author: LINDLEY, District Judge.

text:
    KASER PROCESS PIE CO. et al. v. PIE BAKERIES OF AMERICA, Inc.
    No. 8954.
    District Court, N. D. Illinois, E. D.
    June 5, 1931.
    Williams, Bradbury, McCaleb & Hinkle, of Chicago, Ill., for plaintiffs.
    Haight, Adcock, Banning & Fathchild and Latimer & Donovan, all of Chicago, Ill., for defendant.
   LINDLEY, District Judge.

Plaintiffs, owner and exclusive licensee of letters patent 1,624,490- to Kaser, granted April 12, 1927, applied for December 10, 1925, complain of infringement thereof by defendant, who in turn asserts Invalidity first upon the face of the patent, second, because of anticipation in prior use and publications, and, third, for complete failure of invention.

The patent covers a process for making pies, and claim 3 here relied upon is as follows: “The hereindescribed method of making a pie which consists-in extracting juice with sugar “from a fruit filler, baking the filler within an enclosing crust, and thereafter supplying the extracted juice to the filler.” In his specifications Kaser discloses that he was endeavoring to make juicy fruit pies, reducing to a minimum the loss of juice and preventing its running over the crust during baking or out of the baking container into the oven. The file wrapper discloses státements by the applicant to the effect that it is “common knowledge that the treatment of cut up fruit or berries with sugar and allowed to stand for a period of time, will result in the formation of syrups and the withdrawal of a considerable portion of the juices from the fruit. Heating or partial cooking of the fruit filler will accomplish this result also. These are facts which are probably known to every housewife.” In affidavits filed in support of a petition for early issuance and remarks of applicant concerning same it appears that the insertion of juice in the pie was relied upon as creating novelty, and that the removal and preparation of juice previous to baking was recognized as old. Claim 2, rejected by the Commissioner, in which rejection Kaser acquiesced, embraced only the two steps remaining after excluding the preparation of the juice. In view of the fact that claim 3 included only the additional element recognized as old, the situation is strongly persuasive that the claim is invalid upon the face of the file wrapper contents.

However, there is further persuasive evidence of invalidity in the prior publications. In 1900, James, in describing baking of fruit pies suggested “reserve the juice, boil it with sugar and a little flour, and put it into the pie after baking.” If extraction of juice was known to every housewife, as stated in the file wrapper, James apparently is a complete anticipation. In 1759, 1784, 1886, 1894, and at various dates later, but prior to the filing of the application for the patent herein involved, various culinary experts, striving to achieve succulent pies of the proverbial quality “such as mother used to make,” provided for the making of a broth from the carcass of a bird or from other stock, retaining the same until after baking;, and then inserting the same in game or meat pies after baking; for preparation of syrups or juices, retention until after baking, and insertion of same into the fruit pies. Some of them suggested lifting the crust, others a hole in the crust, for the insertion of the broth, juice, or syrup. At least ten such prior publications arp convincing of the conclusion that, if no one thereof completely anticipated everything Kaser suggested, their teaching is such that Kaser, delving in the art, charged with knowledge thereof, did not achieve invention, but only the results of the ordinary culinary workman exercising such skill as comes to the normally endowed female of domestic tastes. In Ohmer Fare Register Co. v. Ohmer, 238 F. 182, 188 (C. C. A. 6) the court made the following pertinent remarks: “We are cited to no reference in the prior art fully anticipating- the patent in suit. But we are considering the scope of invention, not anticipation; and in such inquiry the question is one of fact, taking into account the entire prior art, whether the advance made in the given ease amounts to invention or only mechanical skill. Herman v. Youngstown Co. (C. C. A. 6) 191 F. 579, 112 C. C. A. 185; Ferro Concrete Co. v. Concrete Steel Co. (C. C. A. 6) 206 F. 666, 668, 124 C. C. A. 466; Ft. Pitt Co. v. I. & M. Mfg. Co. (C. C. A. 6) 232 F. 871, 875, 147 C. C. A. 65.

In addition to the prior publications there was extensive evidence of prior use. Numerous witnesses testified as to prior use of Kaser’s methods in San Francisco, where Kaser formerly lived, over a period beginning in 1919 and extending to approximately the time of filing of Kaser’s application. Six of these testified as to the manufacture and commercial sale of apple pies by Olden in 1919, by extracting juice from the apples by covering them with sugar, baking the apples, minus the juice thus extracted, between two crusts, boiling the juice and inserting the same in the baked pie through a hole in the top crust. Defendant offered in evidence a wooden bowl, identified as one .used by Vogler in extracting the juice, which was drained by a faucet therein. Olden’s place of business was within a block of Ka-ser’s place in San Francisco. Fourteen witnesses testified as to similar manufacture and sale by the Rich Pie Company during 1922, 1923, and thereafter. Two witnesses testified that one Dragon made by the same method and sold apple pies as early as 1915 and as late as 1921. Others testified as to similar manufacture and sale by the A-l Bakery in July and August, 1924; by Paul Yogler in November, 1924, and by Harriss Bros., predecessor of defendant, in October, 1923. There was also corroborating evidence in written documents and physical exhibits.

True it is that parol testimony as to pri- or use is rightfully criticized. Human recollection is not always dependable and is frequently colored by human interest. Consequently, when dealing with dates, or details of a complicated structure/ looking backward, such testimony meets with reluctance upon the part of the courts, to be willing to adjudicate important issues by reliance thereon. But in the ease before us, the witnesses were familiar with the art; the process was a comparatively simple one; the steps distinctive and well defined, and, with certain exceptions, the witnesses were apparently without interest. The pies were made as they stated, or the witnesses deliberately falsified. I find nothing in the record to warrant me in finding that all thirty-two witnesses upon prior use testified falsely. The process being simple, the testimony clear and satisfactory, the parol evidence submitted is clearly sufficient to support the contention of extensive prior use. Hobbs Patent Co. v. Atlas Specialty Co., 244 F. 176 (C. C. A. 7); James Clark, Jr., Electric Co. v. U. S. Electrical Tool Co., 245 F. 753 (C. C. A. 7); American Roll-Paper Co. v. Weston, 59 F. 147 (C. C. A. 6); National Casket Co. v. Stolts, 157 F. 392 (C. C. A. 2); Sipp Electric Co. v. Atwood-Morrison Co., 142 F. 149 (C. C. A. 3); Grupe Co. v. Geiger, 215 F. 110 (C. C. A. 8).

In rebuttal plaintiffs sought to carry back the date of Kaser’s alleged invention by showing his prior use in January, 1924. Without deciding the efficacy of the evidence to establish these facts, I observe that all th:> prior uses discussed, other than that of Yog-ler and the A-l Bakery, were earlier than the use claimed by Kaser in January, 1924.

Kaser’s pies met with commercial success, and, were this a doubtful case, that fact might throw the balance in plaintiff’s favor. But where the convictions of the court from evidence other than that of success are free of doubt, evidence of the latter character cannot be accepted as the sole criterion of whether invention was achieved. Duer v. Corbin Cabinet Lock Co., 149 U. S. 216, 13 S. Ct. 850, 37 L. Ed. 707. In Hewes v. Deiches, 24 F.(2d) 503, 505 (C. C. A. 7) Judge Evans said: “Likewise appellants persuasively argue that the great commercial success which attended the appearance of their bow should resolve any doubt in their favor. We have not overlooked this argument but commercial success cannot create the doubt as well as resolve a doubtful case in favor of the patentee.” (Italics, the court’s.) Certiorari denied 278 U. S. 601, 49 S. Ct. 9, 73 L. Ed. 529. See, also, Judge Alschuler’s opinion in Piston Ring Co. v. Burd High Compression Ring Co., 276 F. 357 (C. C. A. 7).

In view of what has been said, it follows that, if the claim is not invalid upon ih> face, prior use and prior publications antiei pate, and an examination of all the prim, publications is conclusive of the proposition that Kaser did not achieve "invention. The bill will be dismissed- for want of equity at plaintiffs’ cost.

The foregoing memorandum is adopted by the court as its findings of fact and conclusions of law herein.


source: Caselaw Access Project

author: REEVES, District Judge.

license: Public Domain

text:
    METHODIST EPISCOPAL CHURCH OF UNITED STATES OF AMERICA v. WALTERS et al.
    No. 713.
    District Court, W. D. Missouri, W. D.
    Dec. 14, 1928.
    A. J. Colt and Leslie J. Lyons, both of Kansas City, Mo., for plaintiff.
    Harvey D. Taylor, of Los Angeles, Cal., Raymond E. Watson, of Kansas City, Mo., for defendants.
   REEVES, District Judge.

