author: BUFFINGTON, Circuit Judge.

text:
    COX & SONS CO. v. CRANE IRON WORKS.
    (Circuit Court of Appeals, Third Circuit.
    April 28, 1925.)
    No. 3177.
    1. Sales ©=>177 — Seller’s remedies, on buyer’s repudiation biefore time for performance, stated.
    On buyer’s repudiation of contract before time for performance, seller may accept breach as cancellation of contract, or it may stand on contract and decline to accept cancellation.
    2. Sales ©=>374 — Rule as to remedy of seller, 'refusing .to accept buyer’s repudiation of contract before time for performance, stated.
    Where seller refuses to accept buyer’s repudiation before time for performance has arrived, and elects to stand on its contract rights, its duty is to do its part towards fulfilling contract, and it cannot sue for breach until time for performance has expired.
    3. Sales ©=>374 — Seller, accepting buyer’s repudiation before time for performance, may sue before expiration of contract.
    Seller, accepting buyer’s repudiation of con-, tract before time for performance, as cancellation, may bring suit before expiration of contract.
    4. .Sales ©=>384(2) — Measure of. damages for buyer’s anticipatory breach stated.
    Seller’s damages for buyer’s repudiation of contract before time for performance is measured by damages which would have arisen at time for performance, less any abatement which may have afforded him means of mitigating his loss.
    5. Sales <&=382 — Evidence as to market prices at time of buyer’s anticipatory breach should, have been admitted on issue of damages.
    In action for buyer’s anticipatory breach of seller’s contract to deliver pig iron in installments, evidence of market price at time of breach should have been admitted as one of elements which, in connection with contract prices at dates of delivery, buyer was entitled to have considered by jury on issue of seller’s damages.
    In error to the District Court of the United States for the District of New Jersey; Bodine and Rellstab, Judges.
    Action by the Crane Iron Works against the Cox & Sons Company. Judgment for plaintiff, and defendant brings error.
    Reversed and remanded.
    Walter H. Bacon, of Bridgeton, N. J., for plaintiff in error.
    Frederic M. P. Pearse, of Newark, N. J. (Thomas Stokes, of Philadelphia, Pa., of counsel, and Daniel W. Applegate, of Newark, N. J., on the brief), for defendant in error.
    Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
   BUFFINGTON, Circuit Judge.

The proofs in this case tended to show that on September 3, 1920, the Crane Iron Works, a corporate citizen of Pennsylvania, by written agreement sold to the Cox & Sons Company, a corporate citizen of New Jersey, 200 tons of pig iron at $51.25 per ton; deliveries, “about equally over first half of 1921;” payments, “cash 30 days.”

On March 15, 1921, some 3% months before the delivery period of the contract as noted above ended, the Crane Iron Works brought suit to recover damages for the defendants’ breach of such contract. In support of its right to so sue before the expiration of the contract, the plaintiff, in its pleadings, averred that “on or about December 4, 1920, defendant for no good reason or cause whatever, repudiated all liability under the contract above mentioned, and notified plaintiff’s selling agents, Rogers, Brown '& Co., that its letter of December 3, 1.920, was a formal notice of cancellation of the contract above referred • to. Plaintiff claims a recovery for defendant’s breach of the contract above referred to, and demands as damages the sum of $7,500.” The defendant traversed this allegation, but as the case was tried on the theory of an anticipatory breach, and the verdict was in plaintiff's favor, we shall, for present purposes, assume that on December 4th the defendant breached the contract by anticipation, and by reason thereof there was conferred on such plaintiff the options, rights, and duties growing out of an anticipatory breach.

First, then, as to the options given the plaintiff. Deliveries under the contract would not begin for several weeks. In the first place, the seller had (a) the option of accepting the breach by the defendant, as a cancellation of the contract by ft, and of placing plaintiff in the position of one whose contract ¡has been wrongfully repudiated before the time of performance has arrived; or it had (b) the option of standing on the contract and declining to accept its tendered cancellation. If it followed the latter course, declined to accept the cancellation, and stood on the contract, its duty, of course, was to do its part toward the fulfillment of its part of the contract, which it was insisting was in force. In such ease, it could stand on its contract rights, and at the termination of the contract demand and get reparation from the defendant on the basis of the plaintiff performing, and the defendant’s not performing, at the times and manner the contract called for. It follows, of course, that if the seller stood on his contract, was holding himself ready to perform, and insisting on the defendant also performing, it could not bring suit until the time for performance was ended. This course of standing on the contract, and awaiting its termination to bring suit, the seller in this ease did not pursue, but, as averred in its statement, on December 4th it accepted the tendered cancellation of the defendant as a breach, anticipatory in theory, but final in fact.

Under such facts, the leading case of Roehm v. Horst, 178 U. S. 1, 20 S. Ct. 780, 44 L. Ed. 953, controls the situation. In the first place, the seller could bring suit before the expiration of the contract, in that regard that ease holding: “On the other hand, the promisee may, if he thinks proper, treat the repudiation of the other party as a wrongful putting an end to the‘contract, and may at once bring his action as on a breach of it.”

This option to bring suit before the expiration of the contract the seller took in the present case, and the ease cited thus states how damages shall be ascertained. In that regard, and as touching the rights of the seller, it holds, “In such action he would be entitled to such damages as would have arisen from the nonperformance of the contract at the appointed time”; but, as touching the duty of the seller, it adds to the above, “Subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss,” adding also this, “While, by acting on such repudiation and the taking of timely measures, the prom-isee may, in many eases, avert, or at all events materially lessen, the injurious effects which would otherwise flow from the nonful-fillment of the contract.” And that was the measure of damages Roehm v. Horst applied and there affirmed, viz.: “In this case plaintiff showed at what prices they could have made subcontracts for forward deliveries, according to the contracts in suit, and the difference between the prices fixed by the contract sued on and those was eorreetly allowed.”

Now, the subject of delivery in the present ease was 200 tons of pig iron of certain chemical constituents, with deliveries spread over six months. The proofs showed the 200 tons had been made and were, when the contract was breached on December 4th, then ready for future delivery. While, as we' have seen, the plaintiff in its original pleading claimed it was damaged to the extent of $7,500, yet in its amended statement it showed that, when the rule of Roehm v. Horst, namely, “Subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss,” was applied, the contract damages of $7,500 could have been reduced to $3,600. In that regard the plaintiff’s amended statement averred:

“5a. At the time of the cancellation of the contract referred to and attached to the amended complaint, and’ when the iron ought to have been accepted according to its terms by the defendant, the market price for 200 tons of 'Crane’ pig iron, of the grade mentioned in said contract, for shipments to be about equally over first half of 1921, was $33.25 per ton of 2,240 pounds, f. o. b. ears, furnace, Catasauqua, Pa., or $6,650, resulting in a direct loss to plaintiff of $3,600, being the difference between the contract price for the 200 tons at $51,25 per ton and the market price for the'same grade and quantity of iron at $33.25 per ton, at the time of the cancellation of said contract and when the iron ought to have been accepted by the defendant.”

But on the trial of the case the court refused to hear evidence of what the market price of this pig iron was at the time of the breach, which by the averments of the plaintiff, quoted above, would have reduced plaintiff’s loss to $3,600, and confined the case to evidence of what the price of pig iron was at the several times of delivery provided by the contract. The result of this was plaintiff recovered damages of some $4,800, which was $1,200 in excess of what it should have received by its own showing. We would not be understood as holding that the sole measure of damages was the price at the date the anticipatory breach was accepted, but it was one of the elements which, in connection with the prices at the date of delivery specified in the contrast, the defendant was entitled to prove, and have enter into the consideration of the jury in determining plaintiff’s damages.

