text:
    In re EASTHAM.
    No. 1179
    District Court, S. D. Texas, at Houston.
    July 8, 1931.
    See also (D. C.) 32 F.(2d) 717.
    Sharp & Gray, of Ennis, Tex., for bankrupt.
   HUTCHESON, Circuit Judge.

The bankrupt having duly made his application for discharge, creditors the City Investment Company, Citizens’ State Bank of Houston, Huntsville State Bank, and Gibbs Bros. & Co. filed specifications in objection thereto.

The specifications of the City Investment Company alleged the making of false statements for the purpose of securing, and the securing thereon of, advances of money to the bankrupt. These statements were alleged to have been made on March 16, 1925, January 7, 1926, and January 22, 1924. It was alleged as to them that the statements were false as to the amount of liabilities and as to the existence of incumbrances. The specifications alleged that moneys had been advanced by the Second National Bank on the faith of these statements, and that the ereditor City Investment Company was the owner of the notes representing said advances.

The creditor 'citizens’ State Bank alleged the loaning to the bankrupt of $6,500 upon the faith of false representations in a statement made by the bankrupt on March 31, 1924; that said statement fraudulently overvalued the assets, fraudulently overstated the amount of land owned, and fraudulently understated the liabilities. This creditor also adopted the specifications of the City In-Company and in additional speeifi-cations charged that the bankrupt had fraud-uien^y transferred some of his property with jn(.en{. j-0 <jeiay fi;s creditors, and that he had failed to keep books of aecount.

The Huntsville State Bank and Gibbs Bros, filed specifications adopting the speciof ,^e Ci^ Investment Company and Citizens’State Bank.

In limine, the bankrupt makes the claim that the section of the statute invoked by the creditors, the making of false statements, is available only to the creditor advancing money on the faith of it, and that if sustained, operates not generally to prevent discharge as to all creditors, but only specifically as to the creditor defrauded. This is not the law.

The statute den0lmei the obtaining of property, or credit upon a materialJy falge statement in W1,itin£ made for fte purpose of obtaining credit operates generally and completely to prevent the discharge of any person so offending. Gerdes v. Lustgarten, 266 U. S. 321, 45 S. Ct. 107, 69 L. Ed. 309; Morimura, Arai & Co. v. Taback, 279 U. S. 24, 49 S. Ct. 212, 73 L. Ed. 586; Levy v. Industrial Corporation, 276 U. S. 281, 48 S. Ct. 298, 72 L. Ed. 572.

The referee correctly determined the specification as to the failure to keep books in favor of the bankrupt. Gerdes v. Lustgarten, 266 U. S. 321, 45 S. Ct. 107, 69 L. Ed. 309; Stanley v. Neiderhauser (C. C. A.) 45 F.(2d) 489, 17 A. B. R. (N. S.) 23. He a^so ru^e<^ correctly in denying the speeifieaLon charging fraudulent transfer of property-

It remains only to inquire whether the specifications relating to the false statements are sustained by facts which prevent the bankrupt’s discharge.

The referee considered in detail the speci-fieations of the creditors. The specifications filed by the Citizens’ State Bank of Houston fie specifically sustained. He made no reeom-mendation upon the specifications of the City Investment Company. I have carefully eon-sidered the referee’s conclusions in the light of the record, and eoneur in them; but I further find that the statements made in 1925 and 1926, especially that made in 1926 to the Second National Bank for the purpose of inducing loans to the bankrupt, were false within the meaning of the Bankruptcy Act (11 USCA) not only in the matter of the failure to state the eixisting encumbrances, but in the great understatement of liabilities.

The argument is made that the statements were made merely carelessly and not with bad intent, and that therefore a finding of fraudulent purpose cannot be sustained.

It may well be that when these statements were made there was no dark or evil purpose to defraud clearly outlined in the heart and mind of the bankrupt. It may be, in fact no doubt is, true that the bankrupt believed when he got the credit and signed the notes that he would be able to pay them, but the presence of that purpose in the mind of the debtor does not in any way change the fact, if it be a fact, that he has deliberately misstated his assets or Ms liabilities in order to secure credit, or the result of that fact. The law requires that in such cases he share with his creditors the knowledge of Ms condition which he has and the purpose which is his. If his bargain is made in reliance, not upon the vulue ox ussets* but upou s» purpose to ,, , ,,, ■; . . , , repay, the creditors should know this is what they m turn must rely upon. If this is fairly disclosed, no fraud exists.

If, on the other hand, though the purpose be to pay, the money is secured not upon a statement of that purpose, but upon a show-, mg of assets which the bankrupt does not kave, or of a net worth which because of hidden liabilities does not in fact exist, and this showing is deliberately made for the purpose of obtaining credit, in law and in fact 'the bankrupt has made a false statement which, if money or goods were advanced on the faith of it, will deny his discharge.

The long business record of the bankrupt does not indicate that it was his deliberate purpose and intent to fraudulently swindle his creditors out of the moneys advanced, On the other hand, his secret dealings with one of the members of his family in the matter of discharging his.debts, the undisclosed borrowings from others of them, the tremendous overinflation of his assets matched only by the equally great deflation in statement ■of his liabilities, leave no room for doubt that with a recklessness and disregard for the essential truth of the facts, which brings the case directly within the mischief the statute aimed at, the bankrupt made false statements for the purpose of obtaining, and on wMch he obtained credit, and that no other just re-

suit can under the statute follow this showing except a denial of his discharge.

Let an order be accordingly prepared,


source: Caselaw Access Project

author: ADLER, District Judge.

license: Public Domain

text:
    WEGMAN et al. v. NATIONAL BANK OF COMMERCE OF ROCHESTER et al.
    District Court, W. D. New York.
    July 1, 1931.
    James D. Harris, Rochester N. Y., for plaintiffs.
    George A. Carnahan, of Rochester, N. Y., for defendants receiver and National Bank of Commerce.
    Moser & Reif, of Rochester, N. Y., for defendant National Bank of Rochester.
   ADLER, District Judge.

This is an action by plaintiffs, as shareholders of The National Bank of Commerce of Rochester, hereinafter called the old bank, to set aside and declare void a contract made May 19, 1924, between that bank and the National Bank of Rochester, hereinafter called the new bank, upon the ground that the making of the contract was an ultra vires act of the board of directors and officers of the old bank. The contract provided for the absolute transfer from the old bank to the new bank of a certain portion of the assets of the former, and an agreement on the part of the new bank that it would pay all of the liabilities of the old bank. The old bank gave its promissory note in the sum of $2,124,363.13, representing the difference between the liabilities so assumed and the assets so transferred absolutely. The old bank transferred all its remaining assets in trust or in pledge to the new bank, to liquidate the same, to pay the aforesaid promissory note, and to turn over to the stockholders of the old bank whatever remained, if anything. This contract was authorized by the directors of the old bank, but was never directly ratified by its stockholders. The complaint in this action demands that the contract be adjudged null and void, that the National Bank of Rochester account for the property it received, and that it be enjoined from enforcing the promissory note.

On May 17, 1924, two days prior to the making of the contract in question, the National Bank of Commerce of Rochester suspended business. An investigation made by the National Bank Examiner and a committee of the Rochester Clearing House association into the bank’s affairs had resulted in their arriving at the conclusion that the bank was insolvent. The National Bank of Rochester was organized in pursuance of a plan which had the approval of the Comptroller of the Currency, to take over and liquidate the assets of the National Bank of Commerce and of another bank, the Traders’ National Bank. After the execution of the contract herein questioned, the old bank had divested itself of its assets, and steps were taken to bring about a stockholders’ meeting with a view to voting on voluntary liquidation. This meeting was called for June 25,1924, but was never held. • On June 21, 1924, the Comptroller of the Currency appointed a receiver for the National Bank of Commerce.

This action was originally commenced in the Supreme Court of the state of New York on February 5, 1927, and was removed to the District Court. Prior to the commencement of this action, the receiver entered into an agreement with the directors of the National Bank of Commerce for the settlement of claims he made against them for loss of the bank’s assets through their mismanagement. This settlement agreement was approved by the court. Opinion by Judge Hazel (D. C.) 12 F.(2d) 933. The plaintiffs in this action took an appeal from the decree approving the settlement, which appeal was dismissed by the Circuit Court of Appeals, 18 F.(2d) 944. Somewhat later, and still before the commencement of this action, these plaintiffs began an action to dissolve the receivership of the National Bank of Commerce and to set aside the settlement agreement above referred to upon the ground of fraud and collusion on the part of the Comptroller and the receiver of The National Bank of Commerce. This action resulted in a decree that the appointment by the Comptroller of the Currency of a receiver for the National Bank of Commerce was made in good faith and after he had become satisfied of the insolvency of the bank. That the acts of the Comptroller and the receiver in the matter of the settlement agreement were done in good faith and without collusion. Reported in (D. C.) 27 F.(2d) 187. An appeal from this judgment was dismissed by the Circuit Court of Appeals.

The contract between the old bank and the new bank which this suit seeks to declare null and void is in its terms and intention almost exactly like the contract in Wyman v. Wallace, 201 U. S. 230, 26 S. Ct. 495, 50 L. Ed. 738, which contract was upheld by the Supreme Court. The plaintiffs herein distinguish Wyman v. Wallace, because in that ease, subsequent to the execution of the contract, the shareholders of the bank met and passed a resolution for voluntary liquidation. ' In the case at bar the shareholders did not vote for voluntary liquidation, nor did they vote to ratify the aetion of the officers and directors in making the contract. In fact there was no meeting of shareholders after May 19, 1924, the date on which the contract was made. It appears from the opinion of Judge Hazel in the case of Hulse v. Argetsinger (D. C.) 12 F.(2d) 933, at page 936, heretofore referred to, that appreciably more than two-thirds of the holders of the capital stock of the old bank certified to him their approval of the contract of sale and transfer.