This is a proceeding for the construction of a will and to secure the annulment of certain deeds to real estate. The property affected by said will and deeds was on the 30th day of April, 1912) owned by Lucy Will Moss. On that date she published and de>-clared her last will and testament, the pertinent provisions thereof being as follows:

“Item 2nd. Having no children or descendants of any child, or children living, I devise, and bequeath xmto my husband, William Marion Moss, for and during his natural life, all m.y property both real and personal, of whatever name and nature, for his own special use, and hereby empower him to sell, and dispose of the same in such manner,1 and' for such purposes as he may see fit, or as I may hereafter direct; especially, in eareing for my grave, in a suitable manner, as long as he may live, and for the graves of my father and mother at Humboldt, Kansas, and for my brothers in Union Cemetery, Jackson County, Mo., Cemetery. * * *
“Item 3rd. In case any of my property shall remain unexpended for my said husbands use, at the death of my said husband, I devise and bequeath the same unto Charity connected with the Methodist Episcopal Church of the U. S. subject to the caring for the grave of my said husband, and that of my own, and of any kindred described in Item 2, of this Will.”

The testatrix died testate on or about March 15, 1917, and the aforesaid will was duly proved in accordance with law. Notwithstanding the provisions of the will, the beneficiary, William Marion Moss, executed two warranty deeds on October 7, 1918, conveying the property in question to the eode-fendant, May Belle Walters. These deeds were not filed for recordation until the next day after the death of the grantor, which occurred September 27, 1925.

It was admitted at the trial that no consideration was given for said conveyances, but there was introduced in evidence a paper writing dated October 26, 1917, and signed by the grantor and grantee. This instrument contained the recital that the consideration was “mutual covenants.” There was an explanatory recital that the conveyances were “to be effective at once in a limited way, to the extent of enhancing the comfort and enjoyment of both of the parties hereto during our natural lives and for our mutual benefit, and to be absolutely heris at 1st party’s demise.”

Both parties seek an affirmative decree for the repose of title.

Other pertinent facts will be stated in the course of this memorandum opinion.

1. Although plaintiff is an unincorporated voluntary association, yet it seeks recovery in this action in the name of the “Trustees of the Methodist Episcopal Church,” a corporation formed by authorization of representatives of the unincorporated body on June 1, 1868.

Assuming, but not deciding, that plaintiff may proceed as a voluntary association in the name of its corporate arm, the purposes of such corporation were defined in its charter as follows: “The said Board of Trustees, under their corporate name, shall have power to take and hold by donation, gift, grant, devise, or otherwise, any property, real personal, or mixed, in any State in the United States, in behoof of and for the benefit of the Methodist Episcopal Church, and the same to manage, grant, convey, lease, or otherwise dispose of, and to execute such trust or trusts as may be confided to said corporation — the whole to be under the supervision of, and amenable to, the General Conference.”

It is apparent from the foregoing that all property held by the. trustees of the church was subject to the control and direction of the church as managed by its chosen representatives.

Section 8, article 2, of the Missouri Constitution is a provision in lieu of the English Statute of Mortmain, which forbids the special incorporation of religious bodies, but permits the formation “under a general law for the purpose only of holding the title to such real estate as may be prescribed by law for church edifices, parsonages and cemeteries.”

Section 2262, R. S. Mo. 1919, specially operates upon conveyances of this character so as to pass title out of the trustees into the name of the real beneficiary who will manage it. By operation of such statute the constitutional provision is-made applicable which forbids the church holding the title.

Moreover, as decided in Proctor v. Board of Trustees, 225 Mo. 51, 123 S. W. 862, the object of the corporation is purely religious. The court must take judicial notice, as in'the Proctor Case, supra, that the Methodist Episcopal Church of the United States is a great and commendable religious organization. The public policy of the state would not permit a mere resident corporation to have privileges not allowed to a domestic corporation. It would follow from the foregoing that the plaintiff is not entitled to recover.

2. However, there are other reasons prohibiting recovery in this case. The clause of the will relied upon is too vague and indefinite. It says: “I devise and bequeath the same unto Charity connected with the Methodist Episcopal Church of the U. S.”

In construing wills, it becomes the duty of this court to employ in such construction the rules and principles followed by the judiciary of the state of Missouri. Harvard College v. Jewett (C. C. A.) 11 F.(2d) 119. Moreover, section 555, R. S. Missouri 1919, emphasizes a general and acknowledged rule of construction to the effect that “all courts and others concerned in the execution of last wills shall have due regard to the directions of the will, and the true intent and meaning of the testator, in all matters brought before them.”

Although no reference was made to a trustee by the testator, yet, under the decision of Buckley et al. v. Monck et al. (Mo. Sup.) 187 S. W. 31, 32, it appears that the trustees in the instant case, as in the Buckley Case, may have instituted and prosecuted the action in their name.

In the Buckley Case the bequest was made “for the use of worn-out preachers in M..E. Church in North Mo. Conference.” The court sustained the bequest. In the discussion of the ease, however, the court took occasion to say: “It is not every attempted devise or bequest to charitable uses which courts of equity will directly administer. For instance it will not substitute its own jurisdiction for the personality of the testator, by executing a devise to ‘charity’ or to promote the cause of ‘charity’ generally.” •

Such a pronouncement was made upon facts very similar to the case at bar. However, the question here under discussion was lucidly determined by Judge Walker of the Missouri Supreme Court in the case of Jones v. Patterson, 271 Mo. 1, 195 S. W. 1004, L. R. A. 1917F, 660. The Patterson Case was stronger than the one at bar because a trustee was named. The provision there under consideration was as follows: “He (husband of testatrix) is to use the income off of this property for his own use and benefit, and at his death, I want it placed in the hands of Clifford Patterson (my nephew) to be used for missionary purposes in whatever field he thinks best to use it, so it is done in the name of my dear Saviour and for the salvation of souls.”

The court declared the invalidity of the provision because “there can be no trust over the exercise of which the court will not assume a control, for an uncontrollable power of disposition would be ownership and not trust.”

In the instant ease there are many charities connected with the Methodist Episcopal Church of the United States, and “the generality of the words employed is such that it cannot be known what class of persons are entitled to the benefit sought to be conferred or what that benefit will consist in. ' The entire matter is, in fact, left to the wisdom, or it may be the whim or caprice of the trustee. Strong and far-reaching as is the arm of equity in upholding a charity, the one here sought to be created is beyond its grasp.”

3. Neither can the court grant affirmative relief to the defendant, May Belle Walters. The will now being construed empowers the husband during his lifetime to sell or dispose of the real estate “for such purposes as he may see fit,” but it does not authorize him to give it away. Burnet v. Burnet, 244 Mo. 491, loc. cit. 506, 148 S. W. 872; Tallent v. Fitzpatrick & Kaiser, 253 Mo. 10, 161 S. W. 689; Trigg v. Trigg (Mo. Sup.) 192 S. W. 1011.

It should be stated in the Trigg Case, supra, this principle was acknowledged but found to be inapplicable.

In view of the above, plaintiff is not entitled to reeovér, and neither is the defendant, May Belle Walters, entitled to affirmative relief.

Plaintiff’s bill will be dismissed, and in like manner the cross-action, of the defendant, May Belle Walters.


author: THOMAS, District Judge.

text:
    UNITED STATES ex rel. RIZZIO v. KEN-NEY, Immigration Inspector, et al.
    No. 3364.
    District Court, D. Connecticut.
    May 9, 1931.

      Spellacy, Eyan & Yeomans, of Hartford, Conn., for petitioner.
    John Buckley, U. S. Atty., and George H. Cohen, Asst. U. S. Atty., both of Hartford, Conn., for respondents.
   THOMAS, District Judge.

The facts are stipulated and the pertinent parts of the stipulation follow:

The relator was bom in Italy on September 15, 1906, and came to this country with his mother when he was 4 years old. He is unmarried, and lives with his parents in Hartford. Neither he nor his parents have any relatives in Italy. On June 8, 1924, he was arrested for the theft of a poeketbook of .the value of $1 and $1 in money, and of a hand flashlight of the value of $2. He pleaded guilty, and on September 2, 1924, was thereupon committed to the Connecticut Beformatory at Cheshire. He was paroled at the end of eleven months, and returned to the reformatory charged with violating his parole, and after another eleven months’ confinement he was again paroled.

In December, 1926, on information of the state’s attorney, he was presented before the superior court charged with assault with intent to rob, and on a plea of guilty, he was sentenced to the Connecticut State Prison for not less than one year nor more than three years.

After serving his sentence he was apprehended by an inspector from the Immigration Service upon a warrant of deportation signed by the Secretary of Labor. The predicate for the deportation was based on the allegation that since his entry into the United States he had been sentenced to imprisonment more than once for a term of one year or more for the commission of a crime involving moral turpitude.

The language of the pertinent act of Congress has been the subject of frequent judicial construction and yet the specific point raised by this record seems never to have been determined. An alien is subject to deporation “who, after February 5, 1917, is sentenced to imprisonment for a term of one year or more because of conviction in this country of a crime involving moral turpitude. • * * ” 8 USCA § 155.

