author: BOOTH, Circuit Judge.

text:
    UNITED STATES v. TEN CASES, MORE OR LESS, BRED SPRED, Etc., et al.
    No. 8984.
    Circuit Court of Appeals, Eighth Circuit.
    March 25, 1931.
    Rehearing Denied May 4, 1931.

      John B. O’Donnell, Asst, to Sol., U. S. Department of Agriculture, pf Washington, D. C. (Ross R. Mowry, U. S. Átty., of Newton, Iowa, and W. Clifton Stone, Atty., Department of Justice, and Elton L. Marshall, Sol. U. S. Department of Agriculture, both of Washington, D. C., on the brief), for the United States.
    George W. Lennon, of Chicago, 111. (Daniel J. Schuyler, Charles Weinfeld, and William C. Graves, all of Chicago, 111., on the brief), for appellees.
    Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
   BOOTH, Circuit Judge.

This is. an appeal from a judgment after a directed verdict in favor of claimant, Glaser, Crandell Company, intervener, in a libel by the United States against ten cases, more or less, of Bred Spred, strawberry flavor, and other articles of food of similar character.

The libel proceedings were brought by virtue of the Food and Drugs Act, 21 USCA § 1 et seq. (34 Stat. 768). The libel contained three charges of adulteration and five charges of misbranding. The product involved was a food product, its use being indicated by its name.

The libel alleged a shipment in interstate commerce of the Bred Spred by the Glaser, Crandell Company; and prayed for a seizure of the product frr condemnation and confiscation.

The provisions of the statute hero deemed materia] are set out in the mafgin.

The answer set up an estoppel by reason of the record of a similar suit in the United States District Court for the Eastern District of Michigan, including a judgment of dismissal on the merits and a dismissal of an appeal by the United States, said record being set out at length in the answer. Denials of the charges of adulteration and misbranding were also set up in the answer.

On motion of the United States, the trial court, in the case at bar, struck out all that part of the answer relating to the alleged estoppel based on the record of the Michigan case.

A trial was had on the merits and at the close of the evidence introduced by the United States, on motion of the claimant, Glaser, Crandell Company, a verdict was directed in its favor and judgment entered dismissing the libel for want of proof of adulteration or misbranding.

The present appeal followed.

The facts, either admitted or shown by the testimony, are, as appears from the record, substantially as follows: Bred Spred, strawberry flavor, contains 17 parts of strawberries, 55 parts of sugar, 11% parts of water, % part of pectin, and .04 of a part of tartaric acid. Pectin is a fruit product found in considerable quantities in apples, and in different amounts in different fruits. It has the effect, if there are proper amounts of water, sugar, and acid present, to form a jelly. In a product such as Bred Spred, it forms a jelly with the water, sugar, and acid present, and keeps the fruit distributed— keeps it from floating to the top. Tartaric acid is a natural fruit acid and has nothing harmful in it. There is nothing harmful or deleterious in the product Bred Spred. It has some food value and some nutritive value. The label on the jars containing Bred Spred was in part as follows: “Bred Spred (pictorial design of fruit) Strawberry * * * Flavor, Glaser, Crandell Co., Chicago, Net Weight 4 pounds.” There were other flavors such as peach, pineapple, blackberry, ete.

The jars of Bred Spred here in controversy had been shipped in interstate commerce.

Jam is considered by manufacturers as not less than 45 parts of fruit to 55 parts of sugar. Housekeepers usually make jam of 50 per cent, fruit and 50 per cent, sugar.

In addition to the foregoing facts, appearing in the record, there were introduced exhibits, about eight in number, consisting of jars of jam and jars of Bred Spred,*the latter being part of those seized and sought to be condemned and confiscated. None of these exhibits have been brought before this court.

The main contentions of appellant in this court are that the trial court erred in not submitting the questions of adulteration and misbranding to the jury.

The claimant not only opposes these contentions, but urges affirmatively that both questions were res adjudieata by reason of the Michigan judgment, and asks that this court so hold.

We take up first this request of the claimant.

It is to be noted that the claimaht made no. cross-assignments of error, and took no cross-appeal. Perhaps this was not feasible, inasmuch as the judgment was in claimant’s favor and was not divisible into parts. Zoline’s Fed. App. Juris. & Proc. (3d Ed.) § 138. However, claimant contends that, inasmuch as the record of the Michigan case is in the record of the present ease, this court should examine the same and pass upon the question of res adjudieata.

That the Supreme Court of the United States would have power so to do, if the appeal were pending before it, appears to be settled. Langnes v. Green, 282 U. S. 531, 51 S. Ct. 243, 75 L. Ed.-; Story Parchment Co. v. Paterson Parchment Paper Co., 282 U. S. 555, 51. S. Ct. 248, 75 L. Ed.-.

Whether this court has such power we need not decide. Even conceding the,existence of the power, we think it should not be exercised in the instant case.

It has long been the general rule of practice in law cases in the federal courts that questions decided adversely to the defendant in error (now the appellee), in the course of the trial in the lower court, will not be considered in the appellate court, in the absence of a cross-appeal. Cleary v. Ellis Foundry Co., 132 U. S. 612, 10 S. Ct. 223, 33 L. Ed. 473; Bolles v. Outing Co., 175 U. S. 262, 268, 20 S. Ct. 94, 44 L. Ed. 156; Pauly, etc., Co. v. Hemphill County (C. C. A.) 62 F. 698, 703; Guarantee Co. of N. A. v. Phenix Ins. Co., 124 P. 170 (C. C. A. 8); Ætna Ind. Co. v. J. R. Crowe, etc., Co., 154 P. 545, 567 (dissenting opinion) (C. C. A. 8); Midland Valley R. Co. v. Fulgham, 181 F. 91, 95 (C. C. A. 8); Philadelphia Cas. Co. v. Fechheimer (C. C. A.) 220 P. 401, 418, Ann. Cas. 1917D, 64; see Peoria Ry. Co. v. United States, 263 U. S. 528, 535, 536, 44 S. Ct. 194, 68 L. Ed. 427; The Maria Martin, 12 Wall. 31, 40, 20 L. Ed. 251; Board of Com’rs of Shawnee County v. Hurley, 169 F. 92 (C. C. A. 8); O’Neil v. Wolcott Min. Co., 174 F. 527, 535, 27 L. R. A. (N. S.) 200 (C. C. A. 8); Swig v. Tremont Tr. Co. (C. C. A.) 8 F.(2d) 943, 945.

While libel proceedings such as the one in the case at bar are likened in the statute (21 USCA § 14) to proceedings in admiralty, yet this similarity is largely confined to the seizure of the property by process in rem. The method of review-follows the practice in law actions. Pour Hundred and Porty-Three Cans of Egg Product v. United States, 226 U. S. 172, 183, 33 S. Ct. 50, 57 L.Ed. 174; United States v. Seven Hundred and Seventy-Nine Cases of Molasses, 174 F. 325 (C. C. A. 8); United States v. Hudson Mfg. Co. (C. C. A.) 200 P. 956; Lexington, etc., Co. v. United States, 202 F. 615 (C. C. A. 8).

In view of these considerations, we think the question of res adjudieata presented by the claimant should not be reviewed by us.

We turn to the questions presented by the appellant.

The purpose of the Pood and Drugs Act is well established. In United States v. Lexington Mill Co., 232 U. S. 399, page 409, 34 S. Ct. 337, 340, 58 L. Ed. 658, L. R. A. 1915B, 774, the court, in its opinion, used the following language: “The statute upon its face shows that the primary purpose of Congress was to prevent injury to the public health by the, sale and transportation in interstate commerce of misbranded and adulterated foods. The legislation, as against misbranding, intended to make it possible that the consumer should know that an article purchased was what it purported to be; that it might be bought for what it really was, and not upon misrepresentations as to character and quality. As against adulteration, the statute was intended to protect the public health from possible injury by adding to articles of food consumption poisonous and deleterious substances which might render such articles injurious to the-health of consumers.”

The position of the appellant is thus stated by its counsel in their brief: “In the instant case there is no charge against the name 'Bred Spred’ as such, but against the adulteration of the article because it was mixed so as to conceal its inferiority, and the misbranding of the article because it was an imitation of another article, jam.”

The statutory provision relied upon as to adulteration reads: “Damage or inferiority concealed. — Fourth. If it be mixed, colored, powdered, coated, or stained in a manner whereby damage or inferority is concealed.” 21 USCA § 8.

It is apparent that two things were required to be proven in the case at bar, as respects adulteration: First, that Bred Spred was a damaged or an inferior food product, because one or more of its constituents was damaged or inferior; second, that it was mixed in a manner whereby the inferiority was concealed. There was no proof of either of these matters. There was no proof that Bred Spred contained any damaged or any harmful or deleterious substance. The word “inferiority” in the statute raises the question, What is the other member of the comparison? Or, in other words,, the question, Inferior to what? The use of the word “damage” in connection with the word “inferiority” is significant. The word “damage” in this connection means that an ingredient has suffered a loss of strength or quality; the word “inferiority” means that an ingredient is, in the first instance, of low grade' or quality. Nothing of this kind is shown by the evidence as to the elements going to make up Bred Spred. The strawberries, the sugar, the peetip, the tartaric acid, the water, were none of them, so far as the evidence shows, either damaged or of low grade; nor was the resulting product either damaged or of low-grade quality. The mere fact that the product contained fewer strawberries than some other product, e. g., jam, does not show that Bred Spred was inferior to jam; nor does it show that a comparison with jam was called for by the statute unless Bred Spred was being palmed off on the publie as jam. No showing of this kind was made.

As to the matter of misbranding, the evidence clearly shows that the label contained no false or misleading statements; and, therefore, did not come within that definition of misbranding contained in section 10 of the statute. But the government contends that misbranding, under section 10, includes imitation of some other article, and that, in this case, Bred Spred was an imitation of jam. Conceding, but without- deciding, that the construction of the statute contended for by the government is correct, yet there is no evidence in the case that Bred Spred was an imitation of jam. Such imitation would, naturally, be disclosed by the tests of appearance, of taste, of smell. But, although there were introduced in evidence, in the trial court, physical exhibits consisting of jars of Bred Spred and jars of jam, these physical exhibits have not been brought by the government to this court. Nor is there other evidence in the case showing imitation. On such a record, we cannot hold that the ruling of the trial court was error.

