author: ERNEST F. COCHRAN, District Judge.

text:
    PAN AMERICAN LIFE INS. CO. v. MAYFIELD et al.
    No. 429.
    District Court, E. D. South Carolina,
    Nov. 30, 1929.

      J. Waties Thomas and Alva M. Lumpkin, both of Columbia, S. C., for complainant.
    William C. Wolfe, of Orangeburg, S. C., and S. G. Mayfield and W. E. Free, both of Bamberg, S. C., for the Mayfield defendants.
    H. L. Erekmann and Huger, Wilbur, Miller & Mouzon and J. N. Nathans, all of Charleston, S. C., for certain judgment creditors.
    J. A. Mace, of Hampton, S. C., pro se.
   ERNEST F. COCHRAN, District Judge.

The plaintiff brought this bill to foreclose a mortgage on a certain tract of land containing about 756 acres, executed by. the defendant Leda K. Mayfield to the Old Dominion Trust Company to secure certain bonds executed by her to the same company and guaranteed by the defendants J. K. Mayfield and W. D. Mayfield. The bonds and mortgage were assigned by the Old Dominion Trust Company to the plaintiff, th,e Pan American Life Insurance Company.

Several of the defendants were made parties because they were judgment creditors of the defendant Mrs. Leda K. Mayfield, and it was asserted that the judgments were subsequent to the plaintiff’s mortgage. The remaining defendants were made parties because it was alleged that they claimed some interest in the premises, which was also asserted to be subsequent to the plaintiff’s mortgage. Sundry of the defendants answered and merely set up their claims of judgments liens, and asked that they.be paid in the order of their priority. The defendant S. G. Mayfield, Sr. (who is the husband of the defendant Mrs. Leda K. Mayfield, and the father of the defendants J. K., W. D., and Stanwix G. Mayfield, Jr., and Mrs. Christahel M. Williams), answered, setting up a claim of title in himself to all the interest of Mrs. Leda K. Mayfield in the land described in the complaint by virtue of a sheriff’s sale under execution of certain of the judgment creditors, but no claim is made that his interest is prior to the lien of the plaintiff’s mortgage. The defendant J. A. Mace answered and set up a mortgage executed to him by S. G. Mayfield, Sr., covering the tract described in the hill of complaint, and certain other tracts of land, and asks that his mortgage be foreclosed and that he be paid his debt from the proceeds of sale, but no claim is made by him of any priority over the mortgage of the plaintiff, so far as the tract of land described in the complaint is concerned. The defendants Stanwix G. Mayfield, Jr., and Mrs. Christahel M Williams, by their answers, claim title to the land by virtue of a deed which it is claimed was executed to them by their mother, Mrs. Leda K. Mayfield, on January 8, 1918, and which, it is alleged was recorded on January 10, 19J.8; and they claim that the mortgage now owned by the plaintiff having been executed and recorded after that time, they have paramount title, and that the land therefore cannot he subjected to the payment of plaintiff’s mortgage. The plaintiff has assailed the validity of this deed and the recording thereof on a number of grounds, but it will not be necessary to discuss aE of them. The ease was heard and the testimony and evidence presented before me in open court. It is very voluminous, and the counsel for the parties have made oral arguments and filed briefs in support of their several contentions. Some phases of the ease are of a most unusual and serious nature and have given me considerable concern. I shall not attempt to set forth all of the evidence or discuss the facts or points of law in detail. It is sufficient to say that I have, in view of the importance and gravity of the case, given it very careful and earnest study. I will be unable to write a full opinion, but am merely making this as a memorandum opinion and instructions for the attorneys in the preparation of the final decree, in order that it may be clearly understood what should be included in the final decree. I shall advert to the main points of the case only and as briefly as possible.

The main dispute has been concerning the execution and recording of the deed under which the defendants Stanwix G. May-field, Jr., and Mrs. Christahel M. Williams claim. They claim that this deed was duly executed on January 8, 1918, and recorded on January 10, 1918. It is undisputed that the plaintiff’s bonds and mortgage were executed on June 11, 1919, and duly and properly recorded on June 11, 1919. It follows therefore that if the deed to Stanwix G. Mayfield, Jr., and Mrs. Christahel M. WElianas was duly executed and duly recorded on the dates it purports to have been executed and recorded, then those defendants have paramount title and the plaintiff’s mortgage cannot be foreclosed as against them.

It is undisputed that the deed to Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams was not recorded in the auditor’s office, nor is there any auditor’s certificate on the back of the deed showing such record. The plaintiff therefore claims that inasmuch as the statute of South Carolina (Civ. Code S. C. 1922, § 2178) makes it a prerequisite to the recording of a deed in the office of the register of mesne conveyance, that it should be first recorded in the office of the auditor, that any recording of the deed in the register’s office would be illegal and therefore no notice to the plaintiff. While the language of the statute is very strong, nevertheless I am compelled to think that it is directory, and not mandatory. The evident purpose of the statute was to prevent real estate from escaping taxation. It is therefore the duty of the register not to record a deed until he has the auditor’s certificate that it has been recorded in the auditor’s office. But I do not think that the failure to record a deed in the auditor’s office would invalidate its record in the register’s office. If such be the law, then every attorney or other person who passes upon any title would be compelled not only to search the register’s office for the record of every deed, but would be compelled also to make a search in the auditor’s office to see if the deed was properly recorded there. But the almost universal practice of attorneys is to make the search in the register’s office and rely upon what is disclosed there, without making a search in the auditor’s office for the purpose of ascertaining whether it is recorded there. It is true that a search of the auditor’s office and-the treasurer’s office should be and usually is made for the purpose of ascertaining whether the taxes have been paid, but this search is with that end in view, and not for the purpose of ascertaining whether any particular deed has been recorded or not.' The search to ascertain whether any taxes are due or not need not extend beyond the period of limitation prescribed for taxes, and such search would not disclose that old deeds not within the limitation period had not been recorded in the auditor’s office. It is also true that the last statute requiring recording in’ the auditor’s office does undertake to validate certain deeds which had not been recorded in the auditor’s office, as required by the previous statute, and is a very strong indication that the Legislature thought that such recording was necessary to the validity of a record in the register’s office. But in view of the court’s own knowledge of what is the almost universal practice, I should hesitate to declare the recording of a deed in the register’s office void, on the ground that it had not been first recorded in the auditor’s office; for in all probability it would upset many titles in this state, and I do not care to make such a ruling, in the absence of a very plain intent of the Legislature requiring it. But while the failure to record in the auditor’s office does not necessarily, as -a matter of law, invalidate the record in the register’s office, nevertheless the fact that it was not recorded in the auditor’s office is a circumstance upon the question of whether the deed was recorded at all in the register’s office at the proper time and may be considered by the court in deciding that issue.

This brings me to a consideration of the main conflict and dispute between the parties. It is asserted by the plaintiff that the deed from Mrs. Leda K. Mayfield to Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams was not executed or recorded prior to the execution and recording of the plaintiff’s mortgage, but that the deed was executed later, and the same was placed on the deed book in the register’s office, without authority from the register, and after the execution and recording of the plaintiff’s mortgage. I listened very attentively to the testimony and evidence presented, and have given much thought to this question. There are a large number of circumstances which point very strongly indeed to the conclusion that the deed in question was not on record in the register’s office at the time of the execution and recording of the plaintiff’s mortgage. It is certainly very difficult, if not impossible, to explain all of these circumstances, and especially the conduct of the various parties in the cause, upon any other theory than the. theory that the deed was not then on record. On the other hand, the fact that the deed in question, along with another deed claimed to have been executed at the same time by Mrs. Mayfield, now appears in the record book, a bound volume, when taken in connection with certain other circumstances in the case, is very difficult to explain, except on the theory that the deed in question was on record when plaintiff’s mortgage was executed and recorded. I shall not undertake to review all of these circumstances pro and eon; but it is sufficient to say that I have come to the conclusion that it is much more difficult to find an explanation for all the various circumstances, including especially the conduct of the parties, consistently with the theory that the deed had then been executed and recorded as is now claimed, than it is to suggest a reasonable hypothesis to account for the fact that the deed does now appear upon the record. In such circumstances, it seems to me that I have no other recourse than to come to the conclusion that the deed in question was not on record when plaintiff’s mortgage was executed and recorded, and therefore the parties cannot claim under that deed title paramount as against the mortgage. But in view of the difficulties of the case and in view of the fallibility of human judgment, it is possible that I may be mistaken in the conclusion I have reached above as to the recording of the deed, and if the final decree should be rested upon that ground alone, an injustice might possibly be done to the parties. But there is another ground which the plaintiff claims prevents the defendants Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams from setting up, or claiming under, the deed in question, as against its mortgage, and on that ground I have no doubts whatever. It is asserted that these two defendants are estopped by proceedings in another ease in this court and their conduct thereunder. In order properly to understand the plea of estoppel, it will be necessary to recite briefly the facts relating to this plea.

