author: YOUMANS, District Judge.

text:
    LOCKHART v. UNITED STATES.
    No. 9083.
    Circuit Court of Appeals, Eighth Circuit.
    Aug. 19, 1931.
    J. R. Lones, of Omaha, Neb. (Raymond T. Coffey, of Omaha, Neb., on the brief), for appellant.
    Edson Smith, Asst. U. S. Atty., of Omaha, Neb. (Charles E. Sandall, U. S. Atty., and Ambrose C. Epperson, Asst. U. S. Atty., both of Omaha, Neb., Robert Van Pelt, Asst. U. S. Atty., of Lincoln, Neb., and Lawrence I. Shaw, Asst. U. S. Atty., of Omaha, Neb., on the brief), for the United States. '
    Before STONE and GARDNER, Circuit Judges, and YOUMANS, District Judge.
   YOUMANS, District Judge.

Appellant was convicted upon an information charging him with the unlawful transportation in an automobile of 25 gallons of alcohol and five gallons of whisky. Before trial appellant filed a motion to suppress evidence on the ground that it was obtained by a search and seizure without a search warrant or warrant of arrest. The motion was submitted to the court on the affidavits of defendant and two prohibition officers and was overruled. Upon trial a verdict -of guilty was returned. A motion for a new trial was overruled, as was also a motion for judgment for the defendant notwithstanding the verdict. Eight errors were assigned,- but only two were urged and argued by appellant at the hearing. ■ They were: (1) That the court erred in overruling the motion to suppress evidence; - and (2) that the evidence did not show transportation within the meaning of the statute.

On the motion to suppress evidence the government introduced the affidavit of one of the prohibition officers, which was as follows:

“That on or about the 28th of January, 1929, on information that a Chrysler Coupe, License Number 11-3286 Nebraska 1928, driven by Bernie Lockhart, would leave the residency located at 1510 South 60th Street, Omaha, Douglas County, Nebraska, between 10 A. M., and 1 P. M., with a load of alcohol hound for out of town, affiant went to the premises located at 1510 South 60th Street, Omaha, Nebraska, accompanied by Agents Jones and Math wig, and watched said premises from about three-quarters of a block north. That at about 11:37 A. M., on said day, he saw a man come out of a house and open the door of a Chrysler Coupe which was parked by the home, the address of which is 1510 South 60th Street, said Chrysler Coupe bearing license Number 11-3286 Nebraska 1928; that he saw this man open the back of the said Chrysler Coupe and place five 1 gallon cans in the back end of said ear; that he then saw the side door of the house, the address of which is 1610 South 60th Street, open and a lady hand this man twenty more 1 gallon cans, which were placed in the back end of the car.
“That said cans were similar to the shape and the size of cans commonly used by bootleggers in the vicinity of Omaha, Nebraska, for carrying alcohol.
“That the man then returned to the house, the address of which is 1610 South 60th Street, and did not come out again until 12:35 P. M., when he got in the said car and started away. That affiant then went over to and stopped the car. That affiant found twenty-five 1 gallon cans full of alcohol and a five-gallon jug of whisky in said car.”

The affidavit of another officer was introduced which was the same as the first. The officers had neither search warrant nor warrant of arrest. The legality of their search and arrest must depend upon probable cause.

In the ease of Carroll v. United States, 267 U. S. 132, 149, 45 S. Ct. 280, 283, 69 L. Ed. 543, 39 A. L. R. 790, the Supreme Court, speaking by Mr. Chief Justice Taft, said: “On reason and authority the true rule is that if the search and seizure without a warrant are made upon probable cause, that is, upon a belief, reasonably arising out of circumstances known to the seizing officer, that an automobile or other vehicle contains that which by law is subject to seizure and destruction, the search and seizure are valid.”

In this ease the circumstances known to the seizing officers were:

1. The information that the appellant would leave a certain place between certain hours with a load of alcohol in an automobile “bound for out of town.”

2. At the time and place named appellant was observed loading twenty-five 1-gallon cans into the baek end of an automobile.

3. That the cans were similar in shape and size to cans commonly used by bootleggers for carrying alcohol in the vicinity of Omaha.

Within the rule above stated these circumstances constituted probable cause for the search.

Upon the trial the testimony of the officers was that they watched the premises from a point where they had an unobstructed view; that they saw the appellant come out of the house, go to the car and raise up a door at the rear end and leave' it open; that he went back to the house and brought out a number of cans and placed them in the baek end of the car; that a woman came out of the house and handed to appellant a number of cans and he took- them and also placed them in the end of the ear; that he got into the car himself and started off, and at this point he was stopped by the officers who arrested him and searched the ear and found twenty-five 1-gallon cans of alcohol and a five-gallon jug of whisky. One of the officers stated that the appellant said he was taking the alcohol and whisky to Syracuse, Neb., and was going to sell it. The officers also testified that the appellant drove his ear about ten feet before he was stopped.

Appellant denied that he stated to the officers that he was taking the alcohol and whisky to Syracuse, Neb. He also denied that he had moved the ear at all.

Upon the conclusion of the evidence appellant moved for a directed verdict upon the ground that it was “shown by the evidence that no liquor was transported off the premises at 1510 South 60th Street, Omaha, Nebraska” ; and “that the transportation of the liquor as testified to by the government witnesses is so slight that it does not change the status of the intoxicating liquor, which is an element of the offense of transportation.” The motion was denied. With reference to transportation, the court instructed the jury as follows:

“To transport intoxicating liquor in an automobile within the meaning of the law, gentlemen, means to convey it from one place to' another place. That is what the phrase transport by automobile means. It does not mean that although liquor was in an automobile the mere moving of it to one side at the same place or moving it here or there in a man’s own yard, merely as a movement of the automobile and not with the intention of getting the liquor from one place to another, that would not come within the meaning of transportation. * * * There is evidence here adduced by the Government’s witnesses to show that the car was set in motion by the defendant after it was loaded with this liquor and that it was caused to be stopped by them thereafter before it had gotten over the driveway, and while it was in motion and going away. If that is the ease, if it is true that it was stopped by the agents to prevent the movement- for the transportation of liquor, for carrying it to some other place, and you are satisfied beyond a reasonable doubt, you should convict the defendant of transportation.
“On the other hand, there is testimony offered by the defendant to the effect that the car was not put in motion at all. That the defendant was in it and was running the engine for the purpose of warming it up; that at the identical moment when he was arrested he was leaning over,-fixing the heater in the ear, and that he had not started to transport it in the car. If you believe that account of the transaction, or, if it seems to you that the evidence is evenly balanced so that you cannot be certain on this evidence as to whether the ear had been set in motion as a part of the transportation or whether it was standing there as described by the defendant, and he has witnesses who testified to the same effect, then you should acquit him. If there remains in your minds a reasonable doubt as to whether or not the car was sét in motion, by way of transportation, you should acquit.”

The instruction correctly defined transportation as used in the prohibition act sufficiently favorable to appellant. It also clearly submitted the question upon the two lines of testimony, one on the part of the government that the automobile had actually started, and the other on the part of the defendant that it had not started. The jury believed the witnesses for the government.

The case should be, and is, affirmed.


source: Caselaw Access Project

author: BOOTH, Circuit Judge.

license: Public Domain

text:
    NOISOM v. AUTOMATIC AUTO COMPASS CO.
    No. 8939.
    Circuit Court of Appeals, Eighth Circuit.
    July 20, 1931.
    N. S. Amstutz, of Valparaiso, Ind., for appellant.
    W. T. Evans, of Waterloo, Iowa, for ap-pellee.
    Before KENYON and BOOTH, Circuit Judges, and OTIS, District Judge.
   BOOTH, Circuit Judge.

This is a patent suit in conventional form. The main defense relied upon is invalidity of the patent for lack of invention. •

The patent involved is No. 1,665,715, issued April 10, 1928, to Ole P. Noisom; application filed May 8,1926. It covers a compass indicator for automobiles, etc.

The patent ineludes four claims, but only the fourth is here involved. That claim reads as follows: “4. In direction indicators for conveyances, a suitable casing having a flanged edge integral therewith, a double flanged ring for the easing, a cover glass between a flange of the ring and the flange of the casing, a magnetic needle free to rotate between the glass and the casing on its axis, a removable bearing recess in the glass for the lower end of the axis, and means for simultaneously holding the axis free to rotate and have slight endwise movement.”

The elements of the claim are: (1) a casing with a flanged edge; (2) a double flanged ring for the easing; (3) a cover glass between a flange of the ring and the flange of the easing; (4) a magnetic needle free to rotate between the glass and the easing on its axis; (5) a removable bearing recess in the glass for the lower end of the axis; (6) means for simultaneously holding the axis free to rotate and have a slight endwise movement.

The “axis” mentioned is a spindle. The specifications make this clear. It is therein stated: “The compass needle 19 is secured to a spindle in any desired manner. • The lower end 18 of such a spindle at 20, is cone shaped. It rests in a conical depression 21 formed on the upper surface of the glass cover 22. The upper end 23 of the spindle 18 enters a central hole in the retaining screw 13.”

The ordinary compass has, in general, the following elements: A magnetic needle; a spindle which is stationary; a bearing attached to the needle and which fits over the top of the spindle; a cover glass over the needle; and a cardboard or flange around the edge of the easing on the inside to hold the glass from contact with the needle.

It is apparent that the patent device has a number of these old elements. It has the spindle, the needle, the easing, and a flange to separate the glass from the needle; but in the patent device, inasmuch as the compass is to be used upside down, the spindle, instead of being stationary, as in the ordinary compass, is movable, and the needle is attached to it; and there is a bearing in the cover glass for the lower end of the spindle. The upper end of the spindle moves in a guide which, according to the specifications, consists of a cylindrical opening in the tip end of a hollow screw.

