author: INCH, J.

text:
    UNITED STATES v. KELLY.
    District Court, E. D. New York.
    April 15, 1931.

      Howard W. Ameli, U. S. Atty., of Brooklyn, N. Y. (J. Bertram Wegman, Asst. U. S. Atty., of Brooklyn, N. Y., of counsel), for the United States.
    Arthur A. Kestler, of Brooklyn, N. Y., for defendant.
   INCH, J.

From the motion papers it appears that one Mortimer Kelly was arrested on the 16th day of February, 1931, by prohibition agents, charged with having sold to an agent a quart of gin. He was thereupon arraigned before a United States commissioner. It does not appear what has happened further in the ease. I infer however, if held by the commissioner, he has not as yet been tried.

It further appears that immediately after his arrest and before his arraignment before the commissioner, and over his protest, the prohibition agents took the finger prints of Kelly “for the use of the Bureau of Prohibition.”

These finger prints were ordered taken pursuant to the direction of the United States attorney for this district, through one of his assistants.

This method of identification constitutes a new departure in such arrests for such offenses.

In a sense, I am informed, this case of Kelly presents a so-called “test” case as to the right of the prohibition administrator and his ag'ents to continue to take finger prints of a person not only accused of selling a quart of intoxicating liquor or less than a gallon, but of any misdemeanant prior to conviction.

Whether or not, even if guilty, the offense of Kelly is a felony or misdemeanor will depend on further and different facts, none of which is present in the papers now before me.

Kelly by this motion moves for a return to him of his finger print record on the ground that the taking thereof was unlawful, and to restrain the use thereof on the ground that the taking of them violated the Fifth Amendment of the Constitution of the United States.

The United States attorney has duly appeared for the prohibition administrator.

Whether the taking of the finger prints was lawful or unlawful, it was plainly a step in connection with the arrest and arraignment and possible trial of Kelly for violation of the Prohibition Aet (27 USCA), all of which was under the control of said attorney.

It seems to me that sufficient authority and jurisdiction is present for this court to entertain and decide the motion. Go-Bart Importing Co. v. U. S., 282 U. S. 344, 51 S. Ct. 153, 75 L. Ed. 374.

The importance of this motion requires, it seems to me, that the court should decide the real purpose of the motion aside from possible technical objections to such immediate decision, although none is made, and should give its views at once as to the legality of this new departure.

The right to take finger prints of those convicted of felonies is not questioned here.

It is asserted by counsel for both parties that no federal statute exists expressly directing the taking of finger prints of this defendant.

In deciding the motion, therefore, the court is careful to confine its decision within the limits of the motion.

This issue, presented by the motion papers, is, whether it is lawful for the prohibition administrator to finger print, upon arrest and before arraignment or conviction, a citizen charged with the sale of a quart, or less than a gallon, of intoxicating liquor, even though such procedure is suggested and directed by the United States attorney, through an "assistant charged with the duty of prosecuting such offense.

The question of the value of finger prints as a means of identification has been practically settled. It does not seem to me that it can be disputed. See the very thorough opinion of Judge Wadhams, People v. Sallow, 100 Misc. Rep. 447, 165 N. Y. S. 915.

Names and appearances may easily be assumed and changed and while, like everything else that is human, occasional mistakes appear, it is exceedingly rare for this means of identification to fail. It is said in People v. Sallow, supra, 100 Misc. Rep. 447, 165 N. Y. S. 915, 918, page 918: “It is claimed that by means of finger prints the Metropolitan Police force of .London during the 13 years from 1901 to 1914 have made over 103,000 identifications, and the Magistrates’ Court of New York City during the 4 years from 1911 to 1915 have made 31,000 identifications, without error.”

There are many other evidences of the usefulness of finger prints in various ways not involving identification in criminal trials.

It may even be that to overcome, honest objection to this mode of identification is a matter of necessary civic education and of course, because of its accuracy, those who commit crimes are particularly opposed to its use.

Nevertheless that there has been sincere opposition to the compelling of a person to submit to the taking of his fingerprints and that it is considered an indignity and an invasion of personal rights, which oould only be obtained after and pursuant to legislation on the subject, seems to be its history in this state.

Two brief citations from state cases may be made. The first is as follows: “There are certain rights pertaining to mankind which have their origin independent of any express provision of law, and which are termed 'natural rights.’ One of these is the right of personal liberty. This includes not only absolute freedom to every one to go where and when he pleases, but the right to preserve his person inviolate from attack by any other person.” People ex rel. Gow v. Bingham, 57 Misc. Rep. 66, 107 N. Y. S. 1011, page 1014. See also 5 Corpus Juris, § 73, page 433. “The right to do this (taking finger-prints) in advance of conviction and in the absence of statutory authority has been denied.”

Even after the Legislature authorized the taking of finger prints we find this statement in regard to finger prints. “An innocent man. accused of crime is sometimes compelled to make sacrifice and undergo suffering for the benefit of society. Like payment of taxes and service upon juries, it is part of the price paid for the privilege of living in a country governed by law. One, for the good of all, may be required to submit to imprisonment, incur expense, and endure mental distress, because the state eannot exist without the preservation of order, and order ean-not be preserved without the punishment of the guilty, which necessarily involves, sometimes, the trial of the innocent.” Molineux, v. Collins, 177 N. Y. 395, page 399, 69 N. E. 727, 728, 65 L. R. A. 104.

It has therefore been the policy of this state not to authorize or allow the taking of finger prints unless pursuant to statute, that is, by an expression of the will of the people through their Legislature.

As I have already said, both counsel before me assert, and after search I am compelled to agree, that there is no direct federal statute directly authorizing the taking of finger prints of a defendant such as Kelly is.

The United States attorney claims that this absence of statute is not necessarily an insurmountable obstacle for this court can adopt and use the statute now the law in the state in which this court is located, and he specifically refers to section 940 of the Code of Criminal Procedure of this state, which went into effeet July 1, 1928. This section is as follows: thumb prints, and if necessary the photograph, of every person arrested and charged with a felony or with any of the misdemeanors and offenses specified in section five hundred and fifty-two of this code.”

“Identifying criminals; taking of fingerprints. — In order that the courts and public officials dealing with criminals may have accurate information as to the identity of persons charged with crime, there is hereby conferred and imposed upon the chief of police or peace officer performing such functions, in each city, town and village, and upon sheriffs, members of the state constabulary, the railway police, the aqueduct police, the state park police and all other peace officers making arrests, the power and duty of causing to be taken, upon arrest, finger and

It will be observed that this section, which is so depended upon for the right here to take the finger prints of Kelly, charged with the sale of a quart of gin, relates to felonies, and it is only in case of expressly specified misdemeanors that the right is allowed even by this statute. These express misdemeanors have nothing whatever, to do with federal offenses against the National Prohibition Act.

Before this court can thus indirectly enforce the • procedure of a state statute, recourse should be had to some federal statute which allows it. The Conformity Act Rev. St. § 914, title 28, USCA § 724 which directs that practice shall conform as near as may be to that of the state covers only civil causes.

The United States Attorney therefore refers for this authority to Rev. St. § 1014 (title 18, USCA § 591). This statute, enacted in 1896, and amended in 1901, states in substance that an offender against any law of the United States may be arrested, imprisoned, and bailed “agreeably to the usual mode of process against offenders in such State.”

That Congress could have meant thereby that a prohibition administrator in the future might finger print, in advance of conviction, violators against the National Prohibition Act (27 USCA) takes considerable imagination, yet, assuming that this is available, a reference to the state statute gives no such right in eases where the offense charged may' be a misdemeanor.

A nearer statute than the one cited by the United States Attorney is Rev. St. § 722 (title 28 USCA § 729). This statute has been called by Justice Clifford of the Supreme Court in his dissenting opinion (Tennessee v. Davis, 100 U. S. 257, 299, 25 L. Ed. 648) as “a mere jumble of Federal law, common law, and<State law, consisting of incongruous and irreconcilable regulations.” This section reads:

“Proceedings in vindication of civil rights. The jurisdiction in civil and criminal matters conferred on the district courts by the provisions of chapter 3 of Title 8, and. Title 18, for the protection of all persons in the United States in their civil rights, and for their vindication, shall be exercised and enforced in conformity with the laws of the United States, so far as such laws are suitable to carry the same into effect; but in all eases where they axe not adapted to the object, or are deficient in the provisions necessary to furnish suitable remedies and punish offenses against law, the common law, as modified and changed by the Constitution and statutes of the State wherein the court having jurisdiction of such civil or criminal cause is held, so far as the same is not inconsistent with the Constitution and laws of the United States, shall be extended to and govern the said courts in the trial and disposition of the e.ause, and, if it is of a criminal nature, in the infliction of punishment on the party found guilty.” R. S. 722.

The above section apparently authorizes this court to fall back upon the common law; if necessary, but no right is given by the common law to take finger prints. So far as the common law has been modified or changed by the state statute, we have already seen that the statute does not allow finger printing in eases of misdemeanors except as expressly specified which exceptions are not applicable here.

I am unable, therefore, to find any federal statute or statute in this state which applies to the question here involved.

The United States attorney, in the absence of such statutory authority, then urges that it is required (taking of finger prints) and is a duty imposed by Congress upon the Attorney General by the Act of Congress, June 22, 1870 (chapter 150, § 12, 16 Stat. 164, Rev. St. § 384, title 5, U. S. Code § 333 (5 USCA § 333), “whereunder the Bureau of Investigation of the Department of Justice must compile statistics of crime.” Government’s brief, page 3.

This section, however, is insufficient to support the taking of finger prints, in advance of a trial, in a case such as this before me.

Nor do I find any order of the Attorney General’s directing the taking of such finger prints so as to make it a uniform practice, .even if such order would be sufficient.

