author: PARKER, Circuit Judge.

text:
    BALLARD BROS. FISH CO., Inc., et al. v. STEPHENSON et al. BORUM et al. v. SAME.
    Nos. 3122, 3124.
    Circuit Court of Appeals, Fourth Circuit.
    April 13, 1931.

      No. 3122:
    L. P. Matthews, of Norfolk, Va. (A. G. Dunton, of Norfolk, Va., J. Brooks Mapp, of Keller, Va., and Matthews & Dunton, of Norfolk, Va., on the brief), for appellants.
    James Mann, of Norfolk, Va. (Tazewell Taylor and Mann & Tyler, all of Norfolk, Va., on the brief), for appellees.
    No. 3124:
    L. P. Matthews and H. B. G. Galt, both of Norfolk, Va., for appellants.
    G. A. Harris, of Suffolk, Va., and Michael Cooper, I. W. Jacobs, and A. S. Holtz, all of Norfolk, Va., for appellees.
    Before PARKER and NORTHCOTT, Circuit Judges, and GLENN, District Judge.
   PARKER, Circuit Judge.

These are appeals from decrees entered by the court below in controversies which arose in the bankruptcy proceedings of the Norfolk Residence Corporation. Certain property held by the bankrupt was sold under orders of court; and controversies as to the right to the proceeds of sales arose between holders of notes secured by deeds of trust on the property executed by the bankrupt and holders of notes secured by deeds of trust which had been executed by prior owners of the property, and under which it had been sold at the time of its purchase by bankrupt. The holders of the notes last mentioned, which had not been paid, contended that the sales under which the bankrupt acquired title to the property were irregular and void; that the bankrupt took the title subject to their rights; that the trustee under the deeds of trust executed by the bankrupt, being the same person as the trustee from whom it had purchased, had notice of the equities in their behalf; and that notice to him was notice to the holders of the notes secured by the deed of trust to him. These latter contended that they were purchasers for value and without notice, • and, as such,, were not affected by outstanding equities. The court below held with the contention of the holders of the notes executed by the bankrupt; and from decrees in their favor the holders of the notes secured by the prior deeds of trust have appealed.

The eases arise out of the failure of the Guaranty Title & Trust Corporation of Norfolk, hereafter referred to as the Title Company, and of its subsidiary corporation, the Norfolk Residence Corporation, hereafter referred to as the Residence Company. The Title Company was engaged in lending money on real estate, and its method of business was to take notes from the borrower secured by deed of trust executed to its president, one A. P. Grice. It then sold or discounted the notes, guaranteeing the payment of principal and interest. The purchasers of the notes looked for payment to the Title Company, which paid principal or interest when due, whether it had collected from the borrower or not, and attended to the matter of foreclosure upon default. The Residence Company was owned by the Title Company, and was organized to buy in property at foreclosure sales to protect the interest of the latter.

In case No. 3122 it appears that Frank Lindsay and Addie C. Ainsworth, on June 15, 1927, borrowed from the Title Company $35,000, executing notes therefor maturing June 15, 1929, secured by a deed of trust on land in which Grice was named as trustee. These notes were guaranteed by the company, and were sold to investors. The makers defaulted in the payment of interest and taxes, and the company, having paid the interest, and being the holder of interest coupons, directed the trustee to foreclose. The trustee thereupon advertised the land for sale under the terms of the deed of trust; and at a sale on June 13, 1929, it was purchased by the Residence Company at the price of $27,500. The sale was advertised as being for cash, but the Residence Company did not actually pay cash. Instead, it executed to the Title Company its notes for $35,000 secured by a deed of trust to Grice as trustee on the property purchased, which was conveyed to- it by a deed simultaneously executed by Grice, as trustee under the deed of trust from Lindsay and Ainsworth. The Title Company thereupon credited the Residence Company with $35,000; and that amount was set up on its boobs as a fund with which to pay the notes secured by the Lindsay and Ainsworth deed of trust as they should be presented; $15,000' of these notes were presented and- paid, leaving $20,000 outstanding on June 27, 1929, when the Title Company was placed in receivership. On June 18, 1929; the Title Company pledged to the Norfolk National Bank of Commerce & Trusts and the Seaboard Citizens’ National Bank $17,000 of the notes executed by the Residence Company, along with other collateral, to secure loans aggregating $20,000 made by these banks. It is admitted that the banks took the notes in good faith, believing them to be secured by a valid first mortgage on the property in question. The controversy over the proceeds of the property sold is between the banks as holders of these notes and the holders of the notes secured by the Lindsay and Ainsworth deed of trust.

In case No. 3124 it appears that one Dalton had executed to the Title Company notes aggregating $4,109 secured by deed of trust to Grice. Of these notes $300 matured August 15, 1928 and $3,800 August 15, 1930. They were guaranteed by the Title Company, and were sold to one Borum and one Gilliam, whose executors are the appellants in this case. When the $300' of principal notes fell due, there was default by the maker, and the Title Company paid them and held them with certain interest coupons which it had paid. In May, 1929, there was default by the maker, not only as to the payment of the $300 principal notes, but also as to interest and taxes; and the trustee was directed by the Title Company to proceed with the foreclosure of the deed of trust. The property embraced therein, having been duly advertised, was sold on May 23, 1929; to the Residence Company for $3,700, and a deed in due form was executed by Grice, as trustee, conveying it pursuant to the sale, and reciting that the consideration had been paid. On June 1,1930, the Residence Company executed to the Title Company notes for the sum of $3,600 secured by deed of trust on the property executed to Grice as trustee. These notes, with the exception of one for $1,000, were guaranteed by the Title Company and sold to the public, and are now held by persons who acquired them in good faith, believing them to be secured by valid first mortgage and without notice of any equity of the holders of notes secured by the Dalton deed of trust. These holders had no notice of the foreclosure sale, and have never been paid. When the notes and deed of trust were executed by the Residence Company, a credit was set up in their favor on the books of the Title Company, but they knew nothing of this having been done. The controversy is between them and the holders of the notes executed by the Residence Company.

With respect to the regularity of the sales, it appears that each of the notes secured by the deeds of trust contained the following provision: “The maker waives the benefit of homestead exemption and agrees that, in case of default in the punctual payment of any of the annexed interest notes, or in the performance of any covenant on his or her part contained in the deed of trust securing this note, then the trustee in said deed of trust may, and if requested by the holder of this note, shall declare the whole principal secured by said deed due and payable, and proceed to enforce the said deed according to its terms.”

The deeds of trust provided, with respect to defaults in the payment of principal, interest, taxes, or insurance, that: “Upon such default being made, the said trustee shall, so soon thereafter as he shall be requested by the said creditors herein secured, or their assigns so to do, sell the above granted property at public auction, at such time and place, and upon such terms and conditions as he may deem expedient,” etc.

The first contention as to the invalidity of the sales is that they were unauthorized because foreclosure was not requested by all of the holders of the notes secured, as it is contended was required under the conditions contained in the deeds of trust, and that the indebtedness was not declared due under the acceleration clause of the notes as prescribed in the conditions therein contained. We think, however, that there can be no question but that the sales by the trustee were fully authorized. There had been default in the payment of interest and taxes and request for foreclosure by one of the creditors secured. The provisions óf the notes and the deed of trust securing same must be construed together (Indiana & I. C. Railway Co. v. Sprague, 103 U. S. 756, 26 L. Ed. 554); and, when they are so construed, there can be no doubt that, for default in payment of principal, interest, or taxes, the trustee was authorized, upon the request of the holder of any note secured, to declare all of the notes due and proceed with foreclosure. It is said that the trustee did not declare the notes due; but the advertisement-under the deed of trust was, we think, a sufficient exercise of this power.

A more troublesome question arises with respect to the fact that the trustee, instead of demanding cash in accordance with the advertised terms of sale, allowed the Residence Company to give its notes secured by mortgage to the Title Company. It is true that in Virginia the purchaser from a trustee is not required to see to the application of purchase money (Virginia Code of 1924, § 6270); but, if he does not pay the purchase money, and legal title is conveyed to him, he takes it subject to the same equities as attached to it in the hands of the trustee. Here the Residence Company, as a matter of fact, paid nothing to the trustee. Instead of paying the purchase price to him, it merely executed notes to the corporation which owned its stock and controlled its pqlicy. While a credit was thereupon set up on the books of the Title Company in favor of the holders of the original notes, the trustee was neither expressly nor impliedly authorized to accept such credit in payment for the property. Under such circumstances, if this were a controversy between the holders of the original notes and the Residence Company or the Title Company, the legal title would be impressed with the equities existing in favor of these holders.

The controversy, however, is not with either the Residence Company or the Title Company. It is with the holders of notes who took them in good faith, for value and without notice of the outstanding equities, thinking that they were secured by a deed of trust constituting a first lien on the property. The equity of the holders of the notes last mentioned is at least equal to that of the holders of the notes secured by the original deeds of trust, and furnishes a typical ease for the application of the principle that between equal equities the law will prevail. 21 C. J. 207; 10 R. C. L. 385; note, 15 L. R. A. (N. S.) 1027, and eases there cited. Furthermore, the wrongful act of the trustee in selling the property and conveying title without obtaining proper payment was made possible by the trust reposed in the trustee by the holders of the notes under the original deed of trust; and consequently a case arises for the application of another principle of equity, viz., that, where one of two innocent persons must suffer loss by reason of the wrongful act of a third, the one who has made it possible for the third person to occasion the loss must sustain it. Atlantic Life Ins. Co. v. Rowland (C. C. A. 4th) 22 F.(2d) 126, 130; Cleve v. Craven Chemical Co. (C. C. A. 4th) 18 F.(2d) 711, 715, 52 A. L. R. 980: As said by Judge . Rose, speaking for this court, in Norton v. City Bank & Trust Co., 294 F. 839, 845: “In such eases as that here involved, it is trae that- the agent has proved false to his trust, and some innocent person must be the loser. Should it not be the one who gave him the power which he misused?”