Indeed, the court rightly announced the law when it told the jury: “You have heard the evidence as to what the market price was during the first half of 1921, and from that you would determine what was the value of this iron which Cox & Sons would not take, and you would also from the contract figure out what was the contract price for this iron, and the difference would be the measure of damages, unless you should find that there was something that the Crane Iron Works might have done to lessen or minimize the damages.” Its error consisted in having' previously ruled out the offer of the defendant’s evidence of the element of the price at the time of the breach as proof “that there was something the Crane Iron Works might have done to lessen or minimize the damages.” Its refusal to receive evidence of the market price at the time the anticipatory breach was accepted by the seller, and what the seller could have done to minimize the loss, was therefore error, for which the cause must be reversed and the cause remanded for further procedure.


source: Caselaw Access Project

author: ROSE, Circuit Judge.

license: Public Domain

text:
    In re BIDDLE. HART et al. v. DAIL et al. (two cases).
    (Circuit Court of Appeals, Fourth Circuit.
    May 9, 1925.)
    Nos. 2332, 2333.
    1. Fraudulent conveyances <§=321 (2) — In North Carolina, bill by creditor to. set aside conveyance gives equitable lien.
    In North Carolina, bill by creditor to set aside conveyance as fraudulent gives plaintiff equitable lien from date bill was filed, regardless of whether interest sought to be subjected is legal or equitable.
    2. Fraudulent conveyances <§=318, 321(1) — In North Carolina, conveyance ■ set aside as fraudulent is stricken down as to ail creditors; original suitors are not deprived ’ of priorities.
    In North. Carolina, conveyance set aside as fraudulent is stricken down as against all creditors and not merely as against those who attack it, but decree does not deprive original suitors of any priorities they have acquired by their superior vigilance.
    3. Bankruptcy <§=440 — Judgment creditors whose claim against bankrupt exceeded $500, was entitled to appeal from denial of priority.
    Where all of bankrupt’s creditors submitted their claims to priority to bankruptcy court, proceeding was in bankruptcy rather than controversy arising in course of bankruptcy proceedings, but judgment creditors, whose claim exceeded $500; had right to appeal from disal-lowance of their claim of priority.
    On Petition to Superintend and Revise, in Matter of Law, Proceedings of the District Court of the United States for the Eastern District of North Carolina; at New Bern.
    Appeal from the District Court of the United States for the Eastern District of North Carolina, at New Bern.
    In Bankruptcy. In the matter of J. W. Biddle, bankrupt. Property of bankrupt was, or was about to be, sold, and proceeds paid to creditors in accordance with findings of bankruptcy court as to their respective priorities, and H. A. Ilart & Bro. file petition to superintend and revise, in matter of law, against George Dail, trustee in bankruptcy and others, and also appeal.
    Petition to superintend and revise dismissed, and decree appealed from reversed.
    R. A. Nunn and Larry I. Moore, both of New Bern, N. C. (Moore & Dunn, of New Bern, N. C., on the brief), for petitioners and appellants.
    T. D. Warren and R. E. Whitehurst, both of New Bern, N. C., for respondents and ap-pellees.
    Before WOODS, WADDILL and ROSE, Circuit Judges.
   ROSE, Circuit Judge.

One J. W. Biddle, hereinafter called the bankrupt, upon his petition filed on the 30th of December, 1922, was on that day adjudged a bankrupt. More than two years before or, to be precise, on September 20,1920, he had without consideration conveyed to his wife a farm with intent to hinder, delay, and defraud his creditors. On the 4th of April 1921, the petitioners and appellants, H. A. Hart & Bro., hereinafter spoken of as the Harts, issued a summons, and on the 21st of the same month filed a complaint against the bankrupt and his wife in the state court of Craven county, N. C., alleging that the conveyance of the farm was void under the statute of the 13th of Elizabeth. They asked that it be set aside as to them and as to other creditors, for a judgment for their debt, and that pendente lite the defendants should be enjoined from conveying or encumbering the land in question. Such an injunction was issued on May 6, 1921, and served upon the defendants twelve days later. On October 2, 1922, and therefore within less than four months before the bankruptcy, a decree was entered in favor of the Harts for $10,816.86. It set aside the conveyance generally as fraudulent. At various dates, subsequent to the 4th of April, 1921, and prior to October 2, 1922, various other creditors, now respondents and appellees, recovered ordinary money judgments against the bankrupt. After the adjudication and by consent of aE concerned, the farm involved in the state court litigation was taken possession of by the trustee in bankruptcy, and has been, or is to be, sold by him and the proceeds paid to the creditors in accordance with the findings of the bankruptcy court as to their respective priorities.

There is but one question in the case, and that turns on the law of the state: Does the lien of the Harts upon the farm date from the institution of their proceedings to set aside the conveyance to the bankrupt’s wife, or only from the date at which decree was entered? If they obtained a lien as early as April 4,1921, not only is it unaffected by the filing of the petition in bankruptcy 20 months later, but it is prior in time and therefore is right to the lien of the judgment subsequently acquired by the other creditors. Moore v. Green, 145 F. 472, 76 C. C. A. 242 (C. C. A. 4th Ct.). On the other hand, if the Harts had no lien untE the entry of the decree in their favor on the 2d of October, 1922, it is junior to judgment held by the other creditors.

It would seem to be clearly settled in North Carolina that such a bEl as that filed by the Harts is what is there ordinarily eaEed a judgment creditor’s, as distinguished from a general creditor’s, biE. Hancock v. Wooten, 107 N. C. 9, 12 S. E. 199, 11 L. R. A. 466. That case said that the former are entertained in equity not only for the purpose of subjecting equitable estates and other interests which could not be reached and sold under execution, but “also for the purpose of removing obstructions to legal remedies as by setting aside fraudulent conveyances and the like.” WhEe pointing out that, contrary to the earlier law, such a bEl might be filed by a simple contract-creditor, it expressly recognized the distinct character of the judgment creditor’s biE as if formerly existed dispensing only with the necessity of obtaining a judgment in an independent action. Its institution, the court said, creates a preference by way of an equitable lien, whether the interest sought to be subjected be legal or equitable. Vide, also, Monroe v. Lewald, 107 N. C. 655, 12 S. E. 287; Smith v. Summerfield, 108 N. C. 284, 12 S. E. 997; Clement v. Cozart, 112 N. C. 412, 17 S. E. 486. There is nothing to the contrary in Fisher v. Bank, 132 N. C. 769, 44 S. E. 601. That ease was expressly decided under a provision of the Code of the state by which the mere bringing of an action to set aside a conveyance of the character there involved when made by a corporation necessarily resulted in its avoidance. There was no necessity of inquiring as to the intent with which it was made.

The other judgment creditors called attention to the fact that the state court, over the objection of the Harts, set aside the deed generally and not merely as against their claims as they had requested it to do. In North Carolina, it has been settled for nearly a century that when a conveyance is set aside as fraudulent, it is stricken down as against aE the creditors and not merely as against those who attack it. Hoke v. Henderson, 14 N. C. 20. Such a decree, however, does not deprive the original suitors of any priorities th.ey have acquired by their superior vigilance. Monroe v. Lewald, 107 N. C. 655, 12 S. E. 287.

It follows that the learned court below erred in holding that the Harts did not acquire a lien as of the date of the institution of their suit.

As all of the parties submitted their claims and their respective pretenses to priorities to the adjudication of the court in bankruptcy, the proceeding was one in bankruptcy, rather than a controversy arising in the course of bankruptcy proceedings; but as the claim of the Harts exceeded $500, they had a right to appeal from the disallowance of their claim of priority. Coder v. Arts, 213 U. S. 223, 29 S. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008.

