author: SIBLEY, Circuit Judge. HUTCHESON, Circuit Judge FOSTER, Circuit Judge

text:
    AMERICAN CYANAMID CO. v. WILSON & TOOMER FERTILIZER CO.
    No. 5919.
    Circuit Court of Appeals, Fifth Circuit.
    July 21, 1931.

      FOSTER, Circuit Judge, dissenting.
    John W. Davis, of New York City, Stafford Caldwell, of Jacksonville, Fla., and Charles Caldwell, of New York City, for appellant.
    George C. Bedell, Robt. R. Milam and A. Y. Milam, all of Jacksonville, Fla., and E. T. McIlvaine, of Miami, Fla., for appellee.
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.
   SIBLEY, Circuit Judge.

Wilson & Toomer Fertilizer Company, referred to hereafter as plaintiff, sued American Cyanamid Company, referred to as defendant, at law to recover overcharges on phosphate rock delivered in the several years 1919 to 1923, inclusive, under a long-time contract for its purchase which plaintiff had made with Amalgamated Phosphate Company in 1911 and modified in 1912. The suit was in four counts; the third being a common count for money had and received. The first, second, and fourth were special counts which, set up the terms of the contract, and that the defendant had in 1916 acquired all the capital stock of the phosphate company, and leased its mines and equipment, and had thereupon adopted the contract with plaintiff’s consent, or else had so conducted itself with reference thereto as to estop it from denying adoption, and to amount in law thereto, but had continued to use in the business the name of the phosphate company which it dominated only in order to conceal the adoption and enjoy the advantages of the contract without incurring its burdens in a special particular, to wit, a clause that provided that the plaintiff should each year have the benefit of any price lower than the contract price of $2.80 per ton which the seller might wake in such year on sales followed by delivery to others. A verdict was directed for the plaintiff against the defendant for over $60,000, and appeal taken by the defendant.

The first question we face is the effect of the decision of this court upon a former appeal. 33 F.(2d) 812. There was a reversal by a divided court, with a general remand for further proceedings not inconsistent with, the majority opinion. We have here, therefore, no question of enforcing a specific mandate. The one ruling discussed in the majority opinion was the direction by the court below of a verdict in favor of the defendant at the conclusion of the plaintiff's evidence. After a general consideration of the law and the evidence so far as it had gone, the majority decision was that upon the plaintiff's evidence “uncontradicted and unexplained” the directed verdict was wrong. The dissenting judge thought otherwise. It was also ruled that the statute of frauds was not a defense, because the plaintiff had fully performed its side of the contract in dispute. No other distinct rulings were made. The evidence for the defendant has now been offered, which puts a different face on several matters discussed in the former opinion and rebuts some others. The former opinion under such a mandate is not necessarily an adjudication of any questions save those in terms decided. Wolff Paving Co. v. Court of Industrial Relations, 267 U. S. 553, 45 S. Ct. 441, 69 L. Ed. 785; Mutual Life Ins. Co. v. Hill, 193 U. S. 551, 24 S. Ct. 538, 48 L. Ed. 788. We think under the present evidence we are at liberty to re-examine the faets and the entire law applicable to them.

At the new trial pleas of limitation were offered by the defendant to each count, which were allowed to be filed, but were stricken on motion upon the grounds that each was offered as a bar to the count but did not answer the entire count and that neither plea was a good answer in whole or in part to the count to which it was addressed. The former ground was untenable. The counts all sought recovery for rebates due for 1919, 1920, 1921,1922, and 1923. The suit was begun August 22,1924. The plea to each count was that “all parts or portions thereof relating to alleged causes of action arising out of purported transactions between plaintiff and defendant before August 22nd, 1921, occurred, if at all, more than three years before the institution of this suit.” On their face these pleas do not profess to answer the whole counts, and are not demurrable for this insufficiency. In such case at common law, where only one plea in bar could be filed, the plaintiff could not demur but took judgment as by nil dieit as to the portion of the count not answered, and replied to the plea as to the remainder. Steven on Pleading, 216. In Florida, where more than one plea in bar may be filed, a plea which answers only a divisible part of the count is permissible as to that part, although other pleas prevent a judgment as to the remainder of the count until they are disposed of. Hartford Fire Ins. Co. v. Hollis, 64 Fla. 89, 59 So. 785; Cosmopolitan Ins. Co. v. Putnal, 60 Fla. 41, 53 So. 444. Whether the lapse of three years does bar any part of the counts depends upon the causes of action declared on. The laws of Florida, Compiled General Laws of 1927, § 4663, provide a limitation of twenty years for “an action upon any contract, obligation, or liability founded upon an instrument of writing under seal,” and five years if “founded upon an instrument of writing not under seal,” and three years for an action for fraud, or an action “upon a contract, obligation or liability not founded upon an instrument of writing.” The third count is for money had and received, and exhibits no contract, but only a biff of particulars “For overcharges on phosphate rock” at stated dates and for stated amounts. Claiming on its face no written contract for its foundation, the three-year limitation appears to be applicable to this count, and the plea applying to it should not have been stricken. Counts 1, 2, and 4 are also for overcharges or rebates on phosphate rock, but exhibit written contracts and plead the express promise therein that plaintiff should have the benefit of a lower price than that specified in the contract upon certain contingencies which are claimed to have happened. These counts are founded on these contracts. It is true the defendant did not sign the contracts, but it is claimed in count 1 that it “assumed” it, and thus intentionally made it its own contract, and in count 4 that defendant wrote plaintiff certain letters manifesting a purpose to adopt it; and in counts 2 and 4 that certain conduct of the defendant had this effect, whether so intended or not. The Florida statute does not require that the written eontraet be signed by the defendant. If the defendant in any of these ways became bound by the terms of the writing, whether under seal or not, the action is founded upon the writing within the meaning of the Florida statute, and is limited accordingly. Brownson v. Hannah, 93 Fla. 223, 111 So. 731, 51 A. L. R. 976. To a like effeet in other states are Kytle v. Kytle, 128 Ga. 387, 57 S. E. 748; Atlanta, K. & N. R. R. Co, v. McKinney, 124 Ga. 929, 53 S. E. 701, 6 L. R. A. (N. S.) 436, 110 Am. St. Rep. 215; Gilles v. Miners’ Bank (Tex. Civ. App.) 198 S. W. 170; Schmidt v. Louisville R. R. Co., 139 Ky. 81, 129 S. W. 332; Houston Saengerbund v. Dunn, 41 Tex. Civ. App. 376, 92 S. W. 429; Schmucker v. Sibert, 18 Kan. 104, 26 Am. Rep. 765. The fourth count which was allowed as an amendment on September 4, 1926, though exhibiting along with the contract the two letters claimed to be written by defendant, did not thereby introduce a new cause of action so as to fix its allowance as a new date for measuring its limitation. The letters make no express reference to the contract, and contain no promise to rebate or reduce the price. They are not the foundation of the fourth count, but at most are acts or admissions, if authorized, which might tend, along with the other facts, to show an adoption of the eontraet by defendant. We reject the contention that any count is for a fraud or other tort. Ajfew expressions might so indicate, but the gravamen of the counts is the promise of the eontraet, as was held in the first sentence of our former opinion.' The three-year limitation has no application to counts 1, 2, and 4.

The motion to transfer the case to the equity docket was properly overruled. We think no cause of action set forth was necessarily equitable. With some exceptions of concurrent jurisdiction where the plaintiff may make his choice of forum, a ease is equitable only when some remedy is sought which equity alone can give, or some right set up which equity alone will recognize. No relief is here prayed, save a money judgment. Count 3 is the legal action for money had and received. Count 1, while it alleges that the defendant “assumed” the plaintiff’s eontraet with Amalgamated Phosphate Company, does not set up any promise from the defendant to the phosphate company to do so- which the plaintiff is seeking to enforce, but rather that defendant with plaintiff’s acquiescence and consent took over and adopted the contract, thereby effecting a novation, in consequence of which defendant came directly into legal privity with the plaintiff. This is also the theory of the second and fourth eounts. The fourth count also exhibits a lease between defendant and the phosphate company, but the lease contains no promise from the defendant to the phosphate company to assume the contract, but rather a promise by the defendant to the phosphate company to furnish it with the means of performing the contract for itself. The theory of the second and fourth counts we understand to be that, if defendant did not purposely adopt the contract' as its own, its conduct was such as to estop it to deny such adoption, and to amount in law thereto. It has been held in many jurisdictions that plaintiff would have to enter equity to dbtain enforcement of a promise from defendant to the -phosphate company to carry out the latter’s eontraet. Keller v. Ashford, 133 U. S. 610, 10 S. Ct. 494, 33 L. Ed. 667; Willard v. Wood, 135 U. S. 309, 10 S. Ct. 831, 34 L. Ed. 210 ; Second National Bank v. Grand Lodge, 98 U. S. 123, 25 L. Ed. 75. But if defendant adopted the contract, taking the place of the phosphate company in it with plaintiff’s consent, there was a virtual novation and no need for entering equity to enforce the resulting obligation. Taenzer v. Chicago R. R. Co. (C. C. A.) 170 F. 240; Chicago & Alton R. R. Co. v. Chicago Coal Co., 79 Ill. 121; Swift & Co. v. Detroit Rock Salt Co. (C. C. A.) 233 F. 231. Estoppel by conduct to deny such an adoption has been applied in equitable suits. Wiggins Ferry Co. v. Ohio R. R. Co., 142 U. S. 396, 12 S. Ct. 188, 35 L. Ed. 1055. But law courts also enforce so-called equitable estoppel. Kirk v. Hamilton, 102 U. S. 68, 26 L. Ed. 79; Taenzer v. Chicago R. R. Co., supra. From this construction of the counts it also follows that there is no mixing of contract and tort, nor of legal and equitable causes of action, and consequently no error in refusing to compel an election between the counts, or to strike out portions of them.

