text:
    ANDERSON v. UNITED STATES.
    No. 5923.
    Circuit Court of Appeals, Fifth Circuit.
    April 10, 1931.
    Harry C. Weeks, of Wichita Falls, Tex. (Weeks, Morrow, Francis & Hankerson, of Wichita Falls, Tex., oil the brief), for appellant.
    Norman A. Dodge, U. S. Atty., of Fort Worth, Tex., and Wright. Matthews, Sp. Atty. Bureau of Internal Revenue, and C. M. Gharest, Gen. Counsel, Bureau of Internal Revenue, both of Washington, D. C., for the United States.
    Before BRYAN and FOSTER, Circuit Judges, and DAWKINS, District Judge.
   FOSTER, Circuit Judge.

Appellant brought suit to recover certain income taxes, paid under protest, amounting-' to about $2,500, and appeals from an adverse judgment. There is no dispute as to the material facts, which may be briefly stated as follows:

In 1919’ plaintiff closed out an insurance business, conducted by the partnership of Anderson & Patterson of which he was a member, and retired with a considerable amount of money, how much is not shown. He became interested in the Lone Star Stone Company, a corporation engaged in supplying crushed stone suitable for road building. The- Lone Star Company did not prosper. Appellant made loans to it of about $25,000, and paid, interest for the company amounting to over $3,700. A receiver was appointed to the Lone Star Company and appellant advanced the receiver $7,300. Later on he became a'member of a partnership known as the Chico Stone Company which took over the business of the Lone Star Company. This venture also proved unprofitable, and appellant lost about $8,200. The total losses on appellant’s vehture into crushed stone Wefe: approximately $80,000. In making his returns for 1923' these losses were deducted, with the result that there was no taxable income. He then sought to carry over these losses into the returns for the years 1924 and 1925 as net losses, so that his returns for those years also showed no taxable income.. After an audit of his books, the Commissioner determined taxable income for the year 1924 of $2,157.62 and for 1925 of $424-48.

Section 204 (a) of the Revenue Aet of 1921 (42 Stat. 231) defines net losses that may be deducted in the two subsequent years as “only net losses resulting from the operation of any- trade or business regularly carried on by the taxpayer.” This definition is adopted by the Revenue Aet of 1924 and subsequent. acts.

■ It is apparent that the net loss sought to be deducted by appellant did not result from the operation of any trade or business regularly carried on by him. It is evident that Congress intended to give relief to persons engaged in an established business for losses incurred during a year of depression in order to equalize taxation in the two succeeding more profitable years. It was not intended to apply to isolated or occasional losses such as here shown. Why the same privilege was not accorded to all taxpayers is a matter that addresses itself to Congress and not to the courts. The definition cannot be stretched to cover the ease before us. Appeal of Harrington, 1 B. T. A. 11; Rogers v. U. S. (Ct. Cl.) 41 F.(2d) 865; Lederer v. Cadwalader (C. C. A.) 274 F. 753, 18 A. L. R. 411; Woods v. Lewellyn (D. C.) 289 F. 498.

In making out his returns no attempt was made to separate income and losses between appellant and his wife, and only one return was made. However, in filling out a questionnaire incorporated in the return, in answer to the question, “Is this a joint return of husband and wife?” he answered, “No,” and to the question, “Were you married and living with husband or wife on the last day of your taxable year?” he answered, “Yes.” Based on this, appellant contends that the tax liability should have been computed separately as to himself and his wife by virtue of the community laws of Texas.

Section 223 (b) of the Revenue Aet of 1924 (26 USCA § 964) provides that a husband and wife living together may each make a return or tiie income of each may be included in a single joint return, in which case the tax shall be computed on the aggregate income. The questions and answers could not control the character of the returns, which were in the form of a single return, signed by himself and not by his wife. Appellant having elected to make a joint return, the Commissioner was under no obligation to change it and divide it into two separate returns. The mere fact that it was disclosed that appellant was living with his wife in a community property state was not sufficient data upon which to divide the return equally. For all the Commissioner knew, the income might have' been largely the separate income of the husband or wife or not community income at all. The contention is untenable. Rose v. Grant (C. C. A.) 39 F.(2d) 340; Morris v. Commissioner (C. C. A.) 40 F.(2d) 504; Buttolph v. Commissioner (C. C. A.) 29 F.(2d) 695.

Appellant has failed to sustain the burden of overcoming the prima faeie correctness of the .Commissioner’s determination. Avery v. Commissioner (C. C. A.) 22 F.(2d) 6, 55 A. L. R. 1277.

The record presents no reversible error.

Affirmed.


source: Caselaw Access Project

author: RUDKIN, Circuit Judge.

license: Public Domain

text:
    UNITED STATES v. RILEY.
    No. 6289.
    Circuit Court of Appeals, Ninth Circuit.
    March 16, 1931.
    Geo. J. Hatfield, U. S. Atty., and Albert C. Wollenberg, Asst. U. S. Atty., both of San Francisco, Cal.
    Frederic C. Benner and Alvin Gerlack, both of San Francisco, Cal., for appellee.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
   RUDKIN, Circuit Judge.

This is an appeal from a judgment in favor of the plaintiff in an action on a policy of war risk insurance. William Riley enlisted in the military service of the United States March 29, 1919, and applied for and was granted the usual policy of war risk insurance in the isum of $5,000. He was discharged from the army May 20, 1922, and died March'lé, 1929. The present action was brought on the policy by his widow in her own right and as administratrix of his estate. It was stipulated on the trial that the policy was in full £orce and effect on November 1, 1921, and the sufficiency of the testimony to support a finding of total and permanent disability on or prior to that date is the only question presented for our consideration.

The testimony on the part of the appellee tended to show that the deceased, from a date prior to November 1, 1921, and up to the time of his death, was considerably underweight; weak; pale and sickly in color; tired easily; coughed every day, raising much sputum streaked with blood; and had night sweats. The testimony further tends to show that from the time of his discharge to the time of his death, a period of seven years, Riley attempted to hold several jobs, but was actually employed not to exceed two months during that entire period, and was unable to work continuously. He was supported by his wife and by money borrowed from friends. A doctor who examined him in March, 1924, testified that he had tuberculosis of the lungs, active, fairly well advanced j thát he was then totally disabled; and that, there was a possibility, but not a proba-, bility, of his recovery. The death of Riley from tuberculosis some years later, without any apparent change in his condition in-the-meantime, would seem to demonstrate th© correctness of this prognosis. Riley was again examined in May, 1926, by another-doctor, whose finding and'piognósis was practically the same. The foregoing testimony was sufficient to carry the case to the jury, conceding . that there was other testimony which would warrant a different finding. Iii other words, the jury, was warranted in finding that there was such impairment of body as rendered it impossible for Riley to follow continuously any substantially gainful occupation and that it was reasonably certain that the disability would continue throughout his life.

There was admitted -in evidence a rating sheet from the Veterans’ Bureau which set forth the. disability rating of the insured for purposes of compensation. According to this rating sheet, the disability was less than 10 per cent, from the date of discharge until November 7, 1924; temporary, partial, 75 per cent.' from November 7, 1924, to May 28, 1926; and permanent,'total, from August 6,1926, under Regulation 73. The government contends that this rating proves conclusively that the insured ’ was not. permanently and totally disabled at any time prior' to August 6, 1926. It is questionable, at least, whether a disability rating for com-' pensation is competent evidence for any purpose in ah action on a war risk insurance policy. United States v. Golden (C. C. A.) 34 F.(2d) 367; Runkle v. United States (C. C. A.) 42 F.(2d) 804. But, however this may be, the rating schedule is only evidence at best, and is not conclusive, because if it were there could never be a recovery on a war risk insurance policy provided the bureau had fixed a rating at less than total permanent disability at any time after the policy was permitted to lapse for nonpayment of premiums.

There is no error in the record, and the judgment is affirmed.


author: CHASE, Circuit Judge.

text:
    UNITED STATES ex rel. WONG SAI CHAAM v. COMMISSIONER OF IMMIGRATION AT PORT OF NEW YORK.
    No. 260.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.
    James C. Thomas, of New York City, for appellant.
    Robert E. Manley, Acting U. S. Atty., of New York City (Ernest Lappano, Asst. U. S. Atty., of New York City, of counsel), for appellee.
    Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   CHASE, Circuit Judge.

The appellant applied for admission as a minor son of a Chinese merchant domiciled in the United States. It is conceded that he is the minor son of Wong Sai Chaam, a resident of New York, and the sole issue now is the mercantile status of the father.

Wong Sai Chaam entered this country at Seattle on May 25, 1922, as a merchant. Until January 30, 1929, he was a member of the Sun Ligh Jewelry Company, 11 Pell street, New York, N. Y., and his mercantile status as of that time is conceded. He sent to China for his son, the appellant, but, ber fore the son arrived and applied for admission, the Sun Ligh Jewelry Company in December, 1929, became bankrupt, ceased to do business, and Wong Sai Chaam became connected with the Quong Jue Restaurant at 2143 Seventh avenue, New York, N. Y., on or about January 1, 1930. He claimed, and introduced evidence to prove, that he was the manager of the restaurant. There was evidence that a man named Wong Suen managed that restaurant and two others under the same ownership, and the Board of Review, failing to find that Wong Sai Chaam was the manager, dismissed the appeal from the Board of Special Inquiry on the ground that “there has not been a reasonable showing that the alleged father is a merchant at this time or has been a merchant since the failure of the jewelry concern.”

