text:
    MARCANTE et al. v. UNITED STATES.
    No. 334.
    Circuit Court of Appeals, Tenth Circuit.
    April 17, 1931.
    C. R. Ellery, of Cheyenne, Wyo. (H. S. Ridgely, of Cheyenne, Wyo., on the brief), for appellants.
    Albert D. Walton, U. S. Atty., of Cheyenne, Wyo.
    Before COTTERAL, PHILLIPS, and McDERMOTT, Circuit Judges.
   McDERMOTT, Circuit Judge.

The appellants were charged with a conspiracy to violate the National Prohibition Law. The question in the ease is whether there was proof of the single conspiracy charged, or whether the proof disclosed two or more separate conspiracies.

The indictment charged 29 named defendants, together with “others to the Grand Jurors unknown,” with conspiring to manufacture, transport, possess, and sell intoxicating liquors. Overt acts of manufacture, sale, and bribery of public officials are alleged to have been committed in twelve separate localities, by one or more of the defendants, at various dates between November 1, 1926, and September 8,1928. It is charged that one Irving, state commissioner of law enforcement, authorized one Ader to solicit and accept bribes from liquor manufacturers and sellers in “the several cities and towns of Wyoming.” Generally speaking, the indictment charges the other defendants with having entered into this state-wide conspiracy at different times, in different localities, and with having violated the liquor laws under a promise of protection.

The trial court overruled a demurrer to the indictment, and this ruling is assigned as error. The trial court was right. There is no doubt that there can be a conspiracy to violate the liquor laws in a dozen different localities; such a conspiracy may be a continuing one; actors may drop out, and others-drop in; the details of operation may change from time to time; the members need not know each other, or the part played by others; a member need not know all the details of the plan or the operations; he must, however, know the purpose of the conspiracy and agree to become a party to a plan to effectuate that purpose. A conspiracy is bottomed on an agreement to accomplish an illegal act, and without such agreement there can be no conspiracy; a conspiracy “is a partnership in criminal purposes.” United States v. Kissel, 218 U. S. 601, 31 S. Ct. 124, 126, 54 L. Ed. 1168; Brown v. Elliott, 225 U. S. 392, 32 S. Ct. 812, 56 L. Ed. 1136; McDonnell v. United States (C. C. A. 1) 19 F.(2d) 801; Allen v. United States (C. C. A. 7) 4 F.(2d) 688; Rudner v. United States (C. C. A. 6) 281 F. 516.

On the other hand, there may be two or more conspiracies in the same state to violate the same law. If such be the case the government may not convict all the members of all the conspiracies under a charge of membership in one large conspiracy. To do so is to ignore the facts. In United States v. Wills (C. C. A. 3) 36 F.(2d) 855, 857, it appeared that the trial court had, on a prior trial, directed a verdict of acquittal under an indictment charging membership in a comprehensive conspiracy. The defendants were re-indicted under a charge of a smaller conspiracy to commit the same overt acts, and were convicted. There was a plea of autrefois acquit; the Court of Appeals dealt at length with the subject, sustained the convictions, and among other things said: “What actually happened was that the government proved sundry small conspiracies but was unable to mold them into the one conspiracy charged because it was unable to connect up by proof the members of the several group conspiracies with one another and with the political and police influence which constituted an essential ingredient of the conspiracy as pleaded. Or, stated differently, it forged the links but failed to join them into a chain.”

The same Court, in' Wyatt v. United States, 23 F.(2d) 791, 792, cert. denied 277 U. S. 588, 48 S. Ct. 436, 72 L. Ed. 1002, said: “When, as here, one large conspiracy is specifically charged proof of different and disconnected smaller ones will not sustain conviction; nor will proof of crime committed by one or more of the defendants, wholly apart from and without relation to others conspiring to do the thing forbidden, sustain conviction. Terry v. United States (C. C. A.) 7 F.(2d) 28, 30; United States v. McConnell (D. C.) 285 F. 164, 166.”

The Ninth Circuit, in Terry v. United States, 7 F.(2d) 28, 30, in reversing a conviction because one conspiracy was charged and two were proven, quoted with approval from United States v. McConnell (D. C.) 285 F. 164, as follows: “If, however, the charge of conspiracy in the indictment is merely that all the defendants had a similar general purpose in view, and that each of four groups of persons were co-operating without any privity each with the other, and not towards the same common end, but toward separate ends similar in character, such a combination would not constitute a single conspiracy, but several conspiracies, which not only could not be joined in one count, but not even in one indictment.”

Of the 29 defendants indicted, 23 were brought to trial; the government dismissed as to 11, the trial court directed a verdict as to 7, and the jury convicted 5, among them Irving, the commissioner of law enforcement for the entire state, who has not appealed. The evidence disclosed that Mike Bell and Schmitt operated a still at Kirby, a small place near Thermopolis, and paid $1 a gallon to the “State Law Enforcement Department” for protection; that Bell also sold liquor at Thermopolis; that either Schmitt or his wife collected from other bootleggers in Thermopolis and paid the money to Irving or to Ader, his representative. There was evidence that Ader, by code messages, kept the Schmitts advised of the whereabouts of the federal officers. ''

As to Mareante, Eedmon, and Alfonso, the evidence disclosed that they were distillers originally operating at Kemmerer, and later at Eed Canyon ranch about ten. miles from Thermopolis; that they operated in a large way, and were undisturbed for a long period. The government’s raid of their still was tipped off. Irving demanded the liquor seized on the raid, and made away with it. Ader told Mrs. Schmitt that a still was going to open in Eed Canyon, before it was opened. There was an admission by a coeonspirator who was not indicted that the operators at the still at Eed Canyon were paying the “state” or the “law” a dollar a gallon for protection. Ader, who was not an officer, had in his possession an officer’s badge.

There is no evidence that Bell and his associates were connected in any way with Mareante and Ms associates. Unless it can be found from the'above facts, there is no eyidence that Bell knew that Marcante or any one else was paying Irving for protection, or that Irving was protecting others for pay. The purpose of the conspiracy, as far as Mareante was concerned, was solely that of manufacturing whisky in Red Canyon under protection; and the sole purpose of Bell was to manufacture and sell whisky in or near Thermopolis under protection. There is no evidence that (1) either group of defendants knew that any conspiracy existed other than, the one between that group and Irving; or (2) that their group had any part in carrying out the purpose of any other conspiracy.

At the close of the government’s evidence, each defendant separately moved for a directed verdict on several grounds, among them the ground that the evidence .did not prove that any of the defendants were a part of the comprehensive conspiracy charged. The trial court denied the motions; exceptions were saved, and these rulings are assigned as error.

The evidence is conclusive that each of the appellants is guilty pf flagrantly violating the National Prohibition Law (27 USCA). But, for reasons of its own, the government has not seen fit to' charge them with such violations. There is direct evidence that Bell paid Irving for protection, and that a conspiracy existed between Bell and Irving' to violate the prohibition laws. There is circumstantial evidence, although sketchy, that Marcante also conspired with Irving. But the government did not see fit to charge the appellants separately with the two conspiracies disclosed by the evidence. The government charged appellants with membership in a conspiracy, the purpose of which was to engage in a general plan to violate the liquor laws in a state-wide way. Does the evidence disclose (1) that Irving conspired with any ■one, as for example, Ader, to accomplish such purpose; and, if so, (2) that the appellants knew of that conspiracy and joined in the plan to accomplish it?

We cannot find any evidence that the appellants knew of any such general conspiracy between Irving and Ader, even if it be conceded that there is evidence that Irving was engaged in a broad single conspiracy rather than several individual ones. Nor can we find any circumstances from which a jury might legitimately find that Marcante, or Bell, had any other purpose in mind than that of carrying on their own individual operations under a promise of protection. It is elementary that the government need not prove all it alleges; and these convictions would not fall if the government had proven a membership in a single conspiracy to violate the law in eleven, or six or three of the twelve localities alleged. The difficulty is that the proof discloses notMng except one group conspiring with Irving to sell liquor in one locality; another group conspiring with Irving to manufacture liquor in another. Two conspiracies-not alleged are proven, and there is no proof of the single conspiracy alleged.

The proof does not bring the case within the scope of Allen v. United States, supra. In that case a conspiracy between officers of the law to sell protection throughout the town of Gary was first established; there was proof that other defendants, knowing of such general conspiracy, entered therein. Furthermore, the practice of submitting to a jury, in one trial, the question of the guilt of thirty or fifty citizens, where the testimony as to each is different, is not to be encouraged. It is extremely difficult for an experienced trial judge to trace the skeins of scattered testimony to so many individuals; with inexperienced jurors, such complicated testimony is too apt to become but a confused jumble, and a verdict too apt to represent an impression that the defendants are guilty of something, with little reference to the crime with which they are charged.

The judgments are reversed.


source: Caselaw Access Project

author: NORTHCOTT, Circuit Judge.

license: Public Domain

text:
    ST. PAUL FIRE & MARINE INS. CO. v. BACHMANN.
    No. 2997.
    Circuit Court of Appeals, Fourth Circuit.
    April 13, 1931.