I think it perfectly clear that the contract in this case must be held valid without going further if it can be brought within the doctrine of Wyman v. Wallace. In this case there is lacking only the one point of ratification of the contract by the shareholders or the action of the shareholders voting liquidation. In this case we have, however, the appointment of a receiver by the Comptroller of the. Currency immediately after the making of the contract, and before the date on which the stockholders’ meeting was scheduled to be held. We have the insolvency of the bank upon which the appointment of the receiver was based. We have the formal ratification of the contract by the Comptroller of the Currency and the receiver of the bank. Exhibits J, K, and L. We have the further fact that this court has decreed that the appointment of the receiver for the bank was made in good faith.

The appointment of the receiver and his act in ratifying the contract takes the place of the act of the shareholders in voting liquidation in the case of Wyman v. Wallace. He acts for the stockholders in dealing with the assets. In United States v. Weitzel, 246 U. S. 533, 38 S. Ct. 381, 382, 62 L. Ed. 872, Mr. Justice Brandeis uses the following language: “The receiver deals with the assets and protects them for whom it may concern, including the stockholders.”

My cpnelusion is that the ease of Wyman v. Wallace applies, and that the contract of May 19, 1924, between the old bank and the new bank, is a valid contract. It follows from that finding that the demand in the complaint that the National Bank of Rochester account for the property it received under the contract, and that it be enjoined from enforcing the promissory note, is denied.

In view of my finding that the contract is valid on the grounds stated, it is unnecessary to discuss the other points raised by counsel.

A decree may be submitted in accordance with this opinion.


author: HOLMES, District Judge.

text:
    In re SMITH.
    District Court, S. D. Mississippi, Jackson Division.
    July 3, 1931.

      Price, Cassidy & McLain, of McComb, Miss., for petitioner.
    Chambers & Trenholm, of Jackson, Miss., for trustee.
   HOLMES, District Judge.

The bankrupt was a trader engaged in the retail furniture business in Brookhaven, Miss., under the name of J. M. Smith Furniture Company. At the date of the filing of the petition in bankruptcy, it had for sale in its place of business certain furniture and other articles of merchandise upon which a lien is claimed to have existed for the purchase money in favor of the seller under a Louisiana statute, the contract of sale and delivery thereunder admittedly having taken place in that state. The seller, the New Orleans Furniture Manufacturing Company, a Louisiana corporation doing business in the city of New Orleans, filed its claim for ¿aid purchase money with the referee in the sum of $4,137.41, setting forth that it held a secured claim by virtue of a vendor’s or purchase-money lien on such of the articles of merchandise sold to the bankrupt as remained in his possession at the time of adjudication.

The relief asked was that possession of the property be returned to the petitioner, or that a lien be declared to exist thereon in its favor superior to that of the general creditors. It based its claim solely on article 3227 of the Revised Civil Code of 1870 of Louisiana (same article of Merrick’s Code) which reads as follows: “Vendor’s Privilege on Price of Thing Sold. He who has sold to another any movable property, which is not paid for, has a preference of the price of his property, over the other creditors of tile purchaser, whether the sale was made on a credit or without, if the property still remains in the possession of the purchaser.”

There is no dispute about the facts, which were set forth in a written stipulation signed by the parties and filed with the referee. The goods were shipped by rail, f. o. b. New Orleans, to the bankrupt at Brookhaven, Miss., and there placed in his retail store with the other merchandise, to be disposed of in the usual course of business, where that part of them in controversy still remained at the time of filing the bankruptcy petition, and subsequently came into the possession of the trustee. They were sold by the New Orleans concern upon open account, without retention of title or security of any kind, except such as was given by the general law, the lex loci contractus. The referee denied the reclamation petition and also the claim for priority for the purchase money under the Louisiana statute. A petition for review was duly filed, and the record has been considered in the light of the briefs and authorities cited.

The petitioner rests its claim entirely upon the Louisiana statute above quoted, upon the correct assumption that the contract of sale, as well as the delivery thereunder, took place in that state. It is alleged in the petition “that the contract and every step taken in connection therewith were consummated in the State of Louisiana, and that the contract is a Louisiana contract.” While these allegations are conclusions of law, they are supported by the facts set forth in the petition, as well as those shown by the proof, and upon that claim the petitioner must stand or fall. Payne Hardware Company v. International Harvester Company, 110 Miss. 783, 70 So. 892.

The title to the property passed to the purchaser upon delivery thereof to the railroad company. It was in his possession, in his store, being offered for sale, at the time of adjudication, as well as when the petition in bankruptcy was filed, and consequently passed to the trustee as it was at the latter date. The petition to reclaim possession of the property was properly denied by the referee. See section 70, as amended, Bankruptcy Act (11 USCA § 110); section 3352, Miss. Code 1930.

That a vendor’s lien or privilege for the unpaid purchase money was originally acquired by the petitioner on the articles sold, when the sale was consummated, and so long as they remained in the state in the possession of the purchaser and susceptible of identification, is undisputed. In re New Orleans Milling Company, Inc. (D. C.) 263 F. 254. But that it survived the transportation of the property beyond the state and its passing into the hands of the trustee in bankruptcy is an entirely different matter.

Precisely when it became extinct or lost its efficacy is not necessary for decision, but it is quite clear, in any aspect of the ease, that, when- the property was shipped into Mississippi, placed on sale in the store of the bankrupt, who was doing business as a trader under a sign, and there permitted to remain in his undisturbed possession, as his property, until the date the petition was filed upon which he was adjudicated a bankrupt, the lien or privilege for the purchase money given the seller by the Louisiana statute above quoted was lost, and the vendor cannot prevail in this contest with the trustee in bankruptcy who is vested with all the rights, remedies, and powers of a creditor holding a lien thereon by legal or equitable proceed-' ings. In these circumstances, the petitioner’s claim is not entitled to priority over the general creditors. Section 47, as amended, Bankruptcy Act of 1898 (11 USCA § 75); section 3352, Miss. Code 1930; Chism v. Thomson, 73 Miss. 410, 19 So. 210; Hernandez v. Aaron, 73 Miss. 434, 16 So. 910; Pearson v. William R. Moore Dry Goods Company, 146 Miss. 225, 110 So. 709.

The order of the referee is affirmed.


author: LETTS, District Judge.

text:
    THE MAZEL TOV.
    No. 1646.
    District Court, D. Rhode Island.
    May 16, 1931.

      Henry M. Boss, Jr., U. S. Atty., of Providence, ft. I. (Charles H. Eden, Asst. U. S. Atty., of Providence, R. I., on the brief), for the United States.
    Joseph E. Fitzpatrick, of Providence, R. I., for claimant.
   LETTS, District Judge.

This is a libel in rem brought by the United States against the British motor vessel Mazel Tov, after it had been seized and brought- into port by officers of the Coast Guard, to effect the collection of certain penalties claimed to have been assessed against the master for alleged violations of the Tariff Act of 1930. The libel states three causes for penalty: (1) Failure to produce the manifest of the cargo, (2) having on board merchandise not described in the manifest, and (3) having arrived within the limits of Collection District No. 4 and attempting to depart without making entry. The first two causes are laid as violations of section 584 (19 USCA § 1584), and the third as a violation of section 585 (19 USCA § 1585). No forfeiture of either cargo or vessel is asked.

I shall not here review the testimony of the various witnesses, but will state the facts as I find them to be. On the evening of November 1, 1930, the Mazel Tov was boarded by officers of tbe United States destroyer Tucker off the coast of Massachusetts eleven and one-half miles from the nearest point of land. The vessel at the time was under way, but promptly stopped when signaled so to do. Her sole cargo, outside of sea stores, consisted of four hundred three sacks of whisky which had been cleared at St. Pierre on October 16. While the cargo was little more than one-fourth the quantity which the vessel could carry, there was no evidence that the Mazel Tov had either been in communication with our shores or had unladen any part of her cargo. The. circumstances compel the conclusion that the vessel was cruising about off our coast with the intent on the part of the master that ultimately the cargo would be taken to the United States by other boats. The evidence indicates that the master of the Mazel Tov did not intend to approach nearer than four leagues to our coast. The point of land from which the Mazel Tov is here found to have been eleven and one-half miles distant is a small island, “No Man’s Land,” lying some distance at sea off the island of Martha’s Vineyard.

The speed of the Mazel Tov, under normal conditions, was not in excess of ten knots. Her certificate of registration gives the speed as nine knots, which is not inconsistent with the size of the vessel and motors with which it is equipped. The master testified the boat could do between nine and ten knots. No evidence was presented by the government which would suggest that these speeds were not substantially correct.

Upon request of the boarding officer, the Mazel Tov’s papers were produced, consisting of her certificate of British registry, manifest, clearance papers, and crew list. The manifest, which was written in French, shows the port of departure to have been St. Pierre and gives the destination of the vessel as “Nassau et la haute mer.” The cargo and consignee appear as follows:

“1 lot de diverses merchandises lest et provisions de bord.
“Saint Pierre le 16 Oetobre 1930.
“Lecapitaine:
“F. D. Cook.”

Following the inspection by the boarding crew, the Mazel Tov was taken in tow by the Coast Guard at a point thirteen miles from land, having drifted a considerable distance during the period of inspection. She was brought to the port of Providence and there turned over to the customs officials, together with her cargo. The cargo was appraised by customs officials and the following notification to the master given:

“November 18, 1930.
“Frank Cook,
“Master of British Motorship Mazel Tov,
“e/o Joseph E. Fitzpatrick, Attorney,
“317 Hospital Trust Bldg.,
“Providence, R. I.
“Sir:
“You are hereby notified that the above-named vessel has become liable to penalties for violations of Acts of Congress as follows:
“Tariff Act of 1930, Sec. 584, Falsity of Manifest, $14,286.18.
“Tariff Act of 1930, See. 584, Lack of Manifest, $500.
“Tariff Act of 1930, Sec. 585, Attempting to Depart Before Report or Entry, $5,-000.
“These violations occurred November 1, 1930, at, to wit, 6:05 p. m. in latitude 41° 68' 45" N and longitude 70° 36’ 30" W, within a collection district of the United States, said vessel having thereafter been arrested by Customs and Coast Guard officers and brought to the Port of Providence.
“Respectfully,
“Emery J. San Souei, Collector.”