On the contrary, it is asserted by counsel for defendant that this is an innovation in this district, and one that does not prevail in other districts. As to this I do not know.

It would seem far better, if such procedure is to be followed, that it be uniform throughout the United States in the federal courts if it is to be useful and not dependent Upon various decisions of federal courts sitting in forty-eight different states with different statutory provisions in such states.

This brings us to the necessary considera^ tion of Kelly’s offense.

He is charged with the sale, of a quart of gin.

Congress has from time to time legislated on this offense.

There is no necessity to quote at length; suffice it to say that originally Congress made the punishment for the sale of liquor of any quantity, for a first offense, a fine, or imprisonment not exceeding six months. Act of October 28, 1919, e. 85, title 2, § 29, 41 Stat. 316, title 27 USCA § 46.

Thereafter, and on March 2, 1929, Congress increased the punishment for such sale, so that it became a fine, or imprisonment not to exceed five years, adding the proviso that, when the court should impose sentence, it should discriminate between a slight violation and habitual sales, or attempts to commercialize violations of the law. March 2,1929, c. 473, § 1, 45 Stat. 1446, title 27 USCA § 91.

Possibly, in order to aid the court in this discrimination, Congress, on January 15, 1931, again amended the act (27 USCA § 91) and provided, in substance, that any person who violated the law, by a sale of not more than one gallon of liquor, should be punished by a fine or imprisonment not to exceed six months, provided, however, that such defendant had not been convicted within two years of a violation of the National Prohibition Act, or was not a habitual violator thereof.

Thus we see that there has been a continual change in regard to the punishment of one selling liquor. These changes become of great importance.

It has been held that offenses created by the National Prohibition Act are not “mala in se” but are “mala prohibita,” that they do not involve “moral turpitude” as such. Grader v. U. S., 21 F.(2d) 513, page 515 (C. C. A. 8): The importance of all this is that Kelly may be guilty only of a misdemeanor. There is, as we have seen, no authority in state or federal statutes for the taking of finger prints for misdemeanors except those expressly mentioned in the state statute, which do not here apply.

The test as to whether an offense is a felony or misdemeanor lies in the extent of punishment provided.

United States Criminal Code, § 335, provides : “All offenses which may be punished by death or imprisonment for a term exeeed-ing one year, shall be deemed felonies. All other offenses shall be deemed misdemeanors.” Title 18 USCA § 541.

It is unnecessary to go into the question of what crimes may be prosecuted by indictment or by information, except to say that all felonies must be charged by the grand jury by means of an indictment or presentment. This distinction is not only preserved by the Constitution, but has resulted in the discharge of a defendant. In re Wilson, 114 U. S. 417, 5 S. Ct. 935, 29 L. Ed. 89; Parkinson v. U. S., 121 U. S. 281, 7 S. Ct. 896, 30 L. Ed. 959.

The courts have often times decided what was or what was not infamous punishment, and have held that imprisonment in a penitentiary is infamous punishment. U. S. v. De Walt, 128 U. S. 393, 9 S. Ct. 111, 32 L. Ed. 485.

Consequently, in view of the changes in the prohibition law above mentioned, it would be at all times the safest course of the United States attorney to proceed as to all sales by means of indictment, for it has been stated: “When the accused is in danger of being subjected to an infamous punishment if convicted, he has.the right to insist that he shall not be put upon his trial except on the accusation of a grand jury.” Mackin v. U. S., 117 U. S. 348, page 351, 6 S. Ct. 777, 778, 29 L. Ed. 909.

Hence, if Kelly is an habitual offender, or if he has been convicted within the past two years of an offense against the prohibition act, he cannot secure the advantage of the recent amendment to the act making his crime a misdemeanor, but is exposed to the severe punishment of the so-called “Jones Act,” which has been above referred to, and he is entitled to be proceeded against by indictment.

It thus might be to the advantage of Kelly to have his finger prints taken to show his previous innocence, provided such procedure had been in effect for the past two years. He could thus show conclusively that he had not been an habitual offender, nor has he been convicted during the past two years. But no such records are available, for this is a new procedure, and at the present time, therefore, the taking of his finger prints serve no useful purpose either to himself or the government, nor can any claim of necessity be made.

To be sure, it may be urged, that this step must he taken some time but, it seems to me, it should best start with Congress, so that there may be no mistake about the will of the people in regard to offenses which may or may not be misdemeanors.

Congress has recognized this possible confusion as to how the United States attorney should proceed by providing a further amendment, knowing that the more cumbersome process of indictment in all cases of sales was not to be desired. On December 16, 1930 section 335 of the United States Criminal Code supra (18 USCA § 541), which defines felonies and misdemeanors, was amended by adding a “proviso” that, where the penalty was that of confinement in prison for not more than six months, it should be deemed a petty offense, and all such may be prosecuted by the United States attorney by information and not by indictment.

An indictment covers all crimes, an information covers misdemeanors.

Thus, it seems to me, in the absence of any statutory authority in the state or in the federal law, unnecessary to take the finger prints of possible misdemeanants and at the sole direction of the United States attorney or an assistant, who may desire to file an information on the plea that it is important to do so, in order to ascertain the exact nature of the offense.

It is subjecting a “petty” offender to unnecessary indignity, if it may so be considered, and is unnecessary to the United States attorney as, in the case of doubt, he may readily proceed by indictment.

It is my opinion therefore, while not overlooking the advantages proved to exist in the prosecution of felonies arising from identifications available from finger prints and while also, believing in the advisability of some federal statute, duly considered, and expressed by Congress, furnishing proper aid in this direction, uniformly, to prosecutors of violators of the federal law, that, no . statutory authority, either federal or state, having been shown and no necessity existing therefor at the present time, there has no good reason been shown by the government why a possible misdemeanant before trial and conviction should be harassed by having his finger prints taken at the direction of a United States attorney or his assistant, and that such practice is at present unlawful in this jurisdiction.

Therefore the motion is granted and the finger prints of Kelly, so unlawfully taken, should be returned to him, thus obviating the necessity of an injunction against their use. Submit order.


source: Caselaw Access Project

author: F. J. COLEMAN, District Judge.

license: Public Domain

text:
    WILSON et al. v. ANDERSON, Collector of Internal Revenue.
    District Court, S. D. New York.
    March 19, 1931.

      Root, Clark, Buckner & Ballantine, of New York City (George E. Cleary, of New York City, and Clark T. Brown, of Washington, D. C., of counsel), for plaintiffs.
    Robert E. Manley, Acting U. S. Atty., of New York City (W. H. Schulman, of New York City, of counsel), for defendant.
   F. J. COLEMAN, District Judge.

Richard T. Wilson, Sr., died on November 26,1910, leaving as part of his residuary estate the Commercial Building in New York City having a value at that time of $290,000. His son, Richard T. Wilson, Jr., who is the plaintiffs’ testator, was one of the residuary legatees, and when the Commercial Building was sold in 1922 hy the executors of the father’s estate at a loss of $113,305.84, Richard T. Wilson, Jr., deducted his proportionate part of the loss, which is now conceded to be $22,660, from his total income reported for that year. The Commissioner of Internal Revenue disallowed the deduction and assessed an additional tax on account of it, which was paid under protest and is now sought to be recovered. If the deduction was proper, it is conceded plaintiff is entitled to recover $11,909.59 and $2,499.03 interest paid, together with interest on both amounts as provided by law.

The question presented is whether the residuary legatees under the father’s will had the right to deduct from their individual incomes the loss sustained in the sale of the Commercial Building, or whether the deduction could only be made from the total income reported by the father’s executors. Coneededly the residuary legatees had the right to do so if the property was left to them directly and they became the holders of the legal title, subject to a mere power of sale in the executors; but the government contends that the property was given to the persons named as executors in trust for the residuary legatees. The plaintiffs deny that there was any trust and contend that even if there were one, its terms were such that the legatees became immediately entitled to the income and proceeds from the property and so had the right to deduct the loss in their individual returns.

The first problem is the construction of the father’s will to determine whether the residuary estate was left in trust, and if so upon what terms. He left a net estate of approximately $16,000,000 consisting of various parcels of real estate valued at about $2,-300,000 and personalty worth about $14,-000,000. His general plan was to set up spendthrift trusts for each of his five children in the amount of $500,000 in some instances and of $1,000,000 in others, and to divide the residuum of the estate among them. He made a direct and express bequest of the trust funds to a named trustee, which was not one of the executors, and specified the terms of the trust, but as to the residuum he used the following words:

“All the rest, residue and remainder of my property, real, personal and of every kind and description, which I shall own at the time of my death, I direct my executors hereinafter named to sell and convert into personalty, and to divide the proceeds there'of into five equal parts which I give and bequeath as follows:
“(1) To my son Marshall Orme Wilson one of such parts to be his absolutely;
“(2) To my daughter, Mary R. Goelet one of such parts to be hers absolutely.
“(3) One of such parts to the amount of $500,000 I direct to be added to the trust fund of $500,000 created in and by the foregoing third Article of this will for the benefit of my son, Richard T. Wilson, Jr. and to be subject to the provisions of said Third Article, both as to the income therefrom and the disposition of the principal thereof, as if a part of said original trust fund; and the balance of such part I give and bequeath to my said son, Richard T. Wilson, Jr. to be his absolutely.”

Provisions similar to that for Richard T. Wilson, Jr., were made for the remaining two children.