One other matter is called to our attention by appellant. The government offered to show by one of its witnesses, a grocer, ■“that a product consisting of 17 parts of strawberry, 55 parts of sugar, 11-% parts of water, one-fourth part of pectin and a small amount of tartaric acid, is an imitation of strawberry jam.” Objection was made to this offer and the objection was sustained. We think there was no error in the ruling. The matter was not one calling for expert testimony, and especially so when the physical articles themselves were present in court.

We find no error in the record, and the judgment is accordingly affirmed.

       “§ 8. Adulterated articles. For the purposes of sections 1 to 15, inclusive, of this title, an article shall be deemed to be adulterated. ** * *
      “Food. In the case of food:

        “Injurious mixtures. — First. If any substance has been mixed and packed with it so as to reduce or lower or injuriously affect its quality or strength. * * *

        “Damage or inferiority concealed. — Fourth. If it be mixed, colored, powdered, coated, or stained in a manner whereby damage or inferiority is concealed.
      * * *
      “§ 9. Misbranded; meaning and application. The term ‘misbranded/ as used in sections 1 to 15 inclusive, of this title, shall apply to all drugs, or articles of food, or articles which enter into the composition of food, the package or label of which shall bear any statement, design, or device regarding such article, or the ingredients or substances contained therein which shall he false or misleading in any particular, and to any food or drug product which is falsely branded as to the State, Territory, or country in which it is manufactured or produced.
      “§ 10. Misbranded articles. For the purposes of sections 1 to 15, inclusive, of this title, an article shall be deemed to be misbranded; * * *
      “Foods. In the case of food:

        “Imitation or use of name of other article. — First. If it be an imitation of or offered for sale under the distinctive name of another article. * *

        “False or misleading statements on package or ■label as to ingredients or substances. — Fourth. If the package containing it or its label shall bear any statement, design, or device regarding the ingredients or the substances contained therein, which statement, design, or device shall be false or misleading in any particular. An article of food which does not contain any added poisonous or deleterious ingredients shall not be deemed to be adulterated or misbranded in the following cases: t

        “Mixtures or compounds under distinctive names. —First. In the case of mixtures or 'compounds which may be now or from time to time hereafter known as articles of food, under their own distinctive names, and not an imitation of or offered for sale under the distinctive name of another article, if the name be accompanied on the same label or brand with a statement of the place where said article has been manufactured or produced.

        “Articles labeled, branded as compounds, imitations, or blends; construction of term 'blend*; disclosure of trade formulas of proprietary foods. — Second. In the case of articles labeled, branded, or tagged so as to plainly indicate that they are compounds, imitations, or blends, and the word ‘compound,’ ‘imitation,’ or ‘blend,’ as tbe case may be, is plainly stated on tbe package in which it is offered for sale. The term blend as used herein shall be construed to mean a mixture of like substances, not excluding harmless coloring or flavoring ingredients used for the purpose of coloring and flavoring only. Nothing in sections 1 to 15, inclusive, of this title shall be construed as requiring or compelling proprietors or manufacturers of proprietary foods which contain no unwholesome added ingredient to disclose their trade formulas, except in so far as the provisions of such sections may require-to secure freedom from adulteration or misbranding.”


source: Caselaw Access Project

author: PHILLIPS, Circuit Judge.

license: Public Domain

text:
    BOARD OF EDUCATION OF TOWN OF CARMEN, OKI., et al. v. JAMES. BOARD OF EDUCATION OF TOWN OF HELENA, OKL., et al. v. SMITH.
    Nos. 335, 336.
    Circuit Court of Appeals, Tenth Circuit.
    March 30, 1931.

      W. Adelbert Dillon, of Cherokee, Okl., M. K. Cruce and Ben Franklin, both of Oklahoma City, Okl., and A. J. Titus and Ira A. Hill, both of Cherokee, Okl., for appellants.
    Eugene Jordan, of Tulsa, Okl., and Chas. E. McPherren, J. D. Lydiek, and Hayes, Richardson, Shartel, Gilliland & Jordan, all of Oklahoma City, Old., for appellees.
    Before COTTERAL, PHILLIPS, and MeDERMOTT, Circuit Judges.
   PHILLIPS, Circuit Judge.

Opinion in No. 335.

Heberd James, as the owner and holder of ten funding bonds and interest coupons attached thereto, dated January 25, 1921, and issued by the board of education of the town of Carmen, Alfalfa county, Oklahoma, brought this suit against such board of education, the excise board of Alfalfa county, and the officers and individual members of such boards to secure a mandatory injunction enjoining and restraining such boards, officers and individual members-from taking funds in the sinking fund of such board of education created to pay the-principal and interest of such bonds and diverting them to other purposes; from refusing to perform their legal duty to make an itemized statement of the estimated needs of such board of education to pay the interest maturing on such bonds and to create a sinking fund for the purpose of paying the principal thereof at maturity; from refusing to make an appropriation for such sinking fund; from refusing to compel the collection of tax levies to pay such interest and create such sinking fund; from asserting any defense to such funding bonds under the decision of the Supreme Court of Oklahoma in Eaton v. St. Louis-San Francisco Ry. Co., 122 Okl. 143, 251 P. 1032; and from refusing to pay such principal and interest according to the tenor of such bonds, and for a decree establishing the validity of such bonds and plaintiff’s title thereto.

Jurisdiction is predicated upon diversity of citizenship.

The facts, as disclosed by the admissions in the pleadings and the agreed statement of facts, are as follows: On January 25, 1921, in a cause pending in the district court for Alfalfa County, Oklahoma, entitled “Buxton v. Independent School Dist. No. 77” (the Carmen district), and numbered 2046, a judgment was entered in which the court found that the school district was indebted to Buxton in the sum of $13,500, and adjudged that Buxton have and recover judgment against the school district for that amount, with interest at 6% from the date thereof. The board of education voluntarily entered its appearance in that cause and admitted that the indebtedness sued on was due and unpaid.

On March 7, 1921, there was filed in the district court of Alfalfa County an action styled “In The Matter of the Application of Board of Education of Town of Carmen, Alfalfa County, in the State of Oklahoma, to Determine the Existence, Character and Ainount of Its Legal Outstanding Judgment Indebtedness, and to Issue Its Bonds to Fund the Same,” and numbered 2066. On the same day, a judgment was entered in such proceeding which, with the exception of the caption, is fully set out in marginal note .

Plaintiff is the holder and owner of bonds Nos. 3 to 12, inclusive, and coupons Nos. 14 to 40, inclusive, attached to each of said bonds.

Bond No. of the thirteen bonds authorized by such judgment^ the certificates affixed thereto, and coupon No. 14 attached thereto, are set out in marginal note .

Coupons Nos. 15 to 40 matured consecutively January 1 and July 1 in each, of the years 1929 to 1941, inclusive.

No proceeding or action of any kind was instituted within thirty days from June 4, 1921, the date such bonds were approved by the Attorney General and ex-officio bond commissioner of Oklahoma, for the purpose of contesting in any manner the legality of sueh bonds.

About July 5, 1921, such bonds were delivered to the owners and holders of such judgment indebtedness. On December 14, 1921, plaintiff purchased bonds Nos. 3 to 12, inclusive, from the Fidelity National Bank of Kansas City and paid therefor par and accrued interest. Before purchasing sueh bonds, plaintiff made no inquiry 'or investigation of any kind of the records of Alfalfa county to ascertain other outstanding indebtedness or the assessed valuation of the school district. At the time of sueh purchase, plaintiff relied upon the recitals in sueh bonds and certificates attached thereto, and upon sueh funding bond judgment.

At the times judgments in No. 2046 and No. 2066 were rendered, there was on file in the office of the county clerk of Alfalfa county an assessment of school district No. 77 which showed that the assessed valuation of sueh district for the year 1920, approved by the excise board of that county on September 3, 1921, was $1,435,682.

At the time such funding bonds were issued and delivered, there was an outstanding bond issue of sueh school district dated April 1, 1920, aggregating $72.000, and sueh facts were shown in school District Bond Register No. 2, an official record in the office of the county treasurer of Alfalfa County-

Defendants offered to prove that the indebtedness sued upon in No. 2046 had not been included in the financial statement and estimate filed by the school board and approved by the excise board for the year in which such indebtedness was incurred. Upon objection of plaintiff, this offer was denied.

Since July 1, 1928, such boards and officials have refused to make the necessary estimates and tax levies to pay the interest on, and to create a sinking fund for the payment of the principal of such bonds, and will continue to do so in the future because of the decision of the supreme court in Eaton v. Railway Co., supra.

The trial court entered a decree granting the relief prayed for, and the defendants have appealed.

Section 26 of article 10 of the Oklahoma Constitution in part provides:

“No county, city, town, township, school district, or other political corporation, or subdivision of the State, shall be allowed to become indebted, in any manner, for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of three-fifths of the voters thereof, voting at an election, to be held for that purpose, nor in cases requiring such assent, shall any indebtedness be allowed to be incurred to an amount including existing indebtedness, in the aggregate exceeding five per centum of the valuation of the taxable property therein, to be ascertained from the last assessment for State and county purposes previous to the incurring of such indebtedness. * * * ”

Section 28 of article 10 of the Oklahoma Constitution in part provides:

“Sinking funds of town, counties, etc. Counties, townships, school districts, cities, and towns shall levy sufficient additional revenue to create a sinking fund to be used, first, for the payment of interest coupons as they fall due; • second, for the payment of bonds as they fall due; third, for the payments of such parts of judgments as such municipality may, by law, be required to pay.”

Section 29 of article 10 of the Oklahoma Constitution in part- provides:

“No bond or evidence of indebtedness of this State shall be valid unless the same shall have endorsed thereon a certificate, signed by the Auditor and Attorney General of the State, showing that the bond or evidence of debt is issued pursuant to law and is within the debt limit. No bond or evidence of debt of any county, or bond of any township or any other political subdivision of any county, shall be valid unless the same have endorsed thereon a certificate signed by the County Clerk, or other officer authorized by law to sign such certificate', and the County Attorney of the county, stating that said bond, or evidence of debt, is issued pursuant to law, and that said issue is within the debt limit.”

Section 4267, C. O. S. 1921 (section 362, Revised Laws Okla. 1910), provides that municipalities, including towns, townships and school districts, are empowered to refund “indebtedness, including bonds, judgments and warrants,” but the same “shall not exceed in amount the actual amount of outstanding indebtedness, inclusive of attached coupons.”

Section 4269, C. O. S. 1921, provides that the officers of the-munieipality shall give at least ten days’ notice by publication and by posting of the time when the municipality will present to the state district court an application to determine the amount of the legal outstanding indebtedness of the municipality and ask the court to hear and determine the same, and to fix, sign and issue funding bonds in an amount sufficient to pay such indebtedness; and that any person interested in the proceedings may appear and remonstrate against the issuance of such bonds.