      WATKINS, District Judge, dissenting.
    James M. Guiher, of Clarksburg, W. Va. (Russell L. Eurbee, of Fairmont, W. Va., and Steptoe & Johnson, of Clarksburg, W. Va., on the brief), for appellant.
    Charles J. Sehuek and Carl G. Bachmann, both of Wheeling, W. Va. (Handlan, Garden & Matthews and Sehuek, Baehmann & Grimes, all of Wheeling, W. Va., on the brief), for appellee.
    Before NORTHCOTT, Circuit Judge, and WATKINS and WEBB, District Judges.
   NORTHCOTT, Circuit Judge.

This is an appeal from a judgment for $4,591.84 rendered in favor of the appellee, Sophia C. Baehmann, against the appellant, St. Paul Fire & Marine Insurance Company, a corporation, by the District Court of the United States for the Northern District of West Virginia, at Wheeling, in November, 1929. The judgment was rendered in an action of assumpsit prosecuted upon a policy of fire insurance in the amount of $4,009, covering a three-story brick business building located on Main street in the city of Wheeling.

The insured building was badly damaged by fire in December, 1925, and it was claimed by appellant that three moonshine stills were found in the building after the fire, and that large quantities of gasoline, used in the operation of the stills, were in the building at the time of the fire, and the fire was caused by an explosion, due to the operation of the stills.

The building was managed by the husband of appellee, who as agent for the appellee had for many years attended to all the details of supervising, maintaining, and leasing the building. It is conceded that appellee knew nothing about the building, the tenant, or the insurance. The building . was leased to a man by the name of Varisea, in October, 1925, by appellee’s husband, for a term of eighteen months, and appellee’s husband testified that Varisea had paid him in advance the sum of $1,750 in cash on the rent; the building being leased supposedly for the purpose of conducting a wholesale business therein.

Evidence was offered on behalf'of appellant tending to show that Baehmann, the agent, knew, or should have known, that the building was used for operating stills. This was vigorously denied by Baehmann, and in submitting the ease to the jury the judge instructed in the language of the policy.

Two main points are raised by appellant: (1) That, in construing the “Increase of Hazard Warranty,” the trial court erred in refusing to instruct the jury that an increase of hazard upon the insured premises was “within the control or knowledge of the insured,” if the insured or agent had “reasonable cause to believe or know” of the existence of the stills, even in the absence of actual knowledge; (2) that the trial court erred in its'charge to the jury with respeet to the insurance company’s defense based upon the “Prohibited Articles Warranty” in. the policy.

With respeet to the increased hazard question, the policy provided as follows: “Unless otherwise provided by agreement in writing added hereto, this Company shall' not be liable for loss or damage occurring * * * (b) while the hazard is increased by any means within the control or knowledge of the insured.”

We know of no authority contrary to the principle that an insurance policy will be construed in a manner most favorable to the insured. This has been held by this court. Missouri State Life Insurance Co. v. Guess, 17 F.(2d) 450, and cases there cited.

In the case of Mutual Life Insurance Co. of New York v. Hurni Packing Co., 263 U. S. 167, 44 S. Ct. 90, 91, 68 L. Ed. 235, 31 A. L. R. 102, Mr. Justice Sutherland said: “The language employed is that of the company and it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against it. First National Bank v. Hartford Fire Insurance Co., 95 U. S. 673, 678, 679, 24 L. Ed. 563; Thompson v. Phenix Insurance Co., 136 U. S. 287, 297, 10 S. Ct. 1019, 34 L. Ed. 408; Imperial Fire Insurance Co. v. Coos County, 151 U. S. 452, 462, 14 S. Ct. 379, 38 L. Ed. 231.”

Here the judge below charged the jury in the language of the policy, and we think fairly. It is not incumbent upon the courts to write another or a different contract of insurance between the parties. Had the insurance company desired to add to the contract the words “reasonable cause to believe or know,” it should have written the same into the policy, and we are of the opinion that the action of the judge below was right with regard to this question.

On the second point, as to the prohibited articles warranty, the policy provided: “Unless otherwise provided by agreement in writing added hereto, this Company shall not be liable for loss or damage occurring (d) * * * while (any usage or custom to the contrary notwithstanding) there is kept, used or allowed on the described premises * * * explosives * * * gasoline * * * or any other petroleum product of greater inflammability than kerosene oil.”

After the issuance of the policy, the use to which the building was being put at the time of the issuance of the policy being changed, an agent of the insurance company inspected the building, and the following rider was attached to the policy:

“$4,000.00 on three'story brick building, with approved roof, and its additions, adjoining and communicating, occupied for bottling automobile oils, .offices and other mercantile purposes not more hazardous, including foundations * * *
“Privileges granted. To keep for sale not to exceed fifty pounds of gunpowder and ten barrels of kerosene oil * * * and for present and other occupancies not more hazardous and to do such work and to keep and use such materials as are usual in such occupancies.”

The Handbook of Rules in use by the West Virginia Fire. Underwriters’ Association, used by insurance companies doing business in West Virginia in 1925, and required to be filed in the office of the commissioner of insurance of that state, provided as follows:

“Privilege for present and other occupancies not more hazardous and to do suck work and to keep and use such materials as are usual in such occupancies.”
“Note: It is understood that the word ‘materials’ as used above, includes gasoline, and such other materials as a!re prohibited by the printed conditions of the policy, when kept and used for such purposes as are usual to the occupancies permitted.”

At the time of the inspection by the agent of the insurance company, and the attachment of the rider to the policy, the building was being used for the handling and bottling of automobile oil, and it was shown that gasoline was stored in the building, and that the agent of the insurance company saw that gasoline was being used and stored in the building. It was contended on the trial below that this rider constituted a permit for the handling of gasoline within the building, and that its effect was to remove gasoline from the prohibited articles warranty, and that the quantity of gasoline, if greater than used at the time of the issuance of . the permit, brought this question into the increased hazard class. The trial court took this view of the ease, and we think properly so. The agent of the insurance company knew that the rider permitted the use of gasoline, at least to some extent, and, in order to show that the hazard was increased by a greater use of gasoline, as a defense to the recovery by the insured, the insurance company must under the terms of the policy, as above dis•eussed, bring such fact “within the knowledge and control” of the insured or her agent.

A number of other assignments of error were made with respect to instructions allowed or disallowed, and the admission of evidence, or the refusal to admit evidence, but an examination of the record does not disclose them to be of great importance, and none of them constitute, if error at all, vital error. It follows that the judgment of the court below upon the verdict of the jury is affirmed.

WATKINS, District Judge, dissents.


text:
    PATHE EXCHANGE, Inc., v. DALKE. UNIVERSAL FILM EXCHANGES, Inc., v. SAME. FIRST NAT. PICTURES, Inc., v. SAME. FOX FILM CORPORATION v. SAME.
    Nos. 3079-3082.
    Circuit Court of Appeals, Fourth Circuit.
    April 13, 1931.
    Frank F. Nesbit, of Washington, D. C. (George N. Conrad and George D. Conrad, both of Harrisonburg, Va., on the brief), for appellants.
    F. S. Tavenner, of Woodstock, Va. (F. S. Tavenner, Jr., of Woodstock, Va., on the brief), for appellee.
    Before PARKER and NORTHCOTT, Circuit Judges, and GLENN, District Judge.
   NORTHCOTT, Circuit Judge.

These are suits in equity brought in the District Court of the United States for the Western District of Virginia, at Harrison-burg, by appellants against appellee, herein referred to as defendant. The bills alleged that the defendant entered into a written contract with the plaintiffs for the exhibition of their moving picture films, which were copyrighted -under the laws of the United States, and that defendant in violation of the terms of the eontraet and in violation of the copyright laws of the United States, exhibited for profit such motion pictures without the authority or license of the plaintiffs, owners of said copyrights, to do so, and that the defendant profited greatly by such wrongful action. The bills prayed for the recovery of the profits derived from the alleged infringing acts and the damages sustained by the complainants pursuant to the provisions of. the copyright law. The bills prayed for an accounting by the defendant as to the amount of profit made by him in the alleged wrongful exhibitions of said motion pictures.

Motion was made by defendant to dismiss the bills on the ground that they were wanting in equity, and that there existed a full, complete and adequate remedy at law, and later, under the motion, the question was raised that the action was barred by the statute of limitations. The learned judge below in an opinion filed with the record held that under the Virginia statute the suit was barred by the statute of limitations. Plaintiffs then tendered an amended bill, and on objection by the defendant, the court below refused to permit the filing of the amended bill, from which action of the court in holding that the statute of limitations, applicable to the suits, was one year, and in refusing to permit the filing of the amended bill, these appeals were brought.

The United States statute, providing for penalties for infringement of a copyright, is found in title 17, section 25, of the USCA, and permits recovery in certain sums for such infringement as damages.