The testator was concerned about the nature of his property which consisted of real estate and of the stock of manufacturing and business corporations. He desired to provide not only for its division among his children, but also for protection against its loss of value after his death. He, accordingly, directed that the spendthrift trusts be constituted out of securities which were not the stock of business or manufacturing corporations, and provided:

“As the balance of my residuary estate will largely consist of real estate in this and other States and shares of manufacturing and business corporations which should not be sold excepting under favorable conditions, I direct my said exeeutors to hold and manage such remaining portion of my residuary estate until in their judgment it can from time to time be advantageously sold and disposed of, not exceeding however a period longer than the lives of my sons, Marshall Orme Wilson and Richard T. Wilson, Jr., and the survivor of them, and I hereby authorize and empower my said executors within said period, to sell, convey, assign and transfer the same, or any part thereof, at such time or times as they may deem for the best interests of my estate, and upon such terms and conditions as they may deem proper, including the terms and mode of payment therefor.”

Furthermore, in regard to this balance of the residuum he authorized the exeeutors in their discretion to organize a holding dorpo-ration and to retain its stock until in the judgment of the executors it could be advantageously disposed of, but not longer than' the two specified lives in being. The executors, however, never organized such corporation.

The only other provisions which need be considered in detail read as follows:

“Upon any sale or disposition being made by my said exeeutors of such portion of my residuary estate, or of any part thereof, or of the shares of the corporation which they are hereinbefore authorized to incorporate, or any part thereof, I authorize and empower my said exeeutors if the proceeds, or any part thereof, may in their judgment be distributed among the persons entitled thereto hereunder without any detriment to their interests to so distribute them forthwith; or in their discretion to retain the same, or any part thereof, for further conversion before distribution, not, however, beyond the period of the lives of my said sons and the survivor of them.
“During the period that my said executors shall hold such portion of my residuary estate of the shares of the corporation which they are hereinbefore authorized to incorporate, or any part thereof, they shall semi-annually pay over the net income thereof, or of such parts thereof as may be unsold or undistributed, to the persons to whom my residuary estate is bequeathed in and by the foregoing fourth article in the proportion of their respective interests.”

Three exeeutors were appointed, including two of the residuary legatees, and they were given power to vote all stock “held by them as such executors * * * and generally to have and exercise as to all such matters the powers of an individual owner who is under no trust obligation.”

It thus appears that the testator did not expressly give the real property to anyone, but imperatively directed his executors .to sell it within two lives in being. He did, however, make a present gift of the proceeds to his five children “absolutely.” Pending the sale, which might in the discretion of the ex-eeutors be long deferred (it was twelve years in the ease of the Commercial Building), the exeeutors were directed to “hold and manage” the property and to “semi-annually pay over the net income thereof” to the children. While there was no express provision to that effect, it must be held that the executors were empowered to collect the income and profits during the period they held and managed the property. Upon a sale they were authorized to distribute the proceeds forthwith or in their discretion to retain them “for further conversion before distribution,” but not beyond the two lives, in the meanwhile distributing the net income from such proceeds semiannually.

It is clear that the testator did not have the specific idea of a trust in mind when making the* provisions for his residuary estate. Even if the legal effect of these provisions was to create a trust, it is manifest that the testator did not in his own mind apply that name to the result. The will does create trusts in the usual form by expressly giving the trust funds to the trustee upon specified conditions; but in regard to the residuary the only words of gift are of the proceeds to the children “absolutely,” and the persons named as executors are never referred to as trustees.

It remains therefore to be determined whether the provisions necessitate a ruling that a trust of the residuary estate was created contrary to the testator’s classification. It must be recognized that he had no desire to postpone the distribution of his residuary estate nor his children’s absolute dominion over it. He intended that before distribution his realty should be converted to personalty, and, probably, that his stock of manufacturing and business corporations be turned into less speculative investments; and his purpose in making the various provisions which cause the present doubt was merely to give the executors such powers in the conversion and distribution that a sacrifice of value might be avoided, and to provide for the distribution of the income pending the distribution of the corpus. Defendant emphasizes the provision that the executors may retain the proceeds of any sale if in their judgment an immediate distribution would not be for the best interests of the legatees; but that retention was limited to the purpose of “further conversion before distribution.”

I feel constrained to hold that the will created a residuary trust, whatever the testator’s idea of the nomenclature may have been, because of the executor’s control over the property and the income therefrom pending its sale and distribution; and that as to the real estate, the trust was valid under the New York Real Property Law (Consol. Laws, c. 50) § 96, subd. 2, as one to sell for the benefit of legatees. It is impossible for me to see any essential difference between the present ease and Morse v. Morse, 85 N. Y. 53, which apparently has never been overruled or criticized and which establishes the law of New York upon the point.

Notwithstanding the existence of the trust, I believe the loss was deductible from the gross income of the beneficiaries. While it is true that under the federal statutes and regulations a trust estate and its beneficiaries are to some extent separate tax entities, in the present ease the beneficiaries had so immediate an interest in the trust property that a loss of the latter may properly be held to have been suffered by them. They were the beneficial owners not only of the income, but of the corpus, and that ownership was unqualified and “absolute.” They were entitled to a practically immediate distribution not only of the income, but of the proceeds of the sale of the real property subject only to the right of the executors to reserve such part of the proceeds as they thought should be further converted before distribution. Under the Revenue Act of 1921, § 219 (42 Stat. 246), the income was chargeable to the beneficiaries and the tax thereon payable by them even if there had been no distribution of it, because under the terms of the will the beneficiaries were entitled to a distribution. It is difficult to see why that principle should not apply to capital gains and losses where the same beneficiaries are entitled to a distribution of the corpus.

While the facts in Merle-Smith v. Commissioner (C. C. A.) 42 F.(2d) 837, are dissimilar to those of the present case, I think the sentiments therein expressed are applicable. The plaintiff here has real interest in the corpus and possesses every important attribute of ownership to even greater extent than the petitioner in that ease. Munger v. Commissioner, 16 B. T. A. 168, and People ex rel. Field v. Gilchrist, 240 N. Y. 301, 148 N. E. 530, also tend to support this ruling. See, however, Klein’s Federal Income Taxation, p. 1169 and its 1931 Supplement, p. 307.

Judgment is accordingly directed for the plaintiff in the sum of $14,408.62, with interest as provided by law and costs. Settle findings on notice.


author: BOURQUIN, District Judge.

text:
    NORDBERG v. UNITED STATES.
    No. 512.
    District Court, D. Montana.
    July 9, 1931.

      John W. Mahan, of Helena, Mont., for plaintiff.
    Wellington D. Rankin, U. S. Atty., of Helena, Mont., and D. D. Evans, Regional Atty. for United States Veterans’ Bureau, of Ft. Harrison, Mont., for the United States.
   BOURQUIN, District Judge.

Defendant moves for a new trial, contending the verdict for plaintiff in an action upon a war risk policy is not supported by the evidence. The nature of the latter permits brevity. It appears that plaintiff in the National Guard was mustered into service in 1917, became beneficiary in the usual policy, saw service over seas, returned without sears save for appendicitis, nephritis, and another on the hip, all of antewar origin, and in May, 1919, was discharged without wound, impaired health, or disability, as appears by his signed statement and medical examination of record. Thereupon he was employed at his trade of blacksmith for two months and thereafter at “outside work” to November 10, 1919. Later was recurrence of his kidney trouble, and in February and April, 1920, were operations to relieve infection. He was in hospital at defendant’s expense and allowance of $80 per month. Of duration of this is no definite evidence save his vague memory to July, 1920, after which he was again employed as a blacksmith to December, 1920. He then entered upon vocational training at defendant’s expense and allowances of $100, $120 per month, he says from January, 1921, to March, 1923 (though the school’s records say to September 30, 1923, and it collected accordingly), graduating as a bookkeeper. From graduation to August, 1923, he was accountant for the telephone company, was off one month because of flu, and with the company one more month, was released he believes because insufficiently trained. For that reason he applied for the benefits of further schooling but in telegraphy, which apparently refused, in February, 1924, he purchased an “auto shop” and conducted it as workman and overseer of employees to the fall of 1928.

In the mesne time and in March, 1921, he abandoned $7,000 of his $10,000 policy, in January, 1927, was rated of total and permanent disability in respect to the balance of $3,000, about then he married, and in November, 1927, was refused reinstatement of the $7,000 because of the rating aforesaid. So far as his later activities are concerned, he testified on direct only that in the fall of 1928 he had worked “off and on” two weeks in a foundry, but on cross admitted he had worked as blacksmith for the county from January, 1929, until he “laid off to go to the hospital in 1930,” of which hospitalization is no other evidence. The county records disclose he thus worked 308% days in 1929, and 181 days to August 17 in 1930, at $6 per day.

This action was commenced May 23,1929, to enforce payment of the abandoned $7,000. No effort was made to bring it to trial until the October term, 1930, and it was tried January 19, 1931. There are statements of plaintiff and friends of “feeling sick, unable to work, looks bad, lay-offs, poor performance,” etc., and of doctors that at all times he was disabled from labor. The most credible of his doctors, however, testifies that as bookkeeper, clerk, watchman, and the like he could function half to two-thirds of the time.

The court’s notes at the trial record plaintiff of healthful appearance, alert, quick, and active.

March, 1921, plaintiff ceasing to pay premiums upon the abandoned $7,000 of his policy in respect to which he sues, the issue is, was he then, at all times hitherto and now (not one, but all), of that total, permanent disability against which the policy insures and upon which defendant pays? See section 511, 38 USCA.

The burden is his to prove the affirmative, and not only has he failed, but the evidence of the eighteen months immediately preceding the term of trial, alone suffices to' prove the contrary. Eighteen months as a blacksmith refutes all assertions, beliefs, and opinions of total disability. His acts speak louder, more truly than words, and any finding that what he did he was totally disabled from doing, is incited by interest and sympathy and not at all by reason, is a transparent absurdity.

