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https://www.courtlistener.com/api/rest/v3/opinions/7841988/ | Peters, C. J.
The dispositive issue in this administrative appeal is whether an injured state employee, entitled to benefits under General Statutes § 5-142 (a), may also collect “concurrent employment” benefits under General Statutes § 31-310.1 A workers’ compensation commissioner determined that the plaintiff, Kathryn Trinkley (claimant), had suffered a compens*741able work related injury in her primary employment with the named defendant, the Ella Grasso Regional Center (state),2 and was therefore entitled to receive her full salary pursuant to § 5-142 (a). Because the claimant had been concurrently employed by the city of Waterbury, the commissioner held that she was also entitled to receive two thirds of concurrent employment benefits pursuant to § 31-310. On appeal by the state, the compensation review division concluded that the remedy provided by § 5-142 (a) was exclusive and precluded any additional remedy pursuant to § 31-310. The claimant appealed to the Appellate Court, and we transferred the appeal to this court in accordance with Practice Book § 4023. We reverse.
*742The briefs and the record reveal the following facts. The claimant, a mental retardation aide, was totally-disabled as the result of an attack by a client at the Ella Grasso Regional Center. In addition to her primary employment at the state regional home, she had also been working part-time for the city of Waterbury. At the time of her injury, her weekly salary from the state was $257 and her average weekly wage from the city was $161. She had three dependent minor children.
The claimant appeals from the determination of the compensation review division that the legislature, in enacting § 5-142 (a) to provide the payment of their full salary to injured state employees, precluded the payment of concurrent employment benefits under § 31-310. She raises two issues: (1) did the compensation review division have jurisdiction to entertain the state’s appeal when the state did not comply with the requirements of § 31-301 (a); and (2) can a state employee recover concurrent employment benefits in addition to the special benefits provided in § 5-142 (a)?3 We are persuaded that the claimant has not established her jurisdictional claim, but we conclude that her benefits under § 5-142 (a) do not deprive her of the right to receive concurrent benefits under § 31-310.
I
In her jurisdictional argument, the claimant maintains that the compensation review division had no authority to entertain the state’s appeal because its *743appeal petition was not filed within the ten day period specified by General Statutes § 31-301 (a). To support this argument, the claimant relies on the fact that the workers’ compensation commissioner issued his finding and order on October 2, 1989, and on her contention that the state’s filing of two copies of its petition for review on October 12, 1989, by facsimile machine did not meet the statutory mandate. The state filed the original petition for review, with the five copies specified by the statute, on October 16, 1989.
Although the statute specifies that an appeal should be taken “within ten days after entry” of a commissioner’s award, we have interpreted this statutory requirement to include a requirement of notice to the party who might wish to appeal. Murphy v. Elms Hotel, 104 Conn. 351, 352, 133 A. 106 (1926). Fundamental rights to procedural due process mandate such a construction. See Kron v. Thelen, 178 Conn. 189, 193-97, 423 A.2d 857 (1979).
To establish that the state’s appeal was untimely, therefore, the claimant cannot rely on the date when the workers’ compensation commissioner made his award. The record contains no finding about when notice of this award was given to the state.
In the absence of such a finding, we decline to hold that the compensation review division lacked jurisdiction to hear the state’s appeal. “The party challenging an administrative decision always bears the burden of demonstrating that the decision was erroneous or improperly made.” Blaker v. Planning & Zoning Commission, 219 Conn. 139, 149, 592 A.2d 155 (1991). “There is a strong presumption of regularity in the proceedings of a public body such as a municipal planning and zoning commission. Foran v. Zoning Board of Appeals, 158 Conn. 331, 336, 260 A.2d 609 (1969); Scovil v. Planning & Zoning Commission, 155 Conn. *74412, 19, 230 A.2d 31 (1967); 82 Am. Jur. 2d, Zoning and Planning § 354 (1976); see also Brecciaroli v. Commissioner of Environmental Protection, 168 Conn. 349, 356, 362 A.2d 948 (1975); 8A McQuillin, The Law of Municipal Corporations (3d Ed. Rev.) § 25.327.” Murach v. Planning & Zoning Commission, 196 Conn. 192, 205, 491 A.2d 1058 (1985); Caserta v. Zoning Board of Appeals, 219 Conn. 352, 362, 593 A.2d 118 (1991); see also Cyr v. Coventry, 216 Conn. 436,442-43, 582 A.2d 452 (1990) (presumption of regularity of special benefit assessments). A presumption of regularity similarly attaches to the timeliness of a workers’ compensation appeal to the compensation review division.
We recognize that “certain jurisdictional facts are essential to establish the statutory jurisdiction of tribunals of limited authority.” Stern v. Medical Examining Board, 208 Conn. 492, 502, 545 A.2d 1080 (1988). With respect to such facts, the jurisdiction of an administrative body “is not to be presumed and must be established affirmatively”; id., 501; because these facts are “fundamental to the power to entertain and adjudicate a proceeding on the merits. In short, such facts condition the power to act.” Castro v. Viera, 207 Conn. 420, 434, 541 A.2d 1216 (1988). For example, “the existence of an employee-employer relationship is a jurisdictional fact that must be shown in order to proceed with a claim for workers’ compensation benefits. Castro v. Viera, supra, 427-35.” Stern v. Medical Examining Board, supra, 501-502.
In our view, an unresolved factual lacuna about the timeliness of an appeal does not implicate the jurisdiction of the administrative tribunal to act. The claimant suggests that Zoning Board of Appeals v. Freedom of Information Commission, 198 Conn. 498, 503 A.2d 1161 (1986), requires a contrary conclusion. We decided there that an agency’s conceded failure to comply with *745its own specific statutory requirements for the timely processing of appeals nullified its belated adjudication of an administrative complaint. Id., 503-506. Zoning Board of Appeals is, however, distinguishable for two reasons. First, it was premised on a concession of noncompliance with statutory mandates, while this case comes to us with a finding by the compensation review division that the state was in “substantial compliance” with the requirements of § 31-301. On the current record, we cannot conclude that there was an absence of substantial evidence to support that finding. Second, Zoning Board of Appeals construed as mandatory the language of the statute governing the processing of complaints by the freedom of information commission. By contrast, in our recent decision in Besade v. Interstate Security Services, 212 Conn. 441, 450-51, 562 A.2d 1086 (1989), on a record demonstrating considerable administrative delay, we held that the statute governing workers’ compensation claims does not automatically render a belated award invalid, or require a rehearing, absent a showing of prejudice. The claimant in this case has neither alleged nor made a showing of prejudice. We conclude, accordingly, that the compensation review division had jurisdiction to entertain the state’s appeal.
II
In her substantive argument, the claimant asserts that the compensation review division should have allowed her to receive concurrent employment benefits under § 31-310 to supplement the salary to which she was entitled under § 5-142 (a). Under § 31-310, an ordinary injured state employee who “has worked for more than one employer at the time of injury and [whose] average weekly wage received from the employer in whose employ he was injured . . . [is] insufficient for him to obtain the maximum weekly compensation rate from such employer under section 31-309 *746prevailing at the time of his injury” may recover benefits “calculated upon the basis of wages earned from all such employers in the period of such concurrent employment . . . .” It is undisputed that the factual predicate for the claimant’s contention has been met, i.e., her salary benefit under § 5-142 (a) is less than “the maximum weekly compensation rate from such employer under section 31-309 prevailing at the time of [her] injury.” The question before us is, therefore, solely one of statutory construction. Did the legislature, in providing the special benefit of full salary payments for those exposed to the special risks described in § 5-142 (a), intend to preclude the recovery of concurrent employment benefits under § 31-310?
The compensation review division held that “[t]otal incapacity benefits are to be paid in accordance with Sec. 5-142 (a). By requiring payments of ‘full salary’ for injured state employees, the legislature precluded payment for Sec. 31-310 concurrent employment benefits.” In reaching this conclusion, the review division relied in part on its prior holding to a similar effect in Jones v. State, 986 CRD-2-90-2 (Feb. 4, 1991). The state urges us to uphold the ruling of the division.
In Jones v. Mansfield Training School, 220 Conn. 721, 601 A.2d 507 (1992), this court has recently held, contrary to the view of the compensation review board, that an injured state employee eligible for enhanced benefits under § 5-142 (a) may elect, alternatively, to receive workers’ compensation benefits measured by her actual earnings under General Statutes § 31-307 when this alternate measurement would provide greater financial relief. The facts in Jones were closely analogous to those in the present case. In Jones, the worker, who was injured in the course of her state employment at the Mansfield Training School, had supplemented her state salary by working overtime. In this case, the claimant, who was injured during the course of her state employment at *747the Ella Grasso Regional Center, had supplemented her state salary by working part-time for the city of Waterbury.
In accordance with our holding in Jones, the claimant in this case is not relegated to her salary benefits under § 5-142 (a) as an exclusive benefit. She may instead elect an alternate calculation of her benefits, based on her rights as an ordinary state employee to workers’ compensation, including her right to recover concurrent employment benefits under § 31-310. As we recognized in Going v. Cromwell Fire District, 159 Conn. 53, 56, 267 A.2d 428 (1970), benefits under § 31-310 serve the important social purpose of protecting “the concurrent employee such as a wage earner having more than one job who, for instance, might lose his earnings from his principal job because of an injury occurring on another job with a low compensation rate.”4
*748The state urges us, however, to conclude that our holding in Going requires us to deny the claimant’s pursuit of a remedy under § 31-310. It is true that, in Going, a divided court determined that workers’ compensation payments to an injured volunteer firefighter fell outside of the concurrent employment provisions of § 31-310. The majority based its holding on the fact that volunteer firefighters, although entitled to disability benefits under General Statutes § 7-314a, were not “employed” so as to have “earned” wages, as required by § 31-310. Going is distinguishable for two reasons. First, the issue there was not the recovery of benefits by the injured worker but the allocation of liability for the worker’s benefits between a private insurer and the second injury fund. Second, and more important, in this case it is undisputed that the claimant held two paying jobs and, therefore, qualified for concurrent employment benefits within the express terms of § 31-310.
If we were to adopt the state’s view of the relationship between §§ 5-142 (a) and 31-310, a state employee who had the misfortune to be severely injured by a patient during part-time work at a state home for the mentally retarded, despite full-time work for a private employer, would have workers’ compensation benefits limited to the amount of his or her part-time state salary. Such a reading of our statutes finds no support in their text, purpose, or legislative history. We are persuaded that the legislature did not intend so draconian a result.
We are, however, equally unpersuaded by the claimant’s argument that she may recover benefits under § 31-310 in addition to the salary benefit afforded to her by § 5-142 (a). Although § 5-142 (a) expressly permits state workers injured in the performance of special state duties to supplement their special salary benefits by collecting “specific indemnities” where *749appropriate; see General Statutes § 31-308 (b); the statute otherwise precludes recourse to supplemental benefits inconsistent with the salary benefits it provides. In accordance with Jones, the claimant may recover either her salary benefit under § 5-142 (a) or the workers’ compensation benefits to which any other state employee would be entitled, including the right to receive concurrent employment benefits under § 31-310. Because these alternatives were not fully explored before the compensation review division, the case must be remanded to the division for the necessary factual determinations.
The judgment is reversed and the case is remanded to the compensation review division for further proceedings in accordance with this opinion.
In this opinion Shea, Callahan and Covello, Js., concurred.
General Statutes (Rev. to 1991) § 5-142 provides in relevant part: “disability compensation, (a) If any member of . . . any institution for the care and treatment of persons afflicted with any mental defect . . . sustains any injury while . . . attending or restraining an inmate of any such institution or as a result of being assaulted in the performance of his duty, the state shall pay all necessary medical and hospital expenses resulting from such injury. If total incapacity results from such injury, such person shall be removed from the active payroll the first day of incapacity, exclusive of the day of injury, and placed on an inactive payroll. He shall continue to receive the full salary which he was receiving at the time of injury subject to all salary benefits of active employees, including annual increments, and all salary adjustments, including salary deductions, required in the case of active employees, for a period of two hundred sixty weeks from the date of the beginning of such incapacity. Thereafter, such person shall be removed from the payroll and shall receive compensation at the rate of fifty per cent of the salary which he was receiving at the expiration of said two hundred sixty weeks so long as he remains so disabled .... All other provisions of the workers’ compensation law not inconsistent herewith, including the specific indemnities and provisions for hearing and appeal, shall be available to any such state employee or the dependents of such a deceased employee. All payments of compensation made to a state employee under this subsection shall be charged to the appropriation provided for compensation awards to state employees . . . .” This statute was amended by Public Acts 1991, No. 91-339, §§ 40, 55, effective October 1, 1991.
General Statutes (Rev. to 1991) § 31-310 provides in relevant part: “determination of average weekly wage of injured worker, concurrent EMPLOYMENT. PAYMENTS FROM SECOND INJURY FUND. . . . Where the injured employee has worked for more than one employer at the time of injury and the average weekly wage received from the employer in whose employ he was injured, as determined under the provisions of this section, are insufficient for him to obtain the maximum weekly compensa*741tion rate from such employer under section 31-309 prevailing at the time of his injury, his average weekly wages shall be calculated upon the basis of wages earned from all such employers in the period of such concurrent employment not in excess of twenfy-six weeks prior to the date of the injury, but the employer in whose employ the injury occurred shall be liable for all medical and hospital costs, a pro rata portion of the compensation rate based upon the ratio of the amount of wages paid by him to the total wages paid the employee in such average week but not less than an amount equal to the minimum compensation rate prevailing at the time of injury and, if he is totally incapacitated, the applicable dependency allowance, if any, due under section 31-308b. The remaining portion of the applicable compensation rate shall be paid from the second injury and assurance fund. In cases which involve concurrent employment and in which there is a claim against a third party, the injured employee or the employer in whose employ the injury was sustained or the employer’s insurer shall advise the custodian of the second injury fund if there is a third party claim, and such employee, employer or employer’s insurer shall pursue its subrogation rights as provided for in section 31-293 and shall include in its claim all benefits paid by the second injury fund and shall reimburse the second injury fund for all payments made for compensation in the event of a recovery against the third party.” This statute was amended, effective July 1,1991, by Public Acts 1991, No. 91-32, §§ 28, 41, and No. 91-339, §§ 30, 55.
The Second Injury and Compensation Assurance Fund is a codefendant with the Ella Grasso Regional Center. The interest of the Second Injury Fund arises out of its responsibility for concurrent employment benefits pursuant to General Statutes § 31-310. With respect to the issues before us, the defendants filed a joint brief raising a single set of claims. We will therefore refer to them jointly as the state.
The state’s brief, in its counterstatement of facts, complains about a lack of adequate administrative notice to the Second Injury and Compensation Assurance Fund. The compensation commissioner rejected this claim. Although the Second Injury Fund renewed this claim in its appeal to the compensation review division, the division’s opinion did not address its merits. In this court, the Second Injury Fund has not raised the issue either by filing a cross appeal or an appropriate statement under Practice Book § 4013. Indeed, the body of the state’s brief discusses only the issues raised by the claimant. On this record, we decline to address the merits of the notice claim raised by the Second Injury Fund.
Going v. Cromwell Fire District, 159 Conn. 53, 56 n.3, 267 A.2d 428 (1970), reports the legislative history of the statutory predecessor to General Statutes § 31-310. “The House of Representatives member who reported the bill (H.B. 2161, 1967 Sess.) on behalf of the joint committee on labor said ... ‘In today’s world, it is not uncommon for employees to hold more than one job. . . . If an employee is injured on the part time job, his average wages on that job are small in relation to his overall weekly earnings and with respect to his regular job. Yet those wages would determine his compensation rate. This can be devastating to a worker because the amount paid would be a pittance. On the other hand, we must recognize that it would be unfair to the part time or second employer to have him pay benefits based upon the overall wages of the employee. We have therefore proposed a compromise under which the part time or second employer pays for all the medical bills as he now does, and the same amount he would pay for the injury, but the employee would be entitled to receive an additional amount from the second injury fund which would be based upon his overall earnings. We have provided that the benefits be payable in relationship to total wages. In this way, the cost of his time of employment [sic] is spread over the entire economy and will not impose an undue burden upon a single employer.’ 12 H.R. Proc., Pt. 9, 1967 Sess., pp. 4040-41; see also Lee v. Lee, 145 Conn. 355, 358, 143 A.2d 154 [1958].” | 01-04-2023 | 09-08-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218759/ | WHALEY, Judge.
The plaintiff seeks to recover the income tax paid by him upon income derived from certain securities which were included in a trust established by plaintiff on February 16, 1923, for the benefit of his dependents and heirs. The trust instrument required that such income be used to satisfy the premiums on insurance policies in the trust upon plaintiff’s life. Plaintiff duly filed his individual income-tax returns for the calendar years 1926 and 1927. Plaintiff did not include in his return the amount of income derived from the trust securities and used to satisfy the premiums on the insurance policies referred to above. Deficiency assessments were made for the years 1926 and 1927 based upon unreported income. Plaintiff paid the assessments up to October 23,1929, and on the same day filed claims for refund. The claims were rejected.
The sole issue in this ease is the constitutionality of section 219 (h) of the Revenue Act of 1926.
In the recent case of Burnet, Commissioner, v. Wells, 53 S. Ct. 761, 77 L. Ed. -, decided by the Supreme Court on May 29, 1933, the validity of this section of the Revenue Act is upheld. In our opinion, this decision is a complete answer to the question and is controlling -in this case. See also Irenee Du Pont v. Commissioner, 53 S. Ct. 766, 77 L. Ed. -, decided by the Supreme Court on May 29, 1933.
The petition is dismissed. It is so ordered. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218760/ | McVICAR, District Judge.
Findings of Fact.
(1) The patent involved, 1,005,135-, is for an improvement in windshields in relation to hinging the upper and lower sections together, and for the holding of the upper section in a folded position.
(2) Arthur L. Banker, the plaintiff, made application for the patent on December 19, 1907, which was granted October 10, 1911, and which expired October 10, 1928. This action was brought October 7, 1931.
(3) The defendant, a corporation of the state of Delaware, was incorporated in 1919-. It purchased the assets of the Fórd Motor Company, a Michigan corporation, in 1920. The stockholders of the Ford Motor Cbmpany of Michigan differed substantially from those of the Ford Motor Company of Delaware.
(4) Prior to 1915, the Ford Motor Company purchased its windshields from others; since that time, it has manufactured most of the windshields used on its cars.
(5) The windshields purchased by the Ford Motor Company and manufactured by it prior to 1925, were of the type that plaintiff alleges infringes the patent in suit. Such windshields were in common and general use throughout the United States prior to 1925.
(6) The Ford Motor Company constructed its first windshield department in the early part of 1915. The building occupied 10,000-square feet. The machinery and equipment cost approximately $20;000, and the space occupied by the building had an approximate value of $20,000. It employed about seventy-five persons therein. The Ford Motor Company constructed its second windshield department in the latter part of the year 1915. It occupied 20,000 square feet. The machinery and equipment cost approximately $40,000; the space occupied had an approximate value of $70,000'; the number of persons employed was three hundred and fifty. The Ford Motor Company constructed its third windshield department in the year 1928. It occupies a space of 20,000 square feet; the machinery and equipment cost $135,000; the space occupied has an approximate value of $100,000; and three hundred persons are engaged as employees therein.
(7) The plaintiff knew of the defendant's use of the alleged infringing device prior to April 10, 1915, and knew of the continued use thereof by defendant from that date until this action was brought. He also knew, during the same time, that the same device was in general public use on many various types of automobiles made by different manufacturers.
(8) On April 10,1915, plaintiff mailed at Pittsburgh to the defendant at Detroit a letter of which the following is a copy:
“April 10, 1915.
“The Ford Motor Co., Detroit, Michigan.
“Gentlemen: You will find enclosed copies of patents 1,005,135 and 1,005,136 covering features of wind shield construction which are embodied in shields used on the late models of your ears. The applications for *738these patents, you will note, were filed in December 1907 and July 1910.
“You will note that 1,005,135 covers the means of supporting the upper and lower glass by means of metal shelf extending in towards the center from the frame. By means of this construction a shield can be made ■without a binding strip between the two lights of glass which would be an obstruction to clear vision.
“No. 1,005,136 covers a windshield construction in which the upper glass overlaps the lower glass. The advantage in this construction being in the fact that it prevents rain or wind blowing into the ear between the two lights of glass, prevents the whistling of wind at this point, and at the same time permits a clear view unobstructed by any binding or engaging strips between the two sides of the shield.
“If you will take the trouble to look over these patents, you will find that they are complete in every respect.
“Considering the large number of ears you manufacture, all of the shields on which embody the above patented features, I thought you might be interested in purchasing these patents. Failing that you may have something to suggest in the way of royalty.
“Your early advice will be much appreciated.
“Very truly yours,
“ALB :CC.”
Defendant was notified to produce the original letter, and made reply thereto that, after diligent search, it could not find it, nor did it have any record thereof.
(9) There was no evidence of any other communication between the plaintiff and the defendant, other than the letter above. There was no evidence of any threatened action against the defendant, or any other manufacturer or user, prior to the bringing of this action. No action was brought by plaintiff against defendant, or any other person, for infringement of the patent aforesaid, prior to the present action.
(10) During the period from April 10, 1915, to October 7, 1931, material witnesses for defendant have died; memories have been impaired by sickness and advanced age; records and material papers have been destroyed.
(11) The plaintiff, during said period, was actively engaged in the automobile business on a large scale in the city of Pittsburgh. He had offices in New York and Philadelphia. He has died since the time of bringing this action of a disease of the heart, known as an “athletic” heart. He had this trouble for twenty-three years prior to his death. During the period from April 10, 1915, to October 7,1931, he personally managed his business; he visited his New York and Philadelphia offices. He drove his automobile to his business until about two years before his death. He was absent from his office occasionally for a few days on account of his heart trouble. He was physically capable of bringing action for the. alleged infringement of his patent from the time he admits knowing of the defendant’s structure, April 10, 1915, down to the time he brought this action.
(12) Plaintiff, prior to the bringing of this action, did not deem that defendant’s windshields and those of a like type manufactured and used by others, were an infringement of the patent in suit. He acquiesced in such manufacture, and use, from April 10, 1915, to October 7, 1931.
Conclusion of Law.
Plaintiff is not entitled to recover, and should be restrained from proceeding in the present action, by reason of his laches and other acts, which create an estoppel in favor of the defendant.
Opinion.
This is an action to recover $18,000,000 damages alleged to have been caused by defendant through its violation of the patent in suit, from October 10, 1925, to October 10; 1928.
The defendant, in its affidayit of defense, set up the legal defenses of invalidity and infringement, and the equitable defense of laches and estoppel. A hearing of the equitable defense was had by the court, at which the evidence of the parties was heard. The court has made the foregoing findings of fact and conclusions of law. For the purpose of this opinion, the facts are briefly stated as follows:
The patent' in suit, 1,005,135, is for an improvement in windshields. The invention claimed relates to the hinging of the upper and lower sections, and for the holding of the upper section in a folded position. Plaintiff made application for a patent December 18, 1907; it was granted October 10, 1911; it expired October 10, 1928. This action was brought October 7,1931.
The defendant is a Delaware corporation, incorporated in 1919. It purchased, in March, 1920, from the Ford Motor Company, a Michigan corporation, its assets. The *739stockholders of the Ford Motor Company, the Delaware corporation, are substantially different from the stockholders of the Ford Motor Company, the Michigan corporation.
Prior to 1915, the Ford Motor Company purchased its windshield requirements from others. Since that time, it has manufactured the most of the windshields that it used upon its car’s. The windshields purchased and manufactured by the Ford Motor Company, prior to 1925> were of the type which plaintiff alleges infringed the patent in ’suit. Such windshields were made by other manufacturers, and were in public use throughout the United States prior to 1925.
In the early part of the year 1915, the Ford Motor Company constructed its first windshield department; the building occupied 10,000: square feet; the machinery and equipment cost approximately $2:0,000; the space had an approximate value of $20,000'; it engaged seventy-five employees. Defendant constructed its second windshield department in the latter part of the year 1915; it occupied a space of 20;000 square feet; the machinery and equipment cost approximately $40,000; the space had an approximate value of $70,000; three hundred and fifty employees were engaged therein. Defendant constructed its third windshield department in 1928. It occupies 20,000 square feet; machinery and equipment cost approximately $135,000; the space occupied has an approximate value of $100,000; the number of employees is three hundred.
Plaintiff knew of the windshield that the Ford Motor Company was manufacturing prior to April 10, 1915. He has known of the windshield manufactured, sold, and used by defendant from said time until the bringing of this action. During the same time he has known that such windshields were manufactured by others, and were in general use throughout the United States.
On April 10, 1915, the plaintiff mailed a letter to the Ford Motor Company (see finding of fact 8), in which he stated that he inclosed two patents, one being the patent in suit. He also gave a brief description of said patents. He also stated therein that these patents covered features of windshields “embodied in windshields used on the old models of your ears.” In concluding his letter, he said: “I thought you might be interested in purchasing these patents. Failing that you may have something to suggest in the way of royalty. Your early advice will be much appreciated.” There is no evidence that this letter was received, other than the presumption which arises from the mailing thereof. There is no evidence of any other communications between the parties. There is no evidence of any threatened action by the plaintiff against the defendant or any other manufacturer or person for violation of the patent in suit. There is no evidence of any notice, or of any order on defendant or other manufacturer to desist from infringing the patent in suit. No action was brought by plaintiff for infringement against defendant, or any other person, other than the present action. During the time that plaintiff had knowledge of the alleged infringing device of the defendant, material witnesses of the defendant have died; the memories of others have been impaired by sickness and old age; material papers and records have been destroyed.
. The plaintiff, during this period, was engaged in a large automobile business in Pittsburgh, with offices in New York and Philadelphia. He was manager of the Pittsburgh office, and gave personal attention thereto. He was physically able, during the time that he knew of the alleged infringing device of the defendant, down to the time that he brought this action, to bring an action for infringement. There is no claim of financial inability.
Would the facts in this case preclude a recovery by plaintiff on the grounds of laches and estoppel, if this action had been a suit in equity? If so, are they a defense in the present action at law?
Plaintiff knew of the defendant’s manufacture, sale, and use of the alleged infringing device from April 19,1915, to the time of bringing this action, October 7,1931. Plaintiff knew that defendant was making large expenditures in the manufacture and sale thereof, that such devices were being manufactured by others, and that such devices were in general and common use throughout the United States. His failure to act justifies the conclusion that he did not consider such devices an infringement of the patent in suit, that he acquiesced in the manufacture thereof by defendant and others, and in the use thereof probably by millions of persons in the United States. To permit a recovery by plaintiff now, after material evidence to the issues in this case has been lost by defendant, after large expenditures have been made, and after a substantial change has been made in the ownership of the Ford Motor Company, would be inequitable and unjust. It seems well established that plaintiff, if in equity by reason of laches and es*740toppel, would not be entitled to recover. Among the authorities, see Corpus Juris, 21, 234, par. 229; Window Glass Machine Co. v. Pittsburgh Plate Glass Co., 284 F. 645 (C. C. A. 3d Cir.); Ford v. Huff, 296 F. 652 (C. C. A. 5th Cir.); Dwight & Lloyd Sintering Co. v. Greenawalt, 27 F.(2d) 823 (C. C. A. 2nd Cir.); Mosler v. Lurie, 209 F. 364 (C. C. A. 2nd Cir.); Richardson v. D. M. Osborne & Co., 93 F. 828 (C. C. A. 2nd Cir.); Woodmanse & Hewitt Mfg. Co. v. Williams, 68 F. 489 (C. C. A. 6th Cir.); Universal Arch Co. v. American Arch Co. (C. C.) 290 F. 647 (C. C. A. 7th Cir.); Kelley et al. v. Boettcher et al., 85 F. 55 (C. C. A. 8th Cir.); Cummings v. Wilson & Willard Mfg. Co., 4 F.(2d) 453 (C. C. A. 9th Cir.); Triplex Safety Glass Co. v. Kolb, 53 F.(2d) 1062 (D. C. E. D. Pa.); Cinema Patents Co. v. Duplex Motion Pictures Industries, 60 F.(2d) 1013 (D. C. E. D. N. Y.).
In Window Glass Machine Co. v. Pittsburgh Plate- Glass Co., supra, the delay in bringing the infringement suit was eleven years. The court, by Woolley, C. J., said, on pages 649 and 650 of 284 F.:
“After the notice, in July, 1914, of their proposed suit for infringement nothing further was heard from the plaintiffs until December 31, 1918, when they filed the present bill. This was eleven years after one of the plaintiffs had brought the first suit and voluntarily dismissed it; nine years after the defendant had invested a large sum of money in the Mount Vernon plant and had begun commercial operations; four and one-half years after the plaintiffs had given notice of the proposed second suit; and three and one-half years after the defendant had invested an even larger sum in the Clarksburg plant and had there begun commercial operations. These dates are facts which figure against the plaintiffs’ bill in the present action. The circumstances were such, without repeating them at length, that the plaintiffs knew or were chargeable with knowledge of the practices and the apparatus employed by the defendant at its several works during these periods. Foster v. Railroad Co., 146 U. S. 99, 13 S. Ct. 28, 36 L. Ed. 899; Johnston v. Standard Mining Co., 148 U. S. 360, 13 S. Ct. 585, 37 L. Ed. 480. On these facts and circumstances the defendant makes the defense of laches.
“This defense is based on a well-settled principle of law. In its application courts recognize the general rule that, in a case of this kind, mere delay, unaccompanied by anything else, will not ordinarily bar a suit for injunction against a naked infringer. McLean v. Fleming, 96 U. S. 245, 24 L. Ed. 828; Menendez v. Holt, 128 U. S. 514, 9 S. Ct. 143, 32 L. Ed. 526; Prince’s Metallic Paint Co. v. Prince Mfg. Co., 57 F. 938, 6 C. C. A. 647, infra. But they also recognize a distinction between mere delay and unreasonable delay, where in the latter is involved the element of lack of diligence and the consequent inequity, under the circumstances,' of permitting the claim to be enforced. * * *
“When delay in prosecuting a claim is so unusual as to carry with it the appearance of being unreasonable, as in this ease, there devolves upon a plaintiff the burden of disclosing the impediments to an earlier action; of showing, if ignorant of his rights, how he had remained in ignorance so long; and of revealing how and when he first came to a knowledge of the matters on which he relies in his bill for relief. Badger v. Badger, 2 Wall. 87, 17 L. Ed. 836; Hardt v. Heidweyer, 152 U. S. 547, 14 S. Ct. 671, 38 L. Ed. 548.”
In Humphreys v. Walsh et al. (C. C. A.) 248 F. 414, on page 419, it is stated by Woolley, C. J.: “It is such delay as involves the" inequity of permitting a claim to be asserted after the death of parties, change of title, intervention of the rights of others, where, in consequence, evidence has been lost or has become obscured, the discovery of the truth is made difficult, and the party attacked is placed in a position of evident disadvantage.”
In Woodmanse & Hewitt Manufacturing Co. v. Williams et al., supra, the delay in bringing the infringement suit was fourteen years. The court, by Lurton, C. J., said on page 493 of 68 F.: “ * * * Reasonable diligence as well as good faith are necessary to call into operation the powers of a court of equity. Maxwell v. Kennedy, 8 How. 222 [12 L. Ed. 1051]. One who invokes the protection of equity must be ‘prompt, eager, and ready’ in the enforcement of his rights. Equity will not encourage a suitor who has long slept over his rights. It was well observed by Judge Coxe, in Kittle v. Hall [C. C.] 29 F. 511, that ‘time passes, memory fails, witnesses die, proof is lost, and the rights of individuals and of the public intervene. Long acquiescence and laches can only be excused by proof showing excusable ignorance, or positive inability to proceed on the part of the complainant, or that he is the victim of fraud or concealment on the part of others.’ He adds ‘that the court will not entertain a ease *741■when it appears that the complainant, or those to whose lights he has succeeded, have acquiesced for a long term of years in the infringement of the exclusive right conferred by the patent, or have delayed, without legal excuse, the prosecution of those who have openly violated it.’ These general principles find ample support in many cases.”
Laches and estoppel are equitable defenses, which may be set up in the present action at law. In 32 C. J. p. 84, par. 70, it is stated: “* * * The power of courts of equity in a proper ease to enjoin actions or proceedings at law is of long settled standing, and rests on the clear authority vested in them over persons within their jurisdiction.”
In 32 C. J. p. 101, par. 100; it is also stated: “Except where the rule is modified or abrogated by statute, the existence of an equitable defense which cannot be made available as a defense in an action at law is sufficient ground for an injunction to restrain proceedings at law. The court of equity in such a ease will enjoin the suit at law, and will itself assume jurisdiction of the entire cause and do complete justice between the parties.”
The Act of March 3,1915, c. 90, 38 Stat. 956, 28 USCA §' 398, provides: “In all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such ease as if he had filed a bill embodying the defense or seeking the relief prayed for in such answer or plea.”
In Liberty Oil Co. v. Condon National Bank et al., 260 U. S. 235, on page 242, 43 S. Ct. 118, 121, 67 L. Ed. 232, Chief Justice Taft said: “Where an equitable defense is interposed to a suit at law, the equitable issue raised should first be disposed of as in a court of equity, and then, if an issue at law remains, it is triable to a jury. Massie v. Stradford, 17 Ohio St. 596; Dodsworth v. Hopple, 33 Ohio St. 16, 18; Taylor v. Standard Brick Co., 66 Ohio St. 360, 366, 64 N. E. 428; Sutherland Code Pl. and Pr. § 1157. The equitable defense makes the issue equitable, and it is to be tried to the judge as a chancellor. The right of trial by jury is preserved exactly as it was at common law. The same order is preserved as under the system of separate courts. If a defendant at law had an equitable defense, he resorted to a bill in equity to enjoin the suit at law until he could make his equitable defense effective by a hearing before the chancellor. The hearing on that bill was before the chancellor, and not before a jury, and, if the prayer of the bill was granted, the injunction against the suit at law was made perpetual, and no jury trial ensued. If the injunction was denied, the suit at law proceeded to verdict and judgment. This was the practice in the courts of law and chancery in England when our Constitution and the Seventh Amendment were adopted, and it is in the light of such practice that the Seventh Amendment is to be construed.”
In Ford v. Huff, 296 F. 652 (C. C. A. 5th Cir.) (certiorari refused 266 U. S. 602, 45 S. Ct. 90, 69 L. Ed. 462), an action at law was brought to recover a royalty alleged to be due the plaintiff for use of a patent after a delay of ten years in making claim therefor. The Circuit Court of Appeals held that the defendant had the right to set up the equitable defense of. laches and estoppel, saying, on page 657 of 296 F.:
“It would not be consistent with equity and good conscience for plaintiff to enforce the claim asserted by this suit after he, with knowledge of the facts and under conditions inviting the assertion of that claim if it was relied on, acquiesced in defendant treating that claim as nonexistent; after he demanded and accepted payment of the balance of the reward mentioned as a final settlement of all claims based on the services rendered, and theretofore and thereafter for many years refrained from making the claim now asserted, while defendant, in reliance on the belief and understanding, induced by plaintiff's conduct, that such claim never existed or had been abandoned, was changing his position in such a way that he will be injured if plaintiff now is permitted to enforce his claim. Under equitable principles applicable to the state of facts alleged in the plea plaintiff has, by estoppel and laches, lost the right to enforce the claim -asserted by him. Simmons v. Burlington, etc., R. Co., 159 U. S. 278, 291, 16 S. Ct. 1, 40 L. Ed. 150; Washington v. Opie, 145 U. S. 214, 12 S. Ct. 822 [36 L. Ed. 680]; Ward v. Sherman, 192 U. S. 168, 176, 24 S. Ct. 227, 48 L. Ed. 391; Moran v. Horsky, 178 U. S. 205, 20 S. Ct. 856, 44 L. Ed. 1038; 10 R. C. L. 694. The effect of one being es-topped to enforce a claim is that his plight is substantially the same as it would have been if the claim had never existed.
“Under amended section 274b of the Judicial Code (38 Stat. 956 [Comp. St. § 1251b (28 USCA § 398)]), a defendant in an action at law who files a plea setting up an *742equitable defense is given tbe same rights as if he had set them up in a bill in equity. Liberty Oil Co. v. Condon National Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232. We are of opinion that a bill in equity disclosing the state of facts alleged in the plea in question would show that defendant was entitled to prevent the enforcement of the claim asserted by this suit on the ground that plaintiff’s conduct had been such as to deprive him of the right to enforce that claim. The term ‘equitable defenses,’ within the meaning of section 274b of the Judicial Code, includes a state of facts which, by virtue of doctrines recognized by courts of equity alone, has the effect of barring, or rendering unenforceable against a defendant in a suit, the claim asserted by the plaintiff therein.”
Similar rulings were made by the Supreme Court of Maine, in Clark v. Ciarse, 101 Me. 270, 64 A. 493, and by the Supreme Court of Mississippi, in Wall v. Harris, 90 Miss. 671, 44 So. 36. See, also, 32 C. J. 86; 4 Cyc. Fed. Procedure, p. 377, § 1165; Guffey v. Gulf Production Co., 17 F.(2d) 930 (C. C. A. 3d Cir.); Thorpe v. Filene’s Sons Co., 40 F.(2d) 269 (D. C. Mass.).
I conclude that the equitable defense of laches and estoppel should be sustained.
Let an order be prepared and submitted in accordance with the foregoing findings of fact, conclusion of law, and this opinion. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218762/ | BYERS, District Judge.
Hearing on Exceptions to Report of Special Commissioner appointed pursuant to Admiralty Rule 43 (28 USCA § 723), to take testimony and report his opinion to the Court, as to whether the dredge “Lake Fithian” and the barge “Caledonia” were one vessel in the legal sense, for the purposes of limitation; the question arose on a motion by the claimant, to require the petitioner to surrender the dredge as well as the barge, and the Court was unable to decide the motion on affidavits. The disposition of the Exceptions will coincide with the decision of the original motion.
The claimant was a member of the crew of the dredge, which was anchored off Sheepshead Bay in this District, on October 15, 1931, where certain dredging was being carried forward. On that night, he was ordered to go on board the barge and there affix one of the dredge’s lanterns as a riding light.
In performing the task, he fell through a broken hatehway on the barge, and sustained severe injuries. He brought suit in the state court, whereupon the limitation was here filed, and the barge alone was surrendered.
The Special Commissioner has reported that there was in effect common ownership; that the barge had no crew, and that the vessels may be regarded as being under the direction of one master, but that, under the decisions, they were not co-operating in a common effort or movement at the time of claimant’s injury, and hence cannot be regarded as one vessel for the purpose of the limitation proceeding.
The eases examined in the Report involve participation in movement or the exertion of power on the part of two vessels, followed by injury, and in such circumstances the question for decision was whether either or both vessels were doing the thing that caused or gave rise to the injury. The Columbia (C. C. A.) 73 F. 226; Thompson Towing & Wrecking Ass’n v. McGregor (C. C. A.) 207 F. 209; The Capt. Jack (D. C.) 169 F. 455; The W. G. Mason (C. C. A.) 142 F. 913; Van Eyken v. Erie R. Co. (D. C.) 117 F. 712. To these, there should be added The Anthracite (C. C. A.) 168 F. 693, in which The W. G. Mason, supra, is distinguished on the facts.
From these eases, the learned Special Commissioner concludes that participation in 'a joint enterprise requires that “both vessels were actively and physically, by their very movements, participating in the consummation of the end for which they were sent out by their owners.”
He found that element lacking here, and so reported that the dredge and barge were not one vessel in the legal sense at the time of the claimant’s injury.
A reading of the testimony forces the Court to reach a different conclusion.
To the rule as stated, there need be no dissent for present purposes, but it seems not to control these facts.
In a ease where no movement is involved, there would seem to be no requirement for joint movement, in order to establish joint participation in a given enterprise.
This dredge was held in place by anchors and spuds, and operated 24 hours a day, in three 8-hour shifts. The material to be deposited on shore was -cut away by a device carried on the dredge, and pumped through pipes, partly carried on pontoons and partly under water, to Cerritsen Beach. The pumps were on the dredge, to which the conduit pipes were connected.
*754The entire equipment was operated by fuel oil,.carried to the dredge by the barge, which wás made fast alongside for that purpose, with such frequency as the progress of the operations required.
The dredge carried tanks of 700 gallons capacity as operated, which were replenished, as stated, from the barge, which had tanks of about 1,000 gallons capacity; the barge was hauled to the dredge by one of the latter’s attendant tugs, and then returned to her mooring about 1,000 feet away. When the barge’s tanks were empty, she was hauled to Bayonne by the same tug, where oil was laden which had been purchased by the owner of the dredge, and then returned to her mooring until the Captain of the dredge needed more fuel; then the barge was hauled alongside and the deck-hands of the dredge coupled up her steam hose to the tanks on the barge; then a pump oh the latter was connected by the engineers on the dredge, and they ran the pump in the fueling operation.
This process was conducted at least twice a week for the period beginning in August, 1931, and continued until the time of the accident.
The barge was not operated by an itinerant vendor of oil; it was in effect a fuel tender of the dredge, as two of the petitioner’s witnesses somewhat reluctantly admitted, carrying oil which was the property of the owner of the dredge.
The safety of the barge at night was the concern of the Captain of the dredge, in the practical as well as the legal sense, for, if she had been run into by another craft and her cargo lost, or the barge sunk, the 24 hour per day operations of the dredge would have been delayed. In obedience to this realization, the crew of the dredge carried lighted lanterns to the barge each night and put them in place, in connection with affixing lanterns to the pontoons carrying the pipes to the shore. Thus the claimant was not engaged in a casual errand at the time of his accident, but in the performance of a routine duty regularly assigned under the discipline of the dredge. Complete dominion over the barge was exercised from the dredge, and from no other place.
The barge was placed at a mooring established by the dredge, at a sufficient distance to prevent danger from fire to the latter. The barge did not even have accommodations for a man to sleep on board. '
The dredge employed' the barge in the prosecution of the operation being carried forward; i. e., her safety and maintenance were a necessary element in the dredge’s work, as much as the spuds or the anchors which held it in place, and, if negligence was involved (which can alone be determined at the trial), it had its origin in the dredge,.and its effect on an appurtenance of the dredge.
Bor the reason then that the dredge was engaged in an undertaking which did not involve movement as in a collision case, it is not thought that the rule announced in The W. G. Mason, supra, controls the instant proceeding.
It is thought that the barge was an instrumentality — passive but essential — in the dredging operation as conducted.
The difference between the contribution to the enterprise made by the barge, and that made by the lighter in The Capt. Jack, supra, is one of degree, not principle. The same remark applies to Thompson Towing & Wrecking Ass’n v. McGregor, supra, and the language in the last paragraph of that opinion, on page 214 of 207 B., is thought to be apposite.
The Exceptions to the Report will therefore be sustained, and the motion to compel the surrender of the dredge will be granted,
The Court has been asked to pass upon the fee of the Special Commissioner. There seem to have been two fairly long hearings, at which four witnesses were examined, and 160 pages of testimony taken. In addition, there was a separate hearing for argument, and careful briefs were submitted, and the preparation of the Report must have required time and reflection. It is thought that $400.00 would be a reasonable fee under all the circumstances.
Settle order on notice. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218763/ | DAWKINS, District Judge.
This is a suit for the involuntary adjudication of the defendant a-bankrupt, upon the ground that, while insolvent, it was placed in the hands of a receiver in the state court. The sole issue is one of solvency. The matter was referred to a master, who has found that the defendant was solvent, and the petitioning creditors ask a review upon ten specifications of error, to wit: (1) That the master did not correctly state the liabilities, having omitted interest and taxes for 1932, the year in which the receiver was appointed; (2) the finding that the receivers had been operating the property at a profit since March 24,1932, which did not include interest, depreciation, or taxes; (3), (4), (5), and (6) that the master did not use the proper method of ascertaining the fair valuation of defendant’s assets from the evidence adduced; (7) and (8) that insufficient weight was given to the return value made for assessment purposes by the corporation and the testimony of the parish assessor thereon; (9) the failure of the master to show in the report the evidence filed by him constituted all that was taken on the hearing; and (10) the finding of the master that on March 24, 1932 (date of appointment of receivers), defendant’s assets, taken at a fair valuation, exceeded its liabilities, and it was therefore solvent.
Upon the first point, if the master’s finding of an excess of assets over liabilities is correct, it is sufficient to more than take care of any interest upon the indebtedness and that portion of the taxes which had accrued on Mareh 24, 1932.
As to the second ground for review, I do not consider the question of whether the state receivers have or have not made a profit from operations since their appointment of any great value in the determination of this ease. Many elements enter into that situation which have no bearing upon the fair value of the defendant’s property.
Points 5, 6, 7, and 8 involve the values of the assets found by the master. He concluded that the whole property, at a fair valuation, was well worth in excess of $300,-000, while the liabilities amounted to approximately $260,000. I do not deem it necessary to go at length into a recital of the evidence. The appraisers in the state court, at the time the receivers were appointed, valued the company’s fixed assets, including real estate, at $279,443.91, and the personal or movable property at $112,042.22, or a total of $391,-486.13. No value whatever was placed upon some $77,515.76 of notes which were considered “doubtful.” And the same course was pursued with reference to $27,876.46 of open accounts. Of course ordinarily these obligations are of much greater value to a going concern than to a purchaser at forced ox-liquidation sale. Testimony on behalf of plaintiff tended to show that the liabilities exceeded the assets by from $20,000 to $30,-000, while that on behalf of defendant supports the finding of the master. The chief *756point of difference in the fixing of values appears to be that the former considered what could be realized under the distressful conditions which existed in March of last year— in other words, the witnesses thought the figures they named were such as would attract buyers; whereas, the defendant’s witnesses based their estimates on what buyers would be willing to pay, after taking into consideration the depreciation in. values, if they really had a use for the property, as distinguished from speculation. The bankruptcy law itself requires the placing of a “fair” valuation upon property of an alleged bankrupt for the purposes of balancing against his indebtedness, and in my judgment this does not contemplate a situation where only those who can be attracted by the speculative spirit and hope of large profits arising from distress would buy. I do not think the lawmakers ever intended that, for the purposes of bankruptcy, a debtor’s property should be valued according to what he could get for it in the conditions which existed at the time the receivers were appointed, when as a matter of common knowledge there was very little disposition to invest in anything, and particularly property of the kind involved here. I think the formula stated by counsel for plaintiff — that is, fair value means what a willing owner, not compelled to sell, would take, and a willing purchaser would pay, when not compelled to buy — -is correct, but that this includes the thought, first, that' there should be a market and some reasonable competition as between those who have a need or use for the property, and not a condition which would be controlled in great measure by speculation or a desire for large profits on sales made at a sacrifice.
As to the return by the defendant for assessment purposes, it is well known that property is never assessed for its full value, and, in my judgment, this evidence is of little consequence in determining the issue here. Neither do I attach much importance to the statement of the assessor whose conclusions are based on general assumptions rather than a critical examination of the property in detail as was made by the appraisers in the state court and the witnesses who testified in the present case.
I think it proper to assume, and in fact it was admitted at the argument, that the record contains all the evidence introduced at the hearing before the master.
The tenth assignment is of a general nature and is covered by what has been heretofore said. My belief is that the evidence fairly preponderates in support of the conclusion reached by the master, and I am, therefore, constrained to hold that his finding's should be affirmed. Proper decree should be presented. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218764/ | CAVANAH, District Judge.
This case involves the application of the facts alleged in the complaint to provisions in the bond sued upon given by the defendant surety to the Twin Falls National Bank wherein it agreed to “make good and reimburse the Employer by reason of the fraud, or dishonesty of said Employee in connection with the duties of his office or position, amounting to embezzlement or larceny.”
The defendant demurred to the complaint, and moves to strike upon the ground, among others, that the liability assumed by the bond is limited to acts of “embezzlement or larceny” on the part of J. A. Keefer, cashier of the bank, the employee named in the bond. Other provisions of the bond are: “Second, That the Company shall not be liable, by virtue of this bond, for any act or thing done or left undone by the Employee, in obedience to, or in pursuance of any instruction or authorization received by him from the Employer or any superior officer. * * “ Fifth, That should the Employee become guilty of an offense covered by this bond, the Employer will immediately on being requested by the surety to do so, lay information before a proper officer covering the facts and verify the same as required by law, and furnish the Company every aid and assistance, not pecuniary, capable of being rendered by the Employer^ his or its agents and servants, which will aid in bringing the Employee promptly to justice, and such act when required of the Employer shall be a condition precedent to recovery under this bond.” And: “Tenth, This bond will become void as to any claim for which the Company would otherwise be liable, if the Employer shall fail to notify the Company of the occurrence of the act or omission out of which said claim shall arise immediately after it shall come to the knowledge of the Employer; and the knowledge of a president, vice president, director, secretary, treasurer, manager, cashier or like executive officer shall be deemed under this contract to be knowledge of the Employer.”
What, then, is the liability which the defendant seeks to limit? It is manifestly a liability to be determined with reference to the obligations which were expressly assumed by the surety and acts of the cashier limited by reason of fraud or dishonesty, amounting to “embezzlement or larceny” falling within the bond. The solution of the principal problem depends upon whether the acts of J. A. Keefer, the cashier of the bank, relied upon by the plaintiff, constitute a breach of the obligations of the bond amounting to “embezzlement,” for it is not claimed they amounted to larceny.
As receiver of the Twin Falls National Bank, which suspended business on November 21, 1931, the plaintiff asserts in his complaint that the defendant executed its bond to the bank containing the above provisions in which it became surety of J. A. Keefer, cashier, and while it was in force, and as such cashier, J. A. Keefer cashed from the funds of the bank certain checks of the Filer Livestock Company, Jerome Livestock Company, Shoshone Livestock Company, Keefer Department Store, and the Rogerson Hotel Company in the sum of $9,815.67, with knowledge that these companies were insolvent and unable to pay their current bills and obligations and without any deposit in the bank with which to pay the checks, and after so cashing them he held the checks in the bank as cash. He and Joseph Keefer were stockholders and had control of said companies. J. A. Keefer, as such cashier, did also cash the checks of L. F. Hostettler in the sum of $541.68 out of cash of the bank without Hostettler having a balance in the bank, and when he was insolvent and unable to pay his current bills and obligations; that at various times loans were made by the bank acting through J. A. Keefer, its cashier, to these companies in excess of 10 per cent, of the bank’s then capital and surplus, in amounts of $2,750 to the Filer Livestock Company, $3,950 to L. F. Hostettler and Amanda Hostettler, $3,750 to Jerome Livestock Company, $31,349.97 to the Rogerson Hotel Company, and $4,250 to the Shoshone Livestock Com*758pany. On November 13, 1931, J. A. Keefer drew as advance on his salary $125 from the cash of the bank with knowledge that the bank would close.. Joseph Keefer was at all these times president and a director of the bank, had control and management thereof, and was cognizant of the condition of its financial affairs, assets, and liabilities, and cognizant of the wrongful acts of the cashier, acquiesced in them, and in general directed and dictated the acts of the cashier. Due to the control and domination of the hank by Joseph Keefer and J. A. Keefer, none of the acts complained of were discovered until after the closing of the bank by the receiver, who on January 13, 1932, gave written notification to the defendant, and thereafter on February 16, 1932, filed proof of loss under the terms of the bond. A further general allegation is set forth stating that the cashier in doing the acts referred to fraudulently appropriated the moneys of the bank contrary to the lawful execution of his trusts as such cashier, and that it was fraud and dishonesty amounting to embezzlement.
If we turn to the facts pleaded and view the provision of the bond “by reason -of fraud or dishonesty amounting to embezzlement” in the light of the meaning of the word “embezzlement” as defined by the courts, the acts of the cashier do not constitute “embezzlement” and a breach of the obligations of the bond. There was no thought of the parties to extend the application of the expression “embezzlement” to acts of the cashier when in taking part with the president of the bank in making excessive loans and recognizing overdrafts when we face and answer the second and tenth provision of the bond «where it is expressly stated that the surety shall not be liable, by virtue of the bond, for any act done by the cashier in obedience to, or in pursuance of, any instruction or authorization received by him from any superior officer, and that the bond will become void as to any claim if the employer shall fail to notify the surety of the occurrence of the act out of which any claims shall arise immediately after it shall come to the knowledge of the president. Here the intention of the parties is revealed too distinctly to permit us- to ignore the express language adopted as applied to the facts here. We are told in no uncertain words that the president of the bank had knowledge of the acts of the cashier, acquiesced in, and in general directed and dictated, them. The cashier’s acts were authorized by his superior officer, the president of the employer bank, which under the bond relieved the surety of liability. The president’s failure to notify the surety of the occurrence of the acts was due to the fact that he had authorized and directed them, and in doing so they were not such acts of the cashier as contemplated by the bond which required notice to be given to the surety. But, if the case assumes the aspect urged by the plaintiff that these acts were those of the cashier, and do not come under the provisions of the bond relieving the surety from liability, yet we are still confronted with the clear provision of the bond that the surety shall not be liable for any act done by the cashier if the employer fails to give notice to it of the occurrence of the acts immediately after it has come to the knowledge of the president. This was not done. The parties contracted that no liability should attach unless the specific notice had been given. Dominion Trust Co. v. National Surety Co. (C. C. A.) 221 F. 618, Ann. Cas. 1917C, 447; United States Fidelity & Guaranty Co. et al. v. Gray, 106 Okl. 222, 233 P. 731; Shawnee Fire Insurance Co. v. Beaty, 64 Okl. 61, 166 P. 84; New Amsterdam Casualty Company v. Central National Fire Insurance Co. (C. C. A.) 4 F.(2d) 203. The law will not alter a contract for the benefit of one party and to the detriment of the other. Maryland Casualty Co. v. Bank of England (C. C. A.) 2 F.(2d) 793; Southern Surety Company v. MacMillan Co. (C. C. A.) 58 F.(2d) 541.' No judicial duty devolves on the court of construction of this provision of the bond, as it is clear as to time and manner of notice, and no liability shall attach, unless such notice is given. It is a condition precedent to suit before a recovery can be had.
A surety not being liable beyond the terms of its contract, its obligation may not be extended by construction. American Bonding Co. v. Pueblo Inv. Co. (C. C. A.) 150 F. 17, 9 L. R. A. (N. S.) 557, 10 Ann. Cas. 357. There is no ambiguity in the terms used in the bond here which is subject to two different constructions. The word “embezzlement” used, designating a crime, is familiar under the terms of the law. It has a definite meaning. United States Fidelity & Guaranty Co. v. Hughes (C. C. A.) 40 F.(2d) 34. The acts of the cashier by reason of fraud or dishonesty amount to the specific act or crime of “embezzlement.” .The character, nature, and extent of the personal dishonesty against which the surety undertook to protect the employer must amount to “embezzlement.” It must be ascertained from the meaning of the word by which the undertaking is limited in *759connection with the circumstances with respect to which the undertaking relates. Dominion Trust Co. v. National Surety Co., supra. The loss must arise out of embezzlement by the cashier, for an analysis of the bond discloses the fraud or dishonesty must be a charge of commission of embezzlement.
Some of the state courts hold that the words “fraud” and “dishonesty” amounting to “embezzlement or larceny” are to be taken in their broad generic sense, and are not words of limitation, but the great weight of authority, and mainly the federal courts, interpret the bond that the fraud and dishonesty must in effect be embezzlement or larceny. The case of United States Fidelity & Guaranty Co. v. Hughes, supra, is relied upon by both plaintiff and defendant. It involves the interpretation of the same provision of a bond as we have here. The court there held that Lauler’s act, president of the Keifer Bank of Tulsa, constituted embezzlement as he went to the Exchange National Bank and withdrew $6,500 in currency belonging to the Keifer Bank and deposited it in the First National Bank of Tulsa to the credit of the Farmers’ National Bank of Beggs, Okl., for which the Keifer Bank did not receive anything in return. We do not have such a situation here when we consider the acts of the cashier, J. A. Keefer, consisting of allowing overdrafts and making of excessive loans to the companies principally owned by others, and to Hostettler while under the direction and authority of a superior officer, the president of the bank. Ordinarily, overdrafts and excessive loans are, when done with the intent to defraud the bank, treated as misapplication of the funds of the bank and not embezzlement. United States Fidelity & Guaranty Company v. Hughes, supra; United States v. Warner et al. (C. C.) 26 F. 616. So the making of such excessive loans is not criminal, and has no relation to embezzlement. Cockrill v. Cooper (C. C. A.) 86 F. 7, 12. The penalty for so doing is that every director who participated therein is liable in his individual capacity for all damages which the bank has sustained. 12 USCA § 93.
In the case of United States v. Fish (C. C.) 24 F. 585, 593, the defendant, president of the bank, made loans and permitted overdrafts to a company in which he was heavily interested. His aets were concealed from the board of directors of the bank. It was held to be misapplication of the moneys of the bank and not embezzlement. It was there said: “What the defendant did was to allow his firm to overdraw its account under circumstances warranting a finding of the jury that he did this act with intent to defraud the bank of the money. Such an act, done with such an intent, is misapplication of the moneys of the bank within the meaning of section 5209, and the conviction upon the twenty-second count was proper.”
Again in United States v. Kenney (C. C.) 90 F. 257, 259, the defendant entered into a conspiracy with one of the paying tellers of the bank whereby his checks were to be cashed and concealed from the proper officers. ' In this way he secured a large overdraft. The court there held that such act was not embezzlement, but misapplication of the bank’s funds with intent to defraud. Compare Walsh v. U. S. (C. C. A.) 174 F. 615; Flickinger v. U. S. (C. C. A.) 150 F. 1.
The argument for the plaintiff that, when the president and cashier acted together in allowing the excessive loans and overdrafts to companies in which the president and others owned nearly all of the stock and the cashier a small percentage thereof, the provisions of the bond relieving the surety from liability when the cashier is authorized by a superior officer to act and failure to give notice to the surety of the aets of the cashier cannot be invoked, is answered when we realize that the bond did not insure against the acts and conduct of the president of the bank !n authorizing overdrafts and excessive loans, for the purpose of these conditions was that the surety would not be liable if the aets were authorized by the president and failure to immediately give notice of such aets of the cashier so it may be given an opportunity to protect itself from such further conduct. The fact that the cashier happened to have a small interest in these companies at the times the president authorized the loans and overdrafts would not remove the application and compliance with these conditions of the bond, for, if not, the insured could annul the conditions by its president or any other superior officer to the cashier directing and authorizing the cashier to take part in such aets, and the surety would not have the protection the conditions the bond gives it in having such notice, and of not being liable when the aets complained of were authorized by a superior officer to the cashier.
Tested by these principles when applied to the conditions of this bond and the facts pleaded, the overdrafts and excessive loans, when allowed with the acquiescence and authority of the president of the bank .who di*760reeted and dictated them, did not constitute “embezzlement” as required by the bond before a breach thereof can be claimed.
As to the claim that the cashier drew $125 as advance on his salary from the cash of the bank with knowledge that the bank would close, as constituted embezzlement cannot be sustained under the limited facts pleaded, for we are not told that at the time of such withdrawal he knew the bank would be closed at a time before the amount would be earned as such salary. Such advance would not be illegal unless it appears that he knew that the bank would be closed at a time before he would earn the amount, and the amount was withdrawn with the expectation of not rendering services in the future as such cashier to the bank. The president authorized and directed the payment of this advance amount which alone relieves the transaction from liability under the bond.
The motion to strike is directed to removing from the complaint conclusions of law which are not supported by sufficient facts, and it and the demurrer will be sustained. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218766/ | BYERS, District Judge.
This is an aetion at law’to recover from the Collector of Internal Revenue of this district, $53.69, representing a tax of $47.56 with $6.13 interest said to have been improperly assessed in connection with the plaintiff’s income tax return for 1928, as guardian of her minor son, Anthony N. Duke.
The return asserted as a deduction “authorized by law” (line 16) the sum of $1,-942.68, which embraced an item of $777.00 described as “clerical help, etc.”
That item was disallowed, and the tax assessed in connection therewith presents the pending question.
The pleadings raise no issue of fact, but a motion by plaintiff for judgment on the pleadings was denied when made in advance of trial so that the plaintiff might have opportunity “to identify, in the legal sense, the expenditures here involved with those examined” in Commissioner of Internal Revenue v. Wurts-Dundas (C. C. A.) 54 F.(2d) 515.
It now becomes necessary to conclude whether, as the result of the trial, the plaintiff has succeeded in so doing.
The ward’s income for the year in question was $22,831.97 according to the return, derived as to $22,279.33 from trust companies as trustees, and as to $552.64 from interest on bank balances and mortgage certificates.
There was actually received a further sum not included in the return, but it was shown at the trial that this was tax-paid at the source.
Under a decree of the Surrogate’s Court of New York 'County, the guardian is permitted to expend the infant’s income for his support and education to the extent of $28,800.00 per year, in order that he may maintain the scale of living which is appropriate to one of his affluence. This is the provision of the decree of May 14,1930, judicially settling the guardian’s intermediate account covering the period from December 1, 1923, to December 31, 1928, inclusive. The authorization above referred to is prospective in operation, to commence January 1,1930’.
The judicial settlement so obtained, sanctioned the expenditures which had been made by the guardian during the period embraced in the account, including those here involved, and examination of the annual inventory and account filed in the Surrogate’s Court at the close of each calendar year reveals that for the years 1926, 1927 and 1928, the guardian applied a portion of her son’s income to the household expenses of the family of which he was a member, his step-father, Thomas Markoe Robertson, being'the head.
The testimony is that the ward during the year 1928 was chargeable with one-quarter *763of such expenses, which involve the maintenance of homes in Westbury and Southampton as well as the attendant charges for motoring, yachting and the like. Establishing his share of those disbursements gave rise to the disputed item, which represents clerical services; namely:
Share of Miss Cummins’ wages ............... $559.00
Share of Miss Williams’ wages .................. 143.00
$702.00
H. A. Hall, accountant’s services ....................$22.50
52.50 75.00
$777.00
The latter item involves $52.50 for services in connection with the said intermediate accounting which was filed in the New York County Surrogate’s Court in November, 1929; and might well have been embraced in the costs awarded in the final decree therein.
The testimony of Miss Williams alone was offered on this trial, and it is to the effect that she is employed by the ward’s step-father, and is the private secretary of the plaintiff. She has entire charge of the latter’s bank accounts as guardian. The ward lives with his mother and step-father, and pays one-quarter of all costs of the various establishments and appurtenances, and consequently the bills have to be cheeked in order to be sure of their accuracy.
These maintenance charges run about $60;-000.00 annually, of which the ward’s share is around $15,000.00.
Also she cheeks the bills that are personal to him, for tuition at school, doctor’s charges and the like. She segregates the items, and operates three bank accounts in order to accomplish these purposes. She draws all checks, examines vouchers and receipts, and spends from two to four hours per day in these various duties. As stated, $143.00 was paid in 1928 to this witness.
Nothing was said about Miss Cummins’ services, as to whom there is charged nearly four times as much.
The income tax return reveals that the guardian included, in her deduction of $1,-942.68, the spin of $949.2-5' as commissions, presumably computed according to the New York law, and not questioned by the Collector.
That sum was more than sufficient to pay the disputed item.
The questions of law are: First, was the Collector required to regard the acquiescence of the Surrogate’s Court of New York County in these particular charges of the guardian against her son’s income as binding upon him? Second, if not, were they ordinary and necessary expenses paid during the taxable year in carrying on the business of the guardianship ?
The answer to the first question is in the negative. Holifield v. Commissioner, etc., 7 B. T. A. 1302, which involved payments made from income of minors to defray the expenses of removing a former guardian and an administratrix for incompetence, is not to the contrary.
Here there was m> issue made between the special guardian representing the infant, in the accounting proceeding, and the petitioner therein, touching the propriety of these deductions from the ward’s income; thus there was no real adjudication by the Surrogate which, under the principles of comity, might bo urged as controlling.
More important is the fact that the Surrogate did not purport to construe section 23 of the Revenue Act of 1928 (26 USCA § 2023), which is the duty of this Court, with respect to these matters. It is quite conceivable that- the decision herein will not be deemed apposite upon the next settlement of the guardian’s accounts in the Surrogate’s Court.
The answer to the second question does not involve considering whether there is such a thing as carrying on the business of administering a ward’s estate, for such has been recognized for the purposes of the Revenue Act, Commissioner, etc., v. Wurts-Dundas, supra.
Under circumstances that involve preserving the estate, or increasing it, lawyers’ bills have been allowed as proper deductions.
Here the guardian was not required to put forth efforts to garner the income, as will be seen from its constituency above stated. Nor was she called upon to preserve or increase the ward’s estate during the taxable year. The duties of collection consisted in depositing cheeks in a bank, a process lying within the capacity of the average person.
The disbursement of the income is one of the things compensated for by the commissions allowed by law. So far as the bills for tuition and other expenditures personal to the ward are concerned, supervision thereof was confided to the guardian — the ward’s mother — by the Surrogate’s Court. If she *764chose to delegate that duty to others, that was a matter of personal convenience to her, rather than such a business expense as the cases have sanctioned for the purposes of income tax deductions.
With reference to the household bills, it will be seen that, however considerable they may be in number and in detail, they represent in effect what the plaintiff’s husband and herself present to the guardian as the infant’s share of maintaining the family abodes and menage; they come therefore to the guardian with the presumption of regularity and authenticity inherent in their sponsorship. It would be a strange reasoning that would lead to the conclusion that the ward’s income should be exempt in part from the tax in question in order that he may he made secure against mistaken charges presented by his mother and his step-father.
If cheeking these various bills is to be regarded as part of the cost of maintaining the establishments, on the theory that elaborate domestic administration involves clerical services, the answer would be that they may be presumed to have been absorbed in the general charge of 25% of rent and household expense, charged to the ward for the year 1928 as stated.
These reflections induce the belief that the Collector was right and that the items in question represent expenditures made by the guardian for her own personal convenience, rather than necessary deductions in connection with the business of her guardianship, and that judgment must be awarded to the defendant, with costs. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218767/ | KERRIGAN, District Judge.
The libelants and the libelees, together with others, were parties to a fishing enterprise. Libelee Prank Harris was the owner of the schooner Lottie Bennett. He with his brother and libelee Robert Piercy advertised in San Praneisco newspapers the organization of a salmon fishing trip to the waters of Alaska. By this means they contacted certain of the libelants in a room or office apparently procured for the purpose. To them it was represented that the Lottie Bennett was seaworthy and fully equipped for the proposed fishing venture; that, if fifteen men could be gotten together who would each contribute $800, Harris would furnish the vessel, the seamen, and experienced fishermen^ and that the money thus contributed would be used to purchase supplies of food, barrels, salt, etc. An initial deposit of $150 was to be made in escrow with a well-known national bank in San Praneisco, and, when the fifteen men should be found and the $12,000 collected, the vessel would be ready to sail within forty-eight hours thereafter. Piercy was the high-powered promoter. The proposition was painted in glowing colors, and it was roughly estimated that a profit of $40',000 was to be made. It looked attractive, and the required number of adventurers was found, among them being a graduate of the University of California and teacher in the public schools of Berkeley, a civil engineer, and an iron worker. Several gave up steady jobs in order to become members of the project. None of them were seamen nor had any of them experience in commercial salmon fishing. Each of the participants or shareholders was to receive an agreed proportion of the catch, as *765were also the sailors, officers, and owner of the vessel.
There were in all twenty-five men interested in the enterprise, and they signed shipping articles and a formal contract embracing the terms of their agreement. They failed, however, to get the co-operation of the fish, and the venture was doomed to dismal failure from the beginning.
They set sail on the afternoon of May 22, 1932. At the time of their departure the hatches were open and the stores were piled on the main deck. With the exception of the captain and perhaps two others, all on board were drunk; the first mate (who was at the wheel) was so intoxicated that he could not follow the tug and had to be relieved by one of the adventurers, a former truck driver on a milk route, the captain encouraging him in his novel task by the remark, “You have driven a truck and know how to dodge trees and things. You ought to know how to steer a ship clear of rocks and other objects.” Due to negligence of the cook, the cooking range was not fastened to the floor of the galley, nor was it equipped with rolling irons; and upon the pitching or rolling of the vessel in passing out the Golden Gate the containers of hot water and coffee slid off the range and scalded the cook, as the result of which he was confined to his berth for 28 days. Some of the crew were 3 days recovering from their intoxication; others suffered for a week. Nearly all the shareholders were seasick.
Another vessel, the Ohio No. 3 (which was to meet the Lottie Bennett at a certain point and give her a tow), left San Francisco about May 19th and went to Seattle. It was to leave that port at 10 o’clock one night when the wind and tide were favorable, but the school teacher and another member of the venture did not return from shore leave until 12 hours later, which caused the Lottie Bennett to miss connections with the Ohio, and for this and other reasons the former was late in arriving at the fishing grounds in Alaska.
Omitting other harrowing details of the voyage north, and passing to their arrival in Alaskan waters, it appears that the troubles of these optimists had but just begun. There were complaints that the fishing equipment was wholly inadequate, there being no suitable fishing boats or satisfactory fishing nets, and that part of the funds collected had been improperly used to outfit the ship. The shareholders with few exceptions each thought he was the leader of the venture and acted accordingly, particularly shunning hard work. They, with other members of the crew, caught and packed 90 barrels of salmon. Then the adventurers headed for Dutch Harbor, where they had been led to believe brighter prospects awaited them. Here again the Ohio was to give them a tow, and again they missed her. After trying in vain for a week or 10 days to reach the harbor, which they failed to do principally on account of unfavorable weather conditions, a meeting was called for the purpose of surveying the situation. It was then made apparent that, even if they reached Dutch Harbor, the prospects of success were not bright, and, since they had on board only enough supplies to last 30 days — the estimated sailing distance from San Francisco — it was decided to set the course for home.
On the way back there were recurring disputes, misunderstandings and fights; they were short of food. Shortly after the arrival, one of the crew had a stroke, which he now claims to have resulted from starvation. They arrived in port September 15, 1932, as they left — practically all on board drunk. Capt. Harris advised the crew that the remaining supplies and the 90 ban-els of fish belonged to them to do with as they wished. Now, instead of having many captains, there were many salesmen, and confusion resulted. Sales were finally made, and the amounts received by the individual members of the enterprise ranged from $2.50 to approximately $75.
The shareholders, according to some of the testimony, had expected the venture to be something akin to a yachting cruise — that they would work the ship or fish only when they felt like it, and that most of the hard work would be done by the other fellow. Am illustration of their conception of the character of their undertaking may be given; namely, the school teacher was on duty at the wheel while the ship was moving slowly. Seeing what he believed to be an opportunity to take a good moving picture, he left the wheel unattended, and a serious accident was narrowly averted.
Another time, and when the fish were running, some of the single members of the enterprise took a motorboat, and with whisky and women (Eskimos) went on a sight-seeing trip. No more complete failure of a venture has come to my judicial attention. It is a sorry mess. Some of the participants put into it the savings of years. But there is no evidence that Harris misappropriated any of the money contributed. Everyone lost money and time. I am unable to find that there was any fraud or deception committed. But, *766oven if I could find that there was, the libel-ants’ victory would, I think, be as barren as their venture, for it is plain that the two brothers Harris and. Pierey, like thousands of others these days, are judgment proof, and I feel certain that little or nothing would be realized out of a sale of the Lottie Bennett, a sailing vessel, there being little or no market at present for vessels of that type.
In the Rohde ease it is alleged that the libelant was engaged as a seaman and as an expert packer and cooper, for $150' per month, and a percentage of the catch; that he received on account $200 and claims a balance of $300; that, this sum not having been paid when due, the respondents are liable in double that sum. He also alleges that on account of the character of the food furnished on the home voyage of 36 days that he was rendered totally and permanently disabled, and for this reason he prays for $2,000. Respondents deny each of the allegations of the libel.
In the Burns case libelant alleges that he was employed as the chief cook; that there is due him as wages $400. In a second cause of action he alleges that, on account of the unseaworthiness of the ship, he was scalded by the hot water, and for this injury he seeks to recover $5,000 damages. To this libel there is a general denial.
In the Anderson ease the libelants are what is known as shareholders in the venture. They contributed various sums of money to t the venture, and they claim that there was misrepresentation and fraud on the part of respondents Prank Harris, Jack Harris, and Robert Pierey, and they seek to recover the amount contributed by them respectively, and $1,500 each in addition as damages on account of injuries resulting from the lack of proper and wholesome food and for loss of time.
In the Chadwick ease, the libelants in that case are seamen, and their libel is for wages and for damages for injuries. They allege three causes of action, two of them are based on misrepresentation as to the proper equipment of the vessel for the fishing venture and to neglect and carelessness; hence that the catch of fish was small, resulting in damages to each of them in the sum of $500. The third count is based on injury to health on account of lack of wholesome food. Here there is also a specific general denial.
I find that Rohde was not to get $150 per month; that advances made to him were on account of his proportion of the expected satch; that he, like all the others, is bound by the terms of the shipping articles. I also find that the stroke which he suffered after the voyage was concluded was a second stroke, and was not caused, as alleged, by reason of the poor food.
I find that Bums, under the terms of the shipping articles, was to receive a proportion of the catch/ and is not entitled, as alleged, to wages in the sum of $400. As to the personal injuries suffered by him, I find that they were due to his own negligence.
As to the Anderson case (the shareholders), I find that there was no misrepresentation or fraud practiced on them by either of the Harrises or Pierey, and that they are not entitled to the return of the amounts of money contributed by them respectively, nor to damages for injuries due to lack of food.
In the Chadwick case I find that these libelants, seamen, are bound by the terms of the shipping articles, and not entitled, as claimed, to wages; that as to them that there was no misrepresentation or fraud, nor are they entitled to any damage on account of the quality of food.
It is therefore ordered that a decree be entered in favor of libelees without costs to either party.
In view of the foregoing, no formal findings are deemed necessary, and this memorandum will stand as my findings in these cases and let decree be entered accordingly. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218768/ | *769Opinion.
CHESNUT, District Judge.
In broad daylight, on a fine summer morning, with a calm sea and ample seaway, two vessels, one a steam freighter heavily laden with a cargo of sugar, and the other a much smaller power boat, collided in the Chesapeake Bay off the mouth of the Potomac river. The power boat promptly sank with her cargo of tin cans, all her crew being rescued by the freighter. The time was June 28, 1931, at 10-:11 a. m.
In these circumstances it is highly probable that either the steamer or the power boat was seriously at fault; and possible, although less probable, both were at fault. That the power boat, whose owner, with the owner of the cargo, are libelants here, was at fault is admitted by their counsel. His contention, however, is that the steamer was also at fault and the damages should be divided in accordance with the usual admiralty rule in such matters. In my opinion the testimony requires the adoption substantially of respondent’s story of the collision and the circumstances leading thereto. On one, and possibly two, important points there is an irreconcilable conflict of testimony between the principal witness for the libelants and those for the respondent. The story is told for the libelants by one Stevens who was steering the power boat at the time of the collision, while for the respondent a detailed account of the occurrence is given by the pilot of the respondent, the Mundolphin. I had the advantage of seeing and hearing this witness testify in person, and he is corroborated on the most material points in controversy by the captain of the Mundolphin and also to some extent by the captain of a third steamer which a few minutes before had passed both the steamer and the power boat. I did not have the advantage of hearing the witness Stevens in person, his testimony being submitted by deposition. I think the distinct weight of the testimony both in quantity and quality is in favor of the respondent’s version of the occurrence. I have, therefore, adopted it in the finding of facts. It is agreed on both sides that prior to the collision a single blast of the whistle was given by the steamer calling for a port to port passing of the two power driven boats. This signal was heard but not answered or in any way acted on by the Yelma Brooks, the smaller boat, until almost immediately before the collision when the crash was made inevitable by her helmsman who veered his ship to port when the collision could still have been obviated by bearing to starboard. The crucial point in controversy between Stevens and the pilot of the steamer is as to the time when this port to port signal was given, and as to the position of the two boats at that time. According to Stevens this signal was not given to the steamer until the boats were practically already in collision. But according to the pilot, confirmed by the captain of the Mundolphin, the signal was given at 10:07 o’clock, four minutes before the actual collision at 10:11, and when the two boats were at least half a mile apart.
The Brooks was coming down the bay and the Mundolphin going up. Shortly before 10 a. m. a British oil tanker had passed the latter- and was about a mile north of her at that hour. Both vessels were holding the usual north by west course up the bay at that *770point. The Brooks passed the oil tanker well to the starboard or east heading south or south % east, and crossing the stern of the tanker between the latter and the Mundolphin, then nearly a mile to the south. At 10:03 the Brooks was slightly off the port bow of the Mundolphin. A port to port passing of the Brooks and Mundolphin was then quite apparent. Bu,t at 10:07 the Brooks shifted her course somewhat to the eastward, so that the vessels then were approaching each other nearly end on, and, in accordance with the applicable rule of navigation for inland waters, the pilot of the Mundolphin at once blew one blast of his whistle for a port to port passing, and immediately shifted her course a half point to starboard, the usual maneuver. He, of course, expected the Brooks to do likewise in accordance with the well-established and long-prevailing rule and custom of navigation, but, as the Brooks made no response and no change in her course, at lCh09 when the vessels wqre still at least 500 feet apart, he stopped his engines, although still there was no real imminence of collision, as the slightest aetion in proper steering of the Brooks would have avoided it. Then for the first time the helmsman of the Brooks did take aetion — the wrong one — by, quickly veering to his port instead of starboard (due to his excitement, as he said) which was the immediate cause of the collision, although the pilot for the Mundolphin did his best to avert it by reversing his engines full speed astern, at 10:10, the actual collision ensuing at 10:11. The accident was not unavoidable, but could and would have been avoided if the steersman of the Brooks had paid the proper and required attention to the port to port passing signal (which he heard) when given, or at any time within two or three minutes thereafter, and could have been easily avoided even if at 10:10 he had veered to starboard instead of port, as he admitted his boat “was quick at the helm,” and said, “I could have cleared him in the length of the boat away. If he had blew me a blast seventy-five feet away I could have cleared him.”
The fault of the Brooks is undeniable and was seemingly so flagrant that it is hard to understand until we know the conditions prevailing on her. They appear from the libel-ant’s own testimony. In the first place, she was undermanned. The certificate of inspection required her to carry one licensed master, one licensed engineer and one deck hand when under way. On the day of the collision her crew consisted of a licensed master, one deck hand and one cabin boy. Despite this deficiency in her crew no doubt she could have been properly navigated if the crew had been properly disposed and attentive to their duties prior to the collision; but at that time the master was asleep, the cabin boy was in the cabin, but not used as a lookout as could have been done, and the navigation was entirely in eharge of the deck hand who was acting as helmsman. Ftom his own testimony it is clearly apparent that he was inexperienced and at least not skillful and even more importantly, he was greatly handicapped by the presence of the large sail which entirely obstructed his’ vision of the sea on the whole of the starboard side of his boat, except when he would practically leave the wheel and peep under the sail. Although he said that he had been aware of the presence of the two steamers for some time before he passed the first, and thereafter once or twice looked under the sail to locate the Mundolphin, a reading of his deposition in the light of the whole testimony leaves the impression that he did not pay attention to the relative locations of his boat and of the Mundolphin for a considerable time prior to his last sudden desperate effort to avoid the collision, when he made the fatal mistake, in his excitement, of veering to the left instead of to the right. He said that when the captain gave him the wheel the two steamers were pointed out to him well on his starboard and he was told to continue to sail on a course parallel to them but passing them a half mile or more starboard to starboard, and he contends that he did maintain substantially the same course, although he admits that at one time he did change the course slightly to the eastward in order to give even more passing distance. It is obvious that if he had in fact maintained this parallel course to the eastward of the two vessels, he would not have crossed the stern of the oil tanker and could not have come into collision with the Mun-dolphin unless she had deliberately changed her course for no reason whatever. The captain of the oil tanker testified that he observed the Brooks in passing and she was headed on a course which would take her across the stern of the tanker and between it and the Mundolphin and that as he observed her she was “yawing” about on her course.
We have then a situation in which a power boat making eight miles an hour is navigated by an inexperienced helmsman whose vision of half his course is blocked by a large sail; and with knowledge that a large steam*771er is within, his vicinity he continues on his course in the general direction of the other boat without maintaining an adequate lookout and without the assistance of the cabin boy who was otherwise occupied, although he might easily have been used as a lookout, at' least until the other steamer had been passed. This was certainly not careful or prudent navigation. Whether the man at the wheel could have stopped the engines without leaving the wheel and going below does not affirmatively appear, but it does appear that in fact the engines of the power boat were not stopped nor was her speed in any way cheeked until after the collision. In addition to all this, I have been forced to the conclusion from the testimony that the one-whistle blast from the steamer was given when the vessels were at least half a mile apart and at the time that Stevens made, as he admitted, a change in his course. He further admits that he heard this signal when given. His explanation of his apparent failure to respond to it or to thereafter otherwise act on it, was that the signal was not given until the boats were very close together when, in his excitement, he veered the power boat the wrong way. Of course if I could accept his testimony on this latter point a substantially different factual situation would exist.
The libelants however insist that, conceding the negligence of the Brooks, nevertheless the Mundolphin was also at fault and, therefore, the damages should be divided. And it is said the Mundolphin could have avoided the collision if- one of several things had been done by her pilot instead of what he in fact did do. But the important question is not whether the collision would have been avoided if the Mundolphin had done something else but whether what she did do at the times and under the circumstances, was reasonable and prudent navigation. It is suggested that if when she gave the signal for port to port passing and turned her helm half a point to starboard, she could have changed her course very much more to starboard and thus would have avoided the accident. But the answer to this suggestion is that when the signal was given the boats were at least half a mile apart, there was then not the slightest imminence of a collision and she did change her course in the usual and customary manner and to a reasonable extent. Again it is suggested that when the Brooks did not affirmatively respond for a port to port passing but continued on her course toward the Mundolphin, the pilot of the latter should have stopped his engines sooner than he did. The signal was given at 10:07 when the boats were half a mile apart and the engines were stopped a.t 10:09 when the boats were still at least 500 feet apart. Even then the collision could readily have been avoided by proper steering of the Brooks. Consideration must fairly be given to the relative size of the two boats and their respective capacities for equal maneuvers. The Brooks was only 75 feet long and .19 feet beam, with 5-foot depth of hold. She quickly answered her helm and could have cleared the Mundolphin as Stevens testified, in the distance of his boat length or 75 feet, and as the pilot testified, he knew that boats of this type often “come very close to us and then port and go on away from us.” Naturally and reasonably he anticipated that the Brooks would do so, there being nothing to indicate to him that she was in any way disabled. But when she veered to port instead of to starboard he saw that the collision was probably inevitable and at once reversed his engine. Until this final fatal error on the part of the Brooks the danger was not obvious or imminent.
Again it is suggested the Mundolphin might have avoided the collision by suddenly swinging to her port. But this would have been in violation of the passing signal which she had given. And finally, it is suggested that the Mundolphin should have given the danger signal of four blasts prior to the collision. Assuming that it might have been better for the pilot to have given the signal of four blasts when he stopped his engines, it is by no means clear that his failure to do so contributed to the actual collision because. Stevens testified that he could not, and apparently would not, have done anything different if he had heard them. It is, I think, quite possible that if the four blasts had been given before 10:09, Stevens might have been awakened from his apparent lethargy, but prior to that time there was no apparent danger. Still again, it is suggested that at 10:09 or 10:10, the course of the Mundolphin could have been altered sharply to the starboard instead of merely stopping the engines and later reversing them. But the pilot explained that this would have been a dangerous maneuver at that time because if, at 10:09, the Brooks had steered to starboard as she obviously should have done, the swing of the stem of the much larger Mundolphin might thus have caused an even worse collision, and also the effect of reversing the engines on the Mun-dolphin was to slightly carry her bow to starboard, which had the tendency of avoiding the collision even at the last moment, the *772actual collision being between tbe bow of tbe Mundolphin and the starboard side of the Brooks, about 20 feet from her bow.
The ultimate reliance of the libelants is placed on the principle that when two boats are approaching each other, each is charged with the active affirmative duty of exercising all possible care to avoid a collision, and the failure of one to do so does not excuse the failure of the other. And, as is said in some of the eases, the failure of one to take the necessary affirmative action cannot be excused on the ground its navigator expected the other to do something to avoid the collision. This principle is probably best expressed in the leading ease of The America, 92 U. S. 432, 433, 23 L. Ed. 724, as follows : “Imperative obligation is imposed upon each to comply with the rule of navigation ; nor will the neglect of one excuse the other in a case where each might have prevented the disaster, as the law requires both to adopt every necessary precaution, if practicable, to prevent the collision, and will not tolerate any attempt of either, in such an emergency, to apportion the required precaution to avoid the impending danger, in ease where both or either might secure perfect safety to both ships and all intrusted with their control and management.”
Numerous eases are cited by the libelants proctor to illustrate the principle. I have examined the eases but find that they deal with situations materially different from those that existed here. In many of them the collision occurred in narrow channels or where seaway was otherwise restricted and 'both boats were held in fault for lack of prudent navigation after danger became apparent. The principle is sought to be made applicable to the facts of this ease by a reference to the testimony of the pilot that he was expecting at any moment before 10:09 (when he stopped his engine) that the Brooks would port her helm and steer to starboard, and it is urged that the pilot had no right to assume that this would be done, but that on the contrary he was under the positive obligation of taking such steps as would avoid the collision, assuming that the Brooks did nothing whatever to comply with the rule of navigation. But I do not understand the principle to be properly so applicable at least under the circumstances of this ease. Indeed the contrary seems to be indicated in the following eases. The Acilia, 120 F. 455 (C. C. A. 4); The Gerry, 161 F. 413 (D. C. Md.). See also 11 C. J. 1046, § 38. In my opinion it was entirely reasonable for the pilot of the Mundolphin up to 10:09 to assume that the Brooks would comply with the rule by steering to starboard and when the Brooks still failed to do so, we find that the Mundolphin first stopped her engine and then in a minute reversed full speed astern. And this is not a ease in which the Mundolphin did substantially nothing to avoid the collision relying on the other boat to take action. On the contrary, we find that the Mundolphin strictly complied with the rule by first giving the signal for a port to port passing in ample time, and simultaneously changed her course to starboard; and thereafter, when for the first time her pilot became apprehensive that the Brooks would fail to comply with the rule, he stopped his engine and then reversed. He was meeting the situation step by step as it progressively developed. It may be argued that it would have been wiser for him at 10:09 not only to have stopped his engine but at once to have reversed, but at that time the boats were still 500 feet apart and the collision was not imminent or inevitable. A minute later when the Brooks veered the wrong way the pilot adopted the course which his best judgment dictated in the emergency, the reversal of his engine. While it might have been better judgment to have reversed the engine at 10:09 instead of at 10:10, I think this was at most only an error of judgment in a situation brought about wholly by the fault of the Brooks, not amounting to fault or negligence on the part of the pilot of the Mundolphin.
At least the fault of the pilot, if it was such, is not established by such clear and convincing testimony as is required in a case of this kind where the fault of the other boat is obvious and inexcusable. As was said in The City of New York, 147 U. S. 72, at page 85, 13 S. Ct. 211, 216, 37 L. Ed. 84: “Where fault on the part of one vessel is established by uneontradieted testimony, and such fault is, of itself, sufficient to account for the disaster, it is not enough for such vessel to raise a doubt with regard to the management of the other vessel. There is some presumption at least adverse to its claim, and any reasonable doubt with regard to the propriety of the conduct of such other vessel should be resolved in its favor. See also to the same effect, the Umbria, 166 U. S. 404, 409, 17 S. Ct. 610, 41 L. Ed. 1053; The Victory, 168 U. S. 410, 423, 18 S. Ct. 149, 42 L. Ed. 519; The Ludvig Holberg, 157 U. S. 60, 71, 15 S. Ct. 477, 39 L. Ed. 620. In The Ambridge (The Willsolo) 42 F.(2d) 971, 976 (C. C. A. 4), it was said by *773Judge Coleman: “Where, as here, the fault of one vessel is clearly established, the evidence of the other vessel’s fault must also be clear and convincing in order to maté out a ease for apportionment of damage. This principle has been repeatedly announced by the Supreme Court.” See also The Bright (The Cherokee), 45 F.(2d) 150 (C. C. A. 2); The Aeolus (The J. P. McAllister), 58 F.(2d) 984, 987 (C. C. A. 2).
I have, therefore, reached the conclusion that the fault of the Brooks was solely responsible for the collision in this ease. It results that the libels must be dismissed, with costs payable by the libelants. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218769/ | GALSTON, District Judge.
On May 30, 1929, there were shipped and placed on board the steamship Tymeric, then lying at the port of Calcutta, 50 bales of Hessian cloth alleged to have been received in good order and condition, for transport to Boston. It is alleged that the Tymeric failed to deliver the merchandise in the same good order and condition as when shipped.
The bill of lading provided: “Clause Paramount. Indian Carriage of Goods by Sea Act 1925. This bill of lading is and shall have effect subject to the terms and provisions of the Indian Carriage of Goods by Sea Act 1925, and of the Rules comprising the Schedule thereto as in the said Schedule set out and or as applied by the said Act.”
It is urged that, by reason of the Indian Carriage Act, it is incumbent on the respondent affirmatively to prove diligence in having made the ship seaworthy, and absence of negligence.
The shipment was loaded in No. 1 lower hold around the square of the hatch. It covered the forward half and was disposed on other cargo. There were in all 257 bales of Hessian cloth in that hold, and the cargo surrounding the Hessian cloth was also Hessian cloth. The dunnage was carefully disposed. On the ship’s side were placed cross sticks, grating fashion, each stick two inches in diameter, keeping the cargo away from the ship’s side at least two inches. Adequate wooden flooring was placed over the tank' top. Bamboo mats were used against all the iron work. Before the cargo was loaded all holds and the bilges were cleaned and dried. Over the cargo battens, cross sticks were placed, grating fashion, and the cargo was covered with rush mats. /
The space between the lower hold and ’tween-deck was left open for ventilation.
The Tymeric was rated A-l at Lloyds, gross tonnage 4,780 tons, registered tonnage 5,228, five hatches on the main deck, five between decks, five cargo compartments on the main deck, five between decks. There were four ventilators in each of holds Nos. 1, 2, 4, and 5.
As to weather conditions, it appeared that on leaving Calcutta a heavy southwest monsoon was met, the vessel shipping very heavy water. On June 4th and two succeeding days, strong southwest winds and heavy seas were encountered, the vessel again shipping heavy water. On June 18th, 19th, and 20th, again heavy seas resulted in the vessel shipping heavy water, and on a subsequent occasion, July 17th, the vessel shipped water. During the bad weather the hatches were shut *774down. When the vessel began shipping seas, canvas covers were put on the ventilators. No sea water or other water entered the No. 1 lower hold from the time the ship loaded at Caleutta until it was discharged at Boston. When the cargo was discharged on arrival of the ship at Boston, moisture from sweat appeared on the ship’s side and overhead beams in hold No. 1. No damage was found to the cargo in the ’tween-decks which was discharged at Halifax, nor was the cloth on top of the cargo in question damaged.
I think it may reasonably be inferred from the testimony given by the witnesses that the damage, if any, was owing to the moisture produced by the sweat in the hold. This is a usual condition arising from change in temperature, from a hot climate to a cold climate. Such sweat would account for the rust on the bands of the bales. The testimony of Calderwood and Row, the second officer, leaves no doubt as to the seaworthiness of the vessel. In addition, the sufficiency of the ventilation is corroborated by Captain Cocks, the'expert cargo surveyor, called on behalf of the respondent.
Under the bill of lading the steamer is not liable for damage caused by sweat unless indeed it can be shown to have been caused by the negligence of the vessel. But assuming the burden to be on the respondent, as is contended by the libelant, because of the provisions of the Indian Carriage Act, the respondent has met that burden, and by convincing evidence -shown that the damage was caused by sweat without negligence, and that the vessel was in all respects seaworthy, with a sufficient ventilation equipment, and that the cargo was properly stowed.
Indeed, from another point of view, the libelant’s case exhibits infirmity. In the first place there is no proof offered as to the condition of the contents of the bales at the time that they were shipped, or proof that the cargo was not delivered in Boston in like order and condition as when shipped. It is true that the bill of lading recites that the cargo Was “shipped, in good order and condition,” but adds, “weight, measure, quality, contents and value unknown.”
This bare recital in the bill of lading can be accepted as proof only of the external condition of the bales at the time of shipment. Monnier v. United States (D. C.) 16 F.(2d) 812; The Dondo (D. C.) 287 F. 239. That the external appearance indicated that the bales were “shipped in good order and condition” may well be admitted without affording grounds for the inference that the contents were free from moisture.
The libel will be dismissed.
If this opinion is not in sufficient compliance with the rule requiring findings of fact and conclusions of law, submit findings of fact and conclusions of law in accordance therewith. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218770/ | KNIGHT, District Judge.
Relator entered the United States from Italy on June 7, 1923, on a passport viséed by the British eonsul for transit to Canada. He went to Canada, but returned about June 13, 1923, to this country without having a properly viséed passport entitling him to entry to the United States for permanent residence.' On December 6, 1930, he left this country for a visit to Italy and returned April 11, 1932. Prior to his departure, he secured a re-entry permit valid for one year from the Department of Labor at Washington. This was presented at the time of his return; an extension of six months having been secured from the United States consul in Italy.
The alien was subsequently apprehended under a warrant charging that he was in the United States in violation of the Immigration Act of 1924, title 8 USCA § 213, in that at the time of entry he was a quota immigrant who was not in possession of an unexpired immigration quota visé. After a hearing, deportation was recommended, and a warrant therefor was issued by the Department.
The alien swore out this writ of habeas corpus contending that under section 210 (b) of the Alien Immigration Law, title 8 USCA, the issuance of a re-entry permit requires a finding that the alien has been legally admitted and has made application for the permit in good faith, and thus, since a re-entry permit was issued, the Assistant Commissioner of Immigration must have found, after examination of the record, that relator’s entry was legal. Another contention by relator is-that the inspector who allowed the entry from Canada in 1923 was an agent of the United States, and that the United States, in issuing the re-entry permit, ratified his act of admitting the relator, and thus has estopped itself to deny that the entry was legal. The government answers that neither the fact that the alien was able to pass the inspector when he entered in 1923 nor the fact that he was able to secure a re-entry permit can operate to make his entry legal.
Relator claims that the examining officer refused to admit into the record the application for the re-entry permit. The record of proceedings before the examining officer shows that the permit file, including the application for re-entry permit and other records pertaining to it, was received and examined by the attorney for relator, and that he examined the alien regarding such file. The file was not marked in evidence, and the attorney for the alien did not request that it be so marked.
The record shows that the alien’s application for re-entry permit gave the following information: “I arrived on the SS Columbo at the Port of New York, on the 8th day of June, 1923, directly to Canada, where I remained only three days and I came to the United States via the Lower Arch Bridge, Niagara Falls, Ontario, on June 12, 1923. My exact name under which I was admitted to this country was Giuseppe Spina and I was examined at the Lower Arch Bridge at Niagara Falls, New York, by the Inspector of Immigration. I was destined to my brother-in-law, Francesco Spina, Niagara Falls, New York. My head tax was paid at the Port of New York on June 8,1923.” At the hearing the alien stated, however, that his head tax was actually paid in Naples at the time he procured his steamship ticket.
The alien’s first entry was illegal, inasmuch as he was without a properly viséed immigration passport entitling him to admission for permanent residence in the United States, as required by presidential proclamation of August 8, 1918 (40 Stat. 1829), issued pursuant to section 1 of the Act of May 22, 1918 (40 Stat. 559 [22 USCA § 223]) the authority of which was continued by the Acts of November 10, 1919 (41 Stat. 353) and March 2, 192-1 (41 Stat. 1217). That entry could not subsequently be legalized. It therefore follows that the re-entry permit was improperly issued, inasmuch as a legal entry could not be spelled out of an entry which was illegal when made. Section 210 (f) of the Alien Immigration Law, title 8 USCA, reads as follows: “A permit issued under this section shall have no effect under the immigration laws, except to show that the alien to whom it is issued is returning from a temporary visit abroad; but nothing in this section shall be construed as making such.permit the exclusive means of establishing that the alien is so returning.” Ex parte Di Stephano (D. C.) 25 F.(2d) 902, held under this section that a re-entry permit secured by an alien who came within an excluded class conferred no right of re-en*776try upon Mm, since depriving the Immigration Department of the right to question his admissibility when he returned would be giving to the permit an effect other than merely showing that the alien was returning from a temporary visit abroad.
Another case having facts somewhat similar to that at hand is United States ex rel. Orisi v. Marshall (C. C. A.) 46 F.(2d) 853, where it was held that relator had failed to sustain the burden placed upon him of proving that he was in the United States lawfully and was entitled to a re-entry permit. There, despite the fact that he was re-admitted under the re-entry permit, the warrant of deportation was upheld. United States ex rel. Lesto v. Day, 21 F.(2d) 307, is a decision by the Circuit Court of Appeals for the Second Circuit bearing on the question. Relator, after having been away from this country for two years, came back to make arrangements for bringing his family to this country. He came as a temporary visitor, and consequently was not entitled to the reentry permit which he secured. On his return less than a year later, it was held that “the Board of Special Inquiry was justified in investigating his claim that he was returning from a temporary visit abroad,” and the warrant of deportation was sustained. It should be noted that the court found it unnecessary to decide whether or not the reentry permit was secured by fraud. United States ex rel. Iodice v. Wixon (C. C. A.) 56 F.(2d) 824, cited by relator, is distinguishable from the ease at bar, for there the same court found that the alien’s original entry had not been proven illegal. See, also, United States ex rel. Lamp v. Corsi (C. C. A.) 61 F.(2d) 964; Cosulich Societa Triestina Di Navigazione v. Elting (C. C. A.) 64 F.(2d) 95.
Similarly, readmission certificates issued under the Chinese Exclusion Laws have been held to have no binding effect as adjudications of the right to return. In Wong Mon Lun v. Nagle (C. C. A.) 39 F.(2d) 844, 847, the court found that the appellant was originally admitted to the United States on a merchant’s certificate illegally procured, and, “that being the case, he was not entitled to the re-entry permit.” Therefore he was not entitled to re-enter, and a warrant of deportation was upheld. See, also, Nagle v. Lim Foon (C. C. A.) 48 F.(2d) 51; Hee Fuk Yuen et al. v. White (C. C. A.) 273 F. 10; Hom Yuen v. United States (C. C. A.) 214 F. 57.
Relator’s entry in 1923 having been found illegal, and it having been further found that the re-entry permit was improperly issued and did not entitle the alien to re-enter the United States without an immigration quota visé, with which he was not provided at the time of his re-entry, no error of law was committed in the course of deportation proceedings. There is no question but that the relator was given a fair hearing and that there is evidence to sustain the charge on which the deportation warrant is based. The writ is therefore dismissed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218771/ | KNIGHT, District Judge.
The alien entered this country in 1905. Such entry was legal. In 1906 he returned to Italy and remained there until 1923, when he entered the United States from Mexico in transit to Canada. Prom Canada he reentered the United States on July 16, 1923. Coneededly this last entrance was illegal. In October, 1927, he applied for and obtained a re-entry permit. He thereupon went to Italy and returned to the United States on May 22, 1928. He resided in the United States from the last-mentioned date until March 1, 1933, when he was arrested and charged with being found in the United States in violation of the Immigration Act of 1924 (8 USCA §§ 145, 146, 166, 167, 179, 201 et seq.).
Relator sues out this writ to obtain Ms release. The first contention of the relator is that he could not be deported in the absence of his departure under the re-entry permit. This may be conceded. After the relator remained here continuously for five years subsequent to 1923, he was not subject to deportation under the provisions of the Immigration Act of 1917 (39 Stat. 874), which required apprehension within five years from the date of the date of the alleged illegal entrance. The Immigration Act of 1924 was not retroactive, and hence, as stated, continuous residence for upwards of five years following 1923 had given this alien a legal right to remain in this country. However, he acquired no right to return if he subsequently departed. United States ex rel. Williams v. Karnuth (D. C.) 2 F. Supp. 316.
Counsel for relator in Ms brief refers to the re-entry permit as assuring the alien admission to the United States. The statute under which re-entry permits are issued provides otherwise. Section 210 (f) of the Alien Immigration Law, Title 8 USCA gives such a permit no effect except to show that the alien to whom it was issued is returning from a temporary visit abroad. Numerous eases holding that a re-entry permit confers no right of re-entry upon an alien are cited in United States ex rel. Spina v. Karnuth (D. C.) 3 F. Supp. 774, decided herewith. Section 210 (b) provides that a permit may issue where it is found that the alien has been legally admitted to the United States and that the application is made in good faith. Since the alien’s entry in 1923 was unlawful, the re-entry permit should not have been issued and cannot give him the status of a nonquota immigrant.
The relator contends that the warrant of deportation cannot be sustained unless fraud in obtaining the permit is established. I do not think this is a correct statement of the law, nor do I think the cases cited in behalf of the relator sustain this contention. In United States ex rel. Lesto v. Day (C. C. A.) 21 F.(2d) 307, the court sustained a warrant of deportation under somewhat similar circumstances, finding it unnecessary to pass upon the question of whether or not the reentry permit was fraudulently procured. In the present ease, although the concealment may not have been intentional on the part of the alien, there was a concealment of facts from which it would have appeared that he was then illegally in the country and not entitled to a re-entry permit. Relator quotes from the case of United States ex rel. Iodice v. Wixon (C. C. A.) 56 F.(2d) 824, to show that fraud in obtaining of the permit must be shown. The facts there are different from those before this court, and I have no doubt that, had the court found there that the alien’s original entry was unlawful, the writ would have been dismissed as it was in United States ex rel. Lesto v. Day, supra. Neither United States ex rel. Orisi v. Marshall (C. C. A.) 46 F.(2d) 853, nor Ex parte Di Stephano (D. C.) 25 F.(2d) 902, contains any finding of intentional fraud, but in both eases deportation warrants were sustained.
The relator claims that the warrant of deportation is not based upon a record sufficient to justify deportation. While the application and the permit were not received as a part of the’record upon the hearing, the testimony of the relator shows facts such as above stated, and no claim was or has been, made in conflict with this testimony. While the application and permit might properly have been included as a part of the record, their absence is not material, in view of the testimony given by the alien.
I therefore conclude that relator made an erroneous statement as to the time when he last entered the country prior to the application for the permit. This was a material statement. His right to obtain the writ was dependent upon his-being a lawful resident of the country. Coneededly he was not when this application was made. He cannot be permitted to be benefited by either his erroneous or fraudulent statement. The permit was granted as a matter of favor, and imposed no obligation upon the United States. The relator was given a fair hear*778ing, and the evidence supports the charge on which the deportation warrant is based.
Writ dismissed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218772/ | FARIS, District Judge.
This is an action brought by the trustee of a trust created by the last will of Thomas W. Carter, deceased, to recover an alleged overpayment to a former collector of internal revenue, of certain federal estate taxes, which were collected under the Revenue Act of 1921 (42 Stat. 277).
*783The decedent died on March 4, 1922, testate. He made in Ms last will certain provisions for Ms widow, who elected to accept the provisions of the will in lieu of dower or a child’s part of decedent’s estate, as permitted hy pertinent provisions of the statutes of Missouri. Sections 318 and 328, R. S. Mo. 1929 (Mo. St. Ann. §§ 318, 328).
. The conceded and agreed facts were such that tMs widow had the right to take, if she had so elected,- either a child’s part of decedent’s estate, or dower in the real estate, as and if she saw fit. In lieu of either, or both of these rights, she could elect, as she did, to accept the provisions of decedent’s will.
Some confusion and difficulty has been met in the ease by reason of the condition of the pleadings, particularly of the petition; for that, as originally filed on November 1, 1929, the sum sought to be recovered was $3,000, and recovery was then sought upon the sole ground that the value of the real estate in Missouri left by decedent had been included in reaching the total gross taxable worth of decedent’s estate. Subsequent to the commencement of this suit, and on the 30th day of November, 1930, the Supreme Court of the United States decided the case of Crooks v. Harrelson, 282 U. S. 55, 51 S. Ct. 49, 75 L. Ed. 156, wherein it was ruled that, under the local laws of Missouri, and the language of section 402 (a) of the Revenue Act of 1918, real estate, situate in Missouri, could not be included in fixing the gross value of a decedent’s estate for federal inheritance taxes.
Thereupon, such proceedings were had as resulted in the payment to plaintiff, by defiendan^ on or about the 13th day of November, 1931, of the sum of $2,238.74 principal and $1,060.11 interest, as a refund of the taxes herein sued for. This cheek- was accepted by plaintiff. Notwithstanding this, no amendment or repleading in the ease has been had by plaintiff. The specific ground for a refund, as set out in the application therefor,, as well as in the petition (in substance, only, in the latter)" reads thus: “Because there was erroneously included in the value of the gross estate the real estate situated in the State of Missouri, owned by decedent at the time of his death.”
Nevertheless, and in the face of all this, the contentions in the briefs are waged about these two questions, now asserted for the first time in the answer of defendant, and in the briefs filed, to wit: (1) That the sum of $12,-437.43, being the value of the widow’s interest in the real, estate, had she elected, as the law allowed, to take a child’s part under section 324, supra, rather than to accept for herself the provisions made for her in the will, should have been deducted from the value of the gross estate; and- (2) that the local taxes (state, school, city, and so on), in the sum of $250.28, for that proportion of the year 1922 (the year of decedent’s death), from January 1, 1922, to March 4, 1922 (the date of decedent’s death), were not deductible from gross value of the estate. The latter point comes into the equation quite awkwardly. In figuring how much reduction, in the total tax paid defendant, plaintiff should be given on the occasion of the refund to him, the value of the real estate was dimiMshed- by the sum of $250.28 (said amount of local taxes), which resulted in decreasing the value of the real estate, which in turn resulted in diminishing the sum on account of real estate which was subtracted from the net estate, on which the refund was figured. In effect, however, and as thus eked out, plaintiff’s contention, if he had made one,’would likely have been that in Missouri real estate is not to be included in gross value of a decedent’s estate, for federal estate taxes, and that if included, and a readjustment, as here, is had, the value of the real estate may not be decreased by the pro rata of ordinary local taxes earned, if I may so express it, between the beginning of the year of decedent’s death and the actual date of his death.
I think the very statement of the nature of the pleadings and of the application for a refund discloses that neither of the points above recited is properly before me. It may well have been that, since they are the residuum of the original action, they might have been covered by an amendment to the petition, or by filing an amended petition, but this was not done. The case is one at law, which was submitted last term, on agreed facts, which were not filed, however, until September 22, 1932.
So it seems clear to me that this statement, on settled principles of pleading and practice, should dispose of the ease, and that plaintiff is not entitled to recover, and defendant should go hence without day. There is, in short, on the face of the pleadings and the application for a refund, nothing before the court on which plaintiff can recover. However, while the condition of the pleadings is inexcusable, the precise situation is capable ' of being understood, however irregular it may be. So, it may be incumbent, if order can at all be worked out from chaos, to consider the ease as it ought to have been, rather than as it is. Moreover, numerous *784suits were submitted at the identical time, which involve refunds sought since the Harrelson Case was decided, in some of which I am advised similar questions are mooted. It might save time, once for all, perhaps, if I should discuss and consider the question whether dower or a statutory provision, in lieu of dower under Missouri law, is or is not taxable under the provisions of section 402 (b) of the Revenue Act of 1921 (42 Stat. 278). Here, again, the point occurs awkwardly in the easp at bar, and is lugged in by the answer, by a sort of reverse English, if I may take an expression from the nomenclature of a well-known game.
Section 402 (b), supra, provides, so far as pertinent, thus:
“That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated— * * *
“(b) To the extent of any interest therein of the surviving spouse, existing at the time of the decedent’s death as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy.”
No attack, for that the above section, or any part thereof, is constitutionally invalid, is anywhere made, even in the briefs of the plaintiff, so far as I have been able to find. It is fairly well-settled law that courts will not ordinarily pass on the constitutional invalidity of a statute until such invalidity has been raised by one standing in a situation to be hurt by the statute, and also until such attack has been made, as soon as is proeedurally possible, as the courts are fond of saying.
So, what does the language quoted from section 402, supra, mean? It says, in effect, and so far as is relevant here, that the gross estate of a decedent shall be determined, for the purposes of the federal estate tax, by including any such interest therein of the surviving spouse, existing at the time of decedent’s death, as dower, or an estate created by statute in lieu of dower. The statute of Missouri retains, for the benefit of the widow, the old common-law provision of dower (modified, it may be, in some small particulars, but these are not here relevant). Other statutps of the state provide for certain contingencies, wherein an election in lieu of dower may be made by the widow, whereby such widow may take a so-called child’s part. Here the widow was entitled, either to dower in the real estate of decedent, or to an election to take a child’s part. She actually took neither, because there was a will, and she had the right, under the Missouri law, to accept the provisions of the will as to her, in lieu of dower and/or a child’s part. As said, she accepted the provisions of the will, and took no dower, nor any child’s part. So, notwithstanding she took nothing, can an estate tax be put upon the full extent and value of an interest she could have taken under the local law?
I am constrained to the view that such tax was valid. First, from the language quoted from section 402, supra, it seems too clear for argument that her interest, either of dower, or in lieu of dower, is taxable, and so the cases seem to hold (Schuette v. Bowers (C. C. A.) 40 F.(2d) 208), and even the case of Crooks v. Harrelson clearly shows that the Supreme Court held this view.
Second, the power ought not to rest with any person to avoid or defeat a tax by a mere personal election to do one of three permissible things. I think the Congress held in mind to tax any interest in the surviving spouse, which the conditions (as of children or not) should bring into legal existence. For it must be borne in mind that an estate tax accrues at the date of the death of the decedent, and not afterwards; so it cannot be known at such date which of the three provisions of the local law the living spouse may elect to accept.
Pursuant to a very plain statute of Missouri (section 328, R. S. Mo. 1929 [Mo. St. Ann. § 328]), real estate, passing by will to a wife, is to be regarded as in lieu of dower, unless the testator shall in his will otherwise declare. Here, there is no declaration, to the contrary, so the conclusion must be that the widow implicitly relinquished her dower, when she elected to take under the will. Whether such situation at all affects the law now applicable, in view of the differences existing as between the Revenue Act of 1916 (under which Schuette v. Bowers, supra, was ruled), as compared to section 402 of the Revenue Act of 1921, need not, therefore, be discussed.
The question of credit for ordinary state, county, and school taxes seems to me also to be fairly clear, when certain Missouri statutes are held in mind. These statutes provide a sort of statutory fiscal year for taxation on real estate. This year begins on the 1st day of June of each year. All lands owned by decedent on the 1st day of June, 1921, were assessed to decedent for the taxes of 1922, and he became so far liable for such taxes as that, if he had conveyed such land after June 1, 1921, by a conveyance with *785warranties, without reservation, he would have been liable to his grantee for the taxes for the year 1922. Besides, section 9747, R. S. Mo. 1929 (Mo. St. Ann. § 9747), as also did section 12757, R. S. Mo. 1919, provides for a lien in favor of the state for taxes on real estate. True, there are other provisions as to time and maimer of foreclosing such lien, but these in no way militate against the validity and superiority of the lien fixed by statute. Such lien also exists in favor of the state for school taxes and city taxes, the latter not here involved, however. Section 9974, R. S. Mo'. 1929 (Mo. St. Ann. § 9974).
As indicated already, an anomalous situation is presented. The plaintiff, standing in the shoes of the taxpayer, is here objecting because credit was given the gross estate for the taxes on the real estate for four months and four days; whereas, ordinarily, a taxpayer would be expected to contend that such taxes should be deducted from the value of the real estate, for that the taxes for 1922 were liens thereon after June 1, 1921, as against the decedent, or, rather, liens against his interest in the real estate. Since there existed a lien declared by statute for the taxes on this real estate, and since liens are to be, by the estate tax statutes, deducted from the gross value of the real estate, I conclude that the sum of $250.28 was properly deducted in matters affecting federal estate taxes on real estate in Missouri.
I also conclude that the value of the child’s part in the real estate was taxable, even though it was implicitly renounced, and even though real estate in Missouri is not taxable, under the Revenue Act of 1921. The two provisions for taxation of real estate are. separately set out in section 402, supra, and provide (a) for inclusion in gross estate of the “interest therein of the decedent at the time of his death,” and (b) “any interest therein of the surviving spouse * * * as dower, curtesy, or by virtue of a statute creating an estate in lieu of dower or curtesy.”
Clause (a), supra, was modified by the addition thereto of the further limitation that real estate should be taxable only when it was subject to payment of the charges against the estate, and to the payment of the expenses of administration of the estate. No such limitation appears in section 402 (b), supra.
Some addition to this discussion will be found in the case of St. Louis Union Trust Company v. United States of America, this day decided by this court.1
This is a case at law and not in equity, so Rule 70% of the Rules in Equity (28 US CA § 723) has no application. No request for declarations of law is made. The facts are all stipulated, and so they will be just as clear and plain to any other court as they are to the trial court. Notwithstanding this, there is a request in the record that this court make and file a special finding of facts and conclusions of law. To a court well-nigh submerged with litigation, neither time exists for, nor the law requires, compliance with this request. White v. United States (C. C. A.) 48 F.(2d) 178; McPherson v. Cement Gun Co. (C. C. A.) 59 F.(2d) 889. So I decline to make the special finding requested.
It follows that judgment should be against plaintiff and for defendant, that it go hence without day and recover its costs, and so it is ordered.
Orally.
3 F.Supp. — 50 | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218776/ | FRANKLIN E. KENNAMER, District Judge.
The plaintiff filed his petition seeking to recover a money judgment against the defendant and caused a summons to be issued and placed in the hands of a deputy United States marshal for service. The return of the officer shows the summons was delivered to Henrietta Funk, a member of the defendant’s family, over 15 years of age, at the defendant’s usual place of residence in the city of Tulsa. The defendant within the time to plead appeared specially and filed a motion to quash the service of the summons upon the ground it was not issued, served, and returned •according to law. The evidence introduced in support of the motion to quash shows that Henrietta Funk is the mother of the defendant and has resided in the state of Pennsylvania for several years, and has maintained her permanent home in said state for many years prior to the service of the summons as herein stated. It had been a custom of Mrs. Funk for a number of years to visit in the defendant’s home during the winter months.
Section 172, O. S. (Okla. Stats. 1931), provides: “The service shall be made by delivering a copy of the summons to the defendant personally or by leaving 'one at his usual place of residence with some member of his family over fifteen years of age, at any time before the return day.”
The contention of the plaintiff is that the service of the summons meets the necessary requirements of the statute, in that the summons was left at the defendant’s usual place of residence, and that Henrietta Funk, the mother of the defendant, was a member of the defendant’s family. If the contention be sound that the mother of the defendant, Henrietta Funk, is a member of the defendant’s family within the meaning and intent of the section of the statute, supra, the motion should be overruled. With the contention I am unable to agree. The Congress not having provided any rule with regard to the mode of serving mesne process in law actions in federal courts, the state law and practice will be followed. Lemon et al. v. Imperial Window Glass Factory (D. C.) 199 F. 927; Petty & Co. v. Dock Contractor Company (C. C. A.) 283 F. 341; 28 USCA § 724.
“Where a particular method of serving process is pointed out by statute, that method must be followed.” Henry Amy et al. v. City of Watertown, 130 U. S. 301, 9 S. Ct. 530, 536, 32 L. Ed. 946.
It is not contended that the defendant may not by parol evidence show that the officer’s return as to the manner of service is incorrect. It is true such evidence must be clear and convincing to overcome the presumption of the truthfulness of the return. Mayhue v. Clapp, 128 Okl. 1, 261 P. 144, 146; Jones v. Jones, 57 Okl. 442, 154 P. 1136.
The evidence, in support of the motion to quash plainly shows that Henrietta Funk was not a member of the defendant’s family; the defendant was a widower, residing at the place where the summons was delivered, and that his mother who maintained her perma*805nent home in the state of Pennsylvania usually visited in his home during the winter months, and then would return to her home in Pennsylvania, and that she had never had any intention of establishing a home in the same household with her son. In Mayhue v. Clapp, supra, the court said:
“In Webster’s New International Dictionary a ‘family’ is defined as:
“ ‘Tbe body of persons who live in one house and under one head or management; a household including parents, children and ■servants, and, as the ease may be, lodgers or boarders.’
“In 12 A. & E. Ene. Law, 866, it is said:
“ ‘A family is defined as a collective body of persons, who form one household under one head and domestic government, including parents, children, and servants, and, as sometimes used, even lodgers or boarders.'
“It therefore seems that the group of persons constituting a family must reside in the same household, over which there is one head, but that outsiders, or persons who are there to visit, or on business, are not members of tbe family. Tbe fact that W. E. Mayhue may have been around the home of G. C. and Bess Mayhue, either visiting or on business, would not constitute him a member of their family, nor would it constitute them members of his family.”
See Moyer v. Drummond, 32 S. C. 165, 10 S. E. 952, 7 L. R. A. 747, 17 Am. St. Rep. 850; Oystead v. Shed, 13 Mass. 520, 7 Am. Dec. 172.
In the case of Jackson v. Smith, 83 Okl. 64, 200 P. 542, it was held that leaving a copy of the summons at the usual place of residence of the defendant with his daughter-in-law, over 15 years of age, permanently residing in the home of the defendant, was valid service. It must be concluded from a consideration of tbe evidence herein presented that Mrs. Punk was not a member of the defendant’s family within the meaning of the statute. On the contrary, she must be regarded as only a guest of the defendant. Punk & Wagnalls New Standard Dictionary of the English language, defines guest to be “a person received and entertained at tbe house of another; a visitor; as, a welcome guest. The term is applied with little respect to the duration of the call or visit and whether the person he present by invitation or not. The members of an evening party, persons invited to dinner, or relatives or friends making a long sojourn are alike guests.”
The statute, supra, does not authorize the service of summons upon the defendant by leaving a copy with a guest of the defendant at his usual place of residence, and such service is unauthorized.
The motion to quash is sustained. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218778/ | BRYANT, District Judge.
This suit is brought by plaintiff, individually and in her representative capacity, to recover the benefits of a war risk insurance policy issued to Fred Swanson while he was in the military service during the World War.
The plaintiff claims under a $10,000 policy, but the testimony shows that the policy issued was for $5,000 only.
Mary Swanson is the wife of Fred Swanson. They were married at Syracuse, N. Y., her home city, soon after his return from France. He was not a resident of Syracuse. He was under treatment almost continuously at different hospitals. He disappeared from General Hospital No. 28, Fort Sheridan, 111., on April 12, 1919. After his disappearance, and on October 11, 1920, he was honorably' discharged in accordance with the regulations of the War Department.
Mary Swanson, his wife, was living at Syracuse at the time of his disappearance. She made inquiries of his whereabouts without avail. About September 19, 1929, the surrogate of Onondaga county, upon her application, caused to be issued to the said Mary Swanson letters of administration upon the estate of Fred Swanson. The surrogate’s decree was based upon presumption of death from absence. It may be questionable whether the said Fred Swanson ever had a residence or domicile or property in Onondaga county to give jurisdiction to ’the Surrogate’s Court. It is not, however, necessary to consider that question here.
After the granting of letters of administration, demand for the payment of the insurance was made and refused. Thereafter plaintiff, individually and as administratrix, brought action. It is not contended that insurance to the amount of $5,000 is not due and payable if Swanson is dead. Defendant is resisting payment upon the ground that proof of death is insufficient.
Upon the trial it was established that the correct name of Fred Swanson is John Henry Harbaugh, and that he was commonly known as Clyde Harbaugh; that his home was Danville, 111.; that he enlisted in the United States Army under the name of Fred Swanson and so served and was discharged; • that some time after he left the hospital in 1919 he resumed his own name and returned to Danville; that in September, 1923, he married and was in Danville as late as 1925. There is some evidence in the case to show that he was alive and well and in Danville in the fall of 1928. The proof showing this last date is not at all convincing. There is no proof to show that he was ever divorced from Mary Swanson.
These facts rebut the presumption of death from absence. It is obvious that, had they been before the surrogate, letters of administration would not have been issued. The bigamous marriage is a complete explanation of absence and his failure to communicate. The presumption of death by reason of unexplained absence in this ease does not exist.
The granting of letters of administration in this ease is not evidence of death. The act merely establishes the representative character of the person appointed. Scott v. McNeal, 154 U. S. 34-47, 14 S. Ct. 1108, 38 L. Ed. 896; Matter of Rowe, 197 App. Div. 449-452, 189 N. Y. S. 395; Matter of Katz, 135 Misc. 861, 239 N. Y. S. 722.
Inasmuch as letters of administration were granted after the passage of chapter 229 of the Laws of 1929 which, among other things, amended section 119 of the Surrogate’s Act, it may be well to state that the statute, as amended, applies only to estates of persons dying after August 31,1930. The statute under which the appointment was made is section 341 of the New York Civil Practice Act.
Defendant is entitled to judgment. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218779/ | KENNERLY, District Judge.
This is a libel in rem by libelant against the vessel Texas Sport, owned by respondent, the Texas Sporting Goods Company, to foreclose an alleged lien against such vessel for lumber and building material alleged to have been furnished by libelant to repair such vessel while owned by B. H. Elliott, Inc., and while named “Viefre.”
