author: ANDERSON, Circuit Judge. WILSON, Circuit Judge ANDERSON, Circuit Judge.

text:
    GARDINER v. UNITED STATES.
    No. 2531.
    Circuit Court of Appeals, First Circuit.
    Feb. 19, 1931.
    On Rehearing May 28, 1931.
    Harris H. Gilman, of Boston, Mass. (Allan H. W. Higgins, of Boston, Mass., on the brief), for appellants.
    J. Duke Smith, Sp. Asst, to U. S. Atty., of Boston, Mass. (Frederick H. Tarr, U. S. Atty., of Boston, Mass., on the brief), for the United States.
    Before BINGHAM, ANDERSON, and WILSON, Circuit Judges.
   ANDERSON, Circuit Judge.

This appeal raises the single question whether the Samuel Hammond Real Estate Trust is an association subject to taxes as a corporation for the five years ending June 30, 1926.

By stressing the facts that this trust succeeded to a testamentary trust, and that its actual business activities have been little more than those of the testamentary trustees, learned counsel for the appellant has made a fairly plausible argument that it should be classed with such concerns as the Wilson Syndicate Trust [Blair v. Wilson Syndicate Trust (C. C. A.) 39 F.(2d) 43] and the Costella Trust [White v. Hornblower (C. C. A.) 27 F.(2d) 777]. Both of these trusts were held organized for liquidation, not “for the purpose of doing business for profit.”

But we think the court below [43 F.(2d) 450] was right in holding this trust an' association conducting business for profit, and taxable as though a real corporation. Flint v. Stone & Tracy Co., 220 U. S. 107, 171, 31 S. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312.

While it originated under a decree of the probate court authorizing testamentary trustees to transfer real and personal property to themselves as trustees, and to issue therefor transferable shares to a large number of beneficiaries-' — instead of selling a property described in the petition to that court as “of considerable and increasing value” — examination of the terms of this trust instrument shows that its potentialities went far beyond liquidation. It was dated June 1, 1910, nearly seventeen years before this suit was brought. No step towards liquidation seems to have been taken in this fairly long period. Article 1 reads:

“This trust is formed for the purpose of purchasing certain property held by the Trustees under the will of Samuel Hammond, late of Boston, and of purchasing, improving, selling or holding any personal property and any other real estate in the city of Boston, in the Commonwealth of Massachusetts, or within, twenty-five miles thereof, either in fee simple or for any less estate, or sole owners or ag tenants in common with other owners, or as subscribers to other trust agreements for the purchase of any real estate included in the above description, or territory.”

Under article 4, the trustees were given very broad business powers.

Articles 7 and 9 provide for the possible issue of $100 shares, additional to the 7,507 shares issued for the property initially taken over.

Article 11 originally gave three-fourths in value of the shareholders’ powers to require the termination of the trust, to turn the property over to a new trust or to a corporation, to remove trustee, and to amend the trust deed. < This was amended by a new article 13, on November 29, 1919, somewhat limiting the powers of the shareholders as to removal of trustees.

Article 12' contains careful provisions for meetings of shareholders át the calling of a trustee or at the request of shareholders owning not less than one-tenth in value of the shares.

With such hroad powers of doing business, the facts that the trustees have made few changes in the original investments, and have leased most of their real estate so as to avoid furnishing janitor, elevator, and heating service, cannot distinguish this concern from the Hecht and Haymarket Trusts. Hecht v. Malley, 265 U. S. 144, 44 S. Ct. 462, 68 L. Ed. 949. See, also, United States v. Neal (C. C. A.) 28 F.(2d) 1022, certiorari denied, 278 U. S. 659, 49 S. Ct. 250, 73 L. Ed. 567; compare Crocker v. Malley, 249 U. S. 223, 39 S. Ct. 270, 63 L. Ed. 573, 2 A. L. R. 1601.

The judgment of the District Court is affirmed.

WILSON, Circuit Judge

(dissenting).

For the present I must record my dissent to the opinion. If the original declaration of trust had been drawn substantially as it was left by the amendment of November 29, 1919, I should under the circumstances of its creation hold that it was not an association within the meaning of section 700(a) of the Revenue Act of 1924, 43 Stat. 253, 325 (26 USCA § 223 note), since the affajrs of the trust would not then have been carried on in any manner similar to the mode of procedure of corporations, the shareholders having no control over the trustees. It would then have been a pure trust under the definition laid down in Williams v. Milton, 215 Mass. 1, 102 N. E. 355, which was adopted by Judge Holmes in Crocker v. Malley, 249 U. S. 223, 232-234, 39 S. Ct. 270, 63 L. Ed. 573, 2 A. L. R. 1601, as distinguishing pure or “exact” trusts from taxable associations. Also see Hecht v. Malley, 265 U. S. 144, 158-161, 44 S. Ct. 462, 68 L. Ed. 949; Burk-Waggoner Ass’n v. Hopkins, 269 U. S. 110, 113, 114, 46 S. Ct. 48, 70 L. Ed. 183. The substance of these decisions is that it was not the intent of Congress to tax pure trusts where the management of the trust estate was vested wholly in trustees, and for the ultimate purpose of more efficiently distributing the trust estate, but only those organizations, the beneficiaries and trustees of which were associated together, and the affairs of the trust conducted by trustees in substantially the same manner and mode of procedure as the directors of a corporation, and who were, in the final analysis, subject to the control of the shareholders.

As. originally drawn, we agree that the Samuel Hammond Real Estate Trust was clearly subject to the excise tax under the Revenue Act of 1918 (40 Stat. 1057). By the amendment of 1919; however, the shareholders voluntarily surrendered up all their control over the trustees and the conduct of the affairs of the trust and its termination or amendment, except by withholding their assent in certain instances.

The opinion states that the amendment of 1919 somewhat limited the powers of the shareholders as to removal of the trustees. This hardly states the scope of the amendment. It provided: “The shareholders shall have no control over the acts of the Trustees, except in the matter of filling vacancies among the Trustees as provided in See. 11 hereof, and except the right of consenting to an alteration or amendment of this Agreement or termination of this Trust as above provided, anything in this Agreement to the contrary notwithstanding, and any provision in this Agreement whereby the shareholders are given any control except as above stated is hereby annulled.”

The amendment was probably made in view of the change in the Revenue Law by the Revenue Act of 1918, which rendered the original trust taxable. Whether the shareholders could by this amendment change the nature- of the trust originally created, and thus escape the tax, is the real issue here. I have doubts, but I cannot assent to the opinion.

On Rehearing.

ANDERSON, Circuit Judge.

On the appellants’ granted petition for rehearing, the court heard further arguments and carefully reconsidered the ease.

In the original brief opinion there is but a meager statement of the business powers of the trustees. We now somewhat amplify that statement.

The duration of the trust is for twenty years from June 1, 1910, after the death of the last survivor of the original trustees and of the then living descendants of said Samuel Hammond. Several beneficiaries having Hammond names are designated as minors. Their age is not given. It is enough now to note that the trust has a very considerable duration.

Under article 4 (referred to in the original opinion simply as giving the trustees broad business powers) they were authorized, generally, to invest and reinvest funds in their control; to execute and deliver all manner of deeds, agreements, and conveyances; to borrow money, not to exceed $200,000 at any one time; to appoint officers and agents for procuring subscriptions to the capital of the trust; to make conclusive decisions as to what charges should he made to capital and what to income; they are required to keep a register of the names and interests of the shareholders, and proper transfer books and books of account, which shall at all reasonable times be open to the inspection of any shareholder or his personal representative'.

Article 4 was amended on February 20, 1920, so as to require the trustees to pay the entire net income to the shareholders. This savors of a pure trust. But the remaining powers are broad and, in their nature, quasi corporate. The trustees may buy shares from any shareholder, at any price, either canceling or reselling such shares. Distribution to the shareholders is referred to as “dividends.”' The trustees may “from time to time hire suitable officers for the transaction of the business of the trust.”

Under article 7, there is provision for future subscriptions, to be paid in installments, and power to cancel subscriptions for nonpayment and accept another subscriber in place of the defaulter.

Under article 8 is a provision for the issuance of certificates of $100 each, and providing that, in ease of loss or accidental destruction of a certificate, “the trustees may issue a new certificate on-such terms as they may see fit”; and that the certificate “shall be conclusive evidence of ownership of the shares”; that the- shareholder shall have no legal title to the trust property, and no right to call for any partition during the continuance of the trust.

Under article 9 is an express provision for receiving further subscriptions for the purpose of increasing the capital of the trust, giving preference, upon such terms and conditions as they shall deem best, to existing shareholders.

In 'article 10 there is provision that no assessments shall ever be made upon the shareholders.

Some other aspects of the granted powers are closely analogous to those of a corporation.

Article 12 provides for meetings of the shareholders, either called by the trustees or by five shareholders, or by shareholders owning not less than one-tenth in-value of the shares.

It is true that, under the amendment of November 29, 1919, the powers of the shareholders at such meetings are pretty narrowly limited. But the right to meet and to consider the common interests of the shareholders remains unaffected by the amendment.

This amendment is as follows:

“13. The Trustees may at any time, by an instrument or instruments in writing assented to by three fourths in interest of the shareholders, and recorded in said Suffolk County Registry of Deeds, alter or amend this Agreement or terminate this Trust and sell the trust property and distribute the proceeds proportionally among the share-, holders, or convey the trust property to new or other Trustees, under a new Declaration of Trust, or to a corporation. The shareholders shall have no control over the acts of the Trustees, except in the matter of filling vacancies among the Trustees, as provided in See. 11 hereof, and except the right of consenting to an alteration or amendment of this Agreement of termination of this Trust as above provided, anything in this Agreement to the contrary notwithstanding, and any provision in this Agreement whereby the shareholders are given any control except as above stated is hereby annulled.”

This gives the initiation of any proposition to amend or terminate this agreement to the trustees; it cuts off any possible-power of the shareholders to exercise any control over “the acts of the trustees,” except the right of consenting to an alteration of termination of the trust, and except (apparently) power to create, a new trustee only “in case of the death or disability of both trustees.” Otherwise stated, the effect of the amendment was mainly to increase the powers and permanency of the trustees.

In broad perspective, then, the instrument created an organization, with negligible powers in- the. shareholders to control the administration thereof, managed by two nearly permanent trustees.

