author: PER CURIAM.

text:
    RAILWAY EXPRESS AGENCY, Inc., v. LITTLE.
    No. 4561.
    Circuit Court of Appeals, Third Circuit.
    May 4, 1931.
   Sur Motion for a New Trial.

This is an action for damages for personal injuries. The plaintiff’s statement of claim alleges that, while crossing the street, she was negligently run down by the defendant’s electric motortruck. The negligence charged is, among other things, failure to control the course, speed, and direction of the truck, and failure to regard the rights of the plaintiff in the lawful use of the highways and to allow the plaintiff sufficient time to reach a place of safety. The defendant might have asked for a more specific statement, but did not. The defendant filed no affidavit of defense, thereby admitting responsibility for the manner in which the truck alleged to have struck the plaintiff was operated, but not admitting that it struck the plaintiff or that it was operated in the manner averred in the statement. Flanigan v. McLean, 267 Pa. 553, 558, 110 A. 370; Charlap v. Lepow, 87 Pa. Super. Ct. 466; Wilson v. Adams Express Company, 72 Pa. Super. Ct. 384. At the trial the defendant offered no evidence, and the verdict was for the plaintiff.

Strictly speaking, there were no eyewitnesses. The plaintiff herself sustained a fractured skull and was unable to remember anything that had happened. Her ease depended largely upon the testimony of two witnesses, a lady who was crossing the street with her, and a park guard who was directing traffic. Neither of these saw the actual manner in which the plaintiff received her injury- .

There was some conflict between the statements of these witnesses in describing things which they both saw. The testimony of the plaintiff’s companion contains apparent contradictions upon at least one point. However, it was the province of the jury to reconcile conflicting statements in the plaintiff’s evidence, whether of the same or of different witnesses, or to draw the line between them and say which shall prevail (Danko v. Pittsburgh Rys. Co., 230 Pa. 295, 297, 79 A. 511; Parker v. Matheson Motor Car Company, 241 Pa. 461, 467, 88 A. 653; Kohler v. Penna. R. Co., 135 Pa. 346, 19 A. 1049; Ely v. Pittsburgh, C., C. & St. L. Ry. Co., 158 Pa. 233, 27 A. 970; Strader v. Monroe County, 202 Pa. 626, 51 A. 1100; Zenzil v. D., L. & W. R. R. Co., 257 Pa. 473, 101 A. 809), unless, of course, the conflicting statements are so irreconcilable that a finding one way or the other would be a mere guess (Mulligan v. Lehigh Traction Company, 241 Pa. 139, 88 A. 318), which is clearly not the ease here. The verdict for the plaintiff implies that the jury accepted that part of the evidence favorable to the plaintiff (Mackin v. Patterson, 270 Pa. 107, 112 A. 738), and that, where different inferences were possible, it drew those favorable to the plaintiff’s case.

In view of these rules, it is permissible to construct from the plaintiff’s evidence the version of the accident most favorable to her contention and to infer that the jury so found. So viewed, the facts of the plaintiff’s ease áre as follows:

The accident occurred at'quarter to 9 in the evening of September 18, 1929. That it was dark may be inferred from the fact that the headlights of the automobiles on the streets were lighted. At the place of the accident, Eighteenth street running north and south intersects the Parkway running diagonally southeast and northwest. There was no testimony as to the width of the streets or sidewalks, except that it appeared that Eighteenth street is wide enough to accommodate three automobiles side by side. Along the south side of the Parkway there is a curb and a paved footwalk for pedestrians. The footwalk does not extend from the curb to the building line, but there is a plot of grass of undetermined width extending along on either side of it. There is no evidence to show the total distance from the curb to the building line, which distance would include the footwalk and the two plots of grass. There is nothing in Eighteenth street by way of painted lines or staples or otherwise to define the crossing for pedestrians,

The traffic on Eighteenth street is north. At the time and place of the accident, traffic was controlled by a park guard who stood in the middle of the street intersection with white cape and gloves, starting and stopping traffic with arm signals only. The plaintiff and her companion, Mrs. Crowley, left the footwalk at the southeast comer of Eighteenth street and the Parkway and proceeded westwardly aeross Eighteenth street. The traffic direction was with them, and the north-bound vehicles on Eighteenth street were being held up by the arm signal of the guard. Two automobiles were standing in file on the east side of Eighteenth street, and the women passed in front of these. There were no automobiles near by in the ear track. On the west side of Eighteenth street the defendant’s automobile was halted some distance south of the curb line of the Parkway; there being no other ears in front of it.

While the plaintiff and her companion were in the aet of crossing the street, and just as they were about to pass in front of the de^ fendant’s truck, the park guard turned, releasing the north-bound traffic on Eighteenth street. Before the plaintiff had time to reach the west side of Eighteenth street in safety, the defendant’s ear started and struck her, causing severe injury. At the time the plaintiff was struck she was upon the part of the street ordinarily used by pedestrians as a crossing.

The first contention of the defendant is that there is no evidence to support the jury’s finding that the plaintiff was struck by its car, or, for that matter, by any motor vehicle. There was no mark or bruise on her body indicating that the wheels of a car had passed over her; her only injury being an exceptionally bad fracture of the skull. It is of course within the realm of possibility that she slipped or stumbled and sustained her injury by falling on the roadway. However, even under the narrowest view of the jury’s right to find facts from circumstantial evidence (Cain v. Booth & Flinn, 294 Pa. 334, 144 A. 286), the finding that she was struck by the truck standing on the west side'of the street was fully justified. Mrs. Crowley’s testimony was; * * * I seen this truck coming on me, and I looked at her like that, and she was about as far as to this from me (indicating), and when I got on the pavement, before I looked around I seen the truck coming down, she was on the north of me, she was on my right, and I made this jump and I reached on the curb, and with that I heard a scream. * * * ” Again: “ * * * The truck was stopped, parked there, I went to cross over when it moved, and as I said, there was only just a short ways off the curb on the west side of the street when the truck started, and I made the jump. * • * ” McCormick, the park guard, testified that, just after he turned to start traffic north on Eighteenth street, he saw the plaintiff lying “underneath the truck * *■ between the wheels and the batter, the big battery box”; also that, in order to get the plaintiff out from under the truck, he asked the driver to back up a little “so that we could pull her from beneath the front of the truck.” Bearing in mind that, under Mrs. Crowley’s version of the facts, there were no other cars in motion near by which could have struck her, it can hardly be said that it is “equally probable (Flanigan v. McLean, supra) that the accident resulted from any cause other than the defendant’s truck striking the plaintiff or that a finding that it did strike her was a mere guess,

Erbe v. Phila. R. T. Co., 256 Pa. 567, 100 A. 966, probably goes as far as any of the cases cited by the defendant on this point, but that ease did not hold that the evidence was insufficient to support a finding that the plaintiff was struck by the defendant’s ear. What the court said was that, assuming that the plaintiff was struck, still the evidence was insufficient to show negligence. That is quite a different matter, and we may proceed to determine whether the evidence in the case now before the court shows negligence.

The mutual rights and duties of the parties in a situation such as this ease presents are determined by two important matters of fact: First, the place at which the pedestrian was struck, whether on the crossing or in the roadway between crossings; and, second, the direction of the traffic control.