The facts are as follows:
1. During December, 1931, and January, Eekruary, and March, 1932, libelant sold and furnished to B. H. Elliott, Inc., the then owner of the vessel Viefre (aftemvards, and libeled herein as, the Texas Sport), lumber and building material of the reasonable value of $606.63, to be used, and which was used, by Elliott, Inc., in the repair of such vessel. Such lumber and other building material were, however, sold, not on the credit of the vessel, nor with the expectation of fixing a lien thereon, but on the credit of Elliott, Inc., and libelant expected to receive the price of such lumber and building material from Elliott, Inc., after Elliott, Inc., had sold the. vessel to respondent, Texas Sporting Goods Company, and collected therefor. Libelant at no time claimed a lien against the boat prior to the institution of this suit, and looked solely to Elliott, Inc., for its pay in the manner stated. The vessel Viefre, prior to its purchase by Elliott, Inc., was injured by fire, to the extent that it could not be navigated on its own power. It was purchased and repaired (not rebuilt) by Elliott, Inc., and sold to respondent, the present owner.
This suit was filed March 23, 1933, more than one year after the last of the lumber and building material were delivered by libelant to Elliott, Inc. During that period of time, the repairs on the vessel were completed, and without protest from libelant, it passed into the possession of respondent, and libelant, during such period, brought in the state court a suit for debt, for the price of such lumber and building material, against Elliott, Inc. Such suit has subsequently been dismissed.
2. Under the facts, I think libelant has no lien. See section 974, title 46 USCA, and Marshall & Co. v. The President Arthur, 279 U. S. 564, 565, 49 S. Ct. 420, 73 L. Ed. 846, and eases there cited and discussed.
Judgment for respondent. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218780/ | GALSTON, District Judge.
This is a motion made by a judgment creditor of the bankrupt to vacate an order staying proceedings in an action brought in the Supreme Court, Suffolk county, entitled Walter Marrin, plaintiff, against Suffolk Airways, Inc., et al., defendants.
Three grounds are alleged: First, that the Supreme Court of the state of New York, having obtained jurisdiction over the assets of the bankrupt by reason of an action and proceedings commenced prior to the filing of the petition in bankruptcy, should continue to retain jurisdiction over the entire matter; secondly, that this court should not exercise its discretionary power to restrain the action, for the reason that grave injustice to the judgment creditor would result if the stay were continued;' and, thirdly, that the activities of the bankrupt corporation, its officers and board of directors, have been such as to bar a discharge.
The first, ground is without force, for, if it were accepted as a general proposition,' .then there never would be a stay of any action which was instituted prior to the filing of the bankruptcy petition. Orderly procedure makes necessary the stay of such actions except in exceptional circumstances.
Nor is it seen how injustice to the judgment creditor will result if the stay is continued- The judgment creditor is concerned about setting aside an alleged fraudulent transfer of assets by the bankrupt, made for the purpose of defeating the creditor’s right of levy. But sections 70 and 73 of the General Corporation Law of the state of New York (Consol. Laws, c. 23) confer no greater rights upon the judgment creditor than may be exercised on behalf of such creditor by a trustee in bankruptcy. See section 67b of the Bankruptcy Act, 11U. S. C. § 107, subd. (b), 11 USCA § 107 (b), which provides: “Whenever a creditor is prevented from enforcing his rights as against a lien created, or attempted to be created, by his debtor, who afterwards becomes a bankrupt, the trustee of the estate of such bankrupt shall be subrogated to and may enforce such rights of such creditor for the benefit of the estate.”
See, also, section 70e of the Bankruptcy Act, 11 U. S. C. § 110, subd. (e), 11 USCA § 110 (e), and Moore v. Bay, 284 U. S. 4, 52 S. Ct. 3, 76 L. Ed. 133. Indeed, section 61 of the General Corporation Law of the state of New York also makes possible such action by a receiver or trustee in bankruptcy.
As to the third ground, it is certainly untimely, on the showing made in the papers, to conclude that the judgment is not dis-chargeable in bankruptcy. See In re Bernard (C. C. A.) 280 F. 715, 717, where it is said: “Proceedings on a plainly nondischargeable debt cannot be stayed; yet, where the question is debatable, a stay may be granted until the bankrupt shall have had a reasonable time within which to procure that discharge, which he must have in order to present to the proper tribunal the status of the debt in suit.”
The motion is denied. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218781/ | BONDY, District Judge.
The defendant acted as factor for the American Rayon Products Corporation. It did not consider the bankrupt a good credit risk, and required the American Rayon Products Corporation to guarantee the bankrupt’s account. The last shipment made to the bankrupt on defendant’s account was on July 8, 1929. After repeated demands, the bankrupt delivered to the' defendant on September 20,1929, a cheek for $2,763.20, dated October 1, 1929, and another for $2,878.34, dated October 11, 1929. Neither of these cheeks was paid when due, and the first was returned on account of insufficient funds. The bankrupt had never before given defendant any postdated eheeks. After further demands and threats of proceedings against the bankrupt, and after a representative of the defendant had stated that he had two creditors ready to join with defendant in signing papers, there was delivered to the defendant on October 16, 1929, at which time the bankrupt was insolvent, a certified cheek of a finance corporation for $2,500, payable to the order of the bankrupt and indorsed in blank by the bankrupt. This check was obtained by the bankrupt by pledging its accounts receivable as collateral security.
These facts establish that, when the defendant received the cheek for $2,500, it had reasonable cause to believe that the giving of the cheek constituted a preference. They put the defendant on notice and charged it with knowledge of the facts that reasonable inquiry would have disclosed. Lowenstein v. I. N. Platt & Co., Inc. (C. C. A.) 58 F.(2d) 173; Williams v. Plattner (D. C.) 46 F.(2d) 467; In re Jameson & Meyers (C. C. A.) 32 F.(2d) 999; Boston National Bank v. Early (C. C. A.) 17 F.(2d) 691; J. Ochoa & Hermano v. Blanco (C. C. A.) 15 F.(2d) 618; Cohen v. Tremont Trust Co. (D. C.) 256 F. 399; Stevens v. Oscar Holway Co. (D. C.) 156 F. 90; Pittsburgh Plate Glass Co. v. Edwards (C. C. A.) 148 F. 377; Sundheim v. Ridge Ave. Bank (D. C.) 138 F. 951; Pender v. Chatham Phenix National Bank & Trust Co. (C. C. A. 2d) 58 F.(2d) 968, decided May 23, 1932.
There accordingly should be a decree for the plaintiff. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7219567/ | KNOX, District Judge.
The within motion is granted. At the time of the dismissal of the action, its prosecution had been stayed pending determination of limitation proceedings. Through oversight of this fact, the suit was placed upon a calendar call that was designed to weed out dead suits. It should not have been upon that calendar. True enough, proctors for libelant should have detected the fault and they did not do so. Nevertheless, I think, the outstanding stay should be held to protect their client and that the dismissal is within the exceptions of an “error of process” connected with the defaults of clerks as set forth in U. S. v. Mayer, 235 U. S. 55, 35 S. Ct. 16, 59 L. Ed. 129. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218782/ | DAWKINS, District Judge.
Plaintiffs claim damages of the defendant, alleged to have been caused by its negligence in the collision of one of its trains with an automobile. Mrs. Brandon sues for the death of her husband, alleged .to have been a guest in the ear, while Beale seeks to recover for his own alleged personal injuries and the destruction of his automobile. Defendant pleads misjoinder of parties and causes of action.
The sole, common element is that the damages are alleged to have been caused by the same tort. Neither plaintiff claims or has any interest "in the recovery of the other. Different legal principles govern the rights of each. The demand of the one is based upon the loss of support, companionship, etc., of her husband, while the other is for personal injuries, loss of earning power, pain and suffering, drug and doctor’s bills, loss of his automobile, etc. Mrs. Brandon would be entitled to recover if the defendant was guilty of negligence contributing to the accident, notwithstanding the negligence of Beale, the driver of the car, since it is alleged that her husband was a guest, unless he could be shown to have himself been guilty of contributory negligence, operating as the proximate cause of the accident; whereas Beale would have to show that the negligence of the defendant alone was the cause of his injuries and loss. There is no state statute governing the matter, and the Supreme Court of Louisiana has held that the joinder of parties plaintiff or defendant or of causes of action are governed by the common law. Gill v. City of Lake Charles, 119 La. 17, 43 So. 897. Federal courts will construe the common law for themselves, uninfluenced by state decisions, unless they are convinced the holdings accord with the federal jurisprudence. In order to join parties as plaintiff in a tort action, each must have an interest in the claim of the other, or some part thereof. 1 C. J. 1095; McCormick v. Kansas City S. R. Co. (D. C.) 11 F.(2d) 670; Baucum v. Jackson (D. C.) 35 F.(2d) 248. See, also, McGee v. Collins, 156 La. 291, 100 So. 430, 34 A. L. R. 336.
My conclusion is that the plea of misjoinder should be sustained. Proper decree should be presented. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218783/ | LITTLETON, Judge.
The' first question concerns plaintiff’s claim for $82,242.73, being the tax paid during the period July, 1924, to December, 1925, inclusive, upon the sale of complete truck axle assemblies, and $2,017.58* being the tax assessed and collected upon the sale of spare parts for truck axles. These articles could not be used for passenger automobiles, and during this period Ford motortrucks sold for less than $1,000.
Plaintiff contends that the tax imposed by subd. 3 of section 600 of the Revenue Act of 1924 (26 USCA § 881 note), upon the sale of parts and accessories for automobile truck and wagon chassis did not attach, inasmuch as the axle assemblies! for Ford motortrucks could only be used on and were sold for use on Ford trucks selling for'less than $1,000, and are therefore not taxable under subdivision 1 of section 600 — in other words, that parts and accessories are taxable under subdivision. 3 of the section only if they are sold for use on trucks selling for $1,000 or more, and are taxable under subdivision 1; that if the truck is not taxable the parts and accessories therefor are likewise exempt from tax. We cannot sustain plaintiff’s contention.
Section 600 imposes a tax “upon the following articles,” namely, the articles thereafter enumerated in the subdivisions of the entire section. Subdivision 1 enumerated automobile truck chassis and automobile wagon chassis, and imposed a tax upon those selling for an amount in excess of $1,000. Subdivision 3 provides that the sale of parts or accessories “for any of the articles enumerated in subdivision (1)” shall be subject to the tax specified therein. We think the language of the statute in the tax-imposing provision thereof, that “there shall be levied, assessed, collected, and paid upon the following articles sold * * * by the manufacturer, * * * a tax equivalent to the following percentage of the price for which so sold” required the payment of the tax upon the sale of parts or accessories for any automobile, truck chassis and any automobile wagon chassis enumerated in subdivision 1 of section 600, even though the sale of such truck or wagon chassis was not subject to tax under subdivision 1. The word “any” in the phrase “any of the .articles enumerated” in subdivision 1 is significant and requires, we think, the collection of the tax upon the sale of parts or accessories for the automobile truck or automobile wagon chassis mentioned in subdivision 1, even though no tax was payable upon the sale thereof. ,
The plaintiff’s construction of subdivision 3 imposing a tax upon parts or accessories requires that the words “enumerated in” be treated as the equivalent of “taxed under,” but, in our opinion, this is not permissible.
The regulations of the Treasury Department have consistently required that the tax be paid upon parts or accessories for automobile trucks and automobile wagons even though the sale of the trucks or wagons was not taxable because it was less than the price specified in the statute. Article 15, Regs. 47, provide that “The tax of 2% percent applies to all tires, inner tubes, parts, or accessories sold separately by the manufacturer thereof, unless the sale is made to a manufacturer who furnishes a certificate in the form provided in this article for the exemption of such sale. The above applies regardless of the fact that tires, inner tubes, parts, or accessories may be sold for use on chassis selling for $1,000 or less or bodies selling for $200 or less.”
Plaintiff contends that the Treasury regulations are in conflict with the statute, are unreasonable, and should therefore be disregarded. We are of opinion, however, that the regulation is a proper interpretation of the statute, and is therefore reasonable and should not be disregarded. The construction should not be disregarded under tbe well-established'rule that the construction given to an act of Congress by the executive officers charged with its enforcement, although not controlling, is, entitled to great weight.
The next question relates to plaintiff’s claim for $23,464.80 paid with respect to the manufacture and sale by it of ball-bearing bolts and nuts designated by it as “non-taxable parts,” constituting necessary elements of the Ruekstell axle units, which articles were packed and sold with all of the elements constituting a unit assembly; $14,456.61 of this amount was paid April 20, 1928, pursuant to the additional assessment for the monthly periods July 1924 to November 1925 and $4,-*831778.83 was paid April 20, 1928, for the monthly periods January 1923 to June 1924. The balance of $4,032.25 was paid on or before November 27,1923, more than four years before the filing of the claim for refund on December 16, 1927.
The ground upon which plaintiff claims that these parts were exempt from tax is that these particular elements of the complete axle unit were manufactured by it according to the same specifications as those made by other manufacturers and used in machines other than motor vehicles, and were not, therefore, specifically designed or primarily adapted for use on motor vehicles. These parts were specified as taxable under the Treasury regulations. They were necessary elements of the complete Ruckstell axle unit and were manufactured, packed, and sold by plaintiff solely for such use. Under the facts in this case, these articles when so assembled, packed, and sold for use on the automobile axle were primarily designed and specially adapted for use on motor vehicles, and the sale thereof was subject to tax under the decision of this court in Fairmount Tool & Forging Co. v. United States, 42 F.(2d) 591, 70 Ct. Cl. 429. Under that decision this claim of the plaintiff must be denied. The Fairmount Tool & Forging Case related to accessories, but the principle of segregation and sale of an article for a particular use as a basis for classification is applicable as well to automobile parts.
The next question relates to plaintiff’s claim for $17,732.10, being the additional tax collected April 20, 1928, upon the boxing and the warehousing or handling expenses billed by plaintiff as a separate item in each case. Finding 15.
In the circumstances of this ease, we are of opinion that this item was not a part of the sales priee of the axle subject to tax and that plaintiff is entitled to recover the tax collected thereon. The contract between the plaintiff and the Ruckstell Company, of March 10, 1922, provided that the latter should pay plaintiff “for the manufacture and construction of said axles, crated, taxes prepaid, and ready for shipment, the sum of $32 for said axle as then designed for use on Ford passenger cars and $64 for the axle as then designed and constructed- for use on Ford tracks.” The first transaction between plaintiff and the Ruckstell Company, was an order from the Ruckstell Company to plaintiff to machine axles and assemble housings upon tubes at a price of $19 an axle. Thereafter plaintiff accepted orders from the Ruekstell Company for such axles “at a priee per set of $50, the said price to include excise tax to be paid by the plaintiff, the painting of certain parts, and the boxing of the parts in a suitable box to contain one set of parts.” When plaintiff invoiced these articles to the Ruckstell Company they were invoiced at $44.40 each plus a 5 per cent, war tax of $2.22 and plus warehousing and shipping charges of $3.38> making a total of $50', which was the stipulated price. From the inception of operations under the contract of March 10, 1922, plaintiff invoiced as a separate item a charge for boxing and warehousing. This charge was the cost of such boxing and warehousing service, which work was performed by many persons who were engaged also in other work for plaintiff. The correctness of the charge made is not challenged.
In making its returns and paying the tax upon the axles sold, plaintiff excluded from the computation of the tax the boxing and warehousing charge. Thereafter the Commissioner made an additional assessment of $17,732.10 against plaintiff, which included a tax upon the amount so deducted. Section 900 of the Revenue Act 1921 (42 Stat. 291) and section 600 of the Revenue Act 1924 (26 USCA §§ 881 note, 882) provides that the tax shall be computed upon the price for which the parts or accessories are sold. Article 3, Regs. 47, is to the same effect. The Treasury Department has held in published rulings that if the boxing charge was separately billed to the purchaser, no tax should be levied upon the charge therefor. In L. O. 1096, I-1 C. B. 437, the Bureau of Internal Revenue, in the opinion, held as follows:
“The act is silent as to whether or not boxes, containers, or coverings are to be included in the sales priee of a taxable article. It will therefore be necessary to determine the question on principle and in the light of the authorities.
“If a piano be sold without a box (as is frequently done), no one would contend that the purchaser thereof has not acquired an instrument complete in every respect. The language of the statute levying the tax in question clearly indicates that the tax is imposed not upon the piano in package form or as prepared for shipment to the purchaser but upon the article itself measured by the priee for which sold. The sale of a piano box or harness is not the sale of a piano.
“It has become the established practice of the Bureau to permit freight and delivery *832charges to be excluded from the sales price of a taxable article when such amount is paid by the purchaser as a specific item. * * * This office can perceive no reason why the price charged for a shipping box or harness used in connection with the shipment may not also be excluded if similarly billed. Regulations 47, article 3, states that a taxpayer is entitled to reimburse himself in the amount of the tax if such amount is billed as a separate item. Furthermore by way of illustration it is stated in regulations 47, article 3, that if a manufacturer sells an automobile, including insurance, gas, and oil, and bills it as follows: ‘Car $2,000, gas and oil $20, insurance $30, tax $100’, the tax is based on $2,000, the selling price of the ear as specified. * * *
“It is held, therefore, that the price charged fpr a shipping box or harness for a piano, if such box or harness be bona fide billed to and paid for by the purchaser as a separate item, is no part of the sales price of the piano and should not be included in the amount taxable under section 900 (4) of the Revenue Act of 1918.”
To the same effect is the decision of the Treasury Department in II-1 C. B. 285, where it is said that “It was formerly held that cloth covers used to protect automobiles in transit were taxable as included in the price of the car. It is now held that the price charged for such covers, if they are bona fide billed to and paid for by the purchaser as a' separate item, whether the covers are returnable or not, is not part of the sales price of the automobile, and that they are not taxable as parts or accessories for automobiles under section 900 (3) of the Revenue Acts of 1918 and 1921.”
This court has held in J. Hungerford Smith Grape Juice Co. v. United States, 63 Ct. Cl. 140, that in instances where the freight was prepaid by the manufacturer the amount thereof should be excluded from the price before computation of the tax, and in Star Motor Co. of California v. United States, 41 F.(2d) 901, 71 Ct. Cl. 348, we held that transportation charges separately invoiced were to be excluded as a part of the sales price of automobiles. In our opinion the foregoing decisions are applicable here and require that the item in controversy be excluded from the sales price of the automobile parts in computing the tax. The charge made by plaintiff as a manufacturer to reimburse it for the cost of boxing the axles and for the warehousing and handling service was not a part of the money or price received by it for the automobile parts or accessories for automobiles taxed. This charge represented the cost of boxing, handling, and warehousing preparatory to delivery of the automobile parts sold. The cost of this service by plaintiff was an expense separate from the cost of the axle and in paying the charge the purchaser was paying for the box and cost of handling separately. Judgment will be entered for plaintiff for the tax paid upon this item.
The next claim of plaintiff is for $17,-259.02, being the additional assessment made upon the difference between the contract price at which plaintiff sold axles manufactured by it to the Ruekstell Company at wholesale and the price at which plaintiff later sold the articles at retail in the eastern territory, pursuant to contracts between plaintiff and the Ruekstell Company.
Plaintiff contends that, inasmuch as the tax is upon the price at which the article is sold by the manufacturer, the tax upon the axles sold in the eastern territory must be computed upon the price of plaintiff, the manufacturer, to the Ruekstell Company, and that the tax of $17,259.02 computed and allowed upon the excess over such price should be refunded.
The defendant contends that the contract arrangement between plaintiff and the Ruekstell Company provided merely for a division of the price for which plaintiff sold the axles to the public, and that the tax was properly computed and collected by the defendant upon the price at which the axles were sold by plaintiff at retail.
The facts show that in March, 1922, plaintiff and the Ruekstell Company entered into an agreement whereby plaintiff was to manufacture the Ruekstell axles and sell them to the Ruekstell Company at a fixed price. They further show that on October 9, 1922, plaintiff and the Ruekstell Company entered into another contract in which it was agreed that plaintiff should have the exclusive right to sell Ruekstell axles for a given period of time to dealers in all the territory east of the Mississippi River, referred to in the findings.as the “eastern territory.” It was also agreed that plaintiff should purchase the axles used by it for distribution to dealers in the eastern territory from the Ruekstell Company at a stated price and should then sell them to dealers in such territory at the dealers’ price. The findings show that in carrying out this contract the parties complied with the plan agreed upon, namely, that plaintiff would *833manufacture axles, sell them as a manufacturer to the Ruekstell Company, and repurchase from the Ruekstell Company such quantity as needed for sale as a retailer to dealers in the eastern territory. Upon all axles sold in the eastern territory from October 9, 1923, to January 1, 1924, plaintiff invoiced the Ruekstell Company for such axles at the manufacturer’s sales priee in the usual form of invoice described in the findings, and the Ruekstell Company then invoiced plaintiff for such axles at the increased price stated in the contract of October 9, 1922. Plaintiff then sold and invoiced the axles to dealers in the eastern territory at the prices to dealers. These were aims’ length transactions and were in every respect bona fide.
There were three separate and distinct transactions: (1) A sale by plaintiff to the Ruekstell Company at a certain priee; (2) a sale by the Ruekstell Company at a greater price; and (3) a sale by plaintiff to dealers in the eastern territory at dealers’ prices. Such plan was fully provided for and contemplated in the contract of October 9, 1922, and was actually carried out by the parties.
Plaintiff gave the Ruekstell Company credit on its books for the difference between the priee at which plaintiff invoiced the articles to that company and the price at which that company invoiced the articles to plaintiff. From January 1 until July 1, 1924, when the contract with reference to the arrangement in the eastern territory terminated, plaintiff and the Ruekstell Company ceased the unnecessary work of issuing separate invoices to each other and, in lieu thereof, plaintiff issued a credit memorandum at the end of each month on sales by it to dealers in the eastern territory showing the number of sales and the sales price of the axles to the Ruekstell Company, and the number of sales and the sales priee by the Ruekstell Company to plaintiff, crediting the Ruekstell Company with the difference between the two. This procedure likewise constituted the carrying out of the agreement for a separate sale by plaintiff to the Ruekstell Company and the sale by the latter to plaintiff, as provided in the contract of October 9,1922.
Section 900 of the Revenue Act of 1921 and section 600 of the Revenue Act of 1924 imposed the tax upon the sale by the manufacturer, and article '3 of Regs. 47 provides that “the tax is imposed on the sale by the manufacturer, and should be returned and paid by him whether the sales priee is actually collected or not.” In view of the express provisions of the statute and the regulations, we are of opinion that the sale in the transactions involving axles sold in the eastern territory, which was the subject of the tax, was a sale by the manufacturer, and that sale occurred when plaintiff sold the axles to the Ruekstell Company. Thereafter plaintiff assumed the position of a retailer of the axles. Plaintiff is entitled to judgment for $17,259.-02 on this item of its claim.
The last item in plaintiff’s claim is for $1,743.09, finding 16, included in the additional assessment collected April 20, 1928, and computed by the Commissioner by including' in the priee to be taxed the excise tax payable upon the articles sold to the Ruekstell Company. The facts show that under the contract of March 10, 1922, the Ruekstell Company was to pay plaintiff for the manufacture of Ruekstell axles, crated, tax prepaid, and ready for shipment, the sum of $32 an axle for passenger cars and $64 an axle for trucks. In each instance plaintiff invoiced the axles to the Ruekstell Company showing a separate item for the axle, as well as a separate item for the tax, and in the payment of the tax to the government it deducted from the contract prices of $32 and $64, respectively, among other items, the tax before arriving at the sum on which the tax should be computed. The Commissioner levied an additional assessment against plaintiff based upon the full contract price of $32 and $64, respectively, and the amount sought to be recovered under this item of the claim represents the tax upon the tax item separately invoiced by plaintiff to the Ruekstell Company in each ease on all sales after July 1, 1924.
We are of opinion that plaintiff is not entitled to recover on this item of its claim. The Ruekstell Company under its contract with the plaintiff agreed to pay a stipulated priee for each axle regardless of a tax upon the sale; consequently the tax was properly computed upon the full sales price. Lash’s Products Co. v. United States, 278 U. S. 175, 49 S. Ct. 100, 73 L. Ed. 251. Plaintiff relies upon art. 3, Regs. 47, as relieving it from tax upon a sales priee which included the amount of the tax it was required to pay to the government on the ground that the tax item was invoiced as a separate item to the Ruekstell Company; however, the contract between plaintiff and the Ruekstell Company did not expressly provide that the Ruekstell Company pay plaintiff a certain priee for the axle and reimburse it for whatever manufacturers’ excise tax it had to pay, but, on the contrary, the Ruekstell Company was required to pay the full contract price whether *834the tax which plaintiff might be required to pay to the government was high or low, or whether there was no tax whatsoever. Article 3 of the regulations does not, we think, apply to a ease of this character. In our opinion the regulations do not contemplate that a deduction shall be made from the sales price in computing the tax unless, under an arrangement, the purchaser is to reimburse the manufacturer for the tax as such and obtain a reduction in the purchase price if the tax is reduced or repealed.
As we construe the contract between the plaintiff and the Ruekstell Company, the sales prices of the axles were $32 and $64, respectively, during the life of the contract regardless of whether or not the plaintiff, as the manufacturer, was required to pay a tax to the government.
Judgment will be entered in favor of plaintiff for $34,991.12, with interest at 6 per cent, per annum from April 20, 1928, as provided by law. It is so ordered.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in ■its decision.
The $82,242.73 includes subitems (w), (x), (y), and (z). Subitems x, y and z are included in items 1* 2» and 3, respectively, and will be deducted from items 1, 2, and 3 if the entire $82,242.73 is recovered,
(b) Included in item 1, therefore not included in total.
(c) Included in item 2, therefore not included in total.
(d) Included in item 3, therefore not included in total. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218784/ | GREEN, Judge.
Plaintiff brings this action to recover an overpayment of income tax for 1916, and the ease turns on the question of whether the suit has been brought in time. The facts are not in dispute.
The plaintiff duly filed his income tax return for 1916 and paid the amount shown to be due thereby. Thereafter the Commissioner of Internal Revenue assessed a deficiency for that year of $7,658.85, which was *851paid July 30, 1920. November 25, 1921, the plaintiff filed a claim for refund in the sum of $5,975.23, and July 18, 1922, the Commissioner wrote plaintiff setting out the result of the audit of his tax for the years 1913 to 1919, inclusive. December 19, 1922, the Commissioner, after further consideration and audit of the returns for 1916 and 1917 together with other years, made a statement to plaintiff which showed an overassessment for 1916 of $5,322.25, and an additional tax for 1917 of $93,713.26. Both of these audits included consideration of the claim for refund filed November 25, 1921. March 28, 1923, the Commissioner assessed the additional tax for 1917 of $93,713.26, and a few days later signed a formal statement for the collector in which appeared an overassessment in favor of plaintiff for 1916 of $5,322.-25, and therein instructed the collector to apply the overpayment as a credit against the tax owing, if any, on the taxpayer’s account for subsequent periods. The collector complied with the Commissioner’s instructions by applying the 1916 overpayment as a credit against the 1917 additional assessment and forwarded to the Commissioner a schedule of refunds and credits duly signed, on which appeared the credit above referred to and an item of interest on the overpayment of $852.-43. July 19, 1923, the Commissioner mailed a certificate of overassessment to the plaintiff showing an overassessment for 1916 of $5,322.25 which had been credited to the 1917 additional assessment. This certificate contained the following statement:
“The balance (if any) of the overpayment is refunded to you by cheek of the Treasury Department, forwarded herewith.
“Included in the accompanying check is interest in the amount stated below, allowed on the credit, from the date of payment of the additional tax to the date of allowance of the claim.”
A check for the amount of interest was accordingly inclosed and the amount thereof paid to plaintiff.
Plaintiff, however, did not accept this conclusion of the Commissioner, and on April 16, 1926, filed a petition with the Board of Tax Appeals with reference to his taxes for 1917, alleging that the additional tax which had been assessed for that year was barred from collection since collection was not made within five years from May 1, 1918, when the return was filed. May 24, 1928, the plaintiff’s contention was sustained by the Board of Tax Appeals and a decision was entered that there was no deficiency for 1917.
June 21, 1928, plaintiff filed a claim for credit of the overpayment for 1916 which had been applied against the tax for 1917, asking that it be credited against an outstanding assessment due for 1927. The claim for credit was based on the fact that the overpayment for 1916 had been applied on a tax which was barred. Subsequently, the Commissioner advised the collector that his claim would not be accepted as a claim for credit but would be considered as a refund claim for 1916, and on November 22, 1928, the Commissioner rejected the claim. July 17,1936, the plaintiff began this suit.
The plaintiff’s petition sets out the facts upon which'the suit is predicated, but there is nothing in it to indicate whether the suit is brought upon the claim for refund, or the claim for credit, or upon an account stated, in which event the statutory period of limitations for mailing refunds would not apply. All three of these matters are discussed in the briefs of the respective counsel. We think it quite clear that the suit cannot be maintained upon either the claim for refund or upon the claim for credit. Manifestly, the suit upon the claim for refund is barred, and we think that this is equally true with reference to a suit upon the claim for credit unless, as is contended, the statutory provisions with reference to claims for refund and credit are abrogated by reason of the creation of an account stated. We think there was no account stated. In the case of David Daube v. United States, 53 S. Ct. 597, 598, 77 L. Ed. -, decided by the Supreme Court May 8, 1933, the Supreme Court said, as a reason why there was no account stated between the government and the taxpayer, that “no balance was arrived at as the result of computation and agreement,” that is, no balance arrived at by agreement between the government and the taxpayer. In the ease at bar, it would seem clear that no balance was agreed upon between the plaintiff and defendant as a result of the certificate of overassessment that was sent the plaintiff, for the certificate stated in substance that if any balance was due the plaintiff it would be refunded by cheek. The defendant did not agree to pay the amount for which suit is now brought, nor can any promise to pay it be implied. A blank was put opposite the words “Amount refunded,” and opposite the word “Interest,” “$852.43,” for which a cheek was inclosed. In fact the attorney for plaintiff in his brief concedes that no agreement was reached as to the balance due by this certificate of over-assessment, but argues that on the other hand the plaintiff repudiated it by commencing a *852suit before the Board of Tax Appeals to have the additional assessment for 1917 set aside as barred. But he contends that, when the Board of Tax Appeals rendered its decision and plaintiff accepted it, thereafter, at some indefinite date an account stated arose. To this we cannot agree. There was no account presented at that time, and, while the decision of the Board of Tax Appeals showed that the account presented to the plaintiff by the Commissioner was erroneous and this decision was binding upon the defendant in further court proceedings, it did not make a new account or bring the parties into agreement. We therefore hold that there was no account stated between the parties.
But, even if there had been an account stated, we do not think it would avail the plaintiff. If there was any such account, it was presented at the time the plaintiff received the certificate of overassessment, but this suit was not brought until more than six years after that date, and a suit upon an account stated is therefore barred (see 28 US CA § 41 (20). Nor does the fact that the claim for credit was filed within the period of limitations under the account stated, if the certificate of overassessment is to be considered an account stated, enable plaintiff to maintain a suit on the elaim for credit. This fact would not alter the statutory provisions with reference to the effect of filing a claim for credit, for a suit upon a claim for credit and one upon an account stated would be based upon altogether different and unrelated matters. Under the statutory provisions applicable to the elaim for credit filed in the ease at bar (section 284 (b) (1), Revenue Act of 1926, 26 USCA § 1065 (b) (1), no claim for credit could be allowed after four years from the time the tax was paid. This period had long expired when the elaim for credit was filed, consequently, even if it should be held that there was an account stated, the elaim for credit was not presented in time. Our conclusion is that the plaintiff’s suit is barred whether it be considered as based on the elaim for refund, or an account stated, or upon the elaim for credit.
It follows that the petition must be dismissed, and it is so ordered.
WHALEY and WILLIAMS, Judges, concur.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218785/ | LITTLETON, Judge
(concurring).
I concur in the decision dismissing the petition but on the ground that the cause of action arose upon the delivery of the certificate of overassessment on July 19, 1923, and that this suit was not instituted until more than six years thereafter.
The plaintiff accepted as correct the statement of account by the Commissioner for the year 1916 showing his allowance of an overpayment of $5,322.25 for that year, which is the subject of this suit, but insisted, upon the receipt of the certificate of overassessment, as did the taxpayer in the case of Bonwit Teller & Co. v. United States, 283 U. S. 258, 51 S. Ct. 395, 75 L. Ed. 1018, that the 1916 overpayment should be refunded instead of credited, inasmuch as the tax for 1917 against which the credit had been made was barred by the statute of limitation. The protest with reference to the Commissioner’s action did not concern the statement of account of the amount due for 1916 as disclosed by the certificate of overassessment, but related to the Commissioner’s action with reference to the additional tax for 1917, as was the situation in the Bonwit Teller Case. The Commissioner declined to refund to plaintiff the overpayment allowed for 1916 on the ground that collection of the 1917 tax by credit occurred on March 31, 1923, when he signed the schedule of overassessments, and not on July 10, 1923, when he signed the schedule of refunds and credits, and it was not therefore barred. This position of the Commissioner was erroneous just as it was in the case of Bonwit Teller & Co. v. United States, supra, and this is now conceded by the defendant. When the Commissioner took this position and refused to pay to the plaintiff the 1916 overpayment allowed, plaintiff instituted a proceeding before the United States Board of Tax Appeals to contest the legality of the collection for 1917 and the Board decided the ease in his favor, holding that the 1917 tax was barred, but the Commissioner still refused to pay. Compare Ohio Steel Foundry Co. v. United States, 38 F.(2d) 144, 148, 69 Ct. Cl. 158; Arthur Curtiss James v. United States, 38 F.(2d) 140, 69 Ct. Cl. 215. Section 609 of the Revenue Act of 1928 (2:6 USCA § 2609) made the credit void. All of this, however, concerned 1917 and did not affect the statement of account for 1916. At the time of the Commissioner’s allowance of the overpayment for that year, and at all times since, the plaintiff has accepted the overpayment of $5,322.25 allowed for 1916 *853as correct. Payment thereof not having been made, the plaintiff, on June 21, 1928, filed a claim on form 843 asking that the same, with interest thereon, be credited against an outstanding assessment of tax for the calendar year 1927. Prior to the allowance of the overpayment of $5,322.25 for 1916, plaintiff had duly filed a claim for refund of $5,975.23 for 1916, which was allowed by the Commissioner to the extent mentioned.
The certificates of overassessment, in evidence as Exhibit Gr, which was addressed to the plaintiff at 165 Broadway, New York, N. Y., and which was mailed to him by the Commissioner July 19, 1923, stated in addition to the portions set forth in finding 5, as follows:
“No. 304567.
“Allowed: $5,322.25.
“An audit of your income tax return for 1916, form 1040, and examination of related claims (if any), indicates that the amount of tax assessed to you for this year was in excess of the amount due:
Previously assessed April 1917 list, 23-B, folio 16, line 2................................$10,533.84
Additional tax May 1920 list, page 29, line 7 7,658.85
Total tax assessable.......................... 18,192.69
Tax liability as disclosed by audit.......... 12,870.44
Overassessment ..............................$ 5,322.25
“The audit as made has been approved by. this office with the exceptions explained to
you in a previous communication from this Bureau.”
I think plaintiff had a right to file the claim for credit in June, 1928, and that the Commissioner had authority to credit the overpayment allowed in 1916 to the tax due for 1917 and should have done. so. Payment of the 1916 overpayment was not barred at the time the claim for credit was filed. However, I do not think the refusal of the Commissioner to make the credit requested brought the ease back under the provisions of section 3226 of the Revised Statutes (see 26 USCA § 156), and gave a new limitation period of two years after such refusal if such two-year period carried the limitation beyond the six years from the date of delivery of the certificate of overassessment. In Daube v. United States, 53 S. Ct. 597, 599, 77 L. Ed. -, decided May 8, 1933, the court said: “It [the Bonwit Teller Case] is a ruling not to be extended through an enlargement of the concept of an account stated by latitudinarian construction.”
This case in my opinion is on all fours with the Bonwit Teller Case, supra, but the petition was not filed within six years after the cause of action accrued. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218787/ | WILLIAMS, Judge.
The plaintiff, a manufacturer of electric storage batteries, brings suit to recover the sum of $10,121.94, together with interest thereon, excise taxes paid upon the sale of such batteries for the period between May 12, 1921, and March 31, 1926.
The taxes were imposed and collected under sections 900 of the Revenue Acts of 1918 (e. 18, 40 Stat. 1122) and 1921 (e. 136, 42 Stat. 291), and section 600 of the Revenue Act of 1924 (e. 234, 43 Stat. 253, 322 (26 USCA §§ 881 note, 882).
Timely claims for refund of the taxes were filed by plaintiff, and were disallowed by the Commissioner of Internal Revenue on the sole ground that storage batteries constitute automobile parts within the meaning of the taxing statutes. The suit was timely instituted.
The sole issue presented is: Were the storage batteries involved automobile “parts” within the meaning of the statutes?
The facts disclosed by the findings are parallel to the facts in General Lead Batteries Co. v. United States, 60 F.(2d) 177, 75 Ct. Cl. 605, U. S. Light & Heat Corporation v. United States (Ct. Cl.) 3 F. Supp. 861, M. & M. Company v. United States (Ct. Cl.) 3 F. Supp. 886, and Universal Battery Co. v. United States (Ct. Cl.) 3 F. Supp. 878, decided to-day. The taxed batteries in this ease are the same type as those in the cases referred to, and were sold and used for substantially the same variety of purposes. While the chief nonautomotive use and sale of the batteries in the instant ease were in the radio field, they were sold and used for over thirty different purposes other than in automobiles, and were just as adaptable for these, uses as they were for use in automobiles.
Under the rule announced in the eases cited, articles equally adapted to a variety of uses and commonly put to such uses, one of which is use in motor vehicles, may not be classed as “parts” for automobiles. See Universal Battery Co. v. United States, 281 U. S. 580, 50 S. Ct. 422, 74 L. Ed. 1051, C. F. Routzahn, Col., v. Willard-Storage Battery Co., 65 F.(2d) 89, decided May 9, 1933, C. C. A., Sixth Circuit, and McCaughn, Col., v. Electric Storage Battery Co., 63 F.(2d) 715, decided January 31, 1933, C. C. A., Third Circuit.
The plaintiff is clearly entitled to recover. Judgment is therefore awarded the plaintiff in the sum of $10,121.94, with interest as provided by law.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218788/ | WILLIAMS, Judge.
The plaintiff sues to recover the sum of $30,884.34, of which sum $27,841.35 represents excise taxes paid upon the sale of electric storage batteries manufactured by it. The remaining $3,042.99 represents additional interest alleged to be due on a refund of taxes made to plaintiff on July 19, 1923, of $26,809.82, erroneously collected on the sale of battery parts. This item of the claim is abandoned by plaintiff in the brief, and the *885only question presented is the plaintiff’s right to recover the taxes paid on the sales of completed batteries during the taxable period involved.
The challenged taxes were paid between March 30, 1919 and October 31, 1923. The claim for refund was filed on January 16, 1924. Consequently that portion of the taxes paid prior to January 16, 1920, is barred. The amount paid subsequent to that date was $25,583.84.
The sole issue is whether plaintiff’s batteries were parts for automobiles within the meaning of section 900 of the Revenue Acts of 1918 and 1921 (c. 18, 40 Stat. 1122; c. 136, 42 Stat. 291), under the provisions of which the taxes were imposed and collected. These sections are identical and read:
“Sec. 900. That from and after January 1, 1922 [1921 Act], there shall be levied, assessed, collected, and paid upon the following articles sold or leased by the manufacturer, producer, or importer, a tax equivalent to the following percentages of the price for which so sold or leased—
“(1) Automobile trucks and automobile wagons (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), 3 per centum;
• “(2) Other automobiles and motorcycles (including tires, inner tubes, parts, and accessories therefor, sold on or in connection therewith or with the sale thereof), except tractors, 5 per centum;
“(3) Tires, inner tubes, parts, or accessories for any of the articles enumerated in subdivision (1) or (2), sold to any person other than a manufacturer or producer of any of the articles enumerated in subdivision (1) or (2), 5 per centum.”
The applicable Treasury Regulations issued for the administration of sections 900 of these respective acts are identical, and read: “Definition of parts. — A 'part’ for an automobile truck, automobile wagon, or other automobile chassis or body, or motorcycle, is any article designed or manufactured for the special purpose of being used as, or to improve, repair, or replace, a component part of any such vehicle, or article, and which by reason of some peculiar characteristic is not, such a commercial commodity as would ordinarily be sold for general use, or which is primarily adapted only for use as a component part of such vehicle or article.”
The Supreme Court, in Universal Battery Company v. United States, 281 U. S. 580, 50 S. Ct. 422, 423, 74 L. Ed. 1051, approved this administrative definition of the term “parts” as used in the Revenue Acts of 1918 and 1921. The court said: “Certainly it would be unreasonable to hold that articles equally adapted to a variety of uses and commonly put to such uses, one of which is use in motor vehicles, must be classified as parts or accessories for such vehicles.”
The findings show that the taxed batteries in this ease were sold and used for a great variety of purposes other than for use in automobiles, and that they were as equally adapted to such uses as they were to use in automobiles. These facts bring the ease squarely within the rule announced by the court in Atwater Kent Mfg. Co. v. United States, 62 Ct. Cl. 419; General Lead Batteries Co. v. United States, 60 F.(2d) 177, 75 Ct. Cl. 605; and U. S. Light & Heat Corporation v. United States (Ct. Cl.) 3 F. Supp. 861, decided to-day. These cases are parallel with the instant ease in their essential facts and are controlling. See, also, Milwaukee Motor Products, Inc., v. United States, 66 Ct. Cl. 295; W. M. Dutton & Sons v. United States, 59 F.(2d) 839, 75 Ct. Cl. 326; Anthony Company v. United States, 54 F.(2d) 165, 56 F.(2d) 481, 73 Ct. Cl. 758; C. F. Routzahn, Col. v. Willard Storage Battery Co., decided May 9, 1933, C. C. A., Sixth Circuit, 65 F.(2d) 89; and McCaughn, Col., v. Electric Storage Battery Co., 63 F.(2d) 715, decided January 31, 1933, C. C. A., Third Circuit.
The plaintiff is entitled to. recover and judgment is ordered to be entered in its favor against the United States in the sum of $25,-583.84, with interest as provided by law.
BOOTH, Chief Justice, did not hear this case on account of illness and .took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218789/ | WILLIAMS, Judge.
The plaintiff, a manufacturer of electric storage batteries, sues to recover manufacturers' excise taxes paid upon the sale of such batteries on and between July 13, 1921, and April 1, 1926.
The taxes were imposed and collected under sections 900 of the Revenue Acts of 1918 (e. 18, 40 Stat. 1122) and 1921 (e. 136, 42 Stat. 291), and section 600 of the Revenue Act of 1924 (e. 234, 43 Stat. 253, 322, 26 USCA §§ 881 note and 882). The pertinent sections of the respective revenue acts are substantially the same, with the exception that the 1924 act imposes a tax of 2% per cent, instead of 5 per cent, as provided in the acts of 1918 and 1921.
The applicable Treasury Regulations issued for the administration of the three acts are in substance the same, and define the term “parts” as “any article designed or manufactured for the special purpose of being used as or to replace a component part of any such vehicle [automobile truck, automobile wagon, other automobile, or motorcycle] and which by reason of some peculiar characteristic is not such a commercial commodity as would ordinarily be sold for general use, and which is primarily adapted only for use as a component part of such vehicle.”
This administrative definition of the term “parts” was approved by the Supreme Court in Universal Battery Company v. United States, 281 U. S. 580, 50 S. Ct. 422, 74 L. Ed. 1051, and has been applied by this court in General Lead Batteries Company v. United States, 60 F.(2d) 177, 75 Ct. Cl. 605, and in U. S. Light & Heat Corporation v. United States (Ct. Cl.) 3 F. Supp. 861, Englert Mfg. Company v. United States (Ct. Cl.) 3 F. Supp. 873, and Universal Battery Company v. United States (Ct. Cl.) 3 F. Supp. 878, decided to-day.
’ The facts in the instant case are in all essential respects parallel to the facts in the cases cited. The batteries sought to be taxed in these eases were of the same type as plaintiff's batteries, and were sold and used for substantially identical purposes. They were equally as well adapted to use for a great variety of nonautomo.tive purposes as they were for use on automobiles. Such batteries were held not to be parts for automotive vehicles within the meaning of the taxing statutes. See, also, C. F. Routzahn, Col., v. Willard Storage Battery Co., 65 F.(2d) 89, decided May 9, 1933, by C. C. A., Sixth Circuit, and McCaughn, Col., v. Electric Storage Battery Co., 63 F.(2d) 715, decided January 31, 1933, by C. C. A., Third Circuit.
The plaintiff is entitled to recover, and judgment in his favor is ordered to be entered for the sum of $8,801.95, with interest thereon as provided by law.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218790/ | CHESNUT, District Judge.
The only question for decision in this ease involves the application of the rule for determination of the rate of international exchange for foreign money, in this case, between the American dollar and the British pound; and the particular.point in issue is whether the exchange rate prevailing at the time of the accrual of the right of action or at the date of the decree is to govern.
The question is submitted on stipulation of counsel filed May 25,1933, providing that the allegations of the libel are true “and the libelant shall be entitled to damages equivalent to 623.13.5 British pounds.” The stipulation also provides “(a) that if the court shall find that the libelant is entitled to recover the agreed damage on the basis of the rate of exchange prevailing at the time of loss, that is, December 13, 1930, the libelant shall have a decree for $3027.90; (b) that if the • court shall find the libelant is entitled only at the rate of exchange now prevailing, the libelant shall have a decree equivalent to 623.13.5 pounds at the rate of exchange on the date of said decree; (e) that the decree shall bear interest at 6% from the date thereof.”
The facts disclosed by the libel and admitted by the stipulation to be taken as proved, are simple. The steamship “Integritas” is an Italian steamship, the owners of which, on or about September 5, 1930, chartered her to Lowry & Co., Agents, for the carriage of sugar from Cuba to Liverpool, England. On or about October 31, 1930, the steamer sailed from Cuba with a cargo of cane sugar and in due course arrived at Liverpool but with the sugar short and to some extent damaged. Tait & Lyle, Limited, became for value the owner of the cargo of sugar and entitled to the delivery thereof. They had insured the cargo with the Northern Assurance Company, Limited, a British corporation doing business, however, in the United States, and the particular policy having been issued in New York City. In its damaged condition, the cargo was discharged in Liverpool on December 13, 1930, at which time the rate of exchange for pounds sterling was $4,855 as stipulated. The rate now prevailing is approximately $4.05.
The charter party contained the following arbitration clause: “Any dispute that may arise under this charter to be settled by arbitration, each party appointing an arbitrator, and should they be unable to agree, the decision of an Umpire selected by them to be final. The Arbitrators and Umpire are all to be commercial men and resident in London and the arbitration to take place there. This submission may be made a rule of the High Court of Justice in England by either party.”
No arbitration in fact was held but the insurer upon demand paid Tait & Lyle a loss in the amount of 1312.2.5 pounds and, of course, became subrogated to the rights of Tait & Lyle as owners of the cargo.
Presumably the steamship had sailed from Liverpool before any adverse proceedings were taken there, and probably the amount of the loss was not liquidated and determined until later. The libel in this ease was filed March 22, 1932, when the ship was libeled in the port of Baltimore.
As the parties have now by stipulation agreed upon the amount of damages ex-, pressed in British pounds, only the narrow question is presented as to whether the decree which here must be given in dollars is to be the equivalent of the agreed value in pounds taken at the rate of exchange as of the time of the loss when the cause of action arose, or at the date of the decree. As said by Judge Bose in a ease involving a similar problem, Page v. Levenson, 281 F. 555, 557 (D. C. Md.): “The point has been discussed for centuries, apparently without there ever having been a time when all the doctors of the law were of one mind as to it. Story’s Conflict of Laws, § 308 et seq. The date of *892the contract, of its breach, of the bringing of suit, and of the trial or judgment, have each been suggested as the time at which the conversion from one currency to another should be made.”
In that ease, Judge Rose, after an exceedingly interesting discussion of the relative advantages and disadvantages of the several dates suggested, reached the conclusion that the date of the breach of the contract should be adopted as the controlling time to determine the rate of exchange. He said: “To take any other date than that of the breach as that at whieh the conversion is to be made will lead to intentional obstruction of speedy trials or make the rights of the parties dependent upon all sorts of accidental occurrences.”
The English decisions appear to be quite uniformly in support of this rule but the American authorities are very sharply divided upon the subject. See annotations in 11 A. L. R. 363; 43 A. L. R. 520; 50 A. L. R. 1273; 80 A. L. R. 1374.
However, subsequent to Judge Rose’s decision in Page v. Levenson, a series of cases involving the particular problem have been decided by the Supreme Court. In Hicks v. Guinness, 269 U. S. 71, 46 S. Ct. 46, 70 L. Ed. 168, it was held that the debt of a German to an American citizen due and payable here in German marks before this country entered the late war, was to be measured by the value of the marks in dollars as of the time when the default occurred. It is to be noted that the obligation was payable in this country, and therefore subject to the law of this country. And in Sutherland v. Mayer, 271 U. S. 272, 46 S. Ct. 538, 70 L. Ed. 943, a similar rule was applied to an accounting after the war, between an American citizen resident in Boston, and German -partners, in determining the American partner’s share of the partnership property after the war. But in Deutsche Bank v. Humphrey, 272 U. S. 517, 47 S. Ct. 166, 71 L. Ed. 383, the majority opinion by Mr. Justice Holmes, (who had also written the opinion of the court in Hicks v.. Guinness), adopted the date of the decree as the time for fixing the rate of exchange. In that case the situation was a suit in the federal courts by a citizen of this country against the Alien -Property Custodian to affect the property of a German bank held by him. The basis of the obligation was the deposit by the American in a German bank prior to our participation in the war and a demand for the return thereof also prior to the war. The obligation was payable in German marks. In the majority opinion it was said: “In this case, unlike Hicks v. Guinness, 269 U. S. 71, 46 S. Ct. 46, 70 L. Ed. 168, at the date of the demand the German Bank owed no duty to the plaintiff under our law. It was not subject to our jurisdiction and the only liability that it incurred by its failure to pay was that whieh the German law might impose. - It has incurred no additional or other one since. A suit in this country is based upon an obligation existing under the foreign law at the time when the suit is brought, and the obligation is not enlarged by the fact that the creditor happens to be able to catch his debtor here. * * * An obligation in terms of the currency of a country takes the risk of currency fluctuations and whether creditor or debtor profits by the change the law takes no account of it. Legal Tender Cases, 12 Wall. 457, 548, 549, 20 L. Ed. 287. Obviously, in fact a dollar or a mark may have different values at different times but to the law that establishes it it is always the same. If the debt had been due here and the value of dollars had dropped before suit was brought the plaintiff could recover no more dollars on that account. A foreign debtor should be no worse off.”
The minority opinion, written by Mr. Justice Sutherland and. concurred in by three other justices, strongly presents the opposing contention, saying: “The majority opinion rests upon the distinction that the debt upon which recovery here is sought was payable in Germany. The distinction, I think, is fallacious, and proceeds from a very narrow view of the principles applied in Hicks v. Guinness and Sutherland v. Mayer.”
In a still later case, Zimmermann v. Sutherland, 274 U. S. 253, 47 S. Ct. 625, 71 L. Ed. 1034, Mr. Justice Holmes, in rendering the opinion for aA undivided court, said: “The distinction between the Deutsche Bank Case and Hicks v. Guinness, 269 U. S. 71, 46 S. Ct. 46, 70 L. Ed. 168, is not, as argued, that the plaintiff in Hicks v. Guinness was in the United States, but that, as the court understood the facts, the debt was payable in New York and subject to American law, so that upon a breach of the contract there arose a present liability in dollars.”
The problem for my determination is whether the principle applied by the court in Deutsche Bank Case is applicable here, and I have reached the conclusion that it is. In the case at bar the delivery under the contract for safe carriage was at Liverpool, England, and was there breached by the failure to safely deliver the whole cargo. The damages then and there became payable and indeed as above noted, the charter party stipulated *893by the arbitration clause that tbe controversy should be there adjusted. Under the provision of the contract and the facts, the obligation of the party in default was thus payable in British money and governed by British law. So far the case at bar seems to be quite parallel to the Deutsche Bank Case. A possible distinction between the two eases may lie in the fact that in the Deutsche Bank Case what was being sued for was a debt payable in Germany in German marks; and there is a further possible distinction that the plaintiff’s claim in the Deutsche Bank Case was for a definite amount of German marks which, of course, were the currency of Germany and not commodities, while in the case at bar the claim was not directly under the contract for an ascertained debt, but this proceeding is a libel in rem against the ship for damages for breach of contract. However, after a review of the authorities, I have reached the conclusion that these distinctions are not important or controlling, although the contrary has been suggested in some of the decisions. As I read the several cases in the Supreme Court, the controlling principle in the Deutsche Bank Case is that the American courts are simply enforcing here the foreign law as it existed at the time of the breach and also at the time of the institution of this suit. And in this connection it is to be noted not only that the stipulation of the parties states the amount of damages in terms of British pounds, but also provides and stipulates: “3. That if this libel had been brought in the Courts of England the decree would have been for pounds sterling at the time of the decree without any regard to depreciation in the value of sterling in the terms of dollars or other currency.”
And the language of the majority opinion in the Deutsche Bank Case already quoted is particularly in point: “An obligation in terms of the currency of a country takes the risk of currency fluctuations and whether creditor or debtor profits by the change the law takes no account of it. * * * If the debt had been due here and the value of dollars had dropped before siut was brought the plaintiff could recover no more dollars on that account. A foreign debtor should be no worse off.”
And I think the cleanly expressed opinion of Mr. Justice Sutherland dissenting in the case makes it entirely plain that the distinctions above suggested are unimportant to the principle adopted and applied in the majority opinion.
In Royal Insurance Co., Ltd., v. Compania Transatlantica Espanola (D. C.) 57 F.(2d) 288, 291, 292, District Judge Byers in the Eastern District of New York applied the principle of the Deutsche Bank Case to a case involving a situation quite similar to that of the instant case. See also Tillman v. Russo Asiatic Bank (C. C. A. 2) 51 F.(2d.) 1023, 80 A. L. R. 1368, certiorari denied 285 U. S. 539, 52 S. Ct. 312, 76 L. Ed. 932; Thornton v. National City Bank of New York, 45 F.(2d) 127 (C. C. A. 2); The Hurona, 268 F. 910 (D. C. S. D. N. Y.); Marburg v. Marburg, 26 Md. 8, 90 Am. Dec. 84.
The necessary conclusion is that the libelant is entitled to a decree for an amount in dollars equivalent to 623.13.5 pounds at the rate of exchange prevailing on the date of the decree, and that the decree shall bear interest at the rate of 6 per cent, from the date thereof as stipulated in this case. No objection to the jurisdiction has been made by counsel in this ease on the ground that the parties are all foreigners and the cause of action did not arise within the United States. As the parties make no objection to the jurisdiction and as I understand it is discretionary with the court to exercise jurisdiction in such a ease, I have decided to do so. See Canada Malting Co. v. Paterson Steamships, Ltd., 285 U. S. 413, 52 S. Ct. 413, 76 L. Ed. 837; The Eir, 60 F.(2d) 124 (C. C. A. 4).
Counsel may prepare and submit a decree in conformity therewith. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218791/ | CAMPBELL, District Judge.
This suit is brought to recover damages alleged to have been caused to the boat and her .cargo,by the turning over and sinking of the eoalboat Dorothy R. McCollum while in tow of the respondent’s steamtugs Over-brook and Delmar.
I find the facts as follows:
The libelant, at all the times hereinafter mentioned and at the time of the trial, was a domestic corporation and the owner of the eoalboat Dorothy R. McCollum and owner of the cargo of coal laden thereon.
The steamtugs Overbrook and Delmar were, during the currency of process hereunder, within this district and the jurisdiction of this court.
At all the times hereinafter mentioned and at the time of the trial, the Pennsylvania Railroad Company was a corporation organized and existing under and by virtue of the laws of the state of Pennsylvania.
Early on the morning of February 20, 1932, the steamtug Overbrook left South Am-boy, N. J., bound for New York, with a tow of four loaded eoalboats arranged in two tiers each, on a hawser 300 feet in length.
A Cleary boat was the starboard hawser boat, the Dorothy R. McCollum, the port hawser boat, the Dorita the starboard boat in the second tier, and the Port Carbon was the port boat of the second tier.
The Dorothy R. McCollum had a free-board of 3 to 4 feet forward, 2% feet aft, and 18 to 20 inches amidships.
The Port Carbon had a freeboard of about 2 feet amidships.
Both the Dorothy R. McCollum and the Port Carbon were fully loaded, but the Cleary boat and the Dorita were partly loaded, and each had a higher freeboard amidships than the Dorothy R. McCollum and the Port Carbon.
The tow proceeded through the Kills, being joined by the steamtug Delmar, as an assisting tug, off Port Reading.
The wind was out of the northwest, blowing about 25 to 30 miles an hour, and had been blowing out of that quarter for about 12 hours.
The tide was flood, and there was some sea running, but not a very heavy one.
Under these conditions the master of the Overbrook had, as was customary, determined that it was safe and proper to proceed up New York Bay with his tow, when he was in Newark Bay.
About 6 o’clock a. m. the tow proceeded out of the Kills into the upper bay, and about 6:10 o’clock a. m. the captain of the Dorothy R. McCollum, finding that water was coming into the hatch and into the coal, called to the steamtug Delmar for assistance, and said that he was going to sink.
The Delmar at once responded and left the starboard side of the tow and made fast on the port side' of the Dorothy R. McCollum.
The Delmar was larger than the Dorothy R. McCollum, and as she made fast the stem of the Delmar extended over 15 feet ahead of the bow of the Dorothy R. McCollum.
*895The Dorothy R. McCollum was loaded with a small list to port and had two pumps, a hand pump forward on the starboard side, and a gasoline pump aft on the port side.
The hand pump was not fastened to the deck and had the appearance of not having been used for a considerable time, but would have been of no avail as the boat was listed to port. The gasoline pump was out of order, and the captain was unable to start it up, and so informed the captain of the Delmar.
There were supposed to be two siphon boxes on the boat, one on the starboard side and one on the port side.
The master of the Delmar sent his deck hand aboard the Dorothy R. McCollum to ascertain if the siphon could be used, and he found and reported the fact that no water could be found in the siphon box on the starboard side, and that the siphon box on the port side contained a hard substance presumably coal, and that the water could not be reached.
The Delmar was unable to put a siphon on board the Dorothy R. McCollum, and the pumps of the Dorothy R. McCollum could not be used to free her of water.
The Delmar continued on alongside the Dorothy R., protecting her from the seas, and, with the Dorothy R. protected on both sides and astern, the Overbrook continued on until the Dorothy R. turned over and sank off the east end of Governors Island.
The coaming of the hatch of the Dorothy R. McCollum was not water tight, and water and spray were permitted to enter the hold.
A Reading tow came out of the Kills into the bay about an hour after the tow in question, under the same conditions of wind and sea, and proceeded safely up the bay.
No damage was caused to any of the boats in the Overbrook’s tow by pounding while in the bay, and the Port Carbon did not suffer from water eoming aboard.
The condition of the pumps and coaming of the hatch rendered the Dorothy R. McCollum unseaworthy.
The Dorothy R. McCollum was thereafter raised and repaired.
Prom the facts as found, the steamtugs and the respondent were not at fault.
Libelant’s primary contention is that the Overbrook and Delmar were at fault in taking the tow out of the Kills under the weather conditions prevailing at the time, and rely upon The Katie E. (D. C.) 46 F.(2d) 534, 536, as authority supporting their contention.
That case is clearly distinguishable.
The Katie E. had a freeboard of about 7 or 8 inches amidships, whereas the Dorothy R. had a freeboard of 18 to 20 inches amidships, sufficient for a safe passage under the existing weather conditions had she been seaworthy.
In the Katie E. the court found that “there is no evidence that the Katie E. was unseaworthy,” and I have found that the Dorothy R. McCollum was unseaworthy.
The time that elapsed after the Dorothy R. left the Kills before her captain called to the Delmar for help was not sufficient to put her in a sinking condition, if she had ngt had a substantial quantity of water in her hold when she left the Kills.
The holding in the Katie E. that the helper tug should have been sent ahead before the tow left the Kills “to observe and report upon conditions in the bay, as was suggested by Judge Brown in the Nannie Lamberton (D. C.) 79 F. 121,” finds no place in the instant suit, as the testimony of the experienced navigators herein shows that the conditions in the upper bay could be determined by the conditions in Newark Bay, there was no turning back, and another tow thereafter safely navigated in the bay after leaving the Kills. Further it appears from the testimony of the captain of the tug Bulley, a disinterested witness of long experience, not employed by the respondent, who came out with the Reading tow about an hour after, that they never bother with wind going across New York Bay unless it is over 35 miles an hour.
The question of neglect of storm warning referred to in the Katie E. finds no place in the instant suit for the reason that no storm warnings were displayed.
Not only is there no evidence in the instant suit of white caps when the tow came out, or jumping or rolling of the boats as in the Katie E., but, on the contrary the evidence is that there was no pounding.
While it may be desirable to have the boats with the highest freeboard to windward, it would be quite an undertaking, under the changing conditions that frequently prevail as to the wind, to always accomplish that result, and I flatly disagree with much of the testimony on that subject giyen by libelant’s expert.
Surely the placing of a boat with but 7 or 8 inches freeboard amidships on the windward side would be taking a great risk, but 18 to 20 inches freeboard amidships with *896tight coamings of the hatch makes the top of the coaming 3 feet above the water, and I agree with the experienced navigators in the instant suit, called on behalf of respondent and the tugs, that should be sufficient with a seaworthy boat. With one exception there was not a great difference in the freeboards of the boats in the tow in the instant suit.
The tow was under the control of the Overbrook, which was without fault.
The Delmar was an assisting tug and not chargeable with the general navigation of the tow.
The Delmar was in the customary place qf assisting tugs on the starboard side of the tow, and responded without any delay when called upon for assistance by the captain of the Dorothy R. McCollum.
The Delmar did all in her power to relieve the Dorothy R. McCollum, by protecting her by remaining on her port side, and in attempting to put a siphon aboard, which she was prevented from doing by the unseaworthy condition of the siphon box. She also took the captain of the Dorothy R. McCollum aboard and provided for his safety.
Libelant urged, but certainly did not with force, that the Delmar erred in not taking the Dorothy R. McCollum out of the tow when assistance was requested.
That contention was not and could not be sustained. The Dorothy R. McCollum, while in the tow with the Delmar on her port side, was protected on both sides and astern, but, if she had been taken out, she would have had no protection, but the Delmar on one side, and would have sunk sooner and probably in a worse place.
The respondent and tugs were not insurers and were liable only for negligence, which has not been shown.
I find as conclusions of law:
That the libelant has failed to show by a fair preponderance of the evidence that the respondent and the steamtugs Overbrook and Delmar, or either or any one for whose actions they or either of them were responsible, negligently caused or contributed to any damages suffered by the libelant in the sinking of the eoalboat Dorothy R. McCollum and her cargo of coal, or any damages to said boat or cargo on the day in question.
That the respondent and the steamtugs Overbrook and Delmar are wholly without fault, and that any damages suffered by the libelant by the sinking of the eoalboat Dorothy R. McCollum and her cargo of coal, or any damages to said boat or cargo on the day in question, was caused by the unseaworthy condition of said eoalboat Dorothy R. McCollum, and the libelant is solely at fault.
That the respondent and said steamtugs Overbrook and Delmar are entitled to a decree against the libelant, dismissing the libel with costs.
That a decree may be entered accordingly.
Settle decree on notice.
If this opinion is not considered a sufficient compliance with rule 46% of the Rules in Admiralty (28 USCA § 723), proposed findings of fact and conclusions of law in accordance with this opinion may be submitted for the assistance of the court, as provided by the Rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218793/ | MOSCOWITZ, District Judge.
This case has been submitted upon stipulated facts; the libelant and claimant having waived a jury trial. The amended libel herein asserts two causes of action. The claimant has conceded in the aforesaid stipulation the forfeiture of the liquor and containers which are the subject of the second cause of action.
The first cause of action brought under section 26 of title 2 of the National Prohibition Act (27 USCA § 40) prays for a decree finding that the libelant was entitled to the condemnation and forfeiture of one International truck, license No. 448506, motor No. 301148, serial No. 200830, at the time of its release on bond, and further prays that a decree be entered herein in favor of the libel-ant against the claimant in the sum of $1,000, the agreed value of the aforesaid truck.
The claimant herein filed an answer to' the original libel, and pursuant to order of this court procured the release of the truck by filing a bond and stipulation for value whereby the claimant agreed that the truck was of the value of $1,000, and agreed to pay a money decree in favor of the libelant for the stipulated value in lieu of the forfeiture of the truck.
The bond and stipulation for value provided as follows:
“And, it is a further condition that this bond for value takes the place of the vehicle for all purposes.
“And, it is also a further condition that this bond for value shall remain in full force and effect as to any and all amendments that may be made to the original libel now on file in this Court.”
Subsequently by stipulation herein the libelant amended the libel seeking forfeiture of the truck under section 26 of title 2 of the National Prohibition Act (27 USCA § 40).
The claimant urges that the libelant, if successful, is entitled only to the value of the vehicle at the present time (if the vehicle is still in existence), or to a decree affording the claimant an opportunity to surrender the vehicle on the theory that the cause of action now asserted under section 26 of title 2 of thei National Prohibition Act is not an amended cause of action, but a complete change of cause of action which excuses the obligor on the stipulation for value from any performance of the condition of the bond by reason of the change of risk unsubscribed to by him.
This contention is untenable. The claimant and surety agreed to the filing of the bond to procure the surrender of the vehicle. The libelant upon acceptance of the bond surrendered its claim to the vehicle and has in its place the bond and stipulation for value reciting that the value of the vehicle is to take the place of the vehicle for all purposes. The provision that “the bond for value remain in full force and effect as to any and all amendments that may be made to the original libel now on file in this Court” clearly shows that the parties included the addition or change of cause of action within the term “amendment,” and that such a change was contemplated in the clause reciting that the bond was to take the place of the vehicle for all purposes. If the libelant is successful, it is therefore entitled to a decree in accordance with the terms of the bond and stipulation for value.
Passing to the merits of thp case, the stipulated facts briefly are as follows: At 2:16 a. m. on the 27th day of March, 1931, a police officer of the city of New York noticed several large trucks on the street at the foot of Elizabeth avenue, Arveme, Long Island, *900alongside the gate to the yard of the Valvoline Oil Company. The foot of Elizabeth avenue where the Valvoline Oil Company is located is on the water front; the company having its dock fronting directly on the water, namely, Jamaica Bay.
The officer investigated the three trucks on Elizabeth avenue and found nothing on them, but, while examining them, he heard a commotion in the yard of the Valvoline Oil Company. Looking through 'the gate, the officer noticed a large truck. He climbed over the gate into the yard and immediately upon entering he noticed several men running away from the dock which was about 40 or 50 feet from the gate. The officer ran over to the truck and found two men in front of it and detained them. He flashed his light on the truck, and in the back of the truck, the door of which was down, he sawTrarlapi bags labeled “Lucky Boy.” These burlap bags were of such a nature that he believed from his previous experience that they contained whisky bottles. He opened one of the bags, tasted and smelled the contents of one of the bottles, and found the same to be Rye whisky. He then looked about in the yard and on the dock and found scattered thereon 351 eases and bags of whisky and 64 kegs of whisky. The truck, which is the subject of this action, contained 200 bags of whisky. The two men whom the officer had detained were John Burke and Joseph Russo. They were taken to the police station, and, when questioned by the police officer as to* what they Were doing, the defendants answered that they Were loading the truck. In addition to placing the defendants under arrest, the officer took possession of the liquor on the truck and the liquor on the dock and the truck itself. The'truck was driven to the police station by an officer.
Burke and Russo were charged with possession of whisky; a trial was had against both defendants resulting in a disagreement. Subsequently the government dismissed thei charge against the defendant Burke, and the defendant Russo pleaded guilty to the information.
It is apparent that the liquor was transported to the dock by water, and the truck obviously was there at this early hour by prearrangement. It is true that the truck was not at the moment in motion, and section 26 deals with the discovery of a person “in the act of transporting in violation of the law, intoxicating liquors in * * * any automobile,” yet the conclusion is inescapable lhat the liquor was in transportation when lying on the dock, and its temporary deposit thereon until it was loaded onto the truck was but a momentary pause in a continuous transportation to the ultimate destination of the liquor. U. S. v. One Packard Truck (C. C. A. 2) 55 F.(2d) 882.
While it is true that the defendant Russo pleaded guilty to possession only and not to transportation, this plea, viewed in the light of the evidence, shows that his unlawful possession was not a separate possession, antecedent to and independent of the transportation, but was a possession involved in and incidental to the transportation itself.
The libelant therefore is entitled to a decree in accordance with the terms of the bond and stipulation for value. Settle findings and decree on notice. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218856/ | WHALEY, Judge.
On May 10,1922, plaintiff created five irrevocable trusts, and on January 8, 1924, he created a sixth irrevocable trust. The trust respectively set over certain policies of insurance on the life of plaintiff, and, in addition, certain securities. The beneficiaries of the first five trusts were plaintiff’s children and his wife, and the beneficiary of the sixth trust was a subsequently born child. All of the trusts were set up before the date of the enactment of the Revenue Act of 1924 (Act June 2, 1924, 43 Stat. 253). Each trust provided that as much of the income from the securities vested therein as should be necessary for the payment of premiums on the life insurance policies in the trust should be employed for the payment of said premiums on said policies, and that the balance, if any, should accumulate for stated distributions to the beneficiaries.
The facts have been stipulated. The issues presented are:
First. Whether Congress intended section 219 (h) of the Revenue Act of 1926 (26 US CA § 960 note), in so far as it requires that there be included in the net income of the grantor any part of the income of a trust which is or may be applied to the payment of premiums upon policies of insurance on the life of the grantor, should apply to trusts such as those here involved.
Second. If it did, whether the statute was unconstitutional.
In the recent case of Burnet, Commissioner, v. Wells, 53 S. Ct. 761, 77 L. Ed. 1439, decided by the Supreme Court on May 29, 1933, the court upheld the validity of the contested statute and held that the act applied to irrevocable as well as revocable trusts. In our opinion, the Wells Case is decisive of this case.
The petition is dismissed. It is so' ordered.
BOOTH, Chief Justice, did not hear this case on account of illness, and took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218857/ | LITTLETON, Judge.
The first question is whether interest of $306,168.01 on unsecured claims of an insolvent corporation paid by the receivers thereof on May 28, 1917, was a proper deduction in that year or whether it was an accrued expense annually for income and excess profits tax purposes from February 6, 1912, when the receivers were appointed.
Plaintiff contends that interest on such indebtedness of an insolvent corporation does not accrue or become a fixed liability of the receivers at any time during which the estate is in the custody of the law, unless and until there is a surplus in the total assets in the hands of the receivers over the amount necessary to satisfy the principal indebtedness due.
The defendant contends that where the books are kept on the accrual basis, interest on the principal of all indebtedness of the insolvent estate accrues during the receivership and is deductible, if at all, from gross income in each taxable year and may not be deducted in whole or in part only in the year in which a surplus is created, or in the year in which it is paid. The allowance of interest compensation to unsecured creditors after the appointment of equity receivers is contingent and depends upon the creation of a surplus in the estate after payment in full of the principal of the unsecured claims, and, in our opinion, the right of the creditors to interest and the obligation of the receivers to pay such allowance do not exist until such surplus has in fact been created. In this ease the Central Iron & Steel Company was insolvent and receivers were appointed by the court of common pleas of Pennsylvania February 6,1912. The facts show that the estate of the corporation was insolvent and insufficient to pay the principal of the secured claims (first-mortgage bonds) and the unsecured claims, and remained so until about May 28, 1917; that only by good management and with the aid of extraordinarily favorable conditions were the receivers able to create a surplus in the estate after January 1, 1917, which resulted solely from large earnings in the manufacture of ship plates for which the war in Europe brought about an unprecedented demand. The receipt of these earnings was entirely dependent on the continuance of the war and the demand for ship plates, and this condition alone made it possible for the receivers to pay from the insolvent estate even the principal of the unsecured claims. The ability of the receivers to make earnings to create an estate sufficient to pay the principal indebtedness of the corporation was not certain until after January 1, 1917. No surplus whatsoever in excess of the principal of the claims against the corporation existed until after that date. Until such surplus existed there was no certainty that any interest would ever be paid and, under the well-established rule in equity receiverships or in bankruptcy, that provable claims of unsecured creditors not entitled to priority do not include interest after the date of appointment of receivers or of filing of the petition, there was no liability to pay any compensation or interest to creditors due to delay in the payment of the principal indebtedness caused by the receivership. Thomas v. Western Car Co., 149 U. S. 95, 116, 13 S. Ct. 824, 833, 37 L. Ed. 663; Sexton v. Dreyfus, 219 U. S. 339, 344, 31 S. Ct. 256, 257, 55 L. Ed. 244; Board of Com’rs of Shawnee County, Kan. v. Hurley (C. C. A.) 169 F. 92, 94, and Tredegar Co. v. Seaboard Air Line Ry. et al. (C. C. A.) 183 F. 289.
In Sexton v. Dreyfus, supra, the court said, “No one doubts that interest on unsecured debts.stops,” and in Thomas v. Western Car Co., supra, the court pointed out that, “As a general rule, after property of an insolvent passes into the hands of a receiver or of an assignee in insolvency, interest is not allowed on the claims against the funds.” In Brown v. Leo (C. C. A.) 34 F.(2d) 127, 128, a bankruptcy ease, the court held that: “It is true that ordinarily the creditors of a bankrupt cannot be paid in full, and that interest on unsecured claims stops when the petition is filed. With the exception of after-accruing interest on the security held, this applies to secured claims as well. Board of Com’rs of Shawnee Co., Kan. v. Hurley (C. C. A.) 169 F. 92 [supra]; Sexton v. Dreyfus and Sexton v. Lloyds Bank, 219 U. S. 339, 31 S. Ct. 256, 55 L. Ed. 244 [supra]. The manifest reason for this is that on that date each creditor has an equitable interest in the bankrupt estate, which is that proportion of the net assets that the amount of his provable claim bears to the total of the provable claims.”
In Pintsch Compressing Co. v. Buffalo Gas Co. (C. C. A.) 280 F. 830, 844, the court *130allowed interest on unsecured claims in an equity receivership only to the day before the appointment of receivers, saying that: “As, in the case at bar, it is apparent that the claims of creditors cannot be paid in full, interest on the principal will run [only] to September 24, 1914.” This rule is applied and followed in Pennsylvania. Jamison & Co.’s Estate, 163 Pa. 143, 29 A. 1001; Murphy Co.’s Estate, 214 Pa. 258, 265, 63 A. 745, 5 L. R. A. (N. S.) 1147, 6 Ann. Cas. 308; Fulton’s Estate, 65 Pa. Super. Ct. 437; Interest on Bonus on Capital Stock, 12 Dauphin Co. Rep. 259; McGinnis v. Corporation Funding & Finance Co. (D. C.) 8 F.(2d) 532, 541; Pearsall v. Central Oil & Gas Co. of America (D. C.) 23 F.(2d) 716.
In the ease of Interest on Bonus on Capital Stock, supra, the court held that interest was not allowable after appointment of a receiver, even upon the claim of the state for a bonus theretofore due on an increase of capital stock. The rule is adopted generally and no departures from it have been found where claims entitled to priority had not been involved. In 2 Tardy’s Smith, Receivers (2d Ed.) p. 1678, after stating the rule relating to creditors with priority claims, it is said that: “However interest is not allowed to members of a class if the class fund is not sufficient to allow interest to all; thus general unsecured creditors, whether their claims bear interest by contract or simply by way of damage for delay in payment, are not allowed interest in case of insolvency.”
In Gillett v. Chicago T. & T. Co., 230 Ill. 373, 82 N. E. 891, 906, a receivership ease, the court said with respect to the claim to interest after appointment of receivers that: “The rights of all the creditors are fixed when the court takes jurisdiction of the property. * * * It is therefore inequitable that interest should thereafter be allowed on the claims where certain of the claims draw interest at one rate and others draw interest at a lower rate or do not draw interest at all. If interest under such circumstances was allowed at the rate fixed by the contract, and the litigation extended, as here, through many years, the mere lapse of time would enable those holding claims drawing a high rate of interest to materially lessen the proportion of the assets which would pass to those holding claims drawing a lower rate of interest or drawing no interest at all. This is not permitted.”
It is only when a surplus has actually been realized from the estate, after payment in full of claims having priority, if any, and after payment in full of the principal due unsecured and general creditors, that the question arises as to the right of these creditors to interest after appointment of the receivers, unless, under some plan or arrangement with the approval of the court, the property and business are turned back to the corporation which agrees to pay all indebtedness and liabilities, as was the ease in American Iron & Steel Mfg. Co. v. Seaboard Air Line Railway, 233 U. S. 261, 34 S. Ct. 502, 505, 58 L. Ed. 949. When a surplus has in fact been realized some measure of compensation is given by the court to these creditors on an equitable basis, after the deduction of which the residue, if any, is returned to the corporation or to the bankrupt. In such ease the rule is established that equity requires such compensation to be given and that only the balance remaining will be awarded to the corporation upon closing the receivership. Johnson v. Norris (C. C. A.) 190 F. 459, L. R. A. 1915B, 884; Ohio Savings Bank & Trust Co. v. Willys Corp. (C. C. A.) 8 F.(2d) 463, 44 A. L. R. 1162. In all such eases, however, the right to interest compensation depends upon whether a surplus has been created over the principal of the claims. The existence in fact of a surplus is the basis of an obligation to pay and the right to receive.
In Re Murray, 6 Paige (N. Y.) 204, quoted and approved in Johnson v. Norris, supra, it was said that: “As to subsequent interest, if the debts-are not paid at that time, and the fund' which is afterwards realized by the assignee is more than sufficient to pay the amount thus found due at the time of the assignment, the interest on all the debts subsequent to the assignment should be paid rateably out of the surplus.” See, also, People v. Merchants’ Trust Co., 187 N. Y. 293, 79 N. E. 1004; U. S. Fidelity & Guaranty Co. v. Carnegie Trust Co., 161 App. Div. 429, 146 N. Y. S. 804, 809; Green v. Stone, 205 Ala. 381, 87 So. 862; First National Bank v. Campbell Co., 52 Tex. Civ. App. 445, 453, 114 S. W. 887; Lippitt v. Thames Loan & Trust Co., 88 Conn. 185, 206, 90 A. 369; Huff v. Bidwell (C. C. A.) 218 F. 6.
The defendant relies almost entirely on American Iron & Steel Mfg. Co. v. Seaboard Air Line Ry., supra, in support of its contention that the interest on the unsecured claims of the insolvent corporation was an accrued liability of the receivers during each of the years from February 6, 1912, to May 28,1917; but we think that ease supports the rule above mentioned rather than the propo*131sition for which it is cited. The question in that ease was whether the American Iron & Steel Company was entitled to interest on its claim for the period of the receivership for supplies theretofore sold to the railroad company on a credit of “30 days, 1 percent. Discount allowed for payment in 10 days.” There was no question as to whether there were sufficient funds to pay interest, and interest had been paid on other claims. The American Iron & Steel Company filed its claims with the special master in receivership proceedings relying upon a statutory lien under the Labor and Supply Lien Statute, Code of Virginia [1887] § 2485, and the special master reported against the allowance of interest on the claim. Subsequently, on the petition of the railway company, a decree was entered approving “a plan of adjustment” of the finances of the company, and providing for the turning back to the company of its property and for the ending of the receivership at a certain time. From time to time during the receivership and at the ratification of the plan of adjustment and as a part thereof all interest due at the time of appointment of the receivers and accruing during the receivership on all the funded and many of the floating obligations of the railway company was paid in full. The amount so paid as interest aggregated some millions of dollars. The decree approving the plan of adjustment provided that the company should pay in due course of business all its obligations, liabilities, and indebtedness and reserved the right, in the event of default in that regard, to any claimant aggrieved by sueh default to present his petition to the court to have his claim enforced “to the same extent as though the receivership had continued.” After the termination of the receivership the steel company filed its petition in the court praying that its exceptions to the special master’s report be sustained and for the enforcement of its claim, including interest thereon during the period of the receivership, and seeking to enforce it not upon the doctrine of an equitable lien but as a statutory lien. The Circuit Court refused to allow interest for the period of the receivership and this action was reversed by the Supreme Court. The railway company insisted that the indebtedness did not bear interest, and that interest could not have been recovered on the claim even in an action at law; that the right to interest was a matter of agreement and could be recovered as a part of the debt only where it had been reserved in the contract or where a -promise was implied from the character of the note or the instrument evidencing the debt; that, whether treated as a part of the debt or allowed as damages, interest could only be charged against the railway company because of delay due to its own fault, and that in this instance the failure to pay was due to the act of the law in taking its property into custody and operating the same hy receivers in order to prevent the disruption of a great public utility. The Supreme Court recognized and followed the general rule that after property of an insolvent is in custodia legis interest thereafter accruing is not allowed on debts payable out of the funds realized by the sale of the property, not because the claims had lost their interest-bearing quality during that period but because of a necessary and enforced rule of distribution, due to the fact that in ease of receiverships the assets are generally insufficient to pay debts in full, and stated, “But that rule did not prevent the running of interest during the receivership; and if as a result of good fortune or good management, the estate proved sufficient to discharge the claims in full, interest as well as principal should be paid” — a proposition which is not controverted in the present case. The American Iron & Steel Mfg. Company Case simply recognizes and applies the rule that interest on interest-bearing indebtedness accumulates during the period of the receivership, which is not quéstioned by plaintiff in the instant case, and that if a surplus exists and the estate proves sufficient to discharge the claims in full, interest, as well as principal, should be paid. Moreover, in the American Iron & Steel Mfg. Company Case, supra, the indebtedness involved was secured by a lien and was a claim “of the highest dignity.” In addition it appears that the question presented in this case was not involved in the American Iron & Steel Mfg. Company Case, — namely, whether interest accrues and becomes an absolute liability of the receivers until there is a surplus, where the estate is insufficient to pay the principal of the indebtedness. In that ease interest of several millions of dollars accruing during receivership was paid by the receivers on the indebtedness of the corporation under the plan of adjustment, under which the property was turned back to the railway company, and the decree of the court; sueh plan and decree provided that the company “should pay in due course of business all its obligations, liabilities, and indebtedness,” and reserved the right, in the event of default by the railway company to pay any sueh obligations, liabilities, or indebtedness, to any claimant aggrieved by sueh default to present its petition to the court to have its claim en*132forced. The railway company was therefore liable for interest on its interest-bearing indebtedness during the period of the receivership, In conclusion, the court said: “As a fact interest was paid on the floating indebtedness, out of earnings made by the receivers appointed first under a bill which asked that the property be taken in charge by the court so that ultimately all creditors would- be paid in full. We must assume that the court had the right to make these payments, and if so it had a like right in the ease of the claim for railway supplies. No question is raised as to the power of the court to require payment of the principal of appellant’s debt, and, if the court could require a payment of the principal, it could also enforce the payment of the interest, which was but an incident of that debt. If the property had remained in the hands of the receiver the lienor might have been permitted to intervene and share in the fund realized hy the sale of property in the hands of receivers appointed, first, on the application of the railway, in the interest of all creditors, and continued by an order entered in the bill to foreclose the mortgage.” (Italics ours.)
In view of the settled principles of law applicable to equity receiverships, as announced in the foregoing cases, we are of opinion that the interest' compensation distributed by the receivers to unsecured creditors from a surplus created after January 1, 1917, did not accrue as a liability under the applicable revenue laws and regulations in any year between February 6, 1912, and January 1, 1917. Lucas v. American Code Co., Inc., 280 U. S. 445, 449, 50 S. Ct. 202, 74 L. Ed. 538; Burnet v. Logan, 283 U. S. 404, 413, 51 S. Ct. 550, 75 L. Ed. 1143. The essentials necessary to constitute accrual of liability or accrual of income under the revenue acts are to be judged by the general rules of law applicable to the circumstances of the transaction in question, and the parties to it, and the rules which have been established by the decisions to test the existence or nonexistence of accrual. From the standpoint of proper reflection of income the payments that were ultimately made by the receivers of plaintiff in the calendar year 1917 under part YI of said decree, so modified, would not, at any time before January 1, 1917, have been stated as a liability, or been included in stating the liabilities as of any time before said date. Such payments would not have been a liability to have been accrued in a statement of liabilities made at any time prior to January 1, 1917. At all times prior to the yéar 1917 the liability of the receivers to pay interest or the right of the creditors to receive the same was only a mere possibility, wholly contingent upon facts and circumstances not possible to foretell with anything like certainty. It is thus apparent that although under a general rule of law there may be a possibility of right in the creditors to receive payment in the future or of obligation of the receivers to pay in the future, as long as the facts and circumstances to determine such possibility cannot be foretold with any degree of certainty there is neither income nor liability under the revenue acts in respect of the subject matter. Lucas v. American Code Co., Inc., supra; Burnet v. Logan, supra. In the circumstances of this case it is our opinion that interest on the unsecured claims of the corporation while in the hands of the receivers was not at any time prior to January 1,1917, an item as to which the rights of the persons to receive it or the obligation of the receivers or the corporation to pay it had become definite, certain, and free from dependency on uncertain future events within the meaning of the revenue acts so that it was either accrued. income to a creditor on the accrual basis ultimately receiving part payment in 1917, or an accrued liability of the receivers or the corporation also on the accrual basis. Any other conclusion would require that the administrator of every estate taken into receivership or bankruptcy, or under assignment for the benefit of creditors, must accrue as a liability a charge for interest on the indebtedness against the estate, whether secured or unsecured, whether with or without hope of payment, and regardless of the insolvency of the estate, provided only that such administrator keeps his books and records and makes the federal tak rate on the accrual basis. Such a view would also require that creditors of an insolvent estate accrue and report as income interest which they might never receive and which is wholly dependent on the course of future events. Lucas v. American Code Co., Inc., supra; North American Oil Consolidated v. Burnet, 286 U. S. 417, 52 S. Ct. 613, 76 L. Ed. 1197; Lucas v. North Texas Lumber Co., 281 U. S. 11, 50 S. Ct. 184, 74 L. Ed. 668; Malleable Iron Range Co. v. United States, 62 Ct. Cl. 425; S. Naitove & Co., Inc., v. Commissioner, 59 App. D. C. 53, 32 F.(2d) 949; United States v. Block & Kohner Mercantile Co. (D. C.) 33 F.(2d) 196; Commissioner v. R. J. Darnell, Inc. (C. C. A.) 60 F. (2d) 82, 84; Great Northern Ry. Co. v. Commissioner, 8 B. T. A. 225; Northwestern Improvement Co. v. Commissioner, 14 B. T. A. 79.
*133The next question raised hy the defendant is that if the interest paid by the receivers in May, 1917, on unsecured claims of creditors of the corporation from a surplus created after January 1, 1917, to the extent of $355,466.24 and disallowed by the commissioner to the extent of $306,168.01 was a proper deduction in 1917, the plaintiff is entitled to a total deduction of only $126,895, or $29,605.94 in excess of the amount of $97,-289.06 allowed by the commissioner as interest accrued in 1917 under the limitation of section 12 (a) (3) of the Revenue Act of 1916 (39 Stat. 768) as amended by the Revenue Act of 1917 (40 Stat. 334, § 1207). We cannot agree. The limitation contained in section 12 (a) (3) of the Revenue Act of 1916 is a limitation upon the amount of the principal of indebtedness applicable as a basis, and not a limitation upon the amount of interest which may be deducted. The principal may not be larger than the paid-up capital stock at the close of the tax year plus one half of the interest-bearing indebtedness then outstanding. The principal upon which interest may be deducted may not be larger than the paid-up capital stock at the close of the year plus one half of the interest-bearing indebtedness at the close of such year.
The obvious purpose of this limitation, which had also been contained in the act of 1913, 38 Stat. 166, has been stated by this court in Brilliant Coal Co. v. United States, 59 Ct. Cl. 481, 492, and, so far as we have been able to find, has not since been questioned, and is as follows: “It was a provision which accomplished a purpose in that it imposed a limitation on corporations having a small capital stock but reaping excessive profits from the employment of borrowed capital in large and disproportionate amounts.” The court also held at page 493 of 59 Ct. Cl., that “a limitation [is] on the principal sum.” It was held that the limitation must be determined by the application of limitation separately as to each year over which the calculation of interest is made on a time basis. The decision on this point has never been questioned. Two points were involved in that case. The first was whether bond interest coupons due in years prior to 1917 but paid in that year were distributable in the return for 1917 and the second was the interpretation of limitation on section 12 (a) (3) of the 1916 act. Although one phase of the decision in that ease seems to have been that the deduction was allowable whether the taxpayer employed the accrual or the cash-receipts basis of accounting, we may disregard this part of the decision since the taxpayer before the court in that case in fact employed the cash receipts and disbursements method of accounting, and, for this reason, the government dismissed its perfected appeal. United States v. Brilliant Coal Co., 269 U. S. 588, 46 S. Ct. 12, 70 L. Ed. 427. As the legal liability to pay the interest on the legal dates of maturity of coupons was fixed and subjected to no contingency, the result on this point would not be followed if in fact the accrual basis of accounting were used. United States v. Anderson et al., 269 U. S. 422, 46 S. Ct. 131, 70 L. Ed. 347; Cumberland Glass Mfg. Co. v. United States, 44 F.(2d) 455, 71 Ct. Cl. 44. However, the construction by the court of section 12 (a) (3) as being a limitation upon the amount of the principal of indebtedness applicable as a basis was correct as applied to a taxpayer on a cash basis or to a ease like the present where there was no fixed liability to pay the interest in any year prior to 1917 and, therefore, no accrual within the meaning of the revenue acts- at any time prior to January 1, 1917. The decision of this court in United States v. Brilliant Coal Co., supra, should therefore be properly considered as one involving a taxpayer on a cash basis who had in the taxable year paid interest on indebtedness including interest coupons accruing in earlier years. On this basis the taxpayer was entitled to the deduction claimed unless reduced by the limitation provided in section 12 (a) (3), supra. The decision of this court, however, is authority that the construction of section 12 (a) (3) now contended for by the defendant is not correct. It follows from the decision in the Brilliant Coal Company Case that even though the taxpayer is on an accrual basis, if the so-called interest was subject to a contingency which prevented it from accruing as a liability until the taxable year in question, the taxpayer is entitled to the deduction of such interest in such year as if it were on a cash basis. The contingency operates in defining the year of a deduction in the case of a taxpayer on an accrual basis to produce the same result as payment in case of a taxpayer on a cash basis. When the taxable year is thus defined the problem of limitation is precisely the same regardless of distinction between a cash and an accrual basis. In each ease therefore the only remaining problem is the limitation. If, as the court decided in the Brilliant Coal Company Case, and the government conceded by dismissing the appeal, the mere limitation .upon the principal sum does not prevent the entire deduction in one case, it does not prevent it in another. That *134decision governs the question presented in this case and the limitation in question does not bar the deduction of the full amount claimed by plaintiff. Arts. 180 and 181, Regs. 33, accord with this view.
We conclude, therefore, that the limitation in section 12 (a) (3) is properly to be considered a limitation upon the principal of indebtedness upon which interest may be deducted, and not upon the amount of interest deductible, provided the amount claimed as a deduction has been paid in the taxable year on a cash basis or has become an accrued liability in such year on the accrual basis, and, if properly applied, the principal of indebtedness limitation be not exceeded in respect of any year drawn into the calculation of interest on a time basis; when so applied the entire amount paid, if upon a cash basis, or the entire amount accrued, if upon an accrual basis, is deductible in such taxable year. The findings show that the present case fully meets the requirements of the limitation and that the total interest claimed as a deduction for 1917 is not affected.
The last question in the case concerns the defendant’s contention that in any event plaintiff cannot recover more than $61,074.80, being the tax and interest paid October 10, November 10, and December 14, 1926 (finding 32), for which a claim for refund was filed March 7, 1928, upon which the commissioner rendered no decision. It is the contention of the defendant that the first claim for refund for $400,000 filed July 14, 1923, related wholly to the computation of the tax under section 210 of the Revenue Act of 1917, and that this court has no jurisdiction of the subject matter of such claim; that the sworn statements of fact and the grounds filed in connection with the first claim for refund on October 2,1924, and April 6,1925, with specific reference to the right to the deduction of the interest involved in this ease, cannot be considered as amplifying or enlarging the ground of the original claim for refund so as to entitle the plaintiff to maintain this suit for the recovery of any portion of the original tax or interest paid.
We are of opinion that plaintiff is entitled to maintain this suit under the claims for - refund made and under the original and amended petitions filed herein, and to recover the total overpayment of $138,237.92 for 1917 and the overpayments of interest collected thereon in the amount of $8,135.53. July 6, 1923, plaintiff filed with the commissioner an application for computation of its . profits tax for the calendar year 1917 under section 210 of the Revenue Act of 1917 on the ground that its invested capital could not be satisfactorily determined, and on July 14, 1923, it filed a claim for refund of $400,000, stating the only specific ground for a refund existing at that time, namely, that the invested capital could not be satisfactorily determined and that the profits tax should be computed under section 210. In addition, the claim also stated as a general ground that “this claim is accordingly filed to protect all rights under section 252 of the Revenue Act of 1921 pending the final disposition of the ease.” The last-mentioned ground was of necessity general because the taxpayer did not know at that time what adjustments the commissioner might make in the audit of the tax liability for 1917 which might offset any overpayment to which it might be entitled under the specific grounds'stated in the claim, and as to which it might desire to amend. See Lewis v. Reynolds, 284 U. S. 281, 52 S. Ct. 145, 76 L. Ed. 293; Bemis Brothers Bag Co. v. United States, 289 U. S. 28, 53 S. Ct. 454, 77 L. Ed. 1011, decided March 13, 1933. The ease proceeded before the commissioner and the plaintiff submitted facts and argument in support of its application for computation of its tax under section 210. In the course of consideration and audit the commissioner allowed the application for computation of the profits tax under section 210 and in September, 1924, advised the plaintiff at a conference on the case that determination under section 210 would be allowed, but, in his opinion, the entire amount of interest paid by the receivers in May, 1927, on claims against the corporation was not a proper deduction for 1917 and that income should be accordingly increased. The question of the propriety of this deduction was first raised by the commissioner in connection with the reduction in the tax paid through the computation of tax under section 210 of the Revenue Act of 1917 and was brought forward by the commissioner as a counterbalancing item against the overpayment resulting from the determination of the tax under section 210; whereupon the plaintiff, on October 2, 1924, prepared and filed with the commissioner a sworn statement of facts and grounds in connection with its claim for refund as an amplification and amendment of the general ground stated in such claim supporting its claim that the deduction of the interest paid in 1917 was proper. The statute of limitation for filing a claim for refund had not expired at this time. The purpose of this enlargement of *135the claim for refund was to protect plaintiff’s right to any overpayment resulting from the allowance of its application for determination of the tax under section 210 and its right to sue for the overpayment thus resulting if the same should he offset by an increase of income through an adjustment in the interest deduction. The first amplification and amendment of the general ground for refund was filed October 2,1924, at the express request of the commissioner and was accepted and considered by him. Thereafter, on March 12, 1925, the commissioner formally advised plaintiff by a letter of that date that he had allowed its application for computation of its profits tax under section 210 which showed a reduction in the tax paid and, in the same letter, advised that income had been increased by the disallowance of a portion of the interest paid by the receivers in 1917 and claimed as a deduction from gross income for that year, which operated to wipe out the reduction in tax liability through the allowance of the application under section 210. This was a preliminary determination, and, upon the receipt of notice, plaintiff immediately renewed its claim that the entire amount of interest paid in 1917 constituted a proper deduction in that year and that the overpayment resulting from a determination of the tax under section 210 should be refunded. On April 6, 1925, also before the statute of limitation for filing a claim for refund for 1917 had expired, plaintiff again filed with the commissioner a detailed statement of facts and grounds in connection with its claim for refund and in support of its contention that the interest deduction was proper. Further hearings were had thereon, at which the issue involved in this suit was fully stated, argued, and submitted to the commissioner and was considered and decided by him. Thereafter the commissioner, on April 9, 1926, made his final determination on the claim for refund, as amplified and amended, in which decision he specifically acted on the issue involved in this case. In this final determination the commissioner computed the tax under section 210 of the Revenue Act of 1917, which action reduced the tax liability, including the interest collected, below the amount which had been collected in cash or by credit, and offset such reduction by increasing the income through the disallowance of $306,168.01 of the interest paid in 1917 and claimed as a deduction in that year. The commissioner’s action in increasing income by disallowing as a deduction a portion of the interest paid in 1917 wiped out the reduction in tax and interest theretofore collected in cash or by credit through the computation of tax under section 210 and showed a further tax of $55,522.55 due for 1917. In his final decision of April 9, 1926, the commissioner disallowed and rejected in full the claim for refund as amplified and amended. In due course plaintiff was compelled to pay and did pay, in October 1926, the balance of $55,522.55, together with interest of $5,552.25, in November and December, 1926. Thereafter, on March 7,1928, plaintiff duly filed a claim for refund of the total of these amounts upon which claim the commissioner took no action.
On April 6, 1928, this suit was instituted. The original petition stated a cause of action to recover the overpayment of tax and interest theretofore collected which would have resulted, had the commissioner not increased income by the amount of $306,168.01 through the disallowance of that amount of interest paid by the receivers in 1917 and claimed as a deduction in that year.
This original petition set forth in substance the facts with reference to the actions taken as hereinbefore detailed. At the time this petition was filed the commissioner had rendered no decision on the second claim for refund of the balance of the tax and interest collected in 1926 and the six months’ period allowed by the statute for such action before suit had not expired and did not expire until after the statute of limitation for instituting suit upon the disallowance of the first claim on April 9, 1928. Thereafter, on September 3, 1929, more than six months after the filing of the second claim for refund on March 7, 1928, and within four years after collection of the tax and interest in October, November, and December, 1926, plaintiff filed an amended petition repeating the grounds set forth in the original petition and also the necessary facts with reference to the payment of the additional tax and interest in 1926 and the filing of the claim for refund thereof.
In these circumstances we are of opinion that the original claim for refund, as amplified and amended, and the second claim for refund fully support the cause of action set forth in the original and amended petitions; that this court has jurisdiction to consider and render judgment under the first claim for refund as amplified and amended under the cause of action stated in the original petition and, also, in the amended petition; and that plaintiff is entitled to judgment for the overpayment of tax and interest resulting from the erroneous increase of income for 1917 *136through the disallowance by the commissioner of a portion of the interest paid by the receivers in that year.
The cause of action stated in the original petition was not based upon the refusal of the commissioner to compute the tax under section 210 of the Revenue Act of 1917. He allowed plaintiff’s application for a determination of its tax under that section and made the computation accordingly. The case of Williamsport Wire Rope Co. v. United States, 63 Ct. Cl. 463; Id., 277 U. S. 551, 48 S. Ct. 587, 72 L. Ed. 985, is not, therefore, applicable. The statutes with reference to the filing of claims for refund and the bringing of suits upon disallowance thereof should not, in a ease of this character, be so construed as to deprive a taxpayer of the right to go in court to recover an overpayment on a ground whieh was fully brought to the attention of the commissioner, and fully considered and decided by him, in connection with a claim for refund. Compare Illinois Terminal Co. v. United States, 53 F.(2d) 904, 73 Ct. Cl. 263; National Fire Insurance Co. v. United States, 52 F.(2d) 1014, 72 Ct. Cl. 517. Ordinarily where a claim or protest filed with the commissioner against a proposed increase of income through the disallowance of a deduction taken on a return would result in an additional tax, it would be necessary for the taxpayer to make payment .and file a claim for refund before suit could be instituted. But where, as here, a claim for refund has been filed and one of the grounds thereof is allowed whieh produces an overpayment and other adjustments in the income are proposed by the commissioner, and the taxpayer amplifies and amends the claim for refund filed so as to draw into controversy in connection with its claim for refund the propriety of such adjustments and the commissioner disallows such claims and contentions, a suit may be legally predicated upon such claims and the action of the commissioner to recover the overpayment that would have resulted from the allowance by the commissioner of the claim for refund in part, but for his action with reference to other items specifically brought to his attention. If it were otherwise, taxpayers who file claims for refund, which are subsequently allowed on the grounds specified, would be denied the privilege whieh we think the statutes clearly intended to give to test the correctness of the commissioner’s action upon a claim for refund where all the facts and grounds made the basis of the suit were brought to his attention and considered and decided by him.
In this case the decision of the commissioner in allowing the claim for computation of tax under section 210, as set forth in the first claim for refund, produced a reduction in the total amount of tax and interest theretofore collected in cash and by credit for 1917 of $85,298.65 and a total overassessment for 1917 of $179,235.37; but this reduction in the tax liability was wiped out by the action of the commissioner in increasing the income for that year through the disallowance of a portion of the deduction for interest taken on the return. The interest item was fully brought to the attention of the commissioner in connection with the claim for refund and the original petition filed in this case stated a cause of action for recovery of the overpayment of $85,298.65 based on the alleged erroneous increase of income by the commissioner in connection with the interest item. . We think, therefore, that the suit was proper.
The balance of $61,074.80 sued for and included in the amended petition arises as a result of a further tax and interest exacted by the defendant as a result of the aforesaid action by the commissioner with reference to the interest item. In due course, after all the requirements had been complied with, the amended petition was timely filed for the additional payments totaling this amount.
Plaintiff is therefore entitled to recover $146,373.45, consisting of an overpayment of tax of $138,237.92 and overpayment of interest collected thereon of $8,135.53. Judgment will therefore be entered in favor of plaintiff for $146,373.45 with interest at 6 per cent, per annum on $67,311.97 from June 15,1918, on $14,351.58 from January 28,1920, on $2,-583.28 from February 3, 1920, on $1,051.82 from February 23, 1924, on $55,522.55 from October 10, 1926, on $4,441.80 from November 10, 1926, and on $1,110.45 from December 14,1926, to such date as the Commissioner of Internal Revenue may determine in accordance with the provisions of section 177 (b) of the Judicial Code, as amended by section 615 (a) of the Revenue Act of 1928 (28 USCA § 284 (b). It is so ordered.
BOOTH, Chief Justice, did not hear this case on account of illness and took no part in its decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218794/ | ERVIN, District Judge.
Defendant Chapman was tried and convicted under an indictment charging him with being an accessory after the fact to H. Edward Jackson and John J. Jackson in an embezzlement of money from a national bank. The court sentenced him for a term of eighteen months. He then filed a motion to correct the sentence because it was in excess of what the court could impose. The contention being that section 551, 18 USCA, does not declare the offense of accessory after the fact but only provides for its punishment. That section 246, 18 USCA, is the only section under which Chapman could have been sentenced.
It is true that section 551 as written does not define the offense of accessory after the fact. It merely declares that: “Whoever, except as otherwise expressly provided by law, being an accessory after the fact to the com*904mission of any offense defined in any law of the United States, shall be imprisoned not exceeding one-half the longest term of imprisonment, or fined not exceeding one-half the largest fine prescribed for the punishment of the principal, or both, if the principal is punishable by both fine and imprisonment; or if the principal is punishable by death, then an accessory shall be imprisoned not more than ten years.”
Conceding that a common-law crime cannot be prosecuted in a federal court until it has been made an offense by a federal statute, the question arises whether the crime of accessory after the fact is so provided for in this statute. It declares that whoever being an accessory after the fact to the commission of any offense defined in any law may be punished in a prescribed manner.
It is true there is no definition of accessory after the fact, nor any statement of facts set up which constitutes the offense of accessory after the fact.
The definition is left to the common law, and is well known. Suppose the statute had read, whoever commits any murder, or larceny, shall be punished in a certain manner, this would be no more certain than the provisions of this statute. There is'no prescribed formula to be used in adopting a common-law offense. This statute accepts the common-law definition of accessory after the fact and prescribes its punishment.
It is further urged that the words “except as otherwise provided by law” leaves the punishment as provided in section 246, 18 USCA.
When we look to that statute, however, it provides for another offense of attempting to rescue a prisoner in custody, or of harboring or concealing a person for whose arrest a warrant has been issued.
This may or may not amount to being an accessory after the fact. This indictment, however, was not drawn under this statute. The fact that an entirely different punishment is provided in this statute shows that it was never intended to embrace an accessory after the fact as provided for in section 551, 18 USCA. Where the only question is, was the accused an accessory after the fact, and it is not required to make him such that the principal defendant has been arrested or a warrant has been issued for his arrest. The sentence imposed was not in excess of one-half the punishment prescribed for an embezzler from a national bank.
The motion will be overruled.
This is the same case as U. S. v. Chapman (D. C.) 3 F. Supp. 900, where the demurrer raised somewhat the same question. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218795/ | BREWSTER, District Judge.
This is a patent infringement suit based upon letters patent No. 1,586,126. The defenses are invalidity of the patent and non-infringement.
Statement of Facts.
(1) On May 25, 1926, letters patent of the United States No. 1,586,126 were issued to the plaintiff on his application filed August 26, 1925.
(2) This patent related to an improved last used in the manufacture of boots and shoes, designed to support the arch of the foot of the wearer.
(3) The first claim of the patent is as follows:
“1. An improved last provided with a longitudinal instep arch extending from the ball of the toe portion to adjacent the rear end of the heel, a recess in the bottom of the last, separate from the longitudinal arch, to permit an arch supporter to be formed in the *905shoe made on said last between the first and fifth metatarsal joints to support the anterior areh of the foot, the longitudinal areh being elongated forwardly of said recess and extending rearwardly to adjacent the rear end of the heel to permit natural positioning of the osealeis in the shoe made on said last, and the outside drop shank and cuboid extension being so constructed as to result in the supporting of the outer longitudinal arch of the foot by said shoe.”
(4) The second claim differs from the first only in that it adds particulars respecting the formation of the recessed portion which adds nothing of a patentable nature to the first claim. The first claim, therefore, adequately defines the invention for which a patent has issued.
(5) This claim is a combination claim embodying (1) longitudinal instep arch, (2) a recess in the bottom of the last separate from the longitudinal arch, and (3) an outer areh.
(6) The inner areh is represented by a cut-away and rounded portion on the inside of, and adjacent to, the bottom of the last. The rounded portion begins at a point corresponding to the ball of the toe and ends at the rear end of the heel, thus permitting the “natural positioning of the osealeis” in the shoo made on the last. Stress is laid by the plaintiff upon the rearward extension of this areh or rounded portion. He says that 'to naturally position the osealeis, or heel bone, the areh should not only extend to its bottom part but slightly beyond it. Ordinaria, the heel bone is tipped a little to the outside, and, by extending the inner areh of the shoe slightly beyond the bottom point of the bone, this naturally outwardly tipped position is maintained. To thus extend the arch would carry the rear end of it to the rear portion of the heel. These details are important, both on the question of patentability of the last and of infringement. It appears from the evidence before me that this rearward extension of the rounded inner portion, in combination with a recess, constituted the advance over the patented art. From the file wrapper it is evident that this feature was urged upon the Patent Office as the patentable novelty in the invention. The significance of the extended inner arch is further demonstrated by the patent which issued to the plaintiff October 12, 192-8 (No. 1,685,-82.7), on shoes made on lasts covered by the patent in suit. In the later patent, it is pointed out that the object of the last is to provide a shoe that will have a greater eupped heel seat than has theretofore been employed. I quote from the specifications:
“Because of the special configuration of my improved shoe made on my novel last, the heel part of the outsole, particularly on. the inside of the areh of each foot, is slightly raised, instead of being substantially horizontal or long as in normal shoe construction. Therefore the heel seat, in order to be fitted with the usual heels, is ‘offset’ to a certain extent. To build up this offset portion and compensate for the same, I apply the wedge member shown in Fig. 3. * * * As shown in Figs. 1 and 3, the corrective wedge member 10 is substantially rectangular in form, and has its point of greatest thickness at the inner heel breast and forward side of the heel where the wedge is exposed. The specific positioning of this wedge is of the greatest importance in the shoe illustrated in the drawings.”
(7) The recess is formed in the ball of the bottom of the last by cutting away a portion to form a depression separated from the rounded portion or inner arch which gives to shoes a corresponding hump in the inner sole. The patentee claims novelty for the position and form of this recess. According to the specifications, the location of this recess is such that the inside portion fits the sesamoid bone and the first metatarsal joint of the foot, while the outside portion fits the fifth metatarsal joint. “This construction provides a transverse arch of proper length and which supports the anterior arch of the foot.” It is claimed by the defendant that, if the last is constructed according to specifications, the recess will be located further forward on the bottom of the last than is shown on the last provided by plaintiff as a specimen of the patented article. The language of the specifications might support this contention. The drawings, however, show the recess at the same place as shown on the plaintiff’s last in evidence. I am unable to find any serious departure in this respect in the commercial last from the specifications upon which the patent is based.
(8) As to the outer arch, the drawings and the last made under the patent show a slight bulging along the outer edge in front of the heel portion. The claim is made for an outside drop shank and cuboid extension, so constructed as to result in the supporting of the outer longitudinal arch of the foot by the shoe. No instructions are forthcoming from the specifications to indicate how the shank and cuboid extension is to be constructed. This part of the claim would seem to *906relate to functions, or results, rather than to means whereby such results may be attained.
(9) The plaintiff had been successful in the trade with shoes manufactured upon his patented last, and the evidence warrants the finding of utility as indicated by the generous reception which the shoe had received from the public.
(10) It must be conceded that the claim is for a combination of elements, each of which was old in the art. The high longitudinal arch is shown in the patent to Selz, No. 1,333,737, March 16, 1920, and to Brown, No. 1,237,464, August 21, 1917. The recess to form an arch support is found in Plumer’s patent, No. 29,225, July 17, 1860, and in Dunbar’s patents, No. 1,121,236, December 15, 1914, and No. 1,174,133, March 7, 1916. Brown’s patent also shows the recess in combination with this inner arch, as also does the patent to Gallagher, No. 1,141,326, June 1, 1915. Plumer and Gallagher were cited by the examiner in rejecting claims first submitted by plaintiff in his application.
(11) It is admitted that the defendant is ‘using in its business of shoe manufacturing a last which plaintiff claims is an infringing article. Its general contour is similar to the patented last. It embodies the inner arch and the recess. It does not show on the outer arch any bulging to correspond with that on plaintiff’s last. There is little or no difference with respect to the form and position of the recess between defendant’s and plaintiff’s lasts, but the former would not strictly conform to the specifications of plaintiff’s patent, since the recess is clearly positioned where, according to experts, it should be, so as to form a transverse arch back of the metatarsal joints. The more important difference between the two lasts lies in the fact that in defendant’s last the rounded portion on the inner side of the last does not extend to the rear of the heel. The heel of defendant’s last is nearly level, only a slight convexity showing. The inner side of the heel toward the front of it is only slightly lower than the outer side, while in plaintiff’s last the slope is quite marked. The result of this departure from the plaintiff’s last is to avoid all necessity for a wedge in the heel, and the shoe made on defendant’s last does not have an unusually cupped heel seat “where the osealcis fits in.”
(12) The defendant has established by olear and convincing evidence, supported by book entries made in the regular course of its business, that in 1906, in 1917, and again in 1920, it was manufacturing shoes on lasts which in no detail differed from the last alleged to infringe. I refer to the so-called Colgate and Lambert lasts. They embodied the same combination of elements which functioned in the same way, achieving the same results.
(13) The use of the lasts which the defendant has employed in its business of manufacturing shoes since 1906 was not a secret use. While the lasts were used only in defendant’s factory, any employee was free to use them as occasion required without any injunction against revealing the details or purposes of the last. The use had passed beyond the experimental stage. The lasts had constituted a part of the regular equipment of the factory for several years prior to plaintiff’s application.
Conclusions of Law.
The defendant attacks the validity of the patent on the ground (1) that the claim of the patent is for’ an aggregation of old elements; (2) that its conception did not involve exercise of inventive faculties; (3) that it lacked novelty; (4) that it was anticipated by lasts which had been in public use more than two years prior to date of application.
While some of the questions raised by these defenses are not wholly free from doubt, I am disposed to resolve the doubt in favor of the plaintiff. As a patentee, he is entitled to a presumption of validity, which is to some extent, at least, strengthened by the fact that some of the prior patents cited by the defendant were considered by the patent examiner, Diamond Rubber Company v. Consolidated Rubber Tire Co., 220 U. S. 428, 31 S. Ct. 444, 55 L. Ed. 527; Trico Products Co. v. Apco-Mossberg Corp. (C. C. A.) 45 F.(2d) 594, as well as by the utility of the invention, as indicated by public acceptance, Temco Electric Motor Co. v. Apco Mfg. Co., 275 U. S. 319, 48 S. Ct. 170, 72 L. Ed. 298; Trico Products Corp. v. Rico Mfg. Co. (D. C.) 45 F.(2d) 599; Trico Products Co. v. Apco-Mossberg Corp., supra; Gotham Silk Hosiery Co., Inc., v. Artcraft Silk Hosiery Mills, Inc. (D. C.) 1 F. Supp. 643.
The plaintiff entered a field where any advance, although slight, in the method of making shoes to meet abnormalities or deformities of the human foot, might well be regarded by orthopedic surgeons as a real contribution to the art, and such advance would necessarily involve something more than mere mechanical skill. The improvement in plaintiff’s last over those theretofore known or *907used lay in the extension of the rounded portion of the inner arch to the rear of the heel portion, in combination with a recess, thereby giving a shoe with a greater cupped heel seat and a heel that necessitates the use of a wedge properly positioned. This was the feature of his last for which a claim of novelty was urged upon the patent officials.
As to the question of anticipation, I have found that the defendant’s last, which plaintiff claims is an infringement of his patent, differs in no respect from several of those which the defendant had openly used between 1906 and 1923. There is a statement appearing in the decisions that “that which infringes, if later, would anticipate, if earlier.” See Shevenell v. Geo. J. Kelly, Inc. (D. C.) 19 F.(2d) 791. But Walker, in his work on patents, points out that this “epigrammatic formula” may be too broad, depending on whether the patent relied upon is a primary or secondary patent. He states that, “If the competing contrivance turns out to be earlier, it may have no effect upon his patent, except to relegate it to the secondary position in the art, and thus to limit its claim so narrowly that the competing contrivance does not infringe it.” Walker on Patents (5th Ed.) pages 77, 78, § 62. This rule is the one to be applied in the case at bar.
Prior patents and prior devices actually in use conspire to limit plaintiff’s patent to an extremely narrow compass,' and clearly relegate plaintiff’s patent to a “secondary position” in the field of shoe manufacturing.
The basic idea of supporting the transverse or metatarsal arches by employing' lasts with a depression in the bottom has been known since 1860. The combination of the recess with an accentuated inner arch was also old. Whatever of novelty is to be discovered in plaintiff’s invention resides in the specific type of inner arch in' combination with a recess and an outward bulging along the outer edge of the last. The plaintiff’s claim thus narrowly construed is not infringed by defendant’s last. Defendant’s last does not embody the particular types of inner arch formed by extending the rounded portion of the bottom of the last to the rear of the heel, nor does it show the outward bulging.
I conclude, therefore, that the patent to plaintiff is valid, but that he is not entitled to the relief prayed for, since he has not established an infringement of the claims of the patent when properly limited.
A decree dismissing the bill may be entered. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218796/ | JAMES, District Judge.
The libelant has asked for an order referring the issues made by the pleadings to a commissioner or master to take the testimony and report findings. Counsel for respondent formally objected to an order of reference, stating that his particular reason is that he believes it beyond the power of the court to make the order asked for. The libelant taking notice that the calendar of the court, both in this division and in the divisions of the other District Judges, are heavily congested, and that in the ordinary course a trial before the judge cannot be had within at least a year from this date, urges especially that certain witnesses, seagoing *908men, are about to depart from the district, and that there are no funds to pay the costs of taking depositions. He does state, however, that funds could be supplied to pay the costs and fees before a commissioner. Further reason is given that the receiver libel-ant is desirous of closing his receivership and that this libel suit is the only pending matter which interferes. Admiralty Rule 46 (28 USCA § 723), provides that “In all trials in admiralty the testimony of witnesses shall be taken orally in open court, except as otherwise provided by statute, or agreement of parties.” Admiralty Rule 43 (28 USCA § 723), provides that “in cases where the court shall deem it expedient or necessary for the purposes of justice, it may refer any matters arising in the progress of the suit to one or two commissioners or assessors, to be appointed by the court, to hear the parties and make a report therein. And such commissioners or assessors shall have and possess all the powers in the premises which are usually given to or exercised by masters in chancery in references to them, including the power to administer oaths to and examine the parties and witnesses touching the premises.” These rules parallel closely in their requirements the rules governing equity practice. Equity Rule 46 (28 USCA § 723) provides in part “In all trials in equity the testimony of witnesses shall be taken orally in open court, except as otherwise provided by statute or these rules. * * *” Equity Rule 59 (28 US CA § 723) contains this provision “Save in. matters of account, a reference to a master shall be the exception, not the rule, and shall be made only upon a showing that some exceptional condition requires it. * * * ”
Judge Hough, in the Second Circuit, in the Matter of The Spica (C. C. A.) 289 F. 436, 439, states: “Doubtless, although not specifically so authorized by rule or statute, an admiralty court may send to a commissioner or the like the ascertainment of any special set of facts; but the report is merely advisory, the power of final decision being in the tribunal to which the report is made. * * * But no party has a right to a reference; the court is empowered to try each and every part of every case, if so minded. * * * And since equity and admiralty derive their respective methods from a common source, it is as true in admiralty as in equity that: ‘It is not * * * competent for the court to refer the entire decision of a case toi (a master or commissioner) without the consent of the parties. It cannot, of its own motion, or upon the request of one party, abdicate its duty to determine by its own judgment the controversy presented.’ Kimberly v. Arms, 129 U. S. 512, 524, 9 S. Ct. 355, 359 (32 L. Ed. 764); Garinger v. Palmer, 61 C. C. A. 436, 126 F. 906. The commissioner in this ease could only have proceeded to try the whole case by consent. * * * ” See, also, Benedict on Admiralty, vol. 1 (5th Ed.) § 176.
The practice ordinarily in admiralty is to refer only that branch of the case which presents questions of accounting or ascertainment of the amount of damages. So it is in equity. However, it has been recognized that a court, where unusual conditions are present, may in equity refer the taking of testimony on all issues involved to a special master. Such an instance was presented in this court in a patent ease, one party desiring an early trial and the other party objecting to the reference. The condition of the court’s calendar was such that a trial could not be had for many months, and it reasonably appeared that the party desiring an early hearing might suffer a large amount of damages in the event the case was not speedily disposed of. I made the order of reference in that case, and the objecting party took the matter to the Supreme Court of the United States on petition for a writ of mandate to set aside the order of reference. The Supreme Court, by Chief Justice Taft, justified the action as not amounting to an abuse of discretion in the particular circumstances shown. The case is Los Angeles Brush Manufacturing Corporation v. James, 272 U. S. 701, 47 S. Ct. 286, 289, 71 L. Ed. 481, from which I quote the following:
“Of course courts must exercise a discretion in reference to the order of business to be conducted before them, and all the eases cannot be heard at once. It is in the interest of economy of time that there should be hearings, first in. one class of cases, and then in another, provided each class may be given an opportunity within a reasonable time. Arguments based on humanity and necessity for the preservation of public order require that criminal eases should be given a reasonable preference, but even this must be conceded with moderation, and what time there is of the court in view of the whole docket must be equitably distributed. The reason given in the order for referring these cases to a special master is that there is congestion in the court’s calendar and that there are many other cases entitled to be heard first, including a large number of criminal causes which should be preferred over civil eauses as to the trial thereof, that other civil litigation has *909not been accorded a fair proportion of the time of the court, and that the condition will continue unless many of the patent eases, including this cause, be disposed of by sueh a reference.
“In view of the recitals of the order, we are not inclined to infer that there has been any deliberate abuse of discretion in this matter or to hold that there may not sometimes be such congestion) in the docket as to criminal' cases as would justify a District Judge in not literally complying with the requirements of the two rules in question. There has been an emergency due to a lack of judges in some districts which we cannot ig- • nore. We shall therefore deny leave to file this petition, but are content to state our views on the general subject, with confidence that the District Judges will be advised how important we think these two rules are, and that we intend, so far as lies in our power, to make them reasonably effective for the purpose had in view in their adoption.”