There can be no question but that, except in unusual circumstances, theft is a crime involving moral turpitude and that assault with intent to rob is also a crime involving moral turpitude. Nor can there be any question, at this date, that an indeterminate sentence to imprisonment is to be regarded, for the purposes of the Immigration Act, as a sentence to a possible maximum term of that imprisonment. See United States ex rel. Paladino v. Commissioner of Immigration (C. C. A.) 43 F.(2d) 821; United States ex rel. Morlacci v. Smith (D. C.) 8 F.(2d) 663; United States ex rel. Kiobge v. Day (D. C.) 42 F.(2d) 716; United States ex rel. Sirtie v. Commissioner of Immigration (D. C.) 6 F.(2d) 233; United States ex rel. Parenti v. Immigration Inspector et al., 50 F.(2d) 902, decided by this court May 5, 1930. In none of the above-eifed eases, however, was the question raised as to what constitutes “imprisonment” within the meaning of the statute providing for deportation.

That question emerges sharply from this record. The relator was not quite 18 years old when he was arrested upon the charge of stealing property of the value of $4. Had he been 26 years old, he could not have been sentenced to the reformatory, and the maximum prison punishment that could have been inflicted upon him would have been thirty days in jaü in accordance with the penalty provided by section 6255 of the General Statutes of Connecticut, Bevision 1918. A male person between the ages of 16 and 25 years may, however, in the discretion of the trial court, when convicted of an offense the maximum punishment of which is less than one year in jail, be committed to the reformatory upon an indeterminate sentence, but for not more than two years. It is to be noted that under the provisions of section 1838 of the General Statutes of Connecticut, Bevision 1918, inmates of the Connecticut School for Boys between the ages of 16 and 21 whom the trustees of said institution desire to have transferred to the reformatory could likewise be sent there. Practically the same provisions will be found in chapter 262 of the Public Acts of 1919.

If sentence to a reformatory is a sentence to “imprisonment,” then the somewhat anomalous situation results, that an offender of mature age, found guilty of the theft of $4, may be sentenced to imprisonment for only thirty days but that a boy of 14, found guilty of the same offense, may be sentenced to imprisonment for 2 years. It can hardly be assumed that such was the legislative intent and that such a sentence to a reformatory was intended to be a sentence to imprisonment within the ord|inary significance of that term.

I am not now concerned with the question of the actuality of the beneficence which substitutes detention in a reformatory for imprisonment in jail. But it occurs to me that the rationale of the reformatory idea is its assumed ameliorative and correctional influence. How far this materializes in practice is, for the purposes of our discussion, irrelevant. But it is obvious enough that the state of Connecticut does not regard a reformatory as a prison; that is, as a place for the punitive detention of convicted criminals.

I think that it may be fairly said that, when Congress legislated the criteria by which an alien might be determined to be undesirable, it had in mind the usual concomitant of the existence of such criteria. A sentence for a year generally implies, in these United States, the commission of a crime of 'substantial gravity, provided, of course, that the sentence is to imprisonment. A sentence of two years to a reformatory for the theft of a postage stamp, which is quite possible under the laws of Connecticut, is hardly the criterion contemplated by the federal statute. And it is to be noted that ■the word “imprisonment” is not used in the Connecticut statutes regulating commitments to a reformatory. Offenders are sentenced, not to imprisonment in a reformatory but are committed to the reformatory. In the ease of persons who have committed serious offenses, the trial court may commit them to a reformatory, “if they deem them amenable to reformatory methods.” “When they have been committed to the reformatory, they are not to remain “imprisoned” there, but they may be “detained” there, etc. And, if a reformatory be, indeed, a prison, as sueh term is understood in the penal law of Connecticut, then it is quite remarkable that inmates of the Connecticut School for Boys, who have not been convicted of any crime may nevertheless, upon motion of the trustees of that institution, be sent to this prison. •

The question presented in the ease at bar is by no means free from difficulty. Prae-tioally no light is thrown upon it by the language of any previous decision which I have been able to find. It is true, that in several cases, warrants of deportation have been sustained where a sentence to a reformatory has been relied upon. In this jurisdiction this ■ court sustained such a warrant. United States ex rel. Parenti v. Immigration Inspector et al., 50 F.(2d) 902, decided May 5, 1930. But in none of those eases was this exact question raised. All of those cases, as well as the Parenti Case, turned upon'the question as to whether an indeterminate sentence is, from the standpoint of the Immigration Act, a sentence for the possible maximum of the term, and there it was held that the possible maximum governs.

A passing reference in the Paladino Case, decided by the Circuit Court of Appeals for the Second Circuit, 43 F.(2d) 821, 823, is the only language I have been able to find which in any wise touches upon this problem. In that ease the relator had been convicted of grand larceny and had served fourteen months in the Elmira Reformatory. He was later convicted of robbery, in the first degree and sentenced to the petitentiary for an indeterminate term. If so happened in that case that the petitioner did not contest the adequacy of the reformatory sentence as a predicate for deportation proceedings. Both sides concentrated upon the question as to whether the indeterminate sentence to the penitentiary was a sentence for the possible maximum. Peculiarly enough, the petitioner did submit the suggestion that the indeterminate sentence to the penitentiary, under the New York Parole Commission Law (Laws N. Y. 1915, c. 579 as amended by Laws N. Y. 1916, c. 287), involved a reformatory idea and, consequently, was not to be regarded as a sentence to “imprisonment” within the meaning of the congressional act. Judge Hand, in discussing the question had occasion to say: “While it cannot be doubted that the reformation of persons who had not become hardened criminals was a prime reason for the enactment of the Parole Commission Law, yet sentences in the indeterminate form there provided are punitive as well as reformatory.”

After careful consideration of the question here presented, I am of the opinion that the sentence of a juvenile to a reformatory is not a sentence to “imprisonment” within the intendment of the Immigration Act, and, so holding, I find that there is no adequate basis for the warrant of deportation issued herein. It follows, therefore, that the writ of habeas corpus is sustained. Submit order accordingly.


author: BARRETT, District Judge.

text:
    In re LOOKOUT MOUNTAIN HOTEL CO.
    District Court, N. D. Georgia, Rome Division.
    March 17, 1931.
    W. E. Norvell, Jr., of Nashville, Tenn., and Jones, Evins, Powers & Jones, of Atlanta, Ga., for State Court Receiver Thos. W. Bryan.
    Alston, Alston, Poster & Moise, of Atlanta, Ga. (Selden Bacon and Saul S. Myers, both of New York City, of counsel), for trustee in bankruptcy.
   BARRETT, District Judge.

The chronology of this litigation is as follows:

July 29, 1930, the petition for foreclosure of a deed of trust conveying Georgia land to secure $650,000 of bonds and for the appointment of a receiver in the state court was filed. The petition was sanctioned and ordered filed, and the hearing upon the petition for appointment of a receiver and injunction was postponed to September 15,1930.

September 5, 1930, a petition in involuntary bankruptcy was filed in the District 1 Court of the United States for the District of Delaware, and a receiver was appointed by such court on that day.

September 10, 1930, upon petition of such receiver, the District Court of this district appointed him as receiver.

September 15, 1930, the state court appointed a receiver.

September 27, 1930, the hotel company was adjudicated a bankrupt in Delaware.

October 3, 1930, the petition under consideration was filed by the state court receiver praying that this court direct its receiver to turn over the property to the state receiver.

November 21,1930, a trustee in bankrupt cy was elected and qualified.

1. The trustee in bankruptcy, the same individual as the receiver, is now a party to this proceeding as trustee, and challenges the jurisdiction of this court in the premises. Such challenge is thus stated in the brief of such trustee: “The petition at bar can be entertained properly only by the United States Court in the District of Delaware as the bankruptcy court of primary jurisdiction. The petition at bar being addressed to this court must, therefore, be dismissed on the ground of lack of power even aside from its untenability on the ground of discretion.”

It is important to realize that the question for determination is possession, that the proceeding to foreclose the trust deed in the state court had been instituted more than a month before the filing of the involuntary petition in bankruptcy in Delaware, and that the petition in the ease at bar was against a federal receiver appointed in ancillary proceedings in this court instituted by the receiver of the primary court before the qualification of the trustee.

The touchstone as to jurisdiction is ascertained, not only by facts which would appeal to the discretion of the court to interfere with the action of the state court, but also by facts that would not appeal to such discretion. Facts that would not-justify interference would seem to require that, upon appropriate application, inadvertent error in appointment of a receiver should be rectified at once by delivery of possession to the receiver of the state court.

There are two rules whose validity are recognized by all parties to the ease at bar:

(a) “When a court of competent jurisdiction takes possession of property through its officers, this withdraws the property from the jurisdiction of all other courts which, though of concurrent jurisdiction, may not ■ disturb that possession.” Isaacs, Trustee, v. Hobbs Tie & Timber Company, 51 S. Ct. 270, 272, 75 L. Ed.-, decided by the Supreme Court of the United States February 24, 1931.