As to the first of these, the jury were instructed that, unless they found that the plaintiff was on the crossing when she was struck, there was nothing from which they could find negligence, and the verdict would have to be for the defendant. The defendant now argues that it is impossible that the plaintiff could have been on the crossing, basing his argument upon the testimony of the park guard who said that there were at least eight or ten ears halted three deep all the way across Eighteenth street, thus covering the entire crossing.

In view of the absence of any testimony as to the distance between the curb and the building line on the south side of the Parkway, or as to the width of the crossing ordinarily used by the pedestrians, I would not care to say that the conclusion drawn by the defendant follows - as a mathematical certainty from the guard’s testimony. But, be that as it may, the conditions as pictured by Mrs. Crowley are entirely different. According to her testimony, there were only three ears halted on Eighteenth street near the intersection, two on the east side and the defendant’s truck on the west side. As has been pointed out, the jury had the right to accept her testimony, and there is nothing in the facts as shown by her which militates against her positive testimony that they crossed at the crossing. Upon this point she said, “I was in the lower side of the crossing just right at the crossing “ * she (Mrs. Little) was to the right of me.” The point marked by her on a rough sketch used at the trial shows that she reached the west side well within the lines of the footwalk on the crossing. The testimony of the park guard was to the effect that the front end of the truck as stopped with the plaintiff beneath it extended “maybe a couple of feet over” the footwalk. All this fully justifies the finding by the jury that the plaintiff was struck while on the crossing.

As to the traffic direction, it is practically undisputed that, when the plaintiff started to cross, she had the signal in her favor. This being so, she had the right of way over automobiles until she had reached the opposite curb, notwithstanding the fact that the signal changed while she was in the act of crossing. If the defendant’s ear moved forward with the signal without waiting for pedestrians properly on the crossing to get safely across, it was just as much a violation of traffic! regulation as if it had moved against the signal.

A leading decision in Pennsylvania defining negligence of drivers of motorcars at crossings under traffic control is Gilles v. Leas, 282 Pa. 318, 127 A. 774, a case in which the traffic signal changed while the pedestrian was on the crossing. In the opinion the court said: “Some automobile drivers imagine this signal gives them a clear right of way against intersecting traffic; they start their machines recklessly and rapidly regardless of persons already in the driveway, terrifying if not actually striking them. It is a common occurrence for people to narrowly escape injury because of such carelessness. This misuse of the highway is just as culpable as if the drivers were using their cars at night without lights.” If this is not a plain declaration of the law that it is negligence for a driver to start his ear while persons who have started across the street with traffic signals in their favor are still in the act of crossing, it is difficult to see what is. If, as is contended for by the defendant, it is necessary to a recovery to show additional evidence of negligence, such as excessive speed, failure to give warning, or the like, this vigorous statement is valueless except as good advice to motorists.

In Zandras v. Moffett, 286 Pa. 477, 133 A. 817, 818, 47 A. L. R. 699, the court said: “All drivers in congested areas with controls installed must be on the lookout for warnings which they have every reason to see displayed, when necessary, and to have their vehicles, whether light or heavy, under such management as will enable them to promptly obey signals given, which they are bound to discover, and must have seen, if due observation was made.” Note the measure of control required. The driver must be able to obey the signal. Clearly he can be held guilty of negligence if he moves against it even though he proceeds slowly. Quoting again from Gilles v. Leas, supra: “If there is any superior right to use the highway under circumstances such as described in this ease, it is with the pedestrian who is in the cartway. It is quite deal'.the traffic should not run him down when he is in full view. And when it does, even at a moderate or slow rate of speed, the driver lacks the control of his ear necessary under the circumstances, and is chargeable with negligence.” McAvoy v. Kromer, 277 Pa. 196, 120 A. 762, and Wiser v. Parkway Baking Company, 289 Pa. 565, 137 A. 797, cited by the defendant, were eases in which the accident did not happen at a crossing, and of course no question of traffic control was involved.

Of course it is the law, as argued by the defendant, that no inference of negligence is to be drawn from the mere happening of an accident, except in the limited class of cases in which the circumstances are such as to call for the application of the doctrine resi ipsa loquitur. The rule of Gilles v. Leas, supra, does not involve a resort to that doctrine. Putting a motor vehicle in motion against traffic direction or regulation is substantive evidence of negligence, and, if there are any facts which excuse it, it is for the defendant to show them.

Thus the courts of Pennsylvania, whose decisions we are bound to follow [Western Union Telegraph Co. v. Kirby (C. C. A.) 37 F.(2d) 480; Perucca v. B. & O. R. Co. (C. C. A.) 35 F.(2d) 113; Delaware & Hudson Company v. Nahas (C. C. A.) 14 F.(2d) 56], have written into the law the salutary principle that disregard of traffic signals is of itself evidence of negligence. This principle is evolved from the necessities of modem traffic conditions, and is in accord with modem requirements. The position taken by the defendant would simply whittle away the rule.

On the matter of contributory negligence the court’s instructions to the jury were all if not more than the defendant was entitled to.- In Newman v. Protective Motor Service Company, 298 Pa. 509, 148 A. 711, the court said that, “ * * * in eases where the municipality maintains signals for controlling traffic, the signal in the pedestrian's favor, inviting him to cross, warrants his so doing, and he is justified in relying up'on the assumption that motor vehicles, warned by the traffic signal set against them, will not disregard it and ran him down,” and expressly held that the plaintiffs crossing the street at a crossing with a light in their favor were not bound to continue to look fot traffic at their right as they crossed. On other points the presumption of due care stands in the plaintiff’s favor. Thus it is to be presumed that, if she saw the car, she did not deliberately walk in front of it, and that she did not walk so carelessly as to stumble and fall without cause other than her own negligence.

The defendant also complains of the answer of the court to the jury’s request for additional instructions. Conceding that the statement of the law made by the court was correct, the defendant contends that, in order to avoid possible misunderstanding, the court should have repeated the instruction, already plainly given in the charge, that, unless the plaintiff was on the crossing when struck, there would be no evidence of negligence on the part of the driver and the verdict would have to be for the defendant.

The ordinary rule is that, if the charge in general correctly states the law, a party cannot complain of mere omissions unless a specific request has been made that the court charge upon the desired point. In this ease, when the jury returned to the courtroom for instructions, counsel were absent, having stipulated that the verdict should be taken by the court and having expressly and of record waived the right to be present or be notified of the return of the jury. Under these circumstances, it was proper for the court to answer the jury’s requests. Stewart v. Wyoming Cattle Ranche Company, 128 U. S. 383, 9 S. Ct. 101, 32 L. Ed. 439. The exceptions allowed were sufficient to protect the parties in the event of an erroneous statement of the law by the court, but the defendant cannot now assign as error the court’s failure to include an instruction which might have been given if the defendant had been present and asked for it.

Lemuel B. Schofield and W. Bradley Ward, both of Philadelphia, Pa., for appellant.

Robert F. Bonner, of Philadelphia, Pa., for appellee.

Before WOOLLEY, DAYIS, and THOMPSON, Circuit Judges.

The motion for a new trial is denied.

PER CURIAM.