The Virginia statute of limitations, in point, is found in section' 5818 of the Code of Virginia for 1919, and is as follows: “Every personal action, for which no limitation is otherwise prescribed, shall be brought within five years next after the right to bring the same shall have accrued, if it be for a matter of such nature that in case a party die it can be brought by or against his representative; and, if it be for a matter not of such nature, shall be brought within one year next after the right to bring the same shall have accrued.”

Prom the reading of this section it will be seen that the question to be determined is whether or not the suit, in ease of a death of a party, could be brought by or against his representative. If such be the ease, the limitation is five years, but if such be not the case, then the limitation is one year.

This cause, if properly an equity ease, falls under the concurrent jurisdiction of a court of equity, and this court is here bound to follow the applicable Virginia statute of limitations. In 1 Story’s Eq. Jurisp. (6th Ed.) § 529, it is said, speaking of suits for an accounting: “In eases of this sort, where the demand is strictly of a legal nature, or might be cognizable at law, courts of equity govern themselves by the same limitations as to entertaining such suits, as are prescribed by the statutes of limitations in regard to suits in courts of common law in matters of account. * * * In so doing, they do1 not act, in cases of this sort (that is, in matters of concurrent jurisdiction), so much upon the ground of analogy to the statute of limitations, as positively in obedience to1 such statute.”

See, also, 21 Corpus Juris, p. 254, note 85; 3 Cyc. Ped. Proe. § 684, p. 170; Rose, Ped. Juris. (3d Ed.) § 525; McCaleb v. Fox Film Corp. (C. C. A.) 299 P. 48. In the notes to the foregoing texts are numerous cases holding that the statute of limitations of the state in which the suit is pending governs.

The judge below seemed in doubt as to what the common law of Virginia was in respect to the survivability of a cause of action where the plaintiff seeks to recover profits gained by the defendant, by means of a wrongful act such as is here charged; but we have reached the conclusion, after an examination of the authorities, that in such case even at common law, the suit did survive. It was early recognized in England that it was contrary to the principles of justice that where by means of a tort during the lifetime of either of the parties the plaintiff’s estate had been diminished or his property taken or carried away, or by means of a tort the defendant’s estate had been increased or added to, the executors or administrators should not be allowed to assert or not be required to answer such claim. To remedy this obvious injustice the Statute of 4 Edward III, de Bonis Asportatis in Vita Testotoris, was passed in 1330. Hambly v. Trott, Cowper, 376, 98 Engl. Repr. 1136; Berwich v. Andrews, 2 Ld; Raym. 973; Lansdowne v. Lansdowne, 1 Maddock, 116, 56 Engl. Repr. 44.

As a convenient restatement of the distinction and as a test for distinguishing the class of torts which survived at common law from the other, Lord Mansfield in Hambly v. Trott, Cowp. 371, 376, 98 Engl. Repr. 1136 (decided in 1776), laid it down that, if the tort was one which, benefits the offender in some way, it survived, but if it merely injured the sufferer without benefiting the property or estate of the wrongdoer, it was a merely personal tort which would not survive. He said: “Here therefore is a fundamental distinction. If it is a sort of injury by which the offender acquires no gain to himself at the expense of the sufferer as beating or imprisoning a man, etc., there the person injured has only a reparation for the delictum in damages to be assessed by a jury. But, where, besides the crime, property is acquired which beñefits the testator, there an action for the value of the property shall survive against the executor. As, for instance, the executor shall not be chargeable for the injury done by his testator in cutting down another man’s trees, but for the benefit arising to his testator for the value or sale of the trees he shall. So far as the tort itself goes, an executor shall not be liable; and therefore it is that all public and all private crimes die with the offender, and the executor is not chargeable; but, so far as the act of the offender is beneficial, his assets ought to be answerable, and his executor therefore shall be charged.”

At the time of the separation of the colonies from the mother country such an action survived the death of a party.

In Patton v. Brady, 184 H. S. 608, 614, 22 S. Ct. 493, 495, 46 L. Ed. 713, it was said: “If we turn to the common law, there the rule was that if a party increased his own estate by wrongfully taking another’s property an action against him would survive his death, and might be revived against his personal representative. In the case of United States v. Daniel, 6 How. 11, 12 L. Ed. 323, which was an action against one who had in his lifetime been marshal of a district, to recover damages which the plaintiffs had sustained by reason of false returns made on certain executions by one of defendant’s deputies, it was held that the action did not survive, because the decedent had received no benefit and had not increased his estate by means of the wrongful act.”

That this is the view generally taken by the Virginia courts seems to us clear from an examination of a number of Virginia cases. Trust Co. of Norfolk v. Fletcher, 152 Va. 868, 148 S. E. 785, 787; Mumpower v. City of Bristol, 94 Va. 737, 740, 27 S. E. 581; Cover v. Critcher, 143 Va. 357, 130 S. E. 238; Hawling v. Chapin, 115 Va. 792, 80 S. E. 587; Winston v. Gordon, 115 Va. 899, 80 S. E. 756.

However the ease may be as to the common law, we think the Virginia statute, above , quoted, settles the question conclusively. There ean be no doubt that the purpose of the Virginia statute was remedial, and enlarged rather than restricted the classes of action that survived the common law.

In Lee’s Adm’r v. Hill, 87 Va. 497, 502, 12 S. E. 1052,1053, 24 Am. St. Rep. 666, the court in discussing the purpose and construction of this statute said:

“If, however, there were any doubt that the cause of action asserted in the present case survives at common law, it would seem clear that the action was rightly revived by virtue of the statute already alluded to. Code, § 2655 [now § 5385],
“Under that statute, which is an extension of the statute 4 Edw. Ill, c. 7, de bonis asportatis, an action of trespass, or trespass on the case, may be maintained by or against a personal representative, not only for the taking and carrying away of goods, but for any damage to estate, either done or suffered by the decedent. It is a remedial statute, and is, therefore, to receive, as the English statute has always received, a liberal construction.”

And in Trust Company of Norfolk v. Fletcher, supra, the court said: “By Code 1919, § 5385, the common-law rule as to what actions survive has been enlarged.”

Also in Sullivan v. Associated Billposters et al. (C. C. A.) 6 F.(2d) 1000, 1004, 42 A. L. R. 503, the court said: “The harshness of the rule that personal actions die with the person has led to its modification in a greater or less degree by statute in most of the states.”

Here there can- be no question, under the allegation of the bills which must, on the motion to dismiss, be taken as true, that the defendant’s estate was increased by the profits of this wrongful act, and not only that but that the plaintiffs were pecuniarily damaged by such act.

In Head v. Porter (C. C.) 70 F. 498, 499, Judge Colt, in an able opinion, said:

“In ease of the death of the plaintiff, a bill in equity for the infringement of a patent does not abate, but may be prosecuted to final judgment' by his representatives. • * *
“Profits are the gains or savings made by the wrongdoer by the invasion of the complainant’s property right in his patent. They are the direct pecuniary benefits received, and are capable of a definite measurement. Calling them the ‘measure of damages in equity’ does not mean that they are the same as damages in an action at law. They are clearly not the same. ‘Profits in equity are the gain, or saving, or both, which the defendant has made by employing the infringing invention. This gain or saving is a fact. It is an actual pecuniary benefit which has resulted directly from the defendant’s wrongful use of the plaintiff’s property, which he has had and enjoyed, and to which, on equitable theories, the plaintiff is entitled.’ 3 Rob. Pat. § 1062, note 7, par. 3. At law damages may include profits, but they also include other elements necessary to make up the actual loss, and to give full compensation to the injured party. They may be still further increased by way of punishment for the wrong. But equity, unless by statute, exacts nothing by way of loss or punishment from the wrongdoer except his actual gains.
“The general rule that personal actions die with the person does not apply where property is acquired which benefits the testator. * * *
“A patent is an incorporeal property right in an invention, created By statute. Property rights, whether corporeal or incorporeal, are governed by the same principles, and should receive equal protection. When a person wrongfully appropriates a patented invention, it is an invasion of the patentee’s right of property, and the gains or profits derived from such piracy belong to the patentee. Because the machine in which the wrongdoer may have embodied his piracy may not belong to the patentee does not affect the real character of the act. I can see no difference in principle between a suit by the owner of a patent against an infringer to recover the profits he has made and a suit by the owner of land or of a mine against a wrongdoer to recover the value of timber or ore taken. I cannot assent to the proposition that the profits actually made by an infringer, for which recovery is sought by a bill in equity, are the same as damages in an action of libel, slander, diversion of a water course, trespass in breaking up meadow or pasture land, and similar actions of tort. The former are the actual, direct pecuniary benefits, capable of definite measurement, acquired by the wrongdoer; the latter are primarily the loss suffered by the injured party where the wrongdoer realises no pecuniary benefits, or only such as are indirect, indefinite, or rest in speculation, compromise, or arbitrary adjustment. For these reasons I am of opinion that this cause of action survives, and that the motion to dismiss should be denied.”

See, also, Hohorst v. Howard (C. C.) 37 F. 97; Griswold v. Hilton (C. C.) 87 F. 256.