In one of the earliest cases this court declared: “When earning ability or capacity is destroyed to an extent that no substantial portion remains on its merits to serve demand and to secure market, there is total disability, and if it be reasonably probable that this status will long continue, is not temporary, .the disability is total and permanent in legal , contemplation, and within the intent of this statute.” Law’s Case (D. C.) 290 E. 972, 976.

Erom that construction no reason to depart is perceived, and plaintiff’s case is not within it.

In 1929, in addition to insurance payments, not only did the generous defendant render to him at least $1,200 as a pension or compensation, but he actually worked at the hard labor of a blacksmith every working day save four and a half, and earned $1,-851 — a total income of more than $3,051, which well might excite envy in the most able-bodied workman, and inspire hope for another war and “total disability” like in kind and benefits.

Counsel urges, however, that the statute vests authority in the administrative officers to “determine the full and exact terms and conditions” of the policies; that in exercise thereof they define total permanent disability as “any impairment reasonably certain to continue for life and which renders it impossible to follow continuously any substantially gainful occupation”; that this controls the courts; and that even though insured can labor half, two-thirds, three-quarters of the time, that is not continuous within said definition; and so he is totally disabled and entitled to payment of the policy. A sufficient answer is that laws which vest power in administrative officers to make regulations, import regulations to enforce the law as written, confer no authority to legislate, to amend and change the terms of the statute, to defeat the intent of congress, to create liability where the statute does not. The statute and its judicial construction control, not the regulation. In the former, Congress insured against but two particular events and specified contingencies, viz., “death or total permanent disability,” the one well-nigh a synonym for the other, and authorized the administrative officers to “determine full and exact terms and conditions” of time, examination, amount, premiums, proofs, payment, etc., but not to legislate for insurance upon the happening of any other event or contingency. Congress stipulated that the policy will be paid if, when, and during total disability, not disability two-thirds, half, quarter, or anything less than substantially all. Had Congress intended the latter, it would have plainly said so, even as it did in the gratuity, compensation, or pension portion of the statute, wherein it clearly distinguishes between partial disability as low as one-tenth and total disability. And any regulation defining total permanent disability to import less than the clear common-sense meaning of the term, to impose on defendant liability to pay for disability less than the statutory total, is without authority, is favoritism, abuse of power, and void. Moreover, these officers of the Veterans’ Bureau rejected plaintiff’s claim that he was totally disabled when he abandoned the $7,000 of his policy now in suit, demonstrating their regulation is not to he construed as plaintiff would have it in order to recover here.

For that matter, all labor deteriorates and requires time to recuperate. There is no continuous labor. Hence, be the rest period longer or shorter, he who can pursue a gainful calling a half, third, quarter, or other substantial portion of the time is not totally disabled within this statute or any reasonable interpretation of the term.

Plaintiff’s case is very like Rice’s (C. C. A.) 47 F.(2d) 749, and Le Due’s (C. C. A.) 48 F.(2d) 789, wherein for analogous reasons the government was granted new trials.

See also Wills’ Case (D. C.) 7 F.(2d) 137.

New trial granted.


author: KIRKPATRICK, District Judge.

text:
    The JOHN F. LEWIS.
    No. 53.
    District Court, E. D. Pennsylvania.
    March 12, 1930.
    Bigham, Englar & Jones, of New York City, and Acker, Manning & Brown and Everett H. Brown, Jr., all of Philadelphia, Pa., for libelant.
    Lewis, Adler & Laws and Otto Wolff, Jr., all of Philadelphia, Pa., for defendant.
   KIRKPATRICK, District Judge.

The libelants were insurers of a grain elevator hull which was damaged in a collision with a scow of unknown ownership, and in this action in admiralty they seek to recover against the tug John F. Lewis which at the time of collision had the elevator hull in tow. The facts are as follows: On June 19,1922, the Lewis, with her tow, on a voyage from Wilmington to New York, was about to enter New York harbor. The tow consisted of, first, a barge on a hawser 209 fathoms from the tug; and, second, the elevator hull (being towed stem foremost) on a hawser about 150 fathoms in length behind the barge. Between 7 and 8 o’clock in the evening, .the tug - and its tow passed Scotland lightship at the entrance to New York harbor. At that time the weather was somewhat hazy, the tide ebb, and the wind negligible. The tug left Scotland lightship on her starboard hand and set a course up the Swash channel. As she proceeded darkness came on and at the same time the fog became heavier, until by 9 o’clock it was so thick that she could not see the lights on the barge astern. At that point the master reduced the speed of the tug to about two miles per hour and began to blow fog signals, one long blast followed by two short ones. She proceeded in this manner until 9:39, when another tug coming toward them with a mud scow in tow crossed the bow of the barge astern of the Lewis diagonally from starboard to port and parted the hawser between the Lewis and the barge. The mud scow, following, came down the starboard side of the barge doing some damage to it, cleared it, carrying its hawser underneath the barge, and then collided with the elevator hull on her starboard side as she was being towed (actually her port side) also damaging it. The outgoing tug and scow disappeared in the darkness and fog before their identity could be ascertained. No one on the Lewis saw them at any time. The first knowledge the master of the Lewis had that anything had happened was when the speed of his tug increased by reason of the parting of the hawser between her and the barge. The barge immediately anchored, the tug stood by, and the whole flotilla awaited the lifting of the fog. After the fog was lifted, it was discovered that they were alongside Roamer shoal. The tug again made up her tow and proceeded to her destination.

The first fault charged against the tug was failing to stop and anchor when the fog became dense. I am of the opinion that under the circumstances it was not negligent for the tug to proceed in the manner in which she did. The rule does not require that the vessel must always stop in a fog. In the Naamlooze Venootschap Maatschappij Stoomschip Barendrecht v. Moran Towing & Transportation Co. (C. C. A.) 9 F.(2d) 614, it was stated that a steamer in a fog must control her speed, so that she can avoid collision with another; herself observing proper precautions. In fog collision eases the duty of care is met if the vessel is under such control that she can reverse her engines and come to a standstill in time to avoid colliding with a vessel or object which she ought to see, having regard to the’ fog density. Thus, in the City of Norfolk (C. C. A.) 266 F. 641, 645, the court said: “If the fog is so dense as to justify the master in believing that another vessel going at a moderate speed could not be seen at the distance in which he could stop his vessel, and that the two vessels would be in danger of collision, then the master should anchor and give the statutory signals.” See, also, The Manchioneal (C. C. A.) 243 F. 861; The P. R. R. No. 5 (C. C. A.) 181 F. 833. As to the density of the fog in this case, the master of tug testified that he could not see the lights of the barge which was about 266 fathoms or some 1,260 feet astern. He also said that he “could not see anything,” but that statement, of course, cannot be taken literally. Jacobson, the only man on the elevator hull, testified that he saw the outeoming tug after she had crossed the line of the tow and was about 50 feet from the port bow of the barge. That would put her about 1,000 feet away from him. There is nothing to show that the Lewis, proceeding with a heavy tow at less than 3 miles an hour against an ebb tide, could not have stopped her headway within 1,000 feet, and I think that she could. It must also be remembered that when the fog became dense the Lewis Avas in the Swash channel and she had to consider the danger arising from obstructing the channel by anchoring there Avith her flotilla.

The second fault charged is failure to navigate properly Avith reference to the approaching tug and mud scow. The libelants’ case here depends upon showing that the Lewis had some knowledge before the collision that the outeoming tug was in her vicinity, and this involves what is really the only disputed fact in the case. The libelants rely upon the testimony of Jacobson who testified that about three minutes before the collision he heard the LeAvis blow two long blasts of the whistle, inviting a starboard to starboard passing. Jacobson, of course, could not see the Lewis at the time, but testified from the direction of the sound. The libelants argue that Jacobson probably was mistaken, and that the signal came from the outeoming tug, but contend that this is not important, because whether the signal was from the out-coming tug or from the Lewis it indicated that the Lewis had knowledge of the presence of the outgoing scow in the immediate vicinity. On the other hand, both the master of the Lewis and the second mate testified positively that they neither blew such a signal nor heard it, although the mate said he could hear the fog signal on Roamer shoal. Under the circumstances, I think that this is more than merely negative' testimony, and that it is probable that Jacobson mistook the fog signal for the two blast signal. At any rate, I find it to be the fact that no two-blast signal was blown either by the Lems or by the outeoming tug. It follows that the Lewis cannot be charged with fault in failing to navigate with reference to the tug.

The third fault charged is that the tug failed to see to it that the elevator hull displayed proper lights. The fact is that the elevator hull was carrying two bright lights, one fore and one aft, fastened upon poles. It may be assumed that this was not in accordance Avith the regulations for the waters of New York harbor, which required two white lights on the stem thwart horizontal to each other, not less than 5 feet apart and not less than 4 feet above the deck house. The finding must be against the libelants on this point for two reasons: First, where there is a representative of the owner of the tow on board the tow, the duty of seeing that proper lights are displayed devolves at least in part upon the vessel being towed. This rule would call for divided damages. Second, the absence of a second light on the stern of the hull could not by any possibility have contributed to the collision. I do not mean to ignore the rule that, where there has been a failure to observe a statutory requirement, the burden of shoAving that failure in this respect not only did not but could not have contributed to the collision lies upon the party at fault, but in this case it seems obvious that the arrangement of the lights on the hull had nothing whatever to do with the accident. The probabilities are that when the outcoming' tug crossed the hawser between the Lewis and the barge she could not have seen the lights on the hull at all. I£ she did see the lights they told her of the presence of the hull. The only additional information she would have gained from a proper arrangement of lights was that the hull was the last vessel in the tow. How an erroneous belief that there were other vessels behind the hull could have affected her course in any way I cannot imagine, and I therefore find as a fact that the failure of the hull to display her lights by the harbor regulations did not and could not in any way have contributed to the collision.