Looking at the potentialities of the organization, the trustees might embark on very extensive business transactions. In fact, they have made almost no use of their broad powers. Docs the existence of such unused powers, by practically permanent trustees, vested with almost absolute control over the property of the trust, make the concern an association within the meaning of the taxing acts? If the test is to be found in the actual use of the powers, the answer is “No.” If the test is to be found in the existence of broad powers, the answer is “Yes.” We find in the decisions of the Supreme Court no certain answer to this question. The chief cases are Crocker v. Malley, Collector, 249 U. S. 223, 39 S. Ct. 270, 63 L. Ed. 573, 2 A. L. R. 1601; Hecht v. Malley, Collector, 265 U. S. 144, 44 S. Ct. 462, 68 L. Ed. 949; Burk-Waggoner Oil Association v. Hopkins, Collector, 269 U. S. 110, 46 S. Ct. 48, 70 L. Ed. 183. None of these eases give us any clear guidance.

The history and nature of such associations was elaborately considered by this court in Malley v. Howard (C. C. A.) 281 F. 363, affirmed (except as to a minor question concerning the taxing act) in Hecht v. Malley, 265 U. S. 144, 44 S. Ct. 462, 68 L. Ed. 949. But we do not find in any opinion of other Courts of Appeals any entirely clear and decisive view on the erucial question in this case.

In Little Four Oil & Gas Co. v. Lewellyn, 35 F.(2d) 149, 150, 151 (C. C. A. 3d), Judge Woolley, after discussing some of the eases, said:

“The real test is whether the shareholders or trustees, or both combined, carry on business for profit, and, if they do, they constitute a business trust — in legal effect an association or a joint-stock company — with liability for taxes.”

Again:

“As the character of the trust, whether or not a subject of federal taxation, is to be determined not by the broad powers of the ‘trustees or by the limited powers of the stockholders but by what the trust was actually doing through its trustees, we hold on these facts that the Collectors were right in regarding this organization, however named, as an unincorporated association conducting a business for profit in quasi corporate form, liable for taxes at the corporation rate by force of the provisions of the applicable revenue act, and that the judgments of the District Court sustaining the Collectors must be affirmed.” (Italics added.)

In Lucas, Commissioner, v. Extension Oil Co., 47 F.(2d) 65, 66 (C. C. A. 5th), the court affirmed the decision of the Board of Tax Appeals, 16 B. T. A. 1028. District Judge Hutcheson, after referring to many cases, said:

“Each of these cases grounds its result upon the controlling facts, and makes it clear that reality, and not fiction, must in each ease determine whether the tax is or is not properly laid.”

And, after referring to the opinion of the Board of Tax Appeals, Judge Hutcheson said:

“With this opinion we agree, for we think it plain that whether the matter be decided from the standpoint of an analysis and balancing of resemblances to corporate forms, in the light of what use the petitioner made of them, as was done by the board, or whether, these resemblances aside, the matter is decided, not upon the basis of the powers potentially held by the petitioner, but of those actually used by it,-upon what it did, rather than upon what it could do, a regard for the realities of the case before us permits no other decision.” (Italics supplied.)

The facts in.that case were:

“That certain persons were the owners of an oil and gas lease which was about to lapse; that they deemed it good business policy to ascertain the value of the lease by drilling one well and if it was ascertained that oil existed, to forthwith sell the proven lease, otherwise to permit the lease to lapse by operation of time. For this purpose, money was needed and it was determined to raise the same by issuing ‘units’ which gave their owners an interest in the undertaking. It thus appears that the sole purpose of the trust was to raise money sufficient to drill one well, ascertain the posáble value of the property and then sell it. and distribute the proceeds. The purpose for which petitioner was organized was accomplished in the short taxable period before us. The things were done that were planned to be done. The money raised was placed in the hands of the trustees for a single purpose and not for the purpose of obtaining gain from a repetition of investments or business undertakings. As soon as money was received by the trustees, if even from the sale of assets, it was not retained or kept in a business but immediately distributed to the ‘unit’ holders.”

The Board therefore held, in a decision affirmed by the Court of Appeals, that:

“The petitioner was not organized for the purpose of ‘continued efforts in the pursuit of profit or gain and such activities as are essential to those purposes’ (Von Baumbach v. Sargent Land Co., 242 U. S. 503, [37 S. Ct. 201, 61 L. Ed. 460]), but rather to advantageously dispose of property already owned by securing additional funds and thus to wind up a business undertaking. Gonzolus Creek Oil Co., 12 B. T. A. 310, and White v. Hornblower [C. C. A.] 27 F.(2d) 777. The fact that as a trust it engaged in the limited and restricted business necessary to accomplish such a purpose would not convert it from a trust into an association. Wilson Syndicate Trust [v. Commissioner], 14 B. T. A. 508.”

The Board of Tax Appeals also says:

“A question which has troubled the Board is whether the absence of control of the trustees by the shareholders converts what would otherwise be an association into a trust. This question we decided in the negative in E. A. Landreth [v. Commissioner], supra [11 B. T. A. 1, 18], a proceeding which involved an entity which possessed every attribute of a corporation except, as was there contended, the power of the shareholders to control the trustees.”

While none of these cases are, on their faets, exactly in point, the trend of expressed judicial opinion is that the crucial test must be found in what the trustees actually do, not in the mere existence of long unused broad powers. These two trustees have no business office; they hold no formal meetings; they merely consult with each other; they have hired no officers, employed no agents to procure subscriptions to the capital of their trust; they have sold one parcel of real estate and bought another, otherwise their real estate holdings are as originally; they have so arranged their leases as not to require them to run heating plants, or even provide janitor or elevator service. In sum their actual performance is indistinguishable from that of ordinary testamentary trustees.

The judgment below and the former decision of this court must be reversed.

The judgment of the District Court is reversed, and the ease is remanded to that court for further proceedings not inconsistent with this opinion.


source: Caselaw Access Project

author: MANTON, Circuit Judge.

license: Public Domain

text:
    PHIPPS v. BOWERS (three cases). MARTIN v. SAME.
    Nos. 331-334.
    Circuit Court of Appeals, Second Circuit
    May 18, 1931.

      Louis Titus and Ralph B. Pleharty, both of Washington, D. C., and Wilder Goodwin, of New York City, for appellants.
    George Z. Medalie, U. S. Atty., of New York City (Samuel C. Coleman, Asst. U. S. Atty., of New York City, of counsel), for appellees.
    Before MANTON, L. HAND, and CHASE, Circuit Judges.
   MANTON, Circuit Judge.

These cases were heard together. They involve the same questions, and one opinion, it is agreed, will suffice for their disposition.

The considered appeal is taken by the taxpayer, John S. Phipps, who purchased, not as an original subscriber, 3% per cent. United States Victory notes issued by the United States government under the Victory Liberty Loan Act of March 3, 1919 (40 Stat. 1309). This purchase was made in 1919, and a further purchase was made in 1920. At the time of purchase, the appellant borrowed money to buy the notes and paid interest on the loan while.he held the notes. He sold some of these notes in 1921, but at the end of that year had a very large investment in them. He paid interest during the calendar year 1921 of $162,146.72, of which $157,420.45 was paid prior to November 23, 1921, at which date Congress passed the Revenue Act of 1921 (42 Stat. 227). The Commissioner declined to allow appellant to deduct from his income for 1921 the interest thus paid for that year. In 1923, appellant filed a. claim for a refund, based upon the claim that deduction of this interest should be allowed. This suit is for an alleged excess of the amount of tax for that year resulting from the refusal to allow the deduction.

The Revenue Act of 1918, § 214 (40 Stat. 1066) provides:

“(a) That in computing net income there shall.be allowed as deductions: * * * (2) All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after September 24,1917), the interest upon which is wholly exempt from taxation under this title. * * *”

The Victory notes provide on their face:

“Exempt, both as to principal and interest from all taxation (except estate or inheritance taxes) now or hereafter imposed by the United States, or any State, or any of the possessions of the United States, or by any local taxing authority.”

The deduction would be allowable but for the change Congress made in enacting the Revenue Act of November 23, 1921, which reads (section 214 (a) (2):

“(a) That in computing net income there shall be allowed as deductions: * * *
“(2) All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the United States issued after September 24,1917, and originally subscribed for by the taxpayer) the' interest upon which is wholly exempt from taxation under this title.” 42 Stat. 239.

The Revenue Act of November 23, 1921 (42 Stat. 227), was considered and held to be constitutional, within the power of Congress to enact, and not in violation of rights of the taxpayer similarly situated to this appellant. Denman v. Slayton, 51 S. Ct. 269, 75 L. Ed.-. In view of that authoritative pronouncement, the appellant has withdrawn its attack upon the constitutionality of the act.

The appellant argues, however, that, if the act is retroactive, it is unconstitutional, and that it should not be applied as to this taxpayer’s 1921 interest payments. It is clear that Congress intended the statute to apply to all income of 1921 or income received during that year. The statute takes effect January 1, 1921, for the calendar year 1921, and, in determining income, the class named in the statute was permitted to deduct interest on indebtedness incurred in the purchase of securities of the United States. Other holders were not given this deduction. This is not a retroactive operation. But retroactive legislation is not void. It is objectionable where an attempt is made to attach further consequences to events that were completed in the past and by which a radical change of such events takes place. Nichols v. Coolidge, 274 U. S. 531, 47 S. Ct. 710, 71 L. Ed. 1184, 52 A. L. R. 1081. But where there is no offense against fair play, as the term is used in the field.of congressional power of taxation, there is no constitutional impediment. The 1918 act, passed in February, 1919, after the taxing period of 1918 had passed, and which imposed a higher rate of taxation over the 1917 act, and which affected transactions in 1918, was not considered unconstitutional. Brushaber v. Union Pacific Ry. Co., 240 U. S. 1, 36 S. Ct. 236, 60 L. Ed. 493, L. R. A. 1917D, 414, Ann. Cas. 1917B, 713. In Taft v. Bowers, 278 U. S. 470, 49 S. Ct. 199, 73 L. Ed. 460, 64 A. L. R. 362, the court considered the tax on a donee’s income, and it was held that Congress had the power, to tax as part thereof the difference between what the gift cost the' donor and the price received when sold. Revenue Act of 1921, § 202 (á) (2), 42 Stat. 229. The gift was made after December 31, 1920, and the statute was passed November 23, 1921, effective January 1, 1921. Where a gift of property was made November 1, 1921, and a sale November 7,1921, by the donee, the statute was held applicable. Cooper v. United States, 280 U. S. 409, 50 S. Ct. 164, 74 L. Ed. 516. The court said in the Cooper Case: “We can find nothing unusual, arbitrary, or capricious in the provision of the taxing act here involved” (at page 412 of 280 U. S., 50 S. Ct. 164, 165).