In my view of the matter, the observations of the Supreme Court as made in the ease last cited are equally applicable to suits in admiralty. It is to be noted that the court cautions the trial judges that a reference should be made only where there are most unusual conditions present. I am not able to conclude that the order should be made in this ease. Counsel for respondent expressed in open court a willingness to have depositions taken, and in that regard the libelant answers only that there are no funds with which to pay the costs of taking depositions. It is stated, however, that funds may be obtained with whieh to pay the costs of proceedings before a master. In my view of the matter, the expense involved in a master’s or commissioner’s hearing will at least equal, if not exceed, the costs of taking depositions. The commissioner or master will be entitled to a per diem, usually of $50; a reporter must be employed and a transcript of the testimony must be taken and returned to the court.
The second matter as to the necessity to close the receivership of Linde has weight. However, if the depositions of the parties who intend to leave the district are taken, and a motion thereafter to set the cause is . presented to the court, I shall endeavor to find a place to hear the remaining testimony at some date not far in the future, even though the result is to displace some case already set for trial, as to which there is not the same necessity for early hearing;
- The motion to refer the ease to a eommissioner is denied. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218797/ | ANDREW M. J. COCHRAN, District Judge.
This suit is before me upon final'hearing and for decree. Plaintiff seeks thereby to recover a personal judgment against the defendant National Bank of Kentucky for the sum of $857,096.50 with interest from October 11, 1930, until paid; to have same allowed as a claim against its assets in the hands of the defendant Paul C. Keyes, its receiver; and that it be adjudged a lien on the Lincoln Bank property in Louisville subject to a vendor’s lien thereon in favor of the Lincoln Bank & Trust Company for the sum of $109,000 to secure payment of that sum; and that said property be sold to satisfy that lien.
The right to such personal judgment is based on an alleged oral contract of sale made by plaintiff to the defendant bank, June 21, 1929, of a certain lot or parcel of land on the north side of Market street in Louisville, Ky., upon which a building had recently been erected for use in banking and trust business, which it then owned, for the sum for which judgment is sought, which contract plaintiff claims is evidenced by a memorandum or note in writing signed by it, and possession of which property, it is alleged, was delivered by it to such defendant, October 11, 1930. The defendants have it that it is a suit to compel specific performance of such contract. If such be its real nature it is not so pitched. Pending the suit the property which was the subject of sale was, by the agreement of the parties, exchanged for the Lincoln Bank property subject to the lien for $109,000; with the same right against such property that was had against the property which was the subject of the sale.
The principal defenses relied on are that there was no contract of sale and, if there was, it was not evidenced as alleged. I will first consider whether in fact there was a contract of sale. The determination of this question calls for a detailed statement in chronological order of certain facts, most of which are undisputed. In the early part of 1927 plaintiff was engaged in carrying on a trust and banking business at the southwest comer of Fifth and Market streets in Louisville in a building which it owned. The defendant National Bank of Kentucky was engaged in carrying on a banking business in a building on the northeast comer of Fifth and Main streets in Louisville under a lease. In April, 1927, the two institutions were unified through their stock, all the stockholders in each becoming stockholders in the other. The stock was placed in the hands of trustees, and the stockholders received trastees’ participation certificates in lieu of their stock. The board of directors in each was identical, but each retained its separate and distinct identity as a corporation. They were officered by different individuals. John Stites was the president of the plaintiff and James B. Brown of the defendant bank. Mr. Brown was the dominant personality in bringing about this unification. There was in Louisville another institution known as the Louisville National Bank & Trust Company. Between March, 1928, and April, 1929, it had erected the building at 421 West Market street, which, and the land on which it stands, was the subject-matter of the oral contract claimed by plaintiff, at a cost including the land of $857,096.50, exclusive of cost of supervision by its president and interest on the investment. In April, 1929; that institution was merged with plaintiff. Its directors became directors of plaintiff, and its president, Richard Bean, became plaintiff’s president. Thereby plaintiff became the owner of No. 421 West Market street property in addition to that occupied by it on the southwest comer of Fifth and Market in which it had been and was then doing business, i. e. of two buildings on Market street; not far apart. It only needed one. That such would be the result of the merger was a substantial objection to it, and objection thereto on this ground was made. The merger was brought about by the defendant bank. It was on its recommendation that it was made. Mr. Brown, president of the defendant bank, met the objection by the assurance that the defendant bank would buy one or the other of the two buildings and by so doing would solve the problem of its home. That this took place was testified to by Mr. Dodd, one of plaintiff’s directors, and Mr. Bean, its president. There can be no question as to the admissibility of this testimony and its reasonableness makes certain that it did take place. It is hardly conceivable that plaintiff would *912have become the owner of two buildings, when it only needed one, except for such assurance, and it was reasonable for the defendant bank to acquire one of them and change its plaee of business to it. It was occupying as a tenant an old building on the northern edge of the city. Its standing and pretentions called for a more modern building further up in the city. It is not against this having taken place that there is no mention of it in the minutes of the meetings of the board of directors of either institution. The defendants have it that plaintiff claims that the assurance was that the defendant bank would purchase the 421 West Market street building and that it was one of the terms of the consolidation between the plaintiff and the Louisville National Bank & Trust Company. They characterize it as an attempt to inject or interpolate this into the terms thereof covered by a written contract by parol testimony. Such is not plaintiff’s claim. Its claim is that the assurance was that the defendant bank would take one or the other of the two buildings, it not being then determined which one, and it does not claim that it was one of the terms of that consolidation. Manifestly it was not. It had no place in those terms. It was simply the inducement which led the plaintiff to go into the consolidation. The significance of this circumstance is in its bearing on the question as to whether the defendant bank did subsequently agree to purchase the 421 West Market street building and, if it did, as an equitable consideration for it standing by its bargain. That such assurance was given is one of the sure things of this ease. The entry of the plaintiff into the consolidation cannot otherwise be accounted for and the circumstances were such that it was to the interest for the defendant bank that it acquire one or the other of these two buildings. It is not against its having taken place that plaintiff moved into the building at 421 West Market street on May 24, 1929, held a public reception in the afternoon of that day, and celebrated it with a banquet and speeches at the Pendennis Club that night. It had not then been determined that the defendant bank would take that building, and for aught that appears it was the then contemplation that it would take the other building. It was not until after May 24, 1929, and between that date and June 19, 1929, that it was definitely conceived that the defendant bank would take the 421 West Market street building. It was determined that it should at a conference on that day between Mr. Bean and Mr. Brown. They agreed to recommend to their respective boards that the defendant bank purchase that property at what it had cost. The two boards met on the afternoon of June 21, 1929, plaintiff’s board at 2:30 p. m. and defendant bank’s board at 3 p. m. At the meeting of plaintiff’s board, Mr. Bean, its president, was authorized to offer the property to the defendant bank at that priee. At the meeting of the defendant bank’s board Mr. Bean made the offer and that board accepted it. There can be absolutely no question that this took place. It is testified to distinctly and positively by six of plaintiff’s directors and Mr. Bean. That the offer was made and accepted by the defendant bank’s board is evidenced by the minutes of their meeting. According thereto this took plaee at that meeting: “The Louisville Trust Company offered to sell to the National Bank of Kentucky the property now occupied by it known as 42.1 West Market Street for eight hundred & fifty thousand ($850,000.00) dollars, more or less, which offer was accepted. It was agreed that the National Bank of Kentucky shall occupy said property and that the Louisville Trust Company shall occupy the building at the southwest comer of 5th & Market Streets; and that the removal to the respective locations shall be made as soon as the necessary alterations to said building at Fifth & Market Streets are completed.”
The only thing against the claim that this contract was so authorized and entered into is the denial of Mr. Brown and the absence of any mention on the minutes of the plaintiff of Mr. Bean being authorized to make the offer and the testimony of its secretary that the minutes of the meeting of June 21,1929, cover all that then took plaee. No weight eari be given to the testimony of Mr. Brown because of its unreasonableness. The fact that Mr. Bean was so authorized did not have to •appear on the minutes of the meeting. Parol evidence of what took place is admissible. Bank of U. S. v. Dandrige, 12 Wheat. 64, 6 L. Ed. 552; Pittsburgh, C. & St. L. R. Co. v. Keokuk & H. Bridge Co., 131 U. S. 371, 9 S. Ct. 770, 33 L. Ed. 157; Jacksonville, etc., R. Co. v. Hooper Bridge Co., 160 U. S. 514, 16 S. Ct. 379, 40 L. Ed. 515; U. P. R. Co. v. Chicago, R. I. & P. R. Co., 163 U. S. 564, 16 S. Ct. 1173, 41 L. Ed. 265; 2 Thompson, Corp. § 1206.
The fact that no mention of the authorization was made on plaintiff’s minutes may be due.to the informal manner in which it came about. It is possible that it may just have been talked over in the meeting and an understanding had that the offer be made, without any further motion and vote to that effect. *913The witnesses differ somewhat as to just how it came about, a difference which is not material in view of the time that had elapsed from the transaction at the time they testified.
Something else transpired at the meeting of the board of directors of defendant bank on June 21, 1929, which strengthens the position that on that occasion Mr. Bean made such offer and those directors accepted it, thus bringing about a contract of sale and purchase of the 421 West Market street property. According to the minutes of that board of that date these resolutions were adopted by it:
“Resolved that it is the sense of this Board that a corporation of the character as outlined by the President at this meeting be formed.
“Resolved, further, that the President be and he is hereby requested to report to the Board sueh details as may be necessary in connection with the organization of said corporation, together with all matters connected therewith.”
After May 24, 1929, and before June 19, 1929, the defendant bank’s president, Mr. Brown, had a vision of greatness. It was that a corporation be formed to acquire and operate a chain of banks, into which chain the defendant bank and the plaintiff should go-, by their stockholders transferring their trustees’ participation certificates to sueh corporation in exchange for stock in it. It was a corporation of this character which Mr. Brown«outlined at this meeting and to which those resolutions had reference. The defendants correctly interpret these resolutions as the “Birth of Banco Kentucky.” That corporation was subsequently created, organized, and put into operation pursuant to these resolutions. The exact date when this came about does not appear, but it was some time before January 1, 1930. No doubt it was contemplated at the time of the sale that this new institution should be housed in the same building with the defendant bank. It was this proposed venture which rendered it desirable for the defendant bank to acquire the 421 Market street property and which brought about the agreement between Mr. Brown and Mr. Bean on June 19, 1929', and the actual sale thereof by plaintiff to the defendant bank on June 21, 1929, as shown by its minutes. This accounts for plaintiff’s willingness, so shortly after it had celebrated its occupancy of the 421 West Market street property with sueh eclat on May 24, 1929, to surrender it to the defendant bank and go back to its more modest quarters on the southwest comer of Fifth and Market streets. The contract of sale as evidenced by the minutes of the board of directors of defendant bank on June 21, 1929, provided that the execution of it should take effect as soon as the necessary alterations to said building at Fifth and Market streets were completed. Immediately thereafter the plaintiff invited in two architectural firms, one from St. Louis and the other from Chicago, and a third one from New York came without their invitation to submit a layout of the bank floor covering the full alterations to that building in order to make it habitable for the plaintiff. The outcome of this was that a plan of the alterations was provided for plaintiff and adopted and approved by it. This no doubt took some time, just how long not appearing.
In the meanwhile Mr. Brown on behalf of the defendant bank conceived the idea of denationalizing it by converting it into a state bank. Just when this idea was conceived does not appear. Likely some time before October 7,1929, for on that date a step looking to this end was taken. It remained under consideration until March 21, 1939, when it was definitely abandoned, though it must have been realized that it could not have been carried out much earlier. The thought of so doing seemingly came about because Mr. Brown was fretting under criticisms by the comptroller. If this project had eventuated the defendant bank would have become a state institution the same as plaintiff and the way would be open to a consolidation of the two institutions into one, which was contemplated. But one building in that contingency would have answered its purposes. Of course, as long as it was thought that this project involving this possibility would be carried out, no effort would be made to carry into execution the contract of June 21, 1929. During this time no sueh effort was made and the plan as to making the alterations in the building on the comer of Fifth and Market streets and adopting it to plaintiff’s use was held up. There is nothing in all this that has the slightest tendency to show that no contract was entered into on June 21,1929, or if there was it was abandoned. Matters were left simply in statu quo, until the outcome of this project was known. If it had materialized it is not unlikely that the contract would not have been carried out. The defendants introduced in evidence a letter ‘from plaintiff’s president, Mr. Bean, to Mr. Brown dated November 23, 1929, in which he said: “Will you be kind enough to see Dinwiddie Lampton and try to *914get Him interested in buying the Louisville Trust Building at Fifth & Market.”
It is claimed that this letter shows that in Mr. Bean’s mind there was then no contract in existence and that it absolutely proves that there was no contract made in June, 1929. It has no such bearing. Through following the recommendation of the defendant bank plaintiff had on its hands two buildings when it needed but one. It is likely that the building on the comer of Fifth and Market streets was vacant at least so far as the first floor, which it occupied, was concerned. It was natural that Mr. Bean would desire to have plaintiff relieved of this burden. It is not unlikely that it was then thought that the project would go through, an outcome of which would be the consolidation of plaintiff with it, in which ease but one building and that at 421 Market street would serve the purpose of the consolidated institution; and thus,do away with the execution of the contract of sale of June 21, 1920. This letter has no other significance than this. It does not witness that there had never been a contract or that the contract had been abandoned. It merely witnessed that it was the thought at :that time that it was probable that the contract would not be carried out because of a turn in affairs of the two institutions rendering it unnecessary.
This project, as stated, was not definitely abandoned until March 21,1929. It was practically abandoned on or before January 10, 1930. At that time Banco Kentucky had come into existence. It was the owner of 95 per cent, of the trastees’ participation certificates which represented the stock of the two institutions. At a meeting of its directors, who were the directors of the two institutions, a resolution was adopted authorizing the president to appoint a committee to report their recommendations as to whether a saving could not be effected by housing both ■institutions in the same building, i. e. that at 421 West Market street, the defendant bank thereafter confining its business to commercial -banking' and plaintiff to trust business only, •the report to be made on January 13, 1930. The president appointed Mr. Bean, president of plaintiff, and Mr. Jones, vice president of the bank, as that committee. They reported at a meeting held on that date that they were unable to agree and no action was taken as to the proposed housing. All that was done was to adopt a resolution calling on the two concerns to reduce expenses. A meeting of the directors of plaintiff was held on the same ■date. At that meeting it was decided “that the two institutions continue to operate as they then were as separate institutions and further that the plaintiff remodel its old building at Fifth & Market streets as rapidly as possible, after the completion of which it shall move into said building and the National Bank of Kentucky move into the new building* at 421 West Market street at present occupied by the Louisville Trust Company, the National Bank of Kentucky taking over said building from the Trust Company as previously agreed upon by their respective Boards.” The minutes of this meeting were signed by the chairman of the board and its secretary. Here was an express recognition of the contract of sale of June 21, 1929, and that it was still in force.
On January 14, 1930, the regular election of directors for the two institutions were held and separate directors for each were chosen. Thereafter there was no person a member of both boards except Mr. Brown. At a meeting of the plaintiff’s board an executive committee was chosen. That committee met February 7, 1930. The minutes of that meeting state that: “Mr. Bean read a prepared interview with newspaper reporters in which announcement was made of the bank’s intention to move back to the old building at Fifth & Market and the Bank of Kentucky to move into the building at 421 West Market street and the committee authorized him to furnish the interview to the newspapers.”
That interview was published in the issue of the Louisville Herald-Post of February 8, 1930. It was headlined so as to draw attention to it. It set forth in detail the program to be followed by the two institutions and contained therein these words: “The National Bank of Kentucky has purchased the new building at 421 West Market Street, the present home of the Louisville Trust Company.”
Thereupon plaintiff proceeded to the remodeling of the building at the comer of Fifth and Market streets, its old home. It completed the work about October 1, 1930, and on October 14,1930, it vacated the premises at 421 West Market street and moved into the remodeled quarters at Fifth and Market streets. These improvements cost it about $250,000. That it spent this amount of money in remodeling its old home and vacated the premises at 421 West Market street is of overwhelming significance in establishing the fact that it had sold those premises to defendant bank on June 21, 1929. It is inconceivable that it would have so done if there had not been such a sale. In any other view of the matter such conduct on its part *915would have been utter recklessness. Furthermore, it establishes that the defendant bank and Mr. Brown, its president, so understood the matter. They must have known that plaintiff was proceeding on this idea and they would not have allowed it to go ahead under a misapprehension in regard to it.
In anticipation of vacating the premises at 421 West Market street on August 25, 1930, the plaintiff wrote defendant bank a letter in which it stated: “A survey just made by the architect and contractors shows that we can get into the building on Oct. 1. Therefore, we are giving you formal notice that the building at 421 West Market street will be ready for you on that date. In the meantime you will want your auditor to verify the cost figures on our building and you will want your attorney to examine the title. We will be glad to furnish these details whenever you are ready for them. We await your instructions.”
In a postscript it said: “The first day of the month is an unfortunate time to change locations so let us make the move effective Monday Octo. 8th.”
Again on September 22, 1930, plaintiff wrote defendant bank a letter in which it stated: “Attached is our bill against your bank, which we have dated October 6, because on that date we will turn the building over to you. ' In the meantime. I imagine you will want to.cheek up our cost figures and they are available whenever you want them. See Mr. Troxler, please. If you will select your attorney to look after the proper transfer of the property we will be glad to work with him.”
The bill attached was for the sum of $857,-096.50.
The plaintiff after this wrote the defendant bank four letters as to certain details in regard to the premises based on the idea that there had been a sale and defendant bank was soon to take possession of the premises under it. They were dated October 6,1930, .October 7, 1930, October 7, 1930, and October 10, 1930.
All these letters were received by the defendant bank but none of them were answered. The reason for this was inability on its part at that time to pay for the property according to the contract. That it did not in this condition of things answer these letters and deny that there had been a contract of sale and claim that it was under no obligation to take the property can be accounted for on no other ground than that it could not truthfully make such denial and assert such claim. That there was such contract and defendant bank was under such obligation is further borne put by the fact that defendant bank took possession of the premises on or about October 14, 1930. Beginning on that date it actively conducted the business of renting the safety deposit boxes in the vault. From and after that date it employed and paid the superintendent of the vault and the other employees connected therewith. It furnished the superintendent with printed forms used-in the operation of the vault, including a form card or application to be signed by the box holder who desired to enter his box, which forms were in its name. The rentals collected from box holders from and after October 14 were credited to the vault department of the defendant bank. These rentals prior to that time were deposited with plaintiff. November 1, 1930, the superintendent reported to the defendant bank the rentals collected for the month of October, 1930, amounting to $1,017.70. Of this amount $528 had been turned ovér to plaintiff on account of collections to October 14,1930, and $489.70 to the defendant' bank on account of collections from October 14,1930, to November 1, 1930. The securities deposited by a customer, W. L. Lyons & Co., were transported from the vault to them by the employees of the plaintiff up to October 14, 1930, and thereafter by the employees of the defendant bank. The defendant bank signed and delivered to the Louisville Gas & Electric Company a written contract for steam heating for the following winter. The defendant bank assumed control of this property on October 14,1930. From the time the plaintiff moved out on that date the board meetings of the defendant bank were held in the board room of those premises. It never, however, moved its banking business to 421 West Market street. At a meeting at the home of Mr. Brown on November 11th, he gave as a reason for the bank not moving that business into that building was that immediately upon its doing so the plaintiff would at once present a bill for the purchase price. Mr. Brown was urged at that meeting to move promptly into that property and on the next day announced in the Louisville Herald-Post that the removal would be made on December 1, 1930, and the announcement was accompanied by a picture of the building on the first page. This did not happen because on November 17, 1930, the defendant bank was closed by the comptroller. At the same time plaintiff was also closed by the state authorities.
These facts which I have recited in great detail establish beyond question that on June *91631, 1929, plaintiff and defendant bank entered into a contract by which, the one was to sell and convey 421 West Market street property to the other for $857,096.50 and that under that contract the defendant bank took the actual possession of the premises and was in such possession thereof at the time of its failure and on the appointment and qualification of the defendant receiver that possession passed to him.
There is nothing left to be done except to present and consider the grounds upon which defendant claim that the plaintiff is not entitled to the relief which it seeks. There are five of them.
1. That there was no contract between plaintiff and defendant bank for the sale of the 421 West Market street property by the one to the other on June 21, 192,9. It is established beyond reasonable doubt that there was such a contract. It is evidenced by the minutes of the meeting of its board of directors of that date. It is testified to positively and distinctly by six or seven reputable persons, by the minutes of the meeting of plaintiff’s board of directors on January 13, 1930, at which defendant bank’s president and board of directors were present, and by the minutes of the meeting of plaintiff’s executive committee of February 7, 1930, and the publication in the newspapers of February 8, 1930. Then come certain facts and circumstances which speak louder than words: The remodeling of the premises at the southwest comer of Fifth and Market streets by plaintiff at a cost of $260,000' with a view of occupying them on the completion of the work and vacating the premises at 421 West Market street. The failure of any one on behalf of the defendant bank to deny that there had been a sale in response to the letters from plaintiff to the defendant bank beginning August 25, 1930. The taking possession of those premises by the defendant bank on October 14, 1930, and the announcement in the newspapers on November 11, 1930, that the defendant bank would on December 1, 1930, move its banking business to those premises. These facts and circumstances are inexpiain•able on any other basis than that there was the contract of sale made on June 21, 1929‘. During all this time, i. e. from June 21,1929; to November 17, 1930, there was not a word said on behalf of defendant bank denying that there had been a contract of sale.
As against this overwhelming mass of evidence establishing the faet of sale there is nothing but the merest quibbling, which calls for no response from me. The defendants will have to accept it that the evidence establishes this fact as absolutely true. It is impossible for them to wriggle out of it.
2. Defendants claim that the requirement of the statute of frauds of this state, section 470, Kentucky Statutes, has not been satisfied. That statute provides: “No action shall be brought to charge any person * * * upon any contract for the sale of real estate * * * unless the * * * contract * * '* or some memorandum or note thereof, be in writing, and signed by the party to be charged therewith, or by his authorized agent; but the consideration need not be expressed in the writing; it may be proved when necessary, or disproved by parol or other evidence.”
The “party to be charged” is the vendor, and the provision has in view only an action against him on his contract for sale. It does not have in view an action against the vendee for the purchase price. The pertinency of the statute to such an action against the vendee is that if, because of it, no action could have been brought against the vendor, it follows that one cannot be brought against the vendee for want of mutuality. So it is that in every action brought by .a vendor of real estate against the vendee for the purchase price the former must make out that the latter could have brought an action against him for the real estate. Such is the ease here. The plaintiff is the vendor and it must make out that the defendant bank, the vendee, could have brought an action against it. In order to do this the contract in suit or some memorandum or note thereof must have been in writing and signed by the plaintiff or its authorized agent. The contract was not in writing. It was oral. Hence the question is whether there was such a memorandum or note. It is not necessary that it was made contemporaneous with the oral contract. It is sufficient that it was made any time before this action was brought. Nor was it necessary that it was made with the intent of making a memorandum. Williston on Contracts,, vol. 1, § 567.
Nor is it necessary that the memorandum or note show the consideration for the sale. It is sufficient that it shows that there was a contract of sale, that the plaintiff was the vendor and the defendant bank the vendee, and that the subject-matter of the contract was No. 421 West Market street, Louisville, Ky. In the case of City of Murray v. Crawford, 138 Ky. 25, 127 S. W. 494, 496, 28 L. R. A. (N. S.) 680, it was said: “The purpose of the statute is to protect the holders of title *917to realty from alleged verbal agreements for its sale.” The plaintiff relies on eight distinct writings, to wit, the minute of the meeting of the plaintiff’s board of directors on January 13, 1930, which was signed by the chairman thereof and its secretary; the minute of the meeting of the executive committee of the plaintiff February 7, 1930, also duly signed; and the newspaper article to which it refers; and the letters from plaintiff to defendant bank dated, August 35, 1930, September 22, 1930, October 6, 1930, October 7, 3 930, October 7, 1930, and October 10, 1930.
That the minute of a meeting of the board of directors of a corporation duly signed satisfies the statute is well settled. 25 R. C. L., Statute of Frauds, § 273; Lamkin v. Baldwin & Lamkin Mfg. Co., 72 Conn. 57, 43 A. 593, 1042, 44 L. R. A. 786; Tufts v. Plymouth Gold Mining Co., 14 Allen (Mass.) 407; Argus Co. v. Albany, 55 N. Y. 495, 14 Am. Rep. 296; Western Timber Co. v. Kalama R. L. Co., 42 Wash. 620; 85 P. 338, 6 L. R. A. (N. S.) 397, 114 Am. St. Rep. 137, 7 Ann. Cas. 667. The case of Cumberland, etc., R. Co. v. Shelbyville, etc., R. Co., 117 Ky. 95, 77 S. W. 690, 25 Ky. Law Rep. 1265, is not against this position. The minutes there did not witness a previous sale. They simply authorized a future sale.
It is urged that these minutes are not sufficient because they were not delivered to the bank. The statute is silent as to whether a delivery is essential. Of course, where the contract is not oral but in writing, delivery of the writing is essential. This is not because the statute requires it, but because it is essential to constitute the contract. But delivery is not essential in order that a memorandum or note of a previous oral sale may be evidence of such sale. Delivery has not the slightest hearing on the question whether the writing bears witness to a sale. I dealt with this matter in the case of Lowther v. Potter (D. C.) 197 F. 196, 197. The question there was whether an undelivered deed which made no mention of a previous sale satisfied the statute. I held that it did not. The judgment was affirmed by the appellate court, 221 F. 881, 882. As to whether delivery of a writing which witnesses a previous .sale is essential I had this to say: “I think, also, that the better doctrine is that the statute does not require a delivery of the written memorandum or note. Some eases in other jurisdictions hold that such a statute does require a delivery, but the weight of authority is otherwise.”
I opine that on examination it will he found that the eases which are thought to hold delivery to be essential are very largely cases where the question was whether an undelivered deed malting no mention of a previous sale was sufficient. Of course, such decisions are not authority against the position that an undelivered deed or any other writing which witnesses to a previous sale is sufficient to satisfy the statute. Such seems to he the view of them held by Mr. Williston. In volume 1 of his work on Contracts, section 579, he says: “So a letter written by the party be charged to his own agent, or any other third person is enough if it contains the terms of the bargain. It should follow that a document retained wholly within the control of the party to be charged may also he a good memorandum. By hypothesis the bargain at common law is complete and written evidence of it alone is necessary. There seems no reason for doubting the sufficiency of an undelivered writing for this purpose and this finds view in many eases.” He then says: “It has, however, been held in a number of eases, most of which relate to real estate, that a document remaining wholly unpublished in the possession of the writer could not be used as a memorandum.”
The reasoning on which the view that delivery is not essential is based is thus stated in 25 R. C. L., Statute of Frauds, § 313: “The usual ground for holding that the undelivered memorandum is not sufficient is that until it is delivered it cannot operate as a contract and that a paper retained by the party to be charged should not be given the effect of a sufficient memorandum where it is entirely within his power to destroy it and prevent its being used as evidence of the contract. This reasoning, however, is beyond question, which, in this character of eases is not whether there is a written contract, but-whether there is sufficient memorandum signed by the party which is evidence that a contract existed or which tends to prove that faet. The evil the statute seeks to guard ag-ainst is the use of oral evidence to prove the contract. This is obviated by the production of the undelivered memorandum thereof. If produced from defendant’s own custody it guards against the mischief that the statute was passed to prevent just as well as if produced from the custody of plaintiff. The plaintiff is the one that is likely to suffer by leaving the evidence in the hands of the defendant, not the defendant himself.”
Defendants claim that the Court of Appeals of Kentucky in its latest decisions has construed the statute as requiring delivery of *918the memorandum or note and that this court is bound by this construction. The cases relied on are Duteil v. Mullens, 192 Ky. 616, 234 S. W. 192, 193, 20 A. L. R. 361; Gorman v. Gorman, 210 Ky. 65, 275 S. W. 366, 367; Cox v. Stamper, 221 Ky. 745, 299 S. W. 723; Nugent v. Humpich, 231 Ky. 122, 21 S.W.(2d) 153, 155; Klatch v. Simpson, 237 Ky. 84, 34 S.W.(2d) 951, 953. Before these decisions it was the position of that court that delivery of the memorandum or note to the purchaser was not essential. In the ease of Klee-man v. Collins, 9 Bush. 460, 461, a letter had been written by one of the defendants from Chicago to his partner or agent in New Orleans specifying the terms of the contract made with plaintiff, the purchaser. There had been no delivery of this letter to him, and yet it was held that the statute was satisfied thereby. The case of Alford v. Wilson, 95 Ky. 506, 26 S. W. 539, 16 Ky. Law Rep. 70, is rated by Williston as an authority for the position that delivery of the memorandum or note is not essential. It was so regarded by the appellate court in the case of Lowther v. Potter. It was cited in support of the position that in Kentucky “delivery of the memorandum to or for the use of the vendee” is not required. In my opinion I undertook to point out that the case did not involve a memorandum or note of a previous oral sale, but whether a written contract had been entered into. The court, however, acted on the idea that it did and on this basis held that delivery was not required. It cited in support of this position the ease of Drury v. Young, 58 Md. 546, 42 Am. Rep. 343, which is one of the leading eases holding delivery not essential. In the case of Allen v. Stailey (Ky.) 119 S. W. 755, the court said: “While a written memorandum that will satisfy the statute may be an undelivered writing, or a writing other than the contract which rests upon it, it still is necessary for the parties to have entered into a contract respecting the land.” The statement here was a dictum as the question was not involved in the ease. In the case of Purtell v. Bell, 179 Ky. 356, 358, 200 S. W. 644, the question was involved and it was decided that delivery was not required. There it was held that a letter from the agent of the owner and vendor to him setting forth the terms of a sale to the vendee satisfied the statute. Such was the state of the decisions at the time of the decision in the first case relied on by defendants. In Kleeman v. Collins and Purtell v. Bell, the question of whether delivery was essential was direetly involved, and in Alford v. Wilson it was treated as so involved and in each case it was decided that delivery was not required.
In Duteil v. Mullens the contract was oral and there was no memorandum or note thereof signed by the vendor. The .action was by the vendor against the vendee. The plaintiff based his ease on two things. One was a check given him by the defendant for $1,000 as first payment on the purchase which stated in its body “as payment on land.” The bank on which the cheek was drawn refused payment on notification from the vendee not to pay it. The vendor had indorsed his name on the back of the cheek and delivered it to the bank for payment. The other thing was a deed which he tendered to the defendant six months after the transaction took place. It was held that the statute had not been satisfied by either thing. Clearly the decision was right on both propositions. The indorsement of the cheek did not come up to the requirement inasmuch as the land referred to in it was not identified. The ease, therefore, did not involve the question as to whether delivery of a memorandum or note of an oral sale signed by the vendor was required. In the course of the opinion, however, it was said: “A writing evidencing a sale of- land makes an obligatory contract when signed by both parties, or when signed by the vendor alone, and is accepted by the vendee.” It was said further in referring to the undelivered deed: “This, however, would be unavailing, as a deed alone, to take the transaction out of the statute, would not only have to be signed by the vendor, but it would have to be accepted by the vendee. A verbal contract for the sale of- land is not obligatory upon either the vendor or vendee, until a writing evidencing the sale, sufficient to satisfy the statute, has been executed by the vendor and accepted by the vendee.”
These expressions confuse what is essential to make a written contract for the sale of land and what is essential in the way of a memorandum or note evidencing a previous oral sale to satisfy the statute. In the first, the writing referred to is one that “makes an obligatory contract”; in the second, reference is had to what is essential to render a 'tendered deed effective. It must be accepted by the vendee. Indeed, it may be said that what was had in mind was what was essential to constitute a written contract for the sale of land. In so far as the idea is advanced that delivery is essential of a memorandum or note of a previous oral sale to satisfy the statute the expressions are pure dicta.
*919In Gorman v. Gorman, the question involved was whether a letter written by the vendors to the purchaser and signed only by them, submitting to purchaser for his approval and acceptance ultimate contract for sale of a coal lease that vendors were willing to execute, satisfied the statute. It was held that it did not. The decision was clearly sound. The letter had no reference to a previous sale but to a future one. The court said: “The letter with its inelosures is a proposal to contract upon stated terms and conditions, and cannot possibly be construed as having been tendered or accepted as a written memorandum or evidence of a consummated executory contract.” There was no question as to necessity of delivery in the case for there had been a delivery. The letter had been sent by the vendors and received by the vendee. In the course of the opinion the court had this to say: “This court uniformly has construed our statute to mean that, while the written memorandum of the contract need be signed by the vendor only, it must be delivered to and accepted by the vendee before the contract becomes enforceable by either party.” In support of this statement the decision in Duteil v. Mullens was cited. The statement was not correct as to the necessity of the delivery of the memorandum. The court had not uniformly thus construed the statute. It had uniformly construed it as not requiring delivery. The court was just not posted as to the state of its decisions. It went no farther back than the loose and confused expression in Duteil v. Mullens.
In Cox v. Stamper it was held that in ease of an oral sale of land, vendors signing deed and tendering it to purchaser, who refused to take it, did not satisfy the statute. This was sound and in accordance with what I held in Lowther v. Potter. An undelivered deed not witnessing a previous oral sale never satisfies the statute. In the course of the opinion it quoted what has been before quoted as having been said in Gorman v. Gorman. It involved no question as to whether a memorandum or note satisfying the statute has to be delivered in order to be effective. The court did not decide that it had to be.
In Nugent v. Humpich the vendors were empowered to make a sale of land by the will of a certain decedent, if Gutig and Matilda Humpieh should give their consent in writing. There had been delivered to the vendee accepted offers for the purchase of the land signed by both, but differing one from the other. It was held that the vendee was not entitled to specific performance. The decision was sound, but the case did not involve any question as to the necessity of delivery of a memorandum or note to satisfy the statute. In the course of the opinion the court said: “Not only must there be a written memorandum of the contract signed by the party to be charged, but there must be an actual or constructive delivery of it.” There was nothing in the ease calling for any such expression.
In Klatch v. Simpson there had been a verbal acceptance of a written option to purchase certain real estate given by-the owner. It was held that on the acceptance the option became binding on the vendor as the statute did not require the vendee to sign. The ease involved no question as to the necessity of delivery of a memorandum or note of a previous oral sale in order to satisfy the statute. In the course of the opinion it was said: “That in the sale of real estate the signature of the vendor is sufficient to bind him if the writing is delivered to and accepted by the vendee, and that such acceptance by the latter need not be in writing, and, of course, no part of his acceptance is required to be signed or subscribed by him.” The court here was speaking of the necessity of the delivery of a written option by the vendor in order for him to be bound by an acceptance by the vendee as to which there can be no question. There is nothing in the ease upholding defendant’s position.
It is these more or less loose expressions in these five decisions which defendants rely on as justifying their position that the Court of Appeals of Kentucky in its later decisions construes the statute as requiring delivery of the memorandum or note of a previous oral sale to be effective. They are nothing more than pure dicta so far as they have bearing on this question. It is not certain that they have in mind what is essential in order that such a memorandum or note may satisfy the statute. It may be that what was had in mind was as to what was necessary in order to make a written contract that will satisfy the statute.
There is nothing in the decisions in the cases of Keith v. Johnson, 271 U. S. 1, 46 S. Ct. 415, 70 L. Ed. 795; C., M. & St. P. R. R. Co. v. Risty, 276 U. S. 567, 48 S. Ct. 396, 72 L. Ed. 703, calling for this court to follow these dicta. This ease comes rather within what was said in the case of Edward Hines Yellow Pine Trustees v. Martin, 268 U. S. 458, 45 S. Ct. 543, 545, 69 L. Ed. 1050. It was there said: “When questions affected by the interpretation of a state statute or a local rule of *920property arise in a federal court, that court has the same authority and duty to decide them as it has to decide any other questions which arise in a cause, and where state decisions are in conflict or do not clearly establish what the local law is, the federal court may exercise an independent judgment and determine the law of the case. * * * This court has refused to follow a rule established only by a single state decision rendered, after the rights involved in the case in the federal court accrued * * * or a single decision when not satisfied that it is conclusive evidence of the state law.”
Here there is not a single decision of the Kentucky Court of Appeals deciding that a memorandum or note of a previous oral sale must be delivered in order to satisfy the statute. All that can be said is that there are several loose and uncertain expressions to that effect in recent decisions whiéh are pure dicta. And the question is whether they should be followed as against two if not three distinct decisions and one dictum to the effect that delivery is not required. I am clearly of the opinion that they should not. The law of Kentucky should be accepted as that held by those decisions. I, therefore, hold that delivery was not essential to the effectiveness of the memoranda or notes relied on here. This can only apply to the two minutes of January 13, 1930, and February 7, 1930. The six letters relied on were delivered.
The question here then comes to this. Do or do not those memoranda and. notes establish that previous to the date of the first one, on say June 21, 1929, the plaintiff made an oral sale of 421 West Market street to the defendant Bank? The question really is whether such is the combined effect thereof. It is not essential that such should be the effect of any one of them, if such is the combined effect of them all. It is the case of the bundle of sticks. One may be alile to break each stick by itself, but it does not follow from this that he can break the bundle. All these memoranda or notes come from the plaintiff and are signed by it and should be construed together. I do not think that it is arguable that thus considered they do not establish beyond question that such a sale was made. The defendants do not deal with the matter this way. They have acted on the idea that if it can be shown that each one considered by itself does not establish this that ends it.
But how stands it according to this method of procedure? Take for instance the minute of the meeting of plaintiff’s board of directors of January 13, 1930. That minute is as follows: “After a long and complete discussion of the affairs of both institutions it was unanimously decided that the Louisville Trust Company and the National Bank of Kentucky continue to operate as they now are, as separate institutions, and that the Louisville Trust Company remodel its old building at Fifth & Market Streets as rapidly as possible, after the completion of which it shall move into said building and the National Bank of Kentucky move into the new building at 421 West Market Street at present occupied by the Louisville Trust Company, the National Bank of Kentucky taking over said building from the Trust Company as previously agreed upon by their respective Boards.”
The defendants attack the integrity of the minute on the ground of certain claimed contradictions and the power to so act at that meeting. These attacks call for no response. Notice will be taken of the two main attacks on it. One is that they do not indicate a previous oral sale in the absence of evidence of the previous agreement referred to and as that was oral it cannot be availed of to fill out the meaning of the minutes. It cannot be told what the minutes mean in the absence of said testimony. Apart from that reference, what they evidence is a purpose on the part of plaintiff to remodel the old building and to move into it as soon as the remodeling should be completed and that upon its so doing the defendant bank is to take over and move into the new building. The contention is that this does not indicate a previous oral sale of the new building to defendant bank by plaintiff, as the reason for taking it over and moving into it. It is said that the words “taking over” are just as consistent with tenancy under a rental arrangement as with an idea of sale. The question comes to this: What do the words “take over” mean ? And first what does the word “take” in this connection mean? In the Standard Dictionary its meaning in law is given as “to become possessed of, as by descent or devise.” The words “possessed of” here are the equivalent of “ownership,” as shown by the example. One who acquires property by descent or devise becomes its owner. In illustration of this meaning this-quotation from Tourgee’s “Fool’s Errand” is given: “His housekeeper, a quadroon woman, claimed his estate under a will duly executed but as it was suggested that she was a slave and incapable of Taking’ under it, the will was set aside.” To “take” property or a. building, therefore, is to acquire the title to it, not merely the possession of it. This work thus defines the phrase “takeover.” It gives-*921two meanings “to get control of”; “to derive.” These words when used as to property or a buildinglnvolve the idea of acquiring the title thereto. What the minutes in question, therefore, mean is that when the defendant bank moves into thernew building it was to acquire the title thereto. This is what was meant by “taking it over.” This could not be by any other way than by plaintiff conveying such title to it. As it was out of the question for it to so do as a gift, it must have been in pursuance to a sale thereof made previous to the meeting. The minutes, therefore, witness to a previous sale of the new building to the defendant bank in pursuance to which it was to take it over when plaintiff moved out of it and this without resort to the words “as previously agreed upon by their respective Boards.” This-is an express statement to the effect that there was a previous agreement by which the defendant bank was to take over the new building, i. e. to acquire the title thereto,which agreement could have been none other than one of sale. So that.there can be no possible question but that this minute does witness to the fact that plaintiff had sold the new building to the defendant bank. This covered all the terms of the contract except the consideration, i. e. the price to be paid, and the statute provides that this can be proven by parol testimony. Clearly resox*t can be had to the defendant bank’s own minutes to show what that price was.
The other attack on the minute is its lack of formality. The argument is that because it is not stated in the minutes that a resolution was offered and adopted eovexing the matter stated therein, what the minute says took place did not iix fact take place. Defendant bank’s own minute of June 21, 1929', stating the offer of sale and acceptance, was attacked on this ground. Because this matter was not covered by a resolution offered and adopted, it was argued that though the minutes state that the offer was made and accepted this did xxot in fact take place. This position calls for nothing else than to be stated. It falls of its own weight. This relieves me of any special coxxsideratioix of the other writings relied on by plaintiff, though I may say that it seems to me that the minutes of February 7,1930, and the newspaper publication, the letter of August 25, 1930, and that of September 22, 1930, each satisfy the statute.
3. It is urged that the plaintiff is not entitled to the relief it seeks, which is taken to be specific performance of the contract of purchase, because by reason of its voluntary receivership it has disabled -itself from performance of its part. The argument xnins thus. A party to an executory contract who disables himself from performing his part of the contract breaches it and is liable to the other party for the damages caused by the breach just the same as if he had repudiated it and announced that he would not perform. Furthermore, as he is unable to perform, he has no right to performance on the part of such other party. The plaintiff by reason of its voluntary receivership disabled itself from performance of the contract on its part. Hence it is not entitled to performance on the part of the defendants. The exception to be taken to this argument is in its assumption that this is a suit strictly speaking for specific performance and that there has not been performance by plaintiff, and its claim that by the receivership it was disabled from performance. As to the effect of the receivership, defendants eite the following eases, to wit: Central Trust Co. v. Chicago Auditorium, 240 U. S. 581, 36 S. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580; Pennsylvania Steel Co. v. New York City Ry. Co. (C. C. A.) 198 F. 721; Samuels v. E. F. Drew & Co., Inc. (C. C. A.) 292 F. 734. In the Supreme Court case it was held that bankruptcy proceedings disabled the bankrupt from performing its contract and that such disablement was a breach thereof. In the other two- eases it was held that receivership proceedings disabled the defendants from performing their contracts and that sueh disablements were breaches thereof. In each of the three cases a claim for damages occasioned by the breach was allowed against the estate to the other party to the contract. It is important to take note of the nature of the contract in these cases, disablement of the performance of which was thus brought about. In the Supreme Court case the bankrupt had contracted for the term of five years to transfer baggage and carrying passengers to aixd from the hotel of the claimant and to furnish livery to its guests. In Pennsylvaixia Steel Company Case the defendant, a street railroad company, granted to the claimaixt, an express company, the right to conduct an express business over its lines for a term of twenty years and agreed to furnish ears therefor for a percentag-e of the gross receipts. In the Samuels Case the defendant contracted to purchase -a certain commodity from the claimant. In each of these three eases the contractor was insolvent. There can be no question that it was disabled by the proceeding against it. It could not perform the contract without resources and in each instance it was without resources. *922Suela is not the ease here. There was no disablement to perform on the plaintiff’s part. The subject-matter of its contract was No. 421 West Market street. Notwithstanding the receivership proceeding it still had legal title to that property and could convey it to the defendant bank and it was to its interest and that of its creditors that it carry out the contract. Besides, the assumption that plaintiff had not performed and that strictly speaking this is a suit for specific performance is not correct. In this state the vendee in a title bond is treated as the owner of the real estate as much so as if he had received a deed therefor, and the remedy of the vendor, if the purchase money is unpaid in whole or in part, is to bring a suit to enforce the lien which he has thereon by a sale of the property. In the case of Marks v. Tichenor, 85 Ky. 536, 4 S. W. 225, 226, 9 Ky. Law Rep. 125, it was said: “In the sale of land it becomes the real property of the vendee from the execution, delivery, and acceptance of the written contract. ‘It is vendible as his, chargeable as his, and capable of being devised or descending as his.’ Consequently it is a well-established and reasonable rule that the destruction of buildings thereon by fire, between the time of such contract of sale and the time fixed upon in the contract for the delivery of possession by the vendor to the vendee, must be the loss of the latter and not of the former.” In the case of Cottingham v. Firemen’s Fund Ins. Co., 90 Ky. 439, 14 S. W. 417, 12 Ky. Law Rep. 409, 9 L. R. A. 627, it was said: “But in this state the purchaser of real estate by title-bond takes the risk of the property. He is the beneficial owner of it, and its loss or destruction falls upon him, and not the vendor.” In the case of Benjamin v. Dinwiddie, 226 Ky. 106, 10 S.W.(2d) 620, 621, it was said: “He [i. e., the vendee] was regarded in law as the owner of property subject to his liability for the unpaid purchase price; his vendor, Sengel, holding the legal title in trust for him and as security for the payment of the agreed consideration.” In Pomeroy’s Specific Performance of Contracts (3d Ed.) § 6, it is said: “In many states a decree for the vendor is by way of foreclosure of his ‘lien’ for the unpaid purchase price. If the vendee defaults in payment within a time limited by the decree, a sale of the land is directed; any surplus resulting from the sale is awarded to the vendee and any deficiency is made good by execution for the unsatisfied balance of the purchase price.”
Because of this position, if possession is delivered to the vendee before payment of the purchase price, the veaador eanaaot. recover the possession in aaa action of ejectment on the ground of nonpayment thereof. This was so held in the case of Morton v. Dickson, 90 Ky. 572, 14 S. W. 905, 906, 12 Ky. Law Rep. 547. It was there said: “When in equity, and in the possession, the holder of a bond for title. is treated as if he held the fee subject to the lien of the vendor, and this necessarily defeats the action of ejectment. Should the vendee repudiate his executory agreement, or if facts are made to appear showing the contract to be void, the action might be maintained; but the failure to pay works no forfeiture of the right of the equitable owner to the land, or invests the vendor with the right to pursue him as he would a trespasser, or a tenant whose term has expired. Where the vendor vests in his vendee an equitable title to land, and.places him in possession, although default in payment is made, he has no remedy at law to recover possession by reason of the default.”
This position being a rule of property is controlling upon this court. Here plaintiff had delivered possession of No. 421 West Market street to the defendant baook and it had' accepted it, though it had not moved its banking business thereto before its failure. It was in possession at the time of the failure and this possession passed to'the defendant receiver. The plaintiff could not sue to recover the possession. Its sole remedy was to bring suit for the enforcement of its lien for the poorchase price and for a deficiency decree against the defendant bank which would be allowable as a general claim against the estate in the hands of defendant receiver. It was this suit and none other that plaintiff has brought. It must be held, therefore, that this point is not well takeaa.
4. The next point urged is that specific performance of an executory contract for the purchase of real estate will not be decreed against the receiver of a national hank. This contention is answered by what has just been said. This is not a suit for specific performance strictly speaking. The plaintiff does not ask that the defendants or either of them be compelled to accept a deed for No. 421 West Market street and to pay it the purchase price. The defendant bank is disabled by reason of the receivership from so doing. It has no resources out of which it can make payment. The assets in the defendant receiver’s hands belong to the creditors of the defendant bank and cannot be diverted therefrom. As heretofore stated, it is a suit for the enforcement of plaintiff’s vendor’s lien *923and for a deficiency judgment against the defendant bank, allowable as a general, claim against such assets. I do not find it necessary to' consider in detail the decisions cited in support of this contention. They are none of them in point here.
5. The final point urged is that performance of the contract will be oppressive on defendants and specific performance will not be decreed where such is the ease. It is oppressive on account of the great depreciation in value of No. 421 West Market street since the making of the contract. The claim is not that the contract was unfair to defendant bank when made. That it was unfair is not made a special ground for denying plaintiff the relief it seeks. Vet the charge is that it was grossly unfair to the defendant bank. Before considering this fifth point note should be taken of this attack on the contract of sale. It is said that the directors of the two institutions in making the contract “could not be actuated by any motive of independent duty to either institution to see that a fair bargain was effected.” It is repeatedly stated that the plaintiff loaded the property in question off of itself onto the defendant bank. It is said that it is conceded that at the time of sale it was not worth $857,000; that this price was several hundred thousand dollars more than its market value; that the only reason for this loading off and on was that plaintiff owned two buildings and only needed one; that there was no chance of loading it onto any other bank in Louisville; and that the only chance of loading it onto any bank was onto the defendant bank, and that because the same board of directors controlled both banks “they could enrich one at the impoverishment of the other without any financial gain or loss.” It is said further that it was natural that plaintiff “would like to load one of its buildings on to some one else at a price greatly in excess of the market value” and that the property had a value of $315,000 and to sell it to defendant bank at a price of $857,-000 simply meant the enrichment of plaintiff by over $500,000 and the improverishment of the defendant bank by a similar amount. The claim is put forward that, at the time of the sale, the defendant bank was in a crippled condition and this fact was known to the directors of both institutions. On May 25th, preceding the making of the contract, a national bank examiner had reported to the comptroller that the defendant bank had $4,-000,000 substandard assets, and it is claimed that they then knew this. Likewise at that time plaintiff was in a bad way financially. Both institutions were then headed for failure. It is said that June 21,1929, was a “fine time for the Directors of the Louisville Trust Company, who were also Directors of the National Bank of Kentucky, to load over onto the National Bank of Kentucky an additional frozen asset in the amount of $850,000 thereby increasing the sub-standard or frozen assets of the National Bank of Kentucky from four million to almost five million dollars and at the same time increasing the liquidity of the Louisville Trust Company in the same account.” The defendants go further and say this: “We do not mean to insinuate that these gentlemen would do such an unbusinesslike and perhaps criminal thing. To have consummated this alleged sale on that date would have been almost criminal and we ascribe to these men no such conduct. They knew that their Bank was in trouble. A way out of trouble was sought. They certainly did not adopt a way which would get them into deeper trouble. They decided to create Banco Kentucky.” They proceed in the same strain as follows: “Therefore, we ask what right in law or morals did the Directors of the Louisville Trust Company have to contract with themselves as Directors of the National Bank of Kentucky to increase the frozen assets of the National Bank of Kentucky by the sum of .$857,000, and by so doing increase the liquidity of the Louisville Trust Company to the same extent. As stated elsewhere in this brief, we make no charge of criminal conduct or neglect of duty against these directors, but, if with the knowledge of the financial condition of the National Bank of Kentucky before them that then existed they made such a contract as is contended by the plaintiff charges of criminality and neglect of duty should be made against them.”
Though pains axe taken to disavow the charge of criminal conduct on the part of the directors of both institutions, as I interpret these expressions, such charge is in reality made. The reason of the disavowal is the claim that the contract of sale was not made. Of course if no contract of sale was in fact made there was no room for such conduct on their part. But if it was made, as it certainly was, the charge of such conduct stands. The defendants relieve the directors of such criminal conduct at the expense of the truthfulness of those of their number who testified to the making of the contract. And the defendants do go so far as to charge that their testimony was untruthful. They say: “The whole thing reflects a built up case after the failure of the two banks, so that the stockholders of The Louisville Trust Company could profit at the expense of the depositors of the Na*924tional Bank of Kentucky.” They say further that plaintiff “evidently recognized the shortcomings in the written evidence and attempt to supplement, modify and contradict the written evidence by questionable parol testimony.” They say further: “This left a terrible gap in the plaintiff’s case, and it had to be cured in some way. It could not be cured by any written evidence because there is none in existence, so that the best that could be done was to offer some parol evidence.”
Now there is absolutely nothing in the evidence to uphold these serious charges. So far as the parol testimony is concerned, it neither supplements, modifies, nor contradicts the writien evidence. It confirms the written evidence and the written evidence confirms it, and there can be no question as to its truthfulness. As to the fairness of the contract of sale two things are essential in order to interpret the transaction aright. One is a certain method and the other is a certain spirit. The method is that it must be interpreted from its point of view, i. e., from the known conditions existing at the time of the making of the contract. It is a cardinal rule in the interpretation of a transaction or a document that it should be looked at from such point of view. This method is known as the historical method. According to William Morris, his p'oem .entitled “Earthly Paradise” cannot be understood unless the reader thinks himself back to the latter half of the fourteenth century and in the prologue he helps him to do this in this fashion:
“Forget six counties overhung with smoke, Forget the snorting steam and piston stroke, Forget the spreading of the hideous town; Think rather of the pack horse on the down, And dream of London small, white and clean;
The clear Thames bordered by its gardens green.
Think, that below bridge the green lapping waves
Smite some few keels that bear Levantine staves,
And cloth of Bruges and hogsheads of Guienne;
While nigh the thronged wharf Geoffrey Chaucer’s pen
Moves over hills of lading.”
So, if one would interpret aright the transaction involved here he must think himself back to June 21, 1929, and forget all that passed after that date. Then as to the spirit called for in order that one may interpret aright. In a recent English novel entitled “The Running Footman,” which has been well spoken of, it is said that “the moment one sees with the eye of love is the moment when he sees truly.”
Indeed, it has been said that such is the thesis of the book. By the “eye of love” I understand the writer to mean concern — deep concern — for the truth. Such then is the spirit so called for.
In this spirit and adopting this method, what is the result? The price agreed to be paid for the property was reasonable and fair. The building had been completed about two months before at that cost, without taking into consideration services in superintending its construction and interest. There is no reason to think that on June 21, 1929, the property was then worth less than that sum. Things were still riding high ¿t that time. The slump in values did not come about until several months after that. The value of $315,000, placed on the property was made in August, 1931, two years after the sale. It was reasonable that the defendant hank should buy the property at that price. It needed the building to do business in, particularly in view of the intention to organize Banco Kentucky. It was the fitting thing for it to acquire the property. So far as its financial condition was concerned it was not then realized or suspected that it was impaired or that there was any danger that it would not be able to carry on. It was not thought that it was in any trouble or that trouble was ahead of it. Though the report of the national bank examiner as to substandard assets was dated May 25, 1929, there is no evidence to the effeet that its board of directors or any of its officers knew thereof. The first information in regard thereto which any of its directors had of it was in October following. Nor does it appear to what extent such an amount of substandard assets affected its financial condition. For aught that appears in the record these assets may have been good but slow. It is now unlikely that it would never have been driven to the wall if it had not been for the failure of Caldwell & Co. shortly before it was compelled to close its doors. So far as the plaintiff is concerned there is no evidence that at this time it was in any financial trouble. It is not unlikely that it was the failure of the defendant bank that dragged it down. That notwithstanding its failure there was strength in it is shown by the fact that it was able to reorganize, lift the receivership, and get on its feet again. In addition to all this, the defendant bank was under a moral obligation to the plaintiff to take one of its two buildings off its hands and *925it chose to take No. 421 West Market street. On the recommendation of the defendant bank it consolidated with the Louisville National Bank & Trust Company and had on its hands two bank buildings when it only needed one, and it did this on defendant bank’s assurance through its president that upon the consolidation it would take one of these two buildings off its bands. This obligation was increased in 1930, when the directors of the two institutions were not the same, in its permitting plaintiff to expend $250,000 in fixing up its old quarters with the view of occupying them and the defendant bank’s taking No. 421 West Market street property off its hands, at the price agreed upon pursuant to the contract of sale, without indicating that it was acting upon a wrong notion of things. Because of these matters it would have been highly unfair for the defendant not to have completed the purchase had it remained a going concern. Such then is my conclusion as to the fairness of the contract of sale at the time of the sale.
I come now to a consideration of the fifth point made by the defendants as a reason for not granting plaintiff the relief it seeks, to wit, tho great depreciation in value of the property at the time this suit was brought. This position is answered in part by what has been said under the two preceding items. This is not a suit strictly for specific performance. The defendants proceed on the idea that it is and think that if the suit is maintained the defendant receiver will have to pay for the property out of the assets in his hands. The authorities relied on have to do with such a ease. No such relief is asked for or will be granted. That depreciation in value of property sold after the date of sale is not a defense to a suit for specific performance is laid down in the following authorities cited by plaintiff. 5 Pomeroy’s Equity Jur. (2d Ed.) § 2219; Franklin Tel. Co. v. Harrison, 145 U. S. 459, 12 S. Ct. 900, 36 L. Ed. 776; Cox v. Burgess, 139 Ky. 699; 96 S. W. 577, 29 Ky. Law. Rep. 972. It must be beld that tbis point is not well taken.
An amended answer was filed herein claiming that the title to the property in question was defective by reason of a contract with J. P. Martin & Co. restricting the height of the rear of the building and a lease agreement with Louisville Board of Trade granting to the Louisville Board of Trade the use of the fourth floor of the building for a period of ten years. It was claimed that by reason of these alleged defects plaintiff is not entitled to the relief it seeks. They do not constitute a defense to the action, and as defendants have not argued that they do, I do not feel called on to say anything further in regard to them.
The conclusion of the whole matter is that the plaintiff is entitled to a decree. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218798/ | ANDREW M. J. COCHRAN, District Judge.
*926This suit is before me on motion of the plaintiff to set aside so much of the order entered herein January 36, 1933, allowing an appeal from a money judgment theretofore recovered by it as provides for a stay of execution and other proceedings on such judgment pending the appeal. It is conceded that the case comes within title 28 USCA § 876 in that in taking the appeal the defendants are acting under the direction of a departr ment of the government, to wit, the comptroller of the currency. That sueh a case does so come was held in the cases of Pacific Bank of Boston v. Mixter, 114 U. S. 463, 5 S. Ct. 944, 29 L. Ed. 221, Robinson v. Southern National Bank (C. C.) 94 F. 22.
The question presented by the motion is whether this statute relieves the defendants of the necessity of executing a supersedeas bond in order to be entitled to stay of execution and other proceedings on the judgment pending the appeal. I do not readily take in plaintiff’s argument that it does not. The'provision says in so many words that no bond to answer for damages shall be required. A supersedeas bond is a bond to answer for damages, i. e., to pay the damages which the appellee may sustain by reason of the appeal if it is unsuccessful. Those damages are not limited to damages sustained by reason of the delay in payment of the judgment, but include ' the amount of the judgment itself. That sueh is the case is shown by the provision of the preceding section, to wit, 869. That section provides that except as provided in section 876 bond shall be required to “answer all damages and costs, where the writ is a supersedeas and stays execution, or all costs only where it is not a supersedeas.” According to this an appeal bond conditioned to answer all damages and costs is in and of itself a supersedeas and stays execution. That an appeal bond conditioned as required by this provision and by rule 29 of the Supreme Court (now rule 33, see 28 USCA § 354) and rule 13 of the Circuit Court of Appeals covers the amount of the judgment or decree as well as damages for delay was held in Wood v. Brown (C. C. A.) 104 F. 203, American Surety Co. v. North P. & P. Co. (C. C. A.) 178 F. 810.
Now in the face of the express provision of section 870 that no bond to answer in damages, as well as in costs, the meaning of which is that no supersedeas bond shall be required, plaintiff contends that sueh a bond shall be required. Seemingly it contends that the word “damages” in the section should be limited to damages for delay in collecting the judgment and does not cover the amount of the judgment itself. This, as we have seen, is not sound. But if it were, it would not help plaintiff. A bond to answer for delay damages only could be of no value unless it operated as a supersedeas and stayed execution. If it did not do so, there could be no sueh damages. A mere appeal does not in and of itself delay a plaintiff in the collection of his judgment. But its principal argument seems to be that because section 876 makes provision for payment of costs and none for the payment of the judgment in case the appeal is unsuccessful in some way shows that it was not the intention that execution or other proceedings on the judgment should be stayed without a supersedeas bond. I am unable to make this out. What such provision shows is that it was the intention that the government or a party acting under direction of one of its departments should have the right to take an appeal from a money judgment against it without further risk than to have to pay the costs of the appeal.
The plaintiff cites Cochran v. Schell, 107 U. S. 625, 2 S. Ct. 827, 27 L. Ed. 543, Lee v. Jackson L. & T. Co. (C. C. A.) 261 F. 721, Medusa, etc., Co. v. McCormick, etc. (C. C. A.) 266 F. 981, in support of its contention. But they have no bearing whatever on the point involved.
The motion is overruled. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218800/ | NORCROSS, District Judge.
Complainants, by their bill of complaint, pray for an injunction prohibiting certain of defendants from proceeding to sue for or collecting any sum or sums in addition to certain specified amounts which complainants allege they are ready and willing to pay on account of the second installment of state and county taxes due and payable to the county treasurers of several of the counties of the state of Nevada on or before June 5, 1933. To complainants’ bill in equity, and in opposition to a motion for a mandatory and prohibitory preliminary injunction commanding the defendants, tax receivers, to receive certain sums of money on account of said second installment of taxes for the year 1932 and prohibiting the remainder of defendants from instituting suits for or in respect to said second installment, defendants have filed a motion to dismiss the bill upon the ground that this court is without jurisdiction for the reasons that the suit is in effect against the state and that the state has not consented to be sued or waived its immunity from such suit; that complainants have a plain, speedy, complete, and adequate remedy at law; that there is an insufficiency of fact in the bill of complaint to constitute a valid cause of action in equity; and that complainants have failed to exhaust their statutory administrative remedies.
A similar bill of complaint, excepting in respect to the effect of ah act of the Legislature of the state of Nevada, approved March 20, 1933 (Stats. Nev. 1933, c. 103, p. 128), was filed in this court by complainants respecting the assessment of taxes for state and county purposes for the year 1931. A similar motion upon the part of defendants was filed, presented, and denied. From that decision appeal was not taken, and that case is pending. We shall, therefore, consider only the question presented by the said act of March 20, 1933, which was “An Act to amend an act entitled ‘An act in relation to public revenues, * * * ’ approved March 23,1917.” The question presented is whether the said act of 1917, as amended, now provides complainants a plain, speedy, and adequate remedy at law.
By section 11 of the act, as“amended, it is provided:
“(b) Any property owner whbse taxes exceed the sum of $300 and axe in excess of the amount which such owner claims to be justly due, may pay each installment of taxes as it becomes due under protest in writing.
* * * Such property owner, having protested * * * may commence a suit in any court of competent jurisdiction in the State of Nevada against the state and county in which the taxes were paid, and, in a proper case, the Nevada tax commission may be joined as a defendant for a recovery of the difference between the amount of taxes paid and the amount which such owner claims to be justly due. * * * In any suit * * * the person assessed may complain or defend upon any of the following grounds: * * *
“5. Fraud in the assessment or that the assessment is out of proportion to - and above the actual cash value of the property assessed; * * * or that the assessment * * *' is discriminatory in that it is not in accordance with a uniform and equal rate of assessment and taxation, but is at a higher rate of the full cash value of the property so assessed than that at which the other property in the state is assessed; * * * provided further * * * the burden of proof shall be upon the plaintiff to show by clear and satisfactory evidence that any valuation established or equalized * * * is unjust'and inequitable.
“In any judgment recovered * * * the court may provide for interest thereon at not to exceed six per centum per annum from and after the date of payment of the tax complained of. * * *
“(c) Any property owner owning property of like kind and character in more than one county in the state, and . desiring to proceed with a suit under the provisions of sub-paragraphs ‘(a)’ or ‘(b)’ of this section may, where the issues in the cases are substantially the same in all or in some of the counties concerning the assessment of taxes on such property, consolidate any or all of said suits in one action and bring the same in any court of competent jurisdiction in the county of Ormsby, State of Nevada.”
It is complainants’ contention that “the laws of Nevada-contain no effective provision for payment under protest or return of money found to have been unlawfully exacted.” Concerning the said amendment of 1933, it is said: “Whether the change was made in anticipation of the instant suit, we do not know. If such was the intention, the new act does not accomplish the purpose.” The particular defects which are charged in respect to the statute, as amended, are the following :
*931“a. It gives a non-resident tax-payer no remedy at law in a Federal Court in the circumstances of which we complain.
“b. It does not remove the objection of multiplicity of actions by District Attorneys.
“e. It attempts to establish a rule of evidence more strict than that applicable in this court.
“d. It does not impound excessive taxes paid under protest, but permits their expenditure and if the tax-payer he successful in a recovery suit and finds the treasury empty, he has no adequate remedy for enforcing his judgment.
“e. Even if an aetion at law be maintainable in which all the points could be raised concerning the invalidity of the assessment that are raised in this bill, such an action would still fail to furnish the effectual, complete and sufficient relief that equity can furnish.”
Relative to “a”, supra, complainants allege assessments in excess of the full cash value of their property in an amount in excess of $5,500,000, the assessment of other large classes of property at substantially less than full cash value, and also the omission of a large amount of property from assessment. The contention that a nonresident taxpayer is given no remedy at law in a federal court in the circumstances complained of is met by the eountercontention upon the part of defendants that the act, as amended, authorizing the institution of a suit by a taxpayer paying under protest “in any court of competent jurisdiction in the county of Ormsby, State of Nevada,” is inclusive of this court, and that the statute should be so construed. While the interpretation of state statutes is the peculiar province of the state courts, the contention of the Attorney General respecting the construction of a state statute is at least persuasive.
Paragraph (e) of section 11, supra, should be read in connection with section 10, as also amended by the said act of 1933. The section, as amended, reads: “Section 10. No taxpayer shall be deprived of any remedy or redress in a court of law relating to the payment of taxes, but all actions at law shall be for redress from the findings of said commission or the state board of equalization, and may not be instituted upon the act of an assessor, or of a county board of equalization or the state board of equalization until said commission has denied the complainant redress. Said Nevada tax commission, in that name, may sue and be sued, and shall be so named as defendant in any action at law brought under the provisions of this act, and the attorney-general shall defend the same, but the burden of proof shall be upon the complainant to show by clear and satisfactory evidence that any valuation established or equalized by said commission or the state board of equalization is unjust and inequitable.”
In neither of sections 10 or'll, as amended, is there any expression limiting the right of an aetion at law to state courts. In the absence of such limitation, complainants, otherwise qualified, may have their remedy by similar aetion at law in a federal court. Singer Sewing Machine Co. v. Benedict, 229 U. S. 481, 33 S. Ct. 942, 57 L. Ed. 1288; Chicago, B. & Q. R. R. Co. v. Osborne, 265 U. S. 14, 44 S. Ct. 431, 68 L. Ed. 878; Henrietta Mills v. Rutherford County, 281 U. S. 121, 50 S. Ct. 270, 74 L. Ed. 737; Dows v. Chicago, 11 Wall. (78 U. S.) 108, 20 L. Ed. 65; Gramling v. Maxwell (D. C.) 52 F.(2d) 256. It is clear, we think, that the expression “any court of competent jurisdiction in the county of Ormsby, State of Nevada,” may not be construed so as to exclude the federal District Court which by statute is required to hold sessions at Carson City, within said county. The fact that the jurisdiction of the court covers the entire state does not exclude it from the-classification of courts referred to in the statute. One of the purposes of paragraph (c) of section 11 is to confer upon state courts within the county a jurisdiction in the class of actions referred to which may also extend throughout the state.
The contention that the said amendatory act of 1933 does not remove the objection of multiplicity of actions by district attorneys is without merit. If the alleged illegal taxes are paid under protest, there is no occasion for the institution of actions by the district attorneys. The right of the taxpayer who has paid under protest taxes in more than one county to consolidate suits for recovery in one aetion removes the objection of a multiplicity of suits.
The contention that the act as amended “attempts to establish a rule of evidence more strict than applicable in this Court” is based upon the provision that “the burden of proof shall be upon the plaintiff to show by clear and satisfactory evidence that any valuation established or equalized * * * is unjust and inequitable.” The court is ndt impressed that there is merit in this contention.
*932The mere fact that alleged excessive taxes which may be paid under protest are not required to be impounded pending the outcome of the action is not of itself sufficient to justify a conclusion that an action at law may not afford a complete and adequate remedy. Of the number of cases cited where the question of an adequate remedy at law was considered, the only statute appearing to require impounding of the portion of tax paid under protest is that of the state of Oklahoma, considered in the case of Black v. Geissler, 58 Okl. 335, 159 P. 1124, cited in McCoy v. Shaw, 277 U. S. 302, 48 S. Ct. 519, 72 L. Ed. 891. The North Carolina statute under consideration in Henrietta Mills v. Rutherford County, 281 U. S. 121, 50 S. Ct. 270, 272, 74 L. Ed. 737, provided that of the amount of tax held invalid or excessive, “the same shall be collected as in other cases. The amount of state taxes for which judgment shall be rendered in such action shall be refunded by the state treasurer.” The statute considered in the case of Gramling v. Maxwell (D. C.) 52 F.(2d) 256, was substantially the same.
The statute here in question provides that the amount of tax paid under protest shall be apportioned to the various state and county funds the same as though it had not so been paid under protest. If judgment is recovered for the amount paid under protest, the provision in respect thereto roads: “The amount of said judgment plus the interest thereon, as may be fixed and determined by the court, shall be paid out of the general funds of the state and county by the proper officers thereof as the respective liability of the state and county may appear. The county treasurer is hereby directed, and it shall be his duty in making tax settlements with the state, to then and there notify the state controller of the amount of state tax moneys paid under protest, and an amount equivalent thereto, plus a reasonable amount of interest thereon, not exceeding six per cent-um per annum after the date of such payment to such county treasurer, shall be deemed to be and hereby is appropriated for the purpose of satisfying any judgment therefor recovered against the state in a suit under the provisions of this subparagraph ‘(b)’; provided, if and when a judgment against a county is secured under the provisions of this subparagraph ‘(b)’ and there shall not be sufficient money in the general fund of the county affected by such judgment to satisfy the same, the board of county commissioners of such county is hereby empowered and directed, and it shall be its duty, to forthwith levy and provide for the collection of a sufficient tax upon all the taxable property within said county, exclusive .of the property of the person securing such judgment, to satisfy such judgment and such interest thereon as may have been fixed and determined therein by the court; * * * provided, if at the time a final judgment secured against the state under this act is presented for satisfaction there is not sufficient money in the state treasury set apart for the satisfaction of any such judgment, the state treasurer is herein empowered and directed, and it shall be his duty, to satisfy such judgment from moneys, then and there in the general fund of the state.”
The foregoing provisions of the statute provide a reasonably prompt and effective method for the settlement of any judgment obtained.
The amendatory act of 1933 is plain and unambiguous, and presents no question of construction which in the absence of interpretation by the state courts would render doubtful whether or not it may be said that a plain, speedy, and adequate remedy exists at law. While we are dealing with a recent statute which has not been applied by the state courts, a question is not, we think, presented by reason thereof, such as considered by the Supreme Court in Atlantic Coast Line R. Co. v. Doughton, 262 U. S. 413, 426, 43 S. Ct. 620, 625, 67 L. Ed. 1051, and eases therein cited. The court said: “On behalf of the state it was urged that the bill was properly dismissed by the District Court because there is under the laws of North Carolina a plain, adequate, and complete remedy at law by which a taxpayer may recover the amount of an illegal tax paid by him under protest. Our attention has been called to several North Carolina cases and statutes bearing upon this contention. But the statute mainly relied upon is a recent one which appears not to have been construed and applied by the highest court of the state. In the absence of such decision, we cannot say the remedy at law is plain and adequate. Dawson v. Kentucky Distilleries & Warehouse Co., 255 U. S. 288, 296, 41 S. Ct. 272, 65 L. Ed. 638; Wallace v. Hines, 253 U. S. 66, 68, 40 S. Ct. 435, 64 L. Ed. 782; Shaffer v. Carter, 252 U. S. 37, 47, 40 S. Ct. 221, 64 L. Ed. 445; Union Pacific R. R. Co. v. [Board of Com’rs of] Weld County, 247 U. S. 282, 38 S. Ct. 510, 62 L. Ed. 1110; Davis v. Wakelee, 156 U. S. 680, 688, 15 S. Ct. 555, 39 L. Ed. 578.”
*933In the case of Union Pac. R. R. Co. v. Board of Com’rs of Weld County, 247 U. S. 282, 38 S. Ct. 510, 64 L. Ed. 445, the court said: “Por many years the revenue laws of Colorado have contained a section imposing on the board of county commissioners 'in all eases’ the duty of refunding to the taxpayer 'without abatement or discount’ 'any tax, interest or costs, or any part thereof,’ which is found to have been 'erroneous or illegal,’ and by a necessary implication conferring on him a correlative and substantive right to have the same so refunded. * * * If that section is still in force, unqualified and unmodified, the conclusion below that in this ease there is a plain, adequate and complete remedy at law, and therefore that relief by injunction is not admissible, is fully sustained by our decisions. Singer Sewing Machine Co. v. Benedict, 229 U. S. 481, 33 S. Ct. 942, 57 L. Ed. 1288, and cases there cited; Pittsburgh, etc., Ry. Co. v. Board of Public Works, 172 U. S. 32, 19 S. Ct. 90, 43 L. Ed. 354; Arkansas Building & Loan Ass’n v. Madden, 175 U. S. 269, 20 S. Ct. 119, 44 L. Ed. 159; * * * Johnson v. Wells Fargo & Co., 239 U. S. 234, 243, 36 S. Ct. 62, 60 L. Ed. 243; Greene v. Louisville & Interurban R. R. Co., 244 U. S. 499, 519, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88.” (Pages 284, 285 of 247 U. S., 38 S. Ct. 510, 511, 64 L. Ed. 445.)
“An examination of the new statute shows that the controversy just outlined is not without some real basis and that its solution is not free from difficulty. The question is purely one of state law, and, so far as we are advised, the Supreme Court of the state has not passed on or considered it. A ruling by us on the question would neither settle it for that court nor be binding in an action to recover the tax if paid. In these circumstances it cannot be said that the company certainly or plainly has an adequate and complete remedy at law. On the contrary, the existence of such a remedy is debatable and uncertain. And this being so, the situation is not one in which cognizance of the present suit properly can be declined.” (Page 287 of 247 U. S., 38 S. Ct. 510, 512, 64 L. Ed. 445.)
In the case at bar it is the new statute which makes clear that the taxpayer has what repeatedly has been declared to he a plain, adequate, and complete remedy at law.
It is further contended that “there is no provision for reimbursing the taxpayer for the costs of the litigation.” This contention is without merit as the Civil Procedure Act makes provision for the recovery of costs upon a judgment in favor of the plaintiff “in an action which involves * * * the legality of any tax,” ete. Nevada Comp. Laws 1929, § 8924. See, also, sections 8939, 8940.
Defendants’ motion to dismiss should be granted. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218801/ | NORCROSS, District Judge.
In the cases of Nevada-California Power Company v. Amy Roberson et al. and Charles *934L. Slavin et al. there are presented the same questions of law considered in the opinion filed in the case of Central Pacific Railway Company and Southern Pacific Company v. Nevada Tax Commission et al. (D. C.) 3 F. Supp. 929. In these cases the further contention is urged that there was not an adequate remedy at law at the time the suits were instituted, and, therefore, jurisdiction continued for all purposes and that a subsequent change in the law would not affect such jurisdiction. This contention is based upon the case of Dawson v. Kentucky Distilleries Co., 255 U. S. 288, 41 S. Ct. 272, 275, 65 L. Ed. 638. An examination of that ease disclosesthat the determination of the existence of an adequate remedy at law was by a decision of the Court of Appeals of Kentucky, which was not rendered until several months after the decision by the statutory court granting an injunction, and not until the ease was on appeal to the Supreme Court. We have, therefore, a very different state of facts to consider in the eases at bar than the facts presented in the Dawson Case. The two cases cited in that decision supporting the general statement, “Nor is the equitable jurisdiction lost because since the filing of the bill an adequate legal remedy may have become available” (Beedle v. Bennett, 122 U. S. 71, 7 S. Ct. 1090, 30 L. Ed. 1074, and Busch v. Jones, 184 U. S. 598, 22 S. Ct. 511, 46 L. Ed. 707), were both patent suits. In patent suits by act of Congress, law and equity are administered in the same action. New England Fibre Blanket Co. v. Portland Telegram (C. C. A.) 61 F.(2d) 648, 650. The effeet of the decisions cited was that after any right to an equitable remedy by injunction had ceased, the court nevertheless retained jurisdiction for the purpose of determining the legal rights of the parties.
In these cases complaints were filed on December 17, 3932. Applications for interlocutory injunctions, however, were not filed until May 24,1933, after the amendatory, act of March 20, 1933 (St. Nev. 1933, c. 103). The court is of opinion that the reasons supporting the rule applied in the Dawson Case, and in the cases therein cited, do not apply to facts such as exist in the case at bar. Cohens v. Virginia, 6 Wheat. (19 U. S.) 264, 398, 5 L. Ed. 257; Bramwell v. U. S. Fidelity & Guaranty Co., 269 U. S. 483, 489, 46 S. Ct. 176, 70 L. Ed. 368. No sound reason appears why if prior to an application for equitable relief by injunction an adequate remedy at law is provided, that such remedy may not be considered in determining the question of granting equitable relief.
The application for a temporary injunction in each case is denied. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218804/ | DAWKINS, District Judge.
The referee has certified to me for instructions the matter of allowing as priorities the following claims:
“Sam Goldman, President, has filed claim for $375.00 and asks that the same be recognized as a wage claim and paid by priority and preference.”
“Sol Finkelstein, Secretary-Treasurer, has filed a claim for $375.00 and asks that the same be recognized and paid by priority and preference as a wage claim.”
“Harry Stern has filed a claim for $450.-00 and asks that the same be allowed by preference and priority for wages due October, November and December, 1932, at the rate of $150.00 per month.”
The facts as found by the referee with respect to the nature of these claims are as follows :
“First: Sam Goldman is in fact President and one of the managing directors of the business of Goldman Stores, Incorporated; that he likewise sold merchandise over the counter and performed other service in the capacity of a clerk when .necessary.”
“Second: Sol Finkelstein is the Secretary-Treasurer of the corporation and is likewise one of the officers who directed and managed the corporation and he also rendered service as a clerk when necessary in any of the stores owned by the bankrupt.”
“Third: Harry Stern has received a regular salary from Goldman Stores, Incorporated, for representing them in the City of New York and buying merchandise to supply several stores. Goldman Stores, Inc., was only one of many who employed him in this capacity.”
The questions asked by the referee are as follows:
“Are the officers and directors of Goldman Stores, Inc., under the above statement of facts wage earners within the provisions of the Bankruptcy Act?”
“And, second: Is Harry Stem under the statement of fact set forth a wage earner within the provisions of said Act?”
The record shows that the bankrupt had five stores, as follows: One at Monroe, La.; one at Bunkie, La.; one at Smackover, Ark.; one at Kilgore, Tex.; and one at Gladewater, Tex.
The salaries of Goldman and Finkelstein, who are president and secretary-treasurer, respectively, were $375 per month. The stock at Monroe, the domicile of the company, brought $2,600 at bankrupt sale; at Bunkie, approximately $2,900; at Smack-over, $3,100; and at Kilgore and Gladewater, $5,300 — the total being approximately $14,000. The inventory made by the trustee approximated $40,000, including the five stores. It is apparent that no single one of these stores could possibly have justified any such salaries, especially since it appears that there were a very large number of clerks and employees who have appeared and filed claims for their services as priorities, and over whom these officers evidently had supervision. There has been no attempt to separate the amounts claimed for clerks’ hire and as officials. The claimants could scarcely have performed the duties of clerks in all the stores, and they are not entitled to any such salaries for clerk’s hire alone. My conclusion is that they were paid these sums because of their official capacity and the fact that they were the principal owners of the business through its corporate stock. It has come to the attention of this court that these gentlemen have made some arrangement by which most of these stocks were bought in through their relatives or other connections, that is, the most desirable part of it, and the same now belongs to and is being operated by them or others closely identified with them. The circumstances are such that I do not think the claims of Goldman and Finkelstein can be allowed as. privileged or carrying any lien upon the estate. Blessing v. Blanchard et al. (In re Pacific Motor Car Company’s Estate) (C. C. A.) 223 F. 35, Ann. Cas. 1916B, 341.
As to the claim of Stern, the Bankruptcy Act § 64b (5), 11 USCA § 104 (b) (5), ranks as haying priority “wages due to workmen, clerks, traveling or city salesmen, or servants. * * * ” Congress found it necessary to amend the law in 1903 in order to permit “traveling or city salesmen” to claim such priority for the reason that the decisions of the courts had excluded them. Stern was a buyer, living in New York, and who was employed, not alone by the bankrupt, but by other merchants, and the sum paid him by Goldman was only a part of the income which he received for these services. I can see no difference between one who might be a traveling salesman, taking orders for the sale of merchandise in the store of *938a bankrupt, and another who performs a similar service in buying in New York markets 'goods to be placed in such store. If the former were not entitled to the benefits of the statute without amendment, it would seem logical to follow that the latter could not be included in that class, except by express provision. Then, too, the ordinary meaning or definition of the words “workmen,” “clerks,” and “servants” does not include a New York buyer. . All statutes giving privileges or priorities must be strictly construed. Applying that rule to this law, I think by “workmen” would be meant window dressers, models, tailors, etc., in a business like the present; while “clerks,” of course, are those who sell the goods, wait on customers, keep the books, stenographers, etc.; and “servants” would include delivery boys, janitors, draymen, etc. —all directly and immediately connected with the employer’s establishment or business. It would be just as reasonable to say that a commission .house who bought goods- for a merchant would be entitled to' a lien as to apply it to a buyer of the kind involved here. The only difference would be that the former would receive a percentage or commission, while the latter would be paid a salary. See numerous authorities cited in Re Quackenbush (D. C.) 259 F. 599.
,My conclusion is that none of these claim- , ants can be allowed priority. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218810/ | DAWKINS, District Judge.
This is a suit for,the refund of the sum of $3,340.89, alleged to have been paid as income taxes for the year 1920, “which was in fact and law income for the year 1919.” The claim rests solely upon the contention that as a matter of fact and law the income upon which the tax was paid was assessable for the year 1919.
The government insists that it was income for the year 1920, and further pleads estoppel, based upon the fact that the plaintiff returned it as such and paid his taxes thereon and did not file the claim for refund until limitations had run against the right to assess it for the year 1919.
The transaction out of which the money was received by plaintiff was a contract made on December 10, 1919, pursuant to which the funds were deposited in a bank to the credit of plaintiff. That contract stipulated that: “Baird has agreed to sell with full warranty of title, and the said Flannery has agreed to buy, on the terms, conditions and considerations hereinafter set out, the following described property:” (Here follows a description of an oil and gas lease.) In the second clause it further provided that: “The price of the said sale is the sum of $2,500,-000.00, which the said Flannery binds and obligates himself to pay in the manner and terms here set out * * In the third clause it was stated that $500,000 was paid with the signing of the act, receipt of which was acknowledged, and the proposed purchaser “further binds and obligates himself to pay on or before the 8th day of February, 1920, to the said Baird, the further sum of
$300,000.00,” and this clause, in its second paragraph, further reads as follows: “Upon the failure of the said Flannery to make the said payment on or before the date above specified, the said Baird shall have the right and option, after giving the said Flannery fifteen days’ notice in writing of his intention so to do, to declare the forfeiture of this contract and to retain the sums already paid, and any retention of said sums shall be in full liquidation and settlement of damages and in lieu of any other or further damages whatsoever which the said Baird, his heirs or assigns, might claim, and operate as a release and discharge of the said Flannery, his heirs and assigns, of and from any and all liability whatsover incurred under or by virtue hereof.” The fourth paragraph recites that after the payment of $300,000 on February 8, 1920, thus making a total of $800,000 cash, Baird “shall execute to the said Flannery a good and sufficient deed to the property herein sold” for notes of the purchaser, consisting of five for the sum of $300,000 each, due thirty, sixty, ninety, one hundred and twenty, and one hundred and fifty days, respectively, after date of said deed, with the final payment of $200,000, represented by one note, due in one hundred and eighty days. They were to bear interest at 5 per cent, from date and to be secured by vendor’s lien and mortgage upon the property conveyed. Paragraph 5 provides further that at any time, after January 1, 1920, Flannery should have the right to make payment of the entire balance of the purchase price, with interest to date of payment, and to receive deed for the property, and in paragraph 6, that after the payment of the $800,000, or of the entire unpaid balance, Flannery should be entitled to credit for the proceeds of any oil run from the property from 7 a. m., Nov. 8, 1919, “and shall pay to the said Baird all sums expended by him for or on account of the development of the said property from and after said date.” There were other paragraphs not necessary to consider in this suit, but paragraphs 9 and 10 are quoted in full as follows:
“9. If at any time prior to the payment of the said sum of Eight Hundred Thousand Dollars ($800,000.00)” the said Flannery should, without any payment at that time, desire the said Baird to execute a deed, then Baird agrees and obligates himself to do so, depositing the said deed in escrow in the American National Bank of Shreveport, with instructions to the said Bank to deliver the said deed to the said Flannery upon his full *949compliance with all the conditions, stipule tions and obligations hereinabove provided, that is to say, upon the completion of the payment of the said sum of Eight Hundred Thousand Dollars {$800,000.00) within the time hereinabove stipulated and upon his execution of the notes aforesaid, secured as above provided.”
“10. This Agreement to bind the heirs, executors, administrators and assigns of the respective parties hereto.”
The first question to be determined is as to whether or not the $500,000 or any part thereof paid and received on December 10, 1919, was income within the meaning of the tax law. It is conceded that the plaintiff’s business was conducted on a receipts and disbursements basis. At the beginning, this necessitates a consideration of the effect and import of the second paragraph of section 3 of the contract of December 10, 1919, above quoted in full. The Louisiana Civil Code, art. 2463, declares:
“When Earnest is - Given. But if the promise to sell has been made with the giving of earnest, each of the contracting parties is at liberty to recede from the promise; to-wit: he who has given the earnest, by forfeiting it; and he who has received it, by returning the double.”
'Without the second paragraph of article 3 of the contract, quoted in full above, it would evidence a clear and unequivocal promise to sell and agreement to buy on the teams named. This quoted clause could not become operative until the 8th of February, 1920, when the second payment of $300,-000 was due, the failure of Flannery to pay the same, and the giving by Baird of fifteen days’ written notice of his intention to declare the forfeiture. During this period of notice it would seem reasonably clear that Flannery could have prevented the forfeiture by paying the $300,000. The effect of this provision was to give Baird the right to do what Flannery or any one promising to purchase, where earnest is given, could do, that is, forfeit the earnest money and decline to perform. If it had been a giving of earnest, within the meaning of the Code, then from the beginning, the right would have existed, of either to decline to perform — Flannery by forfeiting the deposit, and Baird by returning it with a like amount. Civ. Code La. art. 2463. However, the parties made a different agreement, which they were at liberty to do, with regard to the forfeiture, by which the right was transferred to Baird to declare the forfeiture and to decline to perform. The question of whether or not the deposit Was earnest money or “to bind the trade” was one of intention, to be drawn from the whole instrument, and my eonelusien is that it was not such in this instance. See Nosacka v. McKenzie, 127 La. 1063, 54 So. 351, and authorities therein reviewed.
On the other hand, I think this stipulation does affect materially the question of whether the payment of $500,000 could be said to be an unequivocal transaction involving the receipt of income subject, to taxation at that time. It is evident that the plaintiff did not consider or treat it as such, for he returned it in 1921 as income for the year 1920, after he had instituted suit against Flannery in January of 1921, for the annulment of the contract because of the latter’s failure to perform by paying the $300,000 due on February 8, 1920, and subsequent installments. Of course, the parties could not change the legal effect of what they did in December, 1919, by subsequent actions; but the manner in which they construed their agreement is of assistance in determining its meaning, if the latter is doubtful. But for the above-quoted provision in section 3 of this agreement, the receipt of the money in 1919, in my opinion, would have been income, notwithstanding the right of Baird under the Louisiana Code to resolve or have it set aside for nonperformance. The latter is a privilege accorded by law in all commutative contracts. But it was stipulated that he should have the right at a certain time to refuse further to perform — a special provision permitting him the sole option, of. determining whether he should keep the money and declare a forfeiture, instead of, as the law provides, returning it with a like amount for the privilege of withdrawing. It left the matter within his own conscience, subject to the lapsing of the required time and the failure of Flannery to do eertain things, as to whether he would exercise the right. He, therefore, did not receive the money unconditionally, as in a normal transaction where part of the purchase price of property is paid in cash and the balance in deferred installments. His choice upon this score was not exercised until January, 1921, when he determined to disregard that option and sued for the dissolution of the contract, offering to return what had been received from Flannery, as he was required to do under the state law to have the agreement dissolved, as distinguished from a forfeiture. His own conduct in entering the money in a “suspense account” on his books, and putting it in the bank as an “option” *950showed clearly that he did not intend to treat the matter as closed until it could be seen whether Flannery would make the payment of February 8,1920. It is true that the money, or a good portion of it, was paid out by Baird, commencing in May, 1920, for the account of Flannery, pursuant to an agreement with the Sinclair Oil Company for certain tanks, etc., erected upon the property covered by the agreement of December 10, 1919, under which the funds in dispute were received. But, clearly, there was no conveyance of the property in this last-mentioned contract, nor was there any time thereafter when Flannery could have compelled its transfer for the reason that he never paid the $300,000 due February 8, 1920. Baird remained in control of the property at all times, developed it and received the proceeds of the oil. I am, therefore, constrained to hold that the Commissioner correctly treated the payment of $500,000 as a deposit, the right to retain which, on the part of Baird,. was contingent upon either of two eventualities, both of which were to happen on or after February 8, 1920, to wit, first, the payment of the $300,000 by Flannery, or second, the forfeiture of the $500,000 by Baird after fifteen days’ written notice. Of course, the latter could have, after that date, ignored both and sued for specific performance or the payment of the subsequent installments, but this right also did not arise until 1920, and was never exercised,'as was true of the other two conditions subsequent, just mentioned.
It is not necessary to pass upon the other issues raised.
I, therefore, find that the plaintiff is not entitled to recover for the reason that the money paid was not assessable upon income for 1919. The demand will be rejected. Proper decree should be presented. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218811/ | ANDREW M. J. COCHRAN, District Judge.
This is a proceeding in admiralty under section 183, 46 USCA (Rev. St. § 4283) for limitation of liability. It is before me on the petitioner’s exceptions to the special master’s report, to whom the issues therein were referred to hear the evidence and make findings, whose findings were adverse to him, and for final decree. The petitioner operates a ferry across the Green river in the highway between Owensboro and Henderson, which, at this point, divides the counties of Daviess and Henderson, the former being on the east and the latter on the west, known as Hambleton’s Perry. The ferry consists of a barge operated by a motorboat. On December 6, 1929, the decedent Bennett McGee was driving a truck for J. C. Pisel & Co. of Louisville, Ky., from that city to Henderson going west. He had in the cab with him his wife, the decedent Henrietta McGee, and his son, the decedent Robert Lee McGee, 4 years of age. He drove the truck from the Daviess county side on to the barge, and was transported to the other side. As he was leaving the barge, the chain by which it was tied to the bank broke, the barge backed from under the truck, and the truck itself backed into the river. All three of the occupants of the cab were drowned. The petition seeks to limit the liability of the petitioner, the owner of the ferry, for their deaths to the value of the barge and motorboat, appraised at $1,500. This is not a case for the application of the statutory provision relied on. It applies only when the owner of the vessel is sought to be made liable for the fault of some person other than himself. In such ease the liability is to be limited to the value of the vessel and earned freight if such fault is without his “privity or knowledge.” Here the petitioner is sought to be made liable, not for the fault of some person other than himself, but for his own fault. The owner of a vessel owes to the passengers thereon the duty of exercising reasonable care to see that the vessel is in a reasonably safe condition, i. e. that it is seaworthy, and if he fails personally, i. e., not through some employee, to exercise such care, and by reason thereof a passenger is injured, he is hable for the entire damage caused thereby. He has no right of limitation of his liability in such ease. As to the duty of the owner of a vessel in this particular this was said in the case of Patton-Tully Transp. Co. v. Turner (C. C. A.) 269 F. 334, 338. “It is equally clear that there is liability if the injuries result from lack of original seaworthiness (Chelentis v. Luckenbach S. S. Co., 247 U. S. 381, 38 S. Ct. 503 [62 L. Ed. 1171]); and we think it is the proper inference from the principles stated in the opinion just cited as well as from the discussion in The Osceola, 189 U. S. 158, 175, 23 S. Ct. 483, 47 L. Ed. 760; that the duty to use reasonable care in keeping the ship and her appliances in safe condition is a continuing duty resting upon the owners during the voyage, that this is nondelegable, and that, for injuries resulting from its breach, the owners are liable to the seamen, even if there is an entire lack of that privity or knowledge which will deny to the owners the right to limit their liability. We do not find this to be expressly decided in eases which are later' than, and recognize the rule of, The Osceola; but it had often been held prior to The Osceola. The Osceola seems to accept these holdings as right, when based on a failure to maintain the ship or appliances in seaworthy condition, and there is close analogy to the common law nondelegable duty of maintaining a safe place to work.”
To the same effect is the ease of Henry *952Gillen’s Sons Lighterage v. Fernald (C. C. A.) 294 F. 520.
In the case of Stewart v. United States (D. C.) 25 F.(2d) 869, 870, it was said: “The law is that the owner owes a nondelegable duty to furnish a seaworthy vessel, and is liable where the injuries result from lack of original seaworthiness.”
The petitioner owed this duty to the decedents, passengers on his ferry, and the question is whether he personally breached it, and, if he did, whether such breach was a proximate cause of the deaths. It is the personal fault of the petitioner that is in issue. The matter of the fault of any other person is not necessarily involved. Hence it is that the authorities cited on behalf of the petitioner as to the application of the statute referred to have no bearing here.
The particular in which the defendant claims that the petitioner personally breached this duty was in the chain whieh he provided for tying the barge to the bank, the breaking of whieh was the direct cause of the disaster. It claims that the chain was unsafe and that the petitioner himself failed to exercise reasonable care in seeing that it was reasonably safe. The links in the chain were made out of five-eighths soft steel and were 6 inches in length. It was made about 5 or 6 months before by a negro blacksmith in the neighborhood. The blacksmith was old enough to be called “Uncle” and he had followed his craft for 40 years, 35 of which were on his own account. His father before him had been a blacksmith. His reputation as a skilled and competent blacksmith was good. The links were formed by welding the steel by heat supplied by the usual blacksmith’s furnace. His method was to make two links and then make a third link connecting the two. The giving away of the chain was due to one of the links parting where it had been welded. The weld was a bad one. It may be said that it was a very bad one. Its two ends were held together by a slight connection at the outer edge, which does not seem to have gone all the way around. It is the petitioner’s claim, and he so testified, that the defect in the link could not be detected by a visual inspection. There is evidence on behalf of defendant that it could. But the ease will be disposed of on the basis that it could not— that as to such inspection it was a hidden defect. The petitioner made no test as to the safety of the chain. He did no more than give it a visual inspection. He testified that upon its delivery to him, and before he used it, he so inspected it, and this he did a number of times thereafter, the last time being about 15 days before the accident.
The question whieh the case presents is whether this is all that reasonable care required of him or whether he should not have subjected it to some test that would have determined its safety. A master owes his servants the duty of exercising reasonable care to provide him with reasonably safe appliances with which to work. This duty is said to be performed if he purchases the appliances from a reputable manufacturer. In 39 C. J. p. 424, it is said: “Where a master purchases simple or common tools from a reputable manufacturer he need not make inspection thereof to ascertain their fitness for use although where the instrumentalities so purchased are not of such character he is required to use reasonable care and to inspect the same, but he is not guilty of negligence for his failure to discover latent defects.”
According to this, he owes no duty of testing the appliance so purchased. He need not even inspect it. He has the right to take it for granted that it is not defective, having purchased it from such a manufacturer. Here the petitioner did not purchase the chain in question from a reputable manufacturer. He purchased it from a reputable blacksmith, who had himself made it. Does the principle referred to apply to such a ease? There is a difference in the two cases that may make it inapplicable. I think it may be said to be a nlatter of common knowledge that a manufacturer of chains tests them so as to determine what strain they will bear, and he can furnish the purchaser of a particular chain with information as to just how much strain it will stand; i. e., its factor of safety. An ordinary blacksmith is not supplied with such means of testing the safety of a chain. This is the best possible means of testing its safety. It puts it to the test. In view of this difference, it may be that a purchaser of a chain from a reputable blacksmith by a master for the use of his servants owes him the duty, not only of inspecting it, but of subjecting it to such tests for determining its safety as he may have at hand, and that in the matter of inspection he should use a magnifying glass in aid of his eyes.
But this ease does not involve the duty of a master to his servant in the matter of appliances but of the carrier to his passengers. A carrier owes to his passengers a higher degree of care than a master owes to his servants. The care which a carrier owes his passengers is said in the case of Pennsylvania *953Co. v. Roy, 102 U. S. 451, 26 L. Ed. 141, to be “to observe the utmost caution characteristic of very careful, prudent men” and to exercise “extraordinary vigilance aided by the highest skill.” As to its liability for injuries caused by a defective appliance' purchased from a reputable manufacturer, it has been held that it is liable for the negligence of the manufacturer in the construction of the appliance, even though it has not been guilty of a failure to exercise the high degree of care required of it. It was so- held in the cases of Morgan v. Chesapeake & O. R. Co., 129 Ky. 731, 112 S. W. 859; Id., 127 Ky. 433, 105 S. W. 961, 15 L. R. A. (N. S.) 790, 16 Ann. Cas. 608; Dibbert v. Metropolitan Inv. Co., 158 Wis. 69, 147 N. W. 3, 148 N. W. 1095, L. R. A. 1915D, 305, Ann. Cas. 1916E, 924.
Such is the law in New York and California. This position shows how far the courts holding it will go in making a carrier liable to a passenger for an injury caused by a defective appliance. It practically makes him an insurer. Of course, such a ease would be one for tbe limitation of liability under tbe statute in ease of a vessel carrier. But tbis is not the position of the majority of the courts as appears from the notes to those two eases in L. R. A. (N. S.) and Ann. Cas. Those-courts, however, do hold the carrier in such eases to a high degree of care in inspecting and testing the appliances which have been purchased from reputable manufacturers. The matter is thus put in 10 C. J. p. 954:
“The duty of the carrier as to furnishing materials and appliances originally safe, suitable and adequate is discharged by a purchase thereof from a competent and reputable manufacturer and an inspection to- detect defects discoverable by any tests which the highest degree of care and prudence can suggest and hence will not be liable for injuries resulting from bidden defects Which could not be discovered and provided against in tbe exercise of such care and prudence. A carrier is not liable for latent defects which could not be discovered by the most careful and thorough examination and certainly is not liable for latent defects of such a character that no degree of skill, care and foresight could detect their existence. Thus it has been held that a carrier is not liable for defects in a ear wheel not discoverable by the usual and proper tests.” •
According to this, it is not sufficient that the carrier has purchased the appliances from a “competent and reputable manufacturer.” Having done so, he has no right to take it for granted that it is not defective. A visual inspection of the appliance will not answer. He must use “tests which the highest degree of care and prudence can suggest.” He must make a “most careful and thorough examination.” If this is the rule where he purchases the appliance from such a manufacturer, how much mo-re is it so if the purchase is from a reputable blacksmith who- is not equipped to test its strength. I go back then to the care exercised by the petitioner in determining tbe safety of the chain. He did not act on the idea that, as he had obtained it from a reputable blacksmith, he need not exercise any care whatever, but could take it for granted that it was not defective. He conceived that it was incumbent on him to exercise some care. This implies that he thought that the blacksmith was not entirely dependable. Hence he gave it a visual inspection. This is all he did. He admitted in his testimony that he knew that a magnifying glass would aid his eyes in making the inspection, but be did not avail himself of tbis aid. He also admitted that tbe safety of the chain could be tested by tbe use of acid, but be made no such test. It is clearly proven that the ordinary test used where chains are made in the way this one was is to hammer it when cold. By so doing, if the weld of a link is defective, its two ends will be knocked apart. He did not use this test. Nor did he inquire of the blacksmith if he did. According to the claim of the defendant, if he had so inquired, he would have found out that he did not test each link in this way. He only so tested one-third of the links. The blacksmith testified: “When I would weld two links I would take the third link and weld those two together. Everytime I would weld the link I would hammer it and see if it was good and solid before I would turn it loose.”
The defendant takes it that his meaning was that he only hammered the third link. But this is not entirely clear. The fact, however, that the blacksmith may have used that test to each link, petitioner not knowing that he had, did not justify his refraining from making such test.
My conclusion is that the visual inspection of the chain by tbe petitioner was not the exercise of reasonable care on his part in looking after its safety, and that the finding of the special master that he failed to exercise such care is sustained by the evidence. It seems to me also that it is open to say that the petitioner was negligent in failing to have two chains to meet the contingency of one of them breaking. This may be case of bind-*954sight being better than foresight, but I am inclined to the view that due reflection and proper appreciation of the risks would have led him to resort to this additional precaution to prevent harm to his passengers.
It remains to consider whether such negligence on the petitioner’s part was a proximate cause of the accident and, if so, the sole proximate cause thereof. The petitioner claims that it was not the sole proximate cause; that the negligence of the decedent Bennett McGee, the driver of the truck, was a proximate cause thereof also in that it contributed thereto. P'ossibly if he was guilty of negligence in the particular claimed by petitioner, it is open to say that such negligence on his part was the sole proximate cause of the accident. In that contingency there would be no liability on his part for the death of either decedent in that, though he had been negligent, such negligence was not the proximate cause thereof. But I do not understand the petitioner to go this far. His claim is only that the negligence of the driver contributed to the accident, not that it broke the causal connection between his negligence and it. The sole effect of such negligence on the driver’s part is to affect the amount of recovery on behalf of his estate. It cannot affect the recovery on behalf of the estates of his wife and son, in that it cannot be imputed to either. .In view of its effect on the amount of recovery on behalf of his estate, consideration must be given to petitioner’s claim that the driver was guilty of contributory negligence. There were three witnesses to the accident: Charles Dillehay, whom the petitioner had employed to operate the ferry at a certain weekly wage for daytime work and a certain commission for work at night; Bernard Elder, 19 years old, employed by Dillehay at $1.25 per day to do the actual work of operating; and W. A. Bennett, 56 years old, a farmer who lived, and had lived all his life, about 6 miles from the ferry in Henderson county. He was and had been for 14 years chairman of the school board of that county. The accident happened about 10 o’clock in the morning. Elder was operating the ferry. Dillehay was on top of the bank on the Henderson side, and Bennett was on that side also, according to his statement just a little under the top of the bank. Both were about 150 feet away from the landing. He had come there with W. R. Duncan in a truck which Duncan was driving. It was their purpose to cross the ferry. Duncan did not see enough for his testimony as to what he saw to be of much value. Bennett testified on behalf of the defendant; Dillehay and Elder on behalf of petitioner.
According to the testimony of Bennett, there was no negligence on the part of the decedent Bennett McGee, the driver of the truck. He testified that, when his truck stopped, he got out of it and stood in front of it watching the ferry, Duncan remaining in the truck. When he first saw the ferry, it had left the Daviess side and was coming towards the Henderson side. It landed, and Elder got out of it and made the chain fast. He then opened the chain across the ferry to prevent vehicles and persons leaving it until it was proper for them to do so. He got out of the way on the upper side and motioned with his hands to the driver of the truck to come ahead. He started very slowly, and continued so moving thereafter when the front wheels of the truck struek the concrete roadway, which is 9 feet wide and 100 feet in length from the water up the hill, and started up it, the chain broke, and the ferry went back pretty fast. It was kicked out and shot back into the river. As soon as the chain broke, the driver began racing his motor and made a .desperate effort to continue moving up the incline, but was unable to do so, and his truck backed into the river. He testified that his attention and vision were focused on the truck, and' that he watched it all the time. He gave as a reason for so doing that he was afraid of the river because of accidents which had happened there. He was positive that his account of the affair was correct. He was no relation- of the decedents, and had no interest in the outcome of this litigation.
Elder gave an entirely different account of the accident and how it came about. He testified that he placed the truck a little past the center of the ferry towards the Henderson side. The ferry was 58 feet long. The distance from the center to the end was 29 feet, of which 10 feet was in the rake, leaving 19 feet in the keel. The wheel base of the truck was 17% feet. If placed exactly in the center, there would have been 10%, feet from the front wheels to the back end of the rake. The ferry had an apron in front of the rake 2% feet wide. His testimony as to what took place after the truck was so started on the ferry was this. He started the motor, and, after the ferry was in motion, got out of it and collected the ferriage. In landing, the rake of the ferry ran up on the concrete and laid on it nearly its full length. After it landed, he tied it to the bank, took down the barrier chain, went to the truck, and gave the driver a receipt for the ferriage on a *955piece of road map, lie not having any receipts because not in the habit of giving them. He then started toward the front end of the boat to watch the truck off. As he did so, the driver had his motor racing, let the clutch out or in with a jerk, which put his front wheels up on the rake. This broke the chain. He then kind of slowed up the truck, which was still rolling, and started again. This start put his front wheels on the concrete. When this happened, the ferry began to slip baek, and the further baek it slipped it seemed like it would pick up a little more, and when the rear wheels went down off the ferry, they kicked it out into the river and dropped down into it. When he saw the chain break, he threw up his hand and grabbed the wire extending from one bank to the other on the upper side of the ferry, and to which it was attached and started hollering to the driver to stop and kept doing so until it was too late. When he began to holler, the truck was just starting on the rake, and he was right by the driver’s side, ahead of him possibly a step. This is the account of the affair which he gave in his direct examination on behalf of petitioner. I make out therefrom that, when the driver let his clutch out or in with a jerk, this caused the front wheels of the truck to jump forward from where they were on to the rake. He after-wards testified that when this movement ceased those wheels were 2 or 3 feet on the rake. If at the start they were a little farther than the center of the ferry, this would make a jump of near 10% feet, if not at least that distance.
His testimony here and that of Bennett agreed in this — that the ferry did not begin to slip back until the front wheels of the truck were on the concrete, and that it then did so because of the pressure on it of the rear wheels. On cross-examination, however, he was asked this question: “The ferry didn’t begin to kick out into the river until the front wheels of the truck got on the concrete, did it?” His answer was: “Yes it scotted back some.”
He was again asked: “When did your ferry begin to kick baek into the river?” His answer was: “When the front wheels went off the flat.”
In a further answer he said that “the boat slipped gradually until the front wheels got on the concrete enough to mash it down.”
Possibly his whole testimony on this subject should be taken to amount to this: The ferry slipped gradually from the time of the jerk until the front wheels got on the rake. This put a stop to the slipping by their mashing the rake down on the concrete. When the front wheels hit the concrete, the rear wheels kicked the ferry back into the river. So that it is possible that there was a difference in their testimony in this particular. They did differ in this — that Elder, after tying the ferry and letting down the barrier, went baek to the track and gave the receipt for ferriage and then went to the front again; that there was no signal given to the driver to come ahead; that the truck started with a jerk or a jump; that it was then, and not when the front, wheels of the truck struck the concrete, that the chain broke; and that Elder hollered to the driver.
There are a number of considerations which tend to weaken the force of Elder’s testimony. His feelings were on the side of the petitioner, his employer. It is hard to account for McGee’s wanting a receipt for his ferriage. His employer had sent him to Henderson, and knew that he would have to pay this ferriage to get there, and not unlikely knew that petitioner was not in the habit of giving receipts and was not supplied with blank receipts. If his testimony is to be taken that upon the jerk the truck jumped 10% feet or any substantial number of feet so as to place the front wheels 2 or 3 feet on the rake, this does not strike me as likely. The truck weighed 9,500 pounds and the freight 3,500, making a total of 13,000> pounds. If his testimony is taken to be, further, that the ferry did not begin to back until the front wheels of the truck struck the concrete, this is hardly likely. If the jerk broke the chain, it is most likely that it was taut at the time, and such a force must have caused the ferry to back substantially. If it did so baek, the driver must have known that it was backing as well as that the chain had broken so as to cause it to back, and there is no reason why he should not have heard Elder’s hollering. It was therefore reckless for him to attempt to leave the ferry under these circumstances. There was no occasion for his so doing. He was an experienced and careful driver, and had his wife and son with him. Dillehay, who at time of the accident was on top of the bank on the Henderson side, testified that he was talking to the driver of a state highway truck with his baek to the river. The truck of Duncan and Bennett was in front of the former truck. His first knowledge of the accident was that he heard Elder holler “Stop,” and that he wheeled and went beyond the truck in front. When he got where he could see, the front wheels of the Fisel truck were on the concrete, and he saw the hind wheels *956just as they left the ferry and splashed into the water. The ferry hacked to the center of the river. It was 104 yards or 312 feet across the river. The force of the kick of the hind wheels of the truck was sufficient to drive the ferry out into the river a distance of about 150 feet. His account of what took place just before and at the time the ferry was so kicked back agrees with that of Bennett. His testimony that whilst he was standing with his back to the river he heard Elder holler “Stop” tends to support Elder’s testimony that something had happened before what he saw when he got in sight. But Bennett, whose attention was fixed on the truck from the beginning, testified that he did not hear Elder holler stop. The only sound which he heard was that of Dillehay saying, as he passed him, “There’s a woman in the truck.” Duncan also testified that he did not hear Elder holler. The first thing that he heard which roused his attention was the loud noise. made by the racing of the motor of the truck in the attempt made to keep it from backing into the river. He then looked down the hill and saw the feriy going out from under the truck pretty fast. He corroborated the testimony of Dillehay that the ferry was kicked back halfway of the river. He contradicted Bennett as to his standing in front of their truck when he witnessed the aeeident. He could not, however, say whether Bennett was inside or outside of the truck. If he was outside, as Bennett said he was, the reasonable account of his being so was that he might witness the landing as he testified. It is immaterial whether he was exactly in front of the truck. There was testimony introduced on behalf of the petitioner to the effect that at times when trucks were driven off the ferry without a jerk, and the chain was not taut but slack, the effect of the movement was not to cause the ferry to slip back so as to tighten the chain. Experiments were made'under this condition, and such was the result. At the same time experiments were made of the truck starting rapidly and with some force. In that case the chain became very taut. I am not sure just what effect it is claimed by the petitioner should be given to this testimony. It may be that he claims that it shows.that the ferry could not be driven back when a truck was leaving it without a jerk, and hence corroborates Elder’s testimony that McGee started his truck with a jepk. But it cannot be generalized from the instances testified to that in no ease will the pressure of the rear wheels of the truck as it is leaving the ferry cause it to move back. The use of a chain presupposes that it may. And I would think that it would always be kept taut in order to prevent any such movement. It may, however, bei petitioner’s position that, even if McGee did not start with a jerk, he was careless in operating the truck so as to cause the ferry to move back. I do not think that sueh effect can be given to it'.
I have thus considered all the evidence having any bearing on the question as to whether McGee was negligent in operating the truck as he was leaving the ferry. What the case comes to is this: The bui’den of proof was on the petitioner to establish by preponderance of the evidence that he was. The sole evidence introduced by him tending to show this was the testimony of Elder. Against that is the testimony of Bennett. As I take it, the testimony of the two is in conflict. They cannot stand together. It is not possible to reconcile them on the basis that Elder’s account is the true one. There is no other testimony and no circumstances proven tending to corroborate the testimony of Elder. There is no reason why I should accept his testimony in preference to that of Bennett. If any preference is to be shown, it should be to that of Bennett. If the testimony of the two is put upon an equality, petitioner must fail. The special master who saw the witnesses and heard them testify found that McGee was not negligent. I do not think that I would be justified in differing with him.
The only other question in the ease is as to the amount of damages. Exceptions were taken to the special master’s findings on this score, but they have not been argued before me, and I do not feel called on to consider this phase of the case.
The exceptions of the petitioner are overruled, and the defendant is entitled to a decree which he will prepare and submit.
On Petition for Rehearing.
This suit is before me on petition for rehearing filed by plaintiff. He questions the position taken by me that this is not a ease for the application of section 183,'46 USCA. Possibly I can put the position more clearly than I did in my original opinion. Every carrier, by water as well as by land, owes the duty to his passengers to exercise reasonable care to provide a reasonably safe vehicle in which to carry them. This duty is an absolute one. He is bound to see that it is performed. He cannot delegate its performance to another and escape liability for its nonperformance. Sueh liability is for tba entire damages sustained thereby. There is, *957however a difference between a water carrier and a land carrier, in one particular, and that is this. The former may be entitled to have his liability limited to his vessel and earned freight, whereas the latter is never entitled to any limitation in his liability. The water carrier is entitled to such limitation when he delegates the performance of such duty to another person, and his breach thereof is without his privity or knowledge; i. e., he did not participate in, and had no knowledge of, such breach. If, however, he does not delegate the performance of the duty to another, but undertakes to perform it himself, and does not do so, he is not entitled to limitation, but is liable for the entire damages just as much, so as if in the other ease he participated in or had knowledge of its breach by the person to whom he had delegated its performance.
The case of The Yungay (D. C.) 58 F.(2d) 352, 356, cited by plaintiff, aptly illustrates the distinction that I am trying to make. There the injury complained of was due to defective compasses. The owner had delegated the duty of providing suitable compasses to the master of the vessel. It seems to have been claimed that he had no right to make such delegation. It was held that he had such right. The master breached this duty, and, as the owner had not participated in the breach and did not know of it, it was held that he was entitled to limitation. The court said: “Ordinarily the owner may rest his dut-y to make the ship seaworthy upon a suitable agent, and thus be relieved under the limitation aet, where he has no notice or knowledge of the agent’s negligent performance of the duty. * * * The burden of proving this lack of privity or knowledge, his own nonparticipation in the fault or negligence causing the injury, is upon the owner.”
It said further: “In my opinion, the duty here could be deputed. The owner, who was not a navigator, was not obliged to study the science of navigation or acquire expert knowledge concerning his vessel and equipment before sending her out. It cannot be said that at his own peril he left the adjustment of the compasses to another.”
. It said finally: “We come back to the question, the crucial one as to limitation, whether Webster [the owner] has shown that the faulty condition of the Yungay’s compasses when she set forth on the voyage was without his personal participation. I incline to the view that he has. I accept as true his testimony as to inquiring of the master about the compasses and being told that the master himself would do the necessary ad justing.
“Webster apparently knew enough about ships to realize that the compasses would need adjustment after the lay up and repairs, and he put the duty of adjusting them upon the master, who held himself out as competent to do the work.”
In that case, had Webster, the owner, not delegated to the master the duty of providing suitable compasses, but had undertaken to perform that duty himself, the question of privity or knowledge would not have been in the case. The sole question would have been whether he had breached that duty — had failed to exercise reasonable care in providing reasonably safe compasses for the vessel —had himself been personally negligent. If he had, he would have been liable for the entire damages without any limitation. If he had not, he would not have been liable for any damages whatever.
So here the plaintiff did not delegate to Dillehay or any other person the duty of providing a reasonably safe chain for his ferry. He undertook to perform that duty himself, and the sole question in the ease is whether he failed to exercise reasonable care in so doing. If he did, he is liable for the entire damages. If he did not, he is not liable for any damages whatever. Hence it is that the sole question in this case is whether plaintiff failed to exercise reasonable care in providing a reasonably safe chain for his ferry; i. e., was negligent in so doing. The statute does not apply to the case because it only applies where liability is claimed for the negligence of another, and liability is not claimed here on this ground. Therefore the numerous eases cited where the owner was sought to be made liable for the negligence of another have no application here, and no help can be gotten from their consideration. The- plaintiff in his petition for rehearing addresses himself to the question of his negligence. He considers it as having bearing on his right to limitation. It has no such bearing. Its sole bearing is on the question of liability at all. If he was negligent, he is liable to the full extent of the damages. If he was not negligent, he is not liable to any extent whatever. He seems to think that, though he may have been negligent, his liability is affected if he was not guilty of bad faith or willfulness. It is not a question of bad faith or willfulness. There is no room to claim that plaintiff was guilty of either. It is solely a question whether he was guilty of negligence. As bearing on that question, it is said that it is *958shown without contradiction that shop-made chains are in general use on all ferries. I suppose reference is had'to all ferries on Green river. I do not so read the evidence. According thereto, as I read it, the plaintiff is the only ferryman on that river that used such a chain. The plaintiff is the only witness who testified on this subject. He testified that he did not know any ferry' on Green river that had chains like his; that principally they had something like a log chain; that his chains were as strong again and twice as big; that the sort of chains in general use on Green river were just ordinary log chains, looked more like a log chain. They were fastened to the boat, and on landing wrapped around a stake on the bank. Log chains I take to be factory made chains. The plaintiff refers to them as being sold with a guaranty. I would restate here my position as to plaintiff’s negligence. He was transporting by his ferry across Green river at least seven or eight hundred machines, of which at least 35 or 40 were heavy trucks. Thiá called for great care in the selection of the chain. The only means which he had to keep his ferry in place on landing was a single chain, and that chain was one made by an ordinary country blacksmith. The plaintiff seems to have known nothing more about him than that he had done work for him previously and his work was satisfactory. '
The evidence shows, and it is a matter of common knowledge, that chains are manufactured by reputable manufacturers who are supplied with appliances to test their safety, and there is some evidence that they are sold with a guaranty. An ordinary blacksmith is supplied with no sueh appliances. He can determine the sufficiency of his welding only by visual inspection and by hammering the links when cold. I think that due care on plaintiff’s part required that he should have supplied himself with a factory and not a shop made chain. Having supplied himself with the latter, he should have had two chains to guard against the possibility of one of them breaking. Having only one, he should have seen to it that it was hammered when cold. There is every reason to believe that, if this test had been applied to the link which parted, its defectiveness would have been disclosed. He gave no direction to the blacksmith, Woodward, on this subject, and made no inquiry of him as to what inspection he had made or what tests he had used. His testimony as to the frequency and minuteness of his inspection indicates that he doubted the chain. The mere fact that no defect was discovered to the naked eye was not sufficient to remove the doubt. Nor would an examination with a microscope or by acid have been sufficient. There was the possibility that the link was not welded on the inside. Hence the necessity of testing its safety by hammering when cold. In addition to this, the evidence justifies the conclusion that a proper visual examination- would have disclosed the defect. It was an extremely bad weld. The evidence tends to establish that, so far as there was a weld, it was on top and not at the bottom. Six different witnesses testified that in their opinion a proper visual examination would have brought to light the defective. weld. The plaintiff’s testimony as to the minuteness of his inspection is not conclusive. His interest in the outcome of this litigation affects the weight of his testimony.
The petition for rehearing is overruled. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218812/ | MOSCOWITZ, District Judge.
Mills Novelty Company, the complainant herein, seeks to enjoin the commissioner of police of the police department of the city of New York, and the deputy chief inspector of the police department of the city of New York, from unlawful interference with mint venders, known as “Mills Non-Convertible Venders,” owned and leased by the complainant within the city of New York and within the jurisdiction of this court.
Judge Thomas, in the ease of Mills Novelty Company v. Farrell, 3 F. Supp. 555, in the United States District Court, District of Connecticut, made a final decree on March 10, 1933, perpetually enjoining and restraining the chief of police of the police department of the city of Hartford, state of Connecticut, from seizing or destroying complainant’s vending machines used for the sale of complainant’s mints, and from arresting the possessors of such machines, and also from intimidating the possessors of such machines. Judge Thomas, in an opinion filed March 1, 1933, in that action, decided that the machines in question are not gambling devices per se.
The decree entered by Judge Thomas was unanimously affirmed by the Circuit Court of Appeals, Second Circuit, in an opinion dated April 17, 1933, 64 F.(2d) 476, 477. The Circuit Court of Appeals decided:
“The machine may not be interfered with or changed in any way so as to convert it into a gambling machine as was the case in Triangle Mint Corp. v. Mulrooney, 232 App. Div. 783, 248 N. Y. S. 880. This machine has a stationary prong riveted to the end of the escalator head and a spring which is completely covered by a metal housing and is attached to a hole in the rear portion of the said prong so that all coins go into the cash box, and they cannot possibly be ejected from the machine. This metal housing can be removed only by the use of a hammer which would result in the destruction of the machine. Many of the machines have been sold and are in use. Similar vending machines ejecting tokens have been held by the courts in other jurisdictions not to constitute a gambling device. Ashcraft v. Healey, 23 F.(2d) 189 (C. C. A. 5); People v. Jennings, 257 N. Y. 196, 177 N. E. 419; Overby v. Oklahoma City, 46 Okl. Cr. 42, 287 P. 796. One may not suppose that a person desiring to gamble would put up money in the hope of obtaining tokens which can be used only to produce insignificant humorous sayings. The amusement feature of the machine does not make the machine a gambling device. It arouses interest and perhaps attracts customers to the machine in much the same way as advertising would, but this is lawful.
“The bill of complaint and the admissions sufficiently show interference by the appellant which warrants the injunction prayed for. Iowa-Des Moines Nat. Bank v. Bennett, 284 U. S. 239, 52 S. Ct. 133, 76 L. Ed. 265; Bandini Petroleum Co. v. Superior Court, 284 U. S. 8, 52 S. Ct. 103, 76 L. Ed. 136; Smith v. Cahoon, 283 U. S. 553, 51 S. Ct. 582, 75 L. Ed. 1264.”
Judge Thomas appeared as a witness before this court and testified that the machine in this action is identical with the machine which he had before him in Mills Novelty Company v. Farrell, supra. An examination of the machine, as well as the testimony in this ease, indicates quite clearly that Judge Thomas was correct in that statement.
