to permit those whose usual employment is on board of steam- 
boats to go from place to place free of charge. 

In Packet Co. v. McCue, 17 Wall. 508, 21 L. Ed. 705, a man stand- 
ing on a wharf was hailed by the mate of a boat to assist in loading 
goods upon it. After copip}eting his work he was paid at the office 
on the boat. While going ashore he was injured by the négligence 
of the boat's employés handling the gang plank. Whether the em- 
ployment ceased after payment for the service was made and before 
the wharf was reached was held a question of fact for the jury. 

In Doyle v. Fitchburg R. Co., 162 Mass. 66, 37 N. E. 770, 25 L. 
R. A. 157, 44 Am. St. Rep. 335, and Id., 166 Mass. 492, 44 N. 
E. 611, 33 L. R. A. 844, 55 Am. St. Rep. 417, the injury occurred 
while the employé was riding upon his own personal Jjusiness, on a 
ticket given him as part of his compensation, under which he was at 
liberty to use the ticket whether going to and from his work or not. 

In Dickinson v. West End St. Ry. Co., 177 Mass. 365, 59 N. E. 
60, 52 Lr. R. A. 326, 83 Am. St. Rep. 284, the motorman who was held 
to be a passenger was traveling free at a time when he was not on 
actual duty, under a rule permitting such employés to ride at any 
time. or place, and for any purpose, if in uniform. 

In O'Donnell v. Alleghany Valley R. Co., 59 Pa. 239, 98 Am. Dec. 
336, the carpenter, who was held a passenger while traveling between 
his home and his place of work, received a less price per day than if 
he had paid his fare. 

In McNulty v. Pennsylvania R. R. Co., 182 Pa. 479, 38 Atl. 524, 
38 L. R. A. 376, 61 Am. St. Rep. 721, the case was said to be in its 
controlling features "on ail fours with O'Donnell v. Railroad Com- 
pany." 

The case of Louisville & N. Ry. Co. v. Scott's Adm'r, 56 S. W. 
674, 22 Ky. Law Rep. 30, 50 E. R. A. 381, seems to hâve turned 
largely upon the proposition that the conductor accepted the deceased 
as a passenger. 

In Abell v. Western Maryland R. Co., 63 Md. 433, 445, the de- 
ceased was riding on a pass which, as said by the court, "was no part 
of the contract between Abell and the railroad. The contract between 
them was to pay a certain sum for a day's work. It was given as a 
mère gratuity, and as other passes are given." 

In Enos v._R. I. Suburban Co., 28 R. I. 291, Ç>7 Atl. 5, 12 L. R. A. 
(N. S.) 244, in which a railroad flagman, who received for his serv- 
ices a weekly sum of money plus 14 transportation tickets good on 
the défendantes road, was held a passenger while riding to his home 
upon one of the tickets, it is fairly inferable from the opinion, al- 
though not expressly stated, that the tickets were good elsewhere than 
between the place of work and the home, and that they were not lim- 
ited to use while going to or returning from work. Nor does it af- 
firmatively appear that the wages would be the same were the tickets 
not given; the court saying: 

"The plaintiff earned 14 tickets as well as $8 per week, and the fact that 
the tickets were purchased by work, instead of cash, ia unlmportant." 



DATION COAL « lEON CO. V. DODD 607 

Two cases decided by the Suprême Court of Tennessee are directly 
in conflict with what we hâve stated to be the gênerai rule as to the 
status of an employé while being carried gratuitously to and f rom his 
working place. Thèse cases are Transit Co. v. Venable, 105 Tenn. 
460, 58 S. W. 861, and New Etna Coal Co. v. Bailey, recently de- 
cided and not for publication. In the first of thèse cases it was held 
that a railroad employé having nothing to do with the opération of 
trains but the performing of service at a station, who is permitted by 
the carrier to travel to and from the place of service on a train with- 
out payment of fare, is not a trespasser but a passenger while on its 
trains. The question whether the relation of master and servant ex- 
isted was not expressly raised in that case; but the court said that: 

"The welght of authority and of sound pollcy, we think, is that where a 
servant performs ail hIs work at a flxed place, and the master, either by 
custom or as a gratulty, carries him to and from his work, the servant doing 
no service for the master on the train, he is to be treated as a passenger." 

We think, however, that the authorities do not sustain this prop- 
osition as applied to the case we are considering. 

The facts in the New Etna Coal Company Case are substantially the 
same as those in the case bef ore us ; and were we to follow that déci- 
sion we should be compelled to hold that the deceased was a passenger. 
The décision in the New Etna Case seems to rest largely upon two 
propositions: First, that an employé traveling for a purpose wholly 
disconnected with his employment, and while not engaged in the mas- 
ter's service, upon free transportation furnished him by the master in 
considération of his being an employé, occupies, while so traveling, not 
the position of a servant, but a passenger; and, second, that there 
is a clear distinction between cases where the servant performs ail 
his duties at a given place and cases where the servant in the neces- 
sary performance of his duties, and while in the performance thereof , 
is transported by the master from place to place, wherever his services 
may be required. We think that, under the authority we hâve cited 
and the facts of this case, the carriage of the deceased cannot be said 
to hâve been wholly disconnected from his employment, but that it 
was, on the other hand, in a very proper sensé, connected therewith, 
contemplated thereby, and incident thereto; and while the case of the 
servant who is being transported by the master from place to place, 
wherever his services may be required (such as section hands, em- 
ployés on work trains, and those having charge of structures or op- 
érations along the line of the road), is not identical with that of one 
who performs ail his duties at a given point, yet we think the légal 
distinction referred to is not recognized by the authorities generally. 

In Louisville & Nashville R. Co. v. Stuber, 108 Fed. at page 936, 
48 ce. A. 151 (54 L. R. A. 696), Judge (now Mr. Justice) Lurton, 
speaking for this court, called attention to the f act that : 

"Under the décisions of the Tennessee Suprême Court, the liability of a 
railroad company to one servant who bas sustained Injury through the négli- 
gence of another bas been made to dépend upon the subordination of the one 
to the other, as well as upon reanements in respect to différent departments 
of service." 



fiOS 188 FBDEEAL EEPOBTHK 

We, of course, do not know to what extent, if at ail, the rule so 
prevailing in Tennessee may hâve affected the décisions in the two 
cases we hâve just discussed. 

There is, in our opinion, nothing in the décisions of this court in 
Ellsworth V. Metheney, 104 Fed. 119, 44 C. C. A. 484, 51 L. R. A. 
389, Winters v. B. & O. R. Co., 177 Fed. 44, 100 C. C. A. 462, Dishon 
V. Cincinnati, N. O. & T. P. R. Co., 133 Fed. 471, 66 C. C. A. 345, 
or Huntzicker v. Illinois Central R. Co., 129 Fed. 548, 64 C. C. A. 78, 
supporting the proposition that the status of the deceased in the case 
we are considering was that of passenger. On the contrary, there are 
expressions in Ellsworth v. Metheney and Huntzicker v. Illinois Cen- 
tral R. Co. not in harmony with such conception. For an interest- 
ing review of décisions upon the question before us, see the opinion 
of Judge Cochran in Dishon v. Cincinnati, N. O. & T. P. R. Co. (C. 
C.) 126 Fed. 194, and the référence thereto in the opinion of this 
court, 133 Fed. at page 477, 66 C. C. A. 345. 

In Louisville & Nashville R. Co. v. Stuber, supra, the plaintiff was 
foreman of water supply on a division of the defendant's railroad; 
his business being to supervise the tanks and pumping machinery at 
the water stations and keep the same in repair, in the performance 
of which duties he was required to ride over the road from station 
to station, being furnished with a pass good on ail trains. While he 
was riding on a detached engine to a station where his services were 
required, he was injured in a collision caused by the négligence of 
the engineer in charge of such engine. In holding that the plaintiff 
was not a passenger, Judge Lurton said : 

"His transportât! on to and from his place of work was part of his contract 
of service, and while being thus transported he was as much In the service of 
the Company as when engaged in the repair or construction of a water tanlc 
or pump. He was traveling at the t'inie under a single contract of service, 
and his right to be carried free to and from his work is inséparable from the 
contract to do the work, and no valid ground exists for saying that he paid 
his own fare, or was in any sensé a passenger." 

The facts in the Stuber Case are thus not identical with those pre- 
sented hère. But, following the proposition just quoted, Judge Lur- 
ton said: 

"The rule is now well settled that railway employés, while being carried, 
as part of their contract of service, to and from their place of work, are fel- 
low servants, and not passengers" — citing with approval, among other cases, 
Gillshannon v. R. R. Corporation, 10 Cush. (Mass.) 228; Seaver v. R. R. Co., 
14 Gray (Mass.) 466; Vick v. R. R. Co., 95 N. Y. 267, 47 Am. Rep. 36, and 
Tunney v. Ry. Oo., L. R. 1 C. P. 291. 

The cases of Doyle v. Railroad Co., 162 Mass. 66, 37 N. E. 770, 
25 h. R. A. 157, 44 Am. St. Rep. 335, Id., 166 Mass. 492, 44 N. 
E. 611, 33 L. R. A. 844, 55 Am. St. Rep. 417, McNulty v. R.,R. Co., 
182 Pa. 479, 38 Atl. 524, 38 L. R. A. 376, 61 Am. St. Rep. 721, and 
State v. Western Maryland R. Co., 63 Md. 433, were there distin- 
guished by Judge Eurton as "cases in which it appeared that at the 
time of the injury the employé was not in the service of the company, 
but was traveling for his own purposes, and therefore a passenger." 
The right to ride on the train in question was, in our opinion, an 



DAYTON OOAL & lEON CO. V. DODD 609 

împlîed term of the miners' employment. Such carriage was fur the 
benefiit both of the miners and of the company, and was a privilège 
given for the purpose of facilitating the employment and labor there- 
under. The fact that the renting of houses to miners was facilitated 
by the maintaining of the miners' train does not impress us as impor- 
tant. The houses were presumably maintained, in part, at least, to 
facilitate the employment of laborers. In fact, deceased did not rent 
froin défendant, and no distinction as respects the carriage was made 
between those who did and those who did not so rent. Where an em- 
ployé is, by contract expressed or implied, carried to and from his. 
work in a passenger car of a common carrier, there is more or less 
room for argument that the contract contemplated his carriage as a 
passenger; but with the exception of New Etna Coal Co. v. Bailey, 
we hâve been cited to no case in which an employé riding gratuitousîy 
to and from his work, as an incident of his employment by an em- 
ployer other than a common carrier, bas been held to be a passenger. 

[S] We are constrained to hold that the deceased while being trans- 
ported to his home by virtue of his employment as a miner, and upon 
this private miners' train, was not a passenger of défendant. 

It follows from this conclusion that the case was submitted to the 
jury upon an erroneous theory, under which recovery was permissible 
for the négligent acts of coemployés. This error requires a reversai 
of the judgment. 

[6] 3. The court did not err, however, in our opinion, in refusing 
to direct a verdict for défendant. The first ground of négligence sub- 
mitted was "the alleged failure of the defendant's superior officers or 
agents to instruct the brakeman in référence to the use and opération 
of the derailing switch; that is, the alleged failure to see that the 
use of that derailing switch was kept up by the train crew." This 
ground did not involve the négligent conduct of a fellow servant. It 
was predicated upon the nondelegable duty which a master owes to 
the servant. It is true that with respect to the opération of its road 
the defendant's duty to the deceased extended no further, with re- 
spect to the complaint under considération, than to exercise ordinary 
care to provide a sufficient number of reasonably compétent employés, 
make proper rules for their government, and exercise proper super- 
vision over them; and if that had been done the défendant would 
not be liable for an in jury to an employé in the opération of the road 
through the négligence of other employés in the operating depart- 
menf, or their failure to observe the rules, notwithstanding such nég- 
ligence made the place unsafe to work in. Martin v. Atchison, 'T. 
& S. F. R. Co., 166 U. S. 399, 17 Sup. Ct. 603, 41 L. Ed. 1051; 
Pennsylvania Co. v. Fishack (Sixth Circuit) 123 Fed. 465, 59 C. C. 
A. 269; Kinnear Mfg. Co. v. Carlisle ,( Sixth Circuit) 152 Fed. 933, 
81 C. C. A. 81 ; Illinois Central R. R. Co. v. Hart (Sixth Circuit) 
176 Fed. 245, 251, 100 C. C. A. 49. But the négligence aimed at by 
the proposition we are considering is the failure of the défendant to 
properly instruct its operatives, and to exercise proper supervision 
over them, There was évidence tending to show that due care re- 
188 F.— 39 



610 188 FEDERAL EEPOKTEB 

quired the installation and use of the derailing swîtch. Its installation 
was suggested by the defendant's actual expérience with a runaway 
car. The use of this derailing switch had been maintained until a few 
weeks previous to the accident. There was testimony that its use was 
discontinued by reason of-the failure of défendant to instruct the new 
head brakeman to use the same. The gênerai superintendent testified 
that he did not know that the switch was not being operated, and 
that, had he known, he would hâve issued such instructions as would 
hâve caused it to be used ; also, that the accident in question is evi- 
•dence that the situation required the maintaining of the derailing 
switch. In view of this testimony, the court would not hâve been jus- 
tified in holding, as matter of law, that the fact that the use of such 
switch was in advance of opérations as usually conducted in plants of 
this character relieved défendant of the charge of négligence. Such 
proposition was, at best, addressed to the considération of the jury. 
Nor would the court hâve been justified, under the évidence, in holding 
that the deceased had assumed the risk arising from the nonuse of 
the derailing switch. He was not engaged in the opération of the 
road. While the évidence showed that he passed daily in sight of 
the switch, and while there was évidence from which the jury might 
hâve found that he knew the switch was not being regularly used, the 
testimony was not, in our judgment, such as to require a finding that 
he knew of the discontinuance of the use of the switch, and that he 
knew and appreciated the dangers to ensue from such disuse. 

[7] 4. The jury were instructed that the measure of care owing 
by défendant to deceased was what "a prudent, cautions man, expe- 
rienced in the business of managing and running trains and accustomed 
to the use of trains under similar circumstances as thèse, in the ex- 
ercise of care and skill would hâve used. * * * " The défendant 
presented a request the effect of which, if given, would hâve been to 
exclude from considération the ground of négligence relating to the 
alléged failure of instruction and supervision with référence to the 
derailing switch. The charge as given is in accordance with that ap- 
proved in Shoemaker v. Kingsbury, 12 Wall. 369, 20 L. Ed. 432, as 
relating to the duty resting upon a private carrier. The criticism is 
made that the instruction imposed too high a degree of care upon the 
employer. We think the criticism is not well made. The deceased 
was not a mère licensee, as would seem, from the authorities cited, 
to be defendant's view. 

5. Upon the subject of the assumption of risk, the jury was in- 
structed that, if the ofïîcers and agents of the company were négligent 
in the discontinuance of the use of the derailing switch, then the in- 
quiry would be "whether the deceased, Huff, knew of the discontinu- 
ance of this switch, and whether a man of ordinary intelligence should 
hâve appreciated the dangers that would resuit from a failure to keep 
up the use of the derailing switch. If you find from the weight of the 
proof that the deceased, Huff, knew that the use of the derailing 
switch was not kept up, and knew, as a man of ordinary intelligence, 
and appreciated the dangers to be apprehended from the fact, 
* * * " such fact would be a complète défense to the allégation 



, REYNOIiDS V. NEW YORK TRUST CO. 611 

of négligence relating to the failure to maintain the use of the de- 
railing switch. To this instruction the criticism is made that it is not 
necessary that the deceased should hâve actually appreciated the dan- 
gers, provided he, as a reasonable man, should hâve appreciated them. 
The instruction which we hâve quoted may, we. think, fairly be con- 
strued as conforming to the définition contended for by defendant's 
counsel. 

For the errors above pointed out, the judgment will be reversed, 
and a new trial ordered. 



REYNOI/DS V. NEW YORK TRUST 00. 

(Circuit Court of Appeals, First Circuit. June 22, 1911.) 

No. 918. 

1. Action (§ 28*) — Waiveb of Conversion— Action on Quasi Contract. 

Where a plaintilï's goods liave been converted, bis rlght to waive the 
tort and sue in contract fctr tbeir value Is the same, wliether défendant 
bas sold the goo'ds or bas kept, concealed, or consumed them. 

[Ed. Note. — For other cases, see Action, Cent. Dig. §§ 196-215; Dec. 
Dlg. I 28.»] 

2. Courts (§ 361*) — Bankeuptct— Consiitutional Gbant oï Power— Con- 

STBUCTION of ACTS— EFFECT OF STATB DECISIONS. 

In the exercise of jurisdlction in banlvruptcy, conferred under the Con- 
stitution, the courts of the United States hâve the rlght to resort to the 
principles of the common law, and therefrom to détermine whether an 
obligation of a contract nature arlses upon a conversion of goods and is 
available to the owner upon waiver of his rlght to pursue bis remedy in 
tort, and are not controlled by the décisions of the state courts. 

[Ed. Note. — For other cases, see Courts, Dec. Dlg. § 361.*] 

3. Bankeupict (§ 318*) — Provable Debts— Quasi Contbacts— Waivee of 

Tort. 

Bankruptcy courts may give to Bankruptcy Act July 1, 1898, e. 541, § 
63a (4), 30 Stat. 562 (U. S. Comp. St. 1901, p. 3447), which allows proof 
of debts founded upon "a contract express or implied," a construction 
sufflciently broad to include quasi contracts arlslng upon a conversion 
where the tort bas been waived. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 318.*] 

4. Torts (§ 22*) — Joint and Several Liabilitt— Election by Plaintiff. 

TEe liability of one of several tort-feasors is not both Joint and sev- 
eral, but Is joint or several at the élection of the plaintllï, and, if he bas 
recovered a joint judgment, he is not entltled also to a several judgment 
agalnst one of the same persons. 

[Ed. Note. — For other cases, see Torts, Cent. Dig. §§ 29, 31 ; Dec. Dig. 
i 22.*] 

5. Bankeuptot- (S 309*) — ^Pbovablb Dçbts—Paetnee— Conversion bt Paet- 

HEESniP. 

Tbe rule, wblch permits tbe owner of property converted to waive the 
tort and recover tbe value of tbe property as on an implied contract, Is 
based on the ground that defendant's estate bas been unjustly enrlched 
by the conversion, and where it was by a partnership, and inured to tbe 
beneflt of the flrm estate, whatever Implied contract arises is that of the 
firm, and not of an individual partner, and the owner of the property, 
after havmg proved lus claim against tbe partnership estate as one of 
contract, is not entltled to prove it agalnst the Individual estate of a 

•yor other cases see same toplo & S number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



612 188 FEDERAL BBPOETBB 

partner, whlch would hâve the effect of giving tbem an advantage over 
creditors having express contracts with the firm. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dlg. $ 309.*] 

Appeal f rom the District Court of the United States for the District 
of Massachusetts. 

In the matter of E. H. Gay, bànkrupt. Appeal by John P. Reynolds, 
trustée, from an order allowing the claim of the New York Trust Com- 
pany. Reversed. 

Albert S. Woodman (Tyler & Young, Woodman & Whitehouse, 
Charles H. Tyler, Owen D. Young, John P. Wright, and Robert T. 
Whitehouse, on the brief), for appellant. ■ 

Charles P. Howland (Charles W. Whittlesey and Howland, Mur- 
ray & Prentice, on the brief), for appellee. 

Before COLT, Circuit Judge, and AI^DRICH and BROWN, Dis- 
trict Judges. 

BROWN, District Judge. This is an appeal by the trustée in bank- 
ruptcy of E. H. Gay, from an order of the District Court for the Dis- 
trict of Massachusetts, allowing a claim of the New York Trust Com- 
pany for the sum of $14,875 against the individual esta te of E. H. 
Gay. A claim of Hke amount was allowed against the copartnership 
estate of E. H. Gay & Co., bànkrupt. From the allowance of the 
claim against the copartnership estate there is no appeal. 

The question before us is whether the Trust Company has the right 
to make double proof and to hâve its claim allowed both against the 
copartnership estate and against the individual estate of one of the 
copartners. 

By stipulation the parties hâve agreed upon the f ollowing facts : 

( 1) E. H. Gay was the managing partner of E. H. Gay & Co. 
The New York Trust Company, owner of 25 $500 first-mortgage 6 
per cent, bonds of the Manistce, Filer City & East Lake Street Railway 
Company, lodged them with E. H. Gay & Co. on March 14, 1905, 
together with $3,125 in cash, under a deposit agreement by which 
E. H. Gay & Co. were to deliver to the New York Trust Company 
at par value $15,625 bonds of a corporation to be organized in the 
course of the reorganization of the Railway Company. 

(2) In pursuance of this agreement the Manistee Light & Traction 
Company was incorporated. Its bonds were issued and delivered to E. 
H. Gay & Co., who received and held 15 ""^(«so of them for the New 
York Trust Company under the deposit agreement. Thèse 15 "-''/os» 
bonds were pledged by E. H. Gay & Co., without authority from or 
knowledge of the New York Trust Company, as security for loans 
negotiated in the course of the fîrm business of E. H. Gay & Co. for 
their own benefit. No notice was ever sent to the New York Trust 
Company that the Manistee Light & Traction Company bonds had 
been received by E. H. Gay & Co. for the benefit of the New York 
Trust Company, and the Trust Company had no knowledge that E. H. 
Gay & Co. had the bonds. 

•For other cases see same topic & 5 numeee In Dec. & Am. Diga. 1907 to date, & Rep'r Indexe» 



RErXOLDS V. NEW YORK TRUST OO. 613 

(3) No attempt is made by the New York Trust Company to show 
that the unauthorized pledge of the bonds was the individual act of 
E. H. Gay. 

(4) It is hereby stipulated by parties that the market value of bonds 
of the Manistee Light & Traction Company at the time of conversion 
herein was $950 for each bond of $1,000 face value, and, if said claim 
of the petitioner is allowed as a claim against the individual estate of 
E. H. Gay, it is agreed that such allowance may be in the sum of $14,- 
875. 

The claim fîled against the copartnership estate made no allégation 
of a conversion either by the copartnership or by E. H. Gay, but al- 
leged merely the receipt by E. H. Gay & Co. of bonds, for delivery 
to the Trust Company, and the nondelivery to the Trust Company. 

The learned District Judge was of the opinion that the claim allowed 
against the firm estate was neither presented nor allowed as a claim 
based on a liability in tort, and that as against the fîrm no liability in 
tort had been waived in order to rest the claim on an implied promise 
arising upon the waiver of tort; but that failure to comply with the 
firm's express promise was the sole basis of proof against the firm. 

The claim against the individual estate of E. H. Gay is based solely 
upon the theory of an implied contract or quasi contract, arising from 
the conversion of the bonds by E. H. Gay & Co. in the course of the 
firm business. 

By its terms the claim against E. H. Gay individually alleged a con- 
version of the bonds by E. H. Gay. This allégation, however, becomes 
immaterial since the stipulation provides that no attempt is made to 
show that the unauthorized pledge was the individual act of E. H. Gay ; 
and since it does not appear that E. H. Gay individually received 
benefît therefrom. 

The Trust Company contends that the conversion was in course of 
the firm business, and that thereby the partners became jointly and 
severally liable in tort for the conversion; that upon the waiver of 
tort there arise implied contracts or quasi contracts both of the firm 
and of the individual partners to pay the value of the bonds converted 
to the use of the firm. 

Where there are separate and distinct express contracts of the fîrm 
and of a copartner to pay a debt contracted by the firm, the right to 
prove against both estâtes may be conceded. If one dealing with a 
firm procures also the individual undertaking of a partner to answer 
for the firm debt, there are substantial reasons for permitting him to 
resort to both estâtes. In re McCoy, 150 Fed. 106, 80 C. C. A. 60; 
Chapman y.Bowen, 207 U. S. 89, 28 Sup. Ct. 32, 52 L. Ed. 116. 

The additional several contract of a partner is not implied from the 
firm transaction, but must be created by a distinct act of the copartner. 

As the conversion in the présent case was by the firm, in the course 
of firm business; as the actual participation of E. H. Gay is not 
proved; as there is no évidence that his individual estate benefited 
by the firm conversion— there is difficulty in finding any substantial 
ground upon which to imply from the circumstances a separate con- 
tract of E. H. Gay, which corresponds to an express individual contract 
to answer for a firm debt. 



614 188 FEDERAL REPORTER 

- While the partnership relation exposes one partner to liability for 
firm debts contracted by another partner without his consent, one 
partner bas no authority to make an individual contract for another 
partner. 

In the présent case it is contended that because under the partnership 
relation partners, through firm dealings, may be made jointly and 
severally liable in tort, there arise quasi ex contractu on waiver of 
tort,; not only a joint contract, but also several contracts of each part- 
ner to pay the amount of the firm debt. This contention seems also 
to involve the proposition that upon a conversion of bonds or stock 
by a partnership there arise a number of debts; as many individual 
debts as there are partners, and also a firm debt. 

The breach of an express contract to deliver the bonds to the Trust 
Company créâtes only a partnership debt, for payment of which resort 
must be had to the procefeds of the partnership property. Bankruptcy 
Act July 1, 1898, c. 541, § 5f, 30 Stat. 547 (U. S. Comp. St. 1901, p. 
3424). .,• 

Upon a suit for such a breach of contract only a single judgment 
could be had, a judgment against the firm, upon which resort would 
be had to the firm assets. 

; The claim against E. H. Gay is based entirely upon the fact, stated 
in the stipulation though not in the claim, that the copartnership con- 
verted the bonds. 

Viewing both estâtes, we hâve asserted against E. H. Gay, as a joint 
debtor, either a breach of express contract or an implied contract to 
pay for value received ; as an individual debtor, the conversion of 
the bonds, a tort, with a waiver of the remedy in tort. 
; . We now reach the important question whether the fact that there 
was a conversion by the firm is in itself a sufficient basis for an implied 
or quasi contract of E. H. Gay individually. 

' As was said in the opinion of this court in Clarke v. Rogers, 183 
Fed. 518, 106 ce. A. 64: 

"A claim based on a tort as known at eommon law Is undoubtedly provable 
whenever it may be resolved into an Implied contract. For example, it is 
a settled rule that where a tort-feasor by conversion of Personal property 
lias sold the property converted, and received cash therefor, the true owner 
may sue hlm for money had and received as on an implied contract." 

The trustée, appellant, daims that it is a well-established law that : 

"Unless there has been a sale of the property and a receipt of the proceeds 
of the same in money, the tort cannot be waived, and an action or claim will 
not lie as for money had and received, upon an implied promise or quasi 
contract" — citing Jones v. Hoar, 5 Pick. (Mass.) 285 ; Ladd v. Rogers, 11 
Allen (Mass.) 209; Allen v. Ford, 19 Pick. (Mass.) 217; Berkshire Glass Co. 
V. Wolcott, 2 Allen (Mass.) 227, 79 Am. Dec. 781; Brown v. Holbrook. 4 
Gray (Mass.) 102 ; Hagar v. Norton, 188 Mass. 50, 73 N. E. 1073 ; Newmarket 
Mfg. Co. V. Coon, 150 Mass. .566, 23 N. E. 380; Cooper v. Cooper, 1-17 Mass. 
373, 17 N. E. 892, 9 Am. St. Hep. 721. 

While some of thèse cases might be distinguished on the ground 
that they relate merely to the scope of the spécial action for money 
had and received, yet it must be conceded that upon the whole they 
may be regarded as giving a somewhat narrow limitation to the doc- 
trine of quasi contract. We should be reluctant, however, to rule 



EETNOLB3 V. NEW TOEK TRUST CO. 6l5 

that the daim should be disallowed on so limited a view of the scope 
of the law of quasi contracts. 

It is difficult to find any substantial ground upon which the judicial 
conscience which admits the use of fiction to sustain an action of as^ 
sumpsit for money had and received should refuse to adopt a similar 
fiction upon an action in assumpsit for goods sold and delivered. 
Where a person bas converted personal property to his own use by 
keeping, concealing, or consuming it, there is every reason for requir- 
ing him to pay its value and for giving the owner an option to sue 
upon contract. To hold him upon an implied contract if he bas sold 
the goods for money and used the proceeds, but to refuse to hold him 
upon an implied contract for the value of goods consumed but not 
sold, is to limit the doctrine of quasi contracts by an arbitrary distinc- 
tion which disregards the substantial similarity of the two cases. 

[ 1 ] If the plaintifï's goods are taken, his right to waive the tort and 
to sue in contract should be the same whether the défendant has sold 
the goods or has consumed them. 

While the authorities in America are divided (Keener on Quasi 
Contracts, 193 et seq.), there seems little doubt of the soundness of 
Mr. Keener's conclusion that: 

"The two eases involve a common élément which is universally recognlzed 
in the one case, and should he in the other, as furnishing a ground for re- 
covery, namely, that the défendant has had that for which in conscience he 
should give the plaintiff an équivalent in money." Keener on Quasi Con- 
tracts, 195. 

In Crawford v. Burke, 195 U. S. 176-194, 25 Sup. Ct. 9, 13 (49 
L. Ed. 147), where the défendants sold stocks and thereby converted 
them to their own use, the court said : 

"It Is évident that the plaintifl: might hâve sued them in an action on 
contract charging them with the money advanced and with the value of the 
stock." 

The trustée contends that upon the question whether there arises, 
from a mère conversion without a sale, an implied contract or a quasi 
contract to pay the value of the goods converted, we should be gov- 
erned by the Massachusetts décisions, citing Fleitas v. Richardson, 
147 U. S. 550, 13 Sup. Ct. 495, 37 L. Ed. 276; Humphrey v. Tat- 
man, 198 U. S. 91, 25 Sup. Ct. 567, 49 L. Ed. 956; In re Chantier 
Cloak & Suit Co. (C. C.) 151 Fed. 952; Thompson v. Fairbanks, 196 
U. S. 516, 25 Sup. Ct. 306, 49 L. Ed. 577._ 

Thèse cases, however, are too restricted in scope to support the trus- 
tee's contention. 

[2] In the exercise of the jurisdiction in bankruptcy conferred un- 
der the Constitution, the courts of the United States hâve the right to 
resort to the principles of the common law, and therefrom to déter- 
mine whether or not an obligation of a contractual character arises 
upon the conversion of goods and is available to the owner upon 
waiver of his right to pursue his remedy for tort. See the learned 
opinion of Shiras, J., in Murray v. Chicago & N. W. Ry. Co. (C. C.) 
62 Fed. 24, cited with approval in Western Union Tel. Co. v. Call 
Pub. Co., 181 U. S. 92-103, 21 Sup. Ct. 561, 45 L. Ed. 765. 



616 188 FEDERAL KEPOKTEB 

The décisions of a state court, so far as they relate to the scope of 
particular forms of action and as to the adoption or nonadoption of 
particular modes of procédure involving' the use of ancient fictions, 
can hardly be regarded as conclusive upon the broader question of 
the existence of an obligation of a contractual character. 

In Clarke v. Rogers (C. C. A.) 183 Fed. 518-524, Judge Putnam 
clearly recognizes the distinction between the question of the exist- 
ence of a contractual obligation and the question of the mode of re- 
covery in the f ollowing language : 

"Independently of the bond, we believe there is an obligation resting on a 
defaulting testamentary trustée to restore the value of the assets embeaiiled, 
whlch is of a contractual character. The method of recovering on this 
would be sO far purely Ineidental that the Législature might at any tlme 
provide for an action at common law in behalf of the successor as trustée, 
whatever might at any time be the preeeding remédies either by a suit in 
equity, or by a suit on the bond, or by a surumary order of the court havlng 
Jurlsdietlon In référence thereto." 

[3] As the bankruptcy statute suspends the spécial remédies under 
State laws and substitutes its own procédure, it is important that the 
meaning of section 63, which defines debts which may be proved, 
should not be narrowed nor confused by reading into it local décisions 
denying a right of recovery under particular modes of procédure. 
Uniformity of construction is désirable, and we think the courts of 
bankruptcy are at liberty to give to the words "upon a contract ex- 
press or implied," in section 63a4, a breadth of meaning which will 
include quasi contracts, in which the real ground of liability is that 
for value received in money or in goods a défendant should pay. 

Assuming, therefore, that by the conversion there was created a 
contractual obligation, we hâve next to inquire what is its nature. 

[4] It is argued that as tort-feasors are jointly and severally liable, 
so the implied contract is both joint and several. The proposition that 
joint tort-feasors are "jointly and severally liable" requires careful 
considération, however, since there is ground for thinking that the 
fundamental error in the Trust Company's argument arises from the 
inaccuracy of this expression. 

The liability of one of the several tort-feasors is not both joint and 
several, but is joint or several at the élection of the plaintifï. The 
plaintiff may hâve judgment against one or more, but he may not 
hâve two judgments against the same person on the same transaction. 

If a tort is committed by several, it may be treated as joint or sev- 
eral at the élection of the aggrieved party. Gould on Pleading, c. 4, § 
66; Sessions v. Johnson, 95 U. S. 348, 24 L. Ed. 596; Atlantic & Pa- 
cific R. V. Laird, 164 U. S. 393, 17 Sup. Ct. 120, 41 L. Ed. 485 ; 
Chicago, Burlington & Quincy Ry. v. Willard, 220 U. S. 413, 31 
Sup. Ct. 460, 55 L. Ed. (April 10, 1911). 

A joint judgment is a bar to a several action, and a several judg- 
ment to a joint action. 

At law, therefore, one whose goods were converted by partners 
could not hâve both a joint and several judgment, but could hâve 
tither at his élection. The présent claims, therefore, if reduœd to 



EETNOLDS V. NEW TOEK TRUST CO. 617 

îudgment în tort, would not be two, but one judgment only, joint 
or several, at the plaintiff's élection. 

It seems impossible that the Trust Company should bave greater 
rights before judgment than if it had proceeded to judgment. 

In Bigby v. U. S., 188 U. S. 400-409, 23 Sup. Ct. 468, 472 (47 
h. Ed. 519), it was said: 

"A party may in some cases waive a tort, that Is, he may forbear to sue 
In tort and sue in contract, where the matter out of whieh bis claim arises 
bas in it the éléments both of contract and tort. But it bas been well said 
that 'a right of action in contract cannot be created by waivlng a tort, and 
the duty to pay damages for a tort does not imply a promise to pay them 
upon whieh assumpsit can be maintained.' " 

The individual tort imputed to E. H. Gay being waived, what élé- 
ments remain to support an individual contract? That a partnership 
of whieh he is a membe'r bas had the bonds. 

In Keener on Quasi Contracts it is said (page 160): 

"Assuming a défendant to be a tort-feasor, in order that tbe doctrine of 
waiver of tort may apply, the défendant must bave unjustly enriehed hlmself 
thereby," etc. 

If the right to recover on quasi contract upon a waiver of tort rests 
upon the doctrine of unjust enrichment, the différence between en- 
richment by money and by stocks or bonds, of known market value, 
would be unsubstantial. To limit the right to recover on quasi con- 
tract to cases where money had been received would be arbitrary and 
hardly defensible in reason. 

As there is no individual act of E. H. Gay, or benefit to his estate 
whieh is separable from the act and benefit of the firm, what is there 
except the fact that the créditer once had a right to sue him individ- 
ually as a tort-feasor to support the theory of an individual promise or 
an individual quasi contract? 

The Trust Company contends that both the claim against the firm 
and the claim against the individual were proved on the theory of im- 
plied contract based on the conversion of the bonds, and that the proof 
against the firm was not on an express contract. Chicago & N. W. 
Ry. Co. V. De Clow, 124 Fed. 142-148, 61 C. C. A. 34, is cited, to 
sustain the proposition that there has been no élection to proceed for 
breach of express contract, and thereby to waive any action on im- 
plied contract. 

[5] Assuming for the purposes of the case, however, that the Trust 
Company bases both claims upon the contractual obligations arising 
upon a waiver of the joint tort, we do not escape the fundamental 
difficulty in the case. If there is an implied contract of the firm, of 
E. H. Gay jointly with the other partners, growing out of the fact 
that the firm pledged the bonds as security for loans negotiated in 
the course of the firm business, and for the firm benefit, can it be 
said with consistency that E. H. Gay is also liable because he individ- 
ually had the bonds or their proceeds? 

It is apparent that in the décision of this case we can dérive no as- 
sistance from those cases in whieh it appeared that a partner, or one 
of several joint tort-f easors, had individually converted property ' or 



618 188 FEDERAL KBPOETBB 

funds and wrongfully appropriated them to the uses of a firm. The 
opinion of the District Court correctly distinguishes between cases of 
that character and the présent case. In such cases the individual, as 
well as the firm, has had the property — the individual by using it as 
his contribution to the firm, and the firm by using it in the firm busi- 
ness. Both were under an obligation because both had received a ben- 
efît. Hère are two distinct causes of action. 

It is apparent that the présent claim was allowed solely upon the 
àuthority of décisions in the Second Circuit. In re Coe (D. C.) 169 
Fed. 1002; In re Coe (C. C. A.) 183 Fed. 745. In the opinion of 
the District Court (169 Fed. 1002) it was said that the members of 
a firm were jointly and severally liable upon a claim either in tort 
or upon quasi contract, at the creditors' élection, for misappropriation, 
and that upon their bankruptcy the plaintifif could file double proof 
both against the partnership assets and agaihst the individual assets 
of each partner, citing In re Baxter, Fed. Cas. No. 1,119; In re Jor- 
dan (D. C.) 2 Fed. 319; In re Blackford, 35 App. Div. 330, 54 N. 
Y. Supp. 972; Lindley on Partnership (5th Ed.) 703; Loveland on 
Bankruptcy, 315, and cases cited: In re Parkers, 19 Q. B. Div. 84. 

In the Circuit Court of Appeals (183 Fed. 745) it was said : 

"It makes no dlfCerence that the parties acted without evil intent, nor that 
tlie firm got the benefit of what they did. It remains a wrongful conversion 
for which ail the partners are Uable, not Jointly as partners, but jointly and 
severally as tort-feasors, whether they each actlvely participated in it or 
not; the acts of every one being imputed to every other." 

The only additional authority cited by the Circuit Court of Appeals 
was Blyth v. Fladgate, L. R. Ch. Div. (1891) 337. 

With the greatest respect for the opinions of the learned judges 
in both the District Court and the Circuit Court of Appeals, we are 
unable to accept the proposition that joint tort-feasors are jointly and 
severally liable, if by that is meant subject to both joint and several 
judgments. As we hâve said, a plaintiff is not entitled to two judg- 
ments against a tort-feasor, but is put to his élection. He is permit- 
ted to deal with each of the tort-feasors as if he were the sole cause 
of the tort; but he may not subject a single défendant to two judg- 
ments, joint and several, 

Had this créditer proceeded to reduce its tort claim to judgment 
before bankruptcy, and to prove on the judgment in tort under sec- 
tion 63a ( 1), he could bave had but one judgment against E. H. Gay ; 
at the creditors' élection an individual judgment, or a judgment 
against E. H. Gay 'with others. In other words, he would hâve been 
compelled to elect between a joint and a several liability. 

It is true that upon the joint judgment in tort he might hâve had 
exécution against the individual estate, but this is equally true of a 
joint judgment on contract. 

The bankruptcy statute intervenes to destroy the ordinary rights 
under exécution, by section 5g, which divides the assets into partner- 
ship estate and individual estate, and gives priority of rights in the 
assets to creditors according to whether the debts are partnership or 
individual. 



REYNOLDS V. NEW YORK TKTTST CO. 619 

The brief of the Trust Company states, correctly we think, that 
"this is a question concerning the nature of légal rights." The cred-- 
itor's légal right was to make his daim joint or several; he could not 
make it both, and must elect. The creditor's rights were in the alter- 
native and not cumulative; he is forced to an élection; not accord- 
irtg to the early English rule that an élection must be made even where 
there are distinct contract rights against both the firm and the individ-^ 
ual, but on the ground that at law his right is to hâve his cause of 
action joint or several, but not both. 

If it be granted for the purposes of the case that upon a waiver 
of tort there arise contractual obligations which correspond to the tort 
obligations, then it foUows not that there are two contracts, one joint 
and one several, but one contract which is joint, or in the alternative 
a number of contracts which are several. But, as we hâve seen, the 
proposition that upon a waiver of tort there arise contractual obli- 
gations corresponding to liabilities in tort is itself most doubtful. 

If on principle the doctrine of quasi contracts is broader in scope 
than the action for money had and received, and should be extended 
to ail cases in which a défendant bas had that for which in conscience 
he should give the plaintiff an équivalent in money (Keener, 195), 
yet in the présent case this reason applies only to the firm, and not 
to the individual who was not an actual participant, nor beneficiary. 

Under such conditions the rule that forbids contribution between 
wrongdoers abates, and the right arises to recover from the actual 
wrongdoer the damage imposed upon one who is not in fact a par- 
ticipant; the ultimate responsibility being cast upon the acutal wrong- 
doers. Union Stock Yards Co. v. Chicago & N. W. Ry. Co., 196 U. 
S. 217, 224, et seq., 25 Sup. Ct. 226, 49 L. Ed. 453. 

Whether in any event the right to contribution would not cast this 
claim ultimately upon the partnership estate, under chapter 3, § 5g, 
through a claim of the individual estate, is a query which we need 
not solve, but simply refer to as a possible complication that might re- 
suit from implying a contract against one who is held liable as a tort- 
feasor without actual participation or moral responsibility. 

Furthermore, the fiction of a promise should not be extended be- 
yond its legitimate purpose, and especially should it not be permitted 
to affect injuriously the rights of third persons. 

There is an inconsistency between the requirement that a plaintiff 
should waive the tort and take his place with the other creditors, and 
a contention that by virtue of the tort alone he should hâve implied 
contracts which put him in a better position than other creditors who 
bave express contracts. 

The bankruptcy act requires a distinction between firm and indi- 
vidual debts. The test of whether the debt is firm or individual is 
the character of the transaction from which it arises. Hère there was 
no transaction other than a firm transaction; and a fiction of law 
which raises a promise based solely upon tort liability and not upon 
an obligation to pay for value received by an individual, cannot be 
allowed without an infringement of the rights of the individual cred- 
itors, and of bankruptcy rules of equality. 



620 188 FEDERAL REPORTES 

Upon a revîew of the cases cited we find no sufficîent authorïty for 
the allowance of double proof in a case like the présent. Without 
questioning the correctness of the décisions in the cases in the Sec- 
ond circuit, or considering the différences in facts, we nevertheless 
do not feel constrained to accept the proposition that upon a waiver 
of tort there arise contractual obligations corresponding to tort obliga- 
tions, or the further proposition that upon waiver of a joint tort there 
arise both joint and several obligations ex contractu. The contrac- 
tual obligation arises only when value has been received for which in 
good conscience a défendant should pay. 

We are of the opinion that the claim against the individual estate 
of E. H. Gay should be disallowed on the ground that upon this l'ec- 
ord only a firm contract exista after the waiver of tort. 

The judgment of the District Court is reversed, and the case re- 
manded to that court with direction to disallow the claim of the New 
York Trust Company for the sum of $14,875 against the individual 
estate of E. H. Gay, and the appellant recovers costs in this court. 



NELSON et al. v. OHIO CULTIVATOR CO. 

(Circuit Court of Appeals, Sixth Circuit. June 8, 1911.) 

No. 2,102. 

1. CONTBACTS (§§ 1C9, 170*) — EXTEIKSIC AlDS TO CONSTBUCIION— CONSTKUC- 

TION BT PabTIES. 

A contract, if ainbiguous, is to be construed in the light of the circum- 
stances which surrounded Its exécution, and if the parties hâve given it 
a practical construction which harmonizes with what was probably thelr 
Intention In view of such circumstances, that constraction becomes a part 
of the contract itself, and will be adopted by the court. 

[Ed. Note. — ^For other cases, see Cohtracts, Cent. Dig. §§ 752, 753 ; Dec. 
Dig. §§ 169, 170.*] 

2. CoNTBAOTS (§ 352*) — Action roB Beeach — Questions fob Jubt. 

Défendant contracted to manufacture machines under patents owned 
by plaintiffs during the life of such patents, and to pay royalties thereon, 
and also to sell and deliver a number of the machines to plaintiffs by a 
certain date. On thelr part plaintiffs were to give security to pay for 
such machines, if required, before défendant should be required to make 
them, and also to furnish the woodeu patterns for the castings. Whether 
they were also required to furnish the métal patterns necessary to make 
the castings was a question in dispute. There was delay In givlng the 
security, and also in furnishing the patterns, such that défendant eould 
not complète the machines for delivery to plaintiffs by the time required, 
and when such tlme arrived défendant rescinded the contract, having 
made no machines. There was évidence tending to show that plaintiffs 
agreed to an extension of the time for delivery of the machines to them, 
and that défendant waived the delays. Held, on the évidence, that wheth- 
er défendant was Justifled In rescinding the contract, and whether, if 
not, plaintiffs sustained substantial damages, were questions for the jury, 
and that the direction of a verdict was error. 

[Ed. Note.— For other cases, see Contracts, Cent. Dig. §| 1824^-1828; 
Dec. Dig. § 352.*] 

•For otber cases see same topio & 5 numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



NELSON V. OHIO CULTIVATOR CO. fi21 

8. Trial (§ 178*) — Dibection of Veedict — Considekation of Evidence. 

It is the duty of the court, when a motion is made to direct a verdict, 
to take tïat view of the évidence most favorable to the party against 
whom the instruction is aslied and from that évidence, and the Inferenees 
reasonably and justifiably to be dravvn therefrom, to détermine whether 
or not under the law a verdict might be found for that party. 

[Ed. Note.— For otlier cases, see Trial, Cent. Dig. §§ 401-403; Dec. 
Dig. § 178.*] 

In Error to the Circuit Court of the United States for the Northern 
District of Ohio. 

Action at law by Frank J. Nelson and Frederick D. Bell against 
the Ohio Cultivator Company. From a judgment entered on a verdict 
directed by the court, plaintiffs bring error. Reversed. 

Arthur G. Wade (Guy W. Kinney, on the brief), for plaintiffs in 
error. 

G. A. Seiders, for défendant in error. 

Before KNAPPEN, Circuit Judge, and McGALL and SATER, Dis- 
trict Judges. 

SATER, District Judge. At the close of the évidence the trial court, 
on the defendant's motion for a directed verdict, instructed the jury 
to find for it on the second and third causes of action, and nominal dam- 
ages in the sum of $1, for the plaintiffs, on the first cause of action. 
The plaintiffs charge that this was error and seek a reversai. In our 
considération of the case, référence will be made to such facts only in 
the voluminous record as are reasonably necessary to a détermination 
of the questions presented. 

On October 27, 1906, the plaintiffs, citizens of New York and owners 
of certain letters patent, issued in 1897, for improvements in potato 
planters and diggers and potato cutters and droppers, entered into a 
contract with the défendant, of Bellevue, Ohio, to run for the life of 
the patents, whereby défendant, an Ohio corporation and an extensive 
manufacturer of agricultural implements, agreed to manufacture, in a 
gopd, substantial, workmanlike manner, of good durable material as 
ma'ny of the machinés each year as could be sold or as the trade de- 
manded, and to sell the same either singly or in combination as the 
trade required. It bound itself to use its best endeavor to sell the ma- 
chines and advertise them throughout the large territory in which it 
transactedi business, at a rate fairly to compete with similar machines 
of similar utility and cost of production, and to pay the plaintiffs $5 
for each machine sold singly, i. e., as a planter or a digger, and $10 
for each machine whose parts were sold in combination. The plaintiffs 
agreed to purchase 50 of the completed combined machines for $3,500, 
to be sold by them in New York, for which state they reserved the ex- 
clusive right to sell the patented device. Thèse machines, on which no 
royalty was to be paid, were to be delivered to them on March 1, 1907, 
for which the plaintiffs, at the time of delivery, were to give their note 
maturing December 1, 1907. Except as to the 50 machines above men- 
tioned, the défendant was to furnish plaintiffs machines and extras 

•For other cases see same topic & § numbbe in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



622 188 FEDERAL KEPOETER 

for the New York trade at market price. Whenever the royalties paid 
aggregated $50,000, the défendant was, by assignment then duly to 
be made by the plaintiffs, to become the sole owner of the patents, and 
the payment of royalties was thereupon to cease. The plaintiffs were 
to furnish at their own expense ail métal patterns, core boxes, dies, and 
templets necessary to manufacture the machines, and to défend at 
their own expense any patent litigation that might arise from infringe- 
ment, so long as the défendant manufactured in accordance with the 
patents. They aver in their amended pétition, and support such aver- 
ment by their évidence, that subséquent to the exécution of the written 
contract a paroi agreement was enteréd into that the défendant should 
manufacture the métal (gray iron) patterns, core boxes, dies, and 
templets, but Stahl, the defendant's président, dénies that any such 
modification of the written contract was made. At the same sitting 
at which the written contract was executed, the plaintiff Nelson, by a 
separate written instrument, represented and warranted that he was 
financially responsible for the 50 machines to be delivered to him by 
the défendant on March 1, 1907, to the amount of $3,500,, and that, if 
upon investigation, such was not found to be the f act, he would exécute 
and deliver a bond before he required the delivery of the goods. On 
March 1, 1907, the défendant, alleging as a reason therefor that the 
plaintiffs had, by their failure to observe their contract of October 27th, 
made defendant's compHance with it impossible, canceled the contract 
and notified them to remove such property of theirs as was then at its 
factory. This the plaintiffs did ànd thereafter sued for damages. In 
their first cause of action they seek to recover $50,000 for breach of 
contract on account of defendant's failure to manufacture and sell the 
machines and pay the stipulated royalties. They aver that had the 
défendant proceeded with the performance of its contract, they would 
hâve sold 5,000 of the combined machines, in conséquence of which 
they would hâve réceived royalties in the sum so claimed as damages. 
The second cause of action is for $2,750, being profits alleged to hâve 
been lost through the defendant's failure to make and deliver the 50 
machines for sale to the New York trade in 1907, and for expenses 
incurred by plaintiffs in preparing to care for such trade and in the 
performance of their contract prior to its cancellation. The third 
cause of action is for damages for breach of contract in failing to sup- 
ply the plaintiffs with machines for the New York market, exclusive of 
the 50 machines above mentioned. They allège that they could hâve 
realized a profit of $50 on each machine sold, and could hâve netted a 
total profit of $50,000. 

The answer, among other things, dénies the utility of the machines, 
and the defendant's obligation to make more than 50 of them for the 
trade of 1907, or to make any métal patterns, core boxes, dies, and 
templets, and charges a failure on the part of plaintiffs to furnish such 
articles in time to permit the construction of the machines at the time 
stipulated. It aiso charges misrepresentation as to the plaintiffs' finan- 
cial responsibility, a refusai on their part to extend the time for the 
building of the machines, and the making, on February 18th, of a new 



NELSON V. OHIO CULTIVATOR CO. 623 

contract for their construction, for $3,150 cash in advance, and the ré- 
pudiation of such contract by the plaintiiïs. 

The question for décision is : Did the court err in directing a verdict 
as above mentioned? As the answer to this question must be wrought 
eut from the incidents connected with the plaintiffs giving bond for the 
50 machines to be delivered March 1, 1907, and from their respective 
duties and acts as regards the making of the métal patterns, core boxes, 
dies, and templets, thèse subjects will be considered in their order. 

Standing alone, the obligation given by Nelson to furnish bond for 
the 50 machines to be made and delivered for the New York trade, if 
an investigation proved that he was net financially responsible for their 
cost, was Personal to him, and the bond, if required, would hâve been 
timely, if given at any time before the goods were delivered. An ex- 
amination promptly conducted by the défendant resulted in a demand 
for additional security, with which demand Nelson, with equal 
promptness, promised to comply. He wrote: 

"Before you are required to manufacture any of the macliines I will furnisli 
you such security as may be satisfactory." 

Fearing that his associate, Bell, who had wasted his estate on 
patents and whose relation to him as regards this transaction was that 
of a partner, might not respond to his portion of the liability for the 
machines or bear his just part of the expenses to be incurred in launch- 
ing and maintaining the contemplated New York selling agency, and 
deeming it unwise to make any definite arrangements as to security un- 
til Bell had heard from a relative who was to furnish him financial 
backing, Nelson sought and finally obtained the defendant's consent to 
accept security from him for one-half only of the cost of the ma- 
chines and from Bell for the residue. The défendant from the 
first and at ail times interpreted the contract to mean that the bond 
was to be furnished before it began the manufacture of the machines, 
and although Nelson on différent occasions requested the défendant to 
take the preliminary steps necessary to the procurement of stock for 
the building of the machines, both he and Bell at ail times acquiesced 
in and never disputed the correctness of that interprétation. Moreover, 
the évidence of both Nelson and Stahl reveals an understanding that 
the bond or security was to be given upon its being ascertained that 
Nelson was not financially responsible. Ordinary prudence on the 
part of the défendant, who was about to engage in the manufacture 
of an article of whose practical utility comparatively little was known 
on account of the slight use to which it had been put, would suggest 
this protecting precautionary course of procédure. Notwithstanding 
the apparent meaning of the language of his obligation of October 
27th, considering it in the light of the circumstances which surrounded 
its exécution, évidence of which was admissible (Page on Contracts, § 
1123), and the construction uniformly placed upon it by ail the parties 
throughout their voluminous correspondence and the whole of their 
dealings with each other, it must be held to mean, on the record sub- 
mitted, that the security it called for was to be furnished the défendant 
before it entered upon the manufacture of the machines. 

[1] The parties having placed on their contract a practical con- 



624 188 FEDERAL REPORTER 

struction which harmonized with their understanding- at the time of its 
exécution, that construction became a part of the contract itself and 
the court will therefo're adopt it. Insurance Co. v. Dutches, 95 U. S. 
269, 24 L. Ed. 410; Gorrell v. Home Life Insurance Co., 63 Fed. 
371, 378, 11 C. C. A. 240; Seymour v. Warren, 179 N. Y. 1, 6, 71 N. E. 
260. 

[2] Although the instrument plainly calls for a bond to be delivered 
by Nelson, and although the défendant made repeated urgent appeals, 
down to and including January 23d, for its early delivery, that it might 
proceed with its performance of the contract, Nelson attempted in one 
of his letters of December 3d to cast on défendant the responsibility of 
procuring from Bell his portion of the security to be furnished, and 
sought to substitute fîrst one thing and then another as security for 
himself, and wrote the défendant to notify him what it required in that 
respect, even after it hadi plainly written him that it would accept a sat- 
jsfactory bond from each of the plaintiffs for one-half of the total 
amount of the cost of the machines. He did not forward his bond 
until January 25, 1907, some three weeks after Bell, against whom he 
wished to protect himself, had sent his bond to the défendant. There 
then remained but little more than a month jn which to build and 
deliver the machines. 

The machines could not be manufactured without the required pat- 
terns, core boxes, dies, and templets. The défendant was responsible 
for the procurement of the malléable castings, but as it was not equip- 
ped to make them, it contemplated having them made at the Malléable 
Iron Works at Marion, Ohio. Their production, however, must neces- 
sarily be subséquent to that of the métal patterns, and thèse latter were 
to be made from wood patterns, for which the plaintiffs were respon- 
sible. The controversy is as to who was to make the métal patterns. 
The fîrst machine made under the patents was constructed in 1901, 
and only about ten or a dozen had been built prior to the date of the 
contract in question. Nelson testifies that at the time the contract 
was made he informed the défendant that he and Bell had some 
métal patterns which they had used in the manufacture of machines, 
but that some of them were lost and others were no longer serv- 
iceable, that some changes in the patterns would hâve to be made, and 
that he would ascertain what new patterns were necessary and would 
(lave a pattern maker then working for them to make such as were 
lacking. His statement contained in his letter of November 24th, that 
"In looking over our patterns we hâve f ound them in bad condition, and 
are now having many of them replaced by a pattern maker," reads, 
however, like the récital of a newly discovered fact. Stahl testifies that 
Bell told him on the date of the contract that while the machine 
worked satisfactorily in New York, he found that the soil and condi- 
tions and the methods of planting potatoes varied in différent locali- 
ties, and that he would hâve to make changes in the digger so that it 
would not choke up and would separate the potatoes from the soil. 
There is considérable évidence that the machine worked successfully 
in New York in a variety of soils. There is also considérable évi- 
dence that it worked quite imperf ectly when tested at Bellévue ; that 



NELSON V. OHIO CULTIVATOE CO. 625 

it choked up and failed fully to separate the potatoes from the earth, 
as Stahl says Bell told him it would do. Even portions of Bell's évi- 
dence point in the same direction. The parties, therefore, when they 
engaged in their joint enterprise, knew that changes would be made in 
the digger and consequently in the patterns, and if they did not then 
know, they soon learned, that old patterns would hâve to be replaced, 
and that such reasonable delay as would necessarily be incident to 
such changes and the making of new patterns, would occur. On No- 
vember 8th, Booher, who was then, and until the foUowing February 
Ist, the defendant's secretary, in urging Nelson to promptness in giv- 
ing security, wrote: 

"We would be pleased to hear from you by retum mail, and would Uke to 
get at tliis part of the business at tbe earliest date possible, and as the mallé- 
able proposition Is getting to be quite a serious one, and unless we can get 
to work on the patterns and get them in shape to go to the malléable people, 
we might be delayed in getting out thls stock. We bave practically 90 days 
In which to complète ail arrangements and get thlngs in shape." 

Counsel are not agreed as to the construction to be placed on that lan- 
guage. Stahl says that after métal castings are prepared there still 
remains work to be donc on them before they can go into the sand, 
and that this was work necessarily précèdent to sending the castings 
to the defendant's shops and the malléable people, and was that to 
which the letter refers. The plaintiffs, however, contend that the 
language employed is an admission of duty on defendant's part to 
make the castings. On November 28th, Booher wrote Nelson: 

"We cannot impress you too strongly the importance of getting matters 
shaped around so that the malléables for fhe potato digger and planter can 
be put into the sand in order to insure our getting them promptly when you 
requlre them for the trade." 

Nelson's reply was a request to vary the contract to the extent of 
constructing the planters for delivery March Ist, and the diggers later, 
for the reason that Bell had made and was working on some advanta- 
,geous improvements in the digger which he desired to submit to the 
défendant before the diggers were built. This same request was re- 
peated later, accompanied with a suggestion, which Bell disclaims as 
having originated from him, that the proposed improvements could not 
be tested until the frost was out of the ground. The inference which 
this suggests seems to be that Nelson did not then know and could 
not know what the ultimate f orm of the digger patterns would be, until 
the contemplated improvements were made and tested in the f ollowing 
spring. The defendJant declined to comply with Nelson's requests. On 
December Ist, défendant asked for advice as to what improvements Bell 
contemplated and when the patterns and everything, manifestly mean- 
ing the bond, would be ready, as the patterns should go into the sand 
not later than January Ist, in order to hâve the 50 machines ready 
at the stipulated time, and urged diligence, as it did repeatedly in the 
course of their extendedi correspondence, in the submission of both the 
patterns and the bonds. Notwithstanding thèse urgent appeals for 
prompt action, on December 6th Bell wrote the défendant inquiring 
when it would need the patterns to commence manufacturing. He said 
188 F.— 40 



626 188 FEDERAL REPORTEE 

he had made some changes and mostly new patterns, and that part of 
them would hâve to be made into métal after reaching the défendant, 
as the plaintiffs had no facilities for making patterns of that kind. 
He said the patterns, which proved to be mostly wooden patterns, were 
then ready to ship. This letter does not consist with his later daim 
that the défendant had obligated itself to make the métal patterns, nor 
is Nelson's letter of January 24th helpful to the plaintiffs' contention, 
for on that date,, while still promising to give satisf actory security and 
suggesting methods of furnishing it, he wrote that he had been in- 
formed by Bell that the défendant was unable to make the métal pat- 
terns, which he very much regretted, as he understood that it was to 
make them, and that that was why the patterns were hurried and for- 
warded. He addedi that he was informed by Bell, who was then at 
Bellevue, that he was obliged to hâve the patterns made by another man. 
He expressed an understanding that the défendant was to make the 
patterns, but there was no insistence on the existence of a contract to 
that efifect. He acquiesced in the employment of another person to 
make them. This letter was in answer to that of Booher's of January 
18th, in which he reported Bell's arrivai and that: 

"We flud there wlU hâve to be métal patterns made, which Is going to re- 
qulre considérable time and it' will necessitate some tall hustling In order to 
get thèse machines in shape for use March Ist" 

This language is consistent with the defendant's déniai of a contract- 
on its part to make the métal patterns, and also imports the discovery of 
an unexpected condition. The wood patterns were shipped to the de- 
fendant December 22d, with a promise from Nelson that the métal 
patterns would be forwarded on the following Monday. On Decem- 
ber 28th, the défendant acknowledged receipt of the patterns shipped, 
and noted that the métal patterns would follow in a few days, and 
added, "This is ail right." The métal patterns, however, did not reach 
it until Bell, who had gone to Bellevue in response to defendant's 
request of January 12th, arrived with them on January 17th. He took 
with him no dies or templets, and none were ever furnished, nor were 
any core boxes, other than wooden ones, supplied. He had some dies 
at Pittsburgh, which he proposed, some time after February 12th, to 
hâve forwarded, but says that one of defendant's foremen suggested 
that the défendant had certain dies which might be used in their stead, 
and that he therefore did not send for those at Pittsburgh. There 
is no évidence, however, that the foreman had authority to speak for 
the défendant, or that défendant did not hâve diies of the character men- 
tioned. Stahl says that some of their dies for making shovels might 
hâve answered the purpose. The défendant had no templets available, 
but Bell says their use was not necessary until the machines neared 
completion. He further testified that on his arrivai Booher told him 
"We would get to making the patterns right away," but delayed it and 
finally announced that they could not be made by the défendant, an 
announcement which drew no protest from Bell, though Hoyt says 
that Bell told him that he had expected défendant to make the patterns. 
Bell thereupon employed a pattern maker and began the making of pat- 
terns on January 28th, and delivered them on February 12th, which, ac- 



KELSON V. OHIO CULTIVATOR CO. 627 

cording to Hoyt, was as soon as they could hâve been completed by 
the défendant. The défendant assisted in this work by permitting the 
use of its men and shops after working hours, Bell paying for the nia- 
terial used and the services of the men. On January 23d, the défendant 
notified Nelson that the machines could not be gotten out by March 
Ist, that the delay was due to the failure promptly to deliver the pat- 
terns and give the required bond, and that Bell was uncertain about 
going forward in face of the fact that the machines couldi not be 
completed until two or three weeks beyond the agreed time, but said, 
while it might be a little late for them to get the machines into the 
hands of their agents, it believed there would be ample time for them 
to take care of their customers, provided there was no further delay 
about the patterns. Thereupon Nelson forvi'arded his bond on Janu- 
ary 2Sth, which probably reached Bellevue the day following. On 
the 17th of February he visited that place. On substantially ail ma- 
terial points, the évidence is conflicting as to what was said and done 
between the parties on the occasion of that visit. It sufïiciently appears, 
however, that the défendant was willing to go forward with the con- 
struction of the machines, if a satisfactory extension of time could be 
had, but the évidence is not harmonious as to whether Nelson de- 
manded compensation for the extension, or as to whether Stahl f eared 
it would release the sureties on the bonds or guaranties given by plain- 
tifïs. Nelson says he was willing to waive the delivery of the machines 
on March Ist, and this seems to be the logical inference deducible from 
his letter of January 23d. He further states that Hoyt at one time 
agreed to send the patterns by a spécial messenger to Marion and make 
a spécial arrangement for the early delivery of the malléable castings 
and to hâve the machines ready in a short time, but ail this is denied 
by Hoyt. Following Nelson's visit the défendant took no further ac- 
tion until it notified the plaintiffs of the cancellation of the contract. 

It is clear that, under conditions existing February 17th, the ma- 
chines could not bave been completed for delivery by March Ist. There 
is évidence that from 6 weeks to 60 days would hâve been consumed in 
preparing and returning the malléable castings to Bellevue, and that 
from 15 days to 3 weeks would bave been thereafter required to pré- 
pare the machines for shipment. There is also évidence which tends 
to show that thèse estimâtes of time required are too great. 

The learned trial judge rightly found that there was more than a 
scintilla of évidence that the défendant was obligated to make the 
métal patterns, but held that the submission of that question to the 
jury was unnecessary because the plaintiffs' failure to furnish the pat- 
terns, core boxes, dies, templets, and security forbade the delivery of 
the machines on March Ist, and hence the défendant was relieved of 
its obligation in that respect. He was further of the opinion that the 
défendant had so breached the contract, which was to run for a num- 
ber of years, as to warrant a finding against it on the first cause of ac- 
tion, but that nominal damages only were recoverable on account of the 
uncertain and spéculative character of the damages sought. 

Notwithstanding Nelson's dilatory, vacillating and unbusiness like 
conduct, and the tardiness of Bell, and the further fact that the plain- 



(>28 188 FEDERAL REPORTER 

tiffs did not place the défendant in a position in whîch it could be put 
in default until after Nelson delivered his bond, was there, neverthe- 
less, évidence from which the jury might hâve rightfully found that the 
défendant was obligated to make the métal patterns, that Booher said 
on Bell's arrivai at Bellevue on January 17th that the défendant would 
at once begin the making of them, that Hoyt promised by spécial ar- 
rangement with the malléable people to get the castings and complète 
the machines at an early date, and that the defendant's conduct was 
not such as to relieve it from the construction and delivery of the 50 
machines, or to warrant it in canceling the contract? Might not the 
jury, properly instructed, hâve found that the invention, possessed util- 
ity, that somewhat more than nominal damages had been sustained, 
that a tangible loss occurred through Nelson's inability to deliver to the 
New York trade only about a dozen of the 18 machines which he says 
he sold at a profit, and that the défendant awakened and fed the ex- 
pectation and belief that it would perform and thereby induced the 
plaintiiïs to engage in labor and incur expense, to their financial détri- 
ment? Might not the jury hâve found that the making of the métal 
patterns, if it held that the défendant was required to make them, would 
hâve entailed on it no loss? Nelson's testimony is that the plaintiiïs 
were to pay for their making, and they did in f act pay for ail materials 
and labor furnished by the défendant. The making of the patterns 
would in no wise hâve been a waiver of or militated against the 
provision of the defendant's contract that it should not be required to 
enter upon the manufacture of the machines, until the patterns were 
ready and the security for the machines given. Might not the jury 
hâve found that the plaintifïs so breached their contract that the de- 
fendant was entitled to substantial damages for loss of profits in the 
manufacture of the machines, as an offset against any injury the plain- 
tifïs claimed and were found to hâve sustained ? We think ail of the 
above queries should be answered in the affirmative, and that from 
the facts in évidence fair-minded men might hâve drawn différent con- 
clusions. The questions, therefore, are not of law, but of fact, and 
should hâve been left to the jury for settlement, under proper instruc- 
tions from the court. Mason & O. R. Co. v. Yockey, 103 Fed. 265, 
43 C. C. A. 228. 

The défendant, it is true, repeatedly warned the plaintifïs of the 
danger of delay in fumishing bond and patterns, but it persistently 
urged them to proceed with the contract, with a déclaration of its pur- 
pose to perform. It informed them that the patterns should be in the 
sand by January Ist, and yet on December 8th expressed its satisfaction 
that the unshipped patterns would be sent in a few days. In that same 
letter it invited both Nelson and Bell to come to Bellevue to close up 
matters regarding the security and the patterns, and especially did it 
so request because Bell would bave to come in any event to go over 
the machines with the defendant's purchasing agent, as well as with 
its manufacturing depaitment. On January 12th it wrote that Bell 
should come at the earliest date possible "to take this matter in hand." 
When he arrived on the 17th its purchasing agent took up with him 
the matter of building the diggers and planters for the purpose of 



NELSON V. OHIO CULTIVATOR CO. 629 

ordering materials for their construction. It not only made no an- 
nouncement then that it would not go forward with the contract or 
could not complète the machines in time, but on the day following 
wrote Nelson that Bell had given his portion of the security, inquired 
what kind of security he, Nelson, intended to give, and stated that 
"tall hustling" would be necessary to get the machines ready by March 
Ist. On January 23d, it first notified Nelson that the machines could 
not be completed within the time agreed. It was not the défendant 
that was then hesitating about going forward, but Bell, who feared 
that Nelson might not wish to proceed on account of the two or three 
weeks delay then thought to he inévitable in the completion of the 
machines. As late as January 28th, without warning Bell of the fu- 
tility of making the métal patterns, it witnessed his beginning that 
labor and incurring the expansé incident thereto. As the work pro- 
gressed it lodged no complaint that the machines could not be put out on 
time. The patterns were dehvered on February 12th. Whether they 
were accepted or not need not be determined, as there is évidence that 
they were not satisfactory and other évidence that the dissatisfaction 
was unreasonable. But the défendant did not then refuse to proceed 
with the contract or affirmatively do so until March Ist. During ail 
the time that elapsed after the contract was made the défendant was 
so circumstanced as to be better informed than the plaintiffs as to the 
time the malléable people would require to supply the needed castings. 
It knew that the plaintiffs were making expenditures for wood pat- 
terns, had rented and were paying rent for a store room in which to 
transact the business of their New York selling agency, were getting 
oùt circulars for the trade, were incurring traveling expansés and the 
cost incidental to the manufacture of the métal patterns, and were rely- 
ing on the fulfillment of the contract. In the third défense set up in its 
answer the défendant allèges that, on February 18th, the parties agreed 
that it should proceed with the construction of the machines for an 
advance cash payment of $3,150, and that the plaintiffs repudiated the 
agreement on the following day. The significance of this défense is 
that down to and including the last-named date the défendant was 
still ready to perform. 

[3] We are not called upon to say that, in the light of ail the facts 
in évidence, a jury would hâve fôund for the plaintiffs, or that the 
trial court, having heard the évidence and having seen the witnesses 
who gave it, might not on a motion for a new trial, bave held a re- 
covery by the plaintiffs, had there been such, to a small amount, or 
even set the verdict aside, because there is a différence between the 
légal discrétion of a court to set aside a verdict as against the weight 
of the évidence, and the obligation, which a court bas, to withdraw a 
case from the jury and direct a verdict for insufficiency of évidence. 
Mt. Adams & E. P. Inclined Ry. Co. v. Lowery, 74 Fed. 463, 20 C. C. 
A. 596. It is not a proper test of whether the court should direct a 
verdict that the court in weighing the évidence would, upon motion, 
grant a new trial. On the contrary, it is the duty of a court, when a 
motion is made to direct a verdict, to take that view of the évidence 
most favorable to the party against whom it is desired that the verdict 



630 188 FEDEHAL EBPOHTBB 

should be directed, and from that évidence, and the inferences reason- 
ably and justifiably to be drawn iherefrom, détermine whether or not 
under the law a verdict might be found for that party. Milwaukee 
MeChanics' Ins. Co. v. Rhea & Son, 123 Fed. 12, 60 C. C. A. 103; 
Rochford v. Penn. Co., 174 Fed. 83, 84, 98 C. C. A. 105 ; Travelers Ins. 
Go. V. Randolph, 78 Fed. 754, 759, 24 C. C. A. 305 ; Standard Life 
& Accident Ins. Co. v. Thornton, 100 Fed. 582, 40 C. C. A. 564, 49 L. 
R. A. 116. 

Applying to the évidence the settled rule that governs the direction 
of verdicts, we are constrained to hold that the defendant's motion for 
a peremptory instruction should hâve been overruled. The case is 
therefore remanded to the court below, with directions to set aside 
the judgment and grant the plaintiffs a new trial. 



HUDSON V. NEW YORK & ALBANY TRANSP. CO. 

EMPIRE TRUST CO. v. HUDSON. 

(Circuit Court of Appeals, Second Circuit. May 8, 1911.) 

No. 245. 

L JuDioiAi, Sales {§ 55*) — Vacation— Rights of Puechasek— Expenditueks 
ON Peopektt. 

More than a year after vessels had been sold by a receiver In a cred- 
Itor's suit agalnst the owner, tlie sale was set aside under mandate from 
the appellate court because of misstatements inadvertently made by the 
auctloneer respecting liens subject to whlch the sale was made, which 
tended to materlally lesseu the blds, and the vessels were taken back aud 
resold. In the meantiine they had been In possession of the purchaser, 
whlch had used them, but without profit, and had also expended a large 
sum in repairs and betterments, whlch, as shown by the resuit of the 
second sale, had added more than that amount to their marlcet value. 
Eeld that, under such clrcumstances, the purchaser was entltled to re- 
celve from the proceeds, In addition to the amount pald on Its bid, the 
full amount expended on the vessels which contrlbuted to such Increase 
In value; that It was not chargea ble for the use of the boats, from whlch 
It realized nothing. 

[Ed. Note. — For other cases, see Judlclal Sales, Cent. Dig. § 110 ; Dec. 
Dig. § 55.*] 
2. JuDiciAL Sales (§ 55*) — Vacation— Rights of Purchaser — Payment of 
Claimed Lien. 

A purchaser of vessels at a receîver's sale in a suit asainst an insol- 
vent corporation, sub.iect to such liens as should be established, who paid 
ofC a claimed lien which had been sustalned by the master but wns sub- 
sequently held invaiid by the court, on a subséquent setting nside of the 
sale and a resale of the vessels was not entltled to be relmbursed from 
the proceeds for the amount so paid out, as airainst other creditors, but 
only to be subrogated to the rights of the lien claimant as a gênerai cred- 
Itor. 

[Ed. Note. — For other cases, see Judlclal Sales, Cent. Dig. § 110 ; Dec. 
Dig. § 55.*] 

Appeal from the Circuit Court of the United States for the South- 
ern District of New York. 

*For other cases Eee eame loplc & § numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe! 



HUDSON V. NEW TOEK & ALBANT TKANSP. CO. 631 

Sviît by George P. Hudson against the New York & Albaiiy Trans- 
portation Company; the Empire Trust Company, trustée, intervener. 
Complainant, the Farmers' Bank at Georgetown, the Trust Company, 
and Joseph H. Choate, Jr., receiver, appeal from decrees distributing 
a fund in court and allowing daims in favor of the Manhattan Nav- 
igation Company. Modified and affirmed. 

The following is the opinion of the Circuit Court, by Hough, Dis- 
trict Judge: 

[1] The boats Frank Jones and Saratoga over which thls litigation lias been 
waged, having been sold pursuant to order filed herein September 16, 1910, 
and $76,000 having been bid and pald for them, Manhattan Company, as sub- 
stantially the purchaser at the sale of 1909, prays for whatever sum it is en- 
titled to ont of the présent fund in the light of (a) the opinion of the Circuit 
Court of Appeals in this cause and (b) such other évidence as bas been brought 
to this court's attention since mandate filed, and therefore unknown to the 
appellate tribunal. 

ïhe Manhattan Company having already been repaid the former purchase 
priée of $7,500, interprétation of the higher court's opinion is conflued to a 
considération of vs^hat "sums may hâve been expended on the boats in repairs 
and betterments" and a détermination of "the amount expended in repairs, 
and the différence between the receipts derlved from the opération of the 
boats and the expenses of opération, détérioration, etc." 

In mémorandum herein of September 1, 1910, it was held to be the fair 
meaning of the opinion under which the mandate issued that, while that 
court had not held that a person in the position of the Manhattan Company 
had no other rights, the only rights specifieally accorded such person were 
those growing out of bis care of the property and the bestowal of betterments 
Tipon it, of a nature which at least maintained, if not improved, conditions 
existlng at the time of sale. 

Applying this reading of the opinion to the facts then shown, it was fur- 
ther held that Manhattan Company's rights were strictly confined to repay- 
ment of what it had put into the boats as physical structures on the theory 
that by such expendltures the vessels had either been actually improved or 
at least maintained in good, serviceable, and salable condition. To thèse views 
I adhère without further discussion of a matter, upon which opinions hâve 
beeome wearisome to ail concerned. If "betterments" be taken in its usual 
meaning, of something added to the value of a thing otherwise than by 
mère repair, it cannot be sald to bave been shown that either the Jones or the 
Saratoga was bettered during the 14 months' possession of Manhattan Com- 
pany, in any other substantlal respect than the rebuilding of the wheel boxes 
of the Saratoga. This was done, but at what exact cost is not shown, and 
the court is left between the estimate recently given of $5,000 and the estimate 
of $8,000 stated in the affidavit of MacLaurin, filed July 29, 1909. 

In measuring, however, the value of what Manhattan Company did with 
and for thèse vessels, there are in my opinion aome figures now incontro- 
vertible which speak louder than anything else in the case. If there be con- 
sidered (1) what compétent persons thought the boats worth in July, 1909 ; 

(2) what any person was prepared to bid for the boats at the same time; and 

(3) what the boats sold for in September, 1910 — some information is gaiued 
which is to me controlling. 

On or about July 29, 1909, there were filed herein certain afiidavlts regard- 
ing the then value of the vessels, containing statements not since gainsaid 
nor added to ; although it was provided by the order of August 24, 1910, that 
ail parties should be at liberty to show "what Is the value of said steam- 
boats and both of them in the markets of the city of New York at the 
présent time." The object of that section of the order referred to was to 
ascertain, if possible, what was the probabllity of a greater value, and there- 
fore higher priée in 1910, than in 1909. No testimony was offered, and it 
was agreed by counsel that the affldavits of the previous year fairly repre- 
sented the agreement and divergence of those acquainted with the vessel 
market of this port. 



632 188 FEDERAL REPORTEE 

It Is Interestlng to sum up the resuit of said affldavlts: Mr. Walmsley (for 
tbe recelver) deposed that Mr. Noble of the Joy Une and Mr. Barlow, a ship- 
6roker, valued the Jones at not over $40,000, and Mr. Barlow assigned .$30,000 
as the worth of the Saratoga. Mr. Whitcomb, the président of the Jones' 
previous owner, was sure that that vessel had been worth $100,000 in 1905, 
and, being acquainted "In a gênerai way with her présent condition," he 
believed that she was worth In 1909 from ,'i;50,000 to $T5,000. Mr. Nichols, a 
vessel owner, had known the beats for about two years, and both tosether 
were in bis juidgment worth no more than $28,000 to $33,000. Mr. Gallaher 
of the Central Vermont Railroad valued the .Jones at $2.5,000 and the Sara- 
toga at no more than $7,-500. MacLaurin of the Morse Company thought the 
Jones was worth at prlvate sale about $25,000, but that she could not bring 
at public auction more than $20,000 ; while the Saratoga was worth nothing 
except to be broken up. And Mr. Frincke of the same company gave the 
sale priée of both vessels together at $25,000. 

Doubtless several of thèse affldavlts were made by Interested parties ; but it 
cannot be denied that they are statements on oatb of a body of men whose 
opinions are entitled to considération, and no better opinion évidence has been 
offered tbroughout this bltter litigatlon. 

Let thèse statements be compared with the opinion entertained and acted 
on by Mr. Duval of the Manhattan Company, who by his own testlmooy was 
willlng to glve up to ^40,000 for the two vessels (free and clear), when he had 
immédiate use for them In his own business. From thIs examinatlon of the 
évidence I conclude that no reasonably careful man considered the sale price 
of thèse two steamboats in 1909 to be more than $40,000 (free and clear of ail 
liens). 

Turning to the elrcumstances of the sale of 1909, it is obvions that, how- 
ever erroneous were the statements of the auctioneer, it is more than doubt- 
ful whether any wouild-be purchaser was thereby deceived or diseouraged, 
except posslbly Mr. B. R. Kobinson, attorney for the Hudson Navigation Com- 
pany, who was willlng to bld $16,000 subject to liens, on behalf of a client hav- 
ing every motive to keep the Jones and Saratoga out of compétitive business 
on the Hudson river. It does not appear that Mr. Eobinson attended the 
sale, and it is a fair inference that he had ascertained before making his af- 
fidavlt of July 29, 1909, what the probable amount of liens would be — a mat- 
ter easily and quickly to be accomplished at the office of Mr. Wise. ïhe resuit 
is that ho one was willlng in 1909 to pay as much as $40,000 for thèse vessels 
free and clear except Mr. Duval; and the best bld from any one else, of 
which the record furulshes even a suspicion, is that of the Hudson Navigation 
Company, whose would-be bld meant not over $34,000 (free and clear). 

This being the proven condition of the market in 1909, no évidence has been 
given (though opportunity offered) that market conditions changed in a year ; 
yet after œost unusual compétition thèse two vessels were sold for $70,000 
in cash, 14 months after Manhattan Company thought it had bought them for 
approximately $23,000 (free and clear). 

What has caused this great appréciation In value? If the vessels were 
worth $40,000 in 1909, why were they worth $76,000 in 1910? I think the an- 
swer platn. It has been shown that, within the meaniug of repairs and better- 
ments hereinabove set forth, Manhattan Company has expended therefor — on 
the Frank Jones $14,169.29 and on the Saratoga $17,263.93, a total of $31,- 
432.22. In other words, there Is no other reasouable explanation for the in- 
crément in value of thèse vessels except this: That whereas in 1909 they were 
little more than rusty hulks, lying where they long had lain lu a sort of 
marine graveyard under conditions which naturally afifected thelr market 
value; in 1910 it had been demonstrated that they could be used, they had 
been kept in golng and serviceable condition and were offered for sale with- 
out any preliminary period of rust and with a prompt obédience to the court's 
mandate as commendable as it was unexpected. My conclusion is that al- 
though (as above stated) It cannot be definltely shown, as to any vary consid- 
érable fraction of this $31,432.22, that the sanie was spent for what are techni- 
cally betterments, yet the whole expenditure resulted in an increase in market 
value of thèse vessels greater than the total amount paid out, to wit: There 
was an increase In sale value of $36,000 as a resuit of expenditures of less 



HUDSON V. NEW YORK & ALBANY TEANSP. CO. 633 

than $32,000, ïherefore the Manhattan Company should te allowed In re- 
coupmont for betterments and repairs sald sum of $31,432.22. 

ïhls proceedlng may be fairly described as intended to put back the two 
vessels iato the receiver's hands that he might sell them as he shouid hâve 
sold them. But he has no right to expect to sell that which did not exlst in 
1909, without paying for it what the first purchaser laid out thereon. 

But that which said purchaser laid out on the boats, if productive of no 
advantage to the second sale, does not seem allowable in recoupment. This 
leads me to deny any allowance to the Manhattan Company for Insurance — 
an item which until lately seemed justifled. 

It has been strenuously urged that there should be charged agalnst Manhat- 
tan Company in diminution of their repair and betterment bllls some amount 
for (a) détérioration ; (b) user of the boats ; (c) consumption or destruction 
of a part of the shlp's inventory or equipment. 

No détérioration, however, has talien place, and the use of the boats did not 
resuit in any profit or advantage to Manhattan Company; on the contrary, 
they lost money by having them. As to equipment losses, it has been impos- 
sible to arrive at any basis of déduction because (1) no money value has been 
afiixed to those items of equipment in which shortage exists, and (2) it is 
concluslvely shown that in some items of equipment there Is an overplus ex- 
Istlng in 1910 as compared with 1909, and ail that can be said regarding the 
comparative shortage and overplus is that thèse articles in which a surplus 
exists are apparently greater In Intrlnsic value than those In which there Is a 
shortage. 

On thIs point It Is further worthy of considération that (as above shown) 
there is a far greater appréciation in entire value than the amount of any 
suggested shortage. 

It is further, however, urged that, Irrespective of any actual profit or loss 
made or incurred by Manhattan Company, rent muet be paid merely because 
the boats were used. 

It can hardly be said that rental (or rather a charge for use and occupation) 
can be exacted for a thing which is Intrinsically worthless unless there be a 
contract fixing such rent or charge. Whether a thing be worth anything or 
not dépends not only upon the thing itself but upon the person who owns it. 
The true inquiry is: What was the rental value in the hands of the recelver 
of thèse boats? It appears to me that to state this inquiry Is to answer 
it — the rental value was nothlng, for the broken down hulks he had in 1909. 

The theory of this proceeding is that, whereas the recelver did by inad- 
vertence sell the boats for what was supposed to be about $23,000 free and 
clear, he ought to hâve sold them in 1909, for about .$40,000 free and clear— 
and by boats is meant not only hull and machinery, but also tackle, apparel, 
and furniture. Under présent conditions he has sold at that rate— and more. 
AU the demands therefore made agalnst Manhattan Company in diminution 
of the amounts repayable to them for betterments and repairs are denied. 

A more perplexing question is that presented by the proven fact that wlth- 
in a few days after the sale of 1909, and before any exceptions to Mr. Wise's 
report had been filed, Manhattan Company paid $12,500 on the alleged lien 
of the Morse Dry Dock & Repair Company, and subsequently and on October 
1, 1909, paid a further sum which made the total payment nearly $600 over 
the lien reported by the spécial master and now set aside by the court. 

This matter has already been so often discussed that further argument In 
this court is useless. As Intimated in the opinion on liens flled herewith, I 
am convinced that Capt. Hudson, as président of the corporation that owned 
the Jones and Saratoga, knew that the Morse Company's lien was in part good 
It is not supposed that in believing this he had any especial familiarity with 
either the lien law of New York or the décisions thereunder, but he had been 
a seafaring man, he knew perfectly well the nature of a lien, and I am sure 
that he believed that he had made the boats responsible for the work that 
the Morse Company did upon them. The Manhattan Company acted on his 
advice, and in accordance with the only information, down to that time glven 
the world by this court, in the matter of liens upon thèse steamers. That is, 
the court had appointed Mr. Wise (inter alla) to ascertain what liens or prlorJ- 
tfes existed, and the propriety of that appointment has not even yet been 
questioned. To be sure, It is hard to see why the master should hâve been 



034 188 FEDERAL EBPOETBR 

authorlzed to ascertaln a lien or priorlty whieh the court conid not, or would 
not, enforce. But those -who deny any help to Manhattan Company In the 

flnding of the master must hold either that he was appointed to satisfy curi- 
osity (whlch Is unthinkable), or the appointment was errer (vvhich has not 
yet been pointed ont, and whlch I hâve no power to Indicate or assert). 

What was Manhattan Company then to do, about a lien which the duly 
appointed judlcial offlcer of this court said was good, which the court itself 
would not transfer to any fund, nor divest by any sale, which was asserted by 
the concern having physical possession of the boats, and could only be put 
into litigation by giving stipulations for the whole amoumt claimed, or consid- 
erably more than had been declared valld ; and against which lien if asserted 
in admiralty their only known witness was Hudson, who counseled paymeiit. 

It was indeed a hopeless litigation, that stared in the face the purchaser 
of 1909, and what made it seemingly hopeless was the action of this court. 

The proverbial dlfflculties of selling pigs in pokes are scarcely gréa ter than 
those of selling sueh slngular property as ships subject to unknown liens; 
and therefore (it is presumed) were those liens ascertamed as far as possible ; 
and I, at least, décline to punish one who trusted the power of the court, and 
followed its recommendatlon. 

It Is therefore my opinion that, up to the estent of the amount reported 
by the master, equity demands that the Manhattan Company should be 
protected in their payment. They are therefore further entitled to be pald 
the amount of the Morse lien reported by Mr. Wise $13,090.56, and also the 
lien of Burns Bros, allowed by the master and now confirmed by the court, 
there having been on exception flied thereto. This was $808.50. Making a 
total of $13,899.06. 

If to this be added the amount previously allowed, $31,432.22, the total 
allowance to the Manhattan Company Is $45,331.28. 

The final contention of the bondholders who hâve so largely proflted by 
the resale of thèse vessels rests upon facts flrst made to appear at the hearlng 
of August, 1910. They are briefly recapitulated In the mémorandum of 
September 1, 1910; it being there said that the complainant Hudson and the 
Manhattan Company were cognlzant of a "scheme whlch through ignorance 
or deceit does constitute a plain déception of the court and a fraud upon 
the law." And the facts whlch constituted said scheme were "stated at con- 
sidérable length becauise it may ultlmately be held that they afCect the equl- 
ties of the situation." It Is now asserted (to quote from one of the briefs 
submitted) that the "fraud on the court that was prepetrated or particlpated 
in by Manhattan Company precludes it from claimlug the rlght to reim- 
bursement for betterments and repairs on équitable grounds." 

This very extrême contention requires some further investigation. It is 
admitted at once that a fraudulent purchaser Is not entitled to any allowance 
for expenditures he makes upon that which he obtalned by fraud; he Is 
punished as a quasi criminal by being deprived of that whlch he tortlously 
obtalned, and by losing everythlng that he put into it during his fraudulent 
possession. It Is therefore necessary to look carefully Into the circumstances 
revealed by the évidence and flnd eut just what the fraud was referred to 
In the earlier opinion herein and who particlpated in it either by active as- 
sistance or keeping silent when the means of speech were obvions and at 
hand. The statement of facts made on September Ist need I think be only 
amended by pointing ont that Duval finally agreed to settle with Hudson not 
upon the basis of $50,000, but on that of $40,000 only. 

In the mère fact that Hudson and DvPval attended the sale of July, 1909, 
In the belief that the steamboats were worth to them at least $40,000, and 
with the intention of getting them for as much less than that sum as other 
bldders permitted, there was of course no fraud whatever; any one had a 
rlght to get the boats as cheaply as possible. When, however, a motion was 
made to set aside that sale and the grounds of motion alleged to be (a) In- 
adequacy of prlce and (b) the "inadvertence of the auctloneer," Hudson came 
forward with the affldavit already sufflciently described. The powerful in- 
fluence of that affidavlt is more than plaln from the opinion of Ward, .T., flled 
July 29, 1909. Hère was the fraud, and the only fraud, for the Manhattan 
Company had gotten, as it had a perfect right to get, what looked like a 
good bargain, and it was entitled to use ail falr means to maintaln the ad- 



HODSON V. NEW YORK & ALBANT TRANSP. CO. 635 

vantage thus gained; but thls affldavit was not fair or tnie. It Is apparent 
from the affidavits subniitted on the motion to set aside the flrst sale, and 
from ail the testimony taken since, tliat, as long as tlie sale was made sub- 
ject to liens, no substantial improvement in priée could be expected ; so that 
■when the party whieh knew ail about the liens, and knew through Hudson 
■whether tbey were really good or bad, advanced the proposition that ^^/zo oî 
the bondholders of the défendant corporation were satisfled with the sale, 
they were using an argument unanswerable if it were true ; and I remain of 
the opinion that, if Hudson and Duval did not know that what Hudson said 
was untrue, they had no right to make their ignorance the excuse for such an 
assertion. 

But who was acting with Messrs. Duval and Hudson? At that time the 
Georgetown Bank was through Hudson endeavorlng to gain an illegltimate 
advantage for its $70,000 par value of bonds over ail other bondholders, and 
they had made Hudson thelr agent to accomplish the scheme. Mr. Townsend, 
representing the Baltimore Trust Company, was entirely satisfled with the 
echeme and knew ail about it at the tlme of sale. In other words, apparently 
$81,500 par value of thèse bonds were actively interested in putting Hudson 
forward as that which I cannot persuade myself he really was or had any 
right to believe hlmself to be, i. e., the owner of $180,000 of défendants bonds. 

Yet the owners of those very bonds, having changed front with the décision 
of the Circuit Court of Appeals, now appear with new counsel and profess 
a virtue as vociferous as unconvlnclng. 

Substantially ail the rest of the bonds appear from this record to hâve been 
In the possession of the Empire Trust Company, whose attorney set forth 
in his afiidavit of July 29, 1909, that that Company was acting "at the request" 
of the holders of $85,000 of the bonds of the défendant corporation, and that 
subsequently the owners of $21,000 more had deposited their bonds with the 
Intervening trustée. In other words, the face of the record as It stood in 
July, 1909, showed that Hudson could not own and control $180,000 par value 
of the bonds in question, unless he owed (owned) and controUed nearly ail 
of the $106,000 par value in the physical possession of the Intervener, and 
that intervener knew that Hudson did not control them. 

Thus there was a déception of the court promoted by the légal owners of 
nearly half the bonds of défendant corporation, and acquieseed in by the trus- 
tée which controlled nearly ail the rest; for nowhere in the assignment of 
errors upon the appeal herein does àny référence appear to the conclusion 
drawn by the court from Hudson's afiidavit. This conduct on the part of the 
Intervener Is strangely inconsistent with the position of Innocent trustée now 
asserted and lends more color to Hudson's curious notions regarding "owner- 
ship" in bonds than has hltherto appeared. 

Upon the whole, I am unable to see why, when, as a resuit of thls tragedy 
of errors, ail bondholders of every class hâve realized a fund in 1910 far great- 
er than they had any reasonable expectation of ever seeing in 1909, there is 
any ground for visiting upon that offender, who was no more ignorant or reck- 
less in assertion than the other parties to this case, such a frightful penalty 
as Is contended for by the quotation from argument last made above. 

Manhattan Navigation Company may take an order for the payment to it 
of $45,331.28, upon condition of its abandoning In writing every portion of 
its appeal now pending, except so much thereof as clalms the right to be re- 
imbursed or compensated for expenditures other than those upon the hull or 
fabric of the vessels; and an order may also be taken referring the distribu- 
tion of the fund now in court (after payment as aforesaid to Manhattan Navi- 
gation Company) to a master for considération and report to the court. 

Cowing, White & Wait (Henry Crofut White, of counsel), for Em- 
pire Trust Co. 

Herbert J. Bickford, for receiver. 

J. Parker Kirlin, for complainant bondholders. 

Kelley & Connelly (A. I. Elkus, M. E. Kelley, and C. S. Lorent- 
zen, of counsel), for Manhattan Navigation Co. 

Before I.ACOMBE, COXE, and NOYES, Circuit Judges. 



636' 188 FBDEIEAL EEPORTBR 

LACOMBE, Circuit Judge. This litig-ation was before us on a 
former appeal, and référence may be had to the opinion then filed. 
180 Fed. 973, 104 C. C. A. 129. It will be sufficient now briefly to 
State the séquence of events which resulted in the decrees appealed 
from. 

A stockholder of the New York & Albany Transportation Com- 
pany having brought suit to hâve its assets marshaled and distributed, 
the Empire Trust Company, as trustée under a mortgage, intervened 
and filed bill of foreclosure. A receiver of ail the property of de- 
fendant was appointed, and he took possession of the sanie. Various 
creditors filed claims against the estate; some of them claiming to 
hâve liens of one sort or another. The défendant owned two river 
steamboats, the Saratoga and the Frank Jones, which it was decided 
shouldi be sold forthwith, as they were likely to deteriorate in value 
unless kept in commission. The court ordered thèse two vessels to 
be sold at public auction, "subject only to maritime liens or liens 
under a state law for supplies, labor, or materials furnished on the 
crédit of said vessels." The vessels were sold, subject to such liens, 
on July 27, 1909, for $7,500, to Edward C. Burns, concededly acting 
for the Manhattan Navigation Company. The sale was duly confirmed 
by the Circuit Court, and from the order directing a sale and the or- 
d;er confirming the sale appeals were taken. 

It appearing that at the sale the auctioneer had made a state- 
ment as to' the probable amount of maritime liens and liens under 
State law, which the purchaser would hâve to satisfy, which was 
greatly exaggerated and calculated to deter prospective t)idders from 
making' ofïers to purchase, the order confirming the sale was re- 
versed. As to the order of sale, it was left to the Circuit Judge to 
détermine, after investigation, whether there was any likelihood that 
a resale would produce a substantial increase in the price paid for 
the boats. As a resuit of such investigation, the boats were resold at 
a net advance of over $20,000. The purchaser paid $76,000 in cash. 
The présent appeal concerns the disposition which the Circuit Court 
has made of the proceeds of this sale. 

Except as to a single item we concur with Judge Hough as to the 
disposition of the proceeds and do not find it necessary to add any- 
thing to his exhaustive and careful review of the facts, or to his state- 
ment of the reasons which induced the conclusions he reached. 

[2] The item in question is a claim of the Morse JDry Dock & Re- 
pair Company for $13,090.56, which had been paid as a claim secured 
by lien, by the purchaser at the first sale. Repayment of this amount 
was ordered to be made to such purchaser. The Morse Company's 
claim was for work donc and materials furnished at the home port of 
the vessel; no maritime lien under the gênerai admiralty law was 
claimed — none, in fact, could be claimed — ^but it was asserted that, by 
compliance with the state statute, the creditor had obtained a lien un- 
der the law of the state of New York. When the suit was brought an 
order was made that ail creditors of the défendant should file their 
claims with the receiver and that ail claims filed which mif^ht be dis- 
puted and ail for which any priority is claimed be referred to a spe- 



HUDSON V. lîEW TORK A ALBANT TRANSP. CO. 637 

cîal master "to take proof of the amount of such daims and of the pri- 
orities thereof, if any, and report the same to the court." Thereupon 
the claim of the Morse Company was filed ; it claimed priority by rea- 
son of its alleged lien, and it appeared and introduced testimony in 
support, not only of its claim, but also of such lien before the spécial 
master. Subsequently to the entry of the order confirming the sale, 
the spécial master reported that the Morse Company had liens on the 
respective vessels for the amounts named. Exceptions were duly filed 
to his report, and it was eventually held that, because of its failure to 
comply with the requirsments of the statute, the Morse Company had 
not acquired any lien under the state law, but was merely a gênerai 
unsecured creditor of the défendant to the amount named. Subsé- 
quent to the filing of the spécial master's report, and before the same 
came up for considération by the court, the purchaser at the first sale 
paid this claim of the Morse Company. 

Upon the former appeal we held that, if the first sale were set aside,. 
"the property cannot be retaken from the purchaser without paying 
him the purchase price $7,500 and whatever other sums may hâve been 
expended on the beats in repairs and betterments." It was intended, 
of course, to include as purchase price, in addition to the $7,500, what- 
ever the purchaser might hâve had to pay in order to extinguish ex- 
isting maritime or state liens so as to perfect his title to the property. 
But it is only liens which, if not paidl, would be a cloud on the title 
that should thus be provided for. The mère assertion of a lien, which 
could not be maintained by proof, was not sufficient to require its pay- 
ment or to entitle the person paying it to reimbursement eut of the 
proceeds. The first purchaser seems to bave acted in good faith, in 
paying this Morse claim ; the spécial master having reported that it 
was a valid lien, although the order which sent it to him apparently 
authorized him only to "take proofs and report the same." Moreover, 
the président of défendant told the purchaser that the lien was good 
and shouldl be paid. But in paying it before adjudication as to its 
validity the purchaser took the chances. If the first sale had not been 
set aside, the payment by it to the Morse Company of a debt due to 
that Company by the New York & Hudson Transportation Company, 
unsecured by a valid lien, would hâve resulted in a loss of the money 
so paid to extinguish another person's debt, except for what it might 
be able to obtain through subrogation, by prosecuting the claim of the 
Morse Company against the defendant's estate. So far, therefore, 
as this sum of $13,090.56 is concerned, its situation is not afïected 
by not being repaid that sum from the proceeds of the sale; it had 
already lost the money (before resale was ordered) except for what 
it might obtain by subrogation, and its right to prosecute the Morse 
Company's claim has been in no way afïected by subséquent proceed- 
ings. 

To repay this sum to the Manhattan Navigation Company out of the 
proceeds of the sale would be, in substance and effect, to give priority 
to the unsecured claim of the Morse Company over the bondholders 
secured by the mortgage. 

With this modification the decrees are affirmed. 



638 18S FEDBBAL BBFORTER 

NEW ORLEANS TERMINAL 00. v. HANSON. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,100. 

Sales (| 302*) — Lien of Vendoe— Louisiana Stattjte— Extbateeritobial 
Enfobcement. 

The privilège given to a seller of movable property by Civ. Code La. 
art. 3227, which provides that "he who bas sold to another any movable 
property vrhich is not paid for bas a préférence on tbe priée of his prop- 
erty over the other credltors of the purchaser whether tbe sale was 
made on crédit or vcithout" is not a contract lien on the property but 
merely a préférence over other credltors in the proceeds pertaining to 
the remedy or administration of the debtor's property, and cannot be en- 
forced extraterritorially against a receiver appointed by a court In an- 
other State into vi'hich the property bas beeu removed. 

[Ëd. Note.— For other cases, see Sales, Cent DIg. § 858; Dec. Dig. § 
802.*] 

Appeal from the Circuit Court of the United States for the Western 
District of Tennessee. 

In Equity. Appeal by the New Orléans Terminal Company from 
a decree in a credltors' suit against the Gulf Compress Company deny- 
ing it a préférence claimed. Affirmed. 

Caruthers Ewing, for appellant. 

G. T. Fitzhugh (Fitzhugh & Biggs, on the brief), for appellee. 

Before SEVERENS and KNAPPEN, Circuit Judges, and DENI- 
SON, District Judge. 

KNAPPEN, Circuit Judge. This is an appeal from a decree of the 
Circuit Court denying the lien or préférence claimed by appellant 
(hereinafter called the claimant) for the unpaid purchase price of 
certain compresses and other property, sought to be enforced by inter- 
vening pétition in the receivership proceedings hereafter referred to. 
The material fâcts are thèse : 

The claimant, a Louisiana corporation doing business at New Or- 
léans in that state, on September 6, 1907, sold to the' Gulf Compress 
Company, which is an Alabama corporation having its gênerai offices 
in Memphis, Tenn., two cotton compresses, together with boilers, 
pumps, piping and other appurtenances, ail to be delivered f. o. b. 
cars at Port Chalmette, La., for the price of $12,000, one-half to be 
paid in cash, and for the remaining $6,000 the note of the Compress 
Company to be taken, due in one year with interest. Delivery was 
made, one-half of the purchase price paid in cash, and note for the 
remainder given, ail as per contract. The agreement of sale, which 
was in writing, contained no réservation of title or lien. Indeed, by 
the express terms of the agreement of sale it was "covenanted and 
agreed on the part of the party of the first part (claimant) that it has 
the title to said compresses, boilers, etc., free from liens or incum- 
brances of every character, and that it has the right to make a sale 
to the party of the second part according to the terms of this contract." 
The Gulf Compress Company was operating in several states, in- 

•For other cases see same toplo & § number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



NEW ORLEANS TERMINAL CO. V. HANSOW 639 

cîuding Arkansas. The property in question was purchased from 
claimant for the use of the Compress Company "in whatever state 
it operated," and immediately after being so purchased it was by the 
Compress Company transported to and installed at Little Rock, Ark., 
where it has been continuously since said removal and installation, 
and was in the possession of the Compress Company at the time of 
the appointment of its receiver, since which time it has been in the 
possession of that officer. On May 29, 1908, and thus while the prop- 
erty in question was installed in the plant of the Compress Company at 
Little Rock, Ark., the appellee was appointed receiver of the Compress 
Company under a bill filed by certain creditors and stockholders of 
the company, alleging its financial embarrassment and actual insolvency, 
and the necessity of a receiver for the protection of the interests of 
creditors and stockholders of the Compress Company, as well as al! 
parties concerned ; and praying that the bill b'e sustained as a gênerai 
creditors' bill, and for the administration of the property rights and 
franchises of the Compress Company as a trust fund; that creditors 
be required to prosecute their claims in the court in which such re- 
ceivership was prayed;, and for an injunction against separate suits 
by creditors and stockholders. The Compress Company answered, 
admitting the allégation as to its insolvency, its inability to further 
carry on its business, and the necessity for the appointment of a 
receiver. Thereupon a decree was entered adjudging that the bill "be 
sustained as a gênerai creditors' bill, and as such inure to the ben- 
efit of ail creditors and stockholders who may come in under the same 
by intervention or otherwise as the court may herein direct" ; re- 
quiring creditors to file their respective claims with the receiver ap- 
pointed by the decree, and requiring the corporation to convey to the 
receiver ail its property, with provision for ancillary proceedings in 
other jurisdictions. The intervening pétition alleged the appointment 
of ancillary receivers "in those jurisdictions in which the défendant 
operated its business." The receivership was thus extended over the 
property in question in Arkansas. 

Article 3227 of the Civil Code of Louisiana contains this provision : 

"He who has sold to another any movable property, which is Bot paid for, 
has a préférence on the price of his property, over the other creditors of the 
purchaser, whether the sale was made on a crédit or without, if the property 
stlU remains In the possession of the purchaser. So that although the vendor 
may hâve taken a note, bond, or other ackaowledgment from the buyer he still 
enjoys the privilège." 

It is under this statutory provision that the lien in question is claimed 
for the $6,000 of purchase price represented by the note, and admitted- 
ly unpaid. The Circuit Court denied the claimed lien, being of opinion 
that the statutory privilège under the laws of Louisiana could not be 
enforced after the property had been carried beyond the territorial 
limits of that state and into the state of Arkansas, where it was being 
so held at the time of the assertion of the alleged lien by the receiver 
subject to the rights of creditors of the Compress Company. Claim- 
ant insists that the privilège given by the Louisiana statute can be 
enforced even extraterritorially, and against the property in the hands 
of the receiver, upon the ground that the latter took no higher right 



640 188 FEDERAL HBPORTEB 

than the Compress Company had. The question presented by the 
appeal relates to the correctness of this contention. 

The fundamental inquiry relates to the nature of the "privilège" in 
question. This privilège, as existing under the Code of Louisiana, is 
unknown to the common law (Copley v. Sanford, 2 La. Ann. 335, 46 
Am. Dec. 548) ; and we must therefore look to the provisions of the 
Code of that state. In Voorhies' Revised Civil Code of Louisiana an 
entire title, consisting of 94 articles, is devoted to the subject of 
"privilèges." Référence thereto, in our opinion, clearly indicates that 
the terra "privilège," as there used, relates to the préférence or degree 
of préférence between creditors in the distribution of the property or 
estâtes of debtors, as administered under the laws of Louisiana. The 
first four sections of the title in question read as follows : 

"Art. 3182. Whoever has bound himself personally, Is obllged to fulflll 
hls engagements out of ail hls property, movaWe and immovable, présent and 
future." 

No question of vendor's lien as against the purchaser (as distinguish- 
ed from a préférence as between creditors) is thus involved in the 
vendor's privilège in question. 

"Arit. 3183. The property of the debtor Is the common pledge of his cred- 
itors and the proceeds of Its sale must be distributed among them ratably, un- 
less there exist among the creditors some lawful causes of préférence. 

"Art. 3184. Lawful causes of préférence are privilèges and mortgages. 

"Art. 3185. Privilège can be clalmed only for those debts to which it is 
expressly granted In this Code." 

Article 3186 déclares that: 

"Privilège is a right, whlch the nature of a debt glves to a creditor, and 
Whlch entitles him to be preferred before other creditors, even those who bave 
mortgages. 

"Art. 3187. Among creditors who are privlleged, the préférence is settled 
by the différent nature of their privilèges. 

"Art. 3188. ïhe creditors who are in the same rank of privilèges, are paid in 
concurrence ; that Is, on an equal footing. 

Article 3193 provides that "the debts which are privileged on ail the 
movables in gênerai" are (1) funeral charges (the reasonable amount 
thereof to be determined by the judge); (2) law charges (referring 
to such as are occasioned by the prosecution of a suit before the courts, 
with provision for the taxation thereof) ; (3) expenses of last sick- 
ness (to be "fixed by the judge, in case of a dispute") ; (4) wages of 
servants for the current and past year (with provision that those for 
preceding years "form an ordinary debt, for which the domestics or 
servants corne in by contribution with other ordinary creditors") ; ( 5) 
six months' supplies of provisions (with provision that retail dealers 
as to ail but the last six months "are placed on the footing of ordinary 
creditors"); (6) salaries of clerks and other persons of that kind; 
and (7) dotal rights due to wives by their husbands. Again, the privi- 
lèges provided for are not always of the same class or attended with 
the same incidents. For example, the privilège of the lessor over the 
produce of the estate and the movables found thereon for his rent 
is declared by article 3218 to be "of a higher nature than mère privi- 
lège. The latter is only enforced on the price arising from the sale of 



NEW OELEANS TERMINAL 00. V. HANSO» 641 

movables to which it applies. * * * The lessor, on the contrary, 
may take the effects themselves and retain them until he is paid." 
(Italics' ours.) And by arti:le 3258 of chapter 6, relating to "the 
order in which the privileged creditors are to be paid," the lessor is 
given préférence "over ail the other privilc:^ed debts of the deceased, 
such as expenses of the last illness and others which hâve a gênerai 
priority of the movables." Articles 3220 and 3221 relate to the privi- 
lège on the thing pledged, including the sale of the property for pay- 
ment of the debt. Articles 3222 and 3223 relate to the "privilège of 
a depositor." 

Article 3233 déclares that "innkeepers hâve a privilège, or more 
properly a right of pledge, of the property of travelers who take their 
board or lodging with them, by virtue of which they may retain the 
property and hâve it sold, etc." The innkeeper "must apply to a 
tribunal to hâve his debt ascertained, and the property seized and sold 
for the payment of it." Some of thèse privilèges are thus shown to 
be liens and others not. Article 3227, upon which reliance is had hère, 
bas been already referred to. The privilège of the vendor of movables 
is there defined as "a préférence on the price of his property, over the 
other creditors of the purchaser." (Italics ours.) The same article 
gives a "spécial lien and privilège" to the seller of agricultural products 
of the United States in the city of New Orléans, to secure the payment 
of the purchase money for and during the space of five days only after 
the day of delivery, during which time the seller may seize the product 
sold "in whatsoever hands or place they may be found, and his claim 
for the purchase money shall hâve préférence over ail others." Sec- 
tion 126 of Garland's Revised Code of Practice of Louisiana provides 
for "conflict of privilège resulting from writs in several suits" as fol- 
lows: 

"Whenever a conflict of prh'Ueges arlses between différent creditors, ail the 
suits and claims shall be transferred to the court, by whose mandate the 
property on which the privilège or right of mortgage is to be exercised, was 
flrst served on mesne process, or definilive exécution; and'said court shall pro- 
ceed to class said privilèges and rights of mortgage according to their rank 
and dignity, in a sunvniary mamner, after notifying ail parties interested." 
(Italics ours.) 

Section 300 provides for enjoining the sheriff from paying to the 
plaintiff the proceeds of the property seized, in case a third person 
oppose the payment on the ground that he has a "previous hypotheca- 
tion or privilège, or any other right by which he claims to be paid in 
préférence to the plaintiff." 

It is thus seen that the vendor's privilège as to movables is merely 
a préférence over other creditors in the proceeds of sale of the prop- 
erty afïected by that préférence; and that by the Louisiana Code the 
privilèges declared thereby are inseparably connected with administra- 
tive machinery for their enforcement. This idea of the nature of 
"privilège" as a préférence between creditors in the distribution of the 
property of debtors is referred to in Lee v. His Creditors, 2 La. Ann. 
599, where Chief Justice Eustis, in discussing the question of a claimed 
"lien or privilège" sought to be enforced against a boat under a law 
of Kentucky, quotes from the opinion of Judge Watts the state- 
188 F.— il 



642 188 FEDERAL EEPORTEB 

ment "that lîen or privilège is part of the remedy seems ciear, when 
we consider the purpose for which they are given. They are the 
means of enforcing a right, which right is always the payment of a 
sum of money; and a privilège or lien is the means of compelling 
such payment, and is analogous to a seizure or exécution." While 
Chief Justice Eustis did not find himself "required to assent" to the 
proposition that the privilège in ail cases pertained exclusively to the 
remedy, he did not dissent therefrom. His décision, however, seems 
to treat privilège as "a right or priority of payment." 

The rule is well settled that priority or préférence in the distribution 
of the estâtes of debtors, whether deceased or insolvent, is not a part 
of the contract, but pertains to the remedy or administration ; that the 
statute laws of the state with respect to such matters hâve no extra- 
territorial force ; and that the enf orcement of such right of préférence 
of priority is dépendent upon the law of the place where the property 
lies and where the court sits. In Harrison v. Sterry. 5 Cranch, 289. 3 
L,. Ed. 104, which involved the distribution under a bill in equity of 
the efïects of a bankrupt, the parties including assignées under both 
American and British commissions of bankruptcy, attaching and other 
creditors, Chief Justice Marshall, in holding that the United States was 
entitled to a claimed préférence over ail other creditors, notwithstand- 
ing the contract was not made within the United States or with Ameri- 
can citizens, said : 

"The law of the place where the contract is made Is, generally speaking, the 
law of the contract; I. e., it is the law by which the contract is expounded. 
Biit the right of priority forms no part of the contract Itself. It is extrinsic, 
and is rather a personal privilège, dépendent on the law of the place where 
the property lies, and where the court sits which is to décide the cause. In 
the famlliar case of the administration of the estate of a deceased person, the 
assets are always distributed according to the dignlty of the debt, as regulated 
hy the law of the country where the représentative of the deceased acts, and 
f rom which he dérives his powers ; not by the law of the country where the 
contract was made." 

In Smith v. Union Bank, 5 Pet. 518, 8 L. Ed. 212, where it was held, 
that the efïects of the intestate in the hands of the administrator were 
to be distributed among his creditors according to the laws of Mary- 
land, where administration was being had, and not according to the 
laws of Virginia, where the intestate resided, and where the debt in 
question was contracted, the doctrine stated by Chief Justice Marshall 
in Harrison v. Sterry was followed. See, also, Scudder v. Bank, 91 
U. S. 406, 412, 413, 23 L. Ed. 245. In Story on the Conflict of Laws, 
the author, after discussing the conflict upon the question of récogni- 
tion by foreign countries of the existence or validity of liens or privi- 
lèges created by the law of the place where the contract was made, says 
(8thEd. § 323): 

"But the récognition of the existence and validity of such liens by foreign 
countries Is not to be confounded with the glving them a superlority or prior- 
ity over ail other liens and rlghts acquired in such foreign countries under 
their own laws, merely because the former liens in the countries where they 
first attacbed had there, by law or by custom such a superiorlty or priority. 
Such a case would présent a very différent question, arislng from a conflict 
of rights equally well founded in the respective countries. Thls very distinc- 



NEW ORLEANS TERMINAL CO. V. HANSON 643 

tlon was polnted out by Mr. Chief Justice Marshall In dellverlng the opinion 
of the court in an Important case (referring to Harrison v. Sterry, siipra). 
His language was: 'ïbe law of a place where a contract Is made Is, generally 
speaking, the law of the contract ; I. e., It is the law by which the contract is 
expounded. But the right of priority forms no part of the contract. It is 
extrinsic, and rather a Personal privilège, dépendent on the place where the 
property lies, and where the court sits which is to décide the cause.' And the 
doctrine was on that occasion expressly applied to the case of a contract 
made In a foreign country with a person résident abroad." 

The courts of Louisiana recognize the rule that priority of payment 
created by the laws of another state will not be recognized by the 
courts of the state in which the property is f ound ; thus : 

In Lee v. His Creditors, 2 La. Ann. 600, where it was held that 
"privilèges" on steamers and other vessels estabHshed by the laws of 
other States, uniess expressly recognized by the laws of Louisiana will 
not be enforced there, it was said : 

"That a failure to aeknowledge, or enforce, liens or privilèges on movables 
created by foreign laws, cannot be consldered as derogating from the comlty 
which prevalls among states In relation to the efCect to be given foreign laws, 
Is obvions. A nation within whose terrltory Personal property Is fou,nd, has 
as entire jurisdiction over It while there as It has over Immovable property. 
Its exercise for ail purposes Is a question of policy, and may be eo-extensive 
■with its authorlty over the latter" ; and agaln "So far as authority is consld- 
ered In relation to confllct of laws in slmilar cases, and the comlty which is to 
be observed In relation to the priority of payment created by the laws of the 
place where the contract is made, the décisions of the highest tribunal in the 
Union are directly and positively against its récognition. Harrison v. Sterry, 
6 Crancb, 298 [3 L, Ed. 104]; Smith, Administrator, y. Union Bank, etc., 5 Pet. 
523 [8 L. Ed. 212]. In the distribution of Insolvent estâtes under our laws, 
we are not aware of any distinction that is recognized among creditors, dé- 
pendent on the place of the origin of the debts. The distribution is made ac- 
cordlng to the order of privilèges and mortgages establlshed in the Code, as 
of the proceeds of a common pledge." 

In Swasey v. Steamer Montgomery, 12 La. Ann. 800, the question 
was presented whether a claim based on a statute of the state of Ala- 
bama, granting a privilège to demand toll of vessels passing througn 
a channel, should be classed as a privilège in the distribution of the 
proceeds of the steamer. The claimed privilège was denied, the court 
saying : 

"We consider It settled under the décision in the case of Lee v. His Cred- 
itors, 2 La. Ann. 600, that privilèges must be regulated by the law of the 
forum, and that none can be claimed except such as are expressly granted in 
the CivU Code." 

In Cause v. Bullard, 16 La. Ann. 107, 108, the intervener claimed a 
privilège by reason of the purchase of property in question in the 
State of Georgia, by a citizen of that state, and with funds raised 
therein. In denying this privilège the court said: 

"It Is perfectly immaterial whether, under the f acts of this case, the Inter- 
vener could claim a privilège in the state of Georgia ; for this court has, on 
more than one occasion, said that we are to look to the provisions of our own 
laws for the existence and enforcement of privilèges. Lee v. His Creditors, 
2 La. Ann. 600; Wlekham v. Levistones et al., 11 hn. Ann. 702; Swasey & 
Co. V. Steamer Montgomery, 12 La. Ann. 800." 



644 188 FEDERAL EBPOETBH 

Claimant invokes Carlin v. Gordy, 32 La. Ann. 1285, as holding, 
that the vendor's privilège is not a matter of remedy or administration. 
It is true that in that case the court used this language : 

"The privilège of the vendor is fouinded on the rlght of property. Payment 
of the price is essential to the vestlng of the Indefeasible title in the vendee. 
The vendor's rights to, and securities for, the payment of the price hâve always 
commended themselves to the favorable considération of our courts." 

This was said, however, in a case involving a contest in the Louis- 
iana courts between the mortgagee of property and the vendor, who 
had levied "in exécution of her judgment recognizing her vendor's 
privilège thereon," created by the laws of Louisiana. We see nothing 
in this décision opposed to the viev/ we hâve taken of the nature of 
this privilège. 

Claimant relies, moreover, upon the familiar rule that while the 
statutes of a state hâve in themselves no extraterritorial force, yet 
rights acquired under them are always enforced by comity in the state 
and national courts in other states, uniess they are opposed to public 
policy or laws of the forum. 

But as we hâve already said, we think the privilège relied upon hère 
is not a right acquired by contract under the laws of Louisiana, but 
is merely a préférence relating to the distribution of the property or 
estâtes of debtors, and as such only a matter of remedy or adminis- 
tration with respect to which the doctrine of comity has no applica- 
tion. The statutes of neither Arkansas nor Tennessee recognize the 
existence of the vendor's privilège claimed hère, and of course pro- 
vide no machinery for enforcing it under ordinary circumstances. In 
view of the nature and extent of the receivership proceedings, the 
question of forum as between the two states is immaterial. 

In view of the conclusion we hâve reached as to the nature of the 
claimed privilège, it is not necessary to consider whether the enforce- 
ment of a vendor's lien created by contract would be opposed to the 
public policy of the State of Arkansas. Nor is it material to this in- 
quiry that the Louisiana courts recognize, as is asserted, the doctrine 
of comity as to contract rights to the extent of making it a matter not 
only of judicial récognition, but of Code requirement. The views we 
hâve expressed make it also unnecessary to consider the proposition 
urged by the receiver, that the property in question has become im- 
movable by reason of its being affixed to the real estate, and thus not 
subject to the privilège under the Louisiana Code through failure to 
give the notice required in order to préserve the privilège as to im- 
movable property. Nor is it necessary to détermine whether the re- 
ceivership ordered under the bill in this cause operated as an attach- 
ment in favor of gênerai creditors of the Compress Company. It is 
enough to say that the proceeding is one for the administration of the 
estate of an insolvent corporation, and that the privilège asserted re- 
lates to the assets of such insolvent corporation, so in the course of 
administration. 

For the reasons we hâve stated, we are of opinion that the claimant 
had no privilège or lien upon the property in question enforceable in 



HUNTEB Y. ILLINOIS CENT. E. CO. 64=5 

the court to which application was made, and in which administra- 
tion of the affairs of the insolvent corporation is being had. 

It follows that the Circuit Court rightly denied the privilège as- 
serted, and that its order should be affirmed. 



HUNTER V. ILLINOIS CENT. R. CO. 

(Circuit Court of Appeals, Sixth Circuit. June 6, 1911.) 

No. 2,107. 

1. Rbmoval or Causes (§ 86*) — Sufïïcienct of Pétition — Feaudulent 

JoiNDEB OF Défendants. 

A pétition for removal, flled by one of a number of défendants in an 
action for négligence, whicb cbarges that no grounds of action are al- 
légea by plaintifC or exist against Its codefendants, and, that they were 
fraudulently joined to deprive petitioner of its right to remove the case, 
shows a right of removal on its face, where the requisite jurisdictional 
facts are stated, and, unless issue Is joined on such allégations, a motion 
to remand is properly denied. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. § 172; 
Dec. Dig. § 86.* 

Fraudulent Joinder of parties to prevent removal, eee note to OfCner 
V. Chicago & E. R. Co., 78 O. C. A. 362.] 

2. Removal of Causes (§ 86*) — Pétition for Removal— Veeification. 

A pétition for removal Is not required to be verified. 
[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. § 177; 
Dec. Dig. § 86.*] 

8. Removal of Causes (§ 86*) — Pbocebdings Afteh Removai^-Leave to 
Plead to Pétition— -Discbetion of Couet. 

The déniai of a motion for leave to plead to a pétition for removal, not 
made untll more than five months after a motion to remand had been 
oveiTuled, and when the case was at issue and ready for trial on the 
merits, was within the discrétion of the court. 

[Ed. Note.— For other cases, see Removal of Causes, Dec. Dig. § 86.*] 

4. Masteb and Servant (§§ 285, 286, 289*) — Action fob Injuet to Seevant 
— Questions fob Juky. 

Plalntiff's intestate, who was a brakeman In the employ of défendant 
railroad company, was liilled in maklng a flying switch by a collision be- 
tween the car on which he was riding and other cars standing on the 
switch track. A single box car was switched, with deceased on the top, 
and it was shown without contradiction that he attempted to stop the 
car by setting the brakes, but was unable to check it and it ran into an 
iron coal car. Deceased then got upon that and tried to set its brakes, 
but could accomplish nothing, and both cars erashed at high speed into 
a row of flat cars, causing the wreck In which he was killed. The brake 
mechanism on both the moving cars was found after the collision to be 
broken and inoperative. Held, that the évidence was sufBcient to re- 
quire submission to the jury of the question whether or not the defects 
existed prier to the collision as well as the questions of the négligence of 
défendant and the contributory négligence of deceased. 

[Ed. Note.— For other cases, see Master and Servant, Dec. Dig. §§ 285, 

286, 289.*] 

•For other cases see same toplc & § number in Dec. & Am. Dlgs. 1907 to date. & Rep'r Indexes 



648 188 FMDERAL EEPORTBB 

5. Masteb and Servant (§ 265*) — Action foe Injurt to Servant— Doctrine 
op Res ïpsa Loqitittjr. 

There Is no hard and fast rule that tbe doctrine of res ipsa loquitur 
can in no case bé applicable in a suit by an employé against an employei 
for négligent injuries. 

[Ed. Note. — For other cases, see Master and Servant, Cent. Dig. § 881 ; 
Dec. Dig. § 265.*] 

In Error to the Circuit Court of the United States for the Western 
District of Kentucky. 

Action at law by J. H. Hunter, administrator of S. V. Hunter, de- 
ceased, against the Illinois Central Railroad Company. Judgment for 
défendant, and plaintiff brings error. Reversed. 

Newton Belcher (T. J. Sparks, Belcher & Sparks, and C. A. Denny, 
of counsel), for plaintiff in error. 

Edmund F. Trabue, John C. Doolan, and Attilla Cox, Jr. (Blewett 
Lee, G. L. Sivley, J. D. Atchison, Taylor & Eaves, and R. Y. Thomas, 
Jr., of counsel), for défendant in error. 

Before SEVERENS and KNAPPEN, Circuit Judges, and yA- 
TER, District Judge. 

KNAPPEN, Circuit Judge. The plaintiff in error brought suit in 
a circuit court of the state of Kentucky to recover damages on ac- 
count of the death of his intestate while engaged as a brakeman in 
the employ of the Illinois Central Railroad Company in making a fly- 
ing switch. The pétition alleged, and the évidence tended to show, 
that the deceased was killed by being crushed in a collision between 
a runaway freight car on which he was riding and other cars standing 
upon a switch track, by reason of the failure of certain brakes to work. 
Both plaintiff and deceased were citizens of Kentucky. The Illinois 
Central Railroad Company (défendant in error) is a citizen of Illinois. 
The plaintiff joined as défendants one Bash, the conductor in charge 
of the switchin^ opérations in question, and the Greenville Coal Com- 
pany, the owner of the switch track on which the accident occurred. 
Both Bash and the coal company were citizens of Kentucky. The 
plaintiff's pétition alleged that the death of deceased was occasioned 
Ijy the joint and concurring négligence of the three défendants. The 
railroad company filed in the state court a pétition for the removal 
of the case to the fédéral court, upon the ground that there was pre- 
sented a separable controversy as to it, and that the other défendants 
were joined for the fraudulent purpose of preventing removal of the 
cause to the fédéral court. The state court approved the removal 
bond, but denied the pétition for removal. The transcript was accord- 
ingly filed in the court below. Without joining issue upon the pétition 
for removal, the plaintiff moved in the court below to remand the case 
to the state court upon the face of the proceedings. The motion to 
remand was denied. Several months later plaintiff moved for leave 
to answer and plead to the pétition for removal, which motion was 
likewise denied. The case proceeded to trial, and at the close of the 
évidence the court directed a verdict in favor of the défendant rail- 
road company. The errors assigned bring up for review: First, the 

•For other cases see same tople & § numbek In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



HUNTER V. ILLINOIS CENT. E. CO. 647 

refusai to remand the case to the state court; second, the refusai to 
permit the filing of plea to the pétition for removal; and, third, the 
directing of verdict and judgment for défendant. 

[1] 1. In our opinion the motion to remand was properly denied. 
The railroad Company is alleged, in the plaintiff's pétition, to hâve 
been négligent in respect to the manner of opération of the train, en- 
gine, and cars upon which the deceased was working, and in furnish- 
ing a car equipped with brakes net in a suitable condition to stop 
or control the car. The conductor's alleged négligence related to the 
manner of the opération of the train, engine, and cars upon which 
deceased was working; it being also alleged that "he knew, and by 
the exercise of ordinary care could hâve known," of the def ective and 
dangerous condition of the car. The coal company was charged with 
négligence in placing and allowing the cars to remain at the lower end 
of the switch, and at the same time leaving the switch open. 

In the view we take of the case, it is unnecessary to décide whether 
plaintiff's pétition on its face shows a joint liability on the part of 
the conductor and the coal company. The defendant's pétition for 
removal alleged that "the plaintif! at the time he commenced said ac- 
tion well knew that he had no cause of action against said W. H. 
Bash or Greenville Coal Company, or either of them" ; and, af ter al- 
leging that plaintiff's pétition states no cause of action against the 
conductor or the coal company, allèges that plaintiff — 

"knew that the statement In his pétition that the said injuries were caused 
by the gross négligence or by the eoneurring négligence or any négligence of 
said W. H. Bash or Greenville Coal Company eoneurring with any négligence 
on the part of this petitioner was untrue when he filed said pétition, and 
your petitioner says that its said codefendants * * « were not, nor was 
either of them, when this action was commenced, proper parties to this action, 
and neither of them has ever been a proper party to this action or has ever 
had any agency in causing said injury to * * * plaintifC's intestate, and 
plaintifC well knew ail said facts as herein stated to be true when he instituted 
this action, and your petitioner represents and states that when the said 
action was instituted that the défendant W. H. Bash was in no way respon- 
sible for the injuries eomplained of in the pétition and had no part in causing 
same, and in like manner the Greenville Coal Company was in no way re- 
sponsible for the injuries eomplained of in the pétition and had no part in 
causing same, and the plaintiff well knowing thèse facts to be true, and show^ 
ing by his pétition that such facts were true, nevertheless stated in his 
pétition that the injuries eomplained of therein were caused by the alleged 
gross négligence and carelessness of said" conductor and coal company. 

The pétition for removal further alleged that the plaintiff has in- 
vented and applied to the conductor and the coal company — 

"varions epithets imputing négligence and carelessness, but he has refrained 
from stating any facts showing such négligence or carelessness, and in his 
pétition in this case the plaintiff by design invented and used the epithets 
imputing négligence and carelessness to said W. H. Bash and Greenville Coal 
Company with the pretext and for the fraudulent purpose of claiming a 
color of right to unife them as codefendants in this action with this défend- 
ant, but without any real intention to claim or expectation of recovering a 
judgment against said W. H. Bash or Greenville Coal Company, but with the 
sole purpose and intention of stating in his pétition such a case as would 
seem to niake said W. H. Bash and Greenville Coal Company or one of them 
joint défendants with this petitioner and thereby deprive this petitioner of 
the rIght to remove this action to the United States Circuit Court for the 



648 188 FEDERAL HEPOETBB 

■Western District of Kentucky, and to defeat the right secured to this défend- 
ant by the Constitution and laws of tàe United States of America to liave a 
separate controversy between it and the plaintifC in this action removed to 
and tried in the United States Circuit Court for the Western District of 
Kentucky." 

The pétition for removal also stated that défendant would "con- 
trovert ail daims of négligence asserted against it by the plaintiff in 
his pétition." If the facts alleged in the pétition for removal were 
true, the state court had no jurisdiction over the case. It follows that 
a cause for removal was stated on the face of the pétition therefor. 
Wecker v. National Enameling & Stamping Co., 204 U. S. 176, 27 
Sup. Ct. 184, 51 L. Ed. 430; Dishon v. Cincinnati, N. O. & T. P. 
R. Co. (Sixth Circuit) 133 Fed. 471, 474, 66 C. C. A. 345; McAlister 
V. Chesapeake & O. R. Co. (Sixth Circuit) 157 Fed. 740, 743, 85 
C. C. A. 316; Donovan v. Wells Fargo & Co. (Sixth Circuit) 169 
Fed. 363, 368, 94 C. C. A. 609, 22 L. R. A. (N. S.) 1250. We think 
there is nothing in Illinois Cent. R. Co. v. Sheegog, 215 U. S. 308, 
30 Sup. Ct. 101, 54 L. Ed. 208, in conflict with this view. That case, 
so far as concerns the question we are considering, turned upon the 
proposition that the facts alleged and proved against the lessee raii- 
road made it and the lessor jointly liabîe as matter of law, under the 
décisions of the courts of Kentucky, and that the joinder of the lessor 
and lessee could thus not be f raudulent. Such question does not arise 
hère. The questions of fact asserted in the removal pétition were not 
triable in the state court. That court could only consider whether the 
pétition upon its face showed a right of removal. Such right of re- 
moval being, in our opinion, as already stated, shown upon the face 
of the pétition therefor, the state court lost jurisdiction over the re- 
moving défendant, and the court below, by the filing of the transcript, 
obtained such jurisdiction. Chesapeake & O. R. Co. v. McCabe, 213 
U. S. 207, 29 Sup. Ct. 430, 53 L. Ed. 765 ; Illinois Cent. R. Co. v. 
Sheeg;og, 215 U. S. 308, 316, 30 Sup. Ct. 101, 54 L. Ed. 208. Had 
plaintiff denied the allégations of fact in the pétition for removal, 
the burden of proving the same would hâve rested upon défendant. 

[2] It is urged, however, that a pétition for removal, unsupported 
by proof showing that the joinder was fraudulent, is insufficient, and 
that the motion to remand should prevail, without déniai of the facts 
stated in the pétition for removal. In fact, the pétition for removal 
in this case was verified under oath (but upon belief) by the principal 
officer of the railroad company in Kentucky. We do not, however, un- 
derstand the rule to be as contended by plaintiff. In Dishon v. Cincin- 
nati, N. O. & T. P. R. Co., supra, the pétition for removal was veri- 
fied by the afîidavit of the gênerai manager of the railroad company. 
As to some of the allégations of fact in the pétition the manager could 
hâve had personal knowledge. As to others he manifestly could not 
hâve had such knowledge. In McAlister v. Chesapeake & O. R. Co., 
supra, it does not appear from the report that the pétition was verified. 
In Wecker v. National Enameling Co., supra, the questions of fact 
were tried. out upon affidavits filed by each party. In Donovan v. 
Wells Fargo & Co., sùpra, it was expressly held, and we think rightly, 
by the Circuit Court of Appeals of the Eighth Circuit, that a removal 



HUNTEB V. ILLINOIS CKNT. E. CO. 649 

pétition îs not defective because not verified, as the statute requires no 
vérification. The motion to remand amounted practically to a demur- 
rer to the pétition for removal as stating no suiîîcient ground there- 
for, and, no issue having been made upon the averments in fact of 
fraudulent joinder and nonliability of the résident défendants, the mo- 
tion to remand was properly denied. Dishon v. Cincinnati, N. O. & 
T. P. R. Co., supra; Kentucky v. Powers, 201 U. S. 1, 33, 34, 26 
Sup. Ct. 387, 50 L. Ed. 633 ; Donovan v. Wells Fargo & Co., supra. 
|3] 2. We think the circuit court did not err in refusing plain- 
tiff's motion for leave to plead to defendant's pétition for removal. 
The motion to remand was denied on November 22d, and on that day 
the case was continued for the term by consent. On the next day the 
railroad company filed its answer to plaintifif's pétition, and issue was 
thus joined upon the merits of the action. On May 2d foUowing, 
and on the same day on which plaintifï's amended pétition was filed, 
and when the cause was, as we infer, upon the calendar of the May 
term for trial, being the day before the trial was actually entered upon, 
motion was presentedi for leave to answer the pétition for removal and 
to plead thereto in abatement. The bill of exceptions contains the fol- 
lowing with référence to the déniai of the motion : 

"The court overruled the motion upon the ground that at the last term 
the plaintiff moved the court to remand the action, which motion, after 
argument, was overruled. The plaintife had the option to proceed this way 
or to flle an answer to the pétition for removal. He chose the former, and 
thus made his élection to make the motion to remand without answering the 
pétition for removal and denying its allégations. He had hls day in court 
on the question of remanding the case. Ile should be bound by the élection, 
and the court was of opinion that it would be bad practice to permit parties 
thus to speculate upon its action upon any proposition. There can be no 
object in making the présent motion except as the basis of another motion to 
remand the case. This matter was adjudicated and closed at the la^t term, 
and the court thought It would be an abuse of discrétion to reopen it at this 
term." 

The court also expressed a doubt whether plaintifï's pétition states 
a cause of action against the conductor and the coal company. We 
think that in denying the motion to plead, under the circumstances 
shown, the court did not abuse its discrétion. The request to join 
issue upon the pétition for removal was delayed upwards of five months 
after the déniai of the motion to remand upon the face of the record, 
more than five months after the continuance of the case by consent to 
the next term of court and the joindter of issue upon the merits, and 
upon the very eve of trial upon the merits. No excuse for the delay is 
suggested by the record. Assuming, without deciding, that the plaintiff 
should hâve been permitted, upon a seasonable motion, to plead to the 
pétition for removal, notwithstanding the déniai of the motion to re- 
mand upon the face of the record, such request to plead should bave 
been seasonably made. We think it was not seasonably made when pre- 
sented at the late date and under the circumstances above stated. In 
such case permission to join issue upon the facts contained in the re- 
moval pétition was, at the most, addressed to the discrétion of the 
court, and it does not appear that such discrétion was not properly ex- 
ercised in denying the motion. It is true that the district judge who 



650 188 FEDERAL EEPORTBR 

denied this motion had, in the case of Boatner v. American Express 
Co. (C. C.) 122 Fed. 714, stated that it was the practice in his district 
"to treat allégations in a pétition for removal that défendants were 
joined for the sole purpose of removal, in fraud of the jurisdiction of 
the court, as traversed, without an express déniai, and, on a motion to 
remand, to place the burden of proving such allégation on the défend- 
ant." But the existence of such practice did not, under the circum- 
stance of this case, require the granting of leave to plead under the 
circumstances presented hère. Moreover, the Boatner Case was de- 
cided previously to the décisions of this court in Dishon v. Cincinnati, 
N. O. & T. P. R. Co. and McAlister v. Chesapeal<:e & Ohio R. Co., 
supra. Had it appeared upon the trial of the case upon the merits 
that there was no separable controversy as to the removing défendant, 
it would hâve been the duty of the court to remand the cause. But 
such question does not arise upon this record. 

[4] 3. In our opinion, however, the court erred in directing verdict 
and judgment for the défendant. The plaintiff's testimony tendedi to 
show that in making the switch the deceased was upon a box car and 
apparently making vigorous efforts to stop it by working the brakes; 
that he was unable to check the car, which ran into an iron coal car ; 
that décèdent then got upon the coal car and attempted to stop it by 
working its brakes, but was unable to accomplish anything; that the 
two cars so out from under control ran rapidly down the track until 
they dashed into one of a row of flat cars, killing the décèdent almost 
immediately. The jury had the right to infer from the testimony not 
only that the deceased was using his best efforts to stop the box car, 
but that upon his failure to do so, and in continuance of such efforts, 
he went upon the iron coal car and attempted to apply the brakes to 
that car without effect ; and that his death was caused in spite of his 
efforts to save himself and to prevent the imminent collision. It is 
urged that, had he remained upon the box car, he could not hâve been 
seriously injured, and that, had he kept off the front end of the coal 
car, he would not hâve been caught in the collision of that car with 
the flat car. But, in view oî the emergency which plaintiff's testi- 
mony tended to show, the considérations suggested were, at best, ad- 
dressed to the jury. We cannot say that the jury could not properly 
hâve found that the deceased acted with prudence under the existing 
emergency in leaving an ûncontrollable runaway car, and seeking to 
accomplish its stoppage by checking the car in front of it; nor that 
the deceased acted improperly, even if his death occurred in the at- 
tempt to leave the coal car after failing to control it, and in order to 
avoid colHsion with the flat cars. And what we hâve said answers 
the contention that the defective brakes of the box car could not hâve 
been the proximate cause of the accident. There was testimony that 
upon an examination of the box car following the accident the brake.= 
were found "hanging from the wheel," and that, according to the testi- 
mony of two witnesses, a brake shoe was gone from one side of the 
box car, and, by the testimony of a third witness, that a brake was 
missing from the other side of the car; also, that the brake chain on 
the coal car was, immediately following the accident, found broken. 



GKAHAM V. UNITED STATES 651 

There was testînxmy that the box car had been brought in for the pur- 
pose of taking on and hauling out certain household goods. The'ex- 
amination of the box car was made by two witnesses the day after 
the accident. It does not affirmatively appear when the examination 
by the third witness was made ; but his testimony is consistent with an 
examination on the day of the accident. Indeed, defendant's counsel, 
in their brief, say that some of the witnesses who examined the box 
car "saw it the same day of, and others the day after, the accident." 
The défendant offered no testimony. The trial judge in directing ver- 
dict for the défendant cited Patton v. Texas & Pacific Ry. Co., 179 U. 
S. 658, 21 Sup. Ct. 275, 45 L. Ed. 361, Carnegie Steel Co. v. Byers, 
149 Fed. 667, 82 C. C. A. 115, S L. R. A. (N. S.) 677, Moit v. Ihinois 
Central R. Co., 153 Fed. 354, 82 C. C. A. 430, and Patton v. Illinois 
Central R. Co. (C. C.) 179 Fed. 530. Thèse cases establish the propo- 
sition that in the case of an accident to an employé the fact of the ac- 
cident raises no presumption of négligence on the part of the employer. 

[5] As pointed out, however, by this court in Byers v. Carnegie 
Steel Co., 159 Fed. 347, 86 C. C. A. 347, 16 L. R. A. (N. S.) 214, 
there is "no hard and fast rule that the doctrine of res ipsa loquitur 
can in no case be applicable in a suit by an employé against an employer 
for négligent injuries." We think, however, that plaintiff was not 
compelled, in order to entitle him to go to the jury, to rely upon the 
doctrine referred to. In view of the uncontradicted testimony that de- 
ceased was unable to produce any efifect upon either the box car or 
the coal car by the application of the brakes, the jury would hâve been 
justified in inferring that the brakes upon both cars were defective 
previous to the accident. And, in view of the fact that there was no 
testimony whatever of any inspection of the cars in question by the 
railroad Company previous to the accident, we think that in the case 
of the car just brought in, and lacking at the time of the examination 
not merely one, but two, brake shoes, and in view of the fact that 
the coal car likewise had a broken brake chain, it would hâve been 
open to the jury to infer that the railroad company was négligent with 
respect to the missing brakes upon the box car. 

The judgment of the circuit court should, accordingly, be reversed, 
and a new ttial ordered. 



GRAHAM et al. v. UNITED STATES. 

(Circuit Court of Appeals, Fourth Circuit June 19, 1911.) 

No. 1,014. 

1. Teial (i 110*) — Présentation of Evidence. 

In an action by the United States on the bond of a contractor on wMeh 
a surety company was surety, the admission in évidence of letters written 
by the surety company was not subject to any just objection because they 
were written on letter heads of its own showing that its capital was over 
$^1,000,000. 

[Ed. Note. — For other cases, see Trial, Dec. Dlg. § 110.*] 

•For other casea see same topic & § numbbb m Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



652 188 FKDERAL REPORTER 

2. Saij» (§ 83*) — Construction of Conteact — Goods Bought F. 0. B. Cabs— 

DUTT TO FUBNISH CAES. 

It Is the gênerai rule, In the absence of agreement or a practice to tbe 
contrary, that, where goods are bought f. o. b. cars, the obligation is upon 
the buyer to fumish the cars necessary in transportation. 

[ETd. Note.— For other cases, see Sales, Cent. Dig. §§ 224r-227; Dec. 
Dlg. § 83.*] 
8. CoNTRACTS (§ 262*) — RiGHT OF Rescission^Waivee of Beeach. 

The right of a défendant, who contracted to dress building stone to 
*e delivered to him by the other party, to rescind because of delay in 
dellvery of the stone, was lost, where he falled to act promptly, but re- 
celved and dressed a large part of the stone after shipments had been 
resumed. 

[Ed. Note.— For other cases, see Contraets, Cent. Dig. §§ 1181-1183; 
Dec. Dig. § 262.*] 

4. llNriED States (§ 72*) — Contbact for Putslic Work — Power to Annul. 

Act March 3, 1903, c. 1007, 32 Stat. 1102, making an appropriation for 
a new building for the Smithsonian Institution, authorlzed the Superin- 
tendent of Buildings and Grounds, Library of Oongress, to make the con- 
traets for the work and dlsburse the money therefor. He entered into 
a contract with défendant to do certain work, which provided that on 
defendant's fallure to faithfully prosecute the work the superlntendent or 
hls suceessor should hâve power, "wlth the sanction of the régents of 
the Smithsonian Institution," to annul the contract. The régents include 
the Chief Justice and Vice Président of the United States and Senators, 
and meet only about three times each year, leavlng ail matters of détail 
to the secretary. Held, that an annulment of the contract by the Super- 
lntendent of Buildings and Grounds with the concurrence of the secre- 
tary of^the Institution was légal and efCective. 

[Ed. Note. — For other cases, see United States, Cent. Dig. § 55; Dec. 
Dig. § 72.*] 

6. United States (§ 67*) — Contractoe's Bond — Dischaeqe oF/ Surett— 
Change in Conteact of Principal. 

A bonding company, which for a monetary considération becomes sure- 
ty for the performance of a contract to do work for the United States, 
wîll not be released from liabllity because of changes made in the con- 
tract, in aecordance with Its provisions and with the assent of the con- 
traetor, unless it Is shown that it was injuriously affected by such 
changes. 

[Ed. Note. — For other cases, see United States, Cent. Dig. § 50; Dec. 
Dig. § 67.*] 

In Error to the Circuit Court of the United States for the District 
of Maryland, at Baltimore. 

Action at law by the United States against Frank F. Graham and 
the Guaranty & Surety Company. Judgnient for plaintiff, and de- 
fendants bring error. Affirmed. 

In the Sundry Civil Appropriation Act, approved March 3, 1903, c. 1007, 32 
Stat. 1102, Congress enacted: 

"To enable the Régents of the Smithsonian Institution to commence the 
érection of a suitable fireproof building with granité fronts, for the use of the 
National Muséum, ta be erected on the north side of the Mail, between NInth 
and Twelfth streets, Northwest, substantially In aecordance with the plan A, 
prepared and submitted to congress by the Secretary of the Smithsonian Insti- 
tution under the provisions of the act approved June twenty-elghth, nineteen 
hundred and two, two hundred and fifty thousand dollars. Sald building 
complète, Including heatlng and ventilating apparatus and elevators, shall cost 
not to exeeed three million flve hundred thousand dollars, and a contract 
or contraets for its çompletion is hereby authorlzed to be entered into sub.iect 

•For other cases see same toplc & § numbbk in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



GRAHAM V. UNITED STATES 653 

to appropriations to be made by Congress. The construction sball be In charge 
of Bernard R. Green, Superintendent of Buildings and Grounds, Library of 
Congress, wbo shall make tbe contracts hereln authorized and disburse ail 
appropriations made for tlie work, and shall receive as fuU compensation for 
hls services hereunder the sum of two thousand dollars annually in addition 
to bis présent salary, to be paid out of said appropriations." 

On October 23, 3906, Frank F. Graham entered into a contract wlth Ber- 
nard R. Green, "actlng under the direction of tbe Régents of the Smithsonian 
Institution, for and in behalf of the United States of America," whereby he 
(Graham) agreed to "transport from the quarry, eut, box and dellver com- 
plète, ail the Bethel granité," to be furnished by Green "free on board cars 
at the quarry at Bethel, Vt., required for that portion of the South Pavillon 
above the first floor level of the said building for the National Muséum in 
Washington, District of Columbia, described as part 'G' in the spécifications, 
the drawings therein referred to, and the instructions and gênerai conditions, 
ail for the gross sum of one hundred and forty nine thousand dollars." To 
secure the performance of hls contract Graham executed bond in the penalty 
of $-30,000 with the Title Guaranty & Surety Company as surety. This con- 
tract, among other things, provided that, if Graham failed "to prosecute falth- 
fully and dlligently the work in accordance with the spécifications and re- 
quirements of this contract, then Green or his successor legally appointed 
should hâve power with the sanction of the Régents of the Smithsonian In- 
stitution to annul this contract by giving notice in writlng to that effect" to 
Graham. That the United States should hâve the rlght to recover whatever 
Bums might be required to complète the contract after such annulment, in 
excess of Graham's contract priée, and apply to such eompletion of the work 
any sums not paid over to Graham at the tlme for work done by him. On 
March 18, 1908, Green, alleging that Graham had stopped work and failed 
to prosecute it faithfully and dlligently as the contract required, gave notice 
to Graham in writing of its annulment, and subsequently the work was done 
and completed by the government under Green's supervision at a cost in excess 
of Graham's contract price, after taklng into aceount prior payments, of $58,- 
080.75. Thereupon the United States instituted this suit upon Graham's bond 
and after a protracted jury trial, on June 25, 1910, secured a verdict for $50,- 
000 against Graham and the surety eompany, upon whlch verdict judgment 
was entered by the court on June 28, 1910, for said sum of $50,000 and $280.19 
coste of suit. To this judgment this writ of error has been sued out. 

Charles F. Harley (George R. Gaither, John B. A. Wheltle, and 
Burdette B. Webster, on the brief), for plaintiffs in error. 

John Philip Hill, U. S. Atty., and J. Craig McLanahan, Asst. U. 
S. Atty., for the United States. 

Before PRITCHARD, Circuit Judge, and DAYTON and CON- 
NOR, District Judges. 

DAYTON, District Judge (after stating the facts as above). Gra- 
ham filed some 14 and the surety eompany 15 pleas in défense of this 
suit. The first 14 filed by the surety eompany are substantially the 
same as those filed by Graham, and both sets could hâve been well 
reduced to 4, one the gênerai issue, the other 3 setting forth the 
charges : First, that the contract was not annuled lawf ully by Green ; 
second, that Green had not performed the conditions of the contract 
required of him in the furnishing of the granité properly to Graham, 
whereby and by reason whereof he had broken the contract, and Gra- 
ham was entitled to abandon it ; third, that the expenditures after an- 
nulment of the contract by Green in the eompletion of the work were 
not reasonable and fair. The fifteenth plea filed specially by the sure- 
ty eompany set forth that, without its knowledge and assent, materia! 
altérations had been made in the contract, whereby it became released 



654 188 FEDERAL REPORTER 

of its surety obligation. Thus analyzed it will be perceîved that of 
thèse three substantial défenses, other than the gênerai issue, set up 
by thèse défendants jointly in their multitude of pleas, the last two 
presented wholly questions of fact which were proper to be submitted 
to the jury under instructions of the court. During the course of 
the trial, extended over some 28 days, 39 separate bills of exception 
were taken, and 47 assignments of error are now hère made. 

[1] It could hardly be expected of us to consider thèse excep- 
tions, and assignments in détail. The great majority relate to the 
action of the court in admitting and refusing testimony, and to 
remarks of the court and opposing counsel in the course of trial. 
Especial stress is hère made by counsel in argument and brief on the 
fact that the government's counsel was permitted to introduce in 
évidence written communications from the surety company, which 
set forth upon their printed heads the fact that its capital and surplus 
was over $1,000,000, because it is asserted in the brief that: 

"It Is diffleult for a person, natural or artiflcial, to secure a fair trial in a 
case of thls kind against the United States, and the line against évidence and 
argument of this character should be fairly and flrmly drawn." 

We are not prepared to concur in the assertion of fact contained 
in this proposition. Nor can we quite see what line can be firmly 
drawn against the introduction of a letter headed communication 
which letter head bas been promulgated, published, and used by the 
surety company for no other purpose that we can conceive of than 
that of furnishing a brief, accurate description of itself, its address, 
its responsible officers, the nature of its business and its financial 
ability to conduct such business, and it is far from clear to us how 
such défendant could be prejudiced by this its own act, especially before 
a jury charged, as in this case, by the court that : 

"The same principles of right and justice which prevall between Indlviduals 
should control the construction and carrying ont of contracts between the gov- 
ernment and those who contract wlth it or its agents." 

A careful examination of ail this kind of exceptions has convinced 
us that they présent no just ground of complaint on the part of the 
défendants, and they will be dismissed without further considération. 
Others of thèse exceptions relate to the refusai of the court to give 
to the jury 27 spécial instructions or spécial prayers. The very num- 
ber of thèse was calculated to confuse and mislead the jury, and a 
number were not at ail warranted by the évidence. The court, we 
think, very wisely, concluded to give a gênerai charge touching the 
matters in controversy, and, so far as we can see, fairly and impar- 
tially submitted to the jury the détermination of the facts in dispute. 

In this view of the matter but few légal propositions remain in 
the case for us to consider. First, under the terms of the contract, 
was the obligation upon Green, acting for the governraent, to furnish 
Graham with the railroad cars necessary for the transportation of 
the granité blocks from the quarry in Vermont to his yard in Balti- 
more? 

The contract, as hereinbefore stated, required Graham to "trans- 
port from the quarry, eut, box and deliver complète" the granité 



GBAHÂM V. UNITED STATES 655 

which was to be furnished by Green "free on board cars at the 
quarry." At the beginning a car famine existed, and Graham com- 
plained of the delay resulting thereirom. It is insisted that Green's 
obligation to deUver the granité "free on board the cars" required 
him to furnish the cars. On the other hand, it is insisted that Gra- 
ham's obligation "to transport from the quarry, eut, box and deliver 
complète" required him to furnish the cars. 

The court seems to hâve taken a middle ground and told the jury 
that: 

"In a contract of that kind, I thlnk there was an obligation on both parties 
to furnish cars, that reasonable eflforts should be made to accommodate each 
other." 

[2,3] It seems to us, without entering into an extended discus- 
sion of the question, that the lower court's construction of the law 
was very fair and libéral to défendants, for the gênerai rule is pretty 
well established that, where the goods are bought f. o. b. cars, the 
obligation is upon tbe buyer to furnish the cars necessary in trans- 
portation. See 35 Cyc. 197, and authorities cited; also, note to Samuel 
M. Lawder & Sons Co. v. Albert Mackie Grocery Co., in 62 L. R. A. 
795, where the proposition is discussed. A sound reason for this rule 
is apparent. The transportation company becomes by law agent or 
bailee of the buyer, in conséquence the buyer, under ail ordinary 
conditions and in the absence of contract provisions to ther contrary, 
should be permitted to sélect the agent of his choice. It is true that 
this gênerai rule may be shown to hâve been modified or reversed 
by the agreement or conduct of the parties, but there is nothing in the 
case hère to cause us to believe that it was. But aside from this, 
Graham, if he desired to rely upon this delay as ground for abandon- 
ment of his contract, was required to act promptly at the time. For 
some months he complained ôf it, then, the car famine being over 
and the stone arriving in large quantities, he proceeded with the 
work and did a large part of it. This must be held in any event to 
be a waiver of any right he had, if any, to rescind. 

[4] Second. Was this contract legally annulled by Green, whereby 
he was authorized, on behalf of the government, to finish the work at 
the contractor's cost? 

It is most earnestly insisted by counsel for thèse défendants that 
it was not because, it is alleged, the rescission was not made "with 
the sanction of the Régents of the Smithsonian Institute." 

It seems clear from the évidence that Graham proceeded with the 
work he had contracted to do during the whole time limit of the 
contract, and until it had, by tacit consent, been extended by Green 
for some months, then he discharged his mcn and told them to seek 
other employment, was requested by Green by letter to proceed with 
the work to the completion of the contract, and replied, through his 
attorney, that he had stopped work "for his financial welfare in view 
of the fact of the damage he bas sustained * * * by reason of 
the manner in which this matter bas been gone on with on the part 
of the government, and their agents in the matter." This was on 
March 14, 1908. On February 10, 1908, he had stated in a letter to 



656 188 FSDBRAL EBPORTBE 

Green, "I intend to dévote my entire yard to muséum work, until 
I see the job about completed." It is true that in his attorney's letter, 
from which we hâve first above quoted, the statement is made that 
"if this matter can be in any way amicably adjusted he should be glad 
to do anything that may be fair and équitable between the parties." 
What did he mean by this adjustment, the completion of the contract ? 
Hardly, for he had discharged the men by whom the work would 
hâve had to be done and told them to seek other employment. Could 
he hâve meant anything- else than that he had thrown up the contract, 
but was ready to compromise and adjust his claim of damages for 
delays for changes for larger stone furnished under the terms "net 
dimension blocks" and for times of payment? If this question is to 
be answered in the négative, then hère was a clear abandonment of 
the contract which rendered its annulment by Green unnecessary. 
It must hâve been known by Graham that his remedy, after having 
gone on so far toward the exécution of the contract, was not in its 
abandonment, but in its completion and the assertion afterward of 
claim for extra compensation because of such damages for which 
the Court of Claims was open to him to seek recovery. 