We are of the opinion that the prayer for an accounting in the bills would not of itself give equitable jurisdiction, and that in the bills as originally filed there were no allegations of fact upon which jurisdiction in equity could be predicated. This, however, did not justify their dismissal. As they, unquestionably stated good causes of action at law, they should have been transferred to the law side of the docket and the appropriate relief awarded there. The question of amendment was one resting in the sound discretion of the district judge. He denied the motions to amend,' probably because of the opinion that the only substantial relief sought was the recovery of damages for infringement and that the granting of this relief was barred by the statute of limitations. When the eases go back the motion to amend may be renewed and such action taken thereon as may be appropriate.

In view of our conclusion as to the statute of limitations being five years instead of one year, as held by the court below, it is not necessary to discuss the question raised by appellants as to whether the statute of limitations was properly pleaded, or the question as to whether the court below should have permitted the filing of the amended bill.

The court below was in error in holding that the one-year limitation applied, and the decrees are reversed and the causes remanded for further proceedings.

Reversed and remanded.


author: AUGUSTUS N. HAND, Circuit Judge.

text:
    UNITED STATES v. BEADON et al.
    No. 256.
    Circuit Court of Appeals, Second Circuit.
    April 20, 1931.

      James W. Osborne, of New York City, for appellants Charles Beadon, Trend of the Market, Inc., and Stoek Market Reporter, Inc.
    Abraham Rosenthal, of New York City, for appellant Harry H. Phillips.
    Michael Barnett, of Philadelphia, Pa., for appellant Utah Lead Co. of Delaware.
    Robert E. Manley, Acting U. S. Atty., of New York City (Irving Spieler, Asst. U. S. Atty., of counsel), for the United States.
    Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   AUGUSTUS N. HAND, Circuit Judge.

This appeal is from a judgment of conviction under an indictment for unlawfully using the United States mails in a scheme to defraud, in violation of section 215 of the United States Criminal Code (18 USCA § 338), and for a conspiracy so to do, in violation of section 37 (18 USCA § 88). The indictment contained nine counts. The first eight counts charged unlawful use of the mails and the ninth count conspiracy. The court dismissed counts 1 and 8, and submitted to the jury for its consideration counts 2, 3, 4, 5, 6, 7, and 9.

The appellants Charles Beadon, Trend of the Market, Inc., and Stock Market Reporter, Inc., were convicted upon counts 2, 3, 4, 5, 6, 7, and 9; appellants Harry H. Phillips and Utah Lead Company of Delaware were convicted upon the ninth count.

It is sought to reverse the judgment because :

(1) The motion for a change of venue should have been granted.
(2) The court erred in holding that the defendants Utah Lead Company of Delaware, Trend of the Market, Inc., and Stock Market Reporter, Inc., were in court and were bound to plead to the indictment, and in ordering a plea of not guilty thereto to he entered for them.
(3) The court erred in recording the verdiet and imposing the sentences on the report of the jury.

A motion for change of venue was made by the appellant Charles Beadon and denied by the trial judge.

There had been a prior trial which had resulted in the confession of a juror that he had been bribed by attorneys for the defendant in the ease, and as a result three attor-. neys who were connected with that trial were indicted, tried, and convicted of bribery in the United States District Court for the Southern district of New York. Publicity had been given to these events by the newspapers, and there were many sensational articles dealing with the foregoing matters. The United States attorney, when summing up in the trial for bribery, had denounced the defendants in the ease at bar. It is argued that it was impossible under such circumstances for the defendants herein to obtain a fair trial in New York, and that the denial of the motion for a change of venue was an abuse of discretion.

The only statutory provision regulating-change of venue in criminal eases is section 53 of the Judicial Code (28 USCA § 114), and it affects only “districts containing more than one division,” and provides that “all prosecutions for crimes or offenses shall he had within the division of such districts where the same were committed, unless the court, or the judge thereof, upon the application of the defendant, shall order the cause to be transferred for prosecution to another division of the district.”

It is evident from the foregoing that a judge of the Southern district of New York, which contains no subsections or divisions, had no power to transfer the cause to another district. But, even if the power had existed, the motion for change of venue was addressed to the discretion of the judge and that should not be disturbed except in the event of clear prejudice. Stroud v. United States, 251 U. S. 15, 40 S. Ct. 50, 64 L. Ed. 103. The trial judge in this case conducted an examination of the' jurors on the voir dire with great circumspection. Of the jurors selected upon the second trial, ten stated that they had no knowledge of the newspaper reports about the prior litigation, and the remaining two showed upon their examination that they were entirely fit persons to serve. One of them, Yan Yergler, said that he had read something about the case, but had formed no. opinion, and that what he had read had made no impression which would interfere with his judgment after hearing the evidence. The other, a juror named Bondy, said‘that he had read some of the articles, hut they had made no impression upon his mind as to the guilt or innocence of the defendants, and that he could render a verdict fair both to them and to the government. No objection was made or exception taken to the inclusion of these particular jurors in the panel.

The newspaper articles criticized and the remarks of the United States attorney were apparently all. prior to the date of the second trial. We can find no error in proceeding with the trial before a jury such as was selected in the case at bar, and hold that, not only because of the limitations of section 53 of the Judicial Code (28 USCA § 114), but upon the merits, the objections to denying a motion for change of venue were properly overruled.

There seems to be no merit in the contention of the corporate defendants that they were not in court and that no valid verdict could be rendered against them for that reason. Judge Knox, who presided at the second trial, overruled their objections on the ground that the record showed that they had appeared by attorneys at the first trial before Judge Woolsey.

But it is argued that Judge Woolsey had held that defendants were in court upon the erroneous theory that the presence of their officers Beadon and Barnett had subjected them to the jurisdiction. This, of course, would not be so, but the record shows that the corporate defendants were in court from the beginning because they had appeared generally by counsel. When the cause came on for trial before him on January 6, 1930, the record shows that there were the following appearances among others:

“Arthur N. Sager, Esq., Joseph Shalleck, Esq., and Edward H. Reynolds, Esq., for defendants Beadon, Morris, Rankin, Trend of the Market Inc., and Stock Market Reporter, Inc.”
“Samuel A. Maginnis, Esq., for defendants Barnett and Utah Lead Company of Delaware.”

When the trial proceeded on the next day, the following colloquy took place:

“Mr. Maginnis: In order to have the record straight, your Honor, nobody appears for the corporations of record.
“The Court: I thought Mr. Sager appeared for them yesterday, or Mr. Shalleck.
“Mr. Sager: No.
“Mr. Shalleck: No, not the Utah Lead Company. Mr. Maginnis.
“The Court: Do you appear for the Utah Lead Company?
“Mr. Maginnis: There has been no service on the Utah Lead Company and therefore as far as we know the Utah Lead Company ' is not in court. If the Utah Lead Company were in court, we would .appear, and under the circumstances we do not feel we should make appearance.
“Mr. Spieler: There is no service necessary. Mr. Barnett is the president of that corporation and he is brought in here and that is all that was necessary.
“The Court: I do not think there should be a service on the corporation. You appear for them yourself, you are already in the ease, Mr. Maginnis.
“Mr. Maginnis: I will then in that case.
“The Court: You appear for them do you?
“Mr. Maginnis: We put on the record an exception to the ruling.
“The Court: You appear for them?
“Mr. Maginnis: Yes.
“Mr. Spieler: Is he authorized, your Hon- or?
“The Court: Who appears for the other corporations ?
“Mr. Spieler: Charles Beadon is president of the Stock Market Reporter.
“The Court: I rule both of them in the case.
“Mr. Sager: We appear for them and we take an exception to the ruling.”

The foregoing extracts from the record before Judge Woolsey show that the attorneys were not seeking to raise the point that there had been no appearances for the corporate defendants on the prior day, but rather that those defendants had not been served with process. It is quite plain from the text that Sager and Shalleck substantially conceded their prior appearance for Trend of the Market, Inc., and Stock Market Reporter, Inc. Maginnis did not in terms deny that he had appeared for Utah Lead Company on the day before, .but said: “There has been no service of the Utah Lead Company and therefore as far as we know the Utah Lead Company is not in court.” Nor did Maginnis deny authority to appear. Indeed he said: “If the Utah Lead Company were in court, we would appear. E ° * ”

If the attorneys desired to correct the record or to withdraw their appearances, they should have done so. United States v. Curry, 6 How. at page 111, 12 L. Ed. 363; Rio Grande Irr., etc., Co. v. Gildersleeve, 174 U. S. 603,19 S. Ct. 761, 43 L. Ed. 1103; Tilden v. Johnson, 6 Cush. (Mass.) 354; Daley v. Iselin, 212 Pa. 279, 61 A. 919. We have before us entries showing general appearances and no motion to strike out or withdraw them. Under these circumstances, Judge Knox properly held that the corporate defendants were in court and ordered pleas of not guilty entered when they stood mute. R. S. § 1032 (18 USCA § 564). The second group of objections must therefore fail.