The lower court held that the attaching of the needle to the spindle, 'the making of the spindle movable, and the providing of a bearing in the glass for the lower end of the spindle with a guide at the other end of the spindle did not constitute invention in view of the prior art. We think that conclusion is correct. We are of the opinion that an ordinary mechanic, being confronted with the problem of making the usual compass operate when upside down, would at once see the reason why the compass, as usually constructed, will not work in that position. He would at once see that a bearing in the cover glass was necessary for one end of the spindle, and he would also at once see the advantage of having the needle attached to the spindle. Changes so obvious and so simple do not amount to invention. Florsheim v. Schilling, 137 U. S. 64, 11 S. Ct. 20, 34 L. Ed. 574; Tropic-Aire, Inc., v. Sears, Roebuck & Co., 44 F.(2d) 580 (C. C. A. 8); Magic City Kennel Club v. Smith (C. C. A.) 38 F.(2d) 170, affirmed 282 U. S. 784, 51 S. Ct. 291, 75 L. Ed. 707; Carbice Corp. of America v. American Patents Development Corp. 283 U. S. 420, 51 S. Ct. 496, 75 L. Ed. 1153.

As the trial court did not pass upon the question of infringement, and as a determination of that question is not necessary to a disposition of the case, we do not discuss that matter.

We hold claim 4 of the patent invalid for lack of invention.

The decree of the trial court is modified so as to cover claim 4 only, and, as so modified, is affirmed.


author: PHILLIPS, Circuit Judge.

text:
    ALEXANDER v. MID-CONTINENT PETROLEUM CORPORATION.
    No. 143.
    Circuit Court of Appeals, Tenth Circuit.
    July 3, 1931.
    Chas. T. Hendler, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C. (Roy St. Lewis, U. S. Atty., of Oklahoma City, Okl.) and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, of Washington, D. C., on the brief), for appellant.
    J. C. Denton and R. H. Wills, both of Tulsa, Okl. (J. H. Crocker, I. L. Loekewitz, and H. M. Gray, all of Tulsa, Okl., on the brief), for appellee.
    Before LEWIS, PHILLIPS, and McDERMOTT, Circuit Judges.
   PHILLIPS, Circuit Judge.

The Mid-Continent Petroleum Corporation brought this suit against A. C. Alexander, individually and as collector of Internal Revenue, to enjoin the summary collection from it as transferee pursuant to section 280 (a) (1), Revenue Act of 1926, section 1069 (a) (1), title 26, USCA, section 311 (a) (1), Revenue Act 1928, section 2311 (a) (1), title 26, USCA, of certain income taxes assessed against the Burbank Oil Company.

The bill challenged the constitutionality of section 280 (a) (1), supra, and section 604, Revenue Act of 1928, section 2604, title 26, USCA.

From an order granting a temporary injunction against the collection of such taxes from the Mid-Continent Corporation, Alexander, individually and as collector, has appealed.

The Supreme Court, in Phillips v. Commissioner, 283 U. S. 589, 51 S. Ct. 608, 75 L. Ed. 1289, sustained the constitutionality of section 280 (a) (1), supra, section 311 (a) (1), Revenue Act of 1928, section 2311 (a) (1), title 26, USCA, and section 604, supra. The court held that the procedure provided for in section 280 (a) (1) does not violate the requirements of due process because of the two eventual methods of judicial review provided: one by an appeal from the decision of the Board of Tax Appeals, and the other by a suit by the transferee against the collector to recover the tax after payment and administrative denial of a claim for refund.

The court also sustained the validity of section 604, supra, prohibiting injunctive relief in the case of summary proceedings against a transferee.

It follows that the Mid-Continent Corporation is not entitled to any relief in this suit. Therefore, notwithstanding this is an appeal from an interlocutory order, this court has the power to dispose of the case on the merits. Consolidated Cement Corporation v. Pratt (C. C. A. 10) 47 F.(2d) 90, 93.

The order granting the temporary injunction is reversed with instructions to vacate such order and to dismiss the bill at the cost of the Mid-Continent Corporation.


author: SCHOONMAKER, District Judge.

text:
    CHARPILLOZ et al. v. READE MFG. CO., Inc.
    No. 4578.
    Circuit Court of Appeals, Third Circuit.
    Aug. 13, 1931.
    Border Bowman, of New York City (Albert F. Nathan and Elmer R. Helferich, both of New York City, of counsel), for appellants.
    Lewis J. Doolittle, of New York City, for appellee.
    Before BUFFINGTON and DAVIS, Circuit Judges, and SCHOONMAKER, District Judge.
   SCHOONMAKER, District Judge.

This is a patent suit involving United States patent No. 1,534,289, issued April 21, 1925, to Albert Charpilloz, as assignee of Eugene Teppet, on an application filed October 16,1922.

The court below held it invalid for want of novelty, by reason of the disclosures of a prior French patent No. 487,121, to Georges Trauffaut on an application filed December 4, 1916, granted March 16, 1918, and published June 5,1918.

A comparison of the two patents clearly shows that the District Court was right in so holding. The Teppet patent is for a process and composition for destroying weeds— one that is toxic to weeds, nontoxie to animals, and noneorrosive to metal. A chlorate used in solution in water is the essential element of this weed destroyer, the patentee preferring sodium ehlorate because of its cheapness. The prior patent of Trauffaut discloses and teaches the use of chlorates in solution for precisely the same purpose, expressing a preference for the least costly chlorates, and mentioning chlorate of soda as one of them. The faet disclosed by Teppet that chlorates are nontoxie to animal and noneorrosive to metal is likewise disclosed by Trauffaut, who states that the products, or the mixture of the products which form the objects of his invention, cannot be noxious and give entire satisfaction.

We therefore hold that the Trauffaut patent fully and adequately discloses the whole invention of the Teppet patent.

The decree of the court below is affirmed at the costs of the appellants.


author: NIELDS, District Judge.

text:
    AMERICAN CRAYON CO. v. PRANG CO.
    No. 618.
    District Court, D. Delaware.
    June 26, 1931.
    William G. Mahaffy, of Wilmington, Del., Carl Goepel, of New York City, and Charles E. Frohman, of Sandusky, Ohio, for plaintiff.
    Clifford E. Dunn and David A. Woodcock (Duell, Dunn & Anderson), both of New York City, and Charles F. Curley, of Wilmington, Del., for defendant.
   NIELDS, District Judge.

This is an application by the defendant, the Prang Company, for an order adjudging the plaintiff, American Crayon Company, in civil contempt for violation of an injunction issued in this ease April 5, 1930. The prior history of the case is recorded in (D. C.) 28 F.(2d) 515; (C. C. A.) 38 F.(2d) 448, and (D. C.) 50 F.(2d) 225.

The application must be denied. I think the matter does not call for a discussion either of law or fact. The defendant seeks to draw an analogy between the matter now before the court and the former contempt application of the plaintiff. It is obvious, however, from a reading of the record that there is no basis for defendant’s contention. The conduct of American Crayon Company has been in marked contrast to that of the Prang Company. The former, at great financial loss, fully complied with the letter and spirit of the findings of this court and of the court of appeals. The latter studiously endeavored to find some means to evade the court findings and decrees and to recapture a portion or all of what it had sold to the American Crayon Company.

Further, it is apparent that the facts, upon which this proceeding is based, were known to the petitioner for many months before filing its application. This proeeed-ing was not instituted until fifteen days after this court filed an opinion finding the Prang Company, the petitioner here, guilty of contempt for violation of the above mentioned decree. The neglect of the defendant to take prompt action after the facts were known to it satisfies me that.this proceeding would not have been instituted if the action of the court on plaintiff’s motion had been favorable to defendant. Mere lapse of time is not in all cases a sufficient answer to contempt proceedings. Delay in the absence of any adequate excuse, together with the circumstances of this case, is an additional reason for denying defendant relief.

The motion must be denied.


author: WOOLSEY, District Judge.

text:
    In re BANKER’S CAPITAL CORPORATION. In re BANKER’S CAPITAL CO. OF CONNECTICUT.
    District Court, S. D. New York.
    July 20, 1931.
    Edwards, Murphy & Minton, of New York City (Milton P. Kupfer, George P. Mara, and Phillip W. Haberman, all of New York City, of counsel), for various reclaiming creditors. Powell Crichton, of New York City, for reclaimant, Monfried & Warner, of New York City, for reelaimant, and Charles G. Chamberlin (Harry Loeb Mostow, of New York City, of counsel), in support of petitions for review.
    Breed, Abbott & Morgan, of New York City, by Gerald J. Craugh, of New York City, for trustee in matter of Banker’s Capital Corporation, and Chaffee, Dawson & Shealy, of New York City (William B. Shealy, of New York City, of counsel), for trustee in matter of Banker’s Capital Company of Connecticut, in opposition thereto in. their respective matters, in support of the petition of the trustee of the Connecticut Company in the proceeding of the New York Company.
   WOOLSEY, District Judge.

The petitions to review in these two proceedings in bankruptcy are denied, and the orders of the referee which the several petitions sought to review are in all respects confirmed.

I. On a previous petition to review in connection with the reclamation claims of Taylor and Hill, in the matter of the Banker’s Capital Company of Connecticut, No. 47883, I made a memorandum on the papers on April 27, 1931, granting the petitions to review those two reclamation proceedings, and also stated in the same memorandum that the Jensen claim had been withdrawn at the argument and so might stand as dismissed. There was not any order entered on this decision.

I was.requested to reconsider it in connection with the other reclamation proceedings in the case of Banker’s Capital Company of Connecticut, No. 47883, and in the Banker’s Capital Corporation, No. 47847, and'I granted this request.

After again studying the report of the referee in those reclamations and in the others now first before me, and after reading all the cases cited by counsel for all parties, I have come to the conclusion that the result reached by the referee was right.

I regret that pressure of time prevents my writing a more extended opinion in connection with this interesting matter, but to do so would take more time than I have now available.

II. The Banker’s Capital Corporation, hereinafter called the New York Company, owned all the stock of the Banker’s Capital Company of Connecticut, hereinafter called the Connecticut Company; the same men were officers of the two companies.

All purchases of securities were made by the Connecticut Company from the New York Company, to which the Connecticut Company was indebted in the sum of more than $613,000 at the time of the bankruptcy of the New York Company.