No other action was taken by the government prior to filing this libel.

At the outset there is one question which underlies all three causes stated in the libel. The Mazel Tov, loaded with liquor ultimately intended for transshipment to the United States, was seized at a point less than four leagues from our coast, but at a greater distance than she could have traversed in one hour. Was this seizure lawful? The answer to this question is dependent upon the relation to, and effect upon, the search and seizure provisions of the Tariff Act, of the Treaty entered into between the United States and Great Britain, proclaimed May 22, 1924 (43 Stat. 1761).

The preamble of the treaty ■ recites that the two nations “being desirous of avoiding any difficulties which might arise between them in connection with the laws in force in the United States on the subject of alcoholic beverages, have decided to conclude a Convention,” etc. The preamble also recites that the purpose of the convention is “to aid in the prevention of the smuggling of intoxicating liquors into the United States.”

Article 1 asserts the intention of the parties “to uphold the principle that 3 marine miles * * * constitute the proper limits of territorial waters.” Paragraph (1) of article 2 provides for boarding and examining vessels of British registry. Paragraph (3) of article 2 provides: “The rights conferred by this article shall not be 'exercised at a greater distance from the coast of the United States its territories or possessions than can be traversed in one hour by the vessel suspected of endeavoring to commit the offense.” The remaining provisions of the treaty are not here necessary to be stated.

It was clearly indicated by the court in the case of Ford et al. v. United States, 273 U. S. 593, 47 S. Ct. 531, 71 L. Ed. 793, in an opinion written by Mr. Chief Justice Taft, that this treaty had relation to all the laws in effect in the United States having to do with prohibiting and forestalling the importation of intoxicating liquor. In that ease the court said at page 618 of 273 U. S., 47 S. Ct. 531, 539: “The parties were dealing with a situation well understood by both. In effect they wished to enable the United States better to police its seaboard, by enabling it within an hour’s sail from its coast, beyond its territorial jurisdiction, and on the high seas, to seize British actual or would-be smugglers of liquor and, if they were caught, to proceed criminally against them as if seized within the 3-mile limit for the same offenses in reference to liquor importation. No particular laws by title or date were referred to in the treaty, but only the purpose and effect of them.” The court referred specifically to both the National Prohibition and tariff legislation, and on page 619 of 273 U. S., 47 S. Ct. 531, 540 says: “Any law, the enforcement of and punishment under which will specifically prevent smuggling of liquor, should be regarded as embraced by the treaty.”

There appears to be entertained three distinct interpretations of the effect of this treaty.

First. That the treaty extends the right of search and seizure so that a vessel with a speed greater than twelve knots can be seized within the distance of one hour’s sail even though that be more than four leagues from our coast. Those entertaining this view, when confronted with the query upon what legislative authority can a vessel be seized beyond four leagues from our coast, which is the maximum distance fixed in any provision of the Tariff Act (there being no right of pursuit involved), resort to the doctrine that “the treaties are self-executing and extend the laws of the United States.” They entirely ignore the fact that the treaty purports to forbid nothing but only indicates that “His Britannic Majesty agrees that he will raise no objection to the boarding of private vessels,” etc., and that if certain conditions exist “the vessel may be seized and taken into a port of the United States, * * * for adjudication in accordance with such laws,” clearly referring to acts of Congress.

Second. Others seem to recognize that there is nothing in the treaty which extends the application of any act of Congress but are unwilling to accept the conclusion that the effect of the treaty may in many instances, where the vessel involved could not traverse in one hour a distance of four leagues, result in limiting the exercise of the right of search and seizure asserted by Congress. As was said by the court in the case of the Vinces (D. C.) 20 F.(2d) 164, at page 174: “It is inconceivable that the parties could have intended to abrogate any such rights already existing without an explicit statement to that effect. I am clearly of opinion that the British treaty is not exclusive, and did not abrogate the statute of the United States providing for search and seizure within the 12-mile limit.”

Those entertaining this view appear to assume that prior to the negotiation of the treaty there was an unquestioned right to search and seize within the limits fixed by the statute. Perhaps that was so from the point of view of domestic law. It clearly was not so from the point of view of our international relations with Great Britain and many other countries. The purpose of the treaty was to avoid and to set at rest any international complications arising from an assertion of extraterritorial jurisdiction by Congress which was not recognized by other nations. Both the United States and Great Britain had long been the champions of limiting general territorial jurisdiction to the three-mile limit and had left all assertions of authority beyond that limit, in instances where protecting or police measures were necessary, to be dealt with as specific problems, rather more administrative than jurisdictional in character.

The third view as to the effect of this treaty, and the one which I believe is supported by the majority of present authorities and by the soundest reasoning, is that it dealt completely with the subject of the limits within which search and seizure of British vessels could be made in the enforcement and application of our laws for the prevention of the importation or smuggling of liquor, and that the treaty excludes all extraterritorial seizures (that is, beyond the three-mile limit) not made in conformity with the terms of the treaty. That such was the intention of the parties is apparent from the statement made by Secretary Hughes, who negotiated the treaty with the British government, in his note of July 19, 1923, to the British Embassy wherein he said:

“It may confidently be asserted that there would be no disposition on the part of the American authorities, and the special agreement would not justify any attempt, to seize a British vessel, save within the limits proposed, and when it was clear that the vessel concerned was directly involved in an attempt to introduce its illicit cargo into the territory of the United States.” MS. records, Department of State.

It is a matter of common knowledge that prior to entering into the treaty agreement the British government had on several occasions protested against the seizure of boats of British registry outside the three-mile limit which carried cargoes of liquor. This situation existed at the time the treaty was negotiated and the convention entered into. The treaty says:

“The rights conferred by this article shall not be exercised at a greater distance from the coast of the United States * * * than can be traversed in one hour by the vessel suspected of endeavoring to commit the offense.”

Can it be seriously urged that after entering into this treaty there remained in all cases the same maximum authority which had before been asserted and which was the cause of the differences to be settled?

In one of the early cases dealing with this question, the Frances Louise (D. C.) 1 F.(2d) 1004, at page 1005, Morton, J., upon this point, said:

“I have great doubt whether any such broad right of seizure exists as the government contends. But it is not necessary to decide this question, because I am clearly of opinion that the whole situation is covered by the treaty. The circumstances surrounding the execution of that treaty are matters of general knowledge. Vessels of British registry were lying off our coasts, delivering liquor to small boats, which smuggled it ashore. Seizures of such vessels were made by our officials, which were regarded by the British government as unjustified by international law, and led to representations by the British government to this country. On the other hand, British ships found themselves, much embarrassed by the decision of the Supreme Court in Cunard S. S. Co. v. Mellon, 262 U. S. 100, 43 S. Ct. 504, 67 L. Ed. 894, 27 A. L. R. 1306, concerning supplies of liquor which they customarily carried for use on board. Under these circumstances the treaty was negotiated. It dealt explicitly with the case of liquor ships hovering on our coast and being visited by small boats from shore. Of course, such small boats only come to the hovering vessel to get contraband goods. Both parties understood that. The plain inference is that such trading does not render the hovering vessel amenable to seizure as long as she keeps to the high seas, except as provided in the treaty. I think both nations intended the treaty to deal with the matter in a complete way. If so, upon familiar principles of law, it is conclusive.”

In the ease of the Sagatind (D. C.) 4 F.(2d) 928, at page 930, Hand, J., says, in referring to a similar treaty entered into between the United States and Norway:

“The foregoing treaty extends any limitation which might exist upon the jurisdiction of the court to proceed against offending vessels which may be subject to forfeiture for violations of our laws ‘prohibiting the importation of alcoholic beverages’ to such eases as may come within the terms of the treaty, and, I think, also implies as an alternative rule of treaty-made law that vessels shall not be proceeded against for violation of such laws when seizure was made beyond the distance from our coast prescribed in the treaty. In other words, the treaty completely deals with the extreme right of seizure upon which initial jurisdiction of the cause of forfeiture must depend,”

This- construction as to the effect of the treaty obviously amounts to a limitation upon, and no extension of, the statutes affected. No statute dealing with this question asserts a jurisdiction or imposes any penalty beyond the distance of four leagues. The application of the treaty, therefore, in respeet to all vessels of less than twelve knots, results in a qualification or limitation of the statute involved by narrowing tbe zone over which it may be applied to-that distance only which the vessel can traverse in one hour. It is, of course, an elementary principle that a treaty may have that effect upon an existing act of Congress. The rule as generally stated is that wherever there be an inconsistency between an act of Congress and a treaty, the one most recent in point of time must control. Ribas y Hijo v. United States, 194 U. S. 315, 24 S. Ct. 727, 48 L. Ed. 994; Rainey v. United States, 232 U. S. 310, 34 S. Ct. 429, 58 L. Ed. 617.

The only difficulty in applying this long-established doctrine in the present ease, to the end of construing the treaty as a limitation upon the act of Congress, is that the treaty was negotiated in 1924 and the present action is brought under the Tariff Act of 1930. An examination, however, of the Tariff Act of 1930 (46 Stat. 590) discloses that the enforcement provisions thereof are substantially verbatim re-enactments of like sections in the Tariff Act of 1922 (42 Stat. 858). It cannot be assumed, therefore, that Congress had any intention of altering the status and effect of these treaties when it re-enacted in 1930 the enforcement provisions prevailing when the British and other treaties were entered into.

The conclusions here reached, in respect to the effect of the British treaty, compel the dismissal of the libel and discharge of the vessel. In the hope, however, that the case may be reviewed on appeal, I shall deal with the other and subordinate issues raised which in general affect separate causes stated in the libel. This will insure a final disposition of the ease through having its full consideration before the court for review.