Section 4270, C. O. S. 1921, provides that on the date so fixed, the authorized officer of the municipality shall appear before the court named and make due proof of the “existence, character and amount of the outstanding legal indebtedness of said municipality” to the “satisfaction of the court”; that “on such proof being made the court shall cause to be made, upon the records of the court, a statement and finding to that effect and shall then, in open court, proceed to sign each bond to be issued, up to the amount of said indebtedness so proven and approved, and shall, after expiration of the time for taking appeals, if no appeal be taken, deliver the same to the treasurer of said municipality issuing the same, who shall' be chargeable therefor, and shall be liable on his official bond for said bonds.”

This section further provides for an appeal from the judgment of the district court,, and that, in the event of an appeal, the bonds shall not he delivered to the treasurer of the municipality until the final determination of such appeal.

Section 4271, C. O. S. 1921, provides that the bonds shall be signed' and attested by certain designated municipal officers.

Section 4272, C. 0. S. 1921, provides that when “a refunding has been agreed upon, it shall be the duty of the proper officers to issue such bonds at the rate agreed upon, to the holder of such indebtedness, in the manner prescribed,” but that no bond shall be issued until the proper evidence of the indebtedness for which issued shall be delivered up and canceled.

Section 4273, C. 0. S. 1921, provides for the registration of the bonds in the office of the clerk of the municipality, county clerk and state auditor.

Section 4274, C. 0. S. 1921, provides for the levy of taxes to pay the bonds.

Sections 4283 — 4—5, C. 0. S. 1921, provide that the Attorney General shall be ex-officio bond commissioner and that he shall prepare uniform forms and prescribe the method of the procedure in all cases where it is decided to issue public securities for bonds in any municipality, and that it shall be his duty to “examine into and pass upon any such securities so issued, and any such securities when declared by the certificate of said bond commissioner to be issued in accordance with the law and procedure so provided, shall be incontestable in any court in the state of Oklahoma, unless suit thereon be brought in a court having jurisdiction of same within thirty days from the date of approval thereof by the bond commissioner” and that no bond issued by any political or municipal subdivision of the state shall be valid without the certificate of such bond commissioner.

Counsel for defendants contend: (1) That the judgment in No. 2046 was void because the petition therein failed to state a cause of action and because no process was-issued and served upon the board of education and the attempt, on the part of the board of education, to enter its appearance .and confess judgment, was unauthorized. (2) That the indebtedness sought to be funded was invalid, and therefore the funding bond judgment is void and is subject to collateral attack. (3) That the funding bond .judgment was void because, when considered with other outstanding indebtedness of the ■school district, it exceeded 5% of the assessed valuation of the school district, and violated the 5% limitation prescribed by section 26 of article 10 of the Oklahoma Constitution. (4) That records were required to be kept by the county officials and the school board showing the assessed valuation of the school district and its existing indebtedness; that such records were easily and readily ascertainable and that purchasers of -such bonds were charged with knowledge of the contents thereof, notwithstanding the reeitals in the funding judgment and in the bonds themselves. (5) That neither the Constitution nor laws of Oklahoma authorize the endorsement on funding bbnds of any recitals as to their validity, and that the school district is not estopped, on account of the recitals in the bonds and the certificates attached thereto, from showing the invalidity of the indebtedness refunded.

Defendants’ contentions 1 and 2 may be considered together. They are supported by the decisions of the Supreme Court of Okla-' homa in Eaton v. Railway Co., supra, and Faught v. City of Sapulpa, 145 Okl. 164, 292 P. 15. These cases, however, were both decided long after the bonds in the instant case had been issued and delivered and had passed into the hands of bona fide purchasers.

Where municipal bonds have been issued and delivered, under the statute of a state, and thereafter the state courts have rendered decisions holding bonds issued under like circumstances to be invalid, a federal court is not bound by such state court decisions, and it is not only the right but the duty of such federal court, in passing upon the validity of such bonds, to exercise an independent judgment. Folsom v. Township Ninety-six, 159 U. S. 611, 16 S. Ct. 174, 40 L. Ed. 278; Carroll County v. Smith, 111 U. S. 556, 4 S. Ct. 539, 28 L. Ed. 517; Burgess v. Seligman, 107 U. S. 20, 2 S. Ct. 10, 27 L. Ed. 359; Pine Grove Township v. Talcott, 19 Wall. 666, 22 L. Ed. 227; Mothersead v. U. S. F. & G. Co. (C. C. A. 8) 22 F.(2d) 644; Fetzer v. Johnson (C. C. A. 8) 15 F.(2d) 145.

The validity of municipal bonds arising in a suit in a federal court will be determined by the law as judicially declared by the highest court of the state when the bonds were issued, and the rights and obligations of the parties, which accrued under such a state of the law, will not be affected by a different course of judicial decisions subsequently rendered, any more than by subsequent legislation. Douglas v. County of Pike, 101 U. S. 677, 25 L. Ed. 968; Wilkes County v. Coler, 180 U. S. 506, 531, 21 S. Ct. 458, 45 L. Ed. 642; Id., 190 U. S. 107, 23 S. Ct. 738, 47 L. Ed. 971; Loeb v. Columbia Township, Trustees, 179 U. S. 472, 490-493, 21 S. Ct. 174, 45 L. Ed. 280; First National Bank v. Obion County (D. C. Tenn.) 3 F.(2d) 623, 627; Thompson v. Perrine, 103 U. S. 806, 26 L. Ed. 612.

The opinions of the Supreme Court in Central Land Co. v. Laidley, 159 U. S. 103, 111, 16 S. Ct. 80, 40 L. Ed. 91, and Ross v. Oregon, 227 U. S. 150, 33 S. Ct. 220, 57 L. Ed. 458, to the effect that a decision of a state court overruling its prior decision and determining the rights of the parties contrary to its decisions in force when such rights accrued does not present a question of federal right under the contract clause of the Constitution of the United States (article 1, § 10, cl. 1), do not in any wise limit or overrule the’ doctrine of the cases above cited. Loeb v. Columbia Township, supra, page 493 of 179 U. S., 21 S. Ct. 174.

It follows that the decisions relied upon by counsel for defendants are not controlling and it therefore becomes necessary to determine the state of the applicable decisions of the Supreme Court of Oklahoma at the time the bonds in question were issued and delivered. It may be noted, in passing, that all of the procedural requirements in connection with the issuance and delivery of the bonds in question, including the proceeding leading up to the funding judgment, were carried out in strict accord with the statutory requirements and the existing decisions of the Supreme Court of Oklahoma.

In State ex rel. Board of Education v. West, 29 Okl. 503, 118 P. 146, 147, the court said:

“There seems to be no question as to the regularity of the refunding proceedings under the act of 1905, but the Attorney General bases his refusal to approve the proposed bond issue upon the ground that that act, if extended to and put in force at all by section 2 of the schedule to the Constitution, must be held to be modified by the law creating the office of bond commissioner to the extent of authorizing the Attorney General to examine the refunding proceedings and reject the issue if in his opinion any part of the indebtedness sought to be refunded is illegal, notwithstanding the district court may have judicially found to the contrary. This position cannot be sustained. * * * The act under which the'bonds were issued expressly provides for a proceeding in court against all the parties who may be prejudicially affected by the issue of the bonds to obtain a judicial determination and judgment as to the validity and regularity of the indebtedness to be funded, which judgment constitutes a final and conclusive basis for further action by any public official whose acts are essential to the validity of the bonds. Section 2 provides for giving notice of the application, and expressly provides that any person interested may remonstrate against the issuance of the same. Section S provides that the bonds cannot be delivered until after the expiration of the time for taking an appeal, and further expressly provides that appeals from the judgment of the court shall be allowed as provided by law, and, .if an appeal be taken, the bonds cannot be delivered to the treasurer of the municipality until the final determination of the appeal. Every step essential to a contested litigation is provided. The parties to that litigation are the officers of the district or municipality who seek to exercise the power to issue the bonds on the one hand, and the taxpayers and inhabitants of the municipality on the other. The inhabitants and taxpayers are the members of the corporation, the officers are the duly chosen official representatives of the corporation and the corporation itself is but an instrumentality of the state for the transaction of public business. When a judgment in such a proceeding is rendered, it necessarily binds and concludes all these. The hearing is had before the court which exercises the judicial authority of the state, and the judgment rendered in the proceeding is a judgment by the state that its instrumentality and the chosen officers and representatives thereof are acting according to law, and that the warrant indebtedness sought to be. funded is valid; that the bonds proposed to be issued, signed, and attested by the court are the valid and binding obligations of the municipality; and that they are issued with the final sanction of a judgment of a competent court which has decided every question in relation to their validity. s * * It is the opinion of the court that the decision of the district court validating the warrants and authorizing the funding of the same and signing the funding bonds remaining unappealed from concludes the question as to the validity of the refunding issue, and forecloses the Attorney General from reversing the judgment thus solemnly reached. Territory v. Hopkins, 9 Okl. 133, 59 P. 976; Board of Commissioners of Day County v. State of Kansas, 19 Okl. 375, 91 P. 699.”

In Prince v. St. L. & S. F. Ry. Co., 110 Okl. 141, 237 P. 106, 110, the court said:

“The recital in the journal .entry of judgment, that the bonds to be issued to fund the said indebtedness, together with all other outstanding indebtedness of the board of education, do not exceed any constitutional or statutory limitation of the state, is the solemn finding and judgment of a court of competent jurisdiction, made after full hearing had, after due legal notice given to the defendant and all others interested to be present and remonstrate if they so desired, and, the defendant having been duly served with notice as required by the statute to be present, and failing so to do, defendant can-no.t now be heard to contest the finding of the court at the hearing of the application.
“The journal entry of judgment contained all the necessary averments and findings required by the Constitution and statutes of the state to validate the bonds, and, the judgment of the court being not appealed, such judgment became final, and is not subject to collateral attack.”

Other decisions of the Supreme Court of Oklahoma to the same effect are: Territory ex rel. Jones v. Hopkins, 9 Okl. 133, 59 P. 976; Board of Commissioners of Day County v. State of Kansas, 19 Okl. 375, 91 P. 699; State ex rel. Board of Education v. West, 29 Okl. 503, 118 P. 146; Lawton v. Ayres, 40 Okl. 524, 139 P. 963; Hume v. Wyand, 68 Okl. 261, 173 P. 813; Board of Education v. Short, 89 Okl. 2, 213 P. 857; Schulte v. Board of County Com’rs, 119 Okl. 261, 250 P. 123.