We find no errors in the proceedings and judgment below. Holding that the version of the accident which the trial court, for purposes of discussion, gave in its opinion denying the motion for a new trial was such as the jury could validly find from competent evidence in the ease, and believing that the-trial court in its opinion fully considered, and adequately expressed our views on, the main questions now here on appeal we affirm the judgment on Judge Kirkpatrick’s opinion.


source: Caselaw Access Project

author: THOMPSON, Circuit Judge.

license: Public Domain

text:
    QUEEN INS. CO. v. PEOPLE’S UNION SAV. BANK.
    No. 4464.
    Circuit Court of Appeals, Third Circuit.
    May 29, 1931.
    Horace M. Schell, of Philadelphia, Pa., for appellant.
    Wm. W. Hall and J. Harold Flannery, both of Pittston, Pa., for appellee.
    Before BUFFINGTON, WOOLLEY, and THOMPSON, Circuit Judges.
   THOMPSON, Circuit Judge.

This is an appeal from a judgment upon a directed verdict in favor of the appellee, hereinafter called the savings bank, in a suit brought upon a policy of fire insurance issued by the appellant to, and covering the buildings of, the Sheridan Silk Mills Company, hereinafter called the silk mills. The savings bank held a mortgage for $12,000 on the land and buildings of the silk mills. The policy in suit was for $10,000, and contained a mortgagee clause, the pertinent parts of whieh are as follows: “Loss or damage, if any, under this policy, shall be payable to Peoples Union Savings Bank of Pitts'ton, Pa., as first mortgagee (or trustee) as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy; provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same.”

Whil'e the policy was in effect, the buildings insured were damaged by fire to the extent of $11,953. Without the knowledge of the savings bank, the mortgagee, the silk mills, the mortgagor, had obtained additional insurance upon its buildings, issued by the Commonwealth Insurance Company, to the amount of $30,000, $10,000 of which was upon a policy payable to the silk mills and $20,000 upon a binder, under which $12,000 was payable to the savings bank, mortgagee, $6,000 to one Lee S. Stark, and $2,000 to the silk mills.

The savings bank brought suit against the Queen Insurance Company claiming under the mortgagee clause of the policy for $10,-000. Before that suit came to trial, it joined with the other parties insured in' a suit against the Commonwealth Insurance Company on the $20,000 binder.

The suit involved here was brought to trial twice in the court below. Upon the first trial, the court directed a verdict for the plaintiff in the sum of $4,192.81 upon the ground, that the amount recoverable by the mortgagee must be prorated between the defendant company and the Commonwealth Insurance Company, in view of the following clause contained in the policy of insurance in suit: “Pro rata liability. This Company shall not be liable for a greater proportion of any loss or damage than the amount hereby insured shall bear to the whole insurance covering the property, whether valid or not, and whether collectible or not.”

The savings bank moved for a new trial, alleging error in the direction of a verdict based upon the prorating of loss, and a new trial was granted.

Upon the second trial the court directed the jury to render a verdict for the plaintiff in the sum of $11,500, the full amount of the policy with interest. Erom judgment upon that verdict, this appeal is taken.

The case turns upon the construction of the mortgagee clause of the policy in its bearing upon the pro rata liability clause. We have here a contract of insurance entered into for the benefit of the mortgagee in which the insurer agrees that the .insurance of the mortgagee shall not be invalidated by any act or negleet of the owner of the property. That applies, among other things, to the act of obtaining, by the silk mills, other insurance of its own interest with the Commonwealth Insurance Company without the knowledge or consent of the savings bank, the mortgagee. The effect of the mortgagee clause is to make an entirely separate insurance of. the mortgagee’s interest, and he takes the same benefit from his insurance as if he had received a separate policy from the company free from the conditions imposed upon the owners. Eddy v. London Assur. Corporation, 143 N. Y. 311, 38 N. E. 307, 309, 25 L. R. A. 686. In that case, Justice Peckham well states the ground of the court’s conclusions as follows: “Where the company agreed that the mortgagee’s insurance should not be 'invalidated’ by any act or negleet of the owner of the property it was not intended to limit the application of that word to a case where the whole policy would otherwise be rendered invalid. The plain and obvious meaning of the language is that the insurance of the mortgagee should not be affected or in any wise impaired or lessened by any act or negleet of the owner. Although contained in the same policy issued to the owner, yet the insurer and the mortgagee were nevertheless entering into a perfectly separate contract of insurance, by which the mortgagee’s interest alone was to be insured, and it would be most natural to provide that no act or negleet of the owner should invalidate — that is, impair —any portion of the insurance thus separately secured. Can it for a moment be supposed that a mortgagee would otherwise ever consent to such a contract? His desire is to obtain security, and to that end he insures his interest in the property. Would he knowingly consent that this security should be liable to be wholly frittered away and made valueless by the action of the owner, unknown to him, in procuring insurance upon the owner’s interest in the property? Would any sane man agree to hazard his security in such a way? Would he agree that the value of his security should depend upon the acts of a third party over whom he had no control, and of whose acts he might be wholly ignorant? The statement of the proposition is its best refutation.”

The law in Pennsylvania is thus stated by Judge Linn in Trustee Building & Loan Ass’n v. Liverpool & London & Globe Ins. Co., 93 Pa. Super. Ct. 242 (cited in the opinion of the court below): “It is settled that the ef- , feet of adding the union mortgagee clause to the policy is to constitute an insurance of the mortgagee’s interest, — an interest distinct from the owner’s — and that the result is a new insurance contract composed of the provisions in the clause and such of those in the policy as are essentially applicable to the mortgagee-clause and the mortgagee’s interest; that not all of the provisions of the contract with the owner stated in the policy govern the contract insuring the mortgagee’s interest: [Knights of Joseph, B. & L.] Assoc. v. Insurance Co., 66 Pa. Super. Ct. 90; Reed v. Insurance Co., 67 Pa. Super. Ct. 110; Swoope v. U. S. Fire Ins. Co., 87 Pa. Super. Ct. 349. This conclusion is in accord with the weight of authority on the subject; see Joyce on Insurance, Vol. 3, section 2795; Richards’ Insurance Law, 396 etc.; Cooley Briefs on Insurance, Vol. 1, p. 777.”

And the same rule prevails in the federal courts; see Syndicate Insurance Co. v. Bohn (C. C. A. 8) 65 F. 165, 27 L. R. A. 614; Insurance Company of North America v. International Trust Co. (C. C. A. 8) 71 F. 88 (certiorari denied 163 U. S. 691, 16 S. Ct. 1202, 41 L. Ed. 316); Newark Fire Insurance Co. v. Turk (C. C. A. 3) 6 F.(2d) 533, 43 A. L. R. 496.

When the fire occurred, the contract under the policy with the Queen Insurance Company became effective. At that time no other insurance was existing which had been created with the savings bank’s knowledge or consent. It is, however, contended for the appellant that, when the savings bank, after bringing suit upon the Queen Insurance Company’s policy, joined with others in bringing suit against the Commonwealth Insurance Company upon the binder, it thereby adopted and ratified the pro rata clause notwithstanding the fact that it had no knowledge of the existence of the binder prior to the loss.

But the mortgagee clause in the policy constitutes a contract of insurance entirely separate and distinct from any provisions applying exclusively to the relations between the mortgagor and the insurance company.

