author: CAVANAH, District Judge.

text:
    AMERICAN SURETY CO. OF NEW YORK v. BALDWIN et al.
    No. 1626.
    District Court, D. Idaho, S. D.
    July 31, 1931.
    Richards & Haga, McKeen F. Morrow, Martin & Martin, and Frank Martin, all of Boise, Idaho, for plaintiff.
    James F. Ailshie, Jr., and J. R. Smead, both of Boise, Idaho, for defendants.
   CAVANAH, District Judge.

This is a bill for an injunction against the defendants and the sheriff of Ada county, Idaho, enjoining them from enforcing a judgment in favor of the defendants and against the plaintiff the American Surety 'Company, rendered by the state district court. The ease is before the court upon the pleadings and showing on motion for a temporary injunction which relates to a history of the proceedings surrounding the steps taken by the parties from the inception of the suit out of which the judgment arose to the time of the institution of this action. The partieu-lar proceeding in which the judgment was rendered was by motion for judgment on a supersedeas bond executed by the plaintiff under section 7155, Idaho Compiled Statutes, and which judgment the plaintiff asserts is unconscionable, inequitable and void, and deprives it of its property without due process of law and denies it the equal protection of the law.

A federal court of equity is now asked to review those proceedings and by injunction stay further proceedings in the enforcement of the judgment. It presents the single question as to what extent does the power of the federal court extend when invoking its jurisdiction over proceedings had or pending in a state court, for the recognized principle will be kept in mind that if a state court has first assumed jurisdiction of the subject-matter of the cause and the parties by reason of an action pending there, or that the matters in controversy have been determined by the state court having jurisdiction of it and the parties, a federal court has no jurisdiction under the rule of comity of courts of concurrent jurisdiction to interfere with the jurisdiction of the court, or to review the merits of a controversy or annul the decrees of a court which had first obtained jurisdiction. Bearing then in mind this principle, with the further thought that the federal courts accept as controlling the decisions of the highest court of the state when interpreting the statutes of the state, we are confronted with the inquiry here: Do the facts alleged in the bill and presented on the showing bring the present ease under the principles thus stated?

It appears that in May, 1928, the defendant commenced an action in the state district court against Ed. Anderson and the Singer Sewing Machine Company to recover damages for injuries alleged to have been sustained by Vivian E. Baldwin, and received a judgment against both Anderson and the sewing machine company in the sum of $19,500. An appeal was then taken to the Supreme Court of the state, and the super-sedeas bond for $25,000 was given by the sewing machine company in accordance with section 7155 of the state statutes. Thereafter, in April, 1930, the Supreme Court of the state rendered its decision in the cause, .and its remittitur went down to the trial court reciting that the judgment was reversed as to the Singer Sewing Machine Company and .affirmed as to Anderson. The trial court then dismissed the cause as to the sewing .machine company, and after the expiration of thirty days from the time the remittitur was filed the Baldwins by their attorneys moved in court, under section 7155, for the entry of a judgment against the plaintiff bonding company upon the supersedeas bond, which was done by the court on June 23, 1930. Three days thereafter, the plaintiff moved the trial court to vacate the judgment which was granted on August 12, 1930. An appeal was then taken from the order vacating the judgment by the defendants to the state Supreme Court, who in its decision reversed the order vacating the order and said:

“Many assignments of error are made, but so far as this appeal is concerned we deem it necessary to consider only those which challenge the ruling of the lower court to the effect that the judgment against the surety company on the undertaking was void. * * *
“We disclaim any intention or right to construe the legal effect of the undertaking in question further than to examine it in aid of determining the sole question of the court’s jurisdiction to hear and determine the motion for judgment thereon.
“The surety company did not claim error, and appeal. It did not claim inadvertence or mistake. It challenged the court’s jurisdiction and moved to set aside the judgment as void. The whole question here is a question of jurisdiction. Nothing further. Nothing else.
“If a court has jurisdiction of the parties, jurisdiction of the subject-matter, and jurisdiction of an issue of law or fact presented, then its judgment upon that issue is not void whether erroneous or not. Such judgment in the absence of mistake or, in a proper ease, motion for new trial, may be corrected only by appeal. * * *
“Regarding notice: Where a supersedeas undertaking for stay of execution is filed pursuant to C. S. § 7155, it is held the surety becomes a party to the action, and if the judgment stayed by the undertaking is affirmed in whole or in part and remains unsatisfied for thirty days, the judgment creditor may move in the action for judgment on the undertaking against the surety, and it is unnecessary to give the surety company notice of such motion. * * *
“In the case at bar the only question presented to the court was as to right to judgment on the bond which was presented to the court by appellants in the manner provided by statute for the submission of that issue. TÍiis challenged judicial inquiry.
“The question or issue presented was: Did the surety company, in its undertaking, become a party liable for every part of the judgment appealed from which might be affirmed by the Supreme Court, or did it stipulate only as to such judgment or part thereof as might be affirmed against the Singer Sewing Machine Company? To answer this question the court must look to the bond. The issue required a construction of the bond as a whole. The trial court had jurisdiction of this question. It construed the bond in favor of appellants and against the surety company. It was not only in that court’s power, but it was its duty, to decide the question submitted. * * * We think, regardless of what our construction of the bond might be, it cannot be said appellants held no right to submit the question. Nor can it be said that such submission was a fraud upon the court and on that ground its judgment was void.
■ “We find the trial court, upon the motion for judgment on the bond, had jurisdiction of the parties and jurisdiction of the subject-matter; that an issue was presented and it had jurisdiction to construe the undertaking and decide the issue which its judgment assumes to decide. It follows the judgment was not void, even if erroneous in the construction, and that the trial court committed error in annulling and vacating it as void.” Baldwin et al. v. Anderson et al. (Idaho) 299 P. 341, 343.

Since the decision of the Supreme Court, plaintiff has taken appeals direct from the judgment and from an order. denying the defendant surety company’s motion to correct said judgment, which remain undisposed of. The statute, being section 7155, authorizing the entry of the judgment upon an undertaking on appeal has on many occasions been upheld as valid and not denying tfie surety of due process of law or equal protection of the law, upon the theory that the surety becomes a party to the suit by its voluntary appearance made when its supersedeas bond is filed, although notice is not given of the motion for the entry of the judgment after thirty days has elapsed from the date the primary judgment became final. Upon the primary judgment having become a final one, and the conditions of the supersedeas bond having been broken, the liability of surety is fixed, and, on motion, as provided for in the statute, summary judgment may be rendered on the bond. Pease v. Rathbun-Jones Co., 243 U. S. 273, 37 S. Ct. 283, 61 L. Ed. 715, Ann. Cas. 1918C, 1147; United States Fidelity & Guaranty Co. v. Ft. Misery Highway Dist. (9th C. C. A.) 22F.(2d) 369; Portland, etc., Co. v. Havely, 36 Or. 234, 59 P. 466, 61 P. 346; Meredith v. S. C. M. Co., 60 Cal. 617; Shannon v. Dodge, 18 Colo. 164, 32 P. 61; United States Fidelity & Guaranty Co. v. Ft. Misery Highway District, filed in this court of date February 21, 1927, judgment affirmed (C. C. A.) 22 F.(2d) 369.

In proceedings to render such judgment, the lower court had jurisdiction of the subject-matter and the guaranty company. Toledo Scale Co. v. Computing Scale Co. (C. C. A.) 281 F. 488; United States Fidelity & Guaranty Co. v. Ft. Misery Highway Dist., supra.

Section 7152 of the statutes of the state gave to the plaintiff the same as every other litigant the right to appeal from the judgment and to urge its contention as made here, the erroneous conclusion of the lower court as to the effeet of the bond and of the judgment being void, which gave to it ample-redress at law on the law side of the court; and, therefore, under the statutes of the state and the decisions of the Supreme Court, plaintiff has had a plain, speedy, and adequate remedy at law which precludes the invoking of the jurisdiction of a court of equity. . Donovan et al. v. Miller et al., 12 Idaho, 601, 88 P. 82, 9 L. R. A. (N. S.) 524, 10 Ann. Cas. 444; Buzard v. Houston, 119 U. S. 347, 7 S. Ct. 249, 30 L. Ed. 451. Nor is a court of equity open to the plaintiff because it failed to avail itself of its right of appeal from the judgment. Simonitsch v. Bruce (C. C. A.) 258 F. 331.

The contention that the judgment was entered by the trial court at chambers and not in open court is untenable and not sustained by the record, for the trial judge makes it clear in both his certificate and statement that it was entered in court.

The statute under which the judgment was entered being constitutional when applied to the plaintiff surety company, and the court having jurisdiction of both the subject-matter and the plaintiff, it would seem that the only remaining question is, Whether the judgment was obtained by fraud, accident, or mistake, unmixed with any fault or negligence of the plaintiff? The record seems to be silent as to any fact going to show that fraud was perpetrated upon the court in obtaining the rendition of the judgment. The allegation in the bill as to the obtaining of the judgment by fraudulent means is a conclusion and not a statement of fact showing what the fraudulent acts were. A bill for relief' on the ground of fraud must be specific, and the facts constituting it must be stated, however the showing presented does not establish any fraud of the conduct of counsel for defendants when he moved in open court the entry of the judgment or thereafter, for it appears that he appeared in open court when the judge was on the bench and moved under the statute the entry of the judgment and tendered form of judgment to the judge, who, after requiring authorities to he presented, took the matter under advisement, and thereafter entered the judgment. While there appears a sharp conflict between counsel as to whether the bond only secured the liability of the sewing machine company, whom plaintiff asserts was the only principal in the bond for which it was surety, yet all the facts fall far short in establishing fraudulent conduct of counsel in obtaining the rendition of the judgment.