The next issue to be considered is: What are the limits of a collection district? This issue arises under the third cause stated in the libel which alleges that the Mazel Tov arrived from a foreign port within the limits of Collection District No. 4 and attempted to depart without making entry in violation of section 585.

It is contended on behalf of the government that the limits of the collection district extend four leagues from the shore. If this contention be sound,' the Mazel Tov was, at the time she was boarded, one-half mile within the limits of Collection District No. 4. If, however, as has been found, it was not the intention of her master to go within four leagues of the coast of the United States and that his doing so was an inadvertent approach too close to the small island mentioned, there may be grave doubt as to whether the boat, though within the twelve-mile limit, had “arrived” within the meaning of the term as used in section 585, and in this connection it will be recalled that the Mazel Tov when boarded had not been at anchor but was under way. Passing, however, the matter of the proper construction of the term “arrived” within the meaning of the act, I am satisfied that the Mazel iov was not within the limits of the collection district as alleged.

The present organization of the customs service was fixed by executive act of the President pursuant to legislative authority as outlined in the President’s Message to Congress under date of March 3,1913, with only minor changes which, by similar action, have subsequently been made. Collection District No. 4, as then and now designated, is as follows:

“No. 4, Massachusetts, Ports of entry: Boston (including Cambridge, Chelsea, Med-ford, Everett, Quincy, and Somerville), Fall River, Gloucester, New Bedford, Plymouth, Provineetown, Salem (including Beverly, Marblehead, and Lynn), Springfield, Vineyard Haven, Worcester.”

An examination of the legislation and executive aetion discloses a division of the territorial United States into some forty-nine customs-collection districts, together with their ports of entry and district headquarters. These districts are variously designated, some by states, some inclusive of two states, and some such as District No. 12, “Pittsburgh, Port of entry: Pittsburgh.”

Nowhere in the legislation or executive acts organizing the customs service is there any suggestion of including within a district any area beyond the territorial limits of the state or other municipal designations. The state of Massachusetts is a very definite area, consisting of the land within its borders and littoral waters extending out three miles. Dunham v. Lamphere, 3 Gray (Mass.) 268.

Although the term “collection' district” has for many years been used in our customs legislation, there are few cases which directly involve the definition of the term. They are all so recent as to be yet unreported at this writing. The Metmuzel Miller v. United States, 49 F.(2d) 368, 370 (C. C. A. Fourth Circuit) decided April 13, 1931; United States v. The Frances T (C. C. A. Second Circuit) 46 F.(2d) 1021; The Deauville (D. C. Southern District of Alabama) 49 F.(2d) 372, 374, decided April 29, 1931. All of these eases would be cited in support of the contention that the limits of a eoÚeetion district extend beyond our territorial waters to four leagues from the coast.

In the ease of The Frances T, tbe question of whether the vessel had arrived within the limits of a collection district was involved; the Circuit Court of Appeals, Second Circuit, affirming, without opinion, the holding of Coxe, J., that the vessel had entered collection district No. II. The vessel was seized about ten miles off shore. An examination of the record of the ease discloses, however, that there was evidence, and upon appeal the government so contended, that the Frances T had been within the three-mile limit and made shore contact. There is nothing in the records of the District Court and/or Circuit Court to indicate whether these eourts did or did not find that the vessel had been in territorial waters.

In the ease of The Deauville, the court, in holding that the Jimits of a collection district extend beyond territorial waters, rested the decision solely upon the authority of The Metmuzel Case, supra. Judge Ervin’s full discussion of the question is as follows:

“It is urged that being over three miles from shore, and nearly twelve miles, she was not within a collection district.
“This contention is met by Miller v. United States, 49 F.(2d) 368, Fourth Circuit, decided April 13, 1931.”

The only considered opinions, therefore, to be found upon the question are those in The Metmuzel Case, that of Groner, J., for the Eastern District of Virginia, and that of Parker, C. J., affirming the lower court.

While I am reluctant, sitting as a court of first instance, to decline to follow the holding of a Circuit Court of Appeals, even of another circuit, I cannot in this case do so and believe that the error of the conclusions reached upon this question in the case of The Metmuzel can be demonstrated.

At the outset, in his consideration of the question in The Metmuzel, Parker, J., says:

“Appellant contends that the collection district thus defined is limited to the territorial boundaries of the United States, which extend only to the three-mile limit at sea. We think, however, that this ignores the jurisdiction asserted under the revenue statutes to the twelve-mile limit, and that the collection district as contemplated by the statute in question extends to that limit.”

The court there appears to ignore the fact that nowhere in the statute in question is there the slightest indication that Congress purports, by implication or otherwise, to be defining or fixing collection districts. The collection district had already, by totally disassociated legislation and executive action, been fixed and established. There is nothing to suggest that the Tariff Act of 1930, or that of 1922, undertook to alter the limits of these districts. It must be assumed that when Congress used the term in section 585 of the Tariff Act they were using it with the meaning and with the limits which had long since been-established. It is pure sophistry to try to read into the term “collection district” a meaning drawn by inference from the Tariff Act. If in 1913 in fixing the collection districts Congress had expressly asserted extraterritorial limits for those districts along our coast, it would be the duty of the courts to respect that assertion and leave the international complication for other authority to settle. But Congress did not do so, and it is not for the eourts, in the absence of express language of Congress, to now enlarge upon the meaning of the term.

Parker, J., further says: “ * * * it seems clear that the district must be held to embrace the territory within which the customs officials are given jurisdiction and required to perform their duties. How far does this territory extend?”

This observation by the court involves the assumption that Congress may not, in exercising certain police prerogatives over extraterritorial waters, assign duties to customs officials beyond the liipits of their collection districts. There appears no good reason in law why such duties may not be charged upon customs officials as well as upon the Coast Guard. In fact, the very statute under consideration indicates that Congress had in mind charging customs officials with duties and prerogatives of exactly that character.

Section 581 of the Tariff Act 1930 (19 USCA § 1581), containing the general provisions authorizing the boarding of vessels, provides in part:'

“Officers of the customs or of the Coast Guard, and agents or other persons authorized by the Secretary of the Treasury, or appointed for that purpose in writing by a collector may at any time go on board of any vessel or vehicle at any place in the United States or within four leagues of the coast of the United States, without as well as within their respective districts, to examine. » *

See Maul v. United States, 274 U. S. 501, 47 S. Ct. 735, 71 L. Ed. 1171, and eon-curring opinion of Brandeis and Holmes, JJ., at page 512 of 274 U. S., 47 S. Ct. 739.

The practice of nations to exercise certain protective measures beyond their territorial limits, to better protect their territory, has long been recognized by international law and comity among nations. That such assertions of authority are, however, extraterritorial, although accepted and approved within limitations, does not alter the fact that they are predicated upon necessity and mutual international tolerance. Le Louis, 2 Dodson Adm. Rep. 210, 245. Nowhere is there legal warrant for courts to assert such a jurisdiction by implication. This is especially true of English and American courts.

At another part of his opinion Parker, J., says: “If a ship bound for the United States may be required to produce a manifest of its cargo as soon as it comes within the twelve-mile limit or may be forfeited for transferring cargo within such limit without a permit, there is no reason why forfeiture should not he enforced against a vessel hound for the United States which departs without making an entry as the statute requires.”

The court in The Metmuzel Case begs the question by assuming requirements of the statute as to entry and appears to overlook the fact that Congress in section 581, authorizing boarding and search, specifically fixes the distance within four leagues of the coast of the United States and in section 586 (191 USO A § 1586), forbidding unlading without permit, says: “After its arrival within four leagues,” etc., but in section 585, dealing with departure without entry, for its application fixes the distance “within the limits of any collection district.” If it was intended that the latter should mean the same distance as is expressly provided in the other sections, why was not the same simple statement “within four leagues” used?

Having in mind the fact that we are here dealing with a statute penal in character, and the rule that extraterritorial jurisdiction should not be asserted by a federal court in the absence of express congressional mandate, it is my opinion that every sound principle of construction requires the definition of the “limits of any collection district” as being the limits of territorial waters, namely, one league from our coast.

The next issue to be considered is that raised by the first cause stated in the libel. It is alleged that the master became subject to a penalty of $500 under section 584 for failure at the point where the vessel was boarded to produce the manifest of the cargo. This section, entitled “Falsity or lack of manifest,” provides in part as follows:

“A.ny master of any vessel and any person in charge of any vehicle bound to the United States who does not produce the manifest to the officer demanding the same shall be liable to a penalty of $500, and if any merchandise, including sea stores, is found on board of or after having been unladen from such vessel or vehicle which is not included or described in said manifest or does not agree therewith, the master of such vessel or the person in charge of such vehicle or the owner of such vessel or vehicle shall be liable to a penalty equal to the value of the merchandise so found or unladen, and any such merchandise belonging or consigned to the master or other officer or to any of the crew of such vessel, or to the owner or person in charge of such vehicle, shall be subject to forfeiture, and if any merchandise described in such manifest is not found on board the vessel or vehicle the master or other person in charge or the owner of such vessel or vehicle shall be subject to a penalty of $500. * i * * ”

In the present case, the government’s own testimony discloses that upon request the ship’s papers were promptly produced, including one purporting to be a manifest, the content of which has already been stated. The government contends, however, that the master is liable for a penalty of $500 for failure to “produce the manifest” on the ground that the manifest presented, being inadequate, amounted to no manifest at all.

The government relies upon the ease of The Irene C (D. C.) 41 F.(2d) 288, 290. In that ease the vessel was bound for the United States and was less than four leagues, but more than one league, from our coast. In regard to her manifest the court said: “As her manifest did not comply with the basic requirements of our law (19 USCA § 241), it is for present purposes a nullity. Phile v. The Anna, 1 Dall. 197, 1 L. Ed. 98.” The citation is in point, but with its conclusion I do not agree.