The ease of Williams v. Jackson, 107 U. S. 478, 2 S. Ct. 814, 818, 27 L. Ed. 529-, is directly in point. In that ease owners of property had conveyed the legal title to trustees to secure the payment of notes contemporaneously executed, which were transferred to a bona fide holder for value. Subsequently the trustees, without authority from the holder of the note, released the deed of trust in favor of the grantor, who thereupon executed a new note and deed of trust on the same property; one of the trustees thereunder being one of the trustees who had joined in wrongfully releasing the original deed of trust. The note thus secured was delivered for value to a lender, one Williams, who had no notice, of the transfer of the note secured by the first deed of trust or that same was unpaid. After sale undpr the second deed of trust, suit was brought by the holders of the notes secured by the first to have them declared a lien upon the property. In holding that they were not entitled to relief, the court said:

“Williams is admitted to have had no actual knowledge that the notes secured by the first trust deed were held by the plaintiffs, or that they were unpaid. The knowledge of those facts by Charles T. Davis, through whom Williams made the loan, does not bind him, because upon the evidence Charles T. Davis appears not to have been his agent, but the agent of Sweet and wife. * * *
“To charge Williams with constructive notice of the fact that the notes had not been paid, in the absence of any proof of knowledge, fraud, or gross or willful negligence on his part, would be inconsistent with the purpose of the registry laws, with the settled principles of equity, and with the convenient transaction of business. Hine v. Dodd, 2 Atk. 275; Jones v. Smith, 1 Hare, 43, and 1 Phill. 244; Agra Bank v. Barry, Irish R. 6 Eq. 128, and L. R. 7 H. L. 135; Wilson v. Wall, 6 Wall. 83 [18 L. Ed. 727]; Norman v. Towne, 130 Mass. 52.
“The equity of Williams being at least-equal with that of the plaintiffs, the legal title held for Williams must prevail, and he is entitled to priority.”

In Evans v. Roanoke Savings Bank, 95 Va. 294, 28 S. E. 323, 324, the Supreme Court of Appeals of Virginia dealt with a case involving the rights of the holders of notes secured by a deed of trust, which had been released by the trustee, as against the rights of a bona fide holder for value of notes subsequently executed and secured by deed of trust on the same property. The equity of the holder of the notes secured by the second deed of trust was held equal to that of the holder of the original notes and the doctrine applied that as between them the legal title held for the benefit of the notes subsequently issued would prevail. The court quoted at length from the opinion in Williams v. Jackson, including the paragraphs which we have quoted above, and, referring to the release of the first deed of trust in the ease under consideration, said: “The result of it is that the deed to secure the notes held by the Roanoke Savings Bank was by these transactions released, so far as the Covenant Building & Loan Association is concerned; and that association, being an innocent purchaser relying upon the public record, stands to-day before the court with an equity equal to that of the Roanoke Savings Bank, and with a legal title vested in the trustee for its benefit.”

It is properly conceded in the case at bar that the deed from the trustee conveyed legal title to the Residence Company. Taylor v. King, 6 Munf. (Va.) 358, 8 Am. Dec. 746; Den ex dem. Canoy v. Troutman, 30 N. C. (7 Ired.) 155; Williams v. Jackson, supra, 107 U. S. at page 482, 2 S. Ct. 814, 27 L. Ed. 529 ; 41 C. J. 1012, 1013 and cases there cited. And it follows, of course, that, after this conveyance, the deed of trust from the Residence Company to the trustee vested the legal title in him. It is argued, however, that, as the trustee had notice of the equities of the holders of the prior notes, he took the legal title subject.to these equities, and that under.the law of Virginia notice to him was notice to the holders of the subsequent notes, with the result that they cannot be held to be without notice, and consequently holding an equity equal to the holders of the prior notes. The question thus raised is not a question of title, as to which we would, of course,’ be bound by the Virginia decisiqns, but is a question of general law, wherein we follow the decisions of the courts of the United States. Swift v. Tyson, 16 Pet. 1, 10 L. Ed. 865; Marshall County v. Schenck, 5 Wall. 772, 784, 18 L. Ed. 556; Oates v. Nat. Bank, 100 U. S. 239, 25 L. Ed. 580. Under the federal rule, knowledge of the trustee, in a case such as this, is not to be imputed to a bona fide holder for value of the note secured. The very point was decided by necessary implication in the case of Williams v. Jackson, supra, where the trustee liad knowledge of the wrongful character of the release of the pri- or deed of trust, and it was held that the holder of the notes secured by the deed of trust to him was a holder without notice.

It must not be overlooked that the holders of the notes of the Residence Company here involved were not the original holders or mortgagees, but were holders for value and without notice by transfer from the Title Company. It is the well-settled rule of the federal courts that such a holder takes, not only the notes, but also the rights under a mortgage securing same, freed of the equities which might have been asserted against the original mortgagee. Carpenter v. Longan, 16 Wall. 271, 21 L. Ed. 313; Kenicott v. Wayne County, 16 Wall. 452, 469, 21 L. Ed. 319; Sawyer v. Prickett, 19 Wall. 146, 22 L. Ed. 105; Chicago Railway Equipment Co. v. Merchants’ Bank, 136 U. S. 268, 283, 10 S. Ct. 999, 34 L. Ed. 349; Peninsula Bank v. Wolcott (C. C. A. 4th) 232 F. 68, 70, Ann. Cas. 1918C, 477, and note.

The case last cited was a decision of this court in a case arising under a Virginia deed of trust. One of the notes secured thereby had been transferred to a bank which took it without notice of outstanding equities. In upholding the rights of the bank to the security of the deed of trust freed of defenses, the court, speaking through Judge Woods, said: “The notes were negotiable, and the Bank of Williamsburg took and held them as bona fide indorsees. This indorsement carried with it the security of the deed of trust. The authorities at one time were in serious conflict on the question whether the indorsee of a negotiable note took the mortgage given to secure it subject to defenses which might have been set up against the original mortgagee; but it is now well settled by the great weight of authority that the indorsee of a negotiable note takes the mortgage given to secure it, if valid on its face, as he takes the note, freed from defenses which might have availed against the original mortgagee.”

For the reasons stated, the decrees appealed from will be affirmed.

Affirmed.


source: Caselaw Access Project

author: SOPER, District Judge.

license: Public Domain

text:
    JEFFERSON STANDARD LIFE INS. CO. v. LIGHTSEY.
    No. 3041.
    Circuit Court of Appeals, Fourth Circuit.
    April 29, 1931.
    McOLINTIO, District Judge, dissenting.

      Robert MeC. Figg, Jr., of Charleston, S. C., and Julius C. Smith, of Greensboro, N. C. (Brooks, Parker, Smith & Wharton, of Greensboro, ÜST. C., and Hyde, Mann & Figg, of Charleston, S. C., on the brief), for appellant.
    Randolph Murdaugh, of Hampton, S.-C., for appellee.
    Before PARKER, Circuit Judge, and McCUNTIC and SOPER, District Judges.
   SOPER, District Judge.

This action at law was brought to re>eover the sum of $5,000 under the provision for double indemnity in a life insurance policy upon the life of Jacob Calvin Lightsey. The policy provided for the payment of $5,-000 to the wife of the insured upon receipt of due proof of death, and for the payment of the sum of $10,000 if the death of the insured should result, directly and independently of all other causes, from bodily injury effected solely through external, violent, and accidental means.

The insured died on August- 16,' 1928. Proofs of death were submitted, and the sum of $5,000 was paid by the company to the beneficiary in October of that year by cheek containing the indorsement that the payment was accepted in full and complete settlement of all claims under the policy. During this period, the beneficiary was not in possession of the policy and was not aware of the double indemnity provision. She found the policy in January, 1929, and thereupon made demand upon the company for the additional sum of $5,000 on the ground that the death of her husband fell within the terms of the double indemnity clause. This demand having been refused, suit was brought.

The first question which is raised on this appeal is whether the evidence that the death of the insured resulted from accident independently of all other causes was of such character as to justify the submission of this issue to the jury. It is urged by the company that the only reasonable inference from the evidence is that the death was not caused solely by accidental injury, but that, on the contrary, diseases and ailments from which the insured was suffering at the time co-operated and contributed to bring about his death. The plaintiff’s evidence tended to show that on the 9th day of August, 1928, one week before the insured’s death, he was engaged at his garage at his home in cranking his Ford ear, when it fired loudly, lunged forward a few inches, and knocked him down. He arose after a minute and walked around through the house, but some time later fell and was carried to his bed, from which he was taken to the hospital, where he subsequently died. This testimony was given by the daughter of the insured, who, on cross-examination, emphasized the fact that the ear moved only a few inches and pushed her father over. But the jury would have been warranted'in concluding from her testimony, taken as a whole, that her father was struck a blow by the ear and knocked to the ground. A physician was called in on the day after the accident, and found evidence of a blow to the back of the patient’s head, and came to the conclusion that he was suffering from a concussion; that the blow was sufficient to cause concussion and death, and was the direct and sole cause of death. He was of the opinion that the injured man suffered a cerebral hemorrhage from the blow, resulting in paralysis and death. It was, in his opinion, a very slow hemorrhage, and the period of one week between the injury and the death indicated that the arteries of the patient were not at fault, for otherwise they would have ruptured and the patient would have died within forty-eight hours. The physician concluded that the arteries of the insured were at least in fair condition for one of his age.