It was proved that Wong Sai Chaam had purchased a $500 interest in the Quong Jue Restaurant, a partnership business, while he was with the Sun Ligh Jewelry Company, and that he had held such interest ever since he acquired it; that his interest appeared in his name on the books of the partnership; that he performed no manual labor, did not cook or act as a waiter, but did often act as a cashier when the cashier was absent. He bought the Chinese groceries, and, even though he failed .to establish the fact that he was the manager of the restaurant, it is plain that he did nothing which would not ordinarily be done by the manager. He was paid a salary of $120 a month.

Our decision need not require any review to determine whether or not the appellant was accorded a fair hearing. It is dependent rather upon whether the conclusion that Wong Sai Chaam was not proved to be a merchant is based on a proper construction of law. The question presented is whether he ceased to be a merchant on account of his employment in the restaurant in the manner above stated in January, 1930. As the manager of the restaurant he would have been a merchant. Weedin v. Wong Jun (C. C. A.) 7 F.(2d) 311. After alluding to the different views which have been entertained regarding the status of a restaurant keeper, it was held in the above case that he was a merchant within the meaning of the Chinese Exclusion Act (8 USCA § 289). We have already held that the proprietor of .a restaurant is a merchant. United States v. Lee Chee, 224 F. 447 (C. C. A. 2).

In reaching the conclusion that Wong Sai Chaam was not a merchant, too much emphasis seems to have been placed on the failure to prove him to be the manager of the restaurant and not enough on the fact that he was one of the proprietors owning a real interest in the business standing in his name as shown by the partnership books. It follows from U. S. v. Lee Chee, supra, and Weedin v. Wong Jun, supra, that a restaurant is a mercantile business. Since Wong Sai Chaam owned an interest in this business in his own name and performed no manual labor, or certainly none not necessary to the conduct of the restaurant, he was a merchant. Lee Kan v. United States (C. C. A.) 62 F. 914; Tom Hong v. United States, 193 U. S. 517, 24 S. Ct. 517, 48 L. Ed. 772. Under these circumstances, it was enough to show him to be a part owner of the business and quite unnecessary to prove that he was also the manager. Thus the appellant has established his right to admission as the minor son of a domiciled merchant.

Orders reversed and appellant discharged.


text:
    COMMISSIONER OF INTERNAL REVENUE v. GONG BELL MFG. CO.
    No. 141.
    Circuit Court of Appeals, Second Circuit.
    March 9, 1931.
    G. A. Youngquist, Asst. Atty. Gen., Sewall Key, and John MacC. Hudson, Sp. Assts. to Atty. Gen., and C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Percy S. Crewe, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., for petitioner.
    Mark Eisner and Ferdinand Tannenbauro, both of New York City, for respondent.
    Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   CHASE, Circuit Judge.

The decision on this petition depends solely upon whether the respondent was affiliated, under section 240 (e) of the Revenue Act of 1921, c. 136, 42 Stat. 227, 260, during the calendar year 1921, with Bevin Bros. Manufacturing Company, East Hampton Bell Company, and Bevin Wilcox Line Company. The respondent is a corporation engaged in the manufacture of toys and bells. Bevin Bros. Manufacturing Company is a corporation engaged in the manufacture of bells. East Hampton Bell Company is a corporation which manufactures bells and trolley wheels. Bevin Wilcox Line Company is a corporation manufacturing fishline. Each of these corporations has its principal place of business at East Hampton, Conn. The petitioner determined the income and profits taxes for 1921 of all of them, but the respondent, npqn the basis of a consolidated return for affiliated corporations. The Board of Tax Appeals held the respondent to be affiliated with the others, entitled to be taxed on a consolidated return with them, and redetermined the taxes accordingly.

Beyin Bros. Manufacturing Company owned all of the capital stoek of both the East Hampton Bell Company and the Bevin Wilcox Line Company. The stock in Bevin Bros.' Manufacturing Company was owned by five stockholders, as follows: Chauncey G. Bevin, 54.86 per cent.; Mayo S. Purple, 7.70 per-cent.; A. Avery Bevin, 33.78 per cent.; Stanley Bevin 1.83 per cent.; Marshall Bevin, 1.83 per cent. The stock of the respondent was owned by six stockholders as follows: Chauncey G. Bevin, 17.5 per cent.; Mayo S. Purple, 25.0 per eent.; Alice C. Bevin, 7.5 per cent.; Grace C. Bevin, 10..0 per cent.; J. H. Conklin, 28.0 per cent.; C. M. Watrous, 12.0 per cent. Thus it is seen that these two corporations had only two stockholders in common, Chauncey G. Bevin and Mayo S. Purple, who together owned 62.58 per cent, of the stock of Bevin Bros. Manufacturing Company and 42.5 per cent, of the stock of the respondent.

It appeared that Chauncey G. Bevin dominated all four corporations with the entire acquiescence and approval of all the other stockholders. He managed the entire business of each corporation as if it were his own, and nothing he did was ever questioned. In this way he had control of the four corporations based upon stockholders’ acquiescence, friendship, and kinship, and, if that is the kind of control meant by section 240 (c) of the Revenue Act of 1921 (42 Stat. 260), the decision of the Board is correct.

As we recently pointed out at some length in Handy & Harman v. Commissioner, 47 F.(2d) 184, there is a difference of opinion as to this question. It will serve no good purpose in advance of decision by controlling authority to discuss it anew now. We have adopted the view that the kind of control necessary for affiliation under section 240 (c) is the legally enforceable right to control the requisite amount of stock. Handy & Harman v. Commissioner, supra; Commissioner v. Adolph Hirsch & Co. (C. C. A.) 30 F.(2d) 645; Ice Service Co. v. Commissioner (C. C. A.) 30 F.(2d) 230.

Neither C. G. Bevin alone or with M. S. Purple, the only other person who owned any stock in both corporations, had enough stoek in either corporation to control it by virtue of any legally enforceable right to control the stock. Neither is shown to have had such right to control any stoek not standing in his own name. Therefore, it makes no difference whether Bevin and Purple or Bevin alone be taken to be the same interest. In neither event could that interest control both corporations except at the sufferance of the other stockholders.

The order is reversed, with directions to assess the tax in accordance with this opinion.


author: SWAN, Circuit Judge.

text:
    MULHENS & KROPFF, Inc., v. FERD. MUELHENS, Inc.
    Circuit Court of Appeals, Second Circuit.
    March 16, 1931.
    Katz & Sommerich, of New York City, for the motion.
    Manvel Whittemore, Lucius E. Varney, and Harold Harper, all of New York City, opposed.
    Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   SWAN, Circuit Judge.

The mandate of this court issued during the present term. No action has yet been taken under it because a dispute has arisen between the parties concerning the decree to be entered, and the District Court is in doubt as to what the mandate, in the light of our opinion, directs. Under these. circumstances the present motion is an appropriate procedure. We may either recall and amend the mandate, as was done in Sutherland v. Norris, 33 F.(2d) 899 (C. C. A. 3), or we may deny the motion with an expression of our views for the guidance of the District Court, as we did in Claude Neon Lights v. E. Machlett & Son, 31 F.(2d) 991. In the present ease we adopt the latter course, as we think the mandate is adequate without amendment.

The dispute is whether an injunction shall be denied only as to eau de cologne, the one article advertised as made under a seeret recipe, or whether denial of the injunction shall extend to all articles in fact made under seeret recipes, even though no express representations to that effect had been made to the public. The latter is the view we intended to express in our opinion. Ambiguity has arisen because our opinion stressed the plaintiff’s concession that long-continued representa^ tions with respect to the formula of 4711 cologne had impressed upon the mark the secondary meaning of manufacture under a seeret recipe. But the basis of our decision was intended to be expressed in the subsequent statement that assignment of the recipe is essential to give the assignee the exclusive right to a mark which denotes a produet manufactured thereunder. • Where a business has been built up on the sale of a product made according to a seeret formula, the trade-mark denotes a product so made. None of the eases upon which we relied as showing that an assignee could not be protected in such a mark unless he had the secret formula indicates that the rule is applicable only when express representations had been made with respect to the use of the formula.

The decree appealed from found that plaintiff’s predecessor, the firm of Mulhens & Kropff, had applied the trade-mark to three articles “manufactured according to recipes owned solely by the House of Muelhens.” There was no finding whether other articles involved in the litigation were made under secret recipes or not. In proceeding under the mandate, the court should determine which of the articles in litigation were so manufactured, irrespective of whether they were advertised as containing seeret essences, and the injunction should be denied as to such articles as contain essences manufactured in accordance with secret recipes owned solely by the House of Muelhens, and should be granted as to the others. Apparently there may arise a controversy whether the skillful selection of known ingredients will. constitute manufacture of an essence under a seeret recipe. That question, should it arise, will be for the District Court to determine, and is not now before us.

Motion denied.


author: BRYAN, Circuit Judge.

text:
    COLLIN COUNTY NAT. BANK v. COMMISSIONER OF INTERNAL REVENUE.
    No. 5816.
    Circuit Court of Appeals, Fifth Circuit.
    March 31, 1931.
    J. M. McMillin, of Dallas, Tex., and William R. Abernathy, of McKinney, Tex., for petitioner.
    G. A. Youngquist, Asst. Atty. Gen., J. P. Jackson and J. Louis Monarch, Sp. Assts. to Atty. Gen., and C. M. Charest, Gen. Counsel Bureau Internal Revenue, and J. S. Franklin, Sp. Atty. Bureau Internal Revenue, both of Washington, D. C., for respondent.
    Before BRYAN and FOSTER, Circuit Judges, and HUTCHESON, District Judge.
   BRYAN, Circuit Judge.