The statute deals with income in the year 1921. It defines what is income and what may be deducted from gross income. It ¡might have declined to all tax payers the privilege of deducting interest upon indebtedness in determining net income. Anderson v. Forty-Two Broadway Co., 239 U. S. 69, 36 S. Ct. 17, 60 L. Ed. 152; Flint v. Stone Tracy, 220 U. S. 107, 31 S. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312. But it provides that for 1921 only a class of owners, for reasons sufficient .to Congress, are granted this right of deduction of interest. The statute was valid and applicable to an earlier purchase and sale, as it was good prospectively. It but defines income for 1921, and taxes the income for that year. If it changed the rate and tax from what the taxpayer expected it to be in view of the earlier statute, it did no more than is always done when a taxing statute is changed. Corliss v. Bowers, 281 U. S. 376, 50 S. Ct. 336, 74 L. Ed. 916. The .assurance on the face of the note that the income would be tax exempt continues. Willnuts v. Bunn, 282 U. S. 216, 51 S. Ct. 125, 75 L. Ed. -. The notes make no representation about indebtedness incurred in connection with their purchase. The interest upon such an indebtedness is referred to for the first time in the 1918 act; a limitation' followed in 192Í, which may be a subject of rescission or modification later.

Nor is appellant entitled to an exemption. Income tax is imposed on all, and one claiming an exemption from it in its entirety or some special application must base it upon some phrase of the statute granting the exemption. Heiner v. Colonial Trust Co., 275 U. S. 232, 48 S. Ct. 65, 72 L. Ed. 256. We find no warrant for such claim in this statute.

Judgments affirmed.


author: HICKS, Circuit Judge.

text:
    DICKEY et al. v. TURNER.
    No. 5626.
    Circuit Court of Appeals, Sixth Circuit.
    May 11, 1931.

      Hunter Wilson, of Memphis, Tenn., for appellants.
    Canada, Williams & Russell, of Memphis, Tenn., on the brief, for appellee.
    Before DENISON, HICKS, and HICKENLOOPER, Circuit Judges.
   HICKS, Circuit Judge.

Appellee filed an injunction bill against appellants in the District Court and averred that on December 3, 1927, appellant Dickey had recovered a judgment against him therein for $5,000; that said judgment had been af-. firmed by this court [32 P.(2d) 1019] ; that mandate had been filed in the District Court and that execution had issued or was about to issue; that on March 28, 1929, appellant Dickey had assigned this judgment for an alleged valuable consideration to appellant Taliaferro, his kinsman, and that shortly thereafter Dickey had filed his petition in bankruptcy in the Northern District of Mississippi; that in September, 1928, appellee had recovered a judgment against appellant Diekey in a circuit court of Mississippi for $5,739.99 and interest which remained unpaid; that Dickey had listed this judgment in his bankruptcy schedules; that he had listed assets of the approximate value of $327.00 only; that the alleged assignment and the bankruptcy petition were parts of a fraudulent scheme and conspiracy between Diekey and Taliaferro to force the collection of Dickey’s judgment against appellee with-, out the credit or offset in favor of appellee for the amount of his Mississippi judgment; that this was not only a fraud upon appellee but upon the bankruptcy court as well; that the assignment was void because upon an accounting appellee owed Dickey nothing; that Dickey was in fact indebted to appellee in the amount of the excess of the Mississippi judgment over the judgment against appellee.

Appellee sought an injunction against the issuance of any execution upon the judgment against him or against the enforcement thereof if it had already issued. The bill alleged that appellants Diekey and Taliaferro were residents of Mississippi and Alabama, respectively. Appellant Wilson, a resident of the district in which the bill was filed and in which appellee resided, was made a party defendant because as attorney for Diekey in the original cause, being No. 3028 on the law docket of the court, he had a lien upon the judgment against appellee for his fee of $2,-500. Appellee recognized Wilson’s claim and to secure its payment tendered the money with interest into court.

Appellant Rogers, marshal of the District Court and a resident of the district, was made a defendant because the execution sought to be enjoined had come or would naturally come into his hands for enforcement.

Appellants Dickey and Taliaferro filed answers in the nature of pleas to the jurisdiction. They insisted that after the amount of Wilson’s fee was deducted from the judgment against appellee the requisite jurisdictional amount was lacking, and further insisted that there was no diversity of citizenship and that being nonresidents of the state the court had no jurisdiction over them personally. ' Appellant Dickey later filed an amendment to his answer in which he admitted that he had listed appellee’s judgment against him in the bankruptcy schedules and that he had been discharged therefrom, and filed his discharge as an exhibit to the amendment. Appellants Wilson and Rogers moved to dismiss the bill for want of jurisdiction upon the ground that there was neither diversity of citizenship nor the requisite jurisdictional amount.

Upon the pleadings thus made up the matter was referred to the standing master, who reported that the court had jurisdiction of the cause, which report, over exceptions, was confirmed and the temporary injunction was continued in force; whereupon appellants excepted, appealed and assigned errors.

The principal ground for reversal, urged in various forms, is that the District Court had no jurisdiction, i. e., no power to hear and decide the case because there was lacking not only diversity of citizenship between the parties but also the statutory amount in controversy. We cannot agree with this contention. The gravamen of the bill is an alleged conspiracy between Dickey and Taliaferro to use not only fraudulent bankruptcy proceedings and a fraudulent assignment to Taliaferro but also the processes of the court as instrumentalities wherewith to compel appellee to pay and satisfy a judgment which he did not equitably owe. It is undoubtedly true that the court had complete jurisdiction in the original ease of Dickey v. Turner, No. 3028. It had control of all the proceedings and processes in that case, not only up to and including the recovery of the judgment therein, but until its complete satisfaction. Wayman v. Southard et al. 10 Wheat. 1-23, 6 L. Ed. 253; Krippendorf v. Hyde, 110 U. S. 276, 4 S. Ct. 27, 28 L. Ed. 145; Brun v. Mann, 151 F. 145, 149, 12 L. R. A. (N. S.) 154 (C. C. A. 8); Loy v. Alston, 172 F. 90, 94 (C. C. A. 8).

The power of the court was amply sufficient to prevent its process from becoming an instrument of wrongdoing. In Compton v. Jesup, 68 F. 263, 279 (C. C. A. 6), Judge Taft said: “Again, every court has inherent equitable power to prevent its own process from working injustice to any one, and may entertain a petition by the aggrieved person, either in the form of a simple motion, or by intervention pro interesse suo in the cause in which the process issued, or by ancillary or dependent bill in equity, and may afford such relief as right and justice require. The existence of such a power, independent of statutory jurisdiction, is recognized by the supreme court in Freeman v. Howe, 24 How. 450 [16 L. Ed. 749]; Minnesota Co. v. St. Paul Co., 2 Wall. 609-633 [17 L. Ed. 886]; Railroad Co. v. Chamberlain, 6 Wall. 748 [18 L. Ed. 859]; Krippendorf v. Hyde, 110 U. S. 276, 4 S. Ct. 27 [28 L. Ed. 145]; Pac. R. Co. of Missouri v. Missouri Pac. Ry. Co., 111 U. S. 505, 4 S. Ct. 583 [28 L. Ed. 498]; Stewart v. Dunham, 115 U. S. 61, 5 S. Ct. 1163 [29 L. Ed. 329]; Phelps v. Oaks, 117 U. S. 236, 6 S. Ct. 714 [29 L. Ed. 888]; Dewey v. Coal Co., 123 U. S. 329, 8 S. Ct. 148 [31 L. Ed. 179] ; Gumbel v. Pitkin, 124 U. S. 131, 8 S. Ct. 379 [31 L. Ed. 374]; Johnson v. Christian, 125 U. S. 642-646, 8 S. Ct. 989, 1135 [31 L. Ed. 820]; Morgan’s L. & T. R. R. & Steamship Co. v. Texas Cent. Ry. Co., 137 U. S. 171, 11 S. Ct. 61 [34 L. Ed. 625].”

If the averments of the bill are true and the alleged conspiracy should succeed, appellee will have been forestalled in his claim of equitable set-off against a nonresident bankrupt. See North Chicago Rolling-Mill Co. v. St. Louis Ore & Steel Co., 152 U. S. 596, 615, 14 S. Ct. 710, 38 L. Ed. 565; Loy v. Alston, supra.

We think, therefore, that the bill was purely ancillary and germane to the original suit. It set up a state of facts which if proved would establish an attempted abuse of the court’s process, to defeat appellee’s equitable right of set-off. This was a defense which appellee had tendered in the suit at law (his after-acquired judgment then being in the form of notes) but which, as in the ease of Johnson v. Christian, supra, had therein been denied. The reason for such denial, i. e., that debt cannot be set off against a claim . for unliquidated damages growing out of tort, no longer exists. We think the bill falls clearly within the accepted definition of ancillary and dependent bills and that the jurisdiction of the court to entertain it in no wise depends upon the amount in controversy or diversity of citizenship — it depends upon the inherent power of the court to prevent abuse and injustice. The scope of this jurisdiction is fixed in the time-honored and oft-cited formula: “But a suit in equity, dependent upon a former suit of which the federal court has jurisdiction, may be maintained in the absence of a federal question and of diversity of citizenship (1) to aid, enjoin, or regulate the original suit; (2) to restrain, avoid, explain, or enforce the judgment or decree therein; or (3) to enforce or obtain an adjudication of liens upon, or claims to, property in the custody of the court in the original suit. Such a suit is but the continuation in a court of equity of the original suit, to the end that more complete justice may be accomplished thereby. A defendant may maintain a suit in equity of this nature against a plaintiff and those in privity with the original action to enjoin the prosecution of an action at law or the enforcement of a judgment at law until an equitable defense-, which is not available at law, has been determined.” Campbell v. Golden Cycle Mining Co., 141 F. 610, 612 (C. C. A. 8).

Upon the proposition and in addition to the cases heretofore cited in Compton v. Jesup, supra, see Towle v. Donnell (C. C. A.) 49 F.(2d) 49, decided April 17, 1931; Ferguson v. Omaha & S. W. R. Co., 227 F. 513, 519 (C. C. A. 8); Pell v. McCabe, 256 F. 512, 515 (C. C. A. 2); Brun v. Mann, supra; St. L.-S. F. R. Co. v. Byrnes, 24 F.(2d) 66, 69 (C. C. A. 8); Schenck v. Peay, 21 Fed. Cas. pages 667, 669, No. 12450; Thompson v. McReynolds (D. C.) 29 F. 657.

