text:
    LAMBORN & CO. v. PALMETTO GROCERY CO.
    (Circuit Court of Appeals, Fourth Circuit.
    April 14, 1925.)
    No. 2285.
    Appeal and error <©=3999(1) — Where facts present issue for jury, its finding will not be disturbed on appeal.
    Where question whether sale contract was. canceled, or whether seller’s conduct reasonably ' induced buyer to believe contract was canceled to its prejudice, were questions for jury, finding of jury will not be disturbed on appeal.
    In Error to the District Court of the United States for the Eastern District of South Carolina, at Charleston; Henry A. Middleton Smith, Judge.
    Action by Lamborn & Co. against the Palmetto Grocery Company. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    H. G. Connor, Jr., of Wilson, N. C., F. L. Willcox, of Florence, S. C., Connor & Hill; of Wilson, N. C., and Willcox & Hardee, of Florence, S. C., for plaintiff in error.
    W. F. Stackhouse and A. F. Woods, both, of Marion, S. C., for defendant in error.
    Before WADDILL and ROSE, Circuit Judges, and GRONER, District Judge.
   PER CURIAM.

This case was here before under the same title, and is reported in 284 F. at page 427. In our opinion on the former appeal the facts are fully stated, and a brief outline here will be sufficient.

Lamborn & Co. (plaintiff in error) was a large dealer in sugar, engaged in the importation and sale of the same to local dealers throughout the United States. In May, 1920, it offered for sale a large quantity of Java white sugar, at a fixed price per pound f. o. b. ears at Baltimore or Philadelphia, deliveries to be made on the arrival from, Java of a steamer at a later date. The offer so made provided, as a condition precedent to the making of .a binding contract that the purchaser should furnish an irrevocable letter of credit for an amount of money equal to the value of the sugar purchased, this letter of credit to be in favor of Lamborn & Co. and to be opened through a New York bank within five days after confirmation of sale. Palmetto Grocery Company (defendant in error) bought, for delivery in accordance with the contract, 200 bags of Java sugar, but with the contract for the sugar, which it signed and returned to plaintiff in error, it inclosed a letter of credit furnished by its local (South Carolina) bank. Plaintiff in error declined to accept this letter of credit, and notified defendant in error that unless the letter of credit demanded and provided for by the terms of the contract was promptly furnished it would be compelled to cancel the contract. Between May 17th, the date of the original order of the sugar by defendant in error from plaintiff in-error, and July 10th, there was an exchange of letters between the parties, all of which are fully set out in our former opinion and which it is not necessary here to reproduce;. but on the latter date defendant in error notified plaintiff in error that it had understood the contract would be canceled and had acted upon that assumption. Plaintiff in error declined to agree that the contract had been canceled and insisted upon compliance, and, pursuant to its terms, subsequently notified defendant in error of the arrival of the-sugar in this country, and still later shipped the same, with bill of lading draft attached.. The sugar was refused, the draft unpaid,, and thereafter an action to recover the purchase price was instituted.

At the former trial there was an instructed verdict for the defendant. In reversing, we-said:

“Whether the contract was in fact canceled, or whether the acts and conduct of Lamborn & Co. were of such character as-reasonably to induce the belief on the part of the Palmetto Company of the cancellation of the contract, and thus to mislead it to act in that belief to its prejudice, are questions which we think should be, by appropriate instruction, submitted to a jury for-decision.”

A careful examination of the record, and. particularly the charge of the learned judge by whom the ease was tried, convinces us that a trial in which the facts were substantially the same as in the previous trial these-questions were accurately and fairly submitted to the jury. And the jury having found, for the defendant, we are constrained to accept their conclusion, as was the lower court in refusing to set aside the verdict.

It follows, therefore, that the judgment appealed from should be, and is, affirmed.


source: Caselaw Access Project

author: GILBERT, Circuit Judge.

license: Public Domain

text:
    BALLESTRERO v. UNITED STATES.
    (Circuit Court of Appeals, Ninth Circuit.
    April 20, 1925.)
    No. 4403.
    1. Indictment and information <©=>! 11(1) — Petition alleging sale of cocaine not “origináliy in and from the original stamped package” held sufficient.
    Indictment, alleging that defendant, in violation of the Harrison Anti-Narcotie Act, § 1, as amended by Act Feb. 24, 1919, § 1006 (Comp. St. Ann. Supp. 1919, § 6287g); did “knowingly, willfully, unlawfully and feloni-ously purchase, sell, dispense and distribute a certain derivative of coca leaves, to wit, one bindle of cocaine containing approximately eighteen grains, which said cocaine was not then and there originally in and from the original stamped package,” held sufficient without an allegation that defendant had not registered and paid special tax required by the act or that he was a person required to register and pay the tax.
    2. Criminal law <§= 1090(8)— Sufficiency of evidence to sustain conviction not considered in absence of bill of exceptions.
    Where no bill of exceptions was prepared, settled, or allowed, the sufficiency of the evidence to sustain conviction will not be considered, notwithstanding purported reporter’s transcript, certified as correct by reporter, filed in lower court six months after judgment, and not attested by certificate of approval of judge.
    In Error to the District Court of the United States for the Southern Division of the Northern District of California; Frank H. Kerrigan, Judge.
    Mario Ballestrero was convicted of selling cocaine, and he brings error.
    Affirmed.
    John R. Jones, of San Francisco, Cal., for plaintiff in error.
    Sterling Carr, U. S. Atty., and T. J. Sheridan, Asst. U. S. Atty., both of San Francisco, Cal.
    Before GILBERT, HUNT, and RUDKIN, Circuit Judges.
   GILBERT, Circuit Judge.

The plaintiff in error was convicted under an indictment which alleged that he had violated the Harrison Anti-Narcotie Act, as amended February 24, 1919 (Comp. St. Ann. Supp. 1919, § 6287g), “in that the said defendant did then and there knowingly, willfully, unlawfully and feloniously purchase, sell, dispense and distribute a certain derivative of coca leaves, to wit, one bindle of cocaine containing approximately eighteen grains, which said cocaine was not then and there originally in and from the original stamped package.”

It is contended that the indictment is fatally defective, in that it fails to charge that the defendant had not registered and paid the special tax required by the act, or to charge that he was a person required to register and pay the special tax. To this it is sufficient to point to the fact that in view of the offense charged it was not necessary to allege or prove that the defendant was required to register or to pay a tax or to allege other facts than those which are set forth in the indictment. Sam Wong v. United States (C. C. A.) 2 F.(2d) 969; Coleman v. United States (C. C. A.) 3 F.(2d) 243; United States v. Wong Sing, 260 U. S. 18, 43 S. Ct. 7, 67 L. Ed. 105; Dean v. United States (C. C. A.) 266 F. 695; Pierriero v. United States (C. C. A.) 271 F. 912.

The contention that there is no evidence proving or tending to prove violation of the statute is not properly before us for the reason that the record contains no bill of exceptions, and no bill of• exceptions was prepared, settled, or allowed in the court below. The plaintiff in error brings into this court what purports to be a reporter’s transcript of the proceedings on the trial, certified to be correct by the reporter. It was filed in the court below six months after judgment and it is unattested by a certificate of approval of any judge. .

It is urged that the defendant was incompetently represented by counsel on his trial and that his rights were not protected in the court below. There is no record from which we may authoritatively know what transpired on the trial, but if we turn to the purported transcript of the evidence, we find nothing therein to indicate that the defendant was not properly and adequately represented by counsel. Even if the attorney for the defendant was incompetent or unskillful, it is not conceivable that the court below permitted an unfair trial or failed properly to protect the rights of the defendant.

The judgment is affirmed.


author: RUDKIN, Circuit Judge.

text:
    LUPIPPARU v. UNITED STATES.

    (Circuit Court of Appeals, Ninth Circuit.
    May 11, 1925.)
    No. 4441.
    Conspiracy t§=>32 — Scheme to obtain money by threats held scheme and artifice to defraud.
    Scheme to compel payment of money, by writing letters pretending that writers would kill and murder addressee unless he deposited at. a designated time and place a sum of money, is scheme or artifice to defraud within Criminal Code, § 215 (Comp. St. § 10385), and hence conspiracy to devise such scheme is indictable.
    In Error to the District Court of the United States for the Southern Division of the Northern District of California; Frank H. Kerrigan, District .Judge.
    Johnnie Lupipparu was convicted of conspiracy to devise a scheme and artifice to defraud, and he brings error.
    Affirmed.
    Clay A. Pedrazzini and Ralph B. MeAbee, both of San Francisco, Cal., for plaintiff in error.
    " Sterling Carr, U. S. Atty., and T. J. Sheridan, Asst. U. S. Atty., both of San Francisco, Cal.
    Before GILBERT, HUNT, and RUD-KIN, Circuit Judges.

      Rehearing denied June 15, 1925.

   RUDKIN, Circuit Judge.