The counts were specifically traversed,, and additional facts were pleaded to show defendant’s real relation to the contract, and that there was no intent to adopt it and no necessary inference of adoption. Upon the pleadings thus settled it was proven on the trial that the contract was made by Amalgamated Phosphate Company, and performed by it until August, 1916, when the entire capital stock of that company came to bo-owned by defendant. During that fall the defendant, as shown by its directors’ minutes,, “desiring to more directly own or operate the properties of the Phosphate Company,” appointed a committee to consider the situation. As a result it was decided not to own, but to operate, and on December 29, 1916, the much-discussed lease was made from the phosphate company to defendant demising the phosphate mines and their equipment for a term of thirty years or until within that period the mines should he exhausted. The defendant as lessee bound itself (1) to operate the mines; (2) to pay annually as rent to the lessor an amount equal to the 5 per cent, interest on its $1,400,000 of outstanding bonds, to wit, $70,000, taxes, insurance, and lessor’s administration expenses, and a royalty of 10 cents per ton on rock taken out, to be in no year less than the sinking fund payment due to be made by lessor under its bond mortgage. This royalty ran from $40,-000 to $100,000 per year; (3) to deliver to lessor on cars at the mines all the phosphate rock needed by lessor to fulfill its outstanding contracts, including that of plaintiff, at a price of 15 per cent, over cost, ascertained on an agreed basis; (4) to install additional equipment necessary to produce the phosphate rock promised above, with leave to put in still other equipment; (5) to maintain the properties in good condition and deliver them back in such condition at the end of the lease, lessor to have the right at its end to purchase any or all equipment added by lessee at valuations to be arrived at in an agreed way, lessor to have the right to remove them if not so purchased; (6) to maintain reasonable fire insurance. The lessor on its part covenanted to pay the principal and interest of the bonds and taxes as they matured, and to make no further liens on .the property. The two companies now had the same officers, and they executed the lease for each. The lease was at once put into effect. The additional equipment to a value of about $500,000 was added, the promised payments made, and the promised phosphate rock delivered by the lessee. The lessor company had no other active business, but its corporate organization was kept up, and its separate books and treasury maintained, though by persons who also served the defendant. The lease was not recorded, but in operating the mines the defendant placed its sign on the premises and marked the equipment with its name; its own stationery was used for its business and a different stationery for that of the lessor, and defendant in no wise concealed the fact that it was in possession, and made no misstatement as to the nature of its possession. The deliveries of phosphate rock to plaintiff were billed to it in the name of the phosphate company, and paid for by cheeks payable to and collected by the phosphate company. Prices were adjusted as before by reduction to the lowest prices at which the phosphate company had delivered rock to others each year; payment of the rebate being made by the phosphate company’s check. Much of the money of the lessor was used by the lessee, some borrowed on note and some on open account, hut accurate records of the transactions were kept on the books of both companies. In 1919; the high cost of operation which attended and succeeded the World War having rendered the phosphate company’s long-time contracts at low prices very burdensome, efforts were made to get plaintiff and others who held similar contracts to make some adjustment, which were successful with all exeept plaintiff. The price to plaintiff was practically fixed by long-time contracts with Armour & Co. and others at prices as low as $1.80 per ton. They were thus not alone unremunera-tive in themselves, but lowered the price to plaintiff. These low-price contracts were procured to be canceled, some being substituted by new contracts direct with defendant, hut still at prices lower than plaintiff’s contract price of $2.80. As the lessor, the phosphate company, was no longer making these low-price sales, it assumed that no rebate was due to plaintiff, and none was thereafter made. This suit is to recover the difference between plaintiff’s contract price and the lowest sales executed by the defendant under these substituted contracts.

It was apparently considered in the court below that the lease between parties related as these corporations were, and carried out as this one was, and with the results reached, was necessarily to be disregarded, and the entire transactions to be attributed to the defendant as the dominating actor in them, leaving no possible conclusion but that defendant had adopted the plaintiff’s contract, had violated its terms, and was liable. Accordingly much evidence, documentary and oral, was excluded which was offered to show the circumstances which attended the making of plaintiff’s contract and the acquisition by defendant of the stock of the phosphate company, and the financial condition of the phosphate company at the time of the lease and at the time of the substitutions for the low-price contracts, and the purposes of the parties in these transactions, and the necessity of them to avoid the failure of the phosphate company. Nearly a hundred exceptions relate to these rulings. We see no relevancy of the evidence touching the making of the contract with plaintiff. That contract was of foree when the defendant came into the business. Its meaning is not in dispute. It must have accorded to it what it calls for and nothing more. Nor do we see how the history of the acquisition of the stock in the phosphate company by defendant is material; there being no claim in the declaration that there was any wrong in its acquisition. The financial condition of the phosphate company after defendant became its 'owner, and the purposes in view when the lease was made, are a part of the ease declared on, and the evidence thereabout should have been admitted. So the condition of the phosphate company and its business and the real purpose of substituting the contracts with Armour & Co. and others were relevant. The plaintiff claims that adoption of its contract had already occurred; the lease being a scheme to conceal it, or at least being disregarded in the adoption, and that the substitution of these low-price contracts did not affect the defendant’s liability. The defendant contends that the lease was an actual business transaction intended to be carried out according to its terms, that no adoption of plaintiff’s contract was intended or effected, and that the substitution of the low-price contracts was a lawful act to aid a bad situation. Evidence that the market price of rock during these periods was above plaintiff’s contract price was also rejected. We think it has some bearing on the motives of .the parties, especially if the substituted contracts carried a compromise price less than the market. Of course the market price in no wise affected the obligation of the plaintiff’s contract, but only illustrates the conduct and purposes of the parties in what was being done. Evidence to show that plaintiff knew of the lease and had no cause to suppose that defendant had taken over and adopted the contracts of the phosphate company was offered. Such a fact would be relevant to the issue. But knowledge of mere stockholders and of friends of the officers of the plaintiff would not by itself bring home notice to the plaintiff. We cannot deal separately with the assignments of error, but regard what has been said as a sufficient guide in dealing with the evidence upon another, trial.

Combining the evidence admitted with that erroneously excluded, a verdict was not demanded for the plaintiff. As a rule, one who contracts with a corporation must look to it alone for performance. The ownership by defendant of all the stock of the phosphate company did not merge the corporations, nor did the having of the same officers and offices end the corporate activity of either or by itself make one a mere agency or instrumentality of the other. Peterson v. Chicago, Rock Island & P. R. R. Co., 205 U. S. 364, 27 S. Ct. 513, 51 L. Ed. 841; Conley v. Mathieson Alkali Works, 190 U. S. 406, 23 S. Ct. 728, 47 L. Ed. 1113; Pullman Co. v. Missouri Pacific R. R. Co., 115 U. S. 587, 6 S. Ct. 194, 29 L. Ed. 499; In re Watertown Paper Co. (C. C. A.) 169 F. 252; Pittsburgh & Buffalo Co. v. Duncan (C. C. A.) 232 E. 584. This is not the ease of one corporation taking the assets of another by lease or otherwise without paying a fair value, and leaving it without means to meet its previous obligations, as in Chicago, Milwaukee & St. Paul R. R. v. Third National Bank, 134 U. S. 276, 10 S. Ct. 550, 33 L. Ed. 900; Northern Pacific R. R. Co. v. Boyd, 228 U. S. 482, 33 S. Ct. 554, 57 L. Ed. 931. Nor is it the case of a responsible corporation organizing or using an irresponsible one which it controls to carry out some business of the former but yet to screen it from liability in ease of misfortune as in Luckenbach S. S. Co. v. Grace (C. C. A.) 267 F. 676; Portsmouth Cotton Oil Refining Corp. v. Fourth National Bank (D. C.) 280 F. 879, affirmed (C. C. A.) 284 F. 718. Nor is it a case where in evasion of public duty or public law a part of the corporation’s business is put into or handled through a controlled subsidiary, as were Chicago, Milwaukee & St. Paul R. R. Co. v. Minneapolis Civic & Commerce Ass’n, 247 U. S. 490, 38 S. Ct. 553, 62 L. Ed. 1229; United States v. Lehigh R. R. Co., 220 U. S. 257, 31 S. Ct. 387, 55 L. Ed. 458; United States v. Delaware, Lackawanna & W. R. R. Co., 238 U. S. 516, 35 S. Ct. 873, 59 L. Ed. 1438. Nor yet a ease where a third party takes over an existing contractual situation, his predecessor ceasing to figure in it, and begins to carry it on and enjoy its benefits, his acts being consistent only with the adoption of the contract and explicable only on that theory, and thus leads the other party to believe he has made the contract his own, as Wiggins Ferry Co. v. Ohio R. R. Co., 142 U. S. 396, 12 S. Ct. 188, 35 L. Ed. 1055. The jury might have found the following to be true: The phosphate company was a substantial corporation having about $3,000,000 of assets. The lease did not convey away these assets, but, considering the unfavorable state of the company’s business, made a justifiable and fair disposition of them. The fixed rental to be paid, including bond interest, taxes, insurance, administration expenses, and royalties, might have amounted to $200,000 annually. The phosphate company’s outstanding obligations were to be scrupulously regarded by it, the lessee agreeing to make the plant equal to taking care of them, and spending $500,000 to this end. The phosphate company, though controlled by its lessee, did not disappear, but remained organized, having its own money and property, ready to respond to its own contracts, and in fact doing so in its own name under the operation of the lease, which resulted in an improvement of its own financial condition and the accumulation of a large solvent debt against its lessee. Nothing in the lease itself, or in the conduct of the parties to it prior to 1919, seems necessarily to negative these contentions. Under such circumstances, although it be true that the defendant owned and dominated the phosphate company, we do not see any sufficient reason to say that their separate corporate identities should be disregarded, or one corporation held to be the mere agency of the other as respects plaintiff’s antecedent contract. 14 C. J. “Corporations,” § 3662.