It follows that the petition to superintend and revise in No. 2332 must be dismissed, and the decree appealed from in No. 2333 must be reversed.


author: LEWIS, Circuit Judge.

text:
    DAMICO v. FIREMEN’S FUND INS. CO.
    (Circuit Court of Appeals, Eighth Circuit.
    May 4, 1925.)
    No. 6739.
    1. Insurance <§=552 — Excessive valuation of property destroyed will not defeat recovery unless knowingly, intentionally, and fraudulently made.
    Excessive valuation of property destroyed in proof of loss will not prevent recovery, unless such valuation was knowingly and intentionally made with fraudulent purpose.'
    2. Appeal and error <@=719 (7) — Consideration of alleged error in instruction not assigned in manner prescribed by court rule held unwarranted.
    Court’s consideration of alleged error in instruction, where such error was not assigned as required by Circuit Court of Appeals rule 11, helé unwarranted where law covered by instruction complained of was correctly stated in several other places, and where verdict against plaintiff in error might have been based on ground other than that to which instruction related.
    3. Appeal and error <§=719(1) — Statute requiring court to give judgment without 'regard to' technical errors held not to require review of errors not assigned in manner prescribed by court rule.
    Act Feb. 26, 1919, amending Judicial Code, § 269 (Comp. St. Ann. Supp. 1919, § 1246), requiring court after examination of entire record to give judgment without regard to technical errors, does not require court to , review errors not assigned in accordance with Circuit Court of Appeals.rule 11.
    In Error to the District Court of the United States for the Eastern District of Missouri; Charles B. Davis, Judge.
    Action by Sam Damico against the Eire-men’s Eund Insurance Company. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    Charles M. Hay, of St. Louis, Mo. (Charles A. Lich and E. M. Curlee, both of St. Louis, Mo., on the brief), for plaintiff in error.
    Walter H. Saunders, of St. Louis, Mo. (John S. Leahy and Lambert E. Walther, both of St. Louis, Mo., on the brief), for defendant in error.
    Before SANBORN and LEWIS, Circuit Judges, and POLLOCK, District Judge.
   LEWIS, Circuit Judge.

Damico sued,defendant in error on a policy of insurance against fire, covering his stock of groceries, confections, soda fountain and supplies, furnishings and fixtures therewith, situate in a one-story building at 280-282 De Baliviere street, St. Louis; and there was verdict and judgment for defendant.

The policy provided that in event of fire the insured should render to the insurer a statement signed and sworn to by him, stating among other things, the value of the property and the amount of loss, and that the entire policy should be void “in ease of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.” The answer set up two special defenses — that the fire which damaged and consumed in part the property was of incendiary origin attributable to Damico; and that in his written verified proof of loss he knowingly and intentionally grossly overvalued the property with the intent of defrauding the insurer. There was substantial evidence in support of each -defense and both were submitted to the jury. No exceptions were saved to the court’s instructions, and the one point relied on for reversal is a statement of the court made in connection- with its instruction on the burden of proof:

“ * * * That if you find from the evidence that'the claim made by plaintiff in his proofs' of loss was clearly excessive, then this is a material statement under the terms of the policy and plaintiff cannot recover.”

It is contended, and the soundness of the contention is not challenged by counsel for defendant in error, that excessive valuation in the verified proof of loss will not prevent recovery unless that valuation Was knowingly and intentionally made with fraudulent purpose. Insurance Co. v. Weide, 14 Wall. 375, 382, 20 L. Ed. 894; Columbian Ins. Co. v. Modern Laundry (C. C. A.) 277 F. 355, 20 A. L. R. 1159, 1164; Spring Garden Ins. Co. v. Amusement Syndicate Co., 178 F. 519, 102 C. C. A. 29.

Rule 11 of this court makes provision for assignment of errors and the steps required to preserve them and present them here. The error now complained of and relied on was not assigned, and the plaintiff in error wholly failed to comply with that rule; but we are asked to exercise our option, reserved by the rule, and notice the. error though not assigned. We are not persuaded that we should do so.- The trial court, in submitting defendant’s special defense based on its claim that the verified proof of loss was fraudulently made, instructed the jury that before they could find for defendant on that issue they must believe from the evidence that the actual loss and damage occasioned to plaintiff by the fire was materially less than stated in the verified proof, and that plaintiff made the statement therein willfully and falsely for the purpose of deceiving or defrauding the defendant. This instruction was in substance repeated three times thereafter; and the jury was further instructed that the burden of proof was on the defendant to establish by a preponderance of evidence the two special defenses. We are, therefore, not convinced, as we should be when the rule of court is not complied with, that the jury was undoubtedly misled by the error complained of, to the great prejudice of plaintiff below. Another reason of like character which induces us not to exercise the option reserved by the rule is the fact that .the verdict may have been based entirely on the defense that the fire was of incendiary origin for which the plaintiff was responsible. Observance of the rule is in furtherance of public interest as well as that of the litigants. We do not doubt that the trial court would have corrected the error at the time it was made, if counsel had called it to the court’s notice. The correct principle had been stated more than once to the jury when it was being instructed on that special defense. No objection and exception were made and reserved at the time which called the court’s . attention to the point. It now comes as an afterthought or else, considering the entire charge, it was not then believed to be misleading and prejudicial.

It is also urged upon us that because the Act of February 26, 1919 (40 Stat. 1181), amending section 269 of the Judicial Code (Comp. St. Ann. Supp. 1919, § 1246), provides that “the court shall give judgment after an examination of the entire record before the court, without regard to technical errors, defects, or exceptions which do not affect the substantial rights of the parties,” that we are required to take notice of the error, though not assigned, and reverse the trial court-. That question was carefully considered by this court in Feinberg v. United States, 2 F.(2d) 955, and we held that it was not the intention of the amendment to require a review of errors not assigned as though they had been assigned, that the appellate court would not review claimed errors when there was a failure to properly save them in the record; and we expressed the conclusion that that was the view of the Supreme Court, because it has held since the amendment that a proper objection or exception to instructions given or refused is essential to procure a review by the appellate court.

The judgment is affirmed.


text:
    MINKOW et al. v. UNITED STATES.
    (Circuit Court of Appeals, Fourth Circuit.
    April 25, 1925.)
    No. 2339.
    1. Criminal law <@=376 — Exclusion of testimony relating to accused's reputation for veracity in business dealings after finding of indictment was not error.
    Where accused did not testify in his own behalf, exclusion of testimony relating to accused’s reputation for veracity and honesty in business dealings after finding of indictment was not error under general rule that only accused’s character prior to committing offense can be inquired-into.
    2. Witnesses <@=355 — Testimony of private detective employed by accused as to reputation of government’s witness held properly excluded.
    Testimony of private detective employed by accused as to what he had learned as to reputation of government’s witness held properly excluded.
    3. Criminal law @=865(2) — Court’s refusal to discharge jury after four hours’ deliberation held not error.
    Court’s refusal to discharge jury after four hours’ deliberation and two reports of inability to agree, and the giving of instructions as to their duty to agree if they conscientiously could do so, held not error.
    In .Error to the District Court of 'the United States for the Eastern District of South Carolina, at Charleston; Ernest F. Cochran, Judge.
    David Minkow and another were convicted of conspiring to conceal goods, wares, ánd merchandise belonging to the named defendant from his trustee in bankruptcy, and they bring error.
    Affirmed.
    Before WOODS, WADDILL, and ROSE, Circuit Judges.
    Edgar A. Brown, of Barnwell, S. C. (Brown & Bush, of Barnwell, S. C. on the brief), for plaintiffs in error.
    Louis M. Shimel, Asst. U, S. Atty., of Charleston, S. C. (J. D. E. Meyer, U. S. Atty., of Charlestown, S. C., on the brief), for the United States.
   ROSE, Circuit Judge.

The plaintiffs in error, David Minkow and Sol Ruben, were defendants below and will be so styled here. They, together with six other persons, were indicted for conspiring among themselves and with others, to the grand jury unknown, to conceal goods, wares, and merchandise belonging to the. defendant Minkow, from his trustee in bankruptcy. Four of the eight persons put upon their trial were acquitted by the jury, and four, including the two plaintiffs in error, were convicted. The learned judge below granted a new trial to one of those convicted .and fined another. The two'who are prosecuting this writ of error received prison sentences.

There were six assignments of error, but two of these have been abandoned. Two of those still relied upon are directed to the refusal of the court to permit witnesses to testify to what they had learned, after the finding of the indictment, as to the reputation of the defendants for .truth, veracity, and honesty in business dealings. The learned counsel for the defendant admits that the general rule is “that where a defendant is on trial, it is his character prior to the commission of the offense which may be inquired into and not the character he may have acquired after the commission of the alleged offense or what was said about his character after that time.” He claims, however, upon the authority of such eases as Fossett v. State, 41 Tex. Cr. R. 400, 55 S. W. 497, Fisher v. Conway, 21 Kan. 19, 30 Am. Rep. 419, and Rogers v. Lewis, 19 Ind. 405, that there is an exception when the defendant becomes a witness in his own behalf. Under such circumstances, it is said that evidence as to his reputation for truth and veracity at any time down to the date of his testifying will be admissible. We have no occasion to consider whether such exception does or does not exist, for in this ease neither of the defendants took the stand.