Finally, the jurisdiction and right of a federal court of equity to restrain the enforcement of a judgment of a state court should not be exercised where it appears, as here, that the judgment was rendered by the state court having jurisdiction of the subject-matter and of the parties, and that the same was not obtained by fraud, accident, or mistake, and especially is that true after the highest court of the state had decided that the judgment was not void, but was rendered as authorized by the statutes, and that there are still pending in the Supreme Court two appeals, in which the same question submitted here is being urged. The fact that there appears a dispute as to whether the bond, upon which the judgment was based, covers the liability of the plaintiff goes to the merits ■of the case, which the Supreme Court said was a judicial inquiry submitted to the trial court when the judgment was entered. It is not in the power of a federal court to review the conclusion reached by the state court having first assumed jurisdiction upon a question, which goes to the merits of the case, although it may appear that such conclusion was erroneous. If such was not the rule, then the doctrine of comity between courts could never prevail, and confusion would exist between the decisions and processes of the federal and state courts.

These conclusions require the entry of añ order sustaining the motions of the defendants to dismiss and strike, and denying plaintiff’s motion for a temporary injunction, with ■costs.


source: Caselaw Access Project

author: HUTCHESON, Circuit Judge.

license: Public Domain

text:
    THE ADEN MARU. LUMBERMEN’S RECIPROCAL ASS’N et al. v. KOKUSAI KISEN KABUSHIKI KAISHA.
    No. 1386.
    District Court, S. D. Texas, Galveston Division.
    July 29, 1931.
    Harris & Watkins, of Galveston, Tex., for libelants.
    Hunt Hill & Bette, of New York City, and Lockhart, Hughes & Lockhart, of Galveston, Tex., for respondents.
   HUTCHESON, Circuit Judge.

This ease as first filed presented an effort on the part of Culver, an injured employee of Young & Suderman, independently contracting stevedores, and their insurer, under the Longshoremen’s and Harbor Workers’ Compensation Act (33 USCA §§ 901-950), to sue as “persons other than the employer liable for damages” the owner of the ship Jufuku .Maru, and the ship in the course of the loading of which the injury was received.

A hearing on exceptions to‘their right to sue them as third persons resulted in. an order overruling the contention that the ship and'owners were not third parties, sustaining the exception as fo Culver’s right to sue, and because the insurer had procured an assignment from the insured, the statutory assignee of Culver’s right of action, sustaining the insurer’s right to sue. So. Pac. Co. v. Winton, 27 Tex. Civ. App. 503, 66 S. W. 477; see Culver’s Case (D. C.) 1930 A. M. C. 1791, 44 F.(2d) 659.

The ease afterward coming on for trial on its merits; respondents, renewing their contention that the ship was not a third party, proved that, though Young & Suderman had taken out the insurance required by the act for the protection of its employees, the ship had paid to them, as part of the cost of the loading, the amount of the premiums.

They argued from this, and from the statute making it the duty of the ship to let the work only to contractors who had taken out insurance, that the ship must be treated as a statutory employee and itself protected by the insurance and not as a third party, a stranger to the insurance arrangement.

Cases are cited from states having statutes designed and effective to treat an entire undertaking as a unit and to provide that persons working on it shall have as to all persons working on it, or connected with it, one remedy, that for compensation.

The effect of these statutes is to release all other persons working on or connected with the undertaking from their common-law liability for damages for injuries which they cause. In Standard Accident Ins. Co. v. Pennsylvania Car Co. (C. C. A.) 49 F.(2d) 73, 75, these eases are referred to, but not followed, for the reason that there, as here, the statute under construction was different from those considered in the cited eases. For the same" reason they will be referred to, but not followed here. There, under a statute (Rev. St. Tex. 1925, art. 8307, § 6a) which, while giving a cause of action against “person other than the subscriber,” provided (article 8306, § 3) that the employees should have “no right of action against their employer or against any agent, servant, or employee of said employer,” we held an independent contractor liable in damages to the employees of the contractor. Here the statute provides (section 4 of the act [33 USCA § 904]): “Every employer shall be liable for and shall secure the payment to his employees of the compensation” provided by the act (section 5 [33 USCA § 905]): “The liability of an employer prescribed by the act shall be exclusive and in place of all other liability of such employer to the employee.” Section 33 of the act (33 USCA § 933) provides that, if the employee determines that “some person other than the employer is liable in damages,” he may elect compensation or suit for damages against such third person, and that acceptance of compensation shall operate as an assignment to the employer of all right of the employee to recover damages against such third person, subject only to the requirement that, if the employer recover any excess over his disbursements, he shall pay them to the employee. This statute vests in the employer complete control over the cause of action. Hunt v. Bank Line (C. C. A.) 35 F.(2d) 136.

I think it plain that, just as the independent contractor in the Standard Accident Case, supra, was under the Texas statute a “person other than the subscriber,” and therefore liable to suit, so here, under the Federal statute, if there is liability on the ship and its owners, the statutory case of “some person other than the employer is liable in damages” is presented, and ship and owner are suable; for under no reasonable view of the statute in the light afforded by its language considered alone, or in the light of the purpose to be accomplished by it, the mischief to be remedied, can it be considered that the ship or its owner was Culver’s “employer.” I therefore adhere to the rulings made on exceptions to the libel, holding with the libel-ants that it may sue on the cause of action alleged. See The Pacific Pine (D. C.) 31 F.(2d) 152.

On the merits, however, I think the decision must be for respondents.

In a ease of this kind, where the employer was unquestionably negligent in the way the work was performed, and where, nearly a year after the injury occurred, for the first time, claim is made that the ship caused the injury, libelants should be prepared, not merely to suggest that the ship may have been negligent, and that its negligence may have been the proximate cause of the injury, but to clearly and satisfactorily establish that it was negligent, and that that negligence was a proximate cause.

Respondents insist that the testimony of Jure, generally in charge of the loading for Young & Suderman, that the winch worked all right, and loaded cargo properly, that he saw nothing the matter with it, and that no complaints of anything being wrong with it were made to him, taken in connection with the testimony of the ship’s officers that as to the winch there was nothing wrong with it, and as to the bolts for the beam they were available and used, in the light of the con-cededly dangerous and reckless method employed in- getting the bale of cotton out of the hold by dragging the fall across the beam, instead of topping the boom, rebuts the claim of libelants’ witnesses that the winch was de^ feetive, and that they were unable to secure bolts for the beam.

I do not find it necessary to decide this point, for, assuming without deciding that the ship failed and refused to furnish bolts for the beam, it is entirely plain that everyone, including Culver, knew that the beam was not bolted; and assuming in the same way that in the particulars of leaking steam and the absence of a brake the winch was defective, and that the failure to have the winch in better condition was negligence, it is entirely clear that neither the absence of bolts, nor the condition of the winch, was the proximate cause of the injury. This occurred solely and entirely as the proximate result of the generally reckless manner in which a dangerous piece of work was being performed by attempting to drag the bale up across the beam knowing that it was bound to foul it unless some one pushed it oft, instead of topping the boom for a complete clearance. And specifically because the beam upon which Culver was standing was displaced through the negligence of the gangwayman in ordering the winch to proceed ahead after Culver had signaled to him to stop it.

Libelants’ counsel argue this ease as though the beam was dislodged by the winch proceeding up after the gangwayman had ordered it stopped. The evidence establishes just the contrary.

Giving full effect to all of the testimony of Culver, Burroughs, Lahohn, and Garzell, libelants’ witnesses to the accident, it is made crystal clear that after the bale was stopped at a point twelve or fourteen inches below the beam, and Culver had signaled to hold it until he could push the bale out from the beam, Lahohn not getting or disregarding Culver’s signal attempted by go ahead orders to the winehman to maneuver the bale past the beam while Culver was leaning over in a dangerous position to push it out of engagement, and that not the failure of the winehman to obey Lahohn’s “stop” order, but his obedience to Lahohn’s “go ahead” order, caused the injury.

A brief summary of the evidence of these witnesses will, I think, establish this point.

As to the setting, all agree that Culver and Burroughs were stowing cotton in the ’tween decks. Lahohn was standing on the top deck where he could look down below, giving orders to the winehman. The hatch being only partially covered, a bale rolled out of the sling into the lower hold. 'Without topping the boom as he should have done so as to place it directly over the center of the opening through which the bale was to come back, Lahohn ordered the winehman to drop the sling into the hold and bring up the loose bale, though he knew that on account of the position of the boom the fall would come up directly alongside of the beam, and that, unless the beam was shoved and held off, it would engage and drag the unbolted beam up with it.