In 1923, the plaintiff brought a foreclosure suit in this court against Mrs. Leda K. Mayfield, J. K. Mayfield, W. D. Mayfield, Stanwix G. Mayfield, Jr., Mrs. Christabel M. Williams, and certain other parties, to foreclose this same mortgage. The bill in that ease alleged, among other things, the execution, recording, etc., of the same mortgage by Mrs. Mayfield, to secure the same bonds executed by her and guaranteed by J. K. and W. D. Mayfield. It is alleged in that bill that Mrs. Christabel M. Williams and Stanwix G. Mayfield, Jr., were made parties because they had or claimed some interest or lien upon the mortgaged premises by reason of judgments of record, but the bill alleged that those liens were subsequent to the lien of the mortgage of the plaintiff. In that proceeding, Stanwix G. Mayfield, Jr., and Mrs Christabel M. Williams each filed a separate answer by their attorney, and the answer was sworn to by them respectively before a notary. Those answers merely claimed that they held judgments, respectively, against the defendant Mrs. Leda K. Mayfield, and admitted that they were junior to the mortgage executed by Mrs. Mayfield and described in the plaintiff’s complaint. Nowhere in either of the answers did either of them make any claim whatsoever that they or either of them had any interest in the land by virtue of any deed or other instrument whatsoever. That case proceeded to a final decree for foreclosure and sale of the property, adjudging that the plaintiff’s mortgage was a first lien upon the premises and should be paid first, and directing that the judgments claimed by the defendants Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams should be paid after the satisfaction of the plaintiff’s mortgage. The premises were not sold under this decree; but after the final decree and before any sale, there was entered by consent of all the parties to that suit, a supplemental decree, which recited in substance that all of the indebtedness secured by the mortgage was not then past due, and. that Mrs. Leda K. Mayfield had agreed to pay all of the past-due indebtedness, if -the complainant would accept the same, and the cause should be dismissed as by the consent of the parties and not as a judicial finding, without prejudice to the right of the complainant to institute another proceeding for the foreclosure of the mortgage then sued on, should the defendant Mrs. Leda K. Mayfield thereafter become in default under the terms thereof. Mrs. Leda K. Mayfield then paid the past-due indebtedness in accordance with this agreement, and this money, it appears, was furnished by S. G. Mayfield, Sr. Mrs. Leda K. Mayfield, S. G. Mayfield, Sr., J. K. May-field, and W. D. Mayfield, signed a renewal agreement, whereby the balance of the mortgage was extended and made due and payable in instalments as set forth in that agreement. At no time during these proceedings did the defendants Stanwix G. Mayfield, Jr., or Mrs. Christabel M. Williams, or their attorney, or any one acting for them, ever mention or suggest in the slightest way that they had a deed covering the premises in question and held title paramount. The plaintiff was left completely in the dark as to the existence of such deed or any claim to be made thereunder. Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams were then of age, and according to the testimony before me, they then knew of the existence of the deed and of their rights thereunder. All of the other parties mentioned, namely, Mrs. Mayfield, J. K. Mayfield, W. D. Mayfield; and S. G. Mayfield, Sr., knew of the existence of this deed and of the rights that might be claimed for Mrs. Williams and Stanwix G, Mayfield, Jr., thereunder. But none of them ever mentioned it or brought any knowledge of it home to the plaintiff, and there is no showing before me or claim made that the plaintiff at that time knew or had any grounds to believe that such a deed was in existence or on record. (In justice to the attorney who represented Stanwix Gr. Mayfield, Jr., and Mrs. Williams, in that case, it should be stated that he had no knowledge of the existence of the deed or its record until long after the proceedings in that case were ended.) Under the decree of foreclosure rendered by the court in that ease, the plaintiff had acquired an absolute right to a sale and that the proceeds should be first applied to its mortgage, and as long as that decree stood, neither Stanwix G. Mayfield, Jr., nor Mrs. Christabel M. Williams could ever set up their deed as against this plaintiff. In that situation, with no knowledge on the part of the plaintiff of any secret claims they had, the plaintiff gave up its rights under the final decree in that case and granted an extension of time on the remaining portion of' the mortgage debt. Can any reasonable man doubt that if these defendants or any one of them had given the slightest hint at that time that there was an outstanding deed in favor of these two defendants, paramount to the claim of the plaintiff, or if the plaintiff had had the slightest knowledge upon the subject of any such claim, that the plaintiff would ever have been willing to have agreed to the superseding of that final decree and the canceling of all their rights thereunder, or would have agreed to give the parties an extension of time for the payment of the major portion of the mortgage debt? ' The defendants were silent when they should have spoken, and now they will not be heard when they should be silent. When all the facts and circumstances of the case are considered, it is as plain a case for the application of the salutary rule of estoppel as has probably ever been presented to a court. The .two defendants claiming under the deed assert that the estoppel does not apply, because the supplemental decree provides “that the parties to, this cause be, and they are here restored to the same status that would have existed between them had this cause never been commenced as far as consent of the parties hereto can effect the same.” It is asserted that by virtue of- this'clause they are restored to the condition that existed prior to the institution of the foreclosure, and that therefore they can now plead the deed, just as they could have plead it, if that suit had never been instituted. But this argument is unsound. It ignores entirely the fact that the defendants, by their conduct in the case and their silence and failure to speak when the supplemental decree by consent was agreed to and the extension of time granted, misled the plaintiff into giving up valuable rights under the original decree of foreclosure and sale. In other words, the plaintiff would never have consented to an agreement restoring the defendants to their supposed rights, if there had been anything in their conduct or in the pleadings in that case to indicate in the slightest way that they had any rights of the nature now claimed. I have no doubt that the defendants Stanwix G. Mayfield, Jr., and Mrs. Christabel M, Williams are estopped from setting up any claims under the deed in question.

The plaintiff has attacked the deed in question upon several other grounds, but I do not deem it necessary to pass upon them, as in my judgment the conclusions I have reached are sustained by what is said above, and in ease of an appeal, the plaintiff of course will be at liberty to present to the appellate court any grounds it may deem advisable to sustain the decree which will be rendered in its favor. ■

Now, as to the claim of J. H. Mace to foreclose his -mortgage, not only upon the lands described in the complaint herein, but upon other lands covered by his mortgage, I do not thin£ such relief can be granted to him in this case. All the relief that can be given to him in this ease is to provide for the payment of his mortgage in the order of its priority from the proceeds of sale of the land described in the complaint. As to the other lands covered by Mr. Mace’s mortgage, no adjudication will be made in this court; but he will be remitted to any rights he may have to proceed by an indspendent foreclosure as to them. But so far as the proceeds from the sale of the tract of land described in the bill of complaint is concerned, Mr. Mace has a claim, justiciable in this court, but his claim is subsequent to the satisfaction of all the claims of the plaintiff, the Pan American Life Insurance Company.

As to the claims of the judgment creditors who are made parties to this suit, it appears that Mrs. Leda K. Mayfield’s interest in the land in question was sold under execution by the sheriff in the county where the judgments were filed, and therefore the claims of those judgment creditors (which, in any event, would be subsequent to the claims of the plaintiff herein) were extinguished, so far as the tract of land described in the complaint is concerned. The decree therefore cannot make any provision for the application of any part of the proceeds of sale of the land described in the complaint to the claims of these judgment creditors.

S. G. Mayfield, Sr., has acquired Mrs. Leda K. Mayfield’s interest in the land by sale under executions against her. But his claim is subsequent to plaintiff’s mortgage. From the evidence before me, he had at all times full knowledge of the deed to Stanwix G. Mayfield, Jr., and Mrs. Williams, and can make no claim as’ against them. Nor does he make any claim as against them, or as against the plaintiff’s mortgage, or as against Mr. Mace’s mortgage. Under the facts stated, no part of the proceeds of sale can be paid to him.

I find therefore that the plaintiff’s mort- . gage constitutes a first and prior lien on the premises described in the complaint (including a reasonable attorney’s fee, not exceeding 10 per cent., which will be fixed by the court after hearing the parties thereon when the final decree is presented for signature) and should be paid first from the proceeds of sale (after payment of costs and expenses of this suit, and taxes, if any); and that the mortgage of J. A. Mace (including also a reasonable attorney’s fee not exceeding 10 per cent, to be likewise fixed by the court when the final decree is signed) constitutes a second lien upon the premises and should be paid next from the proceeds of sale; and if any surplus then remain it should be paid to Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams.

The plaintiff is, of course, entitled to judgment against Mrs. Leda K. Mayfield, J. K. Mayfield, and W. D. Mayfield, for the amount due on its bonds and attorney’s fee.

The amounts due under plaintiff’s bonds and mortgage and Mr. Mace’s mortgage are not in dispute and should be computed and fixed by the final decree.

The final decree should be in the usual form, but the attorneys are directed, in preparing it, to make the same conform to the following specific instructions:

1. The provisions for sale shall conform to the requirements of U. S. Code, title 28, §§ 847 and 849 (28 USCA §§ 847, 849).
2. The proceeds of sale shall be applied in the following order and priority, to wit: (1) To payment of costs and expenses of this action (including compensation of the special master); (2) to payment of taxes, if any; (3) to payment of plaintiff’s mortgage debt and attorney’s fee as above provided; (4) to payment of J. A. Mace’s mortgage debt and attorney’s fee as above provided; and (5) the surplus, if any, is to be paid to Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams.
3. The sale to be for one-half cash and the remainder in equal installments, due in one and two years, respectively, with interest on the deferred installments from date at 7 per cent, per annum, payable annually, secured by bond and mortgage of the premises, with the usual attorney’s fee and insurance clauses, and the usual foreclosure and receivership clauses and right to take possession and collect the rents in ease of default; with leave to purchaser to pay all cash.
4. The final decree should also provide for the appointment of a special master to make the sale and carry out the provisions of the decree, and the parties may agree upon such special master subject to the approval of the court, and if they fail to agree, the court will appoint a special master when the final decree is signed.
5. The final decree should also provide that all bidders should make a deposit in cash or .certified check in such an amount as the parties „may agree to be reasonable and proper, and in ease they fail to agree upon the amount, the court will fix the amount when the final decree is signed.

The court reserves the right to make any changes in the form or contents of the final decree when the same is presented as may be advisable.