The referee was quite right, therefore, in dismissing the reclamation filed in behalf of the Connecticut Company.

III. Between the outside reelaimants — i. e., those who bought securities from the two companies — -and the bankrupts, the relationship was not that of customer and broker, but that of buyer and seller of securities.

When they first came into contact with each other, the buyer and the bankrupt were dealing at arm’s length with an executory contract for sale, and there was not any fiduciary relationship between them.

The real question here involved is whether as a result of their subsequent dealings this relationship changed. I think that it did not.

Owing to the fact that the reelaimants here had all of them paid their money, my first impression was that it would be unjust to have the trustee keep the stoek for the estate and the benefit of general creditors, but, on reflection, I have decided that this apparent injustice is merely illusory, for the reason that when, in the relationship of purchaser and vendor with the bankrupts, the purchasers of the stoek paid money before they got their stoek, it simply meant that they were trusting the credit of their vendor for goods, viz. stock, which he was subsequently to deliver to them.

It therefore leaves the situation like any other ease where the pezuons have given credit, and it has turned out unwise to have done so.

The relationship between the parties might have changed from that of buyer and seller on an executory contract of sale to that of bailor and bailee if title to any of the stoek had passed to the buyers on proper allocation by the seller to their respective contracts. But the method of passing of title to stoek is prescribed by section 162 of the Personal Property Law of New York (Consol. Laws, c. 41) and by section 1 of the Uniform Stock Transfer Act, in so far as Connecticut is concerned (see, also, Gen. St. Conn. 1930, § 3429).

The required steps to pass title to the stock were never taken by the bankrupts. Consequently none of the original executory sales contracts ever changed into the relationship of bailor and bailee as between purchaser and seller.

The only question remaining, therefore, is whether, after notiee of the sale of a certain security was given by the seller to the buyer, the status previously existing of buyer and seller under an executory contract was changed int'o a relationship of a fiduciary nature, i. e., of beneficiary and trustee, under the decisions of Beardsley v. Beardsley, 138 17. S. 262, 266, 11 S. Ct. 318, 34 L. Ed. 928, and Currie v. White, 45 N. Y. 822.

I think that such a relationship did not arise.

There were here merely breaches of contracts for sale which left the reelaimants in the position of general creditors.

I think a case which is similar in principle to that now before me is Marshall v. Roettinger, 294 F. 158, 160, 161 (C. C. A. 6th)where it is laid down that, in spite of the fact that reelaimants may have paid money for goods which the bankrupt had to sell, and although, when the bankruptcy occurred, the bankrupt had such goods on hand, if the goods had' not been allocated to the sales contracts of the respective purchasers, they must go to the trustee in bankruptcy as part of the general estate, and the purchasers must .be relegated to the status of general creditors.

Settle orders on two days’ notiee.


text:
    LIBERTY MUT. INS. CO. v. AMERICAN INCINERATOR CO., Inc., et al.
    District Court, S. D. New York.
    July 13, 1931.

      John P. Smith, of New York City (Thomas D. Scoble, Jr., of New Rochelle, N. Y., of counsel), for plaintiff.
    Evan Shelby, of New York City (John E. Walker, of New York City, of counsel), for defendant Abbott Merkt & Co., Inc.
   WOOLSEY, District Judge.

The motion by the defendant for judgment dismissing the complaint as to the first cause of action is granted, without leave to amend, and as to the second cause of action it is granted, with leave to amend.

' The motion by the plaintiff is, consequently, denied.

I. These are cross-motions made in a cause duly removed to this court from.the Supreme Court of New York state for New York county.

II. The plaintiff is a corporation of Massachusetts and at the times here concerned was the insurance carrier of Bloomingdale Bros., Ine., the well-known department store, in respect of the workmen’s compensation insurance required by New York state.

The defendant Abbott Merkt & Co,, Inc., hereinafter called Merkt, is a corporation of the state of New Jersey.

The ground for removal of the cause to this court was that the cause of action against Merkt was severable from that against the other defendants. It seems to me from an examination of the complaint that such severability is established, for the torts alleged against each defendant spring from the separate duties of each. As a result the case is properly here and I have jurisdiction to deal with it.

III. On the 29th day of September, 1928, one George Frederick Taylor was employed by the Bloomingdale Bros, as fireman in charge of the boiler, incinerator, and other appliances in a warehouse owned by it. Whilst in the discharge of his duties Taylor was killed by the collapse of an archway qver a flue leading to the incinerator whereby he was precipitated into the flue and gas chambers thereof.

The incinerator is alleged to have been constructed by the American Incinerator Company, Ine., one of the defendants named, but not served with process.

The incinerator and appurtenances are alleged to have been constructed under the superintendence of and in pursuance of plans and specifications approved by the defendant Merkt.

It is contended that the construction was not in accordance with the specifications, and, due, to the negligent superintendence of Merkt, the incinerator was constructed in a faulty and careless manner without regard to recognized standards of engineering, with a result that it constituted, in effect, a dangerous trap and a continuing nuisance to all who had occasion to use it and to work about it.

It is alleged that after the death of George Frederick Taylor, his legal representatives, dependents, and next of kin elected to take Workmen’s Compensation under chapter 615 of the Laws of 1922 (Consol. Laws, e. 67), and presented a claim to his employer, Bloomingdale Bros., and that, on this claim, the State Industrial Board duly made awards for compensation to his widow, Sarah Taylor, and dependent children, that this award has been paid by the plaintiff, as well as money for the funeral and burial expenses of the decedent.

It is alleged that by virtue of the contract of insurance between the plaintiff and Bloomingdale Bros., securing compensation to the latter’s employees, and by virtue of the Workmen’s Compensation Law, under which compensation was awarded to Sarah Taylor, widow of George Frederick Taylor, and of the payments made by the plaintiff as insurance carrier under that award, an assignment was effected to the plaintiff of any cause of action which the decedent’s personal representative might have had against the defendants.

For a second cause of action, the plaintiff alleges that the cause of the death of Taylor, the employee of Bloomingdale Bros., was the failure of Merkt' to fulfill the terms of á contract entered into between it and Bloomingdale Bros., on July 12, 1926; that an award was made by the State Industrial Board in favor of the widow of Taylor for $8.655 per week from the date of his death during her lifetime and the sum of $1.322 from the date of his death until the certain named children reach the age of eighteen years; that by reason of payments made in pursuance of this award, the plaintiff has discharged the entire legal obligation of Bloomingdale Bros, to the widow of the employee Taylor and his children, and is sub-rogated both by operation of law and by virtue of the specific terms of the said workmen’s compensation insurance policy in force between Bloomingdale Bros, and the plaintiff to all rights of recovery which might be had by Bloomingdale Bros, against the defendant Merkt, owing to its breach of contract of July 12, 1926, for the designing and construction of the incinerator.

The answer of the defendant denies various allegations contained in the complaint and pleads two affirmative defenses to the two causes of action therein stated. Of these two affirmative defenses, the second only is material here. In that it is alleged that George Frederick Taylor at the time of his death had two children who were over the age of eighteen years, and, consequently, not within the ambit of the protection of the Workmen’s Compensation Statute.

The defendant made a motion in conformity with the practice provided for under section 274 of the Civil Practice Act, directing that the plaintiff reply to the new matter thus set up in the second separate defense referred to.

An order for reply was entered, and thereafter a reply was filed in which it was admitted that George Frederick Taylor at the time of his death, September 29, 1928, left surviving a widow of the age of thirty-eight years and ten children. The dates of the births of the children are given; it is thereby shown that two of them, a daughter, Dorothy Taylor, bom in 1906, and a son, Charles Taylor, bom in 1907, were over the age of eighteen years at that time.

IV. Under the first cause of action, the plaintiff contends that it is subrogated to the remedies and rights of action of the employee Taylor, or his personal representative, against third persons whose injury may have caused his death.

The provision of the Workmen’s Compensation law invoked for this is section 29, which, so far as relevant, reads as follows:

“Subrogation to remedies of employees. If an employee entitled to compensation under this chapter be * * * killed by the negligence or wrong of another not in the same employ * * * [and] if * * * his dependents, elect to take compensation under this chapter, the awarding of compensation shall operate as an assignment of the cause of action against such other * • * insurance carrier liable for the payment of such compensation. * • * * ”

This section of the Workmen’s Compensation law must be read in connection with the other sections of that act, and, if so read, it will be seen that by section 16 of the act death benefits thereunder are limited, so far as children are concerned, to those under eighteen years of age.

Under section 130 of the Decedent Estate Law of New York (Consol. Laws e. 13), an action for death caused by negligence is maintainable only by the personal representative of the decedent, and any recovery in such action inures to the benefit of all next of kin.

Consequently the ambit of the recovery under section 29 of the Workmen’s Compensation Act is narrower and involves subrogation to the rights of a more restricted class of persons than the class permitted to share in a recovery by a personal representative, under section 130 of the Decedent Estate Law, for death wrongfully caused.

The result is. that suit in the name of. the insurance carrier under section 29 is only available to such carrier when the class of persons to whom it has paid compensation includes all the next of kin, that is, when, if' there be children of the decedent, they are all under eighteen.

Otherwise the insurance carrier would be splitting for its own benefit the cause of action which the personal representative has for the benefit of all next of kin under section 130 of the Decedent Estate Law, with the possible result that the wrongdoer might have two actions brought against him. Such is the rationale of U. S. Fidelity & Guaranty Company v. Graham & Norton Company, 254 N. Y. 50, 54, 171 N. E. 903, and Matter of Zirpola, Inc., v. Casselman, Inc., 237 N. Y. 367, 375, 143 N. E. 222.

In the instant case, as two of the decedent’s children are over eighteen, the plaintiff, as insurance carrier, has not any locus standi to maintain the first cause of action in its own name owing to the salutary rule against splitting causes of action.

It is unnecessary, therefore, for me to consider, in connection with the first cause of action, the question whether the plaintiff can be considered to have charged therein such negligen.ee on the part of the defendant Merkt as to state a cause of action.