The indictment in this case charges a conspiracy to devise a scheme and artifice to defraud, and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises. The scheme and artifice was that the defendants would write and send, through the post office establishment of the United States, certain letters to one Frank Laurieella, wherein they would pretend that they intended to and would -kill and murder the said Laurieella, unless he would take and deposit at a designated time and place the sum of $2,000 in lawful money of the United States for the use and benefit of the defendants. The indictment then charged as overt acts the mailing of several letters to effect the object of the conspiracy. The present writ of error was sued out to review a judgment of conviction, and the sufficiency of the indictment to sustain the judgment is the only question presented for our consideration. In Horman v. United States, 116 F. 350, 53 C. C. A. 570, the Circuit Court of Appeals for the Sixth Circuit held that a plan to extort" money from another by means of threatening letters was a scheme or artifice to defraud within the meaning .of section 5480 of the Revised Statutes, as amended by the Act of March 1889 (25 Stat. 873 [Comp. St. § 10385]). A contrary conclusion was reached by the-Circuit Court of Appeals for the Seventh Circuit in the recent ease of Naponiello v. United States, 291 F. 1008. The indictment-in the latter ease was returned under section 215 of the Criminal Code (Comp. St. § 10385). The opinion in the Horman Case was delivered by Judge Day and concurred in by Judge Lurton. Certiorari was denied by the Supreme Court. Horman v. United States, 187 U. S. 641, 23 S. Ct. 841, 47 L. Ed. 345. No attempt was made to secure a review of the latter decision, so far as we can .ascertain. What effect should be given to the denial of a writ of certiorari by the Supreme Court we are not prepared to say, but it would seem that if the Circuit Court of Appeals misconstrued a federal statute- and affirmed the conviction of a person innocent of crime, the Supreme Court would undoubtedly review its decision. Furthermore, we are of opinion that a scheme such as is-set forth in the indictment here contains all the essential elements of a scheme or artifice to defraud. '

The judgment of the court below is affirmed.


author: BREWSTER, District Judge.

text:
    OLD COLONY TRUST CO. v. MALLEY.
    (District Court, D. Massachusetts.
    April 15, 1925.)
    No. 878.
    Internal revenue Property held by bank in fiduciary capacity not considered as part of bank’s property in determining tax due-on capital.
    In determining amount of tax due on capital, surplus, and undivided profits of bank under War Revenue Act 1914, § 3, par. 1, the property or values representing property helct by bank as executor, administrator, guardian, or in any other fiduciary capacity during taxable period, will not be included as a part of the-assets or property of bank.
    At Law. Action by the Old Colony Trust: Company against John F. Malley, Collector. Judgment for plaintiff.
    See, also, 288 F. 903; 299 F. 523.
    Currier, Young & Pillsbury, Pillsbury & Dana, and Samuel H. Pillsbury, all of Boston, Mass., for plaintiff.
    The United States Attorney, for defendant.
   BREWSTER, District Judge.

This is an action at law brought to recover a portion of the taxes as'sessed upon and paid by plaintiff under provisions of section 3, paragraph 1, of the War Revenue Act, approved October 22, 1914 (38 Stat. 750); the taxes in dispute covering taxable periods beginning November 1, 1914, and ending December 31, 1916. The tax assessed was a special tax on bankers of $1 on each $1,000 of capital used and employed. The government computed the tax upon the total capital of the plaintiff, including surplus and undivided profits. On March 22, 1923, I rendered an opinion (288 F. 903) in which I held that the tax was not to be measured by the entire capital, surplus, and undivided profits of the defendant, but only by the capital, surplus, and undivided profits employed by the defendant in the business of banking, and that for - the purposes of the tax the words “business of banking” meant the three kinds of business set out in the act, viz.:

(a) Opening credits by deposit or collecting money to be paid or remitted by draft, check, or order;

(b) Advancing or loaning money on stocks, bonds, bills of exchange or promissory notes; and

(e) Receiving for discount or sale stocks, bonds, bills of exchange or promissory notes.

I further found that during the periods in question only a part of the capital, surplus, and undivided profits of the plaintiff was so employed. In determining the proportions employed in the banking business, I took that proportion of the capital, surplus, and undivided profits which bore the same relation to the total capital, surplus, and undivided profits as the average daily assets employed in the three kinds of businesses above referred to bore to the total average daily assets employed by the bank in both banking and nonbanking business, not including, however, the assets employed in its savings bank department. I ruled that the plaintiff was entitled to recover.

On appeal the Circuit Court of Appeals, while agreeing that only capital used or employed in banking under the definition of “banker” as defined in the act was subject to the tax, reversed the judgment and remanded the action to this court for further action not inconsistent with its opinion. 299 F. 523. I have received evidence consisting of the auditor’s report, upon which my earlier findings were based, and also additional oral testimony upon matters which seem to me to be required by the opinion of the Circuit Court of Appeals. As I read the opinion, the judgment of this court was reversed, not because of error in the rule of apportionment, but rather because of error in the application of the rule.

Three objections as noted in the opinion are as follows:

First, that the average daily assets did not include the assets employed in the savings bank department;

Second, that it did not appear whether the plaintiff in underwriting securities became the owner of the stock or bonds which it underwrote, or whether it acted as an agent in so doing;

Third, that there was no evidence in regard to the extent of the business of the trust department of the plaintiff, nor any evidence from which inferences might fairly be drawn in regard to the same.

In my findings of fact upon rehearing, I have included the assets employed in the savings bank department with the other assets of the plaintiff. I have found as a fact that all underwritten securities were purchased outright by the plaintiff, and that it did not act as agent for others in underwriting, and have also found that during the years in question the plaintiff’s trust business included the management and control of property as trustee, executor, administrator, guardian, etc., also' the management and control of property as agents for the owners and included activities as trustee under numerous mortgages and indentures of trust under which bonds and notes of other corporations were issued, and I have been able to set out in my findings of fact the values of property held by the plaintiff during the periods in question as such trustee, agent, or mortgagee. But no part of the property or values representing such property held by the plaintiff as executor, administrator, guardian, or fiduciary whatsoever during the taxable period in question has been taken into consideration or included as part of the assets or property of the plaintiff in determining the amount of the tax due on its capital, surplus, and undivided profits. As a result of including the assets of the savings bank department, the proportion of assets employed in banking business differs slightly from the proportions appearing in my earlier opinion. 288 F. 903, at 912.

I now rule that the defendant illegally collected from the plaintiff the following sums:

(X) On April 27, 1915, 47.6X9% of $X0,233.34.....$4,873.0X

(2) On Sept. 20, X9X5, 52,573% of 7.X57.00..... 3,762.65

(3) On March 4, X9X6, 52.573% of 7.X57.00..... 3,762.65

(4) On Sept. X2, X9X6, 5X.964% of 6,334.00 ...... 3.29X.40

$X5,689.71

—which amount, with interest from the respective dates of collection, the plaintiff is entitled to recover from the defendant.

I have received from the defendant eight requests for rulings of law. The first and sixth requests are consistent with'this opinion, and are therefore granted. The other requests are denied.

Judgment for the above sum, with interest, may be entered forthwith in favor of the plaintiff.


author: BONDY, District Judge.

text:
    HUNYADI JANOS CORPORATION v. STOEGER.
    (District Court, S. D. New York.
    March 24, 1925.)
    1. War <®=I2 — Legal effect of conveyance of alien enemy’s property by Alien Property Custodian is same as conveyance by alien owner.
    Where American business, labels, good will, trade-marks, etc., of Hungarian concern were seized and sold by Alien Property Custodian under Trading with the Enemy Act Oct. 6, 1917, § 7, subsee. (c), as amended by Act Nov. 4, 1918, § 1 (Comp. St. Ann. Supp. 1919, § 3115%d), legal effect of sale was same as if it had been made by alien owner exclusively to purchaser.
    2. Trade-marks and trade-names and unfair competition <§=88 — Purchaser from Alien Property Custodian held entitled to enjoin use of trade-mark on,imported water on which formerly used.
    Purchaser from Alien Property Custodian under Trading with the Enemy Act Oct. 6, 1917, § 7, subsec. (c), as amended by Act Nov. 4, 1918, § 1 (Comp. St. Ann. Supp. 1919, § 3115%d), of American business, labels, good will, trade-marks, etc., of enemy aliens who distributed mineral water from Hungarian wells owned by them, held entitled to enjoin continued use of trade-marks on water imported from Hungarian concern, where American business prior to such sale had been extensive enough to have good will separate from good will appurtenant to wells.
    3. Trade-marks and trade-names and unfair competition <§=85(2) — Purchaser of business, trade-marks, etc., of enemy alien from Alien Property Custodian held not to have used trade-ma'rks to deceive public.
    That purchaser from Alien Property Custodian under Trading with the Enemy Act Oct. 6, 1917, § 7, subsec. (e), as amended by Act Nov. 4, 1918, § 1 (Comp. St. Ann. Supp. 1919, § 3115%d) of trade-mark, etc., of American business belonging to enemy aliens who distributed mineral water from Hungarian wells, used such trade-mark as its corporate name, and stated in its labels that it was owner of business formerly conducted by aliens, held not deception of public in violation of Trade-Mark Act, § 21 (Comp. St. § 9506), so as to prevent protection of trade-mark by injunction.
    In Equity. Suit by the Hunyadi Janos Corporation against Alexander F. Stoeger. Decree for plaintiff.
    Harry D. Elms and Mintum de S. Verdi, both of New York City, for plaintiff.
    Briesen & Schrenk, Hans V. Briesen, and Fred A. Klein, all of New York City, for defendant.
   BONDY, District Judge.

This is a suit to restrain the infringement of trade-marks registered in the Patent Office of the United States, which were seized and transferred to plaintiff’s assignor by the Alien Property Custodian, acting under the Trading with the Enemy Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115y2a-3115y2;j).

Prior to the war between the United States and Austria-Hungary, Andreas Sax-lehner and his successors bottled, and sold throughout the United States and elsewhere, under the name of Hunyadi Janos, mineral water from wells in the neighborhood of Budapest owned by them. They used in the United States a label bearing their trademark “Hunyadi Janos” and a picture of the head of a knight.

In the course of time Andreas Saxlehner registered the trade-mark “Hunyadi Janos” in the Patent Office of the United States, and he and his successors maintained in the United States a place of business from which they distributed to buyers in the United States and other countries their mineral waters and also pills, which were manufactured for them in the United States and sold by them under their trade-mark “Hunyadi Janos.”

When war was declared between the United States and Austria-Hungary, this business of importing and selling mineral water in the United States was being conducted in the name of Andreas Saxlehner at 130 Fulton street, in New York City. Goods were shipped and bills rendered from there and payments were received there.

On December 21, 1918, the Alien Property Custodian of the United States, acting under the provisions of the Trading with the Enemy Act, demanded and seized the business of the firm of Andreas Saxlehner, all its tangible and intangible assets, trademarks, trade-names, and good will as the property of an alien enemy resident in Budapest, Hungary.

On December 24, 1918, the Alien Property Custodian filed a copy of the demand and notice of the seizure of the property in the office of the Commissioner of Patents, and sold as a going concern the business theretofore conducted under the trade-name of An-dreas Saxlehner, at 130 Pulton street, New York, and elsewhere in the United States, including its office furniture, fixtures, pills, labels, good will, trade-names, and trademarks to the Partola Manufacturing Company, which on May 19, 1919, transferred the same to the plaintiff, a corporation existing under the laws of the state of New York.