• The conclusions of this witness were assailed by witnesses and documentary evidence offered on behalf of the ‘ defendant. There was evidence tending to show that, although the plaintiff’s witness had previously known the insured, he had never before treated him; that the physician’s certificate, attached to the proof of death at the time of the original settlement, showed that, although the death was caused by cerebral hemorrhage, following cranking of the automobile, his last illness was complicated with or induced by hypertension or high blood pressure, and his death did not result independently of all other causes, from bodily injuries effected solely by accidental means. Other physicians testified that the insured was suffering from syphilis, that his blood pressure, on admission to the hospital, was very high, that he had arteriosclerosis of long standing, and chronic nephritis, and that no external bruises or injuries were found. It was the opinion of these physicians that the death of the insured was caused by cerebral hemorrhage, chronic nephritis, and hardening of the arteries; and that even if an accidental injury contributed to the cause of death, the existing diseases of the insured co-operated to produce that result.

It must be admitted that the evidence produced by the insurance company for the consideration of the jury made out a strong case tending to show that the death of the ■insured was not due solely to the accident; but, on the contrary, there was the evidence of the plaintiff’s physician which tended to show that the accident was the sole cause of death, and we are unable to say, after a consideration of the whole case, that only one reasonable inference, and that favorable to the defendant’s contention, could be drawn. We think, rather, that the conflict of testimony created an issue for the jury to decide, and that the action of the District Judge in refusing to direct a verdict in the defendant’s favor was correct.

The second question is directed to a portion of the District Judge’s charge wherein he endeavored to make plain to the jury the meaning of the double indemnity elause of the policy. This elause, in full, js as follows: “The Company will pay the beneficiary in full settlement of all claims hereunder the sum of $10,000, if, during the premium paying period of this policy and before a default in the payment of any premium, the death of the insured result from bodily injury within ninety days after the occurrence of such injury, directly and independently of all other causes from bodily injuries effected solely through external, violent and accidental means, not intentionally inflicted by another person or by the insured himself.”

The particular portion of the charge objected to is as follows: “I charge you that if a man is in a diseased condition and has an accident, and the accident contributes.to his death, and his diseased condition contributes also to his death, I charge you that they are not entitled to recover under this policy. But even though a man may be in a diseased condition, and even though his diseased condition may enable an accident more effectively to bring about his death, if the real cause ■ — the efficient cause — was the accident, th^ blow that he may have received, and the diseased condition, although he was in that condition, did not contribute as an efficient factor in determining and bringing about his death, then they are entitled to recover. I think that is about as far as I can go. I take it that this policy is intended as a practical working agreement between the parties, and to be determined in a common sense way, and not upon the question of metaphysics.”

The insurance company complains that this instruction was erroneous because it permitted the jury to find for the plaintiff, even though a diseased condition of the insured may have enabled the accident more effectively to bring about his death, and because the words “all other causes” in the elause in question were restricted to mean “all other efficient causes.”

We think that the meaning of the double indemnity elause, as applied to the facts of this ease, is clear, and that it required a verdict for the company if the death of the insured was caused partly by the accidental blow and partly by a diseased condition. But it is also true that a diseased condition of the insured would not of itself have precluded recovery of the double indemnity, provided that his death was due solely to the effect of the blow. The question for decision is whether the charge of the District Judge could have misled the jury, contrary to the true meaning of the policy, into supposing that they should find for the policyholder if they should conclude that the blow was merely the proximate as distinguished from the sole cause of death. We do not think, from a consideration of the whole charge, that the jury could have been led into this error. In the first place, the use of the expressions “efficient cause” and “efficient factor” were not misleading. They were intended merely to emphasize the causal connection between the accident and the death. The double indem- ■ nity elause itself expresses the same idea when it provides that it shall only apply when the death of the insured results directly and independently of all other causes from bodily injuries effected solely through external, violent, and accidental means. The word “effected” obviously means “caused” and the phrase “efficient cause” was merely the emphatic expression of the same thought.

In the second place it becomes clear from a perusal of the charge as a whole that the District Judge, by saying that the diseased condition of the insured might enable an accident more effectively to bring about his death, did not mean to intimate that the plaintiff should recover even if the djsease was a cause contributing to the death. In the very paragraph of the charge under discussion, the District Judge said, in substance, that, if a man in diseased condition has an accident, and both the accident and the diseased condition contribute to his death, there could be no recovery under such a policy, but that, if the real cause — the efficient cause— was a blow, and the diseased condition did not contribute as an efficient factor in bringing about the death, there could be a recovery.

Moreover, the District Judge both before and after the clause in question took the same position. Prior thereto he told the jury in ■substance that, if the death did not result from bodily injuries effected solely through accidental means, but the insured died in consequence of accidental causes and diseases both concurring, then the verdict should be for the defendant. He also said that, if the ■accident contributed as an efficient cause of ■death, but a disease also contributed as such a cause, then there could be no recovery. The same thought was repeatedly expressed in written instructions offered by the insurance company and granted by the court and read to the jury after the delivery of the clause complained of. The jury was told substantially in four successive instructions that the plaintiff could not recover unless the death was caused solely by accidental means independently of all other causes, and that, if the insured had an existing disease which cooperated with the’ accident to cause his death, and without which the accident would not have caused his death, the double indemnity provision of the policy 'did not apply and the plaintiff could not recover. Under these circumstances, we do not feel that any mistake on the part of the jury could have occurred. It is plain that the District Judge had in mind the distinction between a condition of the insured and a cause of death which is not infrequently met in cases of this sort and was touched upon by Judge Parker in Mutual Life Ins. Co. v. Dodge (C. C. A.) 11 F. (2d) 486, 59 A. L. R. 1290. It was not unimportant in the case at bar to make clear to the jury that a diseased condition of the insured, unless an essential factor in the fatal result, would not prevent a recovery under the policy in suit.

Finally the company contends that the District Court should have directed a verdict in its favor because the plaintiff, as the beneficiary under the policy, on October 9, 1928, prior to the institution of the present suit, accepted a voucher check in the sum of $5,-000 and indorsed thereon a statement that the check was accepted as full payment and full and complete settlement of any and all claims of whatever nature under the policy. It is said that the transaction constituted an accord and satisfaction between the parties, and discharged the company from all liability under the policy. The court declined to direct a verdict on this account, but charged the jury that, if they should find that the company had given the cheek, and that it was accepted by the plaintiff in full. satisfaction of all liability, and was intended as sueh under the policy, then the plaintiff could not recover; that the statement on the voucher that it was intended as a full settlement of all claims under the.policy was not binding upon the jury, who should take into consideration all the circumstances surrounding the transaction, and should decide whether the parties understood and intended that the amount received by’ the beneficiary should be in full discharge not only of the ordinary liability, which was conceded, but was intended to be in discharge of the double indemnity liability. If it was not so understood and intended, the acceptance and indorsement of the check would not bar the plaintiff from recovery if her ease was otherwise made out.

We think that this instruction was as favorable to the company as it had the right to expect. The principles of accord and satisfaction are well settled. There must be a consideration in this as in other contracts. Consequently it is held that, where a debt is liquidated or certain, and is due, payment of a less sum is not a satisfaction thereof, although the creditor agrees to accept it as such; but .where a claim is in dispute, payment and acceptance of a less sum than claimed in satisfaction ordinarily operates as an accord and satisfaction, for under such circumstances there is a sufficient consideration for the settlement. 1 C. J. 539, 551. But it is clear in the case at bar that there was no consideration for the release of so much of the claim as depended upon the application of the double indemnity clause. The company in its pleadings conceded that the policy was in full force and effect at the time of the insured’s death, and hence at least the sum of $5,000 was payable to the beneficiary. There was no payment of any part of the claim which is now in dispute. There were in fact two separate and distinct claims in the one contract, one of which depended upon the death of the insured while the policy was in good standing, and the other upon the existence of an accidental cause of death. Payment of an amount eoncededly due on one of two claims arising on separate promises in the same contract is not a good consideration for a release of a claim on the other. Matlack Coal & Iron Corp. v. New York Quebrach Ext. Co. (C. C. A.) 30 F. (2d) 275; Keene v. Gauen (C. C. A.) 22 F. (2d) 723.

In connection with this point the insurance company claims that the court erred in excluding- evidence tending-- to shpw that the policy was in a lapsed condition at the time of the insured’s death as bearing on the question of consideration for a complete release. This evidence, however, was properly excluded by the District Judge, because the complaint Slleged that at the time of the insured’s death, the policy was in full force and effect, and the answer conceded this allegation to be true. Under this state of the pleadings, evidence tending to show that the policy had lapsed before the insured’s death was obviously inadmissible, at least until some amendment of the pleadings should be made. The beneficiary did not come in court to meet this issue, and it is at least doubtful whether the court would have permitted an amendment of the pleadings, even if application therefor had been made. Certainly the evidence was inadmissible in the state of the ease when it was offered.

Irrespective of the lack of consideration, the facts of the ease fail to make out a contract of accord and satisfaction of the claim of double indemnity for the fundamental reason that there was no meeting of the minds of the parties on this point. The testimony shows clearly that the beneficiary under the policy was not aware that it contained a double indemnity clause, and that the company on its part had no reason to believe, when the settlement was made, that a claim would be made that the death of the insured was caused by accidental means. The undisputed evidence is that the beneficiary did not secure possession of the poliey and knowledge of its contents until after the execution of the indorsement upon the cheek, and that the proof of death, in the possession of the company at the time the settlement was made, indicated that the death was not caused solely by accidental means, but was complicated with or induced by hypertension or high blood pressure of the deceased. Obviously the release could have no reference to the double indemnity clause and constituted no bar to a claim thereunder. See Fire Ins. Ass’n v. Wickham, 141 U. S. 564, 12 S. Ct. 84, 35 L. Ed. 860; 1 Corpus Juris, 527.

Finding no error in the rulings of the court, the judgment will be affirmed.

MeCLINTIC, District Judge, dissents.


author: PHILLIPS, Circuit Judge.

text:
    TURNER et al. v. KIRKWOOD.

    No. 357.
    Circuit Court of Appeals, Tenth Circuit.
    April 2, 1931.
    Rehearing Denied May 18, 1931.