The situation was not changed because parties other than Dickey were made defendants. Krippendorf v. Hyde, supra; Venner v. Pa. Steel Co. (D. C.) 250 F. 292, 297.

Appellants Dickey and Taliaferro urge that the bill should have been dismissed as to them upon their plea to the venue, to wit, that they were nonresidents of the district in which the suit was brought. If this plea be regarded as directed at the venue of the court, the jurisdiction invoked being purely ancillary, and not original, it is obvious that the court which had jurisdiction of the original action is the proper one to consider the ancillary proceedings, provided jurisdiction over the persons of additional defendants can be secured. If the plea be considered from the viewpoint of jurisdiction over the persons, of the defendants, it is equally clear that the appearances of both have been entered. Dickey was a party to the original suit and he is already in court for all ancillary proceedings even though he be a citizen of another state. Minn. Co. v. St. Paul Co., supra. Furthermore, he would have waived the privilege, had it existed, by pleading his discharge in bankruptcy, and the waiver was equally effective as to both defendants by reason of the construction placed by them upon the order of reference. The master stated that “counsel for both parties in argument and in their memoranda construe the order of reference to authorize a report only on the question of the jurisdiction of the court to entertain plaintiff’s clause of action and not the merits.” This presents the issue as one of jurisdiction of the subject-matter. It does not appear that the lack of venue or of jurisdiction of the persons of the defendants was urged either before the master or the court except by the formal filing of the answers in the nature of pleas, to which were coupled pleas of lack of jurisdiction of the subject-matter. By familiar principles such pleas enter the general appearance of the defendants so pleading. The action was thus brought in the proper court — a court having or acquiring jurisdiction both of the persons of the defendants and of the subject-matter.

Lastly, Dickey’s plea of a discharge in bankruptcy presents no defense to the prayer for injunction, if the allegations of the bill are proved. The alleged fraudulent transfer of the judgment by Dickey to Taliaferro antedated the petition in bankruptcy. This judgment was not scheduled among the assets of Dickey. It may well be that appellee could not obtain the relief of equitable set-off, per se, save in the bankruptcy court, nor, it is even more dear, in any other court, without making the trustee in bankruptcy a party. This we need not, and do not, decide. It is sufficient that upon the allegations of the bill the appellee would be entitled to an injunction in respect of the fraudulently acquired and fraudulently held interest of Taliaferro in the judgment. Dickey himsdf claims no present interest. The instant bill was filed before Dickey received his discharge and the rights of the real parties in interest —Taliaferro and Turner — then became fixed. Under the allegations of the bill Taliaferro would take the judgment subject to the equity of Turner then attaching — to have the set-off declared in the bankruptcy court if.not ■elsewhere — and this equity may be enforced against Taliaferro by injunction upon proof of the fraud.

The decree is affirmed, and the case is remanded for further proceedings not inconsistent herewith.


author: SAWTELLE, Circuit Judge.

text:
    MEYER v. DOLLAR S. S. LINE.
    No. 6293.
    Circuit Court of Appeals, Ninth Circuit.
    May 8, 1931.
    Winter S. Martin, Arthur Collett, Jr., and Harry S. Redpath, all of Seattle, Wash., for appellant.
    Hugh Montgomery and E. C. Kester, both of San Francisco, Cal., and John Ambler, of Seattle, Wash., for appellee.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
   SAWTELLE, Circuit Judge.

This is an appeal from a final decree of the United States District Court for the Western District of Washington, Northern Division.

The facts of the case were not in dispute and were stated in a stipulation as follows:

“Bernard Meyer, libellant above named, aged 19, duly signed on the shipping articles of the S. S. President Cleveland, owned and operated by Dollar Steamship Lines, Inc., Ltd., and operated during all times mentioned in the libel herein by the respondent, on the 21st day of November, 1929, at San Francisco, California, for a voyage from said port to Manila, P. I., and return to the United States, said voyage consuming a period of approximately two months. The libellant worked at his usual duties until November 27th, 1929, the day before the arrival of the President Cleveland, at the port of Honolulu. At about 3:30 p. m. on said date, said libellant was on the after-port deck with a few of his shipmates, and entered into a good-natured scuffle with a fellow shipmate, in the course of which the libellant received a severe and painful injury to his leg. At said time libellant was off watch, and had not been drinking. Libellant was employed at wages of $72.50 per month, and his wages for the voyage totalled $130.50. The amount of wages due libellant up until the time he was left in Honolulu on November 28th, 1929, was $19.-33. On said 28th day of November, 1929, libellant was, by order of the officers in charge of said vessel removed therefrom and entered at the hospital at Honolulu, which was necessitated by said injuries received as above mentioned. Said sum of $19.33 was tendered to Meyer as being the amount due him for this-voyage, but said libellant refused this tender. Said libellant, before instituting the above proceeding demanded of respondent his wages for the voyage which to-tailed $130.50, which said demand was refused by the respondent. Said libellant did not earn any wages from the time of his' said leaving said vessel at Honolulu until the end of said voyage, by virtue of any other employment.
“It is further agreed' that said libellant has received at said hospital at Honolulu all maintenance to which he is entitled. That the only question in this case is whether said libellant is entitled to his wages to the end of said voyage; and, if so, is he entitled to the penalty of two days’ pay for eaeh day said wages have been withheld?”-

On July 14, 1930, the lower court made and entered its final decree in said cause and allowed the appellant recovery of his wages from November 21, 1929, to November 28, 1929, and from January 2, 1930, the date on which appellant was released from the hospital in Honolulu, to January 13, 1930, a total sum of $43.44; the court denied appellant recovery of his wages for the time that he was in the hospital; and denied judgment for the penalty of double pay for withholding wages as provided for by U. S. Revised Statutes, § 4529 (46 USCA § 596).

The rule applicable in such eases was stated in the ease of The A. Heaton (C. C.) 43 F. 592: “A seaman, taken sick or injured or disabled in the service of the ship, has the right to receive his wages to the end of the voyage, and to be cured at the ship’s expense.”,, Quoted with approval by the Supreme Court of the State of Washington in Peterson v. Pacific S. S. Co. (The Admiral Dewey) 145 Wash. 460, 261 P. 115, 118, 1928 A. M. C. 545, 551.

Later, this rule was given its final form by the Supreme Court when it said:

“Upon a full review, however, of English and American authorities upon these questions, we think the law may be considered as settled upon the following propositions:
“1. That the vessel and her owners are liable, in case a seaman falls sick, or is wounded, in the service of the ship, to the extent of his- maintenance' and cure, and to his wages, at least, so long as the voyage is continued.” The Osceola, 189 U. S. 158, 23 S. Ct. 483, 487, 47 L. Ed. 760; see, also, Pacific Steamship Co. v. Peterson, 278 U. S. 130, 49 S. Ct. 75, 73 L. Ed. 220.

The point of importance in these statements of the rule is in the meaning to be attached to the‘phrase “in the service of the ship.”

The peculiar nature of a sailor’s oecupation necessarily calls for a liberal interpretation of this phrase. A sailor cannot, like other workmen, divest himself of all his responsibilities to the company for which he works when his work for the day is, done. For that reason, when the courts have been called upon to determine the bearing of the phrase “in the service of the ship” they have given it a wide range. “Courts of admiralty have always considered seamen as peculiarly entitled to their protection.” The Heaton, supra. And more definitely: “We may state our opinion that a seaman ‘falls sick, or is wounded, in the service of the ship,’ if such misfortune attacks him while he is attached to the ship as part of her erew. It is not necessary that the wound or illness should be directly caused by some proven act of labor; it is enough that he was, when incapacitated, subject to the call of duty as a seaman, and earning wages as such.” The Bouker No. 2. 241 F. 831, 833 (C. C. A. 2nd).

One exception is consistently made to-a too wide extension of the phrase, namely,, the person injured “in the service of the-ship” must have acted “without gross negligence or gross misconduct on his part.” Olsen v. Whitney (D. C.) 109 F. 80. No such allegation is made here, but the particular facts of the way in which the accident occurred must be considered.’ Appellant was off duty and was taking recreation; he was, as all sailors are, subject to call to duty in an emergency and was at the time “in the service of the ship.” However, when he commenced his good-natured scuffling with his fellow shipmates the situation was changed. Appellant by his own volition created an extraneous circumstance; he brought about an intervening cause that directly affected his relation to his employers and to the ship. If the appellant had been sitting on a deck reading and something had accidentally fallen on his knee, thus causing an injury similar in type to that which actually occurred, it might be properly held that the accident had occurred “in the service of the ship.” But the instant ease must be differentiated there: from. ’ ■

The phrase “in the service of the ship,” as applied ■ to ordinary seamen, is closely analogous to the phrase “in the line of duty,’’ as applied to soldiers or sailors in the service of the United States. The differences in the status of an ordinary seaman, for example, and that of a sailor are obvious at once, but there is a similarity in the narrow employer-employee relationship in both cases,.

“Line of duty” is defined as follows: “A person in the active service and submitting to its rules and regulations is, in general, in the line of duty.” Naval Courts and Boards^ chapter XII, § 1022.

An injury suffered or a disease contracted by a sailor is considered to have been “in the line of duty” “unless it is actually caused by something for whieh he is responsible which intervenes between his service or performance of duty and the injury 'or disease. He will be responsible for an intervening cause if (1) it consists of his own wilful miscon- . duct, or (2) it is something whieh he is doing in pursuance of some private avocation or business, or (3) it is something which grows out of relations unconnected with the service or is not the logical incident of provable effect of duty in the service.” Ibid.