Another assignment concerns itself with the refusal of the court to permit a Pinkerton detective, aiding the defendants in the preparation of their ease, to give the results of an inquiry he had made as to the reputation of a government witness. The ruling below was in strict accord with the law as it has been settled for more than a century. Mawson v. Hartsink, 4 Esp. 102; Douglass v. Toucey, 2 Wend. (N. Y.) 354, 20 Am. Dec. 616; Young v. Corrigan (D. C.) 208 F. 431; Wigmore on Evidence, § 692.

The remaining complaint is that the court refused to discharge the jury when, after they had been out in all four hours, they had twice reported their inability to agree. The counsel for the defendants had previously said they had no objection to a sealed verdict. When the jury for the second time told the court that-they could not agree, the learned judge in unexceptional language impressed upon them their duty to endeavor to reach a verdict if that could be done, without any one of them surrendering a conscientious conviction. He told them that if they agreed, they might sign and seal their verdict and then separate for the night, reporting in court the next morning formally to return it. Almost immediately after they got back to their room, they sent word to him asking him to wait a few minutes, and within that time they came into court and rendered their verdict and were discharged. There is certainly nothing in all of this of which any complaint may be made.

Affirmed.


author: CUSHMAN, District Judge.

text:
    UNITED STATES v. WINTERS.
    (District Court, W. D. Washington, S. D.
    March 31, 1925.)
    No. 4742.
    Forgery <@=»7(3) — Forgery of indorsement of payee in government check held within Criminal Code, § 29; “order."
    The forgery of the indorsement of the payee on the back of a check of the Veterans’ Bureau helé to change the nature of the writing in effect to an “order” to pay the amount to the bearer, and to constitute an offense under Criminal Code, § 29 (Comp. St. § 10193).
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Order (in Commercial Law).]
    Criminal prosecution by the United States against Ray H. Winters. On demurrer to indictment.
    Overruled.
    Tbos. P. Revelle, U. S. Atty., of Seattle, Wash., and W. W. Mount, Asst. U. S. Atty., of Tacoma, Wash.
    Henry Arnold Peterson, of Tacoma, Wash., for defendant.
   CUSHMAN, District Judge.

The indictment in this case sets out a copy of a compensation check of the Veterans’ Bureau payable to one “Arthur Knight.” In the first count the defendant is accused of having forged “an order, contract and writing on the back thereof, to wit,- the following words and indorsement, to wit, ‘Arthur Knight.’ ” In a second count the defendant is accused of having published the same as true- The defendant demurred. The court sustained the demurrer, being of the opinion that under the doctrine of ejusdem generis the mere indorsed signature of a payee was not a “writing” within the meaning of section 29, infra. The assistant United States attorney has asked a reconsideration of the ruling, citing the following authorities: United States v. Jolly (D. C.) 37 F. 108; United States v. Albert (C. C.) 45 F. 552; De Lemos v. United States, 91 F. 497, 33 C. C. A. 655; Hamil v. United States (C. C. A.) 298 F. 369; Biskind v. United States (C. C. A.) 281 F. 47, 28 A. L. R. 1377, certiorari denied 260 U. S. 731, 43 S. Ct. 93, 67 L. Ed. 486.

The indictment is under section 29 of the Penal Code (section 10193, Comp. St.). This section provides:

“Whoever shall falsely make, alter, forge, or counterfeit, or cause or procure to be falsely made, altered, forged, or counterfeited, or willingly aid, or assist in the false making, altering, forging, or counterfeiting, any deed, power of attorney, Order, certificate, receipt, contract, or other writing, for the purpose of obtaining or receiving, or of enabling any other person, either directly or indirectly, to obtain or receive from the United States, or any of their officers or agents, any sum of money; or whoever shall utter or publish as true, or 'cause to -be uttered or published as true, any such false, forged, altered, or counterfeited deed, power of attorney, order, certificate, receipt, contract, or other writing, with intent to defraud the United States, knowing the same to be false, altered, forged, or counterfeited; or. whoever shall transmit to, or present at, or cause or procure to be transmitted to, or presented at, any office or officer of the government of the United States, any deed, power of attorney, order, certificate, receipt, contract, or other writing, in support of, or in relation to, any account or claim, with intent to defraud the United States, knowing the same to be false, altered, forged, or counterfeited, shall be fined not more than one thousand dollars and imprisoned not more than ten years.”

In United States v. Wilson, Fed. Cas. No. 16,732, decided in 1874, before the enactment of section 1025, R. S. (section 1691, Comp. St.), it was held that a forged indorsement upon1 a genuine check was not covered by the words of the statute “other writing,” and the motion to quash was granted. In United States v. Jolly (D. C.) 37 F. 108, it was held that a forged indorsement was covered by section 5414, R. S. (section 10318, Comp. St.). That section provides:

“Whoever, with intent to defraud, shall falsely make, forge, counterfeit, or alter any obligation or other security of the United States shall be fined not more than five thousand dollars and imprisoned not more than fifteen years.”

In United States v. Albert (C. C.) 45 F. 552, 554, and 555, the court points out the diversity of views expressed by the courts upon this question, including an unreported decision of the District Court of Minnesota, in which a forged indorsement was held not to be within the terms “or other writing” of the statute. The court said in United States v. Albert, supra: “The indorsement of the name of the payee upon a pension, cheek is a writing in the nature of an order, as well as in the nature of a receipt.” In the latter ease the defendant had, by general verdict of guilty as charged, been convicted upon two counts; one of which the court held defective, and granted a new trial.

In De Lemos v. United States, 91 F. 497, 33 C. C. A. 655, the Circuit Court of Appeals of the Fifth Circuit held the forging of an indorsement on a government draft a violation of section 148 of the Penal Code (Comp. St. § 10318); section 5421, R. S. (section 10193, Comp. St.). The court, however, quashed the indictment as defective in other respects. It will also be noted that the indorsement forged was as follows: “Pay his to Ben De Lemos. Thomas X Cook, mark Payee.” This was not only the forging of an indorsement and signature, but of an order ; and a forged order is expressly included in section 29. In Hamil v. United States, 298 F. 369, the Circuit Court of Appeals of the same Circuit — the indictment being under section 148 of the Penal Code — sustained a conviction, saying: “Section 147 of the Criminal Code (Comp. St. § 10317) includes a cheek such as is described in the indictment within the definition of an 'obligation or other security of the United States.’ We are of opinion that section 148 punishes the forgery of an indorsement of sueh an obligation or security. The obligation to pay a genuine check does not become complete until it is properly indorsed. The forgery of the indorser’s name is as effective a method of defrauding as is the forgery of the name of the drawer of the cheek. The demurrer to the indictment therefore was properly overruled. United States v. Jolly (D. C.) 37 Fed. 108; United States v. Albert (C. C.) 45 Fed. 552; De Lemos v. United States, 91 Fed. 497, 33 C. C. A. 655.” The same court, in Irvin v. United States, 298 F. 297 (certiorari denied, 265 U. S. 596, 44 S. Ct. 638, 68 L. Ed. 1198), sustained a conviction upon an indictment under section 148. In this ease the forgery appears to have been an indorsement, yet the decision was of other questions not here material.

Before the amendment of 1888 (25 Stat. 496), it was held that an obscene “letter” was not included in the words “obscene writing” of the statute (United States v. Chase, 135 U. S. 255, 10 S. Ct. 756, 34 L. Ed. 117); the court holding that the word “writing” in law is more frequently used to denote legal instruments, including bonds and notes, than in describing letters.

Section 9109 of the Comp. Stat., specifically provides a punishment for one forging the indorsement of the payee of a pension check.' Section 10388 does the like in case the forgery is of any material signature or indorsement of a postal money order. Section- 10300 also provides a punishment in ease of a forging of the signature of any judge, registrar, or other officer of any court of the United States.