This is a petition to review a decision of the Board of Tax Appeals which disallowed deductions claimed by the 'petitioning bank from its income tax return for the calendar year 1920. The facts are fully stated in the Board’s opinion, 14 B. T! A. 1256, and need not be repeated here at any length.- The bank charged off as losses or bad debts two items, one of $30,000 on October 5, and the other of $56,000 at the end of the year, or in all $86,000 in round numbers. The bank complains in its assignments of error that it was not allowed a deduction of $65,000, made up of $54.000 advanced for the business expenses and $11,000 advanced for the living expenses of its customer Dowell. • The Board held that these advances for business and living expenses were intended by Dowell and the bank to be secured by the cotton which was held as collateral. And the evidence amply sustains this finding of fact. There was but a single account kept which was charged with all checks dr,awn by Dowell, and credited with any profits from sales of cottom. The amounts charged off by the bank in October and December were lump sums which in the aggregate were in excess of the so-called unsecured items.

We aecept these findings of fact by the Board as being correct, and as showing that it was the intention of Dowell and the bank that all advances should be made on the faith of the security held by the bank. Their intention governs, since the rights of third parties are not involved. Armstrong v. Chemical National Bank (C. C.) 41 F. 234; Knight v. Seney, 211 Ill. App. 324; 3 R. C. L. 517. We have then only one account for the payment of all of which the bank held collateral security. Appellant claims the right to make a deduction from its income under section 234 (a) (4) and (5) of the Revenue Act of 1918, 40 Stat. 1077, 1078. That section provides:

“(a) That in computing the net income of a corporation subject to the tax imposed by section 230 there shall be allowed as deductions : * * *
“(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise;
“(5) Debts ascertained to be worthless and charged off within the taxable year.”

The bank had on hand 1,300 bales of cotton which had not been sold during the taxable year. No loss could be sustained until a sale of the cotton was made, and -so the amount in dispute cannot be treated as a loss. United States v. White Dental Co., 274 U. S. 398, 47 S. Ct. 598, 71 L. Ed. 1120; Lewellyn v. Electric Reduction Co., 275 U. S. 243, 48 S. Ct. 63, 72 L. Ed. 262. The debt was not worthless. It was secured by the cotton and was worth at least as much as the cotton was worth. The bank arbitrarily charged off $86,-000, and hence it is clear that it was attempting to claim eredit as a deduction for more than Dowell’s business and personal expenses. Therefore it would seem that no definite part of the debt had been ascertained to be worthless. The Revenue Act of 1918, unlike later revenue acts, does not in terms authorize the deduction as worthless of a part of a debt, and it has been held that no deduction is permissible under it unless the whole debt has been ascertained to be worthless. Minnehaha National Bank v. Commissioner (C. C. A.) 28 F.(2d) 763. We think that decision finds some support in United States v. White Dental Co., and Lewellyn v. Electric Reduction Co., supra. The bank relies on Sherman & Bryan v. Blair (C. C. A.) 35 F.(2d) 713, and Davidson Grocery Co. v. Lucas, 37 F.(2d) 806, 59 App. D. C. 176, as- decisions holding the contrary view; but the first of these two cases left the point undecided, though it is relied on as authority in the second ease. Under the evidence in the instant case each and every part of the debt was equally secured by 1,300 bales of cotton of considerable value; and so it was not ascertained, and could not have been, that any particular part of the debt was worthless.

The petition is denied.


author: DAWKINS, District Judge.

text:
    CRUMP v. RODGERS.
    No. 5968.
    Circuit Court of Appeals, Fifth Circuit.
    March 23, 1931.
    J. Q. Mahaffey, of Texarkana, Tex. ( Jno. J. King, J. I. Wheeler, and C. E. Bryson, all of Texarkana, Tex., on the brief), for appellant.
    L. E. Keeney, of Texarkana, Tex. (Rollin W. Rodgers, Sr., N. L. Dalby, and Rollin W. Rodgers, Jr., all of Texarkana, Tex., on the brief), for appellee.
    Before BRYAN and FOSTER, Circuit Judges, and DAWKINS, District Judge.
   DAWKINS, District Judge.

The banking commissioners of the state of Texas obtained two judgments against the independent executrix of the estate of N. A. Shaw, deceased, aggregating $13,749.99, with interest and costs. The appellant acquired said judgments for the sum of $5,000, and collected a portion thereof by execution upon property of the estate. He thereafter seized, sold, and bought in the lands in controversy here on the 11th of June, 1926. This action was then commenced in the state court for Bowie county, Tex., whieh was removed to the court below. The petition alleged that on December 31, 1924, the executrix, with the intent to hinder and delay the collection of .plaintiff’s claim, had fraudulently conveyed to the defendant, Rodgers, about two hundred acres of land belonging to the deceased, for the recited consideration of $5,000, in the settlement of fees as attorney for said estate; that at the time of the attempted conveyance said property was worth at least $10,000; and that the fee claimed was grossly excessive. Plaintiff prayed that the said deed be annulled as a cloud upon his title and for rents.

Defendant admitted that the property had been conveyed to him at a fixed value of $5,000, in settlement of attorney’s fees for valuable services rendered to the estate, but averred that it was not worth in excess of $3,500; that said fee was a privileged claim upon the property of the estate and the executrix had full authority under the law to make the conveyance.

As found by the court below, we think the record fails to show the slightest element of fraud, or that the property was worth more than the amount for which it was conveyed in settlement of the fee. The sole question, as we see it, is as to whether the relation between the executrix and the law firm which represented her, of whieh defendant was a member, was such as to render illegal the transfer of the land in payment. The estate inventoried more than $100,000 of assets. The attorneys, in addition to handling the routine matters of probating the will, qualifying the executrix, etc., had considerable difficulty in ascertaining the extent of the properties owned by the deceased, being compelled to engage outside help for that purpose; they spent considerable time in making arrangements to cultivate the land; some thirty to forty days were consumed in examining the law in matters affecting the estate; numerous trips were made to the farms, requiring one to three days at a time; they defended a suit in which the estate, as well as a member of the law firm were defendants, which entailed much labor; the extent of the indebtedness of the estate was very uncertain, and a good deal of time was required to work it out and determine what claims were just; they had to arrange for the renewal of two loans of $20,000 and $35,000, respectively, and collected debts amounting to more than $46,000, whieh they disbursed in settlement of the estate.

There is no doubt but that the executrix had the right to employ counsel and pay them a reasonable fee for their services. The defendant contends that this could not be done by conveying the property, for the reason that the relation between her and the attorneys was in its nature a joint trusteeship and prevented the transaction between them. Like the court below, we are unable to see anything in the case other than an agreement between attorney and client. There was no cash with which to pay the fee, and, if property had been sold for this purpose, it would have entailed a greater sacrifice, to the detriment of the creditors.

Of course the courts will scrutinize closely matters of this kind, but we find nothing herein to justify a reversal of the judgment of the lower court. See McDonald v. Hamblen, 78 Tex. 628, 14 S. W. 1042; Ewing v. Schultz (Tex. Civ. App.) 220 S. W. 625; Schramm v. Hoch (Tex. Civ. App.) 241 S. W. 1087.

The judgment appealed from is therefore affirmed.

Affirmed.


text:
    SLAUGHTER v. C. C. SLAUGHTER CO. et al.
    No. 6027.
    Circuit Court of Appeals, Fifth Circuit.
    March 31, 1931.
    Rehearing Denied April 25, 1931.
    D. B. Chapin, of Gladewater, Tex., for appellant.
    Albert S. Rollins, J. Hart Willis, and John W. Pope, all of Dallas, Tex., for appellees.
    Before BRYAN and FOSTER, Circuit Judges, and HUTCHESON, District Judge.
   BRYAN, Circuit Judge.

Appellant filed a bill in the federal District Court to have declared void certain orders theretofore entered therein in bankruptcy, and also certain proceedings in the appellate courts of Texas which resulted in ,a reversal of a judgment in favor of her husband against C. C. Slaughter Company and others rendered by the district court of Palo Pinto county. The bill prayed in the alternative that an injunction entered in the bankruptcy proceedings, restraining her from entering upon a retrial of the case in the state court, be vacated and set aside. On motion of appellees, the bill was dismissed on the ground that the subject-matter thereof was res judicata. The bill'shows that in 1918 W. B. Slaughter was adjudged a bankrupt on an involuntary petition, on the ground that, while insolvent, he permitted a creditor to obtain a preference through a judgment which was not vacated or discharged, but which was satisfied by a sale of some of his property. Slaughter appeared in the bankruptcy proceeding, filed a schedule of his property, and was granted a discharge. His trustee in bankruptcy filed a suit against C. C. Slaughter Company and G. G. Wright, to whom before bankruptcy he had conveyed all his property. The object of the trustee’s suit was to recover that property for the benefit of the bankrupt estate. A Compromise settlement was made under which the defendants kept the property sued for, but paid $85,000 to the trustee. That settlement was approved and confirmed by the court in a final judgment entered in March, 1919. In 1924 W. B. Slaughter sued the C. C. Slaughter Company and Wright in the district court of Palo Pinto county, to' recover the same property that had been awarded to them in 1919 by the judgment in the bankruptcy court. He obtained judgment in the state trial court for the recovery of the property and some $30,000 damages; but this judgment was reversed by the Court of Civil Appeals. Slaughter v. Slaughter, 276 S. W. 724; 284 S. W. 350; 288 S. W. 1107. Writs of mandamus and prohibition were denied by the Supreme Court. 118 Tex. 601, 17 S.W. (2d) 763. After the suit in the state court had been reversed, and to prevent a retrial of it, appellees filed a supplemental bill in the bankruptcy court to enforce the decree of March, 1919, and for an injunction. A temporary restraining order was issued. W. B. Slaughter having died, the appellant, his widow and executrix, was substituted as a party in his place, and on January 14, 1930, a final decree was entered granting a permanent injunction restraining her from prosecuting further the suit in the state court.