As to the occurrence, all agree that when the bale started up Lahohn called out for some one to go out and shove the bale off. That Culver and Burroughs both went out to the edge of the beam to catch the fall, Culver arriving first, Burroughs turned around and started walking slowly back across the approximately eight feet of hatch. That the bale came slowly up to within twelve or fourteen inches of the beam, and that it then stopped or halted. That everybody realized that, unless the bale was pushed off, it would engage the beam. As to this stopping and the onward movement of the bale afterward, Culver testified: “He pulled the bale up within a few inches of the beam and I said to hold it. I wanted to push it out to clear the beam. I said this by holding my hand out flat; that meant to hold it. I saw the bale was going to hook the beam and wanted to go up and push it out and clear the beam. It about stopped and then it continued to go; it went oozing on up; it halted and started going slowly up and eased the beam out.”

Lahohn testified: “When the bale was twelve or fourteen inches below the beam I stopped the winehman and he (Culver) held against it to clear the beam. I stopped the winehman and Culver put his hand on the fall and I gave the signal to go ahead again and she did not respond immediately when she did she could not be stopped. It was swinging slowly and the winch instead of going ahead like it should, went ahead in jerks and loosed the beam out.”

Garzell testified: “Bor a while I crept along and when he gave me the signal to stop I stopped, and he held his hand and then he gave the signal to go ahead easy to clear the beam and then I started ahead a couple of feet and he threw his hand out and I shut the steam off, but it would not shut. After I cut off the steam as tight as I could the fall rose twelve or fourteen inches. After I got the signal to stop it went twelve or fourteen inches.” While Burroughs testified: “When I saw the bale it had come to a stop about a foot below the beam. I saw Culver put his hand on the bale. When I turned my back and started walking off I felt the hatch give a little under me. Before I got off the hatch I felt it rise. Some one on deck cried out just before the man fell, ‘Stop that winch’— this was just as I was about to jump off; just a second before I started off the hatch; at that time I had felt that rising movement.”

Reconstructing the picture of the accident in the light of this testimony, it appears that Culver, realizing the danger of his position standing on the edge of a beam and leaning out to push a heavy cotton bale away from its engagement of the beam, had signaled to Lahohn to stop the winch until he could push the bale out. That Lahohn either did not catch the signal, or misunderstanding it he signaled to the winehman to go ahead slowly and ease the bale out from under the beam. That the winehman did go ahead, and, after it stopped when the bale was only twelve or fourteen inches below the beam, he went two feet more, which would bring the bale up to the beam, and lifted the beam eight or ten inches, enough to take it out of its slot and. cause it to fall. It was then, after the beam had been dislodged and Culver was in the act of falling, and not until then, that the gang-wayman gave the winehman the order to stop the winch, and whether in his excitement the winehman was unable to stop the winch until it went up ten or twelve inches more is wholly immaterial, the injury had already been done.

In this view, which wholly exonerates the ship, it becomes unnecessary to • determine whether, if the ship had been negligent, Cul-ver’s action against it would, because of the dangerous position whieh he voluntarily assumed, have been defeated under the operation of the maxim volenti non fit injuria, and because of the existence of compensation it is also unnecessary to determine whether, under the contractual doctrine of assumed risk, his suit against his own employer would have been defeated.

Reduced to its simplest terms, this is a case in whieh a serious injury has resulted on shipboard to an employee of an independently contracting stevedore in the course of a culpably negligent and dangerous method of • performing work voluntarily adopted' by the employer and voluntarily participated in hy the employee.

In such a case, in order to hold the ship, it must be clearly established, both that it was negligent, and that its negligence was a proximate cause of the injury. In such a case, where the evidence leaves the matter of proximate cause in doubt, it defeats the cause of action. Reading Co. v. Boyer (C. C. A.) 6 F.(2d) 185; Luckenbach v. Buzynski (C. C. A.) 19 F.(2d) 871. Where, as here, proximate cause is clearly shown to be the negligence, not of the ship, but of the employer, it is plainer still that the case against, the ship must fail. Johns-Manville v. Pocker (C. C. A.) 26 F.(2d) 204.


author: KNIGHT, District Judge.

text:
    In re PRUNOTTO.
    No. 17276.
    District Court, W. D. New York.
    Aug. 13, 1931.

      Charles A. Drefs, Jr., of Buffalo, N. Y., for petitioning creditor.
    Christy A. Buscaglia, of Buffalo, N. Y., for bankrupt.
   KNIGHT, District Judge.

Joseph A. Prunotto was adjudicated a bankrupt June 8, 1931. On January 30, 1929, Joseph P. Gimhrone recovered a judgment against Prunotto, and on or about June 19, 1929, an execution against wages was issued under authority of section 684 of the Civil Practice Act of the state of New York. The adjudication was made and the judgment recovered in that state. The execution was outstanding at the time of the adjudication. The judgment was listed in bankrupt’s schedules as one of his debts, and it is not denied that it is one dischargeable in bankruptcy.

An order was heretofore granted by this court restraining the judgment creditors having garnishee executions from taking any further proceedings thereon for one year from the date of the adjudication in bankruptcy or until action on the application for discharge within that time. This motion is made on behalf of a judgment creditor to set aside such order on the ground that the court was without jurisdiction to grant it.

Petitionér contends that the garnishee execution, when issued, became a continuing lien on wages thereafter earned; that, since it was issued out of a state court of competent jurisdiction, more than four months prior to the adjudication in bankruptcy, this court is without authority to restrain proceedings upon it. ■

Section 684, supra, provides in part that “on presentation of such execution * * ", said execution shall become a lien and a continuing levy upon the wages, earnings, debts, salary, income from trust funds or profits, due or to become due * * *,• and said levy shall be a continuing levy until said execution and the expenses thereof are fully satisfied and paid or until modified as hereinafter provided.” Even though we place a literal construction upon this section, this court has jurisdiction to stay payment of wages earned after the adjudication. As the judgment upon which the execution was issued is dischargeable, the situation would be anomalous if the bankrupt could not secure through this court the benefit which the Bankruptcy Act gives him. It does not, however, seem to me that we have here such a “valid judicial lien or levy * * * secured or made more than four months or more prior to the bankruptcy proceedings” as was under consideration in Metcalf v. Barker, 187 U. S. 165, 23 S. Ct. 67, 47 L. Ed. 122; Pickens v. Roy, 187 U. S. 177, 23 S. Ct. 78, 47 L. Ed. 128; and Blair v. Brailey (C. C. A.) 221 F. 1.

In Clarke v. Larremore, 188 U. S. 488, 23 S. Ct. 363, 364, 47 L. Ed. 555, in which levy and sale had been made and the question was whether the moneys obtained upon the sale belonged to the judgment creditor or went to the trustee in bankruptcy, the court used this pertinent language: “The judgment in favor of petitioner against Kenney was not like that in Metcalf v. Barker, 187 U. S. 165, 23 S. Ct. 67, 47 L. Ed. 122, one giving effect to a lien theretofore existing, but one which, with the levy of an execution issued thereon, created the lien.” It does not seem to me there could be any lien until the thing came into being upon which a lien could attach. Vide also Straton v. New, 283 U. S. 318, 51 S. Ct. 465, 75 L. Ed. 1060.

The rules of comity between state and federal courts are often difficult to determine. Covell v. Heyman, 111 U. S. 176, 4 S. Ct. 355, 28 L. Ed. 390. The general ride is that, where a court of competent jurisdiction has taken property into its possession, it should be permitted to continue such jurisdiction. It is obvious that this rule is not applicable where exclusive authority is given the Federal Court. In re Grafton, etc. (D. C.) 253 F. 668, 672; Scott v. Goodman (D. C.) 25 F.(2d) 175, 177; and cases cited. As was said in Scott v. Goodman, supra: “This (rule) has only a qualified .application in bankruptcy * * * and under the bankruptcy law the (court) is authorized to issue injunctions against the parties and stay proceedings in state courts when necessary for the exercise of its jurisdiction.” Vide also section 265, U. S. Judicial Code (28 USCA § 379). Upon the filing of a petition in bankruptcy, the jurisdiction of the District Court becomes exclusive within the authority of the Bankruptcy Act. In re Watts, 190 U. S. 1, 23 S. Ct. 718, 47 L. Ed. 933.

The Bankruptcy Act invests the District Courts “with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings * * (15) make such orders, issue such process, and enter such judgments in addition to those specifically provided for as may be necessary for the enforcement of the provisions of this title.” Section 2, National Bankruptcy Act (11 USCA § 11).

“There'are two principles which lie at the foundation of the Bankrupt Act: (1) That the debtor may be discharged from his provable debts; (2) that his collectible assets may be divided equitably and ratably among his creditors.” Continental National Bank v. Katz et al., 1 A. B. R. 19.

Upon principle and authority the restraining order heretofore granted herein was properly granted. Vide sections 11a and 67f, Bankruptcy Act 11 USCA §§.29 (a), 107 (f); Brenen v. Dahlstrom Metallic Door Co., 189 App. Div. 685, 178 N. Y. S. 846; In re Sims (D. C.) 176 F. 645, 647, 23 A. B. R. 899; In re Matter of Wodzicki (D. C.) 238 F. 571, 38 A. B. R. 282; U. S. Fidelity & Guaranty Co. v. Bray, 225 U. S. 205, 32 S. Ct. 620, 56 L. Ed. 1055; and In re Keet (D. C.) 128 F. 651.