The defendant, a citizen of New York, now imports mineral water bottled by the firm of Andreas Saxlehner in Hungary, and sells this water under the name of “Hun-yadi Janos” and “Andreas Saxlehner” in bottles which bear labels similar in every de* tail to those above described.

The plaintiff asks that the defendant be enjoined from importing and selling any bitter water under the name of Hunyadi Jan-os, or the name Andreas Saxlehner, or under any colorable imitation of plaintiff’s label, and from doing anything which may tend to destroy or impair the rights, trademarks, property, or good will seized by the Alien Property Custodian.

In Bourjois & Co., Inc., v. Katzel, 275 F. 539, the Circuit Court of Appeals held that the importation and sale in the United States by a third person of a face powder made in Prance, bearing the trade-mark under which it is sold in Prance and also in this country, is not an infringement of the American trade-mark on the same imported powder, acquired by an American from the Preneh manufacturer, even assuming that it would be a breach of its obligation, if the Preneh manufacturer sold the powder in this country under that mark. The court held that because the third person bought the face powder in Prance and herself imported it into this country and sold it in the boxes in which she purchased the powder, she did not infringe the American trade-mark.

Following that decision, the Circuit Court of Appeals affirmed an order denying the application of the complainant in the suit under consideration for a • preliminary, injunction against the defendant, and in so doing the Circuit Court said: “If we assume for the purposes of the argument that the plaintiff obtained a good title to the business in this country of the firm of Andreas Saxlehner in Hungary and owns -here the trade-marks claimed, nevertheless as the defendant purchased the water in Europe and it is the genuine Hunyadi Janos water, and he is offering it to the trade in the same form in which he imported it and the labels were affixed to it by the firm of Andreas Saxlehner in Budapest we see no distinction in principle between this ease and the Bourjois Case.” Hunyadi Janos Corporation v. Stoe-ger, 285 P. 861.

Subsequently the United States Supreme Court reversed the decision of the Circuit Court of Appeals in the Bourjois Case, and held that the fact that the powder was the genuine product of the French concern, and that it was contained in boxes of the Preneh concern, bearing its trade-mark, did not give the defendant the right to sell the powder in such boxes in the United States after the French concern had sold to the complainant its trade-marks, business, and good will in the United States. Bourjois & Company v. Katzel, 260 U. S. 689, 43 S. Ct. 244, 26 A. L. R. 567.

As was pointed out by the Circuit Court of Appeals on the application for a preliminary injunction in this suit,' it did not deem it necessary to inquire whether the plaintiff acquired legal title to the trade-marks through the sale by the Alien Property Custodian, because assuming it had the legal title, the defendant could import and sell an article made in a foreign country and bearing the trade-mark under which it is sold in that country, and also in this country, without infringing the American trade-mark on the same imported article.

The Trading with the Enemy Act of Oct. 6, 1917, § -7, subsee. (c), as amended by Act of November 4,1918, ch. 201, § 1 (Comp. St. Ann. Supp. 1919, § 3115%d), provides that if the President shall so require, any property, including patents, copyrights, trademarks, and rights and claims of every character and description belonging to an enemy or ally of an enemy not holding a license granted by the President, which the President after investigation shall determine so belongs, may be seized by the Alien Property Custodian, and that any requirement made pursuant to the act, or a duly certified copy thereof, may be filed, registered, or recorded in the proper office for the filing, registering, or recording of conveyances, transfers, or assignments of patents, copyrights, or trade-marks, or any rights therein, and if so filed, registered, or recorded, shall impart the 'same notice and have the same force and effect as a duly executed conveyance, transfer, or assignment to the Alien Property Custodian so filed, registered, or recorded.

The defendant contends that the trademarks were inseparable,, from the product of the natural springs "or wells in Hungary, and therefore could not be conveyed without the wells to which they were appurtenant, and that therefore they could not be seized and transferred hy the Alien Property Custodian, and that the sale by him effected at most a transfer of the tangible property in the New York selling office and of the right to dispose of the merchandise there on hand under trade-marks appurtenant thereto.

The plaintiff contends that the Alien Property Custodian seized the business and the good will of the business carried on in the United States, and that the trade-marks and trade-names were appurtenant to the business carried on in the United States.

In its opinion on the application for a preliminary injunction herein the Circuit Court of Appeals said: “If the firm of Andreas Saxlehner in Hungary had transferred along with its trade-mark its American business exclusively to the New York firm and had thereafter undertaken to compete with the latter by exporting its water to the United States for sale here, its conduct would have afforded a ground for equitable jurisdiction. See Appollinaris Co. v. Scherer (C. C.) 27 F. 18, 20; A. Bourjois & Co. v. Katzel (C. C. A.) 275 F. 539, 542.”

The seizure of the American business of Andreas Saxlehner by the Alien Property Custodian and its transfer by him did have the same legal effect as if Saxlehner had transferred his American business with its good will and trade-marks exclusively to the New York firm, or its assignor.

In Koppel v. Orenstein (C. C. A.) 289 F. 446, Judge Mantón said:

“It was the apparent intention of Congress to sell enemy property as fully as the owner thereof could sell. This was deemed necessary as a war measure. In the case of a going concern, which owned the good will or trade-marks, it was clearly intended that these concerns should he kept going in order to engage in manufacturing or other enterprises which might he needed for the welfare of our country during this period; and it had the other purpose of crippling’the enemy to the extent of preventing the enemy from enjoying its property or its profits during such period. Likewise, it was the intention of Congress that the American citizen, who was authorized to purchase at public sale, should, if the terms of sale so provided, be able to buy and enjoy his purchase as a going concern, thereby obtaining all, that the German proprietorship consisted of at the time of sale. The language of the Trading with the > Enemy Act clearly embraces this power of' sale. To permit of the sale of the physical property only would have deprived the purchaser in* the instant ease of the great value of the good will of the German corporation, which had made its business and its growth during the preceding years. The conveyance by th,e bill of sale as referred to, conveyed ‘the business as a going concern and the good will,’ together with ‘all registered and unregistered trademarks * * * trade-names and the like,’ and ‘all privileges, franchises, and rights of every kind,’ owned hy the German corporation and its subsidiaries in the United States. We think this conveyed to the purchaser the exclusive right to .carry on the business in the United States, with the right of protection of a court of equity from interference by the German corporation; for, if the present interference be permitted, what was conveyed would in time be destroyed. The sale was as complete as if it were a voluntary conveyance of its interests in the United States by the German corporation. It is not the ease of a sale in invitum of the good will and business. Assuming a voluntary sale of its good will and business had been made hy the German corporation, would it have been at liberty later to impair the good will by seeking the customers of the buyer and carrying on business, using substantially the same trade-name and trade symbol as they had theretofore used? We think not.”

In the Bourjois Case the United States Supreme Court expressly refers to the fact that the labels have come to be understood by the public here as meaning goods coming from the plaintiff who bought the powder in bulk and repacked it in the United States.

In the Koppel Case the product sold hy an alien enemy in the United States, and seized by the Alien Property Custodian, was manufactured, in factories in the United States. The trade-mark affixed to the product, although the trade-mark of an alien, indicated a product coming from a factory in the United States.

In the case under consideration, the evidence that the names Saxlehner and Hunyadi Janos were associated in the United States with a business carried on in New York, rather than with a mineral water having its origin in Hungary, is not very satisfactory. It seems, however, sufficient has been proved to establish that the aliens carried on the business of importing and selling Hunyadi Janos water, and of manufacturing and selling Hunyadi Janos pills, in the United States extensively enough to create good will in connection with their business in tbe United States, and tbat a sale of tbeir business, its good will, and its trade-marks did transfer tbe trade-marks, not as appurtenant to tbe wells, but as appurtenant to tbe business carried on in America and sold by tbe Alien Property Custodian.

Tbe Circuit Court of Appeals seems to have been of tbat opinion when it stated tbat if tbe firm of Andreas Saxlehner bad transferred along witb its trade-marks its American business exclusively to tbe New York firm, and bad thereafter undertaken to compete witb tbe latter by exporting its waters to tbe United States for sale here, it would bave afforded ground for equitable jurisdiction.

Tbe defendant contends tbat tbe bill should be dismissed because tbe trade-mark has been used witb a design of deceiving tbe public in tbe purchase of merchandise. Trade-Mark Statute, § 21 (Comp. St. § 9506).

Tbe fact tbat tbe plaintiff is doing business under tbe name of Hunyadi Janos Corporation, and tbat tbe plaintiff on a label announces tbat it is the owner of tbe firm of Andreas Saxlehner, does not justify defendant’s contention that tbe plaintiff thereby represents itself as tbe owner of tbe wells or as identified witb tbe firm of Andreas Saxlehner. This is so in view.of tbe fact tbat Andreas Saxlehner and his successors, besides selling mineral water, also manufactured in tbe United States and sold, under tbe name of Hunyadi Janos, pills made of chemicals, none of which was derived from Hunyadi Janos water, and in view of tbe fact tbat plaintiff affixed to tbe bottles containing tbe Hunyadi water sold by it a notice tbat in tbe United States the trade-mark Hunyadi Janos is tbe property of and may be used only in connection witb tbe business formerly carried on at 130 Fulton street, New York, by Andreas Saxlehner, which business plaintiff now owns, and any person selling mineral water in tbe United States under tbe name Hunyadi Janos, which does not bear this neck label, shall be prosecuted to tbe full extent of the law.

Tbe facts do not convince tbe court tbat the mark, or tbe name Hunyadi Janos Corporation has been used by tbe plaintiff with a design of deceiving tbe public in tbe purchase of tbe water. See Jacobs v. Beecham, 221 U. S. 263, 273, 31 S. Ct. 555, 55 L. Ed. 729.