A writing such as a cheek directs payment to the payee named, by writing the name of the payee upon the back of which the nature of the writing is changed and, if not literally, in effect becomes an order to pay the amount named to the bearer.

Upon reconsideration I am convinced the demurrer should be overruled, and it is so ordered..


author: INCH, District Judge.

text:
    DIXIE DRINKING CUP CO., Inc., v. PAPER UTILITIES CO., Inc., et al.
    (District Court, E. D. New York.
    March 26, 1925.)
    Courts <s^35l— Procedure to require production of documents, stated.
    The right to a summary order requiring the adverse party in a suit in equity in a federal court to produce documents before trial is governed by equity rule 58, and under that rule to authorize such order there must be an admission of the possession or control of the documents, in the absence of which such admission must be first sought by interrogatories, which may not be filed until after answer and issue joined.
    In Equity. Suit by the Dixie Drinking Cup Company, Inc., against'the Paper Utilities Company, Inc., and others. On nqotion by defendants for an order requiring complainant to file a verified statement of certain exhibits and to produce such exhibits .for inspection.
    Denied.
    Dunn, Goodlett & Massie, of New York City (Clifford E. Dunn, of New York City, of counsel), for plaintiff.
    Ward, Crosby & Smith, of New York City (S. Mortimer Ward, Jr., of New York City, of counsel), for defendants.
   INCH, District Judge.

This is a motion by defendant in an equity action before answer. The plaintiff has sued the defendants for infringement of letters patent. The bill of complaint is in the usual form. The question raised by the motion before me is entirely one of practice.

Care has been exercised to confine this decision solely to the question here presented, and nothing here said is intended as a decision on the merits.

Defendant moves on affidavit for an order directing plaintiff, by its president or other officers, or its patent attorney, to file a verified statement of certain exhibits alleged by defendants to be now in its possession or control, or if not in its possession or control, to state wbat has become of such exhibits, and whether or not such exhibits are in substantially the same condition, as they were when introduced in evidence in a certain interference suit, and in what respect, if any, they have been changed. Further, that all of the said exhibits, in the possession or control of plaintiff, or its attorney, etc., be offered for inspection by defendants and their counsel, with the right to photograph or copy same, and further that such exhibits be preserved by plaintiff, or its attorney, or filed with the clerk of this court, etc.

As has been stated, this motion has been made before any answer has been interposed by defendants or either of them, and calls for a decision of defendants’ right under such condition to an inspection of certain physical exhibits by summary order.

Counsel for both sides state that there is no previous authority, deciding for or against this practice, now attempted by defendants. Whether this is so or not, no such authority has been presented. A number of cases have been cited, however, from which each side argued their respective claims.

The motion papers presented consist of the order to show cause, and affidavit on behalf of the defendants, and a copy of the bill of complaint, and amendment thereto, on behalf of the plaintiff. No opposing affidavit was submitted by the plaintiff, nor does the mention of the. exhibits appear in the said bill of complaint or amendment.

Accordingly, it seems necessary to decide this question for the first time, and it must be done by reference to the rules and practice in equity, with such decisions 'as may throw light upon the present equity practice.

At the outset, the form of defendant’s motion would seem to indicate that defendants have in mind the state practice, relating to discovery and inspection, as set forth in the Civil Practice Act of the State of New York, article 32, and Rules of Civil Practice, title 18; the particular sections being sections 324, 327, and 328, and the rules 140 and 141.

The sections, in substance, allow a party to an action to give notice in writing, to the other party, to produce for inspection any document or other exhibit, where same is mentioned in the pleading, of the other party, or on application to the court obtain, if proper, an order requiring the other party to state whether any such exhibit is, or has been, in its possession, or control, and, if not, when such party parted with same, and, finally, where any such exhibit is shown to be in the possession or control of the other party, the moving party may obtain, where proper, an order requiring its production and inspection.

The procedure, in the last-mentioned instance, is expressly governed by the said rules, and a reference to same shows that an order for production and inspection only follows, in a proper ease, where the moving party has shown to the court that such exhibit is, at the time, in the possession or control of the other party.

The above would not seem to differ materially from the results obtainable under the present practice in equity in this court, yet if same does produce different results, or is so construed, it should be borne in mind that the Conformity Act (Comp. St. § 1537, R. S. § 914) clearly states that such state practice does not control the practice in equity in the federal court. In re Paleais (C. C. A.) 296 F. 403, page 406.

Thus if the practice in the federal court is different, the latter will control.

. The procedure in equity in the federal court was largely regulated by the equity rules, first adopted in 1842; the general scheme remained substantially unaltered for 70 years. On February 1, 1913, the new equity rules of 1912 went into effect; these new rules making radical changes in the. procedure. Rose, Federal Jurisdiction and Procedure (2d Ed.) § 49.

The authorities cited must therefore be carefully examined, to see as to which period in the practice they apply.

Prior to 1913, the practice, in this court, compelled a party seeking inspection or discovery to resort to a bill of discovery.

To be sure, in Coit v. North Carolina Co. (C.C.) 9 F. 577, decided in 1881, that court indicated that the practice then allowed in common-law actions could be introduced in equity, saying: “The practice in equity formerly was to obtain information and use of the contents of books and documents in a party’s possession, by bill of discovery * * * it was so changed as to require simply an acknowledgment of the existence and possession of the document, and upon such acknowledgment to obtain their production.”

Five years later, however, the authority of this case was overruled in this circuit, in the case of Bisehoffsheim v. Brown et al., 29 F. 341, where the court said, referring to the above ease: “Notwithstanding this authority it must be held that such practice cannot be sanctioned.” Since that time, and up to 1913, the latter case bas been consistently approved and followed. West Publishing Co. v. Edward Thompson Co. (C. C. 1907) 151 F. 138; Oro Water Co. v. City (C. C. 1908) 162 F. 975. And many other eases could be cited tQ support this view.

Therefore in equity, a party prior to 1913, situated as the defendant here, would be compelled to proceed by a bill of discovery. In 1913, however, the new equity rules went into effect. As in the case of the New Civil Practice Act of the state, above referred to, the English chancery practice was the source, and particularly order 31 was consulted. Hopkins, Federal Equity Rules (4th Ed.) p. 22. The report of "the committee of the Circuit Court of Appeals, Second Circuit, embodying this order is set forth in the above work as follows: “Every party is entitled as a matter of course to an inspection of documents referred to in pleadings or affidavits. As to documents which are not referred to in the pleadings or disclosed by the proceedings or affidavits, a party who seeks an inspection thereof must satisfy the court upon affidavit •that he is entitled to such inspection and that the documents are in the possession or the power of the other party. Such an inspection will then be ordered if in the opinion of the judge it is necessary for disposing fairly of the cause.”

New equity rule 58 seeks to accomplish in a quick manner, but only in the way mentioned in the rule, this object to be attained, to wit, the production and the inspection of an exhibit. So much of this rule 58, as is applicable, is as follows:

“ * * * The defendant at any time after filing his answer and not later than 21 days, * * * and either party at any time, after joinder of issue, by leave of the court or judge, may file interrogatories, in writing, for the discovery by the opposite party or parties, of facts, and documents, material to the support or defense of the cause, * * * hut no party shall file more than one set of interrogatories to the same party without leave of the court or judge. * * * Each interrogatory shall be answered separately and fully and the answers shall be in writing under oath. * * * Within ten days after service of the interrogatories,^ objections to them, or any of them, may be presented to the court or judge, with proof of notice of the purpose so to do, and answer shall be deferred, until the objections are determined, which shall be at as early a time as is practical. In so far as the objections are sustained answers shall not be required.”
“The court or judge, upon motion -and reasonable notice, may make all such orders as may be appropriate, to enforce answers to interrogatories, or to effect the inspection or production of documents, in the possession of either party, and containing evidence, material to the cause of action, or defense of his adversary.”

From the above rule it is apparent that a summary order of the court directing inspection, aside from the’question of whether such evidence is proper, only follows (as in the case of the Civil Practice Act of the state) where it is shown as a fact that the other party has possession of or control of the exhibit.