(b) “To prevent conflicts as to which of the two courts should take and keep the property and administer it, the rules of comity are established and must be regarded. Of these the most fundamental is that the court that is first in time is first in right. And that court is first in time which first entertains a valid proceeding to complete which will require possession of the specific property, whether that court is first actually to seize it or not.” In re Gallimore (D. C.) 16 F.(2d) 800, 801.

(I do not forget the contention of the trustee in bankruptcy that the courts are not concurrent, but that the bankruptcy court is paramount. That may be cogent or even convincing as to the final conclusion, but jurisdiction alone is now being considered.)

The ancillary jurisdiction of this court has been recognized and invoked by the receiver of the primary court in aid of the bankruptcy administration. Would any one insist that this court when its aid is thus invoked could not exercise its independent judgment? That, if it could not take such action as would in the opinion of the primary court be in its aid, it had no jurisdiction? If this court had jurisdiction to take possession, why has it not jurisdiction to correct the error, if error it be, of taking possession in the first instance? Why was it not its duty upon request to have immediately returned the property if taken in the first instance by error?

The fact of the same person’s being the receiver of this court and also the trustee in bankruptcy is immaterial. Whatever else he may be, he is an officer of this court, and would manifestly violate his duties as such if he relinquished possession to any one — -even himself acting in any other capacity — without an appropriate order of this court.

What is the effect, if any, of the qualification of the trustee in bankruptcy upon the jurisdiction of this court? The most recent statement by the Supreme Court of the rights of a trustee is in the Isaacs Case, supra, as follows: “Upon adjudication, title to the bankrupt’s property vests in the trustee with actual or constructive possession, and is placed in the custody of the bankruptcy court. Mueller v. Nugent, 184 U. S. 1, 14, 22 S. Ct. 269, 46 L. Ed. 405. The title and right to possession of all property owned and possessed by the bankrupt vests in the trustee as of the date of the filing of the petition in bankruptcy, no matter whether situated within or without the district in which the court sits. Robertson v. Howard, 229 U. S. 254, 259, 260, 33 S. Ct. 854, 57 L. Ed. 1174; Wells v. Sharp (C. C. A.) 208 F. 393; Galbraith v. Robson-Hilliard Grocery Co. (C. C. A.) 216 F. 842.”

Let it be noted that the trustee has not by his qualification possession, but “the title and right to possession.” The method of protection of such rights of the trustee when the property is within, and also when it is without, the district of the primary bankruptcy court is, also disclosed in such Isaacs Case, as follows:

“Thus, while valid liens existing at the time of the commencement of a bankruptcy proceeding are preserved, it is solely within the power of a court of bankruptcy to ascertain their validity and amount and to decree the method of their liquidation. Ex parte City Bank of New Orleans, 3 How. 292, 11 L. Ed. 603; Houston v. City Bank of New Orleans, 6 How. 486, 12 L. Ed. 526; Ray v. Norseworthy, 23 Wall. 128, 23 L. Ed. 116; In re Wilka [(D. C.) 131 F. 1004], supra; Nisbet v. Federal Title & Trust Co. (C. C. A.) 229 F. 644.

“The exercise of this function necessarily forbids interference with it by foreclosure proceedings in other courts, which, save for the bankruptcy proceeding, would be competent to that end. As mortgaged property ordinarily lies within the district in whieh the bankruptcy court sits, and the mortgagee can consequently be served with its process, the procedure usually followed is for that court to restrain the institution of foreclosure proceedings in any other. Where the land lies outside the limits of the district in which the bankruptcy court sits, ancillary proceedings may be instituted in the District Court of the United States for the district in which the land is, and an injunction against foreclosure issued by the court of ancillary jurisdiction. In re Patterson Lumber Co. [D. C.] 228 F. 916; Id. (D. C.) 247 F. 578. Compare Security Mortgage Co. v. Powers, 278 U. S. 149, 49 S. Ct. 84, 73 L. Ed. 236.”

Is the jurisdiction in this case dissimilar from that where the primary court seeks the aid of the ancillary court for injunction? Finally, must not this court “exercise jurisdiction,” even if it orders its receiver to deliver possession to the trustee in bankruptcy?

In concluding that this court has jurisdiction, let the trustee be assured that I have not failed to study the cases cited to support his contention, the most pertinent of which is In re Patterson (D. C.) 247 F. 578. Even in that case a vital distinction is that there the trustee appointed in New York was not only in possession of the land in Tennessee but had obtained an order from the bankruptcy court in New York to sell the land free of liens before the trustee under the deed petitioned the District Court in Tennessee to permit him to foreclose.

2. Shall possession be delivered to the state receiver or to the trustee in bankruptcy?

The following state and federal decisions favor the claim of the state receiver:

“If, under foreclosure proceedings, the state court appoints a receiver to take charge of the mortgaged property, and the defendant is subsequently adjudicated a bankrupt, the trustee is not entitled to the possession of the mortgaged property, but can only claim the surplus remaining after the payment of the secured debt.” Merry v. Jones, 119 Ga. 643, 646, 46 S. E. 861, 862.
“Pending suits to enforce specific liens or to deal with specific property (other than insolvency proceedings) are generally not to be interfered with by the bankruptcy court, unless to have the trustee intervene.” In re Barrett & Co. (D. C.) 27 F.(2d) 159, 160; to the same effect Judge Sibley In re Moore (D. C.) 42 F.(2d) 475, 477. See, also, Parks, Trustee, v. Baldwin, 123 Ga. 869, 51 S. E. 722; Nelson, Trustee, v. Spence, 129 Ga. 35, 58 S. E. 697.

The rights of the trustee in bankruptcy are as stated in the Isaacs Case, supra.

The trustee in bankruptcy insists that he should have possession for the following reasons:

(a) “The state court was without personal jurisdiction of any defendant save only J. I. Carter, and as to him the return of service was defective.”

(b) The instrument securing the bonds was never properly recorded.

(e) The equity in the property securing the bonds is of substantial value.

(a) The attacks on the jurisdiction and service in the state court are not in my opinion sufficient to justify this court in declaring such action in appointing a receiver a nullity. It was a court of plenary jurisdiction.At least one defendant was before it. Service, if defective, might be cured. The res was within its territorial jurisdiction. See Empire Trust Co. v. Brooks (C. C. A., Fifth Cir.) 232 F. at page 643.

(b) The argument to sustain the im-' propriety of the record of the instrument securing the bonds may be thus condensed: Such instrument is a “security deed” under-section 3306 of the Code of Georgia of 1926. In order to admit such security deed to record, it “shall be attested or proved in the manner now prescribed by law for mortgages,” section 3308 Id. A mortgage “must be executed in the presence of, and attested by, or proved before, a notary public or justice of any court, in this State, or a clerk of the superior court (and in case of real property by one other witness), and recorded,” section 3257. Section 4203 of such Code, “To authorize the record of a deed to realty or personalty, when executed out of this State,” does not apply to “security deeds.” The deed under consideration was executed out of the state of Georgia, and was attested by a notary public of such state of its execution and another witness. Section 3264 of such Code reads as follows: “All the rules prescribed for the probate of deeds to land, where the witnesses are dead,, insane, or removed from the State, or to the acknowledgment before or attestation by consuls or commissioners, shall apply to the probate of mortgages,” and does not apply to the deed in question because attestation was not by a consul or commissioner.

In order that such reasoning be convincing, it is essential that a deed of trust to secure an issue of bonds be a “security deed” as prescribed by such section 3306. Otherwise it must come within the ambit of “a deed to realty or personalty” and be governed by section 4203, supra.

Security deeds came into existence in 1871, and it may well be that such enactment was caused by the case of Stokes v. Hollis, 43 Ga. 262 (July 1871), holding that a deed in form was in substance a mortgage, and trover could not be founded thereon. Whatever the origin, the Supreme Court of Georgia has thus described it: “The security deed seems to be peculiar to the law of this state, and its legal status has been fixed by judicial decisions considering alone the nature of the instrument,, and in many cases paying little or no regard to analogies.” Shumate v. McLendon, 120 Ga. 396(3), 48 S. E. 10.

That “security deeds” are sui generis was further recognized by such Supreme Court in Jewell v. Walker, 109 Ga. 241, 34 S. E. 337 (1899). Judge Sibley, In re Hammett (D. C.) 286 F. 392, 394, says: “* * * The deed is of a class peculiar to the Georgia statute law known as a security deed (Park’s Code, 3306).” '

The Georgia codifiers manifestly recognized such distinction, for, “Fourth Title — of Relations Arising from Contracts,” security deeds there denominated “Sales to Secure Debts” are in chapter 6, and “Trust Deeds to Secure Debts” are in chapter 7.