The decision in Re Sims, supra, in this circuit, is in point. The question involved was the levy on wages earned after the petition in bankruptcy was filed. Judge Hand, writing the opinion, said in part: “In this ease, however, all the salary which the creditors can get after December 20, 1909, will be part of what the bankrupt has earned and will earn after petition filed. * * * Should I allow the creditors to levy on wages in faet earned in the future, they would recover upon a past debt from property earned subsequently. This contradicts the whole purpose of a discharge, and I cannot permit it, without violating the act.”

Some question is raised regarding the particular employer by whom the wages were to be paid. In view of the determination herein made, this question is immaterial, It is claimed that the execution of the petitioner never became a legal lien because prior executions exhausted the wages payable on garnishee executions. Any decision on this point is likewise immaterial here.

The discharge and cancellation of petitioner’s judgment is, of course, dependent upon bankrupt’s final discharge in bankruptcy. In case such final discharge is denied, petitioner’s judgment will continue. The order heretofore granted herein restrains payment of wages to garnishee execution creditors. It does not direct payment of any part subject to such executions to the bankrupt. Protection to such creditors in- the event of a final denial of a discharge in bankruptcy can be sufficiently procured through notice to the employer upon whom the execution has been served as provided by the-Civil Practice Act of the state of New York.

For the reasons given above, the motion herein is denied, and order may be prepared accordingly.


author: CAMPBELL, District Judge.

text:
    THE ARMINDA.
    No. 12425.
    District Court, E. D. New York.
    May 19, 1931.

      Lord, Day & Lord and Allan B. A. Bradley, all of New York City, for Silver Line, Limited.
    Foley & Martin and Jas. A. Martin, all of New York City, for petitioner.
   CAMPBELL, District Judge.

This is a motion for an order directing that the vessel Arminda remain in the custody of the United States marshal until the determination of this proceeding, unless the petitioner file a bond in favor of Silver Line, Limited, to be approved by this court, in the amount of $15,000.

On March 18, 1931, the MV Arminda, owned by the petitioner herein, and the MV Silveryew, owned by the Silver Line, Limited, were in collision in New York Harbor, resulting in serious damage to both vessels.

On April 1, 1931, Silver Line, Limited, filed in the office of the clerk of this court its libel in a cause of collision, civil and maritime, claiming damages in the sum of $15,000.

Thereafter extensive repairs were made to the MV Arminda, costing upwards of $50,000.

Thereafter and on the 28th day of April, 1931, the United States marshal of this district, in pursuance of process, attached the said MV Arminda.

.Thereafter and on the 29th day of April, 1931, the petitioner, as owner of the MV Arminda, filed a petition in the office of the clerk of this court praying for exoneration from and limitation of its liability as owner of said vessel by reason of said collision, and filed the necessary affidavits, and an ad interim stipulation for value in the sum of $11,250, and a restraining order issued; whereupon notice of this motion was given.

The claims of the Silver Line, Limited, if any, arise solely out of the' collision.

This is an attempt to compel the petitioner to give security for an increase of value in the res subsequent to the collision.

The statute does not require the giving of any such security.

This is not a case where a bond has been given or security other than the res to be surrendered has been obtained.

Nor is it a case where there has been a promise made to give a bond on which the claimant has relied.

This court carefully considered the whole question in Huasteca Petroleum Co. v. Cia de Nav. Lloyd Brasileiro, 297 F. 318, and it seems unnecessary to do more than cite that decision.

The instant suit is clearly distinguishable from the case last cited, in that in the instant suit the res to be surrendered in the limitation proceeding is that which was taken by the United States marshal of this district, and therefore the decision in Societe Napthes Transports v. Bisso Towboat Co. (C. C. A.) 241 F. 463, is controlling.

The case of In re Atlantic Gulf & West Indies S. S. Lines (D. C.) 20 F.(2d) 975, is not in point, as there was no promise shown by the petitioner in the instant suit to file a bond, and therefore no equity arose in behalf of claimant by reason of the failure to keep sueh a promise.

If the ad interim stipulation is not sufficient under the statute, the claimant- has a complete remedy.

The motion is denied. Settle order on notice.


author: JONES, District Judge.

text:
    KLIVANS, Inc., v. ROUTZAHN, Collector of Internal Revenue.
    No. 16182.
    District Court, N. D. Ohio, E. D.
    June 24, 1931.
   JONES, District Judge.

A jury was waived by written stipulation of the parties, and the ease tried and submitted to the court. Upon due consideration, the defendant’s motion for judgment will be sustained. Upon request, findings of fact and conclusions of law have been entered.

The plaintiff had the right to sell its merchandise under any form of valid agreement. It chose to call its contract a lease, and no sound reason is advanced for taking it out of that category. Ohio being a state where conditional sales contracts, rather than leases, are 'the customary instruments employed for such purposes, it is reasonable to infer and conclude that plaintiff for some reason preferred the lease. The fact that the contract may have some of the characteristics of a conditional sale agreement does not require that it be construed to be one, if by its terms it may be held to be a lease. Klivans knew the difference, and also understood when the tax attached under a conditional sales agreement. (Transcript of testimony, pages 5 and 6.) Why he chose to adopt a lease, in view of such knowledge, is not clearly understood, even if it could be concluded that the deputy collector expressed a favorable opinion.

The agreement clearly purports to be a lease, and, under article 4 of Regulation 48, promulgated by the Commissioner under authority of - the Revenue Act of 1924 (26 US CA § 1245 and note), the articles of merchandise sold under such agreement wez-e taxable upon execution of the contract and delivery of the articles to the purchaser. Under the statute (43 Stat. 322, § 600 et seq. [26 USCA § 881 note, and § 882 et seq.]) the tax was to be imposed and paid upon the specified articles, when sold or leased. The fact is that it may be said, with cogent reason, that the tax attaches upon execution of the instrument and delivery of the property in any kind of sale or lease.

The statement of the Senate Finance Committee with reference to the purpose of inserting the word “lease” in the 1924 Revenue Act lends support to the decision in Carter v. Slavick Jewelry Company, that the tax attaches upon a conditional sale when entered into. (C. C. A.) 26 F.(2d) 571, 58 A. L. R. 1043; Lippman’s, Inc., v. Heiner (D. C.) 41 F.(2d) 556 and Id. (C. C. A.) 46 F.(2d) 1016.

Assuming, but not concluding, that the revenue officer expressed a favorable opinion of the contract, the chief field deputy collector was not authorized to determine what form off contract would, avoid the payment of the whole excise tax upon execution and delivery of the articles. And even if it might be thought that he had such authority, in a suppositious instance, his mistake .of law would be subject to correction. The deputy collector would have no more authority to determine the propriety of a submitted contract as fulfilling or avoiding the requirements of the law than would the Attorney General, for instance, have the authority to determine in advance, by opinion to private parties, what conduct or agreements would or would not offend the laws of the United' States. The United States cannot be bound by a mistaken view of the law by its agents.


author: VAN ORSDEL, Associate Justice.

text:
    UNITED STATES ex rel. GOLDSCHMIDT v. SUTHERLAND, Alien Property Custodian, et al.
    No. 5373.
    Court of Appeals of the District of Columbia.
    Argued May 4, 1931.
    Decided June 29, 1931.
    Spier Whitaker, of New York City, and Lawrence A. Baker and Henry Ravenel, both of Washington, D. C., for appellant.
    H. B. Cox, of New York City, for appel-lees.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.
   VAN ORSDEL, Associate Justice.

This appeal is from a judgment of the Supreme Court of the District of Columbia dismissing appellant’s petition for a writ of mandamus to compel the defendants to pay petitioner the sum of $10,236.74, which it was alleged should have been paid to appellant, together with other moneys, on allowance of appellant’s claim for return of money and other property seized by the Alien Property Custodian under the provisions of the Trading with the Enemy Act.

It appears that the petitioner is a German corporation, and as such was an enemy of the United States within the contemplation of the provisions of the Trading with the Enemy Act of October 6, 1917, 40 Stat. 411 (50 USCA Appendix § 1 et seq.). Petitioner was paid the sum of $10,000 under the provisions of Act March 4,1923, 42 Stat. 1511.

Under the provisions of the Act of Congress of March 10, 1928, § 14, 45 Stat. 254, 272 (50 USCA Appendix § 9 (m), known as the Settlement of War Claims Act, petitioner was entitled to a return of 80 per cent, of the property seized upon consent in writing to the postponement of the return of 20 per cent of such property, as provided in the act. The Alien Property Custodian accordingly returned to petitioner 80 per cent, of the balance of the property seized, less certain amounts deducted therefrom to pay taxes duly assessed against said property, and an additional amount which was deducted on account of expenses of the Alien Property Custodian in the collection and administration of said funds. The amount deducted for taxes’ is not contested. The claim here asserted is for the amount deducted on account of expenses in the collection and administration of the funds, or an amount equivalent to 2 per cent of the property belonging to the petitioner and administered upon by the Alien Property Custodian, together with income accrued thereon.