Prom these decisions, it is clear that the funding bond statute makes provisions for a judicial investigation, determination and judgment with respect to the validity and regularity of the indebtedness sought to be funded, and that a final judgment in such proceeding is “a judgment by the state that its instrumentality and the chosen officers and representatives thereof are acting according to law, that the * * * indebtedness sought to be funded is valid; that the bonds proposed be issued, signed and attested by the court are the valid and binding obligation of the municipality; and that they are issued with the final sanction of the judgment of a competent court which has decided every question in relation to their validity.” It follows that, if the decisions of the Supreme Court of Oklahoma in force at the time the bonds in question were issued and delivered are to be followed, the judgment in the funding case must be accepted in this, a collateral proceeding, as a final and conclusive determination that the judgment against the district was a valid indebtedness and that the funding bonds issued to refund the same were issued according to law and were valid.

Defendants’ third contention is that the bonds were invalid because they exceeded the limitations provided by section 26 of article 10 of the Oklahoma Constitution. Section 26 contains two limitations: First, a general limitation that the indebtedness of a municipality in anjr year shall not exceed its income and revenue provided for such year without the assent of three-fifths of the voters of the municipality voting at an election held for that purpose. Second, that an indebtedness incurred with the assent of three-fifths of such voters, together with the municipality’s existing indebtedness, shall not exceed 5% of the valuq of the taxable property of such municipality, as shown by the last assessment previous to the incurring of such indebtedness. Faught v. City of Sapulpa, 145 Okl. 164, 292 P. 15, 24, 25.

The 5% limitation has no application unless an indebtedness is sought to be incurred in excess of the income and revenue provided. An indebtedness within the income and revenue provided, although it, together with the existing indebtedness, exceeds 5% of the assessed -valuation of the municipality as shown by the last assessment, is nevertheless valid. Faught v. City, supra, 145 Old. 164, 292 P. 15, page 24.

In considering defendants’ third contention, we start with the premise that the original indebtedness was valid because it was so adjudged in the funding bond proceeding. It was, of course, created before the judgment in No. 2046 was obtained against the district. The exact date does not appear. Bonds which are issued to fund a valid indebtedness neither create any debt nor increase the debt of the municipality which issues them. They merely change the form of an existing obligation. In re Menefee, 22 Okl. 365, 97 P. 1014; Board of Education v. West, supra; City of Huron v. Second Ward Sav. Bank (C. C. A.) 86 F. 272, 49 L. R. A. 534; Independent School Dist. v. Rew (C. C. A.) 111 F. 1, 55 L. R. A. 364; Board of Com’rs of Lake County v. Keene Five-Cent Sav. Bank (C. C. A.) 108 P. 505; 44 C. J. p. 1132, § 4065.

In Board of Education v. West, supra, the court said:

“There is no inconsistency between the Statutes of 1905 and section 26, art. 10, of the Constitution. It is true that section 26 limits the indebtedness which may be legally created without a popular vote, but it has no bearing on proceedings for the refunding of an indebtedness once legally created, except in so far as it lays down the rule that the court must follow in determining whether the original indebtedness was legally created.
“Funding bonds are issued concurrently with the cancellation of warrants of the municipality, and a municipality does not by their issue become further indebted, provided the warrants themselves represent a valid indebtedness. No new debt is incurred by a mere change in the form of the existing debt. In re Menefee, 22 Okl. 365, 97 P. 1014. Mr. Chief Justice Williams, who prepared the opinion in the Menefee Case, supra, said:
“ ‘The question further arises as to whether or not the issuing of the funding bonds created a debt. * * * It has frequently been held that, where bonds have been issued for the express purpose of liquidating an outstanding indebtedness, that such bonds neither created nor increased the public debt, but simply changed its form.’
“In support of this proposition many authorities are cited.”

Since the bonds in question were issued to fund a judgment conclusively determined to be a valid indebtedness by the judgment in the funding bond proceeding, the bonds in the instant case did not create any debt nor increase the debt of the municipality and therefore it is wholly immaterial that such funding bonds, together with the existing indebtedness at the time they were issued, exceeded 5% of the assessed valuation of the school district as shown by the assessment for the year 1920. The contention that the original indebtedness was not within the income and revenue provided for the year in which it was created is likewise effectually foreclosed by the judgment in the funding proceeding adjudging the validity of such indebtedness.

The fourth and fifth contentions of defendants concern the effect of, the funding proceeding judgment and the recitals in the certificate attached to, and in the bonds themselves. The rights of bona fide holders, who purchase such bonds in reliance upon the judgment in the funding proceeding and of the recitals in the bonds and the certificate attached thereto, are dependent upon principles of general commercial law upon which it is the right and the duty of a federal court to exercise an independent judgment. Pana v. Bowler, 107 U. S. 529, 541, 2 S. Ct. 704, 27 L. Ed. 424. Therefore, we are not bound by the decisions of the Supreme Court of Oklahoma in Faught v. City of Sapulpa, supra, and Eaton v. Railway Co., supra, as to the effect of such judgment and recitals.

It is well settled that, where a municipal corporation has lawful authority to issue bonds on condition that certain facts exist or certain acts be done, and the statute entrusts the power and imposes the duty upon an official or officials to ascertain, determine and certify the existence of such facts at the time of issuing the bonds, the certificate of such official or officials will es-top the municipality as against a bona fide holder of such bonds from proving its falsity to defeat them (Independent School Dist. v. Rew [C. C. A. 8] 111 F. 1, 55 L. R. A. 364), where there is nothing on the face of the bonds to show that the recital is untrue (Gunnison County v. Rollins, 173 U. S. 255, 270, 271, 19 S. Ct. 390, 43 L. Ed. 689; Chaffee County v. Potter, 142 U. S. 355, 363, 12 S. Ct. 216, 35 L. Ed. 1040).

It was held in Faught v. City of Sapulpa, supra, that the provisions of section 29 of article 10, above set out, do not apply to refunding bonds. Since other recitals effectually estop the defendants, we deem it unnecessary to determine the effect of the certificates of the county auditor and county attorney, affixed to such bonds pursuant to such section 29.

There can be no doubt that the funding bond statute, as interpreted at the time the bonds in the instant case were issued, required the officers of a municipality desiring to issue funding bonds to bring a judicial proceeding and to give notice thereof to persons adversely interested, and entrusted the power and imposed the duty upon the district court in which such proceedings were brought to inquire into and determine the validity of the indebtedness sought to be refunded and the validity of the bonds to be issued, and to declare such facts by its solemn judgment and by the district judge affixing his signature to the bonds. Gardner v. School Dist. 87, 34 Okl. 716, 126 P. 1018; Board of County Com’rs v. State of Kansas, 19 Okl. 375, 91 P. 699, 711. In the last cited case, the court said:

“One other ground of defense, the fourth, as set forth in defendant’s answer, remains for consideration, which, in substance, is that the bonds issued were in excess of 4 per cent, of the last-assessed valuation of the taxable property in the county. The answer alleges that such valuation was $469,289.77, and that, considering the outstanding indebtedness of the county not funded, together with taxes levied and uncollected, and all other property, money, and resources belonging to said county July 10, 1900, not more than $11,200 of the bonds of said county could,' at that time, have been lawfully issued, and that therefore $5,600 of such bond issue was illegal and void. By this defense the defendant seeks to try over again a question that was of paramount importance and before the court for consideration when it authorized the issuance of the bonds July 10, 1900. The record shows that at the time the court authorized the issuance of said bonds it found that the amount including outstanding indebtedness did not exceed 4 per cent, of the assessed valuation of the taxable property of Day county, according to the last assessment valuation of the assessor of said county, and the question here presented is whether or not that question may be retried in this action for the purpose of defeating a part of the bond issue of July 10, 1900. Touching this question, this court, in the . case of the Territory v. Hopkins, 9 Okl. 149, 59 P. 980, said:
“ 'The court having determined the validity of the bonds involved in this proceeding,, and having decreed that they are valid obligations and issued in strict conformity with the laws of this territory and no objections or exceptions having been made to the issuance thereof; and no appeal having been taken therefrom, the decree and judgment of the court is therefore final and conclusive upon all matters put directly in issue, tried, and determined in that proceeding. This doctrine has been clearly enunciated and uniformly upheld by the decisions of the Supreme Court of the United States.’
“The soundness of this determination by this court is questioned by counsel for plaintiff in error, who base their conclusions upon the proposition that the district court, when hearing a question touching the issuance of funding bonds, does not reach a conclusion which in effect amounts to a judgment. If this is a correct conclusion, we can see no purpose in having the question of the issue of bonds brought before the court at all. Under the statute the court must hear and determine the question as to whether or not the issuance of such bonds is authorized under the law, and it would seem that, when a court of competent jurisdiction has before it á legal question to determine, and has heard and determined that question, such determination, unappealed from, is thereafter res adjudieatá. * * * The recitals in the bonds from which the coupons were taken were that they were issued pursuant to the laws of Oklahoma. They hore the unquestioned signature of the officials of Day county, together with that of the judge of the district court of that county, attested by the clerk and seal of the court; also-, the indorsement on the back, by the territorial auditor who certified such bonds to be legally and regularly issued in accordance with an act of the Legislature of March 12, 1897. It has been the universal holding of the courts that, where negotiable bonds or securities on their face import by recital a compliance with the law under which they were issued, the purchaser is not bound to look further for evidence of compliance with the law authorizing their execution. In this case they were not only issued as the act of the officials of Day county, but, in addition, the bonds recite that they are issued as the act of the district court and therefore go upon the market as instruments, the authority to issue which has been judicially determined.”

Furthermore, the statute creating the bond commissioner likewise requires him to prescribe uniform forms and methods of procedure and provides that no bond shall be valid until approved by him, and that such bond, “when declared by the certificate of said bond commissioner to be issued in accordance with the law and procedure so provided, shall be incontestable * * * unless suit thereon be brought * * * within thirty days from the date” of such approval.

In Board of Education v. Short, 89 Okl. 2, 213 P. 857, 861, the court said:

“The law authorizing bonds of this character is found in sections 7835 to 7843, inclusive, R. L. 1910, as limited by article 10 of section 26, Constitution of the state. If the Attorney General, under the statute, after examining into the same, approves the bond issue, and no suit is filed questioning the legality of the same within 30 days, the law makes the issue conclusive, as to the municipality and all persons interested in the same.”