But, in addition to this, it is argued with much force by counsel for 
the government that the clause in the contract limiting Green's au- 
thority to annul only with the consent of the Régents of Smithsonian 
Institute was void because the act of Congress conferred upon Green, 
and Green alone, the power to contract, and he had no authority to 
either delegate to or share with any other this power, ail of which it 
was incumbent upon Graham by law to take notice of at the time of 
contracting. In support of this contention the case of Whiteside et 
al. v. United States, 93 U. S. 247, at pages 256, 257 (23 h. Ed. 882), 
is cited, where it is said : 

"Différent rules prevall In respect to the acts and déclarations of public- 
agents from tliose whicli ordinarily govern In tlie case af mère private agents. 
Principals, in tlie latter category, are in uiany cases bound by ttie acts and 
déclarations of their agents, even wbere the act or déclaration was done or 
made without any authority, if it appear that the act was done or déclara- 
tion was made by the agent in the course of his regular employment; but 
the government or public authority Is not bound in such a case, unless it 
manifestly appears that the agent was acting within the scope of his au- 
thority, or that he had been held out as having authority to do the act, or was 
employed In his capacity as a public agent to do the act or make the décla- 
ration for the government. Story's Ageney (6th Ed.) § 307a ; Lee v. Munroe, 7 
Cranch, 376 [3 L. Ed. 373]. 

"Although a private agent, acting in violation of speclflc instructions, yet 
within the scope of his gênerai autiority, may bind his principal, the rule as 
to the efCect of the llke act of a public agent Is otherwise, for the reason 
that It Is better tîiat an Individual should occasionally suffer from the mis- 
takes of public officers or agents, than to adopt a rule which, through im- 
proper combinations or collusion, might be turned to the détriment and injury 
of the public. Mayor v. Eschbach, 18 Md. 282. 

"Individuals as well as courts must take notice of the estent of authority 
conferred by law upon a person acting in an officiai capacity, and the rule 
applies In such a case that ignorance of the law furnishes no excuse for 
any mistake or wrongf ni- act. State v. Hayes, 52 Mo. 578 ; Delaiield v. State, 
26 Wend. [N. T.] 228; People v. Bank. 24 Wend. [N. Y.] 431 [35 Am. Dec. 
634] ; Mayor v. Reynolds, 20 Md. 10 [83 Am. Dec. 535.]" 



OBAHAM V. UNITED STATES 657 

But, asîde from ail this, after carefuUy considering ail the testimony 
and facts relating to this matter, we prefer determining it squarely 
upon the ground's and for the reasons given by the court below. In 
its charge it said : 

"The proof is that the régents are a body of men who are constantly oc- 
cupied, iiK'luding the Chlef Justice of the United States Suprême Court, the 
Vice Président of the United States and United States Senators, and thèse 
men do not uieet over three times a year, when they probably discuss and 
détermine the gênerai poiicies of the institution. It was said, and there was 
no proof to the contrary, that the practice is to ieave ail matters of détail 
and matters such as this to the secretary of tlie institution. For a long time 
they hâve allowed him to exercise those powers. Could it be said now that 
he has not the right to exercise those powers, and that the parties who deal 
with him in this way are not dealingwith the proper person? The secretary, 
acting for the régents, gave his consent to the annulment ui the proper man- 
ner. Mr. Green stated that in his judgment the contract should be annuUed 
because of the fallure of the défendant, and therefore the annulment was 
made. I can see uo ground for saying to the jury that the contract was not 
annuUed. I grant those prayers which say that there is no évidence to sup- 
port the plea that the annulment was without the sanction of the Régents of 
the Smithsonian Instltute. There is no évidence, in my judgment, to show 
that the annulment was the resuit of any bad faifh on the part of Mr. Green. 
Mr. Green has acted within his rights, and as the agent of the govemment 
it was his duty to protect the interests of the government. I do not think he 
has gome beyond the limits of his powers." 

[5] Finally, were such changes and altérations made in the con- 
tract without the surety company's consent as maintained in its spécial 
défense in this regard and which entitled it to release from its surety 
obligation ? 

This question, although elaborately argued, will need but brief con- 
sidération. The contract which the surety company guaranteed per- 
formance of in express terms provided that changes and modifica- 
tions could be made and compensation should be allowed for extra 
vi'ork performed or material furnished. Thèse changes and altéra- 
tions were provided to be required in writing, it is true, and the let- 
ters produced in évidence between Green and Graham seem to us to be 
sufficient to meet ail requirements in this particular. It is also shown 
that Graham and Green agreed on a sum of $4,000 for extra compen- 
sation for the extra labor performed and that he was given crédit for 
this sum. In Atlantic Trust & Deposit Go. v. Town of Laurinburg, 
163 Fed 690,90 G. C. A. 274, this court has determined that the rule 
of strictissimi juris will not be recognized as applying to contracts 
underwritten by thèse bonding corporations whose business it is to 
insure, for a monetary considération, the obligée against a failure 
of performance on the part of the principal obligor. In such cases, 
before such bonding company can be released, it must show that the 
changes made in the contract guaranteed by it, operated injuriously 
to atïect its right and liabilities. 

We agrée fully with the court below that there is no évidence in 
this case to support such plea. 

There is no error in the judgment of the court below, and it will 
therefore be affirmed. 
188 F.— 42 



658 ; 188 FEDERAL EEPOETBE 

JOHN KITCHEN, JK., CO. v. LEFISON. 

(Carcult Court of Appeals, Nlnth Circuit. July 3, 1911.) 

No. 1,900. 

1. Patents (§ 328*) — Validitt and Infkingement— Manifold Book. 

The Levison reissue patent, No. 12,005 (original No. 694,103), for a man- 
Ifold book, discloses patentable invention, especially in view of tbe recog- 
nized defects in the devices of tbe prior art vvbicli were remedied in that 
of tbe patent and its commercial success, and is also valid as against tiie 
claim that the reissue is a departure from the original. Also, lield in- 
fringed. 

2. Patents (§ 148*) — Reissues— Pbesumption or Requlabitx of Prooeed- 

INQS. 

From the reissue of a patent It Is to be presumed that the law was com- 
plled with, and the proceedings can only be impeached for fraud. 

[Ed. Note.— For other cases, see Patents, Cent. Dlg. §§ 221, 222; Dec. 
rrig. § 148.*] 

3. Patents (§ 236*) — Infringement— Leaves "Boxjnd" in Book. 

A manifold book, in which the carbon sheets are attached to a card- 
tJoard stub having a notched edge, the teeth of whlch may be pressed 
between the staples whlch bind the edges of the leaves together to hold 
the sheets in place, although such sheets are removable, does not escape 
Infringement of a patent because the sheets are described therein as 
"bound" in the book. 
[Ed. Note. — For other cases, see Patents, Dec. Dlg. § 236.* 
For other définitions, see Words and Phrases, vol. 1, p. 851.] 

Appeal from the Circuit Court of the United States for the North- 
ern District of California. 

Suit in equity by Alexander Levison against the John Kitchen, Jr., 
Company. Decree for complainant, and défendant appeals. Af- 
firmed. 

The appellee was the complainant in the court below In a suit to enjoin 
infringement of letters patent No. 12,005, issued to him on July 1, 1902, for 
an improvement in manifold books. The court below sustained the patent, 
and enjoined the appellant from infringing the same. The invention relates 
to an Improved manifold receipt and record book for mercantile, rallway, ex- 
press, or other business uses. The manifold book is formed in sections, each 
section comprising in order, first a carbon sheet of about two-thirds the width 
of the book, and, second, record sheets with stubs divided Into three substan- 
tially equal parts by vertical Unes of perforations, said parts having suitable 
printed matter and blank Unes whereon to inscribe the desired record. The 
carbon sheets are carbonized on both sides, and are bound in the book, and 
extend over the flrst two of the divisions of the record sheets. In use the out- 
er third of the record sheet is folded to the left on the Une of perforations. 
It then covers about one-half of the carbon sheet. It is again folded in the 
same direction on the second Une of perforations so that the carbon sheet is 
folded inside the record sheet. The record Is then written upon what was 
the back of the mlddle portion of the sheet before it was folded. The carbon 
sheet being carbonized on both sides, a copy of the record will be made upon 
each of the two terminal parts of the sheet, also a backhand copy of the writ- 
Ing will be formed on the back of each part except the inner one. The claims 
held to be infringed are as follows: 

"(3) A manifold book comprising In order a double carbon sheet, and a 
plurallty of recording sheets, the record sheets outside the stubs being divid- 
ed Into three substahtially equal separable parts, and the carbon sheet ex- 
tending the width of two of said parts, said recording sheets having stubs to 

*For other cases see same topic & § numbes in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



JOHN KITOHEN, JE., CO. V. LEVISON 659 

which tbey are attached along lines of perforations, sald stubs and one slde 
of tbe Carbon sheet beiug ail bound togetber to form a bock, substantially as 
deseri'bed. 

"(4) A manifold bock comprising in order à double carbon sbeet, and a 
plurality of recording sbeets, each of said sheets outside tbe stubs being divid- 
Gd iuto a plurallty, not less than three, of substantially equal separable parts, 
and the carbon sheet extending tbe width of said parts except tbe outermost, 
sald recording sbeets baving stubs to which tbey are attacbed along lines of 
perforations, said stubs and one side of tbe carbon sheet being ail bound to- 
getber to form a book, substantially as described. 

"(3) A manifold book comprising in order a double carbon sheet, and a 
plurallty of recording sheets, each recording sheet outside tbe stub being 
divided Into a plurallty not less than three of separable parts joined along 
lines of perforations, each part being not greater tban the part next It on tbe 
side toward the stub, and the carbon sbeet extending the width of tbe whole 
of said parts except tbe outermost, said recording sheet having stubs to 
which tbey are attacbed along Unes of perforations, sald stubs and one side of 
the carbon sheet being ail bound together to form a book, substantially as 
described." 

Chas. E. Townsend, for appellant. 

John H. Miller and Wm. K. White, for appellee. 

Before GILBERT and MORROW, Circuit Judges, and WOLVER- 
TON, District Judge. 

GILBERT, Circuit Judge (after stating the facts as above). [1] 
The appellant assigns errors to the decree of the court below on the 
ground: First, that the device of the appellee did not involve inven- 
tion; and, second, that the appellant has not infringed the same. It 
is urged that the improvement which the appellee made on the prior 
art was simple and obvious. It may be conceded that it was simple, 
but that fact alone does not deprive the invention of patentability. 
There may be the highest form of invention in some of the simplest 
improvements on the prior art. What was the prior art in this class 
of inventions was shown by the record. For many years manifold 
receipt books had been used in connection with carbon sheets. One 
form of such books consisted of three sheets of différent colors, one 
above the other ; each having the same form of receipt printed thereon. 
To secure three'-copies of the receipt, two loose sheets of semicarbon- 
ized paper were inserted. Another form shows one corner of the 
original and one corner of the duplicate receipt eut off at différent 
lengths to facilitate the handling of the loose carbon sheets. Another 
form shows the use of a sheet of yellow paper, then a sheet of thin 
transparent paper, and then a sheet of pink paper. On each of the 
sheets is printed the same form. The manifolding is done by the 
use of a single sheet, carbonized on both sides, inserted between the 
transparent sheet and the third sheet of the séries. But the device 
which is principally relied upon by the appellant is shown in the pat- 
ent to H. G. and J. B. Barlow of April 29, 1884. This patent antici- 
pâtes the appellee's patent in every feature except one. Instead of 
having their carbon sheet bound in the book as in the appellee's patent, 
it was loose. The patentées pointed out the defects in the books of 
the prior art, in which two detached sheets of copying paper had 



660 188 FBDBEAL REPORTEE 

been necessary to obtain two duplicatas of the written matter. They 
said : 

"The old metbod is objecti'onable on account of the number of sheets to 
be adjusted and cared for, and to the shipping clerk, wtio carries the sheets 
from place to place, the handling and care of the sheets Is a source of great 
annoyance." 

Eight years after the issuance of the Barlow patent, the appellee 
conceived the idea of binding carbon sheets with the stubs of the 
record sheets of the bock, so that the carbon sheets would always 
be in their place. He also conceived the idea of inserting the sheets 
in the book at such intervais as the use and wear of the same would 
justify. The patent to James Bengough of January 28, 1896, shows 
a bound manifold salesbook, the first half of which is a séries of sin- 
gle leaves which are one-half the length of the leaves of the remain- 
ing half. In the center between the two séries of leaves are bound 
two carbon sheets of the same size as the leaves of the first half of 
the book. The book is used by beginning at the middle thereof. The 
first of the long leaves is folded over the second of the carbon sheets. 
The last of the short leaves is brought over the first carbon sheet. 
By writing thereon, two duplicates are made upon the two halves of 
the folded sheet. It is apparent that, long before the whole of the 
book is used, the carbon sheets are so separated from the leaves on 
both sides thereof that copies cannot be successfully taken. The pat- 
ent to G. E. Doughty of October 11, 1898, is similar to the Bengough 
device, excepting that the carbon sheet, instead) of being bound by 
stitching in the book, is held therein by a clamp. The patent to H. 
P. Brown of August 31, 1897, consists of the application by print- 
ing or other means, to the under surface of a sheet, of a nondrying 
transparent ink which serves to duplicata, upon the sheet below, any 
entry or mark made upon the face of the first sheet; a pad or card- 
board being interposed below the last sheet on which it is intended 
the mark should be made. The évidence shows that the book was 
not received favorably for the reason that, as the back of each sheet 
was covered with the nondrying ink, the sheets smutted any paper 
or thing with which it came in contact. 

In addition to the presumption which arises from the issuance of 
the patent to the appellee, there are to be taken into considération, 
as sustaining his patent, the further facts that, when his invention 
was made, there was a want in the art for such a device, that in the 
prior art there were well recognized and admitted defects, and that 
the appellee's device eliminated those defects and went into gênerai 
and successful use. In view of ail thèse considérations, we find the 
évidence insufficient to overturn the finding of the court below that 
the appellee didi exercise inventive faculty in devising the book for 
which he obtained his patent. 

It is contended that the reissue of the patent is void as being a de- 
parture from the original, and not for the same invention, and as 
containing new matter not authorized by the statute. The argument 
is that in the original patent there is no claim for three separate sub- 
stantially equal parts, and that in the original spécification there is 



JOHN KITCHEN, JE., CO. Y. LEVISON 661 

nothing to indicate that the divisions of the record sheets shall be 
equal. It is true that in the original patent it is not said, in either 
the spécifications or the claims, in express terms, that the sheet is 
to be divided by the perforations into substantially equal parts; but 
the drawings in that patent are identical with the drawings in the 
reissue patent. In those drawings it is plainly to be seen that the 
parts are substantially equal. The spécification describes the record 
sheet "divided into three parts by vertical Unes of perforations," 
and describes the carbon sheets as of sufiicient width to cover two 
of said parts, and it says, when the record sheet is first folded, it 
covers about one-half of the carbon sheet. It is too obvions to re- 
quire argument that the device in both patents is the same. A pat- 
entée by a reissue is not permitted to extend the invention which he 
diescribed and intended to be protected in his original patent. In 
the original patent in this case the features of the appellee's inven- 
tion are clearly described. One of them is the use of the cardboard 
backings. The other is the arrangement of the record sheets and 
the carbon sheets. Both are covered by a single claim, but the pat- 
ent did not cover the use of either when not combined with the 
other. Therein was its defect. In applying for his reissue, the ap- 
pellee in his affidavit set forth the facts constituting the inadvertence 
by reason Of which the claims of the original patent were not com- 
mensurate with the scope of his invention. 

[2] From the reissuance of the patent it is to be presumed that 
the law was complied with, and the proceedings can only be impeached 
for fraud. In Seymour v. Osborne, 11 Wall. 516-543 (20 L. Ed. 
33), it was said: 

"Where the commissioner accepta a surrender of an original patent, and 
grants a new patent, his décision in the pr émises in a suit for infringement 
is final and conclusive and is not re-examinable in such a suit in the Circuit 
Court unless it Is apparent upon the face of the patent that he bas exceed- 
ed his authority, that there is such a repugnancy between the old and the 
new patent that it must be held as matter of légal construction that the new 
patent is not for the same invention as that embraced and secured In the 
original patent." 

[3] A more serions question is presented in the appellant's con- 
tention that the court below erred in holding that the appellant has 
infringed the appellee's patent. There is force in the argument that 
the appellee's invention, in view of the prior art, lies in a narrow com- 
pass, and that the appellant's carbon sheets, if they are bound in 
the book, are bound in a dififerent way from those of the appellee. 
But, after ail is said, it nevertheless is apparent that the appellant's 
carbon sheets are bound in the book. It is true that they are not 
permanently bound, and that they may readily be removed ; but the 
appellee's claims do not in terms call for a permanent binding. The 
appellant's book is made up of recording leaves, each divided into 
three sections by vertical lines of perforations, as are those of the 
appellee. The leaves and cover of the book are bound together by 
Staples. The double carbon sheets are attached at one end to a card- 
board strip with notches opposite the staples to allow of their being 
inserted in the book. They are pushed in underneath the cover of 



662 188 FEDERAL EEPORTEB 

the book, and between and on either side of the staples. In the ap- 

pellant's patent which was issued on February 9, 1909, it is said : 

"The pressure on the points 11 of the stub strip, after the latter has been 
inserted, wlU hold the carbon permanently in position." 

A^d again it is said: 

"They are held flrmly in place just as though they had been bound In the 
book originally." 

According to the évidence, there are various known methods of 
binding, as by binding by a clamp, by glue or paste, or by pressure, 
as well as by sewing or stitching. In the appellant's patent no spé- 
cifie means for binding or holding the carbon sheets in the recording 
sheets is described. The claims are broad enough to cover any bind- 
ing means. The patentée of the appellant's patent, testifying as to the 
Doughty patent, in which the carbon and stubs of the recording sheets 
are held in a wire frame which is attached to the cover of the book, 
said that the carbon sheet in that patent is "bound in the book" by 
a spring. We think that it is immaterial that the carbon sheets in 
the appellant's patent are détachable from the book, or that they are 
bound in the book after the book is made up. They are to ail intents 
andi purposes, when the book is in use, bound in the book within the 
meaning of the appellee's claims. 

The decree is affirmed. 



GENEVA MFG. CO. et al. v. NATIONAL FURNITURPl CO. et al.) 

(Olreuit Court, N. D. Illinois. March 27, 1911.) 

No. 29,138. 

1. Patents (§ 311*)— ^tjit roB Infkingement— CoNSTBtrcTios of Brrx. 

Where the complalnants in a suit for int'ringement explicltly state In 
their bill that ail infringements by défendant were slnce a certain date, 
when they became assignées of the patents in suit and rights thereun- 
der, gênerai allégations in an amendiiient that défendant has Infringed 
at divers times since the patents were Issued do not entitle complalnants 
to prove Infrlngenients prier to the time alleged in the original bill. 

[Ed. Note. — For other cases, see Patents, Dec. Dlg. § 311.*] 

2. Patents (§ 138*) — Reissues— Validity. 

A reissue patent Issued on an application filed as soon as the patentée 
discovered that his original claims had inadvertently been made too 
broad, and which narrows them to his actual invention, is valld. 

[Ed. Note.— For other cases, see Patents, Cent. Dlg. §§ 201-203 ; Dec. 
Dlg. § 138.* 

Grounds for reissue of patent, see note to General Electric Co. v. Rich- 
mond St. & I. Ry. Co., 102 C. C. A. 145.] 

8. Patents (§ 328*) — Validity and Infringement— Sofa Beds. 

The Rolph reissue patent, No. 11,831 (original No. 585,122), the Weyer 
patent. No. 624,591, and the Rolph patent, No. 637,976, ail relating to 
sofa beds, are valld and meritorious, but do not diselose any new priuci- 
ples or modes of opération, being merely combinations of old éléments in 
a new relation by which their opération Is improved. As so construed 

•For other cases see «ame toplc & § numbeb lu Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe» 



OENEVA MFG. CO. V. NATIONAL FURNITURK CO. 663 

heH not Infrlnged by the structure of tho Deimel patent, No. 863,365, 
whlcli enabodies some, but not ail, of tlie same éléments, and bas a différ- 
ent mode of opération. 

In Equity. Suit by the Geneva Manufacturing Company, S. Kar- 
pen & Bros., and the Seng Company, against the National Furniture 
Company and the Deimel Sofa Bed Fixture Company. On rehear- 
ing. Decree for défendants. 

Dyrenforth, Lee, Chritton & Wiles, for complainants. 
William R. Rummler and John W. HiH, for défendants, 

SANBORN, District Judge. This is a suit brought June 23, 1908, 
for the alleged infringement of the Rolph reissue patent of June 19, 
1900, No. 11,831, the Weyer patent of May 29, 1899, No. 624,591, 
and the Rolph patent of November 28, 1899, No. 637,976, relating to 
sofa beds. The Pullman car seat, which is a seat in the daytime and 
a bed at night, illustrâtes in a gênerai way the structure in question 
hère. Back and seat are hinged or pivoted together, so that when 
the double seat is pulled down the two opposite seats with the backs 
assume a horizontal position. It is remarkable that no improvement 
has been made in the Pullman car bed seat since Field and Pullman 
took out their patent in 1865. In the advanced sofa bed structures 
of to-day, to make up the bed the operator stands in front of the 
sofa, takes hold of the front of the seat, raises or pulls it out, thereby 
uncovering the bedding box arranged in the base position under the 
seat, and permitting access to the mattress and bed clothing. Thèse 
are then taken out, and the seat raised to the perpendicular. The back 
portion, being ail the time locked to the seat portion, is thus lowered 
to the horizontal, with the seat standing at right angles. By tilting 
the latter slightly backward, the two parts are unlocked, and the seat 
let down to the same horizontal plane of the back, so that the bed 
may be then made up. In the latest Rolph patent, called the "Rolph 
Automatic," the bedding box is automatically moved out when the 
seat is raised, so as to render the bedding more accessible. This is 
donc by a System of links and pivots, Connecting base, bed box, back, 
and seat, so that they ail move as a unit when force is applied to 
seat, back, or bedding box. This feature is not présent in défend- 
ants' sofa bed known as its fourth construction. Another important 
distinction between the two results from this form of construction. 
Défendants' seat and back portions are not mechanically joined or 
connected to the base or bed box portion, but slide or roll on small 
wheels resting on short tracks laid on the upper edges of the ends of 
the base portion, just as a hand car may be rolled along a railroad 
track when one end is lifted up. In other respects défendants' sofa 
bed is the same as that of complainants. Thus the question whether 
thèse différences enable défendants to escape infringement is pre- 
sented," and is the important question in the case. 

Sofa beds are said to be one of the necessities of life in fîats and 
dwellings with small rooms, where economy of space is essential. 
Their manufacture is estimated to represent about a million and a 
quarter dollars a year. To a considérable extent they are replacing 
the folding bed, which is useless by day and is supposed to bave a 



664 188 FEDEEAL EEPOETEK 

tricky habit of shutting up without reason or warning, even when se- 
curely locked. Sofa beds should possess certain highly useful and 
désirable features, among which are the capacity to hold the bed- 
ding, and make it easily accessible for use, of being made up and 
put back by a person standing in front, and without pulling the sofa 
away from the wall or pushing it back to the wall, using the seat as 
a means of raising or lowering the back in converting from sofa to 
bed or vice versa, ability to lock the seat and back together, so they 
will swing as a unit, and to lock and unlock them automatically by 
merely tilting the seat, using the weight of the back to counterbal- 
ance the seat, and employing seat and back for the bed surface. As 
complainants' expert well says: 

"Ail the progress of the art indicates that the desideratum is to quickly 
and easily increase the available bed surface by the estent, at least, of the 
size of the back." 

As in most of the practical arts, sofa beds hâve had a period of 
growth and development, until they are supposed to hâve reached per- 
fection. Before the inventions of Rolph and Weyer (now owned 
by complainants) a number of the désirable features referred to had 
been discovered and utilized by other patentées. Most of the élé- 
ments found in the three patents in suit were old. The gênerai form 
of sofa bed was well known. This comprised a base, bedding box, 
seat, and back portions hinged together (as in the Pullman car), 
locking means to hold seat and back at right angles to each other 
or in any other position, capability of front opération, automatic move- 
ment of base portion to the rear to support the back when horizontal, 
guideways or tracks for guiding the forward and backward move- 
ment of back and seat as a unit, and rollers or wheels pivoted to 
run on the tracks or ways. Ail thèse are found in the prior art, though 
Rolph and Weyer bave so combined the best of thèse pre-existing 
separate éléments, and so improved them, and as to some hâve so en- 
larged and extended their functions that they bave made a considéra- 
ble advance in the art. Fixtures of the patented structures suffi cient 
to make a million and a quarter dollars worth a year are now being 
marketed. Conceding practical merit, commercial success, and merito- 
rious advance in the art, it is further claimed by complainants that 
a new principle of opération was introduced, so as to bring the case 
within the rule of Winans v. Denmead, 15 How. 330, 14 L. Ed. 717, 
Vrooman v. PenhoUow, 179 Fed. 296, 102 C. C. A. 484, and like cases. 
Novelty is denied by défendants; but, if that be found, they urge 
that the différences referred to so distinguish the various structures 
as to avoid infringement. VaHdity of the Rolph reissue is also denied, 
chiefly on the ground that it was not applied for in proper time. 

The main question just stated relates to défendants' fourth con- 
struction, so called, commenced in 1907. Another question pyesented 
relates to the first, second, and third constructions, made in 1901. 
1902, and 1903. As to thèse there is no question of infringement, îf 
the bill of complaint, and proposed amendments thereto, cover thèse 
earlier inf ringements ; so that this branch of the case présents only 
a question of the construction of a pleading. In order to properly un- 



GENEVA MFG. OO. V. NATIONAL FURNITUEE CO. 665 

derstand thèse allégations, it îs necessary to refer to certain assign- 
ments, transfers, and licenses by the patent owners, substantially as 
follows : AU of the patents were assigned to complainant Geneva 
Company, by varions 'mesne transfers, August 21, 1903. The assign- 
ments, and ail of them, are alleged in the bill to hâve been "prior 
to the acts of infringement hereinafter complained of." Litigation 
arose between the complainants in respect to thèse patents, and cer- 
tain others, which was settled by an agreement providing that the 
Geneva Company should hâve certain exclusive rights under ail the 
patents, complainant S. Karpen & Bros, should hâve certain other 
exclusive rights thereunder, and complainant Seng Company should 
hâve the exclusive right to sell fixtures under the Karpen patent (not 
hère involved), and the Weyer patent. This agreement for exclusive 
rights was made December 12, 1904. The proofs thus show acquisi- 
tion of title to the patents by one of the complainants, the Geneva 
Company, on August 21, 1903, and the making of exclusive licenses 
to the other complainants, as well as the rétention of exclusive rights 
by the owner, the Geneva Company, on the 12th of December, 1904. 

In respect to infringement, the original bill, together with certain 
proposed amendments (indicated by italics), contains the following: 
After August 21, 1903, and since the patents issued in 1899 and 1900, 
and since the acquisition of such exclusive rights December 12, 1904, 
at divers times and occasions since the grant of said patents and each 
of them and prior to filing the bill, and also at divers other times and 
occasions since the grant of the patents and within six years of the 
ûling of the bill, défendant National Company bas infringed, and 
since December 12, 1904, défendant Deimel Company has made and 
sold fixtures infringing the patents, and is a contributory infringer. 
It further appears that on May 22, 1908, the patentées assigned to 
complainants ail choses in action arising out of prior infringement to 
complainants jointly. 

Défendant National Company commenced its first, second, and 
third constructions in 1901, and continued them until March or April, 
1903. Ail thèse were infringements of complainants' patents, or some 
of them. It further appears that from 1902 to 1907 complainant Seng 
Company sold to National Company 13,219 sets of the unpatented 
fixtures going with the patented sofa beds covered by complainants' 
patents. Thèse sales were made with the expectation that the fixtures 
should be used by the National Company in complète sofa beds of 
the kinds covered by the patents in suit ; but the Seng Company did 
not know whether or not such complète sofa beds were of the same 
gênerai style as the patented structures. In an agreement made No- 
vember 10, 1900, between the owners of the Rolph reissue and the 
Karpen patent, it was provided that the National Company should not 
be licensed under those patents; but, after the infringements by the 
first three constructions in 1901 to 1903, the Seng Company induced 
the National Company to adopt its fixtures, whereupon the latter Com- 
pany "did discontinue making the devices which we (Karpen and 
Seng) considered infringements, and used only the devices which 
they (National Company) purchased from the Seng Company." The 



066 188 FŒDBBAL EBPOETBR 

National Company paid royalty on thèse fixtures. Sofa bed fixtures 
can be supplied to the tradie by the Seng Company, sufficient to meet 
ail demands, and the annual business in sofa beds made with thèse 
fixtures is estimated at $1,250,000, being furnîshed to nearly every 
sofa bed manufacturer in America. 

From the facts stated, and under the pleadings, it is contended by 
défendants that they cannot be held for any infringement by the first 
three constructions, and they movedi to strike out ail évidence relating 
thereto. 

[1] 1. Infringement by first three constructions is not within the 
amended bill. With ail the gênerai allégations of infringement at 
divers times and occasions, and within six years of bringing suit, there 
is nov^rhere any négation of the prior averments that the transfers of 
August, 1903, were prior to ail acts of infringement, or that such 
acts were since December, 1904, when the agreement creating exclu- 
sive rights was entered into. Hère are positive and definite state- 
ments that no infringement is claimed after certain dates. Even a 
libéral construction of the gênerai allégations, and having in mind 
that the latter were brought in by amendment, will not overcome such 
explicit averments. This construction is aided by the évidence re- 
ferred to, showing that the National Company was persuaded to stop 
the earlier infringement, purchase the patented fixtures to the extent 
of 13,000 sets, and pay royalty thereon. This indicates complainants' 
purpose not to sue for the prior infringements. No suit was actually 
brought for five years. It is indeed true that the National Company 
abandoned the purchase of the fixtures, and put out its fourth con- 
struction, thus affording some reason for saying that circumstances had 
so changed that it would not be inéquitable to hold the National Com- 
pany for its earlier infringement. If the fourth construction were a 
palpable infringement, there would be much force in this suggestion; 
but there is no reason for doubt that défendants regardi their last con- 
struction so distinguishable from the Rolph and Weyer designs, and 
so close in track and roller construction to the Haie patent of 1897, 
No. 595,913, as to justify them in adopting it. Moreover, they are 
operating under the Deimel patent of 1907, No. 863,365, which seems 
on its face to authorize their spécifie fourth construction. Entirely 
apart from thèse considérations, however, complainants' positive al- 
légations that the assignments of August, 1903, were prior to any in- 
fringement, and that ail infringement bas been since 1904, clearly show 
an unmistakable intention to claim nothing for the earlier infringe- 
ments, and treat them as satisfied. 

[2] 2. Validity of the Rolph and Weyer patents: Ail the patents 
in suit are meritorious and valid. Rolph applied for the reissue just 
as soon as he diiscovered that his original claims had inadvertently 
been made too broad. The reissue Hmits them, and -the new claims 
conform to his actual invention. It was within the express terms of 
the statute, and no good reason can be discovered for refusing its 
validity. Toplifï v. Topliff, 145 U. S. 156, 12 Sup. Ct. 825, 36 L. Ed. 
658; Moneyweight Scale Co. v. Toledo Computing Scale Ce, 187 
Fed. 826; McDowell v. Idéal Concrète M. Co., 187 Fed. 814. 



GKNEVA MFG. CO. V. NATIONAL FURNITUKE CO. 667 

[3] In regard to ail three patents, it is claimed they introduced a 
new mode of opération, and are therefore entitled to libéral construc- 
tion, and a reasonably wide range of équivalents. Rolph, it is said, 
conceived the idea of employing the seat as a médium for manipu- 
lating the back, both in changing from sofa to bed and vice versa. 
The back and seat are thus made to counterbalance each other, re- 
sulting in easy opération from the front, rendering it unnecessary to 
go behind the structure. This new method of complainants' three 
patents was not wholly secured by locking seat and back together, 
which many others had donc, but in discerning the possibility and great 
importance of using the balancedi seat as the center of the system, and 
building around this feature very much that is valuable in the prés- 
ent day art. If this were new with Rolph, it would show a high 
degree of invention, and be entitled to libéral protection. Rolph, how- 
ever, had no automatic means for unlocking the mechanism, using for 
that purpose a pull on a rope. Weyer supplied this defect by agai» 
using the seat to do the unlocking, thus utilizing and improving or- 
Rolph by employing the same central feature of seat manipulation to 
carry out the original conception. As yet, however, no means, it is 
said, had been discovered to avoid moving the sofa bed away from the 
•wall when changed to bed form, and pushing it back when restored to 
sofa form. T-his feature was supplied by Rolph himself in the third 
patent sued on, called the "Rolph Automatic." In this final form the 
seat, back, base, and bed box are so tied together by an ingenious ar- 
rangement of pivoted levers or thrust links that when the locked seat 
and back are moved as a unit, up or down, the bed box will move 
automatically with them. Upward movement of the seat pulla the 
back away from the wall, and downward movement towards the wall. 
There is not the slightest doubt of the validity of thèse three patents, 
nor of their complète operativeness, utility, and well-deserved commer- 
cial success. It is, however, equally apparent that they did not intro- 
duce any new mode of opération, but are simply to be classed as exceed- 
ingly meritorious combinations of old éléments co-operating to pro- 
duce new and improved results. 

The new mode of opération asserted, by which the seat is made 
to operate the back as in the Rolph reissue, and which is the central 
idea of the whole Rolph-Weyer system, is most certainly foundi, and 
most explicitly described and illustrated, in the German patent for a 
single sofa bed, issued to Félix Breyer, September 8, 1890. The in- 
venter says that: 

"The tiack is connectée! with the sltting frame by triangular links c In such 
manner that on tuming over the seat for foraiing the hed it lays itself under 
the same, but straightens itself up again automatically when the seat cornes 
uppermost agaln." 

The object of the inventor being to construct a single, instead of a 
double, bed, there is, of course, no attempt to arrest the movement 
of the back when it reaches the horizontal, but simply to get it out of 
the way, below the horizontal seat and bed surface; but the central 
Rolph principle, which is automatic movement of ail other parts by 
seat manipulation alone, is so urtmistakably présent, and so fully 



668 188 FEDEUAL EEPOKTKK 

illustrated and described in this German patent, as to remove Rolph's 
invention, good as it was, f rom the field of newly discovered prin- 
ciples or modes of opération. Nor does the record show any other 
new method of opération, simply a practical and meritorious combina- 
tion of old means in a new relation with bénéficiai results, and better 
opération. 

3. Does défendants' fourth construction infringe? In order to 
fully apprehend this question, it is necessary to state the éléments 
which work together in the Rolph, Weyer, and Deimel constructions 
to produce the results obtained. In the reissue thèse co-operating 
éléments are the base box, seat, back, uprights, or standards rising 
from the base box, seat, and back pivoted or hinged on the uprights, 
and locked together, and unlocking means (shown to consist of a 
releasing lever worked by a rope, chain, or strap). Ail that Weyer 
did was to dispense with the hand manipulated rope, chain, or strap, 
and so change the locking devices that they could be locked and un- 
locked by tilting the seat when it is close to a right angular position 
in respect to the back. And ail that Rolph addied by his last patent 
was to so connect seat, back, and base that when the seat is lifted the 
back will move outward, away from the rear of the frame, or from 
the wall, and the bedding box will do the same. Thus, there are 
seven éléments in Rolph's reissue, seven in Weyer, and ei^ht in Rolph's 
automatic device. 

Turning now to défendants' fourth construction, we find eight élé- 
ments, only five of which at first sight are in the three patents in suit. 
There are no uprights or standards rising from the base box, noth- 
ing hinged or pivoted thereon, no connection whatever between base 
and seat or back, except as everything on the earth is connected with 
the earth by the attraction of gravitation. Défendants hâve indieed 
taken over bodily the cardinal princi'ple of the Rolph invention, the 
automatic and balanced control of the sofa back by means of the seat, 
and the locking and unlocking of seat and back by the same means. 
But for the uprights défendant has substituted a railroad, and for 
hinges or pivots carried by the uprights it has car wheels. Moreover, 
it took its railroad from Haie, Field & Pullman, Marso, and Breyer, 
ail in the prior art. Deimel put it together with other éléments, old 
from the standpoint of his claims or counts, into a patentable combi- 
nation, unless the railroad is the mechanical équivalent of the standards 
or uprights, and the car wheels of the pivots carried thereby. 

Défendants' seat is also distinguished from that of Rolph and Weyer 
by a différent method of opération. One is compound, the other 
simple. A hand car may be shoved along the track by a mère push, 
but a switch standard can be moved only in the arc of a circle. The 
first is a simple motion; the second the compound resuit of applied 
force and pivoted connection. Just so with the two seats in question. 
The Deimel frame can be pulled out horizontally in the same plane, 
lifted straight up by taking it oflf the rails, raised through a circulât 
arc, or raised and slid at the same time; but the Rolph frame, like 
the switch, adrnits of only one of thèse three motions. As said by the 



OENEVA MFG. CO. V. NATIONAL FURNITURB CO. 669 

Suprême Court in Cimiotti Unhairing Co. v. American Fur Refining 
Co., 198 U. S. 399, 25 Sup. Ct. 697, 49 L. Ed. 1100: 

"If the device * » • shows a substantially différent mode of opération, 
even though the resuit of the opération remains the same, Infringement Is 
avoided." 

In the marketed form of défendants' fourth construction there is 
also a différent resuit, as compared with the Rolph automatic design. 
It will be remembered that Rolph's last improvement was to so con- 
nect the parts as to avoid the necessity of puUing the sofa away from 
the wall. Only in part is this accomplished by défendants' form. If 
the tracks were long enough, the results would be the same ; but de- 
fendants hâve so shortened them as to make it necessary to hâve the 
sofa at least eight inches from the wall in order that their device may 
operate. 

It is urged, however, notwithstanding thèse différences, that the 
Rolph combination is so meritorious and successful as to be entitled 
to a range of équivalents broad enough to include the Deimal con- 
struction. It cannot be reasonably denied that Rolph made a distinct 
advance, in clearly discerning the important fundamental law of the 
sofa bed structure. While Breyer discovered it, he neither under- 
stood nor practically applied it. AU he did was to turn a sofa seat 
upside down for a single bed, and at the same time get the sofa back 
out of the way. The real development of the sofa bed of to-day is 
due to Rolph's first invention; the two later forms being mère nat- 
ural successive steps dépendent on the original conception. Prop- 
erly relying on thèse considérations, counsel insist that there is noth- 
ing in the Rolph reissue claim sued on which confines him to a sta- 
tionary or nonshiftable pivot. Why not broaden out the uprights or 
standards and run the pivots in slots, which are only elongated bearings 
at the most? Counsel refer to the Wernicke bookcase pivot, which 
shifts the whole depth of the case, as clearly in point. Reliance is 
also placed on the language of the claims of the Rolph automatic 
patent which are in suit. On their face, and without référence to 
the drawings and description, it must be admitted that the claims are 
broad enough to include défendants' construction. When the claims 
refer to controlling and supporting connections to permit seat and 
back to be bodily moved to and from the wall with the sections niain- 
tained in their raised angle relation, the words are possibly gênerai 
enough to cover shiftable connections. When they count on means 
adapted to move seat and back bodily outward, and turn or swing 
them in such movement, or means for pivotally mounting and sus- 
pending them to permit outward and inward movement bodily, and 
to be raised and swung or turned on the pivots, it is urged that this 
suggests a movable pivotai connection, as clearly as a stationary one. 
The claims are admirably drawn, with a view to exhaustively cover 
the whole invention ; but even in the broadest ones the idea of non- 
dietachable connection between the upper and lower parts is clearly 
apparent. So, also, the words "connections," "means adapted to move 
the parts," and "means for pivotally mounting," etc., clearly dénote 
automatic or mechanical means. 



67Ô 188 FEDERAL REPORTER 

When the description and drawings are consulted, ail uncertainty 
and ambiguity in the wording of the claims disappear. Nowhere in 
the spécifications or cuts is there a suggestion that a sliding pivot was 
contemplated, or anything but a rigid connection between" seat and 
back portions and base. A patent, being a contract, "is vvithin the 
cardinal rule that the manifest intention of the parties must govera 
its construction." Seaman, J., in Louden Machinery Co. v. Janes- 
ville Hay Tool Co., 148 Fed. 686, 78 C. C. A. 548. It seems clear 
that to construe the claims so as to cover défendants' fourth con- 
struction would violate this cardinal rule of construction. 

If a new mode of opération had been produced by Rolph, a dif- 
férent structure performing the same functions might be an infringe- 
ment, as in Winans v. Denmead, above cited. But in the absence of 
this, and with a différent mode of opération in défendants' rlevice. it 
does not infringe, even though the Rolph-Weyer claims shouldl hâve 
a f airly libéral construction ; even though Rolph be considered a 
"primary improver." He took the last and successful step, but his 
invention w^as an improvement only, a combination of old éléments. 
Moreover, défendants leave out at least one élément of that combina- 
tion, and adopt a prior art suggestion. 

The motion for rehearing is denied, and the bill dismissed, with 
costs. 



COVBR V. AMERICAN THERMO-WARE CO. et al. 

(Circuit Court, N. D. Illinois, B. D. April 25, 1911.) 

No. 29,383. 

1. Patents (§ 21*) — Invention— Substitution of Matebials. 

The making of a device in whole or in part of materials better adapted 
to tlie purpose for which it is used tlian materials of whieh those of tlie 
prior art were made, and for that reason better and cheaper, unless the 
mode of opération is thereby changed, does not constltute patentable In- 
vention. 

[Ed. Note. — For otlaer cases, see Patents, Cent Dig. § 23; Dec. Dig. § 
21.*] 

2. Patents (§ 328*) — Validitt— Beissues— Eye-Guabd. 

The Cover reissue patents. No. 12,924 (original No. 845,696) and No. 
12,817 (original No. 850,997), for an eye-guard or goggle, are void (1) as 
reissues not based on errors in the origlnals arising through inadvertence, 
accident, or mistake, (2) as being broadened reissues applied for atter 
the intervention of adverse rights, (3) for lack of patentable invention in 
View of the prior art, and (4) for anticipation by a prior publication. 

In Equity. Suit by Harvey S. Cover against the American Thermo- 
Ware Company and S. L. Gates. On final hearing. Decree for de- 
fendants. 

Parker & Carter (Francis W. Parker and Donald M. Carter, of 
counsel), for complainant. 

Joseph L- Levy, Soliciter and of counsel, for défendants. 

Jones, Addington, Ames & Seibold, Local Solicitors, for défend- 
ants. 

*For otber cases see same topic & | numbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Inâesofc 



AMEEICAN THEEMO-WAKE CO. 671 

KOHLSAAT, Circuit Judge. This cause is before the court on 
final hearing upon bill alleging infringement of claim 5 of reissue pat- 
ent No. 12,817, granted June 16, 1908, out of original patent to 
Cover for an eye-guard, granted April 23, 1907, and numbered 850,- 
997, and daim 2 of reissue patent No. 12,924, granted March 2, 1909, 
being the second reissue patent out of patent No. 845,696, granted to 
said Cover February 26, 1907, for an eye-guard, said claim 2 being 
identical with claim 2 of the first reissue. No. 12,816, which was 
granted on June 16, 1908, upon application filed March 23, 1908. The 
claims read as f ollows, viz. : 

"2. An eye-goggle consisting of two lenses, a flexible pièce embodylng two 
lens-holding portions, each consisting of a ring of elastic material adapted to 
constrictively hold one lens, a flat flexible annular cushlon adapted to bear 
upon the flesh of the wearer about the eye, a thin compressible and elastic 
tubular flange Connecting the ring and cushion and a flexible bridge between 
the lens-holding portions." 

"5. An eye-guard consisting of two lenses, an elastic pièce embodying two 
lens-holding portions, each consisting of a ring of elastic material adapted to 
constrictively hold one lens, a flat flexible annular cushlon adapted to bear 
upon the flesh of the wearer about the eye, a thin compressible and elastic 
tubular flange Connecting the two flat annular cushions which bear upon the 
flesh of the wearer." 

Primarily, it is insisted by défendants that both claims in suit are 
void on the grounds: (1) That they and each of them are not based 
upon errors in the original patent arising through inadvertence, ac- 
cident, or mistake; (2) that by reason of the delay in seeking the re- 
issue, i. .6., about 14 months in the one case. No. 12,817, and more 
than 14 months in the other case, other rights had intervened; (3) 
that the reissues are at variance with the subject-matter of their re- 
spective original patents; (4) and that the substance of said claim 2 
of No. 12,924 is shown in original patent No. 850,997 aforesaid, al- 
most two years prior to the reissue 12,924. 

As to the first primary défense, it appears that the inadvertence, 
accident, or mistake claimed consisted in the ignorance of counsel em- 
ployed. This excuse is given as a reason for a reissue in ail of the re- 
issues, i. e., the ignorance of counsel in procuring patent No. 845,696 
was asserted in procuring reissue No. 12,816, and as still existing at 
the time of making application for the second reissue. There can be 
no claim that both original patents were not operative devices for what 
they severally purported to cover. It appears that the reissues were 
taken out, not to make the device of the original patents operative, but 
to procure alleged inventions of those patents not claimed at the times 
of issue — something in addition to what was claimed. To say the 
least this was an extremely doubtful proceeding on the part of the 
patentée. It further appears that at the time reissue 12,924 was ap- 
plied for there was outstanding an agreement between the patentée 
and third parties whereby Cover on August 24, 1908, granted, subject 
to certain réservations, an exclusive right to manufacture and sell the 
products of said reissues Nos. 12,816 and 12,817, which fact is not 
made to appear in the file wrapper and contents as having been dis- 
closed to the commissioner. While, perhaps, this matter is one for 
the licensee, or other party affected thereby, to raise, the practice is 



672 188 FBDEBAL REPORTER 

not to be commended. Returning to the considération of the substance 
of claim 2 of reissues Nos. 12,816 and 12,924, and contracting the one 
claim of the original patent, No. 845,696, which reads as f ollows, viz. : 

"An eye-guard embodylng lens portions each consisting of a solld ring mem- 
ber havlng an intégral annular flange projecting substantially at right angles 
to the plane of the lens, and gradually tapering in thickness and temiinatiug 
in a flat, yielding, outwardly-extendiug cusliion wliicb is disposed in a plaue 
substantially parallel witb the lens, and an intégral bridge-piece Connecting 
tlie ring members to provide a recess for the nose between the flanges and 
cushions, substantially as described" 

— with said claim 2, it becomes évident that an attempt was made to 
enlarge the original claim by i-eissue, both in reissues Nos. 12,816 and 
12,924. Complainant does not seek to restrain défendants from in- 
fringing the claim of his original patent No. 845,696, which claim is 
made claim 1 of reissue patents Nos. 12,816 and 12,924, whereby it 
seems fair to assume that défendants' device does not infringe that 
claim. The substance of claim. 1 of reissue No. 12,924 is ail that is 
covered by the claim, spécification, and drawings of patent No. 845,- 
696. The flexible lens-holding portions "each consisting of a ring 
of elastic material * * * having a thin compressible and elastic 
tubular flange," as claimed in the reissue, are substituted for the "solid 
ring member having an intégral annular flange * * * ^nd grad- 
ually tapering in thickness" of the original patent No. 845,696, and of 
claim X of the reissue.. If there be any novelty in making the substi- 
tution, it is not suggested in the spécification, drawings, or claim of the 
original patent. It appears from the testimony of defendant's wit- 
ness Wolfstein that prior to the application for reissue patent No. 

12.816, and therefore prior to the application for reissue patent No. 
12,924 in suit, viz., as early as May, 1907, there was on the market in 
this country a goggle known as complainant's Exhibit American 
Thermo- Ware Company goggle. This device défendants claim to 
hâve been selling ever since 1907. There is no patentable distinction 
between the device of claim 2 of reissue patent No. 12,924 and said 
Thermo-Ware goggle. If this be true, then, as défendants' counsel 
say, this exhibit may hâve suggested the necessity of the reissue. 

It hardly seems possible to bring claim 2 in suit within the re- 
quirements of the rule laid down in the cases of Parker &. Whipple 
Co. v. Yale Clock Company, 123 U. S. 95, 8 Sup. Ct. 38, 31 L. Ed. 
100; Miller v. Brass Co., 104 U. S. 350, 26 L- Ed. 783; Mahn v. Har- 
wood, 112 U. S. 354, 5 Sup. Ct. 174, 6 Sup. Ct. 451, 28 E. Ed. 665; 
Dobson V. Lees, 137 U. S. 265, 11 Sup. Ct. 71, 34 L. Ed. 652; and 
General Electric Company v. Richmond Street & Interurban Railway 
Company, 178 Fed. 84, 102 C. C. A. 138. Can it be said that there 
was inadvertence, accident, or mistake in the original patent, or that 
the one claim thereof discloses an inoperative device, or that the re- 
issue in suit does not expand rather than narrow the claim, or other 
rights did not accrue prior to the applications for the two reissues of 
patent No. 845,696? The same may be said as to reissue patent No. 

12.817. The only différence between the two reissues in suit con- 
sists in the place of attachment of the bridge. In No. 12,924 this con- 
nects the lens-holding portions; in No. 12,817, it connects the two flat 



COVEE V. AMERICAN THERMO-WAEE CO. 673 

annular cushions. In each case, of course, the ears or tabs to which 
the holding bands are attached must align with the points of attach- 
ment of the respective bridges. This différence obtains in the two 
original patents, Nos. 845,696 and 850,997. Reissue patent No. 12,- 
817 differs from original patent No. 850,997 in that it too does away 
with the thick rubber walls of the lens-holding members, which taper 
to the cushion and substitute a thin compressible and elastic tubular 
flange Connecting the ring and cushion. 

Assuming, however, that the reissues were granted in accordance 
with the statute and the several décisions construing it, do they con- 
stitute invention in view of the condition of the prior art. 

As early as 1896, a British patent. No. 23,095, was granted to Mor- 
ris and Wilson for an eye-protector in which fine gauze was used in 
place of a lens. "Hitherto," say the inventors, "glass goggles hâve 
been generally used for this purpose, but thèse hâve been liable to 
break and become useless. We substitute for this glass, fine metallic 
gauze which is fitted and secured in rings made of vulcanite or other 
suitable material, thèse rings being attached in any suitable manner to 
a band of India rubber or other fabric for holding the eye-protectors 
securely to the wearer's head." The vulcanite rings are shown to be 
concave, as is also the wire gauze, forming somewhat of a dôme. The 
drawings show a one-piece web of rubber or other flexible fabric com- 
posing the frame and bridge, the bridge being connected between the. 
ring or lens-holding members and the ears being in alignment there- 
with. Substituting rubber as one of the suitable substances mentioned 
in the patent, we bave a goggle very closely resembling the devices in 
suit, though the method for securing the lens is not made plain. The 
lens held constrictively by means of slots or grooves in soft rubber are 
shown in the Crofutt patent, No. 152,215, dated June 23, 1874. ' 

A comparison of the structure described in the claims in suit with 
the devices of the prior art shows that any novelty to which the Cover 
device might lay claim must rest entirely upon the qualities of the ma- 
terial used in its construction. In other words, strike out of the claims 
"flexible," "elastic," constrictively," "compressible"^words which de- 
scribe soft rubber (the only material having thèse qualities practicable 
for the use described, of which we hâve any knowledge) — and there 
remains nothing in the claims patentably difïerentiating the Cover 
goggle from Morris & Wilson British patent. No. 23,095, dated 
October 31, 1896; Genèse patent. No. 295,242, dated March 18, 1884; 
Pozdena patent. No. 476,486,, dated June 7, 1892; and many others. In 
making this statement, the court does not overlook the fact that the 
words "flat" and "annular" would remain in the claim, nor that the 
words " * * * pièce embodying" would imply integrality. But 
flatness of the cushion would be a demerit rather than a merit (see, 
for instance, the Morris & Wilson flat vulcanite rings) were it not 
for the flexibility and elasticity of the soft rubber used in the construc- 
tion of the goggle. Annularity does not distinguish the cushions from 
those of the prior art. Indeed, both flatness and annularity are found 
in the Morris & Wilson British patent. No. 23,095, supra. And that 
annular eye-pieces or cushions are a perfectly obvious departure from 
188 F.— 43 



674 188 FEDERAL EEPORTER 

the oval or other shaped cushions of the art is evidenced by the state- 
ment of the Morris & Wilson spécification that: 

"The metallic gauze A could be eut elther in a round shape as shown In 
the drawlng or In an oval or eye shape, whichever was found to be most suit- 
able and convenient, the rings of vulcanlte or other suitable materlal B for 
holding the gauze belng of the necessary shape and section." 

The integrality implied in the word "pièce" is a resuit of the use of 
soft rubber, because soft rubber is the only material practicable for 
this purpose and having the other qualities called for by the claim, 
which can be moulded. 

If the claims should be sustained as vahd, it would be impossible 
(unless the doctrine of équivalents is to be absolutely ignored) for a 
manufacturer of an ail rubber goggle of any sane shape to escape a 
charge of infringement. It therefore seems a fair conclusion that 
what the claims attempt to cover, and what they were intended to pro- 
tect, was the idea of making a goggle entirely of soft rubber. 

[ 1 ] The law is well settled that the making of a device, in whole or 
in part of materials better adapted to the purpose for which it is used 
than materials of which the old one is constructed, and for that reason 
better and cheaper, cannot entitle the manufacturer to a patent. "It 
may afford évidence of judgment and skill in the sélection and adapta- 
tion of the materials in the manufacture of the instrument for the 
purposes intended, but nothing more." Hotchkiss v. Greenwood, 11 
How. 248, 13 L. Ed. 683. The substitution of a "new material dis- 
covered by the substitutor does not affect the identity of a machine 
unless its mode of opération is thereby changed." Bailey Washing 
Machine Co. v. Lincoln, 4 Fish. Pat. Cas. 379, Fed. Cas. No. 750. 
Evem the f act that the • material substituted was never bef ore used 
for the same purpose is of no conséquence. Rushton v. Crawley 
( 1870) L. R. 10 Eq. 522 ; Jordan v. Moore, E. R. 1 C. P. 624. 

In the case at bar, Cover was by no means the iîrst to conceive of 
the advantages of the use of soft rubber in goggle construction. The 
Morris & Wilson British patent, No. 23,095, utilized the flexibility of 
soft rubber almost to the same extent as did Cover. The bridge-piece 
(upon which the fitting of the face so largely dépends) is as flexible 
as that of Cover's device, and one lens portion can be folded upon 
the other, either in forward or backward position as readily as can 
that of the patent in suit. Construct the Morris & Wilson rings of 
soft rubber (which is surely within the purview of the patent as a 
"suitable material"), and it is believed nothing more than colorable dif- 
férences remain to distinguish it from the construction of the patent 
in suit. It is true the compressibility of the tubular flange of the pat- 
ent in suit would be absent on account of the thickness and heaviness 
of the Morris & Wilson rings; but it requires only a careful ex- 
amination and trial of the Cover goggles to demonstrate that this tu- 
bular flange would perform its function just as well if made of non- 
compressible material, for its compressibility is not called into play 
in the use of the goggles. Even when folded as shown in Figure 
4 of patent No. 12,924, it is seen that the compressibility of the tu- 
bular flange îs not utilized. 



IN RE FEHREEI 675 

"Soft and flexible india rubber" is the material mentioned in the 
Crofutt patent, No. 152,215, dated June 23, 1874, for construction of 
"eye and lung protectors" of that patent. This is also true of the 
Pozdena patent and the Genèse patent heretofore cited. 

The principal value of soft rubber in this art rests, as it does in 
numerous other arts, upon the fact that the material can be molded, 
and thus the article made in one pièce. This, perhaps, makes a 
cheaper and more durable article, and consequently a better seller ; but 
thèse results flow, not from a new combination of éléments, but from 
the skill and judgment of the manufacturer in selecting the material. 

There bas been introduced in évidence on behalf of défendant a 
book entitled "Barème Universal Rozard," being an instruction man- 
ual for the use of métal workers, and containing principally lists of 
tables showing how screw threads should be eut. This book has been 
shown to hâve been published in Paris, France, in 1903, some 2,000 
volumes having been printed, and to hâve been immediately placed 
within reach of the gênerai public by being deposited in the National 
Lfibrary at Paris, as well as by being sold by its compiler to booksellers 
and by them distributed to the gênerai public. Next to the last page 
of this publication appears an advertisement illustrating and clearly 
disclosing an ail rubber goggle varying only in the most insignificant 
détails from the goggle illustrated in Figure 2 of patent No. 12,817. 
From printed matter accompanying the illustration, the goggle is de- 
scribed as being made entirely of black rubber and being therefore 
very flexible, and- by reason of its elasticity permitting the instantane- 
ous replacing of the eyeglasses. Cover does not attempt to carry his 
invention back of September, 1904, and the disclosure of this adver- 
tisement seems to constitute such a publication as should hâve pre- 
cluded the granting of the Cover patent. 

[2] The court is therefore of the opinion: (1) That the letters 
patent in suit are void as reissues because not based upon errors in 
their originals arising through inadvertence, accident, or mistake; (2) 
that they are void as being broadened reissues applied for after the 
intervention of adverse rights; (3) that in view of the prior art the 
claims in suit do not disclose patentable invention ; (4) and that, even 
if invention be assumed, the patents should not hâve been granted 
because the subject-matter thereof was described in a printed publi- 
cation before applicant's invention or discovery thereof. 

The bill may be dismissed for want of equity. 



In re FERRERI. 

(District Court, E. D. Louislana, Bâton Rouge Division. June 27, 1911.) 

No. 217. 

1. Bankruptct (§ 482*) — Expenses — Fées — Bankeupt's Attobnet. 

A référée in bankruptcy Is entitled, and It is his duty, to reduce the 
amount named for fées of the bankrupt's attorney, If such amount In the 
referee's opinion is too high. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 482.*] 

•For other cases see same topic & S numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



676 188 ffEDERAIi REPORTER 

2, Bankbtiptct (§ 482*) — Moktoages — Attobnet's Fées. 

Where a mortgage exeeuted by a bankrupt providefl for the payment 
of attorney's fées of the mortgagee in case he was required to employ 
counsel, the mortgagee was entitled to. an allowance for a reasonable 
attorney's fee for services required in proving the mortgagee's claim 
and lien agalnst the banknipt's estate. 

[Ed. Note.— For other cases, see Banliruptcy, Cent. Dig. §§ 874-876; 
Dec. Dig. § 482.»] 

In Bankruptcy. In the matter of bankruptcy proceedings of Jos- 
eph Ferreri. On appeal from a referee's ruling reducing fées al- 
lowed the bankrupt's attorney, and refusing to allow bankrupt's fées 
in connection with the payment of a mortgage on the bankrupt's 
property. Afiirmed in part and reversed in part. 

T. Jones Cross, for Provident Building & Loan Ass'n. 

FOSTER, District Judge. In this matter appeal has been taken 
from the ruling of the référée: First, as to his action in reducing 
on his own motion the fee of the attorney of the bankrupt; and, 
second, for disallowing the claim of the Provident Building & Loan 
Association for attorney's fées in connection with the payment of 
its mortgage on the bankrupt's property. 

[1] There can be no doubt that the référée has the right, and it 
is his duty, to reduce the amount allowed by the trustée as fées of 
the attorney for the bankrupt, if too much. The law provides for 
one reasonable attorney's fee, and the référée is by long odds in the 
best position to détermine what is reasonable in the premises. 

[2] The question as to whether or not the attorney for the mort- 
gage creditor shall be allowed the fee stipulated in the act of mort- 
gage seeins to be well settled by the jurisprudence of Louisiana. 
There are a number of cases in which such fées hâve been denied, 
but in each instance it was due to the peculiar circumstances of the 
case. In the case of Mullan v. His Creditors, 39 La. Ann. 397, 2 
South. 45, however, which was decided in the instance court by his 
honor, Mr. Justice Monroe, and affirmed by the Suprême Court, the 
court said: 

"The claim of the mortgage creditor for attorney's fées Incurred by hlm, 
after tlie maturity of the note and for services rendered to secure payment of 
his note, is well founded. 

"It was agreed by the act of mortgage that the mortgagor bound himself 
and his assigns to pay the holder of the note ail attorney's fées, as he may 
Incur, in the event of the nonpayment of the notes at maturity. 

"The évidence shovs^s that, after the sale of the mortgaged real estate, the 
syndic ruled the mortgagee to show cause why the inscription of his act of 
mortgage should not be canceled to give a title to the purchaser. 

"The mortgagee was thus eonstrained to employ counsel to represent him 
and see that, if the amount went to the syndic, it would be secure in his 
hands. This was not a mère formality. Responsibility rested on the counsel, 
for which the mortgagee, under the clause, is entitled to recover the compensa- 
tion, as flxed in the contract." 

I do not find that this décision has ever been questioned or over- 
ruled in the slightest degree, and it applies with the same force to 
proceedings in bankruptcy as it did to proceedings under the in- 

♦For otber cases see same toplc & | numueb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN EE SSEAR 677 

soîvent laws, as no valid title to mortgaged property can be delivered 
by the trustée without bringing the mortgagee into court, in practi- 
cally the same manner. 

And it is also well settled t.hat the attorney's fées, when due, are 
considered capitahzed and recoverable by the mortgagee, of course, 
for the benefit of the attorney to whom they must ultimately be paid, 
and no doubt usually are. 

The ruling of the référée as to the réduction of the fées allowed 
the attorney for the bankrupt is approved and affirmed. His ruling 
with regard to the fee claimed by the Provident Building & Loan 
Association is reversed. 



In re SHEAR. 

(District Court, W. D. New York. June 13, 1911.) 

No. 3,963. 

1. BANKRUPTCT (§ 241*) CONTEMPT— JtTKISDICTrON TO PUNISH. 

The judge of a bankruptcy court has jurisdlction to summarlly punish 
for eontempt misbehavlor of the bankrupt and the glving of false testl- 
mony. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dlg. f 241.*] 

2. Bankeuptct (§ 241*) — Exauiination of Bankkupt— False Testimony— 

contempt. 

Wliere a bankrupt swore falsely in his testimony and endeavored to 
conceal property, his conduct was contumacious and punishable as for 
eontempt. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 241.*] 

In Bankruptcy. In the matter of proceedings against Wilson 
M. Shear. On motion to punish for eontempt. Granted. 

Dolson & Dolson, for bankrupt. 
Carleton H. White, for trustée. 

HAZEL, District Judge. Référée Hamlin has certified to me 
as judge of the court of bankruptcy, pursuant to section 41 of the 
bankrupt act (Act July 1, 1898, c. 541, 30 Stat. 556 [U. S. Comp. 
St. 1901, p. 3437]), that the bankrupt, after taking the prescribed 
oath, refused to be examined according to law, in that on the exam- 
ination before him he gave willful, evasive, and false testimony, 
and that he was guilty of eontempt of court for refusing to be ex- 
amined according to law. The asserted false oath was made during 
the course of the examination of the bankrupt (section 7, subd. 9), and 
related to the conduct of his business and whereabouts of his prop- 
erty. The matter now cornes regularly before me on pétition and or- 
der for summary hearing. 

[1] I hâve carefully perused and considered the évidence sub- 
mitted by the certificate of the référée and the answering affida- 
vit of the bankrupt, and it is diflfîcult to escape the conclusion 
that the bankrupt willfully testified falsely and evasively. The 
power of the judge to summarily punish for eontempt for mis- 

*For other cases see same toplc & § numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



678 188 FEDERAL REPORTEE 

behavior and giving false testimony is undeniable. In re Fellerman 
(D. C.) 149 Fed. 244; In re Bick (C. C) 155 Fed. 908; In re Singer 
(D. C.) 174 Fed. 208; In re Schulman (I>. C.) 167 Fed. 237; In re 
Gordon (D. C.) 167 Fed. 239; In re Gitkin (D. C.) 164 Fed. 71; In 
re Bronstein (D. C.) 182 Fed. 349. 

[21 The disobedience certified is one of the gravest known to the 
administration of justice, and the evils of false swearing in our 
courts, and specially in bankruptcy proceedings by bankrupts in their 
endeavor to conceal property, is so great as to require the severest 
condemnation and punishment in a plain case. The bankrupt has 
not only been evasive and disingenious in his replies to questions 
properly put to him before the référée, but in utter disregard of the 
truth and solemnity of the proceeding he has asseverated untruths 
and given false testimony, the falsity of which is thought directly 
established. Abundant opportunity was given him to explain or purge 
himself, by withdrawing his false testimony, and to testify truthfuUy. 
He did not do so, and therefore he is adjudged in contempt of court. 
The contention that the bankrupt is entitled to trial by jury' is un- 
tenable. In re Debs, 158 U. S. 594, 15 Sup. Ct. 900, 39 L. Ed. 1092. 

The record shows that to interrogatories upon the subject relat- 
ing to the property and business affairs of the bankrupt he repeatedly 
testified that in the month of December, 1910, he had given to his 
stenographer 20 shares of St. Lawrence & Cobalt Consolidated Min- 
ing Company stock, being certificate No. 718, and that such stock 
had always been in her possession; that he had never given such 
stock to one Nora Hurd, and did not know it was in her possession. 
Subsequently it appeared that he had previously given such stock to 
Nora Hurd, and, to comply with the direction of the référée to 
produce the same at some future time, he wrote Nôra Hurd, asking 
her to surrender it to him. The false oath evidently consists of his 
repeated statements that the stock was in the possession of his ste- 
nographer, and that it was not in the possession of Nora Hurd, indi- 
cating his intention to conceal such stock. As the bankrupt estate has 
not suffered any loss by the false oath, and as the 20 shares of mining 
stock, in relation to which the false oath was made, hâve been de- 
livered by the bankrupt to his trustée, and, furthermore, as the value 
of such stock was not large, as is presumed from what is contained 
in the record, the punishment will not be attended with imprison- 
ment, unless the bankrupt fails to pay the fine imposed herein. 

The bankrupt is sentenced to pay a fine of $100 within 10 days, and 
for his failure to pay he will stand committed to the marshal of this 
district, to be imprisoned in the Erie county jail for a period of 
30 days, or until the further order of this court. 

So ordered. 



WATEEPROOFINQ CO. V. NEAL FARNHAM 679 

WATERPROOFING CO. v. NEAL FARNHAM, Inc., et al. 

(Circuit Court, S. D. New York. January 4, 1911.) 

Tbade-Makks and Teade-Names (§ 95*) — Infringement— Pbeliminaet In- 
junction. 

A motion for preliminary injunction agalnst the Infringement of a 
trade-mark will net be granted where the use of ttie trade-mark com- 
plained of in an advertisement was only for a week and has been discon- 
tinued, but leave will be granted to renew the motion if the défendant 
continues to use the name in advertising. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent. 
Dig. § 108 ; D«c. Dig. § 95.*] 

In Equity. Suit by the Waterproofing Company against Neal Farn- 
ham, Incorporated, and others. On motion for a preliminary injunc- 
tion. Denied. 

D. A. Usina, for complainant. 

F. Warren Wright, for défendants. 

COXE, Circuit Judge. This is a motion for an injunction restrain- 
ing the infringement of the alleged trademark "HydroHthic" which 
was registered June 12, 1910. This trademark has never been adjudi- 
cated ; its validity is in dispute. The affidavits do not show a case of 
gênerai acquiescence, The particular act of infringement complained 
of is the pubUcation by the défendant J . P. Beck of a program of a Cé- 
ment Exhibition given during last month at the Madison Square Gar- 
den in the city of New York. This program contains an advertise- 
ment by the défendant Neal Farnham in which the words "Hydro- 
lithic Waterproofing for Sub-Structural Walls" are inserted. This 
exhibition lasted but a week or so and was finally closed in the latter 
part of December. No future damages can therefore be attributed to 
this particular act. Whatever damages there are hâve ^Iready accrued 
and cannot be afïected one way or the other by an injunction. The 
défendant Farnham does not sell his product under the name of "Hy- 
drolithic" and does not use that name upon boxes, packages or bun- 
dles. His product is sold under the name of "Waxin." It is not at 
ail unlikely that two fair and intelligent business men will reach a 
settlement of so inconsequential a dispute, but even should the case go 
to a final heàring it will in the usual course be decided.on its merits 
before any serious damage can be suffered by the complainant. Upon 
proof that the défendant continues to advertise by using the name 
"Hydrolithic" as in the catalogue of the Cernent Show, a renewal of 
this motion may be had. As at présent presented, the case is not one 
for a preliminary injunction. 

The motion is denied. 

•For other cases see same topio & § ntjmeer in Dec. & Am. Digs. 1907 to date, & Rep'r Inflexes 



080 , 188 FEDERAL EBPOKTBR 

PENNSriiVANIA STEEL CO. v. NEW YORK CITY RY. CO. et aL 
(«rcuit Court, S. D. New York. June 19, 1911.) 

RECEIVEES (§ 91*) ^LBASES—EeNT— REDUCTION. 

Where receivers of a railroad company rented a building for a hôtel 
wlth the privilège of renewal and the lessee accepted a renewal at tbe 
same rent many months after a change by tbe receivers in the street 
railway facillties in froBt of the hôtel, and the receivers, subséquent to 
the renewal of the lease, had done nothing to affect the lessee's business, 
he was not entitled to a réduction of the rent because of such change. 

[Ed. Note.^-For other cases, see Receivers, Dec. Dlg. § 91.*] 

In Equity. Suit by the Pennsylvania Steel Company against the 
New York City Railway Company and another. Application by 
lessee of building used for a hôtel for réduction of rent. Denied. 

Byrne & Cutcheon, for cpmplainant. 

Jas. L,. Quackenbush, for New York City Ry. Co. 

J. Parker Kirlin, for Metropolitan St. Ry. Co. 

Masten & Nichols, for receivers. 

Bowers & Sands, for Simpson, Thatcher & Bartiett 

LACOMBE, Circuit Judlge. This is an application by the lessee 
of a building near the Twenty-Third street westerly terminal for 
a modification of the lease, by reducing the amount of rent reserved. 
The lease was entered into April 30, 1909, for a period of five years, 
with a privilège reserved to the lessor to terminate it on the Ist day 
of May or November in any year upon giving six months' notice. 
It was in renewal at the same rent of a prior lease to petitioner or 
his brother, and petitioner was himself in possession for some time 
before the exécution of the new lease. 

Under the varions orders and decrees the receivers had abundant 
authority to rnake such a lease, without first securing the spécifie 
approval of the court. The business conducted on the premises is that 
of a hôtel. Petitioner states that the receipts of the business hâve 
fallen off materially in conséquence of the opération of the cars run 
to that terminal. Heretofore they stopped at two stubs and a switch 
quite near the hôtel. Now they run by the hôtel, without stopping, 
upon a loop which sweeps around near ferry entrances. The diiîiculty 
with his application, however, is that the change in mode of opéra- 
tion was made many months before the new lease was entered into. 
Nothing has been done by receivers subséquent to renewal to affect 
his business in any way. It is thought that the court should not, un- 
der thèse circumstances, deprive creditors of whatever may come to 
them by the enforcement of the lease. 

Motion denied. 

•For other cases see same toplc & 5 nttmbbb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



COANË V. NEITBB 681 

COANB V. NETTEK. 

(Circuit Court, E. D. Pennsylvania. July 3, 1911.) 

No. 699. 

1. Tkade-Maeks and Teade-Names (§ 95*)— Unfaib Compétition— I^elimi- 

NARY INJUNCTION. 

The court, in a suit based on unfair compétition by tJie use of a label, 
wîll not order a preliminary iiijunttion, wliere défendant bas dlseontin- 
ued the use of tbe label and does not Intend to use it again; but plaln- 
tiff may renew bis motion for an injunction on défendant using the 
label. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent 
nig. § 108 ; Dec. DIg. î 95.* 

Unfair compétition in use of trade-mark or trade-name, see notes to 
Scheuer v. Muller, 20 C. 0. A. 165; Lalie v. Harper & Bros., 30 C. G.' A. 
376.] 

2. Tbade-Maeks and Tbade-Names (§ 95*) — UnlawFiUL Use of Teade-Mabk 

— Peeliminaet Injunction— Secueity foe Damages. 

Tbe court, in a suit based on the unlawful use of a trade-mark, wlll 
on eomplainant's motion grant a preliminary injunction, unless défend- 
ant will enter into security to respond in damages if It should be deter- 
mlned that the trade-mark Is valld and that It has been infringed. 

[Ed. Note. — For other cases, see Trade-Marks and Trade-Names, Cent 
DIg. § 108 ; Dec. DIg. § 95.*] 

In Equity. Suit by Robert Coane against David Netter. Motion 
for preliminary injunction conditionally denied. 

Horace Pettit, for complainant. 
Loughlin & Bracken, for respondent. 

J. B. McPHERSON, District Judge. [1] So far as concerns the 
charge of unfair compétition by the use of the label complained of, I 
do not see that the plaintifif needs protection at présent. The de- 
fendant has discontinued the use of the label, and I accept his state- 
ment that he does not intend to use it again ; but, if he does so use 
it, the plaintiff has leave to renew this motion. The jurisdiction of 
the Circuit Court to entertain the charge of unfair compétition — both 
parties being citizens of Pennsylvania — need not nowf be determined. 

[2] As to the trade-mark, "No. 6," I am unwilling to décide its valid- 
ity now. No harm, I think, can be donc by deferring the décision 
until final hearing; but I think the défendant should enter security 
to respond in damages, if it should be determined hereafter that the 
trade-mark is valid and that he has been infringing, before final decree. 

It is therefore ordered that the défendant enter security within five 
days in $1,500, with condition as just stated If this be donc, the 
clerk will enter an order that the preliminary injunction is refused. 
If the security be not entered, a preliminary injunction will be granted, 
restraining the use of the trade-mark "No. 6." 

I may add that one of the judges of the Circuit Court will hear 
this case at an early date in the fall after issue has been joined, the 
time to be fixed upon application. 

■TOT otli«r cases see same topic & § numbbb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



682 188 FBDBEAL REPORTEE 

UNITED STATES V. WARNER. 

(Circuit Court, S. D. New York. June 16, 1911.) 

Commerce (§ 47*) — Intehstate Commeece— Immoral Pueposes— Statutes— 

CONSTITimONALITT. 

Act Cong. June 25, 1910, c. 395, 36 Stat. 825, making It a crimina] of- 
fense for a person to transport, or assist or pay for transportation, from 
one statè to another, of any woman for an Immoral purpose, tliougli ap- 
parently interferlng wlth the police power of the state, is not unconsti- 
tutlonal. 

[Ed. Note. — For other cases, see Commerce, Dec. Dlg. § 47.*] 

John Warner was indicted for transporting a woman for immoral 
purposes from one state to another, in violation of Act Cong. June 
25, 1910, and diemurs. Overruled. 

Henry A, Wise, U. S. Atty., and Daniel Day Walton, Jr., Asst. U- 
S. Atty. 
Charles W. Bacon, for défendant. 

HOLT, District Judge. This is a demurrer to an indictment. The 
indictment is brought under the act of June 25, 1910, making it a 
criminal offense for a person to transport or assist or pay for the 
transportation from one state to another of any woman for an im- 
moral "purpose. The ground of the demurrer is that the act is un- 
constitutional. 

If this were an original question, my opinion would be that the 
act is unconstitutional. I do not believe that the f ramers of the 
Constitution ever imagined that the power conferred upon Congress 
by the Constitution to regulate commerce between the states would 
authorize the enactment by Congress of such a statute. Under this 
statute, if a man takes a woman for an immoral purpose from New 
York across the North River to Jersey City, he is guilty of a crime 
punishable by imprisonment for five years and a fine of $5,000. If 
the same man takes the same woman for the same purpose from New 
York across the East River to Brooklyn, he is guilty of no crime at 
ail. This statute, in my opinion, in effect attempts to exercise a purely 
police power of the state, under the guise of regulating commerce. 
If this statute is constitutional, it is in the power of the fédéral govern- 
ment to make it a criminal act for any person to go from one state 
to another while engaged-in any crime, fraud, or object which may be 
deemed objectionable by Congress. But in view of the décisions of 
the Suprême Court in the Lottery Case, 186 U. S. 321, 23 Sup. Ct. 
321, 47 L. Ed. 492, holding that Congress had authority to prohibit 
the transmission of lottery tickets between the states,- of the Passenger 
Cases, 7 How. 283, 12 L. Ed. 702, holding that the transportation of 
passengers is a part of commerce, of Judge Wolverton, in U. S. 
v. Westman (D. C.) 182 Fed. 1017, holding the statute constitutional, 
and the gênerai tendency of législation and of judicial décisions in 
récent years upon cognate subjects, I think it is suffi ciently doubtful 

•For other cases see same topio & 5 nûmbeb In Dec. & Am. Dlgs. 1907 to date, & Eep'r Indexes 



AMERICAN PIN CO. V. BEEG BEOS. 683 

whether the act in question will be held unconstitutional by the United 
States Suprême Court to make it improper for a court of first instance 
to hold it to be so. 

The demurrer is overruled. 



AMERICAN PIN CO. v. BEHG BROS. 

(Circuit Court, S. D. New ïork. May 31, 1911.) 

Teadb-Maeks and Trade-Names (§ 95*)— Unlawful Compétition— Peelim- 

INARY INJUNCTION — DECEIT. 

Where coroplainant sold hooks and eyes on a card, the style of whlcli 
was adopted in 1902, since wLlcli tlme comj)lainant had enjoyed a large 
trade in différent parts of the United States, it was entitled to a pre- 
llminary injunction restraining defendant's sale of similar hooks and 
eyes, though under another name, on eards so closely resembling com- 
plainant's that purchasers would be liable to be deceived, without proof 
of spécifie instances in which an individual purchaser had been deceived. 

[Ed. Note.— For other cases, see Trade-Marks and Trade-Names, Cent. 
Dig. § 108 : Dec. Dig. § 95.* 

Unfair compétition In use of trade-mark or trade-name, see notes to 
Scheuer v. Muller, 20 G. O. A. 165 ; Lare v. Harper & Bros., 30 C. C. A. 
376.] 

In Equity. Suit by the American Pin Company against Berg Bros. 
Application for preliminary injunction to restrain unfair compétition 
in trade. Granted. 

Wetmore & Jenner, for complainant. 
Katz & Sommerich, for défendant. 

LACOMBE, Circuit Judge. The acts complained of are sales by 
défendant of- hooks and eyes fastened on cards, which are imitations 
of the complainant's card, called the "Dorcas." It is alleged that de- 
fendant's cards, called the "Cornet," so closely resemble complainant's 
that purchasers are liable to be deceived, and to mistake the one for 
the other. Samples of the cards are in évidence, and are far more 
illuminative of the issue than any written description could possibly be. 

Complainant's afifidavits sufficiently shovi' that its style of card was 
gotten up in 1902, and that since then they hâve been sold in very 
large numbers in many différent parts of the United States. Thèse 
averments are not controverted by the afïidavits of defendant's wit- 
nesses to the effect that there are many department stores in which 
they are not to be found on sale. It is contended that complainant 
is not entitled to a preliminary injunction, because no proof is given 
of spécifie instances in which some individual purchaser has been de- 
ceived. Such proof is not necessary, where the imitation is so close 
that it is apparent that confusion must resuit. That is the situation 
hère. No doser simulation of the form, coloring, lettering, and gên- 
erai features of the package has been found in any case which has 
corne before this court in very many years. 

Preliminary injunction may issue as prayed. 

•For other cases see same toplc & i humbeb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



684, 188 FEDERAL KEPOETBE 

In re WIEDMANN. 
(District Court, W. D. New York. June 30, 1911.) 
No. 3,608. 

Bankbuptct (I 409*) — Discharge— Objections— Conceaiment of Books. 

A bankrupt, havlng kept books of account during ail the time he was 
engaged In business, on being examined before the référée, was requested 
and promlsed to produce his books at a subséquent hearing. The hear- 
Ing was adjourned several tiuies at his request, until six months after 
tfie flrst hearing he testifled that his wife had kept the books and that 
they could not be found. Held, that such explanatlon was unsatisfactory 
and warranted a déniai of a discharge, ou the ground that he had de- 
Btroyed or concealed his books with intent to coneeal his financlal con- 
dition. 

[Ed. Note. — For other cases, see Bankruptcy, Cent Dig. §§ 739, 752- 
757 ; Dec. Dlg. § 409.*] 

In Bankruptcy. In the matter of bankruptcy proceedings of Charles 
Wiedmann. On motion to confirm the report of the spécial master, 
providing for déniai of the bankrupt's discharge. Affirmed. 

Charles Newton, for bankrupt. 

Lincoln A. Groat, for objecting creditor. 

HAZEL, District Judge. The bankrupt should be denied his dis- 
charge on the ground that he has destroyed or concealed his books 
of account with intent to coneeal his financial condition. It is conceded 
that he kept books of account during ail the time he was engaged in 
business. He was examined before the référée, and requested to bring 
his books at a subséquent hearing, which he promised to do. Sub- 
sequently the hearing was adjourned several times at his request, until 
in October, 1910, six months after the first hearing, he appeared be- 
fore the référée, pursuant to subpœna, and testified that his wife had 
kept the books, that they could not be found, that his wife had been 
careless, that he had looked for the books, and could not find them. 

The profïered explanation is entirely unsatisfactory. The presump- 
tion arises that the bankrupt has concealed his books to keep f rom his 
creditors his actual financial condition, which presumption finds strong 
support in the transactions prior to filing his pétition and within four 
months prior thereto, by which certain of his property was transferred. 
Considering such acts, to which the référée attached importance in 
connection with the later concealment of his books, a disposition to 
hinder his creditors from in any way deriving any benefit from his 
property is strongly indicated. It would be a singular situation if 
a bankrupt, who takes advantage of the privilège given him by the 
bankrupt act, could thus thwart his creditors and refuse them any 
knowledge of his financial affairs, on his uncorroborated testimony 
that his books had been lost since he had been requested to exhibit 
them, and with a wave of the hand place the responsibility for their 
loss and his inability to produce them upon his wife. It is not neces- 
sary that direct évidence of concealment or destruction be given. The 
bankrupt's testimony is nianifestly unreliable, and a discharge will 

«For otber cases see same topic & i ititmbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN EE E08S 685 

be denied him, on the ground that he has destroyed or concealed his 
books of account by which his actual financial condition could be as- 
certained. 

The spécial master also found that the bankrupt, within a period 
of four months before filing his pétition, transferred and concealed his 
property; but this objection, in view of the foregoing, need not be 
passed upon. 

So ordered. 



In re EOSS. 
(Circuit Court, M. D. Pennsylvania. July 29, 1911.) 

No. 1,544. 

1. Aliens (§ 62*) — Natuealization— Qualifications. 

Wliere an alien, applying for admission to citizensliip, has not behavefl 
as a man of good moral character while residing in tlie United States, 
tbe court. In the exercise of a sound discrétion, wlll refuse his pétition, 
though his hehavior has been good during the flve years preeeding the 
pétition; and the court must détermine, taking into account the whole 
conduct of the petitioner, whether he possesses the necessary qualifica- 
tions for citizenshlp. 

[Ed. Note.— For other cases, see Aliens, Cent. Dig. §§ 123-125; Dec. 
Dig. § 62.*] 

2. AiiENs (§ 62*) — Nattjbalization— Qualifications. 

An alien, pleading guilty to murder in the second degree, will not be 
admitted to citizenship, though before the offense, and for more than flve 
years after the expiration of the term of imprisonment, his conduct re- 
veals no cause for censure. 

[Ea. Note.— For other cases, see Aliens, Cent. Dig. §§ 123-125 ; Dec. Dig. 
§ 62.*] 

Pétition of Léonard Ross for admission as a citizen of the United 
States. Pétition denied. 

A. B. Dunsmore, U. S. Atty. 

WITMER, District Judge. [1] If it is made to appear that an 
alien, applying for admission to citizenship, has not behaved as a man 
of good moral character while residing in the United States, the court, 
in the exercise of a sound discrétion, may refuse his pétition, notwith- 
standing the applicant's good behavior during the five years preeeding 
his application. It is the duty of the court to détermine, taking into 
account the whole career and conduct of the applicant, in so far as it 
is made to appear, whether such a one possesses the necessary qualifi- 
cations, moral and otherwise, to entitle him to the rights of citizenship. 

[2] The petitioner is a discharged convict, having on February 10, 
1896, pleaded guilty to the charge of murder in the second degree, 
for which crime he was sentenced to imprisonment at hard labor for 
a period of U years and 6 months. The actual term of his imprison- 
ment was about 9 years, and at the time of filing his pétition he had 
been at liberty more than 5 years. Before the commission of the 
offense, and since, the conduct of the petitioner reveals no cause for 

?'or other cases see same topic & § numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



686 188 FEDERAL KEPOETBK 

censure, and if his personal welfare alone was entitled to considération 
the conferring of the rights of citizenship might be considered as 
proper aid and encouragement. This matter, however, is not to be 
determined along such narrow Unes. The evil resulting from such 
practice would immeasurably exceed the personal benefits conferred 
from such attempts at dispensing charity. Citizenship is not to be de- 
bauched by conferring on the criminal class its sacred privilèges. The 
crime of which the petitioner admitted his guilt is so abhorrent to 
human nature and society that this court will not bestow on him the 
rights of an American citizen, notwithstanding the great liberality of 
our fédéral government. 
The pétition is dismissed. 



In re DE LONG FURNITURE CO. 

(District Court, E. D. Peniisylvania. July 3, 1911.) 

No. 3,677. 

Bankeuptct (§ 355*) — Assigxments of Contbacts— Pebfdemance of Con- 

TEACTS BY ReCEIVER AND TEUSTSa:— EfFECT. 

Where a party to a contract assigned to his créditer the money to be- 
come due under the contract, and the party's receiver and trustée în 
banlïruptcy carried out the contract, the money liecoming due must be 
used to discharge the debt due the créditer, though on the failure of the 
receiver and trustée to complète the contract there would hâve been no 
money to which the asslgnment could apply. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 355.*] 

In the matter of the bankruptcy of the De Long Furniture Com- 
pany. On certificate of référée concerning the claim of the Kutztown 
National Bank. Referee's order affirmed. 

Joseph R. Dickinson, for trustée. 

J. H. Marx, for Kutztown Nat. Bank. 

J. B. McPHERSON, District Judge. The only question presented 
by this certificate is the correctness of the referee's order directing the 
trustée to pay to the bank $508.80 in partial discharge of the furniture 
company's admitted debt. The company did not really assign to the 
bank the contracts in question, but (whatever the mère form of the 
transaction may hâve been) merely assigned the money to become due 
under thèse contracts. This is conceded to hâve been valid in equity 
as an executory agreement to assign, and, if the furniture company 
had continued to do business and had carried out the contracts, the 
bank's right to receive the money when it became due, would be clear. 
But insolvency under the state law, and afterwards bankruptcy, in- 
tervened while the contracts were still uncompleted, and it is this fact 
that introduces the disturbing élément. In my opinion, however, the 
référée came to a proper conclusion. Neither the receiver nor the 
trustée was bound to adopt and complète the , contracts, and, if neither 
had undertaken to complète, there would hâve been no money to 
which the furniture company's assignment could apply, and the bank 

•For other cases see same topic & § numbeh in Dec. Se Am. Digs. 1907 to date, & Rep'r Inijexes 



IN B£ A. A J. M. ESMABK 687 

would hâve been compelled to accept the situation. But the receiver 
and the trustée did adopt and did carry out the contracts, and in my 
opinion they stepped thereby into the furniture company's shoes, and 
became bound in equity, as the company was already bound, to de- 
vote the proceeds to the object agreed upon between the company and 
the bank. 

The order directing the trustée to pay $508.80 to the bank is there- 
fore affirmed. 



In re A. & J. M. ESMARK. 

(District Court, E. D. Pennsylvanla. June 3, 1911.) 

No. 3,779. 

ESTOPPEL (i 68*) ClAIMS— RlSHTS OF CSEDITOE— INCONSISTENT POSITIONS. 

Clalmant, having recelved the bankrupts' judgment notes for money 
advanced, afterwards distralned for rent due him as landlord from the 
bankrupts, and levied on certain property as belonging to them. Held, 
that he could not In bankruptcy thereafter clalm tltle to such property 
as having been purchased by the bankrupts with claimant's funds, under 
an agreement that he sbould hold the title untll the money was repald. 

[Ed. Note.— For other cases, see Estoppel, Cent Dig. §§ 165-169; D«c. 
Uig. § 68.*] 

In Bankruptcy. In the matter of bankruptcy proceedings against 
A. & J. M. Esmark. On certificate of a référée concerning the dis- 
allowance of the claim of Louis Stecher. Affirmed. 

Henry N. Wessel, for claimant. 
JuHus C. Levi, for trustée. 

J. B. McPHERSON, District Judge. The référée (David W. Am- 
ram, Esq.) in a careful and elaborate report has disallowed this claim. 
I think his order finds ample support in the inconsistency of the 
positions taken by the claimant at one time and another with regard 
to the Personal property that produced the fund in question. The 
property was bought by the bankrupts with money furnished by the 
claimant, and his présent position is that he and the bankrupts agreed 
verbally that he should be the owner until the money should be re- 
paid. Repayment having never been made, he lays claim to the fund 
that arises from the sale of his own property. This contention is 
at least intelligible — it should be noted in passing, that the bank- 
ruptcy antedates the amendments of 1910 — but unfortunately for the 
claimant he has heretofore taken a wholly irreconcilable position. He 
received the bankrupts' judgment notes for the money advanced, and 
thus apparently admitted the transaction to be a loan; and, more- 
over, he afterwards distrained for rent due to him as landlord by 
the bankrupts, and .levied upon the very property as theirs that he 
now asserts to hâve been his own. Acts speak more loudly than 
words, and I bave no hésitation in relying upon thèse significant acts, 
rather than upon the verbal agreement that is now set up. 

The order of March 23, 1911, is affirmed. 

•For other cases see same toplc & § number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



688 188 PBDEEAL EBPOETEK 



WEISS V. ARNOLD PEINT WORKS. 
(Circuit Court, S. D. New York. May 1, 1911.) 

CORPOTÎATIONS (§ 448*) LlABILITY FOB BREACH— PERSONS LIABLE. 

The défendant corporation Is not liable on a contract made before It 
came Into existence by plalutifï witli another corporation of the same 
name; and, though the promise of the officers of the défendant corpora- 
tion before it came into existence might bind them Individually, it could 
not bind the défendant. 

[Ed. Note.— For other cases, see Corporations, Cent. Dig. §§ 1709, 1789- 
1792 ; Dec. Dig. § 448.*] 

At Law. Action by Charles Weiss against the Arnold Print Works. 
Heard on complaint and demurrer thereto. Demurrer sustained, with 
leave to amend. 

Goldsmith, Rosenthal, Mork & Baum, for complainant. 
Joline, Larkin & Rathbone, for défendant. 

COXE, Circuit Judge. The défendant, though bearing the same 
name as the corporation which made the contract, is a totally distinct 
corporation. Ail of the agreements alleged in the complaint were 
made before the défendant came into existence. The promise of the 
officers of the existing corporation might bind them individually, but 
could not bind a corporation not then in esse. If A. agrées to secure 
the employment of B. by C. and C. does not employ B., B. has no 
cause of action against C. Assuming the agreement to be valid and 
upon sufficient considération, B. might hâve an action for damages 
against A., but in order to hold C, it must be shown that he was a 
party to the contract. If B. does work for C. with the latter's knowl- 
edge and consent, C. might be sued upon a quantum meruit for the 
value of B.'s services but not upon a contract, for the reason that C. 
has made no contract. 

The demurrer is sustained with costs, with leave to the plaintiflf to 
amend within 20 days after entry of order on paying costs of demur- 
rer. 

. Note. How does this court get jurisdiction? The défendant is al- 
leged to be a Massachusetts corporation but I am unable to find any 
allégation as to the citizenship of the plaintiff. 



Ex parte AVAKIAN. 



(District Court, D. Massachusetts. NovemTier 2, 1910. On the Mérita, 
November 26, 1910.) 

No. 346. 

1. Aliens (§ 54*) — Immigration-— Aehest— DEPORTATION Wabbant. 

A letter written by a United States immigration commissioner In Can- 
ada to a commissioner at Boston, requesting the issuance of a warrant 
for an allen's arrest in Massachusetts, and stating facts tending to a 

•For otlier cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Hep'r Indexes 



ÏSX PARTI AVAKIAH 689 

conclusion that when the allen was admltted at Halifax she must hâve 
been diseased, was insufficient to show, as a basis for the secretary's 
warrant for the alien's arrest, an application therefor complying witb 
Immigration Régulations, rule 35, par. 3b. 

[Ed. Note. — For other cases, see Aliens, Dec. Dlg. § 54.*] 

2. IIabeas Cobpus (§ 29*) — Aliens— Aerest—Pkoceedings. 

Where neither the application for the warrant of arrest, nor any of 
the papers on which it was issued, were shown to an alien or her coun- 
sel during the heariiig, and before the passing of an order for déporta- 
tion, as required by immigration rule 35e, she was entitled to a writ of 
haleas corpus to détermine the validity of her détention. 
[Ed. Note. — ^For other cases, see Habeas Corpus, Dec. Dig. | 29.*] 

On the Jlerits. 

8. Aliens (§ 54*) — Immigration— Wakkant— Application. 

Where a warrant to arrest an alien alleged to be illegally In the United 
States was jRsued on an application made to the department by tlie im- 
migration commissioner at Montréal, accompanied by a certificate as to 
the landing of the alien, and a letter transinitting the application and 
certificate, the warrant was issued on an application duly made in sub- 
stantial conformity with the rules of the department, and was valid. 

[Ed. Note. — For other cases, see Aliens, Cent. Dig. § 112; Dec. Dlg. 
f 54.*] 

4. Habeas Cobpus (§ 97*) — Scope oi' Hbaeing — Grounds Subséquent to 

Writ. 

On habeas corpus to détermine the legality of the détention of an 
alien in déportation proeeedings, the only question for revlew is the le- 
gality of the alien's détention on the return day of the writ, and matters 
subséquent thereto are not proper in a traverse to the return. 

[Ed. Note. — For other cases, see Habeas Oorpus, Dec. Dig. § 97.*] 

5. Habeas Corpus (§ 92*) — Scope of Inquibt— Déportation Pkoceedinqs. 

In habeas corpus to review an alien's détention, the court could con- 
sider the record of proeeedings subséquent to the return to the writ, only 
as tending to establish the truth of the return, and hence. If the alien 
was being held under a warrant issued since the return day, no question 
as to the validity of that warrant could be considered. 

[Ed. Note. — For other cases, see Habeas Corpus, Dec. Dig. § 92.*] 

6. Aliens (§ 54*) — Déportation PROcEEniNGS. 

Where, in a habeas corpus proceeding to détermine the legality of an 
alien's détention, it did not appear that a letter written by the commis- 
sioner requesting petitioner's arrest was ever transmitted to the départ^ 
ment, or was before the department when the warrant of arrest was is- 
sued, It could not hâve constituted évidence on which the warrant was 
Issued which the immigration officers were required to disclose to relator 
or her counsel during the hearing, by immigration rule 35e. 

[Ed. Note. — For other cases, see Aliens, Cent Dig. § 112; Dec. Dig. 
S 54.*] 

Habeas corpus on pétition of Hagop Avakian to obtain the dis- 
charge of Haiganoosli Avakian from the custody of the Immigra- 
tion Commissioner under déportation warrant. Writ discharged, and 
alien remanded. 

See, also, 188 Fed. 694. 

John W. Rorke, for petitîoner. 
William H. Garland, Asst. U. S. Atty. 

•For other cases see same toplc & | mumbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexa» 
188 F.— 44 



690 188 FEDERAL REPOETBE 

DODGE, District Judge. Whether the writ is to be issued or not 
is to be determined in this case from the record of proceedings by the 
immigration authorities under warrants issued by the Secretary of 
Commerce and Labor, under sections 20 and 21 of the Immigration 
Act of 1907 (Act Feb. 20, 1907, c. 1134, 34 Stat. 904, 905 [U. S. 
Comp. St. Supp. 1909, p. 459]), for the arrest and déportation of 
Haiganoosh Avakian. She is an alien, born in Turkey, alleged by the 
petitioner to be bis nièce. She entered the United States from Hali- 
fax, N. S., in July, 1910, and bas since, according to the pétition, 
lived at the petitioner's bouse in Cambridge as a member of his family. 

She is now in the commissioner's custody under a warrant for her 
déportation issued October 12, 1910. In obédience to an order that 
he show cause why the writ prayed for should not issue, the commis- 
sioner bas submitted the warrant and record of proceedings as justi- 
fying her détention. 

It is not disputed that, as the record shows, the alien was first taken 
into custody under a warrant for her arrest, dated September 8, 1910, 
issued by the Department of Commerce and Labor to the commis- 
sioner ; that this warrant was later canceled and another issued in its 
place, dated September 23, 1910; that meanwhile there had been hear- 
ings before a duly authorized inspecter at Boston, and there was a 
further hearing on September 26th, at which the alien, represented 
by counsel, had full opportunity to show cause why she should not 
be deported ; that the record of the hearings was duly submitted to 
the acting secretary; that on October 12, 1910, he issued the war- 
rant under which she is now held; and that she was surrendered to 
the custody of the commissioner October 18, 1910, having been since 
the hearings paroled in custody of her counsel. 

The petitioner contends that both warrants of arrest, the proceed- 
ings thereunder, and the warrant for déportation were and are in vio- 
lation of law and of her rights and therefore void. 

The only warrant of arrest which need be considered is that issued 
September 23d. It recites that from évidence submitted to the sec- 
retary the alien appears to hâve been found in the United States in 
violation of the immigration act of 1907 in the respects : 

"That she was at the time of her entry into the United States afflicted with 
trachoma, a dangerous contagious disease ; and that she was also, at the 
time of such entry, a person liliely to become a public charge!" 

The petitioner does not dispute that it is his nièce mentioned in 
his pétition, to whom the warrant refers, nor that she landed at Hali- 
fax per S. S. "Uranium" on July 23, 1910, as the warrant also recites, 
and immediately came from Halifax into the United States. It is not 
disputed that she was duly examined and admitted by the immigra- 
tion officers at Halifax before her entry into the United States as above. 

The record as at iirst submitted hère did not show that any papers 
were submitted to the secretary before he issued his warrant to take 
the alien into custody except a letter from the commissioner of immi- 
gration at Montréal to the commissioner at Boston, dated September 
3, 1910. In this the Montréal commissioner states that he is asking 



EX PARTE AVAKIAN 691 

the department, und.er the same date, to issue a warrant for this alien's 
arrest, and he also states fàcts tending to the conclusion that when 
admitted at Halifax in July she must hâve been diseased. He asks 
that when arrested she be carefully examined by the médical examiner 
at Boston. 

[1] The letter referred to is obviously insufficient to show that the 
secretary issued his warrant upon an application therefor complying 
with the requirements of rule 25, paragraphs (a) and (b), of the prés- 
ent Immigration Régulations. But it is unnecessary to consider wheth- 
er a warrant issued without such an application would be illegally 
issued, because since this hearing began an application made to the 
department by the commissioner at Montréal under date of Septem- 
ber 3, 1910, and an accompanying certifîcate as to the landing of the 
alien, also a letter to the department f rom the Montréal commissioner, 
transmitting thèse papers, hâve been added to the record submitted 
hère, to which, of course, they properly belong. Thus complète, the 
record shows, in my opinion, that the warrant issued upon an appli- 
cation duly made and in substantial conformity with the rules above 
referred to. 

[2] As to the warrant for déportation, the only question is whether 
the alien was afforded a proper hearing after her arrest and before 
the order for déportation was made. Rule 35e provides that: 

"During the course of the hearing the alien shali be allowed to inspect the 
warrant of arrest and ail the évidence upon which It was issued." 

It appears that neither the application for the warrant of arrest nor 
any of the papers upon which it was issued were so shown to the alien 
or her counsel. The fact appears to be that they were not in the 
hands of the immigration officers at Boston when the hearing was 
held. 

It seems to me doubtful whether, in view of this omission, a hearing 
according to law has been afïorded the alien. Evidently the depart- 
ment's own régulations hâve not been complied with, and no excuse 
is shown for the failure to comply. Under the présent circumstances, 
I think the writ should issue; but, if upon the hearing the évidence 
should stand as at présent, I should not discharge the alien f rom cus- 
tody until .after the immigration officers had had a reasonable op- 
portunity to hold another hearing in full compliance with the rules. 
The real question, of course, is whether the alien is or is not afflicted 
with the dangerous contagious disease alleged. It may well be that 
it makes no différence for the purposes of this question whether or 
not her counsel has been allowed to inspect ail the évidence on which 
the warrant for her arrest was issued. I do not think, however, that 
I ought to find, as the case now présents itself, that it cannot make any 
différence in any event. The question should be decided by the immi- 
gration officiais after due hearing according to their rules. 

On the Merits. 

A writ of habeas corpus was issued November 2, 1910, on grounds 
stated in a former opinion hercin of the same date. It was return- 



^92 188 FBOBRAL RKPOBTEB 

able November Sth. On that day the commissioner of immigration 
duly appeared with Haiganoosh Avâkian in obédience to the writ and 
filed a return in which he set forth that he was then delaining her to 
enable her to show cause why she should not be deported under and 
by virtue of an order of the Secretary of Commerce and Labor issued 
to him November l, 1910. A copy of the order is set forth in the re- 
turn. 

No traverse to the return was filed on the return day of the writ. 
It appearing that the alien was then detained, not under the warrant 
for her déportation, issued October 12, 1910, and considered in the 
former opinion referred to, as was the case when the pétition for the 
writ was filed, but under a new warrant for her arrest later issued 
by the department, the matter was continued for further hearing by 
consent. 

On November 26, 1910, the petitioner filed a paper entitled "Trav- 
erse to the Return." In this he denied that the warrant of arrest is- 
sued November 1, 1910, is good and valid, and says that it and ail pro- 
ceedings under it are null and void for the reasons : 

"(1) Because the application for said warrant does not contain the full 
statement of the facts which show the présence in the United States of the 
said Haiganoosh Avakian to be in violation of the law as required by para- 
graph (b) of rule 35 of the Immigration Régulations. 

"(2) Because said application is not accompanled by such a certificate of 
entry as is required by paragraph (c) of said rule, In that there Is not at- 
tached to said certificate the verifylng certlflcate of the officer havlng charge 
of the manifest containing the name of the said Haiganoosh Avakian. 

"(3) Because said application does not contain a statement of facts suffi- 
cient to constitute 'probable cause' for the Issuance of a warrant of arrest, 
nor is said application supported by oath or affirmation, as required by arti- 
cle 4 of the Amendments to the Constitution of the United States." 

[3] I find that the warrant to arrest issued November 1, 1910, as 
above was issued upon an application made to the department by the 
immigration commissioner at Montréal, under date of September 3, 
1910, an accompanying certificate as to the landing of the alien, and 
a letter from the Montréal commissioner to the department transmit- 
ting the application and certificate. Thèse papers were first produced 
before me at the hearing on the pétition for this writ, and are referred 
to in the opinion of November 2, 1910. I rule, as I then ruled regard- 
ing an earlier warrant to arrest this alien, that the warrant issued No- 
vember 1, 1910, and referred to in the return, was issued upon an ap- 
plication duly made, in substantial conformity with the rules of the 
department, that it is good and valid, and that the proceedings under 
it are lawful and regular so far as any of thèse matters are concerned. 

The "Traverse to the Return" further sets up that since November 
5, 1910, there has been a hearing before the immigration ofiicers un- 
der the warrant to arrest, and another warrant for the alien's déporta- 
tion issued on November 19, 1910 ; also that thèse proceedings are null 
and void for the reasons: 

"(4) Because neither the letter on which said application for the warrant 
of arrest was based, nor a copy thereof, was furnished to Haiganoosh Ava- 
kian or her counsel, although called for repeatedly, and required to be fur- 
nished by paragraph (e) of said rule 35. . 



EX PARTE AVAKIAM R93 

"(5) Because the proceedlngs held under and by virtue of said warrant of 
arrest dated November 1, 1910, were not due process of law within the mean- 
Ing of article 5 of said amendments to the Constitution of the United States." 

[4] The only question before me at présent is whether or not the 
aHen's détention on the return day of the writ was lawful. The re- 
turn made to the writ by the immigration commissioner does not and 
could not undertake to justify his détention of the alien by anything 
done after that time. What is set up on the aHen's behalf in para- 
graphs 4 and 5 above quoted cannot be regarded as having any proper 
place in a traverse to the return on this writ, whether it aiïords ground 
for the issuance of another writ or not. 

[5] The commissioner has submitted the record of the proceedings 
subsequently had before the immigration officers under the warrani 
of arrèst described in his return. Except as it tends to establish the 
truth of the statement in the return that he was then holding the alien 
for hearing under the warrant for arrest above referred to, I am una- 
ble to consider it material for the purposes of this hearing. If a war- 
rant for the alien's déportation has been issued since the return day, 
and she is now being held under that warrant, no question as to its 
validity is at présent before the court. 

[6] In view of what was said in the former opinion, however, it 
may be remarked regarding the record now submitted that the ap- 
plication made by the Montréal commissioner under date of Septem- 
ber 3, 1910, and the accompanying certificate as to the landing of the 
alien, appear by it to hâve been shown at this hearing to the alien's 
counsel as required by rule 3Se. In the application the Montréal com- 
missioner stated that since the alien's admission a letter had been 
received stating that she was diseased at the time of her entry. The 
complaint made on behalf of the alien in paragraph 4 above is that 
this letter was not shown her counsel at the hearing. I find nothing 
to show that it was ever transmitted to the department or was be- 
fore the department when the warrant to arrest was issued. If not, 
it cannot hâve been, in any view of it, évidence on which the warrant 
was issued, and it is not therefore within rule 35e. 

As to paragraph S of the "Traverse to the Return," I hâve inti- 
mated to counsel, in regard to the similar proceedings had under the 
former warrant to arrest, that, except as stated in the former opin- 
ion, I saw no reason to doubt that they were regular and valid so far 
as this objection is concerned. 

The "Traverse to the Return" further sets up that the alien in ques- 
tion has been married to a citizen on November 21st, and must now 
be regarded as herself a citizen and beyond the jurisdiction of the 
immigration officers. The détermination of the question thus raised 
is reserved until it is regularly presented for décision. 

As the case now stands, the writ must be discharged, and the alien 
remanded to the custody of the commissioner. 



694 188 FEDERAL REPORTES 

Ex parte KAPRIELIAN. 

(District Court, D. Massachusetts. November 29, 1910.) 

No. 363. 

1. ALIENS (§ 53*) ENTET— RlQHT TO Remain. 

For three years following an allen's entry, her right to remain Is con- 
ditional only and subject to termination by proper action on tbe part of 
tfie immigration authorlties. 

[Ed. Note. — For other cases, see Allens, Cent Dig. § 112; Dec. Dig. 
§ 53.*] 

2. Aliens (§ 54*) — Entey— RiGHT to Remain— Maeeiage Aftee Depoetation 

Oedeb — Effect. 

Where, after an alien liad been ordered deported because she was af- 
tTicted witli a contaglous disease, stie married a citizen, she was not 
thereby relleved from ttie order of déportation, under Rev. St. § 1994 (U. 
S. Comp. St. 1901, p. 1268), providing tbat any woman married to a citi- 
zen of the United States, and wlio might lierself be lawfully naturalized, 
shall be deemed a citizen. 

[Ed. Note. — For other cases, see Aliens, Dec. Dig. § 54.*] 

Habeas corpus on pétition of Avedis S. Kaprielian, to obtain her 
discharge from arrest under déportation warrant. Denied. 
John W. Rorke, for petitioner. 
William H. Garland, Asst. U. S. Atty., for the United States. 

DODGE, District Judge. This pétition allèges that the petitioner 
is a naturalized citizen and that his wife is unlawfully detained by the 
immigration commissioner at Boston. 

It appears from the pétition that his alleged wife is the same per- 
son whose détention by the commissioner, under her maiden name of 
Haiganoosh Avakian, was complained of in a previous pétition to 
this court by Hagop Avakian, 188 Fed. 688. A writ of habeas corpus 
was issued on that pétition, November 2, 1910, upon grounds stated 
in an opinion dated the same day. After a hearing upon the writ it 
was discharged, for reasons stated in a subséquent opinion dated No- 
vember 26, 1910. The docket number of the case is 346. 

The présent pétition allèges that the détention now complained of 
is under a warrant of déportation issued November 19, 1910, by the 
Acting Secretary of Commerce and L,abor. 

The commissioner has appeared in obédience to a notice to show 
cause issued on the présent pétition. At the hearing upon that no- 
tice it has appeared that the order of déportation referred to is the 
same order, issued November 19, 1910, to which référence is made 
in the above opinion dated November 26, 1910. The record of tb.e 
proceedings had before the immigration officers, which resulted in that 
order, and sets forth the order îtself, was submitted as showing that 
his détention of Haiganoosh Avakian (or Kaprielian if that be her 
présent name) is lawful. 

I find in the record submitted no reason to believe tlîat there was 
any defect in the proceedings or that the déportation order is not valid. 

•For other Cises see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



EX PARTE KAPEIELIAN 695 

It further appears, and I find, that on November 8, 1910, pending 
the hearing under the writ issued November 2, 1910, Haiganoosh 
Avakian was released from custody by the commissioner, on a bond 
in the sum of $1,000 to secure her surrender to him if it should be 
finally held that she was not entitled to remain in the country, and 
not entitled therefore to final discharge from custody. The surety on 
this bond bas surrendered her to the commissioner's custody before 
this pétition was filed, but on the same day. The bond referred to 
bas been aiso submitted by the commissioner. 

It thus appears, and I find, that the marriage alleged in the péti- 
tion took place, if at ail, after the order for the woman's déportation 
was made, pending its exécution, and while the commissioner held 
security for her surrender to him in order that it might be executed. 

The petitioner contends that under Rev. Stats. § 1994 (U. S. Comp. 
St. 1901, p. 1268), she ceased to be an alien and became a citizen by 
virtue of her marriage to him on November 22, 1910, so that the im- 
migration authorities bave now no power to exclude her from the 
country or detain her for that purpose. The marriage is not alleged 
to bave been, on 'the part of either party to it, in ignorance of the 
pending proceedings or of the issuance of the déportation order. The 
mère fact of marriage to a citizen is relied on. 

I am unable to believe that such a marriage is capable of having the 
effect claimed, in view of the facts shown. The déportation order was 
a final décision by the proper authorities that Haiganoosh Avakian 
was an alien belonging to one of the excluded classes and was in the 
country without right. She entered the country in July, 1910, as the 
record shows. [1] For three years following her entry her right to 
remain was by law conditional only and subject to be determined by 
such action on the part of the immigration authorities as bas now been 
had. [2] It bas now been determined, within the period referred to, 
that she had no lawful right to enter and has no lawful right to re- 
main. Rev. Stats. § 1994, was enacted in 1855. Kelly v. Owen, 7 
Wall. 496, 19 L,. Ed. 283, holding that any free white woman is a 
woman who "might be lawfully naturalized" within the meaning of 
the section, was decided in 1868. The présent act regulating immi- 
gration, passed in 1907 (Act Feb. 20, 1907, c. 1134, 34 Stat. 898 [U. 
S. Comp. St. Supp. 1909, p. 447]), repeals ail prior acts or parts of 
acts inconsistent with its provisions. After a final détermination, ac- 
cording to those provisions, that a woman belongs, and belonged at 
the time of her entry into the country, to a class of aliens forbidden by 
law to enter or to remain, it cannot be said that she is capable of being 
lawfully naturalized. It was no part of the intended policy of sec- 
tion 1994 to anniJ or override the immigration laws so as to authorize 
the admission into the country of the wife of a naturalized alien not 
otherwise entitled to enter, and an alien woman who is of a class of 
persons excluded by law from admission to the United States does not 
come within the provisions of that section ; as has been held in the 
Circuit Court for this circuit in the district of Rhode Island. In re 
Rustigian (C. C.) 165 Fed. 980, 982. 

In Hopkins v. Fâchant, 130 Fed. 839, 65 C. C. A. 1, the déportation 



696 188 FEDERAL KEPOETEE 

order was held to hâve been arbitrarily and unlawfully îssued, and ihe 
woman was married pending the décision on that question. 

A marriage entered into under circumstances such as are hère dis- 
closed could hardly hâve been free froni intent thereby to avoid dé- 
portation, whether otherwise in good faith or not. The bare fact of 
marriage to a citizen since the déportation order being ail that is re- 
lied on, I must décline to issue the writ. 

Pétition denied. 



POSTAL TELEGRAPH-CABLE CO. v. LIVERMORE & KNIGHT GO. 
(Circuit Court, D. Ehode Island. August 2, 1911.) 
No. 2,752. 

1. Teade-Maeks and Teade-Naiies (§ 70*) — UNLAWruL Compétition — Mim- 

ICBY— Deceptive Imitation. 

Wbere défendant, manufacturing advertising speeialties, put out an 
envelope similar to those used by coniplaiuaut telegrapli company to In- 
close bona flde telegrams, Inteudlng that the envelopes should be used 
for advertising purposes, the word "Telegram," prlnted thereon, belng 
used to attract attention and to dlstlnguish the envelope, whlch was 
intended to be sent through the mail, from ordinary mail niatter, but 
It also appeared that the momentary déception that the envelope contained 
a telegram was Immediately dispelled on openlng the envelope and seeing 
that it was merely an advertisement, such similitude was mimlcry, rather 
than deeeptîve imitation. 

[Ed., Note. — For other cases, see Trade-Marks and Trade-Names, Dec. 
Dlg. § 70.»] 

2. Teade-Mabks and Teade-Names (§ 70*)— Unlawful Compétition— Biu. 

ACTUAL InJURY INPERENCE. 

Défendant, manufacturer of advertising speeialties, manufaetured and 
sold envelopes in imitation of those used by complalnant telegraph com- 
pany for telegrams, intending that they should be used for advertising 
matter sent through the mail. Complainant sued to restrain such use, 
alleging that the envelopes were used to deceive the public and cause 
them to believe that they were the envelopes of the complainant, and 
that they contained messages transmitted over complainaut's wires and 
delivered by complainant; that defendant's envelopes had been generally 
mlstalcen by the public, by the postal authorltles, and especlally by com- 
plainant's patrons, for the envelopes of complainant, and had induced the 
public and complalnant's patrons to give to the envelopes that prompt and 
Immédiate attention which was usualîy given to télégraphie messages ; and 
that the same would cause annoyance to complalnant's patrons and an in 
jury to complalnant's business. Eeld that, since the use of such envelopes 
It deceptive at ail, the déception was merely momentary and not deceltful, 
complalnant's claim of Injury was derived e;;tirely from inferences based 
on another Inference, and that the facts were insufiiclent to establlsh 
actionable injury. 
■ Ed. Note. — Eor other cases, see Trade-Marks and Trade-Names, Dec. 
DIg. § 70.* 

Unfair compétition In use of trade-mark, see notes to Scheuer v. 
MuUer, 20 C. C. A. 165 ; Lare v. Harper & Bros., 30 C. C. A. 376.] 

In Equity. Bill by the Postal Telegraph-Cable Company against 
the Livermore & Knight Company. Demurrer to bill sustained. 

•For other cases see same topic & § numbbb in Dec. & Am. Olgs. 1907 to date, & Rep'r Indexes 



POSTAL Tï:LEGRAPH-CABLE ÇO. V. UVEKMORE & KNIGHX CO. 697 

Edwards & Angell.. for complainant. 
Comstock & Canning, for défendant. 

BROWN, District Judge. The complainant charges the défendant 
with imitation of the envelopes in which complainant's telegrams are 
delivered. 

Appended to the bill are Exhibits A and B of différent styles of 
envelope used by the complainant. The alleged imitation is also append- 
ed as Exhibit C. 

The imitation is not close, but iipon demurrer the allégation that 
the defendant's envelopes hâve been mistaken for those of the com- 
plainant requires us to assume for this demurrer that the defendant's 
envelopes are somewhat imitative. While it is doubtful if the ex- 
hibits themselves establish a deceptive imitation, yet, if supplemented 
by évidence of actual déception, this might support the bill in this 
particular. 

The défendant is a manufacturer of advertising novelties, and Ex- 
hibit C is an imitation of an envelope for telegrams. It is alleged 
that they are made in the likeness of the envelope of the complainant — 

"for the purpose of deceiving the public, and causing them to believe the sald 
envelopes of the défendant are envelopes of the complainant, and to believe 
that said envelopes of the défendant contain messages transmltted over the 
complainant's wires and delivered by the complainant aforesaid." 

The défendant makes said envelopes for sale to its customers to 
use for advertising purposes. They are so constructed that upon being 
opened they unfold, and upon the inside surface is a space for printing 
advertisements. 

[1] It is évident from an examination of Exhibit C that the word 
"Telegram" is used to attract attention and to distinguish the envelope, 
which is intended to be sent through the mail, from ordinary mail 
matter. It is also apparent that, if there is a momentary déception and 
a momentary false belief that the envelope contains a telegram, this 
is immediately dispelled upon opening the envelope and seeing that it 
is merely an advertisement. This is mimicry, rather than deceptive 
imitation. 

[2] From the allégations of the bill it is very clear that the de- 
fendant does not design to secure for itself or for its customers any 
of the télégraphie business of the complainant. It is doubtless in- 
tended by the manufacturer that an impression shall be created on the 
mind of the receiver by the word "Telegram," though it is doubtful 
whether it is within the design or purpose of the défendant that the 
receiver should gain the impression that it is a telegram from any 
particular company. 

Assuming, however, that the envelope might convey both the im- 
pression of a telegram and the impression of a telegram from the com- 
plainant, we hâve to inquire whether, as the ordinary éléments of a 
case for the infringement of a trade-mark or for unfair compétition 
are wanting, the complainant has stated a case entitling it to équitable 
relief. The bill allèges that the — 

"defendant's envelopes hâve been generally mistaken by the public, by the 
postal authorities, and especially by the complainant's patrons, for the en- 



698 188 FEDERAL EBPOETER 

velopes of the complalnant, and hâve Induced the public and the complalnant's 
patrons to give to said envelopes that prompt and Immédiate attention which 
is usually given to telegrapbic messages of the complainant." 

This feature, however, can hardly be attributed to any spécial imita- 
tion of complainant's envelope, but would doubtless be due to the fact 
that the envelope purported to contain a telegram, by whatever com- 
pany transmitted and delivered. It is alleged that because of this 
prompt attention, and because of déception, there has resulted in the 
past, and is likely to resuit in the future, loss of time to the public, 
and especially to complainant's patrons. It is further alleged that the 
receipt of said deceptive envelopes has caused alarm in the past, and 
is likely to cause alarm in the future, to the public and the complain- 
ant's patrons ; but it is obvious that no spécial alarm could arise f rom 
the false belief that the telegram came f rom the complainant company, 
rather than from any other company, and if imitation telegrams, like 
genuine telegrams, are likely to cause alarm to the receiver, this can- 
not be regarded as a substantial ground for the intervention of equity. 
To cause alarm by sending a real telegram or an imitation telegram 
under ordinary circumstances, and save for very exceptional sur- 
roundings, would be damnum absque injuria. 

It is also alleged that the advertisements appearing upon certain 
of the envelopes hâve been of an offensive character. This, however, 
seems an irrelevant allégation, since there is nothing to show that the 
défendant is responsible for the spécial character of advertisements 
which its customers may place upon the advertising device. 

It is alleged that by reason of the facts above stated the public, and 
particularly the complainant's patrons, hâve become hostile to thèse 
envelopes of the défendant and dislike to receive them, and are great- 
ly displeased and annoyed thereby, and, further, that many of the 
récipients of said envelopes hâve believed, and many future récipients 
are likely to believe, that the complainant has permitted the use of 
said device by those whose goods are advertised, thereby permitting the 
public to be deceived and annoyed. 

There is a certain inconsistency between the contention that there 
is any substantial déception, and the contention that receivers are 
likely to believe that the complainant has permitted them to be an- 
noyed. The annoyance would resuit only when the receiver is unde- 
ceived and no longer believes that he has received a telegram. 

Upon the face of the bill it is somewhat difficult to believe that a 
person who, upon opening the envelope, finds that it is not a telegram, 
should continue to believe that it was sent by the complainant, and not 
by the advertiser whose name or goods would necessarily be clearly 
displayed in order that the advertisement should hâve value. It can 
hardly be said that a belief that the complainant was guilty of annoy- 
ance to the receiver of the imitation telegram is a natural conséquence 
of the defendant's act in putting the imitation envelopes on the 
market. Upon discovery of the fact that the pretended telegram was 
merely an advertisement, the natural conclusion would be that there 
was no connection with the telegraph company. Though it was stated 
at the bar that such belief had in fact been held, it would require proof 



POSTAL TELEGRAPH-CABLE CO. V. LIVEEMORE & KNIGHT CO. 699 

of repeated instances of this character to rebut the natural presumption 
that the advertisement would entirely discharge the complainant from 
ail connection with the sending of the advertising device. The likeli- 
hood that an inference would arise in the mind of a person annoyed 
that the complainant was guilty of participation in this annoyance is 
followed up by the allégation that the récipients so believing are likely 
to become hostile to the complainant and to cease to use its service. 

It must be admitted that thèse allégations upon their face, though 
skillfully phrased, are in substance but little more than inference, 
based upon inference, and rather far-fetched inference at that. The 
theory is that a man who receives a bogus telegram will be annoyed 
upon finding that it is not a telegram, that upon finding that it is not a 
telegram he will believe that the telegraph company is responsible 
for his annoyance, and that because of this belief he will not use the 
télégraphie service of the complainant, but will use some other com- 
pany instead. 

In Cunard Steamship Company v. Kelley,' 126 Fed. 610-615, 61 
C. C. A. 532, the Circuit Court of Appeals for this circuit had occa- 
sion to deal with the question of inferences from inferences, citing U. 
S. V. Ross, 92 U. S. 281-283, 23 L. Ed. 707; U. S. v. Pugh, 99 U. S. 
265, 25 L. Ed. 322; Manning v. Insurance Co., 100 U. S. 693, 25 
L. Ed. 761; First Nat. Bank v. Stewart, 114 U. S. 224-231, 5 Sup. 
Ct. 845, 29 L. Ed. 161. While differing in circumstances, the criti- 
cism in thèse cases of the argumentative process of drawing infer- 
ences from inferences seems especially pertinent, in view of the fact 
that the présent bill contains no allégation that any person has actu- 
ally become so hostile to the complainant as to cease to use its service. 

The complainant recognîzes the necessity of establishing in this 
case some actual or probable injury to its property rights. It asserts 
that the acts of the défendant are calculated to cause irréparable 
damage to the good will of the complainant's business ; and yet, aft- 
er we hâve discarded the irrelevant allégations of the bill, the com- 
plainant's case, so far as the aspect of loss of patronage is concerned, 
is in substance this: One who receives defendant's envelope thinks 
he has a telegram. He opens it, and finds it is not, and that he has 
been deceived, and is angered. He thinks, in spite of the advertise- 
ment, that the complainant is a party to the trick which has been 
played upon him, and becômes so seriously offended that he will go 
to the trouble of avoiding the use of the complainant's télégraphie 
service. 

It is further alleged that if the défendant is not enjoined the récip- 
ients of the imitation envelopes are likely to be so accustomed to 
receiving the same that they will no longer give to real telegrams 
the prompt attention they usually receive, and that genuine telegrams 
will be either discarded or examined at the addressee's leisure, where- 
by the complainant's service will be impared. 

The suggestion made by defendant's counsel at the argument is 
pertinent. Télégraphie messages are usually sent by messenger; the 
defendant's device invariably by mail. This reduces the likelihood 
of mistake of this character to a minimum. 



ÎOO 188 FEDERAL EEPOETEB 

The substance of the argument is, if the cry of telegram is repeated 
when there is no telegram, it will not be heeded when the telegram 
cornes. The logic of ^sop, however, seems hardly appUcable to the 
présent case, or to make it at ail probable that persons will give no 
heed to an envelope purporting to contain a telegram, because it is 
more probable that it is an imitation than a real telegram. 

Thèse are the only particulars in which it is suggested that the busi- 
ness associated with the complainant's envelopes is likely to be in- 
jured. The bill in my opinion is defective, in that it fails to show 
that any actual in jury to the complainant in thèse particulars has oc- 
curred, though the defendant's envelopes hâve been upon the mar- 
ket about a year. 

In the absence of actual in jury in the past by loss of service or 
impairment of the attention to be given to its envelopes, the probability 
of future injury is too weak, and the bill must be regarded as a 
statement of far-fetched appréhensions which do not seem to be 
justified as inferences ftom any facts stated in the bill. It is difficult 
to believe that any serious appréhension of the impairment of com- 
plainant's business is the actual ground for bringing this bill. If the 
complainant's customers hâve been annoyed by the character of ad- 
vertisements printed upon thèse advertising devices, if they hâve been 
put to trouble by being informed that they had received a telegram 
when there was no tekgram but only an advertisement, if they are 
alarmed at telegrams, or if they are seriously irritated at small things, 
such as the momentary déception which would foUow the receipt 
of one of thèse envelopes, ail this may be a reason why the com- 
plainant desires to stop the défendant from making them; but it 
is hardly a reason for believing that the complainant will suffer in 
its property rights and be subjected to pecuniary loss. 

While the complainant may deem it a duty to prevent the défend- 
ant from bothering the complainant's customers by this sort of mim- 
icry, it can hardly accomplish this by a bill in equity, which is merely 
imitative of a bill for the protection of property rights, or for the 
prévention of pecuniary injury. 

I hâve failed to find in the bill any allégations of an actual obstruc- 
tion or interférence with the complainant's business, or which tend 
to show that its business is at ail likely to be obstructed or interfered 
with. 

Cases may be imagined in which an unauthorized use of an enve- 
lope bearing a name or address which is not that of the actual sender 
would so probably lead to mistake, confusion, or actual déception 
as to justify an injunction, even though no actual harm had been 
donc before the filing of the bill. The création of many opportunities 
for actual injury to a complainant by such a course might establish 
a case of threatened injury which equity would enjoin. Such a case, 
however, is not presented by this bill. 

The use of varions kinds of imitative devices, to attract attention, is 
very common in the art of advertising. As the law does not take too 
seriously the mère puffing of goods, and expects the purchaser's 
common sensé to guard him from statements which in ethics, though 



POSTAL TKLEGRAPH-CABLE CO. V. LIVERMOEB * KNIGIIT CO. 701 

not in law, may be classed as deceitful, so it should hardly give seri- 
ous regard to such momentary déception as results from the ordi- 
nary imitative advertising device. A momentary déception generally 
causes amusement, rather than gives oflfense. Its effect as an ad- 
vertisement dépends upon surprise, and thus it is usually but short- 
lived. 

In the law of deceit there is required not merely a f aise statement ; 
justifiable reliance thereon is also an essential élément. A false state- 
ment, made with the intent that it shall be immediately discovered 
to be false, may rob a man of a moment of his attention and may 
be classed as a good joke or a bad joke, but can hardly be put into 
the catalogue of légal deceit or légal or équitable fraud. 

Upon the facts, as distinguished from the inferences and assump- 
tions, I am of the opinion that, while the defendant's device is broadly 
imitative of a telegram, the complainant is not aiïected in any of its 
property rights in this respect; that so far as there are any imitative 
features, which might serve to point to the complainant as distin- 
guished from other telegraph companies, the device is not calculated 
to deceive in the substantial sensé in which that term has been used 
in the law. At most it is calculated to produce a momentary déception 
of such trivial character that any serions action based upon it prej- 
udicial to complainant would not be a natural and probable consé- 
quence of such déception. 

The novelty of this bill is admitted by the complainant. This, of 
course, is not a reason for denying relief, provided it is made to ap- 
pear that complainant's rights or property are in such substantial péril 
that they need protection. I bave considered, however, whether the 
complainant might not be able to aid its case by proof s ; but we may 
accept the allégation that many persons hâve been deceived for the 
purposes of this demurrer as fully as if the complainant had produced 
many witnesses to a momentary déception. I bave also considered the 
possible effect of proof that many of the récipients of said envelopes 
bave believed that the complainant had permitted the use of said de- 
vice ; but this, to be of conséquence, must be coupled with a finding 
that because of this belief they are likely to become hostile. I hardly 
think that proof, unless of the most extraordinary character, is pos- 
sible that any considérable number of persons bave both believed the 
complainant responsible and bave actually become hostile. If such is 
indeed the fact, complainant may amend its bill by positive allégation 
to that effect. The allégation that many hâve so believed is ail there 
is of fact; the likelihood that many will in future so believe and 
become hostile is a matter which is purely inferential, and which the 
court can deal with on demurrer. 

In disposing of this case it should be said that the déception charged 
is merely of a momentary character, for the purpose of attracting at- 
tention, and that the defendarit cannot be said to hâve contemplated, 
or to bave been under the duty of contemplating or foreseeing, any 
impairment of the complainant's business, and has not designed to 
get any of the complainant's trade. So far as the bill states merely 
the appréhensions of the complainant, I am of the opinion that the 



702 188 FEDERAL BÊFOBTEB 

défendant had no reasonable cause to entertain the same appréhen- 
sions. That an imitation so slight, so momentary, could produce any- 
thing more than a mère trivial annoyance, not amounting to légal in- 
jury, it is difficult to believe. 

It is perhaps unnecessary to say that it is not intended to hold 
broadly that no légal damage is possible from the unauthorized use 
of complainant's envelopes or other insignia in connection with tél- 
égraphie service, as distinguished from articles of marchandise. The 
use of a fraudulent badge to attract passengers for coaches was held 
a ground of liability in Marsh v. Billings, 7 Cush. (Mass.) 322, 54 
Am. Dec. 723. Neither is it intended to hold broadly that such im- 
itation is always justifiable, where damage is not pecuniary. Cases 
may arise which would require the intervention of a court of equity 
to protect against repeated annoyances of a serions character; but 
so far as this bill is framed to protect the public from trivial décep- 
tion, alarm, and such loss of time as may be expended in opening an 
advertisement, it is vi^ithout a précèdent and I think without merit. 
So far as it seeks to protect the complainant's good will, I am of the 
opinion that it fails to show any past impairment or any reasonable 
anticipation of future impairment. 

The only injuries complained of are those which are to occur in the 
future, and I am of the opinion that, until the complainant has found 
by actual expérience an instance in which its anticipations are ful- 
filled, the bill is prematurely brought. In other words, such remote 
possibilities of injury as are to be inferred from the facts stated in 
this bill do not constitute such substantial ground as is essential to 
invoke the intervention of a court of equity. 

Demurrer is sustained. 



In re JUDSON et aL 
(District Court, S. D. New York. May 12, 1911.) 

1. Bankbuptct (§ 143*) — Assets— Iniekest in Life Insubance Polict— As- 

signment. 

Bankruptcy proceedings havlng been Instituted against a flrm consist- 
Ing of father and son, the father committed suicide prior to adjudication, 
leavlng certain life policies, payable to his wife and cliildren, share and 
share allke. He left him surviving a wife and three children, one of 
wtiom was a son also bankrupt. Hcld, that the son had an interest in 
such policies prior to his father's death which constituted property he 
was bound to schedule, and, being transférable by the son as a chose in 
action, such Interest passed to the trustée In bankruptcv under Bank- 
rupt Act July 1, 189S, c. 541, § 70a, subd. 5, 30 Stat. 565 (17. S. Comp. St. 
1901, p. 3451), vestlng a trustée with the bankrupfs title to ail property 
which, prior to the flllng of the pétition, he could by any means hâve 
transferred; the policies not being within the provlso of such section 
relating to Insurance policies havlng a cash surrender value payable to 
the bankrupt, his estate, or personal représentatives. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 143.*] 

2. Bankruptcy (§ 138*) — Insurance Policies— Interest to Bankrupt. 

Where a deceased bankrupt had no valuable interest in certain policies 
of his life not voided by suicide, he having borrowed beyond his interest 

•For other casea see same toplc & § numbbb in De?. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN BE JDDSON 703 

In ail of them, the loans being admittedly valld, the bankrupt's executors 
and not hls trustée were entitled to the proceeds of sucli policies in ex- 
cess of the liens for loans held by the Insurance company. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 138.*] 

3. Bankel'ptct (§ 138*) — Insueance— Rettjrn Peemitjm. 

Where, on a bankrupt's suicide, certain policies of Insurance on hls 
llfe became vold, and the Insurance companies thereupon returned premi- 
Tims paid thereon, such money was a refund of the bankrupt's own' f unds, 
and belonged to his trustée. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. S 138.*] 

In Banlcruptcy. In tlie matter of the bankruptcy proceedings of 
Alfred M. Judson and others, individually and trading as Judson 
& Judson. Proceedings to détermine the rights to the proceeds of 
certain policies on the life of Alfred M. Judson, deceased. 

An Involuntary pétition In bankruptcy was flled against the above-named 
flrm and the individual members thereof on December 17, 1910. A subpœna 
was issued on the pétition but no service ever efifected. On December 23, 
1910, Alfred M. Judson, the senior member of the firm, and his son Charles 
Y. Judson entered a notice of appearanee for themselves and for the copart- 
nership. The only other partner entered his Individual appearanee on Jan- 
uary 6, 1911, and on January 9th following the flrm and ail its members 
were duly adjudlcated bankrupts. 

In the meantlme Alfred M. Judson commltted suicide on January 4, 1911. 
On February 9th following a trustée was elected and duly qualifled. 

Before the flling of the involuntary pétition and continuously therea'fter 
until his death the life of Alfred IVI. .Judson was insured as foUows: 

(a) By policies aggregating .$15,000 payable directly to his wife and chll- 
dren share and share alike. He left him survlviug a wldow and three ohil- 
dren, one of whom is the bankrupt Charles Y. Judson, whose share in sald 
Insurance is $3,766.47. 

(b) By a policy for $10,000 payable to the insured's executors, administra- 
tors, or assigns. This policy had no surrender value, and became void by the 
suicide of the insured bankrupt. 

(c) By two policies aggregating $6,000 payable to the bankrupt, his exéc- 
utera, administrators, or assigns. The surrender value of thèse policies (at 
ail times above mentioned) was $63.80, and they were not avoided by suicide, 
but were subiect to loans aggregating .$2,5.50 and interest. 

(d) By a policy for $10,000 payable to the bankrupt, his executors, admin- 
istrators, or assigns, which policy was not avoided by suicide, was subject to 
a loan for $5,240, and had a surrender value of $5.030. 

The trustée has received from the insurers Charles Y. Judson's share of the 
policies payable directly to the wife and children, vlz., $3,766.40; also, the 
net proceeds of the $6,000 of insiirance above mentioned, vlz., $3,462.42 ; also, 
the net proceeds of the $10,000 policy not voided by suicide, namely, $5,212.72 ; 
and from the insurer under the voided $10,000 policy he obtained a rebate of 
premiums paid in advance of $808.50. He thus received ail told $9,483.64, on 
policies whose aggregate surrender value at the time pétition was filed was 
$5,093.80, but on which the bankrupt owed more than that amount. 

Tlie amounts thus received by the trustée were paid without préjudice, and 
there are now flled two pétitions: (a) One by Charles Y. Judson. claimlng as 
his the $3,766.47 to which he plainly would hâve been entitled If at the time 
of his father's decease a pétition in bankruptcy had not been pending against 
him, and he had not been subsequently ad.i'udicated ; and (b) one by the es» 
ecutor of Alfred M. Judson, who claims the différence between the total re- 
covery on the policies coverlng bankrupt's life and payable to hls executor, 
less the surrender value thereof, or (as alleged) $9,419.84. 

The loans aforesaid were made by the insurers and on the policies «s se- 
curlty. 

*For other cases see same topic & § nwmbee In Dec. & Am. Digs. 1907 to date, & Eep'r Indexes 



704 188 FEDERAL EEPOBTBB 

Bail & Ludiow, for petitioners. 

Philbin, Beekman & Menken, for trustée. 

HOUGH, District Judge (after stating the facts as above). [1] 
The right of Charles Y. Judson to receive as his own the money asked 
for is based on the following assertion: He acquired the proceeds of 
the insurance maintained by his father for his wif e and children before 
adjudication and after pétition filed. The légal proposition said to 
justify this assertion is summed up in the syllabus of Sibley v. Nason, 
22 Am. Bankr. Rep. 712, 196 Mass. 125, 81 N. E. 887, 12 h- R. A. 
(N. S.) 1173, 124 Am. St. Rep. 520: 

"Unaer the bankruptcy act of 1898 property acquired by a bankrupt be- 
tween the date of the flling of the pétition and the adjudication does not pass 
to the trustée." 

See, also, In re Harris, 2 Am. Bankr. Rep. 359; In re Pease, 4 
Am. Bankr. Rep. 578; In re Elmira Steel Co., 5 Am. Bankr. Rep. 487. 

It is not necessary to dispute or discuss this doctrine; if it be ac- 
cepted as correct, the inquiry remains: What property did Charles 
Y. Judson hâve prior to pétition filed on December 17, 1910? 

The papers in this case show no power of re vocation nor any re- 
served right to change beneficiaries existing in the father in respect 
of the policies made payable to wife and children. It may be inferred, 
or held as matter of common knowledge, that said policies would hâve 
lapsed if the insured had neglected to pay the premiums; but subject 
only to this contingency the language of Washington Central Bank v. 
Hume, 128 U. S. at page 206, 9 Sup. Ct. at page 44 (32 L,. Ed. 370), 
applies : 

"We thlnk It cannot be doubted that In the Instance of contracts of Insur- 
ance with a wife or children, or both, upon their Insurable Interest in the 
life of the husband or father, the latter, whlle they are livlng, ean exercise 
no power of disposition over the same without their consent, nor has he any 
interest therein of which he can avail himself, nor upon his death hâve his 
Personal représentatives or his creditors any Interest in the proceeds of such 
contracts which belong to the beneiiclarles to whom they are payable." 

Where a policy ran to a wife if she survived her husband, and in 
the event of her predecease then to him or his personal représenta- 
tives, it was held that : 

"Subject to such contingent, Interest In (the husband) the policies and the 
money which became due under them belonged to (the wife), and it was be- 
yond his power to transfer them to any other person or to surrender them." 
In re Holden, 113 Fed. 143, 51 C. C. A. 99 (reversed on another point 198 U. 
S. 202, 25 Sup. Ct. 656, 49 L. Ed. 1018). 

Again : 

"A polîcy taken ont by the insured on his own life and expressed to be for 
the beneflt of his wife is, * * * In the absence of any statutory provi- 
sion, in the nature of an exeeutory trust for her beneflt of which she could 
not be deprlved without her consent." Boyden v. Massachusetts, etc., Life 
Ins. Co., 153 Mass. 544, 27 N. B. 669. 

While in Garner v. Germania Life Ins. Co., 110 N. Y. 269, 18 N. E. 
131 (1 L. R. A. 256), it is said that the beneficiaries of a policy of 
insurance, being the children of the insured, hâve "a vested interest 



IN KE JUD80K 705 

in the policy * * * measured and represented by its surrender 
value." 

It follows that at ail times during the continuance of thèse policies, 
and therefore down to the time pétition was filed against him, Charles 
Y. Judson had a vested interest in the policies which produced the 
money now petitioned for; and that such interest should be scheduled 
was held in Re Blalock (D. C.) 118 Fed. 681, a case where the bank- 
rupt had exactiy the same species of interest as had the petitioner hère. 

Since, therefore, petitioner had an interest, and it should hâve been 
scheduled, then such interest was property, and the remaining- inqui- 
ries are how that property is measured and whether the trustée be- 
came vested therewith on adjudication. 

The answer to thèse inquiries dépends upon section 70A, subd. 
5, which déclares that the trustée shall become vested by opération 
of law with the title of the bankrupt as of the date of adjudication to 
ail "property which prior to the filing of the pétition he could by any 
means hâve transferred." The proviso then following and relating to 
insurance policies only covers policies which hâve "a cash surrender 
value payable to (the bankrupt), his estate or personal représenta- 
tives." 

The petitioning bankrupt, however, had no insurance policy ; he had 
an interest in an insurance policy on the life of another person, which 
is quite a différent thing. Nor, so far as the papers submitted dis- 
close, did the policy itself hâve any cash (or other) surrender value 
payable to Charles Y. Judson, and indeed there could be none in the 
very nature of the insurance because he did not own the policy, even 
though he owned a vested interest therein. Consequently the proviso 
of section 70 does not apply to him, nor to the kind of property rep- 
resented by an interest such as his. 

Before reaching the query whether petitioner's interest was transfér- 
able, there must be noticed a distinction sought to be drawn between 
the interest of the petitioner and the fruits of that interest, i. e., the 
moneys paid on the policy. No such distinction is tenable, for one who 
has an interest in property, even though contingent, owns not only 
the contingency but everything that may flow theref rom. He that owns 
a tree owns the fruit thereof . Thus, if a pétition were filed against one 
having goods on warehoùse receipt, the warehouseman obtaining insur- 
ance for the benefit of his customers, could it be said that, if the 
goods were destroyed after pétition iîled and before adjudication, the 
proceeds of the insurance would not flow to the trustée; it being ad- 
mitted that a transfer of the warehoùse receipt by the alleged bankrupt 
would hâve carried to the grantee the proceeds of the warehouseman's 
insurance? The interest of the petitioner in the policies in question and 
the proceeds of that interest are in law the same thing unless the stat- 
ute draws a distinction. There being no surrender value payable to 
Charles Y. Judson, neither his interest nor the proceeds thereof are 
within the proviso of the act, and if transférable must pass to his 
trustée. 

188 F.— 45 



706 188 PEDBKAL EEPORTEB 

On the question of transferability, the view most favorable to the 
petitioner is to regard his interest in the policy on his father's life 
as a chose in action. 

Under Personal Property Law of New York (Consol. L^aws 1909, 
c. 41) § 41, it is not seen how the assignability or transferability of such 
an interest can be doubted. Yet it was early held, in Wheeler v. 
Wheeler, 9 Cow. (N. Y.) 34, that even at law it was sufficient to grant 
to the assignée of a chose in action a power coupled with an interest, 
while in 1851 it was asserted by the Court of Appeals of this state that: 

"AU choses In action embraelng demands whlch are consldered matters of 
property or estate are now assignable elther at law or in equity. Nothing Is 
excluded but mère Personal torts whlch die with the party." Hoyt r. Thomp- 
son, 5 N. T. at page 347. 

Maryland has a statute certainly no wider than the above-quoted 
section of the personal property law, and under it Hewlett v. Home 
for Incurables, 74 Md. 354, 24 Atl. 324, 17 L. R. A. 447, is a case ex- 
actly like this. 

This matter being in bankruptcy, it is enough to establish the as- 
signability of choses in action in equity, and for this see Peugh v. 
Porter, 112 U. S. 737, 5 Sup. Ct. 361, 28 h. Ed. 859. For thèse rea- 
sons the pétition of Charles Y. Judson is denied. 

[2] The pétition of the executor of Alfred M. Judson must be de- 
cided in conformity with the doctrine clearly laid down in Burlingham 
V. Crouse, 181 Fed. 479, 104 C. C. A. 227. 

The situation of the policies there considered was identical with those 
of the policies hère before the court and not voided by suicide. There, 
as hère, the policies had a certain surrender value to and beyond which 
the insured had borrowed from the companies themselves. 

The doctrine of the case cited is that it is the object of the bank- 
ruptcy act "to place in the hands of the trustée for distribution among 
the creditors every dollar which the bankrupt could collect ; theref ore, 
if he has a policy on which money could be collected by surrendering 
it, he must turn over such policy to the trustée, who may thereupon 
surrender and collect." 

It is true that too great stress can be laid upon the statutory words 
"cash surrender value," for the Appellate Court for this circuit has 
said that: 

"If a Tontine policy (which has no cash surrender value) hâve but a day to 
run after the adjudication in bankruptcy, the trustée should not be deprived 
of It because it has no technlcal cash surrender value." In re Coleman, 14 
Am. Bankr. Rep. 462, 136 Fed. 819, 69 0. O. A. 497. 

This case is quite in accord with Gould v. New York Life Ins. Co. 
(D. C.) 132 Fed.at page 930, where "real cash value" is taken as the 
test even though there be no cash surrender value in the sensé in which 
that phrase is commonly used in insurance matters. And this doctrine 
has been carried so far that a trustée has been authorized to ofïer for 
sale a policy of insurance having no cash surrender value because 
the bankrupt had some interest therein even though the act of sale 
(unless some purchaser having an insurable interest came forward) 



IN EE HORST 70T 

would destroy the property which it is the object of the bankruptcy 
act to préserve for some one. In re Hettling, 175 Fed. 65, 99 C. C. 
A. 87. And see In re White, 174 Fed. 333, 9 C. C. A. 205, 26 h. R. 
A. (N. S.) 451. 

This line of décisions, however, is not important hère, because it is 
not shown or suggested that the deceased bankrupt had any valuable 
interest in those policies not voided by suicide; he had borrowed be- 
yond bis interest in ail of them, and the loans so created are admit- 
tedly valid. Therefore, in conformity with Burlingham v. Grouse, 
supra, the trustée can take nothing because the bankrupt could get 
nothing. 

[3] There remains for considération the $808.50 recovered by the 
trustée for unearned premiums on the voided policy. This money was 
obviously returned because the insured was dead and the policy died 
with him; it was a species of surrender of the policy. If it was a 
voluntary payment by the insurer, it was made to the trustée; if it 
was a payment in pursuance of the contract, the money paid was not 
insurance money. The object of the statute is to préserve to bene- 
ficiaries, legatees, or next of kin moneys which flow from the fulfill- 
ment of the insurance contract. This money cornes from no such 
source; it is a refund of the bankrupt's own money, and under no 
view can it inure to any other person than the trustée who succeeds to 
the bankrupt's property. 

The executor petitioner may therefore take an order for the return 
of the net proceeds of the unvoided policies payable to the bankrupt's 
executors, viz., $8,675.14 



In re HURST. 

(District Court, N. D. West Virginia.) 
Bankkuptcy (§ 311*) — Fraudtjlent Conveyanoes — Pabticipation in Peo- 

CEEDS. 

Under Bankr. Act July 1, 1898, c. 541, 30 Stat. 544 (U. S. Comp. St 
1901, p. 3418), invalidatlng préférences made within four months of the 
fillng of a bankruptcy pétition, and giving tlie trustée a right to sue to 
set aside fraudulent transfers for the beneflt of existiug creditors, a 
grantee guilty of fraud in taking and coneealing a conveyance until a 
few days before the bankruptcy of the grantor, executed in considération 
of a spedfled sum, used by the grantee to discharge a liability of the 
grantor for which the grantee was surety, may, on the setting aside of 
the conveyance as fraudulent, partleipate in the proceeds of a sale of the 
property as to a debt not involved in the fraudulent conveyance and 
ineurred before Its exécution. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 497-500; 
Dec. Dig. § 311.*] 

In the matter of the bankruptcy of J. Garland Hurst. On pétition 
by the executors of one Tearney, deceased, to revise the décision of 
the référée. Ruling of référée reversed. 

Forest W. Brown and R. T. Barton, for Tearney's executors. 
James M. Mason, Jr., for trustées. 

*For otiier cases see same topic & § numbeb in Dec. & Am. Digs, 1907 to date, & Rep r Indexes 



708 188 FEDERAL RBPOETBH 

DAYTON, District Judge. Edward Tearney was the father- 
in-law of Hurst, the bankrupt. It is undisputed that Hurst, for 'bor- 
rowed money and security debts paid, ovved Tearney (now dieceased) 
a sum in excess of $18,000; that after incurring this indebtedness 
Hurst, on December 4, 1896, by two deeds conveyed to Tearney his 
farm and his house and lot in Harper's Ferry for $14,000, which sum 
was paid by Tearney to the state in discharge of Hurst's liability as 
sheriff, for which liability Tearney was bound as surety on his of- 
ficiai bond; that Tearney did not put thèse two deeds upon record, 
but allowed Hurst to remain in possession of the properties, repre- 
sent them to be his own, hâve them taxed in his (Hurst's) name, pay 
such taxes, take out insurance upon the buildings in his own name, 
and exercise other acts of ownership thereover for a period of nearly. 
6 years, until he (Hurst) had incurred large indebtedness, Tearney 
had died, and his executors were called upon to pay another security 
debt for Hurst, when, on September 12, 1902, thèse deeds were filed 
for record by such executors. Hurst was adjudged a voluntary bank- 
rupt 11 days thereafter. By order entered in thèse bankruptcy pro- 
ceedings the trustées were authorized and directed to institute suit to 
set aside thèse deeds as fraudulent. Such suit was instituted in the 
Circuit Court of Jefferson county, and, upon appeal taken, the Su- 
prême Court of Appeals of the state (62 W. Va. 84, 57 S. E. 263) 
held thèse deeds to be fraudulent and directed the farm and the house 
and lot to be sold and the proceeds to be paid over to the trustées in 
bankruptcy. This was done. The Tearney original $18,000 debt was 
proven in the bankruptcy proceeding, and dividends aggregating over 
$4,000 were paid to the executors thereon. The trustées in bankruptcy 
hâve fîled their pétition, setting forth the facts, and praying that the 
executors be required to repay to them, for the benefit of Hurst's 
other creditors, the dividends alleged to bave been paid out of the pro- 
ceeds of sale of the farm and house and lot, because Tearney was the 
fraudulent grantee thereof of Hurst, the bankrupt. This relief, as 
prayed for, has been granted by the référée, and this pétition has been 
filed by Tearney's executors to review his action. 

The case has been ably argued orally and in briefs filed, and pré- 
sents a new and novel question, which may be stated thus: Is Tear- 
ney's estate, by reason of his fraudulent conduct in taking'and con- 
cealing the conveyances from Hurst of the farm and house and lot, 
precluded from participating in the distribution of the proceeds aris- 
ing from the sale thereof after such conveyances were set aside as 
fraudulent, as to the $18,000 debt, in no way involved in the fraud- 
ulent conveyances, incurred before they were made, and admitted to 
be just and unpaid? After long and earnest considération of this 
qestion I am led to the conclusion that its solution will be found in a 
full understanding of the conflict existing between our state insolvency 
laws and the fédéral statutes. 

Section 3099 of our Code of 1906 provides : 

"Every glft, conveyance, asslgnment, or transfer of, or charge upon, any 
estate, real or personal, every suit commenced, or decree, judgment, or ex- 
écution suffered or obtained, and every bond or other writing given, with 



IN RE HDBST 709 

intent to delay, hlnder, or defraud ereditors, purchasers, or other persons, 
of or îrom wliat tbey are or may be lawfully entitled to, shall as to sueh 
ereditors, purchasers, or other persons, their représentatives or assigns, be 
void. ïhis section shall not affect the title of a purehaser for valuable con- 
sidération, unless it appear that he had notice of the fraudulent intent of 
his immédiate grantor, or of the fraud rendering void the title of such gran- 
tor." 

This is substantially the same as the statute of 13 Elizabeth, very 
generally adopted by the Législatures of the several states of the Un- 
ion. Under it, the courts of this state bave very generally held that 
any simple contract créditer may institute, before securing judgment, 
his suit in equity to set aside such conveyance, and upon proof of 
the fraudl it will be set aside only as to the debt of such creditor as- 
sailing it. Other ereditors must sue either by original bill or by péti- 
tion for the same purpose in order to secure its application to their 
debts, and priority is given ereditors in the order of time of the in- 
stitution of their suits. The fraudulent conveyance always remains 
valid as between the grantor and grantee therein. On the other hand, 
the Suprême Court has held in such cases as Scott v. Neely, 140 U. 
S. 106, 11 Sup. Ct. 712, 35 L. Ed. 358, and Cates v. Allen, 149 U. S. 
451, 13 Sup. Ct. 883, 977, 37 L. Ed. 804, that no such suit can be in- 
stituted in a fédéral court until such creditor has reducedi his debt to 
judgment, except in the case of a trustée in bankruptcy, who is held 
by the Suprême Court, as to such préférences and conveyances, to 
hâve "ail the right of a judgment creditor as v^ell as the power spe- 
cifically conferred by the bankrupt act." Dudley v. Easton, 1,04 U. 
S. 99, 103, 26 L. Ed. 668; Wall v. Cox, 101 Fed. 403, 41 C. C. A. 
408. By his appointment in bankruptcy proceeding the trustée is 
subrogated to the rights of ereditors and may sue to avoid such con- 
veyances. In fact, under only such extraordinary circumstances, be- 
fore the appointment of the trustée, such as set forth in Horner-Gay- 
lord Co. V. Miller & Bennett (D. C.) 147 Fed. 295, after bankruptcy 
proceedings instituted, can ereditors institute suits to set aside such 
conveyances. It must be donc by the trustée. Glenny v. Langdon, 98 
U. S. 20, 25 L. Ed. 43 ; Trimble v. Woodhead, 102 U. S. 647, 26 
L. Ed. 290; Moyer v. Dewey, 103 U. S. 301, 26 L. Ed. 394. Thus 
it will be seen that the position of a trustée in bankruptcy, in several 
material particulars, is superior to that of a creditor, so far as thèse 
conveyances are concerned. Why is this? Can there be any doubt 
that it is so, because Congress designed in the bankruptcy act to pre- 
vent any creditor securing those préférences which he could procure 
under state laws by the mère institution of a suit, and, on the con- 
trary, intended to secure the equal distribution of the property of the 
bankrupt of every kind among his ereditors? 

But let us go a step further. Section 3100 of our Code, as amended 
in 1895, is generally regarded as an act preventing préférence of 
ereditors. A careful analysis of it, however, makes very clear the 
fact that its purpose is to create c/a.y.f préférences. It provides, in 
efïect, that ail conveyances made by an insolvent debtor shall stand 
as security for the debts of the creditor secured by it and such others 
as shall (a) be at the time existing and (b) shall either institute, or 



710 188 FEDERAL REPORTER 

corné into àttd unité in a suit institutéd, "to set aside and avoîd" the 
préférence.' ,Such suit must be institutéd within one year after the 
conveyance, or if the conveyance is admitted to record within eight 
months then such suit must be institutéd within four months after 
its recordation. In other words, it simply requires the créditer se- 
cured by the conveyance to share his préférence with such existing 
creditors whô comply with certain conditions required by the act, and 
to thèse, as aclass, préférence is given over ail others. 

It is néedless to point out that under the bankrupt act no such class 
préférence can be secured. On the contrary, every transfer, convey- 
ance made by, or lien secured against, the bankrupt within four months 
prior to the institution of the proceeding, by force of the act becomes 
absolutely nul! and void, and the property conveyed vests in the trus- 
tée, not for the benefit of any class of creditors but for ail alike. Un- 
der the State laws it is hardly possible to conceive of how the condi- 
tion hère sought to be established could arise. Thèse deeds must hâve, 
as to Hurst and Tearney, been upheld as valid ; they could only hâve 
been set aside as to the debts of creditors ass.ailing them ; if the rents, 
issues, and profits were shown to be sufficient in five years to pay ofif 
thèse assailing debts, they alone would hâve been subject to their pay- 
ment, and the estate in fee would hâve reverted to and remained in 
Tearney; on the other hand, if thèse rents were not sufficient to pay 
thèse debts, and the corpus had to be sold, out of the proceeds of such 
sale would hâve been paid the assailing debts and any residue would 
bave 1?een decreed to Tearney. Not so under the bankruptcy act. It 
absolutely ihakes void any conveyance, lien, or préférence made within 
four months of the filing of the bankrupt pétition, and in addition vests 
full power in the trustée to sue, in either fédéral or state courts, to set 
aside fraudulent transfers made by the bankrupt prior to thèse four 
months. In bringing such suits the trustée is not required to do so 
"for the benefit of the existing creditors at the time of the recordation 
of the alleged fraudulent transfer." Nor can he bring it for and on 
behalf of any one particular créditer, whereby that créditer secures a 
prior lien ovèr others, nor can he institute such suit at the cest and ex- 
pense of any particular créditer or creditors. His suit must be for 
the benefit of ail creditors alike and at the cost of the common fund 
held by him for the benefit of ail. And in administering such suit 
institutéd by the bankrupt trustée the state as well as the fédéral 
courts must be governed by the requirements of the bankrupt act as 
being the superior law of the land. 