The savings bank had no agency whatever in taking out the insurance covered by the Commonwealth Insurance Company binder and had no knowledge of its existence until after the loss. When the loss occurred, the rights of the parties had become fixed. So far as the appellant was concerned, the action of the appellee thereafter exerted and could exert no influence upon the conduct df the appellant in respect to the creation or continuance of the risk, for the policy had matured by the law, it had ceased to be, except for the purpose of collection. The moral hazard had ceased to exist. These elements could not be restored by ratification in view of the terms of the contract that “this insurance as to the interest of the mortgagee only therein shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property.” Cowart v. Capital City Insurance Co., 114 Ala. 356, 22 So. 574 (1896); Gould v. Maine Farmers’ Mut. Fire Ins. Co., 114 Me. 416, 96 A. 732, L. R. A. 1917A, 604; Titus v. Glen Falls Insurance Co., 81 N. Y. 410; Dwelling House Ins. Co. v. Garner, 56 Ill. App. 199.

Finding no error in the record, the judgment of the District Court is affirmed.


author: FOSTER, Circuit Judge.

text:
    BASS, Collector of Internal Revenue, v. SUGARLAND INDUSTRIES.
    No. 5894.
    Circuit Court of Appeals, Fifth Circuit.
    June 2, 1931.

      John D. Hartman, U. S. Atty., of San Antonio, Tex., and Wright Matthews, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C. (C. M. Charest, of Washington, D. C., on the brief), for appellant.
    Palmer Hutcheson, of Houston, Tex. (Baker, Botts, Andrews & Wharton, of Houston, Tex., on the brief), for appellee.
    Before BRYAN, FOSTER, and SIB-LEY, Circuit Judges.
   FOSTER, Circuit Judge.

Appellee, the Sugarland Industries, as trustee and successor to the.Imperial Sugar Company and affiliated corporations, on November 10, 1928, brought suit against appellant, James W. Bass, collector of internal revenue, to recover $80,099.96 as an overpayment of income taxes for the year 1917, under the provisions of section 250 (d) of the Revenue Aet of 1921 (42 Stat. 265), which fixes a limitation for collection of five years after the filing of the return, and section 607 of the Revenue Aet of 1928 (26 USCA § 2607), which requires such collections to be considered as overpayments. The jury was waived, and, after overruling appellant’s motion for judgment, to which exception was reserved, the District Court [36 F.(2d) 375] entered judgment in favor of appellee, to reverse which this appeal is prosecuted. Error is assigned to the overruling of appellant’s motion for judgment and to the entering of judgment for appellee.

Appellant relies for reversal upon section 611 of the Revenue Act of 1928 (26 USCA § 2611), which provides that a collection after the limitation has run shall not be considered an overpayment if a claim for abatement has been filed and the collection has been stayed.

The following appears from the special findings of fact by the District Court. A consolidated return was filed for the Imperial Sugar Company and affiliated corporations for the taxable year 1917 on October 9,1918. On January 27, 1921, an unlimited waiver was filed by the Imperial Sugar Company. It was terminated by the Commissioner as of April 1,1924. On February 19,1921, notice of an additional tax amounting to $117,-078.78 was given by the Commissioner. An additional assessment was 'made, and notice of demand was given on June 29, 1921. On July 8, 1921, a claim for abatement was filed. On February 29, 1924, a notice of overassessment of $29,709.14 was sent to ap-pellee, reducing the additional taxes assessed to $87,369.58, with interest amounting to $14,852.83. .This was paid on April 29, 1924, more than five years after the consolidated return was filed. Additional claims for refund were made, and on May 6, 1927, an amount of $25,970.54 was refunded, which included an adjustment of interest, leaving a balance of $80,099.66. Claim for refund of this amount was rejected April 26, 1928.

Notwithstanding that he found the faets above set .out, the District Court refused to find as a fact that the collector of internal revenue withheld the collection of the tax because of the filing of a claim for abatement, and that collection of the tax was delayed and postponed as a result of filing of said claim.

It appears from an opinion found in the record that the District Court, in deciding the ease, relied upon our decision in Burden, Smith & Co. v. U. S., 33 F.(2d) 229. It is doubtful that that ease would be authority for the conclusion reached by the District Court, in view of the facts specially found, but, however that may be, since the decision in the District Court, the Supreme Court, in the ease of Graham & Foster v. Goodcell, and other eases considered in the same opinion, 282 U. S. 409, 51 S. Ct. 186, 75 L. Ed. 415 decided January 26, 1931, has held that, if the collection of the tax is merely delayed by the filing of a claim in abatement, section 611 of the Revenue Act of 1928 (26 USCA § 2611) is applicable. A finding that the collector withheld collection of the tax because of the filing of the claim in abatement would be a conclusion of ultimate faets, without effect to modify or change the faets specially found. From the facts found, the conclusion is inevitable that the filing of the claim for abatement had the effect of delaying the collection. While the collector was considering the return, the statute of limitation was suspended by the unlimited waiver on file with him.. After he had determined and assessed additional taxes in February, 1921, for which demand was made in June, 1921, the delay in collection must be presumed to have been caused by the consideration, partly favorable, of the claim for abate.ment filed on July 8, 1921. The ease comes clearly within the ruling of the Supreme Court in the ease of Graham & Foster v. Goodcell, supra.

However, it is contended by appellee that, as the District Court refused to find as a fact that collection had been delayed by the filing of the claim for abatement, the decision in the case of Graham & Foster v. Good-cell, has no application, and the judgment must stand.

While it does not appear from the record that appellant either excepted or assigned error to the refusal of the District Court to find as a fact that the1 collection was delayed by the filing of a claim for abatement, it is well settled that, regardless of other technical defects in the record, when a case is tried by the court without the intervention of the jury, it is the duty of the appellate court to determine whether the facts specially found support the judgment rendered. McCampbell v. New York Life Ins. Co. (C. C. A.) 288 F. 465; Stanley v. Supervisors of Albany County, 121 U. S. 535, 7 S. Ct. 1234, 30 L. Ed. 1000.

As the facts found in this case do not support the judgment, it follows that it is erroneous and must therefore be reversed.

Reversed and remanded.


author: WALKER, Circuit Judge.

text:
    PEORIA LIFE INS. CO. OF PEORIA, ILL., v. BERGHOLM et al.

    No. 6042.
    Circuit Court of Appeals, Fifth Circuit.
    June 5, 1931.
    J. I. Kilpatrick and Roscoe Wilson, both of Lubbock, Tex., for appellant.
    E. L. Klett and Geo. R. Bean, both of Lubbock, Tex., for appellees.
    Before BRYAN, FOSTER, and WALKER, Circuit Judges.

      Rehearing denied July 16, 1931.

   WALKER, Circuit Judge.