The last error assigned is that the court erred in recording the verdict. The basis of this complaint is that the judge asked certain direct questions of the jurors when they came in to announce their verdict. The foreman stated that the jury had found the defendants Charles Beadon, Trend of the Market, and Stock Market Reporter guilty of conspiracy and of using the mails to defraud; the defendant Harry H. Phillips guilty of conspiracy; the defendant “Michael Barnett, president of the Utah Lead Company, guilty of conspiracy,” and the defendant Joseph Morris not guilty. Inasmuch as the foreman made no pfonouncement as to the defendant Utah Lead Company, the court asked what disposition the jury made as to it. The foreman asked whether he should explain that matter, but the court shut him off and said: “I want a verdict one way or the other, unless you have disagreed as to the Utah Lead Company yourselves. It is a defendant here. A verdict of some kind should be rendered with respect to that company if you have agreed upon a verdict with respect to it." Juror No. 11 then volunteered the statement that one of the jurors was reluctant to bring in a verdict against the Utah Lead Company for fear it might implicate some of the directors, and said, “May I ask your Honor with respect to the directors,” to which the judge replied, “No director or officer of the Utah Lead Company with the exception of Michael Barnett is indicted on this charge.”

The court directed the jury to retire and return a verdict one way or the other with reference to the Utah Lead Company. It accordingly retired and, upon returning to the courtroom, the foreman stated that it found the Utah Lead Company guilty of conspiracy.

Thereupon the judge stated that he understood the verdict as the jury desired it to be recorded was that Charles Beadon, Trend of the Market, and Stock Market Reporter were guilty upon each count which had been submitted, and the foreman replied: “Yes, your Honor.” The judge then started to ask about the verdict as to Harry H. Phillips, when juror No. 6 said: “We have, as I understand it, only two counts * * * conspiracy and mails to defraud.” The judge said that there were six mail fraud counts submitted and again said to the jury: “Do you find Beadon and Stock Market Reporter and Trend of the Market guilty upon each of the mail fraud counts which are Counts 2, 3, 4, 5, 6, and 7 and 9.” But Juror No. 6 continued: “We only considered two counts.” Whereat the court replied: “Gentlemen you should consider them all. Either they are guilty or not guilty.” Juror No. 6 then remarked: “We did consider them all, but we found them guilty on two counts.” Juror No. 8 then interjected: “What he means is, guilty of conspiracy .and the other defrauding the mails.” The court again said: “There are six counts which charge defrauding the mails. Is the defendant Beadon, and Stock Market Reporter and the Trend of the Market guilty upon each of the mail fraud counts?” To which this Juror No. 6 said, “Yes,” and the foreman said, “Yes.” The court again asked: “As to that you have agreed?” The foreman said: “Yes.” But the court, out of caution, still queried: “What about juror No. 6?” To which juror No. 6 replied, “That is right,” but again said: “We agreed on two counts. We considered eight counts but we agreed on two counts.” The court then said: “Gentlemen, I think you had better go back.” But juror No. 6 replied: “The first count conspiracy and the second count was conspiracy to defraud the mail.” The court again said: “Gentlemen, there are six counts in this indictment which charge a scheme and artifice to defraud and the use of the mails in the execution of that scheme.” The foreman replied: “Yes, your Honor.” Thereupon the court again asked: “Now, I want to ascertain whether your verdict is that Beadon, Trend of the Market and Stock Market Reporter, are guilty upon each of those mail fraud counts of the indictment?” The foreman said: “Yes.” The court again queried, “What about you Juror No. 6?” and juror No. 6 said, “Yes.” The court then said, “Is that correct?” and juror No. 6 said, “Yes,” and the court said, “You want that to be your verdict?” and the foreman replied, “That is correct.” The court then asked: “Is it also your verdict that Beadon, Trend of the Market and Stock Market Reporter are guilty of the conspiracy count which is Count 9 of this indictment, is that correct?” The foreman answered: “Yes, your Honor.”

The judge then proceeded to state his understanding about the verdict regarding Harry H. Phillips, Michael Barnett, and the Utah Lead Company, and the foreman said that each was found guilty on the conspiracy count.

After all this, the court directed a poll of the jury, and each juror confirmed the finding that Beadon, Trend of the Market, and Stock Market Reporter were guilty on all counts, and that Harry H. Phillips, Michael Barnett, and Utah Lead Company were guilty on the conspiracy count.

While wé think it would have been better to send the jury out a second time with instructions to dispose of all counts, the court took great pains to ascertain the meaning' of a verdict which was only rendered at first ambiguous by the remarks of juror No. 6. This was done not only by questions to juror No. 6, but by polling the whole jury. We ean discover nothing in the record calculated to force a verdict unfavorable to any of the defendants. The effort of the judge was to make the verdict clear, and we are satisfied from the colloquy that the verdict recorded represented the real finding of the jury. To ask questions to clarify a situation arising because of the remarks of the sixth juror was not error. Anderson v. United States (C. C. A.) 294 F. 593; Meyers v. United States (C. C. A.) 3 F.(2d) 379.

It is further argued that the verdict was not properly rendered because the foreman did not state that the defendants were guilty, hut only replied “Yes” to questions by the court. But he had already stated what the jury found as to each defendant, and the questions of the court were only asked because of the confusion caused by the remarks of juror No. 6. The questions resulted in clarifying all ambiguities. '

It is further contended that the trial judge instructed the jury that a crime had been committed and the defendants were connected with it. This seems to be based on his remarks about Bankin, a defendant, who had pleaded guilty.

In his charge the judge had said that Bankin’s plea of guilty afforded no proof of the guilt of the other defendants, and added that he undoubtedly was an accomplice if all of the defendants were engaged in a fraudulent scheme, and said that “the testimony of any accomplice in a criminal case should he scrutinized with great care, and should be weighed carefully to see whether or not that person for some reason of his own, is seeking to fasten guilt upon some other persons for his own faults or for some other ulterior reason or purpose.”

Thereafter Barnett excepted to that portion of the charge in which it had been stated, “That the ' 6 * defendant Bankin was undoubtedly an accomplice if any agreement existed,” and the court said, “If the jury believe from the facts that he was in the conspiracy that these other defendants were in, it should assume that he was an accomplice.” It is quite manifest that this statement did not mean that the other defendants were in a conspiracy. The judge had previously defined conspiracy, had instructed the jury that eaeh defendant was presumed to be innocent until proved guilty beyond a reasonable doubt, and that Bankin was an accomplice “if all of them were engaged in a fraudulent scheme.” The statement that, if the jury found that Bankin was in the conspiracy “that these other defendants were in, it should assume that he was an accomplice,” can only be taken to mean that, if Bankin and the others conspired together, Bankin was an accomplice.

It is also contended by one of the appellants that the court erred in not hearing evidence in support of the plea in abatement and the motion to quash because records of the Utah Lead Company subpcenaed before the grand jury were not used, and "nothing but hearsay evidence could have been before it. It is enough to say that none of these objections is raised by proper assignments of error. But, aside from this, the indictment could not be successfully attacked on these grounds. Kastel v. United States (C. C. A.) 23 F.(2d) 156; United States v. Morse (D. C.) 292 F. 273; McKinney v. United States (C. C. A.) 199 F. 25.

The judgment of conviction is affirmed.


author: GARDNER, Circuit Judge. WOODROUGH, District Judge

text:
    SKAGGS SAFEWAY STORES, Inc., v. DUNKLE.
    No. 8987.
    Circuit Court of Appeals, Eighth Circuit.
    April 23, 1931.
    WOODROUGH, District Judge, dissenting.

      Roland Max Anderson, of Lincoln, Neb. (Carl E. Sanden, Loren H. Laughlin, and Bernard S. Gradwohl, all of Lincoln, Neb., on the brief), for appellant.
    M. H. Wittstruek, of Lincoln, Neb., for appellee.
    Before STONE and GARDNER, Circuit Judges, and WOODROUGH, District Judge.
   GARDNER, Circuit Judge.

This is a personal injury action in which the appellee as plaintiff brought suit against the appellant to recover damages suffered by appellee as the result of an automobile collision. The parties will be referred to as they appeared in the lower court. At the time of receiving his injuries, the plaintiff was riding with his brother in the driver’s seat of a truck driven by his brother. They were traveling west on the north side of Holdrege street, an arterial highway in the city of Lincoln, Neb. Clyde B. Anderson, in the employ of the defendant as its manager, was driving a Buick sedan automobile east on the south side of this same street. Plaintiff and his brother desired to cross to the south side of the street for the purpose of 'securing gasoline from a filling station located on that side of the street. Plaintiff’s brother, who was driving the car, started to turn southward near the middle of the block, but a warning signal from a ear approaching from behind caused him to swing back into the line of traffic and permit the approaching ear to pass. He again signaled and turned south to cross to the filling station, having shifted his gears to low. This filling station was located a little west of the middle of the block, was set somewhat back from the curb line on the south side of Holdrege street, and had a driveway with three entrances, two of which entered from Holdrege street, one entering somewhat to the west of the station and the other to the east, while a third entrance came from Twenty-First street, which intersected Holdrege street on the west side of this property, so that the filling station and driveway occupied the northwest corner of the block. Holdrege street was paved with brick.