It is true that the Constitution requires the assessed valuation to be ascertained from the last preceding assessment. But neither it nor the statutes provide for any such record of all existing indebtedness. To determine whether the indebtedness sought to be refunded was valid, the prospective bond purchaser would have to go through the proceeding leading up' to the funding bond judgment, learn the year when the original debt was created, examine the budget or estimates for such year, and ascertain whether such indebtedness was within the income and revenue provided for such year. If it did exceed the income and revenue for such year, his next inquiry would be whether, with existing indebtedness, it exceeded 5% of the value of the taxable property of the district. To ascertain these facts, the bond buyer would require the services of a skilled auditor. Clearly, the funding statute does not contemplate such investigation. The very purpose of the judgment in such funding proceeding and the certificate of approval by the Attorney General is to set such matters at rest and to furnish a readily available record, beyond which the bond buyer need not inquire. Board of County Com’rs v. Kansas, supra.

The power to issue funding bonds was granted under certain requisite circumstances. The power to inquire into these circumstances and determine the facts was delegated to the district court and the Attorney General, and they found and certified the existence of those requisite facts upon which the power depended.

Such being the facts, the plaintiff undoubtedly has the right to rely upon the findings and adjudication set forth in the funding judgment, upon the fact that the bonds were signed by the court which rendered such judgment, upon the certificate of the Attorney General, and upon the fact that no proceedings had been brought to contest the validity of such bonds within thirty days after the date of such certificate.

We conclude that the defendants are precluded by the judgment in the funding proceeding; and by the recitals in the bonds and the certificates attached thereto, from questioning the validity of the original indebtedness, and of the bonds issued to refund such indebtedness.

The decree is affirmed.

Opinion in No. 336.

This suit involves the validity of thirty-four $1,000 bonds issued by the board of education of the town of Helena, Alfalfa county, Oklahoma, dated January 1, 1922, and jurisdiction is predicated on diversity of citizenship.

Calvin 0. Smith, as the owner of such bonds, brought this suit against the board of education of the town of Helena, the excise board of Alfalfa county, and the officers and individual members of such boards to secure the same relief as was sought in No. 335. Prom a decree in favor of plaintiff, defendants have appealed.'

The facts with respect to the judgments against the school district, the funding bond! judgment and the funding bonds are substantially the same, as the facts in No. 335, except in the particulars hereinafter noted.

The Brown-Crummer Investment Company, purchased such issue of funding bonds from C. Edgar Honnold, in the regular course of business, paying $955 per thous- and, plus accrued interest. The BrownCrummer Company sold such bonds in the regular course of business to Wells-Dickey & Company, of Minneapolis. About June 1, 1928, the Brown-Crummer Company repurchased such bonds from Wells-Dickey & Company and later resold them to Honnold at $955 per thousand, plus accrued interest. On June 8, 1928, plaintiff purchased such bonds from Honnold. Each bond showed on its face that it was one of a total issue of $34,-000. The assessed valuation of the school district for 1921 was $417,977.

Proof was offered to show that some of the items, making up the claims on which the original judgments against the school district were obtained, were invalid.

There was no proof introduced or tendered showing that the original indebtedness, on which the claims against the school district were based, except certain items which were alleged to be fictitious, were in excess of the revenue provided for the year in which such debts were incurred.

Counsel for defendants make the same contentions here as they asserted in No. 335, and what we have said in the opinion in that case applies equally to such contentions made here.

Counsel for defendants contend that the transfer to plaintiff was merely colorable and was made for the purpose of giving jurisdiction to the federal court; and that plaintiff is not a bona fide purchaser for value.

The proof established that the sale by Honnold to plaintiff was real and absolute and not merely colorable. Under such circumstances, the courts, in passing on the question of federal jurisdiction, will not inquire into the motives which actuated the parties in making the transfer. Black & White Taxicab Co. v. B. & Y. Taxi. Co., 276 U. S. 518, 524, 48 S. Ct. 404, 72 L. Ed. 681, 57 A. L. R. 426; South Dakota v. North Carolina, 192 U. S. 286, 310, 24 S. Ct. 269, 48 L. Ed. 448; Lehigh Mining & Mfg. Co. v. Kelly, 160 U. S. 327, 336, 16 S. Ct. 307, 40 L. Ed. 444; Cross v. Allen, 141 U. S. 528, 533, 12 S. Ct. 67, 35 L. Ed. 843; McDonald v. Smalley, 1 Pet. 620, 7 L. Ed. .287; Dickerman v. Northern Trust Co., 176 U. S. 181, 191, 192, 20 S. Ct. 311, 44 L. Ed. 423; Rojas-Adam Corp. v. Young (C. C. A. 5) 13 F.(2d) 988, 989; City of Livingston v. Monidah Trust (C. C. A. 9) 261 F. 966, 971.

The possession of the bonds, their genuineness not being disputed, made out a prima facie case for the plaintiff, and the burden was upon the defendants to show that he was not a bona fide purchaser and holder. Presidio County v. Noel-Young Bond & Stock Co., 212 U. S. 58, 70, 29 S. Ct. 237, 53 L. Ed. 402; Village of Kent v. Dana (C. C. A. 6) 100 F. 56; Toon v. Wapinitia Irr. Co., 117 Or. 374, 243 P. 554, 557; 44 C. J. p. 1259, § 4267. Defendants did not meet that burden. One who, with knowledge of defenses thereto against the original payee or holder, acquires the title to municipal bonds from an intermediate bona fide purchaser is entitled to the rights and title of the latter as such bona fide holder. Rondot v. Rogers Township (C. C. A. 6) 99 F. 202, 213; Gunnison County Com’rs v. Rollins, 173 U. S. 255, 274, 275, 19 S. Ct. 390, 43 L. Ed. 689; Marion County v. Clark, 94 U. S. 278, 286, 24 L. Ed. 59; Hill v. Scotland County (C. C.) 34 P. 208; 44 C. J. p. 1241, § 4231. The Brown-Crummer Company and the Wells-Dickey & Company were intermediate bona fide purchasers.

We conclude that Smith had the right to maintain this suit in the federal court and •that he is entitled to the rights and title of a bona fide purchaser.

:[14] Counsel for defendants contend that such bonds disclosed on their face that they were in excess of the 5% limitation of section 26, art. 10, of the Oklahoma Constitution. They predicate this contention upon the fact that the amount of the bond issue is more than 5% of the value of the taxable property of the district as shown by the 1921 assessment.

The judgment in the funding bond proceeding is a conclusive adjudication that the indebtedness refunded was valid. Since the original indebtedness funded was valid, the funding bonds neither created a new debt nor increased an existing indebtedness, and the limitations of such section 26 have ho application to such bonds. Fairfield v. Rural Ind. School Dist. (C. C. A. 8) 116 P. 838, 844. Purthermore, if the indebtedness funded was valid otherwise, it is immaterial that the total bond issue exceeded 5% of the value of the taxable property of the district as shown by the last assessment previous to the date such bonds were issued. The question of whether the constitutional limitation was exceeded would have to be determined from the last assessment previous to the date the original indebtedness was incurred, and the status of the district’s indebtedness at that time. Board of Com’rs of Lake County v. Keene Five-Cent Sav. Bank (C. C. A. 8) 108 P. 505, 514. There is no proof as to such assessment or indebtedness.

Moreover, the 5% limitation in such section 26 applies only to an indebtedness in excess of the current revenue and income created with the requisite assent of the voters of the school district at an election held for that purpose, and the proof in the instant case, except as to possibly three items aggregating $7,800 which were alleged to be fictitious, does not show that the original indebtedness was in excess of the income and revenue provided for the year in which it was created. It follows that defendants did not establish that the bonds exceeded the 5% limitation of section 26.

Finally, counsel for defendants contend that, through the inclusion of certain fictitious claims, the bonds were in effect exchanged at a discount of 20% instead of at par. They were issued to fund an indebtedness conclusively adjudged to be valid by the judgment in the funding bond proceeding. Purthermore, the fact that they were exchanged at less than par would constitute no defense to such bonds against a bona fide purchaser. Mercer County v. Hackett, 1 Wall. (68 U. S.) 83, 17 L. Ed. 548; Town of Newbern v. National Bank of Barnesville (C. C. A. 6) 234 P. 209, 221, L. R. A. 1917B, 1019.

The decree is affirmed.

The costs in each case will be adjudged against the defendants therein.

       On this 7th day of March, 1921, the same being one of the days of the March term of said Court, appeared the Board of Education of the town of Carmen, Alfalfa County, State of Oklahoma, through its proper officers, and made proof to the satisfaction of this court, that heretofore the Board of Education Town of Carmen authorized a proceeding of this court to fund the outstanding judgment indebtedness of said Board of Education the sum of $13,500.00, by a resolution duly proved to have been adopted and approved as required by law.
      That notice of the issuance of said bonds was published in a newspaper, published at the County Seat of said County, and posted in five public places in said County for at least ten days preceding this time said notice stating that on the 7 day of March, 1921, or as soon thereafter as a hearing may be had the said Board of Education will proceed before this Court and make a showing and ask this Court to order and determine the amount of the outstanding legal judgment indebtedness of said Board of Education and to sign bonds to be issued in payment of same and provided that all persons interested might be present at the ftme said proof was made.
      That the said Board of Education, through it proper officers proved from the records of said Board that the outstanding judgment indebtedness of said Board is the sum of $13,500.00 and that said judgment is due and that no part of same has been paid. Upon said proof being made it is hereby ordered and adjudged by this Court that the said court finds and orders, that the said Judgment indebtedness, aggregating the principal sum of ^13,500.00, together with interest thereon accruing since said judgment became payable and payment refused for want of funds, amounting in the aggregate to the sum of $13,500.00 is hereby found and declared to be a legal indebtedness of the said Board of Education and subject to being funded pursuant to the statutes of the State of Oklahoma, and the Judge of this Court does now proceed in open court to sign each bond up to the amount of the indebtedness so found and approved, said bonds being described as follows:
      Bonds numbered from One to Thirteen, both inclusive, of the denomination of $1,000.00 each, dated January 25, 1921, due January 25, 1941, bearing interest at the rate of six per cent per annum.
      Bond Number Fourteen of the denomination of $500.00 dated January 25, 1921, bearing interest at the rate of six per cent per annum.
      And the Court now delivers the bonds so signed to the Clerk of said Court to be by him delivered to the Treasurer of said Alfalfa County, after the time for taking an appeal has expired if no appeal be taken, and the Clerk of said Court is directed to cancel the judgments funded by said bonds ; and the treasurer of said Alfalfa County is directed to cancel the warrants funded by said bonds, the said judgment hereby approved, cancelled and funded, being described as follows:
      Court Case No. Rendered Creditor Amount District 2046 1-25-21 Grant M. Buxton $13,500.00
      Witness, Honorable J. C. Robberts, Judge of said Court, and seal of said Court affixed at Cherokee, the County Seat of said County on this 7th day of March, 1921.
      Attest: J. W. Raekley, Court Clerk [Seal.]