The sole question involved is the power of the Alien Property Custodian to retain from petitioner’s allowance 2 per cent, to cover the expenses of administration. At the outset we are confronted with a question of jurisdiction. The act in terms limits the relief of any claimant th the remedy provided in the act. It likewise provides that the money or property in the hands of the Alien Property Custodian “shall not'be liable to lien, attachment, garnishment, trustee process, or execution, or subject to any order or decree of any court.”

These provisions of the statute are jurisdictional and restrict the petitioner’s right to proceed in any other manner or form of action than that expressly provided by section 9 (a) as amended by section 1 of the 1923 Act (50 USCA Appendix, § 9 (a), which, among other things, provides that any person not an enemy oí ally of enemy claiming any interest, right, or title in any property which may have been seized by the Alien Property Custodian and held by him under the provisions of the act “may institute a suit in equity in the Supreme Court of the District of Columbia or in the district court of the United States for the district in which such claimant resides, * * * to establish the interest, right, title, or debt so claimed, and if so established the court shall order-the payment, conveyance, transfer, assignment, or delivery to said claimant of the money or other property so held by the Alien Property Custodian or by tbe Treasurer of tbe United States or the interest therein to which the court shall determine said claimant is entitled.”

We think under the provisions of the act a suit in equity is the only remedy open to a claimant where an interpretation of the provisions of the act is involved, or where issues of fact are to be determined as establishing the basis of the claim. Under section 24 of the Act, as added by section 2 of the 1923 act (50 USCA Appendix § 24 (a), the Alien Property Custodian is not only authorized to pay all taxes lawfully assessed against the property held by him, but “to pay the necessary expenses incurred by him or by any depositary for him in securing the possession, collection, or control of any such money or other property, or in protecting or administering the same. Such taxes and expenses shall be paid out of the money or other property against which such taxes are assessed or in respect of which such expenses are incurred.”

This implies authority on the part of the Alien Property Custodian to retain sufficient funds from the speeffie property to meet the expenses of its administration. Whether that amounts to 2 per cent, or more or less, is an issue of fact to be determined, an issue which cannot be determined in this case. On the other hand, interpretation of the statutes may be necessary to determine whether or not the above implication is correct, whether indeed the Alien Property Custodian has the right to deduct any amount whatever to cover the expense of administration. These are matters involving adjudication which cannot be determined in a proceeding for mandamus; hence we think it clear that the petitioner is relegated to the remedy provided by statute, namely, a proceeding in equity in the proper court for the determination of his rights.

The judgment is affirmed.


author: EVANS, Circuit Judge

text:
    CAPONE v. UNITED STATES.
    No. 4457.
    Circuit Court of Appeals, Seventh Circuit.
    July 24, 1931.
    Rehearing Denied Sept. 25, 1931.

      There was evidence tending to establish the following facts:
    AppeEant, a resident of Cook county, failed to file a return or pay any income tax for the years 1922, 1923, 1924, and 1925. In November, 1926, he was called to the Revenue Agent’s office, and, as a result of conversation with the Revenue Agent, admitted that he owed $4,082.18. He thereupon filed (November 23, 1926) delinquent returns and also a “waiver and consent to assessment” of this amount. His income tax return for each of the four years stated that he was a “gambler” by occupation and his income was derived “from speculation.” Such speculation resulted in a reported profit of $20,000 for each of three years and $15,000 for one year. He accompanied his returns with an affidavit wherein he stated that he had previously failed to file a return or pay a tax because of his beEef that his income, E-legally obtained, was exempt from taxation. On October 3, 1927, appellant made a written offer of compromise, upon a blank ordinarily used in submitting such an offer, wherein he offered to pay $1,000 as a compromise for his income taxes for the years 1922, 1923, 1924, and 1925.- As grounds for such offer, he referred in his'offer to an accompanying letter, which read as follows:
    “September 9, 1927.
    “Mrs. Mabel Reineeke, Collector of Internal Revenue, Federal Building, Chicago, Illinois.
    “Dear Madam:
    “In Re: Ralph Capone, 1924 S. 49th Court, Cicero, Illinois. Income taxes 1923, 1923,1924 and 1925.
    “In re Offer in Compromise of income taxes for the years above stated, I wish to submit as reasons for acceptance of the offer as follows:
    . “1. I have sustained considerable losses as a result of sickness and death of racing horses, which I have owned for the past year.
    “2. I have lost considerable money as a result of gambling on horse races.
    “3. I have spent whatever reserve money I had in defending myself and my employees for various criminal prosecutions including federal and state.
    “At the present time my liabilities are very much greater than my assets and the only tangible asset that I have, is a half interest in two racing horses, now located at Hawthorne Race Track and at the present time I am using up practically my entire income, trying to get them in shape.
    “I am hereby making an offer in compromise of $1000.00 in full for .income taxes for the years 1923-23-24-25 and respectfully submit that you accept same* as I am compelled to borrow even this small sum. Thanking you for your many courtesies in this matter, I am. * * * ”
    The letter was signed by appellant in ink, and the offer of compromise and the accompanying letter were filed October 4, 1927.
    His statements in the returns filed and in his offer of compromise .and in the accompanying letter were false in the following respects: His profession was not limited to gambling; he was extensively engaged in selling and transporting liquor; his income was greatly in excess of the amounts reported; his liabilities did not equal his assets; he had on hand money with which he could have paid his taxes; he was not compelled to borrow the money offered as a compromise of his taxes.
    As further proof of appellant’s attempt to deceive the collector of internal revenue, it appeared that he deposited his money in • various banks under fictitious names and conducted his business under various false or feigned names, frequently changing the deposits and the names in which the deposits were made. It further appeared that he thus deposited, during a period of five years and four months next preceding April 22, 1929, sums aggregating $1,851,840.08.
    While there is some dispute in the testimony and some uncertainty as to the facts, the record disclosed evidence from which the jury could well have found that following the filing of the report by appellant, a tax was assessed against him. This was followed by a second assessment. Likewise, the evidence justified a finding that a demand was made on appellant for the payment of the tax shortly after its assessment, which was followed (in September, 1927) by the issuance of a distraint warrant, which was in the hands of an officer for service when appellant and his counsel, after learning that such warrant was about to be served, appeared at the office of the collector. He there learned of the assessment of the tax and of. the government’s demand for its payment, if he did not know of it before. This all occurred prior to the appellant’s making his offer of compromise.
    The assignments of error raise the following questions: (1) The sufficiency of each count of the indictment; (2) the bar of the statute of limitations to the first count of the second indictment; (3) the effect of the passage of the statute (section 2616, title 26, USCA) after the submission of the offer of compromise; (4) the failure of the evidence to support the charges in the indictment; (5) the admission of evidence over appellant’s objection; (6) the joinder of the three indictments for the purposes of trial; (7) the validity of the sentence.
    Dennis M. Kelleher, of Fort Dodge, Iowa, and George Norman Murdock, of Chicago, Ill., for appellant.
    George E. Q. Johnson, U. S. Atty., of Chicago, Ill., Cassius Poust, Asst. U. S. Atty., of Sycamore, Ill., Jacob I. Grossman, Asst. U. S. Atty., of Chicago, Ill., and Dwight H. Green and Alfred Page, Sp. Assts. to Atty. Gen.
    Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
   EVANS, Circuit Judge

(after stating the facts as above). Pertinent statutory provisions aré set forth in the margin.

Each count of the first indictment and each count of the third indictment attempts to charge a violation of section 80, title 18, USCA. Appellant contended that no offense is set forth in any of the four counts of these two indictments. He properly presented the. question, first, by demurrer to the indictment and then by motion to direct a verdict and still again by motion in arrest of judgment.

His objection to these four counts is based upon the alleged inapplicability of section 80, title 18, USCA, under which the indictments are drawn. It is evident that, if the objection is well taken, all four counts must fail unless the government can show that though drawn to state an offense under section 80, title 18, USCA, they are nevertheless good under section 1266, title 26, USCA.

Substantial parts of count 1 of the first indictment are set forth in the margin.

It is appellant’s contention that the offenses covered hy section 80, title 18, USCA, are limited to the presentation of false claims against the government. In support of his position, he cites U. S. v. Cohn, 270 U. S. 339, 46 S. Ct. 251, 253, 70 L. Ed. 616; U. S. v. Bowman, 260 U. S. 94, 43 S. Ct. 39, 67 L. Ed. 149; U. S. v. Hull (D. C.) 14 F. 324.

Appellant relied strongly^ upon the Cohn Case, supra, to sustain the argument that section 80 applies only to offenders who present false claims against the government. He further supports his position by reference to the Revenue Act, which contains various sections making it unlawful for a taxpayer to willfully fail to file a return, to- willfully refuse to pay a tax due the government, to willfully conceal assets in connection with an offer of compromise, and to willfully attempt to evade or defeat a tax. Title 26, USCA, §§ 1265, 1266, 2616'.