Tbe infringement of plaintiff’s trademark, therefore, must be enjoined.


author: MEEK, District Judge.

text:
    In re GRAND LEADER.
    (District Court, N. D. Texas, at Dallas.
    April 25, 1925.)
    No. 1991.
    Bankruptcy <@=346 — Tax claim of United States against corporation held entitled to priority in distribution of assets of bankrupt successor.
    Where, on dissolution of corporation, its assets and liabilities were assumed by partnership composed of same members, which in turn was succeeded by another corporation tax claim of United States against first corporation was entitled to priority, under Bankruptcy Act, § 64a (Comp. St. § 9648), in proceedings against latter corporation, bankrupt, notwithstanding that successive transfers were not in writing, as required by statute of frauds, there having been part performance of the agreements in each instance.
    In Bankruptcy. In tbe matter of tbe Grand Leader, bankrupt. On bearing of referee’s report, allowing tax claim of tbe United States as an unsecured claim.
    Order reviewed, witb directions.
    See, also, 5 F.(2d) 511.
    Henry Zweifel, U. S. Dist. Atty., and Norman A. Dodge, Sp. Asst. U. S. Atty., both of Fort Worth, Tex., for the United States.
    Prentice Wilson and Church, Read & Bane, all of Dallas, Tex., for trustee.
   MEEK, District Judge.

In this tax claim tbe assessment made by tbe government is for tbe sum of $1,108.62, which was made in December, 1923, for additional taxes due for tbe year 1919 by a corporation of tbe same name as tbe bankrupt. Tbe corporation against which this assessment was made was incorporated in the year 1917, and it was later dissolved on February 13, 1920. After this date tbe same business was carried on under tbe same name by tbe stockholders of the corporation as a partnership. However, two additional names were interested in tbe partnership; these having what is termed by the witnesses “a .working interest.” These parties so carried on this business until May 15, 1923, at which date a new corporation was formed under tbe same name, tbe Grand Leader, and this corporation carried on tbe identical business tbat bad theretofore been carried on by tbe partnership and by tbe earlier corporation.

In tbe bankrupt corporation tbe same persons owned and controlled tbe business, except tbat tbe two persons having a working interest in the partnership also held shares of stock, for which they gave tbeir promissory notes, which were to be paid for by the earnings of the corporation. This certificate has been before me once before. The referee, after hearing, and after giving the United- States opportunity to be heard, which seemingly was not taken advantage of promptly and fully by the government, the referee entered an order dissallowing the claim of the government for said income tax against the bankruptcy corporation.

The United States appeared and petitioned that the certificate be returned to the referee for the further development of the facts surrounding this tax claim, and to have it allowed against the bankruptcy corporation. The trustee of the bankruptcy estate opposed the granting of this petition, on the ground that the government failed to take advantage of the opportunity already accorded it to do this; but, after considering the matter, and in view of the showing made and questions involved, the record was sent back to the referee.

After the taking of additional testimony and hearing, the referee returned the certificate, with such additional evidence and his conclusions of fact and law upon the record, as it now stands. The referee now finds that the government is entitled to have this tax claim allowed as an unsecured claim against the bankrupt corporation.

The trustee of- the estate and his attorneys were present an'd took part in such further hearing before the referee, and have been advised of his additional findings as to the allowance of said tax claim of the government as an unsecured claim.- Thom the findings of the referee in this matter I quote as follows:

“The testimony is rather extensive and complicated. The facts, as I see it, should have been gotten up by an accountant from the books and submitted as an agreed statement. It is very difficult to determine, from the 21 pages of testimony taken and submitted herewith, anything pertinent to the ease, except what I have stated, which I will recapitulate as follows:

“A corporation under the name of Grand Leader, followed by a partnership under same name, partnership followed by corporation under same name, which became bankrupt; each successive concern assumed the obligations of its predecessor.”

I quote from the evidence, which the referee says is extensive and complicated:

“Q. Were there any fixtures belonging to the old corporation turned over to the partnership ? A. Yes.
“Q. What was the value ? A. Cannot say.
“Q. Were there any fixtures turned over from the partnership to the new corporation? A. Yes.
“Q. Can you not give us an idea as to what the fixtures were worth? A. About $2,500. '
“Q. If I get you right, about $2,500 worth of fixtures came from the old corporation into the partnership, and from the partnership into the new corporation that is bankrupt? A. Yes, sir.
“Q. (by referee): Do you think they would bring that much cash, if the trustee in bankruptcy had to sell them at cash sale? A. To the best of my knowledge that is what they would sell for at thát time.”

Another witness, who was the main owner of this business from the first, testified that these fixtures were at different times, during the first corporation, the partnership, and the last corporation, mortgaged; but the evidence of the witness is, of a character that it leaves the court in uncertainty as to the condition of the fixtures of this bankrupt at the beginning of the bankruptcy proceedings. However, we are not shown affirmatively that any fixtures coming in to the trustee’s hands were covered by a mortgage.

On the record now before me, the United States claims that, under the evidence taken and the finding of fact made by the referee, it is entitled to priority of payment of the assessed tax from the assets of the bankruptcy corporation. Such priority is claimed by it under section 64a of the Bankruptcy Act (Comp. St. § 9648). There is nothing before the court indicating the trustee of the estate objects to the referee’s findings that the government be allowed its claim for this tax as an unsecured claim against the bankruptcy estate. This being the case, the only question now for determination is whether the government is entitled to the claim of priority for the amount of this assessment. Upon this question the United States has submitted a brief.

The Grand Leader became bankrupt while owing the tax claimed here by the government, and under the provisions of section 64a of the Bankruptcy Law the government is given the right of priority for this income tax. The claim being shown to be a tax claim, there is only the question of its being legally due and owing by the bankrupt. This tax claim of the government, which is admitted to be a personal liability of the bankrupt, is entitled to priority of payment by virtue of section 64a of the Bankruptcy Act.

According to my views, there is no necessity for the existence of a lien to the gov-emment to vitalize priority here claimed. The record shows that the different agreements by which the partoiership followed the corporation and the second corporation followed the partnership, each in turn assuming the liabilities of the preceding business concern, were not in writing. However, the point made by the trustee of the estate under the statute of frauds is answered by the fact that there was such part performance of the agreements entered into in each instance as to take it out of the provisions of the statute of frauds. The succeeding concerns, the partnership following first corporation, actually received the business assets of the preceding concern and continued the business of its predecessor.

The continuance of this business is shown by the evidence given before the referee, and it cannot be questioned; this is supported in all that took place, and especially by the fact that the original permanent store fixtures secured by the original corporation were taken by the following partnership, together with the stock of goods, which were renewed and replaced as the goods and stock were sold out at retail. The second corporation; in turn, the bankrupt here, received from the partnership the same fixtures and the stock of merchandise that was carried by the partnership, and the same business was continued under the same name.

In so far as the record before me goes, there is no creditor of the bankrupt claiming to be protected by any specific lien upon any of the assets of the bankrupt now in possession of the trustee that entitled said creditor to the payment in full, not even any mortgagee of the store fixtures that came from the first corporation. The right of the government to priority of payment does not arise from any lien right,' but comes from the provisions of the Bankruptcy Law taking care of the tax claims of the United States. This right arose when the Grand Leader Company was adjudicated a bankrupt. If this tax claim is a correct tax claim, as I have indicated above, there is no cause shown why it should not have priority of payment over the general creditors of the estate.

In so far as the ruling of the referee does not provide for the priority of payment of the tax claim of the government, which he finds to be due to the government from the bankrupt, I think his ruling is erroneous, and should be reviewed and sent back to him, with directions to arrange for priority of payment of the government’s tax claim.


text:
    In re GRAND LEADER.
    (District Court, N. D. Texas, at Dallas.
    May 15, 1925.)
    No. 1901.
    Bankruptcy <§=>346 — Taxes assessed against predecessor of bankrupt corporation personal liability of bankrupt, entitled to priority against general creditors.
    Where corporation was succeeded by partnership, and partnership by bankrupt corporation, each taking over the assets and business and assuming the obligations of its predecessor, government’s claim for income taxes assessed against the first corporation is a personal liability of bankrupt — which the law requires to be paid ahead of general creditors— both because bankrupt received the assets as a privy successor and continued the same business, and because it assumed to pay the claim.
    Iu Bankruptcy. In the matter of the Grand Leader, bankrupt. On trustee’s motion to set aside judgment allowing the tax claim of the United States with priority of payment, and for judgment allowing the claim without priority.
    Denied.
    See, also, 5 F.(2d) 509.
    Henry Zweifel, U. S. Dist. Atty., and Norman A. Dodge, Sp. Asst. U. S. Atty., both of Ft. Worth, Tex., for the United States.
    Church, Read & Bane and Prentice Wilson, all of Dallas, Tex., for trustee.
   MEEK, District Judge.

In the matter of the Grand Leader, bankrupt, the trustee of the estate has filed a motion seeking to have judgment entered allowing the tax claim of the United States with priority of payment set aside and asking a judgment allowing the government’s claim for taxes without priority of payment, as it was allowed by the referee. The motion constitutes as well a brief of argument and authorities.

While the certificate was before me for consideration, the attorneys for the trustee of this estate did not submit any argument or brief at all upon the questions, and they did not appear until after the decision was filed on April 25th.

I have considered the grounds of the motion submitted and will pass upon them.

The trustee complains of my finding as to the personnel of stockholders of the bankrupt corporation.

The referee in charge of this matter had allowed this tax claim of the government against this estate as a general creditor without granting priority of payment. This fact makes the personnel of such stockholders immaterial in this connection, because the referee by his order bad established this tax indebtedness against the bankrupt corporation as proper. In this motion the trustee prays that this be done. All that the court did was to fix priority of payment of this tax claim, and this because of the provisions of the bankruptcy act itself.

The main assets belonging to the partnership that preceded the bankruptcy corporation were the stock of goods then on hand and the fixtures • that were holding those goods.

The record from the referee concerning the fixtures did not satisfy the court as to whether the fixtures were mortgaged or free; if mortgaged, to what extent when considered in view of the value of the fixtures? The last questions and answers of the witness Cecil, who was the chief owner of this business, are as follows:

“Q. The mortgage on the fixtures was executed by the bankrupt corporation? A. You can determine that by looking at the record of when the mortgage was filed.
“Q. Was it given on fixtures other than those purchased then? A. No.
“Q. So the old fixtures from the old corporation and the partnership to the new corporation, was there any mortgage on them? A. Not that I know of.”