A judgment finally dismissing the first cause of action with costs, accordingly, must be entered.

V. In so fax as the second alleged cause of action is concerned, I think that the complaint must be dismissed, with leave to amend.

In the first place, the subrogation allowed by section 29 of the Workmen’s Compensation Law is a subrogation to the cause of action, if any, which may inhere in the employee who is injured or killed, against a negligent third party. It does not provide any subrogation to the employer’s right of action against a negligent third party.

The whole theory of the Workmen’s Compensation Law is that, when the employer, by engaging an insurance carrier and by paying him premiums, provides compensation for his employees, he has done what is required of him under the law and is, in effect, relieved of its provisions. Cf. Matter of Jensen v. Southern Pacific Co., 215 N. Y. 514, 519, 524, 525, 109 N. E. 600, L. R. A. 1916A, 403, Ann. Cas. 1916B, 2.76; reversed on a wholly different point, 244 U. S. 205, 37 S. Ct. 524, 61 L. Ed. 1086, L. R. A. 1918C, 451, Ann. Cas. 1917E, 900.

VI. Section 10 of the Workmen’s Compensation Law N. Y., so far as is relevant to the present discussion, provides:

“§ 10. Liability for compensation. Every employer subject to this chapter shall in accordance with this chapter secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment, without regard to fault as a cause of the injury. * * * ” (Italics mine.)

Section 54 of the Workmen’s Compensation Law N. Y., provides, inter alia:

“§ 54. The insurance contract. 1. Eight of recourse to the insurance carrier. Every policy of insurance covering the liability of the employer for compensation issued by a stock company or by a mutual association authorized to transact workmen’s compensation insurance in this state shall contain a provision setting forth the right of the commissioner to enforce in the name of the people of the state of New York for the benefit of the person entitled to the compensation insured by the policy either by filing a separate application or by making the insurance carrier a party to the original application, the liability of the insurance carrier in whole or in part for the payment ofi such compensation; provided, however, that payment in whole or in part of such compensation by either the employer or the insurance carrier shall to the extent thereof be a bar to the recovery against the other of the amount so paid.
“2. Knowledge and jurisdiction of the employer extended to cover the insurance carrier. Every such policy shall contain a provision that, as between the employee and the insurance carrier, the notice to or knowledge of the occurrence of the' injury on the part of the employer shall be deemed notice or knowledge, as the ease may be, on the part of the insurance carrier; that jurisdiction of the employer shall, for the purpose of this chapter, be jurisdiction of the insurance carrier and that the insurance carrier shall in all things be bound by and subject to the orders, findings, decisions or awards rendered against the employer for the payment of compensation under the provisions of this chapter.
“3. Insolvency of employer does not release the insurance carrier. Every such policy shall contain a provision to the effect that the insolvency or bankruptcy of the employer shall not relieve the insurance carrier from the payment of compensation for injuries or death sustained by an employee during the life of such policy.”

It seems to me perfectly clear from these sections that an insurance carrier in the position of the plaintiff here has, by issuing his policy to cover an employer under the Workmen’s Compensation Law, put himself under a direct liability to the employee, and, so far as subrogation is concerned under the law, his subrogation is only to the employee’s rights as given under section 29. •

In the last paragraph of the second cause of action — the twenty-fifth paragraph, of the complaint — the basis of the liability of Merkt is frankly stated to be its contractual liability under its contract with Bloomingdale Bros., and the right over against Merkt on this cause of action is, apparently, based on the principle laid down in the case of Straus v. Buchman, 96 App. Div. 270, affirmed 184 N. Y. 545, 76 N. E. 1109.

VII. Obviously there is not any contractual privity between the plaintiff insurance carrier and Merkt, whose breach of contract with Bloomingdale Bros, is made the basis of the second cause of action.

It may be, however, that, as one of the considerations for entering into the contract of insurance carrier with Bloomingdale Bros., the plaintiff exacted in its insurance policy some provision giving it an assignment of rights which Bloomingdale Bros., as the employer insured by it, might have against third parties in its own behalf. That, of course, would be a subrogation by contract and not by law.

Here, in the twenty-fifth article of the complaint, there is an allegation which really amounts to a conclusion of law that there is some such provision in the Workmen’s Compensation insurance policy issued in this case.

If there be'such a provision, I think that, in order properly to establish its locus standi under its second cause of action, which it has the burden of doing, the plaintiff should set forth the terms of the policy on which it relies in order that the third party defendant may be advised as to the basis of the claim of contractual subrogation, and, if so advised, thus become able to test its validity by appropriate interlocutory motion before trial.

Accordingly the complaint is dismissed as to the second cause of action, with leave to amend the complaint as to that cause of action only within twenty days in accordance with the views hereinabove expressed.

Settle order on two days’ notice.


author: HOLMES, District Judge.

text:
    SANDERS v. STEVENS.
    No. 252.
    District Court, S. D. Mississippi, Jackson Division.
    Aug. 11, 1931.
    Alexander & Alexander, of Jackson, Miss., for plaintiff.
    Fulton Thompson, of Jackson, Miss., for defendant.
   HOLMES, District Judge.

On January 14,1931, R. M. Sanders gave the First National Bank of Jaekson, Miss., a cheek for $1,134.06, drawn by one R. W. Manning on the Merchants’ & Planters’ Bank of Drew, Miss. The check was payable to the order of R. M. Sanders, and indorsed by him. He told the-president of the bank, J. B. Stirling, who was also one of the trustees of the Tribette estate, to whom Sanders was indebted, to collect the check, and, out of the proceeds, to pay the interest of $320 on his indebtedness to the Tribette estate and turn the balance over to him in cash. Sanders was not a depositor of the bank, and had no account of any kind with it. The president agreed to make the collection and handle the proceeds as requested. The cheek was sent on January 14, 1931, directly to the Bank of Drew, with instructions to remit for it to the Bank of Commerce & Trust Company, of Memphis, Tenn., for the account of the First National Bank of Jackson, Miss. The remittance was accordingly made by the Bank of Drew to the Memphis bank on January 17, 1931, which latter bank credited the proceeds to the First National Bank of Jackson, and at the close of business on that day the Jaekson bank had a credit balance with the Memphis bank of $18,450.65, but at that time the latter bank had outstanding collection items, which had previously been forwarded to the Jaekson bank, in a large amount in excess of the credit balance.

On January 20, 1931, the First National Bank of Jackson closed its doors on account of insolvency, and a receiver was appointed by the Comptroller of the Currency. The Memphis bank then charged all of its claims .against the credit balance of the Jackson bank, absorbing that balance entirely and leaving unpaid the sum of about $15,000. The Memphis bank never turned over to the ■receiver the proceeds of the check of $1,134.-'06, or any sums whatever.

By this suit the plaintiff seeks to follow the proceeds of his cheek into the possession of the receiver and there have it declared to be a trust fund and paid to him as a preference claim. Admitting his inability to trace and identify the specific money, he ■claims that the entire assets which came into the hands of-the receiver were increased in the amount of the cheek, and that in equity he is entitled to have a first lien impressed ¡upon the same as a whole and to be- given priority over the general creditors and de-; positors in the payment of claims against the bank.

As the cheek in this ease was-given for ¡collection.merely, the bank, through its president, expressly agreeing to collect the proceeds, pay the interest of $320 to the Tribette estate, and. deliver the balance immediately to Sanders himself, it is quite plain that the bank took no title to the check, but that .the relation of principal and agent existed, and that, as between the parties, the property in the check and its proceeds remained in the plaintiff. Anheuser-Busch Brewing Association v. Clayton (5th Cir.) 56 F. 759; Larabee Flour Mills v. First National Bank (8th Cir.) 13 F.(2d) 330; Id., 273 U. S. 727, 47 S. Ct. 238, 71 L. Ed. 861; Ellerbe v. Studebaker Corporation (4th Cir.) 21 F.(2d) 993; Nyssa-Arcadia Drainage District v. First National Bank (D. C.) 3 F.(2d) 648.

That the proceeds of the cheek were misapplied cannot be doubted, and that such misapplication rendered the bank, as agent, civilly liable to the plaintiff, as principal, for the full amount thereof is equally clear. But the plaintiff is not simply contending for recognition by the receiver as one of the general creditors of the bank. He is asking priority of payment, not only because of a breach of the relationship of trust which existed between him and the bank, but because the assets of the bank which came into the hands of the receiver were augmented 'in the transaction by the proceeds of the cheek.

The foundation of the claim is the equitable right of following trust funds or property into the hands of any one not a bona fide purchaser for value. Central National Bank v. Ins. Co., 104 U. S. 54, 69, 26 L. Ed. 693. Formerly, the right depended upon the ability of the owner to identify the property, and attached only to the identical thing in its original form. It was later extended to property in its converted form, to its proceeds, or to that which was procured in place of it by manufacture, exchange, purchase, or sale. “But if it became confused with other property of the same kind, so- as not to be distinguishable, without any fault on the part of the possessor, the equity was lost. Finally, however, it has been held as the better doctrine that confusion does not destroy the equity entirely, but converts it into a charge upon the entire mass, giving to the party injured by the unlawful diversion-a priority of right over the other creditors of the possessor. This is as far as the rule has been carried.” Peters v. Bain, 133 U. S. 670, 693, 10 S. Ct. 354, 361, 33 L. Ed. 696.

The receiver in this case is a trustee for lienholders, depositors, general creditors, stockholders, and all other persons who may be beneficially interested in the assets of the bank. The burden of proof is on the plaintiff to show that the funds which came into the hands of the receiver were swollen by the proceeds of his check. If he is unable to trace the same into the defendant’s possession, the burden is not met, and the preference must fail. Schuyler v. Littlefield, 232 U. S. 707, 34 S. Ct. 466, 58 L. Ed. 806.