The corporation counsel of the city of New York, representing the defendants herein, conceded that the machines in question are not gambling devices per se, as evidenced by the -following which took place at the trial:
“The Court: Get back to my question which has not been answered. You say that, the Police Commissioner has issued an order,, that they are not going to interfere with these' machines?
“Mr. Wilson: Yes.
“The Court: You make this statement ini *970court that he will not interfere with the machines?
“Mr. Wilson: Yes.
“The Court: That is because in your judgment, and in the judgment of the Police Commissioner, the particular machines are not a violation of law?
“Mr. Wilson: To look at them outwardly. I will answer your question, yes.
“The Court: You mean that they do not violate the law, the machines that were seized?
“Mr. Wilson: May I have time to speak to my associate?
“The Court: Yes.
“Mr. Wilson: I will say that they are not gambling machines per se.”
The police commissioner, when questioned by the corporation counsel, testified as follows: “Q. Commissioner, are you cognizant that the Court of Appeals, People v. Jennings, 257 N. Y. 196, 177 N. E. 419, which in substance held that the same machine now being tried in this cause has been held to be not a gambling device per se? A. I am.”
The police commissioner in his testimony recognizes the fact that the machines are not gambling devices per se.
•On April 27, 1933, after the commencement of this action, the police commissioner issued 'the following order to the police: “Commanding officers, all commands of Boroughs, instruct members of the force under your command to refrain from seizing any slot machine that does not come within the purview of Section 982 of the Penal Law without first playing the particular machine to determine if it is or can be used for gambling purposes.”
The police commissioner testified: “Q., That, Commissioner, correctly states your attitude, does it not? A. Yes.”
The police commissioner testified: “I issued the order because I felt that every policeman in seizing the machines should first get the necessary evidence and determine whether or not the machine was being operated illegally and I felt in- this ease that they should have done it in this case.”
He further testified: “Q. In other words, you agree with the complainant that there should not be wholesale seizures of these machines? A. Yes.”
He further testified: “Q. As I see it, your view is the same practically as that of the plaintiff. The plaintiff is not asking that you instruct your police not to make arrests for gambling if actually done with any particular machine, the relief he is seeking, that there should not be wholesale seizures of this machine unless it can be shown that they are actually engaged in gambling; do you agree with that? A. Yes.”
It appears from the police commissioner’s own testimony that he frankly admitted that the police, in making wholesale seizures of the machines, did so illegally, and stated that no seizures would be made unless the machines are actually being used for gambling purposes.
On the 20th day of April, 1933, police officers of the city of New York entered the warehouse of the plaintiff corporation and seized thirty-six “Mills Non-Convertible Vender” machines which were in storage at the said location. One Hoffman, an employee of the plaintiff corporation, was arrested and subsequently discharged by one of the magistrates of the city of New York. Hoffman testified that the police officers stated that the seizures of the machines and the arrest of Hoffman were made under orders, and that, if any other machines were installed anywhere in the city of New York they would be seized by the police.
The police commissioner admitted that the seizure of these machines was illegal. Numerous seizures of the plaintiff’s machines have been made at different locations within the jurisdiction of this court, and the persons in charge arrested and subsequently discharged by magistrates of' the city of New York.
The Court of Appeals of the state of New York, in the case of People v. Jennings, 257 N. Y. 196, 177 N. E. 419, decided July 15, 1931, that machines emitting tokens, as in the instant case, were not gambling machines. Judge Crane, writing for the Court of Appeals in People v. Jennings, supra, stated:
“The defendant has been convicted of violating section 982 of the Penal Law * * * for having in his possession a slot machine: The evidence shows that the machine is not one of those covered by the section. It is conceded that in its operation there is no element of chance for the winning or losing of money, or any check or memoranda calling for money. By the dropping of a coin in the slot and the pulling of a lever, a candy mint falls out of the machine and a witty or funny saying appears in an upper panel. One or more metal rings of no intrinsic value may also fall out, according to combinations formed upon the turn of the lever. These rings or metals have no money value. *971By tlieir insertion in the slot, other bright or witty statements appear in the panel. The only chance connected with the operation of the machine is that wit or humor may momentarily brighten up the vacuous minds hunting amusement. In this machine age, even humor is manufactured.
“The product, however, is valueless from a monetary standpoint, perhaps, if not from any other. Section 982 of the Penal Law differs from section 970-a in certain particulars. The former section applies to the possession of slot machines, and makes it a misdemeanor to keep or maintain any machine into which may be inserted a piece of money, and from which as a result may issue ‘any piece or pieces of money, or any cheek or memoranda calling for any money.’ The latter section, 970-a, applies to the sale or lease of a slot machine, and this describes the contrivance as one from which ‘may issue any piece or pieces of money, or any cheek or memoranda calling for any money; or any machine or device of any kind or nature by the use or operation of which there is an element of chance for the winning or losing of money or other things of value.’ The words ‘other things of value’ do not appear in section 982. Nothing of value, or at least of money value, came out of the machine in the control and possession of the'defendant in this ease. The judgment of conviction for the violation of section 982 is unsupported by the evidence, and must be reversed.”
It is striking that the seizures of these machines which were made in 1933 were in total disregard of the decision of the Court of Appeals in Re People v. Jennings, supra.
If I could refuse jurisdiction of this ease, I would do so for the reason that I believe that this ease is particularly one that the state courts should decide, as it deals with questions relating to the laws of the state of New York. However, under the law, the jurisdictional elements being present, it becomes the duty of this court to decide the questions involved.
In view of the decision made by Judge Thomas in Mills Novelty Company v. Farrell, supra, affirmed by the Circuit Court of Appeals, supra, and the decision of the Court of Appeals in People v. Jennings, supra, the stipulation of the corporation counsel that the machines are not gambling devices per se, the testimony of the police commissioner in' which he too recognizes this fact, and regardless of my personal views, and being bound by the decisions of the higher courts, I have no alternative but to grant a decree in favor of the plaintiff, which decree shall not go beyond the views expressed by the police commissioner in his testimony 'that there should not be any seizures of “Mills NonConvertible Vender” machines “unless it can be shown that they are actually engaged in gambling.” The police are not in any wise enjoined or restrained from seizing machines which are gambling machines or gambling machines per se, or any machines operated as gambling machines or gaming devices. If any machines, including the “Mills Non-Convertible Vender” machines, are used or operated for gambling purposes, it is the duty of the police to make arrests and enforce the law, and they are not in any wise enjoined by me from so doing.
These machines eject tokens. There is no doubt that in many instances these tokens are redeemed in cash, merchandise, or something of value. This constitutes gambling. If this court could stop the use of these machines, it would do so. However, the court must follow the law; it cannot enact laws. The remedy, therefore, does not rest with this court, but with the Legislature of the state of New Yoik, which is chargeable with knowledge of the decision of the Court of Appeals of-the state of New York in People v. Jennings, supra, decided in 1931. That court decided that these machines which eject tokens are not gambling devices.
The Legislature could stop the sale and use of tliese machines. I regret that this court is powerless to do so.
Settle findings and decree on notice in accordance with this opinion. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218813/ | JOHNSON, District Judge.
This is a bill in equity to enjoin the defendants from using the names “Fredericks Armature Manufacturing Company,” “Ffederieks Armature Corporation,” or “Fredericks,” or any substitution therefor, from soliciting customers of the Fredericks Armature Corporation for the sale of armatures or coils, from receiving mail addressed to the Fredericks Armature Corporation and from doing any act or deed detrimental to the right of the complainant as a purchaser of the good mil and the right to use the name “Successor 'to Fredericks Armature Corporation.”
The Fredericks Armature Corporation, a Pennsylvania corporation, with places of business in Chicago, 111., and Lock Haven, Pa., was engaged in the electrical equipment business throughout the United States. Apparently the principal place of business was located in Chicago as the corporation was there adjudicated a bankrupt. The United States District Court for the Northern District of Illinois appointed a receiver in bankruptcy who sold the assets of the Fredericks Armature Corporation in that district. The court approved the sale of the assets to the complainant’s assignor and stated in its order of approval that the sale included the receiver’s right, title, and interest only in and to the good will of the Fredericks Armature Corporation, together with the right to use the name “Successor to Fredericks Armature Corporation,” lists of customers, orders on hand, and incoming orders, if any, correspondence, stationery, electros, catalogues, advertising matter, patterns, blue prints, trade-marks, designs, jigs, and dies.
The real estate, fixtures, rights, privileges, and franchises of the Fredericks Armature Corporation located in Lock Haven, Pa., had been mortgaged several years prior to the institution of bankruptcy proceedings, to the Lock Haven Trust Company. The mortgagee issued execution on the bond accompanying the mortgage several days before the filing of the petition in bankruptcy and at the Sheriff’s sale it purchased the mortgaged property. The Fredericks Armature Manufacturing Company was formed in Lock Haven by the purchaser and later the Fredericks Armature Corporation was formed and the Fredericks Armature Manufacturing Company was dissolved.
Both the plaintiff and defendants have been endeavoring to secure the nation-wide business of the bankrupt corporation and both have represented to the trade that they have succeeded to the business of the bankrupt.
The defendant corporation contends that it is entitled to use the name of the Fredericks Armature Corporation and seeks the business of the bankrupt corporation because it is a reorganization of the old corporation under the Pennsylvania Act of Assembly of 1861, P. L. 259, as amended (see 15 PS, Pa., § 571). This act provides in part that whenever property and franchises, or any part thereof of any corporation may be sold by virtue of any process or decree of any court of this state, the person or persons for or on whose account such property and franchises may be purchased shall be constituted a body politic and corporate and shall be vested with all the right, title, interest, property, possession, claims, and demands in law or equity, in the property or franchises so sold and conveyed.
The good will of the Fredericks Armature Corporation was sold by the United States District Court for the Northern District of Illinois sitting in bankruptcy prior to the sale and conveyance of the property by the state court in Pennsylvania. The principal place of business of the bankrupt corporation had been determined as being in Chicago. That the bankruptcy court has the power to sell the good will of the bankrupt corporation and protect the purchaser’s enjoyment thereof has been decided. S. F. Myers Co. v. Tuttle (C. C.) 183 F. 235; S. F. Myers Co. v. Tuttle (C. C.) 188 F. 532. The question whether the receiver in bankruptcy in the Northern District of Illinois was vested with the title of the bankrupt’s assets and whether the sale of the assets and good will of the bankrupt in the primary jurisdiction passed such title to the purchaser cannot be attacked collaterally in this court where the bankruptcy proceedings were ancillary only.
The question which presents the most difficulty is whether, under the Pennsylvania Act of Assembly of 1861, as amended, the defendants are entitled to use the name Fredericks Armature Corporation, and hold themselves out to the trade as the successors to the *975old Fredericks Armature Corporation by reason of the fact that the act provides that purchasers at the sale shall be vested with the property and franchises of the old corporation. A reading of the act does not disclose such intention of the Legislature. In fact the act referred to provides that such new corporation “shall adopt a corporate name and common seal.” No doubt it may use the name and good will of the old corporation in cases where such assets have not been conveyed previously, but so long as the decree of the bankruptcy court in the primary jurisdiction remains in effect the rules of comity require that such decree be protected.
Counsel for the defendants contend further that because the mortgage on the bankrupt’s real estate in Lock Haven contained the words “corporate franchises” and because the property mortgaged was not included in the bankrupt’s assets by reason of its having been sold under a valid pre-existing lien, the right to the name and good will passed to the purchaser of the real estate by reason of its having been included in the mortgage to the Lock Haven Trust Company.
There are decisions to the effect that the good will of a corporation can be mortgaged, but there is nothing in this ease to indicate that the good will of the old Fredericks Armature Corporation was mortgaged and counsel have not cited any cases holding that the word “franchise” includes the good will or the right to use the corporate name, nor do the definitions of the word “franchise” include such terms. The advertisement of sale of the property in Lock Haven did not specify the name nor did the sale cover specifically the name in question, and we cannot presume that the same included the name of the corporation without which the corporation could not exist and do business.
In view of the foregoing conclusions this court is of the opinion that as against the assignee of the purchaser of the good will of the bankrupt corporation and the right to use the name “Successor to Fredericks Armature Corporation” in the Northern District of Illinois, the defendants have no right to use the name or in any manner destroy the good will of the old Fredericks Armature Corporation, which was purchased by the complainant’s assignee as long as the decree" affirming that sale is in effect.
A formal decree in accordance with this opinion may be submitted by counsel for the complainant upon notice to counsel for the defendants. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218814/ | CAMPBELL, District Judge.
The three above entitled suits arise out qf a collision at Pier K, Weehawken, N. J., on December 29, 1932. By stipulation they were tried together, and one opinion will suffice.
The first above entitled suit is brought by Annie Baker, who is alleged to be the *978owner of the grain boat Elizabeth M. Baker, which was sunk.
The second above entitled suit is brought by Smith-Murphy Company, Inc., which is alleged to be the owner of the cargo of wheat lately laden on board the barge Elizabeth M. Baker.
The third above entitled suit is brought by Joseph A. Ryan, who is alleged to be the owner of the barge Marion Ryan, which was damaged in said collision.
Each of these suits was brought against the steamship Black Hawk, steamtugs Joseph P. Meseek, Eugene Meseck, Meseck Towing Lines, Inc., and American Diamond Lines, Inc.
In each of the above entitled suits the steamtug Top Sergeant was on the petition of the respondent, American Diamond Lines, Inc., owner of the steamship Black Hawk, impleaded under the 56th Rule in Admiralty (28 USCA § 723).
In each of the above entitled suits, the tug New York Central 20 and the New York Central Railroad Company were on the petition of Meseek Towing Lines, Inc., claimant of the steamtug Joseph E. Meseek, impleaded under the 56th Rule in Admiralty.
Incorporation, ownership, and jurisdiction as to all parties, as alleged in the pleadings, was admitted.
On the morning of December 29, 1932, the steamtugs Joseph E. Meseck and Eugene Meseek, pursuant to the request of the Black Diamond Steamship Corporation, general agent and as such operating the steamship Black Hawk, were sent by Meseek Towing Lines, Inc., which was operating and controlling said tugs, to Pier K, Weehawken, to assist in undocking the steamship Black Hawk, the master of the steamtug Eugene Meseck to board said steamship and act as pilot under Meseek’s pilotage clause, which was admittedly known to the owner of the Black Hawk, and which made the master of the Eugene Meseek the agent of the owner of the Black Hawk and of said vessel.
According to said agreement the said steamtugs arrived at Pier K, Weehawken, at about 7 o’clock a. m. that day, to assist in undocking the Black Hawk, but she was not ready and the said steamtugs Joseph E. Meseck and Eugene Meseek, after waiting a little while, left to assist in undocking another ship on the New York side of the river. •
When the two Meseek Tugs arrived and when they went away, there were at the end of Pier K four barges, the Erie 343- being made fast.across the end of the pier, the Lackawanna 531 alongside the Erie 343, the Pennsylvania 458 alongside the Lackawanna 531, and the Pennsylvania 498 alongside the Pennsylvania 458.
The Erie 343 lay about 10 feet up river from the south end of the pier, and each of the other boats lay about 5 feet up river from the down river end of the boat inside of her.
At about 7:50 o’clock a. m. the tug Top Sergeant, with two grain boats, Elizabeth M. Baker and Marion Ryan, in tow on two hawsers in tandem style, bow first, in the order named, arrived off the south side of Pier K.
The Baker and Ryan were consigned to the Black Heron, a sister ship of the Black Hawk, which was lying on the south side of Pier K, farther out toward the outer end than the Black Hawk.
When the Top Sergeant and her tow were over toward Pier K, she let go the two hawsers and picked up the tow alongside by making fast the port side of the tug to the Elizabeth M. Baker.
The Top Sergeant then proceeded to go in on the south sfde of Pier K at about 7:50 o’clock a. m., at which time there was a grain elevator alongside the Black Heron toward which the Top Sergeant directed her tow, but was told by some one not to come in the slip as the ship was going out.
There is a conflict as to what was said by way of warning, and the witnesses on behalf of the Top Sergeant were not able to identify the person who gave the warning.
The Top Sergeant knew that the Black Hawk was going out, and that was why she was told not to come into the slip.
The Top Sergeant then headed her tow downstream, put her wheel hard-astarboard and pushed them down head to the tide, after which the tug placed two stern lines on the tow and dropped the barges down alongside the barges on the end of Pier K.- '
On the order of the master of the tug, the Elizabeth M. Baker put out two bow lines to the Pennsylvania 498 and the tug dropped down alongside the Elizabeth M. Baker, and the master of the tug told the captain of the Elizabeth M. Baker that the shifting tug would take care of him later. Whereupon the tug Top Sergeant, at 8:15 o’clock a. m., left to perform other work. No stem lines were put out from the tow, and the tow angled out in the river, the stern of the Baker being out 10 to 12 feet.
*979I can find no violation of law on the part of the tug Top Sergeant in placing the grain boats outside of the ether boats at the end of Pier K, one at least of which had been placed there by the shifting tug, whieh was a contributing cause of the accident. The most that could be said would be that it was merely a condition. No request was made of the barges to move, but the shifting tug No. 20, employed in shifting loaded boats alongside the steamship to discharge their cargo, and shifting light boats away from the steamship after discharge,' had been ordered before the moving of the Blaek Hawk to stand by the grain boats.
The Marion Ryan was made fast astern of the Elizabeth M. Baker with four lines, one at each corner, and two cross lines, but before the collision, one of these lines was let go by the captain of the Ryan, and that let her bow go around some distance, but the Ryan did not put out any lines to any of the boats at the end of Pier K.
The American Diamond Line had a lease of the south side of Pier K, with permission to use the north side when it wanted it, from the New York Central Railroad Company, and on the day in question the American Diamond Line was occupying the entire pier.
The New York Central Railroad Company, also by agreement with the American Diamond Lines, Inc., furnished a shifting tug whieh shifted boats under the orders of the Black Diamond Line, its officers, agents, or servants. The shifting tug furnished by the New York Central Railroad Company, on the day in question, was the No. 20.
There was really no slip to the south of Pier K, as the next pier to the south is over a quarter of a mile distant therefrom, but there were four dolphins, each about 200 feet distant from the south side of Pier K, the outer one being about 200 feet from the pier end.
This dolphin was about 8 or 9 feet out of water.
There were lying on the south side of Pier K on the morning in question, bow in, the steamship Black Hawk, 401 feet long, 54 feet beam, with her bow about 200 feet from the bulkhead, and the Black Heron, a sister ship of the Blaek Hawk.
The bow of the Blaek Heron was about 50 feet astern of the Blaek Hawk, and her stem was about 50 feet in from the end of the pier.
Alongside the port side of the Black Heron was the grain elevator Oswego, 125 to 130 feet long, 32 to 33 feet beam. The bow of the Oswego was about opposite No. 5 hatch of the Blaek Heron, and the stern of the Oswego a few feet aft of amidships of the Blaek Heron.
With the south side and the end of Pier K occupied as aforesaid, at 8:40 o’clock a. m. on the day in question, the steamtugs Eugene Meseek and Joseph P. Meseek returned to assist in undocking the Black Hawk, which was bound for Antwerp and was to be moved under her own steam.
The Blaek Hawk finished loading about 7:45 o’clock a. m., and her master gave the order to stand by the engines at 8:25 a. m.
Capt. John Melestieh, generally known as Capt. Martin, by whieh name I will refer to him hereafter, the master of the Eugene Meseek, went upon the bridge of the Black Hawk to act as pilot in undocking the vessel and left his pilot, Peter Bogoesch, a licensed master, in charge of the'Eugene Meseck.
Capt. Martin ordered the tug Eugene Meseek to take a bow line off the Blaek Hawk’s port bow to pull her off from the dock, keep the ship clear of the shed, and to square her off. After that he gave an order to the Eugene Meseek to let go of the hawser when he got squared off, and drop on the bow and follow the ship out, and guide the ship out.
All of the orders of Capt. Martin to the Eugene Meseek were properly and promptly obeyed by her, and no act of omission or commission on the part of the tug Eugene Meseek negligently caused or contributed to the collision.
Capt. Martin gave orders to the steamtug Joseph P. Meseek to take a hawser off the port stem of the Blaek Hawk and square the ship off, and also asked her, if she had a good line, to put out her own line.
The Joseph P. Meseek put out her own line as ordered.
Capt Martin was a man of experience in docking and undocking ships in New York harbor, having acted as pilot in such docking and undocking almost daily for about nineteen years.
As the Black Hawk left the dock there were on her bridge Capt. Martin, the pilot, Capt. Wheeler, master of the Blaek Hawk, Hauffman, the Sandy Hook pilot, and Andrew G. King, third officer of the Blaek Hawk, and Moll the quartermaster, who was also 'a cadet.
Mietehkoff, the second officer, was sta*980tioned on the poop deck and, assisted by some of the sailors, took the hawser from the Joseph 3? Meseck through the center stern chock of the Black Hawk, and personally placed the eye of the hawser around the after post of the starboard bitt.
At 8:49 o’clock a. m. the Black Hawk cast off her lines to the dock, and Capt. Wheeler, the master of the Black Hawk, said to Capt. Martin, “It is all clear aft.” Capt. Wheeler had made no investigation as' to what boats were on the end of Pier K, and Capt. Martin, who as pilot was the agent of the Black Hawk and her owner, and not of the Meseck Towing line, Inc., must have seen the grain boats at the end of Pier K outside of the four other boats, when the Meseck tugs returned at 8:49 a. m. to assist in undocking the Black Hawk.
As Capt. Martin said he would not have gone out if he had known the grain boats were there, then the Black Hawk and her owners were guilty of negligence in leaving the pier without notifying the grain boats to move, or having them moved by the shifting tug.
The weather was clear with a moderate easterly wind and flood tide then running about two knots.
The tugs Eugene'Meseck and Joseph. E, Meseck, assisted by the engine of the Black Hawk, squared the Black Hawk up to go out of the slip, clearing the Black Heron and the grain elevator Oswego, and proceeded to back out of the slip.
At 8:59 o’clock a. m., the engine of the Black Hawk was put slow astern, stopped, and put half astern, at 8:59% stop, at 9 slow astern, at 9:01 full speed astern with a jingle, at 9:92 stop, at 9:05 full ahead, at 9:06 slow, at 9:13 stop, and at 9:15 slow ahead. The Black Hawk then started to proceed down the river.
The Black Hawk in proceeding out of the slip was close to the grain elevator Oswego, being about 6 feet off her.
The tug Joseph E. Meseck with her line was at an angle of about 45 degrees to the Black Hawk, and was assisting the Black Hawk to back out from the south side of Pier K.
As the Black Hawk approached the outer dolphin there was not sufficient room for the tug Joseph E. Meseck to pass between the Black Hawk and that dolphin, and the tug Joseph E. Meseck passed on the other side of the dolphin, allowing her line to the Black Hawk to slacken and lifting the same over the dolphin.
The Black Hawk was then going astern, and the tug Joseph E. Meseck then picked up the slack, the line parted, and the stern of the Black Hawk by the force of the flood tide was being carried toward Pier K.
There is a sharp conflict in the evidence as to whether the line parted immediately on taking up the slack and subjecting it to strain, or after the slack had been taken up and the line had been subjected to strain for an appreciable period of time, which I will discuss later.
The Joseph E. Meseck blew an alarm whistle, tried to get a hawser off the ship but could not, and went around in an effort to get on the starboard quarter of the Black Hawk, to hold her off the barges which were at the end of the pier, but did not have time.
When the pilot, Capt. Martin, heard the alarm of the Joseph E. Meseck, he signalled full speed astern with a jingle and ordered the helm of the Black Hawk hard-astarboard, the tendency of which, with a right-handed screw, was to put the stem of the Black Hawk to port and as much as possible offset the effect of the flood tide. This was the proper and seamanlike thing to do, but even if such an action could be criticized, it would impose no liability as it was action taken in extremis.
The Black Hawk continued to go astern and toward the boats at the end of Pier K.
Before the Black Hawk east off her line at about 8:40 o’clock a. m., the New York Central 20, which was the shifting tug, reported and was ordered by the stevedore employed by the Empire Stevedoring Company, which loaded and discharged vessels at Pier K, owned by the American Diamond Lines, Inc., under the agreement with it, when the ship sailed, to go around and stand by the grain boats.
The master of the New York Central 20 saw that the Black Hawk was not going out right away, and instead of standing by the grain boats; made fast to an ash scow anchored below the south side of Pier K, and remained there until the stem of the Black Hawk was about abreast of the bow of the Black Heron, when the New York Central 20 left the ash scow and proceeded to make fast to the Marion Ryan.
The witnesses called on behalf of the New York Central 20 say she had not completed *981making fast to the Marion Ryan at the time of the collision.
This is contrary to the allegations of the pleadings on behalf of the New York Central 20, in which it is alleged that the accident did not happen until several minutes after the tug had made fast.
If, however, it be true that the No. 20 had not completely made fast to the Marion Ryan at the time of the collision, that does not relieve the No. 20, as the master of the No. 20 had seen the grain boats at the end of the pier about 15 minutes before he received the order to stand by them, and knew that the Black Hawk was going out, and yet made fast to an ash scow and did not go out to stand by the grain boats until the stern of the Black Hawk was about abreast of the bow of the Black Heron, and the failure to make fast was due to the negligence of the No. 20 in not at once obeying the order to stand by the grain barges, which it was the duty of the No. 20 to stand by and shift.
The No. 20 was not a stranger, but was in duty bound to have obeyed the order to stand by the grain boats, and its failure so to do constituted negligence and it was a contributing cause of the damage.
As soon as the stern line to the Black Hawk parted, the Joseph E. Meseek blew an alarm and her captain shouted to the No. 20 to pull the grain barges out of the way.
Capt. Martin, the pilot of the Black Hawk, called through a megaphone to the No. 20 to pull the grain boats back.
The captain of the Elizabeth M. Baker was on the bow of his boat, not on the stern as contended on behalf of the No. 20, and heard no orders from the No. 20 to east off; the Baker’s lines, and I can find no reason for his not hearing such order if ®ne had been given. I cannot find that such orders were given, nor can I find the captain of the Elizabeth M. Baker at fault, even if he knew that the No. 20 was alongside of and with a line to the Marion Ryan, as the force of the tide would have carried the Baker and Ryan quickly upstream, unless held by the tug, and he had a right to expect orders from the tug before easting off his lines, as he could have done nothing himself to stop the boats from going adrift if he had cast off his lines.
The captain of the Marion Ryan could not have prevented injury by letting go her lines to the Elizabeth M. Baker, and she had no lines to any of the other boats on the pier end. The tug No. 20 being alongside, with a line to the Ryan, her captain could not act without orders from the No. 20, and the No. 20 gave him no orders to cast off his lines.
The Black Hawk continued to come out sagging up the river under the effect of the strong flood tide, and when the pilot of the Black Hawk saw that she could not clear thi grain boats, he stopped her engine and let her drift so that her propeller would not come in contact with the grain boats.
The Black Hawk rubbed the third and fourth boats out, the two Pennsylvania boats, causing them and the Lackawanna boat to go adrift, and came so strongly into contact with the bow of the Elizabeth M. Baker that she shortly thereafter sank with her cargo on board, damaging both boat and cargo, and caused the Elizabeth M. Baker to come so strongly into contact with the Marion Ryar as to damage her.
The New York Central 20 cared for the Marion Rjmn, and the Meseek tug picked up the barges that went adrift, with the exception of the Elizabeth M. Baker which sank.
Thereafter the Black Hawk proceeded on her voyage.
This brings us to a consideration of the hawser, the parting of which allowed the force of the tide to carry the stern of the Black Hawk up into contact with the Elizabeth M. Baker.
Of course, the mere fact that the hawser parted did not impose liability upon the tug Joseph E. Meseek or her operator, without some proof of negligence.
The hawser in question was a seven-inch hawser, the size generally and properly used for the purpose to which it was put, made by the Plymouth Cordage Company, recognized as makers of good hawsers, and was comparatively new, having been in use about a month, and having a normal life of five or six months.
The breaking point was in the eye, the stronger part of the hawser. The breaking is much more likely in the standing part, as that is a much weaker part of the hawser than the eye.
The weight of the expert testimony seems to be that the break occurred at a point where the hawser was cut or chafed, which was not necessarily a large cut or chafing and it seems clear to me that the hawser may have been sufficiently cut or chafed to part under sudden strain, without the cut or chafing being observed by the quick handling of those on the tug, or the second officer of the Black Hawk.
*982The evidence of the witnesses called on. behalf of the Joseph F. Meseek, and also of the second officer of the Black Hawk, shows that there was no mark observed by either oí them of any such cut or chafing, before or when the line was put aboard the Black Hawk. The examination they were able to make, however, was not of such a character as to have enabled them to observe a small cut or chafing sufficient to cause the line to part if subjected to a sudden strain or jerk. The line was put under strain in assisting in the undocking of the Black Hawk before' there was presented the problem caused by the existence of the outside dolphin, but not a sudden strain or jerk, and it may well be that the line, having been chafed or cut before it was placed on the ship, was weakened by such strain and thus rendered unable to resist the sudden jerk or strain in suddenly taking up the slack.
There is no evidence of any examination of the line after it was placed on the bitt on the Black Hawk and before the time that it parted.
The Joseph F. Meseek could not pass between the Black Hawk and the outside dolphin, as there was not sufficient room, and therefore there was but one tiling for her to do, viz., for the tug to go outside of the outer dolphin, slack' the hawser, and put it over the dolphin. This was accomplished by slacking up on the' line and the putting of the line over the dolphin, and then taking up the slack and proceeding to hold up the stern of the Black Hawk against the tide.
There is a sharp conflict in the evidence as to whether the tug took up the slack too quickly and so caused it to part, or whether the line was caused to part while under steady pressure from the tug, due to something on the ship which caused the chafing.
The Black Hawk was going astern a knot or a knot and one-half an hour, that is, one hundred to one hundred and fifty feet a minute, and the evidence, which is conflicting, shows that the hawser parted sometime between the time when the stern of the Black Hawk was 170 feet inside of the pier and 30 feet from the dolphin, and the time when it was about even with or 25 feet inside of the outer end of Pier K.
The hawser parted somewhere between 9 o’clock and 9:01, when the signal for full speed astern and the jingle was given.
The tide was felt more strongly as the Black Hawk’s stern proceeded out toward the outer end of the pier, and though the evidence is conflicting, the evidence of two disinterested witnesses, the Sandy Hook pilot and the captain of Erie 343, is to the effect that the line parted when the Joseph F. Meseek suddenly took up the slack. The evidence of these disinterested witnesses is entitled to and I have accorded it greater weight than that of the interested witnesses.
On behalf of the Joseph F. Meseek it is argued that the time which elapsed from the time that the Black Hawk passed the outer dolphin to the time that the line parted, makes it impossible for the line to have parted due to a sudden strain, and that it parted due to the cutting or chafing of the line on the bed plate of the bitt, while over the after bollard of the bitt on the Black Hawk.
The evidence does not satisfy me that the line at the point where it parted could have been cut or chafed on any surface of the after bollard of the bitt or on the bed plate thereof, of the Black Hawk, and no witness definitely placed the break in the line at any such place. The most that can be said with reference to the possible chafing of the eye of the hawser while on the Black Hawk is that it is speculative.
Before the Joseph F. Meseek passed outside of the dolphin, she had been moving at an angle of forty-five degrees to the Black Hawk, whereas after the hawser'had been put over the dolphin by the Joseph F. Meseek, due to the increased force of the tide, she was obliged to pull more nearly at right angles to the Black Hawk, and the sudden jerk did not occur immediately after the hawser had been lifted over the dolphin.
I am convinced that the parting of the line was caused by the negligent taking up of the slack too quickly by the Joseph F. Meseek.
No special orders for passing the hawser over the dolphin, or for suddenly taking up the slack, were given by the pilot, Capt. Martin, and the Black Hawk is under no liability for the independent action of the master of the Joseph F. Meseek.
The use of a tug having a stern line on the vessel with the dolphins located as they were did not present such an unusual situation as to impose liability on the Black Hawk.
There was no fault on the part of any respondent, respondent impleaded, or any of the vessels in the use of but two tugs in undocking the Black Hawk, as that was the customary number used and would have been sufficient but for the parting of the hawser.
The steamtug Joseph F. Meseek and the *983respondent Meseek Towing Line, Ine., which, controlled and operated said tug, were guilty of negligence in taking up too quickly, with a sudden strain or jerk, the* hawser to the stem of the Black Hawk, which had been cut or chafed before being placed on the Black Hawk, and by the breaking of said hawser to allow the Black Hawk to come into collision with the boats at the end of Pier K, damaging the barges Elizabeth M. Balter and Marion Ryan, and the cargo of the Elizabeth M. Baker.
The steamship Black Hawk and her owner, the respondent American Diamond Lines, Inc., were guilty of negligence in going out of the slip with the grain boats and the four boats inside of the grain boats, moored on the end of Pier K, without notifying them to move or causing them to move, and that such negligence was a contributing cause of the collision and damages to the barges Elizabeth M. Baker and Marion Ryan, and the cargo of the Elizabeth M. Baker.
The steamtug New York Central 20 and her owner, the respondent New York Central Railroad Company, were guilty of negligence in failing to promptly stand by and make fast to the grain boats, and in failing promptly to order the captain of the Elizabeth M. Baker to cast off her lines, and to allow the Elizabeth M. Baker and the Marion Ryan to be carried to safety by the tide or the action of the tug, and that such negligence was a contributing cause and not a condition of the damages to the barges Elizabeth M. Baker and Marion Ryan, and the cargo on the Elizabeth M. Baker.
The steamtug Eugene .Meseek obeyed all orders promptly and is without fault.
The steamtug Top Sergeant is without fault.
Neither the barges Elizabeth M. Baker, nor Marion Ryan, nor the libelants Annie Baker, Smith-Murphy Company, Ine., nor Joseph A. Ryan, nor any one for whose actions either of them are responsible, negligently caused or contributed to the damages caused by the collision, and are without fault.
That the libelant in each of the above entitled suits is entitled to the usual decree for one-third damages and one-third costs against each of the following vessels and their owners or operators, to wit: Steamtug Joseph F. Meseek and her operator, Meseek Towing Line, Inc., steamship Black Hawk and her owner, American Diamond Line, Inc.; and steamtug New York Central 20 and her owner, New York Central Railroad Company, with the usual order of reference; and the steamtug Eugene Meseek to a dismissal of the libel as to her in each of the above entitled suits, with costs against the libelant; and the steamtug Top Sergeant to a dismissal of the petition and libel as to her in each of the above entitled suits, with costs against the American Diamond Lines, Inc., the petitioner.
That a decree may be entered in each of the above entitled suits in accordance herewith.
Settle decrees on notice.
If this opinion is not considered a sufficient compliance with rule 46% of the Rules in Admiralty (28 USCA § 723), proposed findings of fact and conclusions of law in accordance with this opinion may be submitted for the assistance of the court, as provided by the rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218815/ | MORTON, District Judge.
This is a suit to restrain the defendant from various forms of alleged unfair competition. It was heard in open court. The facts are as follows:
The business in question is that of selling fire clay for use in lining boiler furnaces. Such furnaces are sometimes lined with fire brick set in mortarj and sometimes with fire clay. In the latter ease the clay is used in a condition sufficiently moist to be workable and adherent. Such linings can be shaped to forms and are referred to as “pliable,” in distinction from brick linings.
The plaintiff’s business began as early as 1914 under the name “Pliable Firebrick Company.” In 1924 this name was changed to “Plibrieo Jointless Firebrick Company,” which it still retains, “Plibrieo” being a coined word. The plaintiff’s business is said to amount to more than $1,250,000 a year and its product to be sold all over the world.
The real defendant is Israel Caigan. He owns substantially all the stock of the other defendant; and he also does business under several other trade-names which he has registered with the city halls at Boston and at Worcester, viz.: Boiler Furnace Construction & Repair Corporation, “Flint-Clay” Pliable Fire Brick Company, and Caigan Engineering Equipment Company, and perhaps others. Caigan testified that in 1920 he was in the business of selling pliable linings at 110 State street, Boston; and that by arrangement between him and the plaintiff in that year he undertook the sale of its product. The plaintiff’s name was put in the telephone book in both the alphabetical and business indexes at the State street address; and in other ways its goods were advertised in the New England territory, the advertisements referring to said office and telephone. After a few years the relations between the parties became unsatisfactory to the plaintiff, and under date of September 8,1925, it gave the defendant sixty days’ notice of the termination of them, which accordingly took place on November 8,1925. The acts complained of have occurred since that time.
The plaintiff then put other representatives into this field and continued to advertise its goods here. But it seems not to have given any widespread notice that Caigan had ceased to represent it. Caigan at once took on another line of fire-clay linings and pushed actively for the business. In the years immediately following his separation from the plaintiff, he received from time to> time orders for Plibrieo from persons who supposed that he was still selling it. These orders he filled with his own product “Flint-Clay.” He billed it in that name. If any objection was made by the buyer, he explained that it was not Plibrieo but was as good or better. It is not easy to prove a course of business of this sort; but from the instances which the plaintiff has been able to establish I have no doubt that the facts are as above stated, and that Caigan’s regular course of business, after separating from the plaintiff, was to endeavor to fill all orders for “Plibrieo” which came to him with “Flint-Clay” and not to mention the difference unless it was called to his attention by the purchaser; and I so find.
The package in which “Plibrieo” was put out was an iron drum painted red with the name stenciled in white. Caigan put out his “Flint-Clay” in the same sort of drum painted a darker shade of reddish brown and stenciled in white with the name “Flint-Clay” and other information. The stenciling was put on differently from that on the plaintiff’s drum, and the two packages were not likely to be mistaken for each other. The plaintiff used as a sort of trade-mark a cut of its drum with two mason’s tools at the foot of it. The defendant adopted the same sort of cut with three mason’s tools at the foot of the drum. In his advertising the defendant closely imitated, although he did not copy, certain cuts originated by the plaintiff to show how Plibrico was worked and applied to various uses. These cuts were not trade-marks in the sense that they were associated in the public mind with the plaintiff’s goods; they were descriptive of the way in which it — or any clay fur7 nace lining — was applied, and they illustrated how much easier it was to use than bricks; the idea of such cuts originated with the plaintiff. The defendant made certain installations using his product “Flint-Clay” in which the buyers supposed that they were getting “Plibrieo.” One such instance was proved in which “Flint-Clay” failed in service and the user attributed the fault to “Plibrieo.” While the evidence on the point is not very clear because it is a difficult thing to prove, it seems to me distinctly probable that the reputation of “Plibrieo” in the trade using it was injuriously affected by the defendant’s acts. And I so find.
*985I believe that after separating from tbe Plibrieo Company the defendant meant to take every possible advantage of his former connection With it in furthering the sale of his own product, and to go as far as he could in underhand practices in that direction without getting caught. He intentionally and fraudulently substituted his own goods for “Plibrieo” whenever he had w'hat looked like a safe opportunity to do so; and in furtherance of his general purpose, he .adopted a somewhat similar package and very similar advertising matter. His imitation of the plaintiff’s drum-and-tools trade-mark must have been intentional and was certainly fraudulent. I find the facts accordingly. The defendant’s chances for such fraudulent practices have become less as time has gone on, but I see no reason to believe that his will and intent have changed. In my opinion the plaintiff is entitled to an injunction protecting-it against a recurrence of such unfair and illegal competition, and also for damages for the defendant’s past conduct.
As to the defendant’s cross-bill: The defendant included in his answer a cross-bill in which he alleges:
(1) That the plaintiff maliciously interfered with his telephone service.
(2) That the plaintiff maliciously used a name similar to that of the defendant’s Boiler Furnace Construction & Repair Corporation.
(3) That the plaintiff has since November 8, 1925, falsely and maliciously stated that the defendant Caigan was still connected with the plaintiff.
(4) That the plaintiff in the fall of 1928 falsely and maliciously stated to a customer of the defendant that certain repairs which in fact had been made by the defendant had been made by the plaintiff and by this misstatement obtained said customer’s business.
(5) That the plaintiff submits bids and accepts contracts at ruinous prices for the purpose of forcing the defendant out of business and thereby obtaining a monopoly in the sale and installation of this product.
(6) That the plaintiff has made slanderous and libelous statements about the defendant,
(7) That the plaintiff has maliciously caused a customer of the defendant to break a contract with him.
(8) That the plaintiff has assisted concerns not connected with it who were in litigation with the defendant for the purpose of damaging the defendant.
No evidence whatever was introduced by the defendant tending to prove the first, third, fourth, fifth, and seventh of these charges. As to the second the plaintiff did organize a subsidiary called the “Boiler Brick Repair Company.” It did so in entire good faith and without any purpose or intent to interfere with the business which the defendant carried on under the name “Boiler Furnace Construction & Repair Corporation.” The names are so dissimilar that there was no danger of the public being confused by them. And there is no evidence that any such confusion actually occurred. The plaintiff was within its rights in using the name which it did use. On objection by the defendant, however, it promptly abandoned it. I find that this charge is not sustained.
The sixth charge is based solely, as the defendant admits, on a letter dated August 2.9, 1928, which the plaintiff wrote to the Boston Better Business Bureau in an effort to prevent unfair competition by the defendant without recourse to legal proceeding. I am not satisfied that any of the statements in this letter were untrue, nor that they were maliciously made. This charge also is not sustained.
The eighth charge is based on the fact that one Grant, employed by the plaintiff, testified for the opposing party in a lawsuit against the defendant. There was nothing that could properly be called evidence in support of this charge. I find that it is not sustained.
As a whole, the defendant’s charges contained in its cross-bill may be properly characterized as reckless and unfounded charges of fraud such as have been often and strongly judicially disapproved. The cross-bill should be dismissed, with costs on the highest scale legally permissible.
The plaintiff is entitled to an injunction under the first, second, and third prayers of the bill. It is also entitled to an injunction under the fifth prayer in so far as the cut of the drum is concerned, but not, I think, as to the descriptive photographs. The plaintiff is also entitled to an injunction by way of equitable attachment under the seventh and eighth prayers of. its bill. As to the fourth prayer, none of the names under which the defendant has done business which are here listed is so similar to the plaintiff’s name as to create any confusion in the trade. The defendant in effect admitted in his testimony that he had tried to register all likely names applicable to his business in which the words *986“pliable,” “jointless,” and “plastic” occurred. That he would not be protected in equity in his effort is entirely probable; but it does not give the plaintiff a right to an injunction against such practices.
Deeree accordingly. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218816/ | COSGRAVE, District Judge.
Suit for patent infringement. Plaintiff is the owner by assignment from the patentee, Robert McDonald Pyles, of patent No. 1,683,096, application for which was filed May 2,1921, and patent issued September i, 1928. It is for a rotary jar, a mechanism used in rotary drilling of oil wells for dislodging and recovering tools lost or stuck in the well, and is designed to loosen the obstruction by force applied suddenly; that is, by jarring it. Henee it is called a “jar” in the oil well drilling trade. Plaintiffs’ device is called the “Pyles jar.”
The tool is used after the obstruction, whether it be drill bit, casing, or other form of obstruction, has become frozen or fastened in the hole. It is constructed with a tubular section and a plunger section moving longitudinally within the tubular section during the jarring movement, and with means to permit a rotary movement when necessary. Means exist to provide a water circulating opening in the plunger, for in rotary drilling it is necessary that fluid mud be circulated down the drill pipe to keep the bit that is operating on the formation clean and to carry the cuttings from the bit out of the hole. The obstruction, or “fish,” as it is referred to in the business of oil well? drilling, having become fastened in the hole, some grappling implement is made fast to it at the lower end of the drill pipe so that the obstruction may be withdrawn. In order to effect the withdrawal of the “fish,” it is necessary that sudden force be applied upward ordinarily, although the Pyles mechanism can be used to jar downward as well. To accomplish this, the jar is inserted at some point in the drill pipe or line of pipe by means of which the power is transmitted from the surface to the bit at the bottom of the hole. It may be inserted at any point in the line of drill pipe, and, when the latter is fastened to the “fish,” the jarring operation may be commenced.
When plaintiff’s mechanism is thus inserted, its effectiveness depends entirely upon the speed with which the portion of the drill pipe above it can be withdrawn. It operates only at the speed with which the drill pipe can be raised, as this is the only means of securing a sudden stroke or jar. The action of the pipe is equally effective when used as a hammer whenever such use is necessary. This, of course, is in the opposite direction. The lower end of the drill pipe is fastened to the “fish” in ány manner, and the plaintiff’s device is screwed at its opposite ends to sections of drill pipe so that the device is made to serve as a short section of the drill pipe. The entire drill pipe is then raised, and the plunger section moves longitudinally within the tubular section, and the drill pipe is withdrawn until the impacting surfaces meet. The result is a shock or sudden jerk applied to the “fish” which, if of sufficient force, will dislodge it. This force is necessarily limited to the momentum of the entire string of drill pipe as it is being raised.
The Bowen jar, which is the alleged infringing device, is a jar used in rotary drilling for a purpose similar to that of the Pyles jar. It is inserted in a section of the drill pipe at some point above the “fish.” The evidence in this case shows that in the present day drilling of oil wells such is the power and effectiveness of the machinery employed that) when the line of drill pipe- is fastened immovably to the fish at the bottom of the hole, force may be exerted by engines at the *987surface sufficient to stretch, the heavy steel as much as one inch to every 100 feet. In deep wells, say of 8,000 feet, this would produce a lengthening of 80 inches, something more than 6 feet. A sudden release of this tension will produce a contracting force of many tons. The Bowen jar (patent issued to Stephan, licensor,. No. 1,794,991), which plaintiff claims infringes, is designed to produce an upward jar, but not downward. It operates with an outer tubular section and inner member, but the force is produced, not as in the Pyles jar, from hoisting the drill pipe above until the impacting surfaces of the jar contact and thus producing a shock or jar, but depends for its effectiveness as force on sudden release of the tension obtained when the entire line of drill pipe is stretched for the distance described, or for greater or less distance as the ease may be. The Bowen jar is provided with an ingenious mechanism by which ribs on the inner surface of an inverted truncated cone or bushing may be so adjusted with relation to corresponding ribs on the outer contacting surface fitting within the bushing that they will yield with a certain degree of force pulling the two apart and allow a sudden movement of the plunger relative to the tubular section. The bushing acts as a spring, and, when the tension reaches a certain degree of strength, acting as a spring, it yields outwardly, allowing the ribs to slip past each other. The conical shape frees the surfaces from contact with each other allowing relative downward movement of the plunger. The sudden springing upward of the drill pipe produces an impact upon the opposing surfaces of the tubular members in the same manner as in the Pyles jar, jarring the “fish” upwardly.
The degree of power necessary to secure the release of the surfaces is regulated by a screw arrangement adapted to fix the point of tension at which the jar trips. This may be done in the shop or at the well as the situation may require. Obviously before the degree of tension is reached at which the ribs will slip past each other the full strength necessary to stretch the pipe to the distance designated is used and the suddenness and strength of the impact produced when the jar trips by far exceeds that which is possible to obtain by the mere upward movement of the entire body of drill pipe as in the Pyles device.
Plainly, therefore, while the two devices are similar in many respects, the principle and mode of operation are entirely different. The Pyles jar produces only such jar as results from the upward movement of the drill pipe in its course while being hoisted by the engine at the surface of the ground. The Bowen jar is released when a tension of the required degree is reached and a delayed action is produced. The Pyles jar operates only at the speed at which the pipe can be raised or lowered. The Bowen jar derives its power from an entirely different source, being the contracting force of the long line of pipe when suddenly released from its tension, and in no way affected by the hoisting of the drill pipe. The Bowen jar may be set in the shop or at the well to withstand a certain amount of strain, and, when this point is reached, it trips, producing the jar. Plainly there is an obvious and substantial difference in means and in operation and function of the two devices. Assuming that the Bowen machine accomplishes the same result as the Pyles patent, this is not controlling, since the means and method of operation are so radically different. United States v. Berdan Firearms Mfg. Co., 156 U. S. 552, 15 S. Ct. 420, 39 L. Ed. 530; Safety Car H. & L. Co. v. Gould Coupler Co. (D. C.) 245 F. 755; Union Steam-Pump Co. v. Battle Creek Steam-Pump Co. (C. C. A.) 104 F. 337; Walker on Patents (6th Ed.) vol. 1, p. 491; 48 Corpus Juris, 302.
I cannot find from the evidence that the Pyles patent was a success. Only one device under the patent was ever made. One driller at least, who testified, stated that it was of no practical use. The Bowen jar, on the other hand, is widely used and effective for the purpose. This is not at all improbable considering the difference in the operation of the two devices. Deering v. Winona Harvester Works, 155 U. S. 286, 15 S. Ct. 118, 39 L. Ed. 153.
Having come to a fixed conclusion on the matters above set out, I think it unnecessary to discuss the other issues raised.
Judgment will therefore be for the defendants. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218818/ | COSGRAVE, District Judge.
This action is to establish a trust on behalf of plaintiff in certain of the assets of the United States National Bank of Los Angeles. The complaint was originally filed against the bank and H. F. Schilling as receiver thereof; the bank having closed its doors and defendant Schilling having been appointed receiver by the Comptroller of the Currency.
The complaint was filed in the state court on November 23, 1932. On December 8, 1932, at 10:08 a. m. the receiver filed in the office of the county clerk his petition for removal, together with the required bond. On the same day at 1:50 p. m. there was filed in the office of the county clerk notice of the petition for removal. It is agreed by the parties that notice of the petition and of the bond for removal was not given to the plaintiff before the petition and bond were filed, but was given a few hours afterwards and on the same day- After the petition and bond for removal had been filed in the state court and notice served on plaintiff, but before the hearing of the motion for removal, plaintiff dismissed as against defendant Schilling, the receiver. At the hearing in the state court, the petition for removal was denied, and a stipulation was entered into and filed in the state court after the denial of the motion by which defendants were given additional time in which to answer. The defendants on December 22d filed a certified copy of the record in the District Court, filing an answer on behalf of both defendants at the same time. Motion is now made by plaintiff to remand to the state court.
Contention is made by plaintiff that, by agreeing to the stipulation in the state court, by which time was given in which to answer after denial of the motion for removal, defendants waived their right to removal; further that the dismissal of the ease as against the receiver waived their right to remove the case, and on the further ground that, because notice of the petition and bond for removal was not given before the same was filed, but afterwards, the proceeding was not effectual to remove the ease to the District Court.
Judicial Code § 24 (16) (28 USC § 41, subd. 16), 28 USCA § 41 (16), provides that: “The district courts shall have original jurisdiction * * * 0f * * * cases for winding up the affairs of any such [national banking association] bank.” Counsel for plaintiff concede, although denying the correctness of that view, that under the decisions the ease here presented is one for winding up the affairs of a national bank within the meaning of the statute quoted. Section 28 of the same Code (28 USC § 71 [28 US CA § 71]) provides that: “Any suit of a civil nature, at law or in equity, arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority, of which the district courts of the United States ai;e given original jurisdiction, in any State court, may be removed by the defendant * “ therein to the district court of the United States for the proper district.” Such right of removal exists regardless of citizenship or amount involved. ’’
The complaint alleges the closing the doors of the bank and the appointment of the receiver by order of the Comptroller of the Currency. An action to establish priority to the right of the assets of the bank in the hands of the receiver it seems to me is peculiarly an action for winding up the affairs *992of the hank, and by the express provision of the statute the District Court is given original jurisdiction of the ease. This is conceded by plaintiff. In this respect the action differs from that class of eases where the plaintiff seeks merely a money judgment against the bank without seeking a preferred right to its assets as in Denton v. Baker (C. C. A.) 79 F. 189. The receiver is a necessary party, since the decree sought must operate upon him personally, in that the court is asked that the amount of the claim be declared held in trust, and that the receiver be directed to deliver the same to the plaintiff.
The jurisdiction of the District Court attached as soon as sufficient petition for removal and bond were duly filed. Kern v. Huidekoper, 103 U. S. 485, 26 L. Ed. 354; Home Life Insurance Company v. Dunn, 19 Wall. 214, 22 L. Ed. 68.
The filing of the stipulation in the state court after denial of the motion to remove is not a waiver of such right. The defendant might even contest the case on the merits without waiver. New Orleans, M. & T. R. Co. v. Mississippi, 102 U. S. 135, 26 L. Ed. 96; Kern v. Huidekoper, supra; Home Life Insurance Company v. Dunn, supra.
The foregoing views assume the regularity of the proceedings for removal. In this respect the statute provides, Judicial Code § 29, 28 USC § 72 (28 USCA § 72) that: “Whenever any party entitled to remove any suit mentioned in section 71 [Judicial Code § 28] * * * may desire to remove such suit from a State court to the district court of the United States, he may make and file a petition * * * for the removal of such suit * * * and shall make and file therewith a bond. * * * Written notice of said petition and bond for removal shall be given the adverse party * * * prior to filing the same.” Judicial Code § 29, 28 USC § 72 (28 USCA § 72).
It is undisputed that the petition and bond were filed in the morning and notice was not given until the afternoon. Plaintiff contends that this was fatal to the proceeding, as the statute requires that notice be given the adverse parties prior to the filing of petition and bond. The reason for this requirement is not readily apparent. The notice was given, and counsel for plaintiff appeared at the hearing and opposed the motion. All results that would flow from the order of service as prescribed by statute were apparently obtained; that is, knowledge of the proceedings and opportunity to oppose the same.
The purpose of the notice is to give an opportunity to the plaintiff to be present when the petition is presented so that he may resist it. This is quite uniformly pointed out in the cases where the subject is discussed as in Lee v. Continental Insurance Co. (D. C.) 292 F. 408, 414, and eases there cited. A case similar in its essentials is Lewis v. Erie R. Co. (D. C.) 257 F. 868, where no formal notice was given, but the petition and bond were presented in the presence of counsel for plaintiff. A rule was entered to show cause at a fixed time why it should not be granted. The court says: “The record shows that plaintiffs appeared to the rule, filed an answer and were heard. What more could they expect from a more literal compliance of the statute, if that were possible? They were afforded a hearing and careful consideration of their objections to the attempted removal.” Lewis v. Erie R. Co. (D. C.) 257 F. 869.
The observation of Judge Caffey in Kueck v. Northwestern Mutual Life Insurance Co., in the District Court, Southern District of New York, reported in 2 F. Supp. 400, 401, fits the case at bar. The court says: “I think that consideration of the statute as a whole indicates that the requirement as to the exact time of service of notice is directory, and that it is not jurisdictional. The giving of notice is* undoubtedly essential. The statutory provision must undoubtedly be substantially lived up to. Where, however, as here, the adverse party has suffered no injury, there was at most an unsubstantial variance (due possibly to miscalculation of mail deliveries or to some similar unanticipated exigency), the object of affording notice was fully complied with, and the plaintiff refrained from appearing in the state court to resist removal, there is not only no duty on the part of this court, but it is without authority to send the ease back to the state court. To hold otherwise, I believe, would do violence to a common-sense application of the law.”
I think therefore that the sequence of the two acts, that is, the filing of the petition and bond in the state court and the giving of notice of the same to the plaintiff in the action, is unimportant, and the statutory direction respecting the same is directory rather than mandatory, and that the objection urged is not well founded.
This is a ease where the District Court has jurisdiction, not because of diversity of citizenship or amount involved, but by express provision of the statute. The right to remove the ease seems equally definite. *993While the bank and the receiver were both made parties, the cause of action was not separate, but was identical with respeet to both. It was the right, as well as the duty, of the receiver to appear on behalf of the bank and in his own behalf and to insist that the case be tried in the District Court. Cyc. Fed. Proc. § 174.
For the reasons given, I think the petition to remand to the state court should be denied, and it is so ordered. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218821/ | Findings of Fact.
THOMPSON, Circuit Judge.
1. Plaintiffs herein are common carriers by railroad subject to the Interstate Commerce Act [49 USCA § 1 et seq.], and engage in the transportation of cotton from points of origin in the state of Arkansas and from Memphis, Tenn., to destinations in the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, and Connecticut.
2. On August 29,1932, plaintiffs and other railroad carriers, because of severe competition from unregulated truck and water carriers, established carload rates upon cotton from points of origin in the state of Arkansas and from Memphis, Tenn., to destinations in the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, and Connecticut, upon a basis substantially and materially lower than the any-quantity rates theretofore prevailing, and on November 16, 1932, plaintiffs and other railroad carriers further reduced said carload rates in the belief that such further reduction was necessary to meet the competition above referred to.
3. By petitions dated October 31, 1932, and November 5, 1932, the American Barge Line Company applied to the commission to enter an order requiring the railroads participating in the said carload cotton rates to participate with it in joint through rail-barge-rail and barge-rail carload rates from the same origins to the same destinations upon a basis lower than the all-rail carload rates. The natural and normal effect of such participation in through routes and rates with the American Barge Line Company would be to divert cotton, in carloads, from the all-rail routes previously established to the lower rail-barge-rail and barge-rail routes.
4. By petitions dated November 12, 1932, and November 14, 1932, the carriers operating both east and west of the Mississippi river, including plaintiffs in this action, prayed the commission to set down for hearing the said applications of the American Barge Line Company, and represented to the commission in their said petitions that without a full and *1006fair hearing, after reasonable notice, at which hearing carriers by railroad, including plaintiffs, shippers, and other parties in interest, and representatives of the American Barge Line Company, should be permitted to appear and offer testimony and examine and cross-examine witnesses offered by all parties in any respect interested therein, the commission could not properly and justly determine the issues presented by such applications. The carriers by railroad further averred specifically that without such hearing the commission would be without proper evidence to determine:
(a) Whether carriers by railroad, including certain of these plaintiffs, should be required to join with the American Barge Line Company in establishing through rail-barge-rail rates and through barge-rail rates on cotton, in carloads, from Arkansas and Memphis, Tenn., to the destination territory heretofore described;
(b) Whether such through rail-barge-rail rates and bargé-rail rates, or either of them, should be lower or the same as the through all-rail rates then in effect;
(e) What through routes, if any, should be required;
(d) What rail-barge-rail routes and barge-rail routes, if any, should be established; and
(e) What differential, if any, should be maintained for the water-rail routes under the all-rail routes.
5. In neither the petitions of the American Barge Line Company, dated October 31, 1932, and November 5, 1932, nor in the petitions or replies of the carriers dated November 12, 1932, and November 14, 1932, are there set forth any faets or evidence necessary to a determination by the commission of the issues presented by the applications of the American Barge Line Company. The petitions of the American Barge Line Company substantially set forth solety the ultimate conclusion that the establishment of rail and water rates there requested was desirable and in the public interest, and the petitions or replies of the carriers set forth in substance only a denial of such ultimate conclusion and a prayer for a hearing.
6. The Interstate Commerce Commission declined to grant to the railroad carriers a hearing as prayed in their petitions of November 12, 1932, and November 14, 1932, and without such hearing, on December 10, 1932, entered its said second supplemental report and order in Ex parte 102, Application of American Barge Line Company, in which plaintiffs and certain other carriers by railroad named therein were required to join with the American Barge Line Company in establishing, on or before January 25, 1933, upon fifteen days’ notice, joint rail-barge-rail rates on cotton, in carloads, from the origin territory to the destination territory above described, upon a basis 8, 6, and 4 cents lower than the all-rail rates between the same points, dependent upon the application of varying minimum weights.
7. The said second supplemental order of the commission was made without evidence to support it, and there is no record before the commission which may be examined by a court if called upon to determine the legality or validity of the commission’s order.
8. By petitions dated December 30, 1932, and January 7, 1933, the southwestern carriers by railroad, plaintiffs herein, on their own behalf and on behalf of other carriers by railroad similarly situated, requested the commission to vaeate and set aside the said second supplemental order of December 10, 1932; to grant a reconsideration of all matters by the entire commission; in connection with such reconsideration to afford said railroads a hearing prior to the effective date of any order; and to extend the effective date of said second supplemental order of December 10, 1932, in order to afford the commission an opportunity to pass upon said petitions. The said petitions above referred to were denied by the commission in its order of January 18, 1933.
9. By appropriate orders of the commission the said second supplemental order of the commission of December 10, 1932, has been extended to become effective June 1, 1933, upon ten days’ notice to the public.
10. The said second supplemental order of the commission will require the railroads serving the origin and destination territories involved to participate in joint through rail-barge-rail and barge-rail rates from points of origin in Arkansas and Memphis, Tenn., to destinations in the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, and Connecticut, upon a basis 4, 6, and 8 cents lower than the corresponding all-rail rates between the same points, and to observe such rail-barge-rail and barge-rail rate so construed as a maximum rate as long as plaintiffs maintain all-rail carload rates on cotton between the same points- of origin and destination heretofore referred to.
11. The said second supplemental order of the commission of date December 10, 1932, if made effective, will require carriers by rail*1007road whose lines serve the state of Arkansas to participate in joint rail-barge-rail rates on cotton, in carloads, from Arkansas to the destination territory heretofore described, substantially lower than contemporaneously in effect via the all-rail routes in which such carriers now participate. In addition, such order will require carriers by railroad whose lines extend from Arkansas points to the St. Louis gateway to deliver cotton to the barge line at Memphis, Tenn., for transportation by water to Pittsburgh, Pa., in many instances short-hauling such carriers and depriving them of the full use of their lines of railroad.
12. Such carriers would, in the event the cotton is delivered to the barge line at Memphis, Tenn., receive less revenue than if such cotton were transported over all-rail routes to the St. Louis gateway and there delivered to eastern rail connections.
13. Carriers by railroad, plaintiffs in this action, who operate lines of railroad extending from the St. Louis gateway to the destination territory heretofore described, would, as to cotton moving rail-barge-rail, if the order of the commission referred to becomes effective, take such cotton at Pittsburgh, Pa., instead of at St. Louis, and would thereby be deprived of the use of their lines of railroad extending from the St. Louis gateway to Pittsburgh, Pa., and would receive less revenue than such carriers would receive if they enjoyed an all-rail haul from the St. Louis gateway to the destination territory involved under the all-rail rates now in effect.
14. Carriers by railroad serving Memphis, Tenn., with lines of railroad located west of Pittsburgh, as to cotton moving barge-rail, would be deprived of participation in the transportation of cotton, in carloads, moving from points in Arkansas and from Memphis, Tenn., to the destination territory before set out. Lines of railroad operated by carriers extending eastward from Pittsburgh, Pa., to the destination territory involved, would be required to participate in rail-barge-rail rates from points in Arkansas, and barge-rail rates from Memphis, Tenn., lower than now in effect via all-rail routes in which such carriers participate.
15. If the said second supplemental order of the commission becomes effective, plaintiffs will be unable to recoup in any manner any losses which they will sustain thereby and the damage done them will therefore he irreparable.
Conclusions of Law.
1. The statute here involved, section 3 (e) of the Inland Waterways Corporation Act, as amended, U. S. Code, tit. 49, c. 5, § 153 (e), 49 USCA § 153 (e), properly construed, requires the establishment by the Interstate Commerce Commission of through routes, joint rates, and differentials without a hearing in advance, and the order of the commission here attacked was made in pursuance of the express terms of the statute and not in disregard thereof.
2. Section 3 (e) of the Inland Waterways Corporation Act, as amended, vests in the Interstate Commerce Commission the power to require carriers by rail to participate in rail and water routes without opportunity to be heard before the entry of such an order or the effective date thereof to determine:
(a) Whether carriers by railroad, including certain of these plaintiffs, should be required to join with the American Barge Line Company in establishing through rail-barge-rail rates and through barge-rail rates on cotton, in carloads, from Arkansas and Memphis, Tenn., to the destination territory heretofore described;
(b) Whether such through rail-barge-rail rates and barge-rail rates, or either of them, should be lower or the same as the through all-rail rates then in effect;
(e) What through routes, if any, should he required;
(d) What rail-barge-rail routes and barge-rail routes, if any, should be established; and
(e) What differential, if any, should be maintained for the water-rail routes under the all-rail routes.
3. The second supplemental order of the commission is void because made without evidence to support it.
4. The second supplemental order of the commission is an affirmative and final order of the Interstate Commerce Commission which plaintiffs must comply with by a certain date or incur the penalties provided for by statute, and is such an order as may be reviewed by the courts pursuant to section 41, paragraph 28, and sections 43, 44, 45, 46, and 47, of title 28, United States Code Annotated.
5. Section 3 (e) of the Inland Waterways Corporation Act, as amended, authorizes the entry of an order and compliance therewith without hearing, denies the parties the right *1008to the judicial review of sueh order referred to in paragraph 4 hereof, and is arbitrary and unreasonable and therefore in violation of the Fifth Amendment to the Constitution of the United States.
6. Section 3 (e) authorizes the commission to establish joint rail and water rates without hearing or evidence, and constitutes a delegation of pure legislative power contrary to the provisions of article 1, § 1, of the Constitution.
7. The constitutional right of plaintiffs to a full and fair hearing before the entry of an order against them and compliance therewith is not complied with by provision for any subsequent hearing.
8. The constitutional right of plaintiffs to a full and fair hearing before the entry of an order against them and compliance therewith is not affected by the fact that the commission in some subsequent proceeding may change or alter its former order after hearing. If plaintiffs be required to comply with any sueh order for any period whatsoever without prior hearing their constitutional rights are invaded, and due process of law is denied them.
9. The action of the commission in denying plaintiffs’ petitions for a hearing, and in requiring the joint rail and water rates to become effective without such hearing, denied to the carriers a hearing or opportunity to be heard and constituted a denial of due process of law, in violation of the Fifth Amendment to the Constitution of the United States.
Opinion.
This suit was brought under the provisions of the District Court Jurisdiction Act, 38 Stat. 219 (28 USCA § 41, subd. 28) to set aside an order of the Interstate Commerce Commission and, pending final decree, to secure a preliminary injunction. The plaintiffs are common carriers by rail. The American Barge Line Company is a common carrier by water, and operates barges on the Ohio and Mississippi rivers between Pittsburgh and New Orleans. The barge company had on several occasions sought and obtained from the commission, in.accordance with the provisions of the amended Inland Waterways Corporation Act, § 3 (49 USCA § 153 (e), certificates of public convenience and necessity which authorized it to operate on the named rivers. The commission ordered the plaintiff railroad carriers to establish through barge-rail rates and they complied with those orders. At the time of the entry of the orders, the railroads were operating under normal rates. Subsequently the plaintiffs and other carriers by railroad established so-called carload rates upon cotton from points in Arkansas and Memphis, Tenn., to points in the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, and Connecticut. Those rates were lower than the any-quantity rates on cotton then prevailing and were designed to assist the railroads to meet competition from unregulated truck and water carriers. Following the establishment of these depressed rates, the barge company petitioned the commission to order the railroad carriers to establish through rail-barge-rail rates on cotton in carload lots for the territory already described. The railroad carriers petitioned the commission for a hearing on the application of the barge company. This hearing was denied.
The commission entered its second supplemental report and order in which it directed the plaintiffs to participate with the barge company in joint through rail-barge-rail and barge-rail rates on cotton in carloads, in the named territory, upon a basis of 8, 6, and 4 cents lower than the all-rail rates between the same points. The plaintiffs’ petitions requesting the commission to vacate and set aside this second supplemental order and to grant them a hearing were denied. The effective date of the order has been extended to June 1, 1933. All parties have agreed by stipulation filed that the court may.enter a final decree on the pleadings and record now before it.
The question in controversy is whether the commission was in error in refusing a hearing upon the plaintiffs’ petition prior to entering the second supplemental order. The plaintiffs argue that the commission misconstrued the wording and the intent of the amended Inland Waterways Corporation Act, supra. They further contend that, if the commission was justified in its interpretation of the act, the act is unconstitutional in that it deprives the plaintiffs of property without due process of law in contravention of the Fifth Amendment to the Constitution, and constitutes a delegation of legislative power in violation of the provisions of article 1, § 1, of the Constitution.
Section 3 (e) of the act, 49 USCA § 153 (e), is as follows: “Any person, firm, or corporation, including the Inland Waterways Corporation, engaged or about to engage in conducting a common-carrier service upon the Warrior River or the Mississippi River, or any tributaries thereof, may apply to the Interstate Commerce Commission and obtain a *1009certificate of public convenience and necessity in accordance with the provisions of section 1 of this title, and the Interstate Commerce Commission shall thereupon, by order, direct all connecting common carriers and their connections to join with such water carrier in through routes and joint rates with reasonable rules, regulations, and practices, as provided in paragraph (3) of section 15 of this title, and the commission shall, in such order, fix reasonable minimmn differentials between all rail rates and joint rates in connection with said water service to apply until changed by order of the commission. Such joint routes, rates,, rules, regulations, and practices may be changed by order of the commission or by agreement of the water carriers and the other participating carriers. The commission shall further require the interested common carriers to enter into negotiations for the purpose of establishing equitable divisions of the aforesaid joint differential rates within thirty days after such joint rates are established, and if the carriers are unable to agree upon equitable divisions within one hundred and twenty days from date of publication the commission shall, by order, determine and establish reasonable divisions to become effective coincident with the effective date of the joint rates. The commission is hereby given authority upon complaint, at once, and if it so orders without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning (1) the reasonableness or lawfulness of any through route or joint rate filed pursuant to such order of the commission, or (2) the reasonableness of any minimum differentials between all rail rates and joint rates in connection with any water service; or (3) the reasonableness of any division of joint rates ordered by the commission under the provisions of this section; and after full hearings the commission may make such order with reference to any such matters as it may find to be proper and in the public interest. At any such hearing the burden of proof concerning the unreasonableness or unlawfulness of any through route, joint rate, minimum differentials between all rail rate and joint rate in connection with water service, or division of joint rates shall be upon the carrier or carriers making the complaint; and the commission shall give the hearing and decision of such questions preference over all other questions pending before it, except such questions as are given like preference by law, and decide the same as speedily as possible. * * * ”
The language of the act is unambiguous. There is no requirement that a hearing be had prior to the order establishing through routes and joint rates. The provision for a hearing appears later in that portion of the section wherein the commission is given authority to enter upon a hearing concerning the reasonableness or lawfulness of any through route or joint rate already filed in obedience to its order. Soon after the passage of the amendment to the Inland Waterways Corporation Act, the commission secured the views of interested parties with respect to the meaning and purpose of the section in dispute and with respect to the procedure which it should follow, particularly with reference to the extent to which public hearings are required. The commission concluded, at that time, that a hearing was not provided for nor required prior to the issuance of orders directing or prescribing through routes and joint rates. Its analysis of the provisions of the section is reported in Procedure under Barge Line Act, 148 I. C. C. 129.
A study of the situation which preceded the enactment of the Inland Waterways Corporation Act and of the amendment thereto discloses that Congress intended to foster transportation by water wherever possible. In House Report No. 1537, House of Rep., 71st Cong., 1st Sess., appears the following statement:
“This policy of opposition on the part of many of the railroads has resulted in years of delay in the extension of the benefits of water transportation to interior communities and has seriously retarded the successful operation of the Inland Waterways Corporation. Unless such opposition on the part of the railroad carriers is overcome and through routes,, joint rates, and an equitable division of joint rates is made available without interminable delays and the heavy expenses necessary to carry on such proceedings before the Interstate Commerce Commission, privately owned transportation service will never be realized on the inland waterways of the country.
“The hearings on this bill convinced the committee that legislation somewhat drastic is now not only needed but is necessary in order to fully carry out the purposes for creating the Inland Waterways Corporation, and to realize the benefits of the policy of Congress manifested by the large expenditures made for the improvement of our inland waterways.
“Paragraph (e) of the bill was carefully *1010prepared to accomplish, this purpose. If enacted into law, it is believed by the committee that it will immediately result in -overcoming the reluctance of many of the railroads to cooperate with the Inland Waterways Corporation, and will aid in bringing about such through routes, joint rates, and fair division of joint rates as will afford to the people of a large part of the country the economies of cheaper transportation by water.
“This paragraph of the bill authorizes the commission to direct connecting common carriers to join with the water carriers in through routes annd joint rates, and to fix reasonable minimum differentials between all rail rates and joint rail and water rates; and it further authorizes the Commission to require the rail and water carrier to enter into negotiations for the purpose of establishing equitable divisions of joint rates within 30 days after such joint rates are established. If they fail to so agree upon equitable divisions within 120 days, the Commission shall itself determine and establish reasonable divisions of such rates. Provision is made for any carrier who feels aggrieved by such action of the Commission to make complaint and have a full hearing under short proceedings, and the Commission is authorized to give the hearing and decision of such question preference over all other questions pending before it, except such questions as are given like preference by law. All carriers are thus given their day in court.”
Since it is our view that the commission did not misconstrue the act nor exceed the powers the Congress intended to confer upon it, the question is whether the act, so construed, is constitutional.
The second supplemental order, of which complaint is made, was unquestionably and admittedly made by the eommissiofi without according the plaintiffs an opportunity to submit evidence or examine and cross-examine witnesses. Many authorities may be cited holding that an order establishing rates, without hearing the public service corporations affected thereby, violates'the guaranty of the Fifth Amendment of the Constitution. Cases cited by the plaintiffs, such as Interstate Commerce Commission v. Louisville & Nashville Railroad Co., 227 U. S. 88, 33 S. Ct. 185, 57 L. Ed. 431; New York & Queens Gas Co. v. McCall, 245 U. S. 345, 38 S. Ct. 122, 62 L. Ed. 337; and Manufacturers’ Railway Co. v. United States, 246 U. S. 457, 38 S. Ct. 383, 62 L. Ed. 831, although they involve statutes which provide for a public hearing, sustain the general principle that in the exercise of the rate-making power by administrative bodies, a hearing must be accorded the parties affected in order to afford due process of law. The same constitutional question, from a somewhat different viewpoint, is raised by the plaintiffs when they assert that, since the commission made the order complained of without legal evidence to support it, the order is necessarily void. See United States v. Abilene & Southern Railway Co., 265 U. S. 274, 44 S. Ct. 565, 68 L. Ed. 1016. The necessity for a hearing when the commission exercises its rate-making power over public service corporations is pointed out by Mr. Justice Cardozo in Norwegian Nitrogen Products Co. v. United States, 288 U. S. 294, 53 S. Ct. 350, 77 L. Ed. 796, decided February 6, 1933. In Atchison, Topeka & Santa Fé Railway Co. v. United States, 284 U. S. 248, 52 S. Ct. 146, 76 L. Ed. 273, it was held that a fair hearing is a fundamental requirement in the discharge by the commission of its duty of determining reasonable rates.
We are forced to the conclusion that the attempted delegation by Congress of its power to establish rates without a public hearing is unconstitutional. The Supreme Court, in Hampton, Jr., & Co. v. United States, 276 U. S. 394, 48 S. Ct. 348, 351, 72 L. Ed. 624, said: “Again, one of the great functions conferred on Congress by the Federal Constitution is the regulation of interstate commerce and rates to be exacted by interstate carriers for the passenger and merchandise traffic. The rates to be fixed are myriad. If Congress were to be required to fix every rate, it would be impossible to exercise the power at all. Therefore, common sense requires that in the fixing off such rates'Congress may provide a Commission, as it does, called the Interstate Commerce Commission, to fix those rates, after hearing evidence and argument concerning them from interested parties, all in accord with a general rule that Congress first lays down that rates shall be just and reasonable considering the service given and not discriminatory. As said by this Court in Interstate Commerce Commission v. Goodrich Transit Co., 224 U. S. 194, 214, 32 S. Ct. 436, 441, 56 L. Ed. 729: ‘The Congress may not delegate its purely legislative! power to a commission, but, having laid down the general rules of action under which a commission shall proceed, it may require of that commission the application' of such rules to particular situations and the investigation of facts, with a view to making orders in a particular matter within the rules laid down by the Congress.’ ”
*1011While it is well settled that Congress may-delegate to the Interstate Commerce Commission, as an administrative tribunal, the power to fix rates, provided they are just and reasonable, that result can be lawfully accomplished by the commission only after a fair and full hearing of the carriers affected.
A final decree may be entered in accordance with this opinion, and a permanent injunction issued setting aside, annulling, and suspending the order of the commission. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218858/ | KNIGHT, District Judge.
This action, originally brought in the Supreme Court in New York state and removed to this court, is to recover $249,346.79 on account of loss by storm occurring on or about September 26 or 27,1932, covered by a policy of insurance issued by the defendant on October 26, 1931, to the Central “San Miguel” of Luquillo, Puerto Rico.
This is a motion by the plaintiff to strike out the affirmative defense in the answer relating to arbitration, on the ground that it is insufficient in law. The substance of such alleged defense is: That the policy of insurance contained, among other terms and conditions, a clause providing for arbitration of the amount of loss, if disputed, and that an award by the arbitrators was a condition precedent to any right of action or suit upon the policy; that the parties have been unable to agree upon the amount of loss; that each party has selected an arbitrator; and that no appraisal has been made.
Plaintiff is a domestic corporation organized under the laws of the state of New York. Defendant is a foreign corporation organized under the laws of the state of Connecticut, and authorized to do business in the state of New York and in Puerto Rico. At the tima when the policy was issued, the Central “San. Miguel” was a corporation organized under the laws of Puerto Rico, having its principal office and place of business at Luquillo, Puerto Rico, and the property covered by the policy was situate in Puerto Rico. Plaintiff was then the holder of a trust deed of the. property described in the policy, constituting a first mortgage upon the property, and such poliey was made payable to the plaintiff as its interest should appear. Thereafter and priot to the loss in question, the plaintiff became the owner of the insured property, and proper indorsement was made upon such policy of insurance making it payable to the plaintiff as owner. The question raised for determination is the situs of the contract of insurance.
Section 175 of the Insurance Law of Puerto Rico, enacted in 1921, No. 66, among oth*138er things provides that “any clause in an insurance contract depriving the insured of his right to claim in the courts of justice, at any time after the occurrence of the accident against which the insurance was made, the amount of any loss suffered and which has been the objeet of such insurance, shall be illegal.”
The court takes judicial knowledge of the statute and of the fact that Puerto Rico is an insular possession of the United States having power to enact laws not in conflict with the provisions of the act of Congress relating to territories and insular possessions. Garzot v. Rios De Rubio, 209 U. S. 283, 28 S. Ct. 548, 52 L. Ed. 794; USCA, title 48, “Territories and Insular Possessions,” chapter 4, sections 731-894. This provision of the Insurance Law of Puerto Rico has been sustained as constitutional by the highest court of that possession. Rodriguez v. U. S. Fire Ins. Co., 34 Porto Rico 370. The arbitration clause is unenforceable under the laws of that possession.
The policy of insurance is designated upon its face as a “Foreign Windstorm Policy.” It contains the provision that it is not valid “until countersigned by the duly authorized general agent of the company at San Juan, Porto Rico.” It was countersigned by such general agent at San Juan, Puerto Rico, on October 26, 1931.
The complaint alleges that the contract of insurance was entered into in Puerto Rico. In the first paragraph of the answer, not included in the separate affirmative defense aforesaid, defendant denies such allegation. The affirmative defense contains no allegation regarding the place where the contract was made and no denial that the contract was made in Puerto Rico.
In defendant’s brief, it is stated that the contract was made in New York through defendant’s brokers, that it was delivered in that state, and the premium and certain taxes paid there.
Statements of fact made in the briefs of counsel will not supply the omission of a material allegation in a pleading. On this motion the court can consider only the matters which appear in the pleadings in question. Levan v. American Safety Table Co., 222 App. Div. 110, 225 N. Y. S. 583. Since the separate affirmative answer contains no allegations as to where or how the contract was entered into, it, is insufficient to raise an issue on the question of situs.
Since no issue is raised as to the countersigning of the policy of Puerto Rico, as to the residence of the insured and location of the property insured, it seems to me it must be concluded that the contract was made in Puerto Rico. The provision for arbitration has no extraterritorial effect. A state, or in this case, the United States possession known as Puerto Rico, has the right to determine the condition upon which a foreign corporation may do business within its confines. Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 20 S. Ct. 518, 44 L. Ed. 657. The contract of insurance made in Puerto Rico is subject to its laws.
Since the first paragraph of the answer contains a denial that the contract was entered into in Puerto Rico, any issue raised thereby may be passed upon on the trial of this action. The court can then be called upon to determine whether under such denial evidence can be given to show where the contract was made. Thus the question sought to be raised by the defendant can again be considered.
Motion to strike out the first separate affirmative defense of the answer is therefore granted. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218859/ | WEST, District Judge.
Petition and bond for removal were filed March 27,1933, in the District Court of Kerr county, Tex., the case being numbered 1765 on the state court docket and filed in that court March 7,1933. The necessary diversity of residence and citizenship is conceded, and it is also apparent of record. On presentment of petition and bond for order of removal from the state court the plaintiff contested the defendant’s right to remove to this court, on the ground that in the suit filed in the state court he sought recovery of exactly $1,620, exclusive of interest and costs, and thus showing that the amount in controversy was less than the $3,000 necessary to confer jurisdiction on the United States District Court.
The state court heard the issue tendered and by formal order found that the amount in controversy was $1,620, exclusive of interest and costs, retaining jurisdiction and denying defendant’s petition to remove. Defendant thereupon filed in this court, April 14, 1933, a certified transcript of the record of the state court proceedings in the said suit numbered 1765. The defendant also filed, the same day, in this court, its bill in equity, numbered 539, seeking to restrain the plaintiff from further prosecuting his said suit pending in the District Court of Kerr county, being the law action removed to this court, asserting that removing No. 1765 had the effect of likewise carrying with it the final determination of another action at law between the same parties in the state court, being numbered 1738, because of an agreement of the parties litigant to the effect that suit No. 1737 in the state court having been tried and judgment appealed prior to trial in No. 1738, to avoid retrials No. 1738 should stand, the judgment to be entered in that ease to be the same as that entered by the appellate court in No. 1737.
That the effect of said agreement thereby increased the amount in controversy in No. 1765 removed to this court by the amount sued for, $1,620, plus the amount sued for in No. 1738, the sum of which, as alleged by plaintiff in his bill in No. 539 equity, to be in excess of $3,000, because plaintiff in No. 1765 sues for all installments due from June 1, 1932, to October, 1932, and thence to March, 1933, which at $200 per month would then exceed...................$2,400.00
The statutory penalty, June to October^ in No. 1738, per agreement.. 120.00
Attorney’s fees in No. 1738, per agreement.................... 250.00
Statutory penalty on installments November, 1932, to March, 1933.. 120.00
Attorney’s fees sought in No. 1765.. 500.00
Total ....................$3,390.00
The transcript of the state court suit No. 1765 shows that the controversy grows out of insurance policy contracts which have matured because of plaintiff’s total disability, thus obligating defendants to pay monthly installments of certain sums of money and imposing a penalty for nonpayment, and reasonable attorney’s fees. ¡
In suit No. 1765, docket number in this court 1739, the defendant insurance company is sued for five monthly installments of $200 each, or $1,000, for attorney’s fees, $500', and for $120 penalty for failure to pay, a total of $1,620, excluding interest and costs.
The transcript of the record of this suit only is before the court. The law fixes the. methods by which suits may be removed from the state to the federal courts. Suit No. 1738 has not been removed. The jurisdiction of this court fails unless the agreement has the effect of merging suit No. 1738 with suit No. 1765, brought here by transcript and filed on the law side as No. 1739. It provides for the entry of judgment in No. 1738 when the state appellate court has made final disposition of No. 1737 to the effect that should the judgment of the lower court be affirmed a final judgment should be entered in the trial court in No. 1738.
Parties cannot, by agreement, confer jurisdiction if the necessary elements be lacking. The agreement of merger, so called, even if effectual, fails of its purpose here because the contingency upon which the jurisdiction rests does not come into being until a court of another jurisdiction has rendered a final judgment in another case also of another jurisdiction. Plaintiff earnestly contests the defendant’s estimates of values involved by the results of the so-called merger, insisting that *140the only controversy is as to alleged default in payment of five months’ allotments at $200 per month, 12% per cent, thereof as penalty, and $500 attorney’s fees, a total of $1,620. The defendant replies that if the state appellate court affirms the judgment of the lower court in No. 1737, .then the judgment in No. 1765 would be $3,390, exclusive of interest and costs, and bond for removal was filed in the state court.
But uncertain future contingencies are not present controversies and cannot be taken into account in estimating jurisdictional amount at the time of removal. The case of Wright v. Mutual Life Insurance Company of New York, 19 F.(2d) 117, decided by the Court of Appeals of the Fifth Circuit, affirmed in 276 U. S. 602, 48 S. Ct. 328, 72 L. Ed. 726, states the law applicable to the facts in this ease. This was an insurance installment case. The plaintiff sued for $60 per month because of accidental death, seven installments due — $420—with 20 years to run. The defendant, a nonresident insurance company, filed petition and bond for removal on the ground that the amount in controversy exceeded $3,000. The appellate court reversed the judgment of the lower court, retaining jurisdiction (3 F.(2d) 501), and remanded the ease, holding that the amount in controversy was insufficient, though a decision on the issue, whether death was accidental or otherwise, might aggregate recovery beyond the jurisdictional amount, declaring that the collateral effect of a judgment is not the test of jurisdictional amount, quoting Elgin v. Marshall, 106 U. S. 578, 1 S. Ct. 484, 27 L. Ed. 249, leading case, citing many supporting cases; also quoting from Vicksburg Railroad, etc., v. Smith, 135 U. S. 195, 10 S. Ct. 728, 34 L. Ed. 95, and New England Mortgage Security Company v. Gay, 145 U. S. 123, 12 S. Ct. 815, 36 L. Ed. 646.
Judge Sanborn, District Judge, in Enger v. Northern Finance Corporation, 31 F.(2d) 136, 140, masses all authorities, including those cited in Wright v. Mutual Life, supra, in support of the proposition that if the suit could not have been originally brought in the federal court it could not be removed, and the proposition that the probative effects of a judgment eannot be taken into consideration in determining the amount in controversy. Judge Sanborn quotes Circuit Judge Kenyon in Elliott v. Empire Natural Gas Co. (C. C. A.) 4 F.(2d) 493, as follows: “It is what the appellees will directly lose in this suit that determines the jurisdictional value of the matter involved. It is not what they may lose as an indirect result.”
As cumulative of the decision of the Wright Case, supra, and following the rule there announced, U. S. District Judge Caffey, in denying motion to remove in LaVecchia v. Connecticut Mutual Life (Southern District of New York), 1 Fed. Supp. 588, 589, a disability installment ease, holds: “Even if a judgment for the February, 1932, installment were res adjudieata of liability for installments maturing in subsequent months, that would not increase, for jurisdictional purposes, the amount in controversy beyond the sum for which, upon the complaint, judgment can presently be rendered,” citing the Wright and Enger Cases, supra.
From the foregoing, the court is of the opinion that the amount shown to be in controversy here is less than the jurisdictional requirement, and that the ease should be remanded. An order in accordance may be presented for entry. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218860/ | SYMES, District Judge.
This is an action on a war risk insurance policy by the plaintiff, George R. Birdsell, who enlisted in the U. S. Army September 21, 1917, and was honorably discharged May 11, 1919. He took out a war risk insurance policy which, according to statement of plaintiff's counsel, was in force until May 31,1919. The date of expiration does not appear in the complaint. By stipulation the ease was tried to the court without a jury; and now, at the end of the plaintiff’s evidence, defendant’s motion for a directed verdict requires the court to view the evidence most favorable to the plaintiff, against whom it is desired a verdict be directed, and from that evidence and the inference reasonably and justifiably to be drawn therefrom, determine whether under the law a verdict might be found for that party. Mt. Adams & E. P. Inclined Ry. v. Lowery (C. C. A.) 74 F. 463. Therefore, the only question is: Was the plaintiff totally and permanently disabled on or before the date his policy lapsed for nonpayment of premiums in this ease, May 31, 1919?
After some training in this country, plaintiff went “overseas” with his outfit, an artillery regiment. Upon arrival in Liverpool, England, he was hospitalized with diphtheria, was sick two weeks, and after a convalescent period of two weeks returned to his outfit. Thereafter he saw a great deal of service in the front line and, according to his service record, performed full duty until after the Armistice. He was No. 1 man on his gun squad; testifies that at times after continuous firing he became sick and dizzy, and had to fall out; that on his arrival home he was discharged from the army on the date mentioned, and did some work on his father’s farm.
About a year later he came to Denver and took a course in a barber school for six months, and returned to his home in Kansas in July, 1929, and held one job continuously as a barber for four years. He then worked for another employer, Mr. Close, for three years, or until 1927. He came to Denver again, and according to his testimony, did not try for a job for nearly a year. He returned home in May, 1929, and barbered for a man named Boling for six months, and says he was discharged because of the fainting fits described herein. He visited Denver again for two months in the fall of 1929, and again returned home and bought an interest in a barher shop.
According to his testimony, which is corroborated, he has been subject to fainting or dizzy spells ever since he left the army. These occur at infrequent intervals but are becoming worse. He states that at times he goes for several months without an attack; that they come on without warning; and that on occasions he had fainted while at work and in the street. The first definite date given for any fainting spell was in June, 1923, when he fell over unconscious in the street.
According to the evidence, these spells have the characteristics of epilepsy, such as biting of his tongue, frothing at the mouth, and a glassy, staring expression. There is evidence of medical attention received at various times, none of which seems to have helped.
None of the doctors called in his behalf state he was at any time totally and perma^ nently disabled. Dr. Collins of Denver examined him the day before the trial, and states that physically he was “not far from normal.” Dr. Aldridge examined him once in 1928, and also saw him on the day of trial. He says he looked weak and underweight. Dr. Reeves, who had known him most of his life, testified that when he examined him in 1927 his diagnosis was shell shock, but that his temperature, pulse, and blood pressure were within normal limits, vision and hearing normal, and that there was nothing the matter with his nose, throat, sinuses, gastric, intestines, or lungs.
Plaintiff testified his average earnings since the war have run around $709 a year. In his applications for compensation he stated he was earning $109 a month as a barber.
The motion must be granted for two reasons: First, there is no evidence that the plaintiff at any time was totally and permanently disabled.' None of his doctors so testified, and the physical facts are to the contrary. He has been continuously arid gainfully employed as a barher, with the exception of one or two short periods of time, since 1929. During that time he has earned wages which, while not munificent, represent a livelihood.
It is argued that due to these fainting spells he was unable to hold a permanent job; that customers of the shops did not want to be shaved by a’ man subject to epilepsy. This argument is not convincing, in view of the *142fact that he held one job for four years, and another for three years, and is now operating a shop of his own. But granting he is, as claimed, unable to earn his living as a barber, there is no showing he is unsuited for any of the other means of livelihood open to a man of his condition of health and education.
Second, even if he is now, or has been for some years totally and permanently disabled, there is no evidence that that condition existed on May 31, 1919. Evidence of illness and disability since that time is only material as it throws light upon the alleged total and permanent disability of that date. His good war record of continuous and hard service throughout without any interruption refutes any such claim. Temporary fatigue or dizziness after a particularly hard bit of service at the front is no criterion, but was to be expected as part of the game. There is not a scintilla of evidence of any epilepsy at the critical date. The court may take judicial notice of the faet that many men in various walks of life, unfortunately afflicted with epilepsy, are earning a living. Partial disability is not sufficient, it must be both total and permanent, and be such as to render it impossible for plaintiff to have followed continuously any substantially gainful occupation as of May, 1919.
The Wood Case (Wood v. U. S.), 28 F. (2d) 771 (D. C.), is said to be on all fours with this. Wood, an epileptic, was admittedly totally and permanently disabled at the time of the trial. His epilepsy, of the grand mal and petit mal type, came on without warning, and was more or less constant, two or three major attacks a month, although he sometimes went as long as six weeks without any. The minor attacks were more frequent, but less violent.
Judge McDermott in finding for the plaintiff, states that epilepsy is not necessarily a total disability; that where the attacks were infrequent, such as one every four or five months, they were not disabling. He points out that government witnesses stated they knew of no job that plaintiff could hold. He holds, of course, that if one is able to pursue any gainful occupation there can be no recovery, and that liability will not be imposed simply because the insured cannot hold a particular class of employment, or do the same work he did before the War.
The attacks Wood was subject to were of greater violence and frequency than in the ease at bar. Birdsell was able to hold jobs for several years, and often went several months without an attack.
A leading case in this Circuit, applicable here, is Nicolay v. U. S., 51 F.(2d) 170, holding that subsequent employment may be of such duration and of such a nature as to conclusively refute any idea that the insured may have been permanently and totally disabled prior to and during the employment in question. See, also, U. S. v. Leroy Harrell (10th C. C. A.) 66 F.(2d) 231, decided July 3, 1933.
The motion for a directed verdict in favor of the defendant should be granted, and judgment entered for the defendant with costs.
It is so ordered. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218861/ | WATSON, District Judge.
In this, a trespass action, plaintiff, a resident of Lackawanna county, Pa., sued a resident of the state of Michigan, alleged in plaintiff’s statement to he the owner of a motor vehicle operated within Pennsylvania, to recover damages for personal injuries as the result of an alleged accident alleged to have occurred within the commonwealth of Pennsylvania, in which said motor vehicle was involved. The defendant, appearing de bene esse, by his attorney, petitioned the court for a rule to show cause why the service of process in the case should not be set aside. The rule was granted and is now before the court for disposition.
I have examined the sheriff’s return of service and the record, and, according to the return, the service was made in strict and literal compliance with the Pennsylvania Act of May 14, 1929, P. L. 1721, as amended by the Pennsylvania Act of the 24th day of April, 1931, P. L. 50 (75 PS § 1201 et seq.). It is true that the summons did not give the defendant’s address, nor contain information to enable the sheriff to ascertain it, but such is not required by the act. It is immaterial in the absence of statutory requirement how the sheriff discovers the address, if he mails the notice to the defendant’s “last known address.”
The defendant contends that if the service of process is sustained, he will be deprived of his property without due process of law in violation of the Fourteenth Amendment of the Constitution of the United States. I see no reason to doubt that the act is constitutional.
The constitutionality of the Pennsylvania statute does not seem to have been passed upon by the Supreme Court of the United States. But that court has more than once held substantially similar statutes of other states not to be obnoxious to the Fourteenth Amendment. In Hess v. Pawloski, 274 U. S. 352, 47 S. Ct. 632, 633, 71 L. Ed. 1091, the Massachusetts statute was held to be constitutional. The Massachusetts statute (G. L. c. 90, § 3A, as added by St. 1923, c. 431, § 2) is substantially similar to the Pennsylvania statute, and provided as does the Pennsylvania statute, Act of May 14, 1929, P. L. 1721, as amended by the Act of April 24, 1931, P. L. 50, in substantially the same words: “That a copy of the process be ‘sent by registered mail * * * to the defendant, and the defendant’s return receipt’ be ‘appended to the writ and entered with the declaration.’ ” In Hess v. Pawloski, supra, Mr. Justice Butler, who delivered the opinion of the court, said: “Motor vehicles are dangerous machines, and, even when skillfully and carefully operated, their use is attended by serious dangers to persons and property. In the public interest the state may make and enforce regulations reasonably calculated to promote care on the part of all, residents and nonresidents alike, who use its highways. The measure in question operates to require a nonresident to answer for his conduct in the state where arise causes of action alleged against him, as well as to provide for a claimant a convenient method by which he may sue to enforce his rights. Under the statute the implied consent is limited to proceedings growing out of accidents or collisions on a highway in which the nonresident may be involved. It is required that he shall actually receive and receipt for notice of the service and a copy of the process. And it contemplates such continuances as may be found necessary to give reasonable time and opportunity for defense. It makes no hostile discrimination against nonresidents, but tends to put them on the same footing as residents. Literal and precise equality in respect of this matter is not attainable; it is not required. Canadian Northern Ry. Co. v. Eggen, 252 U. S. 553, 561, 562, 40 S. Ct. 402, 64 L. Ed. 713. The state’s power to regulate the use of its highways extends to their use by nonresidents as well as by residents. Hendrick v. Maryland, 235 U. S. 610, 622, 35 S. Ct. 140, 59 L. Ed. 385. And, in advance of the operation of a motor vehicle on its highway by a nonresident, the state may require him to appoint one of its officials as his agent on whom process may be served in proceedings growing out of such use. Kane v. New Jersey, 242 U. S. 160, 167, 37 S. Ct. 30, 61 L. Ed. 222. That case recognizes power of the state to exclude a nonresident until the formal appointment is made. And, having the power so to exclude, the state may declare that the use of the highway by the nonresident is the equivalent of the appointment of the registrar as agent on whom process may be served. Cf. Pennsylvania Fire Insurance Co. v. Gold Issue Mining Co., supra, 96 [of 243 U. S.] (37 S. Ct. 344) [61 L. Ed. 610]; Lafayette Ins. Co. v. French, 18 How. 404, 407, 408, 15 L. Ed. 451. The difference between the formal and implied appointment is not substantial, so far as concerns the application of the due process clause of the Fourteenth Amendment.”
A similar statute of the state of New Jersey was held to be valid in Cohen v. Plutschak (D. C.) 40 F.(2d) 727, and in Dwyer v. Volmar Trucking Corporation (Supreme Court *144of New Jersey) 105 N. J. Law, 518, 146 A. 685. A similar statute of the state of Minnesota was held to be constitutional in Jones v. Paxton (D. C.) 27 F.(2d) 364.
I am convinced that the Pennsylvania Act of the 14th day of May, 1929, P. L. 1721, as amended by the Act of April 24, 1931, P. L. 50, is constitutional, and that in this ease the provisions of the act were complied with.
Now, July 17,1933, the rule to show cause why the service of process should not be set aside is discharged.
Exception noted for defendant. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218862/ | CHESNUT, District Judge.
This case presented an action at law in which the jurisdiction of the court is based on diverse citizenship, to recover for the benefit of the next of kin of Edith H. Bailey, deceased, damages resulting from her death by the wrongful act, neglect or default of the> defendant. The accident occurred in New Jersey where the plaintiff was appointed under a statute of that State in such matters, administratrix ad prosequendum of the de*145ceased. In this suit in Maryland in the United States District Court it is the New Jersey and not the Maryland statute, here known as Lord Camphell’s Act, which is to he enforced. The New Jersey statute (2 Comp. St. 1910, pp. 1907, 1911, §§ 7, 9 and Comp. St. Supp. §§ 55—8, 55—10) is in general effect similar to the Maryland Lord Campbell’s Act (Code Pub. Gen. Laws 1924, art. 67, § 1 et seq.) but differs to some extent in procedure. The suit is not brought in the name of the State for the benefit of the deceased’s dependents but is brought in the name of a special administratrix appointed for the particular purpose, called administratrix ad prosequendum. The statute also provides that the proceeds of the suit by collection of damages or by settlement without judgment are not to be paid to the administratrix ad prosequendum but only to a general administrator. And it has been said by the Court of Appeals of New Jersey that the administrator ad prosequendum is merely a formal party for the maintenance of the action. Pisano v. B. M. & J. F. Shanley Co., 66 N. J. Law, 1, 48 A. 618. See, also, Public Serv. Elec. Co. v. Post (C. C. A. 3) 257 F. 933.
Under the New Jersey statute as under the Maryland statute, the measure of damages for the wrongful death is the pecuniary loss sustained hy the dependents who are in the class provided for by the statute. In this ease, the administratrix ad prosequendum is the mother of the decedent and the evidence tended to show that she sustained financial detriment by the death of her daughter. But she is a party to. the cause not by virtue of her interest in the result but by virtue of her special appointment for the prosecution of the suit in accordance with the procedural requirement of the New Jersey statute. She is not entitled directly to receive any part of the recovery but will be benefited only through a distribution made by the general administrator. But, as in Maryland, the recovery is not for the benefit of the decedent’s estate as such but for the benefit of the next of kin, at least where the deceased dies intestate. The trial of this case resulted in a verdict for the plaintiff for $2500. The defendant has moved for a new trial, and the principal reason assigned therefor is the admission over objection of the testimony of the plaintiff to the effect that her deceased daughter contributed to her support. This objection is based on section 3 of article 35 of the Maryland Code, the language of which here involved is as follows (Acts of 1902 and 1904): “In actions or proceedings by or against executors, administrators, heirs, devisees, legatees or distributees of a decedent as such, in which judgments or decrees may he rendered for or against them, and in proceedings by or against persons incompetent to testify by reason of mental disability, no party to the cause shall he allowed to testify as to any transaction had with, or statement made hy the testator, intestate, ancestor or party so incompetent to testify, either personally or through an agent since dead, lunatic or insane, unless called to testify by the opposite party, or unless the testimony of such testator, intestate, ancestor or party incompetent to testify shall have already given in evidence concerning the same transaction or statement, in the same cause, on his or her own behalf or on behalf of his or her representative in interest.” (I have italicized the particular phraseology here involved.)
Although in this case the court is administering the substantive law of the State of New Jersey, it is entirely clear that the proper rule of evidence is to be determined by the law of the forum; that is, in this case, the law of the State of Maryland. While the suit is in the United States District Court, the competency of witnesses in this civil case must be determined according to the State law, as provided in 28 USCA § 631, which reads: “The competency of a witness to testify in any civil action, suit, or proceeding in the courts of the United States shall be determined by the laws of the State or Territory in which the court is held.” This statute as it now reads, became effective by Act of Congress on June 29, 1906, c. 3608, 34 Stat. 618. This Act of, 1900 amended Rev. St. § 858, which was differently worded, and provided that in actions by or against executors, administrators or guardians in which judgment may be rendered for or against them, neither party shall be allowed to testify against the other, as to any transaction with or statement by the testator, intestate or ward, unless called to testify thereto by the opposite party, or required to testify thereto by the courts.
Under the statute as formerly worded the competency of a witness in a case in which an executor or administrator was a party was governed by the proviso quoted and not by the state law; but since the amendment it is clear that the state statute and its construction and application by the highest court of the state is controlling. See 6 Hughes Federal Practice, § 3606, pp. 128, 132; Huntington National Bank v. Huntington Distilling Co. (C. C. W. Va.) 152 F. 240; McBride v. *146Kirkpatrick (D. C. W. Va.) 207 P. 893; Id. (C. C. A. 4) 232 P. 859.
When the objection was made during the trial there was only a limited opportunity to re-examine the Maryland statute (section 3 of article 35 of the Code), but subsequent study of the history of the enactment and the decisions of the Court of Appeals of Maryland, confirms the impression that I had at the trial that the statute when properly construed does not exclude the testimony of the plaintiff in this particular ease. The reasons for the conclusions reached may be briefly stated as follows: (1) The statute was not intended to apply to a situation of this character; (2) the administratrix ad prosequendum under the New Jersey statute is not a general administrator or executor and is, I think, not to be considered an administrator at all within the meaning of section 3; (3) the particular testimony admitted did not constitute a “transaction had with * * * the testator, intestate, ancestor or party so incompetent to testify,” within the meaning of the statute as applied to this ease.
The legislative history of section 3 in its present form shows that even if the particular ease could be brought within the literal wording of the statute, it is entirely foreign to its substantial purpose. The first form of the statute was included in what is known as the Maryland Evidence Act of 1864, c. 109. This statute was for the general purpose of liberalizing the rules as to the competency of witnesses and to qualify certain witnesses, including parties to the case who, by reason of interest, had previously been disqualified in accordance with the rules of the common law of evidence. But section 2 of the Act of 1864 excepted from the category of competent witnesses (even though interested) cases where an original party to a contract or cause of action was dead and the survivor, a party to the case, was called as a witness; in which situation he was made incompetent by section 2 to testify. The language of the exception in its original form was as follows: “When an original party to a contract or cause of action is dead * * * or when the executor or administrator is a party to the suit, action or other proceeding, either party may be called as a witness by the opponent but shall not be admitted to testify upon his own offer or upon the call of his co-plaintiff or co-defendant otherwise than now by law allowed unless a nominal party merely.” The statute as so worded was comprehensively considered and construed in the Court of Appeals of Maryland in Robertson v. Mowell, 66 Md. 530, 8 A. 273. In an opinion by Judge Miller who, according to tradition, was one of the most accomplished appellate judges in this State, it is made plain that the terms “contract or cause of action” as used, meant a contract or cause of action in issue and on trial; and that the exception to competency excluded only an original party to such a contract who is also a party to the suit from testifying where the other original party to the contract was dead. In other words, it was the purpose to put the two parties to a suit upon the terms of substantial equality in regard to the opportunity to give testimony. It is also said that the general purpose of the Evidence Act was to remove restrictions and not to impose them and that such exceptions were made as would seem necessary to preserve mutuality and to prevent undue advantage to a survivor.
To the original section 2 of this Evidence Act (now section 3) the Legislature made many amendments by adding additional clauses and provisos so that prior to 1902 this section as a whole became prolix and somewhat obscure in effect and led to many controversies as to its proper application, but without changing its fundamental purpose. These amendments are reviewed in Judge Miller’s opinion in Robertson v. Mowell, supra. It was possibly to cure this prolixity of-language that finally in 1902 the Legislature entirely re-wrote the Act changing the structural phraseology but still maintaining its main purpose. The original Act rendered the survivor to a contract wholly incompetent to testify at all except upon the call of his adversary but the new and present Act approaches the subject from a different angle. It does not render the witness incompetent to testify in all matters but only those involving “transactions had with or statements made by the decedent.” See Gorter on Maryland Evidence Act, page 233. As to such matters, no party to a ease may testify, whether the administrator or the surviving party, and whether a necessary or only a nominal party. Farmer v. Farmer, 137 Md. 69, 111 A. 464; Smith v. Humphreys, 104 Md. 285, 290, 65 A. 57. In the present form of the Act the phrase “transactions had with or statements made by the decedent” is the substantial equivalent of the phrase “contract or cause of action” in the original Act. This appears from the recent decisions of the Court of Appeals construing* and applying the Act in its now amended form.
Thus, in Griffith v. Benzinger, 144 Md. 575, 596, 125 A. 512, 520, it was said by *147Judge Offutt: “The statute Was intended to prevent one party to a transaction from testifying to the acts and declarations of a decedent whose acts are under consideration in a proceeding to which the witness is a party, to enforce obligations arising from such transactions’’’ (Italics supplied.) And in Grove v. Funk, 131 Md. 694 (104 A. 363), the Reporter states the ruling of the Court (in an unreported opinion) as follows: “The Evidence Acts, section 3 of Article 35 of the Code, were passed in recognition of the necessity of protecting estates, at least to the extent of requiring those asserting claims to produce testimony from disinterested persons, and prohibiting those who are parties to the proceedings to establish their claims by transactions and conversations had with those whose lips are sealed in death.” See, also, Schaefer v. Spear, 148 Md. 620, 626, 627, 129 A. 898; Temple v. Bradley, 119 Md. 602, 608, 87 A. 394; Whitehurst v. Whitehurst, 156 Md. 610, 613, 145 A. 204.
It seems clear from the present phraseology of the statute as construed in these decisions of. the Maryland Court of Appeals that the testimony now excluded by the Act is only that testimony of a party to a cause which would tend to increase or diminish the estate of a decedent by establishing or defeating a cause of action by or against the estate. As so construed, it is evident that the statute does not operate to exclude the testimony of the plaintiff in this ease. The ease itself does not deal with a claim by or against the estate of the decedent, Edith H. Bailey. Recovery in the case, although not to be collected or received by the plaintiff as administratrix ad prosequendum, will pass to the general administrator not as assets of the estate of the decedent but for distribution among her next of Mn as provided in the New Jersey statute. The proceeds of the suit are not an asset of the decedent’s estate as would have been the ease if the suit had been brought by a general administrator to recover damages for pain and suffering occasioned to the decedent during her lifetime as is now provided for in Maryland by article 93, § 106, of the Code Supp. 1929. On the contrary, the New Jersey statute is in its essential nature, apart from some procedural differences, substantially equivalent to the Maryland form of Lord Campbell’s Act where the suit is brought in the name of the State of Maryland for the use and benefit of the decedent’s dependents and where, of course, the recovery is in no proper legal sense an asset of the decedent’s estate. Nor did the decedent in this ease stand in the relation of a “testator, intestate or ancestor” to the plaintiff. The testimony of the plaintiff that was objected to did not involve any “transaction had with” the decedent within the meaning of the Act, which, as above construed in the Maryland eases, relates to transactions which constitute the basis of the controversy as to liability; that is to say, the issue on trial. Here the issue on trial was the liability of the defendant for wrongfully causing the death of the decedent and the plaintiff’s testimony did not in any way relate to that issue. It is true that the plaintiff’s testimony did bear upon the proper measure of damages but this was merely incidental to the cause of action and grew out of the pecuniary relationship of the decedent to the plaintiff who was a party to the cause, not in her individual capacity as next of kin of the decedent but only as a formal party appointed by the New Jersey courts for the purpose of prosecuting the suit.
It is, of course, the usual and habitual practice in suits in Maryland under Lord Campbell’s Act for the equitable plaintiffs to testify as to the pecuniary relationship existing between them and the decedent. In such a case these plaintiffs are within neither the literal language nor the substantial import of the statute. I see no necessity for applying the Maryland Evidence Statute to the proceedings here under the New Jersey Statute which is similar in its substantial purport although variant in certain procedural formalities.
I may add that such a formal party as an administratrix ad prosequendum under the New Jersey statute is in my opinion not an administrator within the meaning of section 3 of article 35 of the Maryland Code.
For these reasons, I think the objection to the testimony is not tenable, and the motion for a new trial will be overruled. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218863/ | CHESNUT, District Judge.
This ease was tried at Cumberland at the last May Term of court and resulted in a verdict for the plaintiff for $20,500 in a suit upon two accident insurance policies, being the full amount (without interest) claimed by the plaintiff as payable thereunder for the loss of one eye by accidental means. The defendant duly filed a motion for a new trial and counsel has submitted a comprehensive brief in support of the motion.
The points urged in support of the motion are (1) that the court should have directed a verdict for the defendant on the ground of false answers by the plaintiff in the written applications attached to the policies, and (2) .that if the plaintiff was entitled to recovery at all the amount of recovery should have been limited to $500' or, in the alternative, to $3750. Requested instructions to this effect were duly presented at the trial and were overruled, but the several defences were submitted to the jury for their determination of the facts in accordance with the applicable law as contained in the oral charge.
The most important point in the ease involves the construction and application of a particular clause in the insurance policies which, so far as I am advised, has not heretofore been dealt with in any opinion in this Circuit or in the Court of Appeals of Maryland. It is the clause which provides for a reduction in the amount of insurance in the event that the insured changes his occupation during the life of the policy to one more hazardous, “or while he is doing any act or thing pertaining to any occupation so classified.” It is the contention of the defendant that the uneontradicted evidence in the ease shows that the accident to the plaintiff occurred while he was doing an act pertaining *149to an occupation more hazardous than that described in the application for the insurance policies, to wit, general manager of a glass manufacturing business with office, executive and travelling duties, the accident having occurred while the plaintiff, in a business emergency due to the necessity of prompt forwarding of certain sample table glasses to a prospective customer and in the absence of the regularly employed glass polisher, was himself engaged in polishing glasses by dipping them into an acid, some of which splashed up into his eye, necessitating its removal. The defendant contended that the polishing of glassware was an occupation more hazardous than that of a general manager of a glass plant with office, executive and travelling duties and that (a) the plaintiff’s accident occurred in a more hazardous occupation than that insured, to which the plaintiff had changed after the issuance of the policies, or (b) -at least, if the plaintiff had not changed his occupation, the accident occurred while he was doing an act pertaining to a more hazardous occupation, as classified by the defendant’s manual of rates and risks which provided in effect that the maximum amount of insurance for a glass polisher was, in this case, limited to $500 for the injury sustained. As a further alternative the defendant contended that if the limit of liability under the policy was not $500 for the reason stated, then the maximum limit recoverable in this ease for the particular accident was $3750, the limit of the amount payable under the defendant’s manual to a person injured while acting as a superintendent of a glass works as distinguished from a general manager.
There was evidence in the case on behalf of the plaintiff tending to show that the occasional polishing of glass by the plaintiff was within the scope of his duties and activities as general manager of the glass manufacturing business; and while the plaintiff did not habitually or customarily personally perform this manual labor, yet, as general manager of the factory and business it was necessary for him to be personally familiar with how the work should be properly done and very occasionally, possibly five or six times a year, he would in an emergency situation in the absence of the regular glass polisher or his substitute or for their better instruction, polish a few glasses himself. There was also evidence that the action of the plaintiff in this particular ease was due to an emergency in) that a certain prospective customer had ordered two sample glasses to be delivered not later than a named time; and that the plaintiff had secured this order on a travelling trip and on his return had given instructions for the manufacture of the samples and had then gone on another trip, and on his return from the latter, found the glasses on his desk but only in the “gray” and not polished state. In order to have the glasses delivered by the specified time, the glass polisher having left the factory for the day, it was necessary for the plaintiff, who was himself familiar with the process, to polish the glasses that evening; and the accident occurred while he was so doing.
The question of law thus presented was whether an accident so occurring from a-n act within the general scope of the duties of a general manager, if so found by the jury, was within the coverage of the policies as written with the amounts therein specified, or whether it fell within the exception mentioned in the policies requiring a reduced amount because the aet, -although within the duties of a general manager as an occasional or sporadic occurrence, was also an aet pertaining to the habitual occupation of a glass polisher or, in the alternative, that of a superintendent of a factory, both risks classified as more hazardous by the defendant’s rate manual. The point being a novel one in this jurisdiction, such examination of available authorities was made as opportunity afforded during the trial. The conclusion then reached was that if the jury found as -a fact that the aet was within the duties of a general manager as specified in the policies, the plaintiff was entitled to recover without reduction in amount. The question of fact was thus left to the jury under appropriate instruction of law to that effect. The jury’s verdict established that the particular aet was within the. scope of the duties of a general manager in this particular ease.
After study of the carefully- prepared brief of counsel for the defendant and a further and more deliberate study of the authorities, I am confirmed in the view of the law announced in the charge to the jury. As the particular point has apparently not heretofore been passed upon in Maryland, or in this Fourth Circuit, a brief reference to the authorities may be helpful.
The authorities dealing with this particular clause of the modem accident insurance policy are annotated in 22 A. L. R. 780, and 26 A. L. R. 123. It will be noted that the policy provides for a reduction in the amount of the insurance in two contingencies, (1) where the occupation has been changed to a *150more hazardous one and (2) where the accident results from doing “any act or thing pertaining to a more hazardous occupation.” In the earlier forms of accident policies the exception was generally limited to a mere change in the occupation. As so worded the judicial decisions generally took the view that the limitation did not apply in the case of an accident resulting from an act pertaining to a more hazardous occupation if the latter was merely incidental or occasional and not as a result of a change in general occupation. And it is said that this tendency of judicial decision caused the insurers very generally to add the second clause of limitation above mentioned. See statement to that effect in Ogilvie v. Ætna Life Insurance Co., 189 Cal. 406, 209 P. 26, 30, 26 A. L. R. 122, where the Court said that the particular provision was “embodied in defendant’s policies in response to the suggestion found in the opinion in the Berliner Case” (Berliner v. Travelers’ Ins. Co., 121 Cal. 458, 53 P. 918, 41 L. R. A. 467, 66 Am. St. Rep. 49), “of a means by which the insurer might have avoided a result which there followed.” That suggestion was in the following language: “If the company intended to say to the assured that if he did any aet which did not strictly belong to his own occupation, but was embraced more properly in some other business, and if thereby any harm to him accidentally resulted, that in such event he could claim nothing under his policy, it was easy for them to do so in plain language.” In a prefatory note in the annotation in 22 A. L. R. 781, it is said by the author, referring to the older form of policies, “under which provisions the conclusion was generally reached that the classification intended by these provisions was one of occupation, and not of particular acts or exposures, and that consequently the fact that the insured occasionally performed acts pertaining to a more hazardous occupation did not have the effect of reducing the amount of the recovery in case of an injury sustained while he was performing such acts.” And in the same note in referring to the annotated judicial decisions which deal with the policy in its later form, that is, the clause for reduction of liability in eases of “any aet or thing pertaining to a more hazardous occupation” it is said: “It will be observed from the cases that some of the decisions depend upon the conclusion that the aet which the insured was doing did not pertain to another occupation, while others are based on the theory that the aet which the insured was doing was one pertaining to his occupation as well as to another, as, for example, where a foreman was injured while illustrating to an employee how his work should be done; and, in others, the view is adopted that the classification intended by the provisions related to a vocation, and not to an occasional aet aside from the insured’s usual business.”
In my opinion the principle applied in the cases referred to in the above underscoring, which I have supplied, is applicable to this ease and properly made it a jury issue on the particular point.
This principle was applied to a somewhat similar factual situation by the Circuit Court of Appeals for the 6th Circuit in Gotfredson v. German Commercial Accident Co., 218 F. 582, 585, L. R. A. 1915D, 312, where the court said: “It is not too much to say that the parties here possessed the common knowledge that is derived from observation and experience respecting the occasional and unexpected necessities which exact of men, whose occupations are not regarded as comprising manual labor, the doing of an act which in a literal sense may be called manual labor. It is hardly conceivable that the policy would ever have been written and received upon any other understanding. * '* * To. construe the fifteenth clause so as to preclude the insured from doing an isolated act, such as the one here involved, would in effect be to prevent an assured from incurring such dangers as are essentially incident to the whole business comprised in his occupation. It might well be conceded that in such circumstances an employee in a particular department, say an insured bookkeeper, could not rightfully have operated the elevator even in an emergency; but it would by no means follow that the managing proprietor could not have done so.” This case is a leading one, at least in the federal courts. Its authority was re-affirmed by the same court in Union Indemnity Co. v. Acord, 48 F.(2d) 1084. It was cited with approval by the Circuit Court of Appeals for the 9th Circuit in Reliance Life Insurance Co. v. Swanson, 11 F.(2d) 709, 710, and again in Schwartz v. Northern Life Insurance Co., 25 F.(2d) 555, 560, and also by the District Court of Texas in Elkins v. Ætna Life Ins. Co., 26 F.(2d) 277, 278.
The same principle is applied by the North Carolina Supreme Court in a well reasoned opinion in Smith v. Massachusetts Bonding & Ins. Co., 179 N. C. 489, 102 S. E. 887, 888, where it was said: “We do not construe the expression ‘or while doing an aet or thing pertaining to any occupation so classed’ as more hazardous, to mean that, if the injury is caused by the doing of an aet within the *151line or scope of the insured’s employment, if hazardous, he is to be paid only the diminished amount of insurance, if it also be an aet which pertains to a more hazardous business, but as meaning, at most, that if he does a more hazardous aet of another occupation, not pertaining to his own, the payment to him shall be reduced as specified. * '* * Any other construction would make the policy a deception and a snare. The one we adopt is a reasonable interpretation of the language used and the only' admissible one. Under the other construction, the company would be saying to the insured: We accept your risk as a supervisor and overseer, but if you do a certain aet, which is essential to the proper and full performance of your duties to your employer, you must forfeit the larger part of your insurance.” The same principle was also applied in Maine in the case of Thorne v. Casualty Company of America, 106 Me. 274, 76 A. 1106; and in Nebraska in Redmond v. United States Health & Accident Insurance Company, 96 Neb. 744, 148 N. W. 913, although the latter case perhaps goes farther in its application of the construction of the policy provision than is required in the present case. See, also, Eggenberger v. Guarantee Mutual Accident Ass’n (C. C.) 41 F. 172, and Zantow v. Old Line Accident Ins. Co., 104 Neb. 655, 178 N. W. 507.
The numerous cases cited by defendant’s counsel are distinguishable. Indeed I have not noted any ease, either state or federal, which clearly rejects the principle above discussed. The authorities cited by defendant’s counsel do, I think, support, by the weight of authority, the conclusion that the policy provision is effective in reducing the amount of recovery where the aet in question was entirely outside of the insured’s duties as described in the policy although the particular act pertaining to a more hazardous occupation was merely an isolated or sporadic aet and not incident to a changed occupation. Some authorities have taken a contrary view, as for instance, Holiday v. American Mutual Acci. Ass’n, 103 Iowa, 178, 72 N. W. 448, 64 Am. St. Rep. 170.
So far as I have noted, very few if any of the eases cited by defendant’s counsel deal with a situation such as we have here where the aet causing the injury was within the general duties of the insured’s occupation as described in the policy, although only an occasional one. Ogilvie v. Ætna Life Ins. Co., 189 Cal. 406, 209 P. 26, 29, 26 A. L. R. 116, is the leading authority relied on by the defendant. The distinction between the present case and the Ogilvie case is clear. In the latter the aet causing the injury was not an incident of the insured’s occupation. This appears in the following quotation from the court’s opinion: “The defendant conceded at the trial that the assured had not changed his occupation, but its contention was that the manual labor of plowing is not incident to the occupation of ‘real estate and investments,’ but is an act incident to the occupation of ‘farmer,’ ‘farm laborer,’ and ‘common laborer,’ each of which was classified by it as ‘hazardous.’ ” And eases where the assured is really engaged in two occupations, one covered by the policy and one a more hazardous classification, and where the act causing the injury results from the latter,' are also distinguishable. See annotation in 55 A. L. R. 1057.
In Richards on Insurance (4th Ed.) § 396, in discussing the exceptions of hazardous employment in the aeeident policy, it is said: “Where a person is insured as engaged in a certain specified occupation, he may do whatever customarily appertains to' such an occupation, including acts that may be forbidden by general restrictions of the policy.” See, also, eases reviewed in Couch, Cyclopedia of Insurance Law, vol. 5, § 1139.