The testimony shows that an expansion of the business of the Grand Leader occurred about the time of, or shortly after, the dissolution of the old corporation, when additional fixtures were required upon which a mortgage was given. No mortgage was given other than on the fixtures purchased at the time of the mortgage. The old fixtures were not incumbered if the evidence on the subject is correct.

The government is not seeking to displace any mortgage lien, and the contest here is one of its right to priority of payment over the general creditors of the bankruptcy estate.

In the motion of the trustee, now before me, the allegation is made that the store fixtures were mortgaged and that he has sold these fixtures on the order of the referee in order to take care of the mortgage that was on them for their purchase price. But it also appears front the allegation of the motion that the trustee now has on hand money belonging to this bankruptcy estate in an amount more than sufficient to care for this tax claim and against which amount there is not claimed to be any outstanding liens or mortgages. Therefore he should use sufficient of this amount to meet this tax claim of the United States.

To restate conclusions expressed in my original opinion, I state the liability of the bankrupt for the government tax in this ease exists as urged by its counsel (a) because the bankrupt received the assets as a privy successor and continued the same business, which assets largely exceeded the amount of the claim; and (b) because the bankrupt assumed to pay the claim either one of which established the claim as a personal liability which the law requires to be paid in advance of dividends to general creditors. In re Marshall G. Co. (D. C.) 3 F.(2d) 192; Heyward v. U. S. (C. C. A.) 2 F.(2d) 467.

The prayer of the trustee’s motion wherein he prays that judgment be entered here allowing the government’s claim' for taxes, but disallowing its claim for priority of payment, must be denied the trustee, and the government’s claim for taxes due from the bankrupt must be allowed with priority of payment as by the order entered by me on the 25th day of April, 1925.


author: WINSLOW, District Judge.

text:
    In re SCHIFF et al.
    (District Court, S. D. New York.
    May 21, 1925.)
    No. 34796.
    1. Bankruptcy @=>409 (I) — Rule as to effect of careless bookkeeping methods on bankrupt’s right to discharge, stated.
    Careless method of bookkeeping is not ground for denial of discharge of bankrupts unless books disclose an intent on part of bankrupts to conceal their financial condition, and bolster! up fictitious accounts entered in the schedules, and have been so falsely kept that the true financial condition of bankrupts cannot be ascertained by competent accountant.
    2. Bankruptcy @=>414(3) — Evidence held insufficient to sustain objections to discharge for failure to keep proper books and listing' of fictitious debts.
    Evidence held insufficient to sustain specifications of objection to bankrupts’ discharge on ground of failure to keep, proper books and listing of fictitious debts.
    3. Bankruptcy @=>414(3) — Greater degree of proof required where ground of objection depends on offense for which bankrupt may be punished criminally.
    Where ground of objection to discharge of bankrupts depends on an offense for which bankrupt may be punished criminally, a greater degree of proof should be required.
    In Bankruptcy. In the matter of Isaac O. Sehifl: and Joseph Sehifl:, individually and as copartners trading under the firm name and style of Schiff Bros. On motion to confirm special master’s report sustaining specifications of objection to bankrupts’ discharge.
    Specifications dismissed, and bankrupts discharged.
    Douglas Newman and Charles Eno, both of New York City, for objecting creditors.
    Pereival Jackson, of New York City (Marcus Helfand, of New York City, of counsel), for bankrupts.
   WINSLOW, District Judge.

This is a motion to confirm the special master’s report-sustaining certain specifications of objection to the bankrupt’s discharge relating to the failure of the bankrupt firm to keep proper books, and the listing of fictitious debts in the schedules. Between the dates of December 12, 1923, and February 18, 1924, various specifications of objection and amended and supplemental specifications of objection were filed to the discharge of the bankrupts. They were referred to the referee in bankruptcy as special master to take the testimony and report thereon. The special master has had numerous hearings, at which witnesses appeared and documentary evidence was received, including the books kept by the bankrupts.

All of the specifications were dismissed as not proven, or because they were insufficient in law, except certain specifications filed on behalf of Simon Gulaek — No. 1, failure to keep proper books, and No. 3 as to the listing of fictitious debts, only — and also similar specifications described as amended and supplemental specifications of Amoskeag Manufacturing Company and Lawrence & Company, described as “First” (subdivision b) and “Fourth.” These specifications are sustained by the learned special master, and by reason thereof the special master reports that the application for discharge of the bankrupts, individually and as copartners doing business under the firm name and style of Sehiff Bros., should be denied.

This motion for confirmation now brings up for consideration the specifications referred to, sustained by the special master. The attorney for the bankrupts asks that the specifications be overruled and dismissed, and that the bankrupts be duly discharged.

I am of the opinion that the conclusion of the special master overruling all objections, except the ones referred to, is amply justified by the record. There therefore remains for consideration only the question of the propriety of the master’s conclusion as to the specifications sustained. These specifications, while filed by different creditors, are, in substance, the same and resolve themselves into two groups.

Specification No. 1 by the creditor Simon Gulaek, and specification fourth filed by other creditors, opposing the discharge of the bankrupts, allege that the bankrupts failed to keep propér books of account.

No. 3 of the Gulaek specifications and first (subdivision b) of the other creditors allege that the bankrupts made a false oath as to the bankrupts’ schedules in that the bankrupts included therein fictitious debts, (1) to Jennie-Sehiff, and (2) to Yetta Juliber.

In view of the court’s agreement with the learned special master with regard to all specifications, except those now referred to, it is unnecessary to consider the record, except as to these. The objections of specification are so related that for practical purposes they are one; that is to say, the schedules filed by the bankrupt set forth, among others, the following alleged fictitious debts, which appear on the books of Sehiff Bros.:

Jennie Sehiff, wife of Joseph Sehiff, bankrupt, $31,000.

Yetta Juliber, sister-in-law of bankrupt, $10,029.70.

No proof of these debts was filed, and the time for such filing has expired. But the books show entries thereon of such debts appearing in January, 1923.

The witness Joseph Sehiff testified before the special master, in regard to the debt alleged to be due Yetta Juliber, that he received this amount from her (his sister-in-law) in cash and cheeks; that this money represented estate and insurance of upwards of $10,000, received from her late husband’s estate; that, after investments by permission of Yetta Juliber, he later loaned it to the firm from time to time. There is other corroborating evidence. The books would seem to show that original entries were made therein, apparently related to this fund, not as a loan from Yetta Juliber, however, but from Joseph Sehiff. The firm’s books show that the account of Juliber was. set up on January 21, 1923, by the transfer of items aggregating $10,029.70 from the Jennie Sehiff account, which, in turn, had been transferred from the ledger account of Joseph Sehiff. In like manner, documentary and other evidence is presented to substantiate loans from Jennie Sehiff to Sehiff Bros., which supposed loans were entered in the account of Joseph Sehiff. These items were set up on the books by similar transfers. It is these transfers on the books to which, apparently, the special master has directed his attention in sustaining the specifications o£ objection' that proper books of account were not kept and fictitious debts were listed and sworn to. - The other objections based upon general ■ allegations were overruled and dismissed; so that it becomes important to direct attention to these alleged debts.

As stated, no proofs of claim of these debts have been filed, and it may be debatable whether, as a matter of law, they could be proven. The accountant, however, apparently ascertained, without difficulty, the status of the account from the books themselves. The making of the entries referred to and their transfer indicate an extremely careless and hazardous method of bookkeeping, but the question to be determined is whether these books disclose an intent on the part of the bankrupts to conceal their financial condition and bolster up fictitious accounts which were entered in the schedules. In re Hamilton (D. C.) 133 F. 823. ‘Bookkeeping methods alone do not disclose such intent, unless there be, in addition, circumstances or proof from which the presumption of evil intent may be drawn. In re Marcus v. Scherr, 27 Am. Bankr. Rep. 164, 192 F. 743.

■ The books must have been so falsely kept that the true financial condition of the firm could not be ascertained therefrom. If a competent accountant, from an examination of the b.ooks produced in the hands of the trustee, determines the true condition-of the debtor, this is sufficient to justify his discharge. Matter of Acomb, 33 Am. Bankr. Rep. 854.

While the testimony of the bankrupts before the special master is far from satisfactory, I do not think that the proof adduced is sufficient to warrant the conclusion that the books were falsified, or that the schedules, including the two particular áecounts under consideration,- were intentionally falsified, or that perjury was committed. Where the ground of objection depends upon an offense for which the bankrupt may be punished criminally, as in this case, a greater degree of proof should be required. In re Gaylord, 112 F. 668, 50 C. C. A. 415. The primary object of inclusion in schedules of every possible claim is to bar such listed persons from future legal action. If á bankrupt should omit claims where the liability is doubtful, he subjects himself to the possibility of enforcement of such claims in the future. It is true that a bankrupt might, on the other hand, include in his séhedules colorable or fictitious claims, thus depleting the fund and allowing friendly fraudulent claimants to. participate. In the -present instance, it is conceded that the questioned claims were not' proven so as to participate in a dividend, and any benefit which otherwise might have accrued to such claimants, if filed and if susceptible of proof, would, have been relatively small.

The report of the special master is most complete, and I am loath to disagree with him in his conclusion. After careful consideration, however, while there is much to justly criticize in the bankrupts' conduct, I am of the opinion that the specifications of objection, .to which special reference is herein directed, have not been sustained by that burden of proof required in the premises.