For this reason I think the Suprême Court of Appeals of the state 
very rightly and preperly held thèse conveyances of Hurst to Tearney 
void and set them aside "as to the rights of the plaintiiï trustées" 
(representing ail creditors equally), and not as to any particular créd- 
iter or class of creditors of the bankrupt, thus leaving to the bankrupt- 
cy court the administration of the funds arising from the sale of the 
properties according te the requirements of the bankruptcy act and not 
thèse of the state laws. A clear distinction in this regard is te be 
drawn between an absolute conveyance held te be fraudulent and a 
mortgage or deed of trust only giving security or lien for debt. If the 



IN EE HUBST 711 

bankruptcy court had been confrontée! with a situation wliereby, after 
the payment of ail debts and costs of administration, a surplus re- 
mained by reason of the proceeds of sale arising f rom the f raudulently 
conveyed properties, it would doubtless hâve recognized Tearney's 
right to such surplus as against Hurst; but certainly it would eut out 
none of the creditors, précèdent or subséquent, represented by the 
trustées, to create such surplus in Tearney's favor. 

Thus it will be seen that Tearney in this case may hâve lost rights 
in this property which under state laws he might otherwise hâve had, 
for possibly few if any of Hurst's creditors would hâve undertaken 
to assail his deeds. The whole fund arising from the sale of the prop- 
erties came into the control of the bankrupt court. How is it to be 
administered ? Will Tearney be allowed to prove and secure pro rata 
payment of the $14,000 which he paid for the properties? I think not, 
for this debt, if it be considered such, arose from fraudulent intént 
and designs, and courts will leave parties guilty of fraud without rem- 
edy. But will a court of bankruptcy go farther, and punish the fraud- 
ulent grantee by refusing him the right to participate, with an honest 
and undisputed debt, in the funds coUected by the trustées for the 
equal benefit of ail honest debts of the bankrupt, properly proven? I 
think not. To do so in effect would be to establish a class préférence in 
favor of Hurst's other creditors as against an honest debt due Tear- 
ney. It might be carried further and become a discrimination against 
an assignée for value of Tearney, in case he had assigned the debt in 
his lifetime to another. Being now dead, it certainly would be a dis- 
crimination against his creditors and legatees. Such préférences and 
discriminations are just what bankrupt acts are created to prevent and 
destroy, for "the primary object of the bankrupt law is to secure the 
equal distribution oi the property of the bankrupt of every kind 
among his creditors." Trimble v. Woodhead, 102 U. S. 647, 650, 26 
L. Ed. 290. 

It therefore follows that the ruling of the référée must be reversed, 
and the pétition filed by the trustées, praying for a return of the divi- 
dends paid to the executors of Tearney, must be dismissed. 

Note. — The very valuable System, adopted by the publishers of the Féd- 
éral Reporter, of annotating the syllabi of our décisions, has, upon présenta- 
tion of the proof sheets of the foregoins opinion t'o me for correction, called 
niy attention to a number of cnses' digested under the title Banlîniptcy In 
Century Uigest, §§ 497-500, and Decennial Digest, § 311. A careful examina- 
tlon of the cases so digested has led me to the conclusion that the principles 
enunciated by the Suprême Court in Keppel v. Tiffln Savings Bank, 197 U. S. 
856, 25 Sup. et 443. 49 U Ed. T90, are fidly in accord with the conclusion 
reached by me in this case. 



71â< 188 FBDBRAL BBFORTSB 

HAKRIS V. GALE. 

(Circuit Court, E. D. Oklahoma. June 29, 1911.) 

No. 1,459. 

lyotLns (5 15*) — Aliénation of Land— Statutes— Effect. 

Act Gong. May 27, 1908, c. 199, § 9, 35 Stat. 315, providlng that the 
death of any allottee of the Five Clvllized Trlbes sliall operate to re- 
move ail restrictions upon the aliénation of his land, provided that no 
conveyance of the interest of any full-hlood Indian heir therein shall be 
valld unless approved by the court having ,1urisdiction of the settlement 
of the estate of the deceased allottee, applies to conveyances of interest 
of helrs of deceased allottees whether such death occurred before or af ter 
Hay 27, 1908. 

[Ed. Note. — ^Por other cases, see Indians, Dec. Dig. § 15.*] 

In Equity. Bill by John Harris, guardian, against G. W. Gale. De- 
murrer sustained, and bill dismissed. 

J. F.. Bledsoe, J. C. Little, and E. D. Slough, for complainant. 
H. A. Ledbetter and S. T. Bledsoe, for défendant. 

CAMPBELL, District Judge. The question for considération 
arises upon defendant's demurrer to complainant's bill. By the bill 
it is sought to bave canceled, as a cloud upon the title to certain lands 
of the complainant's minor ward, a deed made by complainant as 
guardian of such ward, because it was not approved by the Secretary 
of the Interior. The ward is a full-blood Choctaw Indian. The land 
was the allotment of her ancestor, also a full-blood Choctaw Indian, 
who died in March, 1905, whereupon the ward inherited the land. 
Subséquent to the passage of the act of Congress approved May 27, 
1908 (chapter 199, 35 Stat. 312), on pétition of the guardian the 
county court of Pittsburgh county ordered the interest of the ward 
in said land sold; whereupon the sale was duly made, pursuant to 
said order, for a fair considération, and duly coniîrmed by the said 
court, and deed executed accordingly. The only question to be consi- 
dered is whether or not, in a case where a full-blood allottee of any 
of the Five Civilized Tribes bas died prior to May 27, 1908, his full- 
blood Indian heirs, may, after said date, sell their interest in the al- 
lotted lands inherited from the deceased without the approval of the 
Secretary of the Interior. 

By section 9 of the act of Congress approved May 27, 1908, supra, 

it is provided : 

"That the death of any allottee of the Five Civilized Trib^es shall operate 
to remove ail restrictions upon the aliénation of said allottee's land: Pro- 
vided, that no conveyance of any interest of any full-blood Indian heir in 
such land shall be valid unless approved by the court having jurisdiction of 
the settlement of the estate of such deceased allottee." 

It is contended by complainant that the above provision applies 
solely to the sale of such inherited land by full-blood Indian heirs, 
where the death of the ancestor occurs subséquent to the date of the 
passage of said act, and that, in ail cases where the ancestor had died 

*For othet casps see same topio & 5 numebb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



HARRI8 V. OALB 713 

prior to its passage, a sale by a full-bïood Indian heîr, even though 
made subséquent to its passage, must be approved by the Secretary 
of the Interior as provided in section 22 of the act of April 26, 1906, 
(chapter 1876, 34 Stat. 145), reading as foUows: 

"That the adult heirs of any deeeased Indian of either of the Pive Civilized 
Tribes vvhose sélection bas been made, or to wbom a deed or patent bas been 
issued for bis or her share of the land of the tribe to whlch he or she belongs 
or belonged, may sell and convey-the lands inherited from suoh décadent ; and, 
if there be both adult and minor heirs of such décèdent, then such minors 
may join in a sale of such lands by a guardian duly appointed by the proper 
United States court for the Indian ïerritory. And in case of the organiza- 
tion of a state or ten'itory, then by a proper court of the county in whlch 
said minor or minors may réside or in whlch sald real estate Is situated, upon 
an order of such court made upon peiition âled by guardian. AU conveyances 
made under this provision by heirs who are fuU-blood Indians are ta be sub- 
ject to the approval of the Secretary of the Interior, under such rules and 
régulations as he may preserlbe." 

It appears that for about a year following the passage of the said 
act of May 27, 1908, the Department of the Interior, charged with the 
administration of governmental affairs relating to the Indians and tlie 
exécution of the various acts of Congress pertaining thereto, con- 
strued said act as contended for by the défendant, and held that ail 
sales by full-blood Indian heirs of lands inherited from deeeased al- 
lottees should be approved by the court having jurisdiction of the 
settlement of the estâtes of the said deeeased allottees, regardless of 
whether they died before or after May 27, 1908, and that the approval 
of such conveyances by the Secretary of the Interior was not neces- 
sary. But on August 17, 1909, the Attorney General, having been 
asked his advice thereon, rendered an opinion in which he held: 

"ïhat the provisions of section 9 of the act of 1908 coujd not be held 
to operate retroaetively and to remove absolutely ail restrictions upon the 
aliénation of the lands of an allottee who died prior to the passage of the act, 
and that conveyances made since May 27, 1908, by full-blood Indian heirs of 
land inherited prior to that date, are not valid Unless approved by the Sec- 
retary of the Interior, even though they shall' be approved by a probate court 
of the State of Oklahoma." 

He further held that the date of the death of the allottee governs 
the question whether or not the act of 1908 applies. Since the ren- 
dition of this opinion, the Department of the Interior has been pro- 
ceeding in conformity therewith. It is conceded by the Attorney Gen- 
eral in his opinion that: 

"There would seem to be no good reason in making a différence in the alien- 
ability of lands Inherited by full bloods prior to the passage Of the act and 
that of land sa Inherited after Its passage." 

But he finds: 

"The Intention of Congress to make such différence Is so clear that It may 

not be disregarded." 

To my mind it is not clear that such was the intention. The act 
providies that the deaih of any allottee shall operate to remove ail re- 
strictions, etc. That is, the fact of the death of an allottee shall from 
and after the passage of the act hâve such effect. But while the op- 
ération or effect which the act attaches to the fact of the allottee's 



Tié 188 FEDERAL BBPOKTBR 

death arises with the act and must, therefore, be of future application 
and prospective rather than rétroactive and rétrospective, still it by 
no means follows that the death of the allottee contemplated by the 
act is of necessity a death occurring subséquent to its passage. It is 
the death of any allottee which the act provides shall thereafter op- 
erate to remove restrictions. Is it not the opération or effect of the 
death rather than the death itself which shall exist or arise after the 
passage of the act ? What more authority is there for reading the act 
as if it said "the death hereafter of any allottee," than for reading it 
as if it said "the death heretofore or hereafter of any allottee?" In 
any event, it would still proceed in the language of the statute "shall 
operate," etc. 

Nôr does the use of the word "shall" necessarily confine this act 
to cases where the ancestor's death occurs after its passage, as is 
seen from a considération of a number of cases which the diligence 
of counsel interested in this case has brought to the court's attention. 
In the case of Fitzpatrick v. Simonson Bros. Mfg. Co., 86 Minn. 140, 
90 N. W. 378, the following statute was involved: 

"When any person shall ^le intestate, selsed of an estate of Inherltance 
In any lands, * • • where administration shall not hâve been granted for 
flve years from the death of the décèdent, * * * any heir or grantee of 
an helr may institute proceedings to obtain a decree of helrship of distribu- 
tion." 

It was held that thîs statute was applicable to cases where death 
occurred before the date of its passage. After giving what it con- 
sidered the reasons for this législation, the court says: 

"We can imagine no other sensible ground upon which the Législature could 
hâve made the distinction In the relief it intended to glve or that could hâve 
justified the lawmakers in saying this is a wholesome remedy only where 
Its beneflts are to accrue to those whose ancestors die flve years after the 
law takes efCect, but it Is to be withheld from very many otherwise witliin 
the beneflts we bestow. The reasons are agalnst, rather than in favor of, 
such an unjust discrimination. * * * Be this as it may, the word 'shall' 
is often used in remédiai statutes in a gênerai sensé, Including both the past 
and the future, and shoijld be so considered where a more restricted interpré- 
tation is not required. We therefore hold that chapter 157, supra, being in- 
tended to glve a remedy for existing rights, must be liberally construed, in 
order ta acconiplish the bénéficiai purpose for which it was enacted, and 
shouJd be applied to rights and obligations that acerued before Its enactment, 
as well as those to accrue thereafter.' " 

In Maysvine& L. R. Co. v. Herrick, 13 Bush (Ky.) 122, a Kentucky 
statute was involved which provided that any "married woman who 
shall corne to the commonwealth without her husband, he residing 
elsewhere, may a'cquire property, contract and bring and défend ac- 
tions as an unmarried woman." It was held that this statute applied 
to married women who came to the state before the statute took ef- 
fect, as well as to one who came afterwards. The court said: 

"Mrs. Herrick is within the description of persons intended to be beneflted 
by this -statute, unless she Is excluded because she came to Kentucky prier 
to the adoption of the gênerai statutes. To exclude her only because the 
statute speaks only of married women 'who shall corne,' etc., would be to 
adhère to the letter of the law, and disregard its spirit. It was intended for 



HAERIS V. GALE 715 

an enabllng act for the beneflt of a class of persons laborlng under légal 
disabllities and not enjoying tbe protection Incident to tbe state of marrlage, 
because of tbe absence, f rom tbe commonwealtb, of their husbands ; persons 
clearly witbin tbis class will not be denied tbe beneflt of a remédiai statute 
by grammatical construction, at tbe expense of the manifest législative la- 
tent." 

In Plum V. City of Fond du Lac, 51 Wis. 393, 8 N. W. 283, there 
was involved a statute of Wisconsin which provided that: 

"If any damage shall happen • • * no action shall be maintained 
tbereon, unless, witbin 90 days after the happening of the event causing such 
damage, notice in writlng » * * shall be given to the mayor," etc. 

The court said : 

"The learned counsel of the respondent insists that the language In some 
parts of the section makes this particular provision apply only to cases of 
future injury. The section begins, 'if any damages shall happen,' and, further 
on, 'if such damage shall happen,' and, in the clause requlring such notice to 
be given, 'such damage.' Thls form of the future tense of the verb Is very 
common in statutes which clearly relate to tbe past as well as the future, 
and bas no particular slgnlflcance in determining their efCect aa future or 
rétroactive. By the statute Tule of construction the words 'shall bave been' 
include past and future cases (section 4972, Rev. St.), and in Klaus v. City of 
Green Bay, 34 Wis. 628, It was argued by counsel that the words 'who shall 
bave done work' plainly referred to the future and not to the past, and the 
présent Chief Justice said, In his opinion: 'But there is nothlng in tbe language 
when considered with référence to the object of the law, which requires that 
they should bave this restriçted opération. This and similar language is 
frequently used In statutes which ^ve been beld to operate retrospectlvely, 
and we bave no doubt the Législature intended that the remedy should apply 
to a case like this before us.' This language is entlrely approprlate in this 
case." 

In Kelly v. Owen, 7 Wall. 496, 19 L. Ed. 283, the Suprême Court 

was considering a statute which providedi: 

"That any woman who mlght lawfully be naturallzed under existing laws. 
married, or who shall be married to a citizen of the United States, shall be 
deemed and taken to be a citizen." 

The court said: 

"As we construe this act, It confers tbe privilèges of cltizensblp upon women 
married to cltlzens of the United States, if they are of the class of person.» 
for whose naturalization the previous acts of Congress provide. The terms 
'married,' or 'who shall be married,' do not refer, in our judgment, to the time 
when the ceremony of marriage is celebrated, but to a state of marriage. 
They mean that, whenever a woman, who under previous acts might be 
naturallzed, is In a' state. of marriage to a citizen, whether bis cltizensblp 
existed at the passage of the act or subsequently, or before or after the mar- 
riage she becomes, by that fact, a citizen also. HIs citizensbip, whenever it 
exists, confers, under the act, citizensbip upon ber. Tbe construction which 
would restrict' the act to women whose husbands, at the time of marriage, are 
citizens, would exclude far the greater number, for whose beneflt, as we think, 
the act was Intended. Its object, in our opinion, was to allow her citizen-- 
sbip to follow that of her busband, without the necessity of any application 
for naturalization on her part ; and, if this was the object, there Is no reason 
for the restriction suggested." 

This question was before the Suprême Court of this state in Ma- 
Harry v. Eatman, 116 Pac. 935, recently decided and not yet ofïicially 



716 188 FBDERAIi REPORTER 

reported, and that court décidée! that the approval of tlie Secretary of 
the Interior was not necessary, saying : 

"The only object to be accompllshed by requiring the approval of deeds 
of fuU-blood heirs by the secretary or the county court was the protection of 
the livlng and not the dead. The law in force at the time of the exécution 
of the deed ought to govern, and not that in force at the time of the deatli 
of the allottee. This is the construction, as we are advised, placed upon this 
act by the Department of the Interior for the flrst year following its passage. 
What caused a change In the pollcy or construction of the act by the depart- 
ment, we are not advised ; but we know that there was no change in the 
statute, nor was there ,any subséquent enaetment by Congress authorizing 
it We are constrained to hold that after the passage of the act of May 27, 
1908, the approval of the Secretary of the Interior was not necessary to the 
deed of any full-blood heir other than the spécifie instances in the statutes 
enumerated, and as the heirs of Davis Lowman, deceased, executing the deed 
to the plaintlff in error were not in the excepted class, the approval of the 
county court of McCurtain county of plaintifC's deed in the instant case was 
sufflcient, and said deed so approved conveyed ail the title of the heirs of 
the deceased allottee in sald land." 

There being no conceivable reason why Congress should hâve in- 
tended to distinguish between conveyances by full-blood heirs of in- 
herited lands, made subséquent to the act of May 27, 1908, where the 
ancestor died prior to that date, and where the ancestor died subsé- 
quent to that date, and the language of the act itself not so clearly 
evincing such an intention as to preclude the contrary construction, 
it is decided that by the said act any full-blood Indian heir of any 
deceased allottee of the Five Civilizçd Tribes is authorized to con- 
vey any interest in the lands inherited by him, from such deceased 
allottee, upon approval thereof by the court having jurisdiction of 
the settlement of the estate of such deceased allottee, whether such 
death occurred before or after May 27, 1908, and the approval of such 
conveyance by the Secretary of the Interior is not required. Of 
course, in cases where such heir is a minor, the procédure to secure 
the necessary order and approval of the court must be as in cases 
of other minors. 

The demurrer must therefore be sustained, and the bill dismissed. 
It is so ordered. 



XHE SATELLITE 717 

THE SATELOTH. 

(District Court, D. Massachusetts. Aprll 20, 1910.) 

No. 248. 

1. Maeitime Liens (§ 25*) — Massachusetts Statute— Supplies— "Otheb Ab- 

TICLES." 

In Rev. Laws Mass. e. 198, § 14, whlch gives a lien on a vessel for 
money due for "provisions, stores, or otber articles furnlshed for or on 
account of such vessel" by virtue of a contract, express or implied, with 
tlie owner, the words "other articles" Include only such articles in the 
nature of provisions and store as might be necessaries for the vessel in 
the sensé of the maritime law. 

[Ed. Note. — For other cases, see Maritime Liens, Cent. Dig. §§ 20-36 ; 
Dec. Dlg. § 25.* 

For other définitions, see Words and Phrases, vol. 6, pp. 5070-5102; 
vol. 8, pp. 7741-7743. 

Maritime liens created by state laws, see note to The Electron, 21 C. 
O. A. 21.] 

2. Maritime Liens (§ 25*) — Massachusetts Statute— Necbssaet Supplies— 

LiQUOEs— "Otheb Abticles." 

Liquors supplied to a vessel engaged in making daily fishing excur- 
sions from Boston to sea, of about 8 hours' duratlon, during the summer 
months, to be dispensed by the owners to passengers orderlng the same, 
are in ald of the business in whîch the vessel is employed, and may fairly 
be deemed necessaries and within Bev. Laws Mass. c. 198, § 14, giving a 
lien for provisions, stores, and other articles supplied to a vessel under 
contract with the owner. 

[Ed. Note. — For other cases, see Maritime Liens, Cent. Dig. §§ 20-36 ; 
Dec. Dig. § 25.*] 

3. Maeitime Liens (§ 32*) — Massachusetts Statuts — Time foe Filing 

Statement— "Depabt fbom Pobt." 

Under Rev. Laws Mass. c. 198, § 15, which provides that the lien on a 
vessel for supplies, etc., given by the preceding section, shall be dissolved 
unless a statement of the demand is flled for record within 30 days after 
the vessel "départs from the port at which she was when the debt was 
eontraeted," a vessel which made daily fishing trlps from the port of 
Boston to sea, beyond the limits of the port and the state, on each of 
such trlps "departed from the port" within the meanlng of the statute. 
although she did not touch at any other port, and the lien for any item 
of debt eontraeted for supplies was dissolved In 30 days after the next 
trip made, notwithstanding the fact that a running account was kept for 
euch supplies whîch was not closed until after she had made her last 
trip for the season. 

[Ea. Note. — For other cases, see Maritime Liens, Dec. Dig. § 32.* 
For other définitions, see Words and Phrases, vol. 2, pp. 1988, 1989.] 

In Admiralty. Suit by Francis M. Doyle against the steamer Satel- 
lite. Decree for respondent. 
George L. Dillaway, for libelant. 
Russell, Moore & Russell, for claimant. 

DODGE, District Judge. This libel was filed December 6, 1909. 
The Hbelant, who is a liquor dealer in Boston, claims $1,262.49 as the 
balance of an account for aie, béer, whisky, and bottled drinks called 
tonics, furnished by him to the steamer at Boston, on various dates 

•For other cases see same topio & 5 number In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



718 188 FEDERAL BEPOKTBB 

in April, May, June, July, August, September, and October, 1909. 
The earliest date of any of the deliveries is April 17th, and the latest 
date is October 30, 1909. 

The évidence shows that the Satellite was employed by her owner, 
during the season of 1909, in making daily fishing excursions out of , 
the port of Boston. On thèse trips she was accustomed to leave Bos- ' 
ton at 10 a. m., go out to various fishing grounds some miles from 
land, and get back to her wharf in Boston at about 6 p. m. On none 
of thèse trips did the steamer put into any other place than Boston, 
nor was there at any time any intention that she should do so. The 
fishing grounds visited were ofï Marblehead or ofï Scituate. They 
were in every case more than one marine league from, the shore of 
Massachusetts and were outside the territorial limits of the common- 
wealth as defined by Reyised Laws Mass. c. 1, § 3. Tickets for the 
trip were sold to the persons carriéd, which also entitled the holders 
to the use of fishing tackle and bait and to a chowder, ail provided 
by the steamer. An extra charge was made for drinks ordered, which 
were supplied by the steamer as ordered by the persons carried. The 
évidence showed that the steamer had carried on the same business 
during the corresponding months in years previous to 1909; that its 
supplies of aie, béer, and other liquors had been ordered during those 
seasons from the libelant ; and that there had been a running account 
with him continuing through each previous season, as in 1909, the 
crédit items being partly cash on account and partly empty bottles or 
cases returned, and the final balance of the account being settled, in 
former years, after the boat stopped running at about the end of Oc- 
tober. The items of the account now sued on are not disputed, and 
there is no dispute that the articles were delivered to the vessel by 
the libelant, or that the balance claimed is due as between the libelant 
and the owner of the vessel, who knew and approved of what was 
done. , 

The Satellite belonged tô a citizen of Massachusetts, was registered 
at Boston, and Boston was her home port. The alleged lien is claimed 
lunder Revised Laws Mass. c. 198, § 14. This section provides as f ol- 
lows: 

"If by vlrtiie of a contract, express or implied, with tlie owner of a vessel 
* • * monej' is due for * * * provisions, stores, or other articles 
furnished for or on account of such vessel in this commonwealth, the person to 
whom such money is due shall hâve a lien on the vessel, her tackle, apparel 
and furniture to secure the paymeftt of sucli debt, and such lien shall be 
preferred to ail others, except that for marinera' wages; and shall continue 
until the débt ts satisfléd." ■ ' _ 

The claimant contends that thèse provisions give no lien for liquors 
furnished to a vessel under circumstances as above. 

[,1] The libelant could acquire no lien according to the gênerai mar- 
itime law -for supplies 'Of. any kind furnished, as thesé were, at the 
vessel's home port, and by authorityof the owner there residing. ' His' 
claim must rest whoUy upon the state statute. If his contract with' 
the owner of the vessel was maritime in its nature, "the case in admir- 
alty becomes complète if only the conditions of the statute are , ail 
complied with, and whether or not thèse conditions conform in ail 



THE SATELLITE 719 

détails to the gênerai rules of the maritime law." The Iris, 100 Fed. 
104, 113, 40 C. C. A. 301, 310. 

A contract is not necessarily maritime in its nature because it has 
relation to a vessel, nor because it is a contract for articles to be used 
on board a vessel. Regard must be had to the character of the ar- 
ticles eontracted for. If they were such as can be called necessaries 
for the vessel, the contract is maritime. Looking only at the language 
of the State statute hère in question, a contract for supplies does not 
meet ail its conditions unless the suppHes eontracted for are within 
the description "provisions, stores, or other articles." "Other arti- 
cles" hère means articles of the same kind with provisions and stores, 
and the words quoted are intended, in my opinion, to include only 
such articles in the nature of provisions and stores as might be nec- 
essaries for the vessel in the sensé of the maritime law. The ques- 
tion is whether the articles furnished by this libelant can be said to fall 
within that description. 

[2] It has been said that necessaries include whatever would hâve 
been ordered by a prudent owner if présent; but, under the circum- 
stances of this case, the application of such a test is not of much as- 
sistance. On the question whether liquors to be dispensed to pas- 
sengers on a vessel may be regarded as necessaries, there are conflict- 
ing décisions. In The Long Branch, 9 Ben. 89, Fed. Cas. No. 8,484, 
supplies furnished for a restaurant maintained on board a steamboat 
running from New York to Sandy Hook included liquors to be dis- 
pensed from a bar which formed part of the restaurant. It was held 
that the restaurant and bar were no more than a convenient method 
of supplying the ordinary wants of the class of passengers transported, 
and the court declined to make any distinction between the liquors and 
the other supplies furnished. In The Mayflower (D. C.) 39 Fed. 41, 
a lien was maintained, under provisions of a Pennsylvania statute 
substantially like those hère in question, for liquors furnished to be 
dispensed to passengers on an excursion boat, plying in the vicinity of 
Pittsburgh. 

On the other hand, in The Shrewsbury (D. C.) 69 Fed. 1017, it was 
held that there was no Hen, under similar provisions of an Ohio stat- 
ute, for liquors furnished to be dispensed at a lunch counter and bar 
maintained on board a steamer carrying passengers on Lake Erie. 
It is true that the lunch counter and bar in that case appeared to hâve 
been managed, not by the owners themselves, but by othèr persons 
under a contract with the owners ; but the décision seems to hâve been 
that such supplies were not of the kind contemplated by the Ohio 
Législature as entitled to the protection of a lien on the boat. And 
in The Robert Dollar (D. C.) 115 Fed. 218, where the question was 
whether a lien existed under the gênerai maritime law, it was held 
that there was no lien for liquors furnished for a bar maintained by 
the owners on a vessel making voyages to Alaska. The court said: 

"It is always optional with the owner of a vessel whether to conduct a 
bar or not, and as it is not essential to the navigation of the vessel, or to 
the safety and comfort of the passengers, I cannot regard bar supplies as 
necessaries in the sensé In which that word is used in the twelfth admiralty 
rule." 



720 188 FEDERAL EEPOETER 

There is no doubt that in determining what supplies are necessaries 
regard must be had to the character of the voyages or the employ- 
ment in which the vessel is being used, nor that a more inclusive con- 
atruction of the term has had to be adopted, as the uses to which ves- 
sels are put and the purposes for which they are employed hâve corne 
to be more varions in character. If she is employed in carrying pas- 
sengers, part of the profits from her employment is, of course, ob- 
tained by supplying passengers' wants during the voyage. The longer 
the voyage and the more passengers carried, the greater will be the 
variety in kind of the articles which must be furnished to her for this 
purpose. The décision in The Plymouth Rock, 13 Blatchf. 505, Fed. 
Cas. No. 11,237, that supplies for use in the restaurant on board a 
passenger steamer were necessaries, has never been, nor do I see how 
it could be, questioned. At least in cases like The Long Branch, 
above cited, where the voyages made were only of a few hours dura- 
tion, it might be possible to say that it is optional with the owner 
whether to maintain a restaurant on board or not ; but the probability 
that, if he did not, he would get fewer passengers to carry, seems to 
me to meet this objection. If passengers are carried, whatever may 
be reasonably supposed to meet the ordinary wants of the class of 
passengers expected must, I think, be necessaries, whether strictly es- 
sential to their safety and comfort or not. Judged by this test, I think 
the liquors furnished by the libelant may fairly be called necessaries. 
The J. S. Warden (D. C.) 175 Fed. 314, a récent décision by Judge 
Hand in the New York Southern district, tends to confirm this con- 
clusion. It was there held that the services of a bartender rendered 
on board a passenger-carrying vessel are maritime and secured by a 
lien on the vessel, because they are in aid of the purposes of the voy- 
age, notwithstanding the earlier décisions that the only services on 
board which confer a lien are such as aid in the navigation or prés- 
ervation of the ship. I hold, therefore, that the libelant acquired a 
lien under the state statute. 

[3] Such a lien is dissolved under the provisions of the statute 
unless a statement of the demand is filed for record within 30 days 
after the vessel départs from the port at which she was when the debt 
was contracted. Rev. Laws Mass. c. 198, § 15. The last of the daily 
trips made before the libel was filed was on October 31, 1909, and 
the last supplies furnished to her by the libelant were furnished Oc- 
tober 30, 1909, as has been stated. No statement of the demand was 
filed for record until December 7, 1909. Between November Ist and 
December 7th the vessel had not departed from Boston. The respond- 
ent contends that she had departed from the port of Boston on each 
of her daily trips, and that, if the libelant ever had a lien for what 
he furnished, he has now lost it because no statement was filed within 
the required time. The libelant's contention is that there was no 
departure from the port of Boston on the daily trips, and that, even 
if there had been, the fact that there was a running account with the 
vessel made it unnecessary to file the required statement until 30 days 
had elapsed after the departure of the vessel from the port next fol- 
lowing the close of the account. The account was closed, according 



THE TBA8EB 721 

to him, on November Ist, on which date there were items credited. In 
view of The Helen Brown (D. C.) 28 Fed. 111, and The William 
E. Cleary (D. C.) 114 Fed. 756, both of them décisions in this court, 
I am obliged to hold that each of the daily trips made by this vessel 
was a departure from the port of Boston. It is true that the vessel 
went into no other port while absent from Boston; but there can be 
no question that her trips took her in each instance beyond the limits 
of the port of Boston and upon what are called the high seas. The 
décisions referred to are each put upon the ground that the vessel 
had been outside the limits of the port, not upon the ground that she 
had been into some other port. When beyond the outward geograpli- 
ical limits of Boston Harbor and in Massachusetts Bay, as was said 
by Judge Nelson in The Helen Brown, the vessel "was then upon 
the high seas ; she had lef t her port and had gone to sea. Whether 
her departure was for a longer or shorter voyage, or with the inten- 
tion of returning sooner or later, can make no différence." 

The fact that there was a running account might be important if 
the statutory limitation of the time, within which the statement must 
be file"d for record, referred to the time whén the cause of action ac- 
crued. It refers, however, to the time when the debt was contracted, 
and I do not see how it can be said that the debt was not contracted 
until the account was closed. It seems to me that a separate debt was 
contracted upon each occasion when articles were f urnished to the ves- 
sel. Elmore v. The Alida, Fed. Cas. No. 4,419; Spencer v. The 
Alida, Fed. Cas. No. 13,231 ; The Goldenrod, 153 Fed. 171, 82 C. 
C. A. 345. If so, the lien for them was dissolved 30 days after the 
daily trip next following, in the absence of a statement fàled for rec- 
ord within that time. 

I am obliged to hold that the libelant's lien for what he furnished 
had been dissolved before his libel was filed, and the libel is there- 
fore to be dismissed. 



THE TEASER. 

THE HARRISBUEG. 

(District Court, D. Massachusetts. January 27, 1910.) 

No. 230. 

1. Collision (§ 118*) — Suit foe Damages— Answeb. 

In a suit for collision against a tug and her tow, the two are to be re- 
garded for many ijurposes as one vessel under steam for the navigation 
of which the tug is responsible, and, where both are charged with fault, 
an answer by the elaimant of the tug is insufficlent unless it answers the 
charges against the tow. 

[Ed. Note. — For other cases, see Collision, Cent. Dig. § 252 ; Dec. Dig. 
§ 118.*] 

»For other oasea see same toplc & § ndmber In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
188 F.-^6 



122 188 FEDERAL EHPORTEB 

2. Collision (§ 118*) — Suit for Damages— ànsweb. 

In a suit for collision, an allégation In tUe libel that Hbelant's vessel 
was without fault should be answered eiclier by déniai, admission, or an 
averment of want of lînowledge. 

[Ed. Note. — For other cases, see Collision, Cent. Dig. § 252 ; Dec. Dig- 
! 118.*] 

3. XoMiRALTT (§ 65*) — Pleading— Answer. 

Where allégations in an answer in admiralty are' unnecessary and not 
required by ttie rules of pleading, tliey are not subject to exception for 
insufliciency. 

[Ed. Note. — For other cases, see Admiralty, Cent. Dig. §§ 515-518; 
Dec. Dig. § 65.*] 

4. Admiralty (§ 64*) — Pleading — Interroqatories in Libel. 

■ Exceptions to interrogatories propounded in a libel for collision con- 
sidered. 

[Ed. Note. — For other cases, see Admiralty, Cent Dig. §§ 511-514; 
Dec. Dig. § 64.*] 

5. Admiralty (§ 64*) — Pleading — Interrogatories in Libel. 

That an interrogatory propounded in a libel for collision has been an- 
swered In the answer to the libel Is not ground for exception to the in- 
terrogatory. 

[Ed. Note. — For other cases, see Admiralty, Cent Dig. §§ 511-514; 
Dec. Dig. § 64.*] 

6. Admibaltt <§ 64*) — Answebs to Interrogatories. 

Answers to interrogatories propounded In a libel held subject to ex- 
ception for ambiguity and insufliciency. 

[Ed. Note. — For other cases, see Admiralty, Cent. Dig. |§ 511-514; 
Dec. Dig. § 64.*] 

In Admiralty. Suit by John L. McDonald and others against the 
steam tug Teaser (Harry W. Law, claimant), and the barge Harris- 
burg (George Fredericksen, claimant). On exceptions to answers of 
both claimants. Sustained in part. Also on exceptions by claimant 
Law to interrogatories propounded in the libel. Overruled. Also on 
exceptions to answers by claimants to interrogatories. Sustained in 
part. 

Benjamin Thompson, for libelants. 

Carver, Wardner & Goodwin, for claimant of Teaser. 

Blodgett, Jones & Burnham, for claimant of Harrisburg. 

On Exceptions to Answers of Claimants. 

DODGE, District Judge. The libel against this tug and barge is in 
a cause of collision. The collision is alleged to hâve occurred October 
13, 1907. 

The libelants allège that their schooner Demozelle was run into and 
sunk by the barge while in tow of the tug. 

They also allège that the tug passed their schooner, going in an 
opposite direction, but passed too near for safety, yet that the barge, 
which foUowed immediately after, would also hâve passed their 
schooner without collision had she not failed to folio w the tug' s 
course, and, instead of doing so, sheered across the schooner's course. 

[1] 1. Article fourth of the libel allèges that the collision and re- 
sulting damage were wholly caused by négligence on the part of the 

•For other cases see same toplc & § numbeb in Dec. & Âm. Digs. 1907 to date, Si Rep'r Indexes 



THE TEA8EB 723 

tug and of the barge. It goes on to make eîght spécifications of the 
négligence thus charged to iiave caused the collision. The first is 
that neither the tug nor barge had a compétent lookout, wheelsman, 
or officer of the deck. The next three spécifications are of faults as- 
cribed to the tug. The remaining four spécifications are of faults 
ascribed to the barge. 

Law, claimant of the tug, answers the above allégations in the 
fourth article of his answer by denying the collision to hâve been 
caused by any négligence on the tug's part, but without saying any- 
thing in answer to the charges of fault on the barge's part. This the 
libelants except to as insufficient. 

A tug and tow are for many important purposes, in cases of this 
kind, to be regarded as one vessel under steam. And since, under 
ordinary circumstances, according to our law, the tug is responsible 
for the combined navigation, the navigation of both is to be regarded 
as under the orders and direction of the tug until the contrary ap- 
pears. Thèse well-recognized principles seem to me to require the 
claimant of the tug to answer the charges of fault made against the 
barge. I find nothing in the libel indicating that the barge was not 
under the orders and directions of the tug, nor does anything of the 
kind appear to be claimed in the answer. It cannot be said, therefore, 
that for the faults ascribed to the barge the tug can in no event be 
held. Absence of a proper lookout, etc., on board her, failure on her 
part to follow the tug, or to avoid sheering toward the schooner or 
across her course, or failure to slip or eut the hawser, if necessary, 
cannot now be said to be matters as to which the tug had no control 
or responsibility, and therefore matters as to which she was not called 
upon to know, by observation at the time, what the f acts were. I con- 
sider this exception well taken, and it is sustained. 

[2] 2. The last allégation made in the fourth article of the libel is a 
déniai that the collision was caused by any négligence on the schoon- 
er's part. 

To this the only answer made by the claimant of the tug in the 
fourth article of his answer is a déniai of any fault on the tug's part. 
The libelants except to this as insufficient. 

This exception also Imust sustain. I think the libelants are enti- 
tled to know whether or not the claimant of the tug admits or dénies 
their allégation that the schooner was without fault. Whether the 
schooner was in fault or not seems to me a matter presumably within 
the observation and knowledge of those in charge of the tug at the 
time of the collision. If so within their knowledge, I think the al- 
légation ref erred to has not been answered as rule 27 requires. Other- 
wise, I think a statement that the claimant can neither admit nor 
deny, for want of knowledge, is called for. 

[3] 3. The seventh article of the answer is one which does not pur- 
port either to admit or deny spécifie allégations of the hbel. Those 
articles of the libel, containing allégations which rule 27 requires the 
claimant to meet by direct admission or déniai if he can, are ail cov- 
ered by the first five articles of the answer ; or will be so covered if 
the fourth article of the libel be answered as above directed. In the 



724 188 FEDERAL EBPOETEB 

sixth article of the answer is set forth the claimant's own account of 
the collision, after which the seventh makes a gênerai déniai that the 
collision was due to fault of the tug and a gênerai averment that 
everything possible to be done on board her to avoid it was done. The 
libelants object that this seventh article is insufficient in not setting 
forth specifically what was thus done on board the tug. 

It does not seem to me that the averments of the article were nec- 
essary for the purpose of complying with rule 27 or any other of the 
admiralty rules. If not required, I do not see how they can be called 
insufficient. Taken in the connection in which they occur, it may be 
doubted whether they add anything substantial to the allégations of 
fact made in the sixth article. But, however this may be, if, as I 
think, the averment that the tug took every possible précaution was 
not a required averment, I am unable to sustain the objection that it 
is not spécifie enough. 

4. The same considérations oblige me to overrule the objection that 
the seventh article does not, besides denying that fault on the tug's 
part caused the collision, aver what or whose fault did cause it. 

5. Of the exceptions to the answer filed by Fredericksen, claimant 
of the barge, the only one which I am called upon to consider is the 
second exception. This objects that the last three lines of the eighth 
article of the answer are insufficient. 

In the lines referred to it is alleged that everythinig was done on 
the barge to avoid collision that could hâve been done, and that the 
collision was due to the fault of the schooner or of the tug, or of both. 
The objection made is like that made to the seventh article of the tug's 
answer, i. e., that it does not specify what was done on the barge, 
nor in what respect schooner or tug, or both, were to blâme. 

The eighth article of this answer occupies a position corresponding 
to that occupied by the seventh article of the tug's answer, in that it 
follows after articles (first to sixth, inclusive) in which each article 
of the libel is taken up in order and the allégations thereof admitted 
or denied — and after an article (seventh) wherein the claimant's ac- 
count of the facts is set forth affirmatively. I am obliged to regard it, 
as I regarded the corresponding article of the tug's answer, as contain- 
ing allégations which are not inserted because required by any express 
rule or requirement of admiralty pleading; and which, moreover, are 
entitled to no greater weight than statements of inferences from facts 
previously pleaded. I do not see how what has thus been inserted 
can give the libelant the right to demand that it be amplified. This 
exception is therefore overruled. 

On Exception of Claimant Law to Interrogatories. 

1. The objections made to interrogatories 9, 10, 21, 22, and 24 are, 
in substance: 

That they dô not seek information regarding anything alleged in 
the libel. 

That they do not seek information in support of the libelants' case. 

That they are irrelevant and immaterial. 

Admiralty rule 23 gives the libelants the right to interrogate "touch- 
ing ail and singular the allégations in the libel." 



THE TEASEE 725 

Their libel allèges fault on the part both of the tug and of the barge, 
causing the collision between their schooner and the barge — which 
they describe. 

They hâve specified as fault on the part of both, among other things, 
that neither had any compétent lookout, wheelsman, or ofificer of the 
deck (article fourth). 

[4] I do not see how it can be doubted that interrogatories 9 and 
10, which call for the name of the persons on boardi the tug and the 
barge, or on watch at the time, the position and station of each per- 
son and how long he had occupied it, are interrogatories touching 
the allégations of the libel. 

Nor do I see how it can be doubted that interrogatories 21, 22, and 
24, which ask what the first knowledge any such person on the tug 
had of the collision, how the knowledge was acquired and when, and 
what orders were thereupon given to the tug's man at the wheel and 
engineer, are in like manner interrogatories touching the allégations 
of the libel, in which the tug is further charged with fault in not 
slowing, stopping, or reversing when danger of collision became im- 
minent. 

The exceptions to the five interrogatories above mentioned are 
therefore overruled, and the claimant Law is required to answer 
them. 

[5] 2. The objection made to interrogatory 25, that it has been 
partly answered in the answer to the libel, if true, does not seem to 
me sufficient.to excuse the claimant from answering it again as re- 
quired by the interrogatory. Of course, libelants cannot know, when 
they annex interrogatories to their libel, what answer will be made to 
the libel itself. 

The remaining objections to this interrogatory are similar to those 
dealt with above. If the tug, having a barge in tow, passed the 
schooner starboard to starboard, shortly before a collision between 
that schooner and the barge, the inquiries how far she was from the 
schooner in passing, and to what extent the schooner was kept under 
observation and by whom after passing, are, in my opinion, inquiries 
touching those allégations in the libel which charge the tug with 
failure to tow the barge clear of the schooner and with faihire to 
slow, stop, or reverse when danger of collision between those ves- 
sels became imminent. This exception is overruled. 

3. The objection made to interrogatories 26, 27, and 28 is that they 
inquire about matters not within the claimant's reach or knowledge, 
and over which those in charge of the steam tug had no control. The 
inquiries made in ail thèse interrogatories relate, it is true, to what 
happened on the barge, which by this claimant's answer to interrog- 
atory 15 appears to hâve been a considérable distance astern of the 
tug. I cannot, however, assume it to be impossible that the claim- 
ant has any knowledge which will enable him to answer any of the 
inquiries. The tug appears to hâve been in charge of and responsible 
for the barge to such an extent as to forbid me to sustain the excep- 
tions on the grounds stated. If the claimant is without such means 
of knowledge as enable him to answer, he can so state in his answers. 
The exceptions to thèse three interrogatories are overruled. 



726 188 FEDERAL REPORTER 

On Exceptions to Answers of Claimants to Interrogatories; 

[6] The exceptions to the answers filed by Law to interrogato- 
ries 17, 18, and 23 are sustained. In each answer the language used 
leaves some doubt whether it is or not a full, distinct, and expHcit 
answer as it stands.- Ail ambiguity can, as it seems to me, be easily 
removed, and should be removed. 

If, in answer to interrogatory 17, the persons named were the only 
persons in the pilot house during the time inquired about, it should 
be distinctly so stated. If not, the answer is, of course, incomplète. 

In answer to interrogatory 18, there should be a spécifie mention 
or description of each light, such as will leave no room for dispute 
whether they were "régulation towing and side lights" or not. 

In answer to interrogatory 23, the Teaser's course and speed 
"prior to the collision" may or may not hâve been her course and 
speed at the time about which inquiry is made. The answer, as it 
stands, is irresponsive. 

As to the exceptions to answers fîled by Fredericksen on behalf 
of the barge, I sustain those to answers 7, 8, 11, 12, 13, 26, and 27, 
and overrule that to 28. 

In answer to interrogatory 7, the claimant should hâve stated on 
what voyage the Teaser was bound, if he knew. 

In answer to interrogatory 8, having stated, in answer to the pre- 
vious interrogatory 4, that another barge was concerned in the tow- 
age opération, he should hâve stated whether she was light or loaded, 
if he knew. 

(Both thèse interrogatories having been answered by the claimant 
of the Teaser, thoùgh this claimant ought to answer them also, it 
would seem that his answers can hardly be of great importance.) 

If there were objections to answering interrogatories 11, 12, and 
13, those objections ought to hâve been raised by exceptions, stating 
the ground of objection. An objection in place of an answer seems, 
strictly speaking, to be a refusai to answer. Treating ' thèse objec- 
tions as exceptions, however, I rule that thèse interrogatories ought 
to be answered. 

This claimant's answer to interrogatory 26 seems to me, though 
not complète, yet more nearly so than the libelants allow it to be. If 
the schooner was seen nearly ahead and between the tug and barge, 
this may well hâve been the circumstanee that caused appréhension. 
If she was about halfway between tug and barge, the'length of the 
hawser, stated in answer to interrogatory 15, gives her distance from 
the barge approximately. Who it was that first saw the schooner 
ih a position to cause appréhension, to whom and how he reported 
the fact, if to any one, and the speed of the Harrisburg at the time, 
are ail matters called for by the interrogatory, and the claimant 
should answer upon thèse points. 

His answer to interrogatory 27 is obviously insufficient. The in- 
quiry is as to orders given on board the Harrisburg as well as given - 
from the tug. 

His answer to interrogatory 28 seems to me sufficient. The inter- 
rogatory does not call for the reasons why he has no information 
enabling him to answer. 



THE MITRBELL 727 

THE MURRELL. 

pistrict Court, D. Massachusetts. Mareh 18, 1910.) 

No. 241. 

1. SmppiNO (§ 209*) — Peoceedings fob Limitation of Liability— Pleading 

— Intekbogatories. 

Admiralty rule 23, permitting a libelant to attach to hls lihel interrog- 
atories to be answered by a respondent, is applicable to proceedings for 
limitation of liability brouglit by a vessel owner, and the petitioner in 
such a proceeding is to be regarded as a llbelant within such rule and 
may attach to Ms pétition interrogatories to be answered by a damage 
elaimant who bas brougbt suit on his claim or by leave of court may be 
allowed to do so by amending his pétition after It bas been flled. 

[Ed. Note.— For other cases, see Shipping, Cent. Dlg. §§ 646-661 ; Dec. 
Dig. § 209.*] 

2. Shipping (§ 209*) — Peoceedings toe Limitation of Liabilitt— Inteb- 

eogatobies. 

Objections to interrogatories propounded by a llbelant under admiralty 
rule 23, in a proceeding for limitation of liability, consldered. 

[Ed. Note. — For other cases, see Shipping, Dec. Dig. § 209.*] 

3. Shipping (§ 209*)— Peoceedings fob Limitation of Liability- Pleadinq. 

In a proceeding for limitation of liability by the owner of a vessel, he 
bas the burden of proving the necessary allégation of his pétition that 
whatever damage may hâve resulted from any act or négligence of those 
In charge of his vessel was vyithout his privlty or linowledge, and a dé- 
niai of such allégation is not necessary; but, if a damage elaimant dé- 
nies It in his answer vcith the Intention of raising an issue of fact and 
ofCerlng évidence thereon, he should specify the acts relied on to estab- 
llsh petitioner's privlty or knowledge. 

[Ed. Note. — For other cases, see Shipping, Cent. Dlg. §§ 646-661 ; Dec. 
Dig. I 209.» 

Limitation of owner's liability, see note to The Longfellow, 45 C. 0. A. 
387.] 

Pétition by the Baltimore & Boston Barge Company, as owner of 
the steam tug Murrell, for Umitation of Hability. On exceptions of 
Eastern Coal Company, damage elaimant, to interrogatories pro- 
pounded by petitioner. Sustainedj in part. Also on exceptions to 
answer of Eastern Coal Company and Austin Gove & Son. Sus- 
tained. 

Frédéric Cunningham, for petitioners. 

Blodgett, Jones & Burnhani, for Eastern Coal Co. and Austin Gove 
& Son. 

On Exceptions of Eastern Coal Company to Interrogatories Pro- 
pounded by Petitioner. 

DODGE, District Judge. By its pétition filed October 27, 1909, 
the owner of the tug seeks limitation of its liability for the loss of 
a barge while being towed by the tug. A monition was issued Octo- 
ber 28, 1909, returnable February 4, 1910. On January 18, 1910, 
before the return day, and before any damage elaimant had appeared 
in obédience to the monition, the petitioner filed an amendment to 
the pétition asking to amend it by adding interrogatories to be an- 

•For other cases see same topic & i hcmbé» In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



728 188 FBDBBAL RIIPORTBB 

swered by the Eastern Coal Company, owner of the barge and named 
in the pétition as a probable damage claimant, in case it should ap- 
pear in thèse proceedings as such and answer the pétition. The 
Eastern Coal Company did appear and filed an answer claiming dam- 
age for the loss of the barge, on January 26, 1910, and it bas since 
excepted to the interrogatories propounded in the petitioner's amend- 
ment of January 18, 1910. [1] The Coal Company contends that 
a petitioner to limit liability bas not the right under his pétition to 
propound interrogatories and require a damage claimant to answer 
them. It also contends that, if he bas such a right, the interrog- 
atories must be annexed to the pétition when filed and cannot be 
added afterward by amendment. 

It is true that admiralty rule 23, which permits the' libelant to re- 
quire the défendant to answer on oath interrogatories at • the close 
of the libel, was made before proceedings for limited liability had 
been authorized by statute or regulated ty rules 54—58, inclusive. 
Rule 23, when made, undoubtedly contemplated only such libels as 
were then familiar in cases of admiralty jurisdiction ; but now that 
section 4284, Rev. St. (U. S. Comp. St. 1901, p. 2943), bas provided 
that the owner of a vessel is permitted to take appropriate proceed- 
ings for the purpose of apportioning the amount limited according 
to section 4283 among the parties entitled thereto, and rule 54 has 
since provided that he may take such proceedings by filing a "libel 
or pétition" in the proper District Court, and since there is no dbubt 
that such a libel or pétition is to ail intents and purposes a libel in 
admiralty, I see no sufficient reason for holding that rule 23 bas no 
application whatever, and that the petitioner is without the right to in- 
terrogate the parties against whom relief is sought. 

It is alleged in this pétition that the Eastern Coal Company has filed 
in this court a libel against the petitioner, claiming damages for the 
loss of the barge and of her cargo. The petitioner might bave an- 
swered that libel in the ordinary manner, setting up in its answer, 
if it chose, statutory limitation of liability. At the close of its answer 
it might hâve required the Eastern Coal Company to answer inter- 
rogatories touching the allégations of the libel or its own défensive 
allégations by virtue of admiralty rule 32. In the limited liability 
proceedings commenced by its pétition, the same controversy as 
might thus hâve been raised is to be heard and determined, witb the 
différence only that the petitioner becomes nominally the libelant and 
the Coal Company nominally the défendant. The provisions of the 
admiralty rules regarding interrogatories were intended to assist the 
court and parties by securing, in advance of the trial, full and explicit 
statements of their respective claims, and thus presenting more clearly 
the précise issues to be determined. So far as the petitioner's alléga- 
tions regarding the sinking of the barge are concerned, its interrog- 
atories will perfôrm the same function if permitted hère, and in the 
same controversy, notwithstanding the change in the nominal posi- 
tion of the parties. My décision must be that the petitioner has the 
right to interrogate this damage claimant and to be regarded for that 
purpose as a libelant under admiralty rule 23. 



THE MUREELL 729 

If I am right in this view of the matter, whîle the petitioner can- 
not put interrogatories as of course after his libel has been filed, he 
may nevertheless be allowed to do so by amending his libel. The 
Edwin Baxter (D. C.) 32 Fed. 296. 

[2] The Coal Company, without waiving the objection that it can- 
not be required to answer the interrogatories at ail, objects to certain 
of thejn that they are not "touching ail and singular the allégations" 
in the pétition, as ruie 23 provides, and are immaterial or call for 
opinions insteadi of facts, or pry unduly into its défense. Thèse are 
interrogatories 1-11, 20-26, 27, 28, and 31. 

Interrogatories 1-4 ask where the barge was built, whether built 
for the Coal Company; if so, what she cost; and when and what 
the company paid for her. 

Thèse questions bear so remotely, if at ail, upon any of the allé- 
gations in the libel, that I do not think they corne within the rule. 

Interrogatories 5-11 ask if the barge did not leak so that she had 
to put in during the voyage for repair at Delaware Breakwater; if 
so, how much she leaked per hour; whether her pumps could keep 
her clear ; how many and what kind of pumps she had ; what their 
condition was at the Breakwater ; how long it took to repair them ; 
and the nature and location of the repairs. 

I think thèse questions bear sufficiently on the petitioner's alléga- 
tions that the barge leaked so that she could not be kept afloat after 
groundiing long enough to get to a place of safety, to bring them 
within the rule. I think the Coal Company should answer them. It 
does not object to answering interrogatory 12, which bears upon the 
same allégations. 

Interrogatories 20-26 ask if the barge's master knew beforehand 
that the tow was going through PoUock Rip Slue (in the channel of 
which she is alleged to hâve grounded), whether he knew any rea- 
son why she could not go through safely, whether he suggested a dif- 
férent course to the tug, whether he knew that since he was last there 
a new shoal had formed in the slue and a new buoy had been put 
there and that the new buoy had disappeared, and how often and 
when he had been there with a vessel dirawing so much water as the 
barge is alleged to hâve been drawing when she grounded. 

Thèse questions seem to me to bear sufficiently upon the alléga- 
tions that the grounding of the barge was because she was improperly 
steered by an incompétent helmsman and failed to follow the barge 
ahead of her or the tug, or the allégations that she grounded upon 
an unknown and newly formed obstruction in the channel, to make 
them proper under the rule, and I think the Coal Company should 
answer them. 

Interrogatories 27 and 28 ask whether the barge grounded within 
or without the channel as known andi used before the accident, and 
whether the channel referred to had not long been the usual route 
for vessels of the barge's size and draft. 

Thèse questions I think should be answered, for the same reasons. 

Interrogatory 31 asks for a statement of ail that was done on the 
barge to keep her afloat after she had been pulled ofï from where she 
grounded 



730 .188 FBDBEAL EBPOKTEB 

This question seems to me proper for the reasons stated with regard 
to interrogatories 5-11, I do not see that it requires any improper 
disclosure of the défense. 

The resuit is that the Coal Company need not answer interrog- 
atories 1-4, inclusive, but is required to answer ail the other inter- 
rogatories excepted to. 

On Exceptions to Answer and! Claim of Damages Filed by Eastern 
Coal Company and Austin Gove & Son. 

[3] The pétition in this case was filed October 27, 1909. The 
liability sought to be limited is that to which the petitioner may be 
found subject by reason of the stranding and sinking of the barge 
West Virginia on September 29, 1909, while being towed by the Mur- 
rell. The Eastern Coal Company, as owner of the barge, and Austin 
Gove & Son, as owner of the cargo of coal on board her, hâve filed 
on January 26, 1910, an answer containing a claim by each for dam- 
ages for the loss of its property caused, as it allèges, by the tug's nég- 
ligence. This answer dénies generally the following allégations of 
the pétition : 

"Eighth. That if any loss, damage or injury from sald (collision) was svs- 
talned or occasioned by reason of any aet, matter, or thlng, or négligence by 
tbose in charge of said tug, the same was occasioned or Incurred without the 
prlvlty or knowledge of your petitioner or any of its offlcers." 

The petitioner excepts because, having denied this eighth article 
of the pétition, the answer "fails and omits to allège and specify in 
détail what acts, matter, or thing, or négligence by those in charge of 
said tug, were occasioned or incurred without the privity or knowl- 
edge of your petitioner." With its exceptions it has filed a motion 
that the damage claimants be ordered "to specify in détail the acts, 
matter, or thing, or négligence by those in charge of said tug, where- 
by any loss, damage, or injury from the grounding of the barge was 
occasioned or incurred with the privity or knowledge of your peti- 
tioner or any of its officers." 

The answer elsewhere charges the tug with négligence causing the 
barge to sink, and this charge is made in considérable détail. The 
acts or omissions specifiedi as constituting such négligence are ail of 
them, however, acts or omissions by persons in charge of the tug who 
are not alleged to be officers of the petitioner company, nor is it al- 
leged that any such oificer was on board the tug. Nor is it alleged 
that the petitioner put incompétent persons in charge of the tug or 
otherwise failed in its duty regarding her before the voyage was, un- 
dertaken. 

The petitioner contends that, if the damage claimants mean noth- 
ing more by their déniai of the eighth article of its pétition than that 
they intend to rely on any insufficiency in its proof of the absence of 
its own privity or knowledge in connection with any négligence of its 
employés that may be shown, they ought to hâve alleged their own 
ignorance whether there was such privity or knowledge or not, and 
required it to prove the absence thereof. The déniai, it contends, im- 
plies an intent to oflfer affirmative proof of f acts tendling to establish 



EOSS V. H. S. GEEE CO. 731 

its privity or knowledge and gives it the right to know before the 
trial what the facts intended to be shown are. 

The nature of the question as to the absence of privity or knowledge 
on the petitioner's part is such that I am by no means clear that the 
damage claimants' déniai can be taken to mean anything more than 
that they dispute generally on information and belief the petitioner's 
right to limitation, whatever may be the évidence in support of it. 
The petitioner has the burden of proving the absence of its privity 
or knowledge, as one of the "facts and circumstances on which lim- 
itation of liability is claimed" (Adm. Rule 54), and therefore as a 
jurisdictional fact without sufificient proof of which, whether denied 
by an answer or not, the authority of the court to make the diecree 
sought is not established. Benedict, Admiralty (3d Ed.) § 580. 
Whether it has made sufficient proof of the absence of its privity or 
knowledge may be a question both of law and of fact. But if the 
damage claimants should ofïer évidence upon it of facts not spe- 
cificially pleaded, and it should appear that the petitioner was taken 
by surprise and had not had a fair opportunity to meet the évidence 
offered), delay might prove necessary in order to afford it such an 
opportunity, and delay after the trial had once begun would be un- 
desirable from every point of view. If the damage claimants do not 
intend to rely upon such affirmative proof of facts not pleaded, they 
■will lose no advantage to which they are entitled if they are required 
to say so before the trial. I think their position upon the question 
should be disclosed in the pleadings. If such proof is to be ofifered, 
the facts to be proved should be specifîed. Such seems to hâve been 
the character of the pleadings in this respect, in more than one of 
the reported cases wherein the absence of privity or knowledge has 
been in dispute. The Colima (D. C.) 82 Fed. 665; In re La Bour- 
gogne (D. C.) 117 Fed. 261; In re Starin (D. C.) 173 Fed. 721. 

Without ruling that the damage claimants' answer is exception- 
able under admiralty rule 28, I shall grant the petitioner's motion for 
spécifications of négligence claimed to hâve been with its privity or 
knowledge. 



ROSS V. H. S. GEER CO. 

(Circuit Court, N. D. New Yorlî. Juiy 3, 1911.) 

1. CoTJETS (§ 292*) — Fedeeal Coukts — Jubisdiction — Teade-Mabks and 
Trade-Nambs. 

If acts constitutlng infringement o( a trade-mark and other acts con- 
stituting unfalr compétition in trade are Independent, thougà relating to 
the same article, eacli set of acts is a separate cause of action, of the for- 
mer of which a fédéral Circuit Court has jurisdiction, but not of the lat- 
ter, both parties belng résidents of the same state ; but, where the wrong- 
ful acts are not distinct, unfair compétition as well as infringement of 
the trade-mark may be enjoined in the same suit. 

[Ed. Note. — For other cases, see Courts, Cent. Dlg. § 834; Dec. Dig. § 

292.*] 

•For other oases see same topic & i ndmber In Dec. & Am. Digs. 1307 to date. & Rep'r Indexes 



732 188 FEDERAL REPORTER 

2. Courts (§ 292*) — Fbdebal Couets — Jueisdiction — Teade-Marks and 
Teade-Names. 

A fédéra] Circuit Court, In a suit to enjoin infringement of a trade-' 
mark, cannot enjoin future acts amounting to uut'air coiiipetitloii ouly. 

[Ed. Note. — For other cases, see Courts, Cent. Dig. i HS4; Dec. Uig. § 
292.» 

Unfair compétition in use of trade-mark or trade-name, see notes to 
Sctieuer v. Muller, 20 0. C. A. 165 ; Lare v. Harper & Bi-os., 30 C. 0. A. 
376.] 

In Equity. Suit by William Ross against the H. S. Geer Company. 
On motion to modify a preliminary injunction. Motion granted. 

Frank C. Curtis, for complainant. 

John W. Roberts (John T. Norton, of counsel), for défendant. 

RAY, District Judge. The parties are both résidents and citizens 
of the state of New York. The complainant has a valid registered 
trade-mark, "Trojan," duly registered after 10 years' appropriation 
and exclusive use. He applied it to an ice cream disher or spoon, dip- 
per or ladle, for accurately measuring the amount of ice cream taken 
up thereby and so constructed as to remove the contents into another 
réceptacle without adhering to the disher or spoon. It was also so 
constructed as to be easily and thoroughly cleansed. This spoon or 
ladle is of simple construction and has a distinctive and an attractive 
appearance. It was called and known as the "Gem." It was well 
known in the trade and known as of the complainant's make indé- 
pendant of the trade-mark, "Trojan," used or placed thereon, but es- 
pecially when that name was f ound thereon. The complainant used 
this name "Trojan" on other goods of the same class made and sold 
by him. 

Prior to the commencement of this action, the défendant, or the 
Company who manufactures, the défendant being a dealer only, it is 
said, commenced manufacturing and selling an ice cream dipper, 
spoon, disher, or ladle, used for the same purpose, and which, as to 
the bowl and some of its parts, resembled the spoon of the complain- 
ant. This had: "Clipper Disher, Pat. Feb. 7, 05. Geer Mfg. Co., 
Troy, N. Y." — on the handle. A later one, more nearly resembling 
complainant's spoon or disher, had on the handle : "New Clip Disher, 
Pat. Pend. H. S. Geer Co., Troy, N. Y." Later, and before the com- 
mencement of this suit, the défendant put out another dipper or ladle 
approaching very much nearer to the gênerai form, construction, and 
appearance of the complainant's spoon or disher, and on the handle 
of this défendant put the words, "Trojan Disher," and on the reverse 
side, "H. S. Geer Co., Troy, N. Y." Later défendant put on the 
market an almost exact duplicate of the complainant's spoon or disher 
with the same marks, and later one that merely omitted the complain- 
ant's trade-mark on the dipper or ladle itself , but which when offered 
for sale and sold had on the box containing it the words: "Trojan 
Ice Cream Disher. Cup Shape. H. S. Geer Co., Troy, N. Y." And 
also, "Directions for cleaning Trojan Spoons." 

The défendant was clearly infringing the complainant's trade-mark 

*For other cases see same tapie & § numbbb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



EOSS V. H. S. GKEE CO. 733 

"Trojan" and was clearly making and selling a substantîal duplicate 
of the complainant's dipper or ladle and taking a substantial part of 
his trade and injuring him in his business. The defendant's spoon or 
ladle as finally made and put on the market was such a close imitation 
or duplication of complainant's spoon or ladle that, regardless of the 
trade-mark, it would be easily taken and purchased for the spoon or 
ladle of complainant's make, and confusion did occur. In short, de- 
fendant by so making its spoon or ladle in the form and style of com- 
plainant's and putting on same the word "Trojan" was clearly passing 
ofï its spoon or ladle as that of complainant's make and intending so 
to do, and in so doing was not only guilty of infringement of the 
trade-mark, but of unfair compétition in trade. The defendant's 
spoons or ladles were made by one process, and the infringement of 
the trade-mark and the construction were parts of one act and related 
to this one article. The single purpose of thèse acts was to get com- 
plainant's trade. The complainant brought suit alleging the facts and 
characterizing them as both infringement of the trade-mark and un- 
fair compétition in trade and applied for a preliminary injunction re- 
straining or enjoining such acts which resulted in a single wrong and 
damages, viz., the impairment of complainant's trade by passing off 
on the public the spoon or disher of defendant's make as those of com- 
plainant's make. The injunction order was granted and bas not, at 
this time, been appealed from. Thereupon, on the commencement of 
this action, the défendant wholly ceased to use the complainant's trade- 
mark, "Trojan," in any place or way. It did not longer place it on 
the spoon or ladle or on the package containing it or in its advertise- 
ments. In short, défendant ceased to infringe the trade-mark, but 
desires to make or to sell the dippers, spoons, or ladles made in such 
close imitation of complainant's dippers, spoons, or ladles as above 
described. 

The injunction order contains a clause which enjoins the défendant 
from making or selling or offering for sale any dipper, spoon, or 
ladle made in such close imitation of the complainant's dipper, spoon, 
or ladle as to deceive the public or cause the one to be taken or pur- 
chased as the other, etc.; in short, it enjoins the défendant from com- 
mitting acts in the future in référence to this article which amount 
to unfair compétition in trade with respect thereto, but which acts 
will not infringe the complainant's trade-mark inasmuch as what de- 
fendant proposes to do and desires to do will not use the word "Tro- 
jan" in any way. The dipper or spoon défendant desires to make is 
called "New Troy Cup Disher," instead of "Trojan." 

Is the injunction broader and more comprehensive than the facts 
justify, the power and jurisdiction of this court in the premises con- 
sidered? As the parties are ail citizens of the state of New York, 
this court has no jurisdiction of an action for unfair compétition in 
trade pure and simple. It does bave jurisdiction of an action between 
thèse parties for infringement of the trade-mark. 

[1] If acts constituting infringement of a trade-mark and other 
acts constituting unfair compétition in trade are separate and inde- 
pendent acts, even though they ail relate to the same article of manu- 



734 188 FEDERAL REPORTER 

facture, each set of acts constitutes a separate and a distinct cause of 
action, of one of which this court has jurisdiction and of the other 
of which it has no jurisdiction. In such a case this court could not 
take jurisdiction of the acts amounting to unfair compétition only 
for the reason it has jurisdiction of the other separate and distinct 
acts amounting to infringement of a trade-mark. But when the 
wrongful acts are not separate and distinct, but are ail done together 
as one >vhole, or one act, as was the case hère, then the facts may be 
alleged and proved and the wrongful acts enjoined. The complain- 
ant should not be compelled to separate the one act into parts and al- 
lège and prove in the Circuit Court of the United States those parts 
of the act which çonstitute infringement of the trade-mark and al- 
lège and prove in the state court those parts of the same act which 
amount to unfair compétition in trade, thus resorting to two tribunals 
to right one wrong, the impairment of his business by the diversion 
of a part there.of by another. The Circuit Court of the United States, 
having jurisdiction of the parties and of the subject-matter for the 
purpose of enjoining the infringement of the trade-mark, may also 
enjoin ail wrongful acts done in connection with the infringement 
which augment and aggregate the wrong. Globe-Wernicke Co. v. 
Fred Macey Co., 119 Fed. 696, 701, 56 C. C. A. 304; Siler et al. v. 
Louisville, etc., R. Co., 213 U. S. 175, 29 Sup. Ct. 451, 53 L. Ed. 753. 
In the Globe-Wernicke Case, supra, the court, Lurton, Day, and 
Severens, said: 

"The biU was not founded on two separate matters or transactions. Tbe 
conduct of the appellee complained of consisted of the same acts. The légal 
qualities of those acts were in some respects différent, and the resuit was 
that the facts presented a double aspect. It Is upon this considération that 
such a bill can be sustained agalnst an objection that it is multlfarious." 

[2] But can the court enjoin the doing of acts in the future not 
done in connection with and as a part of the infringement of the 
trade-mark or of an infringement thereof for the reason the same 
acts substantially hâve been done heretofore in connection with in- 
fringement of the trade-mark? If, having jurisdiction for one pur- 
pose, the court may retain and exercise jurisdiction for every purpose, 
still that purpose or those purposes must be to enjoin or restrain some 
act or acts done in connection with the acts creating the cause of action 
which gave the court jurisdiction. But may the court extend its ju- 
risdiction to and over future acts which hâve no connection with an 
infringement of the trade-mark? In short, I doubt that in this action 
the court can enjoin the doing of acts by the défendant in the future 
which, if done, will amount to unfair compétition in trade only. 
Saxlehner v. Eisner & Mendelson Co., 179 U. S. 19, 37, 41, 21 Sup. 
Ct. 7, 45 L. Ed. 60, is a case where the trade-mark was infringed and 
the shape of bpttles and color of labels copied and the whole wrong 
was righted. In Saxlehner v. Eisner, 147 Fed. 189, 77 C. C. A. 417, 
the last headnote reads: 

"That a corporation, and, through it, its ofBcers, agents, and servants, had 
been enjoined from further infringing complainant's trade-marks, and from 
conducting a business campaign of unfair compétition, did not preclude corn- 



IN RE YORK SILK MFG. GO. 735 

plainant from, obtainlng an injunction restralnlng certain of the offlcers In 
their individual capacity from performing such unwarranted acts." 

As a condition of modifying the injunction, the défendant ofïers 
to give a bond to pay ail damages, etc., awarded against it in the ac- 
tion and to keep an account of its sales. There will be an order modi- 
fying the injunction so as to permit the défendant to make and sell 
its ice cream dippers, ladles, or spoons which do not bear the word 
"Gem" or "Trojan" in any form or combination on the article itself 
or on the package or packages containing it and which are not ad- 
vertised as the Trojan spoon, dipper, or ladle, provided it exécutes 
and files a bond to complainant in the sum of $5,000, conditioned to 
pay ail costs and damages awarded against it in case the court finally 
holds that it has power in this action to enjoin the future making and 
sale of dippers or spoons of the character mentioned entirely discon- 
nected from any infringement of the trade-mark "Trojan," and also 
keeps an account of its sales to be rendered to this complainant if 
directed so to do. 



In re YORK SILK MFG. CO. 

(District Court, M. D. Pennsylvania. July 8, 1911.) 

No. 1,T19. 

1. Bankruptcy (§ 353*) — Distbibution— Allowance of Claims— Statutes. 

Distribution of the bankrupt's estate Is controlled by the provisions of 
the act of Congress, and Its interprétation is ultimately a matter for féd- 
éral détermination. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 541-^44; 
Dec. Dig. § 353.*] 

2. Bankbuptct (§ 346*) — Claims Agaikst Estate— Taxes— Bonus. 

A bonus exacted by a state from a corporation for the privilège of In- 
creaslng its capital stock Is not a tax entltled as such to priority under 
Bankr. Act July 1, 1898, c. 541, § 64 (a), 30 Stat. 563 (U. S. Comp. St. 
1901, p. 3447), but a debt based on a contractual relationshlp, provable 
and entltled to a pro rata distribution with gênerai credltors. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 535; Dec. 
Dig. § 346.*] 

3. Bankbuptct (§ 346*) — Allowance op Claims— Pkioeities— Claims of 

CoMMONWEALTH— Tax on Value op Coeporate Loans. 

The obligation of a Pennsylvania corporation, through its treasurer, 
to collect from the Pennsylvania holders of Its obligations a tax of four 
mlUs by deducting It from fhe Interest due tbem, Is not a tax on the cor- 
poration, and an account settled therefore by the state offlcers is not en- 
tltled to a priority In the distribution under fhe bankrupt law. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 535; Dec. 
Dig. § 346.*] 

4. Bankeuptct (§ 346*) — Claims— Peioeities— Debts Owing the Common- 

wealth— "Penalty' '— "Tax ." 

Penaltles imposed on a corporation for fallure to return increase of 
capital stock, file reports, etc., are not taxes wlthin the mea.ning of any 
law, and are not entltled to priority under the bankniptcv act, and under 
Bankr. Act .luly 1, 1898, e. 541, § 57 (j), .30 Stat. 560 (U. S. Comp. St. 1901. 
p. 3443), cannot be allowed except for the amount of the pecuniary loss 

•For other cases see same toplo & % numeer in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



736 188 FEDB3RAL EBPORTBB 

sustalned by the act or transaction out of whlch the penalty arose. A 
penalty is a fine or punishment or forfelture, and does not become an ob- 
ligation untll imposed by lawful authority, and the penaltles so Imposed 
on the corporation are différent from penalties for nonpayment of taxes, 
the latter being exact'ed in lieu of interest, while those on the corpora- 
tion are by way of punishment 

[Ed. Note. — For other cases, see Banliruptcy, Cent. Dig. § 535; Dec. 
Dig. § 346.* 

For other définitions, see Words and Phrases, vol. 6, pp. 5272-5276; 
vol. 8, pp. 7750, 6867-6886, 7813.] 

5. Bankruptcy (§ 191*) — Claims by Commonwealth— Liens. 

Clalms of the commonwealth founded on settlements by state officiais 
of Pennsylvanla, made under Act March 30, 1811 (5 Smith's Laws, • p. 
228), and April 16, 1827 (Laws 1826-27, p. 471), against a banljrupt cor- 
poration after the adjudication In banljruptcy, were too late to acquire 
liens on the bankrupt property ; the statutes of the state relating to such 
settlements providing that they shall be a lien from tlie date of the set- 
tlement 

[Ed. Note.— For other cases, see BanUruptcy, Cent. Dig. §§ 286-295; 
Dec. Dig. § 191.*] 

In the matter of the York Silk Manufacturing Company, bankrupt. 
Heard on exceptions to report of référée disallowing claims of the 
Commonwealth. Order affirmed. 

The following is the referee's report: 

Claims of Commonwealth. 

On October 20, 1910, the Auditor General filed a clalm for $18.806.67. 
The proof is made up as follows: 

(1) Bonus on increase of capital stock, August Ist, 1903, % 0( 

1 per cent, on $3,200.00 $10,666.67 

Settled and entered by Auditor General and approved by 
State Treasurer October 19, 1910. Interest claimed from 
June 25, 1904, at rate of 6 per cent per annum. 

(2) Penalty for neglect to Aie a sworn return of actual In- 

crease of capital stocli from $1,800,000 to $5,000,000. . . . 5,000.00 
Settled and entered by Auditor General and approved by 
State Treasurer, October 18, 1910. Interest claimed 
from November 18, 1910, at rate of 6 per cent, per an- 
num. 

(3) Tax of 4 mills as estlmated and appraised value of eor- 

porafe loans 2,400.00 

Penalty for f allure to make report, 10 per cent 240.00 

Settled and entered by Auditor General and approved by 

State Treasurer October 18, 1910. Interest claimed at 

rate of 12% per annum from December 18, 1910. 

(4) Penalty for failure to file capital stock reports for the 

years 1903, 1904, 1905, 1906, 1907, 1908, and 1909. 600.00 

Settled and entered by Auditor General and approved by 
Treasurer October 19, 1910. Interest claimed from No- 
vember 19, 1910, at rate of 6 per cent, per annum. At- 
torney's commissions of 5 per cent, are claimed. Cer- 
tiflcates of settlements covering the above were filed aa 
liens in York, Berlîs, and Cumberland countles, Pa.m 
and writs of scire facias issued thereon on or about Oc- 
tober 20th, 1910. 

Statement of Fncts. 
(1) On September 6, 1910, the York Silk Slnnufacturing Company was ad- 
judged a bankrupt by the District Court of the United States for the Middie 
District' of Pennsylvanla. 

*For otber cases see same toplc & § numbs^b In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN EE YORK 8ILK MFG. CO. 737 

(2) The bankrupt corporation was incorporated in Peunsylvanla August 24, 
1900, with authorized capital of $200,000, for the purpose of manufacturing 
silk and textile fabrics. The authorized capital was increased February 2, 
1902, to $1,800,000, which was actually issued and the bonus paid. 

(3) On August 23, 1903, a further Inerease was authorized to $5,000,000. 
No return of the actual inerease of $3,200,000 was made, nor was the bonus 
on it paid. The actual inerease appears to hâve been made May 31, 1904; 
the corporation engaged In the business for which it was incorporated having 
mills in iTork, Berks, and Cumberland counties, in the state of Pennsylvania, 
and Middlesex county, in the state of Connecticut. 

(4) On September 23, 1910, George E. NefC, Esq., was elected trustée in 
bankruptcy, and thereafter entered upon the discharge of his duties as such. 

(5) Ou Oetober 7, 1910, the trustée filed a iietition asking for an order to 
sell at private sale to A. D. Walker, Richard L. Austin, James Orosby Brown, 
the real estate of the bankrupt and certain personal property. 

(6) On Oetober 21, 1910, the référée grant'ed an order authorizing the trus- 
tée to sell at private sale ail the real estate of the bankrupt to the parties 
named for the sum of $276,000 freed and discharged from ail mortgages, judg- 
ment liens, or incumbrances whatsoever, and certain personal property of the 
bankrupt for the sum of $15.000, freed and discharged from ail liens and in- 
cumbrances whatsoever. This order was afterwards ratifled and afBrœed by 
the order of Hon. K. W. Archbald, district judge of said court. / 

(7) On September 1, 1908, a mortgage for $750,000 to secure a bond issue 
for like amount was entered of record against ail the real estate of the bank- 
rupt. Under this mortgage bonds to the amount of $682,500 were issued. 

(8) The trustée, in addition to the said items of $276,000 and $15,000, re- 
ceived the following sums of money: Cash in bank, $7,752.65; cash, $54.57; 
rent, $2,694.13; rent, $208.33; rent, $1,250. The account of the trustée 
showed receipts for $303,0-59.68, and the balance on his account is $288,144.10. 

(9) The trustée paid the borough, county, sehool, and building taxes on the 
Fleetwood Miil, situate in Berks county, the high sehool, tuition, and sehool 
taxes on the Middletovï-n mill, water rents at Middletown mill, and other real 
estate taxes due. 

(10) The bondholders will receive about 35 or 40 per cent, on their bonds In 
the distribution. 

Conclusions of Law. 

(1) The commonwealth claims priority out of the real estate and personal 
estate of the bankrupt for ail the items embraeed in the claim. The state's 
contention to priority appears to be based upon three grounds: (1) That the 
said bonus, corporate loans, and penalties are taxes within the purview of 
the bankruptcy act; (2) that the fiscal officers of the commonwealth having 
proceeded in accordance with the provisions of the Pennsylvania acts of 
March 30, 1811 (5 Smith's Laws, p. 228) and April 16, 1827 (Laws 1826-27, p. 
471), liens were acquired prier to the sale of the property of the bankrupt; 
and (S) that according to sections 31 and 32 of the Pennsylvania act of June 
1, 1889 (P. L. 420), relating to taxes, It is entitled to a préférence in this dis- 
tribution. 

Section 64 (a) of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 563 
[U. S. Oomp. St. 1901, p. 3447]) provides as follows: "The court shall order 
the trustée to pay ail taxes legally due and owing by the bankrupt to the 
United States, state, county, district, or municipality in advance of the paj'- 
ment of dividends to creditors and upon flling the receipts of the proper pub- 
lic officers of such payment, he shall be credited with the amount thereof, 
and in case any question as to the amount or legality of any such tax, the 
same shall be heard and defermined by the court." 

The first and most important question is whether the bonus claimed hère 
is a tax within the meaning of the fédéral or state statutes. 

The bankrupt act of 1867 (Act March 2, 1867, c. 176, § 28, 14 Staf. 531), 
Inter alla, gave priority to "ail debts due to the state, in which the proceed- 
Ings in bankruptcy are pending and ail taxes and assessments made under 
the laws of such state." 

The présent act of 1898 is quite différent Section 64 relating to priority 
claims omits "ail debts due the state," as well as "assessments." It is nar- 

188 F.-^7 



738 188 FEDERAL REPORTEE 

rowed down so far as the state 1b concerned to "ail taxes legally due and ow- 
Ing by the banknipt." 

It is iirged that the case of State of New Jersey v. Andersen, 17 Am. 
Bankr. Eep. 63, 203 TJ. S. 483, 27 Sup. Ct. 137, 51 L. Ed. 284, is directly ap- 
plicable to the faets of this case. There the tax In question was an aunual 
license fee or franchise tax requlred by the statute of New Jersey to be paid 
by corporations upon their outstanding capital stocli for the privilège of the 
existence and contlnued rlght to exercise theIr franchise. This Is the same 
as our capital stock tax whlch bas invariably been allowed priority in this 
court. The bankrupt, however, Is excepted from the payment of this tax by 
the Pennsylvania statute, because It is a manufacturing corporation. 

[1 ] This distribution is controUed by the provisions of the acts of Congress 
relating to banliruptey, and the Interprétation of a fédéral statute is ulti- 
mately a matter for fédéral détermination. 

In the case of the State of New Jersey v. Anderson, 17 Am. Bankr. Eep. 
63, 203 U. S. 483, 27 Sup. Ct. 137, 51 L. Ed. 284, deflnes a tax as follows: 
"Generally speaking, a tax is a pecuniary burden laid upon individuals or 
property for the purpose of supporting the government. We think this exac- 
tion is of that character. It Is requlred to be paid by the corporation after 
organlzation in invitum. The amount Is flxed by the statute, to be paid on 
the outstanding capital stock of the corporation each year and capable of 
being enforeed by action against the wlll of the taxpayer." 

The bonus hère Is not a tax on capital stock as in the above case. It Is a 
sum exacted by the state for the privilège of Increasing its capital stock. It 
is not a tax, but a debt based upon a contraetual relationship. Eléments 
of a tax are that It be levled annually and requlred to be paid In Invitum. 
A bonus Imports a considération. 

In Commonwealth v. Erle & Western Transportation Co., 107 Pa. 112, the 
Suprême Court of this state held that a bonus was not a tax. Also see Com- 
monwealth v. Bessemer, 207 Pa. 302, 56 Atl. 871 ; Commonwealth v. Hoop Oo., 
226 Pa. 6, 74 Atl. 617. The superlor court in Commonwealth v. Bailey, Banks 
& Biddle Co., 20 Pa. Super. Ct. 210, also held that a bonus Is not a tax. 

[2] The same décision is reached In Balte. & Ohio R. R. v. Maryland, 21 
Wall. 456, 22 L. Ed. 678. It will thus be seen that it is authoritatively held 
that a bonus Is not a tax. I therefore am obliged to conclude that the claim 
of the commonwealth for bonus Is not entîtied to priority in this distribution, 
but is a provable debt against the bankrupt, entitled to a pro rata distribu- 
tion with other gênerai creditors. 

The next question is whether fhe corporate loans are a tax within the 
meaning of the bankruptcy act or a state statute. 

[3] The obligation of a Pennsylvania corporation tlirough its treasurer to 
collect from the Pennsylvania holders of its obligations a tax of four mills by 
deductlng It from the interest due them Is not a tax on the corporation, and 
an account settled therefore by the state officers is not entitled to a priority in 
the distribution under the bankrupt law. In re Wyoming Valley Ice Co. (D. 
0.) 16 Am. Bankr. Rep. 594, 145 Fed. 267. 

The Suprême Court of Pennsylvania in Commonwealth v. Railroad Co., 186 
Pa. 246, 40 Atl. 492, has sald, in regard to this obligation: "The tax is not in 
any sensé or In any degree a fax on a corporation or its property, but on the 
Indlvidual citizen of the state who holds the bonds. The corporation Is 
chargeable with It only as collecter, and by reason of the default of the duty 
to collect." In Darlington v. Marshall Kennedy Milllng Co., 56 Pittsb. Leg. 
J. 201, the court ordered payment' of the taxes on corporate loans to be paid 
In advance of a mortgage under sections 31 and 32 of the act of June 1, 1889. 
The point, however, was not raised in that case, and the distribution was un- 
der an exécution, and the provisions of the banlvruptcy law were not Involved. 
If we could conclude that the taxes due on the corporate loans were taxes 
within the meaning of the act of June 1, 1889, we reach a point of conflict 
between the state statute and the fédéral law in which the latter provides 
that the taxes to hâve priority must be "legally due and owing by the bank- 
rupt," and It necessarily follows that the provisions of the fédéral statute 
must prevail over the state law. 

The case of In re Wyoming yalley Ice Company (D. C.) 16 Am. Bankr. Rep. 
594, 145 Fed. 267, Is a ruling of Judge Archbald of this court, and is conclu- 



IN BE rOKK SILK MFG. CO. 739 

sive upon the référée. It therefore follows thaf this tax on corporate loans 
Is not entltled to priority in this distribution, but is allowable as a gênerai 
clalm in this State. 

[4] Corning next is the question of penalties. It is perfeetly manifest that 
they are not taxes within the meaning of any law. A penalty is a fine or 
punisliinent or forfaiture, and does not become an obligation untll imposed 
by lawful authority. Thèse penalties are qulte différent from penalties im- 
posed for nonpayment of taxes. The latter are exaeted in lieu of interest. 
The penalties untler considération are punishments for failure to perforœ cer- 
tain acts, and the penalties were not imposed untll after the adjudication in 
bankruptcy. 

Section 57 (j) of the bankruptcy act provides as follows: "Debts owing to 
the United States, a state, a county, a district or a municipality as a penalty 
or forfelture shall not be allowed except for the amount of the pecuniary loss 
sustained by the act, transaction or proceeding out of which the penalty or 
forfelture arose witli reasonable and actual costs occasioned thereby and such 
interest as may hâve accrued thereon accordlng to law." It will thus be seen 
that under thèse cireumstances penalties are not even provable in bankrupt- 
cy, and can only be allowed for the amount of the pecuniary loss sustained 
by the act, transaction, or proceeding out of which the penalty or forfelture 
arose with reasonble and actual cost occasioned thereby, and such interest 
as may hâve accrued thereon accordlng to law. The penalties are in no sensé 
a flx'ed liabillty absolutely owing at the time of the filing the pétition in bank- 
ruptcy. whieh is a necessary requisite to a provable clalm as provlded by sec- 
tion 63 of the bankruptcy act. Also see In re Southern Steel Co. (D. C.) 25 
Am. Bankr. Rep. 358, 183 Fed. 498. Thèse penalties must therefore be dis- 
allowed entirely, but without préjudice to the state to make a clalm as pro- 
vlded for in the above section. 

[5] The State Treasurer and Auditor General proceeded under the acts of 
1811 and 1827, and niade settlements against the bankrupt October 18 and 19, 
1910, whieh was after the adjudication in bankruptcy, and on the 20th of 
October, 1910, entered liens In York, Adams, and Berks counties, Pa., where- 
on sclre facias were issued. This was too late to acquire liens on the bank- 
rupt property. The date of cleavage is the date of adjudication. 

It should be observed that an adjudication in bankruptcy acts is personam 
and in rem. The property of the bankrupt at once vests in the trustée subse- 
quently to be appolnted. The rights of ail parties are fixed by the adjudica- 
tion. An adjudication is in effiect a caveat, attachment, and injunction. 
When in any settlement made agreeable to the Act of 1811 a balance is found 
to be due to the commonwealtti, this balance, together with interest from the 
expiration of the three months after the date of the settlement, "shall be 
deemed and adjudged to be a lien from the date of settlement of such account 
upon ail the real estate of the person or persons indebted and on his or their 
securities throughout this commonwealth." The date of the lien hère men- 
tioned is tlie date of settlement. It is- manifest that a settlement made after 
an adjudication in bankruptcy créâtes no valld lien. In fact, under section 67 
of the bankrupt act, liens obtained against a person who is insolvent at any 
time within four months of fillng of the pétition In bankruptcy are void. 
Bven if the settlement had been made prier to the adjudication in bank- 
ruptcy, they would not be conclusive in this court under the case of the State 
of New Jersey v. Andersen, 17 Am. Bankr. Rep. 63, 203 U. S. 483, 27 Sup. Ct. 
137, 51 L. Ed. 284. Under the act of 1827, the transmission by the Auditor 
General to the prothonotaries of the respective counties of the certlfled cop- 
ies of the balance due the commonwealth, and the entry of record of such 
copies in the office of the prothonotary, are necessary in order to maintain 
a lien of such balances as against other lien creditors of the debtor. William 
Wilson & Son v. Sllversmith Co.'s Estate, 150 Pa. 285, 24 Atl. 636. From this 
it will be seen that the mortgage in this case wovild bave priority over the 
settlements. In the case just cited the Suprême Court says: "Being stlU in 
force, tlierefore, we are obliged to hold that their provisions must be com- 
plied with in order to enforce the collection of the claims of the common- 
wealth, and when they are in hostillty t» the claims of lien creditors in the 
county where the delinquent debtor résides. We do not eee how we could 



740 188 FEDERAL REPOETBB 

hold otherwise, unies» we are prepared t'o hold tliat the lien given to the com- 
monwealth is a spécifie lien upon eacli Item of Personal property In question, 
so as to follow it in whatever hands it may be found." We could net pos- 
sibly hold sueh a doctrine as it would afCect ail the business carried on by 
corporation and limited partnerships with such an extremely oppressive and 
onerous liability as to destroy It altogether. We hâve never held such a lia- 
bility by way of lien as thls, and it would be entirely hostile to the splrit of 
Dur laws and the free Interchange of commoditles among our cltizens. In 
this case the exécutions had been issued and levies made on Personal prop- 
erty. 

In Gladden v. Chapman, 188 Pa. 586, 41 Atl. 735, it is again held that if 
the comœonwealth does not file certifled copies of the settlements in the pro- 
thonotary's office, as required by the act of 1827, it is postlponed to other lien 
creditors. The acts of June 7, 1879 (P. L. 112), and June 1, 1889 (P. L. 420), 
are considered in this case. 

In re Clark Coal & Coke Ce. (D. C.) 22 Am. Bankr. Kep. 843, 173 Fed. 658. 
which wiLS a distribution in bankruptcy proceedings, the claim of the state 
for capital stock tax was postponed to ofher liens. The référée there held 
that "the lien of the state for the taxes claimed is to be paid as of the dates 
of the entry in the prothonotarj^'s office." 

I therefore hold tliat the claim of the state cannot partlcipate in the dis- 
tribution of the real estate fund, and the same is accordingly awarded to the 
bondholders under the mortgage. 

This leaves for considération only the personal fund which Is much less 
than the amount of the claims of the state. The acf of April 14, 1905 (P. L. 
166), under which the $.'500 penalty is claimed, provides that the penalty im- 
posed shall be a lien from the date of settlement by the Auditor General and 
State Treasurer. The penalty of $5,000 is claimed under act Feb. 9, 1901 
(P. L. 3) § 3. This "shall be coUeeted on account settled by the Auditor Gen- 
eral and State Treasurer." It wiU be seen that there can be no lien under 
thèse acts, except from the date of settlement, and, as settlement was made 
after the adjudication in bankruptcy, it was then too late to originate any 
lien agalnst the assets of the bankrupt corporation. And as already stated 
penalties are not provable. Bankr. Act, § 57 (j). 

Sections 31 and 32 of the Pennsylvania act of June 4, 1889 (P. L. 420), pro- 
vided as foUows: "That ail taxes imposed by thls act shall be a lien upon the 
franchise and property both real and personal. * * * Whenever the fran- 
chise and property of a corporation, company, association, joint-stock asso- 
ciation or limited partnership shall be sold at judicial sale ail taxes due the 
commonwealth shall first be allowed and paid out of the proceeds of such 
sale, before any judgment, mortgage, or other claims which shall be entered 
of record or become a lien after the passage of this act. • * • Nor shall 
any judicial sale be valid or a distribution of the proceeds thereof be made 
until ail taxes due the commonwealth bave been fully paid into the State 
Treasury, and the certiflcate of the Auditor General, State Treasurer, aud 
Attorney General to this effect, filed in the proper court with the proceedings 
* * * for sale." Section 31 refers to "ail taxes imposed by this act." The 
act has no application to a bonus. In fact, section 33 expressly says "that 
nothing in this act contained shall be taken or construed to alter or repeal 
existiug laws imposing taxes upon collatéral inheritances or imposing any 
bonus," etc. Nor is a bonus a tax, as already stated. Referring to corporate 
loans, it is not a tax "legally due and owlng by the bankrupt." Section 64 (a) 
of the bankruptcy act. In re Wyomlng Valley Ice Co. (D. C.) 16 Am. Bankr. 
Rep. 594, 145 Fed. 267. It is not a tax on the corporation or its property, 
but on the individual citizen of the state who holds the bonds. Section 32 is 
not pertinent fo proceedings under the bankruptcy act. In the last analysis 
In order that the state may obtaln priority its claims must be for taxes le- 
gally due and owing by the bankrupt withln the meaning of the bankruptcy 
act. The bonus and taxes on corporate loans are not taxes legally due and 
owing by the bankrupt 

The penalties claimed of $500 and $5,000 cannot be considered as taxes, 
under the act of 1889 or of the fédéral statute. The penalties are not even 
provable in bankruptcy. 



UNITED STATES V. TUCKEB 711 

It Is therefore ordered as foUowa: 

(1) AU the claims of the commonwealth filed are denled participation In the 
distribution of the real estate fund. 

(2) AU the claims of the state are disallowed as priority claim against the 
Personal estate. 

(3) The claims for bonus, interest, and amount due on corporate loans, and 
interest, attorney's commissions, etc., are allowed as gênerai daims against 
the bankrupt estate. 

(4) The items relating to penalties of $500 and $5,000 are disallowed, but 
without préjudice to the state to présent a claim under the provisions of sec- 
tion 57 (j) of the bankruptcy act 

Niles & Neff, for the bankrupt. 

A. V. Bower, John F. Kell, and C. P. Miller, for the Commonwealth 
of Pennsylvania. 

WITMER, District Judge. After hearing the argument of coiin- 
sel, reading and considering the opinion filed by J. Edward Vander- 
sloot, Esq., référée, the exceptions thereto and the record in this case, 
it is, upon considération, adjudged and decreed that the findings of 
the référée in favor of the trustée and gênerai creditors disallowing 
the claim of the commonwealth, as preferred, and in rejecting the 
daim for penalties, are in accordance with the law, and the referee's 
conclusions and order are affirmed. 

The well-considered opinion of the leamed référée is adopted as 
the opinion, conclusions, and order of the court. 



UNITED STATES v. TUCKER. 
(District Court, S. D. Ohio, B. D. Aprll 8, 1911.) 

1. Commerce (§ 40*)— Subjects of Régulation— Sales. 

The sale and shipment from Ohio to Washington, D. C, of a bottle of 
medicine containing cocaïne without a label iudlcatlng Its présence, the 
seller knowlng when he soliclted the order that the transaction, If com- 
pleted, would necessitate Interstate transportatlon, was Interstate com- 
merce, whether the sale was made before or after shipment, and is with- 
In Pure Food & Drugs Act June 30, 1906, c. 3915, 34 Stat. 768 (U. S. 
Comp. St. Supp. 1909, p. 1187). 

[Ëd. Note. — For other cases, see Commerce, Cent. Dlg. §| 29, 30; Dec. 
Dig. § 40.*] 

2. Commerce (§ 14i/^,* New, toI. 12, Key No. Séries)— Subjects of Requla- 

TION—FOEM OF NEGOTIATIONS. 

Commerce being intercourse, It Is unlmportant. In determining whether 
a transaction was Interstate commerce, whether the negotiatlons were 
conducted by mail, by travellng salesmen, by telegraph, or by téléphone. 

[Ed. Note. — For other définitions, see Words and Phrases, vol. 2, pp. 
1287-1298 ; vol. 8, pp. 7606, 7607.] 

3. Commerce (§ 14%,* New, vol. 12, Key No. Séries)— "Interstate Commerce." 

Every negotiatlon, Inltlatory and Intervening act, contract, trade, and 
deallng between citizens of any state or territory, or the District of Co- 
lumbla, wIth those of another political division of the United States, 
which contemplâtes and causes importation from one sucb division to 

♦For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



743 188 FEDERAL BEPORTEB 

another, whether It be of goods, persons, or Information, Is a transaction 
of Interstate commerce. 

[Ed. Note. — For other définitions, see Words and Phrases, vol. 4, pp. 
3724-S731.] 

Nathan Tucker was convicted of violating the pure food and drugs 
act, and moves for a new trial. Overruled. 

Sherman T. McPherson, U. S. Dist. Atty. 
Vorys, Sater, Seymour & Pease, for défendant. 

' SATER, District Judge. The défendant delivered at Mt. Gilead, 
Ohio, and shipped from that place to one Henson (whose real name 
is Morgan), residing at Washington, D. C, a bottle of medicine con- 
taining cocaine. The bottle bore no label or brand indicating the 
présence of that drug in the medicine. The jury having found him 
guilty of violating the pure food and drugs act of Juné 30, 1906, 34 
Stat. 768, c. 3915 (U. S. Comp. St. Supp. 1909, p. 1187), he moves to 
set aside the verdict on the ground that he was engaged in intrastate, 
Mid not in interstate, commerce. 

In answer to an inquiry from Henson, the défendant mailed him 
an examination or symptom blank and what is manifestly a previously 
prepared stock letter, stating that under a separate cover were f or- 
warded to him circulars fully explaining the defendant's System of 
relief and cure for asthma, hay fever, and nasal catarrh, and naming 
the cost of treatment. Henson viras requested to fill out the blank and 
return it with full payment in advance, on receipt of which a treat- 
ment would be sent by express without delay. Henson filled out the 
symptom blank and returned it with a postal order for the sum named. 
Thereupon the défendant deposited in the mail at Mt. Gilead a bottle 
containing two ounces of the medicine, addressed to Henson, and also 
shipped to him by express an atomizer, both of which were received 
by Henson at Washington. Later a second bottle of medicine was 
sent in the same manner as the first. Henson made no suggestion and 
gave no direction as to the mode of transporting any of the medicine. 

[1] Was the transaction in which the .défendant engaged interstate 
commerce? His contention is that the sale and delivery were com- 
pleted in Ohio, when the medicine was deposited in the mail, and that 
the title thereto then and there passed to the purchaser, f ree from any 
interest of the défendant therein, that the delivery to the postal de- 
partment for transmission to Henson was a delivery to him, and that 
consequently the transaction was whoUy intrastate and governed by 
the Ohio law of sales (99 Ohio Laws, pp. 413-425; sections 8381- 
8455, Ohio General Code). He claims that the fact that the sale was 
made with the intent that the medicine should be transported from 
Ohio to the District of Columbia after the sale and delivery were 
fully completed did not impart an interstate character to the trans- 
action, because the agent by whom the transportation was effected— the 
United States mail — was the agent of the purchaser and not of him- 
self. To sustain his contention he relies on State v. Mullin, 78 Ohio 



UNITED STATES V. TUCKEE 743 

St. 358, 85 N. E. 556, 18 L. R. A. (N. S.) 609, 125 Am. St. Rep. 
710. In that case a résident of Harrison county gave an order 
by mail to a résident of Jefferson county for a case of béer to be 
forwarded to the purchaser by express, marked "C. O. D." The 
béer was sent, received, and paid for. It was held that the ex- 
press Company was the agent of the purchaser to receive the goods 
from the seller and the agent of the seller to receive their price 
from the purchaser, and that t'pon delivery to the carrier the title 
to the goods passed to the purchaser, àlthough he was not entitled 
to their actual possession until he paid or tendered the purchase price. 
It was further held that the place of both the sale and delivery was 
the place of the seller's résidence, and that the sale was completed 
when the seller delivered the goods to the carrier. The transaction 
was wholly intrastate, and the goods were shipped under instructions 
given by the purchaser. The facts of that case and the law applicable 
thereto readily distinguish it from the case at bar. 

The second section of the pure food and drugs act is limited in its 
application to interstate and foreign commerce. The prohibition there- 
in contained runs against the introduction of misbranded drugs into 
any state, or territory, or the District of Columbia, from any other 
part of the United States, or from any foreign country. The offense 
with which the défendant is charged in the indictment is the delivery 
of such a drug at Mt. Gilead, Ohio, for shipment, and its actual ship- 
ment from that place, to a point outside the state, an offense which, if 
established, is punishable under the provisions of the act. 

[2] That the negotiations were conducted by mail is unimportant. 
Commerce is intercourse (Gibbons v. Ogden, 9 Wheat. 189, 193, 6 
L. Ed. 23), and for the purposes of commercial intercourse parties 
may avail themselves of the mails as well as of traveling salesmen 
(Robbins v. Shelby Taxing District, 120 U. S. 489, 495, 7 Sup. Ct. 
592, 30 L. Ed. 694), or of the telegraph (Pensacola Tel. Co. v. West- 
ern Union Tel. Co., 96 U. S. 1, 24 L. Ed. 708), or the téléphone (Cen- 
tral Union Téléphone Co. v. State, 118 Ind. 194, 19 N. E. 604, 10 Am. 
St. Rep. 114; Judson on Interstate Commerce, § 6). 

Neither a sale nor the place of sale and delivery is alone the test 
of interstate commerce, nor does transportation, àlthough an adjunct 
essential to commerce, constitute a transaction interstate commerce. 
A sale, the parties to which are from différent states, when such sale 
necessarily involves the transportation of goods, is a transaction of 
interstate commerce, whether the contract of sale be made in the one 
state or the other, or made before or after shipment. 

[3] Every negotiation, initiatory and intervening act, contract, 
trade, and dealing between citizens of any state, or territory, or the Dis- 
trict of Columbia, with those of another political division of the United 
States, which contemplâtes and causes such importation, whether it 
be of goods, persons, or information, is a transaction of interstate 
commerce. U. S. v. Swift & Co. (C. C.) 122 Fed. 529, 531; Butler 
Bros. Shoe Co. v. U. S. Rubber Co., 156 Eed. 1, 17, 84 C. C. A. 167; 
Hopkins V. U. S., 171 U. S. 578, 597, 19 Sup. Ct. 40, 43 L. Ed. 290; 



744 188 FEDERAL EBPOKTEB 

Robbins v. Shelby County Taxing Dist., 120 U. S. 489, 497, 7 Sup. 
Ct. 592, 30 L. Ed. 694; Caldwell v. North Carolina, 187 U. S. 622, 
629, 23 Sup. Ct. 229, 47 L. Ed. 336; 7 Cyc. 416; Globe Elevator Co. 
V. Andrew (C. C.) 144 Fed. 871, 882; In re Charge to Grand Jury 
(D. C.) 151 Fed. 834, 839. When the state courts hâve been called 
upon to express themselves, their utterances hâve been in harmony 
with the foregoing. Cook v. Rome Brick Ce, 98 Ala. 413, 12 South. 
918; Culberson v. American Trust & Banking Ce, 107 Ala. 464, 19 
South. 34; Loverin & Browne Co. v. Travis, 135 Wis. 322, 331, 115 
N. W. 829, 832. In the last-named case it is said that : 

"It cannot now be doubted that 'commerce,' lu the fédéral Constitution, 
comprehends ail of the intercourse between the parties necessarily or ordi- 
narily involved In a commercial transaction with référence to merchantable 
commodities. Nor can it be doubted that the solicitation of the purchaser by 
the seller, the contract of purchase and sale, and the actual physieal delivery 
to the purchaser, by whatever means may be selected, are ail inhérent parts 
of th« intercourse pertaining to trade or trafflc in merchandise." 

The transaction in which the défendant engaged was inter state com- 
merce. The évidence justified the verdict returned by the jury, and 
the motion is therefore overruled. 



. In re SCHEIEE et aL 

(District Court, E. D. Washington, E. D. June 2, 1911.) 

No. 1,021. 

L CouBTS (§ 96*) — Tebkixobial Cotjbts— Décisions— Conclusiveness — Rur-B 
Oï Peopeety. 

Décisions of a Suprême Court of a territory construing a territorial 
statute should be given the saine force and eft'ect as a décision of a su- 
prême court of a state, especially where the décision establishes or re- 
lates to a rule of property. 
[Ed. Note. — For other cases, see Courts, Dec. Dig. § 96.* 
Conclusiveness of judgment between fédéral and state courts, see notes 
to Kansas City, Ft. S. & M. R. Co. v. Morgan, 21 C. C. A. 478 ; Union & 
Plantera' Bank v. Memphis, 49 O. C. A. 408.] 

2. Courts (§ 366*) — Consteuction— Effect. 

Construction placed on a statute by the highest court within the jurls- 
dlction of the lawmaking body becomes a part of the statute. 

[Ed. Note. — For other cases, sée Courts, Cent. Dig. §§ 954-957; Dec. 
Dig. § 366.*] 

3. Bankeuptct (§ 397*) — Pabtnebship— Exemptions. 

Indivldual partners cannot claim exemptions from the partnership 
property as against partnership debts in bankruptcy, tbough the other 
partner or partners may bave consented thereto. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 397.*] 

4. Exemptions (§ 52*) — Statutes— Pbopeety in Lieu of Pbovisions, etc. 

Under Rem. & Bal. Code Wash. § 563, subd. 4, providing that a debtor 
shall hâve exempt certain- domestic animais and the f eed therefor for six 

•For other cases see same topie & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN EE SCHEIEE 745 

months, and also provisions and fuel for hls family, a debtor who Eias 
not the animais referred to cannot select other property in lieu thereof 
and hold the same exempt from àls creditors. 

[Ed. Note. — For other cases, see Exemptions, Cent. DIg. § 40 ; Dec. Dig. 

§ 52.*] 

In Bankruptcy. In the matter of bankruptcy proceedings of Julius 
Scheier and Louis Scheier, copartners as Scheier Brothers, and as in- 
dividuals. On certified questions by the référée. Referee's décision 
denying exemptions affirmed. 

Edelstein & Weinstein, for bankrupts. 
Campbell & Goodwin, for trustée. 

RUDKIN, District Judge. The following questions hâve been 
certified to the court by the référée in bankruptcy at the instance of 
one of the above-named bankrupts v 

1. "Is a bankrupt, a member of a bankrupt partnership, who is a house- 
holder as deflned by the laws of the state of Washington, and, at the time 
of fiiing hls pétition in bankruptcy, possessed none of the animais enu- 
merated in subdivision 4 of section 563 of Remington & Ballinger's Codes and 
Statutes of Washington, entitled to retain from the assets of his firm, as ex- 
empt under said subdivision 4 of sald section 563, other property to the 
value of $250 In lieu of such animais; he having no individual assets from 
which to elaim such exemption, no member of the partnership having assets 
not claimed by and set off to hlm as exempt, the firm assets being Insuflil- 
clent to pay flrm creditors in full, and his only copartner consenting to 
the allowance of the exemption claimed by him from the firm assets?" 

2. "If the bankrupt, Julius Scheier, is entitled to the allowance of ex- 
emptions from the partnership assets under the facts stated in question No. 1, 
should he be allov^fed, by virtue of said subdivision 4 of said section 563, to re- 
tain from the partnership assets any property In lieu of sufficient provisions 
and fuel for the comfortable maintenance of himself and family for six 
months ; he having had no appréciable supply of provisions and fuel on hand 
at the time of fiiing his pétition In bankruptcy?" 

Section 563, subd. 4, Rem. & Bal. Code, referred to in the foregoing 
certificate, provides as follows: 

"The following property shall be exempt from exécution and attachment, 
except as hereinafter specially provlded: * * * (4) To each householder, 
two cows, with their calves, flve swine, two stands of bées, thirty-slx do- 
mestic fowls, and provisions and fuel for the comfortable maintenance of 
such householder and family for six months, also feed for such animais for 
six months: Provlded, tbat in case such householder shall not possess or 
shall not désire to retain the animais above named, he may select from his 
property and retain other property . not to exceed two hundred and fif ty 
dollars, coin, in value. The sélection in the proviso mentioned shall be 
made in the manner and by the person and at the time mentioned in su!b- 
dlvision three, and said sélection shall bave the same effect as sélections 
made under subdivision three of this section." 

The right to the exemptions claimed is fixedi by the laws of the 
state where the bankrupt résides, and the décisions of the highest 
court of the state construing .thèse laws are controlling upon the 
fédéral courts. 

In Charleston v. McGraw, 3 Wash. T. 344, 17 Pac. 883, the Su- 
prême Court of the territory held that a partner could not claim ex- 

♦For otiier cases see same topic & § ndmeek In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



746 188 FEDBBAL RHPOETEE 

emptions f rom partnership property under similar f acts ; but no dé- 
cision bas been made by the Suprême Court of the state upon this 
question. 

[1] How far the décision of the Suprême Court of the territory 
is binding on this court may admit of question; but it would seem 
that the décision of the highest court of the territory construing a 
territorial statute should hâve the same force and effect as a décision 
of the Suprême Court of the state. This is especially true where the 
décision estabHshes or relates to a rule of property. 

[2] The construction placed upon a statute by the highest court 
within the jurisdiction of the lawmaking body becomes a part of the 
statute,. and, if the Législature cannot add to exemptions without im- 
pairing the obligation of existing contracts, certainly no court should 
accomplish the same resuit by a mère change in its décisions. 

[3] However, if I should disregard the décisions of the Suprême 
Court of the territory entirely, the overwhelming weight of judicial 
authority would lead me to the same conclusion. 

"By the great weight of authority individual partners cannot elaim exemp- 
tions In the partnership property as against a partnership debt. This is 
held on varions différent grounds: (1) On the well-known ground that 
partnership property Is subject to the payment of partnership debts before 
ail other claims; (2) the impracticabillty or even Inequlty of allowlng an 
exemption ont of the property; (3) that, under the theory of the civil law 
that a partnership is an entity — a theory not generally recognlzed by the 
common law and one which Is Inconsistent with its prlndples — and that the 
partnership property does not belong to the individual partners, but to the 
flrm, that is, to the légal eutity; (4) that the différent exemption statutes 
contemplate only Indlviduals and bave no référence to partnerships." 18 Cyc. 
1883. 

A différent rule obtains in Georgia, Michigan, North Carolina, 
New York, Wisconsin, and perhaps one or two other states ; but the 
fédéral courts sitting in bankruptcy hâve never adopted or followedl 
the minority rule outside of the particular states in which that rule 
prevails. In re Beauchamp et al., 101 Fed. 106. 

The fact that the other partner has consented to the allowance of 
the exemption does not change the rule. McCrimmon v. Linton, 4 
Colo. App. 420, 36 Pac. 300, and cases there cited. 

The first question certified must therefore be answered in the nég- 
ative. 

[4] The second question certified must be answered in the néga- 
tive for the same reason, and for the additional reason that the stat- 
ute does not permit the debtor to sélect other property in lieu of pro- 
visions anâ f uel for his family and feed for the animais therein named. 
Carter v. Davis, 6 Wash. 327, 33 Pac. 833. 

The décision of the référée denying the exemptions claimed is ap- 
proved and affirmed, and an order will be entered accordingly. 



UNITED STATES V. ERICKSON 747 

UNITED STATES v. ERICKSON, 
(District Court, W. D. Michigan, S. D. September 28, 1910.) 

1. Evidence (§ 83*) — Peesumption— Pbeitoiîmance of Officiai, Acts. 

In the absence of a coutrary sbowing, names of witnesses for an ap- 
plicant for naturalization are presumed to liave been posted for the time 
required by law. 

[Eia. Note. — For other cases, see Evidence, Cent. Dlg. § 105; Dec. Dig. 
§ 83.*] 

2. Aliens (§ 71%*) — Natuealizaiion— Defects— Effect. 

A naturalization certiflcate sbould not be vacated as having been ob- 
tained lllegally or through fraud, because, on ineligibility of one of two 
vyitnesses appearing, hls name was erased from the witnesses' affidavit, 
and another name substituted, and tbe date of the afiSdavit clianged to 
that wàen tlie new witness verified, though no duplicate of tlie affldavit 
as so changed was forwarded to tbe Department of Commerce and Labor. 

[Ed. Note. — For other cases, see Aliens, Dec. Dig. § 71%.*] 

3. Aliens (§ 71%*) — Naturalization Peoceedings— Review. 

Naturalization proceedings, lilie ordinary judlcial proceedings, are 
properly sustained if defects asserted are merely technical and formai, 
though tbe defects cause annoyance to tbe supervising administrative de- 
partment. 

[Ed. Note. — For other cases, see Aliens, Dec. Dlg. § 71%.*] 

4. Aliens (§ 68*) — Natdealization— Filing of Papebs. 

Absence of a filing Indorsement, or a calendar entry by a clerk con-r 
cerning a naturalization pétition actually filed, is Immaterlal if the fact 
of filing sufflciently appears. 

[Ed. Note.— For other cases, see Aliens, Cent. Dig. §§ 138-146; Dec. 
Dlg. § 68.*] 

5. Aliens (§ 68*) — Naturalization— Validity— Omission bt Clerk. 

An applicaut for naturalization is not affeeted by any failure of the 
clerk to report to the Department of Commerce and Labor any détails 
which he ought to report 

[Ed. Note.— For other cases, see Aliens, Cent. Dig. §§ 138-146; Dec. 
Dig. I 68.*] 

Pétition by the United States to vacate Ole Erickson's naturaliza- 
tion certificate. Pétition dismissed. 

Geo. G. Covell, U. S. Atty. 

DENISON, District Judge. This is a pétition to vacate a natural- 
ization certificate issued by the circuit court of Benzie county, Sep- 
tember 21, 1908. It appears that Erickson filed his pétition February 
29, 1908, with William A. Anderson and F. Erickson as witnesses; 
that F. Erickson was not eligible as a witness, for lack of citizenship ; 
that on April 25, 1908, the name of Erickson was érased from the 
witnesses' affidavit, and the name of Peter Anderson was substituted, 
and the date of the affidavit changed from February 29, 1908, to 
April 25, 1908. Thèse are the allégations of the pétition, taken as con- 
fessed by default, and I interpret them as meaning that there appears 
of record upon the pétition an affidavit purporting to be signed and 
sworn to on April 25, 1908, by William Anderson and Peter Ander- 

»For other cases see same topio & § nttmeee In Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



748 188 FEDERAL EEPORTBB 

son, as witnesses; and that it was so subscribed and sworn to, by 
them on that day, is the proper inference to be drawn from this rec- 
ord, li, however, the fact was that only Peter Andersen appeared 
and sîgned upon the second stated day, this would not présent an es- 
sentially différent situation, because that would amount to an affidavit 
by one witness on February 29th and by the other on April 25th, 
making the paper then complète. 

[1] It was the duty of the clerk to post both of thèse names for 
more than 90 days before September 21st, the day of hearing, and 
there is no allégation that he did not do so. It must, therefore, be 
presumed. that they were so posted. 

[2] The présent pétition to vacate is based upon this substitution 
of a witness, and upon the attending irregularities. It seems to me 
quite clear that the alleged defects are not vital, nor, indeed, serions, 
and that they do not justify depriving respondent of his citizenship. 

[3] I know of no reason why the proceedings for naturalization 
in a court of record should not be governed by the same gênerai prin- 
ciples as ordinary judicial proceedings, and vacated if the defects are 
vital and essential things, but sustained if the defects are merely tech- 
nical and formai. The fact that defects of the latter class cause an- 
noyance and trouble to the supervising, administrative department, 
cannot make void any proceedings upon which substantial rights are 
based. , 

It may well be conceded, as held in United States v. Martorana, 171 
Fed. 397, 96 C. C. A. 353, that a pétition, verified by only one com- 
pétent witness, is invalid, and it may even be called void in the sensé 
in which that word is often used, although it would seem rather to 
be a sort of ineffective paper, ready to become effective at any time 
upon attaching the other affidavit. However this may be, the worst 
that can be said of such a pétition is that it is not lawfully on file with 
the clerk, but is an unofficial paper remaining in his hands either with 
an imperfect affidavit, or with no affidavit, according to the view which 
may be taken. When, 30 days later or 60 days later, two compétent 
witnesses come into the clerk's office and sign and swear to this pa- 
per, it then becomes a valid and unimpeachable pétition, and an en- 
tirely sufficient basis for the posting of the witnesses' names and the 
subséquent judicial examination and pronouncement. 

[4] It would be more orderly for the clerk then to file the paper 
over again and give it a new consécutive number upon the officiai rec- ' 
ord ; but it is a familiar rule that the absence of a filing indorsement 
or a calendar entry by the clerk with référence to a paper which is 
actually filed, and upon which the clerk has acted, is quite immaterial, 
if the fact of the filing sufficiently appears. 

[5] So, too, the f allure of the clerk to report to the Department 
of Commerce and Labor any détails which he ought to report can- 
not affect the right of the applicant for citizenship. 

The only obstacle, as I think, to treating the pétition, when finally 
properly verified, as sufficient, upon the theory that it is a pétition 
then first efficiently initiated, is that by clause 2 of section 4 (Act 
June 29, 1906, c. 3592, 34 Stat. 597 [U. S. Comp. St. Supp. 1909, p. 



SLADE V. KOSE 749 

479]) the pétition is required to be filed in duplicate; and, as one of 
the duplicatas first -filed in this case had been forwarded to the De- 
partment of Commerce and Labor, a complète affidavit was attached 
only to one duplicate. The requirement of a duplicate pétition as 
distinguished from a mère copy cannot be for any purpose excepting 
for the convenience and permanence of record, and I do not think the 
absence of one duplicate, under the conditions hère stated, is vital. 
The department desires to be advised of ail the particulars specified 
in the pétition, so that it can make the necessary inquiry and opposi- 
tion, if there is reason therefor. This substantial purpose was fully 
satisfied by what was done in this case. When the pétition was event- 
ually filed, the duplicate, perfect in every respect, excepting in one, 
was on file in Washington; and there was, in this case, no substan- 
tial préjudice to the department, or to the public, or the law, from the 
failure of the department to hâve 90 days' notice of the name of the 
new witness. 

I hesitate extremely to reach a conclusion which may seem to be 
in conflict with that of the Court of Appeals of the Second Circuit, 
but the matter, unless as to the single question of the duplicate affi- 
davit, seems to me very clear ; and since the theory that the pétition, 
when properly verified, may be treated as a new pétition, was not 
mentioned by the court in that case, it may be assumed that the facts 
of that case did not justify such a theory. 

I feel compelled to hold that Erickson's naturalization should not 
be cancelled on the ground of fraud nor on the ground "that such 
certificate of citizenship was illegally procured" ; and, as no other 
grounds are provided for in section 15 of the act in question, the pé- 
tition must be dismissed. 



SLAPE V. BOSH. 

(Circuit Court, D. Rhode Island. June 24, 1911.) 

No. 2,934. 

1. Taxation (§ 805*) — Rédemption fbom Tax Sale — Time to Redeem. 

Gen. Laws R. I. 1909, c. 60, § 18, providing that the person who owned 
real estate sold for taxes, at the fime of the assessment, or any interest 
therein, may redeem upon repaying to the purchaser the amount paid 
therefor with 20 per cent, in addition, within one year after the sale, or 
within six months after final judgment has been rendered in any suit In 
which the validity of the sale is in question, provided the suit be com- 
menced within one year after the sale, does not afCect the right to ques- 
tion the validity of the tax sale, and imposes no limitation on that right, 
but affeets only the right of rédemption. 

[Ed. Note. — For other cases, see Taxation, Dec. Dlg. § 805.*] 

2. Taxation (§ 696*) — Rédemption fbom Tax Sale — Statutoby Provisions— 

constkuction. 

Statutes afCording a right to redeem from tax sale are given a libéral 
construction. 

fEd. Note. — For other cases, see Taxation, Cent. Dig. § 1393 ; Dec. Dig. 
§ 696.*] 

•For other cases see same topic & S numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



750 188 FEDERAL REPORTER 

3. Taxation (§ 699*) — Rédemption fkom Tax Sale — Time to Redeem. 

Under Gen. Laws R. I. 1909, c. 60, § 18, givlng the riglit to redeem 
from tax sale within one year after the sale or withln six months after 
final judgmeiit In any suit in wliicli ttie validity of the sale is in question, 
provided the suit be commeneed within one year after the sale, the right 
of rédemption exists throughout the pendency of a suit begun within a 
year as well as durlng the six months after final judgment, and is not 
Buspended from the end of the year until the date of tie final iudgmeuf. 

[Ed. Note.— For other cases, see Taxation, Cent. DIg. §§ 1402-1405; 
Dec. Dlg. § 699.*] 

4. Taxation (§ 699*) — Rédemption pbom Tax Sale — Time to Redeem. 

Under Gten. Laws R. I. 1909, c. 60, § 18, giving the right to redeem 
from a tax sale within one year after the sale or within six months after 
the final judgment in a suit In which the validity of the sale is In ques- 
tion, provided the suit be commeneed within one year after the sale, the 
right to redeem within six months after final judgment is not upon condi- 
tion that in the pending suit the ovmer shall establish some right. 

[Ed. Note. — For other cases, see Taxation, Dec. Dig. § 699.*] 

6. Taxation (§ 699*) — Rédemption from Tax Sale — Time to Redeem— 
"Final Judgment." 

In Gen. Laws R. I. 1909, c. 60, § 18, giving the right to redeem from a 
tax sale within one year after the sale or within six months after "final 
judgment" in any suit in which the validity of the sale is in question,^ 
provided the suit be commeneed within one year after the sale, the term 
"final judgment" means a Anal disposition of the suit fo test the validity 
of the sale, and Is not to receive such strict interprétation as when used 
In statutes concerning appeals or writs of error, but covers ail judgments, 
whether before or after hearing on the merlts, which put an end to the 
suit whose pendency defers the vesting of an indefeasible title in the 
purchaser. 

[Ëd. Note.— For other cases, see Taxation, Dec. Dlg, § 699.* 
For other définitions, see Words and Phrases, vol. 3, pp. 2774^2798; 
vol. 8, p. 7663.] 

6. Taxation (§ 806*) — Tax Title— Suit to Test Validité— Intervention. 

In an action of ejectment by the owner of land against the purchaser 
at a tax sale, a mortgagee clalmlng the right to redeem is not entitled 
to Intervene. 

[Ed. Note.— rFor other cases, see Taxation, Cent. Dig. § 1598; Dec. Dig. 
§ 806.*] 

At Law. Action by Mary G. Slade against Almanza J- Rose. 
Heard on pétition of Elbert A. Bennett and another to be allowed to 
intervene and be made parties plaintiff. Pétition denied. 

Charles A. Wilson, for plaintiff. 
Christopher E. Champlin, for défendant. 
Gardiner,'Pirce & Thornley, for interveners. 

BROWN, District Judge. This is a pétition to intervene as pkin- 
tiffs in an action of ejectment begun by writ dated January 10, 1910, 
by the plaintiff as owner in- fee of lands in New Shoreham, against 
the purchaser at a tax sale. Elbert A. Bennett is the mortgagee of 
record of the lànd in 'question, and the American Exchange ÎNTational 
Bank is the actual owner of the mortgage ; said Bennett merely hold- 
ing it for the bank. 

'For other cases see same topic & § nuhbbk in Dec. & Am. Plgs. 1307 to date, & Rep'r Indexes 



SLADE T. KOSE 751 

Chapter 60, § 18, General Laws of Rhode Island of 1909, is as 
follows : 

"Sec. 18. The person who owned any real esta te sold for taxes, at the tiuie 
of the assessment, or any inferest therein, his heirs, assigns or devlsees, may 
redeem the same upon repaying to the purchaser the amount paid therefor, 
witli twenty per centum In addition, within one year after the sale, or wlthin 
six months after final Judgment bas heen rendered in any suit in which the 
validity of the sale is in question: Provided, said suit be commenced within 
one year after such sale." 

This action was brought by the plaintiff, Mary G. Slade, within one 
year after the tax sale. 

[1] The statute does not affect the right to question the validity 
of the tax sale, and imposes no limitation on that right, but affects 
only the right of rédemption. Struthers v. Potter, 30 R. I. 444, 75 
Atl. 867. 

The petitioners désire to avail themselves of the right of rédemp- 
tion, which exists after the expiration of one year, by reason of the 
fact that a suit was brought .by the plaintiff, Mary G. Slade, within 
the year. 

[2, 3] Sta tûtes afifording a right to redeem from a tax sale are giv- 
en a libéral construction. Dubois v. Hepburn, 10 Pet. 1, 23, 9 L. Ed. 
325. Upon a literal interprétation, as well as upon a fair interpré- 
tation of the statute, a suit brought by any owner within the year 
préserves the right of rédemption for the benefit of that owner and 
his assigns, as well as of other owners. A reasonable interprétation 
of the statute requires us to hold that the right of rédemption exists 
throughout the period of the pendency of a suit begun within the year, 
as well as during the period of six months from and after final judg- 
ment. 

To hold that the right of rédemption exists for a year and then is 
suspended until the date of final judgment in a, suit brought within 
the year, and then is revived for a period of six months, is to give 
the statute an unreasonable construction, and to attribute to the Lég- 
islature an eccentric intention. 

The purpose of the statute is to give an opportunity to test the 
validity of a tax sale. If the sale is invalid then there is no need of 
rédemption. The six-month extension of the period of rédemption is 
for the benefit of those who cannot invalidate the sale and are forced 
to redeem or lose their property. 

[4, 5] The right to redeem within six months after final judgment 
is not upon condition that in the pending suit the owner shall estab- 
lish some right; on the contrary, the provision is valuable only in 
case of his failure. The character of the provision for the benefit of 
those whose lands bave been sold, by a valid sale, should be kept in 
mind when we consider what is meant by the term "final judgment" as 
used in section 18. Obviously it means a final disposition of the suit to 
test the vahdity of the sale. The earlier the termination of the suit, the 
earlier the termination of the attack upon the validity of the sale, the 
better for the purchaser. The purchaser has no interest in having the 
case delayed for a trial on the merits in case the plaintiiï prefers to 
enter a judgment of dismissal or discontinuance. 



752 188 FEDERAL EEPOETEB 

After the expiration of a year, the date of final disposition of a 
suit brought within the year fixes definitely the expiration of the 
statutory right of rédemption, at a day six months thereafter. It fol- 
lows that the words "final judgment" are not to receive such strict 
interprétation as when used in statutes concerning appeals and writs 
of error, but cover ail judgments, whether before or after hearing 
on the merits, which put an end to the suit whose pendency def ers the 
vesting of an indefeasible title in the purchaser. 

[8] The reasons given in support of the pétition to intervene are 
therefore, in my opinion, insufficient. 

The petitioner, as mortgagee, is entitled, under the statute, to re- 
deem at any time during the pendency of the présent suit, and for 
the period of six months after its termination by a judgment, ren- 
dered before or after hearing, which is final in the sensé that it ends 
the suit and fixes a date for the beginning of the final period of six 
months. Whether, after the expiration of a year, the petitioners 
could gain any additional rights by being made parties plaintifï to 
a suit brought within the year, is doubtful. 

Ordinarily an amendment introducing new rights of action must 
be considered as of the date of its allowance. If thèse petitioners had 
independent rights to institute a suit within a year tb test the va- 
lidity of the sale, and hâve not donc so, there is a very serions doubt 
whether, if added as plaintifïs, the suit as to them could be consid- 
ered as a suit brought within the year. Unless the suit as it stands 
inures to their benefit by extending the period of rédemption, I doubt 
if the right to redeem exists or can be secured. 

I find it unnecessary to détermine whether, under chapter 283, § 
23, of the General Laws of Rhode Island, pétition of this character 
may be granted. The dispute between the présent plaintifï and the 
petitioners as to their respective rights at law, would doubtless tend 
to confuse, if not to change, the issues in the case. Such a departure 
f rom the ordinary procédure, if permissible in any case at law, is not 
justified by the reasons assigned in support of this pétition. 

Pétition for leave to intervene is denied. 



JOHNSON V. HANLEY, HOYB CO. 
(District Court, D. Rhode Island. July 3, 1911.) 

1. BANKBUPTCT (§ 167*) — PREFERENCES— ACTS CONSTITUTINQ. 

Where a partner of a bankrupt firm dlrected a mortgagee of flrm prop- 
erty, forecloslng the mortgage and obtaining a surplus after satisfaction 
of the mortgaa;e debt, to pay the surplus to a firm creditor, the transac- 
tion was In eflfect a direct payment by the firm to the creditor, and con- 
stituted a preferential payment. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 282; Dec. 
Dig. § 167.*] 

2. Bankruptcy (§ 302*) — Phefebential Payment— Suit to Set Aside. 

Though equlty bas cognizanee of constructive and actual fraud, wheth- 
er a bill in equity lies by a trustée in bankruptcy to set aside a prefer- 

•For other casea see saine topio & § numbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



JOHNSON V. HANLET, HOTE CO. 753 

entlal payment to a créditer of a bankrupt wlll not be determined on de- 
murrer to the bill, but the demurrer wlll be overruled, reservlng tbe rigbt 
to ralse the question of jurisdiction at final hearing. 

[Ed. Note. — For otber cases, see Bankruptcy, Dec. Dig. § 302.*] 

In Equity. Suit by Edwin A. Johnson against the Hanley, Hoye 
Company. Demurrer to bill of complaint. Overruled. 

Gardner, Pirce & Thornley, for complainant. 
Gorman, Egan & Gorman, for respondent. 

BROWN, District Judge. This is a demurrer to a bill in equity 
by a trustée in bankruptcy, to set aside a preferential payment of 
money to a firm creditor. 

[1] Upon the foreclosure of a mortgage upon firm property, there 
remained after satisfaction of the mortgage debt a considérable sur- 
plus belonging to the bankrupt firm. One of the copartners direct- 
ed the mortgagee to pay from the surplus in his hands a debt due the 
défendant, a creditor, thereby creating a préférence. 

In légal efïect this transaction was the same as a direct payment 
by the firm to prefer a firm creditor. 

The défendant contends that a bill in equity will not lie because the 
complainant bas a full and complète remedy at law. Neither brief 
upon demurrer considers how far Rev. St. § 723 (U. S. Comp. St. 
1901, p. 583), is designed to limit the jurisdiction of equity as to sub- 
ject-matters whereof the jurisdiction at law and equity is concurrent. 
It bas been said, as in Whitehead v. Shattuck, 138 U. S. 146-150, 11 
Sup. Ct. 276, 34 L. Ed. 873. that section 723 is merelv declaratory. In 
Coder v. Arts, 213 U. S. 223, 29 Sup. Ct. 436, 53 L. Ed. 772, is cited 
with approval the opinion In re Maher (D. C.) 144 Fed. 503, wherein 
it was said : 

"In a preferential transfer the fraud Is constructive or technical, consist- 
Ing In the infraction of that ruie of equal distribution among ail creditors 
whicb it is the poïicy of the law to enforce when ail cannot be fully paid." 

[2] Equity has cognizance of constructive fraud as well as actual 
fraud. Eyre v. Potter, 15 How. 42, 14 L. Ed. 592. 

It must be admitted, however, that the question presented by the 
demurrer is not free from doubt, and that there is a serious conflict 
of authority upon tfie question of "the right of a court of equity to en- 
tertain jurisdiction of a suit of this character. An action at law has 
been held adéquate in many cases, and upon principle I fail to see why 
the trustée cannot bave a complète remedy at law in the présent case 
upon the facts alleged in the bill. Whether there is also relief in equity 
is the subject of conflict of décision. The complainant cites the follow- 
ing cases: Pond v. New York Nat. Ex. Bank (D. C.) 124 Fed. 992, to 
the efïect that this suit "is analogous to a judgment creditor's suit to 
set aside a fraudulent conveyance"; also In re Plant (D. C.) 148 Fed. 
37; Mason v. National Bank (D. C.) 163 Fed. 920; Norcross v. 
Nathan (D. C.) 99 Fed. 414; Wall v. Cox, 101 Fed. 403, 41 C. C. A. 
408; Ofï V. Hakes, 142 Fed. 364, 73 C. C. A. 464; Parker v. Black, 151 
Fed. 18, 80 C. C. A. 484. 

♦For other cases see same toplo & § number in Dec. & Am. DIgs. 1907 to date, & Rep'r Indexe» 
188 F.-48 



754 188 FEDERAL KEPOETER 

The décision of the Circuit Court of Appeals in the Sixth circuit, 
however, in Warmath v. O'Daniel et al., 159 Fed. 87, 86 C. C. A. 277, 
16 L. R. A. (N. S.) 414, directiy supports the defendant's demurrer. 
Whether a distinction between the transfer of money and of other 
property afîects the question is doubtful in view of Pirie v. Chicago 
Title & Trust Co., 182 U. S. 438-443, 21 Sup. Ct. 906, 45 L. Ed. 1171. 
In Page v. Rogers, 211 U. S. 575, 29 Sup. Ct. 159, 53 h. Ed. ,332, it 
was pointed out that though the défendant was obliged to surrender 
a préférence he was yet entitled to a dividend, and that circuity of 
proceeding might be avoided by permitting the défendant to prove his 
claim so that the court might settle the amount of the dividend, and 
that the final decree might direct a déduction of the amount of the 
dividend from the amount of the préférence. 

A bill of this character has been characterized as of the nature of 
a creditor's bill, as a bill based upon constructive f raud ; and it has been 
suggested that circuity of action may be avoided by a bill in equity, 
though the weight of this suggestion is doubtful. 

The conflict betw^een the Circuit Courts of Appeals upon this ques- 
tion is not determined by any décision of the Suprême Court which 
has been brought to my attention. The Suprême Court case which 
in its facts most closely resembles the case at bar is perhaps Hicks v. 
Knost,_ 178 U. S. 541, 20 Sup. Ct. 1006, 44 L. Ed. 1183, which was 
a bill in equity to recover money paid by the bankrupts with intent 
to prefer. Upon a (question certified by the Circuit Court of Appeals 
for the Sixth circuit, and which must hâve been answered in view 
of the particular facts, it was held that the District Court, by the 
consent of the proposed défendant, had jurisdiction. This case was 
decided before the enlargement of jurisdiction of the District Court. 

It seems hardly possible that if the en tire want of jurisdiction on 
the ground that the remedy was at law, because only a money judg- 
ment was sought, or because there was a full remedy at law, was ap- 
parent upon the statement of facts, that this could hâve been overlook- 
ed by the Circuit Court of Appeals which certified the question, or by 
the Suprême Court which answered it. Nevertheless, it is quite true 
that the question decided was of diiiferent character from that before 
us, and related rather to the right of a défendant to litigate in the 
State court than to a question of équitable jurisdiction. 

Upon the whole, the question of équitable jurisdiction is doubtful 
and requires a careful considération of the décisions of the Suprême 
Court. In view of the doubt the proper course in the présent case is 
to overrule the demurrer, reserving to the défendant the liberty to raise 
the same question at final hearing. 

Demurrer overruled. 



ZH BX FOOELMAH 735 

In re FOGELMAN. 
(District Court, E. D. New York. July 17, 1911.) 

1. Bankbttptcy (J 288*) — Couets— Jukisdiction— Pkopebtt in Hands oi 

Third Pebson. 

Where property of a bankrupt was alleged to be in the possession of a 
tbird person, who, thougli not admitting possession, clalmed no title to 
any of the property, he could not object to the banlvruptcy court's juris- 
dii'tion to order him to surrender the property to the trustée. 
[Ed. Note. — For other cases, see Bankruptey, Dec. Dig. § 210.* 
Jurisdiction of fedçral courts in suits relating to bankruptey, see note 
to Bailey v. Mosher, 11 O. C. A.I28«.* 

2. BaNKBUPTOT (§ IH<3*) CONCEALED Pbopeett — Peoceedinqs Against 

Bankhupt. 

Proceedlngs to compel a bankrupt to tum over property whieh was 
concealed for or by him could be based on an examination of the bank- 
rupt's agent as to what disposition he had made of the bankrupt's prop- 
erty ; but untll the property or Its proceeds had been traced through the 
hands of the bankrupt to the agent, or until he had avoided responsiblllty 
by showing that his control over It had fermlnated, because it reached 
the possession of his agent and had been converted or stolen, the bank- 
rupt should be dealt wlth flrst, and the trustée could not demand that 
the agent be compelled to aceount for the property, unless the property or 
Its prooeeds was speclflcally shown to be in his hands. 

[Ed. Note. — For other cases, see Bankruptey, Dec. Dlg. § 136.*] 

In the matter of bankruptey proceedings against Boris Fogelman. 
On application to confirm a spécial commissioner's report. Granted. 

Amy Wren, trustée, in pro. per. 
l<aw & Holtzmann, for bankrupt. 

CHATFIELD, District Judge. This is an application to confirm a 
spécial commissioner's report, in which he has directed that the bank- 
rupt turn over to the trustée the value of certain property, which the 
spécial commissioner has estimated as at least $1,639.27, and which 
represents merchandise traced into the hands of the bankrupt or his 
agents and not accounted for, under such circumstances that its 
fraudulent concealment or disposition is proven. The trustée in bank- 
ruptey has filed certain exceptions to the spécial commissioner's re- 
port, based principally on his failure to add certain items to the 
amounts found by him, and on his conclusion that no jurisdiction ex- 
ists over a third party, who actually handled or disposed of some of 
the goods. The bankrupt has also pointed eut one or two crédits to 
which he is entitled, if the figures found by the spécial commissioner 
be taken as the maximum value of the property concealed. 

It appears that the bankrupt sold out a business in Manhattan, and 
with the greater part of the proceeds therefrom purchased a business 
in Brooklyn, which was put into the hands of his prospective son-in- 
law for actual management. The store was conducted by this man, 
who has since married the bankrupt's daughter. The clerks in the 
store were also relatives, and a large quantity of goods was pur- 
chased upon crédit, which was bolstered up by false statements of the 

*For other casns aee tame toplc & { nvubsb in Dec. & Am. Diga. 1907 to date, & Rep'r Indexv» 



756 188 FEDERAL REPORTER 

son-in-law, the bankrupt, and the clerks. After large quantities of 
goods had been purchased, and after a peculiar method of running the 
business had been followed, an involuntary pétition in bankruptcy was 
filed by Ihree relatives, two of 'whom are brothers of the son-in-Iaw. 
The charge is boldly set forth in their pétition that assets hâve been 
concealed by the bankrupt, who was doing nothing except through his 
agent, the brother of thèse petitioning creditors. The claims of thèse 
petitioning creditors and of other creditors who are relatives are not 
substantiated, as the circumstances under which thèse creditors are 
said to hâve made loans and received payments are unbelievable, and 
there is an abundance of testimony to justify the conclusion of the 
spécial commissioner that a large amount of assets was concealed, even 
much more than the amount reported. 

[1] The original proceeding to turn over property was directed 
against the bankrupt and his son-in-law; but, upon the hearings be- 
f ore the ■ spécial commissioner, certain attorneys, who appeared at 
first for the son-in-law, ob^ected to any proceeding to compel the 
son-in-law to turn over property, on the ground that the court had 
no jurisdiction to dispose of a claim of title against objection by a 
third party or one claiming title. This ground of objection was 
plainly invalid. The son-in-law did not admit the possession, and 
made no claim of title to any of the property which the bankrupt had 
in his business; and unless this son-in-law laid claim of title to some 
spécifie articles or funds, he could not object to the jurisdiction of the 
court, if the proceeding were an attempt to trace into his hands prop- 
erty of the bankrupt, not in any sensé his own. But during the course 
of the référence, and in the commissioner's report, it would appear 
that this objection and ruling was treated as the foundation for a dé- 
termination by the commissioner, which was entirely correct so far as 
it went. No property was traced into the hands of the son-in-law, 
Svigals, except as agent for the bankrupt. 

[2] Any proceedings to compel the bankrupt to turn over property 
which was concealed for him or by him could be based upon an ex- 
amination of the barikrupt's agent as to what disposition he made of 
the bankrupt's property. But until the property or its proceeds had 
been traced through the hands of the bankrupt, and until he avoids 
responsibility by showing that his control over it had terminated, be- 
cause it had reached the possession of his agent and been converted 
or stolen, and was hence out of his own control, the trustée is not in 
a position to demand that the agent be compelled to make good 
or account for the bankrupt's property, unless the property or tne 
proceeds be specifically shown to be in his hands. Therefore the com- 
missioner's report that the bankrupt should be ordered to return the 
property or to account for its proceeds, and that the agent on the 
présent évidence should not be treated as a principal, but merely ex- 
amined as a witness, is correct. 

There being suiEcient testimony to establish the conclusions of the 
commissioner as to the sécrétion of property by the bankrupt, or his 
agents for him, the only question remaining is as to amount. The com- 
missioner has allowed the bankrupt crédit for twice the amount ob- 



IN EE WIESEBROCK 757 

tained by the sale of the property at auction. While this is arbitrary, 
it is an increase over any estimated amount indicated by the testi- 
mony, and it is difficult to see how the bankrupt can properly object 
to the commissioner's allowing more than the witnesses for the trustée 
fix as the value of the property account'ed for. In other respects the 
commissioner's computation seems to be correct, with the exception 
of such items as necessary déductions for checks paid after the striking 
of the bank account balance and the item of $180 for the Leavitt note. 
Thèse matters can be adjusted upon the settlement of the order. 

The motion to confirm the report will be granted, and the exceptions 
to the report overruled for the présent. ' If the bankrupt disavows re- 
sponsibility, and accuses his son-in-!aw of conversion or larceny, by 
attémpting to show that possession was last in the son-in-law, then 
the report will be sent back for further hearing, on the charge that 
the son-in-law has or has concealed property belonging, not to himself , 
but to the bankrupt estate. 



In re WIESEBROCK. 

(District Court, E. D. New Yorlf. July 10, 1911.) 

L Bankkuptcy (§ 241*) — Examination of Bankeupt— False Testimont— 

PUNISmiENT— CONTEMPT. 

Where a banlirupt, on his examination, was guilty of contumaeious con- 
duct and false swearing, tlie scope of the banlîruptcy court's jurisdiction 
to punish hlm depended on interférence with the exercise of the court's 
Jurisdiction, and not on the injury to the public welfare and morals, 
which is the basis of punishment for perjury. 

[Ed. Note. — For other cases, see Banliruptcy, Cent. Dig. § 405; Dec. 
Dlg. § 241.*] 

2. Bankbuptcy (§ 241*) — Contempt— False Swearing — Punishment. 

Where a bankrupt was guilty of contumaeious conduct and false swear- 
ing in his examination before credltors, but had purged himself of the 
greater part of the contumaeious acts, which related to the concealment 
of assets and imaglnary incurring of debt, and his creditors did not seek 
to prosecute him crlminally or to recover any assets, his punishment for 
contempt would only extend to an adéquate punishment for his disregard 
of his dutles as a bankrupt and his failure to properly comply with the 
bankruptcy act. 

[Ed. Note. — ^Por other cases, see Bankruptcy, Dec. Dig. § 241.*] 

In the matter of bankruptcy proceedings against Robert Wiese- 
brock. On application to punish the bankrupt for contempt and giv- 
ing false testimony. Granted. 

^Willett & Frost, for bankrupt. 
Francis M. Eppley, for objecting créditer. 

CHATFIELD, District Judge. The bankrupt has been denied his 
discharge on the merits, because of false testimony before the référée 
in an attempt to conceal assets properly belonging to his estate. While 
the discharge proceedings were pending, an application was made 
to punish him for contempt for interfering with the bankruptcy pro- 

•For other cases see same topio & S numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



758 188 FEDERAL REPORTEE 

ceedings by the giving of this false testimony, and by his failure to 
give correct information regarding the actual assets of his estate. The 
référée has certified to that effect, and the matter was referred to the 
district attorney for this district in the following menhorandum : 

"The bankrupt so acted and testified as to justify the report of the refereé, 
as certified, that he was In flagrant contempt ; but this contemptuous conrluct 
was as to matters which should hâve been made the basis of a erlminal 
charge, as well as used in opposing the discharge. If false testimony Is a 
means of conceallng assets, then an order to turn over property may be 
made the basis of a contempt proceeding as an alternative in case of dis- 
obedlence; but this court does not wish to act in place of a petit jury, 
upon a pure question of perjury, disguised as a failure to respect the court 
(the crime being a failure to respect the oath). The matter will be referred 
to the district attorney ; but, as the statute of limitations may hâve run as 
to some or ail of the matters,. a détermination upon this motion will be left 
until the district attorney has finished his investigation." 

The United States attorney has informed the court that no action 
was deemed advisable, but has not stated whether this was because of 
the apparent running of the statute of hmitations, or whether his 
action was based upon other reasons. 

[1] Assuming that no criminal action can be taken, the creditors 
hâve renewed the motion to hâve the bankrupt punished for contempt. 
His way of testifying and his actions before the référée were suffi- 
cient, as shown by the testimony, to justify an order declaring his 
conduct contumacious ; but the scope of this court's jurisdiction to 
punish him therefor depended upon the interférence with the exer- 
cise of that jurisdiction, and not with the injury to the pubHc welfare 
and morals which is understood to be the basis for the crime of per- 
jury, upon a trial for which the défendant is entitled to hâve the peo- 
ple proceed (rather than individual creditors) by way of indictment 
and trial by jury. 

The certificate of the référée and the testimony show that, before 
the référence was completed, much of the careless or false testimony 
was admitted or corrected by the bankrupt. At that time any proper 
proceeding for the criminal act of perjury could and should hâve been 
iDrought to the attention of the prosecuting authorities of the district. 
Any interférence with the activities of the creditors or of the référée 
in locating, assets of the estate could hâve beon treated as a contempt 
(including the giving of false testimony with regard thereto), for 
the purpose of vindicating the court's authority and discovering as- 
sets. But even then the bankrupt would hâve beèn allowed to purge 
himself of contempt, in so far as he could by giving correct testi- 
mony or information as to the property, and the creditors would then 
hâve been compelled to proceed by attempting to secure this property 
directly. This attempt might hâve taken the form of a direction by 
the court that the bankrupt purge himself of contempt by disclosing 
the whereabouts of his property; but such a proceeding would not 
hâve been countenanced to the extent of forcing a civil settlement 
of his debts under the threat of contempt proceedings. 

[2] As the matter stands at présent, the creditors diid not seek to 
prosecute criminally, they did not seek to recover any assets, and the 
bankrupt has purged himself of the greater part of the contemptuous 



UNITED STATES V. HAESHA 759 

acts which had to do with the concealment of assets and imaginary 
incurring of debt. He is still liable to punishment for his disregard 
of his duties as a bankrupt and the way in which he failed to comply 
with what the bankruptcy statute requires him to do. 

To that extent the report of the référée should be confirmed, and 
he may be ordered to appear before the court for a disposition of the 
matter. 



TJNITED STATES v. HARSHA et al. 

(Circuit Cîourt, E. D. Michigan, S. D. April 27, 1911.) 

Account (§ 12*) — Dtjty to Account— Remedt— Equitable Peoceedings. 

An action at law was instituted by the United States against a former 
clerk of the Circuit Court for an accounting, and to review the conduct 
of the clerk's office for 27 years, and the clerk's taxation of his own 
costs In about 2,200 cases. The blll of particulars, after stating a few 
Items, set out a summary of the fées and costs account, followed by a 
list of 2,181 cases of law and equitji, with the amount of the alleged over- 
charge In each case; the items varying from $250 to 10 cents. Each of 
thèse items constituted a balance the constituent items of which were 
not shown ; it having required a skilled examiner, with from two to five 
assistants, more than six months to make up and state the account which 
was the basis of the action. It appeared that the trial of the case. If 
proceeded upon at law, would consume at least four months. Eeld, that 
the court was justifled in refusing a trial to a jury and suspending pro- 
ceedlngs until action should be taken in equity. 

[Ed. Note. — For other cases, see Account, I>«c. Dig. § 12.*] 

At Law. Action by the United States against Walter S. Harsha and 
the FideHty & Deposit Company of Maryland on the bond of the 
défendant Harsha as former clerk of the Circuit Court. Trial re- 
fused. 

F. H. Watson, U. S. Atty., and J. E. Bland, Asst. U. S. Atty. 

Harrison Geer, for Harsha. 

Brennan, Donnelly & Van De Mark, for Surety Co. 

DENISON, District Judge (sitting by désignation). At the last 
term of this court, when I found this case upon the calendar, I thought 
it unsuitable for trial at length before a jury, and I urged upon coun- 
sel the advisability, if not the necessity, of some arrangement that 
should put the issues in shape where they could be tried and disposed 
of intelligently. To this end, I suggested either a gênerai référence 
by a consent or the appointment of an auditor under the state statute. 
As the case stood for jury trial, the latter course also could be taken 
only by consent. 

After several months, the case now comes up for trial and is reg- 
ularly reached. Counsel and parties hâve accomplished nothing along 
the suggested Une, so that the situation is controlled by the record as 
it stands, and without any opportunity to rely upon the voluntary co- 
opération of ail parties in removing diificulties. 

The suit is for an account and on an account. It covers and in- 
volves reviewing the conduct of the clerk's office for 27 years, and the 

•For other caaes see same topic & S numbïib in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



760 188 FEDERAL REPORTER 

clerk's taxation of his own costs in about 2,200 cases. The bill of 
particulars, after stating a few items which présent no unusual dif- 
ficulty, gives what it calls a "summary of the fées and costs account," 
followed by a list of 2,181 cases at law and in equity, with the amount 
of alleged overcharge in each case. Thèse items vary in amount from 
$250 down to 10 cents. This is not ail. Each of thèse items is only a 
balance item and dépends upon the correctness of each of its constit- 
uent items. The records of the court show (by estimate) an average 
of 20 items to a case. This makes more than 40,U00 items. It is 
familiar knowledge about the clerk's office that a skilled examiner, 
with from two to fîve assistants, worked industriously for more than 
six months to make up and state the account which is the basis of the 
action. 

Counsel ail agrée that the trial will occupy as much as four weeks. 
With the indicated tendency to contest every item, it is more likely 
to take four months; and this would allow only fifteen minutes to 
each balance item, that is, to each independent issue. 

Under thèse circumstances, should I impanel a jury and proceed 
with the trial? I think not. The case is the typical, the idéal, one 
for a master in chancery, and it is so unsuitable, indeed, so unfit, to 
be tried by jury, that such a trial, unless the issues were simplied, 
would be a mère farce. I think ail the proceedings herein should 
be stayed pending a resort to equity by some one or more of the par- 
ties. If no one of them should do so, that would raise another ques- 
tion; but the propriety of a proceeding in equity seems to me so 
obvions that I anticipate no such reluctance. 

Whether the jurisdiction in equity dépends on (1) the right to bring 
a' formai "action of account," or (2) the existence of mutual débits 
and crédits, or (3) the practical inadequacy of the légal remedy, in 
either case, it is clear. 

1. The case seems in ail respects suitable for the common-law ac- 
tion of "account render," "where a man is charged as bailiff whereby 
the certainty of his receipt appears not till account" (Bouvier); de- 
fendant would plead "plene computavit," and the plaintilï, if success- 
ful, would get a judgment "quod computet." 

2. Under the law, défendant has rendered formai accounts at stated 
periods. Accounting, then and now, is the essence of the whole situa- 
tion. Défendant is entitled to crédit in each case for his lawful fées, 
and then to crédit on the final balance for certain errors and exces- 
sive remittances, if any; in other words, each of the balance items, 
and then the final balance, dépends upon mutual débits and crédits. 

3. It is impossible to believe that a trial by jury is adéquate to dé- 
termine the issues accurately and truly. It is true a suit at law and 
a judgment at law are adéquate remédies to recover any spécifie sum 
which the défendant, as former clerk, owes; but to apply the phrase 
"adéquate remedy" to such proceedings, under the circumstances of 
this case, seems to me an abuse of words. There hâve been various 
décisions bearing upon the question, but none of them which are ad- 
verse to the right of équitable procédure are, so far as I hâve ob-, 
served, under circumstances nearly as extrême as those of this case. 



IN RE VARLET & BAUMAN CLOTHING CO. 761 

Thèse conclusions will be embodied in a formai order refusing to 
proceed with the trial, and, if I am mistaken in entering such order, 
the question can be quickly raised and disposed of by mandamus pro- 
ceedings. 



In re VARLEY & BAUMAN CLOTHIXG CO. 

Plstrlct Court, N. D. Alabama, S. D. June 10, 1011.) 

No. 11,000. 

1, Liens (§ 14*) — Tbansfeb to Peoceeds of. Sale. 

Ordinarily a lien on personalty can be transferred to tbe proceeds of 
its sale only by order of court directing sale free from lien. 
[Ed. Note. — For other cases, see Liens, Dec. Dig. § 14.*] 

2. Bankeuptcy (§ 264*) — ^Rekt— Riqht op Landlokd. 

A bankrupt merchant's landlord being equitably entltled only to se- 
eurity for future rent to accrue under the lease, an order approving a 
sale of the lease suffleiently protected the landlord's rights, by ordering 
the purchaser to exécute good bond to the trustée securing payment of 
such rent, especlally sinee the rental value of the premises exceeded the 
rent provlded in tlie lease, and the landlord had additional recourse 
against the new tenant, by proceeding against the latter's stock of goods 
or to dispossess. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dlg. § 264.*] 

In the matter of the Varley & Bauman Clothing Company, bankrupt. 
On pétition of John C. Gallagher to pay a rent lien out of a particular 
fund. Pétition denied. 

H. U. Sims, for petitioner. 
■ London & Fitts, for trustée. 

GRUBB, District Judge. In this cause a receiver was appointée by 
the court and authorized to conduct the business of the bankrupt. The 
bankrupt, at the time of the fihng of the pétition, had a sale on, which 
the receiver continued, and sold practically ail of the goods before the 
appointment of the trustée. The trustée, when appointed, elected to 
assume the lease, and sold it, as part of the assets of the estate, for 
$500 and the covenant of the purchaser to pay ail future accruing 
rents. The refer.ee approved the sale, requiring the purchaser to ex- 
écute a bond with sufficient sureties to the trustée to secure the cove- 
nant. The landlord now asks that the trustée be directed to hold 
sufficient of the proceeds of the sale of personal property in his hands, 
about $9,100 in amount, to secure the payment of rent during the un- 
expired term of 30 months, or to pay that sum to him presently and 
without discoimting it, or to set aside the sale of the lease and restore 
the rented premises to him. 

The landlord had a lien on the personal property which was sold at 
retail, under the law of Alabama, for ail future accruing rent under 
the lease. Martin v. Orgain, 174 Fed. 772, 98 C. C. A. 246. No 
appearance or objection to the retail sale was made by the landlord dur- 
ing its progress, nor was any notice given him of the sale. After the 

•For other cases see same topic & § ndmber in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



762 188 FEDERAL REPORTEE 

Personal property was converted into cash, the landlord first filed his 
pétition, asking- that his lien upon the stock of goods be transferred to 
the proceeds of the retail sale in the hands of the trustée. No action 
was had upon this pétition until after the élection of the trustée and 
his assumption of the lease. 