In an opinion of the Attorney General concerning the phrase “in line of duty” as interpreted under the provisions of the War Risk Insurance- Act, 32 Ops. Atty. Gen. 12, 20, he said:

“Was that cause appertaining to, dependent upon, or otherwise necessarily and essentially connected with, duty within the line, or was it unappurtenant, independent, and not of necessary and essential connection ? That, in my judgment, is the true test-criterion of the class of * * * eases under consideration. * * *
“This seems to mean that if he has stepped aside from the discharge of his duty as a' soldier to exercise some private right or perform some private duty, though still in the service and violating none of a soldier’s duties, and what he thus does causes injury or disease, there will have intervened an adequate and sufficient cause for whieh he is responsible and the injury can not be said to have been suffered in the line of duty. On the other hand, although at the time of receiving an injury he is actually exercising some private right or performing some private duty, it does not necessarily follow that he is precluded. If he is subject to military rules and regulations and, in general, performing his duty as a soldier and what he does, outside of this duty, does not contribute as a cause to bring about the injury, there has been no intervening cause and the injury is suffered in the line of duty.
“To illustrate, a soldier in camp may, during a rest hour, be employing his time by working on an invention wholly disconnected with the military service. He is, in general, in the line of duty, but at the moment is exercising a private right for private purposes. An explosion is produced by chemicals which he is using. There has intervened a cause for whieh he is responsible and the injury is not suffered in the line of duty. But while so employed he is struck by lightning, or becomes ill, or is suddenly stricken with appendicitis, clearly there has been no intervening cause for whieh he is responsible and the injury is suffered in the line of duty. In either ease, what he was doing was in no way inconsistent with the performance of his military duty. While he was doing it the duties of a soldier still rested on him. He was not free of their obligations, nor was he necessarily deprived of the rights which grow out of their performance. This would result only in the event the thing he was doing, outside of his duty, in fact, caused the injury he received.”

We think this reasoning and the example given are directly applicable to the instant case, and here as there the question of importance is whether or not there was an intervening cause for whieh appellant was solely responsible. If appellant, as we have said before, had been sitting quietly on the deck and something had fallen on his leg through circumstances entirely beyond his control, the injury might have been held “in the line of duty” or “in the service of the ship.” Even if he had been scuffling and the same weight had fallen on his leg, the injury might have been held as incurred “in the service of the ship.” But the actual case was quite different, for here the injury flowed directly from an intervening cause for whieh the appellant alone was responsible. Consequently, the injury cannot be held to have been incurred “in the service of the ship.”

Appellant contends that the withholding of his wages was in the nature of a penalty, but this does not appeal to us. Clearly, the seaman’s act was not in the line of his duty and he was the author of his own misfortune.

The judgment of the lower court is affirmed.

WILBUR, Circuit Judge, concurs.


author: WILBUR, Circuit Judge.

text:
    SOUTHERN PAC. CO. v. CITY OF WILLOW GLEN.

    No. 6282.
    Circuit Court of Appeals, Ninth Circuit.
    May 8, 1931.
    Lords Oneal, of San Jose, Cal., and Frank C. Cleary and E. J. Fonlds, both of San Francisco, Cal. (Guy V. Shoup, of San Francisco, Cal., of counsel), for appellant.
    L. D. Bohnett, of San Jose, Cal., for appellee.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.

      Rehearing denied July 22, 1&31.

   WILBUR, Circuit Judge.

This is an appeal from the decree enjoining the appellant from proceeding with the construction óf a double-track railway “or operating thereon any railroad” upon its land within the city of Willow Glen, a municipal corporation of, Santa Clara, Cal., unless and until said appellant obtains, from the city council of the city of Willow Glen by two-thirds vote thereof the grant of the right to so use said land. The action is predicated upon section 470 of the Civil Code of the state of California, which provides as follows : “No railroad corporation must use any street, alley, or highway, or any of the land or water, within any incorporated city or town, unless the right to so use the pame is granted by a two-third vote of the town or city authority from, whieh the right must emanate.”

The action was brought in the superior court of the state of California in and for the county of Santa Clara and Was removed to the. United States District Court for the Northern District of California because of diversity of citizenship ; the appellant being a corporation organized under the laws of the state of Kentucky; After removal the appellant answered the complaint admitting all the allegations thereof except the allegation that it was proceeding without lawful authority, and the allegation that irreparable injury would result from the proposed construction and operation. Appellant also set np affirmatively its alleged rights‘as an interstate commerce carrier acting under an authorization of the Interstate Commerce Commission to construct and operate the railroad in question. A motion was made by the plaintiff to strike out all these affirmative allegations of the answer and for judgment on the pleadings. The court, on May 31, 1930, granted the motion to strike and for judgment in favor of the plaintiff on the pleadings. The judgment enjoining the appellant was entered on July 18th. In view of the fact that the motion to strike was granted upon the ground that the affirmative allegations of the answer, if true, were immaterial, and there seems to be no question as to the truth thereof, we will assume them to be true, as did tbe parties and the court below. In the court below plaintiff contended that the appellant had no right to build a railroad through the city of Willow Glen without express authority thereto granted by the action of the city council of said city by two-thirds vote, although duly authorized so to do by the Interstate Commerce Commission. It appears from the allegations of the answer that the appellant has leased and is operating a railroad constructed by the Southern Pacific Company through the states of California, Arizona, and New Mexico, including a railroad extending from San Francisco via the city of San Jose, Santa Clara county, to Los Angeles, in California, and into and through the states of Arizona and New Mexico. This railroad is operated across and along certain streets in the city of San Jose, Santa Clara county, Cal., and the franchise for the use of said streets has expired. Appellant applied to the Interstate Commerce Commission for authority to obtain a portion of its railway in the city of San Jose and to shift the location of its main tracks approximately .one mile westerly of the present location to traverse certain agricultural lands owned in fee by the appellant in the extreme southeasterly corner of the city of Willow Glen. Such location crosses no street or public property within the city of Willow Glen. The cost of the relocation of the lines will be approximately $3,000,000. The line in San Jose to be abandoned is about 1.12 miles long and the new mileage to be constructed is about 5.64. The segment of the line proposed to be abandoned was constructed in 1868 and 1869 and has been used continuously since March, 1869, for the movement of all classes of traffic. It is on Fourth street in San Jose, Cal., and is a part of the main coast line between San Francisco and Los Angeles, Cal. After due notice the Interstate Commerce Commission issued a certificate of public convenience and necessity for the construction by the applicants of the proposed neiw line of railroad and the abandonment of that portion of the railroad above mentioned. In pursuance of said authorization a material part of the cost of such changes has already been expended. The construction and operation of said line of railroad within the corporate limits of the city of Willow Glen is necessary to avoid interruption of the service to the public rendered by said railroad in state and interstate commerce. The certificate and order of the Interstate Commerce Commission provides for the commencement of the construction of the proposed new line of railroad on or before July 1, 1929, and its completion on or before June 30, 1931. The Transportation Act of 1920, § 402, amending the Interstate Commerce Act, § 1, provides, paragraph 20 (49 USCA c. 1, § 1, par. 20): “ * * * From and after issuance of such certificate, and not before, the carrier by railroad may, without securing approval other than such certificate, comply with the terms and conditions contained in or attached to the issuance of such certificate and proceed with the construction, operation, or abandonment covered thereby.”

The injunction prohibits the appellant from constructing the railroad as authorized by the Interstate Commerce Commission at any time unless the consent of the city council of the'dty of Willow Glen be first secured. Appellant, during the pendency of the action, made an application to the city of Willow Glen for permission to build its railroad in accordance with the terms of the certificate of convenience by the Interstate Commerce Commission through the city, but such request was refused.

£.t the threshold of the case appellant contends that jurisdiction of an action to enjoin the construction of the railroad tracks in accordance with the terms and provisions of the order of the Interstate Commerce Commission is in the United States District Court, and that such jurisdiction cannot be exercised by the state courts nor by the federal courts in an action removed therefrom by reason of a diversity of citizenship. This contention is based upon 28 USCA § 46: “Suits to enjoin, set aside, annul, or suspend any order of the Interstate Commerce Commission shall be brought in the district court against the United States.”

This question has been frequently considered by the courts. The Supreme Court of Illinois, in People v. Ill. Cent. R. Co., 324 Ill. 591, 155 N. E. 841, 51 A. L. R. 1236, decided February 16, 1927, dealt with a similar case wherein the Southern Illinois & Kentucky Railroad Company (an interstate carrier) had been granted a certificate of convenience by the Interstate Commerce Commission, among other things, to construct a railroad extending from Edgewood to Metropolis paralleling the lines of the Illinois Central Railroad Company within thirty miles thereof. In that ease it was claimed that the railroad was being constructed between Edgewood and Metropolis without an application to the Illinois Commerce Commission in violation of the laws of the state of Illinois with reference to the construction and ownership of parallel and competing lines. It was contended by the plaintiff there- ’ in that the bill to enjoin the construction of such new line “was not in effect a bill to enjoin, set aside, annul and suspend the orders of the Interstate Commerce Commission, but that it is merely a proceeding to enjoin the appellees from doing certain things which are not permitted by their charters and which are in violation of the constitutional laws of this state, and that despite the issuance of such an injunction the order of the commission will be unaffected.” It was held by the Supremo Court of Illinois that the action was essentially one to enjoin the doing of the very thing permitted and authorized by the Interstate Commerce Commission and that exclusive jurisdiction of sueh an action had been vested by Congress in the United States District Court. In a later ease the Supreme Court of Illinois (St. Louis Connecting R. Co. v. Blumberg, 325 III. 387, 156 N. B. 298, 302) again had occasion to consider the right of a railroad company to construct a line of railway in pursuance of authority thereto by the Interstate Commerce Commission. The question arose in an action brought by the railroad, company to condemn lands for the right of way of the line so authorized. The trial court held that the proposed use was a private and not a publie use and upon that ground dismissed the case. In a decision reversing the lower court, the Supreme Court of Illinois, speaking through Justice Heard, said:

“If the right of way here sought to be condemned were for the use of an intrastate railway, then a different question might arise as to appellant’s right to invoke the sovereign power, as such railways are subject to the Illinois Commerce Commission, while interstate railways are expressly exempted from its control by paragraph 109 of chapter 111a of Callaghan’s Statutes.
“Neither can this court hold that the use for which the land sought to be taken is to be subjected is a private and not a publie use. The Interstate Commerce Commission has specifically found that publie necessity and convenience require the building of appellant’s road on this location. Under the decisions of the Supreme Court of the United States a state court is.without jurisdiction to set aside, modify, or nullify the finding and order of the Interstate Commerce Commission ; ' such jurisdiction being vested solely in the federal courts. Judicial Code, §§ 208, 211 (U. S. Comp. St. §§ 997, 1004); chapter 32, 38 Stat. L. 219; Ill. Cent. R. R. Co. v. State Public Utilities Com., 245 U. S. 493, 38 S. Ct. 170, 62 L. Ed. 425; North Dakota v. C. & N. W. Ry. Co., 257 U. S. 485, 42 S. Ct. 170, 66 L. Ed. 329; Texas v. I. C. C., 258 U. S. 158, 42 S. Ct. 261, 66 L. Ed. 531; Lambert Run Coal Co. v. B. & O. R. R. Co., 258 U. S. 377, 42 S. Ct. 349, 66 L. Ed. 671; Robinson v. Anderson, 121 U. S. 522, 7 S. Ct. 1011, 30 L. Ed. 1021; Excelsior Wooden Pipe Co. v. Pac. Bridge Co., 185 U. S. 282, 22 S. Ct. 681, 46 L. Ed. 910; Devine v. Los Angeles, 202 U. S. 313, 26 S. Ct. 652, 50 L. Ed. 1046; Venner v. Mich. Cent. R. Co., 271 U. S. 127, 46 S. Ct. 444, 70 L. Ed. 868; State of Colorado v. U. S., 271 U. S. 153, 46 S. Ct. 452, 70 L. Ed. 878.
“The action of the county court in dismissing appellant’s petition in effect annulled and set aside the orders and certificate of necessity and convenience of the Interstate Commerce Commission. This it did not have jurisdiction to do.”