The specifications will be dismissed, and the bankrupts' discharge granted.


author: DAWKINS, District Judge.

text:
    GULF REFINING CO. OF LOUISIANA v. PHILLIPS, Tax Collector. SAME v. SANDLIN, Tax Assessor.
    (District Court, W. D. Louisiana, Shreveport Division.
    February 20, 1925.
    On Rehearing May 12, 1925.)
    Nos. 196, 199.
    1. Commerce <§x=72 — Oil stored awaiting transportation held subject to focal taxation.
    Oil in tanks, located on pipe lines extending from fields of production to refineries in another state, some of which had remained in storage for several months in the tanks, which were of greater capacity than required for con-, tinuous operation of the pipe lines and at all times contained a large quantity of oil, held not in course of interstate transportation, but to have a local situs, and to be subject to local taxation.
    2. Courts <§=>263 — Jurisdiction of federal court, once attached, extends to all questions involved.
    Where a suit involves the right of a state to tax property claimed to be in course of interstate transportation, a federal court, having acquired jurisdiction because of the constitutional question, has jurisdiction to determine all other matters involved therein.
    3. Schools and school districts <§=>97(l) — When issuance of bonds cannot be controlled by .courts, stated.
    Where the taxable property within a school district justifies the issuance of bonds under the state statute, the discretion of its officers as to the amount of bonds issued, the length of -time they are to run, etc., cannqt be controlled by the courts. •

      • In. Equity. Suit by the Gulf Refining Company of Louisiana against A. H. Phillips, Tax Collector, and against M. H. Sand-lin, Tax Assessor. On motion of respondent in the first ease for leave to introduce further evidence. Granted. Decree for respondent in second case.
    J. S. Atkinson and F. E. Greer, both of Shreveport, La. (D. Edward Greer, of Houston, Tex., of counsel), for complainant.
    Harry P. Sneed, of New Orleans, La., R. H. Lee and D. W. Stewart, both of Minden, La., and Robert A. Hunter, of Shreveport, La., for respondents.
   DAWKINS, District Judge.

These two suits have been submitted together for the reason that they involve the validity of state and local taxes sought to be collected in the one case and to be assessed in the other, against complainant’s property in the parish of Webster. In other words, in the first ease an injunction is asked to prevent collection of said taxes, and in the second to restrain a similar assessment for the succeeding year.

The property involved is the estimated average amount of crude oil contained in some 17 tanks situated near Dubberly, in said parish, during the years respectively for which the taxes are claimed. The principal contention of complainant (other than certain matters of procedure which I shall consider further on) is that the said taxes are “illegal, unconstitutional, null and void for the reason said oil on which said taxes were purported to be levied was never at any time at rest in Webster parish, as its destination, but on the contrary all of such oil at all times while within said parish was in actual transit through the parish in interstate commerce and was enroute from the state of Arkansas and from Claiborne parish, state of Louisiana, to the state of Texas, and, therefore, said purported levies and the said taxes claimed by reason thereof % * » are ^ yi0iati0n 0f sections 8 and 10 of article 1 of the Constitution of the United States. * * * ”

It is further contended that the special tax levied by the Dubberly school district is void for the reason that its attempted imposition is an unconscionable abuse of the taxing power, in fact a taking of .complainant’s property without due process of law and a denial to it of the equal protection of the law, in this, to wit: That after its said tanks were erected at Dubberly, a local school district known as Dubberly district No. 27 ■was designedly and fraudulently created so as to include its said property, and a bond issue of $50,000 authorized with the view and intention that approximately 80 per cent, of the taxes necessary to redeem the same with interest should be paid by complainant, since the attempted assessment against it represents that proportion of the entire taxable property within said district; that this illegal purpose is further disclosed by the fact that, instead of providing that said bonds should mature over a. long period of years, not to exceed 40 under the Constitution, as is usually done, the time was deliberately fixed at the extraordinarily short period of 5 years in order that the same might be paid before the oil fields from which complainant was obtaining its said oil could be exhausted; and that while it is thus called upon to pay such a large proportion of said taxes, “it receives no benefit, or far less benefit, from the school building than any other taxpayers in the district.” These contentions, which are common to both cases as well as to one previously heard by Judge Foster, formerly of the Eastern district of Louisiana, sitting in the place of the late Judge Jack, but now on the appellate bench of this circuit, are, of course, all controverted by the respondents. ■

The first and paramount question to be decided is one of mixed fact and law, and that is: Was the oil, at the time it was sought to be taxed, being transported in interstate commerce? If so, then all other issues necessarily disappear, for it is conceded that neither the state nor its subdivisions have the power to tax under such conditions.

The facts as I appreciate them are substantially as follows: Plaintiff and its associated companies have for many years been engaged in the production, transporting, and refining of- crude oil in the states of Louisiana and Texas. The source of production in Louisiana had been for many years, prior to 1919, mainly in the Northwestern and Southwestern portions of the state; but in the early part of the latter year, a very rich oil field was discovered in the parish of Claiborne, where none before had been found. It was located some 50 miles east of the Cad-do field. During the latter part of -1919 and early in 1920, complainant constructed a pipe line from- Ferguson in Claiborne, to Dubberly in Webster parish, and built at the latter point 17 tanks each of the capacity of approximately 55,000 barrels. The tanks cost between $350,000'and $400,000. In the months of January to April, inclusive, they were nearly all filled with oil, which condition continued throughout practically the remainder of the years 1920, 1921, 1922, and 1923; hut during the latter half of 1923 it had been greatly reduced, so that while there was some oil in all 16 of the tanks (1 in the meantime having been destroyed by lightning), at the end of 1923 it varied from a few hundred to a few thousand barrels each. About the latter part of March or first of April, 1920, complainant completed its pipe line from Dubberly to Bast Point on the south, and this gave it a connection through Mansfield, in De Soto parish, which permitted this oil to be delivered to the Gulf Refining Company of Tesas at the state line, as was already being done with oil produced in Red River and De Soto parishes. The capacity of the line leading into Dubberly, under ordinary conditions, was approximately 16,000 barrels, while the one running south from there was about half that size or could carry say 8,000 barrels per day. Bor pumping purposes from 2 to 4 tanks are ordinarily used.

After the discovery of oil in Uniop county, Ark., complainant received from that field, through pipes connecting with the one built from Berguson, oil which was also pumped into the tanks at Dubberly.

On March 25, 1922, complainant, through its tax commissioner, made a return to the assessor of Webster parish of its property for taxation showing an average of 526,170 barrels of oil in its tanks during the year 1921 (the basis of assessment being the average quantity on hand during the preceding year), valuing it at $1.58 per barrel, or a total of $831,340. This return was increased by the assessor to $1,104,967, but upon application to the Louisiana Tax Commission, the assessment was reduced to approximately the figures originally rendered by complainant. No return was made for 1923.

As heretofore indicated, the complainant seeks to prevent collection of the taxes for the years 1922 and 1923 and to enjoin the assessment of 1924. The case covering 1922 is in the hands of Judge Boster, while those for the two subsequent years are the ones now under consideration.

Since the submission of the present cases, respondent in No. 196 has filed a motion to reopen for the purpose of enabling him to prove that a certain resolution offered to the school board by one of its members for levying the school taxes of 1923 was actually adopted. This motion is strongly opposed by the complainant; but before adverting to it again, I shall dispose of the questions of law which are applicable to both eases.

The reason given by complainant for constructing so many tanks at Dubberly, 17, when ordinarily 2 to 4 would have been sufficient to serve a pumping station in transporting its oil, is that it could not get the iron pipe to connect its line from that point south, and it needed the extra tanks to take care of flush production in the newly discovered Claiborne field, as a means of holding it for shipment by rail; also, that at times there might be breaks below that station, and it would need these facilities to receive the oil while repairs were being made. However, as hereinabove stated, it is shown that oil was kept in all of the tanks throughout the entire period from 1920 to 1923, inclusive. In some eases the same oil was so held for several months, and in at least one instance, for approximately a year. In most other eases it varied from a few weeks to several months. In justification of this course, it is said that the policy was to always pump the freshest oil first, and this sometimes required that in the other tanks to be held longer than otherwise would have been done.

The facts as disclosed by the record, the substance of which I have related here, convince me that the tanks at Dubberly were intended to be used and were actually used as something more than means of facilitating the transportation of oil. There was at all times a very large and valuable property interest at rest in the state and parish enjoying the protection of local laws, and as such it owed the duty of support to state and parochial governments, the same as any other property.

Some objection has been made by respondent that this court is without jurisdiction to decide the local issues raised in these suits, but having acquired jurisdiction upon the constitutional question of the power to tax property claimed to be in interstate commerce, I am of the view that I have the right to decide all other matters arising in the cases. Siler v. L. & N. Ry. Co., 213 U. S. 175, 29 S. Ct. 451, 53 L. Ed. 753; Greene v. L. & I. R. Co., 244 U. S. 499, 37 S. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88.

Complainant has cited a number of cases to sustain its contention, among them Champlain Realty Co. v. Town of Brattleboro, 260 U. S. 366, 43 S. Ct. 146, 67 L. Ed. 309, 25 A. L. R. 1195; Stafford v. Wallace et al., 258 U. S. 495, 42. S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229; Lemke v. Farmers' Grain Co., 258 U. S. 50, 42 S. Ct. 244, 66 L. Ed. 458; Eureka Pipe Line Company v. Hallanan, 257 U. S. 265, 42 S. Ct. 101, 66 L. Ed. 227; United Fuel & Gas Company v. Hallanan, 257 U. S. 277, 42 S. Ct. 105, 66 L. Ed. 234; G. H. & S. A. R. R. Co., etc., v. State of Texas, 210 U. S. 217, 28 S. Ct. 638, 52 L. Ed. 1031.

It is well to repeat here that respondent concedes that the state and its subdivisions are without power to tax the oil, if as a matter of fact it was in continuous movement in interstate commerce, but does contend that the facts in these cases show a considerable quantity of it to have been held at rest in the tanks for such length of time and under such circumstances as to render it subject to local taxation.