It would seem that the ascertainment by admission of this fact, so far as the ability to proceed by summary order, under rule 58, depends both on the filing of interrogatories, and the answers given or compelled thereto. A motion to obtain this admission is not provided for.

Brief reference to some of the eases, arising since the new rules went into effect, may not be out of place, and would seem to support this view.

In P. M. Co. v. Ajax Co. (D. C. 1914) 216 F. 634, we have an answer filed, and objections to interrogatories filed" under rule 58.

In Luten v. Camp (D. C. 1915) 221 F. 424, an action in equity, with answer filed, and objection to interrogatories, we find at page 429 the following: “Interrogatories Nos. 2, 6, 9, 15, and 16 inquire of the defendants what was the precise showing by Lyons * * * of certain sets of blueprints. * * * If these blueprints are in the possession of the defendants, the plaintiff is entitled, upon proper showing, to have an order made for their production and inspection.”

In Blast Furnace Co. v. Worth Co. (D. C. 1915) 221 F. 430, an action in equity, answer filed, and objections to interrogatories, we find at page 432 the following: “The third interrogatory asks for the production of the defendant’s drawings for the construction of No. 1 furnace, and the drawings containing the corrections made by the defendant for its construction as alleged in the answer. This is material to the charge of infringement in the use, in the erection of No. 2 furnace, of the drawings furnished for No. 1 furnace, and the drawings should be produced for the plaintiff’s inspection.”

In the case of Batdorf v. Sattley Co. (D. C. 1916) 238 F. 925, an action in equity, with answer filed and exceptions to interrogatories, we find at page 928 the following: “Interrogatories 100 and 101 read as follows:

“(100) ‘State where the device is located upon which the plaintiffs will rely in their proof of infringement, and whether or not such device can be inspected on behalf of defendant.’
“(101) ‘If the machine referred to in interrogatory 100 cannot be inspected on behalf of defendant, describe and illustrate the device sufficiently for all parts thereof to be understood.’
“The answer to these interrogatories would be material to the defense of the cause, since the answers would inform defendant, or enable it to be informed, not only as to the construction of the device plaintiffs will rely on in their proof of infringement, but give defendant information which in all probability would enable it to ascertain whether it had manufactured or permitted any other act of infringement in connection with the device plaintiffs complain of. The answers would advise the defendant, providing it had manufactured or sold the machine, whether any change having a bearing on the question of infringement had been made after the machine had been disposed of by defendant. Interrogatories calling for facts or documents tending to definitely advise the defense of the act or acts and device or devices complained of I consider proper. Such interrogatories are not.only material to the defense, but tend to narrow the issues. Plaintiffs are required to answer interrogatories 100 and 101.”

In Window Glass Co. v. Brookville Co. (D. C. 1916) 229 F. 833, an action in equity, with answer filed, and motion to compel answers to interrogatories, we find the following: “A party will not be required to answer interrogatories propounded under equity rule 58, where they suggest a ‘fishing expedition,’ or at least an att&mpt to pry into the adversary’s case.”

A party, which without any order of the court requiring it to do so, answered improper interrogatories propounded by the opposite party, could not afterwards complain that they ought not to have been propounded. “It is unnecessary to extend this opinion by pointing out a lack of strict harmony (between a number of adjudicated cases on the subject of equity rule 58) or to emphasize the points upon which some of them agree.”

In Churchward Co. v. Bethlehem Co. (D. C. 1916) 233 F. 322, an action in equity, answer filed, motion for inspection denied, we find the following: “The production of any paper writing which a party desires to offer in evidence may, generally speaking, be compelled. Again, generally speaking, neither party is required to submit its evidence in advance of the trial. There may be exceptions to each of these rules.”

As stated at the outset, no attempt is made here to decide, nor does this decision require a decision in advance, as to the propriety of some subsequent order for inspection. I am here deciding simply the question of practice. Por such other matters, see Sanford, J., in Day Co. v. Mountain Co. (D. C.) 225 F. 622; Pressed Steel Car Co. v. Winn R. Co. (D. C.) 241 F. 964; Dick Co. v. Underwood Co. (D. C.) 235 F. 304; Marquette Co. v. Oglesby Co. (D. C.) 247 F. 351; Kinney v. Rice (D. C.) 238 F. 444; Carpenter v. Winn, 221 U. S. 533, 31 S. Ct. 683, 55 L. Ed. 842; Rodman Co. v. Houghton Co. (D. C.) 233 F. 470.

It may be said that in most of the above eases support will be found, indirectly at least, for the practice here indicated.

Prior to the new rules, it is shown therefore that no summary order was allowed. Since the new rules, such order is allowed, but only as provided in rule 58.

To support an order the certainty of possession seems to be necessary. If possession is admitted, it can be summarily dealt with by order; if it is not so admitted, no order can be made. It was the purpose of the said interrogatories to obtain in advance proof of this necessary fact of possession.

“Rule 58 was framed to afford an opportunity to obtain this admission in advance of trial and save the necessity of proving that which is only formally and not really in controversy.” Rodman Co. v. Houghton Co., supra.

So in Hartford v. Cleveland Co. (D. C. 1921) 275 F. 590, an action in equity, and objection by defendant to interrogatories, we find the following: “Interrogatory 10 calls for the production of documents, namely, ‘working drawings.’ I find no admission of record of the defendant that it has such documents in its possession, custody, or control. In the absence of such admission, there is nothing upon which to base an order directing their production.”

I am not discussing the right to file a bill of. discovery, but it seems to me indicated from the reading of the rule, as well as from the manner in which the rule has been discussed, by authorities since 1913, that where, by summary order an inspection, such as here, is desired, the admission of possession or control must first exist. The plaintiff, after filing Ms bill of complaint, and tbe defendant, after filing Ms answer, but not later than 21 days after tbe joinder of issue, may file interrogatories. After tbe cause bas been at issue for more than 21 days, by leave of court, either party may file interrogatories.

In tbe state court a party might possibly seek tMs‘ admission by motion. In this court be must seek it by interrogatories.

Such interrogatories may be objected to, and, if objections are sustained, need not be answered, or on refusal answer may be compelled, or tbe admission may be made and an order follow, in tbe proper case.

The method, however, so far as summary orders are concerned, is exclusive in equity practice. In tbe case here, there is no admission beforq tbe court on wMeh an order can be based, and where such is tbe case, rule 58 indicates that this admission must be sought by interrogatories.

These interrogatories cannot be filed until issue bas been joined. Therefore this method of defendants of proceeding by notice of motion before answer bas no support in tbe rule. Defendants should first answer, and then proceed, in accordance with rule 58, before relief can be obtained, in tbe form of a summary order, directing tbe production and inspection of an exhibit, found to be material and necessary to tbe defense, and admitted to be in tbe possession or control of tbe other party. ,

The time of tbe defendants to answer is extended 20 days, after tbe entry of tbe order, to be entered hereon. Tbe motion is premature and denied.


author: SIBLEY, District Judge.