      R. W. Stoutz, of Tulsa, Okl., for appellants.
    Preston C. West, of Tulsa, Okl. (John D. DeBois, of Searcy, Ark., and West, Gibson, Sherman, Davidson & Hull, of Tulsa, Okl., on the brief), for appellee.
    Before COTTERAL, PHILLIPS, and MeDERMOTT, Circuit Judges.

      Rehearing’ denied June 1, 1931.

   PHILLIPS, Circuit Judge.

Julia A. Turner was the owner of certain lots in Muskogee, Indian Territory. She deeded an undivided one-half interest in such lots to her son, Fred E. Turner. She and Fred E. Turner incorporated the Old Homestead Company under the laws of Arkansas, which were then in force in the Indian Territory, with a capital stock of 2,000 shares of the par value of $25.00 per share. The capital stock of the Homestead Company was issued in exchange for such lots. Julia A. Turner and Fred E. Turner each received 999 shares and Gunter M. Turner, wife of Fred E. Turner, and James M. Givens each received one share.

In 1909, Julia A. Turner mortgaged certain real estate and pledged her 999 shares of Homestead Company stock to the national Bank of Commerce in St. Louis to secure an indebtedness of approximately $450,000 owed to the bank by her son, Clarence W. Turner. The contract of pledge provided that Julia A. Turner should be entitled to all dividends earned on such stock during her lifetime and that the pledge should not be foreclosed or the stock sold to pay the indebtedness of Clarence W. Turner until sixty days after her demise.

In August, 1914, Julia A. Turner and Fred E. Turner incorporated the Eureka Realty Company under the laws of Oklahoma, with a capital stock of 8,000 shares of the par value of $25.00 per share. 7,997 shares were issued in exchange for property of the Homestead Company valued at $200,-000.

On August 4, 1914, the directors of the Homestead Company declared a dividend of the Eureka Company stock and distributed it as follows: Fred E. Turner, 3,996 shares; Julia A. Turner, 3,996 shares; J. M. Givens, 4 shares, and Gunter M. Turner, one share. On August 6, 1914, Julia A. Turner surrendered her certificate of Eureka stock and caused two new certificates to be issued, each for 1,998 shares, one to Fred E. Turner individually and one to him as trustee for Mrs. Kirkwood, and delivered both certificates to Fred E. Turner.

Julia A. Turner died April 9, 1915, and Fred E. Turner was appointed administrator of her estate.

At the expiration of the sixty day period stipulated iñ the contract of pledge, the bank commenced a suit against the Homestead Company, the Eureka Company, Fred E. Turner, Gunter M. Turner, J. M. Givens, Geo. W. Stoutz, R. W. Stoutz, Thomas A. Bell, Fred E. Turner as administrator of Julia A. Turner, deceased, Effie T. Kirkwood and Clarence W. Turner in the United States District Court for the Eastern District of Oklahoma to foreclose such mortgage and pledge, and to obtain a judgment against Fred E. Turner, individually and as administrator of the Turner estate, for the conversion of 3,996 shares of the Eureka Company stock paid as a dividend to Julia A. Turner. ’ This suit resulted in a judgment and decree for a foreclosure of the mortgage and the pledge, and for a money judgment against Fred E. Turner, individually and as administrator of the Turner estate, for $135,-724.14 with interest from August 4, 1914, at 6% per annum, amounting in the aggregate to $157,982.89, on account of the conversion of the stock of the Eureka Company paid to Julia A. Turner as a dividend. This decree was dated April 28, 1917. Clarence W. Turner’s indebtedness to the ■ bank on that date amounted to $298,596.58.

On October 10, 1917, Fred E. Turner and the bank entered into a compromise agreement which provided that he should pay the bank $220,000, as follows: $18,560 by securities of Clarence W. Turner held by the bank, $112,440 in cash and $89,000 in deferred payments of not less than $1,000 per month, with interest on such deferred payments at 6%; that he should secure the note evidencing the deferred payments by a pledge of all the capital stock of the Eureka Company; and that the bank should cause the decree in the foreclosure suit to be modified by eliminating the personal judgment against Fred E. Turner and in lieu thereof requiring him to deliver to- the bank the 3,996 shares of Eureka stock paid to Julia A. Turner as a dividend of the Homestead Company. It further provided that, upon the modification of the decree, the bank should cause the stock and real property pledged and mortgaged to be sold pursuant to such decree, and, unless somp one at the sale bid more than certain stipulated sums therefor, the bank should buy in such stock and real property at the foreclosure sale and transfer the same to Fred E. Turner.

On November 12, 1917, the bank notified counsel of record for Mrs. Kirkwood that on November 14, 1917, it would apply to the court for modification of the decree in the foreclosure suit. On the latter date, the court entered a modified decree in the foreclosure suit as of April 28, 1917, which eliminated the money judgment against Fred E. Turner individually and as administrator, and provided that, in lieu thereof, he should deliver to the bank the 3,996 shares of Eureka stock paid to Julia A. Turner as a dividend of the Homestead Company on August 4, 1914, and all dividends declared on such Eureka stock after such date; and that such Eureka stock should be foreclosed and sold under the pledge of Julia A. Turner to the bank to satisfy the indebtedness of Clarence W. Turner.

Thereafter, the foreclosure sale's under the decree were made by W. H. Clark, a commissioner appointed by the court, and were confirmed in due course. The bank purchased the stock and real property at such foreclosure sales and thereafter transferred the same to Fred E. Turner.

Fred E. Turner paid the bank the sum stipulated in the contract of compromise out of his own means, with the exception of $19,001.79 which was paid out of the accumulated dividends on stock of the Homestead and Eureka Companies in his hands as administrator. These dividends accrued after the death of Julia A. Turner and pending the foreclosure litigation, and became a part of the' collateral security held by the bank.

It will be noted that the effect of the compromise agreement was to restore the 3,996 shares of Eureka stock to the Homestead Company and to exonerate Fred E. Turner, individually and as administrator, from liability on account of the conversion thereof. It did not affeet the Eureka stock paid to Fred E. Turner as a dividend.

At the time of the foreclosure sales, the Turner estate had neither the funds nor the • credit with which to secure funds to redeem the mortgage on the real estate or the pledge of the stock of the Homestead Company, and 'the indebtedness of Clarence W. Turner to the bank exceeded the value of such stock and real estate.

Fred E. Turner did not advise Mrs. Kirk-wood of such compromise agreement either before or after it had been consummated. Upon learning the facts with respect to such compromise agreement, and of the acquisition of the stock of the Homestead and Eureka Companies by Fired E. Turner, Mrs. Kirkwood commenced two actions, one against him to establish a trust in the 1,998 Eureka shares and for an accounting; and another against him and Clarence W. Turner to establish a trust in her interest in the property belonging to the Turner estate acquired by Fred E. Turner through such foreclosure sales and for an accounting. These suits were consolidated for trial. Pending the trial, Fred E. Turner dissolved the Homestead and Eureka Companies and transferred their assets to himself and Gunter M. Turner. Thereupon, the latter was made a party defendant to such suits.

The court found that Mrs. Kirkwood was the owner of a 24.975% interest in the real estate formerly owned by the Eureka Company and a 50% interest in the real estate formerly owned by the Homestead Company, which had been conveyed to Fred E. Turner and Gunter M. Turner; that, after charging Fred E. Turner with the rents and profits thereof and crediting him with" the amount paid to the bank, $202,086.16 was due him on June 1, 1930, and that he was entitled to a lien on the interest of Mrs. Kirkwood in such real estate for one-half of such amount. It adjudged that if, within nine months from the date of such decree, to wit, June 26, 1930, Mrs. Kirkwood should pay into the registry of the court $101,043.08 with interest thereon at 6% from the date of such decree, then Fred E. Turner and Gunter M. Turner should forthwith execute and deliver to Mrs. Kirkwood a good and sufficient deed, with special warranties of title, conveying to her a 24.975% interest in the real estate formerly owned by the Eureka Company and a 50% interest in the real estate formerly owned by the Homestead Company. It further adjudged that, in the event Mrs. Kirkwood failed to. pay such sum within such time, the property should he sold to satisfy the lien of Fred E. Turner, and that any balance remaining after satisfying such lien should be paid into the registry of the court to be disposed of by the court.

Counsel for Mrs. Kirkwood contend that the contract of October 10, 1917, between Fred E. Turner and the bank wa's in substance and effect a sale by the administrator to himself of the property of the estate, and is within the prohibition of section 1305, C. O. S. 1921, which provides:

“No executor or administrator must directly or indirectly, purchase any property of the estate he represents, nor must he be interested in any sale.”

The compromise agreement, in effect, provided that the bank, as the agent of Fred E. Turner, should bid in the property at the foreclosure sales. Therefore, in legal effect, Fred E. Turner was the purchaser of the stock and the real estate sold at such foreclosure sales.

Our attention has not been directed to any decision of the Supreme Court of Oklahoma passing upon the question of whether section 1305, supra, applies to a foreclosure sale. The Supreme Court of Missouri in the cases of Briant v. Jackson, 99 Mo. 585, 591, 592,13 S. W. 91, and Dillinger v. Kelley, 84 Mo. 561, construed a similar statute of Missouri and held that it did not apply to a sale made under an order of the circuit court in a mortgage foreclosure proceeding, and that it was applicable only to probate sales. At common law, the prohibition against an administrator purchasing the property of his decedent’s estate does not apply to a judicial sale made by a commissioner appointed by the court, over which sale the administrator has no control, and in connection with which he has no duties to perform. 24 C. J. p. 635, § 1591. The Oklahoma statute seems to be merely declaratory of the common law prohibition. We conclude that section 1305, supra, applies only to probate sales and has no application to the sales involved herein.