The facts as submitted do not supply the necessary proof. Not only do they fall short of it, but they show the contrary. The check was sent directly to the Bank of Drew, which, according to instructions, re- • mitted the proceeds directly to the Memphis correspondent of the sender. While the proceeds were credited to the Jackson bank on the books of the Memphis bank, it does not appear that the credit after that time was ever utilized by the former, or that there was ever a moment when it was anything more than a chose in action which was the asserted subject of a set-off against an admitted indebtedness of the Jackson bank existing in favor of its Memphis correspondent. The asserted right of set-off was exercised, and no part of the proceeds of the check was remitted to the Jackson bank. It further appears that no part of such proceeds or any other sum whatever was paid over to the receiver by the Memphis bank. Consequently, there is no fund or property of any kind, either in its original or converted farm, specific or commingled, which, came into the hands of the receiver as a result of the transaction between Sanders and the bank. The assets in the hands of the defendant not having been augmented as claimed, no lien may be impressed upon them to secure priority of payment as asked in behalf of the plaintiff. He must be relegated to his position as a general creditor. Spokane County v. First National Bank (9th Cir.) 68 F. 979; Macy v. Roedenbeck (8th Cir.) 227 F. 346, L. R. A. 1916C, 12; Mechanics & Metal National Bank v. Buchanan (8th Cir.) 12 F.(2d) 891; Farmers’ National Bank v. Pribble (8th Cir.) 15 F.(2d) 175; Rorebeck v. Benedict Flour & Feed Co. (8th Cir.) 26 F.(2d) 440.

This is not a case like Commercial Bank v. Armstrong, 148 U. S. 50, 13 S. Ct. 533, 535, 37 L. Ed. 363, where the relation, as to uncollected paper, was that of principal and agent, which changed to that of debtor and creditor, after collection, by reason of an agreement permitting the collecting bank to hold the proceeds for a definite period. In that casé the preference was denied by the Circuit Court (39 F. 684) on the ground that the “collections could not he traced, because they had passed into the general fund of the bank,” and by the Supreme Court for the “more satisfactory reason” that, under the arrangement between the parties, “the relation of debtor and creditor was created when the collections were fully made.” If the language of Mr. Justice Brewer, who wrote the unanimous opinion of the court denying priority, that a collection by a subagent “was the same as though the money had actually reached the vaults of the” agent or collecting bank, be relied upon for any applicable weight here to sustain the proposition that the proceeds of •plaintiff’s cheek came into the possession of the First National Bank of Jackson, it may be answered that the contention is unnecessary, so far as rendering the agent liable as an ordinary debtor, because the funds were remitted by the subagent, as directed, to the Memphis bank, and applied to the credit of the Jackson bank.

Liability as debtor to the owner for the value of property misappropriated exists whether the property can be found or not, but impressing a lien upon it for the debt is a different matter, and cannot be done, unless the property can be traeed with reasonable certainty into the possession of the defendant, who in this ease is the receiver.

In order to fix a lien upon funds in the hands of the receiver, it is not sufficient merely to show that, before the receiver was appointed, while the bank was open and in operation, funds of the plaintiff came into-its possession, “actually reached the vaults”’ of the bank, but they must remain there and pass into the hands of the receiver. American Can Co. v. Williams (2d Cir.) 178 F. 420; Lucus County v. Jamison (C. C.) 170 F. 338.

The further suggestion is made thafi plaintiff’s demand has the elements of a preference claim, in that a reduction in the First National Bank’s indebtedness to the Memphis bank decreased the total of the outstanding claims, and thereby, in effect, increased the value to the general creditors of the assets of the defunct bank. Several considerations repel this suggestion. First, it seeks to impress a lien upon assets in the hands of the receiver, not because they have been augmented by funds of the plaintiff, but because the total indebtedness of the bank has-been reduced and the liabilities of the receiver diminished, when there is nothing in the record to indicate what any of those amounts are now or were at any time. Second, to supply the missing proof would not change the result, because, since it does not" appear that any part of the indebtedness to the Memphis bank was secured by collateral which was surrendered or otherwise, the suggestion would substitute priority for equality to the extent of $1,134.06. If the remittance had not been made to the Memphis-bank, it would merely have been a claimant for $1,134.06 more, and would have been entitled, not to that additional amount in full, but only to pro rata dividends on that amount. The benefit to the general fund is limited to the dividends on the amount of the cheek, and these will be paid by the receiver* to the plaintiff as a general creditor. Thirds and without reference to either of the two preceding reasons, no statute authorizes suehs a preference, and the equitable doetrine of following trust funds has never been extended to such lengths. On the contrary, the-proposition has been definitely repudiated. City Bank of Hopkinsville v. Blackmore (6th. Cir.) 75 F. 771 (opinion by Judge Taft, Judges- Lurton and Hammond concurring) ; Empire State Surety Co. v. Carroll County (8th Cir.) 194 F. 593; Titlow v. McCormick (9th Cir.) 236 F. 209; Anadarko Cotton Oil Co. v. Litteer (D. C.) 300 F. 222; Dudley v. Richards (8th Cir.) 18 F.(2d) 876; Burnes Nat. Bank v. Spurway (D. C.) 28 F.(2d) 40.

The specific relief asked will be denied, but under Ms prayer for general relief the plaintiff is entitled to a decree against the receiver adjudicating the amount due him by the bank. The costs should be taxed against the plaintiff, as the defendant has not contested Ms rights as a general creditor. A decree may be entered accordingly.


author: GALSTON, District Judge.

text:
    UNITED STATES BLIND STITCH MACH. CORPORATION v. RELIABLE MACH. WORKS, Inc.
    No. 4646.
    District Court, E. D. New York.
    July 28, 1931.
    Mock & Blum, of New York City, for plaintiff.
    Cavanagh & James, of New York City (Maxwell James, of New York City, of counsel), for defendant.
   GALSTON, District Judge.

This is a patent infringement suit wherein the plaintiff alleges the infringement of letters patent No. 1,706,392, issued March 26, 1929, to Mario Buono and Julius Buono, for a method of treating furs and a machine therefor. The answer, in addition to defenses, sets up two counterclaims alleging the infringement by the plaintiff of letters patent No. 1,724,542 to Jacob Zabel, issued August 13, 1929, for a fur brushing and ironing machine, and also letters patent No. 1,776,114 issued to Samuel Friedman on September 16, 1930, for a method and apparatus for treating fur.

Consideration will be given first to the Buono patent, to which defenses of invalidity and noninfringement are vigorously asserted. The five claims of the patent are in issue. Claims 1 and 2 cover a machine, and the remaining claims a method.

The inventor sought a machine and also an improved method for brushing and setting the hairs of the furs so as to create in the fur a fluffy and ornamental appearanee.(

According to the invention the fur is subjected to a brushing operation after it has been thoroughly moistened, warmed, and pressed, and while it is being dried. Fig. 4 of the patent discloses a heated roller 27 revolvedly mounted upon an arm 27' and pivotally mounted upon brackets connected to the feed table T. The roller is provided with an arm 26, so that it may be moved back to the inoperative position. Stop screws 29 are provided for regulating the forward movement of the roller, and tension springs 30 for regulating the pressure with which the roller is pressed against the hair of the fur.

The operation disclosed indicates that the fur may be moistened by means of a brush and then fed to the machine with the heated roller in the operative position. The feed of the fur is effected by means of the rollers 4 and 5 after passing the heating roller 27. The warm and moist fur is then subjected to a rapid drying action by a current of air which is induced' by a blower 16, while at the same time the fur is brushed by the brush 3.

The machine claims read as follows:

“1. A machine for setting the hairs of a pelt comprising brushing means, feeding means adapted to feed the pelt towards said brushing means, and means adapted to heat the fur before it is subjected to the action of the brushing means.”
“2. A machine ftr setting the hairs of a pelt comprising brushing means, feeding means adapted to feed the pelt towards said brushing means, and roller means adapted to heat the fur before it is subjected to the action of the brushing means, and means adapted to force a current of air over the hairs after they have been subjected to the brushing operation.”

The defendant’s machine has a pair of feed rollers which feed the fur toward a drum made up of two ironing segments and two brushing segments. It is also provided with a suction unit. Plaintiff’s expeif said that the air enters defendant’s machine (Plaintiff’s Exhibit 6, fig. 2) between the rollers 61 and 31 on both sides of the fur and is drawn in the direction of the arrows, as indicated on that drawing.

Comparing the defendant’s machine then with claim 1 of the patent, while it appears that there are feeding .means adapted to move the pelt towards the brushing means, it is clearly apparent that it is altogether a matter of haphazard as to whether the fur will first be subjected to the action of the heating element or the brushing element. Of course, if it is brought in contact with all four segments of the drum, it will alternately be brushed and heated or heated and brushed, as the case may be, and therefore at some stage it will be heated before it is again brushed.

It seems to me that the Buono specification cannot'be read without reaching the conclusion that the inventors provided particularly for heating the fur before brushing it. Otherwise there would be no reason for positioning the roller 27 in advance not only of the brushing means but also of the feeding means; and I do not believe that claim 1 is entitled to any such broad construction as would include the defendant’s construction.

Differences in operation resulting from differences in the structure of the patented machine and the defendant’s machine are readily noted. Erom the patent it appears that fur to be treated must first be continuously heated and then continuously brushed. This is not the defendant’s structure. Secondly, it is obvious why in using the machine of the patent it is necessary to wet the fur before it is subjected to the heating operation. The continuous heating of a dry fur would be very likely to singe the pelt. This would not be the result of the defendant’s machine, for the alternating heating and brushing segments, as was stated by Mr. Wentworth, defendant’s expert, make it possible to feed the fur in a dry condition to the machine without likelihood of singeing.

In short, I do not find either identity of means.or identity of operation, and there is much doubt as to whether even identity of result is proved by the plaintiff.

In these circumstances there can be no infringement. Westinghouse v. Boyden Power Brake Co., 170 U. S. 537, 18 S. Ct. 707, 42 L. Ed. 1136.

What has been said about failure of proof in respect to infringement of the first claim is equally true of the second claim.

The remaining claims of the patent are method claims. Claim 3 may be taken as typical: “3. A method of setting the hairs of a pelt which consists in moistening and heating the said hairs, and subsequently brushing the hairs while permitting them to dry and cool.”