It seems to be the contention of appellant that the .proceedings in the bankruptcy court and in the appellate courts of Texas were all void, because appellant was denied due process of law. There cannot possibly be any merit in that contention under the allegations of the bill; and so we pass it by without further comment, and treat the bill as an application to vacate the injunction issued in January, 1930, and to grant appellant the relief which she sought in the state court. The court below had the power to protect its own previous decree and in doing so to grant the injunction prayed for in the supplemental bill. Swift v. Black Panther Oil & Gas Co. (C. C. A.) 244 F. 20; Wilson v. Alexander (C. C. A.) 276 F. 875. Appellant was a party defendant to the supplemental bill and filed a counterclaim in which she sought, or could have sought, all the relief she now prays for. The decree entered upon the supplemental bill was a final decree, and any errors contained in it could and should have been presented for review by a direct appeal. Appellant cannot be permitted to substitute for an appeal an independent suit and thereby litigate anew questions which have been finally decided. If the rule were otherwise, there never would be an end of litigation or such a thing as the final decision of a ease.

The decree dismissing the bill of complaint is affirmed.


author: PER CURIAM.

text:
    McINTYRE v. TEXAS CO. (two cases).
    Nos. 240, 298.
    Circuit Court of Appeals, Second Circuit.
    March 16, 1931.
    C. B. Dunham, of New York City, for appellant.
    Lucien V. Axtell, of New York City (Elizabeth Robinson, of New York City, of counsel), for appellee.
    Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   PER CURIAM.

Appellee has had a judgment below entered upon a jury’s verdict for personal injuries. A motion is made to strike out the bill of exceptions as not having been settled and filed within the time prescribed by the rule. It appears that the District Judge stated that he had made an order within the time extending the time to settle and file the bill of exceptions, and that such order was mislaid. It was not found on file in the District Court clerk’s office. With this information, and the statement thereof recited, an order was entered nunc pro tunc settling the bill of exceptions and ordering it filed. This statement having been made by the trial judge is sufficient, and an order nune pro tunc was properly entered as a substitute for the order which was mislaid. In re Wight, 134 U. S. 136, 10 S. Ct. 487, 33 L. Ed. 865. An order nune pro tune could not have been lawfully entered if an order had not been made originally extending the time. Gagnon v. U. S., 193 U. S. 451, 24 S. Ct. 510, 48 L. Ed. 745.

Upon an examination of the reeord thus before us, it is clear that no substantial error requiring a reversal of the judgment was made. Issues of fact were presented for the jury’s determination, and the verdict for the plaintiff won the approval of the trial judge, who denied the motion to set the verdict aside. The judgment entered thereon is affirmed.

An application was made for a new trial on newly discovered evidence. The court below in a satisfactory opinion, examined the evidence submitted by affidavits and held that the appellant not only was not vigilant in presenting it, but, upon an examination thereof, ifc was insufficient to warrant a new trial. The exercise of that discretion against the appellant is not reviewable. Miller v. Maryland Casualty Co., 40 F.(2d) 463 (C. C. A. 2). The appeal from such order is therefore dismissed.

Judgment entered on the verdict is affirmed.


author: FOSTER, Circuit Judge.

text:
    BULLARD et al. v. CITY OF CISCO et al.
    No. 6052.
    Circuit Court of Appeals, Fifth Circuit.
    April 2, 1931.
    Dexter Hamilton, of Dallas, Tex. (Caldwell & Raymond, of New York City, and McBride, O’Donnell & Hamilton, of Dallas, Tex., on the brief), for appellants.
    J. J. Butts and Clayton L. Orn, both of Cisco, Tex. (Barker & Om and Butts & Wright, all of Cisco, Tex., on the brief), for appellees.
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.
   FOSTER, Circuit Judge.

Appellants filed a bill, with appropriate allegations as to diversity of citizenship, their ownership of certain bonds and interest coupons of the city of Cisco, Tex., default on same, and the refusal of the constituted authorities of the city to assess and collect taxes, and prayed for the appointment of a receiver for the said city, under the provisions of the then existing law of Texas, Act of October 1, 1929, chapter 46, Acts 41st Legislature of Texas (1929) 2d Called Sess. (Vernon’s Ann. Civ. St. art. 835a). The said act authorized the appointment of a receiver for any incorporated town or city, under the conditions alleged in the bill, by the District Court of the district in which the town or city might be situated. The bill was dismissed for want of jurisdiction, and .this appeal followed.

While the appeal was pending and before a hearing, the Legislature of Texas, by an Act passed on March 4, 1931, repealed chapter 46 of the General Laws of the Forty-First Legislature (2d Called Sess.), above referred to.

Whether the decision of the District Court was correct when rendered is now immaterial as jurisdiction, and appellants right of action depended wholly upon the Act of October 1, 1929. Meriwether v. Garrett, 102 U. S. 472, 26 L. Ed. 197.

It follows that the judgment appealed from must be affirmed.


text:
    CANAL STEEL WORKS, Inc., v. ONE DRAG LINE DREDGE.

    No. 6053.
    Circuit Court of Appeals, Fifth Circuit.
    April 2, 1931.
    Eugene S. Hayford, of New Orleans, La. (Nathan H. Feitel, of New Orleans, La., on the brief), for appellant.
    Bernard Titche, Sr., Richard W. Leche, and Bernard Titche, Jr., all of New Orleans, La., for appellee.
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

       Rehearing denied May 5, 1931.

   FOSTER, Circuit Judge.

Appellant filed a libel in rem against a dredge, asserting a lien for repairs. Admiralty process issued, and the dredge was seized and taken into custody by the marshal. The District 'Court determined that the dredge was not a vessel engaged in a maritime venture when the debt was incurred, and dismissed the libel for want of jurisdiction in admiralty. The dredge was neither released on bond nor sold, and remained in the custody of the court until the libel was dismissed. Appellant appealed, but did not sue out a supersedeas, and gave bond only for costs. Appellee has filed a motion to dismiss on the ground that the case is moot.

We need not consider the merits. By the failure of appellant to obtain a supersedeas, the seizure was released, and there is now no subject-matter upon which the judgment of this court could operate and give relief to appellant. The ease has become moot. Heitmuller v. Stokes, 256 U. S. 359, 41 S. Ct 522, 65 L. Ed. 990; Brownlow v. Schwartz, 261 U. S. 216, 43 S. Ct. 263, 67 L. Ed. 620; Norwegian Co. v. Tariff Com., 274 U. S. 106, 47 S. Ct. 499, 71 L. Ed. 949; U. S. v. Anchor Coal Co., 279 U. S. 812, 49 S. Ct. 262, 73 L. Ed. 971. Case dismissed; appellant to pay costs.


author: PATTERSON, District Judge.

text:
    OVERMAN CUSHION TIRE CO., Inc., v. GOODYEAR TIRE & RUBBER CO., Inc.
    District Court, S. D. New York.
    Dec. 22, 1930.
    Archibald Cox and Robert W. Byerly, both of New York City, for plaintiff.
    Cooper, Kerr & Dunham, of New York City, for defendant.
    William B. Coekley, of Cleveland, Ohio, for Goodyear Tire & Rubber Co.
   PATTERSON, District Judge.

This is an application by the plaintiff in a patent infringement suit, after interlocutory decree, to add a new party 'defendant and to have the pleadings and decree amended nunc pro tune so as to bind such new party. The suit is for patent infringement, and was cpmmenced in 1927. The only defendant named in the bill and the only defendant served with process was Goodyear Tire & Rubber Company, Inc. The bill alleged that the defendant was a Delaware corporation, with a principal place of business in Akron, Ohio, and a regular place of business in this district, and that it had committed acts of infringement within the district. In particular the bill charged the defendant with having within the district manufactured, sold and used tires which infringed the plaintiff’s inventions. These allegations, except as to the defendant being a Delaware corporation and having its principal place of business in Akron, were controverted in the answer. The case came on for trial in March, 1929. At that time it was stipulated that the defendant had “sold” in this district certain tires marked as exhibits. The trial resulted in an interlocutory decree, to the effect that the defendant had infringed “by making, using and selling” tires containing the plaintiff’s invention (D. C.) 34 F.(2d) 508. This decree was affirmed by the Circuit Court of Appeals, 40 F.(2d) 460. In the accounting which followed, a conflict developed regarding the scope of the accounting. It was then pointed out by the defendant’s solicitors that the defendant, Goodyear Tire & Rubber Company, Inc., was a selling company pure and simple; that it was a subsidiary of Goodyear Tire & Rubber Company, which was an Ohio corporation, and which manufactured the tires; and that the latter company was not a defendant in the suit. The defendant at first consented to include manufacturing profits of the parent company, Goodyear of Ohio, in the accounting, but refused to accede to the plaintiff’s suggestion that the parent company be added as a defendant. Later it withdrew its offer to broaden the scope of the accounting.

The plaintiff thereupon made this application to have the parent company added as a party defendant, to have the pleadings and proceedings amended nunc pro tunc, and to have the interlocutory decree amended so as to grant an injunction and award an accounting against the parent company, Goodyear of Ohio. In the affidavits supporting the application, it is shown that both on the trial and in the briefs on appeal there are references by the defendant’s solicitor to the “manufacture” of tires by the defendant, and it is argued that, since the parent company was the manufacturing unit,' 'these references must have been to the parent company. It is also shown that the entire capital stoek of the selling company is owned by the parent company; that the same persons fill corresponding offices in both companies; that the place of business in New York City conducted by the selling company is listed in the parent company’s annual report to stockholders as a distributing branch and bears on a sign the parent company’s name — “The Goodyear Tire & Rubber Co. Building,” without the suffix, “Inc.” It is also shown that a salesman in the employ of the subsidiary used a card bearing the name of the parent company —“The Goodyear Tire & Rubber Co.”