Appellee meets this argument by contending : First, that section 80, as it now reads, is not limited to offenders who filed fraudulent claims against the government. Second, section 80 is not amended or repealed hy implication by the passage of the sections of the Revenue Act dealing with offenders who willfully fail to file returns or pay their tax, or who willfully attempt to evade or defeat a lawful tax due the government. Third, if section 80 be, by implication, amended by the aforesaid sections of the Revenue Act, the 1918 amendment to section 80 is nevertheless still applicable, because section 2616 (title 26, USCA) of the Revenue Act was not enacted until after appellant had made the misrepresentations. Fourth, if section 80 be modified or amended, or, by implication, repealed, so far as it applies to offending taxpayers, the first and third indictments are nevertheless good under section 1266, title 26, USCA, notwithstanding they were drawn with the purpose of stating an offense under said section 80.

The issues thus clearly drawn necessitate the consideration of the history of section 80, as well as the construction placed upon it by the courts that have dealt with it. It seems quite clear, and we accept it as established, that, prior to the amendment of 1918, section 80 applied solely to those offenders who filed fraudulent claims against the government. But in 1918, the act was amended by inserting the words “or for the purpose and with the intent of cheating and swindling or defrauding the Government of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, shall knowingly and willfully falsify or conceal or cover up by any trick, scheme, or device a material fact, or make or cause to be made any false or fraudulent statements or representations * * * » qijj0 presence of these words, inserted by the amendment, can not be ignored. They must be given a meaning. To a certain extent, at least, the amendment makes inapplicable all of the decisions construing the section prior to this amendment. It is also clear that the effect of the amendment was to enlarge the class of offenders to which the section applied.

Who were thus included in the class by the amendment?

If we insert the word “whoever” after the word “or” for the purpose of clarity, there is little doubt or uncertainty as to its meaning. It would clearly include one who is indebted to the government for taxes, and who for the purpose and with the intent of cheating. and swindling or defrauding the government knowingly and willingly falsified, concealed, or covered up by any trick, scheme, or device, material facts, or who made or caused to be made any false or fraudulent statement or representation. If, however, we included after the word “or” the limitation found in the first line of the statute, “whoever shall make or cause to he made or present or cause to be presented, for payment or approval, * * * any claim upon or against the Government of the United States,” then it is equally clear that the offender must be a claimant against the United States. If the latter construction be adopted, we are at some loss to understand the purpose of the amendment.

The section, before the amendment, made it an offense to file a false claim knowing it to be false, fictitious, or fraudulent. The crime there charged was established without showing any fraud, trick, or scheme to secure its allowance. The section did not require the allowance of a claim, but merely the presentment of such a claim. The amendment, therefore, if construed as appellant contends for, would not only require the presentment of a false claim, but proof that fraudulent means were adopted to secure its allowance. The amendment was enacted a few years after the passage of the Revenue Act calling for the payment of income taxes, the assessment and collection of which supplied a fertile field for 'the practice of fraud by those who would so evade federal taxes. Such increased opportunity for fraud upon the government might account for the action of Congress in passing the amendment. At any rate the language of the amendment is comprehensive, and we see no reason for giving it a narrow construction.

The Cohn Case, so much relied upon by the appellant, deals with a fact situation entirely different from the one before us. Doubtless, it must be read as applicable only to the facts there disclosed. However, it is significant that the court in disposing of that ease dealt with the evidence on two hypotheses : (a) That Cohn was a claimant who filed a false claim knowing it to be false and fraudulent, and (b) that he defrauded the government “within the meaning of the statute.” It would have been unnecessary for the court to consider, the second hypothesis if section 80 were limited in its scope to offenders who filed or presented false claims. On this second hypothesis, the language of the court, “ ‘Defrauding' * * * is used in connection with the words ‘cheating or swindling/ indicating that it is to be construed in the manner in which those words are ordinarily used, as relating to the fraudulent causing of pecuniary or property loss,” is significant. The court also said: “We may assume, without deciding, that under these Regulations Cohn was not entitled to enter and obtain possession of the cigars until he had paid the draft and become the holder of the bill of lading. But even so, the acts by which the possession of the cigars were obtained did not constitute an offense against the United States unless done for one or other of the purposes entering into the statutory definition of the offense and charged in the indictment, that is, either for the purpose of obtaining the approval of a ‘claim upon or against’ the Government or for the purpose of ‘defrauding’ the Government.” United States v. Cohn, 270 U. S. 339, 345, 46 S. Ct. 251, 252, 70 L. Ed. 616.

The court’s conclusion is predicated upon the fact basis that the cigars, which Cohn attempted to obtain without paying the import duty on them, were in fact non-dutiable. This fact forced the government to take the untenable position that its construction of the entire section included the offense of impairing or obstructing governmental functions^ by fraudulent practices, whereas the language of the amendment limited the prosecution to pecuniary or property loss suffered by the government through the fraud of the accused.

Our conclusion is that the amendment included in section 80 those offenders who, by their cheating, swindling, or defrauding, caused a “pecuniary or property loss” to the government. This latter class of offenders need not be claimants, who present claims against the government, but include others, like taxpayers who cause pecuniary or property loss to the government by willfully concealing by some trick, etc., a material fact.

Appellant’s argument that this construction of the statute should not be adopted because Congress has enacted three other penal provisions, parts of the revenue act, to punish such offenders, is lost, even though we might otherwise be persuaded thereby, when it is recalled that such provisions were not in existence when the amendment to section 80 was enacted.

Whether section 80, title 18, USCA, is by implication amended by sections 1266 and 2616, title 26, USCA, also presents an interesting and a somewhat close question. Is section 2616 so similar to the amendment to section 80 as to require us to say that the two statutes are in pari materia? We think they are not. Strictly speaking, statutes defining crimes are never in conflict, nor are they inconsistent. Each deals with offenders who do prohibited acts. Such asserted inconsistencies as exist must necessarily be limited to the punishment provisions. The punishment provisions may overlap, but they do not conflict.

Likewise the maxim, “Generalia speeiali-bus non derogant,” applies only when two sections of a civil statute or two paragraphs of a contract dealing with the same subject-matter are inconsistent in whole or in part. Surely it cannot be said that statutes defining crimes are in pari materia merely because there is a likeness of subject-matter. There must be identity of elements constituting the crime. Identity, not similarity, must be the test in determining whether statutes defining crimes are in pari materia. If one statute which defines a crime requires an element not present in another criminal statute, separate crimes are defined.

We have recently had occasion to consider similar questions in the ease of Lawrence C. O’Brien v. U. S., 51 F.(2d) 193, decided June 29, 1931, and, Blockburger v. U. S., 50 F.(2d) 795, decided June 11, 1931, so that further discussion is unnecessary.

But if we assume for the purpose of the argument that the statutes are in pari, ma-teria, it is apparent at onc.e from a reading of them that there are differences in essential elements between the crime defined by section 80 as amended and the section deal-íng with, willful attempt to evade and defeat a tax (section 1266) and the section dealing With a willful failure to file an income tax return and willful failure to pay a tax (section 1265) whieh differences refute the contention that parts of section 80 were repealed by implication by the passage of the other sections. Perhaps the most related section is section 2616. It deals with concealment of assets in connection with an offer of compromise. However, there are differences between section 2616 and section 80, as amended, whieh would necessitate the establishment of different facts to sustain convictions under the respective sections. To illustrate, it would be necessary, in order to secure a conviction under section 2616, that there be an offer of compromise of a tax. No such fact would be necessary under section 80. Moreover, under section 80, a successful prosecution would necessitate the production of proof to the effect that the accused acted “with the intent of cheating and swindling or defrauding the Government.” Still another difference is to be found in the fact that a successful prosecution under one part of section 2616 requires proof of a willful concealment of property from the officers or employees of the United States.

But if it be conceded, for the purpose of the argument, that section 80, title 18, USCA, was by implication repealed by section 2616, title 26, USCA, it would only be so repealed to the extent of the subject-matter specifically covered by said section 2616> to wit, fraud practiced by the taxpayer in connection with a compromise or offer of compromise of his tax. Such a construction, however, would be of no avail to appellant here because, he is charged with an offense, the commission of whieh occurred prior to the passage of section 2616. Section 80 was then in force and effect and applied to appellant’s wrongdoing. It would remain in force for the purpose of such prosecutions, even though it were repealed by implication when section 2616 was enacted. See title 1, USCA, § 29.

Indictment under the Wrong Statute. The Government contended that even though section 80, as amepded, be construed as contended for by appellant, all counts of the first and third indictments state an offense under section 1266, title 26, USCA.

Judge Wilkerson, in passing upon this question in the District Court, said: “It is wholly immaterial what statute was in the mind of the district attorney when he drew the indictment, if the charges made are embraced by some statute in force. The in-dorsement on the margin of the indictment constitutes no part of the indictment and does not add to or weaken the legal force of its averments. We must look to the indictment itself, and if it properly charges an offense under the laws of the United States, that is sufficient to sustain it, although the representative of the United States may have supposed that the offense charged was covered by a different statute.” Williams v. United States, 168 U. S. 382, 389, 18 S. Ct. 92, 94, 42 L. Ed. 509.