[1,2] Ôrdinarily a lien on personal property can only be transferred 
to the proceeds of its sale by an order of court directing its sale free 
from lien, after notice to the lienholder. Collier on Bankruptcy (8th 
Ed.) p. 839. Without such provision in the decree of sale, the prop- 
erty is presumed to be sold subject to the lien. Collier (8th Ed.) pp. 
838, 839. Goods sold at retail in the ordinary course or conduct of a 
mercantile business are not sold subject to the lien, since in such case it 
is not practicable for the lien to foUow the goods. Ordinarily the lease 
of a retail storehouse contemplâtes a sale in the ordinary course of 
business, and is an authority for the tenant to dispose of such goods 
as are so sold, free from any lien in favor of the landlord. The lien, 
in that event, is waived both as to the goods and the proceeds of the 
sale. In this case the goods were sold under an order of court, au- 
thorizing the receiver to continue the conduct of the business of the 
bankrupt. It would seem that, ordinarily, a sale of this kind might, 
within the contemplation of the parties to the lease, be made free from 
the landlord's lien. However, in this case, the receiver sold ail the 
goods, on which the landlord's lien rested. Under such circumstances, 
it is but équitable that the lien of the landlord be transferred by 
decree of the court to the proceeds of the sale, and this even though 
the decree of sale made no such provision. 

However, it does not seem to me that, when donc, the lien so created 
is of the same character as the lien given by law to the landlord on the 
property itself, which is a contractual lien, and, therefore, not subject 
to displacement by decree of court. So far as the proceeds of the 
sale in this particular case are concerned, the lien or priority of the 
landlord is created by the order of court, and it is compétent for the 
court to mold its order so as to do equity as between the landlord and 
the trustée. The landlord is equitably entitled only to security for his 
future accruing rent. If the référée, in his order, has provided such 
ample security, the landlord is without grievance. Whether the land- 
lord's motive in asking présent payment without discount out of the 
fund in the hands of the trustée, or that it be held in the hands of 
the trustée to await the unexpired term, is to coerce the surrender of 
the lease back to him or not, it will embarrass the administration of the 
estate to do either, and without corresponding benefit to the landlord, 
if he has adéquate security for his rent under the order of the référée. 
He has, under that order, for his security a tenant, with the right to 
dispossess, in the event of default, a stock of goods in the rented prem- 
ises, belonging to the new ienant, and the benefit of a good bond in the 
sum of $5,000. In addition, the évidence shows that the présent rental 
value of the premises is in excess of the stipulated rental in the lease. 
This furnishes adéquate security to the landlord ; and the order of the 
référée will therefore be confirmed, and the pétition to review be 
denied, at the cost of the petitioner. 



IS HE FITZGERALD 763 

In re FITZGERALD. 
Plstrlct Court, D. Connecticut July 28, 1911.)" 

No. 2,564. 

Bankbuptcy (5 140*) — TiTi,E OF Trustée— Propertt Held Undeb Condition- 
AL Sale. 

Where clalmant, the bankrupt's mother-ln-law, loaned him $200 to "buy 
fixtures for a grocery business, and after he bought thein be gave ber a 
written conveyanee of tbem, and sbe took possession on the same day and 
Inimediately gave blm a conditional blll of sale, duly recorded, the trans- 
attiou was merely colorable, and the property passed to the trustée, not- 
wlthstandlng tbe good faitb of the parties. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 140.*] 

In the matter of Robert E. Fitzgerald, bankrupt. On décision of 
référée as to the daim of Mrs. Margaret Welch. Décision affirmed. 

The following is the décision of Référée Newton: 

In the matter of the daim of Margaret Welcb to certain personal property 
which was in tbe possession of the bankrupt at the time of bis adjudication 
in bankruptcy, May 27, 1911. Margaret Welcb is the mother-in-lavv of tbe 
bankrupt. The facts as agreed to are as foUows: She loaned him $200 to- 
buy the fixtures for the grocery business. He bought the fixtures, and on 
September 20, 1910, gave her a written conveyanee of them ; and it is claimed 
that she at once took possession, and thereupon, on said September 20, 1910, 
she gave to him a conditional bill of sale, correct as to form, which was duly 
and Immediately recorded. This transaction took place before the store was 
opened. 

The question Is: Is she entitled, under thèse clrcumstances, to hold the 
property against the trustée? The money was actually advanced by said 
Margaret Welch, and the whole transaction was in good faith, and she and 
said Fitzgerald both believed that tbe conditional bill of sale would protect 
said Welch against an attachment and against bankruptcy proceedings. The 
two bills of sale are made a part of this mémorandum. Nothing bas been 
pald by Fitzgerald on the conditional bill of sale. Witb regret I feel obliged 
to hold that the property passes to the trustée, and that the conditional bill 
of sale is void. 

By agreement of ail parties, it is ordered that the trustée sell the property 
and hold the money until the décision of the judge, and, as the parties 
désire a review, as the quickest and simplest way of obtaining the opinion 
of the judge, I bave allowed them to waive flling a pétition, and send this 
mémorandum to the judge, wlth the uinderstancling on ail hands that he 
shall pass upon the matter and render his décision without any hearing or 
argument 

PLATT, District Judge. Would the proceedings set forth in the 
mémorandum hâve protected Fitzgerald against a bona fide creditor 
under our state law? is the only question in the case. 

Mrs. Welch might hâve bought the property herself, and hâve 
given him a conditional bill of sale, in which case she would hâve 
been protected; but unfortunately she did not take that course. She 
loaned him the money to buy the fixtures. After he bought them, they 
were his fixtures, and he still owed her the money which she loaned 
him to buy them with. His transfer of them to her by the written 
assignment of September 20th, and attempt to place her in possession, 
is a mère fiction, and does not do what the parties sought to do, and 

•For othsr cases see same topic & § nitmeek in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexe* 



7M 188 FEDERAL REPORTER 

their good faith and honest intention does not help them out in the 
least. 

Sections 4864 and 4865 of the Connecticut Statutes of 1902 hâve 
not changed the law in regard to rétention of possession by the ven- 
dor. This has been twice decided by our highest court. Property 
sold by the bankrupt, but retainedi in his possession, is subject to be 
taken by bona fide creditors as his property, and the good faith of 
the parties makes no différence. 

The décision of the référée, which is explained in his mémorandum, 
is affirmed. 



In re VOGT. 
(District Court, E. D. New York. June 22, 1911.) 

1. Bankruptcy (§ 336*) — Feaudtjlent Claim of Lien— Amendment. 

Where a claim of lien under a mortgage had been declared fraudnlent, 
the cl aimants were not entitled to amend, so as to prove such claim as a 
gênerai claim against the bankrupt's estate. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 523, 524; 
Dec. Dig. § S36.*] 

2. Bankruptcy (§ 314*) — Oi.aims— Liens — ^Amendment. 

Where certain claimants against a bankrupt were shown by the sched- 
ules to hâve been creditors in the sum of $3,250 for goods sold, for which 
notes had been given and later an alleged usurious mortgage dellvered, 
they were entitled, if they had not estopped themselves, or limitations 
had not run against them, to prove such amount as a gênerai claim 
against the estate, though their liens were defeated. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 314.*] 

In Bankruptcy. In the matter of bankruptcy proceedings against 
Jacob Vogt. 

See, also, 163 Fed. 551. 

Francis B. Mullin, for trustée. 
Roger Foster, for the Franks. 

CHATFIELD, District Judge. At the présent time the référée is 
ready to proceed with the case. The trustée has at last applied to 
the court to administer the estate, and the mortgagees, who hâve va- 
riously attempted to enforce their claims, but whose latest mortgage 
was declared invalid, hâve appeared in court and expressed a désire 
to assert their lien, if they can substantiate any to the fund, or, if 
their claim be not a lien, that it be allovved as a gênerai debt against 
the bankrupt estate. Under thèse circumstances, the situation is dif- 
férent from that which was decided upon the previous motions, wheri 
the trustée asked this court to hâve the funds paid over to him, and 
the claims of ail mortgagees declared null and void, upon his motion 
and against the objection of those mortgagees. 

[1] The receiver's estate may be ordered to turn the property over 
to the trustée, subject to the further order of the court, and the trus- 
tée may apply to the référée for the déclaration of a dividend. The 

•For other casea see aame toplo & § yuMBEB In Dec. & Am. Dlga. 1907 to date, & Kep'r Indexes 



PHÉLPS V. CONNECTIOTTT CO. 765 

Franks may appear before the référée, and, if they are so advised, file 
a verified pétition, setting forth any claim of lien which they may now 
make (bearing in mind the décision of the Suprême Court of the 
United States, in Frank v. Vollkommer, 205 U. S. 521, 27 Sup. Ct. 
596, 51 L. Ed. 911) to any part of the bankrupt estate. Inasmuch as 
the claim of the Franks, under the third mortgage, was held to be 
fraudulent, they obtained nothing thereby, and cannot amend that 
claim, so as to prove a gênerai claim. 

[2] But they were shown by the schedules to hâve been creditors 
in the sum of $3,250 for goods, that notes had been given for this 
amount, and later the alleged usurious mortgage delivered. Their 
claim has always been a part of the record, and they would seem to 
be entitled, if their claimed liens are ail def eated, to be treated as gên- 
erai creditors, if they hâve not estopped themselves, or put themselves 
in a position in which the statute providing for a year within which to 
prove claims has eut them ofï. 

It is not necessary to dispose of this question at the présent time. 
If they attempt to claim a lien, the matter will be referred to the réf- 
érée as spécial commissioner, to hear and détermine upon the validity 
of the lien, and at the same time he can consider whether or not they 
are estopped from being treated as gênerai creditors if the lien be 
disallowed. 

The motion to pay over the money to the trustée, with the other 
provisions indicated, will be granted. 



PHELPS V. CONNECTICUT CO. 
(Circuit Court, N. D. New York. June 22, 1911.) 

1. Eemoval of Causes (§ 111*) — Jubisdiction Acquieed bt Removal— Serv- 

ice OF Pkocess. 

Défendant, a Oonnectlcut railway company, had neither office, prop- 
erty, nor place of business In New York, dld no business In tbat state, 
and had no agents or servants there. Suit was brought against it in 
the State court of New York by service on its secretary whlle within the 
State on business not connected with or relating to tbe corporation. 
Held, that such service, though sufficient to confer jurisdlction on the 
State courts, was not valid to confer jurisdlction on a fédéral Circuit 
Court, sltting in New York, on removal of the cause. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. § 237; 
Dec. Dlg. i 111.*] 

2. Removal oe Causes (§ 108*)— Dismissai/— Motion— Lâches. 

Suit was brought by service of process on defendant's secretary In the 
State of New York March 16, 1911. On Aprll 3d foUowIng. the case was 
removed to the fédéral Circuit Court, and on Aprll 21st affldavits of de- 
fendant's officers, supporting a motion to dlsmiss, were made in Connect- 
Icut and forwarded to defendant's attorney in New York. Such attorney 
appeared speclally on Aprll 26th and moved to set aside the service ; the 
papers being served on the 28th. HeU, that the motion was not barred 
by lâches. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dig. § 217; 
Dec. Dlg. § 108.*] 

'For other cases see same topio & § numbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Inflexes 



768 188 FEDERAL HEPOBTBB 

At Law. Action by Louise Phelps against the Connecticut Com- 
pany. On motion to set aside service o£ summons and complaint after 
removal of the cause to the Circuit Court. Granted. 

Charles M. Sheafe, Jr., for the motion. 
Hancock & Spriggs, opposed. 

: RAY, District Judge. [1] The plaintiff îs a citizen and a rés- 
ident o£ the sta'te of New York. The défendant is a corporation, a 
Street car company, operating a surface Hne wholly in the state of 
Connecticut, organized and doing business under the laws of that 
state. Neither now does it hâve, nor at the time of the service of 
the summons and complaint in this action did it hâve, any property. 
office, or place of business in the state of New York, nor was it doing 
any business in the state of New York. It had and has no agents or 
servants in said state of New York. 

The plaintiiï allèges a cause of action against the défendant for 
Personal injuries sustained on or about October 3, 1908, by reason 
of defendant's négligence while riding on one of defendant's cars 
between Hartford and Waterbury, state of Connecticut. Damages 
are laid at $10,000. 

March 16, 1911, while A. E. Clark, the secretary of the défendant 
company, was temporarily in the city of New York on business in 
iio way connected with or relating to that of the défendant company, 
he was served with the summons andi complaint herein ; such action 
being commenced and the summons issued out of the Suprême Court 
of the state of New York. April 3, 1911, the défendant duly moved the 
case into the Circuit Court of the United States, in which district the 
plaintiiï résides. 

The défendant, by its attorney, appeared specially for the purpose 
of such removal, and on the 26th day of April prepared motion pa- 
pers to set aside the service of the summons and complaint which 
were served April 28, 1911. Thèse are the only proceedings in the 
case up to the hearing of this motion. This service of the summons 
and complaint on the défendant under the décisions of our Court of 
Appeals was good in the state court. Pope v. Terre Haute Car & 
Mfg. Co., 87 N. Y. 137; Atl. & Pac. Tel. Co. v. Balt. & Ohio R. R. 
Co., 87 N. Y. 355. 

However, the holdings in the fédéral courts are the very opposite. 
Goldey v. Morning News, 156 U. S. 518, 15 Sup. Ct. 559, 39 L. Ed. 
517. See Grant v. Cananea Con. Copper Co., 189 N. Y. 241, 249, 
82 N. E. 191, where comment is made on the différent holdings of the 
two courts. Conley v. Mathieson Alkali Works, 190 U. S. 406, 23 Sup. 
Ct. 728, 47 L. Ed. 1113; Geer v. Mathieson Alkali Works, 190 U. 
S. 428, 23 Sup. Ct. 807, 47 L. Ed. 1122; Wabash Western Rail way 
v. Brow_, 164 U. S. 271, 17 Sup. Ct. 126, 41 L. Ed. 431. In Conley 
V. Mathieson Alkali Works, supra, the action was commenced in the 
Suprême Court of the state of New York and then removed to the 
Circuit Court of the United States, and service was set aside after 
removal. There has been no gênerai appearance by défendant vol- 
untary or otherwise. 



IM EB 0UMMING8 767 

[2] The plaintifï contends that this motion should be denied for 
lâches; that the défendant should hâve moved eariier. But the re- 
moval was had April 3, 1911, and April 21st C. S. Mellen verified 
his afKdlavit at New Haven, Conn., and Mr. Clark verified his at the 
same place the same day. The defendant's attorney résides in New 
York City, and allowing a reasonable time to examine the law, ascer- 
tain the facts, and prépare the papers and secure their vérification, 
I do not see that there was any unreasonable or undue delay in mak- 
ing this motion. 

The facts as stated are not controverted, and plaintiff's counsel says 
he is unable to dispute the allégation of the moving papers. 

Under the décisions I am compelled to grant the motion. It is not 
a matter of discrétion. 

Motion granted 



In re CUMMINGS. 

(District Court, E. D. Pennsylvania. June 23, 1911.) 

1,938. 

Bankbtjptct (§ 393*) — Impbisonment — Okder to Pay Monet — Failtjee to 

COMPLY iSiSCHARGE. 

Where a bankrupt on faillng to comply with an order requirlng hlm to 
pay a large sum of money to his trustée was Imprisoned, and, after belng 
conflned from May 5, 1911, to June 9tli following, applied for his release 
on the ground of poverty and inability to comply with the order, and on 
a hearing had June 21st It appeared tliat he had no money or property 
either in possession or under his control, or that any property was held 
for his benefit, he would be released. 

[Ed. Note.—For other cases, see Bankruptcy, Cent. Dlg. §g 619-622; 
Dec. Dig. § 393.*] 

In Bankruptcy. In the matter of bankruptcy proceedings of John 
E. Cummings. On pétition to discharge the bankrupt from custody. 
Granted. 

Clarence H. Goldsmith, for bankrupt. 
M. Hampton Todd, for trustée. 

J. B. McPHERSON, District Judge. The petîtioner has been in con- 
finement since May 5, 1911, for failing to comply with an order made 
April llth, requirlng him to pay a large sum of money to his trustée. 
Cummings v. Synnott (C. C. A.) 184 Fed. 718, and In re Cummings 
(D. C.) 186 Fed. 1020. On June 9th he filed the pending pétition as- 
serting his poverty and inability to comply with the order, either in 
whole or in part. Upon this pétition a hearing has been had (June 
21st) at which numerous witnesses were examined. It is not neces- 
sary to say that imprisonment for debt no longer exists. It is true that 
in some instances a man may still be put into jail for failing to obey 
the decree of a court that orders him to pay money, but this power con- 
tinues to exist because in thèse instances a contempt of court is com- 
mitted if the order is not obeyed where obédience is possible ; and be- 

•For other cases see same toplc & | numeer in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



768 188 FEDERAL REPORTEE 

cause the défendant may not yet hâve satisfied the court that the pre- 
sumption of his ability to pay is opposed to the fact. This subject 
was considered in Re Marks (D. C.) 176 Fed. 1018. Imprisonment is 
one means — and I hâve known it to be an effective means — of finding 
out whether an assertion of financial iriability is really true ; but af ter 
a court bas been clearly satisfied that a debtor is unable to pay, im- 
prisonment cannot lawfully be continued. It would then become pun- 
ishment pure and simple, and this can no longer be inflicted. In Trust 
Co. v. Wallis, 126 Fed. 464, 61 C. C. A. 342, the Court of Appeals for 
this circuit bas discussed the gênerai subject. 

"The powers vested In courts of tsankruptcy, to acconipllsh the gênerai pur- 
pose of the baukrupt law, to wit, to segregate the estate of the bankrupt and 
provide for its équitable distribution amougst the creditors, are plenarj' and 
far-reaching. The court may, by suœmary order, direct the delivery and 
turning over to the trustée by the bankrupt, or by any thlrd person holding 
the same under his order and control, any property which, prior to the flling 
of the pétition, the bankrupt could by any means bave transferred, or whlch 
mlght hâve been levied upon and sold under judicial process agalnst him. 
For disobedience of such order, the court in bankruptey undoubtedly has the 
power, by attachment for contempt, to enforce compllance with such order, 
and punish refusai to comply. This power, however, is far-reaching and 
drastic, and must be exercised with cautions discrétion. If the bankrupt 
dénies that he has possession or control of the property, or, if a thlrd person 
In possession thereof claims to hold it, not as the agent or représentative of 
the bankrupt, but by title adverse to him, and there is no évidence to indis- 
putably show that such déniai or claini is false or fraudulent, and that the 
case is one of simple concealment or refusai on the part of the bankrupt, 
or the one In possession, to deliver up the property as ordered, it would be 
an unwarranted stretch of power on the part of the court to resort to a sum- 
mary proceeding for contempt for the enforeement of its order. In the ab- 
sence of fraud or concealment, tbe bankrupt court can only order the delivery 
of property to the trustée which the bankrupt is physically able to deliver up, 
having the same In his possession or control. If It shall appear that he is 
not physically able to deliver the property required by the order, then, con- 
fessedly, the proceedings for contempt, by fine or imprisonment, would resuit 
in nothing, certainly not In corapliance with the order. The contempt in this 
case could only be purged by a réitération of the physlcal impossibllity to 
comply with the order whose disobedience is heing thus punished. An order 
made under such cireumstanoes would be as absurd as it is inconsistent with 
the principles of indîvldual llberty." 

The évidence just heard leaves no doubt in my'mind about the fi- 
nancial situation of the bankrupt. He has no money or property, ei- 
ther in possession or under his control, and none is held for his bene- 
fit. He cannot pay any part of the money that he has been ordered 
to pay, and, so far as appears, he is never likely to bave such ability. 
To confine him longer would be not only useless, but unlawful. If he 
has offended against the criminal law, the criminal law must punish 
him. 

It is therefore ordered that he be discharged from custody. 



C. J. HDEBEL CO. V. LEAPEE J69 

C. J. HUEBEL CO. V. LBAPEB. 

(Circuit Court of Appeals, Sixth Circuit. July 11, 1911.) 

No. 2,119. 

1. Sales (§ 89*) — Weitten Conteact— Subséquent Modiîjcation. 

Subséquent correspondence between tlie parties extending the time for 
perform,ance of a written contraet for tlie sale and delivery of posts and 
pôles, the extensions being favorable to both parties, was admissible un- 
der the rule tbat parties having power to make a contraet hâve equal 
power to agrée on subséquent modifications thereof. 

[Ed. Note.— For other cases, see Sales, Cent. Dig. §§ 251, 252 ; Dec. Dig. 
S 89.*] 

2. Saies (§ 388*) — Contbacts—Bbeach— Instructions— Damages. 

Tn an action for breach of a contraet for the sale of posts and pôles, 
évidence and admissions held to justify an Instruction that plaintift' vpas 
entitled to recover the différence between what he was able to obtain for 
the balance of the pôles and posts which défendant refused to accept and 
the contraet priée. 

[Ed. Note.— For other cases, Bee Sales, Cent. Dig. § 1108; Dec. Dig. § 
388.*] 

5. Saies (§ 372*) — F^rfoemanoe— Extension or Time— Delat— Damages. 

Time of performance of a contraet for the sale of posts and pôles hav- 
ing been extended by agreement, défendant could not recoup damages 
for delay in plaintlffi's performance against plaintiff's claim to recover 
damages for defendant's breach of contraet. 

[Ed. Note. — For other cases, see Sales, Dec. Dig. § 372.*] 

4. Sales (§ 384*) — Contbact— Breach— Damages— Additional Wobk— Taxes 
— Intebest. 

In an action for the buyer's breach of a contraet for the sale of posts 
and pôles, plaintifl! having "eut back" 681 pôles at defendant's request, 
and having sold the balance of the contraet quality after défendant had 
refused to receive any more, was properly permitted to recover the rea- 
sonable value of the cutting baclt, taxes paid on the pôles after they 
were ready for delivery, and tnterest on the balance due after the date 
of the sale of the remainder of the contraet qaantity which défendant 
refused. 

[Ed. Note. — For other cases, see Sales, Cent Dig. §§ 1098-1107; Dec. 
Dig. § 384.*] 

B. Sales (§ 384*) — Bkeach of Conteact— Damages. 

Where plaintiff contracted to sell défendant certain po'sts and pôles, 
and, after taking part of the contraet quantity, défendant refused to ac- 
cept any more, he was not entitled to recover the cost of clearing addi- 
tional land which he held under a lease for the purpose of clearing and 
removing the timber therefrom, on the theory that it was necepsary to 
provide space to store the posts and pôles waiting defendant's directions 
to ship. 

[Ed. Note.— For other cases, see Sales, Cent Dig. |§ 109S-1107; Dec. 
Dig. § 384.*] 

6. Sales (§ 384*) — Contbact—Bbeach— Damages. 

■WTiere delays on both sldes in the performance of a contraet for the 
sale of posts and pôles up to June 25, 1909, were agreed to on grounds 
satisfactory to both parties, and on June 30, 1909, plaintiff sold the bal- 
ance of the material, on notice to défendant, because of defendant's 
breach of contraet, plaintiff could not recover interest by way of dam- 
ages prlor to that date. 

[Ed. Note.— For other cases, see Sales, Dec. Dig. § 384.*] 

*Far otber cases see same topic & i sumbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 
188 F.— 49 



770 188 FEDERAL EBPOETEB 

7. Appeal and Erboe (§ 1140*) — Revebsa3>-Damage8— Hemittitub. 

Where a judgment Is erroneous only In the amounts of damages al- 
lowed, and the items for whieh plaintliï was not entitled to recover were 
clearly ascertainable, the Court of Appeals was authorlzed to afflrm the 
Judgment In case plaintlffi would agrée to remit an amount sufflcient to 
cover the Items for which he was not entitled to recover. 

[Ed. Note. — For other cases, see Appeal and Error, Cent Dig. §§ 4462- 
4478; Dec. Dig. § 1140.*] 

Knappen, Circuit Judge, dissentlng In part. 

In Error to the Circuit Court of the United States for the Western 
District 'of Michigan. 

Action by Henry E. Leaper against C. J. Huebel Company. Judg- 
ment for plaintiff, and défendant brings error. Reversed in part. 

M. J. Doyle, for plaintiflF in error. 

W. S. Hill (W. P. Belden, of counsel), for défendant in error. 

Before SEVERENS and KNAPPEN, Circuit Judges, and EVANS, 
District Judge. 

EVANS, District Judge. The défendant in error, Henry E. Lea- 
per, whom we shall, for convenience, call the plaintifï, sued the C. J. 
Huebel Company (a corporation), which we shall call the défendant, 
for damages resulting from the alleged breach of a contract which 
was in writing, and the material parts of which are as f oUows : 

"This agreement, made and entered into this twelfth day of January, 1907, 
by and between H. E. I^aper of Green Bay, county of Brown, state of Wis- 
consin, party of the first part, and C. J. Huebel Co., of Menominee, Michigan, 
party of the second part, witnesseth: 

"That for and In considération of the moneys to be paid, and the conditions 
to be performed by the party of the second part, hereinafter set forth, party 
of the flrst part hereby agrées to sell and deliver to said party of second part 
ail the cedar pôles and posts that he may hâve during the winter 1906 and 
1907 estimated at about seven thousand pôles and twenty thousand posts. 
* * * 

"Party of the flrst part hereby agrées to deliver sald material on cars of 
the Soo line as may be directed by parties of the second part from time to 
time, parties of the second part agrée to move ail the sald pôles and posts by 
July 20, 1907, and party of the second part agrées to inspect the same from 

time to time when so delivered, in quantities of not less than per cent, 

of the whole amount, said inspection to be final, and upon such inspection and 
marking of said material by said party of the second part, the same shall be- 
corne the property of the said party of the second part, and they shall pay 
therefor In the manner hereinafter provided. Party of the flrst part agrées to 
pay for any labor necessary in handling said material for Inspection. 

"In considération of the sale and delivery by said flrst party to said second 
party, of the material speclfied in this agreement, the said second party here- 
by agrées to pay therefor when delivered accordlng to contract, the parties 
for themselves, their heirs and assigns agr.ee as follows, to wit: * * • 

"Terms of payment: Two thousand dollars on the slgning of this contract, 
two thousand April 15th, two thousand June Ist, four thousand July Ist and 
balance July 20, 1907, and any moneys advanced to said flrst party shall be- 
come a lien on ail material intended under this contract, and the same to be 
deducted from the proceeds of flrst materlals delivered." 

Omitting certain averments of the déclaration, which were not 
pressed at the trial, the plaintiff, in stating his cause of action, averred : 

•FoT other casM see same toplc & i numbsb in Dec. & Am. Dlgs. 1907 to date, & Kep'r Indexes 



C. 3. HUEBEL CO. V. LEAPEB 771 

"That during the winter of 1906 and 1907, as contemplated as aforesald, 
he did eut and manufacture and had ready for delivery to the said défendant, 
at the time and times and places contemplated by said contract, the full 
amount of, to wit, 7,000 cedar pôles and 20,000 cedar posts, ail of which con- 
formed in every respect to the spécifications thereof, as set forth in said con- 
tract. 

"And the plaintifC allèges that, at the time of the exécution of the contract 
aforesald, it was contemplated, understood, and agreed between the parties 
thereto that the pôles and posts so to be gotten out and delivered to the said 
défendant should be delivered upon cars at the mlllyard of said plaintiff in 
said county of Alger in said district, upon a railroad track to be bullt Connect- 
ing the Minneapolis, St. Paul & Sault Ste. Marie Railway with said millyards, 
and to be completed on or about the Ist day of June thereafter ; that, by an 
understanding and agreement between the parties to said contract, the time 
for the completion of said railroad track was extended to, and said railroad 
track was completed on, to wit, July Ist thereafter; that it was the duty of 
the said défendant to direct from time to time the delivery of said pôles and 
posts upon cars at the said mlllyard of the plaintiff on or before the 20th day 
of July, A. D. 1907, or within a reasonable time, to wit, one month, thereafter. 
Yet the said défendant, notwlthstanding his duty as aforesald, did not so 
order and direct the delivery of said polës and posts as aforesald within the 
time as aforesald, and afterwards did only order and direct the delivery of 
a portion of said pôles and posts as aforesald, to wit, 3,000 of said pôles and 
10,000 of said posts, and on, to wit, the Ist day of July, A. D. 1909, refused 
and still does refuse to direct and order the delivery of the balance thereof. 

"And the said plaintifiC allèges that on, to wit, the Ist day of July, A. D. 
1909, the said défendant still refusing and neglecting to direct and order the 
delivery of said balance of cedar pôles and posts as aforesald, the said plain- 
tiff did elect to hold the said contract forfelted and did offer the said pôles 
and posts for sale of ail of which the said défendant was notified and in- 
formed, and did sell said balance of said pôles and posts at the hlghest mar- 
ket prlce obtainable therefor, and did receive for said posts and pôles a large 
sum of money, to wit, $2,000. And the said plaintiff "allèges that there was 
then due hlm and unpaid under the said contract from said défendant the 
full and complète sum of $4,400 ; and that by reason of the premises the said 
plaintifC bas lost and been deprived of a large sum of money, to wit, $2,400, 
which said sum the said défendant did undertake and agrée to pay to hini, the 
said plaintiff, upon request. Yet the said défendant, although often requested 
so to do, has not paid the said sum, or any part thereof, to the damage of the 
plaintiff of $4,000." 

The plaintiff also gave notice of the particulars of his claims, the 
détails of which appear in the record but need not be stated hère. 

After demanding a trial of the matters set forth in the déclara- 
tion, the défendant filed notice of its défenses, which, in substance, 
were: First, that the plaintiff had been paid in full; and, second, 
that it had upon its part performed ail the stipulations of the agree- 
ment, but that the plaintiff had not donc so, and that by his f ailure to 
do so the défendant had been damaged in the sum of $10,000. 

Upon the issues thus made the case went to trial before a jury and 
resulted in a verdict for the plaintiff for $2,613.70. Exceptions were 
taken to certain rulings of the court in respect to the admission of 
testimony and also in respect to certain phases of the charge to the 
jury. Many errors are assigned upon the rulings referred to, but 
we shall only notice such as seem to be material. 

|1] 1. The testimony for the plaintiff tended to show that by the 
mutual agreement of the parties the time for performing certain stipu- 
lations of the contract was extended. The défendant objected that 
there was no averment in the déclaration to authorize admission of 



77|î 188 FEDERAL EBPOETEB 

testimony to 'establish the fact of an extension of time ; but, while that 
pleading is not entirely spécifie, the court is of opinion that it is suffi- 
cient to authorize the admission of the testimony objected to. That 
testimony consisted mainly of a written correspondence between the 
parties, which occurred after the exécution of the contract. While 
what takes place before its exécution may be merged in a written con- 
tract, we know of no principle of law which would prevent the par- 
ties to an agreement f rom af terwards modifying or changing its terms, 
They hâve the same right to change their agreement that they had to 
make it originally. Citation of authority is not needed upon the prop- 
osition, but we may refer to Teal v. Bilby, 123 U. S. 578, 8 Sup. Ct. 
239, 31 L. Ed. 263. 

If the correspondence which was had after the contract was made 
tended to show that its terms had been changed to better suit both of 
the parties, it was compétent and admissible as évidence. The import- 
ance of this testimony may be indicated by stating the respects in 
which the written contract was changed by the parties and their rea- 
sons for it, though their reasons may not be very material, if in fact 
the changes were made. The plaintifï had agreed to deliver the pôles 
and posts on cars of the railroad known as the Soo Line, but the mill 
of the plaintiff was located several miles distant from it. The pôles 
and posts were gotten out in winter and accumulated at the mill, and 
could only be delivered on cars of the railroad during the warm months. 
In order to get them on the cars of the Soo Une, a branch track had 
to be laid from the railroad to plaintiff's mill, and it was supposed when 
the contract was made that this branch line could be completed be- 
fore midsummer and in time for delivery and removal of the lumber 
within the time stipulated in the contract; but the completion of the 
track was delayed, and the cars could not be gotten to the mill, nor was 
it practical to wagon the pôles and posts to the railroad. It was in 
référence to this situation that the correspondence took place, and we 
think it was not error to permit it to be read as évidence. It might 
also be observed that it may not hâve been very prejudicial to the 
défendant to hâve the correspondence read, as possibly the modifica- 
tions thereby made in the contract were quite bénéficiai to it as well 
as to the plaintiff. And it may be added that in view of the nature 
of the correspondence it is scarcely possible that défendant could hâve 
been prejudiced by an amendment of the déclaration and a proceeding 
with the trial thereunder. There was no suggestion that ail the cor- 
respondence or other évidence on the subject was not immediately 
available. The Michigan practice is libéral in permitting amendments 
when préjudice will not resuit, and such amendment would clearly hâve 
been within the discrétion of the trial judge. There was surely no 
greater préjudice in admitting the testimony without amendment than 
if it had been admitted under amendment. 

[2] 2. In writing, under date of June 25, 1909, the plaintiff gave no- 
tice to the défendant that unless the balance due him was paid he in- 
tended, on June 30th, to sell the pôles remaining in his yards, and to 
hold the défendant liable in damages for the différence, if they did not 
bring enough to pay the balance due under the contract. The sale 
was accordingly made, and, after deducting the price obtained, a 



C. J. HUEBEL CO. V. LEAPER 773 

balance was left of $1,911.05. This sum was part of several amounts 
which made up the verdict of the jury for $2,613.70. 

It appears from the record that in the course of the trial the de- 
fendant's counsel, Mr. Doyle, made the following statement to the 
court and jury: 

"The défendant concèdes that on the Ist day of July, 1909, there was re- 
maining In the plaintiff's millyard of the Huebel 1,907 stock pôles and posts 
whlch at the priées named in the contraet would amount to $4,616.54, and that 
said stock was on that day.sold by the plaintiff for the sum of $2,705.49 and 
that said sum was the tiest priée then obtainable therefor, and that, if the 
plaintiff is entitled to recover anything in this suit, he is entitled to recover 
the différence between those sums. The défendant further concèdes that there 
were esi pôles eut back at the request of the défendant." 

The same counsel in his brief hère says: 

"There is no controversy as to number, quality, or priée. On June 30, 1909, 
Leaper declared the contraet broken by Huebel and sold the pôles then remain- 
Ing in his yard for a sum .¥1,911.05 less than the contraet priée. It is agreed 
by both parties that such was the best price obtainable at the date of sale." 

[3] Upon the statement of counsel made at the trial, and upon the 
written correspondence admitted as testimony, we think the learned 
judge who tried the case was entirely right in charging the jury that 
the correspondence by its terms constituted an agreement to extend 
the time of performance of certain stipulations in the original con- 
traet, and that as there remained due on the contraet price of the 
pôles, after selling those sold under the notice of June 25th, a balance 
of $1,911.05, the plaintiff was entitled to recover that much of his 
claim. It seems to the court that the facts admitted of no other con- 
clusion. Besides, the time of performance having been extended by 
agreement, the right of recoupment for alleged damages during such 
delay falls to the ground. 

[4] 3. Other items were embraced in the bill of particulars, two of 
which, namely, one for $34.05, for "cutting back" 681 pôles, and an- 
other for $41.76 for certain taxes paid on the pôles, do not seem to be 
disputed. Both of thèse items were also included in the verdict, and 
there can be no doubt of the propriety of this action. 

4. Another item claimed by the plaintiff and included in the verdict 
was for $130.61 which covered interest on the balance due plaintiff 
from July 1, 1909 (the day after the sale of the pôles) to the date 
of the trial. We see no reason for supposing that this was not a 
proper élément of damages if the jury chose to include it, and we 
think there was no error in the allowance of this item. Moreover, we 
find no assignment of error aimed at its allowance. 

[5] 5. The plaintiff, in his bill of particulars, stated one item of the 
damages he claimed, in this language, "To expense of clearing land 
to store material, $200," and $150 of this sum was allowed by the 
jury and included in their verdict. The facts upon which this claim 
was based appear to be that the plaintiff having gotten the pôles upon 
his yards at the mill, and the same not having been taken by the de- 
fendant, the plaintiff eut the timber off a part of the land contiguous to 
his millyard, so as to make room for the convenient care of the pôles 
and possibly for the more convenient handHng of his business gen- 



774 188 FEDEEAL REPORTER 

erally. The land so cleared was part of that held by the plaintiff un- 
der a lease providing, among other things, for cutting and removing 
the timber therefrom. The court below submitted this item to the 
jury with the resuit stated. While a charge for storage might, under 
some circumstances, be a proper item of damage, we hâve reached the 
conclusion that the expense of "clearing the land" was not, as such, 
a proper élément of any damage sustained by the plaintiiï. There was 
nothing in the contract between the parties nor in the correspondence 
by which it was modified that seems to the court to authorize the con- 
clusion that the expense of "clearing" additional land, even for enlarg- 
ing plaintiff's facilities for taking care of the pôles, was within the 
contemplation of the parties when they made their contract or when 
they modified it. Besides, the removal and sale of the timber f rom the 
land cleared was one of the plaintiff's objects in leasing it, and non con- 
stat that the increase of yard facilities was not permanently advan- 
tageous to the plaintiff and his business. This élément of damage was, 
therefore, as we think, too remote, and in submitting it to the jury the 
court erred. 

: [6] 6. The court at the trial also submitted to the jury the question 
of allowing interest on the claim of plaintiff from January 1, 1908, to 
july 1, 1909, and to the extent of $346.23 the jury allowed it and 
included it in their verdict. Up to June 25, 1909, when the notice of 
the sale was given, the delays upon the one side and the other in 
the performance of the stipulations of the contract were by mutual 
consent and for reasons which are stated in the correspondence — rea- 
sons which sometimes favored one side and sometimes the other, and 
the delays apparently resulted as much to the advantage of one party 
as to the other. At any rate, the delays were agreed to upon grounds 
which we may assume were satisfactory to the parties, and in thèse 
circumstances we cannot perceive that the plaintiff was entitled to 
damages by way of interest for any part of the time previous to June 
30, 1909. In submitting this item to the jury we think there was er- 
ror. 

7. In short, the court is of opinion that in the verdict there were 
properly included the items of $1,911.05, $130.61, $34.05, and $41.76, 
which make up a total of $2,117.47. To that extent the verdict and 
judgment were proper, but it was excessive and erroneous to the ex- 
tent of $496.23, made up, as we hâve indicated, of the items of $150 
and $346.23. 

[7] The judgment must be reversed, with costs, and with directions 
to the court below to grant the défendant a new trial of the action 
unless the plaintiff éhall, within 30 days from the entry of this judg- 
ment> file in this court a consent to remit, from the judgment hereto- 
fore entered by it, the sum of $496.23. That this practice is warranted 
by the authorities is shown by the f ollowing décisions : Tefft v. Stern, 
73 Fed. 591, 21 C. C. A. 67; Tefft v. Stern, 74 Fed. 755, 21 C. C. A. 
73 ; American Nat. Bank v. Williams, 101 Fed. 943, 42 C. C. A. 101 ; 
Farrar v. Wheeler, 145 Fed. 482, 75 C. C. A. 386. 

If that réduction is thus made by the plaintiff and entered of record, 

new trial will be denied, and the judgment will be affirmed. 



JACKSON V, WHITK 775 

As the errors to its préjudice were substantial ones, the court is of 
opinion that the défendant, the C. J. Huebel Company, should recover 
its costs on this writ of error. 

KNAPPEN, Circuit Judge. I concur in the foregoing opinion et 
Judge EVANS, except that I think the question of interest discussed in 
subdivision 6 of the opinion was properly submitted to the jury, and 
that the item of taxes rests upon the same basis as the interest allow- 
ance. 



JACKSON V. WHITE et al, 

^Circuit Court of Àppeals, Fourth Circuit. June 15, 1911.) 

No. 953. 

1. Appbal and Eerob (§ 1022*) — Eeview— Findings of Fact. 

Where on questions of fact a spécial uiaster and the trial judge con- 
cur, an appellate court will accept tlielr findings, unless the record shows 
them to be çlearly erroneous. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4015- 
4018 ; Dec. Dig. § 1022.*] 

2. COEPORATIONS (§ 187*) "DEBT" — CONSTETJCTION OF AGBEEMENT BETWEEN 

Stookholdeks. 

Owners of a majority of the stock of a railroad Company sold thelr 
holdings under an agreement to pay ofC ail indebtedness of the company 
and deposited the proceeds of the stock to be paid ont in diseharge of 
Buch indebtedness on vouchers issued by the direetors ; the surplus re- 
maining to be divided between them in proportion to their several hold- 
ings. Held, that the sum which a stockholder had paid for his stock 
was not a debt of the company, and the direetors had no authority to 
allow and pay a claim therefor as against another stockholder. 

[Ed. Note. — ^For other cases, see Corporations, Cent. Dig. § 703; Dec. 
Dig. § 187.* 

For other définitions, see Words and Phrases, vol. 2, pp. 1864-1886; 
vol. 8, p. 7628.] 

3. COEPORATIONS (§ 187*) ACTIONS BETWEEN STOCKHOLDEES— LlABILlTT FOS 

MiSEEPBESENÏATION. 

Where stockholders of a corporation joined In a sale of their stock 
under an agreement to pay the debts of the corporation from the pro- 
ceeds, statements made by certain of the stockholders to another to in- 
duce him to join in the sale, as to the amount which would be required 
to pay the debts, if made in good faith, did not create a llability on their 
part because the debts proved to be larger than their estimate. 

[Ed. Note. — For other cases, see Corporations, Cent. Dig. § 703; Dec. 
Dig. i 187.*] 

4. Corporations (§ 327*) — Conteact et Offioeb— Liabilitt foe Breach. 

A contract, by which a défendant, who owned a controlling interest In 
a corporation, agreed to deliver certain of its bonds to complainant's as- 
signer, construed, and held to create an indebtedness from such défend- 
ant to complainant equal to the par value of such bonds, where tbey were 
never issued, but claims by others against the corporation on similar 
contracts were paid on that basis with defendant's consent as a director. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 327.*] 

Appeal from the Circuit Court of the United States for the North- 
ern District of West Virginia, at Parkersburg. 

*For other cases see Bame topic & § numbbh in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



776 188 FUDERAL EEPOETER 

Suit in equity by Ida G. Jackson against A. B. White, H. C. Jack- 
son, V. B. Archer, H. B. Nye, Citizens' Trust & Guaranty Company 
of West Virginia, and Citizens' Trust & Guaranty Company of West 
Virginia, as trustée. Complainant appeals from the decree. Re- 
versed. 

James S. McCluer and Seth T. McCormick (McCluer & McCluer, 
on the brief), for appellant. 

William Beard and William H. Wolfe, Jr. (B. M. Ambler and A. G. 
Patton, on the briefs), for appellees. 

Before GOFF and PRITCHARD, Circuit Judges, and ROSE, Dis- 
trict Judge. 

ROSE, District Judge. In the summer and early fall of 1901 the 
complainants and the défendants White, H. C. Jackson, Archer, and 
Nye held among them more than one-half of the capital stock of 
the Littlfr Kanawha Railroad Company. They united in a sale for 
$350,000 of ail their holdings to J. T. Blair and E. D. Fulton. Out of 
this sum the sellers agreed to pay and discharge ail exi'sting liens and 
incumbrances and ail valid claims and demands of any character 
whatever against the company. The buyers deposited $350,000 with 
the défendant the Citizens' Trust & Guaranty Company. The last- 
named company was to pay this money out in the iirst place in dis- 
charge of the debts of the railroad company upon vouchers made up 
by its then board of directors. If a demand was made upon the rail- 
road company which the directors did not believe to be valid, the 
sellers of the stock reserved the right to contest such claim. If they 
made such contest, they were required to leave in the hands of the 
trust company a sum of money sufficient to save harmless the buyers 
from any loss or damage that might arise in conséquence of such 
claim. The surplus, if any, remaining after discharging the debts and 
liabilities of the company, was to be divided among the sellers in pro- 
portion to the number of shares of stock sold by each of them, re- 
spectively. 

The complainant says that the $350,000 was paid out under the 
direction of the défendants White, H. C. Jackson, and Archer. She 
asserts that she did not receive the sum due her, first, as créditer of the 
company; second, as stockholder therein; third, under a written con- 
tract with the défendant H. C. Jackson. 

We will consider thèse contentions in the order above mentioned. 

First, as creditor : Among the claims against the railroad company 
presented to its board of directors was that of W. W. Jackson for 
$2,000 for services rendered and expenses incurred for the company. 
This claim the board of directors rejected. W. W. Jackson is the 
complainant's husband. She says that the claim should hâve been al- 
lowed and not rejected. The spécial master agreed with her and held 
that she was entitled to this sum. The court below held that the spé- 
cial master was in this respect in error. In so holding the court below 
was right. It was right whether the claim of W. W. Jackson was or 
was not a valid one in his hands as against the company. The record 



JACKSON V. WHITB 777 

does not show that this claim was ever assigned to the plaintifï. She 
has, therefore, in a légal sensé, no interest in it. 

Second, as stockholder: The number of shares of stock sold to 
Blair and Fulton was 2,971. At the time such sale was made, 282 
shares stood in the name of the complainant. The spécial master 
found that 2314 of thèse belonged to défendant H. C. Jackson, and 
had been put in the name of the complainant by mistake, and that 
the complainant was legally and equitably entitled to 258% shares and 
no more. The report of the spécial master was in this respect con- 
fîrmed by the court below. Complainant does not hère contest such 
conclusion. 

As the holder of 258% shares she is entitled to the same proportion 
of the surplus remaining after discharging the debts and liabilities of 
the Company as 258% bears to 2,971. This is not now denied. Until 
the filing of the bill in this cause it was ignored. That there is a 
surplus in which she is entitled to share is now admitted. What that 
surplus amounts to, or at least what it should amount to, is disputed. 
Défendants say that the détermination by the board of directors of 
the Company that a particular claim was a valid claim against the 
Company is binding upon the complainant. This the complainant dé- 
nies. She asserts that the défendants White, H. C. Jackson, and 
Archer caused to be paid claims which they knew were not debts of 
the Company. She contends that the larger part of such sums so 
improperly expended were paid to some one or the other of the three 
défendants last named. She says that they are bound to account to her 
for her share of the sums which they so unlawfully paid out. To the 
extent that any of the défendants received out of this sum of $350,000 
money which he was clearly not entitled to claim under the terms of 
the agreement with Blair and Fulton, the complainant's contention un- 
der the peculiar circumstances disclosed by the record appears to us to 
be well founded. 

To judge justly what was done and how it came to be donc it is 
necessary, if possible, to understand something of the history of the 
railroad company and of the relation of the three principal défendants 
to it. 

That there was a Little Kanàwha Railroad appears to hâve been due 
in large part to the défendant H. C. Jackson. With him in the years 
immediately preceding 1901 were associated the défendants V. B. 
Archer and A. B. White and, apparently somewhat less intimately, H. 
B. Nye. Their resources were not adéquate to enable them comfort- 
ably to finance theproject. They at times found it very difïicult to 
raise needed money for the road. , The crédit of the company had be- 
come so impaired that its name on commercial paper rendered the 
paper nonnegotiable. In other words, its note, even thpugh indorsed 
by White or Archer or H. C. Jackson, would not be discounted at 
bank, although the individual notes of those gentlemen would bave 
been. They were accordingly forced to give, in lieu of its paper in- 
dorsed by them, their individual notes. 

They were hopeful that some day the enterprise would pay hand- 
Eomely. They knew it had no money at the time. They, or some of 



778 188 FEDERAL REPORTEE 

them, kept imperfect accounts of the expenditures and liabilities made 
or incurred by them for it. In order to raise money when it was sore- 
ly needed, sometimes the company and sometimes some of the défend- 
ants as individuals made bargains with other people by which such 
other persons were promised an interest in the securities to be issued 
by the road under varying terms and conditions classified in the several 
briefs. When the sale to Blair and FuUon was actually made, the 
sum received was not sufficient to reahze any great expectations. The 
obhgations entered into by the company and by the individual défend- 
ants varied in their terms. It was not easy — perhaps it was not 
possible — to make an exactly équitable distribution of the money re- 
ceived because the varying contracts and engagements could not be re- 
duced to any common denominator. It was largely because of thèse 
conditions and difficulties that the présent litigation has arisen and 
the record has expanded into nearly 1,300 printed pages. 

The défendants H. C. Jackson and White, and to a somewhat less 
extent Archer, had borne the burden and beat of the struggle to keep 
the company out of absolute financial ruin. In order to save the com- 
pany, H. C. Jackson and White had used their crédit and resources to 
their full limit. For years the company had been ever before them. 
Their financial future was largely bound up with it. They had 
labored, spent, and risked for it. It did not seem to them that the 
complainant's husband, W. W. Jackson, under whom she claimed, had 
ever been of much use to the company, although in its earlier days he 
seems to hâve spent considérable time in writing about it and in talk- 
ing about it. When the directors or their executive committee were 
auditing the bills against the company and issuing vouchers for the 
payment of such bills, they realized that the enterprise was being 
finally wound up. The hope of large profits which had buoyed them 
up through many periods of doubt, struggle, and difficulty were now 
at an end. They not unnaturally thought that they were entitled to 
hâve their claims against the company treated in a libéral and generous 
way. They did not feel that the complainant stood in this respect 
on the same footing with themselves. This feeHng was very natural. 
It was very human. Nevertheless, in a court of equity the complain- 
ant's rights as a shareholder in proportion to the number of shares 
she held were exactly the same as theirs. If they had any claims as 
creditors against the company, they were entitled to bave them paid. 
As a stockholder she was entitled to insist that no claims against the 
company should be paid except those for which the company was lia- 
ble. " 

After paying ail the claims presented against the company, includ- 
ing those to themselves to which complainant objects, there still re- 
mained a surplus of some $16,000. The complainant points to the 
way in which they dealt with this $16,000 as showing that H. C. Jack- 
son, White, and Archer were at or about the time they passed upon the 
claims against the company disposed, consciously or unconsciously, to 
ignore her rights. They distributed this $16,000 among themselves 
and a certain C. H. Shattuck, who, by the terms of the agreement with 
Blair and Fulton, had no interest in it. They paid $10,000 of it to 



JACKSON V. WHITB 779 

H. C. Jackson, $1,000 to Archer, $2,500 to Whîte, and $2,500 to Shat- 
tuck. Thèse payments were not made absolutely. Each one of them, 
when he withdrew the money from the Citizens' Trust & Guaranty 
Company, gave a bond executed by the Citizens' Trust & Guaranty 
Company conditioned that the person who withdrew the money v^ould 
repay it, if it should be necessary, to pay the debts of the railroad 
Company, or in case the amount so withdrawn was greater than the 
amount that would be due to the person withdrawing it on final settle- 
ment among the stockholders who united in the sale to Blair and Fui- 
ton. The bonds so given appear to hâve been delivered to the per- 
sons who withdrew the money. It should be remembered that at the 
time thèse withdrawals were made the complainant held more stock 
than did Archer and something over two-thirds as much as White. 
She was not given the opportunity to withdraw anything, nor was 
there any substantial sum left for her to withdraw if she had asked 
permission to do so. 

By the decree below the défendants who made thèse withdrawals, 
or authorized them, are required to account to the complainant for her 
share of the sums so withdrawn. That portion of the decree below 
has not been appealed from. It has been necessary, however, to re- 
fer to this feature of the case because it undoubtedly played a large 
part in convincing the complainant that she has not received fair and 
just treatment. It does throw a good deal of light upon the way in 
which the défendants H. C. Jackson, White, and Archer looked at the 
complainant and her rights at the time when thèse transactions took 
place. 

Under such circumstances a court of equity must scrutinize with 
some care the action taken by thèse défendants in passing upon the 
claims. 

[1] The complainant says that many of the claims were improperly 
and unjustly allowed. Thèse objections of the complainant appear to 
hâve been ail carefully considered by the spécial master. Most of 
them he overrules. He frankly states that in many cases the évidence 
on the question as to the nature and amount of the claim is not alto- 
gether satisfactory, but, on the whole, he believes that there is not 
sufficient évidence to show that the claims which he allows were not 
valid clairns against the company and justly owing by it. His con- 
clusions in thèse matters hâve been confirmed by the court below. 
Where, on questions of fact of this character, the spécial master and 
the judge below concur, the appellate court will accept their findings, 
unless the record shows them to be clearly erroneous. Except in one 
instance, we see nothing in this record to justify us in coming to any 
such conclusion. 

[2] When the défendant White became a stockholder in the com- 
pany, he paid $2,500 for his stock. None of the other individual stock- 
holders who sold their stock to Blair and Fulton appear to hâve paid 
anything for it. When the directors were dividing the $350,000, Mr. 
White made a claim on them for the return of this $2,500. They paid 
it to him. In so doing they paid out $2,500, for what was not a debt 
of the railroad company and for what they must, if they had thought 



780, 18S FEDERAL EEPOKTEB 

about it, hâve known was not a debt. To this payment the complaîn- 
ant objects. She is entitled to object. There being no controversy 
over the facts, the question présentée! to us is one of law purely, and 
we are of opinion that the spécial master and the court below erred in 
not requiring the return by the défendant White of this $2,500. 

There are three items as to which the court below overruled the 
findings of the spécial master. 

H. C. Jackson had made a personal contract with one Gregory for 
the delivery to Gregory, in certain contingency, of bonds of the rail- 
road Company. He paid Gregory $3,000 for a release from this con- 
tract. The directors of the railroad company repaid this sum to 
Jackson out of the $350,000. The spécial master held this payment 
was improper. 

By an error of calculation the directors overpaid H. C. Jackson 
$382.52 on salary account. The spécial master held that this sum 
should be returned by H. C. Jackson. 

$500 was paid the défendant Archer as a retainer to défend prob- 
able suits which might be brought against H. C. Jackson by W. W. 
Jackson, George Mastin, and J. H. Gregory. The spécial master 
found that thèse claims were claims against H. C. Jackson and that 
the company was under no obligation to défend them. 

The learned judge below sustained exceptions made by the de- 
fendants to the disallowance by the spécial master of the above-men- 
tioned claims. We hâve not the benefit of his statement of the rea- 
sons which led him to take such action. As the record stands before 
us, it seems'to us the spécial master was right, and the défendants who 
received the above-mentioned sums should be required to return the 
complainant's share of them to her. 

[3] The complainant says that H. C. Jackson and Archer induced 
her to unité in selling the stock to Blair and Fulton by telling her that 
the debts of the company did not exceed $276,000. There was ac- 
tually paid out under the authority of the directors $333,858.86. We 
hâve held that $6,382.52 of this amount was improperly paid to H. C. 
Jackson and White and must be returned by them. Deducting the last- 
mentioned sum from the total amount originally expended will leave 
the amount we hold to faave been properly paid out for the indebted- 
ness of the company, $327,475.34. Complainant says that this is 
$51,475.34 more than Archer and H. C. Jackson told her the debts 
would amount to. She asks that they be required to put her in the 
position she would hâve been in had the facts been as she says they 
represented them to be. In other words, she asks that they be re- 
quired to pay to her her proportion as stockholder of $51,475.34, or 
in the neighborhood of $4,500. 

It suffices to say that we do not find from the record that H. C. Jack- 
son and Archer, or either of them, in any way bound themselves to 
complainant to make good any loss she might suffer by reason of the 
debts of the company exceeding $276,000, nor do we find that at the 
time they made such représentation to her they knew it to be false or 
made it in reckless indifférence as to whether it was true or false. 
They do appear to hâve told her that tliey believed the indebtedness 



JACKSON V. WHITE 78] 

would not exceed $276,000. There is nothing to show that such state- 
ment was not made in good faith. Neither in contract nor in tort is 
the complainant entitled to recover against H. C. Jaci<son or Archer, 
or either of them because of such statement. 

There remains for considération: 

Third, complainant's rights under a contract with H. C. Jackson. 

[4] The contract in question is dated April 14, 1898. By it, in 
considération of $2,500 cash paid by W. W. Jackson and one J. H. 
Gregory, and the undertaking by the said Gregory to indorse cer- 
tain notes of the railroad Company and an assumption by him of 
some contingent liabilities on its behalf, H. C. Jackson sold "an un- 
divided one-eighth in the first mortgage bonds of the Little Kanawha 
Railroad Company on its présent mileage of thirty miles, which mort- 
gage provides for the issue of first mortgage bonds in the amount 
of $15,000 per mile, making the total authorized issue $450,000." 
Thèse bonds were subject to certain enumerated prior liens aggre- 
gating $140,000. By the terms of the contract two-thirds of the one- 
eighth of the bonds so sold were to go to Gregory and one-third to 
W. W. Jackson. W. W. Jackson's interest in this contract was sub- 
sequently assigned to his wife; the transaction taking the form of 
an assignment by him of his interest in the contract to H. C. Jackson 
and of the latter's reassignment of such interest to the complainant. 

The complainant says that $140,000, the amount of the prior liens 
provided for in the contract, should be deducted from the $450,000, 
the total issue of bonds mentioned in the contract. This leaves a 
balance of $310,000. 1/24 of $310,000 is $12,916.66, which is the 
amount that the spécial master found to be due on this contract 
from H. C. Jackson to complainant. The défendant H. C. Jackson 
sets up various défenses to this claim. 

First, he says he assumed no personal obligation under the con- 
tract of April 14, 1898. Such construction of the contract does not 
appear to us to be reasonable. 

Second, he says that the Cartwright contracts, to which W. W. 
Jackson assented, made impossible the carrying out of the contract 
of April 14, 1898. With this contention we cannot agrée. By the 
consent of every one, the Cartwright contracts were ended. It was 
the obvions intention of ail the parties that every one interested 
should return to the position he or she occupied before those contracts 
were made. The défendant Archer had a claim against the company 
for $18,000 of bonds. This claim arose out of an agreement made 
years prior to the Cartwright contracts. Archer assented to those 
contracts. When the $350,000 received from Blair and Fulton was 
distributed, Archer made- a claim against the company for the par 
value of thèse bonds. H. C. Jackson assented to the payment of this 
claim. No one then contended that Archer had waived his claim 
to thèse bonds because of his assent to the arrangements with Cart- 
wright. Other persons who had claims against the company were in 
the same position as Archer and were dealt with in precisely the 
same way. The présent reliance of H. C. Jackson upon the Cart- 
wright contracts is quite obviously an afterthought of his counsel. 



782' 188 FEDERAL EBPORTEB 

Tfiîrd, H. C. Jackson says that the contract of Aprîl 14, 1898, was 
assigned by W. W. Jackson to him and was reassigned by him to 
the complainant, and the latter assignment expressly released him 
from any personal Hability under the contract of April 14, 1898. 
We do not so understand the purport of the language of such assign- 
ment. In our view the assignment intended to transfer to the com- 
plainant whatever rights W. W. Jackson had assigned to H. C. Jack- 
son. H. C, Jackson did not wish to incur any personal liability by 
reason of the assignment and so said. We do not think it reasonable 
to assume that any of the parties intended that the complainant should 
not take under the assignment from H. C. Jackson ail that H. C. 
Jackson had received by the assignment from W. W. Jackson. 

Fourth, H. C. Jackson says that the complainant by claiming as 
a stockholder under the Blair and Fulton option is estopped to de- 
mand bonds under the agreement of April 14, 1898. We see no basis 
for this contention. Her rights as a stockholder arose under a con- 
tract of January 12, 1899. This contract was in no wise connected 
with the contract of April 14, 1898. In conséquence of the agreement 
of January 12, 1899, she became a stockholder. Such agreement 
did not affect any rights she had acquired under the agreement of 
April 14, 1898, to demand bonds from H. C. Jackson. 

Fifth, H. C. Jackson says that complainant waived any rights that 
she had to bonds by becoming a party to varions option agreements, 
plans of reorganization, and the like. That resuit does not seem to- 
us naturally to follow from anything that she did with référence to 
thèse agreements. 

Sixth, H. C. Jackson says that the complainant is not entitled to 
any bonds because no bonds were issued. Bonds were not issued 
because H. C. Jackson, who controlled the company, did not think it 
expédient to issue them. Doubtless the reason he did not think it 
expédient to issue them was that he had no reasonable hope of being 
able to sell any of them. When he came, as director of the company 
and a member of its executive committee, to settle with Archer, 
Barstow, and the other persons who had claims against the com- 
pany, for bonds, he and ail the other directors treated thèse claims 
as if they were valid claims for an amount of cash represented by 
their par value. 

The spécial master reached the conclusion that the complainant 
was entitled to recover from H. C. Jackson upon this contract of 
April 14, 1898. We think in so doing that the spécial master was 
in principle right and that the learned court below was in error in 
sustaining the exception of the défendant H. C. Jackson to so much 
of the master's report. Certain modifications, however, in this matter 
should be made in that report. To carry the $140,000 of prior liens 
from April 14, 1898, to the time they were paid, say October 14, 1901, 
a period of three years and six months, must hâve cost the company 
at least as much as légal interest on the amount of those liens for 
that time would hâve amounted to. If the principal of thèse liens 
was entitled to priority over complainant's claim, the interest on them 
was equally a prior claim. Interest at 6 per cent, for three years and 



EOBEETSON T. TERRIÏOET OF ARIZONA 783 

six months on $140,000 is $29,400. 1/24 of this sum is $1,225. From 
the amount found by the spécial master to be due from H. C. Jack- 
son to the complainant should be deducted, therefore, the sum of $1,- 
225, reducing the amount so due to $11,691.66. Nor do we think 
that the complainant is entitled to interest on this sum from April 
14, 1898, as allowed by the spécial master. Under the construction 
put upon the contract by the parties, we do not think that the com- 
plainant is entitled to the principal of this sum until the division of the 
$350,000 received from Blair and Fulton was completed, say Decem- 
ber 1, 1901. 

We are therefore of the opinion that, with the exceptions herein 
specially mentioned, the spécial master's report should be confirmed. 

In view of the form in which the spécial master's report of the 
adjustments between the complainant and the défendants H'. C. 
Jackson, White, and Archer was made, it will be more convenient 
for a new calculation to be made in the court below of the sums which 
in accordance with this opinion and following the principles of the 
spécial master's report, should be paid and received by the respective 
parties. When such calculation is made, interest on the amounts sev- 
erally to be paid should be brought down to the date at which, in ac- 
cordance with the mandate of this court, the final decree below shall 
be passed. It follows that the decree below, in so far as it is incon- 
sistent with what is herein stated, must be reversed, and the cause re- 
manded for further proceedings not inconsistent with this opinion. 

Reversed. 



ROBBRTSON v. TERRITORY OF ARIZONA. 

(Circuit Court of Appeals, Nlnth Circuit. July 3, 19H.) 

No. 1,933. 

1, Homicide (§ 298*) — Making Abbest— Rigiits of Opficeb. 

Instructions, on the trial of a peace oflicer charged with homicide com- 
mitted whlle attempting to arrest the deceased for a mlsdemeanor, con- 
sldered, and, taken as a whole, held to correctly charge that, while défend- 
ant dld not hâve the right to kill the deceased for attempting merely to 
avoid arrest by running away, he had the right to overcome actual ré- 
sistance to arrest by such force as was necessary even to the taliing of 
life. 

[Ed. Note. — For other cases, see Homicide, Cent. Dig. § 612; Dec. Dig. 
§ 298.*] 

2. Cbiminai, Law (§ 823*)— Teiai^-Instbuctions— Weight to be Given Tes- 

TiMoxT or Défendant. 

On a trial for homicide in which défendant testlfled in hls own behalf, 
an Instruction, referring speclfleally to bis testimony, that, if hls strte- 
ments were convinclng and carried with them a helief in their truth, the 
jury had a "right to receive and act upon them," and, if not, they had a 
"right to reject them," was not erroneous, read in connection with a gên- 
erai Instruction correctly statlng the rules to be applied to the considéra- 
tion of the testimony of ail witnesses. 

[Ed. Note. — For other cases, see Crimlnal Law, Cent. Dig. § 1995 ; Dec, 
Dig. i 823.*] 

•For other cases see same topic & g ncmbeb in Dec. & Âm. Digs. 1907 to date, & Rep'r Indexes 



T84 188 FEDERAL KEPOETEB 

In Error to the Suprême Court of the Territory of Arizona. 

William D. Robertson was convicted of homicide, and, from a judg- 
ment of the Suprême Court of the Territory of Arizona (108 Pac. 
217) afifirming that of the court below, brings error. Affirmed. 

PlaintifC in error was Indlcted in the district court of Graham eounty, Ariz., 
for the murder of one Wayne Purseley. At the time of the alleged murder, 
the plaintiff in error was the town marshal of the town of SafEord In Graham 
eounty, and, In the performance of his duties as such town marshal, was en- 
deavoring to arrest the deceased. The plaintlfC in error pleaded not guilty 
to the indictment, was tried before a judge and a jury, which resulted in a 
verdict of conviction, and he was sentenced to a term of 15 months in the 
territorial prison. On appeal to the Suprême Court of the territory of Arizo- 
na the judgment of the lower court was affirmed. Robertson v. Territory, 
108 Pac. 217. From this judgment plaintifC in error sued out this writ of 
error. 

The facts of the case, as summarized by the Suprême Court of the territory 
In its décision, and which under the stipulation of counsel are to be taken as 
the statement of facts for the purpose of this writ of error, are, in substance, 
as follows: 

On the day of the homicide there was in progress In the town of Safford, 
Graham eounty, Ariz., a célébration of the Independence of the republic of 
Mexico. A large crowd had assembled in the town, attracted by the célébra- 
tion, and some of the persons participating therein had become intoxicated. 
Wayne Purseley, of whose homicide the plaintifC in error was convicted, 
was among those in that condition. The deceased had a violent altercation 
with one Campbell and was using violent and threatening language against 
him. The plaintiff in error was at that time the marshal of the town of 
Safford. To him Campbell, after having been severely maltreated by the de- 
ceased. appealed for protection against further assaults by the deceased. The 
plaintiff in error, responding to this appeal, approaehed the deceased, who 
was demanding of the people holding him to be let loose to get at Campbell. 
The plaintifC in error remonstrated with him, saying: "Ilere, Wayne, that 
won't do. Tou can't do that. There are too many women and children on the 
Street to be talklng that way. You will hâve to go with me." Deceased said 
he would not go. The plaintiff in error then placed his hand upon deceased, 
who knocked the plaintiff in error down. A hystander attempted to calm de- 
ceased, and tbe deceased knocked the bystander down. The plaintifC in error 
again took hold of the deceased, and they elinehed and fell, the plaintiff in 
error on top. The crowd interfered, rescued the deceased from the plaintiff 
in error, and took him away to a neighboring house. The plaintifC in error 
went to a saloon and got his revolver, and oalled upon a friend of the de- 
ceased to assist him, saying to him: "I hâve got to get him. Will you go 
with meV 

Meanwhile the friends of the deceased had been unable to keep him In the 
house where they endeavored to hâve him remain to hâve the wounds that 
he had received in the contest with Campbell further dressed. The deceased, 
however, resisted the efforts of his friends to restrain him indoors, and going 
through the house came into the yard, where he encountered the plaintiff in 
error. The plaintiff in error addressed the deceased as an offlcer, saying that 
the deceased must come with him, and referred to his conduct. A bystander 
asked that the deceased might be allowed to retum to the house to hâve his 
wounds further dressed. The plaintiff in error said that he would take the 
deceased to the doctor or anywhere else that he wanted to go. The deceased 
said that the plaintiff in error should not arrest him, and, according to some 
testimony, applied opprobrious epithets to plaintiff in error, and struck him. 
At this juncture the brother of the deceased interfered, and many other peo- 
ple of the crowd rushed in, and there was confusion. The brother of the de- 
ceased told the plaintiff In error that he should not arrest the deceased. 
Thereupon plaintiff in error pulled his gun. The brother grabbed the gun 
and. attempted to wrest it from the offlcer. In the meantime the deceased 
was striklug at the offlcer witli an ppen knif e. The deceased, his brother. 



BOBERTSON V. TEREITORT OF ARIZONA 785 

and the plaintift In error were ail together engagea in a struggle. The plaln- 
tiff in error struek the brother of the deceased over the head with his gun, 
and the Brother fled. Deceased continued flghting with the plaintiff In error. 
The plaintifC in error struek him twice over the head with the gun ; but the 
blows did not stop the onslaught of the deceased. The offleer became ex- 
hausted and flred upon the deceased, and still the deceased did not stop, and 
he again flred, and the deceased fell mortally wounded and died almost in- 
stantly. Many of the facts are contradlcted, and a number of witnesses tes- 
tlfied that at the time the fatal shot was flred the deceased was retreating 
and had declined further to struggle; but the évidence, as a whole, tends to 
establish the facts as above stated. 

Walter Bennett, Kibbey, Bennett & Bennett, W. K. Dial, and Stone- 
man & Jacobs, for plaintiff in error. 

John B. Wright, Atty. Gen. of Arizona, and W. J. Galbraith, for tlie 
Territory. 

Before GILBERT and MORROW, Circuit Judges, and WOLVER- 
TON, District Judge. 

MORROW, Circuit Judge (after stating the facts as above). The 
plaintiff in error complains of the instructions given to the jury by the 
trial court: 

[1] 1. That the instructions were based upon the theory that the 
deceased was being arrested by the plaintiff for a misdemeanor, and 
not for a felony; and that the instructions were so drawn as to mi.slead 
the jury. The plaintiff in error requested the court to instruct the 
jury that: 

"The deceased was în the actual commission of a misdemeanor in the prés- 
ence of the plaintiff in error, who was at that time a peace offleer, to wit, the 
town marshal of the town of Safford, In Graham county, Ariz., and that it 
was the duty of the plaintiff in error as such peace ofBcer to then and there 
arrest the deceased, Wayne Purseley." 

Had this instruction been given by the court as requested, and had 
stopped there, there might hâve been ground for this criticism; but 
not for complaint, since it was an instruction requested by the plain- 
tiff in error. The court gave the first clause of the instruction as re- 
quested, but specifically limited it to the time when the plaintiff in er- 
ror first encountered the deceased in the street. The court said: 

"This instruction is to be Ilmlted in Its efCect to the time at which, under 
the testimony, the défendant went into the street, and to the time in whlch 
the incidents covered by the testimony which occurred in the street were in 
their progress." 

This was not the time when the tragedy occurred. The plaintiff in 
error failed at this time to accomplish the arrest of the deceased. In 
this encounter the crowd interfered, rescued the deceased, and took him 
away to a neighboring house. In the second encounter, when the 
deceased came from the house into the yard, the situation took on an 
entirely différent complexion, and there is évidence tending to show 
that the deceased became an aggressor. The deceased declared that 
the plaintiff in error should not arrest him, and there was évidence 
that he struek the plaintiff in error. The plaintiff in error thereupon 
pulled his gun. A brother of the deceased attempted to take the gun 
away from him. In the meantime the deceased was striking at the 
188 F.— 50 



786 188 FEDERAL REPOETBK 

plaintiff in error with an open knife. The plaintiff in error struck the 
deceased twice upon the head with the gun, but the blows did not stop 
the onslâught of the deceased. The plaintiff in error became ex- 
hausted, and fired upon the deceased, and still he did not stop. Then 
it was that the plaintiff in error fired the fatal shot. How did the trial 
court treat this part of the affray in its instructions to the jury? The 
court said: 

"Where an arrest Is sought to be made, though for a misdemeanor only, 
and the person sought to be arrested resists by the use of a deadly weapon, 
the offlcer has the rlght, If he belleves, and bas reasonable grounds to believe, 
that the other will kill him or Inflict great bodilj; harm upon him, to use his 
own weapons even to the taklng of life." 

Further on in the instructions the court said: 

"It was entirely wlthin hls rlghts (that is to say, wlthin the rights of the 
plaintiff In error as an offlcer) to use force to overcome résistance. îou must 
observe the différence between resisting arrest and running away. Be the 
offense ever so trivial, If he actually resists arrest and fights back against 
arrest, the ofBcer may use ail force necessary and summon ail the assistance 
that the surroundlng clrcumstances ofCer him, to enable him to overcome that 
résistance even to the infliction of bodily harm, or, if necessary In extremity, 
the infliction of death. This duty of the offlcer to avold infliction of Injury 
or death only occurs when the man seeks to avold arrest, but it does not de- 
volve upon him to avold the infliction of injury or death if it be necessary 
to overcome résistance, but he may inflict It only if It is necessary, and he 
may go only so far as it is necessary to effect arrest or overcome résistance. 
If the offieer's life becomes in jeopardy durlng the course of the attempt to 
overcome résistance in making the arrest, he has the rlght as anybody else 
to protect himself from bodily harm or death." 

We do not think that thèse instructions, taken as a whole, were mis- 
leading ; or that in this final affray the jury understood that they were 
instructed that the plaintiff in error could use no force other than was 
necessary to arrest the défendant for a misdemeanor committed in his 
présence, or that he could not défend himself from the assaults of the 
deceased. The act of the deceased in committing a misdemeanor in 
the présence of the ofiîcer was, of course, the original cause for the ar- 
rest; but, if the jury believed the testimony, the cause had grown to 
include the actual forcible résistance of arrest by the deceased, and a 
necessity had been thrown upon the plaintiff in error to overcome such 
résistance and défend himself against the assault of the deceased. 
Whether the jury gave to this testimony the weight it was entitled to 
receive, or whether they believed that the deceased was retreating and 
had declined further struggle when the fatal shot was fired, as some 
of the witnesses testified, is another question, and one with which we 
are not called upon to deal. The only question this court has to dé- 
termine is whether the trial court in directing the attention of the 
jury to this testimony did so with .proper instructions as to the law 
applicable to that situation. We think it did, clearly and distinctly, 
and that there is no ground of complaint. 

2. It is objected that the court did not give the last clause of the 
requested instruction as f ollows : 

"And that It was defendant's duty as such peace offlcer to then and there 
arrest the deceased, Wayne Purseley." 



R0BERT80N V. TERRITORY OF ARIZONA 787 

The court gave the instruction in its appropriate place, and in ap- 
propriate language, and more favorable to the défendant than the 
requested instruction, as foUows: 

"You are Instructed as a matter of law that it Is not only the rlght but the 
duty of a peace offlcer to arrest a person who is committlng a public offense 
in bis présence, and that in making such arrest he may use such force as is 
necessary to overcome ail résistance and may repel force wlth force and need 
not glve back ; and, when the offender puts the peace offlcer's lif e in jeopardy, 
the otHcer may use sufflcient force to overcome the résistance he encounters 
even to the taking of llfe." 

[2] 3. It is next objected that the instruction of the court singled 
out the plaintiff in error from among ail the other witnesses who were 
examined in the case, and, calling attention to his spécial interest in the 
case, instructed the jury that they were to consider the very great 
interest he must hâve and feel in the resuit of the case, and the effect 
the verdict would hâve upon him, and détermine to what extent, if 
any, such interest would color his testimony or affect his credibility; 
that, if his statements be convincing and carry with them belief in their 
truth, the jury had the "right to receive and act upon them"; if not, 
they had the "right to reject them." This instruction had been twice 
approved by the Suprême Court of the Territory. Halderman v. Ter- 
ritory, 7 Ariz. 120, 60 Pac. 876; Prior v. Territory, 11 Ariz. 169, 89 
Pac. 412. 

In the présent case the Suprême Court held the instruction not to 
be error, but said it was in some respects an undesirable instruction, 
and recommended to the District Courts that its use be discontinued. 
Robertson v. Territory, 108 Pac. 217. It is contended that this recom- 
mendation is an admission that the instruction does not correctly state 
the law, and, if the instruction should be given again by a district 
judge, the Suprême Court would hold it to be error. We do not so 
nnderstand the opinion of the Suprême Court. The instruction ap- 
pears to be substantially in accord with recognized authority. In the 
case of People v. Cronin, 34 Cal. 191, 195, 204, substantially the same 
instruction was given to the jury, and the instruction was sustained 
by the Suprême Court of the state in the f ollowing language : 

"The Instruction of the court In relation to the credibility of the défendant, 
who offered himself as a wltness, was In ail respects légal and proper. We 
do not agrée with the learned counsel for the défendant In holding that it Is 
not compétent for the court to single ont a particular wltness and charge the 
jury as to his credibility. On the contrary, the less abstract the more useful 
the charge. Jurors flnd but little assistance in the charge of a judge who 
deals only in the gênerai and abstract propositions which he supposes to be 
Involved in the case, and leaves the jury to apply them as best they may." 

In Reagan v. United States, 157 U. S. 301, 306, 15 Sup. Ct. 610, 
611 (39 L. Ed. 709), the instructions in a number of cases of a 
similar import, including the instruction in the Cronin Case, were 
referred to as an authority for the approval of an instruction in the 
case before the court, in the f ollowing language: 

"The law permits the défendant at his own request to testify in his own 
behalf. The défendant hère bas availed himself of this privilège. His testi- 
mony is Before you, and you must détermine how far it is crédible. The deep 
Personal interest which he may hâve in the resuit of the suit should be con- 



788 188 FEDERAL HEPOKTEB 

sidered by the Jury In weighing his évidence and In determlnlng how far or to 
what extent, If at ail, it Is worthy of crédit." 

But the spécifie objection is made to the instruction that it told» the 
jury that if the statements of the défendant "are convincing, and 
carry with them a beHef in their truth, the jury had a "right to re- 
ceive and act upon them; if not, they had a right to reject them." 
It is contended that this instruction authorized the jury to reject the 
testimony of the plaintiff in error unless it in itself carried the belief 
in its truth, even though it might be corroborated by the testimony of 
other witnesses. This is another instance where an instruction taken 
singly and by itself may be considered open to criticism, and perhaps 
it was this criticism that moved the Suprême Court of the territory 
to say that the instruction was in some respects undesirable and 
recommended that its use be discontinued. But the instruction should 
be taken in connection with the preceding instructions, where the 
court told the jury that, in determining the credibility of any witness 
and the weight to be given to his testimony, the jury had the right 
to take into considération, among other things, "the probability or im- 
probability of the truth of his statements when considered in connec- 
tion with the other évidence in the case." When the instruction in 
question is considered with this instruction upon the same subject, 
we do not see how the jury could hâve been misled as to the considéra- 
tion they were required to give to the defendant's testimony if corrob- 
orated by the testimony of other witnesses. 

It is objected further that the jury were instructed that they had 
a "right" to receive the defendant's statements if they were convincing 
and carried with them a belief in their truth ; whereas, the instruction 
should hâve been that they "should" do so, that is to say, the instruc- 
tion should hâve been imperative and not permissive. We think this 
objection is hypercritical. It will be presumed that the jury would 
do what they liad a right to do, and that they would not refuse to 
receive defendant's statements if they were convincing and carried 
with them a belief in their truth, simply because the court had not 
told them that they "should" do so. The instruction might be im- 
proved, as indicated by the Suprême Court; but we cannot hôld that 
it contained error prejudicial to the défendant. 

After carefully considering ail the objections urged against the in- 
structions by the plaintiff in error, we are of the opinion that they 
do not contain any error for which the case should be reversed. 

The judgment is theref ore aifirmed. 



In re MALLOT. 

(Circuit Court of Appeals, Eighth Circuit May 18, 1911,) 

No. 109. 

1. HOMESTEAD (§ 33*) — ^ACQUISITION— CHAEACTER OF OCCUPANCT. 

Under the homestead law of North Dakota (Rev. Codes 1905, § 6049), 
which exempts to every head of a family a homestead, consistlng of the 
dwelllng house In which he résides and not to exceed 160 acres of land, 

•For other caaes see same toplc & i numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



IN RE MALLOT 789 

If not wlthîn a town plat, and which, under the décisions of tbe Suprême 
Court of the state, Is to be liberally construed, whlle oecupancy is essen- 
tial to inltiate a homestead right, such oecupancy may be constructive. 
[Ed. Note. — For other cases, see Homestead, Cent. Dig. §i 44-49 ; Dec. 
Dig. § 33.*] 

2. Bankkuptcy (§ 396*) — Homestead Exemption— Right of Bankeupt. 

A bankrupt, more than a year before his bankruptcy and when un- 
married, proved up on a government homestead lu North Dakota, and 
after staylng on tbe land three months longer left his furniture in the 
house and went away. He was compelled later to go to a hospital, where 
he remalned until the followlng June, when he married, obtained employ- 
ment in a town 100 miles from his farm, and rented a house untll April 
Ist followlng ; it being then too late In the season to put in a crop. In 
December he was adjudged a bankrupt. He and his wife intended at ail 
times to remove to the farm as soon as circumstances rendered it feasi- 
ble and make it their home. Before their marriage his wife had also* 
proved up on a homestead, and sent some of her furniture to his house, 
where it was left. Held, that such oecupancy, together with their bona 
fide intention, impressed the land wlth the homestead character, and 
that he was entitled to hâve it set aside as exempt. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. § 670; Dec. 
Dig. i 396.*] 

Pétition for Review of Order of the District Court of the United 
States for the District of North Dakota. 

In the matter of M. F. Malloy, bankrupt. On pétition by the bank- 
rupt to review u.e order of the District Court (179 Fed. 942). Re- 
versed. 

John E, Greene and L,. J. Falda, Jr., for petitioner. 
Bessie & Gréer, for trustée. 

Before HOOK, Circuit Judge, and RINER and WM. H. MUN- 
GER, District Judges. 

WM. H. MUNGER, District Judge. M. F. Malloy, a single man, 
entered as a homestead under the laws of the United States, and re- 
sided thereon, 160 acres of land, the subject of this controversy. He 
made final proof some time during the year 1908. The exact date is 
not disclosed. He continued to réside upon said land subséquent to 
making his final proof, and during the summer of 1908, for three 
months. He had a house upon the land, the exact character of which 
is not disclosed ; but the référée, in the summary of the évidence, states 
that it was better than the average homesteader's house and reason- 
ably well furnished. Upon leaving the premises, three months after 
final proof, he went to Williston, N. D., where he remained for some 
time, engaged apparently in a debauch or spree, resulting in his being 
required to enter a hospital at Fargo, where he remained until June, 
1909, when he married. In leaving his place, he left, not only his 
furniture therein, but some of the furniture which his subséquent wife 
owned, and which she had used upon a homestead upon which she 
made final proof, and thereafter transferred to Mr. Malloy's house 
before he made his final proof. Upon Malloy's marriage in June, 
being broken ia health, and it being too late in the season to cultivate 
a crop upon his land, he obtained employment as an accountant at 

Tor other cases see same topic & § kuhbsb In Dec. & Am. Digs. 1907 to date, & Rep'r ladezei 



790 188 FBDBEAL REPORTER 

Minot, N: D., a town about 100 miles from the land, and leased a 
house until April 1, 1910, in which he and his wife resided. At the 
time of renting the house in question he stated to the landlord of whom 
he rented that he should want the place only until about spring, when 
he intended to move out on his farm. The testimony of other rési- 
dents of Minot showed that, during casual conversations while visit- 
ing at Malloy's home in Minot, he and his wife spoke of their purpose 
and intention of moving upon his homestead in the spring. An at- 
tachment, however, had been levied upon the land before thèse state- 
ments were made. On the Ist day of February, 1910, petitioner was 
adjudged a bankrupt, and claimed the land in question exempt as a 
homestead. He filed his pétition with the référée for an order requir- 
ing the trustée to set apart said land as a homestead. Upon the hear- 
ing the référée made the following findings of fact: 

"(1) That Mr. Malloy, whlle a single man, In good faith resided upon the 
land In question as a home for three months during the summer of 1908, 
after he had made proof thereon. 

"(2) That he has never abandoned such land as a home, or had any perma- 
nent home elsewhere. 

"(3) That slnce the end of the three months after proof Mr. Malloy has 
never actually Uved upon such land, or done any overt act indicating an 
intention so to do. 

"(4) That since their marriage neither Mr. Malloy nor his wife hâve ever 
actually resided upon such land, nor done any overt act Indicating their In- 
tention so to do.' 

"(5) That since the marriage neither Mr. Malloy nor his wife hâve done 
any overt act indicating an intention to abandon such home. 

"(6) That it has at ail times since the marriage been the bona flde Inten- 
tion of Mr. Malloy aud his wife to make such land their permanent home, 
and to retijrn thereto and actually réside thereon as soon as circumstances 
rendered It feaslble." 

The référée also made an order that the trustée forthwith set apart 
to petitioner as exempt the homestead claimed by him. From this 
order of the référée the trustée filed his pétition for its review, and 
upon hearing the District Court decided that, under the facts, the land 
in question was not a homestead under the laws of the state of North 
Dakota, and reversed the order of the référée. Petitioner brings the 
case to this court. 

Section 5049, Revised Code of North Dakota 1905, is as follows: 

"The homestead of every head of a family reslding in this state, not ex- 
eeeding in value five thousand dollars, and if withln a town plat not ex- 
ceeding two acres in extent, and if not within a town plat not exceeding 
in the aggregate more than one hundred and slxty acres, and consisting 
of a dwelilng house in which the homestead claimant résides, and ail its 
appurtenances, and the land on which the same is sltuated, shall be exempt 
from judgment lien and from exécution or forced sale, except as provided in 
this chapter." 

The principal contention in this case upon the part of the trustée is 
that the land never became impressed with the character of a stat- 
utory homestead, for the reason that it never had been actually occu- 
pied by petitioner or his wife subséquent to their marriage, that subsé- 
quent to the marriage they had done no act of a physical character 
which indicated an intent to réside thereon in the immédiate or near 
future, and such was the holding of the learned district judge. 



IN RE MALLOT 791 

While the summary of the évidence certified by the référée is very 
meager, we think it sufficient to sustain the findings of fact made by 
him. From those findings we are advised that the land in question 
was the home of petitioner, occupied by him as such during the sum- 
mer of 1908 for at least three months subséquent to bis making final 
proof in the United States land office ; that petitioner never abandoned 
such land as a home, or had any permanent home elsewhere. While 
it is true that the land in question did not bave the character of a 
statutory homestead while petitioner was a single man and not the 
head of a family, yet upon bis marriage petitioner became the head of 
a family and entitled to a homestead exemption under the statute of 
the State. The Suprême Court of North Dakota, in the récent case 
of Dieter v. Fraine, 128 N. W. 684-686, say : 

"It is settled" beyond ail cavil by previous holdings of this court that the 
constitutlonal and statutory provisions of homestead right are wholesome 
and salutary régulations in furtherance of a wise, gênerons, and humane 
public policy, encouraging the establishment and maintenance of homes; 
that statutes provldlng for homestead exemptions are remédiai In char- 
acter, and should be liberally construed, with a view of carrying into effect 
the obvions purpose of their enactment; and that the object sought by the 
adoption of this constitutlonal provision and the enactment of statutes in 
furtherance thereof Vas to protect and préserve the home, not for the benefit 
of the head of the family, but for the benefit of the family as a v?hole. 
* • * It was the protection of the family whieh v^as the purpose in view, 
and, this being true, it is the duty of the courts in construing said provisions, 
to give effect to such plaln intent.' " 

While occupancy is essential to create a homestead right, yet, con- 
sidering the purpose and policy for which the exemption laws are 
enacted, it is now accepted law that such occupancy may be con- 
structive, as well as actual. Davis v. Kelly, 62 Neb. 642, 87 N. W. 
347; Cameron v. Gebbard, 85 Tex. 610, 22 S. W. 1033, 34 Am. St. 
Rep. 832 ; Kingman v. O'Callaghan, 4 S. D. 628, 57 N. W. 912. 

It is held that the purchase of vacant, unimproved land, for the 
purpose of occupying it as a home, followed by acts of improvement, 
indicating such intent, and subséquent actual occupancy, impresses 
the homestead character upon such premises from the time of the 
purchase. 

Such being the law, and having in mind the "generous and humane 
public policy" that caused the enactment of the homestead exemption 
law, we are of the opinion that it was not necessary for both or even 
that one of the parties should, after their marriage, actually go upon 
the land to impress it with the character of a homestead. It being at 
that time his home, be being then the head of a family, it was bis 
homestead, exempt from exécution or attachment, and could not there- 
after be conveyed or incumbered by him alone. 

The case of Brookken v. Bauman, 10 N. D. 453, 88 N. W. 84, is 
cited and much relied upon by the trustée. Reading the décision of 
that case in the light of the facts there before the court, we find noth- 
ing in conflict with our views herein expressed. 

The land being impressed with the homestead character, we think 
the référée was correct in his finding that it had not been abandoned. 
The fact that petitioner's wife, before the marriage, removed some of 



792 188 FEDERAL KEPOETEB 

fier furnîture to his place, is strong évidence indicating that they 
contemplated future marriage and résidence upon the place. His 
going to Williston, leaving his furniture and her's upon the premises, 
as aforesaid, does not indicate any intent to abandon the place as a 
home. His illness, requiring him to enter a hospital, was sufficient 
excuse and justification for his remaining away during that time, 
and did not indicate an intention on his part to abandon the place as 
a home. His recovery and marriage in June following, after the 
seeding period had passed, was, we think, a sufficient justification for 
himself and wife to remain away from the premises until the follow- 
ing spring, and it was commendable for him to seek and obtain em- 
ployment for the purpose of earning a livehhood during such absence. 
In this regard the référée says: 

"That slnce the marriage neither Mr. Malloy nor his wlfe hâve done any 
overt aet indicating an Intention to abandon such home. 

"That It has at ail times siuce the marriage been the bona fide intention 
of Mr. Malloy and his wife to make such land their permanent home, and 
to return thereto and actually réside thereon as soon as circumstances ren- 
dered It feasible." 

While it is true that the establishment of a homestead may not be 
shown by mère intent alone, unaccompanied by acts indicating such 
intent, yet, where the homestead character is once established, mère 
absence therefrom does not indicate abandonment, unless such is 
shown to be the intent of the parties. We do not think that the absence 
of petitioner and his family from the land, under the circumstances 
disclosed, indicates an intent to abandon the land as their home. 

For thèse reasons, the decree of the District Court, reversing the 
order of the référée, was erroneous, and such decree of the District 
Court is vacated and set aside, and the cause is remanded, with di- 
rections to enter an order confirming the order of the référée. 



EYDER et al. v. TOWNSEND, 

(Circuit Court, N. D. New York. April 1, 1911.) 

L Patents (§ 328*) — Validitt and Infkingbment— Silo. 

The Harder patent, No. 627,732, for a silo, having a continuous opening 
from top to bottom, claim 4, which covers broadly in combination braces 
between the edges of the walls forming the opening, door sections for 
closing the opening, and reinforcing sti'ips for the door sections, was not 
anticipated, discloses Invention, and is enfitled to a fairly libéral construc- 
tion and range of équivalents. Also held infringed. 

2. Patents (§ 167*) — Validity— Beoad and Specific Claims. 

When an Inventor makes an Invention and In his spécification points 
eut a spécifie construction, he may clalm the spécifie construction and 
also bave a gênerai broad claim, and when this is done. In order to sus- 
tain the broader claim, it is not necessary that he should point out in 
his patent that the spécifie construction shown Is not essential to the in- 
vention. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 167.*] 

•For other cases see Bame topic & S ndmbeb in Sec. & Am. Digs. 1907 to date, & Rep'r Indexes 



RYDER V. TOWNSEND 793 

3. Patents (§ 288*) — Suit fob Infeingement— Right to Sue Users. 

Where infrlnging articles are in use in tlie district in wiiicti the owner 
of the patent résides, altliongh made elsewtiere, he is not subject to crit- 
icism for exercising his légal right to sue the users in that district in- 
stead of going to the district of the manufacture and tbere bringing suit 
against the maker. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. I 288.*] 

In Equity. Suit by Edgar S. Ryder and others against Edward 
Townsend. Decree for complainants. 

Samuel Owen Edmonds, for complainants. 

Briesen & Knauth (Hans v. Briesen, of counsel), for défendant. 

RAY, District Judge. [1] On the 27th day of June, 1899, on an ap- 
plication filed February 4, 1899, letters patent No. 627,732 were issued 
to George D. Harder for certain improvements in silos, the invention 
relating "to silos or tanks of that class in which a continuous opening 
is made from top to bottom, through which the contents are removed 
at intervais." It was particularly designed for tanks for holding ensi- 
lage, or silage, as it is sometimes called. The patentée in his spécifica- 
tions, says: 

"I do not herein claim, therefore, the vertical opening from top to bottom, 
nor the round construction of the tank or silo, nor the means for closing 
formed in sections and inserted so as to be removable from the top down- 
ward and arranged to be pressed against the wall or any part of the wall in 
an outward direction, as I am aware that thèse devices and éléments are very 
old in the same or analogous structures." 

The patentée, Harder, then says : 

"My invention relates particularly to the spécial form of brace or stay- 
piece for holding the edges of the opening at the proper distauce from each 
other to prevent coUapse, and, further, in the spécial means for holding the 
sections of the door firmly In place." 

The claim in issue is broad, and limited only in that it relates to the 
braces between the edges of the walls forming the opening extending 
substantially from the top to the bottom of the silo, the door sections 
for closing this opening, and reinforcing-strips for the door sections or 
openings, and by the words "substantially as described," meaning, of 
course, that he claims what he bas described in thèse regards and their 
substantial équivalents. 

To understand what the patentée was speaking of, and the utility 
of the parts referred to, it is necessary to inform ourselves as to what a 
silo is and its uses. Used almost universally for packing therein, until 
taken out for feeding, green eut forage, such as corn, stalks and ail, 
which is necessarily moist and fermentable, and contains considérable 
acid, and which, so far as possible, must be excluded from the air un- 
til actually fed lest it spoil, and which must be packed in evenly, sol- 
idly, and fîrmly with tlie least possible air spaces, the silo should be 
cylindrical and from 25 to 50 feet high, and from 10 to 15 feet in di- 
ameter, the diameter being uniform from top to bottom so as to secure 
uniformity in the settling of the contents and exclude air spaces, and 
ccttistructed of upright staves tongued and grooved together and made 

*For other cases see same topic & § NnMBi:B m Dec. & Am, Dlgs. 1907 to date, & Rep'r Indexes 



794 188 FEDERAL EEPOETER. 

perfectly s"nooth on the interior so as not to interfère wîth or impede 
the easy and uniform settling of the silage. This, with a suitable 
foundation and bottom, and a suitable roof or covering, with an open- 
ing for the entrance of the ensilage when and as eut and carried into 
the tank, forms the best wood silo known so far as preserving the ensi- 
lage is concerned, if we add suitable hoops extending about it at proper 
intervais so as to keep it in place ; that is, prevent its too great expan- 
sion or out-bulging when newly fiUed, or its collapse when the con- 
tents are wholly or partially removed and shrinkage of the wpoden 
staves occurs. Thèse hoops must be strong, adjustable, and capable of 
being tightened. If the problem of an efficient and useful silo ended 
hère, Harder, the patentée, would be outside the art entirely. But thus 
far we hâve provided a réceptacle for the silage and means for pre- 
serving it only.- We hâve made no provision for removing a part of 
it at intervais, during the barn-f eeding season, say, one or twice each 
day during the winter and early spring. Hence the necessity for the 
vertical opening on one side f rom top to bottom which was found bet- 
ter or more labor saving than a séries of openings the one above the 
other with a closed space between. This last construction necessitated 
going in and lifting about one-half the contents a greater or a lesser 
distance, while with the continuons opening a man may go up the lad- 
der on the outside of the silo and, without entering (except at long in- 
tervais), rake out the desired quantity. But this continuous opening 
must be kept closed and air tight (so far as reasonably possible) after 
the silo is filled, and the means for closing such opening must be in 
sections so that it can be removed section by section, and from the top 
downward as the ensilage is removed or fed out, a few inches in depth 
each dlay. If an opening is made at the bottom of the silo and the con- 
tents taken out there the air enters, permeates the mass above, and the 
fodder or ensilage is spoiled. To put in sliding sections of door to 
close this continuous opening supported by cleats was easy enough and 
within the skill of the ordinary farmer or mechanic, but this did not 
prevent leakage or exclude air and interfered with the settlement of 
the ensilage. Neither did this construction prevent a collapse of the 
structure when the ensilage was wholly or partially removed With 
the door sections held in position when the silo was f ull by the outward 
pressure of the contents alone the continuous opening from top to bot- 
tom so weakened the structure that when the contents were removed 
and even at other times, the staves would spread apart and towards 
this open doorway. Hence the edges of this doorway must be kept in 
normal position — that is, apart and upright — and braces for this pur- 
pose were inserted extending from side to side across this doorway at 
intervais. And it was désirable and necessary to hâve the sections of 
door fit in tightly and be self sustaining, not trusting to the pressure 
of the ensilage behind them, in the interior of the silo. To efficiently 
hold the edges of the walls of the silo on each side of this doorway 
apart and in position by means of braces, it was necessary to strengthen 
or reinforce such edges with additional material. Put in a brace from 
one side of the dborway to the other, each end of the brace resting 
against the edges of the side walls, and almost any inequality of près- 



EYDEB V. TOWN8END 795 

sure on the respective ends of the brace, or even on the contents of the 
silo, would resuit in the inward bending of the one "edge" and the 
outward bend or spring of the other "edge." Harder set himself to 
the problem of providing better and more efficient means of so bracing 
the dloorway or adjacent walls of the main body of the silo as to pre- 
vent springing out of position and collapse, maintaining, so far as pos- 
sible, an even interior surface and without interfering with the sec- 
tions of the door and their movement ; and also to the problem of pro- 
viding better and more efficient means for holding the sections of this 
door extending f rom top to bottom of the silo firmly in place while at 
the same time being made easily movable and air tight. He was an 
improver, and in his line of improvement in silos of this construction a 
pioneer in the silo art. 

Cannon's Patent. 
Before going into what Hardier actually did we will refer to what 
had been donc by way ol a prior patent to one Warren B. Cannon, 
granted May 9, 1899, on application filed October 17, 1898, No. 624,- 
751. Cannon in his spécifications, said: 

"Tlie object of this invention is to provide a silo havlng a séries of door- 
openlngs one above another for puttïng food into the silo from the cutting 
machine and removing the same" (from the silo). 

AIso: 

"A further object conslsts In the pecullar and convenlent means of fasten- 
ing the doors in the door openings, as particularly set forth below." 

Harder assumed a silo (circular in form) with a continuous opening 
or doorway from top to bottom of the silo, closed with a continuous 
door made in sections, so as to be removable section by section, and 
he set himself to properly bracing such doorway to keep it and the rest 
of the silo in proper position, and also to providing spécial means for 
holding thèse sections of his continuous door for closing the doorway 
firmly in place. Cannon, on the other hand, did not deal at ail with a 
continuous vertical doorway or opening, extending from top to bottom 
of the silo, but with a séries of doors, the one above the other with a 
closed space intégral with the walls of the silo, between, and means for 
fastening thèse several and distinct doors in their several openings or 
doorways. Fig. 1 of the Cannon patent shows this clearly and dis- 
tinctly. Fig. 3 shows his door, 7. I do not consider it necessary to 
go into the history of the development of the silo from the hole in the 
ground to the modem portable silo of wood such as is described in 
the patent in suit, or the stone or brick silos with cément linings. It is 
obvious that the braces of the Harder patent would be superfluous in 
stone or brick silos. The spécial means for holding the sections of the 
door in place might not be. Cannon had several openings in the side 
of the silo, the one above the other, each forming a separate and dis- 
tinct doorway and each calling for a door. He had door frames for 
each opening consisting of an upright strip on each side grooved to fit 
the adjacent stave. The inner faces of thèse side pièces were eut or 
mortised out to form a shoulder into and against which the door it- 
self when put in position (from the inside of the silo) would fit. To 



796 188 FEDERAL EEPORTBE 

the ends of the short staves between thèse doors or doorways, he at- 
tached strips of métal running- from side to side of the door opening 
and projecting somewhat above the staves at the bottom of the door- 
way and below the staves at the top of the doorway so as to form a 
shoulder at the top and bottom of this door frame for the door itself 
to rest against as well as against the shoulders in the side pièces. This 
complètes his door frame, and does not differ materially from the old- 
fashioned frame of the farm stable window, the window made détach- 
able from the inside or to swing inwardly, the projection of the shoul- 
ders being on the outside to aid in keeping ont the cold. In this silo 
thèse projections of the shoulders are on the outside as the pressure of 
the ensilage cornes from the inside of the silo and the shoulders pre- 
vent the doors from being pushed out entirely and also aid to make the 
door air tight. Cannon's door was made of short staves tongued and 
grooved together and also held together with outwardly projecting 
cleats, so outwardly projecting for the purpose of furnishing a handle 
when pulling them into position or removing them from position (donc 
from the outsidie), and was also provided with a rubber packing strip 
on its outer face running around its outer edge. When brought into 
position this rubber packing would come against the shoulders of the 
door frame before described. Each door had four bolts, one near 
each corner with head on the inside of the door, the bolts projecting 
outwardly with screw threaded end. He had two "securing trusses" or 
long bars with holes therein for receiving such bolts, such trusses hav- 
ing end projections (projecting towards the body of the silo). Put the 
dloor in position, slip the "securing trusses" on the bolts, put nuts on 
the bolts and turn them down and the door was drawn securely ànd 
firmly against the shoulders of the frame and the end projections of 
such securing trusses against the outside of the door frames or sides 
of the silo itself and the door was held securely in position. Unscrew 
the nuts, remove the trusses, and the ensilage having been removed, 
the door was pushed in on the ensilage below and then taken away. 
This was held patentable, or at least was patented in the Patent Office 
in 1899, about 10 years ago. He claimed : 

"A round silo, constructed of staves, having a séries of door-openings and 
shoulders and flanges for the doors to fit against, In combination with the 
doors, the détachable trusses fifting against the staves of the silo (by means 
of the projections on such trusses), and binding bolts projecting outward from 
the door and passing through the trusses." 

It is seen that this in no sensé anticipâtes Harder. Cannon had no 
use for braces as he did not hâve a continuons opening from top to 
bottom. The spaces between his door openings were filled with a con- 
tinuation of the body of the silo itself and thèse formed sufficient 
braces. The method of holding a détachable door or window in a 
frame having shoulders for it to press against by means of headed 
bolts extending through such door far enough to take on a bar of 
wood, or iron, and receive nuts for drawing the door firmly against 
the shoulders, the bar of wood extending beyond the opening on each 
side so as to be drawn against the walls of the building, was so old and 
so common years before Cannon was grown to manhood that courts 



, EYDBR V. TOWNSEND 797 

ought to take judicial notice of it, but Hardier did not copy this method 
in jmproving on the prior art. What did he do ? 

Harder's Improvements. 

After showing a round silo bound together by hoops, Fig. 1, with a 
continuous opening from top to bottom, Harder says : 

■'As a matter of course the edges of this opening unist be braced by cross- 
pieces inserted between the edges [of the opening, by "edges" meanlng the 
termination of the walls of the silo on each side of the opening! to prevent 
the structure from collapsing. Thèse braces are made In spécial form as I 
now pi-oceed to esplaln." 

He then describes one form of his brace which consists of a straight 
bar having at each end thereof a flange or bearing at right angles, 
substantially, to the bar. Thèse bearings or flanges are adapted to 
bear against the edge of one thickness of the silo wall where it ends 
and the opening begins, but not to overlap the entire edge of the silo 
wall so as to interfère with the door sections which are to close the 
opening. Outside of this bearing, at each end of the brace, and reach- 
ing beyond the end of the- brace proper (which now bas a shoulder 
consisting of the "bearings" fitting against the side walls of the open- 
ing) is an inclined extension of the brace fîtted to bear against the 
side walls of the silo and on the outside thereof. Thèse extensions 
hâve, each, two holes to receive bolts, which preferably are headed on 
the inside and hâve a screw threaded andi projecting outwardly to re- 
ceive nuts. However, they may be riveted or placed in a fixed posi- 
tion. He also provides an additional outside bar on this brace to make 
it stronger, but this is in noway essential to the Harder invention. 
This is the Harder brace aside from its more secure attachment to 
the silo itself. We hâve seen that by means of the "bearings or 
flanges" at right angles to the brace proper and adapted to bear against 
the edge of one thickness of the wall of the silo, the brace wouldl keep 
the walls of the silo at the sides of the opening from pressing into 
the opening, collapsing, but it miglit drop down or slide down or fall 
out. In providing means for making sure that the braces are main- 
tained in proper position, Harder bas combined therewith his means 
and manner of holding the sections of his continuous door in place and 
also means for strengthening the edges of the silo walls at each side of 
this continuous opening. 

First : On each side of this continuous opening he attaches an ad- 
ditional pièce of timber, f, f, shown in Fig. 1, which may or may not 
be intégral from top to bottom. This is outside the main wall of the 
silo, but attached, and it is seen that this may as well be ail of one 
pièce, double thickness, tongued and grooved so as to form a part of 
the wall proper of the silo, but making it of greater strength and 
rigidity at this point or at thèse points each side of the doorway. The 
one structure is the plain équivalent of the other. In either structure 
we hâve reinforced the silo walls at the points next the continuous 
door opening so as to maintain rigidity and prevent the collapse of the 
silo. However, there may be an advantage in having the reinforcing 



798 1S8 FBDBBÂL BBFOBTEB 

strip outside the stave of the wall proper at this point, as we shall see. 

Of this reinforce, f, Harder says : 

"Referring now to Flg. 2, It will he observed that a casing or reinforce, f, 
is provided on each side of the opening and fixed upon the edge of the wall 
so as to overlap said edge and afford a bearing for the flange, d, and exten- 
sion, 6 (being parts of the brace before described), the iirst bearing against the 
edge of the reinforce and the second on the outside thereof." 

Second: 

"The brace Is held by bolts, g (the bolts before mentloned), which pass 
through the reinforce and through the stave (at the edge of the opening) so 
as to bind the whole together." 

It is at orice seen that if this stave at the end of the silo wall next 
the opening and the reinforce is ail of one pièce, double thickness 
properly grooved and tongued to the silo wall so as to make it a part 
thereof, and then eut out on the inside so as to form a fîange and 
shoulder for the door section itself to fit into and rest against the 
bolts would not be necessary for holding the staves and reinforce to- 
gether, but only to hold the brace to this part of the silo wall. Such a 
pièce made of double thickness would not only form a part of the silo 
wall, but make a door casing on each side of the opening. In this 
shoulder, whether formed in the one way or the other, the door sec- 
tion can be moved up and down as the braces, or the bearings or 
flanges thereof "adapted to bear against the edge of one thickness of 
the silo (the reinforce), but not to overlap so as to interfère with the 
door sections," do not extend inwardly far enough to interfère with 
the movement of such door sections. Thèse braces, thus attached, 
whether we hâve the stave of the silo with the reinforce at each side of 
the opening, or the single pièce made of twice the thickness of the 
stave, keep the walls of the silo in position and efifectually prevent col- 
lapse. 

The Door Sections. 
Harder says : 

"The door is composed of sections, h, which may be simply cross staves 
dovetalled and made so as to be placed one on top of the other with the ends 
bearing on the outside (not outside of the silo but outside pièce) against the 
reinforce, /." 

And further: 

"That part of the reinforce against which the ends of the pièces, h (the side 
edges or ends of the door sections), bear Is provided witli rubber or other 
sultable llning to form an alr-tight paclilng." 

It will be remembered that Cannon placed his packing on the door 
itself, about its outer side next its edges. Harder continues : 

"The pressure of the contents of the silo may be relled upon to press out- 
wardly the pièces, h (torming the door sections), to form an air-tight joint, if 
constant care be used to press the materlal (ensilage) down in filling the silo 
so as to create a sufflcient pressure ; but this constant care on the part of the 
workmau cannot be relied upon, and I hâve therefore provided a metallic 
strip or plate, i, extending from top to bottom (of the opening or doorway) 
and arranged to overlap the edge of the stave at the margins of the opening 
on the Inside (inside of the silo). The bolts, g, pass through this plate and 



BYDER V. TOWNSEND 799 

are held In any Bultable manner. Preferably the bolts are headed on the In- 
side and are provided wlth nuts on the outslde, so that tUey may be turned 
up to draw the flange (overlap o( the metallic strip of plate, t), in closely aft- 
er the pièces, h (door section), are Inserted, or the bolts may be riveted or 
otherwise set in flxed position, the parts belng adjusted so that the pièces, h 
(door sections), may be erowded down one after the other flrmly in place and 
so closely fltting as to bear tightly agalnst the packing." 

It is seen that the construction is such that, whether we use the rein- 
force or the double thickness with a shoulder eut in, when the metalUc 
strip, or plate, i, is added we hâve a continuons groove or slideway with 
a rubber packing in which the door sections may slide or be moved 
f rom the top to the bottom of the doorway. And it is perfectly obvious 
that the insertion of the dioor sections is intended to be and must be at 
the top whence they are slid down into position as the silo is filled. 
When the removal of ensilage has progressed down to one of thèse 
sections it may be slid or moved up and taken out, or moved up and 
left in, and tacked in place so as not to fall on the one in or about the 
opening below, or, if the bolts with nuts are used and not put in a fixed 
position, the nut may be turned up after the section is slid or movedi 
upward and the compression of the metallic strip, i, will hold it in 
place above that part of the opening in actual use. In short, in empty- 
ing a silo by feeding it is not necessary to take out more than the top 
section of door, if that, as they may be moved up and fastened, the one 
after the other, and found there when the fall comes and the silo is 
again filled. This is an advantage, as the sections are not in danger 
of being lost, misplaced, or injured, as is the case when actually taken 
out. Of course it is optional with the farmer whether or not he will 
wholly remove the door sections. As the hoops binding the silo to- 
gether pass entirely about it and cross the opening thèse hâve been 
used as a ladder, if sufficiently numerous, although this is not wise, for 
obvious reasons. 

Commercial Success and Adjudication. 

Silos thus constructed, and with a door opening and braces and door 
sections as described, and which silos may be and are made in sec- 
tions so as to be easily transportedi, and which may or may not 
hâve a roof, depending on whether erected inside or outside a building, 
hâve proved a commercial success. The Harder patent was held valid 
in the Third Circuit by the Circuit Court of Appeals, although the de- 
fendant claims it did not there appear that there was any prior art in 
silo construction. It is obvious that this construction may be varied in 
many ways without departing from the spirit of the alleged invention. 
For instance, we may substitute a wooden strip for the metallic strip, 
i, or we may do away with that strip entirely and eut out in the single 
pièce next the opening, made of double or greater thickness, a groove 
or sHdeway for the door sections. The one would be the substantial 
équivalent of the other for ail practical purposes, although the groove, 
or slideway, eut in a suitable pièce of timber, would be more expensive 
than the groove formed by adding the metallic strip, and there would 
be no way of clamping the dbor sections by means of the bolts and 
nuts unless the bolts were made movable in the grooved timber or 



800 188 FEDEBAL KEPOETBE 

f rame, and so attached to the door section as to draw it against the 
shoulder when the nut is turned up. And in such case it would be im- 
possible to move the door section up or down until the boit is removed. 
However numerous, inexpensive devices can be substituted for this 
mode of drawing the door sections against the flanges or shoulders of 
the dloor f rames without interfering with their up or down movement. 
Claim 4 of the Harder patent in a silo or tank having the continuons 
opening from top to bottom does not purport to claim the door sec- 
tions or the means or mode of inserting, removing, or holding them in 
place alone. It does in such a silo claim the combination of ( 1 ) the 
braces between the edges of the walls forming the opening; (2) door 
sections for closing the opening; and (3) reinforcing strips for the 
door sections. As the door sections of themselves — that is, the sec- 
tions of the door — ^have no reinforcing strips, but the silo wall, next 
the opening and on both sides thereof, each, has a reinforcing strip or 
strips overlapping the wall proper on the outside of the silo (see 
Fig. 2), or overlapped by the wall proper when used on the inside of 
the silo (see Fig. 3), against which, or against the flange or shoulder 
formed by such overlapping, the sections of the door rest and are 
pressed, we must either read the words "and reinforcing strips for the 
door sections" as meaning reinforcing strips for the use of and to sup- 
port the door sections proper, or as forming a part of the door sec- 
tions proper, although in no way connected therewith except when in 
use by pressing the one against the other, if we take the spécification 
as properly defining the door section proper, viz. : 

"The door Is composed of sections, h, wliich may be simply cross-staves 
dovetailed and ruade so as to be placed one on top of the other with the euds 
bearing on the outside against the relnforce, /." 

In both Fig. 1 and Fig. 2, the sections, h, or door sections, are 
pointed out by h, and as the sliding or movable parts of the door. In 
a broader sensé "door sections" may be construed to mean, or include, 
that part of the silo which takes in or includes the opening, the door 
proper, or sections of the door proper when in position, and also the 
staves next the opening and the reinforcing strip, against which staves 
and strips the door sections above described abut. 

This combination of door sections proper and braces and reinforcing 
strips, for keeping and maintaining in position the walls of the silo 
next the openings for the dbuble purpose of preventing collapse of the 
silo structure and enabling the door made in sections to perform its 
function, was new, and in my judgment disclosed patentable invention. 
Clearly it was not anticipated. I do not mean to indicate that it was a 
new or patentable conception for Harder to use braces of some sort 
and a reinforce to keep the walls next the opening in normal position 
and prevent collapse. It was not a new idea with him and would 
hâve occurred to any ordinary farm hand, or at least any carpenter 
andi joiner. In Farmers' Bulletin, No. 32, U. S. Department of Agri- 
culture, 1895, four years prior to Harder, Charles C. Plumb, B. S., 
gave a historical description of silos and their uses; ideas as to their 
cost, form, and construction ; and in his "Miscellaneous Suggestions" 
said: 



KYDEK V. TOWN8BND 801 

"The feeding door should be about 2% to 3 f eet wide, and «xtend In sec- 
tions, from the sill to within 3 or 4 feet of the top, eaeh section being about 5 
feet long. Portions of tlie wall 2 to 3 feet wide should be left between ttie 
sections of tbe door at sufflcient Intervais to make the wall perfectly strong. 
Some persons prefer iron rods for this purpose, and then hâve a continuons 
Une of doors from top to bottom. Boards as long as the door is wide must 
be placed horizontally in the frame, edge to edge and flush with the inside 
of the silo, resting against cleats nailed on the inside of the casing. Thèse 
boards may be put in place as the silo is filled. The studs on each side of the 
door should be re-enforced to give sufflcient strength to the silo wall at this 
point." 

Does Défendant Infringe? 

The défendant is a mère user of a portable round stave silo with a 
continuons opening on one side for feeding, or taking out the ensilage 
pnd permitting ingress and egress, extending from top to bottom, and 
which has a brace or braces extending across said opening to prevent 
collapse and the ends of which brace engage with the edges of the silo 
walls respectively next such opening, that is, is placed between the 
edges of the walls forming the opening, and which silo has, also, door 
sections for closing the said opening and reinforcing strips for the 
door sections. If Harder is entitled to a broad construction the de- 
fendant infringes as he is within this broad claim 4, of Harder. But 
Harder is, of course, limited to what he has described and its well- 
known équivalents. Not to his précise forms, however. He is entitled 
to a liberality of construction commensurate with his described struc- 
ture andi disclosed invention. Harder, in a circular silo, with the con- 
tinuons opening combined a door made in sections (removable) with 
braces or stay pièces of spécial form, and also with spécial means for 
holding the several sections of the door firmly in place and also with 
reinforcing strips for the door sections in the sensé or sensés referred 
to. The circular silo used by the défendant having the same continu- 
ous opening, combines a door made in sections (removable), with 
braces or stay pièces of spécial form, and also with spécial means for 
holding the several sections of the door firmly in place, and also with 
reinforcing strips for the door sections in the same sensé Harder uses 
the expression, and in the same place in his silo Harder has the strips 
in his, and for the same précise purpose, to prevent collapse. How- 
ever, the spécial form of defendant's brace, in some respects, differs 
from the spécial form of Harder's brace, and the spécial means of 
défendant for holding the sections of the door firmly in place difïer 
somewhat from the spécial means of Harder, and the rein forcement of 
defendant's structure next the opening also differs somewhat from 
Harder's. 

Différences. 

Commencing with the reinforcement of defendant's structure, we 
find that it answers to every function and purpose of Harder's rein- 
force and is its équivalent. It is made in one pièce of more than twice 
the thickness of the stave, but is tongued and grooved to the staves 
so as to form a continuation of the walls of the silo and make them 
strong and rigid at the beginning of or next the opening on each side 
thereof. Thèse rein forcements also receive the brace or braces be- 
188 F.— 51 



802 188 FEDERAL EEPOBTBR 

tween them to prevent collapse. Thèse thick, heavy reinforcements of 
the défendant extend further into the interior of the silo than the other 
staves. Each reinf orcing pièce is grooved on the face next the open- 
ing, and this groove extends from the top to the bottom of the open- 
ing, and carries the door sections which may be moved up and down 
therein. On the part of this reinforce inside or beyond the groove 
(looking into the silo), it is rounded for a purpose to be described. 
The portion of this reinforce outside this groove présents a flat sur- 
face against which the end of the brace abuts and an extension in- 
wardly of the brace, which is made thick, and also a prolongation of 
such brace fits into the groove and upon the rounded portion of such 
reinforce. In this construction this brace actually fills the groove at 
this point so that door sections inserted from above cannot slide below 
it. A section is eut from the upper back of this brace forming a 
shoulder so that a corresponding flange of the door section above fits 
into the eut or shoulder. This brace would be just as efficient and 
fully perform ail its necessary functions if it did not extend inwardly 
to the groove so as to obstruct the groove or runway and prevent the 
up and down movement of the door sections. This brace for its width 
up and down serves to close that part of the opening. The rounded 
portion of this reinforce answers to the metallic strip or plate, i, of the 
Harder patent, except it cannot by boit and nut be drawn against the 
door sections. This brace has an extension and a shoulder as seen. 
It is a straight bar, and has the équivalent of a bearing or flange at 
right angles therewith adapted to bear against the edge of one thick- 
ness of the wall of the silo. It does, in fact, overlap and interfère with 
a door section at that point, but, as stated, it was evidently made that 
way designedly and not necessarily. The brace has no inclined ex- 
tension outside the bearing fitted to bear on the outside of the silo 
wall, but it does hâve an extension inside the bearing extending into 
and against the side of the groove. This extension might just as well 
be on the outside of the silo and fitted to bear on the outside of the 
wall as on the inside of the groove. The function and mode of opér- 
ation in performing it is the same as in Harder's brace. The construc- 
tion is more cumbersome. This brace is made in two parts connected 
with a hinge with shoulders which is eut into the brace from the out- 
side. Press the hinge inwardly and the brace is loosened and drops 
out. Place the ends of the brace in the grooves and press outwardly 
and the brace becomes rigid in place and is held there. This method or 
mode and means of holding a brace in place is old. It is, of course, 
less reliable and efficient than Harder's. The mode of putting the 
brace in and of taking it out difïers from Harder, but its function in 
the combination is the same. 

The silo used by the défendant has door sections of suitable height 
made in two pièces, but fitted together by a half round on the end of 
the one pièce and a rounded groove on the end of the other with f elt or 
other material in the bottom of the groove. Thèse are hinged to- 
gether. The outer ends are rounded out to fit the half round of the 
reinforce before described so that when in place they are moved up 
or down at will sliding on said rounded portion, except when brought 



ETDER V. TOWNSKND 803 

in contact with the brace. Cut off the inner projecting portion of de- 
fendant's brace which can be donc without impairing its function or 
efficiency and thèse door sections would slide past the brace. Each of 
thèse door sections may be slid in or out at the top and elevated to or 
fastened at any desired point and tacked temporarily in position. They 
are in ail respects the équivalent of Harder's door sections proper. 
How and by what means are they so brought together and against the 
reinforced edges of the silo at the opening, and on both sides thereof, 
that they press firmly against the flange or rounded part of the rein- 
forced wall so as to exclude the air? As stated, the outer ends of 
thèse door sections are grooved to fit on the roundied portion of the 
reinforce. In the bottom of thèse grooves is placed rubber or felt 
or some suitable material so as to make a tight joint or closure. Bend 
the hinge by pressly inwardly, and the door section is so much short- 
ened that the ends can be placed on the rounded part of the reinforce. 
Now close the door section by bringing the hinge into position, and 
the grooved ends are pressed firmly against the rounded portions above 
described, and we hâve a tight joint in the center and at the ends of 
the door sections. Thèse sections may be removed by pushing in on 
the center, operating the hinge, the ensilage behind having been re- 
moved, when the section will fall out or easily be pushed out. 

Defendant's door sections hâve also a flange on the upper outside 
edge of the bottom section formed by a cut-out portion behind it. The 
next section has a iîange on the inside lower edge formed by a cut- 
out portion in front and a similar flange formed in the same way on 
its upper edge or side. When the one section is pressed down on the 
one below the flanges enter or fit into the cut-out portion, or the flange 
of the one shuts by the flange of the other tending to make a tight 
joint. Thèse are elaborate door sections, and may be superior to those 
of Harder, but they are the équivalents of his, and perform the same 
function in obédience to the same law and in substantially the same 
•way. It is, of course, true that if Harder is confined to the spécial 
and particular or exact form of door sections and mode and means of 
holding them in place described, and to the spécial and particular and 
exact form of brace described, and the spécial and particular and exact 
form of reinforce described, and his claim 4 covers nothing more or 
broader, défendant does not infringe as he does not use them. 

However, he does use their mechanical équivalents in the same com- 
bination where the office and end of the combination is substantially 
identical with Harder's, and where each élément of the combination 
performs the same function in the combination as does the correspond- 
ing élément of Harder. I take it that the patent law is settled that a 
patentable combination is infringed when the alleged infringer has ail 
the same éléments in his combination, or their substantial équivalents, 
operating in substantially the same way, each performing the same 
function in the combination, even if it does something more and is an 
improvement, and the two combinations as a whole operate in substan- 
tially the same way and produce the same resuit or serve the same pur- 
pose. A person cannot avoid infringement by changing the form of 
construction of one or more of the éléments or improving it merely, or 



■804 188 FEDERAL EEPORTEB 

by changîng the mode and rrïanner or means of puttîng the éléments 
together unless he changes the mode of opération of the combination 
as a whole. I do not see that infringement of Harder's combination 
is avoided by substituting a heavy, cumbersome and two-part brace, 
the parts hinged together, in place of Harder's simple and effective 
brace. I cannot see that the défendant avoids infringement by an im- 
provedJ door section, if it be an improvement, or by his substituted 
means of pressing thèse door sections into place. The hinge is plainly 
an équivalent for the boit and nut where used. The pressure of the 
door sections into place is by a leverage action of the hinge. It vi^as 
in the silo art in 1903, and is an improvement in the construction of 
door sections as appHed therein, but was old in analogous arts. See 
patent to Edward Winslow Gilbert, No. 720,419, dated February 10, 
1903, application filed September 13, 1902, for an improvement in silos, 
which says: 

"A spécial feature of my invention consists in the construction of the doors 
and the seating of same in the doorposts, while the construction of the cross- 
braces E form another feature of my Invention, as will be more f ully described 
in détail." 

Gilbert has a doorpost each side the door opening; that is, a rein- 
forced stave, or thick, heavy stave at each side of the opening. This 
has a groove to receive the corresponding tongue of the adjacent stave 
so that the doorposts form a continuation of the silo walls. He has a 
two-part door section hingéd together. He cuts a groove or runway in 
the face of the doorpost next the opening. He has no rounded portion 
like defendant's structure, but instead of a groove in the outer ends of 
the dbor sections he rounds them outwardly.so they fit into the groove 
or runway in the doorpost. Thèse door sections will run up and down 
in this groove when the hinge is slightly sprung. Thèse doorposts, an- 
swering to the reinforce of Harder, project outwardly and on a Une 
with the outside of the silo walls, and are so eut out as to form a 
shoulder for the brace. The brace extends from side to side of the 
door opening, but is located outside. It bends sharply backward at 
each end to fit the shoulders of the doorpost against which it abuts 
and presses, holding the walls in position so as to prevent springing 
and collapse. The brace at such end then turns at a right angle and 
projects through an opening in the outward extension of the doorpost 
and is fastened with a nut. The shoulders prevent a springing into 
the opening and the nut, provided with a suitable washer or . plate 
next the doorpost, prevents movement or springing of the post away 
from the opening. The hoops, adjustable, encircling the silo, prevent 
any outward movement of the silo walls or doorposts. 

In Hoard's Dairyman of June 26, 1896, we find a circular silo con- 
structedi outside the barn but opening into it. This silo was lined and 
had an opening into the barn extending from sill to plate and was ZY^ 
feet wide. The article says: 

"There are % inch rods that cross the doorway at intervais of two feet, 
passing through the studding on each side of the door and held in place by 
nuts while the door consists entirely of separate spruce boards, one and one- 
fourth Inches thick by eight inehes wide, matehed. A projection of au inch 



KTDER V. TOWNSEND 805 

of the llnlng on one slde of the doorway, into whleh one end of the boards ai-é 
thrust, with the pressure of the sileage against them, holds them in place. 
But one board is removed at a time, thus exposing much less silage to the 
air than when regular short doors are set at intervals." 

This does not show or tend to show anticipation of Harder, but 
rather serves to emphasize the crude condition of the art at that time 
and the improvement Harder made. I find a statement in Bulletin, 
No. 40, vol. 3, entitled, "The Silo and Silage in Indiana," issued in 
June, 1892, by Purdue University Agricultural Experiment Station, 
as to the door of a silo which shows the then crude ideas on this sub- 
ject. It reads: 

"The door of the silo should be located on the side most convenient for 
feeding from, and exteud from the floor to within two or three feet of the top. 
A well battened, double icehouse door, made in several sections, not exeeeding 
four feet long each, is most satisfaotory. Temporary boards should be fltted 
In the door casing, flush with the iuside edge, to hold back the silage. Thèse 
boards may be held in place by strips nailed against the casing, and can be 
removed from time to time as the silo contents are lowered." 

In 1903, Farmers' Bulletin, No. 32, "Silos and Silage, Revised Edi- 
tion," was issued. It is some eight years later than the original édition 
before quoted from and described, "The Stave Silo and Its Construc- 
tion." As to the feeding doors this "Revised Edition" says : 

"In constructing the silo, when the place is reached where the doors are de- 
sired, one stave should be sawed nearly through in the right place for the top 
and bottom of each door, cutting with the saw a bevel of about 45 degrees. 
When the construction of the wall is flnished, the saw may be Inserted at the 
points where the staves hâve been partly sawed and the other staves may be 
sawed through to secure a door of the desired width. The pièces sawed out 
of the staves should be used in maklng the doors. Two cleats 2 or 3 Incbes 
wide and long enough to reach aeross the door may be sawed with the proper 
curvature from 2-Inch plank and flrmly bolted to the sections of the staves 
before they are sawed out (Flg. 4). When the silo Is fllled, two thlcknesses of 
tarred paper should be tacked over the entire Inner surface of the wall, In- 
cluding the doors." 

Plumb, in 1903, was evidently ignorant of the Harder invention, or 
he would not hâve abandbned the continuous door with braces for the 
single small doors, the one above another with sections of the silo wall 
between in place of braces. I quite agrée with the Circuit Court of 
Appeals, Third Circuit, Judges Acheson, Gray, and McPherson, Ry- 
der V. Schlichter, 126 Fed. 487, 491, 61 C. C. A. 469, 473, in its con- 
struction of claim 4 of the Harder patent. The question was squarely 
up and commanded thorough considération. It is évident that the 
prior art was considered as the court said: 

"Harder's Invention may not hâve been of primary importance, but he 
seems to hâve been among the flrst, If not the very iirst, to make silo building 
a commercial art', and his structure Is an unquestionable improvement in sev- 
eral particulars over ail its predecessors. It is entitled to protection, and to 
a reasonable application of the doctrine of équivalents." 

The answer in that case set up over a dozen prior patents and a 
greater number of alleged prior uses. How many, if any, were in évi- 
dence, does not appear. 

The question of suitable feeding doors in any silo, particularly the 



806 188 FEDERAL BEPORTEE 

high ones, which will save labor in taking out the contents at fréquent 
intervais and in small quantities without exposing the remainder to 
air, is of great importance to users. 

Prior to the final décision of the Schlicliter Case, November, 1903, 
the Economy Company, the maker and seller of the defendant's silo, 
became the owner of the Gilbert patent, before referred to, issued 
February 10, 1903, and commenced the manufacture and sale of silos 
in accordance therewith. Complaint was made that this structure in- 
fringed the Harder patent, and in that claim the Economy Company 
acquiesced andi paid damages. Thereupon the Economy Company 
changed the construction of its silo to its présent form by substituting 
for the iron brace of the Gilbert patent, which did not interfère with 
the movements of the door sections, the heavy cumbersome double 
pièce brace which does. I cannot escape the conviction that it is pur- 
posely constructed in its présent form for that very purpose, as such 
construction is unnecessary to the strength of the silo or its proper 
opération. 

Second, the Economy Company instead of cutting out a groove in 
the back part of the reinforce or timber next the opening fashioned it 
with a half round at that point and changed the form of the ends of 
the door section to correspond. As this cumbersome brace, never re- 
moved in actual use, fills a few inches of the opening wherever a brace 
is inserted, it is saidl that the opening is not "continuous" I take it that 
a reproduction of the Harder silo made in accordance with his patent 
except that the brace is extended inwardly so as to interfère with the 
runway, or up and down movement of the door sections, and the sub- 
stitution of a hinged door section does not avoid infringement if 
Harder is entitled to any range of équivalents whatever. 

I find nothing in the Van Deusen patent. No. 546,204, dated Sep- 
tember 10, 1895, or the Roberts patent, No. 257,762, dated May 9, 
1882, that even suggests anticipation of Harder. Van Deusen claimed 
(claim 2), "The combination with a silo provided with a séries of 
doors arranged one above the other for the removal and insertion of 
the silage" the reciprocatory piston and rake, neither of which had 
anything to do with the doors. He shows and describes a séries of 
doors, the one above the other, with an interval of silo wall between, 
and each door is pivotally connected) to a bail journaled in the silo wall 
acting as a hinge on which the door swings. To fasten them he bas a 
cross-bar pivoted to the door in the center, with staples in the side 
walls of the silo with which the ends of this swinging bar engage. The 
moment thèse doors are opened the silage falls out unless boards are 
put across on the inside. The efficiency of such a door may be 
doubted but in any event Van Deusen shows nothing like the combina- 
tion of Harder or like that of the structure, Economy silo, used by de- 
fendant. 

In Roberts, the walls of the silo are rabbeted (eut out) to receive 
the ends of planks fitted in as the filling progresses, a strip of some 
fabric impervious to air first being placed across the opening, rabbets 
and ail. Evidently the pressure of the ensilage is relied on to keep the 
planks in place. Evidently he was not dealing with a stave silo, and he 



ETDER V. TOWNSEND 807 

is very far from a combination which strengthens the walls next the 
continuous opening in such a silo and combines therewith means, 
braces, for keeping the walls in position, preventing collapse, and door 
sections which may be moved up and down, or removed entirely, at the 
same time forming reasonably air-tight joints. 

[2] It seems plain to me, and the évidence fully sustains the proposi- 
tion that Harder first came into the field with such a combination, and 
claimedi (claims 1, 2, and 3), first, the spécifie devices in combination, 
and, second (in claim 4) the combination generally not limited to the 
spécifie things pointed out in the spécifications. This last claim, in 
question hère, is not limited in terms to any spécifie form of brace, or 
door, or reinforce, and for the court to do so would be rewriting 
the claim and importing into it limitations not found in the claim itself , 
and certainly not imposed by any action of the Patent Office or by the 
prior art. The Circuit Court of Appeals in this circuit has many times 
held that a rewriting of claims is not permitted. And when an in- 
ventor makes an invention and in his spécifications points out a spécifie 
construction he may claim the spécifie construction and also hâve a 
gênerai broad claim, and when this is donc, in order to sustain the 
broader claim, it is not necessary for the patentée to point out in his 
patent that the spécifie construction shown is not essential to the in- 
vention. The law gives him ample protection whether he does or not. 
Machine Co. v. Murphy, 97 U. S. 120, 125, 24 L. Ed. 935 ; Int. T. R. 
Co. V. Dey et al. (Second Circuit) 142 Fed. 736, 744, 745, 74 C. C. A. 
68, 76, 17. 

I am satisfied that daim 4 of the Harder patent is valid, and that 
défendant infringes. 

[3] It is contended that the complainants should hâve gone into 
Maryland where the Economy Company makes the infringing silos and 
brought suit there. I do not see much point in this contention. The 
complainants réside in the Northern district of New York. The rec- 
ord shows several of the' infringing silos in use in the Northern dis- 
trict of New York. The law gives the complainants the rignt to sue 
thèse users in the district where both parties réside and test the ques- 
tions involved. The user may discontinue the use of the silo com- 
plained of or contest. He has his élection. The maker and seller may 
assume the défense of its own device which it puts on the market if it 
would protect that market abroad. Such manufacturer may keep still 
and allow the use of such product in other districts to be enjoined. 
The party offended against is not under obligation to go far from home 
and prosecute the original wrongdoer at the place where the infringing 
device is made. It seems to me plain that, without incurring the dis- 
pleasure or réprobation of the courts a person injured in person or 
property may seek redress in any forum where the law of his country 
says he may. So far as the payment of tribute by the farnier is con- 
cerned it is immaterial whether he pays to the complainants or to the 
Economy Company as both operate under patents. 

There will be a decree for the complainants for an injunction and an 
accounting, with costs. 



808 188 FEDERAL EBPOETEK 

EMERSON & NORRIS CO. v. SIMPSON BROS: CORPORATION. 

SAME V. STRUCTURAL CEMENT STONE CO, 

(Circuit Court, D. Massachusetts. June 5, 1911.) 

Nos. 655, 656. 

Patents (§ 328*) — Anticipation— Peoce.ss of Making Artiiticiai, Stone. 

The Stevens patent. No. 624,563, for a process of making artlflcial 
etone by the use of sand molds for drawing the surplus water from the 
stone compound by absorption, is void for anticipation by the pvior pub- 
lic use of substantially the same process by one Berthelet for two years 
pr more In the ordinary course of his business of making artlflcial stone. 

In Equity. Suit by the Emerson & Norris Company against Simp- 
son Brothers Corporation and same against the Structural Cément 
Stone Company. On final hearing. Decrees for défendants. 
- Louis W. Southgate and O. Ellery Edwards, Jr., for complainant. 

Emery & Booth and Emery, Booth, Janney & Varney, for de- 
fendants. 

HALE, District Judge. Thèse suits are for infringement of claim 
1 of Stevens' United States patent, No. 624,563, for process of making 
artificial stone. The claim at issue is as f ollows : 

"1. The process of formlng artlflcial stone consistlng in molding the 
stone compound whlle In a plastic or semiliquid state In or on a mold formed 
of relatively dry sand and tben allow the mass to set untll the sand absorbs 
the surplus molsture from the compound, thereby couverting the latter to a 
solid or nonllquld form, substantially as and for the purpose set forth." 

The process consists substantially in ; First, molding the stone com- 
pound while in a plastic or semiliquid state in or on a mold formed 
of relatively dry sand ; and, second, letting the mass remain until the 
sand absorbs the surplus moisture. The former practical process of 
manufacturing artificial stone was by means of a rigid mold prepared 
in the shape of the desired block. Such mold was usually of wood or 
plaster of paris, or some material strong enough to resist force. The 
stone compound, in a wetted mass, was shoveled into the bottom of the 
box. An excess of water had to iie avoided in order to give the stone 
texture, strength, and a good appearance. The process of tamping 
was then applied to the layer. This process consistée in the workman 
taking a heavy tool and ramming the mixture, in order to tightly com- 
press it in the bottom of the box to reduce its volume, eliminate the 
air holes in it, and make the mass as dense as possible. After the layer 
had been pounded or tamped, and so reduced, another layer of the 
wetted compound was shoveled in, and tamped, and this process was 
continued until the mold was filled;.the top of the mold wa§ then 
evened oflf; and the moist block was taken out and allowed to stand 
and harden. 

It is asserted that Stevens is the inventer of the process of doing 
away with this old system of making artificial stone. He relied upon 
the use of dry molding sand to extract or absorb the moisture from 

*Far otber cassa see same toplc & § numbbk lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



EMERSON A NORRIS CO. V. SIMPSON BROS. CORPORATION 809 

the stone compound, instead of pounding it eut. In his spécification 
he thus describes his process: 

"I first take a box of suitaWe dimensions, corresponding to a molder's flask, 
the inner walls of which I prefer should serve as the faces against which 
ail of the outer plane faces of the stone article shall be molded exeept the 
ornamented and opposite faces thereof. In the bottom of this box 1 place 
a suitable layer of fine molder's sand of any suitable thiekness and in a just 
sufliciently moistened condition to hold its form when pressed to any desired 
shape. In other words, I propose to hâve this sand as dry as possible for the 
intended purpose. Into ■ this sand wlth a suitable pattern I impress the 
shape of the ornamented face desired. » * * i next pour into the Im- 
pression thus made the stone compound in a plastic or semiliquid state, suf- 
ficiently wet to flow easily and to a depth corresponding with the desired 
thiekness of the hollow stone." 

In référence to the ingrédients to be used he says: 

"The cernent being dry ground Portland or similar cément, and the sand 
being ground stone of the selected varlety, its flneness depending on the 
character of the work to be produced." 

And he points out the final step in his invention to be the use of the 
molding sand: 

"The molding sand in my présent invention being comparatively dry and 
relied upon to extract or absorb the moisture from the stone compound." 

The claim of the patent provides for allow^ing "the mass to set until 
the sand absorba the surplus moisture from the compound, théreby 
converting the latter to a solid or nonliquid form." This process re- 
lies upon drawing the water from the wet compound by capillary at- 
traction instead of employing the old method of tamping or raniming 
the compound in a hard mold. The défendant says that the Stevens 
patent is void by reason of anticipation. 

1. The contention of the défendant is that the Stevens process of 
making artificial stone has been anticip^ted by one Charles A. Berthe- 
let, who manufactured artificial stone by this process during the years 
1881, 1882, and 1883, in Milwaukee and Racine, Wis. Berthelet's use 
had its conception in the tangible basis given by two patents to an 
Englishman by the name of Sellars — an English patent, No. 1,379, 
dated April 9, 1877; and a United States patent, No. 244,321, dated 
July 12, 1881. Thèse are for the same invention, and disclose a mold 
consisting of sand and paraffin for casting concrète, as described in 
the United States patent "in a liquid or semiliquid condition so as to 
obtain castings of sharp, clear, well-defined outline." The American 
patent provides for "a lubricating binding material which is not af- 
fected by alkalies, such as paraffin, and a finely divided body material 
such as sand or charcoal." There is much testimony that while Berth- 
elet's use was suggested by the Sellars patent, and while he acted for 
a while under the Sellars patent, he used, in fact, a much broader 
scheme than any which the Sellars patent taught. The évidence 
tends to show that he did not rely upon paraffin as a binder, but used 
molds of slightly moistened sand and a liquid concrète of a creamlike 
consistency. Sometimes he used paraffin, and sometimes he operated 
with moist sand without paraffin, and poured the liquid concrète into 
molds which absorbed the surplus water, and thereby he converted 
the concrète into solid artificial stone. The testimony tends very 



810 188 FEDERAL EBPOKTBH 

strongly to show that he achieved his resuit by absorption or capillary 
attraction. He produced stone letters and numerals, ornamental win- 
dow copings, signs, and plaques. He followed the Sellars practice 
rather than his patent; and there is much évidence that Sellars' prac- 
tice involved absorbent sand molds. From his testimony it appears 
that he did not always wet or dampen the sand and paraffin for the 
molds, "but, when the mold had become too dry by exposure, water 
was added to give it a consistency which would admit of its being 
readily molded by the pressure of the hand." He varied the amount 
of paraffin which he mixed with the sand and found, as he says, that 
"the decrease of paraffin rendered the mold more porous and the 
increase of paraffin allowed the use of stronger concrète, and enabled 
a casting of a finer détail." 

Up to the fall of 1881, Berthelet operated a sewer pipe manufactory ; 
but he then turned his pipe wbrks into a letter factory. He and his 
wife had visited Sellars at Birkenhead, England, where Sellars had ex- 
plained the process to them of making liquid concrète in sand molds. 
Berthelet himself is not living; Mrs. Berthelet has testifîed very fully, 
not only from memory, but from letters and a diary which she kept. 
There is àlso the testimony of other witnesses who had means of ob- 
servation in référence to the conduct of Berthelet's manufactory dur- 
ing the years he was making artificial stone. From the testimony I 
am induced to believe that the letters and numerals produced by 
Berthelet, and the panel upon the Blatz Brewery which has stood the 
test of time, were made from artificial stone produced from sand molds 
by absorption, or capillary attraction, after the manner set out in 
the claim of the patent in suit. The burden of proof rests upon the 
défendant, every reasonable doubt should be resolved against it, and 
the greatest scrutiny should be given to testimony of a long past 
prior use. I think the défendant has met the weighty burden of show- 
ing that the process described in the Stevens patent was known to 
Berthelet long before the invention of Stevens. 

But the plaintifï urges that Berthelet's use at best was merely ex- 
périmental. It appears that Berthelet did at fîrst experiment, but that 
he soon after changed his sewer pipe business for the letter business. 
His own letter written in 1882 shows that he was engaged in making 
artificial stone products as a business; that he had $2,500 invested in 
it; and that his endeavor was then to make it a remunerative and 
permanent business. He afterwards gave it up, but not until it had 
passed far beyohd the period of expérimentation and had fully put an 
operative process into practice. It is true that the letters made by 
Berthelet and his associâtes were crude; that they did not hâve the 
perfection of finish that is acquired by the présent use of the Stevens 
patent, or by the improvements upon such patent. But the testimony 
is convincing that the products of his process must be held to be "arti- 
ficial stone" ; that they were made substantially as described in claim 
1 of the Stevens patent; that they were made in the ordinary course 
of business ; and that their manufacture illustrated and taught the use 
of substantially the method described by the patent in suit. I must 
come to the conclusion that, as a business, for profit and not for ex- 



DRAPEE CO. V, STAFFOED CO. 811 

périment, for more than two years, Berthelet op'enly made artificial 
stone letters and other artificial stone articles by use of sand molds, 
by drawing the water from the stone compound by means of absorp- 
tion. I am constrained to find that Berthelet did make a public use 
of the processes described by Stevens in claim 1 of his patent, that 
his manufacture of artificial stone was not inchoate or embryonic, but 
that it met the severe tests of the courts. Coffin v. Ogden, 18 Wall. 
120,- 124, 21 L. Ed. 821 ; Gayler v. Wilder, 10 How. 496, 13 h. Ed. 
504; Smith & Griggs Mfg. Co. v. Sprague, 123 U. S. 256, 8 Sup. Ct. 
122, 31 L. Ed. 141 ; Brush v. Condit, 132 U. S. 39, 48, 10 Sup. Ct. 1, 
33 L. Ed. 251; Reed v. Cutter, 1 Story, 590, Fed. Cas. No. 11,645; 
Walker on Patents (4th Ed.) § 95. I corne to this conclusion after 
a careful study of the record, and with great délibération. I am con- 
scious of a disinclination to uphold any prior use that destroys the pe- 
cuniary value of a patent which has met with commercial success and 
has been of value to the community. I cannot undertake to décide, 
however, how far this commercial success is due to the patent in suit, 
or how far it is the resuit of improvements made by others upon the 
Stevens process. 

This patent has been before the Circuit Court for the Eastern Dis- 
trict of New York, in Donaldson v. Roksament Company (C. C.) 170 
Fed. 192, and upon a contempt proceeding in (C. C.) 176 Fed. 368. 
In those cases the learned judge of that court held that the Sellars 
patents were not anticipatory of the Stevens patent. But the record 
hère does not show that in those cases the Circuit Court passed upon 
the question of Berthelet's prior public use. 

It is not necessary for me to discuss the other questions of antici- 
pation raised by the record. A careful study of the whole testimony 
in the case has forced me to the conclusion that the Stevens invention 
was anticipated by Berthelet's prior use, and that the patent in suit 
is void by reason of anticipation. 

The decree must be: Bill is dismissed, with costs. 



DRAPER CO. V. STAPFORD CO. 

(Circuit Court, D. Massachusetts. April 14, 1911.) 

No. 651. 

Patents (§ 328*) — Infringement. 

The Draper patent, No. 527,014, for a loom, discloses patentable In- 
vention, but the daims must be limited to a construction in çhlch the 
détecter, whlch détermines the degree in which the weft thread in loom 
weaving has been drawn from the bobbin, is mounted independently of 
the shuttle and to substantially the mechanical means described. As so 
construed, held not Infringed. 

In Equity. Suit by the Draper Company against the Stafïord Com- 
pany. Decree for défendant. 

Fish, Richardson, Herrick & Neave and W. K. Richardson, for 
complainant. 

William A. Copeland and Wilmarth H. Thurston, for défendant. 

♦For othor cases see same toplc & % numbbe In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



812 188 FEDERAL KEPORTEE 

ALDRICH, District Judg'e. Under pld conditions in loom weaving, 
the weft thread, as the shuttle was thrown, was delivered from the 
spool or bobbin until it was wholly drawn from the spool or bobbin, 
and as a resuit it sometimes; and perhaps oftentimes, happened that 
the end of the thread was left in the cloth between the selvages, thus 
creating a defect or imperfection which was particularly detrimental 
in weaving the finer goods. In order to unravel the imperfection 
and remedy the defect, it was necessary to stop the machine, and 
means had been devised for stopping the machine automatically, to 
the end that the imperfection might be removed. 

It is plain enough that, under such conditions in loom weaving, any 
means for determining the degree in which the weft thread had been 
drawn from the bobbin as it was approaching exhaustion, to the end 
that the bobbin might be displaced and another, filled with weft thread, 
supplied before the thread upon the operating bobbin should be broken 
at its. end and the loose end left in the body of the cloth, would be 
looked upon as a meritorious and substantial improvement in the 
loom-weaving industry. 

This proceeding is one to restrain alleged infringement of patent 
527,014 which was issued to G. O. Draper, October 2, 1894. 

The foUowing claims are the only ones in issue: 

"1. In a loom, a shuttle earrylng an exposed cop or bobbin of fllling, a 
détecter independent of the shuttle to contact with the fiUing at predeter- 
mined intervals to détermine its volume, and devlces interinediate the dé- 
tecter and a fllling supplying mechanlsm to cause a new supply of filling to 
be placed in the shuttle when the former supply shall hâve been exhausted 
to a predetermined amount, substantially as described. 

"2. In a loom, a lay having a shuttle-box, and a shuttle therein open at one 
side to expose the fllling on a bobbin or cop within said shuttle, comblned 
with a detector independent of the shuttle to enter the latter and contact 
with the filling wound on the bobbin or cop, for the purpose set forti." 

There were inventions earlier than Draper's based upon the idea 
of furnishing mechanical means for detecting the condition of the 
weft on the bobbin as it was approaching exhaustion, and of sub- 
stituting a bobbin fîlled with thread before the thread upon the one 
in use had been fully run out and broken midway or at other points 
which might create a defect in the cloth. 

Without going very much into the prior art, it is sufficient to say 
that earlier patents covered the idea of detecting the measure at 
which the thread had run out, and means were suggested for a de- 
tector which should operate intermittently or at predeterminedl inter- 
vais. In some of the earlier devices, the detector was suggested as 
something to be installed inside the bobbin. In others, as mounted 
upon the shuttle, and in some of the earlier patents, at least, the idea 
of mounting the detector independently of the shuttle was perhaps 
présent. It is probably true, however, that no practical way of doing 
this was either conceived or demonstrated prior to the Draper in- 
vention. 

It is apparent that the Patent Office, at the time the Draper pat- 
ent was under considération, deemed the state of the art to be such 
that it covered the idea of ascertaining at intermittent periods the 



DKAPEE CO. V. STAFFOED CO. 813 

extent to which the thread had been drawn from the bobbin or cop, 
and, when it had reached a certain point of approximate exhaustion, 
of displacing the operating bobbin and substituting another with a 
fresh supply of thread, thus avoiding the imperfection which might 
resuit from a possible or probable loose end left between the selvages. 
Such phase of the art is so apparent that it seems quite unnecessary 
to make an analysis of the différent patents, like that to Crawford 
and Templeton, the two Brooks patents, the Rush and Oldfield pat- 
ent, and others, because it is true in a very broad sensé, at least, that 
thèse ideas, including that of automatically replenishing the weft, 
had a substantial status in the then existing art. 

While none of thèse inventions came into commercial use, the 
same is true of the Draper patent in question. 

The reasonable view of the situation would seem to be that every- 
thing substantial in the Draper patent, except the idea of mounting 
the detector mechanism independent of the shuttle, was présent in 
the prior art; and, while it is true that the idea of mounting the 
detector mechanism independent of the shuttle had been previously, in 
a shadowy way, suggested, still Draper seems to hâve been the first 
to develop the idea in a way to hâve it accepted as something useful 
in the loom-weaving industry; and he seems to hâve been the first 
to conceive and describe a practical means for operating a detector 
thus independently mounted. 

The Patent Office apparently acted favorably with référence to 
Draper's application for a patent, upon the sole supposition that his 
idea of independent mounting, reinforced by a particular description 
of mechanical means for making the detector operate intermittently 
upon the weft thread as it was being drawn from the bobbin, and at a 
predetermined point to operate with favorable results upon a bobbin 
holding the nearly exhausted weft thread, involved invention. 

The Draper construction, as described, contemplated a detector 
pivoted to the lay, and an important feature in his train of mechanism 
was a rock-shaft which, at a predetermined point, is operated upon 
by the end or point of the detector, and performs the function of 
starting mechanical means which introduce a fresh bobbin or cop 
into the shuttle. 

While what Draper didi would, of course, not be accepted, under 
the established rules of patent construction, as an invention in the 
pioneer field, or as one broadly covering every possible mounting of 
a detector outside and away from the shuttle, it would seem that, in 
yiew of the fact that he conceived, or at least made practical, the 
idea of pivoting the detector upon the lay, in connection with means 
which made it operate independently of the shuttle, and especially in 
view of the fact that subséquent improvements, including those in 
actual commercial use, very largely, if not altogether, employ the idea 
of separate mounting; it would seem that what he did should be ac- 
cepted as involving patentable invention. Indeed, Ihe défendant 
does not very stoutly contend otherwise. The more substantial dé- 
fenses are upon other lines. 

Viewing the invention as one of considérable merit, and as one 



814 188 FEDERAL REPOETER 

in which the inventer should be looked upon, at least in a pretty, 
substantial way, as the original discoverer of the idea of mounting 
the detector independently of the shuttle (though unknown to Dra- 
per it had previously, in an imperfect way, been in the minds of oth- 
ers), the claims should not, under the strictest rule of construction, 
be limited to the exact and particular means described. 

Among other things in the inventor's spécification is the following: 

"Belleving tnyself to be the first to combine with a loom a détecter whieh 
shall come in direct contact interniittingly with the mass of filling on a bobbln 
or cop in a shuttle, and thus prevent further weaving of cloth by the filling 
then in the shuttle when the said filling bas been nearly exhausted from 
the said bobbin or cop, I do not désire or intend to limit my invention to 
the exact shape shown for the detector, nor to the exact position shown for 
it on the loom, nor to the exact shape of the trigger connected to the rocli- 
shaft for operating the devices at the opposite end of the loom." 

At the arguments, considérable stress was placed upon what is 
said in this particular part of the spécification. It cannot be accepted, 
however, as of much weight upon the question whether the claim 
shall be construed narrowly or broadly, because what is now con- 
cedled to hâve been the then state of the art, taken in connection with 
the action of the Patent Office, makes it apparent that, when that 
part of the spécification was formulated, Mr. Draper was under a mis- 
apprehension as to what had been done by others in the field which 
he thus undertook to cover. 

This case seems to résolve itself into a situation in which it is not 
so much a question as to just how broadly the claims of the Draper 
patent should be construed, as one whether the défendant, who is op- 
erating under a patent, is using the same idea and substantially the 
same means. A careful reading of Unes 41-63 of page 3 of the spéci- 
fication of the Draper patent, which hâve référence to the opération 
of the detector, makes it perfectly clear that the défendant is not using" 
the particular construction which Draper described. There is no 
occasion, however, for saying that the Draper invention is one which 
limits itself to the particular mode of opération described. Indeed, 
probably such a view would be unwarranted. 

Holding the view that the Draper claims should be limited to the 
idea of independent mounting and to substantially the construction 
and the mechanical means which Draper described, and holding the 
,view that the defendant's construction and mode of opération are to 
be accepted as clearly and radically outside of the Draper patent, there 
is no occasion for passing upon the question of the particular limit 
which shall be placed upon its claims. This results because the de-r 
fendant's machine does its work on différent principles, and through 
substantially différent mechanical and structural means. 

Apparently under the Draper construction the bobbins are changed 
without stopping the loom, while in the defendant's it is the shuttles 
which are changed, the loom for the instant stopping, but that is not 
viewed as a détail of décisive or essential importance upon the ques- 
tion of équivalents and infringement, and it would likewise seem that 
no great conséquence should attach to the thin leaf-spring, marked 
"32,'" which is mounted in the side of the defendant's shuttle, as a par- 



IN EE m'oartnet 815 

ticular differentiating feature. This spring performs no essentîal func- 
tion, and no very important one, save that of protecting the yarn or 
thread upon the bobbin from the forceful points of the defendant's feel- 
ers or detectors, which are called fingers or slides, one of which opér- 
âtes, as the lay beats up, to contact with the disk of the shiittle spindle, 
while the other opérâtes to impinge upon or contact with the thin 
spring and force it against the weft upon the bobbin. The fact that 
this thin leaf-spring prevents actual physical contact between the fin- 
ger and the weft would seem not to be a controlHng fact. 

As illustrated in argument, the leaf-spring in question is no more 
a functional detector or feeler than is the glove in the ordinary grasp 
or hand-shake. But aside and beyond thèse détails, it is the gên- 
erai structural plan in respect to the instruraentalities back of the 
leaf-spring which force contact with the thread upon the bobbin, that 
broadly difïerentiates the defendant's scheme of mechanical means 
from that arranged and described by Draper. 

There being, under thèse views, no infringement, it results that 
the bill should be dismissed. 

Bill dismissed. 



In re McCARTNET. 

(District Court, M. D. Pennsylvania. July 3, 1911.) 

No. 1,753. 

Bankeuptct (§ 91*) — AcT of Bankeuftct— Evidence. 

On an application to hâve an alleged insolvent declared an Involuntary 
bankrupt, évidence held to require a flndlng, not only that the alleged 
bankrupt was insolvent, but also that, while insolvent, he had permitted 
his vflfe to obtain a préférence through légal proceedings, and had not, 
live days before the selling or final disposition of his property affected 
by such préférence, revoked or discharged the same, so that he should be 
adjudged a bankrupt. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. § 91.*] 

In Bankruptcy. On pétition to déclare W. J. McCartney an in- 
voluntary bankrupt. Granted. 

Wm. Maxwell, for petitioning creditors. 
E. J. Mullen, for bankrupt. 

WITMER, District Judge. Certain creditors of W. J. McCartney, 
on October 26, 1910, presented their pétition praying that he be ad- 
judged a bankrupt, representing that while insolvent the said W. J. 
McCartney sufïered and permitted certain of his creditors to obtain 
a préférence through légal proceedings, and not having, five days be- 
fore the selling or final disposition of his property aiïected by such 
préférence, revoked or discharged the same. To this the alleged 
bankrupt made reply, denying his insolvency. Testimony was taken 
and reported to the court. 

It appears: That on August 1, 1910, Mrs. Margaret McCartney en- 
tered three judgments against the said W. J. McCartney, her husband, 

*For other car.es see same topic & S numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



816 188 FBDBEAL REPORTER 

in the court of common pleas of Sullivan county, to wit: No. 61, 
September term, 1910, debt, $500; No. 62, September term, 1910, debt, 
$1,500; and No. 63, September term, 1910, debt, $500. That she 
caused writs of fieri facias to issue on her said judgments, followed 
by writs of venditioni exponas, on which the personal property of 
the alleged bankrupt was seized by the high sheriff of Sullivan coun- 
ty, levied, and advertised for sale, to take place on Friday, the 28th day 
of October, 1910, at 1 o'clock p. m. Judgment was also entered in 
said court against the alleged bankrupt by one John Hassen, Jr., on 
August 1, 1910, for $100, with like proceedings following. 