Let the attorneys for the plaintiff prepare a final decree of foreclosure and sale in the usual form in accordance with the foregoing, serve a copy on the several attorneys for the defendants, and submit the same to the court for signature, upon four days’ notice to said attorneys of the time and place of such submission.


source: Caselaw Access Project

author: NORTHCOTT, Circuit Judge.

license: Public Domain

text:
    MAYFIELD et al. v. PAN AMERICAN LIFE INS. CO. et al.
    No. 3110.
    Circuit Court of Appeals, Fourth Circuit.
    April 13, 1931.
    William C. Wolfe, of Orangeburg, S. C., and Stanwix G. Mayfield, of Bamberg, S. C., for appellants.
    Alva M. Lumpkin, of Columbia, S. C. (Thomas & Lumpkin, J. Waties Thomas, Morris C. Lumpkin, and Pinckney L. Cain, all of Columbia, S. C., and Albert Wright, of New York City, on the brief), for appellees.
    Before PARKER and NORTHCOTT, Circuit Judges.
   NORTHCOTT, Circuit Judge.

This is a suit in equity brought by one of the appellees, the Pan American Life Insurance Company, which will be herein referred to as plaintiff, to foreclose a mortgage on a certain tract of land, executed by one Leda K. Mayfield on the 11th day of June, 1919, and recorded on that date, to the Old Dominion Trust Company, to secure certain bonds executed by her. The bonds and mortgage were assigned by the Old Dominion Trust Company to the plaintiff. A number of others were made parties because of the claim of some interest in the land in question, or because they were judgment creditors. The appellants, Stanwix G. Mayfield, Jr., and Christabel M. Williams, children of Leda K. Mayfield, claimed that their mother had, on January 8, 1918, and prior to the execution of the mortgage, deeded the same tract of land that was covered by the mortgage to them. The deed to the appellants was claimed to have been recorded on January 8, 1918, and by virtue of this deed it was claimed that appellants had paramount title, and that the tract of land could not be subjected to the payment of plaintiff’s mortgage. In the written application for the loan, filed by Leda K. Mayfield and sworn to by her before a notary, on April 28, 1919, she stated that she held the undisputed title in fee simple to the tract of land in question.

The suit was heard, and the testimony and evidence presented before the judge below in open court. The validity of appellants’ claim to the paramount title was contested on the ground that the deed to appellants had not been recorded at the time of the execution and recordation of the mortgage, and without going into detailed discussion of the evidence, which was voluminous, it is sufficient to say that a study of the record convinces us that while the deed in question to appellants may have been executed prior to the execution and recordation of plaintiff’s mortgage, it was not recorded pri- or thereto. We are forced to this conclusion by a large number of unquestioned circumstances, which prove the fact, and this is the conclusion reached by the learned judge below, who saw the witnesses and heard them testify. Unless clearly wrong, the conclusion of the trial judge will not be reversed.

“It is settled that we will not reverse a finding of the District Court having support in the evidence unless we think that the Judge has misapprehended the evidence or gone against the clear weight thereof, or, in other words, unless we think that his finding was clearly wrong.” Chesapeake Lighterage & Towing Co., Inc., v. Baltimore Copper Smelting & Rolling Co. (C. C. A.) 40 F.(2d) 394, 395.

In this instance, we are firmly of the opinion that the learned judge below was clearly right in his conclusion, but as stated by him in his memorandum .opinion the case is settled beyond any doubt on another ground.

In 1923, the plaintiff brought a foreclosure suit in the District Court of the United States for the Eastern District of South "Carolina against Mrs. Leda K. Mayfield, J. K. Mayfield, W. D. Mayfield, Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams, and certain other parties, to foreclose this same mortgage. The bill in that ease alleged, among other things, the execution, recording, etc., of the same mortgage by Mrs. Mayfield, to secure the same bonds executed by her and guaranteed by J. K. Mayfield and W. D. Mayfield. In that suit Mrs. Christabel M. Williams and Stanwix Gr. Mayfield, Jr., appellants here, were made parties because they had or claimed some interest or lien upon the mortgaged premises by reason of judgments of record, but the bill alleged that those liens were subsequent to the lien of the mortgage of the plaintiff. In that proceeding Stanwix G. Mayfield, Jr., and Christabel M. Williams each filed a separate answer by their attorneys, and the answers were sworn to by each of them before a notary. Those answers merely claimed that they held judgments respectively against the defendant, Mrs. Leda K. Mayfield, and admitted that they were junior to the mortgage executed by Mis. Mayfield and described in the plaintiff’s complaint. Nowhere in either of the answers did either of them make any claim whatsoever that they or either of them had any interest in the land by virtue of any deed or other instrument whatsoever. That ease proceeded to a final decree for the foreclosure and sale of the property, adjudging that the plaintiff’s mortgage was a first lien upon the premises and should be paid first, and directing that the judgments claimed by the defendants, Stanwix G. Mayfield, Jr., and Mrs. Christabel M. Williams, should be paid after the satisfaction of the plaintiff’s mortgage. The premises were not sold under this decree; but after the final decree and before any sale, there was entered by consent of all the parties to that suit a supplemental decree, which recited in substance that all of the indebtedness secured by the mortgage was not then past due, and that Mrs. Leda K. Mayfield had agreed to pay all of the past due indebtedness, if the complainant would accept the same, and the cause should be dismissed as by the consent of the parties and not as a judicial finding, without prejudice to the right of the complainant to institute another proceeding for the foreclosure of the mortgage then sued on, should the defendant Mrs. Leda K. Mayfield thereafter become in default under the terms thereof. Mrs. Leda K. Mayfield then paid the past due indebtedness in accordance with this agreement, and this money, it appears, was furnished by S. G. Mayfield, Sr.; Mrs. Leda K. Mayfield, S. G. Mayfield, Sr., J. K. Mayfield, and W. D. Mayfield signed a renewal agreement whereby the balance of the mortgage was extended and made due and payable in installments as set forth in that agreement. At no time during these proceedings did the defendants, Stanwix G. Mayfield, Jr., or Mrs. Christabel M. Williams, or their attorneys, or any one acting for them ever mention or suggest in the slightest way that they had a deed covering the premises in question and held title paramount. The plaintiff was left complete,ly in the dark as to the existence of such deed or any claim to be made thereunder. Stanwix G. Mayfield, Jr., and Christabel M. Williams, were then of age, and according to the testimony before us they then knew of the existence of the deed and of their rights thereunder. All of the other parties mentioned, namely, Mrs. Mayfield, J. K. May-field, W. D. Mayfield, and S. G. Mayfield, Sr., knew of the existence of this deed and of the rights that might be claimed for Mrs. Williams and Stanwix G. Mayfield, Jr;, thereunder. But none of them ever mentioned it or brought any knowledge of it home to the plaintiff, and there is no showing before us or claim made that the plaintiff, at that time knew or had any grounds to believe that such a deed was in existence or on record. The plaintiff had a vested right by virtue of the final decree of foreclosure for the sale of the tract of land, and the appellants acted in such a manner as to change plaintiff’s position for the worse. It is not necessary to cite authorities to the effect that this creates an estoppel against them. As was well said by the learned judge below: “Can any reasonable man doubt that if these defendants * * * [held title] paramount to the claim of the plaintiff, or if the plaintiff had had the slightest knowledge upon the subject of any such claim, that tbe plaintiff would ever have been willing to have agreed to tbe superseding of that final decree and tbe cancelling of all their rights thereunder, or would have agreed to give the parties an extension of the time for the payment of the 'major portion of the mortgage debt? The defendants were silent when they should have spoken, and now they will not be heard when they should be silent. When all the facts and eireumstánces of the-case are considered, it is as plain a ease for the application of the salutary rule of estoppel as has probably ever been presented to a court.”

On both questions, (1) the recordation of the deed, and (2) the question of estoppel, the learned trial judge was clearly right, and the decree of the court below subjecting* the tract of land in question to the mortgage is affirmed.


author: TUTTLE, District Judge.

text:
    UNITED STATES v. GRIDLEY et al.
    No. 14098.
    District Court, E. D. Michigan, S. D.
    April 28, 1931.
    Gregory Frederick, U. S. Atty., of Detroit^ Mjch.
    - Anthony Nelson and Edmund E. Shepherd, both of Detroit, Mich., for defendants.
   TUTTLE, District Judge.

This is a petition by the defendants for leave to file a motion for a new trial.

The petitioners, Willis T. Gridley and Gladys Wright, on March 15, 1929, after a protracted trial in this court, were convicted of the offense of using the mails to defraud, in violation of section 215 of the Criminal Code (18 USCA § 338). On November 6, 1930, this conviction was affirmed by the Circuit Court of Appeals for the Sixth Circuit, in an exhaustive opinion, which covered twenty-four pages of the printed report of such opinion. Gridley v. United States, 44 F.(2d) 716, 731. On March 9, 1931, the United States Supreme Court, 51 S. Ct. 351, 75 L. Ed. -, refused to grant the writ of certiorari sought by the defendants. Thereafter, and two years after the expiration of the term of this court at which the judgment of conviction of the defendants was entered, the defendants filed the petition already mentioned. The grounds for a new trial alleged in this petition are: That the jury considered certain matters outside of the evidence produced at the trial; that the evidence did not support the verdict; and that such verdict was against the overwhelming weight of the evidence. For several reasons, this petition must be denied.