Counsel for Mrs. Kirkwood further contend that, independently of the statute, Fred E. Turner, because he was the administrator of the Turner estate and the holder of 1,998 shares of Eureka stock as trustee for Mrs. Kirkwood, occupied a fiduciary relationship with respect to the property of such estate and the Eureka Company shares held in trust by him, and, on that account, was precluded from purchasing such property at the foreclosure sales. ,

We will consider this contention, first, with respect to the property of the Turner-estate, and, second, with respect to the 1,998 shares of Eureka stock held in trust by Fred E. Turner.

I.

It will be noted that Fred E. Turner did not induce or procure the foreclosure. No act or omission of his brought it about. The estate did not have and could not secure the necessary funds to redeem the incumbered property from the mortgage and pledge. The. indebtedness secured was1 in excess of the value of the property mortgaged and pledged. Fred E. Turner had no control over, and no duty to perform in connection with the foreclosure sales.

Counsel for Mrs. Kirkwood assert that, even under these circumstances, Fred E. Turner, because he was administrator of such estate, was prohibited from purchasing such property at the foreclosure sale. Martin v. Wyncoop, 12 Ind. 266, 74 Am. Dec. 209, and Fleming v. Foran, 12 Ga. 594, support such contention. These eases fail to recognize the important distinction between an administrator’s sale over which the administrator has control and which is conducted by him, and judicial sales over which the administrator has no control and in connection with which he has no duties to perform, such as a mortgage foreclosure sale.

Martin v. Wyncoop, supra, is bottomed upon Campbell v. Johnston, 1 Sandf. Ch. (N. Y.) 148. The latter case is clearly distinguishable from the case at bar. There the executors, having funds with which to pay the interest on the mortgage, failed to do so and by their omission induced the foreclosure. The court held that an executor could not be a purchaser at a foreclosure sale brought about by the neglect of his duties as such fiduciary.

In Allen v. Gillette, 127 U. S. 589, at page 596, 8 S. Ct. 1331, 1334, 32 L. Ed. 271, the court said:

“The principle that a trustee may purchase the trust property at a judicial sale brought about by a third party, which he had taken no part, in procuring, and over which he could not shave had control, is upheld by numerous decisions of this court and of other courts of this country.”

In Starkweather v. Jenner, 216 U. S. 524, at page 528, 30 S. Ct. 382, 384, 54 L. Ed. 602, 17 Ann. Cas. 1167, the court said:

“Even a trastee has been held competent to purchase the trust property at a judicial sale which he has no interest in, nor [had] any part in bringing about, and which sale he in no way controls.”

In Steinbeck v. Bon Homme Mining Co. (C. C. A. 8) 152 F. 333, at page 339, the court said:

“On the other hand, there is an exception to the general rale that one who occupies a fiduciary relation may not lawfully purchase the property of his' correlate for his own benefit, as well established as the rule itself. It is that an agent or trustee may lawfully buy the property of his principal or cestui que trust at a judicial sale caused by a third party which he has no part in procuring, and over which he can exercise no control.”

In Prevost v. Gratz, Fed. Cas. No. 11,406, the court said:

“I know of no principle of equity which will invalidate the title of a trustee to land, which the law has taken out of his hands, and which he purchased from one appointed by the same authority to sell it.”

In Chorpenning’s Appeal, 32 Pa. 315, 72 Am. Dec. 789, the court said:

“The appellee was entirely powerless in his capacity of guardian in relation to the land. He had neither money nor influence as such. It may be conceded, that he stood very near the line of disability as a purchaser for his own interest, but still outside of it, if the reason of the law is to govern. Authority, however, sustains his position.”

The question was exhaustively considered in Brown v. McGraw, 98 W. Va. 607, 128 S. E. 124, 127, where the court said:

“There can be no question but that, as a general rule, one occupying a fiduciary relation cannot purchase and hold for his own benefit, as against the claims of his beneficiary, property sold by him, or under his direction and control as such fiduciary, and that such a purchase is voidable at the option of the beneficiary. Newcomb v. Brooks, 16 W. Va. 32; Ayers v. Blair, 26 W. Va. 558; Winans v. Winans, 22 W. Va. 678. The appellants while recognizing this gen-' eral rule, contend that where the sale of the trust property is made pursuant to a decree of the court by a special commissioner or' other agent appointed by the court, the fiduciary has the right and privilege of purchasing. The appellees, on the other hand, maintain that there is no such exception or qualification of the general rule. While it cannot be said that the courts are in complete accord in recognizing this exception, there is substantial authority to the effect that it is well founded. In fact, the decisions holding that a fiduciary may purchase at a sale made by court decree and not by him, without fraud or fault on his part, but in good faith, are almost as numerous as those which hold that he has no right to purchase where he conducts the sale. 11 Am. & Eng. Ency. Law, p. 1067; 24 C. J. 635; and case cited infra. An examination of a number of cases holding contra reveals the fact that they were, for the most part, jurisdictions in which the administrator himself is given the power of sale by order of the court, and so he was in reality both buyer and seller, there being in such cases a clear conflict of interests.”

See, also, Barber v. Bowen, 47 Minn. 118, 49 N. W. 684; Eckrote v. Myers, 41 Iowa, 324; Fisk v. Sarber, 6 Watts & S. (Pa.) 18; 26 R. C. L. p. 1327, § 190; 24 C. J. p. 635, § 1591.

However, in order to- avoid a purchase of the property of his correlate by one who occupies a fiduciary relation, it is not necessary to show a breach of duty resulting in actual injury to the correlate. The law recognizes the infallible truth of that divine saying, “No man can serve two masters,” and requires that a fiduciary refrain from voluntarily placing himself in a position where his duty as fiduciary-and his private interests conflict. So, the test is not whether the correlate has suffered an injury but whether there has been a clash between the personal interests and the duties of the fiduciary. Hoyt v. Latham, 143 U. S. 553, 566, 12 S. Ct. 568, 36 L. Ed. 259; Michoud v. Girod, 4 How. 503,11 L. Ed. 1076; Wormley v. Wormley, 8 Wheat. 421, 441, 5 L. Ed. 651; Bennett v. Weber, 323 Ill. 283, 154 N. E. 105; Rittenhouse v. Smith, 255 Ill. 493, 99 N. E. 657; Miller v. Rich, 204 Ill. 444, 68 N. E. 488; Shute v. Austin, 120 N. C. 440, 27 S. E. 90; Stewart v. Baldwin, 86 Wash. 63, 149 P. 662; 24 C. J. p. 635, § 1590; 39 Cyc. 366; Roger v. Whitham, 56 Wash. 190, 105 P. 628, 629, 134 Am. St. Rep. 1105, 21 Ann. Cas. 272; West v. Waddill, 33 Ark. 575, 587; Jansen v. Williams, 36 Neb. 869, 55 N. W. 279, 20 L. R. A. 207; Tisdale v. Tisdale, 2 Sneed (34 Tenn.) 596, 64 Am. Dec. 775; People v. Township Board, 11 Mich. 222.

In the last cited ease, the court said:

“So careful is the law in guarding against the abuse of fiduciary relations, that it will not permit an agent to act for himself and his principal in the same transaction, as to buy of himself, as agent, the property of his principal, or the like. All such transactions are void, as it respects his principal, unless ratified by him with a full knowledge of all the circumstances. To repudiate them he need not show himself damnified. Whether he has been or not is immaterial. Actual injury is not the principle the law proceeds on in holding such transactions void. Fidelity in the agent is what is aimed at, and as a means of securing it, the law will not permit the agent to place himself in a situation in which he may be tempted by his own private interest to disregard that of his principal.”

But the rule'does not apply to cases where the reason for the rule, to wit, a conflict between the personal interests and the fiduciary duties of the trustee, is absent.

It is true, in the instant ease, that Fred E. Turner as such administrator held the legal title to the Homestead shares and the real property of the Turner estate pledged and mortgaged to the bank, but, at the time of the foreclosure sales, such property had passed from the jurisdiction of the probate court and from the control of the administrator, and was under the jurisdiction of the United States District Court in the foreclosure proceeding. Ho act or omission of the administrator brought about the foreclosure sales. As such administrator, he was powerless to prevent the foreclosure proceeding and the sales thereunder. He had no control over such sales and he had no duties to perform in connection therewith. By becoming the purchaser of such property at the foreclosure sales, he did not place himself in a position where his duties as administrator conflicted with his personal interests as-purchaser.

We conclude, therefore, that Fred E. Turner had a right to purchase such property at the foreclosure sales.

II.

The original decree in the foreclosure •suit in no wise affected the rights and title of Mrs. Kirkwood to- the 1,998 shares of Eureka stock held .by Fred E. Turner as trustee. The bank originally sought no relief against Mrs. Kirkwood with respect to such stock. Instead, it sought and obtained a judgment against Fred E. Turner, personally and as administrator, on account of the conversion of the Eureka stock paid to Julia A. Turner as a dividend.

Without the knowledge or consent of. his correlate, Fred E. Turner entered into a compromise agreement with the bank which provided that the decree in the foreclosure suit should be modified so that the 3,996 shares of Eureka stock, paid to Julia A. Turner as a dividend (which included the 1,998 shares held by Fred E. Turner as such trustee), should be delivered to the bank and subjected to its lien, and that the money judgment against him, personally and as such administrator, should be eliminated. It further provided for the foreclosure and sale of such shares, the purchase thereof by the bank, and the transfer thereof by the bank to Fred'E. Turner.

As a result of such compromise agreement and the modified decree made in pursuance thereof, Mrs. Kirkwood lost title to such shares and the title thereto passed through the bank to Fred E. Turner. It is clear that Fred E. Turner, by entering into such compromise agreement, used the trust property for his personal benefit and advantage, and thereby violated his trust.