text:
    In re TRAMMELL. In re MILLER SHOE STORE.
    (District Court, N. D. Georgia.
    April 24, 1925.)
    Nos. 2143, 10761.
    1. Bankruptcy <@=396(I)— State laws at time of filing petition measure bankrupt’s right to exemption.
    The state laws existing at filing of petition are measure of bankrupt’s right to exemption, which to be allowable must have existed at time of filing petition.
    2. Exemptions <$= I — Homestead <@=l — Distinction between “exemption” and “homestead,” stated.
    “Homestead” and “exemption” are not in law synonymous; a “homestead” consisting of realty, the home place, the home and adjoining land, while an “exemption” is the right given to a debtor by law to retain a portion of his property without liability to execution or distraint, and may include either realty or personalty, or both.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Exemption (From Execution); Homestead.]
    3. Exemptions <$=l, 89 — Exemptions provided by Georgia laws not in nature of homestead; exemption cannot be waived after setting apart.
    There is no true homestead in Georgia, but under Const. Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416 et seq., there, is a direct exemption of property without regard to residence or home, realty or personalty, and though such exemption may be waived before setting apart (Const. Ga. art. 9, §§ 3, 5), after setting apart of exempt property it cannot be aliened or incumbered by debtor.
    4. 'Exemptions <$= 128 — Setting apart between levy and sale is timely.
    Setting apart of property exempt under Const. Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416, though necessary to defeat sale, is timely, though not had before levy, if made before sale.
    5. Constitutional law <$=121 (I) — Debtor’s statutory exemption cannot be increased as to debts in existence without violating contract clause of Constitution.
    Debtor’s right of exemption under Const: Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416, affect/s debtor’s whole property as an inchoate incumbrance created by law, and cannot be increased as to debts in existence without violating contract clause of federal Constitution.
    6. Bankruptcy <S=400(2) — Exemptions <$=128 —“Setting apart” of exempt property is function of bankruptcy court; burden of identification on debtor.
    “Setting apart” of debtor’s exempt property is a mere identification of property to which exemption shall be applied, the burden of securing which is put on debtor and is a proper function of bankruptcy court, whose action is equivalent to action by state court in effectuating exemption.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Set Apart.]
    7. Bankruptcy <$=400(2) — Property exempt, but not set apart before filing petition, may be set apart.
    Property exempt under Const. Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416, but not set apart prior to petition in bankruptcy, may be set apart in the bankruptcy proceeding, in view of Bankruptcy Act, 1898, §§ 2 (11), 6, 47 (11), 70 (a), being Comp. St. §§ 9586, 9590, 9631, 9654, and General Order 17.
    8. Bankruptcy <$=400(2) — Court must decide whether bankrupt may claim exemption under law of his .domicile.
    Under Bankruptcy Act 1898, §§ 2 (11), 6 (Comp. St. §§ 9586, 9590), bankruptcy court in setting aside exemption must decide whether debtor may claim exemption under laws of the state of his domicile.
    9. Exemptions <§=16 — Alien resident of Georgia having no family within state not entitled to exemption as head of family.
    Alien resident of Georgia having no family within state, but having mother in Poland and sister in other state to whom he regularly sends money, helé not the head of family entitled to exemption provided by Const. Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416.
    10. Exemptions <®=25 — Alienage no har to claim of exemption by resident debtor.
    Alienage of resident of state is no bar to claim of exemption provided by Const. Ga. art. 9, § 1, and Civ. Code Ga. 1910, § 3416.
    In Bankruptcy. On review of decisions of referees in the matter of John P. Tram-mell, bankrupt, denying bankrupt’s claim of exemption, and in tbe matter of the Miller Shoe Store, a partnership bankrupt, granting claim of exemption. Decision in Miller Shoe Store Case affirmed.
    Decision in Trammell Case reversed.
    H. A. Wilkinson, of Dawson, Ga., for bankrupt Trammell.
    Clarence H. Calhoun, of Atlanta, Ga., for bankrupt Miller Shoe Store.
    R. S. Wimberly, of Lumpkin, Ga., Wallis & Port, of Americus, Ga., and Little, Powell, Smith & Goldstein, of Atlanta, Ga., for trustee of Trammell.
    W. C. Hendrix, of Atlanta, Ga., for trustee of Miller Shoe Store.
   SIBLEY, District Judge.

Trammell is a voluntary bankrupt who in his schedules claimed as exempt property of the value allowed by the Constitution of Georgia. Miller Shoe Store, a partnership, is an involuntary bankrupt, the partners in which have, in their duly filed schedules, similarly made claims of exemptions. None of the claimants had, at the time of filing of the bankruptcy petition, or at the time of adjudication, secured any setting apart of exempt property before the state tribunals, nor had made any application therefor. The referee^ in the former ease, on the authority of White v. Stump, 45 S. Ct. 103, 69 L. Ed. -, October term, 1924, refused to allow any exemption in the bankruptcy court. The referee in the latter ease allowed exemptions, thinking the Stump Case not controlling.

In White v. Stump, supra, three things are settled: (1) The state laws existing when the petition was filed are the measure of the right to exemptions in bankruptcy. (2) The date of the filing of the petition is the time as of which the right of exemption under the state law must have existed. (3) Under the Idaho law there was no right of exemption for land which had not been actually registered as a homestead before the filing of the bankruptcy petition. The first two propositions are general and apply here. The force of the third depends on a comparison of the laws of Idaho with those of Georgia.

Let it be remembered that a “homestead” and an “exemption” are quite different things. A “homestead” is properly “the home place — the home and the adjoining land.” Bouvier, Law Dict. (3d Ed.). It is therefore realty. When established according to statutory requirements, it is commonly made exempt from forced sale, and the family is often given special rights in it. An “exemption” is “the right given by law to a debtor to retain a portion of his property without its being liable to execution at the suit of a creditor or to distress for rent.” Bouvier, Law Dict. (3d Ed.). This right of the debtor may refer to realty, personalty, or both. The Bankruptcy Act nowhere mentions homesteads, but refers to and deals with exemptions only. The statutes of Idaho disclose a direct and absolute exemption from execution of certain kinds of personal property, Comp. Stat. 1919, § 6920. By section 5437 provision is made for the erection of a homestead of realty, and by section 5440 one of- the incidents following thereon is that the homestead is partly exempt from sale on execution. This exemption is incidental, and exists only when the homestead has been fully established. As is clearly pointed out in White v. Stump, supra, the establishment of the homestead requires the execution and acknowledgment and filing for record of a declaration thereof. “The exemption arises when the declaration is filed, and not before. Up to that time the land is subject to execution and attachment like other land; and where a levy is effected while the land is in that condition the subsequent malting and filing of a declaration neither avoids the levy nor prevents a sale under it.” This has been frequently held in other states having similar homesteads. 21 Cyc. p. 514. By the report of the Stump Case in (C. C. A.) 284 E. at page 200, it appears that Stump was allowed his exemption of personalty without question. His wife was denied an exemption in realty because it -was not a homestead, with the incident of exemption, when the bankruptcy petition was filed and when the trustee’s rights in behalf of creditors attached.

In Georgia there is no true homestead. That term is freely used in the headings of code sections and in judicial decisions, hut the language of the Legislature in establishing the ancient “short homestead,” now Code, § 3416, and following, and of the Constitution of 1877, establishing the alternative “constitutional homestead,” uses the more accurate expression “exemption”' and “property set apart.” In both provisions there is the direct exemption of property from sale, without regard to residence or home, and either of realty or personalty. Exemption is not an incident, but the principal enactment. The incidental matter is rather the establishment, after the setting apart, of certain rights in the dependents as beneficiaries and the imposing of certain disabilities on the debtor. The effective language of the former provision is: “The following property of every debtor who is the head of a family, shall he exempt from levy and sale by virtue of any process whatever, * * a but it shall remain for the use and benefit of the family of the debtor.” The provision of the Constitution, art. 9, § 1, is: “There shall he exempt from levy and sale, by virtue of any process whatever under the laws of this state, except as hereinafter excepted, of the property of every head of a family * * * realty or personalty, or both, to the value in the aggregate of sixteen hundred dollars.” Both exemptions must be “set apart.” After setting apart, it is a trespass either to levy on, or, having levied, to sell, the exempt property, and the sale is void. The exemptions may be waived before setting apart .(Constitution, art. 9, §§ 3 and 5), but after-wards the exempt property cannot be alienated or incumbered by the debtor. Thereafter the dependents become “beneficiaries” and have what is referred to in the decisions as a “homestead estate” and the debtor a “reversion.” This twofold aspect of Georgia homesteads, first as a debtor’s exemption from sale, and second as resulting in the establishment of certain rights or estates in third persons as beneficiaries, must not be lost sight of. The Georgia decisions are too numerous to review. It has always been held that the “setting apart” of the exempt property, while necessary to defeat a sale, was in time between levy and sale. An application for setting apart pending at the time of sale, by a sort of lis pendens, affects the sale with the results of the application. Kilgore v. Beck, 40 Ga. 293; Blivins v. Johnson, 40 Ga. 297.