The application is opposed by the present defendant. It is- also opposed by attorneys appearing specially for .the parent company, who have made a .counter motion to have set aside the service of the plaintiff’s motion papers-upon the person in charge of the Goodyear local office, in so far as such service is an attempt to serve the parent company. It is shown that the two companies are distinct corporate entities, and that the course of dealing between them is for the parent company to sell goods to the selling subsidiary.

Where a plaintiff in an equity suit desires to have a new party added as a defendant, the course nsually pursued is to ask leave to file an amended or supplemental bill stating a cause of action against the new party. Findlay Mfg. Co. v. Hygrade Lighting Fixture Co. (D. C.) 288 F. 957; Safety Car Heating and Lighting Co., v. United States Light & Heating Co. (D. C.) 2 F.(2d) 384. If leave is granted, service of process, pleadings by the new defendant, and trial of the new issues follow. Until process is served upon the new defendant, he is not subject to the jurisdiction of the court. Shaw v. Bill, 95 U. S. 10,14, 24 L. Ed. 333. In the present case, the plaintiff’s motion is not of this character. What is here sought is to have the parent company added as a defendant and to have the pleadings and interlocutory decree amended retroactively, so that the injunction and accounting already ordered against the present defendant may run also against the proposed new defendant. The new party is not to have its day in court in the future. I take it as plain that this relief can be granted only on proof that the proposed new party has already had its day in court, that it was actually before the court as a defendant at the trial of this case.

In my opinion, it cannot be said that the parent company, Goodyear of Ohio, was before the court as a party defendant. It was not named as a defendant in the bill. Process has never been served upon it. The only remaining way in which it could have acquired a status in the suit was by its voluntary appearance. Now it is settled that the fact that a stranger to a suit is conducting the defense in behalf of the nominal defendant does not amount to an appearance by the stranger. A ■motion by the plaintiff to have such a party joined as a defendant will fail. Parsons Non-Skid Co. v. Willis Co. (C. C.) 176 F. 176; Bidwell v. Toledo Consol. St. Ry. Co. (C. C.) 72 F. 10; Freeman-Sweet Co. v. Luminous Unit Co. (C. C. A.) 264 F. 107. Here there is no such proof; so far as I know, the defendant’s solicitors never admitted that the parent company had taken charge of the defense. What we do- have here is the fact that in the course of the trial, and also upon the appeal, the defendant’s goliptorg seein to-have drawn no distinction betw.éen^the,gfjlling conn pany, which was the actual defendant, and the manufacturing company. They referred several times to the defendant as a manufacturer of tires. But, in view of their statement that they were never authorized by the manufacturing company to appear for it in the suit, it seems to me that these mistaken statements cannot be deemed the equivalent of an appearance in behalf of the manufacturing company. The ease would be different if the latter company had been named in the bill as a defendant.

If these views are sound, it is unnecessary to consider in detail the relationship between the two Goodyear companies. That they are distinct corporate entities is clear. Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S. 333, 45 S. Ct. 250, 69 L. Ed. 634. The plaintiff urges, however, that the connection between them is so close that the acts of the subsidiary in this district (selling the infringing tires and maintaining a regular place of business) should be viewed as the acts of the parent, on grounds of agency, and that consequently this court has jurisdiction over the parent in a patent infringement suit. The full force of this argument might be granted without reaching the conclusion that the plaintiff is entitled to the relief asked for. Even if the parent were doing business here in its own name, and were therefore clearly subject to suit in this district, it would not be a party until actually brought into court. The question here is whether the parent company has been in court. Conversely, as to the contention by the parent company that it is not amenable to process here. This position might be conceded; yet, if the parent company has already appeared in this very suit, the point that the court would otherwise have no jurisdiction over it becomes academic. As already indicated, the question on this application is not whether the parent company might have been sued in this district; the question is whether it has already become a party defendant in the ease.

The point whether the parent company, Goodyear of Ohio, will be bound by the result in the suit against the subsidiary, Goodyear of Delaware, is not before me. Probably the final decree, when entered, will be binding upon it so far as infringement is concerned. Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, 37 S. Ct. 506, 61 L. Ed. 1148. But it by no means follows that it should be made a formal party to the suit. Freeman-Sweet Co. v. Luminous Unit Co., supra.

I am not impressed with the defendant’s argument based upon the pendency in the District Court for the Northern District of Ohio of a suit by the parent company against the plaintiff. It seems that, since the affirmance of the interlocutory decree,' the parent company has dropped the manufacture of the infringing tire, and is making a tire of another type, and that the plaintiff has told the trade that tires of this new type are inferior. In the Ohio suit, the parent company charges' the plaintiff with circulating false statements about its new tires. Rule 30 of the Equity Rules (28 USCA § 723) provides that the answer must state any counterclaim “arising out of the transaction which is the subject-matter of the suit,” and the parent company urges that consequently the plaintiff’s sole remedy against it is to file a counterclaim in the Ohio suit. Suffice it to say that the parent company’s infringement of the plaintiff’s patent does not arise out of the transaction which the former is complaining of in that suit. The situation is too plain to require the citation of authorities.

The plaintiff’s motion will be denied, without prejudice to a motion for leave to file an amended or supplemental bill. In view of this result, it is unnecessary to pass upon the motion made in behalf of the parent company to set aside service.


text:
    OVERMAN CUSHION TIRE COMPANY, Inc., Plaintiff-Appellant, v. GOODYEAR TIRE & RUBBER COMPANY, Inc., Defendant-Appellee.
    No. 281.
    Circuit Court of Appeals, Second Circuit.
    Feb. 16, 1931.
    Robert W. Byerly, of New York City, for appellant.
    F. O. Richey and Richey & Watts, all of Cleveland, Ohio, and Cooper, Kerr & Dunham, of New York City, for appellee.
    William B. Coekley, of Cleveland, Ohio, for Goodyear Tire & Rubber Co. (Ohio corporation).
    Béfore MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
   PER CURIAM.

Order [48 F.(2d) 213] affirmed.


author: BARRE T.T, District Judge.

text:
    In re LA VARRE.
    District Court, S. D. Georgia, Augusta Division.
    June 28, 1930.
    Chas. L. Redding, U. S. Atty., of Savannah, Ga., for the prosecution.
    Perrin & Tinsley, of Spartanburg, S. C., and W. O. Cooper, Jr., of Macon, Ga., for respondent.
   BARRE T.T, District Judge.

Hall brought suit against La Varre in the superior court of Richmond county, Ga., averring in substance that plaintiff and defendant as partners had borrowed from the International Paper Company some $900,000 which had been used to purchase the stoek of the Augusta Chronicle, Augusta, Ga., the Record Publishing Company, Columbia, S. C., and the Spartanburg Herald-Journal Company, Spartanburg, S. C.; that, by the agreement with the lender, the stock so purchased was to be pledged as collateral security for the obligation of such partners to the paper company; that La Varre denied the partnership and claimed that he was the sole owner and that Hall was his employee. This ease was at the instance of La Varre removed to this court, and, after a protracted hearing, there resulted a final decree on September 30, 1929, establishing that the partnership did exist, and containing the following paragraph:

“That said William La Varre and Harold Hall be enjoined and restrained from in anywise interfering with the assets of said joint estate or with the administration of the same under the orders of this Court, or with the Commissioner herein and hereby appointed, by legal action or otherwise, in carrying out the terms of this decree; and that the said Harold Hall and William La Varre be and they are hereby each enjoined from proceeding in any way, .as individuals or officers of either of said corporations or as directors or stockholders of said corporations, to change the status of said corporations, and from proceeding in any Court for the administration of the assets of said corporation, no such application to be made unless and until authorized by the vote of the stoek of said corporation transferred to .and held by said Commissioner.”

J. T. Webb, Jr., was appointed by the court as commissioner, and was ordered to have issued to him as such commissioner the stoek in the aforesaid corporations, “but with no right in said Commissioner to vote said stoek at any meeting of the stockholders of either or all of said corporations unless and until hereafter authorized or directed by the Court upon application for leave so to do.”

On December 16, 1929, Judge Deaver filed an opinion which he felt impelled to do because of certain facts in connection with an application for supersedeas as to the final decree and as to an amendment thereto passed October 29, 1929. Reference will be made hereafter to certain portions of such opinion.

There was delay on the part of La Varre in transferring the stoek in the two South Carolina corporations, but finally he present•cd certificates transferred, with a notation thereon to the effect *that it was done in deference to the aforesaid final decree and subject to the right of appeal. The court declined to accept such transfer with the notation on the certificates as a compliance with its order. On the 2d of January, 1930, La Varre transferred the certificates to the commissioner without any notation thereon. On the same day, however, he wrote a letter to each of the South Carolina corporations containing in substance the same conditions which had been attached to the stock certificates.

On January 6,1930, Judge Deaver passed an order authorizing the commissioner to vote the stock in such corporations.

La Varre through his counsel filed lengthy objections to the passage of such order, such objections, briefly stated, being that the hearing was not called for such purpose; that no petition or any pleading of. any kind had been previously served upon La Varre; that the purpose of the hearing had been stated to be to determine as to the payment of certain debts and to hold “an informal discussion of the Commissioners’ report”; that the two South Carolina commissioners appointed to investigate and report upon the possibility of profitably operating the papers had not been heard; that such order was contrary to certain statements in the opinion of Judge Deaver of December 16, 1929, such as “Under these decrees the defendant was purposely left in position to devote his talents to the upbuilding and successful operation of the papers,” and that no- change would be made in the plan of letting the defendant continue his efforts to run the papers until after full discussion, and “if * * * jt appeared that the corporations under defendant’s management were headed for bankruptcy” a change might be made and there is not a scintilla of evidence that they were so “headed”, and that La Varre’s consideration of the advisability of applying to the Circuit Court of Appeals for a supersedeas of certain portions of the decrees of September 30, 1929, and October 29, 1929, “was abandoned because your petitioner’s (La Varre’s) counsel were of the opinion that your Honor’s opinion was a definite chart and express opinion of the future course of the case.”