The ordinances of the city of Lincoln forbade the crossing of a street in the middle of a block, and required one to go to the street intersection before crossing from one side of the street to the other. When plaintiff and his brother first attempted to cross the street, they were some 30 or 40 feet east of the east entrance to the driveway. When they made their second attempt to cross the street, they were at a point directly opposite the east side of the east driveway entrance, and, according to the plat, the east side of this east entrance was 108 feet east from the intersection of Holdrege street with the east curb line of Twenty-First street. They had observed Anderson when they first attempted to turn to the south, and when they again attempted to go south they observed him coming at a rate of speed estimated by them at from 45 to 50 miles an hour. Their truck was moving slowly and could have been stopped within 3 feet, and, when it had reached a point where its front end was about 4 feet south of the center of Holdrege street, which was 30 feet in width, they observed Anderson’s car approaching at what they described as “a terrific speed,” whereupon the driver of the truck took his foot off the brake and “gave it the gas” and attempted to cross the street in front of Anderson’s car, resulting in a collision at the south curb line of Holdrege street, where the street joins the east driveway entrance to the filling station.

The defendant offered evidence to the effect that Anderson was traveling about 25 miles an hour; that he first saw plaintiff’s truck when it was within 25 to 40 feet in front of him; that he immediately applied his brakes and turned his ear to the right, but frost on the pavement caused it to skid into the side of plaintiff’s truck. He estimated the distance between his ear and the truck, when he first observed it, from 25 to 40 feet. On cross-examination, however, he indicated that he observed the truck when his car was just crossing the east line of Twenty-First street. There was testimony to the effect that a car moving at 25 miles an hour, equipped with four-wheel brakes, could be stopped on this pavement in 32 feet. There was testimony that a Chevrolet car equipped with four-wheel brakes, traveling 25 miles an hour on this pavement on the morning of the collision, was stopped in 30 to 40 feet; the witness so testifying having at a former trial testified that he stopped the ear in 30 feet. There was no evidence to show the distance within which a car equipped with four-wheel brakes, going at a speed of from 40 to 50' miles an hour, could have been stopped on a pavement of this sort.

The court overruled defendant’s motion for a directed verdict interposed at the close of all the testimony, and sent the case to the jury 'on the doctrine of last clear chance or discovered peril, limiting the jury to the question as to whether or not Anderson, in the exercise of ordinary care, could have stopped his car after observing the truck in front of him. The instructions as given were not excepted to. In its instructions, the court, among other things, said: “As I say, there is no sufficient evidence of any negligence of the defendant or Mr. Anderson in any act or any omission, which is sufficient to base a recovery upon before the time that the Ford truck got across the middle line of Holdrege Street just before this collision and got into the pathway of the cars going east on the south side of Holdrege Street. So the speed of Mr. Anderson’s car, or any other act or any other omission of his before that time is to be disregarded by you as any ground for recovery in this case.”

Again the court, in its instructions, said: “There is no evidence that Mr. Dunkle, the plaintiff, was guilty of any contributory negligence after the time that the Ford truck got into the pathway of automobiles going east on Holdrege Street. So you are to eliminate all question of whether or not the plaintiff was guilty of contributory negligence, but the negligence of the defendant as represented by Mr. Anderson driving one of its ears at the time of the accident, is limited by the pleadings in this case, and you are not authorized to find any negligence except as it is pleaded and the negligence of Mr. Anderson at. that time as pleaded, is limited by the evidence that has been produced in this ease, and therefore you are hound to consider no question of his negligence except as limited both by the pleadings and by the parties and the question is reduced to this: If Mr. Anderson saw the Ford car in a position of danger ahead of him on the south part of Holdrege Street, the part that east bound autos ordinarily traveled, and after seeing this Ford ear in such a place of danger, did Mr. Anderson negligently fail to properly operate his Buiek automobile, not in every possible way, but in the one way of using reasonable care or failing to use reasonable care, I should say, to endeavor to stop before hitting the Ford car, and, of course, whether that negligence caused the plaintiff’s injuries and damages.”

These instructions, not having been excepted to, became the law of the ease. Hard & Rand, Inc., v. Biston Coffee Co. (C. C. A.) 41 F.(2d) 625; Yelloway, Inc., v. Hawkins (C. C. A.) 38 F.(2d) 731; Security Life Ins. Co. v. Brimmer (C. C. A.) 36 F. (2d) 176. There is therefore presented only one issue, and that a very narrow one. Was there substantial evidence from which the jury might properly have concluded that Anderson, after observing the plaintiff’s truck, could have stopped his ear in time to avoid the collision? In considering this question, we must accept as true all evidence supporting plaintiff’s contention, and assume that it proved all that it reasonably may be found sufficient to establish, and if, when so considered, fair-minded men might honestly draw different conclusions from the proof, then the question was a fact question to be settled by the jury. Mutual Life Ins. Co. v. Hatten (C. C. A.) 17F.(2d) 889; Crookston Lbr. Co. v. Boutin (C. C. A.) 149 F. 680; United States Can Co. v. Ryan (C. C. A.) 39 F.(2d) 445; Gunning v. Cooley, 281 U. S. 90, 50 S. Ct. 231, 74 L. Ed. 720.

When the plaintiff rested his ease, there was no substantial evidence warranting a finding that Anderson might have stopped his car in time to have avoided the collision. At that time the undisputed evidence was to the effect that Anderson was driving his car at a speed of from 45 to 50 miles an hour, and there was no substantial evidence that he observed this truck at a sufficient distance ahead of him to enable him to stop his ear in time to have avoided the collision. The evidence of the defendant, however, was to the effect that the ear was. not being driven at a speed of from 45 to 50 miles an hour, but at a speed of about 25 miles an hour, and there was evidence from which the jury might have believed that the car could have been stopped in a distance of from 30 to 40 feet. There was also the evidence of Anderson to the effect that, when his ear was crossing the intersection of Holdrege street with the east line of Twenty-First street, he observed this truck. It is true, he estimated that it was then from 25 to 40 feet distant, but it appears from the undisputed evidence, as a physical fact, that the collision occurred at a point at least 100 feet east from this intersection. The witness might' well have been' in error as to his estimate of the distance) but there could be no mistake as' to the physical facts, to wit, the point where the cars-, collided, and the point of iriterseetion of' these two streets. It is observed, too, that; Anderson estimated the distance between his. car and the plaintiff’s car, when first observed by him, at from 25 to 40 feet. The.jury might, under the evidence, have found that his car could have been stopped within 40 feet. In view of the verdict of the jury, we must assume that it found that the car was going 25 miles an hour and that Anderson observed the truck as he crossed the intersection of Twenty-First street, at which time the plaintiff’s truck was at least 100 feet in front of him.- As already observed, there was direct evidence that a ear equipped with four-wheel brakes, going at a speed of 25 or 30 miles an hour, could be stopped within 32 feet. On the issue submitted under instructions which were not excepted to, there was therefore substantial evidence to sustain the verdict of the jury.

It is urged by defendant that, notwithstanding the fact that its employee Anderson may have failed to exercise ordinary care to avoid the accident after becoming aware of plaintiff’s danger, yet there could be no- recovery if the negligence for which the plaintiff was responsible concurred and co-operated with that of the defendant, and contributed to the injury complained of. Accepting this contention as a proper statement of the law, it is not available to the defendant here, because the court specifically instructed the jury that there was no evidence that plaintiff was guilty of any contributory negligence after the time that his truck got into the pathway of the defendant’s ear, and this instruction, as has already been observed, was not excepted to. There is therefore no question of concurrent negligence presented by this record.

The judgment of the lower court is affirmed.

WOODROUGH, District Judge

(dissenting).

I concur fully in the conclusion that the plaintiff failed to make out a case for the jury, but I do not agree that one was made out by defendant’s evidence. The majority of the court finds that the jury could infer from the testimony of defendant’s witness Anderson that Anderson was at- the east side of the intersection of Holdrege and Twenty-First streets when he first saw the truck in which the plaintiff was riding. It is demonstrated that the distance was at least 108 feet from there to the point of collision, and the conclusion is that Anderson could have stopped in that distance if he had tried as hard as he ought to — at least the jury could so find. I think the only" fair inference from Anderson’s testimony is that he was only from 25 to 40 feet away from the plaintiff’s car when he first saw it, and did not have time to stop before the collision. He so testified both on direct and cross examination very positively, and that he immediately slammed on his brakes, and the skid marks on the frosty pavement corroborated him. If that were all of his testimony, of course there would be no difference of opinion here.