This was an action on a life insurance policy in the sum of $5,009, issued by appellant to Carl Oscar Bergholm, and naming his wife, Iris Christine Bergholm, as the beneficiary. That policy contained the usual provisions as to the payment, of premiums, as to the policy ceasing and determining if any premium is not paid on the date when due, except as provided in the policy, and as to the policy continuing in force for the term of one month, of not less than thirty days, if any premium after the first one is not paid on the date when due. After the first year the premiums were made payable quarterly; the first quarterly premium being due on February 27, 1927. In addition to the above-mentioned provisions, the policy contained the following, called “Income Disability Clause”:

“Upon receipt by the Company of satisfactory proof that the Insured is totally and permanently disabled as hereinafter defined the Company will
“1. Pay for the Insured all premiums becoming due hereon after the receipt of such proof and during the continuance of the total and permanent disability of the Insured and will also
“2. Pay to the Insured a Monthly Income for life of 1% of this Policy: The first payment of such income to be paid immediately upon receipt of such proof and subsequent payments to be made on the first day of each month thereafter as long as the Insured shall live and be totally and permanently disabled as hereinafter defined and
“3. In addition to the payment of premiums and a Life Income as above set forth the Company, in accordance with the terms of the policy, will pay the full face of this policy, together with all additions thereto, upon receipt of due proof of the death of the Insured, and the premiums and Life Income paid by the Company in conformity with this provision will not be an indebtedness on this policy, and the ’Values in the tables herein will increase and progress from year to year, and this policy will be credited with dividends from the surplus, in like manner as if the premiums were being duly and regularly paid by the Insured.
“To entitle the Insured to the above Total and Permanent Disability Benefits this policy at the time of making claim for such benefits must be in full force and all premiums becoming due prior to the time of making claim must have been duly paid by the Insured, and the Total and Permanent Disability of the Insured must be due to bodily injuries or disease occurring while this Policy is in full force, and before the Insured shall have attained the age of sixty years, and must be such as to prevent the Insured then and at all times thereafter from performing any work or conducting any business for' compensation or profit; provided that, notwithstanding proof of disability may have been accepted by the Company as satisfactory, the Insured shall at any time, on demand, furnish the Company satisfactory proof of the continuance of such disability, and if such proof is not furnished, or if it shall appear to the Company that the Insured is able to perform any work, or to conduct any business for compensation or profit, then the Company shall cease to pay or allow the above benefits and the Insured shall immediately resume the payment of premiums hereon.”

The appellees asserted claims based on the above set out provision. It appeared that the last premium paid by or for the insured was the quarterly one due May 27, 1927, and that the insured died in April, 1929. The claims that appellant became liable to pay to the insured a monthly income of $59, beginning September 1, 1927, and continuing so long as he lived, and to pay the amount of the face of the policy to the beneficiary, were based on allegations to the effect that, during the spring and summer of the year 1927, and prior to September 27,1927, while the policy was in full force and effect, all premiums having been paid when due, the insurer became totally and permanently’ disabled as a result of a disease occurring while the policy was in full force and effect, which disease was such as to prevent the insured then and at all times thereafter until his death from performing any work or conducting any business for compensation or profit. Pleading duly raised the questions whether the appellant did or did not incur the liability asserted if the insured did not, before the expiration of the thirty days allowed for the payment of the unpaid quarterly premium which was due August 27, 1927, make claim for the benefits stipulated for by the above set out provision and furnish to appellant satisfactory proof that the insured was totally and permanently disabled as defined in that provision.

Evidence adduced in the trial showed that at the time the policy was issued the insured was appellant’s district manager at Plain-view, Tex., his duties being to solicit and write life insurance for the appellant, to employ agents, to look after the appellant’s business and build it up in that part of Texas ; that the insured held that position throughout the year 1927, and during the summer and fall of that year and until after the expiration of it, engaged in correspondence in reference to the büsiness of such agency with Thomas A. Stamp, the state manager for Texas of the appellant, who was located at Dallas, Tex.; that in the course of that correspondence, and also in letters written during that time by the insured’s wife to Mr. Stamp, mention was made of the fact that the insured was or had been sick and unable to work, but there was no statement or suggestion in that correspondence that the insured was totally and permanently disabled as defined in the above set out provision. In the trial there was testimony tending to prove that the insured was totally and permanently disabled prior to September 27, 1927, and that such disability continued until his death. There was no evidence tending to prove the making of any claim for the benefits stipulated for in the above set out provision prior to the date of the following letter written by tbe insured’s wife, tbe beneficiary :

“Plainview, Texas, April 5,1928. “Mr. Thomas A. Stamp, Dallas, Texas.
“Dear Mr. Stamp: I am just wondering if Oscar can not collect on the disability part of his policy. I tried to get him to make a claim- last summer but he would not because he believed it would permanently bar him from taking out any more life insurance, if he collected on a disability clause.
“He was disabled for a good deal longer than three months and from what the doctors say it could easily be called disability from the time of his trouble last year.
“I talked to Oscar about it and he is of the opinion that he is entitled to it.
“I do know he has not been able to work for a long time. He was in bed for about two months last year and for two or three months he was up and down. He would walk down town and back and be almost exhausted. The doctor told him all along not to work, but he felt that he had to and would attempt it, but without success as you know.
“It has been discouraging to me at times but I have tried to be patient for I knew he was not well.
“Please let me know if he is entitled to any benefits, for we surely are in need of money.
“This long spell of sickness is what kept us from being able to pay the last premium, however, it began several months previous to the time the premium was due.,
“Thanking you for any advice you may offer, I am,
“Yours truly,
“Mrs. C. 0. Bergholm.”

Upon the conclusion of the evidence, the court, at the request of the plaintiff, instructed the jury to return a verdict in favor of the plaintiff.

The above set out provision had the effect of creating an exception to the requirements of the policy as to paying premiums within the time allowed in order to keep the policy in force. That provision described the event or contingency upon the happening of which the policy could be kept in force without continuing the payment of the stipulated premiums within the time allowed, and stated what was required to be done to entitle the insured to the total arid permanent disability benefits stipulated for. Explicit language of that provision negatives the conclusion that the appellant consented that the fact of the insured becoming totally and permanently disabled as defined in that provision should have the effect of keeping the policy in force without the continued payment of the stipulated premiums within the time allowed by other provisions of the policy, and of entitling the insured to the stated total and permanent disability benefits, without the insured, while the policy is in full force, and before the expiration of the time allowed for the payment of any unpaid premium, making claim for. such benefits and furnishing to the appellant proof that the insured is totally and permanently disabled as defined in that provision. The language of that provision /makes the making of such claim by' the insured and the receipt of such proof by the appellant, while the policy is in full force and before there is a failure to pay any premiums within the time allowed by other provisions of the policy, conditions precedent to the insured becoming entitled to the stated total and permanent disability benefits. The obligation of the appellant to accord to the insured the stated total and permanent disability benefits being purely contractual, the insured could not become entitled to those benefits without doing what the contract required to be done to entitle him thereto. The provision now in question plainly evidences the absence of appellant’s consent that the policy remain in force without the continued payment of premiums within the time allowed by other provisions of the policy} and without appellant, before there is a failure to pay a. premium within the time allowed, being apprised of a claim by the insured that he is entitled to the stated total and permanent disability benefits, and receiving proof that the insured is so disabled. Without a compliance with the prescribed requirements, the appellant would be deprived of a stipulated for opportunity of being informed whether an authorized excuse for a failure to pay premiums within the time allowed did or did not exist before that time expired, and of determining, within a reasonable time after the receipt by it in accordance with that provision of proof that the insured is totally and permanently disabled, whether that proof is or is not satisfactory. It reasonably might be expected that an insurer of lives would not consent to a policy remaining in force without the continued payment of premiums, because of the insured becoming totally and permanently disabled after the policy takes effect, without stipulating for being informed, before there is a failure to pay any premium within the time allowed, of a claim that the insured is so disabled, and for being furnished proof satisfactory to itself of the existence of such •disability. Where a life insurance policy provides for an exception to the requirement that premiums be paid -within prescribed times in order to keep the policy in force, the rights of the insured and the beneficiary-under the policy are forfeited by a failure to pay any premium within the time allowed by provisions on that subject, except in so far as the policy provides for the insurer continuing to be liable notwithstanding a discontinuance of the payment of premiums. New England Mut. Life Ins. Co. v. Reynolds, 217 Ala. 307, 116 So. 151, 59 A. L. R. 1075; Pilot Life Ins. Co. v. Owen (C. C. A.) 31 F.(2d) 862.