This incidental comment may be here pertinent. The trustee in bankruptcy urges that, inasmuch as section 3311 of such chapter 7 creates a method of foreclosure of such “Trust Deeds to Secure Debts,” no foreclosure can be had unless the conditions of such section be complied with, that one of its conditions is that foreclosure must be requested by two-thirds in amount of the indebtedness secured, and that two-thirds had not so requested. This section has for me an entirely different meaning. I think it means that, upon request of two-thirds, but not otherwise, this unusual method of foreclosure may, but not must, be followed. Under other conditions, other methods must be pursued. Surely it cannot be seriously urged that the failure of two-thirds to request can absolutely defeat the rights of the other one-third.

My conclusion is that the deed in question is a “Trust Deed to Secure Debt,” is not a “Security Deed” under section 3306, and is properly recorded.

(e) The charge that there is an equity of value to the general creditors, even though the deed of tnist be held valid, is apparently made in good faith and with ample justification.

3. The ultimate decision as to the validity of the record of the deed of trust and of the value of the equity should be made by the court of primary jurisdiction. The allegations and the evidence are sufficient to justify this court in enjoining the state court from proceeding with the sale of the property if such were necessary. It would be inexcusable folly to deliver possession to the state receiver and then proceed to forbid his action under the allegations and facts now developed.

It is therefore ordered that the petition of the state receiver for possession of the property is hereby declined.


author: NORTHCOTT, Circuit Judge.

text:
    LIBERTY CENT. TRUST CO. et al. v. GREENBRIER COLLEGE FOR WOMEN et al.
    No. 2786.
    District Court, S. D. West Virginia, at Charleston.
    Jan. 9, 1931.

      W. C. Revercomb, of Charleston, W. Va., and S. M. Austin and J. S. McWhorter, both of Lewisburg, W. Va., for complainants.
    H. B. Lee and W. Elliott Nefflen, both of Charleston, W. Va., R. A. Blessing, of Point Pleasant, W. Va., and J. H. White, of Lewisburg, W. Va., for defendants.
    Before NORTHCOTT, Circuit Judge, and MeCLINTIC and GLENN, District Judges.
   Findings of Faet.

NORTHCOTT, Circuit Judge.

This is a suit in equity seeking to enjoin, the state road commission of West Virginia, a corporation, the county court of Greenbrier county, a corporation, and Echols Bros., Incorporated, from building a road over and on certain real estate situated in Greenbrier county, W. Va. The legal title to this real estate is vested in the Greenbrier College for Women, a corporation.

Plaintiffs are citizens of the state of Missouri, and are trustees under a deed of trust, in which the real estate in question was conveyed to them in trust to seeure the payment of bonds issued upon said real estate in the amount of $167,000. The property conveyed by the deed of trust is not sufficient in present value to pay the said sum of $167,-000. The state road commission was proposing, under the statutes of West Virginia, to at once enter upon and take possession of the right of way over the real estate in question, pending condemnation proceedings. The proposed road is a part of the state road system of West Virginia and a part of the road across the entire state, known as the “Midland Trail,” itself a national road. It is contended by the plaintiffs that the statutes under which the state road commission is acting are unconstitutional, as being in violation of the “due process” clause of the Fourteenth Amendment of the Constitution of the United States, and also in violation of the “just compensation” clause of section 9 of article 3 of the Constitution of West Virginia.

The suit was brought in the District Court of the United States for the Southern District of West Virginia, the judge of which court granted a temporary restraining order, and proceeded to convene a- three-judge court under section 266 of the Judicial Code as amended (section 380, title 28, USCA).

l< Under date of August 6, 1980, a written notice was addressed to Judge C. W. Campbell, president of the board of trustees of the Greenbrier College for Women, stating that the state road commission and its contractors and agents were entering upon the lands of the Greenbrier College for Women for the purpose of constructing a state road, and that the county court would apply within sixty days from the service of the notice to the circuit court of Greenbrier county for the appointment of commissioners to assess the damages to the lands. This notice was signed by the county court of Greenbrier county by Julius K. Monroe, county road engineer. At the time of the serving of this notice, the county court of Greenbrier county had entered no order of record authorizing such proceeding by the county road engineer. The judge of the District Court, on September 6, 1930, granted the restraining order prayed for, and the matter was set down for hearing on September 12, 1930. On that date a second restraining order was issued, and the cause again set down for hearing on September 20, 1930, at which time an amended bill was tendered by the plaintiffs, and the defendants filed a written motion to dismiss the original and amended bills, which motion was taken under advisement by the court. The court continued the restraining order in force, and in October, 1930, after filing a written memorandum, amended the order so as to permit the state road commission, the county court of Greenbrier county, and Echols Bros., to proceed with the building of said road, according to law.

Thereafter the state road commission requested the county court of Greenbrier county, in accordance with the state statutes, to furnish the right of way through the grounds of the Greenbrier College for Women. The ’ county court of Greenbrier county refused to furnish such right of way by an order entered, and thereupon the state road commission, acting under section 31 of chapter 6, of the Acts of West Virginia Legislature of 1923, served a notice on the president of Greenbrier College for Women that they were going to enter upon the lands in question and build the road. The plaintiff thereupon filed their supplemental bill, and asked for an injunction restraining the state road commission from further entering upon the lands of Greenbrier College for Women. The court granted the restraining order until the matter could be heard before the court as at present constituted.

Conclusions of Law.

Section 31 of chapter 6 of the Acts of West Virginia Legislature of 1923 reads as follows:

“See. 31. Whenever it shall be necessary from any cause to acquire any lands for the purpose of constructing, widening, straightening, grading or altering any state road which cannot be acquired at a satisfactory price by purchase or grant, the said commission is hereby empowered to condemn the necessary lands therefor, together with all necessary rights and easements, under the right of eminent domain, or it may proceed as provided in section one hundred ana thirty-eight of this act. The cost of all rights of way acquired for any state or county-district road, or roads, or for the purpose of widening, straightening, grading, or altering any such road or roads, shall be paid by the county court of the county in which such road or roads shall lie.
“If any county court fails or refuses to obtain any right of way necessary for the purpose of constructing, widening, straightening, grading or altering any state road within thirty days after being requested so to do by the state road commission, then the state road commission may secure such right of way in the manner hereinabove provided and pay for the same out of the state road fund, which fund shall be reimbursed by the county court of the county in which such right of way is obtained. All claims for reimbursement for right of way expenditures incurred by the state road commission subsequent to April twenty-first, one thousand nine hundred and twenty-one, shall be filed by the commission with the clerk of the county court of the county where such expenditures are made, which claims shall be audited and paid as other claims against the county. Such claims shall be payable to the state road commission and returned by it to the state road fund.”

. Section 138 of chapter 6. of the Acts of West Virginia Legislature, of 1923, under which the state road commission proceeded to act upon refusal of the county court of Greenbrier county, reads as follows:

Sec. 138. Establishment of County — District Roads; Compensation to Landowners.

“Upon hearing the parties interested in an application for a county-district road, said county court shall decide fbr or against undertaking the proposed work on behalf of the county. If it decides in favor of the same and the compensation for damages, if any, to be paid to any proprietor or tenant be not fixed by agreement, it shall order proceedings to be instituted and presented in its corporate name in the circuit court of the county, pursuant to chapter forty-two of the code of West Virginia, to ascertain what will be a just compensation, if any, to each proprietor or tenant for the land proposed to be taken, and the said court shall lay a sufficient levy for that purpose. But when such compensation, if any, shall be so ascertained, it shall be at the option of the county court to pay the same or to abandon the proposed undertaking. If it decides to pay the same, it shall lay a sufficient levy for that purpose as provided in this act. In any ease where the petition is for the establishment or alteration of a county-district road leading from the main public road or roads, the court may refuse to undertake the proposed work, unless the petitioner or some one for him, shall deposit with said county court a sufficient sum to pay all damages and costs sustained by reason of the establishment or alteration of such road. In such case, if it seems proper so to do, the court may establish any such road, upon conditions that the petitioner shall pay all costs and damages as aforesaid, and make and keep in repair such road, and erect and maintain in good repair one or more gates across such road where the road passes through a fence* or fences, as is provided in section one hundred and sixty-nine of this act; and the court may also impose upon such petitioner, his heirs or assigns, and upon the public such other conditions in reference to such road as the court may deem just. In the event that any of the conditions, so imposed by the court are not fully complied with, the court at any time, after giving at least sixty days’ notice to the public and to the petitioner, his heirs or assigns, in such manner as the court may prescribe, may discontinue or abandon such road.

“But the court, instead of proceeding in the manner hereinbefore provided in this section, is authorized to enter upon any lands, other than those prohibited by law, and locate and build said roads. Within sixty days after such entry the county court shall petition the circuit court to nominate thirteen freeholders, and the said circuit court, or the judge thereof in vacation, shall nominate, within thirty days after the filing of such petition, thirteen freeholders, of whom the county court shall strike off four and the property owners or their representatives, or such of them as appear, shall strike off four, and after eight names are stricken from the list the remaining five shall be commissioners appointed to assess the damages hereinafter provided. But where there is no appearance for the property owners, or if they appear and do not agree as to any one or more of the names to be stricken off on their behalf, or the right to strike off any one or more names is waived on the part of either of the property owners, or their representatives, or from any cause the full number shall not be stricken off by the court or the parties aforesaid, the names or additional names, as the case may be, to be stricken from the list in order to reduce the number to five, shall be ascertained by lot under the direction of the court. Vacancies shall be filled, and any commissioner, for good eause shown, may be removed by the court.