The libel may be dismissed, with costs to be taxed.


author: SIMONS, District Judge.

text:
    CLEVELAND TRUST CO. v. NELSON et al.
    No. 4408.
    District Court E. D. Michigan, S. D.
    July 17, 1931.
    Warren, Hill & Hamblen, of Detroit, Mich. (Richey & Watts, of Cleveland, Ohio, of counsel), for plaintiff.
    Ramsey & Kent, of New York City, for defendants Nelson and Bohn Aluminum Co.
    Carlos J. Jolly and Bruce G. Booth, both of Detroit, Mich. (Melville Church, of Washington, D. C., and George B. Schley, of Indianapolis, Ind., .of .counsel), for defendants Berry and General Motors Corporation.
   SIMONS, District Judge.

The present suit was begun by bill in equity under section 4915, R. S., as amended by the Act of March 2,1927 (35 USCA § 63), based upon certain interference proceedings in the Patent Office. Section 4915 is printed in full in the margin. The parties to this suit and their relationship to the subject-matter is .as follows:

Tbe plaintiff is the assignee of one Jar-dine, who was an, applicant in two antecedent interferences in the Patent Office. The defendants Nelson and Berry were also applicants in the interference proceedings; the latter being successful both before the Examiner and before the Board of Appeals. Nelson’s application was assigned to the defendant Bohn Aluminum & Brass Corpora^ tion. The defendant General Motors Corporation is an exclusive licensee under the Berry application. The defendants Nelson and the Bohn Corporation, acting together, filed a counterclaim under section 4915. The successful applicant, Berry, and the General Motors Corporation, his licensee, are asking for no affirmative relief.

The cause is now before the court upon a motion made by Berry and the General Motors Corporation to dismiss the bill. This motion asserts that this court is a constitutional court as distinguished from a legislative court, and therefore has no jurisdiction in the present suit, for the reason that: (a) This suit is not a case or controversy, because not in such form that the judicial power is capable of acting upon it, since the contentions of all adverse parties are not submitted to the court for adjudication; (b) this suit calls for mere administrative or advisory or declaratory action. It is urged that, if either of these reasons is correct, suit must be dismissed.

Section 4915, either in its present or some other form, has been part of the law of the United States since 1836. It purports to give to an applicant for a patent, whenever his application has been refused by the Commissioner of Patents and an appeal has not been taken from the decision of the Board of Appeals to the Court of Customs and Patent Appeals for the District of Columbia, a remedy by bill in equity, and undertakes to empower the proper court in which such bill is filed to adjudge that the applicant is entitled according to law to receive a patent for his invention. The power of the Congress under the Constitution to grant such remedy as is by this statute sought to be given to a defeated applicant for a patent, and the power of the court within the grant of judicial power conferred by article 3, section 1, of the Constitution, to make such adjudication as is by the statute provided, is now for the first time directly challenged. It may at once be conceded, without argument or citation, that the constitutionality of an act of Congress is presumed, unless the contrary appears beyond all reasonable doubt, and that long custom and acquiescence reinforces this presumption. It must also be conceded that a mere assumption of jurisdiction by a court, however long continued, cannot confer a jurisdiction otherwise nonexistent under the constitutional grant of judicial power.

Such general aids to construction being understood, we come to the arguments advanced in support of the motion to dismiss. There has been an increasing tendency in recent years on the part of the Supreme Court to sharply distinguish between constitutional courts and legislative courts, and the respective limits of the jurisdiction which Congress may impose on them. Illustrative of this class of eases are the following: Postum Cereal Co. v. California Fig Nut Co., 272 U. S. 693, 47 S. Ct. 284, 71 L. Ed. 478; Liberty Warehouse Co. v. Grannis, 273 U. S. 70, 47 S. Ct. 282, 71 L. Ed. 541; Ex parte Bakelite Corporation, 279 U. S. 438, 49 S. Ct. 411, 73 L. Ed. 789; Old Colony Trust Co. v. Commissioner, 279 U. S. 716, 49 S. Ct. 499, 73 L. Ed. 918; Federal Radio Commission v. General Electric Co., 281 U. S. 464, 50 S. Ct. 389, 74 L. Ed. 969. The duty to give decisions which are advisory only, and that do not have force as judicial judgments, may not be laid on a constitutional court established under article 3 of the Constitution, such as is the United States District Court.

The Constitution extends the judicial power only to cases or controversies. The classification which the defendants make of their reasons upon which the motion is based is somewhat confusing. When it is said that this suit calls for mere administrative or advisory or declaratory action, it is but another way of saying that this suit is not a ease or controversy within the meaning of article 3 of the Constitution, or that the court is not called upon to exercise judicial power. The two grounds for the motion may therefore be considered as one, and an inquiry made as to whether or not the suit is a case or controversy. Upon careful analysis of the moving defendants’ arguments, it appears that the reasons they present for this suit not being a case or controversy include the following: A ease or controversy implies the existence of present or possible adverse parties whose contentions are submitted to the court for adjudication. In the present case the Commissioner of Patents is not a party. The defendant Berry neither seeks nor under the law is he permitted to seek affirmative relief. Therefore thei’e are neither present nor possible adverse parties to the present suit. The granting of a patent is a mere administrative duty. The proceeding px’ovided for in section 4915 is a pai't of the proceeding by which a patent is granted. Therefore the adjudication provided for is not an exercise of judicial power, nor does it determine a ease or controversy. The adjudication provided for in the statute authorizes the Commissioner to issue a patent, but does not command him to do it; therefore it is advisory or declaratory only, and not an exercise of judicial power. The statute does not contemplate the enforcement of the court’s judgment by judicial process, and it becomes effective in any event only when the applicant otherwise complies with the requirements of law. Therefore the adjudication is not final, and is merely advisory or declaratory.

I cannot agree with the contention that thex-e are in this suit neither present nor possible adverse parties. The plaintiff’s assignor was a defeated applicant for a patent befox*e the Patent Commissioner and the Board of Appeals. The defendant Nelson ip also a defeated applicant, whose interests were adverse to the plaintiff’s assignor. In this suit the interests of plaintiff and the defendant Nelson are clearly adverse. Berry is the successful applicant. It is idle to say that he is hot an adverse party, because in this suit he neither does nor can seek affirmative relief. He won his ease before the administrative tribunal. He is here defending his position. He does not require any affirmative relief. If the suit of the plaintiff fails, and if the suit of the cross-plaintiffs fails, he will secure his patent. He is in this suit in position that differs not at all from that of any other defendant who resists a plaintiff’s ¿aim, but asks for no affirmative relief. He is an adverse party. The Commissioner of Patents is not made a party to this suit. While he is not a present adverse party, he is always a possible adverse party. He could have been made a party. He may desire to become a party by filing a petition to intervene. Granted that this court has no jurisdiction at the present time over the person of the Patent Commissioner, that does not prevent him from subjecting himself to its jurisdiction if he so desires. That would not have prevented the plaintiff from joining him as a party, giving him an opportunity to subject himself to the jurisdiction.

In this suit the contentions of the parties, both present and possible, are submitted to the court for adjudication. In Tutun v. United States, 270 U. S. 568, 46 S. Ct. 425, 426, 70 L. Ed. 738, the Supreme Court had before it the question as to whether the granting of citizenship was an exercise of judicial power applied to a case or controversy. Speaking through Mr. Justice Brandéis, the court said: “Whether a proceeding which results in a grant is a judicial one does not depend upon the nature of the thing granted, but upon the nature of the proceeding which Congress has provided for securing the grant. The United States may create rights in individuals against itself and provide only an administrative remedy. United States v. Babcock, 250 U. S. 328, 331, 39 S. Ct. 464, 63 L. Ed. 1011. It may provide a legal remedy, but make resort to the courts available only after all administrative remedies have been exhausted. Compare New Orleans v. Paine, 147 U. S. 261, 13 S. Ct. 303, 37 L. Ed. 162; United States v. Sing Tuck, 194 U. S. 161, 24 S. Ct. 621, 48 L. Ed. 917; American Steel Foundries v. Robertson, 262 U. S. 209, 43 S. Ct. 541, 67 L. Ed. 953. It may give to the individual the option of either an administrative or a legal remedy. Compare United States v. Clyde, 13 Wall. 38, 20 L. Ed. 479; Chorpenning v. United States, 94 U. S. 397, 399, 24 L. Ed. 126. Or it may provide only a legal remedy. Compare Turner v. United States, 248 U. S. 354, 39 S. Ct. 109, 63 L. Ed. 291. Whenever the law provides a remedy enforceable in the courts according to the regular course of legal procedure, and that remedy is pursued, there arises a ease within the meaning of the Constitution, whether the subject of the litigation be property or status.”

I see no distinction in principle between the granting of a naturalization petition and the adjudication of the rights of an applicant to a patent as bearing upon whether the proceeding is a ease or controversy. All of the tests applied by the court in the Tutun Case to the one proceeding are answered by the other. The applicant’s claim is one arising under the Constitution and laws of the United States. It is presented to the court in such form that the judicial power is capable of acting upon it. The proceeding is instituted and is conducted throughout according to the regular course of judicial procedure. The Commissioner of Patents is in the instant case always a possible adverse party, just as is the United States in a naturalization proceeding. The applicant’s contentions are submitted to the court for adjudication. The judgment entered like all other judgments of a court of record is accepted as complete evidence of its own validity unless set aside. The Supreme Court said of a grant of naturalization: “It is in this respect, closely analagous to a public grant of land * * * or of the exclusive right to make, use and vend a new and useful invention. Johannessen v. United States, 225 U. S. 227, 32 S. Ct. 613, 56 L. Ed. 1066.”