It seems unnecessary to discuss the defendant’s requested instructions for a directed verdict based on the contention that the uncontradicted evidence showed that the plaintiff was injured in doing an aet “after having changed his occupation to one classified by the company as more hazardous” than that stated in the policies. This issue was left to the jury for determination on the facts as to whether there had been such a change in occupation. This is the usual and required course where there is substantial evidence in support of the plaintiff’s case, as there was here. Garrison v. United States (C. C. A. 4) 62 F.(2d) 41, 42; Federal Life Ins. Co. v. Bailey (C. C. A. 8) 13 F.(2d) 113, 114.
I think it sufficient to comment briefly only on the defendant’s contention that an absolute verdict should have been directed for the defendant on the ground of false answers in the applications. This was an affirmative defence as to which the defendant had the burden of proof. Ordinarily it is a question for the jury. The defendant therefore had the burden of establishing that the answers were false and insufficient and given in bad faith or, if in good faith, were nevertheless false or insufficient and material. And materiality is itself in insurance law ordinarily a question of fact for the jury. Certainly there was in this case no basis for a directed *152verdict in favor of the defendant on the issue as to the plaintiff’s good faith in making the answers; but it is contended by the defendant that the uncontradieted evidence showed that the information as to the plaintiff’s duties was materially defective. I cannot reach that conclusion. Here the defendant’s principal argument is that the plaintiff’s duties as described by him classified him according to the defendant’s manual as a factory superintendent rather than as a general manager. But the terms “manager,” “general manager” and “superintendent” have no absolute and precise meaning apart from the nature and customs of the business to which they pertain. They are to some extent at least relative terms. To determine their relation to any particular business resort is necessary to the testimony to show the size, character and nature and customs of the business. Here the testimony showed that the particular business was a glass factory employing 200 to 300 men; that the plaintiff and his brother were the proprietors and general managers of the business and that probably the larger part of the plaintiff’s personal attention was given to travel in the solicitation of customers, but that when at the plant he customarily visited the several departments of the plant at some time during each day and occasionally made suggestions or gave instructions to the foreman or employees. In one sense it might be said that when at the plant he had general supervisory duty over the whole of the business. The position which he occupied, however, was called “general manager” and I do not think it can be said as a matter of law from the uncontradieted testimony that this designation of his office and duties was clearly inappropriate.
Nor should his answers in the applications for the policies of “office and travelling” and “executive duties and travelling” to the question “state fully your duties” be construed as excluding any and all activities other than those physically performed in an office or while travelling. The answer must fairly be considered in relation to the other answers in the application which told the Insurance Company that the business of the applicant was that of a manufacturer of glass and that he was the general manager of the business. While the question was “State the duties of your occupation fully,” it may be noted that the answer was not “office and travelling only” or “executive duties and travelling only.” It is true that literally the question, including the word “fully,” is susceptible of requiring an answer that would describe with great minituae and detail every act no matter how minor and casual, performed by the plaintiff in his occupation. But reference to the original application attached to the policy shows that no such minute detail could have been reasonably intended in view of the limitation of physical space afforded for the answers. Nor should we entirely disregard the well known method of business in writing these accident policies. Indeed the testimony in the ease to some extent indicates the practice. They are written locally by an agent and the amount of detailed information required in the application for an accident policy is generally very greatly less than the much more comprehensive and detailed examination and answers required in the life insurance policy. It is suggested by the defendant that there was ample space provided for the insured to have personally written in, or request the agent to write in, a short phrase to the effeet that the plaintiff was a superintendent of the business in addition to office, executive and travel-ling duties. But there is nothing in this ease to indicate that either the plaintiff or the defendant’s agent made any distinction between the term “general manager” and “superintendent” or that the plaintiff knew that a general manager was classified differently from that of a superintendent in the defendant’s rate manual. Even, therefore, if the term superintendent were properly applicable to the plaintiff’s duties (a conclusion which was not inescapable under the testimony) there is nothing to show that the plaintiff knew this. Furthermore and perhaps more importantly, the defendant was affirmatively advised by the plaintiff’s answers that he was the general manager of a glass manufacturing business, which would reasonably imply that he had incidental duties more extensive than those necessarily physically performed in the office and while travelling. (In the later policy issued by the same company, the plaintiff’s answer to this question was “executive duties and travelling.” Here again the term “executive” is of no certain and definite meaning apart from the nature and customs of the particular business). If the defendant had desired more particular and precise information as to the details of the plaintiff’s duties for his proper classification under its rate manual which was in its possession and not known to him, further and more particular questions could have been submitted before the acceptance of the risk.
The issue here involved was fully submitted to the jury. In my opinion it could not properly have been treated otherwise. It was so held in Business Men’s Assur. Co. of Amer*153ica v. Campbell (C. C. A. 8) 6 F.(2d) 540; Id. (C. C. A.) 18 F.(2d) 223, in a case involving a quite similar situation. See, also, Redmond v. United States Health & Accident Ins. Co., 96 Neb. 744, 148 N. W. 913; Warren v. Globe Indemnity Co., 170 Wis. 600, 176 N. W. 73.
Other formal reasons contained in the motion for a new trial have not been insisted on in the defendant’s brief. I see no occasion to disturb the verdict of the jury in this case which I think was based on substantial and indeed ample eyidence. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218865/ | KIRKPATRICK, District Judge.
This is a suit by the receivers of a corporation to recover a balance ($43,836.67) of taxes paid by the corporation for the year 1919. Although the Commissioner of Internal Revenue found that there was an over-assessment of $82,325.75 for that year, the defendant has refused to pay the balance claimed, upon the ground that the claim for refund filed by the taxpayer before bringing suit did not cover that portion of the overassessment. The period of statutory limitation has expired, so that no new suit can be begun.
By written stipulation the parties in this ease waived trial by jury and the ease was tried to the court without a jury. A stipulation of facts was filed which is adopted by the court as its findings of fact. Such additional facts as are stated in this opinion may also be taken as special findings.
Briefly summarized, the facts are as follows :
The taxpayer’s return for the year 1919 was filed November 5, 1920, and the income and profits tax of $145,833.93 disclosed therein duly paid. Waivers extended the time for assessment and collection of these taxes until December 31, 1926.
On February 12, 1926, the commissioner sent the taxpayer a 60-day letter dealing with its returns of income and exeess profits tax for the two years, 1918 and 1919. The let*156tur stated that, for the year 1918, a deficiency of $153,077.07 had been determined against the taxpayer, and that, for the year 1919, an overassessment in the amount of $82,325.75 had been found in its favor. In particularizing the 1919 overassessment, the letter dealt with the two phases of the return — net income and invested capital. The overassessment, it appeared, arose entirely by reason of a reduction of the net income from $440,-291.87, as reported, to $189,550.60, which resulted in a reduction of both the income tax and profits tax. On the profits tax side, the invested capital was reduced from $1,110,323. 74, as reported, to $828,454.40. This last, of course, was a finding against the taxpayer, and, had not the income been greatly reduced, would have resulted in an additional profits tax.
Promptly upon receiving this letter the taxpayer filed a claim for refund of the 1919 overassessment in the amount found, or $82,-325.75. Less than three weeks later it filed its petition with the Board of Tax Appeals, appealing from the deficiency assessment for 1918.
The claim for refund specified the “character of assessment or tax” for which it was filed as “income and profits tax.” No detailed facts were stated, but the facts set forth in the commissioner’s 60-day letter were incorporated by the following reference: “This claim is filed pursuant to a Treasury Department Letter received by us dated February 12,1926, which sets forth * * * an over-assessment in the sum of $82,325.75 (as above) for the year 1919.” In the petition appealing to the Board of Tax Appeals (as subsequently amended) the taxpayer set forth ¿s a ground for appeal the failure of the commissioner to add to its invested capital a number of items (paid-in surplus, accounts receivable from officers, etc.) which it claimed should have been allowed in order properly to determine its profits tax.
It thus appears that from April, 1926, the commissioner had pending before him two practically contemporaneous proceedings initiated by the same taxpayer, one' to defend against a deficiency assessment of profits and income tax for 1918, which raised the question of invested capital, and the other to recover an overassessment of income and profits tax for 1919, in which the commissioner’s determination of invested capital was not challenged.
Both proceedings received' administrative attention from the commissioner, and on July 18,1929, the one based upon the claim for refund of the 1919 taxes was terminated by a certificate of overassessment sent by the commissioner to the taxpayer notifying it that “a consideration of all the claims (if any) filed by you for the year 1919” indicated that there had been an overassessment for that year in the amount of $89,473.11. Of this amount, $45,636.44 was allowed as a refund, and $43,-836.67 was disallowed as “due to adjustments not covered by claim for refund.”
The certificate of overassessment was based upon a decision of the commissioner (Decision No. 197) captioned as of the 1919 proceeding filed the day previous which contained an elaborate revision and restatement of the various items going to make up the taxpayer’s tax liability. By this decision the income was increased over that given as the basis for the 60-day letter — thus reducing the overassessment of income tax appearing by that letter. Four pages of the decision were devoted to a 'redetermination of the invested capital resulting in its increase from $1,110,-323.74 as reported, to $2,409,829.88 and a consequent reduction of profits tax liability of $43,836.67, which, however, as stated above, was disallowed.
The commissioner’s statement that this balance was the result of adjustments not covered by the claim for refund was strictly correct. The additions to invested capital found allowable by Decision No. 197 had not been claimed, nor for that matter had any increase of invested capital been even mentioned in the 60-dav letter of February 12, 1926, which was the basis of the claim for refund." Naturally, the taxpayer had not in his claim for refund raised the question of the invested capital on which his 1919 profits tax was based (although the commissioner’s 60-day letter had decreased it) because the profits tax itself was actually reduced by that letter, through reduction of income.
Now it will be remembered that the appeal from the 1918 deficiency assessment (involving principally invested capital) was pending during the time that he was considering the 1919 claim for refund. And it will also be borne in mind that, as a matter of accounting, invested capital, once determined for any year* is carried on through subsequent years in the same amount without change except as newly acquired information may cause it to be revised. Therefore, whatever information or data relating to invested capital the taxpayer submitted in one proceeding went to make a determination which was equally available in both. Though, as a matter of- form and caption, it may have *157referred to the year 1918, as a practical matter it bore upon all subsequent years as well.
The appeal from the deficiency assessment for 1918 (to which had been added appeals from deficiency assessments for 1920-22 and 23) was dealt with by the commissioner through a Special Advisory Committee. To this committee the taxpayer had submitted comprehensive information relating to its invested capital, and entered into conferences with it on two occasions, to wit, June 25, 1928, and July 10, 1928.
The reason why a readjustment of invested capital was allowed and reported in the decision on the claim for refund of the 1919 tax appears from the record of the 1918 tax appeal. On September 12, 1928, in the latter proceeding, the taxpayer submitted to the committee a paper entitled “Agreement to Stipulate” by its counsel, reading in part as follows; “Subject to the approval of the Commissioner of Internal Revenue, the following adjustments (together with such other adjustments as arise as a proper and necessary incident thereto) are agreed to as a basis for. closing the case.” Then followed a list of thirteen items, three of which deal with additions to be allowed to invested capital. The agreement closes with the following : “It is also agreed that the 1919 tax liability is to be recomputed on a basis reflecting changes in net income and invested capital as shown above.”
The Special Advisory Committee made an exhaustive report which appears to have reached the commissioner in April, 1929, or thereabouts. It closes with thirteen recommendations each dealing with a corresponding item of the agreement to stipulate. In addition, it recommends that the net income for the year 1919 be increased by $103,510.-99 and closes: “The changed tax liability resulting from the above adjustment is contained in the schedules attached hereto and made a part hereof. The taxpayer has signed agreement to stipulate, consenting to the closing of the case on this basis.” One of the schedules attached shows a “Corrected tax liability” and -an “overpayment” for 1919 which involves, among other things, a determination of an overassessment of $43,836.67 excess profits tax for that year. The commissioner indorsed the report of the Special Advisory Committee “Approved” on May 3, 1929.
Even if the agreement to stipulate be taken as no more than an offer by the taxpayer, as the government contends, it was unquestionably accepted and acted upon by the commissioner. It is the basis of a large part of the report of the Special Advisory Committee which the commissioner specifically approved.
Now it is plain that from the time the. agreement to stipulate in the 1918 proceeding was acted upon by the commissioner the two proceedings were practically consolidated. Apart from the express terms of the agreement itself, it appears from the contents of Decision No. 197 upon which the final letter was based that the commissioner had been dealing with the two proceedings as one. If it is necessary to correlate the situation in this case to any general rule of law, it may be said that when the commissioner, under the agreement, proceeded to recompute the 1919 tax liability “upon a basis reflecting changes in * * * invested capital” made from data derived from the 1918 appeal, he waived formal defects in the pleadings of the former. Or it may be said equally well that he allowed the claim for refund to be supplemented and amended by the particulars set forth in the third amended petition for appeal which was filed about that time.
At the beginning of the proceedings on the claim for refund the commissioner was in a position, if he so desired, to stand upon the technical insufficiency of the claim. All that would have been necessary would have been for him to reject it upon that ground and decline to consider it further. Instead, he elected to deal with the whole 1919 tax (profits as well as income) on its merits in conjunction with his consideration of the 1918 tax, thus according to the taxpayer in the consolidated proceedings the benefit of any properly pleaded cause of aetion in either.
In United States v. Memphis Cotton Oil Company, 288 U. S. 62, 53 S. Ct. 278, 281, 77 L. Ed. 619 (January 9, 1933), the court said: “The Commissioner has the remedy in his own hands if the claim as presented is so indefinite as to cause embarrassment to him or to others in his Bureau. He may disallow the claim promptly for a departure from the rule. If, however, he holds it without action until the form has been corrected, and still more clearly if he hears it, and hears it on the merits, what is before him is not a' double claim, but a claim single and indivisible, the new indissolubly welded into the structure of the old.”
This language is applicable here. In the case at bar the commissioner holding the claim without action, heard it and heard it on the merits. True, the form was never cor*158reeted (that is, it was never formally amended), but the proceedings before the commissioner was certainly such 'as to give the taxpayer to understand that formal amendment would be unnecessary. In Bonwit Teller & Co. v. United States, 283 U. S. 258, 51 S. Ct. 395, 75 L. Ed. 1018, a letter from the taxpayer, accompanied by a formal waiver requested by the Bureau, was held the equivalent of a notice of claim where the commissioner so treated it.
In the same ease and in that of United States v. Henry Prentiss & Company, Inc., 288 U. S. 73, 53 S. Ct. 283, 285, 77 L. Ed. 626 (January 9, 1933), Judge Cardozo clearly indicated the method of approach which ought to be adopted toward these questions of what may be called the pleadings in administrative proceedings before the Treasury Department. The analogies of pleadings in a law suit are given due consideration “But,” the court said, “the analogies of pleadings are not decisive of the controversy before us, wherever they may point and however helpful they may be. To make our conclusion sound, we must keep in mind also the necessities and realities of administrative practice.” Again, “Definitions and analogies borrowed from pleadings in a lawsuit will have their place and recognition, but in due subordination to differences of end and aim.” Pursuing this guide, the instant case presents a practical consolidation of two suits or proceedings between the same parties, both based upon the same general cause of action. “The ultimate question presented for decision, upon a claim for refund, is whether the taxpayer has overpaid his tax. This involves a redetqrmination of the entire tax liability.” United States v. Memphis Cotton Oil Company, supra. “A statement, without explanation, to the effect that overpayments have been made in an aggregate amount is broad enough to cover any and all grounds for reassessment and return.” United States v. Henry Prentiss & Company, Inc., supra.
Erom an administrative point of view it was the only practical and sensible way to handle the whole situation and, obviously, the Commissioner did not think he was in danger of being misled or prejudiced as to his adversary’s case nor did he, until the last minute, indicate the slightest intention of invoking the provisions of the statute and regulations, designed solely to protect him against such an event. The 1918 proceeding gave notice that invested capital was in issue between him and the taxpayer. In the course of that proceeding the invested capital had to be determined and was determined upon information furnished by the taxpayer. An agreement to use the results thus obtained, in both proceedings, was in the interest of simplicity and dictated by common sense.
Conclusions of Law.
1. The claim for refund filed in this ease, standing alone, is wholly insufficient as a basis for the suit.
2. The commissioner may waive the insufficiency of the claim for refund.
3. Such waiver may appear at any time during the proceedings upon the claim and is not necessarily confined to the commissioner’s final action in allowing or disallowing the claim.
4. In this ease, the proceedings disclose a practical consolidation of the two proceedings before the commissioner — the 1919 claim for refund and the 1918 deficiency assessment.
5. The consideration of the two proceedings together by the commissioner under the agreement to stipulate and as shown by the subsequent conduct of the proceedings amounted to a waiver of the insufficiency of the claim for refund in the 1919 proceeding.
6. Having waived such insufficiency and. both parties having dealt thereafter on the basis of such waiver, the commissioner could not withdraw it by refusing the refund in his final action, even though he then asserted the insufficiency of the claim as the ground for his refusal.
If the defendant desires to submit specific requests for conclusions of law, it may do so.
• Judgment may be entered for the plain tiffs in the amount claimed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218866/ | JONES, District Judge.
This cause was tried and submitted to the Honorable D. C. Westenhaver in September, 1927. Due to his siekness and subsequent death, it was not decided. By written stipulation of counsel for the parties, it was agreed that the matter should be submitted without retrial to one of the judges of this court; and, upon oral argument had January 9, 1929, the matter was submitted on the record and briefs.
This is a patent infringement suit involving pull-stroke ditchers or excavating scoops and machines. They are distinguished from the ordinary steam shovel in that they dig inwardly, toward the operating machine, as a pick or hoe, rather than away from the machine, as a shovel. The pull-stroke or inwardly digging shovel has an outstanding advantage over the ordinary steam shovel, in that the ditch or trench is cut the width of the bucket only, and the machine always remains on solid ground as the excavation progresses, rather than astride or over the wall of the ditch or trench. Another advantage urged for this type of machine is its interchangeable character; that is, construction for other uses may be applied to the same operating machinery. The patents claimed to be infringed are, generally speaking, combinations of old elements producing improvements-and advantages over prior conceptions and embodying many of the functional elements of earlier invention. Plaintiffs contend that claim 4 of Clutter patent 1,317,431, claims 5, 6, 7, and 9, of Wagner, 1,476,121, and all claims of the two Downie patents, 1,511,114 and 1,543,250, are infringed by the defendants’ construction. It is the plaintiff’s claim that the infringing use of these inventions is disclosed by Plaintiff’s Exhibits 16, 17, and 18, which are to be found in the defendants’ advertising catalogues and referred to as, “Byers’ Bear Cat.”
One of the chief advantages claimed for the plaintiff’s machine is its ability to break through, with a hammerlike blow, rock, shale, sandstone, and the like, found near the ground surface, thus doing away with considerable blasting. Another advantage being its control by two lines, or two control members; and, further, that it has the advantage of exact spotting in a wdde area or range for the discharge of the spoil or contents of the scoop, having the falling bottom which may be closed by momentum produced by manipulation of the scoop, thus accomplishing, perhaps, old results in a new and useful manner, as well as obtaining new and better results by reason of a novel combination of some old elements. Sueh a result has been repeatedly held to require inventive faculty and produce invention.
Without going into detail or discussing technical means, I think the plaintiff’s patents have initiated and accomplished, in a practical, commercial, and economical way, an advance in the field of mechanical digging, and that through its efforts and developments have produced a better and, in substantial respects, a new result out of old elements in the art of trenching and ditching.
It is not thought necessary here to review the extensive reference to the prior art, since from an examination thereof nothing suggests or anticipates the novel operative control and other commercial advantages found in the claims in suit. It seems to me that the plaintiff, through the successive steps of Clutter, Wagner, and Downie, has developed the art over the earlier disclosures. I am satisfied, from a reading of the transcript of the *160testimony and the evidence in the ease, that the defendants’ construction was the result of the study of plaintiff’s conceptions, Clutter, Wagner, and Downie, and the copying of the plaintiff’s construction and mechanism.
John M. Zane, Harold W. Norman, and Zane, Morse & Norman, all of Chicago, Ill., and Horace B. Pay, Robert W. Wilson, and Pay, Oberlin & Pay, all of Cleveland, Ohio,, for appellants.
P. O. Richey and Richey & Watts, all of Cleveland, Ohio, and Charles R. May and May & Bradshaw, all of Beaver, Pa., for appellee.
The parts of the defendant’s machines are combined and function in precisely the same way as the plaintiff’s commercial machine. ' The defendants have taken substantially the plaintiff’s patents. I find no substantial variation in the construction of the defendants’ machine whieh is not within the scope of the claims relied upon or the result of mechanical suggestion and change. One of the most important accomplishments claimed by the plaintiff for its commercial machine, that of the two-member control, appears to have been stressed in the “Byers’ Bear Cat” catalogue by the legend appearing in Plaintiff’s Exhibit 17, “The All-Purpose One-Man Crane,” and as appears in Plaintiff’s Exhibit 18, “The All-Purpose One-Man Crane-Shovel.”
Defendants’ machines, as appear in Plaintiff’s Exhibits 16 and 17 (defendants’ catalogues), though functionally differing in respect of the link or pivotal means, would seem to substantially embody the construction found in claim 4 of Clutter, 1,317,431. It is the defendants’ third construction, as illustrated by Plaintiff’s Exhibit 18 (defendants’ catalogue), whieh it is contended infringes Wagner, 1,476,121. Any difference in positioning or attaching the hauling line to the ditcher stick, rather than to the open end of the scoop, is not, as I see it, a distinction sufficient to avoid infringement; no more than the difference with respect to the scoop attachment or mounting being centrally pivoted in the plaintiff’s machine and flexibly mounted in the defendants’. They appear to me to embody substantially the same idea and to serve the same purpose. While the liberal treatment accorded the many claims of the Downie patents might not be extended to the various elements as units, yet the combination of admittedly old elements perform additional functions and accomplish additional results. Any weakness in that respect, it seems to me, is overcome by their novel and useful combination and commercial success.
Some question as to notice was also raised, but I find no omission in that respect to warrant a finding of failure or neglect upon whieh to base a denial of relief to the plaintiff.
The patents are valid and infringed as to the claims relied upon. A decree may be entered for the plaintiff, with injunction and accounting. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218867/ | Memorandum on Rehearing Under Order of the Circuit Court of Appeals Entered October 15, 1981.1
JONES, District Judge.
In this case an. interlocutory decree entered in January, 1929, was affirmed November 5, 1930, 44 F.(2d) 283. On October 15, 1931, an order was entered by the Circuit Court of Appeals whieh in effect directed this court to reopen the pase for the purpose of receiving and considering testimony regarding only an alleged prior use and the suppression of evidence of one Clutter relating thereto.
It is claimed by the defendants (appellants above) that the prior use of the rigid scoop attachment and drop bottom, for more accurate spotting, occurred at Joplin, Mo., early in 1920; that this was made by Clutter as the result of an earlier idea in 1916; that Downie appropriated Clutter’s invention and attempted to pay him for it, and for his silence in respect of the alleged prior use at Joplin, by letting Clutter have a new excavator for half price. Downie’s conception date was the summer of 1920. His patent was applied for a year later and issued in October, 1924.
The evidence of prior use and alleged suppression seems to be obscure, indefinite, and unsatisfactory as a basis upon which now to sustain the claims made by the defendant. It appears that Clutter now repudiates his affidavit made April 16, 1925, that the scoop at Joplin was an abandoned experiment of no practical worth. He testified that Downie wrote it, but that he never read it and did not know its contents. This is effectively controverted by the notary before whom he signed and swore to it. If he swore to that affidavit, his present testimony is false. His credibility, in my opinion, has been so far impaired as to effectually destroy its weight. It is idle to suppose that Clutter'did not know what he had signed and agreed to with respect to the Joplin use. If he did not, he then was under *161no obligation of silence as far as he was concerned, and therefore under no suppressive influence. The conduct of Clutter, both before and after the Byers’ suit, is of such a character that little credibility can be accorded his evidence with respect to the prior use, unless it be adequately corroborated and supported; nor is it easy to understand why Clutter took no steps to secure for himself the benefit of apy novel change or attachment which he now believes was his invention. If he was told that Downie had made application for a patent on his improvement, it would seem to have been the natural thing to have raised the question then. It is inconceivable that Clutter, whose brother was an inventor of ditchers, and himself an experienced operator, would have been content to let the time go by for applying for a patent, if he thought he had invented something patentable at Joplin in 1920. In any event, the subsequent shabby treatment of him by Downie, in respect to his account and the repossession of the machines sold to him as the price of his silence, all had transpired before the trial of the present case. Tet it seems to me he did nothing consistent with one then under no obligation to remain silent.
What has been said here is not intended as exculpation of Downie’s actions. His anxiety to protect his patent led him into a maze of questionable complications and temporizing, which, in the view I take of the alleged use, were wholly unnecessary, although inexcusable. If the matter lay between Clutter and Downie, the answer would be simple; but the issue is whether the defendants have been deprived of a real defense through the wrongful conduct of both.
A great part of the evidence as to prior use depends upon recollections given in 1930 of incidents occurring in 1920, and are certainly open to serious weaknesses. I am not impressed with the independence of Hazen’s recollection without the aid of adequately framed leading questions and Defendant’s Exhibit 26, prepared in 1929. The same may be said as to Cummings’ and the Culbertson’s depositions. Wallower’s deposition indicates that his recollection has been somewhat clarified in 1930 over his affidavit of May, 1926, as regards the satisfactory character of the latch mechanism. Erom such evidence, gathered after the passage of ten years, I find myself unable to visualize a completed and successful invention at Joplin. The Barbed Wire Patent, 143 U. S. 275, 284, 289, 12 S. Ct. 443, 36 L. Ed. 154. The changes there made in the machine were not satisfactory and were not developed, in my opinion, to the point where they constituted anticipation of Downie. The drop bottom rigid "scoop tried out at Joplin was not persisted in, but, on the contrary, it was abandoned five years before the evil complained of was set in motion by the affidavit of April 16, 1925. Symington Company v. National Malleable Castings Company, 250 U. S. 383, 39 S. Ct. 542, 63 L. Ed. 1045; Buser et al. v. Novelty Tufting Machine Co. (C. C. A.) 151 F. 478, 492.
I am more impressed with the testimony of Oliver and the affidavit of Wallower. The defendant at first objected to the introduction of the latter, but later withdrew objections. Oliver testified that, after the skimmer bucket had been converted over to a ditcher bucket, there was difficulty with the latch arrangement; that at first they tried it with the pull rope, with the man standing alongside of the machine, and that the driver on the wagon would sometimes dump it with his hands; that they used a club or stick, or repeated the first operation mentioned. To close the bottom of the bucket, it was let down to the ground; it would not close by momentum swinging. He further testified that the ditch-er scoop was not rigid and was not used wherever there was rock to be excavated. The machines thus used were disposed of as skimmer buckets; that is, they were both converted back to their original state. He denied that he told Clutter that Downie was taking out, or had taken out, a patent on the drop bottom ditcher scoop. Wallower’s affidavit, under date of May 8, 1925, describes the changes made from the skimmer scoop to the drop bottom rigid scoop. Two machines were so changed and were tried on the job for six weeks. While the falling bottom was advantageous in discharging sticky clay, it was not sufficient to continue the use of the scoops, and the latch mechanism was never reduced to a positively acting and properly constructed form. In March or April, 1929, their use as ditchers was abandoned and both scoops were converted into skimmers and disposed of.
When the conditions of Clutter’s alleged rewarded silence were, as he thought, breached by the repossession of his machines, it is difficult to believe that he would longer remain silent, if he had in truth made a prior use at Joplin of his claimed original invention.
I find that the Joplin machine was not satisfactory; that it was never perfected to the point of successfully accomplishing the result claimed for it; that it was an abandoned experiment. My conclusion is that it was not a prior use constituting an anticipa*162tion of the Downie patent. No satisfactory showing of the Joplin use appearing, there was no suppression ¿fleeting the rights of the defendant. Upon that phase of the case, however, I find that Downie endeavored to secure for his own protection whatever rights Clutter may have had to the improvement, for the purpose of avoiding any trouble in sustaining his patent, together with the denial of prior use by Clutter. I find that Downie did not successfully accomplish this purpose, that such arrangement as was entered into with Clutter was breached prior to'trial of this case, and that Clutter was under no suppressive influence or obligation at that time respecting his alleged invention or prior use. I find there was no suppression of evidence materially, affecting the defendant’s rights.
Appeal from present order dismissed (C. C. A.) 63 F. (2d) 996. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7219569/ | CAMPBELL, District Judge.
This is an action in equity, brought by a trustee in bankruptcy, to set aside as preferential, under the provisions of the Bankruptcy Act (11 USCA § 1 et seq.) and under section 15 of the Stock Corporation Law of the state of New York (Consol. Laws N. Y. c. 59), an assignment made on March 7, 1930, by Werner-Mitehell Company, Inc., to defendant Bank of Huntington & Trust Company of moneys due or to become due to the bankrupt from, the state of New York, in connection with work performed and materials furnished by the bankrupt under its contract with the Long Island state park commission, for the construction of a bathhouse at Jones Beach, Long Island,, and to recover an alleged payment received on April 11, 1930, of $5,000 and an alleged payment received on May 31,1930, of $40,000.
Briefly stated, the facts are as follows:
Werner-Mitehell Company, Inc., the bankrupt above described, was incorporated in November, 1924, and was engaged in the contracting business around New York City, with an office in Brooklyn, from 1925 until the filing of the petition in bankruptcy.
The defendant Wenzel is a retired contracting plumber and a man of some means. During all the times in question he resided and still resides at Huntington, Long Island, where during all of said times he had numerous activities and was well and favorably known at the defendant bank.
He was an old and intimate friend of the Werners, and sometimes loaned money to them.
The said bankrupt was a family affair with a very small capital.
On or shortly prior to April 4, 1929, the said bankrupt secured the contract to construct a bathhouse for the Long Island state park commission, at Jones Beach, Long Island.
The said bankrupt was already engaged on a job at Avenue Z, Sheepshead Bay, for the city of New York.
The small capital of the said bankrupt was already engaged in the Avenue Z job, and was insufficient to finance the job at Jones Beach.
William Werner, Sr., then went to Huntington, Long Island, and asked the defendant Wenzel to lend the said Wemer-Mitehell Company, Inc., $50,000 on its note, and promised to repay the loan from the moneys to be received from the Jones Beach job as they came in from time to time.
The defendant Wenzel said he could not make a loan of that size, but would see if the bank would let him have it.
He requested the loan from Mr. Conklin, president of the defendant bank, and told him that he (Wenzel) intended to reloan the money to the said Werner-Mitehell Company, Inc., and’ that William Werner, Sr., had promised to repay him (Wenzel) out of the proceeds of this job as the moneys were received from time to time, which was a fact; and the defendant Wenzel also told the said president of the defendant bank that he would repay his loan to the bank as he received the money from said Wemer-Mitehell Company, Inc., and that said company would open an account with the said bank.
The defendant bank loaned $59,000' to the defendant Wenzel, and took his three months’ note for that sum, secured by a deed to his real estate in Huntington, which deed was not recorded.
At the request of the defendant Wenzel, an account was opened in the defendant bank in the name of the bankrupt, and the $50^000 placed to its credit on April 4, 1929'.
The defendant Wenzel took the demand note of the bankrupt.
*984The bankrupt then proceeded with the performance of the Jones Beach contract, and on July 29', 1929, it received a payment on the contract of $128',716.92, which it deposited in the defendant bank, and two days later repaid the defendant Wenzel $25,000 by check which he indorsed to the defendant bank as payment on account of his note.
On November 11, 1929, the bankrupt again borrowed $15,000 from the defendant Wenzel which the defendant bank loaned him, taking his note therefor, and he passed it on
the bankrupt, taking its note.
On December 12,1929, the bankrupt again borrowed another $5,000 from the defendant Wenzel, which the defendant bank loaned him, taking his note therefor, and he passed it on to the bankrupt, taking its note, and at the same time the defendant Wenzel gave the def endant bank a, letter, which was dictated by Addison W. Sammis, the secretary and treasurer of the defendant bank at the time, reading as follows:
“In view of the fact that the Bank of Huntington and Trust 'Company is this day making to me a loan of $5,000 in addition to the $40,000 which I have already borrowed from the bank, I beg to certify as follows:
“That I am borrowing the same for the Werner Mitchell Co., Inc., that said Werner Mitchell Co., Inc., have already completed for the State work for which they will be paid in the amount of over $200,000 and that a small amount of work still to' be completed will give them a total amount due from the State of $240,000;
“I further certify that this amount is due and should be received and deposited in the Bank of Huntington and Trust Company within thirty days from this date, and that there are no offsets or claims which will in any way affect the claim of said Werner Mitchell Co., Inc., on the payment to be received from the State.
“I furthermore certify that the notes which I have given to the Bank of Huntington and Trust Company will be paid from the amount to be received in accordance with the agreement which I have with the Werner Mitchell Co., Inc.”
On December 28, 1929, the $5,000 loan was repaid by the bankrupt to the defendant Wenzel and by Wenzel to the defendant bank.
The bankrupt paid interest to Wenzel regularly on the amounts loaned by him to it, and he paid the interest to the defendant bank.
The Jones Beach job was virtually finished, and the large final payment seemed about to become due.
The bankrupt was bidding on new work.
Final payment on the Jones Beach job continued to be delayed. The money from that job looked to be certain, but the time of payment was uncertain.
The defendant Wenzel was making monthly renewals of his notes in the defendant bank.
On January 6, 1930, the bankrupt owed the defendant Wenzel $40,000, which he in turn owed to the defendant bank, the latter holding the notes of the defendant Wenzel for $25,000' and $15,000', respectively, and on that day the two loans were consolidated, the defendant Wenzel giving to the defendant bank his note for $40,000', payable one month after date.
On January 10,1930, the defendant bank loaned the defendant Wenzel $5,000 additional on his one month’s note, which he in turn loaned to the bankrupt.
On January 23, 1930, William Werner, Jr., prepared and on behalf of the bankrupt executed an assignment of all the moneys due or to become due from the Jones Beach job to the defendant bank, and on January 28th he sent a copy to the state comptroller for filing in his office, and delivered a duplicate original to the defendant Wenzel, who at the request of William Werner, Jr., took it to the defendant bank and delivered it to Mr. Sammis, at the end of January or the first part of February, 1930.
The defendant bank did not request the assignment and knew nothing about it until it was delivered to Mr. Sammis, about February 1, 1930.
The making of the assignment was the idea of William Werner, Jr., who suggested to the defendant Wenzel that, instead of renewing the notes from month to month, he would give the defendant Wenzel an assignment, or the defendant bank an assignment, so that the assignment would be in the hands of the bank.
The bank had had no dealings whatever with the bankrupt up to this time, except those of bank and depositor.
The bankrupt was not indebted to the defendant bank.
The defendant bank never took any steps in regard to the assignment, but simply waited for the money to be paid by the state, and upon its collection proceeded to close the transaction.
*985The assignment was absolute in form and transferred to the defendant bank the moneys that were to come from the state, without any qualifications whatever.
On February 3, 1930, the bankrupt desired to make a bid on another contract, which was required to be accompanied by a certified cheek for $7,500, and applied to the defendant Wenzel for the money, who' borrowed it from the bank and loaned it to the bankrupt.
The bid failed, and on February 7, 19*30', the money was repaid by the bankrupt to the defendant Wenzel, and by Wenzel to the defendant bank.
On February 6, 1930, the $40,000 note of the defendant Wenzel, held by the defendant bank, was renewed for one month, and thereafter allowed to run as an open item.
The defendant Wenzel at the same time allowed the bankrupt to extend its note for another month, and thereafter allowed it to rmi as an open item.
On February 10, 1930, the $5,000 note made by the defendant Wenzel to the defendant bank was renewed for one month, and thereafter allowed to run as an open item. The defendant Wenzel, at the same time, allowed the bankrupt to extend its note for another month, and thereafter allowed it to run as an open item.
The defendant Wenzel, during February, 1930, made other loans to the bankrupt aggregating $2,700, which, sums do not appear to have been borrowed by Wenzel from the defendant bank, and which were repaid by the bankrupt on February 27, 1930.
The assignment of January 23, 1930, was not filed in the proper office, and, on or about March 7,1930, William Werner, Jr., without the knowledge of the defendant bank or the defendant Wenzel, prepared and filed with the state department of audit and control, and with the Long Island state park commission, the proper offices, a second or confirmatory assignment, and a few days thereafter delivered a duplicate original copy to the bank, which accepted and kept it as it had the other.
The first that the bank knew of this assignment was when it was apprised of it by a letter of the state comptroller.
William Werner, Jr., prepared the assignment which was absolute in form and purported to assign all the moneys due or to become due under the Jones Beach contract to the bank, but he testified, “When the bank got the money they were supposed to deposit it to our account.”
About March 15, 1930, a notice of lien was filed, and Mr. Sammis of the defendant bank, suggested to the defendant Wenzel “That it might be well if he had a financial statement to file with the bank,” and in accordance with that suggestion the defendant Wenzel “asked for the statement.”
About March 15, 1930, the defendant Wenzel brought the statement to the bank.
The statement showed solvency with a favorable balance including estimates of expenses for completion of both joi>s on hand, of $11,416,47.
There is no evidence that Sammis, of the defendant bank, or the defendant Wenzel, knew that an alleged obligation of $10,000 was owing to Miss Werner and had been omitted, even if anything’ was due to- her. They were not in a position to know and had no motive for remaining ignorant.
On March 22d, the bankrupt sent to the defendant Wenzel its two cheeks to his order for $5,000' and $40,000, respectively, with the following explanatory letter:
“My dear Mr. Wenzel: In regard to our indebtedness of $45,000.00 with interest, which amount you borrowed from the Bank of Huntington for our account in accordance with your suggestion, we are sending you herewith two checks, one for $5,000.00 and one for $40,000.00', dated March 22nd.
“As you understand, we do not have any monies in the bank to meet these checks at this time. We expect to meet the cheek for $5,000.00' in about two weeks, which will be part of the money which we will receive from the Sheepshead Bay job, and the check for $40^000.00 in about four weeks. The cheek for $40,000.00 will be paid out of the monies which will be deposited at the Bank of Huntington under the assignment which we heretofore made to the Bank of Huntington coming to us from the Jones Beach job.
“It is understood that the $5,000.00' cheek will be paid out of the Sheepshead Bay job, and the $40,000.00 check will not be presented until the bank receives the money under the assignment of the Jones Beach job.”
After indorsing the checks Wenzel delivered them to the bank on March 25,1930'.
On April 10, 1930, the bankrupt made a deposit in the defendant bank of $18,199.50', received on the Sheepshead Bay job.
On April 11, 1930, the bank charged off the amount of the said $5,000 cheek from the deposit credit of the bankrupt, marked the check as paid, and returned the $5,000 note to the defendant Wenzel.
*986At the time that the assignment of March 7, 1930, was filed, bnt one lien that of the Montauk Plumbing & Heating Company, had been filed.
Subsequently other liens were filed, two of which the bankrupt bonded.
On May 14, 1930-, the bankrupt wrote letters to the defendant bank authorizing it to pay the three undisputed liens, including the lien of the Montauk Plumbing & Heating Company, from the final payment due from the state on the Jones Beach job. The de>fendant bank thereupon wrote letters to these lienors that, when the expected payment was received from the state, the amount of their liens would be paid to them by the bank. On May 26th, the bankrupt sent a letter to the defendant bank inclosing three checks, dated May 28, 1930, to the order of these lienors, or the bank, for the amount of the liens.
On May 31, 1930-, the bank received from the comptroller a warrant or check, drawn payable to th.e defendant bank, the assignee, for the final payment on the Jones Beach job, in the sum of $62,553.09, and credited it to the account of the bankrupt.
The defendant bank then charged the account of the bankrupt with $40,000-, the amount of the cheek aforesaid, and the defendant Wenzel paid the interest, thereby settling the note to the defendant bank, made by the defendant Wenzel, and the defendant bank returned the note and deed, which he had given as security to the defendant Wenzel. The defendant bank also charged the bankrupt’s account with the three cheeks covering the liens, and, in order to have vouchers for the payments, the defendant bank issued its own checks to the order of the lienors, which were paid by the bank in due course.
The bankrupt was solvent on January 23, 1930.
The bankrupt was solvent on March 15-, 1930, and there is no evidence of any financial change adverse to the bankrupt between March 15-, 1930-, and March 25, 1930-, when the said cheeks were delivered to the defendant bank and April 11, 1930, when the $5-,-000- cheek was charged to account of the bankrupt by the defendant bank.
It is on these facts that plaintiff asks for a decree against the defendants.
Plaintiff contends, and defendants deny, that the defendant Wenzel was a stockholder of the bankrupt.
The stock book of the bankrupt was not produced. The only evidence offered on behalf of plaintiff was the cashbook, which, as I view all the evidence, did not show that the defendant Wenzel was a stockholder, or that he invested the $10,000 in question in the bankrupt, but, on the contrary, it shows that he made a loan of that sum to William Werner, Sr., on which he was paid interest.
Assuming, however, that it does appear from the cashbook that the defendant Wenzel was a stockholder that alone is not sufficient, and the case of Union National Bank v. Scott, 53 App. Div. 65, 66, 66 N. Y. S. 145, cited by the trustee, is not in my opinion authority in support of plaintiff’s contention.
Even if the stock book had been produced and showed the name of the defendant Wenzel as a stockholder, it would only create a presumption which could be destroyed by evidence. Breck v. Brewster, 150 App. Div. 202, 134 N. Y. S. 697.
The defendant Wenzel is in no- way responsible for the missing ledger. And the evidence shows that the defendant Wenzel knew nothing of the entries in the books of the bankrupt.
The loan of $10,000- seems to have been made by the defendant Wenzel to William Werner, Sr., and by him loaned to the bankrupt. Whatever may have been done with reference to issuing stock to William Werner, Sr., when he made the loan to- the bankrupt, such stock appears to have been retired when the loan was paid. But in any event, the defendant Wenzel has not been shown to have had any part in or knowledge of the stock and its disposition, other than that he refused 100- shares offered to him by William Werner, Sr., as security for the loan.
There was no proof by common-law rules of evidence that the defendant Wenzel was a stockholder of the bankrupt, and the uncontradicted oral evidence of William Werner, Sr., and the defendant Wenzel, is that he was not such a stockholder. Therefore Zander v. New York Security & Trust Co., 178 N. Y. 208, 70 N. E. 449, 102 Am. St. Rep. 492, and U. S. Radiator Corp. v. State of New York, 208 N. Y. 144, 101 N. E. 783, 46 L. R. A. (N. S.) 585, cited by the plaintiff, are not in point.
While it is true that there ma.y be some suspicion as to the relations of the defendant Wenzel with the corporation, it does not seem to me that those suspicions point to an ownership of any stock; and, let the suspicion be what it may, it is insufficient to- support a finding that the defendant Wenzel was a stockholder of the bankrupt. Brookheim v. Greenbaum (D. C.) 225 F. 635, affirmed (C. C. A.) 225 F. 763.
The defendant Wenzel has not been *987shown to have been a stockholder of the defendant bank, and no recovery can be had against him under section 15 of the Stock Corporation Law of the state of New York, on the theory that he was a stockholder of the bankrupt.
The notes held by the defendant bank for $40,0.00 and $5,000; respectively, were drawn by the defendant Wenzel, and were not indorsed by the bankrupt; therefore, on January 23, 1930; the bankrupt was not indebted to the defendant bank on said notes.
There is no evidence to show that the bankrupt was insolvent at that time.
The bankrupt was indebted to the defendant 'Wenzel at that time in the sum of $45,-000 for money loaned by him to it, which money he had borrowed from the defendant bank, for which loans the bankrupt had given its notes to the defendant Wenzel,
At the time of his making the original loan of $50,000 to the bankrupt, the defendant Wenzel had been promised by William Werner, Sr., who solicited the loan, that payment would be made as the money was received from the state.
The final payment from the state was not made, as work remained to be done, and as a consequence the bankrupt’s note to Wenzel, and Wenzel’s note to the defendant bank, were being renewed from month to month, and William Werner, Jr., with the intention to render this unnecessary, gave the assignment to the defendant bank of the money to he paid on the Jones Beach job.
The bankrupt was asking extension of the time of payment of its debt to the defendant Wenzel, and he in turn was asking extension of the time of payment of his debt to the bank, and, whatever may now be said, the purpose of the execution of such assignment was undoubtedly to facilitate collection by the bank, and to secure the payment of the bankrupt’s debt to the defendant Wenzel, who was indebted to the defendant bank for the money he had loaned to the bankrupt.
There is no evidence on which could be predicated insolvency of the bankrupt at that time.
Subsequent to the making of such assignment, the defendant Wenzel extended the time of payment of the notes of the bankrupt, and the defendant hank extended the time of payment of the notes of the defendant Wenzel, and thereafter the notes so given were allowed to stand as open items.
The assignment of January 23,1930, having been filed improperly, on March 7, 1930, William Werner, Jr., filed another assignment to the defendant bank, in the proper offices.
He did not consult with either of the defendants before filing such assignment, and it was not requested by either of them.
There is no evidence that the bankrupt was insolvent at that time; on the contrary, the evidence is that the bankrupt was solvent, and there is no reason whatever why there should be deducted from the balance shown in the statement of March 15, 1930;, a claim of Miss Werner for $10,000; as it appears to me that such sum was not due to her, but had been paid.
There is no* evidence to disprove the account receivable of $4,100' due to the corporation from William Werner, Jr., and shown in the statement made by the bankrupt, of March 15; 1930; and given to' the defendant bank by the defendant Wenzel.
That the assignment to the defendant hank was for the security of the defendant Wenzel, as to the $40,000 note, is plainly shown by the letter of the bankrupt, of March 22, 1930, and the two cheeks of $40,000 and $5,000; respectively, to the order of the defendant Wenzel, drawn on the Bank of Huntington by the bankrupt.
As to the $5,000; the letter clearly provides for its payment from a different fund.
There is no evidence to show that the bankrupt was insolvent on that date.
The $5;000 check drawn to the order of the defendant Wenzel which he had indorsed and left with the defendant bank, was paid on April 11,1930; out of funds received from the Sheepshead Bay job, and deposited in the defendant bank on April 10,1930.
On May 31, 1930, the defendant bank received the comptroller’s warrant or cheek drawn to its order as assignee for the balance of the Jones Beach job, and deposited the same to the credit of the bankrupt, and then charged against the same the cheek for $40,000 drawn to the order of the defendant Wenzel, which he had indorsed and left with it.
The defendant hank was not a creditor of the bankrupt as to the said $45,000; and received no payment from the bankrupt.
The defendant bank and its officers had no knowledge, nor were they at any time before tbe said cheeks were paid by it put on notice that the bankrupt was insolvent, and no payment of the said $45,000 or any part thereof was made by the bankrupt to the defendant bank.
The plaintiff can have no recovery against the defendant bank.
*988The bankrupt was indebted to the defendant Wenzel in the sum of $45,000, and that debt was paid to him.
The plaintiff contends that the payment of the aggregate sum of $45,000 was a transfer voidable under section Ob of the Bankruptcy Act (11 USCA § 96 (b), so much of which as is necessary for consideration at this time reads as follows:
“If a bankrupt shall have * * * made a transfer of any of his property, and if, at the time of the transfer * * * and being within four months before the filing of the petition in bankruptcy * * * the bankrupt he insolvent and the * * * transfer then operate as a preference, and the person receiving it * * “ shall then have reasonable cause to believe that the * * * transfer would effect a preference, it shall he voidable by the trustee and he may recover the property or its value from such person.”
Five elements of such voidable preferences are presented by this section of the Bankruptcy Act, each of which is necessary to sustain a suit by the trustee. They are:
~(1) That a transfer of property of the debtor has taken place.
(2) That the debtor at the time of the transfer was insolvent.
(3) That the transfer was made within four months before the filing of the petition in bankruptcy.
(4) That, by the transfer, the creditor must have been enabled to obtain a greater percentage of his debt than other creditors of the same class.
(5) That the person receiving the transfer must have had reasonable cause to believe that the enforcement of the transfer would effect a preference. Grandison v. National Bank of Commerce (C. C. A,) 231 F. 800.
A consideration of the law and the facts leads me to the following conclusion as to each element in its order, as follows:
1. A transfer of $45,000' from the bankrupt to the defendant Wenzel took place.
2. That the bankrupt was insolvent at the time of the transfer has not been shown.
The evidence does not fiz a positive date when the bankrupt became insolvent earlier than May 31, 1930-, when it is shown by the financial statement of the bankrupt as of May 31, 1930, prepared by its certified public accountant, Karmel (Plaintiff's Exhibit 9), and which was not based entirely on the books or records of the bankrupt.
With reference to the two payments of $5,000 and $40,000', respectively,, I will deal with them separately.
I will first consider the payment of $5,-000’. This payment was not made from the proceeds of the Jones Beach job, nor was it covered by the assignment of those proceeds to the hank.
The letter of March 20:, 1930', plainly shows that this sum was to be paid from the proceeds of the Sheepshead Bay job.
The financial statement of the bankrupt of March 15', 1930’, showed solvency and m> evidence has been offered that shows insolvency of the bankrupt on April 11, 1930;
Solvency having been shown on March 15, 1930, is presumed to have continued until insolvency is shown.
Therefore it matters not whether it he found that the transfer was made on March 22, 1930, by the delivery of the $5)000' cheek by the bankrupt to' the defendant Wenzel, or the charging off of that check by the hank on April 11, 1930, as there is no- evidence in this case which would support a finding that the bankrupt was insolvent on either date.
Figures are given at the top of page 16 of the plaintiff's brief which are not in evidence and cannot he considered.
The concession that the trustee has not come into possession of a sufficient sum to enable him to pay and discharge the bankrupt’s debts in full is far from proving insolvency on April 11,1930.
With reference to the transfer of the $40,-000, the question of the insolvency of the bankrupt at the time of the transfer is dependent upon whether such transfer he held to- have been made on January 23, 1930, March 7, 1930, March 22:, 1930) March 25, 1930, or May 31, 1930; If on any of the first four mentioned dates, then the bankrupt was not shown to have been insolvent at the time. If on the last-mentioned date, May 31, 1930, then it was at a time when the bankrupt was, according to the said statement (Plaintiff's Exhibit 9) insolvent.
As it will be necessary to determine when the transfer was made in order to arrive at a conclusion as to whether it was made within four months before the filing of the petition in bankruptcy, it will be sufficient to discuss that but once.
3. As I have hereinbefore stated, I am convinced that the assignment of January 23, 1930, and the confirmatory assignment of March 7, 1930) were made to the defendant bank to facilitate collection by it of the pro*989ceeds of the Jones Beach joh and for the security of the defendant Wenzel, the creditor of the bankrupt, and that the transfer to the defendant Wenzel was made by the bankrupt by the assignment.
The first assignment of January 23,1930', was clearly before the commencement of the four months’ period prior to the filing of the petition.
Plaintiff contends that such assignment was ineffective to save it from condemnation as preferential under section 60b of the Bankruptcy Act (11 USCA § 96 (b), as it was not filed in the proper office.
Under sections 15 and 16 of the Lien Law of the state of New York, Laws 1909, c. 38 (Consol. Laws N. Y. c. 33), the-only class originally sought to be protected by those provisions are subsequent lienors. By amendment in 1925 (Laws 1925, c. 624), a subsequent assignee in good faith and for a valuable consideration, whose assignment is first duly recorded, is brought within its protection.
By chapter 515, of the Laws of 1929, these sections were re-enacted without substantial change, no change being made in section 16, and by chapter 859 of the Laws of 1930 section 16 was amended by changing the filing time from ten days to twenty days.
In Edison Electric Illuminating Co. v. Horace E. Frick Co., 221 N. Y. 1, 116 N. E. 369, L. R. A. 1917F, 1123 (1917), it was held that the provisions requiring filing could be taken advantage of by subsequent lienors only, and could not be invoked for their benefit by a judgment creditor or attaching creditor.
The trustee cannot take advantage of the nonfiling of the assignment of January 23, 1930. In re Interstate Paving Co. (D. C.) 197 F. 371.
Under section 47a of the Bankruptcy A ct, as amended in 1910 (11 USCA § 75 (a), the trustee was “deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied” “as to all property not in the custody of the bankruptcy court.” In re Morris (C. C. A.) 204 F. 770, 771.
The status of the trustee as a judgment creditor holding an execution returned unsatisfied exists as of the date of the filing of the petition in bankruptcy. Bailey v. Baker Ice Machine Co., 239 U. S. 268, 36 S. Ct. 50, 60 L. Ed. 275.
The trustee being vested with the rights, remedies, and powers of a judgment creditor, as of the date of the filing of the petition in bankruptcy, cannot attack an assignment which has not been filed.
Plaintiff contends, however, that as the filing of an assignment of January 23, 1930, was permitted by section 16 of the Lien Law of the state of New York, omission to file brings it within the operation of section 60b of the Bankruptcy Act (11 USCA § 96 (b).
This contention cannot be based upon section 60b as it reads, for the reason that by its terms the four months’ period commences from the recording or registering of the transfer, “if by law recording or registering thereof is required.” It does not sa.y, “required or permitted,” but simply “required.”
Section 60b has not been amended, but section 60a was amended in 1926 (11 USCA § 96 (a) by including a transfer within four months of bankruptcy, which period does not expire until four months after the registering or recording of the transfer, where such transfer is required or permitted. The words “or permitted” are new. The same words are found in section 3b (11 USCA § 21 (b).
Prior to the amendment of section 60a, section 60b had been construed in Carey v. Donohue, 240 U. S. 430, 36 S. Ct. 386, 389, 60 L. Ed. 726, L. R. A. 1917A, 295, wherein it was held that, where the failure to record or register the transfer does not make the transfer void as to creditors, but only to bona fide purchasers or incumbrances, the date of the recording is not the date from which to compute the four months, but the case stands precisely as if recording or registering were not required. See, also, Telford v. Hendrickson, 120 Minn. 427, 139 N. W. 941, 31 A. B. R. 866, decided before the 1926 amendment of section 60a, and Heiman v. Parnass (D. C.) 40 F.(2d) 558, decided after such amendment.
Plaintiff contends that section 60a, as amended in 1926 (11 USCA § 96 (a), and section 60b (11 USCA § 96 (b) must be read together, and that Congress intended to apply the same measure to the definition, 60a, and the trustee’s right of avoidance, 60b, and cites in support thereof Gilbert’s Collier on Bankruptcy (2d Ed. 1931) p. 878, ánd Matter of Bowles, 14 A. B. R. (N. S.) 133 (referee’s opinion).
The weight of authority seems, however, to be against plaintiff’s contention. First National Bank v. Live Stock National Bank, 31 F.(2d) 416, 419, in which the Circuit Court of Appeals of the Eighth Circuit said: “The 1926 amendment changed only section 60a and not 60b. It simply made a preference as defined in this section conform to see*990tion 3b, and did not in any way change the rule with reference to preferences that were voidable.”
This distinction was recognized in Carey v. Donohue, supra, where the court said: “Congress did not undertake in section 60 to hit all preferential transfers (otherwise valid) merely because they were not disclosed, either by record or possession, more than four months before the bankruptcy proceeding.”
It therefore seems to me that the assignment as to the $40;000 was of the date of January 23, 1930, and not within the four months’ period prior to the filing of the petition in bankruptcy herein.
4. Unquestionably the defendant Wenzel, creditor, was by the transfer enabled to obtain a greater percentage of his debt than other creditors in the same class.
5. This brings us to a consideration of the last of the five elements hereinbefore enumerated.
I shall not only consider whether the creditor, the defendant Wenzel, had reasonable cause to believe that the enforcement of the transfer w'ould effect a preference, but also whether the defendant bank had such notice.
I shall consider the question with reference to the defendant bank, first, because if it should be held that I am in error in finding that the defendant bank was not a creditor, and did not receive payment of a debt from the bankrupt, then the defendant bank could not be held liable, unless it be shown that it had such reasonable cause to believe; and, second, because if the defendant bank be held to have acted on behalf of the defendant Wenzel, or as trustee for the benefit of the defendant Wenzel, such reasonable cause to believe on the part of the bank might be imputed to the defendant Wenzel.
Again, there may be suspicion of knowledge by the defendant Wenzel as to the financial condition of the bankrupt, there certainly appears to be none as to the defendant bank; but that is not sufficient, nor would it be sufficient even to show that the defendant Wenzel had a mere suspicion of insolvency of the bankrupt. Grant v. National Bank, 97 U. S. 80, 82, 24 L. Ed. 971.
That the defendant Wenzel was a friend of long standing of the members of the Werner family is conceded, but that does not create any presumption against the defendant Wenzel, the creditor. Marshall v. Nevins (C. C. A.) 242 F. 476.
That he actually loaned to the bankrupt the moneys represented by the notes for $45,-006, which were repaid to him, is clearly shown.
The loan originally for $50;000 was made by the defendant Wenzel to the bankrupt, at the request of William Werner, Sr., president of the bankrupt, to enable it to carry out a state contract which its officers considered a profitable contract.
The defendant Wenzel did not have sufficient cash, and therefore borrowed it from the defendant bank, which he at the time informed of his intention to loan the money to the bankrupt, and which he also informed of the arrangement that, as the money was received from the state, the loan would be paid off.
That such was the arrangement is shown by the fact that, while Wenzel’s note to the bank was made payable at a fixed date, the note from the bankrupt to the defendant Wenzel was made payable on demand; and further by the fact that when the bankrupt, in July, 1930; received a payment of approximately $129,000 on the state job, it immediately reduced the loan by a payment to the defendant Wenzel of $26-,000, by check, which he in turn gave to the defendant bank in reduction of his note, which was not due until October.
The evidence shows that the work on the state job continued without trouble or interruption, and in January, 1930, was substantially completed, and an early payment from the state was expected.
In the meantime the defendant Wenzel had loaned additional money to the bankrupt, some of which had been repaid, but the balance to him from the bankrupt, and from him to the defendant bank, was $45,000.
There is no evidence in this ease on which could be founded any claim that the defendant Wenzel or the defendant bank, at the time of the making by the bankrupt of the assignment to the defendant bank on January 23,1930, had reasonable cause to believe that the enforcement of the assignment would effect a preference.
All of the loans made to the bankrupt by the defendant Wenzel, and the very fact that such assignment by the bankrupt was a voluntary act, not requested by either the defendant bank or the defendant Wenzel, clearly confirm such finding.
The defendant Wenzel was not familiar with the books or the business affairs of the bankrupt, and there is no evidence which shows that he knew of any entries in its books or of its indebtedness.
*991The evidence shows that he received no money for the making of the loans and had no financial interest in the corporation. All that was paid to him by the bankrupt was interest on his loans to it, which he paid to the defendant hank for the loans to him.
Counsel for the plaintiff contends that such a condition is so unusual as to make the story improbable.
This does not seem to me to be true, as the defendant Wenzel was certainly not the first man to assume obligations to assist a friend whom he trusted.
All that the defendant Wenzel received for himself, as appears from the evidence, was a subcontract from the bankrupt for work done for a concern other than the state, at Jones Beach, for which the defendant Wenzel was paid in full, and on which the bankrupt made a profit.
If as I believe the transfer was made by said assignment of January 23, 1930, there would be no need to consider further, as whatever happened after that would not be of moment. Chapman v. Hunt (C. C. A.) 254 F. 768; Sexton v. Kessler & Co,, 225 U. S. 90, 32 S. Ct. 657, 56 L. Ed. 995.
If, however, there be any question, I will consider thfe question with reference to the date of March 7, 1930, when without any request by either the defendant bank or the defendant Wenzel the bankrupt executed the confirmatory assignment which it filed in the proper office.
Nothing is shown, in the evidence which would warrant a finding that either the defendant Wenzel, or the defendant bank at that time had any reasonable cause to believe that the enforcement of the transfer would-effect a preference.
On March 15, 1930; in response to a suggestion from the defendant bank, the defendant Wenzel obtained from the bankrupt a statement in writing, which showed it to be solvent. Neither defendant had aiiy reason to doubt the statement, and certainly the defendant Wenzel did not doubt William Werner, Jr., whom he trusted, as is shown by the loan he subsequently made to him, and the defendants were justified in believing that the state of solvency disclosed by that statement was correct. Irving Trust Co. v. Bank of United States (C. C. A.) 54 F.(2d) 535, 537.
The same is true as. to March 22-, 1930, when the two checks were sent by the bankrupt to- the defendant Wenzel, and as to March 2o, 1930, when they were delivered by him to the defendant bank with the letter of the bankrupt.
The statement of the bankrupt of the 15th day of March, 1930, having been received and relied on by the defendant Wenzel and the defendant bank, and they not having received any information of any change in the bankrupt’s financial condition, and not having been put on notice, they certainly did not have reasonable cause to believe that the charging of the $5,000' cheek to the bankrupt’s account, on April 11, 1930; would effect a preference.
Final payment on the state contract was held up pending the completion of a small amount of work on the contract and the filing of the liens that were bonded, or for which checks were drawn and given to the defendant bank, was not sufficient to put the defendants on notice, and the fact that the defendant bank guaranteed the payment of the hens, for which it received the checks, is sufficient of itself to show that the defendant bank had no doubt of the solvency of the bankrupt and had no reasonable cause to believe that the enforcement of the transfer would effect a preference.
The fact that the defendant Wenzel went to Jones Beach, twenty-five minutes distant from his home, partially for pleasure, and assisted the bankrupt to finish the job, was a perfectly natural thing, considering that only on receipt of the final payment on that job would his note be paid.
There is no evidence that on May 31,1930, or at any time prior thereto, either defendant knew of any change in the financial condition of the bankrupt from that of March 15, 1930, except that its debts were reduced by, the payments made from the proceeds of the Avenue Z, Sheepshead Bay job, which were deposited on April 10, 1930.
The first evidence of insolvency was the statement of the bankrupt’s accountant, made in June, 1930, as of May 31, 1930, of which neither defendant had any notice before the payment of the $40,000 was made on May 31, 1930.
Plaintiff makes some point of the fact that the defendant Wenzel made a loan of $5,000 to William Werner, Jr., when he disassociated himself from the bankrupt and started in business for himself, but, instead of showing knowledge or belief of the insolvency of the bankrupt by the defendant Wenzel, it shows confidence in the Werners which I cannot believe the defendant Wenzel, then holding the bankrupt’s note for $40,000, would have had if he had then had reasonable cause to believe that the bankrupt was insolvent and that the transfer to him of the $40;000 would effect a preference.
*992All that has been said here with reference to section 60b of the Bankruptcy Act applies as well to section 15 of the Stock Corporation Law of the state of New York, as amended in 1929, so much of whieh as is necessary for consideration reads as follows:
“§ 15. Prohibited transfers to officers, stockholders, directors or creditors. No corporation which shall have refused to pay any of its notes or other obligations, when due, in lawful money of the United States, nor any of its officers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash. No conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created or security given .by it or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid, except as to any rights or interests whieh may be acquired thereunder by any person without notice or reasonable cause to believe that such conveyance, assignment, transfer, payment, judgment, lien or security would effect a preference, and except also that laborers’ wages for services shall be preferred claims and be entitled to payment before any other creditors out of the corporation assets in excess of valid prior liens or incumbrances.
This statute not only requires, in the case of creditors not officers, directors, or stockholders, proof of insolvency, or imminence of insolvency,- but also proof that the recipient had notice or reasonable cause to believe that a preference was intended.
No proof such as is required under that statute was offered.
The petition in bankruptcy was not filed herein until over five months after the assignment of January 23, 1930, and over one month after the check for $40,000, on May 31, 1930, was charged against the bankrupt’s account.
Plaintiff has failed to sustain the burden of proof whieh rested upon him.
The defendants are entitled to a decree dismissing the bill of complaint as to each of them, but, under all the circumstances, without costs. Settle decree on notice.
Submit proposed findings of fact and conclusions of law in accordance with this opinion, for the assistance of the court, as provided by the rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7219570/ | MOSCOWITZ, District Judge.
This is a hearing on the exceptions to the amended libel.
*993The amended libel alleges a cause of action founded upon deviation and sets forth with particularity the ports off her course lo which the ship deviated.
The respondent’s vessel left Hopewell, Va., with a cargo of Arcadian nitrate of soda, for the port of Alexandria, Egypt.
The libel states that the said steamship departed from the port of Hopewell, Va., but, under the direction of and with the knowledge of the respondent, failed to pursue her voyage in due course and with utmost dispatch, and wrongfully in violation of the respondent’s and ship’s obligation as common carriers departed and deviated from her said course and proceeded in a contrary direction thereto, and proceeded to New Orleans, La., Houston, Tex., Galveston, Tex., Mobile, Ala., Venice, Italy, Trieste, Italy, Eiume, Italy, and then proceeded to dispatch her cargo at Alexandria, Egypt, where the cargo was found not to be in the same good order and condition as when shipped, but on the contrary seriously injured and damaged by having come in contact with fire, water, and other substances, the nature of which is not known to the libelant, all of which is in violation of the respondent’s and the ship’s obligations as common carriers.
The exceptions to the libel allege in substance that the amended libel does not allege that the fire was due to the personal design or neglect of the respondent as required in section 4282 of the Revised Statutes (46 USCA § 182), and that the libel does not state facts sufficient upon which to base a cause of action.
The question in this ease is whether the amended libel sets forth a cause of action. It need not be decided, but must be assumed for the purpose of this motion that there was a deviation as stated in the amended libel. What is the effect on the shipowner’s liability if there is a deviation ? If there has been a deviation is it necessary for the libel-ant to affirmatively allege and prove that the fire was caused by the design or neglect of the ship’s owner as required by section 4282 of the Revised Statutes of the United States?
The law is well settled that a earner which has been guilty of deviation becomes an insurer for any damage suffered by the cargo. The Willdomino, 272 U. S. 718, 47 S. Ct. 261, 71 L. Ed. 491; The Citta Di Messina (D. C.) 169 F. 472; Thorley v. Orchis, 1 K. B. (1907) 660.
It is wholly immaterial whether her deviation had any cause or connection with the damage caused to her cargo. If the cargo was in good order and condition when the deviation occurred, the ship must answer for its subsequent damage. The Citta Di Messina, supra.
Section 4282 of the Revised Statutes of the United States (46 USCA § 182) states: “No owner of any vessel shall be liable to answer for or make good to any person any loss or damage, which may happen to any merchandise whatsoever, whieh shall be shipped, taken in, or put on board any such vessel, by reason or by means of any fire happening to or on board the vessel, unless such fire is caused by the design or neglect of such owner.”
The vessel having deviated from its course cannot claim the benefits of the fire statute. The Indrapura (D. C.) 171 F. 929; The St. Paul (D. C.) 277 F. 99; The Elizabeth Dantzler (D. C.) 263 F. 596; Charbonnier v. U. S. (D. C.) 45 F.(2d) 166.
Exceptions are overruled.
Settle order on notice. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7224446/ | OPINION AND ORDER
MARCOS E. LÓPEZ, United States Magistrate Judge.
I. Procedural History
On June 9, 2010 the United States of America (the “government” or “plaintiff’) filed a complaint along with a statement made under penalty of perjury in support of the same (the “affidavit”) by José I. Cruz Pillich, a special agent for ICE (“Agent Pillich”), to institute a civil in rem action under 18 U.S.C. § 545 and 19 U.S.C. § 1595a(c)(1)(A) and (2)(C) for the forfeiture of 323 “quintales” (approximately 32,300 pounds) of green coffee beans (the “property”). ECF Nos. 1, ¶¶ 1-2; 265, ¶ 2; 279, ¶ 2. The property had been seized by a United States Immigration and Customs Enforcement (“ICE”) agent, pursuant to a search and seizure warrant. ECF No. 265-1. On July 13, 2010, Daniel Omar Torres (“claimant”) filed an answer to the complaint, along with a third party complaint against third party defendant Nelson Colón (“Mr. Colón”), in his personal capacity and official capacity as inspector for the Puerto Rico Department of Agriculture, and against third party defendant Javier Aquino (“Mr. Aquino”), in his individual capacity and official capacity as Secretary of Agriculture for the Commonwealth of Puerto Rico at the time the property was seized. ECF No. 9. On May 19, 2011, the court granted third party defendant Mr. Aquino’s motion to dismiss plaintiffs third party complaint against him in both capacities, without prejudice. ECF No. 36. On March 30, 2012, the court adopted the Magistrate Judge’s Report and Recommendation (ECF No. 157) and granted third party defendant Mr. Colon’s motion to dismiss plaintiffs third party complaint against him in both capacities, with prejudice. ECF Nos. 157; 172 (report and recommendation adopted).
On September 13, 2013, six days prior to the commencement of a jury trial in the case of caption, plaintiff filed a motion for summary judgment (ECF No. 238), which the court denied without prejudice on September 20, 2013. ECF No. 263. After a rescheduling of the trial, plaintiff was granted until September 25, 2013 to re-file the motion. Id. Pending before the court are plaintiffs motion for summary judgment (ECF No. 264), and a response in opposition filed by claimant and interested party International Coffee Vendors, Inc. (ECF No. 275). For the reasons set forth *125below, plaintiffs motion for summary judgment is granted.
II. Uncontested Facts 1
Claimant incorporated International Coffee Vendors, Inc. D/B/A/ Gustos Coffee Co. (“ICV”) as a for-profit corporation under Puerto Rico law on September 17, 2001. ECF Nos. 265, ¶ 10; 279, ¶10. Neither claimant nor ICV are involved in growing coffee and neither do they have the processing equipment to process coffee, so that all coffee which was to be roasted once they began the roasting operations had to be purchased from a “benefi-ciado” who had the necessary equipment to be able to process the coffee. ECF Nos. 265, ¶ 17; 279, ¶ 17. Claimant acknowledges that when coffee is purchased from a coffee processor or “beneficiado” that sells coffee that has been grown by another grower who is different from the “beneficiado,” it is impossible for him to determine from where the coffee originated. ECF Nos. 265, ¶ 18; 279, ¶ 18.
Claimant has a license from the Department of Agriculture to purchase coffee. ECF Nos. 265, ¶ 19; 279, ¶ 19. As a condition of being licensed claimant is required to allow inspectors from the Department of Agriculture to come onto the ICV premises for certain purposes, and the inspectors have the right to do an inventory of the coffee and sample it under certain circumstances. Id. At all pertinent times for the purposes of the pending motion, Mr. Colón was an inspector for the Department of Agriculture of the Commonwealth of Puerto Rico, and taking samples of coffee beans was among his functions as an inspector. ECF Nos. 265, ¶¶ 21-22; 279, ¶¶ 21-22. He was part of the chain of custody of the samples of green coffee beans that he took at the premises of ICV. ECF Nos. 265, ¶ 25; 279, ¶ 25.
On January 26, 2010, Mr. Colón visited the ICV premises. ECF Nos. 265 ¶ 26; 279 ¶ 26.2 Mr. Colón provided a sample of coffee beans taken from the ICV premises to Senior Special Agent for ICE, Antonio Illas (“Agent Illas”). ECF Nos. 265 ¶ 45; 279 ¶ 45. On or about February 3, 2010, Agent Illas provided the U.S. Customs and Border Protection (“CBP”) Laboratory samples of the property for “country of origin” analysis, which indicated a greater than 99% probability match with the green coffee beans in the CBP Savannah Laboratory database from the Dominican Repub-*126lie. Id. Mr. Colón had to return to the ICV premises because the coffee beans samples that he initially took from the premises tested positive for not being coffee from Puerto Rico, and he placed a hold on the property there. ECF Nos. 265, ¶¶ 30, 88, 29; 279, ¶¶ 30, 38, 39. Pursuant to the search and seizure warrant issued on February 11, 2010, the property ICE agents seized the property on or around February 16, 2010. ECF Nos. 265, ¶¶ 3-4; 279, ¶¶ 3-4. The ICE agents seized the property from a warehouse of ICV, where the property had been stored. ECF Nos. 265, ¶ 5; 279, ¶ 5. Once the property had been seized, CBP conducted subsequent sampling and laboratory tests under the laboratory report number SV20100184. ECF Nos. 265, ¶ 46; 279, ¶46. A total of thirty-three additional coffee samples were taken at random, thirty-two of which yielded a positive result for coffee beans with originating from the Dominican Republic, and the CBP chemist deemed the result for one sample as inconclusive. Id. The samples taken for CBP testing and the 323 Quintales of coffee beans seized by federal law enforcement agents were composed of exclusively unroasted coffee beans.3
III. Legal Standaed
The purpose of summary judgment “is to pierce the boilerplate of the pleadings and assay the parties’ proof in order to determine whether trial is actually required.” Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 794 (1st Cir.1992). Summary judgment is granted when the record shows that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “ ‘A dispute is genuine if the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party. A fact is material if it has the potential of determining the outcome of the litigation.’ ” Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 782 (1st Cir.2011) (quoting Rodríguez-Rivera v. Federico Trilla Reg’l Hosp., 532 F.3d 28, 30 (1st Cir.2008)).
The party moving for summary judgment bears the burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant presents a properly focused motion “averring ‘an absence of evidence to support the nonmoving party’s case[,]’ [t]he burden then shifts to the non-movant to establish the existence of at least one fact issue which is both ‘genuine’ and ‘material.’” Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990) (quoting Garside v. Osco Drug., Inc., 895 F.2d 46, 48 (1st Cir.1990)). For issues where the nonmoving party bears the ultimate burden of proof, that party cannot merely *127“rely on the absence of competent evidence, but must affirmatively point to specific facts” in the record “that demonstrate the existence of an authentic dispute.” McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir.1995). The plaintiff need not, however, “rely on uncontradicted evidence .... So long as the plaintiffs evidence is both cognizable and sufficiently strong to support a verdict in her favor, the factfinder must be allowed to determine which version of the facts is most compelling.” Calero-Cerezo v. U.S. Dep’t of Justice, 355 F.3d 6, 19 (1st Cir.2004) (emphasis in original).
In assessing a motion for Summary judgment, the court “must view the entire record in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party’s favor.” Griggs-Ryan, 904 F.2d at 115 (citations omitted). The court may safely ignore “conclusory allegations, improbable inferences, and unsupported speculation.” Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990) (citations omitted). However, there is “no room for credibility determinations, no room for the measured weighing of conflicting evidence such as .the trial process entails, [and] no room for the judge to superimpose his own ideas of probability and likelihood (no matter how reasonable those ideas may be).” Greenburg v. P.R. Mar. Shipping Auth., 835 F.2d 932, 936 (1st Cir.1987).
IV. Legal ANALYSIS
A. 18 U.S.C. § 545
In the case of caption, plaintiff is pursuing civil forfeiture under two statutes: 18 U.S.C. § 545 (“§ 545”) and 19 U.S.C. § 1595a (“§ 1595a”).4 Before the Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), Pub.L. No. 106-185, 114 Stat. 202 (2000), in a civil forfeiture action, the government needed only to establish probable cause that the property was subject to forfeiture; upon the government’s showing, the burden would shift to the claimant. See 19 U.S.C. § 1615. CAFRA, however, “ ‘heightened] the government’s evidentia-ry burden in civil forfeitures.’ ” United States v. $21,510.00 in U.S. Currency, 144 Fed.Appx. 888, 889 (1st Cir.2005) (quoting United States v. Funds in Amount of Thirty Thousand Six Hundred Seventy Dollars, 403 F.3d 448, 454 (7th Cir.2005)). Under CAFRA, “the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture.” 18 U.S.C. § 983(c)(1). “The burden of showing something by a preponderance of the evidence, the most common standard in the civil law, simply requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence before [it] may find in favor of the party who has the burden to persuade the [jury] of the fact’s existence.” United States v. Four Hundred Sixty Three Thousand Four Hundred Ninety Seven Dollars & Seventy Two Cents ($163,197.72) in U.S. Currency *128From Best Bank Account, 779 F.Supp.2d 696, 706-07 (E.D.Mich.2011), appeal dismissed (July 19, 2012) (citing Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602, 622, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993) (quoting In re Winship, 397 U.S. 358, 371-72, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970))) (internal citations omitted). However, “[t]hat the burden is on the government does not change the fact that, if the government meets its burden, it will prevail unless the claimants introduce evidence to support their case” that the property in question is not subject to forfeiture. United States v. $171,206.00 in U.S. Currency, 320 F.3d 658, 662 (6th Cir.2003) (finding “evidence of legitimate income that is insufficient to explain the large amount of property seized, unrebutted by any evidence pointing to any source of legitimate income ... satisfies the burden [for forfeiture] imposed by the statute”).
The provisions of CAFRA apply to actions pursued under § 545. See United States v. One Tyrannosaurus Bataar Skeleton, No. 12 Civ. 4760 PKC, 2012 WL 5834899, at *1, *3 (S.D.N.Y. Nov. 14, 2012) (holding, in a civil forfeiture case under, inter alia, 18 U.S.C. § 545, that “CAFRA applies to the two forfeiture statutes invoked by the government that are found in Title 18”). Thus, with respect to § 545, it is plaintiff, not claimant, who ultimately bears the burden of proving that the property is forfeitable.5 Section 545 states:
Whoever knowingly and willfully, with intent to defraud the United States, smuggles, or clandestinely introduces or attempts to smuggle or clandestinely introduce into the United States any merchandise which should have been invoiced, or makes out or passes, or attempts to pass, through the customhouse any false, forged, or fraudulent invoice, or other document or paper—
Shall be fined under this title or imprisoned not more than 20 years, or both.
18 U.S.C. § 545.
*129Merchandise introduced in violation of § 545 “shall be forfeited to the United States.” Id. Civil forfeiture under § 545 is not dependent on criminal conviction under the provision. See United States v. Approximately 2,175,810 Lbs. of Clean, Unroasted Coffee Beans, 608 F.Supp. 288, 291-92 (D.P.R.1985) (citations omitted) (“[W]here a statute contains a forfeiture clause which is in rem in nature and not in personam, and the clause does not expressly or impliedly provide for a prior conviction of the individual offender, such a conviction is not a prerequisite of the forfeiture. A conviction in these cases is not necessary because the property, and not the person, is considered to be the offender.”).
For its action under § 545 — pursuant to which it bears the ultimate burden — the government has not shown the absence of a genuine issue of material fact. All reasonable inferences must be indulged in the non-movant’s favor. Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990). In Section V(B) of the pending motion for summary judgment, plaintiff notes that merchandise that is imported into the United States contrary to law is subject to forfeiture under § 545. ECF No. 264, at 11-12.6 The importation of unroasted coffee into Puerto Rico is prohibited. See 7 C.F.R. § 319.73-2(a)(1). Plaintiff argues that because unroasted coffee beans cannot be brought into Puerto Rico and there is no evidence to demonstrate they were legally brought into the United States, the property must have been either been smuggled or clandestinely introduced in violation of § 545. ECF No. 264, at 12. This contention rests on the proposition that the property is not from Puerto Rico. Plaintiffs only comment on this matter in its memorandum in support of its motion for summary judgment is that “CBP laboratory testing confirmed that [the coffee beans] are of Dominican Republic origin.” Id. at 12. The government makes this argument in Section V(F)(1) as well. Id. at 20-22.
Plaintiffs argument that claimant’s expert Dr. Kim Anderson (“Dr. Anderson”) “did not reach the conclusion that the 323 Quintales of green coffee beans seized are coffee originated in Puerto Rico and not the Dominican Republic as claimed” misses the mark. Id. at 22. Claimant does not bear the ultimate burden on this issue under § 545. Although claimant’s expert report does not offer an independent assessment regarding the coffee beans’ country of origin he can defeat summary judgment under this section without presenting a rebuttal expert opinion to affirmatively suggest the property originated in Puerto Rico by raising a question about the credibility plaintiffs evidence.7 See e.g., Ross Univ. Sch. of Med., Ltd. v. Brooklyn-Queens Health Care, Inc., 09-CV-1410 KAM, 2012 WL 6091570 (E.D.N.Y. Dec. 7, 2012) report and recommendation adopted in part, 09-CV-1410 KAM RLM, 2013 WL 1334271 (E.D.N.Y. Mar. 28, 2013) (“[E]ven absent a rebuttal expert a party may defeat summary judgment by citing evidence in the record that arguably suggests flaws in an expert’s methodology, thereby impeaching the expert’s conclusions.”). In *130the ease of caption, based on the flaws that Dr. Anderson’s report suggests regarding the methodology used in the CBP laboratory and the certainty of the conclusions in the CBP report, it cannot be said that the government’s proof that the property is subject to forfeiture is “unrebutted by any evidence” such that the government must prevail on its § 545 claim. $174,206.00 in U.S. Currency, 320 F.3d at 662.
Claimant submits an expert report by Dr. Anderson that includes analysis and findings which could lead a reasonable jury to conclude that plaintiff has not met its burden of proving by a preponderance of the evidence that the coffee beans did not originate in Puerto Rico. Whether the property originated from Puerto Rico is a central factual issue in this case of, and plaintiff must demonstrate by a preponderance of the evidence that the coffee beans are from Puerto Rico in order to succeed on its § 545 claim. According to CBP chemist Robert Redmond (“Redmond”), the model used by the CBP laboratory to test the samples uses a “robust database in coffee.” ECF Nos. 265, ¶ 36; 265-12, at 47. Dr. Anderson’s report critiques the methodology used in the CBP tests, contending, inter alia, that more robust methods for classification of the coffee beans are available and that the data set used to produce the CBP laboratory test report was too small to create “rigorous classification capability.” ECF Nos. 279, ¶ 46; 279-2, at 5. The ultimate conclusion of Dr. Anderson’s report is that “[g]iven the incomplete database, likely erroneous data used in the database, lack of seasonal data [and] overall small number of samples used to create the database” it is not possible to conclusively assign geographic authenticity with the model and database used to attain defendant’s conclusion that there is a 99% probability that the coffee beans originated from the Dominican Republic. Id.
Dr. Anderson’s report offers adequate explanation of her findings and conclusions, such that it cannot be discounted as overly speculative or conclusory. Her conclusion undermines the credibility of the findings from the CBP report regarding the origin of the property, raising a dispute about the likelihood that the coffee beans originated from the Dominican Republic. Therefore, in order to find for the government under § 545, the court would need to “superimpose [its] own ideas of probability and likelihood,” which is not permissible at the summary judgment stage. Greenburg, 835 F.2d at 936. Drawing all reasonable inferences from Dr. Anderson’s report in favor of claimant as the non-moving party, the court finds that summary judgment is not appropriate on this issue because a rational factfinder could find that the government has not met its burden of showing the property is subject to forfeiture under § 545 because, inter alia, the property originated from the Dominican Republic.
B. 19 U.S.C. § 1595a
The government also argues it is entitled to forfeit the property under 19 U.S.C. §§ 1595a. ECF No. 264, at 8. Section 1595a(c)(1)(A) authorizes the forfeiture of merchandise “introduced into the United States contrary to law,” if that property “is stolen, smuggled, or clandestinely imported or introduced.” 19 U.S.C. § 1595a(c)(1)(A). The government argues that it is reasonable to contend that the property was clandestinely introduced or imported into the United States because under 7 C.F.R. § 319.73-2 unroasted coffee beans cannot be imported into Puerto Rico. ECF 264, at 8. The government adds that there is no evidence to show the property was declared upon entry into the United States. Id. The government asserts that the only way the beans could *131have come into the United States would be if they were smuggled or clandestinely introduced, relying on the indication from CBP laboratory tests that there is a 99% probability that the property originated from the Dominican Republic. Id.
In the alternative, the government argues in its memorandum in support of its motion for summary judgment that the property may also be subject to forfeiture under § 1595a(c)(2)(A)8, which states that “merchandise may be seized and forfeited if ... its importation or entry is subject to any restriction or prohibition which is imposed by law relating to health, safety, or conservation and the merchandise is not in compliance with the applicable rule, regulation, or state.” 19 U.S.C. § 1595a(c)(2)(A). In support of this argument, the government again points to 7 C.F.R. § 319.73-2, contending that the stated purpose of its ban on the importation of unroasted coffee into Puerto Rico is to prevent the spread of injurious pests and fungus. ECF 264, at 8. Since the CBP laboratory tests. indicate that the property originated from the Dominican Republic in violation of 7 C.F.R. § 319.73-2 — a regulation related to health and safety- — the government argues the property is forfeitable under § 1595a(c)(2)(A).
Claims of civil forfeiture under § 1595a are not subject to the provisions of CAFRA. CAFRA specifically excludes from the definition of “civil forfeiture statute” the “Tariff Act of 1930 or any other provision of law codified in title 19.” 18 U.S.C. § 983(i)(2)(A). This exclusion “has become known as the ‘customs carve-out.’ ” United States v. Davis, 648 F.3d 84, 94 (2d Cir.2011). The provisions pertaining to the burden of proof and the innocent owner defense, for instance, apply expressly to actions pursuant to “any civil forfeiture statute.” 18 U.S.C. § 983(c), (d)(1). Because § 1595a is a provision of law codified in title 19, “CAFRA is in no way applicable to the 19 U.S.C. § 1595a forfeiture claim.... ” United States v. Broadening-Info Enterprises, Inc., 462 Fed.Appx. 93, 95 (2d Cir.2012). As such, the burden-shifting scheme set forth in 19 U.S.C. § 1615 is applicable to plaintiffs action under § 1595a. See Davis, 648 F.3d at 96 (finding that “the district court correctly applied the pre-CAFRA burden-shifting approach of 19 U.S.C. § 1615” to a case under § 1595a); United States v. Aircraft (One (1) Douglas AD-4N Skyraider Aircraft, FAA Registration N-121CH, Serial No. 126956, together with its Log Books), 839 F.Supp.2d 1243, 1246-47, 1250 n. 10 (N.D.Ala.2011); United States v. Three Burmese Statues, No. 3:07-CV-250-RJC, 2008 WL 2568151, at *2 (W.D.N.C. June 24, 2008) (19 U.S.C. § 1595a(c)); United States v. One Lucite Ball Containing Lunar Material, 252 F.Supp.2d 1367, 1377-78 (S.D.Fla.2003).
Under § 1615, the government “carries a relatively light burden” of demonstrating “probable cause to believe ‘that the property had the required nexus to a specified illegal purpose.’ ” United States v. One Parcel of Real Prop. With Bldgs., Appurtenances, & Improvements, Known as Plat 20, Lot 17, Great Harbor Neck, New Shoreham, R.I., 960 F.2d 200, 204-05, 208 (1st Cir.1992) (citations omitted). For plaintiffs action under § 1595a, the determination of whether the government has met its initial burden to show probable cause that the seized coffee beans are subject to forfeiture is to be made by the *132court, not the jury. See 19 U.S.C. § 1615 (“[Pjrobable cause shall be first shown for the institution of such suit or action, to be judged of by the court.”). Under the customs laws, “ ‘the judge, and not the jury, was to determine whether there was probable cause, so as to throw on the claimant the onus probandi to establish the fairness of the importation.’ ” Id. (quoting Buckley v. United States, 45 U.S. 251, 260, 4 How. 251, 11 L.Ed. 961 (1846)). “That rule was carried forward by 19 U.S.C. § 1615.... ” Id. As such, the probable cause determination under § 1595a is made by the court before the case is presented to the jury. To meet this burden, the government must demonstrate a reasonable ground for its belief the property is subject to forfeiture, “supported by less than prima facie proof, but more than mere suspicion.” United States v. $250,000 in United States Currency, 808 F.2d 895, 897 (1st Cir.1987). The government may use hearsay or otherwise inadmissible evidence is making its showing of probable cause. See United States v. One 1986 Chevrolet Van, 927 F.2d 39, 42 (1st Cir.1991) (citations omitted):
Upon the government’s showing of probable cause, “the claimant has the burden of persuasion to show by a preponderance of the evidence that the property is not in fact subject to forfeiture.” Douglas AD-4N Skyraider Aircraft, 839 F.Supp.2d at 1246-47; see also Three Burmese Statues, 2008 WL 2568151, at *2 (noting that the burden shifts to claimant “to show by a preponderance of the evidence that forfeiture is inappropriate”); United States v. One Urban Lot Located at Rd. 143 K 36.1 Bauta Abajo Ward Orocovis, Puerto Rico, 14 F.3d 45, 1994 WL 9790, at *2 n. 4 (1st Cir.1994) (noting that, once the government establishes probable cause, the claimant “must establish a defense to forfeiture by a preponderance of the evidence”).9 In forfeiture actions under § 1615, after the government has made its probable cause showing, the party opposing forfeiture must “produce evidence which not only puts the material facts in dispute, but which enables a trier of fact to find that [it] has disproved the government’s contentions by a preponderance of the evidence.” United States v. Parcels of Real Prop. With Bldg., Appurtenances & Improvements Known As 1933 Commonwealth Ave., Newton, Mass., 913 F.2d 1, 3 (1st Cir.1990) (citations omitted) (affirming United States District Court for the District of Massachusetts’s grant of summary judgment to the government in in rem forfeiture action).
For the purposes of instituting the instant action under § 1595a, the court finds that the government has presented evidence that establishes it had probable cause that the property was subject to forfeiture, which was sufficient to institute the instant action. In reaching its determination regarding whether the government had probable cause under § 1615 to institute a civil in rem action for forfeiture, the court may rely on the contents of an affidavit submitted by the government. See Parcels of Real Prop. With Bldg., Appurtenances & Improvements Known As 1933 Commonwealth Ave., Newton, Mass., 913 F.2d at 4 (“It is clear that the district court found probable cause and that it relied on the DEA agent’s affidavit. This is sufficient.”); see also United States v. One 1974 Porsche 911-S Vehicle Identification No. 9114102550, 682 F.2d 283, 285 (1st Cir.1982) (“The question here, then, is whether agent Ferncer’s affidavit constituted sufficient probable cause.”). The *133coffee beans were seized pursuant to a search and seizure warrant10 supported by Agent Pillich’s affidavit, see ECF No. 264-1, after the initial CBP laboratory tests were conducted on samples of the property. The government cites to Agent Pil-lich’s affidavit, which states that the country of origin analysis performed at the CBP laboratory “indicated a greater than 99% probability match with the green coffee beans in the CBP Savannah Laboratory database from the Dominican Republic.” ECF No. 264-1, at 3. The affidavit further indicates that a database check did not reveal a customs entry or legal importation of approximately 323 “quintales” of coffee beans into Puerto Rico by claimant or ICV. Id. Lastly, the affidavit indicates that under 7 C.F.R. § 319.73-2 unroasted green coffee beans cannot be imported into Puerto Rico. A reasonable inference from these assertions is that the property was not from Puerto Rico and was brought into the United States illegally under § 1595a.
In his memorandum in opposition to summary judgment, claimant contests that the government had probable cause, stating: “Here, the seized [sic] affidavit was based on wrong date and the government purposely left certain data and samples [out] to concoct their ill based [sic] affirmation.” ECF 278, at 6. This conclusory argument is without support from evidence in the summary judgment record. The only evidence to which claimant offer in support of this contention is a general citation to Dr. Anderson’s report, without referencing a specific page, or paragraph. Id. This is inadequate to support claimant’s point, even if the underlying evidence in the record did bolster his contention. See Davila v. Potter, 550 F.Supp.2d 234, 238-39 (D.P.R.2007) (citing Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 930-31 (1st Cir.1983)); Dominguez v. Eli Lilly & Co., 958 F.Supp. 721, 727 (D.P.R.1997) (aff'd per curiam, 141 F.3d 1149 (1st Cir.1998)) (“It is insufficient to merely refer to an exhibit in general. Rather, parties must make specific reference to pages and/or paragraphs. Under the anti-ferret doctrine, the Court will not search through the entire record in an attempt to discern to what parties are referring in their briefs.”).
A review of Dr. Anderson’s report reveals, nonetheless, that it is completely silent regarding the dates and timeline relevant to the facts of this case, and in fact makes no mention of Agent Pillich’s affidavit whatsoever. See ECF No. 279-2. Furthermore, Dr. Anderson’s report does not indicate that the government purposefully omitted certain data or samples from the CBP laboratory testing, laboratory report, or Agent Pillich’s affidavit. She comments that the CBP laboratory report incorrectly classified a sample tested as .“inconclusive,” when it should have been classified as Puerto Rican coffee. Id. at 4. Dr. Anderson’s argument regarding the labeling of a sample as “inconclusive” applies to one of the thirty-three samples tested after the property was seized — not to one of the samples of the property originally referred' for country of origin analysis that Agent Pillich’s affidavit referred to, prior to the seizure of the property. See ECF Nos. 1-1, at 3; 265-12, at 1, 43; 279-2, at 4. Thus, her argument regarding the treatment of the sample the CBP laboratory labeled as “inconclusive” in its country of origin analysis does not undermine the information contained in the affidavit, which supports a finding of *134probable cause that the property was for-feitable.
Even taking Dr. Anderson’s report into account, which the court is not obliged to do under the anti-ferret rule, the same does not discredit the evidence in front of the government at the time this action was instituted, such that — as a matter of law— probable cause did not exist. While the remainder of Dr. Anderson’s report suggests that better methodology might exist for performing “country of origin” analysis and that it could not be shown to a 99% certainty that the property originated from the Dominican Republic, the court does not find that Dr. Anderson’s report demonstrates the CBP laboratory could not determine that the samples it tested had a reasonable likelihood of originating from the Dominican Republic. The evidence contained in Agent Pillich’s affidavit, of which the government had knowledge at the time it instituted the forfeiture proceedings in the case of caption, was probative to suggest that the property originated from the Dominican Republic, and thus was subject to forfeiture. It goes significantly further to suggest that the property in question was not from Puerto Rico “than simply arousing suspicion”. See One 1974 Porsche 911-S Vehicle Identification No. 9114102550, 682 F.2d at 285. As previously noted, § 1615 dictates that probable cause for the institution of a forfeiture action is not a question of fact for the jury, but must be judged by the court. Based on the foregoing, the court finds that the government had sufficient evidence of for-feitability at the time it filed the complaint in the case of caption, such that probable cause existed to believe the property was subject to forfeiture under § 1595a. See United States v. 863 Iranian Carpets, 981 F.Supp. 746, 748 (N.D.N.Y.1997) (concluding government established probable cause that bundles consisting of 863 carpets were subject to forfeiture under § 1595a where U.S. Customs agents seized the carpets after finding that tags of some of the carpets indicated said carpets were made in Iran and federal regulation existed prohibiting importation of Iranian goods into the United States).
Because the court finds that the government met its burden to show probable cause that the property was subject to forfeiture under § 1595a, the burden shifts to claimant to show by a preponderance of evidence that the property is not subject to forfeiture. Claimant has failed to present evidence sufficient to create a genuine issue of material of fact sufficient to survive plaintiffs motion for summary judgment under § 1595a. Pivotal to claimant’s argument that the property is not subject to forfeiture is the proposition that the coffee is Puerto Rican coffee — a proposition that claimant has not bolstered with citations to evidence in the summary judgment record.11 ECF No. 278, at 3-4. Claimant *135states that “[t]he testimony of Daniel Omar Torres, Rafael Garcia Pagan and Dr. Kim Anderson expert report [sic] establish that the coffee is Puerto Rican coffee. ECF No. 278, at 3. Once again, claimant cites to Dr. Anderson’s report in general, without developing any argument regarding how her report supports his contention that the coffee is Puerto Rican coffee. ECF No. 5, at 2. As previously noted, “it is insufficient to merely refer to an exhibit in general.” Davila, 550 F.Supp.2d at 238. Moreover, claimant does not articulate any argument regarding how Dr. Anderson’s report establishes the property is Puerto Rican coffee. “It is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel’s work, create the ossature for the argument, and not put flesh on its bones. Instead, a litigant has an obligation to spell out its arguments squarely and distinctly, or else forever hold its peace.” Harriman v. Hancock Cnty., 627 F.3d 22, 28 (1st Cir.2010) (citing United States v. Zannino, 895 F.2d 1, 17 (1st Cir.1990) (“issues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.”)) (internal citations omitted). Thus, the court finds that claimant has waived any argument regarding how Dr. Anderson’s report supports the claim that the property is from Puerto Rico, by failing to so articulate in the materials before the court for the purposes of evaluating plaintiffs motion for summary judgment.
Even ignoring claimant’s failure to cite to any specific page of Dr. Anderson’s report or to articulate an argument regarding how the content of her report demonstrates the property is from Puerto Rico, the totality of her report is insufficient for a rational jury to find that claimant has met its burden of showing that the property is not subject to forfeiture. The focus of Dr. Anderson’s report is on undermining the government’s evidence that there is a 99% probability that the property originated from the Dominican Republic; she does not offer her professional opinion regarding the likelihood that the property is from Puerto Rico. See ECF No. 279-2. As previously noted, her report is not conclusive on the issue of the property’s origin. The only portion of her report that offers any support for claimant’s proposition that the property is from Puerto Rico is the section entitled “selective reporting.” Id. at 4, 8-9. In this section, Dr. Anderson suggests that sample # 6 — the sample the CBP chemist determined was of inconclusive origin— should have been classified as being from Puerto Rico. Id. In her opinion, “the methodology clearly classified the sample as from Puerto Rico, any value >50% (i.e. > 0.5) by the method is appropriately allocated to a group[,] in this case Puerto Rico (0.3012 DR, 0.6988 PR)” Id. at 4 (emphasis in original).
Assuming, for the purposes of evaluating plaintiffs motion for summary judgment, that Dr. Anderson is correct that the CBP chemist improperly assigned sample # 6 as inconclusive in origin rather than as being from Puerto Rico, her report nonetheless fails to provide evidence from which a rational jury could find for claimant on this matter. The classification regarding this one sample does not alter the overall finding from the CBP report “that the remaining thirty two bags of coffee beans have a greater than 99% probability match with coffee beans from the Dominican Republic. For these thirty two bags of coffee beans, canonical discriminant analysis also results in a match with the coffee beans from the Dominican Republic.” ECF 265-12, at 43 (emphasis added). Dr. -Anderson’s report does not constitute evidence “which not only puts the material facts in dispute, but which enables a trier *136of fact to find that [claimant] has disproved the government’s contentions by a preponderance of the evidence.” Parcels of Real Prop. With Bldg., Appurtenances & Improvements Known As 1933 Commonwealth Ave., Newton, Mass., 913 F.2d 1 at 3. The classification of the outlier among the thirty-three samples tested as being from Puerto Rico would not constitute evidence “sufficiently strong to support a verdict in [claimant’s] favor.” Calero-Cerezo, 355 F.3d at 19. Assuming claimant had articulated an argument regarding how this demonstrates the property is from Puerto Rico, which he has not done, his evidence in support of said argument would amount to little more than an indication that one sample tested correlated with Puerto Rican samples in the database, while thirty-two others correlated with samples from the Dominican Republic. This outlier would not enable a rational jury to find that the property was from Puerto Rico, rather than the Dominican Republic, upon which premise claimant rests its claim against forfeiture. Thus, a rational jury could not find claimant has met his burden of showing the property is not subject to forfeiture by a preponderance of the evidence.
The remainder of claimant’s evidence offered in support of its contention that the property is from Puerto Rico, and thus not subject to forfeiture, consists of claimant’s testimony and that of Mr. Rafael Garcia Pagan (“Mr. Garcia”). Claimant’s own deposition testimony to which he cites indicates that he purchases coffee beans, from farmers who have “beneficiados”. ECF No. 279-1, at ll. 13-23. Claimant has admitted that when coffee is purchased from a “beneficiado” that sells coffee that has been grown by another grower who is different from the “beneficiado,” it is impossible for him to determine from where-the coffee originated. ECF Nos. 265, ¶ 18; 265-2, at 76, ll. 6-11; 279, ¶ 18. The fact that claimant allegedly purchases coffee beans from farmers with “beneficiados,” even if the sales take place within Puerto Rico, does little to affirmatively demonstrate that the coffee beans in question originated from Puerto Rico. Whatever speculative inference may be rationally drawn regarding the origin of the coffee beans from this allegation is undercut by the uncertainty regarding the origin of coffee beans that are purchased from a “beneficiado”. Furthermore, no evidence has been presented to suggest that ICV purchased coffee beans exclusively from “beneficiados” or farmers that sell only coffee beans that they themselves have grown.
Mr. Garcia’s deposition testimony is similarly insufficient to create a genuine issue of material fact that would allow a rational jury to find that property originated from Puerto Rico, and thus is not subject to forfeiture under § 1595a. He indicates only that he goes directly to a “beneficia-do” with claimant to purchase coffee beans. ECF 279-3, ll. 7-10. According to Mr. Garcia, “it is our understanding that it’s puerto rican [sic ] coffee because there’s not supposed to be any other coffee other than puerto rican [sic ] coffee there.” Id. at ll. 12-14. Upon being asked if there is any way he can test or verify that the coffee beans do in fact originate from Puerto Rico, claimant responded: “For me coffee is coffee. I don’t have a way of knowing whether it’s from Puerto Rico or not, green coffee is green coffee.” Id. at ll. 15-24. Overall, far from establishing that the property originated from Puerto Rico, Mr. Garcia’s deposition testimony tends to cast doubt on said contention, suggesting that he is not sure of the property’s origin.
Overall, claimant’s contention that the property originated from Puerto Rico— upon which his claim that the property is *137not subject to forfeiture under § 1595a rests — is not supported by evidence in the record. Since claimant bears the burden of showing by a preponderance of evidence that property is not subject to forfeiture, he “must affirmatively point to specific facts” in the record “that demonstrate the existence of an authentic dispute.” McCarthy, 56 F.3d at 315. Claimant has failed to do so; his evidence is speculative and conclusory, at best. That one sample out of thirty-three tested revealed a greater than 0.5 probability of being from Puer-to Rico is not sufficient to create a genuine dispute about the origin of the property, let alone enable a rational factfinder to find that by a preponderance of the evidence claimant has disproved the government’s evidence that the property originated from the Dominican Republic. See Parcels of Real Prop. With Bldg., Appurtenances & Improvements Known As 1933 Commonwealth Ave., Newton, Mass., 913 F.2d 1 at 3. Any conclusion that the coffee is from Puerto Rico from the deposition transcripts to which claimant cites also would not be rationally drawn — the inferences that would be required are far too vast to support it. Viewing claimant’s evidence in the light most favorable to him as the non-moving party, no rational jury could find that claimant has met his burden of showing by a preponderance of the evidence that the property in question is Puerto Rican coffee and thus find in favor of claimant under § 1595a. Thus, claimant has cannot survive the government’s motion for summary judgment on this claim and the property must be forfeited to the United States. See 863 Iranian Carpets, 981 F.Supp. at 748 (finding the 863 carpets at issue were forfeitable to the United States where claimant failed to proffer evidence as to the carpets’ origin to successfully rebut the government’s evidence that the carpets were made in Iran and thus were subject to forfeiture under § 1595a).
C. Previously Addressed Claims
Plaintiffs arguments in Section V(D) and (E), ECF No. 264, at 14-20, concerning due process and the Dominican Republic-Central America Free Trade Agreement (“CAFTA-DR”), are moot as the court has already addressed them. Claimant’s arguments under the U.S. Constitution — including the Fourth, Fifth, and Fourteenth Amendments — and CAFTA-DR have already been rejected by this court. See ECF No. 157, at 5-15 (“The third-party complaint this fails to set forth any plausible Fifth Amendment violation, and it is recommended that judgment be entered for third-party defendant on this claim ... CAFTA-DR provides absolutely no basis for third-party plaintiff to challenge the Commonwealth’s taxation or other regulation of coffee imports from the Dominican Republic, nor any actions undertaken to enforce such regulations. It is thus recommended that judgment be entered for third-party defendant on this frivolous claim.”), report and recommendation adopted, ECF No. 172.
Plaintiff also contends that claimant should not be permitted to assert the innocent owner defense under CAFRA. ECF No. 264, at 12-14. Claimant, however, makes no mention of the innocent owner defense in any of the four submitted joint proposed pretrial orders. See ECF Nos. 142; 202; 206; 255. Moreover, the only mention of the innocent owner defense in claimant’s answer to the complaint relates to “the fact that the coffee beans may be from the Dominican Republic and entitled to ‘Most Favored Nation Status’” pursuant to CAFTA-DR. ECF No. 9 ¶¶ 3, 6. As discussed above, claimant’s arguments under CAFTA-DR have already been addressed by the court.
V. Conclusion
In cases in which the government asserts multiple causes of action seeking for*138feiture of a particular piece of property, it need only prevail on its legal theory under one of the provisions in order to seize the property in question. See Davis, 648 F.3d at 98 (affirming District Court’s judgment providing that the property at issue be forfeited to the government where the claimant in that case had prevailed on government’s claim for forfeiture under 18 U.S.C. § 981(a)(1)(C) and the government prevailed on claim for its forfeiture under § 1595a(c), because the claimant’s partial victory at summary judgment “did not entitle her to retain ownership” of the property in question).12 Although a genuine issue of material fact remains with respect to plaintiffs forfeiture claim under § 545 entitling claimant to defeat plaintiffs summary judgment motion on said cause of action, since claimant has not presented evidence from which a rational factfinder could find in claimant’s favor under § 1595a, the property is forfeitable to the government under said provision. Assuming, arguendo, that claimant were able to demonstrate at trial that plaintiff had not met its burden under § 545 the outcome would be the same — the government would be entitled to the property under § 1595a — rendering a jury trial on § 545 moot. Based on the foregoing analysis, plaintiffs motion for summary judgment, ECF No. 264, is hereby GRANTED and the property shall be forfeited the government.
IT IS SO ORDERED.
. Local Rule 56 "structures the presentation of proof at summary judgment.” Goya Foods, Inc. v. Orion Distributors, Inc., 916 F.Supp.2d 177, 179 (D.P.R.2012). It "relieve[s] the district court of any responsibility to ferret through the record to discern whether any material fact is genuinely in dispute,” CMI Capital Market Inv. v. González-Toro, 520 F.3d 58, 63 (1st Cir.2008), by requiring "a party opposing a motion for summary judgment to accept, deny, or qualify each entry in the movant’s statement of material facts paragraph by paragraph and to support any denials, qualifications, or new assertions by particularized citations to the record.” Caban Hernández v. Philip Morris USA, Inc., 486 F.3d 1, 6-7 (1st Cir.2007). In accordance with Local Rule 56(e), proposed facts that are properly supported by record evidence and have not been successfully controverted or qualified by the opposing party have been deemed admitted. See, e.g., ECF Nos. 279, ¶¶ 45, 46.
. The parties contest the circumstances surrounding this visit; however, they do not dispute that Mr. Colón visited the ICV premises on said date. The government contends that he visited the premises because claimant had not submitted all the documents necessary to conduct a coffee business in Puerto Rico. ECF No. 265, ¶ 26. Claimant responds that Mr. Colón did not issue a notice of non-compliance to him. ECF No. 279, ¶ 26. The circumstances surrounding this visit are not pertinent to the disposition of the pending motion for summary judgment.
. In their memoranda of law regarding the government’s motion for summary judgment, plaintiff and claimant both directly or indirectly allude to the premise that coffee beans sampled, seized, and tested were unroasted coffee beans. See ECF Nos. 264; 278. However, neither the statement of uncontested material facts nor the opposing statement of material of facts directly asserts as such. See ECF No. 265. For the sake of clarity, the court permitted the parties to submit citations to the record by December 23, 2013, if either had evidence to support the proposition that the coffee beans sampled, seized, and/or tested were roasted. See ECF No. 280. The court noted that failure to provide evidence to specifically controvert the proposition that the coffee beans in question were unroasted would be deemed as a stipulation that the samples taken for U.S. Customs and Border Protection laboratory testing and the 323 Quintales of coffee beans seized by federal law enforcement agents were comprised of exclusively unroasted coffee beans. Id. As of the filing of this Opinion and Order, neither party has provided evidence to controvert the proposition that the coffee beans in question were unroasted.
. Although "Section 545 is a criminal provision,” a forfeiture action may be brought in "a civil in rem proceeding.” United States v. An Antique Platter of Gold, 184 F.3d 131, 139 n. 6, 140 (2d Cir.1999); see United States v. Davis, 648 F.3d 84, 96 (2d Cir.2011); United States v. Universal Fruits & Vegetables Corp., 370 F.3d 829, 835 n. 11 (9th Cir.2004) (noting that Congress has created "civil forfeiture remedies and criminal penalties,” citing 18 U.S.C. §§ 542 and 545); United States v. Ahmad, 213 F.3d 805, 811 (4th Cir.2000) (holding that "§ 545 entitles the government to civil forfeiture” of certain funds, subject to the Eighth Amendment); United States v. One Tintoretto Painting Entitled The Holy Family With Saint Catherine & Honored Donor, 691 F.2d 603, 604 (2d Cir.1982) (civil action in rem under 18 U.S.C. § 545).
. Plaintiff urges the court to " 'defer heavily to agency within agency's sphere of interest.’ ” United States v. Approximately 600 Sacks of Green Coffee Beans Seized from Café Rico, Inc., 381 F.Supp.2d 57, 61 (D.P.R.2005) (quoting United States v. Members of Estate of Boothby, 16 F.3d 19, 21 (1st Cir.1994); citing 5 U.S.C. § 706(2)(A)). Nevertheless, plaintiff has not submitted any reason why the instant case should be subject to the provisions of the chapter on judicial review within the Administrative Procedure Act ("APA”). Claimant has not alleged any cause of action under the APA. Nor does claimant contend in his answer to the complaint that an administrative agency's findings or decisions were arbitrary or capricious. See ECF No. 9; cf. United States v. Seda Perez, 825 F.Supp. 447, 450 (D.P.R.1993) (reviewing an agency's action under the APA's arbitrary-or-capricious standard where “[d]efendant’s only defense is that the denial of [a] permit was an arbitrary and capricious agency action”), aff'd sub nom. United States v. Members of Estate of Boothby, 16 F.3d 19 (1st Cir.1994). Moreover, even if claimant had alleged a cause of action under the APA, such cause’ of action would necessarily fail. A party may "bring[][a] case under the APA, pursuant to which judicial review is available for 'final agency action for which there is no other adequate remedy in a court.' " Town of Sanford v. United States, 140 F.3d 20, 23 (1st Cir.1998) (quoting 5 U.S.C. § 704). As CAFRA itself indicates, "[a] motion filed under [subsection (e) ] shall be the exclusive remedy for seeking to set aside a declaration of forfeiture under a civil forfeiture statute.” 18 U.S.C. § 983(e); see United States v. Pickett, No. 07-CR-117, 2012 WL 694712 (E.D.N.Y. Mar. 1, 2012); Browne v. Gossett, 259 Fed.Appx. 928, 929 (9th Cir.2007); cf. United States v. 662 Boxes of Ephedrine, 590 F.Supp.2d 703, 708-09 (D.N.J.2008) (dismissing counterclaim for declaratory judgment under the APA because "the underlying forfeiture action provides an adequate method of achieving the relief sought by th[e] counterclaim! ]”). As such, plaintiff has not shown why the arbitrary-or-capricious standard under the APA should be applicable to the case of caption.
. Section V(A) addresses plaintiff's action under 19 U.S.C. § 1595a.
. Plaintiff’s argument that Dr. Anderson “in the past has agreed with the USDA methodology” is inappropriate at the summary judgment stage. ECF No. 238, at 22-24. While this argument regarding Dr. Anderson’s past publications would be acceptable for the purposes of cross-examination, there is "no room for credibility determinations” or “the measured weighing of conflicting evidence” when assessing a motion for summary judgment. Greenburg v. P.R. Mar. Shipping Auth., 835 F.2d 932, 936 (1st Cir.1987).
. The complaint, however, states: "This is a civil action in rem brought to enforce the provisions of ... Title 19, United States Code, Section 1595a(c)(1)(A) and (2)(C)." ECF No. 1, at 1. Ultimately, the outcome of this Opinion and Order does not rest on the merits of this alternative argument.
. Moreover, "[u]nlike other forfeiture statutes, § 1595a(c) does not contain a so-called 'innocent owner’ defense.” One Lucite Ball Containing Lunar Material, 252 F.Supp.2d at 1378.
. Claimant’s arguments concerning the validity of the search and seizure warrant have already been addressed by the court. See ECF No. 157, at 8-13, report and recommendation adopted, ECF No. 172; ECF No. 187, at 5-6.
. Claimant also cites to Mr. Colon’s deposition testimony in support of the premise that "the property seized was not imported into the U8nited [sic ] States.”. ECF No. 278, at 5. In a conclusory, two-sentence paragraph claimant argues: "Nelson Collin states in his deposition that he had no evidence to support [that] the coffee was imported into the United States. Nelson Collin states in his deposition that he does not have any evidence that whether this coffee you sampled had been imported to the United States.” Id. Viewing Mr. Colon’s deposition testimony in the light most favorable to claimant for the purposes of summary judgment, this evidence does little to advance his burden of demonstrating that the property was not subject to forfeiture under § 1595a. The fact that Mr. Collin has no evidence to support whether the property was imported, without more, would not allow a rational factfinder to find that the property was not "stolen, smuggled, or clandestinely imported or introduced” into the United States in violation of § 1595a. 19 U.S.C. § 1595a(c)(1)(A).
. The procedural posture resulting in the decision affirmed in Davis differs from that of the case of caption; however, the Second Circuit's reasoning regarding conflicting judgments on alternative claims for forfeiture is nonetheless instructive. See United States v. Painting known as Le Marche, 06 CIV. 12994(RJS), 2010 WL 2229159 (S.D.N.Y. May 25, 2010) aff'd sub nom. United States v. Davis, 648 F.3d 84 (2d Cir.2011). In U.S. v. Painting known as Le Marche, the United States District Court for the Southern District of New York (the "District Court”) granted the claimant’s motion for summary judgment under § 981(a)(1)(C) and denied both the government and the claimant’s motions for summary judgment under § 1595a(c). Id. at *1. The government's § 1595a claim proceeded to a jury trial, which resulted in a unanimous verdict in its favor. Id. As a result the District Court "entered a judgment providing that (1) Claimant prevailed on the § 981(a)(1)(C) claims, (2) the government prevailed on the § 1595a(c) claim, (3) the artwork would be forfeited to the government....”. Id. In the case of caption, although the government has prevailed on its claim for forfeiture under § 1595a at the summary judgment stage rather than at trial, the result that a claimant’s partial victory at summary judgment on one alternative cause of action for forfeiture does not entitle said claimant to retain the property in question is applicable. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7224447/ | MEMORANDUM AND ORDER
BESOSA, District Judge.
Before the Court is defendant Oscar Figueroa-Quinones’ motion to dismiss for improper destruction of evidence (Docket No. 46), joined by defendants Mayco Aponte-Rodriguez and Axel Figueroa-Nieves (Docket Nos. 48 & 50). For the reasons discussed below, the Court DENIES the motion to dismiss.
I. Background
An indictment charges all three defendants with possession with the intent to distribute controlled substances — one hundred or more marijuana plants — in violation of 21 U.S.C. § 841(a)(1)(B) (“Count One”); and possession of firearms — an AK-47 rifle and a Glock pistol — in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c) (“Count Two”). (Docket No. 11.) Defendants were arraigned on February 27, 2014 before Magistrate Judge Silvia Carreño-Coll, who ordered an on-site inspection of the seized evidence to be performed within seven *140days. (Docket No. 15.) On March 4, 2014, the Court ordered the government to permit defense counsel to view the marijuana plants no later than March 6, 2014. (Docket No. 13.)
Defense attorneys were granted access to the U.S. Customs and Border Protection Agency(“CBP”)’s storage facility in La Puntilla, in San Juan, Puerto Rico on March 6, 2014 to view the evidence. (See Docket No. 21 at p. 1.) The next day, however, defendants filed a motion alleging a “discovery violation” due to the fact that the marijuana plants had been chopped into pieces and placed into ten storage bags. .Id. Because the attorneys were not permitted to open the bags, photograph the material, or personally inspect the drugs, defense counsel requested court intervention. Upon reviewing CBP’s policies in camera, the Court determined that the government’s denial of defendants’ request to sample the evidence was not a discovery violation. (Docket No. 37.) It assured the defendants of the government’s discovery obligations to provide all documentation regarding the seized marijuana, and explained that if the government were to fall short on those obligations, defendants could file a motion to dismiss based on improper destruction of evidence. Id. at p. 2. On April 23, 2014, defendants filed such a motion, now pending before the Court. (Docket No.« 46.)
II. Motion to Dismiss Due to Destruction of Evidence
A. Standard
Defendants claim that the government destroyed evidence when agents chopped up the marijuana plants before the March 6th viewing. (Docket No. 46 at p. 1.) Alleging that “this purposeful action deprived [defendants] of their right to access and evaluate potentially exculpatory evidence,” defendants seek to dismiss the indictment pursuant to the Due Process Clause of the Fifth Amendment to the United States Constitution. Id. The government responds that agents followed normal CBP practices in seizing and storing the' marijuana plants, and that the evidence “ha[s] not been altered or tampered [with] in any manner.” (Docket No. 62 at p. 5.) Deeming defendants’ motion “frivolous” and nothing more than a “thinly veiled attempt to resurrect [their] failed claim of [a] discovery violation,” the government both maintains that it did not destroy evidence and claims that defendants fail to prove that destruction occurred as a result of bad faith. Id. at p. 2.
“It is axiomatic that [Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) ] and its progeny established that a defendant has a due process right to request and receive evidence that the government possesses which is material to his guilt or punishment.” United States v. Femia, 9 F.3d 990, 993 (1st Cir.1993). “[T]he Supreme Court has developed a framework to analyze ‘what might loosely be called the area of constitutionally guaranteed access to evidence’ ” to be used when a defendant accuses the prosecution of destroying evidence. Id. (quoting California v. Trombetta, 467 U.S. 479, 485, 104 S.Ct. 2528, 81 L.Ed.2d 413 (1984) and Arizona v. Youngblood, 488 U.S. 51, 55, 109 S.Ct. 333, 102 L.Ed.2d 281 (1988)). In order to establish a due process violation pursuant to that framework, a defendant must show: (1) either that the evidence had an exculpatory value that was apparent prior to its destruction or that the government acted in bad faith destroying potentially useful evidence; and (2) that the evidence was irreplaceable. Olszewski III v. Spencer, 466 F.3d 47, 55-58 (1st Cir.2006); Illinois v. Fisher, 540 U.S. 544, 124 S.Ct. 1200, 157 L.Ed.2d 1060 (2004) (per curiam); Youngblood, 488 U.S. *141at 56-58, 109 S.Ct. 333 (1988); Trombetta, 467 U.S. at 488-89, 104 S.Ct. 2528.
B. Analysis
Defendants fail to meet their burden of establishing destruction of evidence. As a threshold matter, the Court finds no basis for holding that “destruction” occurred in this case. The government represents to the Court that since the marijuana plants were seized according to the normal CBP practices, they “have not been altered or tampered [with] in any manner.” (Docket No. 62 at p. 3.) In order to store the marijuana plants, CBP or DEA agents chopped the plants into pieces and placed them into ten large, transparent plastic bags. (Docket No. 46 at p. 2.) Defendants allege that “not only is there no photographic evidence of each of the plants or their roots, but the photographs are- also incapable of showing the number of plants with any accuracy.” (Docket No. 46 at p. 7.) The government’s submission at Docket No. 42, however, represents that controlled substances laboratory reports, color photographs of the marijuana plants, and the seized marijuana have been designated as evidence. (Docket No. 42 at pp. 1-2.) The Court cannot conclude that the plants being in chopped form necessarily means that their roots were “destroyed” without being photographed to preserve an accurate count of the plants. See, e.g., United States v. Montgomery, 676 F.Supp.2d 1218, 1245 (D.Kan.2009) (deeming “obvious” the fact that the number of plants and their root formations would be critical to the case); United States v. Belden, 957 F.2d 671, 673-74 (9th Cir.1992) (not finding bad faith even though law enforcement officials failed to preserve the root systems of the marijuana plants because officers conducted counts twice).
Further, defendants offer no support for the first prong of the destruction of evidence standard. They do not explain what exculpatory value the physical plants could have offered, leaving the Court to surmise that the argument pertains only to Count One’s “100 plants” calculation. In cases involving the destruction of marijuana plants, however, courts generally have found that the plants “constitute only potentially useful evidence as opposed to evidence with apparent exculpatory value, and that defendants must therefore show bad faith to establish a due process violation.” Montgomery, 676 F.Supp.2d at 1242 (compiling cases). Given the “potential usefulness” of the evidence, defendants must thus demonstrate that law enforcement agents acted in bad faith when they chopped up the marijuana plants.
Nothing suggests that the agents who seized and stored the marijuana plants acted in bad faith by chopping up the marijuana plants before defendants’ viewing on March 6, 2014. “The presence or absence of bad faith ... necessarily turn[s] on the [agent]’s knowledge of the exculpatory value of the evidence at the time it was lost or destroyed.” Youngblood, 488 U.S. at 57 n. *, 109 S.Ct. 333. Defendants have not offered a bad faith reason for the chopping in this case; they merely recite procedural history and claim that “notwithstanding two Court orders granting the defense’s request to access live marijuana plants, the government destroyed them.”1 (Docket No. 67 at p. 2.) The government, on the other hand, de*142fends the evidence’s seizure and storage as complying with CBP “routine, rules, and procedures.” (Docket No. 62 at p. 5.) Consistent with the government’s theory is the fact that agents represented to defense counsel at the viewing that they had chopped the plants in order to place the evidence into storage, and that was “the way they always do it.” (Docket No. 21 at pp-1-2.)