Subsequent to January 6, 1930, La Varre petitioned the Circuit Court of Appeals of the Fifth Circuit to supersede that portion of the order of January 6,1930, authorizing the commissioner to vote the stock of said corporations. Among other allegations in said petition for supersedeas were the following:

That La Varre would be removed from the presidency of the two South Carolina corporations ; that the reason the Columbia and Spartanburg papers did not through a named period show a profit was because petitioner was engaged upon “a development program in connection with the said papers and was not at that 'time making any effort to show a profit”; that the “present board of directors of the Columbia and Spartanburg papers, who were elected by the stockholders of the respective corporations at a time when there was no litigation, and who have shown that they are capable of successfully managing the properties under their direction, be left in control of the corporations and that the control be not snatched from them and placed in the hands of a commissioner”; that “no other act is necessary on the part of the Georgia Court to place the Commissioner in position to sever appellant’s connections with his papers” (this quotation in black type); and that such order of January 6, 1930, was contrary to certain portions of the opinion of Judge Deaver, quoted in the petition.

By petitions filed with the court by the commissioner, it appeared that the commissioner, pursuant to the authority of the order of January 6,1930, held a meeting of the stockholders of the Record Publishing Company and elected directors and adopted bylaws, and the directors elected officers who. undertook to take charge of the newspaper, the Columbia Record, when they were ejected by force by La Varre, who claimed to be acting as president of the Piedmont Press Association, which, according to his claim, was the lessee of the said newspaper; and that a like effort was made on the part of La Varre as to the two Spartanburg papers, the Herald and Journal, but any interference by La Varre was prevented there by the issuance of a criminal trespass warrant against him; that thereafter the Piedmont Press Association, at < the instance of La Varre, brought its petition in the Supreme Court of South Carolina, exercising original jurisdiction, undertaking to enjoin the commissioner of this court and the officers elected by virtue of the authority granted such commissioners to vote the stock from interfering with the Columbia Record, which it was claimed was under lease to the said petitioner, and the further fact was brought to the attention of the court of the filing with the Record Publishing Company and the Spartanburg Herald-Journal Company of the letters of January 2, 1930, concurrently with the transfer of the certificates of stock by La Varre unconditionally, which is above referred to.

This resulted in an order passed by Judge Deaver on February 24, 1930, as follows:

“It is Considered, Ordered and Adjudged :
“(a) That this court has jurisdiction over the body of the said La Varre;
“(b) That the petition of said Webb, filed on the - day of February, 1930, and duly verified by him, be treated as information advising this court of a probable wilfull criminal violation of the decrees and or-' ders' of this court, and that said petition be made a part of this order for the purpose of advising the said La Varre of the charges against him, in detail;
“(c) Probable cause exists to believe the said William La Varre has violated the third paragraph of the decree of the court dated September 30, 1929, and has challenged the power, dignity and authority of this court, and that probable cause exists to believe the said William La Varre to be guilty of the offense of criminal contempt of this court;
“(d) That this cause he transferred to the criminal side of the court and entitled: ‘In re William La Varre’;
“(e) That writ of attachment issue under the seal of this court, requiring the marshal to attach the body of said William La Varre and have him before me at the United States court house at Augusta, Georgia, at 10 o’clock A. M., on the 28th day of February, 1930, and from day to day thereafter then and there to answer this court touching the contempt which he is alleged to have committed against it, and such other matters as shall then he laid to his charge, and further to abide such charge as the court shall make in this behalf;
“(f) It is further ordered that, in the event the return of the Marshal for the Southern District of Georgia shows that the said La Varre can not he apprehended in the Southern District of Georgia, then the said J. T. Webb, Jr., as representative of this court, is authorized and directed to take such steps and initiate such proceedings in any district in the United States in which the said La Varre may he found, to attach his body and have him before me at the time and place herein provided.”

It is deemed unnecessary to set forth the order of February 6, 1930, based upon the first report of the commissioner because of the fact that such first report, together with the order thereon, is embodied in the second report.

The return of La Varre to the aforesaid order was substantially to the effect that his objecting to the exercise of possession and control by J. T. Webb,” Jr., who had been-elected as president of the two South Carolina corporations, acting under the authority of the order of January 6, 1930, was not in contempt of this court, but was a sincere exercise of the rights of the Piedmont Press Association, of which La Varre was president, and which association held a valid lease from said newspapers dated June 22 and 24, 1929, respectively; that this court had no-jurisdiction over him in the premises; that he was advised by competent counsel as to-his rights and duties in the premises both in. objecting to the possession and control by the said Webb and in the matter of bringing his petition for injunction to the Supreme-Court of the state of South Carolina; that the letters of January 2,1930, written to the said two corporations as to the transfer of' the certificates of stock were both in accordance with the opinion of Judge Deaver and' were written prior to the order of January 6,1930, which for the first time authorized the-voting of such stock by the commissioner; and “that at no time and in none of his actions was this respondent conscious of intentionally or otherwise violating any of the-provisions of the orders of this court and. was simply performing such acts as he conceived it to be his duty to perform as president of the Piedmont Press Association in accordance with the legal advice given him as-to his duties as such; and that at no time did. any act in wilfull disobedience to the orders-of this court.”

Thereafter there was resistance to extradition on the part of La Varre both in South-Carolina and in New York, resulting in vigorous litigation. If La Varre were not in contempt, such resistance was logical and justified. If he were in contempt, the offense was-completed before these resisting efforts were-made.

The- main ease of Hall v. La Varre has been conducted exclusively by Hon. Bascom S. Deaver, designated judge for this district. The trial of this criminal contempt proceeding falls to William H. Barrett, Judge of the Southern District.

Counsel for the prosecution urges that the aforesaid order, with the accompanying petition to which reference in the order is made, presents four charges of criminal contempt against La'Varre, as follows:

(1) Interference with Webb, who was acting under the order of this court of January 6,1930, authorizing him to vote the stock in the South Carolina corporations.

(2) Interfering with the assets of the estate, or with the administration of the same, in violation of paragraph 3 of the final decree above quoted, and other provisions of the decree to a like effect.

(3) The institution by La Yarre of the suit in the name of the Piedmont Press Association in the Supreme Court of South Carolina.

(4) The sending of the letters of January '2, 1930, to the two South Carolina corporations concurrently with the apparent unconditional transfer of the certificates of stock by La Yarre to Webb.

While the foregoing order for attachment ■of February 24, 1930, refers to the petition upon which it is based, making it a part of this order “for the purpose of advising, the said La Yarre of the charges against him, in detail,” yet in the nest paragraph of such order is the only definite charge against him, namely, the violation of “the third paragraph of the decree of the court dated September 30, 1929.”

Inasmuch as it is the opinion of this court that in essential elements the several acts of contempt all involve violation of the aforesaid decree of September 30,1929, this case will be considered from that viewpoint alone.

The first three charges, as analyzed above, depend upon the good faith of La Yarre in connection with the Piedmont Press Association as hereinafter discussed, while the fourth feature of the charge is distinct from that, and will be first discussed.

2. The letters from La Yarre to the newspaper corporations dated January 2, 1930, are as follows:

“In view of a letter which you have shown me from Irvine F. Belser, Attorney at Law, and in view of statements made in open court, and in writing by judge Baseom S. Deaver, Macon Georgia, that the court desired only to hold certain certificates of stock in the Spartanburg Herald-Journal Company, pending the outcome of the ease by Court of Appeals Decision, I hereby authorize you to reissue the stock which is on the books of the company in my name to J. T. Webb Jr As Commissioner, specifically reserving untoi myself all voting rights therein, the said commissioner only to hold the equity rights of the certificates pending the final decision of the Court of Appeals.
“It is to be specifically understood, and a requirement of this transfer that the said new certificates do not carry with them any voting rights to the said J. T. Webb as Commissioner, all voting rights of such shares of capital stock to remain in my name pending the final decision of the Circuit Court of Appeals.
“This is the understanding under which, without value received, I authorize said new certificates to be made and issued.”

We are not advised as to the contents of the letter from Attorney Belser.. It is true that this court had up to that date specifically provided that the voting power of the stock did not pass to the commissioner. But this court had notified La Yarre that the transfer of the stock certificates with a notation thereon of like import to such letters was not a compliance with the order, and then La Yarre had transferred the stock without such notation. These letters, written concurrently with the professed compliance with the order of this court and which were apparently kept secret from this court, could have had no other purpose than to impair, if not destroy, the effectiveness of the apparently absolute and unconditional transfer. -All must agree that such conduct was not ingenuous. My conviction is that not only did it smack of sharp practice, but was in violation of paragraph 3 of the decree of September 30, 1929.

3. The real issue to be determined as to the other divisions of the charge is, Was the claim of La Yarre, in taking the action that he did as president of the Piedmont Press Association, in good faith, or was the utilization of this association, together with the alleged leases, a mere device or subterfuge as a part of his defiance and disobedience of the orders of this court?

There is no difference of opinion as to the nature of this proceeding and the law applicable thereto. Proceedings for criminal contempt are “to preserve the power and vindicate the dignity of the courts, and to punish for disobedience of their orders.” Footnote, title 28, § 385, USCA. Counsel for defendant advise that they rely upon the ease of Gompers v. Buck’s Stove & Range Co., 221 U. S. 418, 31 S. Ct. 492, 55 L. Ed. 797, 34 L. R. A. (N. S.) 874. That is the law.