Plaintiff’s proof as to the alleged infringement of these claims does not establish any practice by the defendant. The proofs show that the defendant is engaged only in the leasing or sale of the alleged infringing. machines. There certainly, therefore, cannot be any direet infringement by the defendant; and there is failure of proof to establish by a fair preponderance of evidence that the defendant’s machine must be operated so as to fall within the limitations of claim 3 or the other method claims. Despite affirmative testimony of some of plaintiff’s witnesses, I am not convinced that in the operation of the defendant’s machine the fur must first be moistened. That it may be so operated is, of course, possible; but that it may also be operated effectively without moistening the fur was demonstrated at the trial. The most that can be said is that some skins can best be given the desired fluffy appearance if in the course of the process they have been moistened, whereas with many other skins moistening is not necessary. From the state of the proof one cannot draw the conclusion that even though some of defendant's lessees moisten the furs which they run through the defendant’s machines that the normal use of the machine necessitates such' a method. It is well understood that the defendant would be a contributory infringer if his machine were supplied to one with the knowledge that in its normal and usual operation it were necessary to moisten the fur. Such, however, is not the proof. Moreover, the president of the defendant company testified that a special point is made of instructing lessees not to wet the skin. His testimony'was corroborated by the witness Bublitz. 'In this state of the proof, contributory infringement is not shown. Electro-Bleaching Gas Co. v. Paradon Engineering Co. (D. C.) 15 F.(2d) 854. It is true that plaintiff cites what apparently is authority to the contrary, as, for example, Parsons Non-Skid Co. v. Asch (D. C.) 196 F. 215.

There can be no quarrel with that law, but the facts in respect to the acts of the defendant in this ease do not fall within its limitations. The same comment can be made of Parsons v. Atlas (C. C. A.) 198 F. 399; and Marconi v. De Forest (D. C.) 225 F. 65.

Again, aside from the question of whether in the normal operation of the defendant’s machine the fur is moistened at all, it remains true, as appeared in the discussion of the maehine claim, that the heating operation is a separate and distinct stage and precedes the brushing operation. Such is not at all the operation of the defendant’s maehine.

Because of the foregoing views on the question of infringement, it is not necessary to discuss the defense of invalidity.

There remains for consideration the alleged infringement by plaintiff of the Zabel and Friedman patents.

As to the former, the defense of the plaintiff at the trial seemed to be along the lines of ino'perativeness'of the Zabel device. The claims of the patent at issue are 1, 4, 6, and 8, and are applied by the defendant to Defendant’s Exhibit H, one of plaintiff’s machines.

The Zabel invention as described in the specification seeks a means for finishing furs in which the brushing and ironing steps are carried out with uniformity. Referring to the figures of the drawing, the inventor says:

“Referring now more in detail to the ■drawings and having reference first to Figs. 1 to 3 thereof wherein is shown a suitable form of apparatus for carrying out the objects of the invention, the apparatus comprises the supporting standards 7 and 8 having bearings for a shaft 9 upon which contact rings 10 are secured for furnishing energy to a plurality of electrical heating units, 12, 12 arranged beneath the curved smoothing or ironing surfaces 13 and 14. The ironing surfaces 13 and 14 are supported by a block 15 which extends longitudinally upon and is fixed to the shaft 9, the said block also serving .as a support for a plurality of brush bases 16 and 17 suitably secured thereto. These brush bases are provided with brush elements or bristles 18 preferably arranged at an angle as shown. The brush' elements 16 and 17 and the heating elements 13 and 14 thus comprise, when fixed to the supporting block 15, a rotatable drum with the heating and brushing elements arranged in close contiguity and in alternation.”
“Cooperating with this drum assembly and fixed to the standards 7 and 8, there is provided a table or platform 20 which serves as a table or support for the fur or like fabric to be treated. For rotating the drum assembly there is provided a handle or other suitable motor 21 secured to the shaft 9 so that as the fur is fed beneath the drum and on the table or support 20, the fur is subjected to the alternating action of the brushes 18 and the ironing elements 13 and 14 in a continuous operation.”

I think the court demonstrations showed the maehine to be operable; and though by statement of plaintiff’s counsel it seems the plaintiff subsequent to the date of the Zabel jpatent sold but two of its machines, nevertheless those machines do fall within the confines of the Zabel invention. Photographs, Defendant’s Exhibit G, as well as Defendant’s Exhibit H, illustrate the plaintiff’s ma-ehine in question.

Taking claim 6, for example, one finds “means for mounting a pelt” in table F. “A rotatable drum having brushing and ironing members arranged in alternating contiguity” are the brushes C and the ironing members B. “Means for rotating the drum relatively to the pelt so as to move the brushing and ironing members alternately in successive repeats relative to said pelt” are the operating mechanism of the machine.

I think all four claims of this patent are infringed.

The only prior art set up in the reply to the counterclaim is the Buono patent in suit. I do not find in the Buono patent a disclosure of the alternate heating and brushing means of the Zabel patent.

I find, although the actual infringements of the Zabel patent are unlikely to make an accounting other than burdensom'e, the defendant is entitled to injunctive relief as to this patent.

The Friedman patent in suit, also owned by the defendant, covers, as appears from the first paragraph of the specifications, an improvement of the Zabel patent.

Of the thirty-three claims of the patent, the defendant relies for infringement on claims 8, 11, 13, 14, and 25. Plaintiff contends that no discussion of this patent is necessary because it asserts that it has sold no machine complained of subsequent to the date of the issuance of the patent. Buono, for the plaintiff, testified that the last sale of a machine such as Defendant’s Exhibit H was sold by plaintiff in the latter part of May, 1930. The Friedman patent issued on September 16, • 1930. Buono testified that after conference with his attorney he caused two of these machines to be broken up and kept one, which is still in the possession of the plaintiff. It was placed in the showroom because the witness did not want counsel for the defendant, or any of those connected with the defendant, on their appointed visit of inspection, to enter plaintiff’s factory.

There is no proof that the plaintiff made, used, or sold a machine of the Friedman type subsequent to September 16, 1930; nor is there evidence that the mere possession of one of the machines made prior to the issuance of the Friedman patent indicates an intention by the plaintiff to infringe. It is for that reason that cases cited by the defendant, such as Sherman v. Nutt (C. C.) 35 F. 149; Bonsack Machine Co. v. Underwood (C. C.) 73 F. 206; Westinghouse Machine Co. v. Press Publishing Co. (C. C.) 127 F. 822, etc. do not apply.

A decree may, therefore, be entered for the defendant in accordance with the foregoing opinion, dismissing the complaint and sustaining the counterclaim as to the Zabel patent; and for the plaintiff, dismissing the counterclaim as to the Friedman patent.

If this opinion is not in sufficient compliance with the rule requiring findings %of fact and conclusions of law, submit findings of fact and conclusions of law in accordance therewith.


author: WHAM, District Judge.

text:
    MISSOURI PAC. R. CO. v. SCHNIPPER, County Treasurer, et al.
    No. 4257.
    District Court, E. D. Illinois.
    April 3, 1931.

      Whitnel & Browning, of East St. Louis, Ill., for plaintiff.
    F. J. Tecklenburg, of Belleville, Ill., for defendants.
   WHAM, District Judge.

. By its petition the plaintiff seeks to enjoin the defendants from enforcing the collection of a tax of $3,403.80 on railroad ties owned by the complainant and found by the tax assessor of Centreville township on April 1, 1929, in the yards and plant of the T. J. Moss Tie Company at Valley Junction, Centreville township, St. Clair county, Ill.

As grounds for the injunction the plaintiff alleges that the ties, when assessed, were in transit in, and subjects of, interstate commerce; that they were being shipped under the provisions of lawful rate schedules and tariffs permitting ties to be shipped in interstate commerce with privilege of stopover for ereosoting treatment; that they were at the plant of the T. J. Moss Tie Company by virtue of such stop-over privilege and in process of treatment at the time they were so assessed; that they were delayed no longer at the said plant than was necessary for the purpose of ereosoting; that they, while at said plant and when assessed, were subjects of interstate commerce and were not taxable as part of the general mass of property in the state of Illinois, and that said tax directly interferes with and constitutes a burden upon interstate commerce in violation of clause 3, section 8, of article 1 of the federal Constitution, and is therefore illegal.

The facts shown by the evidence taken on the trial of the merits of the case were as follows: The Missouri Pacific Railroad Company is a corporation organized and doing business under the laws of the state of Mis-spuri with lines of railroad in various states, including Illinois, Missouri, and Arkansas. It purchases at points in Louisiana, Oklahoma, Arkansas, and Missouri cross-ties for use in building and maintaining its lines of railroad in the various states. At the beginning of each year, responsible officials of the plaintiff, after receiving reports from maintenance of way officials and employees on the various districts and divisions of the railroad, prepare and submit to its general office estimates of the number and classes of ties that will be required during the year on the respective divisions of its lines. Based on the estimates so arrived at, representatives of the company proceed to make contracts for ties at available points in Arkansas, Louisiana, Oklahoma, and Missouri. Pursuant to such estimates ties are accumulated on plaintiff’s lines in Said states, inspected, and received. Thereafter they are shipped from points where received to the plant of the T. J. Moss Tie Company at Valley Junction, 111., where they are treated with creosote, and thence, after treatment, to various points on plaintiff’s lines for use. The plaintiff neither buys nor owns any ties for resale nor for any purpose other than for its own use. When shipments of ties are made from point of origin to the creosoting plant, the final destination beyond the plant of neither the shipment nor of any tie in .the shipment has been definitely determined. It is known, however, that the ties made of certain woods will go to certain divisions for certain specific uses, and that all will be forwarded after treatment from the plant for use at some point on plaintiff’s lines pursuant to the intention at time of shipment.