Courts “have previously held that destruction of evidence in accordance with an established procedure precludes a finding of bad faith absent other compelling evidence.” United States v. Deaner, 1 F.3d 192, 200 (3d Cir.1993) (citing cases). The Customs Directive submitted ex-parte for in camera review provides that bulk marijuana in excess of ten kilograms will be photographed and sampled for DEA laboratory analysis. (Docket No. 33-2 at pp. 34-36.) The Directive does not appear to contain a provision, however, as to the form in which marijuana plants are to be “stored,” or within what time frame chopping — if even permitted — may take place for storage purposes after seizure.2 (See Docket No. 33-2 at pp. 5-6, 34-37.) Nevertheless, though an agency’s failure to comply with standard procedures “could provide some evidence of bad faith, [courts] have not held that an improper procedure in and of itself implies bad faith.” Deaner, 1 F.3d at 200. The Court thus gleans no support for finding bad faith, especially when the government has indicated that photographs, the seized marijuana, and laboratory tests are available and have been designated as evidence.
Furthermore, defendants do not satisfy the second prong of the destruction standard because they do not explain how the intact marijuana plants are “irreplaceable.” As discussed above, the government claims to have color photographs of the marijuana plants, the seized marijuana, and lab results of the controlled substances. Simply stated, the marijuana was not destroyed.
III. Conclusion
The Court is not convinced that agents’ chopping seized marijuana plants constitutes destruction. Because defendants have failed (1) to establish that the government acted in bad faith by chopping the marijuana plants, and (2) to demonstrate that the marijuana plants are irreplaceable, the Court DENIES defendants’ motion to dismiss, (Docket No. 46).
IT IS SO ORDERED.
. Viewing the record as a whole, the Court declines to follow defendants down that rabbit hole to conclude that the government violated court orders by chopping up the plants. The minute entry for the arraignment proceedings reveals that the government was to make arrangements for an on-site inspection of evidence, (Docket No. 17), and in response to defendants' motion requesting a viewing of the plants "while they are still alive,” (Docket No. 13), the Court ordered the government only to “insure that the defense may view the *142marijuana plants no later than March 6, 2014.” (Docket No. 14.) At the viewing, CBP agents then communicated that they had chopped the plants into bags for storage purposes, in compliance with regular protocol. (Docket No. 21 at pp. 1-2.) Because none of the court orders made reference to the plants’ live status, the Court stops short of attributing bad faith to the government.
. The Directive, however, does provide that "the evidence remaining after sampling will be stored in a secure location pending receipt of DEA laboratory analysis.” (Docket No. 33-2 at p. 36.) Upon completion of the laboratory analysis and return of the bulk marijuana to district director, "the bulk marijuana evidence will be destroyed, subsequent to the effective date of the authorization, by burning in a suitable incinerator” and in accordance with certain additional procedures. Id, at pp. 35-36. One such procedure directs the special agent in charge to "immediately notify the appropriate U.S. Attorney, or the responsible state/local prosecutor that the amount of seized drugs exceeding the threshold amount and its packaging will be destroyed after 60 days from the date notice is provided of the seizure, unless Customs is requested in writing by the authority receiving the notice not to destroy the excess contraband drug.” Id. at p. 48 (emphasis added). | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7224448/ | MEMORANDUM AND ORDER
BESOSA, District Judge.
Karen Rodriguez-Reyes (“Rodriguez”), Carmen Rivera-Rosado (“Rivera”), Maria Torres-Plaza (“Torres”), Pilar Vega-Rodriguez (“Vega”), and Liz Katiria Fuentes-Rodriguez (“Fuentes”) (collectively, “plaintiffs”) are former employees1 of the Juvenile Institutions Administration (“AIJ”). They claim that defendants Carlos Molina-Rodriguez (“Molina”) and Sonia Rios-Rus-si (“Rios”) (collectively, “defendants”) discriminated against them on the basis of their political affiliation when the New Progressive Party (“NPP”) assumed office in Puerto Rico in early 2009.2 Plaintiffs allege that after the NPP administration took office, the administration in the Department of Corrections “began to dismiss employees and replace them with those affiliated with the NPP or maintained those identified with the party.” (Docket No. 1 at p. 4.) They thus bring claims for political discrimination pursuant to the First Amendment to the U.S. Constitution; Section 1, Article II of the Constitution of the Commonwealth of Puerto Rico; and articles 1802 and 1803 of the Puerto Rico Civil Code. Id. at pp. 7-8.
*144Pending before the Court are the'motion for summary judgment filed by defendants Molina and Rios (Docket No. 97), and the plaintiffs’ response (Docket No. 105). Because plaintiffs have utterly failed to comply with both Federal Rule of Civil Procedure 56 and Local Rule 56(e)’s standards for responding to a motion for summary judgment, they cannot overcome defendants’ arguments, and defendants’ motion for summary judgment is GRANTED.
I. Standard of Review
Summary judgment serves to assess the evidence and determine if there is a genuine need for trial. Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir.1990). The Court may enter, summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The party moving for summary judgment has the initial burden of “demonstrating] the absence of a genuine issue of material fact” with definite and competent evidence. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994). It must identify “portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any’ ” which support its motion. Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (citing Fed.R.Civ.P. 56(c)). Once a properly supported motion has been presented, the burden shifts to the non-moving party “to demonstrate that a trier of fact reasonably could find in [its] favor.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.2000) (internal citation omitted).
It is well-settled that “[t]he mere existence of a scintilla of evidence” is insufficient to defeat a properly supported motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “[A] party opposing summary judgment^ therefore,] must ‘present definite, competent evidence to rebut the motion.’ ” Maldonado-Denis, 23 F.3d at 581 (internal citation omitted). In making this assessment, the Court must take the entire record in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 779-80 (1st Cir.2011).
This district’s Local Rule 56(c) requires a party opposing a motion for summary judgment “to submit with its opposition a separate, short, and concise statement of material facts” that admits, denies, or qualifies the facts supporting the motion for summary judgment. The opposing statement may also propose additional facts, set forth in separate numbered paragraphs and supported by a record citation as required by Local Rule 56(e). Local Rule 56(e) states that:
[f]acts contained in a supporting or opposing statement of material facts, if supported by record citations as required by this rule, shall be deemed admitted unless properly controverted. An assertion of fact set forth in a statement of material facts shall be followed by a citation to the specific page or paragraph of identified record material supporting the assertion. The court may disregard any statement of fact not supported by a specific citation to record material properly considered on summary judgment. The court shall have no independent duty to search or consider any part of the record not specifically referenced in the parties’ separate statement of facts.
Loe. R. 56(e) (emphasis added).
The First Circuit Court of Appeals has “repeatedly ... emphasized the impor*145tance of local rules similar to [this district’s] Local Rule 56.” Caban Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir.2007). Rules like Local Rule 56 “are designed to function as a means of ‘focusing a district court’s attention on what is — and what is not — genuinely controverted.’ ” Id. (quoting Calvi v. Knox Cnty., 470 F.3d 422, 427 (1st Cir.2006)). Due to the importance of this function to the summary judgment process, “litigants ignore [those rules] at their peril.” Id.
II. Summary Judgment
A. Plaintiffs’ Failure to Comply with the Anti-Ferret Rule
In their complaint, plaintiffs claim that defendants discriminated against them by “engaging] in a witch-hunt scheme to obtain information as to the affiliation of each employee.” (Docket No. 1 at p. 6.) Specifically, the “officers began to talk about politics, to ask about everybody’s affiliation and even made expressions as to the fact that there would be NPP’s [sic] very upset if their [the plaintiffs’] contracts would be renewed.” Id. at p. 7. Defendants contend that plaintiffs’ allegations of political discrimination have no factual basis, and that because no evidence exists to establish a prima facie case; the Court must grant summary judgment. In support of their motion, defendants attach the full deposition testimony of all five plaintiffs, as well as those of both defendants, and argue that no piece of evidence supports plaintiffs’ claims that defendants failed to renew their contracts on the basis of political affiliation. (Docket Nos. 97 to 97-8.)
On May 20, 2014, plaintiffs filed a response in opposition to defendants’ motion for summary judgment. (Docket No. 105.) Simply stated, plaintiffs’ motion fails to meet both Local Rule 56 and Federal Rule 56’s standards for an opposition to a motion for summary judgment. The motion is completely devoid of factual allegations, falling unacceptably short of presenting the type of “definite, competent evidence” needed to rebut defendants’ motion. See Maldonado-Denis, 23 F.3d at 581. Instead, plaintiffs attach 208 pages of depositions — identical testimony already submitted by defendants in their motion for summary judgment — and claim: (1) that they “have identified” people at the workplace who the defendants used in order to discriminate against the plaintiffs “from afar,” and (2) that they “are prepared to call them as witnesses as well as other people with personal knowledge of said agentsf’] actions on behalf of defendants.” Id. at p. 4. By not submitting any supporting evidence for those assertions, plaintiffs impermissibly ask the Court to ferret3 through the record and scrutinize the depositions for genuine issues of fact which may be lurking among the pages. Although under no obligation to do so, the Court did review the 400 + pages of depositions filed in support of the defendants’ motion and finds no competent evidence demonstrating that defendants utilized third parties to scope out plaintiffs’ political affiliations. Due. to plaintiffs’ failure to engage in any type of legal discussion regarding defendants’ insufficiency of the evidence argument, the Court is left “to do counsel’s work, create the ossature for the argument, and put flesh on its bones.” U.S. v. Zannino, 895 F.2d 1, 17 (1st Cir.1990). The Court declines to do so, not only because “judges are not expected to *146be mind-readers,” id. at 17, but also because perfunctory arguments deserve little attention when a party engages in lazy lawyering. See Grajales v. P.R. Ports Auth., 897 F.Supp.2d 7, 12 (D.P.R.2013) (Besosa, J.).
B. Defendants’ Burden
Because the anti-ferreting rule does not shift the parties’ respective burdens, a Court may not grant summary judgment unless the moving party is entitled to it. Fed.R.Civ.P. 56(e)(3). In order to prevail, therefore, defendants Molina and Rios must point out an absence of evidence supporting political discrimination. The majority of defendants’ statements of material facts do not conclusively demonstrate the lack of evidence regarding their alleged discriminatory animus. Many of the proffered facts do little more than establish that none of the plaintiffs had personal interactions with the defendants sufficient to gain first-hand knowledge of the defendants’ discriminatory motives, statements, or actions regarding employees’ political affiliations. (See Docket No. 97-1.) Nonetheless, the Court finds that defendants meet their initial summary judgment burden. The parties admit, and several plaintiffs testified, that all of the plaintiffs’ contracts at AIJ were transitory, and that many of their positions ended in May at the end of the school year regardless of political affiliation. (Docket No. 97-1 at pp. 1, 3, 6, 8, 9; Docket No. 105-1 at pp. 1, 2, 3, 5). Furthermore, as indicated above, the Court reviewed the extensive deposition transcripts submitted in support of the parties’ submissions and finds no admissible evidence of discriminatory animus.
Each plaintiff in his or her deposition claims to have heard “through the grapevine” that defendants sought out plaintiffs’ political affiliations. (See, e.g., Docket No. 105-2 at pp. 20-21 (deposition of plaintiff Rivera); Docket No. 105-3 at pp. 16-20 (deposition of plaintiff Fuentes); Docket No. 105-4 at pp. 20-24 (deposition of plaintiff Vega); Docket No. 105-5 at pp. 14-19 (deposition of plaintiff Rodriguez); Docket No. 105-6 at pp. 23-25 (deposition of plaintiff Torres)). Pursuant to the nascent joint pretrial report filed on May 14, 2014, plaintiffs would seek to offer eleven witnesses at trial, many of whom the plaintiffs’ depositions reveal are people with first-hand knowledge about defendants’ alleged “witch-hunt” for political affiliation information. See id.; (Docket No. 102 at pp. 29-30.) In their statement of uncontested material facts, plaintiffs explain that Sonia Alamo, Miriam Monje, Miguel Mora, and Stacy Milan are “available to testify” as to that knowledge. (Docket No. 105-1 at pp. 2, 4, 5, 6.) Because plaintiffs do not offer so much as an affidavit or sworn statement from those individuals in support of their submission, however, they have failed to meet their burden in opposition to defendants’ motion. They have done nothing to put forth more than a trivial, “scintilla of evidence” or to create more than a “metaphysical doubt as to the material facts.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The Court cannot draw any reasonable inference that political discrimination played a role in the non-renewal of plaintiffs’ employment contracts. Accordingly, defendants are entitled to summary judgment.
III. Conclusion
Because plaintiffs failed to comply with Local and Federal Rules 56, the Court finds that they have not met their burden of presenting definite, competent evidence to rebut defendants’ motion. Accordingly, defendants Molina’s and Rios’s motion for *147summary judgment, (Docket No. 97), is GRANTED. Plaintiffs’ claims are DISMISSED WITH PREJUDICE. Judgment shall be entered accordingly.
IT IS SO ORDERED.
. Rivera was an elementary school teacher; Fuentes a physical education teacher; Vega a math teacher and "Principal Director”; Rodriguez a science teacher; and Torres a custody officer. (Docket No. 97-1 at pp. 1, 3, 6, 8, 9; Docket No. 105-1 at pp. 1, 2, 3 & 5.)
. Rodriguez, Rivera, Torres and Fuentes claim to be well-known affiliates of the Popular Democratic Party ("PDP”), and Vega claims to be a well-known affiliate of the Puerto Rico Independence Party (“PIP”). (Docket No. 1 atpp. 2-3.)
. "All too frequently, litigants before the District Court of Puerto Rico overlook the importance of the anti-ferret rule in the summary judgment stage ... [Local Rule 56] prevents the recurrent problem of ferreting through the record and the specter 'of district judges being unfairly sandbagged by unadvertised factual issues.” Dominguez v. Eli Lilly & Co., 958 F.Supp. 721, 727 (D.P.R.1997) (Laffitte, J.) (emphasis added). | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218822/ | NIELDS, District Judge
(concurring).
I concur in the result reached by Judge THOMPSON that section 3 (e) of the amendment to the Inland Waterways Corporation Act, known as the Denison Act (49 USCA § 153(e), violates the Fifth Amendment to the Constitution of the United States and, consequently, that the second supplemental order of the Interstate Commerce Commission, here complained of, is void.
In. my opinion, the deprivation of property that plaintiffs will suffer is not “short-hauling” over their all-raff routes. That loss might well be the result of wholesome water competition. But the second supplemental order of the commission directs the plaintiffs to participate with the American Barge Line Company in joint through rail-barge-rail and barge-rail rates on cotton in carloads upon a basis of 8, 6, and 4 cents lower than the all-rail rates between designated points. This is nothing less than rate-making in which plaintiffs are forcibly required to participate. The order is directed against plaintiffs, “limiting their powers in the transaction of their business” and is a deprivation of property within the Fifth Amendment. Norwegian Nitrogen Co. v. United States, 288 U. S. 294, 318, 53 S. Ct. 350, 77 L. Ed. 796.
The due process or hearing guaranteed by that amendment is not afforded in the Denison Act and cannot be imported into the text of the act. It is true that the commission may only “fix reasonable minimum differentials between all rail rates and joint rates in connection with said water service * * * ” and may only establish “equitable divisions” of the joint differential rates. If it were sought to imply a hearing before order from this language, the implication is negatived by the express provision of the act for a hearing of complaints after order filed.
The hearing by the commission after the filing of its order is a hearing after deprivation of property and is not the hearing guaranteed by the Constitution. It may well be where the administration of the taxing power has been delegated to a commission public necessity requires that due process be afforded after the imposition or even after the payment of the tax. Hagar v. Reclamation District No. 108, 111 U. S. 701, 4 S. Ct. 663, 28 L. Ed. 569; Standard Oil Co. of California v. McLaughlin (D. C.) 55 F.(2d) 274, 277. No such public exigency exists where, as here, the purpose of the act is “to promote, encourage, and develop water transportation, service, and facilities in connection with the commerce of the United States, and to foster and preserve in full vigor both rail and water transportation.” 49 USCA § 142, 41 Stat. 499. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218823/ | DICKINSON, District Judge
(dissenting).
Except for one underlying thought, .we would be able to follow the majority opinion to its conclusion. Not being in accord with this underlying thought, we must dissent.
The thought is that railroad carriers have a property right in the prospective traffic which might or would (except for some complained of act of another) pass by their lines. This is the same claim of property right which the ox team and pack horse asserted against steam transportation, the stagecoach against the trolley, and which now in turn the railroads are asserting against the gas engine, motortruck, and bus. It may be that all of them will in the near future combine in the attempt to enforce such a right against air carriers.
It is unnecessary to inquire into the validity of such a claim of right because the complainants have expressly disclaimed it and the. majority opinion does not avow it. It seems to us, however, that it underlies the ruling made because this is based upon the unconstitutionality of the act of Congress, under authority of which the commission acted in making the order, the enforcement of which is enjoined, and the uneonstitutionality consists in that the order deprives the complainants of property without due process, etc. The logic of the situation is that if they have a property right they should have protection, but if they have no property right they have no legal or equitable right of complaint. The property interest of a carrier in compensation for the carriage of traffic committed to it is undoubted. Whether it has a like property right in prospective traffic is another question. The sole question here is the existence of the latter right.
An outline and very general statement of the fact situation, it seems to us, makes this clear. There is a traffic between the Atlantic *1012and Pacific Coasts. There are established railroad line carriers which have been taking care of this traffic and will, if permitted, continue to do so. This traffic, or a part of it, may be visualized as carried by existing railroads from the Pacific Coast to the Mississippi river where the Ohio empties into it. If we then think of the traffic as transported northwardly by one line of railroad to its junction with the Pennsylvania Railroad and over it eastwardly through Pittsburgh to the Atlantic Coast, we have a sufficiently general idea of the pre-order situation. The Ohio river extends from its junction with the Mississippi northeastwardly to and beyond Pittsburgh and is navigable at least to Pittsburgh. If we think of the line of the first railroad we have mentioned and of the Pennsylvania railroad as forming the legs of a right angle triangle, the Ohio river would be the hypothenuse. A barge line water route has been established on the Ohio river. Any one can foresee that if the all-rail route from coast to coast traffic is diverted to a rail and water route to Pittsburgh and a rail route to the Atlantic, the railroad first mentioned may lose all of this through traffic and the Pennsylvania that part of it formerly carried by the first mentioned railroad except only as the Pennsylvania would continue to carry it east from Pittsburgh.
The situation of the railroads mentioned is typical of all and shows the real nature of the damnum of which complaint is made and that it relates to what we have called prospective traffic. The damnum is unquestioned and is not merely speculative but actual. The sole question is whether there is likewise an injuria. If, as before stated, the complainants have a property right in this prospective traffic which they will lose, they have suffered not merely a loss but a legal injury.
Inasmuch, however, as it is conceded that no such right exists, we are unable to see how the decree in question can deprive the complainants of property which has no existence. If we were dealing with a statute which gave the right to a hearing before a preliminary order could be made, we would concede that the question of a property right did not arise. The statute, however, is, and we think correctly, construed to permit of the order without a hearing, and thus the sole question is its constitutionality and its constitutionality turns upon the question of a deprivation of property without compensation or otherwise without due process. The existence of the property right thus becomes pivotal.
We think the bill should be dismissed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218826/ | ADLER, District Judge.
This action was brought by the United States after an adverse decision by the Board of Tax Appeals respecting a deficiency in tax in accordance with section 274 (b) of the Revenue Act of 1924 (26 USCA § 1049 note).
The decedent, Samuel G. Heinrich, made and filed his income tax return for the year 1918 on March 19, 1919, and the taxpayer died soon afterwards. The defendant filed returns as executrix for subsequent years. She was the sole beneficiary of the estate. The contention made by the taxpayer which was allowed by the Board was that a waiver signed by the executrix after the expiration of the five-year period of limitation was invalid and of no effect. The waiver is signed “Rose B. Heinrich, tax payer,” but in the body of the instrument she is referred to as “Mrs. Rose B. Heinrich, Executrix, Estate of Samuel G. Heinrich, Buffalo, New York.”
The defendant’s contentions are summarized as follows: First, that the waiver is not signed and executed in a proper way, and that it is ineffective to charge the defendant in her official capacity; second, that defendant’s action in enlarging the liabilities of the estate was ultra vires and contrary to the law of New York state applicable to executors and administrators; third, that the wording of the waiver is at variance with the allegations of the complaint, and that it is ineffective to toll the statute of limitations on the return of Samuel G. Heinrich, referring as it does specifically to a return filed by or on behalf of Mrs. Rose B. Heinrich, executrix for the year 1918; fourth, that the waiver, executed after the passage of the act of 1924, was ineffective under that act and particularly sections 278 (e) and 278 (e) (26 USCA §§ 1060 and note, and 1062 note) to restore the rights of the Commissioner to assess any tax for the year 1918.
The first three points made by the defendant will be treated together. The waiver was not executed in the most approved way, but I believe it to be effective to charge the defendant in her official capacity. Matter of Miles’ Estate, 33 Misc. 147, 68 N. Y. S. 368, affirmed In re Miles’ Estate, 170 N. Y. 75, 62 N. E. 1084; Virginia & West Virginia Coal Company v. Charles (D. C.) 251 F. 83; Aldridge v. United States, 64 Ct. Cl. 424; Davis v. United States (D. C.) 27 F.(2d) 630.
The fact that the defendant was the sole beneficiary of the decedent establishes her authority to bind the estate by the’ signing of the waiver under the authorities above cited. It appears to me clear under the wording of the waiver that it was intended to extend the time for the consideration of the tax under the return of Samuel G. Heinrich for the year 1918.
The question raised by defendant’s fourth point has been answered by the Supreme Court of the United States in the decision of McDonnell v. United States (Truda v. United States, decided at the same time), 288 U. S. 420, 53 S. Ct. 410, 77 L. Ed. -. Without going further into the facts of the ease at bar, the above recent decisions apply, and this point must be determined in favor of the complainant.
An order may be entered in accordance with this opinion. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218827/ | KENNERLY, District Judge.
This is a libel in rem by libelant against the steamship Phoenix, in which libelant claims that on or about October 31, 1931, he was a seaman on such ship, and was injured by the breaking of a rope ladder (Jacob’s ladder), permitting him to fall, while descending thereon, over the side of the ship. That such injury was caused by the unseaworthiness of the ship, and the failure to keep same seaworthy, in the following particulars set forth in the libel:
“(1) That the ladder leading from the side of the ship to the dock was in an unseaworthy condition, and defective, and that the rope forming said ladder was worn out and not sufficiently strong to hold .the ordinary weight of a human body.
“(2) That the ladder was unseaworthy in that it was not properly fastened to the side of the ship, forming a dangerous condition to any one leaving said ship-, and particularly to Libelant herein.”
Libelant seeks to recover wages, maintenance, and cure, and compensatory damages for such alleged injury. In the alternative, libelant alleges that if at the time he used such ladder, and at the time of the alleged injury, he was not a seaman in the employ of the ship, he was an invitee entering and leaving the ship for the purpose of seeking employment, and was injured by the negligence of the owners, officers, crew, etc., of the ship.
Findings of Fact.
There axe sharp conflicts in the testimony of the witnesses. Therefrom, the following is found to be the facts:
Libelant was about October 31, 1931, in Houston unemployed. He had been, for a time, employed as a seaman on the Phoenix about 1928, and learning that the Phoenix was to arrive in the port of Houston, and desiring to seek employment thereon, he was on the date stated (October 31,1931) on the dock at the Manchester Terminals at Houston, on the Houston Ship Channel, navigable waters, awaiting her arrival. The ship was docked in such ship channel, with her starboard side against the dock. Following a custom or practice of persons seeking employment, he went aboard the ship. He did so by climbing a rope ladder (Jacob’s ladder) hanging over her side. He found and interviewed the chief mate about employment, and was at once employed as seaman, and assigned to the 4 to 8 p. m. watch. He was given permission to come ashore for his clothes, and started to come ashore in the same manner he had gone aboard, i. e., by means of the Jacob’s ladder. The ladder was unseaworthy, in that it was old and worn-out and not sufficiently strong to hold the weight of an ordinary human body. It broke under libelant’s weight, causing him to fall. In falling, he struck the side of the dock, injuring his right hand and arm, and then struck the water, and was helped from the water by some of the ship’s crew and bystanders on the dock. Such unseaworthiness of the ship was the proximate cause of libelant’s injury, and its condition was known to the ship’s officers, or, if not known, could have been known and discovered by the use of reasonable and ordinary diligence. The injury to his hand and arm caused him pain and suffering, caused him to expend sums of money for treatment, and caused him loss of time. Such injury is permanent, and causes a disability of approximately 50 per cent. At the time libelant went aboard the ship, and started ashore from the ship, by means of the Jacob’s ladder, there were no other available means of so doing, and it was customary for seamen to use the *1018Jacob’s ladder under such circumstances. Respondent has never paid libelant wages, nor furnished him cure and maintenance. The sum of $2,000. would reasonably cover compensatory damages, wages, maintenance, and cure.
Conclusions of Law.
(1) I conclude, from the foregoing facts found, that this court (admiralty) has jurisdiction in this suit of libelant’s cause of action for compensatory damages, wages, maintenance, and cure] and that he should recover the sum of $2,000.
(2) I am not impressed with the contention that the case is not within admiralty jurisdiction because libelant was injured by striking against the dock in falling.
(3) I conclude that libelant should not recover on the alternative cause of action asserted. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218828/ | DAWKINS, District Judge.
In the above numbered and entitled cause a plea to the jurisdiction ration® materia et person® was filed and overruled. See written opinion [(D. C.) 48 F.(2d) 285]. Thereafter, and before issue joined, defendant filed another pleading, labeled “Exception to the Jurisdiction or Yenue,” wherein it is set up that the citation was served upon one S. H. Dowell, “who had no authority to accept sendee or to be served with legal process, by reason of the fact that defendant has, according to law, named and appointed É. A. Frost, its president, as its agent for service of legal process in the State of Louisiana.”
On the trial of the latter motion, there was offered in evidence, certified under the signature and seal of the Secretary of State of Louisiana, copy of a power of attorney executed and recorded according to the laws of the state, in the year 1907, naming said Frost as the agent for service of process in said state for Frost-Johnson Lumber Company, and another certificate showing proper recordation of proceedings, changing the name of the said company to Frost Lumber Industries, Inqorporated, which had been done, in 1925. Frost is shown therein to be a resident of the city of Shreveport, Caddo parish, La., where this suit was filed.
Plaintiff urges that by first excepting to the jurisdiction on grounds which were overraled, defendant made such a general appearance as amounted to a waiver of the present plea, citing Grodchaux v. T. & P. Ry. Co., 151 La. 955, 92 So. 398, and other state decisions. However, the question of jurisdiction of a federal court is one which is controlled by federal law and the decisions of the Supreme Court of the United States, and cannot be affected by rulings of state courts, if in conflict therewith. Mexican Central Ry. Co. v. Pinkney, 149 U. S. 194, 13 S. Ct. 859, 37 L. Ed. 699; Cyclopedia of Federal Procedure, vol. 4, § 1226, p. 536 et seq.
It thus appearing that the defendant, a foreign corporation, has named an agent for service of process in this state, to wit, its president, whose residence and domicile was within this district at the time of filing this suit, the service made upon Dowell, described in the return as “Secretary-Treasurer,” was *1019invalid. Fullilove v. Central State Bank, 160 La. 831, 107 So. 590. Counsel for plaintiff appear to concede that the service was had but relies upon tbe contention of waiver. However, this position I think is not tenable under the authorities above cited.
The plea will, therefore, be sustained. Proper decree should be presented. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218829/ | NIELDS, District Judge.
Boyeraft, Ine., Glenn Eiddle Mills, and Fleischer Coat Co., Inc., three creditors of Lippineott & Co., Incorporated, a Delaware corporation, bolding claims aggregating $545.18, filed their petition in this court April 29, 1933, alleging an act of bankruptcy, “in that it did consent to tbe appointment of receivers in the Court of Chancery of the State of Delaware.” The petition is verified by Stewart Lynch as attorney in fact for each petitioning creditor. The verification states that the facts therein “so far as they relate to his own act and deed are true, and so far as they relate to the act and deed of any other person, he believes them to be true.”
The alleged bankrupt and certain creditors have appeared and moved to dismiss tbe involuntary petition on tbe ground (1) that tbe petition does not allege and state an act of bankruptcy, and (2) that the verification is improper and insufficient. Verification upon belief is insufficient. In re Bellah (D. C.) 116 F. 69; Sabin v. Blake-McFall Co. (C. C. A.) 223 F. 501. Tbe petitioning creditors ask leave to file an amended petition properly verified. Should leave to ameud be granted? While it is within the discretion of the court to allow such an amendment, leave will not he granted unless the ends of justice will be promoted thereby. Woolford v. Diamond State Steel Co. (D. C.) 138 F. 582; In re Refund Cash Grocery (D. C.) 30 F.(2d) 158. No proof has been offered to sustain tbe application. On the contrary, it appears that tbe alleged bankrupt operated a large department store in Wilmington, Del., and in February last receivers were appointed by tbe Court of Chancery of this state to operate tbe store and liquidate its assets. This liquidation is now completed, with tbe exception of tbe sale of accounts receivable of doubtful value, store fixtures, and certain parcels of real estate. This court assumes tbe state court receivers will properly dispose of tbe above assets of tbe company and make distribution under tbe order of tbe chancellor. Approximately 550 creditors, including tbe three petitioners, have filed their proofs of claim in tbe receivership proceeding. There is no suggestion of any act of omission or commission on the part of tbe state court receivers detrimental to tbe interest of creditors. The bankruptcy petition alleges no priorities or preferences that may be set aside or voided. If tbe administration of the estate is now transferred to this court, it will entail additional fees and costs. Tbe intervention of this court will not benefit tbe estate. I can perceive no possible advantage to tbe creditors from tbe prosecution of tbe bankruptcy proceedings.
An order denying leave to amend and dismissing tbe involuntary petition may be presented. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218830/ | KNIGHT, District Judge.
The action is in negligence. Each defendant sets up as one of its defenses a release by the plaintiff. Plaintiff replying alleges that such release was obtained through misrepresentation and that it is null and void. Eaeh defendant now moves for an order directing that the issue as to validity of such release be tried separately from the issue of negligence.
Section 443 of the Civil Practice Act of New York State specifically provides that the court, in the exercise of its discretion, may direct separate trial “of some or all of the issues of fact.” It is well settled by the authorities in that state that the court should direct separate trial of such issues as are presented here. Charles N. Warner v. Star Co., 162 App. Div. 458, 147 N. Y. S. 803; Linker v. Jamison, 173 App. Div. 349, 159 N. Y. S. 469; Piuntkosky v. Harrington’s Sons Co., 167 App. Div. 117, 152 N. Y. S. 902; Galanti v. Brady & Gioe, Inc., 211 App. Div. 858, 207 N. Y. S. 839. The reason'for these decisions is well grounded. The issues are entirely disconnected. Consideration of the issue of negligence is likely to lead the jury to disregard the issue upon the release.
I think it is in line with the purpose of the Conformity Act (28 USCA § 724) and also in accord with decisions in the Federal Courts that this motion be granted. Union Pacific R. Co. v. Syas (C. C. A.) 246 F. 561; Cavender v. Virginia Bridge & Iron Co. (D. C.) 257 F. 877; Plews v. Burrage (C. C. A.) 274 F. 881; National Aniline & Chemical Co. v. Arnhold (D. C.) 298 F. 755; Pringle v. Storrow (D. C.) 9 F.(2d) 464.
In none of the eases cited by plaintiff was it held that separate actions upon the two issues could not be directed. In Manchester Street Ry. v. Barrett (C. C. A.) 265 F. 557, the issues were tried together, and defendant raised no point about a separate trial until the trial had been commenced. In Lion Oil Refining Co. v. Albritton (C. C. A.) 21 F.(2d) 280, the issue arising out of the alleged release was transferred to the equity side to be tried separately from the other issue. In Capital Traction Co. v. Sneed, 58 App. D. C. 191, 26 F.(2d) 296; the issues were tried together and without objection. In Union Pacific Ry. v. Harris, 158 U. S. 326, 15 S. Ct. 843, 39 L. Ed. 1003, and S. A. Lynch Enterprise Finance Corp. v. Dulion (C. C. A.) 45 F.(2d) 6, a question raised was whether an issue of fraud arising out of the procuring of a release was triable by a court of law.
I am not called upon now to pass upon the question of whether the issue raised by the reply shall be tried by the court or by a jury or whether the jury may render an advisory verdict under proper directions by the court. Reference to Union Pacific R. Co. v. Syas, supra, Pringle v. Storrow, supra, and National Analine & Chemical Co. v. Arnhold, supra, will disclose somewhat divergent views as to the procedure upon the trial.
The motion is granted. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218831/ | DICKINSON, District Judge.
This motion is made under the Supreme Court Admiralty Rule 43 (28 USCA § 723). In its terms it is broad enough to empower the court to refer any cause to two or more commissioners. There is, however, a general reference to chancery practice. The analogue is the appointment of masters in chancery. Under the Supreme Court Equity Rule 59 (28 USCA § 723), the reference to masters is exceptional. The admiralty rule has further been interpreted by the practice thereunder. By an analogy to masterships in equity and under the practice which has grown up under the admiralty rule, very much the same distinction is made which is made in patent eases, although the latter has its real basis in statutes. The distinction, however, is that the court determines the broad question of liability and refers to commissioners merely the question of the quantum of the damages, if any are awarded.
We see no reason for departing in the present cause from this practice. We are asked to refer to a commissioner both the question of liability as well as the question of the sum to be awarded, if any. This calls for a dismissal of the motion.
In doing so, however, we call the attention of the respective proctors to the rules of this court, recently adopted, after conference with the members of the admiralty bar. We expect a compliance with these rules. The pertinent ones are Rule 2, clauses III, V, and IX, and Rule 30%.
Motion dismissed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218886/ | JONES, District Judge.
Defendant demurs to each of the three causes of action set up in the plaintiff’s petition on the ground that the suit was not brought within the time limited for the commencement of such actions as provided by the Ohio Code (section 10509-133). It is conceded that, if the applicable sections of the new Probate Code of Ohio (sections 10500-1 to 10512-25) raise a bar to the action, the demurrers are well taken.
It seems clear that the time for instituting suit in respect of the matter here involved was intended to be cut down to two months after the rejection of the elaim. The fact that the shortened period expired before the operative date of the new legislation does not, as it seems to me, operate to extend the time. The new Code was enacted into law in April, 1931, with a warning that it would become effective January 1, 1932, as a limitation upon remedies existing prior and subsequent thereto. The six-month period of the old statute was continuously reduced in respect of rights to such remedies arising after July 1, 1931.
The new Code section relates to the limitation upon commencing suit on a rejected claim after the effective date of the law, and not to the commencement of suit upon claims re j ected- after its effective date. The fact that the law was not to become operative until January 1, 1932, or eight months after its passage, is strong support for this view as the legislative intention. Under the plaintiff’s contention, it has six months from October 29,.1931, within which to commence suit; and that would be true of every such elaim filed and rejected up to December 31, 1931. The statute deals with the time for pursuing the remedy, and not with the time that the right to pursue it arises.
The demurrer will be sustained, with exceptions to the plaintiff. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218887/ | PATTERSON, District Judge.
The libelant shipped 2,555 boxes of Winter Nelis pears on the respondent’s refrigerating ship Gothic Star. When loaded at Seattle on November 6, 1928, they were in apparent good order. When discharged at Hull, England, on January 12,1929, a considerable quantity proved to be decayed and unfit for use. This suit is for the damage.
Winter Nelis pears are known for their keeping qualities. In Washington the crop is picked in September, and the pears will generally keep for six months under proper storage. The pears in question had been in cold storage warehouses at interior points in Washington. On shipment into iced cars on November 3, 1928, they were examined by inspectors of the Washington Department of Agriculture and found to be “mostly hard, few firm.” Three days later they were loaded on the Gothic Star in apparent good order, with temperatures ranging from 42 to 50 degrees.
The Gothic Star is a refrigerating vessel, equipped for carrying fruit from the Pacific Coast to European points. The compartments are insulated and kept cold by the cold air system, cold air being driven through a trunk along the starboard side, escaping into the compartments through holes in the trunk and being sucked back through similar holes in a trunk along the port side. In this way cold air constantly circulates across the compartments and the desired low temperatures are maintained. The cold air method is superior to the brine method often used on refrigerating ships, and the proof here is that the Gothic Star was seaworthy and fit for the carriage and refrigeration of cargo.
These pears were stowed in the forward part of No. -4 tween decks, a compartment which was thoroughly insulated. Apples and other pears were placed aft. The stowage was in the usual way, with dunnage between the tiers to permit air circulation through the pile and with about a six-inch clearance at the top. The compartment was equipped with six thermometer tubes, three on each side, in which thermometers were suspended about midway on strings; the thermometers were pulled up to the deck above and read every four hours.
The Gothic Star, on leaving Seattle; touched at Portland and San Francisco. At Portland the No. 4 hatch was opened for the loading of cargo into the lower hold. To protect the cargo in the tween decks a temporary hatch was constructed of planks with thick paper pasted over the seams. At the other end 'of the voyage the ship discharged cargo at Southampton, London, Rotterdam, Hamburg, and finally at Hull. At most of these ports the hatch of this compartment was opened long enough to discharge fruit; the same temporary structure being used. There was no untoward incident on the voyage. The thermometers in the four tween decks uniformly showed temperatures of around 34 de*241grees, once the pears were thoroughly cooled after shipment.
The contract of affreightment exempted the carrier from liability for damage caused by decay. The damage here being the decayed condition of the fruit, it was incumbent on the shipper to show by a preponderance of proof that negligence on the carrier’s part caused or contributed to the decay. In my opinion, the shipper has not sustained this burden.
The refrigerating capacity of the vessel was not defective. It is true that one or two expert witnesses called by the shipper found fault with the fact that the outlet ducts were somewhat lower than the intake ducts, but the weight of evidence indicated that this feature would not interfere with the satisfactory circulation of cold air throughout the compartment. The stowage was proper, and the care given in transit was all that could reasonably have been expected.
It is significant that the surveyor who inspected the cargo at Hull for the shipper had no criticism to make of the refrigerating equipment or of the stowage, but said that warm air must have entered the compartment when it was opened at other ports for discharge of cargo. Yet the record shows that low temperatures were maintained in the compartment during discharge at the earlier ports, and also that the outside air at these ports was not warm, being at the freezing point or only a few degrees above. The likelihood of damage to the pears when the compartment was opened at Southampton and other ports was thus negatived.
Prior to shipment on the Gothic Star, the pears had been kept in warehouse for some two months. There is nothing to show what the conditions of storage were. When loaded into ears, most of the pears appeared hard, but some were found to be only firm. This may well indicate that the cause of the decayed condition of part of the fruit on arrival at Hull was some fault antedating shipment at Seattle. While the state inspectors passed the pears as fit for export, there is nothing to show that they regarded the pears as in fit condition for the extremely long voyage upon which they were sent. In any event, there is no proof of negligence by the carrier, and the libelant has failed to establish his case.
The carrier defended also on the ground that the shipper had not complied with the notice of claim clause in the bill of lading. In my opinion, the shipper has proved that the requirements of this provision were fulfilled.
The libel will be dismissed. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218888/ | KNOX, District Judge.
H. Goodman & Sons, Inc., claiming to be an exclusive licensee of the patent in suit, brings this suit against Jacob Rubin and Noah Rubin, copartners, trading under the firm name and style of Rubin Bros., for an alleged *242infringement of United States letters patent No. 1,326,153, of December 23, 1919, owned by Fleming & Keevers Company, Inc., a Massachusetts corporation. The latter corporation, having neglected or refused voluntarily to join in the action and not being amenable to the service of process, has been joined as a party plaintiff herein.
The claims of the 'patent are as follows:
“1. A buckle supporting member having two spaced and connected members between which the vamp of a slipper may be received to detachably connect the member thereto.
“2. A supporting means for buckles and the like, comprising, a part for attachment to the buckle and a second part in the nature of a clip having two spaced jaws to respectively slip over and under the vamp of a slipper to detachably connect said means thereto.
“3. A supporting means for buckles and the like, comprising, a part for attachment to the buckle and a second part in the nature of a clip having two spaced spring jaws to respectively slip over and under the vamp of a slipper to grip the same and detachably connect said means thereto.
“4. A support for buckles and the like, comprising a member bent baekwardly upon itself to provide two spaced parts to .engage the outer and inner surfaces of the vamp of a slipper or the like, the rear edge of said member and the inner part being curved to substantially fit the instep of the foot, and a part provided on said member to support the buckle.
“5. In combination with a shoe or the like, a buckle supporting member having a part for attachment to the buckle and another part for detachable connection to the shoe, said last-named part comprising two relatively closely spaced spring jaws between which the vamp of the shoe is received and gripped to detachably connect said support thereto.”
In the case of Fleming & Keevers Co., Inc. v. Goodman & Sons, 4 F. Supp. 444, decided on July 19, 1928, Judge Goddard held the foregoing claims to be valid and infringed. As a result of this decision, H. Goodman & Sons paid Fleming So Keevers $10,000 in full settlement of its claim, and entered into a license agreement wherein, in consideration of the payment of certain stipulated royalties, Fleming & Keevers Company, Ine., granted to the present plaintiff “the exclusive right, license, and privilege under said Letters Patent No. 1,326,153, to make, use and sell buckle-holders of the same, or substantially the same, form), type, construction or hind, as the buckle-holder hereto attached and identified as ‘Specimen No. 1’, and which buekle-holder is further identified by the name or mark ‘Triumph’ stamped thereon, and which ‘Triumph’ buekle-holder formed the basis of the charge of infringement by Fleming & Keevers Co. in the patent suit aforesaid.” (Italics mine.)
The agreement further provided: “Fleming & Keevers Co. agrees, at its own cost and expense, to institute and prosecute such suits or actions against infringers of said Letters Patent No. 1,326,153 as it may or shall be advised by its counsel, learned in the law, should be instituted or prosecuted, but nothing herein contained shall prevent or estop' Fleming & Keevers Co. settling, compromising or giving acquittance for, any and all claims, suits or actions, brought or made by it, and relating to or growing out of the infringement of said Letters Patent No. 1,326,153 aforesaid, with the exception that Fleming So Keevers Co. agrees to bring suit against and to diligently prosecute any infringer making, using or selling, or causing to be made, used or sold any buckle-holder the same or substantially the same, as ‘Specimen No. 1’ attached hereto, and not to settle, compromise or give acquittance for any such infringement involving buckle-holders the same or substantially the same as said ‘Specimen No. 1’, without the consent, in writing, of H. Goodman & Sons first had and obtained.” (Italics mine.)
On August 17, 1929, the same day that this agreement was made, Fleming & Keevers Company, Inc., wrote a letter to H. Goodman & Sons, which was accepted by that company, in which it was stated:
“At the conference had yesterday * * * between your Mr. Abraham Goodman and our Mr. Matthew J. Keevers, your representative indicated that you might find it desirable to manufacture and market a buckle-holder of a different type than your ‘Triumph/ holder, to wit, a small buckle-holder of what might be called the ‘paper clip’ type, comprising a U shaped clip formed of two spaced continuous-edged plate like jaws provided with inwardly projecting opposing prongs, and which jaws are adapted to clamp the vamp of a shoe, so that the buckle will be detach-ably supported at the front of the shoe.
“We therefore hereby give and grant you the exclusive right and license to manufacture, use and sell this particular type of buckle-holder, and to hold you free and harmless from and against suit under our Flem*243ing patent No. 1,326,153, by reason of your manufacture, use and sale of such particular type of buckle-holder, in consideration of which license you agree to pay us the sum of Ten Cents (100) for each gross * * * of such buckle-holders sold, distributed, or marketed by you. * * *” (Italics mine.)
The matter which first presents itself for consideration is as to the situation created by the refusal and neglect of the patent owner to participate affirmatively in the present action. In this connection, the licensee relies upon the decision of the Supreme Court in Independent Wireless Co. v. Radio Corporation of America, 269 U. S. 459, 46 S. Ct. 166, 79 L. Ed. 357. Proof taken at the trial shows plainly that Fleming & Keevers Company, Inc., was acquainted with the alleged infringement and was requested to take action thereon, and that it either refused or neglected so to do. From this standpoint, therefore, H. Goodman & Sons, Inc., may join the patent owner as a party plaintiff!, provided that H. Goodman & Sons, Inc., is entitled to assert the rights here claimed against defendants. This phase of the matter involves, not only the present license agreements, but their relationship to the law as declared in the above-mentioned decision, as well.
The agreement in the Independent Wireless Case gave the plaintiff the exclusive right to use and sell in the United States, for radio purposes, apparatus for transmission of messages, and especially for use between ship and shore for pay. The defendant had the right to use the same apparatus only in the amateur and experimental field. The bill charged that defendant was using the apparatus or part of it in the commercial radio field between ship and shore for pay and thus was violating the rights of plaintiff. Apparently, each licensee was authorized, within certain fields, to enjoy the full scope of the patent; in other words, use or vend the invention. Sueh would seem not to be the fact in the ease at bar. All that was granted to H. Goodman & Sons, Inc., was the exclusive right to make, use, and seE particular forms of devices that are claimed to be within the scope of the invention. Conceivably, there may be many forms of clips within the length and breadth of the invention, and each of them may be the subject of an exclusive license granted, or to be granted, by the patent owner. This is made clear by the two forms of clips which H. Goodman can manufacture, use, and seE, and by the “exclusive Eeense” that was given by Fleming & Keevers Company, Inc., to Deauville Import Corporation under which the latter can manufacture and seE a particular type of patented eEp.
H. Goodman & Sons, Inc., is not possessed of an exclusive right to make, use, or seE devices under the patent which is wide enough to give it the standing of an assignee under the patent or a part of it. This is necessary if it is to be allowed eompulsorüy to join the patent owner as a plaintiff in an infringement suit. A Eeense, however it may be worded, which does not entitle the Ecensee to the fuE scope of some right which is specified and secured by the patent, cannot properly be said to be an exclusive Eeense. Otherwise, it would be impossible to ascertain the extent to which the exclusive Ecensee of a particular form of the invention might be damaged by another and different form closely approximating a stiE different embodiment of the invention, also covered by a so-called “exclusive Eeense” of the patent owner. Indeed, the very form of device so alleged to infringe might itself be the subject-matter of sueh a Eeense. Or, if several sueh licenses were outstanding, each of them might be infringed by the unauthorized manufacture and sale of a form of the invention differing from each of the others. An infringer might well damage several Ecensees, and do so in differing amounts. Unless each such Ecensee and the,owner of the patent were brought into a suit against such an infringer, he could not, as is his right, respond in one action to all claims of infringement, and thus either defeat all claims in one action, or, by satisfying one adverse decree, bar aE subsequent actions. From the foregoing it seems plain that the reasons for aEowing an exclusive Ecensee sueh as was before the court in the Independent Wireless Co. Case, to join the licensor in an infringement suit, do not exist with- respect to the Ecensee in the present suit.
Considerations such as the foregoing may he responsible for the form of the covenants of Fleming & Keevers Company, Inc., in the Eeense agreement, and, also, they may account for the failure of that concern to come into this suit. The limitation of the agreements, particularly the engagement of the licensor “to hold (the Ecensee) free and harmless from and against suit under our Fleming patent, No. 1,326,153,” indicates that H. Goodman & Sons, Inc., acquired “the right not to be sued.” See Keystone Type Foundry v. Fastpress Company (C. C. A.) 272 F. 242, 243; Heaton-Peninsular Button-Fastener Company v. Eureka Specialty Company *244(C. C. A.) 77 F. 288, 290, 35 L. R. A. 728. Then, too, it cannot he overlooked that, if the licensor and licensee themselves regarded it as necessary to differentiate between the buckles which H. Goodman & Sons, Inc., were to be permitted to make, use, and sell, they did not view the small clip covered by the second agreement as being “substantially the same” as the one which Judge Goddard held to be an infringement of the Fleming patent.
Now, defendant’s device is of the general type of H. Goodman & Sons, Inc., small clip. It is not within the scope of the license relating to the “Triumph” holder. Such rights, if any, that here may he claimed against defendants must he found within the agreement having to do with the paper clip type of buekle holder. Reading it, and bearing in mind the discussion already had, I am of opinion that H. Goodman & Sons, Inc., by reason of a defeet of parties, cannot maintain this suit.
But, proceeding to the merits of the cause of action which is here asserted, the following may he added:
The patent in suit contemplates a device with two distinct parts: One to which the buckle can be attached, and one having two jaws to grip the vamp of the shoe. This is apparent from an inspection of the drawings, and a perusal of the specifications and the claims. The specifications state: “The buekle support comprises essentially a part 10 for attachment to the bow, buckle, or other ornament, and a clip portion 11 for attachment to the slipper or pump. The clip portion 11 includes two closely spaced jaws 12 and 13 beneath which the vamp of the slipper or pump is received.”
Similarly, claim 2 specifies: “A part for attachment to the buekle and a second part in the nature of a clip having two spaced jaws. * * * ” Claim 3: “A part for attachment to the buckle and a second part in the nature of a clip. * * ’* ” Claim 4: “A member bent backwardly upon itself to provide two spaced parts to engage the outer and inner surfaces of the vamp of a slipper * * * and a part provided on said member to support the buckle. * * * ” Claim 5: “A part for attachment to the buckle and another part for detachable connection to the shoe. * * * ”
The language of claim 1 is not so clear, reading as follows: “A buekle supporting member having two spaced and connected members between which the vamp of a slipper may be received to detachably connect the member thereto.”
Although it is possible to construe these words by themselves to mean that there need not be two distinct parts to the device, it is my opinion that, in the light of the specification, the claim must be interpreted as contemplating two such parts. It is well settled that claims may be narrowed by limitations in the description. See McClain v. Ortmayer, 141 U. S. 419, 12 S. Ct. 76, 35 L. Ed. 800; Crawford v. Heysinger, 123 U. S. 589, 607, 8 S. Ct. 399, 31 L. Ed. 269; Sargent v. Lock Company, 114 U. S. 63, 86, 5 S. Ct. 1021, 29 L. Ed. 67; Walker on Patents (6th Ed.) § 227. Furthermore, a broad construction of the claim would appear to make it invalid in view of the prior art. See Frees patent, No. 269,658, for neckties; Bleakney patent, No. 878,497, for paper clip (illustrated by Defendant’s Exhibit K); and Washburne patent, No. 1,242,620, for paper clips (illustrated by Defendant’s Exhibit M). For both of these reasons, a proper interpretation of claim 1 also requires that the part for attachment to the buekle must be distinct from the clip part which grips the vamp of the shoe. Neither the small paper clip type of holder of H. Goodman & Sons, Inc., nor the defendant’s alleged infringing device, contain a part for attachment to the buekle as an element separate from the clip portion of the holder. In a crowded field such as is here presented, the omission of this element places the Goodman small clip beyond the scope of the patent and precludes a charge of infringement against the defendants. Cimiotti Unhairing Company v. American, etc., Co., 198 U. S. 399, 410, 25 S. Ct. 697, 49 L. Ed. 1100; Walkup v. Interborough R. T. Co., 22 F.(2d) 266 (C. C. A. 2d). See Otis Elevator Company v. Atlantic Elevator Company (C. C. A.) 47 F.(2d) 545, at pages 547-548.
The license agreement between Fleming & Keevers Company and H. Goodman & Sons, therefore, which purported to grant a license with respect to the paper clip type of buckle holder, was ineffective to confer any rights upon H. Goodman & Sons as against third parties. A licensor can convey no greater title or interest than he possesses. Mitchell v. Hawley, 16 Wall. 544, 21 L. Ed. 322; New York Phonograph Company v. National Phonograph Company (C. C.) 163 F. 534; Keene Machine Company v. Barratt (C. C. A.) 100 F. 590. For this reason, therefore, as well as because the agreement did not grant them an exclusive license, H. Goodman & Sons, Inc., cannot join Fleming & Keevers Company, as coplaintiffs, without their consent; and they cannot, of course, maintain an action for infringement in their own name. *245Independent Wireless Company v. Radio Corporation, supra; Paper Bag Cases, 105 U. S. 766, 26 L. Ed. 959; Gayler v. Wilder, 10 How. 477, 13 L. Ed. 504.
The complaint is dismissed, with costs. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218889/ | GIBSON, District Judge.
Above suits present practically the same questions, and relate to plaintiff’s taxes for the year 1918. The only issue not common to each suit is the claim against the collector for $30,899.01, collected after the expiration of the Statute of Limitations.
As to the elaim based upon the Statute of Limitations, it is plain to us that section 611 of the Revenue Act of 1928 (26 USCA § 2611) prevents recovery by the plaintiff. The tax was assessed in 1919, a elaim for abatement was filed late in the same year, and collection of the tax was stayed by the collector. The tax was not collected until 1925, after the period of collection had expired, but the elaim for abatement brought the matter within the scope of section 611 of the act of 1928, and prevents the return of the amount collected to plaintiff as an overpayment. See Graham & Foster v. Goodcell, 282 U. S. 410, 51 S. Ct. 186, 75 L. Ed. 415.
The main issues relate to the amortization of war facilities. In 1918, the plaintiff’s plant consisted of forty-four hot mills, and was then the largest tin plate plant in the World. Twenty-two of its mills had been built in 1915 and 1916 to meet the growing demands for plaintiff’s products. Plaintiff’s *246steam power plant, built in 1902, was obsolescent in 1917 and interfered with a proper production, and late in that year it was resolved to construct a new steam power plant upon another site. The new boilers were designed to have sufficient capacity to operate twenty-six additional hot mills. Land was purchased beside the river at a cost of over $200,000, retaining walls constructed, and a boiler house with twelve boilers was built. The original plan was to have sixteen boilers, but before the completion of the construction the war had ended, and the twenty-six hot mills, and the four additional boilers intended for their operation, were* not built.
The allowance claimed by plaintiff as a deduction for amortization is founded upon the construction of its boiler house. An examination of the records of the Commissioner of Internal Revenue relating to the matter discloses the fact that plaintiff, from time to time, has varied its amortization claim. In its two returns filed in 1919, it claimed an allowance of $714,119.18. In a return filed March 15, 1920, it claimed an allowance for that year of $97,001.94, making the total deduction claimed for the two years $811,121.-12. These claims were based upon a cost of $2,561,121.12. The proper cost, it is now agreed (if the cost of the land and wall be included), is $2,470,222.58. On October 13, 1923, plaintiff filed a claim for a total amortization allowance of $1,134,865.33, of which $683,282.46 was claimed for 1918. In this claim the percentage of value in use, theretofore fixed by the Commissioner at 72% per cent., was not mentioned, the 72% per cent, finding being accepted. On March 14, 1925, plaintiff filed a claim for refund, in which no change was made in the amount of amortization claimed in the immediately preceding claim, but in which the entire amount was claimed as a credit to the 1918 taxes.
Plaintiff’s original pleadings in the instant suits are based upon the claim of an amortization allowance of $1,134,865.33, which, as stated, accepted the Commissioner’s finding of 72% per cent, as the value in use. Upon trial, however, it offered proof which (it contended) showed the value in use to be $735,-014.33. This amount was reached by a rejection of the Commissioner’s 72% per cent, value in use, and the adoption of a %2 value, and the use of an average of the estimates of engineers as to the cost of a steam boiler plant whieh would have met the needs of the plaintiff in the post-war period. Permission was given plaintiff to amend its claim to bring it into agreement with its proof, but no formal order allowing a specific amendment has been submitted.
After the Commissioner stated his determination that plaintiff’s boiler house had a value in use of 72% per cent., no protest in respect to that finding was made by the plaintiff, but his determination was accepted in subsequent claims. Under such circumstances there is considerable force in the contention of the defendant's counsel that the plaintiff is estopped by statute and regulations from now attempting to set up a different value in use. The statute (section 1113 (a) of the 'Revenue Act of 1926 [26 USCA § 156]), and the regulations established by its authority, require a claim for refund upon the Commissioner wherein “all facts relied upon in support of the claim should be clearly set forth under oath.” While the plaintiff did protest against the original finding of the Commissioner of the value in use of the boiler house, its protest had, in part, been sustained. At no time was any claim made to the Commissioner that the value in use was as small as indicated in testimony offered by plaintiff, and he had no opportunity to rule upon a claim to that effect. No such opportunity having been given him, the suit must fail in so far as it is based upon that claim. United States v. Felt & Tarrant Mfg. Co., 283 U. S. 269, 51 S. Ct. 376, 75 L. Ed. 1025. The necessity of filing a claim is not dispensed with because the claim will in all probability be rejected. Rock Island, A. & L. R. R. Co. v. United States, 254 U. S. 141, 41 S. Ct. 55, 65 L. Ed. 188.
The immediately foregoing comment, in respect to the claim of the defendant that plaintiff was prevented from now asserting a less value in use than that determined by the Commissioner, is perhaps unnecessary, in view of the fact that the evidence has failed to satisfy us that the Commissioner was in error in fixing the value in use at 72% per cent. The testimony showed _ that all’the new boilers of the plaintiff were in use at .different times, but that the plant might have been operated with six in active operation. It is quite plain that at least two spares' tvere desirable, if not entirely necessary. Part of the time, in the post-war period, eight boilers were used, and eight were used at the time of trial, when plaintiff was operating the same number of mills as in the post-war period. In any event, in the replacement of a manufacturing plant, good engineering would dictate proper provision for a reasonable increase in the output in the future. Under all the tes*247timony it ■would seem that the CommissioneFs determination of the value in use was based upon sound reasoning. It will be remembered that some of the twelve boilers were installed subsequent to the close of the war.
The next matter, for comment is seemingly complicated by the fact that the plaintiff’s testimony as to replacement cost was based upon the theory that the value in use of plaintiff’s boiler house was 58% per cent., not 72% per cent., and we therefore have no definite testimony of the replacement cost in the post-war period of a plant which had a 72% per cent, value in use. The dearth of such testimony is immaterial, however, in view of our conclusion that plaintiff is not entitled to an amortization allowance based upon value in use and to an additional allowance based upon replacement cost in the post-war period.
- Congress, by section 234 (a) (8), of the Revenue Acts of 1918 and 1921 (40 Stat. 1077; 42 Stat. 254), conferred wide powers upon the Commissioner of Internal Revenue in respect to the amortization of war facilities. Pursuant to those powers, among others, the Commissioner has, with proper approval, established article 184, regulations 62 (article 184 of regulations 45 being substantially the same). That article, as it relates to the present claims, provides that the amortization allowance is the difference between the original cost of the property and the value of the property on the basis indicated by its subsection (2), which is as follows: “(2) In the case of property not included in (1) above, the value shall be the estimated value to the taxpayer in terms of its actual use or employment in his going business, such value to be not less than the sale or salvage value of the property and not greater than the estimated cost of replacement under normal postwar conditions less depredation and depletion. * * * ”
The subsection (1), referred to in the subsection (2) quoted, relates to property which has been sold by the taxpayer or entirely discarded by him. The taxpayer, in the instant case, is endeavoring to apply both subsections to its advantage. Although still using the facility, and intending to continue the use, it seeks to have the court treat the matter as though the boiler house had been discarded in part. As stated, Congress has given the Commissioner great power in the matter of amortization, and, since originally conferring that power, has taken no action to curb or confine it. For ten years the regulations of the Commissioner have been established, and for that period his interpretations of them have been known. During that period he has applied the regulations in the same manner as in the amortization allowance to the plaintiff. This application of the law has been accepted and followed by the Board of Tax Appeals and by various courts, during the existence of the regulations, as being a correct observance of the statute providing for amortization. Under such circumstances, it is not for this court to undertake to establish a new regulation, or to interpret the existing regulation in another way than that in which it has been construed by its author, and as universally accepted.
By section 184 of both regulations 45 and 62, the Commissioner of Internal Revenue reasonably exercised the power conferred upon him by statute; and by such sections it is provided that the allowance for amortization, where the property has not been sold or abandoned, shall be the amount of the difference between the actual cost of the property and the post-war residual value, where (as here) such value in less than the replacement cost.
Plaintiff has also contended that the amortization allowance, whatever it may be, should have been credited to income for 1918, instead of being spread over the years 1918, 1919, and 1920. The claim is based upon the fact that the contract for the boiler plant had been made in 1918. The costs therefor, however, were not expended in 1918, but in the years over which the allowance was spread. The spread was in accordance with prior practice and followed article 185, regulation 62, which provides: “The amortization allowance shall be apportioned * * * and (b) in cases where the property was not completed in time for use in the production of articles contributing to the prosecution of the war, on the basis of the expenditures made on account of which amortization is allowed.”
As was article 184, so article 185 has been established by the Commissioner pursuant to general powers conferred upon him, and what has been said in respect to article 184 is equally applicable to article 185. We see no error in the apportionment of the amortization allowance to the incomes for the three years in which the cost of the property was expended.
Judgment will be entered for the defendant in each case. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218832/ | JOHNSON, District Judge.
This is a petition and rule to show cause why a writ of habeas corpus should not issue and the petitioner be discharged from the custody of the warden of the United States Northeastern Penitentiary as to a two-year portion of the seven-year sentence under each of the three indictments.
On June 1, 1931, the petitioner entered a plea of guilty to three indictments charging him with violations of the national banking laws. Each indictment contained more than one count. On the same date the petitioner was sentenced by the United States District Court for the Eastern Division of the Northern District of Ohio to imprisonment for a gross period of seven years on each indictment, to run concurrently. Separate sentences under each count in the indictments *1022were not imposed. The aet of Congress under which the indictments were obtained provides as a penalty for each violation a fine of not more than $5,000 or imprisonment for not more than five years, or both.
The petitioner contends that a gross or general sentence upon all the counts in an indictment without specifying the penalties imposed upon the defendant upon each count is defective and void as to that portion of the sentence that exceeds the limit fixed by act of Congress, and cites in support of this contention the case of United States v. Peeke, 153 F. 166, 12 L. R. A. (N. S.) 314, decided by the Circuit Court of Appeals for the Third Circuit.
The great weight of authority in the federal courts holds that such sentences are not void and that a general or gross sentence may be imposed under an indictment containing more than one count so long as it does not exceed the aggregate of the punishments which could have been imposed upon the several counts. Ex parte DeBara, 179 U. S. 316, 21 S. Ct. 110, 45 L. Ed. 207; Hyde v. United States (C. C. A.) 198 F. 610, 613; Myers v. Morgan (C. C. A.) 224 F. 413; Brinkman v. Morgan (C. C. A.) 253 F. 553; Neely v. United States (C. C. A.) 2 F.(2d) 849; Feigin v. United States (C. C. A.) 3 F.(2d) 866; Rice v. United States (C. C. A.) 7 F.(2d) 319; Adams v. White, Warden (C. C. A.) 31 F.(2d) 982; Flynn v. United States (C. C. A.) 57 F.(2d) 1044.
The foregoing decisions have so well settled the law in the federal courts with respect to the question raised by the petitioner that a further discussion of the case is rendered unnecessary, and the petition will be dismissed.
And now, June 21, 1933, the petition for a writ of habeas corpus is dismissed, and the rule granted thereon is discharged. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218833/ | CAVANAH, District Judge.
The petitioner, a resident of Idaho engaged chiefly as housewife, files her petition under section 74 of the amendment to the National Bankruptcy Act approved March 3, 1933 (11 USCA § 202), stating that she is insolvent and unable to meet her debts as they mature and desires to effect a composition or extension of time to pay her debts. A schedule containing an inventory of all the property and' debts is attached to the petition and in which the Amsterdam Savings Bank, mortgagee, holds a mortgage in the sum of $3,000 against certain real property, situate in the comity of Montgomery, state of New York, and prays for an order enjoining the bank from proceeding further in the foreclosure of the mortgage. It is further set forth that the bank about May 20, 1933, instituted the foreclosure action, and, unless restrained, the bank will proceed to obtain a decree foreclosing all of her rights and title in the property without redemption. The amended act provides for the filing of such petition, and grants power to the court to enjoin secured creditors who may be affected by the extension from proceeding in any court for the enforcement of their claims until the extension has been confirmed. The bank appeared by filing its answer and affidavits upon which it submits its contentions. Upon the hearing the evidence, in substance discloses that the bank holds a mortgage in the principal sum of $3,000 and interest upon the real estate in question situate in Montgomery county, state of New York; that under an arrangement between the petitioner and the bank the bank was authorized to rent and collect the rent of the premises and apply it upon its mortgage debt. It collected the sum of $145.50 as rental, and has applied that amount upon its interest and taxes paid. *1023The amount of the delinquent taxes was $156.60 and the amount of interest due is $82.50. The testimony of the petitioner shows that the bank applied out of the rents collected $88.13 as interest, $4.75 on repairs on the premises, and $14.55 as commission charged for collecting the rent, making a total of $107.43.
The evidence further discloses that at the present time the tenants are unable to pay the rent. After deducting the amount collected as rental of $145.50 from the total amount of $3,239.10, which represents the principal and interest of the mortgage and taxes, there is a balance of $3,093.60 due tire bank upon the indebtedness of the petitioner. It seems the taxes for the present year have not been paid. Now the question arises as to whether the petitioner should be granted an extension of time under the act in which to pay the indebtedness of the bank, and, as there will only accumulate in addition to the principal a sum covering the interest and taxes for the year 1933, which will not, under the evidence, exceed the value of the property securing the same, it would seem that the purpose of the amendment to the National Bankruptcy Law applies to such at ease as this, and the prayer for a restraining order will be granted in which the Amsterdam Savings Bank is enjoined from proceeding further as prayed for in the petition, until the 1st day of December, 1933. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218834/ | DAWKINS, District Judge.
This is another suit upon an alleged policy of war risk insurance by the plaintiff, as tutrix for her minor children. The government has moved to dismiss upon the ground that the court is without jurisdiction for the reason that the period allowed by the last Act of Congress for filing such claims had expired before the suit was filed. However, section 445 of title 38, U. S. C. (38 USCA § 445), contains the proviso that the period of limitations shall only apply as to infants, insane persons, ete., after three years have elapsed from the removal of their disabilities. There seems to be no qualification and I am nnable to find any decisions construing this provision of the act. In so far as the right to sue is concerned, the disabilities were removed with the appointment of the tutrix a few days prior to July 3,1931, when the act went into effect. This suit was filed in April, 1932, well within the three-year period applying to infants and other incapacitated persons; henee I am of the view it was timely.
The exception will, therefore, be overruled. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218835/ | ATWELL, District Judge.
Nicholas J. Downey, a resident citizen of the state of Illinois, complains of the respondent, Schmidt, and alleges that on the 29th of November, 1930, a criminal complaint was filed against J. T. De Grazier, in the city of Chicago, charging the said De Grazier with having uttered to the Congress Hotel Company, with the intent to cheat and defraud that company, a cheek for the sum of $559.26, for which he obtained that amount in money and other property; that at the time of delivering said check to the company he knew that he did not have any account with *2the bank upon which the check was drawn; that this was contrary to the statutes of the state of Illinois, and in fact a crime; that the Governor of the state of Illinois made a requisition to the Governor of the state of Texas, having attached thereto proper exhibits showing the commission of a crime, for the said De Grazier, and he was arrested at Dallas in said state, and on the 23 d of June, 1931, the Governor of Texas honored such requisition and issued his executive warrant for the said De Grazier. The prisoner sued out a writ of habeas corpus in the criminal district court of Dallas county, Tex., alleging an illegal restraint. The judge of that court remanded him to the custody of the agent; the order being as follows: “Relator remanded to the custody of John T. Carton, agent in governor’s warrant of the State of Texas, issued June twenty-third, 1931, to be delivered to the state of Illinois to answer charge set out in said warrant. Defendant excepts and gives notice of appeal to the court of criminal appeals, at Austin, Texas.” The judge also found, in a formal order entered upon the same date, that De Grazier was a fugitive from the state of Illinois, and that upon a legal request for his extradition the Governor of the state of Texas had issued his warrant.
The Court of Criminal Appeals of Texas [Ex parte De Grazier, 59 S.W.(2d) 139] to which the cause was taken, affirmed the order of the district judge in the following language : “This cause came on to be heard on the transcript of the record of the court below, and the same being inspected, because it is the opinion of this court that there was no error in the judgment, it is ordered, adjudged, and decreed by the court that the judgment be in all things confirmed, and that the relator pay all costs in this behalf expended, and that this decision be certified below for observance.” This latter judgment was entered on the 28th of April, 1933, and on May 29th the sheriff took him into custody, and on May 31st the petitioner appeared as the messenger of the state of Illinois to receive De Grazier and transport him to that state-to be dealt with according to law. The respondent, who was holding De Grazier, refused to deliver him, and the petitioner came into this court asking for a mandatory injunction to require the sheriff to turn the prisoner over to him. On June the 5th the court issued a show cause order to the respondent.
The respondent answers that on June 3, 1933, he had received a telephone call from the Governor of Texas not to recognize the extradition warrant that had been issued by his predecessor, Governor Sterling, and that the same had been suspended subject to a second hearing which was to be held on June the 6th. Thereafter, on June the 6th, he had received a telegram from the Governor of Texas, advising that he had revoked the warrant on the ground that it was an effort to collect “a civil debt.” Attached to the response was a photostatie copy of the order reading as follows: “Honorable W. W. Heath, Secretary of State, State Capitol, Austin, Texas. Dear Sir: I have revoked the writ of extradition granted by R. F. Sterling, Governor, on June twenty-third, 1931, for the return of Joe T. De Grazier upon requisition from the Governor of Illinois issued the twentieth day of June, 1931. My reason for such action is that the prosecution of the defendant in this ease was for the sqle purpose of collecting a civil debt. Very truly yours, Miriam A. Ferguson, Governor of Texas.”
The allegations of both the petitioner and the respondent are supported by record testimony.
To the answer'of the sheriff the petitioner filed a motion to strike.
The petitioner claims that a warrant on an application for extradition having once been delivered, like a pardon or a deed, may not be revoked without some judicial action. The respondent contends that a valid revocation may be had at any time before the prisoner is removed from the state.
Section 2 of article 4 of the National Constitution provides that “A person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on Demand of the executive Authority of the State from which he fled, be delivered up to be removed to the State having Jurisdiction" of the Crime.”
The Revised Statutes of the United States (§ 5278 [18 USCA § 662]) provide that it shall be the duty of the executive authority of a state to which a person had fled to cause him to be arrested and secured and to deliver him to an agent appointed by the demanding state.
The executive of the asylum state is charged with the responsibility of determining, in sopie legal mode, whether the person is a fugitive from the justice of the demanding state. Of this he may exact competent proof. He may not hold insufficient the pro*3cedure of the demanding state, provided that procedure complies with the fundamental guaranties of the National Constitution as to life, liberty, and property. In Kentucky v. Dennison, 24 How. 66, 16 L. Ed. 717, it was held that the words, “treason, felony, or 'other crime,” in the section above mentioned include every offense from the highest to the lowest known to the law of the state from which the accused had fled, including misdemeanor. Chief Justice Taney, saying that, “Looking, therefore, to the words of the Constitution — to the obvious policy and necessity of this provision to preserve harmony between States * * * and law within their respective borders * * * this compact en-grafted in the Constitution included, and was intended to include, every offence made punishable by the law of the State in which it was committed.” In re Reggel, 114 U. S. 642, 5 S. Ct. 1148, 29 L. Ed. 250; Ex parte Brown (D. C.) 28 F. 653.
The authorities seem to hold that the duty of the Governor, when a requisition is presented, is ministerial and not discretionary, and is described as imperative, although, in the absence of a state statute, there is no power to compel the executive to act. 25 C. J. 265. He is to settle two questions, viz., Is the person demanded substantially charged with a crime against the laws of the state from whose justice it is alleged he has fled? and Is he a fugitive from that state? 25 C. J. 265.
Both of these matters were passed on by Governor Sterling, and he concluded that the requisition of Illinois should be honored. Can his successor in office revoke the warrant he issued?
Could he himself have revoked his order?
The lapse of time between the granting of the warrant and 'its attempted revocation does not complicate the question because the fugitive has remained during that entire time within the state of Texas,- and during that entire time he has been before the Texas courts asking to be liberated.
The warrant operated on him, but was not delivered to him.
The Minnesota Supreme Court, in the case of State v. Toole, 69 Minn. 104, 72 N. W. 53, 38 L. R. A. 224, 65 Am. St. Rep. 553, held that the power to revoke existed. It would seem that the chief executive of a state should have the same right to undo an act which he considered erroneous as does any other official or court, provided vested rights have not intervened. If a Governor discovers that a warrant which has been issued was granted improvidently, the righteous course would seem to be to recall it, to revoke it, provided the person upon whom it operated was still within his domain, It is a license to take and not a contract. It is a privilege to move within the state, and before the border is reached the privilege may be withdrawn.
A pardon is not effective unless accepted, and there is no power to compel such acceptance. Burdick v. U. S., 236 U. S. 79, 35 S. Ct. 267, 59 L. Ed. 476.
There is another reason why the relief sought here cannot be granted. The state district judge, it seems to me, has ample power to make orders in the premises. He committed the fugitive. His action was affirmed by the Court of Criminal Appeals with directions to “observe his order.” The sheriff may not liberate De Grazier without that court’s permission. If the Governor of Texas has acted improvidently, then the legal machinery for the determination of that question is in that court.
While the national courts have frequently been appealed to for the liberation of citizens held under extradition warrants, and while an extradition agent, in the act of transferring a fugitive, is under the protection of a federal statute, it seems to me that the application which is made here, to enjoin the sheriff from refusing to hand over De Grazier to the Illinois agent, is a request that this court should refuse. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218836/ | McDOWELL, District Judge.
This motion is based on the theory that this suit is not a suit to remove cloud from title. The first argument made in behalf of the defendants assumes that this is a transitory action, and seemingly admits that this court would have jurisdiction of the persons of the defendants, but for the (alleged) fact that federal jurisdiction is here not based solely on diversity of citizenship. The latter part of this argument, even if it were sound, is unnecessary. If this is a transitory action, the residence of the plaintiff in this district could not possibly give this court jurisdiction of the persons of the defendants over their objection unless they had been served with process within this district. Munter v. Weil Corset Co., 261 U. S. 276, 43 S. Ct. 347, 67 L. Ed. 652; Robertson v. Railroad Labor Board, 268 U. S. 619, 45 S. Ct. 621, 69 L. Ed. 1119.
If, as I think, this suit is one to remove cloud from title to real estate, it is, ipso facto, not a transitory, but a local, action.
It is next contended that it is only such part of the order of April 3,1931, made by the Federal Power Commission as forbids the plaintiff to proceed with its proposed construction work until it shall have accepted a standard license that can be regarded as a cloud on title, and that this order was directly induced by the plaintiff, as appears from the bill, in itself applying to the Federal Power Commission for a license. If the premise be granted, this contention is an attack on the merits of the bill. In effect this is an assertion that the plaintiff has heretofore made an election of remedies, and that it is thereby estopped from prosecuting this suit. This plainly goes to the merits of the plaintiff’s ease.
A defendant who appears specially to protest that he is not subject to the jurisdiction of the court should not be heard to assail the merits of his opponent’s pleading. A sufficient reason for so saying is the reason which forbids courts to decide moot eases, and which should prevent obiter dicta. It is that human nature is such that only decisions which are necessary should be made. It follows that, if this present motion can be decided without considering the merits of the bill, it should be so decided. And that it can be seems too plain to require argument.
Authority for the foregoing is found in Citizens’ Sav. & Trust Co. v. Illinois Central R. R. Co., 205 U. S. 46, 58, 27 S. Ct. 425, 51 L. Ed. 703. That was a suit to remove cloud from title, in which some of the defendants, corporations not inhabitants of the district of suit, sought in effect to have service of process quashed. In the opinion (page 58 of 205 U. S., 27 S. Ct. 425, 429, 51 L. Ed. 703) it was said: “We express no opinion upon the question whether, upon its .own showing, or in the event the allegations of the bill are sustained by proof, the plaintiff is entitled to a decree giving the relief asked by it. There was no demurrer to the bill as being insufficient in equity. The only inquiry now is whether, looking at the allegations of the bill, the suit is of such a nature as to bring it within the act of 1875, as one to remove encumbrances or clouds upon real or personal property within the district *5where the suit was brought, and, therefore, one local-to such district.” See, also, Illinois Central Railroad Co. v. Adams, 180 U. S. 28, 21 S. Ct. 251, 45 L. Ed. 410; McComb v. U. S. Housing Corporation (D. C.) 264 F. 589.
It follows that the last-mentioned contention cannot be considered on the present motion.
In the course of the brief for the defendants it is urged that the bill here is “bad,” because in it the constitutionality of the Federal Water Power Act (16 USCA § 791 et seq.), is attacked, citing Devine v. Los Angeles, 202 U. S. 313, 334, 335, 26 S. Ct. 652, 50 L. Ed. 1046; Chicago Auditorium Association v. Cramer (D. C.) 8 F.(2d) 998. But this again is an attack on the merits of the bill. The right to decide whether or not a bill to remove cloud from title to property in this district is a good bill or a bad bill is vested in this court by section 57, Jud. Code, 28 USCA § 118; and no decision of such question may be had on a motion to quash service of process at the instance of defendants who say that they are not subject to the rulings of this court.
It is contended that the bill is not one for removal of cloud because, inter alia, injunctive relief is prayed for. I can see no force in this contention. In suits to remove cloud, which are admittedly such, and in which the court has jurisdiction of the persons of all of the parties, of the subject-matter, and of the cause, injunctive relief is freely granted whenever such relief is necessary in order to do complete justice (Camp v. Boyd, 229 U. S. 530, 552, 33 S. Ct. 785, 57 L. Ed. 1313; Shaffer v. Carter, 252 U. S. 37, 48, 40 S. Ct. 221, 64 L. Ed. 445), and because without granting injunctive relief it may and sometimes is impossible to do complete justice. In 51 Corpus Juris, p. 273, § 260, note 74, is an extensive list of cases for removal of cloud, or for quieting title, in which injunctive relief was granted. See, also, Lamb v. Farrell (C. C.) 21 F. 5, 12; Bedford-Bowling Green Stone Co. v. Oman (C. C.) 134 F. 441, 453.
Without intending to express or intimate any opinion as to what powers of relief this court may possess in the event that this present motion is properly overruled, and in the further event that the defendants never enter a general appearance, it is certain that in drafting the bill the plaintiff had a right to assume the possibility that the defendants might enter a general appearance, and had also a consequent right to conform to the usual practice and pray for every form of relief that the draftsman thought might possibly be needed. At the least, it follows that the prayers for injunctive relief cannot be used as a basis for argument that the bill is not on its face one for removal of cloud from title.
The orders of the Federal Power Commission in question are documentary assertions of power by the Commission over the plaintiff’s use and enjoyment of its property; these orders have been made public records; these orders, if made without lawful authority, must largely impair the value of the property as a source of credit, and must greatly restrict the plaintiff’s right of ownership, and its use of its property. If the orders are invalid, and as their invalidity does not appear on the face of the orders, ' they must of necessity be clouds on the plaintiff’s title. Sufficient authority for this conclusion is found in City of Los Angeles v. Los Angeles City Water Co., 177 U. S. 558, 581, 20 S. Ct. 736, 44 L. Ed. 886; Village of Euclid v. Ambler Realty Co., 272 U. S. 365, 386, 47 S. Ct. 114, 71 L. Ed. 303, 54 A. L. R. 1016; Id. (D. C.) 297 F. 307, 310.
In so far as the character of this suit is concerned, I can see no substantial distinction between an illegal assertion by a -defendant of ownership of the real estate claimed by the plaintiff and an illegal assertion by the defendant of a highly important power of control over the use that may be made by the plaintiff of the real estate in question.
It follows that the defendants’ motion to quash must be overruled, and the defendants given a reasonable time within which to file such pleading as they may be advised to file. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218837/ | ANDREW M. J. COCHRAN, District Judge.
These two actions are before me on plaintiffs’ motions to remand to the state court, whence they were removed by defendant. The plaintiff Rosamond M. Seese was the owner of a dwelling house and the household and kitchen furniture therein in Salt Lick, Bath county, in this district, through which defendant’s railroad runs. The house and its contents were totally destroyed by fire September 7, 1930. At that time she had an insurance policy on the house and its contents with the plaintiff National Union Fire Insurance Company in the sum of $3,000’. Thereafter, just when not appearing, it paid the plaintiff Seese $3,000 in satisfaction of its liability on the policy. On September 22, 1932, over two years after the fire, these two actions were brought against the defendant to recover damages on account of the fire. In each the damages claimed were $3,000, an. amount less than that of which this court has jurisdiction. The actions seemed to have been brought in the order given in the caption of this opinion. The amount sought to be recovered in the first action was the amount which the plaintiff insurance company had paid in satisfaction of its policy. The right to recover same was based on the claim that such plaintiff was subrogated to the right of' the plaintiff Seese to the extent of the amount so paid and she was joined as plaintiff for its-use and benefit. No allegation was made as-to the value of the property destroyed and no reference was made in the petition as to-any action by the plaintiff Seese. In the petition in her action it was alleged that she carried a policy for $3,000’ with plaintiff on the property destroyed which had been paid and that such property was worth $3,000 over and above the amount so paid for which recovery was sought. No reference was made-to the bringing of the other action.
There was but a single cause of action-against the defendant for"’the damages sustained by the fire and that in favor of the-plaintiff Seese, the owner of the property. The plaintiff insurance company had a right, perhaps, to join as plaintiff in the action on account of its interest in the recovery to the-extent of $3,000. The. cause of action was split and the two actions were brought to prevent a removal to this court. This is not avowed by plaintiffs or alleged by defendant in its petition for removal. But there can be no doubt that such was the ease. There is no-*27other explanation for the course pursued. That this procedure was illegal is well settled.
In 26 C. J. p. 464, it is said: “Where insurer by payment of the insurance money becomes subrogated to the remedy of the insured against a person whose wrongful or negligent act has caused destruction of the insured property by fire, the question as to who may or must bring the action against the wrongdoer becomes important, the wrongful act of such third person being indivisible and giving but one cause of action. The general rule of law is that in such a ease the insurer must work out his remedy through the insured and assert his right to recover against the wrongdoer in the name of the insured.” As to the law where the loss exceeds the insurance, as here, on page 466 it is said: “When the loss exceeds the amount of the insurance, so that payment under an insurance contract constitutes but a partial satisfaction of the damages sustained leaving a residue to be made good to the wrongdoer, a question has arisen as to whether the action against the wrongdoer for the recovery of the portion paid by the insurer should be undertaken in the name of the insurer or insured. The tendency of the courts seems to be to hold that the action must be brought in the name of the insured and that the insurer is not a necessary party.”
Again it is said: “Insured may sue for his own benefit and for the benefit of the insurer the wrongdoer for the loss caused by the wrong; and where the action is brought by the insured in his own name against the ■wrongdoer to recover the full amount of the loss he sustains toward the insurer the relation of trustee, in respect of such portion of the amount recovered as the former under his contract has been compelled to pay.” And again it is said: “Conversely, where the action is brought by the insurer in .the name of the insured, or in his own name when permitted to do so, to enforce his right acquired by subrogation on having paid the insurance money, if the insured has sustained loss beyond that paid by insurer, the entire liability of the wrongdoer, can be determined in the suit, and if the insurer in such ease recovers a judgment, he may retain the sum which he has paid the insured and interest thereon, the balance of the money so collected being the property of the insured.” Still further it is said: “Under the practice in some jurisdictions, on the theory that the insured and the insurer after payment of the insurance become joint owners of the cause of action against the wrongdoer, each should be made a party to the action either as plaintiff or defendant according to the exigencies of the case.”
According to these quotations, therefore, where the loss exceeds the insurance there is. but a single cause of action and but one action should be brought. No right to split the cause of action and to bring two actions, one by the insurance company for the amount paid by it, and the other by the insured for the excess value of the property destroyed over and above such payment, exists. In Norwich Union Fire Ins. Soc. v. Standard Oil Co. (C. C. A.) 59 F. 984, 987, the leading federal authority on the subject, it is said: “When an insurance company pays to the assured the amount of a loss of the property insured, it is subrogated, in a corresponding amount, to the assured’s right of action against any other person responsible for the loss. This right of the insurer against such other person is derived from the assured alone, and can be enforced in his right only. At common law it must be asserted in the name of the assured. In a court of equity or of admiralty, or under the modem codes of practice, it may be asserted by the insurance company in its own name, when it has paid the insured the full value of the property destroyed. * * * But the rule seems to be well settled that, when the value of the property exceeds the insurance money paid, the suit must be brought in the name of the assured. * * * In such an action the assured may recover the full value of the property from the wrongdoer, but as to the amount paid him by the insurance company he becomes a trustee.” It is further said: “The wrongful act is single and indivisible and can give rise to but one liability.”
I know of no Kentucky decision to the contrary of the law as thus laid down, and I am satisfied that there is none. The question has frequently arisen as to whether where a person and his property are injured at the same time and by the same wrong, separate actions may be brought for each injury or a single one for both. The majority of the courts hold that but a single action shall be brought for both injuries. The Kentucky Court of Appeals’ position is that of the majority. In the case of Cassidy v. Berkovitz, 169 Ky. 785, 185 S. W. 129, 130, it is said: “The injuries to appellee and to his horse and wagon were, the result of the same accident, and constituted but a single cause of action against the defendants which could and should have been included in one action against them. It is against the policy *28of the law to permit a plaintiff to split his cause of aetion and institute two or more actions for different parts thereof, and it is a well-established principle that, where a plaintiff has filed a suit and had trial upon a cause of action, the judgment rendered therein is a bar to another proceeding based upon the same cause of action; that it was his duty in one action to set up all items of damages whieh resulted to him from the accident.” Of course if but a single cause of action exists in such a case whieh cannot be split, a single cause of action for a single injury cannot be split. It is clear, therefore, that no right existed to bring these two actions. But a single .action should have been brought.
I proceed now with a narration of the proceedings in the state court. On the first day of the next October term of the court answer was due from the defendant in each aetion. In the Seese aetion it filed a special demurrer on the ground of defect of parties. No further steps were taken therein at that term. Nor were any steps whatever taken at that term in the aetion of the insurance company. The next steps taken in either action were at the next February term, February 17, 1933, the fifth day of that term. On that day defendant filed its answer and plea in abatement in the insurance company ease, defendant’s special demurrer to the petition in the Seese ease was overruled, defendant filed its answer and plea in abatement in the Seese case, the plaintiff Seese filed her demurrer to the defendant’s plea in abatement, the first paragraph of its answer; and the eo-urt entered the following order:
“Rosamond M. Seese, Plaintiff, vs. Chesapeake & Ohio Railway Co., Defendant, Order, and
National Union Fire Insurance Co., etc., Plaintiffs, vs. Chesapeake & Ohio Railway Co., Defendant.
“On the Court’s own motion, the above styled two cases are hereby consolidated for the purpose of being tried together; and henceforth said two causes shall be carried together upon the docket of this court entitled as above; and said consolidated causes and each of them are set for trial for the eighth day of the May term 1933; and it is hereby ordered that said two causes and each of them, are set for trial, for the eighth day of the May term 1933; and it is hereby ordered that said two causes shall be tried together.”
Thereafter, on February 20, 1933, the seventh day of that term, the defendant filed its petition and bond for removal in the consolidated causes, and on February 24, 1933, the court overruled the petition.
The plea in abatement filed in each action was the pendency of the other action in bar of its prosecution. No demurrer to this plea was filed in the insurance company aetion and the demurrer to the plea in the Seese action was not acted on. The ground of each plea was that plaintiffs had no right to split the single cause of aetion between them; hence the bringing of one barred the bringing of the other. Seemingly the plea in the insurance company action was not good, as at the time that aetion was brought the other one was not pending. It was brought after-wards, though seemingly immediately after-wards. And it is open to say that the plea was not good in the Seese action. This is on the ground that the insurance company had no right to bring the aetion. The sole right of aetion being in Seese. In Norwich Union Fire Ins. Soc. v. Standard Oil Co., supra, it is said: “But the rule seems to be well settled that, when the value of the property exceeds the insurance money paid, the suit must be brought in the name of the assured.”
Seemingly the special demurrer in the Seese aetion which was overruled was treated as raising the question as to whether- the cause of aetion could be split and whether only one aetion could be brought. It really did not raise that question. The only question whieh it raised was whether the insurance company was a necessary party to the Seese action. It was not a necessary party. In 26 C. J. 466; it is said that it seems that where the loss exceeds the insurance the tendency of the courts is to hold not only “that the action must be brought in the name of the insured” but also “that the insurer is not a necessary party.” Such being the case, it would seem that the special demurrer was properly overruled. The true tactics of the defendant would seem to have been to demur to the petition in the insurance company action on the ground that it had no right to maintain it either in its own name or in the name of Seese. This, if successful, would have left the Seese action standing. It could not be removed, for the amount in controversy was insufficient notwithstanding it was made less for the purpose of preventing a removal. Woods v. Mass. Protective Ass’n (D. C.) 34 F.(2d) 501. Had the petition been amended to claim the whole $6,000, the aetion could then have been removed.
*29I come then to a consideration of the question whether the actions were removable. It is urged that they were on the ground that there was no right to split the single cause of action against the defendant and they were split for the purpose of preventing a removal. I have held otherwise in the case of Patrick v. Equitable Life Ins. Soc. of U. S. (D. C.) 2 F. Supp. 762. To this position I adhere. If these two actions had been brought in this court exactly as they were brought in the state court, each would have had to be dismissed for want of jurisdiction; the amount in controversy not being in excess of $3,000. So if they should be removed here they would have to be dismissed on the same ground. That such is the ease necessitates that they were not removable. The motive behind the splitting of the action has no bearing on their removability. It should be taken for granted that the state courts will visit on the plaintiffs the consequences of their so doing. But over and above this, if the actions were removable, the defendant had lost the right to remove them by not filing removal papers in the required time. If the actions were removable it must be because of the order of consolidation. If I am right in the position that they were not removable before the making of that order and it turns out that they became removable because thereof the removal papers were filed in time. So the question before me depends solely on the effect of the order of consolidation. The actions were not removable unless because thereof.
The Standard Dictionary gives this as the legal meaning of the word “consolidation”: “The merging of two or more actions into one, by order of court, done to save litigation and expense.” In 1 C. J. p. 1121, it said: “Consolidation of actions has been defined as the combination of several actions into one.”
In the strict sense of the word there can be no consolidation of .two or more actions unless they can be merged or combined into one. The consolidation under consideration is of actions, not of causes of action. Causes of action, which inherently are separate and distinct, cannot be merged or combined into one cause of action. This is impossible. They "will always remain separate and distinct and cannot be made otherwise. The consolidation of several actions brought upon such causes of action has no effeet upon those causes of action. They remain several as before. As to whether several actions can be merged and combined into one, i. e. consolidated, would seem to depend on the question whether a single action could have been brought embracing the several causes of action. If so, they can‘be consolidated. What could have been done originally can be brought about by consolidation. Otherwise there can be no consolidation. But though such is the case, if the several actions are of like nature or relate to the same question, they can be tried together. Where such actions are tried together it may be said that there is a consolidation of trials, i. e. a merger or combination of several trials into one, but not of the several actions themselves. This is the ease where several persons are injured by the same wrong and each brings a separate action against the wrongdoer, or where there are several policies of insurance on the same property which has been destroyed by fire and the owner brings a separate action against each insurance company. In neither case could a single action have been brought in the first instance, nor can the several actions be consolidated, but the trials therein can be consolidated into one trial. The word “consolidation” has been loosely used to express that which is not in fact a consolidation of actions. This is the ease with what is known as the “consolidation rule” in the English courts. According thereto, where there are several actions pending of like nature or relating to the same question, one of them is tried and its result is made an adjudication of all of the actions. The word is used in this loose sense in section 734, title 28 USCA, formerly section 921 U. S. Rev. Stat. Whilst as there used it is broad enough to cover a ease of consolidations of two actions which might have been brought as one, as usually applied, it is made to cover a consolidation of actions or suits that could not have been so brought.
It was so applied in the case of New York Mut. Life Ins. Co. v. Hillmon, 145 U. S. 285, 12 S. Ct. 909, 912, 36 L. Ed. 706. The consolidation there was of three actions on three separate life insurance policies. The court said: “But, although the defendants might lawfully be compelled, at the discretion of the court, to try the eases together, the causes of action remained distinct and required separate verdicts and judgments; and no defendant could be deprived without its consent of any right material to its defense, whether by way of challenge of jurors, or of objection to evidence, to which it would have been entitled if the cases had been tried separately.” Such eases may be characterized as eases not of ‘consolidation but of quasi *30consolidation. The distinction I have made is stated in 1 C. J. p. 1121. It is there said: “The term ‘consolidation’ has also sometimes been applied to a mere trial of several actions together, but properly a consolidation of actions is to be distinguished from the trial of several actions together, for actual consolidation involves the union of several actions into one which is tried as such, while where several actions are tried together, although there is but one trial, the identity of the actions is preserved and separate verdicts and judgments rendered. This distinction is also one which the authorities have frequently failed to observe.” As to what constitutes a consolidation of actions in the case of Harrigan v. Gilchrist, 121 Wis. 127, 99 N. W. 909, this is said: “Consolidation of actions does not mean a consolidation of trial. It is not a trial of several actions, but the trial of one action instead of several actions, the consolidation having the effect of creating one action out of two or more that might have been brought as one.” 1 C. J. p. 1121.
The conditions essential to a consolidation of actions are thus put in 1 C. J. p. 1124: “Unless otherwise provided by statute, the conditions ordinarily prescribed as authorized and essential to authorize a consolidation of actions at law are that the different actions shall be pending in the same court at the same time between the same parties and involving substantially the same subject matter, issues and defenses.” The matter is put better in note 17 in quotation from the ease of Hallam v. Moore (Tex. Civ. App.) 126 S. W. 908, 911: “(1) The actions must be depending, all perfect and complete, at the same time; (2) the actions must be between the same plaintiff and the same defendant; and (3) the actions must be such as may be joined.”
As to the power of the court to make an order of consolidation, in 1 C. J. p. 1122, it is said: “Courts of general jurisdiction have independently of statute, inherent power to consolidate different actions where the conditions authorizing consolidation exist.” And again on p. 1133, it is said: “While an order for consolidation is ordinarily made pursuant to an application therefor by one of the parties, the court may in a proper case order a consolidation upon its own motion and under some circumstances it is its duty to do so.”
In 5 Standard Encyclopedia of Procedure, 250, it is said: “It is a well recognized principle of the common law that where a plaintiff has two or more causes of aetion which may be joined in one, he might bring one suit only; and if he commences more than one, he may be compelled to consolidate them.”
In the case of India Rubber Co. v. C. J. Smith & Sons Co., 75 Ill. App. 222, it is said: “Even if there had been no motion by either party, it would have been the duty of the court to have ordered the consolidation when the substantial identity of the subject-matter of the two cases came to its knowledge.”
In the case of Steitler v. Helenbush’s Ex’rs, 61 S. W. 701, 702, 23 Ky. Law Rep. 174, a decision of the Kentucky Court of Appeals, two actions were pending in the same court, one by a creditor attacking a preference making the debtor and preferred creditor defendants, and the other by the preferred creditor against the debtor to enforce the preference. The court said: “It [L e. the latter aetion] was pending in the same court in which this action [ i. e. the former aetion] was pending, and under such circumstances it was the duty of the court below to consolidate the actions.”
Then as to the effect of an order of consolidation of an action the matter is thus put in 1 C. J. 1135: “The effect of a consolidation of actions at law is to unite and merge all of the different actions consolidated into a single aetion, in the same manner as if the different causes of aetion involved had originally been joined in a single aetion, and the order of consolidation if made by a competent jurisdiction is binding upon all the parties to the different actions until it is vacated or set aside. After the consolidation there can be no further proceedings in the separate actions which are by virtue of the consolidation discontinued and superseded by a single action which should be entitled in such manner as the court may direct and all subsequent proceedings therein be conducted and the rights of the parties adjudicated as in a single action.”
In 5 Standard Encyclopedia of Procedure, 272, it is said: “The effect of consolidation is to merge the actions into one, so that after the consolidation there is but one aetion pending between all the parties embraced in the order, the other actions being in effect discontinued, a new and distinct action being created presenting the issues involved in both former actions.”
In Montana the common-law rule as to consolidation of actions is provided by statute (Rev. Codes 1921, § 9820). It is in-these words: “Whenever two or more actions are pending at one time between the same parties and in the same court, upon causes of action which might have been joined, the court may *31order the actions to he consolidated.” In the case of Handley v. Sprinkle, 31 Mont. 57, 77 P. 296, 298, 3 Ann. Cas. 531, the effeet of consolidation under the statute is thus stated: “In our judgment, the consolidation of actions under our statute merges all the actions consolidated into one suit. There may be many causes of action, but the effect of consolidation is to join them all in one suit. If this is true, there can be but one judgment in the consolidated suit, and this judgment must settle all the issues involved. All the suits consolidated are ended as separate suits, and exist thereafter only as parts, respectively, of the consolidated suit.”
This full consideration of the question as to the consolidation of actions places one in position to determine the effect of the order of consolidation in this case on the removability of the two actions which were thereby made one. The plaintiffs cite in support of their position that it did not render them removable: 54 C. J. 228; Holmes & Co. v. U. S. Fire Ins. Co. (C. C.) 142 F. 863, 867; Cooper v. American Stores Co. (D. C.) 25 F. (2d) 916.
In 54 C. J. 228, it is said: “Where neither of two or more suits pending in a state court between the same parties is removable to a federal court because the matter in dispute does not exceed the amount or value prescribed by the removal statute, the consolidation of such suits so that the aggregate amount involved in the consolidated cause is in excess of that specified by the statutes will not authorize removal.” In support of this statement the two decisions cited are given. That in the case of Cooper v. American Stores Co. (D. C.) 25 F.(2d) 916, did not involve a consolidation of two actions by order of court. It arose in Pennsylvania. A statute of that state (12 PS § 1625) provided that: “Whenever any injury, not resulting in death, shall be wrongfully inflicted upon the person of a child, and a right of action for such wrongful injury accrues to the child and also to the parent, these two rights of action shall be redressed in only one suit, brought in the names of the parent and child.” Under this statute a father and daughter sued in one action in the state court, the father for medical expenses and loss of services, and the daughter for personal injuries. The claim of the one was for $1,500, and of the other $2,900. It was held that this action was not removable to the federal court. In the opinion it is said that the “two causes of action were consolidated” by the statute and as to a similar statute that it provided “for the consolidation of separate rights of action of husband and wife.” Eather the statute in each instance required the consolidation of the two causes of action in one suit, i. e. that they be litigated therein. As to the effeet of this requirement, there is quoted from a Pennsylvania decision (Fries v. Wiser, 62 Pa. Super. Ct. 218) this: “The statute still keeps separate the independent causes of action and provides for the rendition of separate verdicts and the entry of separate judgments.” The court itself said: “We have here two actions which for purposes of convenience are directed by the law to be tried at the same time. Except for the coincident trial, however, they ore separate and distinct. The suit proceeds to separate verdicts and judgments. The parties having no common, undivided interest. * * * In an action by parent and child, particularly in the case of an infant, the parent might be held guilty of contributory negligence and recovery denied, while a verdict in favor of the child might be sustained.”
The consolidation provided for by that statute was not a consolidation of actions. It was no more than “quasi consolidation”; no more than what would have been the ease had the statute provided that two separate actions brought by parent and child should be tried together. Or, if there had been no statute at all and the state court had ordered that the two actions so brought should be tried together. In the latter case there could be no removal to the federal court on the ground that, though the amount sought to be recovered in each action was less than the required amount, together they were more. This would be so because the two actions would remain in existence notwithstanding the order of consolidation. This decision is not an authority for the position that where two causes of action which might have been set up in one action are set up in two, the amount sought to be recovered in each not exceeding $3,000, that there may not be a removal if the two actions are ordered to he consolidated and the two amounts sought to he recovered exceed that sum. It has no bearing whatever on such a ease. Cooper v. American Stores Co., was just such a case. It was held therein that there could be no removal. An-owner of property on which he held two insurance policies with the same company and which was destroyed by fire brought separate actions on each policy. A petition for removal was filed in eaeh action. The state court overruled the petitions. Its action was correct as the amount in controversy in neither action was sufficient to render it removable. *32The defendant then moved that the actions be consolidated. This motion was sustained and an order made consolidating them. Thereupon a petition for removal was filed in the consolidated aetion. It was overruled in the state court and on the transcript being filed in the federal court a motion to remand was sustained. I cannot agree with the position there taken. A consideration of the effect of the consolidation of the two actions as above set forth is against it. In 1 C. J. 1135, it is said that the actions are merged into “a single action in the same manner as if the different causes of aetion involved had originally been joined in a single action” and that the separate actions “are by virtue of the consolidation discontinued and superseded by a single aetion.”
In Handley v. Sprinkle, it is said: “All the suits consolidated are ended as separate suits, and exist thereafter only as parts, respectively, of the consolidated suit.” In 5 Standard Encyclopedia of Procedure, p. 272, it is said that, “after consolidation there is but one aetion pending between all parties embraced in the order, the other actions being in effect discontinued, a new and distinct aetion being created presenting the issues involved in both former actions.”
Such being the case, I can conceive of no reason why this new and distinct aetion, having no previous existence but being created, i. e. coming into existence, for the first time by reason of the order of consolidation, the amount in controversy being sufficient, does not at once become removable to the federal court, just as much so as if a single aetion had been brought in the first instance. The court in that case took note of the fact that the question presented was novel. It said ([C. C.] 142 F. 863, 865): “The complainants had the right to bring but one suit to recover on both policies. They could have joined their causes of aetion, had they chosen to have done so. They having elected to bring a suit on each policy, separately, they have a right to prosecute each suit to a final decision in their own way.”
But they did not have such right. The court had the right to order them consolidated and thereby put an end to the separate actions and bring into existence a single aetion exactly the same as if plaintiff had brought it in the first instance. Had plaintiffs moved for the order of consolidation and substituted a single petition for the original petition, it could hardly be claimed that the action did not thereupon become removable. The fact that the order was made on defendants’ motion or may have been made on the court’s own motion should make no difference. The removability was settled by the fact that the order of the consolidation, however it came to be made, for the first time brought into existence an aetion the amount in controversy in which was sufficient to confer federal jurisdiction. The court referred to the decisions of the Supreme Court of the United States in which it had held that “no separable controversy exists where joint tort-feasors are sued jointly, albeit separate suits would lie against each, and each defendant might have a different defense,” and then said: “Does it stand to reason, then, that a defendant would have the right to say that a complainant must join all his causes of action against one defendant in-one suit so that the total amount involved would confer jurisdiction of the federal court, whereas the jurisdiction would not exist in any one of such causes of aetion, and that, because he brings separate suits in each cause of aetion, he does it for the fraudulent purpose of preventing a removal to the United States court?”
The defendant has no such right and the two actions are not removable on the ground that two instead of one are brought to prevent a removal. But the defendant has a right to move the court for an order of consolidation, and authority is cited above to the effect that it is the duty of the court to make such order when its attention is called to the matter. Possibly the court would have the right to refuse to make the order on the ground that its effect would be to render the consolidated action removable. If, however, it makes it the full consequence thereof follows.
The only ground upon which the decision can be upheld is the form of the order of consolidation made by the state court. It was that the two causes of aetion “be consolidated for the purpose of taking proof and hearing.” As to the effect of the order the court said: “The decree d-id not merge the two cases into one. It did not destroy the complainant’s right to have each of them heard and determined on its merits. Neither ease lost its identity. ‘In equity ah order of consolidation simply has no other effect than to hear the cases consolidated at the same time.’ And they are to be determined exactly as if the cases were heard separately. 4 Eng. & Am. Encyc. Pleading & Practice, p. 695; Masson v. Anderson, 62 Tenn. [3 Baxt.] 295.”
The authority cited has reference to a cáse of quasi consolidation and not to one calling *33for a consolidation as that case does. The effect of the decree was not as stated. It provided that the two causes should he eonsolidated, i. e. made one. This was not qualified by the statement that it was “for the purpose of taking proof and hearing.” Every case of consolidation is for such purpose. Possibly had the order provided no more than that the two causes be heard together there would have been no consolidation. But it did not so provide.
Coming then to the case in hand, we find that it is not a case like that of Holmes & Co. v. United States Fire Ins. Co. Here there was no right to bring two separate actions. The sole right was to bring a single action and that right was in the plaintiff Seese. There was but a single cause of action which was split-by bringing the two separate actions. The order of consolidation merely brought about that which should have been brought about in the first instance. The order here, as in that ease, was that the two actions be consolidated “for the purpose of being tried together.” The purpose for which the consolidation was made to no extent qualified the consolidation. Such would have been the purpose had it not been expressed.
In the case of Cassidy v. Berkovitz, 169 Ky. 785, 185 S. W. 129, 131, where it was held, as heretofore set forth, that the right of action on a policy of insurance which covered both injuries to person and property was single, and separate actions cannot be maintained for such injuries, the insured brought separate -actions on the policy therefor. The defendants filed separate answers and made no objection to the splitting of the cause of action. It was held that recovery of judgment for the injury to the property was not a bar to recovery for injury to the person, as defendants by not so objecting had waived the splitting. The court said: “Here the actions were filed in the same court at the same time, and the defendants accepted the issue in each ease, and made no objection to the filing of separate actions to recover for the different parts of appellee’s one cause of action. They had the opportunity and right, if they had so desired, to have had the causes consolidated, or one or the other of them discontinued or dismissed, but they elected rather to try the actions separately, and, having so elected, waived their right to object to the splitting of his cause of action by appellee.”
According to this the defendant here was entitled to have the two actions consolidated, as a matter of right, particularly so after the court had denied defendant’s right to have one or the other of them dismissed.
j a.jp; therefore, constrained to hold that the motion to remand - should be overruled. On an oral hearing I held to the contrary of this, but further reflection has led me to change my mind. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218838/ | PER CURIAM.
This is an application, duly instituted, for the discipline of the above-named attorney, based upon the petition of the attorney appearing for the application, pursuant to the direction of the Senior Judge of this court, made under the following circumstances:
A motion was made by Mr. O’Neill for an order substituting him as attorney for plaintiff in the place of the respondent, in the action of Klemm v. N. Y., O. & W. R. Co., lately pending in this court, on affidavits made by the plaintiff Klemm and his wife, containing allegations of unprofessional conduct on the part of the respondent; and the respondent personally appeared on the return day of that motion and submitted in opposition only an affidavit of the plaintiff Klemm that he did not desire a change of attorney, but no denial of the allegations of unprofessional conduct, and neither the plaintiff Klemm nor the respondent appeared on the day set by the court for the examination of Mr. Klemm in relation to said motion.
An order to show cause, based upon the said petition, was granted by the Senior Judge, and, after a preliminary hearing, the hearing was directed to proceed before the entire court on June 5, 1933.
The respondent was admitted to the bar of this court on January 30, 1920.
Effective July 1, 1931, this court adopted, as part of the rules of this court, the following : “Adherence to the standards of professional conduct established by the Canons of Ethics of the New York State Bar Association will be exacted of all of the members of the Bar of this court.” A copy of the foregoing was published in the New York Law Journal prior to the effective date.
These charges involve the alleged violation by the respondent of that part of Canon 28 reading as follows: “ * * * It is disreputable * * * to breed litigation by seeking out those with claims for personal injuries * * * in order to secure them as clients, or to employ agents or runners for like purposes, or to pay or reward, directly or indirectly, those who bring or influence the bringing of such cases to his office, or to remunerate * “ others who may succeed, under the guise of giving disinterested friendly advice, in influencing * * * the sick and the injured, * " * to seek his professional services. * * * ”
The taking of testimony herein required two half-day sessions of the court, on June 5th and 6th.
It is unnecessary to recapitulate the evidence, and only those charges involving solicitation since July 1, 1931, have been considered.
The evidence establishes, and we find, that the following persons were solicited by the respondent to place their respective personal injury causes in his hands as their attorney:
Anthony Lowe: This man, a resident of Philadelphia, Pa., was injured on November 26, 1931, while in the employ of the Reading Railroad Company, with the result that his leg was amputated. The respondent came to *36see him personally about one month after the former left the hospital where he was treated, and talked to him about the ease, exhibiting papers and news clippings showing his experience in other similar matters. Lowe testified that the respondent offered to pay him money pending the trial of his ease, which was refused, as was the employment. The respondent’s visit was preceded by at least one call made by one Barrett, who introduced himself as a former railroad switch-man, and sought to induce Lowe to employ the respondent. Lowe had no prior acquaintance with either Barrett or Rowe.
This man received hospitalization from the date of the accident for the ensuing six months, and returned to his home during the latter part of April, 1932, and in August of that year was visited by the respondent’s witness Paster, who testified that he called upon Lowe at the suggestion of a manufacturer of artificial limbs, for the purpose of interesting Lowe in the purchase of an artificial leg, and thus learned of Lowe’s injury, which he communicated to the respondent by telephone. Paster testified that the reason for doing this was that Lowe had already suffered the amputation of his leg, and that Paster demonstrated to Lowe the merits of an artificial leg that he (Paster) was using. His testimony was clearly to the effect that it was because Lowe needed an artificial leg that he (Paster) called upon him.
The difficulty with this narrative is that Lowe did not suffer amputation of his leg until February, 1933. The bearing of that fact upon Paster’s testimony and upon the respondent’s conduct in offering him as a witness requires no comment.
Napoleon D. Cote: This witness lived in New London, Conn., and was injured on December 18, 1931, while in the employ of the Central Yermont Railroad Company. He was confined to a hospital for two months, and forty-eight hours after leaving the hospital was visited by a man named Burke, who said he represented the respondent, and who exhibited an Interstate Commerce Commission report of the accident; he urged that Rowe could handle the ease so as to probably secure a verdict of $100,000, while a recovery of $3,000 only could be anticipated if some other lawyer were to be retained.
Burke made two more calls, and then the respondent visited Cote more than once, exhibiting clippings of other cases that he had handled, and a photostatic copy of a check representing the recovery in a prior ease. The testimony concerning this solicitation was given by both Cote and his wife, and the latter testified that the respondent offered to the injured man $1,000 to “get by on” pending the trial.
In connection with this ease, it was suggested but not demonstrated by the respondent that a next door neighbor of the injured man was really responsible for introducing both Burke and the respondent to Cote, but no evidence to this effect was offered. There was no prior knowledge on the part of Cote, concerning either Burke or the respondent.
Jokn J. Henry: This witness was injured while in the employ of a railroad company on June 24, 1932, at Maybrook, N. Y. The respondent visited the injured man, calling in an automobile, accompanied by the said Barrett; the latter spoke to Henry first, and then went out to the ear and brought Rowe into Henry’s house; the respondent uiged Henry to employ him, and promised that he would get a good verdict, and said that he represented train men, and that he could get a better result for him than the local counsel for the Brotherhood of Railroad Employees ; the respondent exhibited newspaper clippings and photostatie copies of checks representing recoveries in other actions.
The testimony of Mr. Henry was corroborated by that of his wife, who said that the respondent called upon her while her husband was still in the hospital. Neither Barrett nor the respondent was known to either Mr. Henry or his wife prior to the time in question; nor did either of them send for the respondent directly or indirectly.
John Simpson: This man resided in Philadelphia, Pa., and was injured on July 4, 1931, while in the employ of the Baltimore & Ohio Railroad Company. He spent the months of July and August in a hospital, •as also the months of January and February, 1932, having suffered an amputation of the leg. He identified as a caller the witness Paster, heretofore referred to, whom he met through a manufacturer of artificial limbs. Paster urged him to get a lawyer, and then the said Barrett called upon him, first recommending a lawyer by the name of Klein and then the respondent. This call of Barrett was followed by a visit from the respondent, who offered Simpson $150 a month until his case should be tried, according to Simpson’s testimony, which was denied by Rowe. It is unnecessary to make a finding on this point, but the court was impressed with the sincerity of Simpson’s testimony.
The attempt was made to discredit him because he was carried on the pay roll of the *37railroad company under another name, for reasons which need not be discussed but which satisfied the court that the integrity of the witness’ testimony was not impaired by that fact. He had no knowledge of the respondent, or Barrett, or Paster, prior to the call of the latter.
James A. Bums: This man was a resident of Elizabeth, N. J., and was injured on April 15, 1932, while in the employ of the Central Railroad of New Jersey; following-treatment in a hospital which lasted eleven weeks, he returned to his home, and was there interviewed by the said Barrett, who solicited employment of the respondent, and the latter then came to Burns in person and urged his qualifications as a lawyer to successfully conduct the ease. Burns explained that he was negotiating a settlement with the railroad and would not employ an attorney at that time, and a week later the respondent came again and offered to have his own doctor examine the witness without charge.
The wife of this witness corroborated his testimony, and explained how Barrett called, first representing himself as a railroad switchman. The respondent had the Interstate Commerce Commission report of this accident on the occasion of one of his calls, and during the course of the interview the respondent stated that large companies succeeded in taking advantage of injured persons through the signing of releases and so on, to the detriment of the former, and he offered to finance the husband as well as the railroad company was then doing, pending the negotiations. In spite of the fact that Burns refused to employ the respondent, the latter called upon him again, for the same purpose, in the month of November, 1932.
The wife testified that, when Barrett called, he said he represented Mr. Rowe but that he would not leave a lawyer’s card because, if he did so, he would run the risk of being sent to jail for so doing, under the laws of the state of New Jersey. However, he wrote respondent’s name and address on a slip of paper, and left it with Mrs. Burns.
There were other instances of solicitation concerning which we forbear to comment, particularly the Sofield case, for the reason that this injured man called upon the respondent in his office in New York in company with another client of the respondent, and it is not thought that the evidence completely demonstrated that the respondent caused this client (O’Connor) to solicit the retainer.
In general, it may be said that the respondent’s attitude in the handling of this proceeding, and as a witness in his own behalf, created the impression in the minds of the court that his sense of responsibility for the observance of professional standards is signally deficient.
In the preliminary hearing of this matter before the Senior Judge, the respondent undertook to procure the presence of Barrett as a witness, but he failed to do so, although he was in communication with the latter as recently as one week prior to the hearing before this court. He did not subpoena Barrett as a witness; nor did he seek to examine him under commission prior to the hearing before this court, although he testified before the court that Barrett resided in Scranton, Pa., having stated at the preliminary examination that he resided in Queens county in this district. Barrett had been employed by the respondent to make special “investigations,” and had been paid for so doing, within the past year.
Rowe’s previous experiences with employees soliciting retainers, namely, one Meóla and one Williamson — both of whom were brought up on charges for soliciting cases— failed apparently to make any impression upon the respondent. As recently as during the month of May, 1933, and after the institution of these proceedings, Rowe called upon an injured man by the name of James Maloney, residing in New York City, according to Maloney’s testimony; although the respondent denied having done this, at first, he later admitted that he did make the call to see if he could get Maloney’s ease.
This call was preceded by one made by the said Barrett and O’Connor, the client who introduced Sofield to Rowe, which-would be entirely consistent with an arrangement between the respondent and O’Connor as well as one between him and Barrett, to procure cases for the respondent.
Upon the evidence as a whole, we are persuaded that the respondent has deliberately and intentionally violated the requirements of Canon 28 of the Canons of Ethics, and has thus challenged the purpose of this court in adopting them as herein stated.
The respondent is suspended from practice as an attorney in this court for a period of three years, subject to reinstatement at the end of that time upon a proper showing that during the period of suspension he has refrained from unprofessional conduct in any aspeet.
The court will file an order in ten days, conforming to this decision. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218839/ | AVIS, District Judge.
The bill in this ease prays for the assignment and transfer of the right, title, and interest of defendant in certain inventions of defendant, which, it is alleged, belong to the plaintiff, because of a certain claimed contract of employment between the parties, plaintiff and defendant. Plaintiff alleges and claims it has proven that the defendant, a consulting engineer with inventive ability, was employed by it in research work to recover phosphate rock from other mineral with which it commingled, so as to make such recovery profitable, and to avoid the processes then in use by other parties, upon which patents had been issued, which patent processes could not be used by the plaintiff without infringement.
The question involved is one of contract. The plaintiff claims rights to all discoveries and inventions of the defendant, while he was in the employ of the plaintiff, under what is termed by plaintiff as an express contract, and under which the result of the work of the defendant was to belong to his employer, the plaintiff in this suit. The plaintiff secondly claims that, if there was not an express contract, the evidence shows that the defendant was employed by the plaintiff to develop a process and machinery which would accomplish the purpose desired, and that the result of such investigation vests'ln the plaintiff, the employer, the title to the patents issued, or to be issued thereon, under the doctrine established in the case of Standard Parts Company v. Peck, 264 U. S. 52, 56, 44 S. Ct. 239, 68 L. Ed. 560, 32 A. L. R. 1033.
Considerable time was taken at the trial in developing the facts with relation to the various processes in use for separating phosphate rock, but, as I view the case, it is not necessary for me to discuss any of these processes, as the question involved is whether an express contract was made, entitling the plaintiff to the result of work of the defendant, or, in the alternative, whether the employment was of' such a nature, regardless of any express contract to that effect, to vest plaintiff with title to the processes of invention.
Defendant claims that the. minds of the parties never met; that no 'express contract was ever made by which the plaintiff was to have the benefit of defendant’s investigations; that the employment by the plaintiff of the defendant did not constitute the position of employer and employee, but that the defendant was an independent consulting *39chemist, and, although paid by the plaintiff for making eez’taiiz investigations, the insult was foz’ tlze benefit of the defendant, and that the plaintiff could have no greater interest than shop rights in the invention developed; that the invention was conceived by defendant and developed long prior to his employment by the plaintiff, and by reason thereof plaintiff is not entitled to patents to be issued; and that, as regards the cross-wire invention, it was developed while the defendant was employed by the U. S. Phosphoric Products Corporation, a separate company, upon a distinct and separate agreement, and that consequently the plaintiff can claim no rights in this invention.
The inventions involved, coming out of the original investigation, are represented by two patent applications, prepared by John F. Neary, patent attorney for the plaintiff, resulting from conferences with, and information from, the defendant, which have been filed in the Patent Office, and have, respectively, serial numbers 394739 and 394740, and the cross-wire invention was submitted to Mr. Neary, but before completion of the application the defendant revoked the power of attorney. The evidence shows, however, that subsequently an application embodying this cross-wire invention was filed in the Patent Office.
The plaintiff’s claim of express contract is based upon sundry telegrams and letters, offered in evidence, and the testimony of witnesses as to verbal conversations with the defendant.
As hez’einbefore stated, Mr. Martin was a consulting engineer, and it appears, as such, he was at times engaged, prior to the negotiations leading up to his alleged employment by the plaiiztiff, in research work on the method of recovery of minerals from crude ores containing gangue.
Mr. Neary represented the plaintiff and. conducted the negotiations with Mr. Martin.
Without referring specifically to any of the evidence pertaining to his authority, I am satisfied that within the scope of the matters eiztrusted to him any contracts or agreements made by him with Mr. Martin were valid and binding upon the plaintiff.
Some time in the fall of 1928, Mr. Martin had requested Mr. Neary to obtain for Martin some phosphate rock that could be used in experiments he was then conducting. This was forwarded, and Neary, on December 17, 1928, wrote to Martin, requesting information as to the result of Martin’s experiments. On December 21, 1928, Martin answered this letter, requesting other ores.
Subsequently, and after consultation between Mr. Neary and his clients, the negotiation betweeiz the parties was initiated by a telegram, from Neary to the defendant, who was then in Florida, which read as follows:
“Western Union
“Day Letter January 25,1929
“R. B. Martin, General Delivery, Welaka, Florida
“Have you become involved with Bier-man or the Cyanamid Company or any other interest in your flotation work? Stop If not, are you willing to undertake some research work on phosphate rock for my client on a per diem basis, the result of the work to belong to the employer. Stop If so, what would you charge per diem? Stop If terms can be agreed upon they want you to start work while in Florida.
“John F. Neary”
Subsequent to this telegram, correspondence was had between the parties by telegraph and mail, copies thereof being here inserted :
“Western Union
“1929 Jan 27 PM 6 12
“JHA 196 73 NL — PALATKA FLO 27
“John F. Neary- — ■
“43 Exchange Place New York NY—
“Thank you for your wire Have no arrangement with Cyanamid Company or Bier-man Stop Hesitate at this time to undertake research on per diem basis as magnitude of their problem unknown quantity and solution of it might involve much time for this reason would prefer to examine conditions before undertaking work and suggest you arrange for me to make such examination while in Florida and I will report to you-with my recommendations.
“R. B. Martin”
“R. B. Martin
“520 Pine Street
“Roselle, New Jersey
“Welaka, Florida
“January 27, 192-9
“Mr.. John F. Neary, 43 Exchange Place, New York City.