Instead of undisputed evidence showing that the discontinuance of the payment of premiums was in such circumstance as to bring the failure to pay premiums within the exception stipulated for in the above set out provision of the policy, there was, as appears from the above statement, evidence persuasively indicating that, before the expiration of the time allowed for the insured claiming that he was entitled to the stated total and permanent disability benefits and furnishing to appellant proof of the existence of such disability, the insured elected not to claim that he was entitled to such benefits and not to furnish to appellant proof of the existence of such disability; in other words, elected not to do what the policy required him to do to become entitled to such benefits. As undisputed evidence showed that premiums were not paid within the time allowed, and there was evidence tending to prove that the insured did not do what the policy required to make the insurer subject to the liability asserted by this suit, the court erred in giving to the jury the above-mentioned instruction.

Where a life insurance policy provides for a forfeiture of the insurance in case of a failure to pay premium, and one claiming under the policy does not show that his claim is within any exception to the requirement that premiums be paid within the time allowed, disability of the insured at the time of the default in the payment of premium does not avoid the forfeiture. Klein v. N. Y. Life Ins. Co., 104 U. S. 88, 26 L. Ed. 662; Thompson v. Knickerbocker Life Ins. Co., 104 U. S. 252, 26 L. Ed. 765; New York Life Ins. Co. v. Alexander, 122 Miss. 813, 85 So. 93, 15 A. L. R. 314, and note.

Because of the above-mentioned error, the judgment is reversed, and the cause is remanded for a new trial.

Reversed.


author: HICKS, Circuit Judge.

text:
    THE KY-ILL. MUSCOVALLEY v. AYER & LORD TIE CO.
    No. 5679.
    Circuit Court of Appeals, Sixth Circuit.
    June 11, 1931.

      J. G. Wheeler, of Paducah, Ky. (Charles K. Wheeler and D. H. Hughes, both of Paducah, Ky., on brief), for appellant.
    C. C. Grassham, of Paducah, Ky., for ap-pellee.
    Before DENISON, MOORMAN, and HICKS, Circuit Judges.
   HICKS, Circuit Judge.

Appellee, Ayer ■ & Lord Tie Company, brought a libel to recover $1,661.62 and interest, claimed as a balance due for work done and materials furnished in the repair of the ferryboat “Ky-Ill.” Museovalley, the owner, gave bond for its release, and in his answer denied liability. By eross-libel he sought damages on account of alleged inferi- or workmanship and defective materials used in the work, alleged unreasonable delay in its completion, and alleged negligence in permitting the Ky-Ill to become and remain submerged in water. There was also presented a question of admiralty jurisdiction, i. e., whether the work was new construction or reconstruction. The court overruled the jurisdictional objection, entered a decree for the balance claimed, and disallowed appellant’s claim for damages.

Clearly, the court had jurisdiction. See New Bedford Co. v. Purdy, Claimant of The Jack-O-Lantern, 258 U. S. 96, 42 S. Ct. 243, 66 L. Ed. 482. The specifications for the work prepared by a naval architect and relied upon by appellant bear the caption “Specifications of Alterations of Ferry Boat Ky-Ill.” The accompanying blue print bears the legend “Proposed Additions to Ferry Boat Ky-Ill.” The purpose of appellant was to provide the boat with inore free board and greater tonnage. Although the alterations were extensive, yet upon their completion the boat retained the old deck plate, deck angle beams, angle stanchions, angle floors, portions of the bulkheads, and portions of the old bottom. The deck itself, together with the cabin, the railing, and everything above deck, remained undisturbed.

The original answer and eross-libel, filed July 1, 1929, proceeded upon the theory that the work was a repair job. It was not until November 19, 1929, that appellant amended the answer and eross-libel so as to aver that the work was the construction of a new boat. We regard this amendment as an afterthought.

We think the recovery against appellant was right.

The insistence of appellee was that there was no fixed price upon the work, but that it was to be done upon a “cost plus” basis, i. e., the cost of labor and material, plus compensation. Appellant claimed that it was a contract job, to be completed at a cost of not exceeding $5,500, and that he had paid in full.

There were two sets of specifications. The first, dated September 18, 1926, was submitted to Berry, manager of appellee, on September 20th, who, on September 22nd, submitted in writing a flat bid of $4,186 for .completion of the work. This bid was not accepted. The second specifications, dated November 22, 1926, were likewise submitted to Berry, whereupon on December 1st, he wrote appellee:

“We have to thank you for the chance of estimating on your ferry boat addition. We can do this work on a ‘cost basis’ only. Many of our customers are having repair work done this way and are well pleased with our service.

“Roughly we think $5,500.00 should cover your job. We can pull your boat after Jan. 1, 1927, and complete in about seven weeks.” (Italics ours.)

Berry testified that this letter was the basis on which the work was taken. The Ky-Ill was placed upon appellee’s ways about January 16, 1927, where it remained undergoing repairs, with the exception of certain periods when it was submerged in high water, until about May 3d. Appellant was present substantially all the time the work was being done. The weight of the evidence is that, although the blueprint and specifications were used generally, yet to some extent at least appellant directed and supervised the work. Leak, general foreman, and superintendent of appellee, testified that the work was done upon a time and material basis, and that he requested appellant to be present either by himself or his representative, and make a daily check of the time and material as the work progressed, so that any misunderstanding could be promptly corrected. These items were entered daily upon “way sheets,” and these sheets were signed by appellant as indicating his approval. Copies thereof were delivered to him. The weight of the evidence is that he made no complaint as to any of the items or the cost thereof. The original sheets were delivered by the elerk, who made them up, to Miss Baker, assistant manager and bookkeeper. The account against appellant was correctly made up by her from these way sheets. The way sheets endorsed by appellee are in evidence.

Before the altered Ky-Ill was launched, appellant made two payments upon the account aggregating $3,000. After the boat was delivered to appellant, appellee wrote him many letters asking for payment, and appellant, with four exceptions, made monthly payments by check until on June 28,1928, he paid $500, making total payments of $5,500. He declined to pay more. During the correspondence over the account, appellant wrote two letters to appellee. In the first, dated October 24,1927, he said:

“Enclosed you will find cheek for $100.00 to be applied on my account which is all that'I can pay at. present as business has been very dull for the past two months.
“I will send checks on this account as fast as I cam.” (Italics ours.)

On January 27,1928, he said:

“Enclosed you will find check for $100.00 ■to be applied on my account.
“I realize this is a small amount but I paid $500.00 for months of July and August last year and if business had been normal I could have paid a thousand dollars per month just as easy.
“1 will increase my monthly payments just as soon as I can with as much as I cam.” (Italics ours.)