Even if the petitioners were otherwise entitled to a. new trial, it would be necessary to deny this petition for the reason that the term of court at which the judgment of conviction was entered expired without the filing of any motion for a new trial or any request for an extension of time for the filing of such a motion, and therefore this court has no jurisdiction to now grant such relief. As this court said in its opinion in United States v. Luviseh, 17 F.(2d) 200, at page 202:

“It is now fully established by decisions of the United States Supreme- Court that where, as here, the term at which a final judgment of a federal court has been rendered has expired, without the filing of any application to set aside such judgment, or to extend to a future term the time for filing such an application, such court is without jurisdiction or power to grant such an application filed at a subsequent term. Bronson v. Schulten, 104 U. S. 410, 26 L. Ed. 797; Phillips v. Negley, 117 U. S. 665, 6 S. Ct. 901, 29 L. Ed. 1013; United States v. Mayer, 235 U. S. 56, 35 S. Ct. 16, 59 L. Ed. 129.”

In the ease of United States v. Mayer, 235 U. S. 55, 35 S. Ct. 16, 20, 59 L. Ed. 129, a new trial was sought, after the expiration of the term, on the ground óf improper conduct by a juror. The trial court found that the facts on which the defendant based its application were not discovered until after the expiration of the term at which he had been convicted. Nevertheless, the Supreme Court, speaking by Mr. Justice Hughes, held that the court lacked jurisdiction to grant relief, saying, among other things:

“In cases of prejudicial misconduct in the course of the trial, the misbehavior or partiality of jurors, and newly discovered evidence, as well as where it is sought to have the court in which the ease was tried reconsider its rulings, the remedy is by a motion for a new trial (Judicial Code, § 269 [28 USCA § 391]) — an application which is addressed to the sound discretion of the trial court, and, in accordance with the established, principles which have been repeatedly set forth in the decisions of this court above cited, cannot be entertained, in the absence of a different statutory rule, after the expiration of the term at which the judgment was entered.”

There being no statute conferring such jurisdiction, this court has no power to grant the relief prayed. But, even if this court had the power to grant this petition, the petition would not be granted. I have carefully examined and considered the allegations and arguments presented by the petitioners, and I find no reason for supposing that the petitioners have any just cause for complaint.

It is well-settled law that where, as here, it is not claimed that any improper attempt to influence a juror has been made, the verdict of a jury cannot be impeached by statements of the members of such jury concerning the reasons which prompted them to reach such verdict. Hyde v. United States, 225 U. S. 347, 32 S. Ct. 793, 56 L. Ed. 1114, Ann. Cas. 1914A, 614; Williams v. United States, 3 F.(2d) 933, 936 (C. C. A. 6); Lancaster v. United States, 39 F.(2d) 30 (C. C. A. 5). As was said by the Circuit Court of Appeals for the Sixth Circuit, in Williams v. United States, supra:

“It is fundamental that a verdict may not be impeached by the testimony of its members regarding arguments advanced by individual jurors in the course of the jury’s deliberations. There is not here presented a case of attempts from without to influence the jury. The influence was altogether from within.”

Assuming, -however, that statements of a juror concerning the deliberations of the jury of which he was a member could be considered' in impeachment of a verdict of such jury, and assuming further that the three affidavits submitted by these defendants correctly recite the statements which one of the woman jurors in this case is alleged to have made after the rendition of the verdict, I am satisfied that such statements do not contain any sufficient basis for a new trial. It is clear from these affidavits that the jury were convinced of the guilt of the defendants. One affidavit quotes this juror as saying that “it was plain, to her that the whole plan and purpose was a scheme to defraud the people of their money.” The second affidavit shows that the said juror said: “I think it was a scheme to get the people’s money.” This affidavit further quotes this juror as saying: “It was very plain to the jury that it was just a scheme to get the members’ money.” It appears from the third affidavit that the juror in question stated “that it was quite plain to her that it was simply a scheme to get the people’s money.” It is very plain- that the jury believed the defendants guilty of the scheme to defraud, of which they were convicted.

I have carefully considered the claims of the defendants to the effect that the verdict was not supported by, but was contrary to, the evidence, and I am fully satisfied that such claims are entirely without merit. There is no occasion to now review' or discuss the evidence. This was done at length by the Circuit Court of Appeals in its opinion already cited. That court expressed, in no uncertain terms, its conclusion that the verdict of the jury was amply supported by the evidence. Its conclusions in this connection are fairly indicated by the following excerpts from its opinion:

“The representation that he [Gridley] had authentic proofs or any data or evidence tending to show that the descendants had the moral right to the property and that their case could be so won was absolutely false. * * * It must be taken as a matter beyond reasonable doubt that the appellants knew that the representation which' they made according to their witnesses was false and that they made it with fraudulent intent. It was obviously without foundation. It could, not have proceeded from honest ignorance or delusion. * * * According to their own showing, therefore, appellants had for a period of four years at least, prior to the finding of the indictment, falsely and with fraudulent intent represented that they possessed and had access to information and evidence which would establish at least that Trinity Church had wrongfully deprived the descendants of their property and that morally same was rightfully theirs and that the publication of same would convince the public that such was the case," or, in other words, that such information and evidence would enable them to win their case at the bar of public opinion. By reason thereof they obtained from the descendants a large sum of money. Beyond all question they were thus engaged in putting over a colossal humbug to enrich themselves at the expense of their dupes and with no concern for the gross wrong they were doing Trinity Church. * * * There was ample evidence introduced by appellee to establish the scheme specifically charged in the' indictment.”

The defendants received a fair trial. They were p'roperly, convicted on evidence which amply warranted the verdict. No error has been shown. I can find no basis for any complaint on the part of either of the defendants. The motion is denied. An order will be entered accordingly.


author: WATSON, District Judge.

text:
    ANTHRACITE TRUST CO. et al. v. PHILLIPS, Collector of Internal Revenue.
    No. 2462.
    District Court, M. D. Pennsylvania.
    May 19, 1931.
    L. E. Renard and W. M. Bunnell, both of Scranton, Pa., for plaintiffs.
    C. M. Charest, General Counsel, Bureau of Internal Revenue, and Pereia E. Miller, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., Andrew B. Dunsmore, U. S. Atty., of Wellsboro, Pa., and A. A. Vosburg, Asst. U. S. Atty., of Seranto'n, Pa., for defendant.
   WATSON, District Judge.

This is an action in assumpsit brought by the Anthracite Trust Company, Jane H. Connell, and E. E. Connell, executors of the estate of Alfred E. Connell, deceased, against David W. Phillips, collector of internal revenue for the Twelfth district of Pennsylvania, to recover the sum of $8,729.76, with interest, the amount of taxes assessed on the proceeds of certáin insurance policies insuring the life of Alfred E. Connell, which tax was paid to the defendant by the plaintiff.

The ease was tried without the intervention of a jury on' an agreed statement of facts, and the facts so stipulated are adopted as the court’s findings of fact, as if fully set forth in this opiniori.

Alfred E. Connell, of Scranton, Pa., died on March 17,1925. At the time of his death, there were outstanding fifteen certain insurance policies on his life, all issued prior to February 24, 1919, or a total of $144,545.38. Jane H. Connell, widow of the insured, was the beneficiary in, or the assignee of, these policies, and she received from all of them $144,545.38.

Five of the policies were assigned to Jane Connell, the decedent’s wife, with no right reserved in the insured to change the assignee or revoke the assignment. One policy, a benefit certificate, issued by the Modern Woodmen of America, was made payable to Jane Connell, the decedent’s wife. The insured had the right to change the beneficiary but only to some relative of the insured. In one policy, Jane Connell was the beneficiary named, and the policy contained no provision for a change of the beneficiary by the insured. In eight of the policies, Jane Connell, the decedent’s wife, was the beneficiary named, and the right to change the beneficiary was reserved in the insured.

The decedent’s representative filed federal estate tax return with the defendant as collector of internal revenue. The return did not include in the gross estate the proceeds of the policies above referred to. Upon an audit and review of the return by the Commissioner of Internal Revenue, the commissioner included as a part of the statutory gross estate of Alfred E. Connell for federal estate tax purposes the proceeds of said insurance policies, and assessed the estate with an additional tax of $9,285.40, together with interest of $1,779.74, or a total of $11,063.14, which amount was paid by the plaintiffs to the defendant. A claim for refund of this tax was duly filed. The commissioner refunded to the plaintiff the sum of $1,290.29, and refused to refund the balance of the claim. Subsequently, this suit was brought.

The question in the case is whether or not the proceeds of the fifteen insurance policies, or the proceeds of any of said policies, taken out in his lifetime by Alfred E. Connell, all issued prior to February 24, 1919, the effective date of the Revenue Act of 1&18, should be included in the gross estate of the insured, who died March 27, 1925, and should be taxed under the provisions of section 302 (g) and (h) of the Revenue Act of 1924 (26 USCA § 1094 note), which read as follows:

“See. - 302. The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated— * * *
“(g) To the extent of the amount receivable by the executor as insurance under policies taken out by the decedent upon his own life; and to the extent of the excess over $40,000 of the .amount receivable by all other beneficiaries as insurance under policies taken out by the decedent upon his own life.
“(h) Subdivisions (b), (c), (d), (e), (£), and (g) of this section shall apply to the transfers, trusts, estates, interests, rights, powers, and relinquishment of powers, as severally enumerated and described therein whether made, created, arising, existing, exercised or relinquished before or after the enactment of this Act.”

A similar question was involved in Lewellyn v. Frick, 268 U. S. 238, 45 S. Ct. 487, 488, 69 L. Ed. 934. In that case, there were eleven insurance policies in existence at the time of Mr. Erick’s death. They were all taken out prior to the effective date of the Revenue Act of 1918. In eight of the policies, the insured had no power to change the beneficiary or assignment. In three the insured had that power. Section 402 (f) of the Revenue Act of 1918 (40 Stat. 1097) is in the same language as section 302 (g) of the Revenue Act of 1924. In the case cited, it was held that section 402 (f) was not intended to apply to amounts received on insurance policies taken out prior to the effective date of the act of 1918.