With this statement we agree. Taylor v. U. S. (C. C. A.) 2 F.(2d) 444. If the indictment states a good cause of action against the defendant, under section 1266, title 26, USCA, even though drawn to state an offense under section 80, title 18, USCA, it is nevertheless invulnerable to attack by demurrer.

An examination of the second count of indictment No. 21,117 convinces us that the facts there set forth state an offense under section 1266. The indictments charged appellant with being a person required to pay a tax; that he willfully attempted to evade and defeat such tax; that the means set forth were fraudulent and prompted by criminal motives; and therefore the requirements of said section 1266 were met.

There is here no such question as was presented in the O’Brien Case, supra, and which in the O’Brien Case prompted a dissenting opinion. Though the conviction under the first and third indictments be made to rest upon section 1266, instead of section 80, since the willful attempt to evade in the instant case was not limited to a willful failure to pay the tax, there can be no such contention as was made in the O’Brien Case as the basis for saying that O’Brien was being twice punished for the same offense, and that the two statutes there under consideration were in pari materia.

Statute of Limitations, Count 1, Second Indictment. The first count of the second indictment attempts to charge appellant with a violation of section 1265 of title 26, USCA, and charges that he was indebted to the United States in the sum of $4,065.75 for income taxes whieh had been assessed and were past due; that he had been duly notified of said assessment, and demand was made on March 1, 1927, for their payment; that appellant was able to pay said taxes; that he unlawfully and willfully failed to pay the same, and that the taxes had not been paid by any other person on behalf of said defendant.

Appellant relied upon the statute of limitations as a defense to this count. The indictment was returned on January 31, 1930. Unless the evidence showed “that the crime was committed subsequent to January 30, 1927, this defense must prevail. Section 585, title 18, USCA.

Section 1265, title 26, USCA, has been heretofore quoted. Reliance is upon that provision thereof which reads: “Who willfully fails to pay such tax, * * * at the time or times required by law or regulations. * * * ” Appellant contends that, inasmuch as the income taxes for the years 1922, 1923, 1924, and 1925 became due and payable March 15 succeeding the taxable year in which the income was earned, the statute of limitations began to run from said date.

Appellee contended that to constitute the offense charged, the failure to pay the tax must be willful; that a taxpayer might-fail to pay his tax when it became due and yet not violate this section. It is only when his nonpayment becomes willful that he violates the act. This last named issue — willfulness —is usually, and was in the instant ease, an issue of fact and a question for the jury. As the statute of limitations does not begin to run until the offense is committed,' it could not begin to run until the failure of the accused became willful. Therefore, the date when the failure became willful was also a material issue for the jury to determine.

We see no escape from the latter reasoning. True, the statute limits the words “who willfully fails to pay such tax” by the clause “at the time or times required by law or regulations. * * * ” This limitation,- however, does not mean that one cannot offend against this section unless his refusal to pay is willful on March 15 of the year succeeding the earning of the income. We think the only rational construction that can possibly be placed upon the words, “at the time or times required by law or regulations,” includes all dates subsequent to the earliest date at which such tax is due and payable and continues so long as the tax is unpaid and remains due and payable. It would be absurd and ridiculous to hold that a taxpayer might avoid conviction under this section if his failure to pay were willful on all days save March 15 of the year succeeding the year the income or gain was received. Congress never intended such an effect to be given to its language. It intended that the failure to pay a tax could become willful at any date or dates the tax was made payable. It was due as much the day after March 15 as it was on March-15.

There is another reason which supports the conclusion thus reached.

If it be conceded that appellant’s tax became due March 15 following the year the income was received, it by no reason follows that it was the only time when his income tax for this year was due. Appellant’s failure for four years to file any income tax return was followed by his filing delinquent income tax returns for said years in November, 1926. At that time he made certain representations to the collector to the effect that his failure to file was due to a misunderstanding of his obligations under the revenue laws. At the same time, he consented, in writing, to an assessment and determination of the tax without further notice to him. But the assessment of the proper tax depended upon the determination of the amount of penalty which was to be imposed, as well as the amount of interest which was to be added to the 'sum for which- he was admittedly liable. The determination of these two items was for the Revenue Department to make. At this time, November, 1926, appellant was informed that he should pay the tax when he was notified of its assessment and determina^ tion. On December 22,1926, the revenue officer at Chicago sent him a written notice wherein it was stated: “No remittance should be made until you receive notice of the assessment from the Collector of Internal Revenue for your District.”

Upon the filing of these delinquent returns and the written consent on the part of the taxpayer to an assessment and determination of the tax upon such delinquent returns, the government was in a position to make a valid assessment. The time fixed for the payment of such tax assessed upon the delinquent returns depended upon its assessment, and was, of course, different from the time fixed in the statute for the original payment of the income tax without penalties or interest. Perhaps the existence of different dates for the payment of income taxes accounts for the use of the expression, “time or times required by -law or regulations,” in section 1265.

A further illustration of the difference in times when taxes are due and. payable appears in sections 1.051 and 1054 (title 26, USCA) as well as other sections dealing with the assessment and eolleetion of deficiency taxes. These sections provide different times for the payment of deficiency taxes. They also make provisions for earlier and later payment thereof. Such a tax, though due from the taxpayer on March 15 following the year the income was received, was nevertheless a tax which the taxpayer was not required to pay until after it was assessed and determined. Assessed at a much later date, it became a fixed liability only when determined. The time of its payment was not March 15 following the year when the income was received. And, of course, it cannot be successfully contended that section 1265, the Criminal Statute, did not apply to the willful failure to pay deficiency taxes any more than such section should be exempted in its application from eases where the tax was assessed upon the filing of’delinquent returns. It therefore seems to be clear that there are different times when income taxes are due and payable, even though we give the limitation clause its narrowest possible construction. And so our quest may be directed to an inquiry as to the time or times when the tax (including penalties and interest) assessed on appellant’s delinquent returns became payable.

The notice from the Treasury Department to the taxpayer to the effect that no remittance should be made until he received notice from the- Collector of Internal Revenue was in the regular course of business and pursuant to a regulation, the 'effect of which was to postpone the date when appellant was required to pay the tax assessed on his delinquent returns. Other proof in the record tended to show that such notice and such demand were not made by the Collector of Internal Revenue for the District of Chicago until after January 31, 1927. As the indictment was returned within three years from such date, the statute of limitations had not run against this offense.

Count 2 of the Second, Indictment. Count 2 of the second indictment charged appellant with being indebted to the United States in the sum of $4,065.75 for income taxes; that such tax was assessed and determined upon his returns showing said amount to be due; that notice was given of such assessment, and demand made for its payment on March 1, 1927; that defendant failed to pay said tax; that no one has paid it for him; and that on October 4, 1927, he filed with the collector a written offer of compromise of his debt for taxes and offered to pay $1,000, in accordance with section 158, title 26, USCA; such offer remained pending with the collector until October 8,1928, when it was rejected by the Commissioner of Internal Revenue and by the collector; that appellant well knew said offer was pending; that he did unlawfully conceal from the collector certain property, to wit, $10,000 on deposit in the Pinkert State Bank in Cicero, 111., under certain fictitious and assumed names, James Carson, Harry Roberts, and Harry White; that he failed to disclose to said collector the fact of such deposits; that such money was well known to appellant to be estate, money, and property which he could have used as a taxpayer to satisfy his debt.

Appellant’s position is that his offer in compromise was made October 4, 1927, and that the act under which he was indicted, 26 USCA § 2616, was enacted May 29, 1928, and that he could not be punished for an offense which the statute created after the act was committed. Section 2616, heretofore quoted, deals with the subject of compromises and concealment of assets.

Appellee’s argument is that the offer of compromise was a continuing one; that the written document which set forth such offer was but evidence of the proposed compromise ; that each and every day from the date the offer was made to the government until it was rejected by the government there was a new offer of compromise.

We are here dealing with a criminal statute. Moreover, the expression “offer of compromise” has a well-understood meaning. Section 158, title 26, USCA, deals with the subject of compromises and authorizes the Commissioner of Internal Revenue to compromise any civil or criminal ease arising under the Internal Revenue Law. Rules and regulations have been promulgated, and blanks have been furnished for use by the taxpayer who desires to submit an offer of compromise. Keeping in mind that we are dealing with, a criminal statute, and, further, that the construction of any statute ordinarily should be given only a prospective effect (25 R. C. L., page 787), we conclude that section 2616 applies only to persons who make an offer of compromise after its passage and does not apply to one whose offer of compromise antedates the passage of the act. Such a construction malees it unnecessary for us to decide the doubtful question, which otherwise would arise, of whether one who made an offer of compromise before the act, and did nothing affirmatively in reference thereto after the passage of the act, would have violated the statute by remaining silent or by not withdrawing the offer.

Admission of Evidence. Appellant assigns errors in the admission of evidence. They are without merit and require no extended discussion. One such class of evidence deals with the proof offered and received bearing upon the accused’s participation in the beer business at times preceding and subsequent to the date the offer of compromise was made. Appellant contended that he was prejudiced thereby in that such evidence placed him in an unfavorable light before the jury. It is argued that, as such evidence tended to show the accused to have' guiltily participated in an illegal business, it prejudiced him before the jury. There is, of course, no legal justification for showing that the accused committed offenses other than those charged in the indictments unless such other offenses are connected with the offenses for which he is on trial.