“The said commissioners shall go upon the land and assess the damages and benefits, taking into consideration the benefits accruing to the property and the damages to it sustained, and shall fix the compensation or damages as said commissioners may seem [deem] proper, and the amount so fixed shall be paid out of the road fund of the county or district at the discretion of the court.

“If the damage so assessed be not satisfactory to the property owner or owners, proprietor or tenant, or to the court, he or they, or said court, may within six months after the assessment aforesaid, appeal or apply to the circuit court of the county and demand a. trial therein, as in other condemnation proceedings; Provided, however, before entering upon said land as authorized by this section, it shall be the duty of the county court or its representatives to serve notice upon the owner or owners of said land, as provided by law, notifying such owner.or owners that the road is to be located upon their land under the authority of this section; Provided, however, that when a state road shall be located by the state road commission, in, upon or through any property owned or controlled by the state, no compensation shall be paid for Such right-of-way. Any persdn who shall obstruct said road while in process of construction or repair, or interfere with the engineer or other persons in charge of said work or construction, their agents or employees, shall be guilty of a misdemeanor and upon conviction thereof shall be fined not to exceed fifty dollars, and may be imprisoned not to exceed one month, or both, in the discretion of the court.

“In any proceeding authorized by this section, the revenues applicable to the payment of any damage assessed shall be deemed sufficient security, and to have been pledged for the payment thereof.

“After a public road has been established and constructed heretofore or hereafter and used as such for a period of one year, and no claim for damages or compensation has been made, the right-of-way for such road shall vest in the county court or the state, as the case may be, and they shall not be liable for damage or compensation arising out of the construction of said road.”

The action of the road commission is contested and the injunction sought on the ground that the notice given by the road commission was not a proper notice, and on the further ground that the statutes in themselves are in violation of the Constitution of the United States and of the state of West Virginia, in that the public'faith and credit of the state are not pledged to- the payment of the damages, the damages being paid only from a particular fund, and because there is no adequate provision for enforcing payment of compensation.

We are of the opinion that the preliminary notice served by the road commission was a sufficient compliance with the statute, and that the statutes are not unconstitutional and are not in violation of “due process” clause of the Federal Constitution.

The preliminary notice required by see. 138, c. 6, Acts of 1923, need only be served on those in possession of the lands, and lienors need not be given notice until the filing of the petition in the circuit court. Keystone Bridge Co. v. Summers et al., 13 W. Va. 476; State Road Commission v. McMurray, 103 W. Va. 346, 137 S. E. 530; Mortgage Co. of Maryland v. Lory et al., 109 W. Va. 310, 154 S. E. 136.

This holding of the West Virginia court is binding upon the federal courts. North Laramie Land Co. v. Hoffman et al., 268 U. S. 276, 45 S. Ct. 491, 69 L. Ed. 953; Baltimore Traction Co. v. Baltimore Belt R. R. Co., 151 U. S. 137, 14 S. Ct. 294, 38 L. Ed. 102.

It is well settled that principles of law establishing a rule of real property in the state courts are binding on the federal courts. McKeen v. Delaney’s Lessee, 5 Cranch, 22, 3 L. Ed. 25; Kinney et al., etc., v. Clark et al., 2 How. 76, 11 L. Ed. 185; Suydam v. Williamson, 24 How. 427, 16 L. Ed. 742; Beauregard v. New Orleans, 18 How. 497, 15 L. Ed. 469; Williams v. Kirtland, 13 Wall. 306, 20 L. Ed. 683; Lippincott v. Mitchell, 94 U. S. 767, 24 L. Ed. 315; Bondurant v. Watson, 103 U. S. 281, 26 L. Ed. 447; Britton v. Thornton, 112 U. S. 526, 5 S. Ct. 291, 28 L. Ed. 816; Ridings v. Johnson, 128 U. S. 212, 9 S. Ct. 72, 32 L. Ed. 401; U. S. v. Robbins, 269 U. S. 315, 46 S. Ct. 148, 70 L. Ed. 285.

The'highest court in West Virginia has decided that the statute does not violate the Constitution of West Virginia. Keystone Bridge Co. v. Summers et al., supra; Mc-Gibson v. County Court, 95 W. Va. 338, 121 S. E. 99.

“The due process clause does not guarantee to the citizen of-a state any particular form or method of state procedure. Under it he may neither claim a right to trial by jury nor a right of appeal. Its requirements are satisfied if he has reasonable notice ánd reasonable opportunity to be heard and to present his claim or defense; due regard being had to the nature of the proceeding and the character of the rights which may be affected by it. Reetz v. Mich., 188 U. S. 505, 508, 23 S. Ct. 390, 47 L. Ed. 563; [State of Missouri ex rel.] Hurwitz v. North, 271 U. S. 40, 46 S. Ct. 384, 70 L. Ed. 818; Bauman v. Ross, 167 U. S. 548, 593, 17 S. Ct. 966, 42 L. Ed. 270; Backus v. Union Depot Co., supra, 169 U. S. 569, 18 S. Ct. 445, 42 L. Ed. 853.

“Nor does the equal protection clause exact uniformity of .procedure. The Legislature may classify litigation and adopt one type of procedure for one class and a different type for another. That condemnation proceedings under the Highway Act are conducted on behalf of the state is in itself sufficient basis for the exercise of the legislative judgment in providing for it a different-procedure from that prescribed for the exercise of eminent domain by a private corporation. See Backus v. Union Depot Co., supra, 169 U. S. 570, 18 S. Ct. 445, 42 L. Ed. 853.” Dohany v. Rogers, State Highway Commissioner of Michigan, et al., 281 U. S. 362, 50 S. Ct. 299, 302, 74 L. Ed. 904, 68 A. L. R. 434.

That the taking of the property under proper procedure before the actual payment of compensation is not of itself a violation of the “due process” clause has been repeatedly held, and we know of no authority to the contrary. McGibson v. County Court, supra; Keystone Bridge Co. v. Summers, supra; 20 Corpus Juris, 837; Backus v. Fort St. Union Depot Co., 169 U. S. 557, 18 S. Ct. 445, 42 L. Ed. 853; Bragg v. Weaver, 251 U. S. 57, 40 S. Ct. 62, 64 L. Ed. 135; Joslin Mfg. Co. v. City of Providence, 262 U. S. 668, 43 S. Ct. 684, 67 L. Ed. 1167; Dohany v. Rogers, 281 U. S. 362, 50 S. Ct. 299, 74 L. Ed. 904, 68 A. L. R. 434.

Of course, the payment of the award must be insured, and it is held that the full faith and credit of the political division involved' must be pledged to the payment. Sweet v. Rechel, 159 U. S. 401, 16 S. Ct. 43, 40 L. Ed. 188; 20 Corpus Juris, 651, 652.

Here it is contended that because, when the state road commission pays under the statute, it is to pay out of a certain fund, the road fund, the full faith and credit rule is not complied with. Here the road commission is proceeding under section 138 of chapter 6 of Acts of 1923, where the full faith and credit of the county is behind the taking and compensation is payable out of any or all the funds of the county.

There can be no doubt that under the West Virginia decisions the state road commission or the county court of Greenbrier county may by mandamus be compelled to comply with the statutes. McGibson v. County Court, 95 W. Va. 338, 121 S. E. 99.

This being true, there is no question in our minds but that the owner of the property taken under these statutes will have a complete remedy to secure the payment of compensation. We have confidence in the fact that the courts of the state would find not only a proper but a prompt method of enforcing the payment of compensation under these circumstances, should there be any attempt to evade it. The presumption is, of course, that there would be no such attempt at evasion. There can be no doubt as to the security of the property owner for the payment of compensation.

It is contended on behalf of the plaintiffs that the Legislature of West Virginia exceeded its power by attempting to' compel county courts to use county funds for rights of way for state highways. We are of the opinion that the Legislature has such power. Hutchinson v. County Court, 100 W. Va. 461, 130 S. E. 654; State ex rel. Sprague v. County Court, 93 W. Va. 481, 117 S. E. 135; 15 Corpus Juris, § 283; County of Mobile v. Kimball et al., 102 U. S. 691, 26 L. Ed. 238.

Federal courts do not interfere with the internal affairs of the several states, unless there is a plain necessity for such a course, and no such necessity here exists. On the contrary, while the proceeding authorized by the West Virginia statutes is a summary one in some respects, and should be used only with care and discretion, it is a perfectly proper and lawful one well within the power of the sovereign, the state. The presumption is in favor of the constitutionality of a state statute. The matter of the exercise of the power conferred by the statute is placed within the discretion of the body in charge of road building in the state, the road commission, and that body-is presumed, until the contrary is, conclusively shown, to have acted properly in the exercise of that discretion.