The sensitive point in the case is really not the lease, which did neither the phosphate company nor its creditors any harm, but its getting rid of the low-price contracts with Armour & Co. and others, which had operated to entitle plaintiff to the rebates. These contracts were testified to be unprofitable after the World War, indeed, threatening the bankruptcy of the phosphate company. Most of them were exchanged for cost plus contracts made directly with defendant. Some saving was thus made in these contracts by a bettered price, and a further saving was no doubt contemplated in the effect on the contract of plaintiff. Putting the new contracts in the name of the defendant instead of the phosphate company was probably for this very purpose. But this suit is not against the phosphate company on the theory that in thus substituting- the defendant for itself it had used its fully controlled agency or instrumentality so that the deliveries to Armour & Co. and others continued to be the acts of the phosphate company entitling plaintiff to its rebate. Instead, the plaintiff has sued the defendant, which did not even receive the difference in price sought to be recovered. It clearly appears in the present record that this difterence went to the phosphate company, and is among its assets and liable to its debts, and cannot reach the coffers of the defendant as belonging to it until the phosphate company is liquidated and its affairs settled. The count for money had and received fails just here. As regards the special counts founded on the contract, the making of the new contracts with Armour & Co. and others did not in law make the plaintiff’s contract with the phosphate company to become one with the defendant, but the phosphate company remained as much bound to perform it, and as capable of performing it, as ever. If the defendant thereby caused the phosphate company wrongfully to breach its contract, that would be a tort, and we have held that not to be the cause of action set up. But we go further and say that, aside from an adoption of it in fact by defendant, we perceive no breach of the plaintiff’s contract by the phosphate company in what was done. The plaintiff has held onto its contract, and demanded what is nominated in the bond. This was phosphate rock at a price of $2.80 per ton, subject to rebate only if “the sellers during the life of the contract should sell any phosphate -rock followed by deliveries thereof” at lower prices. This agreement had nothing to do with market price, or what others sold at. It was one-sided, in that the price was not to be raised if the seller could get better prices from others. Mere contracts at lower prices were to have no effect, but only deliveries. The long-time cheap contracts with Armour & Co. and others which were having a doubly disastrous operation were not contracts with plaintiff, and had no effect on plaintiff’s contract save as the phosphate company from year to year might make deliveries on them. Plaintiff had no right to have the deliveries made-. If the phosphate company should simply refuse to perform, or could buy off and completely terminate these cheap contracts, plaintiff could not complain. If it could arrange with some one else to make new contracts as the price of canceling the old ones, plaintiff could not object. Supposing the only purpose of the substitution to be escape from the rebates, the escape, however purchased, is not a fraud on or a wrong to the plaintiff, nor a breach of plaintiff’s contract with the phosphate company.

Since, therefore, neither the ownership of the phosphate company’s stock by the defendant, nor the identity of their officers, nor the lease of its property, nor the substitution of the low-price contracts, nor all of these things combined entitled the plaintiff as a matter of law to a recovery against the defendant, there remains for consideration only the question whether defendant had in fact ■by intention or by estoppel adopted the phosphate company’s contract with plaintiff and made it its own, so that on delivering rock to ■others afterwards at lower prices it owed the rebate as its own obligation. The letters exhibited in count 4, one written just after the lease and one the following year, may indicate a purpose to adopt. In reply it is contended that the writer had no authority to act for defendant in respect to its contracts, and that the letters were written and signed in •defendant’s name by mistake. It is also argued that the purpose to adopt is negatived in that the very shipments of rock to which these letters referred were made in the name •of the phosphate company, that of the hundreds of bills of lading only seven showed defendant as the consignor and they were errors and oversights, and that all the rock was finally billed by the phosphate company and payment was made to it. The testimony of plaintiff’s president is pointed to, that at all times plaintiff had looked to the phosphate company for its rock and complained to it in ease of delay, issued checks to it, and received refunds from it, and, if any letter about the business was addressed to defendant, it was in error. This also goes far to rebut any contention that plaintiff was so misled to its disadvantage by the conduct of defendant as to ■create an equitable estoppel. Indeed, it is not easy to see how plaintiff could have refused to take the rock tendered it, or have ■acted otherwise than it did if it had always known the full facts. The case of Wiggins Ferry Co. v. Ohio Ry. Co., 142 U. S. 396, 12 S. Ct. 188, 35 L. Ed. 1055, is distinguishable in that there the original contractor disappeared entirely from the transaction, there-, by releasing the other party if he so elected, and the successor in its own name proceeded to carry out the contract, doing things “which were only consistent with the adoption of the contract” and “only explicable on that theory,” and “which led the other party to believe that he had made the contract his own.” None of those things clearly appears here. Many of the acts of the defendant were consistent" with adoption and explicable on that theory, but not only on that theory, for they were also explicable by and consistent with the theory that it was executing its obligations under the lease. That there was an adoption of the contract by defendant, notwithstanding the provisions of the lease .and the form in which the business was ■transacted, was not a conclusion demanded by the evidence, if indeed authorized by it, and the judge should not have so directed the verdiet.

Each party moved for an instructed verdiet. The plaintiff requested specific instructions if its motion should be denied. The defendant phrased its motion thus: “The defendant moves the court for a directed verdiet for the reasons hereafter set forth, but reserves the right to go to the jury on anything the court may regard as a disputed question of fact, in case the court refuses to grant the motion, and defendant’s motion for a directed verdiet is not to be construed or regarded as having placed the case in the court’s hands for a decision of the facts.” Specific undisputed matters of fact were then pointed out by the motion as controlling. The court denied defendant’s motion, and granted that of the plaintiff. Defendant immediately excepted, but presented no further motion or request. If both sides move for an instructed verdiet without more, it is to be understood that both request the court to find the facts, and on review the only question is whether the finding made is supported by substantial evidence. Beuttell v. Magone, 157 U. S. 154, 15 S. Ct. 566, 39 L. Ed. 654; Williams v. Vreeland, 250 U. S. 295, 39 S. Ct. 438, 63 L. Ed. 989, 3 A. L. R. 1038. But a motion for an instructed verdiet is the only way to make test of the sufficiency of the evidence to support a contrary verdict. It should not, merely because the opposite party also makes such a motion, involve a sur-. render of the constitutional right to a jury trial of material contested issues of fact. It often happens, as was claimed in this case, that certain indisputable facts entitle the movant to a verdict if the law upon them is as he claims it; but, if the law be otherwise, he may still win if he can sustain his version of the disputed facts. Where, from the nature of the ease and. the language of the motion or from other proceedings taken, it is apparent that the movant does not intend to request the court to find the disputed facts, such artificial inference ought not to be made, contrary to the truth. Empire State Cattle Co. v. Atchison R. R., 210 U. S. 1, 28 S. Ct. 607, 52 L. Ed. 931, 15 Ann. Cas. 70; Michigan Copper Co. v. Chicago Screw Co. (C. C. A.) 269 F. 502; Fire Association v. Mechlowitz (C. C. A.) 266 F. 323. The present case belongs to the latter category. We do not regard the failure of defendant to request that specific issues be presented to the jury as important. If the defendant had not waived a jury trial, the court was hound in a law case to submit controverted issues of fact to the jury. Gunning v. Cooley, 281 U. S. 90, 50 S. Ct. 281, 74 L. Ed. 720; Hartman Goldsmith & Co. v. Fidelity & Deposit Co. (C. C. A.) 33 F.(2d) 89.

There is a further contention that rebates on deliveries made in 1923 are in no case collectible, because not within the life of the contract. The contract was originally limited to December 31, 1922, but by its terms undelivered tonnage in one year was to be carried forward to the next. By a special agreement of the parties the undelivered tonnage prior to 1921 was carried over to 1923. Nothing was said therein as to the price. We think the fair construction of the agreement is that the time of delivei-y was to be extended under the contract stipulations as to price; that is, the life of the contract was protracted into 1923.

Because of the erroneo.us rulings on evidence, and because of the direction of the verdict for the plaintiff, the judgment is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.

HUTCHESON, Circuit Judge

(concurring).

I agree with Judge SIBLEY that the judgment of the court below was wrong; with Judge FOSTER that there should be an end to this litigation. I do not, however, agree with Judge FOSTER, that it should be ended by an affirmance for plaintiff.

Giving every fact in the record every effect in favor of plaintiff possible to it, it seems plain to me that no obligation of any kind has ever sprung in its favor against the defendant, and I think that, but for the fact that the cause was tried below to a jury (Slocum v. New York Life Ins. Co., 228 U. S. 364, 33 S. Ct. 523, 57 L. Ed. 879) judgment should be here rendered for defendant.

Whether, if the facts developed on the retrial had sustained the factual assumptions of the majority opinion on the former appeal, I should have felt hound to accept that opinion as the law of this case, I do not find it necessary to decide, though I find myself in agreement with Judge Walker’s dissent, that the facts upon which the majority rested its conclusion that defendant had assumed a liability to plaintiff do not support that conclusion.

The record here does not present the state of facts assumed and given» the most importance in the former opinion, that there was a secret lease, “kept secret for the purpose of compelling appellant to pay more than the market price for phosphates.” It directly and by the' uncontradicted proof rebuts that assumption, and leaves this court not only at liberty, but bound to determine on this appeal the legal effect of the undisputed facts which this record discloses.

These facts make it entirely dear to me that it never was the purpose of the defendant to assume Phosphates’ contract, but quite the contrary, that it took no action having that effect, and that a verdict finding that way on this record would be without a shred of evidence to support it.

If a cause of action could arise out of the act of the defendant in arranging for the cancellation of the low price contracts with Armour & Co. and others, for the purpose and with the effect of removing the conditions which gave plaintiff the right to rebates, plaintiff should of course have had an instructed verdict, for there is no question hut that the defendant did just that thing.

If that action alone could not furnish the spring of liability, and it is perfectly clear to me that it could not, then defendant should have had an instruction, for that was all that the defendant did. To find in the face of the deliberately adopted and carefully carried out purpose of defendant not to assume or become liable for plaintiff’s contract with Phosphate that it did do so, would be to permit a theory that it ought to have done so to supply the place of evidence that it did.

I concur in the judgment of reversal, but, believing with Judge FOSTER that this litigation over an undisputed state of facts ought to end, I think that, instead of a general reversal, the reversal ought to be with directions to instruct a verdict for defendant, if upon a retrial the same facts appear.

FOSTER, Circuit Judge

(dissenting).