That the alleged bankrupt sufïered or permitted thèse préférences 
within five days preceding the selUng or final disposition of his prop- 
erty is not denied. His answer is to the efïect that, while he was 
unable to discharge thèse obligations, he is nevertheless solvant, having 
more than sufficient assets to meet his liabilities, as required by section 
1, subd. 15, of the fédéral bankruptcy act (Act July 1, 1898, c. 541, 30 
Stat. 544 [U. S. Comp. St. 1901, p. 3419]). From a careful examina- 
tion of the testimony and the application of common sensé in the in- 
spection of the proceedings adopted by the wife of the bankrupt in her 
effort to enforce the collection of her claims, or possibly remove 
from the reach of her husband's creditors his personal property, the 
court has no difficulty in afriving at a true solution of this case. It 
matters not much whether the debtor was actually unable to pay the 
money alleged to be due his wife, or simply unwilling to do so. The 
conduct of the husband and^of his wife is convincing that they, be- 
lieving that the husband's property was insufficient to meet ail of his 
honest debts, a préférence over some of them was necessary to secure 
for the wife the money represented by the judgments entered. It 
would be difficult to reach any other conclusion, when considering that 
the whole proceeding was timed to the maturing of the husband's ob- 
ligations in bank on which Mr. Frost was the indorser and having de- 
clined to renew such indorsements. 

The testimony is, however, otherwise convincing that the aggre- 
gate of the property of the alleged bankrupt is at a fair valuation not 
sufficient in amount to pay his just debts. W. J. McCartney is un- 
questionably insolvent and unable to pay his lawful debts, and having 
stood by while his creditors secured judgments against him and 
levied upon his property, suffering and permitting such judgments 
to be taken and such levy to be made, has committed an act of bank- 
ruptcy under paragraph 3a, § 3, c. 3, of the bankruptcy act of 1898 
and its suppléments. 

The said W. J. McCartney is therefore hereby adjudged a bank- 
rupt accordingly. 



IH EE BODEK 817 

In re BODEK. 

(District Court, E. D. Pennsylvania. June 22, 1911.) 

No. 3,992. 

1. Bawkbuptct (§ 59*) — Act or Bankbuptct— Levt— Validity. 

A debtor attacked tlie validlty of a sheriff's levy relied on as an act 
of bankruptcy, in that lie had preferred the créditer by failiiiii to dis- 
charge the lien, and showed that the sheriff's return was fnlse, so far as 
It recited a levy and that subsequently the debtor was adjudged a banlc- 
rupt, beeause the records of the banlcrupfcy court disclosed that no ad- 
judication had ever been entered. The testimony of a deputy sheriff 
showed that no actual levy had been made. Held to show the invalid- 
Ity of the levy to constitute an act of banl^ruptcy, thoush the balance 
of the sheriff's return mlght be secure against collatéral attnck. 

[Ed. Note. — For other cases, see Bankruptcy, Cent. Dig. §§ 81, 82 ; Dec. 
Dig. § 59.*] 

2. Execution (§ 145*) — Levy— Dieect Attack. 

A debtor may directly attack a levy, though a part of the offlcer's re- 
turn may be secure against a collatéral attack, and he may question the 
validity of the levy where he bas steadily denied its validity. 

[Ed. Note.— For other cases, see Execution, Cent. Dig. §§ 376-380 ; Dec. 
Dig. § 145.*] 

In the matter of bankruptcy proceedings against Samuel Bodek. 
Issue of validity of a levy alleged to constitute an act of bankruptcy 
found in favor of bankrupt. 

Samuel W. Cooper, for petitioning creditors. 
Alex. J. Brian, for alleged bankrupt. 

J. B. McPHERSON, District Judge. The bankrupt waived his 
demand for a jury trial, and the issue raised by the pétition and answer 
was thereupon submitted to the court. [ 1 ] It has now been heard, and 
the évidence satisfies me that the so-'called levy made by the sheriff was 
not valid, and therefore that the only act of bankruptcy charged in the 
pétition, namely, preferring an exécution creditor by failing to dis- 
charge the lien, was not committed. In part, the sheriff's return upon 
the writ is manifestly not true. It recites that he "Levied Feb. 7, 
1911, upon the personal property of the within-named défendant at 
No. 17 South Fourth street, and afterwards the défendant was ad- 
judged a bankrupt in the United States District Court for the Eastern 
District of Pennsylvania;" for the records of this court disclose that 
no adjudication has ever been entered. - [2] The rest of the return 
might perhaps be secure against collatéral attack, but it may still be 
attacked directly by the bankrupt himself . Thé testimony of the deputy 
sherifï shows clearly that he made no actual levy. Stuckert v. Keller, 
105 Pa. 386, is not in point. There a levy was made in f orm, although 
the sheriff did not seize or even see the goods, but he was prevented 
from .levying in fact by the wrongful act of a third person, a 
temporary bailee, who afterwards attempted to transmit title by a levy 
and sale on his own account. The controversy was betvi'een the re- 
spective purchasers under thèse two levies, and the Suprême Court 

•For other cases see same topic & ^ number In Dec. & Am. Digs. 1907 to data, & Rep'r Indexes 
188 F.— 52 



818 188 FEDERAL EBPOETEE 

held the irregular levy on the first exécution to be good on the dis- 
tinct ground that the debtor, who might himself hâve objected to it 
successfully, was présent at the sale and made no protest — thereby 
waiving his rights. The second sale was held to be of no validity, be- 
cause the exécution creditor, the temporary bailee, had wrongfully 
kept the sheriff from making a levy upon the first exécution, and 
was therefore attempting to take advantage of his own wrong. Hère, 
however, the debtor himself protested from the beginning against the 
levy, and has steadily denied its validity. He had an undoubted right 
to question the fact, and to hâve it determined by a proper tribunal. 
I therefore fînd the issue in favor of the bankrupt. 



ANDERSON LAND & STOCK CO. v. McCONNELL et al. 

(Circuit Court, D. Nevada. December 24, 1910.) 

No, 783. 

1. Waters and Watee Courses (§ 152*) — ^Appropriation. 

Proof that haying was done on the respective meadows of parties 
claiming prlor appropriation of water for irrigation, without évidence as 
to whether the hay was raised by artiflcial irrigation or by the use of a 
natural overflow, was insufficient to establish an appropriation . 

[Ed. Note. — For other cases, see Waters and Water Courses, Cent Dig. 
§§ 156, 15T ; Dec. Dig. § 152.*] 

2. Waters and Water Courses (§ 35*) — Ripaeian Ownbkship— Common- 

Law Doctrine— Abrogation. 

In Nevada the doctrine of riparlan ownershlp as a foundation for 
rights to water has Sbeen abandoned; ail rights to the use of water by 
reason of necessity arising from the arid nature of the country being 
founded on prier appropriation only. 

[Ed. Note. — For other cases, see Waters and Water Courses, Cent. Dig. 
§§ 27, 28 ; Dec. Dig. § 35.*] 

3. Waters and Water Courses (§ l51*) — Appropriation— Abandonment. 

Abandonment of an appropriation of water for irrigation Is a question 
of intention to be evideneed by overt acts ; but, when such overt acts 
appear, the right to appropriate water eeases and cannot be resumed as 
against intervening rights of others. 

[Ed. Note. — For other cases, see Waters and Water Courses, Cent. Dig. 
§ 155 ; Dec. Dig. § 151.*] 

4. Waters and Water Courses (§ 142*) — Appropriation. 

Where complainant's predecessor in title, though conceding a prior ap- 
propriation by défendants, was entitled to the unused water naturally 
flowing to him from défendants' land, and was entitled to Inslst that 
such unused water be not diverted elsewhere, but should be allowed to 
return to the stream and serve his appropriation, such unused water was 
not waste water, but excess above the water défendants were entitled 
to appropriate, which they eould not by subséquent enlargement of their 
dltches, etc., appropriate to complainant's préjudice. 

[Ed. Note.— For other cases, see Waters and Water Courses, Cent. Dig. 
§ 152; Dec. Dig. § 142.*] 

5. Waters and Water Courses (§ 130*) — Natural Water Courses^Ohan- 

NEL. 

Where, though a water course spread out over a meadow in delta for- 
mation and was broken up into several ehannels, it could be identifled on 

«For other cases see same topic & § numbeb 1d Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



ANDERSON LAND & STOCK OO. V. m'CONNELL 819 

the surface, and flowed In a defined course through low dépressions, It 
was a natural water course, and subject to appropriation by the land- 
ovvner, though there was no deiinitely defined cliannel on tlie surface. 

[Ed. Note.— For other cases, see Waters and Water Courses, Cent. Dig. 
§ 145 ; Dec. Dig. § 130.*] 

6. Waters and Watek Courses (§ 152*) — Appbopkiation — Pbiority— Evi- 
dence. 

In an action to détermine water riglits for irrigation, évidence held to 
require a flnding that complainant was entitled to priority as a prior ap- 
propriator as to certain streams. 

[Ed. Note. — For other cases, see Waters and Water Courses, Cent. Dig. 
§i 156, 157; Dec. Dig. § 152.*] 

In Equity. Suit by the Anderson Land & Stock Company against 
Charles McConnell, revived after his death pendente Hte in the name 
of Thomas A. IVIcConnell, exécuter of the will of Charles IVIcConnell, 
deceased, and Thomas McConnell individually. Decree for complain- 
ant. 

See. also, 171 Fed. 475. 

Mack & Green and J. W. Dorsey, for complainant. 

Cheney, Massey & Price and Harry Warren, for défendants. 

VAN FLEET, District Judge. This is a suit in equity to détermine 
conflicting rights of the parties to the waters of three natural water 
courses known as "Quin River," "Eight Mile Creek," and "Twelve 
Mile Creek," sometimes called "Three Mile Creek." The complainant 
is the owner of about 4,000 acres of land f ormerly belonging to Henry 
Hoppin, and known and herein designated as the "Hoppin Ranch." 
Respondent, Charles McConnell, was the owner of about 6,000 acres 
adjoining the Hoppin ranch on the north and of two smaller neigh- 
boring ranches called herein the "Upper Eight Mile" and "Upper 
Twelve Mile" ranches, respectively. Pending the détermination of the 
suit, respondent, Charles McConnell, died and Thomas McConnell, 
as exécuter, was substituted. Charles McConnell filed a cross-bill 
alleging rights by prior appropriation to the waters of the streams in 
controversy, and Thomas McConnell individually has iîled a cross- 
bill setting up a right by appropriation of the waters of Quin river 
and Eight Mile creek, prior to the complainant and subséquent to that 
of the respondent Thomas McConnell as exécuter. Thomas McCon- 
nell's land consists of 160 acres at the southwesterly cerner of the main 
McConnell ranch and adjoining the Hoppin ranch. 

It appears from the évidence that Quin river rises in the moun- 
tains of northern Humboldt county in this state, and flows in a gen- 
erally southwesterly direction and, se far as affects this controversy, 
passes first through the McConnell ranch and then through the Hoppin 
ranch immediately belew and adjoining on the south. In passing 
through the McConnell ranch, it séparâtes into several channels or 
sloughs. Hardin slough, which puts eut from the river above the Mc- 
Connell ranch is west of the main river channel, uniting with it again 
en the Hoppin ranch, and is net in controversy in this litigation. The 
first slough east of the river, apparently having no fixed local desig- 

•For other cases see Bame topic & § nui>ibeb lu Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes. 



820 188 FEDERAL REPORTER 

nation, but named by the complainant and respondents respectively, 
"Beef Corral Slough" and "Main Sloug-h," branches from the river 
in the northerly portion of the McConnell ranch, and flows in a south- 
westerly direction approximately parallel to the river channel onto 
the lands of the Hoppin ranch, and there rejoins the main river chan- 
nel. "Eight Mile Slough," so called, a natural water course, not head- 
ing in the river but apparently on the McConnell meadows, and here- 
after found to be a part of the channel of Eight Mile creek, is easterly 
of and approximately parallel in its course to .that of Main or Beef 
Corral slough, and after passing through the McConnell meadows pro- 
ceeds through the Hoppin ranch in the same gênerai southwesterly 
direction until it unités with the main Quin river channel near the 
lower southwesterly corner of the Hoppin ranch. Eight Mile creek 
rises in a range of mountains on the easterly side of the Quin River 
Valley, and, after passing through the Upper Eight Mile ranch of 
Charles McConnell situated at the point where Eight Mile creek 
émerges from the mountain canyon, flows in a northwesterly course 
for about two miles over sagebrush lands not owned by the parties 
hereto until it enters the easterly line of the main McConnell ranch. 
Upon entering the McConnell meadows, its visible channel largely dis- 
appears and in its natural state uninfluenced by artificial diversions the 
waters flow across the McConnell meadows, flattening and spreading 
out fanlike but generally following a definite course through low de- 
pressions first northwesterly and then southwesterly for a distance of 
a half or three-quarters of a mile, until they reach and unité in the 
natural channel above referred to as Eight Mile slough. Twelve Mile 
^reek, formerly known as Three Mile creek, rises in the same range 
of mountains as Eight Mile creek, and émerges from a canyon at a 
distance of about four miles southerly from the latter, passes through 
the small ranch above mentioned belonging to Charles McConnell, des- 
ignated as Upper Twelve Mile ranch, which is situated at the point 
where the stream débouches from its canyon, and, after passing in a 
northwesterly direction through about two miles of sagebrush land not 
belonging to the parties, enters the Hoppin ranch at its southeasterly 
corner, and, proceeding in the same gênerai northwesterly direction, 
spreads over and disperses itself in the Hoppin meadows, the waters 
then flowing southwesterly with no defined channel until they reach 
Eight Mile slough and Quin river. Canyon and Pôle creeks, men- 
tioned in the évidence, lie successively to the south of Twelve Mile 
creek, and, substantially paralleling its course, flow toward Quin river. 
They enter the Hoppin ranch on its southerly boundary, and their wa- 
ters are used and can be used only on the southerly portion of the 
Hoppin ranch ; no claim being made by the respondent to the waters of 
thèse creeks. 

The Hoppin ranch was purchased by James P. Anderson, grantor of 
the complainant, in 1900. Prior thereto Charles McConnell and Henry 
Hoppin do not appear to hâve had any différences over the use of the 
waters in controversy. The water on the main McConnell ranch was 
diverted by ditches and dams upon the McConnell meadows and pas- 
ture, returning by natural flow to Main or Beef Corral slough and 



ANDEKSON LAND A STOCK CO. V. m'cONNELL 821 

Eight Mile slough, and after being used by McConnell naturally flovved 
to and was diverted by Hoppin by varions ditches and dams situate 
partly on his own place and partly in the southerly portion of the Mc- 
Connell ranch, upon the Hoppin meadows and pastures. There was ne 
cultivation on either ranch by plowing; the water being used to raise 
wild hay and natural pasturage. 

Shortly after the purchase of the Hoppin ranch by Anderson, Mc- 
Connell began to construct new ditches and to enlarge and extend ex- 
isting ditches so as to lead the waters of Quin river and Eight Mile 
creek upon certain lands in the southeasterly corner of his ranch and 
upon the Thomas McConnell lands above mentioned. Thèse lands, 
formerly in sagebrush, were on higher ground easterly of the McCon- 
nell meadows and hâve been set out in alfalfa, about 160 acres in ail 
The character of the soil of thèse latter lands and the natural configu- 
ration of the ground is such that none of the water so diverted nat- 
urally reaches the Hoppin meadows. In addition to this new diver- 
sion, Charles McConnell, in 1906, after the beginning of this litiga- 
tion, built a ditch from the Upper Eight Mile ranch diverting the wa- 
ters of Eight Mile creek from their channel and carrying them in a 
course approximately parallel to the channel, but to the south thereof, 
to the westerly portions of the McConnell ranch, where they were used 
upon the alfalfa fields just mentioned and entirely consumed. In 1902 
alfalfa was also planted by McConnell at the Upper Twelve Mile 
ranch, and ail the waters of Twelve Mile creek diverted thereon so 
that no water reached the Hoppin ranch from that source. The re- 
suit has been that except in certain years of abundant water, as for 
example the years 1906 and 1907, the irrigated lands of complainant 
in the westerly, northerly, and easterly portions thereof hâve been 
deprived of water which they had previously enjoyed, leaving unaf- 
fected by lack of water supply only certain portions of the southerly 
part of complainant's ranch vidiich were served by the waters of Pôle 
and Canyon creeks. 

The case was tried in open court, and the taking of évidence con- 
sumed 10 or 12 days. Approximately 30 witnesses were examined. 
During the trial testimony was ofïered concerning the history of thèse 
ranches for approximately 40 years. The complexity of the problems 
involved has been increased by the fact, as shown by the évidence, 
that by numerous natural waterways or sloughs other than those 
above named, and by a large number of ditches constructed by the 
parties, the waters of Quin river and of Eight Mile creek hâve been 
mingled; dams hâve been built, both temporary and permanent, and 
hâve been washed out; and ditches constructed and abandoned. It 
has not been possible for either the witnesses or the court in ail in- 
stances to satisfactorily define the locations of the ditches or dams as 
to which testimony has been ofïered, and the testimony covering so 
broad a period is naturally very conflicting. Furthermore, it appears 
that at the time of the yearly recurring spring season of flood the wa- 
ters of ail thèse streams spread over the lands of the parties and for 
the time afiford sufficient water for ail. It appears also that in years 
of abundant water both parties hâve sufficient for their uses even after 



S22 188 FEDERAL EEPORTEE 

the diversions herein complained of ; the difficulty arising only in years 
of average or insufficient water. 

[1] The évidence, as indicated, présents ail the perplexities which 
may be expected from the nature of the subject. There is much testi- 
mony in the record which is vague and much that is inconclusive and 
in many instances sharply conflicting. For example, many witnesses 
hâve testified that haying was done on the respective meadows at va- 
rious early dates without giving any definite information as to whether 
the hay was raised from irrigation by artificial means or by the use 
of natural overflow which would found no right of appropriation. 
Walsh v. Wallace, 26 Nev. 299, 67 Pac. 914, 99 Am. St. Rep. 692. 
The court must also inevitably disregard some testimony in cases of 
conflict without any imputation upon its sincerity. As stated by Judge 
Hawley in Union Mill & Mining Co. v. Dangberg (C. C.) 81 Fed. 99: 

"One can naturally understand that lapse of memory cornes with lapse of 
time, and that any man, however conscientious or honest, may be mistaken 
as to events that transplred 40 or more years ago ; and the truth of such 
matter, as to the tîme of any given transaction, can often only be solved by 
comparing the testimony of the witnesses with known and uncontradicted 
facts as to the date of other events which ail concède occurred at or about the 
same tIme. One can also readily understand the uneertainty, and sometimes. 
If not always, the unreliabillty, of the testimony of witnesses who attempt to 
glve with any degree of précision the amount of land under Irrigation, or the 
exact amount of water flowing In a river, stream, eut, canal, or ditch, by 
merely looking at it." 

The questions presented for solution are largely those of fact, and 
as to the gênerai principles of law applicable to those facts, when as- 
certained, there is little, if any, controversy. 

[2] In the state of Nevada the doctrine of riparian ownership as 
a foundation for rights to water has been definitely abandoned, and 
rights to the use of water founded, by reason of necessity arising from 
the arid nature of the country, upon prior appropriation only. The 
rules governing such right of appropriation, so far as necessary to 
State them, hâve been codifîed in Cutting's Compiled Laws of Ne- 
vada, as follows : 

"Sec. 354. AU natural water courses and natural lakes, and the waters 
thereof which are not held in private ownership, belong to the state, and are 
subject to régulation and control by the state." 

"Sec. 358. There is no absolute property in the waters of a natural water 
course or natural lake. No right can be acquired to such waters exeept as 
usufructuary right — the right to use It, or to dispose of.its use for a béné- 
ficiai purpose. When the necessity for the use of the water does not exist, 
the right to divert it ceases, and no person shall be permitted to dlvert or use 
the waters of a natural water course or lake exeept at such times as the 
water is required for a bénéficiai purpose. 

"Sec. 357. No person shall be permitted to divert or use any more of the 
waters of a natural water course or natural lake than sufflclent, when prop- 
erly and economlcally used, to answer the purpose for which the diversion Is 
made; nor shall any person be permitted to waste any such water, and ail 
surplus water remaining after use, unavoldable wastage excepted, shall be 
returned to the channel by the persons diverting the same without unreason- 
able delay or détention. 

"Sec. 858. Any person who has acquired the right to use the water for a 
bénéficiai purpose may change the place of diversion and manner of use; 
provided, such change does not substantially injure the rights of others." 



ANDERSON LAND <Sc STOCK CO. V. m'cONNELL 823 

An able exposition of the law of prior appropriation as obtaining in 
this State, but not necessary to be hère restated, will also be found in 
Hewitt V. Story, 64 Fed. 514, 12 C. C. A. 250, 30 h. R. A. 265, and 
Union MiH, etc., Co. v. Dangberg, supra, decided by the late Judge 
Hawley. Having thèse gênerai principles in view, we will proceed 
to examine the history of the settlement and cultivation of thèse 
ranches and the appropriations of waters made by the respective par- 
ties, or their grantors ; and it will be most convenient to consider this 
history in its relation to the several streams whose waters are in con- 
troversy : 

As to Twelve Mile creek: Charles McConnell drove a band of sheep 
to Quin River Valley in the fall of 1869 and established a camp at 
what is now the Upper Twelve Mile ranch at the point where the 
stream émerges from its canyon in the mountains. During the year 
1870 shearing corrals were built, and a small ditch was taken from the 
creek to keep the dust down while the men were shearing. A small 
garden for vegetables, apparently about one-half acre in extent, was 
planted in 1871. Charles McConnell married in 1872 and took his wife 
to the Twelve Mile camp. In 1876 he moved to the Upper Eight Mile 
ranch and took his buildings with him. The évidence of any continued 
use of water at the Twelve Mile ranch after such removal is quite 
vague and unsatisfactory. It tended to show that as late as the early 
nineties varions Indians, at uncertain intervais, cultivated a small gar- 
den patch on the place and raised vegetables by means of water ; but 
it whoUy fails to show the nature of their right thereto. The respond- 
ents endeavored to establish that thèse Indians occupied the position 
of tenants toward McConnell ; but I find the évidence entirely insuffi- 
cient to establish any such relation. 

Henry Hoppin came to the Quin River Valley and established him- 
self on the présent ranch of the coniplainant in 1870. He diverted the 
waters of Twelve Mile creek where it entered his boundaries by a ditch, 
now existing, at least as early as 1877 ; and such diversion continued 
unbrokenly down to its interruption in 1902, and without any interfér- 
ence or claim adverse thereto by Charles McConnell. 

The testimony as to the bénéficiai use of water at the Upper Twelve 
Mile ranch by the respondents or their predecessors during the period 
approximating 26 years, from the time Charles McConnell moved 
away in 1876 to the time that Thomas McConnell, Jr., began to put in 
alfalfa in 1902, shows only such a vagrant, occasional, fugitive, and 
uncertain use as conclusively raises a presumption of abandonment. 
Charles McConnell's needs in that stream apparently ended when he 
moved his home to the Upper Eight Mile ranch, and no definite right 
to those waters was thereafter asserted by him. 

[3] Abandonment is â question of intention, to be evidenced by 
overt acts ; but, when such overt acts appear, the right to appropriate 
water, like any usufructuary right, ceases and cannot be resumed after 
the rights of others hâve intervened. Hewitt v. Story, 64 Fed. 515, 
516, 12 C. C. A. 250, 30 L. R. A. 265, and cases therein cited. It is 
entirely clear from that évidence that the respondents hâve no rights 



824 188 FEDEBAL KBPOETEK 

whatsoever in the waters of Twelve Mile creek except in subordination 
to complainant's appropriation, and that the complainant has the right 
to the entire flow thereof unobstructed by any acts of diversion by the 
respondents. 

As to Quin river and Eight Mile creek: The first settlement on 
Eight Mile creek was made by one Rose in 1867 at the place now called 
the Upper Eight Mile ranch, where the stream émerges from the moun- 
tains on the east of the Quin River Valley. Rose made some small 
cultivation of the ground and used some water from the creek. He 
was apparently a squatter and is not connected in any chain of title 
with respondents' ownership of the land. He was there only one sea- 
son and was succeeded by one Peter Flynn. The old Idaho stage road 
ran by the place, and Flynn kept a station for travelers by stage. He 
had a small vegetable garden and a small field of barley irrigated by 
ditches from Eight Mile creek. The amount of acreage under cul- 
tivation is variously estimated and widely divergent in the testimony. 
Flynn sold to Charles McConnell in 1872. McConnell, as heretofore 
stated, moved his home from Twelve Mile creek to Eight Mile creek 
about 1876, and remained there for 20 years, or until he removed 
to his présent location on the main McConnell meadows near Quin 
river in 1896. After this last removal, further cultivation of the Up- 
per Eight Mile ranch was abandoned, and the fields grew up in sage- 
brush ; the place of use of the water hitherto diverted at the upper 
ranch being apparently transferred with the change of the home. This 
situation continued until about 1906, when, as stated above, the old 
ditch at the upper ranch was continued northwesterly parallel to the 
creek until it entered the main McConnell ranch south of the creek 
channel and was used to divert ail the waters of Eight Mile creek 
upon the newly planted alfalfa fields. 

It seems to be practically conceded by complainant that Flynn was 
the first appropriator on Eight Mile creek ; but the amount diverted is 
in dispute. The testimony as to the quantity of land under cultivation 
at the Upper Eight Mile ranch or station is, as indicated, very unsatis- 
factory, and the estimâtes of the acreage cultivated show a wide vari- 
ance. It was shown, however, that in this country an abandoned cul- 
tivated field grows up with sagebrush and other désert végétation, and 
that such new growth is so distinguished by its size, color, and man- 
ner of growth from the ancient undisturbed growth outside the culti- 
vated area as to présent a natural line of démarcation between the 
two areas and affords thereby a definite basis for accurate détermina- 
tion of the acreage formerly cultivated. Complainant's engineer testi- 
fied that, taking this sharply defined démarcation as a basis, he had 
surveyed the ground thus shown to hâve been under cultivation at 
the Upper Eight Mile ranch, and the resuit of the survey showed 6.77 
acres of such land. This is the only évidence of a definite nature on 
the subject, and, in the absence of any satisfactory évidence to the con- 
trary, I must accept this estimate as a reliable index of the fact ; and 
the extent of the right to the water by the Flynn appropriation, which 
does not appear to hâve been extended through the McConnell occu- 
pancy, will be determined upon this basis. 



ANDERSON LAND & STOCK CO. T. m'CONNELL 825 

The main McConnell meadow or ranch, as indicated above, is wa- 
tered both by the waters of Eight Mile creek and of Quin river. The 
first seulement at this latter place seems to hâve been made by a rrian 
named Anderson, not connected with the complainant. For perhaps 
two or three years prior to 1871 this man Anderson had been cutting 
wild grass or hay in the vicinity of the delta of Eight Mile creek. 
There is some évidence that he had made a ditch f rom Quin river ; 
but it is too vague to predicate a finding of appropriation and continued 
use in favor of respondents to any extent. McConnell bought him out 
in 1871. As has been stated, Hoppin settled at his ranch, now owned 
by complainant, in 1870. 

According to the witness Cogswell, who worked for McConnell f rom 
1872 to 1875, crops of natural grass or hay were gathered from both 
the Hoppin and McConnell ranches and were grown by the natural 
overflow from the streams and without resort at that time to artificial 
irrigation by either party. Before very long, however, it is évident 
that the parties began to build dams ^nd ditches to divert the waters 
of Eight Mile and Quin river upon their ranches, and in the course of 
years an elaborate system of irrigation was built up upon each ranch. 
Some of thèse dams were purely temporary in character, consisting of 
brush and manure which was renewed each year. Many were not 
connected with ditches, but were placed in the natural sloughs and 
dépressions to swell the waters onto adjoining land, whence they would 
flow back to the stream below the dam. The natural slope of the land 
on both ranches was such that the waters diverted above would return 
to Eight Mile slough or Beef Corral slough, where they would be again 
diverted, and so on in a cycle many times repeated. It naturally fol- 
lows that ail the waters of Eight Mile creek and a large part of the 
waters of Quin river were successively used each season first on the 
McConnell place as above indicated, and then in the natural course of 
their flow upon the Hoppin ranch in the same manner. As long as 
Hoppin and McConnell were neighbors, the system of irrigation thus 
pursued was satisfactory to each and to a considérable extent in con- 
junction. Each ranch as far as apoears had sufficient water, and there 
is nothing to show that either ranch used an excessive amount of wa- 
ter. During this period the use of the waters was confined, on both 
ranches, to the irrigation of the meadow land, largely, and to a lesser 
extent to pasture lands. It is at once apparent that, in the case of a 
System of irrigation upon two adjoining ranches developed and main- 
tained in the manner and by the means as above stated, during a period 
practically identical in time, the question of prior appropriation must 
necessarily be, as in this instance, difficult of ascertainment. It will be 
neçessary for that purpose first to get as near as may be the exact facts 
as to the times of construction and location of the more important 
ditches. Thèse ditches are designated by letters on respondents' map 
and by names on complainant's map. 

"A" ditch begins at a dam diverting part of the waters of Quin 
river situated above the northerly boundary of the McConnell ranch, at 
a point designated as Upper Diversion. This Upper Diversion dam 
is apparently very old; built, as indicated, possibly as early as 1876. 



826 188 FEDERAL EBPORTBK 

In 1903 the "A" ditch was built from a natural slough running out 
at Upper Diversion dam, thence in a southeasterly direction through 
McConneH's pasture, lands to a f ence a little north of Eight Mile creek 
(marked "128 A" on complainant's map). Eight Mile ditch had been 
apparently built southerly from Eight Mile creek in 1895 ; how far 
does not appear, but at that time its water, which came from Eight 
Mile creek, crossed over into the "C" ditch hereafter described. The 
space between point 128 A and the head of the old Eight Mile ditch 
was connected by a ditch in 1904 and 1905 after the beginning of this 
litigation. It diverts a portion of the waters of Quin river upon the 
sagebrush and alfalfa land above referred to in the southeasterly por- 
tion of the McConnell ranch. The évidence shows that its waters do 
not thereafter reach the Hoppin land below. 

"B" ditch is a short ditch beginning like "A" ditch in a natural 
slough served by the Upper Diversion dam and terminating in pas- 
ture land in the northerly part of the McConnell ranch. Prior to the 
building of the "A" ditch, such water as was diverted by the Upper 
Diversion dam passed through the "B" ditch. It was apparently there 
as early as 1880; but the witness Hayward says that in 1865 it was 
used only in periods of high water. The testimony as to its use at 
periods other than of high water is indefinite and unsatisfactory, and 
I conclude that it was only so used. 

"C" or Alfalfa ditch and "E" or Company ditch both properly begin, 
as indicated on complainant's map, at a dam in Quin river called the 
"Lower Diversion Dam." Thç two ditches diverge just below the 
township line between township 46 north, range 38 east, and township 
47 above. The Lower Diversion dam is properly placed as on com- 
plainant's map at a point in Quin river near the easterly and westerly 
half section line of section 32, township 47 north, range 38 east. Ap- 
parently a dam at lower diversion existed as early as 1876, and at that 
time a short 30-yard ditch led out of it to the east. A ditch was ex- 
tended from this point to the point 22 F below the township line 
where the "C" ditch and "E" ditch now diverge, in the years 1881 and 
following. This portion was built by Charles McConnell and Henry 
Hoppin under a joint appropriation which will be hereafter referred to. 
There is évidence that "C" or Alfalfa ditch from the point 22 F on 
complainant's map was commenced in the fall of 1897 and used in the 
spring of 1898. It is impossible to tell from the testimony with abso- 
lute accuracy how far it went at that time ; but it extended apparently 
but little below the McConnell buildings, and its waters flowed down 
into Eight Mile Slough. In 1901, 1902, and 1903 it' was further ex- 
tended to Charles McConnell's alfalfa lands and the lands of Thomas 
McConnell at the southeasterly corner of the McConnell ranch, in 
which use its waters are lost to the complainant's lands below. "D" or 
Middle ditch is a fork of the Alfalfa ditch serving the same alfalfa 
lands and completed between 1901 and 1903. 

"E" or Company ditch, as above stated, began at the Lower Diver- 
sion dam in 1881 under the joint construction of McConnell and Hop- 
pin. Between then and 1884 it was extended as far south as the 
point in the southeast quarter of section 6 on McConnell's ranch de- 



ASDEKSON LAND & STOCK CO. V. M'CONNELL 827 

scribedi on complainant's map as "14 J." Through part of this course it 
runs through natural sloughs or channels previously existing. Its 
southerly Hmit at the time of the transfer of the Hoppin ranch to An- 
dersen, the immédiate predecessor of complainant, appears to hâve 
been about the easterly and westerly half section Hne of section 7 on 
the McConnell ranch. In its course this ditch at that time irrigated 
part of the land on the McConnell ranch between Beef Corral slough 
and Eight Mile slough, and, passing to the east of Eight Mile slough, 
spread its waters upon the McConnell meadows at that point. AU this 
water fiowed by natural gravitation toward Beef Corral slough and 
Eight Mile slough, respectively, and thus went down to the Hoppin 
ranch. 

About the year 1903 the Company ditch was extended by défendants 
south so as to serve the alfalfa lands and the Thomas McConnell lands 
heretofore described. Its southerly terminus, hke the southerly ter- 
minus of the "D" or Middle ditch, is at the division fence between the 
two ranches; but the water so diverted is entirely consumed on the 
McConnell land or, as in times of unusual fiow, is delivered upon the 
Anderson ranch at a point where it cannot be beneficially used thereon. 

The "F" or Tom ditch was built by Charles McConnell in 1879, and 
diverts the waters of Beef Corral slough into Eight Mile slough at 
a point about halfway up the McConnell meadows. "K" or Plowbeam 
ditch No. 1 is a ditch existing as early as 1883, and is extended to a 
short distance above the Anderson north fence. It carries the waters 
of Beef Corral slough into Eight Mile slough. It does not satisfac- 
torily appear by whom this ditch was built; but its location clearly 
indicates that it was intended principally, if not entirely, for the bene- 
fi.t of the Hoppin ranch. Plowbeam ditch No. 2 was built in 1877 by 
Henry Hoppin and enlarged in 1878. It carries the waters of Beef 
Corral slough, diverted at the point 75 A by means of various natural 
sloughs and artificial ditches, into Eight Mile slough immediately north 
of Anderson's northerly fence. From that point in Eight Mile slough 
dams and a séries of ditches radiating southeasterly carry the water 
of the two sloughs thus intermingled out upon the complainant's 
meadows. 

AU of the above ditches except the radiating ditches last mentioned 
are on the McConnell ranch. In addition, many other smaller ditches 
and many dams regulated the flow of the water at the time of the 
transfer of the Hoppin ranch to Anderson. 

Upon the last-named ranch, at the time of the transfer, an elaborate 
System of dams and ditches diverted water from Eight Mile slough 
both easterly and westerly, from Beef Corral slough likewise in both 
directions, and in certain seasons from Quin river easterly. 

From the above description deduced from the évidence it wiU be 
seen that the new Eight Mile ditch and "A" ditch hâve been con- 
structed, and "C", "D", and "E" ditches hâve been extended by the 
McConnells since the transfer of the Hoppin ranch to Anderson, with 
the resuit that aU of the water in Eight Mile creek and of Quin river 
has been diverted to the high alfalfa ground on the McConnell ranch 
and does not reach the Hoppin meadows in the ditches theretof ore ex- 



828 188 FEDERAL EEPOKTEE î . 

isting and hereinabove described. It will be seen that the System of, 
ditches on the McConnell ranch as used prior to the transfer was of 
mutual benefit, and with the Hoppin ditches was adapted to the suc-, 
cessive repeated use of the waters of the two streams, first upon the 
McConnell meadow land, and later upon the meadows of the Hoppin 
ranch. Under thèse circumstances, it is a matter of no surprise to find 
some further évidence of mutual action between the then owners of 
the two ranches. In 1880 Charles McConnell and Henry Hoppin filed 
a joint ditch claim affecting the waters of Ouin river, together with a 
plat showing the course of three différent ditches therein claimed. 
Ditch No. 1, as designated in that claim, started at Upper Diversion 
and to my mind must be identified with "B" ditch above described. 
Ditch No. 2 was west of the river and is of no interest in this contro- 
versy. Ditch No. 3, however, is clearly identical with the upper or 
joint portions of the Company or Alfalfa ditches, and it is clearly this 
ditch which was constructed by Henry Hoppin and Charles McConnell 
in 1881. Ditch No. 3 plainly benefited not only the lands north of the 
township line through which it ran, but flov/ed upon the McConnell 
meadows, in township 46 north, range 38 east, and after use there 
flowed down through Eight Mile slough upon the Hoppin meadows. 
About this time it also appears that there was an excha,nge of lands 
between Hoppin and McConnell; Hoppin conveying to McConnell 
certain tracts in the northerly portion of the présent McConnell 
ranch, and McConnell conveying to Hoppin a considérable quantity of 
land in the présent Andersen ranch, much of which is under the'flow 
of Eight Mile creek and Beef Corral slough. It is claimed by the re- 
spondents that the transfer of thèse lands, in the absence of any clause 
of réservation, conveyed to McConnell ail water rights arising out of 
the joint location notice. While this might be true as to the Ditches 1 
and 2, I think any such intention or purpose clearly negatived as to 
the waters diverted by Ditch No. 3 which discharged upon the upper 
McConnell meadows and formed a part of the waters benefiting the 
lands conveyed to Hoppin in the exchange and thereafter continued 
to so flow. The parties did not act upon any such theory until after 
the purchase by Anderson. Not only was the Upper Company ditch 
constructed by the parties jointly, but it appears from the testimony 
of the witness Thad Hoppin the flow through the headgate was at ail 
times subject to régulation for the benefit of the Hoppin ranch. The 
respondents deny Henry Hoppin's part in the construction of this 
ditch ; but the prépondérance of évidence and the situation of the par- 
ties seem to me conclusive of the fact. As to the waters of Quin 
river, I conclude that complainant and respondent Thomas McCon- 
nell, executor, are each entitled to the waters thereof flowing through 
the ditch at lower diversion, and that complainant is entitled to regu- 
late the flow in such way as to protect its right to one-half of such 
waters. This equal right, however, neither prevents McConnell from 
first using ail the water of the ditch on his lands, nor does it give him 
the right to divert his moiety away from the watershed. The com- 
plainant is, I think, clearly entitled to hâve the water jointly diverted 
by his predecessors come down to him in the channels that existea 



ANDER80N LAND <fe STOCK CO. V. M'CONNELL 829 

prior to the extensions and diversions later made by McConnell to 
new lands as above indicated. 

As to appropriation f rom Quin river other than the amount included 
in the joint diversion mentioned, it is sufficient to say that by a pré- 
pondérance of the évidence the complainant has established a priority. 
The amount of water acquired thus and by the joint appropriation will 
be determined by the acreage to vvhich it was devoted. 

With respect to the question of priority of appropriation of the wa- 
ters of Eight Mile creek other than the amount included in the Flynn 
appropriation, the matter is difficult of solution. The witness Foster 
testifies to a ditch across the Hoppin meadows northwesterly of the 
ranch buildings as being in existence as early as 1873 or 1874. Ap- 
parently this ditch was from Eight Mile slough. This évidence itself 
is not so certain and convincing as could be desired ; but, taken in con- 
nection with the testimony of Thad Hoppin and others and with the 
situation of the parties and the natural configuration of the ground, 
it seems to me sufïïciently clear that the first appropriation of Eight 
Mile waters was made by Henry Hoppin. The McGonnell ranch is 
intersected by numerous small swalelike dépressions or natural chan- 
nels which facilitate the flow and spread of the water, especially during 
seasons of high water, and naturally moisten the adjacent meadows. 
In addition to this, Eight Mile creek when it reached the meadow in 
its natural course spread out fanlike through thèse dépressions as 
heretofore described and gave its entire flow for the benefit of the 
meadow before collecting again into Eight Mile slough. The Hoppin 
ranch has broader meadows, generally flat in character, and largely 
without thèse natural advantages, making necessary to a greater extent 
a resort to artificial means by dams and ditches to spread the water 
over the fields ; and, as water became scarce from more numerous set- 
tlements and increased cultivation in the upper part of the Quin River 
Valley, the Hoppin ranch would be the first to feel the scarcity and 
the necessary resort to artificial means for the distribution of its wa- 
ter. Such corroboration as thèse physical facts afiford, together with 
the évidence given by the witnesses Foster and Thad Hoppin, are, I 
think, suificient to establish a prior appropriation in favor of the com- 
plainant. 

[4] Respondents seem to rest their case both as to Eight Mile 
and Quin river waters upon the contention that Hoppin's use was 
merely of waste water from the McConnell ranch, and rely upon Burk- 
art V. Meiberg, 37 Colo. 187, 190, 86 Pac. 98, 99, 6 L. R. A. (N. S.) 
1104, 1106, 119 Am. St. Rep. 279. But I do not think the doctrine 
of that case applies. In that case it appeared that défendants owned 
valid water rights in several ditches having their headgates in a natural 
stream, and with this water had for a number of years irrigated a 
tract of land. Some of this water by surface drainage from the irri- 
gated land passed upon the field of plaintifï adjoining, where plaintiff, 
by means of an irrigating ditch running parallel with the common 
boundary line, collected'the water and diverted it for her own uses. 
Défendants subsequently dug a parallel ditch upon their own land. 



830 188 FEDERAL BEPOETBB 

thus saving the water which had escaped to plaintiff's land and ditch, 
and carried it to other lands belonging to them and away from plain- 
tiff. It appeared, however, in that case that plaintifï did not daim by 
virtue of an appropriation from the same stream. The court says : 

"The plaintlfE does not assert the right to the use of this water by virtue 
of an appropriation made from the same stream, or any of its tributaries, 
which are the source of défendants" supply. She cannot, therefore, lil^e a 
prior or junior appropriator of water from the same stream, insist upon an 
economical use by the défendants of their appropriation." 

The case, therefore, is not in point for two reasons: First, that 
hère the Hoppins, as we hâve seen, were the first appropriators, except 
to the hmited extent above noted; and, second, that even if their ap- 
propriation was subséquent to that of MeConnell, they had the right to 
insist that the unused water naturally flowing to them from the Me- 
Connell ranch should not be diverted elsewhere, but should be allowed 
to return to the stream to serve their appropriation. There is, strictly 
speaking, under the évidence, no waste water question in this case. 
If MeConnell as an appropriator prior in right had diverted more than 
his fields shoiild need, the excess thus diverted was not the subject of 
any rights resting in him, but was part of the water to which even a 
junior appropriator would be entitled. It was part of the water ap- 
propriated by Hoppin, and could not be diverted elsewhere by Me- 
Connell. It is immaterial, so far as respondents are concerned, whether 
or not Hoppin collected a part of it in a ditch intercepting it on its way 
to Eight Mile slough. 

[5] Respondents also contend with great earnestness that Eight 
Mile creek and Eight Mile slough do not constitute a continuons water 
course; that Eight Mile creek ends'within the MeConnell ranch, and 
its waters therefore are in no sensé subject to appropriation by the 
complainant based upon a diversion made from Eight Mile slough. It 
has already been stated that af ter Eight Mile creek enters the main Me- 
Connell ranch and passes onto the MeConnell meadow it spreàds in 
delta like form losing its banks and definite ehannel. The gradient of 
Eight Mile creek, originally steep, changes as it leaves the higher lands 
and enters the main MeConnell meadows where its débris-burdened 
flood waters naturally meet the overflow of the flood waters of Quin 
river. The resuit inevitably follows that with the cessation of rapid 
flow the débris is dropped and a delta is formed, leaving the water 
to escape to its ultimate destination as best it may, naturally following 
the lowest places. It appears clearly from the testimony that, despite 
the spreading of the water over the meadow, the major portion of it 
flows in a definite course through the low dépressions above described, 
which are so interrelated that, while no definite ehannel traverses the 
meadow land, a number of broken or partial channels to Eight Mile 
slough may be identified upon the surface. Even respondents' engineer 
admits that the source of the water in Eight Mile slough is Eight Mile 
creek, and I am left with no doubt upon the évidence that the two con- 
stitute but one and the same natural water course. It is not material 
that no definitely defined ehannel appears on the surface. Visible 
banks are not necessary charàcteristics of a water course. 



ANDKRSON LAND & STOCK CO. V. m'OONNKLL 831 

In New York, C. & St. L. R. Ce. v. Hamlet Hay Co., 149 Ind. 344, 
47 N. E. 1060, the court says : 

"That the banks of the streams are not everywhere elearly and sharply de- 
fined is not eontroUing. The eharacter of the country through which the 
stream flows must be taken into account. Where the country is hilly or roU- 
ing, the fall rapid, and the soil easily eut and vvashed, there will, In gênerai, 
be a deep and well-marked channel. Where, however, the country is flat, the 
fall slight, ànd the soil turfy and full of roots and strong grass, there the 
channel will often be shallow and the sides in many places not sharply de- 
flned. But as said in Mitchell v. Blain, 142 Ind. 604, 42 N. E. 230 (citing au- 
thorities) : 'A stream does not cease to be a water course and become mère 
surface water, because at a certain point it spreads out over low ground, sev- 
eral rods in width, and flows for a distance without a deflned channel or 
banks before flowlng again in a delinite channel. If a water course is lost 
in a swamp or lake, It is still a water course, if it. émerges therefrom In a 
well-defined channel.' " 

See, also, Lambert v. Alcorti, 144 111. 313, 33 N. E. 53, 21 L. R. A. 
611; Rigney v. Tacoma Lt. & Power Ce, 9 Wash. 576, 38 Pac. 147, 
148, 26 L. R. A. 425; Macomber v. Godfrey, 108 Mass. 219, 11 Am. 
Rep. 349; 2 Farnham, p. 1558. 

In Strait v. Brown, 16 Nev. 317, 40 Am. Rep. 497, the waters of 
a spring left their natural channel and flowed underground for a dis- 
tance of half a mile into a certain creek. The court protected an 
appropriation from the creek as against a diversion from the springs 
on the ground that even in the absence of a definite surface channel 
the continuity of the stream was established by reason of the fact that 
the springs were the definite source of supply. 

Whether, therefore, we consider Eight Mile creek and Eight Mile 
slough a continuons stream in visible fact, or décide its continuity on 
the ground adopted in Strait v. Brown, it appears sufficiently clear that 
an appropriator from Eight Mile slough may restrain a diversion from 
Eight Mile creek. 

[6] This brings us to the question of the extent of the rights of 
the parties in the waters in controversy. The amount of water to 
which the complainant is entitled from the several streams in question 
can, I think, best be determined under the évidence by the acreage 
severally irrigated by thèse streams. In fact, I find no other practical 
basis afforded by the évidence. The amount of water necessary for 
the irrigation of thèse lands is estimated by complainant's engineer at 
approximately two miners' inches an acre, and at three miners' inches 
by respondents' engineer. I am disposed upon ail the évidence to 
adopt the former estimate as being amply sufficient. Complainant's 
engineer Coleman gives the acreage under irrigation on the complain- 
ant's ranch from Twelve Mile creek as 310.14 acres; and, this being 
not disputed, it would be entitled thus to 620.28 miners' inches of 
Twelve Mile water. From Eight Mile slough the acreage irrigated on 
the Hoppin ranch was 608.33 acres, and this area therefore required 
1,216.66 inches of water. The Flynn appropriation for 6.77 acres 
would consume 13.54 inches. Irrigation on the complainant's ranch 
from Quin river was applied to 125.2 acres of meadow; and 114.6 
acres of pasture, irrigated from Beef Corral slough ; and 219.85 acres 
of pasture lying between and irrigated from both the river and the 



832 1S8 FEDERAL REPORTEE 

slough. This total of 459.65 acres would need 919.3 inches of water. 
Thèse figures will be adopted as the measure of complainant's rights. 

It will be obvious that the above estimate of complainant's appro- 
priation from Eight Mile slough includes water diverted from Quin 
river or Beef Corral slough by the Company ditch, the Plowbeam 
ditches and Tom ditch into Eight Mile slough above the Anderson 
ranch. There is not sufficient data in the évidence to segregate the 
amounts of the waters thus mingled; but a decree may be so drawn 
as to protect the complainant, if necessary, to the end that Quin river 
water may continue to swell the Eight Mile water sufficiently to satisfy 
the appropriation made from the latter channel. 

The estate of Charles McConnell has clearly an appropriator's right 
to the waters of Eight Mile creek and Quin river in addition to what 
has been specified sufficient to irrigate a considérable acreage of 
meadow and pasture, but subordinate to complainant's rights. The 
évidence, however, does not afïord any basis on which findings can 
be made as to the acreage of the McConnell lands irrigated by the 
streams severally. The total acreage irrigated by McConnell, other 
than the alfalfa lands, may be determined; but I cannot tell the sev- 
eral tracts lying under the flow of the différent streams in contro- 
versy. No other satisfactory basis of determining their secondary 
right seems to be presented. In view of the fact, however, that the 
Charles McConnell estate may under this décision first use the waters 
of Quin river and Eight Mile creek to the fullest extent compatible 
with their obligation to deliver to complainant through the channels 
named, the amounts of water to which they are entitled as above stated, 
it does not appear that respondents can or will sufifer any injury in this 
regard. 

From what has been saîd it is obvious that Thomas McConnell in- 
dividually has no right to any of the water in controversy except in 
subordination to the other parties herein. 

Let a decree be entered in accordance with the findings accompany- 
ing tliis opinion, with costs to the complainant. 



PHYSICIANS* DEFENSE CO. v. COOPEE, State Ins. Com'r. 
(Circuit Court, N. D. Californla. June 6, 1911.) 

INSUKANCE (§ 2*) — CONTKACTS OF "INSURANCE" — REGULATION. 

An associatiou organlzed to protect physicians against civil prosecu- 
tions for malpractice, which Issues contracts to physicians for a specified 
considération and agrées to défend at its ovvn cost, not in excess of a 
specified sum, actions against physicians for malpractice, without as- 
suming the payment of any judgment in any suit defended, is engaged 
In the business of Insurance within Civ. Code Cal. §§ 2527, 2531, defining 
"Insurance" as a contract whereby one undertakes to Indemnify another 
against loss or liability arising from ai> unknown or contingent event, 
and providing that any contingent or unknown event which may damnify 
a person or create a llability against him may be insured against, since 
the contract is one of indemnlty and not one to render personal services 

•For other cases see same toplc & { numksb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexer 



PHTSICIANS' DEFENSE CO. V. COOPEE 833 

for another, and such company is subject to the provisions of the stat- 
utes of tlie State regulating the business of insurance therein. 

[Ed. Note. — For other cases, see Insurance, Cent. Dig. § 1% ; Dec. 
Dig. § 2.* 

For other définitions, see Words and Phrases, vol. 4, pp. 3674-3677.] 

In Equity. Suit by the Physicians' Défense Company against E. C. 
Cooper, as State Insurance Commissioner of California. Application 
for injunction denied, demurrer to bill sustained, and bill dismissed. 

Stanley Moore and Goodfellow, Eells & Orrick, for complainant. 

U. S. Webb, Atty. Gen., and E. B. Power, Asst. Atty. Gen., for 
défendant. 

VAN FLEET, District Judge. The bill seeks to restrain the de- 
fendant, as State insurance commissioner, from threatened interfér- 
ence by that officer with complainant's business by proceedings to 
require it to conform to the provisions of the statutes of the state 
regulating the business of insurance therein. The order to show 
cause is met by a demurrer which challenges the bill as devoid of eq- 
uity ; and the sole question presented is whether the business in which 
.complainant is engaged is that of insurance, and so subject to the 
supervision of the insurance commissioner. This question dépends 
upon the nature of the contracts the complainant issues to its patrons ; 
that is, whether they are contracts of insurance. 

As disclosed by the bill, the purposes for which the complainant is 
organized, as stated in its articles .of incorporation, are "to aid and 
protect the médical profession in the practice of medicine and surgery 
by the défense of physicians and surgeons against civil prosecution 
for malpractice" ; and its plan of business as therein sèt forth is as 
f ollows : 

"The association will issue to physicians and surgeons, upon stated and 
agreed compensation, contracts by which it will undertake and agrée to dé- 
fend the holder of the eontract, at its own expense, against any action brought 
against him for damages for alleged malpractice in relation to or in connec- 
tion with services performed, or which should hâve been performed, within 
the time covered by the eontract ; but the association shall not in any dé- 
fense eontract issued by it assume or agrée to assume or pay any judgment 
for damages for malpractice rendered against the holder of such eontract." 

Under the eontract issued by it, complainant undertakes, for an 
agreed and stipulated annual payment in the nature of a premium, 
to défend the holder "against ail suits for damages for civil malprac- 
tice based upon professional services rendered by himself or his agent 
during the term of this eontract, at its own expense, not exceeding 
five thousand dollars in défense of any one suit, and not exceeding 
in the aggregate ten thousand dollars in défense of suits based on 
services rendered by the holder hereof or his agent within one year 
from the date of this eontract." 

And the eontract provides: 

"Upon receipt of notice from the holder hereof that a suit bas been com- 
menced against him for damages for civil malpractice, the company wUl em- 
ploy a local attorney, in whose sélection the holder hereof shall hâve a voice, 

•For other cases see same topic & § numbbb In Dec. & Am. Digs. 1907 to date, & Hep'r Indexes 
188 F.— 53 



834 188 FEDEKAIi RBPOETEa 

who, together with the company's attorney, will défend the case without ex- 
pense to the holder hereot 

"Such défense will be malntained untll ûnal judgment shall bave been ob- 
tained in favor of the holder hereof, or until ail remédies by appeal, wrlt of 
error, or other légal proceedings, shall hâve been exhausted, or until the above- 
mentioned sums shall hâve been expended in said défense; providlng that 
thls contract does net cover sults based upon criminal acts or suits involving 
the collection of fées for services. 

"Said Company does not obligate itself to pay or to assume or to secure 
the payment of any judgment rendered against the holder hereof in any suit 
defended by it. 

"The Company shall not compromise any suit or elaim for malpractice 
against the holder hereof." 

The foregoing are the material and substantive f eatures of the con- 
tract issued by complainant to its patrons ; and the contention of the 
complainant is that, as indicated by its terms, it is purely a contract 
for Personal services and embraces none of the essential features of 
a contract of insurance. The correctness of this claim must be de- 
termined by ascertaining the real nature and purpose of the contract 
when construed in the light of the provisions of the statute of the 
state declaring what shall be deemed a contract of insurance as therein 
defined, ignoring, if necessary, considérations arising from the mère 
outward semblance or form in which the contract is cast. 

Section 2527 of the Civil Code provides: 

"Insurance is a contract vphereby one undertakes to indemnify another 
against loss, damage or llability arising from an unknown or contingent 
event." 

And section 2531 of the same Code provides: 

"Any contingent or unknown event, whether past or future, which may 
damnify a person having an insurable Interest, or create a liabillty against 
him, may be insured against, subject to the provisions of this chapter." 

Section 2532 excepts from the category of insurable contingencies 
drawings in a lottery or for or against any chance or ticket in such 
lottery drawing a prize. 

It will at once be seen that thèse provisions are sufficiently broad 
in their scope to include every contract the effect and purpose of which 
is to indemnify the holder against any contingent liability as being in 
its nature insurance; and to include as the proper subject of such con- 
tracts any conceivable event of an uncertain or unknown nature the 
effect of which may give rise to liability or loss, saving only contin- 
gencies dépendent upon events deemed contrary to public morals. 

Wherein the contrapt involved is lacking in the éléments of a con- 
tract of insurance as thus defined is not readily to be perceived. Very 
clearly to my mind it is a contract providing indemnity against a con- 
tingent liability. The liability of the holder to be sued is certainly a 
contingent thing; and the undertaking, in the event of suit, to hold 
him harmless, limited though it be, is quite as certainly an indemnity. 

Complainant argues that the élément of indemnity is wholly elimin- 
ated by the provision which exempts it from obligation to pay the 
judgment ; and that ail it contracts to do is to secure compétent coun- 
sel and, at its own expense, see that the suit is properly defended. 
The contract is more or less artfully drawn to put forward this idea, 



835 

but not sufficiently so to conceal the fact that such is not its under- 
lying purpose and effect. If the amount of the final judgment was the 
extent of the liabihty incurred in the event provided against, the con- 
tention might be more plausible; but there are other éléments of 
damnification which such suits entail. Indeed, not infrequently the 
amount of the judgment recovered is the small end of the loss incur- 
red and suffered by a défendant in the class of litigation covered. In 
many instances the costs and expenses of such suits — expansés of a 
nature for which no recoupment may be had — far exceed the amount 
awarded by the judgment; and thèse the complainant oUigates itself, 
up to the limit of $5,000, to pay. This is clearly indemnity ; and ob- 
viously it is not essential to make it a contract of insurance that it 
shall indemnify against ail loss. But complainant argues that such 
extra légal costs and expenses, if any are incurred, are not the liability 
or loss of the contract holder, for he does not incur them; that the 
liability incurred in this regard, if any, is that of complainant and not 
the physician. This is begging the question. The obligation rests 
upon the complainant, it is true, but only by reason of its contract by 
which it has assumed it; the primary liability to such costs and ex- 
penses is incurred by and rests upon the défendant physician, and but 
for bis contract he would be called upon to pay them. It is this very 
feature that constitutes the contract one of indemnity. But it is con- 
tended by complainant that the essential feature of ail insurance is a 
money reimbursement for damage or loss sustained or liability incur- 
red by the insured; and that a contract whereby one undertakes 
merely to perform certain services for another, and to pay any ex- 
penses incurred in such service out of his own pocket, is not reim- 
bursement in money, and so not insurance. This is only another way 
of putting complainant's claim that this is but a contract for personal 
services; and, of course, if that were the real nature of the contract, 
the discussion would be at an end. But, as suggested, the real nature 
of the contract is to be determined not so much by regarding its form 
as its efifect; and for this purpose its terms may be transposed and its 
stipulations so stated as to show what is really accomplished. If, as 
aptly suggested by the Assistant Attorney General, the contract was 
one which by its terms provided that the holder in the event of a suit 
against him should himself proceed to défend it and pay the costs 
and expenses in the first instance out of his own pocket, and that the 
complainant should thereupon be obligated to reimburse him for such 
outlay up to the amount of $5,000, excepting only its liability to pay 
any part of a final judgment, would any one say that such a contract 
was not one of insurance? And yet that is precisely the resuit accom- 
plished under a slightly différent guise and by going the other way 
about. 

It is said that, if this is a contract of insurance, then the contract 
by which an attorney for a stipulated retainer or fee undertakes at 
his own expense to défend a client in certain litigation or against a 
certain class of suits, or a contract by which a board of trade under- 
takes in considération of an annual payment by its members to pros- 
ecute and défend at its own expense ail litigation growing out of the 



836 188 FEDERAL KEPORTEK 

business in which such members are engaged, are equally contracts 
of insurance. But we are not hère concernée! with the nature of such 
contracts. If attorneys and boards of trade are engaged in the busi- 
ness of making such contracts, it may be of interest to the insurance 
commissioner ; but ail we are hère concerned with is whether the con- 
tract under considération is an insurance contract, and so renders the 
complainant, which is engaged in the business of putting forth such 
contracts, amenable to régulation under the insurance laws of the 
State. That the contract is one of insurance, I entertain no doubt. 

Complainant relies, in support of the contention advanced by it, 
upon Vredenburgh v. Physicians' Défense Co., 126 111. App. 509, and 
State ex rel. Physicians' Défense Co. v. Laylin, 73 Ohio St. 90, 76 
N. E. 567, both involving a construction of the same contract, and 
wherein conclusions were reached in harmony with complainant's 
claim that the contract is merely one for personal services. I am un- 
able to acquiesce in the views expressed in those cases. The reasoning 
proceeds from a considération of the formai terms of the contract 
in suit as affected by certain gênerai définitions of the essentials of a 
contract of insurance as stated in the text books ; and both cases ig- 
nore the considération that the liability to loss, incurred in the con- 
tingency as to which the contract relates, involves a liability beyond 
the naked amount of the judgment that may be recovered. 

On the other hand, the views herein expressed will be found fully 
sustained in the later case of Physicians' Défense Co. v. O'Brien, In- 
surance Com'r, 100 Minn. 490, 111 N. W. 396, where the Suprême 
Court of Minnespta, interpreting the same contract in the Hght of a 
statutory définition very similar to and no broader than our own, hold 
it to be clearly a contract of insurance. 

The application for an injunction must be denied, the demurrer 
sustained, and the bill dismissed ; and it is so ordered. 



UNITED STATES v. STONE et al. 
(District Court, D. Maryland. July 5, 1911.) 

1. Statutes (§ 241*) — Pénal Statutes— Construction. 

The court, in construlng a higlily pénal statuts, may not extend doubt- 
ful words beyond thelr natural meaning in the connection in which they 
are used ; but, though the statute must be strictly construed, it must not 
be so construed as to defeat the législative wjll. 

[Ed. Note.— For other cases, see Statutes, Cent. Dig. § 322 ; Dec. Dig. 
§ 241.*] 

2. CoNSPiBACY (§ 29*) — Injuet— Deprivation op, Kigut to Votbî— Cbiminal 

Responsibility— "Injure." 

Pen. Code, § 19 (Act March 4, 1909, e. 321, 35 Stat. 1092 [U. S. Comp. 
St. Supp. 1909, p. 1396]), punishlng persons conspirlng to Injure any citi- 
zen lu the free exercise of any right or privilège secured to him hy the 
fédéral Constitution and laws, eovers a conspiracy to deprive a citizen of 
hls right to vote at a congresslonal élection and thereby injure him, 
withln the ordinary meaning of the word "Injure," and a consplraey to 
deprive lUiterate negro voters of thelr right to vote by preparlng the bal- 

•For other cases see same topio & S numeee In Dec. & Am. Digs. 1907 to date, & Rep'r Infleies 



UNITED STATES V. STONE 837 

lots In such a way as to make it difflcult to vote for thelr candidate for 
Congress Is punishable. 

[Ed. Note. — For other cases, see Conspiracy, Cent. Dlg. 8 49; Dec. Dig. 
§ 29.* 

For other définitions, see Words and Phrases, vol. 4, pp. 3612, 3613.] 

3. CoNSPiRACT (§ 43*) — Deprivation of Riqhts— Indictment— Requisites. 

An indictment charglng a conspiracy to deprive negro voters of their 
rlght to vote at a congressional élection, in violation of Pen. Code, § 19 
(Act Marcli 4, 1909, c. 321, 35 Stat. 1092 [U. S. Comp. St. Supp. 1909, p. 
1396]), need not allège the names of the negro voters whom défendants 
intended to injure. 

[Ed. Note. — i'or other cases, see Conspiracy, Cent. Dlg. |§ 79-99; Dec. 
Dig. § 43.*] 

4. CoNSPiKACY (§ 43*) — Depbivation of Riqhts— Indictmbn't—Eeqiiisites. 

An indictment, alleging that accused aided and abetted two persons 
named vvho conspired to deprive citizens of their right to vote at a con- 
gressional élection by printing the ballots for the other two wlth knowl- 
edge of their purpose, is sufficient as agalnst a demurrer. 

[Ed. Note. — For other cases, see Conspiracy, Dec. Dig. § 43.*] 
6. CoNSPiEACT (§ 43*) — Deprivation of Riqhts— iNDioTMENT—REquisiTES. 

An indictment, charglng a violation of Pen. Code, § 37 (Act March 4, 
1909, c. 321, 35 Stat. 1096 [U. S. Comp. St. Supp. 1909, p. 1402]), punlsh- 
ing a conspiracy to commit the offense punishable by section 20, punlsh- 
Ing any one who under color of any law deprives an inhabltant by rea- 
son of color or race of any rights secured by the fédéral Constitution or 
laws, which allèges that a state law requires that the officiai ballots in 
a desiguated part of the state shall be arrangea in alphabetical order 
with a désignation of the political party, and that sample ballots must 
be posted before the élection, and that In other parts of the state the su- 
pervisors of élection may arrange the names of the candidates in any 
order without party désignation and wlthout furnlshing sample ballots ; 
that the Législature in enacting the law intended to give the supervlsors 
of élection of the counties where the negro population is large the oppor- 
tunity to so arrange the ballots as to deprive negro voters of the right 
to vote ; and that défendants by the form of the ballots adopted made It 
extremely diffieult for negro voters to vote their choice at a congressional 
élection, etc. — Is sufficient as agalnst a demurrer, though it does not al- 
lège that the state statute is, on Its face, directed against negro voters, 
and does not disclose an intent to discriminate agalnst negro voters. 

[Ed. Note. — For other cases, see Conspiracy, Cent. Dig. §i 79-99; Dec. 
Dig. § 43.*] 

John E. Stone and others were indicted for crime. Demurrer to 

each indictment overruled. 

John PhiHp Hill, Edgar H. Gans, and J. Craig McLanahan. Asst. 
U. S. Atty., for the United States. 

William L. Marbury, WilHam S. Bryan, Jr., Edgar Allan Poe, and 
William L. Rawls, for défendants. 

Before IVIORRIS and ROSE, District Judges. 

ROSE, District Judge. Tv^^o indictments hâve been retumed 
against the above-named défendants. They hâve demurred to each of 
them. The government says that indictment 354 properly charges a 
violation of section 19 of the Pénal Code (Act March 4, 1909, c. 321, 
35 Stat. 1092 [U. S. Comp. St. Supp. 1909, p. 1396; R, S. § 5508]). 
That section provides for the punishment of any two or more persons 
who conspire to injure, oppress, threaten, or intimidate any citizen in 

•For other cases see same topic & § numbsb in Dec. & Am. Digs. 1907 ta date, & Rep'r IndexM 



838 188 FEDERAL REPORTEE 

the free exercise or enjoyment of any right or privilège secured to Wm 
by the Constitution and the laws of the United States or because of 
his having so exercised the same. 

There are two counts in the indictment. They are alike, except that 
in the first count the right or privilège of the citizens interfered with 
is said to be the right to vote at the congressional élection held on the 
8th day of November, 1910, in the Fifth congressional district of 
Maryland for a représentative in the Congres s of the United States. 
In the second count the right or privilège is alleged to be the right to 
vote at said congressional élection for a candidate for Congress with- 
out discrimination against them by the state of Maryland acting 
through its élection officers and otherwise on account of their race and 
color. 

In each count it is alleged that the citizens in question were ail 
duly qualifîed and registered under the laws and Constitution of 
Maryland and the laws of the United States to vote for such repré- 
sentative' in Congress at said élection in Charles county, Md. 

When we speak of the indictment, it will therefore be understood 
that what we say is applicable to each of the counts, unless the con- 
trary is stated. 

The indictment charges that on November 8, 1910, an élection was 
held in the Fifth congressional district of Maryland to choose a repré- 
sentative in the Congress of the United States. The défendants, 
Stone and Miller, together with one J. Wirt Wilmer, were under the 
laws of Maryland supervisors of élection for Charles county. Charles 
county is in the Fifth congressional district. It was their officiai duty 
to provide and cause to be printed the ballots to be used at such élec- 
tion. No ballots except those provided by them could lawfully be cast 
or counted. In Charles county there were a large number of persons 
of the negro race and of black color, citizens of the United States 
and of the state of Maryland and résidents of Charles county. They 
were duly qualified and registered voters in such county, and under 
the Constitution and laws of Maryland and the Constitution of the 
United States were entitled to vote for a représentative in Congress 
at said élection. A large number of said negro voters were illiterate. 
They could neither read nor write. There is no educational qualifica- 
tion for the right to vote prescribed by the Constitution and laws of 
Maryland. Stone and Miller constituted a majority of the board of 
supervisors of élection. They conspired together to injure a large 
number of the duly qualified and registered negro voters in Charles 
county on account of their race and color in the free exercise of their 
right to vote at the élection named for a représentative in Congress. 
The indictment says that that right is a right secured to them and each 
of them by the Constitution and laws of the United States. Stone 
and Miller prepared and had printed and folded the officiai ballots 
in such form that any voter could easily vote for the Démocratie can- 
didate. It was difiicult for any of the illiterate negro voters to vote 
for the Republican candidate. It would be impossible for many of 
them so to do. A detailed description of the ballot is given in the in- 
dictment. It is not necessary to repeat that description hère. The 



UNITED STATES V. STONE 839 

ballot as described was so peculiar as to suggest that those who di- 
rected its préparation must hâve had some other purpose in mind than 
to facilitate the qualifîed and registered voters of the county in vot- 
ing for the candidates of their choice. It was conceded at the argu- 
ment that such a ballot made it very much more difiScult to vote for 
the Republican than for the Démocratie candidate for Congress. 
The indictment says that the form of ballot was devised by Stone and 
Miller with the intent and purpose, on account of the race and color 
of said negro voters, to make it impossible for many of the duly qual- 
ified and registered negro voters of Charles county, and difhcult for 
any of them, to vote at said congressional élection for the candidate 
of their choice ; the said Stone and Miller well knowing that said duly 
qualifîed and registered negro voters would in ail probability vote for 
the candidate of the Republican party and not for the candidate of 
the Démocratie party. 

The défendant Dulany is charged with aiding and abetting Stone 
and Miller by printing the ballots for them. It is said that he well 
knew that Stone and Miller's purpose in causing the ballots to be 
printed in the way they were printed was the purpose already set 
forth in the indictment. 

The défendants say that the indictment is bad because such a con- 
spiracy as is charged against them is not a conspiracy to injure the 
negro citizens referred to within the meaning of the word "injure" as 
used in section 19. They argue that no conspiracy is punishable by 
the statute in question unless the purpose of it is to cause personal 
or bodily harm to a citizen or to do some act with intent to control 
or coerce his will. It is contended that the statute is not violated un- 
less the thing which is purposed to be done is in the nature of a 
threat, an in jury, an oppression, or an intimidation. A conspiracy 
merely to hinder, delay, or obstruct the exercise of the rights men- 
tioned in the statute is not made a crime by it unless the conspiracy 
contemplâtes as the means of its accomplishment the doing of bodily 
harm or the putting in fear. The défendants claim that to give to 
this section the construction contended for by the government will 
make it applicable to ail f raudulent practices at congressional élections 
participated in by two or more persons. They point out that this sec- 
tion 19 was originally enacted contemporaneously with many other 
provisions punishing various spécifie acts of fraud or corruption at 
congressional élections. 

Those other provisions were repealed in 1894. 

[1] The statute is highly pénal. The punishments prescribed by' it 
are much more severe than many of those which were prescribed for 
other élection offenses. In such a statute doubtful words are not to 
be extended beyond their natural meaning in the connection in which 
they are used. 

This prosecution belongs to a class of cases in which the courts 
hâve thought it best to insist on the technical as well as the substantial 
accuracy of ail pleadings. Still it remains true that even such a stat- 
ute, though it should be construed strictly, must not be so construed 



840 188 FEDERAL REPORTER 

as to defeat the législative will. Baldwin v. Franks, 120 U. S. 691, 
7 Sup. Ct. 656, 763, 30 L. Ed. 766. 

In this case the government does not ask that the word "injure" 
shall be given any other construction than that which it usually has. 

[2] Unlawfully to deprive a citizen of the United States of his 
right to vote at a congressional élection is to injure him in any ordi- 
nary use of the word "injure." 

The Suprême Court has said of this statutethat it covers any con- 
spiracy to prevent the exercise of any of the rights- protected by it, 
or to throw obstruction in the v/ay of exercising such right, or for the 
purpose or with intent to prevent its exercise. United States v. Wad- 
dell, 112 U. S. 80, 5 Sup. Ct. 35, 28 L. Ed. 673. 

It does not f ollow that such a construction of the statute will make 
it the all-embracing enactment that défendants describe. A voter who 
votes for a Republican candidate for Congress may be in a very 
gênerai sensé injured by a fraudulent practice which results in the re- 
turn of a Démocratie candidate which would not otherwise hâve been 
returned. Indeed, every citizen, whether he voted for the Republican 
or the Démocratie candidate, or for neither, might be said to be in- 
jured by a fraudulent return. It does not f ollow, however, that either 
the Republican voter or the citizens in gênerai are thereby injured in 
the sensé meant by this statute. A public nuisance injures ail the pub- 
lic. For ail that, it is only some person who is injured in some way 
differing from that of the great body of the public who at common 
law may maintain an action for the damage resulting from such nui- 
sance. It is not every wrongful act which alters the resuit of the 
élection which is punishable under the section in question. It must be 
some act which is intended to prevent some citizen or citizens from 
exercising their constitutional rights. 

We think that the conspiracy charged is a conspiracy to injure the 
negro voters in question in the f ree exercise of a right or privilège se- 
cured to them by the Constitution of the United States. Défendants 
say that, even if this be so, the conspiracy charged is one which nec- 
essarily must hâve been intended to injure voters because they were 
Republicans and not because they were negroes. The form of ballot 
made no discrimination as to race or color. It was a ballot upon 
which no one would find it easy to vote for the Republican candidate. 
Any man, whether he was black or white, who was illiterate or poorly 
educated or had clumsy fingers or poor sight, might hâve found it 
impossible to do so. AU this may be conceded. The right to vote 
at a congressional élection is a right which was not dépendent upon 
the race or color of the voter. The motive of the défendants might 
hâve been, as charged in the indictment, to disfranchise negro voters. 
If they knowingly conspired to prevent légal and qualified negro vot- 
ers from voting, they ofifended against the statute. It would make no 
différence if in trying to do what they wanted to do they also in- 
jured other voters. 

[3] Défendants say that the indictment is bad because it does not 
set forth the names of the negro voters whom the défendants are al- 



UNITED STATES V. STONB 841 

leged to hâve intended to injure, and it does not say that their names 
are to the grand jury unknown. This objection is, we think, disposed 
of by the décision of the Suprême Court in the case oi WilHamson 
V. United States, 207 U. S. 449, 28 Sup. Ct. 163, 52 L. Ed. 278. 

[4] The défendant Dulany say s that, whatever may be the case as 
to his codefendants, he is not charged with any punishable crime. He 
says he committed no offense in printing the ballots that Stone and 
Miller told him to print, although he knew why they asked him to 
print so peculiar a ballot. We think the indictment is on its face good 
as against him. What the proof may be is another question. 

[5] We pass now to the considération of the demurrer to indict- 
ment No. 355. By that the défendants are charged with the violation 
of section 37 of the Pénal Code (R. S. § 5440) by conspiring to com- 
mit the offense defined and prohibited by section 20 of the Pénal Code 
(R. S. § 5510). The latter section imposes punishment upon any one 
who "under color of any law, statute, ordinance, régulation or custom 
willfully subjects, or causes to be subjected, any inhabitant * * * 
to the deprivation of any rights, privilèges or immunities secured or 
protected by the Constitution and laws of the United States * * * 
by reason of his color or race." 

Like indictment No. 354, this contains two counts. They difïer 
from each other in the same and in no other respect than that in 
which one count of No. 354 differs from the other. 

No 355 contains ail the allégations made in 354. They are phrased 
in substantially the same language. The material distinction between 
the two indictments is that No. 355 contains a number of allégations 
charging that what the défendants are said to hâve donc was done un- 
der color of State laws, colloquially described as the Wilson laws. 
The indictment says that in Baltimore city and in 12 of the counties 
of the State there are in the aggregate, approximately, 191,451 regis- 
tered white, and 28,448 registered negro, voters. In that city and in 
those counties the law requires that on the officiai ballots the names 
of ail the candidates for each office shall be arranged in alphabetical 
order with the désignation of the party or principle represented by 
them foUowing after their respective names. Spécimen copies of the 
ballots are required to be posted not less than four days before the 
élection. Thèse counties are commonly called the "non Wilson bill 
counties." The remaining 11 counties are known as the "Wilson bill 
counties." In them there are about 39,268 registered white, and 20,- 
345 registered negro, voters. In the latter counties party désignations 
are not allowed on the ballots. The supervisors of élection are au- 
thorized to arrange the names of the candidates for each office in any 
order they see fit. No spécimen ballots are required to be posted. It 
is charged that the Législature in enacting a différent élection code 
for the portion of the state in which the negroes were relatively nu- 
merous intended "to give the supervisors of élection of said Wilson 
counties the opportunity and power of so arranging the officiai ballots 
to be voted in said Wilson counties in any élection to be held there- 
in, and so to keep the said arrangement secret as to subject by reason 
of their race and color a large number of the duly qualified and régis- 



842 188 FEDERAL BEPOETBR 

tered negro voters, aforesaid, and especially those who were illiterate, 
being citizens of the United States and of the state of Maryland, and 
inhabitants of the said Wilson counties, to the deprivation of the right 
of voting without discrimination by reason of their race and color at 
any public élection to be held in said Wilson counties." 

In addition to the objections which were made to the indictment in 
No. 354, the défendants say that indictment No. 355 is bad because it 
is not alleged that the so-called Wilson laws on their face directed 
or made a discrimination against negro voters. 

It is argued that, unless the statutes show by their wording that 
there is the intent to discriminate against negro voters as such, any 
discrimination made by the défendants in fact was not made under 
color of thèse laws, as the word "color" is to be construed in the stat- 
ute in question. 

We think that this contention is answered in the négative by the 
opinion in the Suprême Court in Yick Wo v. Hopkins, 1 18 U. S. 356, 
6 Sup.Ct. 1064, 30 L. Ed. 220. 

In view of the fact that we hâve arrived at the conclusion that the 
défendants must stand their trial, we hâve purposely refrained from 
discussing with élaboration any of the questions involved. Many 
of them will in other forms doubtless arise at the trial. 

The demurrer to each indictment will be overruled. 

MORRIS, District Judge, concurs. 



FITHIAN et al. v. ST. LOUIS & S. F. RY. CO. 
(Circuit Court, W. D. Arkansas. June 22, 19H.) 

1. Death (§ 9*) — ^Action foe Oausing Death— Riqht or Action— Statutort 

Provisions. 
The right of action for causing death created by Employer's Liability 

Act April 22, 1908, c. 149, 35 Stat. 65 (U. S. Comp. St. Supp. 1909, p. 

1171), must be determined by that act. 

[Ed. Note. — For other cases, see Death, Dec. Dig. § 9.* 

What law governs actions for wrongf ul death, see note to Burrell v. 

Fleming, 47 C. C. A. 606.] 

2. Death (§ 31*) — Action foe Causing Death— Pebsons Bntitled to Sue. 

Since the right of action for Injuries resulting In death is based en- 
tlrely upon statute, no such right existing at common law, the action can 
be brought only in the name of the person or persons to whom the right 
Is given by the statute. 

[Ed. Note. — For other c'ases, see Death, Cent Dig. §§ 35-46 ; Dec. Dig. 
§ 31.*] 

3. Death (§ 31*) — Action for Causing Death— Peesons Entitled to Sue— 

Next of Kin. 

Under Employer'» Liability Act April 22, 1908, c. 149, 35 Stat. 65 (U. S. 
Comp. St. Supp. 1909, p. 1171), providing that every common carrier shall 
be liable In case of the death of any persons employed by it in Interstate 
commerce to bis or her Personal représentative, for the beneflt of the 
surviving widow or husband and children of such employé, and, if none, 
then of the next of kin dépendent upon such employé, the next of kin bas 

•For other cases see same toplc & S numeee in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



FITHIAN V. ST. LOUIS & S. F. RT. CO. 843 

no rlght of action where there is no personal représentative; the phrase 
"if none" referring to tbe beneflciaries, and net to the person to whoni 
the carrier is liable. 

[Ed. Note.— For other cases, see Deatl), Dec. Dig. § 31.*] 
4. Statutes (§ 200*) — Constbuction— Général Rules— Punctuation. 

Wtiile ttie punctuation of statutes will not be permitted to defeat the 
oBvious intent of the lawmakers, it will be given considération when 
there is a claim that the meaning of the statute is doubtful. 

[Ed. Note.— For other cases, see Statutes, Cent. Dig. § 278; Dec. Dig. 
§ 200.*] 

At Law. Action by Jessie Fithian and others against the St. Louis 
& San Francisco Railway Company. Heard on demurrer to the com- 
plaint. Demurrer sustained. 

Thls is an action for the recovery of damages by reason of the alleged 
wrongful death of Floyd 0. Fithian, an employé of the défendant, alleged to 
hâve been caused by the négligence of defendant's servants. The action îs 
brought under the employer's liability act of Congress, approved April 22, 
1908, c. 149, 35 Stat. 65 (U. S. Comp. St. Supp. 1909, p. 1171). The plaintifCs 
are the widow and only chlld of the deceased. The complalnants allège that 
there Is no adminlstrator of the estate;- that the plaintiffs are the next of 
kin of the deceased, and were dépendent upon him. The défendant demurred 
upon the ground that the plaintiffs hâve no légal capacity to sue, as an action 
under this act of Congress can only be maintalned by the Personal représenta- 
tive of the deceased. 

Hill, Brizzolara & Fitzhugh, for plaintiffs, 
B. R. Davidson, for défendant. 

TRIEBER, District Judge (after stating the facts as above). [1] 
As this is a cause of action created by an act of Congress it must be 
determined by that act. Schreiber v. Sharpless, 110 U. S. 76, 80, 3 
Sup. et. 423, 28 L. Ed. 65 ; Fulgham v. Midland Valley Ry. (C. C.) 
167 Fed. 660-; Walsh v. N. Y., N. H. & H. R. R. Co. (C. C.) 173 
Fed. 494; Cound v. A., T. & S. F. Ry. Co. (C. C.) 173 Fed. 527; 
Smith V. Détroit, etc., Ry. Co. (C. C.) 175 Fed. 506; Hagen v. Kean, 
3 Dill. 124, Fed. Cas. No. 5,899. This leaves for détermination 
whether under this act the next of kin dépendent upon the deceased 
can maintain an action if there is no personal représentative, or can 
the .action be maintained only by the personal représentative? . 

The acts for the protection of employés, enacted by the several 
States of the Union, generally modeled after "Lord Campbell's 
Act," vary considerably as to the person who is to prosecute the 
action as plaintiff. Some of the acts require it to be brought by the 
Personal représentative for the benefit of those named in the act; 
others authorize it to be brought directly by the party for whose ben- 
efit the remedy is given although there is a personal représentative, 
while others prescribe that the action be prosecuted by the personal 
représentative if there is one, and if not by the beneflciaries. In some 
of the States the action must be prosecuted in the name of the state 
for the use of the beneficiaries named in the act, and in Maine and 
Massachusetts the remedy was at one time by indictment. For a full 
review of the différent acts in the United States, see Tiffany on Death 
by Wrongful Act, c. 6, §§ 90-108. 

•For other cases see same topic & § number In Dec. & A m. Digs, 1907 to date, & Rep'r Indexes 



844 188 FEDERAL KEPOETBB 

[2] As the right of action for injuries resulting in death is en- 
tirely based upon statute, no such right existing at common law, the 
law is well settled that such an action can only be brought in the name 
of the person or persons to whom the right is given by the statute 
under which it is sought to prosecute it, upon the well-settled prin- 
ciple that when a statute gives the cause of action and désignâtes the 
persons who may sue, they alone can sue. Usher v. West Jersey R. 
R. Co., 126 Pa. 206, 17 Atl. 597, 4 L. R. A. 261, 12 Am. St. Rep. 
863 ; Stewart v. Louisville, etc., Ry. Ce, 83 Ala. 493, 4 South. 373 ; 
Dacey v. Old Colony R. R. Co., 153 Mass. 112, 26 N. E. 437; Nash 
V. Tousley, 28 Minn. 5, 8 N. W. 875 ; Columbus, etc., R. R. Co. v. 
Bradford, 86 Ala. 574, 6 South. 90 ; Raiiway Co. v. Hunter, 70 Miss. 
471, 12 South. 482; Little Roclc & Ft. Smith Ry. Co. v. Townsend, 
41 Ark. 382; Davis v. Raiiway Co., 53 Ark. 117, 13 S. W. 801, 7 
h. R. A. 283 ; Whiton v. Chicago, etc., R. R. Co., 21 Wis. 310; Oates 
V. Union Pac. R. R. Co., 104 Mo. 514, 16 S. W. 487, 24 Am. St. 
Rep. 348; Wooden v. Western N. Y., etc., Ry. Co., 126 N. Y. 10, 26 
N. E. 1050, 13 L. R. A. 458, 22 Am. St. Rep. 803 ; Hagen v. Kean, 
3 Dill, 124, Fed. Cas. 5,899. 

[3] But it is earnestly contended by the learned counsel for plain- 
tiffs that upon a proper construction of the act of Congress an action 
may be maintained by the next of kin dépendent upon the deceased 
if there is no personal représentative, and it is claimed that the words 
"and, if none, then the next of kin dépendent upon such employé" re- 
fer to the personal représentative and not the beneficiaries. Section 
1 of the act of Congress, which provides for this remedy, so far as 
it is applicable to this issue, is as foUows : 

"That every common carrier ♦ * * ghall be liable in damages to any 
person suffering Injury while he Is employed by such carrier in such com- 
merce, or, in case of the death of such employé to his or her personal repré- 
sentative, for the benefit of the survlving widow or husband and childreu of 
such employé ; and, if none, then of such employé's parents ; and, if none, 
then of the next of kin dépendent upon such employé, for such injury or 
death resulting in whole or in part," etc. 

The language of the act is too plain to bear such a construction. 
What was intended by Congress by the words "and, if none" refers 
to the beneficiaries mentioned in the preceding part of that section. 
This is clearly shown by the context of the entire section. The ben- 
eficiaries first mentioned are "the surviving widow or husband and 
children of such employé." That is followed by a semicolon. Then 
the act proceeds, "and, if none, then of such employé's parents," fol- 
lowed again by a semicolon; and then foUows, "and, if none, then 
of the next of kin dépendent upon such employé." The words "if 
none" clearly apply solely to the persons for whose benefit the per- 
sonal représentative is authorized to prosecute the action, and who, 
in case of a recovery, are to be the beneficiaries. 

The importance of having the relationship of the parties for whose 
benefit the action is brought set out is apparent from the fact that 
this act does not provide for the survival of the cause of action which 
the deceased had at the time of his death, but is a new cause of ac- 
tion solely for the benefit of those dépendent upon the deceased, and 



FITHIAN V. ST. LODIS & S. F. KY. CO. 845 

the measure of damages is the pecuniary loss sustained by those for 
whose benefit tlie remedy is given. Stewart v. B, & O. Ry. Co., 168 
U. S. 445, 18 Sup. et. 105, 42 L. Ed. 537; Chesapeake & Ohio Ry. 
Co. V. Dixon, 179 U. S. 131, 135, 21 Sup. Ct. 67, 45 L. Ed. 121 ; 
Goodsell V. H. & M. H. R. R. Co., 33 Conn. 51 ; Raiiroad Co. v. 
O'Connor, 119 111. 586, 9 N. E. 263; Northern Pacific Ry. Co. v. 
Adams, 116 Fed. 324, 57 C. C. A. 196; Davis v. Railway, 53 Ark. 117, 
125, 13 S. W. 801, 7 h. R. A. 283. 

What that measure of damages should be dépends to a great ex- 
tent upon the relationship of the survivors to the deceased and the 
pecuniary loss sustained by them by reason of his death. The widow 
and children are naturally dépendent upon him to a greater extent 
than any other relative and entitled to support from the husband and 
parent. For this reason they would no doubt be entitled to a larger 
compensation than any other relatives. Baltimore & Potomac R. Co. 
V. Mackey, 157 U. S. 72, 15 Sup. Ct. 491, 39 L. Ed. 624. Next to them 
the parents are more dépendent upon a son than any others, as there is 
not only a moral, but a légal, duty on the part of a child to contribute 
tovv^ard the support and maintenance of his parents when they are un- 
able to support themselves. The provision for the beneiit of relatives 
other than those before mentioned is not uniimited as the act ex- 
pressly provides only for such next of kin as were "dépendent" upon 
the deceased. The amount of the recovery must naturally dépend 
to a very great extent upon the contribution by the deceased to those 
for whose benefit the action is prosecuted by the personal représen- 
tative. If the deceased contributed nothing toward the support of 
the next of kin and he leaves no widow, children, or parents surviving 
him there can be no recovery, because they sustained no pecuniary 
loss by reason of his death. 

The language of the act is clear and unambiguous, and, in the opin- 
ion of the court, leaves no room for construction. The personal rep- 
résentative of the deceased, and no one else, is authorized to maintain 
the action. This is the natural grammatical construction of the lan- 
guage used, and is strengthened by the punctuation — a semicolon — 
after each class of beneficiaries. 

[4] While the matter of punctuation will not be permitted to defeat 
the obvious intent of the lawmakers, it will be given considération 
when there is a claim that the meaning of the statute is doubtful. 
United States v. Oregon & C. R. R. Co., 164 U. S. 526, 541, 17 Sup. 
Ct. 165, 41 E. Ed. 541 ; United States v. Three R. R. Cars, 1 Abb. 
eu. S.) 310, Fed. Cas. No. 16,513; Central Trust Co. v. Wabash, St. 
t. & P. Ry. Co. (C. C.) 29 Fed. 546, aff. sub nom. Joy v. St. Louis, 
138 U. S. 1, 11 Sup. Ct. 243, 34 L. Ed. 843. 

The only reported case on this question is Thompson v. Wabash 
Ry. Co. (C. C.) 184 Fed. 554, and it was there held that none but 
the personal représentative can maintain the action; the same con- 
clusion reached by this court. 

The demurrer to the complaint upon the ground that the plain- 
tififs hâve no légal capacity to maintain this action is sustained. 



846 188 FEDERAL REPORTEE 

COOK V. MORAN TOWING & TRANSP. 00. 
(District Court, S. D. New York. April 5, 1911.) 

Collision (§ tf*) — Tow and Dkifting Latjnch— Failuee to Keep Lookout. 

A tug returnlng to New York from tlie sea about dayllght in the morn- 
Ing, witli two dump scows on hawsers, passed witliin from 50 to 150 feet 
of a disabled motor launch containing eiglit pcrsons wlio shouted and 
waved their tiandkercliiefs, but were apparently not seen, and one of 
the scows struck and overturned ttie launch, three of the occupants being 
drowned, whlle the others, including libelanf, were rescued by other 
vessels. Held, on the évidence, that the tug was in fault and liable for 
the collision for failing to hâve a lookout forward where one, if atten- 
tive to hls duty, would hâve seen the launch. 

[Ed. Note.— For other cases, see Collision, Cent. Cig. §§ 140-149; Dec. 
Dig. § 7T.* 

Collision wlth or between towlng vessels and vessels In tow, see note 
to Nielson v. Northern Pac. Ry. Co., 100 C. C. A. 581.] 

In Admiralty. Suit in personam by Mabelle B. Cook against the 
Moran Towing & Transportation Company, owners of the tug Julia C. 
Moran. Decree for hbelant. 

Hunt, Hill & Betts (George Whitefield Betts, Jr., and Robert Mc- 
Leod Jackson, of counsel), for hbelant. 

Frank Verner Johnson (WiUiam L,. O'Brion, of counsel), for re- 
spondlent. 

HOLyT, District Judge. This is an action in personam to recover 
damages for personal injuries sustained by the libelant by reason of a 
collision between a motor launch and a scow, alleged to hâve been 
caused by the négligence of the tug Julia C. Moran, owned by the re- 
spondent, which was towing the scow. On the evening of September 
14, 1906, the libelant Mabelle B. Cook was a member of a pleasure 
party of eight, consisting of four men and four women, who, after 
dining at a hôtel at Sheepshead Bay, embarked about 9 o'clock on a 
motor launch, owned by one of the men of the party, intending to go 
to Rockaway Beach, and there take the train to return to New York. 
The owner of the launch had invited the rest of the party to take the 
trip. The launch was about 20 feet long, 5 feet beam, and drew about 
18 inches of water. She had a 4 horse power gasoline engine. Her 
freeboard was about three and a half feet. She was decked over for- 
ward, for a short distance aft of the stem, and on the sides, but had no 
cabin, and was substantially an open launch. She had on board no 
lights, whistle, foghorn, or apparatus of any kind for showing a light 
or making a noise. The trip the party intended to take from Sheeps- 
head Bay to Rockaway Beach was about five or six miles in length, on 
shallow waters, protected from the océan by Rockaway Beach. After 
the launch had been out about half an hour, the engine became out of 
order and stopped. Efforts to repair it were made, but they were un- 
successful. A brisk breeze from the northeast sprang up. The launch 
had a small anchor, to which a rope was attached ; it was thrown over, 
but in a short time the rope broke. Some boards were removed from 

'For other cases see same toptc & S numbek in Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



COOK V. MOKAN TOWING & TRANSP. CO. 847 

the bottom with which the men tried to paddle ashore, but the tide was 
so strong that they could not accomplish anything. Thereafter the 
boat drifted through the night, under the influence of the northeast 
wind, down into the lower bay, and near dawn the boat was in a posi- 
tion above the Romer Shoal and not far above the West Bank Light. 
At that time the tug Julia C. Moran, towing two empty dumper scows, 
came up the bay, heading for the Narrows. The flrst scow was on a 
hawser 200 fathoms in length, and the second scow trailing behind on 
another hawser of 85 fathoms, making a total flotilla of more than a 
third of a mile in length. The tug passed to leeward of the launch. 
The wind at that time was blowing a stiiï breeze, causing a choppy sea. 
The witnesses from the launch estimate the distance of the tug, when 
she passed the launch, at from 50 to 150 feet. They testify that sev- 
eral in the launch stood up, waved handkerchiefs and shouted for help, 
and that a man in the pilot house of the tug opened the window and 
waved his arm in a backward direction, as though warning them to 
keep away from the tow. Ail the men on the tug deny that any one 
looked out of the window, or saw the launch at ail. The tug passed on 
without stopping. The witnesses from the launch testify that about 
the time she passed she changed her course to starboard, and some of 
them assert that if that had not taken place the collision would not 
hâve occurred. The witnesses from the tug ail testify that there was 
no change of course of the tug at that place; that from the time she 
passed the Romer Shoal Light she was headed straight for the Nar- 
rows. The tug passed on, and the launch drifted down and came in 
collision with the front of the last scow, with the resuit that the launch 
was tipped over, and ail its occupants thrown into the water. Three of 
them, two women and a man, were drowned. Two of the men and 
Miss Cook, the libelant, reached the overturned launch, and clung to it, 
and another man clung to a tool chest which floated from the launch. 
lyater the steamer El Paso, coming up the bay, heard cries for help, 
saw the people in the water, and put out a boat to rescue them. About 
the same time, the tug McCaldin Bros, came down the bay, and the El 
Paso whistled to them to help. The boat from the El Paso saved the 
man on the tool chest, and the McCaldin Bros, rescued the three on 
the launch. The other woman of the party was saved in an extraor- 
dinary manner. The scow which collided with the launch had gâtes 
or doors in the bottom, by which its load was dumped. They had been 
opened for that purpose at the dumping ground below Scotland Light, 
and were left open. When the collision occurred, the woman in ques- 
tion went under the scow, and on coming to the surface found herself 
inside the scow. She clung to a chain fastened along the side of the 
scow. When the tug reached the Narrows, about half an hour later, 
her crew proceeded to shorten the hawser as usual, for the purpose 
of taking the tow through the Narrows on a short hawser, and then 
discovered the woman in the scow. She was thereupon rescued and 
brought to New York. The witnesses from the launch who hâve tes- 
tifiedl ail fix the time which they were in the water at about an hour, 
but I think in fact they were in the water about 25 or 30 minutes. 
Miss Cook, when rescued, was almost unconscious; the men with her 



848 188 FEDERAL EEPOETEK 

on the launch had lashed a rope to her and held her up, but the waves 
had frequently gône over her. The McCaldin Bros, took the rescued 
persons to the Marine Hospital, and it was some hours before Miss 
Cook regained much consciousness. The Marine Hospital having no 
women attendants, she was removed that afternoon to the infirmary on 
Staten Island, and. the next day to her rooms in New York. She was 
under médical attendance for about a fortnight, during which time 
she was in great danger of pneumonia. She suffered much during 
ail that time from pain and nervousness. At the end of about a fort- 
night, she went to Boston, and thereafter lived there with her mpther. 
She was practically unable to do any work for about a year, being in 
a weak, nervous, and anémie condition. She had a large number of ab- 
scesses, one of which was so serions as to require her being taken to 
a hospital for an opération, where she remained about a fortnight. 
About September, 1907, she undertook to résume work in her trade as 
a milliner, but for a long time could not work but a few days at a time. 
Her health, however, has steadily improved, and she has now substan- 
tially recovered. 

The only claim of fault in this case is that the tug did not take 
suitable means to avoid running down the launch with the scow. The 
substantial question in the case is whether the lookout on the tug was 
négligent in not seeing the launch. If, as the witnesses on the launch 
assert, some one on the tug did see the launch, and failed to prevent 
its collision with the tow or to rescue its occupants from their dan- 
gerous situation, I hâve no hésitation in saying that the tug should be 
held for the conséquences of the collision. The question, therefore, is 
whether it was light enough, when the tug passed the launch, for the 
launch to be seen by a lookout on the tug attending properly to his 
duty. As ail the witnesses on the tug assert that they knew nothing 
about the collision, none of them has given any direct évidence fixing 
the time when it occurred. ■ The évidence upon which the respondent 
relies as to the time of the collision is the évidence of the officers of 
the steamship El Paso and the tug McCaldin Bros, as to the time of 
the rescue, and the évidence as to the time when the tug Moran 
reached the Narrows, from which an attempt is made to compute the 
time of the collision. The évidence of the officers of the El Paso, 
which is supported by the entries in the log, is that they left Scotland 
Light at 4 :4S, that about 5 :30 the captain on the bridge heard a cry 
for help, that it was still quite dark, and that it took him several 
minutes to locate the man floating on the tool chest, and several min- 
utes more to discover the three people clinging to the launch. The cap- 
tain of the McCaldin Bros, testifîed that it was breaking day when he 
was hailed by the El Paso. The record kept by an officiai at the Nar- 
rows of the arrivai and departure of tugs with tows at that place states 
that the Moran arrived there that morning at 5 :40. The point where 
the Hbelant and the others were rescued was perhaps an eighth of a 
mile above the West Bank Light, and the distance from that point to 
the Narrows is about four miles. The tide was about the end of 
the flood. I think that the place of rescue was not far from the place 
of collision. What tide there was would tend to send them up towards 



CXÏOK V. MORAN TOWING & TRANSP. CO. 849 

the Narrows, and the brisk northeast breeze would tend to send them 
down away from the Narrows. I think that the influence of the wind 
would more than counteract the influence of the tide, and that the 
point of collision was somewhat northeast of the point of rescue. But 
I do not beheve that they floated very far before they were rescued. 
The witnesses who were rescued testify that they were in the water 
about an hour, but they would natura'lly much exag:gerate the time 
passed while awaiting rescue in such a dangerous situation. The dif- 
ficulty which the officers of the El Paso had in seeing the people in 
the water, when they first heard their cries for help, does not seem to 
me very weighty proof of the darkness. The rescue was certainly but 
a f ew minutes before sunrise. Probably only the heads of the persons 
in the water were visible, and the surface of the water was made 
rough by the wind. On the other hand, of the five persons rescued, 
four testified, being the four that were rescued by the McCaldin Bros, 
and the beat from the El Paso. They ail testify positively that before 
and at the time of the collision the daylight was sufficient to enable 
them to see objects at a long distance. They ail say that they saw the 
tug coming a long distance away ; that the night had been a clear night, 
and that they had seen the Coney Island lights ail night, and that for 
some time before the collision they had become dim and substantially 
ceased to be visible, and the shore line and objects on the shore were 
visible. Three watches carried by members of the party stopped about 
5:15. Upon the whole évidence, my conclusion is that the collision 
took place between 5:10 and 5:15; that is to say, less than half an 
hour before sunrise, which occurred at 5 :36. The weather reports 
show that it was a clear morning. The choppy sea raised by the îirisk 
wind undoubtedly would hâve some tendency to prevent a small boat 
from being seen, but this boat had a freeboard of 31,4 feet, and was 
filled with eight people, who, as they passed the tug, were waving 
handkerchiefs, shouting and making every effort in their power to at- 
tract the attention of the men on the tug. It is possible that they were 
seen from the tug, and that the man who saw them, supposing that 
their boat was under control, waved to them a warning to keep away 
from the scows, but ail on board the tug deny that they knew anything 
about the accident, and my conclusion is, upon the whole évidence, that 
they did not, and that the man who was seen, by the persons on the 
launch, at the pilot house window of the tug did not see them. But in 
view of ail the évidence in the case, although the question must be ad- 
mitted to be a close one, I am of the opinion that if the tug had had a 
proper lookout, attending to his duty, he would hâve seen the launch. 
There was no lookout forward. The officers claimed that the wind 
was so heavy that morning that spray constantly dashed over the stem 
of the tug, and that the pilot house was a better place for a lookout 
than the bow. I do not think so. A little spray may bave occasionally 
broken over the bow, but I do not think it was heavy enough or con- 
stant enough to justify the tug in not having a lookout forward. 
There was a man in the pilot house with the captain. If he had been 
on the deck forward he would hâve been more likely to see the launch . 
188 F.— 54 



850 188 FEDERAL REPORTER 

against the sky line than in his position in the pilot house. The pilot 
house Windows to windward were closed. The probability is that, no- 
ticing no lights, they assumed that there was no vessel in the vicinity. 
It was perhaps not to be expected that any such launch would be eut 
in such a place at such an hour in the morning. But it is the funda- 
mental duty of ail vessels under way, and especially of a vessel under 
way in a crowded harbor, to keep a lookout in the best place of obser- 
vation, constantly alert and attentive to his duty, and vessels should 
be held strictly accountable for the performance of that duty. 

My conclusion is that the men on the tug were at f ault for not see- 
ing the launch when they passed her, and that the libelant is therefore 
entitled to recover in this case. I think that she should recover the 
foUowing amounts : 

Loss of wages for one year, at $10 a week $ 520 00 

6 months' time lost while employed in Boston as a milliner, at $18 

a week , 432 00 

Personal effects lost and destroyed 187 00 

Pald for medlcines 100 00 

Hospital expansés In Boston 52 50 

Médical attendance, other than Dr. Gay 150 00 

Dr. Gay's bill 454 00 

Pain and sufCering, the resuit of the accident 2.000 00 

$3,895 50 

My conclusion is that the libelant should hâve judgmer^t against the 
respondent for $3,895.50, with costs. 



MARKS et al. V. MBRBILL PAPER MFG. CX). et al. 
(Circuit Court, W. D. Wlsconsin. July 28, 1911.) 

1. COEPOBATIONS (§ 180*)— StOCKHOLDEES— DiRECTOES— NaTUBE OF OBLIGA- 

TION. 

Slnee niajority stockholders and directors of a corporation occupy a 
fidueiary relation to the minority, no action taken by the majority or by 
the directors, prejudicial to the rights of the minority, and by which 
the majority gain an advantage over the minority, will be sustained in 
equity. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 180.*] 

2. OoEPOEATiONS (§ 573*) — Sale of Assets — Validitt. 

Where a corporation was insolvent and doing a loslng business, and 
ifs s.tockholders were unwilling to furnish additional capital pursuant 
to an équitable plan, and certain of its stockholders thereupon formed 
a new corporation and purchased the old company's equity in mortgaged 
water power, the subséquent sale of ail the old company's agsets to the 
new for an amount suffieient to pay ail of ifs credltors pursuant to a 
plan authorizing ail of the stockholders of the old company to become 
stockholders in the new company on the same basis, was neither inéqui- 
table nor invalid as an impairment of the rights of minority stockholders 
who did not see fit to take up their rights in the new company. 

[Ed. Note.— For other cases, see Corporations, Cent. Dig. §§ 2293-2296 ; 
Dec. Dig. § 573.*] 

•For other cases see same topio & f numbbk In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



MARKS V. MERRILL PAPER MFG. CO. 851 

In Equity. Bill by Fred J. Marks and others against tHe Merrill 
Paper Manufacturing Company and others. Decree îor défendants. 
Bulkley, Gray & More, for complainants. 
Smart, Van Doren & Curtis, for défendants. 

SANBORN, District Judge. Final hearing on bill to set aside a 
conveyance of the property of the Merrill Company to the Grand- 
father Falls Company. Complainants are minor stockholders of the 
Merrill Company. Marks holds 50 shares, Klapperich 100 shares, 
and Mrs. Scott 50 shares of the capital, the total amounting to $200,- 

000. The individual défendants are ail the stockholders of the Mer- 
rill Company. The alleged equity of the bill is that the individual 
défendants are majority stockholders of the two companies, and 
were such at the time of the transfer ; that the majority stockholders 
hâve obtained unauthorized advantage from such transfer, not shared 
in by the minority; and, therefore, that the transfer is fraudulent 
and void, and should be set aside, and if it cannot now be avoided 
on account of the rights of the innocent third persons, such other 
relief as may be proper should be given. 

The proof shows that the Merrill Company was organized Januarv 
19, 1905, with a capital of $160,000, afterwards increased to $200,000. 
The corporation was organized for the purpose of making print 
paper. Àfter the company commenced business it was found that it 
had insufficient water power. At that time it had a total investment 
in money in its plant and transmission Une of about $444,000. In 
order to obtain sufficient water power it purchased certain interests 
in lands on the Wisconsin river at Grandfather Falls, agreeing to pay 
therefor $62,500. This was in April, 1905. The amount paid down 
was $2,500, the balance being payable in yearly installments, running 
five years at 6 per cent, interest. In order to raise the money to 
develop the Grandfather Falls power, and pay certain debts of the 
Merrill Company, the attempt was made to increase the stock to 
$400,000. Several attempts were made to raise money for the sale 
of stock, and a plan was adopted by which stock was to be sold on 
condition that 95 per cent, of the stockholders would subscribe for 
the new stock, up to three-fourths of the présent stock. The per- 
sons holding the stock now owned by the minority were solicited to 
come in on this basis, but refused to do so. The holders of the ma- 
ority of the stock were willing to take the increased amount but 
were unwilling to do so unless a large proportion of the stockholders 
would come in on the same basis. Repeated attempts were made to 
induce the minority of the stockholders to take the new stock ; ail of 
which failed. The Merrill Company was obliged to buy pulp in or- 
der to make the paper which it had contracted to sell and was con- 
stantly losing money and going deeper into debt. Being unable to 
raise any more money through the sale of its stock, it could not de- 
velop the Grandfather Falls power. In this situation a number of its 
largest stockholders organized the Grandfather Falls Company, June 

1, 1906, for the purpose of building a dam at Grandfather Falls and 
with power to build and maintain dams, construct and maintain hy- 



852' 188 FEDERAL REPORTER 

draulic and electrical plants, sawmills, and paper mills, and carry on 
a gênerai pulp and papei business. The capital was $200,000, after- 
wards increased to $400,000. Upon its organization the Grandfather 
Falls Company made a proposition to the Merrill Company to pur- 
chase its rights and interests in the lands at Grandfather Falls, and 
June 14, 1906, the stockholders of the Merrill Company held a meet- 
ing and passed a resolution to convey to the Grandfather Falls Com- 
pany ail their interests in the lands at Grandfather Falls in consid- 
ération of the repayment of the $2,500 paid by the Merrill Company 
for such rights and the assumption of the debts thereon. It was also 
resolved that they should enter into a contract to procure from the 
Grandfather Falls Company 2,000 or more horse power for three 
years, commencing as soon as the power plant should be ready, at 
a rental of not over $25 per horse power per year, payable in equal 
monthly installments at the end of each month. The dam at Grand- 
father Falls was not then commenced, and it was not expected it 
would be in opération for a year or more. 

In the latter part of the year 1906 the affairs of the Merrill Com- 
pany were in a very critical condition. There were pressing clairas 
amounting to $68,393.59 and past-due bonds for $33,(XX). It was un- 
able to raise any money to pay thèse liabilities either by loans from 
its stockholders or others, or by the sale of stock. In this situation 
a proposition was made by the Grandfather Falls Company to the 
Merrill Company to purchase ail its property for the amount of its 
indebtedness. At this time the stockholders and oïïicers of both 
companies were substantially the same. The Merrill Company being 
without adéquate water power its property was of very small value in 
proportion to what it had cost. Its value was some $25,000 less than 
the amount of its debts. It was not in any position to procure power 
for some time to come. A plant without water power is worth only 
what it will bring to wreck, dispose of its machinery and other prop- 
erty to its best advantage. Under thèse circumstances it was compé- 
tent for the stockholders and officers of the Grandfather Falls Com- 
pany to purchase from themselves as stockholders and officers of the 
Merrill Company ail the property of the latter, if this could be done 
at a fair sale without fraud or undue advantage. The proposition of 
the Grandfather Falls Company was accepted by resolution of the 
Merrill Company dated December 15, 1906, and the arrangement 
was carried out by the exécution and delivery of a deed of convey- 
ance to the Grandfather Falls Company by the Merrill Company, 
January 15, 1907, for an expressed considération of $186,000. 

The plan of the majority stockholders of ^he Merrill Company is 
expressed in a subscription paper which formed the basis of the or- 
ganization of the Grandfather Falls Company, as follows : 

"We, the undersigned, do each for àlmself, alone, separately and severally, 
subscribe for and agrée to purchase and pay for in cash, at par value, the 
number of shares of the capital sfoclt of the Merrill Paper Manufacturing 
Company set opposite our respective names hère following: On condition, 
however, that the owners of not less than 95 per cent, of the présent outstand- 
ing capital stock of said oompany each in like manner subseribe for addition- 
al stock of said Company, equal in each instance to not less than 75 per cent. 
of his présent holdings. And in case said condition shall not be complied 



MARKS V. MERRILL PAPER MFG. CO. 853 

with within 15 days, then we agrée to incorporate and organize a corporation 
under the laws of Wisconsln, t'o be known as the Grandfather Falls Company, 
for the purpose of pureliasing the lands and water povver facilities at Grand- 
father Falls heretofore owned in common by Messrs. Anson S. Heinemann, 
B. Heinemann, Harmon, O'Day and Daly Estate, and providing boomage fa- 
cilities, improving navigation, developing water power thereon, and purehas- 
ing and holding the stoel?: of the underslgned in Merrill Paper Manufact'uring 
Company and other stock in manufacturing corporations likely to need or use 
said power, and for sueh other purposes as inay be agreed upon. And upon 
such incorporation being effected this subscription shall as to eaeh subseriber 
stand as a subscription and agreement t'o purchase at par value thé same 
amounts respectlvely of the capital stock of sald Grandfather Falls Company, 
and we each severally agrée to pay our respective subscrlptions on demand of 
the proper board of dlreetors." 

At a directors' meeting of the Grandfather Falls Company Feb- 
ruary 18, 1907, resolutions were passed for the issuing of a stock 
dividend in the Grandfather Falls Company of 133% per cent, of the 
holdings of the stockholders in that company. This stock dividend 
was based upon the shares in the Merrill Company held by share- 
holders in the Grandfather Falls Company. Two resolutions were 
passed at the same time as follows : 

"The following resolution was then presented and carried unanlmously: 
Resolved that the company's holdings of stock in the Prairie River Improve- 
ment & Boom Company, representing property tiiat cost in round figures $64,- 
000 and carried on our books at that amount ; and that the company's prop- 
erty carried on the books under the head of 'Plant' which originally cost to 

construct the sum of S in round numbers to be valued at $258,000 and 

be carried on the company's books at that amount. The following resolution 
was then presented and carried unanimously: It appearing that after mak- 
Ing the vaïuation aforesaid that a statement of the company's assets and lia- 
bilities shows a surplus of over $163,000 ; theref ore be it resolved that a stock 
dividend of 133^/^ per cent, be declared and the stock therefor ordered issued, 
subject to the approval of the stockholders at their next meeting." 

It will readily be seen that this stock dividend would not add any- 
thing to the real interest of the persons receiving it, for the reason 
that it was substantially proportional. The reason for making the 
dividend was to aid small stockholders to borrow money on théier 
stock in the Grandfather Falls Company. Some of thèse stockhold- 
ers had pledged their stock in the Merrill Company, but that had be- 
come worthless by the sale of the assets of that company. If thèse 
shareholders could pledge their original stock in the Grandfather 
Falls Company and add thereto the amount received by them on the 
stock dividend, their holdings would thus appear to be substantially 
doubled and they might then perhaps borrow enough more money 
to pay for their original stock in the Grandfather Falls Company. 
That it really added nothing to the actual voting power and value in 
stock interest in the Grandfather Falls Company seems to be en- 
tirely clear. At the beginning of the taking of the testimony in this 
case the following olïer was made on behalf of the défendant : 

"Mr. Smart: In behalf of the défendant in this case, and particularly the 
Grandfather Falls Company, we désire to make this statement: That it has 
been the position of the défendants and the défendant companies to ail fîmes 
that there has been no intent or désire or conspiracy to freeze the complain- 
ants in this action, or any stockholders of the Merrill Paper Company, out 
of the old company or to Injure it in any way, and that they hâve been selle- 



854 188 FBDBIEAL KEPOETER 

ited and erery effort has been made to get them to join In savlng the prop- 
erty of the Merrill Paper Company. In furtber évidence of that intent and 
purpose, we désire to state at this tlme that the défendants will cause and 
procure, and do hereby offer to the complainants the opportunity to obtaln 
stock and to become Interested in the Grandfather Falls Company on exactly 
the same basis and terms under whleh the other st'ockholders became Inter- 
ested, wlth this condition, that there should be added to the amount that they 
would hâve to pay to get in at the time of the organization of the company, or 
the reorganization or the purchase of the Merrill Paper Company property a 
sum equal to the interest on such original amount up to the time of the ac- 
ceptance of this offer. Mr. More: You make no offer, as I understand it, to 
issue (0 them stock in the Grandfather Falls Company équivalent to their 
stock in the Merrill Oompany, do you except on condition? Mr. Keid: There 
is no condition whatsoever. Our statement hère is not based upon any such 
hypothesis. There is no condition attached to this whatsoever. The com- 
plainants may become stockholders and members of the Grandfather Falls 
Company on exactly the same basis that every présent stockholder became a 
stoekholder, with interest upon the money when they would otherwise hâve 
paid their money in. I did not understand what you referred to when you 
said something about issuing stock of the Merrill Manufacturing Company. 
What do you mean? Mr. More: You would issue them stock in the Grand- 
father Falls Company for the amount of stock which they hold in the Merrill 
Paper Companv, share for share. Mr. Reid: Independently of anything else? 
Mr. More: Ye's. Mr. Reid: No, sir. There isn't anybody that ever got any- 
thing on that basis." 

Judge Reid represented the défendant in connection with Mr. 
Smart, and Mr. More is one of the solicitors for the complainant. 

After the conveyance to the Grandfather Falls Company, of which 
complainants had knowledge at or about the time it was made, the 
company issued and sold its bonds to creditors having no knowl- 
edge of the rights of the minority. Complainants delayed bringing 
this suit until December, 1907, nearly a year after the conveyance. 
Under thèse circumstances the sale cannot be set aside ; but if the 
majority thereby obtained any benefit or property interest not shared 
by the minority or afterwards used their power to obtain any such 
benefît in any other way adéquate relief may be decreed. It is insist- 
ed that the sale was not a real transaction. It is said that the busi- 
ness of the Merrill Company went right on after the sale, just as be- 
fore, and that the sole purpose of the transaction was to deprive the 
minority of their property rights in the Merrill Company if they de- 
clined to join the majority in the purchase of further stock. It is 
true that the sale would not hâve been made if the minority had been 
willing tp come in. They were given the alternative to do so, or lose 
their rights through a sale of the property. Choosing the latter al- 
ternative, the question is whether there was any fraud on them, 
whether the majority hâve used their position to oppress or injure 
them in any way, or hâve gained any undue or inéquitable advantage 
over them. The authorities on this question leave the law in no 
doubt whatever. [1] The rule is stated by Sanborn, Circuit Judge, 
in Jones v. Missouri Edison-Electric Co., 144 Fed. 765, 75 C. C. A. 
631, where the transaction was condemned, and proper relief direct- 
ed, as follows : 

"The fraud or breach of trust of one who occupies a fiduciary relation 
while In the exercise of a lawful power is as fatal in equlty to the résultant 
ftct or contract as the absence of the power. The relation of a stockholder 



MARKS V. MERKILL PAPER MFG. CO. 855 

to his corporation, to its offlcers and to hls costockholders is a relation of 
trust and confidence. Tiie corporation holds its property in trust for its 
stockholders who hâve a joint interest in if. The officers of the corporation, 
if not technical trustées for the stockholders, are such in so real a sensé that 
any use by them of the property of the corporation for their own profit to 
the détriment of any of the stockholders is a breach of their trust and their 
diity, which is actionahle in equity. The stockholders of a corporation are 
iointly interested in the same property and in the same title. Community 
of interest in a eommon property or title imposes a community of duty and 
mutual obligation to do nothing to impair the property or the title. It cré- 
âtes such a flduciary relation as makes It inéquitable for any of those who 
thus share in the eommon property to do anything to or with it for their 
own profit at the expense of others who hâve the same rights." 

The leading case to the same effect in the Suprême Court, where 
a consolidation was upheld, is Leavenworth County v. Chicago, R. 
I. & P. R. Co., 134 U. S. 688, 10 Sup. Ct. 708, 33 L. Ed. 1064. 
Other cases in point are McCourt v. Singer-Bigger, 145 Fed. 103, 7(^ 
C. C. A. 73; Burnes v. Burnes, 137 Fed. 781, 70 C. C A. 357; Wheel- 
er V. Abilene National Bank Building Co., 159 Fed. 391, 89 C. C. A. 
477, 16 L. R. A. (N. S.) 892 ; Figge v. Bergenthal, 130 Wis. 594, 109 
N. W. 581, 110 N. W. 798; Rogers v. Nashville Co., 91 Fed. 299, 33 
C. C. A. 517; Werle v. Northwestern Co., 125 Wis. 534, 104 N. W. 
743. Thèse décisions, and many others, agrée substantially with the 
rule laid down by Judge Sanborn in the language quoted. 

[2] Applying such rule to this case I find that the sale in question 
was a fair one, that the majority hâve not obtained any advantage 
whatever over the minority, and that the bill should be dismissed. 
The légal relations of the majority and minority are well expressed 
by the Suprême Court of Illinois, in Harts v. Brown, 77 111. 226, as 
foUows : 

"The stockholders had been called together and they were urged to make 
advances in proportion to the stock they severally held and thus relieve the 
Company and presers'e its existence, but tliis they refused to do, and as it 
could not be preserved and must corne fo an end by a sale under the power 
in the trust deed, no reason is perceived why appellants might not become 
purchasers at the sale. They were under no moral or légal obligation to 
advance their own means, pay the debt and préserve the property for the 
use of the other stockholders who had declined to joln in making pro rata 
advances to relieve it from debt. Appellants seem to hâve acted fairly, a» 
they purchased at a sum suffloient to pay ail the délits of the company. They 
chose to do so ratlier than make an effort to obtain ail the property for the 
debts secured by the trust deed and the certiflcate of purchase. On the con- 
trary they gave many thousand dollars more that honest creditors might be 
fairly pald and the company wrong no one. This does not hâve the appear- 
ance of fraud. Appellants had faith that the enterprise could be carried 
out with suecess, and that they could thus save the means they had advanced, 
but appellees, by the course they adopted, manifested an eptire want of con- 
fidence in its ultimate suecess. They were even offiered the opportunity to 
come in for a considérable period afterwards and share in the new enterprise 
by advancing a ratable portion of the means, but they ail declined ; but when 
suecess was aehieved they then saw advantages they had lost, and then 
sought to set aside the sale and hâve the property restored to the old com- 
pany, and thus reap the benefits arising from the enterprise and means 
adVanced by others. To do so should show fraud, or want of power to make 
the sale or the purchase by appellants, neither of which bas been done." 

Decree for défendants, with costs. 



856 188 FEDERAL KBPOETBB 

GARPENTER et al. v. KNOLLWOOD CEMETERY et al. 

(Circuit Court, D. Massachusetts. June 30, 1911.) 

No. 701. 

1. Injunction (§ 132*) — Inteelocutory Injunction— Nature— Puepose. , 

An interlocutory injunction is a mère provisional remedy intendedto 
préserve property in statu quo until a hearing can be had on the merits. 

[Ed. Note.— For otlier cases, see Injunction, Cent. Dig. § 302 ; Dec. Dig. 
§ 132.*] 

2. Injunction (§ 134*) — Pbeliminabt Injunction. 

Whether a preliminary injunction shall be granted dépends on whether 
there is a substantial question betvveen tlie parties and on tlie relative 
degree of Injury tbat wlU be caused by the préservation of the property 
in statu quo until final hearing. 

[Ed. Note. — For other cases, see Injunction, Cent. Dig. § 303; Dec. 
Dig. § 134.*] 

3. Injunction (§ 136*) — Pbeliminaet Injunction— Sale of Oemetery Peop- 

EETY. 

Where complainants interested in a cemetery instituted a suit to re- 
strain the association from selling its remaining cemetery lands at one 
time at public auction, claiming that such sale was contrary to the asso^ 
ciation's charter, by-laws, and a prior agreement, and It was found by a 
master that the sale v?as to liquidate the Interest of shareholders under 
such agreement and emancipating the corporation therefrom, that the 
sale was in violation of the association's by-laws, would operate to re- 
pe.'il certain of them, and would operate to give nonconsenting sharehold- 
ers very small amounts instead of substantial returns which they had a 
right to expect from their investment under the plan set forth in the 
agreement, and would resuit in the acquisition of the property by a spéc- 
ulative syndicate to the exclusion of parties who had vested légal and 
équitable rights in the property, complainants were entitled to a prelim- 
inary injunction to prevent such sale until a hearing on the merits. 

[Ed. Note.— For other cases, see Injunction, Cent. Dig. §§ 305, 306; 
Dec. Dig. § 136.*] 

In Equity. Suit by Reese Carpenter and others against Knollwood 
Cemetery and others. On motion for a preliminaty injunction. 
Granted. 

Francis E. Baker, C. H. Tyler, O. D. Young, and I. H. Ellis, for 
complainants. 

Atherton N. Hunt and A. L. Harwood, for défendant Knollwood 
Cemetery. 

Joseph W. Lund, for défendant Beacon Trust Co. 

Warren, Garfield, Whiteside & Lamson, for défendant Puritan 
Trust Co. 

Barney & Lee and Thomas Z. Lee, for John J. Cameron. 

Wendell P. Murray, pro se. 

COLT, Circuit Judge. This case is now before the court on r^o- 
tion for a preliminary injunction. As the défendants' ' counsel, and 
to some extent the complainants' counsel, hâve treated the case as 
if it were before the court on final hearing, it may be \yell at the 
outset to refer to some of the elementary principles governing mo- 
tions of this character. 

•For other cases see same topio & § numeek lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



CAEPENTER V. KNOLLWOOD CEMETERT 857 

[1] An înterlocutory injunction is merely provisional în its na- 
ture, and does not conclude any right. Its object and effect are 
merely to préserve the property in statu quo until a hearing on the 
merits. [2] The first question to be determined is whether the case 
shows that there is a substantial question between the parties. If 
the court is satisfied that there is no substantial question to be tried, 
no injunction will issue; on the other hand, if it appears that there 
is a substantial question in the case, then the court will address it- 
self to the second question, namely, the relative degree of injury 
which will be caused by the préservation of the property in statu 
quo until final hearing. If it appears that by granting this relief the 
injury to the respondents will be serions and the injury to the com- 
plainants comparatively slight, the injunction will be refused. If, 
however, it appears that the injury to the complainants will be serious, 
and the injury to the respondents comparatively slight, the injunc- 
tion will be granted. Kerr on Injunctions (2d Ed.) pp. 12, 16, 17; 
High on Injunctions (4th Ed.) §§ 4, 5, 13; Russell v. Farley, 105 
U. S. 433, 437, 26 L. Ed. 1060; Shrewsbury & Chester Railway 
Company v. Shrewsbury & Birmingham Railway Company, 1 Sim. 
(N. S.) 410; Glascott v. Lang, 3 Milne & C. 451, 455 ; Great Western 
Railway Company v. Birmingham Railway Company, 2 Phil. Ch. 597; 
Jensen v. Norton, 64 Fed. 662, 12 C. C. A. 608; Buskirk v. King, 72 
Fed. 22, 18 C. C. A. 418; New Memphis Company v. Memphis (C. 
C.) 72 Fed. 952; City of Newton v. Levis, 79 Fed. 715, 25 C. C. A. 
161 ; Southern Pacific Company v. Earle, 82 Fed. 690, 27 C. C. A. 
185 ; Denver & Rio Grande Railroad Co. v. United States, 124 Fed. 
156, 59 C. C. A. 579; Harriman v. Northern Securities Company 
(C. C.) 132 Fed. 464; Goldfield Consolidated Mines v. Goldfield M. 
U. (C. C.) 159 Fed. 500. 

[3] Applying thèse principles to the case at bar, I am satisfied that 
there is a substantial question to be determined in this case, namely 
whether the KnoUwood Cemetery, under its charter, by-laws, and the 
Cameron agreement, can sell its remaining cemetery lands at one time 
at public auction without the consent of ail the parties in interest. 

Ùpon this gênerai question the master has f ound as f oUows : 

"(25) The proposition to sell the unsold portions of the cemetery property 
at public or prlvate sale at such priées as the directors shall détermine, for 
the purposa of liquidating the interest of the shareowners under the Cameron 
agreement and emancipating the corporation from that agreement Is in efCect 
a nullifieation of the Cameron agreement. 

"(26) Such action cannot lawfuUy be taken without the unanimous consent 
of the land shareowners under the Cameron agreement, which consent has 
not been obtained. 

"(27) The proposed sale, whlle nominally for cemetery purposes, Is in fact 
a sale for the purposes of reorganization and its resuit would be to nullify 
the provisions of the Cameron agreement without the consent of ail the 
shareowners thereunder and permit of the proceeds of the sale of the use of 
lots and plats in the cemetery to be divided contrary to the provisions of the 
charter. 

"(28) The proposed sale of the property is In violation of the provisions of 
article 12 of the by-laws. 

"(29) The proposed repeal of said by-law by action of the directors would 
be illégal and void." 

"(32) The efCect of the proposed sale would be to give to the nonassenting 



858 188 FEDBEAL REPOETEE 

land shareowners a very small amount Instead of the substantlal retums 
which they hâve a right to expect from their investment utider the plan 
set forth In the Cameron agreement and as set forth in the charter of the 
cemetery. 

"(33) No plan for purchaslng the property has apparently been worked 
ont, and a sale may resuit In the acquisition of the property by a spécu- 
lative syndicate and in the exclusion of parties who hâve vested légal and 
équitable rights in the property." 

Thèse conclusions of the master were reached after a full hearing 
and a careful considération of the case. Without passing upon the 
question whether the master was right in his conclusions — a question 
which cannot properly be determined on this motion — it does appear 
from thèse findings, and from the able arguments of counsel on Jsoth 
sides, that this case présents substantial and serious questions to 
be judiciallly determined. 

Upon the question of the comparative injury to the parties if this 
property remains in statu quo until final hearing, it is clear that, 
while the défendants may suffer some inconvenience, a serious injury 
may resuit to the complainants if the readjustment plan is carried 
out and the remaining cemetery lands sold at public auction before 
the questions raised by this bill are judicially settled. The very fact 
that the complainants contest the validity of the proposed sale would 
naturally seriously afïect the price which could be obtained. 

Upon the whole, it seems to me that the complainants hâve made 
out a case in which a preliminary injunction should be granted. 

Motion granted. 



Ex parte DINEHART. 
(Circuit Court, S. D. New York. Aprll 17, 1911.) 

1. EXTEADITION (§ 11*) — COMPLAINT— INFORMATION AND BeLIEF. 

Where a complaint in extradition was based on the information and 
bellef of the Vice Consul General of the demanding country, and stated 
that the sources of hls information and the grounds of his bellef that 
petltloner committed the crime of murder, and that a warrant had been 
issued In Mexico for his arrest, and a réquisition aecompanied by the 
warrant, and duly authenticated dépositions in support thereof were 
about to be or had been made, was officiai correspondence that had 
passed between déponent and the Department of Foreign Affairs of the 
United States of Mexico and officiai communications that had passed be- 
tween the déponent and the Mexican Government at Washington, the 
complaint was not détective In that it was based on Information and be- 
lief, and, did not sufflciently allège the sources of deponent's information 
and the grounds of the deponent's belief . 

[Ed. Note.-^For other cases, see Extradition, Cent. Dlg. § 12 ; Dec. Dig. 
8 H-*] 

2. Extradition (§ 11*)— Complaint— Désignation op Offense. 

A complaint In extradition, charging accused with murder committed 
In Mexico, the demanding country, was sufflcient to confer jurisdlction 
on the commlssioner to issue a warrant of arrest, without charging the 
facts constitutlng the substance of the offense. 

[Ed. Note. — For other cases, see Extradition, Cent. Dig. § 12 ; Dec. Dig. 
§ 11.*] 

•For other cases aee same topio & S numbbb in Dec. & Am. Dlga. 1907 to date, & Rep'r Indexes 



EX FAETE DINEHAKT 859 

Pétition of Alphonse Dinehart for a writ of habeas corpus. Denied. 
See, also, In re Urzua, 188 Fed. 540. 

Richard Krause, for petitioner. 

Edward L. Tinker, for demanding Government. 

WARD, Circuit Judge. The extradition treaty of April 22, 1899, 
31 Stat. at Large, 1818, between this country and Mexico provides 
for the provisional arrest of persons chargea with any crime men- 
tioned in the treaty until the production of the documents on which 
the claim for extradition is founded: 

"Article 10. On being Informed by telegraph or otberwise, through the dip 
lomatic channel, that a warrant bas been Issued by compétent authority for 
the arrest of a fugitive criminal chargea with any of the crimes enumerated 
in the foregoing articles of this treaty, and on being assured from the same 
source that a réquisition for the surrender of such criminal is about to be 
made accompanied by such warrant and duly authenticated dépositions or 
copies thereof In support of the charge, each government shall endeavor to 
procure the provisional arrest of such criminal and to keep him in safe cus- 
tody for such time as may be practlcable, not exeeeding forty days, to await 
the production of the documents upon whlch the claim for extradition is 
founded," 

[1] The complaint in this case was verified by the Vice Consul 
General of Mexico and upon it United States Commissioner Shields 
issued a warrant for the arrest of the petitioner. He applied for this 
writ of habeas corpus on the ground that he was illegally detained be- 
cause the complaint was insufficient to give the commissioner juris- 
diction. The objections are that, being on information and belief, the 
sources of information and grounds of belief are insufficiently stated, 
and that the substance of the offense is insufficiently charged. He 
treats the complaint as if it were to be tested in the same way as an 
afïidavit to obtain an attachment — citing Buell v. Van Camp, 119 N. Y. 
160, 23 N. E. 538 ; or an afïîdavit to obtain a third party order in pro- 
ceedings supplementary to exécution — citing Lowther v. Lowther, 110 
App. Div. 122, 97 N. Y. Supp. 5. Compacts between sovereigns for 
the reciprocal surrender of fugitives charged with crime and proceed- 
ings thereunder are not to be treated in this technical fashion. Yordi 
V. Nolte, 215 U. S. 227, 30 Sup. Ct. 90, 54 L. Ed. 170. 

The Vice Consul General states that the sources of his information 
and grounds of his belief that the petitioner committed the crime of 
murder, that a warrant has been issued in Mexico for his arrest, 
and that a réquisition accompanied by the warrant and duly authen- 
ticated dépositions in support thereof is about to be or already has 
been made, are "officiai correspondence that has passed between your 
déponent and the Department of Foreign Affairs of the United States 
of Mexico, and officiai communications that hâve passed between 
your déponent and the Mexican Government at Washington." 

[2] The charge of murder sufficiently advises the petitioner of the 
offense that he is alleged to hâve committed, and it is sufiicient to ad- 
vise the court that it is an offense covered by the treaty. It is a 
common-law crime and needs no further définition as many statutory 
crimes like forgery, embezzlement, counterfeiting, etc., require. 

In Re Farez, 7 Blatchf. 34, Fed. Cas. No. 4,644, on which the pe- 



S60 188 FEDERAL EBPOETBR 

titioner relies, arose in 1869 under the treaty with Switzerland (11 
Stat. 593). The warrant was held void because it did not show that 
the commissioner who issued it was authorized to do so under the 
act of August 12, 1848, c. 167, 9 Stat. 302, and because there was 
no previous réquisition by the foreign government. No contention 
is made in this case that the commissioner was not authorized to act, 
and article 10 of the treaty does not require a previous réquisition. 

I think the commissioner was fully justified in issuing the warrant. 
As he proceeds he can détermine whether the évidence produced be- 
fore him is sufficient to justify the petitioner's final commitment for 
extradition. The writ is dismissed, and the petitioner remanded. 



NAYLOR & CO. V. LEHIGH VALLEY R. CO. et al. 
(Circuit Court, S. E. D. Pennsylvania. May 11, 1911.) 
No. 1,312. 

1. Action (§ 27*) — Nature and Form— Contract ok Tort. 

Under Act Cong. Feb. 4, 1887, c. 104, 24 Stat. 379 (U. S. Comp. St. 1901, 
p. 3154), as amended by Act June 29, 1906, c. 3591, 34 Stat. 584 (U. S. 
Comp. St. Supp. 1909. p. 1149), giving a remedy wbere a carrier does not 
comply wlth an order of the Interstate Commerce Commission for the 
payment of money, and providlng that the suit shall proceed in ail re- 
spects like other civil suits for damages, a statutory proceeding to enforce 
an order of réparation is one sounding in tort for damages. 

[Ed. Note. — For other cases, see Action, Dec. Dig. § 27.*] 

2. Commerce (§ 94*) — Afpidavit of Défense— Necessity. 

The Pennsylvania procédure act of May 25, 1887 (P. L. 272), reqnirlng 
affidavits of défense, being applicable only to actions founded on con- 
tract alone, does not apply to a statutory proceeding to enforce an order 
of réparation by the Interstate Commerce Commission. 

[Ed. Note. — For other cases, see Commerce, Dec. Dig. § 94.*] 

At Law. Action by Naylor & Co. against the Lehigh Valley Rail- 
road Company and others. Rule to vacate rule for affidavit of défense 
made absolute. 

Thompson & Van Sant and Vivian Frank Gable, for plaintiffs. 

Henry S. Drinker, Samuel Dickson, James F. Campbell, James Wil- 
son Bayard, and John G. Johnson, for défendants. 

BUFFINGTON, Circuit Judge. In this case we hâve reached the 
conclusion the défendants should not be required to file afirdavits of 
défense. The plaintiffs are hère seeking to enforce a statutory right 
by a statutory proceeding. Having secured, in a case against thèse de- 
fendants before the Interstate Commerce Commission, an order for 
réparation (see Naylor & Co. v. L,ehigh Valley R. R. Co. et al., 18 
Interst. Com. R. 624, No. 1,511, Opinion and Order No. 168), the 
plaintiffs served that order on the défendants. On noncompliance by 
the latter, the plaintiffs brought this action of assumpsit, which in their 
statement of claim they aver is "to enforce the aforesaid order of 
the Interstate Commerce Commission, dated June 7, 1910, as provided 

•For other cases see same topic & % kumbes lu Dec. & Am. Digs. 1907 to date, & Rep'r Indezeg 



IN RE SPOT CASH HOOPEK CO. 861 

by the 'Act to regulate commerce, approved February 4, 1887, and ail 
acts supplemental thereto and amendatory thereof.' " 

[1] Waiving for présent purposes the question whether, in view 
of the fédéral statutory provision, "if a carrier does not comply with 
an order for the payment of money within the time limit of such or- 
der, the complainant, or any person for whose benefit such order was 
rrtade, may file in the Circuit Court of the United States * * * ^ 
pétition setting forth briefly the causes for which he claims damages, 
and the order of the Commission in the premises," the plaintiffs should 
not hâve pursued the statutory remedy by pétition, a practice fol- 
lowed in Penn Refining Co. v. Western Co., 208 U. S. 208, 28 Sup. 
Ct. 268, 52 L. Ed. 456, v*^e are clear that in view of the further pro- 
vision in such fédéral statute that "such suit shall proceed in ail re- 
spects like other civil suits for damages," and of the several décisions 
and rulings in Parsons v. Chicago, 167 U. S. 447, 17 Sup. Ct. 887, 42 
L. Ed. 231, Ratican v. Terminal (C. C.) 114 Fed. 666, and Southern 
Fine Co. v. Southern Ry. Co., 14 Interst Com. R. 195, that a statu- 
tory proceeding to enforce an order of réparation is one sounding in 
tort for damages. 

[2] Such being the fact, the Pennsylvania procédure act of May 25, 
1887 (P. L. 272) requiring affidavits of défense, does not apply. In 
Corry v. Penna. R. R., 194 Pa. 516, 45 Atl. 341, the Suprême Court 
of that State held: 

"Under the act of May 25, 1887, the actions of assumpsit for which judg- 
ment may be taken for want of an afïïdavit of défense are limited to such as 
are founded on contract alone, and do not Include cases In which the cause of 
action is ex delicto or of a mlxed character of contract and tort. It was the 
intention of the Législature to limit the remedy by judgment for want of an 
affidavit of défense to causes of action which were either actually in writing, 
or contracts the whole détails of which could be plainly set down in writing, 
with particular ternis and limitations, so that a liablllty for the payment of 
a deflnite sum of money could be expressed." 

And in Kinney v. Mitchell, 136 Fed. 773, 69 C. C. A. 493, this court 
held to the same effect. The présent suit, therefore, not being one ex 
contractu, no affidavits of défense are required. 

The rule to vacate a rule for an affidavit of défense is made abso- 
lute. 



In re SPOT CASH HOOPER CO. 

(District Court, W. D. Texas, Waco Division. July 20, 1911.) 

No. 660. 

Bankbuptct (§ 814*) — Claims— Natuee and Chaeacter— Teade CEBirpi- 

CATBS. 

A bankrupt corporation, having been originally capitalized for $10,000 
and desiring to increase itis capital, abandoned the scheme to Inerease the 
stock, and in lieu thereof voted to Issue trade certiflcates to the amount 
of $10.000, certifying that the owner had deposited with the corporation 
a specifled amount of money entitling him to purchase goods from the 
corporation at a profit not to exceed 10 per cent., the certiflcate to be 

*For otàer cases see same topic & § «umbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



862 188 FEDERAL REPORTEE 

taken Into account In declarlng divldends, and the holder to recelve for 
the use of the amount specifled an amount annually equal to the dividend 
declared, based on $20,000 and paid on account of stock certlflcates, a 
dividend of at least 8 per cent, being guaranteed, and that at the end of 
two years the eertlflcate was payable In merchandise on demand of the 
holder after 30 days' notice. Held that, under Kev. St. Tex. 1895, art. 
653, conferrlng on prlvate corporations the risht to borrow money on the 
corporatlon's crédit, not exceedlng its authorized capital, and to exécute 
bonds or notes therefor, such trade certificates should be regarded as 
debts of the corporation, provable under Bankr. Act July 1, 1898, c. 541. 
§ 63, 30 Stat. 544 (U. S. Comp. St. 1901, p. 3447), and not stock. 
[Ed. Note.— For other cases, see Bankruptcy, Dec. Dig. § 314.*] 

In the matter of bankruptcy proceedings of the Spot Cash Hooper 
Company. On certified question as to the nature of an obligation evi- 
denced by certain trade certificates. Referee's détermination, refusing 
to allow such certificate as a debt, reversed. 

J. J. Mitchell, claiming to be a créditer of the bankrupt, Spot Cash Hooper 
Company, proved, and submltted for allowance to the référée, a clalm based 
upon the following paper, denominated upon Its face "Trade Certificate": 

"Trade Certificate. 

"Ineorporated under the Laws of the State of Texas. 
"No. 2. $100.00 

"Spot Cash Hooper Company, Ineorporated, of Hillsboro, Texas. 

"Capital Stock, $10,000. 

"Trade Certificates Issued, $10,000. 

"This certifies that J. J. Mitchell has deposited with Spot Cash Hooper 
Company $100.00, whlch entitles him or the holder thereof to purchase goods 
from sald corporation at a profit not to exceed 10 per cent. Thls certificate 
shall be taken Into account in declarlng divldends, and the holder shall re- 
ceive for the use of sald sum of $100.00 an amount annually equal to the 
dividend declared, based on $20,000 and paid on account of stock certificates ; 
the holder being guaranteed to recelve at least 8 per cent, per annum of said 
sum of $100.00. After the end of two years thls certificate is payable în 
merchandise on demand of holder after 30 days notice. 

"[Slgned] Spot Cash Hooper Company, 

"By W. Finch, Président. 
**Attest: 

"W. 0. Hooper, Sec. & Treas." 

The claim vr&s contested by the trustée on the ground that It was not a 
debt against the estate, and, in the language of the référée, "the construc- 
tion of this instrument is the only question involved in thls case." It appears 
from the record that the bankrupt is a corporation, originally organized with 
a capital stock of $10,000. In December, 1909, the offlcers held a meeting 
to provide for the Increase of the stock from $10,000 to $20,000. Subsequently, 
In January, 1910, another meeting was held, at which it was declded to 
abandon the purpose to Increase the stock, and in lieu thereof the meeting 
voted to issuie the trade certificates above described. The face of the certifi- 
cates expresses the agreement of the parties. It further appears that several 
of the trade certificates were Issued ; one to the protesting creditor, Mitchell. 
The référée held that the clalm was not provable, and disallowed it. Ihe 
question is hère upon a pétition for review. 

Vaughan & Hart, for creditor. 

MAXEY, District Judge (after stating the facts as above). By ar- 
ticle 653 of the Revised Statutes of Texas of 1895 express authority 
is conferred upon private corporations to borrow money on the crédit 

«For other cases see Bame toplc & i kdmbeb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



FELLOws V. borden's condensed milk co. 863 

of the corporation, not exceeding its authorized capital stock, and to 
exécute bonds or promissory notes therefor, and to pledge the property 
and income of the corporation. In the présent case Mitchell advanced 
to the bankrupt $100, and as évidence of the indebtedness the latter 
issued to him the trade certificate described in the statement of the 
case. This paper is not a stock certificate, since ail the original stock 
had been subscribed, and the plan to increase the capital stock had 
been abandoned. Indeed, the instrument does not purport to be a cer- 
tificate entitling the holder to shares of stock in the corporation. It is 
equally apparent that the certificate is not a promissory note, nego- 
tiable by the law merchant. It does, however, évidence an indebted- 
ness due by the bankrupt to Mitchell, and guarantees the payment of 
at least 8 per cent, per annum for the use of the money, which is 
merely the équivalent of a guaranty of interest at the rate mentioned 
on the amount of money borrowed. The fact that the certificate is 
payable in merchandise, after the end of two years, on the demand 
of the holder, in no way detracts from its value as an obligation to 
pay. See Baker v. Todd, 6 Tex. 274, 55 Am. Dec. 775 ; Dumas v. 
Hardwick, 19 Tex. 239 ; Short v. Abernathy, 42 Tex. 94 ; Bummel v. 
City of Houston, 68 Tex. 10, 2 S. W. 740. 

In the judgment of the court the claim of Mitchell is founded upon 
an express contract, the liability is fixed, and the amount was abso- 
lutely owing when the pétition in bankruptcy was filed. The debt is, 
therefore, under section 63 of the bankruptcy act, a provable claim. It 
follows that the order of the référée, disallowing it, should be re- 
versed. The cause will be referred back to the référée, with direc- 
tions to allow the claim of Mitchell, the same to be paid in due course 
of administration of the estate. 

So ordered. 



FELLOWS V. BORDEN'S CONDENSED MILK CO. 

(Circuit Court, S. D. New ïork. June 13, 1911.) 

Appeal and Errob (§ 1201*) — Circuit Court of Appeals — Mandate — Ef- 

FECT. 

Wliere the Circuit Court of Appeals had ordered the issuance of a man- 
date directlng the dismlssal of a Mil, with costs, the Circuit Court had 
no jurisdiction to grant leave to file a supplemental bill in the nature of 
a bill of review, without leave first obtained by complainant from the 
Circuit Court of Appeals. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dlg. §§ 4673- 
4683; Dec. Dig. § 1201.*] 

In Equity. Suit by Olin S. Fellows against Borden's Condensed 
Milk Company. On pétition for leave to file a supplemental bill in 
the nature of a bill of review. Denied. 

See, also, 180 Fed. 421. 

Gifford & Bull, for complainant. 

Masten & Nichols and W. D. Edmonds, for défendant. 

•For other cases see same topio & § numeeb in Dec. &. Am. Dlgs. 1907 to date, & Rep'r Indexe» 



864 188 FEDERAL REPORTER 

WARD, Circuit Judge. In this cause the défendant présents an 
order upon the mandate of the Circuit Court of Appeals dated June 
7, 1911, directing the bill to be dismissed with costs, and at the same 
time the complainant présents a pétition for leave to file a supple- 
mental bill in the nature of a bill of review and a motion for a re- 
hearing, founded upon his disclaimer filed in the Patent Ctlfice June 
10, 1911. My duty is to enter a decree dismissing the biïi in accord- 
ance with the mandate of the Circuit Court of Appeals, and I can do 
nothing else or further. In re Potts, Petitioner, 166 U. S. 263, 17 
Sup. et. 520, 41 L. Ed. 994; American Soda Fountain Co. v. Sam- 
ple, 136 Fed. 857, 70 C. C. A. 415. 

The complainant may hereafter apply to the Circuit Court of Ap- 
peals to authorize this court to entertain this motion, which, because 
now made without such permission, is denied. 



LESSER V. GEORGE BOEGFELDT & GO. 
(Circuit Court, S. D. New York. June 22, 1911.) 

Copyrights (§ 82*) — Infbinoement— Actions— Exhibition. 

Wbere there was nothing to show that a copyright alleged to hâve been 
lufringed was a sculpture or other similar worli or that the production 
of a copy was not feasible, défendant was entitled to hâve a copy of the 
alleged infringement, and a copy of the worlî alleged to hâve been in- 
fringed upon, aceompany the pétition as required by Suprême Court 
Practice Rule 2, in effect July 1, 1909. 

[Ed. Note. — For other cases, see Copyrights, Cent. Dlg. §§ 72, 73; Dec. 
Big. § 82.*] 

In Equity. Suit by Elizabeth L,esser against George Borgfeldt & 
Co. for infringement of copyright. On motion to compel complainant 
to attach a copy of the alleged infringement, and of the work alleged 
to hâve been infringed, to the pétition. Granted. 

LACOMBE, Circuit Judge. The Rule of Practice (No. 2) adopted 
by the Suprême Court and which went into effect July 1, 1909, pro- 
vîdes that "a copy of the alleged infringement of copyright, if actually 
made, and a copy of the work alleged to be infringed, should aceom- 
pany the pétition, or its absence be explained." No such copies hâve 
been submitted, and défendant is entitled to the relief asked for, unless 
the case comes within one of the exceptions contained in the rule. 
The record does not show that the copyright is a "sculpture or other 
similar work," and there is nothing to show that the production of 
"copy" is not feasible. 

Motion granted. 

•For otiifir ctses see same topic & § numbeh In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



SPENCER T. THE DALLES, P, ic A. NAVIGATION CO. 866 

SPENCER V. THE DALLES, P. & A. NAVIGATION CO. 

(Circuit Court of Appeals, Nlnth Circuit. July 10, 1011.) 

No. 1,890. 

1. COI.LISION (§ 51*)^-0VEETAKING VESSELS— MXITUAL DUTIES. 

It is the duty of an overtaklng vessel to keep eut of the way of the 
overtaken vessel, and the corrélative duty of tbe leading vessel to keep 
her course and avoid any maneuver calculated to embarrass the overtak- 
lng vesstîl in passing. 

[Ed. Note. — For other cases, see Collision, Cent Dig. §§ 57-61; Dec. 
Dlg. § 51.*] 

2. Collision (§ 105*) — Oveetaking Vessels— Fault of Overtaking Vessel. 

The findlng of the trial court that a collision between two steamers 
passing down the Willamette river from Portland, whicb occurred when 
one vessel was attempting to pass the other, was due solely to the fault 
of the overtaking vessel, aflirmed, where such findiug was made on con- 
flicting évidence, and in view of the burden of proof resting on the 
overtaking vessel and her duty under the rules to keep out of the way, 
it being shown that there was ample room for her to do so. 
[Ed. Note. — For other cases, see Collision, Dec. Dig. § 105.* 
Overtaking vessels, see note to The Kebecca, 60 C. C. A. 254.] 

Appeal from the District Court of the United States for the District 
of Oregon. 

Libel in admiralty by The Dalles, Portland & Astoria Navigation 
Company, a corporation, against E. W. Spencer, claimant and owner 
of the steamer Charles R. Spencer, to recover damages suffered by the 
Dalles City, a steamboat owned by the libelant, in a collision with the 
Charles R. Spencer, on the Willamette river upon the 31st day of 
May, 1905. The District Court rendered a decree ( 178 Fed. 862) for 
the libelant in the sum of $6,020.03, from which the respondent appeals 
to this court. Affirmed. 

Couvert & Stapleton and Richard W. Montague, for appellant. 
Williams, Wood & Linthicum, Carey & Kerr, and Harrison Allen 
(Erskine Wood, on the brief), for appellee. 

Before MORROW, Circuit Judge, and HANFORD and DIET- 
RICH, District Judges. 

DIETRICH, District Judge. This controversy grows out of a col- 
lision which occurred between two river steamboats, the Dalles City 
and the Charles R. Spencer, upon the Willamette river, a short dis- 
tance above its mouth, on the 31st day of May, 1905. The boats were 
plying between Portland and The Dalles, and belonged to opposition 
lines which were aggressively competing for the passenger business of 
the two terminal cities and intermediate points along the Willamette 
and Columbia rivers. The fifst to arrive at any place along the route 
where passengers were received secured the larger part of the busi- 
ness, and, both boats being scheduled to leave Portland at the same 
hour, speed becam.e an important considération. The Charles R. 
Spencer was the larger, more powerful, and swifter craft, and, with 

•For other cases see same toplc & § nvmbsb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexas 
188 F.— 55 



866. 188 FEDBBAL REPORTER 

equal opportunity, could outstrip her rival. Upon the mornîng in 
question, they left the Portland docks at about 7 o'clôck, the Dalles 
City passing out through the drawbridges a few hundred feet ahead of 
the Charles R. Spencer. A struggle at once began, the Charles R. 
Spencer seeking by her superior speed to pass her competitor, and 
the Dalles City to maintain the advantage that she had secured in màk- 
ing the start. The Dalles City was apparently under a full head of 
steam, and moved at the -rate of 17 or 18 miles an hour. The Charles 
R. Spencer, necessarily following practically the same course, pushed 
close up in her wake, and two or three times essayed to pass, but with- 
out avail. Hère arises the first substantial conflict in the testimony. 
Upon behalf of the Charles R. Spencer it is charged that her failures 
to pass were due to the "jockeying" maneuvers of the Dalles City 
in swinging across her course from time to time, and thus crowding 
her out. The charge is denied by the libelant, who puts forth the 
theory that the différence in speed of the two vessels was at the time 
insufficient to enable the Charles R. Spencer to climb the swell left 
by the Dalles City and make the détour which an overtaking vessel 
must necessarily make in saf ely passing to the leading position. How- 
ever that may be, the relative positions of the two vessels remained 
substantially unchanged for approximately 30 minutes, and until just 
before the collision occurred. Then the Charles R. Spencer, being at 
the time close astern of the Dalles City, but a little upon her 
port quarter, resolved to pass upon her starboard. Accordingly, veer- 
ing to the right and having called for and received consent to pass, she 
swung across the course of the Dalles City from 50 to 100 feet in her 
wake. Upon what followed the évidence is highly conflicting, and the 
whole case turns. The libelant's version is that immediately upon 
crossing over, the Charles R. Spencer, either willfully or with gross 
carelessness, put her wheel hard to port and thus came into contact 
with the Dalles City. Upon the other hand, upon behalf of the Charles 
R. Spencer, it is contended that as she lapped up on the starboard quar- 
ter of the Dalles City, the latter, to keep her from passing, deliberately 
swerved to the right, thus intercepting her course and bringing the two 
vessels into collision. 

That which admittedly happened is quickly told. At the time the 
Charles R. Spencer passed to the right of thé Dalles City, the former 
was running at a speed of about 19 miles an hour, and the latter 17 
miles an hour. In a moment of time the prow of the Charles R. 
Spencer struck the Dalles City a few feet forward from the stern, 
upon the starboard side. The collision was accompanied with no per- 
ceptible shock, but by reason of the greater weight and speed of the 
Charles R. Spencer and the fact that the two vessels were at the 
time pursuing divergent courses, the . stern of the Dalles City 
was carried around until she lay almost directly athwart the course of 
the Charles R. Spencer. In this position she was unable readily to yield 
to the momentum of the other boat, and, as a resuit, she careened 
heavily to port, the bow of the Charles R. Spencer crushed through 
her guard rail and broke her pitman shaft, and thereupon both the 
cylindèr heads of her engine were blown out, and other damage en- 



867 

sued. By the time the Charles R. Spencer had succeeded in stopping 
lier engines, the Dalles City had turned or had been turned entirely 
around, and lay with her bow to the stern of the Charles R. Spencer, 
and upon the starboard side. 

The décision of the lower court was in favor of the libelant, and the 
respondent brings this appeal. In form a number of errors are assign- 
ed, but in reality only the findings of fact by which the Charles R. 
Spencer alone is held to be responsible for the collision, are assailed. 

[1] The controlling principles of law are simple, and, being un- 
oontroverted, may be stated, but need not be discussed. By rule 6 
of the Pilot Rules for the Inland Waters of the Atlantic and Pacific 
Coasts (Edition of August 20, 1908), it is provided that when steam 
vessels are running in the same direction, the one astern, if she shall 
désire to pass on the right or starboard hand of the vessel ahead, shall 
give one short blast of the steam whistle, and the vessel ahead shall 
signify her consent by a similar blast. Admittedly this provision of the 
rule was complied with by both vessels, and at the point where con- 
sent to pass was asked for and given there was ample room in the river 
to pass in safety upon the starboard, if not upon the port, side of the 
leading vessel. Having obtained the assent of the Dalles City to pass, 
it became the duty of the Charles R. Spencer, as the overtaking vessel, 
to keep out of the way of the Dalles City, the vessel overtaken. Upon 
the other hand, while the Dalles City, as the leading vessel, had the 
right of way, and was not bound to yield to the convenience of the 
Charles R. Spencer, it was her corrélative duty to refrain from will- 
fully changing her course so as to cross the path of the Charles R. 
Spencer. By pilot rule 6, above referred to, it is expressly provided 
that "the vessel ahead shall in no case attempt to cross the bow or 
crowd upon the course of the passing vessel" ; and it may be stated as 
a gênerai rule of maritime law that the vessel ahead is bound to re- 
frain from any maneuvers calculated to embarrass the overtaking ves- 
sel while attempting to pass. Whitridge v. Dill, 23 How. 448, 16 £. Ed. 
581. Making spécifie application of thèse principles, it was the duty of 
the Charles R. Spencer, in passing, to give to the Dalles City a wide 
enough berth to avoid collision, and it was the corrélative duty of the 
Dalles City to refrain from changing her course or maneuvering in 
such a way as to embarrass her rival. Moreover, the duty of avoid- 
ing collision being imposed by law primarily upon the overtaking 
vessel, the burden of proof was in this case cast upon the Charles R. 
Spencer to show that she acted prudently, and that the collision was 
not caused by any fault upon her part. Spencer on Marine Collisions, 
§ 69. It is further well established that if the collision was due to the 
concurring négligence of both vessels, the damages suffered should be 
divided equally between the two. The Schooner Catharine v. Dick- 
inson, 17 How. 170, 15 L- Ed. 233; The Max Morris, 137 U. S. 1, 11 
Sup. et. 29, 34 L. Ed. 586. 