The government’s contention is based upon the fact that the manifest produced by the master of the Mazel Tov eleven and one-half miles from our coast did not conform to the requirements of title 4, § 431, of the act (19 USCA § 1431). This section provides in part as follows:

“The master of every vessel arriving in the United States and required to make entry shall have on board Ms vessel a manifest in a form to be prescribed by the Secretary of the Treasury and signed by such master under oath as to the truth of the statements therein contained.”

To determine whether the requirements of section 431 as to form and content of a manifest are to be read into section 584, it becomes necessary to scrutinize the subdivisions of the statute and to consider the purpose and application of these subdivisions. Title 4 of the statute (19 USCA §§ 1401-1654), entitled “Administrative provisions,” is in turn divided into parts 1, 2, 3, 4, 5, and 6. Each part is subdivided into numerous sections providing different .and independent penalties where it is intended to penalize for their nonobservanee. Section 431, wherein counsel for the government finds the detailed requirements for the form of a manifest, is the first section of part 2 which is entitled, “Report, Entry, and Unlading of Vessels and Vehicles.” I am convinced from a reading of the several sections of part 2 (19' USCA § 1431 et seq.) that they apply only to vessels wMeh have arrived in our territorial waters and in general come into intended application only when the vessel has arrived in port.

It is not until we come to part 5 (19 US CA § 1581 et seq.), wherein we find the several sections brought under consideration by the present libel, that we come to that portion of the act embodying the special enforcement provisions and which includes among its several sections those which assert and authorize the special extraterritorial jurisdiction wMeh has already been discussed.

Indicative of what I may term the intended “port application” of the provisions of part 2 is the very nature of the things required to be done. For example, section 431, fixing the form of the manifest, makes it applicable to the master of every vessel arriving in the United States and required to make entry. Section 439 (19 USCA § 1439), closely following in part 2, provides:

“Immediately upon arrival and before entering Ms vessel, the master of a vessel from a foreign port or place required to make entry shall mail or deliver to the comptroller of customs for the district in which the port of entry is located, a copy of the manifest. * * *»

Surely no common sense interpretation of the meaning of the terms “arrival” and “arrived” as used in part 2, when considered in conjunction with things required to be done, could construe them as meaning the crossing of an extraterritorial line twelve miles at sea.

The purpose of the requirements and penalties of section 584, part 5, is to facilitate a protective and general examination of the vessel and cargo at any point within four leagues from our coast. It represents a part of the extraterritorial authority asserted. The section does not purport to impose a domestic control over the detail or form of the ship’s papers other than that the cargo must be described, which is obviously necessary to the purpose to be served. It would, indeed, be a marked alteration of the American and English stand, in respect to extraterritorial jurisdiction, if in such a zone a vessel of foreign registry, or its master, should become subject to special penalties because the form of the manifest, beyond the necessary description of the cargo, did not conform to a regulation of a department of government as is contemplated in section 431. Congress in the Tariff Aet has wisely made no such assertion of absolute domestic regulation in detail until the vessel has “arrived” in the United States.

The ease of Phile v. The Anna, 1 Dall. 197, 1 L. Ed. 98, cited by the court in The Irene C, supra, is not in conflict with tMs interpretation. In that case the Anna, whose inadequate manifest was involved, was not in extraterritorial waters but was in the port of Philadelphia.

My interpretation of the law is that the master of a vessel from a foreign port,, if within four leagues of- our coast, may be required to produce Ms sMp’s papers, specifically the manifest, which he carries. If he cannot or does not, he becomes subject to a penalty of $500. If he produces a manifest, he has, in that regard, complied with the requirements of section 584. If the manifest produced does not reasonably describe the cargo carried, there are drastic penalties to cover that situation.

As the remaining objections which were interposed to the libel are of specific, rather than of general, application or interest, they will not here be reviewed. I find that there was no irregularity or unfairness in the appraisal of the cargo. The form of the notice to the master, advising him that the vessel had. become liable to the several penalties set forth, was sufficient because of the authority under section 594 (19 USCA § 1594) to enforce the collection of penalties by summary proceedings against the vessel. The Irene C (D. C.) 41 F.(2d) 288, supra; The Pesaquid (D. C.) 11 F.(2d) 308. A better practice would be, however, to notify the master, personally and directly, that he has become liable to, and that there have been assessed against him, the specific penalties for specified violations.

In arriving at the conclusions expressed in respectólo the major issues involved in this case, I am alert to the importance and necessity of curbing the smuggling and importation of liquors in violation of our laws. I am convinced, however, that a vigorous adherence to sound legal principles of interpretation, leaving it to Congress to remedy any deficiencies in the law, is the only course which will stand the test of time.

A decree, dismissing the libel and discharging the vessel, may be submitted for approval and entry.

       Error in notice.

       This notion may have beqn introduced by some courts because of the currency which has been given to an excerpt from a communication by Secretary Hughes, March 3,1924, addressed to the House Committee on Foreign Affairs, in which he said: “The proposed treaty is, in a strict sense, self-executing, requiring no legislation on the part of Congress to make it effective.”

       Memorandum only.

       “The Government of the United States has repeatedly asserted that the limits of territorial waters extend to three marine miles outward from the coastline. * * * It' is quite apparent that this government is not in a position to maintain that its territorial waters extend beyond the three-mile limit and in order to avoid liability to other Governments, it is important that in the enforcement of the laws of the United States this limit should be appropriately recognized.” Secretary Hughes’ address before the Council on Foreign Relations, New York, January 23, 1924.

       “Yet in faot we do not deal differently with a statute from our way of dealing with a contract We do not inquire what the legislation meant; we ask only what the statute means.” Harvard Law Review, vol. 12, pp. 417, 419. “The Theory of Legal Interpretation”—Oliver Wendell Holmes.


author: JOHNSON, District Judge.

text:
    ASHCRAFT v. BREAM.
    No. 2335.
    District Court, M. D. Pennsylvania.
    July 22, 1931.
    Henry H. Cole, of Tampa, Fla., Pepper, Bodine, Stokes & Schoch, of Philadelphia, Pa., and Knapp, O’Malley, Hill & Harris, of Scranton, Pa., for plaintiff.
    Edwin D. Strite, of Chambersburg, Pa., and Paul G. Smith, of Harrisburg, Pa., for defendant.
   JOHNSON, District Judge.

In this action of assumpsit, E. H. Ash-craft, receiver of the Seminole County Bank of the State of Florida, is suing to recover from the defendant the sum of $42,325, with interest and attorney’s fees, the amount claimed to be due on four different promissory notes on which D. M. Bream, the defendant, is maker, and H. S. Long, trustee, is payee. W. H. Tunnieliffe, liquidator, has been substituted as plaintiff in place of E. H. Ash-craft, receiver.

The defendant on October 17, 1929, filed an affidavit of defense raising questions of law, as follows:

First, that this court does not have jurisdiction;

Secondly, that the plaintiff, receiver, does not have the right to sue on the notes in question; and

Thirdly, that the right of the plaintiff to sne in this court has been adjudicated against the plaintiff.

As to the jurisdiction of this court to entertain the action. A receiver appointed by a court of one state or jurisdiction cannot maintain a suit in another state or in another jurisdiction; he is confined to the jurisdiction of the court which appoints him. Booth v. Clark, 17 How. (58 U. S.) 322, 15 L. Ed. 164; Great Western Mining & Manufacturing Co. v. Harris, 198 U. S. 561, 25 S. Ct. 770, 49 L. Ed. 1163; Holmes v. Sherwood (C. C.) 16 F. 725; Hazard v. Durant (C. C.) 19 F. 471. But where a receiver is not an officer of the court of another state or of another jurisdiction, but is the person designated by the law of that state to take the property of any dissolved or insolvent corporation of that state and hold and dispose of it in trust for the use and benefit of creditors and other parties interested, such receiver, under the law of that state, secures title to all the assets and property of such insolvent corporation and may sue to collect the assets and property in another state or jurisdiction. Relfe v. Rundle, 103 U. S. 222, 26 L. Ed. 337.

As to the right of the receiver to sue on the notes: Paragraph 8 of the plaintiff’s Statement of claim alleges that “on or about the 18th of March, 1927, the payee named in each of the four notes aforesaid endorsed them in blank and delivered them for a valuable consideration to the Seminole County Bank, who. took them in good faith, without any notice of any infirmity in the said notes or any defect in the title of the payee.” The indorsement on each of the notes was as follows: “For collection and credit to account of H. S. Long, trustee, H. S. Long, trustee.” The plaintiff claims the right to sue on these notes on two grounds: First,' that the bank of which he is the receiver, received the notes for a valuable consideration; and, secondly, because at the time of the appointment of the receiver, the bank held the notes for collection, and on each ground the receiver now has the right to sue on the notes. This position of the plaintiff appears to be sound. If the bank owned the notes, having secured them for a valuable consideration, it was entitled to sue on them and its receiver now has the same right to sue, and if the bank held the notes for collection only, it still had the right to sue thereon. First Nat. Bank v. Walker, 289 Pa. 252, 137 A. 257; McKinley v. Nainstein, 81 Pa. Super. Ct. 596.

As to whether the cause of action is res judicata: On a previous suit between the same parties to recover on the same notes, this court decided that the plaintiff had no authority to sue in this court; that the jurisdiction was within the state of Florida, citing Booth v. Clark, supra; Great Western Mining & Manufacturing Co. v. Harris, supra; Holmes v. Sherwood, supra; Hazard v. Durant, supra. But in the former suit it did not appear from the plaintiff’s statement of claim that the receiver was an officer of the state of Florida, and that under the law of the state of Florida, he was clothed with the power to take the property of the Seminole County Bank and to hold and dispose of it for the use and benefit of creditors and other parties interested. In the present suit it does appear from the plaintiff’s statement that the receiver is an officer of the state of Florida and designated by law to take the property of this bank and to hold and dispose of it for the use and benefit of the creditors and other parties interested. He is the statutory successor of the corporation for the purpose of winding up its affairs. As such he represents the corporation at all times and places in all matters connected with his trust. He is an officer of the state and as such represents the state in its sovereignty while performing its public duties connected with the winding up of the affairs of one of its insolvent and dissolved corporations. His authority does not come from the decree of the court, but from the statute. He is in fact the corporation itself for the purpose of winding up its affairs. Relfe v. Rundle, supra.