This is the second appeal in this case. On the former appeal we reversed a judgment based on a verdict directed for defendant at the close of the plaintiff’s evidence. Our former decision is conclusive on the question that there was sufficient evidence before the court to support plaintiff’s cause of action. The same evidence is in the record on this appeal. While there are some ninety-four assignments of error running to rulings on the admission or exclusion of evidence, only fourteen of them are in form suf-fieient to properly present them in this eourt. These assignments in my opinion are immaterial, as the evidence admitted or rejected would not substantially affect the rights of the defendant.

The record shows that at the close of all the evidence both plaintiff and defendant moved for a directed verdict. The rule is well settled that in that situation both sides assert that there is no disputed question of fact to be submitted to the jury. If there is any evidence at all to support the judgment, it cannot be disturbed on appeal. The exception ,to'the rule is this: Where a party in asking for a directed verdict submits requests for special instructions to the jury, he asserts that, while he believes there is undisputed evidence in the record warranting a judgment in his favor, there is also disputed evidence which, if the conflict is resolved in his favor, would entitle him to a verdict. In this case the plaintiff submitted requests for special instructions, but the defendant did not. The defendant incorporated with its motion to direct a lengthy argument in support thereof, but nowhere does it appear that the defendant asked for special instructions. The part of this motion quoted in the majority opinion amounts to nothing unless it be to create a trap for the trial judge, which ought not to be tolerated. If the defendant had any idea that disputed evidence in the record entitled it to a verdict, if the conflict were resolved in its favor, it was its duty to point it out clearly to the court. The defendant can derive no benefit from the action of the plaintiff, and its motion should be governed by the general rule. Beuttell v. Magone, 157 U. S. 154, 15 S. Ct. 566, 39 L. Ed. 654; Empire State Cattle Co. v. Atchison, Topeka & Santa Fe Ry. Co., 219 U. S. 1, 28 S. Ct. 697, 52 L. Ed. 931, 15 Ann. Cas. 70; Sena v. American Turquoise Co., 220 U. S. 497, 31 S. Ct. 488, 55 L. Ed. 559; Williams v. Vreeland, 259 U. S. 295, 39 S. Ct. 438, 63 L. Ed. 989, 3 A. L. R. 1038; Birge-Forbes Co. v. Heye, 251 U. S. 317, 40 S. Ct. 160, 64 L. Ed. 286.

In my opinion there is sufficient evidence in the record to support the conclusion that the phosphate company had become the mere alter ego of the eyanamid company, and that the latter had in fact assumed the contract between the phosphate company and plaintiff (appellee).

I have no doubt that, had the ease been submitted to the jury upon proper instructions, the result would have been the same. However, it is not our province to weigh and reconcile the evidence. There is ample evidence to sustain the conclusion reached by the District Court, and we have no right to substitute our opinion for his. There should be an end to this litigation, and the judgment should be affirmed. For these reasons I respectfully dissent.


source: Caselaw Access Project

author: EVANS, Circuit Judge

license: Public Domain

text:
    O’BRIEN v. UNITED STATES, and four other cases.
    No. 4503.
    Circuit Court of Appeals, Seventh Circuit.
    July 27, 1931.

      Wilbur A. Royse, Clarence W. Nichols, and Fred R. Bonifield, all of Indianapolis, Ind., for appellants.
    George R. Jeffrey, U. S. Atty., and Alexander G. Cavins and Telford B. Orbison, Asst. U. S. Attys., all of Indianapolis, Ind., for the United States.
    Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
   The five appellants, O’Brien, Ridenbaugh, Lambert, Curran, and Gray, all police officers of the city of Indianapolis, were indicted with others on three counts of an indictment, two of which were dismissed as to appellants. The remaining count charged: “That “ * * (appellants and others) * * * on or about the first day of January, 1929, and thereafter continuously, did then and there unlawfully, wilfully, knowingly, corruptly and feloniously combine, conspire, confederate, arrange and agree together and with each other and with other persons * * * unknown, to commit an offense * * * which offense was that they * * * would then and thereafter and in the said district unlawfully and feloniously and for beverage purposes, transport, possess for sale and sell alcohol and other intoxicating liquors fit for beverage purposes * * * and would unlawfully maintain in the City of Indianapolis * * * rooms, buildings and places wherein such alcohol and other intoxicating liquors would be so sold and would be unlawfully kept therefor.”

The jury found all the appellants guilty. O’Brien and Ridenbaugh were sentenced to four months’ imprisonment; Lambert was sentenced to imprisonment for ninety days; Curran and Gray were each given a sixty-day sentence. As to the other eight defendants named in the indictment, three were never apprehended, one pleaded guilty, one was dismissed upon direction of the court, and three others were found guilty. One of these three obtained a new trial. Of the thirteen defendants, seven wei’e policemen. One obtained a new trial, one was dismissed by the court for want of evidence to connect him with the alleged conspiracy. The other five have appealed.

The assigned errors are: (1) Refusal to direct a verdict in favor of each appellant; (2) the entering of a judgment upon the verdict when the evidence was such as to estop the government from prosecuting the ease.

On August 14, 1930, three prohibition agents, Kroeneke, McGrath, and Wilson, in connection with one Lyle, opened what appeared to be a pool room in the city of Indianapolis. Lyle, who was placed in charge of the business, was a 'decoy employed by the prohibition agents, ostensibly to operate the pool room, hut in reality to seeure evidence against violators of the prohibition law. Lyle was loaned to the government agents by the state officials of Indiana. He had been previously engaged in the bootlegging business in Indianapolis.

EVANS, Circuit Judge

(after stating the facts as above).

Appellants challenge the sufficiency of the evidence to support the verdict. They ■ deny that it disclosed a conspiracy or, if such conspiracy he shown, a guilty participation in it by any appellant.

.[1] As to the first objection, little need be said .other than to state our conclusions. That there was a conspiracy to violate the prohibition law, there can he no doubt. The conspiracy was conceived by the three prohibition agents, who enlisted the services of a decoy, Lyle, to more effectually accomplish their object. ■ A place was rented, ostensibly for the operation of a pool hall. At this place, liquor was possessed, sold, and given away, as well as transported to and from it. While the record seems barren of proof as to actual sales therein, positive proof established the fact that liquor was brought to the place and- distributed by Lyle to the several policemen who called at the place at various times. It might be urged, perhaps, that the object of the conspiracy was to entrap certain suspected offenders. Nevertheless such entrapment was to be accomplished through the violation of the Prohibition Act. As a conspiracy may have several objects, it follows that, if one of its objects be the violation of a federal law, it falls within the condemnation of .the statutes. U. S. v. Rabinowich, 238 U. S. 78, 86, 35 S. Ct. 682, 59 L. Ed. 1211; Frohwerk v. U. S., 249 U. S. 204, 209, 39 S. Ct. 249, 63 L. Ed. 561; Taylor v. U. S. (C. C. A.) 2 F.(2d) 444; Allen v. U. S. (C. C. A.) 4 F.(2d) 688.

Whether appellants, or any of them, joined in the conspiracy is a much closer fact question. Our consideration of the evidence must, in view of the question presented (the existence of sufficient evidence to go to the jury), be limited largely to a review of the government’s testimony. The fact that the appellants disputed the government’s witnesses, and denied guilty participation in any offense, was evidence for the jury to consider and weigh. If any evidence tended to establish the offense charged, however, the denial by appellants would not avoid the necessity of submitting the fact issues to the jury. The government’s ease would no doubt have been much stronger had Lyle, who represented the prohibition agents and played the leading role in the conspiracy, testified. His nonappearanee, while perhaps weakening the government’s case, was not fatal to the prosecution. His nonappearanee may, too, be accounted for, because the unenviable part he played would probably have made him valueless or worse than valueless as a witness. Nevertheless, appellants’ criticism of his nonappearanee is appreciated, and the evidence has been examined with that faet as a background'.

The only offense charged in this indictment was a conspiracy to violate the Prohibition Act. The evidence tending to show that the various officers were corrupted by money bribes, by liquor, or by free drinks, bore only on the appellants’ alleged guilty participation in the conspiracy.

Considering all of the evidence and not overlooking the position and duty of a police officer, we cannot say that the court erred in submitting the case to the jury. No doubt the appellants did not know the extent of the conspiracy, nor the names of all those who participated in it. They did know that there was an unlawful enterprise being conducted in the pool hall, and they, knowing such facts, gave active aid and support to its successful consummation. • The support whieh one may give to an unlawful conspiracy naturally differs. There are leading and minor roles to be played. One actor is active, another nonaetive. Omissions may, under certain circumstances, he tantamount to acts of commission. Guilt may in some instances be established by nondoing, as well as by affirmative acts, provided the intended and actual effect of such nonaetion is to advance or consummate the object of the conspiracy. Allen v. United States (C. C. A.) 4 F.(2d) 688.

Entrapment; Estoppel. A difficult question is presented by the record, so far as the issue of entrapment is concerned. The district judge submitted this issue to the jury with instructions as favorable to appellants as they could have legitimately requested. He charged the jury:

“We have a rule of law, Gentlemen, which says that if an officer, or a person places into the mind of someone else that he should commit a crime, when that was not in that person’s mind until it' was so placed there, and he goes ahead and commits that crime, he cannot be convicted if the person who placed that into his mind, does it for the purpose of entrapping him. That is to say, they must have a strong suspicion that the person is a law violator, or that person must do something himself to invite the invitation to commit a crime, before it can be suggested by someone else, and not be considered as an entrapment. Because, in this land of ours, Gentlemen, public policy forbids that officers sworn to enforce the law, should seek to have that law violated, or that those whose duty it is to detect criminals, should create them.
“That is to say, in this case, public policy says that a prohibition officer who is sworn to enforce the law, should not, himself, seek to violate that law, and that they whose duty it is to detect crime, should not create it.
“So that when an officer induces a person who has had no intention of committing a crime, to violate the law, the Courts will not lend their aid in the punishment of persons thus lured into committing crime.
“I think- that is a fair statement of the law, Gentlemen, with reference to entrapment. That is to say, if the prohibition officers induced these defendants to violate the law, these defendants not having in their minds, at that time, and having no intention to commit a crime, or violate the law, and these prohibition officers not having had sufficient knowledge that they had been violating the law, then you cannot punish the Defendants for doing the things that they are charged in this Indictment with having done, because that would be contrary to public policy under our law.
“" * If, * * * you have a reasonable doubt as to whether or not these Defendants were entrapped into doing the things that they did — if you find they did those things — as the term ‘entrapment’ has heretofore been explained to you, in these instructions, then it is your duty to return a verdict of not guilty.”