The evidence submitted is ample to establish beyond a reasonable doubt that the defendant, La Yarre, is guilty of criminal contempt in violating section 3 of the decree of the court of September 30, 1929, unless his claim made subsequent to such decree and subsequent to the decree of January 6, 1930, that all the property of the South Carolina newspapers were under a legal formal binding lease to the Piedmont Press Association, and that all of the activities of La Varre were genuinely and sincerely for the purpose of maintaining the rights of the said lessee corporation and his oath that it was not his intention, as declared both in his return to the court and his oral testimony, to violate any order of this court, are well founded.

It is not open to question that from the beginning of the borrowing of the money from the paper company in 1928 and the purchase of the stock of the newspaper corporation a holding company was to be organized, principally for the purpose of financing the whole affair in such a way as to enable the repayment of the money borrowed from the paper company. This did not mean, however, that such holding company was to be a lessee which was to have all the real substance of this transaction and leave the corporations owning the newspapers as mere shells. Let us examine the facts. The Piedmont Press Association was chartered under the laws of South Carolina May 23, 1929. The capital stock of 1,000 non-par value shares was all acquired by La Varre. So far as disclosed by the financial statement furnished, only $500 was paid for these shares. La Varre testified that he paid $1,000 for them. The company had no other assets, unless it be that the value of the leases from the two paper companies was an asset. The financial statement of such company discloses that it had no financial transactions between the 23d of May, when it received the $500, and August 20th, when it is alleged to have received from the Columbia Record $2,135. The only items of receipt, as shown by its financial statement, up to September 30, 1929, were loans from La Varre of $15,360, which money it is claimed by the prosecution was part of the partnership assets, and collections from the newspaper corporations aggregating $6,331.-58. The minutes of the association do not disclose any action for some months after its organization, and there was no corporate action authorizing such leases. La Varre continued to have the ownership of all of such capital stock except a few qualifying shares and a few shares distributed by him.

The minutes of the Record Publishing Company of June 22,1929, authorize the execution of a contract with the Piedmont Press Association. At that time La Varre owned 950 of the 1,000 shares of the capital stock of such publishing company, and the whole record discloses that it was La Varre’s action. On the 24th of June, 1929, the Spartanburg Herald-Journal Company, acting through its board of directors, authorized the execution of the lease to the Piedmont Press Association. At that timé 994 shares of the capital stock of such company stood in the name of La Varre and the other 6 shares were under his control.

It must be remembered that this action of La Varre was attacked by Hall as a part of his scheme to defraud Hall, and that it was charged that a similar action was proposed as to the Augusta Chronicle, which action was. restrained by the superior court of Richmond-county, Ga. The issue here is not as to the legality of this as between Hall and La Varre,. but it is as to the good faith of La Varre as against the orders of this court. If La Varre entertained the conviction that this lease was-genuine and that the lessee was actually lawfully, as a separate entity that should be protected, in charge of the two newspapers and' in control of their operation, with full right, as disclosed by the terms of the lease to continue such control and operation for fifty-years, with the right to receive the entire earnings of the newspapers conditioned only upon the lessee company carrying out its contract, why should he have been utterly silent during the time when the court, according to. his own assertions, was passing orders which would affect the control and operation of the newspapers in South Carolina? Why was he concerned materially at all as to whether, in the first place, the stock was transferred t> the commissioner and, in the second place, as. to whether the voting power was given to the-, commissioner, when such transfer and such-voting power could- not deprive the lessee company, which was undoubtedly La Varre in substance, of the operation and control of the papers? Is it conceivable that he could have entertained such belief on January 6, 1930, when he filed his seven objections to the passing of such order giving the voting power to the commissioner? If at that time he honestly believed that the lessee company was in-control of the operation of these papers, what more natural, — if he was dealing at all fairly with the court and really believed that the legal relationship which he afterwards asserted did at that time exist, namely, that there was a genuine lease from the owners of the papers to the Piedmont Press Association,— than that he should have advised the court of the fact? He must have known, as indicated both by his declarations and by his silence, that certain it was that this court, acting through Judge Deaver, believed and had every reason to believe that the passing of the orders, especially that of January 6, 1930, would result in taking from La Varre the operation and control of the newspapers and vesting the same in his commissioner or in whomever his commissioner should elect. What other belief than this could La Varre have had when he stated with emphasis in his petition for supersedeas “no other act is necessary on the part of the Georgia court to place the commissioner in position to sever appellant’s connections with his newspapers” ? •

The masthead of a paper is supposed certainly to speak the truth. As late as October 5, 1929 (and it may be later), the masthead of the Spartanburg Herald discloses the following: “Charles 0. Hearon, Editor. William La Varre, Publisher. Published every morning by Spartanburg Herald-Journal Company.” The masthead of the Spartan-burg Journal of December 6, 1929, discloses the following: “Charles 0. Hearon, Editor. William La Varre, Publisher. Published daily except Sunday at 177 West Main Street, Spartanburg, S. C. by Spartanburg Herald-Journal Company (incorporated) * * * Member of Associated Press.” On the 7th of December, 1929, the masthead was different in these particulars: Instead of declaring that it was published “by” the Spartanburg Herald-Journal Company, it is published “at the offices of” such company, and contained this additional feature: “Member the Piedmont Press Association.” The masthead of the Columbia Record of December 2, 1929, was as follows: “Fitz Hugh McMaster, Editor. William La Varre, Publisher. Published afternoons and Sunday morning by The Record Publishing Company * * * Member of the Associated Press.” On December 3,1929, this masthead was changed so as to disclose, instead of being published “by The Record Publishing Company,” it read “at the offices of” such company, and with this added feature, “Member of the Piedmont Press Association.” There is no disclosure as to why there was the change in the mastheads from declaring that these papers were published “by” the corporations to “at the offices of” such corporations. As to that we are left entirely to surmise. The added statement that the two papers are “Member The Piedmont Press Association” is most significant. It discloses that at that time it was no mere lapse of memory as to the existence of the association. If the association was in truth’the publisher, it is difficult to conceive why the statement should not be made, and still more inconceivable as to why the statement should be made that the newspaper was “member” of such association in the same language that the statement is that it was a member of the associated press.

Be it remembered that the injunction forbade La Varre from interfering “with the commissioner herein and hereby appointed, by legal action or otherwise, in carrying out the terms of this decree.” Even though Judge Deaver erred in supplementing the power originally granted his commissioner with the authority to vote the stock, that change was one of the possibilities in contemplation as evidenced by the provision in the final decree of September 30, 1929, that the commissioner could not vote the stock “unless and until hereafter authorized or directed by the court.” It is true that there was added, “upon application for leave so to do,” but nevertheless there was this notice of the possibility of a change in the authority; and such a possibility would exist even though there had not been this implication thereof. The fact, if such be a fact, that the order of January 6, 1930, was erroneous, either by lack of power or by a wrongful exercise of discretion, does not alter the fact that it stood and stands as an order of a court of competent jurisdiction, and, if it can be defied and set at naught, then any order of any court can be defied and set at naught. Appeal was possible. Supersedeas, if proper, was possible. But defiance cannot be tolerated by a court that would maintain, as is its duty, its power .and dignity.

As was well said by Judge Thomas G. Jones of the Circuit Court of Alabama, in the case of In re Rice, 181 F. 217, 221: “Courts will not tolerate defiance or evasions of their commands by artifice or contrivance of any kind. They look behind the form to the substance, and, sitting as trier of the facts as well as the law, in passing upon such contempts, will draw any inference a jury may legitimately draw from the circumstances.”

With full knowledge that this is a criminal case and of the degree of proof required, and an entire recognition of the entirely sound proposition that neither laymen nor lawyers should be held criminally responsible for honest errors in interpreting the validity or meaning of contracts, this court reaches the conclusion that the acts of William La Varre in the name of the Piedmont Press Association, or as its executive head, in ejecting Webb and the other officers elected with him from the office of the Record Publishing Company, in attempting to do likewise in the case of the Spartanburg Herald-Journal Compaq ny, and in seeking an injunction from the Supreme Court of the state of South Carolina were all consciously in violation of the order of this court, and that the attempt to hide behind the organization, charter, name, or lease contract, or all, of the Piedmont Press Association, was not in good faith and was in defiance of these orders and therefore criminal contempt.

4. Citation of authority is unnecessary to establish the legal proposition that advice of counsel does not relieve of responsibility for criminal contempt. It may and properly does mitigate the punishment. The rule is wise for a number of reasons. No other need be cited than the possibility always that counsel is not fully acquainted with all the facts. Then, too, there is always the possibility that counsel may be willing to co-operate in defying the order of a court which is contrary to his advice and contention. We need not discuss this element here. The law is fixed.

5. The defendant in this case has both in writing and orally sworn that he did not mean to be guilty of contempt. There have been times when such oath was conclusive in his favor, but the law is and has been for many years different in the United States courts.