In the previous suit on a demurrer to plaintiff’s statement of claim, or more strictly in the language of Pennsylvania practice, on an affidavit of defense raising questions of law, the court decided that it did not have jurisdiction for the reason that ordinarily a receiver of another state or jurisdiction could not maintain this action in this federal court. The former decision did not go to the merits of the ease, but merely to the right of the plaintiff to maintain the action in this jurisdiction on the facts alleged in his statement. He now brings a new suit in which he alleges facts which bring his claim within the jurisdiction of this court and he should have the right to try his ease on the merits. Hughes v. United States, 4 Wall. (71 U. S.) 232, 18 L. Ed. 303; Smith v. McNeal, 109 U. S. 426, 3 S. Ct. 319, 27 L. Ed. 986.

The affidavit of defense raising questions of law filed October 17, 1929, raising the above stated question of law is overruled for the reasons stated above. At the time of the argument on the questions of law raised in the affidavit of defense filed October 17, 1929, on February 19, 1931, the defendant filed his petition asking permission to file an amendment to his affidavit of defense raising the question of law, whether the notes in question were negotiable, alleging that the notes were not negotiable and that the plaintiff, therefore, could not sue thereon. This court has granted a rule this day directing the plaintiff to show cause why the amendment should not be allowed, returnable at Lewisburg, Pa., on Monday August 3, 1931, at 2 p. m.' When this petition and the matters contained therein are disposed of, the court will make a further and proper order as to the pleadings.


author: HUTCHESON, Judge.

text:
    UNITED STATES ex rel. LOUROS v. LINDSEY, Inspector in Charge, Immigration Service.
    District Court, S. D. Texas, at Houston.
    July 8, 1931.
    A. J. De Lange, of Houston, Tex., for relator.
    H. M. Holden, U. S. Atty., and M. S. McCorquodale, Asst. Dist. Atty., both of Houston, Tex., for respondent.
   HUTCHESON, Judge.

This is a proceeding by habeas corpus in which the relator attacks the validity of a warrant ordering his deportation.

The order for deportation was based upon the finding that “the alien, who landed at the port of New York on the 27th day of March, 1914, has been found in the United States in violation of the Immigration Act of February 5, 1917, towit, in that he was found to be an immate of a house of prostitution, and that he has been found assisting a prostitute.”

The record fails to support either of these grounds. It is quite evident that the proceedings in this case have been instituted, the evidence taken, and the finding reached under a misapprehension of the meaning and effect of the section of the statute invoked.

The subdivision of section 19 of the Immigration Act of 1917 (8 USCA § 155), under which this particular proceeding was brought, strikes in a comprehensive way at the evils of public prostitution, and seeks to make deportable those who engage in the furtherance of that business. It does not denounce acts of immorality as such, nor make deportable those who engage in them. It certainly does not make outlaws of nor proscribe from the pity and interest of mankind women of the street so as to justify the charge made here, that the furnishing by Louros of money to pay for the hospitalization and care of a sick woman was, because she had practiced prostitution, within the letter or the spirit of that statute which interdicts assisting a prostitute. The invoked section in full is as follows: “Any alien who shall be found an inmate of or connected with the management of a house of prostitution or practicing prostitution after such alien shall have entered the United States, or who shall receive, share in, or derive benefit from any part of the earnings of any prostitute; any alien who manages or is employed by, in, or in connection with any house of prostitution or music or dance hall or other place of amusement or resort habitually frequented by prostitutes, or where prostitutes gather, or who in any way assists any prostitute or protects or promises to protect from arrest any prostitute.”

This section of course applies to and makes deportable any person who is in any way connected with the furtherance of prostitution by engaging in or promoting its gainful activities, whether this connection consists in directly maintaining women who practice it, or places where it is practiced or indirectly promoting it in ways adjunc-tive to or connected with its practice, such as musie or dance halls, or kindred places of amusement or resort, which act as feeders to it. It also applies to and makes deportable an alien who assists a. prostitute to ply her vocation. ■

Neither in themselves, nor as construed in the light of the age-old instincts and practices of the human raee do the words of this clause extend to persons whose relations with prostitutes or places of prostitution are personal, and not at all motivated by or connected with the promotion of the trade or business as such. Nagle v. Eizaguirre (C. C. A.) 41 F.(2d) 735.

The evidence in this case shows that this alien had lived in the United States before these proceedings were brought for more than fifteen years. In his behalf fifteen responsible and respectable citizens of Galveston testified to his being the owner and manager of the Royal Café, a first-class respectable restaurant, and that his reputation, outside of the one occasion when he had been convicted of violation of the Volstead Act (27 USCA) and of vagrancy because he had been found and arrested in a house of prostitution, was excellent. He himself denied ever having any relation whatever with the business of prostitution or ever having been an inmate of a house of that kind, and the only evidence which the government offered to the contrary was evidence that he had frequented such places, and had for some time lived with a woman who conducted such a business, and of one witness that when she became sick the woman had told him that Louros furnished her money for medical attention and cure.

The alien denied that he had furnished her money in her sickness. He testified, however, that he knew her well, that he had visited her many times, and that they had expected to be married.

Upon these facts, together with the statement of one witness, a policeman, whose testimony was vigorously denied, that he had visited a girl at the place where Louros visited the woman in question, that he had seen Louros beat her up, either because he was jealous of another man or because she did not make enough money, he did not know which, the government’s finding rested.

I think it plain that the record contains no testimony which, fairly construed, remotely sustains the finding that the alien was either an inmate of a house of prostitution, or assisted a prostitute within the' meaning of the statute.

Upon the whole record it is manifest that the alien has not been as choice in the selection of his associates as he should have been, and that he allowed his affections to center on one who has made her living in ways which, though ro'oted in custom old as earth, have never received the sanction of the law. It is also manifest, however, from the very facts upon which the government relies to sustain the charge, that it cannot be sustained, for, instead of his relations with the woman being professional and in the way of business, they were personal and in the way of affection for her. Instead of leaving her sick and desolate to her fate, according to the government’s testimony, he furnished her the money for her maintenance and cure.

Stem and harsh though the face which the law turns to the woman of the streets has ever been, it has never been so cruel as to denounce as criminal or beyond its pale the giving her aid and comfort in sickness and in distress when, poor and miserable, dejected, and deserted, she stands pitiful and alone.

It appearing that the detention of the relator is unlawful, it is ordered that he stand discharged.


author: NETERER, District Judge

text:
    KESSELL v. GREAT NORTHERN RY. CO.
    No. 20284.
    District Court, W. D. Washington, N. D.
    April 17, 1931.

      Charles A. Turner and Louis A. Merrick, both of Everett, Wash., for plaintiff.
    ‘ Thomas Balmer and Edwin C. Matthias, both of Seattle, Wash., for defendant.
   NETERER, District Judge

(after stating the facts as above).

The materiality of allegations can have relation only when they give plaintiff a right of action. All that can be gathered from the eomplaint is that there was an employment agreement between the railway company and the Brotherhood of Railroad Trainmen; that the plaintiff was a member of the brotherhood.

The railway company is a corporate entity. The Brotherhood of Railroad Trainmen is a distinct entity, either corporate or otherwise, and contracted with the railway company in that capacity and relation. There is not asserted any right or remedy which shall accrue to a member of the Brotherhood of Railroad Trainmen for a breach of the agreement which directly involves a member.

The contention that the railway company is contractually bound to plaintiff by the terms of the agreement in his individual capacity and that his discharge, being a breach of the contract, gave him a right of action for losses sustained, would create a relation which is not expressed, and certainly not pleaded. No right of action accrued to the plaintiff by reason of the employment, unless predicated upon contract or tort. The action is on contract, and there is no allegation that the agreement was by reason of any stipulation incorporated with the service so as to entitle either party to enforce inter se the terms thereof. The agreement obviously was intended to operate between the railway company and the brotherhood, by mutually agreed terms of employment and regulations beneficial to the employees. The agreement is clearly between the railway company and the brotherhood organization, and constitutes no contract between any member employee and the railway company. No precedent is presented from any courts of the United States.

Lord Russell of Killowen, for the Lords of the Judicial Committee of the Privy Council, November 25, 1930, in a like relation and contract, in Young v. Canadian Northern Ry. (Canada), among other things, said: “It appears to their lordships to be intended merely to operate as an agreement between a body of employers and a labor organization by which the employers undertake that as regards their workmen certain rules beneficial to the workmen shall be observed. By itself it constitutes no contract between the individual employee and the company which employs him. If an employer refuse to observe the rules, the effective sequel, not an action by an employee, not even an action by Division No. 4 (the distinct brotherhood or society) against the employer for specific performance or damages, but of a strike until the grievance was remedied.”

The motion of the defendant to strike the parts of the first cause of action of the third amended complaint relating to the contract between the defendant railway and the Brotherhood of Railroad Trainmen is granted. As to the second cause of action, the parte of the third, fourth, eleventh, and twelfth paragraphs will be likewise granted; and the motion as to the third cause of action will be granted unless a bill of particulars is furnished.


author: COXE, District Judge.

text:
    KUNSCHMAN v. UNITED STATES et al.
    District Court, S. D. New York.
    April 6, 1931.
    Simone N. Gazan, of New York City, for libelant.
    George Z. Medalie, U. S. Atty., of New York City (Frederick H. Cunningham, of New York City, of counsel), for respondents,
   COXE, District Judge.