Neither do I see merit in the contention that under the terms of the statute the adjudication provided for is merely advisory. It determines a right or a status. It cannot be ignored by the Patent Commissioner. The decision of the court on a bill in equity becomes the decision of the Patent Office, and is to govern the action of the Commissioner. Gandy v. Marble, 122 U. S. 432, 7 S. Ct. 1290, 30 L. Ed. 1223. In so far as the adjudication by the court is concerned, it is binding upon the parties, and binding upon the Commissioner of Patents. It adjudicates the right to a patent. It cannot be ignored or set aside except on appeal. Granted that the patent will not issue to the successful party until he has complied with the requirements of law, there is nothing in that provision that takes the proceeding outside of the class of cases or controversies. Compli-anee with all procedural and incidental provisions of law is required of successful litigants in every case or controversy before the relief granted by judgment or decree may become operative.

Nor does the fact that the adjudication in this suit becomes enforceable through the acts of an administrative officer rather than through the issuing of usual judicial process constitute the proceeding anything but a case or controversy. There are judgments and decrees in many kinds of eases which operate as an exercise of judicial power for whose enforcement no judicial process issues. Such relief is not an indispensable adjunct to the exercise of the judicial function. Fidelity National Bank v. Swope, 274 U. S. 123, 47 S. Ct. 511, 71 L. Ed. 959. Among the examples cited in that ease are naturali-ziatiojn proceedings, suits to determine a matrimonial or other status, suits for instructions to a trustee, or for the construction of a will, bills of interpleader so far as the stakeholder is concerned, bills to quiet title where the plaintiff rests his claim on adverse possession. Other strictly judicial proceedings requiring no award of process of execution might be cited.

This suit does not come within the class of suits wherein no actual controversy exists between adverse litigants and which call for a. merely declaratory judgment, such as the one considered in Muskrat v. U. S., 219 U. S. 346, 31 S. Ct. 250, 55 L. Ed. 246, nor does it come within the class of proceedings which are purely administrative and which may be imposed upon a legislative court but not upon a constitutional court, such as were the proceedings considered in the Bakelite and the Fig Nut Cases herein referred to. The distinctions are obvious.

It follows from what has been said that the motion to dismiss must be denied.

       Section 4&15. Whenever a patent on application is refused by the Commissioner of Patents, the applicant, unless appeal has been taken from the decision of the hoard of appeals to the United States Court of Customs and Patent Appeals, and such appeal is pending or has been decided, in which case no action may he brought under this section, may have remedy by bill in equity, if filed within six months after such refusal and the court having cognizance thereof, on notice to adverse parties and other due proceedings had, may adjudge that such applicant is entitled, according to law, to receive a patent for his invention, as specified in his claim, or for any part thereof, as the facts in the case may appear. And such adjudication, if it be in favor of the right of the applicant, shall authorize the commissioner to issue such patent on the applicant filing in the Patent Office a copy of the adjudication and otherwise complying with the requirements of law. In all cases where there is no opposing party a copy of the bill shall be served on the commissioner ; and all the expenses of the proceedings shall be paid by the applicant, whether the final decision is in his favor or not. In all suits brought hereunder where there are adverse parties the record in the Patent Office shall be admitted in whole or in part, on motion of either party, subject to such terms and conditions as to costs, expenses, and the further cross-examination of the witnesses as the court may impose, without prejudice, however, to the right of the parties to take further testimony. The testimony and exhibits, or parts thereof, of the record in the Patent Office when admitted shall have the same force and effect as if originally taken and produced in the suit (35 USCA § 63).


author: PRAY, District Judge.

text:
    WIEDEMAN v. UNITED STATES.
    No. 386.
    District Court, D. Montana, Great Falls Division.
    July 9, 1931.
    John W. Mahan, of Helena, Mont., for plaintiff.
    W. D. Rankin, U. S. Atty., of Helena, Mont., and D. D. Evans, Veterans’ Bureau Counsel., of Ft. Harrison, Mont., for the United States.
   PRAY, District Judge.

This is the usual action on a contract of war risk insurance issued by the government and was tried before the court without a jury. The essential facts appear to be as follows: Plaintiff enlisted and entered officers’ training school at Fort Dodge about May 17, 1918; was discharged July 7,1919. Insurance policy became effective June 1, 1918, and premium was paid up to August 1, 1919, continuing policy in force to August 31, 1919. The question now is: Did plaintiff become totally -and permanently disabled before the policy lapsed. November 9, 1918, plaintiff was under shell fire and a “sliver of steel” was taken from his right leg; it looked like “a scratch” at the time and healed up; ligaments of left ankle tom by hitting a rock when dismounting from an unruly horse at St. Mihiel; had trench-mouth; April 1, 1919, at Trier, Germany, right leg swelled so badly could not wear trousers; operated on leg at that place and wound did not heal; “I was a casualty from that time until I was discharged;” from that time until ilischarge pus came out of wound while he was in hospitals at Fifty-Ninth street, N. Y. and at Fort Snelling; it had “kind of healed over” at time of discharge; was clerk in hardware store at Moore, Mont., from September 1, 1919, to'7th of January, 1920; sometimes could work 30 days before pains were bad enough to lay him up; December, 1919, went to hospital, leg painful and swollen, there two weeks; went back to store at Moore for ten days, but could not work all the time on account of pain; 1st of January, 1920, went to hospital, leg swollen and in pain, an operation performed, there three weeks; did not go back to work at Moore;. did not work again, with slight exceptions, until 1925; entered school under the government at Missoula in June, 1920; worked part time for wages for “a little while,” at Missoula Mercantile Company, and “couldn’t stand it. * * * I think every night of my life I have gone to bed with a back ache since this thing started getting bad in April 1919.” Had two major operations on his leg since December, 1919; in the hospital after one operation from 13th of October, 1926, to 8th of January, 1927; after the other was in hospital from August 1, 1928, to 3d of January, 1929; finished training in June, 1923, but did not find a job until February, 1925; his reason for not going to work before was: “Every place I applied for a job they would ask me why I quit work and I would tell them that my leg didn’t stand up under the work and they would say ‘We can’t use you if you can’t stand up under the work’; that is the reason I didn’t work.”

His job at Windham February, 1925, was that of manager of a lumber and hardware company; he was clerk, bookkeeper, and janitor; he could not keep the job; he “hung on” working part time until September and then “my leg went bad and I went over to Ft. Harrison”; there 15 days; he went back to same job and tried to hold it and did remain until October, 1926, when J. E. Lane, the manager, told him he could not keep him any longer because he could not stand the work; he says that he never was able to work continuously for more than 30 days without laying off because of his physical ailment; the next job was assistant sergeant at arms at Helena during legislative session of 60 days; at the end of 20 days he was obliged to lay off on account of leg, but returned after 3 or 4 days; in 1929 he had a job with the Singer Sewing Machine Company as collector; was on a commission basis and managed to work 3 days a week, was employed here from May until November; he had a clerical job with the Census Bureau in Washington last summer; he suffered pain and discomfort and quit in October; had a wife and child depending upon him since about 1929; on August 18, 1927, the United’ States Veterans’ Bureau gave him a rating for compensation purposes of permanent and total disability from August 15, 1927, apparently based upon the same physical conditions or service disability that existed at the time of his discharge; he claims permanent and total disability since he wa§ operated upon at the Trier Hospital in Germany in 1919.

Plaintiff was at the Montana State University at Missoula during parts of the years beginning in the fall of 1920, 1921,1922, and spring of 1923, and played baseball at times during the last three years; but upon his own testimony it does not appear that he was subjected to strenuous exercise for any great length of time and never played for pay; the testimony of the baseball coach shows that plaintiff took part in about five games a season during 1921, 1922, and 1923 as a substitute player; each game about two and one-half hours; the coach noticed impairment of locomotion, he always limped and complained about his right leg; when questioned about the injury, he said it occurred during the World War; practice for the spring schedule began according to the weather in March or April and games ended about the second week in June; at Missoula he played City League baseball for a while, one game a week, no practice; in same way he played with team at Helena part of summer of 1929; between June, 1923, and February, 1925, he “tried out” for a job at Springfield, Mass., but when they found his leg was bad would not keep him; went from there to Canton, Ohio, and lived with his wife’s mother during the winter, his leg was bad and gave him much pain; at Windham, from February, 1925, to October, 1926, he received $135 per month but hired a man from May, 1926, to last of September at $100 per month to do the work, because he (plaintiff) was unable to do it; in summer of 1925 was there alone, but could not stand the work; in September, 1925, went to Fort Harrison and had a “big abscess” treated in his leg, and on the first of the year 1926 went there again and remained until the first of May and suffered continuously while there; no time that he could sit at a desk for a full day without pain, and it also gives him pain to move about; there was no open wound running pus from spring of 1920 to 1925, between those dates hard lumps would come but instead of breaking out and running pus on the outside, the system seemed to absorb it; “they-would • get sore and stay sore for a while and then gradually go away without coming to a head and opening * * * I have not had one job since I was discharged from the army or since April, 1919, that I didn’t let go, the-company let me go because of the condition of my leg; I couldn’t hold the job.”

Defendant seems to lay great stress upon the baseball episode and much time was devoted to it: “Q. How did it happen you played baseball ? A. I found when I would sit around in school or in an office, anything; like that, my leg would get all quivering and sore; if I got out in the air and got a little exercise and got my mind off my leg, it would kind of help me and I felt better for it lots of times, for the exercise; it seemed to liven me up a little bit.” He said that he consulted a physician with reference to playing. Dr. E. S. Porter had plaintiff under treatment at Port Snelling in May or June, 1919; described the wound as: “Old gun shot wound, right thigh, inner aspect, four inches above the knee joint, still draining.” He was there three or four weeks until the wound healed. Dr. Porter said of the wound in December, 1919, when he again treated it: “He was suffering with a painful swelling at the site of the old wound * * * he had chronic osteomyelitis at that time, but it was negative.”