Questions have been raised as to the jurisdictional amount being involved, as to the diversity of citizenship of the parties, as to the right of the plaintiffs to maintain this suit, and as to the right of a federal court to pass upon a question of this character, but, in view of our conclusions as above stated, we do not consider it necessary to discuss them!

The injunction will be denied and the suit dismissed, but, as the restraining order, as issued originally, was properly issued and kept in effect until the county court of Green-brier county entered its nunc pro tune order on October 2? 1930, the costs up to that time will be paid by the defendants, all other costs to be paid by the plaintiffs.


author: SANBORN, District Judge.

text:
    In re CHICAGO, M., ST. P. & P. R. CO. et al. STATE OF MINNESOTA v. CHICAGO, M., ST. P. & P. R. CO. et al.
    District Court, D. Minnesota, Fourth Division.
    May 20, 1931.

      Neil M. Cronin, City Atty., and Norton M. Cross, both of Minneapolis, Minn., for City of Minneapolis.
    F. W. Root, C. 0. Newcomb, and A. C. Erdall, all of Minneapolis, Minn., for Chicago, M., St. P. & P. R. Co.
    O’Brien, Horn & Stringer, of St. Paul, Minn., for Chicago, R. I. & P. Ry. Co.
   SANBORN, District Judge.

The Chicago, Milwaukee, St. Paul & Pacific Railroad Company and the Chicago, Rock Island & Pacific Railway Company— which companies, for convenience, will be hereinafter referred to as the railroads — removed this proceeding to this court. Their petition, asserts that they are both citizens and residents of states other than Minnesota; that the state of Minnesota is a nominal party, designated as the complainant in the title because of the provisions of section 4651, Mason’s Minnesota Statutes 1927; that the suit in the state court wás commenced by the city of Minneapolis by an appeal from an order of the Railroad and Warehouse Commission, and that the city is the. real party in interest and the real complainant, and that the entire controversy is wholly between the city of Minneapolis- and the railroads ; that the proceeding is a suit of a civil nature, and that more than $3,000' is involved. Attached to the petition, aside from the bond on removal, are the findings and the order of the commission which is appealed from, the notice of appeal by the city, and certain exhibits.

The motion to remand is based upon many grounds, but there are actually two questions involved in the determination of this motion: (1) Is this a suit which may be removed from a state court to this court? (2) If it is such a suit, have the railroads a right to remove it?

While the past history of the controversy between the city of Minneapolis and the railroads has no direct bearing upon the questions involved, it is of assistance in understanding the exact situation with which the court is confronted.

The Chicago, Milwaukee, St. Paul & Pacific Railroad Company (hereinafter referred to as the Milwaukee) and the Chicago, Rock Island & Pacific Railway Company (hereinafter referred to as the Roek Island) operate their trains over, tracks belonging to the Milwaukee to and from the Milwaukee Depot in the city of Minneapolis and to and from the Rock Island freight house and yards not far distant from the depot. Many trains pass over these tracks each day, and the tracks themselves cross at grade many of the heavily traveled streets of the city. For many years there has been a demand on the part of the citizens of Minneapolis tljat the grade of the railway tracks and the grade of the streets here involved be separated. In 1913 the city passed an ordinance requiring the Milwaukee to separate the grades by depressing its tracks. It brought suit in this court to enjoin the enforcement of the ordinance. Its enforcement was enjoined by. Judge Booth. His decision is found in the ease of Chicago, M. & St. P. Ry. Co. v. City of Minneapolis et al. (D. C.) 238 F. 384. In 1921 the city passed another ordinance requiring the railroads to depress these tracks, and a suit was brought by them in this court to enjoin its enforcement. While that suit was pending, the Legislature enacted chapter 336,. Laws of Minnesota, 1925, which, among other things, provided: “The commission [Railroad and Warehouse Commission] may require any railroad company to construct overhead and maintain underground crossings and separate grades when, in its opinion, the interests and safety of the public require, and no overhead or underground crossing, nor separation of grade, shall be made except upon the petition therefor to the commission, and with the approval of the commission.”

The enactment of this statute was called to the attention of the court, and resulted in an injunction against the enforcement of the ordinance on the ground that the ordinance could not be enforced unless the method of grade separation provided by it was approved by the commission; the court retaining jurisdiction to modify its decree if the commission granted approval. In the prior proceedings in this court, the railroads have admitted that in the public interest there should be a separation of grades, but have contended that the separation should be brought about by the elevation of the railway tracks, while the city has always contended that the proper and reasonable method of separating the grades was to depress the tracks.

The recitals in the decision of the commission, which is attached to the petition for removal, show that on the 25th day of August, 1928, a verified petition was filed with it, requesting the separation of the grades by the elevation of the railroad tracks; that this petition was signed by not less than 116 residents and owners of property adjacent to the railroad right of way or in the immediate vicinity thereof in South Minneapolis, Minn.; that this petition directed the attention of the commission to the matter of _ grade separation, and that the commission proceeded, upon the petition as well as upon its own motion in the interest and safety of the public, to investigate and determine the matter; that the city of Minneapolis objected to the jurisdiction of the commission, and procured from the state district court of Hennepin county an order directed to the commission to show cause why it should not be restrained from proceeding; that on November 36,1928, that court denied the city an injunction, holding that chapter 336, Laws of 1925, gave to the commission jurisdiction of the matter in controversy before it; that on December 14, 1928, the city of Minneapolis again questioned the jurisdiction of the commission on the ground that neither the city nor the railroads were asking relief; that the railroads then filed answers to the petition, requesting grade separation by elevation and the apportionment of the cost incident thereto on such terms and conditions as might be just and equitable; that the matter finally came on for hearing on December 18, 1928; and that evidence to the extent of some four thousand pages of transcript and three hundred and soventy-four documentary exhibits was submitted. It appears that the city, while objecting to the jurisdiction of the commission, participated in the proceedings before it, and contended for grade separation by depression of the tracks. The commission reached the conclusion that the grades should be separated by elevating the tracks, and not by depressing them, and, aside from certain specific items of cost, provided that the expense should be borne two-thirds by the railroads and one-third by the city. It was from this order that the city appealed.

The proceedings before the commission were not judicial proceedings. The commission was acting in an administrative capacity. The controversy became a suit or a judicial proceeding, if at all, when the city appealed from the order of the commission. While the commission had a public duty to perform with respect to the question as to how the railroad and street grades should be separated, it had no pecuniary interest in the matter, And its function was to determine what method of grade separation it could approve and order, since, under the statute, its approval and order was required before the.railroads could be compelled to make any separation of grades. That it might have had the right to enforce its order, if valid, does not make it an indispensable party in a judicial proceeding attacking the validity of that order.

The state of Minnesota has no pecuniary interest in the controversy, and is in no sense a real party in interest. Reagan v. Farmers’ Loan & Trust Co., 154 U. S. 362, 14 S. Ct. 1047, 38 L. Ed. 1014; M., K. & T. Ry. Co. v. Missouri Railroad & Warehouse Commissioners, 183 U. S. 53, 22 S. Ct. 18, 46 L. Ed. 78; Ex parte Nebraska, 209 U. S. 436, 28 S. Ct. 581, 52 L. Ed. 876; United States v. Beebe, 127 U. S. 338, 8 S. Ct. 1083, 32 L. Ed. 121.

Section 4650, Mason’s Minnesota Statutes 1927, gave to tbe city the right of appeal. Section 4651 provides that, when an appeal is taken, the case shall be tried to the state district court “according to the rules relating to the trial of civil actions.” It further provides that “the complainant before the commission, if there was one (otherwise the State of Minnesota), shall be designated as complainant in the district court, and the carrier or warehousemen as defendant,” and that, if the court determines that the order appealed from is “lawful and reasonable,” it shall be affirmed, but, if it shall be determined that the order is “unlawful or unreasonable it shall be vacated and set aside.”

The court, on,an appeal from an order of the commission, examines the whole matter in controversy. It receives evidence to determine whether the findings of fact made by the commission can be sustained. It does not try the matter anew as an administrative body nor substitute its findings for those of the commission. The making of • regulations governing separation of grades is legislative or administrative, and not judicial. The question as to whether' the order requiring the separation and prescribing the method to be used is lawful and reasonable is a judicial question. The order of the commission may be vacated if contrary to law, if beyond the powers of the commission, if unsupported by the evidence, or if. so arbitrary as to indicate abuse of discretion and judgment. State v. Great Northern Ry. Co., 130 Minn. 57, 153 N. W. 247, Ann. Cas. 1917B, 1201.