Mr. Justice Holmes, in delivering the opinion of the court, said: “We do not propose to discuss the limits of the powers of Congress in cases like the present. It is enough to point out that at least there would be a very serious question to be answered before Mrs. Frick and Miss Erick could be made to pay a tax on the transfer of his estate by Mr. Erick. There would be another if the provisions for the liability of beneficiaries were held to be separable and it was proposed to make the estate pay a transfer tax for property that Mr. Erick did not transfer. Acts of Congress are to be construed if possible in such a way as to avoid grave doubts of this kind. Panama R. R. Co. v. Johnson, 264 U. S. 375, 390, 44 S. Ct. 391, 68 L. Ed. 748. Not only are such doubts avoided by construing the statute as referring only to transactions taking place after it was passed, but the general principle ‘that laws are not to be considered as applying to cases which arose before their passage’ is preserved, when to disregard it would be to impose an unexpected liability that if known might have induced those concerned to avoid it and to use their money in other ways. Schwab v. Doyle, 258 U. S. 529, 554, 42 S. Ct. 391, 66 L. Ed. 747, 26 A. L. R. 1454. This ease and the following ones, Union Trust Co. v. Wardell, 258 U. S. 537, 42 S. Ct. 393, 66 L. Ed. 753, Levy v. Wardell, 258 U. S. 542, 42 S. Ct. 395, 66 L. Ed. 758, and Knox v. McElligott, 258 U. S. 546, 42 S. Ct. 396, 66 L. Ed. 760, go far toward deciding the one now before us. They also indicate that the Revenue Act of 1924, c. 234, § 302 (h); 43 Stat. 253, 305, making (g) (the equivalent of (f) above) apply to past transactions, does not help but if anything hinders the Collector’s construction of the present law. Smietanka v. First Trust & Savings Bank, 257 U. S. 602, 42 S. Ct. 223, 66 L. Ed. 391.”

No retroactive provision, sueh as that contained in subdivision (h), was in the Revenue Act of 1918, but it was added in the' Revenue Act of 1924. Does this newly added subdivision (h) have the effect of making section 302 (g) retroactive, so as to warrant the inclusion of that which is received by “other beneficiaries” on insurance policies which were taken out before the effective date of the Revenue Act of 1918 9

In answering this question, we are concerned only with the second clause of subdivision (g), and not with the first clause, which has to do-with insurance received by the executor of the estate of the decedent. Subdivision (h) makes no reference to the second clause in subdivision (g). My opinion is that Congress did not intend by subdivision (h) to make subdivision (g) retroactive, so as to include in the gross estate of the decedent amounts of insurance receivable by beneficiaries other than the executor of his estate on policies taken out by decedent on his own life.

In Wyeth v. Crooks (D. C.) 33 F.(2d) 1018, it was held that the newly added subdivision (h) does not have the effect of making section 302 (g) retroactive so as to warrant the inclusion of the amount received by beneficiaries other than executors as insurance under policies taken out by the decedent upon his own life before the effective date of the Revenue Act of 1918. As I hold this to be so, this case would be wholly decided on the authority of Lewellyn v. Frick, supra, if” it were not for that which was decided by the Circuit Court of Appeals for this Circuit in the case of Heiner v. Grandin, 44 F.(2d) 141, in which it was held that insurance policies in which insured reserved right to change beneficiary constituted part of the “gross estate,” and were taxable though issued before the effective date of the act of 1918.

In seven of the policies — that is, No. 67249, the Provident Life & Trust Company, issued July 9, 1896; No. 83997, the Provident Life & Trust Company, issued December 23, 1899; No. 150163, the Provident Life & Trust Company, issued April 19, 1909; No. 117938, the Penn Mutual Life Insurance Company, issued January 4,1897; benefit certificate No. 692746, Modern Woodmen of America, issued September 14, 1900; No. 237681, Penn Mutual Life Insurance Company, issued May 7, 1903; No. 1127, Scranton Life Insurance Company, issued October 8, 1907 — the.right to change the assignee or beneficiary was hot reserved in the insured, and the proceeds of those policies should not be included in the gross estate of the insured.

In eight of the policies — that is, No. 15781, Scranton Life Insurance Company, issued April 17,1912; No. 306812, the Provident Life & Trust Company, issued December 24,1918; No. 1295961, the North Western Mutual Life Insurance Company, issued December 18, 1918; No. 1249484, the North Western Mutual Life Insurance Company, issued December 24, 1917; No. 522967, the Penn Mutual Life Insurance Company, issued December 27, 1909; No. 522968, the Penn Mutual Life Insurance Company, issued December 27, 1909; No. 603085, the Penn Mutual Life Insurance Company, issued January 23, 1913; No. 730904, the Penn Mutual Life Insurance Company, issued December 31,1915 — the right to change the beneficiary was reserved in the insured. As I feel I should follow that which was held in Heiner v. Grandin, I find that the proceeds of these policies should be included in the gross estate of the insured and should be taxed under the provisions of the Revenue Act.

The plaintiffs are entitled to recover from the defendant the amount of the taxes not lawfully assessed upon the proceeds of the seven policies, as above named, together with interest, and the amount of the interest collected on the amount of the tax not lawfully assessed with interest. A formal decree may be prepared accordingly and submitted for approval and entry.


author: CAMPBELL, District Judge.

text:
    THE JUMPING JACK. THE PINTA.
    No. 11589.
    District Court, E. D. New York.
    April 27, 1931.
    As Amended May 27, 1931.

      Maeklin, Brown, Lenahan & Speer, R. P. Lenahan, and J. Dudley Eggleston, all of New York City, for libelant.
    Hunt, Hill & Betts and J. W. Crandall, all of New York City, for claimant.
   CAMPBELL, District Judge.

This is a suit to recover for damages alleged to have been caused by the motor vessel Pinta coming into contact with the motorboat Jumping Jack.

I find the facts as follows:

At all the times hereinafter mentioned, the libelant was the owner of the motorboat Jumping Jack, which up to the time of the happening hereinafter described was tight, staunch, strong, and in all respects seaworthy.

The motor vessel Pinta was during the pendency of process hereunder within this district and within the jurisdiction of this court.

On the early morning of September 16, 1929, the motorboat Jumping Jack was lying at anchor in the Promised Land Channel, Napeague Bay, in the vicinity of Goff Point, Long Island. The Jumping Jack did not have a proper anchor light set and burning.

The tide was flood, and the wind was light. About 4:26 o’clock a. m. daylight saving time, on that day, the motor vessel Pinta, traveling at a high rate of speed, came into contact with the starboard side of the stem of the motorboat Jumping Jack, damaging her and causing her to sink.

No anehor watch was maintained on the motorboat Jumping Jack. No efficient lookout was maintained on the motor vessel Pinta,

Prom the facts as found, it appears that both boats were at fault.

I recognize the force of the rule that the positive testimony of one on a boat as to what was done on that boat, especially when he testified that he did it himself, is entitled to greater weight than the negative testimony of others not on the boat; still I saw and heard the witness who testified on behalf of the libelant, and believe he was in error when he said that the anchor light was lighted before and at the time that the motor vessel Pinta came into contact with the motorboat Jumping Jack. The evidence on behalf of the claimant as to the nonexistence of the light is very convincing.

While the witness produced on behalf of the libelant, who said that the anchor light was lighted before and at the time that the motor vessel Pinta came into contact with the motorboat Jumping Jack was not the master of the boat and could not bind the claimant, still any statement made by him as to his actions at the time may be offered to contradict his testimony and considered solely on the question of his credibility.

He was also obviously in error as to the place where the Jumping Jack was anchored, as the evidence is overwhelming that she was anchored about in the middle of the- channel, and not outside the channel.

To anchor in the channel without an anchor light, as required by article 11 of the Pilot Rules, was a fault, but did not make tho Jumping Jack an outlaw.

Any proper lookout should have discovered the Jumping Jack at a greater distance than twenty feet from the motor vessel Pinta, and in sueh ease the collision could have been avoided.

The Jumping Jack was not swinging across the channel and blocking it, but was lying about in the center of the channel nearly parallel with its sides, and leaving plenty of room on each side of her for the Pinta to pass.

In the face of all the evidence, I cannot find that a proper lookout was maintained on the Pinta, and, according to her all the superiority of right of a traveling vessel in a navigable channel over the Jumping Jack anchored therein without anehor lights or anchor watch, she cannot be freed from all blame, but must be held at fault for not maintaining sueh a watch.

I find as conclusions of law:

That the motor vessel Pinta was guilty of negligence in failing to maintain an efficient lookout, which, if maintained, would have prevented the collision, and in coming into contact with the motorboat Jumping Jack.

That the libelant and his motorboat Jumping Jack were guilty of negligence in failing to carry on said motorboat Jumping Jack an anchor light, as provided by article 11 of the Pilot Rules, while at anchor, and were also guilty of negligence in falling to maintain an anehor watch.

That both the libelant and the motor vessel Pinta were at fault, and the damages must be divided between them.

That the motor vessel Pinta suffered no damage.

That the libelant is entitled to recover from the motor vessel Pinta one-half of the damage to the motorboat Jumping Jack, with interest and one-half costs, and to have preference to determine such damages and interest.

A decree may be entered in favor of the libelant against the motor vessel Pinta for one-half damages, with interest and one-half costs, and the usual order of reference.

Settle on notice.