       Number Dollars

       $1,000.00
      State of Oklahoma, County of Alfalfa The Town of Carmen
      Being Independent School District No. 77 Funding Bond of 1921.
      Know All Men by These Presents: That the Board of Education of the Town of Carmen, of the State of-Oklahoma, a body corporate, duly organized and existing as the corporate authority of the School district comprising said Town and the territory thereto attached for school purposes, hereby acknowledges itself indebted to and for value received, promises to pay to the bearer the sum of One Thousand Dollars on the 25th day of January, A. D. 1941, together with interest thereon from the date hereof until paid at the rate of six (6) per cent per annum, payable semi-annually on the 1st days of January and July of each year, said interest evidenced by and to be paid upon the surrender of the coupons hereto attached as they severally become due, both principal and interest payable in lawful money of the United States of America, at the Fiscal Agency of the State of Oklahoma, in the-City of New York, in the State of New York; or, in the event of the discontinuance of such Agency, then at the National City Bank, in said city and state of New York.
      This Bond is one of a series numbered from One to Fourteen, both inclusive, of like date and tenor, aggregating the principal sum of Thirteen Thousand Five Hundred ($13,500.00) Dollars, and is issued for the purpose of funding a like amount of the legal outstanding judgment indebtedness of said Board of Education, under Article 3, Chapter 7, Revised Laws of Oklahoma, 1910, and other Laws-of the State of Oklahoma, supplementary and amendatory thereto.
      The Full Faith, credit and resources of said Board of Education are hereby irrevocably pledged to the-payment of this Bond.
      It Is Hereby Certified and Recited that all acts, conditions and things required to be done, precedent to and in the issuance of this Bond have been properly done, happened and been performed in regular and due form and time as required by law, and that the total indebtedness of said Board of Education, including this Bond and the series of which it forms a part, does not exceed any constitutional or statutory limitation, and that due provision has been made for the collection of an annual tax sufficient to pay the interest on this Bond as it falls due and also to constitute a sinking fund for the payment of the principal hereof at maturity.
      In Witness Whereof, said Board of Education has-caused this Bond to be signed by its President, attested by its Clerk, and the seal of said Board of Education to be affixed hereto this 25th day of January, A. D. 1921.
      [Signed] L. R. Springer,
      [Seal] President of Board of Education.
      Attest:
      [Signed] E. D. Peck, Clerk, Board of Education.
      Approved and signed by me in open Court, this 7th day of March A. D. 1921.
      [Signed] J. C. Robberts,
      Judge of the District Court of Oklahoma in. and for the County of Alfalfa.
      Attest:
      [Signed] J. W. Raekley, Court Clerk. Countersigned:
      [Signed] H. B. Eaton, County Treasurer.
      State of Oklahoma, County of Alfalfa, ss.
      We, the undersigned, County Attorney and County Clerk, respectively, of said County and State, in-which the Board of Education of the Town of Carmen is situate, hereby certify that the within Bond. is one of a series of bonds issued by said Board of Education pursuant to law, and that the entire issue of said Bonds is within the debt limit imposed upon said Board of Education by the Constitution and laws of the State of Oklahoma.
      Witness our respective hands and the official seal of said County this 12 day of March, A. D. 1921.
      [Signed] J. Milford Hill,
      County Attorney.
      [Seal] [Signed] Edith Couch,
      County Clerk.
      State of Oklahoma, County of Alfalfa, ss.
      I, the undersigned, the duly qualified and acting County Clerk of said County, in this State, hereby certify that I have duly registered the within bQnd in my office on this the 14 day of March, 1921.
      Witness my hand and the official seal of said County, the date above written.
      [Signed] Edith Couch,
      [Seal] County Clerk.
      State of Oklahoma, County of Alfalfa, ss.
      I, the undersigned, the duly qualified and acting Clerk of the within named Board of Education of Carmen, in said County and State, hereby certify that I have duly registered the within Bond in my office on this 15 day of March, 1921.
      Witness my hand and the seal of said Board of Education the date above written.
      [Signed] E. D. Peck,
      {Seal] Clerk, Board of Education.
      State of Oklahoma, County of Alfalfa, ss.
      I, the undersigned, the duly qualified and acting Treasurer of Alfalfa County, Oklahoma, in which the Board of Education of the Town of Carmen, Alfalfa County, is situated, hereby certify that on the 11 day of March, 1921, I registered the within Bond in a hook kept for that purpose; that I entered the number, the date, the name of the payee, the fund upon which it is drawn and the amount.
      [Signed] H. B. Eaton, County Treasurer. United States of America, State of Oklahoma, ss.
      I, the undersigned, the State Auditor of said State, hereby certify that I have duly registered the within bond in my office on this the 12 day of April, A. D. 1921, according to law.
      Witness my hand and seal the date above written.
      [Signed] F. C. Carter,
      [Seal] State Auditor.
      Great Seal of the State of Oklahoma, 1997 Number 3
      State of Oklahoma County of Alfalfa
      The Board of Education of the Town of Carmen Being Independent School District No. 77.
      Funding Bond of 1921 $1000.00
      Dated January 25th, 1921 Due January 25th, 1941
      Interest 6% ’per Annum Payable Semi-Annually on the 1st days of January and July.
      Principal and Interest payable at the Oklahoma Fiscal Agency, New York City, N. Y.
      State of Oklahoma
      Office of the Attorney General
      Bond Department Jun. 4, 1921.
      I Hereby Certify that I have examined a certified copy of the record of proceedings taken preliminary to and in the issuance of the within Bond; that such proceedings and such Bond show lawful authority for the issue and are in accordance with the forms and methods of procedure prescribed and provided by me for tbe issuance of bonds of like kind; and that said Bond is a valid and binding obligation according to its tenor and terms, and, under tbe provisions of law in effect March 24, 1910, requiring the certificate of the Bond Commissioner of the State of Oklahoma, thereon, is incontestable in any Court in the State of Oklahoma unless suit thereon shall be brought in a Court having jurisdiction of the same within thirty days from the date of this approval of said Bond appearing in the caption hereto.
      [Signed] S. P. Freeling, Attorney General,
      Ex-Officio Bond Commissioner of State of Oklahoma.
      ^ Tho following is a copy of coupon due July 1, 1928.
      On the 1st day of July, 1928,
      The Board of Education of the Town of Carmen, 30.00 Being Independent School District No. 77 of the State of Oklahoma,
      Promises to pay to the bearer the sum of Thirty Dollars, at the Fiscal Agency of the" State of Oklahoma, in the City and State of New York; or in the event of the discontinuance of such Agency, then at the National City Bank in said City and State of New York, for the interest due that day on its Funding Bond of 1921, of One Thousand Dollars, dated January 25, 1921.
      L. R. Springer, President.
      Attest:
      E. D. Peck, Clerk.


text:
    HALLAM v. COMMERCE MINING & ROYALTY CO. et al.

    No. 288.
    Circuit Court of Appeals, Tenth Circuit.
    March 27, 1931.
    Joseph W. Howell, of Tulsa, Okl., for appellant.
    A. Scott Thompson, of Miami, Okl., and Geo. S. Ramsey, of Tulsa, Okl. (Ray McNaughton and F. D. Adams, both of Miami, Okl., on the brief), for appellees Commerce Mining & Royalty Co., Jas. F. Robinson, Geo. L. and Alfred E. Coleman and Chas. M. Harvey.
    Before PHILLIPS and McDERMOTT, Circuit Judges, and KENNEDY, District Judge.

      Rehearing denied June 1,1931.

   PHILLIPS, Circuit Judge.

Anna Beaver Hallam, hereinafter called Anna Beaver, is a full blood Quapaw Indian. She was allotted a tract of two hundred acres of land in Ottawa county, Oklahoma, under the Act of March 2, 1895 (28 Stat. 876, 907), and on September 26, 1896, received a patent therefor. Under the act just mentioned, such land was inalienable for a period of twenty-five years from the date of patent.

Under the .Act of June 7, 1897 (30 Stat. 62, 72), Quapaw Indians were empowered to lease their lands for mining purposes for a term of ten years. Under the Act of March 3,1909 (35 Stat. 781, 783 [25 USCA § 396]), such Indians were empowered to lease their lands for mining purposes for “any term of years,” with the consent of the Secretary of Interior. The pertinent portions of the two last mentioned Acts are set out in marginal •note .

On September 30, 1907, Anna Beaver executed to Don P. Wills a mining lease on her allotment for a term of ten years. Such lease contained the following provision:

“If oil, or any minerals or other substance of value are found in paying quantities in any well drilled or shaft sunk, the privilege of operating shall continue as long as oil, minerals or other substances of value can be produced in paying quantities, on such terms and conditions as parties hereto have herein agreed upon after the expiration of this lease.”

This provision violated the restrictions imposed by Congress, and rendered the lease void. Smith v. McCullough, 270 U. S. 456, 46 S. Ct. 338, 70 L. Ed. 682.

On August 22, 1911, Anna Beaver executed to Wills a mining lease on her allotment for a term of ten years from its date. This lease did not violate any of the restrictions imposed by Congress. United States v. Abrams (C. C.) 181 F. 847; Id. (C. C. A. 8) 194 F. 82. On September 28, 1912, Anna Beaver executed to Wills a mining lease bn her allotment for a term of ten years from its date. The Commerce Mining & Royalty Company is a common law trust created by a declaration of trust executed September 22, 1913. Its predecessor was a copartnership called the Miami Royalty Company. In 1913, Wills assigned the 1911 and 1912 leases to the Miami Company, which in turn assigned them to the Commerce Company.

On September 19, 1913, and January 21, 1915, Anna Beaver executed to Wills mining leases on her allotment each for a term of ten years from its respective date. In taking these two leases, Wills was acting as the agent of the Commerce Company and he assigned such leases to the Commerce Company.'