“Dear Mr. Neary: I am enclosing a confirmation of the night letter I am sending you today.
“You will readily appreciate my difficulty in fixing some equitable per diem fee without a knowledge of their conditions. I am will*40ing to undertake an examination on any basis you might arrange.
“With kindest regards, I am
“Sincerely yours,
“RBM — M R. B. Martin”
“Western Union-
“Night Letter January 29,1929
“R. B. Martin, Palatka, Florida
“Your wire twenty-seventh. Believe no difficulty will arise out of magnitude of problem or time for working. Stop We can arrange to fit it in with other requirements. Stop Suggest you meet Mr. Case of Phosphoric Company at Tampa about February eleventh. He will be at Tampa for about a month after that time. Stop Write me at once your itinerary so I can arrange with Case for time of meeting at Tampa. Stop Acknowledge receipt by wire.
“John F. Neary”
“R. B. Martin
“520 Pine Street
“Roselle, New Jersey
“Welaka, Florida
“January 30,. 1929.
“Mr. John F. Neary, 43 Exchange Place, New York City.
“Dear Mr. Neary: I received your wire today, and have acknowledged its receipt by wire.
“I will be glad to meet Mr. Case at any time.
“My present plans call for being in Miami on Monday, February 4th, and in Tampa about the 7th or 8th. Telegrams could be sent in care of Western Union, to be called for.
“I am sending you a crate of oranges from down here. I found them to be very fine. I hope they reach you in good order.
“With kindest'regards, I am
“Sincerely yours,
“RBM — M R. B. Martin”
“February 7, 1929
“Mr. R. B. Martin C/o General Delivery Tampa, Florida.
“Dear Mr. Martin: I am enclosing a copy of a wire that I am sending you today. Will you be good enough to get in touch with Mr. Case as soon after his arrival in Tampa as possible and go over the ground with him?
“What he is desirous of having you do is to study their raw material and the contemplated products, and then to see if you can develop, by research, an agent that will get away from the Minerals Separation patents. These patents cover the use of fatty acids and a soap, together with sodium silicate. This combination is probably patentable. What you will have to do is to avoid the use of fatty acids and the soaps, or either of them, although you need not avoid the use of sodium silicate in combination with some substance other than a fatty acid and a soap.
“I would suggest that after you have made such study of the problem as you can in Tampa, that you either there or here carry on such experiments as occur to you in a preliminary way. Before you go too far with your work, I think you ought to consult with me, if I am here (if not, with Mr. Yerxa and possibly with Dr. Pond) for the purpose of determining whether or not the agent that you have in contemplation is outside of the Minerals Separation patents. For your information, I am sending you copies of two patents' belonging to Minerals Separation, namely, No. 1,492,904, to Sulman and Edser, and No. 1,547,732, to Broadbridge and Edser, and also a patent to Whitaker, No. 1,457,680. There may be other patents that we would need to consider in this connection, but for the present I think these patents will give you the field within which you must not venture, if you are to produce anything useful to the U. S. Phosphoric Products Company.
“I would suggest that you keep in close touch with my office and with Dr. Pond in the work that you do, so that we may be sure that no time will be spent upon reagents that are covered by the Minerals Separation patents. We ought to all be in agreement upon this subject before any extended work is done with any particular reagent.
“I am sending a copy of my telegram and of this letter to Mr. Case, for his information.
“Very truly yours,
“J.F.N./O John F. Neary”
“Western Union
“Night Letter February 7, 1929
“R. B. Martin, C/o Western Union Tampa, Florida
“(To be called for).
“A. H. Case will be in Tampa about February eleventh. Can be reached at Palace of Florence Apartments, Davis Island, Tampa, Telephone Number H one two nine five Tampa. Stop Suggest you leave question of compensation for me to arrange. Am writing you today to Tampa General Delivery.
“John F. Neary”
*41“R. B. Martin
“520 Pine Street
“Roselle, New Jersey
“St. Petersburg Fla.
“February 14, 1929.
“Mr. John F. Neary, 43 Exchange Place, New York City.
“Dear Mr, Neary: I acknowledge the receipt of your telegrams and letter of February 7th. with enclosures, for which I beg to thank you.
“I telephoned Mr. Case on Monday, and made an appointment to see him yesterday, Wednesday. We had a short general talk, and as he is slightly indisposed, put off our visit to the works until Monday next.
“After our inspection, I will be able to report at more length.
“Sincerely yours,
“RBM — M R. B. Martin”
“Western Union
“1929 Feb 16 AM 11 47
“MP56 39 DL Tampa Flo 16 1109A
“A. H. Case Palace of Florence Apts., Davis Island
“Unable to reach you by telephone this morning Stop Am leaving St. Petersburg and stopping at Babson Park for next few days telephone eight seven eight R please advise me where to meet you on Monday morning and at what time
“R. B. Martin”
“R. B. Martin
“520 Pine Street
“Roselle, New Jersey
“Babson Park, Fla.,
“February 19, 1929
“Mr. John F. Neary 43 Exchange Place, New York City.
“Dear Mr. Neary: I met Mr. Case in Bartow on Monday morning, and he took me to the pit and washery of the Phosphate Mining Co., near Mulberry. He is arranging to send to me at Roselle such samples of phosphate as I will need in my preliminary work.
“I am leaving here on Friday of this week, to be in Washington by March first. In care of Mr. Semmes’ office will be my next address.
“Sincerely yours,
“RBM — M R. B. Martin”
I believe the evidence sustains my conclusions of fact that subsequently, some time in March or April of 1929, Mr. Martin went to Mr. Neary’s office in New York, and there discussed the terms of the agreement as to Martin’s compensation and it was then agreed that Martin was to receive $50 per day for his time spent in research and experimental work, and, if the research resulted in an invention of a process, patentable, and which would accomplish the purpose desired, a total compensation of not less than $5,000 and not to exceed $10,000; the exact amount within these limits to be determined by the employer, depending upon the value of the result.
Considering the telegrams and letters, and this verbal agreement, I am convinced that there was a complete coming together of the minds of the parties, constituting an express contract, which included the understanding that the result of the work was to belong to the employer, the plaintiff in this suit. No other conclusion can be fairly reached in view of all of the circumstances. The defendant readily accepted the employment; took no exception to the statements in the original telegram; continued his research work; consulted with Mr. Neary as to the results; forwarded to Mr. Neary the facts upon which applications for patents could be prepared; presented his 'bills for services rendered on the per diem basis: signed receipts indicating the employment, and certifying in the last receipt that this work was not then completed; and accepted cheeks or drafts in payment of his fees in accordance with contract made as’ claimed by the plaintiff.
Although the defendant, on the stand, denied the making of the contract, his actions can only be construed to indicate that, at the time he was rendering services, he was gratified to have the opportunity of earning the moneys which the plaintiff had agreed to pay. Subsequently, when it appeared that the invention might be valuable, his evidence indicates that he was desirous of retaining the discoveries for his personal benefit.
Although it appears not to be necessary to discuss the other legal principles advanced by the plaintiff, surely the evidence justifies the conclusion that the defendant was an employee of the plaintiff, and was employed to make researches and experiments to devise a new method of separation of phosphate rock. Whether or not the result worked out, as originally contemplated, or resulted in the origination of a new method, these discoveries were made in the course of employment, and became the" property of the plaintiff.
*42The foregoing applies to the inventions covered by the two original applications for patents, but the invention of the cross-wire apparatus presents a somewhat different issue. It is true that the trip made to Florida by Mr. Martin in the winter and spring of 1930 was for the purpose of testing out, in a commercial way, the apparatus which had been devised, and that prior to going to Florida Mr. Martin had frequently been in contact with Mr. Neary, inquiring as to the time when this “pilot plant” would be ready to operate, and that it might be considered to have been under the'original contract. However, the actual arrangements to go to Florida, and the fixing of compensation, appear to have been made in a letter by Mr. Martin to Mr. Case, and this, together with the latter’s reply by telegram and letter, is inserted :
“520 Pine Street
“Roselle, New Jersey
“January 3, 1930
“Mr. A. H. Case, C/o U. S. Phosphoric Products Corporation 61 Broadway New York, N. Y.
“Dear Mr. Case: Mr. Neary has informed me that you would like to have me go to Tampa on a salary basis, rather than at my per diem of $50. I will superintend the ex-, perimental work and operation of the pilot plant at $700' per month and pay my own living ajid traveling expenses. It is my belief that not over three months will be required. It is my understanding that I will not be required to do work other than that connected with the phosphate concentration tests and that during temporary cessation in the work caused by breakdowns or by waiting for supplies I will not be required to remain at Tampa.
“If this arrangements meets with your approval, I am prepared to leave for Tampa within one week after hearing from you.
“Very truly yours,
“R.B.M./S. R. B. Martin”
“Telegraphed Mr. Martin to come on these terms.
“A. H. C.”
“Western Union
“January 8,1930
“N309 16 NM — Tampa, Flo 8
“R. B. Martin 520 Pine Street Rósele, N. J.
“Referring your letter of January third terms proposed by you entirely satisfactory. Please report soon as possible.
“U.- S.'-Phosphoric Products Corpn.
“A.' H. Case”
“R. B. Martin
“520 Pine Street
“Roselle, New Jersey
“Washington, D. C.
“January 13, 1930
“Mr. A. H. Case, U. S. Phosphoric Products Corporation, Tampa, Florida.
“Dear Mr. Case. Responding to your telegram of January 8th, I have wired you as follows:
“ 'Enroute Tampa. Expect to arrive early part of next week.’
“Very truly yours,
“RBM — M [Signed] R. B. Martin”
The work in Florida was in continuance of the original contract, but, according to the contract made, did not contemplate more than the demonstration of what had already been invented. I am inclined to believe that it was not intended that further research or experiments should be made. The invention of the pross-wire attachment occurred during this demonstration, and while defendant was employed by the plaintiff for the purpose of developing a complete and efficient apparatus. Even though there was no express agreement at that time, the invention so devised is the property of the plaintiff company under the doctrine expressed in Standard Parts Company v. Peck, 264 U. S. 52, 44 S. Ct. 239, 68 L. Ed. 560, 32 A. L. R. 1033, supra.
There can be no question, under the evidence, but that Martin at the time he rendered these services in Florida in 1930 was actually the employee of the plaintiff.
I find as facts, as applied to the original agreement:
(1) That a valid contract was entered into between the plaintiff and the defendant for the services of defendant, in research and experiment for the accomplishment of a specific purpose, and that the results were to vest in the. plaintiff.
(2) That, in any event, the defendant was an employee of the plaintiff, to make research and conduct experiment's to accomplish a specific purpose, in the nature of the segregation of phosphate rock from gangue.
(3) That in this transaction the defendant was an employee of the plaintiff, and not an independent contractor or operator.
(4) That any conception of the process which may .have occurred to the defendant prior to making the contract was not of a complete nature, never put in practice, and was developed to a workable point only after *43the defendant became an employee of the plaintiff.
As to the cross-wire invention:
(5) That the defendant’s operations in Florida in 1930 were as an employee of the plaintiff.
(6) That, although the invention at this time was not accomplished directly under the original contract, the defendant was there to test out the other apparatus, and any new device created to accomplish the original purpose was created while in employment of plaintiff for that specific purpose.
As applicable matters of law, I find:
(1) The defendant, having entered into an agreement with the plaintiff under which the defendant conducted research work and created inventions, and the agreement providing that the result of the work was to belong to the employer, the plaintiff is entitled to have the two original applications for patents, filed as aforesaid, assigned to it. Hull v. Pitrat (C. C. S. D. Ohio W. D.) 45 F. 94. Appeal in Supreme Court dismissed by stipulation of counsel, see 145 U. S. 650, 12 S. Ct. 986, 36 L. Ed. 847; Conway v. White (C. C. A. 2) 292 F. 837; Conway v. White (C. C. A. 2) 9 F.(2d) 863; Triumph Electric Co. v. Thullen (C. C. A. 3) 235 F. 74, 75. See, also, 36 Cyc. 558. Wege v. Safe-Cabinet Co. (C. C. A. 6) 249 F. 696; No-Leak-O Piston Ring Co. v. Chandlee, 53 App. D. C. 128, 289 F. 526.
(2) The defendant engaged for the specific purpose of making research and investigation to develop a phosphate rock separating process, as an employee of the plaintiff, if without a specific agreement as to the plaintiff being entitled to the result of the employment, his inventions would nevertheless vest in the plaintiff, who, under these circumstances, is entitled to have an assignment of the inventions evolved during such employment. Standard Parts Company v. Peck, 264 U. S. 52, 44 S. Ct. 239, 68 L. Ed. 560, 32 A. L. R. 1033, supra; Goodyear Tire & Rubber Co. v. Miller (C. C. A. 9) 22 F. (2d) 353.
The full consideration for the assignment has not yet been paid. What balance is due.the defendant cannot be ascertained from the record. No tender has been made by the plaintiff, and such tender, before suit, was not required under the circumstances of this ease, where the defendant, before issuance of the patent, revoked the power of attorney of Mr. Neary and denied the rights claimed by the plaintiff. However, some adjustment of this should be made before the assignment is completed, which may be taken up at the time the decree is signed.
Decree for specific performance will be entered in accordance with this memorandum. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218840/ | HOPKINS, District Judge.
This controversy involves the validity of the “Bone Dry” intoxicating liquor law of Kansas.
Plaintiff seeks a restraining order against the defendants, and asks for the assembling of a three-judge court to hear the ease on application for an interlocutory injunction.
Roland Boynton, Attorney General for Kansas, has filed a motion to dismiss the bill for want of equity and lack of jurisdiction of this court to hear the cause.
The plaintiff’s bill prays that the defendants be enjoined from enforcing the intoxicating- liquor laws of Kansas (article 21, chapter 21, of the Revised Statutes of the state of Kansas 1923 [21 — 2101 et seq.]), in so far as such laws prohibit the sale of malt beverages containing not more than 3.2 per centum of alcohol by weight. Plaintiff alleges and contends that he has secured a dealer’s permit in fermented liquors from the collector of internal revenue for the District of Kansas, and that, in so far as the intoxicating liquor laws of Kansas prohibit the sale of such malt beverages, they are unconstitutional and void, being repugnant to the Fourteenth Amendment and to clause 2 of article 6 of the Constitution of the United States.
Plaintiff’s hill shows that all of the parties to the action, are residents and citizens of the state of Kansas.
The defendants contend that the plaintiff’s bill fails to present a substantial federal question, and, since there is no diversity of citizenship shown on the face of the bill, the court is without jurisdiction to hear the cause, and, such being the case, the District Judge may rule on the motion to dismiss the plaintiff’s bill without convening a three-judge court for that purpose.
Does the plaintiff’s bill on its face disclose a lack of jurisdiction? And, if there is a failure of jurisdiction, is it necessary to convene a three-judge court for the purpose of dismissing it?
It appears plain, there being an absence of diversity of citizenship, that, if the bill fails to present a substantial federal question, this court is without jurisdiction, and the hill must fall of its own weight. There is, therefore, but one question before this court, Does the plaintiff’s attack upon the constitutionality of the intoxicating liquor laws of the state of Kansas present a substantial federal question in view of the previous decisions and construction of the intoxicating liquor laws of the state of Kansas and of the Federal Prohibitory Act? This, I think, must he answered in the negative.
The constitutionality of the intoxicating liquor laws of the state of Kansas has been determined by her Supreme Court and by the Supreme Court of the United States. In *45Mugler v. Kansas, 123 U. S. 623, 8 S. Ct. 273, 31 L. Ed. 205, it was held:
“The Prohibition Law of the State of Kansas is not in conflict with that clause of the Fourteenth Amendment of the Constitution of the United States, which provides that
“ ‘No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law.’
“It belongs to the legislative department to exert what are known as the police powers of the State, and to determine, primarily, what measures are appropriate or needful for the protection of the public morals, the public health, or the public safety — subject to the power of the courts to adjudge whether any particular law is an invasion of rights secured by the Constitution.” Syl. pars. 1 and 3.
See, also, State v. Sherman, 81 Kan. 874, 107 P. 33, 135 Am. St. Rep. 403. Also appendix attached to this opinion, giving digest of territorial and state laws of Kansas.
The fact that Congress has seen fit to liberalize the federal prohibitory liquor laws authorized by the Eighteenth Amendment to the Constitution by allowing an increased alcoholic content of beer does not, in my opinion, affeet the existing liquor laws of the several states. The National Prohibition Act (27 USCA § 1 et seq.) passed by Congress in 1919' provided that intoxicating liquors within the meaning of the act were such liquors that contained in excess of one-half of 1 per cent, of alcohol by volume. That act was held to be constitutional. The states have concurrent jurisdiction with the federal government to enforce the Eighteenth Amendment to the Constitution by appropriate legislation.
The Eighteenth Amendment specifically provided that: “The Congress and the several States shall have concurrent power to enforce this Article by appropriate Legislation.”
The constitutionality or validity of a state’s statute is not affected by the mere fact that it has a broader scope than the provisions of the National Prohibition Act upon the same subject. Van Oster v. Kansas, 272 U. S. 465, 47 S. Ct. 133, 71 L. Ed. 354, 47 A. L. R. 1044.
A similar question was under consideration in McCormick & Co. v. Brown, 286 U. S. 131, 52 S. Ct. 522, 527, 76 L. Ed. 1017, in which the court quoted from United States v. Lanza, 260 U. S. 377, 43 S. Ct. 141, 67 L. Ed. 314, as follows: “In effect the second section of the Eighteenth Amendment put an end to restrictions upon the state’s power arising out of the federal Constitution, and left her free to enact prohibition laws applying to all transactions within her limits. To be sure, the first section of the amendment took from the states all power to authorize acts falling within its prohibition, but it did not cut down or displace prior state laws not inconsistent with it. * ® * We have here two sovereignties, deriving power from different sources, capable of dealing with the same subject-matter within the same territory. Each may, without interference by the other, enact laws to secure prohibition, with the limitation that no legislation can give validity to acts prohibited by the amendment. Each government in determining what shall be an offense against its peace and dignity is exercising its own sovereignty, not that of the other.”
The McCormick Case, supra, also laid at rest the plaintiff’s claim that his right to sell malt beverages in Kansas in opposition to the Kansas intoxicating liquor laws has been strengthened by the fact that he has obtained from the collector of internal revenue for the District of Kansas a retail dealer’s permit in fermented liquors. It was there held that the fact a federal permit had been issued for the sale of certain preparations containing alcohol did not prevent the state from placing additional restriction upon the sale of such preparations.
The intoxicating liquor law of Kansas provides that:
“It shall be unlawful for any person to directly or indirectly manufacture, sell, barter, or give away, furnish or keep or have in his possession for personal use or otherwise, any spirituous, malt, vinous, fermented or other intoxicating liquors. * * * ” R. S. 21 — 2101, Laws 1917, ch. 215, § 1.
“All liquors mentioned in Laws of 1917, ch. 215, sec. 1, as amended, shall be construed and held to be intoxicating liquors within the meaning of this act.” R. S. 21 — 2109.
Malt and fermented liquors being specifically mentioned in the section, beer containing 3.2 per cent, alcohol must necessarily fall within the statutory definition of intoxicating liquors.
In City of Topeka v. Heberling, 134 Kan. 330, 5 P.(2d) 816, an instruction that, as a *46matter of law, “home brew,” “when containing three or more per cent, of alcohol, would be considered as intoxicating,” was upheld by the Kansas Supreme Court. The same court has held that beer is presumed to be intoxicating under the Kansas prohibitory liquor law. State v. May, 52 Kan. 53, 34 P. 407.
The right to regulate the use, or to prohibit the use, manufacture, or sale, of liquor within a state, is a valid exercise of the police power of that state, the exercise of which is reserved to the several states by the Constitution of the United States. The exereise of a valid police power by a state violates none of the property rights secured under the Fourteenth Amendment to the Constitution of the United States. These propositions are so well settled that citations of authority are hardly necessary. However, see McCormick & Co. v. Brown, 286 U. S. 131, 52 S. Ct. 522, 76 L. Ed. 1017; Crane v. Campbell, 245 U. S. 304, 38 S. Ct. 98, 62 L. Ed. 304; Butler v. Perry, 240 U. S. 328, 36 S. Ct. 258, 60 L. Ed. 672; Eberle v. Michigan, 232 U. S. 700, 707, 34 S. Ct. 464, 58 L. Ed. 806; Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192, 201, 33 S. Ct. 44, 57 L. Ed. 187; and Chicago, B. & Q. R. Co. v. McGuire, 219 U. S. 549, 568, 31 S. Ct. 259, 55 L. Ed. 339.
The plaintiff seeks to raise a federal question by alleging that the “Bone Dry Law” of Kansas is unconstitutional. It is argued' in this connection that the Kansas law is in conflict with the National Prohibition Act and the recent Revenue Act removing from the operation of the National Prohibition Act the sale of 3.2 per cent. beer. But plaintiff apparently overlooks the rule clearly stated in Colonial Drug & Sales Co. v. Western Products Co. (C. C. A.) 54 F. (2d) 216. There it was said that this question has been so often decided that it has ceased to be a federal question. That rule is applicable and controlling in the instant case. The identical question has been decided many times by the United States Supreme Court; that is to say, a state may legislate against intoxicating .liquors as strictly as it reasonably desires. The fact that it goes farther than the acts of Congress makes no legal difference. Congress may legislate as it desires within its own field, and the state may legislate as it desires within its own field, so long as the legislation does not attempt to authorize that which the Eighteenth Amendment prohibits. United States v. Lanza, 260 U. S. 377, 43 S. Ct. 141, 67 L. Ed. 314; Vigliotti v. Pennsylvania, 258 U. S. 403, 42 S. Ct. 330, 66 L. Ed. 686. Since this question has been definitely decided, it ceases to be a federal question.
While it may not be necessary to a decision in this ease, it may be observed in passing that the federal act (27 USCA § 64a et seq.), allowing the manufacture and sale of 3.2 per cent, beer prohibits its sale in states or territories where the manufacture, sale, or transportation of fermented malt or vinous liquor containing 3.2 per cent, alcohol is prohibited by law.
Section 6 of the act (27 USCA § 64j) provides that: “In order that beer, ale, porter, wine, similar fermented malt or vinous liquor, and fruit juice, containing 3.2 per centum or less of alcohol by weight, may be divested of their interstate character in certain cases, the shipment or transportation thereof in any manner or by any means whatsoever, from one State, Territory, or District of the United States, or place non-contiguous to but subject to the jurisdiction thereof, or from any foreign country,, into any State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, which fermented malt or vinous liquor or fruit juice, is intended by any person interested therein, to be received, possessed, sold, or in any manner used, either in the original package or otherwise, in violation of any la-w of such State, Territory, or District of the United States, or place noncontiguous to but subject to the jurisdiction thereof, is hereby prohibited. *• * *”
Section 7 (27 USCA § 64k) provides that: “Whoever orders, purchases, or causes beer, ale, porter, wine, similar fermented malt or vinous liquor, or fruit juice, containing 3.2 per centum or less of alcohol by weight, to be transported in interstate commerce, except for scientific, sacramental, medicinal, or mechanical purposes, into any State, Territory, or the District of Columbia, the laws of which State, Territory, or District prohibit the manufacture or sale' therein of such fermented malt or vinous liquor or fruit juice for beverage purposes, shall be fined. * *”
From which it would appear that the sale of 3.2 per cent, beer for transportation in Kansas would be a violation-of the federal statute.
Under the Judicial Code § 266, as amended (28 USCA § 380), the question of the unconstitutionality of a state statute must be a substantial one to warrant the in*47tervention of a three-judge court. If it appears upon the face of the bill that the question is not a substantial one, the convening of a three-judge court is not 'warranted. Independent Gin & Warehouse Co. v. Dunwoody (D. C.) 30 F.(2d) 306; United Drug Co. v. Graves (D. C.) 34 F.(2d) 808. If it clearly appears upon the face of the hill that there is no substantial federal question involved, it would he useless to go to the inconvenience and expense of convening a court of three judges to determine that an injunction should not issue.
Plaintiff cites and relies upon the case of Ex parte Northern Pac. R. Co., 280 U. S. 142, 50 S. Ct. 70, 74 L. Ed. 233, in support of his contention that a single District Judge is without jurisdiction to dismiss the bill. This decision is not controlling. The federal District Judge to whom that case was presented issued a temporary restraining order pending a final determination by a three-judge court upon the merits as to whether or not an interlocutory injunction should be issued. Having granted a temporary restraining order, he had already committed himself to the fact that there was a substantial federal question involved, and, of course, was without jurisdiction to hear either the motion to dissolve the temporary restraining order or the motion to dismiss the hill on its merits.
In conclusion, it may be observed that it has been repeatedly held that the Kansas intoxicating liquor laws are not in violation of the Constitution of the United States. It has been specifically provided that the states have concurrent power with Congress to pass their own legislation enforcing the Eighteenth Amendment to the Constitution of the United States. It has been held by the Supreme Court of the United States that each state, in determining. what shall he an offense against its peace and dignity, is exercising its own sovereignty, not that of the other. It would, therefore, in my opinion, he useless to go to the inconvenience and expense of convening a three-judge court for the purpose of again citing the many decisions on this question.
The application for a temporary restraining order and the application to convene a three-judge court to pass upon the question of the interlocutory injunction will therefore be denied, and the bill be dismissed.
Appendix.
Prohibition of the beverage liquor traffic has had a progressive development in Kansas from initial regulation of the saloon and tavern down to and including “bone'dry.” The Supreme Court of Kansas, perhaps more than any other court of last resort, has'interpreted the successive acts of the Legislature and dealt with the liquor question in all its numerous phases. This note contains a digest of such laws and the principal decisions of the Supreme Court of Kansas, pertaining thereto.
Territorial Laws.
Statutes 1855, c. 53, § 29: Crimes and Punishments. “Every person who shall erect or keep a booth, tent, stall or other contrivance for the purpose of selling or otherwise disposing of any wine, or spirituous or fermented liquors, or any drink of which wine, spirituous or fermented liquors form a part, within one mile of any camp or field-meeting for religious worship, during the time of holding such meeting, shall, upon conviction, he adjudged guilty of a misdemeanor, and punished by fine not exceeding ten dollars. * * * Chap. 53, Sec. 34, Every person who shall expose to sale any goods, wares or merchandise, or shall keep open any ale or porter house, grocery, or tippling shop, or shall sell or retail any fermented or distilled liquor, on the first day of the week, commonly called Sunday, shall, on conviction, be adjudged guilty of a misdemeanor and fined not exceeding fifty dollars.”
Statutes 1855, c. 64, provided that a special election be held on the first Monday of October, 1855, and on the first Monday of October, every 2 years thereafter, in each municipal township in every county in the territory, and in each incorporated city or town to take the vote of the people upon the question whether dramshop and tavern licenses should he issued in the township or town for a period of 2 years thereafter ; that, upon such election being held, it should he the duty of the county tribunal having control of the county business for the several counties in the territory to examine, ascertain, and adjudge in what township, or incorporated cities, licenses should he issued; that, before any licenses should he issued to any person applying for the same, such person should present to the tribunal a petition signed by a majority of the householders of the township, or of the city block or square of the town in which it is to be kept, recommending the applicant as a fit person to keep the same; that a tax should he levied for every license granted of not less than $10 nor more than $500 for county purposes; that every person operating without a license should be fined not less than $100 for each offense. Any person selling to ■ slaves without the consent of the owner was deemed guilty of a misdemeanor. Any person selling liquor on Sunday should he guilty of a misdemeanor, and in addition should forfeit his. license for a period of 2 years; that, before any person should be licensed as a dramshop keeper, he should execute a bond in the sum of $2,000, conditioned that he would not violate the provisions of the act.
Statutes 1855, c. 77, provided that no liquor should be sold within one mile of the Shawnee Manual Labor School during the sitting of the then Legislative Assembly, and any person violating the act should be deemed guilty of a misdemeanor and fined not less than $50 or imprisoned not more than 60 days.
Statutes 1855, c. 84, § 1, provided a fine of not less than $200 nor more than $500 for selling liquor to an Indian and imprisonment not less than one month nor more than six in the county jail.
Sections 2 and 3 provided: “If any person shall introduce or attempt to introduce any spirituous liquors or wine into the Indian country, except such supplies as shall he necessary for the officers of the United States and troops of the service, under the direction of the war department, such person shall forfeit and pay a sum not exceeding five hundred dollars nor less than two hundred dollars, and he imprisoned as in the last section specified; and if any sheriff, constable, justice of the peace, or- other civil officer of this territory has reason to suspect or is informed that any person is about to introduce or has introduced any spirituous’ liquors or wine into the Indian country, in’ violation of this act, it shall he lawful for such officer to cause the *48boat, stores, packages and places of deposit of such person to be searched, and if any such spirituous liquors or wines are found either in the Indian country, or near on the borders thereof, as show an evident intention to carry'the same into the Indian country, to cause the same to be destroyed, and also to hold to hail or commit the party searched.”
“Any person who shall, within the Indian country, set up or continue any distillery or manufactory of ardent spirits, he shall, upon conviction be subject to a fine of not less than two hundred nor more than five hundred dollars, and not less than one nor more than six months’ Imprisonment in the county jail.” Any Indian found guilty of violation of the above terms shall be subject to one-fourth the penalty prescribed. An Indian shall be a competent witness in any trial under this act.
Laws 1859, c. 91, provided that, before any license be issued to any person for the purpose of operating a dramshop in any township, a petition signed by a majority of the householders of the ward must be presented to the governing body of the town, recommending such person as a fit person to operate the same. Dramshop, tavern keepers and others who came under this act were required to pay a license fee of from $50 to $500 per year. Any person selling intoxicating liquors without a license was to be fined $100 for the first offense while more severe penalties were provided for subsequent offenses. It further provided fines and for the revocation of licenses for the selling of intoxicating liquors on Sundays, Fourth of July, and other stated days. Dramshop keepers were further required to execute bond in the sum of $2,000 that they would not sell to minors, etc. Further provision was made that it should be unlawful for any person or persons by agent or otherwise to sell intoxicating liquors to persons intoxicated or who are in the habit of becoming intoxicated or to married men against the known wishes of their wives. All places where liquor was sold in violation of the act were declared to be a nuisance, and might be abated. It provided a fine of $5 for intoxication. Any person who caused the intoxication of another was liable for reasonable compensation to any person who cared for such intoxicated person. Dependents of any intoxicated person were given the right to bring suit for damages actually sustained by reason of such intoxication against the person so selling the intoxicating liquor. The giving away of intoxicating liquor or other devices or shifts to evade the provisions of this act were to be deemed an unlawful sale of liquor. The act further provided methods of procedure and stated the act should not apply to cities over 1000 inhabitants; such cities had full power to regulate licenses and dispose of the proceeds thereof.
Laws 1860, c. 73, provided that any person who sold liquor to the Indians under any circumstances, unless directed by a physician, should he fined not less than $5 nor more than $500 or imprisoned not less than one *month nor more than six months in the county jail.
State Laws.
Comp. Laws 1862, c. 114, provided that any person directly or indirectly selling liquor to an Indian should be deemed guilty of a misdemeanor.
Laws 1867, c. 56, was an act amendatory of the act passed February 11, 1859, providing in substance that, before any dramshop license should be granted to the applicant, the tribunal transacting the county business should be in receipt of a petition signed by a majority of the residents of the township, both male and female over the age of 21 years.
Laws 1867, c. 81, provided that any person who directly or indirectly sells intoxicating liquors in any unorganized county of the state of Kansas should be fined not less than $100 nor more than $1,000, or be confined in the county jail for a term of not less than 4 nor more than 12 months or both. Also that any person giving information that should lead to conviction should be entitled to a sum not less than $50 nor more than $200 to be paid out of the fines collected under the provisions of the act.
Gen. St. 1868, cc. 18 and 19, granted to cities of the first and second classes power to restrain, prohibit, and suppress tippling shops, disorderly houses, and other like resorts.
Gen. St. 1868, c. 35; The tax for running a dram-shop was raised from $50 to $500 to $100 to $500. Penalty for selling intoxicating liquor on Sunday was changed to from $25 to $100, or imprisonment from 10 to 30 days, and, in addition, the license of such dram-shop keeper forfeited for a period of 2 years after conviction; that any person who sold -liquor or gave it away to one whom he knew or had been given notice was an habitual drunkard, or that he was then in a state of intoxication, or to any minor without consent of his guardian, should be deemed guilty of misdemeanor, and fined not less than $5 nor more than $100 or imprisoned 10 to 60 days or both. All places where liquor should be found were declared to be common nuisances. Any person causing the intoxication of another was declared liable to pay compensation to any one taking charge of said intoxicated person in a reasonable amount and $5 per day in addition to said person for each day such intoxicated person should be kept in consequence of such intoxication. Any dependent was given a right of action against any person causing intoxication. Real estate and personal property was held liable for fines and costs. All sales of intoxicants made on credit were declared void, and the debt thereby created not recoverable at law.
Gen. St. 1868, c. 50: Fine for sale of intoxicants to an Indian was changed to not less than $5 nor more than $500.
Gen. St. 1868, c. 53, provided that no intoxicants he given to any prisoner by the sheriff or jailor of any prison, unless the prisoner’s health required it and provided fines for violation thereof. Also that any other person who should sell to any person in jail should be subject to a fine not to exceed $25.
The Proposed Prohibitory Amendment.
Laws 1879, § 1, p. 293: “The following proposition to amend the constitution of the state of Kansas shall be submitted to the electors of the state, for adoption or rejection, at the general election to he held on the Tuesday succeeding the first Monday of November, A. D. eighteen hundred and eighty.
“Proposition — Article fifteen shall be amended by adding section ten thereto, which shall read as follows : The manufacture and sale of intoxicating liquors shall be forever prohibited in this state, except for medical, scientific and mechanical purposes.
“Section 2. The following shall be the method of submitting said proposition to the electors: The ballots shall be either written or printed, or partly written and partly printed, and those voting for the proposition shall vote, ‘for the proposition to amend the constitution,’ and those voting against the proposition shall vote, ‘against the proposition to amend the constitution.’
“Section 3. This resolution shall take effect and he in force from and after its publication in the statute book.’* (Adopted November 2, 1880; votes for, 92,302; against, 84,304.)
Citations applicable thereto: State has power to prohibit manufacture and sale as beverage, Prohibitory Amendment Cases, 24 Kan. 700; law prohibiting manufacture and sale not repugnant to state Constitution, State ex rel. v. Foster, 32 Kan. 765, 3 P. 534; Legislature may absolutely prohibit manufacture or sale of intoxicating liquor, State v. Durein, 70 Kan. 13, 80 P. 987; section cited in discussing Bone Dry Act, and Persistent Violator Act, State v. Berry, 103 Kan. 891, 176 P. 649; rights under Federal Constitution not violated by this act, Mugler v. Kansas, 123 U. S. 623, 8 S. Ct. 273, 31 L. Ed. 205; federal act making liquor subject to state law held valid, In re Rahrer, 140 U. S. 545, 11 S. Ct. 865, 35 L. Ed. 572; State v. Bieber, 121 Kan. 536, 247 P. 875, 48 A. L. R. 252.
Laws 1881, c. 128, § 16: This law provided for the prohibition of tippling shops, saloons, dramshops, clubrooms, etc.
*49Citations applicable thereto: Section held valid. State v. Woodard, 7 Kan. App. 421, 53 P. 278; State v. Topeka Club, 82 Kan. 756, 109 P. 183, 29 L. R. A. (N. S.) 722, 20 Ann. Cas. 320; keeping liquor for personal use not offense under this section, State v. Standish, 37 Kan. 643, 16 P. 66; keeping liquor for sale is punishable without proof of actual sales. State v. Schoenthaler, 63 Kan. 148, 65 P. 235; each delivery constitutes separate offense, State v. Peak, 66 Kan. 701, 72 P. 237; conducting saloon as lodge held unlawful, State v. Bush, 70 Kan. 739, 79 P. 657.
Laws Making Constitutional Amendment Effective.
Laws 1881, c. 128: Any person who should manufacture, sell, or barter intoxicating liquor deemed guilty of a misdemeanor, unless said liquor be sold for medical, scientific, or mechanical purposes. Any one selling intoxicating liquor had to first secure from the probate judge of the county á druggist's permit therefor which was good for one year. A petition signed by at least twelve citizens of the township or city where such business was located was presented to the court, signifying that the applicant was a person of good moral character and lawfully engaged in the business of druggist. Bond was also required in the sum of $2,500 conditioned that the applicant would not dispose of liquor in violation of the terms of the act. In cities and towns of less than 5,000 population, bond was required only in the sum of $1,000. A permit under this act, issued at the discretion of the probate judge (see Stanley v. Monnet, 34 Kan. 708, 9 P. 755 ; Martin v. Probate Judge, 32 Kan. 146, 4 P. 158), who received compensation in the sum of $5 for his services. The permit was to be posted in a conspicuous place in the store where such business was carried on. Any physician deeming it necessary for the health of a patient could procure intoxicating liquor for the patient’s use and give him a written prescription therefor. See State v. Nye, 32 Kan. 201, 204, 4 P. 134, 136; Miller v. Minney, 31 Kan. 522, 3 P. 427. It was necessary that the physician file an affidavit with the probate judge stating that such liquor was necessary for the health of his patient. Each affidavit had to be renewed at the end of 5 years. Any physician making a prescription without affidavit was deemed guilty of a misdemeanor. No druggist could fill any prescription calling for intoxicating liquor until the affidavit of the physician had been filed with the court as provided by this act. No druggist could sell for medical purposes without a written prescription of the doctor prescribing the same, and neither could he sell for mechanical or scientific purposes unless upon affidavit made before some officer authorized to administer oaths. All such applications were filed in probate court at the end of a 30-day period, where they, were then kept for a period of 2 years. Every person who made a false oath was guilty of perjury, and no sales could be made to minors under any condition except upon prescription. Druggists kept a record of all intoxicating liquors sold by them, which was a public record. Any druggist having a permit to sell liquors might sell in quantities of not less than one gallon to any other druggist having a like permit. Section 5 of this act provided that the manufacture of liquors in Kansas except for medical, scientific, or mechanical purposes was forbidden, and any person desiring to do the same was required to present to the probate court of the county in which the business was to be carried on a petition asking for a permit for such purpose. Bond was required in the sum of $10,000. If satisfied with the bond and petition, the probate judge had the right in his discretion to grant a permit for the manufacture of intoxicating liquors for the purposes above stated, the permit to be recorded in the office of the probate judge. The act also provided that the manufacturer keep a complete record of all liquors manufactured by him, sales made, to whom, the kind and quality of the liquor sold, and the price received or charged therefor. Such record was filed quarterly in the probate court. The act provided the liquor was to be sold only in the original package, and then in quantities of less than five gallons. All sales so made were made only upon written application to the manufacturer, verified by affidavit of the applicant. All applications were filed in the office of the probate court 30 days after receiving the same and kept on file by the court 2 years thereafter. All records were open for inspection at all times. Any one not having a permit to sell liquors as provided by this act was deemed guilty of a misdemeanor and fined $100 to $500 or imprisoned in the county jail 30 to 90 days. The act provided more severe penalties for a second and further offense. Any person who manufactured liquor without a permit as provided in this act was deemed guilty of a misdemeanor, and subjected to the same punishment as one who sold without a permit. Any person who possessed a permit and sold liquor for any unlawful purpose or violated any provision of this act was deemed guilty of a misdemeanor and subjected to a fine of $100 to $300 or imprisoned in the county jail 30 to 90 days, and forfeited his permit. More severe penalties were provided for second and other offenses. Intoxicating liquors under this act were defined as any spirituous, malt, vinous, etc., liquors which would produce intoxication. Permits to sell under this act were in force for one year from the date granted. Permits to manufacture lasted for 5 years from date. Any police officer, sheriff, constable, etc., who knew of the violation of any of the provisions of the above act was required to report the same to the county attorney, and, failing to do so, was guilty of a misdemeanor and subjected to fine and removal from office. It was the duty of the county attorney to diligently prosecute such offenses if sufficient grounds existed therefor, and failure to do so was a misdemeanor, and he became subject to fine and removal from office. For each successful prosecution under this act, the county attorney was entitled to a fee of $15.
Citations applicable thereto: This act held constitutional, Intoxicating Liquor Cases, 25 Kan. 751, 37 Am. Rep. 284; courts will take judicial notice of intoxicating qualities of ordinary liquors, Intoxicating Liquor Cases, 25 Kan. 751, 37 Am. Rep. 284. See, also, State v. Sterns, 28 Kan. 154. On the admission of evidence in prosecutions under this section, see State v. Schaefer, 44 Kan. 90, 24 P. 92; beer presumed to be intoxicating liquor, State v. Teissedre, 30 Kan. 476, 2 P. 650; State v. Jenkins, 32 Kan. 477, 4 P. 809; State v. Pfefferle, 36 Kan. 90, 12 P. 406; City of Topeka v. Zufall, 40 Kan. 47, 19 P. 359, 1 L. R. A. 387.
Section 13 of the act last above named provided that all places where intoxicating liquors were manufactured, sold, or given away in violation of the provisions of this act be declared common nuisances. Police officials could abate the same, and the owner thereof was subject to a fine of from $100 to $500 or imprisonment in the county jail from 60 to 90 days or both.
Every person who caused the intoxication of another was liable for reasonable compensation for his care and $5 per day for each day such intoxicated person was kept. Every wife, child, etc., or employer or other person who was injured in personal property by any intoxicate^ person had a right of action against any person, who, by furnishing such intoxicating liquor, caused the intoxication of such person for all damages actually sustained as well as for exemplary damages. See Werner v. Edmiston, 24 Kan. 147; Zibold v. Reneer, 73 Kan. 312, 85 P. 290. Married women had the right to prosecute such an action as if feme sole. A minor could bring the action by his guardian or next friend. This section valid; Durein v. Pontious, 34 Kan. 353, 8 P. 428; Werner v. Edmiston, 24 Kan. 147; Jockers v. Borgman, 29 Kan. 109, 44 Am. Rep. 625; action under this section, see Durein v. Pontious, 34 Kan. 353, 8 P. 428; Jockers v. Borgman, 29 Kan. 109; husband may maintain action, Landrum v. Flannigan, 60 Kan. 436, 56 P. 753; Zibold v. Reneer, 73 Kan. 312, 85 P. 290.
Every person who directly or indirectly maintained, either by himself or by association with oth*50ers, any clubrooms or other place in which intoxicants were sold or given away for distribution among the members of the society, was guilty of a misdemeanor, and liable to a fine of one hundred to five hundred dollars or imprisonment in the county jail 30 days to 6 months.
Cases applicable to the above provision are: State v. Nickerson, 30 Kan. 545, 2 P. 654; State v. Peak, 66 Kan. 701, 72 P. 237. Moving liquors across state line for sale within state held unlawful, State v. Kirmeyer, 88 Kan. 589, 128 P. 1114 (reversed 236 U. S. 568, 35 S. Ct. 419, 59 L. Ed. 721). Section held to apply to prosecution of persistent violators, State v. Compton, 94 Kan. 642, 146 P. 1161. See, also, Harris v. Hardesty, 111 Kan. 295, 207 P. 188.
Leased premises were subject to a lien for fines and costs. The penalty for intoxication was $5 or imprisonment in the county jail not exceeding 10 days. The county attorney was required to advise with the probate judge in granting permits for the manufacture or sale of intoxicating liquor.
Citations applicable thereto: Knowledge of agent is knowledge of nonresident principal, Financial Association v. State, 6 Kan. App. 206, 49 P. 696 ; lien attaches to property leased by husband as agent for wife, Hardten v. State, 32 Kan. 637, 5 P. 212; notice to agent is notice to principal, Hardten v. State, 32 Kan. 637, 5 F. 212; county attorney may proceed by civil action to enforce lien, State v. Pfefferle, 33 Kan. 718, 7 P. 597 ; lien is liability created by statute, not penalty or forfeiture, State v. Pfefferle, 33 Kan. 718, 7 P. 597; section is constitutional and valid, State v. Snyder, 34 Kan. 425, 8 P. 860; unnecessary to show knowledge by proprietor of particular sales, Cordes v. State, 37 Kan. 48, 14 P. 493; fines and costs in criminal action prima facie amount of lien, Pfefferle v. State, 39 Kan. 128, 17 P. 828 ; husband is proper defendant where title in wife, Pfefferle v. State, 39 Kan. 128, 17 P. 828; lien attaches and operates from date of conviction of tenant, Snyder v. State, 40 Kan. 543, 20 P. 122; conveyance of premises after conviction will subject to lien, Snyder v. State, 40 Kan. 543, 20 P. 122. See, also, Karcher v. State, 80 Kan. 757, 104 P. 568. Appeal from conviction, effect as to enforcement of lien, considered in State v. Alexander, 84 Kan. 393, 114 P. 241.
Laws 1883, c. 104, provided that, if any person be drunk in a public place or in his own house, disturbing his family’s peace or the peace of others, he shall be deemed guilty of a misdemeanor, and upon conviction thereof be fined in any sum not exceeding $25 or imprisonment in the county jail for a period not exceeding 30 days. Prosecution under this act had to be commenced 30 days after the misdemeanor had been committed.
Citations applicable thereto: Intoxication through mistake of fact proper defense, section held valid, State v. Brown, 38 Kan. 390, 16 P. 259; section does not limit authority of city to punish for drunkenness, City of Minneola v. Naylor, 84 Kan. 147, 113 P. 309. See, also, State v. Clark, 117 Kan. 133, 230 P. 318; Crabb v. Kansas State Board of Dental Examiners, 118 Kan. 513, 515, 235 P. 829 ; State v. Bieber, 121 Kan. 536, 540, 247 P. 875, 48 A. L. R. 252, and State v. McLaughlin, 121 Kan. 693, 695, 249 P. 612; Garden City v. Legg, 126 Kan. 569, 268 P. 827; State v. Smith, 128 Kan. 139, 276 P. 80.
Laws 1885, c. 149: An act amendatory of and supplementary to chapter 128, Laws 1881. Amended to provide that a permit granted by the probate judge of the county for a period of one -year may be revoked in the discretion of the judge of the probate court at any time. The petition for such permit must be signed by 12 freeholders, whereas the former law stated 12 citizens. The requirement for bond was repealed. Section 3, c. 128, Laws 1881, was amended by this law to provide that a physician may administer the liquor himself where it is deemed actually necessary. Also provided that a physician may purchase intoxicating liquors upon his written or printed statement that same will be used for medical purposes. Section 4 provided that any druggist having a permit under £be provisions of the act might sell the same for medical or other purposes upon the written statement of the applicant, the written prescription of a physician, or to a manufacturer upon his written or printed statement, and such druggist might sell intoxicating liquors for mechanical or scientific purposes only upon the written or printed statement of the applicant setting forth the particular purpose for which such liquor was required, the kind and quantity desired, and that it was not intended for beverages nor to sell nor to give away, and, when it was desired for medical purposes, the applicant should state that it was actually needed and necessary, and there should be but one sale and delivery on any one prescription or statement. That no druggist should permit the drinking on his premises of liquor purchased by prescription or otherwise, provided, however, that the druggist should be permitted to sell to any regularly practicing physician .wim was engaged in the practice of his profession any of the liquors named in the act, upon his written or printed statement that said liquors were to be used for medical purposes; that all statements were to be filled out and should be signed by the applicant in the presence of the druggist and attested by him. Thirty days thereafter all such statements, together with the druggist’s affidavit that the liquors mentioned therein were all the intoxicants sold by him during the month, should be filed by him in the office of the probate judge who issued the permit where they shall be kept for a period of 2 years; that every person making a false statement for the purpose of obtaining liquor should be deemed guilty of a misdemeanor, and upon conviction therefor should be punished by a fine of not less than $100 nor more than $500, and by imprisonment in the county jail not less than 30 nor more than 90 days. Section 7 of the act should be amended to read: “Any person without taking out and having a permit to sell intoxicating liquors, as provided in this act, or any person not lawfully and in good faith engaged in the business of a druggist, who shall directly or indirectly sell or barter any spirituous, malt, vinous, fermented, or other intoxicating liquors, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined in any sum not less than $100 nor more than $500, and be imprisoned in the county jail, not less than 30 nor more than 90 days.” Section 8 of the act was amended to contain the provision that anything in the act which relates to the manufacture of intoxicants should not be construed to prohibit the making of wine or cider from grapes or apples raised by the person making the same for his own use or the sale of wine for communion purposes. Section 9 of the act was amended to contain the provision that, if any person who had 'a permit to sell liquors, and sold to any person whom he had reason to believe desired the liquor for an unlawful purpose, or sold to any one under the influence of liquor, or who was in the habit of becoming intoxicated, or sold it to be drunk on his premises, should be deemed guilty of a misdemeanor, and fined not less than $100 nor more than $500, and be imprisoned in the county jail not less than 30 nor more than 90 days, and should forfeit his permit and for 5 years, his right to be granted a permit should be forfeited. Section 12 of the act as amended provided that any sheriff or other police officer not reporting any violation of this law should be fined not* less than $100 nor more than $500. That such conviction should work a forfeiture of his office.
Citations applicable thereto: Duty of county attorney to proceed; prosecution by city insufficient, State v. Trinkle, 70 Kan. 396, 78 P. 854; ousted mayor cannot be re-elected to finish term, State v. Rose, 74 Kan. 262, 86 P. 296, 6 L. R. A. (N. S.) 843, 10 Ann. Cas. 927; police judge included in this section, State v. Keener, 78 Kan. 649, 97 P. 860, 19 L. R. A. (N. S.) 615; police should communicate information to county attorney, manner of communication, etc., State v. Bowden, 80 Kan. 49, 101 P. 654.
It was further provided in the above act that, if any county attorney shall have notice of any viola*51tion of the provisions of the act, he might issue subpoenas for such person or persons ás he had reason to believe had knowledge concerning the violations of the act, to testify before him at a time and place designated in such subpoena. The witness might be put under oath, the testimony reduced to writing and signed by the witness, and the county attorney had the power to punish for contempt.
If the testimony disclosed that an offense had been committed, the county attorney should file complaint or information, together with such testimony, and such statement so filed should have the same effect as though the information or complaint had been verified positively. That warrant should thereupon issue for the arrest of the person or persons named in such information, and, in addition thereto, should command the officer to whom it should be directed to seize and take into his custody any and all intoxicating liquor, vessels, and barrels containing the same which he might find in such premises to be safely kept subject to the order of the court. The statement of the witness must describe the property to be seized and the place where kept, and, if upon trial of such person he be convicted of violating any provisions of this act, the court should order as a part of his judgment, in addition to the penalty herein provided, that the officer having custody thereof shall destroy all such property used or employed for such illegal purposes.
Citations applicable thereto: Section sufficient to justify county attorney in filing information, State v. Wheldon, 6 Kan. App. 650, 652, 49 P. 786; failure to file statement, State v. Kirkpatrick, 52 Kan. 50, 34 P. 415; State v. Huffman, 51 Kan. 541, 33 P. 377; State v. Tuchman, 47 Kan. 726, 727, 28 P. 1004; state confined to sales specified in statement, State v. Lawson, 45 Kan. 339, 25 P. 864; State v. Whisner, 35 Kan. 271, 10 P. 852.
The act further provided that, if the name of the violator be unknown, action might be brought against the place where the liquor was found and warrant issued against the keeper or keepers thereof. Statements must describe place where sold. The act provided that the county attorney be allowed a fee of $25 upon each count upon which the defendant should be convicted and the same be taxed as costs in the case, but the county in no case should be liable therefor; that, upon all sums collected by the county attorney for forfeited recognizances, he should receive 20 per cent, thereof; that it should be his duty to diligently prosecute persons violating any provisions of the act, and should immediately bring suit upon forfeited bonds to recover the penalty and pay out any so collected into the school fund of his county. Failure to so diligently prosecute rendered him guilty of a misdemeanor, and, upon conviction, he should be fined not less than $100 nor more than $500, and be imprisoned not less than 10 nor more than 90 days in the county jail, and such conviction should operate as a forfeiture of his office. Upon refusal of the county attorney to prosecute under the provisions of this act, it should be the duty of the Attorney General to enforce this law.
The act further provided that any person who should take or receive orders for the sale of intoxicating liquor from any person not authorized to sell the same or any person who should directly contract with any person in this state other than a person authorized to sell the same should be deemed guilty of a misdemeanor, and upon conviction punished as provided for the sale of intoxicating liquors.
Citations applicable thereto: Solicitation of orders or making contract of sale is a misdemeanor, Westheimer v. Weisman, 8 Kan. App. 75, 54 P. 332; Id., 60 Kan. 753, 57 P. 969 ; act held invalid as applied to interstate commerce, State v. Hickox, 64 Kan. 650, 651, 68 P. 35. See, also, State v. Sherman, 81 Kan. 874, 107 P. 33, 135 Am. St. Rep. 403; State v. Kirkmeyer, 88 Kan. 589, 128 P. 1114; Crigler v. Shepler, 79 Kan. 834, 101 P. 619, 23 L. R. A. (N. S.) 500.
In the abatement of any common nuisance, any fixtures therein found such as barrels, bottles, glasses, decanters, etc., should be destroyed, and the owner thereof adjudged guilty of maintaining a common nuisance, and punished by fine of not less than $100 nor more than $500, and should be imprisoned in the county jail not less than 30 days nor more than 90 days. The Attorney General or county attorney or any citizen of the county where such nuisance existed might maintain an action in the name of the' state, to perpetually enjoin the same, and such injunction might be granted at the commencement of the action without bond. Any person violating the terms of the injunction should be deemed guilty of contempt.
Section 21 was amended to read: In all indictments under the provisions of this act, it shall not be necessary to state the kind of liquor manufactured or sold and it shall not be necessary to describe the place where sold except in prosecutions for keeping and maintaining a nuisance, or when a lien is sought to be established against the place where liquor is sold and it shall not be necessary to state the name of the person to whom sold. Persons'buying liquors are competent witnesses under this act. No person shall be excused from testifying as to any offense committed by another against any of the provisions of this act by reason of his testimony tending to criminate him, but all testimony given by him for such purpose, shall in no case be used against him. Section held valid, State v. Schweiter, 27 Kan. 499.
Whenever any relatives of any intoxicated person or persons addicted to the use of intoxicating liquors shall forbid any druggist from selling, bartering, or giving away to such person any intoxicating liquors, it shall be unlawful for any such druggist to let such person have any intoxicants upon any terms or conditions whatever. That any druggist violating these terms should be deemed guilty of a misdemeanor. The giving of intoxicants to a minor by any person other than relatives or a physician should be unlawful, and any person so doing would be guilty of a misdemeanor. See State v. Fletcher, 74 Kan. 620, 87 P. 729. Any officer or employee of a railroad company, express company, or other common carrier, who shall knowingly carry or deliver to any person intoxicants in violation of this act, should be deemed guilty of a misdemeanor; that any citizen who desired might employ an attorney to assist the county attorney in the prosecution of suits under this act.
Citations applicable thereto: Defects in verification of information waived by recognizance, State v. Goff, 10 Kan. App. 286, 61 P. 680, reversed, 62 Kan. 104, 61 P. 683 ; section is constitutional and valid, State v. Schweiter, 27 Kan. 499 ; unnecessary to state in information name of purchaser, State v. Schweiter, 27 Kan. 499 ; State v. Forner, 32 Kan. 281, 4 P. 357; State v. Brooks, 33 Kan. 708, 7 P. 591; unnecessary in information to state kind of liquor, State v. Sterns, 28 Kan. 154; State v. Brooks, 33 Kan. 708, 7 P. 591; information is sufficient though stating date of offense in blank, State v. Brooks, 33 Kan. 708, 7 P. 591; verdict cures defects in information not objected to at trial, State v. Ratner, 44 Kan. 429, 24 P. 953; complaint under ordinance for keeping drinking resort must describe the place, City of Kansas City v. Smith, 57 Kan. 434, 435, 46 P. 710; description of liquor nuisance is sufficient if place may be identified, State v. Walters, 57 Kan. 702, 47 P. 839. See, also, State v. Allen, 63 Kan. 598, 66 P. 628 ; State ex rel. v. Dick & Bros. Brewing Co., 96 Kan. 215, 150 P. 568.
Laws 1887, c. 164, provided that it should be unlawful for any person to have in his possession or under his control any intoxicating liquor within one-half mile of any voting place, or to sell, barter, or give away any intoxicating liquor within the vicinity of such voting place; that any person so offending should be deemed guilty of a misdemeanor.
Laws 1887, c. 165, was amendatory to Laws of 1881 and supplementary to the Laws of 1885 above. It *52provided that any druggist procuring a permit to sell liquor under this act must be a registered pharmacist of the state of Kansas. Any druggist, in order to obtain his permit to sell liquor, must file a petition 30 days prior to the hearing thereof in the office of the probate judge of the county, which permit shall be signed by 25 freeholders having the qualifications of electors and 25 women over the age of 21 years, which petition shall stale that the applicant is a person of good moral character, does not use intoxicants himself, and can he entrusted to sell the same; that he is a pharmacist, and is in good faith lawfully engaged in such business, and that he has a stock of drugs in his store of the value of $1,000. Before the permit is issued, -the applicant must give public notice of the fact that he has applied for a permit and further state the time and place set for the hearing of such petition. Permits are granted in the discretion of the probate judge, and are to be posted in the petitioner’s store in a conspicuous place. Bond in the sum of $1,000 must be given that neither he nor any one in his employ will use, sell, barter, nor give away intoxicants, and, on violation of the same, his bond is forfeited, and the conviction of such pharmacist shall be deemed prima facie evidence of such violation. Appeals to the district court may be taken from the decision of the probate judge upon the giving of a bond for $50. On receipt of the petition signed by 25 men and 25 women in the township, city ward, etc., in which the business of the druggist is carried on, requesting that his permit be canceled because of violation of the terms stated above, the probate judge will issue an order citing him to appear before him not more than 30 days from the date, requesting him to appear before him for hearing. If it appears that the druggist has violated the provisions of this act, his permit shall be canceled. Appeals may be taken to the district court. His permit becomes inoperative until the final decision of the district court where appeal has been taken. Probate judge may cancel the permit any time of his own motion. For unlawfully issuing a permit, the probate judge becomes guilty of a misdemeanor. The applicant must pay a $5 fee on the filing of his application for a permit.
Section 4 was amended by section 2 to provide that a druggist must sell intoxicants in person or by a clerk who is a registered pharmacist under the laws of this state, for medical purposes, only upon the written or printed statement of the applicant setting forth the particular medical purpose for which it is required and the kind and quantity desired; that' it is necessary and actually needed, and not intended to be used as a beverage, and that the applicant is over 21 years of age. A similar order must be made before a druggist can sell intoxicating liquors for mechanical or scientific purposes. There shall be but one sale and one delivery on any affidavit. No drinking on the premises or in apartments under the control of the druggist shall be allowed. Affidavits here provided for are to be made in the presence of the pharmacist upon blanks furnished by the county clerk which are of uniform style and consecutively numbered. All pharmacists and assistant pharmacists have power, under this act, to administer oaths. Affidavits filed monthly and at the end of the month are sent to the probate judge for keeping for a period of 2 years. Any person Signing a name other than his own to an affidavit for purpose of obtaining intoxicants shall be guilty of perjury. Any one reselling or using beverages shall be guilty of misdemeanor. The druggist shall keep a daily record of sales of intoxicants which is to be at all times open to the public. Any druggist who fails to keep the reports above provided or violates any of the provisions of this law shall he guilty of a misdemeanor. His permit shall he forfeited for 5 years thereafter.
Section 13 was amended by section 4 to read substantially as follows: All places where intoxicating liquors are manufactured, sold, or given, away in violation of any of the provisions of this act, or where persons are permitted to resort for the purpose of drinking, are declared to be common nuisances, and may be abated as such. Remainder of the section remains the same, except for the provision that fixtures found therein be publicly destroyed.
Citations applicable thereto: Section held valid in the following cases: State v. Campbell, 50 Kan. 433, 32 P. 35; State v. Lindgrove, 1 Kan. App. 51, 41 P. 688; State v. Teissedre, 30 Kan. 476, 2 P. 650; State v. O’Connor, 3 Kan. App. 594, 43 P. 859; State v. Walters, 57 Kan. 702, 47 P. 839; Koester v. State, 36 Kan. 27, 32 P. 339; State v. Krum, 32 Kan. 372, 4 P. 621; State v. Davis, 44 Kan. 60, 24 P. 73.
Section 5 of chapter 128 of the Laws of 1881 was amended by section 6 to read that all manufacturer’s petitions for a permit to manufacture intoxicants be accompanied by a certificate of at least 100 resident electors of the ward of the city or by a majority of the resident electors of the township, that the applicant is a person of good moral character, and a proper person to engage in this business. Bond is required in the sum of $10,000. Remainder of act remains the same. Any county clerk or probate judge refusing to perform the duties required of him under this law is guilty of a misdemeanor.
Citations applicable to the above sections: Having a permit and not a druggist, State v. Tanner, 50 Kan. 365, 31 P. 1096 ; druggist having permit may be enjoined, State v. Davis, 44 Kan. 60, 24 P. 73; evidence construed, State v. Skinner, 34 Kan. 256, 8 P. 420; State v. Sterns, 28 Kan. 154; State v. Schmidt, 34 Kan. 399, 8 P. 867; Assistant Attorney General may verify complaint, In re Gilson, 34 Kan. 641, 9 P. 763; physician cannot furnish, State v. Fleming, 32 Kan. 588, 5 P. 19; clerk of druggist having permit may sell, State v. Hunt, 29 Kan. 762, 764; State v. Copp, 34 Kan. 522, 9 P. 233; State v. Nield, 4 Kan. App. 626, 630, 45 P. 623; this section held valid, In re Gilson, 34 Kan. 641, 9 P. 763 ; State ex rel. v. Foster, 32 Kan. 14, 3 P. 534; State v. Crilly, 69 Kan. 802, 77 P. 701; assistant attorney appointed under this section has power to sign indictment charging unlawful sale of intoxicating liquor; duty of county attorney, State ex rel. Coleman v. Trinkle, 70 Kan. 396, 78 P. 854; provision for appointment of Assistant Attorney General held valid. State v. Brooks, 74 Kan. 175, 176, 85 P. 1013.
Laws 1887, c. 165, § 9, provided that it shall be the duty of all sheriffs, constables, majors, marshals, police judges, and other local officers of any city or town having notice or knowledge of any violations of the provisions of this act to notify the county attorney and to furnish him the names of any citizens within his knowledge by whom such violations can be proven. Any officer failing to comply with the provisions of this act upon conviction shall be fined not less than $100 nor more than $500.
Citations applicable thereto: County attorney must act on reports, State v. Trinkle, 70 Kan. 396, 78 P. 854; title of act broad enough to cover removal of mayor, State v. Everhardy, 75 Kan. 851, 90 P. 276 ; police judge is within penalties of section, State v. Kenner, 78 Kan. 649, 97 P. 860, 19 L. R. A. (N. S.) 615; not sufficient that officer merely talks occasionally with county attorney, State v. Bowden, 80 Kan. 49, 101 P. 654; no action taken on previous report, sheriff not excused thereby, State ex rel. v. Martin, 87 Kan. 817, 126 P. 1080. State v. Finch, 128 Kan. 665, 280 P. 910, 66 A. L. R. 1369.
Laws 1891, c. 131: Sale of all liquors or drugs that will produce intoxication or stupefaction to inmates of national or state homes for disabled voluntary soldiers is prohibited and provisions made for the punishment of same.
Laws 1901, c. 232, p. 416, § 1: All places whore intoxicating liquors are manufactured, sold, bartered, or given away in violation of the law, or where -persons are permitted to resort for the purpose of drinking intoxicating liquor as a beverage, or where intoxicating liquors are kept for sale, barter, or *53delivery in violation of the law and all intoxicating liquors, bottles, glasses, kegs, pumps, barrels, and other property kept in and used in maintaining such a place are hereby declared to be common nuisances, and every person who maintains or assists in maintaining such common nuisances shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not less than $100 nor more than $500, and be imprisoned in the county jail not less than 30 days nor more than 6 months for each offense.
Section 2: Upon the filing of the complaint setting out that the place is being maintained or kept as a common nuisance, a warrant shall be issued directing the officer to arrest the person or persons maintaining such a nuisance and to search the place described and to seize all the liquors and equipment for the sale of liquor found therein and keep the same safely subject to the order of the court. The complaint shall describe the place in question with sufficient particularity to identify it, and, where possible, shall describe the liquors sold therein, but any description so general in its nature as to enable an officer to identify the same shall be deemed to be a sufficient description. Upon the return of the warrant, the court shall proceed in the same manner as in the case of a person arrested.
Citations applicable thereto: See Greentree v. Wallace, 77 Kan. 149, 93 P. 598; owner cannot maintain replevin, Allison v. Hern, 102 Kan. 48, 51, 169 P. 187; State v. Queen, 103 Kan. 632. 176 P. 111, and State v. Carr, 114 Kan. 442, 218 P. 1007. Verification of information by prosecuting officer held proper, State v. Queen, 103 Kan. 632, 176 P. 111; State v. Clark, 117 Kan. 133, 230 P. 318; State v. Adler, 119 Kan. 757, 241 P. 119; State v. Toelkes, 128 Kan. 293, 278 P. 20; State v. Martin, 129 Kan. 240, 282 P. 726 ; State v. Geselle, 131 Kan. 729, 293 P. 494.
Section 3: Within 48 hours after the seizure of the property as described in the foregoing section, a notice shall issue to the defendants to appear and show cause why the same should not be adjudged forfeited and ordered destroyed. It should be served in the same manner as a summons. Any person interested in the outcome of matters of this kind, as an owner of some of the fixtures held, may interplead. Trial shall be had in a summary manner before the court of the allegations of the complaint or information against the liquors or other property seized, and, whether any answer shall be filed or not, it shall be the duty of the county attorney to appear and adduce evidence in support of such allegations.
Section 4: All intoxicating liquors found to have been used in the maintenance of the common nuisance shall be adjudged forfeited and publicly destroyed. Appeals from judgment of the court under violations of this section may be taken in the same manner as in the case of criminal appeals.
The maintenance of a common nuisance shall render void the lease under which a tenant holds possession of a building, and shall give the lessor an immediate right of entry. If an owner knowingly permits the operation of a common nuisance, he shall be deemed guilty of assisting in its maintenance.
Section 5 provides that the use of a building by a tenant in maintaining a common nuisance renders void the lease under which he holds, and the right of immediate possession accrues to the owner of the building.
Section 6 provides that any one who knowingly permits any building or tenement owned or leased by him or under his control or any part thereof to be used in maintaining a common nuisance, or, after being notified in writing of such use, omits to take all reasonable measures to eject therefrom persons so using same, shall be deemed guilty of assisting in maintaining such nuisance.
Section 7 provides that cities of the first, second, and third classes may provide by ordinance for the prohibition of the sale of intoxicating liquors contrary to law and the suppression of common nuisances as hereinafter defined and for the search of premises where such common nuisances are maintained, and for the seizure of the property used in maintaining the same. The presence of either liquor or fixtures for the sale of same shall be deemed prima facie evidence that such liquors are kept for sale except in the case of liquors being found in a private residence.
Citations applicable thereto: This act is valid, State v. McManus, 65 Kan. 720, 70 P. 700; personal punishment without abatement of nuisance, State v. Lee, 65 Kan. 698, 70 P. 595; evidence, State v. Engleman, 66 Kan. 340, 71 P. 859; State v. Schoenthaler, 63 Kan. 148, 65 P. 235; seizure, Iler Brewing Co. v. Campbell, 66 Kan. 361, 71 P. 825; not necessary to aver that place is not a private dwelling house, State v. Thurman, 65 Kan. 90, 68 P. 1081; druggist keeping a nuisance, State v. Engborg, 63 Kan. 853, 66 P. 1007; no proof of actual sales, State v. Lewis, 63 Kan. 265, 65 P. 258; evidence as tending to charge owner with knowledge of use of building; part of liquors not used in nuisance cannot be destroyed, State v. Woodland, 89 Kan. 641, 132 P. 204 (see, also, State v. Brooks, 74 Kan. 175, 85 P. 1013); penalties imposed by city must conform to state law, Assaria v. Wells, 68 Kan. 787, 75 P. 1026; this section is valid, City of Wilson v. Herink, 64 Kan. 607, 68 P. 72; seizure of taxicab held lawful, Allison v. Hern, 102 Kan. 48, 169 P. 187; time for hearing as to forfeiture "of property stated, State v. Foren, 78 Kan. 654, 97 P. 791; place of seizure must be within jurisdiction of court, State v. Woodland, 89 Kan. 641, 132 P. 204; see, also, State v. Queen, 103 Kan. 632, 176 P. 111; possession is prima facie evidence when, section held valid, State v. Sheppard, 64 Kan. 451, 67 P. 870; common nuisance, liquor, glasses, pumps, faucets, etc., should be destroyed, State v. Poggmeyer, 91 Kan. 633, 138 P. 593; the general reputation of the place may be shown, State v. Brooks, 74 Kan. 175, 85 P. 1013; moving vehicle may become a common nuisance, Kansas City Breweries Company v. Kansas City, 96 Kan. 731, 153 P. 523; drug store selling Jamaica ginger declared a common nuisance, State v. Miller, 92 Kan. 994, 142 P. 979; hotel porter cannot store ice and serve liquor for guests, State v. Ross, 86 Kan. 799, 121 P. 908; injunction properly allowed restraining sale in streets and alleys, State v. Rabinowitz, 85 Kan. 841, 118 P. 1040, 39 L. R. A. (N. S.) 187; injunction may restrain defendants from maintaining nuisance anywhere in county, State v. Dykes, 83 Kan. 250, 111 P. 179; court may grant temporary injunction without defendant having had notice, State v. Jepson, 76 Kan. 644, 92 P. 600 ; persistent violator, see State v. Shiffler, 93 Kan. 618, 144 P. 845 ; section held valid, City of Wilson v. Herink, 64 Kan. 607, 68 P. 72; Stahl v. Lee, 71 Kan. 511, 80 P. 983; penalties imposed by city must conform to state law, Assaria v. Wells, 68 Kan. 787, 75 P. 1026; city may prosecute suit to enjoin and abate liquor nuisance, Kansas City Breweries Co. v. Kansas City, Kansas, 96 Kan. 731, 153 P. 523; cities may regulate and prohibit transportation of liquor, Kansas City v. Jordan, 99 Kan. 814, 163 P. 188, Ann. Cas. 1918B, 273 ; presence of liquor in room of hotel prima facie evidence, State v. Roos, 86 Kan. 799, 121 P. 908; common nuisance in dwelling house, liquor not prima facie evidence, State v. Penquite, 86 Kan. 970, 122 P. 894; preponderance of evidence is sufficient to warrant an injunction, State v. Cipra, 92 Kan. 951, 141 P. 1133; statements of forms filed with county clerk are competent evidence, State v. Railroad Company, 96 Kan. 609, 152 P. 777, Ann. Cas. 1917A, 612, affirmed 248 U. S. 276, 39 S. Ct. 93, 63 L. Ed. 239, 2 A. L. R. 1589 ; certified copies from internal revenue office competent evidence, State v. Railroad Company, 96 Kan. 609, 152 P. 777; State v. Morris, 124 Kan. 142, 257 P. 731; State v. Rausch, 128 Kan. 291, 276 P. 799.
Laws 1901, c. 233, p. 421, relates to investigations of violations of the prohibitory law. County attorney is required to issue a subpeena for such persons as he may have information or reason to believe know of violations of the prohibitory law. “No person shall disclose any evidence so taken as here*54inbefore Authorized, or disclose the name of any person SO subpoenaed or examined, except when lawfully required to testify as a witness in relation thereto, until the parties against whom complaint or information shall be filed by reason of such evidence have been arrested. Any disobedience of the subposna, hereinbefore authorized, or any refusal to be sworn as a witness, or any refusal to answer any pertinent and material question propounded by the county attorney pursuant to the provisions of this act, or any refusal of a witness to sign his testimony taken under the provisions of this • act/ or any violation of the requirement of secrecy imposed by this act, shall he a misdemean- or, and punishable as such.” Section 1.
Laws 1903, c. 338, p. 524: The county attorney may maintain a suit in the name of the state to enjoin any common nuisances as defined in the Laws of 1901, c. 232, and an injunction may be issued at the comm'encement of the action, and no bond shall be required. Any person violating the terms of any injunction shall be punished for contempt by a fine of from $100 to $500 and be imprisoned in the county jail from 30 days to 6 months in the discretion of‘the court or judge thereof.
Citations applicable thereto: No notice of application for temporary injunction is necessary, State v. Jepson, 76 Kan. 644, 92 P. 600 ; act not repugnant to Federal Constitution, Fritz v. State, 80 Kan. 168, 101 P. 1013; temporary injunction may be granted by a probate judge, State v. Werner, 80 Kan. 222, 101 P. 1004; see, also, Kansas Wheat Growers’ Ass’n v. Schulte, 113 Kan. 672, 684, 216 P. 311; Norton v. Board of County Com’rs of Saline County, 118 Kan. 659, 236 P. 819; State v. Jones, 126 Kan. 658, 270 P. 579.
Laws 1903, c. 339, p. 525: This amends chapter 165 of the laws of 1887, section 2, whereby provision was made for a fee of $15 per annum for each 1,000 people, to be paid to tbe probate judge of the county for the issuance of permits to sell liquor under the terms of this act; the maximum limit of $1,000 in the old act is hereby removed.
Laws 1905, c. 347, § 1: Any officer, agent, or employee of any railroad company who shall knowingly deliver any intoxicating liquor to any person other than the person to whom such liquor is consigned and without a written order in each instance by said consignee shall be deemed guilty of a misdemeanor.
Section 2 of this act provides that it shall he unlawful for any railroad company, express company, or other common carrier or its officers or agents, etc., to deliver any intoxicating liquor to any person whatsoever where said liquor has been consigned to a fictitious person or to a person under a fictitious name, and any officer or agent, etc., so violating these provisions shall be guilty of a misdemeanor.
Section 3 provides that it shall he unlawful for any person to whom liquor is consigned, whether consigned to him in his own name or a fictitious name,, to give to any other person an order for such intoxicating liquor to any railroad company or other common carrier, where the intent and purpose of such order is to enable such other person to get such liquor for himself 05 some other person than the consignee, and any person guilty of violating such order shall be deemed to be guilty of a misdemeanor. See Danciger v. Cooley, 98 Kan. 38, 43, 157 P. 453, affirmed 248 U. S. 319, 39 S. Ct. 119, 63 L. Ed. 266.
Laws 1909, c. 164, p. 302: The laws of 1881 relating to the sale of intoxicants amended so as to read that “any person or persons who shall manufacture, sell or barter any spirituous, malt, vinous, fermented [etc.] liquors shall be guilty of a misdemeanor and punished as hereinafter provided” (section 1). Provision for the sale of. liquor for medical, scientific, and mechanical purposes as stated in the previous act left out in this new amendment. Any person who shall directly or indirectly sell or barter any liquors shall be deemed guilty of a misdemeanor, and. shall be..fined as provided by this act.
The county attorney, Attorney General, or Assistant Attorney General may file with some justice of the peace of the county a written statement signed by such county attorney, etc., alleging any violation of the laws of this state relating to intoxicating liquors, and such justice of the peace shall then on a written praecipe of the county attorney, or Attorney General a& above stated, issue the subpoena for the witness named in such subpoena, commanding him to be and appear before such justice of the peace at the time designated in such subpoena to testify concerning any violation of the provisions of said law. Each witness shall be sworn to make true answers to all questions propounded to him touching the matters under investigation, and the testimony of each witness shall be reduced to writing and signed by the witness. Justices of the peace have power to adjourn such proceedings from time to time. If the testimony so taken discloses 'that an offense has been committed, the county attorney shall prosecute the person or persons committing such offense, and may file such testimony, together with a complaint or information against the person or persons having committed the offense, in some court of competent jurisdiction, and such testimony, together with the information and complaint of the county attorney, when verified by him on information and belief, shall have the same effect as if such information or complaint had been verified positively. Thereupon the 'warrant shall be issued.
Citations applicable thereto: Legislature may absolutely prohibit manufacture or sale of liquor, State v. Durein, 70 Kan. 13, 80 P. 987; this statute not repugnant to Constitution, State v. Sherman, 81 Kan. 874, 107 P. 33, 135 Am. St. Rep. 403; statute prohibits the sale of liquor for any purpose, held valid, State v. Weiss, 84 Kan. 165, 113 P. 388, 36 L. R. A. (N. S.) 73; statute covers any liquors which are intoxicating, State v. Miller, 92 Kan. 994, 142 P. 979, L. R. A. 1917F, 238, Ann. Cas. 1916B, 365; malt liquors presumed to be intoxicating, State v. Trione, 97 Kan. 365, 155 P. 29; enforcement of this section does not interfere with interstate commerce, State v. Sherman, 81 Kan. 874, 107 P. 33, 135 Am. St. Rep. 403; sales other than those shown in statement may be proved, State v. Wheldon, 6 Kan. App. 650, 49 P. 786; verification by county attorney unnecessary when another has verified information, State v. Brooks, 33 Kan. 708, 7 P. 591; defects in information waived by petition and removal of cause. State v. Tuchman, 47 Kan. 726, 28 P. 1004; information need not contain all statements made in preliminary inquiry, State v. Kirkpatrick, 52 Kan. 50, 34 P. 415; personal knowledge of prosecutor not subject to inquiry, State v. Taylor, 75 Kan. 417, 89 P. 672; duty of county attorney under statute mandatory, State v. Dawson, 86 Kan. 180, 119 P. 360, 39 L. R. A. (N. S.) 993 ; duty of prosecuting officer to file complaint, State v. Railway Company, 96 Kan. 609, 629, 152 P. 777, Ann. Cas. 1917A, 612, affirmed 248 U. S. 276, 39 S. Ct. 93, 63 L. Ed. 239, 2 A. L. R. 1589.
Laws 1909, c. 165, p. 305: It shall be lawful for any person to drink liquors upon any passenger-trains or street cars,, etc., in violation of this act. Any person so violating the provisions shall be guilty of a misdemeanor. Any conductor shall have the power to arrest any such person and turn him over to any constable, sheriff, police, or peace officer of the state. See State v. Farrow, 114 Kan. 202, 217 P. 700.
Laws 1911, c. 165, p. 250, § 1: Any person or persons, having once been duly convicted of the violation of the prohibitory liquor law, and who is thereafter directly or indirectly violating the provisions of the prohibitory liquor law, * shall be considered a persistent violator of the prohibitory liquor law, and shall be deemed guilty of a felony, and upon conviction thereof shall he imprisoned in. the state penitentiary at hard labor for hot more than one year. A true copy of the journal entry, of judgment showing former conviction supported by a certificate showing its authenticity shall be* *55prima facie evidence of a former conviction under this act.
Citations applicable thereto: Act held valid, State v. Adams, 89 Kan. 674, 132 P. 171; former conviction need not occur subsequent to passage of act, State v. Adams, 89 Kan. 674, 132 P. 171; certified copy of court record prima facie evidence of conviction, State v. Schmidt, 92 Kan. 457, 140 P. 843. See, also, State v. Bizer, 113 Kan. 731, 733, 216 P. 303; State v. Reed, 119 Kan. 467, 239 P. 749; and State v. Cochran, 122 Kan. 183, 185, 250 P. 1071; proof of one subsequent violation is sufficient, State v. Shiffler, 93 Kan. 618, 144 P. 845; penalty single though many violations proved, State v. Shiffler, 93 Kan. 618, 144 P. 845; sales or maintenance of nuisances by convict is persistent violation, State v. Briggs, 94 Kan. 92, 145 P. 866; aider and abettor of liquor nuisance, persistent violator, State ex rel. v. Dick & Bros. Brewing Co., 96 Kan. 215, 219, 150 P. 568 ; violation of Bone Dry Act is within Persistent Violator Act, State v. Berry, 103 Kan. 891, 176 P. 649.
Laws 1911, c. 178, p. 304: The penalty for the unlawful sale of intoxicants shall be a fine in a sum not less than $100 nor more than $500, and by imprisonment in the county jail from 30 to 90 days, provided that any person, copartnership, or corporation engaged in the wholesale drug business, and having a stock exclusive of alcohol, worth not less than $60,000, may sell alcohol for medical, mechanical, or scientific purposes to registered pharmacists who are actually and in good faith engaged in the drug business. Such sale shall be in quantities of not less than one nor more than five gallons.
Laws 1911, c. 237: Every person holding any office of trust or profit under the laws of the state of Kansas, any state, district, county, township, or city officer, who shall in any public place within or without the state be in a state of intoxication produced by strong drink voluntarily taken, shall forfeit his office, and shall be ousted from such office in the manner hereinafter provided. Officer may be removed for delinquency, In re Macy, 109 Kan. 1, 8, 196 F. 1095, 14 A. L. R. 848; State ex rel. v. Barker, 119 Kan. 853, 241 P. 253.
Laws 1913, c. 65, § 6, provides that it shall he unlawful for any intoxicated person to operate a motor vehicle, and any owner of a motor vehicle who permits an intoxicated person to operate a motor vehicle shall be deemed guilty of a misdemeanor.
Laws 1913, c. 248, p. 428, § 1, provides that it shall be‘unlawful for any railroad company, express company, or other common carrier or for any person, company, or corporation, to carry any intoxicating liquor into this state or from some point to another within the state for the purpose of delivery, or to deliver the same to any person, company, or corporation, within the state, except for lawful purposes.
Section 2 provides that any carrier who shall bring in intoxicating liquor into this state for a lawful purpose must file a statement with the county clerk of the county, setting forth the date on which such liquor was delivered, the name and post office address of the consignor, the place of delivery, to whom delivered, and the kind and amount of intoxicating liquor delivered. Statement is to be filed 30 days after the date of delivery of such liquor. The files of the county clerk where such statements are to be kept shall at all times be open to the inspection of the public. It shall he unlawful for any common carrier to deliver liquor to any person other than the consignee thereof. Where there is reasonable belief that the shipment contains intoxicating liquor, the consignee must file a statement declaring himself to be the owner of the liquor consigned, and that it is for his own use. A common carrier shall not be liable for damages for refusing to deliver liquor, unless a statement as provided is executed. Any one making a false statement with regard to liquors received by him is guilty of a misdemeanor. No intoxicants shall be delivered to a minor. All packages shipped from a point within the state and containing intoxicating liquors must contain the statement plainly written on the outside of the package, that "this package contains intoxicating liquor.” A common carrier violating any of these provisions is guilty of a misdemeanor.
Citations applicable thereto: Webb-Kenyon Act (27 USCA § 122) commented on and beld valid, State v. Columbia Brewery Co., 92 Kan. 212, 139 P. 1169; State v. Railway Co., 96 Kan. 609, 152 P. 777, Ann. Cas. 1917A, 612, affirmed 248 U. S. 276, 39 S. Ct. 93, 63 L. Ed. 239, 2 A. L. R. 1589 ; section is constitutional and valid, State v. Railway Co., 96 Kan. 609, 152 P. 777, Ann. Cas. 1917A, 612; section does not violate Interstate Commerce Act (49 USCA § 1 et seq.), State v. Railway Co., 96 Kan. 609, 152 P. 777, Ann. Cas. 1917A, 612. See, also, State v. Rogl, 100 Kan. 590, 592, 164 P. 1165; State v. Robinson, 118 Kan. 775, 778, 236 P. 647.
Laws 1913, c. 249, p. 430: This act provides that it shall be unlawful for any agent of a common carrier to erase the name of either the consignor or consignee or any part thereof on any shipment of intoxicating liquor while the same is under the control of such common carrier. Any agent so violating these provisions shall he deemed guilty of. a misdemeanor.
Laws 1915, c. 232, p. 292: Section 1 of the Laws of 1911, c. 165, amended to read: "Every violation, directly or indirectly, of any provision of the prohibitory liquor lav/, by a person who has heretofore been or shall hereafter be once convicted of any violation of the prohibitory liquor law [shall be considered as a persistent violator of the law, and each conviction], shall be considered a separate and distinct felony.”
Citations applicable thereto: Persistent violator defined, State v. Briggs, 94 Kan. 92, 145 P. 866; act supplemental, procedure authorized by general intoxicating liquor law governs, State v. Schmidt, 92 Kan. 457, 140 P. 843; former conviction means conviction under state law, not city ordinance, State v. Marks, 97 Kan. 147, 154 P. 261. See, also, State v. Will, 103 Kan. 59, 172 P. 1003; State v. Sweezer, 112 Kan. 818, 212 P. 661; State v. Farrow, 114 Kan. 202, 217 P. 700; State v. Reed, 119 Kan. 467, 239 P. 749; State v. Diehl, 119 Kan. 656, 240 P. 844; State v. Cochran, 122 Kan. 182, 250 P. 1071; State v. Colopy, 120 Kan. 220, 242 P. 1016; State v. Eisminger, 124 Kan. 464, 260 P. 661; Brockway v. Wagner, 126 Kan. 285, 268 P. 96; State v. Smith, 128 Kan. 139, 276 P. 80; State v. Oliver, 129 Kan. 719, 284 P. 357; State v. Fry, 131 Kan. 277, 291 P. 782.
Laws 1915, c. 233, p. 293, § 1: Every dependent or employer of any intoxicated person who shall be injured in person or property or means of support by any intoxicated person has a right of action against the owner of any place where such intoxicating liquors were sold, bartered, or given away in violation of the law without the knowledge of the owner of the premises or when such intoxication occurred on said premises when intoxicating liquors were being sold or kept thereon contrary to law, contrary to the knowledge of the owner, for all damages actually sustained and exemplary damages. If liquors were sold in violation of the .law, such fact shall be deemed prima facie evidence that it was done by and with the knowledge of the owner of such premises.
Section 2 provides that any judgment obtained by the plaintiff in any action under this act shall be a lien on the premises wherein such liquor was sold or where such intoxication occurred.
Laws 1915, c. 234, p. 294: Every dependent, employee, or other person who shall he injured in person or property by any intoxicated person shall have a right of action against the city wherein such liquor was purchased. It shall he a good defense to such action if the mayor or other city officials enumerated in the statute shall prove that they in good faith were attempting to enforce the prohibitory law. Garden City v. Legg, 126 Kan. 569, 268 P. 827.
Laws 1915, c. 235, p. 295: It shall be unlawful for any,person under the influence of intoxicating liquor, or any exhilarating or stupefying drug, to *56drive or have charge of any vehicle propelled by other than muscular power on the public highways of this state. Any violator of the provisions of this act shall be guilty of a misdemeanor, and fined not less than $5 nor more than $25, or be imprisoned in the county jail not less than 10 days. See State v. McLaughlin, 121 Kan. 693, 249 P. 612; State v. Ketter, 121 Kan. 516, 247 P. 430 ; State v. Sarver, 134 Kan. 98, 4 P.(2d) 440.
Laws 1917, c. 215, p. 283: Section 1 provides that it shall be unlawful for any person to keep or have in his possession for personal use or* otherwise any intoxicating liquors, or permit another to have or keep or use intoxicating liquor on any premises owned or controlled by him, or to give away or furnish intoxicating liquors to another except druggists or registered pharmacists as hereafter provided. Any person violating the provisions of this section shall be deemed guilty of a misdemeanor, and on conviction shall be fined not less than $100 nor more than $500, and imprisoned in the county jail from 30 days to 6 months.
Section 2 provides that it shall be unlawful for any common carrier to bring into this state or to carry from one place to another within the state intoxicating liquors * for another or for his agent, where intended for personal use, and it shall be unlawful for any common carrier to deliver any intoxicating liquors that may be in its possession to any person for any purpose whatever. Any person violating any provisions of this act shall be guilty of a misdemeanor. It shall be unlawful for any person to receive any intoxicating liquor from any common carrier or agent thereof intended for personal use. "Wine for communion purposes is excepted from the provisions of this act, with the proviso that a clergyman must file a statement with the county clerk of the receipt of same for such purposes.
Section 5 provides that any person, partnership, or corporation, having a stock of not less than $20,-000 exclusive of its stock of alcohol, may sell alcohol for medical, mechanical, or scientific purposes to hospitals, schools, and manufacturers and to druggists, where such druggist is actually and in good faith engaged in the retail drug business. Said drug business may receive alcohol for the purpose of selling as hereinafter provided. A common carrier may deliver to a wholesale drug business, and upon delivery must file statement with the county clerk as to his receipt of the same. Any regularly established hospital that is engaged in the care of the sick or injured, or any school having a medical or scientific or mechanical course, or any person or corporation regularly engaged in manufacturing, may buy, receive, and possess such amount of alcohol as is necessary for their respective needs for medical, mechanical, and scientific purposes only. A common carrier may deliver to users of this kind, providing the statement above provided for shall be filed with the county clerk.
Citations applicable thereto: Unnecessary to allege defendant was not druggist or registered pharmacist, State v. Perello, 102 Kan. 695, 171 P. 630 ; violations of act are within persistent violator act, State v. Berry, 103 Kan. 891, 176 P. 649 ; act of 1917 constitutional, State v. Macek, 104 Kan. 742, 180 P. 985; State v. Kurent, 105 Kan. 13, 181 P. 603; unlawful possession and permitting liquors on premises are distinct offenses, State v. Macek, 104 Kan. 742, 180 P. 985; evidence of sale competent to show possession, State v. Hanger, 108 Kan. 115, 193 P. 1052; personal use of liquor is not punishable, State v. Munson, 111 Kan. 318, 206 P. 749; see, also, State v. Harris, 116 Kan. 387, 226 P. 715; State v. Harwi, 117 Kan. 74, 230 P. 331; State v. Cochran, 122 Kan. 182, 250 P. 1071; State v. Walbridge, 123 Kan. 386, 255 P. 83; State v. Bozick, 122 Kan. 517, 253 P. 554; Brockway v. Wagner, 126 Kan. 285, 268 P. 96; State v. Kucera, 126 Kan. 792, 271 P. 275; State v. Smith, 128 Kan. 139, 276 P. 80; State v. Bradley, 130 Kan. 759, 288 P. 735; State v. Wharton, 132 Kan. 409, 295 P. 656; State v. Colson, 134 Kan. 147, 4 P.(2d) 414; City of Topeka v. Heberling, 134 Kan. 330, 5 P.(2d) 816; State v. Corbin, 135 Kan. 79, 9 P.(2d) 627; State v. Dunning, 136 Kan. 5, 12 P.(2d) 809.
Laws 1917, c. 216, p. 286: Section 1 provides that the city attorney of any incorporated city shall be required to make inquiry into any Violations of the prohibitory law, and he is authorized to issue subpoenas for such persons as he has reason to believe have any information concerning violations of tfiis law, or said city attorney may file with the police judge or justice of the peace a written statement alleging any violation of the ordinances of said city relating to intoxicating liquors and prsecipe shall then issue. The witness shall be sworn, and hiS‘ testimony then reduced to writing and signed by the witness. If the testimony discloses that a violation has been committed, the city shall prosecuto the person committing such offense, and may file such testimony together with the complaint against the person or persons having committed such offense in the police court of the city, and such testimony together with the complaint of the city attorney and verified by him on information and belief shall have the same effect as if such complaint had been verified positively, and thereupon warrant shall be issued for the arrest of the person or persons violating the law.
Laws 1917, c. 217, p. 288: This act provides that all cities of this state may enact and enforce ordinances relating to possession, receipt, transportation, and delivery of intoxicating liquors and provide punishment therefor in accordance with the state bone dry law above set out.
Citations applicable thereto: Ordinance may provide punishment different from other penalties, In re Hurston, 112 Kan. 238, 210 P. 495; ordinance need not provide for commitment for fines and costs, In re Hurston, 112 Kan. 238, 210 P. 495.
Laws 1919, c. 217, p. 294: Section 1 provides that all automobile's, vehicles, and other property used in the transportation or 'carrying of intoxicating liquors into this state and in carrying and transporting intoxicating liquors from one place to another within this state are hereby declared to be common nuisances.
Section 2 provides that, upon the filing of a complaint or information charging a common nuisance as above defined, a warrant shall issue authorizing-the arrest of the person described in said complaint or information or the person or persons using the automobiles or other vehicle for the transportation of intoxicating liquors, to seize and take into custody all such vehicles so used, which he may find, and safely keep the same subject to the order of the court. It is not necessary to describe the automobile accurately. Notice shall be given to all persons 48 hours afterwards, claiming any interest in such vehicles, fixing a time and place at which all Bueh persons claiming any interest may appear and answer the complaint made against such .vehicles to show cause why the same should not be adjudged forfeited and ordered sold. Any person interested in the vehicle may file his answer in writing, setting up his claim thereto, and shall thereupon be admitted as a party defendant to the proceedings against such vehicle. Trial may be 'had in a summary manner before the court of the allegations of the complaint, and it shall be the duty of the county attorney to appear and adduce evidence in support of such allegations.
Section 4 provides that, if the court finds such vehicle to be a common nuisance, he shall order the officer in whose custody it is to sell the same publicly, and said officer shall sell the same after having given notice of the sale, and shall make return to the court issuing the order. The court shall declare forfeited the proceeds of said sale and order the money so received paid into the treasury of the county for the support of the schools.. All intoxicating liquors therein found shall be destroyed.
Section 5 of the act provides for the taking of appeals from the judgments of the court in the same manner as in the case of criminal appeals.
Citations applicable thereto: For section 1, see the following: State v. Lee, 113 Kan. 462, 215 P. *57299; State v. Carr, 114 Kan. 442, 218 P. 1007; State v. Robinson, 118 Kan. 775, 236 P. 647; and State v. Powell, 120 Kan. 731, 244 P. 1053.
For section 2, see the following: State v. Lee, 113 Kan. 462, 215 P. 299; State v. Carr, 114 Kan. 442, 218 P. 1007; and State v. Robinson, 118 Kan. 775, 236 P. 647.
For section 4, see the following: Section is constitutional, State v. Peterson, 107 Kan. 641, 193 P. 342; State v. Stephens, 109 Kan. 254, 198 P. 1087; interest of a bona fide mortgagee is forfeitable, State v. Peterson, 107 Kan. 641, 193 P. 342; State v. Stephens, 109 Kan. 254, 198 P. 1087; Grant Co. v. United States, 254 U. S. 505, 41 S. Ct 189, 65 L. Ed. 376; one violation is sufficient to declare forfeiture, State v. Stephens, 109 Kan. 254, 198 P. 1087.
For section 5, see State v. Lee, 113 Kan. 462, 215 P. 299 ; State v. Carr, 114 Kan. 442, 218 P. 1007.
Additional citations for chapter 217, Laws of 1919: Norton v. Board of County Com’rs of Saline County, 118 Kan. 659, 236 F. 819; State v. Brown, 119 Kan. 874, 241 P. 112; State v. Boucher, 126 Kan. 796, 271 P. 278; State v. Eccleston, 133 Kan. 354, 299 P. 646; State v. Davidson, 136 Kan. 406, 15 P.(2d) 404; State v. Universal Finance Corp., 136 Kan. 599, 16 P.(2d) 466; Barrett v. Hurd, 136 Kan. 799, 18 P.(2d) 184; State v. Bennell, 137 Kan. 183, 19 P.(2d) 443.
Laws 1923, c. 135, p. 193: Section 1 provides that it shall be unlawful for any person to brew or make any mash, wort, or wash, capable of distillation and intended for the production of spirits, or by any process of evaporation to separate alcoholic spirit from any fermented substance, and any person so doing shall he deemed guilty of a misdemean- or and punished as herein provided.
Section 2 provides that it shall be unlawful for any person to manufacture or have in his possession any still, boiler, or other vessel or apparatus to be used for the purpose of distilling or separating, by any process of evaporation, alcoholic spirit from any fermented substance or any part of such still, boiler, or other vessel or apparatus, and any person so doing or having any still, boiler, etc., or part thereof in their possession shall be deemed guilty of a misdemeanor.
Section 3 provides that the act does not apply to legitimate chemical testing laboratories.
Any person convicted of violating this act shall be punished by confinement in the county jail for a term of 6 months and by a fine of from one to five hundred dollars. Read, State v. Metzger, 121 Kan. 837, 250 P. 258; also State v. Sacks, 116 Kan. 150, 225 P. 738, and State v. Harris, 116 Kan. 387, 226 P. 715; State v. Johnson, 116 Kan. 58, 226 P. 245; State v. Finch, 128 Kan. 665, 280 P. 910, 66 A. L. R. 1369; State v. Martin, 129 Kan. 240, 282 P. 726; State v. Wharton, 132 Kan. 409, 295 P. 656.
Laws 1925, c. 158, p. 206: Section 1 provides that it shall be a felony for any one under the influence of intoxicating liquor or any exhilarating drug to injure another by reckless driving of a vehicle upon any public road, highway, street, etc. Any person so violating the provisions of this act shall be deemed guilty of a felony, and shall be fined not to exceed $3,000 or shall he imprisoned in the state penitentiary not to exceed 3 years or be punished by both.
Laws 1933, House Bill No. 27 (March 7), c. 291, permits the manufacture, sale, and possession of denatured or industrial alcohol.
Miscellaneous Cases Dealing With Some Interesting Phases of the Prohibitory Law During Its Existence in Kansas.
At the general election of November 7, 1882, John Foster was elected county attorney of Saline county. He took his office January 1, 1883. From that time until November saloons ran wide open in Salina and other towns in the county. Mr. Foster himself patronized the saloons. When complaints were made to him, he would bring suits in justice court and then continue them from time to time and finally dismiss them.
Wm. A. Johnston, the Attorney General (now Chief Justice of the Supreme Court of Kansas), deeming that something drastic must be done to restore respect for law, brought quo warranto proceedings against Foster in the Supreme Court to remove him from office. Thirty-six men from the body of the state were summoned to act as jurors. This was the first case of its kind in the history of the state, and the only case in which a jury was ever used in the Supreme Court. The case was hotly and vigorously contested at every point. The defendant admitted the main facts, but gave as his excuse for not enforcing the prohibitory law that: First, he believed it was not the wish of the people of the county to have this class of cases prosecuted because of the expense and uncertainty of conviction, and bad feeling it would bring; second, the sentiment, as he gleaned it from the results of the last election; third, no one had come to him and requested him to enforce the law; fourth, the city of Salina had ample ordinances and should attend to it and pay the expense; fifth, no person had volunteered to act as prosecuting witness.
The jury found for the state. The opinion was delivered by Chief Justice Horton and concurred in by all the justices. The State ex rel. v. Foster, 32 Kan. 14, 48, 3 P. 534. A rehearing was asked and denied, and the case appealed to the Supreme Court of the United States, where it was affirmed. Foster v. Kansas ex rel. Johnston, 112 U. S. 205, 5 S. Ct. 8, 97, 28 L. Ed. 696, also reported in 32 Kan. 765.
Where an incorporated association purchases beer outside of the state of Kansas and brings it into the state, and then sells chips to its members, each chip representing a drink or glass of beer, and then furnishes a drink or glass of beer for each chip returned by a member, and the beer is drunk as a beverage, and neither the association nor any of its members has any permit to sell intoxicating liquors, held, that the members of the association who sell these chips, and the president of the association who is present at the time and knows of these things, may be prosecuted, convicted of and punished for selling intoxicating liquor in violation of law. State v. Horacek, 41 Kan. 37, 21 P. 204, 3 L. R. A. 687.
The search and seizure clause of the prohibitory law is not in contravention of either section 10, or section 15, of the Bill of Rights. State v. O’Connor, 3 Kan. App. 594, 43 P. 859.
It is no defense to one who violates the prohibitory liquor law that any officer, in order to detect and prosecute him for the violation of the law, solicited him to obtain and sell intoxicating liquor to the officer, and that his prosecution for the violation was baséd on the evidence so obtained. State v. Driscoll, 119 Kan. 473, 239 P. 1105.
An automobile which the owner places in the possession of another for general use, and such other uses it in the unlawful transportation of intoxicating liquors without the knowledge of the owner, is subject to the forfeiture and condemnation under the statute relating to liquor nuisances, following State v. Peterson, 107 Kan. 641, 193 P. 342, and State v. Stephens, 109 Kan. 254, 198 P. 1087. State v. Brown, 119 Kan. 874, 241 P. 112.
Officers of experience who found the liquor transported and determined by the sense of smell and from its appearance that it was strong intoxicating liquor are qualified to testify that it was intoxicating, and no error was committed in the admission of such testimony. State v. Brown, 119 Kan. 874, 241 P. 112.
Where violations of the liquor law in a clubroom or society are allowed, the officers and members thereof responsible for such violations are all subject to criminal prosecution. City of Coffeyville v. Reed, 117 Kan. 85, 230 P. 320.
A prosecution for the persistent violation of the prohibitory liquor law may be maintained although the former conviction occurred more than 2 years before the repeated and later offense. The statute of limitations on prosecutions for public offenses has no application to the time of the former conviction. State v. Parise, 117 Kan. 106, 230 P. 304.
A liquor still and apparatus taken from a dwelling house during the owner’s absence by the sheriff and *58county attorney acting without semblance of legal authority to search and seize may be introduced in evidence in a criminal prosecution of the possessor for maintaining a public nuisance. State v. Johnson, 116 Kan 58, 226 P. 245.
Intoxicating liquor, possession of which is a crime, taken from a traveler’s handbag, following his alighting from a train on a completion of an interstate journey, by a police officer acting without semblance of authority, may be introduced in evidence in a criminal prosecution of the possessor, though he made timely application of the court for reversal of the error. State v. Johnson, 116 Kan. 179, 226 P. 251.
• A conviction upon one count for having possession of intoxicating liquor and upon another for tho sale of the same liquor does not violate the constitutional provision against double jeopardy for the same offense. Where the information docs not show on its face the facts on which are based the claim that the conviction has been had upon two different counts for the same offense, such claim cannot properly be presented by a motion in arrest of judgment. State v. Ford, 117 Kan. 735, 232 P. 1023.
One charged with the offense of the unlawful manufacture of intoxicating liquor may he convicted of an attempt to commit that offense. State v. Rooney, 118 Kan. 618, 236 P. 826.
The day and month of the year when the offense •was committed was not stated in the information, but it was alleged that the offense ‘Was committed Withih 2 years prior to the filing of the information. Held,' that the omission to fill out the blank of the day and month was not a good reason for quashing the information. State v. Harwi, 117 Kan. 74, 230 P. 331.
In prosecution for the unlawful sale of intoxicating -liquor, a bargain on an executory contract is not sufficient, but there must be a completed sale which passes the property to sustain conviction. State v. Fields, 115 Kan. 489, 223 P. 285.
Laws of 1919, c. 217, providing for the forfeiture of automobiles used in unlawful transportation of intoxicating liquor, does not violate United States Constitutional Amendment 14, because the interest of an innocent holder is not preserved from forfeiture when the automobile itself is adjudged to be a common nuisance and forfeited. State v. Stephens, 109 Kan. 254, 198 P. 1087.
It is proper to refuse to instruct that “spotter’* testimony should be taken with extreme care and suspicion, when there is nothing in the conduct or demeanor of such person to reflect unfavorably upon his credibility, except his admission that he made the purchase from one engaged in the illegal selling of intoxicating liquor, intending to testify if called upon to So so. State v. Keys, 4 Kan. App. 14, 45 P. 727.
The jugs, bottles, and vessels, supposed to contain intoxicating liquors, procured by an officer in making the arrest in a liquor case‘-at defendant’s place of business, may be offered in’ evidence upon the trial, together with the labels printed and written matter thereon. State v. Stockman, 9 Kan. App. 422, 58 P. 1032; Id., 9 Kan. App. 888, 58 P. 1006; State v. O’Connor, 3 Kan. App. 594, 43 P. 859.
A proprietor conducting a business is not criminally responsible for the alleged possession or sale of intoxicating liquor surreptitiously brought into his place of business by an agent or employee, and where ’kept and handled there without the employer’s authority, knowledge, or consent. State v. Caldwell, 115 Kan. 374, 223 P. 299.
In State v. Finch, 128 Kan. 665, 280 P. 910, a question arose as to whether or not the Attorney General could control a liquor prosecution without the concurrence of or in opposition to the county attorney. The facts were that Finch procured an agreement with the Attorney General that he would impart information concerning the operation of a still if the Attorney General would grant him immunity. Afterwards the county attorney of Shawnee county prosecuted Finch for the identical matter in which the Attorney General had agreed to give Finch immunity. _ Finch was convicted in the district court over the protest of the Attorney General, who appealed to the Supreme Court, where it was held that the Attorney General, subject to the direction of the Governor and the Legislature, is the chief law officer of the state, and, where he appears in a legal prosecution, he is entitled to have full charge thereof and ordinarily the case should be dismissed if he so directs. The powers of the Attorney General were considered and discussed at length in the opinion ; also the state’s public policy concerning enforcement of the prohibitory liquor law.
Conclusion.
The highest courts have long since taken judicial notice that the beverage liquor traffic is the dominant cause of crime, misery, and pauperism. In State v. Durein, 70 Kan. 13, 80 P. 987, 989, it was said in the opinion: “Intoxicating liquor is * * * the prolific source of disease, misery, pauperism, vice, and crime. Its power to weaken, corrupt, debauch, and slay human character and human lif& is not destroyed or impaired because it may be susceptible of some innocent uses, or may be used with propriety on some occasions. The health, morals, peace, and safety of the community at large’ are still threatened.’’ See, also, Adler v. Whitbeck, 44 Ohio St. 539, 9 N. E. 672; Schwuchow v. Chicago, 68 Ill. 444; The License Cases, 5 How. 504, 592, 12 L. Ed. 256; Mugler v. Kansas, 123 U. S. 623, 8 S. Ct, 273, 31 L. Ed. 205; Crowley v. Christensen, 137 U. S. 86, 11 S. Ct. 13, 34 L. Ed. 620. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218841/ | KNIGHT, District Judge.
On August 13, 1929, the steamer Inland, with a cargo of sulphur rock, was proceeding down the Buffalo river, Buffalo, N. Y. Approaching a bend in the river, the Inland blew one blast of her whistle. It is not denied that there was no response. The steamer was then approaching the Ohio street bridge, and following the single blast blew three blasts for the lift. The Inland was then making for her port side of the river, and, as the lift was raised, the tug Chilton, with barges Drayton Thurston and Rita Thurston in tow, was seen on the other side approaching the lift. The undisputed evidence shows that the Inland then blew a two-blast signal and that the Chilton answered with the same signal. The Inland came to a stop- approximately 300 feet from the bridge and 50 to 65 feet from the port side of the dock. The width of the river at that point is approximately 200 feet. There was a barge of about 22-foot beam at the Nisbet Elevator on the starboard side of the river at this point. The Chilton and tow came on through the draw, and the barge Drayton Thurston came in contact with the Inland, and damages were sustained for which this libel has been brought. Proof on the part of the respondent Inland is that the barge and tow were proceeding at a rate of six to seven miles an hour when,the collision occurred.
The beam of the Inland was 42 feet, that of the Chilton 20.2 feet, and that of each towed barge 22 feet. Locating the Inland 65 feet from the port side and including the width of the barge docked at the Nisbet Elevator, the width of clear water for passage would be 61 feet. The lift of the bridge was 100 feet in width, and was located on the Chilton’s port side. Proceeding through the lift on its starboard side, the Chilton and tow were headed almost directly to the open water beyond.
Inland’s captain testified that in making for port side he was taking the usual and proper course to make the draw. "Why this is so does not appear. To pass the barge at Nisbet Elevator, it was necessary to swing to the port side but not to the point taken- by the Inland. However, whether or not the course taken was the usual one, the libelant cannot recover against the respondent Inland. There is no rule or law of navigation which required these boats, under the circumstances shown here, to navigate each on its starboard side of, the channel. The Inland gave the proper two-blast signal that it proposed to pass on the port side, and this was assented to by the proper reply whistle. The Chilton and tow were proceeding at an excessive speed.
Libelant claims that the statutory rules for navigating the inland waters of the United States (Act June 7,1897 [33 USCA § 210 et seq.]) required the Inland to keep to her starboard side. The title of that act (30 Stat. 96) expressly excludes the Great Lakes and their connecting and tributary waters from its application, and the rules for these tributary waters, such as the Buffalo river, are specifically laid down in the separate statute, chapter 64, Act of February 8, 1895, chapter 4, title 33 USCA, § 241 et seq.
If we assume that the statutory rules for navigating inland waters are applicable, Article 25 (33 USCA § 210), the so-called Starboard Side Rule, is qualified or modified by article 27 (33 USCA § 212), which recognizes *60that the Starboard Side Rule is not infallible. Rule 23, chapter 4, title 33 USCA (section 288), specifies the passing signals to be given and Rule 6 of the Inspectors Pilot Rules provides that one long blast of the whistle be given by a boat approaching a bend or curve. It further provides that, if such blast of the whistle is not answered, the channel may be considered clear. In this case, the one-blast bend signal was given and was not answered. Rules 17, 24, and 25 (33 USCA §§ 282, 289, 290), clearly contemplate circumstances under which vessels may pass in the portion of the channel which lies on the port side of each.
All the eases cited by libelant on the question of passing signals arose in connection with collisions on waters other than the Great Lakes or their connecting or tributary waters. The Titan (C. C. A.) 49 F. 479; Nereus (D. C.) 23 F. 448; Occidental & O. S. S. Co. v. Smith (C. C. A.) 74 F. 261; The Hokendaqua (C. C. A.) 251 F. 562; The Hokendaqua (D. C.) 270 F. 270; The Victory & The Plymothian, 168 U. S. 410, 18 S. Ct. 149, 42 L. Ed. 519. I do not think that the eases cited by libelant with regard to the duty of free and unincumbered vessels have application, for the reason that the Inland had come to a full stop and in a position to permit passage of the incumbered vessel.
Counsel for libelant in his brief disputes the claim that the Chilton was traveling six miles per hour, but no evidence to the contrary was offered. The excuse for the speed is that it was necessary for control of the tow, but no testimony was offered to' show that a speed of six miles per hour was necessary to secure this control. On the other hand, the rules of navigation for the Great Lakes and connecting waters require steam vessels about to meet and pass in channels less than 500 feet in width to slow down to a moderate speed according to the circumstances. Rule 25 (33 USCA § 290). There is no doubt about the Inland’s compliance with this rule. Likewise there is no doubt about the Chilton’s failure to observe it. It is apparent that no definite speed rule applicable to all conditions and circumstances can be made. Speed must be regulated in accord with the width of the channel, usual traffic conditions, and unusual and not expected emergencies. “The test of speed is whether the speed is such as allows the vessel to comply with the duty imposed upon her.” 11 C. J. 1158, and numerous authorities cited.
The Chilton saw, or should have seen, that the Inland had stopped and that the channel which remained between the Inland -and the moored barge would allow a comparatively small clearance. Knowing this, the Chilton elected to proceed at unreduced speed, and consequently, as the result of its own negligence, found itself in difficulty when it attempted to make the passing. A sharp turn to port was made by the tug in an attempt tp sheer the barges away from the Inland, but it resulted in a starboard swing of the stem of the barges with the collision resulting. Had the Chilton been proceeding at a reduced rate of speed, it is reasonable to believe that a much greater degree of control over the barges would have been possible.
The libelant offered no direct proof to contradict the movements of the boats as-claimed by respondent Inland, and relies mainly upon the provisions of the statutory rule, article 25 (33 USCA § 216), and the inferences which he claims must be drawn from the testimony given by respondent. Libelant has not sustained the burden of proof east upon him, and therefore cannot recover against the Inland.
The libel in this action was filed by the owner of the barge Drayton Thurston against the Inland. The Iroquois Steamship Corporation made claim to the Inland and impleaded the tug Edwin Chilton. The Marine Transportation Company intervened as-claimant. The answer of the respondent impleaded set forth a contract between the respondent impleaded and the libelant containing this provision: “The barges are to-be insured for the benefit of both parties under policy as agreed upon and nothing here,in contained shall make either parties of this agreement liable beyond the terms of the insurance policy.” It was stipulated on the trial that insurance under this provision was in effect at the time of the collision. In this circuit the law is settled that a contract by which the tow releases from or limits the liability of the tug is valid. The Oceanica (C. C. A.) 170 F. 893; Ten Eyck v. Director General (C. C. A.) 267 F. 974; The Dalzellite (D. C.) 48 F.(2d) 598, 599; The Niels R. Finson (D. C.) 52 F.(2d) 795. The condition in this contract is broadly drawn. The policy has not been offered in evidence. The libel alleges no act of negligence or liability on the part of the Chilton, nor is there anything in the case to show who was in control of the Chilton. Under these circumstances it must be found that the effect of the charter provision is to release the Chilton from liability to the tow. The Oceanica, supra; The Barnstable, 181 U. S. 464, 21 S. Ct. 684, 45 L. Ed. 954; Newport News Shipbuilding *61Co. v. United States (C. C. A.) 34 F.(2d) 100.
The libel must be dismissed, with costs. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218842/ | TUTTLE, District Judge.
This is a criminal prosecution against the defendant Olds Motor Works, a Michigan corporation, on an indictment charging it with having knowingly accepted certain unlawful concessions from the New York Central Railroad Company and from the Grand' Trunk Western Railroad Company in respect to the transportation, by those carriers, for the defendant, of'various automobiles in interstate commerce, whereby such automobiles were transported at a rate less than the lawful rate, in violation of the Elkins Act, § 1, as amended (section 41, title 49, United States Code [49 USCA § 41]). After a trial before'a jury, the defendant was convicted. Thereafter it filed a motion for a new trial, based on alleged error committed by the court in its instructions to the jury, which motion is now before the court for decision.
After careful examination and consideration of the entire record, including a transcript of all of the testimony, and of the able and exhaustive briefs- submitted by counsel for the parties, I have reached the conclusion that error was committed in the instructions to the jury and. that the judgment of conviction should be set aside.
The indictment alleges, in substance, that on various specified dates the defendant ordered from the said carriers certain cars having a length of 40 feet 6 inches, for transportation, in carload lots, of the said automobiles from Lansing, Mieh., to New York; that sueh. carriers furnished such cars and transported such automobiles accordingly; that the minimum carload weight, on which the lawful tariff rate per 100 pounds on sueh carload shipments was required to be based, was 11,-200 pounds; that the aggregate weight of each of such carload shipments was 9,150 *66pounds, and therefore the aforesaid minimum weight was applicable thereto; that the defendant, although it paid the proper freight rate of 100 pounds, computed the freight charges so paid upon a minimum carload weight of 10,000 pounds, instead of upon the applicable minimum weight of 11,200 pounds, and thereby accepted a concession in respect to such transportation, “contrary to the form of the statute in such ease made and provided.”
The material facts, as disclosed by the undisputed evidence, may be stated, sufficiently for the purposes of this opinion as follows :
The defendant shipped the afore-mentioned automobiles, in interstate commerce, from its factory at Lansing, Mich., in carload shipments, some over the New York Central Railroad and some over the Grand Trunk Western Railroad, on various dates, in ears having a length of 40 feet, 6 inches, which were furnished to it by those carriers, respectively. The lawful published tariffs governing these carload shipments provided for a certain rate per 100 pounds,.depending on the point of destination, but also provided that such rate should be computed on a specified minimum carload weight, which minimum weight, in the case of a 40-foot 6-ineh car, was 11,200- pounds per car and, in the ease of a 36-foot 6-ineh ear, was 10,000 pounds per car. Those rates and charges, however, were subject to the following provisions of section 2 of Rule 34 of Consolidated Freight Classification No. 5, constituting official classification No. 49, governing interstate carrier railroads, including the carriers here involved:
“When a shipper orders a ear 36 feet 6 inches or less in length for articles subject to Rule 34, and the carrier is unable to furnish car of desired length when ordered, a longer ear will be furnished under the following conditions: .(a) If the carrier is unable to furnish car of desired length and furnishes a longer car not exceeding 40 feet 6 inches in length, the minimnm weight for the car furnished shall be that fixed for the car ordered, except that when the loading capacity of the ear is used the minimum weight shall be that fixed for the car furnished. * " * If a longer car than ordered is furnished, the following notation must be made by Agent on Bill of Lading and Way-bill: ‘Car-ft. in length ordered by shipper on - (date); car- ft. in length furnished by carrier on-(date), under Rule 34 of the Consolidated Classification.’ ”
The loading capacity of 56-foot 6-ineh ears was three automobiles per ear and that of 40-foot 6-ineh cars was four automobiles per car. The defendant, desiring to use only the loading capacity of 36-foot 6-inch ears, from time to time gave to the said carriers written orders for such cars. These carriers, however, neither owned nor had in their possession any ears of that length, as the defendant knew when it ordered them, and the only cars which they had, suitable for the purpose of the defendant, were the 40-foot 6-inch ears already mentioned, which fact also was known to the defendant. After the filing of these written orders with the said carriers by the defendant, through its shipping department, the switching crews of the carriers furnished to the defendant, as the defendant expected and consented that they should, 40-foot 6-inch ears instead of the shorter cars so ordered, which longer ears were accepted and used by the defendant, but were loaded with only three automobiles per ear instead of the four automobiles which could have been loaded into them. These substituted cars were so furnished as and when verbally called for by the yard employees of the defendant, who, as and when ears were needed for immediate loading, asked the yard employees of the carriers to deliver such ears at designated points, knowing that- only 40-foot 6-inch ears could and would be furnished for such loading. When so loaded, these carload shipments were transported by these carriers, as consigned by the defendant, under bills of lading containing the notation required by the language of Rule 34 already quoted. The weight of each' such shipment was less than 10,000 pounds, and freight charges therefor were paid by the defendant on the basis of a minimum carload weight of 10,000 pounds, which the defendant claimed, and now claims, was the proper basis for payment of such charges, under the provisions of the said Rule 34.
The ultimate question here involved is whether the transportation charges for these shipments should have been computed on the basis of a minimum carload weight of 10,000 pounds, as was done by the defendant in reliance on Rule 34, or upon a minimum carload weight of 11,200 pounds, as the government claims should have been done. The answer to this question depends entirely upon the correct interpretation of the rule just mentioned. The fundamental question involved is whether this rule, properly construed, was such that, under the circumstances here shown, the defendant, desiring to ob*67tain the cheaper tariff freight rate fixed for a minimum load on the 36-foot 6-ineh cars, could obtain such cheaper rate by filing with the railroad company written orders for such 36-foot 6-ineh cars, which it knew that the railroad could not supply, accept the 40-foot 6-inch ears which it knew were available and would be furnished, load and ship the three-automobile carload shipments in the 40-foot 6-inch ears, and be entitled to the minimum rate provided for the shorter ears, 36 feet 6 inches in length. If a proper interpretation of this tariff rule permits the doing of that thing, then the defendant is not guilty. The written orders for the 36-foot 6-ineh ears were actually filed by the defendant company with the carriers. They were filed in bunches and in large numbers, and for a greater number of ears than were actually needed and used. If this tariff rule, correctly construed, permitted this, then no criticism attaches to the mannér in which these orders were given. If, under the circumstances stated, the defendant company was entitled to the minimum rate for 36-foot 6-ineh ears if they ordered ears of that dimension where larger ears were furnished, and the load of the larger ear did not exceed the capacity of the smaller ear, then no complaint can be made simply because the defendant company and the railroad company handled the matter of securing for the defendant what it was entitled to receive in a simple manner. The fact that subordinate employees of the defendant company told the train crews of the railroad company when and where to place cars on the siding for immediate loading*, and in so doing referred to the 40-foot 6-ineh cars which were the only ones available, would have no bearing on the question. It would not indicate any bad faith or constitute an order by the defendant company for the larger cars if a proper interpretation of the tariff rule permitted the use of the larger ears at the lower freight rate, under these circumstances.
This court, in submitting the matter to the jury, did not interpret this rule in the manner just indicated. The court was then of the opinion that a proper interpretation of the rule was such that, if the defendant company knew that the railroad company had no cars 36 feet 6 inches in length, that none could be supplied by it to the defendant, and that the only ears which could be supplied by the railroad company were cars 40 feet 6 inches in length, then there was no way under the rule by which the defendant company could lawfully secure the lesser minimum rate: that, under these circumstances and with this knowledge, it was the duty of the defendant company to place its orders for the only cars which, as it knew, were available; and that, if the defendant company placed orders' for the shorter cars which it knew could not be supplied, knowing that the longer ears would be supplied under that order, then in reality it was actually ordering the longer ears.. The question as to whether or not this was a proper instruction to the jury depends upon the question as to what is a correct interpretation of the tariff rule here involved. If the intent of that rule is not to permit a shipper to get the lower rate under these circumstances, then, of course, no scheme could be devised to avoid such rule. On the other hand, if a proper interpretation of the rule permits a shipper with the smaller load, but knowing that the railroad cannot furnish the smaller car, to file a written order for the smaller ear, and, when the larger car is furnished, load it with the smaller load and pay only the smaller freight rate, then no just criticism can be made of the defendant for availing itself of such rule and thus avoiding the greater expense.