If this opinion is not considered a sufficient compliance with rule 46% of the Rules in Admiralty, proposed findings of fact and conclusions of law in accordance herewith may be presented for the assistance of the court.


author: HINCKS, District Judge.

text:
    HURLEY v. WELLS-NEWTON NAT. CORPORATION.
    No. 3465.
    District Court, D. Connecticut.
    April 1, 1931.

      Tuttle & Day and William A.'Bree, all of New Haven, Conn., for plaintiff.
    Paxton Blair, of New York City, and James E. Wheeler, of ¡New Haven, Conn., for defendant.
   HINCKS, District Judge.

This is an action brought originally to the superior court for Fairfield ¡county, state of Connecticut.

The original writ recites that the plaintiff, Hurley, is a resident of New ¡York, and that the defendant corporation is a Delaware corporation, “located and having a principal place of business in the ¡City, County and State of New York.” The complaint itself alleges facts purporting to show a breach of a contract on the ¡part of the defendant, • and then alleges that the defendant is the owner of certain shares of stock in the William P. Kirk Company, Inc., a ¡ Connecticut corporation, and further facts supporting the plaintiff’s claim for an attachment of the stock owned in said Connecticut corporation'by the defendant, by means of an injunction restraining the defendant from a transfer of said stock. The complaint was accompanied by an application for a temporary injunction against said transfer. And it appears also from the record that an ¡order for such injunction was issued by the state court. To the foregoing papers was attached a citation from the state court, ¡commanding that “notice of the pendency of this complaint and of the foregoing order of injunction” be given the defendant by ¡leaving a true and attested copy of the papers with “William P. Kirk as Vice-President and Treasurer of Wells-Newton National Corporation, or at'his usual place of abode in the Town of Bridgeport, County of Fairfield, and State of Connecticut.” The sheriff’s return ¡recites that he “left with and in the hands of William P. Kirk, as he is Treasurer of the Wells-Newton National Corporation, ¡the within named defendant, a true and attested copy” of the various papera with, his doings thereon indorsed.

Thereafter the > defendant, having appeared specially for the purpose, filed a petition for the removal of the action to this court on the ground of 'diversity of citizenship,' which motion was duly granted by the state court.

Thereafter the defendant filed motion in this court'“for an order vacating and setting aside the attempted service of process and of a complaint herein, and dismissing the complaint for want of jurisdiction of the'defendant’s person, on the ground that the defendant, at the time of the attempted service, 'was not doing business in the State of Connecticut and was not present at said'time, in the District of Connecticut.” To this motion, which was filed nine days prior to the time set for 'its return, were appended affidavits by the officers of the defendant corporation, in which the following facts are disclosed:

That the defendant is a holding company, chartered by -the state of Delaware for the financing and purchasing for plumbing contracting companies; that it owns stock in some twenty-two such companies, one of which is a Connecticut'corporation; that the defendant owns all of the stock in said Connecticut corporation, and prior to this action had pledged the same'in New York to secure an obligation of the defendant; that the defendant’s treasurer, on whom the writ in this case was served, is'president of said Connecticut subsidiary, and has his personal residence in Connecticut, going to New York usually once a week to perform his duties as treasurer of the defendant; for the personal convenience of said treasurer the defendant has made such arrangements that he may receive requisitions from the defendant’s New York office and make out checks in Connecticut which are in the r usual course sent to the New York office for handling; that occasionally the defendant, due to temporary financial stringency, has made loans from áte Connecticut subsidiary which have been deposited in Connecticut banks for specific obligations of the defendant; that'the defendant ships goods to its Connecticut subsidiary in Connecticut on orders transmitted by the subsidiary to the New York'office of the defendant; that it has no dealings or contracts whatever with others in Connecticut, and maintains no officers or agents án the state for the solicitation or execution of contracts in Connecticut; that it maintains, leases, and owns no office, no real -estate or personal property, in the state, and no bank accounts other than the intermittent credits described above resulting from loans from’its Connecticut subsidiary; and that it pays no taxes in Connecticut, and has not qualified as a foreign corporation-doing business therein.

The plaintiff’s claim in opposition to these motions is to the effect that objection to jurisdiction such ras this, depending for its validity'upon facts outside the record, must he made, if at all, by a plea to the jurisdiction filed in conformity rwith state practice on which an issue of fact may be joined which shall be resolved by actual testimony in open court; that, rsuch being the practice in the state courts, this court is bound by the Conformity Act, 28 USCA § 724, to require similar procedure.

It will be observed at the outset that the defendant’s motions do not seek to question the existence of “federal- jurisdiction”— meaning by that term the power of a federal court, as distinguished from a state court of general jurisdiction, to -entertain the case. Indeed, it was necessary for the defendant in obtaining a removal of the case from the state court to show the - existence of such federal jurisdiction. And, if it succeeded in making that showing, it could not, if it would, now bring these elements of - jurisdiction into question. In any event, the record clearly discloses the requisite diversity of citizenship and amount in controversy to sustain federal jurisdiction -under Judicial Code § 24 (1), 28 USCA § 41 (1).

Nor is objection made on account of venue. To be sure, the record discloses - that neither plaintiff nor defendant is a resident of Connecticut. And section 51 (a) of the Judicial Code- (28 USCA § 112 (a) provides: “No civil suit shall be brought in any district court against any person by any original process or proceeding in any other -district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that -the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.” •

But it is now definitely established that with regard to cases coming to the federal courts by removal - from state courts, section 51 (a), just quoted, yields to section 29 of the Judicial Code (28 USCA § 72). And in all such cases, - as is there provided, the suit must he removed “into the district court to be held in the district where such suit is pending.” Lee v. Chesapeake & Ohio R. Co., 260 U. S. 653, 43 S. Ct. 230, 67 L. Ed. 443; Gen eral Investment Co. v. Lake Shore & M. R. Co., 260 U. S. 261, 43 S. Ct. 106, 67 L. Ed. 244; Gt. Northern Ry. Co. v. Galbreath Cattle Co., 271 U. S. 99, 46 S. Ct. 439, 70 L. Ed. 854.

It thus -appearing that the so-called “federal jurisdiction” of the case is unquestionable, the defendant, by its motions, questions the existence of jurisdiction on the fundamental-ground that the court is without jurisdiction of the person of the defendant. In other words, the defendant claims that the court is without jurisdiction, since the record fails to - disclose any valid service on the defendant within the jurisdiction. As to this, the record discloses that the defendant is a Delaware corporation. Such being the ease, it is-to be classified as a citizen of Delaware, both for the purposes of federal jurisdiction', Barrow Steamship Co. v. Kane, 170 U. S. 100, 18 S. Ct. 526, 42 L. Ed. 964; Louisville, Cincinnati, & Charleston R. R. Co. v. Letson, 2 How. 497, 11 L. Ed. 353; Wells Co. v. Gastonia Cotton Mfg. Co., 198 U. S. 177, 25 S. Ct. 640, 49 L. Ed. 1003, and also for the purposes of venue under section 51 of the Judicial Code (28 USCA § 112), Central Trust Co. v. McGeorge, 151 U. S. 129, 14 S. Ct. 286, 38 L. Ed. 98; Jones v. Consolidated Wagon & Machine Co. (D. C.) 31 F.(2d) 383, appeal dismissed, 280 U. S. 519, 50 S. Ct. 65, 74 L. Ed. 589; Steidle v. Reading Co. (C. C. A.) 24 F.(2d) 299, certiorari denied, 278 U. S. 609, 49 S. Ct. 13, 73 L. Ed. 535. The defendant being thus described as a nonresident of Connecticut, the record nowhere discloses facts from which its presence within the jurisdiction can-be found. The sheriff’s return of service, it will be observed, recites merely service upon an officer of the defendant in Connecticut. It does not even purport'to recite the presence of the defendant itself in Connecticut. Nor does the record by the sheriff’s return, or-elsewhere, disclose any attachment of property of the defendant within the jurisdiction-. But the complaint discloses a right of action in personam,-and jurisdiction of the person is an essential element of the jurisdiction of every court, state or-federal, in every action in personam. Ex parte Craig (C. C. A.) 282 F. 138; Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565; Caledonian Coal Co. v. Baker, 196 U. S. 432, 444, 25 S. Ct. 375, 49 L. Ed. 540.

It is well-established that the peculiar facts requisite to federal jurisdiction must affirmatively appear. Otherwise it will'be presumed that federal jurisdiction is absent, and the-case will be dismissed. 28 USCA § 41 (1), notes 61 and 71. A fortiori, a similar presumption must obtain as to a fundamental condition of jurisdiction, such as jurisdiction over the-person.

The existence of this presumption is clearly disclosed in eases in whieh it is sought to attack the judgment of a -court of general jurisdiction. And it is generally held that, if the record even of such a court discloses that the defendant -in a personal action, “at the time of the alleged service, was without the territorial limits of the court, and thus beyond the reach of its process, -and that he never appeared in ,the action, the presumption of jurisdiction ceases, and the burden of establishing the jurisdiction -is east upon the party who invokes the benefit or protection of the judgment or decree.” Galpin v. Page, 18 Wall. 350, 368, 21 L. Ed. 959; Clark v. Wells, 203 U. S. 165, 27 S. Ct. 43, 51 L. Ed. 138. And the doctrine has-precisely the same application in eases in whieh the defendant is a foreign corporation. See St. Clair v. Cox, 106 U. S. 353, 1 S. Ct. 354, 27 L. Ed. 222, where it was held that a personal judgment was inadmissible in a collateral action where its supporting record failed to show affirmatively that the defendant — a foreign corporation- — -was engaged in business in the state of tíie forum.