A statute which attempts to give to the court administrative or legislative powers is unconstitutional. State v. Great Northern Ry. Co., supra; Steenerson v. Great Northern Ry. Co., 69 Minn. 353, 375, 72 N. W. 713; State v. Brill, 100 Minn. 499; 111 N. W. 294, 639, 10 Ann. Cas. 425; Duluth v. Railroad & Warehouse Commission, 167 Minn. 311, 209 N. W. 10.

The order of the commission is prima facie valid, and an appellant has the burden of proving its invalidity. Section 4651, Mason’s Minnesota Statutes 1927; State v. Great Northern Ry. Co., 130 Minn. 57, 153 N. W. 247, Ann. Cas. 1917B, 1201; State v. Great Northern Ry. Co., 135 Minn. 19, 159 N. W. 1089; State v. Northern Pacific Ry. Co., 176 Minn. 501, 233 N. W. 915; City of St. Paul v. Great Northern Ry. Co., 178 Minn. 193, 226 N. W. 470.

It is obvious that, on an appeal from an order of the commission, the court exercises a judicial 'function only, and that the question before the court is whether the commission’s order is lawful and reasonable.

In Weston v. City Council of Charleston, 2 Pet. 449, 464, 7 L. Ed. 481, Chief Justice Marshall gives the following definition of a suit: “The term is certainly a very comprehensive one, and is understood to apply to any proceeding in a court of justice, by which an individual pursues that remedy in a court of justice which the law affords him. The modes of proceeding may be various, but if a right is litigated between parties in a court of justice, the proceeding by which the decision of the court is sought is a suit.”

In Boom Co. v. Patterson, 98 U. S. 403, 407, 25 L. Ed. 206, Mr. Justice Field says: “And in Gaines v. Fuentes (92 U. S. 20 [23 L. Ed. 524], it was held that a controversy between citizens is involved in a suit whenever any property or claim of the parties, capable of pecuniary estimation, is the subject. of litigation and is presented by the pleadings for judicial determination.”

That this- proceeding became a civil suit when the city took its appeal is indicated by the following cases: Commissioners v. St. Louis Southwestern Ry. Co., 257 U. S. 547, 42 S. Ct. 250, 66 L. Ed. 364; In re Water Right of Utah Construction Co. (D. C.) 30 F.(2d) 436; In re Chicago, R. I. & P. Ry. Co. (D. C.) 28 F.(2d) 56; Boom Co. v. Patterson, 98 U. S. 403, 25 L. Ed. 206; Pacific Removal Cases, 115 U. S. 1, 5 S. Ct. 1113, 29 L. Ed. 319; Smith v. Douglas County (C. C. A.) 254 F. 244; Chicago, M. & St. P. Ry. Co. v. Spencer (D. C.) 283 F. 824; Chicago, M. & St. P. Ry. Co. v. Drainage Dist. (D. C.) 253 F. 491; State of Washington ex rel. Markham v. Seattle & R. V. Ry. Co. (D. C.) 2 F.(2d) 264; State of Washington ex rel. Markham v. Seattle & R. V. Ry. Co. (D. C.) 1 F.(2d) 605; State of Washington ex rel. Seattle v. Pacific Tel. & Tel. Co. (D. C.) 1 F.(2d) 327; In re The Jarnecke Ditch (C. C.) 69 F. 161; Weston v. Charleston, 2 Pet. 449; 7 L. Ed. 481; Gaines v. Fuentes, 92 U. S. 10, 23 L. Ed. 524.

Since this proceeding is a civil suit, it is removable under section 71, title 28, US CA, which, so far as we are concerned, provides that any suit of a civil, nature, at law or in equity, of which the District Courts of the United States are given jurisdiction, in any state court, may be removed into the District Court of the United States for the proper district by the defendant or defendants therein, being nonresidents of that state.

The more difficult question to determine is whether the city is plaintiff and the railroads defendants.

“In a determination of the jurisdiction of the national courts, and the right to remove causes of action to them, indispensable parties only should be considered, because all other parties may be dismissed and disregarded if their presence would oust or restrict the jurisdiction or the right. Geer v. Mathieson Alkali Works, 190 U. S. 428, 432, 23 S. Ct. 807, 47 L. Ed. 1122; Bacon v. Rives, 106 U. S. 99, 104, 1 S. Ct. 3, 27 L. Ed. 69; Wormley v. Wormley, 8 Wheat. 421, 451, 5 L. Ed. 651; Wood v. Davis, 18 How. 467, 475, 15 L. Ed. 460; Sioux City Terminal R. & W. Co. v. Trust Co. of North America, 82 F. 124, 126, 27 C. C. A. 73, 75.

“The positions assigned to parties in a suit by the pleader are immaterial in determining the removability of a cause. It is the duty of the national court to ascertain the real matter in dispute, to arrange the parties on opposite sides of it aeeording to the facts and their respective interests, and then to determine whether or not a controversy exists between citizens of different states which invokes the jurisdiction of that court. Removal Cases, 100 U. S. 457, 460, 25 L. Ed. 593; Pacific Ry. Co. v. Ketchum, 101 U. S. 289, 298, 25 L. Ed. 932; Harter v. Kernochan, 103 U. S. 562, 566, 567, 26 L. Ed. 411; Evers v. Watson, 156 U. S. 527, 532, 15 S. Ct. 430, 39 L. Ed. 520; Black's Dillon on Removal of Causes, § 90.” Boatmen’s Bank v. Fritzlen (C. C. A.) 135 F. 650, 658.

That the actual controversy here is between the city and the railroads is reasonably clear. The city has continuously asserted its right to have the separation of grades provided for in the ordinance of 1921, and, except for the passage of chapter 336, which gave the commission jurisdiction of the matter, it would have enforced that ordinance unless enjoined. The city was not the aggressor in the proceedings before the Railroad and Warehouse Commission. It did riot initiate those proceedings, but objected to the jurisdiction of the commission to order a separation of grades. It did present its evidence to the commission and its contentions that the separation should be made by the ordinance method. When the city appealed, it initiated a civil suit, and questioned the validity and reasonableness of the order of the commission, and required the: railroads to defend that order. It sought to take away the rights' which the order would have given them if left undisturbed. The city assumed the burden of establishing the invalidity of the order. The mere'fact that a party appeals from the order of an administrative and nonjudicial body does not constitute that party a plaintiff.

In the case of Mason City & Ft. D. R. R. Co. v. Boynton, 204 U. S. 570, 27 S. Ct. 321, 51 L. Ed. 629, which involved a condemnation proceeding, Boynton, who had appealed from the award, was nominally the plaintiff. The Supreme Court held that he was, as a matter of fact, the defendant. On page 579 of 204 U. S., 27 S. Ct. 321, 323, the court Said: “But this court must construe the act of Congress regarding removal. And it is obvious that the word 'defendant’ as there used is directed toward more important matters than the burden of proof or the right to open and close. It is quite conceivable that a state enactment might reverse the names which, for the purposes of removal, this court might think the proper ones to be applied. In condemnation proceedings the words 'plaintiff’ and 'defendant’ can be used only in an uncommon and liberal sense. The plaintiff complains of nothing. The defendant denies no past or threatened wrong. • Both parties are ae-tors; one to acquire title, the other to get as large pay as he can. * * * The intent of the railroad to get the land is the •mainspring of the proceedings from beginning to end, and the persistence of that intent is the condition of their effect.”

In condemnation proceedings, it is, of course, apparent that before appeal and after appeal the entire purpose is to acquire the lands sought to be condemned. The owners are on the defensive. In this proceeding the thing which' is ultimately sought is the separation of grades. The city seeks to have them separated in a'certain way. It is obviously the party most interested in securing the separation.

It is not a fact that the railroads were attempting to force a separation of grades upon the city. They complain of nothing, arid would be satisfied, no doubt, to leave the grades of their tracks and the city streets as they now are. The city complains of the grade crossings, and complains of the method of grade separation advocated by tbe railroads and now ordered by the commission. Before the commission, the city and the railroads were on a parity. Each admitted the desirability of a separation of the grades, but there was a controversy between them as to the method. Had the Legislature of Minnesota, instead of giving jurisdiction to the commission to pass upon the question of grade separation, undertaken to fix the method by statute, and had the city then sought to enjoin the railroads from complying with the statute on the ground that it was invalid, the city clearly would have been the plaintiff and the railroads the defendants. In principle, the relation of the parties to each other in this proceeding would appear to be analogous. The city attacks an order made by the commission under authority of a legislative act. As a practical matter, the intent of the city to secure the separation of the grades by the method which it has at all times contended for is the mainspring of this proceeding, and, when it took its appeal from the order of the commission, and thereby instituted a civil suit, it put the railroads in a position which entitled them to remove that suit to this court. Having jurisdiction of this proceeding, this court is bound to retain it. It is without power to remand the case. Even if the question of re-movability is doubtful, it is the duty of the court to deny the motion to remand. Boatmen’s Bank v. Eritzlen, supra.

The motion to remand is denied.