In view of this charge, the only error upon which appellants could rely arises out of the court’s failure to direct a verdict. To determine this question, we must examine the evidence and apply the proper law.

There was evidence which'supported the prohibition officers in their asserted belief that the National Prohibition Act was being extensively violated in Indianapolis, and this violation was in part attributed to the nonaction, if not to the connivance, of the police officers of the city. Certain prohibition agents made a preliminary investigation of the conditions in Indianapolis and found that certain police officers not only failed to enforce the prohibition law of the state of Indiana, but aided in the violation of the National Prohibition Act and they accepted bribes from others who violated the act. Doubtless, the extent to which the Indianapolis police force winked at violations of the National Prohibition Act was unknown, and the prohibition agents proceeded to gather the information by tempting those who called at the pool hall.

Assuming their purposes to be legitimate, an inquiry as to the means by them adopted is necessary to determine this question of entrapment. In approaching this question, it is assumed that there axe instances in criminal law, as well as in civil actions, where the end, though laudable enough, does not justify the means.

It would seem that the natural and logical approach to this subject of entrapment must be through the application of the doctrine of estoppel. Individuals, in dealing with each other, are not permitted to assert rights or enforce remedies when their own. acts induced another to commit the wrong out of which arose the right sought to be enforced. “Estoppel is founded on morality and justice, and especially concerns conscience and equity.”

We^see no reason why the government-should not be subjected to the same rule of' conduct. Although it be a sovereign, it-should not be permitted to adopt means which are condemned by the courts when practiced by its citizens. It may not be-sued save with its consent, it is true, but if it comes into court, it is as a litigant.

If the conduct of one be unconscionable, if it be intentionally deceptive and designed to induce, and does induce another to do something which he would not otherwise have done, the wrongdoer is not and should not be permitted to profit thereby. This rule, widely invoked in civil actions, has been applied to the government in the prosecution of its criminal eases. Similar questions are arising with ever increasing frequency in criminal eases involving prosecutions under the National Prohibition Act. Decisions

dealing with, this subject and the practice questions growing out of it are collected and classified in the footnote.

Generally the courts have considered the question under the head of entrapment, hut whether it he called entrapment or estoppel, it would seem that the essential elements of an estoppel must exist before the government is denied a judgment because of such conduct.

In the ease of Voves v. U. S., 249 F. 191, 192, Judge Baker, speaking for this court, said:

“Grant that the government may use a decoy to discover evidence of a committed crime of whatever nature; that, where one has the intent to commit a malum in se, or the willingness to do a malum prohibitum, a decoy may accompany the wrongdoer and even participate in the offense; that a liquor seller is guilty, despite his honest and reasonable belief respecting tbe age or race of tbe purchaser; and even that he must take -his chance that a purchaser, who is not a government decoy, may willfully deceive him by camouflage — still the question remains : May the government maintain mi indictment against a person for doing a malum prohibitum when the government’s conduct has misled the person into believing that the prohibited aet was a lawful aet?
“In a civil transaction between citizens such conduct as the jury might have found in this ease would create an estoppel which would preclude a suit based upon the suppressed truth. Is our government of the superman type that releases the ruler from the obligations of honesty and fairness that are imposed upon the citizens? Is one’s liberty or reputation as a law-abider to have less protection than his property? We are strongly of the view that sound public policy estops the government from asserting that an act which involves no criminal intent was voluntarily done when it originated in and was caused by the government agents’ deception.”

In Woo Wai v. United States (C. C. A.) 223 F. 412, 415, the court said: “We are of the opinion that it is against public policy to sustain a conviction obtained in the manner which is disclosed by the evidence in this case, taking the 'testimony of the defendants to be true, and that a sound public policy can be upheld only by denying the criminality of those who are thus induced to commit acts which infringe the letter of the criminal statutes. Some of the courts have gone far in sustaining convictions of crimes induced by detectives and by state officers. This is notably so of the decision in People v. Mills, 178 N. Y. 274, 70 N. E. 786, 67 L. R. A. 131. But it is to be said, by way of distinguishing such cases from the ease at bar, that in all of those eases the criminal intention to commit the offense had its origin in the mind of the defendant.”

Attempting to distinguish between the eases involving the legitimate use of decoys to detect a crime and thpse dealing with evidence showing an inducement on the part of the government, we said in the ease of Goldstein v. United States, 256 F. 813, 815: “ * * * Something more than the mere use of decoys or detectives by the government is necessary to raise an issue of estoppel. * * * There must be deception of such a character as to make it unconscionable for the government to press its case.”

The evidence in that case clearly showed that the criminal intent was lodged in the defendant’s mind before the government agent gave him an opportunity to carry it out. Defendant was ready and prepared to commit the crime when the opportunity presented itself.

Like questions were considered in Casey v. United States, 276 U. S. 413, 418, 48 S. Ct. 373, 374, 72 L. Ed. 632, There the majority opinion and a dissenting opinion both dealt with the subject of entrapment. In the majority opinion, the conclusion was reached that the government was not estopped from prosecuting the ease. We quote therefrom: “We do not feel at liberty to accept the suggestion that the Government induced the crime. A Court rarely can act with advantage of its own motion, and very rarely can be justified in giving judgment upon grounds that the record was not intended to present. * * * Furthermore Casey according to the story, was in no way induced to commit the crime beyond the simple request of Cicero to which he seems to have acceded without hesitation and as a matter of course. *' * We are not persuaded that the conduct of the officials was different from or worse than ordering a drink of a suspected bootlegger.”

The test dedueible from these decisions turns upon the issue of inducement. If the accused entertained the criminal intent before he was afforded the opportunity to violate the law, he is in no position to plead estoppel. Usually such intent is disclosed by words spoken or deeds committed before the decoy is used. Under sueh 'circumstances he cannot be heard to say that he would not have violated» the law but for the action of the government’s agent. In short, applying the doctrine of estoppel, he was not led into the commission of the crime by anything which the government’s agent said or did. It is the fact that one was induced to aet in a manner in which he would not otherwise have acted, by the inducement of another, that makes applicable the doctrine of estoppel.

The government is guilty of no misconduct when it endeavors to discover wrongdoing and punish the wrongdoer. To secure the evidence to establish the commission of a-crime, it becomes necessary at times to use decoys to discover the commission or catch the transgressor in the act of committing the offense. But it is unnecessary to the due administration of the criminal laws and it shocks the court’s sense of justice to permit a prosecution to proceed where the evidence shows the offender was innocent of wrongs doing and free of evil intent prior to his acquaintance with the government or state representative, who, in the professed cause of law enforcement, proceeds, first to corrupt the accused’s mind hy possibilities of profit and gain through violation of the statutes and then, surrounded by accomplices as witnesses, awaits the downfall and ignominy of the victim.

Applying these tests to the ease at har, we find no evidence in the record which would indicate that any of the appellants had, prior to the opening of the pool hall, disclosed any disposition to enter into a criminal conspiracy to violate the prohibition law. There was evidence tending to show a widespread violation of the National Prohibition Act in the city of Indianapolis, and that policemen in that city either aided others in violation of the act or were willing to accept bribes from those who trafficked illegally in intoxicating liquor. The evidence, however, does not show, prior to the formation of the conspiracy charged in the indictment, that any one of the appellants was guilty of such misconduct. Such evidence as was given on this subject dealt with the police force generally, rather than with any law viola/tions by appellants.

Moreover, the offense charged is conspiracy. This offense is, of course, separate and distinct from the various crimes which may be the object of the conspiracy. We think there is a vast difference between the use of decoys for the purpose of discovering crimes and apprehending criminals and the use of decoys to induce others to join an unlawful conspiracy originated by the government for the purpose of securing the violation of laws by others. Two cases have been found, State v. Dougherty, 88 N. J. Law, 209, 96 A. 56, L. R. A. 1916C, 991, Ann. Cas. 1917D, 950, and Woodworth v. State, 20 Tex. App. 375, where the courts refused to sustain a conviction on conspiracy charges where the conspiracies originated with the state officials, and which had for their object the detection of substantive crimes. The conspiracy charge in the indictment herein originated with the prohibition agents. It cannot be divided into two enterprises, one legal and one illegal. If the conspiracy were unlawful, it must have been so not only as to those who subsequently joined it, but also as to those who originated it.

Such a situation is not dissimilar to the case where one arranges through a third party for a robbery to be committed upon himself with a view of receiving a reward, or a case of burglary where the entry was made through the assent of those who were in the occupancy and control of the building burglarized.

Had this case been one for the prosecution of the substantive offense, the evidence, meager as it was, perhaps presented a jury question on the issue of inducement -by the prohibition agents. Such questions, like other questions of fact are, under the authorities cited, for the jury to determine. But the government here charged conspiracy, and it must be held to that charge alone.

We conclude that the evidence conclusively established an estoppel against the government on the charge presented, and the motion to direet a verdict for the defendants should have been granted.

The judgment is reversed.