Dr. Porter testified, in his opinion, that plaintiff was permanently and totally disabled at the time of his examination in June or July, 1919. Mr. J. E. Lane, employer of plaintiff, corroborated statements of plaintiff as to his physical condition at Windham; kept 'him on out of sympathy and because his father was a partner, although he (Lane) discovered plaintiff’s physical incapacity within three or four months after he began work, but did not ask him to resign until October, 1926. Others testified about the same as to plaintiff’s record at Moore and Windham. Dr. John L. Treacy saw plaintiff at Yiehy, France, in November, 1918; the latter was in a hospital there at that time, or said he was; examined plaintiff numerous times; first time about 1925, when diagnosis was cellulitis of the leg, abscess, right leg; operated on the leg on three different occasions; heard the evidence and knows the history of the ease; and testified that in his opinion- plaintiff’s disability has been total and permanent since he was operated on in April, 1919. Dr. Treacy said that plaintiff could have played baseball as testified, but it was foolish of him to do so; that he might play to-day and be unable to play again; that his trouble is an “up and down situation”; that he was in the hospital for treatment frequently during the past four or five years.

Dr. F. B. Nather, for the defendant, said from the evidence he thought that plaintiff had an osteomyelitis in 1920; that following the operation of Dr. Porter that it healed up, became quiescent, and was not of a very disabling nature. Dr.* B. H. Fraser said he did not think the condition of plaintiff would be a permanent total disability with proper treatment. Dr. Robert P. Smith believes he could do office work, not farming or hardware business, and that his case is not one of a permanent total disability.

The wounded leg seems to have been seriously hurt when plaintiff was in charge of dipping mules for mange in Germany in April, 1919; he was helping put an unruly mule into a vat, and said: “The mule went in, and as he did he put considerable weight on my back, which forced me down into a squatting position which pulled on the ligaments and the muscles where this pieee of steel had gone in and maybe tore something loose in there, is what it felt like, because it immediately started to swell.”

Dr. Thomas F. Walker said that osteomy-elitis “is essentially an inflammation of the bone marrow or cancellous tissue, which-is in the center of the bone.” When shown X-ray pictures of the injured part of the right leg, used by defendant’s doctors, he said they did not show the marrow of the bone and “therefore one would be absolutely unjustified in drawing any conclusions whatever regarding osteomyelitis from those pictures”; he excepted one picture only as better than the others.

From his own examination, X-ray plates, coupled with the history of the ease and testimony he had heard, he was of the opinion that plaintiff was permanently and totally disabled and that he has had osteomyelitis for years; that he “is very apt to have these ‘flare ups’ of this condition the rest of his life unless proper surgical treatment or a cure is perfected.” Did not know of any cure except by surgical operation; whether he could be cured would seem to depend upon whether he could stand the severe shock of another operation. Dr. Treacy said after a consultation at Fort Harrison that such a course was not deemed advisable.

It does not seem necessary to discuss another ailment out of which counsel for defendant endeavored to make capital, as it would make no difference under the facts .here whether it contributed to the soldier’s disability, or not, although from the evidence it does not appear to have done so.

I have tried to keep constantly in mind during the progress of this trial the rule relied upon to enable one to recover on a policy of war risk insurance, which is: Does the evidence show that the insured soldier, while his insurance was in force, became so disabled as to prevent him from following a substantially gainful occupation continuously, and, if so, is such condition likely to continue throughout the life time of the insured? Voluminous notes were taken of the testimony during the trial which have been used frequently in referring to the transcript of the testimony, and I have endeavored to examine and weigh all the material evidence showing injuries, sickness, hospitalization, medical and surgical treatment, various kinds of work and length of time engaged, plaintiff’s entire statement on the witness stand, particularly scrutinizing all evidence of a corroborative nature, and its materiality and importance, bearing in mind the rule referred to, which is always giyen as an instruction in a jury trial, and is of equally binding force upon the court in a trial without a jury. Time and again throughout the years that have elapsed since the defendant received his honorable discharge from the army, has he endeavored to follow a substantially gainful occupation, and at times he succeeded in doing so for a brief period; but nowhere throughout the ease does it appear that he has been able to follow such occupation continuously; in all instances it appears that he was sooner or later obliged to leave his work because of his physical inability to carry on. Time and again employment was refused because plaintiff could not furnish a satisfactory record of prior employment. As soon as it appeared that he had been obliged to quit his former positions because of his physical unfitness, the prospective employer was no longer interested in his application for work. I have examined carefully briefs and authorities submitted by counsel for both sides, and in the main it would be difficult to disagree with either as to the facts claimed to exist. There is, of course, usually a tendency on the part of the contestants to overemphasize advantageous points, and although I could accept in the main the statement of facts prepared by the defendant, the conclusions of law from the same source could not be adopted. In other words, I cannot conscientiously say, in view of all the proof, that the plaintiff has not brought himself within the rule which will enable him to recover the proceeds of his war risk policy. One thing certainly is made quite prominent in the career of Lieut. Wiedeman from the time of his discharge from the Fort Snelling Hospital and from the army, and that is that he seems to have endeavored with great determination to obtain and hold positions irrespective of his physical ailment, and that when the government sent him to school at Missoula he made the best of his opportunities and graduated; if he is to be penalized for his strenuous and often repeated efforts to find work and do it, rather than quit altogether and let the government take care of him, then this case might afford a good example of what a soldier must not do before entering upon a contest with the government over a policy of war risk insurance. U. S. v. Spencer H. Lawson (C. C. A. 9, May 18, 1931) 50 F.(2d) 646.

Accordingly, judgment will be entered for the plaintiff with costs.


author: HUTCHESON, Circuit Judge.

text:
    FIRST NAT. BANK OF FINDLEY, OHIO, et al. v. BLACKWELL.
    No. 419.
    District Court, S. D. Texas, at Houston.
    Aug. 3, 1931.

      Atkinson & Gaugler, of Houston, Tex., for plaintiffs.
    Andrews, Streetman, Logue & Mobley, of Houston, Tex., for defendant.
   HUTCHESON, Circuit Judge.

Plaintiffs filed this suit in the district court of Harris county, Tex., as a creditor’s bill to subject to judgments obtained by them in the state of Iowa in 1914,1915, and 1916, against J. S. Blaekwell, property described in their petition as situated in Harris county, Tex., which property they allege was the community property, during the lifetime of Blaekwell, of himself and his wife, the defendant, Edna D. Blackwell, a citizen of Iowa.

They allege that Blaekwell died insolvent about the month of February, 1930; that his wife, Edna D. Blaekwell, a resident of the state of Iowa, is holding in her name the said property, which property, during the lifetime of Blackwell, was concealed from his creditors.

Plaintiffs assert an equitable lien upon the property as against the estate of J. S. Blaekwell, deceased, and the community estate of the defendant, and pray for nonresident process upon the defendant, and for judgment subjecting the property to their debts.

Defendant having been served not personally, but by substituted process, and the cause having been removed to this court, the defendant, claiming that the petition asserts no claim to real property, but is a mere personal action, moves to dismiss the cause for want of jurisdiction over the person of the defendant. Subject to'this motion, defendant moves also to dismiss the bill for want of equity, because, though brought as a creditor’s bill, it is wanting in averments to sustain it, and because upon its face the claim shows to be unenforceable because long since barred by the statute of limitation.

■Upon the first point I think the defendant’s motion not well taken, for whether the facts alleged do in fact give plaintiffs any light to or interest in the property in question, it cannot be denied that the whole suit is to subject property to its demands; no claim of personal liability being at all asserted against the defendant.

Upon the second point, the matter I think stands differently, for, while it is true that the judgment sued on would not be barred in Iowa, and therefore would not be barred in Texas under article 5530, Bev. Stat. of Texas, if the defendant had not prior to his death resided in Texas, there is no allegation in the petition that he was a nonresident, but, on the contrary, as the pleadings now stand, it is, though meagerly, by the allegation that the property in question was community property of Blaekwell and his wife, sufficiently alleged that he was at least at the time the property was acquired a resident of Texas, bringing the case within that part of the Texas statute limiting the right of action on judgments to ten years, and the judgments, being all considerably more than ten years old, could therefore not be sued upon.

In addition, apart from limitation, I am of the opinion that the cause as now pleaded does not present a ease of equitable cognizance. A creditor’s bill may be ordinarily maintained to subject assets of a debtor in which, though it is the kind of property ordinarily takeable on execution, the debtor’s interest cannot "by ordinary legal process be reached. .8 B. C. L. 5.

Because of its character as not in substitution but in extension of legal remedies, it is the well-established general rule that a creditor "cannot come into equity to obtain satisfaction of his claim to property not reachable by legal process until he has exhausted his remedies at law, and shown them to be unavailable.” B. C. L. 19.

A corollary of this rule is that the creditor must show a valid and subsisting judgment, not of another state, but one of a state or federal eourt having the status in the jurisdiction where the bill is filed of a domestic judgment, or must plead facts such as absence from the jurisdiction, and inability to get service upon, or the death of, the debtor, with no administration pending or possible upon his estate. Bank v. McArthur (C. C. A.) 256 F. 84.