In Champlain Realty Company v. Brat-tleboro, supra, the plaintiff had placed in the West river and its tributaries in Vermont about 10,000 cords of wood, to be carried by way of its conjunction with the Connecticut river at Brattleboro in said state to its mill at Hinsdale in the state of New Hampshire. The boom at the mill was incapable of holding the wood at flood stages of the Connecticut river, and much of it would have been lost if placed there under such conditions. Near the mouth of the West river in the state of Vermont, and within the town of Brattleboro, was a considerable pond, and here plaintiff maintained a boom for the purpose of holding said timber during high water. On March 25, 1919, the putting of its wood in the West river was started and a portion of it reached the town about March 27th, but, because of high water, was not moved forward until April 3d. Up to that time less than half of the 10,000 cords had reached Brattleboro. On March 28th the boom broke and allowed some of it to escape onto a meadow near the mouth of the river. The boom was repaired on March 29th, but at that time the part of the river called the “holding ground” was frozen so that the wood .could not be continued on its journey. It remained on the meadow for about two weeks after the boom was cut and floating recommenced to destination and had to be pulled back by a process called booming. The town of Brattleboro demanded payment of a local tax, which was done under protest, and suit was brought by the complainant to recover. The Supreme Court of Vermont rejected the claim upon the ground that the pond at Brattleboro amounted to a gathering station for the timber and the interstate journey did not actually begin until it had started down the Connecticut river. However, in reversing that decision, the Supreme Court of the United States, through the present Chief Justice, had this to say:

“The question here then is: Where did the interstate shipment begin? When the wood was placed in the waters of the West river in the towns of Jamaica, Strafton, London-berry and Winhall, or at the boom in Brat-tleboro ? The whole drive was -ten thousand cords. Six thousand cords of that, shipped from these towns after the 3d of April, went through directly to Hinsdale, N. H., without stopping. Certainly that was a continuous passage and the wood when floating in the West river was as much in interstate commerce as when on the Connecticut. Why was it any more in interstate commerce than that which had been shipped before April 3d from the same towns for the same destination by the same natural carrying agency, to wit, the flowing water of the West and Connecticut rivers? Did the fact that before April 3d the waters of the Connecticut were frozen, or so high as to prevent the logs reaching Hinsdale, requiring a temporary halting at the mouth of the West river, break the real continuity of the interstate journey? We think not. The preparation for the interstate journey had all been completed at the towns on the West river where the wood had been put in the stream. The boom at the mouth of the West river did not constitute an entrepot or depot for the gathering of logs preparatory for the final journey. It was only a safety appliance in the course of the journey. It was a harbor of refuge from danger to a shipment on its way. It was not used by the owner for any beneficial purpose of his own except to facilitate the safe delivery of the wood at Hinsdale on their final journey already begun. The logs were not detained to be classified, measured, counted or in any way dealt with by the owner for his benefit, except to save them from destruction in the course of their journey that, but for natural causes, over which he could exercise no control, would have been actually continuous. This was not the ease in Coe v. Errol. It is evident from the statement of that case, and Mr. Justice Bradley’s language, that the logs were partly drawn and partly floated to Errol and deposited some in the stream and some on the banks, where ‘they were to remain until it should be convenient to send them to their destination,’ and they were being gathered there for the whole previous winter season. It was an entrepot or depot as the justice several times describes it. The mere fact that the owner intended to send them out of the state under such circumstances did not put them into transit in interstate commerce. But here, we have the intention put into- accomplishment by launching, and manifested by an actually continu-eras journey of more than half the drive, with a halting of less than half of it in the course of the interstate journey to save it from loss, and only for ijhat purpose.”

It is thus seen that the court pitched its conclusion upon the proposition that the slight interruption in the interstate journey was caused by the necessities of the ease, conditions over which the shipper had no control, and without any element of convenience or choice on its part. Whereas, in the present ease, the eómplainant built the large number of tanks and used them for its own convenience. In other words, when it decided to enter the Claiborne field, it knew that it would have to provide storage facilities to take care of the flush production until means could be had to transport it, and to my mind the situation is no different from what it would have been had this tank farm been constructed at Ferguson instead of Dubberly and the oil held until the interstate journey had actually started. Complainant found it more convenient to build them at Dubberly, and the oil was collected and stored there until the pipe line could be built for pumping it on to the refinery at Port Arthur. Then, after the line was extended, it continued to receive and store for varying periods larger quantities than could be passed through the line south; the average on hand daily being approximately 40 to 50 times the quantity which could be pumped. The idea that this was a gathering station is very forcefully illustrated by the fact that the intake pipe to the tank farm had a capacity double that of the outflow.

In my opinion, the ease just analyzed comes nearer in its facts. to those under consideration than any of the others cited. Many of the latter involved attempts to interfere with interstate commerce by regulations and restrictions upon the business of dealing in particular kinds of property such as cattle, wheat, etc., while in the course of trade between the several states, and which, of course, is a power specifically delegated to Congress. Eureka Pipe Line v. Hallenan and United Fuel & Gas Company v. Same were in the nature of license taxes upon the business of the complainants. The difference between a license tax and a property tax is of course important. As was said by the Supreme Court in Wells Fargo & Company v. Nevada, 248 U. S. 165, 39 S. Ct. 62, 63 L. Ed. 190:

“The difference is vital, for, consistently with the commerce clause of the federal Constitution, the state could not tax the privilege or act of engaging in interstate commerce, but could tax the company’s property within the state, although chiefly employed in such commerce.”

And again, in St. Louis, etc., v. Missouri, 256 U. S. 314, 41 S. Ct. 488, 65 L. Ed. 946:

“Slightly condensed, it is that, while a state may not, in the guise of taxation, constitutionally compel a corporation to pay for’ the privilege of engaging in interstate commerce, yet this immunity does not prevent the state from imposing an ordinary property tax upon property having a situs within its territory and employed in interstate commerce. Even the franchise of a corporation, if not derived from the United States, al-, though that franchise is the business of interstate commerce, is subject to state taxation as a part of its property,”

The taxes sought to be imposed in the present ease are clearly property taxes, and if the oil had not started in interstate commerce, or if it had, and there had been such an interruption of the journey as to give it a situs in Webster parish, then it was liable to local taxation. An illustration of the first kind of eases — that is, where the journey had not commenced—is Coe v. Errol, 116 U. S. 517, 6 S. Ct. 475, 29 L. Ed. 715; while among those involving an interruption are to be found General Oil Company v. Crain, 209 U. S. 211, 28 S. Ct. 475, 52 L. Ed. 754; American Steel & Wire Company v. Speed, 192 U. S. 501, 24 S. Ct. 365, 48 L. Ed. 538, and Bacon v. Illinois, 227 U. S. 504, 33 S. Ct. 299, 57 L. Ed. 615. In the case of General Oil Company v. Crain, Inspector, it was said :

“We are brought, then, to consider whether the law would, if administered against the oils in controversy, violate any constitutional right of plaintiff in error.

“As determining an affirmative answer to this question, it is contended that the oil in both tanks was in transit from the place of manufacture, Pennsylvania, to the place of sale, Arkansas. The delay at Memphis, it ■is urged, was merely for the purpose of separation, distribution and reshipment, and was no longer than required by the nature of the business and the exigencies of transportation. The difference in the oil in tank No. 1 and that in tank No. 2, it is further said, is that the former was sold before shipment, and the latter was-to be held in Tennessee for sale, but in neither ease was the oil to be sold in Tennessee, and it is hence insisted that the interstate transit of the oil was never finally ended in Memphis, but was only temporarily interrupted there.

“The. .beginning and the ending of the transit which constitutes interstate commerce are easy to mark. The first is defined in Coe v. Errol, 116 U. S. 517, to be the' point of time that an article is committed to a carrier for transportation to the state of its destination, or started on its ultimate passage. The latter is defined to be in Brown v. Houston, 114 U. S. 622, the point of 'time at which it arrives at its destination. But intermediate between these points questions may arise. State v. Engel, 5 Vroom (N. J.) 435; State v. Carrigan, 10 Vroom (N. J.) 35; The Daniel Ball, 10 Wall. 557.

“In Pittsburg Coal Company v. Bates, 156 U. S. 577, coal in barges shipped from Pitts-burg, Pa., to Baton Rouge, La., was stopped about nine miles above destination. It was held that it had ceased to be interstate commerce, and was subject to taxation by the state of Louisiana.

“In Diamond Match Company v. Ontona-gon, 188 U. S. 82, logs in transit to a point without the state were held subject to- taxation under a statute of the state where they would ‘naturally leave the state in the ordinary course of transit.’

“‘In Kelley v. Rhoads, 188 U. S. 1, a flock of sheep driven from a point in Utah across Wyoming to a point in Nebraska for the purpose’ of shipment by rail from the latter point was held to be property engaged in interstate commerce and exempt from taxation by Wyoming under the statute taxing all live stock brought into the state ‘for the purpose of being grazed.’ There was no difficulty in the case except that which arose from the contention that the manner of transit was adopted as an evasion of the statute.' Otherwise the grazing of the sheep was as incidental as feeding them would be if transported by rail. The pertinence of the case to the present controversy is in its summary of the principles of prior eases expressed in the following passage: ‘The substances of these cases is that, while property is at rest for an indefinite time awaiting transportation, or awaiting a sale at its place of destination, or at an intermediate point, it is subject to taxation. But if it be actually in transit to another state, it becomes the subject of interstate commerce and is exempt from local assessment.’ Property, therefore, at an intermediate point between the place of shipment and ultimate destination may cease to be a subject of interstate commerce. Néeessarily, however, the length and purpose of the interruption of transit must be considered.

■ “In State v. Engle, Receiver, etc., 5 Vroom (N. J.) 425, 435, where coal mined in Pennsylvania was sent by rail to Elizabethport, in New Jersey, where it was deposited on the wharf for separation and assortment for the purpose of being shipped by water to other markets for the purpose óf sale, it was held that the property was not- subject to taxation in New Jersey. The court said: ‘Delay within the state, which is no longer than is necessary for the convenience of transhipment for its transportation to its destination, will not make it property within the state for the purpose of taxation.’ See also State v. Carrigan, 10 Vroom (N. J.) 36, where coal also shipped from Pennsylvania to a port in New Jersey and remaining there no longer than was necessary to obtain vessels to transport it to other places was held to be in course of transportation and not subject to the taxing power of the State. In Burlington Lumber Co. v. Willetts, 118 Illinois, 559, the principle was recognized that property in transitu was not subject to the taxing power of a state, but it was held that logs in rafts sent from Wisconsin to Burlington, Iowa, by the Mississippi river, a part of which were stopped at a place in Illinois called Boston Harbor, to be there kept until needed at Burlington for mill purposes, were subject to taxation. The court said that the property was ‘kept at New Boston on account of the profit of the owners to keep it there,’ and further, that the company was engaged in business in the state beneficial to itself, and its property was so located as to claim the protection of the laws of the state and hence was liable to taxation.