       I. Cases Holding No Entrapment:
      A. Federal Cases:
      Casey v. United States, 276 U. S. 413, 48 S. Ct. 373, 72 L. Ed. 632 ; Price v. U. S., 165 U. S. 311, 17 S. Ct. 366, 41 L. Ed. 727; Rosen v. U. S., 161 U. S. 29, 16 S. Ct. 434, 480, 40 L. Ed. 606; Grimm v. U. S., 156 U. S. 604, 15 S. Ct. 470, 39 L. Ed. 550 ; Montgomery v. U. S., 162 U. S. 410, 16 S. Ct. 797, 40 L. Ed. 1020 ; Scott v. U. S., 172 U. S. 343, 19 S. Ct. 209, 43 L. Ed. 471; U. S. v. Smith, 43 F.(2d) 173 (D. C. Tex.) ; Patton v. U. S., 42 F.(2d) 68 (C. C. A. Okl.) ; Swallum v. U. S., 39 F.(2d) 390 (C. C. A. Iowa); Vaccaro v. Collier, 38 F.(2d) 862 (D. C. Md.); Buckley v. U. S., 33 F.(2d) 713 (C. C. A. Ohio) ; De Mayo v. U. S. (C. C. A.) 32 F.(2d) 472; Polski v. U. S., 33 F. (2d) 686 (C. C. A. 8) ; Sauvain v. U. S. (C. C. A.) 31 F.(2d) 732; Lawrence v. U. S. (C. C. A.) 28 F.(2d) 608; Shields v. U. S., 58 App. D. C. 215, 26 F.(2d) 993; Cain v. U. S., 19 F.(2d) 472 (C. C. A. Minn.) ; Hadley v. U. S., 18 F.(2d) 507 (C. C. A. Okl.); U. S. v. Washington, 20 F.(2d) 160 (D. C. Neb.) ; St. Clair v. U. S., 17 F.(2d) 886 (C. C. A. Neb.) ; Porter v. U. S., 31 F.(2d) 544 (C. C. A. Iowa) ; Sargent v. U. S., 35 F.(2d) 344 (C. C. A. Wash.); Thomas v. U. S., 27 F.2d) 1023 (C. C. A. Ohio); Vamvas v. U. S., 13 F.(2d) 347 (C. C. A. Fla.); Kendjerski v. U. S., 9 F.(2d) 909 (C. C. A. Ohio); De Long v. U. S., 4 F.(2d) 244 (C. C. A. Neb.) ; Scriber v. U. S., 4 F.(2d) 97 (C. C. A. Mich.) ; Orsatti v. U. S., 3 F.(2d) 778 (C. C. A. Cal.); Reyff v. U. S., 2 F.(2d) 39 (C. C. A. Cal.) ; Conway v. U. S., 1 F.(2d) 274 (C. C. A. Ill.) ; Rosso v. U. S., 1 F.(2d) 717 (C. C. A. N. J.); Bethea v. U. S., 1 F.(2d) 290 (C. C. A. Ill.); Napolitano v. U. S., 3 F.(2d) 994 (C. C. A. Me.); De Marco v. U. S., 296 F. 667 (C. C. A. Va.); Murphy v. U. S., 2 F.(2d) 599 (C. C. A.); Johnstone v. U. S., 1 F.(2d) 928 (C. C. A. Wash.); Aultman v. U. S., 289 F. 251 (C. C. A. Tex.); U. S. v. Pappagoda, 288 F. 214 (D. C. Conn.) ; U. S. v. Reisenweber, 288 F. 520 (C. C. A. 2); Zucker v. U. S., 288 F. 12 (C. C. A. N. J.); Ritter v. U. S., 293 F. 187 (C. C. A. Nev.) ; Browne v. U. S., 290 F. 870 (C. C. A. Mich.); Rossi v. U. S., 293 F. 896 (C. C. A. Colo.) ; Luterman v. U. S., 281 F. 374 (C. C. A. Pa.) ; Fisk v. U. S., 279 F. 12 (C. C. A. Tenn.) ; Martin v. U. S., 278 F. 913 (C. C. A. 2); Rothman v. U. S., 270 F. 31 (C. C. A. 2) ; Farley v. U. S., 269 F. 721 (C. C. A. Wash.); Saucedo v. U. S., 268 F. 830 (C. C. A. Tex.); Ramsey v. U. S., 268 F. 825 (C. C. A. Tenn.) ; Partan v. U. S., 261 F. 515 (C. C. A. Or.) ; Fetters v. U. S., 260 F. 142 (C. C. A. Cal.); Goldstein v. U. S., 256 F. 813 (C. C. A. Ill.) ; U. S. v. Amo, 261 F. 106 (D. C. Wis.); Jung Quey v. U. S., 222 F. 766 (C. C. A. Cal.).
      B. State Court Decisions:
      People v. Ficke, 343 Ill. 367, 175 N. E. 543; State v. Cowling (Wash. 1931) 297 P. 172; State v. McKenzie (Minn.) 235 N. W. 274; State v. Hoyt (Mo. Sup.) 24 S.W.(2d) 981; State v. Franco (Utah) 289 P. 100; Piper v. State (Wis.) 231 N. W. 162; Terrell v. State, 89 Ind. App. 125, 166 N. E. 8; State v. Heeron, 208 Iowa, 1151, 226 N. W. 30; State v. Lovell, 127 Kan. 157, 272 P. 666 ; State v. Erlich, 154 Wash. 336, 282 P. 220; State v. Webster, 46 Idaho, 798, 271 P. 578 ; French v. State, 149 Miss. 684, 115 So. 705 ; People v. Milium, 103 Cal. App. 163, 284 P. 224; State v. Murphy, 320 Mo. 219, 6 S.W.(2d) 877 ; State v. Sheeler, 320 Mo. 173, 7 S.W.(2d) 340; State v. Jarvis, 105 W. Va. 499, 143 S. E. 235 ; Claxton v. People, 82 Colo. 115, 257 P. 347; Warren v. State, 35 Okl. Cr. 430, 251 P. 101; People v. Ramirez, 95 Cal. App. 140, 272 P. 608 ; State v. Ragan, 157 Wash. 130, 288 P. 218; State v. Wong Hip Chung, 74 Mont. 523, 241 P. 620; State v. Johnson, 49 S. D. 414, 207 N. W. 216 ; DeBell v. People, 79 Colo. 137, 244 P. 600; State v. Kirkbride, 34 Wyo. 98, 241 P. 709; People v. Harris, 80 Cal. App. 328, 251 P. 823 ; People v. Amort, 60 Cal. App. 29, 212 P. 50; People v. Rodriguez, 61 Cal. App. 69, 214 P. 452; People v. Caiazza, 61 Cal. App. 505, 215 P. 80; In re Moore, 70 Cal. App. 483, 233 P. 805 ; Plue v. People, 69 Colo. 250, 193 P. 496; Simmons v. People, 70 Colo. 262, 199 P. 416; State v. See, 177 Iowa, 316, 158 N. W. 667 ; Cooke v. Commonwealth, 199 Ky. 111, 250 S. W. 802; State v. Abraham, 158 La. 1021, 105 So. 50; People v. McIntyre, 218 Mich. 540, 188 N. W. 407; People v. England, 221 Mich. 607, 192 N. W. 612; State v. Contarino, 92 N. J. Law, 381, 105 A. 197; Mullikin v. State, 32 Okl. Cr. 226, 240 P. 1099.
      II. Cases Holding Entrapment:
      A. Federal Decisions:
      U. S. ex rel. Hassel v. Mathues, 22 F.(2d) 979 (D. C. Pa.) ; Butts v. U. S., 273 F. 35, 18 A. L. R. 143 (C. C. A. 8) ; U. S. v. Eman Mfg. Co., 271 F. 353 (D. C. Colo.); U. S. v. Lynch, 256 F. 983 (D. C. N. Y.) ; U. S. v. Echols, 253 F. 862 (D. C. Tex.); Voves v. U. S., 249 F. 191 (C. C. A. 7); Sam Yick v. U. S., 240 F. 60 (C. C. A. Cal.) ; Woo Wai v. U. S., 223 F. 412 (C. C. A. 9); U. S. v. Thompson, 202 F. 346 (D. C. Cal.) ; U. S. v. Healy, 202 F. 349 (D. C. Mont.); Cline v. U. S., 20 F.(2d) 494 (C. C. A. 8).
      B. State Court Decisions:
      State v. Mantis, 32 Idaho, 724, 187 P. 268; State v. McCornish, 59 Utah, 58, 201 P. 637; Koscak v. State, 160 Wis. 255, 152 N. W. 181; Shouquette v. State, 25 Okl. Cr. 169, 219 P. 727.
      III. Entrapment a Jury Question:
      Robinson v. U. S., 32 F.(2d) 505, 66 A. L. R. 468 (C. C. A. 8) ; Jarl v. U. S., 19 F.(2d) 891 (C. C. A. Neb.); Hadley v. U. S., 18 F.(2d) 507 (C. C. A. Okl.) ; Cermak v. U. S., 4 F.(2d) 99 (C. C. A. Ohio); Di Salvo v. U. S., 2 F.(2d) 222 (C. C. A. 8); Silk v. U. S., 16 F.(2d) 568 (C. C. A. 8); Peterson v. U. S., 255 F. 433 (C. C. A. Cal.); Butts v. U. S. (C. C. A.) 273 F. 35, 18 A. L. R. 143; State v. Decker (Mo. Sup.) 33 S.W.(2d) 958 ; State v. McKeehan, 48 Idaho, 112, 279 P. 616.
      IV. Evidence Not Sufficient to Require Submission to Jury on Entrapment:
      Hall v. U. S., 46 F.(2d) 461 (C. C. A. 4); Polski v. U. S. (C. C. A.) 33 F.(2d) 686; Grove v. U. S., 3 F.(2d) 965 (C. C. A. Md.) ; Vamvas v. U. S., 13 F.(2d) 347 (C. C. A. Fla.); Kendjerski v. U. S. (C. C. A.) 9 F.(2d) 909; Brown v. U. S., 260 F. 752 (C. C. A. Cal.); Bakotich v. U. S., 4 F.(2d) 386 (C. C. A. Or.); State v. Webster, 46 Idaho, 798, 271 P. 578; State v. Lambert, 148 Wash. 657, 269 P. 848 ; State v. Chacon, 37 Idaho, 442, 216 P. 725 ; State v. Clark, 117 Kan. 133, 230 P. 318; State v. Hicks (Mo. Sup.) 33 S.W.(2d) 923.
      V. Evidence Required Submission to Jury on Entrapment :
      Driskill v. U. S., 24 F.(2d) 525 (C. C. A. Ariz.) ; State v. Decker, 321 Mo. 1163, 14 S.W.(2d) 617; People v. Gallagher, 107 Cal. App. 425, 290 P. 504. See cases cited under IIA.


text:
    COMMISSIONER OF INTERNAL REVENUE v. STEPHENS-ADAMSON MFG. CO.
    No. 4413.
    Circuit Court of Appeals, Seventh Circuit.
    July 27, 1931.