[2] No useful purpose could be subserved by an extended discussion 
hère of the question of fact whether the Charles R. Spencer or the 
Dalles City was the more to blâme for the collision. The most that 
can be said for the appellant is that the voluminous testimony is highly 



'868 188 ffEDBRAL EEPOKTBR 

conflicting, and that it is entirely possible to take the view that the 
Dalles City was wholly at fault, or that the Charles R. Spencer was 
alone responsible for the accident, or that the négligence of both 
vessels contributed thereto. We hâve the testimony of a number of 
witnesses in support of any one of the three possible views, and there 
is nothing inherently improbable in any of the théories, nor is there any 
admitted or incontrovertible fact or circumstance which is wholly in- 
consistent with any one of such théories. It is clearly a case of con- 
flicting oral testimony, where it cannot be said that there is a strong 
prépondérance with either party. The District Judge heard the wit- 
nesses testify, and observed their demeanor while upon the stand. His 
finding upon the conflicting évidence was that the Charles R. Spencer 
alone was responsible for the collision, and that the Dalles City was 
wholly without fault. Under the well-settled rules of appellate pro- 
cédure, the finding ought not, under the circumstances, to be disturbed. 
In The Alijandro, 56 Fed. 621, 6 C. C. A. 54, we hâve said : 

"The rule Is well settled that in cases on appeal In admiralty, when the 
questions of fact are dépendent upon conflicting évidence, the décision of 
the District Judge, who had the opportunity of seeing the witnesses and 
judging thelr appearence, manner, and credibility will not be reversed 
unless It clearly appears that the décision is against the évidence. The 
Albany (C. O.) 48 Fed. 565, and authoritles there clted." 

See, also, Gaflfner v. Pigott, 116 Fed. 486, 54 C. C. A. 641; The S. 
S. Wilhelm, 59 Fed. 169, 8 C. C. A. 72. 

There being no other question for considération, it follows that the 
judgment must be affirmed, with costs to the appellee. 



BALTIMORE & O. R. CO. v. THORNTON. 

(Circuit Court of Appeals, Fourth Circuit June 17, 1911.) 

Ho. 1,019. 

1. Caebiebs (§ 356*) — Ejection or; Passenqek— Action foe WEONGFtJt Ejec- 
tion — Défenses— Defective Ticket. 

Plaintiff paid for her carrlage as a passenger from Newport News to 
ParkersbuTg, W. Va., by boat to Baltimore and from there over defend- 
ant's railroad to destination. She received a ticket stating that it was 
good to the station prlnted thereon which was punched, and whlch con- 
talned a prlnted llst of the stations on defendant's road as far as Cin- 
cinnati, but the agent neglected to punch it for Parkersburg and plain- 
tiff dld not notice the omission. The ticket was properly stamped by the 
agent, and plaintiff's baggage checked thereon to Parkersburg, the fact 
of the checking being indicated by the letters "B. C." punched therein. 
It was also accepted and punched on the boat and by defendant's gate- 
man at Baltimore, but the conductor on the train refused to receive it, 
and although she explalned the facts ejeeted plaintiff at Washington, 
where she was obliged to lay over, but was flnally carried to her destina- 
tion on the same ticket. Held that, concedlng that as between conductor 
and passenger the ticket Is concluslve évidence of the contract of car- 
nage, It was the duty of the conductor before ejecting plaintiff to use ail 
reasonable means to ascertaln therefrom the extent of her rights ; that 
her ticket was not vold, but contained on its face évidence that the agent 

•For other cases see same topic & § ndubbb in Dec. & Am. Dlgs, 1907 to date, & Rep'r Indexes 



BALTIMOEE <b O. E. CO. V. THOENTON 869 

had mhde a mistaUe In falling to punch any station, and also, In connec- 
tioD with the baggage check referred to therein, évidence whlch should 
hâve been aceepted by any reasonable man as a conflrmation of her state- 
ments, and that in ejecting her he committed a tort for which défendant 
was liable In damages. 

FEd. Note. — For other cases, see Carriers, Cent Dlg. § 1427; Dec. Dlg. 
I 356.*] 
2. Caeribes (§ 376*) — Ejection of Pàssenqee— Invalid Ticket— Fobm o» 
Action foe Weonqful E-jection. 

A passenger who without fault on hls part, but through the mistalîe 
or négligence of an agent of a railroad company, has been given an In- 
valid ticket, and in conséquence is ejected from a train for which he haa 
paid fare, may recover damages therefor from tte company, whether the 
action Is on the contract or in tort. 

[Ed. Note. — For other cases, see Carriers, Cent Dlg. § 1463 ; Dec. Dlg- 
§ 376.*] 

8. COUETS (i 360*) FEDERAL COUETS— AUTHOEITT OF DECISIONS OP STATB 

Courts— CoNTBACTs of Gareiage. 

The légal rights of a passenger, growing out of a contract of carrlage 
Is not a question of local law but of gênerai substantive law upon whlch 
a fédéral court is not controUed by the décisions of the courts of the 
State where the contract was made or the cause of action accrued. 
[Ed. Note. — For other cases, see Courts, Dec. Dig. § 360.* 
Conclusiveness of judgment between fédéral and state courts, see notes 
to Kansas City, Ft. S. & M. B. Co. v. Morgan, 21 C. C. A. 47S ; Union & 
Plantera' Bank v. City of Memphis, 49 C. C. A. 468.] 

4. Cakeikrs (§ 352*) — Ejection of Passengeb— Action r,0E Damages— Dé- 
fense— Rules OF COMPANT. 

The right of a passenger ejected from a railroad train In violation of 
hîs rights to recover damages therefor cannot be affected by any rule of 
the carrier prescribing the duties of its agents or conductors. 

[Ed. Note. — For other cases, see Carriers, Cent Dlg. S§ 1412-1414; 
Dec. Dig. § 352.*] 

6. Evidence (§ 121*) — Res Gestjst— Statement Made by Paett. 

The time, place, and circumstances under which a statement of a party 
sought to be introduced in évidence was made are always relevant, and 
may be shown as a part of the res gestae. 

[Ed. Note.— For other cises, see Evidence, Cent Dlg. Si 307-328 ; Dec. 
Dlg. § 121.»] 

6. Appeal and Eeeor (§ 971*) — Witnesses (§ 275*) — Review— Disceetion of 
Lower Court— Examinatton of Witnesses. 

It is within the discrétion of a trial judge to llmlt the cross-examlna- 
tion of a party testifylng as a wltness, and hls action la not reviewable 
by an appellafe court except for an abuse of discrétion. 

[Ed. Note.— For other cases, see Appeal and Error, Cent. Dlg. §§ 3852- 
3857 ; Dec. Dig. § 971 ;» Witnesses, Cent. Dig. § 924 ; Dec. Dlg. § 275..*] 

In Error to the Circuit Court of the United States for the Eastern 
District of Virginia, at Norfolk. 

Action at law by Agnes B. Thornton against the Baltimore & 
Ohio Railroad Company. Judgment for plaintiff, and défendant 
brings error. Afïirmed. 

R. Gray Williams, for plaintiff in error. 

J. Winston Read and John N. Sebrell, Jr., for défendant în error. 

Before PRITCHARD, Circuit Judge, and DAYTON and CON- 
NOR, District Judges. 

•Foi othur cafct see same topic & i numbeb in Dec. & Am. Digs. 1907 to date, & Rep'r Indexa* 



870 188 FEDERAL EEPOETEB 

GONNOR, District Judge. Défendant in error, hereinafter_ called 
plaintiff, instituted this action against plaintifï in error, hereinafter 
called défendant, and the Merchants' & Miners' Transportation Com- 
pany, for the recovery of damages alleged to hâve been sustained by 
reason of her wrongful expulsion from the car of défendant Baltimore 
& Ohio Railroad Company. The action was instituted in the_ cor- 
poration court of Newport News, Va., and removed into the Circuit 
Court of the United States. Plaintifï, in her original déclaration, set 
forth a cause of action sounding in tort. An amended déclaration was 
filed, alleging the same facts as in the original, but averring a breach 
of contract of carriage. The facts disclosed by the déclaration are : 

[1] On August 10, 1907, plaintiff purchased from the agent of the 
Merchants' & Miners' ' Transportation Company at Newport News a 
ticket from said point to Parkersburg, W. Va., over the railroad of the 
défendant, Baltimore & Ohio Railroad Company, via Baltimore and 
Washington City, paying the fare ($13.75) charged therefor. She was 
given a ticket èntitling her to travel from Newport News "to the station 
printed thereon, which was punched." The ticket attached to the 
déclaration contained a printed list of stations over défendant road 
as far as Cincinnati, Ohio, including Parkersburg. The agent selling 
the ticket neglected to "punch" the word "Parkersburg," which failure 
was not noticed by plaintiff. The ticket was duly stamped by the 
agent at Newport News. She exhibited the ticket to the baggage agent 
at Newport News for the purpose of having her baggage checked and 
reçeived from him a check to Parkersburg; he punched through the 
ticket the letters "B. C.,'-' signifying that the passenger's baggage was 
cjiecked. Plaintiff entered upon the boat of the Merchants' & Miners' 
Transportation Company and was carried; that is, her ticket was re- 
çeived and punched by the captain on said boat to Baltimore. She 
was permitted, upon exhibiting the ticket, to pass through the gâte 
of defendant's yard at Baltimore and directed to enter defendant's 
train of cars for Parkersburg — the ticket was punched — this was about 
8 o'clock a. m. About 20 minutes after boarding the train the con- 
ductor came to plaintiff and called for her ticket, which she presented, 
when he refused to accept it and compelled her to leave the car at 
Washington, and conducted her to an agent of défendant company to 
hâve the ticket fixed. The agent to whom the conductor conducted 
plaintiff said that he was not authorized to "fix" the- ticket — that it 
could not be donc until the next morning. Plaintiff told him that she 
was a stranger in Washington — without friends. The agent said that 
probably the other agent, when he came on duty, might possibly fix 
it up for her that day — to hâve a seat until he came. When the other 
agent came in, he beckoned plaintiff to the window "took his pencil 
and marked on the ticket, and said at the same time, 'Your ticket is 
ail right, it will carry you to any place that is marked on hère. Your 
train will leave' this evening at 4:05.'" Plaintiff gave an account of 
her condition and expérience while waiting for the train, which she 
took, reaching Parkersburg the foUowing morning at about 3 o'clock. 
Défendant demurred to the déclaration, saying : 



BALTIMORE & O. R. CO. T. THOKNTOM 871 

"For spécification of the grounds of its demurrer, thls défendant allégea 
that the ticket declared upon in the count of plalntlfC's amended déclaration 
does not, upon its face, conform to the eontract of carriage set up by the 
plalntifl. As between the conductor and the passenger, who is the plaintifC 
hère, the ticket declared upon and flled as a part of the déclaration is con- 
clusive évidence of the passenger's right to ride and the extent of that right. 
The ticket declared upon shows, upon its face, that there was no destination 
indicated and, therefore, there being no allégation that the conductor used, 
more force than was necessary in ejectiug the plaintif! from the Baltimore 
& Ohio train, the éjection was not wrongful or tortious, and the plalntlfC's 
action in tort cannot be sustained as matter of law. The face of the ticket 
not entitling the passenger to ride to any destination on the Baltimore & 
Ohio Railroad, it was the right and duty of the conductor to eject her, using 
no more force than necessary, and the plalntifiC cannot sustaln an action in 
tort for the éjection. Any action the plalntiff may hâve against the défend* 
ant must be by suit for damages for the breach of the eontract niade by the 
ticket agent at Newport News, who failed to deliver her a ticket to Parkers- 
burg." 

It will be convenient to dispose of the question raised by, and argued 
upon, the demurrer, before discussing the exceptions pointed to the 
rulings of the lower court during the trial. Defendant's contention is 
thus clearly stated in the brief : 

"The ticket being invalid upon its face, the éjection was not wrongful; 
therefore, plaintiff's déclaration .sounding in tort for the wrongful éjection 
cannot be malntained. She has mistaken her forni of action whieh is for 
breach of the eontract of carriage actually made and for failure to deliver 
her a true token or ticket conforming to the eontract made." 

The court qverruled the demurrer, and for this ruHng défendant 
makes its first assignment of error. 

Counsel for défendant frankly conceded that, if his proposition that 
the_ ticket given to plaintiff by the agent at Newport News was in- 
valid could not be maintained, the demurrer was properly ovcrruled. 
This invites an examination of the question whether the ticket was 
so manifestly invalid that it conferred upon plaintiff no right to be 
treated as a passenger or to be carried to Parkersburg. The ticket 
was properly stamped, showing the station at which it was issued. 
There could, therefore, be no suggestion that it had come into the pos- 
session of plaintiff through any other than a lawful channel. It was 
not mutilated. The date was the same day upon which it was tendered. 
It contained unmistakable évidence that it had been recognized by the 
baggage man at Newport News, and that the plaintiff had received 
a check for her baggage — it was "punched" showing that the officer 
on the boat had recognized it as valid, and that the gateman at Balti- 
more had passed plaintiff into defendant's station upon it. The ticket 
contained the names of stations over defendant's road beyond Parkers- 
burg, as far as Cincinnati. The only respect in which there was any 
ambiguity, therefore, was the failure to "punch" the station to which 
plaintiff was entitled to be carried. Her claim that she was entitled to 
go to Parkersburg was not contradicted by any printed or written words 
on the ticket. It must hâve been apparent to any person of reasonable 
intelligence that the agent had neglected to "punch" the station to 
which plaintiff had paid her fare. In this respect the case differs 
from those cited by counsel or found in the reports. 



872 188 FEDERAL KEPOETER 

Conceding the soundness of the rule that, as betweeh the conductor 
and the passenger, the ticket is conclusive évidence of the contract with 
the Company and of the extent of the passenger's right to remain on 
the car and pursue her journey, it is manifest that the conductor could 
not arbitrarily, or without at least a reasonable effort, by an inspection 
and resort to such sources of information as the ticket contained, as- 
certain the terms and provisions of the contract made with défendant, 
refuse to receive it and expel her from the car. It is well settled 
that the company may make and enforce reasonable rules prescribing 
and regulating the conditions upon which persons may become pas- 
sengers and determining their right to remain on the cars and be 
carried to their destination. There is no évidence in this record show- 
ing any rule of défendant company prohibiting the conductor from 
accepting the ticket as presented ; on the contrary, it is conceded 
that another conductor, on the same day, accepted the ticket without 
being "punched," and carried plaintiff over the same route pursued by 
the first train to Parkersburg. The only change made on the ticket 
was a sUght pencil mark made by an employé of the company who, it 
seems, had no power to change or "fix it." Conceding that the con- 
ductor was under no obligation to accept, as true, plaintiff's statement 
that she paid $13.75, the fare from Newport News to Parkersburg, 
or to resort to any other source for explanation of the ambiguity, 
than was indicated by the ticket itself, we yet think that the ticket 
contained, upon its face, information which any reasonable man, un- 
der the circumstances, would promptiy, and without hésitation, hâve 
resorted to and accepted as conclusive évidence of the extent of plain- 
tiff's right to travel on the train. The letters "B. C." punched through 
the ticket, were plain and of unmistakable meaning. It is attached to, 
and made a part of, the déclaration. It is but a reasonable construc- 
tion of the ticket to treat the check as a part of the évidence of the 
contract of carriage and to construe them together. The contract to 
carry the plaintiff included the carriage of her baggage to the same 
point, and that this was evidenced by the check referred to on the 
ticket and Hmited to the destination of the passenger was well known 
to the conductor. The law imposed upon the défendant the duty to 
give to plaintiff, upon payment of the prescribed fare, a ticket for 
herself and check for her baggage, which entitled her to ail of the 
rights and privilèges of a passenger. The possession of the check is 
évidence that she was entitled to go to Parkersburg as a passenger. 
Moore on Carriers, 548. If, by reason of the négligence of défend- 
ants agent, the ticket was ambiguous or uncertain, it was the duty 
of the conductor to resort to any source of information on the ticket 
to explain the ambiguity. "When, from the circumstances appearing 
on the face of the ticket and the surrounding circumstances known to 
the conductor, it is probable that a mistake has been made by the 
company issuing the ticket, and this probability is so strong that the 
conductor should, under the circumstances, investigate further before 
ejecting the passenger," the ticket cannot be said to be invalid. Kreu- 
ger V. Ry. Co., 68 Minn. 445, 71 N. W. 683, 64 Am. St. Rep. 487. 

An examination of the decided cases, cited by counsel, discloses 



BALTIMORE 4 O. E. CO. V. THORNTO» 873 

facts distinguishable from those found in this record. In Pouilin v. 
Canadian Pac. R. R. Co., 52 Fed. 147, 3 C. C. A. 23, 17 L. R. A. 800, 

Judge Taft says: 

"The plaintiff, before he T^'ent aboard the train from which he was ejected, 
discovered that the agent had inade a rnistalje, and thàt he hnd not deliv- 
ered him a ticket which, on its face, entitled him to return from Québec 
to Détroit." 

The plaintiff relied upon the statement of some person in the office 
of the ticket agent that the conductor would understand the mistake 
and make it ail right. While the learned judge, writing for a majority 
of the court, states the rule that the face of the ticket is conclusive évi- 
dence to the conductor of the terms of the contract of carriage between 
the passenger and the company, plaintiff was not permitted to recover 
because of his contributory négligence. He said: 

"As the conduct of the plaintiff, in attempting to ride on a ticket which 
he knew dld not give him a rlght to do so was, in our view, négligence in 
law, the fact that the conductor was négligent could not afCect the proper 
standard of care on the part of the passenger." 

Mr. Justice Brown dissented: 

In Railroad Co. v. Hill, 105 Va. 730, 54 S. E. 872, 6 L. R. A. (N. 
S.) 899, plaintiff applied to the defendant's agent at Clinchport for a 
ticket to Appalachia. He paid the correct fare, but the agent, by mis- 
take, gave him a ticket to Duffield, an intermediate point. He put the 
ticket in his vest pocket and boarded the train. The conductor took 
up the ticket and put a check in plaintiff's hat, which indicated that 
he was entitled to ride to Duffield. When the cars reached that sta- 
tion, plaintiff did not leave the train — the conductor demanded that he 
pay his fare — which plaintiff refused, telling the conductor that he had 
bought a ticket to Appalachia. He was ejected and sued therefor. 
The court held that he was not entitled to sue in tort for the éjection, 
but was entitled to sue for a breach of the contract — the mistake made 
by the agent in giving him a ticket to Duffield instead of Appalachia. 
Hère there was nothing on the ticket to indicate that a mistake had 
been made by the agent. Plaintiff simply had a ticket to one station 
and demanded that' the conductor accept his statement — that he had 
paid for one to another station. The distinction between that case 
and the one before us is clearly stated in the language used by the 
court in Frederick v. Marquette, etc., R. R. Co., 37 Mich. 342, 26 Am. 
Rep. 531, quoted with approval by Mr. Justice Buchanan: 

"How, then, is the conductor to ascertain the contract entered Into be- 
tween the passenger and the railroad company when a ticket is purchased 
and presented to him? Practlcally there are but two ways^-one, the évidence 
afforded by the ticket; the other, the statement of the passenger, con- 
tradieted by the ticket" 

Hère, the statement by the plaintiff is not contradicted by the ticket — 
but, in the light of the check to which the ticket refers and which the 
conductor could, for the asking, hâve seen, is fully corroborated. In 
Texas & P. Ry. Co. v. Smith, 38 Tex. Civ. App. 4, 84 S. W. 852, the 
ticket was lost. It is true that, there the passenger offered to identify 
her trunk and show that it had been checked to Dallas, the point to 



874 Y , 188 FEDERAL EBPOBTEB . 

which shé tiâd purchased a ticket. The court held that the conductor 
was under no obligation to examine it. The reasoning of the opinion 
is not very satisfactory, and net apphcable to the conditions found in 
this record. In Shelton v. Erie R. R. Co., 73 N. J. Law, 558, 66 Atl. 
403, 9 L. R._ A. (N. S.) 727, 118 Am. St. Rep. 704, the passenger 
presented a liroited ticket which, by its terms, had expired. The agent, 
by mistake, gave the passenger a hmited, whereas he paid for and was 
entitled to an unlimited, ticket. The court enforced the rule of con- 
clusiveness of the ticket as between the passenger and the conductor 
holding that the action should hâve been for breach of contract and 
not for the expulsion from the car. There was nothing on the ticket 
to show, or suggest, that a mistake had been made. As in the other 
cases, the statement of the passenger was a clear contradiction of the 
ticket. In Hufford v. Grand Rapids & Ind. Ry. Co., 53 Mich. 118, 18 
N. W. 580, the ticket was invalid, and the passenger relied upon 
the statement of the agent from whom he purchased it — in which 
statement he was mistaken. Cooley, C. J., says : 

"If, when the passenger makes the assertion that he has pald fare through, 
he can produce no évidence of It, the conductor must, at his péril, concède 
what the passenger claims or take ail the responsibllity of a trespasser 
If he refuses, etc. * * * But we are ail of the opinion that, If the plaintiffi's 
.ticket was apparently good, he had a right to refuse to leave the car." 

This case, upon a new trial, was again before the Suprême Court (64 
Mich. 631, 31 N. W. 544, 8 Am. St. Rep. 859) upon plaintiff's appeal. 
The judgment was again reversed, Sherwood, J., saying: 

"When the plaintifC told the conductor, on the train, that he had pald 
hIs fare, and stated the amount he had pald to the agent who gave him the 
ticket he presented, and told him It was good, It was the duty of the con- 
ductor to accept the statement of the plalntifC until he found ont it was not 
true, no matter what the ticket contained in words, figures or other marks. 
AU sorts of people travel upon the cars ; and the régulation and management of 
the Company 's business and trains which would not protect the educated and 
unedueated, the wlse and the Ignorant alike, would be unreasonable indeed." 

Without undertaking to reconcile the two opinions, we think that 
the language quotèd is in accordance with sound reason, and, therefore, 
good law. In Erie R. R. v. Winter, 143 U. S. 60,- 12 Sup. Ct. 356, 36 
L. Ed. 71, the controversy grew out of the failure of the first con- 
ductor to whom the passenger presented his ticket to give him a "stop 
over" check at an intermediate station — the agent selling the ticket had 
informed the passenger that he could stop at such station by informing 
the conductor that he wished to do so. The conductor, upon being in- 
formed that the passenger wished- to stop over, said he would "fiix him 
ail right" and punched his ticket, returning it to the passenger, who 
stopped over at the intermediate station and, upon boarding the train to 
complète his journey to the station for which the ticket called, present- 
ed it to the conductor who refused to accept it and demanded fare, 
which the passenger refused to pay and was ejected from the car. The 
contention was made that the ticket was the only and conclusive évi- 
dence of the contract of carriage. Mr. Justice Lamar said : 

"Whlle it may be admitted, as a gênerai rule, that the contract between 
the passenger and the company Is made up of the ticket which he pur- 



BALTIMORE & O. E. OO. V. THÔKNTON . 875 

Phases and fhe rules and régulations of the road, yet It does not ïollow 
that paroi évidence of what was said between the passenger and the ticket 
seller from whom he purehased his ticket is inadmissible, as going to 
make up the contract of carriage and forining a part of it" — titing Huiïord's 
Case, supra. 

It is f urther said : 

"Under the eircumstances of the case, as testified to hy the plaintiff, the 
conductor of the first train Tv-as derelict in his dûty in not providing the 
passenger with a stop-over check when the latter stated to him that he 
desired to stop off at Olean (as he had a right to do) if such check was 
necessary to enable the passenger to complète his joumey to Salamanca." 

We hold that the ticket, upon ils face, afforded sufficient notice to 
the conductor that a mistake had been made by the agent selling it, 
to impose upon him the duty to make a reasonable effort to ascertain 
the truth before resorting to the harsh measure of removing the plain- 
tiff from the car and leaving her, a stranger, in a large city without 
any care whatever for her saf ety and welf are. While he may not hâve 
so intended, he inflicted upon her, by his action, intense suffering, 
humiliation, physical pain, and mental anxiety. We hold that she was 
rightfully on the car and entitled to pursue her journey. 

[2] We are f urther of the opinion that, if her right be measured 
by the rule in respect to the form of action contended for by défend- 
ant — that is, if by the négligence of the agent selling the ticket and 
without any f ault on her part, she was induced to believe, and did be- 
lieve, that he had, as was his duty, given her a valid ticket, whereas, 
in truth, the ticket was invalid — the conductor, in ejecting her from 
the car in the manner testified by him, was guilty of a tort, and de- 
fendant is liable for ail such damages as proximately flowed there- 
from. 6 Cyc. 565 (Note). In P. C. C. Ry. Co. v. Reynolds, 55 Ohio 
St. 370, 45 N. E. 712, 60 Am. St. Rep. 706, it is said: 

"When, by the fault of an agent of the company a passenger takes the 
wrong train or is without a ticket, or (has) one imperfectly or erroneously 
stamped, or for any similar reason is ejected by the conductor of the 
train, in pursuance of the rules of the company, it is liable to him as for 
a tort." 

So, after stating the rule contended for by défendant, it is said: 

"The weight of authority in the courts, state and national, however, 
now is to the effect that the passenger has a right to rely upon the acts 
and statements of the ticket agent or conductor and that, if expelled from 
the train when he had acted in good faith and is without fault, the carrier 
will be liable in damages for such expulsion, whether the action is brought 
for a breach of the contract or solely for the tort of the conductor; that 
it is Immaterial that the différent acts were by différent agents of the 
carrier ; that its liability is the same, notwithstanding, for its own con- 
venience, it has intrusted the management of its trains to différent con- 
ductors. * * * When a passenger has purehased a ticket from a railroad 
agent, purporting to entitle him to passage to a particular place, and has 
undertaken his journey therefor, and there is nothing on the face of the 
ticket and no prior knowledge or notice of the rules of the company, which 
would make such a ticket invalid, brought home to the purchaser, he is 
rightfully a passenger on the train, and the comimny is liable in an action 
to recover damages for his éjection." Moore on Carriers, 742, 743. 



876 188 FEDERAL EEPORTER 

In Northern Pac. R. R. Co. v. Pauson, 70 Fed. 585, 17 C. C. A. 
287, 30 L,. R. A. 730 (9th Cir.), Hawley, District Judge, after dis- 
cussing the conflicting views of the courts and citing those cases which 
hold that, when the agent has made a mistake in giving the passenger a 
ticket he is entitled to sue for the éjection, said: 

"Thèse cases, as well as the others previously referred to, ail proceed 
upon the broad ground that the passenger was whoUy without f ault ; that 
he had done ail that could reasonably be requlred of him to do; and that 
the rallroad company, by the mistake or carelessness of Its agents or cou- 
ductor was Itself at fault. This is the underlyiug princlple of ail the well 
considered. cases upon this subject ïhis principle is fair to both parties. It 
Is Sound, reasonable and just." 

In Murdock v. Boston, etc., R. R. Co., 137 Mass. 293, 50 Am. Rep. 
307, it is said: 

"The plalntiff had a rlght to act upon the explanation given to him at the 
time when he bought his ticket. The mistake was that of the ticket seller, 
in supposing that the punched holes signifled that the ticket had beeu used 
only to Chester, whereas in fact, according to the defendant's rules for the 
instruction and guidance of conductors, they signifled that it had been used 
to Pittsfield, a station farther on. The offer of the conductor to give a re- 
ceipt to the plaintifif for the additional fare which he demanded, stating the 
circumstances under which It was paid, so that the plaintilï might get back 
the money. If it should be found that his account of the purchase of the ticket 
is true, though showing good faith on the part of the conductor did not hâve 
the effect to make it the légal duty of the plaintlfC to pay the additional fare." 

The action was for the tort in the éjection of plaintifî f rom the car. 

It is contended that, whatever may be the rule in other courts, state 
or fédéral, the Suprême Court of Virginia, the state in which the con- 
tract was made, has held that, in such cases, the passenger's cause of 
action is for breach of the contract and not in tort; that this court 
should be governed by this décision. In the view which we take of 
this record the case is distinguished from Hill's Case, supra, and that, 
therefore, no conflict between our conclusion and the conclusion of 
the court in that case is presented. We are further of the opinion that 
the rule of comity invoked and conceded does not apply. 

[3] The character of plaintiff's légal right and defendant's liability 
is not one of local law or of practice and procédure, but is controlled 
by the gênerai principles of substantive law, and, in such cases, the 
fédéral courts are not bound by the décision of the state court in which 
the contract is made or the cause of action accrues. Mr. Justice Field, 
in Myrick v. Mich. Cent. Ry. Co., 107 U. S. 102, 109, 1 Sup. Ct. 425, 
431, 27 L. Ed. 325, says: 

"What constitutes a contract of carriage Is not a question of local law 
upon which the décision of a state court must control. It is a matter of 
gênerai law upon which this court will exercise its own judgment" Chicago 
V. Robbins, 67 U. S. 418, 17 L. Ed. 298. 

No question is presented hère respecting the validity of the contract 
or its construction — it is conceded that défendant entered into a valid 
contract to carry plaintiff from Newport News, Va., to Parkersburg, 
W. Va. The sole question is whether, upon failure of defendant's 
agent to dehver to the plaintiff, as was his duty, a proper token or évi- 
dence of such contract, the plaintifî for the injury which resulted 



BALTIMORE & O. R. CO. V. THOKNTON 877 

therefrom is confined to an action for breach of the contract or may 
sue in tort for the wrongful conduct of its conductor. No case is 
called to our attention in which the Suprême Court of Virginia has 
passed upon, or discussed, a case involving facts essentially similar to 
those presented in this record. The Hill Case, as we hâve pointed out, 
présents a very différent state of facts. It is true that it was held in 
that case that if the ticket did not, by reason of a mistake of the agent, 
entitle the passenger to go to the station claimed liy him, and upon his 
refusai to pay the fare was ejected from the car, he could not sue in 
tort. We entertain for the opinion of the Suprême Court of Virginia 
profound respect, and would hesitate to départ from a conclusion 
reached by that learned and careful court, upon the same or essentially 
similar facts as those presented to us. In the décision of this case we 
do not find it necessary to do so. However, in the light of the conflict- 
ing conclusions of courts of eminent respectability and learning treat- 
ing the ticket as void or a "ticket to nowhere," we incline, very decid- 
edly, to concur with those courts which hold that the company is hable 
for a breach of duty resulting in in jury to a passenger by reason of the 
mistake or négligence of either of its agents with whom the pas- 
senger is required to deal in respect to the transaction in which the 
several agents are concerned. 

[4] While, as conceded, a railroad company may make rules for 
the guidance of its several employés engaged in a common service, bind- 
ing upon them, it may not thereby change the standard and measure 
of duty imposed by the law, which ît owes to the pubhc or the remedy 
for breach thereof. If, by the négligence of the agent, a passenger 
is given an invalid ticket, and without fault on his part is thereby led 
to believe, and does in fact believe, that a valid ticket had been given 
him and in good faith acts upon that belief, we fail to see how, if he 
sustain injury therefrom at the hands of some other agent of the com- 
pany in the performance of the duty of carriage, his remedy or 
measure of recovery can be affected by some rule of the company, un- 
known to him, prescribing the respective duties of its agents. The 
passenger deals with the company, which owes him the duty, upon 
application to the proper agent and the payment of the prescribed fare, 
to furnish him a proper ticket and, in pursuance thereof, to carry him 
safely to his destination; he looks to the corporation — the common 
carrier and not to its employés — to protect his rights and redress his 
wrongs without regard to rules made for its internai management. 
Plaintiflf's case, upon the uncontradicted testimony, is a striking illustra- 
tion of the injustice of any other rule. Except in respect to the degree 
of considération shown for the feelings of the plaintiff — rudeness of 
manner, etc. — the conductor does not, in any essential respect, con- 
tradict the plaintiff's testimony in regard to what passed between them 
on the car, the manner of her removal and what occurred thereafter, 
until he left her in the dépôt in Washington. In our opinion, without 
attributing to him any rudeness or a wanton disregard of plaintiff's 
rights and feelings, his conduct was grossly négligent and inconsider- 
ate. In the aspect of the testimony, most favorable to the défendant, 
plaintiff has a good cause of action in tort for her wrongful éjection 



878 188 FEDERAL REPORTER 

from the car at Washington, and défendant is liable for ail damages 
wliich proximately flowed therefrom. What we hâve said disposes of 
the demurrer. 

[5] The third assignment of error is pointed to the refusai of the 
judge to permit défendant to use, on cross-examination, a written state- 
ment made by plaintiff, unless plaintiff was allowed to show that the 
staternent was made as a part of negotiations for a compromise. We 
do not perceive any error in this ruling. The time, place, and cir- 
cumstances under which a staternent is made are always relevant as a 
part of the res gestîe. 

[6] We find no error in the ruling of the judge limiting the extent 
of the cross-examination of the plaintiff. Full and ample latitude was 
afforded défendant to bring out, upon cross-examination of plaintiff, 
ail of the material facts regarding her condition, cause and effect of 
her injuries. In his sound discrétion, which we think was wisely ex- 
ercised, the judge placed a reasonable restriction upon counsel in this 
respect. This was within his discrétion and not reviewable unless 
abused. We hâve carefully examined the assignments of error in 
regard to the ruling of the court upon the admission of évidence and 
other incidents of the trial and find in them no prejudicial error. De- 
fendant moved to strike out certain parts of the testimony and submit- 
ted prayers in regard to certain éléments of damage to which plaintiff 
claimed she was entitled, which practically amounted to a demurrer to 
the évidence in that respect. They were so treated in the argument be- 
fore us. We bave carefully examined the testimony, and are of the 
opinion that there was both compétent and sufficient évidence, in that 
respect, to be submitted to the jury to sustain her allégation as to the 
extent and character of the spécial injuries sustained by her. For 
reasons appearing upon the record, we do not deem it necessary or 
proper to discuss this testimony. No légal principle is involved. The 
court carefully instructed the jury in regard to the doctrine of proxi- 
mate cause and its application to the testimony in this case. The ques- 
tions involved were délicate in their character and of admitted scien- 
tific difficulty — the physicians introduced by both parties explained to 
the jury fully the conditions and probable conséquences flowing from 
the situation in which plaintiff was placed by the conduct of the con- 
ductor. The jury had the benefit of their opinions based upon facts 
and physical conditions in regard to which there was but little con- 
tradiction. We concur with the learned and careful judge, who tried 
the case, in the opinion that the verdict should not be disturbed. 

Upon an inspection of the entire record, with the aid of the enlighten- 
ing arguments and briefs of counsel, we do not find any error entitling 
défendant to a new trial. The Merchants' & Miners' Transportation 
Company was eliminated from the record in the court below. The 
judgment must be affirmed. 



LEHIGH VALLEY K. CO. V. UNITED STATES 879 

LEHIGH VALLEY R. CO. v. UNITED STATES. 

PHILADELPHIA & R. RY. CO. v. SAME. 

BETHLEHEM STEEL CO. v. SAME. 

<01rcuit Court of Appeals, Third Circuit. June 13. 1911.) 

Nos. 21, 22, 23. 

1. CARSIERS (§ 30*) — I^TTEESTATE COMMEKCE ACT— ScirEDULKS OF EATES— "TEB- 

MINAL ClIABGE"— DeMCKBAGE— "TeANSPOETATIOX." 

Demurrage cliarged for the détention of cars in loading or unloading 
is a terminal charge, required to lie sliown by the schedules of rates filed 
and published by an Interstate railroad company by the terms of the In- 
terstate commerce act of February 4, 188T, c. 104, §§ 1, 6. 24 Stat. 379, 
380 (U. S. Comp. St. 1901, pp. 3154, 3156), as subsequently amended by 
Act June 29, 1906, c. 3591, §§ 1, 2, 34 Stat. 584, 586 (U. S. Comp. St. Supp. 
1909, pp. 1150, 1153), which deflne transportation as including ail the in- 
strumentalitles and facillties of shipment and ail services in connection 
with the receipt, delivery, and handling of property transported, and re- 
qulre the fillng and publishing of sehedules showing ail the rates, fares, 
and charges for transportation, stating separately ail terminal charges. 

[Ed. Note. — For other cases, see Carriers, Cent. Dig. § 81; Dec. Dlg. 
§ 30.* 

For other définitions, see Words and Phrases, vol. ,8, pp. 7075-7076.] 

2. Careiebs (§ 38*) — Violation or Interstate Commerce Act— Demurbage 
' Charges. - 

Àny departure by an Interstate railroad company from the demurrage 
charges flxed by its filed and published sehedules constitutes a mlsde- 
meanor under the Elkins act of February 19, 1903, c. 708, § 1, 32 Stat. 
847 (U. S. Comp. St. Supp. 1909, p. 1138). 

[Ed. Note. — For other cases, see Carriers, Cent. Dig. §§ 96, 97; Dec. 
Dlg. § 38.*] 

8. Carriers (§ 38*) — Prosecution fob Giving Concession in Violation of 
Interstate Commerce Act— Défenses. 

That demurrage charges flxed by the rate sehedules of Interstate rail- 
road companies in a certain district were discriminatory as between a 
shipper located in such district and competltors placed in other districts 
and governed by différent rates is no défense to a prosecution of a rail- 
road company or the shipper for granting or receiving a concession by 
a cancellation of such charges, the only légal mode of correcting the dis- 
crimination being by a change in the sehedules on proper notice or under 
authority from tho Interstate Commerce Commission. 

[Ed. Note. — For other cases, see Carriers, Dec. Dig. § 38.* 
What constitutes an unlawful préférence or discrimination by a car- 
rier under Interstate commerce régulations, see note to 94 C. C. A. 230.] 

In Error to the District Court of the United States for the Eastern 
District of Pennsylvania. 

Criminal prosecutions against the Lehigh Valley Railroad Company 
the Philadelphia & Reading Railway Company, and the Bethlehem 
Steel Company. From a judgment of conviction in each case, the 
défendants bring error. Affirmed. 

For opinions below, see 184 Fed. 543, 546. 

John G. Johnson, for plaintiffs in error. 

J. W. Thompson, for the United States. 

•For other cases see saine topic & § numbek in Dec. Se Am. Ulgs. 1907 lo date, & Rep'r Indexer 



880 188 FEDERAL REPORTER 

Before LANNING, Circuit Judge, and YOUNG and McPHER- 
SON, District Judges. 

YOUNG, District Judge. Ail the défendants were indicted under 
the acts of Congress regulating commerce, as amended by the act of 
February 19, 1903, known as the "Elkins Act," and as amended by 
the act of June 29, 1906, known as the "Hepburn Act," in the follow- 
ing indictments: 

The Lehigh Valley Railroad Company, hereinafter called the Le- 
high, at No. 23 and No. 24, March sessions, 1910. At No_. 23 in 97 
counts for failure to observe the tarifif in force from April 1, 1907, 
by canceling and remittiag the demurrage charges upon 97 différent 
cars delivered in interstate commerce by the Lehigh to the Bethlehem 
Steel Company, hereinafter called the Steel Company; and at No. 24 
in 58 counts, in the 29 odd-numbered counts (from 1 to 57 thereof) 
in granting a concession of one day's free time in excess of the 48 
hours' free time specified in the tarifï filed and then in force, where- 
by the demurrage charge was reduced by $1 on each car, with respect 
to 29 différent cars delivered to the Steel Company between October 1, 
1907, and November 12, 1907, and in the 29 even-numbered counts 
(from 2 to 58, inclusive) with failure to observe the tariff in force as to 
the cars set out in the odd-numbered counts. 

The Philadelphia & Reading Railvi^ay Company, hereinafter called 
the "Reading," was indicted at No. 25 and No. 26, March sessions, 
1910. At No. 25 in 63 counts for failure to observe the tariff then in 
force by canceling and remitting the demurrage charge on 63 différent 
cars delivered to the Steel Company between April 1, 1907, and Octo- 
ber 9, 1907; and at No. 26 in 24 counts, in the odd-numbered counts 
(from 1 to 23, inclusive), with granting a concession of one day's 
free time in excess of the 48 hours specified in the tariff, whereby 
the demurrage charge was reduced by $1 on 12 différent cars delivered 
to the Steel Company between October 9 and October 24, 1907, and 
in the 12 even-numbered counts (from 2 to 24, inclusive), with a 
failure to observe the tariff in force as to the cars set out in the odd- 
numbered counts. 

The Bethlehem Steel Company was indictedl at No. 33 and No. 34, 
March sessions, 1910. At No. 33, with soliciting and receiving the 
concessions from the Reading specified at No. 25 ; and at No. 34, 
with soliciting and receiving the concessions from the Lehigh speci- 
fied at No. 23. 

By agreement of counsel the six indictments were tried together, 
and the jury returned a gênerai verdict of guilty upon each of the 
indictments, and the défendants were respectively sentenced by the 
court in the first count of each indictment to pay a fine of $20,000; 
the Lehigh on the first counts of No. 23 and No. 24, the Reading on 
the first counts of No. 25 and No. 26, and the Steel Company on the 
first counts of No. 33 and No. 34. At the trial, as shown by the 
record, there was no dispute as to the cars, as to the amount of the 
demurrage on each car, or the. time wlien it accrued, or the aggregatj 



LEHIGH VALLEY B. CO. V. UNITED STATES 881 

amount charged as having accrued and been canceled and remitted. 
The record also shows the following facts as undisputed: 

During the period covered by the indictments, the Lehigh and the 
Reading were members of the Northeastern Car Service Associa- 
tion, hereinafter called the "Association," composed of certain rail- 
roads engaged in interstate commerce, and operating within a certain 
territorial division of northeastern Pennsylvania. The Steel Com- 
pany was also within this territory. The Association, through its 
Car Demurrage Bureau, hereinafter called the "Bureau," had charge 
of the business of supervising the application of the demurrage rules, 
auditing demurrage accounts, and adjusting claims for improper de- 
murrage charges collected by the railroad companies within its terri- 
tory. This was accomplished by the freight agents of the différent 
railroads reporting to the manager of the Bureau the arrivai, placing, 
and release of cars subject to demurrage rules. The freight agents 
also reported to the accounting departments of their respective com- 
panies, and under the supervising of the manager of the Bureau 
collected the earnings for the companies in accordance with the tariflfs 
and rules on file with the Interstate Commerce Commission, and it 
was the duty of the manager of the Bureau to see that thèse tariffs and 
rules were observed and carried out. The Association adopted uni- 
form rules for demurrage -charges which applied to ail the railroads 
within its territory. After the Hepburn act went into effect in August, 
1906, the Association* adopted car service rules, and on August 27 , 
1906, the Lehigh filed with the Interstate Commerce Commission thèse 
rules as its original tarifï of charges for demurrage in the transpor- 
tation of freight within the Association's territory, and on November 
23, 1906, the Reading filed the same rules, and by those rules it was 
provided that a charge of $1 per day should be made "for car service 
and use of track on ail cars not unloaded within 48 hours after arrivai, 
not including Sundays and légal holidays, the time to be computed f rom 
7 a. m. of the following day on cars arriving after 7 a. m., and from 
12 noon of the following day on cars arriving after 12 noon." While 
thèse rules were in effect, the Lehigh and Reading, the former on 
August 27, 1907, and the latter on August 26, 1907, filed new rules, 
marked, respectively, 2208 and 200, with the Interstate Commerce 
Commission, which were to take effect on October 21, 1907, and which, 
when effective, would cartcel the rules then in force. The only material 
change was that the 48 hours' f ree time was to be computed in every 
case from 7 a. m. of the day following the arrivai of the car instead 
of from 7 a. m. and 12 noon, respectively. 

It appears the Association then adopted rules on October 9, 1907, 
by which the 48 hours' free time should not only be computed from 7 
a. m. of the day following placement, but that industrial plants per- 
forming their own switching would hâve an additional allowance of 
24 hours for switching. This rule, marked "Supplément No. 1 to 
Lehigh Tariff," was filed with the Interstate Commerce Commission 
by the Lehigh on October 10, 1907, to become effective November 
12, 1907, and by the Reading on September 21, 1907, marked "Sup- 
plément No. 1 to the Reading Tariff'," and to become effective on 
18S P.--56 



882 188 FEDERAI, HBPORTBB 

Oçtpber 24, 1907. On October .9, 1907, the first vice président of the 
Lehigh and the gênerai manager of the Reading notified Thomason, 
the manager of the Association, and under his protest, that the rule 
allowing 24 hours' additional free time to those plants doing their 
own switching, and which would not become effective as to the Leliigh 
until November 12, 1907, and as to the Reading until October 24, 1907, 
would be put into eflfect October 9, 1907, thus giving 24 hours' addli- 
tional free time to the Steel Company from October 9, 1907. 

On April 15, 1908, the Car Service Association adopted what were 
known as the "National Car Service Rules," which by an order fiiled 
by the Reading as order 578 became effective May 15, 1908, and can- 
celed the rules theretofore in efïect. The same rules were put into 
effect June 15, 1908, by the Lehigh by a tariff marked "Supplément 
No. 2 to Tarifï 2208," which superseded the previous rules. 

The évidence shows that the outstanding demurrage bills from 
January, 1901, to August, 1906, owing by the Steel Company to the 
Lehigh, were $26,539, and to the Reading, $23,424. Thèse amounts 
were canceled on the ground that they were incorrect and the records 
unreliable, but as they accrued before the Hepburn act they were not 
made the subject of indictment. From September, 1906, after the 
Hepburn act became effective, to June 1908, exclusive of the period 
from April 1, 1907, to October 9, 1907, demurrage charges had ac- 
crued from the Steel Company to the Lehigh amounting to $44,125, 
and from the Steel Company to the Reading amounting to $29,275. 

On May 15, 1907, the Reading demurrage charges against the Steel 
Company were transferred from the Northeastern Association to the 
Philadelphia Association, and on June 15, 1907, the Lehigh demurrage 
charges were transferred from the Northeastern Association to the 
Philadelphia Association. It appears from the évidence that from 
time to time prior to July 24, 1908, the manager of the Bureau and the 
Lehigh and Reading had requested payment of the demurrage charges 
from the Steel Company, and finally on July 24, 1908, the manager 
of the Association wrote the Lehigh and the Reading that the demur- 
rage charges had been reduced from $73,400 to $7,391 ; the Lehigh 
from $44,125 to $4,284, and the Reading from $29,275 to $3,107. 

In August, 1908, the manager of the Association notified the Steel 
Company of the adoption of the car service rules and that the same 
had been made rétroactive as to the Steel Company, andi agreed under 
authority of the Lehigh and Reading to settle ail demurrage bills 
against the Steel Company, reducing the Lehigh charges from $44,125 
to $4,284, and the Reading from $29,275 to $3,107. On December 4, 
1908, the Steel Company paid to the Lehigh the sum of $4,284 by 
its check to the order of the Lehigh, and to the Reading $3,107, by 
its check to the order of the Reading. It clearly appears from the évi- 
dence that there was included in this settlement ail demurrage charges 
accruedi from the Steel Company to the Lehigh and Reading from 
September, 1906, to June, 1908, except for the months of April, May, 
June, July, August, and September andI to October 9, 1907. 

An inspection of the indictments shows that the charges set out in 
indictment 24 against the Lehigh, and in indictment 26 against the 



LEHIGH VALLEY B. CO. V. UNITED STATES 

Reading, were for the cancellation of charges included in the settlement 
of December 4th. It was found that the charges for the period from 
April 1, to October 9, 1907, which were assumed to hâve been in the 
settlement of December 4th, were not included, and on December 10, 
1908, the manager of the Association recommended to the Lehigh a 
cancellation of the Lehigh charges therein stated to be $40,611, for 
the period from April 1 to October 9, 1907, to which the Lehigh an- 
swered 'December 23, 1908, approving such cancellation and on De- 
cember 29, 1908, thèse charges wei-e canceled. It also appears from 
the évidence that the demurrage charges due by the Steel Company 
to the Reading were $15,635 for the period from April 1 to October 
9, 1907, and that thèse were recommended for cancellation by Fraser, 
the inspector of the Association, in his letter to Challenger, included 
in which was his analysis showing the complète cancellation of the 
charges. The évidence also shows that no effort has since been made 
to collect thèse charges and that they were abandoned. An inspection 
of indictment No. 23 against the Lehigh and No. 25 against the Read- 
ing shows that they were based upon demurrage charges accruing 
from the Steel Company between April 1, 1907, and October 9, 1907, 
and which it is alleged were settled December 29, 1908. The two 
indictments, 33 and 34, against the Steel Company, were for receiv- 
ing thèse cancellations from the Lehigh and the Reading respectively. 

Ail the foregoing facts were either admitted' during the trial or 
are abundantly proved by the évidence submitted by the government. 

It thus appears that the Lehigh and Reading were engaged as com- 
mon carriers in transporting property for the Steel Company in In- 
terstate commerce, and that certain rules had been adopted by the 
railroads governing the demurrage charges, and that thèse were filed 
with the Interstate Commerce Commission, and that they were well 
known to the Steel Company. It also appears that beginning in Jan- 
uary, 1901, and up to June, 1908, charges in favor of the Lehigh had 
accrued from the Steel Company to the amount of $113,360, and to 
the Reading to the amount of $68,263, and although demand had been 
made from time to time upon the Steel Company for the payment 
of ail of thèse charges, they had not been paid. During the summer 
of 1908, the Lehigh and Reading, through the manager of the As- 
sociation, took up with the Steel Company the settlement of thèse 
charges and the évidence clearly shows that the Steel Company was 
soliciting the cancellation, and that the Lehigh and Reading were en- 
deavoring to make a settlement satisfactory to the Steel Company. 
There cannot be a particle of doubt under the évidence that after thèse 
charges had accrued the railroads on the one hand and the Steel Com- 
pany on the other were endeavoring to effect a settlement by which 
the charges would be canceled. With this end in view the railroads 
first canceled ail the charges accruing before the passage of the Hep- 
burn act and up to September, 1906. They then attempted to cancel 
ail the charges from September, 1906, to June, 1908, and on Decem- 
ber 4, 1908, they finally settled ail the charges of which they had 
knowledge at that time, and this they accomplished, first, by assum- 
ing that the change in the rules, which they had attempted to make 



88| 188 FEDERAL EEPORTEB 

on October 9, 1907, without the 30 days' notice required by the act, 
was légal and effective, and by making the rules subsequently adopted 
rétroactive, and by making certain allowances for conditions about the 
railroads and Steel Company not in any sensé provided for by the 
rules and tariffs in force. 

Immediately after the settlement of December 4, 1908, certain ac- 
counts of demurrage for the period from April Ist to October, 1907, 
which had been overlooked, were discovered, and thereupon -the Le- 
high, upon December 29, 1908, canceled thèse charges for that pe- 
riod, and as to the Reading the inspector of the Association recom- 
mended to the manager of the Association that thèse charges for that 
period were caused by the fault of the Reading and should not hâve 
been charged. No effort was ever made by the Reading to collect 
thèse charges, and the jury had sufficient évidence upon which to find 
that the Steel Company had demanded their cancellation and that the 
Reading had made the cancellation. 

The cases were tried upon the theory that the railroads and the 
Steel Company had the right to adjust the demurrage charges, and the 
défendants insisted that the demurrage charges had been entered up 
against the Steel Company wrongf ully, and that the Steel Company 
had consistently and persistently refused to pay them, and that finally 
the railroads having investigated the charges found that they had 
wrongf ully charged the Steel Company, and that the adjustment was 
fînally agreed upon by the railroads and the Steel Company, which 
was satisfactory to both, and which resulted in the cancellation set 
out in the indictment. It was contended by the government that the 
charges were correct and in accordance with the tariffs filed by the 
railroads, and that the railroads in making the settlement were seek- 
ing to make concessions demanded by the Steel Company under the 
guise of a settlement of disputed charges. 

The court submitted to the jury, as bearing upon the guilt of the 
défendants, the question of fact raised by the évidence in order to 
détermine whether the settlement was an honest correction of mis- 
takes in the charges, or a means of granting and receiving concessions. 
The jury evidently found that the settlement was the means of grant- 
ing concessions, and not the correction of honest mistakes, for they 
found the défendants guilty. 

Thèse cases may be disposed of by considering the numerous as- 
signments of error as raising the following questions: (a) Do the 
acts regulating commerce require rules, tariffs, and schedules relat- 
ing to demurrage charges to be fîled with the Interstate Commerce 
Commission ? (b) Can there be a prosecution for the violation of such 
rules, tariffs, and schedules? (c) Was there any error in the charge 
of the court? 

[1 ] (a) That the commerce act requires that every common carrier 
engagfd in interstate commerce shall file with the Interstate Com- 
merce Commission, and pubhsh and keep open for public inspection, 
ail rates, fares, and charges, stating separately ail terminal charges, 
and that such terminal charges include demurrage charges, is estab- 
lished (1) by the words o£ the act; (2) by the décisions of the In- 



LEHIGH VALLEY B. CO. V. UNITED STATES 885 

terstate Commerce Commission ; and (3) by the rulings of the fédérai 
courts. 

(1) Section 1 of the act to regulate commerce of February 4, 1887, 
as amended by subséquent acts, defines transportation as including, 
"ail the instrumentalities and facilities of shipment or carriage 
* * * and ail services in connection with the receipt, delivery, élé- 
vation, and transfer in transit, ventilation, réfrigération or icing, stor- 
age, and handling of property transported." Section 6 of the act of 
1887, as amended by the act of 1889 and by the act of 1906, provides : 

"ïhat every common carrier subjeet to the provisions of thls act shall file 
with the Commission created by thls act and prlnt and keep open to public 
inspection schedules sliowlng ail the rates, tares and charges for transporta- 
tion." 

The section further provides that the schedules "shall also state 
separately ail terminal charges, storage charges, icing charges, and ail 
other charges which the Commission may require, ail privilèges or 
facilities granted or allowed, and any rules or régulations which in 
any wise change, affect or détermine any part or the aggregate of 
such aforesaid rates, fares and charges, or the value of the service 
rendered to the passenger, shipper, or consignée." 

Thus we see that by the language of the act transportation is de- 
fined to include terminal charges. It must be conceded that demur- 
rage, being a charge for the détention of a car because of the use of 
the car and track until unloaded, is a terminal charge. 

(2) It has been uniformly held by the Interstate Commerce Com- 
mission that démarrage charges are part of transportation, and are 
required to be filed with the Commission. "Beyond ail possibiHty of 
doubt, therefore, the duty of regulating terminal charges when re- 
lated to Interstate transportation has been lodged with the Interstate 
Commerce Commission, and fédéral courts hâve so held." Wilson 
Produce Co. v. Pennsylvania R. R. Co-, 14 Interst. Com. R. 170, 174. 
"It does not appear to be necessary to do more than refer to the dé- 
cision of the Commission in Wilson Produce Co. v. P. R. R. Co., 14 
Interst. Com. R. 170, in which it was held that the duty of regulating 
terminal charges, when related to traffic between states, has been 
lodged with the Commission, and cases therein cited." Peale, Pea- 
cock & Kerr v. C. R. R. of N. J., 18 Interst. Com. R. 25, 33. 

(3) The fédéral courts hâve so held. In Michie v. New York, N. 
H. & H. R. Co. (C. C.) 151 Fed. 694, Judge Lowell said: 

"The phrase of the statute 'dellverlng, storage or handling' is broad enough 
to include demurrage." 

In United States v. Standard Oil Company (D. C.) 148 Fed. 719, 
722, Judge Landis said: 

"The law requlres the publlshed tarife to show everything In the way of 
terminal régulations which in any way affects the cost of the service rendered 
by the carrier, and such publlshed terminal charge is no less binding on the 
parties than is the tarife specified for the transportation." In Interstate Com- 
merce Co. V. Détroit, etc., Ry. Co., 167 U. S. 633, 17 Sup. Ct. 986, 42 L. Efl. 
306, Mr. Justice Shiras said on page 645 of 167 U. S., page 090 of 17 Sup. 
et.: "It may vt-ell be doubted whether cartage, when furnlshed without charge, 
cornes wlthin the meaning of the phrase 'terminal charges,' or can be regard- 



886 188 FEDERAL EEPOETEE 

ed as 'a rule or régulation,' whleh In any wlse 'changes, affects, or déter- 
mines' any part or the aggregate of the rates, fares, and charges." 

And after discussing the opinion of Judge Cooley and the report of 
the Interstate Commerce Commission continues: 

"However, in a matter of this klnd, much should be left to the judgment 
of the Commission, and should it direct, by a gênerai order, that rallway 
companles should thereafter regard cartage when furnlshed free as one 
of the terminal charges, and include it as sueh in their schedules, such an 
order mlght be regarded as a reasonable exercise of the Commlssion's powers." 

To the same effect is Rhodes v. lowa, 170 U. S. 412, 18 Sup. Ct. 
664, 42 L. Ed. 1088, where the présent Chief Justice held that the 
moving of goods from the platform to the freight warehouse was a 
part of interstate commerce transportation. Bowman v. Chicago, etc., 
Railway Co., 125 U. S. 465, 8 Sup. Ct. 689, 1062, 31 L. Ed. 700; 
McNeill V. Southern Railway Co., 202 U. S. 543, 26 Sup. Ct. 722, 
50 L,. Ed. 1142. The railroad companies, the défendants in thèse 
cases, 30 regarded them and filed them with the Commission. To 
hold otherwise than that demurrage is part of transportation and part 
of the terminal charges would be to open the door to a railroad Com- 
pany to allow favored patrons to occupy the tracks and the cars for 
such demurrage charges as they chose. Transportation includes the 
hiring of the vehicle and the hauling of it to its destination. The 
rates are based to some extent upon the time the car is used and out 
of service to the railroad company, because if not unloaded it is still 
in use. It is not a penalty. In the ordinary use of a car the time of 
the journey measured by miles is calculated and considered as well as 
the cost of moving it in fixing the charges. When the journey is fin- 
ished of course the cost of moving ceases, but the use of the car re- 
mains. The aggregate of the rates is therefore afïected and clearly 
cornes within the Hepburn act. 

[2] (b) The tarifï having been filed and published not to observe it 
is a misdemeanor. In Texas & Pacific Ry. Co. v. Abilene Cotton Oil 
Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553, Mr. Justice White 
said: 

"Thus. by section 1 of the act approved February 19, 1903, commonly known 
as the 'Elkins Act,' whlch, although enacted since the shipments In question, 
Is yet Ulustratlve, the wlUful failure upon the part of any carrier to fiie 
and publish 'the tariffs or rates and charges,' as requlred by thé net to 
regulate commerce and the acts amendatory thereof, 'or strlctly to observe 
such tariffs untU changed according to la-w,' was made a misdemeajior, and 
It was also made a misdemeanor to ofCer, grant, glve, sollclt, accept, or re- 
celve any rebate from published rates or other concession or discrimina- 
tion. And in the closing sentence of section 1 it was provlded as follows: 
'Whenever any carrier files with the Interstate Commerce Commission or pub- 
lishes a partlcular rate umder the provisions of the act to regulate commerce 
er acts amendatory thereof, or participâtes in any rates so filed or puMislied, 
that rate as against such carrier, its officers or agents in any prosecution 
begun under this act, shall be conclusively deemed to be the légal rate, and 
any departure from such rate or any offer to départ therefrom shall be deem- 
ed to be an offense under this section of the act.' " 

If, therefore, the terminal charges are part of the transportation, 
and if demurrage charges are included in the term "terminal charges," 
then clearly the failure to observe thèse tarifïs and the soliciting and 



liEHIGH VALLEY B, CO. V. UNITED STATES 887 

receiving of concessions are misdemeanors for which a prosecution 
will lie. 

[3] (c) Was there error in the charge of the court? The whole 
case turns upon whether or not the settlement was an honest settle- 
ment or one made for the purpose of allowing the cancellation of 
demurrage. The division of territory by which the Steel Company 
was put in one district and its competitors in another, the demurrage 
charges for the Steel Company not being as favorable as for others, its 
competitors, and were therefore discriminatory, cannot aiïect the case. 
If the charges were discriminatory, that matter could be rectified by 
an appeal to the Interstate Commerce Commission, or by making 
changes in the rules in accordance with the laws giving 30 days' no- 
tice, or such other notice as was required by the Interstate Commerce 
Commission, the authority resting in that Commission alone to grant 
a change of rules on less than 30 days' notice. 

It is to be observed that the charges of concessions made by the 
railroads to the Steel Company, and which are made the subject of 
indictment, had accrued before any change was made in the rules. 
No concession is set forth in the indictment of a later date as to the 
Lehigh than October 23d, and as to the Reading, than October 18th, 
and yet no ofïer was made to change the rules until October 9th. But 
it is argued by counsel for plaintiff in error that : 

"There was no évidence as against the Steel Company to sustaln the aver- 
ment that from elther railroad company It dld unlavvfully, knowlngly, and 
wlllfuUy soHcIt and reçoive a concession or a certain sum upon the amount 
of a demurrage charge by it due and payable." 

This turns upon the knowledge and intent of the Steel Company 
in soliciting and receiving. It must be conceded it demanded the ré- 
duction of the charges and received it. Its contention was based upon 
the knowledge of the demurrage charges, and its refusai was based 
upon many conditions as to railroad tracks being torn up and the 
Steel Company's tracks being in a bad condition. But no allowance 
could be made for thèse things unless they were allowed by the Com- 
mission. In Texas & Pacific Ry. v. Abilene Cotton Oil Co., supra, 
Mr. Justice White said: 

"Concluding, as we do, that a shipper seeliing réparation predicated upon 
the reasonableness of the establlshed rate must, under the act to regulate 
commerce, primarily invoke redress through the Interstate Commerce Com- 
mission, which body alone is vested with power origlnally to entertain pro- 
ceedings for the altération of an establlshed schedule, because the rates flxed 
thereln are unreasonable, it is unnecessary for us to consider whether the 
court below would hâve had jurisdictlon to afford relief if the right asserted 
had not been répugnant to the provisions of the act to regulate commerce." 

To the same efïect is Baltimore & Ohio R. R. v. Pitcairn Coal Co., 
215 U. S. 481, 30 Sup. Ct. 164, 54 L. Ed. 292. The rates were fixed 
by the tariff filed and could not be departed from. The law did not 
intend that the railroad and shipper could alter thèse charges, because 
that would do away altogether with the purpose sought by the act. 
It was known by the Steel Company what the charges were, and the 
law was violated by reducing those charges by the settlement between 
the railroads and the Steel Company, thus allowing the carrier and 



888 188 FEDEEAIi REPORTER 

fhe shipper to détermine in each case whether the tariff should be 
observed or not. 

Again, it is argued that there was not any settlement at ail of cer- 
tain demurrage charges specified in the counts upon which sentence 
was imposed. Under the first indictment, No. 23, the charges were 
based upon différent transactions, différent cars as to the Lehigh. 
The same is true as to indictment No. 25 as to the Reading. Settle- 
ment for thèse transactions was made December 29, 1908. Bethlehem 
received by this settlement, which it had demanded through its cor- 
respondence, the concessions included in the settlement. It clearfy 
appears from the évidence that this settlement of December 29, 1908, 
included ail demurrage charges from April 1, 1907, to October 9, 
1907, and this carries with it indictment 33, based on indictment 25 
of the Reading, and indictment 34, based on 23 of the Lehigh. This 
was a distinct settlement from the settlement of December 4, 1908, 
which included ail charges from September, 1906, to June, 1908, ex- 
cept those from April to October, 1907. 

We find no error in the charge. The case, as has been said, was 
tried upon the theory that, if the settlement was an honest one, the 
défendants were not guilty, and the court submitted it to the jury 
fully and fairly upon this theory. This was a more favorable view 
of the case than défendants were entitled to bave presented to the 
jury under the facts of this case. If the rates were discriminatory 
they could be changed, and changed alone by an application to the 
Interstate Commerce Commission. If the conditions were such as 
to make the charges unjust, proper application could hâve been made, 
and made only to the Interstate Commerce Commission for an adjust- 
ment of the charges, but the Lehigh and the Reading being a law unto 
themselves changed the rules which were in force and applied them 
without the notice required by the act as to a portion of the charges, 
and made them rétroactive as to others. 

Under ail the évidence in this case, the railroads and the Steel Com- 
pany hâve violated the law, and they are clearly proved to hâve been 
guilty under the law as charged in the several indictments. 

The judgments are affirmed. 



WELLS FARGO & CO. v. POTTEE. 

(Circuit Court of Appeals, Third Circuit. June 13, 1911.) 

No. 2. 

1. Carbieks (§ 230*) — Action for Injuet to Live Stock — Questions fob 

JUEY. 

In an action for an Injury to plaintiff's horses wtiile being transported 
by défendant, where tbere was évidence tliat after they were placed in tbe 
car plaintiff's superintendent called tbe attention of defendant's agent to 
the insufflciency of the partitions in the car and requested tbat they be 
strengthened, which was refused, and that the horses were injured by 
reason of the insufflciency of such partitions, although contradicted, 

*For other cases see same topic & § numbsr in Dec. & Am. Digs. 1907 to date, & Bep'r ladexes 



WELLS FAEGO & CO. V. POTIER 889 

made a case requiring the submission of the question of defendant's négli- 
gence to the jury. 

[Ed. Note.— For other cases, see Carriers, Cent. Dlg. § 962 ; Dec. Dlg. § 
230.*] 

2. Caeeiers (i 230*)— Action foh Injubt to Live Stock — Questions ïoe 

JUEY. 

Evidence that the horses became frightened while passlng through a 
tunnel, and broke down the partitions, that plaintlfï's servants assisted 
In placlng them in the car and accompanied them, and that they had 
lanterns whlch they mlght hâve lighted when the tunnel was reached, 
was not sufficient to establish contributory négligence as matter of law. 

[Ed. Note. — For other cases, see Carriers, Cent Dlg. § 962; Dec. Dig. 
§ 230.*] 

3. Caehiees (§§ 207, 230*) — Cabbiage of Live Stock— Conteact— Limitation 

OF Liability. 

Evidence that plaintiff and defendant's superintendent made an oral 
agreement by vs'hich défendant was to furnish a car of a certain klnd at 
a stated tlme and place for the transportatlon of a number of horses, 
the rate also being agreed on, was sufBcient prima facie to establish a 
completed contract, and, where defendant's agent obtained the signature 
of plaintiffs agent In charge of the horses when loaded to a written con- 
tract whlch llmited the defendant's liability, it was not error for the 
court to instruct the jury, In an action for injuries to the horses, that if 
they found that the oral contract was made as testifled to without any 
agreement for limited liability, or for any further agreement, plaintifC 
would not be bound by the written contract unless he ratifled It, or his 
agent had actual authorlty to mabe It. 

[Ed. Note.— For other cases, see Carriers, Dec. Dig. §§ 207, 230.*] 

In Error to the Circuit Court of the United States for the District 
of New Jersey. 

Action at law by Robert H. McCarter Potter against Wells Fargo & 
Company. Judgment for plaintiff, and défendant brings error. Af- 
firmed. 

Collins & Corbin (Gilbert Collins, W. W. Green, George S. Hobart, 
of counsel), for plaintiiï in error. 
Joseph Coult, Jr., for def-endant in error. 

Before BUFFINGTON and LANNING, Circuit Judges, and 
YOUNG, District Judge. 

YOUNG, District Judge. The défendant in error, plaintiff below, 
brought an action in tort against the plaintiiï in error, défendant be- 
low, to recover damages for alleged injuries to plaintiff's horses, which 
the défendant had undertaken to carry from Andover Junction, in 
the State of New Jersey, to Sheepshead Bay, in the state of New York. 
It appears from the record that the plaintiff, prior to August 29, 1904, 
arranged with Mr. Crowe, superintendent of défendant at Jersey City, 
for a car in which to ship a certain number of horses, and that during 
the negotiations the rates and place and time of shipment were fixed. 

On August 29, 1904, the plaintiff delivered 20 horses to the défend- 
ant at Andover Junction, and the same were received by the défendant 
and placed in a car provided. It appears that the plaintiff was at the 
car when the loading began, but left before it was completed; he 

•For other cases see same topic & § mumbeb lu Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



890 188 FEDERAL REPORTER 

taking a train for New York. After the horses were plàced in the 
car, but before the train started on its journey, O'Neill, agent for the 
défendant, presented to Claxton, superintendent for plaintiff, a writ- 
ten contract which was signed by both, and which contained a clause 
limiting the liability of défendant in case of injury to $75 for each 
horse carried, and also providing against liability in the event of the 
injury arising from the action of the animais themselves. 

During the transportation of the horses from Andover Junction 
to Sheepshead Bay, two of the horses were injured, as claimed by 
plaintiff, by the négligence of défendant company's employés in not 
having provided proper and sufficient partitions between the horses 
injured, and, as claimed by défendant, by the contributory négligence 
of plaintiff's employés in not properly attending the horses while pass- 
ing through a certain tunnel whereby the horses became frightened 
and broke down the partition provided. It was further asserted by 
défendant that the injury to the horses resulted from the actions of 
the animais themselves. 

The case was submitted to the jury by the trial judge with instruc- 
tions that the jury were to find whether or not the défendant had 
been guilty of négligence which was the proximate cause of the injury. 
He also submitted to the jury whether or not there was a complète 
oral contract màde before the written contract was signed by Claxton. 
The jury was also instructed that, if there was not a complète oral 
contract arising out of the negotiations between plaintiff and Crowe 
prior to August 29th, then thèse negotiations were but preliminary 
to the making of a written contract, and Claxton, by virtue of being 
in charge of the horses for shipment, had apparent authority to sign 
the written contract, and it would be binding upon the plaintiff, and he 
could only recover for the injury to the amount stipulated in the writ- 
ten contract ; but that, if there was a complète oral contract made by 
plaintiff, then the doctrine of apparent authority would not apply, but 
the jury must be satisfied by the évidence' that either the plaintiff him- 
self sanctioned the making of the new contract or authorized Claxton 
to do so for him. The jury found a verdict for plaintiff in the sum 
of $3,500 and added that they based their verdict upon the oral con- 
tract. 

Counsel for défendant filed numerous assignments of error based 
upon the admission and rejection of évidence. Thèse it is not nec- 
essary to consider in détail, because none of them are well founded 
or would be sufficient to call for a reversai of the case. The other 
assignments of error may be considered under three propositions : 
First, did the court err in submitting the case to the jury upon the 
question of négligence? Second, did the court err in refusing to direct 
the jury to render a verdict for défendant because of contributory 
négligence on the part of plaintiff's servants? Third, did the court 
err in instructing the jury that, if there was a complète oral contract, 
the plaintiff was entitled to recover the amount of damage proved by 
him, unless fhey found that (a) either the plaintiff had sanctioned the 
written contract made by Claxton as his agent, or (b) that Claxton 



WELLâ FAEGO & CO. V. POTTER 891 

was his agent and was authorized to make a new contract in writing 
differing from the oral contract. 

[ 1 ] First, as to the négligence of the défendant : The évidence on 
the part of the plaintiff was that on the morning of August 29, 1904, 
the horses were taken by the plaintiff's servants to the car at Andover 
Junction and placed in the car, defendant's agent O'Neill and other 
employés of défendant being there at the time, and that the attention 
of O'Neill was called by Claxton, plaintiff's superintendent, to the 
fact that one of the horses, the Diamond Jubilee coït, was a most 
valuable horse, and that the arrangements for its safe carriage were 
insufficient, specifying wherein they were insufficient, and suggesting 
the remedy by the procuring of additional boards to place in the 
partition between the horses, but that O'Neill refused to wait for the 
boards and informed plaintiff's superintendent that he was in charge 
of the shipment and that he would guarantee their safety. This évi- 
dence was corroborated by other of plaintiff's servants. The defend- 
ant's witness O'Neill contradicted this évidence; but there was no 
, corroboration of his testimony. The plaintiff then having offered to 
show that the injury to the horses was caused by the insufficiency 
of the partition to keep the horses separated, whereby they were eut 
and bruised when they became frightened in the tunnel through which 
the train passed, this évidence, together with the évidence as to the 
insufficiency of the partition, made out a case to go to the jury, and 
the court would havè erred in not submitting it to them. The évi- 
dence of the plaintiff, if believed, shows a clear case of négligence on 
the part of the défendant and warranted the jury in so finding. 

[2] Second, as to the contributory négligence of the plaintiff: The 
only évidence tending to show contributory négligence was that the 
horses were placed in the car by plaintiff's servants, that they accom- 
panied them on their journey, and that they were provided with lan- 
terns which they should hâve lighted and had in the car so that the 
horses in passing from the light of day into the tunnel would not be 
in the dark and frightened. It would hâve been plain errer for the 
court to bave directed a verdict for the défendant upon this évidence. 
It is true the plaintiff's servants placed the horses in the car ; but the 
évidence clearly warrants the finding that O'Neill, the agent of the 
défendant, was supervising their placement, and that the proximate 
cause of the injury was not the manner in which they were placed in 
the car, but was the insufficiency of the means used to secure their 
séparation in case of fright or otherwise, after the attention of O'Neill 
was called to the insufficiency of the means used. True it is, also, 
that the plaintiff's servants accompanied the horses and had lanterns ; 
but there was no such conclusive évidence that the injury was caused 
by any négligence of the plaintiff's servants, either in their attendance 
or failure to use the lanterns, as to justify the court in directing a 
verdict for défendant. 

There was scarcely more than a scintilla of évidence of the con- 
tributory négligence of plaintiff's servants, and it well may be doubted 
if a verdict for défendant could hâve been sustained upon that évi- 
dence. 



892 188 FEDERAL REPORTER 

[3] Thîrd, as to the contracts: The évidence of the plaintiff, if 
believed by the jury, shows that, prior to the date of shipment, the 
plaintiff and Mr. Crowe, superintendent for the défendant, met, and 
that it was arranged between them that défendant was to provide a 
certain kind of car for the transportation of a certain number of 
horses, that the rates were fixed at a certain sum, and that the car 
was to be at a certain place at a certain time for the loading of the 
horses. Nothing remained to be donc in the making of a contract 
so far as plaintiff was concerned and nothing so far as défendant was 
concerned, except to reduce it to writing and limit the liability. None 
of thèse things were necessary for an oral contract. It was just as 
binding as a written one, and the limitation of liability was a matter 
which, if défendant desired, it was its privilège to hâve mentioned. 
The évidence was conflicting whether or not the understanding was 
that the contract should be reduced to writing and whether or not the 
limited liability was mentioned. Crowe said not only was the con- 
tract not completed, but that it was only a preliminary talk as to rates 
and the time of shipment, and that he told plaintiff there would be 
a limited liability. Plaintiff denied this, and the évidence was clearly 
for the jury. There was sufficient évidence of a complète oral con- 
tract, and the court did not err in submitting it to the jury. 

Neither did the court err in instructing the jury tha,t, if the oral 
contract was not complète, then Claxton, who was plaintiff's superin- 
tendent and in cliarge of the horses about to be Shipped, had apparent 
authority to make the written contract. This was as favorable a 
présentation of the case as the défendant was entitled to hâve. 

Nor was there error in the trial judge's instructions that if there 
was a complète oral contract, yet if plaintiff sanctioned the making 
of a contract in writing thereafter which varied the oral contract, or 
if Claxton had authority to change the oral contract by the written 
one, then the plaintiff could not recover more than the limited lia- 
bility therein mentioned. This présentation to the jury was quite as 
favorable as the défendant was entitled to hâve. 

A careful reading of the charge convinces us that there was no 
error in it, and that the case was fairly left to the jury under careful 
and adéquate instructions. The verdict was not excessive. The évi- 
dence as to the value of the horses and the extent of the injury might 
well hâve justified a much larger verdict. 

The judgment is affirmed. 



SECOND POOL COAL CO. v. PEOPLB'S COAL CO.t 

(Circuit Court of Appeals, TMrd Circuit June 23, 1911.) 

No. 8. 

1. Navigabuc Waters (§ 24*) — Obstruction bt Wbeck— Liability fob In- 
JUBT Causkd to Otheb Vessels— "Ownee.'' 

Respondent, a coal company, havlng In its possession a loaded coal flat 
moored to Its float In the Allegheny river in Pittsburgh, with the right 
to retaln It untll It was unloaded, cast it loose durlng a flood to avoid 

*For other cases see same topic & i numbek In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 

tRebearlng denied. 



SECOND POOL coAL co. V. people's COAL CD. 893 

injury to Its float and other vessels, and It sank some distance below. 
The place was not marked, and some three weeks later libelant's vessel 
ran into It and was Injured. Held, that respondent stood in the place 
of the owner within the meaning of Act March 3, 1899, c. 425, § 15, 30 
Stat. 1152 (U. S. Comp. St. 1901, p. 3543), requiring the owner of any 
vessel sunk In a navigable channel to immediateiy mark the place and 
main ta in the marks until it Is removed or abandoned, and, It appearing 
that there had been no abandonment, that respondent was liable to 
libelant for the Injury to its vessel. 

[Ed. Note. — For other cases, see Navigable Waters, Cent. Dig. § 66; 
Dec. Dig. § 24.* 

For other définitions, see Words and Phrases, vol. 6, pp. 5134-5151; 
vol. S, p. 7744.] 

2. Adjiikaltt (§ 88*)— Pleading— Vamance. 

The rule obtains in admiralty, as in other cases, that the proof can- 
not avail a party further than It corresponds with the allégations of 
the pleadings, and that the decree must conform to the pleadings. 

[Ed. Note.— For other cases, see Admiralty, Cent. Dig. § 627; Dec. 
Dig. i 88.*] 

3. Notice (§ 14*) — Peoof of Notice— Téléphone Communications. 

To establish notice by a téléphone communication, the party relying 
upon such notice bas the burden of establishlng the identity of the person 
receiving the communication, and that It reached the party sought to 
be charg'jd. 

[Ed. Note. — For other cases, see Notice, Dec. Dig. § 14.*] 

Appeal from the District Court of the United States for the West- 
ern District of Pennsylvania. 

Suit in admiralty by the People's Coal Company aprainst the Second 
Pool Coal Company. Decree for libelant (181 Fed. 609), and respond- 
ent appeals. Affirmed. 

H. O. & B. H. Evans and Lowrie C. Barton, for appellant. 
Reed, Smith, Shaw & Beal, for appellee. 

Before GRAY and BUFFINGTON, Circuit Judges, and YOUNG, 
District Judge. 

YOUNG, District Judge. The respondent, now the appellant, was 
engaged in the retail coal business upon the Allegheny river, and had 
in its possession a loaded flat of coal which it eut adrift from its float 
at Thirty-First street during high water to save such float and other 
beats. After being separated by respondent, it drifted a short distance 
down the river, and finally, on March 15, 1907, sunk in the channel 
of the river at Twenty-Fifth street, thereby obstructing navigation. 
Upon April 4, 1907, the libelant's now the appellee, steamboat W. C. 
Jutte, while proceeding down the river, ran upon the sunken flat and 
was damaged. The court below entered a decree against the respond- 
ent for the damage, and from this decree the présent appeal was taken. 

We approach the discussion of this case de novo because such is the 
rule in admiralty. The assignments of error raise the following ques- 
tions : First. Was the respondent négligent in not marking the sunken 
flat? Second. Was the hbelant guilty of contributory négligence? 

[1] The first question suggests two inquiries: (a) What was the 

•For other cases see same topic & i numbek lu Dec. & Am. Digs. 1907 to date, & Eep'r Indexes 



894 188 FEDERAL REPORTER 

obligation of the respondent as the person in possession of the flat? 
(b) What was respondent's obligation to navigators as to the flat? 

(a) Respondent, as shown by the évidence, was engaged in the re- 
tail coal business, and as such was accustomed to purchase the coal 
in flats, and, after unloading, to deliver the empty flat to the owner 
thereof. On March 15, 1907, the respondent being in possession of 
the flat in question, which had not yet been unloaded, finding the ré- 
tention of the flat in the place where it then was to be dangerous to 
its float and other boats, turned it loose. There can be no doubt under 
this évidence that the respondent because of its purchase of the coal 
in the flat coupled as it was with the right to retain the flat until un- 
loaded became the bailee of the flat until redelivered to the bailor, and 
that the respondent therefore and thereby stood in the place of the 
owner so far as the duty of preventing the flat from becoming an ob- 
struction to navigation was concerned. 

(b) The respondent being then the bailee of the flat, and it being its 
duty to safely keep it, the inquiry first arises whether the Cutting of it 
loôse made the respondent liable for the damage subsequently caused 
to the libelant. After careful examination of the évidence whicù 
shdws that the flat was eut loose at the time when its rétention be- 
cause of the high water made it dangerpus, we are satisfied that the 
conclusion of the learned judge of the District Court vi'as correct, 
and that there was no négligence or want of care in cutting the flat 
adrift which would make the respondent liable; but, the respondent 
being in possession of the flat and having turned it adrift, was bound 
to see that it did not become a menace to navigation. Section 15, Act 
March 3, 1899, c. 425, 3Q Stat. 1152 (U. S. Comp, St. 1901, p. 3543), 
provides : 

"That It shall not be lawful to tle up or anchor vessels or other craft In 
navigable channels In such a manner as to prevent or obstruct the passage 
fit 'other vessels or craft, or to voluntarily or carelessly slnk, or permit or 
cause to be sunk, vessels or other craft in navigable channels; or to float 
loose timber and logs, or to float what is known as sack rafts of timber and 
logs in streams or channels actually navigated by steamboats in such manner 
as to obstruct, impede or endanger navigation. And whenever a vessel, raft 
or other craft Is wrecked or sunk in a navigable channel, accidentally or 
otherwise, it shall be the duty of the owner of such sunken craft to imme- 
diately mark it with a buoy or beacon during the day and a lighted lanteru 
at night, and to maintaln such marks until the sunken craft is removed or 
abandoned, and the neglect or failure of the said owner so to do shall be 
unlawful; and it shall be .the duty of the owner of such sunken craft to 
commence the Immédiate removal of the same, and prosecute such removal 
dillgently, and failure to do so shall be considered as an abandonment of 
such craft and subject the same to removal by the United States as herein- 
after provided for." 

It clearly became the duty of the respondent under this statute until 
the sunken flat was removed or abandoned to properly mark the place 
where it was. But the respondent argues that it had abandoned the 
sunken flat. The évidence in this case clearly shows that the respond- 
ent had not abandoned the flat. In its answer filed the respondent 
alleged : 

"That when respondent was Informed that said flat boat was sunken in said 
river, it at once took ail possible steps to designate its présence by a buoy 



SECOND POOL COAL CO. V. PEOPLE'S COAL CO. 895 

and hâve said obstruction removed, although it knew only by report that 
said obstruction was Its flat boat; that It was impossible to remove said 
obstruction or deslgnate its présence on account of said flood and high water ; 
amd that respondent used every effort so to do." 

Under this allégation of the answer, évidence ought net to be re- 
ceived from respondent to contradict it. But the évidence submitted 
in the case very clearly shows that there never was any such abandon- 
ment by the défendant. We are clearly of the opinion that the re- 
spondent stood in the place of the owner as to the sunken flat, and 
was bound to either remove the obstruction or keep the same marked 
as required by the statute. The évidence also clearly shows that the 
injury to the libelant's boat was caused by the unmarked sunken flat, 
and this brings us to the considération of the second question, viz., 
Was the libelant guilty of any négligence which contributed to the in- 
jury? This négligence is put by the respondent upon the foUowing 
grounds: (a) The libelant's boat was not properly manned; (b) the 
sunken flat was known to the libelant; and (c) there were surface 
indications showing where the sunken flat was. 

[2] (a) The évidence shows that Capt. Myers was at the wheel at 
the time of the accident, and it is now claimed that, because the évi- 
dence shows he was not at that time a licensed pilot for the Allegheny 
river, therefore the boat was not properly manned. The answer in 
this case did not raise any such défense. The rule obtains as well in 
admiralty as in other cases that the proof cannot avail a party further 
than it corresponds with the allégations of the pleadings. In The 
Rhode Island, 20 Fed. Cas. 648, No. 11,745, it was said: 

"A cardinal prinelple in admiralty proceedings is that proofs cannot 
avail a party further than they are in correspondence with the allégations 
of his pleadings, and that the decree of the court must be in consonance with 
the pleadings and proofs. Wood, Clv. baw, 377; The Hoppet v. U. S.. 7 
Cranch, 389 [3 L. Ed. 380] ; Treadwell v. Joseph, Fed. Cas. No. 14,157 ; Jenks 
V. Lewis, Fed. Cas. No. 7,280 ; The Wm. Harris, Fed. Cas. No. 17,695. What- 
ever may be the case then upon the évidence on the one side or the other, 
the judgment of the court must be restrained and guided by the allégations 
In Issue ; and, if they are Insufflcient to maintaln the right of either party 
as established by the proofs, or the two stand in conflict, an amendment 
must be obtained, or the court will be compelled to pronounce its décision 
secundum allegata et probata, disregarding ail évidence not brought within 
the fair and reasonable scope of the pleadings." 

But the évidence in this case did show that Capt. Thomas was in 
charge of the boat, and had only left the wheel a moment before to go 
to his cabin. The évidence does not show that Capt. Myers was not a 
. skilled pilot. He was a licensed pilot on the Ohio and Monongahela 
rivers, and had an application then pending for the Allegheny river. 
He knew the Allegheny river, had made trips upon it, and was ac- 
quainted with its channel. The learned District Judge was right in 
fînding the boat was properly manned. 

[3] (b) The sunken flat, it is alleged, was known to libelant. The 
évidence to sustain this proposition is not at ail convincing. It con- 
sists only of the évidence of the lockkeeper ~ that he had called the 
People's Coal Company, the libelant, on the téléphone, and some one 
in the office had answered, and to this person he had communicated 



896 188 FEDERAL EEPORTEB 

the fact of the flat having been sunk in the channel. It does not 
appear whb the person was who answered the téléphone. It does not 
appear that the téléphone communication was delivered to ahy em- 
ployé or officer of the libelant. The évidence therefore of knowledge 
was not at ail sufficient, and was entitled to but little weight. The 
rule as announced in Young v. Seattle Transfer Co., 33 Wash. 225, 
74 Pac. 375, 63 L. R. A. 988, 99 Am. St. Rep. 942, as to téléphone 
communications is sound. It is: 

"To hold parties responsible for answers made by unldentlfled persons In 
response to a call at tlie téléphone from their offices or places of business 
concerning thelr afCalrs opens the door for fraud and Imposition and estab- 
llshes a dangerous précèdent which Is not sanctloned by any rule of law or 
of ethics. A party relying or acting upon a communication of that charac- 
ter takes the risk of establlshing the identity of the person conversing wlth 
hlm at the other end of the lin&" 

(c) There were surface indications of the sunken flat. It clearly 
appears from the évidence that there were quite a number of swirls on 
the surface of the river in this part of the channel, the same being 
caused by holes made by the removal of sand from the bottom of the 
river. There is nothing in the évidence to show that thèse swirls 
caused by the sunken flat even if it existed on the surface of the river 
differed from the swirls made by the holes caused by the removal of 
the sand. Altogether the évidence on this branch of the case is most 
unsatisfactory. 

We are clearly of the opinion that there was no error in the find- 
ing of the court, and that the judgment of the court and the decree 
should be sustained. 



TACONT IRON CO. v. SLOSS-SHEFFIELD STEEL & IRON CO.t 

(arcult Court of Appeals, Thlrd Circuit June 13, 1911.) 

No. 20. 

1. Pleadino (§ 348*) — Judgment— On Stjmmabt Pboceedins— Judgment fob 

Part op Demand— Pennsylvania Pbactice. 

Under the Pennsylvania practlce act of July 15, 1897 (P. L. 276), the 
court on application to it may enter judgment for any part of plalntifC's 
clalm as to which the affidavlt of défense Is Insufflcient, and, upon the 
enterlng of such Judgment, the plalntiff may hâve exécution, and there- 
after proceed wlth the case for the remainder of his clalm. 

[Ed. Note. — For other cases, see Pleadlngs, Dec. Dlg. | 348.*] 

2. COEPOBATIONS (§ 672*) — FOEEIGN COBPOBATIONS— DOINQ BUSINESS IN StATE. 

Where a contract sued on by a foreign corporation in Pennsylvania 
purports on Its face to bave been executed in the state of plaîntiff's dom- 
icile, an affldavit of défense is insufflcient to defeat the action on the 
ground that plaintiff was dolng business In Pennsylvania without having 
registered as requlred by the state statute, where It consists only of gên- 
erai averments that plalntiff maintained an established office In a build- 
ing in Philadelphia, wlth agents in charge, where it pursued its ordi- 
nary business and that the contract was procured through such agents; 

*For other caees <ee aame toplc & S numbbk In Dec. & Am. Diga. 1907 to date. & Rep'r Indexes 
t Rehearlng denied June 28, 1911. 



TACONT lEON CO. V. SLOSS-SHEFFIELD STEEL & lEON CO. 897 

no facts being set ont showlng the nature of the business there trans- 

acted or of the agency. 
[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 672.* 
Foreign corporations "doing business" in state, see notes to Wagner v. 

J. & G. Mealiln, 33 C. 0. A. 5S5 ; Ammons v. Brunswick-Balke-Collen- 

der Co., 72 C. 0. A. 622.] 

3. COBPOBATIONS (§ 672*) — FOEBIGN COKPORATIONS— EiGHT TO SUB. 

Plaintiff sued for the prlce of iron alleged to hâve been delivered 
under a written contract. Défendant averred that such contract had 
been rescinded, and that the delivery was made under a new contract 
made in Pennsylvania where the suit was brought, and that, as plaintiff 
was a foreign corporation not registered in the state, it could not sue 
thereon. Held, that the afBdavlt of défense laid no foundation for such 
claim where it did not show any new contract except such as may hâve 
arisen by implication from the shipment of the Iron from another state 
and its receipt in Pennsylvania. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 672.*] 

In Error to the Circuit Court of the United States for the Eastern 
District of Pennsylvania. 

Action at bw by the Sloss-Sheffield Steel & Iron Company against 
the Tacony Iron Company. Judgment for plaintifif (183 Fed. 645), for 
part of its claim, and deifendant brings error. Affirmed. 

Albert B. Weimer, for plaintiff in error. 

C. W. Van Artsdalen and W. Howard Ramsay, for défendant in er- 
ror. 

Before BUFFINGTON and LANNING, Circuit Judges, and 
YOUNG, District Judge. 

YOUNG, District Judge. The Tacony Iron Company, a Pennsyl- 
vania corporation, submitted through J. K. Dimmick & Co., as sales 
agent for the Sloss-Sheffield Steel & Iron Company, a corporation 
of New Jersey, whose furnaces were at Birmingham, in the state 
of Alabama, a proposition for the purchase of 2,000 tons of iron of 
a certain quality, at the rate of 500 tons monthly, beginning January 
1, 1910, at the price of $14 per ton f. o. b. cars furnaces Birmingham, 
Ala. The contract was marked : 

"Accepted at Birmingham, Alabama, %, 1910. Sloss-Sheffield Steel and 
Iron Company, per J. W. McQuoen, Vice-Président. Tacony Iron Company, 
per Johnson, Treas. Pnrchaser." 

During the month of January the Sloss-Sheffield Company ship- 
ped 97 tons of iron to the Tacony Company, and a dispute having 
ariseii between Dimmick & Co., through whom the contract had been 
submitted, and the Tacony Company, no more iron was shipped until 
April, when 700 tons of .iron were shipped by the Sloss-Sheffield Com- 
pany to the Tacony Company and deHvered by that company. On 
May 12, 1910, after the 700 tons had been shipped (the last shipment 
having been on April 29th, although it does not appear when it was 
received by the Tacony Company), the Tacony Company by letter 
notified Dimmick & Co. that they would only pay current market 
priées for the iron shipped, and giving as a reason therefor that 

•For other cases see same topio & § number in Dec. & Am. Digs. 1907 to date, & Eep'r Indexes 
188 F.— 57 



898 188 FEDERAL EEPOKTEK 

the Tacony Company had notified Dimmick & Co. before the iron 
was delivered that they would only pay market prices because the 
Sloss-Sheffield Company had not delivered the iron during January, 
February, and March, as provided by the contract. Suit was brought 
by the Sloss-Sheffield Company, hereinafter called the plaintiff, against 
the Tacony Company, hereinafter called the défendant, to recover the 
contract price of the iron, together with interest at the rate of 8 per 
cent., as provided by the law of Alabama. 

The défendant filed an affidavit of défense setting up the nonreg- 
istration of the plaintiff company, as required by the Pennsylvania stat- 
ute, as a bar to the action. The défendant admitted in the affidavit 
of défense the receipt of 797 tons of iron sued for, but denied its lia- 
bility for the same at the price sued for, alleging that, as to the 700 
tons shipped in April, the same had been shipped after Dimmick & 
Co., agents of plaintiff, had stated to défendant that no more iron 
would be delivered under the contract, and after notice by the de- 
fendant to Dimmick & Co., as agents for plaintiff, that the iron then 
being shipped would be received only at market prices, and that the 
current prices were.less than the contract price, and défendant, if lia- 
ble at ail, was only liable for the lower price and at a rate of inter- 
est of 6 per cent., as provided by the law of Pennsylvania, it being 
averred that the delivery of the said 700 tons and the receipt thereof 
constituted a new contract and one made' in the state of Pennsylvania 
by a nonregistered foreign corporation, and one therefore not action- 
able in Pennsylvania. Plaintiff took a rule for judgment for want of 
a sufficient affidavit of défense, f ollowing the Pennsylvania practice act 
of July 15, 1897. After argument, the court entered judgment for 
the sum of $9,568.52, the amount admitted by the affidavit of défense, 
the court adjudging that the action could be maintained because the 
contract was not made in Pennsylvania, but in the state of Alabama, 
but refusing judgment for the balance >of the claim because it was 
sufficiently averred to go to a jury whether or not as to the 700 tons 
the market price was $11.75 or the contract price of $14. Was there 
error in thus entering judgment for part of the claim? 

[1] It may be stated preliminary to the discussion of the vital 
questions in this case that it is established by both statute and décision 
that the court upon application to it may enter judgment for such part 
of the claim as to which the affidavit of défense may be insufficient, 
and, upon the entering of such judgment, the plaintiff may hâve ex- 
écution and thereafter proceed with the case for the balance of the 
claim. Act July 15, 1897 (P. L. 276) ; Moore v. Eyre, 32 Pa. Super. 
et. 259; Pierson v. Krause, 208 Pa. 115, 57 Atl. 348. 

The controlling questions, however, in this case, are : First. Was 
the action barred by reason of the nonregistration of the plaintiff com- 
pany ? Second. Was the delivery of the 700 tons in April a new con- 
tract, and was the same barred by the nonregistration of the plaintiff 
company ? 

[2] An inspection of the contract shows that it was submitted by 
défendant through J. K. Dimmick & Co., sales agents; that it was 
for iron to be delivered f. o. b. raiiroad cars at furnaces, Birmingham, 



TAOONY IRON CO. V. SL0S8-SH EFFIELD STEEL A IRON CO. 899 

Ala. ; that this "contract" was "not bindîng on seller till accepted by 
officer named on form below" ; and that it is marked : 

"Accepted at Birmingham, Alabama, 1/3, 1910. Sloss-Sheffield Steel and 
Iron Company, per J. W. McQueen, Vlce-PresIdent Tacony Iron Company, 
per Johnson, Treas. Purchaser." 

Unless, then, the affidavit of défense contained averments sufficient, 
if proved, to overcome this, the writing itself was sufficient to estab- 
lish that the contract was made in Alabama. The affidavit of défense 
avers the following: 

"ïhe défendant further avers that the plaintiff corporation maintains and 
did maintain at the time this contract in question was entered into hy the 
défendant established offices in the Land Title Building in the city of Phila- 
delphia. The défendant avers that the Messrs. J. K. Dlmmlck & Co. are the 
agents of the said plaintiff and are in charge of the said established offices 
as aforesald. The défendant avers that the plaintiff is pursuing the ordinary 
business of the corporation in said established offices. The défendant fur- 
ther avers that the contract out of which this transaction arose was pro- 
cured through Messrs. J. K. Dimmick & CO., agents of the plaintiff as afore- 
sald, and that the contract and ail negotiations relating thereto took place 
in the offices of the sâid J. K. Dimmick & Co. as aforesald. The défendant 
further avers that the plaintiff corporation is therefore doing business with- 
In the State of Pennsylvania. The défendant further avers that at the time 
this contract was entered into by the défendant as aforesald the plaintiff 
corporation had not complled wltb the act of April 22, 1874 (P. L. 108), re- 
lating to the registratlon of foreign corporations in the Secretary of State's 
office In Harrlsburg. The défendant further avers that the plaintiff corpora- 
tion was not so registered at the time of the Institution of this suit. The 
défendant further avers that by rèason of the fallure of the plaintiff corpora- 
tion to comply with the requirements of the said act, the alleged contract 
was an illégal transaction upon whleh the plaintiff cannot maintain any ac- 
tion or suit iu any of the courts of the state of Pennsylvania or in this 
court." 

The rule by which this affidavit of défense is to be measured is laid 
dovvn in Hall's Safe Co. v. Walenk, 42 Pa. Super. Ct. 576, in the fol- 
lowing language by Judge Henderson : 

"The flrst affidavit Is defective In the failure to set forth the character of 
the business carried on by the plaintiff in Pennsylvania. The allégation is the 
opinion merely of the défendant, and not a statement of the facts from which 
the court could détermine whether the plaintiff was violatlng the statute in 
respect to registration. In a sensé every foreign corporation which through 
its agents Is selling goods wlthin the state Is doing business thereln. Many 
such corporations are largely engaged in business in that way, but this is 
not doing business wlthin the meaning of the statute. Only such corporations 
as hâve established offices or transferred a portion of their capital to this 
state and hâve engaged in the prosecutlon of their ordinary business thereln 
are subject to the obligations to register. Hence the importance of setting 
forth the character of the business transacted. Moreover, if there was a suffi- 
cient averment that the plaintiff was at some time engaged In the prosecu- 
tlon of business, wlthin the state In violation of the act, it is not alleged that 
the transaction out of which this litigation arises had any connection with 
that business. * * * The burden Is on the défendant to show that the 
conduct of its business in this state subjected it to the disability provided 
by the statute. This is not donc by the gênerai averment that the plaintiff 
had offices and places of business in the state 'several months prior to the 
time when the transactions t)etween himself and the représentative of the 
plaintiff company took place.' Where It had its places of business, what the 
business was and when it was transacted are not made to appear." 



900 188 FHDHBAL EEPOKTEK 

This décision îs consistent with the former cases both in the Su- 
prême and Superior Courts of Pennsylvania. Blakeslee Mfg. Co. v. 
Hilton, 5 Pa. Super. Ct. 189; Hovey's Estate, In re, 198 Pa. 385, 48 
Atl. 311 ; Dannemiller v. Kirkpatrick, 201 Pa. 218, 50 Atl. 928. 

Measured, then, by the rule thus laid down, we find that the aver- 
ments are not sufficient to prevent judgment. The affidavit consists of 
gênerai averments and inferences therefrom. It does not set out in 
détail what business was transacted at the alleged offices in Philaaei- 
phia. It does not set out such f acts as would warrant the conclusion 
that Dimmick & Co. were agents of the plaintifï. It does not allège 
that the contract in question was made with Dimmick & Co., but it does 
contain the averment "that the contract out of which the transactions 
arose was procured through Dimmick & Co." It does not allège what 
business the corporation was doing in Pennsylvania, but contains the 
conclusion, "the défendant avers that the plaintiiï is therefore doing 
business within the state of Pennsylvania." 

[3] Second. Was there a new contract as to the 700 tons and was 
that contract made in Pennsylvania? The affidavit of défense avers 
that "the plaintifï through its said agents rescinded the said contract 
and stated that no more iron would be delivered under it." It is now 
argued by defendant's counsel that, the written contract having been 
rescinded, the shipment of iron thereafter was a proposai to deliver 
iron under a new contract, and that that contract was only entered 
into by the receipt of the iron by défendant in Pennsylvania, and that 
this would constitute the making of a new contract in the state of 
Pennsylvania, and that no action could be maintained upon it by rea- 
son of thé nonregistration of the plaintifï corporation. This is a very 
ingenious argument, and might hâve some force if there were suffi- 
cient averments in the affidavit of défense to support it. But the af- 
fidavit of défense only allèges the rescission as a reason- for entitling 
it to a lower price than that of the contract. It does not allège a new 
contract. The averments of the affidavit upon this matter are : 

"And the défendant avers that this Iron shlpped during the month of Aprll 
constituted Iron which under the contract should hâve been delivered during 
the months of January, February, and March. The défendant avers that 
plaintifï bas demanded the contract priée for this iron so shlpped. The 
défendant avers that on Aprll 7, 1910, 85 tons of iron were shlpped by the 
plalntiff to the défendant, and thereafter shlpments v^ere made during the 
month of Aprll of the tonnage and at the dates set fprth in sehedtile B 
attached to plalntiffs statement of clalm; that, as soon as défendant heard 
of the shipment on Aprll 7th, It notified the plaintlfC that in vlew of the 
rescission of the written contract of December 30, 1909, by plalntiff, it would 
not pay for the said Iron or any future deliveries of iron by the plaintifC more 
than at the current market priée. A c6py of such notice is attached hereto 
marked 'Eshibit A,' and made a part of this affidavit of défense." 

An examination of Exhibit A shows that the notice was that in view 
of the failure to ship as provided by the contract the current priées 
would be insisted on. Taking the whole affidavit of défense and giv- 
ing every possible weight to it, it certainly does not aver the making 
of a new contract or the facts attending the making of this new con- 
tract so it could be determined where the contract was made and what 
its terms were. 



DELAWAEE <fe H. CO. V. DIX 901 

'The court below was clearly right in entering judgment for the 
amount it did, and, were it not for the alleged loss by défendant by 
reason of the failure to dehver, judgment might hâve been entered 
for the amount of the claim, with interest. 

The judgment is affirmed. 



DELAWARE & H. CO. v. DIX. 

(Circuit Court of Appeals, Thlrd Circuit. June 23, 1911.) 

No. 13. 

1. Railroj«ds (i 282*) — Injuries to Licensees— Peesumption and Bubdbn of 

Pboof— Res Ipsa Loqtjitur. 

PlalntifiFs intestate was conductor of a freight tralu of another Com- 
pany wlilch was uslng the tracks of défendant rallroad Company, and 
was kllled while hls train was passing a meeting train of défendant on 
a parallel track. Plaintifï offered évidence tendlng to show that at the 
time of the accident Intestate was kneeling on a bench in the caboose, 
wlth his arms resting on the slU of a small window in the side of the 
caboose and facing it, and while In this position, occupied by him in the 
performance of hls duty, a freight train of défendant company was pass- 
ing in the opposite direction to that of his train and on an adjacent 
track; that one of the cars of defendant's train was a refrigerator car 
in which was a door ; and whlch door had upon it an appllanee eonsist- 
ing of a movable iron lever attached to boit bars used for locklng the car 
door; that thls door was negligenfly allowed to be open, and by the 
movement of the train it was caused to swing outwardly at right angles 
to the car, and that the lever, also upon the car door, projected further, 
at right angles f rom the middle of the door, so as to reach over the space 
betweon the sides of the passing trains ; that this proiectlng lever, while 
the car was passing the caboose, struck the side of the caboose, and as it 
passed along the side of the caboose, when It reached the window, struok 
fhe décèdent on the left side of the neck, almost severing the head from 
the body, and pulling him vlolently from the window of the caboose, and 
thus instantly killing him. The lever was of sufficient length to reach 
the caboose and extend some distance Info the window. Under ordinary 
conditions intestate's position was not one of danger from passing trains. 
Held, that such évidence was sufficient under the doctrine of res Ipsa 
loquitur to create a presumption of négligence on fhe part of défendant 
which cast upon it the burden of proof and that the case was properly 
submitted to the Jury. 

[Ed. Note. — For other cases, see Rallroads, Cent Dig. S§ 912, 919; 
Dec. Dig. § 282.*] 

2. Négligence (§ 121*) — "Res Ipsa Loquitur." 

"Res ipsa loquitur," the thlng speaks for itself, symbollzes that the 
occurrence of the injury ralses a presumption of culpablUty on the part 
of the owner or manager of an apparatus. 

[Ed. Note. — For other cases, see Négligence, Cent. Dig. §§ 218, 225; 
Dec. Dig. § 121.» 

For other définitions, see Words and Phrases, vol. 7, pp. 613&-6139; 
vol. 8, p. 7787.] 

In Error to the Circuit Court of the United States for the Middle 
District of Pennsylvania. 

•For other cases see same topio & i numbee in Dec. & Am. Dlgs. 1307 to date, & Eep'r Indexe» 



902 188 FEDERAL EEPORTEB 

Action at law by Anna A. Dix against the Delaware & Hudson 
Company. Judgment for plaintiff, and défendant brings error. Af- 
firmed. 

Welles & Torrey, for plaintifï in error. 

M. S. Kaufman and R. L. Levy, for défendant in error. 

Before GRAY and BUFFINGTON, Circuit Judges, and YOUNG, 
District Judge. 

YOUNG, District Judge. Anna A. Dix, défendant in error, plain- 
tiff below, brought this action against the Delaware & Hudson Com- 
pany, plaintiff in error, défendant below, in her own behalf and that 
of her children, to recover damages for an injury caused by the al- 
leged négligence of the défendant and resulting in the death of Walter 
Dix, her husband. The évidence in the case shows that Walter Dix, 
on january 4, 1908, at 10:40 p. m., was employed by the Erie Rail- 
road as a conductor, and was riding in the caboose attached to a 
freight train of the Erie Company. 

[ 1 ] The plaintiff offered évidence tending to show that at the time 
of the accident Walter Dix was kneeling on a bench in the caboose, 
with his arms resting on the sill of a small window in the side of the 
caboose and facing it, and that while in this position, occupied by him 
in the performance of his duty, a freight train of the défendant Com- 
pany was passing in the opposite direction to that of the Erie train 
on an adjacent track; that one of the cars of the defendant's train 
was a refrigerator car in which was a door; that this door had upon 
it an appliance consisting of a movable iron lever attached to boit 
bars used for locking the car door ; that this door was negligently al- 
lowed tp be open, and that by the movement of the train it was caused 
to swing outwardly at right angles to the car, and that the lever also 
upon the car door projected still further at right angles from the mid- 
dle of the door, so as to reach over the space between the sides of 
the passing trains; that this projecting lever upon the door, while the 
car was passing the caboose, struck the side of the caboose, and as it 
passed along the side of the caboose, when it reached the window, 
struck the décèdent on the left side of the neck, almost severing the 
head from the body, and pulling him violently from the window of 
the caboose, and thus instantly killing him. 

The Erie train upon which the deceased was riding consisted of 
two engines and a caboose, and was running south on tracks of the 
défendant company. The freight train of the défendant company was 
running in the opposite direction upon tracks of the défendant com- 
pany adjacent to the tracks upon which the Erie train was running, 
and this train consisted of an engine and some 12 or 15 cars. The 
caboose was a car having built on the top of it what is known as a 
"cupola."^ On the side of the caboose, and a f ew feet from the floor, 
a bench ran along the side of the caboose just below an open window. 
In the cupola of the caboose were tyvo seats, one on the left-hand side 
of the caboose and the other on the right. Scheusenack, a brakeman 
in the crew of the Erie train, s'at in the cupola on the right-hand side, 
and Plath, also a brakeman in the crew of the Erie train, sat on the 



DELA-WABE & H. CO, V. DIX 903 

left side în the cupola. Dix was kneeling upon the bench with his 
arms resting on the sill of the window on the right-hand side of thé 
caboose, and at the side where the defendant's train was passing. 
There was a light in the caboose which shone over the back of Dix 
and through the window. Mr. Scheusenack was the principal witness 
of the accident, and he testified : 

"I heard the sound of that door strike the front end of the caboose. 

* * * Atter I heard the noise of the car strike the front end of the ca- 
boose, it called my attention to the car, and I saw what it was; and just 
as I looked down I saw Mr. Dix golng eut of the window and right by hls 
back I saw the refrigerator door pass by. * • • It was open. * * * 
Q. Will you please deseribe to the jury what marks there were upon the 
body, if any? A. Mr. Dix had a great big mark from hère on, a way down 
hère (Indicatlng). Q. On whlch side of the head? A. On the left side. Q. 
What sort of a mark was it? A. It was a great big eut, just jerked right 
out. Q. How deep was that eut, if you know? A. It was quite deep. The 
head was almost tore off. Q. Was the left side of the face battered any at 
ail? A. Yes; it was scratched. * • * Q. What other marks were on his 
head? A. There was a mark on the head where he struck the frame of the 
caboose, on the right side, and there was a mark on the left side hère (indi- 
catlng), and the middle of his head. Q. What was the condition of his face? 
A. The face was scratched. Q. On which side? A. On the right side. 

• ♦ * Q. You only judge from the appearance of the door that it was a 
refrigerator car? A. I don't judge. I seen it." 

Charles J. Plath, a brakeman, who was in the cupola of the caboose, 
thus described the occurrence: 

"Q. What kind of a noise was that you heard? A. A kind of dumb noise, 
a kind of a bang. Q. 'Wlien you heard that bang, what happened? A. I 
twlsted right around and seen Mr. Dix was going out of the window, lookéd 
like that, and he was gone." 

It appears from the évidence that, if the refrigerator door were 
open and the lever were projecting from it, it would hâve a reach of 
36 inches. As the évidence shows the distance between the sides of the 
trains in passing was 331/4 inches and as the lever upon the door would 
reach 36 inches, it would allow the lever to project within the car win- 
dow a distance of 21/4 inches. It thus appears from the plaintiff's 
évidence that the brakeman, Scheusenack, heard the noise of some- 
thing striking the side of the car, saw Dix go out at the window, and 
saw the swinging door of the refrigerator car. From the noise of 
something striking the side of the car while the train was passingy 
from the évidence that there was a swinging car door, that re- 
frigerator car'doors are so constructed with bar and lever that, when 
open, the lever will fly out straight at right angles to the car, that, 
if such lever was out, it would reach within the side of the caboose 
or into the window; and that the man disappeared through the win- 
dow, that he was pulled out, and that he went so violently as to strike 
his heels against the top of the window — it is to be reasonably inf er- 
red that he was pulled from the train by the projecting lever of the 
car door on the passing train, as there is no évidence, or any pretense, 
that there was any obstruction or fixed obstacle between the tracks at 
this point. The évidence that he was pulled out by something outside 
is strengthened by the évidence of the deep eut on the left side of 
the neck almost severing the head and the marks of the blood and 
fiesh extending from the window through which he was drawn. 



904 188 FEDERAL KBPOKTEH : 

Unlèss, then, the plaîntiff was required tb go further and show that 
the défendant knew, or ought to hâve known, that the car door was 
loose, then the motion for a nonsuit was properly refused, as also the 
motion for judgment non obstante veredicto. Under the doctrine, 
therefore, of res ipsa loquitur, was the plaintiff required to prove 
more? That doctrine is clearly stated by Wigmore in his work on 
Evidence (volume 4, § 2509), as follows : 

"With the vast Increase In modem tiines of tîie use of powerful machinery, 
harmless in normal opération, but capable of serious human injury if not 
constmcted or managed in a spécifie mode, the question has come to be in- 
creàsingly common whether the fact of the occurrence of an injury (unfor- 
tunately now termed 'accident' by inveterate misuse) Is to be regarded as 
raislng a presumption of culpabllity on the part of the owner or manager 
of the apparatus. 'Ees ipsa loquitur' is the phrase appealed to as symboliz- 
Ing the argument for such a presumption. In Elugland, a rule of that sort 
ihas for a génération been conceded to exlst, for some classes of cases at 
least. In the United States, the presumption has spread rapidly, although 
with mnch looseness of phrase and Indeflniteness of scope. As against a com- 
mon carrier, the presumption against a ballee (ante, section 2508) bas per- 
haps helped to conflrm the rule where InJury to goods or passengers is involv- 
ed. What Its final accepted shape will be can hardly be predicted. But 
the followlng considérations ought to llmit it: (1) That apparatus must be 
such that In the ordinary Instanne no injurions opération is to be expected 
unless from a careless construction, Inspection or user. (2) Both inspection 
and user must hâve been at the tlme of the injury in the control of the party 
chargea. (3) The Injurlous occurrence or condition must hâve happened 
irrespective of any voluntary action at thé tlme by the party injured. It 
may be added that the particular force and justice of the presumption, 
regarded as a rule throwing upon the party chargea the duty of producliig 
évidence, consists In the circumstance that the chief évidence of the true 
cause, whether culpable or innocent, Is practically accessible to him, but inac- 
cessible to the injured person." 

Let us apply thèse limitations to the case at bar. The first of thèse 
requires that: 

"The apparatus must be such that In the ordinary Instance no injurlous 
opération is to be expected unless frbm a careless construction, inspection, 
or user." 

This applies directly to the case at bar. No injurious opération 
was to be expected by one a passenger or lawfully upon the Erie train 
from the passing freight or from any car or appliance attached to the 
car. 

Second : 

"Both inspection and user must hâve been at the tlme of the Injury In the 
control of the party chargea." 

This applies directly. The frain and its cars and defective door and 
apparatus were in the absolute control of the défendant. 
Third: 

"The Injurious occurrence or condition muSt hâve happened Irrespective 
of any voluntary action at the tlme by the party Injured." 

This applied directly, because the accident happened to Mr. Dix, 
irrespective of any voluntary action of his. He was occupying a po- 
sition he had a right to occupy as conductor of the train. Even if his 
body projected somewhat from the car, it was not négligence, as his 
business as a trainman might require him to see out to look ahead, 



DELAWARE & H. CO. V. DIX 905 

and, as was said by the learned trial judge, it was not the same as 
though he were a passenger. 

So regarding the doctrine by this construction, the doctrine would 
apply. But we must consider the doctrine to détermine whether or 
not the plaintiff proved sufficient to raise the presumption of négli- 
gence on the part of the défendant and thereby require défendant to 
explain the injury. 

[2] "Res ipsa loquitur," the thing speaks for itself, symbolizes that 
the occurrence of the injury raises a presumption of culpability on the 
part of the owner or manager of the apparatus, because in cases where 
it applies powerful and dangerous agencies in the control of one will 
do harm unless properly constructed or managed, and also because the 
évidence of the cause of the injury, whether innocent or blamewor- 
thy, is in the possession of , or accessible to, the person constructing or 
operating, and not accessible to the other party. Erle, C. J., in Scott 
V. London & St. K. Docks Co., 3 H. & C. 596 (injury to a passer-by 
from the falling of goods from a train), said : 

"Tbere must be reasonable évidence of négligence, but, when the thlng Is 
shown to be under the management of the défendant or his servants and 
the accident Is eucb aa In the ordinary course of things does not happen 
when those who bave the management use proper care, It affords évidence 
In the absence of explanatlon by the défendant that the accident came 
through want of care." 

How completely this applies to the case at bar. Such an accident 
would not happen in the ordinary use of a refrigerator car, unless 
the défendant was négligent in permitting it to hâve its door open 
with an extending lever. It had in its possession the évidence by which 
it might be explained. 

Not only is this the doctrine of the English cases, but of many of 
the States and of the fédéral courts. Cincinnati R. R. Co. v. South 
Fork, 139 Fed. 533, 71 C. C. A. 316, 1 L. R. A. (N. S.) 533; Kansas 
Railroad Co. v. Stoner, 49 Fed. 209. 1 C. C. A. 231. Wallace, J., in 
Rose V. Stephens & C. Trans. Co., 20 Blatch. 411, II Fed. 438,.says: 

"The presumption originates from the nature of the act, not from the 
nature of the relations between the parties. It Is Indulged as a Içgitimate 
Inference whenever the occurrence is such as in the ordinary course of things 
does not take place when proper care Is exercised, and Is one for whlch the 
défendant is responslble." Holbrook v. Rallway Co., 12 N. Y. 236, «>4 Am. 
Dec. 502 ; Inland, etc., v. Toison, 139 U. S. 551, 11 Sup. Ct. 653, 35 L. Ed. 270. 

There can be no doubt the doctrine applies properly in this case. 
Nor can it be doubted, as is shown by the évidence and the reason- 
able inferences from it, the plaintifï raised the presumption of négli- 
gence, and the burden was then shifted to the défendant to explain 
the occurrence of the injury. This it attempted to do, but the whole 
case was for the jury, and was carefully submitted with very clear 
instructions by the court. The verdict for the plaintiff results. The 
charge of the court was f air, and, if any error was made by the court, 
it was in favor of the défendant. 

The court was right in submitting the case to the jury, and in re- 
fusing to enter judgment for défendant non obstante veredicto, and 
the case is therefore affirmed. 



906 188 FEDERAL REPORTER 



CITX OF DES MOINES, lOWA, v. WELSBACH STREET LIGHTING CO. 

OF DELAWARE. 

(Circuit Court of Appeals, Eighfh Circuit. May 20, 1911.) 
No. 3,407. 

1. Municipal Cobporations (§ 248*) — Conteacts— Estoppel. 

In respect to Its business powers, a city is subject to tlie application of 
the doctrine of estoppel the same as an individual or private corporation, 
and a business contraet, whlch is witliin the scope of the powers of the 
city to make, but illégal because entered into in an Irregular manner, 
wten It bas been fully executed by the other party, and the city has re- 
ceived and accepted the full benefit of it, and cannot restore what it has 
receiyed, is enforceable; the city being estopped to set up its irregular 
exécution. 

[Ed. Note. — For other cases, see Municipal Corporationa, Cent. Dig. §§ 
684-686 ; Dec. Dig. § 248.*] 

2. GAS (§ 12*) — SUPPLY TO MUNICIPALITT— CONTEAOTS— VaLIDITT. 

An ordlnance fixing the priée per year to be paid by the city for street 
lamps, which was amended so as to apply only to a contraet betvveen the 
city and a gas company and reserving the right to the city to contraet 
for Street Ughting with others, did not Impose any limitation upon the 
city In respect to the priée it might pay under such a future contraet. 

[Ed. Note.— For other cases, see Gas, Cent Dig. § 4; Dec. Dig. § 12.*] 

3. Gas (§ 12*) — Contbact bt a City foh Stbeet Lightinq — "Franchise." 

A contraet by which a company agreed to erect and malntain lamp 

posts and flxtures to Ught the streets of a city for a term of 10 years 

was not the grant of a franchise by the city. 

[Ed. Note.— For other cases, see Gas, Cent. Dig. § 4; Dec. Dig. § 12.* 

For other définitions, see Words and Phrases, vol. 3, pp. 2929-2942 ; 

vol. 8, p. 7666.] 

In Error to the Circuit Court of the United States for the South- 
ern District of lowa. 

Action at law by the Welsbach Street Lighting Company of Dela- 
ware against the City of Des Moines of the state of lowa. Judg- 
ment for plaintifif, and défendant brings error. Aiîàrmed. 

Robert O. Brennan (J. M. Parsons, on the brief), for plaintifif in 
error. 

N. T. Guernsey (Alonzo C. Parker -and William E. Miller, on the 
brief), for défendant in error. 

Before SANBORN and ADAMS, Circuit Judges, and WM. H. 
MUNGER, District Judge. 

WM. H. MUNGER, District Judge. On the 2d day of April, 
1904, the city of Des Moines and the Welsbach Street Lighting Com- 
pany entered into a written contraet, by the terms of which said 
Welsbach Street Lighting Company agreed to furnish to the city 
of Des Moines improved Welsbach street lights according to spéci- 
fications statéd'for the. term of 10 years from and af ter the Ist day of 
May, 1904. The Welsbach Street Lighting Company was to furnish 
and erect at its own cost and expense first-class iron posts and boule- 
vard lanterns and keep the same in good repair, and to place tl eon 

•For other cases see same topio & § itombbb in Dec. & Am. Dlgs. 1907 to date, £ Rep'r Indexes 



CITY OF DES MOINES V. WELSBA.CH STREET LIGHTING CO. 907 

its improved attachments for the Welsbach System of street lighting, 
and to furnish at its own cost and expense ail mantels, aluminum ma- , 
terial, and labor to be used in lighting, extinguishing, cleaning, and 
repairing said lamps and iixtures. The lamps were to be placed and 
maintained in such locations along the lines of the gas mains in the 
Street and thoroughfares of the city of Des Moines. as should be di- 
rected by the board of public works of said city, and should be not 
less than 800 in number and as many more as should be ordered by said 
party of the first part. In considération of which the city agreed to 
pay to said lighting Company $22 per lamp per year, payable monthly 
as the service was performed. The Welsbach Street L^ighting Com- 
pany fully performed the contract upon îts part, installed and main- 
tained such lamps in addition to the 800 as were directed by the board 
of public Works until on January 1, 1908, there were so installed and 
maintained 1,117 and on January 1, 1909, 1,133. The city made pay- 
ments according to the terms of the contract until the Ist day of May, 
1908, when it ceased to make payments, and the lighting company 
brought this action in the Circuit Court to recover the monthly pay- 
ments for the months of May, June, July, August, and September, 
1908. 

The city defended the action upon three grounds: (1) That the 
contract was invalid for the reason that it was enter ed into without 
first advertising for bids; (2) that it was invaHd as there was in ex- 
istence, at the time that the contract was entered into, an ordinance of 
the city of Des Moines, fixing rates which the city should pay for 
Street lighting at a less sum than that agreed upon in the contract; and 
(3) that the contract in question was the grant of a franchise to the; 
Lighting Company which the city was not authorized to grant except-; 
ing upon a vote by the people. 

A jury was waived and the cause tried to the court upon an agreed- 
statement of facts and judgment rendered for plaintiff, from which 
judgment the city prosecutes error. 

The several provisions of the statute (Code of 1897) claimed as ap- 
plicable to a considération of this case are the following: 

"Sec. 867. Bids. It shall advertise for blds and make ail contracta on be- 
half of the city for ail work, and for material and work for public Improve- 
ments in excess of two hundred dollars, wlienever the same shall be ordered 
by the councU or voted for at any élection. Proposais for bids shall be pub- 
lished once each week for two weeks in two of the daily newspapers therein, 
which shall be completed at least two weeks before the making of any con- 
tract, which proposais shall state the amount and kinds of material to be 
furnished, the kind of Improvement, an'd the time and conditions upon whiéh 
bids will be recelved, ail of which may be rejected. Ail contrac-ts shall be 
made wlth the lowest responsible bidder, but it shall not be necessary be- 
fore proposais are published or bids received to détermine specifically the- 
kind of material to be used. Ail contracts made by said board shall be sub- 
.1ect to the approval of the council." 

"Sec. 869. Superintend lighting. It shall advertise for bids and make con-, 
tracts for the lighting of the streets, alleys, public grounds aud buildings, 
and shall hâve entire control, management and direction of the lamps, lights, 
lighting material and persons charged wlth the care thereof." 

Manifestly the contract in question was not one of those contem- 
plated in section 867 (City of Vincennes v. Citizens' Gas L,ight Co., 



9D8 188 FEDERAL EEPORTEB 

132 Ind; 114, 31 N. E. 573, 16 L. R. A.'485), but îs controlled entirely 
by section 869. 

[1] As the contract was entered into without previous advertising 
for bids, the first question presented for considération is, Was the 
contract, by reason thereof, ultra vires in the sensé that it had no 
vitality? It must be conceded as a correct proposition of law that 
contracts entered into by a municipahty, which are beyond and out- 
side of the scope of the city's authority, are ultra vires and non- 
enforceable. To enter into a contract for lighting the streets, alleys, 
public grounds, and buildings of the city was a power expressly 
granted to the city by section 869. In entering into such contract the 
city was exercising its business powers as distinguished from govern- 
mental. In respect to its business powers a municipahty is subject to 
the same application of the doctrine of estoppel as an individual or 
private corporation. Illinois Trust & Savings Bank v. City of Arkansas 
City, 76 Fed. 271, 22 C. C. A. 171, 34 L- R. A. 518. The complaint 
made of the contract in question is not that it was one beyond the 
scope and power of the city to enter into, but that it was not entered 
into in the manner prescribed by law. A business contract, which is 
within the scope of the powers of the city to make but illégal because 
entered into in an irregular manner, when fully executed by one party 
and the city has received and accepted the full benefit of the contract 
and cannot restore what it has received, is enforceable, the city being 
estopped to assert the irregular exécution when the ends of justice 
would thereby be defeated. Westbrook v. Middlecoff, 99 111. App. 
327; Drainage Commissioners v. Lewis, 101 111. App. 150; Rogers v. 
Omaha, 76 Neb. 187, 107 N. W. 214; Bell v. Kirkland, 102 Minn. 
213, 113 N. W. 271, 13 L. R. A. (N. S.) 793, 120 Am. St. Rep. 621; 
Moore v. Ramsey County, 104 Minn. 30, 115 N. W. 750; Coit v. City 
of Grand Rapids, 115 Mich. 493, 7Z N. W. 811 ; City of Kansas City 
V. Wyandotte Gas Co. 9 Kan. App. 325, 61 Pac. 317; Illinois Trust & 
Savings Bank v. City of Arkansas City, supra. 

[2] It appears frora the agreed statement of facts that the city 
council of Des Moines, in May, 1895, passed an ordinance entitled: 

"An ordinance to flx the price of lUuminating gas and to prescrite the 
conditions under which persons and corporations dealing in llluminating gas 
can occupy and use the streets and alleys of the city of Des Moines." 

The fjrst section of the ordinance fixed the price o£ gas furnished 
to the inhabitants of the city. The second section fixed the price 
for Street lamps at $17 per year. This ordinance was amended in 
February, 1896, so as to constitute a contract with the Capital City 
Gaslight Company, and fixed the price which such company should 
charge to the inhabitants of the city, and also fixed the price for 
Street lamps at $18 per year until the total number reached five 
hundred. After the total number reached 500, $17 per lamp per year. 
Section 6 of this amended ordinance contained this provision : 

"ahis amendment shall not he construed as conferring upon the Capital 
City Gaslight Company an exclusive right for any period of time to furnish 
gas to said city or to private consumers, nor to limit or restrain the city 
or such private consumers from purchasing gas from any othèr gas company 
upoh such terms as may be agreed upon or may be fixed by légal authority; 



OCKANIC STEAM NAVIGATION CO. V. WATKIN8 909 

nor to lirait the city of Des Moines from purchasing from any otlier company, 
person or persons, or from at any time constructing gas, electric light or 
any other works that may be adapted to the purpose, either in its own 
name or througb tlie instrumentality of trustées, or iu any other manner, 
for the purpose of lightlug its streets and of supplying the city and its citi- 
zens with light, tnél or power." 

While the original ordinance was gênerai in its terms, by the 
amendment it was made to apply to its contract arrangement with 
the Capital City Gaslight Company, and expressly reserved to itself 
the right to contract in the future with other parties upon such terms 
as it could agrée upon for the lighting of its streets. Hence such 
ordinance fixing the price at which the Capital City Gaslight Company 
should charge for stfeet lamps has no application to the contract 
under considération. The city did not thereby disarm itself from sub- 
sequently entering into a new contract with other parties upon other 
and différent terms. 

[3] The contract in question clearly was not the grant of a franchise. 
McPhee & McGinnity Co. v. U. P. R. Co., 158 Fed. 5, 16, 17, 18, 
87 C. C. A. 619. 

The Judgment is affirmed. 



OCEANIO STEAM NAVIGATION CO., Limited, v. WATKINS. 

(Circuit Court of Appeals, Second Circuit. May 23, 1911. On Motion 
for Reargument, June 19, 1911.) 

OouBTS (g 406*) — Circuit Oouets of Appeai>-Issuance of, Remedial Wbit. 
Where the mandate has gone to the Circuit Court, an application for 
a stay to allow plaintifC In error to apply for eertiorari should be made 
there, and not to the Circuit Court of Appeals. 

[Ed. Note. — For other cases, see Courts, Dec. Dlg. § 406.*] 

In Error to the Circuit Court of the United States for the Southern 
District of New York. 

Action by one Watkins against the Oceanic Steam Navigation Com- 
pany, Limited. Judgment for plaintifï, and défendant brings error. 
Judgment affirmed. 

Burlingham, Montgomery & Beecher, for plaintifï in error. 
Paris S. Russell, for défendant in error. 

Before LACOMBE, COXE, and WARD, Circuit Judges. 
PER CURIAM. Judgment affirmed. 

On Motion for Reargument. 

PER CURIAM. The motion for reargument is denied. Inasmuch 
as the mandate has gone to the Circuit Court, application for a stay 
to allow plaintiff in error to apply for eertiorari should be made there. 

•For other cases see same toplc & 5 numbek In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



910 188 FEDERAL REPOETEB 

STAR CO. V. MADDBN. " 
(Circuit Court of Appeals, Second Circuit. June 6, 1911.) 

No. 287. 

1. Appeal and Error (I 501*) — Record— Eesekvation in Lower Court or; 

Gbounds oe Review— Exceptions to Instructions. 

TJnder the establlshed rule of the fédéral courts, asslgnments of error 
to the givlng or refusai of instructions cannot be consldered on a wrlt of 
error t)y an appellate court, unless it appears by the transcript that ex- 
ceptions were reserved while the jury were at the bar. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 2300- 
2305 ; Dec. Dlg. § 501.*] 

2. Appeal and Errob (§ 501*) — Réservation in Lower Court of Grounds 

OF Rbview— Exceptions to Rbfusal to Charge. 

Where the bill of exceptions in a cause sliowed requests to charge 
made by défendant, but they were not marl^ed to show what action was 
taken thereon, although a comparison wlth the charge showed that cer- 
tain of them were not glven, nor covered thereby, a statement reciting 
that after the jury retired the judge stated that he understood that de- 
fendants' counsel were entitled to "every exception which belongs to 
them by reason of requests handed up to the court in advance and either 
refused or modified" was not sufflcient to make It appear that exceptions 
were taken by défendant before the jury retired to the failure to charge 
such requests. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 2300- 
2305 ; Dec. Dlg. § 501.*] 

3. Appeal and Error (§§ 260, 263*)— Réservation in Lower Court of 

Geounds of Review— Exceptions. 

An asslgnment of error to the overruling of a 'motion to strike out, or 
to Instruct the jury to disregard, testimony cannot be consldered by the 
appellate court, unless based on an exception taken at the tlme. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. |§ 1503- 
1532 ; Dec Dlg. §§ 260, 263.*] 

4. LiBEL AND SLANDER (§ 107*)— DAMAGES— EVIDENCE. , 

In an action for libel, It Is not error to permit the plaintifC to testlfy 
as to his feelings on readlng the libelous article; hls mental suffering 
belng an élément of the damages recoverable. 

[Ed. Note. — For other casés, see Libel and Slander, Dec. Dig. § 107.*] 

In Error to the Circuit Court of the United States for the Southern 
District of New Yorlf. 

Action at law by Edvirin C. Madden against the Star Company. Judg- 
ment for plaintifï, and défendant brings error. AfSrmed. 

This cause cornes hère upon writ of error to review a judgment of the Cir- 
cuit Court in favor of défendant in error, who was plaintlff below. The ac- 
tion was for libel, and the judgment was entered upon verdict of tlie jury. 
ïhe appeal has been twice argued. At the conclusion of the first ai'ijumeut, 
question havlng arisen as to ttie reserving of certain alleged exceptions, and 
a certiflcate of the tl'lal judge being presented, the court, upon motion of philu- 
tlff in error directed that "the record should lie sent back to the Circuit Court,, 
In order that the trial judge may, if the facts warrant such action, amend the 
blll of exceptions by Insertlng therein any exceptions to refusai to charge de- 
fendant's reguests, which exceptions were actually taken and allowed during 
the trial and whlle the jury were at the bar." This was done, but no amend- 
ment was allowed by the Circuit Court. The bill of exceptions reuiaina a» 

•For other cases see same topio & § kumeee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes- 



STAR CO. T. MADDEN 911 

It was when the cause was first brought to this court. Thereupon the cause 
was reargued upon several assignments of error which had not beau discussed 
on the flrst argument. 

Clarence J. Shearn, for plaintiff in error. 
James D. Fessenden, for défendant in error. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

EACOMBE, Circuit Judge (after stating the facts as above). [1] 
The first group of assignments of error which may be considered are 
those which deal with defendant's requests to instruct the jury in cer- 
tain particulars. Thèse assignments are numbered 1, 2, 7, 8, and 9, 
and are correct in form; but they cannot be considered, unless the 
record discloses the fact that exceptions to the court's refusai to charge 
such requests were properly reserved. What must be done to reserve 
an exception to instructions given or refusedi at the trial is prescribed 
by the Suprême Court in Phelps v. Mayer, 15 How, 161, 14 L,. Ed. 
643, in the following language : 

"It bas been repeatedly decided by tbis court that It must appear by the 
transcript, not only that the instructions were given or refused at the trial, 
but also that the party who complains of them excepted to them while the 
jury were at the bar. The statute of Westminster II, which provides for the 
proceeding by exception, requires, in explicit terms, that this should be done ; 
and, if it is not done, the charge of the court, or its refusai to charge as re- 
quested, form no part of the record, and cannot be carried before the appel- 
late court by writ of error. It need not be drawn out in form and signed 
before the jury retire; but it must be taken in open court, and must appear, 
by the certificate of tbe judge who authenticates it, to bave been so taken. 
Nor is this a mère formai or technical provision. It was introduced and is 
adhereû to for purposes of justice." 

It is difficult to conceive of language more spécifie and positive than 
this. It sets forth the rule of practice for ail fédéral courts, has been 
announced and reannounced many times, and has been repeatedly ap- 
plied in this circuit. Park Bros. v. Bushnell, 60 Fed. 583, 9 C. C. A. 
140; Commercial Travelers' Accident Co. v. Fulton, 79 Fed. 423, 24 
C. C. A. 654; Berwind-White Coal Co. v. Firment, 170 Fed. 151, 95 
C. C. A. 1 ; Mann v. Dempster, 179 Fed. 837, 103 C. C. A. 325. See, 
also, opinion of Circuit Court of Appeals, Ninth Circuit, in Western 
Union Tel. Co. v. Baker, 85 Fed. 690, 29 C. C. A. 392, and cases there 
cited. 

[2] Before thèse five assignments of error can be considered, there- 
fore, it must appear by the certificate of the trial judge that the five 
exceptions to refusais to charge were reserved while the jury were 
at the bar. The only authentication of the trial judge is to the bill of 
exceptions. Referring to that document, there is found, after the tes- 
timony was closed, a document entitled "Defendant's Requests to 
Charge," consisting of 16 separate propositions, separately numbered. 
There is nothing on the face of this dbcument to indicate which re- 
quests were charged and which were refused. It is quite common for 
the trial judge to note on the margin of each request what disposition 
he makes of it, but it is not essential that he should do so. Such an- 
notation is useful, because it enables the appellate court to ascertain 
quickly what was done with the requests, without having to collate 



912 188 FEDERAL EBPOKTBB 

them with the charge and by a careful comparison détermine how 
much was refused. Such an examination shows that some of the 16 
requests were substantially charged in différent language, but none of 
the 5 covered by the assigTiments of error were charged, nor did the 
court give any spécifie instructions one way or the other touching the 
subject-matter of thèse S requests. 

Near the conclusion of his charge the trial judge stated that in pre- 
paring it he had carefully read and attempted, as well as he could, to 
digest and understand the requests for charges made by both sides. 
He then added : 

"I am not consclous that I hâve falled to take up any suibstantial branch 
of the discussion which it Is my duty to refer to. If counsel will call my at- 
tention to an omission to discuss any particular spécifie sub.1ect, I shall be very 
glad to do It now. So far as a gênerai criticism of my charge is concerned, 
I would prefer that the jury should retire and enter upon a considération of 
the évidence, and I will be willing to take the responsibility for permlttlng 
you to enter upon the record your gênerai critieisms of my charge after they 
hâve gone. If I hâve omitted a subject which you think I should charge, I 
will be very glad to consider It" 

Thereupon counsel for défendant, who was not the counsel who 
has argued this appeal, said: 

"May I asb your honor to charge somethlng that Is not contained in ou.r 
requests. It was overlooked." 

The court acceded, and the new request was stated and substantially 
charged. Defendant's counsel thereupon asked the court to charge that 
in libel suits the défendant was not allowed to prove facts, unless al- 
leged in the answer. This also was charged, whereupon counsel stated : 
"I hâve not anything further." Counsel for plaintiff thereupon called 
attention to his seventh request, asking the court if it had not been 
overlooked. Thereupon this request, with a modification suggested by 
defendant's counsel was charged. The record concludes as f ollows : 

"The jury then retired. 

"Thé Court: I understand that the counsel for the défendant, from re- 
marks made during the delivery of the charge, are entitled to every exception 
which belongs to them by reason of requests handed up to the court in advance 
and either refused in whole or modifled in some respects." 

Is this a certification by the trial judge that exceptions to thèse fiv : 
refusais to charge were taken while the jury was at the bar? We think 
not. It merely states that the court understands that counsel for de- 
fendant are entitled to every exception which belongs to them, but in 
no way indicates what exceptions "belong to them." For those référ- 
ence must be had to the record, and the record is silent. From what 
has been quoted supra it appears that what the trial judige undertook 
to reserve until after the jury had gone were "gênerai critieisms 
of the charge." If gênerai critieisms meant exceptions, and we can 
give it no other meaning, this was incorrect practice under Phelps v. 
Mayer, supra, and no exceptions which might then for the first time 
hâve been noted could be considered. A refusai to receive exceptions 
to the charge while the jury was at the bar would be réversible error, 
if an exception to such disposition of the case brought it before this 



BTAB CO. T. MADDEM 913 

court. Mann v. Dempster, 179 Fed. 837, 103 C. C. A. 325. But no 
one, at any time before or after the jury left the box, oiïered any 
criticism, gênerai or spécifie, of the charge itself. 

Manifestly the trial judge did not undertake to postpone taking 
action with regard! to requests until after the jury had retired. He 
listened to requests and charged them. He took up and disposed of 
plaintifï's seventh request, when asked if he had not overlooked it. 
There is nothing to show that, if at that time defendant's counsel had 
called attention to the five requests, asking if they also had not been 
overlooked, the trial judge WQuld not hâve disposed of them, either 
by charging or refusing, and to a refusai of any request exception could 
then hâve been taken. As to what took place at the trial we can be 
informed only by the record, and that does not disclose an exception 
to any refusai to charge as requested. Whatever ambiguity there may 
hâve been in the statement of the trial judge, made after the jury had 
retired and which is quoted supra, has now been removedl. Since he 
did not amend the bill of exceptions in the manner asked for by plain- 
tiff in error, we must assume that the facts did not warrant any such 
amendment. The assignments of error above enumerated cannot, 
therefore, be considered. 

[3] The next assignment of error relied upon is the fourteenth, 
which asserts that the court erred in overruling the objection to a cer- 
tain question, in permitting it to be answered, and in refusing to in- 
struct the jury to disregard it. The plaintiff was asked by his counsel 
whether prior to the publication he, as Third Assistant Postmaster 
General, had taken any action which interfered with the use of the 
mails by défendant. Before objection was interposed the witness an- 
swered in the affirmative. Discussion ensued, and plaintiff's counsel 
stated the testimony was offered on the question of actual malice, Per- 
sonal malice; but, upon being pressed by the court, he admitted that 
he couldl not connect this évidence, whereupon the court told him he 
had better stop. Defendant's counsel thereupon asked the court to in- 
struct the jury to disregard the witness' answer, to which the court 
replied that he did not think it necessary to do that, for the expressed 
reason that he thought the jury understood there was no connection 
in fact. From the discussion as it is set forth in the record, we also 
think that the jury understood the answer was of no importance, and 
apparently defendant's trial counsel was of the same opinion, since he 
reserved no exception to the refusai of his request, asked for no fur- 
ther instructions, and made no motion to strike out the answer. This 
assignment of error is based on no exception, and cannot be consid- 
ered hère. 

Other objections to the admission and exclusion of évidence do not 
call for any extended discussion. The witness William Loeb, Jr., was 
asked what conversation he heard between Postmaster General Cor- 
telyou and the Président relative to plaintiff's removal 'rom office; it 
being disputed between the parties whether the Postmaster General 
demanded Madden's résignation because of officiai reports which the 
latter had made in a particular case, or because of "révélations of rot- 
tenness in his department." The answer of the witness tended to con- 
188 F.— 58 



914 188 FEDERAL REPORTER 

tradict Mr. Cortelyou's statement as to the cause. There îs some un- 
certainty about the dates, but we think there was sufficient to justify 
the admission of the testimony as part of the res gestse. 

It is contended that the court erred in sustaining an objection to 
the following question asked during the re-direct examination of the 
witness George Miller: 

"Wltli regard to the gênerai speech of people, what was her [Mrs. Sevilla 
Miller's] réputation at that tlmeî" 

The question presented by this assignment of error is académie, be- 
cause the same witness elsewhere testified in référence to Mrs. Miller : 

"I dld not thlnk that my repeatlng that about her would injure her répu- 
tation, because, as I say, rumor and gossip had it that her relations at thnt 
time and previous to that time were improper." 

[4] Exception was reserved to a question put to plaintiff on his 
direct examination, as foUows : "Hbw did you feel when you read it 
[meaning the hbelous article] ?" That is disposed of by our décision 
in S. S. McClure Co. v. Phillipp, 170 Fed. 910, 96 C. C. A. 86. We 
find no error in allowing plaintiff to testify that his résignation was 
not due to any of the things mentioned in the libelous article. 

The judgment is afïàrmed. 



HEIDE V. PANOULIAS. 

(Circuit Court of Appeals, Second Circuit. June 12, 1911.) 

No. 250. 

1. Patents (§ 278*) — Mattees Eeviewable— Issues Not Presented to Low- 

EB Cotjet. 

On writ of error to review a Judgment awardlng damages for infringe- 
ment' of a patent, the court wlll not consider an objection to the validity 
cl the patent which was not pleaded nor relied on below, and which, if 
it had been, mlght hâve been met by évidence. 

[Ed. Note. — For other cases, see Patents, Cent Dig. § 436; Dec. Dlg. 
§ 278.»] 

2. Patents (§ 276*) — ^Actions at I>aw for Infeingement— Questions fob 

JUBÏ. 

In an action at law to recover damages for infrlngement of a patent. 
where the évidence is conflicting on the questions of invention disclosed 
by plalntlfï's patent and of infrlngement, such questions are of fact for 
the jury. 

[Ed. Note.— For other cases, see Patents, Cent. Wg. §§ 432-434; Dec. 
Dig. § 276.*] 

3. Tbial (§ 260*) — Instkuctions— Refusal oii 'Rbquests. 

The refusal of requests for instructions in an action for infrlngement 
of a patent held not error, in view of the charge given. 

[Ed. Note.— For other cases, see Trial, Cent. Dig. §§ 651-659 ; Dec. Dig. 
§ 260.*] 

4. Appeal and Ebhor (§ 1001*) — Action at Law fob Infeingement— Con- 

OLUSrVENESS OF VEBDIOT. 

In an action at law for infrlngement of a patent, where the jury has 
decided the questions of invention and infrlngement In one way, and jm) 

•For other cases see same toplc & § numbeb in Dec. & Am. Diga. 1907 to date, & Rep'r Indexes 



HEIDB V, PANOtJLIAS 915 

error îb found In the conduct of the trial, the appellate court wlll not set 
aside tlieir verdict merely because it might hâve reached a différent con- 
clusion on the same record. 

[Ed Note. — For other cases, see Appeal and Brror, Cent. DIg. §§ 3928- 
3934; Dec. Dig. § 1001.*] 

In Error to the Circuit Court of the United States for the Southern 
District of New York. 

Action at law by Panayiotis Panoulias against Henry Heide. Judg- 
ment for plaintiff, and défendant brings error. Affîrmed. 

See, a'iso, Panoulias v. Hawley, 178 Fed. 101. 

Hunt, Hill & Betts (Geo. Whitefield Betts, Jr., and Francis H. Kin- 
nicutt, of counsel), for plaintiff in error. 
F. E. M. BuUowa, for défendant in error. 

Before LACOMBE, COXE, and NOYES, Circuit Judges. 

LACOMBE, Circuit Judge. The patent is No. 663,359, issued De- 
cember 4, 1900, to plaintiff for "dipping-frame for coating candies." 
The spécification states that : 

"TKls Invention relates to dipplng-frames for coating candies and more par- 
tlcularly chocolatés; and the objeet thereof Is to provide an Improved dip- 
ping-frame of this class In whleh the candies or cores thereof are immersed 
In llquid chocolaté or other materlal and are thus coated. A partlcular objeet 
of the présent Invention Is to provide a dlpplng-frauie of the class descrlbed 
wlth devices whereby the coated candies are marked to simulate the con- 
formation of hand-dipped candies. The dipping-frame Is adapted for elther 
manual or mechanlcal opération. The invention consista in the novei con- 
struction and arrangement of parts hereinafter set forth." 

Then follows a description of the apparatus, its parts, and mode of 
opération with références to the ilrawings. This description need not 
be hère repeated. It concludes with the sentence: 

"The rldges JSb and 13o simulate the ridges formed upon the coated can- 
dies by the drip of the mobile coating when the same are manually dipped 
and then suspended for hardening vylth the crown in the lowermost position." 

The patentée adds : 

"I do not limlt myself to the spécifie construction and arrangement of part» 
herein descrlbed, but reserve the right to vary the same within the seope of 
my Invention." 

The second daim, which is the only one relied on, reads: 

"2. A dipping-frame of the class descrlbed, provided veith means for sup- 
porting the eandy cores and wlth relatively-movable means for rearranging 
a portion of the coating thereof, whereby fhe complète candies are marivea 
to simulate a drip formation of the coating thereof, substantially as sbovra 
and descrlbed." 

[1] Upon the argument the court called attention to the statement 
that the objeet of the invention was apparently solely to simulate can- 
dies coated by hand, and thus to deceive the purchaser ; référence be- 
ing made to our former décision in Rickard v. Du Bon, 103 Fed. 868, 
43 C. C. A. 360. In that case we had before us a patent for discolor- 
ing tobacco leaves in spots, so as to induce a belief that the leaves were 

•For other «sases see same toplc & § number In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



916' 18à FEDERAL REPORTER 

naturally spotted. We held that the patent statutes were not intendled 
to extend protection to those who confer no other benefit upon the 
public than the opportunity of profiting by déception and that to war- 
rant a patent the invention must be capable of some bénéficiai use as 
distinguished from a pernicious use. In the case at bar, however, no 
such défense was raised, nor was the utility of the invention disputed. 
Defendant's counsel now^ asks that he be allowed to reargue on this 
point, and to contend that the "court may take judicial notice that the 
patent is invalid for the reason stated." This should not be done. 
Plaintifif has had no opportunity to litigate that point, nor to put in év- 
idence which might hâve avoided it. This judgment based on the 
verdict must stand or fall upon the record which was before the court 
and jury. 

The main argument of défendant is directed to support the excep- 
tions to the refusais of the trial judge to dismiss the complaint and to 
direct a verdict in favor of défendant on the grounds: (1) That the 
évidence showed that the plaintiff 's patent was anticipated by prior pat- 
ents and the prior art; and (2) that there was no évidence of in- 
fringement. 

[2] Ordinarily the présence or absence of "invention" and "in- 
fringement" are questions of fact. When disposed of by the trier of 
the facts in an equity suit, his décision may be reviewed on appeal. 
When dlisposed of by the verdict of a jury, properly instructed, its dé- 
cisions on those points are not reviewable on appeal. Défendant, how- 
ever, relies upon Singer Co. v. Cramer, 192 U. S. 275, 24 Sup. Ct. 291, 
48 Iv. Ed. 437, and other cases, which hold that, where thèse questions 
can be determined from a mère comparison of two or more patents, 
they should be decided by the trial judge, and the jury instructed ac- 
cordingly. Thus : 

"If It appears from the face of the instruments that Intrinsie évidence Is 
not needed to explain terms of art or to apply the descriptions to the subject- 
matter, so that the court is able to say from such mère comparison that the 
inventions are not the same, but difCerent, then the question of identity is 
one of pure construction, and not of évidence, and conseguently is matter of 
law for the court." Heald v. Rice, 104 U. S. 737, 26 L. Ed. 910. 

But we do not find in thèse citations anything which disturbs the rul- 
ings heretofore announced by the Suprême Court, when the situation 
presented is the one ordinarily presented on the trial of a patent cause, 
with much more in the record than a few certified copies of issued pat- 
ents. In Bischofr v. Wethered, 76 U. S. 812, 19 L. Ed. 829, the court 
said : 

"It is undoubtedly the common practice of the tJnite^ States Circuit Courts, 
In actions at law, on questions of priority of invention, where a patent uiider 
considération is attempted to be invalidated by a prier patent, to tal^e the 
évidence of experts as to the nature of the varions mechanisms or manufac- 
tures describéd in the différent patents produced, and as to the identity or 
diversity between them, and to submif ail the évidence to the jury under 
gênerai instructions as to the rules by which they are to consider the évidence. 
A case may sometimes be so clear that the court may feel no need of an ex- 
pert to explain the terms of the art or the descriptions contained in the re- 
spective patents, and may therefore feel authorized to leave the question of 
identity to the jury under such gênerai instruction as the nature of the docu- 



HEIDB V. PANOULIAS 917 

ments seems to require. But In ail such cases the question would stlll be 
treated as a question of fact for the jury and not as a question of law for the 
court. Such we think has been the prevailing rule in this country, and we 
see no sufBcient reason for changing It." 

The court points out that the practice is the same in England. It 
adds: 

"The spécifications of patents for Inventions are documents of a pecuUar 
klnd. They profess to describe mechanisms and complicated machinery, 
Chemical compositions, and ofher manufaetured products, which hâve their ex- 
istence in pais, outside of the documents themselves, and which are commonly 
described by terms of the art or mystery to which they respectively belong ; 
and thèse descriptions and terms of art often require iteculiar knowledge 
and éducation to understand them aright, and slight verbal variations, scarcely 
noticeable to a eommon reader, would be detected by an expert in the art as 
Imdieatlng an important variation in an invention. Indeed, the whole subject- 
matter of a patent Is an embodied conception outside of the patent Ifself, 
which, to the eyes of those expert in the art, stands out in clear, distinct re- 
lief, while it is often unperceived or but dimly perceived, by the unlnltiated. 
This outward embodiment of the terms contained in the patent is the thing 
invented, and is to be properly sought, llke the explanation of ail latent ambi- 
gulties arising from the description of extemal things, by évidence in pais." 

In Keyes v. Grant, 118 U. S. 25, 6 Sup. Ct. 950, 30 L. Ed. 54, de- 
fendant set up a prior publication of a machine, and there appeared 
obvious différences between the two machines ; experts differing upon 
the question whether those différences were material to the resuit. 
Verdict was directed for the défendant. The Suprême Court re- 
versed, saying: 

"Clearly it was not a matter of law that the spécifications of the plaintifE's 
patent and the publication of Karsten, taken in connection with the drawings, 
described the same thing. It was a question of fact properly to be left for 
détermination by the jury, under sultable instructions." 

In Royer v. Schultz Belting Co., 135 U. S. 319, 10 Sup. Ct. 833, 34 
L. Ed. 214, the court held) that it was a question for the jury to pass 
upon whether the patented invention was of a primary character and 
the patent a "pioneer patent," and that it was also a question for them 
whether defendant's machine inf ringed its claims. In Coupe v. Royer, 
155 U. S. 565, 15 Sup. Ct. 199, 39 L. Ed. 263, the court approved the 
statement quoted from Robinson on Patents : . 

"Where the défense dénies that the invention used by défendant Is Identlcal 
with that included In the plaintife's patent, the court deflnes the patented 
invention as indicated by the language of the claims. The jury judge whether 
the Invention so defined covers the art or article employed by the défendant." 

_ In the case at bar there was conflicting testimony as to both inven- 
tion and infringement. The experts disputed as to how prior patents 
worked and as to whether they were practical. They disputed vigor- 
ously as to the meaning of the phrase "dipping-frame," used in the 
claim, whether it would convey to one skilled in the art the idea both 
of a pin-bar and of a wire mesh basket. They disputed as to whether 
a machine made under the patent in suit would or would not work. 
We are satisfied that under the authorities cited the trial judge would 
hâve committed error, had he decided thèse questions of validity and 
infringement, instead of sending them to the jury. 



918 188 FEDERAL BBPORTBR 

The court charged the jury at great length, going in détail over ail 
the disputed points, çalling their attention to ail thè separate défenses, 
referring to the prior patents, quoting from and explaining the patent, 
and laying down for them the gênerai rules which are to be applied in 
determining the questions of invention and infringement. It is signifi- 
cant that to the charge no exception was taken. 'It must be therefore 
assumed that both sides were satisiîed that, so far as it instructed the 
jury, it instructed them correctly. Defendant's assignments of error 
on -this branch of the case deal only with refusais to charge some of 
his requests. 

Before the summing up défendant submitted 36 separate written 
requests. Thèse, as usual, were prepared to cover the entire contro- 
versy, and the court, in summing up, embodied many of them textual- 
ly or substantially in the charge. The requests were not separately 
marked in the margin as "Charged" or "Refused," which is always a 
convenience for the appellate court. See our opinion in Star Co. v. 
Madden, 188 Fed. 910, filed this month. At the close of the charge the 
court, referring to the requests, said : 

"I hâve eadeavored to pass upôn ail the points which are referred to in 
them, and, if there is any point whieh I hâve not referred to at ail, counsel will 
please call it to my attention, and I will charge It. I am not prepared to 
charge anything in any particular language, and I décline to charge as 
requested In the requests, other than as I hâve already charged in this case;" 

Counsel for défendant thereupon undertook to read each separate 
request and to ask for. a ruling upon it. This the court refused to 
permit, but allowed counsel to note an exception to his refusai to 
charge each separate request. This was quite sufficient. It would 
hâve been a waste of time to read them ail over again. 

[3] The assignments of error do not include ail the requests, and 
the argument hère does not cover ail the refusais which were assigned 
as error. It will be sufficient to refer only to those which were made 
the subject of argument. 

Request No. I : 

"The évidence shows that Smith machines, used at defendant's factory, 
contained the déviées shown in the Smith patents numbered 901,749. and 905,- 
472, and are in accordancç with the drawings and spécifications sfet forth 
thereln."^ 

Défendant was not entitled to this request as phrased, because there 
was some évidence to show that the entire device shown in the two 
Smith patents was not found in the machine used in the Heide factory. 