If such is the presumption after judgment, necessarily the same presumption must prevail at earlier stages whenever jurisdiction is properly drawn into question. And it is so held in the well-considered opinion in the case of Earle v. Chesapeake & Ohio Ry. Co. (C. C.) 127 F. 235. On procedural questions, this case is indistinguishable from the case at bar.

Consequently, I hold here that, since the record fails affirmatively to show jurisdiction over the person, the presumption is that such jurisdiction is lacking. It follows that there was no need for the defendant to resort to facts outside the-record to support its motion. And the plaintiff’s contention that the point could be taken only on plea, raising an issue of fact, therefore fails.

However, the absence from the record of a showing of jurisdiction over the person is a defect which might be corrected, if the facts permitted, by an amendment to the complaint alleging that the defendant was doing business in Connecticut. In order to make a final disposition of the ease, it seems advisable to consider whether such an amendment, if allowed, could prevail on the underlying facts. It thus becomes important to consider whether the defendant’s motions, with the supporting affidavits, are sufficient as to form.

In this connection, it may be noticed that, notwithstanding the plaintiff’s contention, in raising in this court a question of jurisdiction, the defendant is not bound to conform to the state procedure established for that purpose. In the case of Munter v. Weil Co., 261 U. S. 276, 43 S. Ct. 347, 348, 67 L. Ed. 652, the question was one of jurisdiction, claimed to be defective by reason of “want of jurisdiction in the court over the defendant because” of a defective service. As to this point, the Supreme Court said: “We have decided, in cases which concern the jurisdiction of the federal courts, that, notwithstanding the Conformity Act, neither the statutes of the states nor the decisions of its courts are conclusive upon the federal court, the determination of such questions being 'in this court alone.’ ”

As to the method in which such a point of jurisdiction may be raised in federal practice, it will be observed that the books are full of eases in which a similar objection has been raised by motion supported by affidavits. Christian v. International Ass’n (D. C.) 7 F.(2d) 481, 483; Vitkus v. Clyde S. S. Co. (D. C.) 232 F. 288; Filli v. Delaware, L. & W. R. R. Co. (C. C.) 37 F. 65.

In Meisukas v. Greenough Red Ash Coal Co., 244 U. S. 54, 37 S. Ct. 593, 595, 61 L. Ed. 987, the court disposed of a similar objection to the method of attack on the jurisdiction where, as here, the underlying issue was whether the corporate defendant was “doing business” within the jurisdiction, with these words: “Finally, it is said that as, under the local law, ,the right to challenge the summons and the jurisdiction resting on it could only have been raised by demurrer, therefore under the Conformity Act (section 914, Eev. Stat. [28 TJSCA § 724]) the motion to quash the summons could not be entertained, and, on the contrary, should have been disregarded. We do not stop .to discuss the proposition since it is too clear for discussion that its want of merit is foreclosed by previous decisions of this court which have recognized and upheld the practice of challenging the jurisdiction under circumstances like those here present by way of motion to quash instead of by demurrer. Goldey v. Morning News, 156 U. S. 518, 15 S. Ct. 559, 39 L. Ed. 517; Wabash Western Railway v. Brow, 164 U. S. 271, 17 S. Ct. 126, 41 L. Ed. 431; St. Louis Southwestern Ry. Co. v. Alexander, 227 U. S. 218, 33 S. Ct. 245, 57 L. Ed. 486, Ann. Cas. 1915B, 77. Affirmed.”

And in the case of Gilbert v. David, 235 U. S. 561, 35 S. Ct. 164, 59 L. Ed. 360, it is held that the method by which the question of jurisdiction shall be raised is left to the sound discretion of the trial judge. This clearly left room for Judge Brewster to rule, as he did in the case of Jeffrey-Nichols Motor Co. v. Hupp Motor Car Carp. (D. C.) 41 F.(2d) 767, that the methods in which jurisdiction may be attacked are within the rule-making powers of the federal courts.

The plaintiff, however, on argument, objéeted to the defendant’s use of affidavits on the jurisdictional question. In the JeffreyNiehols Case, just above cited, it appeared that the District Court of Massachusetts had a rule that, in matters in abatement, facts not apparent on the record are to be heard upon affidavits and counter affidavits, it being discretionary with the court whether evidence should be taken on any such issues. This court has no similar rule, and, consequently, the matter rests in the legal discretion of the court. The existence of such a rule as that just referred to in the Jeffrey-Niehols Case, expressly authorizing,the use of such affidavits, necessarily suggests that the practice is a proper one. And in many of the cases cited above it appears incidentally that the facts were presented on affidavits without objection or question. Wabash Western Ry. Co. v. Brow, 164 U. S. 271, 17 S. Ct. 126, 41 L. Ed. 431; Mechanical Appliance Co. v. Castleman, 215 U. S. 437, 30 S. Ct. 125, 54 L. Ed. 272; Goldey v. Morning News, 156 U. S. 518, 15 S. Ct. 559, 39 L. Ed. 517. See, also, Lukosewicz v. Philadelphia & Reading Coal & Iron Co. (D. C.) 232 F. 292, and Zurich General Acci. & Liab. Ins. Co., Ltd., v. Imperial Wheel Co. (D. C.) 277 F. 71. Clearly, the practice is well established.

As to its use in the present case, it appears that the defendant’s affidavits in question were annexed to its motion and copies served on the plaintiff nine days prior to court motion day and the hearing. It thus appears that the plaintiff had ample opportunity'to obtain and present counter affidavits, if he so desired. Moreover, although plaintiff’s counsel objected to the use of affidavits since it deprived him of his right of cross-examination, it does not appear that he even requested defendant’s counsel to have his affiants present in court. And, if the defendant’s treasurer,' who was one of the affiants in question, resides within the state, clearly he could be reached by subpoena. But, notwithstanding, there was apparently no attempt on the part of the plaintiff to compel his attendance for cross-examination.

Doubtless it would be within the power of the court to take testimony on the jurisdictional facts, or in certain eases to refer the matter to a special master for a finding on the jurisdictional facts. However, since the plaintiff’s objections to the procedure in this ease are technical only, it seems to me reasonable to rule, as I do, that the jurisdictional facts have been properly presented.

The foregoing cases, cited above on the question of procedure, also are instructive on its merits.

It is a necessary conclusion from the facts disclosed in the defendant’s affidavits that the only acts of the defendant’s treasurer within Connecticut were confined to the intraorganization activity of the defendant. Such acts do not constitute such a doing of business as to make the defendant amenable to process in Connecticut. People ex rel. Manila Ry. & Light Co. v. Knapp, 229 N. Y. 502, 128 N. E. 892; Consolidated Iron & Steel Co. v. Maumee Iron & Steel Co. (C. C. A.) 284 F. 550; United States v. Am. Bell Tel. Co. (C. C.) 29 F. 17; Bank of America v. Whitney Central National Bank, 261 U. S. 171, 43 S. Ct. 311, 67 L. Ed. 594. Nor does the mere Connecticut residence of the treasurer of defendant necessarily subject the defendant to process here. Toledo Railways & Light Co. v. Hill, 244 U. S. 49, 37 S. Ct. 591, 61 L. Ed. 982; St. Clair v. Cox, 106 U. S. 350, 1 S. Ct. 354, 27 L. Ed. 222; Conley v. Mathieson Alkali Works, 190 U. S. 406, 23 S. Ct. 728, 47 L. Ed. 1113. And it has frequently been held that the mere ownership of stock in a local subsidiary corporation is not “doing business” locally. Peterson v. Chicago, R. I. & P. R. Co., 205 U. S. 364, 27 S. Ct. 513, 51 L. Ed. 841; Philadelphia & Reading Ry. Co. v. McKibbin, 243 U. S. 268, 37 S. Ct. 280, 61 L. Ed. 710; Conley v. Mathieson Alkali Works, supra; Cannon Mfg. Co. v. Cudahy Packing Co., 267 U. S., 333, 45 S. Ct. 250, 69 L. Ed. 634; People’s Tobacco Co. v. Am. Tobacco Co., 246 U. S. 79, 38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537.

This is not to say, of course, that dealings between a corporation and its subsidiary cannot operate to bring the parent company into the jurisdiction which obtains over the subsidiary. Here the facts disclose that the dealings consisted in loans from and to the parent company and the shipment of goods from the parent, company to the subsidiary on orders received by the parent company at its main office in New York. Such loans, collateral as they are to the primary business of the corporation, do not constitute a “doing of business.” U. S. v. Am. Bell Telephone Co. (C. C.) 29 F. 17. Nor does the ownership of occasional bank credits within the state imply the presence of the defendant. Bank of America v. Whitney Central Bank, 261 U. S. 171, 43 S. Ct. 311, 67 L. Ed. 594. And obviously the shipment of goods from without the state on orders sent directly to the New York office of the defendant does not bring the defendant within the jurisdiction for purposes of process. Manning v. Schweitzer & Conrad (D. C.) 9 F.(2d) 642; Cannon Mfg. Co. v. Cudahy Packing Co., supra.

The absence of a general rule defining the elements of “presence?’ prerequisite to local service would be more disturbing if ultimate rights were involved. In every such case, however, if it be adjudged that the nonresident defendant has not or cannot be reached within the'jurisdiction in question, the plaintiff may without prejudice, of course, pursue the defendant elsewhere. This consideration underlies the recent decision in Hutchinson v. Chase & Gilbert (C. C. A.) 45 F.(2d) 139, wherein, with refreshing candor, the court concedes the impossibility of enunciating any general rule defining the requisites of “presence,” and turns frankly to the practical consideration as to whether it is fairer that the plaintiff should go to the defendant’s domicile or that the defendant be required to stand suit where served. Doubtless, if the elements of corporate presence or absence were clearly established, there would be no room for the application of this practical test. But in doubtful eases it seems wholly reasonable to let this practical consideration control.