      G. A. Youngquist, Asst. Atty. Gen., and Sewall Key, Sp. Asst. to Atty. Gen. (C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Dean P. Kimball, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for petitioner.
    Lester B. Mann, of Chicago, Ill., and Lee I. Park and Charles D. Hamel, both of Washington, D. C., for respondent.
    Before EVANS and SPARKS, Circuit Judges, and BARNES, District Judge.
   EVANS, Circuit Judge

(after stating the facts as above).

Petitioner argued that because the patent was not issued until 1918, the only basis for computing its depreciation was its cost, and, as its cost was nothing, the substantial allowances made by the Board of Tax Appeals for depreciation were unauthorized.

Article 167, Regulations 45 of the Treasury Department, reads as follows: “Art. 167. Depreciation of patent or copyright.— In computing a depreciation allowance in the case of a patent or copyright, the capital sum to be replaced is the cost (not already deducted as current expense) of the patent or copyright or its fair market value as of March 1, 1913, if acquired prior thereto. • * »»

Three questions are presented, which may be stated thus:

(1) Is an invention .for which an application for a patent is pending March 1,1913 “property,” as that term is used in section 202(a), Revenue Acts of 1918 and 1921 (40 :Stat. 1060; 42 Stat. 229) and section 204(a), Revenue Acts of 1924 and 1926 (26 USCA § .935 and note), so that its fair market value may be used as a basis of computing depreciation or exhaustion for each of the years in question?

(2) Does the fact that respondent paid nothing for the invention and the application for a patent, which were acquired prior to March 1, 1913, and which ripened into a patent grant subsequent to said date, prevent respondent from securing an allowance for the exhaustion of said patent?

(3) Assuming questions (1) and (2) are answered in favor of respondent, what was the fair market value of the invention and. the application for a patent on March 1, 1913?

The first two questions will be considered together. The word “property,” as used in the above referred to sections of the Revenue Acts, should not be given a narrow or technical meaning. In Lynch v. Alworth-Stephens Co., 267 U. S. 364, 369, 45 S. Ct. 274, 275, 69 L. Ed. 660, the court said: “The general provision “ * * is that the deduction from gross income shall include a reasonable allowance for the ‘exhaustion * * * of property.’ There is nothing to suggest that the word property’ is used in awy restricted sense.”

■[1-3] The ruling of the Treasury Department, article 167, Regulations 45, confirms our impression that the rights accruing to the inventor by reason of the issuance of a patent are within the meaning of the word “property,” as that term is used in the statute. As we understand petitioner, he does not dispute the soundness of this conclusion. He makes an attempted distinction between the property of one who owns a patent and the rights of one who has merely a pending application for a patent. Such a distinction, it seems to us, goes to the value of the property right rather than to its existence. That one who has secured through assignment the application for a patent, or who has himself made a discovery of a patentable article, has a property right therein, is established by the fact that he may (35 USCA § 47) sell and assign his application for a patent. Gayler v. Wilder, 10 How. 477, 13 L. Ed. 504; Cook v. Sterling Electric Co. (C. C.) 118 F. 45. We think it a fair definition to say that what may be sold and assigned is property. It has likewise been held that an application for a patent passed to the trustee in bankruptcy under section 70a of the Bankruptcy Act (11 USCA § 110(a). In re Myers-Wolf Manufacturing Co. (C. C. A.) 205 F. 289.

Petitioner relied largely upon Durham vSeymour, 161 U. S. 235, 16 S. Ct. 452, 454, 40 L. Ed. 682. He points to the following language appearing in the opinion:

“Whether the alleged invention were patentable or not was the question, and that question had no relation to' its value in money. If the invention were not patentable, Durham had suffered no loss; if the invention were patentable, it was not material whether it had or had not a money value. * * *
“The matter in dispute must have actual value, and that cannot be supplied by speculation on the possibility that, in a given case, an invention might be held patentable.”

True, the court said, page 238 of 161 U. S., 16 S. Ct. 452. 454: “ * *. * But ‘until the patent is issued there is no property right in it; that is, no such right as the inventor ean enforce. At all events, there is no power over its use, which is one of the elements of the right of property in anything capable of ownership.’ Marsh v. Nichols, 128 U. S. 605, 612, 9 S. Ct. 168 [32 L. Ed. 538]; Brown v. Duchesne, 19 How. 193 [15 L. Ed. 595].”

But the real question in controversy in the Durham Case was over the jurisdictional amount in dispute. Without a showing “that the matter in dispute in the courts below was money to an amount exceeding $5,-000, exclusive of costs; or some right, the value of which could be ascertained in money and exceeded that sum,” the court was without jurisdiction of the appeal. We think there is a justifiable distinction between “property” as used in the Revenue Act and a matter in controversy having a value in excess of $5,000 as used in the other act.

Likewise, the Durham Case ean be distinguished upon another ground. In that case, the litigation was between the applicant for a patent and the Commissioner of Patents. There was no controversy between these parties over any'sum of money. The subject of the litigation was the applicant’s right to a patent. The value of such patent, as between the Commissioner and the applicant, was not in dispute. No-judgment or decree for any sum of money could have been entered in plaintiff’s favor had he prevailed. The effect of the holding, therefore, is that the naked right to a patent did not involve a sum of money exceeding five thousand dollars.

Congress, in enacting this legislation, was dealing with a most practical problem — the problem of taxation. Tyler v. U. S., 281 U. S. 497, 50 S. Ct. 356, 74 L. Ed. 991, 69 A. L. R. 758. In construing any Revenue Act, we, therefore, should not ignore the ordinary everyday commercial experiences which constitute its background.

It is, we think, common knowledge that an individual may have property (unpatent-ed discoveries) which, in the ordinary channels of commerce, would be r.eadily recognized as of substantial value, even though the inventor has gone no further than to file an application for a patent to cover the invention.

We conclude that respondent’s invention and its application for a patent were “property” as that term is used in the statute.

It follows, too, that if one may have a property right, within the meaning of the Revenue Act, in and to a pending application for a patent, the basis (cost or fair market value as of March 1,1913) for determining exhaustion must be fixed as of the day he acquired such right. Section 204 (a), (b), Revenue Act 1926, 26 USCA § 935. Here, the right was acquired in 1911, and, therefore, the fair market value as of March 1, 1913, rather than its cost price, must be used as the basis for determining depreciation or exhaustion.

We conclude that the Board of Tax Appeals properly held that it was required to determine the fair market value of the invention and the pending application for a patent as of March 1, 1913, and to use such valuation as the basis for determining the respondent’s deduction for exhaustion of such property for the years in question.

(3) The Board fixed the fair market value of the invention and application for a patent on March 1,1913, at $500,000. There is some evidence to support this finding, and we, therefore, are not at liberty to disturb it. Doubtless, there is considerable danger of a fact-finding body being unduly influenced by the subsequent grant of the patent in determining the value of an invention, to cover which an application for a patent is pending in the Patent Office. We are not prepared, however, even were we permitted so to do, to say from all of the evidence, which covered a wide range of valuation, that the finding fails to correctly appraise the worth of this highly valuable property. The weakness of respondent’s testimony is apparent. However, the Board of Tax Appeals discounted this testimony liberally.

The order is affirmed.


author: WILBUR, Circuit Judge.

text:
    STANDARD SANITARY MFG. CO. v. MOMSEN-DUNNEGAN-RYAN CO. et al.
    No. 6416.
    Circuit Court of Appeals, Ninth Circuit.
    July 29, 1931.
    Rehearing Denied Sept. 14, 1931.
    Armstrong, Kramer, Morrison & Roche, of Phoenix, Ariz., for appellant.
    ■ Alice M. Birdsall and Thomas W. ISTealon, both of Phoenix, Ariz., for appellees.
    Before WILBUR and SAWTELLE, Circuit Judges, and NETERER, District Judge.
   WILBUR, Circuit Judge.

This is a motion to dismiss the appeal. A petition for involuntary bankruptcy was filed by Momsen-Dunnegan-Ryan Company, Pratt-Gilbert Hardware Company, and Union Oil Company of Arizona, as petitioning creditors, against Phoenix Plumbing & Heating Company, a copartnership composed of Leo Francis, Lyon Francis, and D. L. Francis, co-partners, all of the parties above named other than appellant being named as appellees on this appeal.

The petition, filed on August 17, 1929, alleged a number of acts of bankruptcy, including preferential payments to each of three .creditors of the alleged bankrupts, it being averred as to one such preference that said alleged bankrupts, at a date subsequent to June 1, 1929, and while insolvent, transferred to the appellant, Standard Sanitary Manufacturing Company, a creditor, a portion of the property of such bankrupts, to wit, money in the sum of $13,000, with intent to prefer said creditor over their other creditors. Appellant filed its answer to said petition, in which answer it denied such preference. An answer to said petition was also filed by Crane Company, a corporation (one of the appellees herein), which was one of the creditors to whom, the petition alleged, a preferential payment had been made, constituting one of the several acts of bankruptcy eharg-ed in the petition.

Thereafter an order was made by the District Judge that the issues in said proceeding be referred to the special master, with direction to ascertain and report the facts with his conclusions thereon. Thereupon hearings were had and evidence taken before the master, who later filed his report. In said report it was among other things found that said Phoenix Plumbing & Heating Company, - a copartnership, and the previously named persons composing it, as partners and as individuals, were, and each of them was, at the date of filing said petition (August 17, 1929), and at the date of filing said report, and had been for more than four months next preceding the date of filing said petition, insolvent; in addition to other acts of bankruptcy found in said report, consisting of preferential payments made by said alleged bankrupts to creditors other than appellant, it was found in substance that on or about June 10, 1929, said alleged bankrupts did, while insolvent, 'transfer and pay over to Standard Sanitary Manufacturing Company, a corporation, creditor, the sum of $13,000, with intent to prefer said creditor over their other creditors; which said payment was, in the conclusions of law, characterized as a “further act of bankruptcy” on the part of said alleged bankrupts. Said sum of $13,-000 so paid to appellant was paid from moneys received by said partnership which were due it from the Lincoln Mortgage Company.