In support of his contention appellant testified that, after he had received the letter of December 1, 1927, from Berry, he took the blueprint, went to see Berry, Leak (general foreman), and Bishop, who was shop foreman (whether separately or together does not clearly appear), and that they all agreed to save him some money. He was asked:

“Q. Was the cost price fixed by Capt. Berry of the Ayer & Lord; if so what was it? * * * A. Eifty-five hundred ($5,-500.00) dollars; that was the maximum price.”

We think the effect of this testimony is weakened by the cross-examination of appellant, wherein he states in substance (1) that he made the trade with Leak and Bishop; that they stated “that they would do the work for $5,500, and deliver the boat in about three weeks”; (2) that he “traded in a letter’' (the Berry letter of Dee. 1); and (3) that he closed the trade with all three These statements at variance with each other, and not sufficiently cleared up by explanation, leave his evidence beclouded. He explained that he indorsed the way sheets because he had no alternative; that in the course of the alterations portions of the bottom had been cut from his boat and he could not remove it; that he was anxious to get away with his boat, and signed anything that was presented. It is significant, however, that he made no complaint of the account, even after the Ky-Ill was delivered to him, until the libel was filed. We do not regard it necessary to dwell longer upon the testimony. We conclude that appellee has supported its claim by a preponderance of the evidence.

We think that appellant has failed to establish his cross-libel. Assuming, without deciding, that appellee used either inferior workmanship or defective material, appellant was present, professes - knowledge of it, and made no objection, except that one or two workmen were laid off at his request. After the boat was delivered to appellant, he placed it in service, made the payments upon the account as presented, and wrote the letters above referred to without complaint, and has since continually kept the boat in use.

As to the claim for damage and delay by reason of allowing the boat to become submerged in flood water — appellee had two sets of ways, called the upper ways and the lower ways. The boat, without any objection from appellant, was placed upon the lower ways near the river (it seems there was no room for it elsewhere) and, having portions of its bottom removed, it could not be floated to avoid tides in the river. If it could be assumed that there was negligence in thus docking the boat, and that some damage resulted, we agree with the District Judge that the amount thereof was not proven by any determinative or substantial evidence. There was evidence pro and con that the asphalt covering of the deck softened and came off because of its submergence, and appellant presented a canceled cheek for $252 which he claimed was paid for resurfacing. An examination of this cheek disclosed, however, that it was issued and paid in May, 1925, or at least two full years before the occurrence complained of.

The decree of the District Court is affirmed.


author: MANTON, Circuit Judge. L. HAND, Circuit Judge

text:
    UNITED STATES v. OSCAR FROMMEL & BRO., et al.
    No. 339.
    Circuit Court of Appeals, Second Circuit.
    May 18, 1931.
    L. HAND, Circuit Judge, dissenting.
    George Z. Medalie, U. S. Atty., of New York City (Leon E. Spencer, Asst. U. S. Atty., of New York City, of counsel), for the United States.
    John C. Grier, of New York City, for defendants-appellees Frommel Realty l& Inv. Co. and George Davis, Helen Elizabeth, Lane and Oscar Rue Frommel.
    Henry W. Jessup-, of New York City, for defendants-appellees Harry and Louis Ferguson.
    Before MANTON, L. . HAND, and CHASE, Circuit Judges.
   MANTON, Circuit Judge.

On March 26, 1918, Oscar Frommel & Bro., a corporation, filed with the collector of internal revenue, its corporation income and profits tax return for the year 1917 showing a tax i due of $21,847.41. On June 27, 1919, an amended return was filed for that year showing a tax due in the sum of $104,-428.42. It had no taxable earnings for part' of the year subsequent to June 21,1917. An assessment was made on the original return (June 15, 1918) of $21,847.41 land on the amended return (July 29,1919) of $82,581.-01; the total tax assessed for the calendar year was $104,428.42. After demand for payment by the United States, an action was brought June 6,1922, to recover the taxes assessed, issue was (joined, by the service of an answer, the action was reached for trial and on April 3, 1925, judgment was entered by default against Oscar Frommel & (Bro-. for $146,760.34. Execution of this judgment was returned unsatisfied. On December 1, 1925, a suit was begun to recover from (the appel-lees the amount of the judgment. The an-' swers were filed and a motion was made to strike out the answers, and the appellees moved to dismiss the bill for failure to state a cause of action. The latter motion was granted, and the bill dismissed. The court below held that the action was one to collect the tax and was barred by the five-year period of limitations described in section 277 (a) (2) of the Revenue Act of 1924 [43 Stat. 253, 299 [26 USCA § 1057 note]). The fact thaD a judgment was obtained for the arrears of taxes was regarded below as not altering or changing the applicability of the statute.

Section 277 (a) (2) of the Revenue Act provides: “The amount of income,- excess-profits, and war-profits taxes imposed by the Act entitled ‘An Act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,’ approved August 5, 1909, * * * the Revenue Act of 1917, * * * and by any such Act as amended, shall be assessed within five years after the (return was filed, and no proceeding in court for the collection of such taxes shall be begun after the expiration of such period.”

The judgment obtained against the corporation, Oscar Fromm el & Bro., on April 3, 1925, was for the arrears of taxes — a debt. It was binding on the corporation only. The present suit is against the stockholders to recover the amount of the judgment because they have received by transfer the assets of the corporation and made it impossible to collect on the judgment obtained against the'corporation. The Oscar Frommel & Bro. Company was a New York corporation. Section 105, subd. 8,iof the New York Stock Corporation Law (Consol. Laws, e. 59), provides that a “corporation shall continue for the purpose of paying, satisfying and discharging any existing (liabilities or obligations, collecting and distributing its assets and doing all other acts required to adjust and wind up its business and affairs, and may sue j and be sued in its corporate name.” The bill alleges that the stockholders received, without giving consideration, the assets of the ( corporation. The corporation was not dissolved by any action authoritative in law. Under these circumstances, the assets received are regarded as a trust fund in the hánds of transferees for the payment of all debts and demands against the corporation, (and under proper proceedings such funds are applicable to the payment of outstanding indebtedness against the corporation. Pierce v. United States, 255 U. S. 398, 41 S. Ct. 365, 367, 65 L. Ed. 697; Swan Land & Cattle Co. v. Frank, 148 U. S. 603, 13 S. Ct. 691, 37 L. Ed. 577. In the Pierce Case, the court said: “It is true that the bill to (reach and apply the assets distributed among the stockholders cannot, as a matter of equity jurisdiction and procedure, be filed until the claim has been (reduced to judgment-and the execution thereon has been returned unsatisfied. Hollins v. Brierfield Coal & Iron Co., 150 U. S. 371, 14 S. Ct. 127, 37 L. Ed. 1113. But, as a matter of substantive law, the right to follow the distributed assets * * * applies (not only to those who are creditors in the commercial sense, but to all who hold unsatisfied claims. A corporation cannot by divesting itself of all property leave remediless the holder of a contingent claim, or the obligee of an executory contract * * * ; and there is no good reason why the United States with a claim for penalties should be in > a worse plight.”