The Supreme Court of the United States, in a recent decision upon an appeal from the United States District Court of Colorado, had occasion to consider a somewhat similar order of the Interstate Commerce Commission. The commission had authorized the abandonment of a branch line of railway operated by the Colorado & Southern Railway Company, an interstate carrier. It was held that the order of the Interstate Commerce Commission authorizing sueh abandonment was an exercise of its power over interstate commerce vested in it by Congress; that Congress had power to authorize the abandonment of a portion of the lines of an interstate carrier, notwithstanding the fact that intrastate commerce was carried on sueh lines; and that Congress had power to assume paramount control and “may determine to what extent and in what manner intrastate service must be subordinated in order that interstate service may be adequately rendered. The power to make the determination inheres in the United States as an incident of its power over interstate commerce. The making of this determination involves an exercise of judgment upon the facts of the particular case. The authority to find the facts and to exercise thereon the judgment whether abandonment is consistent with public convenience and necessity, Congress conferred upon the Commission.” Colorado v. U. S., 271 U. S. 153, 166, 46 S. Ct. 452, 455, 70 L. Ed. 878.

The case of Lambert, etc., Co. v. B. & O. R. R. Co., 258 U. S. 377, 42 S. Ct. 349, 350, 66 L. Ed. 671, involved the question of jurisdiction of an action affecting a rule adopted by the Interstate Commerce Commission relating to the furnishing of coal ears. The action was brought in the circuit court of - Marion county, W. Ya., to restrain the defendant railroad company from violating paragraph 12 of section l’of an act to regulate commerce (Act of Eeb. 28, 1920, e. 91, § 402, 41 Stat. 456, 476 [49 USCA § 1, par. 12]). The case was removed to the United States District Court for the Northern District of West Virginia. The District Court issued an interlocutory injunction which was reversed on appeal to the Circuit Court of Appeals (267 E. 776). The Supreme Court held that the bill should have been dismissed for lack of jurisdiction. The court there stated, opinion, by Justice Brandéis:

“The decree of the District Court was properly reversed; but We are of opinion that the Circuit Court of Appeals had no occasion to pass upon the merits of the controversy and that the direction should have been to dismiss the bill for want of jurisdiction and without prejudice. The. rule of the railroad here complained of was that prescribed by the Commission. To that rule the railroad was bound to conform unless relieved by the Commission or enjoined from complying with it by decree of a court having jurisdiction. By this suit such a decree was in effect sought. The appellate court was therefore correct in holding that in such a suit an injunction of the District Court could be granted only by three judges.
“But there are in addition two fundamental objections to the jurisdiction: First, the United States, an indispensable party to suits to restrain or set aside orders of the Commission, was not joined, and could not be, for it has not consented to be sued in state courts. Secondly, such suits are required to be brought in a federal District Court. Judicial Code, §§ 208, 211 [28 USCA §§ 46, 48], Act of Oct. 22, 1913, c. 32, 38 Stat 208, 219; Illinois Cent. R. R. Co. v. State Public Utilities Comm., 245 U. S. 493, 504, 38 S. Ct. 170, 62 L. Ed. 425; North Dakota v. C. & N. W. Ry. Co., 257 U. S. 485, 42 S. Ct. 170, 66 L. Ed. 329; Texas v. I. C. C., 258 U. S. 158, 42 S. Ct. 261, 66 L. Ed. 531. The fact that this was a suit to set aside an order of the Commission did not appear on the face of the bill; but it became apparent as soon as the motion to dismiss was filed. Jurisdiction cannot be effectively acquired by concealing for a time the facts which conclusively establish that it does not exist. As the state court was without jurisdiction over either the subjeet-matter or the United States, the District Court could not acquire jurisdiction over them by the removal. The jurisdiction of the federal court on removal is, in a limited sense, a derivative jurisdiction. If the state court lacks' jurisdiction of the subjeet-matter or of the parties, the federal court acquires none, although it might in a like suit originally brought there have had jurisdiction. Courtney v. Pradt, 196 U. S. 89, 92, 25 S. Ct. 208, 49 L. Ed. 398; American Well Works Co. v. Layne & Bowler Co., 241 U. S. 257, 258, 36 S. Ct. 585, 60 L. Ed. 987.”

The appellee concedes the force of these decisions, but denies their applicability on the ground that we are here dealing with the police power of the state of California exercised through the city of Willow Glen prohibiting the appellant from building its railroad within the city limits of that city without the consent of the municipal authorities. We see no merit whatever in this contention. In fairness to the trial court it should be stated that the question of jurisdiction was not raised in the trial court.

In the ease at bar we have an order of the Interstate Commerce Commission authorizing and requiring an interstate carrier to abandon a portion of its interstate line and to construct a cut-off which passes through the city of Willow Glen in lieu thereof. The appellee city has refused to grant permission to construct this line and invokes the jurisdiction of a state court to prevent such construction as required by the order of the Interstate Commerce Commission. In legal effect the action is one to enjoin the enforcement of an order of the Interstate Commerce .Commission.

We are not now concerned with the merits of the controversy. It is clear that the controversy is over the validity of the order of the Interstate Commerce Commission. In such ease jurisdiction is vested in the district court to the exclusion of the state court. 28 USCA § 46, supra.

The decree of the District Court enjoining the appellant from constructing its railroad within the city of Willow Glen is reversed, and the ease remanded to the District Court with instructions to dismiss the ease without prejudice for lack of jurisdiction upon removal from the state court.

SAWTELLE, Circuit Judge, concurs.


author: BOOTH, Circuit Judge.

text:
    POWER et al. v. MOLA WASHING MACH. CO.
    No. 9101.
    Circuit Court of Appeals, Eighth Circuit.
    April 29, 1931.
    C. Paul Parker, of Chicago, 111. (Lionel V. Tefft, of Peoria, 111., and Francis O. Downey, of Kansas City, Mo., on the brief), for appellants.
    Eugene A. Thompson, of Syracuse, N. Y. (Denison & Thompson, of Syracuse, N. Y., and Henry S. Conrad, of Kansas City, Mo., on the brief), for appellee.
    Before BOOTH and GARDNER, Circuit Judges, and MUNGER, District Judge.
   BOOTH, Circuit Judge.

This is a patent suit in. the conventional form, the defenses being invalidity of the patent and noninfringement.

The trial court dismissed the bill on the ground of noninfringement, the validity of the patent not being passed upon.

The patent involved is No. 1,288,694, issued December 24, 1918, to Simon E. Schroeder and Charles W. Bird, entitled “Driving Mechanism for Operating Devices.”

The specifications state:

“Our invention has particular application to combined washing and wringing devices, but as here presented has special relation to the positioning of the wringer relative to containers used in connection with doing of a family washing.
“Our invention consists of driving parts applied to operate a wlfinger mechanism interchangeably'in different locations relative to containers in different positions upon supporting frame. Said driving connections being associated with independent wringer supports, but having a common driving means.”

.Claims 10 and 11 only are involved. Claim 10 reads as follows :

“10. In a device of the class described, in combination, a support, a vertical drive shaft in said support, provided with a seating member at its upper end formed for clutch engagement with an opposing member adapted to be positioned relative thereto at varying angles about the axes thereof; an operating mechanism including a horizontally disposed shaft provided with a gear thereon; a vertically disposed short shaft alinable with the vertical drive shaft provided' with a gear at its upper end adapted to engage the horizontal shaft of the operating mechanism, and fashioned for detachable engagement with the clutch member of the drive shaft at various angles of placement about the axis of said drive shaft, and manually removable therefrom, and a sleeve member suitably connected to the operating mechanism and supporting said short shaft and fashioned for seating upon the seating member of the drive shaft, whereby the operating mechanism may be lifted from its connection with the drive shaft and positioned at various angles about the axis of the latter without the removal of parts or attaching means.”

Claim 11 reads as follows:

“11. In a device of the class described, in combination, a vertical drive shaft, a combined seating and clutch member, at its upper end fashioned to seat and engage opposing members of an operating mechanism at various angles about the axis of the drive shaft, an operating mechanism including a horizontal shaft provided with a gear thereon, and means on the operating mechanism centered with respect to the drive shaft and seating member thereon, and adapted, for detachable seating, and to establish driving connection between the seat and clutch members of the drive shaft and the gear of the horizontal shaft of the operating mechanism, but in a relation that will permit the operating mechanism to be lifted bodily from the seat and driving connection on the horizontal shaft and to be placed at varying angular positions about the axis of said driving shaft to establish driving connection at such varying angles thereabout.”

The two main elements upon which the present suit turns relate to the support of the wringer in connection with -the detachable driveshaft. They are thus stated in claim 10: “ * * * A vertical drive shaft in said support, provided with a seating member at its upper end formed for clutch engagement with an opposing member adapted to be positioned relative thereto at varying angles about the axes thereof; * * * a sleeve member suitably connected to the operating mechanism and supporting said short shaft and fashioned for seating upon the seating member of the drive shaft * * ;

The patentee was well acquainted with the prior art covering wringers attached or attachable to washing machines.

It is thus apparent from the excerpts, that swinging wringers were old in the art. ,

If further proof is needed, it is found in Cooling, No. 1,340,328; in Sehroeder, No. 1,048,215; and in Winger, No. 1,070,761.

Detachable drive sháfts were also old in the art. Greenlief, No. 1,082,745, discloses one; Wenzelmann, No. 1,118,980, discloses one; and the evidence shows that the Dodge and Zuill wringer, in use before the application for plaintiff’s patent, also disclosed one.