6. It is recognized that the power to punish for contempt of court should be used sparingly and with great caution and deliberation. In this case there have resulted from the criminal contempts large losses in the way of expensive litigation, traveling, and the like. Were the defendant in position to satisfy such losses, it would seem that the appropriate punishment would be to require him “to-make restitution or reparation to the aggrieved party or parties for actual damages or loss caused by the offense for which conviction was had,” as provided by the act commonly known as The National Probation Act, title 18, section 724, USCA, which would be quite sufficient. Under his oath we are advised by him that his financial resources are less than zero. Therefore such a sentence would be futile as indemnity, and, if his confinement were to be continued until payment, it would be too severe. It is recognized that he has already suffered, both in the way of expenses (though it is claimed that most of the money expended by' him really belonged to the funds at issue) and by confinement in the jail of Richmond county, Ga., for thirty days, and the sentence will be imposed with full consideration of these elements.


author: CAVANAH, District Judge.

text:
    BOISE CITY NAT. BANK v. ADA COUNTY et al. (two cases).
    Nos. 1394, 1556.
    District Court, D. Idaho, S. D.
    Feb. 11, 1931.
    Richards & Haga, of Boise, Idaho, for plaintiff.
    Carl A. Burke, Clarence T. Ward, and Prank T. Wyman, all of Boise, Idaho, for defendants.
   CAVANAH, District Judge.

These eases were consolidated and heard together hy the court, a jury having been waived. They present the question of whether, under the evidence, the taxes levied on the shares of stock of plaintiff, a national banking association, for the years 1928 and 1929 by the assessor of Ada county, are in violation of section 5219 of the Federal Revised Statutes (12 USCA § 548). , The application of the law was settled in the opinion of the court on the demurrer to the complaint in ease No. 1394 [(D. C.) 37 F.(2d) 947], and the cases are now being considered upon the issue as to whether the evidence is sufficient to establish the causes of action alleged in the complaints.

Approaching then the consideration of them with the settled principle in mind that Congress has only permitted the taxation by the state of property and shares of stock of national banks, subject to the restriction that “the tax imposed shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State coming into competition with the business of national banks: Provided, That bonds, notes, or other evidences of indebtedness in the hands of individual citizens not employed or engaged in the banking or investment business and representing merely personal investments not made in competition with such business, shall not be deemed moneyed capital within the meaning of this section” (section 5219, R. S.; 12 USCA § 548), the court is asked to declare the assessments void on the ground that moneyed capital is-not assessed in the hands of others who are not engaged in the banking or investment business in the state and who come in competition with the business of plaintiff.

The competition contemplated by the federal statute does not have to be with all phases of the business of national banks, for it may arise from the employment of capital invested by individuals or institutions in particular investments or operations like those of national banks. By the statute the federal government permits state taxation only on terms of -substantial equality in fact and in law, in entire fairness, and the tax on shares of national banks must not discriminate in favor of moneyed capital entered into competition with them. Exact equality from a mathematical standpoint is not intended by the statute, for such may not be attainable in every ease. The main purpose of the legislation is stated to be by the Supreme Court in Mercantile National Bank v. New York, 121 U. S. 138, 155, 7 S. Ct. 826, 835, 30 L. Ed. 895: “A tax upon the money, of individuals, invested in the form of shares of stock in national banks, would diminish their value as an investment, and drive the capital so invested from this employment, if at the same time similar investments and similar employments, under the authority of state laws, were exempt from an equal burden. The main purpose, therefore, of congress, in fixing limits to state taxation on investments in the shares of national banks, was to render it impossible for the state, in levying such a tax, to create and foster an unequal and unfriendly competition, by favoring institutions or individuals carrying on a similar business and operations and investments of a like character. The language of the aet of congress is to be read in the light of this policy.” So the inquiry here is: Does the evidence show that there were during the years in question other moneyed capital in the hands of individual citizens of the state that came in competition with the business of the plaintiff national bank, and not taxed? During that period plaintiff exercised the normal banking powers conferred upon it by law, including the purchase and sale of government, state, and municipal bonds, the loaning of money 'on financial statements and on real and personal security, and receiving commercial deposits on demand and time savings deposits. ¡

The capital, surplus, and undivided profits of plaintiff of January, 1928, was approximately $456,822.72, and of January, 1929, $460,076.52. As required by the statutes of the state, the assessor of Ada county secured from plaintiff the amounts and number of shares of its capital stock, its surplus and undivided profits, and the amount of real estate, furniture, and fixtures owned by it. After so doing, he deducted the value of such real estate, furniture, and fixtures, which were assessed separately as other property from its capital, surplus, and undivided profits, and the remainder was accepted by him as the valuation of the shares of stock, and as-sessed accordingly. On January 9, 1928, the time the assessment was made, plaintiff’s total loans aggregated $9,016,218, of which $125,806 consisted of mortgages on real estate, $133,370 to farmers, $114,030 to orchard owners, and $323,368 on automobile paper. It purchased in 1928 bonds of approximately $503,450, and owned in government securities $890,450, in other securities $222,713, and stock in the Federal Reserve $13,500. In 1928 it sold $160,200, and in 1929 $276,050, in bonds and-other securities to residents of Idaho, and purchased in 1928 $90,000, and in 1929 $275,000, in commercial paper. During the same period it purchased and sold $100,000 of the preferred stock of the Idaho Power Company, while approximately $631,000 of said stock was sold by investment houses in Idaho. Pursuant to section 3297, Comp. Stats, of the state, relating to the assessment of shares of bank stock for taxation, the assessor assessed 3,750 shares of the capital stock of the plaintiff then outstanding, on the basis of the actual value of such stock as shown by the capital, surplus, and undivided profits of plaintiff on January 9, 1928, which was $456,822.72, less the value of its real estate, furniture, and fixtures. The value of its real estate, furniture, and fixtures on that date was $253,346.28, leaving $203,476.47 of its capital and surplus invested in bonds, notes, mortgages, and warrants, which was assessed and a tax levied thereon of $7,537.37. The tax was paid by plaintiff under written protest, and defendants declined to repay the same.

The facts referred to apply to case No. 1556, relating to the taxable year 1929, except as to dates and amounts, which appear to be different, as we find for that year, on January 14, 1929, plaintiff had loans and discounts aggregating $8,683,998, of which $162,459 consisted of mortgages on real estate, $173,572 to farmers, $116,321 to orchard owners, and $327,428 on automobile paper. It purchased bonds of approximately $216,-900, owned in government securities $905,600, in other securities $313,400, and stock in Federal Reserve $13,500, and that the assessor of the county for that year assessed 3,750 shares of its capital stock on the same basis as was done for the- year 1928, which was $460,-076.52, after deducting the value of the real estate, furniture, and fixtures. The value of the real estate, furniture, and fixtures on that date was $290,979.72, leaving $169,096.80 of its capital and surplus invested in bonds, notes, mortgages, and warrants, which was assessed and a tax levied thereon in the amount of $6,635.72. That tax was also paid by the plaintiff under written protest and defendants declined to repay the same. Plaintiff has for years maintained a savings department in which it pays interest at the rate of 4 per cent, per annum. Its deposits of January, 1928, which covered commercial, savings, and postal savings, totaled $4.790,-124.89, and of January, 1929, $4,619,963.81.

It is apparent that the moneyed capital invested in securities in the state by others than banks during the years 1928 and 1929 were exempt by the state law of taxation, and intentionally omitted from the tax rolls, and were substantial in amount as compared with the capital of plaintiff bank, and in competition with national banks, for it appears that during these two years there was so invested, in bonds and stocks, approximately from $18,000,000 to $30,000,000, of which amount approximately $5,000,000 was by investors in Ada county, as there were numerous individuals and foreign and domestic investment corporations engaged in the state for profit in loaning money and acquiring and selling notes, bonds, stocks and mortgages, and obtaining the savings and surplus funds of investors. Among those were investment houses, savings and loan associations, building loan companies, insurance companies, real estate mortgage loan companies, and finance companies handling automobile and other paper, who in many instances had a paid-in capital and volume of business done by them, in direct competition with plaintiff bank, in substantial amounts, as we find among them that Childs & Co. sold bonds aggregating from several hundred thousand dollars to over a million dollars; Walter S. Bruce & Company in amount in exeess of the amount sold by plaintiff; High & Fritehman Company, dealers in similar securities in large amounts; People’s Finance & Thrift Company, a paid-in capital of $63,800, sold approximately $84,000 of bonds; insurance companies holding securities, in bonds and mortgages, of approximately $11,118,541.04, and made new loans during the year of $874,165.93, and collected on former loans $1,631,176.23; the Oregon Mortgage Company, a paid-in capital of $2,433,250, surplus and undivided profits of $886,100, and invested in mortgages $1,-362,472; the Scottish American Mortgage Company, a paid-in capital of $6,189,097, surplus and undivided profits of $1,866,055, and mortgage loans of $370,132; and the Vermont Loan & Trust Company, a paid-in capital of $300,000, and mortgage loans of $300,000. Savings and loan companies and building and loan associations and mortgage loan companies, operating in the state, had loans of similar character and far in exeess of that of the plaintiff, and finance companies handling installment automobile and other paper, aggregating approximately $7.359,-110.52, among which were the General Motors Acceptance Company, Commercial Credit Corporation, Commercial Investment Company, National Credit Company, and Pacific Finance Company.

Applying the facts in these cases to the principle laid down in the former opinion of the court in case No. 1394, Boise City Nat. Bank v. Ada County et al. (D. C.) 37 F.(2d) 947, and in Brotherhood Co-op. Nat. Bank et al. v. Hurlburt (D. C.) 26 F.(2d) 957; Commercial Nat. Bank of Columbus, Ohio, et al. v. Treasurer of Franklin County, Ohio (D. GC.) 45 F.(2d) 213; Public Nat. Bank of New York v. Keating et al. (D. C.) 38 F.(2d) 279, there has been in the years 1928 and 1929 substantial discrimination against a large portion of the moneyed capital invested in the shares of stock of the plaintiff bank, and in favor of competing moneyed capital invested in the companies and in the hands of individuals referred to, in violation of the federal statutes, which requires the cancellation of the taxes so levied, and accordingly a decree in each case will be entered in favor of plaintiff as prayed for.