Counsel for Fred E. Turner contend that, notwithstanding the fact that the bank waived its right to enforce its lien against the 3,996 shares of Eureka stock, transferred to Julia A. Turner, and elected to hold Fred E. Turner and Julia A. Turner for the conversion thereof, the bank retained a lien upon such shares until the judgment in conversion was satisfied; and cites in support thereof Union Pacific R. Co. v. Schiff (C. C.) 78 F. 216; Lovejoy v. Murray, 3 Wall. 1, 16, 18 L. Ed. 129, and 38 Cyc. 2112. But the bank asserted no such lien in the foreclosure suit and the original decree in such suit established no lien against the 1,998 shares of Eureka stock held by Fred E. Turner as trustee.

One of several wrongdoers, who has been compelled to pay the damages for the wrong committed, cannot, as a general rule, enforce contribution from the others who participated in the commission of the wrong. Sparrow v. Bromage, 83 Conn. 27, 74 A. 1070, 27 L. R. A. (N. S.) 209, 212, 213, 19 Ann. Cas. 796; Union Stock Yards Co. v. Chicago, B. & Q. R. Co., 196 U. S. 217, 224-228, 25 S. Ct. 226, 49 L. Ed. 453, 2 Ann. Cas. 525; Goldsmith v.. Koopman (C. C. A. 2) 152 F. 173, 177; The Hudson (D. C. N. Y.) 15 F. 162, 167; Boyd v. Gill (C. C. N. Y.) 19 F. 145, 146; Adams v. White Bus Line, 184 Cal. 710, 195 P. 389, 390; Seattle v. Peterson & Co., 99 Wash. 533, 170 P. 140; Fakes v. Price, 18 Okl. 413, 89 P. 1123; 13 C. J. p. 828, § 18; 6 R. C. L. p. 1054, § 17; Pomeroy’s Equitable Remedies (2d Ed.) vol. 5, § 2339, p. 5173. Where, however, the act. is not necessarily nor ordinarily unlawful, one who has acted without moral guilt or wrongful intent and has paid the damages caused thereby, may recover contribution from the other wrongdoer. Farwell v. Becker, 129 Ill. 261, 21 N. E. 792, 6 L. R. A. 400, 16 Am. St. Rep. 267; Vandiver v. Poliak, 107 Ala. 547, 19 So. 180, 54 Am. St. Rep. 118; Horrabin v. Des Moines, 198 Iowa, 549, 199 N. W. 988, 38 A. L. R. 554; Union Stock Yards Co. v. Railway Co., supra; Pomeroy’s Equitable Remedies (2d Ed.) vol. 5, § 2339, p. 5173; 13 C. J. p. 829, §20.

In the instant case, Fred E. Turner and Julia A. Turner, in paying the dividend of Eureka stock to the latter, were guilty of an unlawful conversion and of a fraud against the bank. Their act, therefore, comes within the general rule rather than the exception, with respect to the right of contribution between joint tort feasors.

If Fred E. Turner had paid the money judgment awarded against him by the original decree in the foreclosure suit, he could not have enforced contribution or secured indemnity from the Turner estate, or from Mrs. Kirkwood as to the shares transferred to her by Julia A. Turner. Such being the situation and relation of the parties, it follows that the fact the bank had a lien upon the trust property was no justification for Fred E. Turner inducing the bank to assert such lien to the detriment of his cestui que trust in order 'to avoid the personal judgment against him.

The shares held in trust by Fred E. Turner passed to the bank and from the bank back to him. He and the other stockholders transferred the property of the Eureka Company to Fred E. Turner and Gunter M. Turner. The trust property was thus converted into such real estate and is now held by the two last mentioned persons. Neither of them was a bona fide purchaser for a valuable consideration without notice of the trust.

A cestui que trust may pursue and recover trust property conveyed or transferred by the trustee otherwise than in the course of executing and carrying into effect the terms of the trust, provided its identity has not been lost and it has not passed into the hands of a bona fide purchaser for a valuable consideration without notice. United States v. Dunn, 268 U. S. 121, 132, 133, 45 S. Ct. 451, 69 L. Ed. 876; Oliver v. Piatt, 3 How. (44 U. S.) 378, 11 L. Ed. 622; Cook v. Tullis, 18 Wall. 332, 341, 342, 21 L. Ed. 933; Hynds v. Hynds, 274 Mo. 123, 202 S. W. 387, 390; Pomeroy’s Equity Jurisprudence (4th Ed.) vol. 3, §§ 1048, 1052, 1058, 1080; 26 R. C. L. p. 1348, § 214.

Whenever property in its original state and form has once been impressed with the character of a trust, no subsequent change of such state and form can divest it of its trust character so long as it is capable of clear identification, and the cestui que trust may pursue and reclaim it in whatever form he may find it, unless it has passed into the possession of a bona fide purchaser for value without notice. United States v. Dunn, supra; Oliver v. Piatt, supra; Cook v. Fullis, supra; Merritt Oil Corp. v. Young (C. C. A. 10) 43 F. (2d) 27, 31; Pomeroy’s Jurisprudence (4th Ed.) vol. 3, §§ 1048, 1058, 1080; 26 R. C. L. p. 1348, § 214.

Even where the property has passed into the hands of an innocent purchaser for value, the wrongdoer may not reacquire it from such purchaser free of the obligation which equity imposes upon one who despoils another of his property by breach of trust. Independent Coal & Coke Co. v. United States, 274 U. S. 640, 647, 47 S. Ct. 714, 71 L. Ed. 1270; Oliver v. Piatt, 44 U. S. (3 How.) 378, 11 L. Ed. 622.

Fred E. Turner wrongfully delivered such trust property to the bank. He reacquired it at the foreclosure sales. He caused the Eureka Company to transfer its assets to him and Gunter M. Turner. The trust property was thus converted into the real estate now held by him and Gunter M. Turner. Neither of them was a bona fide purchaser for value without notice of the trust. It follows that Mrs. Kirkwood is entitled to recover from Fred E. Turner and Gunter ML Turner 24.975 per cent, of the real estate conveyed by the Eureka Company to Fred E. Turner and Gunter M. Turner, and to have an accounting for the rents and profits thereof, less a reasonable allowance for the care, custody and management of the trust property.

The decree is reversed and the cause remanded for further proceedings in accordance with this opinion.

The costs of this appeal will be assessed equally between appellants and appellee.

On Petition for Rehearing.

Appellants have filed an extended petition for rehearing, predicated entirely upon the hypothesis that this court found that the ■stock of the Eureka Realty Company was never subject to the pledge to the National Bank of Commerce in St. Louis. This court ■did not so hold. On the contrary, it is stated in the opinion that “the bank had a lien upon the trust property,” but that such fact “was no justification for Fred E. Turner inducing the bank to assert such lien to the detriment of his cestui que trust in order to avoid the personal judgment against him.”

In its bill of complaint, the St. Louis bank prayed specifically for a decree of foreclosure as to the stock of the Old Homestead Company and as to certain real estate. No ■foreclosure was sought as to the Eureka Company stock, but a personal judgment was ■prayed against Fred E. Turner and others for the conversion thereof. A decree and judgment as prayed for were rendered. On October 10,1917, Fred E. Turner found himself in this position: A personal judgment had been rendered against him for $157,982.-'89. He was financially responsible. 1,998 shares of the stock of the Eureka Company had been issued to him in trust for his sister. If he paid this judgment, or if it were collected on execution, his sister’s stock would be free from the lien of the bank. What Turner did was to apply his sister’s stock to the satisfaction of the personal judgment against 'him. He thereby violated his trust.

The petition for rehearing is denied.


author: SPARKS, Circuit Judge.

text:
    UNITED STATES ex rel. GOVORSHIN v. SMITH, District Director of Immigration.
    No. 4501.
    Circuit Court of Appeals, Seventh Circuit.
    April 29, 1931.
    Jose Carlos Soriano, of East Chicago, Ind., for appellant.
    Thomas Dodd Healy, of Chicago, 111., for appellee.
    Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
   SPARKS, Circuit Judge.

Alien, a citizen of Jugo-Slavia, landed in Baltimore October 20, 1926, as a seaman from the S. S. Isabo, of Italian registry. He thereafter deserted his ship and his calling, and proceeded inland to Indiana Harbor, Ind.

On May 22, 1930, he was arrested on a warrant charging him with being in the United States in violation of the Immigration Act of May 26, 1924 (8 USCA §§ 145,146, 166, 167, 179, 201-226, 229), in that he remained in the United States for a longer time than permitted by the act or the regulations there"under. A hearing was had on May 22, 1930, the charges were sustained, and a warrant of deportation was issued. The alien thereupon filed his petition in the District Court for a writ of habeas corpus, the writ was issued, a hearing had, and the petition dismissed.

The only question involved in the appeal is whether the Secretary of Labor is barred from deporting alien by reason of the three-year period of limitation contained in section 34 of the Act of February 5, 1917, 39 Stat. 896 (8 USCA § 166).

Section 14 of the Act of May 26,1924, 43 Stat. 162, 8 USCA 214, contains the following : “Any alien who at any time after entering the United States is found to have been at the time of entry not entitled under this Act to enter the United States, or to have remained therein for a longer time than permitted under this Act or regulations made thereunder, shall be taken into custody and deported in the same manner as provided for in sections 19 and 20 of the Immigration Act of 1917: * * *”

Paragraph 2, subd. I, of rule 6 of the regulations of the Commissioner of Immigration', is as follows: “Where a bona fide alien seaman, serving as such on a vessel arriving at a port o£ the United States, and permitted to enter temporarily the United States as a non-immigrant pursuant to subdivision (5) of section 3 of the immigration act of 1924 solely in pursuit of his calling as a seaman, engages in any other calling or occupation for hire or profit, or enters into the coastwise trade of the United States, or remains within the United States for more than 60 days after such entry, he shall be deemed to have abandoned his status as a nonimmigrant within the meaning of said subdivision (5) of section 3 of the immigration act of 1924, and shall be taken into custody and deported at any time thereafter in -accordance with the provisions of section 14 of said act.”