As stated, there is no dispute as to the facts. The defendant wanted to ship three automobiles in a car because it believed under the rule it would be cheaper. Three automobiles would go into a freight car 36 feet 6 inches long. The defendant ordered a ear 36 feet 6 inches long, knowing that it could not be furnished, knowing that a ear 40 feet 6 inches in length would be furnished, and for the express purpose of securing the lower minimum freight rate. A ear 40 feet 6 inches long was actually furnished to it, and it put three automobiles in such car. The defendant paid the minimum jrate for a ear 36 feet 6 inches long. The filing of the written order and the other things which it did were for the express purpose of getting the lower rate. If this rule permitted this lower rate under these circumstances, then the defendant is not guilty of any offense. The defendant has done all that it could do to secure the lower freight rate; the defendant has paid the lower freight rate. If, under a proper interpretation of the rule, defendant can, by the filing of an order for the smaller ear which cannot be furnished and by placing in the larger car which is furnished a load which would go into the smalldr car, secure the benefit of the rate on the smaller car, even though the defendant knows when the order is filed that the smaller bar cannot be furnished, then the defendant was within its rights and a verdict of not guilty should have been directed.
*68■ I ain of the opinion that defendant is correct in its interpretation of the rule. The interpretation placed on this rule by the defendant is not an unreasonable one. These tariffs, when promulgated by the railroad company and approved by the Interstate Commerce Commission, should have in mind the rights and interests of the shipper. What is the position of a shipper? Whether he be engaged in farming or manufacturing, he may wish to ship a load of a given weight or a given dimension. He, of course, wishes to avail himself of the cheapest possible rate, which usually means a ear as small as possible which will carry the load which he wishes to ship. I know of no reason why a proper tariff could not be made and approved by the Commission, if it were thought advisable, which would take care of such a shipper and permit him to order a car which would fit his load and get the lower rate, even though he had actual knowledge that there was no such ear on the railroad and no such ear was available, or even though no such ear of that dimension had ever been made in the United States. It might be thought by the Commission to be desirable to bring to the attention of the railroad in that manner the demand for cars of that particular dimension in order that cars of the size needed might be made available and in order that shippers might avoid the necessity of incurring unnecessary expense in being forced to use ears which were larger than they needed. The Commission might well decide that, if demand for the cars of the smaller dimension were not sufficient to warrant the building of ears of that size, then the railroads should be required to furnish the larger cars at the rate of the smaller ears and thus give the shipper the advantage of a rate which fitted the load to be shipped. It seems to me that there are such considerations and reasons which can be urged for such a rule that it cannot be said that a rule which makes such a plain provision is so unreasonable that a court should search for some other interpretation. This rule plainly states that, if the smaller ear is ordered by the shipper and cannot be supplied by the railroad company, and a larger car is furnished to the shipper and not loaded to its capacity by the shipper, then the minimum rate for the smaller car is to be charged. No other conditions are provided. If the Interstate Commerce Commission had wished to impose other conditions, it would have been easy to add them. It could have been provided that the lower rate should apply only in the event that the railroad usually had available ears of the dimensions ordered; it could have been stated that the rule should apply only in the event that the snipper believed that the ear ordered was available and could be furnished; but no such conditions were added.
After careful consideration, I reach the conclusion that the intent of this rule, when so promulgated and approved, was to give to the shipper who had a minimum load which would fit into a 36-foot 6-inch car the absolute right to make his shipment at the minimum rate fixed for a 36-foot 6-inch ear, provided he ordered a 36-foot 6-inch car, entirely independent of the question whether the shipper had knowledge that the railroad could not furnish the car so ordered. The rule plainly provides that, if the shipper does order the smaller ear and the railroad company cannot furnish it, but furnishes a 40-foot 6-inch ear in place of the smaller car, and the shipper places in such longer car a load less than its total loading capacity, the correct rate is the rate for the smaller ear. That being my interpretation of the rule and the defendant in this ease having complied with the rule as so construed, defendant was entitled to a directed verdict of not guilty.
The clerk will therefore enter an order setting aside the verdiet of guilty and granting a new trial. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218843/ | MANTON, Circuit Judge.
I have duly considered the opinion of the Supreme Court (53 S. Ct. 721, 729, 77 L. Ed. 1331) on the affirmance by it of the judgments of the Circuit Court of Appeals in the two suits in equity brought in the District Court for the Southern District of New York (1 F. Supp. 809) by Benjamin F. Johnson and Lillian Boehm, respectively, against the Manhattan Railway Company et al. [Johnson v. Manhattan Ry. Co. (C. C. A.) 61 F.(2d) 934, 937]. The opinion discusses the exercise of jurisdiction by me in the above-entitled suit of the American Brake Shoe & Foundry Company against the Interborough Rapid Transit Company in pursuance of the authority and judicial duty vested in me as Senior Circuit Judge in and by sections 22 and 23 of the U. S. Code, title 28 (28 USCA §§ 22, 23), which provide:
Ҥ 22. (Judicial Code, section 18, amended.) The Chief Justice of the United States, or the circuit justice of any judicial circuit, or the senior circuit judge thereof, may, if the public interest requires, designate and assign any circuit judge of a judicial circuit to hold a district court within such circuit. * * *
“During the period of service of any judge designated and assigned under this chapter, he shall have all the powers, and rights, and perform all the duties, of a judge of the district, or a justice of the court, to which he has been assigned (excepting the power of appointment to a statutory position or of permanent designation of newspaper or depository of funds). * * *
“§ 23. (Judicial Code, section 19 [amended].) It shall be the duty of the district or circuit judge who is designated and appointed under either of sections 17 to 22 of this title [U. S. C.], to discharge all the judicial duties for which he is so appointed, during the time for which he is so appointed; and all the acts and proceedings in the courts held by him, or by or before him, in pursuance of said provisions, shall have the same *70effect and validity as if done by or before the district judge of the said district.”
These sections are supplemented by section 313 of the U. S. Code, tit. 28 (Judicial Code § 138), 28 USCA § 213, which, after declaring it to be “the duty of each circuit judge in each circuit to sit as one of the judges of the circuit court of appeals in that circuit from time to time according to law,” provides that “nothing in this section shall be construed to prevent any circuit judge holding district court or otherwise, as provided by other sections of the Judicial Code.”
Mr. Justice Van Devanter declares in his opinion that the statute, section 22, “makes the public interest, as found by the assigning authority, the criterion,” and then states as follows: “The District Judge did not rule oni the part of the attack wherein it was contended that the assignment was invalid because there was no public interest requiring it; but the Circuit Court of Appeals rejected the -contention on the ground that the recital or finding in the assignment that public interest required it is conclusive in this proceeding. Plainly the Circuit Court of Appeals was right. By section 22 the decision as to requiring public interest is left to the one having the power to assign. The duty and the responsibility are with him — as well when he is a Senior Circuit Judge as when he is the Chief Justice or a Circuit Justice. His decision that there is a requiring public interest is not open to a collateral- attack such as is here presented. [Note No. 15 citing authorities.] And were it so- open, no litigant could with any safety submit any matter to an assigned judge — a situation which would involve intolerable uncertainty and embarrassment to both public and private interests.”
Yet, notwithstanding this explicit ruling that the Circuit Court of Appeals was plainly right because the statute “makes the public interest, as found by the assigning authority, the criterion” and “the recital or finding in the assignment that public interest required it is conclusive in this proceeding,” from which it would ordinarily and logically follow that the Supreme Court was not called upon to pass upon the existence or nonexistence of a sufficient public interest, the opinion nevertheless proceeds to assume that the difference of opinion between the District Judge and myself as Senior Circuit Judge respecting the relative fitness of individuals and trust companies as equity receivers was the sole ground or consideration of public interest upon which I acted, and on that assumption expresses the view that in and of itself it “was not a proper ground.”
As I am convinced that these assumptions were the result of a misapprehension, I deem it my duty to review as briefly as practicable the questions of jurisdiction and judicial duty presented to and passed upon by me as Senior Circuit Judge in August last when application was made to me in due form to exercise the judicial duty prescribed in the Act of Congress.
It should be noted at the outset that the Supreme Court concurs in my views as to the construction of section 22 authorizing “a special assignment such as is shown here,” and as to my authority to designate and assign myself to hold a District Court, and it has likewise concurred in my views as to the invalidity of the so-called rules la and 11a adopted by the District Judges in June of last year in and by which they sought to nullify the Act of Congress by attempting to prevent any designated judge from performing judicial duties in the District Court except by the leave and at the discretion of the Senior District Judge, the language of rule la going so far as to provide that “any judge designated to sit in the District Court for the Southern District of New York, shall do such work only as may be assigned to him by the senior district judge.” The Supreme Court has held that these so-called rules were in conflict with sections 22 and 23 of title 28 of the United States Code (28 USCA §§ 22, 23), and therefore invalid.
No Senior Circuit Judge could properly decline to consider an application presented to him in due form under the statute (28 U. S. C. § 22 [28 USCA § 22]), or could properly refuse to perform the judicial duty of determining whether or not in his judgment and discretion the public interest required that one of the Circuit Judges should be designated and appointed to hold a District Court. Tt is surely elementary and beyond! question that when a statute provides that a judge “may, if the public interest requires,” exercise jurisdiction, it is his duty to consider and determine whether or not the public interest so requires whenever an application is made to him in due form calling for the determination of that question. As Mr. Justice Van Devanter declared, speaking for the unanimous court, in Second Employers’ Liability Cases, 223 U. S. 1, 58, 32 S. Ct. 169, 178, 56 L. Ed. 327, 38 L. R. A. (N. S.) 44: “The existence of the jurisdiction creates an implication of duty to exercise it, and that its *71exercise may be onerous does not militate against that implication.” See, also, Ex parte American Steel Barrel Co., 230 U. S. 35, 45, 46, 33 S. Ct. 1007, 57 L. Ed. 1379.
In so advising the federal bench as to the proper rule of judicial duty, the Supreme Court undoubtedly had in mind and applied the principle of its famous decision in the leading case of Cohens v. Virginia, 6 Wheat. 264, 404, 5 L. Ed. 257, where Chief Justice Marshall impressively said: “It is most true, that this court will not take jurisdiction if it should not: but it is equally true, that it must take jurisdiction, if it should. The judiciary cannot, as the legislature may, avoid a measure, because it approaches the confines of the constitution. Vfe cannot pass it by, because it is doubtful. With whatever doubts, with whatever difficulties, a case may be attended, we must decide.it, if it be brought before us. We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given. The one or the other would be treason to the constitution. Questions may occur, which we would gladly avoid; but we cannot avoid them. AE we can do is, to exercise our best judgment, and conscientiously to perform our duty.”
The opinion of the Supreme Court declares that the suit brought by the American Brake Shoe & Foundry Company against the Interborough Rapid Transit Company “plainly was within the jurisdiction of the District Court as a federal court” and further that the Circuit Court of Appeals had accurately and concisely observed that: “The controversy does not touch the substantial rehef asked by any of the parties; all acknowledge that the two railways are in such financial straits that a court of equity must take over their assets, to prevent their dismemberment by execution, attachment and the like. The plaintiffs, and those who have intervened [in the Johnson suit], ask for receivers, just as do the parties to the American Brake Shoe Company suit. The dispute touches merely who shall be the receivers, and who the judge to have charge of the receivership.”
The imperative necessity and the judicial propriety of the immediate appointment of receivers were evident and indisputable on the face of the pleadings presented to me on August 25,1932, in view of the default about to occur within a few days (on September 1st) upon $31,672,100 face value of obligations of the Interborough Company then f aEing due and a floating indebtedness of more than $2,500,000 including $1,340,000 of unpaid taxes, then overdue, with no funds to pay the same.
When the biE of complaint and the accompanying affidavits were presented to me as Senior Circuit Judge, and appEeation duly made to me that I should exercise the jurisdiction and perform the judicial duty expressly provided in section 22 of title 28 of the United States Code (28 USCA § 22), I was clearly called upon to determine whether the controversy and subject-matter set forth in the bill of complaint were of sufficient pubEe importance to caE for the designation in the public interest of a Circuit Judge of this circuit to hold a District Court, and, if I so concluded, then whether I should designate myself or one of the other Circuit Judges to discharge the exceptionally onerous labors and the exceptionaEy difficult judicial duties likely to’ be involved in such a suit.
I then entertained no doubt whatever, from long familiarity with the subject, and the Supreme Court concurs in this view, that it was the intention of Congress in and by the Act of March 3, 1911 (36 Stat. 1087), when the Circuit Courts were abolished and the Judicial Code was enacted, and again in and by the Act of September 14,1922, when section 22 was recast and substantially re-enacted as part of title 28 of the United States Code, to impose, upon the Senior Circuit Judge the judicial duty to designate and assign a Circuit Judge to hold a District Court whenever in his judgment any case of sufficient public importance and likely to present difficult and complicated questions of law and judicial administration was presented to him if in his judgment the public interests then so required. I was also of opinion that the statute clearly authorized a special designation for a special or single ease. Such for twenty-one years had been, and it stül is, the uniform construction of the statute and the uniform practice in every circuit. The opinion of the Supreme Court recognizes that when section 18 of the Judicial Code was enacted in 1911 and later recast in 1922 'as section 22 of title 28 of the United States Code (28 USCA § 22), it was explained ta the respective Houses of Congress that section 22 “was intended to establish a Eberal and flexible plan under which Circuit Judges could sit in the District Courts; and that under it any Circuit Judge readily could be assigned to hold a District Court within his circuit whenever occasion therefor might arise, whether from a pressure of business in a District Court, from the presence therein of particular eases of special importance, from an *72absence of business in the Circuit Court of Appeals, or from any other situation, if the Senior Circuit Judge, or the Circuit Justice, or the Chief Justice, deemed the assignment to he in the public interest.” This quite conclusively appears from the debates published in the Congressional Reeord, as cited by Mr. Justice Yan Devanter in a note to his opinion.
It had, moreover, been the -well-known and uniform practice of all my predecessors in the Second Circuit to designate themselves to render additional and generally onerous judicial service in the District Court whenever they deemed this advisable in the public interest; namely, Senior Circuit Judges Laeombe, Ward, Rogers, and Hough, beginning in January, 1912, when Senior Circuit Judge Laeomhe designated himself to hold a District Court and exercised jurisdiction over the receivership of the Metropolitan Street Railway System of the city of New York; and it had likewise been the general practice for many years in the other circuits, including cases of the insolvency of railroad or other public service corporations having property in two or more districts.
It was in the light of these precedents and of this uniform practice that I considered! and determined that in view of thq far-reaching public interests involved, the immense numbers of the public affected, the vast and unprecedented investment of the city of New York in the subway system leased to the Interborough Company, and the unprecedented and extraordinary importance and complexity of the issues involved and likely to be litigated, there was clearly presented to me a case which was essentially within the intent and purpose of Congress as evidenced by sections 22, 23, and 213> and that the public interest required the appointment of a Circuit Judge to hold the District Court in which the case should be heard and determined and the receivership administered.
I venture confidently to assert that in public interests affected and involved, values in controversy, numbers of creditors of all classes, capitalization, and outstanding securities, extent and value of lines operated in two districts, numbers of public affected, and investment ánd interests of the city of New York (over $309,000,000), no suit in equity has ever been brought in the Second Circuit which has equaled in public importance and public interest the case presented to me in August last by the bill of complaint in this suit, or which was more clearly within the scope and purview of section 22 of title 28 of the United States Code (28 USCA § 22).
It is a misapprehension of my action and of my views to assume that the difference of opinion existing between the District Judges and myself as to the relative fitness of individuals and trust companies as equity receivers was the sole ground upon which I acted in determining the existence of adequate and sufficient public interest. The contrary is the fact, for the far-reaching and extensive public interests explained above and considerations of the public good were the principal and determining factors, although I did also consider the objections to the appointment of a trust company as receiver of such a railroad corporation.
In my opinion of October 18, 1932 ([D. C.] 1 F. Supp. 820), I did not state or intend to intimate that the question as to individuals or trust companies as receivers presented the only consideration of public interest which in my judgment required the appointment of a Circuit Judge to hold a District Court. I was therein answering and refuting the criticism of myself by District Judge Woolsey in his opinion in Johnson v. Manhattan Ry. Co., 1 F. Supp. 809. I did not consider or act upon the assumption that a mere difference of opinion as to the relative fitness of individuals and trust companies as receivers of corporations would constitute in and of itself a sufficient ground for exercising jurisdiction and a sufficient public interest within the intent and meaning of the Act of Congress (section 22), irrespective of the subject-matter of the controversy, although I was then and am still profoundly convinced that the public interest requires that a trust company should not be appointed receiver of such a railroad system or public service cori poration as the Interborough Railroad Company, or of any other large corporate enterprise which has to be continued in operation, in order that its property may be conserved as a going concern and the performance of its. services continued unbroken, for the due protection of the public interests and in furtherance of the public good.
I have examined the reeord and briefs and the report of the oral arguments in the Supreme Court, and I cannot find any basis in the reeord before the court for the assumption that my difference of opinion with the District Judges was the only ground upon which I exercised jurisdiction. I find the statements to this effect made by petitioners’ counsel were unfounded and were duly challenged in the brief and argument on behalf *73of the receivers. The only basis specified by petitioners’ counsel for their contention upon this point was the affidavit of Mr. James L. Quaekenbush, for many years the attorney and counsel for the defendant Interborough Company, and the opinion that I filed October 18th upon the petition of the receivers for instructions in view of District Judge Woolsey’s decision criticizing my action and setting aside all the orders I had made as void and of no effect. (D. C.) 1 F. Supp. 820.
As to Mr. Quaekenbush’s affidavit, there is no suggestion therein that I should assume the exercise of jurisdiction or would be justified in so doing simply on the ground that individuals and not a trust company should be appointed as receivers of the Interborough! Company. As disclosed on the face of this affidavit, he was urging that a trust company or any other corporation should not be appointed as receiver, and his statements would have been just as fitting and appropriate if they had been submitted to one of the appointed District Judges. It was a plea addressed to the court in favor of the appointment of individual receivers rather than a trust company “in respect to a railroad of the size, importance and character of the defendant, with its complicated and involved daily operations, its enormous staff of operating officials and employees consisting of more than 18,000 individuals and its contracts and relations with the City of New York and the public using its facilities.” The affidavit undoubtedly was in support of the plea that in the public interest a trust company should not be appointed as receiver of such a corporation as the Interborough Company; but I certainly did not deem it then nor did any one then suggest it to be the sole ground calling upon me to exercise jurisdiction and determine in my judicial discretion as Senior Circuit Judge whether or not the public interest required that a Circuit Judge should be designated and assigned under section 22.
My .opinion of October 18th (1 F. Supp. 820, 821) was misinterpreted by the petitioners’ counsel on the argument in the Supreme Court as establishing that the only' ground upon which I exercised jurisdiction was the difference between the District Judges' and myself respecting the relative fitness of individuals and trust companies as equity receivers. This is an erroneous construction. I distinctly referred therein to the case involving “the due performance of their duties to the public’in the care, management, and operation of the largest street railway system in this circuit, and which consisted of a railway system operated in both the Southern and Eastern Districts of New York, representing a capitalization and investment of over $300,000,000 with respect to the Inter-borough Company and the Manhattan Elevated Company, and a capitalization and investment of over $300,000,000 by the city of New York,” and I further referred therein to the various outstanding issues of securities and emphasized the extent and far-reaching nature of the public interest and the huge financial investment of the city of New York, as follows (at page 827 of 1 F. Supp.): “As is well illustrated in this case, the public interest was clearly involved not only by reason of the vast property values and investments but 18,000 employees, millions of daily passengers, thousands of security holders, and the huge financial investment of the city of New York. * * * I was mindful of the judicial power intrusted to me and the judicial duty imposed upon me under section 18 of the Judicial Code [section 22, 28 U. S. C., 28 USCA § 22] to act when the public interest in my opinion required action. I profoundly believed that the public interest did then so require action, and I acted in accordance with my conception of my judicial duty in the premises.”
The remaining point I desire to discuss is as to the propriety of designating myself to hold a District Court and take charge of this case, although the Supreme Court has fully recognized, as above shown, not only that I had ample legal authority to do so- under the Act of Congress, section 22, but that my finding of the existence-of the public interest was the criterion and conclusive, and that the duty and the responsibility were mine and .not that of any other tribunal.. I knew that it had been the uniform practice of my distinguished and revered predecessors in the office of Senior-Circuit Judge in this circuit ever since the Act of Congress went into effect in 1912 — to repeat, Senior Circuit Judges Laeombe, Ward, Rogers, and Hough —and I understood (subsequently confirmed by personal inquiry) that the practice had been general throughout all the other circuits. So far as I had ever heard or have yet heard, this uniform, well-known, and long-established practice of. self-designation has never been criticized or challenged by the Chief Justice or justices of the Supreme Court, who would, of course, have acted to prevent its continuance if they had conceived that there was the slightest judicial irregularity or impropriety in the practice, Nor has the pro*74priety of this practice ever been questioned, so far as I know, at any of the annual conferences of Senior Circuit Judges under the presidency of the Chief Justice (28 U. S. Code, § 218 [28 USCA § 218]). It is true, as now publicly disclosed for the first time, so far as I am aware, in the opinion of Mi". Justice Van Devanter, that Senior Circuit Judge Sanborn in 1912 felt that such a self-assignment might have a personal side approaching impropriety, but this fact was not publicly disclosed; no suggestion or criticism on the subject, so far as I know, was ever made to the other Senior Circuit Judges; and Judge Sanborn’s successor as Senior Circuit Judge accepted and conformed to the' general practice of self-designation without, so far as I can ascertain, any intimation or disapproval by any one. When Judge Woods became Senior Circuit Judge of the Fourth Circuit, I am informed that he wrote to Chief Justice Taft inquiring whether or not he could with propriety designate himself, and that he was advised by the Chief Justice “that there was no necessity for bothering the Chief Justice with requests to designate him [Judge Woods] to sit in the District Court, but that he should proceed to designate himself whenever in his opinion such designation was proper.”
After the most anxious and self-critical consideration, I am convinced that I was fully justified in following a practice and course of action which had been uniformly followed by all my predecessors in the Second Circuit and by the Senior Circuit Judges of all the other circuits, most of them judges of the highest .national distinction and repute. This view is fully confirmed by the following quotation from the opinion of Mr. Justice Van Devanter: “The practice of the Senior Circuit Judges here described [i. e., of self-designation] and the decision just mentioned amounted to a practical construction of the provision in question in keeping with its literal meaning. In 1922, after that construction had prevailed and been acted on for several years, the provision' was re-enacted by the Congress as part of an act dealing with other assignments of judges to the District Courts. [Note No-. 18.] The re-enactment was without any change indicative of a disapproval of the prior construction by the Senior Circuit Judges. In such circumstances, as this court often has pointed out, re-enactment operates as an implied legislative approval of the prior construction — -in other words, as a re-enactment of the statute as before construed. [Note No. 14.]”
Every judge worthy of judicial office ought to be keenly sensitive to and deeply concerned at any intimation of any action on his part approaching-impropriety in the discharge of what always ought to be regarded as a sacred duty. In the present ease, I was acting in the performance of my judicial duty according to my conscience and in the belief which I still entertain that I was authorized and called upon by the Act of Congress to do exactly what I did if in my judgment the public interest so required.
In the light of these profound convictions and with great respect, I cannot for the present bring myself voluntarily to withdraw from this case, whatever may be my ultimate decision. Applications involving vital property rights and interests have been partially argued and are to be further argued which require my study and decision. Counsel who have appeared representing the various parties in these proceedings, except Mr. Hughes (who preferred not to express an opinion) and Mr. Franklin, have assured me that there has been no embarrassment and will be none in the receivership proceedings by reason of my self-designation. I am confident that if and when the Supreme Court’s attention is called to this statement of public interest, it will agree that within the admonition of Co-hens v. Virginia, supra, I must continue the performance of my duties to judicially supervise these receivership proceedings. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218844/ | ERVIN, District Judge.
The Yulu is a motorboat of Honduran registration and was found within the twelve-mile limit of the coast of Louisiana loaded with liquors, by one of the coast guard cruisers, and upon discovering the coast guard cruiser she headed out to sea and was pursued and overhauled outside the twelve-mile limit, and upon examination was found to be loaded with liquor. She was then arrested and brought to Mobile, where she was libeled by the government for violation of the custom’s act (19 USCA § 1585).
A motion to dismiss was filed to the libel on various grounds; only two of them, however, need to be noted.
The first proposition asserted is that the boat was found within the twelve-mile limit off the Louisiana coast; that she could only be prosecuted in the federal court for that district, which would be New Orleans. This proposition was raised before me in the case of The Miss C. B. (D. C.) 59 F.(2d) 744, where I discussed the proposition. It is true that this ease was reversed by the Circuit Court of Appeals but not on this question. 63 F.(2d) 639. It was also ruled by me in the ease of the Halcón, which was affirmed by the Circuit Court of Appeals in 63 F.(2d) 638. Whatever may be the ruling on the state of facts in other circuits, the ruling is settled in the Fifth Circuit by this decision.
The next question presented is whether because of the most favored nation clauses in the treaty between Honduras and the United States, the provision of the treaty with Great Britain that a vessel suspected of smuggling liquors and found within one hour’s run of the coast is substituted for the twelve-mile provision of our statute.
There is no treaty between Honduras and the United States similar to the one made with Great Britain in reference to searches and seizures of vessels suspected of transporting liquor.
It is, however, contended that under the most favored nation clauses contained in the treaty with Honduras that the provisions on this subject found in the treaty with Great Britain are controlling, and hence that the rule laid down in Cook v. U. S., 288 U. S. 102, 53 S. Ct. 305, 77 L. Ed. 641, where it is held that the federal statute authorizing searches and seizures within twelve miles of the coast have been superseded by the provision of the treaty providing for a search and seizure within one hour’s run of the vessel.
This brings us to an examination of the treaty. It professes to be a treaty of friendship, commerce, and consular rights.
The first two articles are devoted to the personal rights of the nationals of the respective governments.
The third and fourth articles refer to the property rights of the nationals of the respective governments.
The fifth article refers to the religious rights of the nationals.
The sixth refers to the right to draft in time of war the nationals of the other government.
The seventh article is the one which it is claimed gives the right to have the provisions of the treaty with Great Britain as to searches and seizures substituted for the provisions of our statute. • So much of it as bears on the question reads as follows (the italics are mine):
“Between the territories of the High Contracting Parties there shall be freedom, of commerce and navigation. The nationals of each of the High Contracting Parties equally with those of the most favored nation, shall have liberty freely to come with their vessels and cargoes to all places, ports and waters of every kind within the territorial limits of the other which are or may be open to foreign commerce and navigation. Nothing in this Treaty shall be construed to restrict the right óf either High Contracting Party to impose, on such terms as it may see fit, prohibitions or restrictions of a sanitary character designed to protect human, animal, or plant life, or regulations for the enforcement of police or'revenue laws.
“Each of the High Contracting Parties binds itself unconditionally to impose no higher or other duties or conditions and no prohibition on the importation of any article, the growth, produce or manufacture, of the *76territories of the other, than are or shall he imposed on the importation of any like article, the growth, produce or manufacture of any other foreign country.
“Each .of the High Contracting Parties also binds itself unconditionally to impose no higher or other charges or other restrictions or prohibitions on goods exported to the territories of the other High Contracting Party than are imposed on goods exported to any other foreign country. Any advantage of whatsoever kind which either High Contracting Party may extend to any article, the growth, produce, or manufacture of any other foreign country shall simultaneously and unconditionally, without request and without compensation, be extended to the like article the growth, produce, or manufacture of the other High Contracting Party.
'“All articles which are or may be legally imported from foreign countries into ports of the United States or are or may be legally exported therefrom in vessels of the United States may likewise be imported into those ports or exported therefrom in Honduran vessels without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in vessels of the United States; and, reciprocally, all articles which are or may be legally imported from foreign countries into the ports of Honduras or are or may be legally exported therefrom in Honduran vessels may likewise be imported into these ports or exported therefrom in vessels of the United States without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in Honduran vessels.
“In the same manner there shall be perfect reciprocal equality in relation to the flags of the two countries with regard to bounties, drawbacks, and other privileges -of this nature, of whatever denomination which may be allowed in the territories of each of the Contracting Parties, on goods imported or exported in national vessels so that such bounties, -drawbacks and other privileges shall also and in like njanner be allowed on goods imported or exported in vessels of the other country.
“With respect to the amount and collection of duties on imports and exports of every kind, each of the two High Contracting Parties binds itself to give to the nationals, vessels and goods of the other the advantage of every favor, privilege or immunity which it shall have accorded to the nationals, vessels and goods of a third State, whether such favored State shall have been accorded such treatment gratuitously or in return for reciprocal compensatory treatment. Every such favor, privilege or immunity which shall hereafter be granted the nationals, vessels or goods of a third State shall simultaneously and unconditionally, without request and without compensation, be extended to the other High Contracting Party, for the benefit of itself, its nationals and vessels.”
The title shows the purpose of the treaty.
It is friendship, commerce, and consular rights that are to be provided for. So these subjects are to be kept in mind in construing the words of the treaty.
The first six sections may be classified under the first purpose of friendship, for they cover the personal, religious, and property rights of the nationals of the contracting parties.
The later sections refer to various rights of the nationals of respective parties giving them the same rights in both countries, and rights as to flags and tunnage duties and various rights that do not bear on the question.
So far as rights of commerce and navigation, and duties, bounties, etc., and the regulations concerning them appear in the treaty, they concern goods shipped and intended to be introduced into the other country for use or sale therein, and ships transporting such goods.
None of them refer to goods that are prohibited entry, or to ships transporting such goods.
Many of the provisions give to the Honduran nationals or ships the same rights possessed by the United States citizens or ships, but none undertake to give any greater rights than those possessed by citizens or ships of the United States.
The same thing applies to each of the references to rights given to the most favored nations.
They have references to ships and commerce, “open to foreign commerce and navigation,” and “no higher or other duties or conditions and no prohibition of any article * * * than are or shall be imposed on the importation of any like article * * * of any other foreign country.”
“No higher or. other charges or other restrictions or prohibitions on goods exported * * * than are imposed on goods exported to any other foreign country.”
“Any advantage of whatsoever kind which either High Contracting Party may extend *77to any article * * * of any other foreign country shall simultaneously and unconditionally without request and without compensation, be extended to the like article the growth, produce, or manufacture of the other High Contracting Party.”
“All articles which are or may be legally imported from foreign countries into ports of the U. S., or are or may be legally exported therefrom in vessels of the U. S. may likewise be imported into those ports * - * without being liable to any other or higher duties or charges whatsoever than if such articles were imported or exported in vessels of the U. S.”
“In the same manner there shall be perfect reciprocal equality in relation to the flags of the two countries with regard to bounties, drawbacks, and other privileges of this nation “ “ * on goods imported or exported.”
“With respect to the amount and collection of duties on imports and exports of every kind - * the advantage of every favor, .privilege or immunity which it shall accord to the nationals, vessels and goods of a third state, whether such favored state shall have been accorded such treatment gratuitously or in return for reciprocal compensatory treatment.”
It is manifest that only favors as to goods that are to be legitimately imported or exported by some other government are contemplated or granted.
The British treaty nowhere contemplates that the liquors are to be imported into the United States and pay any duties, but that such liquors are to be sealed up and remain on the vessels when they enter port, and go out when the vessel clears. Then it is agreed that seizures may be made of liquor-laden vessels in one hour’s run of the coast instead of the twelve miles specified in our statutes.
This privilege does not come under any of the most favored nations clauses in the Honduran treaty.
The motion will be overruled. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218845/ | NETERER, District Judge
(after stating the facts as above).
A right in gross is personal to the grantee. Cowan v. Gladder, 120 Wash. 144, 206 P. 923. The United States has a mere personal interest in the land of the defendants. Cadwalader v. Bailey, 17 R. I. 495, 23 A. 20, 14 L. R. A. 300; Weigold v. Bates, 144 Misc. 395, 258 N. Y. S. 695; 9 R. C. L. 739; Messenger v. Ritz, 345 Ill. 433, 178 N. E. 38. The rights of the plaintiff and the defendants are governed by the principles applicable to individuals. Reading Steel Casting Co. v. United States, 268 U. S. 186, 45 S. Ct. 469, 69 L. Ed. 907; McArthur Bros. Co. v. United States, 258 U. S. 6, 42 S. Ct. 225, 66 L. Ed. 433. An easement to a corporation in gross does not carry a common right to each stockholder.
The plaintiff, acting as an entity in its governmental capacity, secured the easement for functioning in its governmental relation. The governmental sovereignty did not extend the easement, as the fruit of expedient exercise of the sovereign power, to the public for individual enjoyment. All power emanates from the people intrusted to their chosen representatives for execution and has to do with the machinery of government and a privilege or right for the proper functioning of the machinery of government by the chosen representatives in the conservation of or in obtaining the easement does not give to the whole people, as individuals, the enjoyment in their several relations in such license as a public right.
The easement clearly was merely to provide an accessory to the governmental machinery for a function in its capacity as such, and was expressly limited to the United States as an entity or those acting in its behalf. The grant is limited to the purpose of creation, and enjoyment may not be extended by implication. Smith v. City of Rochester, 92 N. Y. 463, 465, 44 Am. Rep. 393; Koenigs v. Jung, 73 Wis. 178, 40 N. W. 801.
In 1926, the date of the easement, the automobile was the dominating vehicle used on public highways, but the easement was expressly limited to wagon road and the automobile was thereby impliedly excluded; its operation is not quiet and is dangerous to fowl, swine, or cattle on the highways, as well as to the safety of children, and there is persuasive reason for a farmer living within 30 feet of the roadway in the remote district in issue to limit the use to “safe wagon road,” to which speed or noise of klaxon are strangers, and he safeguarded against use by sportsmen during the hunting and fishing season, and to the personal use by the plaintiff for operation in its governmental machinery, and the automobile, the dominating highway vehicle, being excluded from the use of the easement, by it being expressly limited to wagon road, is conclusive.
The claim of plaintiff wmuld unreasonably burden the land of the defendants to an extent not contemplated, and does unnecessarily injure defendants, and the right clearly apparent, may not be extended by implication and convert the private way to a public highway, with accompanying noises, dangers, and exposure of the home, family, and stock to, perhaps, irrespbnsible trespassers. *79Nor is a free, full, and quiet enjoyment a grant of an open way prohibiting gates at termini, and where the private way is being subjected or permitted to be subjected to greater burden by the plaintiff, the defendants have the right, on failure of plaintiff to restrict such use, to maintain gates in such reasonable fashion necessary for their protection and which will not unreasonably interfere with the plaintiff’s use. Boyd v. Bloom, 152 Ind. 152, 52 N. E. 751; see, also, Collins v. Degler, 74 W. Va. 455, 461, 82 S. E. 265.
Fay v. United States (C. C. A.) 204 P. 559, is not in point. In that case the government was within its stipulated rights. The right there was not only granted to the Department for certain purposes, but for any other purpose, and it was put to a purpose stipulated.
Decree for defendant dismissing the action. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218846/ | BYERS, District Judge.
This is an action in equity by a trustee in bankruptcy, who seeks to set aside, as preferential, a payment of $10,000 made by the bankrupt to the defendant on or about May 31, 1932.
An involuntary petition was filed in this court on June 4, 1932, and the payment m question was of a 30-day note given by the bankrupt to the defendant on May 16, 1932.
It is not contended that the bankrupt was solvent at the time of the payment, the only issue being whether, at that time, the defendant had reasonable cause to believe that it was receiving a preference.
The bankrupt conducted a nursery in Farmingdale, Long Island, and the enterprise had been in existence for some years when, on September 15, 1931, the bankrupt applied for a loan at the defendant bank, explaining that one or more banks in New York City with which he had been doing business were restricting his borrowings; namely, they were “crowding him.”
He borrowed $15,000 from the defendant, giving his three,-months’ note, and with the proceeds opened a bank account; when the note became due, it was renewed for a like period, and the process was repeated in March, 1932, and the note then given became due May 16, 1932; on that date $5,000 was paid on account, and application was made to renew as to $10,000 with the privilege of paying the note off from daily or frequent receipts of the business. The cashier of the defendant suggested to the bankrupt that the new note be given for 30 days, and pointed out that the payment could be anticipated if desired. The note was discounted at 6% per annum, and no part of this item was refunded when on May 31, 1932, the note was paid in full by applying the then balance in the bank account, of $2.,741.33-, plus cash of $7,-258.67, and the note was surrendered; at that time the bankrupt’s son, who made the payment, asked for the return of a financial statement given to the bank in the previous September, when the original loan was negotiated ; this request was complied with, and, from these circumstances, the trustee urges that the bank had reasonable cause to believe that the payment of the note would constitute a preference.
There is no testimony whatever to establish that the bank had reason to suspect that *80the bankrupt was in financial jeopardy at any time. The only circumstance which helps;the trustee’s argument is the failure of the bankrupt to demand the return of the unearned 6% interest for the unexpired period of the note. Standing alone as this does, it tends to illustrate the conventional cupidity of a bank, rather than to signalize a duty of inquiry concerning the possible legal effect of accepting payment of the debt before it was due.
It is true that the business was conducted in a comparatively small community, wherein it might be thought that the officials of the bank would have had every opportunity for* observing the size and earnings of the enterprise, but nothing has been brought home to <any official or employee of the bank which would reveal either'knowledge of the bankrupt’s affairs, or a special opportunity to obtain it. Forty or fifty hands were employed by the bankrupt, and the payroll was financed through another account in the same bank, carried by the bankrupt under the. trade-name “City of Glass,” which referred to the greenhouse operations. The bankrupt distributed flowers through two large department stores in New York City, and, as above stated, many of its financial operations were conducted through New 'York City .banks, and consequently this defendant did not have that insight into the bankrupt’s 'financial condition as a whole which would have been available if all of the banking arrangements had been confined to this particular institution.
The bankrupt had not overdrawn this bank account at any time, and the renewals of the note, to’-which reference has been made, were not accomplished through the exaction of collateral; there is no evidence that the defendant brought any pressure whatever to bear either to secure the $5,009 which was paid on May 16, 1932, or to force the anticipation of the $10,000 balance. Such are the maneuvers which ordinarily visit upon a creditor the basis of a reasonable cause to believe that a preference is likely to result from such an anticipatory payment as was here made.
The trustee stresses the compliance with the request for the return of the financial statement as related. Whether this is cus.tomary practice in banking circles or not, the fact remains that there is no evidence to the effeet that the return of the statement was exacted as a condition of paying the $10,000 loan. "
The most that can be said concerning the handling of this entire matter by the defendant is that it blindly accepted the financial statement in September, 1931, and rediscounted the loan with the Federal Reserve Bank of which it was a member, without taking any precaution whatever to check the items set forth in the statement, or making an independent appraisal of the assets as therein listed.
Whatever may be thought of the apparent credulity of the defendant bank, the argument comes down to this, that the payment should be set aside as preferential, not because the bank knew or had reason to believe that the bankrupt was insolvent, but because the bank should not have relied blindly upon the truth of the facts asserted in the financial statement. It is thought that such a contention suggests an impracticable test under the Bankruptcy Act.
None of the authorities cited by the trustee would justify a decision based upon the theory so advanced. In other words, the trustee has failed to bring home to the defendant knowledge of facts which would put a rea^ sonably prudent person upon inquiry to learn if the transaction in question would be likely to result in a preference.
The defendant may take a decree dismissing the complaint on the merits, with costs. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218847/ | BORAH, District Judge.
Plaintiff, an Illinois corporation engaged in the business of furnishing sleeping and parlor ears to the railroads for the transportation of passengers, brings this suit in equity against defendants, state tax officials, to enjoin the collection of a'state license tax. On motion of the attorneys for the plaintiff, the Pullman Company, a District.Court of three judges was organized and convened to hear its application for an interlocutory injunction, a preliminary restraining order having been granted without notice because of the danger of irreparable injury resulting by a delay until notice could be given and a hearing had on said application for interlocutory injunction. After a full hearing, at which evidence was introduced in the form of affidavits, and argument had by counsel, the court is of the opinion that defendants’ plea to the jurisdiction should be dismissed and that plaintiff’s prayer for an interlocutory injunction should be granted, and makes the following findings of fact and conclusions of law.
Findings of Fact.
The verified pleadings and affidavits filed herein show that plaintiff is a corporation organized and existing under and by virtue of the laws of the state of Illinois, and is duly qualified and licensed to do business in the state of Louisiana. The plaintiff is and has been for a great many years engaged in the business of furnishing sleeping and parlor cars to railroads for the transportation of passengers, and in the business of furnishing in such cars sleeping berths by night and seats by day, principally in interstate commerce. Some of the railroads to which such ears are furnished run in, into, out of, and through the state of Louisiana, and plaintiff therein furnishes seats and berths to passengers principally in interstate commerce and has so furnished its cars and so conducted its business in the state of Louisiana for many years. Some of its ears run wholly between points in the state, and some of its ears run into and out of the state, and others run entirely through the state. For its services in the furnishing of accommodations to said passengers in its ears, both in interstate and *89intrastate transportation, the plaintiff collects from said passengers rates, fares, and charges which are prescribed by the Interstate Commerce Commission for the accomodations furnished to interstate, passengers and by the Louisiana Publie Service Commission for the accommodations furnished to passengers wholly within the state of Louisiana, which constitutes the sole and only revenue for the services furnished to such passengers.
The statute complained of, Act No. 190 of the General Assembly of Louisiana of 1932, provides in section 31-A: “That every person, firm or corporation operating any Pullman or sleeping car company in this State shall pay a license tax to the State of Louisiana of seventy-five hundred dollars ($7,500.-00), to be paid at the place where taxes are usually paid by railroads or Pullman companies on rolling stock.”
It further provides in substance that if any person, firm, or corporation should fail to pay the tax, an attorney at law designated by the Governor shall take a rule, which is a summary process, to show cause why the delinquent should not pay the amount of the license claimed and be ordered to cease from further pursuit of business until after having obtained the license. The act further provides that all unpaid licenses shall bear interest at the rate of 2 per cent, per month from March 1st until paid, and that a lien and privilege in favor of the state shall exist upon both the movable and immovable property of the delinquent owing the license. In addition to the interest, the delinquent taxpayer is subject to the payment of 10 per cent, attorney’s fees upon the amount of the tax and penalties.
The plaintiff contends that this license tax is in conflict with article 1, section 8, of the Federal Constitution, as being a regulation of interstate commerce, and with section 1 of the Fourteenth Amendment, in that it deprives the plaintiff of its property without due process of law and in denial of equal protection of the law.
The first ground is based upon the argument that the statute imposing the tax does not differentiate between intrastate and interstate business, but imposes the tax upon the conduct of both indiscriminately.
The second ground is based upon the argument that the statute is discriminatory and arbitrary and imposes up’on plaintiff burdens that are not imposed upon others engaged in like business in the state of Louisiana, and that because of the imposition of the unreasonable, arbitrary, and discriminatory license taxes provided by said statute, plaintiff will be unable to continue in the conduct of its business within the state because the amount of license taxes imposed by the state and the exaction by the state of the payment of said license taxes will result in the confiscation of its property.
We find it necessary to consider the first ground only.
Conclusions of Law.
The privilege taxed by the act is the business of furnishing Pullman car accommodations. Any person, firm, or corporation who exercises this privilege, without first paying the tax and procuring the license, is subjected to the prescribed penalties and may be enjoined from the operation of its business. The language of the act is general in its terms and applies to cars running through the state as well as those whose operation is wholly intrastate. It applies to all alike and requires payment for the privilege of running the ears of the company regardless of the fact whether used in interstate or intrastate traffic. The language of the act is unambiguous, contains no restriction as to the character of the business taxed, and is broad enough to prohibit the operation of a Pullman or sleeping car company from engaging exclusively in interstate commerce. There has been no decision of the Supreme Court of Louisiana limiting the act in its operation as to intrastate traffic, and in the absence of such authoritative construction it must be given a construction consistent with its language.
Following the hereinafter cited cases, we are obliged to hold that the flat license tax, including as it does all business of the plaintiff both interstate and intrastate, is void as an attempt by the state to impose a burden upon interstate commerce. Crutcher v. Kentucky, 141 U. S. 47, 11 S. Ct. 851, 35 L. Ed. 649; Osborne v. Florida, 164 U. S. 650, 17 S. Ct. 214, 41 L. Ed. 586; Allen v. Pullman’s Palace Car Co., 191 U. S. 171, 24 S. Ct. 39, 48 L. Ed. 134; Illinois Central R. Co. v. Mississippi Railroad Commission et al. (D. C.) 229 F. 248.
An interlocutory injunction will accordingly be granted as prayed for. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218849/ | BYERS, District Judge,
Plaintiff sues for the alleged infringement of his patent No. 1,614,906 for a “Current Converter for Ignition Systems.” Validity is conceded, so that but brief reference need be made to the device. It is a compact structure, cylindrical in form, consisting of six small aluminum discs in vertical relation, and minutely separated by spaces called gaps, so arranged that the electric current of an. ignition system incident to the operation of an internal combustion engine shall pass from one end of the assembly to the other; in so doing the current is interrupted, i. e., caused to oscillate, so that the spark or discharge produced at the spark plug is disintegrated— that is, the disruptive discharge is broken up into a series of discharges — whereby the combustion resulting from the spark is more generally and completely accomplished than would be the case if no such agency were interpolated between the distributor and the spark plug.
The defendant’s device performs the same function, and the only real contention pre*92sented in its brief is that the method employed to accomplish the purpose is not that of the plaintiff, and hence a necessary element of infringement is lacking.
The plaintiff’s attachment functions entirely by causing the ignition current to oscillate or break up, because it encounters a series of non-conducting elements in its passage from one end of the device to the other; these are the said gaps, and the coatings of aluminum oxide formed on each of the aluminum discs as the result of current heat. The coating or film is punctured by the current and, being self-healing, the desired oscillations are thus multiplied many hundreds of times every second.
The defendant argues that, while his device produces a substantially identical result, it is accomplished through a different action of the ignition current, and hence there is no identity between the means employed by, or between the operation of, the two structures, and hence there is no infringement shown. That the defendant correctly apprehends the applicable test appears from the discussion of the subject in McDonough v. Johnson-Wentworth Co. (C. C. A.) 30 F.(2d) 375, at page 383.
It becomes necessary to determine, therefore, whether the defendant’s device employs the same means and operates in the same way as the plaintiff’s.
The defendant calls his device a spark intensifier and relies upon Patent No. 1,909,-255, issued to him May 10, 1933, to demonstrate that infringement has been avoided.
The latter patent opens with the statement that it refers to means interposed between the spark point and the distributor of an ignition system, for “stepping-up” the current. In line 50 on page 2, it is asserted that the device portrayed in the drawing will so operate that the current leaving the coil, will flow through the wire provided for that purpose, “through the intensifier and is stepped-up in its passage from the electrodes provided by the cups and spheres and an increased amount of current’will pass from the distributor to each of the spark plugs.”
Thus it would appear that the patentee, in using the expression “stepped-up” and “stepping-up,” has intended to convey the idea of increase or expansion of the current itself.
Nothing in the defendant’s testimony'justifies such a teaching. It is not sought to be shown that there is a growth of volume of the current which is generated in a magneto, or in a battery. The patentee Doerrhoefer was himself a witness, and his deposition seemed to be confined entirely to the course of the current in passing through the device, rather than to the effect upon it while so doing.
The invention as claimed is a spark intensifier, cylindrical in form, comprising a sleeve containing oppositely directed metal cups arranged in pairs, which are spaced from each other, containing spheres of high electric conductivity freely arranged in the cups.
In practice the article is seen to be a series of three brass cups formed of upper and lower flanged members which do not meet at the sides; these cups are vertically held in place by a sleeve, and they each contain several little perforated brass balls which have been cadmium plated. The cups appear not to be in actual contact, for the spacing seems to accept a piece of thin paper.
The inventor says that there are air spaces in the cups, but the effort is made to expel this during the course of manufacture, by heating. It would have been more helpful if proof had been offered to show how this process could have dispelled or tended to dispel the air, instead of merely to expand it. .
It is not thought that there is a showing that even a partial vacuum is created in the cups during manufacture.
The inventor deposed that the ignition current passed through the brass cups, and the cadmium plated balls, between entrance to and exit from the device, rather than through the air spaces, because the current thus follows the line of least resistance. .
The trouble with the theory is that the brass and the cadmium plating both form oxide coatings, as the result of the passage of the current.
The balls, if made of brass only, did not form part of a commercial product, as experience demonstrated, hence resort to the cadmium plating.
■ To meet the argument that this expedient was adopted to supply the needed element of an oxide coating or film upon the electrodes, the inventor said that he purposely resorted to a metal in which the oxidation process would be retarded, and that he desired to avoid it altogether. That, in the “make-up” of his invention, he does not depend upon any oxidation process whatever.
It is impossible to reconcile this testimony with the statement that, until the balls were plated, the invention could not be reduced to commercial practice; that is, so long as brass alone was so employed.
*93The assertion that the defendant achieves its purpose by an agency of conductivity rather than one of resistance, has not been fortified by evidence sufficient to meet the plaintiff’s proof to the contrary.
The defendant’s article is thought to be mechanically different from that described hi the plaintiff’s patent, and manufactured and sold by him and his licensee in large volume for the past five years. This mechanical difference is not an improvement upon the teaching of the plaintiff’s patent, in that no new extension of the fundamental conception is portrayed.
The defendant’s disclosure is of a particular assembly through which an ignition current can be passed so as to culminate at the spark in distributed intensity; but that assembly is described in words appropriate for something else, namely, a device which will increase the amount of current passing to the spark plug.
The defendant’s device employs brass cups and cadmium plated balls, instead of aluminum discs, to cause an ignition current to oscillate and expend itself in a disruptive spark, and is not otherwise to be distinguished from the plaintiff’s invention.
Since the desired result is obtained by employing means which are the equivalents of those taught in claims 3 and 4 of the plaintiff’s patent, infringement has been proved.
This conclusion is understood to conform to the decisions in Elliott Addressing Mach. Co. v. Addressing Typewriter Stencil Corp. (D. C.) 39 F.(2d) 232; Welsbach Light Co. v. Sunlight Incandescent Gas-Lamp Co. (C. C.) 87 F. 221; Van Kannell Revolving Door Co. v. Straus (C. C. A.) 235 F. 135.
Decree for plaintiff, to be settled on notice.
If findings are desired, they should be settled on notice, and should contain appropriate recitals as to incorporation, ownership of the patents and licenses, etc. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218850/ | JOHNSON, District Judge.
This is a petition to review the action of the referee in disallowing priority in payment, from the fund derived from the sale of the bankrupt’s real estate, to the claim of the First National Bank of Towanda, Pa., on twcf notes given by the bankrupt.
The facts before the referee in bankruptcy were agreed upon by counsel for the First National Bank and counsel representing the Citizens’ National Bank of Towanda, Pa., assignee of the $4,000 note given by the bankrupt, later referred to in the agreed statement of facts. They are as follows:
“On the 27th day of March, 1928, W. F. Humphrey and others made conveyance of a parcel of real estate located on Second street in Towanda Borough, Bradford County, Pa., to Catherine Winifred Duggan MacNulty and the deed was duly recorded on July 24, 1929 in Bradford County, Pa., in Deed Book 372 at page 120. The deed bears the following *94certificate: ‘I certify that the residence of the within Grantee is Towanda, Pa. W. E. Lane, Attorney for the Grantee.’ In 1930 this property was assessed to Winifred MacNulty and in 1931 to D. J. MacNulty, her husband. The grantee was commonly known as Winifred Duggan MacNulty or Teddie Duggan MacNulty.
“On October 30, 1930, a judgment was entered for the First National Bank of Towanda, Pa., by W. W. Jennings, its President, against Winifred D. MacNulty to No. 224 December Term, 1930, Court of Common Pleas of Bradford County, Pa. for seven hundred sixty five dollars and another judgment to No. 225 December Term, 1930 for four hundred dollars. On March 9th 1931, a judgment was entered in the same Court to No. 151 May Term, 1931, in the sum of four thousand dollars, the plaintiff being W. E. Lane, trustee, now to the use of Charles H. Davidson, Administrator, d. b. n. e. t. a. of the estate of W. E. Lane, deceased vs. 'Winifred D. MacNulty, so-called and also known as Catherine Winifred Duggan MacNulty,’ and indexed in both names.
“The said W. E. Lane, Trustee, was the same W. E. Lane, who signed the certificate of residence in the above mentioned deed to Mrs. MacNulty and the note upon which the judgment was entered in favor of W. E. Lane, Trustee, was in the handwriting of W. E. Lane except a printed portion and a signature of Winifred D. MacNulty, and was found among his possessions by his Administrator. The said W. E. Lane was the stepfather of Winifred Duggan MacNulty.
“By virtue of an amicable scire facias the judgments of the First National Bank against Winifred D. MacNulty were revived to No: 369 and 370 May Term, 1931 and judgments were entered by virtue of an amicable scire facias on May 1, 1931, against Winifred D. MacNulty and Catherine Winifred D. MacNulty, she having signed the amicable scire facias in each ease in both names.
“The note on which judgment was entered to the use of Charles H. Davidson was signed only in the name of Winifred D. MacNulty, the other name being suggested of record by prsecipe of Stephen H. Smith, Counsel for Charles H. Davidson, Administrator d. b. n. c. t. a. of the Estate of W. E. Lane, deceased.
“On July 8, 1931, Catherine Winifred Duggan MacNulty was adjudicated bankrupt and the above mentioned real estate was sold at public sale for the sum of two thousand dollars and this money remains for distribution.
“At the time of the entry of all the said judgments Catherine Winifred Duggan MacNulty was insolvent.
“The judgment in favor of Davidson and against Winifred D. MacNulty appears on the same page of the judgment index as the judgment in favor of the First National Bank of Towanda, Pa., and exactly one inch below those judgments, there being only two judgments against parties not concerned in this case intervening between the judgments of the First National Bank and the judgment of C. H. Davidson.”
On these facts the referee concluded that the two notes held by the First National Bank were defectively entered and did not constitute valid liens on the real estate of the bankrupt as against the holder of the $4,009 note because the Christian name of the judgment debtor was not recorded and indexed in the judgment docket by the First National Bank. The $4,000 note having been entered within four months prior to the adjudication of the bankrupt, its lien was destroyed, and therefore the fund was directed to be distributed pro rata among the claimants.
With the conclusion of the referee this court is unable to agree. It has been held repeatedly in Pennsylvania that a judgment entered on the judgment docket against a debtor without setting forth the Christian name of the debtor does not create a valid lien so far as respects subsequent purchasers. The York Bank’s Appeal, 36 Pa. 458; Burns v. Ross, 215 Pa. 293, 64 A. 526, 7 L. R. A. (N. S.) 415, 114 Am. St. Rep. 963. And subsequent purchasers or judgment creditors need not look beyond the judgment docket. Ridgway, Budd & Co.’s Appeal, 15 Pa. 177, 53 Am. Dec. 586.
As between the bankrupt and the First National Bank, the liens of the judgments entered by the First National Bank were valid, even though there was an omission of part of the name. The York Bank’s Appeal, supra. If a subsequent judgment is entered by a creditor without notice of the previous judgment, such previous judgment will be postponed.
In the case at bar, however, there is something more than a mere failure of the First National Bank to set forth the full name of the debtor on the docket to be considered. The facts show that, while the notes given by the bankrupt to the First National Bank were signed in the name of Winifred D. MaeNulty, and so entered on the docket, these same facts also show that the subsequent *95note of $4,000 entered by Davidson, and now-held by the Citizens’ National Bank as trustee, was also signed in the name of Winifred D. MaeNulty. Apparently the-bankrupt was accustomed to sign her name Winifred D. MaeNulty and was commonly known by' that name. How then can it be said that the holder of the note signed by Winifred D. MaeNulty would be misled by the entry of any prior judgment signed in the identical name ? Certainly any reasonable person would have sufficient notice to examine the docket for any entries under -the same name- as that on the judgment which they held. It is apparent that this point was not raised at the hearing before the learned referee, otherwise, no doubt, the referee would have decided differently.
While the courts of Pennsylvania have held that the first or Christian name must appear in the judgment docket, they also have held that this rule must have reasonable construction. Burns v. Ross, supra. In Butts v. Cruttenden, 14 Pa. Super. Ct. 449, it was held that, if a subsequent incumbrancer had such knowledge of the existence of a prior judgment as made inquiry a duty, he would be affected with notice.
This court is of the opinion that Davidson, at the time of the entry of the $4,000-note, since the name on his note was identical with the name under which the previous notes were entered, had sufficient notice to require him to examine the judgment docket for any prior liens under that name, and his assignee cannot now be heard to say that he had no notice of the prior liens.
The opinion and order of the referee are overruled, the petition for review is sustained, and distribution is directed to be made in accordance with this opinion. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218851/ | CAMPBELL, District Judge.
This action is brought to obtain relief by injunction and damages for the alleged infringement of reissue patent No. 16,611, issued to Leo L. Lewis, assignor to Carrier Engineering Corporation, for method of and apparatus for cooling and ventilating, granted May 3, 1927, on application for reissue filed February 12, 1927, original No. 1,583,-060, May 4, 1926, original application filed December 22, 1924, and of patent No.-1,670,-656, issued to Walter L. Fleisher, assignor by mesne assignments to Auditorium Ventilating Corporation, for ventilating system, granted May 22, 1928, on an application filed May 20, 1927.
Both of these patents relate to methods and apparatus for conditioning the air in auditoriums, theaters, and similar places in which -a considerable number of people assemble.
The plaintiff, Auditorium Conditioning Corporation, a New Jersey corporation, which changed its name from Auditorium Ventilating Corporation, has title to both patents.
The defendant St. George Holding Company, a New York corporation, is the owner, and the defendant St. George Amusement Company, a New York corporation, is the op*96erator, of a theater in the Eastern district of New York, called the St. George Playhouse, which contains an air-conditioning system put into operation subsequent to the issuance of said patents in suit, after notice and prior to the filing of the bill herein, and continuously operated from that time on.
The problem that confronted Lewis and Pleisher, of air conditioning for human comfort, was very different from the so-called air conditioning for industrial purposes, in whieh the factors of moisture and heat are always known, and the system can easily be operated either to add moisture, add heat, or to remove heat or moisture, according to a predetermined plan. The materials processed constitute the real load; the people in such a plant usually being a negligible factor.
The prior art in the main deals only with industrial systems.
In air conditioning for human comfort within a public inelosure such as a theater or the like, the factors of moisture and heat are not always known, as the people to a preponderant degree constitute the heavy load, and this is an uncertain load whieh cannot be estimated, due to the constant shifting of audiences.
The people may arrive in large numbers and pack the theater to capacity at some time during the day, while at another time the theater may be almost empty.
This, however, while the dominant, is not the only, difficulty, as changes in weather have some effect on the load, and each person gives off heat and moisture, and also gives off odors which in the aggregate become seriously objectionable. The quantities of heat and moisture given off differ with different people, and the variations in temperature and humidity do not follow the same curves.
The heat and moisture given off by individuals tend to raise the temperature and absolute amount of moisture in an atmosphere, but the relative humidity will actually fall, since the heat given off is proportionately greater than the moisture exuded.
The human organism is extremely sensitive to atmospheric conditions, and, to be considered comfortable, the humidity in the air must not be oppressive, the air motion must create a pleasant effect without excessive evaporation from the skin, and there must also be an absence of streaks and drafts.
In addition, the temperature and moisture must be correlated with the air motion, or the air at comfortable temperature with too much moisture would feel hot and muggy, or the same air with too little moisture would increase evaporation and feel cold, as it would tend to dry the membranes of the nostrils and throat, which would be physically injurious.
Attempts were made to solve the problem prior to the dates of invention of the patents in suit, but in all of them all of the air was treated, and, if any reheating of cold air was accomplished, it was by means of heating devices, usually requiring the use of a steam boiler under summer conditions, whieh was objectionable.
The patentees of the patents in suit taught the art that all the air need not be treated, and that mechanical reheaters could entirely be eliminated and comfortable conditions produced at a reasonable cost despite the quantities of air handled.
Both of the patents in suit have a primary fourfold object in view:
First, to provide for producing and controlling atmospheric conditions in an inelosure by means of a system wherein only part of the air is conditioned, instead of all of it.
Second, to provide a system where the need for mechanically reheating the dehumidified air is entirely eliminated. Thus, although air is chilled to a low temperature in order to produce desired dehumidification, that air is introduced into the inelosure at a higher and comfortable temperature, yet no mechanical reheaters are employed.
Third, to provide a system wherein the same volume of air may at all times be introduced, even though the constituent proportions of dehumidified air and other air are varied, so that equable conditions may be maintained throughout the theater and fluctuations in temperature be limited to a degree or two.
Fourth, to enable such systems to be installed and operated at a reasonable cost.
Large quantities of air are used by both of the patentees of the patents in' suit in achieving these objects.
This is also true of the St. George Playhouse of the defendants, in whieh about 33,-000 cubic feet of air per minute is used, and was true of the adjudicated Rochester system, in which about 108,000 cubic feet per minute were used.
An appreciable part of the air so used in both inclosures was recirculated air, or air which is reused without conditioning.
Recirculated air is in practice often called “bypassed” air, due to the faet that it bypasses the conditioner instead of passing through it, and mixes at the outlet end of the *97conditioner with conditioned air discharged from the conditioner.
This bypassing seems to me to be the gist of both of the patents in suit.
Lewis states that his invention relates to air conditioning of rooms where people congregate,, such as theaters; that it is desirable to maintain a relative humidity preferably not greater than 59 per cent.; that it is essential to keep the air circulating in order quickly to absorb heat and moisture from the. bodies and the exhalations of the people; and that he avoids first cooling the air to dehumidify it and then heating it up again by mechanical means, which would require the operation of a boiler in summer, by a new arrangement which contemplates bypassing. He states his primary object is to provide a cooling system “in which the bulk of the air is recirculated without being conditioned.”
Only a small part of the air is taken from outside and conditioned; this small part being mixed with the recirculated or bypassed air, “thus saving in refrigeration and eliminating the necessity of means for reheating the air during the summer months.”
The working of the Lewis system is shown in Exhibit 8, in which outside air under Control of damper A, comprising less than one-third of the air handled by the system, is cooled in the conditioner to a point where its excess undesirable moisture is squeezed out, and leaves the conditioner saturated at a low temperature, too cold for comfort. If it entered the theater in this condition without reheating, the occupants would be exposed to dangerously cold air. However, in emerging from the conditioner, the cold conditioned air meets a large volume of air returning from the theater.
This air, which in practice comprises about two-thirds or more of the air handled by the system, is the recirculated or bypassed air under the control of damper C, which is used for reheating the cold conditioned air. The cold conditioned air and the bypassed air then mix in the mixing chamber before being discharged by the fan into the theater. Some air from the theater is released to the outer atmosphere under control of damper B.. The fan operates at constant speed, and not only draws outside air into the conditioner through damper A, and air from the theater through damper C, but discharges the mixed air from the mixing chamber into the theater.
Since it operates at constant speed, it always delivers the same amount of air into the theater, so that circulation requirements of thirty cubic feet per seat may always be maintained. The constituent parts of conditioned air and bypassed air may be varied, so that, when the theater temperature seeks to rise, more cold air from the conditioner and less bypassed air will be mixed for delivery to the theater, but, if the condition in the theater calls for greater reheating, less air will be taken through the conditioner and more will be bypassed from the theater.
The bypassed air is higher in temperature than the cold conditioned air due to the people in the theater who are giving off heat, to infiltration of heat through walls, etc., and to heat given off by lights, motors, and other apparatus.
The bypassed air is lower in relative humidity than the cold, dehumidified air, which is saturated or at a 109 per cent, relative humidity, because relatively a human being gives off more heat than moisture, so that, although the amount of moisture in a theater, all things being equal, would continually tend to add up, yet, relatively, the percentage of humidity compared to saturation tends to diminish, due to the heat given off by the people, and that added because of hot outdoor climate, from the lights, etc.
Lewis perceived that, due to this phenomenon, air in a theater was a perfect reheating agency, which could be mixed with the conditioned air for raising its temperature and lowering its relative humidity, and therefore conditions but a small percentage of the total air, and recirculates or bypasses a large volume, which reheats the conditioned air and eliminates the necessity for steam reheaters under summer conditions.
Lewis has a. dew point control which may be set at any desired point, and fixed the temperature of the spray of water in the conditioner. The outside air entering the conditioner will thus be reduced in temperature by the cold sprays to a point depending upon the setting of the control. A hygrostat D responds to relative humidity which is a function of temperature, and controls operation of dampers A, B, and G. This hygrostat is in the return duct leading from the theater to the mixing chamber, and, since the movement of air is very rapid, it responds almost immediately to changes in condition within the theater.
Thus, as theater conditions vary, the hygrostat will cause the dampers tb operate so that more or less air is conditioned and bypassed.
If more conditioned air is required, the hygrostat will cause damper A to open more *98widely and bypass damper C to close somewhat ; whereas, if the theater tends to become a bit too cool, the reverse action will take place. The bypass damper, in any event, will never close, so that the conditioned air will always be augmented in volume and reheated by a sufficient volume of bypassed air.
Lewis shows a positive relief duct, but in practice relief may take place either through an exhaust or through any desired opening in the theater.
While the system is designed for all year round, and winter conditioning equipment is provided, the winter heating arrangement forms no part of the bypassing system for summer operation primarily covered by the invention.
Fleisher went further than Lewis, in that he taught that, while some outdoor air should be taken in at all times, the total quantity of cooled and conditioned air desired for mixing with recirculated air could with advantage be composed of a portion of outside air and a portion of washed and cooled air from the room, thus saving the large difference in cost arising from the difference in condition between the inside and outside air.
He provided for intaking that minimum of outdoor air required for physiological reasons, and the prevention of odors, and supplied an additional quantity as was required for conditioning from the theater itself.
Fleisher sends outside air and theater air to the conditioner, but Lewis sent outside air alone to the conditioner.
There is an appreciable saving in Fleisher over Lewis.
Fleisher as well as Lewis usually conditions less than one-third of the air handled by the system.
Fleisher was faced with the problem that, if air from the theater were sent to the conditioner, there to be dehumidified with outdoor, air, and other return air were bypassed beyond the conditioner, the volumes of theater air sent to and beyond the conditioner would have to be proportioned. He therefore took a further step forward and arranged to proportion the return air from the theater, so that the amount going to the conditioner, as well as the amount bypassing the conditioner, would vary, responsive to the fluctuations in , theater conditions.
He discovered that, if theater air going to and around the conditioner were subject to the usual constant fan suction, and the openings admitting this return air were variably controlled, a correct volume of return air drawn beyond (bypassing) the conditioner would correspondingly insure a correct volume of return air being drawn through the conditioner.
Fleisher’s proportioning of return air to and beyond (bypassing) the conditioner coineidently regulates both temperature and humidity with an eye to maximum economy and the coincidental varying of outdoor, return air to the conditioner and bypassed air volumes makes for a maximum flexibility regardless of the wide fluctuations in conditions within and outside the theater.
Fleisher’s system also enables speedy cooling down of a theater before patrons are admitted and before any outdoor air is needed.
Lewis’ system would require expensive conditioning of hot outdoor air in the summertime.
Fleisher’s system does not require, before the theater is opened, the conditioning of outside air, but the air from the theater may be returned to the conditioner over and over again and the cooling down effected prior to the opening of the theater, at a very little cost.
The return air in Fleisher’s system supplements the quantity of outdoor air required for physiological reasons when the theater is open, which very often is a relatively small amount. The outside air, therefore, requires less conditioning, and therefore a smaller conditioning apparatus may be employed, which is an advantage.
The working of the Fleisher system is shown in Exhibit 7, which shows the bypass duet with damper I),- which corresponds to Lewis’ bypass duet with damper C shown on Exhibit 8. The outdoor air is admitted to the conditioner under control of damper E. Return air from the theater, under control of damper C also goes to the conditioner. The outdoor air plus return air is dehumidified and leaves the conditioner cold but saturated. In the mixing chamber, at the outlet end of the conditioner, this cold air meets a large volume of bypassed air from the theater. This bypassed air is under control of damper D, and in mixing with the conditioned air raises its temperature, as well as lowers its relative humidity. This mixture is then delivered by the fan to the theater.
When the theater requires more cooling, more air is taken through the conditioner and less bypassed, whereas, if a higher temperature is required, more bypassed air is fed to the mixing chamber and less delivered from the conditioner.
*99Fleisher uses a thermostat A, which is located in the return duet.
The rush of air from the theater affects this thermostat so that it responds to changes in conditions within the theater. Under summer conditions thermostat A governs damper D, which controls the amount of return air bypassing the conditioner. The return air from the theater is divided into two streams. One stream goes past damper C to the entrance end of the conditioner, whereas the other stream, of greater volume, bypasses the conditioner and goes directly to the mixing chamber, where it meets the cold, saturated air emerging from the conditioner. If more conditioned air is required, damper D will tend somewhat to close, whereupon less return air will be admitted to the mixing chamber, and hence more air will go to the conditioner. If the temperature in the theater tends to fall and reheating is demanded, damper D will tend to open, whereupon more return air will be bypassed and less go to the conditioner. By the manipulation of damper D under control of the thermostat, the proportions of return air admitted to the conditioner and bypassing 'the conditioner are controlled responsive to fluctuations in atmospheric conditions in the theater. The fan draws a constant 'amount of air and supplies this air to the theater, and the shifting in position of damper D will not only vary the proportions of return air admitted to the conditioner, and bypassing the conditioner, but also controls the amount of outside air entering the conditioner, as the air takes the path of least resistance, and there is comparatively little resistance to the entrance of bypassed air to the fan, whereas there is considerable resistance to the entrance of outside air because of sprays, cooling coils, eliminators, etc., in the conditioner.
When damper D tends to open and allow more return air to bypass the conditioner, it will not only cut down the amount of return air which enters the conditioner, but also the amount of outside air which enters the conditioner.
A wet bulb thermostat B is provided for governing the temperature of the conditioner spray water in the summertime, and of a preheater in the wintertime. It is unnecessary to discuss the winter appliances.
The commercial success of the two patents in suit is shown by their acceptance by the theater world.
Defendants’ system installed in the St. George Playhouse (Exhibits S. G. 5 and S. G. 6) shows that outside air is admitted to the front end of a washer or conditioner 10, and is drawn through the conditioner by the suction of fan 12L Return air enters chamber 16 at the front end of the conditioner or washer 10, and is also drawn through the conditioner. Return damper 2 and fresh air damper 1 are hand-controlled. Bypass damper 4 is automatically controlled and admits return air directly to bypass passage 14, which bypasses the conditioner. This return air comes from the theater. The bypass damper responds to a control instrument, and serves to admit more or less return air, which bypasses the conditioner and goes directly to the fan. All of the elements of the patent in suit are present; outside air being conditioned, return air being conditioned, and return air bypassing the conditioner for mixture with conditioned air, so that a greater volume of air will result,' higher in temperature than the conditioned air and lower in relative humidity. The fan is operated at constant speed, and, due to the variations in position of bypass damper 4, the proportions of conditioned air and unconditioned bypassed air will be varied.
The bypass damper responds to the thermostat which is in the theater, and controls the proportioning of the different volumes of air responsive to fluctuations in condition in the theater.
The manner of control is that of the patents in suit. Heaters are used in winter just as in the patents in suit.
As in the patents in suit, the bypass dampers in defendants’ installation are always partly open and never closed, as the reheating of the cold, conditioned air is constantly required, and, if the bypass damper were to close even for an instant, a cold blast of air would immediately be delivered by the fan, to the discomfort of the patrons and the disruption of comfortable conditions.
The patents in suit read on the defendants’ structure, the prime objects of the patents in suit are achieved, and the instrumentalities disclosed by the patentees, as well as the manner of employing these instrumentalities, is completely embraced in the defendants’ structure.
Plaintiff relies upon claims 1, 3, 5,13, and 14 of the Lewis patent in suit, and claims 1, 13, 14, 17, and 20 of the Fleisher patent in suit, all of which were held to he valid and infringed in the said Rochester suit.
Claims 1 and 14 of the Lewis patent in suit, and claims 1 and 13 of the Fleisher patent in suit, may be deemed typical and read as follows:
*100“1. The method of ventilating an enclosure in which people assemble, which includes withdrawing air from said enclosure, conditioning fresh air to provide air having a dew point lower than the dew point of the withdrawn air, mixing said conditioned fresh air with air withdrawn from the enclosure and delivering the mixed air to the enclosure, and varying the proportions of said fresh air in the mixture in accordance with changes in the number of people in the enclosure.”
“14. In an apparatus for ventilating and providing desired atmospheric conditions in an enclosure in which people assemble, the combination with said enclosure of means for permitting relief of air therefrom in restricted quantities, an air dehumidifier having an inlet for outside fresh air, a mixing chamber in communication with the outlet of said dehumidifier, means between said mixing chamber and the enclosure for causing fresh air to be drawn through the dehumidifier and mixing chamber and insuring the delivery there-, of into the enclosure ánd also for returning air from the enclosure to said mixing chamber wherein it is 'mixed with the dehumidified air passing therethrough, and means for varying the admission of fresh air to said dehumidifier.” Lewis patent.
“1. The process of ventilating and conditioning a room, which includes withdrawing air from the room, mixing fresh air with withdrawn air, conditioning said mixture, adding withdrawn air having a condition different from the conditioned air to said mixture after conditioning and adjusting responsive to air conditions in the room the proportions of conditioned air and withdrawn air to vary the humidity in the room.”
“13. In an apparatus of the character described, in combination, means for feeding air to an enclosure, means for conditioning said air, means for supplying fresh air and return air for conditioning, means for diluting the conditioned air with recirculated air, and means responsive to the temperature within the room for varying the quantity of such recirculated air.” Meisher patent.
Without going into a detailed description of the structure found to infringe in the Rochester suit and comparing it with defendants’ structure, it is sufficient to point out that the heart of the patents in suit, the bypass, is found in the defendants’ system just as in the Rochester system, which was held a complete infringement.
Defendants are.not relieved from infringement because they contend that, in the patents in suit and in the Rochester Theatre, the operation of the system is accomplished by a greater amount of automatic control, and it is also accomplished by the placing of additional instruments than those shown in defendants’ structure. Additional controls such as the dew point and wet bulb controls, respectively, in the patents in suit, may be advantageously used, but neither the claims in suit nor the bypass feature are directed nor are linked with such added instruments. •
Defendants cannot avoid infringement merely by eliminating devices which form no part of the invention. Walker v. Lakewood Engineering Co. (D. C.) 14 F.(2d) 333, affirmed (C. C. A.) 23 F.(2d) 623; Parsons Non-Skid Co., Limited, v. Atlas Chain Co. (C. C. A.) 198 F. 399; Davis v. Perry (C. C. A.) 120 F. 941; Johnston v. Davenport Brick & Tile Co. (D. C.) 237 F. 668; Marconi Wireless Telegraph Co. v. De Forest Radio Tel. & Teleg. Co. (D. C.) 225 F. 65; Westinghouse Elec. & Mfg. Co. v. Royal-Eastern Elec. Supply Co. (D. C.) 9 F.(2d) 397.
Infringement is not avoided if the alleged infringing mechanical device lacks one of the functions of the patented device, where such function is not claimed in the patent. Alaska Packers’ Association v. Letson (C. C.) 119 F. 599; Id. (C. C. A.) 130 F. 129.
That the thermostat in the defendants’ theater is placed in front of the balcony while in the patents in suit it is shown in return duets, and in the Rochester Theatre it was placed in a collecting chamber in the basement and not in return ducts, is immaterial, as the patents in suit do not limit themselves to any particular position where the control need be placed, and the movement of 'the air is so rapid that the thermostat will respond to the changing conditions in the theater, whether the thermostat is in the theater or in ducts leading from the theater.
Even if it were a fact (which it is not) that the thermostat in the defendants’ theater is located in a less advantageous position, that would not relieve from infringement. Detroit Motor Appliance Co. v. Burke (D. C.) 4 F. (2d) 118, 123; Penfield v. Chambers Bros. Co., 92 F. 630, 34 C. C. A. 579; King Ax Co. v. Hubbard, 97 F. 795, 38 C. C. A. 423; Murray v. Detroit Wire Spring Co., 206 F. 465, 124 C. C. A. 371.
The refrigeration in the defendants’ theater system is controlled by a hand expansion valve exactly the same as in the Rochester Theatre and as in the Lewis patent in suit, when the dew point of the washer water is controlled by hand, and the defendants are in error in their contention that no provision *101is made in the St. George apparatus for regulating the moisture content of the air; but in any event this feature forms no part of the invention.
The thermostat in the defendants’ theater acts exactly the same as the thermostat in the Fleisher patent in suit and in the Rochester Theatre, and as the hygrostat in the Lewis patent in suit, so that the air fed to the theater will always be governed by conditions in the theater, and not so different from the air. in the theater as to produce gusts and drafts, and the defendants are in error in their contention that the theater has no system to insure that the air being fed into the inclosure will always be of a condition approximate to the air of the inelosure.
Defendants contend that their apparatus does not function in the winter; neither did the Rochester Theatre system; hut that does npt relieve from infringement, as none of the claims in suit relate to winter operation, and it is sufficient that the defendants’ apparatus infringes part of the time. Wright Co. v. Herring-Curtiss Co. (D. C.) 204 F. 597.
Defendants cannot escape infringement by the contention that they have a system 'which is not as efficient as the patented systems, as their system appropriates the patented features. Hinman v. Visible Milker Co. (D. C.) 231 F. 174, 181.
That the fresh air damper of the defendants’ system is hand-controlled does not relieve from infringement, as the Fleisher patent is hand-controlled and the 60 per cent, hand-operated damper which exercised the actual control in the Rochester Theatre works the same way as the defendants’ fresh air damper, and, even if the defendants’ system is an imperfect one (which I do not believe), it would still be an infringement. Sundh Electric Co. v. General Electric Co. (D. C.) 198 F. 116, 125.
The defendants’ mixing chambers are the equivalent of mixing chambers of the patents in suit. It is of no moment whether or not . the particular form of mixing chamber is employed, inasmuch as there is an area at the entrance end of the conditioner for receiving the air which goes to the conditioner, the operation will be the same.
Defendants’ contention with reference to heaters is irrelevant, as the claims in suit do not cover heaters, and they form no part of the invention.
The defendants’ contention that there is a difference in fan arrangement is not supported by the evidence; on the contrary, an examination of the patents in suit and the Rochester system shows that in defendants’ system the fan arrangement is the same, and that there is no difference in operation.
The testimony as to the mode of operation in defendants’ theater by the witness. Schlanger is hearsay and need not be further considered.
The witness Schlanger is in error in his testimony that there is no synchronous control of dampers in the St. George system, with the exception of 3 and 4 working together, and that they do not synchronize at all with any fresh air intake damper. Damper 3 of the defendants’ system controls the intake of fresh air to the washer, and works synchronously with damper 4 to reinforce the effect of the latter. The defendants’ system operates on the same principle as the Fleisher patent in suit, and the Rochester Theatre, and, while there is a difference in the Lewis patent which relates only to the particular mode of installing the apparatus, that does not relieve the defendants from infringement, as they take full advantage of the inventions of both the patents in suit.
Defendants have appropriated every element required to carry out the invention of the patents in suit, and have arranged those elements as in the patents in suit, and this arrangement parallels the adjudicated infringing Rochester system.
The defendants’ structure infringes. all the claims of the Lewis and Fleisher patents in suit, on which this suit is based.
All of the prior art, consisting of ten patents cited, has already been considered in the Rochester suit and held not to anticipate either of the patents.
Six of these patents were issued to plaintiff’s licensees or their assignors and relate to industrial problems.
Three of the remaining patents also relate to industrial problems.
The remaining patent to Peters, and Hungerford was issued almost twenty-five years ago, and did nothing to solve the theater problem, and may rightly be described as a paper patent.
Briefly considered, the irrelevance of these citations is clearly apparent.
Peters and Hungerford patent, No. 843,909.
Does not teach or even suggest the thought of bypassing.
*102
Cramer and Hodge patent, No. 1,075^.97.
Covers a humidifier, but there is no refrigeration and no provision for bypassing.
.Braemer patent, No. 1,101,901.
Covers a humidifier, but there is no bypassing of return air.
Klein patent, No. 1,296¿168.
The Klein patent is exemplified in the American Bosch prior use. The arrangement covers a jet device through which very • hot air up to 1,000° is discharged. Its' discharge induces a current in an associated stack, so that air from the room is drawn through the stack and mixes with the hot air from the jet. The air from the jet is always in constant proportion with the air drawn from the room, depending upon the jet speed. By reducing the air through the jet, the air from the room falls off in the same proper-' tion. The constant proportioning of the air volume of the Klein system prevents the altering of the mixture to respond to changing conditions, whieh must be accomplished if the Lewis and Pleisher inventions are to be carried out, and therefore the Klein nozzles do not and cannot approximate the bypassing employed in the patents in suit.
Stacey patent, No. 1,330,920.
Does not teach or even suggest the thought of bypassing.
Carrier patent, No. 1,393,086.
There is no bypassing taught in this patent; on the contrary, all the air which is injected into the room is treated.
Lissa/uer and Keyes patent, No. 1,416,218.
This system is entirely closed. It relates to a drying room, and is entirely unsuited to a theater.
Carrier patent, No. 1,467,306.
This patent does not teach bypassing and does not disclose a refrigerating apparatus nor the thought of reheating conditioned air by return air bypassing a conditioner.
Stacey patent, No. 1,550,714.
Covers a humidifier but no refrigeration. Bypassing air for mixture with cold conditioned air is not even suggested.
Edwards British patent, No. 15,662, A. D. 1914.
Does not even suggest the bypassing operation of the patents in suit.
The following alleged prior uses briefly considered show how far removed they áre from the teachings of the patents in suit.
The American Bosch System.
Has already been considered with the Klein patent on whieh it is based.
The Central Park Theatre.
As originally installed at this theater, cold air was discharged at the rear of the orchestra and was hitting those in the rear of the orchestra in the neck. A small duet was installed at this theater in order to reverse the direction of the flow of air, whereby, instead of discharging cold air, air from the theater was drawn in through the openings directly to a fan, which eliminated the objectionable cold drafts, and at the same time avoided a stagnant condition. This change arose in a wholly incidental way, and its object was merely to correct faulty location of ventilating ducts. There was no thought of producing a new type of system but a mere accident of convenience. The test at the theater showed that only 8 per cent, of the total air was affected, and that this could not effect a rise of temperature of the conditioned air of as much as 2°. It was therefore an inconsequential alteration.
I agree with the court in the Kochester Case that this was so inconsequential as to be of no' value.
The Hennepvn-Orpheum Theatre.
In this theater, sufficient air could not be supplied to a washer, and, in order to increase the air quantity, the washer was widened. The amount of air so supplied remained insufficient, and a hole was made in a wall whereby air from a shaft was additionally provided. This hole in the wall could not be considered a bypass passage, nor could it be employed for bypassing. Either outdoor air or return air could be routed down the shaft, and not a-mixture of both. The air from the shaft went directly to the conditioner and through the hole in the wall.
This installation does not and cannot rout outdoor air and return air in segregated volumes, to and around a conditioner. The hole in the wall was designed merely to add air volume. There was no thought of bypassing. This is clearly shown by the fact that there was another washer in the theater for whieh no hole in the wall was provided, and, if bypassing was desirable, it would be used for the whole theater.
The Ashland Installation.
Was a system used for drying matches in an industrial match plant at Ashland, Ohio. A washer and refrigerating equipment were *103installed in the basement, and the mateh room proper was on the top floor of the building'.
Air from the mateh room through a return damper, arid in addition outdoor air-through -a fresh air damper, were adapted to enter the washer and he cooled.
A damper was also provided for admitting return air from the mateh room directly to a heater chamber leading to the fan. A shaft led from the cooling equipment in the basement to the match room, and in this shaft was a huge interehanger which comprised a series of tubes through which the cold air from the washer was discharged. Two heaters were located at the top of the interchanger in the match room, and all air sent to the match room first went through the inter-changer tubes, and then passed the heaters and finally entered the mateh room.
The return air from the mateh room was pulled down the shaft by the fan and contacted with the outside surfaces of the tubes comprising the interehanger. The damper-leading to the heater chamber at the 'discharge end of the conditioner did not even approximate the bypass damper of the patents in suit. This damper was a winter expedient, and was not and could not be used in the summertime, when the refrigerating equipment and washer apparatus were in operation. This system could not provide continuous bypassing operation required at all times for reheating conditioned air, and in it bypassing or the idea of bypassing finds no support in the physical combination of elements actually installed, or in their manner of operation.
All of the alleged prior uses presented in the case at bar were considered by the court in the Rochester Case, and I agree with its findings that none of them anticipate.
The claims of the patents in suit on which this action is based are valid and infringed.
The contention of the defendants that because of a supposed failure to give defendants specific notiee, plaintiff has forfeited its right to a recovery of damages under section 4900 of the Revised Statutes, title 35, § 49, U. S. Code (35 USCA § 49), is not sustained, as the stipulation Exhibit S. G. 1 admits that the acts constituting the infringement therein set forth in detail were committed by the defendants “since the issuance of the patents in suit, after notiee, and prior to the filing of the bill herein.”
The defense of laches was not sustained.
Assuming that defendants’ installation was made in 1928, under the stipulation, it was made subsequent to the issuance of the patents in suit, the date of the Eleisher patent being May 22, 1928, and finding that this action was not filed against them until September 1, 1932, about four years thereafter, such a short delay would not constitute laches, when, as in this ease, the patents were in constant litigation from January, 1928, up to the present time. Tompkins v. St. Regis Paper Co. (C. C. A.) 236 P. 221; United States Fire Escape, etc., Co. v. Wisconsin Iron & Wire Works (C. C. A.) 290 P. 171.
The plaintiff is entitled to a decree against the defendants, with costs and the usual order of reference and injunction.
A decree may be entered in accordance with this opinion. Settle depree on notiee.
Submit proposed findings of fact and conclusions of law in accordance with this opinion for the -assistance of the court, as provided by the Equity Rules and Rule 11 of the Equity Rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218853/ | GALSTON, District Judge.
This is an application for a writ of habeas corpus for the release of the relator from the custody of the sheriff of Kings county.
From the petition it appears that a judgment in the sum of $14,490.17, in the Supreme Court of the State of New York, County of New York, had been recovered by Mc-Neely & Price Company, the judgment creditor. The date of the entry of the judgment is not set forth.
Subsequent thereto, under a warrant directed to the sheriff of the county of Kings, the relator was on the 18th day of May, 1933, arrested and incarcerated in- the City Prison of the County of Kings.
On June 23, 1933, he filed a voluntary petition in bankruptcy. It is now contended that he should be released because: “The said judgment was not obtained for a tax levied by the United States, the State, County, District or Municipality in which your petitioner resides, as provided for by section 17a, subdivision 1 of the Bankruptcy Act of 1898 [11 USCA § 35, subd. 1] nor was it obtained by any liability for obtaining property by false pretenses or false representation, or for willful and malicious injuries to the person or property of another, or for alimony due or to become due, or for maintenance or support of wife or child, or for seduction of an unmarried female, or for breach of promise of marriage accompanied by seduction, or criminal conversation as provided for by subdivision 2 of said section [11 USCA § 35, subd. 3] nor was the said judgment created by your petitioner’s fraud, embezzlement, misappropriation or defalcation while acting as an officer or in any fiduciary capacity, within the purview of the Bankruptcy Act, as provided by subdivision 4 of said section [11 USCA § 35, subd. 4] nor for wages due to workmen, clerks, etc., within three months before the date of commencement of the proceedings in bankruptcy, nor was it obtained for moneys due an employee to secure the faithful performance of such employee for the term of a contract of employment, as provided for in said section 17 of the Bankruptcy Act [11 USCA § 35, subds. 5, 6].”
A copy of the complaint in the state court action is annexed to the affidavit of J. Leon Friedman. It is alleged in this complaint; that on or about January 15, 1927, the judgment creditor and Volmer H. Houlberg, Inc., entered into an agreement whereby the latter was employed as agent- for the former, for the purpose of purchasing goat skins for the account of the said MeNeely & Price in Aden, Arabia; that the principals agreed to pay through the purchasing agent the actual cost of said goat skins in Aden, Arabia, plus 3 per cent, commissions on said cost, plus the actual banking commissions, and plus the cost of marine insurance; that subsequently and in accordance with the terms of authority vested in the agent, a number of purchases of such goat skins were made, the cost of which was fraudulently represented to MeNeely & Price; that by reason of the false and fraudulent representations made, MeNeely & Price overpaid the said Volmer H. Houlberg, Inc., the sum of money sought to be recovered in the action.
It will be noted that the contract was not made with the individual, Volmer H. Houlberg; but it is alleged that he owned a majority of the shares of the issued capital stock of the corporation, and was in active control and management thereof, and was president thereof.
From Mr. Friedman’s affidavit it appears that the case was tried before a judge and jury in the Supreme Court of the State of New York, and that the judge “placed the issue between the parties in the hands of the jury, giving them the usual instructions as regards the law of fraud and deceit.”
Title 11, U. S. C., § 27, par. (a), 11 USCA § 27 (a), provides (July 1, 1898, c. 541; § 9a, 30 Stat. 549): “A bankrupt shall be exempt from arrest upon civil process except in the following eases: (1) When issued from a court of bankruptcy for contempt of disobedience of its lawful orders; (2) when issued from a State court having jurisdiction, and served within such State, .upon a debt or claim from which his discharge in bankruptcy would not be a release, and in such ease he shall be exempt from such arrest when in attendance upon a court of bankruptcy or engaged in the performance of a duty imposed by the provisions of this title.”
From the foregoing it must appear that the relator has the burden to show that his discharge in bankruptcy would be a release of the judgment.
Title 11, U. S. C., § 35 (11 USCA § 35) provides: “Debts not affected by a discharge. A discharge in bankruptcy shall release a bankrupt from all of his provable debts, ex*106cept such as * * * (second) are liabilities for obtaining property by false pretenses or false representations; * * * or (fourth) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity.”
Reference is made by the objecting creditor to Bullis v. O’Beirne, 195 U. S. 606, 25 S. Ct. 118, 122, 49 L. Ed. 340. There the court said: “The question for this court is whether the judgment rendered by the New York court is in an action for fraud. If so, it is excepted from the effect of a discharge in bankruptcy.” In that case the court concluded that: “An inspection of the record as well as the interpretation put upon the pleadings and judgment by the courts of' New York in the various trials and proceedings had shown that the relief was granted upon the ground of fraud.”
Unlike the opportunity afforded in Bullis v. O’Beime, this court has not the record of the state court in the action of McNeely & Price Co. v. Volmer H. Houlberg. But the facts set forth in the Friedman affidavit are not traversed by the relator, and so it must be assumed from such facts as appear in the return that the New York judgment was based on fraud.
In an action in this court entitled United States of America ex rel. Leo Greenfield v. Sheriff of County of Kings, State of New York, 4 F. Supp. 103, a similar conclusion was reached.
In such circumstances, and without other facts appearing to warrant a different view, it would seem that the judgment was not dis-chargeable in bankruptcy. Thus the writ will have to be dismissed.
Some point was made in the argument and in the briefs filed that the bankrupt’s attendance was necessary for examination under section 21a of the act (11 USCA § 44(a), and perhaps for other duties to be performed in the bankruptcy proceedings. When such time arrives, application may, of course, be made for the release of the bankrupt. In re Thomashefsky (C. C. A.) 51 F.(2d) 1040.
In dismissing this writ, it is, of course, without prejudice to the making of another application. Possibly the relator can show from the entire record in the state court action that the judgment was not based on fraud.
Settle order on notice. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218854/ | COLEMAN, District Judge.
Motion to vacate stay is granted. It is clearly within the policy of the law that a debt “for maintenance and support of wife” be not discharged, and the debt sued on in the Municipal Court was for this, both as to the installments due before bankruptcy and as to those accruing afterwards. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218891/ | CUSHMAN, District Judge
(after stating the facts as above).
The sections of the Tariff Act of 1930 (sections 454, 459), to which reference is made in the libel, are as follows:
Title 19 USC A, § 1454:
“Unlading of Passengers — Penalty. If any passenger is unladen from any vessel or vehicle without a special license or permit therefor issued by the collector, the master of such vessel or the person in charge of such vehicle and every other person who knowingly is concerned, or who aids therein, shall each be liable to a penalty of $500 for each such passenger so unladen. (June 17, 1930, c. 497, Title IV, § 454, 46 Stat. 716.)”
Title 19 USCA, § 1459:
“Contiguous Countries — Report and Manifest. The master of any vessel of less than five net tons carrying merchandise and the person in charge of any vehicle arriving in the United States from contiguous country, shall immediately report his arrival to the customs officer at the port of entry or customhouse which shall be nearest to the place at which such vessel or vehicle shall cross the boundary line or shall enter the territorial waters of the United States, and if such vessel or vehicle have on board any merchandise, shall produce to such customs officer a manifest as required by law, and no such vessel or vehicle shall proceed farther inland nor shall dis.marge or land any merchandise, passengers, or baggage without receiving a permit therefor from such customs officer. The master of any such vessel, or the person in charge of any such vehicle who fails to report arrival in the United States as required by the provisions of this section shall be subject to a fine of $100 for each offense. If any merchandise or baggage is unladen or discharged from any such vessel or vehicle without a permit therefor, the same, together with the vessel or vehicle in which imported, shall be subject to forfeiture; and if any passenger is unladen or discharged from any such vessel or vehicle without a permit therefor the master of such vessel or the person in charge of such vehicle shall be liable to a penalty of $500 for each such passenger so unladen or discharged. (June 17, 1930, c. 497, Title IV, § 459, 46 Stat. 717.)”
The provisions of the Air Commerce Act of 1926, sections 7 (b), 8,11 (b, c), pertinent to the present suit, are:
Title 49 USCA, § 177:
“Application of Existing Laws Relating to Foreign Commerce. * * *
“(b) Resignation of Ports of Entry; Retail of Officers; Application of Customs and Public Health Laws.
“The Secretary of the Treasury is authorized to (1) designate places in the United States as ports of entry for civil aircraft arriving in the United States from any place outside thereof * * * and (3) by regulation to provide for the application to civil air navigation of the laws and regulations relating to the administration of the customs and public health laws to such extent and upon such conditions as he deems necessary. * « * (May 20, 1926, c. 344, § 7, 44 Stat. 572.)”
Title 49 USCA, §181:
“Offenses; Penalties. * * *
“(b) Further Violations of Law; Penalties Imposable, Remission or Mitigation; Lien; Collection; Libel Proceedings.- — Any person who (1) violates * * * any entry or clearance regulation made under section 177 of this chapter, or (2) any customs * * * regulation made under such section, * * * shall be subject to a civil penalty of $500. * * '' In ease the violation is by the owner or person in command of the aircraft, the penalty shall be a lien against the aircraft. Any civil penalty imposed under this section may be collected by proceedings in personam against the person subject to the penalty and/or in case the penalty is a lien, by proceedings in rem against the aircraft. Such proceedings shall conform as nearly as may be to civil suits in admiralty; except *252that either party may demand trial by jury of any issue of fact, if the value in controversy exceeds $20, and facts so tried shall not be reexamined other than in accordance with the rules of the common law. The fact that in a libel in rem the seizure is made at a place not upon the high seas or navigable waters of the United States, shall not be held in any way to limit the requirement of the conformity of the proceedings to civil suits in rem in admiralty. * * *
“(c) Seizure Under IAen; Enforcement; Release. — Any aircraft subject to a lien for any civil penalty imposed under this section may be summarily seized by and placed in the custody of sueh persons as the appropriate Secretary may by regulation prescribe and a report of the ease thereupon transmitted to the United States attorney for the judicial district in which the seizure is made. The United States attorney shall promptly institute proceedings for the enforcement of the lien or notify the Secretary of his failure so to act. * * * (May 20, 1926, c. 344, § 11, 44 Stat. 574.)”
Title 49 USCA, § 178:
“Powers of Secretary of Commerce; Regulations; Expenditures; Publication of Bulletin; Acquisition and Operation of Aircraft, etc.
“Except as otherwise specifically provided, the Secretary of Commerce shall administer the provisions of this subchapter and for such purpose is authorized (1) to make such regulations as are necessary to execute the functions vested in him by this subchapter. * * * (May 20, 1926, c. 344, § 8, 44 Stat. 573.)”
The articles of the Customs Regulations of 1931 to which the libel refers are as follows:
“Art. 244. Landing at Airports of Entry —Requirement.
“Except in the case of forced landings aircraft arriving in the United States from any foreign port or place shall make the first landing at an airport of entry, unless permission to land elsewhere than at an airport of entry is first obtained from the Commissioner of Customs, and in such eases the owner or person in charge of the aircraft shall pay the additional expenses, if any, incurred in inspecting the aircraft, merchandise, passengers, and baggage carried therein.
“Art. 245. Advance Notice of Arrival.
“The person in charge of any aircraft about to depart for the United States from a foreign port or place shall give notice of the intended flight to the collector of customs for the district in which is situated the intended place of first landing in the United States. Sueh notice shall specify the type of aircraft, the markings thereon, the name of the person in charge, the intended landing place and the estimated time of arrival, and shall be sent in sufficient time and by such means as to enable the officer designated to inspect the aircraft to roach the landing field prior to the arrival of the aircraft. Except in the case of a forced landing, no aircraft from a foreign port or place shall land in the United States unless notice shall have been sent in accordance with this article, nor make its first landing in the United States at any place other than that specified in such notice. Such advance notice will not be required in the case of an aircraft making a flight in accordance with a regular schedule filed with the collector for each district in which a landing is to be made.
“Art. 246. Report of Arrival — Manifest.
“The person in charge of any aircraft arriving from a foreign port or place shall immediately report his arrival to the customs officer at the airport of entry or other place of first landing in the United States, and, if sueh aircraft shall have on board any merchandise or baggage, or, in the ease of an aircraft of the United States, shall have been repaired abroad, the person in charge shall produce to sueh customs officer a manifest in duplicate on customs Form 7533, signed by such person under oath as to the truth of the statements therein contained, one copy of which shall be immediately forwarded to the comptroller. Customs Form 5119 may be used if the merchandise does not exceed $100 in value. No sueh aircraft shall, without receiving permission therefor from sueh customs officer, depart from the airport or other place of first landing, or discharge any merchandise, passengers or baggage.”
(The foregoing section was amended in 1932, but in a manner not affecting any question at present apparent in this cause.)
“Art. 254. Penalties. The appropriate penalties applicable in the case of vehicles arriving from contiguous foreign territory shall be assessed for violations of the customs regulations involving aircraft from any foreign country, except that when the regulation violated is peculiar to aircraft, sueh as that requiring the first landing to be made at a customs airport of entry, or that requiring advance notice of arrival, the penalty of $500 prescribed by section 11 of the air commerce act of 1926 shall be imposed.”
*253The jurisdiction of the court over the res under the libel of the United States being unquestioned, other courts are without jurisdiction .to entertain the complaint of the intervening libelant, and therefore, whatever the nature of its claim against the res, it must be asserted in this cause. It is not necessary in advance to settle the form of the decree in case intervening libelant should prevail.
Libelant’s exceptions to the amended intervening libel will be overruled.
The clerk is directed to notify the attoro for the parties appearing of this decision,. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218892/ | GALSTON, District Judge.
This is a motion for an order directing the entry of judgment in favor of the defendant American Surety Company and dismissing the complaint as against that defendant.
The complaint alleges that the defendants Springer & Lotz were engaged in the business of retail druggists, and that on or about July 3, 1922, a permit was issued to them by the federal Prohibition Commissioner on the filing of a bond by the defendant American Surety Company, and that said bond provided: “Now, therefore, the condition of this obligation is such that if the principal shall comply with the terms of said permit * * * and if the said principal shall further pay all taxes, assessments and penalties payable by the said principal under the National Prohibition Act * * then this obligation shall be void, otherwise to remain in full force and effect.”
The complaint further alleges a violation of the National Prohibition Act by the defendants Springer & Lotz, subsequent to the delivery of the bond, in that they unlawfully disposed of about seventy gallons of whisky on fraudulent prescriptions, and that by reason of such violations the defendants became liable to pay the United States “as taxes, assessments and penalties * * * the sum of $845.56, a detailed statement of said indebtedness being as follows:
Por special tax as retail liquor dealer, 11 months ending June 30, 1923 doubled under Section 35, National Prohibition Act........ $45.83
25% penalty, failure to file returns.. 5.73
Por specific penalty for unlawful sales, as retail liquor dealer, under Section 35, National Prohibition Act, incurred August, 1923.. 500.00
Por differential tax under section 600, Revenue Act of 1921, at $4.20' per gallon on 70 gallons distilled spirits unaccounted for......... 294.00
$845.56”
*254It is alleged that on November 10, 1927, dne notice of a breach of the conditions of the bond was given to the defendants; but no part of the sum due was paid to the plaintiff.
The complaint was filed in the office of the clerk of the court on October 7, 1932, almost ten years after the violations complained of. The answer set up an affirmative defense in which it is alleged that the action was not commenced within five years from the time when the tax or penalty accrued; and that therefore the action is barred by section 791, title 28, U. S. C. (28 USCA § 791), and section 105, title 26, U. S. C. (26 USCA § 105).
Title 28, U. S. C., § 791, 28 USCA § 791 (R. S. § 1047), provides as follows: “No suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States, shall be maintained, except in cases where it is otherwise specially provided, unless the same is commenced within five years from the time when the penalty or forfeiture accrued.”
The first matter to be determined is whether from the face of the complaint this suit relates to penalties and forfeitures.
The first item is designated in the complaint as a special tax “doubled under section 35 [tit. 2], National Prohibition Act [27 USCA § 52].” This has all the earmarks of a penalty, and so much seems to be indicated in O’Sullivan v. Felix, 233 U. S. 318, 34 S. Ct. 596, 58 L. Ed. 980.
The next item is designated in the complaint as a 25 per cent, penalty for failure to file returns, and speaks for itself.
The third item likewise is called a specific penalty for unlawful sales.
The fourth item is for a differential tax under section 600 of the Revenue Act of 1921 (26 USCA § 245 note). This is a tax “on all distilled spirits on which tax is paid at the nonbeverage rate of $2.20 per proof gallon and which are diverted to beverage purposes * * * there shall be levied and collected an additional tax of $4.20 on each proof gallon. * * * ”
This is a penalty rather than a tax, for it “involves the idea of punishment for infraction of the law.” Lipke v. Lederer, 259 U. S. 557, 42 S. Ct. 549, 551, 66 L. Ed. 1061. See, also, United States v. Smith, Kline & French Co. (D. C.) 184 F. 532.
Clearly, then, as against the principals, Springer & Lotz, the action being for penalties and forfeitures, and the action not having been commenced within five years from the date when the penalty or forfeiture accrued, it is barred by the statute.
Is the obligation of the surety greater than that of the principal? In the matter of Cheesman v. Cheesman, 236 N. Y. 47, 139 N. E. 775, 776, it is said: “It is the general rule that a surety is not liable if the original debt' is barred by the statute of limitations. In such a ease no recovery may be had even where the principal has allowed judgment to be taken against him. The surety may avail itself of the statute in an action brought against it. Dawes v. Shed, 15 Mass. 6, 8 Am. Dec. 80; McMullen v. Rafferty, 80 N. Y. 456; Williston on Contracts, 1283.” See, also, 17 Ruling Case Law, 966. "
It may be noted that the cases relied upon by the plaintiff are not in point. This is true of United States v. United States Fidelity & Guaranty Co. (C. C. A.) 221 F. 27, which the court stated specifically was not a suit to recover a statutory penalty or forfeiture, and consequently the statute of limitations relating thereto was not available to the defendant.
Other cases, such as United States v. The John Barth Company, 279 U. S. 370, 49 S. Ct. 366, 73 L. Ed. 743; Roberts Sash & Door Co. v. United States, 282 U. S. 812, 51 S. Ct. 185, 75 L. Ed. 727; and United States v. Jureidini et al. (D. C.) 35 F.(2d) 57, can readily be distinguished. The bonds in such cases were given in quite different circumstances. Obviously, when a tax is due and the United States is in position to make assessment or claim therefor, and the assessment or collection is waived in consideration of the giving of a surety bond, a situation is presented distinguishable from the ease at bar.
Finally, it may be noted that no assessment was made within four years of the accrual of the so-called taxes. Title 26, U. S. C. § 105 (26 USCA § 105).
The motion to dismiss is granted.
Settle order on notice. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218893/ | CAMPBELL, District Judge.
This suit is brought by the libelant .to recover from the respondents damages for personal injuries alleged to have been received by libelant while employed as a seaman on the tugboat Margaret A. Moran.
I find the facts as follows:
At all the times hereinafter mentioned, and at the time of the trial, the respondent Moran Towing & Transportation Company, Inc., was a corporation duly organized and existing under and by virtue of the laws of the state of New York.
At all the times hereinafter mentioned, and at the time of the trial, the respondent Tug Margaret A. Moran Corporation was a corporation duly organized and existing under and by virtue of the laws of the state of New York.
The libelant is a resident of the borough of Brooklyn, city of New York, and was on the day in question a seaman, and in or about September, 1931, shipped aboard the tugboat, Margaret A. Moran, as a cook, and was acting as such on board said vessel on September 29, 1931, at the rate of wage of $90 a month.
The libelant was an experienced deek hand and had formerly served as such, and, as a part of his duties as cook, he was, as was customary, required to perform the duties of stem line deek hand when required.
At all the times hereinafter mentioned, and at the time of the trial, the respondent Tug Margaret A. Moran Corporation was the owner of the tug Margaret A. Moran.
At all the times hereinafter mentioned, and at the time of the trial, the respondent Moran Towing & Transportation Company, Inc., operated the tugboat Margaret A. Moran under a bare boat charter, and as such charterer did man, victual, and navigate said tugboat at its own expense.
The full crew supplied by the charterer, the respondent Moran Towing & Transportation Company, Inc., consisted of the master, engineer, deck hand, fireman, and cook.
On the morning of September 29, 1931, the tug left Pier 1, New York, with all of the crew aboard except the deek hand who had missed the boat.
During the absence of the deck hand, the tug proceeded down to Erie Basin, to Robinson’s Dry Dock. She then did a couple of jobs there and followed up a steamer to the West Shore Railroad, North River, on the New Jersey side of the river, Pier 7. After finishing the job there, she went over to Fifty-Third street, North River, right across the river, and made fast, and the master of the tug went ashore.
The master returned aboard and told the libelant he had two scows to pick up.
The tug then let go and went on the lower side of the pier and picked up one scow and put her on the end of the pier, and then went on the other side of the pier, the other slip, and picked up another scow and put her alongside the first scow, both scows being headed up the river, and the tide ebb.
The scows were made fast with a head line, and the tug was outside.
After returning from the shore again, the master put the straps one on the forward end of each of the starboard and port forward bitts.
The tug then pushed in between the two scows, the head line between the two scows having been slackened, but the starboard scow remaining made fast to the pier, and, on orders from the master of the tug, the libelant took the place of the absent deek hand and *256passed the strap from the port side of the tug to the scowman on the Moran No. 113, the scow on the port side of the tug, -which the scowman put over the bitt next to the after bitt of the scow, and the libelant then passed out to the scowman a head line, which he made fast on the forward bitt of the scow, and libelant took a few turns around the forward bitt.
The fireman of the tug, on orders from the master, acted as stem line deck hand.
The master of the tug then ordered the libelant to put up the strap on the starboard side.
The libelant, without any necessity for doing so, had negligently put his left leg inside the bight of the strap on the port side, and as the port scow settled back, due to the action of the tide, the port strap tightened up, and the master of the tug called to libelant, “Look out, Julius,” and rang two quick bells to go back to take the strain off the line.
The libelant’s left leg was caught, but the quick action of the master in causing the tug’s engines to be put astern took the strain off the strap, and the libelant’s leg was released.
The libelant continued on duty as cook all of the remainder of the day.
About 11 o’clock a. m. the tug and tow rounded-to at Christopher street and picked up the deck hand of the tug, who had missed the boat that morning, and was picked up as thereafter arranged.
The next day the libelant continued on duty as cook until about 12 o’clock noon, and then went to the Marine Hospital, Staten Island, where he remained from October 1st to January 15th.
The usual operation for torn ligaments and cartilage having been performed on his left leg on October 26th, after which libelant stayed in bed 12 to 14 days, when the bandage was taken off, and libelant stayed in bed for another week, aften. which he received physiotherapy treatment for three weeks.
The libelant was then given something which rendered him unconscious, and he does not know what was done to his leg, after which he received the same physiotherapy treatment again up until the 15th day of January, when he went home in accordance with his desire.
After he went home he took treatment as an out patient at the Hudson and Jay Street Hospital.
The doctors found they could do nothing further for the libelant.
His injuries are not permanent, and with use he will probably have a perfectly serviceable leg by September 29th, next ensuing.
The libelant suffered from a moderate degree of varicosity in the right leg, and evidence of arthritis in both knees, neither of which was caused by the accident.
The strap in question was made of new rope and in good condition and fit for the purpose for which it was used, and was not twisted or kinked.
The tugboat Margaret A. Moran .was properly equipped, but was not properly manned, as by her certificate she was required to carry five men, including the master. The officers and crew were competent men, and the respondent, Moran Towing & Transportation Company, Inc., had employed a full crew, but the master proceeded to operate the tug without the deck hand, who had missed the boat.
No officer of either of the respondents was aboard the tug at the time of the accident.
The value of the tug was $4,009, and the accrued freight was $36, and the right of the respondents to limit liability to $4,036, if liable for any damages to the libelant, was established.
From the facts as found, the respondent Moran Towing & Transportation Company, Inc., was at fault in operating the tug with four men, and the libelant was guilty of contributory negligence.
The tug Margaret A. Moran was unseaworthy in not being properly manned.
The respondent Moran Towing & Transportation Company, Inc., had provided a proper crew, but under orders of the master, for whose actions the said respondent was responsible, the tug proceeded with her work for some hours during the absence of the deck hand.
I eannot say that the accident did- not result from the insufficiency of the number composing the crew, for the reason that the double duty of cook and deck hand imposed on libelant may well have played its part in causing the accident, and this was not occasioned by any emergency during the voyage, but because the tug started out short-handed.
The libelant was an experienced deck hand, and the performance of the duties of stem line deck hand is required of the cook when necessary.
This is according to the custom of the harbor.
*257The libelant seems to base his claim of liability on the part of the respondents, first, because, as he alleges, there was a twist in the strap, and says that there always are twists in the straps.
The evidence does not sustain his claim of twists in the strap in question, as both the mastar of the tug and the scowman of the port scow, Moran No. 113, did not see any twists.
Further, libelant says he told the captain of the Moran No. 113 to put it right on the bitt, and the captain of the Moran No. 113 says that he did put it on right, and he did.
The libelant, secondly, bases his claim on the unseaworthiness of the tug in operating with less than the number of men required by her certificate. This contention is sustained, as the libelant, due to the absence of the deck hand, was compelled, not only to perform the duties of cook, and was engaged in preparing the dinner, but also the duties of deck hand, which were much greater than the duties of stem line deck hand, which he was ordinarily required to perform.
The master of the tug Margaret A. Moran did not, by any negligent act at the time of the accident, contribute to the injury to the libelant; on the contrary, he not only warned the libelant of his danger, but by his very timely action, causing the engines of the tug to be put speedily astern, undoubtedly saved the libelant’s left leg.
The engine of the tug Margaret A. Moran had been stopped before her master ordered the libelant to put out the lines, and naturally the port bow set back from the effect of'the tide, and the libelant negligently contributed to the accident in unnecessarily putting his left leg in the bight of the strap and leaving it there while he made fast the bow line.
The right of the respondents to limit liability to the value of the boat of $4,000, with accrued freight of $36, making $4,036, was clearly shown, as there was no privity on the part of the respondents with the act of the master of the tug in proceeding with four instead of five in crew including himself, as required by the certificate of said tug.
I find as conclusions of law:
That the respondents are entitled to limit their liability to $4,036, if liable for any damages to the libelant.
That the respondent Moran Towing & Transportation Company, Inc., the charterer, charged with the duty of manning, victualing, and navigating the tug Margaret A. Moran under a bare boat charter, its agents or servants, negligently operated said tug as an unseaworthy tug, in that the master, in the absence of the deck hand regularly employed by said respondent, operated said tug with a crew of four men, including himself when she was undermanned, as five men were required by her certificate, and in so doing required the libelant, not in an emergency arising after starting out, the dual duty of cook and deck hand, which was much greater than the duties usually required of the libelant as cook and stem line deck hand, and could not be performed by him with the same efficiency, because of the time required, as they could be performed by two persons, the deck hand and the cook.
That the libelant, with knowledge of the duties and dangers to be apprehended, negligently contributed to the damages he received, without any necessity for so doing, by putting his left leg inside the bight of the strap on the port side while passing out to the scowman on the Moran No. 113 a head line and leaving it there until his leg was caught, and the damages he suffered must be reduced in proportion to his contributory negligence.
That the respondent Tug Margaret A. Moran Corporation was without fault.
That the libelant is entitled to a decree against the respondent Moran Towing & Transportation Company, Inc., for $1500j with costs, and the respondent Tug Margaret A. Moran Corporation to a dismissal of the libel, without costs.
That a decree may be entered in accordance herewith. Settle decree on notice.
If this opinion is not considered a sufficient compliance with rule 46% of the Rules in Admiralty (28 IJSCA § 723), proposed findings of f aet and conclusions of law in accordance with this opinion may be submitted for the assistance of the court, as provided by the rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218894/ | CAMPBELL, District Judge.
This suit is brought to recover for damages alleged to have been caused to a moored boat by swells from the steamer Alexander Hamilton.
I find the facts as follows:
At all the times hereinafter mentioned and at the time of the trial, the libelant was the owner of the lighter Jim and Bill, which was up until the time of the happening hereinafter referred to tight, hut moored in an unsatisfactory manner.
The steamer Alexander Hamilton was, during the currency of process herein, within this district and the jurisdiction of this court.
On September 3, 1932, at about 8:45 o’clock p. m., the lighter Jim and Bill was lying improperly and in an nnseaworthy manner moored and made fast at the foot of 150th street and Hudson river, Manhattan.
The berth was an open one, and, as the steamer Alexander Hamilton passed down the river as was customary at half speed, some, swells were caused, and as a result of the improper mooring of the Jim and Bill she and some of her moorings were damaged.
The Jim and Bill was moored bow-up river, about 45 feet offshore, by means of two A-frame outriggers, the outshore ends of which were made fast to the forward and after towing bitts on the starboard or inshore side, the four inshore ends of which were made fast to .steel outriggers on shore. In addition, it was anchored bow and stern, had two breast lines of wire and two of manila rope, two fore and aft spring lines of wire cable, and two bow spring lines of manila rope from each end. In addition, there was used in mooring the Jim and Bill one 200-pound mushroom anchor, approximately 150 feet south of said lighter, in line with the fore and aft center line of said lighter, with its line made fast to a cleat on center of stern or south end of said lighter, on the north or bow end of said lighter, a new 5-ineh manila line was tun from the bow bitt and made fast around the bottoms of four light piles set in the river about 90 feet from the bow in lieu of an anchor, and a 200-pound mushroom anchor, about 200 feet offshore, about opposite the port side amidships, with its line running to the after port towing bitt.
The Jim and Bill, moored as she was, would move up and down when swells came in from the river, but the whole resistance caused by the outriggers would come on the boat, coming first on the forward bitt and then on the after bitt, if the swell be moving north, and this would tend to loosen the bitts, especially if they left a little slack in the bolts down at the post. There is a great deal more strain, under the same conditions, on the bitts and on the sides of the lighter as a result of the manner of rigging the lighter than there would be if there were no stiff, rigid outriggers.
There would have been no damage from swells from the Hamilton if the Jim and Bill had been moored as most boats are moored along the river. The Jim and Bill was an old boat, and, while she was tight before the happening herein referred to, she was not strong enough to endure the unusual strain placed upon her by being moored with the outriggers.
The tide was ehh, and there were probably one hundred boats anchored in the im*259mediate vicinity at the time in question, but none was damaged.
From the facts as found, the steamer Alexander Hamilton was not at fault.
There is a grave question as to jurisdiction. The Jim and Bill had been a box barge of the open scow type, with no motive power and no rudder. Her deck house had been removed, and she was intended to he used as a gasoline float for the purpose of supplying oil and gas to motorboats on the river.
She was afloat and had been moored in the position described for approximately three weeks, hut had not yet been converted into a gasoline float, as her pumps were not installed, nor the platform from the shore which gave access to the lighter until after the happening herein referred to, and she could have been used as a vessel. This, it seems to me, is sufficient to give this court jurisdiction. The Bart Tully (C. C. A.) 251 F. 856, distinguishes this case from The Hendrick Hudson, Fed. Cas. No. 6,355, 3 Ben. 419; Pile Driver E. O. A. (D. C.) 69 F. 1005; The Big Jim (D. C.) 61 F. 503; Ruddiman v. A Scow Platform (D. C.) 38 F. 158; Cope v. Vallette Dry-Dock Company, 119 U. S. 625, 7 S. Ct. 336, 30 L. Ed. 501; Gas Float Whitton No. 2, 1896 Prob. Div. 42, and Hayford v. Doussony (The Pirate Ship) 32 F. (2d) 605 (C. C. A.), cited by claimant.
The libelant cannot, however, impose liability on the steamship by mooring an old boat in a way that imposes on the boat a strain greater than that generally imposed on a boat used for freight or passengers under like conditions. Such a mooring renders the boat unseaworthy, and the steamer, when operated in a reasonably careful and customary manner, is not liable for damage to a boat due to the unseaworthy manner in which she is moored, which would not have been caused to a boat moored in a proper and seaworthy manner.
I find as conclusions of law:
That the libelant has failed to prove by a fair preponderance of the evidence that the steamer Alexander Hamilton was negligently and carelessly navigated, so that she caused unusual swells dangerous to a boat properly moored, or that the lighter Jim and Bill received any damage caused or contributed to by the negligence of the steamer Alexander Hamilton, and the steamer Alexander Hamilton is without fault.
That the damages suffered by the lighter Jim and Bill were caused by the negligence of the libelant or those for whose, actions he is responsible, in mooring the Jim and Bill' in an improper and unseaworthy manner and subjecting an old boat to a strain so much greater than boats of her character are customarily and reasonably exposed to when moored in a proper and seaworthy manner, and the libelant is solely at fault.
That the claimant is entitled to a decree against the libelant dismissing the libel with costs.
That a decree may be entered in accordance herewith. Settle decree on notice.
If this opinion is not considered a sufficient compliance with rule 46% of the Rules in Admiralty (28 USCA § 723), proposed findings of fact and conclusions of law in accordance with this opinion may be submitted for the assistance of the court, as provided by the rules of this court. | 01-04-2023 | 07-25-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/7218868/ | GALSTON, District Judge.
In this suit, for the alleged infringement by the defendant of letters patent No. 1,643,-159, a decree pro confesso was entered on March 2, 1933, whereby the defendant, “its officers, agents, attorneys, clerks, servants, employees and workmen and each of them,” were enjoined from infringement of the patent.
This motion seeks punishment for violation of the injunction order not only of the defendant but also of the La Salle Girl Coat Corporation and one Maurice Chalk.
Neither the La Salle Girl Coat Corporation nor Maurice Chalk was a party to the suit nor bound by the decree.
From the affidavit of Louis Barnett, attorney for the plaintiff, it appears that subsequent to the entry of the decree pro confesso, the defendant purchased from the La Salle Girl Coat Corporation, a corporation having its place of business in the Southern District of New York, a number of coats which the affiant states “embodied infringement of the plaintiff’s patent.”
The respondents appear specially in opposition to the order to show cause to contest the jurisdiction of the court on the ground that neither of the respondents is a defendant in the cause, nor in any way connected with the defendant, because the service of the order to show cause was made by a private person and not by the marshal of the court; and because the service of the order was within the Southern District of New York and outside of the jurisdictional limits of the court; and, finally, because no act of infringement is charged by the plaintiff to have been committed by the respondents within the jurisdiction of this court.
It will not be necessary to consider all of these grounds. . It is sufficient to sustain the opposition on the contention that this court did not obtain jurisdiction over the respondents by the service of its process beyond the territorial limits of the Eastern District of New York. McCall Co. v. Bladworth (C. C. A.) 290 F. 365; Munter v. Weil Cor*167set Co., Inc., 261 U. S. 276, 43 S. Ct. 347, 67 L. Ed. 652.
Accordingly, the order to show cause as to the respondents La Salle Girl Coat Corporation and Maurice Chalk is vacated, and the motion to punish, of course, denied.
As to the defendant in the action a different situation exists. The defendant admits having violated the decree pro eonfesso, and without seeking to justify such violation, explains at considerable length how it was brought about. Apparently, the defendant, through one of its employees, was led to believe that the La Salle Girl Coat Corporation had a license which permitted it to sell the coats which were purchased by the defendant. It was eertainly the duty of the defendant to procure proof of the existence of such license. That it failed to do. I am convinced that such failure was not the result of bad faith, but rather of carelessness; and in consequence only a nominal fine of $50 will be imposed. Settle order on notice. | 01-04-2023 | 07-25-2022 |