This is a suit in admiralty te recover damages f°r the death, of Frederick W. Kunsehman as a result of an accident on July 10, 1929, at 11:52 a. m., in the engine room of the motorship Triumph, owned by the gov-eminent and operated by the Shipping Board, The libelant is Mary Kunsehman, the mother °f the deceased and administratrix of his estate, and the respondents are the United States and the Shipping Board Corporation.

The deceased was third assistant engineer on the Triumph at the time of his death, and was receiving a monthly salary of $155 besides his keep. He was 25 years old, and unmarried, and contributed $20 weekly towards his mother’s support. The explosion occurred in the crank ease of engine No. 4 as the Triumph was approaching Manila, and the deceased was so severely burned that he died two days later at the Manila Hospital.

Originally, the Triumph was steam driven but had just been overhauled and equipped with new Diesel engines, and was on her initial voyage to the Philippines after the installation. Prior to the accident, the vessel had covered over 15,000 miles with the new engines, and there had been no difficulty of any kind or warning of impending trouble,

mea fte yeggel arrived at Hankow some d after the esplosion engin6 No. 4 was taken and it was ften foimd that the piston of the air compressor was broken and that the inside of the cylinder was scorched ¡^a seratched. The crank ease door had not been ruptured or tom off, but was corrugated and distorted from the explosion. It was also found that one side of the piston was one-fourth of an inch thick and the other side one-half an inch thick.

It is insisted by the libelant that the aeei-dent wag cauged (1) by the break in the piston du6 itg thickness and defective construction; and (2) by the faulty design of the engine which did not make adequate provision for ventilating the crank case and releasing the trapped gases. The respondents contend, on the other hand, that liability can be predicated only on negligence, and that although eoncededly the mere happening of the accident in the manner shown is sufficient to create an inference of negligence, Rose v. Stephens (C. C.) 11 F. 438; The Rambler (C. C. A.) 290 F. 791, still the respondents have completely met and rebutted this inference by proving that in the selection, design, and installation of the engine every reasonable precaution was taken to make it safe and sound, and that no negligence is therefore properly attributable to the respondents.

When the government decided in 1927 to install. Diesel engines in various Shipping Board vessels of the type of the Triumph, Cox & Gibbs, naval architects, and Admiral Taylor, were requested to prepare the necessary plans. The Gibbs firm had previously been employed by the Shipping Board in advisory work, and was unquestionably qualified by ability and experience to take charge of the conversion of the vessels and to supervise the installation of the new engines. After thoroughly canvassing the field, for the best type available, the McIntosh & Seymour engines were selected as the most suitable, and appropriate contracts were thereupon entered into with that company. The enp gines were of standard design, and practically identical with those previously manufactured by McIntosh & Seymour, and in extensive use ia this country, except for the addition of two cylinders, making eight in all, and the engines were to be specifically built for the government. During the course of manufacture in the McIntosh & Seymour shops at Auburn, the Gibbs firm was constantly in touch with the work, and Mr. Cook, a member of the Gibbs staff, was detailed to the McIntosh & Seymour plant to inspect and test the materials going into the engines as they were being manufactured.

The engines were installed in the Triumph at Boston in the early part of 1929, and were there tested, inspected, and approved by representatives of the American Bureau of Shipping. The bureau had previously approved the design and plans of the engines, and, before they were finally accepted by the government, issued the requisite certificate of approval. Furthermore, the vessel was given preliminary trials at Boston, at which the engines proved entirely satisfactory. Afterwards, the vessel proceeded to Baltimore, from there to New York, thence to Norfolk, and shortly afterwards out through the Canal to Honolulu, and then on to Manila. During this entire voyage, covering a period of over 45 days and a distance of more than 15,000 miles, engine No. 4 was continuously in operation and functioned perfectly.

The libelant insists that the piston was defective in that one side was thicker than the other. But it is by no means clear that the piston broke because of this difference in thickness; and even if it did, I do not think the respondents can be charged with negligence in that respect, especially as they were not the manufacturers. The contract to build the engines was placed with a competent, independent contractor, and the respondents were not liable for defects which reasonable care on their part would not have disclosed. If this were not so, a shipowner would be liable as an insurer of the adequacy or safety of the machinery of his vessel, which clearly is not the law in the federal courts. Burton v. Greig (C. C. A.) 271 F. 271; The Henry B. Fiske (D. C.) 141 F. 188. Nor is a different rule to be applied because Mr. Cook, an employee of the Gibbs firm,'was present at the McIntosh & Seymour plant during the construction of the engines, testing and inspecting the materials. He was not the agent or servant of the respondents so as to make them liable in damages in case his inspection failed to disclose defective materials or workmanship.

I do not think, either, that the respondents are chargeable with negligence in connection with the design of the engines. They committed this work to responsible naval architects, and are not liable for their negligence. Burke v. Ireland, 166 N. Y. 305, 59 N. E. 914. Furthermore, there was a sharp conflict in the testimony as to whether there was adequate provision for releasing the trapped gases in the crank case. In any event, the use of vents in the crank case was not so clearly indicated that a failure to install them can be regarded as negligence on the part of the respondents. It is settled, also, by abundant authority that alterations made after an accident are incompetent to show negligent construction at the time of the accident. Columbia & P. S. R. Co. v. Hawthorne, 144 U. S. 202, 12 S. Ct. 591, 36 L. Ed. 405; Loughlin v. Brassil, 187 N. Y. 128, 79 N. E. 854; Wigmore on Evidence, vol. 1, § 283.

I am, therefore, reluctantly constrained to hold that the libelant cannot recover; and there may be a decree for the respondents dismissing the libel.


author: UNDERWOOD, District Judge.

text:
    VENTIMIGLIA v. ADERHOLD, Warden.
    No. 171.
    District Court, N. D. Georgia, Atlanta Division.
    July 11, 1931.
    Prank A. Doughman, of Atlanta, Ga., for petitioner.
    Hal Lindsay, Asst. U. S. Atty., of Atlanta, Ga., for respondent.
   UNDERWOOD, District Judge.

The petitioner in this ease was, on March 5. 1928, convicted in the United States District Court for the Northern District of Ohio, on an indictment in two counts alleging violations of the National Motor Vehicle Theft Act (18 USCA § 408), the first charging the unlawful transportation in interstate commerce of a stolen automobile from Cleveland, Ohio, to Pittsburgh, Pennsylvania, and the second charging the unlawful sale of the same automobile in Pittsburgh, Pennsylvania.

The court sentenced petitioner to a term of five years and a fine of $5,000 on the first count; and a term of three years and a fine of $3,000 on the second count.

Petitioner alleges the invalidity of the sentence on the second count on the ground that the trial was not held in the state and district where the crime was committed.

Under both article 3, § 2, cl. 3, of the Constitution of the United States, and the Sixth Amendment thereto, petitioner could be tried only in the state and district where the ciime charged was committed.

The indictment shows that the sale of the automobile was made in Pittsburgh, Pennsylvania, without the district of the court passing the sentence.

The National Motor Vehicle Theft Act (18 USCA § 408) provides that: “Whoever shall transport or cause to be transported in interstate or foreign commerce a motor vehicle, knowing the same to have been stolen, shall be punished by a fine of not more than $5,000, or by imprisonment of not more than five years, or both. Whoever shall receive, conceal, store, barter, sell, or dispose of any motor vehicle, moving as, or which is part of, or which constitutes interstate or foreign commerce, knowing the same to have been stolen, shall be punished by a fine of not more than $5,000, or by imprisonment of not more than five years, or both. Any person violating this section may be punished in any district in or through which such motor vehicle has been transported or removed by such offender.”

The last clause providing that any person may be punished in any district through which the vehicle has been transported is properly applicable to the offense of transporting a stolen automobile in interstate commerce, and is valid because the offense is actually committed in any district through which the automobile is being transported; but this clause cannot be construed to apply to the sale of such automobile unless the sale was made in the district where the crime is being prosecuted, without rendering such clause unconstitutional to that extent.

Whether this clause be. construed to refer only to the provisions of the act relating to the transportation of automobiles, or be construed to refer to the sale of same outside of the district where the trial is had, and unconstitutional to that extent, petitioner’s trial and conviction on the second count were, in either event, illegal and void, because the trial court had no jurisdiction over the offense charged in this count.

Petitioner’s confinement under sentence of the court on the. second count would, therefore, be unlawful, and, when he has completed the sentence imposed under the first count, he should be released.

It is so ordered.


author: WOOLSEY, J.

text:
    In re WASSELF.
    No. 49556.
    District Court, S. D. New York.
    July 13, 1931.
    Silver & Hennock, of New York City (Julius Silver, of New York City, of counsel), for the petition.
    Jjdius D. Tobias, of New York City, opposed.
   WOOLSEY, J.

The petition to review is dismissed, and the order below thereby sought to be reviewed is affirmed.

I. It is common ground that the assignment which supports the successful claim of Schwartz below was made May 15, 1928, more than twenty-six months before this bankruptcy proceeding was brought, and is not a document which depends on filing for its validity against third persons.

II. The law of New York would, of course, apply. Benedict v. Ratner, 268 U. S. 353, 359, 45 S. Ct. 566, 69 L. Ed. 991.

The assignment is- an unconditional assignment to Schwartz, made as of May 15, 1928, of a contingent right to a fund given to him by the bankrupt as collateral security for a loan and, consequently, though constituting a secret lien, would operate in equity as a transfer of the fund to the extent of the loan indebtedness if, and so soon as, the fund came into the assignor’s hands. Field v. Mayor, etc., of City of New York, 6 N. Y. 179, 186, 187, 57 Am. Dec. 435, approved in Greey v. Dockendorff, 231 U. S. 513, at page 516, 34 S. Ct. 166, 58 L. Ed. 339. See also, Montgomery v. City of Philadelphia (D. C.) 253 F. 473, 476; In re Hawley Down-Draft Furnace Co., 238 F. 122, 124, 125 (C. C. A. 3), which were decided on similar principles as to the effect of an assignment.