Here it is impossible to detect the “presence” of the defendant in Connecticut. Any doubts, however, on this score are swept away by the application of the doctrine of the Hutchinson Case; for here the plaintiff is a resident of New York where the defendant has its main office. Certainly it imposes no undue hardship on the plaintiff to leave him to the pursuit of his rights there.

Doubtless the plaintiff’s chief consideration in selecting Connecticut as the forum for his action was the hope of obtaining a valuable attachment here. But the affidavits show that the defendant’s complete lack of property in Connecticut made that hope illusory. And the effort to attaeh the defendant’s share of stock in its Connecticut subsidiary by enjoining their transfer has proved fruitless, since a valid injunction for that purpose necessarily requires jurisdiction over the defendant’s person.

Holding, as I do, that the defendant had not such “presence” in this state as to support a service of process on it here, the injunction fails. But such a failure involves no-substantial hardship on the plaintiff. For such an injunction, if desired, can be obtained in any court having jurisdiction over the defendant.

Accordingly, the attempted service of process is vacated, and since, in view of the defendant’s lack of presence in this jurisdiction, no valid service of process can be made, the complaint also is dismissed, without prejudice to the plaintiff on the merits.


author: KIRKPATRICK, District Judge.

text:
    MOBLEY v. J. A. FISCHER CO. et al.
    No. 4531.
    District Court, E. D. Pennsylvania.
    June 18, 1930.
    Leon Edelson, of Philadelphia, Pa, for plaintiff.
    Harry Fischer, of Philadelphia, Pa., and George P. Kimmel, of Washington, D. C., for defendant.
   KIRKPATRICK, District Judge.

This is a proceeding in equity based upon the alleged infringement of United States letters patent No. 1,664,988, granted April 3, 1928, to Ida E. Mobley, the plaintiff. The subject of the patent is a sound box or sound reproducer particularly adapted for use with talking machines. The defenses set up are: (a) Invalidity by reason of anticipation and want of invention; (b) invalidity by reason of certain matters appearing in the proceedings in the Patent Offiee for the grant of the patent — more specifically (1) because the file wrapper shows that the claims finally allowed were properly the subject of a divisional application and had no place in the patent here in suit; (2) because the claims constitute such new matter as would require a supplemental oath, and (3) because the claims do not read upon the structure disclosed in the drawings and described in the specifications of the original application — ■ and (e) implied license to the defendant.

There are four claims all of which are alleged to have been infringed by the defendant. Without setting them out in full (and disregarding the stylus bar which appears in claim 5 and which admittedly is not an element in the patent), the claims call for a combination of four elements — an annular rim with an intumed flange, a back plate secured to the rim so that the back plate and the flange of the rim form an annular groove, a diaphragm with a conically raised central portion, and a shield conforming to the shape of the diaphragm. In'the assembled structure the edges of the diaphragm and shield are received within the groove formed by the back plate and the flange of the rim, and are retained there by gaskets.

The first question is whether,the patent in suit discloses patentable novelty.

It is first to be noted that the art into which the patent comes may be fairly callad crowded. A large number of patents for sound boxes conforming to the general type of the plaintiff’s device have been granted, and such sound boxes have been for a long time in general use. At least five of the pri- or patents granted for various minor improvements contain in their specifications references to the “usual,” “conventional,” or “ordinary,” type of sound boxes. (Head 1,-489,211; Kantner 1,394,427; Suiter 1,263,-816; Roop'1,143,784; Bauer 1,464,739.)

In the second place, each of the separate elements in the plaintiff’s device, not only in its general type, but precisely as described in the claims, is old in the art. The annular rim with its intumed or radially extending flange is disclosed in Blood 1,365,298; Gay 1,418,249; Hunt 1,410,679; English 1,064,-062; Head 1,489,211. A back plate of some kind appears in almost all of the prior patents and in Blood 1,365,298; Gay 1,418,249 ; Hunt 1,410,679; Miller 1,200,212; English 1,064,062, it is detachably secured to the rim. In the last four patents named and in some of the others, notably Bauer 1,464,739, the rim and the back plate conjointly form an annular groove. Diaphragms with plane marginal portions and central raised portions are disclosed in Duncan 1,442,215; Thomas 1,116,165; Semple, Jr., 1,480,785. The shield appears in Miller (though here it performs a double function as a shield and has a point from which to exert pressure), Gay, and Bauer. It is useless to multiply instances, though others could be found. It is beyond question that every element of the patent in suit is disclosed in the prior patented art.

This being so, if the patent is to be sustained, it must be as a combination and, as such, some new function or result must arise from putting the elements together. In the language of Mr. Justice Matthews in Pickering v. McCullough, 104 U. S. 310, 318, 26 L. Ed. 749: “It must form either a new machine of a distinct character and function, or produce a result due to the joint and co-operating action of all the elements, and which is not the mere adding together of separate contributions.” What is the new function or result in the Mobley device?

Neither the plaintiff herself nor her expert witness have been able to give me any definite idea of what they think the device has added to the prior art. To the court’s question, “What did you invent — what is the new part in that patent?” the plaintiff answered, “The diaphragm, the cover and the stamped-up brass back.” But this is merely enumerating some of the elements of the patent, all of which are old. If a “stamped-up back” means a sort of bell-shape back, it appears in Hunt 1,410,679, Serabie 1,455,972, and for that matter in many others. When the plaintiff’s expert was called, his replies to the questions asked by the court in an endeavor to ascertain what the plaintiff’s invention was, were as follows:

“Question: The idea of a metal diaphragm held in these grooves is new in this patent? Answer: In combination with the shield. * * *
“Question: What did they do before? How did they ever hold the diaphragm in the soundbox? Answer: I don’t know.
“Question: It must have been held there somehow ? Answer: I don’t know.”

The expert also suggested that the idea of a metal diaphragm was new, but in this he is in error, since that idea appears in Serabie 1,455,972 which even shows a conical metal diaphragm with the shield. The nearest to any intelligent statement as to what, if anything, has been accomplished by Mrs. Mobley’s assemblage of old elements, is to be found in her counsel’s reply brief in which be says: “ * * * No single reference shows the Mobley idea of clamping the marginal edges of a diaphragm and a protecting shield within a groove formed conjointly by a removable backing or back plate and an intumed flange formed integrally with the cylindrical rim of the sound box body.”

I am not sure that even this statement is correct, because Parker No. 1,133,883 shows a shield and gaskets within the groove along with the diaphragm. In Parker the back plate, rim, and flange are all made in one piece instead of the back plate in one piece and the rim and flange in another. At all events, in view of the Parker patent, as well as the numerous other patents in which the diaphragm is held by gaskets or otherwise in a groove formed by ring and hack plate (Hunt, Bauer, English, etc.), if there is anything at all new in the Mobley patent, it is the introduction of the plane peripheral portion of the shield into an annular groove, which groove is formed of two pieces, a back plate on the one hand and a rim and flange on the other. The novelty, if any, lies in thus positioning the shield. By no stretch of the imagination am I able to see anything patentable in the arrangement, even if it is novel at all.

The idea of introducing the shield inside of the flange of the rim instead of fastening it outside by screws or otherwise is merely a matter of assembling parts such as would certainly occur to a mechanic of the most ordinary ability engaged in the construction of the device. It creates no new functional relationship whatever among the elements. I am not at all sure that it is an improvement. By placing the rim inside, as the Mobley patent does, four screws are eliminated, but on the other hand the shield is not firmly held, but is movable within the circumference of the ring. I find in the patent no inventive advance from the prior art, and consequently hold it to be invalid. Even if it were valid, the defendant would not be infringing because in the “Val-PÜonie” the shield is attached to the outside of the flange of the rim.

In view of the conclusion reached as to the invalidity of this patent, it is unnecessary to discuss at length the defendant's remaining contentions. I have noted them at the outset of this opinion. They all fail if the substance of the claims finally allowed was fairly indicated, suggested, or disclosed by the original drawings and specifications. Heller Brothers v. Crucible Steel Company (C. C. A.) 297 F. 39; Gibson v. Smoot Engineering Corporation (D. C.) 28 F.(2d) 123, 129. In the latter case the court said: “ * * * An inventor is entitled to secure by a patent his actual invention, as fairly indicated * * * or disclosed by his original drawings and specifications and that while his application is pending he may make such amendments to his elaims, without regard to the nature or scope of the elaims originally made, as will secure that end.” This states the law as it is in this circuit, .and I must follow it. Notwithstanding the very able argument made by counsel for the defendant, there is no doubt in my mind that the substance of the elaims as allowed was indicated in the original drawings and specifications clearly enough to support the grant of the patent without requiring a supplemental oath and without a divisional application. Even had the Patent Office granted the patent in disregard of a Patent Office rule, it would not have affected its validity under the law as understood in this circuit. It was held in Heller Brothers v. Crucible Steel Company, supra, that, assuming Rule 48 of the Patent Office to be a valid rule, nevertheless, if the Office does not enforce its own rule against the applicant, and grants the patent, the disregard of the rule has no bearing upon the question of the validity of the patent so issued. This holding applies with equal force to Rules 41 and 42, and it is therefore my view that these defenses are not well taken.

I am also of the opinion that the defendant has failed satisfactorily to make out a case of implied license, and I so hold.

A decree may be prepared based upon the holding of this opinion that Mobley patent, No. 1,664,988, is invalid for want of invention and patentable novelty.