To said findings of fact and conclusions of law, with reference to the preferential payment of $13,000, appellant filed its exceptions. The court overruled these exceptions and ordered that said report be approved and confirmed, and “that the Phoenix Plumbing and Heating Company, a copartnership composed of Leo Francis, Lyon Francis and D. L. Francis, co-partners, and D. L. Francis, Leo Francis and Lyon Francis, as individuals, be and they hereby are declared and adjudged bankrupts.”

The petition for appeal herein was presented to, and allowed by, the District Judge. In said petition it was averred that petitioner felt itself “aggrieved by the overruling of the said objections and the adjudication” of bankruptcy, “and particularly that portion of said decree declaring that the payment of money to the petitioner by the Lincoln Mortgage Company an act of Bankruptcy.” The prayer of petitioner was that an appeal be granted in its behalf to this court “for the correction of the errors complained of and herewith assigned.” Error is assigned, in each instance, to the overruling of the above objections of appellant to findings and conclusions of law in the reply of the special master. In the brief of appellant it is stated that its appeal is confined “to the finding of fact and conclusion of law covering the so-called Lincoln Mortgage Company transaction, and the question • of insolvency prior to the 20th day of July, 1929”; said brief further stating that appellant “did not at any time in the proceedings raise any question whatsoever as to the adjudication on the 17th of August, 1929, nor to the findings of fact and conclusions of law on other acts of bankruptcy save the Lincoln Mortgage Company transaction.” It is thus apparent that the appellant does not complain of the adjudication of bankruptcy. The appellees’ motion to dismiss is upon the ground that this court is without jurisdiction to hear and determine this appeal, for the reason that it was not taken in conformity with any of the provisions of either section 24 or section 25 of the Bankruptcy Act (11 USCA §§ 47, 48) governing the taking and prosecution of appeals in bankruptcy matters. The appeal is apparently taken by reason of appellant’s fear that the order of adjudication in bankruptcy will be conclusive in a subsequent action brought by the trustee to determine the question of preference. The order does not have that effect. In re Sears, Humbert & Co. (C. C. A. 2) 128 F. 275.

In view of the foregoing facts, we are compelled to grant the motion of appellee to dismiss the appeal, for it appears therefrom that the matter sought to be presented here is not appealable under section 25. Section 24, as amended by Act May 27, 1926, c. 406, § 9, 44 Stat. 664 (11 USCA § 48), provides that the allowance of all appeals other than those mentioned in section 25 is discretionary with this court. The petition for the allowance of the appeal was not addressed to, nor was it acted upon by, this court.

Appeal dismissed.


author: WOOLLEY, Circuit Judge.

text:
    LEFKOWITZ et al. v. SCHNEIDER, United States Marshal.
    No. 4571.
    Circuit Court of Appeals, Third Circuit.
    July 2, 1931.

      Otto Kraus and Benjamin Golder, both of Philadelphia, Pa., and Minturn & Wein-berger, of Newark, N. J., for appellants.
    Phillip Forman, U. S. Atty., of Trenton, N. J., and Raymond S. Norris, Sp. Asst, to Atty. Gen., for appellee.
    Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
   WOOLLEY, Circuit Judge.

' Twenty-eight persons were indicted in the District Court of the United States for the Distinct of Maryland for conspiring to violate the National Prohibition Act in one way and another. Four of them, resident in New Jersey, resisted removal to Mainland for trial. At the hearing (under section 591 of Title 18 USCA, Rev. St. § 1014) all parties stood on the indictment, the only evidence introduced by anyone;' the government urging the indictment as evidence of probable cause and the defendants claiming that it did not charge a crime and therefore denying that it was such evidence. On the issuance of a warrant of removal the four defendants filed in the District Court a petition for a writ of habeas corpus. From an order dismissing the writ and remanding them to custody they now appeal and assign error to the court in continuing the restraint of their liberty under a warrant of removal issued, they say, without proof of probable cause.

The law on the subject is settled and may be found in Tinsley v. Treat, 205 U. S. 20, 27 S. Ct. 430, 51 L. Ed. 689; Hughes v. Gault, 271 U. S. 142, 46 S. Ct. 459, 70 L. Ed. 875; Fetters, Marshal, v. United States ex rel. Cunningham, 283 U. S. 638, 51 S. Ct. 596, 75 L. Ed. 1321; Parker v. United States (C. C. A.) 3 F.(2d) 903; United States ex rel. Tassell v. Mathues, Marshal (C. C. A.) 11 F.(2d) 53; United States ex rel. Haim v. Mathues, Marshal (C. C. A.) 19 F.(2d) 22; Swan v. United States (C. C. A.) 23 F.(2d) 148; United States ex rel. Mayer v. Glass, Marshal (C. C. A.) 25 F.(2d) 941.

One of the essential proofs in removal proceedings is that of probable cause or cause for belief that the person accused is guilty of the offense for which his removal for trial is sought. It may be proved in several ways, Swan v. United States, supra, but the usual way is by proving the indictment which is itself evidence that there was probable cause for finding it. Tinsley v. Treat, supra. Such proof, however, is only prima facie. United States ex rel. Haim v. Mathues, Marshal, supra. But when, as here, the indictment is not attacked and overcome by countervailing evidence, it is, with the qualification presently to be stated, conclusive.

On an indictment with this evidential quality the committing magistrate must act, yet within limits. He has no power to try the accused even preliminarily; nor has he power to pass on the sufficiency of the indictment, or to resolve debateable questions as to its infirmities, whether of substance or form, or to decide doubtful questions of fact, for that is the function of the trial court. But to raise an evidential presumption of probable cause the indictment must charge a crime, for if no crime be charged, clearly no presumption of probable guilt can arise. And so on that ground the accused may, as here, attack the indictment and, if he succeed, the committing magistrate has power to refuse removal. Hence in this case, where the only evidence on either side is the indictment, the sole question is whether it charges a crime.

The three counts of the indictment charge, respectively, that the twenty-eight defendants did, between certain dates and at a named place, feloniously conspire to commit offenses against the United States, that is to say, unlawfully to possess liquor, unlawfully manufacture liquor, and unlawfully possess articles and substances designed for the manufacture of liquor, all in violation of the National Prohibition Act (27 USCA).

Thus far the counts are in usual form. The requirements of venue, presentment, time and place are unquestionably present. The charging parts state the crimes not only by pleading facts which bring them within the statute but by counting upon the statute itself.

The facts pleaded, though meager, state crimes defined by the Act and state them sufficiently to apprise the defendant's for present purposes and to identify them for future use in a possible plea of former acquittal or conviction. The counts do not recite all facts necessary as evidence to prove the averments and of course they do not recite the facts necessary to connect the twenty-eight defendants with one another in the web of the conspiracy. Nor is this required so long as the counts state the essentials of the crimes and charge the defendants with their commission. If the statement is lacking in particulars which are necessary to the preparation of their defense the appellants can avail themselves of a motion for a bill of particulars or other appropriate motion with respect to the parts which they, or any of them, played in the conspiracy when they reach the jurisdiction in which the indictment was found.

The indictment thus far recited conforms to the requirements of a criminal pleading at common law. But the federal statute under which it was drafted (section 37 Criminal Code, section 88 of title 18 USCA) extends the common law crime of conspiracy to include at least one overt act in furtherance of the conspiracy and requires that at least one overt act shall be pleaded. Four were pleaded in each count of this indictment and were in substance that in order to effect the object of the conspiracy each of four defendants (other than the four appellants) did one of these several acts:

(a) Met a truck on a certain highway and piloted it to its destination in Baltimore.

(b) Drove a truck from an unknown point to premises in Baltimore known as The Old Wilson Distillery.

(c) Paid the freight on seventy-four drums containing a liquid called “Spray Disinfectant” shipped from Newark, New Jersey, to Baltimore, and

(d) went with another defendant to the office of a certain man in the District of Maryland.

The appellants complain that while these pleaded overt acts reveal acts by the four named defendants they fail to show their connection with the conspiracy and particularly they -fail to show any connection of the appellants with the conspiracy, and that, in consequence, the indictment is bad under the decision in United States ex rel. Mayer v. Glass, Marshal (C. C. A.) 25 F.(2d) 941.

The answer is twofold: First, section 37 of the Criminal Code (18 USCA § 88) does not require that an overt act shall be pleaded with respect to each of several alleged conspirators; the statute is satisfied by an averment and proof that “one or more of such parties (did) any act to effect the object of the conspiracy. * * * ” And next, this ease is distinguished from the Glass case where eleven defendants were charged with conspiracy by counts pleading forty-eight overt acts of which at least one was an overt act charged against each defendant and pleaded in a way which showed that the several overt acts pleaded in respect to the several defendants disclosed their whole connection with the conspiracy. That being so we held the averments as to the several defendants must mean what they said and must show that the acts grew out of or had some relation to the conspiracy. Applying that test we held that the indictment charged a crime as to some of them and did not charge a crime as to others. The trouble in the Glass case was that the pleader over-pleaded his case, that he went further than was necessary as to some defendants and in doing so he was ■ bound by what his averments showed and did not show as to them. In this ease there are no averments of overt acts committed in furtherance of the conspiracy by the four appellant-defendants; but as that is not required there are enough overt acts pleaded with respect to other defendants to satisfy the statute, leaving the main body of the counts to charge and hold all defendants for conspiracy. As we cannot, from the four overt acts pleaded, see the whole scheme of the conspiracy, we cannot say that they are not. a part of the conspiracy or that they do not adequately apprise the defendants of the matter charged.

Therefore we would hold, as against the silence of these defendants, that the indictment stands as evidence of probable cause and justifies the warrant of removal, and, were the matter here on a valid record, we should affirm the order of the District Court dismissing the writ of habeas corpus.

In view of the fact that this appeal touches the liberty of persons, we have, of our own motion, considered and discussed it on a record which, as printed, is so defective that it compels dismissal of the appeal for want of signatures and verification to the petition for a writ-of habeas corpus, for want of signatures to the writ itself, to the- marshal’s return, to the judge’s order dismissing the writ, to the petition for appeal, to the order allowing appeal, to the citation, and, finally, for want of the requisite certificate by the clerk of the court to the record.

The appeal is dismissed.