In the instant case, the evidence objected to tended to establish the commission of the crimes charged in the indictments. That being the case, there was no justification for excluding it, even though it tended to establish the commission of an offense not charged in the indictments. Appellant stated in his offer of compromise and in. his various efforts to secure a settlement of the taxes due the government for a sum less thqn the full amount that he was a professional gambler whose property had all been lost; that his only assets were a couple of broken-down race horses, and that he was not able to train them for races wherein he might recoup his fortune. He also stated that he had to borrow the $1,000 with which to make the offer in compromise. To disprove these facts, to show that the accused made false and fraudulent representations and to show that his failure to pay his taxes was willful, it was permissible for the government to show that appellant’s principal business was trafficking in beer; that the proceeds from the beer business in five or six years exceeded a million and a half dollars, and that at all times he had to his credit, under fictitious names, in various banks, sums far in excess of the amount required to pay his taxes. That such evidence was damaging and prejudicial may be conceded, but such fact affords no grounds for its exclusion. It was revelant to the issues presented by the indictments upon which the accused was being tried.

Other evidence objected to deals with the proof obtained from the clearing house sheets of the Pinkert State Bank and other memoranda and records of that bank, as well as the tabulations made therefrom.

We had occasion to consider a somewhat similar objection to such evidence in Cub Fork Coal Co. v. Fairmont Glass Co., 19 F.(2d) 273, and we adhere to the views there expressed.

The records were sufficiently established by competent proof to justify their admission in evidence.

Sufficiency of the Evidence to Support the Verdict. We have considered this assignment of error and find ourselves compelled to reject it. The evidence, it seems to us, not only supported the verdict, but overwhelmingly established each fact essential to the successful prosecution of the causes set forth in the indictments.

Appellant’s strongest contention in respect to this assignment of error was that the tax was not assessed or determined to the knowledge of appellant; neither was there any demand made upon ifim for its payment. While there was some confusion due to the fact that the collector made an assessment as did the Commissioner of Internal Revenue, we think the evidence clearly established, not only the levy and assessment of a tax, but that notice was given to the appellant, and that payment was demanded. It is difficult to reconcile appellant’s alleged ignorance of the existence of the tax with his offer of compromise. Likewise, his assertion of innocence respecting the amount due, or that the government was making a demand therefor, is disputed by the proof that a distraint warrant was issued and would have been served upon him had he and his attorney not gone to the collector’s office and thereafter made a second offer of compromise somewhat larger than the first.

Moreover, this was not a deficiency tax. A deficiency tax is defined by section 1047, title 26, USCA. As it was not a deficiency tax, the notice of its assessment and demand for its payment were not required.

Joinder of Offenses. Appellant complained because the court consolidated the indictments for the purpose of trial. As we understand appellant, the alleged error committed by the trial court was in compelling him to go to trial on charges which joined felony counts with misdemeanor counts. There is no merit in this objection, for section 557, title 18, USCA, authorizes the consolidation of several indictments, as well as the inclusion of several counts in a single indictment. The statute has been repeatedly ■so construed and upheld. Kelleher v. United States, 59 App. D. C. 107, 35 F.(2d) 877; Perry v. United States (C. C. A.) 18 F.(2d) 477; Phillips v. United States (C. C. A.) 264 F. 657. We have found no case under this section which holds that indictments may not be consolidated for the purpose of trial because one' charges a misdemeanor while the other charges a felony.

Sentence. The sentences as pronounced have been set forth in the statement of facts. It is argued that they are in such form and the times for their commencement are so arranged as to prevent the application of the parole statute to the penitentiary sentence. We are unable to appreciate appellant’s argument. The statutes permitted the imposition of the sentences which the judge pronounced. The court could have made all of the sentences run consecutively as well as run concurrently. Had it desired to prevent the operation of the parole law before three years of imprisonment had expired, it could, under the counts in the first and third indictments, have pronounced sentences which exceeded ten years. The sentences pronounced were much less than the maximum penalty provided in case of conviction therefor. Likewise, the court could have caused the enj ailment upon conviction, under the two counts in the second indietmerit, to begin at the end of the penitentiary sentence.

If the sentences were within the power of the court to impose, they are not in any manner affected by the operation of the parole law. It is for the court to impose such penalty as in its discretion is deemed fairly proportionate to the offense. If and when the parole law may be invoked in a given case is a matter for subsequent consideration and proceedings under that law. Hawkins v. United States (C. C. A.) 14 F.(2d) 596.

Other assignments of error we have duly considered, but they do not require separate discussion.

The judgment and sentence pronounced upon the second count of indictment 21,118 is reversed. The judgment and sentence on all other counts of the three indictments are affirmed.

       Section 80, title 18, USCA (Criminal Code, § 35, amended):

        “Presenting False Claims; Aiding in Obtaining Payment Thereof. Whoever shall make or cause to be made or present or cause to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, any claim upon or against the Government of the United States, or any department or officer thereof, or any corporation in which the United States of America is a stockholder, knowing such claim to be false, fictitious, or fraudulent; or whoever, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, or for the purpose and with the intent of cheating and swindling or defrauding the Government of the United States, or any department thereof, or any corporation in which the United States of America is a stockholder, shall knowingly and willfully falsify or conceal or cover up by any trick, scheme, or device a material fact, or make or cause to be made any false or fraudulent statements or representations, or make or use or cause to be made or used any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, shall be fined not more than $10,000, or imprisoned not more than ten years, or both.”
      Section 1265, title 26, USCA:

        “Failure to Pay Certain Other Taxes or to Make Returns and So Forth; Penalty. Any person required under this title to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any tax imposed by this title, who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution.
      Section 2616, title 26, USCA:

        “Compromises — Concealment of Assets. Any person who, in connection with any compromise under section 158 of this title, or offer of such compromise, or in connection with any closing agreement under section 2606 of this chapter, or offer to enter into any such agreement, willfully (1) conceals from any officer or employee of the United States any property belonging to the estate of a taxpayer or other person liable in respect of the tax, or (2) receives, destroys, mutilates, or falsifies any book, document, or record, or makes under oath any false statement, relating 'to the estate or financial condition of the taxpayer or other person liable in respect of the tax, shall, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both. (May 29, 1928, 8:00 a. m., c. 852, se<x 616, 45 Stat. 877.)”
      Section 1266, title 26, USCA:

        “Failure to Collect, Account for, or Pay Over Certain Taxes. Any person required under this title to collect, account for and pay over any tax imposed by this title, who willfully fails to collect or truthfully account for and pay over su,ch tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.”

       “The grand jurors for the United States of America * * * upon their oath present, that Ralph J. Capone, hereinafter called defendant, on March 12, 1927, * * * and at and within the First Internal —Revenue Collection — District of Illinois, became and was indebted to the United States, and to the Treasury Department thereof, in the total sum of $4,065.75, on account of income taxes then due and owing from him to the United States, and by reason of an assessment and determination of said taxes made by the Commissioner of Internal Revenue of the United States and, on February 19, 1927, certified and delivered by said Commissioner to the Collector of Internal Revenue of the United States for said collection-district, and by reason of a notice and demand made to and upon said defendant on March 1, 1927, by said collector, who was thereby required by law there to proceed to collect said taxes from said defendant; and that said defendant afterwards, to wit, on October 4, 1927, for the purpose and with the intent on his part of cheating, swindling and defrauding the Government of the United States, and the Treasury Department thereof, out of a large portion, to wit, $3,065.75, of said sum so then still due from him to the United States, unlawfully and feloniously, at and within said judicial and collection districts, did make to said collector certain false statements and representations concerning his ability to pay any more than $1,-000.00 on said debt with money borrowed, as he claimed, by him for that purpose, to wit, statements contained in a certain written ‘Offer in Compromise’ filed on that day with said Collector by said defendant, and in a certain letter, dated September 9, 1927, signed by said defendant, and also filed, on said October 4, 1927, with said Collector, to the effect that he the said defendant then had no tangible assets except a half interest in two racing horses, and that he was then insolvent and therefore unable to pay said debt for taxes; which said statements, as said defendant then and there well knew, then were and are false, in that said defendant then had, and since then has had, in addition to his half interest in said racing horses, large assets, among others the sum of $25,000.00 in money in a bank at and within said judicial and collection districts subject to check by him, and in this that he, the said defendant, then was neither insolvent nor unable to pay said debt; and that said defendant, when so as aforesaid making said false statements to said Collector of Internal Revenue for the purpose aforesaid, there expected thereby to induce said collector to believe said* statements to be true and to transmit said offer in compromise and letter to the proper officers of said Treasury Department with her recommendation that the same be accepted by said officers and so to procure the acceptance by said officers of said offer of said defendant to pay- $1,000.00 in full fqr his liabilities in connection with said debt, as said officers then were by law empowered to do if said statements were true, and thereby to cheat, swindle and defraud the United States as aforesaid: Against the peace and dignity of the United States, and contrary to the form of the statute of the same in such case made and provided,”