III. The bankrupt did not have, any property in the fund in escrow on his adjudication. He and his trustee had at most merely a somewhat filmy claim to it.

Suit having been brought by the bankrupt’s assignee Schwartz against the escrow depositary, the latter, on appropriate quit-, tances, put an agreed portion of the funds in the hands of the bankrupt’s trustee in order that an interpleader before the referee might be conveniently had as between the trustee in bankruptcy and the bankrupt’s as-signee.

The fund necessarily had in theory to reach the trustee via the bankrupt, and, on passing through of the latter became affected by the assignment equity, which was superior to any equity assertable herein by the trustee. In re Seward Dredging Co., 242 F. 225, 227, 228 (C. C. A. 2); In re I. S. Remsen Mfg. Co., 232 F. 594, 596 (C. C. A. 2).

IV. The complaint by Schwartz of errors below is not properly before me, because a petition to review was not filed on his behalf.

Settle order on two days’ notice.


author: PETERS, District Judge.

text:
    INGALLS v. MAINE CENT. R. CO.
    District Court, D. Maine, S. D.
    July 27, 1931.
    See also (D. C.) 24 F.(2d) 113; (D. C.) 49 F.(2d) 631.
    John W. Hill and F. R. Dyer, both of Portland, Me., for plaintiff.
    Col. George E. Fogg, of Portland, Me., for defendant Maine Cent. R. Co. .
   PETERS, District Judge.

This was an action brought to recover' some overcharges on freight, and the court is asked to fix a reasonable attorney’s fee to-be taxed as costs under the provisions of section 8 of the Interstate Commerce Act (49 USCA § 8).

Speaking of that part of the section covering the matter of attorney’s fee, the Supreme Court says, in Meeker & Co. v. Lehigh Valley R. R., 236 U. S. 412, page 433, 35 S. Ct. 328, 336, 59 L. Ed. 644, Ann. Cas. 1916B, 691: “The evident purpose is to charge the carrier with the costs and expenses entailed by a failure to pay without suit, — if the claimant finally prevails, — and to that end to tax as part of the costs in the suit wherein the recovery is had a reasonable fee for the services of the claimant’s attorney in instituting and prosecuting that suit.”

The plaintiff has established his claim for $196.29 and is entitled to a reasonable attorney fee in addition. No evidence was presented to me as to the nature and extent, of services rendered or the value of the same, except an informal statement of counsel that the usual charges for all work done in connection with the rather protracted litigation would amount to several times the amount recovered. My information is to be-gained from the record. Evidently a large amount of work has been done by counsel for plaintiff in this case, but most of it in an effort to collect $1,500 or more claimed to be recoverable instead of the sum finally awarded. If the amount recovered had been $1,500, a fee of $500 might not have been regarded as unreasonable, considering the amount of work that must have been performed, both in the hearings before the auditor and in this court; but the $200 (approximately) recovered cannot be loaded with fees that might be chargeable for collecting a larger sum that was denied. The fee must be considered on the basis of instituting and prosecuting a suit which resulted in the recovery of some $200. Taking the result into account, as a lawyer does in making his charges, it would seem that a fee of $75 would be reasonable under the circumstances, and that amount is fixed as an attorney fee in this ease to be-taxed by the clerk as a part of the costs.


author: BOURQUIN, District Judge.

text:
    UNITED STATES v. NEARMAN et al. UNITED STATES v. VICKERS et al.
    Nos. 926, 929.
    District Court, D. Montana.
    July 11, 1931.
    Wellington D. Rankin, U. S. Atty., of Helena, Mont.
    E. F. Gummer, of Missoula, Mont., for movants.
   BOURQUIN, District Judge.

These are the usual suits in equity against owners of the premises and tenants to abate Volstead nuisances, and by way of additional relief to enjoin further nuisance and to close the premises to all use for one year.

Subpoena was served on the tenants alone. Some six months later the matter was first presented to the court as upon final hearing, default entered of “all defendants served,” and final decrees rendered as prayed. They and the injunctions assume to enjoin the tenants but not the owners by name, all acting “through or under” the tenants, “and all other persons,” from any act of nuisance upon the premises and from any use thereof for one year.

And now specially appearing the nonresident owners move only to “quash” the injunctions because subpoena not served upon them as aforesaid. Neither party makes any other point, and any departure from good practice in equity, once the delight of bench and bar and now very much in the discard in these police court proceedings, is by both parties ignored. The movants contend that, if without service of subpoena they be enjoined from use of the 'premises as plaintiff maintains they can be and are by virtue of section 34, 27 USCA, they are deprived of property without due process in contravention of the Fifth Amendment; and with that contention the court agrees.

It must be remembered that the equitable jurisdiction of the court is not the creation of the Volstead Act, and is by said statute affected none at all save as a limitation upon the length of time the court may close premises when deemed necessary in behalf of its injunction against nuisance. In any event, the said act in no wise affects the Constitution, even did it assume to, and the fundamental principle to which movants appeal yet prevails in all its pristine force and vigor.

The law of parties, equity, injunction, nuisance, is virtually as before the Volstead Act. If the nuisance be by a tenant, the owner of the premises and especially if nonresident. is not an indispensable party to proceedings to abate the nuisance and to enjoin its continuance or repetition by the tenant and his privies, incidental to which they may be denied any use of the premises during the statutory period of one year. The owner need not be made a party, for that the entire controversy can be completely determined and relief as aforesaid granted without affecting his rights, and within the sanction of settled principles of equity. True, his tenant is ousted, but in him he has no property, his right to rents is unimpaired, as is his right to otherwise use and enjoy his premises. Whether there could be substituted service upon the owner is not before the court.

The motions are granted, but only to relieve the movants, owners, from the injunctions too broad to the extent above indicated.

Order accordingly.


text:
    UNITED STATES v. JOHNSON et al.
    No. 1408.
    District Court, D. Montana.
    July 10, 1931.
    Wellington D. Rankin, U. S. Atty., of Helena, Mont., for the United States.
    H. R. Boden, of Missoula, Mont., for defendants.
   BOURQUIN, District Judge.

This is an action upon a bond given on permission to occupy premises abated- as a nuisance, pursuant to section 34, 27 USCA.

Plaintiff proceeds upon the theory that, without allegation or proof of any fines, costs, or damages, it is entitled to recover the full penalty. The statute reads that the bond shall be by owner or tenant “in the penal and liquidated sum * * * and conditioned that intoxicating liquor will not •thereafter be manufactured, sold, bartered, kept, or otherwise disposed of therein or thereon, and that he will pay all fines, costs, and damages that may be assessed for any violation of this chapter upon said property.”

The bond is conditioned accordingly, providing that “if” no acts of nuisance be committed in the premises “and if the said! principal and sureties will pay all fines, costs and damages that may be assessed for any violation of the National Prohibition Aet upon said property, then this obligation shall be null and void; otherwise to remain in full force and effect.” In principle, the case cannot be distinguished from United States v. Zerbey, 271 U. S. 332, 46 S. Ct. 532, 534, 70 L. Ed. 973. There was a permit to sell intoxicating liquors, and a bond conditioned not to violate the law, and to pay all fines and penalties imposed by law. Payment was a condition, because tie valid practice and regulations themselves and law, so provided; and as always, the law is part of the bond. The Supreme Court held that the provision for such payment and not the penal sum was without doubt intended to be and was “the measure of the obligation incurred under” the bond. Here, was a permit to occupy the premises for lawful uses, and a bond conditioned as in the Zerbey Case. And the construction and liability in both eases must be one and the. same. In brief, a statutory bond to secure performance of two conditions, viz.: (1) Lawful conduct, and (2) payment for any breach, the second but a consequential incident of the first, in the nature of things is in legal effect alternative; that is, obey or pay. The failure to perform one imposes no liability, unless there be failure also to perform the other. Until breach of the first condition, there is no debt owed and payment due, and so no possible breach of the second condition. There is no duty to perform the second until the first is breached, and performance of the second is compensation for the breach. Before there can be resort to the bond, there must have been breach of both conditions, happening of both contingencies. And the extent of the liability is not the penal sum prescribed save as a limitation, but is indemnity or payment according to the condition. That is evidently the intent of this more or less eriide and confused statute, to arrive at which and to avoid absurdity, requires that the conjunctive “and” be, as usual, read the alternative “or.” And that is the principle of Zerbey’s C.ase, supra, even if but vaguely conceived.

In their brief, defendants consent to judgment for coste, fines, damages, upon which, if the parties do not agree, further hearing will be had. Damages may include all expense of imprisonment for fines unpaid and the like.

Judgment accordingly.


author: WATSON, District Judge.

text:
    UNITED STATES v. KOHLMAN.
    No. 735.
    District Court, M. D. Pennsylvania.
    July 1, 1931.
    Andrew B. Dunsmore, of Wellsboro, Pa., for plaintiff.
    Homer L. Kreider, of Harrisburg, Pa., for defendant.
   WATSON, District Judge.

This cause came on to be heard on a motion to quash the search warrant and suppress the evidence obtained thereunder, for the reason that the search warrant was not addressed to the proper officer. The search warrant was directed to Col. S. 0. Wynne, Federal Prohibition Administrator, his assistant administrator, and all agents and inspectors under his command, or any or either of them. ■

A search warrant should be directed to a person or persons by name, and not to a class. United States v. Leach, 24 F.(2d) 965 (D. C. of Del.); United States v. Innelli et al., 286 F. 731 (D. C. E. D. Pa.).

The proper practice is for the Commissioner to make a selection of qualified officers to serve the search warrant, and then designate those officers by mentioning them by name. No persons other than those named should execute the writ otherwise than in accordance with title 11, section 7, of the Espionage Act (18 USCA § 617).

Now, July 1,1931, the rule to show cause why the search warrant should not be quashed and the evidence obtained thereunder be excluded and suppressed is made absolute.