The ties are carried into and out of the plant by the plaintiff on its own rails. At the plant the plaintiff maintains a supervisor who records the shipments in and out. At the. first of each month he receives from the plaintiff’s general office a setup for shipment of ties from the plant during the month corresponding to plaintiff’s requirements on the various operating divisions, which he fills out of plaintiff’s ties at the plant, which have been treated and are ready to be moved. In addition to recording and supervising the incoming and outgoing shipments of ties, the supervisor superintends the delivery of ties to the plant for treatment and determines whether the ties, when received at the plant, are ready for treatment or must be yarded for drying or air seasoning. Ties cannot be treated until thoroughly air-seasoned. Air-seasoning of a tie is shown by the evidence to require from three to nine months. When received at the plant some of the ties are air-seasoned and the remainder are in varying stages of air-seasoning. The unseasoned ties must be, and are, stacked in the yards until properly seasoned. Wet ties must be yarded until dry. A tie which is dry and properly seasoned can be treated with creosote in the course of a few hours.

About 20 per cent, of the ties, upon arrival at the plant, are treated immediately and shipped out as soon as treated. The others remain in the yards for varying periods of time. The average length of time the ties remain in the plant or the yards of the plant is more than three months, but not more than four months. The records of the tie company show that some ties remain at the plant for a period of a year or more and very considerable numbers for varying periods in excess of six months. It is estimated that the number of plaintiff’s ties at the T. J. Moss Tie Company plant maintain an approximate average throughout the year of 300,000, with a fairly equal number coming in and going out in the course of the year. There is frequently a great variance, however, between the number coming in during a given month, or other given period within a year, and the number going out in the course of the same period. The ties treated at this plant are used in Illinois, Missouri, and other states, but the evidence does not disclose what proportion of the ties are used in Illinois and what proportion elsewhere.

A duly published through rate from point of origin to final destination, with privilege of stop-over in transit for creosoting treatment at the T. J. Moss Tie Company plant, is applied to the movement of all the ties in question under provisions of tariffs duly published by authority of the Interstate Commerce Commission.

The tax in question is a general property tax and not open to any charge of discrimination, nor is any made. No question is raised by the plaintiff with reference to the amount of tax imposed. The issue, therefore, is whether or not a local tax in any sum could be legally assessed against complainant’s ties at the T. J. Moss Tie Company plant on April 1,1929. The burden of proof is upon the plaintiff to establish the illegality of the tax and its right to injunctive process.

While the United States Supreme Court in Central R. R. Co. v. U. S., 257 U. S. 248, 42 S. Ct. 80, 82, 66 L. Ed. 217, cited by complainant, recognized, without passing on, the validity of creosoting in transit privileges, the following significant language is found in the opinion: “Creosoting-in-transit, like other transit privileges, rests upon the fiction that the incoming and the outgoing transportation services, which are in fact distinct, constitute a continuous shipment of the identical article from point of origin to final destination. The practice has its origin partly in local needs, partly in the competition of carriers for business. The practice is sometimes beneficial in its results; but it is open to grave abuses. To police it adequately is difficult and expensive. Unless adequately policed, it is an avenue to illegal rebates and seriously depletes the carriers’ revenues. Railroad managers differ widely as to the policy of granting such privileges.”

It is obvious .that the practice is not only open to abuse in the respects pointed out by the Supreme Court, but to an even greater degree in the evasion of state taxation if the state cannot, under any circumstances, tax commodities found at rest within its borders under a stop-over privilege conferred by an interstate rate schedule or tariff, regardless of what the actual facts may be with reference to the length and nature of the stop-over and the use made of it by the shipper. An examination of the authorities discloses, however, that the courts have never held the test of a state’s power to tax an article of commerce at rest within the state to be whether an interstate or an intrastate rate tariff is being applied at a given time.

The ultimate test of a state’s constitutional power to tax articles of commerce appears to be, and always to have been, whether the exercise of such power under given circumstances amounts to a regulation of interstate commerce. Clause 3, section 8, article 1, Constitution of the United States; Woodruff v. Parham, 8 Wall. 123, 19 L. Ed. 382; Brown v. Houston, 114 U. S. 622, 5 S. Ct. 1091, 29 L. Ed. 257; American Steel & Wire Co. v. Speed, 192 U. S. 500, 24 S. Ct. 365, 370, 48 L. Ed. 538; Swift & Co. v. U. S., 196 U. S. 376, 25 S. Ct. 276, 280, 49 L. Ed. 518. In the case last mentioned, which was not a tax ease, Mr. Justice Holmes threw out a hint that the precise question in cases involving the right of states to tax is peculiar to that class of cases, when in the opinion he said: “But it may be that the question of taxation does not depend upon whether the article taxed may or may not be said to be in the course of commerce between the states, but depends upon whether the tax so far affects that commerce as to amount to a regulation of it.” In the later ease of Bacon v. Illinois, 227 U. S. 504, 33 S. Ct. 299, 302, 57 L. Ed. 615, sustaining the power of a state to tax a commodity temporarily withdrawn from the carrier in transit under a stop-over privilege, the court said: “We come then to the question whether the grain, here involved, was moving in interstate commerce so that the imposition of the local tax may be said to be repugnant to the Federal power.” Again, in the same opinion: “The question, it should be observed, is not with respect to the extent of the power of Congress to reg-u-late interstate commerce, but whether a particular exercise of state power in view of its nature and operation must be deemed to be in conflict with this paramount authority.”

No decision is in conflict with the proposition that a state is without power to tax an article when it is actually in transit in. interstate commerce. Bacon v. Illinois, supra.

The rule was established in Coe v. Errol, 116 U. S. 517, 6 S. Ct. 475, 29 L. Ed. 715, that products being prepared and assembled for interstate shipment remain liable to local taxation until actually started in course of their interstate journey, or until delivered to a common carrier for that purpose. Likewise, it has long been held that, as soon as goods shipped in interstate commerce have reached their final destinatibn, they there become liable to local taxation, though intended for sale, for further shipment in interstate or foreign commerce, Brown v. Houston, 114 U. S. 622, 5 S. Ct. 1091, 29 L. Ed. 257; and though they still be in the original unbroken packages in which shipped, Woodruff v. Parham, supra.

Whether goods, the movement of which in interstate commerce has been interrupted at a point between the point of origin and final destination, become subject to local taxation at the point of interruption must be determined from the various circumstances attending the interruption. Hughes Bros. Co. v. Minnesota, 272 U. S. 470, 47 S. Ct. 170, 71 L. Ed. 359. In Carson Petroleum Co. v. Vial, 279 U. S. 95, 49 S. Ct. 292, 293, 73 L. Ed. 626, the court said: “The crucial question to be settled in determining whether personal property or merchandise moving in interstate commerce is subject to local taxation is that of its continuity of transit.” The difficulty lies in determining when the “continuity of transit” is broken. Temporary cessation of the actual forward movement does not break such continuity if reasonable, in good faith, and solely in furtherance of the intended transportation. Coe v. Errol, supra; Kelley v. Rhoads, 188 U. S. 1, 23 S. Ct. 259, 47 L. Ed. 359; Champlain Realty Co. v. Brattleboro, 260 U. S. 366, 43 S. Ct. 146, 67 L. Ed. 309, 25 A. L. R. 1195; Hughes Bros. Co. v. Minnesota, supra; Carson Petroleum Co. v. Vial, supra.

It is well established that the question as to whether the continuity in transit of a movement in interstate or foreign commerce is broken by an interruption at an intermediate point is not controlled by the character or method of the billing of the shipment nor by the fact that the exact ultimate destination in another state or country may or may not be known at the time of shipment. Carson Petroleum Co. v. Vial, supra; Texas & New Orleans R. R. Co. v. Sabine Tram Co., 227 U. S. 111, 33 S. Ct. 229, 57 L. Ed. 442. Nor does the mere fact that the goods may be under the control of the owner at the point of interruption with power in the owner there to withdraw or divert the goods from the interstate or foreign movement take the goods out of interstate or foreign commerce, though this circumstance makes the problem more difficult of solution, as observed in the Brattleboro Case, supra. If the shipment has been made in good faith to a destination beyond the point of interruption, and the interruption is not indefinite, but is reasonable and solely in furtherance of the intended transportation of the shipment to its ultimate destination, then the continuity of the journey is not broken by the delay nor by the mere power of the owner there to destroy its character as interstate or foreign commerce. Champlain Realty Co. v. Brat-tleboro, supra; Hughes Bros. Co. v. Minnesota, supra; Carson Petroleum Co. v. Vial, supra.

In Coe v. Errol, supra, the United States Supreme Court approved the ruling of the Supreme Court of New Hampshire that logs which had started their interstate journey floating down the Androscoggin river and which were detained for a season in New Hampshire by low water were not subject to taxation in New Hampshire at the point of detention since the interstate movement had begun, and the delay was entirely due and incidental to the means of transportation.

In Kelley v. Rhoads, supra¡ sheep driven five hundred miles from Utah to Nebraska for further shipment there by rail, traveling nine miles per day and grazing for sustenance as they traveled, were held to be moving in interstate commerce and immune from local taxation enroute through the state of Wyoming under a state statute imposing a tax on all live stock brought into the state for the purpose of being grazed, the court finding that the sheep were not brought into Wyoming for the purpose of being grazed, but that such grazing as they did was necessary for their sustenance and incidental to their continuous interstate journey through Wyoming.

In Champlain Realty Co. v. Brattleboro, supra, it was held that logs being floated down the West river in Vermont on a continuous movement on the waters of the West and Connecticut rivers to Hinsdale, N. H., were not taxable at Brattleboro, Vt., an intermediate point, though detained for a considerable time by a boom at Brattleboro to await subsidence of high water in the Connecticut river, since the interruption was only to promote the safety of the drive.

In Hughes Bros. Co. v. Minnesota, supra, it was held that logs which the Hughes Bros. Timber Company of Minnesota were under contract with the Central Paper Company of Muskegon, Mich., to deliver at the mouth of the Pigeon river on Lake Superior for transportation, thence by vessels of the paper company to Muskegon, Mich., started their interstate journey when the drive of the logs began on the waters of the Swamp river where they had been assembled on the ice during the preceding winter, preparatory to floating down the Swamp river' to the Pigeon river and thence to its mouth when the ice broke up; that the delay at the booms at the mouth of the Pigeon river for loading into the lake vessels of the paper company and the change in the means of transportation from floating to carriage on vessels did not break the continuity of the interstate journey and the logs were not taxable in Minnesota after the drive began on Swamp river.