The plaintiffs’ petition, while it does allege the death of Blaekwell, does not negative the fact or the possibility of administration, nor allege the fact that, though administration is then pending, relief has been denied or is unattainable. Especially in Texas should plaintiffs so allege, for it is definitely held here (Blinn v. McDonald, 92 Tex. 608, 46 S. W. 787, 48 S. W. 571, 50 S. W. 931), that, though the statute casts the inheritance upon the heir charged with a lien for the debts of his ancestor, the creditors "cannot as a general rule, subject the property to their claims during such period, in any other way than through such administration.”

The motion to dismiss for want of jurisdiction is denied; that to dismiss the bill for want of equity is sustained; but plaintiffs may have leave to within fifteen days amend, failing in which, judgment final of dismissal will be entered.


author: HOLMES, District Judge.

text:
    In re MONTGOMERY BROS.
    No. 1077.
    District Court, S. D. Mississippi, W. D.
    July 11, 1931.
    Dabney & Dabney, of Vicksburg, Miss., for petitioner.
    Hirsh, Dent & Landau, of Vicksburg, Miss., for respondent.
   HOLMES, District Judge.

The referee denied the petition of the trustee in bankruptcy to require the Merchants’ National Bank & Trust Company, of Vicksburg, Miss., to pay over to him the sum of $328.18, charged to the cheeking account of the bankrupts on the books of the bank, and ex-edited on a note due it by the bankrupts after the involuntary petition was filed but before adjudication. The trustee filed a petition to review the order of the referee, and the ease is here for detexmination upon facts free from dispute.

An involuntary petition was filed against the bankrupts on February 13,1931, at which time, and prior thereto^ they were doing business with the above-named bank, owing it large sums of money, both secured and unsecured. After banking hours on February 12, 1931, Montgomery Bros, had on deposit with the defendant $802.35, and the next day, February 13, after all cheeks presented had been charged off, there was on deposit to their cx-edit the sum of $707.39. The bank knew of the filing of the involuntary petition on the following day, February 14, but continued to pay cheeks drawn by, and to transact business with, the firm in the ordinary way up -to and including February 21, 1931, when it made the debit entry for interest above mentioned, which resulted in an overdraft of $61.08. In the meantime, that is, on February 17, Montgomery Bros, deposited with the bank the sum of $268.29. On February 28 they filed their answer and schedules and were duly adjudicated bankrupts. The following is a list of cheeks charged to the account of Montgomery Bros, on and after February 13, 1931:

The trustee does not claim that the bank acted in bad faith or received any preference prior to the filing of the involuntary petition, Upon the petition to review he concedes to the bank the right of set-off as to the balance of $707.39 .when the petition was filed, if it had exercised it, hut contends that, having failed to avail itself, in fact, having deprived itself, of that right by permitting the funds to be withdrawn, it cannot offset the deposit made between the filing of the petition and the date of adjudication. On this hearing the trustee is only claiming the sum so deposited of $268.29. The referee says in his certificate that he ignored this deposit because it came after the date on which the right of set-off accrued, and because "the other cheeks paid by the bank were just as chargeable to this account as to the amount on hand on February 13, 1931.’

This ruling disregards the effect the filing of the petition has upon the title to property when an adjudication of bankruptcy thereon subsequently takes place. It is a caveat to all the world, and, in effect, an attachment and injunction. Mueller v. Nugent, 184 U. S. 1, 14, 22 S. Ct. 269, 46 L. Ed. 405. While it does not divest the bankrupt of title to his property, it constitutes him in effect a trustee for the benefit of his creditors from that time until adjudication, when that follows. In re Sternburg (D. C.) 249 F. 980. The estate is regarded as in custodia legis from the filing of the petition. Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300, 307, 32 S. Ct. 96, 56 L. Ed. 208. The trustee ordinarily takes the status of a lien creditor as of that date. Bailey v. Baker Ice Machine Co., 239 U. S. 275, 276, 36 S. Ct. 50, 60 L. Ed. 275. The trustee takes title to the surrender value of a life insurance policy as of the date of the filing. Burlingham v. Crouse, 228 U. S. 459, 33 S. Ct. 564, 57 L. Ed. 920, 46 L. R. A. (N. S.) 148. The bankrupt is entitled to the policy by paying the cash surrender value, or the excess thereof °ver loans, as of that date. His subsequent death, or the maturity of the policy, before adjudication does not affect the division , . „ . „ ,, . ,. , . , willCil YV£U5 ÍÍXGCl 9.S OX "til© ulTUG ctu wulCil til© petition was filed. Andrews v. Partridge, 228 U. S. 479, 33 S. Ct. 570, 57 L. Ed. 929. In short, the property which vests in the trustee uPon adjudication is that which the bankrupt owned at the time of the filing of the petiftoru The purpose of the law was to fix the line of cleavage with reference to the condition of the bankrupt estate as of the time at -m u t n-which the petition was filed. Everett v. Judson, 228 U. S. 474, 479, 33 S. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154. Provable debts are those absolutely owing when the petition is filed. Section 63, Bankruptcy Act (11 USCA § 103). The forms prescribed for provable debts all declare that the indehtedness existed at and before the filing, Forms 31 to 36, inclusive (172 U. S. Appendix [11 USCA § 53]). The discharge, when granted, relates to the filing of the petition, and an obligation incurred afterwards but before discharge is not included in it. Zavelo v. Reeves, 227 U. S. 625, 33 S. Ct. 365, 57 L. Ed. 676.

seetion 68 of the Bankruptcy Act (11 USCA § 108) provides for set-offs in all caseg 0f mutnal debts or mutual credits between the estate of a bankrupt and a creditor. It sayS account shall be stated and one debt shall he set off against the other, and the balanee only shall be allowed or paid. Subdivision b (11 USCA § 108 (b) imposes certain specific limitations, notably among which is that a set-off shall not be allowed which was purchased or transferred áfter the filing of the petition.

The seetion did not create the right of set-off, but recognized its existence and provided a method by which it could be enforced even after bankruptcy. It is “grounded on the absurdity of malting A pay B when B owes A.” If it has been exercised by the parties before the petition is filed, there is no necessity of the trustee doing so. If not, then, under command of the statute, it must be done by the trustee. Studley v. Boylston Bank, 229 U. S. 523, 33 S. Ct. 806, 57 L. Ed. 1313. A deposit of money upon general aecount with a bank creates the relation of debtor and creditor, and in the absence of fraud or collusion amounting to a preferential transfer may be the subject of a eounterelaim or set-off the same as any ordinary debt. New York County National Bank v. Massey, 192 U. S. 138, 24 S. Ct. 199, 48 L. Ed. 389.

Although section 68 says “the account shall be stated,” it does not expressly name the time when it sjiall be done, which often becomes a matter of first importance in a case such as this where there is a substantial interval of time between the filing of the petition and the adjudication. We have noted in subsection b that a set-off or counterclaim shall not be allowed which was purchased or transferred after the filing of the petition, We have observed that the section did not create the right, but protected it “if the petition is filed before the parties have “themselves” exercised it. Studley v. Boylston Bank, 229 U. S. 523, 529, 33 S. Ct. 806, 808, 57 L. Ed. 1313. From what has gone before we have concluded that the filing of the petition is the crucial time in nearly all matters arising in bankruptcy proceedings, provided adjudication follows. See, also, section la (10) of the Bankruptcy Act (11 USCA § 1 (10); Sexton v. Dreyfus, 219 U. S. 339, 345, 31 S. Ct. 256, 55 L. Ed. 244.

From all of which it is logically deduced that wherever a proper set-off or counterclaim is allowable under the statute it is the duty of the trustee to state the account and set off one debt against the other as of the date of the filing of the petition. Collier on Bankruptcy (13th Ed.) vol. 2, p. 1610, par. f.

In this ease the amount’ of $268.29' deposited with the bank on February 17,1931, belongs to the trustee, and is not the subject of set-off, because before the bankrupt deposited it the petition in bankruptcy had already been filed and had become operative as a caveat to all the world. Toof v. City National Bank (C. C. A. 6th Cir.) 206 F. 250, 30 A. B. R. 79.

In a similar ease the Circuit Court of Appeals of the Fifth Circuit said:

“The ease presented is that of a creditor getting possession of funds of the bankrupt after the petition against him was filed, and setting up a claim of right to apply such sum to the bankrupt’s debt to it. * * * There was no color of right in the bank to re-fcajn funds received and kept under such cir-eumstanees. The bank was incapable of acquiring an adverse claim upon funds received from the bankrupt after the petition against him was filed. The claim could not be regarded as an adverse one, existing when the petition in bankruptcy was filed, as the subject of it was in the bankrupt’s possession thereafter, and the bank’s claim was one that could not be made until it acquired possession.
“The trustee seeks an order requiring the delivery to him of assets of the bankrupt which were in the latter’s possession, subject to no lien, after the petition in bankruptcy was A plenary suit is not necessary jn suc]j case_ The delivery to the trustee of the bankrupt’s property so acquired and held after the court’s control of it attached may be ordered in a summary proceeding.” Reed v. Barnett National Bank, 250 F. 983, 984, 985.

Other authorities are to the same effect, In re Michaelis & Lindeman (D. C.) 196 F. 718, holds that the mutual accounts between a bankrupt and his bank of deposit are closed by 0perafi0n of law at the time the petition is filed, and no right of set-off exists in the bank as to deposits made after that time, even though neither party knew of the filing of fbe petition when the deposit was made, ln Bramham v. Lanier Bros., 138 Tenn. 702, 200 S. W. 830, 41 A. B. R. 215, it is held fbat for the purpose of testing rights upon liquidation the time of the filing of the petition is the proper date, and a creditor's right to a set-off or counterclaim is determined as of that date. There seems to be no authority to the contrary, at least none has been cited by any one upon this hearing,

Accordingly, the decision of the referee is reversed, and the matter again referred to him for further proceedings not inconsistent with this opinion.