Request No. Il : 

"The issuance of patents numbered 901,749 and 905,472 to Myron A. Smith, 
créâtes a prima facie presumption of patentable différence between the device 
shown in the plaintiff's patent in suit and the Smith machines used in the 
defendant's factory." 

This request is dépendent on No. I, and falls with it. 
Request No. IV : . 

"The plaintifC's patent In suit must be construed in référence to the prior 
art, and in this case is limited to the construction shown and set forth iu the 
drawings and spécifications of the patent" 



HEIDE V. PANOUIilAS 919 

Request No. V: 

"Olalm 2 of the patent In suit Is Umlted to a construction siowlng a basket 
with pockets and a flnger which constitutes two sides of said poekets and the 
relatively movable means for rearranging coatlng, substantially the same as 
the tllpper or flnger shown in the drawlngs and spécifications in the patent 
in suit, and operating substantially In the same manner as is explained by 
the spécification of the patent in suit." 

The fifth is but an amplification of the fourth request. The court 
charged the jury in gênerai terms: 

"That claim No. 2 of the patent must be construed with référence to the 
language preceding It In the spécifications and with référence as to the draw- 
Ings and Is limited by the drawings and spécifications." 

This was ail, possibly more than, défendant was entitled to. Cer- 
tainly the évidence as to the meaning of words used in the art was too 
conflicting to warrant a charge that the claim of the patent covered 
only the particular form of meshed basket dipping-frame which the 
drawings showedl. 

The sixth request referred to a device known as Exhibit D, which 
will be discussed later. 

The seventh request asked an instruction that plaintiff could not hâve 
a claim against défendant under a later patent issued to him, which 
was not in suit. The charge most clearly told the jury that they were 
concerned only with an alleged infringement of claim 2 of the patent 
in suit. It was not error to refuse this additional instruction. 

The eighth and ninth requests called for spécifie instructions as to 
practical commercial results of operating varions machines, as to 
which the jury had been sufficiently instructed) in the gênerai charge. 

It is not necessary to go over the remaining requests in détail, be- 
cause they were evidently so constructed as to dispose of the entire 
controversy by direction of the court, while apparently submitting it 
to the jury. The careful and exhaustive charge, which told them 
what the questions were and where they should look to find answers 
to them, was quite sufficient. Précise instructions on minute points 
would hâve taken away from their considération the very questions 
which in a common-law case should be submitted to them. 

Request No. 16, as to commercial use of a prior patent, was substan- 
tially covered by the charge ; and the same is true of requests Nos. 33 
and 34. 

At the outset of the trial plaintiff ofïered in évidence a device which 
he said was made under his patent, and which he used in coating can- 
dies. Its appearance differed from the drawings of the patent and 
rather resembled that of defendant's device. It was admitted, over ex- 
ception, as Exhibit D. We think that at the time it was ofifered it had 
not been sufificiently proved) to be an embodiment of the device of the 
patent ; but the question whether it was or was not covered by the pat- 
ent was eventually left to the jury, and they found that it was so cov- 
ered. This gave them the burden of determining whether two différ- 
ent machines, viz., Exhibit D and defendant's machine, both infringed 
the patent, when they should hâve been troubled only with the ques- 
tion whether or not defendant's machine infringed. But we do not 



920 188 FEDERAL EEPORTEE 

think it was error to allow them thus to classify Exhibit D, and, since 
it has: been found to embody the device of the patent, any error in 
originally admitting it is cured. The sixth request asked an instruc- 
tion that the device of Exhibit D is not shown in the patent in suit. 
Such an instruction was not justified by the testimony, which was in 
confîict as to the scope of the patent. 

There are a number of exceptions to the admission of testimony; 
but we do not find any instance of réversible error. 

[4] We hâve, then, a' patent suit on the common-Iaw side of the 
court, where there is much conflicting testimony, andi where the case 
has been given to the jury with sufficiently full and proper instructions. 
The Suprême Court said in Tucker v. Spalding, 13 Wall. 455, 20 L. 
Ed. 515: 

"Whatever may be our Personal opinions as to the fltness of a jury as a 
tribunal to détermine the dlversity or identlty In principle of two mechanieal 
Instruments, it cannot be questloned that when the plaintifC, în the exercise 
of the option which the law glves him, brings bis suit in the law in préférence 
to the equity side of the court, that question must be submitted to the jury. 
If there is so much. resemblance as raises the question at ail." 

In such a case, where the jury has decided the questions of inven- 
tion and infringement in one way, and no error is found in the conduct 
of the trial, it is not for us to set aside their verdict merely because, if 
the same questions were submitted to us as triers of the facts upon 
the same record, we might hâve reached a différent conclusion. 

As to the question of damages, the jury were instructed that plain- 
tiff could recover only such damages as he might prove as a consé- 
quence of failure to sell machines of his own to défendant through the 
intrusion on the market of infringing machines. He testified to the 
price at which he sold complète machines with the patented f eature in- 
cluded, and that he did not sell the patented feature separately, except 
to persons who had already purchased a complète machine. He tes- 
tiiied what it cost to make the patented feature and the complète 
machine. The jury were told that they could not give more than nom- 
inal damages, unless they were satisiîed that défendant, if he hadi not 
bought the infringing Smith machine, could hâve bought plaintiff's 
machines. There was évidence from which they might fairly hâve 
reached such a conclusion, and the verdict does not exceed the amount 
which woiild naturally resuit from such a conclusion. We find no er- 
ror in the charge on this branch of the case. 

The judgment is affirmed. 



DIXIE COTTON PICKER CO. V. BULLOCK 92] 

DIXIE COTTON PIOKER CO. v. BULLOCK et al. 

(OircTiit Court, N. D. Illinois, B. D. August 4, 1911.) 

No. 30,271. 

1. CANCEI.LATION OF iNSTBtTMENTS (§ 15*) EQUITT IeBEPABABLE iNJTrBY. 

■RHiere the Injury caused by a breach of contract is irréparable, and 
damages are wholly inadéquate, equity has power to decree a rescission. 

[Ed. Note.— For other cases, see Cancellation of Instruments, Cent. Dig. 
§§ 14,21; Dec. Dig. § 15.»] 

2. Cancellation of Instbuments (§ 15*)— ^Beeach of Contbact— Remedt bt 

Hecoveby of Damages. 

That défendants had refused to comply witli any of tlie terms of a 
contract is not sufficient to sustain a decree for cancellation. In the 
absence of a sliowing that the recovery of damages at law would be 
Inadéquate. 

[Ed. Note. — For other cases, see Cancellation of Instruments, Cent Dig. 
§§ 14, 21 ; Dec. Dig. 1 15.*] 

8. Patents (§ 216*)— Contbacts — Manufactube and Sale. 

Where a contract for the manufacture of patented machinery pro- 
vided certain conditions précèdent to défendants' obligation to pay royal- 
ties, for failure to do which the contract was subject to cancellation, a 
failure to pay such royalties was not ground for cancellation, in the 
absence of a showing that complainant had performed the conditions. 

[Ed. Note. — For other cases, see Patents, Cent Dig. § 329; Dec. Dig. 
§ 216.*] 

4. Patents (§ 216*) — Mantjfactueb and Sale — Beeach of Contbact. 

Where a contract for the manufacture and sale of certain patented 
machinery provided that défendants were granted the privilège of man- 
ufacturlng, but the contract eontained no covenant obligating them to 
do so, or to attenipt to sell, complainant relying on the chance that défend- 
ants wovrld take advantage of their privilège to manufacture, rather 
than on their covenant to do so, the contract was not subject to cancel- 
lation for défendants' refusai to manufacture, or to attempt to sell 
machines properly constructed under the patents. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 

5. Patents (§ 216*) — Contbacts — Consteuotion — Patented Machinebt — 

Manufactube. 

Where the contract for the manufacture and sale of certain patented 
machinery provided that défendant agreed to be diligent in supplying 
the market with sufflclent machines to supply the demand of the market 
therefor, défendant was not bound by such agreement to create a market 
or to try to sell the machines. 

[Ed. Note. — For other cases, see Patents, Cent Dig. 8 329; Dec. Dig. 
§ 216.*] 

9. Patents (§ 216*) — Contbacts— Bbeach—Bemedt. 

Where a contract for the manufacture and sale of patented machinery 
provided that if complainants were dissatisfied with the diligence used 
by défendant, its remedy should be as follows, and then eontained a pro- 
vision that complainant should send to défendants bona fide orders for 
machines by sol vent responsible parties to be paid in cash, there being 
no allégation ttiat orders had been so sent, and that défendants had 
refused to flll them, défendants were not subject to a suit for cancella- 
tion of the contract on the ground that they had failed to diligently manu- 
facture and sell the machines. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 

•For other cases see same toplo & § numebe in Dec. & Am. DIga. 1907 to date, & Rep'r Indexes 



922 188 FBDEEAL EBPOETEB 

7. Patents (§ 216*) — Contracts — Manot-acture and Samî. 

Where there was nothing in a contract for the manufacture and sale 
of certain macliinery obligating défendants to comply with tlie suggestions 
of complalnant's mechanical expert, nor to refrain from spying on tlie 
work of sueh expert, nor to refrain from taklng out patents on devices 
embodylng the Ideas of the expert, nor to refrain from trying to purchase 
the stock of complalnant company, nor to ferminate the contract, the faet 
that défendants had committed ail such acts was not ground for cancel- 
lation of the contract in equlty. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 
& Patents (§ 216*)— Contbacts— Breach. 

Where a contract for the manufacture and sale of certain patented 
machinery contalned a covenant obligating défendants not to manufacture 
other similar machinery, but the contract dld not provide that a breach of 
such covenant should ^ve complalnant a right to resclnd, a breach there- 
of was not ground for cancellatlon In equlty, in the absence of a showlng 
that complalnant would be Irreparably injured if such relief was denied. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. 216.*] 

In Equity. Bill by the Dixie Cotton Picker Company against H. E. 
and J. È. Bullock and others. On demurrer to bill. Sustained. 

Herbert D. Crocker (Americus B. Melville, of counsel), for com- 
plainant. 
Judah, Willard, Wolf & Reichmann, for défendants. 

KOHLSAAT, Circuit Judge. This cause is before the court on 
demurrer. The principal relief prayed by the bill is the cancellation 
of a certain contract, the substance of which is as follows: Com- 
plalnant, as the owner of certain patents on cotton picking machinery, 
grants to défendants the sole and exclusive right to manufacture, sell, 
and use machines and devices made in accordance therewith. In con- 
sidération whereof, défendants agrée, among other things, to be "dili- 
gent in supplying the markét with sufhcient machines to meet the de- 
mand of the market therefor," and not to engage in the manufacture 
of other cotton picking machinery. 

Complalnant charges that défendants hâve (1) refused to comply 
with any of the terms of said contract; (2) refusfed to manufacture or 
to try to sell any machines properly constructed under said patents ; 
(3) refused to comply with the suggestions of the mechanical expert 
employed by complalnant; (4) dtevoted their attention to the manu- 
facture of other cotton picking machines of entirely différent types; 
(S) hâve spied upon the work and inventions of complalnant's expert, 
and hâve taken out patents upon devices embodying the ideas thereby 
acquired from complainant's expert; (6) tried to buy up the stock of 
the Dixie Cotton Picker Company with intent to get control of the 
same; (7) refused to terminate the contract. 

Cancellation of the contract, accounting, and damages are prayed. 
Défendants urge, among other things, as grounds of demurrer that 
there is a failure upon the part of complainant to aver a compliance 
with certain conditions précèdent, andi that the bill shows that com- 
plainant has a plain, adéquate, and complète remedy at law. 

•For other cases aee aame topic & i numbbb in Dec. & Am. Diga. 1907 to date, & Bep'r Indexes 



DIXIE COTTON PICKER CO. V. BULLOCK 923 

[1] While it is true that, uhless expressly stipulated therein, the 
mère breach of a contract will not ordinarily constitute a ground for 
the équitable remedy of cancellation, yet where a case is stated which 
clearly shows that the in jury caused by such breach is irréparable, 
and that damages are wholly inadéquate, equity has undoubted power 
to decree a rescission. 24 Am. & Eng. Ency. of Law (2d Ed.) p. 619, 
and cases cited. The principal question before the court, theref ore, is : 
Has complainant stated a case which shows that the remedy at law is 
inadéquate ? 

[2] The charge of the bill that défendants hâve refused to comply 
with any of the terms of the contract is not sufficient to sustain a de- 
cree of cancellation, for, even if it should be admitted that there has 
been a breach of each and every covenant to be performed by défend- 
ants, it does not follow that damages at law would be inadéquate. 

[3] Nonpayment of royalties, it is true, is expressly made ground) 
for revocation of the contract by the Dixie Company, and possibly 
might be a sufficient basis for a decree of cancellation were it not for 
the fact that under the terms of the agreement such revocation can 
only be effective upon the compliance by the Dixie Company with 
certain conditions précèdent. The bill does not support its gênerai al- 
légation of breach as to ail of the covenants by any allégation of com- 
pliance with such conditions précèdent. Failure to pay royalties 
seems to be the only ground expressly made by the contract ground 
for rescission by first party. 

[4] Complainant charges that défendants refuse to manufacture or 
to try to sell any machines properly constructed under said patents. A 
sufficient answer to the breach assigned) is that the contract contains 
no undertaking on the part of défendants to do either of thèse things. 
There can be no doubt that the parties contemplated that party of 
the second part should enter upon the manufacture of machines. The 
Dixie Company granted the "privilège" of manufacturing, and while 
on page 2 of the contract the "obligation of party of the second part 
to manufacture" is spoken of, the court looks in vain through the 
contract for any covenant obligating them either to manufacture or 
to try to sell. At the time the contract was entered into it doubtless 
appeared very much to the interest of second parties to push the man- 
ufacture and sale, and the possibility of their refusing to do so prob- 
ably did not enter into the calculations of first party. The Dixie Com- 
pany chose to rely upon the chance that défendants would take ad- 
vantage of their privilège to manufacture, rather than their covenant 
to do so. Reformation of the contract is not asked ; neither fraud nor 
mistake are alleged. It would seem hardly necessary to say that the 
court cannot, under the circumstances, remake the contract for the 
parties by the insertion of covenants which they hâve seen fit to omit. 

[5] True it is that party of the second part agreed "to be diligent 
in supplying the market with sufficient machines to supply the demand 
of the market therefor." This, however, cannot be construed as an 
obligation to manufacture. Party of the second part did not agrée to 
create a market or to try to sell machines. If for want of proper ad- 
vertising or for any other cause, there was no market to be supplied. 



924' 188 FEDERAL REPORTEE 

certaîrily the covenant to be diligent in supplying the market should 
not obligate party of the second part to put in a stock of machines on 
the chance that purchasers might be îound in the future. 

[8] While breach of the covenant to be diligent in supplying the 
market is charged, complainant has not averred performance of con- 
ditions necessary under the terms of the contract to be performed by 
first party before it can take advantage of such breach. The contract 
provides that if party of the first part is dissatisfied with the dihgence 
used by party of the second part "its remedy shall be as follows:" 
Then follows a number of conditions, principal among which is that 
party of the first part shall send in "bona fide orders for machines by 
solvent responsible parties who will pay in cash. * * * " There 
being no allégation in the bill that orders hâve been sent in, and that 
défendants hâve refused to fill such orders, the court cannot say that 
there has been a breach of the covenant to be diligent in supplying 
the market. 

[7] There seems to be nothing in the contract obligating second 
party to comply with the suggestions of the mechanical expert em- 
ployed by complainant; nor to refrain from spying upon the work of 
complainant's expert; nor to refrain from taking out patents on de- 
vices embodying the ideas of complainant's expert; nor to refrain 
from trying to buy stock of the Dixie Cotton Picker Company; nor 
to terminate the contract. Surely, therefore, none of thèse acts can be 
ground for cancellation of the contract. 

[8] It is true that party of thé second part hâve obhgated them- 
selves not to engage in the manufacture of other cotton picking ma- 
chines or cotton picking machinery, and that the bill charges a breach 
of this covenant. It is not provided in the contract, however, that 
such acts shall give to first party a right to rescission, and nothing is 
stated from which the court would be justified in concluding that com- 
plainant is irreparably injured thereby or that damages at law would 
not be adéquate. Indeed, it is difficult to see how the expérimental 
manufacture of other machines could injure complainant. 

So far as the allégations of the bill show, there is not the slightest 
ground for an accounting, and it is very clear that equity cannot take 
jurisdiction to decree damages alone. 

The allégations of the bill are inadéquate to justify the court in 
departing from the gênerai rule that, in the absence of some provi- 
sion of the contract for its cancellation, a court of equity will not in- 
terfère, except for fraud in securing its exécution, or for irréparable 
in jury growing out of the breach of its terms. 

The demurrer is sustained. 



THOMAS A. IDIgON V. IRA M. SMITH MBBCANTILE OO, 925 

THOMAS A. EDISON, Inc, t. IBA M. SMITH MEEOANTILB 00. 
(Circuit Court, W. D. Michigan, S. D. July 25, 1911.) 

L Patents (§ 216*) — Rights of Patentée— Pbice or Sale. 

A patentée may, by appropriate ccintract, reserve to himself control 
over the priée or other conditions attendlng the public enjoyment of the 
patented article. 

[Ed. Note. — For otlier casea, see Patents, Cent Dig. g 329; Dec. Dig. 
i 216.»] 

2. Patents (§ 216*) — Patented Aeticle— Sale— Resteictions. 

Wliere priée restrictions and other conditions are imposed by contract 
on the sale of a patented article, such restrictions will or will not be 
considered as running with the article, depending in each case on the 
transaction by which the patentée offered the article to the public for 
use; the right of use and resale being such only as might be normally 
appropriate to the article and Implied from the circumstances of the orig- 
inal sale. 

[Ed. Note.— For other cases, see Patents, Cent Dig. § 329 ; Dec. Dig. 
g 216.*] 

8. Patents (§ 216*) — Sale ou Patented Article— Pbice Restrictions— In - 
jttnction. 

Patented phonograph records were manufactured and sold under con- 
tracts authorizing Jobbers and dealers to resell the same, provided that 
such resale should not be made except for a specified price, and that on 
any breach of the condition the license to use and vend the record implied 
from the purchase for resale immediately terra inated. The stock of an 
authorized dealer in such records having heen damaged by fire, it was aban- 
doned to an insurance Company which sold the stock to a salvage company 
by which it was sold to défendant ; some of the records belng in the origi- 
nal cartons and others havlng been replaced in blank cartons. Held, tliat 
défendant having offered such records for sale at eut priées with knowl- 
edge of fhe restrictions under which they were originally sold was subject 
to an injunction restralnlng a resale at less than the contract priées. 
[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 

4. Patents (§ 216*) — Sale of Patented Article— Price Restrictions. 

The right of a patentée to Impose a price restriction on resale of a 
patented article extends to a lieensee to whom has been granted the exclu- 
sive right to make, use, and sell the patented invention tliroughout the 
United States. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 

6. Patents (§ 216*) — Sale in Violation of Restrictions— Injunotion— 
Adjudication ou Patent. 

Where there was nothing t'o rebut the presumption of validlty of a 
patent, and there was a certain publie acquiescence, It was no objection 
to the Issuance of a temporary injunction to restrain defendant's sale of 
the patented article in violation of price restrictions that the patent had 
never been adjudicated. 

[Ed. Note. — For other cases, see Patents, Dec. Dig. § 216.*] 

In Equity. Bill by Thomas A. Edison, Incorporated, against the 
Ira M. Smith Mercantile Company. On motion for preliminary in- 
junction. Granted. 

Offield, Towle, Graves & Offield and Butterfield & Keeney, for 
complainant. 

James H. Campbell and Wilson, Wilson & Rice, for défendant. 

•For other caBng lee same topic & S numbeb in Dec. & Am. DIgs. 1907 to date, & Rep'r Indexes 



926 188 FEDERAL EBPOÏITBB 

DENISON, District Judge. [1] As to the underlying question pre- 
sented by this motion, I cannot hesifate to accept, as the now preyail- 
ing and gênerai rule established by many familiar cases, the position 
that a patentée may, by appropriate contract, reserve to himself a con- 
trol over the price or other conditions attending the public enjoyment 
of the patented article. Several courts hâve recognized a tendency to 
go too far in sanctioning such conditions, and some récent décisions in 
the Second Circuit, as vvell as the opinions of the Suprême Court in 
the Bobbs-Merrill Case, 210 U. S. 339, 28 Sup. Ct. 722, 52 L. Ed. 1086, 

and the Dr. Miles Case, 220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. , 

and the granting of the pending certiorari in the Dick Case,^ hâve tend- 
ed to indicate that some limita will be placed upon the now customary 
practice. 

[2] As the resuit of ail the décisions on this subject, andi in the 
absence of any pronouncement by the Suprême Court, I think it must 
be taken as the existing rule that the force of thèse restrictions, as 
running writh the patented article, dépends, in each case, upon the 
transaction by tvhich the patentée embarked the article upon its voy- 
age. Such transaction is not necessarily unconditional and absolute, 
because it is denominated a "sale" ; nor is it necessarily any less than 
a complète sale because denominated a "conditional sale" or "license." 
Its dominant characteristiç is a question of construction in each case. 
Some analogy may be found in the case of a shipment and delivery 
of an unpatented article where, afterwards, the vendor claims the 
title was reserved, and that he may retake the article. There arc cases 
such that even where title and right of réclamation were, m terms, 
reserved, yet, if the vendee had the right to sell and convey a perfect 
title and to become merely a debtor to the vendor for the proceeds, 
the characteristics of a complète sale dominated those of a conditional 
sale or bailment, and the attempted réservation of title was inefficient. 

Applying the above criterion to this case, it would seem that the 
patentées hâve rightly apprehended the exact nature of the patent 
monopoly to make, use, and sell. A sale by the patentée of the pat- 
ented article which he has manufactured, does not, according to the 
letter of the statute, exhaust the patentee's monopoly with référence 
thereto. The purchaser does not, in so many words, acquire a right 
to use the article or to sell it again; but such right of use, and 
such right of resale as may be normally appropriate to the article, are 
implied from the fact of the original sale. This implication may be 
more or less extensive. It involves the right to repair, but not the 
right to reconstruct. Accordingly, in this case, the patentées, while 
they speak, in their jobbers' contracts and dealers' contracts and in 
their notices on the cartons, of a "sale," go on expressly to say that 
it is a condition of such sale that the article shall not be resold, except 
for the specified) price, and that "upon any breach of said condition, 
the license to use and vend this record, implied from such sale, im- 
inediately terminâtes." 

[3] The proper construction of this contract, it seems to me, is 
that it is not an absolute sale or entitled to be spoken of without lim- 
itation as a sale, so that there is no attempt to accompany what is 

' For décision on merlts, eee Henry v. A. B. DIok Co., 224 V. S. 1, 32 Sup. Ct. S64 56 
L. Ed. 645. ' 



EDI80N V. IKA M. SMITH MERCANTILE CO. 927 

really a perfect sale, by conditions which are répugnant and there- 
fore inoperative. Whether, on the other hand, it is called a sale upon 
condition subséquent, or a terminable license, is not important for the 
purpose of this inquiry. If called by either name, it is clear that the 
patentée has not parted with the dominion over his property and put 
it into unrestricted circulation. The language used in the contract 
and in the notice in this case seems fully as effective for complainant's 
purpose as the language used upon the plates or machines in Heaton- 
Peninsular Co. v. Eurêka Co., 77 Fedl. 288, 25 C. C. A. 267, 35 L. R. 
A. 728. 

In this case, it appears that the stock of a presumably authorized 
dealer in such records had been damaged by lire; that some of the 
cartons were smoked and blackened and others more seriously in- 
jured; that the stock was abandoned to an insurance company which 
took it over; that the insurance company sold the stock to a salvage 
company; and that this latter company sold to défendant the records 
in question. Some of them were then in the original cartons and some 
had been replaced in blank cartons. The défendant does not deny 
having full knowledge of the gênerai System pursued by complainant ; 
and, indeed, in its advertisement offering the records at eut prices, it 
expressly stated that the prices were restricted by contract, "as every 
owner of a talking machine knows." The case, therefore, does not 
présent any question as to the rights of one who purchased in igno- 
rance of the price restriction ; and if it is, as I think, the true theory 
that such a condition as this is a license condition attaching to the 
article and not merely a personal covenant by the first purchaser, it 
makes no différence that the défendant never had any direct dealings 
with complainant. There is, nevertheless, in a proper sensé, privity 
between them, as to this condition. Whether the language in question 
effectively opérâtes in this way after the article has once reached the 
ultimate user and has been used is a question not presented by this 
record, and which may not be, in ail material respects, the same ques- 
tion as the présent one. 

The importance, to the patentée, of maintaining the fixed prices, 
is apparent, and I do not see that any controlling question of public 
interest or public policy is involved. Under this System, the patentée 
sells at such a price that the retail dealer can afford to sell the ordi- 
nary record for thirty-five cents. Except for the fact that there is a 
continuing volume oif sales maintained at that priée, and if it was 
compelled to compete with last season's records at any price, the 
patentée might find his current sales greatly reduced and be obliged to 
double his prices in order to realize the same profit. This may or 
may not be the situation, but the fact that this may be true shows that 
there is no inhérent impropriety in the system. 

[4] It is urged that the sales were made and the licensed conditions 
inaugurated, not by the patentée, but by a licensee. The bill allèges 
that the complainant, as licensee, held under a grant of exclusive right 
to make, use, and sell the patented invention throughout the United 
States. Under such a grant, there is no différence, so far as this 
question is concerned, between patentée and licensee. The opinion in 



928 188 FBDBKAL BEPOETBB 

Ingersoll v. Snellenberg (C. C.) 147 Fed. 522, holding that such re- 
strictions are not valid when imposed by a licensee, seems to rest upon 
the idea that the license there in question was not shown to be exclu- 
sive so as to supersede the rights o£ the patentée. 

[5] Défendant also urges that the patent in suit, No. 880,707, does 
not appear to hâve been adjudicated, and is a^ récent patent upon which 
preliminary injunction should not rest. If this point could be rnain- 
tained regarding ah article created under the patent, the question is 
not sufïiciently raised by the record. Défendant, by its answer, f ormal- 
ly questions the vaUdity of the patent, but makes no showing what- 
ever which has a tendency to dispute the légal presumption of validity. 
Under such circumstànces, that légal presumption, with so much of 
public acquiescence as appears by the bill, is sufficient. 

A more serions question is presented by the fact that apparently 
some of the records in question were manufacturedi before the issue 
of the patent in suit. Complainant urges that thèse license conditions 
may properly be applied to articles manufactured and put out while 
the patent application is pending and may be indirectly enforced in 
an infringement suit based upon the patent later issued ; but, upon the 
argument, complainant proposed to iile an amended bill or a further 
bill, based also upon another patent, issued before thèse articles were 
manufactured. The fîling of such a bill would apparently obviate this 
question. 

The restraining order will be continued for one week, andi, upon the 
filing of such amended bill (unless the défendant shall wish further 
hearing on the new allégations thereof), a greliminary injunction will 
issue as praj^ed. 



ATOHISON, T. A S. F. ET. 00. V. INTEKSTATB COMMERCE OOM. 929 

AÏCHISON, T. & S. F. RY. CO. et al. v. INTERSTATE COMMERCE 
COMMISSION et al. 

No. 2. 

(Commerce Court. July 31, 1911.) 

For majority opinion, see 188 Fed. 229, 241. 

MACK, Judge (dissenting). In my opinion the finding of the Com- 
mission, that the industry track service in the city of Los Angeles is 
substantially the same as the team track and dépôt service, is binding 
upon this court. I agrée that this court should not be concluded by 
a finding of the Commission, based upon admitted facts which in no 
wise tend to sustain the conclusion reached; but in my judgment the 
facts in this case, as related by the Commission in its report, fully 
justify its conclusions. The Commission finds as follovvs: 

"Each of the carriers hère Involved bas designated certain territory as 
within its switching or yard limits in tbe city of Los Angeles, extending for 
six or seven miles in a gênerai easterly and westerly direction, and iiicluding 
numerous tracks, main Unes, brancli Unes, industry spurs; classification 
traelîs, team fracks, repair tracks, and others, and also their stations, freight 
sbeds, derricks, roundhouses, and other structures. Freiïlit nioving in car 
loads is delivered at team tracks, at freight sheds, or at industry spurs. * * * 

"Thèse industry spurs are not private, In that the carrier may use them 
for purposes of its own — as for storage of cars, as leads to other industries, 
and sometimes for public delivery. They are often laid upon public streets 
and over private property, are operated exclusively by the railroad with its 
own engines, and furnish means of interiiidustry conveyance by rail, for 
which tbe carrier properly imposes a switching charge. * » * 

"We are fully convlneed that the complainant's view of the nature of thèse 
tracks is correct, and that they are portions of the terminal facllities of the 
carrier with whose Unes they connect, and, together with the team tîaeks and 
other yards, form the terminal facllities of thèse carriers. * * * 

"Agaln, it is not to be overlooked that the deliverj' given on an industry 
Bpur is not supplemental to any other delivery. Cars destined to industry 
spurs are not placed flrst at) a spur, dépôt, or on the team tracks. or at the 
sheds, and later switched to oblige the consignée. A train of freight cars 
goes to the breaking-up yards, vs'hich lie at the entrance fo the city, and there 
It is divided up with respect to the character of the freight in the various 
cars and their destination. No one bas access to the cars at fhis point. This 
yard is pnrely a railroad facllity. After the cars are segregated, they are 
taken to the tracks to which they are ordered — -some to the various team 
tracks distributed along the main Une, some to différent Industries, some per- 
haps to the railroad shops, or to freight sheds, or to the stockyards. * * * 
After a most exhaustive Inquiry, we cannot flnd, taking this service as a 
whole, in the same way that it is treated by the carriers, tbat the service is 
more expensive to the carrier than if ail cars were given team track de- 
livery." 

If, then, thèse industry tracks are, as the Commission in my judg- 
ment correctly finds them to be, terminal facllities of the railroad, and 
if, as the Commission further finds, the service for which the charge 
in question is made is substantially the same service as that which is 
performed by the carrier in delivering freight on its team tracks, the 
188 P.— 59 



930 188 FEDERAL EBPOETHB 

Commission was justified in prohibiting, as an unreasonable practice, 
the "additional so-called switching charge made for the delivery at the 
industry tracks. 

While under the American practice, as distinguished f rom the Eng- 
lish practice, the transportation rate has always included the charge 
for the use of the ordinary terminal facihties — ^that is, the use of de- 
pots or tracks for the purpose of delivery — it may well be that the 
Commission has the right, in regulating the practices of the carriers, 
to require a séparation of the transportation rate into its éléments. It 
may well be that the dangers of undue préférences and unjust discrim- 
inations in favor of large industries, which can afïord to hâve indus- 
try tracks, may not only justify, but in the future require, the Com- 
mission se to act, and that, too, despite the common-law principle 
enunciated in Covington Stockyards v. Keith, 139 U. S. 128, 11 Sup. 
Ct. 469, 35 L. Ed. 73, and conceded in complainant's brief in the fol- 
lowing language : 

"Of course, it may rlghtfuUy be assumed that the charge establlshed by the 
carrier for carrying goods to and from the given clties does necessarily em- 
brace the use of instrumentalities which the carrier must furnish to accom- 
plish the carriage, such as engines, cars, the railroad, and the dépôts and de- 
livering yards, where goods of the publie in gênerai may be received and de- 
Itvered. In other words, a double charge may not be imposed for the same 
thing." 

If such action should be taken, shippers located on industry tracks, 
whose cars go directly from the breaking-up yards to thèse tracks, 
could not be compelled to pay for the use of the team track terminal 
f acilities ; but, on the other hand, they could be compelled to pay for 
the use of terminal facilities on the industry tracks. We need not 
now détermine whether, in that event, a higher rate for industry than 
for team track delivery could be permitted or compelled, if the cost 
of each delivery to the carrier were the same, in order to prevent the 
large shipper, located on an industry track, from gaining such ad- 
vantage as would naturally accrue to him from his location. 

The Commission, however, has not yet attempted to exercise this 
possible power. It has acted on the basis of the long-established 
American practice, which it was justified in assuming would be con- 
tinued. Under that practice the shippers on industry tracks pay a de- 
Uvery charge in the regular transportation rate. Nothing in the order 
sought to be enjoined compels the railroads to continue to maintain 
the industry tracks or to make delivery thereon. If, however, they 
voluntarily make delivery thereon, instead of on their other tracks, 
they are prohibited from exacting additional compensation for a serv- 
ice found to be substantially the same as that for which payment has 
already been made. 

Moreover, nothing in the order prevents the railroads from making 
différent transportation charges to the various dépôts or tracks in the 
city. A différence of seven miles in the length of the haul might, 
under some circumstances, justify a différence in the transportation 
rate. That rate, however, is not in question on this record. More- 
over, this extrême différence in the length of some of the hauls does 



JESSUP V. CHICAGO & N. W. KY. CO. 931 

not, in my judgment, Justify the court in holding as untenable the 
finding of the Commission, based on a careful considération of ail the 
physical and économie conditions, that industry and team track de- 
livery in thèse cities are practically identical. 

The conclusion of the Commission is, in substance, that inasmuch as, 
under the American practice, no separate charge is made for team 
track delivery, but only a single charge for transportation, including 
delivery, a separate charge for the similar, no more costly, and volun- 
tarily substituted spur track delivery is an unreasonable practice. An 
order prohibiting the charge is, in my judgment, within the powers 
granted to it under section 15 of the act to regulate commerce. 



JBSSUP et al. v. CHICAGO & N. W. RT. CO. 
(arcuit Court, S. D. New York. Aprll 24, 1911.) 

1. COEPOEATIONS (§ 133*) — COMPELLING TRANSFEB OF STOCK— EEMEDT. 

The remedy of a stockholder having the right to compel a transfer of 
hls stock is in equity, and a suit in equlty in the United States Circuit 
Court to compel a transfer is sustalnable as against the objection of com- 
plainant's adequacy of remedy at law, since the United States Circuit 
Court has no original jurisdiction to issue mandamus. 

[Ed. Note. — For other cases, see Corporations, Cent. DIg. §§ 513-520; 
Dec. Dlg. § 133.*] 

2. COEPOEATIONS (§ 133*) COMPELLING TBANSFEB OP StOCK — PAETIE8. 

An executor suing a Wisconsin corporation to compel It to transfer 
stock standing in testator's name, and to pay the différence between the 
market value of the stock on the day transfer was demanded and its 
highest market value between that day and judgment, need not make 
the State of Wisconsin, or its proper officer, a party, though the stock is 
property within AVi.sconsin and under Sanbom's St. Supp. Wis. 190G, § 
1087, subject to an inheritance tax which remains a lien on the property 
untll paid. 

[Ed. Note. — For other cases, see Corporations, Dec. Dig. § 133.*] 

3. CouBTs (§ .328*) — Fedeeal Couhts — Jtjbisdiction — Amount in Conteo- 

VEBSY. 

A blU in a fédéral court to compel a corporation to transfer corporate 
stock of the market value of $33,600 and to pay the différence between 
the market value of the stock on the day transfer was demanded and its 
highest market value between that day and judgment, which allèges that 
the corporation refused to make the transfer of the stock which was prop- 
erty within the state of Wisconsin, and subject to an inheritance tax un- 
der the laws of Wisconsin, of less than $2,000 until a waiver or consent 
to the transfer from the state was produced, was demurrable on the 
ground that the amount in controversy was not over $2,000 ; the corpora- 
tion not claiming the stock not any right to control it. 

[Ed. Note;— For other cases, see Courts, Cent. Dig. §§ 890-896; Dec. 
Dig. § 328.» 

Jurisdiction of Circuit Courts as determlned by the amount In contro- 
versy, see notes to Auer v. Lombard, 19 C. C. A. 75 ; Tennant-Stribling 
Shoe Co. V. Roper, 36 O. C. A. 459 ; O. J. Lewis Mercantile Co. v. Klepner, 
100 C. O. A. 288.] 

In Equity. Suit by one Jessup and others, executors of Horace B. 
Stillman, deceased, against the Chicago & Northwestern Railway 

•For other cases see same topio & § ndmbee in Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



932 188 FSDBIRAL REPOKTBB 

Company for a mandatory injunction. Demurrer to bill sustained, 
with leave to amend. 

Daniel D. Shermah, for complainants. 
Pierpont Davis, for défendant. 

WARD, Circuit Judge. The complainants, citizens of the state of 
New York, as executors of the last will and testament of Horace B. 
Stillman, deceased, who was a résident of the state of New York at 
the time of his death, bring this bill against the Chicago & Northwest- 
ern Railway Company for a mandatory injunction compelling it to 
transfer at its transfer office in the city of New York into their names 
as executors shares of its capital stock standing on the books of the 
Company in the name of their décèdent of the market value of $33,600, 
and also to pay to them the différence between the market value of 
the stock on the day transfer was demanded and its highest market 
value between that day and judgment. 

The bill allèges that the défendant is incorporated under the laws 
of the states of Illinois, Wisconsin, and Michigan, and that it has re- 
fused to make the transfer until the executors shall produce and file 
with it a waiver or consent to the transfer from the state of Wiscon- 
sin. 

The défendant demurs on the grounds that : 

(1) This court has no jurisdiction of the cause of action in equity. 

(2) That the bill is without equity. 

(3) That the complainants hâve a full, adéquate, and complète rem- 
edy at law. 

(4) That the amount in controversy is not over the sum of $2,000 
without interest and costs. 

(5) That the state of Wisconsin or the proper officers thereof are 
necessary parties. 

It is conceded, or I think must be conceded, that the stock in ques- 
tion is property within the state of Wisconsin subject to transfer tax. 
Matter of Palmer, 183 N. Y. 238, 76 N. E. 16. Section 1087 of the 
Inheritance Tax Wisconsin Statutes Supplément, pp. 438 to 450, subd. 
2, provides that the following property of a nonresident within the 
state shall be subject to the tax: 

"(2) When a transfer Is by will or intestate law, o( property within the 
state or within its jurisdiction and the décèdent was a nonresident of the 
state at the time of his death." 

Section 11, subd. 1, provides: 

"(1) If a foreign exécuter, administrator, or trustée shall asslgn or transfer 
any stock or obligations in this state standing in the name of a décèdent or 
In trust for a décèdent, liable to any such tax, the tax shall be paid to the 
treasurer of the proper county or the • • * state Treasurer on the trans- 
fer thereof." 

The défendant rests its right to refuse a transfer on subdivision 2 
of the same section : 

"(2) No safe deposit Company, bank, or other Institution, person, or persons 
holding securities or assets of a nonresident décèdent, shall deliver or trans- 



JESSUF' V. CHICAGO & N. W. ET. CO. 933 

fer the same to the executors, administrators, or légal représentatives of said 
décèdent, or upon their order or request uniess notice of tlie time and place 
of such Intended transfer be served upon the * * * Attorney General at 
least ten days prior to the said transfer; nor shall any such safe deposit 
Company, banls or other institution, person or persons deliver or transfer any 
securities or assets of the estate of a nonresldent décèdent wlthout retaining 
a sufficient portion or amount thereof to pay any tax whlch may thereafter 
be assessed on account of the transfer of such securities or assets uiider the 
provisions of tbis act uniess the * * * Attorney General or publie ad- 
ministrator consents thereto in writing ; and it shall be lawful for the At- 
torney General or public administrator, * * * personally or by repré- 
sentative, to examine said securities or assets at the time of such delivery 
or transfer. Failure to serve such notice or to allow such examination or 
to retain a sufficient portion or amount to pay such tax as herein provided, 
shall render said safe deposit company, trust company, bank, or other insti- 
tution, person or persons, liable to the payment of the tax due upon said 
securities or assets in pursuance of the provisions of this act." 

ri] I think the first three ground-s of demurrer bad. This court 
h?.s HO original jurisdiction to issue a writ of mandamus (Fuller v. 
Avîesworth, 75 Fed. 694, 699, 21 C. C. A. 505), and stockholders hâve 
a right to compel the transfer of stock in proceedings in equity (Cook 
on Corporations, §§ 389-391). 

[2] The fifth ground of demurrer also seems to me bad. The bill 
asks no relief against the state of Wisconsin, and the state's lien upon 
the stock (if any) for any transfer tax due will not be aiïected by the 
issue of a new certificate. Section 1087 of the Wisconsin Statutes, 
subd. 5(1), provides : 

"(5) Every such tax shall be and remain, a lien upon the property trans- 
ferred until paid and the person to whom the property Is transferred and the 
administrators, executors, and trustées of every estate so transferred, shall 
be personally liable for such tax until its payment." 

[3] But the fourth ground of demurrer must be sustained. If the 
tax said to be due the state of Wisconsin can be regarded as the 
amount in controversy, it is not sufificient to give the court jurisdiction 
because it is less than the sum of $2,000. 

Although the bill describes the defendant's refusai to transfer as a 
conversion of the stock valued at $33,600, it does not ask for relief 
on that ground. On the contrary, it asks for the transfer of the stock 
and incidentally for the différence between its market value on the day 
transfer was demanded and its highest market value between that day 
and judgment. The amount of this différence is not, and in the nature 
of things cannot be, stated. 

The fact that the controversy is about a thing worth $33,600 does 
not necessarily show that this sum is the amount in controversy. The 
défendant does not claim the stock nor any right to control it, nor does 
it impugn the complainants' title in any way. The certificate is only 
évidence of the ownership of the stock, and, while the defendant's 
refusai to issue a new one to them may prevent the complainants from 
making a good stock exchange delivery in case they sell the stock, it 
does not affect their title as owners at ail. It would be as impossible 
to fix the value of this right of transfer on the books of the corpora- 
tion as it is to fix the value of the right to register a trade-mark. 



984 188 FEDERAL REPORTES 

South Carolina v. Seymour, 153 U. S. 353, 14 Sup. Ct. 871, 38 ly. Ed. 
742. At ail events, no attempt to do so is made in the bill. 

The demurrer is sustained, with leave to the complainants to amend 
on payment of costs within 20 days after service of notice of entry 
of order hereon. Otherwise the bill to be dismissed. 



McCLEIjLAN et al. v. BLACKMAN (STATE OF SOUTH DAKOTA, 

Intervener.). 

(Circuit Court, D. South Dakota. July 17, 1911.) 

Courts (5 99*)— .Law of The Case— Former Décision. 

Where the rlght of the state to Intervene In proceedings to reeover prop- 
erty belonging to a decedent's estate had beea sustained by the Circuit 
Court of Appeals, and the suflactency of the pétition in intervention had 
been considered on a motion to strlke It from the files, a demurrer thereto 
must be overruled. 

[Ed. Note. — For other cases, see Courts, Cent Dlg. § 340; Dec. Dig. 
§ 99.*] 

Action by John C. McCIellan and others against George T. Black- 
man, spécial administrator of the estate of John C. McClellan, de- 
ceased, in which the state of South Dakota intervened. On complain- 
ants' demurrer to the bill in intervention. Overruled. 

Grigsby & Grigsby, for complainants. 

U. S. G. Cherry, Sp. Counsel, and S, W. Clarke, Atty. Gen,, for 
state of South Dakota, 

ELLIOTT, District Judge. This case was before this court upon 
motion in behalf of the state of South Dakota for leave to intervene 
and such motion was denied and) f urther order made in the premises in 
référence to a stay of proceedings and the opinion of the court filed 
herein December 24, 1908. Whereupon the complainants presented 
to the United States Circuit Court of Appeals a pétition for a writ 
of mandamus, commanding the United States District Judge of South 
Dakota to vacate his order staying the prosecution of this suit, and 
that court duly dismissed said pétition, and the Suprême Court of the 
United States thereafter duly reversed such dismissal. McClellan v. 
Carland, 217 U. S. 268, 30 Sup. Ct. 501, 54 L. Ed. 762. The United 
States Circuit Court of Appeals thereupon issued an alternative writ 
of mandamus to the District Judge of the district of South Dakota and 
in answer to sùch alternative writ, the Honorable John E. Carland, 
District Judge, returned to the said Court of Appeals a transcript of 
ail the files and records before him when the orders staying the suit 
were made, and the question then was, should the District Judge 
vacate said orders staying the suit and proceed to hear and décide the 
issues, presented by such bill in intervention. The United States Cir- 
cuit Court of Appeals, Eighth Circuit, after an examination of such 
record, determined that the District Judge "should vacate said orders 
staying this suit and should proceed to hear and décide the issues it 

*For other cases see same toplc & S numbeb in Dec. & Am. Dlgs. 1907 to date, & Hep'r Indexes 



M'CLELLAN V. BLACKMAN 935 

présents." McClellan v. Carland, 187 Fed. 915. Opinion filed April 
27, 1911. Threnpon the Honorable John E. Carland, Judge of tîie 
District Court for the district of South Dakota, upon ail the proceed- 
ings theretofore had in said cause and "on considération of the judg- 
ment of the Circuit Court of Appeals," ordered that the motion of the 
said State of South Dakota for leave to intervene in this action, be, and 
the same was, thereby granted, and an order was also entered vacating 
the order staying the proceedings in this action. Whereupon on the 
19th day of December, A. D. 1910, the said state of South Dakota duly 
filed in this cause a bill in intervention as referred to in the foregoing 
orders ; which bill in intervention was substantially the same and pray- 
ed for substantially the same relief as the former bill in intervention 
theretofore denied, as above set forth, on the 4th day of January, 1909. 
That thereafter, on, to wit, the 16th day of February, 1911, the Hon- 
orable Charles A. Willard, then District Judge for the district of 
South Dakota, upon a showing made by the complainants, required 
said intervener to shov^r cause before the court at Sioux Falls, S. D., 
on the Ist day of March, A. D. 1911, why the orders of this court 
theretofore made, filed and entered in this cause, reciting therein the 
orders above set forth, should not be vacated, set aside, and held for 
naught, and why the said bill in intervention, filed herein on December 
19, 1910, by the said state of South Dakota, should not be ordered 
stricken from the files and records in this cause for the reasons stated 
in the affidavits presented to the court andi filed with such order. 
That said order to show cause was duly brought on for hearing be- 
fore the court, Hon. Charles A. Willard, judge of said court, at the 
city of Sioux Falls, S. D., on March 16, A. D. 1911, and thereupon, 
on that date, an order was duly entered in the minutes of the court 
in ail things denying the motion of the complainants to vacate, set 
aside, and hold for naught the said bill in intervention and dtenying 
the motion to strike said bill in intervention from the files and records 
of this cause. Whereupon, within the time granted by said order, the 
complainants duly filed and served a demurrer to said bill in interven- 
tion for the several reasons set forth therein; which demurrer is in 
form sufficient to raise the question of the sufficiency of said bill in 
form and substance as well as the jurisdiction of this court. This 
cause was thereupon duly noticed for trial and brought on for hearing 
upon said demurrer on the 27th day of June, A. D. 1911. 

This action is one in equity brought by the complainants for the 
recovery of certain property alleged to be in the possession of the de- 
fendant, George T. Blackman, as spécial administrator of the estate of 
John C. McClellan, deceased. The bill in intervention on behalf of 
the said state of South Dakota, in the form of a sworn pétition 
above referred to, sets forth that the pronerty in question is the prop- 
erty of the state by reason of the fact that John C. McClellan died 
intestate, without heirs, and that this property, beinç- the residue of his 
estate, escheated to the state. An examination of the record before 
the United States Court of Appeals, Eighth Circuit, discloses the fact 
that the bill in intervention, then under considération by that court, 
is in ail respects substantially the same as the bill that was thereafter 



936 188 FEDERAL EBPOETBB 

filed herein and to which this demurrer is interposed. Upon that rec- 
ord said court determined that the District Judge should net only va- 
cate his order staying said suit and proceed to hear the issues pre- 
sented therein, but also determined : 

"It Is possible that the state will again apply to that court for leave to 
Intervene, and, if it does, its application should, in our opinion, be granted." 
McClellan v. Carland, 18T Fed. 915. Opinion flled Aprll 27, 1911. 

That this décision of the United States Circuit Court of Appeals, 
Eighth Circuit, which, as shown by the record in this cause, was 
made and rendered at a regular term of said court at St. Louis, and 
affidavits as to the substance o£ the oral décision then rendered were 
furnished the then judge of the district court of South Dakota, and 
that he was influenced thereby, and that such décision, in his judg- 
ment, made it his duty to grant the motion of the state of South 
Dakota for leave to intervene herein — is evidenced by the language 
of the order thereafter entered by the Honorable John E. Carland, 
judge of the United States District Court for the district of South 
Dakota, dated December 9, 1910, and filed herein, in which he spe- 
cifically refers to the judgment of the Circuit Court of Appeals, from 
which the above quotation, relative to the leave of the state to inter- 
vene, is taken. 

After granting leave to file said bill in intervention, such proceed- 
ings were had that a motion was made by the complainants to vacate, 
set aside, and hold for naught said bill in intervention, filed pursuant 
to said order of this court on the 19th day of December, 1910, and 
a motion to strike from the files and records of this cause said bill in 
intervention, and the same was brought on for hearing upon an order 
to show cause, before the Honorable CharJes A. Willard, then acting 
United States District Judge for the district of South Dakota, and 
after a full hearing upon said motion, an order was made and en- 
tered in the minutes of the court in ail things denying said motion. 
This order overruling the motion of the complainants to strike out 
this pétition in intervention was équivalent to granting leave to file 
the bill in intervention. Ringen S. Co. v. Bowers, 109 lowa, 175, 80 
N. W. 318. In view of this record showing an order permitting the 
state of South Dakota to file its bill in intervention and the subséquent 
order of this court overruling the motion of the complainants to strike 
out said bill in intervention, it becomes important in the détermination 
of the issues raised by this demurrer to note what issues were pre- 
sented and were proper for the considération of the court upon the 
making of the above-named orders. 

In our judgment every issue presented by this demurrer was pre- 
sentedl to the court, and was before it for détermination at the time 
each of the above-named orders were made. It is our judgment that 
when it was determined by the court to permit the filing of the péti- 
tion in intervention, the suniciency of the allégations of the bill in in- 
tervention to give this court jurisdiction thereof was passed upon by 
the court. Upon making and entering the order denying complain- 
ants' motion to strike this bill in intervention from the files, the suffi- 



BOWLES V. H. J. HEINZ OO. 937 

ciency of said bill, both as to stating a cause for intervention and 
showing the jurisdiction of this court, was again passed upon. 

It therefore appearing from the record that the right to iiitervene 
and this pétition in intervention were favorably consideredi by the 
United States Circuit Court of Appeals, Eighth Circuit; that such 
opinion was interpreted by this court and an order granting the filing 
of the bill in intervention was made; that the motion to strike said 
bill in intervention was thereafter denied by this court; that ail of 
the objections urged upon this demurrer were duly considered by this 
court in the making of the above and foregoing orders, and that such 
issues were resolved against the complainants herein — this .court 
will now act upon the interprétation that must hâve necessarily been 
placed upon said pétition in intervention in both instances and over- 
rule the demurrer. 

The order is that the demurrer of the complainants to the bill in 
intervention be overruled, and that this cause proceed as equity and 
justice may require. 



BOWLES V. H. J. HEIXZ 00. et al. 
(Circuit Court, S. D. New York. June 27, 1911.) 

1. Eemoval or Causes (§ 82*) — Joint Défendants— Pétition to Eemand— 

JOINDEB. 

Wliere an action is brought against joint défendants and there is no 
separnte controversy, one of them cannot remove the cause wlthout join- 
der of tlie otlier. 

[Ed. Note. — For other cases, see Removal of Causes, Cent. Dlg. § 163: 
Dec. Dig. § 82.* 

Separable controversy as ground for removal of cause, see notes to 
Eobbins v. Ellenbogen, 18 C. C. A. 86 ; Meelce v. Valleytown Minerai Co., 
35 C. C. A. 155 ; Pollitz v. Wabash R. Ce, 100 C. C. A. 4.] 

2. Removal of Causes (§ 82*)— Joint Défendants— Failube to Sebve One. 

WhereplaintifC, a résident of New Yorlî, sued défendants, résidents of 
Pennsylvania, for malicious prosecution, but only served tlie corporation 
défendant, it was no objection to tlie corporatîon's ri.sht to remove, tliat 
tlie individual défendant not served did not join In the pétition. 

[Ed. Note.— For other cases, see Removal of Causes, Cent. Dlg. S 163: 
Dec. Dlg. § 82.»] 

At Law. Action by Dwight W. Bowles against H. J. Heinz Com- 
pany anJ another. The case having been remanded to the circuit 
court, plaintiff moves to remand. Denied. 

House, Gro.ssman & Vorhaus, for plaintiiï. 

Janes, Schell & Elkus, for défendants. 

LACOMBE, Circuit Judge. Plaintiff is a résident of New York, 
défendants are résidents of Pittsburgh, Pa., and nonresidents hère. 
The action is for malicious prosecution, and the défendant corporation 
only bas been served. Within the statutory time it removed the cause 

•For other cases see same topic & § ndmber in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



038 188 FBDEEAL EBPOETEB 

into this court. Plaintiff moves to remand, contending that the re- 
moval was improper because both défendants did not unité in it. 

[1] There is no separate controversy, and there is abundant au^ 
thority for the gênerai proposition that in such a case one of several 
défendants cannot remove th'e cause. I concur, however, with Judge 
Hanford (Tremper v. Schwabacher [C. C] 84 Fed. 413) in the con- 
clusion that such rule does not apply where one only of two défend- 
ants has been served. 

[2] Adhérence to the rule in such cases would put it in the power 
of plaintifï to defeat the right of removal which the statute gives to 
nonresidents. He could neglect to serve one of them until the time 
for removal by the one served had elapsed. Then he might serve 
the other and resist removal by him on the ground that the one first 
served did not join in application to remove, which, of course, he could 
not do since his right to make such application was barred by lapse of 
time. 

The motion to remand is denied. 



HIGGINS V. EATON. 
(Circuit Court, N. D. New York. August 3, 1911.) 

1. WiLLs (§ 184*) — Conditions — Revocation. 

A testator imposing a condition on a glft may by codlcil expressly 
or implledly remove the condition and leave tlie glft. 

[Ed. Note.— For otlier cases, see Wills, Cent Dlg. §§ 462^67; Dec. 
Dig. § 184.*] 

2. Wills (§ 184») — Jjegacies-t^Revocaiion — Substitution. 

A legacy may be revoked by substltuting anotlier gift In Its place, 
èlther by express words or by plain implication. 

[Ed. Note.— For other cases, see WUls, Cent. Dig. §§ 462-467; Dec. 
Dig. § 184.*I 

3. WiLXS (§ 476*) WiLL AND CODICIL — CONSTRUCTION. 

A will and eodidl must be construed togetlier as parts of one instru- 
ment, and the dispositions of the will must not be disturbed further 
than is necessary to give eCEect to the codlcil. 

[Ed. Note. — For other cases, see WUls, Cent. Dig. § 997; Dec. Dig. 
8 476.*] 

4. Wills (§ 184*) — Revocation oi\ Will by Codicil — Constbuction. 

A testatrix gave to her slster A. for life $100 a month, "provided and 
on condition that" she made a home for a mute brother, and provided 
that, if A. died before the brother, the executor should pay a slster B. 
$50 a month for carlng for the brother for life. A codicil stated that 
it was testatrix's wlsh that her slster O. and her husband should care 
for her brother, and that they should reçoive $75' per month compensa- 
tion, and declared that, in the event of hls death before that of A. or 
C., they should share wlth the other heirs in the final distribution of 
the estate. Held, that the will and codlcil when read together gave to 
A. $100 per month, though C. and h •; husband cared for the brother; 
A. not having refused to care for the brother. 

[Ed. Note.— For other cases, see Wills, Cent. Dig. §§ 462-467; Dec. 
Dig. § 184.»J 

•For other cases see same topic & § nvmbeb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexef 



HIQGIN8 V. EATON 939 

5. JUDGMENT (§ 828*) JUDGMENT OF STATE COXJRT EFFECT IN FEDEBAL COUET 

—Collatéral Attack — Gbounds. 

A fédéral court will net correct errors o( a stâte probate court admlt- 
tlng to probate or rejecting a wlll of one dying domidled withln the 
territorial limits of the probate court, and one complaining of the decree 
of the probate court may only show that it acted without jurisdiction. 

[Ed. Kote.— For other cases, see Judgment, Cent. Dig. §§ 1504-1509; 
Dec. DIg. § 828.*] 

6. WiLLS (§ 2*) — Distribution of Personal Peopertt — What Law Govebns. 

The provisions of a will of Personal property may be valid in the 
State of testator's domicile while coutrary to the laws of the state whero 
the personalty is situated, and in that case the courts of the latter state 
will transf er the proiierty to the state of testator's domicile for distribution 
In accordance with the will, and the will as established by the law of 
testator's domicile controls the distribution of the estate. 

[Ed. Note. — For other cases, see Wills, Dec. Dig. § 2.*] 

7. Descent and Distribution (§ 5*) — What Law Govebns. 

Where a résident and citizen of one state dies intestate in another 
state leaving Personal property therein, the courts of the latter state 
may issue letters and administer the estate, but the distribution must 
be made according to the laws of the state of the domicile. 

[Ed. Note. — For other cases, see Descent and Distribution, Cent Dig. 
§§ 19-22 ; Dec. Dig. § 5.*] 

8. WiLLS (§ 22*) — Testamentabt Oapacitt— What Law Governs. 

Where a testator domiciled in one state dies in another state while 
temporarily therein, and most of his Personal property is In the latter 
state, the courts of testator's domicile alone bave jurisdiction to déter- 
mine testamentary capacity, and their judgnients are conclusive on the 
courts of the other state. 

[Ed. Note. — For other cases, see Wills, Cent. Dig. § 50; Dec. Dig. § 

22.r] 

9. Appeal and Bbeok (§ 1097*) — Subséquent Appeals— Law of the Case. 

The décision of the Circuit Court of Appeals rendered on appeal from 
a judgment sustalning a demurrer to the bill in a suit by a legatee 
against the executor to establish and enforce rights under the will Is 
the law of the case on a subséquent trial. 

[Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 4358- 
4368 ; Dec. Dig. § 1097.*] 

10. Wills (§ 222*) — Contest — Nature ofi Proceedings. 

The contest of a will on the ground of testamentary Incapaelty Is 
not an ordinary suit or action or proceeding betvi'een the parties, even 
where the contestants are interested and appear personally and raise 
the issue. 

[Ed. Note. — For other cases, see Wills, dent. Dig. §§ 542-544; Dec. 
Dig. § 222.*] 

11. Executobs and Administrators (§ 2*) — What Law Govebns. 

The controlllng place of administration of a wlll of personal property 
and distribution under it is in the state of testator's domicile. 

[Ed. Note. — For otlier cases, see Bxecutors and Administrators, Cent. 
Dig. §§ 2, 562 ; Dec. Dig. § 2.*] 

12. Wills (§ 22*) — Testamentary Capacity^What Law Govebns. 

A testa trix died domiciled in Michigan leaving personal property in the 
hands of an agent in New York, who had in his hands the wlll and codicil. 
He applied to a surrogate of New Yorlî: for the probate of the will and 
codicil, and three of the persons interested in the estate appeared and 
contested the codicil on the ground of testamentary Incapacity. The wiU 
was executed in New York, while the codicil was executed In Mlchigan 
according to its laws. The surrogate admitted both will and codicil to 

•For other cases see same toplc & S numbeb In Dec. & Am. Digs. 1907 to date, & Kep'r IndezM 



940 188 FEDERAL EBPOETEE 

probate. Subsequently the probate court lu Michigan admltted the wlll 
to probate, but rejected the codlcil for testamentary Incapacity. Heldi 
that, In vlew of the law of New York that testamentary capacity to 
make a wlll Is govemed by testator's domicile, the décision of the 
surrogate was not binding, but the estate must be administered accord- 
Ing to the wlll admltted to probate In Michigan without référence to 
the rejected codicll. 
[Ed. Note.— For other cases, see Wllls, Dec. Dlg. § 22>] 

13. WiLLS (§ 70*) — WiLL OF Eeal Estate — Construction. 

A wlll of real estate must be executed In accordance with the Inw of 
the State where the real estate Is situated, and must be valid under 
the laws of such state, and it is not enough that it is valld In the state of 
testator's domicile. 

[Ed. Note.— For other cases, see Wllls, Cent. Dlg. 184-186 ; Dec. Dig. 
S 70.*] 

14. JUDGMENT (§ 822*) ^FOEEIQN JUDGMENTS CONCLUSIVENESS. 

The full falth and crédit clauses of the acts of Congress and of the 
fédéral Constitution (article 4, § 1) do not requlre that any more force 
shall be glven to the Judgment of a state court than the law or custom 
of the state where pronounced gives It or demands. 

[Ed. Note.— For other cases, see Judgment, Cent Dlg. §§ 1496-1500; 
Dec. Dig. § 822.* 

Glvlng full falth and crédit, jurisdlction of fédéral courts, see note 
to Bailey v. Mosher, 11 0. C. A. 318.] 

15. WiLLS (§ 434*) — PEESONAi IhîOPEETÏ— ADMISSION TO PBOBATE— JUKISDIC- 
TION. 

The probate or rejection of a will of personal property by the courts 
of a state other than that of the domicile of the testator bas no effect 
on distribution as against a decree of the court of testator's domicile, 
where the distribution must be made according to the law of the domicile. 

[Ed. Note.— For other cases, see Wllls, Cent. Dig. §§ 937-945; Dec. 
Dig. § 434.*] 

16. WiLLS (§ 211*) — Pbobatb — Production of Will — Jueisdiction. 

Under the statutes of Michigan requiring that a wiil sought to be 
probated shall be produced or its loss or destruction proved, the produc- 
tion of a will sought to be probated is not jurisdictibnal. 

[Ed. Note.— For other cases, see Wllls, Cent. Dig. § 518; Dec. Dig. 
i 211.*] 

17. WiLLs (§ 211*) — Peobate — Production of Will — Jueisdiction. 

Where, in proceedings in Michigan to probate a will, under the stat- 
ute requiring the production of a will or proof of its loss or destruction, 
the probate court provided for the taking of proofs by dépositions, 
and proofs were taken and the will was produced before the person 
empowered to take dépositions, the wlll was sutficiently produced lu 
court to authorize the court to admit it to probate. 

[Ed. Note.— For other cases, see Wllls, Cent. Dlg. § 518; Dec. Dig. § 
211.] 

18. WiLLS (§ 243*) — Probate — Foeeign Wiixs. 

Comp. Laws Mich. §| 9282, 9283, providing that a will admltted to pro- 
bate in the place of testator's domicile may be admltted to probate and re- 
corded in the state, and the will so admltted shall hâve the same effect 
as if originally proved in the state, do not provide for the récognition 
or record of the will of a person domiclled in Michigan and proved 
outside the state, but recognizes the rights of the courts of the domicile 
of testator to conclusively détermine the validity of the will. 

[Ed. Note.— For other cases, see Wllls, Cent. Dig. §§ 573-576; Dec. 
Dig. § 243.*] 

•For other cases see same topic & § numbbb In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



HIGGINS V. EATON 941 

In Equity. Suit by Susan C. Higgins against Hervey E. Eaton, as 
executor of the estate of Elizabeth S. Eaton. Decree for complainant. 
See, also, 183 Fed. 388, 105 C. C. A. 608. 

This is an action tried before the court and brought by the plain- 
tiff, Susan C. Higgins, to recover or hâve it determined that she is 
entitled to recover and receive from the estate of Elizabeth S. 
Eaton, deceased, the sum of $100 per month for and during the 
term of her natural Hfe, provided, etc., as a legacy or bequest given 
her by the last will and testament of said Elizabeth S. Eaton, and 
to which she claims she is entitled. The défendant dénies that she 
is entitled to such legacy or to any part of same. The essential facts 
will be stated in the opinion. 

A. F. & F. M. Freeman (B. M. Thompson, of counsel), for com- 
plainant. 

Carlos J. Coleman and Edwin H. Risley, for défendant. 

RAY, District Judge (after stating the facts as above). Eliza- 
beth S. Eaton, the testatrix, died at Ann Arbor, V'ashtenaw county, 
State of Michigan, of which state she was a resu.ont and a citizen 
both at the time of the making of her last will and testament and 
alleged codicil thereto, and at the time of her death on the 17th 
day of May, 1906. She left her surviving two brothers, Edward 
Storms and George Albert Storms, and four sisters, Susan C. Hig- 
gins, the complainant, Geneviève S. Jacobs, Eeah S. Kersey, and 
Pamelia S. Dickinson, and also a nièce Lizzie Lusher, the only child 
of a predeceased sister. Said testatrix left a small amount of Per- 
sonal property at the place of her said résidence and domicile, Ann 
Arbor, Mich., but something Hke $50,000 in personal property in 
the liands of Hervey E. Eaton, her friend, agent, and business man 
who resided at Eaton, Madison county, N. Y. He also had the pos- 
session and custody of her papers, or some of them, including her 
last will and testament and an alleged codicil thereto. On the 29th 
day of May, 1906, said Hervey E. Eaton executed a pétition ac- 
cording to the laws of the state of New York for the proof of the 
last will and testament of said Elizabeth S. Eaton and of the two 
codicils thereto, the will being dated October 31, 1901, and the codi- 
cils March 19, and March 31, 1906, respectively. This pétition alleged 
that the said testatrix "was at and immediately previous to her death 
a résident of the county of Washtenaw and state of Michigan, and 
that said last will and testament relates to personal property only." 
This pétition was filed in the Surrogate's Court of the county of 
Madison, N. Y., on the 28th day of May, 1906, and a citation in due 
form was issued for service on ail the heirs at law and next of kin 
to said deceased, returnable July 16, 1906. The will itself, dated 
October 31, 1901, was executed at Eaton, Madison county, N. Y., and 
witnessed by said Hervey E. Eaton and Olivia C. Eaton, his wife. 
The codicil of March 31, 1906, in question hère, was executed at Ann 
Arbor, Mich., according to the laws of that state and was witnessed 
by Thomas W. Young and Sarah L. Ptolemy who also witnessed a 



942 188 FEDERAL REPORTEE 

"mémorandum" in the nature of a codicil dlated March 12, 1906. By 
the will proper she gave to the Young Men's Christian Association 
$300, to said Hervey E. Eaton three family portraits in oil, to certain 
nièces, five in number, and to James Harry Lusher, $500 each, or 
in ail $3,000. She also authorized her executor to place a mémorial 
window in the Central Baptist Church at Syracuse, N. Y., at a cost 
of not to exceed $300. The will then contained thèse provisions : 

"Sixth. I give and bequeath to my slster Susan 0. Storms, during the 
term of her natural life, from the income of my estate, one hundred dollars 
per month, provlded and on condition that she cares for and makes a home 
for my mute brother George Albert Storms during his life time. 

"Seventh. Should my sister Susan C. Storms die before my brother George 
Albert Storms, then and in that case I hereby direct and empower my said 
executor to pay to my sist'er Leah Catherine Kersey, from the income of my 
estate the sum of fifty dollars per month for caring for and making a home 
for my said brother George Albert Storms during his life time, and in case 
said George Albert Storms should survive both Susan C. Storms and Leah 
Catherine Kersey then my said executor Is hereby authorized and directed 
to make other suitable and sufïicient arrangements for such care and home 
and to pay for the same." 

Susan C. Storms thereafter married, and her name became Hig- 
gins. The will proper then after the death of Susan C. Storms and 
George Albert Storms gave to Rachel P. Dickinson $1,000, the legacy 
to lapse in case she did not survive Susan C. and George A. Also 
after the death of Susan C. and George A. she gave $1,300 to the 
treasurer of the Baptist Church of Ann Arbor for the Baptist Home 
Missionary Society and the Baptist Foreign Missionary Society. Also 
after the death of Susan C. and George A. and the payment of such 
legacies, she directed her residuary estate to be divided as f oUows : 
"Equally to my sisters Leah Catherine Kersey and Geneviève Jacobs 
and my brother Edwin J. Storms subject to" the conditions that, 
should Leah Kersey die before final distribution, her share should 
be paid to her daughter Margaret E. and from the share of Edwin 
J. $300 was to be deducted and from that of Geneviève $1,000. 

The codicil of March 31, 1906, provided as follows: 

"Whereas, my brother George A. Storms Is unable to care for hlmself 
through physical defects and infirmities, it is my wish that my sister Geue- 
vieve S. Jacobs and her husband Nathanlel P. Jacobs do so care for him 
and make his home with them during the term of his natural life and that 
they shall receive the sum of seventy-five dollars (Ç75) per month compen- 
sation during that time. In the event of his death before that of Geneviève 
S. Jacobs OF Susan S. Higgins I direct that they shall share alike with the 
other heirs, In the gênerai and final distribution of my estate. 

"Also that any and ail property not mention ed in my will is to go to 
Geneviève S. Jacobs subject to the mémorandum annexed to this document." 

The "mémorandum" is not material to this controversy. 

One claim of the complainant is that the codicil, if valid, does 
not revoke the sixth clause of the will, and that therefore she is en- 
titled to the $100 per month in any event. The other claim is that 
the codicil is invalid and has not been proved or probated in Michi- 
gan, but refused probate there, and that the judicial action of the 
probate court in Michigan, the place of the actual résidence and dom- 
icile of the testatrix, détermines what her will was and is and controls 



HIGGINS V. EATON 943 

in the distribution of the estate. I will dispose o£ the question of 
revocation first. The gift of $100 per month from the income of the 
estate to Susan C. Storms, now Higgins, is on the express proviso 
and condition that she cares for and makes a home for her mute 
brother George Albert Storms during his lifetime. Prima facie this 
is intendedi to be by way of compensation for such care, etc., of said 
brother. It will be noticed that, while there are gifts to nièces, there 
is no gift to either brother or to either sister until after the death 
of Susan C. and George A. by the will proper when after satisfying 
certain legacies to nièces the residuary estate is to be divided between 
the brother Edwin J. and the sisters Leah and Geneviève. By the 
seventh clause, if Susan C. dies before the death of George Albert, 
Leah Catherine was to care for said George A. and receive $50 per 
month for so doing. Thèse provisions together indicate plainly that 
the $100 per month during life to Susan C. was not as compensation 
to her only for caring for George A., but as a gift in addition. 

[1] It was compétent and within the province of the testatrix to 
revoke or remove the condition on which Susan C. was to receive 
the $100 per month for life and leave the gift. This could bave been 
donc by express words in which case no doubt would exist, and the 
gift would stand notwithstanding the provisions of the codicil. But 
there are no express words to this efïect. .Clearly the codicil removes 
the condition to an extent as the codicil makes express provision for 
the care of George A. otherwise. 

[2] A gift or legacy given in a will may be revoked by substitu- 
tion; that is, by substituting another gift in place of it. When this 
is dlone by express words, there is no doubt, and the original provi- 
sion making the gift is revoked by the substitution. It may be done 
by plain implication when that resuit and no other is shown by the 
will and codicil read together to be the plain and unquestionable in- 
tent or purpose of the testatrix. By the codicil, after providing that 
Geneviève S. Jacobs and her husband, Nathaniel P. Jacobs, are to 
care for said George A. during his natural life and receive $75 per 
month compensation for so doing during the said titne, the testatrix 
continues : 

"In the event of his (George A. Storms) death before that of Geneviève 
S. Jacobs or 'Susan S. Higgins, I direct that they shall share alike with the 
other heirs in the gênerai and final distribution of my estate." 

The testatrix evidently referred to the eleventh clause of the will 
which gives the residuary estate to Leah, Geneviève, and Edwin J. 
The codicil makes no provision whatever for the care of George 
A. Storms and the furnishing him a home in case he survives Gen- 
eviève S. Jacobs and Nathaniel P. Jacobs. The seventh clause pro- 
vided for the contingency of the death of Susan C. before that of 
George A. I think we would do violence to the intent of the testa- 
trix to conclude that she intended to release Susan C. Storms, now 
Higgins, from the obligation to care for George A. Storms, and give 
him a home in case he survived Geneviève S. Jacobs and Nathaniel 
P. Jacobs, or in case they should refuse to care for him and give him 
a home for the $75 per month. 



944 18S FEDERAL EEPORTEB 

In the seventh clause of the will it is provided that, in case George 
A. should survive .both Susan S. andi Leah C, the exécuter should 
make suitable provision for him elsewhere, but we iînd no such pro- 
vision in the codicil. Again, the codicil expressly provides that, in 
case George A. dies before the death of either Geneviève S. or Susan 
C., they are to share in the gênerai and final distribution, indicating 
that then, in that event, both will be relieved from further care and 
obligation in the matter of caring for George A., and not before. 
The main objection to this construction is that it gives Susan C. 
$100 per month for life and also a share in the residuary estate. 
The provision of the codicil is inconsistent with the provisions of 
the eleventh clause of the vi^ill in a way. By the said eleventh clause 
the final and gênerai distribution of the estate is to be madle after 
the death of both Susan C. and George A., and by the codicil in case 
Susan C. survives George A. she, not her descendants, etc., are to 
share in the final and gênerai distribution. She could not share as 
she would be dead. I am impressed with the idea that the testatrix 
intended by the codicil to impose on Mrs. and Mr. Jacobs the care 
of George A. during his Hfe in case they or either of them survived 
him, and to remove the biyden from Susan C. while they so cared 
for him, but did not intend to revoke the gift of $100 per month to 
Susan C. as the codicil does not so stàte in terms or by necessary 
implication, and it seems plain, too, that the testatrix did not intend 
to release Susan C. from such obligation absolutely — that is, abso- 
lutely remove the condition — but intended that in case Mr. and Mrs. 
Jacobs refused or failed to care for George A., or died before his 
death, to leave the condition of the gift of $100 per month to Susan 
C. in full force. On this question, assuming the validity of the codicil, 
it is the duty of the court to read the two instruments together giving 
préférence to the later expressions of the testatrix and force thereto, 
and rejecting former provisions found in the will when plainly in- 
consistent with the later provisions. After the making of the will, 
but prior to the exécution of the codicil, Susan C. Storms married 
a widower with three children. There is no évidence that this in 
any way estranged the testatrix or afFected her feelings towards 
Susan C. It did as matter of course change the situation in life of 
Susan C. and the testatrix may hâve thought it would be unpleasant 
for Susan C. to hâve George A. in the family, or she may hâve 
thought it would be unpleasant to George A. to be in a family with 
children. We may speculate as to her thoughts on this subject, but 
it is mère spéculation. The surmises and spéculations of a court do 
not, or should not, revoke wills or definite provisions contained therein. 
If the testatrix intended to revoke clause 6 of her will, why did she 
not do so in terms ? 

In Schouler on Wills, §§ 409 (page 418), 437 (page 447), 438 (page 
448), the law on this subject is thus stated: 

"Sec. 409. Inclination against Revacation ; Use of a Codicil. The courts 
incline to so construe doubtful cases as to préserve, wholly or in part, the 
contents of the prior will rather than prorionnce for a total revocation by 
inference. Where, for instance, the later will only disposes of a l'Drtion of 



HIGGIN8 V. EATON 945 

the estate, they avold the 111 conséquence of partial Intestacy ; and where 
the later paper Is styled a codicil, they take this to mean that the intent 
was to amend and not repeal ; and in either case the former will is treated. 
as no more than pro tanto revoked. In other cases, perhaps, the context 
may justify a similar construction. But if the later will does not profess 
to be a codicil at ail, and dlsiwses moreover of the whole estate inconslst- 
ently with the earlier, a court would violate its duty not to hold that the 
earlier will was wholly revoked, unless the context supplied good reason for 
supposing that the testator otherwise intended. 

"ïhe intention to revoke may be coUected from informai expressions, though 
not from ambiguous ones. And in case of doubt, provisions by a later will 
appear to be presuœed additional and cumulative, rather than intended as a 
substitute and by way of révocation. • * * 

"Sec. 437. Codicil Does Not Revoke Will Except so Far as Necessary. 
Many testamentary causes arise where the effect of one or more codicils upon 
a prier will has to be considered ; and it is a fundamental maxlm that no 
codicil shall revoke a prier will more than is absolutely necessary at ail 
events to glve its own provisions effect; unless it contains an express clause 
of full revocation. The décisions which turn upon this principle are very 
numerous and need not be stated at length ; being quite prolix for the most 
part and involving the construction of language as variable as the détails of 
mental Intention. 

"Even though the codicil should profess to make a différent disposition of 
the whole estate, the principle above stated is the natural and controlllng one. 
And words and expressions contained In the codicil may by construction re- 
strict its opération. Thus, it is held that a declared purpose therein to alter 
the will in one or more stated respects, implies that it is not altered in other 
respects. And tliat a spécifie gift in a will is not revoked by a gênerai gift 
in the codicil. And that a gênerai expression in the codicil must be conflned 
to its meaning in the will. And that a clear gift In the will is not revoked 
by doubtful expressions in the codicil. But ail artificial rules like thèse 
should bend to the real Intention of the testator, as gathered from the whole 
face of the paper, aided in douhtful cases by proof aliunde. • * • 

"438. Later Provisions, Whether by Way of Substitution or Addition. 
Whether provisions under a later will or codicil are intended for substitution, 
or as something additional and cumulative to the gift by the earlier one, must 
be determined by compa/ing the instruments to dlscover their true Intent. 
But in case of doubt an additional gift is presumed rather than revocation ; 
unless, indeed, resort may be had to paroi évidence outside the Instruments 
for assisting the conclusion. 

"In gênerai, the différent parts of a will, or of a will and codicil, should be 
reconeiled if possible and receive a falr and consistent interprétation." 

It is said that the gift of $100 per month to Susan C. Higgins dur- 
ing her life is made only provided and on the condition that she 
furnishes a home and cares for said George A. Storms, and that as 
she cannot comply with the condition, that having been removed and 
other provision made for his home and care, the gift fails necessarily. 
If the gift of $100 per month had been made as compensation for 
such care and home furnished George A., and so expressed, there 
would be great and irrésistible force in the suggestion. But it is 
quite plain, as before stated, that the gift of $100 per month was not 
so intended. It is not so expressed. The seventh clause is differently 
worded, viz. : 

"Should my sister Susan O. . Storms die before my brother George Albert 
Storms, then and in that case I hereby direct and empower my' said executor 
to pay to my sister Leah Catherine Kersey from the income of my estate the 
sum of fifty dollars per month for caring for and making a home for my 
said brother George Albert Storms during his life time, and in case," etc. 
188 F.— 60 



946 188 FEDERAL EBPOETEB 

Her compensation for the care and home is to be $50 per month, 
and we are hardly justified in assuming that it was regarded as worth 
$100 per month for Susan C. to furnish care and a home to George 
A. and only $50 per month for Leah Catherine to do the same thing. 
Then in the codicil the sum of $75 per month to Mrs. and Mr. Jacobs 
is fixed by the testatrix as "compensation" for caring for and furnish- 
ing a home to said George A. Storms. The conclusion is irrésistible 
that the $100 per month to Susan C. was not compensation aîone. 
As stated, the condition could be removed, released, and the gift 
left. The codicil does remove the condition in case Mrs. and Mr. 
Jacobs see fit to accept the care and responsibility of caring for and 
furnishing a home to said George A. Storms at the "compensation" 
named. I think the fair inference and conclusion much more reason- 
able and probable that it was the intent and purpose of the testatrix 
to leave the gift to Susan C. Storms unaffected, but release or remove 
the condition in case Mrs. and Mr. Jacobs accepted the trust and com- 
pensation of caring for George A. and so long as they did so, but no 
longer. I do not think the testatric intended to take the care of 
George A. Storms and the responsibility and duty of furnishmg îiim a 
home f rom Susan C. Storms (Higgins) and cast it on or intrust it to 
a stranger or strangers in either of three events, ail possible, viz., 
the refusai of Mrs. and Mr. Jacobs to accept and perform the trust 
and duty, or their death before that of George A. Storms, or their. 
inability or conséquent neglect by reason of infirmity or otherwise 
to discharge the trust. I do not think it was the purpose of the testa- 
trix to discharge Susan C. from the trust or obligation to care for and 
furnish a home to George A. Storms in the event that for any reason 
Mrs. and Mr. Jacobs failed so to do. The codicil, if valid, simply 
qualifies the condition or proviso of the sixth clause of the will that 
Susan C. is to care for and furnish a home to George A. Storms. 
"The intention to revoke may be coUected from informai expressions, 
though not from anibiguous ones. And in case of doubt provisions by 
a later will appear to be presumed additional and cumulative, rather 
than intended as a substitute and by way of revocation." Schouler 
on WiUs, § 409 (page 419) ; 1 Williams' Executors, 167 ; Gordon v. 
Hofïman, 7 Sim. 29; Pilcher v. Hole, 7 Sim. 208; 1 Jarwin on Wills, 
182. 

[3] "A will and codicil must be taken and construed together as 
parts of one and the same instrument, and the dispositions of the will 
are not to be disturbed f urther than are necessary to give efifect to the 
codicil." Hard et al. v. Ashley, 117 N. Y. 606, 23 N. E. 177; Crozier 
V. Bray, 120 N. Y. 366, 375, 24 N. E. 712; Austin v. Oakes, 117 N. 
Y. 577, 23 N. E. 193; Newcomb v. Webster, 113 N. Y. 191, 196, 21 
N. E. 17; Westcott v. Cady, 5 Johns. Ch. (N.Y.) 334, 9 Am. Dec. 
306; Nelson v. McGifïert, 3 Barb. Ch. (N.Y.) 158, 49 Am. Dec. 
170. This rule has been declared in most of the states, and there is 
no authority to the contrary. 

In Newcdmb v. Webster, supra, at page 196 of 113 N. Y., at page 
78 of 21 N. E., the court said: 



HIGGINS V. EATO» 94T 

"It may be taken as a well-settlert gênerai rule thaf a wlll and codicll are 
to be construed together as parts of one and the same Instrument, and that 
a codicil Is no révocation of a will further than it is so expressed" — eiting 
Westcott T. Cady, supra. 

Also: 

"But if, regarded as one Instrument, It Is found to contain répugnant be- 
quests In separate clauses, one or the otber, or both, must fail, and therefore 
the rule is that of the two the bequest contalned in the later clause shall 
stand. The same principle applles vvith greater force where tbere are two 
distinct instruments relating to the same subject-niatter. In such a case an 
incousistent devise or bequest in the second or last instrument is a complète 
revocation of the former. But, If part is inconsistent and part is consistent, 
the first will Is deemed to be revoked only to the extent of the discordant dis- 
positions, and so far as may be necessary to give effect to the one last made. 
Nelson v. McGifCert, 3 Barb. Ch. [N. Y.] 158 [49 Am. Dec. 170]." 

In Hard v. Ashley, supra, the court held : 

. "A will and codicil must be taken and construed together as parts of one 
and the same instrument, and the dispositions of the will are not to be dis- 
turbed further than are necessary to give effect to the codicil. 

In Austin v. Oakes, supra, the court held : 

"The doctrine that an earlier provision of a will Is revoked by a later one 
or by a codicil répugnant thereto opérâtes only so far as it is necessary to 
give the later provision effect ; and so does not apply where it (the codicil or 
later provision) Is absolutely void." 

And in Crozier v. Bray, supra, the court said (page 375 of 120 
N. Y., page 714 of 24 N. E.): 

"If a will and codicil are plainly inconsistent, the latter must control to 
the extent necessary to give it full effect' as the presumption in such a case 
is much stronger than in the case of a later clause in the same instrument. 
While a clear gift cannot be eut down by a doubtful expression still when a 
prédominent purpose is apparent, but a doubt arises as to the method devised 
to effect that purpose, such a doubt should be so resolved as to aceomplish 
the object of the testator by presuming that be intended a légal, and not an 
illégal, method." 

[4] Applying thèse principles hère, we find no words of revocation 
in the codicil, and nothing in the codicil inconsistent with the will 
itself except that as the gift of $100 per month to Susan C. Storms 
(now Higgins) is provided, and on condition that she "cares for and 
makes a home for my mute brother George Albert Storms during his 
lifetime," and the codicil says, "Whereas my brother George A. 
Storms is unable to care for himself through physical defects and in- 
firmities, it is my wish that my sister Geneviève S. Jacobs and her 
husband Nathaniel P. Jacobs do so care for him and make his home 
with them during the term of his natural life and that they shall re- 
ceive the sum of $75. per month compensation during that time" — we 
may guess or surmise that the testatrix intended to substitute a pro- 
vision for the care, etc., of George A. Storms and by the clause 
foUowing directing that, in the case of his death before that of 
Geneviève or Susan C, they should share in the estate, etc., sub- 
stitute that gift in place of the $100 per month. And the testatrix 
immediately adds, as if conscious that this takes the care of George 



948 188 FEDERAL REPORTER 

A. from Susan C. and that perhaps it does away with the gift of $100 
per month to her: 

"In the event of hls death before that o( Geneviève S. Jacobs or Susan C. 
Higgins, I direct that they shall share alike with the other heirs in the gên- 
erai and final distribution of my estate." 

That is, if he dies before either of them, they share in the distribu- 
tion of the residuary estate which by the eleventh clause of the will 
is to be made after the death of both George A. and Susan C. Was 
this provision intended to accelerate the gênerai and final distribution ? 
The codicil does not so state. But, if the codicil revokes the $100 
per month payment to Susan C. during her Hfe, there would be no 
objection to such distribution, as no longer would there be any object 
in deferring final distribution. So again we are led to inquire was the 
provision by which Susan C. on the death of George A. was to share 
in the gênerai distribution by way of substitution for the legacy or 
provision of $100 per month to Susan C.? We at once enter the field 
of surmise and conjecture. The intent is doubtful and the provisions 
are ambiguous so far as they are claimed to afïect a revocation of the 
gift of $100 per month to Susan C. Hère we hâve a gift based on a 
condition to be performed by the legatee. Later, by the codicil, the 
condition is changed as the duty and obligation imposed thereby is 
transferred to others provided those others see fit to assume it for a 
compensation, but not otherwise. The transference of the duty is 
expressed in the form of a wish, and its performance is not made 
obligatory. If not assumed by the party later named or they die be- 
fore the duty is fully performed, the duty rests on the one first named, 
Susan C. Higgins, as otherwise the care of this brother incapable of 
caring for himself would pass to Etrangers. It is évident, I think, 
that the provisions of the codicil can be fully met and carried into 
effect without disturbing in any way the gift of $100 per month to 
the complainant, Susan C. Higgins. The testatrix had the right to 
let that provision stand in her will and add the provision that Susan 
C. should share in the gênerai and final distribution of the estate. 
This, if effective (the final division being postponed until after her 
death), would give her more than the other sisters, but this the tes- 
tatrix had the power and right to do. I am of the opinion that the 
final clause of the first subdivision of the codicil was intended as 
though it read, "In the event of his death before that of either Gene- 
viève S. Jacobs or Susan C. Higgins, I direct that she shall share alike 
with the other heirs (brother and sisters named in the eleventh clause 
of the will) in the gênerai and final distribution of my estate," al- 
though Geneviève was already named as one to share and the codicil 
is a mère duplication as to her so far as final distribution is concerned. 
If the codicil had not been made and George A. Storms had died be- 
fore the death of the testatrix, the gift of $100 per month to Susan 
C. would hâve stood valid and effective. If the codicil had not been 
made and George A. had survived the testatrix one day, the same re- 
suit would hâve foUowed. And the validity of that gift depended in 
no way on the action or élection of George A. Storms. It was and is 
•entirely immaterial so far as the validity of that bequest is concerned 



HIGGIN8 V. EATON 949 

whether George A. Storms elected to go with Susan C. or with Gene- 
viève S. My conclusion is therefore that the will and codicil together, 
read together, and both conceded to be valid, give to Susan C. Higgins 
$100 per month even if Mrs. and Mr. Jacobs care for George A. 
Storms and thus relieve the complainant f rom that duty ; she not hav- 
ing refused to care for him and provide him a home. This is con- 
trary to my impressions on first reading the will and codicil and be- 
fore giving them a careful analysis and examining the authorities ap- 
plicable. 

Validity of the Codicil. 

On the return of the citation in the Surrogate's Court of Madison 
county, N. Y., Susan C. Higgins, the complainant, Mrs. Kersey, and 
Mrs. Dickinson appeared in person or by attorney, not having been 
personally served in the state of New York, and filed objections to 
the proof and probate of the codicil on the ground of the mental in- 
competenCy of Elizabeth S. Eaton to make same. The issue thus 
framed was tried in said court, and on the 12th day of November. 
1906, the surrogate of that county made his décision finding that the 
testatrix was compétent to make and exécute the codicil, and the will, 
codicil, and mémorandum were admitted to proof and probate as the 
last will and testament of said Elizabeth S. Eaton, and a de crée was 
entered accordingly and letters testamentary duly issued to Hervey E. 
Eaton, the executor therein named, who duly qualified and has acted 
as such in the state of New York ever since. As the testatrix left 
Personal property in Madison county, N- Y., the surrogate and Sur- 
rogate's Court of that county, so far as the state of New York is con- 
cerned, had power and jurisdiction to take proof of such will and cod- 
icil and make a decree admitting it or them to probate and issue let- 
ters testamentary thereon by virtue of the statutes of the state of 
New York. 

But that surrogate and court had no power or jurisdiction to take 
proof of such will and codicil, or of either, for the courts of Michigan, 
or which would bind them in any way or affect the rights of legatees 
or détermine so far as the courts of Michigan are concerned the 
validity of either paper or whether executed by a person possessing 
the necessary mental capacity to make a will. This is not only elc- 
mentary law but the fixed rule established and as held by the courts 
of New York, Michigan, most if not ail the states of the United 
States, and by the Suprême Court of the United States. There is no 
controversy over this proposition. While the pétition for the pro- 
bate of this will was pending in the Surrogate's Court of Madison 
county, N. Y., with such objections on file and before any proof was 
taken, and on the 23d day of July, 1906, Susan C. Higgins, the com- 
plainant and Pamelia S. Dickinson and Leah C. Kersey, filed a péti- 
tion in the probate court of Washtenaw county, Mich., for the proof 
and probate of the last will and testament of said Elizabeth S. Eaton. 
This was the place of her actual résidence and domicile at the time 
of and for years prior to her death. The will itself with the codicil 
was in the hands of Eaton in New York state, and they were not 
taken to or produced in court in Michigan. A citation was issued 



950 188 FEDERAL RBPORtBB 

returnable August 15, 1906, and published as required by the laws of 
Michigan and served by mailing copies on ail necessary parties. 
There is no record of an adjournment, and tHat proceeding was 
pending in the courts of Michigan, not dismissed. July 23, 1906, a 
pétition was filed by Susan C. Higgins.in the probate court of Wash- 
tenaw county for the appointment of a spécial administrator of the 
estate of Elizabeth S. Eaton, and letters were issued August 2, 1906, 
to one Clarkson. August 22, 1906, an inventory was filed in the same 
court by him. October 23, 1908y a pétition was fîled for the revival 
and continuance of the proceedings for the probate of the will of 
said Elizabeth S. Eaton in the probate court of Washtenaw county. 
November 9, 1908, that court made an order for the taking of dépo- 
sitions and dépositions were taken. December 1, 1908, the probate 
court of said Washtenaw county, Mich., made an order or decree 
on such proofs admitting the will proper to probate, but rejecting 
and disallowing the codicil and mémorandum on the ground of 
mental incompetency. That order or decree has not been opened, 
set aside, or reversed and the decree of the Surrogate's Court of 
Madison county, N. Y., was not appealed from. In the meantime 
and on the 18th day of January, 1907, some one who is uncertain 
filed an exemplifîed copy of the will, codicil, mémorandum, and pro- 
ceedings had in the Surrogate's Court of Madison county, N, Y., in 
the olîice of the probate judge, probate court, of Washtenaw county, 
Mich. No order or decree was made or entered by said court or the 
judge thereof admitting the will or codicil to probate at that time 
or in that connection, and no order or decree was ever made ad- 
mitting the codicil to probate in that court. On the 6th or 8th day 
of April, 1907, the said probate .court of Washtenaw county issued 
letters of administration on the estate of said Elizabeth S. Eaton 
to WilHs L,. Watkins, and he gave a bond as such administrator. 
It is well to mention hère that the will in question is signed "Eliza- 
beth S. Eaton, her true and correct name." The codicil is signed 
"Eizabeth Storms." Storms was her maiden name. The mémo- 
randum is signed, "Mrs. J. H. Eaton." 

April 8, 1907, Willis L. Watkins as principal with S. W. Clarkson, 
who was such spécial administrator, and A. F. Freeman, executed a 
bond in the sum of $5,000, which was filed the same day in said 
probate court, which recites : 

"Whereas the above bounden Wlllls L. Watkins has been appointed by the 
probate court of said county Fcounty of Washtenaw] administrator with the 
will annexed o'f the estate of Elizabeth S. Eaton late of said county deceased, 
now," etc. 

I iind no évidence that this complainant had anything to do with 
this, or that the codicil or even the will had been proved or ad- 
mitted to probate, and there is no order of that court to that purport 
or effect. At that time, however, an exemplifîed copy of the will, 
codicil, and mémorandum and the other proceedings had in the 
Madison county, N. Y., Surrogate's Court had been placed on file 
by some one. No copy of any will or codicil was annexed to the 
letters. The pétition of Susan C. Higgins for the proof of the will 
of Elizabeth S. Eaton in which Mrs. Dickinson and Mrs. Kersey 



HIGGINS V. EATON 951 

joined and which was executed July 21, 1906, and filed July 23d, as 
stated, set forth the making of the will of Elizabeth S. Eaton, dated 
October 31, 1901, but repudiated the codicil and mémorandum by the 
following allégation in said pétition contained, viz. : 

"Your petltioner further represents that the said Elizabeth S. Eaton was 
not of Sound and disposlng mind at the time she signed and executed the pa- 
pers attached to said will purporting to be a codicil and mémorandum affect- 
ing the same," and also "and was of sound mlnd and under no restraint or 
undue influence whatever, as I am informed and believe except as to the 
making of said codicil and mémorandum." 

This répudiation of the codicil and mémorandum has never been 
retracted or withdrawn by said Susan C. Higgins. No pétition was 
substituted, and, when the proceedings were finally revived and 
continued, they were based on and proceeded on this pétition and 
resulted in the proof of the will in Washtenaw county, Mich., and 
the rejection of the codicil and mémorandum. The pétition referred 
to a copy of the will as filed with the pétition and to the codicil and 
mémorandum attached. As the will and codicil had been propound- 
ed for probate in Madison county, N. Y., it cannot be doubted that 
copies were filed with the pétition, although not found with the 
files. This pétition with its allégations was on file at ail times, and 
whatever action was taken subsequently by the probate court of 
Washtenaw county, Mich., was with référence to it. I fînd no évi- 
dence in this record that Susan C. Higgins ever assented to the 
codicil or mémorandum as a part of the last will and testament of 
Elizabeth S. Eaton, or as valid instruments. It is not shown that 
she filed the transcripts from the Surrogate's Court of Madison 
county, N. Y., or assented thereto or took any action thereon or 
directed it to be done. No action was taken thereon by the probate 
court of Washtenaw county, and, if the grant of letters with will 
annexed can be construed as an adoption of ail thèse instruments, it 
was not sanctioned by the complainant hère, and was repudiated 
and canceled by that court itself which later admitted the will to 
probate, and rejected the codicil and mémorandum. It must be 
presumed that court had jurisdiction and power to do what it did 
do and to make the decrees it actually made, and, if attacked, it must 
be by a direct proceeding in that court. 

[5] This court cannot assume to correct its action if it has erred, 
inasmuch as the jurisdiction of the probate court of the county 
of Washtenaw, Mich., to prove the will of Mrs. Eaton and décide 
what paper or papers made up or constituted her will must be con- 
ceded and cannot be doubted. Its decrees were subject to such 
review as the statute of that state provides for, but jurisdiction in the 
matter being proved and conceded, the proceeding having been 
founded on a written pétition with appropriate allégations and fol- 
lowed by process and notice and the taking of proofs and the entry 
of a decree, the record imparts absolute verity so far as this court, 
or any other court, except the appellate courts of Michigan, is con- 
cerned. The défendant hère may show that the probate court of 
Washtenaw county acted without jurisdiction, but he cannot in this 
action establish a défense by showing it acted erroneously. We 



952 188 PBDEKAIi BBPORTHB 

corne then dîrectly to the question whether the decree of the Sur- 
rogate's Court of the county of Madison, N. Y., or that of the pro- 
bate court of the county of Washtenaw, Mich., controls hère L- .^e 
termining what the will of EHzabeth S. Eaton is, and what the rights 
of this complainant, Susan C. Higgins, are under it. On this ques- 
tion T am foreclosed, not only by my own décision in this matter 
(Watkins V. Eaton [C. C] 173 Fed. 133, 138-147, afîirmed by the 
Circuit Court of Appeals, Watkins v. Eaton, 183 Fed. 384, 105 C. 
C. A. 604), but by the décision of the Circuit Court of Appeals in 
this very case (Higgins v. Eaton, 183 Fed. 388, 105 C. C. A. 608, 
reversing Judge Hand in 178 Fed. [C. C] 153). 

It is, to my mind, intolérable to suppose that a testatrix may hâve 
two valid wills difïering from each other — one good and contrqlHng 
at the place of her résidence and domicile at the time of and im- 
mediately preceding the date of her death, and the other, inconsistent 
therewith and contrary thereto, valid and controlling in the state 
where her personal property happened to be at the time of her death. 
Such a contention is contrary to reason and ail settled authority. 

[6] It is true that certain provisions of the will of a testator re- 
lating to Personal property may be valid in the state of the domicile, 
but in some other state according to the law of that state invalid, 
or rather such as the courts of such other state will not enforce be- 
cause contrary to some statute of the state, or some rule of public 
policy in regard to which it is tenacious, in which case the courts 
of such state will transfer the property to the state of the testator's 
domicile for distribution in accordance with the will, in most other 
cases the transfer being usually discretionary. Despard v. Churchill, 
53 N. Y. 192. However, the will of the testator as established by the 
law of the testator's résidence or domicile always controls the dis- 
tribution of the estate. No state which has reached the degree of 
modem civilization assumes to dictate what is the will of a tes- 
tator residing and domiciled in another state as against the courts 
of that state having jurisdiction, except so far as to protect creditors 
residing within its own jurisdiction, or to dictate the distribution of 
the Personal property of such testator contrary to the terms of the 
will of such testator as estabHshed by the courts of the state of his 
actual résidence and domicile on the ground that having the posses- 
sion of the property it has the power to administer it and distribute 
it and theref ore it will détermine for itself the mental competency 
of the testator, the validity of the will, and who shall take the prop- 
erty under it. As to a wiil of real estate situate in a state other than 
that of the testator's domicile, the rule is différent, but even then the 
court of the state where the property is situated daes not assume to 
détermine the question of the mental competency of the testator as 
against the courts of the state of his domicile. 

[7] When a résident and citizen of another state dies intestate in 
New York, leaving personal property there, the courts of that state 
hâve power to issue letters and administer same, but not to dis- 
tribute according to the laws of the state of New York. The laws 
of the state of the domicile in such raatters govern and control the 
courts of such state. 



HIGGINS V. EATON 953 

[8] If a testator domiciled in Michigan, having a will executed 
there, dies in New York while temporarily there, and it so happens 
that most of his personal property is in New» York at the time, it 
would seem contrary to a sensé of justice for tlie New York courts 
to proceed to détermine and adjudge that tlie testator was insane 
when the will was executed, and therefore void, and that he died 
intestate, and then proceed to distribute his personal property in 
accordance with the statutes of distribution of the state of New 
York, the courts of Michigan determining in the meantime that the 
testator was sane and compétent to make the will, and that it is 
valid, and its statutes of distribution differing from_ ours. This 
would be determining with a vengeance that "He is right wno has 
the might and he shall rule who can," a rule that prevailed in England 
centuries ago when the rule of physical power, and not "the rule of 
reason," prevailed. 

In Watkins v. Èaton (C. C.) 173 Fed. 133, while the question was 
whether or not this court had power and jurisdiction to compel the 
executor Eaton, appointed by the courts of New York, to transmit and 
deliver the personal assets to Watkins, the administrator with the 
will annexed of the estate of Mrs. Eaton appointed by the probate 
court of Washtenaw county, Mich., this court, foreseeing what might 
arise, took occasion to point out (1) that in regard to the disposition 
of personal property wherever situated the will of the testatrix as es- 
tablished by the probate court of Michigan controls, and that the 
said court had power to détermine what her last will and testament 
is ; (2) that the will as there established and as by that court and the 
courts of Michigan interpreted must control the executor Eaton and 
the courts of New York in distribution, and the rights of Susan C. 
Higgins, this complainant, under it, unless she by coming to New 
York and contesting the codicil and not appealing from the adverse 
décision of the Madison County Surrogate's Court on the question 
of the validity of the codicil has become bound by the said décision 
and decree notwithstanding the adjudication by the probate court of 
Michigan to the contrary ; (3) that the décision of the probate court 
of Michigan on the question of the mental competency of Mrs. 
Eaton to exécute the codicil and mémorandum controls. 

Many of the leading and controlling authorities on thèse subjects 
were cited and quoted from. Seè pages 138 to 145, inclusive. It is 
unnecessary to repeat them hère. Indeed, thèse décisions hâve been 
summarized and condensed and put in the form of a statute by the 
Législature of the state of New York. Article 7, tit. 3, § 2694, Code 
Civ. Proc. This court, while dismissing the bill on the ground that 
application must be made to the Surrogate's Court of Madison 
county, and that the transfer of the assets to Michigan was discre- 
tionary (subject to review) with that court, also held, following the 
Suprême Court of the United States in numerous cases, that Susan C. 
Higgins or any other nonresident of the state with over $2,000 in 
question could come into this court £ind hâve her right determined. 
That case was appealed and afifirmed. Watkins v. Eaton, 183 Fed. 
384, 105 C. C. A. 604. Susan C. Higgins then brought this action to 



954 188 FEDERAL BBPORTEB 

have her rights under the will of Elizabeth S. Eaton as probated by 
the courts of Michigan determined. Deniurfer was interposed and 
sustained by Judge Hand, that learned judge taking exactly the op- 
posite view, without citing any authority, held by this court. Higgins 
V. Eaton (C. C.) 178 Fed. 153. That holding was reversed by the Cir- 
cuit Court of Appeals (Second Circuit) — Higgins v. Eaton, 183 Fed. 
388, 105 C. C. A. 608— and that court referred to the opinion of this 
court in Watkins v. Eaton (C. C.) 173 Fed. 133, on thèse subjects and 
approved same and declared the law to be as already stated. 

[9] That décision of the Circuit Court of Appeals is the law of this 
case, and controls on ail the above questions. However, the question 
of the effect of the voluntary personal appearance of Mrs. Higgins in 
the Surrogate's Court of Madison county, N. Y., and the contest over 
the codicil, has not been passed upon. Hervey E. Eaton has no right, 
generally speaking, to voluntarily distribute the personal estate ac- 
cording to the décision of the Surrogate's Court of Madison county, 
N. Y., so far as in conflict with the décision of the probate court of 
Washtenaw county, Mich. He is well informed of that décision, and 
is presumed to know that the will as established by that probate court 
govems and controls him. The Circuit Court of Appeals in this ac- 
tion where he is a party has so decided. 

The défendant, Hervey E. Eaton, as executor of the last will and 
testament of Elizabeth S. Eaton, deceased, contends, however, that 
the decree of the Surrogate's Court of the county of Madison, N. Y., 
has become and is res adjudicata, final, and conclusive between him 
and the complainant, Susan C. Higgins, and between Susan C. Hig- 
gins and Geneviève S. Jacobs and Nathaniel P. Jacobs, that the cod- 
icil and mémorandum are valid and to be taken as a part of the last 
will and testament of said Elizabeth S. Eaton, and that, notwithstand- 
ing the decree of the probate court in Michigan, Susan C. Higgins is 
estopped from claiming that she is entitled to the $100 per month 
for her life, assuming that the codicil works a revocation of the said 
gift. In that proceeding in the Madison County Surrogate's Court, 
Hervey E. Eaton represented himself, one whose right and duty it 
was to présent the will for probate and maintain it if he could. He 
also represented ail the legatees and beneficiaries named in the will 
and codicil. However, when objections were filed, Hervey E. Eaton 
and the contestants became adverse or opposing parties. The issue 
was what papers or written instruments compose or constitute the last 
will and testament of Elizabeth S. Eaton, deceased, and this involved 
the question of the mental competency of Mrs, Eaton to exécute the 
codicil ; that is, whether or not she possessed the necessary testa- 
mentary capacity at the time of its exécution in Michigan. If the ap- 
plication had been for letters of administration, the mère fact of as- 
sets in Madison county would have been the issue. But hère the exis- 
tence of assets in Madison county gave jurisdiction to proceed with 
the probate of the alleged will of Elizabeth S. Eaton and the probate 
of her will at ail by that court necessarily involved, under the issue 
framed, the trial and détermination of the question of the due exécu- 
tion by and the testamentary capacity of Elizabeth S. Eaton to exe- 



HIGGIN8 V. EATON 955 

cute the will and codicîl. If either of thèse questions was determined 
adversely, it was the duty of the Madison County Surrogate's Court 
to reject the codicil. The détermination of this question would dé- 
termine in New York what the will was, but did not affect the ques- 
tion of the right to letters testamentary, as Eaton was named executor 
by the will proper, and not by the codicil. As seen, the détermina- 
tion of that question as to the validity of the codicil by the Madison 
County Surrogate's Court did not (in the absence of »Susan C. Hig- 
gins or mère service by publication) in any way affect her rights 
under the will, or, as to the Michigan probate court, in any way make 
the codicil a part of the will as against a decree by that court that 
it was not a part of the will, and, as a conséquence, as the personal 
estate, according to the statute of New York referred to and the dé- 
cisions of the Court of Appeals of the state of New York referred 
to, is to be distributed, if distributed in New York and by its execu- 
tor under and according to the will as probated in Michigan, the 
Surrogate's Court of Madison county in decreeing distribution must 
follow the will as probated in Michigan, unless Susan C. Higgins is 
estopped to say that the codicil is not a part of the will. 

[10] The contest of a will, a contest over the competency of the 
alleged testatrix to make it, is not an ordinary suit or action or pro- 
ceeding inter partes. This is so where the contestants are interested 
and appear personally and raise the issue. This contest in this case 
was an essential part of the probate procédure in Madison county, 
N. Y. Thèse words "inter partes" in the law and décisions relate 
only to independent controversies inter partes, and not to mère contro- 
versies which may arise on an application to probate a will. Farrell 
V. O'Brien, 199 U. S. 89, 110, 111, 114, 115, 116, 25 Sup. Ct. 727, 50 
L. Ed. 101. An examination and comparison of the procédure, rights, 
and remédies given by the probate court of the states of New York 
and Washington demonstrate that they are substantially the same. It 
follows that the contest in Madison county over the validity of the 
codicil and the testamentary capacity of Mrs. Eaton to make it was 
not a suit or action inter partes. 

In Thormann v. Frame, 176 U. S. 350, 20 Sup. Ct. 446, 44 L. Ed. 
500, one Fabacher died in the city of New Orléans leaving a will in 
which he described himself as of Waukesha, Wis., where his will was 
executed, where he had a résidence, and where the most of his Per- 
sonal estate was situated. Frame, the executor named in this will, 
presented it for probate in Waukesha county, alleging in the pétition 
that Fabacher at the time of his death was an inhabitant of said 
county. His widow and ten of his children were named as legatees 
and devisees. Pending this proceeding Antoinette Thormann, a daugh* 
ter of Fabacher by a first marriage, petitioned the proper court in 
Louisiana to be appointed administratrix of the estate of Fabacher, 
asserting that he "was at the time of his death and many years before 
a citizen of Louisiana domiciled and residing in the city of New 
Orléans," that he left property in the jurisdiction of the court, and 
that "your petitioner is the sole surviving heir and legitimate child 
of said deceased, issue of his marriage," etc. Eetters were issued to 



1)56 188 FEDERAL EEPORTÉR 

her accordingly. Ail the notice required having béèn given, later 
the probate court in Wisconsin proceeded against objections filed by 
Thormann that Fabacher was a résident and domiciled in lyouisiana, 
etc., to adijudicate that he was a résident of and domiciled in Wiscon- 
sin, etc., and the Suprême Court of the state affirmed the decree. On 
appeal to the Suprême Court o£ the United States that court said : 

"Whatever the effect of the appointment, it must be as a judgment and by 
way of estoppel. Now» a judgment In rem blnds only the property within the 
control of the court which rendered It; and a judgment in personam binds 
only fhe parties to that judgment and those in privity wlth them. This ap- 
pointment eannot be treated as a judgment In personam, and as a judgment 
In rem it merely determined the rlght to admlnister the property within the 
jurisdietlon (Louisiana) whether cousidered as directly operating on the par- 
ticular thlngs seized or the gênerai status of assets there sltuated." 

"If then, the decree in Madison county was but a decree or judg- 
ment in rem (notwithstanding the appearance and contest of Mrs. 
Higgins), it only "determined the right to administer the property 
within the jurisdiction," and the final distribution, even then, must be 
according to the law of Michigan and will of Mrs. Eaton as there 
determined, which law and will control as we hâve seen. 

In Caujolle v. Ferrie, 13 Wall. 465, 20 L. Ed. 507, it was held: 

"A grant of letters of administration by a court having sole and exclusive 
power of granting them, and which by statute Is obllged to grant them 'to the 
relatives of the deceased, who would be entitled to succeed to hls personal 
estate,' Is conclusive in other courts on a question of legitimacy; the grant 
having been made on an issue raised on the question of legitimacy alone, and 
there having been no question of mlnority, bad habits, alienage, or other dis- 
qualification simply Personal. Held, accordingly, after a grant under such 
circumstances, that the legitimacy could not be gone into by the complainants 
on a blll for distribution by the persons who had opposed the grant of letters 
against the person to whom they had been granted ; but, on the oontrary, that 
the complainants were estopped on that subject." 

This would seem to be a direct holding by the Suprême Court of 
the United States that a décision by a probate court on a question 
necessarily before the court and put in issue and tried and determined 
estops the party making the contest to deny the fact determined and 
the légal conséquences flowing theref rom. In that case the Revised 
Statutes of the State of New York provided that the surrogate of 
each county had sole and exclusive power within the county for 
which appointed to grant administration on the estate of an intestate 
who at or immediately previous to his death was an inhabitant of the 
county of such surrogate. Also, "administration in cases of intes- 
tacy shall be granted to the relatives of the deceased who would be 
entitled to succeed to his personal estate." Jeannie Du Lux died in 
New York county, intestate, and leaving a large personal estate, andi 
one John Pierre Ferrie applied for letters of administration, claiming 
he was the only child and sole heir and next of kin to said intestate. 
Other persons appeared, intervened, and claimed they were of the 
heirs at law and next of kin and entitled to share in the estate. On 
the issue whether or not Ferrie was sole heir and next of kin, legiti- 
mate, évidence was taken, and it was dJecided that he was, and letters 
issued, and this was affirmed by the Court of Appeals. Such contest- 



: HIGGIN8 V. BATON 957 

ing parties then filed a bill in the Circuit Court of the United States 
for their distributive shares seeking to iiave it adjudicated as against 
Ferrie that they were entitled to share notwithstanding the decree in 
Ferrie's favor on the grant of letters that he was the sole heir and 
next of kin. That adjudication was pleadied in bar and as final and 
conclusive, and the plea was upheld. That proceeding was in the 
Surrogate's or Probate Court of New York. True, it was not a pro- 
ceeding to probate a will, but for the grant of letters of administra- 
tion. Let us suppose Du Lux had also left a large personal estate 
in the state of Michigan, and Ferrie had also applied on the same allé- 
gations for letters there, and the same contestants had appeared and 
contested the same question and applied for letters, and it had been 
held the other way and no appeal taken. The law of the domicile of 
the testator controls the distribution of the estate of an intestate as 
well as that of a testator. Assume that the courts of Michigan as do 
the courts of New York recognize this rule, which is, of course, one 
of comity, but the law nevertheless when recognized by the courts 
of a state. How would the courts of Michigan hâve distributed the 
estate in Michigan? Or suppose those who contested in New York 
had applied for letters in Michigan, and Ferrie had contested but 
without avail, andi the question had been decided the other way, and 
the décision had not been appealed from. Now, suppose that Ferrie 
with this décision of the New York courts at his back had come into 
the courts of the United States invoking same, and also the rule of 
comity hy which the law of the state of the domicile of the intestate 
governs m the distribution of estâtes asking a decree establishing that 
he was entitled to the personal property in Michigan, would the courts 
of the United States hâve said that Ferrie was estopped by the de- 
cree in Michigan as to the personal estate there, and that the other 
claimants were entitled to it, but to no share in the property in New 
York? And suppose the other claimants having their alleged rights 
declared by the decree in Michigan, not appealed from, had come into 
the United States Circuit Court for a decree adjudging that they 
were entitled to the personal property in New York, would the. court 
be at liberty to décide that, New York being the domicile of the intes- 
tate, its judgments and decrees as the law of the domicile must prevail 
in ail places where the intestate left personal property? Or would 
it hold the decree first pronounced should control? Or would the 
United States courts hâve held that Ferrie was entitled to the prop- 
erty in New York, but the other claimants to that located in Michi- 
gan? The courts hâve said again and again that a judgment in rem 
binds ail the world if the notice required by the laws of the state is 
given as to the personal property situate in the state where the decree 
is pronounced. But this means the right to administer and distribute 
the estate, not the right to distribute it otherwise than as provided 
by the law of the domicile. 

Should not ail thèse controversies yield to the dominant and con- 
trolling rule that the law of the domicil of the testator or intestate 
controls in the distribution of his personal estate, and that, wherever 
this is recognized as the rule of distribution, judgments or decrees 



958 188 PEDBBAL KBPOKTBB 

pronounced by probate courts in a state of the Union not that of the 
domicile in establishing wills and granting letters, if in direct con- 
flict as to a particular estate, testate or intestate, with those of the 
State of the domicile, must yield to those of the latter state? If this 
is not true, then Elizabeth S. Eaton left two wills operative as to 
her Personal estate ; for it related to no other as she had no real es- 
tate, and as to Susan C. Higgins and the. two sisters who contested 
the codicil with her in New York the codicil is a part of the will, 
and in Michigan where the testatrix resided, and where ail or nearly 
ail the parties in interest réside, it is not. The particular consé- 
quences in this case are not to control this question. They might 
be serious in many cases that may arise. The probate of the will in 
Michigan (proceeding pending concurrently with that in New York) 
followed that of the probate in New York, and ail parties were cited 
according to the laws of Michigan. The proof shows that the pend- 
ency of the probate in Michigan was known to the parties and Sur- 
rogate's Court in New York. The exclusive right of that court to 
probate the will in the first instance was asserted but overruled. Each 
court took évidence and by decree established a will (one including 
the codicil, the other not) as the last will and testament of Elizabeth 
S. Eaton. Concède that each court had jurisdiction. No appeal 
was taken in either case. That each court under the statutes of its 
state had power to prove the will must be conceded 

[11] That the principal and controlling place of administration 
and exécution of the will and distribution under it was Michigan can- 
not be denied. That the law of that state détermines what the will 
is is equally certain. "In regard to a will of personalty, in an espe- 
cial manner, the law of the place of the testator's domicile governs 
the distribution thereof and will govern in the interprétation of wills 
thereof, unless it is manifest that the testator had the laws of some 
other county in view." Harrison v. Nixon, 9 Pet. 483, 9 L- Ed. 201 ; 
Fowler, Décèdent Estate Law, 324; Story, Conflict of Laws, § 380; 
Code of Civil Pfoc. (N. Y.) § 2694. 

Thèse two wills as established) by the court in Michigan and the 
court in New York hâve a decree to support them. The New York 
court did not await the action of the Michigan court and the Michi- 
gan court at the place of the testator's domicile rightfully refused to 
be bound by it or to follow and détermine what the will of Mrs. 
Eaton was and her testamentary capacity to make it. This déter- 
mines the policy and law of the state of Michigan which controls 
the question of testamentary capacity as to personalty and the estab- 
lishment and interprétation of the will. Suppose that this codicil had 
been such as to seriously affect the rights of legatees under the will 
proper who did not appear in New York and contest or join in the 
contest if held binding on Mrs. Higgins and enforced accordingly. 
Would the courts enforce it to the détriment of such others? 

In Sharon v. Terry, 36 Fed. 337, 13 Sawy. 387, 1 L. R. A. 572, an 
action had been commenced in the fédéral court when one of the 
parties went into the state court (Sharon v. Sharon, 79 Cal. 633, 22 
Pac. 26, 131), and commenced an action against his adversary in- 



HIGGINS V. EATON 959 

volving the same subject-matter. The state court held its Judgment 
valid, and the fédéral court on the other hand (see case supra) was 
determined to pay no attention to it. The judgment in the state 
court was reversed, and this ended the controversy. In 1 Freeman 
on Judgments (4th Ed.) § 118, he refers to thèse cases and expresses 
the opinion that in such a case, if both actions go to judgment, the 
controlHng one will be that of the court first obtaining jurisdiction 
by the institution of suit. If that be so in the case of the probate of 
a will, or alleged will of a testator, serious complications and results 
may follow. For instance, a testator domiciled in Michigan where 
a large part of his personal estate is situated, the balance being in 
New York, leaves two papers purporting to be his will both executed 
in Michigan where the witnesses are and) naming différent executors, 
and making a différent disposition of his property. The New York 
executor has one and the Michigan executor the other. It is claimed 
that the later in date revokes the other, but it is alleged by the execu- 
tor in New York that the testator had not the mental capacity to 
make such latter will, and he propounds the earlier will for probate 
in New York, and the Michigan executor and one or two of the nu- 
merous legatees contest and présent the later will for probate, but 
are defeated, and the New York will (we will term it for conveni- 
ence) is probated in New York. By error or misfortune or neglect 
no appeal is taken in time, and so the decree stands. In the meantime 
the Michigan executor propounds the other will in Michigan, gives 
notice as required by law, and it goes to probate, and no appeal is 
taken. Is the personal property in New York to be distributed under 
the (so-called) New York will and the personal property in Michi- 
gan under the latter or (so-called) Michigan will? Or is the policy 
and law of Michigan and the will as actually established by the court 
of the testator's domicile to govern in the actual distribution of ail 
the property irrespective of the decree of the New York Surrogate's 
Court? If we leave out the élément of contest and assume that none 
is made in either court, is or is not the will of the testator's actual 
domicile to control the distribution? I think the policy of the law 
is that a testator shall hâve but one will as to his personal estate in 
whatever state of the United States it may be situated, and that the 
law of the state of the domicile of the testator détermines what that 
will is, and that, when established by the proper court of such state 
having jurisdiction and not appealed from, ail controversies over it 
are ended, and that it becomes operative and binding on ail whose 
rights under it are in question,, and controls the distribution of the 
personal estate (save payment of debts) wherever situated, no matter 
how many contests there may bave been in other states on application 
for probate there over what papers constituted the will made by lega- 
tees, or how many différent wills may hâve been established on such 
contests. A sound public policy demands that this should be the rule. 
The laws of one state cannot be permitted either on the ground of 
comity or duty to be overruled by those of another, nor can the 
judgments of one state be enforced in another on either ground in 
opposition to its settled policy. This is a question involving more 



960 188 FEDERAL EBPOETEE 

tlian the rights of Susan C. Higgins. ït involves the due and orderly 
distribution of the estate and the settlement and détermination of 
the amount each legatee is to receive in the final distribution, and 
that must be determined, not by what Susan C. Higgins did or did 
not do in the Madison County Surrogate's Court, but by the terms 
of the will of Elizabeth S. Eaton, the testatrix, as settled and found) 
to be by the probate court of her actual domicile. The foUowing cases 
and authorities, while not exactly in point, are pertinent, and demon- 
strafe the law on the subject where judgments in différent jurisdic- 
tions conflict: 2 Wharton on Conflict of Laws (3d Ed.) 1411, § 656, 
1170, § 490; Scoville v. Canfield, 14 Johns. (N. Y.) 338, 7 Am. Dec. 
467; Grover & Baker Machine Co. v. Radcliffe, 137 U. S. 299, 11 
Sup. et. 92, 34 L. Ed. 670; De Brimont v. Penniman, 10 Blatchf. 436, 
Fed. Cas. No. 3,715. The gênerai rule is that a contract made in a 
foreign state or the law of such state vi^ill not be enforced in another 
when contrary to its public policy, and it makes no différence that 
the claim has been reduced to a judgment in a suit between the par- 
ties. Says Wharton, § 656: 

"Sec. 656. Will not be enforced wàen overrldlng home policy, nor when for 
penalty. We hâve already seen that a foreign law will not be admitted for 
the purpose of overriding any rule of distlnetive domestic policy, This ])rin- 
clple is necessarily applicable to judgments, since, otherwise, ali that would 
be necessary to force tlie répugnant law upon us would be to formulate it in 
the shape of a judgment. The fact of the obnoxlous prérogative taking shape 
as a judgment does not make It any the more authoritative. Nor will a judg- 
ment entered for a statutory penalty be enforced In a slster or foreign state." 

In Grover, etc., v. Radcliffe, supra, page 299 of 137 U. S., page 
95 of U Sup. et. (34 L. Ed. 670), the court said: 

"The courts of Maryland were not bound to hold thls judgment as obliga- 
tory either on the ground of comlty or duty, thereby permitting the law of 
another state to override thelr own." 

In De Brimont v. Penniman, supra, where the French Code pro- 
vides that a father-in-law and a mother-in-law must make an allow- 
ance to a son-in-law who is in need so long as a child of the marriage 
is living, the son-in-law in France, where ail the parties then resided, 
the son-in-law being domiciled there, but the father-in-law and moth- 
er-in-law being citizens of and domiciled in the United States (tempo- 
rarily in France), obtained a decree for an allowance in the courts 
of France against the father-in-law and mother-in-law which was not 
paid. The son-in-law thereafter brought suit on that decree in the 
fédéral courts of the United States, which court refused to enforce 
it as contrary to the policy of our laws. Hère was no question of 
jurisdiction in the courts of France over both the subject-matter and 
persons of the défendants. To enforce the decree of the Madison 
County Surrogate's Court is not only to violate the policy of the 
law oiÉ the state of Michigan, but of the state of New York and of 
the courts of the United States, in the récognition of wills and the 
distribution of estâtes of decedents thereunder. Not ail judgments 
or decrees rendered in one state are enforceable in another or binding 
on the parties there. Says Wharton : 



HIGGINS V. EATON 961 

"Nor will a Judgment entered for a statutory penalty be enforced In a sls- 
ter or a foreign state" — citing œany cases ; New York cases wlth others. 

We may look behind the face of the judgment or decreé to see what 
it was for and the grounds upon which based or pronounced. 

[12] Taking thèse two decrees together, it is impossible for this 
court to give full faith and crédit to both. It is called upon to dé- 
cline to recognize the Michigan decree at ail by saying that Mrs. Hig- 
gins is estopped to assert it. If she is estoppedl to assert it hère, she 
must be estopped to assert it anywhere, even in Michigan. And, as 
ail estoppels to be binding must be mutual, ail other distributees and 
legatees who would profit by enforcing the estoppel against Mrs. 
Higgins must be estopped or bound also. To hold them ail bound 
would be to substitute the action, decree, and will of the New York 
Surrogate's Court for that of the probate court of Washtenaw county, 
Mich., the county and state of the conceded domicile of the testatrix, 
and thus the dsclared policy of the law of both states would be de- 
feated by the mère act of Mrs. Eaton in coming into New York and 
contesting the codicil without avail. I think this one of the cases 
where the ordinary rule as to judgments does not apply. 

[13] It is also the settled policy of the law in the states and United 
States courts that wills of real estate or affecting real estate must 
be executed in accordance with the law of the state where the real 
estate is situated, and that the provisions disposing of such real es- 
tate must be valid under the laws of such state. It is not enough 
that such will andi the provisions thereof are valid in the state of the 
testator's domicile. So it was held in Clarke v. Clarke, 178 U. S. 
186, 20 Sup. Ct. 873, 44 L. Ed. 1028, where a will executed by a tes- 
tator domiciled in South Carolina according to the laws of that state, 
and valid there and everywhere as to real and personal estate, was 
construed by the courts of that state as converting ail the real estate 
of the testator, including that situated in the state of Connecticut, 
into personalty for the purposes of the will, that the courts of Con- 
necticut would not regard or enforce the judgment or decree of the 
South Carolina court so cohstruing the will. The courts of Con- 
necticut and the Suprême Court of the United States on appeal held 
that such decree and judgment was not binding, although the gênerai 
rule is that the construction of a will as to personal estate is for the 
courts of the testator's domicile. If the real estate in Connecticut was 
personal estate by virtue of the will, then it was disposed of thereby 
as Personal property ; if not so converted, it was not so disposed of . 
The South Carolina courts had jurisdiction to pronounce a decree con- 
struing the will, and ordinarily this decree would be binding every- 
where, but as to real estate in Connecticut that state refused to rec- 
ognize it or hold it binding on the parties to the decree. That decree 
pronounced in South Carolina was pronounced after contest, appealed 
from and sustained by its highest court. Clarke v. Clarke, 46 S. C. 
230, 24 S. E. 202, 57 Am. St. Rep. 675. If we say that décision turned 
on the point that the court in South Carolina had no jurisdiction over 
real estate in Connecticut, we may concède that fact, but, if there was 
an out and out conversion, as equity regards that as done which is 
188 F.— 61 



962 188 FEDERAL EEPORTEK 

directed) to be donc and ought to be donc, then the real estate in Con • 
necticut was personal property and so to be treated, and the South 
Carolina court had jurisdiction. But the point is that the Connecti- 
cut courts, upheld by the Suprême Court of the United States, re- 
fused to give any f aith and crédit to this decree afïîrmed by the high- 
est court of South CaroUna, and not reversed. It was a probate mat- 
ter, and the rule of comity which prevails in both Connecticut and 
South Carolina did not, we will say, authorize the courts of South 
Carolina to construe its own will made by a domiciled citizen as to 
real estate in Connecticut which it assumed to do and which its law 
said it might do. Hère the Michigan court, the place of the testa- 
tor's domicile, has refused to recognize the New York ancillary pro- 
bate (or assume it to be probate in chief for purposes of mère ad- 
ministration in New York). That decree stands. The New York 
court has no jurisdiction or power to détermine the testamentary ca- 
pacity of Mrs. Eaton as against the courts of Michigan and establish 
the codicil as a part of the will against the diecrees of that court, and 
yet it did just that if defendant's contention is correct, and this court 
is called upon to say that its action must be recognized. In 2 Wharton 
on Conflict of Laws (3d Ed.) p. 1375, § 618a, it is said: 

"In j:he absence of a local statute substltuting the lex situs for ttie lex 
domlcllii as the governlng law with respect to succession to personal prop- 
erty, the administration granted at the deceased's domicile is everywhere re- 
garded as the administration in chief, while that granted in another country 
in which assets are found is considered merely as auxiliary or ancillary." 

And at page 1318, § 591a: 

"The same gênerai principle tliat refers a will of Personal property to the 
law of the testator's last domicile applles, without qualification or exception — 
other than such as may be made by local statute or the publie policy of the 
forum — to the gênerai capacity of the testator to make a will and to the 
formai validlty of the will." 

And in section 570, p. 1286, the author, citing authority, including 
Lawrence v. Kitteridge, 21 Conn. 582, 56 Am. Dec. 385, Story, Con- 
flict of Laws, § 465, Schultz v. Dambmann, 3 Bradf. Sur. (N. Y.) 379, 
Davison's Will, 1 Tuck. (N. Y.) 479, and 1 Jarmin on Wills (Bige- 
low's Ed.) 1881, p. 5, and note, says; 

"By the English common law, as held both In England and the United 
States, testamentary capacity, as to personalty, is governed by the law of the 
domicile of fhe testator at the time of his death." 

And at page 1332, § 595, he says : 

"Sec. 595. Judgment of court of domicile has ublqultous authority. The 
judgment of the court of the domicile of the deceased at the time of his death 
is authoritative on the courts of a foreign country in ail questions as to the 
succession and title to Personal property, whether under testacy or intestacy, 
where the same questions between the sanie parties are in issue in the for- 
eign court as hâve been decided by the court of the domicile, and where such 
judgment does not conflict with ijositive prescriptions of the lex sltus." 

And at page 1388, § 644, the author says : 

"So far as concerns the adequacy of the exécution of the will, the rule is 
that the probate of the testator's last domicile is conelusive" — citing au- 
thority. 



HIGGIN8 V. EATON 963 



Rood, on Wills says : 



"The law of tlie testator's domicile détermines ail questions as t'o the will 
so far as personalty is concerned— the testator's capacity ; the formality of 
executlng and revoking ; the legality of the dispositions ; the construction 
and effect of the provisions. If complying with the law of his domicile, it 
will be allowed even in the state where he made it without complying with 
the formalities required by the laws of that state. If not complying with the 
law of his domicile, it cannot be sustained, though exeeuted in compliance 
with the law of the state where made and offered for probate and where the 
property is situated." Eood on Wills, § 409. 

In Newcomb v. Newcomb, 108 Ky. 582, 57 S. W. 2, 51 h. R. A. 
419, E. B. Newcomb, a subject of the kingdom of Great Britain liv- 
ing in the state of Kentucky, died leaving a widow and two children 
by her and one by a former wife. He left .three différent exeeuted 
papers, each purporting to be his last will and testament, one dated 
July, 1888, one March 1, 1890, and the other March 4, 1890. The 
widow presented the paper of March 4, 1890, for probate, and it 
was probated on her motion in the proper probate court, and she 
was duly appointed executrix. An appeal was taken by W. S. New- 
comb and the probate reversed, and such paper held not to be the 
will of the said E. B. Newcomb. Prior to the appeal the will was 
presented in England where Newcomb had personal property, and 
ancillary letters were issued, and the personal estate in England 
reduced to possession. After the reversai and affirmance thereof, 
Mrs. Newcomb presented the will of March 1, 1890, for probate in 
the Kentucky court and fînally presented that of July, 1888, also, 
but subsequently withdrew both and abandoned the proceedings. 
Subsequently she took thèse two papers of July, 1888, and March 1, 
1890, to England, and offered them for probate there, and that court 
on notice required by its laws held that the paper of March 1, 1890, 
was the true will, and it was probated accordingly and the ancillary 
probate mentioned was revoked. Subsequently the probate court in 
Kentucky granted administration of the estate of Newcomb to Ohio 
V. B. & T. Co. Said W. S. Newcomb subsequently brought suit for 
a settlement of the estate and made the administrator and Mrs 
Newcomb and her children parties, she being the principal legatee in 
the will proved in England, and sought to hâve her account for 
and pay over the money that had corne to her hands as executrix to 
the administrator. The only question was whether or not the pro- 
bate of the will of E. B. Newcomb in England, of which country he 
was a subject, was good and controlled. There was no question of 
two wills in this case. Newcomb left a will and left personal prop- 
erty in England, of which country he was a subject. There is a 
statute in England which provides ifor such a case, and provides that 
the will left by a subject of that kingdom who dies abroad may be 
proved and shall take effect as to the property left by him in England 
only. Newcomb and his property left in England were clearly sub- 
ject to the laws of England as against letters of administration in 
Kentucky where he resided. A foreign country or a state even has 
the right to pass a statute whicli will control, not only the admin- 
istration, but the distribution of the personal property in its juris- 



964 188 FEDBBAL EEPOETBB 

diction of a person domiciled in another country or state. Indeed, 
at least two of the states of the United States hâve done so. 

[14] It has been held many times that the full faith and crédit 
clauses of the acts of Congress and of the Constitution of the United 
States (article 4, § 1) do not require that any more force be given 
to the judgment or decree of a state court (jurisdiction of the par- 
ties and subject-matter being conceded) than the law or custom 
of the state where pronounced give it or demand. Robertson v. 
Pickrell. 109 U. S. 610, 3 Sup. Ct. 407, 27 L. Ed. 1049, where it is 
said : 

"The act o( Congress declarlng the effect to be given in any court within 
the United States to the records and judieial iiroceedin,gs of the several states 
does not require that they shall hâve any greater force and effleacy in other 
courts than in the courts of the states from which they are taken, hut only 
such faith and crédit as by law or usage they hâve there. Any other rule 
v?ouia be répugnant to ail principle, and, as we said on a former occasion, 
would contra vene the policy of the provisions of the Constitution and laws of 
the United States on that subject. Board of Public Works v. Columbia Col- 
lège, 17 Wall. 521, 529 [21 L. Ed. 6S7]." 

As we hâve seen, the courts and the statutory law of the state of 
New York fully recognize and déclare (1) that the laws of the 
domicile of the testator or intestate govern in the actual distribution 
of the Personal estate of the décèdent, and (2) that testamentary ca- 
pacity to make a will is governed by the law of the testator's domicile, 
and (3) that proof of the will of a testator or the grant of letters 
of administration of the estate of an intestate, actually domiciled 
in some other state at the time of his death, within and by the 
courts of the state of New York who dies leaving personal property 
only in the state of New York, is for the sole purpose of adminis- 
tering that personal property so situated in New York, paying cred- 
itors, taxes, etc., and then either passing it over to the executor or 
administrator of the testator or intestate, as the case may be, of the 
state of the domicile for distribution, or retaining and distributing 
it itself, but in either event the balance of such estate is to be dis- 
tributed according to the law of the state of the domicile of such tes- 
tator or intestate. Matter of Hughes, 95 N. Y. 55, 60; Harvey v. 
Richards, 1 Mason, 381, Fed. Cas. No. 6,184; Despard v. Churchill 
53 N. Y. 192; Dammert v. Osborn, 140 N. Y. 30, 35 N. E. 407; 
Fowler's Décèdent Estate Law, 324, who says: 

"Wills of Personalty. It was a postulate of the common law, that movable 
or Personal property has no situs or visible locality, but is subject to that law 
which governs the person of the owner, both with respect to the manner of 
Its disposition and with respect to the transmission of it either by succession 
or by the act of the owner. This postulate of the common law became the 
law of this state by the effectuai and formai continuation of that law by the 
Constitution of the state ; and it still remains the law of this state, alttiough 
the exigencies of modem governments tend more and more to give a local 
situs to Personal property for merely local purposes of taxation." 

It was not the purpose of the Législature of the state of New 
York to substitute its probate courts in place of those of the state 
of the testator's domicile as arbiter of the testamentary capacity of 
the testator or the proper exécution oî the will. To say that this 



HIGGINS V. EATON 965 

was its purpose would contradict the very terms of the New York 
statute. It would also force legatees and devisees or next of kin 
as the case might be to corne from say Oregon to New York to 
test the mental capacity, etc., of a testator domiciled in Oregon in 
the New York courts. Now, I take it that the decree of the proper 
Surrogate's Court in New York, not appealed from, establishing 
the will of a testator domiciled hère, settles the law of the state of 
New York as to what his will is, and that the decree of the proper 
probate, court in Michigan, not appealed from, détermines the law 
of that state as to what is the last will and testament of a testator 
domiciled there. New York has not undertaken to say by statute 
that the personal estate hère of a person domiciled in another state 
shall be distributed according to our law or according to the will as 
proved hère in the case of a testator domiciled abroad, but has said 
exactly the contrary. Code Civ. Proc. § 2694, reads as follows : 

"Sec. 2694. What Laws Govem as to Effect of Testamentary Disposition. 
The validity and effect of a testamentary disposition of real property, situ- 
ated within the state, or of an interest in real property so situated, which 
would descend to the heir of an intestate, and the manner in which such 
property or such an interest descends, where It is not disposed of by will, are 
regulated by the laws of the state, wlthout regard to the résidence of the 
décèdent. Except where spécial provision Is otherwise made by law, the va- 
lidity and effect of a testamentary disposition of any other property situated 
within the state, and the ownership and disposition of such property, where 
it is not disposed of by vs^ill, are regulated by tbe laws of the state or coun- 
try, of which the décèdent was a résident at the time of his death." 

"The place of domicile is the place of principal administration and other 
administrations are merely ancillary. The law of the place of ancillary ad- 
ministration governs as to the payment of debts there ; but the distribution 
is made according to the lex domicilii." Churchill v. Prescott, 3 Bradf. Sur. 
(N. Y.) 233; Suarez v. Mayor, 2 Sandf. Oh. (N. T.) 173; Mills v. Fogal, 4 
Edw. Ch. (N. Y.) 559. 

Section 2700 of Code of Civil Procédure, which provides for the 
disposition of the personal estate hère belonging to the estate of a 
testator or intestate domiciled in other states, reads as follows : 

"Sec. 2700. Ancillary Executors and Administrators to Transmit Moneys. 
The person to whom ancillary letters are issued, as prescribed in this article, 
must, unless otherwise directed in the decree awarding the letters; or in a 
decree made upon an accounting, or by an order of the surrogate, made dur- 
ing the administration of the estate; or by the Judgment or order of a court 
of record in an action to which that person is a party ; transmit the money 
and other personal property of the décèdent, received by him after the let- 
ters are issued, or then In his hands in another capacity, to the state, terri- 
tory, or country, where the principal letters were granted, to be disposed of 
pursuaiit to the laws thereof. Money or other property, so transmltted by 
him, at any time bef ore he is so directed to retain it, must be allowed to Mm 
upon an accountlng." 

It seems to me very clear that it is the policy of the probate and 
administration laws of the state of New York, in the case of a tes- 
tator or intestate domiciled in another state, to respect and conform 
to the law of that state and either transmit the personal estate located 
hère, after payment of debts and taxes and other charges, if any, 
to that court for distribution there in accordance with the law of 
such state which includes the décisions of its courts as to what the 



966 188 FEDERAL EEPORTEB 

will of the testator is, or to distribute, in certain cases, under and 
through its own courts in accordance with such law ; also that the 
probate in New York of the will of such testator domiciled in such 
other State authorized by statutes (Code Civil Proc. §§ 2476, 2611), 
is for the purpose of fixing the right of administration in New York 
so far as personal property there is concerned and the rights of heirs 
and devisees in real estate, and not for the purpose of determining 
as against the courts of such other state the testamentary .capacity 
of the testator or what his will actually is. If the latter be the pur- 
pose and efîect of the New York statute, then its courts not ônly dé- 
termine what the will is as against the courts of such other state, the 
state of the testator's domicile, the question of due exécution ac- 
cording to the laws of such state and what its laws are, and their 
true meaning, and also the law of that state as to testamentary ca- 
pacity and whether the testator possessed it, but enforce it so far 
as the New York courts hâve possession of the assets. If this is 
donc, the law of New York, not the law of Michigan, in this case 
governs in the distribution of substantially the entire personal es- 
tate of EHzabeth S. Eaton in the face of the express mandate of 
section 2694, Code of Civil Procédure, above quoted. 

I do not think, in face of the provisions quoted, the New York 
courts will give any such eflfect as is contended for to the probate 
of this codicil in the Madison County Surrogate's Court, but that 
they will and must recognize the will as probated in Michigan. New 
York can hardly afïord to establish the doctrine contended for 
against its own domiciled citizens and their estâtes who hâve as- 
sets in other states at the time of death. If such is its law, Cali- 
fornia or Oregon or any far distant state may enact a like statute, 
and, in case of domiciled citizens in New York who happen to hâve 
Personal estate there prove his will, détermine for itself ail the 
questions referred to, détermine for itself the New York laws, and, 
disregarding the décisions of its courts in regard thereto, distribute 
the Personal estate as it says the laws of New York require. If its 
courts get ahead of those of New York, New York must accord such 
judgments full faith and crédit, regardless of its own. I think, there- 
fore, that so far as the probate in Madison county is concerned it 
conclusively estabhshed the right to administer in New York; that 
a will existed; that Eaton was executor named therein, and justified 
the letters testamentary and administration of the property hère to 
the extent stated, but that it did not conclusively establish that EHza- 
beth S. Eaton had testamentary capacity according to the law of 
Michigan to exécute the codicil on which question thé decree of 
the probate court of that state is conclusive ; and that, therefore, the 
codicil must be held void, and that it forms no part of her last will 
and testament. This is giving to the decree of the Madison Coun- 
ty Surrogate's Court the full faith and crédit it is entitled to, and the 
same force and efîect the courts of the state of New York will, or 
should, give it so far as distribution of the estate is concerned. 
Again, sections 2695-2704, New York Code of Civil Procédure, pro- 
vide for the record and exécution in New York of wills made by 
testators domiciled in other states and proved there, and such wills 



HIG6IN8 V. EATON 967 

cannot be proved hère at ail, having been once proved in the state 
of the testator's domicile. Clark v. Poor, 73 Hun, 143, 25 N. Y. 
Snpp. 908. And in Cross v. United States Trust Co. of N. Y., 131 
N. Y. 330, 30 N. E. 125, 15 L. R. A. 606, 27 Am. St. Rep. 597, it 
is held : 

"Personal property is subject to the law of the owner's domicil both in re- 
spect to a disposition of It by aet inter vives and to its transmission by will, 
or by succession on its ovmers dying intestate." 

So in that case a trust of personal estate created by a will in 
Rhode Island to be executed in New York and which trust was to be 
executed in New York was held valid, and our courts would not 
interfère or entertain an action to déclare the invahdity of the trust 
under our laws. Ail that Foulke v. Zimmerman, 14 Wall. 113, 20 
ly. Ed. 785, décides is that a will proved in New York and then in 
Louisiana protects a purchaser in good faith and for value in Eoui- 
siana, who relied on such probate, although the probate in New 
York had been reversed. 

It is not clear that the courts of New York will refuse to ghe 
greater force to the will of a testator domiciled in Michigan and 
first proved in New York and then in Michigan than they would if 
such will had been fîrst proved in Michigan, and then recorded in New 
York. The policy of the New York statutes and décisions is very 
plain, viz., to recognize and enforce the will of a testator domiciled 
in another state relating to personal property, and, so far as it relates 
thereto, as it is finally declared to be by the courts of such state. 
And I doubt not that the New York courts expect the same rule to be 
applied by the courts of other states with référence to the wills of 
the testators domiciled in New York leaving personal property in such 
states, excepting, of course, those states which hâve adopted a dis- 
tinctly diflferent statutory rule and policy. There is conflict of au- 
thority as to the effect of a decree admitting or rejecting a will out- 
side the state pronouncing it. Kerr v. Moon, 9 Wheat. 565, 6 L. 
Ed. 161, not conclusive; Bowen v. Johnson, 5 R. I. 112, 73 Am. Dec. 
49, is only prima facie évidence; Rice v. Jones, 4 Call. (Va.) 89, 
decree of one state rejecting a will for incapacity of testator has no 
effect in probate proceedings in Virginia. See, also. In re Gaines, 84 
Hun, 520, 32 N. Y. Supp. 398, aiïirmed 154 N. Y. 747, 49 N. E. 1097, 
absolute rejection as a forgery did not preclude proof in New York, 
the state of testatrix's domicile. Also Williams v. Jones, 14 Bush. 
(Ky.) 418, not within the full faith and crédit clause; and see Blount 
V. Walker, 134 U. S. 607, 10 Sup. Ct. 606,_ 33 h. Ed. 1036, question 
not decided. But see Ives v. Salisbury, 56 Vt. 565 ; and Crippen 
V. Dexter, 13 Gray (Mass.) 330, contra. In Nat v. COons, 10 Mo. 
543, and Stewart v. Pettus, 10 Mo. 755, it is held that, when the 
domicile of the testator is in another state than Missouri, the probate 
in such other state is invalid. So held in Varner v. Bevil, 17 Ala. 
286; Brock v. Frank, 51 Ala. 85; Sturdivant v. Neill, 27 Miss. 157; 
V/elIs V. Wells, 35 Miss. 638; Manuel v. Manuel, 13 Ohio St. 458; 
Stark V. Parker, 56 N. H. 481, record, etc., from another state of no 
effect if domicile was in New Hampshire. 



968 188 FEDERAL REPORTEE 

[15] I thînk the weight of authority and reason is that the probate 
or rejection of a will of personal property by the courts of a state 
other than that of the domicile bas no effect on distribution as against 
a decree of the court of the testator's domicile in ail states where the 
distribution is to be according to the law of the testator's domicile. If 
distribution is to be according to that law and undfer a will, it seems 
to me that the will as probated and established in that state is the 
law of distribution of that estate. If the will "as established by the 
law of the state, a decree of the court of the state, does not furnish 
the rule for distribution, I am unable to détermine where it would 
be found. This must be so unless New York, pretending to regard 
the law of the testator's domicile in such cases, bas reserved to itself 
the right and power to détermine what the will is and override the 
courts of the domicile. 

It is claimed that the probate court of Washtenaw county, Mich., 
had no jurisdiction to take proof of the will of Elizabeth S. Eaton 
and admit it to probate, for the reason the statutes of that state re- 
quire that the will itself be produced (or its loss or destruction 
proved), and that this will was never produced in that court. I do not 
think this point has merit. 

[16, 17] First the production of the will was not jurisdictional at 
ail ; second, the probate court of Michigan made provision for taking 
the proofs by déposition, etc., and it was so taken and the will and 
codicil were produced before the person authorized to take the dépo- 
sitions. This within the statute referred to was a production in court. 
Estate of Delaplaine, 12 Civ. Proc. R. 401 ; 9 N. Y. St. Rep. 786. 

[18] The statutes of Michigan (Comp. Laws) do not provide for 
the récognition or record of the alleged will of a person actually dom- 
iciled in that state and proved outside the state. The statute reads 
([9282] section 21): 

"That any will duly admltted to probate without ttie probate court of any 
county in this state in which the testa torleft real or Personal estate, and in 
the place of the testator's domicile, may be duly admitted to probate and re- 
corded in this state by duly flling an exemplifled copy of said will and of the 
record admittlng the same to probate; and proceeding in the manner here- 
inafter provided." 

(9283) Section 23 : 

"If, on hearing the case, It shall appear to the court that tlie Instrument 
ought to be allowed in this state, as the last will and testament of the de- 
ceased, the copy shall be flled and reeorded and the will shall bave the same 
force and effect as if it had been originally proved and allowed In the same 
court" 

See In re Mower, 48 Mich. 441, 12 N. W. 646. As to the policy of 
the Michigan courts, see Glynn v. Corning, decided February 3, 1910, 
159 Mich. 474, 476, 477, 124 N. W. 514-516 (134 Am. St. Rep. 739), 
where it is held: 

"The question presented is whether the will of a person domiciled In an- 
other state, who died leaving an estate within this state, may be admitted to 
probate hère before its validity is established in a proceeding in the courts 
of the domicile of the testator. * * * It is plain that the Législature has 
recognized the right of the courts of the domicile of a testator to concluslvely 



HIGGIN8 V. EATON 969 

détermine the valldity of the will, and quite as plaln that the courts of the 
domicile of this testator hâve niade no such détermination. It has been re- 
peatedly held tliat the Issue hère upon the offerlng of a domestic will for pro- 
bate Is 'will or no will.' We hâve then thèse two methods provided by the 
Législature for admitting wills of deceased persons to probate: One, to try 
out every issue upon whieh validity of the instrument dépends ; the other, 
to accept the détermination of ail of thèse issues by the courts of the domi- 
cile of the testator. There is no method pointed out for admitting a will 
hère as valid to the extent of appointment of au administrator of the estate, 
leaving the question of its validity to be deteruiined at the domicile of the 
testator. It is not eonceivable that the courts of this state will inqulre about 
and flnally décide that a certain instrument is, or is not, a valid will, subject 
to having the détermination reversed hy the courts of any other state. As- 
suming the right of each state to assert complète jurisdiction in rem over ail 
property of decedents found within the state, including the right to déter- 
mine, through its tribunals, the validity or nonvalldity of a foreign will, it 
is equally the right of each state, acting through its Législature, to accept as 
conclusive the judgment of the courts of the domicile of the testator as to 
the validity of his will and to permit his property, found in the state, to be 
disposed of according to the provisions of the will. I flnd in the statutes suf- 
fleicnt évidence of a state policy which dénies to the probate court of Saginaw 
county the jurisdiction which it assumed when it admitted the particular 
will to probate." 

In Matter of Rubens, 128 App. Div. 626, 112 N. Y. Supp. 941, 
affîrmed by Court of Appeals on opinion below, holds that the will of 
Rubens, who died in France leaving property in New York, might 
be proved in New York even if not executed according to the laws 
of France. That this is the law I do not doubt. It is not a décision, 
however, that if a will of Rubens had been proved and probated in 
France as his will, and this one denied probate there on the ground 
of mental incompetency to make it, that the will proved hère and de- 
nied probate, there would control the distribution of the personal 
estate hère. Neither does the case hold that the will will control 
the disposition of the personal estate of Rubens in New York. The 
efïect of the will was not passed upon. And the question of testa- 
mentary capacity to make the will was not in question. It is not 
held in the Rubens Case that if Rubens had been shown domiciled 
in France, and then by the laws of his domicile declared incompétent 
to exécute a will, the will would hâve been admitted to probate hère. 
Indeed, Tudge Clarke quotes with approval Surrogate RoUins in Mat- 
ter of McMulkin, 5 Dem. Sur. (N. Y.) 295: 

"There is no inconsistency between section 2611 as thus Interpreted and 
section 2694. * * * a will niay be entitled to probate although ail its 
dispositions of property may be discovered to be invalid. It was not intended 
to overthrow the established law that the law of the domicile of a testator 
leaving a valid will détermines the distribution of ail personal property. In- 
deed, as said Judge Clarke, the will of a testator domiciled in one state re- 
lating to both real and personal property, or only real property, must be 
proved, if duly executed and the testator was compétent to make a will, but 
it would hâve no effect in the disposition of real property in another state if 
not executed accoiding to the laws of such state. The law that domicile Con- 
trols disposition is not changed." 

In Cross et al. v. U. S. T. Co. et al., 131 N. Y. 330, 341, 30 N. E. 
125, 127, 15 L. R. A. 606, 27 Am. St. Rep. 597, the court said: 



970 188 FEDERAL REPORTER 

"ShoTild our Législature deem it for the public good fo repeal the statute 
relating to wllls, and to provide tUat ail property should, upon the death of 
the owner, pass under the laws of intestacy, a disposition by will of personal 
property, actually within the territory of the state, but ovvned by a person 
domiclled In another state, would stlU be valid, providlng it was valid by the 
iaw which governed the owner. When it is urged that we are bound by for- 
eign Iaw as to ail the formai requisites of a will, as a testamentary instru- 
ment, the capacity of the testator to make it, and its légal coustructiou, 
meaning and efCect, and not bound by such Iaw with respect to the particular 
hequests by which the testatrix has distributed her property among her heirs 
and next of kin, it is not perceived that such a distinction has any sound rea- 
son or principle to rest upon." 

The will of a person domiciled in New York must be proved) in 
New York, and Michigan recognizes its action as final and conclu- 
sive. It would be a violation of ail rules of justice and comity 
for New York to say it will prove the will of a person domiciled in 
Michigan in its own courts and assert its action against the courts 
of Michigan and distribute the personal estate as it détermines the 
will to be regardless of the action of the Michigan courts. 

It is claimed that Mrs. Higgins has accepted" benefits under the cod- 
icil as proved in New York, and therefore is estopped to question 
its validity. I find no évidence establishing such fact. While in the 
first instance objections were filed to both will and codicil and mém- 
orandum, thèse were abandoned as to the will proper, and the sole 
question was over the codicil and mémorandum. The proof of the 
will proper was and is valid, and the issue of letters to Hervey E. 
Eaton was and is valid, and conferred power on him to pay ail debts 
owing by Elizabeth S. Eaton, whether owing to persons in New York 
state or elsewhere. He has the right to administer the estate, but 
not to distribute same except according to the Iaw of the state of 
Michigan. How far he may be protected in making payments to Mrs. 
and Mr. Jacobs under the codicil can be determined in an appropriate 
proceeding. If I am correct in my understanding and interprétation 
of the will and codicil, allowing both to stand, and, if both stand, the 
executor is fuUy protected, as the codicil in providing for the care 
of George A. Storms by Mrs. and Mr. Jacobs simply modifies the 
condition of the will imposing that duty on Mrs. Higgins, but does 
not revoke or annul the gift of $100 per month to her. 

My conclusion, therefore, is pursuant to Waterman v. Canal L,ou- 
isiana Bank & Trust Co., Executor, 215 U. S. 33, 30 Sup. Ct. 10, 
54 L. Ed. 80, that the complainant, Susan C. Higgins, is entitled to 
a decree establishing her interest in the estate of Elizabeth S. Eaton, 
late of Ann Arbor, Mich., and now in the hands of Hervey E. Eaton, 
as executor, etc., under the last will and testament of said Elizabeth 
S. Eaton, viz., that the legacy to her of $100 per month for and dur- 
ing the term of her natural life is not revoked expressly or by impli- 
cation or substitution, but is in full force and efïect, and is a charge 
on the income of the personal estate and property of said testatrix 
to be paid in due course of administration by said executor if dis- 
tribution is retairted in New York, or by the administration with the 
will annexed in case such property is transmitted to Michigan for 



VANDERBILT V. BI8HOP 971 

distribution and aiso fixing the amount now due her. Mrs. and Mr. 
Jacobs are not before this court, nor was their présence necessary, 
and the effect of the payment to them pursuant to the codicil on the 
exécuter is not determined, although this court is of opinion such pay- 
ment is fully justified if the codicil is finally held to be a part of 
the will. 

Decree accordingly, with costs to be paid from the estate in due 
course of administration 



VANDERBILT et al. v. BISHOP et al. 

(Circuit Court, D. Oregon. July SI, 1911.) 

(No. 3,647.) 

1. Oancellation of Instruments (§ 45*) — Rescission — Fbaud — Evidence. 

A vendee seeking to rescind a contract for tlie sale of land for frauda- 
ient représentations must establish fraud by clear and irréfragable évi- 
dence. 

[Ed. Note. — For other cases, see Cancellatlon of Instruments, Cent. Dig. 
§§ 157-193 ; Dec. Dig. § 45*] 

2. Vendok and Pubchasek (§ 33*)^CoNTBACT op Sale — Eescission — ^Fbaud. 

Misrepresentatlons sufficient to vitlate a contract for the sale of land, 
must not only relate to a material matter constituting an inducement to 
the contract, but to a matter respenting which the vendee did not possess 
means of knowledge, and it must also be a misrepresentation on which 
he relied and by which he was actually misled to his injury. 

[Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 
38-40; Dec. Dig. § 33.*] 

3. Vendor and Pubchasee (§ 44*) — Contbact of Sale— Vacation— Feaud— 

Evidence. 

Evidence held to require cancellatlon of a contract for the sale of an 
orchard for false représentations concerning the âge and variety of the 
trees, and the condition and quallty of the soil. 

[Ed. Note. — For other cases, see Vendor and Purchaser, Dec. Dig. § 44.*] 

4. Cancellation of Instruments (§ 58*) — Contract— Cancellation— Fbaud 

■ — Damages. 

AVhere a contract for the sale of an orchard was canceled for the ven- 
dor's fraud, the vendee was entitled to reeover the money paid on the 
contract, with interest from the day of payment, the amount expended 
in the care and cultivation of the orchard, in addition to costs and dls- 
bursements. 