We come then to the combination of the elements as described in claims 10 and 11. These claims were added in the Patent Office. They were both rejected on the reference Wenzelmann. The claims were then modified and were again rejected on the references Greenlief and Winger. They were again -modified and applicant’s attorney stated as follows: “The new claims 10 and 11 have been drawn with Greenlief cited in view, and also Winger. We have limited the claims to seating and, seatable members and, opposing clutch members, respectively on the drive shaft and the operating mechanism, the same centering with respect to the drive shaft. The Greenlief structure has never been marketed while applicant’s structure has been marketed by the S. E. Sehroeder Manufacturing Company quite extensively. The margin of invention between the Green-lief and applicant’s structure may not be great, but there is a wide enough difference to serve to commercialize applicant’s structure while that of Greenlief has never been on the market to this applicant’s certain knowledge.” (Italics ours.)

It is apparent that claims 10 and 11 were earefully and closely examined in the Patent Office, and allowed only when narrowed and limited to the form in which they now appear.

The same narrow construction must follow the claims after the patent is allowed.

In the case of Phoenix Caster Company v. Spiegel, 133 U. S. 360, at page 368, 10 S. Ct. 409, 412, 33 L. Ed. 663, the court said: “It is well settled that, where a patentee has modified his claim in obedience to the requirements of the patent office, he cannot have for it an extended construction which has been rejected by the patent office, and that, in a suit on his patent, his claim must be limited, where it is a combination of parts, to a combination of all the elements which he has included in his claim as necessarily constituting that combination.”

In the case of Smith v. Magic City Kennel Club, 51 S. Ct. 291, 293, 75 L. Ed.-, opinion February 25, 1931, the court said: “The ease, in our opinion, thus calls for the application of the principle that where an applicant for a patent to cover a new combination is compelled by the rejection of his application by the Patent Office to narrow his claim by the introduction of a new element, he cannot after the issue of the patent broaden his claim by dropping the element which he was compelled to include in order to secure his patent. * * * The applicant having limited his claim by amendment and accepted a patent, brings himself within the rules that if the claim to a combination be restricted to specified elements, all must be regarded as material, and that limitations imposed by the inventor, especially such as were introduced into an application after it had been persistently rejected, must be strictly construed against the inventor and looked upon as disclaimers. * * * The patentee is thereafter estopped to claim the benefit of his rejected claim or such a construction of his amended claim as would be equivalent thereto.”

To the same effect are Sargent v. Hall, etc., Co., 114 U. S. 63, 86, 5 S. Ct. 1021, 29 L. Ed. 67; Shepard v. Carrigan, 116 U. S. 593, 597, 6 S. Ct. 493, 29 L. Ed. 723; Morgan Envelope Co. v. Albany Paper Co., 152 U. S. 425, 429, 14 S. Ct. 627, 38 L. Ed. 500; Hubbell v. United States, 179 U. S. 77, 83, 21 S. Ct. 24, 45 L. Ed. 95; Weber Elec. Co. v. Freeman Elec. Co., 256 U. S. 668, 677, 41 S. Ct. 600, 65 L. Ed. 1162; D’Arcy Spring Co. v. Marshall, etc., Co. (C. C. A.) 259 F. 236; Computing Scale Co. v. Automatic Scale Co, 204 U. S. 609, 27 S. Ct. 307, 51 L. Ed. 645; Crawford v. Heysinger, 123 U. S. 589, 8 S. Ct. 399, 31 L. Ed. 269; Phoenix Caster Co. v. Spiegel, supra; Campbell v. American Shipbuilding Co. (C. C. A.) 179 F. 498; Johnson, etc., Co. v. Western Furnace Co., 178 F. 819 (C. C. A. 8).

Limitations and qualifications in the claims of a patent form part of the contract between the patentee and the government, and cannot be disregarded by the courts. Fay v. Cordesman, 109 U. S. 408, 421, 3 S. Ct. 236, 27 L. Ed. 979; Knick v. Bowes, etc., Corp., 25 F.(2d) 442 (C. C. A. 8), and cases cited.

In Harris v. Ladd, 34 F.(2d) 761, this court said at page 763: “It is well established that all words in the claim of a patent must be given effect if possible, and cannot be disregarded. If plaintiff has seen fit to make use of a limiting phrase, he must be bound by it. In Automatic Appliance Co. v. McNiece Motor Co., 20 F.(2d) 578, 581, this court said: ‘ * * * When an inventor in a crowded art has used limitative language in setting forth his claim, such language should not be rejected as surplusage, but should be considered as narrowing the patent,’ citing numerous cases.”

Comparing the elements of claims 10 and 11 of the patent, as thus construed, with the elements of the defendant’s device we find that the patent device has “a vertical drive shaft in said support, provided with a seating member at its upper end formed for clutch engagement with an opposing member adapted to be positioned relative thereto at varying angles about the axes thereof.”

The defendant’s device also has a vertical shaft, but this shaft has no seating member at its upper end formed for clutch engagement with an opposing member. Defendant’s seating member is a stationary tube and it is not formed for clutch engagement with anything.

In the patent device, the seating member at the upper end of the drive shaft is part of the drive shaft and necessarily revolves with the shaft. In defendant’s device, this seating member is not a part of the drive shaft and does not revolve at all.

Again, the patent device has “a sleeve member suitably connected to the operating mechanism and supporting said short shaft and fashioned for seating upon the seating member of the drive shaft.”

The defendant has a sleeve member, but it is not fashioned for seating on the seating member of the drive shaft, for the simple reason that the drive shaft has no seating member; but the sleeve member in the defendant’s device is fashioned for seating on a stationary tube, which is entirely separate from the drive shaft.

Other minor differences might be pointed out. '

It is contended that the same result is reached by defendant’s device as by the patent device; but this does not establish infringement. Not only the result reached must be the same, but it must be produced by substantially the same means, acting in substantially the same way. McDonough v. Johnson-Wentworth Co., 30 F.(2d) 375, 383 (C. C. A. 8), and cases cited.

In the ease at bar, there was a sub-' stantial difference, both in the means employed and in the mode of their operation,

Plaintiffs invoke the doctrine of equiva-' lents and they are entitled so to do; but we think that doctrine can work no difference in the outcome of the instant case.

In Smith v. Magic City Kennel Club, supra, the court said: “The petitioner resorts to the doctrine of equivalents, insisting that the rigid horizontal arm of the respondents is to be treated as the equivalent of the arm of the patent, and that the limiting specifications of the claims may be ignored. What has already been said disposes of this contention, for where a patentee has narrowed his claim, in order to escape rejection, he may not ‘by resort to the doctrine of equivalents, give to the claim the larger scope which it might have had without the amendments, which amount to disclaimer.’ ”

In Knick v. Bowes, etc., Corp., supra, this court said at page 446 of 25 F.(2d):

“It is true that the patent is entitled to a range of equivalents. But the patent is not a pioneer and entitled to a broad range of equivalents. It is a very narrow patent, and therefore limited to a correspondingly narrow range of equivalents. Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 405, 415, 28 S. Ct. 748, 52 L. Ed. 1122; National Hollow B. B. Co. v. Interchangeable B. B. Co., 106 F. 693, 710 (C. C. A. 8); Mallon v. Wm. C. Gregg & Co., 137 F. 68, 78 (C. C. A. 8).
“And a range of equivalents will not be allowed which would give to a claim an enlarged scope that was expressly denied to it ip the Patent Office. I. T. S. Rubber Co. v. Essex Rubber Co., 272 U. S. 429, 47 S. Ct. 136, 71 L. Ed. 335; Brill v. St. Louis Car Co., 90 F. 666 (C. C. A. 8); Hennebique Const. Co. v. Urban Const. Co. [(C. C. A.) 182 F. 496] supra; Thacher v. Transit Const. Co. (D. C.) 228 F. 905; Dry Hand Mop Co. v. Squeez-Ezy Mop Co. (C. C. A.) 17 F.(2d) 465; Wood v. Boylan, 19 F.(2d) 48 (C. C. A. 8).”

Our conclusion is that defendant’s device does not infringe claim 10 or claim 11 of plaintiffs’ patent. In view of this conclusion, it becomes unnecessary to discuss other questions in the case.

The decree is affirmed.

       The specifications state:
      “Our knowledge of tlie art relating to the subject to which this invention is directed advises us that it is common in 'the patent and in the practical art to associate a wringer in close connection with an agitator tub for convenience of work, and also to establish a common driving connection for both driven elements; also that reversing means for the wringer elements are old; and likewise it is old to associate the wringer with the agitator receptacle and a main support in such a manner that the wringer may be moved in different positions relative to said support and agitator receptacle.
      “Types of machines of the class above noted are exemplified in structures where a wringer is mounted upon the agitator tub, and a common driving connection is provided for both the agitator tub and the wringer, and including a reversing arrangement for the latter; and similar machines, with the wringer supported in a manner to permit it to be swung around horizontally from a pivoted support. Machines of what is known as the ‘platform type/ wherein the wringer is moved lengthwise upon a frame support fop the ^yorking parts of the machine, including common driving connections for the agitator devices and the wringer, means for reversing the wringer and means for operating the wringer at determined spaced positions, and those in which the wringer is slidable upon a square driving shaft and may be driven in ‘any position of placement; and also we have knowledge of machines comprehending the association of the agitating means and tub and the wringer under similar driving connections and relations as above noted, that distinguish it from the others in that the wringer supporting frame is mounted across the machine and pivoted in a manner to permit the frame and the wringer support thereon to be swung from the tub to a definite position of placement, and back again, at the will of the operator, and this without interfering with, or necessitating either breaking or establishing a different driving connection.
      “It is with the view of improving upon these several types of washing machines that we have developed our present structure. * * *
      “Our experience in the course of an extended manufacture of washing machines has taught us that any required movement of the wringer support, whether it be on a sliding frame, a frame swingable about a vertical pivot, or about a horizontal pivot, is objectionable, in that the movable parts in time lose their rigidity; that is, they become loosened and shaky, which leads, of course, to repair and readjustment, and likewise the wringer and gear supporting parts from the normal relation to their gear connections out of normal mesh, and hence causes wear and the expenditure of additional power over the normal, and generally disqualifies the machine for the highest grade of efficiency. We seek by our invention by and through the fixed and immovable supports for the wringer to avoid these disadvantages. It is a very small matter to simply lift the wringer from one position to the other, and generally is a more convenient method of changing its position, as compared with the plan followed out in the several types of machines heretofore specified."


author: BRYAN, Circuit Judge.

text:
    NIXON v. CONDON et al.
    No. 5758.
    Circuit Court of Appeals, Fifth Circuit.
    May 16, 1931.