The right of exemption affects the debtor’s whole property as an inchoate in-cumbrance created by law, and so could not be increased as to debts in existence without violating the contract clause of the federal Constitution. Gunn v. Barry, 15 Wall. 610, 21 L. Ed. 212. The setting apart is a mere identification of the property to which it shall be applied, the burden of securing which is put on the debtor. Compare Gheen v. Summey, 80 N. C. 187. This identification for a bankrupt debtor has always been an unquestioned function of the bankruptcy eourt, when not previously accomplished in the state tribunal. The question has rather been whether an identification and valuation by the state court would bind the bankruptcy eourt. The Bankruptcy Act of 1867, in section 14 (14 Stat. 522), contained provisions as to exemptions under state laws and the recognition of them in bankruptcy which are comparable to those of the present law. The Georgia Constitution of 1868 (article 7, § 1) provided a homestead exemption similar to the present one in material respects. Thereunder it was promptly held by the state courts that a setting apart in the bankruptcy eourt without aetion in a state eourt effectuated the debtor’s exemption. Bushin v. Gause, 41 Ga. 180. Indeed, it was held that pending the bankruptcy proceedings, the state tribunal should hot act to effectuate the rights of the dependents (Woolfolk v. Murray, 44 Ga. 133), though by proceeding in the state court afterwards these rights might be matured in the property set apart in the bankruptcy eourt (Colquitt v. Brown, 63 Ga. 440). But without reference to the homestead rights of beneficiaries consequent on state eourt aetion, it was settled, and has remained so under present laws, that the setting apart in bankruptcy was equal to action in the state tribunal in effectuating the debtor’s exemption, which concerns only himself and his creditors. Bush v. Lester, 55 Ga. 579; Farmer v. Taylor, 56 Ga. 560; Ross v. Worsham, 65 Ga. 624; Evans v. Rounsaville, 115 Ga. 684, 42 S. E. 100; Pincus v. Meinhard, 139 Ga. 365, 77 S. E. 82; Baltimore Bargain House v. Busby, 143 Ga. 734, 85 S. E. 875; Murphy v. Smith, 16 Ga. App. 472, 85 S. E. 791. The same view has been taken in the federal courts. In the early case of Bass, Fed Cas. No. 1091, Justice Bradley, on circuit in Georgia, said: “Nor does it make any difference that the homestead was not ascertained.or set out in severalty until after the proceedings in bankruptcy were commenced, or until after the conveyance to the assignee was executed. Whenever properly claimed and designated, the exemption protects it, and the exemption created by tbe bankrupt act relates back to the conveyance and limits its operation. Though not designated when the conveyance was executed, it was capable of being designated, and on the principle that id certum est quod certum reddi potest, it is as much entitled to the benefit of the exception as if it had been designated and set apart before the bankruptcy occurred.”

This decision, followed throughout the administration of the Act of 1867, was applied to the present act in this district by Judge Newman, in Re Camp (D. C.) 91 F. 745; he holding: “Under Bankruptcy Act 1898, § 47, it is the duty of the trastee to set apart the bankrupt’s exemptions as soon as practicable after his appointment, without waiting until such exemptions shall have been allowed and set apart by state officers, according to the procedure prescribed by the laws of the state.” This, on reargument, was reaffirmed in Re Hill (D. C.) 96 F. 185. Some divergence of view arose in the Southern district of Georgia on the effect of a waiver of homestead, though not on the duty of the trustee to act without precedent action in the state court. In re Woodruff (D. C.) 96 F. 317. In the Circuit Court of Appeals, the doctrine of the Camp Case was upheld. Woodruff v. Cheeves et al., 105 F. 601, 44 C. C. A. 631. The matter, however, was certified to the Supreme. Court, in Lockwood v. Exchange Bank, 190 U. S. 294, 23 S. Ct. 751, 47 L. Ed. 1061. It there plainly appeared that the trustee and not the state court had set apart the exemption in controversy. The first contention in the brief of the defendant in error was: “Under the laws of Georgia a debtor cannot claim any property as exempt until it is set apart to him on proceedings instituted for that purpose.” The court did not notice the contention, but treated the exemption of the present Georgia Constitution as such an exemption under the state laws as would be effectuated in bankruptcy by the trustee, quoted from the Bass Case as still applicable, and upheld the ruling of the Camp Case.

The Bankruptcy Act and the Orders and Forms provided by the Supreme Court are plainly adapted to apply to specific property exemptions granted as generally as are those of the Georgia law. By section 2 (Comp. St. § 9586) the courts of bankruptcy may “exercise original jurisdiction in bankruptcy proceedings 4 * * to * * * (11) determine all claims of bankrupts to their exemptions” — not merely to review or ratify and apply the determination of a state court. By section 6 (section 9590): “This act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws” — allowance being only another word for “setting apart,” the term used in the state law, and the thing allowed being, not what some other court has allowed, but what is prescribed by state law. Section 47 (11), being Comp. St. § 9631, expressly makes it the duty of the trustee to “set apart the bankrupt’s exemptions and report the items and estimated value thereof to the court” — using the very term of the state law and doing the very thing a state tribunal would do. General Order 17 requires the trustee to report “the articles set off to the bankrupt by him, etc.,” and provides for exception and decision by the referee. The mere application of some decision of a state tribunal is not contemplated. Form 47 reads: “The following is a schedule of property designated and set apart to be retained by the bankrupt as his own property under the provision of the act of Congress relating to bankruptcy.” Section 70 (a) being Comp. St. § 9654, adds little to the argument in excepting from the trustee’s title property “which is exempt.” It gives no test whatever to determine what is exempt. Practically, it excludes that which the trustee and the court shall set aside as exempt, and as we have seen, they set aside that which is exempt by the law of the state. Section 70 (a) as an argument begs the question.

The true adjustment of bankruptcy to the Georgia exemptions is to treat the filing of the petition in bankruptcy as the equivalent of a levy or attachment on all the bankrupt’s property, which he may meet before an actual sale by having the exemptions to which he is entitled, if not previously ascertained, set apart to him by the machinery of the bankruptcy court just as he would do in the state court had state process been levied upon it.

Upon this interpretation of the Bankruptcy Act as applied to the Georgia exemptions for more than 50 years, much property of the state has been dealt with. To change it might unsettle many titles. ' The opposite rule would enable the dishonest to secure their homesteads in the state courts, and then voluntarily go into bankruptcy, while the honest but straggling debtor, suddenly proceeded against involuntarily, could have no exemption. The temptation for all would be to avoid the possibility of such an involuntary bankruptcy by a prepared voluntary one, often taken prematurely and unnecessarily. This is not likely to have been the intent of Congress. It is not the holding of this court. The decision of the referee in the case of Miller Shoe Store is affirmed on this point. That of the referee in the Tram-mell ease is reversed.

Levin, one of the partners in the Miller Shoe Store, was denied an exemption by the referee on the ground that he was not a person entitled to one under the Georgia laws. The bankruptcy court in setting aside an exemption may and must decide whether the bankrupt may claim an exemption under the laws of the state of his domicile. Bankruptcy Act, §§ 2 (11), 6; Collier on Bankruptcy (13th Ed.) 284. The Georgia Constitution (article 9, § 1) grants an exemption to “every head of a family * * • or person having the care and support of dependent females of any age, who is not the head of a family.” Levin, an. alien resident in Georgia, has no family within the state, but has a mother in Poland and a sister in Chicago, Ill., to each of whom he regularly sends money. It does not appear whether they have husbands or what other means of livelihood they have. Levin’s alienage is no bar to an exemption, if he be otherwise entitled, since he is domiciled in Georgia and is subject to her laws. 21 Cye. 470. If his mother and sister lived with him and were indigent and supported by him, he would, because of the moral obligation to support, these near relatives, be treated as the head of a family. Marsh v. Lazenby, 41 Ga. 153; Holloway v. Holloway, 86 Ga. '576, 12 S. E. 943, 11 L. R. A. 518, 22 Am. St. Rep. 484. But not thus being within the state, nor intending presently to come, they cannot constitute a Georgia family with Levin as its head. 21 Cyc. 470. It may be doubted whether dependent females who are not residents of the state, are within the class for whose benefit, as such an exemption is allowed. In this ease it does not appear that Levin has either their “care and support” on him, nor that they are really “dependent” on him. The referee correctly d&nied the exemption.