Alien contends that seetion 34 of the Act of February 5, 1917, 39 Stat. 896 (8 USCA § 166), is applicable to and controls the facts as above set forth. That part of the paragraph which it is claimed pertains to the subject-matter before us is as follows: “That any alien seaman who shall land in a port of the United States contrary to the provisions of this Act shall be deemed to be unlawfully in the United States, and shall, at any time within three years thereafter, upon the warrant of the Secretary of Labor, be taken into custody * * * ”

We think the act of 1917 is not applicable to the instant ease. The uncontroverted facts bring the ease squarely within the provisions of the act of 1924, and the regulations of the Commission of Immigration relative thereto, which clearly give authority for deporting this alien. United States ex rel. Rios v. Day (C. C. A.) 24 F.(2d) 654; Cellamare v. Day (D. C.) 32 F.(2d) 623; United States ex rel. Piccolella v. Day (C. C. A.) 36 F.(2d) 1022; United States ex rel. Philippides v. Day (C. C. A.) 37 F.(2d) 1015, (affirmed by the Supreme Court, 51 S. Ct. 358, 75 L. Ed.-, March 23, 1931); Zurbrick v. Traicoff (C. C. A.) 38 F.(2d) 811.

The decree of the District Court is affirmed.


author: STONE, Circuit Judge.

text:
    STIX, BAER & FULLER CO. v. ALFRED J. SWEET CO.
    No. 8924.
    Circuit Court of Appeals, Eighth Circuit.
    April 6, 1931.
    Ralph Kalish, of St. Louis, Mo., for appellant.
    Marston Allen, of Cincinnati, Ohio (Allen & Allen, of Cincinnati, Ohio, and Hugh K. Wagner, of St. Louis, Mo., on the brief), for appellee.
    Before STONE and BOOTH, Circuit Judges, and DEWEY, District Judge.
   STONE, Circuit Judge.

This is an action for infringement of a trade-mark on shoes and for unfair competition. From a decision favoring complainant, the defendant brings this appeal.

We place our decision upon unfair competition and notice the matter of trade-mark only so far as it sheds light upon the other issue. The registered trade-mark here involved was “Ye Olde Tyme” in a particular arrangement of old English type and was applicable to leather boots and shoes. The registration was made January 9,1912. The evidence shows that there is a class of shoes manufactured for women which is known in the trade as “Comfort” shoes. In connection with this class of shoe, appellee has, for many years, used this trade-mark in combination with the word “comfort” and has long designated that class of its products as “Ye Olde Tyme Comfort” shoes. Under this arrangement and designation, that class of its shoes has become known to the retail trade and customers and has been extensively advertised for some time.

For some time, appellant, which is a retail department store, had handled these shoes of the appellee in its shoe department and sold them to the public under the above .designation. In the course of its business, appellant ceased purchasing these shoes from appellee replacing them with another “comfort” shoe made for it by another manufacturer and upon which it stamped the name “All Time Comfort” and which were desig-. nated by that name. These shoes were to meet the same character of custom and were sold in the same place where it had shortly ceased selling the shoes of- appellee.

The evidence seems to show that appellant adopted its mark or trade-name on an occasion and under circumstances when confusion would likely arise and, also, that the choice of such a brand was, in part, to satisfy an existing demand for shoes of the appellee formerly sold there by appellant. It seems clear that customers, who had formerly bought appellee’s shoes from appellant, would naturally and could easily be misled into thinking that they were buying the same kind of shoes (made by appellee) which they had formerly bought. It is hardly to be supposed that customers buying this sort of article would be very much impressed by the particular form or arrangement of type in the expression “Ye Olde Tyme,” or any spelling or any designation or mark on the shoes themselves. Shoes would be called for by the name “Ye Olde Tyme” or “Old Tyme,” and “All Time Comfort” is easily confusible in sound with “Ye Olde Tyme Comfort.” The probable result under the circumstances here leads strongly to the conclusion that appellant adopted these particular words in its new name for the purpose of holding the trade it had established on the former brand. At any rate, the result, intentional or unintentional, is the same.

Instances of similar sounding trade-names which have been deemed unfair competition axe Ceresota and Certosa (Northwestern C. Mill Co. v. Callam [C. C.] 177 F. 786); Mellwood and Millwood (Mellwood Fist. Co. v. Harper [0. C.] 167 F. 389); Sapolio and Sopono (Enoch Morgan’s Sons Co. v. Ward, 152 F. 690, 12 L. R. A. [N. S.] 729 [C. C. A. 7]); Home Brand and Home Comfort (Griggs, Cooper & Co. v. Erie Preserving Co. [C. C.] 131 F. 359); Junket Capsules and Junket Tablets (Hansen v. Siegel-Cooper Co. [C. C.] 106 F. 691); Iwanta and Uneeda (National Biscuit Co. v. Baker [C. C.] 95 F. 135); Clark’s N-E-W and Clark’s O. N. T. (Clark Thread Co. v. Armitage, 74 F. 936 [C. C. A. 2]); Improved Fig Syrup and Syrup of Figs (Improved Fig Syrup Co. v. Calif. Fig Syrup Co., 54 F. 175 [C. C. A. 9]); Noxie and Moxie (Moxie Nerve Food Co. v. Beach [C. C.] 33 F. 248); Cellonite and Celluloid (Celluloid Mfg. Co. v. Cellonite Mfg. Co. [C. C. ] 32 F. 94); Hostetter and Smith and Holstetter and Smyte (Hostetter v. Vowinkle, Fed. Cas. No. 6,714); Crown Malt and Creamalt (George G. Fox Co. v. Glynn, 191 Mass. 344, 78 N. E. 89, 9 L. R. A. [N. S.] 1096, 114 Am. St. Rep. 619); Rexall and Rex (Regis v. Jaynes, 185 Mass. 458, 70 N. E. 480); the Vulcan and the Vulture (Akticbolagat Taendsticksfabriks Vulan v. Myers, 139 N. Y. 364, 34 N. E. 904); Excellent and Excelsior (Volger v. Force, 63 App. Div. 122, 71 N. Y. S. 209); the Grocer and the American Grocer (American Grocer Pub. Ass’n v. Grocer Pub. Co., 25 Hun [N. Y.] 398); Old Crow and White Crow (Gaines v. Leslie, 25 Misc. Rep. 20, 54 N. Y. S. 421). In the present case there is as great similarity of names as in the above cases.

The decree should be, and is, affirmed.


author: PER CURIAM.

text:
    INDEPENDENCE INDEMNITY CO. v. DREYFUS.
    No. 5696.
    Circuit Court of Appeals, Sixth Circuit.
    May 6, 1931.
    John M. Yorys, of Columbus, Ohio (Yorys, Sater, Seymour & Pease, of Columbus, Ohio, and John L. Baker, of Philadelphia, Pa., on the brief), for appellant.

      Howard M. Jones, of Columbus, Ohio, for appellee.
    Before MOORMAN, HICKS, and HICKENLOOPER, Circuit Judges.
   PER CURIAM.

Prior to the time of appellant’s withdrawal from the Youngstown, Ohio, territory, appellee was its general agent in that locality. Each of the policies issued through appellee contained the usual cancellation clause to the effect that it might be canceled at any time by the company upon refund of the pro rata premium for the unexpired term of such policy. Clause 16 of the general agency contract provided: “The general agent will return to the company the full commission on that part of any premium returned to the insured.” The District Court held that this provision “was apparently intended to refer to the premiums returned to the insured through cancellation of his policy in the regular and due course of the transaction of the business under the agency contract,” and did not apply to- the instant case, where all policies in force in Youngstown and vicinity were canceled because of unsatisfactory conditions affecting the risks in general. In this the District Court erred.

The general intent of the agency contract, when read in connection with the admitted right of cancellation by the company, was that the agent’s commissions should be limited to the stated percentages of premiums earned (that is, received and retained) under the policies. Compare Milwaukee Mechanics’ Ins. Co. v. Warren, 150 Cal. 346, 89 P. 93; National Union Fire Ins. Co. v. Nason, 21 Cal. App. 297, 131 P. 755; National Union Fire Ins. Co. v. Nevils, 217 Mo. App. 630, 274 S. W. 503; Stone v. Hartford Ins. Co., 231 Ky. 264, 21 S.W. (2d) 281; American Ins. Co. v. Bean, 232 Ky. 111, 22 S.W. (2d) 426. A different rule is perhaps applicable when the insurance company becomes insolvent and is thus unable to perform its contracts, instead of simply exercising an acknowledged right of cancellation [Moren v. Ohio Valley Fire & Marine Ins. Co.’s Receiver, 224 Ky. 643, 6 S.W. (2d) 1091; Hay v. Union Eire Ins. Co., 167 N. C. 82, 83 S. E. 241, Ann. Cas. 1916A, 1129], or where the agency contract is silent as to 'the agent’s obligation to make return. See Reed v. Union Central Life Ins. Co., 21 Utah, 295, 61 P. 21; Garfield, Adm’r, v. Rutland Ins. Co., 69 Vt. 549, 38 A. 235; Chicago Life Ins. Co. v. Robertson, 165 Ky. 217, 176 S. W. 1010; and compare American Steam Boiler Ins. Co. v. Anderson, 130 N. Y. 134, 29 N. E. 231. But we are unable to see any distinction in law between the cancellation of all policies within a given territory because of unsatisfactory conditions affecting all risks in such territory, and the cancellation of but certain policies because of conditions affecting the risk only as regards those policies. In either event the agent’s compensation is limited to commissions upon the several portions of the premiums earned before cancellation, and the agent is under expressly defined obligation to return to the company the commissions computed upon the unearned portions of the premiums which had theretofore been retained..

The judgment of the District Court is accordingly reversed, and the cause is remanded for a new trial.


author: ANDREW M. J. COCHRAN, District Judge.

text:
    HUMBLE v. UNITED STATES.
    District Court, E. D. Kentucky.
    Feb. 18, 1931.