On June 11, 1915, a contract was entered into between Anna Beaver and Wills, acting for the Commerce Company, by which it was agreed that all of such leases were surrendered and canceled, and that the possession of the leased premises was surrendered to Anna Beaver. Thereafter, and on the same date, Anna Beaver executed to Wills, as the agent of the Commerce Company, a new mining lease on her allotment for a term of ten years from its date at a royalty of 5%. Neither Wills nor those claiming under him went into possession of the leased premises under the leases of August 22, 1911, September 28, 1912, September 19, 1913, or January 21, 1915. The lease of June 11, 1915, among other things, provided:

“Second. • The party of the second part agrees to go upon’ said described land and mine and carry on mining operations thereon from the date hereof. - * *
“This lease shall be in full force and effect from the date hereof for a period of ten years, and the parties of the first part (Anna Beaver Bear and Thos. M. Bear, husband) agree to and do hereby deliver possession of said premises to said party of the second part for mining purposes concurrent with the delivery of this lease, and the party of the second pai’t agrees to and does take possession and control of said described land for mining purposes concurrent with the execution of this lease.”

Prior to the lease of June 11, 1915, the lands included in the' above mentioned leases were undeveloped. Six prospect holes had been drilled along the north line of the allotment but no commercial ores had been discovered. Immediately following the execution of the lease of June 11, 1915, the Commerce Company commenced exploration and development on the allotment, and discovered and developed lead and zinc ores in commercial quantities. On February 26, 1917, the Commerce Company entered into a mining sub-lease with Bulkeley Wells, agent, on 180 acres of such allotment. Such sub-lease was later assigned to R. H. Charmings, Jr., agent. On February 2, 1918, the Commerce Company entered into a mining sub-lease on the additional twenty acres with the Standard Zinc Lead Mining Company. Between June 11,1915, and October 18,1922, the Commerce Company and its sub-lessees expended approximately $900,000 in the exploration and development of the property, and the erection of mining plants thereon.

On April 30, 1919, the Secretary declared Anna Beaver incompetent to manage her mining business. In 1907, the Commissioner of Indian Affairs caused an investigation to be made as to the competency of the Qua-paws to manage their business and to lease their lands without departmental supervision. On July 30, 1907, he reported to the Secretary the results of such investigation and recommended that supervision be retained over nine Quapaws. Anna Beaver was not one of such nine. On November 15, 1907, the Secretary adopted the recommendation of the Commissioner and struck the names of all other Quapaws from the incompetent class. From the foregoing it will be seen that from August 22, 1911, to April 30, 1919, Anna Beaver was both legally and actually competent to lease her land for mining purposes for a term of ten years.

By the Act of March 3, 1921 (41 Stat. 1225, 1248), existing restrictions against the alienation of allotted lands of certain named Quapaw Indians were extended for 25 years from the date of suteh act. Anna Beaver was one of those named in such act. Such act provides that the lands of such named Indians may “be leased for mining purposes for such period of time and under rules, regulations, terms, and conditions only as may be prescribed by the Secretary of the Interior, and said lands while restricted against alienation may be leased for mining purposes only as provided herein.” 41 Stat. 1249.

On October 18, 1922, the Commerce Company -negotiated and entered into a new lease with Anna Beaver, subject to the approval of the Secretary, “for the period of 15 years from and after the .date hereof and as long thereafter as lead and zinc may be produced in paying quantities • but not longer than March 3,1946.” As additional consideration for such lease, the Secretary required the Commerce Company: To expend, in five years from the date of approval of such lease, $10,000 in prospect drilling on the allotment; to keep accurate and detailed maps of the workings of each mine on the allotment, and to furnish blueprints of such maps to the lessor or the representative of the Department of Interior whenever demanded; to permit an audit of its books and accounts semiannually or at such other times as the Secretary might direct, and to furnish copies thereof, without charge, to the Secretary; to keep and maintain a complete and adequate organization of mining engineers and accountants; to furnish proper supervision of the mining operations conducted on such allotment; to maintain a store-room, stockyard and machine shop with sufficient supplies and equipment to minimize delays resulting from break-downs and accidents; to permit the miners and other employees freedom of purchase; to operate on an eight hour day and not to employ any boy under the age of sixteen years or any girl or woman, without regard to age, underground. It provided that the royalty to be charged sub-lessees, including the base royalty, should not exceed 12%%; that the royalty provisions under such lease should be-in force from and after its approval by the Secretary; and that the Commerce Company should give a bond with a responsible surety conditioned for the faithful performance of such lease and supplemental agreement. On July 9, 1923, the Secretary approved such lease and supplemental agreement. Such lease provided for a royalty of 7%% for a period approximating the unexpired term of the lease of June. 11, 1915, and for a royalty of 10% there-* after.

Thereafter the Commerce Company executed and delivered to Wells, agent, a mining sub-lease on 180 acres of the leased premises, and to O. W. Sparks a mining sub-lease on 20 acres of such leased premises. The Secretary approved such sub-leases on October 22, 1924. On January 11, 1924,.Wells assigned his sub-lease to R. H. Channings, Jr., agent. The Secretary approved such assignment on October 22, 1924. On October 3, 1924, Sparks assigned his sub-lease to the Blue Streak Mining Company, a corporation. The record does not disclose whether this assignment was approved by the Secretary.

Up to May, 1928, $707,829.11 in royalties had been paid to Anna Beaver, either directly or deposited to her credit with the Secretary, under the leases of June 11, 1915, and October 18, 1922. ' Of this sum, $625,161.83, or 88%%, had been paid under the lease of October 18, 1922.

After the lease of October 18, 1922, had been approved by the Secretary, Anna Beaver brought a proceeding before the Secretary to have the approval of such leases and sub-leases set aside. Upon a hearing, the Secretary refused to set aside the approvals.

Anna Beaver brought this suit against the Commerce Company and its sub-lessees alleging that they at all times have been and now are trespassers on her allotment, prayed for cancellation of each of such leases and sub-leases, for an injunction against further operation thereunder, and for an accounting for the ores extracted therefrom.

The trial court held that the leases of June 11, 1915, and October 18, 1922, were valid, and entered a decree dismissing the bill. Anna Beaver has appealed.

Counsel for Anna Beaver contends that all of such leases, except the lease of October 18, 1922, were overlapping leases, were violative of the restrictions imposed by Congress and were void. He cites in support of this contention United States v. Noble, 237 U. S. 74, 35 S. Ct. 532, 533, 59 L. Ed. 844, and Smith v. McCullough, 270 U. S. 456, 46 S. Ct. 338, 70 L. Ed. 682.

United States v. Noble, supra, was a suit ¡brought by the United States to cancel certain leases and certain assignments of royalties Tinder leases made by one Black Hawk, a 'Quapaw Indian. Such leases and assignments' ate described in the opinioil of the Supreme Court, as follows:

“(1) Lease, dated January 11, 1902, to A. W. Abrams, for ten years from date, in consideration of the sum of $10, and a royalty of 5 per cent. * * * On August 13, 1903, the lease was assigned by Abrams to the Iowa & Oklahoma Mining Company.
• “(2) Lease, dated August 24,1903, to A. W: Abrams, for ten years from date, in consideration of $18, and of royalties which were the same as in first lease. * * * This lease was assigned on November 2, 1904, .to the Iowa & Oklahoma Mining Company.
“(3) Lease, dated March 25, 1905, to L. C. Jones, and the appellee A. J. Thompson, for ten years from date, for $10 -and 5 per cent royalty. It was stated that the lease was subject to the first lease above mentioned. The interest of Jones was assigned to the appellee A. J. Thompson on July 31, 1905.
“(4) Lease, dated April 4, 1905, to the Iowa & Oklahoma Mining Company, for ten years from date, for $25, with the same royalties as in the first lease above mentioned. * * *
“(5) Lease, dated May 12, 1906, to the same company, for ten years from date, and with the same consideration as that of the lease described in paragraph (4). It was provided that ‘this lease and all former leases above referred to shall run concurrently,’ —the lessee being entitled to elect under which of the leases it would operate.
“(6) Lease, dated July 28, 1906, to the same company, for the term of twenty years from date for $21, with the same royalties and minimum rental as those reserved in the preceding lease described in paragraph (5).
“(7) Grant or assignment, dated August 16, 1902, to the appellee Charles P. Noble, of all the allottee’s ‘right, title, and interest in and to the royalty, rent, and proceeds’ of the mining lease dated January 11, 1902, made to Abrams, described in paragraph (1). * * *
“(8) Assignment, dated February 21, 1906, to the appellees A. S. Thompson and Y. E. Thompson. It recited a judgment, in a suit against Noble and Cooper, decreeing that the allottee was the owner ‘of 2% percentage of the entire product mined from said land and sold on or subsequent to the 31st day of January, 1906, and up to and including the 11th day of January, 1912,’ and assigned to the above-mentioned appellees ‘an undivided one-half interest in and to the said judgment for royalties,’ that is, ‘1% per cent of the whole product on said lands’ during the period covered by the first lease to Abrams, described in paragraph (1).”

The government conceded the validity of the lease described, in paragraph one. The trial eourt sustained the validity of the leases described in paragraphs two, three and four. It held that the leases described in paragraphs five and six were invalid. United States v. Abrams (C. C.) 181 P. 847. On appeal this decision was affirmed by the Eighth Circuit. United States v. Noble, 107 F. 292. The United. States prosecuted an appeal from the decision of the Eighth Circuit to the Supreme Court and there questioned the decision of the lower court with reference to the lease described in paragraph three and the assignments of rents and royalties. It will be noted that the lease described in paragraph three was expressly subject to the pri- or lease of January 11, 1902, to Abrams and was inferior to the prior lease of August 24, 1903, to Abrams. ,The Supreme Court held that the lease described in paragraph three was either a lease in futuro or an assignment of the reversion and, in either event, it violated the restrictions imposed by Congress and was void.

The Noble Case is distinguishable from the instant case. The lease of August 22, 1911, was valid. The leases of August 22, 1911, September 28, 1912, September 19, 1913, and January 21,1915, were to the same lessee and covered the same premises. Where there is an existing lease, the term of which has not expired, the acceptance by the tenant from the lessor of a new lease for the same premises, unless it appears that the parties intended otherwise, operates as a surrender of the first lease by operation of law. United States v. Noble (C. C. A. 8) 197 F. 292, 294; United States v. Abrams (C. C.) 181 F. 847; Diamanti v. Aubert, 68 Utah, 582, 251 P. 373, 374; Brown v. Linn Woolen Co., 114 Me. 266, 95 A. 1037, 1038; Enyeart v. Davis, 17 Neb. 228, 22 N. W. 449; Coe v. Hobby, 72 N. Y. 141, 146, 28 Am. Rep. 120; Fleischner v. Citizens’ Real Estate & Inv. Co., 25 Or. 119, 35 P. 174, 176. The release of one party to the old lease is a sufficient consideration for the release of the other party. Diamanti v. Aubert, supra; Evans v. McKanna, 89 Iowa, 362, 56 N. W. 527; Ettlinger v. Kruger, 76 Misc. Rep. 540, 135 N. Y. S. 659; Eggers v. Paustian, 184 Iowa, 1250, 169 N. W. 739. It follows that each of the four last mentioned leases operated as a surrender of the lease immediately preceding it. Therefore, they were not leases in futuro nor assignments of the reversion, as was the lease held invalid by the Supreme Court in the Noble Case.