“Like comment is applicable to plaintiff in error and its oil. The company was doing business in the state, and its property was receiving the protection of the state. Its oil was not in movement through the state. It had reached the destination of its first shipment, and it was held there, not in necessary delay or accommodation to the means of transportation, as in State, etc., v. Engle, supra, but for the business purposes and profit of the company. It was only there for distribution, it is said, to fulfill orders already received. But to do this required that the property be given a locality in the state beyond a mere halting in its transportation. It required storage there — the maintenance of the means of storage, of putting it in and taking it from storage. The bill takes pains to allege this. ‘Complainant shows that it-is impossible, in the coal oil business, such as complainant carries on, to fill separately eách of these small orders directly from the railroad tank ears, because of the great delay and expense in the way of freight charges incident to such a plan, and for the further reason that an extensive plant and apparatus is necessary, in order to properly and conveniently unload and receive the oil from said tank cars, and it would be impracticable, if not impossible, to have such apparatus and machinery at every point to which complainant ships said oil.’

“This certainly describes a business — describes a purpose for which the oil is taken from transportation, brought to rest in the state and for which the protection of the state is necessary, a purpose outside of the mere transportation of the oil. The case, therefore, comes under the principle announced in American Steel & Wire Co. v. Speed, 192 U. S. 500.

“We have considered this case so far in view of the cases which involve the power of taxation. It may be that such power is more limited than the power to enact inspection laws. Patapsco Guano Co. v. Board of Agriculture, 171 U. S. 345, 356. The difference, if any exists, it is not necessary to observe. The cases based on the taxing power show the contentions of plaintiff in error are without merit; in other words, show that its oil was not property in interstate commerce.”

I also quote at length from the case of Bacon v. Illinois, as follows:

“The following facts are shown by the agreed statement: The grain had been shipped by the original owners who were residents of southern and western states, under contracts for its transportation to New York, Philadelphia and other eastern cities which reserved to the owners the right to remove it from the cars at Chicago ‘for the mere temporary purposes of inspecting, weighing, cleaning, clipping, drying, sacking, grading or mixing, or changing the ownership, consignee or destination’ thereof. While the grain was in transit it was purchased by Bacon, the plaintiff in error, who succeeded to the rights of the vendors under the contracts of shipment. He was represented at the points of destination by agents through whom he disposed of grain and other commodities on the eastern markets, and the grain in question was purchased by him solely for the purpose of being sold in this way and with the intention to forward it according to the shipping contracts; it was not his intention to dispose of it in Illinois. Upon the arrival of the grain in Chicago, Bacon availed himself of the privilege reserved and removed it from the ears to his private elevator. This removal, it is said in the agreed statement of facts, was for the sole purpose of inspecting, weighing, grading, mixing, etc., and not for the purpose of changing its ownership, consignee or destination. It is added that the grain remained in the elevator only for'such time as was reasonably necessary for the purposes above mentioned, and that immediately after these had been accomplished it was turned over to the railroad companies and was forwarded by them to the eastern cities in accordance with the original contracts of transportation. No part of the grain was sold or consumed in Illinois. It was while it was in Bacon’s elevator in Chicago that it was included in the assessment as a part of his personal property.
“But neither the fact that the grain had come from outside the state nor the intention of the 'owner to send it to another state and there to dispose of it can be deemed controlling when the taxing power of the state of Illinois is concerned. The property was held by the plaintiff in error in Chicago for his own purposes and with full power of disposition. It was not being actually transported and it was not held by carriers for transportation. The plaintiff in error had withdrawn it from the carriers. The purpose of the withdrawal did not alter the fact that it had ceased to be transported ánd had been placed in his hands. He had the privilege of continuing the transportation under the shipping contracts, but of this he might avail himself or not as he chose. He might sell the grain in Illinois or forward it as he saw fit. It was in his possession with the control of absolute ownership. He intended to forward the grain after it had been inspected, graded, etc., but this intention, while the grain remained in his keeping and before it had been actually committed to the carriers for transportation, did not make it immune from local taxation. He had established a local facility in Chicago for his own' benefit and while, through its employment, the grain was there at rest, there was no reason why it should not be included with his other property within the state in an assessment for taxation which was made in the usual way without discrimination. Woodruff v. Parham, supra; Brown v. Houston, supra; Coe v. Errol, supra; Pittsburgh & Southern Coal Co. v. Bates, 156 U. S. 577; Diamond Match Co. v. Ontonagon, supra; American Steel & Wire Co. v. Speed, supra; General Oil Co. v. Crain, supra.
“The question, it should be observed, is not with respect to the extent of the power of Congress to régulate 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. American Steel & Wire Co. v. Speed, supra, pages 521, 522. Thus, goods within the state may be made the subject of a nondiseriminatory tax though brought from another state and held by the consignee for sale in the original packages. Woodruff v. Parham, supra. In Brown v. Houston, supra, the coal on which the local tax was sustained had not been unloaded, but was lying in the boats in which it had been brought into the state and from which it was offered for sale. In Pittsburgh & Southern Coal Co. v. Bates, supra, coal had been shipped from Pittsburgh to Baton Rouge in barges which, to accommodate the owner’s business, had been moored about nine miles above the point of destination. The coal while remaining on the barges under these conditions was held subject to taxation. In General Oil Co. v. Crain, supra, the oil which had been brought from Pennsylvania to Memphis, a distributing point, was held in tanks, one of which was kept for oil for which orders had been received from Arkansas, Louisiana and Mississippi prior to the shipment from Pennsylvania, and which had been shipped especially to fill such orders. The tank was marked, ‘Oil Already Sold in Arkansas, Louisiana and Mississippi.’ The local tax upon this oil, which remained in Tennessee only long enough (a few days) to be properly distributed according to the orders, was sustained.
“In the present ease the property was held within the state for purposes deemed by the owner to be beneficial; it was not in actual transportation; and there was nothing inconsistent with the federal authority in compelling the plaintiff in error to bear with respect to it, in common with other property in the state, his share of the expenses of the local government.”

It so happens that in the present eases the complainant was both owner and carrier of the oil, but this can make no difference. If, instead, the pipe line had been a common carrier and the oil had been pumped into the tanks at Dubberly and shipped out as was done, the case could hardly be distinguished in principle from the one last quoted. In the latter, wheat was handled not only with the intention but under contracts of transportation to be carried to the eastern markets in other states; but since the interruption was for the shipper’s benefit, who might have sold it at that time, the court found that the interstate journey had been broken and upheld the tax. What was said there is equally applicable here, for not only was the holding voluntary and for complainant’s ’ benefit, but it did actually sell from Dubberly in the first two years of its operations a half million barrels of this oil. In other words, although property may be taken from the stream of commerce only for a short while, nevertheless, if done under such circumstances, it thereby becomes part of the mass of property within the local jurisdiction subject to taxation.

My conclusion, therefore, is that the facts do not warrant my finding the tax was laid upon property in interstate commerce. The basis of assessment was not unreasonable, but the same as was used with respect to all other property under similar circumstances.

With regard to the alleged fraudulent or oppressive purpose in creating the Dubberly school district No. 27, I do not believe that the facts sustain that contention. The matter, by the Constitution and laws of the state, is left to the discretion of the school authorities, subject to the approval of the property taxpayers' qualified to vote under the law, and I am convinced that all requirements to that end have been complied with. If they found that the taxable property justified the issuance of the bonds (and that of complainant has been lawfully included therein), the courts would not be authorized to substitute their judgment for that of such officers as to the amount, length of time, etc., within which the obligations should be paid.

Decree.

As to suit No. 196, I think I am justified in exercising the discretion which seems to be vested in me to reopen the ease for the purpose of permitting the proof sought by respondent’s motion to that end. The point of the alleged insufficiency of thé school board’s record to establish an actual levy of the taxes does not appear to have been fully disclosed until after the evidence had been taken and the ease submitted. I therefore believe the ends of justice require that respondent be given an opportunity to offer this additional evidence if it is to be had.

With regard to suit No. 199, I cannot assume that the assessor will pursue any different course in assessing complainant’s property from that used for the preceding years. If any condition should arise whereby it might be prejudiced in that respect, it will have the right to apply first to the assessing agencies of the state, and, if denied relief, then to the proper courts for protection. ■

It is therefore ordered that suit No. 196 be reopened in accordance with the prayer of respondent’s motion, and that suit No. 199 be, and the same is, dismissed, at complainant’s cost.

On Rehearing.

This case was reopened for the purpose of permitting the respondent to prove the passage of the ordinance levying the tax by introducing evidence to show that, although the language of the ordinance of the school board did not affirmatively disclose its adoption, nevertheless same was actually done and the property entered upon the assessment roll accordingly. I think the evidence offered on the new trial fully sustains the contention that the tax was properly levied.

The only other question which, has given me concern upon the rehearing is as to whether the assessment should be reduced to the extent of the oil contained in the tanks necessary for the operation of the pumping station, After further consideration, I am of the opinion that at least two of the tanks were necessary for this purpose, and that the assessment should be reduced by the amount of the daily average of oil contained in the tanks, Nos. 966 and 967 during 1922, the year upon which the assessment for 1923 was based. This was 18,278 and 31,917 barrels, respectively, which, at $1.65 per barrel, makes the sum of $82,811.75. The assessment made by the board was $778,165, which should be reduced to $695,353.25, and upon which the taxes levied should be' collected. Western Union Telegraph Company v. Rat-terman, 127 U. S. 411, 8 S. Ct. 1127, 32 L. Ed. 229.

The Act 170 of 1898, known as the Revenue Law of the State of Louisiana for that 'year, imposes certain penalties and attorneys fees upon those who enjoin the collection of a tax, and I think the facts in this ease warrant the assessment of the same against the complainant. Under this statute and subsequent amendments, unless the assessment is reduced as much as 25 per cent., the penalties and fees have to be paid. The injunction should therefore be sustained as to the average daily contents of the tanks Nos. 966 and 967, or, say, 50,195 barrels at the rate of $1.65 per barrel, and otherwise the demand of plaintiff should be rejected and the bill dismissed. The costs should be paid in the proportion of fifteen-seventeenths by complainant and two-seventeenths by respondent.

Let there be judgment accordingly.