      Arthur B, Spingam, of New York City, and Fred C. Knollenberg, and E. F. Cameron, both of El Paso, Tex., for appellant.
    Ben R. Howell, of El Paso, Tex. (Thornton Hardie, of El Paso, Tex., on the brief), for appellees.
    Before BRYAN and FOSTER, Circuit Judges, and DAWKINS, District Judge.
   BRYAN, Circuit Judge.

Appellant sued the judges of election for the precinct in whieh he was registered to recover damages for their refusal to permit him to vote at the primary election held in Texas in 1928 for the nomination of candidates of the Democratic Party. He alleged in his petition that he was- a citizen of the United States and of Texas,.a member of the Democratic Party, and in every way qualified to vote; that he is a negro, and solely because of his race and color-he was denied the right to vote by appellees, who as precinct 'judges of election based their denial of such right upon a resolution, adopted by the State Democratic Executive Committee of Texas, whieh provided “that all white Democrats, * * * and none other, be allowed to participate in the primary elections to be held,” etc.; that this resolution was void and of no effect because chapter 67 of the Laws of 1927, 1st Called Sess. (Vernon’s Ann. Civ. St. art. 3107), enacted by the Legislature of Texas, pursuant to whieh it was passed, violates the Fourteenth and Fifteenth Amendments to the Constitution of the United States.

The action was dismissed by the District Court on motion of appellees. 34 F.(2d) 464. A similar action brought by the same appellant against the precinct judges of election because of their refusal to permit him to Vote in the primary election of 1924 held in Texas to nominate candidates of the Democratic Party was sustained by the Supreme Court. Nixon v. Herndon, 273 U. S. 536, 47 S. Ct. 446, 71 L. Ed. 759. A statute of Texas enacted in 1923 (Acts 38th Leg., 2d Called Sess., e. 32), whieh later became known as article 3093a (Vernon’s Ann. Civ. .St. art. 3107), and which provided that “in no event shall a negro be eligible to participate in a Democratic party primary held in the State of Texas,” was held in that ease to violate the equal protection clause of the Fourteenth Amendment; and it therefore was found unnecessary to consider the Fifteenth Amendment. The Legislature of Texas in 1927, 1st Called Sess., repealed the Act of 1923 which the Supreme Court had shortly theretofore declared unconstitutional in Nixon v. Herndon, supra, and enacted in its place chapter 67, which provides: “Every political party in this State through its State Executive Committee shall have the power to prescribe the qualifications of its own members and shall in its own way determine who shall be qualified to vote or otherwise participate in such political party,” etc.

It is of course to be conceded, since the decision in Nixon v. Herndon, supra, that the right of a qualified citizen to vote extends to primary elections as well as to general elections. The distinction between appellant’s eases, the one under the 1923 statute and the other under the 1927 statute, is. that he was denied permission to vote in the former by state statute, and in the latter by resolution of the State Democratic Executive Committee. It is argued on behalf of appellant that this is a distinction without a difference, and that the state through its Legislature attempted by the 1927 act to do indirectly what the Supreme Court had held it was powerless to accomplish directly by the 1923 act. We are of opinion, however, that there is a vast difference between the two statutes. The Fourteenth Amendment is expressly directed against prohibitions and restraints imposed by the states, and the Fifteenth protects the right to vote against denial or abridgment by any state or by the United States; neither operates against private individuals or voluntary associations. United States v. Cruikshank, 92 U. S. 542, 23 L. Ed. 588; Virginia v. Rives, 100 U. S. 313, 25 L. Ed. 667; James v. Bowman, 190 U. S. 127, 23 S. Ct. 678, 47 L. Ed. 979. A political party is a voluntary association, and as such has the inherent power to prescribe the qualifications of its members. The act of 1927 was not needed to confer such power; it merely recognized a power that already existed. Waples v. Marrast, 108 Tex. 5, 184 S. W. 180, L. R. A. 1917A, 253; White v. Lubbock (Tex. Civ. App.) 30 S.W.(2d) 722; Grigsby v. Harris (D. C.) 27 F. (2d) 942, It did not attempt, as did the 1923 act, to exclude any voter from membership in any political party. Precinct judges of election are appointed by party executive committees, and are paid for their services out of funds that are raised by assessments upon candidates. Revised Civil Statutes of Texas, sections 3104, 3108.

Each political party is represented by its own election officials who have nothing to do with conducting the primary of any other party. In these particulars the primary election law of Texas differs radically from that of Virginia, where the state conducts and pays the expenses of holding the primary for all political parties just as it does in the general election. West v. Bliley (D. C.) 33 F.(2d) 177, affirmed by the Circuit Court of Appeals for the Fourth Circuit in 42 F.(2d) 101, cannot, therefore, in our opinion be relied on as authority in this case. It is true that there are many provisions of the Texas primary law which are designed to safeguard the ballot and secure fair and honest elections ; but none of those provisions can justly be said to deny to any citizen of Texas the right to vote in a primary election.

The judgment is affirmed


author: SIBLEY, Circuit Judge.

text:
    DOWLING v. UNITED STATES.

    No. 6066.
    Circuit Court of Appeals, Fifth Circuit.
    May 19, 1931.
    Ion L. Farris and M. H. Myerson, both of Jacksonville, Fla. (R. E. Stillman, of Jacksonville, Fla., on the brief), for appellant.
    W. P. Hughes, U. S. Atty., of Jacksonville, Fla.
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

      Rehearing denied July 7, 1931.

   SIBLEY, Circuit Judge.

From a sentence of fine and penitentiary imprisonment‘for violation of the Volstead‘Act (27 USCA), W. H. Dowling appeals. He has moved in this court for leave' to present in the trial court an extraordinary motion for a new trial, based on evidence newly discovered since the appeal, and on a contention that his leading counsel was insane at the time of trial. We have examined the affidavits accompanying the motion. There is nothing to support the contention of counsel’s insanity at the time of the trial except the fact that some months later he committed suicide.’ Two other counsel actively assisted in the trial. Neither the record before us, nor the brief signed by him alone, contains anything to suggest mental aberration in the leading counsel. The newly discovered evidence consists mainly of photographs and' a surveyor's plat which are claimed more reliably to show the surroundings of the distillery. This evidence cannot be called newly discovered. It differs but little from the evidence in the record, and would not likely have produced a different result had - it been before the jury. Leave to make the motion in the trial court is refused.

The indictment, besides counts charging the appellant alone with manufacturing intoxicating liquor and with being in possession of intoxicating liquors and a distilling apparatus designed for making such liquor on October 25, 1929, upon which he was convicted, contained also counts charging him and one Mott with like offenses on January 7, 1930, upon which he and Mott were acquitted. No objection for misjoinder of offenders and offenses was taken until after the verdict, when appellant moved in arrest of judgment on that ground. Assuming that there was a misjoinder, and passing by the question whether the misjoinder was cured by the acquittal on those counts in which Mott was concerned, as held in Weinhandler v. U. S. (C. C. A.) 20 F.(2d) 359, and Morris v. U. S. (C. C. A.) 12 F.(2d) 727, we yet think the motion in arrest of judgment was rightly overruled. Misjoinder does not render an indictment incapable of supporting a verdict. If the defendant is embarrassed by such a fault in the indictment against him, he should in advance of trial move to quash it, or for a severance, or to compel the prosecutor to elect on which counts he shall be put to trial. He cannot take the chance of acquittal on a trial and object to the misjoinder only after conviction. Logan v. U. S., 144 U. S. 263, 297, 12 S. Ct. 617, 36 L. Ed. 429; Goldberg v. U. S. (C. C. A.) 280 F. 89; Phillips v. U. S. (C. C. A.) 264 F. 657.

The assignments of error relating to the instructions given the jury cannot be considered, because no exception was taken at the trial. An exception calling the judge’s attention to the claimed error in his charge, and affording him opportunity to correct it before the jury retires from the bar, is indispensable to a review in the federal appellate courts. Lindsay v. Burgess, 156 U. S. 208, 15 S. Ct. 355, 39 L. Ed. 399; Sou. Trans. Co. v. Ashford, 48 F.(2d) 191, decided by this court March 31,1931. In view, however, of the contention made as to the leading counsel’s mental aberration, we have examined the instructions complained of, and find that they all relate to the charges upon which there was an acquittal- except one, and we have found no reversible error in it. •

At the conclusion of the whole evidence a peremptory instruction to acquit was moved, and the motion denied. The evidence was wholly circumstantial, but was sufficient to carry the case to the jury. It tended to show that appellant owned a small farm in the fork between Trout river and a tributary creek, where he had chickens and live stock and a pecan orchard. On October 25, 1929, the dwelling on this land was occupied by one Lane, who had come there two months previously. Another dwelling on an adjoining lot separated only by a wire fence belonged to appellant’s wife, and he generally spent the week-ends there accompanied by her. His home was in another county, where he had recently been sheriff. On the date in question the place was raided, and an eight hundred gallon still was found yet hot just outside the farm fence but on appellant’s land next to the Creek about four hundred yards across the open field from the residences but in a skirt of trees that hid it from view. An artesian water-system watered the chicken yards and garden near the residences, and a smaller pipe line had been extended some 270 yards to the still, which was thus supplied with water. A well-traveled road led from the rear of the two dwellings across appellant’s land to the still, and no further. The still appeared to have been operated for two or three months. Some 4,000 gallons of beer and 75 gallons, of whisky were found at the still; 30 gallons more of whisky in a smokehouse at the dwelling; over a ton and a half of sugar, and 1,400 pounds of grain and 125 gallons more of whisky were in some of the chicken houses. Below the still at the mouth of the creek was a sign reading: “Posted. No trespassing. W. H. Dowling, owner.” Nobody was found at the still, but appellant was on the dock in front of the dwellings. Appellant testified that he did not know anything about the still, had come down that day to fish, had. put up the trespass sign in good faith to protect his oysters and not the still up the creek, that he had had the pipe line run to water six or eight hogs he kept over by the creek, and that he had rented the place to Lane about September 1st by the month at $75 per* month. There was no testimony that any rent was ever paid. This evidence clearly indicated that the dwelling and outhouses were headquarters for the distillery operation. The jury might well have considered the renting of a farm by the month to be a subterfuge, and the running of a long and expensive pipe line to water a few hogs to be unlikely. That the still should have been operated the very day that the appellant was present was consistent with his abetting it, but not likely to happen if he was not. The amount invested in the outfit .and supplies, and the strategic position of the trespass sign were facts to be weighed. The credit to be given the appellant’s denial of complicity was for the jury. There was no error in submitting the case to their decision.

Affirmed.