Furthermore, on June 11, 1915, Anna Beaver and Wills acting for the Commerce Company, which held assignments of all pri- or leases, entered into a contract for the cancellation of such prior leases and the surrender of the leased premises to Anna Beaver. On the same day, Anna Beaver executed a new lease to Wills, agent of the Commerce Company, for a term of ten years from its date, containing the provisions with reference to possession and the commencement of the term of the lease, hereinbefore set out. The validity of such a transaction was sustained in the case of the United States v. Abrams (C. C. A. 8) 194 F. 82, 83, where the court said:

“The act of Congress authorized a leasing for a term not exceeding 10 years. We perceive of no reason, and find nothing in the letter or spirit of the congressional enactment, which restrains her [the Indian lessor], after having made a lease, from entering into a valid contract with the lessee to eaneel such, lease before the expiration of its term, and then make a new lease to such party or parties as she might see fit for another term, not exceeding 10 years. This is what she did,, and all that she did. We think it clear that, the last-mentioned lease, of date March 21„ 1910, was a valid lease.”

The opinion in that case was handed down by the Eighth Circuit -on March 4,1912. The United States prosecuted no appeal therefrom, thus indicating that it accepted as correct the principles therein announced. Since the contract of June 11, 1915, effected a cancellation of the prior leases, and the lease of June 11, 1915, became immediately effective, and the Commerce Company went into immediate possession thereunder, it is clear that it was neither a lease in futuro nor an assignment of the reversion.

On July 9,1923, the Secretary expressly approved the lease of June 11,1915. Should this be construed as an over-lapping lease to commence in futuro, Anna Beaver was not authorized to make it without the approval of the Secretary, under the Act of March 3, 1909. But it was so approved and such approval, if authorized, related back to June 11, 1915, the date the lease was made, and validated it from its inception. Barnett v. Kunkel (C. C. A. 8) 259 F. 394; Lykins v. McGrath, 184 U. S. 169, 22 S. Ct. 450, 46 L. Ed. 485; Anchor Oil Co. v. Gray (C. C. A. 8) 257 F. 277, 280, 281; Id., 256 U. S. 519, 522, 41 S. Ct. 544, 65 L. Ed. 1070.

Counsel for Anna Beaver contends that the Secretary was not authorized to approve the lease of June 11, 1915, after the enactment of the Act of March 3, 1921. A very-analogous situation was considered by the Supreme Court in Harris v. Bell, 254 U. S. 103, 113, 41 S. Ct. 49, 65 L. Ed. 159. The Act of April 26, 1906 (34 Stat. 137), prohibited the alienation of inherited lands by full blood Indian heirs, without the approval of the Secretary. The Act of May 27,1908 (35 Stat. 312), prohibited the alienation of inherited lands by full blood Indian heirs, without the approval of the court having jurisdiction of the settlement of the estate of the deceased allottee. The deed of the full blood Indian heir in Harris v. Bell, supra, was executed on January 15, 1908, and was approved by the Secretary on July 6, 1910. The court held that the 1908 act did not take away from the Secretary the power to approve deeds made prior to its enactment. Here, under both statutes, the power of approval is vested in the Secretary, and the latter act broadens the authority and discretion of the Secretary in this respect. We conclude that the Secretary was authorized to approve the lease of June 11,1915.

For the reasons hereinbefore stated, we hold that the leases of August 22, 1911, and June 11,1915, were valid.

Counsel for Anna Beaver contends that the lease of October 18, 1922, was illegal and void because it was bottomed inseparably upon a consideration that was in part unlawful and was modified by another contract to which Anna Beaver was not a party.

As to the second ground of this contention, it is sufficient to say that this court held, in Whitebird v. Eagle-Picher Lead Co. (C. C. A. 10) 40 F.(2d) 479, that the Secretary had the power to make a lease of Quapaw lands without the consent of the incompetent Indian allottee. Furthermore, Anna Beaver wrote a letter to the Secretary expressing her consent to, and requesting the Secretary not to withdraw his approval of such lease and supplemental agreement.

It is true that, in fixing the royalty under the 1922 lease, consideration was given to the lesser royalty provided in the lease of June 11, 1915, and the unexpired term of the latter lease. Counsel’s contention, however, is predicated upon the premise that the June 11, 1915, lease was invalid. We have concluded that such lease was valid. Therefore, it was neither illegal nor improper to take into consideration the royalty provision and the unexpired term of the 1915 lease, in arriving at the terms of the 1922 lease.

Counsel for Anna Beaver contends that the 1922 lease was illegal because it was made in violation of the regulations promulgated by the Secretary on December 29,1921. He asserts that such lease violated section 18 of such regulations, which provides that a lease “shall be for a fixed period of time to be determined in each case by the Secretary.” While such lease did not specify the exact period for which it should extend beyond 15 years, it provided .that it should be for so long as lead and zinc were found in commercial quantities but, in no event, beyond March 3, 1946. It provided means by which the term could be ultimately ascertained and made certain. It was a substantial compliance with the regulations. Section 10 of such regulations, in part, provides:

“Applications under the provisions of Section 10 for a lease or extension of lease or for the approval of said lease or extension of lease will not be received or considered prior to the period of one year next preceding the date of the expiration of such valid existing lease, or leases as may be on the land covered by such application.”

Counsel for Anna Beaver asserts that the above quoted portion of section 10 was violated because the term of the existing 1915 lease did not expire until 1925, and the new lease was approved in 1923. Even if the consideration of the 1922 lease by the Secretary in 1923 was contrary to such regulation, which we do not decide) his approval was not vitiated on that account. The Secretary had the power to suspend such regulations. Ingraham v. Ward, 56 Kan. 550, 44 P. 14; Gage v. Gunther, 136 Cal. 338, 68 P. 710, 89 Am. St. Rep. 141; Pickett v. Wallace, 54 Cal. 147; Knight v. United Land Ass’n, 142 U. S. 161, 12 S. Ct. 258, 35 L. Ed. 974.

Counsel for Anna Beaver contends that the court should have held she was entitled to royalties on a basis of 7%% instead of 5% from October 18, 1922. The approval of the Secretary provided that the royalty provisions should be effective from the date of such approval. In this respect he modified the provisions of the lease negotiated between the Commerce Company and Anna Beaver. This he had full power to do under the decision of this court in Whitebird v. EaglePicher Lead Co., supra.

Counsel for Anna Beaver contends that thé leases entered into between the Commerce Company and Anna Beaver, prior to October 18, 1922, were void, and that they so clouded the title of the allotment of Anna Beaver as 'to disable her from negotiating leases with any other person than the Commerce Company; that, because of these facts, the Commerce Company had no right to enter into the lease of 1922, even with the approval of the Secretary. This argument is bottomed upon the proposition that the lease of August 22, 1911, and the lease of June 11,1915, were void. We have already considered these leases and concluded that they were valid.

Finally, counsel for Anna Beaver contends that the lease of June 11, 1915, and the 1922 lease were invalid because the amount of royalties provided therein were inadequate. The amount of royalty provided in the lease of June 11, 1915, compares favorably with the amount of royalty reserved in other leases on undeveloped lands in the same vicinity as the Anna Beaver allotment. While a few of such leases reserved a royalty of 7%%, by far the greater number provided a royalty of 5%. The evidence wholly failed to establish that the royalty provision in the 1915 lease was inadequate. The amount of royalty in the 1922 lease rested in the discretion of the Secretary. It was his duty to determine the highest obtainable economic royalty, not the highest percentage of royalty, in order that all the ores should be mined and the greatest ultimate return obtained from such lands. This he did after obtaining the advice of experts. See Whitebird v. EaglePicher L. Co., supra. The Act of March 3, 1921, vested discretionary power in the Secretary to determine the amount of royalty and the other terms of mineral leases upon lands of Quapaw Indians named in such act. 41 Stat. 1248; Anicker v. Gunsburg, 246 U. S. 110, 119, 38 S. Ct. 228, 62 L. Ed. 603. The Secretary’s determination of the proper amount of royalty, in the absence of a showing of arbitrary action or fraud, was final and was not open to review by the court. United States v. California & Oregon Land Co., 148 U. S. 31, 43, 44, 13 S. Ct. 458, 37 L. Ed. 354; United States v. De la Maza Arredondo, 31 U. S. (6 Pet.) 691, 728, 729, 8 L. Ed. 547; United States ex rel. Riverside Oil Co. v. Hitchcock, 190 U. S. 316, 325, 23 S. Ct. 698, 47 L. Ed. 1074; United States ex rel. McCullough v. Lane, 50 App. D. C. 123, 269 F. 202, 204. There is no evidence tending to show that the Secretary acted either arbitrarily or fraudulently.

We have examined the other contentions made by counsel for Anna Beaver, and find they are without merit.

We conclude that the leases of August 22, 1911, and June 11,1915, and the lease of October 22, 1922, approved July 9, 1923, were valid, and that the decree of the trial court was right. It is therefore affirmed.

       “That the allottees of land within the limits of the Quapaw Agency, Indian Territory, are hereby authorized to lease their lands, or any part thereof, for a term not exceeding three years, for farming or grazing purposes, or ten years for mining or business purposes. * * * Provided, That whenever it shall be made to appear to the Secretary of the interior that, by reason of age or disability, any such allottee can not improve or manage his allotment properly and with benefit to himself, the same may bo leased, in the discretion of the _ Secretary, upon such terms and conditions as shall be prescribed by him.” 30 Stat. 72.
      “That all lands allotted to Indians in severalty, except allotments made to members of the Five Civilized Tribes and Osage Indians in Oklahoma, may by said allottee be leased for mining purposes for any term of years as* may be deemed advisable by the Secretary of the Interior; and the Secretary of the Interior is hereby authorized to perform any and all acts and make such rules and regulations as may be necessary for the purpose of carrying the provisions of this paragraph into full force and effect.” 35 Stat. 783 (25 USCA § -396).