What happened, however, was this: Anderson was not in Lincoln when he gave his testimony, but some 1,500 miles away in, Seattle, Wash. He could not remember “the location and distances of the station grounds, driveways and streets” about the scene of the accident, and said so. He had it perfectly clear in mind just exactly how the accident happened, the sudden looming up of the truck 25 to 40 feet in front of him, the immediate instinctive slamming on of his brakes, and the crash, but not the map of the location; and there was nothing unnatural about that. Equally according to nature the lawyer examining him for the plaintiff would not let the matter rest that way. So the lawyer drew up a map of what and where he imagined the physical things like the oil stations and entrances and curbs and streets and intersections were thereabouts. Doubtless with the best intentions in the world his map was utterly false and misleading. Particularly it showed the point of collision at the entrance' to the oil station to be 25 to 40 feet (and a car length) away from the east line of the street intersection. Now solely on the basis of that false map the lawyer got Anderson to say that he was at the intersection when he saw the plaintiff’s ear and peril, and as the examination of the witness proceeded there were drawn on the false map two squares to represent automobiles and a line between them to indicate distance marked “25 to 40” (meaning that the cars were 25 to 40 feet apart when Anderson saw the plaintiff), and on this map the tail end of Anderson’s car was indicated to be right at the east line of the street intersections.

It is from this slip in Anderson’s testimony so occasioned that we let the jury infer he contradicted himself on the question of what room he had to stop in. We have the true map before us, and we see that it is really 108 feet from the intersection to the point of collision, and so we say the jury could conclude that the 25 to 40 feet Anderson so positively remembered and swore to is false, and the truth to be gotten from his testimony is that he was 108 feet away and just went ahead for 108 feet and smashed up his own and the plaintiff’s car when he did not need to. It is true there was expert testimony that a car going at the speed Anderson estimáted his car to be going could be stopped by application of the brakes a matter of 8 feet quicker than Anderson says his car was stopped by the collision. This collision took place early in the morning, when there was frost on the ground, and the ear skidded some. The seeming contradiction in Anderson’s testimony and this testimony together amount to no more than a mere scintilla of evidence against him.

My reason for dissent is -that it seems to me there is a misapplication of the last clear chance doctrine. That humane doctrine has been beneficent in railroad collision eases. It doubtless has its place in eases of automobile collision, but not where its application shocks common sense as it does here. Auto drivers know that collision between their cars imposes mutual perils. They all naturally and instinctively try to escape it when they see it imminent. We ought not to assume or justify a jury in assuming that Anderson was inhumanly void of the instinct-to save himself and his ear. There is no persuasive proof of it. Of course he tried to stop his car when he saw he was going to smash. There is no real doubt of it. Plaintiff’s poverty availed for him against the chain stores and outweighed the evidence. A doctrine that is very wise and good has, in my humble judgment, been turned to upset good sense. This court ought to assert its necessary power against a wrong verdict.


author: GARDNER, Circuit Judge.

text:
    BETTENDORF v. COMMISSIONER OF INTERNAL REVENUE.
    Nos. 8995-8997.
    Circuit Court of Appeals, Eighth Circuit.
    April 20, 1931.
    Walter M. Balluff and Edmond M. Cook, both of Davenport, Iowa, for petitioner.
    Morton K. Rothschild, Sp. Asst, to Atty. Gen. (G. A. Youngquist, Asst. Atty. Gen., Sewall Key, Sp. Asst, to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and R. N. Shaw, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., on the brief), for respondent.
    Before STONE and GARDNER, Circuit Judges, and WOODROUGH, District Judge.
   GARDNER, Circuit Judge.

In this case three petitions have been filed to review three decisions of the Board of Tax Appeals, finding the petitioner liable for the payment of alleged income tax deficiencies for the years 1922 to 1926, both inclusive. The same issues are present in each ease, and the cases have been submitted together.

The facts are not in dispute. The petitioner is an individual residing in Bettendorf, Scott county, Iowa. The Bettendorf Axle Company was organized in 1894 by petitioner and his brother, W. P. Bettendorf. On the death of the latter, on June 3, 1910, Catherine Bettendorf, as an heir of W. P. Bettendorf, received stock in the Bettendorf Axle Company and other corporations. For some years a cousin of the petitioner had been living with Catherine Bettendorf and had been employed in the Bettendorf factory. He had not been legally adopted, but the petitioner and Catherine Bettendorf, petitioner’s mother, discussed the possibility of claims by the cousin upon her estate, and, to forestall such claims, a written contract was entered into as follows:

“Whereas, Catherine Bettendorf, of Bettendorf, Iowa, has sold, transferred and delivered to Joseph W. Bettendorf, of Bettendorf, Iowa, the following shares of stock and other personal property, viz., [Here appears a list of stocks, including stocks in the Bettendorf Axle Company.]
“And, Whereas, as a part consideration for such sale and transfer, said Joseph W. Bettendorf .is to pay to Catherine Bettendorf and' M. Bettendorf the certain amounts as hereinafter stated and at the time hereinafter specified. Therefore,
“Know All Men By These Presents, That Joseph W. Bettendorf does hereby agree by and with Catherine Bettendorf that during the life of Catherine Bettendorf the said Joseph W. Bettendorf will pay to Catherine Bettendorf, or her assigns, all earnings and dividends paid to him on any or all of the shares of stock, hereinbefore mentioned, except a stock dividend, which if declared shall be and remain the property of said Joseph W. Bettendorf. The said earnings so received by said Joseph W. Bettendorf shall he paid to Catherine Bettendorf, or her assigns, as soon after their receipt by Joseph W. Bettendorf as is practicable.
“Upon the death of Catherine, should her husband, M. Bettendorf, be surviving, said Joseph W. Bettendorf hereby agrees to pay one-half of the earnings and dividends received by him, as hereinbefore stated, to said M. Bettendorf, or his assigns, during his natural life. .
“Upon the,death of both Catherine Bettendorf and M. Bettendorf there shall be no further obligation on the part of Joseph W. Bettendorf to make such payments.
“It is agreed that if at any time there should be issued by any of the companies or corporations, the stock of which is included in the above and foregoing- list, a stock dividend, or a dividend of stock, that such stock dividend shall become and forever remain the property of said Joseph W. Bettendorf and said Catherine Bettendorf shall have no interest therein further than to receive and have paid to her, or her assigns, such earnings or dividends as may be paid thereon.
“In the event that Joseph W. Bettendorf shall sell or otherwise dispose of any of the stocks included in the above and foregoing list of stocks (including the liquidation of any company or corporation whether voluntary or involuntary) said Joseph W. Bettendorf agrees to pay as often as practicable, and at least quarterly, to whom it is herein-before provided, earnings or dividends shall be paid, a sum equal to the rate of interest paid by savings banks on savings deposits in the City of Davenport, Scott County, Iowa, provided, however, that if the proceeds of the sale of any stock or stocks shall be invested by said Joseph W. Bettendorf in any other stocks, bonds, or in any other manner than in the savings account, the earnings arising from such sum or sums so invested shall be paid as hereinbefore provided, to said Catherine Bettendorf, or her assigns, or one-half thereof to M. Bettendorf, as hereinbefore provided.
“The agreement to pay earnings, dividends, income or interest, as hereinbefore provided to Catherine Bettendorf or M. Bettendorf is a part consideration for the sale and transfer of the aforesaid stocks to said Joseph W. Bettendorf by Catherine Bettendorf, and this contract shall he binding upon the heirs and assigns of said Joseph W. Bettendorf.
“In Witness Whereof said Joseph W. Bettendorf has hereunto set his hand this 26th day of September, A. D. 1911.
“[Signed] Joseph W. Bettendorf,
“[Signed] Catherine Bettendorf.”

Pursuant to this contract, Catherine Bettendorf delivered the stock to the petitioner, which was transferred to his name on the books of the several corporations. None of the stock was converted or sold, except an exchange of the stock of the Bettendorf Axle Company for the stock of its successor, the Bettendorf Company, as of January 1, 1913. Petitioner received the earnings, in the form of dividends, from- these stocks, and paid them over to Catherine Bettendorf, as provided in the contract, and'Catherine Bettendorf included these earnings in her innome tax returns and paid income tax thereon, but they were not included in the income tax returns of the petitioner, nor did he pay'income tax thereon. The Board of Tax Appeals held that the earnings from this stock were taxable to the petitioner as a part of his income, and the petitioner challenges the correctness of this decision.