In Carson Petroleum v. Vial, supra, it was held that oil purchased at interior points for export to fill contracts previously made did not lose its character as foreign commerce and become subject to state taxation, because, after arrival at the port, it was temporarily stored there for reasons of expedition and economy preparatory to its being loaded on the vessels of foreign consignees, it appearing that the delay was incidental to and in aid of the transshipment in foreign commerce, and therefore did not break the continuity in transit of the commodity.

In each of the foregoing cases in which it was held that the intermediate interruption of and the consequent delay in the interstate journey did not break its continuity, it will be observed that the interruption had solely to do with the transportation and was incidental to, in furtherance of, or operated to expedite or to promote the safety of, the transportation.

Let us now advert to some of the cases in which the passage of commodities from point of origin to final destination in another state was interrupted under circumstances held by the courts to have broken their continuity in transit so as to subject them to loeal taxation at the point of interruption.

In Pittsburgh & Southern Coal Co. v. Bates, 156 U. S. 577, 15 S. Ct. 415, 39 L. Ed. 538, coal shipped by the owners in their own barges from Pittsburg, Pa., consigned to their agent at New Orleans, La., was held taxable in the barges nine miles above Baton Rouge, La., where the barges were moored as a matter of convenience pending sale there or the receipt of orders from the said agent in New Orleans for further movement.

In Diamond Match Co. v. Ontonagon, 188 U. S. 82, 23 S. Ct. 266, 47 L. Ed. 349, logs floated by owner down the Ontonagon river and its tributaries to booms at its mouth at the village of Ontonagon, Mich., there to be loaded on cars for transportation by railway- to the owner’s mills at Green Bay, Wis., were held to be liable to taxation at Ontonagon, in view of the evidence that this place was used by the owner as a sorting grounds and to hold the logs until such times as they were needed to keep the mills supplied to capacity at Green Bay. While it was pointed out in the opinion that neither the method of transportation nor the change of the means of transportation enroute from floating to carriage by rail affected the character of the commerce, it was held that, because the interruption at the point of change within the state of the origin of the logs was used for purposes other than the furtherance of the transportation to the final destination at Green Bay, the continuity in transit was thereby broken, and the actual interstate journey did not begin until the logs were shipped from Ontonagon.

In American Steel & Wire Co. v. Speed, supra, goods shipped by owner in original packages from points north of the Ohio river to the Patterson Transfer Company, Memphis, Tenn., for temporary storage, assortment, and reshipment in the original packages, in accordance with directions from the owner, to fill sales orders to jobbers and wholesalers, 90 per cent, of which went outside of the state of Tennessee, and which sales orders, reserving to the customers certain limited privileges of choice of quality and time delivery of the goods ordered, had usually been taken in advance of the production of the goods at the factories, were held to be taxable while in the hands of the said storage company at Memphis. The court, after reviewing the facts, said: “With these facts in hand we are of opinion that the court below was right in deciding that the goods were not in transit, but, on the contrary, had reached their destination at Memphis, and were there held in store at the risk of the steel company, to be sold and delivered as contracts for that purpose were completely consummated.” The court recognized that the goods in the hands of the storage company in the original _ packages may not have entirely lost their character as subjects of interstate commerce, but held, nevertheless, under the doctrine laid down in Woodruff v. Parham, supra, and Brown v. Houston, supra, that they were taxable in view of the circumstances shown by the evidence.

In General Oil Co. v. Crain, 209 U. S. 211, 28 S. Ct. 475, 52 L. Ed. 754, oil shipped by owner from Pennsylvania and placed in storage tanks at Memphis, Tenn., for distribution and reshipment in smaller quantities to previously ascertained customers in other states, was held taxable in Tennessee as having been taken from transportation and brought to rest within the state of Tennessee, for the convenience and advantage of the owner in filling separately small orders for delivery beyond Memphis, and while so at rest enjoying the protection of the state.

.In Bacon v. Illinois, supra, grain which the owner had bought in the South and was shipping in interstate commerce under an arrangement between the owner and the railroad companies transporting the grain by which the owner was permitted to remove the grain from the custody of the carriers to his private grain elevator in Illinois for inspection, weighing, cleaning, clipping, drying, sacking, and grading with the power, under his contract with the carriers, either to change its ownership, consignee, or destination, or to restore the grain, after the processes mentioned, to the carriers to be delivered at the destination in "another state according to his original intention, was held to be taxable at the owner’s elevator in Illinois for the reason that the grain was there locally dealt with in the interest of'the owner while it was in his custody and subject to his complete disposition for a collateral purpose of his own.

In Susquehanna Coal Co. v. South Amboy, 228 U. S. 665, 33 S. Ct. 712, 714, 57 L. Ed. 1015, coal shipped from Pennsylvania to South Amboy, N. J., and intended for further shipment to destinations in other states or countries, but not definitely determined, and stored while awaiting orders or means for transportation of orders already received, was held subject to taxation by the municipality within whose jurisdiction it was stored because the interruption was not a mere incident of or in furtherance of the transportation, but also served other beneficial purposes of the owner. The court said: “ * * * There was something more than the submission to delay in transportation and the acceptance of its consequences. The situation was made a facility of business, — a business conducted through agents and employees. And, it will be observed, there was valuable property kept in the state, represented by the coal, varying in quantity from 10,000 tons to 150,000 tons. There was something more, therefore, than an incidental interruption of the continuity of its journey through the state.” The court, after alluding to the facts shown by the evidence that part of the coal was accumulated at South Amboy to fill anticipated orders, further said: “The eoal, therefore, was not in actual movement through the state; it was at rest in the state, and was to be handled and distributed from there. Therefore, the principles expressed in General Oil Co. v. Crain, 209 U. S. 211, 28 S. Ct. 475, 52 L. Ed. 754, and Bacon v. Illinois, supra, are applicable to it. The products in neither of those cases were destined for sale in the states where stored; the delay there was to be temporary, —a postponement of their transportation to , their destinations. There was, however, a business purpose and advantage in the delay which was availed of, and while it was availed of, the products secured the protection of the state. In both cases it was held that there was a cessation of interstate commerce and subjection to the dominion of the state.” Again, after discussing the difficulty of marking the line of dominion between national and state jurisdiction, the court said: “The one is as necessary as the other to be preserved.”

In the group of eases in which the right of the state to tax was sustained, it will be observed that the controlling principle is precisely the same as that recognized in the cases in which the right of taxation was denied; that is, that any interruption of the movement of commodities at an intermediate point between origin and final destination that is not incidental to the transportation or the use of the means of transportation, or, being so incidental, is used or extended for purposes of the owner not incidental to the transportation or the means used therefor, breaks the continuity in transit and subjects the shipment to local taxation at the point of interruption. Under such circumstances a shipment is looked upon as being withdrawn from interstate commerce to an extent that its taxation by local authorities does not amount to a regulation or direct burdening of interstate commerce.

A review of the evidence in'the case before the court convinces me that, while the primary purpose of the withdrawal of the ties from transportation at the T. J. Moss Tie Company plant was to procure their treatment with creosote under a privilege provided by the tariff schedules of doing so without losing the benefit of the lower through rate, the plaintiff extended and made use of the stopover for business purposes, advantageous to itself, that were neither incidental to the transportation por to a procurement of the treatment of the ties which was the sole privilege under the rate schedule.

The testimony of the plaintiff’s witnesses conclusively- shows that the plaintiff, in practice, extended the interruption of the transportation of the ties at the T. J. Moss Tie Company plant beyond the time reasonably necessary to have the ties treated with creosote; that the extension was for purposes not incidental to the treatment of the ties and was made use of by the plaintiff as a business facility and convenience as follows: First, for sorting the seasoned ties from the unseasoned ties and otherwise using the grounds of the tie plant as a point for assembling and sorting the ties; second, for stacking the unseasoned ties in the yards for such periods before creosoting as was necessary for nature to put them into a completely seasoned condition ready for treatment; third, for storage of the ties in the yards of the plant until needed to meet the maintenance and construction requirements of the plaintiff as indicated by the monthly set-ups for shipment furnished by the plaintiff to its supervisor at the plant. In view of the evidence'that the actual treatment required but a few hours, the conclusion is inescapable that, after making due allowance for any reasonable delay caused by the exposure of the ties to inclement weather and the routine handling of the ties through the plant, it was necessary to interrupt the transportation for a comparatively short period instead of an average of from three to four months.

These conclusions clearly bring the case within the principles laid down in the decisions of the United States Supreme Court in Bacon v. Illinois, supra; Diamond Match Co. v. Ontonagon, supra; Susquehanna Coal Co. v. South Amboy, supra, and other eases hereinbefore discussed wherein the power of the state to tax was sustained. They show that the continuity in transit of the ties was broken at the ereosoting plant within the meaning of the test laid down in Carson Petroleum Co. v. Vial, supra, wherein the court pointed out with meticulous care that the delay there was in all respects incidental to the necessary transshipment of the oil in foreign commerce which began at its point of origin. The evidence fails to sustain the essential averment in the plaintiff’s petition that the ties were delayed no longer at the plant of the T. J. Moss Company than was necessary for the purpose of creosoting them. Whether or not, if that averment had been sustained by the evidence, the result would be different is not necessary to determine.

Under the circumstances shown by the evidence, the conclusion must be, and is, that the ties in question were so far withdrawn from transportation in interstate commerce at the time they were assessed as complained of as to render them part of the general mass of property in the state of Illinois for taxation purposes; that the imposition of the tax in question did not amount to a regulation of or a direct burden upon interstate commerce, but was a proper exercise of the taxing power of the state of Illinois and its taxing bodies; and that the plaintiff’s prayer for injunction should be denied and the bill dismissed for want of equity.