      Perry B. Miller, of Louisville, Ky., for plaintiff.
    Sawyer A. Smith, U. S. Atty., of Covington, Ky., and George R. Brown, Jr., Regional Atty. for the Bureau, of Louisville, Ky., for the United States.
   ANDREW M. J. COCHRAN, District Judge.

This cause is before me on final hearing. It is an action by a World War veteran on a war risk insurance policy. The plaintiff enlisted May 2, 1917 and was honorably discharged January 27, 1919. The policy was issued February 6, 1918, and the prescribed premiums were paid until July 2, 1928, when plaintiff ceased to pay same. The claim is that he was totally and permanently disabled when discharged, and henee that his policy then matured and he was thereafter under no obligation to pay any further premiums. It is not claimed that, if he was not then so disabled, he had become so at the time he ceased to pay premiums. The right to recover is based on the existence of total and permanent disability at the time of discharge.

The plaintiff landed overseas June 26, 1917. He entered the trenches at Bethelmont in October, 1917, where he remained ten days and was sent to St. Die and then to Cantigny. He was in the battle at that place May 28, 1918. Thereafter he was in the woods until the battle of Soissons beginning July 18, 1918, in which he participated. On July 22,1918, whilst he was leading a squad consisting of himself and seven other men, he was gassed. The gas came from the explosion of a shell near by which killed the other seven men. It was chlorine and not mustard gas. As a result thereof he was put permanently out of service and returned to this country January 23, 1919, his discharge following immediately there-after. He was awarded three service chevrons for gallantry and one for-. As stated, the claim is that he was then totally and permanently disabled. This claim is based mainly on the claim that he was then suffering from active pulmonary tuberculosis. Some reliance is had" on the effect of the gassing, but it is hardly claimed that, apart from the tuberculosis with which it is claimed he was then afflicted, he was so disabled. Nor can I make out that it is claimed •that the tuberculosis was due to the gassing. Possibly it may have lowered his vitality and rendered him more subject to it. If, in fact, the plaintiff was then so afflicted, I think that it follows that he was then totally and permanently disabled. The question as to whether he was is to be determined as if this action had been brought immediately upon his discharge. If he was then so disabled, he was entitled to have payments under the policy to then begin and was not bound thereafter to continue payment of premiums to keep it alive, and if such payments were refused he was entitled to bring an action at once on the policy. Had he so done, the question as to whether he was so disabled would necessarily have been dependent alone on the facts that then existed. Subsequent facts could not be taken into consideration because they had not then happened. If such facts are entitled to be so taken here because they have happened before this action was brought, it can only be so for the light such facts throw on his physical condition at the time of his discharge.

So limiting myself, i. e. to his then physical cbndition,. my conclusion is that if he was then suffering from active pulmonary tuberculosis he was totally disabled. He was incapacitated from following continuously any substantially gainful occupation. There can be, I think, hardly any question as to this. My conclusion. further is that he was then permanently disabled within the meaning of the act. It was then impossible to say that the disease would not continue active for the rest of his life. The disposition of the ease could not await subsequent developments to determine whether it would. Besides, the possibility that it might thereafter cease to be active and become arrested did not affect the permanency of the disability and that for two reasons. An arrested tuberculosis may become active again if the vitality is lowered — manual labor performed continuously and to the extent necessary to the success of a substantially gainful occupation is calculated to lower the vitality — and plaintiff was adapted only to an occupation involving such labor. The other reason is that the act seems to contemplate that a total disability may at the same time be permanent so as to cause the maturing of the policy notwithstanding it may subsequently turn out that it may not be permanent in which ease the payment of installments- of insurance should cease and the payment of premiums should be renewed to keep the policy alive. If this reasoning is sound, the disposition of this ease-hangs on the question whether plaintiff was suffering from active pulmonary tuberculosis at the time of his discharge. In determining this question subsequent developments have a bearing.

The plaintiff made an application for compensation on account of his physical condition January, 1920, and he has been and is now drawing compensation. I want first to present the results of the examinations made by the Bureau through its physicians upon that application, in regard thereto. Question is made as to the admissibility of such evidence. It is thought that the fact that these examinations were made for compensation purposes renders the results thereof inadmissible in evidence in' an action on an insurance policy. There is nothing what-ever in this consideration affecting their admissibility. They are valuable in determining the truth as to plaintiff’s physical condition. In the case of United States v. Golden (C. C. A.) 34 F.(2d) 367, 370 it was said:

“The doctors making the 'ratings’ are of course competent witnesses, just as doctors examining for other purposes are; but it is their testimony that is competent,, and not the Bureau’s 'rating’ predicated thereon.”

The plaintiff was so examined on nine different occasions: September 6, 1922; January 5, 1923; August 3, 1923; October 24, 1923; February 13, 1924; July 31, 1924; November 26, 1924; February, 1925; and August 7, 1925. September 6, 1922, the diagnosis was chronic pulmonary tuberculosis, apparently arrested; January 5, 1923, the diagnosis, which was made by the same physician as the preceding one, was the same; August 3, 1923, it was chronic pulmonary tuberculosis, moderately advanced, quiescent; October 24, 1923, it was chronic pulmonary tuberculosis, active, moderately advanced; February 13, 1924, it was chronic pulmonary tuberculosis moderately advanced, quiescent, i. e. no present signs of activity, hospitalization needed; July 31, 1924, the diagnosis here being made by the same physician who made that of October 24, 1923, it was chronic pulmonary tuberculosis apparently arrested; November 26, 1924, the diagnosis here being made by the same physician who made the preceding one, it was chronic pulmonary tuberculosis, apparently arrested; February, 1925, it was chronic pulmonary tuberculosis, quiescent; and August 7, 1925, which was an X-ray examination the disclosure was negative. Bach of these examinations, except the last, covering a period of two and one-half years disclosed the existence of chronic pulmonary tuberculosis. On the first occasion as well as the others the disease was diagnosed as chronic, i. e. it had persisted over a period of time, i. e. for months. On the first two’ occasions it was diagnosed as apparently arrested;, on the third as moderately advanced, quiescent; on the fourth as active, moderately advanced; on the fifth as moderately quiescent; on. the sixth and seventh as apparently arrested and the eighth as quiescent. It will be noted that after having been diagnosed as apparently arrested and quiescent the' diagnosis was active and then again apparently arrested and quiescent. On the basis of these examinations plaintiff was allowed compensation from his discharge, first to' January 30; 1920 on the basis of 50 per cent, disability, and from that date to June 16; 1922, on the basis of total disability. Thereafter the award was substantially diminished until after the enactment of the amendment of July 2, 1926’, since which time by virtue thereof he has received $50 per month.

The tendency of the testimony, without more, is to establish that, at the time of his discharge, plaintiff was afflicted with active pulmonary tuberculosis, which subsequently became arrested and quiescent, only to resume again its active form and then again to become arrested and quiescent.

■ The plaintiff himself testified that when he was gassed he was rendered unconscious; that he was picked up and carried to a first aid station, from thence to a field hospital, where he became conscious, from thence to a Bed Cross Hospital in Paris, and from thence to a base hospital on the coast of France, where he remained until transferred to this country where he was shortly after-wards discharged; that since he was gassed he has coughed continuously, spit blood and had hemorrhages, run a temperature a great part of the time, had night sweats and had hardly any strength at all; that when he got home he weighed 119 pounds, his normal weight being 140 pounds; that he hemorrhaged on his return and was sent to several tubercular hospitals in succession, first to Fairview Sanitorium, Normal, 111., where he stayed for five or six days, then to a sanitorium at Madison, Wis., where he stayed something like two months, being, whilst there, placed in the tubercular ward, and then to the Old Soldier’s Home Tubercular Sanitorium at Milwaukee, Wis., where he stayed something like three or four months, just when he was at these several hospitals not clearly appearing; that he had tried to work some, but was unable to continue at it; and that he has had hemorrhages off and 'on. Photostatic copies of reports covering the time when he was in the hospitals in France were introduced in evidence. They are in reduced form and difficult to read. I should not be expected to make out their contents. So far as I can make them out, their showing is rather against the seriousness of plaintiff’s condition.

Three acquaintances testified on behalf of plaintiff. One testified that on his return'from the army he was thin in flesh and appeared to lack strength and vitality; that he had a cough; that he was unable to do anything except little odd jobs. Another testified that on his return his health was very poor and he was weak; that he had seen him try to do carpentry work for his father and he appeared to be weak and sick and not able to work; that he had seen him sick at different times and at times he was not able to knock around; and that he did not look like he could do manual labor. The third one testified that he saw plaintiff in the spring of 1919 or 1920; that his condition as to health and strength appeared pretty bad, some days he would eat something and others he would not; that he hired plaintiff to carry water to the boys on the farm, but he had to quit because he could not hold out; that he had one hemorrhage and spit blood whilst threshing wheat; that he tried to help him while running a sawmill, but he started coughing and could not hold out.

His mother and father testified on his behalf. According to her testimony when he returned home he was in bad health, yellow, had no appetite, had hemorrhages and night sweats, and was down and out in every way. He had a hemorrhage the night he came home and very frequently thereafter had hemorrhages and coughed and spit blood. He was confined to his bed a good part of his time and when he did get up and try to walk he was so weak he could not walk. He has continued to have night sweats. She frequently had to change his pillows and sheets and find blood sputum on them. According to his testimony, when plaintiff returned ■ home he had a hacking cough and spit blood, was very thin and yellow, lie never had any strength and but little appetite. He tried to help him as carpenter and painter and in the garden, but he could not hold out. His coughing, expectoration of blood, and weakened condition has been continuous. He had hemorrhaged within the last three months before the trial.

It is not unlikely that this nonmedieal testimony is somewhat exaggerated, but it is substantially borne out by the showing of the medical testimony. My conclusion is that plaintiff was totally and permanently disabled at the time of his discharge, and hence is entitled to recover.