In reaching its conclusion, the Board stated that the petitioner “was first the recipient of that income, and it is taxable as his income,” and quoted from its decision in Alfred Le Blanc, 7 B. T. A. 256, in support of this conclusion. In the Le Blanc Case the petitioner was a stockholder, and continued to own the stock. He, however, assigned the income of the stock to his son, but infused to transfer the stock, and the Board held that not only the stock but the earnings belonged to the petitioner. In the instant ease, at the' time of the execution of this contract, Catherine Bettendorf was the absolute owner of these securities, and, as an incident to such ownership, she was entitled to all the earnings or dividends derived therefrom. By her contract, however, she transferred the legal title to the stock, but by the terms of this same contract she retained and reserved to herself the right to the income during her life. The income was therefore at no time that of the petitioner,, because by the very contract under which he held the legal title he was bound to account to the donor for the income. The contract required that the petitioner account only for sueh income as accrued, and not for a specified sum. He was not chargeable personally with the income fr.om the s[oek, except as and When it should be received by him, and hence the contract did not create an annuity in favor of Mrs. Bettendorf. Peck v. Kinney (C. C. A.) 143 F. 76, 80; Goodyear Shoe Machinery Co. v. Dancel (C. C. A.) 119 F. 692; Bartlett v. Slater, 53 Conn. 102, 22 A. 678, 55 Am. Rep. 73; White v. City of Marion, 139 Iowa, 479, 117 N. W. 254, 256; Nehls v. Sauer, 119 Iowa, 440, 93 N. W. 346.

In pointing out the distinction between income and an annuity, in Peck v. Kinney, supra, the court said: “There is this distinction between income and an annuity. The former embraces only the net profits after deducting all necessary expenses and charges; the latter is a fixed amount directed to be paid absolutely and without contingency. Ex parte MeComb, 4 Bradf. Sur. (N. Y.) 151, 152. ‘An annuity is defined as “a stated sum, payable annually” (Pearson v. Chace, 10 R. I. 455), or as “a yearly payment of a certain sum of money granted to another, in.fee, for life, or for years.’” ”

The Supreme Court of Iowa in Nehls v. Sauer, supra, defined an annuity as “a yearly sum, the payment of which is chargeable only upon the person of the grantor.”

In White v. City of Marion, supra, the grantor conveyed to his son certain real estate by a deed in which he reserved to himself and to his wife, for their lives, the right of occupancy and rents from the property conveyed. It was contended that the reservation was an annuity. The court said: “W.e do not regard this as an annuity, and agree with the contention of appellee’s counsel in this respect. * * We are all agreed that plaintiff had no annuity.”

The author of the article on annuities, 2 R. C. L. at page 4, says: “The grant of the income or interest of a certain fund to a beneficiary during the term of his natural life is not the grant of an annuity, but is simply a grant of profits to be earned, and although directed to be paid annually, sueh a direction relates only to the mode of payment, and does not change the character of the be- . quest. While an annuity is a fixed sum and is generally given absolutely, the income from a fund constituting net profits to be earned after the deduction of expenses may vary in amount from year to year, and so is necessarily uncertain.”

The facts in the Board of Tax Appeals’ decision entitled Hallahan v. Commissioner, 14 B. T. A. 584, bear a much closer analogy to those in the instant case than do the facts in the Le Blane Case. In the Hallahan Case, the petitioner received title to the corpus, which was an interest in a partnership. The conveyance was on condition that he pay portions of the income to his father, and, after his father’s death, to petitioner’s mother and brother. The Board held that the income was taxable to the persons ultimately entitled thereto, and that the faet that the petitioner held legal title did not necessarily charge him with an income tax thereon. In the course of the opinion in that case it was said: “In these cases we have held the individual receiving the total income taxable on only the-portion in which he individually had the beneficial interest, the portion paid his Associate being merely received by him in trust for such party.”

We should regard the substance rather than the form. The simple faet appears to be that the petitioner was, so far as the income from these securities was concerned, a trustee, -.a fiduciary, and not a beneficiary. The purpose of the income tax law was to tax ■ incomes actually and substantially derived, rather than sueh as might be construetively received. We must assume that it was not the purpose of the act to penalize an individual because he might be the innocent agency by or through whom a substantial income was derived for some one else. The government will not resort to sharp practice, nor invoke technical construction or fiction, which will manifestly thwart the good-faith intention of its taxpayers, for the purpose of visiting a tax burden upon one who in fact did not, except by construction, derive any beneficial income from the transaction. The income which petitioner received from these securities was not the income with which one pays debts. By this contract, Catherine Bettendorf made a gift of the securities, receiving nothing in exchange, but she retained, for the period of her own life, the right to the income. The petitioner, by the terms of the contract, assented to this reservation, and he thereby became a trustee, and was required to account to his mother for the earnings received. This court, in Edson v. Lucas, 40 F.(2d) 398, 405, sustained a gift of securities, subject to reservations by the donor as to the disposition and control of the stocks. In the course of the opinion in that ease it was said: “It is safe to say that, where there is a complete transfer of the legal title to the subject-matter of the gift, together with some equitable or beneficial present interest, to the donee, without power of revocation in the donor, coupled with the intentional delivery of complete possession, dominion and control over the gift, the gift is not invalid because of conditions imposed by the donor which are not inconsistent with the immediate vesting of such legal title in the donee.”

There were fewer restrictions and reservations attached to the gift in the instant case than in that referred to in the Edson Case. The stocks and securities here were delivered to the petitioner. He paid nothing therefor, but agreed to the reservations attached to the gift. .

In Shellabarger v. Commissioner, 38 F. (2d) 566, 567, the Circuit Court of Appeals of the Seventh Circuit had before it a case which in its essential facts was very similar to the ease at bar. In that case petitioner’s father died testate, leaving as the only heirs at law two daughters, the petitioner, Maud, and Georgia. To Maud he gave outright $20,000, and to Georgia $100. Two trusts were created, one of $300,000, whereof itylaud was given the net income during her life, and one of the residuum of the estate, the net income from which, after certain payments including $100 a month to Georgia during her life, was also given to Maud during her life. Georgia threatened to contest the will. The controversy was, however, settled by a written .contract, whereby, in consideration of Georgia abandoning her threatened contest, Maud agreed to give her half of the $20,000 legacy, and as received to pay to her during her life three-tenths of the net income from the two trusts, the one-fifth to be paid to a bank as trustee for the use of Georgia’s descendants. There was provision for reversion to Maud in ease of Georgia’s death leaving no descendants.

In her income tax return for 1924, Maud did not include that part of the income paid by her to Georgia and the bank. The Commissioner'of Internal Revenue increased- the net income on the ground that the payments to Georgia and the bank were in the nature of gifts, and this determination was sustained by the Board of Tax Appeals. On petition for review the court, in reversing the decision of the Board of Tax Appeals, among other things said: “The fact that in certain contingencies the contracted payments to Georgia and the bank might cease, and Maud might then be entitled to receive them for her own use, has no relevancy to the question here involved. This could happen only when conditions specified in the contract came to pass. Until then the right of Georgia and the trustee bank to receive- half of the net income was absolute. The contract left no option of revocation in Maud, and no authority to withhold at will from Georgia or the bank and to take unto herself any of the net income so payable to them.”

In the instant ease, it is urged that the contract vested the petitioner with the absolute legal title to the securities, with power of disposition, and provided that, if he should sell, then he was to pay a sum equal to the rate of interest paid by savings banks, and this, it is contended, indicated that under certain contingencies the petitioner might be required to pay a sum equal to the rate of interest paid by savings -banks, rather than the actual income irom these securities. The short answer to this contention is that it has no relevancy to the question here, because the contingency has not arisen, and we are dealing only with actual income from these securities. As said in the Shellabarger Case: “Income taxes look to the period for which they are imposed, and operate upon income accrued and paid to the taxpayer as income to the taxpayer within that period. That in some subsequent tax year conditions might come into existence under which Maud would again have for her own use a greater part, or even the whole, of the net income from the testamentary trusts, is wholly beside the question in determining her taxable income for the year 1924.”

Again the court said:

“The bare fact that the entire net income from the trusts was first paid to Maud does not of necessity determine the 'question. * * * The mere fact of Maud’s receiving it does not indicate that it was her taxable income. The statute (Act June 2, 1924, c. 234, § 213 [a], 43 Stat. 267 [26 USCA § 954]) does not impose an income tax upon everything which is received by the taxpayer. Many items may be received which are not taxable income of the recipient.. ‘Derive’— not ‘receive’ — is the word the statute employs.
“Under the contract, for the year in question Maud was but an instrumentality or agency for receiving and conveying to Georgia and the bank their contracted proportion of the net income. Maud could not convey the fund itself since she had no title to it. She did not direct the testamentary trustees to pay the half to Georgia and the bank, since the terms of the trusts seemingly required the payments to be made to Maud herself. She did all she reasonably could to invest Georgia and the bank with full right and title to the half. * * *
“As the fund was paid over to Maud, the interest of Georgia and the bank immediately attached, and Maud became in equity a trustee for the benefit of Georgia and the bank. * , * *
“While the whole of the net income from the trusts was physically received by Maud, the half did not accrue to her as her income, but on the instant of receiving it she held it in trust for Georgia and the bank," and it was in good faith paid over as received, pursuant to her valid and binding contract.”

We are in accord with the views expressed in the Shellabarger Case. > Dividends from these securities, as soon as collected by the petitioner, were impressed with- a trust in favor of his mother, and they were in fact paid to her. We are of the view that the Board of Tax Appeals erred in sustaining respondent’s determination, and the order of the Board approving the determination is therefore reversed, and the causes remanded with directions for further proceedings in harmony with these views.