[Ed. Note.— For other cases, see Cancellation of Instruments, Cent 
Dig. §§ 118, 120; Dec. Dig. § 58.*] 

In Equity. Bill by Oscar Vanderbilt and another against Minette 
Thullen Bishop and another, to foreclose a contract for thfe sale of 
real estate, in which défendants filed a cross-bill to cancel the contract 
and for recovery of the money paid thereon for fraud. Bill dis- 
missed, and relief granted on défendants' cross-bill. 

On March 22, 1910, Oscar Vanderbilt and wife entered into a contract 
with Carrie E. Schmick, acting as the agent of Minette Thullen Bishop and 
Joseph C. Thullen, whereby Vanderbilt and wife agreed to sell to Bishop 
and Thullen, and the latter agreed to purchase, a certain orchard, the prop- 

•For other cases see same toplo & i ndmbeb in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



972 188 FEDERAL KBPOBTJBK 

erty of Vanderbilt, comprising 30 acres, for tbe prtce and considération of 
$43,000, whieli sald sum Bishop and Thnllen agreed to pay in uaanner fol- 
lowing: $1,000 In cash, $9,000 on or before 30 days, $5,000 on or before 90 
days, the further sum of $5,000 on December 1, 1910, and tbe remalning 
$23,000 on or before flve years from the date of the contract, ail det'erred 
payments to draw Interest at the rate pf 7 per cent, per annum from the 
terminatlon of a period of 90 days after the signiug of the contract. It was 
further agreed thaï, upon the payment of the $5,000 due December 1, 1910, 
the vendors should exécute to the vendees a deed to the premises, and that 
tbe vendees should give a mortgage back as security for the paymeut of the 
balance remalning due on the contract. Many other stipulations are set 
forth, but they are not material to the présent controversy. The vendees 
made the first payment of $9,000, but defaulted on the next following of 
$5,000. Thereupon Vanderbilt and wife Instituted a suit against Tliullen 
and Bishop for a strict foreclosure of the contract; or, if not agreeable 
to equity, then they pray that the property be sold and the proceods applied 
to the payment of the balance of the purchase price. The défendants, deny- 
Ing plaintiffs' rlght of foreclosure, set up, by way of cross-blll, mlsrepre- 
sentation and fraud on the part of the plaintiff Oscar Vanderbilt and bis 
agent, John L«land Henderson, whereby the défendants were JjUuced to pur- 
chase the premises, and pray a reseissloïi. Thèse allégations, ueing denied, 
présent the real Issues of the controversy. 

A. J. Derby and John H. Hall, for plaintiffs. 

F. V. Holman and A. A. Hampson, for défendants. 

WOLVERTON, District Judge (after stating; the facts as above). 
The spécial matters of fraud alleged are the following, briefly stated : 

That Vanderbilt and Henderson, his agent, represented and stated 
to Carrie R. Schmick, the agent of défendants, that the parcel of land 
bargained to be sold contained an orchard, planted with apple trees 
bearing merchantable fruit, and that it was a first-class commercial 
orchard; that such trees comprised 14 différent varieties, and no 
more ; that the land was composed of first-class soil, entirely suitable 
for the growing of apple trees and the propagation of an apple or- 
chard, and that there was no hardpan thereon; that the net returns 
from the orchard during the years in which Vanderbilt was the owner 
were equal to a net income of 20 to 30 per cent, on $43,000 for each 
year ; that the net returns for the year 1908 were $11,332 ; that the or- 
chard was planted with trees 14 years of âge, excepting 50 or 60 trees 
which hâd been reset ; that said orchard was of the value of $45,000, 
and had been greatly benefited by deep plowing — which statements and 
représentations were false, so known to Vanderbilt and Henderson, 
and were made for the purpose of misleading and overreaching de- 
fendants, that the défendants relied upon them, and were thereby in- 
duced to enter into the contract of purchase. The falsity of such rep- 
résentations is set forth in thèse particulars, namely : That the orchard 
is planted with trees 17 years of âge instead of 14; that it comprises 
24 to 36 varieties instead of 14 only; that the soil is not first-class, 
suitable for growing apple trees, and without hardpan, but that it is 
hard and impervious to moisture, and impénétrable to the roots of 
the trees, and to a great extent consists of hardpan; that the net 
returns from the orchard were much less than as represented; that tl- ; 
orchard was not benefited by the deep plowing, but on the contrai y 
was irreparably damaged and injured; that the same is not a first- 



VANDERBILT V. BISHOP 973 

class orchard planted with trees bearing merchantable varieties of 
apples, and is not of the value of $45,000, or any greater sum than 
$20,000. 

Reduced to the questions of substance really involved, they fire: 
Was the orchard first-class, and bearing a merchantable commodity? 
Did it consist in trees of varieties in excess of 14? Were the trees of 
the âge of 17 years instead of 14, and does the soil contain hardpan 
under any considérable proportion of the area of the orchard? And, 
if the first of thèse is to be answered in the négative, or the three 
latter or any of them in the affirmative, then did Vanderbilt and 
Henderson knowingly represent to the contrary, and by so doing mis- 
lead défendants to their injuiy? 

It is largely a matter of opinion as it respects the estimated value 
of the property. Also the falsity of the alleged représentations touch- 
ing the profits or net returns previously realized from the orchard 
bas not been shown ; nor do I think the issues tendered as to the 
hurtful results of deep plowing hâve been sustained. Thèse may 
therefore be eliminated from further considération. 

There is little dispute in the testimony respecting the merchantable 
quality of the apples produced, with the exception of some from a few 
trees only. Not ail of them were of choice varieties, but practically 
ail were salable at fair priées. A "standard commercial orchard" 
lias been spoken of in the development of the testimony, but, as de- 
fined — it being an orchard with but few varieties of apples, namely, 
from two to four — the question as to whether the one hère is of 
that class could hardly arise, as it is a thing conceded that it contains 
14 varieties and more. It seems that the purchasers, acting through 
Mrs. Schmick, were in quest of such an orchard, but, on finding this 
one, purchased it notwithstanding it did not come within the class. 

To détermine the questions remaining, it will be necessary to re- 
view briefly the testimony of the chief witnesses for the parties. Mrs. 
Schmick was the accredited agent of her father and sister. Of this 
there is no dispute. John Leland Henderson was the authorized 
agent for Vanderbilt in the sale of the orchard. Mrs. Schmick, hav- 
ing had some prior dealings with Henderson, came to Hood River in 
March, 1910, and applied to him (pursuant to an arrangement previ- 
ously made through correspondence) for a list of the best orchards 
in the district that he had for sale, and accordingly a list was handed 
to her. She testifies that her désire so expressed was for a list of 
"standard commercial orchards." She was without particular or prac- 
tical knowledge of apple orchards at the time. She subsequently ex- 
amined ail the orchards on the list save the first named (being the one 
in question hère), to which she objected on account of the number 
of varieties, the list showing 14. Later, however, she made an exami- 
nation of this orchard also, which, according to her testimony, was 
brought about by the solicitation of Mr. Allen, who was in business 
with Henderson, and is referred to as the junior member of the firm. 
In this connection, it should be stated that Henderson and Allen were 
associated together as a corporation in the transaction of law business, 
as well as in real estate. Mrs. Schmick further states that Henderson • 



974 188 FEDERAL EEPORTEK 

represented to her, on numerous occasions, that the Vanderbilt orchard 
was of the kind indicated by the list. Net only this, but that he dis- 
cussed with her the advisabiHty of having différent varieties, claiming 
that,it was not a détriment to any orchard, the varieties being choice 
or first-class in quality. He being an orchardist of long expérience 
in that locahty, she placed strong rehance upon his statements and 
judgment. The first time Mrs. Schmick visited the orchard was with 
a party, Allen having telephoned her that they were going ont and 
asked if she would go along, to which she assented. On the same 
trip she went to Vanderbilt's home orchard, a half-mile distant, and 
there talked with him about the orchard in question ; in fact, discussed 
it much in détail. He also said he considered that the fact of numer- 
ous varieties was not a détriment, and stated that he had netted $11,- 

000 from the orchard in 1908. He further represented that the âge 
of the orchard was 14 years, and to her question, "Is there any hard- 
pan in this orchard?" replied, "There is not a foot of hardpan in that 
orchard," and said, "I will give you a dollar a foot for any you can 
fînd." She inquired again, "How deep is the soil?" To which he 
replied, "Look down the well. You can see how deep the soil is. 
There is a 50-foot well there." And further remarked, "Why, the 
trees and the crop would show you that this is perfect soil. I hâve 
been an orchardist hère for six years, and hâve a fine orchard of my 
own, and I certainly know soils of the valley." This was in March, 
when the trees were dormant, and one could not tell whether they were 
thrifty or not. The soil looked fine as they were plowing, but Mrs. 
Schmick claimed to know nothing of soils at the time. Mrs. Schmick 
wrote at once to her father and sister in California of the favorable 
représentations made by Vanderbilt, but before concluding to close a 
bargain for the property, she desired to visit the same with Hender- 
son, and so arrangea the matter with him. She testifies that she was 
stopping with Henderson at the time, was confidential with him, and 
that he took a "fatherly sort of interest" in her, and gave her a great 
deal of advice about the valley. Henderson's brother became one of 
the party, at the request of both Mrs. Schmick and Henderson. The 
brother was from Moscow University, had been in the employ of the 
United States, and was represented by Henderson to possess a knowl- 
edge of orchards. When they arrived out, there was another man 
in the orchard — Mr. Dethman — and Henderson then said to Mrs. 
Schmick, "Hère is Mr. Dethman, one of the oldest orchardists in the 
valley, and he cleared this land, rolled the logs, plahted the trees ; he 
can tell you anything you want to ask him regarding the orchard — 
the soi], the trees, anything." On inquiring of Mr. Dethman regard- 
ing the trees, and in particular about the soil, he said, "Why, I will 
give you a dollar a foot for every foot of hardpan in this orchard. 

1 planted thèse trees myself. I dug the holes. I rolled thèse logs by 
hand." Mrs. Schmick asserts that she relied absolutely on his state- 
ments. Thereupon she wrote again to her sister, who telegraphed 
back to make the purchase. In pursuance of the advice, the contract 
was entered into for a purchase of the orchard at $43,000. There is- 
a dispute in the testimony as to whether Dethman was in the orchard 



/" 



VANDERBILT V, BISHOP 975 

at the time Henderson and Mrs. Schmick arrived. Both Henderson 
and Dethman testify that he was in an adjoining orchard — a Mr. David- 
son's — and came over of his own accord. Mrs. Schmick further tes- 
tifies that just before signing the papers, she said to Mr. Vanderbilt, 
"Now, this orchard is exactly as you hâve represented it to me in 
every détail — the trees, the âge, the varieties? You will guarantee 
that it is just as represented?" And he replied, "It is just as I hâve 
represented it, and you will get a fine orchard." The papers were 
then signed up, and the vendees went into possession. 

John Leland Henderson testifies, in effect, that a list was requested 
of his corporation, through correspondence ; that Mr. Allen submitted 
a list of the properties held for sale, which vvitness thinks he never 
saw until in court ; that Mrs. Schmick and Mrs. Bishop had written 
to witness that, should they buy any orchards, they would expect him 
to represent them as their attorney, and that when Mrs. Schmick 
came in on the occasion mentioned by her, in March, 1910, with a 
view to buying, he told her that under no conditions would he hâve 
anything to do, either directly or indirectly, in advising her with réf- 
érence to the purchase of any orchard or any pièce of ground; that 
if he was acting as her attorney, he could only attend to the légal part 
of it ; that after she had decided upon what she wished, if she found 
something that suited her, he would then tell her whether she had made 
a wise sélection or not, but that he wanted to be entirely foot-loose so 
as to attend to the duties of an attorney without any bias or anything 
of that character; that such was the understanding between himself 
and Mrs. Bishcp and Mrs. Schmick, which was acted upon throughout 
the negotiations. Mrs. Schmick went to Henderson's house, at his 
wife's invitation, and stayed there with the family until the purchase 
in question was completed. Henderson further testifies that, after 
Mrs. Schmick had made her investigations, she said to him, "Well, 
I think of ail the orchards I hâve seen, that I am the most impressed 
with the Vanderbilt orchard, and I think I will buy it," and he replied 
to her : 

"I think you had better wait and make a careful examination, and décide 
certain questions. I hâve been told that there was hardpan in that orchard. 
I don't know anything about It, for I hâve never been in the orchard in my 
llfe. I hâve been told that the varieties, the number of varieties of trees 
in there, are more than you state there bas been represented to you. I 
don't know anything about it. I hâve been also told that there was some 
complaint about some rock or hard ground. Now, Mr. E. L. Smith and 
Dr. Watt owned those places and planted the trees ; that is, they controlled 
the planting of the trees. Mr. Chris Dethman, so I am informed, actually 
had the charge of planting the trees. Now, there is my brother hère, right 
from Hoscow Universlty, who has been employed by the United States Gov- 
ernment for years as a hortieulturist. He knows orchards. I would advise 
you to see him. See thèse other gentlemen. Hâve an examination of the 
ground made — see what the character of this is. And I don't want you to 
come back afterwards and say that this place, if you décide upon buying it, 
having been sold through a member of our firm, had been misrepresented. 
You fmd thèse things out for yourself, and do not décide now. Wait till 
to-morrow." 

The next day after this conversation, Henderson, his brother, and 
Mrs. Schmick drove to the orchard. On arriving there, Henderson 



976 188 FEDBEAL REPORTER 

further relates, Dethman came over to where they were from David- 
son's orchard; that Dethman was introduced to Mrs. Schmick, and 
that he (Henderson) then told her that Dethman had planted the 
orchard, and that she could ascertain from him about it, "as to the 
kind of soil, and whether there was any hardpan or anything of the 
kind there." Henderson further relates, in the same connection, that 
he had previously telephoned to VanderbiU, and wished he would 
hâve a man there with a shovel to dig holes wherever Mrs. Schmick 
wanted, but that Vanderbilt had repHed that there were 50 or more 
holes that were recently dug in différent parts of the orchard, and that 
Mrs. Schmick could examine those. The parties walked through the 
orchard. Mrs. Schmick, during the time, inquired of Dethman about 
the nature of the ground, and whether he had planted the trees, and 
ail about it. She also conversed with Prof. Henderson as to the 
gênerai condition of the orchard. Dethman assured her that there 
was no hardpan in the orchard, as he understood hardpan, and Mrs. 
Schmick examined the holes to détermine for herself. On returning 
to Hood River, Mrs. Schmick expressed herself as satisf.cd with the 
orchard, and Henderson told her that he thought she had tnade a good 
purchase. She then authorized Henderson to make an ofïer to Mr. 
Vanderbilt of $43,000 in her behalf, which was later accepted, and 
the negotiations were closed. Henderson affirms that, up to the time 
she decided to buy, he saidi not a word to her expressive of his opinion 
relative to the advisability of her purchasing any particular tract. 

On the next day Vanderbilt came over, and after some conférence 
with référence to payments and rate of interest, the contract was 
signed. In connection with the transaction, Vanderbilt gave to the 
purchasers a written guarantee that the orchard would produce 10,- 
000 boxes of apples the following season, and that he would pay to 
them $L00 per box for every box falling short of that amount. Some 
time later Mrs. Schmick and Mrs, Bishop put the orchard into the 
hands of Henderson for sale, at $2,000 per acre if sold) as a whole, or 
$2,250 per acre if sold in 10-acre tracts. Henderson relates that they 
said at the time thàt the proposition was too big for them to handle. 
The property remained in the hands of the agents for sale for 47 
days, when it was withdrawn. On cross-examination, Mr. Henderson 
further testified that he considered the orchard third-class in the sensé 
of first-class, better than good, and good ; that he had heard from one 
or two parties (mentioning Mr. E. L. Smith and Dr. Watt) that there 
was hardpan in the orchard, and that he heard Dethman say to Mrs. 
Schmick, "There is no hardpan in hère in this orchard, and I will give 
you a dollar a foot for every foot of hardpan in this orchard," or 
words to that efïect, and witness did not think that there was any 
hardpan to be found therein. 

Vanderbilt testifies that he purchased the orchard from Dr. Watt, 

practically five jears ago this spring, and that Watt told him that the 

trees were then 11 and 12 years old; that about a year or a year and 

, a half ago he. placed the orchard in the hands of Heilborn for sale at 

] $30,000, and later, the date is not fixed, he placed it in the hands of 

'Henderson for sale at $1,500 per acre; that Mrs. Schmick came to 



VANDEBBILT V. BISHOP 977 

his house with Mr. Allen, and) she talked with him about the orchard ; 
that he told her he had made money out of it ; that the first two crops 
had paid him back the money he had invested ; that orchards about 
Hood River were rated as an investment on the basis of 30 per cent, 
on $1,000 per acre, and that this orchard would pay from 15 to 20 per 
cent, on the price he was asking. As to the soil, she asked if there 
was any hardpan in the orchard, and he told her that Mr. Dethman 
hadi grubbed the orchard, and he had offered a party, who had made 
the contention that it contained hardpan, a dollar a foot for every foot 
of hardpan he could find in there ; that witness had plowed the orchard 
from the first year he bought it, and at one time on an average of 
from 12 to 14 inches deep, and that he encountered no hardpan ; that 
the top soil or layer is a loam, or what is called red-shot soil, being a 
little sandy. Below that it is the same as ail soil about Hood River, 
and a clay subsoil, but that this pièce of ground bas been cultivated 
for over 20 years, mostly shallow tillage, that Vi'ould cause a cake to 
form in a layer below the surface, and until you go under that with 
a plow it is hard, but not impervious to water or the roots of trees ; 
that hardpan is a hard clay soil, impervious to water, and no végéta- 
tion will penetrate it, and that the only hardpan he had seen in Hood 
River was the blue clay subsoil ; that there is a ridge running diagonal- 
ly through the orchard, which dries sooner than the rest, but that the 
trees there are as good as any other place in the tract. The witness, 
continuing, testifies that he next saw Mrs. Schmick in Henderson's 
office at the time the contract was closed; that he toldl her again 
about the earnings of the orchard, and that he had been able to 
handle the odd varieties for good prices, by selling independently of 
the union ; that the matter of hardpan was mentioned, and he again 
told her what Dethman had said — also that she could go to any number 
of peuple in Hood River, and probably half of them would bave a good 
Word to say and the other half would knock the orchard ; that the 
main varieties were noted on the slip he had given to Mr. Allen, and 
the others came mostly from resets that had been put in to replace 
trees which had been removed, but he did not state to her the num- 
ber; that he stated that the orchard was 13 or 14 years old, which 
he based upon what Dr. Watt had told) him. On cross-examination, 
he testifîes that he bought the orchard in the spring, of 1906, and as 
to the hardpan as follows : 

"Q. Now, at that time you stated — ^you did not give the exact words, but 
did you not say to her that there is no hardpan In this orchard, and that you 
would give her a dollar a foot for every foot of hardpan in that orchard? A. 
No. sir. Q. Well, then, what did you mean that you repeated about what 
Dethman had said? A. I did that to answer her question, because that was 
the way I understood it I heard Mr. Dethman make an offer to a party who 
stated that there was hardpan in there that he would give him a dollar a 
foot for every foot he could flnd. Q. When Mrs. Schmick asked you if there 
was any hardpan, you told her there was uot, did you not? A. That was my 
answer. My answer was, as I stated, In regards to virhat Mr. Dethman had 
told. Q. I didn't ask your means of information. You didn't explain to her 
that Mr. Dethman said that? A. That was the answer I gave her; what Mr. 
Dethman had said to this other party. Q. You stated that as your own 
knowledge, when she asked you if there was hardpan. you stated there was no 
hardpan? A. I did not. I answered her in that Indirect way, as I belleved 
188 F.— 62 



978 188 FEDERAL REPORTER 

It at the tlme, and as I now believe it Q. What did you state? A. I stated 
in regard to hardpan thaf Mr. Dethman — a man who had grubbed the or- 
chard, a neighbor of mine — liad stated to a party down town wlio said tliere 
was liardpan in tliere, that be would give liim a dollar a foot for every foot 
of liardpan be found in tbe orchard. Tbat was my answer." 

Thèse are the principal witnesses who tell about the transaction, 
but there is corroboration both ways. It will be well, therefore, to 
ascertain what that corroboration is, and how it affects the case. 

C. H. Sproat, who was appointée! receiver in the case, gathered the 
fruit and marketed the same. He testifies that 21 varieties of apples 
off the orchard went through the union for sale, and there were a few 
other varieties besides. He further states that in cultivating the or- 
chard he found it in very good condition, excepting a few acres, from 
five to seven, which lie on a ridge running through the orchard from 
northeast to southwest. As to this, he says the spring-toothharrow 
did not make very much impression, which indicated to his mind that 
the soil was clay, and had become iDaked by reason of the work not 
having been done soon enough ; that it was not hardpan, as he under- 
stood it ; that hardpan, as considered in Hood River, is a layer of soil 
"of blue clay and impervious to water," underneath a top layer of 
soil ; that he had always heard of it in that way, but did not consider 
himself an expert. Witness was of the further opinion that the or- 
chard was not first-class as compared with other orchards in Hood 
River, and that if he were to grade the orchards in that section, he 
would put them into five classes, àndi would rate this orchard from 
médium to good, or médium plus. 

Roscoe W. Thatcher, who is a chemist and director of the State 
Experiment Station of Washington and head of the Department of 
Agriculture in the State Collège, testifies that on December 29, 1910, 
at the request of Mrs. Schmick, he made an examination of the soil. 
This he did by digging holes in the earth, from 18 to 20 inches deep, 
in différent parts of the tract, and obtaining samples. As a resuit of 
his analysis, he says : 

"I found tbe entire orctiard having a well-deflned dividing-line between the 
surface and the subsoil. This dividlng-line varied in depth from four to 
twelve inches, apparently at the depth at which the soil had been plowed. 
Below this Une, throughout the entire orchard, was a sharply defined layer 
of sofl which I w.ould class as hardpan. I found, throughout the entire or- 
chard, that the roots of the trees were wholly — practically wholly— above this 
Une of subsoil. » * * The soil is diiïerent in différent parts of the or- 
chard. The ridge of which I hâve already spoken is a much heavier clay, red 
clay, and when wet, as it was at this time, much more plastic and sticky 
than in the south, extrême southeast corner, and very much more so than in 
the north and west portions of the orchard. But I found the roots of the 
trees to be ail within the surface layer everywhere that I dug throughout the 
orchard. The subsoil or hardpan is much barder, and has in it a cementing 
agent on the ridge, and, so far as I can detect, has no cementing agent in the 
Jiortherly and westerly parts of the orchard. Q. What Is that cementing 
agent? A. Iron hydrate or carbonate in the ridge. Q. What, approximately, 
was the area of what y ou speak of as tlie ridge? A. I didn't make a eareful 
estimate of its area. Q. Approximately. A. But it appeared to me to be per- 
haps a little less than one-fourth of the entire orchard. Q. Now, from your 
observation of this soil and of virgin land adjoiuing it, what would you say 
as to what was the cause of this blanket of from four to twelve inches over 



VANDERBILT V. BI8HOP 979 

the soilî That is, as to whether It was that way naturally, or deooînposed, 
dislntegrat'ed, or whether It was due to tillage? A. I thought from my ob- 
servation that it was due to tillage, and so I went outside the orehard Into 
some raw land, that is, uncultivated land, to the east of the orehard, and 
there I found no such dlviding line. The soil was uniform from the surface 
downward. Q. And ail hardpan? A. It would ail be of this type which I 
would class as hardpan." 

On redirect examination, witness continuedl: 

"Q. Now, you spoke about digging thèse holes, and that the ground was 
very wet? A. I said it was molst — not very wet. Q. Well, moist. You could, 
by pressure, dig into this hardpan? A. Yes, sir. Q. But if that hardpan had 
been dry, it would hâve been a very différent matter, would it not, compara- 
tively dry? A. Particularly on that ridge. When I fook the samples home 
and began to dry them out for the purpose of analysis, I found, in order to 
prevent their drying into a solld mass, I had to stay right with them and 
keep breaking them down. I spent one whole evening simply breaklng the 
samples down, by pounding them with a club as they dried. Otherwise, they 
would hâve dried Into a solid chunk. Q. In other words, in the growlng sea- 
son the tendency of this hardpan is to grow hard, so at last the roots don't 
penetrate into it? A. I should think so, yes, sir. • * * I think that this 
whole soil would he hardpan if it had not been moistened at the surface. 
Hardpan Is deflned by authorities as being any layer of soil made up of clay, 
either with or without an admixture of sand and gravel, whieh Is Impervious 
to the entrance of plant roots. ♦ * * In this particular instance, the évi- 
dence convinces me that the hardpan would extend elear to the surface of the 
ground if it had never been tilled, because I found it so in adjoining land 
which had not been tilled." 

E. L. Smith testifies that in the fall of 1892 or spring of 1893 he 
made a contract with Dethman, concerning the land upon which the 
orehard in dispute is growing, by which witness was to bear ail the 
expense of planting the orehard, and in considération thereof Deth- 
man was to deed to him an undivided one-half interest in the land, 
but in 1895 witness bought the entire interest, and became the sole 
owner, and that 12 acres were planted in the spring of 1893, and the 
remaining 18 acres in the following spring of 1894. As to the char- 
acter of the soil, he says: 

"■The northern part of the orehard I considered very good soil, and the 
trees made a fine growth there. When we planted the eighteen acres towards 
the south part of the orehard, we eneountered a good deal of difHculty there. 
It is a différent formation entlrely. It is a clay formation, and in digging 
the holes there, over quite an extended area, after spading out the surface 
soil, we had to use mattocks and picks to loosen the ground up before It 
could be taken out Q. Is there any hardpan in that orehard, Mr. Smith? A. 
I ealled that hardpan, where we could not spade it out, and had to use a 
mattock or a pick. T ealled that hardpan. Q. Do you call that a first-class 
commercial orehard, Mr. Smith? A. No, sir, I cannot consider It a first-class 
orehard." 

On cross-examination, witness says he planted the trees in April, 
when the gron'-'rl had not yet dried out from the winter rains; that 
as to the 18 acres, he was disappointed in the soil, and for that rea- 
son dug the large holes, thinking it would help out considerably. 

A. P. Paasch testifies that he helped plant the orehard; that they 
dug the holes about three feet in diameter, and from 20 to 22 inches 
in depth ; that they used a long handled shovel and a grub hoe ; that 
they spaded as far as they could with the shovel, and the lower part 



980 188 FEDERAL EBPOBTEK 

they loosened up with the grub hoe, to get the soil out, it being too 
hard to spade — that was on a ridge rttnning from the east and diago- 
nally through the middle of the orchard. When asked if there was 
any hardpan in the orchard, witness answered : 
"I call It hardpan what I can't spade. * * » This is red clay hardpan." 

Witness did not consider it a first-class orchard. He testines that 
the surface soil varied ail the way from six to eight inches in depth, 
some places not so much. On cross-examination, he asserts that the 
clay spoken of as hardpan looks like rusted iron, and is so hard that 
the roots of trees cannot go through it; that he has seen the roots 
lying very high up on the surface of the ground; that he has a little 
patch in his own orchard similar to the ridge spoken of; that he 
dug the trees out of it, and found the roots ail on top of the ground; 
and that there are some good trees on the Vanderbilt orchard — fair 
trees — on the north end, but that he would not call the average of 
them good trees. 

Mason G. Fifer testifies that he cultivated the orchard in 1904 ; that 
it is a very peculiar soil in some parts, one great fault being that it 
bakes so hard it is difficult to cultivate, which is especially true of the 
ridge running through the orchard ; that he considers the orchard 
contains hardpan, which lies more or less ail over it, the depth of 
the surface soil being in some places only four or fîve 'inches, while 
in other places it is probably nine or ten inches. 

Clay S. Prather, of the Corvallis Experiment Station, who has had 
expérience in apple culture in the Hood River district, testifies that 
he was employed as foreman of the orchard for about two months; 
that there is hardpan in ail of it, with a covering of soil to a depth 
on the ridge of from 3 to 4 inches, and elsewhere from 12 to 14 
inches, and that the area occupied by the ridge is 12 to 15 acres. 

George R. Castner, the county fruit inspecter, testifies that he made 
an inspection of the orchard near the middle of June last, and that, in 
his language, "Many of the trees you can take hold of them with 
ycur hand and give them a pull, and lift the roots, as if a good, strong 
man could pull the tree out. You can see the roots lift right close 
to the top of the ground. I hâve taken hold of a good many in that 
way, and that is the condition." He also states that the indications 
were that there was a large area of the orchard showing the shallow- 
rooted condition of the trees — that is, that they sit nearly on top of 
the ground — but the condition exists in larger measure on the ridge 
than elsewhere. 

On the other hand, C. Dethman, who once owned the land and sold) 
to E. h. Srnith, and who assisted in planting the trees, testifies that 
he was foreman on the work; that 12 or 13 acres were set out in 
1894, and the remainder of the orchard in 1895 ; that in the northern 
part of the orchard there was no trouble in digging the holes; that 
in the other part they got in pretty late in the spring, the ground was 
dry, and they used a mattock and shovel.' When asked if there was 
hardipan under the soil, he answered, "No, sir ; what I call hardpan, 
there is no hardpan," and that "the roots of the trees penetrate in that 



VANDERBILT V. BISHOP 981 

ground." The witness relates, further, that he first met Mrs. Schmick 
at the orchard, and was introduced to her by Mr. Henderson; that 
he was at the Davidson orchard when Henderson drove up, and that 
he went over to where they were, it being but a short distance, to 
talk with him ; that on being introduced to Mrs. Schmick, she inquired 
of him about the character of the soil, whether there was any hardpan 
in the orchard, and also wanted to know about the trees, their variety, 
etc., and he says: 

"I told her that I offered a dollar for every foot that they could find In 
that orchard, as far as hardpan was coneerned — vvhat I understood t'o be 
hardpan." 

Witness further says that he beheved at the time, and now beheves, 
that there is no hardpan in the orchard ; that he showed her the trees, 
and explained to her the several varieties. He further relates that he 
dug postholes around the place for fencing, and encountered no hard- 
pan. On cross-examination, he affirms that hardpan is found on 
low, wet land, where the water cannot penetrate through — that that 
was what he called hardpan. 

Dr. J. F. Watt, who owned the orchard for a while, testifies that 
he had it cultivated shallow, because that was considered the proper 
method of cultivation at the time ; that he did not consider there was 
any hardpan under this cultivation, and that there is no soil in the 
orchard that the roots of trees will not penetrate. 

Prof. L. F. Henderson testifies that he went to the orchard at the 
request of Mrs. Schmick, and acted rather for the protection of her 
interest; that hardpan was mentioned to Mr. Dethman, and he said, 
"I think there is no hardpan on this place. Look in those holes;" 
that Mrs. Schmick and witness did look in the holes, which were 
about two feet in depth, and the soil looked very good; that in his 
judgment it wouldi not be impervious to either water or the roots, of 
trees. Witness further explained that if holes of the kind referred 
to were left through the winter, there would be a breaking up of the 
hardpan into more or less little pièces — a dropping off from it. 

William Ehrck testifies that he owns an orchard adjoining the one 
in question ; that the soil is the same, and that there is no hardpan on 
his place that he knows of. 

Frank C. Dethman testifies that, during the trial of the case, he in- 
vestigated six trees in the orchard, by digging under to ascertain the 
nature of the roots, and found that the main roots extended down- 
ward into the soil from two to four feet, which was as far as he dug, 
and beyond. Some of the trees examined were on the ridge spok- 
en of. 

The évidence shows that Vanderbilt does not really claim that the 
orchard is first class, but he does insist that it is a good and prontable 
orchard, and under proper management would yield a profit of from 
15 to 20 per cent, on an investment of $45,000. It is quite probable 
that his représentations in this particular do not go beyond the facts 
as they exist. Nor am I disposed to place much emphasis upon the 
spécification that Vanderbilt represented the orchard to be first-class. 
It runs so near along the borderline of opinion, when made with ref- 



982 188 FEDERAL EBPORTER 

erence to an orchard under the conditions found to be prevailing in 
the district, that one cannot be clear in rating it as a statement of an 
issuable fact upon which alone to predicate a cause for canceling 
the contract. The alleged représentation and the testimony respecting 
it may, however, be considered along with other alleged misrepresenta- 
tions, which seem more material to the controversy. 

That Vanderbilt represented that the orchard contained but 14 
varieties of apple trees appears satisfactorily from the proofs. The 
list handed to Mrs. Schmick upon her inquiry for a description of 
the orchards the Henderson Company had for sale shows this. It 
is of small importance whether the list was handed to her by Hender- 
son, or by Allen or some clerk in thé office. It was done with the 
entire approval of Henderson, who was the agent of Vanderbilt. Not 
only this, but it was with the express personal approval of Vanderbilt 
himself, for he made out the list when he put the property in the 
hands of his agents for sale. So that nothing could be plainer than 
that this paper containing the list was an apt représentation respecting 
the varieties of the apple trees contained in the orchard. The informa- 
tion was very material to the purchaser, because it bore directly upon 
the value and utility of the orchard as a business venture. Now, it is 
conclusively proven that the orchard contains 21 varieties, and more. 
Such is the testimony of Sproat, the receiver, who gathered and mar- 
ketedl the apples, and it is not seriously disputed. The numerous 
varieties are accounted for somewhat by reason of the resets put in to 
replace trees removed ; but, however accounted for, the fact remains 
that the orchard contains many more varieties than as represented, 
and no plausible, valid or substantial excuse is afïorded for making 
the misrepresentation. Again, this in itself would not be sufficient 
cause for disturbing the contractual relations between the parties. 
While material, and somewhat vital, it is not of that especial signifi- 
cance in ail its bearings that the court could therefore say that the 
orchard is not such a one as was bargained for. 

Respecting the âge of the trees, it is clearly proven that they were 
16 and 17 years old at the time of the sale. Vanderbilt's positive rep- 
résentation was that they were 14 years old. This is verified by the 
list submitted, which was made up by him. There may be a question 
as to whether Vanderbilt knew their âge when he made the représenta- 
tion. However that may be, he made it as though of a fact known 
to him, and the légal effect is the same. The représentation was of a 
fact essential to the negotiations, and one which was not apparent 
from an inspection of the trees themselves. It required inquiry be- 
yond that to arrive at the truth — inquiry of persons who had knowl- 
edge of the fact. This Mrs. Schmick made no prêteuse of making. 

By far the most serious spécification of misrepresentation is respect- 
ing the hardpan. I am convinced that the allégations of the cross-bill 
in this particular are sustained by a clear prépondérance of the proof. 
The testimony of E. L. Smith and of Paaseh shows that the hardpan 
existed on the ridge — ^much spoken of at the time the orchard was 
planted; and that of Thatcher, Prather, Fifer and Castner that it 
exists at the présent time. True, Dethman, who superintended setting 



VANDEBBILT V. BISHOP 983 

the orchard, contradicts Smith and Paasch, andi daims that no hard- 
pan exists, but he qualifies that by adding, "as he understands hard- 
pan." It is significant, however, that he relates that it was necessary 
to useï a mattock to break up the ground on the ridge after the top soi] 
had been removed. The time of year was in April when, as Smith 
says, the moisture had not left the soil. The manner in vvhich the 
roots of the trees hâve grown is corroborative of the existence of 
hardpan. A tree that had been taken out, which shows to a démon- 
stration that the roots could not hâve run far below the surface, was 
offered in évidence, and such is the testimony of some of the wit- 
nesses. One witness, Mr. Fifer, relates that, while spraying at one 
time, the wagon was drawn against two of the trees and tipped them 
over, thus uprooting them. The most convincing testimony is that of 
Thatcher, who carefully selected samples of the soil, and as carefully 
analyzed it, and was of the opinion that hardpan existed ail over the 
orchard. While it may not exist so extensively as that, there seems 
to be little question that it does exist on the ridge described). This 
occupies a considérable portion of the orchard — from five or six acres, 
as testified by Dethman, to one-half the area, as asserted by other 
witnesses. The truth of young Dethman's testimony may be conceded, 
that he found roots of trees as low in the ground as four feet and 
still running down. Yet it does not disprove the facts as deposed by 
other witnesses. Many of the trees, doubtless, rest but slightly below 
the surface of the ground. Hardpan is defined as a layer of earth 
near the surface, which is more or less impervious to water and the 
roots of trees. This is Prof. Henderson's idea of it, with the words 
"more or less" emphasized. Hilgard says : 

"By hardpan is understood a dense and more or less hardened layer In the 
subsoll, which obstructs the pénétration of both roots and water, thus mate- 
rially llmiting the range of the former, both for plant food and moisture." 
Hilgard on Soils, p. 183. 

Whether the strata found especially on the ridge described in this 
orchard may technically be termed hardpan or not is not very ma- 
terial. It constitutes a serious, if not grievous fault in the soil, and 
it was a fault known to Vanderbilt. He must hâve known of it. It 
was known and talked of in the neighborhood. Of this he was 
aware, for he cautioned Mrs. Schmick that she would find people 
who would disparage the orchard, as well as persons who were ready 
to speak favorably of it. The quality of the strata was in the nature 
of hardpan; it was more or less impervious to the roots of trees, 
and would not take the moisture as it ought, as was demonstrated 
by the expérience with the irrigation attempted. So that, technical 
définition aside, the fault partakes so largely of the characteristics of 
hardpan as that it may be so termed. 

Vanderbilt dénies that he represented to Mrs. Schmick that there 
was no hardpan in the orchard, while Mrs. Schmick testifies positive- 
ly that he made such a représentation. He says in réfutation thereof 
that he told her that Dethman had ofïered a party who had made the 
contention a dollar a foot for every foot of hardpan that could be 
found in the orchard. When Dethman comes to testify, he employs 



984 188 FBDBKAL EEPORTBE 

almost the identical language in relating what he said to Mrs. 
Schmick on the subject, while he évades saying that he told Mrs. 
Schmick that the orchard contained no hardpan. Henderson says, 
however, that Dethman assured her there was no hardpan in the 
orchard, and Prof. Henderson says he said he thought there was no 
hardpan. 

It will be remembered that Dethman was introduced to Mrs. 
Schmick by Henderson, who advised her that Dethman could tell her 
ail about the orchard. In this wise, Dethman was made the mouth- 
piece of both Vanderbilt and Henderson, as they, to ail intents and 
purposes, vouched for his représentations. The circumstances lead 
me to place the greater credence in Mrs. Schmick's testimony on this 
subject. At any rate, what Vanderbilt and Dethman said to Mrs. 
Schmick was calculated and intended to lead her to believe there was 
no hardpan in the orchard, and the conséquence was the same as 
though they had assured her in so many words of the fact. That she 
relied upon the représentation and was misled is asserted by Mrs. 
Schmick, and I am convinced that such is the case. 

When the parties came to close the transaction, Mrs. Schmick in- 
sisted upon the exécution by Vanderbilt of the guarantee of the pro- 
duction of 10,000 boxes of apples from the orchard. This signifies 
nothing as to the représentations. Vanderbilt declared by the list 
submitted that he would so guarantee, and the exécution of the paper 
was only in pursuance of that représentation. 

[1] The law requires of a party seeking the rescission of a con- 
tract on the ground of misrepresentation that he cstablish the same 
by clear and irréfragable évidence. Farnsworth v. Dufïner, 142 U. S- 
43, 12 Sup. Ct. 164, 35 h. Ed. 931. 

[2] As to the character of misrepresentations that will render nu- 
gatory a contract of sale, the law is also well settled. A few excerpts 
from the authorities will sufïice. Says the court in Slaughter's Ad- 
ministrator v. Gerson, 13 Wall. 379, 383, 20 L. Ed. 627 : 

"The misrepresentation which wlU vitlate a contract of sale, and prevent 
a court of eçiiilty from aldlng Its enforcement, must not ouly relate to a ma- 
terlal matter constltuting an induceinent to the contract, but it must relate 
to a matter respectlng whleh the complalnlng party dld not possess at hand 
the means of knowledge; and it must be a misrepresentation upon whlch he 
relled, and by which he was aetually misled to his injuiy. * * * where 
the means of knowledge are at hand and equally avallable to both parties, 
and the sub.lect of purchase is alike operi to thelr Inspection, If the purchaser 
does not avall himself of thèse means and opportunlties. he will not be heard 
to say that he has been decelved by the vendor's misrepresentations. » • ♦ 
And the same rule obtains when the complalnlng party does not rely upon 
the misrepresentations, but seeks from other quarters means of vérification 
of the statements made, and acts upon the Information thus obtalned." 

Again, says Mr. Justice Brewer, in Farnsworth v. Duffner, supra, 
quoting from Ludington v. Renick, 7 W. Va. 273 : 

"If it appears that he (the purchaser) has resorted to the proper means of 
vérification, so as to show that he in fact relled upon hîs own inqulries, or if 
the means of Investigation and A'erification were at hand, and his attention 
drawn to them, relief will be denled." 



VANDEEBILT V. BISHOP 985 

. The distinguished jurist then alludes to Pomeroy's analysis of the 
circumstances under which a party will not be justified in relying up- 
on représentations made to him, as foUovvs : 

"1. When, before entering into tlie contract or other transaction, be aetu- 
ally resorts to the proper means of ascertaining the truth and verifying tbe 
Ktatement. 2. When, having the opportunity of maklng such examiuation, he 
is charged wlth the knowledge which he necessarily would hâve ohtalned if 
he had proseeuted it with diligence. 3. When the représentation is coneern- 
Ing generalities equally within the knowledge or the means of acquiring 
knowledge possessed by both parties." 

See, also, Farrar v. Churchill, 135 U. S. 609, 10 Sup. Ct. 771, 34 L. 
Ed. 246. 

[3] Now, to apply thèse rules to the présent controversy. It 
is strongly iirged that Mrs. Schmick not only had ail the means 
at her command for ascertaining the true facts pertaining to the 
orchard, but that she made full and ample investigation thereof upon 
her own account, and that she cannot now be heard to say that 
Vanderbilt made the misrepresentations complained of. But is this 
sustained by the évidence? 

Mrs. Schmick, when she came to purchase, had no practical knowl- 
edge of the apple industry, nor of the soil suitable for its profitable 
pi'opagation. True, she says she examined many orchards in Ya- 
kima, and in the course of her purchase examined several in Hood 
River, but she did not thereby obtain either the practical or technical 
information to make her fairly compétent to détermine for herselî 
the questions arising as to the quality of the orchard, the variety of 
the trees growing therein (they being in their dormant state, with- 
out foliage or fruit), or the nature, adaptability and productiveness 
for apple culture of the soil. Touching thèse three spécial mattera 
she was constantly seeking information, and her source of inquiry 
was through Vanderbilt, Henderson, his agent, Prof. Henderson, and 
Dethman,- to the latter of whom both Vanderbilt and Henderson re- 
ferred her, commending him as the person who could give her the 
particular information she was seeking. According to Mrs. 
Schmick's testimony, both Vanderbilt and Dethman assured her that 
there was not a foot of hardpan in the orchard, the former reassur- 
ing her immediately before the transaction was closed. Mrs. Schmick 
made no independent investigation, outside of the persons mentioned. 
Prof. Henderson went to the orchard at her request, but it was 
not until John Leland Henderson had told her that his brother would 
be a compétent person to advise with. Prof. Henderson's investi- 
gation consisted in looking into the holes that had been dug upon 
the premises for the présence of hardpan, and in this he seemed to) 
be at a disadvantage, as the frost, he says, in effect, would cause the 
clay to disintegrate. In this connection, it may be noted that, when 
the two Hendersons and Mrs. Schmick were preparing to ride out 
to see the orchard, Henderson telephoned to Vanderbilt to send over 
a man with a shovel for digging holes, by which to make the in- 
vestigation, and Vanderbilt replied that it would not be necessary, 
as there were holes already excavated in every part of the orchard. 
Thèse had been excavated for planting trees. Prof. Henderson con- 



986 188 FEDERAL REPORTER 

cluded that the clay or subsoil was not impervious to water or the 
roots of trees, and therefore that there was no hardpan présent. 
If there was any indépendant investigation by Mrs. Schmick, it was 
through the assistance of Prof. Henderson, and yet this was evident- 
ly not such an investigation as one relying wholly upon his own 
judgment would.naturally hâve been prompted to make, and it is rea- 
sonable to believe that Mrs. Schmick was depending upon the rep- 
résentations of those concerned in making the sale for the facts upon 
which to direct her conclusion to purchase. It was not a case where 
the means of knowledge were available to both parties and the sub- 
ject of purchase alike open to their inspection, the hardpan being of 
a nature, and hidden beneath the top soil, that it was not readily dis- 
cernible; its présence could be verified only by a spécial and care- 
ful examination for that particular purpose, and that by persons fa- 
miliar with the objectionable soil. Henderson told Mrs. Schmick, 
according to his own testimony, after the investigation had been 
made through his brother, that she had made a good sélection or 
"purchase," thereby confirming, if need be, her acquisition of an or- 
chard free from the especial defect she was inquiring about. Hen- 
derson claimed, contrary to the testimony of Mrs. Schmick, that he 
refused absolutely to give her any information as to quality of the 
orchard, or to advise her at any time whether to buy, and that he 
was only to pronounce judgment after she had made up her mind as 
to her choice, and to attend to the légal part of the transaction. He 
(that is, the Henderson Company, a corporation) was, however, ac- 
cepting a fee from her for his opinion on the character of purchase 
and légal advice, while the company was at the same time taking a 
commission from the vendor for selling the property, and it was 
through his suggestion that the advice of his brother was sought. 

Vanderbilt doubtless knew that the defect was one constituting a 
serions impediment to^ a sale, and while it was désirable to dispose 
of the property — a thing that was his right — yet I think open and 
fair dealing on his part required of him and his agents, when spécifie 
and pointed inquiry was made as to the présence of any hardpan, a 
frank disclosure oiÉ the true condition. Such a course on his part 
would probably hâve defeated the sale, and it is for this very reason 
we must predicate the conclusion that the purchasers were misled to 
their injury. There were palpable misrepresentations in the three 
particulars, namely, touching âge, variety, and condition and quality 
of the soil, and, taken as a whole, they were so flagrant and vital as 
to vitiate the contract. 

[4] The decree of the court will be that plaintiflfs' complaint be 
dismissed, and that défendants hâve judgment, under their cross-bill, 
for a cancellation of the contract, and that the money advanced by 
them to plaintifïs under the contract be repaid to them, with interest 
at the rate of 6 per cent, per annum from the time or times the same 
was paid to plaintifïs ; that défendants further recover from plaintifïs 
the sum of $1,736.26, being the amount expended in the care and 
cultivation of the orchard, and their costs and disbursements of this 
suit to be taxed; and that défendants hâve a lien upon the premises 
for the demands found due them. 



HUBBARD V. rOBT 987 

HUBBARD et al. v. FORT et aL 
(Circuit Court, D. New Jersey. August 2, 1911.) 

1. Navigable Watees (§ 2*) — Pipe Line Cbossing— Consent of State. 

Where a navigable stream forms the boundary line between two states, 
State consent to the erossing of the stream with a pipe Une laid under 
the bed to be used In Interstate commerce is not necessary If authorlty 
has been obtained from Congress. 

[Ed. Note.— For other cases, see Navigable Waters, Cent. Dig. §§ 2, 
63 ; Dec. Dlg. § 2.*] 

2. Navigable Waters (I 19*)— Ceossinq Stebam— Pebmit by Secretaet of 

Wae~Effect. 

Act Cong. March 3, 1899, c. 425, | 10, 30 Stat. 1151 (U. S. Comp. St. 
1901, p. 3541), prohlblts the création of any obstruction to the navigable 
capacity of any vraters In the United States unless affirmatively author- 
Ized by Oongress, and déclares that It shall be unlawful to bulld any 
structure In a navigable water lu the United States except on plans 
recommended by the chlef of englneers and authorlzed by the Secretary 
of War; that It shall not be lawful to escavate or fill the channel of 
any navigable water In the United States unless such work Is recom- 
mended by such englneer and authorlzed by the Secretary of War prlor 
to heginnlng the same. Beld, that a license executed by the Secretary 
of War under such section authorlzlng a corporation to carry water pipe 
Unes under a navigable stream separatlng two states was a mère flndlng 
and déclaration that the pipes, structure, or excavation would not inter- 
fère with or be detrlmental to navigation, and was not équivalent to a 
positive déclaration by authorlty of Oongress that the Ucensee might 
make such obstruction or excavation without flrst obtainlng authorlty 
from the state. 

[Ed. Note. — For other cases, see Navigable Waters, Cent Dlg. §§ 59- 
72; Dec. Dlg. | 19.*] 

3. Navigable Watees (§ 2*) — Obstructions — Control — Statutes. 

Act Gong. Sept. 19, 1890, c. 907, §§ 7, 10, 26 Stat. 454, and Act March 
3, 1899, c. 425, § 9, 30 Stat. 1151 (U. S. Comp. St. 1901, p. 3540), relating 
to the obstruction of navigable waters, and providlng for the construction 
of wharves, dams, welrs, bridges, etc., are not llmlted to waters whoUy 
wlthin a state, but apply to Interstate waters as well. 

[Ed. Note. — For other cases, see Navigable Waters, Cent Dlg. §S 2, 63 ; 
Dec. Dlg. § 2.*] 

4. Navigable Watees (§ 19*) — Obsibuotion— Statutes— Construction— "Ar- 

riEMATIVELT AUTHORIZED." 

Act Cong. March 3, 1899, c. 425, § 10, 30 Stat 1151 (U. S. Comp. St 
1901, p. 3541), regulatlng the obstruction of navigable waters, provides 
that the création of any obstruction not "affirmatively authorlzed bv 
Oongress" to the navigable capacity of any waters In respect of which the 
United States has jurlsdlctlon Is prohlblted, and then déclares that the 
building of certain structures and the performlng of certain work with 
référence to navigable waters are forbidden without authorlty of the 
Secretary of War. Held, that the word "affirmatively" was used to dls- 
tlnguish the two kinds of authorlty referred to, and that the section 
should be construed to require that the Initial authorlzation to create an 
obstruction must rest on affirmative congresslonal authorlty, and not on 
a mère permit of the Secretary of War. 

[Ed. Note.— Por other cases, see Navigable Waters, Cent. Dlg. S8 59- 
■ 72; Dec. Dig. § 19.* ** 

For other définitions, see Words and Phrases, vol. 1, p. 249.] 



*For other cat.es see same topic & i numbbh in Dec. & Am. Dlgs. 1907 to date. & Rep'r Indexes 



988' 188 FEDERAL REPORTEE 

5. NAriGAEtE Waters (§ 1*) — "Navigable Capacitt." 

À stream bas "navigable capacity" when It ia capable of belng navl- 
gated over any part of tlie waters in their normal condition. 

[Ed. Note. — For olher cases, see Navigable Waters, Cent. Dlg. §§ 5-16 ; 
Dec. Dig. § 1.* 

For otber définitions, see Words and Phrases, vol. 5, pp. 4675-4684 ; 
vol. 8, p. 7728.] 

6. Navigable Waters (§ 19*) — "Obstruction" — Statutes. 

Act Cong. Marcb 3, 1S99, c. 425, § 9, 30 Stat. 1151 (U. S. Comp. St. 1901, 
p. 3540), relating to the obstruction of navigable streaiiis, déclares that 
It shall not be lawful to construet or commence the construction of any 
bridge, dam, dike, or causeway over or in any port, roadstead, haven, 
harbor, canal, navigable river, or other navigable water of the United 
States, unless the consent of Congress to such structures shall hâve been 
obtained, and until the plans for the same shall bave been approved by 
the chief of engineers and the Secretary of War, with certain provIsosL. 
Section 10 prohibits the création of any obstruction, not affirmatively au- 
thorized by Congress, to the navigable capacity of any of the waters of 
the United States. Held, that section 10 not only Includes the klnd of 
structures speciflcally referred to in section 9, but ail others that may 
be an obstruction to the navigable capacity of tlie waters of the United 
States, without référence to whether the obstruction is but sUght, and 
only temporary. 

[Ed. Note. — For otTier cases, see Navigable Waters, Cent. Dig. §§ 50-72 ; 
Dec. Dig. § 19.* 

For other définitions, see Words and Phrases, vol. 6, pp. 4890-4894.] 

7. Navigable Watebs (§ 19*)— Obstructions— "Authorize." 

Act Cong. March 3, 1899, c. 425, § 10, 30 Stat. 1151 (U. S. Comp. St 
1901, p. 3541), provides tUat the création of any obstruction not affirma- 
tively authori7,ed by Congress to the navigable capacity of the waters of 
the United States is prohibited, except on plans recommended by the 
chief of engineers and authorized by the Secretary of War. Held, that 
the Word "authorize" was used in such section In the sensé of to approv© 
of and formally sanction, and did not confer on the Secretary of War 
authority to grant original authorization for the construction of any 
work constituting an obstruction of the navigable waters of the United 
States. 

[Ed. Note. — For other cases, see Navigable Waters, Cent. Dig. §§ 59- 
72; Dec. Dig. § 19.» 

For other définitions, see Words and Phrases, vol. 1, pp. 646-648.] 

In Equity. Bill by Harry Hubbard and another, as receivers of the 
Hudson County Water Company, against John Franklin Fort and oth- 
ers. Dismissed on demurrer. 

McCarter & English and Bennett Van Syckel, for complainants. 
Edmund Wilson, Atty. Gen., for défendants. 

RELLSTAB, District Judge. The bill is filedi by the receivers of 
the Hudson County Water Company, a New Jersey corporation (here- 
inafter called the Water Company), and attacks the constitutionality 
of certain acts of the New Jersey Législature, and seeks to hâve the 
défendants, certain state officers, enjoined from enforcing such acts, 
and from interfering with complainants in carrying out certain con- 
tracts and eng^aging in interstate commerce in water. 

The bill, so far as is necessary for présent considération, allèges, in 

•For othor case» see same toplc & { numbee In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexa» 



HUBBARD V. FOKT ■ 989 

substance : The incorporation of such Water Company b]^ the state 
of New Jersey, the appointment of complainants as receivers with 
power to institute suits for the protection and enforcement of the law- 
ful rights and contracts of such Water Company. That among the 
objects stated in such Water Company's certificate of incorporation 
were "the acquisition of water from either surface or subterranean 
sources or by purchase and the storage, sale, and dehvery of the same ; 
the acquisition, construction, opération, and sale of waterworks and 
réservoirs, wells, pipe lines, andi ail other property, real and personal, 
pertaining to the collection, sale and distribution of water," the mak- 
ing of contracts by the Water Company with the city of New York to 
supply subterranean water for use and consumption on Staten Island 
in the state of New York. That Staten Island is separated from the 
State of New Jersey by a navigable tidewater stream known as Kill 
von Kull. That the boundary Une between the state of New York and 
the state of New Jersey is located in the center of said Kill. That the 
Water Company acquired lands in New Jersey, sunk wells therein, and 
under municipal authority laid pipe lines therefrom to such stream, 
with the purpose of laying pipe lines in the bed of such stream to con- 
duct the water from such wells to said island, to carry out its said con- 
tracts ; that by grant contained in an ordinance of the city of Bayonne 
the Water Company holds the right to lay water pipes "southerly 
through Ingham avenue, and under the property of the city at the 
foot of said Ingham avenue, to the southerly boundary Une of said 
city, being the center of the said Kill von Kull * * * and that 
by grant made by the J. M. Gufïey Petroleum Company to the Water 
Company * * * said Water Company purchased from the Pe- 
troleum Company a right of way to lay, maintain, and operate its pipes 
upon a strip of land twenty feet in width on the easterly side of Ing- 
ham avenue, and succeeded thereunder to the rights of the Petroleum 
Company, as owner of the upland and as grantee of the lands under 
water by grant from the riparian board of the state of New Jersey." 
That ail of said constructions and contracts are Interstate commerce. 
That the Water Company obtained from the Secretary of War of the 
United States, under section 10 of the act of Congress approved 
March 3, 1899 (Act March 3. 1899, c. 425, 30 Stat. 1151 [U. S. Comp. 
St. 1901, p. 3541]), known as the "River and Harbor Bill." authority 
to lay its pipes in the bed of saidi stream, the foUowing being a copy 
of such authority: 

"War Department, Washington. 

"November 17, 1909. 
"45716 Engs. 

"Sir: In answer to your application of the 4th instant, permission, revo- 
cable at will by the Secretary of War, is hereby granted the Hudson County 
Water Company (suecessor to the Richmond Water Company), its successors 
or assigns, in accordance with the recommendation of the Chief of Engineers, 
U. S. Army, to lay, maintain and operate two water mains across the Kill 
von Kull, from Bayonne, N. J., to Staten Island, N. Y., as shown on map at- 
tached hereto, subject tothe followlng conditions; 

"(1) ïhat if at any time in the future it shall be made to appear to the 
Secretary of War that the structures herein authorlzed are unreasonable ob- 
Btructions to the free navigation of said waters. said licensee will be re- 



990 188 FEDERAL REPORTEE 

qulred, upon notice from the Secretary of War, to remove or alter the same 
so as to render navigation through said waters reasonably free, easy, and un- 
obstructed. 

"(2) That the hlghest part of sald pipes shall be at least thirty (30) feet 
below the plane of mean low vrater. 

"(3) This permit is given in lieu of Instrument dated December 9, 1904, au- 
thorlzing the Rlehmond "Water Company to lay two water mains across the 
Kin von Kull from Rayonne, N. J., to Staten Island, N. Y., at the location 
shown on plans attached to said instrument, which is hereby revoked. 

"(4) TEat the work herein permitted to be done shall be subject to the su- 
pervision and approval of the local offlcer of the Corps of Engineers, U. S. 
Army. whose address is Army Building, New York City. 
"Very respectfully, 

"Robert Shaw Oliver, Assistant Secretary of War. 
"Mr. T. A. Beall, Président. 

"Hudson County Water Company. 
"100 Broadway. New York City. 

"(Map 4.5716-28 Engs. hereto attached.)" 

That by virtue of said authority "and of other grants hereinbefore 
set forth the said Water Company was authorized and possesses the 
full right to lay and maintain said pipes in the bed of said Kill von 
Kull. That by virtue of the authority bestowed by the United States 
Constitution upon Congress to regulate commerce between the states 
the Congress of the United States was authorized to enact section 10 
of the act of March 3, 1899, above (liereafter) quoted, andthe Secre- 
tary of War, upon the recommandation of the chief of engineers, was 
likewise authorized and empowered to give the licenses above men- 
tioned, and that said Water Company, after securing such Hcenses, 
was justified in having dredging done in the bed of said Kill von Kull 
for the purpose of laying therein the said pipes as aforesaid, without 
the sanction or permission and in spite of the objection of the state 
of New Jersey, and that there was expended by the Water Company 
and its contractors a sum in excess of thirty thousand ($30,000) dol- 
lars in such work and dredging, extending over a period of about six 
months, before any interférence or objection thereto by the state of 
New Jersey or any officiai thereof." That such work in the bed of said 
stream was forcibly stopped by défendants acting under the following 
state enactments: 

"An act to prevent the diversion of well, subsurface, or percolating waters 
of this state by means of pipes, conduits, ditches or canals into other states 
for use therein. 

"Be it enacted by the Senate and General Assembly of the State of New 
Jersey: 

"(1) It shall be unlawful for any person or corporation to transport or 
carry through pipes, conduits, ditches or canals any well, subsurface or per- 
colating waters of this state into any other state for use therein. 

"(2) This act to take effect immediately. 

"Approved April 7, 1910." Laws 1910, c. 98. 

"A supplément to an act entitled, 'An act to ascertain the rights of the 
state and of the riparian owners in the lands lying under the waters of the 
Bay of New York and elsewhere in the state,' approved Aprll eleventh, one 
thousand elght hundred and slxty-four. 

"Be It enacted by the Senate and General Assenjbly of the State of New 
Jersey: 

"(1) It shall be unlawful for any person or corporation to lay any pipe or 
pipes on any ot the lands of the state lying under tidal waters without the 



HUBBAKD V. FORT 991 

consent or permission of the Governor and the Board of Biparlan Commls- 
sloners of thls state flrst had and obtained in writing ; provided, that nothlng 
In this act contained shall be construed to apply to lands under tbe waters 
of the Atlantic Océan. 

"(2) Thls act shall take effiect Immediately. 

"Approved Aprll 7, 1910." I^aws 1910, c. 103. 

That the défendants "hâve interfered with and prevented the con- 
struction and completion of said pipe lines which were to be used 
wholly and solely for the interstate carriage and transportation of sub- 
terranean water, and caused the construction of the same to be discon- 
tinued and the material therefore removed and the contractors of said 
Water Company to be driven from said work." That it is the avovved 
purpose of the défendants to prevent the transportation of subterran- 
ean water from the lands of the company beyond the limits of the state 
of New Jersey, to the destruction of the riglits of said company under 
its contracts. That prior to the enactment of said state législation 
such company was enjoined by the state Court of Chancery from pros- 
ecuting said work in crossing said stream upon the alleged insufficiency 
of the title of said company, and the insufficiency of the authority 
'obtained from the War Department of the United States permitting 
the laying and opération of said pipe line. "That the subterranean 
water which the said Water Company and your orators as its receivers 
purpose to transport from the lands of said Water Company in the 
state of New Jersey to Staten Island is the property of and owned 
solely by the said Water Company, and that in sâid water the state of 
New Jersey has no right, title, or interest, nor any control thereof, and 
that the state of New Jersey cannot take and appropriate the same nor 
prohibit or prevent the use or sale thereof by the said Hudson County 
Water Company or your orators as receivers without the exercise of 
the right of eminent domain and compensation therefor, and) that the 
so-called 'L,aws' above referred to were really and solely designed for, 
and are now being used by the défendants for, the purpose of taking 
■ and destroying the property of the Water Company, without compens- 
ation, by preventing the use thereof." 

The bill charges that said statutes of New Jersey, so far as they 
apply to the Water Company in the interstate carriage and piping 
of subterranean waters ont of the state of New Jersey to Staten Island, 
are unconstitutional and void because they conflict with clause 3, § 8, 
art. 1, of the Constitution of the United States, granting to Congress 
the power to regulate commerce among the several states, in that 
they are an absolute inhibition upon the exportation of an article of 
commerce; that the state of New Jersey and the défendants hâve no 
"power, authority, dominion, control or jurisdiction over persons, 
fiirms or corporations engaged like said Water Company and your 
orators as receivers thereof, in the transportation and carriage of 
subterranean waters between states, such persons, firms or corpora- 
tions so engaged, being wholly within the control, power, authority, 
jurisdiction and protection of the laws and Constitution and courts 
and government of the United States of America, and no other." 

The grounds of demurrer are several; but from the conclusion I 



992 188 FEDERAL REPORTER 

have reached it will not be necessary to consider more than one, vîz., 
that the permit of the Secretary of War to cross the Kill von Kull 
amounts to no authority, and that the state may forbid the crossing 
regardless of the permit. It is conceded that the state of New Jersey 
is the owner in fee of the lands in the Kill von Kull, in which the 
said Water Company intends to lay the saïd pipe lines, and that no 
grant or permit has been obtained by the Water Company from the 
state to excavate the bed of that stream, or to lay its pipe therein. 

[1] No such permit is necessary, however, if authority has been 
obtained from the United States Congress to make such crossing. 
It is well-settled law that state authority is not necessary to cross a 
navigable stream between states with instrumentalities engaged in 
interstate commerce ; that such crossing may be made by authority of 
the Congress in spite of the state's protest. Decker v. Baltimore & 
N. Y. R. R. (C. C.) 30 Fed. 723; Stockton v. Baltimore & N. Y. R. 
R. Co. (C. C.) 32 Fed. 9; United States v. Rio Grande Nav. Co., 174 
U. S. 690-708, 19 Sup. Ct. 770, 43 L. Ed. 1136. 

No act of Congress specifically authorizing the Water Company to 
so cross the Kill von Kull exists, nor is there any législation which 
empowers generally the crossing of any navigable interstate water.' 
Complainants claim, however, that such congressional authority was 
secured by the permit already referred to from the Secretary of War. 
This authority, as already noted, was a "permission re vocable at will 
by the Secretary of War" to lay water mains under such Kill in 
accordance with thé recommendations of the chief of engineers of 
the United States army upon cer-tain conditions. Section 10 of the 
act of Congress approved March 3, 1899 (30 Stat. c. 425, pp. 1121- 
llSl), the basis for such permit or license, reads as follows: 

'•Sec. 10. That the création of any obstruction not affirmatively author- 
ized by Congress, to the navigable capacity of any of the waters of the United 
States is hereby prohibited ; and it shall not be lawful to build or commence 
the building of any wharf, pier, dolphln, boom, weir, breakwater, bulkhead, 
jetty, or other structures in any port, roadstead, haven, harbor, canal, navi- 
gable river, or other vyater of the United States, outside establlshecl harbor' 
lines, or where no harbor lines have heen establlshed except on plans reeom- 
mended by the chlef of engineers and authorized by the Secretary of War ; 
and it shall not be lawful to excavate or flll, or in any manner to alter or 
modify the course, location, condition or capacity of any port, roadstead, 
haven, harbor, canal, lake, harbor of refuge, or enclosure within the limits of 
any breakwater, or of the channel of any navigable water of the United 
States, unless the work has been recommended by the chief of engineers and 
authorized by the Secretary of War prior to beginning the same." 

[2] Upon the only ground of demurrer considered, the question is 
thus reduced: Is this authority from the Secretary of War plenary or 
merely permissive ? So far as applicable to the présent question, such 
section may be summarized thus: First, the création of any ob- 
struction to the navigable capacity of any waters of the United States 
is prohibited unless affirmatively authorized by Congress; second, 
it shall not be lawful to build any structure in a navigable river or 
water of the United States, except on plans recommended by the chief 
of engineers and authorized by the Secretary of War ; and, third, it 
shall not be lawful to excavate or fill the channel of any navigable 



HUBBAED V. FOKT 993 

water of the United States unless such work is recommended by said 
Secretary of War prior to beginning the same. 

This section was construed in Cobb v. Lincoln Park, 202 111. 427, 67 
N. E. 5, 63 L. R. A. 264, 95 Am. St. Rep. 258, and Wilson v. 
Hudson County Water Co., 76 N. J. Eq. 543, 76 Atl. 560 (the 
défendant in the last case being the Water Company in the case at 
bar, and the question there considered being the same as raised nere). 
In both of thèse it was held that the Secretary of War's authorization 
was a mère license to do the work and not a grant of power to do 
it. In the latter case V. C. Walker, adopting the view of the Illinois 
court, said: 

"The doctrine of Cobb y. Lincoln Park as applicable to the case under 
considération may be paraphrased as follows: The provisions of section 
10 of the river and harbor act of March 3, 1899, were designed to protect 
the navigable waters of the United States (Including the Klll von Kull) from 
encroaehment and from obstructions to navigation, and to commit the duty 
of thelr protection to an offlcer of the gênerai government wlthout vehose 
permission no such obstructions ean be made; that the act is a mère régu- 
lation for the benefit of commerce and navigation, and that the license or 
permission of the Secretary of War is only a finding and déclaration that 
a proposed structure or excavation would not interfère with or be detrimental 
to navigation, and is not équivalent to a positive déclaration by the author- 
Ity of Congress that the licensee may make such obstruction or excavation 
wlthout flrst obtainlng the consent of the owner of the submerged land ; that 
the Water Company, not having by the law of this state the rlght to exca- 
vate on the submerged lands wlthout the state's consent, could not acqulre 
that right by obtainlng a license from the Secretary of War; that the act 
is not a déclaration touchlng the rights of the owner of the submerged lands 
in question, and, assuming that the permission of the gênerai government 
to the excavation and laylng of the proposed pipe Une is necessary, such 
permission is not given to override the rights of the owner of ttie submerged 
lands, namely, the state of New Jersey, and It is, as said, the déclaration 
hy the guardian of the interests of the public at large that the proposed 
work wlll not interfère with navigation, and is strictly permissive, and not 
an authorization by paramount authority to do the work proposed. Thus 
it appears that the cases in principle are parallel. The Water Company con- 
tends for the rlght to lay its pipe Une across the Kill von Kull in lands under 
water belonging to this state beeause it allèges that It is engaged in infer- 
state commerce, which may be conceded (Kansas City Natural Gas Co. v. 
Haskcll [C. C] 172 Fed. 545), and relies upon the language of Mr. Justice 
Bradley, speaking for the Circuit Court, In Stockton v. Baltimore & N. Y. R. 
Co.. 32 Fed. 20, where he says: 'We think that the power to regulate com- 
merce between the states extends not only to the control of the navigable 
waters of the country and the lands under them for the purpose of navigation, 
but for the purpose of erecting piers, bridges, and ail other instrumentalities 
of commerce, which, In the judgment of Congress, may be necessary or expé- 
dient' Oonceding to this language ail that is clalmed for it, it is nevertlie- 
less perfeetly apparent that nowhere in the tenth section of tlie river and 
harbor act of 1899 is there any intention, expressed or implied, to grant to 
any person or corporation the right to lay a pipe Une under navigable waters 
in lands belonging to a state or indlvidual for tlie puiT)ose of transporting 
any merchantable commodity whatever. The only intention dlscoverable 
Is, as already said, the authorization of such a work if It may be lawfully 
done, and the intention Is to authorize it to be done only in such way as to 
prevent its being any obstruction to navigation. Congress may some day 
be induced to enact a law under the commerce clause of the fédéral Con- 
stitution which will make a grant of power such as Is eontended for by the 
Water Company in tiiis case, but up to the présent time It has not done so, 
and the Water Company, wlthout a grant of power, is seeking to prosecute 

188 F.— 63 



994 188 FEDERAL EEPORTEE 

an unlâwful work — a work not unlawful in ajid of Itself, but unlawful so 
far as It appropriâtes the land and invades the rights of the state of New 
Jersey, and tliis toy obtalning a mère license from a supervisory power, a 
license to do the thing desired, efficacious only If and when lawful authorlty 
to prôsecute the work shàll hâve been obtalned. In 'this connection it may 
be ObséWed that the tenth section of the river and harbor act does not pro- 
vide that it shall be lawful for the Secretary of War to authorize the exca- 
vation of land in the ehannel of any navigable waters of the United States, 
but only that it shall not be lawful to do the work without the authoriza- 
tion Of the Secretary, had before beginning the work. The section as worded 
clearly contemplâtes that the consent of the Secretary shall merely be per- 
missive of the doing of work for which authorlty already exists." 

While thèse décisions are not binding upon this court, they should 
not be disregarde d unless it clearly appears that they are founded in 
error. In the New Jersey case will be f ound a critical review of the 
authorities relied upon by the complainants in this case. The com- 
plainantp contend that such case does not give due effect to the cited 
authorities; but I hâve carefully considered such authorities, and I 
concur with the conclusion reached by V. C. Walker that they do not 
support the contention of complainants' counsel that a license ob- 
tained by the Water Company from the Secretary of War is plenary 
in its character. It is further contended, ho-wever, that the construc- 
tion thus placed upon section 10 of the act of 1899 is erroneous, and 
that, first, unless such section be so construed as to empower the 
Secretary of War to authorize the excavation and fiUing, etc., of inter- 
state waters in the first instance without resort to Congress, violence 
will be donc to the word "authorize" as used in that section, in view 
of the use by Congress of the word "approve" in section 9, where 
permission only was intended to be expressed; and, second, that, 
unless such construction be given, it was unnecessary to change or 
modify the seventh section of the act of 1890 (Act Sept. 19, 1890, 
c. 907, 26 Stat. 454). 

[3] Considering the question from the viewpoint of thèse criticisms, 
an extended examination of the pertinent sections of the acts of 1890 
and 1899 is necessary. Section 7 of the earlier act is as f ollows : 

"Sec. 7. That it shall not be lawful to build any wharf, pier, dolphin, 
boom, dam, weir, breakwater, bulkhead, jetty, or structure of any kind outslde 
established harbor lines, or in any navigable waters of the United States 
where no harbor lines are or may be established, without the permission of 
the Secretary of War, in any port, roadstead, haven, harbor, navigable river, 
or other waters of the United States, in such manner as shall obstruct or 
impair navigation, commerce, or anchorage of said waters, and it shall not 
be lavrful hereafter to commence the construction of any bridge, bridge draw, 
bridge piers and abutments, causeway or other works over or in any port, 
road, roadstead, haven, harbor, navigable river, or navigable waters of the 
United States, under any act of the législative assembly of any state, until 
the location and plan of such bridge or other Works hâve been submltted to 
and approved by the Secretary of War, or to excavate or flll, or in any 
manner alter or modify tbe course, location, condition, or capacity of the 
ehannel of sald navigable water of the United States, unless approved and 
authorlzed by the Secretary of War: Provided, that this section shall not ap- 
ply to any bridge, bridge draw, bridge plers, and abutments, the construction 
of which has been heretofore duly authorlzed by law, or be so construed as to 
authorize the construction of any bridge, draw bridge, bridge piers and abut- 
ments, or other Works, under an act of the Législature of any state, over 



HUBBAKD V. FORT 995 

■or In any stream, port, roadstead, haven or harbor, or other navigable water 
not wholly within the limits of sueh state." 

And the first sentence of section 10 (the only part necessary to be 
considered) is as follows: 

"That the création of any obstruction, not afflrmatively antliorlzed by 
law, to tl)e navigable capacity of any waters, in respect of wbich the Unlt'éd 
States bas jurlsdiction, Is hereby prohibited." 

It will be observed that section 7 consists of three distinct pro- 
hibitions followed by a proviso in the nature of a limitation. Com- 
plainants concède that this section was permissive, but contend 
that it applies exclusively to intrastate waters. This contention 
in my judgment is ill founded. • Without the proviso this section 
would be applicable to ail structures and other works in ail navi- 
gable waters. 21 Ops. Atty. Gen. 41. And the exception in favor 
of intrastate waters contained in such proviso is limited to bridges 
and similar constructions authorized by state law. 22 Ops. Atty. 
Gen. v332. So far as wharves and the other structures mentioned 
in the first part of this section are concerned, the prohibition, 
without the Secretary of War's permission, applied only if they 
obstructed or impaired the navigation, commerce, or anchorage 
of said waters. The third prohibition contains no référence to 
state authority, and seemingly was not subject to such limita- 
tion. 22 Ops. Atty. Gen. 332. This section, therefore, did not 
deal exclusively with intrastate waters. Neither does section 9 of 
the act of 1899, as contended by complainants, apply exclusively 
to intrastate waters. This section is as follows : 

"Sec. 9. That it shall not be lawful to construct or commence the con- 
struction of any bridge, dam, dike, or causeway over or in any port, road- 
stead, haven, harbor, canal, navigable river, or other navigable water of the 
United States until the consent of Congress to the building of . such structures 
shall hâve been obtained and until the plans for the sàme shall hâve been 
submitted to and approved by the chief of engineers and by the Secretary of 
War: Provided, that such structures may be built under authority of the 
Iiegislature of a state across rivers and other vratervvays the navigable por- 
tions of which lie wholly withln the limits of a single state, provided tlie 
location and plans thereof are submitted to and approved by the chief of 
engineers and by the Secretary of War before construction is commenced: 
And provided further, that when plans for any bridge or other structure 
bave been approved by the chief of engineers and by the Secretary of War, 
it sliall not be lawful to deviate from such plans either before or after com- 
pletion of the structure unless the modification of said plans has prevlously 
been submitted to and reeeived the approval of the chief of engineers and 
of the Secretary of War." 

It will be noted that this section applies to ail navigable waters 
of the United States; that it does not embrace ail the structures 
and works embraced by section 7 of the earlier act, but is limited 
to bridges, dams, dikes, and causeways; and that the construc- 
tion of thèse are prohibited without the consent of Congress, ex- 
cept such as cross waters the navigable portions of which are 
wholly within the limits of a single state, and which are to be 
built by state législative authority. Congressional consent to the 
building of such structures in ail other navigable waters is still 



996 188 FEDERAL REPORTEE 

necessary by this section. Nor, as contended by complainants, does 
section 10 of the 1899 act apply only to interstate waters. There 
is nothing in this section that restricts it to interstate waters. The 
first part which prohibits "the création of any obstruction not afRr- 
matively authorized by Congress to the navigable capacity of any 
of the waters of the United States" not only comprehends the 
kind of structures specifically referred to by section 9, but ail others 
that may be an obstruction to the navigable capacity of the waters 
of the United States, regardless of whether they are interstate or 
intrastate. 

Manifestly bridges, dams, dikes, and causeways are not the only 
structures that obstruct the navigable capacity of such waters, 
and the prohibition with which section 10 begins would be utterly 
unnecessary and meaningless if the same were limited to the char- 
acter of structures dealt with in the preceding section. Such mean- 
ingless législation is not to be imputed unless there is no escape 
from such resuit. The remainder of this section shows other struc- 
tures and Works, any of which may prove an obstruction to the 
navigable capacity of such waters. Thèse are the same as are 
mentioned in section 7 of the earlier act, and which are not found 
in section 9 of the act of 1899, and of necessity are included within 
the prohibition of the first part of such section, if it is to hâve any 
meaning or opération. 

[4] What is afifirmative authorization? Affirmative îs the antithesis 
of négative. The use of the word "afïirmatively" with "authorized" 
would be difficult to understand except for the use of the word 
"authorize" in the latter part of this section where the building 
of certain structures and the performing of certain works are for- 
bidden without the authority of the Secretary of War. As pointed 
out by V. C. Walker in the New Jersey case, this section "does 
not provide that it shall be lawful for the Secretary of War to au- 
thorize the excavation of land in the channel of any navigable 
water of the United States, but only that it shall not be lawful to 
do the work without the authorization of the Secretary and before 
beginning the work." In vîew of the context, the word "aïïirma- 
tively" was. legislatively used to distinguish the two kinds of author- 
ity referred to, and to make it plain that the initial authoriza- 
tion to create an obstruction was not to rest on implied, but ex- 
press — affirmative — congressional authority. 

[5] What is navigable capacity? Does it not mean the capability 
of being navigated over any part of the waters when in their normal 
condition ? 

And how can it be said that the structures or the works sub- 
sequently referred to in this section may not amount to an obstruction 
to such navigable capacity ? It is to be noted that "excavate or fill" is 
associatedi with "alter or modify the course, location, condition, or 
capacity of any" navigable water, ail of which may be so performed as 
to become serions obstructions to navigation. That such obstructions 
may be but slight, and that some will be of only temporary duration, 
would not make them any less obstructions, and within the prohibition. 



HUBBAKD V. FOKT 997 

Any less comprehensive interprétation of the first part of section 10 
would do violence to its language, and, as already said, be meaningless. 
If Congress intended that as to ail other obstructions not prohibited 
by section 9, no affirmative action by Congress should be necessary, 
but that they might be constructed upon obtaining the permission of 
the Secretary of War it used singularly inapt and ambiguous language 
in expressing such intention. 

The use of the word "authorize" instead of "approve" does nor 
change the Secretary of War's act from permissory to plenary. Two 
of the définitions of the word "authorize" are to approve of ; to for- 
mally sanction. Cent. Dict. & Cyc. What does the Secretary of War 
authorize? Not the building of the structures mentioned in the second 
part of this section, but the plans to which such construction is to con- 
form. And what does he authorize as to excavating, filling, altering, 
etc., of the channel of navigable waters, but the commencement, the 
character, and the manner of doing such work? While the language 
hère employed is not as felicitous and clear as it might be, yet, when it 
is considered that Congress was hère revising and amending, any 
other interprétation than that such officiai action by the designated 
executive officer was to be had only after the initial power to do such 
Works shall hâve been procured from Congress would be to unneces- 
sarily limit the plain and unambigous language used in the first part 
of this section by which full control over ail the works in Interstate 
waters was kept in Congress itself. 

Authority to excavate and lay a pipe line in the bed of the Kill von 
Kull is one thing, and authority relating to the time when and the 
plans in conformity to which the work is to be done is another. The 
Secretary of War's authorization is supervisory, and relates to the 
character and performance of the work, and not the directing or au- 
thorizing it to be done in the first instance. Section 9 clearly évinces 
that Congress intended to keep to itself the initial authorization of the 
Crossing of Interstate waters by bridges, dams, etc., and section 10 af- 
fords no presumption that in respect to the structures and works 
specifically referred to therein it intended to delegate such initial 
authorization to the Secretary of War. The first part of such section 
unambiguously embraces them, and the remainder does not disclose 
an intent to effect an exception. 

[6] Something more than a mère change of expression, particularly 
when the différent word is not différent in ail its meanings, is there- 
fore necessary to show a législative intent to effect a so radically dif- 
férent purpose. It is also to be noted that this requirement in the first 
part of section 10 of the act of 1899 effects a radical change in the lég- 
islative purpose of the earlier act. As noted, section 10 of the act of 
1890 prohibited the création of any obstruction to the navigable ca- 
pacity of any water not affirmatively authorized by law, while the first 
part of section 10 of the later enactment required this affirmative au- 
thorization to be made by an act of Congress. 

In United States v. Bellingham Boom Ce, 176 U, S. 211, 20 Sup. 
Ct. 343, 44 h. Ed. 437, this clause of section 10 of the act of 1890, 
contrary to the contention of the government, was held not to re- 



998 188 FEDERAL REPORTER 

Bt'rict the âuthorization by law to laws enacted by Congress, but that 
it included âuthorization by state législation, where the obstruction 
was in a navigable stream confined wholly within a single state; the 
court saying'in this behalf: 

"Congress, it must be assumed, was aware of the fact that until It acted 
upon the suhjeet of navigable streams, which were entirely within tlie con- 
fines of a single state, although Connecting with waters beyond its boundaries, 
such state had plehary power over the subject of that navigation, and it 
Imew that, when in the absence of any statute of Congi'esfe on the subject 
an obstruction to such a navigable river had been built under the authority 
of an aet of the Législature of the state, such obstruction was légal and 
afflrmatlvely authorized by law, because it was so authorized by the law of 
a state at a time when Congress had passed no act upon the subject. When 
Congress In 1890 passed the river and harbor bill, we think the expression 
eontained in section 10 in regard to obstructions 'not aflirmatively author- 
ized by law' wieant not only a law of Congress, but a law of the state in 
whieh the river was situated, whleh had been passed before Congress had 
Itself legislated upon the subject. An obstruction created under the author- 
ity of a state statute under such ciroumstances we cannot doubt was an 
obstruction 'afflrmatlvely authori.^ed by law.' " 

■ In that case the government sought to hâve removed from an in- 
trastate stream a boom authorized by the law of the state, and it 
is signifîcant that, while the appeal from the Circuit Court of Ap- 
peals' décision (81 Fed. 658, 26 C. C. A. 547) was pending in the 
Suprême Court, the law was changed and made to require affirmative 
congressional action in ail cases where the navigable capacity of any 
United States water was obstructed. The act of 1899 produced radi- 
cal changes in the matter of constructing works in both intra and 
inter state waters. 

[7] As the law stood immediately before the act of 1899 was pass- 
ed, the initial âuthorization of the Congress to create obstructions to 
the navigable capacity of an intrastate water was not necessary if 
state législative authority for such construction had been obtained, 
and the building of wharves and other structures mentioned in the 
first part of section 7 of the act of 1890, in any United States navi- 
gable water, was only prohibited without the permission of the Sec- 
retary of War, if they obstructed or impaired navigation, commerce, 
or anchorage. The érection of bridges and their appurtenances over 
intrastate waters was permitted without the need of the approval of 
the Secretary of War, if authorized by law before the passage of 
said act. The excavating, filling, altering, etc., the channel of navi- 
gable waters was permitted if approved and authorized by the Sec- 
retary of War. 

Among the changes effected by the act of 1899 was to require the 
affirmative âuthorization by Congress to create any obstruction to 
the navigable waters of the United States, except that bridges, dams, 
dikes, and causeways in or across waters the navigable portions of 
which lie wholly within the limits of a single state was permitted if 
authorized by state législation and the location and plans of such 
structure were approved by the chief of engineers and of the Secre- 
tary of War. Perhaps without the change from "authorized by law" 
to "authorized by Congress" no obstruction to the navigable capacity 
of interstate waters without affirmative congressional enactment 



CLABE V. NOBWALK STEEL <ft IKON OO. 999 

would hâve been lawful, but a présent reading of the law in the light 
oi the history of its enactment clearly évinces to my mind a législa- 
tive purpose to require affirmative action on the part of Congress 
before such a crossing of Interstate streams as contemplated by com- 
plainants in this suit shall be permitted, and that only when such 
congressional action shall hâve been taken can the powers delegated 
to the Secretary of War be put into opération. 

This is not a case of the United States government seeking to 
make a crossing of this Interstate stream in the exercise of its gov- 
ernmental powers, but an attempt to override a sovereign state's 
opposition to the use of its submerged land by a corporation of its 
own création, under the claim of being engaged in Interstate com- 
merce. This can only be successfully accomplished when it shall be 
shown that Congress in the assertion of its superior rights under the 
Interstate commerce clause of the United States Constitution has 
clearly and definitely authorized such crossing. Until then the state 
of New Jersey as against every corner is sovereign master of the 
situation. 

The complainants' equities as set up in this suit being dépendent 
upoh the Water Company having obtained from Congress the right 
to enter upon and cross the lands of the state of New Jersey sub- 
merged by the waters of the Kill von Kull, and no such authority ap- 
pearing, the bill is dismissed. 



CLARK V. NOBWALK STEEL & IRON CO. et aL 

(Circuit Court, N. D. Ohlo, W. D. October 19, 190S.) 

No. 2,083. 

Bankbuptcy (§ 213*) — Pendenct of Pbocefdings— Eitect. 

Pendency of bankruptcy proceedings, prosecution of which Is delayeà, 
Is'no défense to pétitions by interveners to foreclose mortgages covering 
land talcen possession of in ttie recelvershlp suit in whicti tlie intervenlng 
pétitions are flled. 

[Ed. Note. — For otlier cases, see Baiîkruptcy, Dec. Big. S 213.*] 

In Equity. Suit by Arthur Clark against the Norwalk Steel & lion 
Company and others. On demurrers to answers to intervening péti- 
tions. Demurrers sustained. 

Ford, Snyder & Tilden, for complainant. 

A. M. Beattie, for défendants. 

Judge Malcolm Kelly, for Citizens' Bank and T. B. Taylor, 

TAYLER, District Judge. The complainant, on the 7th day of Jan- 
uary, 1908, filed his original bill in equity against the défendants, with 
the resuit that receivers were appointed, who, on the 9th day of Janu- 
ary, under the order of the court, took possession of ail the property of 
the Norwalk Steel & Iron Company. Whatever the fact may hâve 

•For otber cases see same topic & i numbbb In Dec. & Am. Dlgs. 1907 to date, & Rep'r Indezea 



1000 188 FEDERAL EEPORTEB 

been, the atlegéd ground upon which the receivership was sought was 
not insolvency of the corporation. On the lOth of January an involun- 
tary pétition in bankruptcy was filed against the Iron Company, alleg- 
ing, among other things, that it had committed an act of bankruptcy 
in having receivers appointed on account of insolvency. To this bank- 
ruptcy pétition the défendant repHed, denying the allégation as to the 
acts of bankruptcy. May 26, 1908, Truman B. Taylor and the Citi- 
zens' Banking Company, of Sandusky, Ohio, were allowed, on appli- 
cation made to the court, to file their several pétitions in intervention 
in this suit, setting up certain mortgages which they severally held 
against some of the real estate of the Iron Company, the possession of 
which had been taken by the receivers on the 9th day of January. 
In the meantime, nothing more had been done with the bankruptcy 
case. The Iron Company answered both of thèse intervening péti- 
tions, setting up the bankruptcy proceedings as a défense to the fore- 
closure of the mortgages in this suit in equity in the circuit court, and 
to thèse answers Taylor and the Banking Company demurred. 

I see no reason why thèse demurrers ought not to be sustained. 
The Circuit Court bas jurisdiction of this property. It is the only 
court into which any person may come to assert any rights which he 
has against the property. 

The argument is made by counsel who filed thèse answers to the 
cross-petitions that the appointment of the receivers in this case is the 
very act of bankruptcy which they allège justified the filing of the pé- 
tition in bankruptcy, and that, therefore, this court has no jurisdiction 
to foreclose the mortgage. 

This contention may be answered in many ways. It is enough to 
say, in the first place, that at least until there is a détermination by 
the bankruptcy court that the appointment of the receivers in this 
court constituted an âct of bankruptcy by the alleged bankrupt, this 
court has unassailable jurisdiction; and, in the next place, that even 
if it was an act of bankruptcy, the Circuit Court, having had jurisdic- 
tion when the bill was filed and when the cross-petitions were filed, 
held the jurisdiction for ail proper purposes for which the cross- 
petitions were filed and might proceed with the foreclosure of the 
mortgages. 

The facts in this particular case illustrate the manifest impropriety 
of any other rule being asserted. Hère are mortgage creditors, with 
claims not provable under the bankruptcy law if they inténd, as thèse 
parties do, to stand upon their rights as mortgagees. The parties in- 
terested in the bankruptcy proceedings, for reasons of their own — ^and 
very proper reasons they may be — désire to postpone somewhat in- 
definitely the further prosecution of the bankruptcy case, in order 
that some arrangement may, if possible, be made among the parties 
interested. In the meantime, what is to become of thèse persons who 
hâve independent rights which are not to be affected in any sensé by 
the bankruptcy proceedings? A court of equity having taken juris- 
diction of the property itself, the mortgagees are not permitted to 
enter any other court, into which otherwise they might go, for their 
remedy, but must proceed in the court which has jurisdiction of and 



IN KE DONNELLT 1001 

has taken possession of the mortgaged property. Therefore, they 
hâve donc the only thing that they could do, and are entitled hère tp 
hâve their rights enforced. 
Both demurrers are sustained. 



In re DONNELLT. 

(District Court, N. D. Ohio, W. D. NovemTjer 12, 1910.) 

No. 1,5.54. 

Bankruptct (§ 217*) — Eesteainino Pboceedings in State Court— Jttbis- 

DICTION. 

A fédéral district court has jurisdictlon in a bankruptcy proceeding to 
enjolu prosecutlon In a state court of suit to foreclose a mortsage, the 
glving of wlilch, while insolvent, is relled upon as an act of banlcruptcy. 

[Ed. Note.— For other cases, see Bankruptcy, Cent. Dig. §§ 323, 330, 
340 ; Dec. Dig. § 217.* 

Jurisdiction of fédéral courts in suits relating to bankruptcy, see note 
to Bailey v. Mosher, 11 C. G. A. 313.] 

In the matter of Michael Donnelly, bartkrupt. On motion to dis- 
solve a temporary injunction. Motion overruled. 

Potter & Potter, for petitioners. 

E. N. Warden and Doyle & Lewis, for bankrupt. 

KILLITS, District Judge. In March, 1909, Louis Becker, claim- 
ing to be a créditer of Michael Donnelly, filed a pétition in involun- 
tary bankruptcy against Donnelly in this court, and, among other al- 
leged acts of bankruptcy, charged in the pétition that within four 
months prior to the filing of the pétition, while insolvent, andi for the 
purpose of defrauding, hindering, and delaying his creditors, and 
with intent to prefer the créditer hereinafter named over his other 
creditors, said Donnelly conveyed 100 acres of land in Henry county, 
Ohio, by mortgage, to one J. D. GroU, to secure the sum of $15,000, 
which mortgage was recorded on the 9th of December, 1908. Don- 
nelly answered the pétition, taking issue with the allégations assert- 
ing him to be a bankrupt and demanding a trial by jury, andI that 
question is yet to be tried. In August last, the petitioning creditor, 
Becker, filed a pétition in this case for an injunction, alleging that 
one Dennis D. Donovan, assignée of the Citizens' State Banking Com- 
pany, of Napoléon, Ohio, has begun an action in the common pleas 
court of Henry county, Ohio, against said Donnelly and others, to 
foreclose the mortgage above described, and asking for a writ of in- 
junction forbidding said assignée Donovan or any person under him 
from further prosecuting the foreclosure suit in the state court, and 
asking for the appointment of a receiver in this proceeding. Upon 
this pétition a restraining order was issued without notice, andi the 
matter is now before the court upon the motion of the assignée 

•For other cases see same topic & § number in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



1002 188 FEDERAL EBPOETEE 

Donovan to dissolve the temporary injunction upon three grounds; 
the principal one and the only one which the court cares to consider 
being that this court in this case is without jurisdiction in the prem- 
ises. The motion is overruled as to the other grounds without com- 
ment. 

Counsel for the assignée, in arguing the motion, relies principally 

upon the cases of In re Wells (D. C.) 114 Fed. 222, In re Brown 

(D. C.) 104 Fed. 762, and an opinion by Judge Tayler, of the Cir- 

■ cuit Court of this district and division, in the case of Arthur Clark 

V. Norwalk Steel & Iron Company, 188 Fed. 999. 

Collier, in the eighth édition of his vsfork on Bankruptcy, on page 
32, note 88, suggests that the court in Re Wells carries the doctrine 
of comity tpo far, and in note 174 on page 50 suggests that this case 
cannot be considered of much authority outside of its owrn district. 
Whether or not this comment is just, the f acts of the case are so 
différent from the facts of the case at bar as to make it easily possi- 
ble to distinguish the propositions involved in the respective cases, 
for, to use the language of the court in the Wells Case, the situation 
there was this: 

"After the pétition In bankrliptcy was flled, but before the reeelver was ap- 
pointed, and before the adjudication of bankruptcy, the state court took pos- 
ses.slon of the property now in controversy. The trustée, by direction of the 
référée, appeared In the state court, and asked leave (whlch was granted) to 
défend against the action In replevin. He flled hls answer thereln a year 
or more ago. The trustée now flled in this court hls blll In equity, asklng 
that the carrlage company, by wrlt of injunction, be enjoined from the fur- 
ther prosecution of the replevin action In the state court." 

The Brown Case, in 104 Fed., was a case in which the bankrupt 
had no possession of the property at the time of the filing of the péti- 
tion in bankruptcy, but it . was in the possession of a creditor, who 
held) it on pledge with power of sale, and the case simply décides that 
the court may not enjoin the exercise of such power where there is 
no claim that the same will be exercised in a fraudulent or oppres- 
sive manner, and the case is one of those cited by Remington on 
Bankruptcy, p. 1089, as authority for this rule, depicting the summary 
jurisdiction of the bankruptcy court: 

"If the possession, aetual or eonstructive, is In the bankrupt or in his 
agent or In some oné not clalmlng a bénéficiai interest in it, or is In the re- 
eelver, marshal, or trustée in bankruptcy, the bankruptcy court has summary 
jurisdiction over It by orders made in the bankruptcy proceedings themselves, 
and may summarily order its surrender or dellvery, may brlng ail parties 
clalmlng interests in it into court, and may détermine ail rights to it. If, on 
the other hand, some third party clalmlng some bénéficiai Interest in the 
property has possession, * • * then such third party need not corne into 
the bankruptcy proceedings for hls rights," 

In the Clark Case, in this district, the facts were that the property 
was in the hands of the Circuit Court through a receiver before an 
involuntary pétition in bankruptcy was filed, which alleged, among 
other things, that the obtaining of the appointment of a receiver 
was in itself an act of bankruptcy. In the case in the Circuit Court 
certain parties were . allowed, upon their application, to file interven- 
ing pétitions setting up mortgages against real estate in the posses- 



IN BE DONNELLT 1003 

sion of the receiver, and asking to hâve the mortgage foreclosed. 
In the meantime, nothing more had been donc with the bankruptcy 
case, but the alleged bankrupt answered the intervening pétitions, 
setting up the bankruptcy proceedings as a défense to the foreclosure 
of the mortgages, and the matter was before the court upon the de- 
murrers of the mortgagees to thèse answers, and the court held that 
the property was in the jurisdiction and! custody of the Circuit Court, 
and that it was the only court in which any person under the circum- 
stances could come to assert any rights which he had against the 
property. 

The great distinction between the Wells Case, and the Clark Case, 
on the one hand, and the case at bar, lies in the f act that in those cases 
the property in question was actually in the custody of the other 
court, whereas in this case the property is not in the custody of any 
court, but is in the possession of the ïaankrupt subject to the déter- 
mination of thèse bankruptcy proceedings, and the relief sought is 
to restrain a créditer from enforcing an alleged lien, the création of 
which is before this court for considération upon a claim that it was 
of itself an act of bankruptcy. This court regards this distinction 
between the facts as vital. 

The court fînds, for the exercise of the power attacked in this mo- 
tion, authority in subdivision 15 of section 2 of the bankruptcy act 
(Act July 1, 1898, c. 541, 30 Stat. 545 [U. S. Comp. St. 1901, p. 
3421]), wherein jurisdiction is given "to make such orders, issue 
such process, and enter such judgments, in addition to those specific- 
ally provided for, as may be necessary for the enforcement of the 
provisions of this act." Collier, in commenting on this provision 
(Bth Ed. pp. 49, 50), says: 

"Generally speaking, it may be availed of to compel anything which ought 
to be done for, or to prevent anything which ought not to be done against, 
the enforcement of the law; provided the court of bankruptcy has jurisdic- 
tion of the person or the subject matter. » * * Early in the administra- 
tion of the présent law, the injunctlon was frequently used to prevent the 
dissipation of assets to which the bankrupt had title. * * * The power 
to enjoln Is inhérent in the court of bankruptcy as a court of equity. * * * 
That the broad phrasing of subdivision 15 amounts to an express ratification 
of this inhérent power has not been doubted. The exercise of it, like the 
quasi crlmlnal remedy of contempt, is essential to the due enforcement of the 
act." 

And cases are numerous in which this power has been exercised as 
broadly as hère expressed by Collier. 

The question primarily is : What is the effect upon the bankrupt's 
property as a resuit of the filing of the pétition? 

In the case of Mueller v. Nugent, 184 U. S. 1 (quoting from page 
14), 22 Sup. Ct. 269, 275 (46 L. Ed. 405), the court says: 

*'It Is as true of the présent law as it was of that of 1867 that the filing of 
the pétition is a caveat to ail the world and in effect an attachment and in- 
junctlon." 

The Circuit Court of Appeals for the Eighth Circuit in Re Demp- 
ster, 172 Fed. 353, says, on page 355, 97 C. C. A. SI, on page 53: 

"The court in which the pétition is filed has plenary jurisdiction In bank- 
ruptcy tbroughout the United States. Wlthin that limit ail the estate la VcA 



1004 188 FEDERAL REPORTEE 

possession of the banknipt or held by another as Ms property Is brou^it Im- 
medlately within the custody of the court and made subject to Its protection. 
The flling of the pétition Is an attachment of the estate, and an injunction 
restralnlng any act whlch wlU interfère with Its administration in bank- 
ruptcy. This Jurisdiction is national, and takes no account of districts or 
States." 

In the case of In re Weinger, Bergman & Co. (D. C.) 126 Fed. 
875, Judge Holt said on page 876 : 

"I think that, when a pétition is filed before a state court acts, the state 
court cannot by any subséquent action claim to hâve first taken possession of 
the res. The fact that the bankruptcy court may not hâve yet made an ad- 
judication, and that no receiver or trustée bas yet been appointed, in my 
opinion, is immaterial. The bankrupt's property Is within the jurisdiction of 
the bankruptcy court as soon as the pétition Is filed, so far as to prevent a 
state court which subsequently seizes the property from being held to hâve 
flrst obtalned exclusive jurisdiction." 

In 148 Fed. page 464, in Re Duncan, the court says (page 468) : 

"The flling of a pétition agalnst him (the bankrupt) is a caveat to ail the 
world, and ail persons dealing wlth him during the interval from that date 
to the date of final adjudication do so at their péril. The property of the 
bankrupt, after the flling of the pétition agalnst him and before adjudication 
thereon is in custodio legls. It is subject to the prehensory povyer of the 
court, and the person against vyhom sueh pétition has been filed cannot make 
any légal disposition of it. No créditer can lay hands on It, and no court, 
state or fédéral, can attach It. It Is under the sole and exclusive jurisdiction 
and control of the bankruptcy court." 

In the case of In re Briskman, 132 Fed. 201, Judge Hazel, of the 
District Court of the Western district of New York, said on page 202 : 

"That the property of the bankrupt cornes within the jurisdiction of the 
bankruptcy court upon the fillng of elther a voluntary or an involuntary pé- 
tition is not controverted. Nelther is it dlsputed that thls court has the Pow- 
er to prevent a state court from exerclsing exclusive jurisdiction over prop- 
erty of a bankrupt selzed subséquent to the flling of a pétition In bank- 
ruptcy." 

Almost the exact action of this court attacked in this case has been 
sustained in numerous cases, of which we cite but a few. 

In the case of In re Jersey Island Packing Co., 138 Fed. 625, 71 
C. C. A. 75, 2 L. R. A. (N. S.) 560, on a pétition for revision of an 
order of the District Court of the United States for the Northern Dis- 
trict of California, the Circuit Court of Appeals denied the pétition. 
In that case there was a trust deed to secure debts not due at the 
time of the filing of the pétition in involuntary bankruptcy. The 
District Court enjoined the grantees under this trust deed from sell- 
ing the property therein conveyed, holding that subdivision 15 of sec- 
tion 2 granted such power to the District Court. In this case the 
pétition for injunction, as in the case at bar, was filed by unsecured 
creditors of the alleged bankrupt. 

In the case of In re Dana, 167 Fed. 529, 93 C. C. A. 238, wherein 
the Circuit Court of Appeals of the Eighth Circuit denied a pétition to 
revise, this question was before the court, as stated in the opinion of 
the Circuit Court of Appeals, on page 529: 

"The principal question arising on this pétition to revise Is whether a Dis- 
trict Court of the United States, in which proceedlngs in bankruptcy are 



IN RE DONNELLT 1005 

pendlng, and which Is in the actual possession of certain real property con- 
ceded to belong to the bankrupt, lias jurisdiction to détermine the amount 
and order of priority of liens thereon, and to liquidate such liens, to the end 
that the property may be sold free of incunibrances, and in aid thereof to 
enjoin the lienholders from prosecuting the foreclosure of their liens in a suit 
brought in a state court before the commencement of the bankruptcy pro- 
ceedings, but within four months thereof ; and this, though the lienholders 
object to such jurisdiction, and it is not contendod that their liens are pref- 
erential or fraudulent, or Invalid for any other reason." 

This question the Circuit Court of Appeals, following the District 
Court, answers in the affirmative, and the case has pecuHar strength 
because of its very différences in facts from the case at bar. In it, 
the action to foreclose was brought before the filing of the pétition 
in involuntary bankruptcy, and the lien was not attacked as fraudu- 
lent or preferential, and yet, under the authority on which that court 
relies, it was held that foreclosure might be restrained. 

The case of New River Coal Land Co. v. Ruffner Bros., 165 Fed. 
881, 91 C. C. A. 559, in which the Circuit Court of Appeals of the 
Fourth Circuit denied a pétition to revise may also be cited. 

The case of Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 
45 L. Ed. 814, is also instructive. In that case, a bankrupt, nine days 
before the filing of a pétition in bankruptcy against him, made a 
gênerai assignment, which was alleged to be an act of bankruptcy. 
After the filing of the pétition, the assignée sold the property. Aft- 
er the adjudication and before the appointment of a trustée the pe- 
titioning creditors applied to the District Court for an order to seize 
the property sold by the assignée. The property was taken through 
the marshal, notice being given to the purchaser of the property to 
appear and propound his claim. The purchaser came in and alleged 
that he bought the property for cash in good faith. and asked for 
protection and that the creditors be remitted to their claim against 
the assignée for the price. The court held that the purchaser had no 
title whatever to the property superior to the bankrupt's estate, and 
that the equities between him and the creditors should be determined 
by the District Court. 

It appears from the facts involved in the cases cited that the power 
now questioned has been upheld on the theory that the bankruptcy 
court should be allowed fuU sway in attempting to conserve the bank- 
rupt's equity of rédemption, that the most might be made thereof for 
the unsecured creditors. The mortgagee is as completely protected 
in this court as he could be in the state court, and hère is the only 
forum in which the contingent interests of the gênerai creditors may 
be fully protected. If the power exists to stop the foreclosure of an 
unquestioned Hen, as the fact appears, a fortiori it is présent under 
circumstances such as those hère, wherein an attack on the validity of 
the lien is one of the supports of the pétition in bankruptcy. 

The fact that the lien is in the hands of an officer of a state court 
is a mère incident; to ail intents, as far as this case is concerned, the 
status of the assignée is just that of a private créditer, or what that 
of the original mortgagee would hâve been, and no more. 

The motion should be disallowed. 



1006 188 FBDBKAL EEPOETEB 

MANHATTAN TRUST 00. et al. v. CHICAGO ELECTRIC TRACTION 00. 

In re WILCKE. 
(Circuit Court, N. D. Illinois, E. D. July 20, 1910) 

No. 25,595. 

1. Equjtt (§ 214*)^PLEADiNa— Exceptions. 

Wliether an affirmative défense of fraud Is sufflciently pleaded, or 
wliether, if sufflciently stated, is a défense, can only be considered on 
demurrer, and cannot be raised by exception. 

[Ed. Note.— For other cases, see Equity, Cent Dig. § 487; Dec. Dig. 
§ 214.»] 

2. Equity (§ 253*) — Pleading— Impertinent and Scandalous Mattee. 

Where a judgment In a state court against the recelver of a street 
railroad Company for injuries was flled as a claim against the company's 
property in the hands of the receiver, an answer alleging that the judg- 
ment was fraudulent and had been obtalned by false and perjured testi- 
mony was not subject to exception as impertinent and scandalous. 

[Ed. Note.— For other cases, see Equity, Ctent. Dig. § 525; Dec. Dig. 
f 253.*] 

3. PxEADiNG (§ 23*) — Impertinent Matteb. 

No matter is to be deemed impertinent whlch is materlal In establlsh- 
ing the rights of the parties or ascertainîng the relief to be granted. 

[Ed. Note. — For other cases, see Pleading, Cent. Dig. § 46; Dec. Dig. 
§ 23.*] 

4. Pleading (§ 23*)— "Scandai,." 

Scandai is impertinent matter whieh Is also crimlnatory or whicb 
otherwise reflects on the character of an individual, and no matter whicb 
is not also Impertinent will constitute scandai, however strong its asper- 
sions oi; reflections. 

[Ed. Note. — For other cases, see Pleading, Cent. Dig. § 46; Dec. Dig. 
i 23.* 

For other définitions, see Words and Phrases, vol. 7, p. 6341; vol. 8^ 
p. 7795.] 

5. Receivebs (i 54*) — Insoivenct — Claims — Establishment — Conclusive- 

NESS OK Judgment. 

Where a decree appolntlng a receiver for an insolvent street railway 
Company provided that the court should détermine and fix claims, costs, 
charges of administration, etc., sueh provision did not mean that the 
court In which the receivershlp proceedings were pending would try de 
novo' a elalm which had been reduced to judgment against the receiver 
in a state court, slnc« the decree did not specify the kind of évidence 
which the court should receive in determining whether the claim should 
be allowed. 

[Ed. Note. — For other cases, see Eeceivers, Cent. Dig. § 91 ; Dec. Dig. 
i 54.*] 

6. Judgment (§ 678*) — EECEivEis — Conclusiveness. 

Since a receiver of a street railroad company Is an arm of the court 
and hls officiai acts those of the court, a judgment recovered against him 
in his officiai capacity as to any act or transaction of hls in carrying 
on the business connected with the property is thé establishment of a 
llabillty against the assets in hls hands, and is conclusive as against 
lienors or purchasers of such assets in the absence of fraud, and this, 
not'withstanding the statute providing that such a recelver shall be sub- 

•For other cases see same topic & § numebe in Dec. & Am. Digs, 1907 to date, & Rep'r Indexes- 



MANHATTAN TRUST CO. V. CHICAGO ELECTEIO TRACTION CO. 1007 

jeet to the gênerai jurisdiction of the court In whieh the recelver was 
appointée! bo far as necessaiy to the ends of justice. 

[Ed. Note. — For otlier cases, see Judgment, Cent Dig. §§ 1195-1199; 
Dec. Dig. § 678.*] 

7. Judgment (§ 828*) — Oomity— State Courts— Judgment Against Fedekal 

Court Receiveh. 

l'Ile judgment of a state court tiaving jurisdiction of tbe parties and 
subject-matter against a fédéral court recelver in liis officiai capaeity 
In respect of any act or transaction of his in carrying on the business con- 
nected with the receiversliip property is final and conclusive as to the 
existence and amount of the llability. 

[Ed. Note. — For other cases, see Judgment, Cent. Dig. §§ 1504-1509; 
Dec. Dig. § 828.* 

Conclusiveness as hetween fédéral and state courts, see notes to Kan- 
sas City, Pt. S. & M. R. Oo. v. Morgan, 21 C. C. A. 478 ; Union & Planters' 
Bank v. City of Memphis, 49 C. C. A. 468.] 

8. Receivbrs (§ 150*) — Olaims — Proop — Judgment — F'kaud. 

Where a judgment against a fédéral court recelver In a state court 
Is filed as a claim in the receivership proceedings, an objection that it 
was obtained by fraud and false swearing would not authorize a retrial 
of the cause and the weighing of the same évidence on whieh the judg- 
ment was based, nor could it be proved by évidence merely cumulative, 
Impeaching, or contradictîng the former évidence produced. 

[Ed. Note.— For other cases, see Eeceivers, Cent. Dig. §§ 267, 268; 
Dec. Dig. § 150.*] 

In Equity. Bill by the Manhattan Trust Company and others 
against the Chicago Electric Traction Company. In the matter of pé- 
titions of William Wilcke. On exceptions to answer of interveners. 
Overruled. 

Wing & Wing and Pred W. Bentley, for petitioner William Wilcke. 
Mayer, Meyer, Austrian & Platt and Isaac H. Mayer, for pur- 
chasers, trustées, and bondholders. 

KOHLSAAT, Circuit Judge. Petitioner sets up judgment re- 
covered against the receiver herein for $10,000 and costs taxed at 
$74.85 on July 16, 1907, for which no exécution was awarded; that 
the judgment order directed that the same be paid in due course of 
administration out of the funds of said receivership; that said judg- 
ment was affirmed by the Appellate and Suprême Courts, and now 
stands in full force and effect and unsatisfied. The pétition further 
States that said judgment was filed with the master on August 16, 
1907, and asks that the receiver show cause why said judgment should 
not be allowed and paid out of the proceeds of foreclosure sale herein. 
To this pétition the receiver, the reorganization committee of the 
bondholders, the owners of the receiver's certificates, and the Chicago 
& Southern Traction Company, purchaser under said mortgage sale, 
make answer, alleging that by the decrees of June 11, 1907, and May 
27, 1908, in said cause, it was ordered that ail claims not presented to 
the master for allowance by September 8, 1908, should be barred, of 
which order petitioner had notice ; that petitioner's claim was not so 
presented and is barred. The answer further charges that said judg- 
ment is not binding against the respondents ; that respondents, other 

•For other cases see same topic & § numbek In Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 



1008 188 FBDEBAL EBPOETEB 

than the receiver, were not parties to said proceeding; tliat judg- 
ment was procured by fraud, and by false and perjured testimony. 

The answer further allèges that the injury complained of in said 
suit of Wilcke, upon which said judgment is based, was caused by his 
own négligence alone; that he produced false testimony as to the 
cxtent of his injury ; that he is not entitled to any damages ; that the 
judgment is excessive and inéquitable ; and that before the pétition be 
granted the facts should be fully inquired into. The answer further 
charges that the sale made in said cause under the foreclosure proceed- 
ings has been confirmed and deed delivered, and that the property is 
in the possession of the purchaser. 

To this answer petitioner files exceptions, which exceptions are now 
before the court. 

No reason is perceived why exceptions 1, 2, 3, 4, 5, and 6 should 
lie to the answer, and they are overruled. 

[1,2] The seventh and last exception is to the fourth oaragraph of 
the original answer of respondent, which allèges that Wilcke secured 
said judgment by means of fraud and by false and perjured testimony. 

This is excepted to as scandalous and impertinent. It is very 
clear that the only question before the court on this exception is: 
Is the paragraph properly a part of the answer? Should it be ex- 
punged? Whether the affirmative défense of fraud hère set up is 
sufficiently alleged, or whether if properly alleged it is a sufHcient dé- 
fense, are not matters in issue upon this exception. Thèse questions 
could only be raised by demurrer (2 Bâtes on Fédéral Practice, p. 
667), or, perhaps, by analogy to the method of testing the sufficiency 
as a matter of law of an answer or plea to an original bill, by setting 
down for argument. 

Of course, fraud may be set up at any stage of the proceedings. 
It vitiates ail transactions, and is always pertinent if it relates to the 
matter in controversy. To be sure, one may sometimes be precluded 
from establishing such a défense, as where, for instance, the principle 
of res adjudicata is applicable, but even in such a case it would not be 
impertinent. . 

[3] "No rnatter is to be deemed impertinent which is material in 
establishing the rights of the iparties or ascertaining the relief to be 
granted." Mechanics' Bank v. Levy, 3 Paige, Ch. (N. Y.) 606; 12 
Beav. 44; 10 Sim. 345. 

[4] "Scandai is impertinent matter which is also criminatory, or 
which otherwise reflects on the character of an individual. * * * 
No matter which is not also impertinence will constitute scandil how- 
ever strong its aspersions or reflections may be. * * * " 19 Ency 
PI. & Pr. 195 et seq. Tested by thèse rules, it is clear that the ex- 
ception must be overruled. 

The court finds itself somewhat embarrassed in administering ap- 
propriate relief by reason of the fact that counsel hâve ignored the 
issues raised by the exceptions ; i. e., questions of whether the alléga- 
tions of the answer are impertinent, scandalous, and an insufficient 
response to the pétition. The main question submitted in the briefs 
is as to the weight to be accorded the judgment as proof of petitioner's 



MANHATTAN TEC8T CO. V. CHICAGO ELECTEIC TRACTION CO. 1009 

claim, petitioner contending that the judgment is conclusive as to the 
right as well as the amount of his recovery, and respondents insisting 
that they are entitled to a hearing de novo on the original cause of 
action ; i. e., that the judgment is not even prima facie évidence in 
favor of Wilcke. Adhering strictly to the record, an order overruling 
the exceptions would dispose of ail questions properly in issue; but 
perhaps the court is warranted by this departure from the issues raised 
by the exception to treat the submission as a demurrer or as the setting 
of the matter down for argument on pétition and answer, and to thus 
consider the suffîciency as a matter of law of the proposed défense of 
fraud, which would involve the question submitted as to the conclu- 
siveness of Wilcke's judgment. 

[5] Respondents deny the conclusiveness of the judgment against 
bondholders, certificate holders, and purchasers: (1) Because the de- 
cree provides that the court shall détermine and fix claims, costs, 
charges of administration, etc.; (2) because bondholders, certificate 
holders, and purchasers were not parties to Wilcke's suit, and there- 
fore had no chance to be heard in défense thereof. 

The first point may be briefly disposed of by saying that the court 
may détermine, fix, and allow the claim solely upon proof of the judg- 
ment, without ignoring thèse provisions of the decree. The decree 
does not provide what kind and how much évidence shall be required 
to convince the court that the claim should be allowed. 

[6] As to the second point: Respondents do not contend that the 
judgment is not entitled to some weight against the receiver. Their 
contention is that it is of no weight against purchasers, bondholders, 
and certificate holders. 

Now, a receiver is simply a représentative of the estate being ad- 
ministered by the court of his appointment. He is an arm of the 
court — an officer appointed to conserve the property and manage it 
under the direction of the court for the benefit of ail those who may be 
adjudged ultimately entitled thereto. The receiver's officiai acts are 
those of the court, and any liability incurred while in the performance 
of his judicial duties is a part of the cost of administration, and neces- 
sarily given priority over ail other classes of creditors. 24 Am. & 
Eng. Ency. of Law, 31. A suit against a receiver in his officiai capaci- 
ty in respect to any act or transaction of his in carrying on the business 
connected with such property is nothing less than an attempt to es- 
tablish a liability against assets in his hands. It is idle to say that a 
judgment in such a suit is conclusive against a receiver in his officiai 
capacity, but yet of no weight against those ultimately entitled to those 
assets. That bondholders and trustées in a foreclosure proceeding 
are bound by the judgment rendered against the receiver therein in a 
court of compétent jurisdiction, see Turner v. Indianapolis, etc., R. 
Co., Fed. Cas-. No. 14,260. "It is also generally held that the assignée 
or receiver represents the whole body of creditors, so that ail of 
them are bound by the resuit of the proceedings by or against him, 
whether joined as parties or not." 23 Cyc. 1248, and cases cited. 
The appearance of the receiver, therefore, in the state court proceed- 
ing is, in effect, the court's appearance, and binds parties interested 
188 F.— 64 



1010 , 188 FEDERAL REPORTES 

in the receivership proceeding as fully as though the claim was set 
up and adjudicated. against the receiver in the court of his appoint- 
ment. It is therefore important to consider what weight should be 
given the judgment as against the receiver. 

If respondent's proposition is law, it is pertinent to inquire : What 
use could there be of ever suing a fédéral receiver in a state court? 
Would it not be a waste of time and expense? The statute (Act Aug. 
13, 1888, c. 866, § 3, 25 Stat. 436 [U. S. Comp. St. 1901, p. 582]) 
provides that: 

"Every receiver * * • appointed by any court of the United States may 
be sued in respect to any act or transaction of his in carrying on the business 
connected with sueh property, without the préviens leave of the court in 
which such receiver * * * ^vas appointed. ♦ * *" 

As stated by Beach on Receivers (Alderson's Ed.) § 721 : 

"It is apparent that if a judgment against a receiver, when presented to 
the court having jurisdiction of the receivership proceeding for payment, 
'may be modified, ehanged, or rejected, the trial of the cause in which it was 
rendered would be but an enipty and useless formality." 

And, it may be added, the statute permitting such suit vi^ithout any 
meaning, force, or effect — "a very useless act," to use the expression 
of the court in Dillingham v. Hawk, 60 Fed. 497, 9 C. C. A. 104 (23 
L. R. A. 517). "It is presumed that the Législature intends to impart 
to its enactments such a meaning as will render them operative and 
effective," and "when différent constructions may be put upon an act, 
one of which will accomplish the objects of the Législature and the 
other render the act nugatory, the former should be adopted," are 
very elementary maxims of interprétation of statutes which respond- 
ent's theory seems entirely to overlook. 

There seems to be no reason nor authority for holding that the 
clause of the statute, "but such suit shall be subject to the gênerai 
equity jurisdiction of the court in which such receiver * * * was 
appointed, so far as the same shall be necessary to the ends of jus- 
tice," means that the solemn adjudication of a state court vested with 
power and having jurisdiction over parties and subject-matter may be 
laid aside as of no weight, especially in a case like the one before us, 
where the receiver under the sanction of the court of his appointment 
has tested the validity of the judgment by proper proceedings in the 
highest tribunals of the state. In the first place, the words of the 
statute are, "such suit shall be subject. * * * " Nqw after judg- 
ment there is no suit to be subject, etc ; the cause of action has merged 
in the judgment, which is a contract of record. In the second place, 
such suits are only subject to the gênerai equity jurisdiction "so far 
as the same shall be necessary to the ends of justice," and certainly 
the ends of justice do not require a hearing de novo after the fact of 
liability has once been judicially determined by a compétent court. 
The construction of this clause of the statute by the court in Dilling- 
ham v. Hawk, supra, "as applying only to suits which seek to interfère 
with the receiver's possession of property," is a reasonable construc- 
tion, gives effect to ail parts of the statute, and seems to be ail that 
justice requires. 



MANHATTAN TRUST 00. V. CHICAGO ELECTRIC TRACTION CO. 1011 

[7] The soundness of the rule that a judgment of a state court 
having jurisdiction of the parties and subject-matter against a fédéral 
receiver in his officiai capacity in respect of any act or transaction of 
his in carrying on the business connected with the receivership prop- 
erty is final and conclusive as to the existence and amount of the 
liability is attested by almost unanimous authority. 34 C3'c. 445 ; 23 
Cyc. 1248; 23 Am. & Eng. Ency. of Law, 1126; Central Trust Co. 
V. St. Louis, etc., R. Co., 41 Fed. 551; St. Louis S. W. Ry. Co. v. 
Holbrpok, 73 Fed. 112, 19 C. C. A. 385; Jones on Corporate Bonds 
and Mortgages, § 493a ; Beach on Receivers ( Alderson's Ed.) §§ 659, 
721. In Missouri Pac. R. R. Co. v. Texas & Pacific R. R. Co., 41 
Fed. 311, Judge Pardee decided that such a judgment was not conclu- 
sive, but later, in the case of Dillingham v. Hawk, supra, concurred in 
the opinion of the Court of Appeals of which he was a member, there- 
by reversing his former holding. 

Counsel's argument, apparently granting that the judgment may 
hâve some weight against the receiver, but denying its conclusiveness 
against bondholders and others, because', as counsel says, "not one of 
thèse persons was a party to Wilcke's suit or judgment," manifestly 
leads to absurdity. At the time of the alleged in jury upon which 
the judgment hère sought to be collected was rendered some one was 
liable. It certainly was not the holders of receiver's certificates or 
bondholders, for they were not in possession of the property or in any 
way responsible for the opération of the road. The purchasers were 
not yet in existence. A jdinder of any of thèse parties would hâve 
been a misjoinder. If respondent's theory is correct, Wilcke, at the 
time of his injury, faced this dilemma : It was useless to sue the re- 
ceiver because any judgment he might obtain against him would be 
of no force or effect as against the assets in the receiver's hands or 
those to be realized upon foreclosure sale, or, as counsel puts it, not 
even prima facie évidence against those ultimately entitled thereto. 
He could not sue bondholders and certificate holders because they 
were not in possession or control of the road. The purchasers were 
not yet ascertained. If he did not sue some one, the statute of limita- 
tions would run against him. It follows of necessity that the judg- 
ment must be of some weight; for, if petitioner is relying upon his 
original cause of action in disregard of the judgment, his claim is 
barred by the statute of limitations. But Wilcke's claim herein is 
not based upon his original cause of action; it is based upon the 
judgment. If a duly authenticated record of the judgment is not évi- 
dence of the judgment and pertinent évidence in support of his péti- 
tion, how could the claim ever be proved? Surely not by évidence of 
the injury upon which the cause of action was based, for that cause 
of action is merged in the judgment. 

The cases cited by respondents do not sustain their position. Has- 
sall V. Wilcox, 130 U. S. 493, 9 Sup. Ct. 590, 32 L. Ed. 1001, is 
clearly distinguishable f rom this case, in that it was not a suit against 
a receiver for liability incurred by him while acting in his officiai 
capacity. At the time Wilcox obtained his judgment in the state 
court, the railroad property was not in process of foreclosure and in 



1012 188 FEDERAL REPORTES 

the hands of an officer of the court. There the trustées and bond- 
holders were not represented in the suit in which judgment was re- 
covered. Hère they were represented by the court's receiver. The 
same is true of Central Trust Co. v. Hennen, 90 Fed. 593, 33 C. C. 
A. 189. The judgment in that case was against the railroad before the 
appointment of a receiver, and could not therefore be part of the 
costs of administration. Central Trust Co. v. Bridges, 57 Fed. 753, 6 
C. C. A. 539, likewise was not a suit against a receiver for his officiai 
acts in relation to the property. So, also, of Central Trust Co. v. 
Condon, 67 Fed. 84, 88, 14 C. C. A. 314, and Keokuk & Western R. 
R. Co. V. Missouri, 152 U. S. 301, 14 Sup. Ct. 592, 38 L. Ed. 450. 
In short, this distinction seems to run through every authority that 
has been cited on behalf of respondents on this question. It will not 
be presumed that défense to Wilcke's action was not fully and ably 
presented, and, as said in Central Trust Co. v. St. Louis, A. & T. Ry. 
Co., supra, "the court will not entertain the suggestion that its receiver 
will not obtain justice in the state courts." 

[8] If respondents can pFoduce any clear évidence of fraud or 
perjury, whicli by the exercise of due diligence could not hâve been 
brought to the attention of the state courts, the matter might be 
referred on this question only. But such a hearing would not permit 
a retrial of the cause — the weighing of the same évidence upon which 
the judgment was based, and the passing anew upon the same questions 
which were decided by the state courts. Something more than évi- 
dence merely cumulative to the former évidence, or merely impeach- 
ing or contradicting the former évidence, must be produced. Ùnless 
this can be done the claim must be allowed. 



HILI.S V. F. D. McKINNISS CO. 

(District Cîourt, N. D. Ohlo, W. D. October 28, 1910.)' 

No. 1,329. 

1. Banketjptct (§ 52*) — Natube of Peoceedings. 

The proceeding contemplated by the bankruptcy act of 1898 ta not a 
mère Personal action against the bankrupt for the collection of debts, 
but is also a proceeding in rem to Impound ail of hls nonexempt prop- 
erty, to dlstrlbute It equitahly among hls creditors, and the court must, 
If possible, 80 construe the act as to secure unlformlty in Its administra- 
tion. 

[Ed. Note. — For other cases, see Bankruptcy, Dec. Dig. f 52.*] 

2. Bankettptct (§§ 14, 297*) — Jurisdiction— Statuts». 

Under Bankruptcy Act 1898, 5 2,t glvlng courts of bankruptcy Jurls- 
aiction to adjudge persons bankrupt who hâve had thelr principal place 
of business or résidence or domicile, for the greater part of six months 
preceding the flling of the pétition, wlthln the territorial jurisdlction of 
the court, and section 18, provldlng that Personal service shall be made 
as process Is served In sults In equity, and, where Personal service can- 
not be made, notice must be given by publication as provided by law for 
notice by publication, and Kev. St. § 629, subd. 8 (U. S. Oomp. St. 1901, 
p. 504), authorizing service by publication, a person who Is beyond the 

•For other cases see same topic & S mumbeb in Dec. & Am. Diga. 1907 to date, & Rep'r Infleie» 
t Act July 1, 1898, c. 641, 30 Stat. 645 (U. S. Comp. St. 1801, p. 3420), 



HILLS V. F. D. m'kINNISS CO. 1013 

territorial llœits of a bankruptcy court at the time of the filing of a pé- 
tition; but who bas for more than a year prior to a few days before the 
filing of a pétition resided vvithin tbe district, may be ad.ludged a banlc- 
rupt on Personal service and publication without the district, tliough lie 
does not appear in the proceedings, and the trustée may go outside of tlie 
district and avoid. as authorized by sections 60b, 67e, preferential trans- 
fers, notwithstanding Rev. St. § 740 (U. S. Comp. St. 1901, p. 587), pro- 
viding that suits not of a local nature against a single défendant luust 
be brought in the district in wUich he résides. 

[Ed. Note.— For other cases, see Bankruiitcy, Dec. DIg. §§ 14, 297.*] 

S. SlATtlTES (§§ 174, 175*) CONSTRITCTION— LEUISLATIVE InTENT. 

The court in construing a statute must avoid a construction that will 
lead to absurdity. If that may be done without violating either the lan- 
guage of the statute or its manifest intent. 

[Ed. Note. — For other cases, see Statutes, Cent. Dig. § 254; Dec. Dig. 
|§ 174, 175.*] 

Action by R. E. Hills, trustée in bankruptcy of L. C. Hatcher, 
against the F. D. McKinniss Company. Judgment for plaintiff. 

H. W. Crist and C. W. Everett, for plaintiff. 
Crissinger & Guthery, for défendant. 

KILLITS, District Judge. This case is before tbe court upon the 
complaint of the trustée and the plea of the défendant thereto and 
stipulations as to facts entered into by the parties. The facts as thus 
agreed on and which are not controverted by the plea are as follows : 

Hatcher was for more than a year prior to June 1, 1908, a résident 
of, and doing business in, Delaware county, Ohio, a county without 
this district. On the 14th of February, 1908, he gave the défendant, 
a corporation doing business in Marion county, Ohio, which county is 
within this district, a chattel mortgage on his stock of goods in Dela- 
ware county, and in April, 1908, the défendant took' possession of this 
merchandise, and between that time and the Ist of June disposed of 
the same or removed it out of the jurisdiction of the Southern district 
of Ohio, in which Delaware county is located. 

At the time of giving the chattel mortgage, Hatcher was insolvent. 
The défendant company was a créditer, and the mortgage was given 
for the purpose of preferring the défendant company. 

Hatcher moved f rom Delaware county into Marion county about the 
Ist day of June, or, at least, prior to the lOth of June, when the péti- 
tion in involuntary bankruptcy was filed against him in the Southern 
district of Ohio. He was not found within the Southern district, but 
was served personally and by pubhcation without the djstrict, conform- 
ably to section 18 of the bankruptcy law. He never at any time en- 
tered appearance to the proceedings, in which, on the 23d of April, 
1909, he was adjudged a bankrupt in the Southern district. Subse- 
quently Hills was appointed trustée. 

The plaintifï trustée, in the proceedings in this court, seeks to avoid 
the transfer to the défendant company as a préférence and to require 
the défendant company to answer and account for the disposition of 
Hatcher's property. It appears also that no property of Hatcher was 
found within the Southern district after the filing of the pétition. 

*For other cases see same topic & S numbeh in Dec. & Am. Dlgs. 1907 to date, & Rep'r Indexes 



1014 188 FEDERAL EBPOETER 

No question is made as to the jurisdiction of this court to entertaîn 
a complaint of this character made by a trustée appointed in another 
district. It is conceded that, barring other considérations to be here- 
after alluded to, sections 60b and 67e, one or both of them, confer 
jurisdiction upon this court to entertain this sort of a suit. 

The exact question attempted to be raised is whether, under the 
facts hère, the trustée, by virtue of the adjudication in the_ Southern 
district, has authority to attempt recovery of property found in another 
district. 

The position that is talten by the défendant company is that, because 
neither personal service within the Southern district nor entry of ap- 
pearance of the bankrupt is shown by the record, the trustée cannot 
go outside of the district to take advantage of the provisions of either 
sections 60b or 67e of the bankruptcy act, and that the adjudication 
attaches to only such efïects of the bankrupt as may be found within 
the district. 

Although this position is apparently supported by some authority 
and the question has not otherwise been discussed in any précèdent 
found by counsel or the court, we feel that we would make sport of the 
évident purpose of the bankruptcy act, if not its terms, should we ac- 
cept it as valid. 

[ 1 ] The title of the act of 1898 expresses its purpose to be to cre- 
ate a uniform System of bankruptcy in the United States and terri- 
tories, and Congress has seen fit in the body of the act to confer ju- 
risdiction not ônly over persons and property of persons domiciled or 
residing within the United States, but over property within the United 
States owned by nonresidents thereof , and, as was said by the Circuit 
Court of Appeals of the Eighth Circuit, in Shute v. Patterson, 147 Fed. 
509, 78 C. C. A. 75, the proceeding contemplated by this act "is not a 
mère personal action against the bankrupt for the collection of debts," 
but that its purpose is "to impound ail of his nonexempt property, to 
distribute it equitably among his creditors, and to release him from 
further liability," being both a proceeding in personam and a proceed- 
ing in rem. 

It seems to us that this act must be construed, if the language rea- 
sonably permits such construction, to secure uniformity in the fullest 
measure and to avoid an interprétation, unless the same be compelled 
by the language of the statute, which permits a dishonest or tricky 
debtor to easily escape its provisions. 

[2] It was compétent for Congress, of course, to détermine what 
should be the locus of the forum in which the adjudication should be 
had. It might hâve said that the jurisdiction in which the bankrupt 
is found at the time of the filing of the pétition should détermine the 
forum. What it did say was that the location of the bankrupt's prin- 
cipal place of business or of his résidence or of his domicile for the, 
greater portion of the six months preceding the filirig of the pétition 
should be the jurisdiction in which proceedings should be begun, and 
the language of this second section of the act contemplâtes clearly the 
possibility of a person being ad judged a bankrupt who was beyond the 
territorial limits of the court at the time of the filing of the pétition ; 



HILLS V. F. D. iM'kINNISS CO. 1015 

and, in order to préserve the uniformity of the law's opération, it 
seems clear to us that we must assume that Congress intended the 
same jurisdiction over, and as complète and full an administration 
upon, the property of a bankrupt who was without the jurisdiction of 
the district when the pétition was filed, but whose domicile, résidence, 
or place of business otherwise conformed to the provisions of this sec- 
ond section, as in a case where the bankrupt was at the time within 
the territorial limits of the court. 

This view is strengthened by a considération of the terms of that 
section of the act which provides for service (section 18), which is 
that Personal service "shall be made upon the person therein named as 
défendant in the same manner that service of such process is now had 
upon the commencement of a suit in equity in the courts of the United 
States, * * * but in case personal service cannot be made, then 
notice shall be given by publication in the same manner and for the 
same time as provided by law for notice by publication," etc. 

This language undoubtedly refers to Act March 3, 1875, c. 137, § 8, 
18 Stat. 472 (U. S. Comp. St. 1901, p. 513), being section 629, subd. 
8, of the Compiled Statutes, and, of course, it suffices to bring ail re- 
ferred to provisions of that act into the bankruptcy law as completely 
as if they were fully written therein. 

Referring, then, to this portion of section 629, we may read section 
18 as if it contained substantially this : That when the alleged bank- 
rupt shall not be an inhabitant of, or found within, the district, or 
shall not voluntarily appear, it shall be lawful for the court to make 
an order directing such alleged bankrupt to appear to answer the péti- 
tion by a day to be fixed, which order shall be served on such absent al-- 
leged bankrupt "if practicable, wherever found." 

It seems inévitable that, by directing this manner of service in a 
case such as we hâve before us, the statute aims to clothe the court 
with as complète a power of adjudication and administration upon the 
bankrupt's property as if he had either been served within the dis- 
trict or had voluntarily appeared. 

[3] In construing a statute, the court's first duty is to avoid a con- 
struction that will lead to absurdity, if that may be done without vio- 
lating either the language of the statute or its manifest intent. 

The construction asked for by défendant involves the assumption 
that Congress left unguarded a very obvious way to avoid the law 
and the uniformity of its opération, which such acts as thèse of Hatch- 
er and défendant create, if the law is indeed as défendant claims. 

It is clearly not within the language of the law that a bankrupt may 
weaken or narrow the power of the court which alone has jurisdiction 
over his case, by simply keeping without the district and avoiding the 
entry of appearance to the pétition. The fact that the act so plainly 
makes résidence, domicile, or conduct of business for something less 
than the whole time immediately before the filing of the pétition the 
sole criterion of jurisdiction suggests that the personal movements of 
the bankrupt are immaterial. 

We are referred by défendant to section 740 of the Revised Statutes 



1018 188 FBDSRAL BEPOBTEB. 

(U. s. Comp. St. 1901, p. 587), providing that suits not of a local na- 
ture against a single défendant must be brought in the district in which 
such défendant résides, and it is urged that section 2 of the bank- 
ruptcy act does not in any way change or modify this gênerai provi- 
sion. 

We are not willing to agrée with défendant that the bankruptcy act 
is in entire harmony with this gênerai provision, for, as we hâve seen, 
the former omits the question of the présent résidence of the bankrupt 
altogether from the considération of jurisdiction. 

A System of bankruptcy national in its character to be uniform în its 
opération must of necessity be unique in its method of administration, 
and, when one of its provisions involving the very policy of the law 
is deemed inconsistent with the gênerai law, the spécial provision must 
control. 

Defendant's main reliance is upon the case of In re Appel (D. C.) 
103 Fed. 931. The question before the court in that case was to dé- 
termine whether, for jurisdictional purposes, touching the application 
of periods of limitation, proceedings in involuntary bankruptcy are 
commenced by the filing of the original pétition without référence to 
the time of service of the order on the défendant. In the opinion the 
court uses this language, which does not appear necessary to a deter- 
inination of the question before it: 

"Without an appearance on the part of the défendant, no order can be 
made which wlll apply to the banlîrupt in person. It can only proceed as a 
proceeding against the property of the bankrupt, if any, wlthin the jurisdic- 
tion of the court and which can corne into the possession of the trustée." 

If we may agrée with défendant that this language of the court in 
the Appel Case supports defendant's contention, we should disregard 
it, not only as mère dictum, but because it seems clearly improvident. 

Subdivision 8 of section 629, Revised Statutes, which, as we hâve 
seen, is referred to in section 18 of the bankruptcy act, contains a pro- 
vision applicable to Circuit Courts alone, that the adjudication regard- 
ing défendants without appearance shall affect only the property un- 
der the jurisdiction of the court within the district and which shall 
hâve been the subject of the suit. Congress had this subdivision in 
mind, evidently, when enacting section 18, and, if it had intended that 
this particular provision of the subdivision should be applicable, it cer- 
tainly would hâve referred to it in as apt language as it employed in 
reierring to those which direct the manner of service. 

The failure of section 18 to refer to the limitations upon the effect 
of service without the district written into section 629, subd. 8, while 
making the manner of service there provided for generally applicable 
in bankruptcy proceedings, is significant. It seems clear that every 
considération of the policy involved in a law providing for a uniform 
System of bankruptcy dictated the omission. The policy of a law per- 
mitting administration upon the efïects of an absconding debtor for 
the benefit of ail his creditors is as important, at least, as any other 
considération moving the law's enactment. 

But we do not regard this language of the court in Re Appel as 



8. 8. WHITE DEKTAL MFG. CO. V.MITCHELL 1017 

necessarily out of harmony with the position that we take, for the trus- 
tée in this very proceeding is attempting to acquire possession of the 
property of a bankrupt, or its équivalent, in the manner accorded him 
by the law. 

The conclusion is that the prayer of the complaint should be granted, 
and the défendant be required to account for the property conveyed to 
it by the chattel mortgage. 



S. S. WHITE DENTAL MFG. OO. T. MITCHBLL. 
(Circuit Court, E. D. New York. July 8, 1911.) 

1. INJUNCTION (§ 56*) — Tekmination of Bmployment— Tbade Secuets— Dis- 

CLOSUEE— INJUNCTION. 

In a suit to enjoln a servant from dlsclosing trade secrets, consisting 
of spécifie methods or secret processes for the manufacture of commercial 
oxygen, it was no objection to the Issuance of an injunction that plain- 
tlff failed to point out any spécifie methods or secret processes which it 
was proposed to enjoin défendant from dlsclosing, since the gênerai pro- 
vision of the order prohibiting action in violation of defendant's con- 
tract of employment would be no more Indefinite than was the threatened 
injury, and, if the Injunction were enforceable at ail, it would. be enforce- 
able as well against any disclosure as against any particular process or 
devlce. 

[Ed. Note. — For other cases, see Injunction, Cent Dlg. § 110 ; Dec. Dig. 
§ 56.*] 

2. Injunction (§ 56*) — Disclostjbe of Teade Secbets— Défenses— Ultba 

Vires. 

In a suit to enjoin a servant from dlsclosing trade secrets pursuant to 
bis contracj of employment after the terminatlon thereof, it was no dé- 
fense that the manufacture of the article of commerce to which the se- 
crets related, by plaintlfC, was ultra vires. 

[Ed. Note. — For other cases, see Injunction, Dec. Dig. | 56.*] 

S. Injunction (§ 56*) — ^Th beats— Disclosure op Trade Seckets. 

Where a servant, having agreed net to diselose trade secrets learned 
whlle In complainant's employ, had terminated bis contract and taken 
employment with anotber concern in the same Une beyond the court's 
jurisdiction, and denîed that be intended to violate bis contract, an in- 
junction restraining him from doing so would not be granted as a thre^t ; 
défendant being as much bound by his contract not to disclose after tak- 
ing up his new employment as before, and subject to suit for the viola- 
tion thereof in the jurisdiction In which such breach, if any, mlght occur. 

[Ed. Note. — ^Por other cases, see Injunction, Dec. Dig. § 56.*] 

In Equity. Bill Ijy S. S. White Dental Manufacturing Company 
against George D. H. Mitchell to restrain défendant from communi- 
cating trade secrets after the termination of his employment by com- 
plainant. Dismissed. 

Alfred T. Davison, for complainant. 

Edward S. Brownson, Jr. (De Witt V. D. Reiley, of counsel), for 
défendant. 

»Por other cases see same topic & | ntjmbee In Dec. & Am. Digs. 1907 to date, & Rep'r Indexe» 



1018 188 FŒDEEAL REPORTEE 

CHATFIELD, District Judge. The défendant hâs been for a num- 
ber of years in the employ of the complainant company. Some months 
since he gave notice of terminating that employment, and exhlbited a 
contract under which he was to enter the employment of a firm in a 
Western city, to build, put in opération, and conduct a plant for the 
making of oxygen for commercial use. The complainant, in connec- 
tion with its manufacture of dental supplies, has been making oxygen 
for médical purposes, and has sold some of that product for ordinary 
commercial uses, some of which are not within médical lines. 

There is a grave dispute between the complainant and the défendant 
as to whether or not the défendant had knowledge of processes for 
making oxygen prior to his employment by complainant. The com- 
plainant allèges in its complaint and affidavits that it has a number of 
secret processes, and particularly of secret machines, developed partly 
by the défendant and partly by other employés of the complainant, and 
that the défendant is threatening to disclose and make use of thèse in 
such a way as to publisfi or furnish to competitors such secret pro- 
cesses and secret machinery for getting profitable results in the manu- 
facture of oxygen. 

The défendant, like other employés, had made a contract to give to 
the complainant the advantage of anything which he might discover 
while in their employ, and to keep secret whatever he learned during 
or by means of such employment. The complainant allèges in its bill 
of complaint that, if the défendant is allowed to make use of anything 
in violation of this contract, the injury will be irréparable, because 
of the loss of secrecy thereby caused. The défendant allèges an at- 
tempt merely to use a method of producing oxygen made known in 
this country by the inventors. Du Motay and Maréchal, by United 
States letters patent No. 70,705, on November 12, 1867. 

The défendant points to a clause in the contract which he has made 
with his new employers, under the provisions of which he is to install 
a plant, using this old patented, but now f reely available, process. The 
complainant answers this by calling attention to a provision in the 
contract that this old patented process (the Tessie du Motay and Maré- 
chal process) is to be used, "or any other process devised and put into 
5uccessful opération by Mitchell," and "unless the parties hereto shall 
agrée in writing upon such other process." 

'[1] The défendant further objects that the complainant does not 
point out any spécifie methods or secret process which this court is in 
a position to enjoin the défendant from disclosing, and hence that the 
injunction order would be so indefinite as to be void. But if an in- 
junction order were possible, or a situation shown in which it should 
be granted, this objection would fail, inasmuch as. the gênerai provision 
of the order prohibiting action in violation of a contract would be no 
more indefinite than is the threatened injùry; and if such an injunc- 
tion were enforceable, it would be enforceable against any disclosure, 
as well as against the disclosure of some particular process or device. 

[2] The défendant also allèges that the complainant is not entitled 
under its charter to manufacture oxygen for commercial purposes out- 
side of the dental trade. But it does not seem that the doctrine of 



s. 8. WHITE DEKTAL MFG. 00. V. MITCHELL 1019 

ultra vires is applicable in this situation. A man can be restrained 
f rom breaking a contract, even though the state might hâve an interest 
in the transactions of one of the parties to the contract (unless the 
subject-matter had to do wîth an illégal transaction) ; and whether a 
contract with the company with relation to the sale of the product 
might or might not be avoided, if the défense of ultra vires be inter- 
posed, nevertheless, a person cannot justify his own breach of contract 
as to a matter entirely within the authority of the corporation, because 
incidentally something outside of its charter powers might at the same 
time be going on. In other words, the complainant company might 
hâve secret processes which it did not use, and which it could not use, 
but yet which the défendant would not hâve the right to disclose; and 
he could not défend himself by saying that the complainant would not 
be allowed to put thèse processes to profitable use and that for this 
reason saw fit to appropriate to himself their property. 

[3] The question therefore cornes back on this application for a 
preliminary injunction (which has been pending with a restraining 
order against the défendant for some time) to the gênerai question of 
whether the complainant shows any action violative of his contract 
right from which irréparable injury is likely to resuit, and which is ac- 
tually threatened or is about to occur within this court's jurisdiction 
by the defendant's actions. 

_ As to this, it must be held that the complainant does not, either by 
his complaint, treated as an affidavit, nor the other affidavits submitted, 
show a situation upon which an injunction should issue. The défend- 
ant is bound, just as much as if he were enjoined by this court, to 
respect the légal rights of the complainant. He is bound to keep secret 
any processes which he learned while in complainant's employ, and 
which he agreed should be their property and not disclosed by him. 
An injunction (as has been sug-gested) would do him no harm, in the 
sensé of not interfering with w.^at he had a légal right to do. But, on 
the other hand, an injunction would not enlarge the complainant's 
rights, and would not protect them in the least; for the défendant 
would still hâve the right to enter into his new employment, and, in- 
asmuch as the papers show that the new contract is to be performed 
outside of the territorial jurisdiction of this court, the only efifect of 
an injunction would be that if the défendant at any time returned into 
the court, or appeared as a party or witness at final hearing, he could 
be punished, but the disclosure would hâve been made and the damage 
would hâve been done. 

Under such circumstances, the court is not willing to grant an in- 
junction order purely as a threat, or to hold that a man is intending to 
do what he says he is not intending to do, when there is nothing to 
détermine the matter other than the contradictory statements of the 
parties. 

The complainant is perfectly free to apply for an injunction at the 
place where the défendant begins his work if he attempts anything 
there which will be violative of his contract rights. The relief asked 
by the complaint in this action, namely, a permanent injunction, is 



1 020 188 FEDERAL REPORTEE 

substantially équivalent to that which is asked on prelimînary motion ; 
but up to the présent time no action or attempted action on the part 
of the défendant is shown which will be a violation of any contract 
right that the court can defiriitely ascertain. Whether or not, at final 
hearing, the fact that the parties are présent before the court and that 
some injury is imminent may make an action in this jurisdiction more 
effective than in some other, need not be considered now. The injunc- 
tion asked for would seem to be of no benefit, and it does not seem 
that the court should issue an order merely requiring a man in terms to 
avoid doing anything which he ought not to do, because, if he did begin 
the illégal or wrongrful act, he would then and there be subject to in- 
junction. 

Motion denied. 



In re HAMMOND. 

(District Court, N. D. Ohlo, W. D. March 15. 1911.) 

No. 1,759. 

Bankeuptct (§ 188*) — Title of Trustée— Lien or Existing Mortgage. 

A chattel mortgage, ijeruiitting the mortgagor to retain possession wltli 
power of sale, and subjecting aecretlons to the stock to the lien of the 
mortgage, was, under the laws of Ohio, good between the parties, though 
void as to creditors, and would formerly hâve given the mortgagee a 
lien, as against the mortgagor's trustée in bankruptcy, under Bankr. Act 
July 1, 1898, c. 541, § 70, 30 Stat. 565 (U. S. Comp. St. 1901, p. 3451), vest- 
ing in the trustée the title of the bankrupt as of the date he was ad- 
Judged a bankrupt: but section 70 is to be construed with the amend- 
ment by Act June 25, 1910, c. 412, § 8, 36 Stat. 840, of section 47a (2), by 
which the trustée is vested with the rights, remédies, and powers of a 
creditor holding a lien; and, subséquent to the amendment, such mort- 
gagee would bave no lien against the trustée, although the mortgage was 
executed prlor to the amendment. 

FEd. Note.— For other cases, see Bankruptcy, Cent Dig. §§ 286-295; 
Dec. Dig. i 188.*] 

In the matter of Clarence S. Hammond, bankrupt. On pétition to 
review the order of the référée disregarding a claim to a lien. Péti- 
tion denied. 

h. B. Hall and B. F. James, for petitioner. 
J. W. Grabiel and D. R. Jones, opposed. 

KILLITS, District Judge. September 21, 1909, John J. Fee filed 
with the recorder of Wood county, Ohio, a chattel mortgage upon 
a stock of fixtures and merchandise in said county, executed and 
made to him by the bankrupt, Hammond, and wife, to secure the 
payment of a note dated on or before the 18th of September, 1910, 
for the sum of $934.60. The mortgage pgrmitted the mortgagor, 
Hammond, to remain in possession with power of sale, and provided 
that ail accretions to the stock made to replace the goods sold in gen- 

•For other cases see same topic & § nuubes in Dec. & Am. Qlga. 1907 to date, & Rep'r Indexes 



IN RE HAMMOND 1021 

eral trade by the mortgagor should corne within the lien o£ the mort- 
gage. There can be no question but that, as to creditors, this mortgage 
was void, although good between the parties, upon the authority of 
Collins et al. v. Myers, 16 Ohio, 547; Freeman v. Rawson, 5 Ohio 
St. 1; Harman v. Abbey, 7 Ohio St. 218; Francisco v. Ryan, 54 
Ohio St. 307, 43 N. E. 1045, 56 Am. St. Rep. 711. 

On September 17, 1910, Hammond filed a voluntary pétition in 
bankruptcy, a receiver was appointed, who took possession of his 
store, and subsequently a trustée was elected, and Fee was cited to 
set up his claim. On the hearing before the référée Fee's claim to 
a lien upon the merchandise against the trustée was disallowed, the 
property was ofïered for sale and purchasedi by Fee, who tendered 
his note and mortgage in payment, which was refused. The matter 
is now before the court on pétition to review the order of the réf- 
érée disregarding Fee's claim to a lien on the merchandise. 

As the bankruptcy law stood prior to the amendment of June 25, 
1910, on the authority of York v. Cassell, 201 U. S. 344, 26 Sup. Ct. 
481, 50 L. Ed. 782, Fee should hâve been allowed the lien he claimed. 
The question before the court, in its essence, is whether the amend- 
ment of 1910 afïects Fee's mortgage rights held under a mortgage 
made prior to the amendment. If it were not for the amendment of 
1910, we would be referred for détermination of the question before 
us to section 70 of the bankruptcy act, which read then, as now : 

"The' trustée of the estate of a bankrupt • * * shall * * • be vested 
by opération of law with the title of the bankrupt as of the date he was ad- 
judged a bankrupt." 

And, foUowing the authority of York v. Cassell, it would trans- 
pire that, none of the creditors of Hammond having reduced his 
claim to judgment, the décisions cited above from the Ohio authorities 
would hâve no application, and Fee could enforce his lien as if the 
bankruptcy pétition had not been filed; for, under the Ohio author- 
ities, the mortgage was good bètween the parties, and, by the lan- 
guage of the bankruptcy act just quoted, manifestly the trustée stood 
in the shoes of the bankrupt ; York v. Cassell being to the effect that 
only creditors who hâve reduced their claims to judgment or who 
hâve levied by attachment may assert rights against the mortgagee 
of a mortgage void in the particulars referred to. 

But the act of June 25, 1910, amending the bankruptcy law, adds 
to section 47, par. "a," thèse words: 

"And such trustées, as to ail properties in the custody or comlng into the 
custody of the bankruptcy court, shall be deemed vested with ail the rights, 
remédies and powers of a créditer holding a lien by légal or équitable pro- 
ceedings thereon, and also, as to ail property not in the cuptody of the 
bankruptcy court, shall be deemed vested vrith ail the rights, remédies and 
powers of a judgment creditor holding an exécution duly retumed unsatis- 
fied.» 

It seems that this language might hâve found a more appropriate 
place in section 70 of the act; but^ however that may be, it is plain 
that the two sections must now be construed together, and that the 



1022 188 FEDERAL EEPOETER 

trustée can no longer be said to hâve the limited title of the bankrupt. 
Wherefore it need not be argued further that, if this mortgage had 
been made after the amendment, Fee would hâve had no lien against 
the trustée. And we think that the amendment effects the same resuit 
in this case, although the mortgage is prier in time. 

At any time before or after the adoption of the amendment, any 
créditer, by reducing his claim to judgment and levying, or by suing 
out an attachment, could hâve defeated Fee's mortgage. At ail times 
it was in péril of the individiual action of Hammond's creditors in 
this way. The amendment of 1910 does nothing more under thèse 
circumstances than to collectively put thèse creditors into the posi- 
tion of judgment or attaching creditors by représentation. It simply 
offers another method of eflfecting a remedy against the mortgage, 
which already existed, in behalf of the creditors. 

In that respect the case before us is not unlike that of Rairden v. 
Holden, 15 Ohio St. 207. There ïlolden, as administrator de bonis 
non, brought an action against the défendants Rairden and Burnet 
on the administration bond of one for whom they were sureties. At 
the time the bond was executed, an administrator de bonis non was 
without power to commence such an action; the only remedy under 
such circumstances being by action by creditors, legatees, or distribu- 
tees. Between the date of the exécution of the bond and the com- 
mencement of Holden's action the Législature of Ohio enacted a 
law providing that any succeeding administrator might maintain an 
action on the bond of an administrator whose powers had ceased 
against any of the obligors thereof or their légal représentatives. The 
contention against Holden's right of action in the Suprême Court of 
Ohio was that this statute, as applied in the particular case, was in- 
operative, as being rétroactive, and the inquiry was : What are ré- 
troactive laws.'' The court quotes Judge Story's définition of rétro- 
spective laws, in Society for Propagation of Gospel v. Wheeler, 2 Gall. 
139, Fed. Cas. No. 13,156, as follows: 

"Upon principle, every statute whieh takes away or impairs vested rights, 
acqulred under existing laws, or créâtes a new obligation, imposes a new duty, 
or attaches a new disability, in respect to transactions or considérations al- 
ready past, must be deemed rétrospective." 

Applying that définition as a test to the facts before it, the Suprême 
Court of Ohio says: 

"It seems to us that the statute now in question before us is free from 
constitutional objection. It neither 'takes away nor impairs vested rights ac- 
quSred under pre-existing laws.' The rights of creditors, legatees, and dis- 
tributees of the estate, and those of the sureties on the bond remain the 
same as before. It créâtes no 'new obligation, imposes' no 'new duty,' and 
'attaches' no 'new disability.' The amount of the liaMllty, and the extent of 
the duty, of the obligors in the bond, is the same as before ; the only différ- 
ence being that, before the statute, they were liable to a multiplicity of 
suits by a multiplicity of creditors, legatees, and distributees, and now they 
are liable to a single suit upon the same obligation and for the same amount, 
brought by a trustée for the beneflt of ail creditors, legatees, and distributees 
of the estate." 

It seems to us that the amendment of 1910 very properly applies 
to this mortgage, and that, as the law in its opération has the same 



IN EE HAMMOND 1023 

practical effect as if the creditors of Hammond had severally levied, 
the appointment of the trustée gives him priority. 

Other questions hâve been raisedi by Fee, which we hâve net con- 
sidered, for the reason that the record does not appear to hâve saved 
them. Our conclusion is that the trustée was right in his insistence 
that the merchandise went into the gênerai estate, and Fee's pétition 
for review is denied. 

The trustée pétitions for a review of the order of the référée award- 
ing to Fee a lien on the fixtures. The mortgage, although invalid 
as to creditors on the merchandise, for the reasons given in the au- 
thorities cited, was clearly valid as to the fixtures, and the only point 
made in the case in regard to this feature is that the mortgage appears 
to hâve been canceled on the files of the recorder prior to the filing 
of the voluntary pétition. It seems very plain, however, from the 
testimony, that this cancellation was an inadvertence of the recorder, 
for which Fee was not responsible, and it âlso appears that no creditor 
was deceived by the mistake. We agrée with the référée that the 
equities in this matter are clearly with Mr. Fee, and the trustee's 
pétition for review will be denied. 



End of Cases in Vol. 188