It is no answer to say that there had been a substantial liquidation of the firm of Oscar Frommel(& Bro. in July, 1917, and that there were sufficient assets left to enable it to pay the income tax which under the internal revenue laws then in existence would'be payable. United States v. Armstrong, 26 F.(2d) 227 (C. C. A. 8); United States v. Klausner, 25 F.(2d) 608 (C. C. A. 2); United States v. McHatton, 266 F. 602 (D. C. Dist. Mont.). And the allegations of the complaint must be accepted as true in testing the result below.

It has been held that, where judgment has not been first obtained and the action is one to collect a tax, and the resort to a judgment would be idle and useless, equity will interpose to prevent such useless circuity. United States v. Updike, 281 U. S. 489, 50 S. Ct. 367, 74 L. Ed. 984; United States v. Fairall, 16 F.(2d) 328 (D. C. S. D. N. Y.); United States v. Pann, 23 F.(2d) 714 (D. C. S. D. Cal.). In (the Updike Case, the income tax was for eleven months ending June 30, 1917. In August, 1917, the corporation dissolved and distributed its assets. It filed, no tax'return until October, 1918, when a return was filed by a revenue agent after examination'of the books, and the United States, in 1927, instituted an action to recover from the stockholders a sum of money sufficient to pay the tax. The court held that a' suit in equity against the distributees of the assets might lie, but that it must be brought within six years after the assessment under section 278 (d) and section 280 of the Revenue Act of 1926 (26 USCA §§ 1061, 1069). Moreover, that section 278 (d) of the act'of 1926, providing that, where the assessment had been made within the statutory period of limitation properly applicable (thereto, the tax might be collected by a proceeding in court, but only if begun within six years after the assessment of the tax, (applied to an assessment in 1920 of 1917 taxes, notwithstanding that in 1920, when the assessment was made, there was and had been (no provision of law which in any form limited the time for assessing and collecting the tax.

But (the result below deprives the United States of the right to proceed on its judgment which is valid and stands unchallenged. Section 280 of the Revenue Act of'1926 authorizes the collector to assess a tax against a transferee of the property of a taxpayer. The (appellant does not rely upon section 280 for assistance. It proceeds 'as if on a creditor’s bill on a judgment to collect a tax liability which, was liquidated'by judicial action prior to the dissolution of the corporation. By section 280 Congress imposed a new liability upon the transferee of rthe property of a taxpayer who has failed to pay the tax. Section 280 was not intended to limit the ap-pellantiin pursuing'the assets of the corporation which had been transferred, without first having paid the taxes due to it; a judgment therefor having been obtained.

Decree 'reversed.

L. HAND, Circuit Judge

(dissenting).

United States v. Updike, 281 U. S. 489, 50 S. Ct. 367, 74 L. Ed. 984, dealt with a.bill filed after the Revenue Act of 1926 became law, section 280 (a) ' (1) of which expressly applied the limitations of suits against taxpayers to suits against transferees. The argument of the Treasury had been that the suit was derivative from the corporation’s liability, the equitable equivalent of the right to follow the assets at law — after judgment and execution nulla bona. It insisted that section 280 (a) (1), 26 USCA § 1069, applied only to the 'direct liabilities of transferees to pay the tax, and therefore affected only those for the first time created by the Act of 1926. This the court answered by holding that such a suit, in spite of its ancillary character, was to “collect the tax.”

I cannot think it a material difference that no judgment and 'execution had there gone against the corporation. Normally, these are conditions precedent to such a suit; they may be omitted only when they would be patently futile. But, when they are, the suit still remains one to subject voluntary transferees to the transferrer’s obligations; the procedural prerequisites do not change the nature of'the remedy. Hence I think that the suit at bar is one to collect a tax, if <a suit without judgment is such. While of course the Act of 1926 does not apply here, there were'limitations, indeed narrower limitations, in the earlier acts, with which eoncededly the Treasury has not here complied. These barred this suit as much as they would have barred a suit brought without judgment and execution.

While, perhaps, it should not be conclusive, a consequence of my 'brothers’ ruling seems to me worth notice. If they are right, it is always enough to toll the statute for'the Treasury to sue the corporation or other transferrer in season. Thereafter xt may at its leisure bring suit against the transferees, though it would be barred if it sued them'directly. The effect of the distinction we are making is to put it into the hands of the Treasury, by eschewing the short cut, indefinitely to extend the period of limitation. I cannot think that this is all that the Supreme Court meant in U. S. v. Updike, supra.


author: SWAN, Circuit Judge

text:
    In re BOROK.
    No. 309.
    Circuit Court of Appeals, Second Circuit.
    May 18, 1931.

      Archibald Palmer, of New York City . (Sydney Basil Levy, of New York City, of counsel), for appellants.
    Lewis, Marks & Kanter, of Brooklyn, N. Y. (Oscar A. Lewis and Lloyd B. Kanter, both of Brooklyn, N. Y., of counsel), for appellee.
    Before L. HAND, SWAN, and CHASE, Circuit Judges.
   SWAN, Circuit Judge

(after stating the facts as abo've).

The order appealed from permits the trustee to recover from an adverse claimant three classes of property: (1) Uncollected accounts receivable assigned to Mayerson prior to the bankruptcy petition as security for a loan; (2) moneys collected by Mayer-son on assigned accounts after the bankruptcy petition was filed; and (3) moneys, including the proceeds of checks of the bankrupt’s customers, which were delivered to Mayerson the day before the petition was filed. The chief question presented is whether the court had jurisdiction to grant such relief in summary proceedings.

It is argued by the trustee that, despite the assignment, all accounts outstanding on the date of the petition remained in the “possession” of the bankrupt and so fall within the doctrine of property in custodia legis, as to which the bankruptcy court has summary power. One cannot speak of “possession” of a chose in action in the same sense as of tangibles; but if such terminology is to be used it would seem that the bankrupt was as much in “possession” of the assigned accounts as he could be of any chose in action. He had the right to collect from the debtors and to use the proceeds as he saw fit. The debtors had received no notification of the assignment; and Mayerson, though the agreement declared him to be irrevocably constituted the assignor’s attorney for collection, was not to use this power unless the assignor was in default under the agreement, and there is no suggestion that default had occurred prior to the filing of the petition. Under such circumstances we believe that the bankruptcy court has power to determine summarily the respective rights of the trustee and the assignee in respect to the assigned accounts outstanding at the date of the petition. So it was held by Judge Rellstab in In re Gottlieb & Co., 245 F. 139, 146 (D. C. N. J.), affirmed in 257 F. 72 (C. C. A. 3), without reference to this point.

That it is possible for a bankrupt to have “possession” of intangible property in such sense as to give the bankruptcy court summary jurisdiction over adverse claims, appears from numerous eases. Chicago Board of Trade v. Johnson, 264 U. S. 1, 44 S. Ct. 232, 68 L. Ed. 533; O’Dell v. Boyden, 150 F. 731, 10 Ann. Cas. 239 (C. C. A. 6); In re Ransford, 194 F. 658 (C. C. A. 6); Orinoco Iron Co. v. Metzel, 230 F. 40 (C. C. A. 6); In re Roman, 23 F.(2d) 556, 558 (C. C. A. 2). It is trc e that in Chicago Board of Trade v. Johnson, the Chief Justice said, at page 12 of 264 U. S., 44 S. Ct. 232, 234, of his opinion : “Membership on the Board of Trade is different from a mere chose in action, like a simple claim or debt asserted against another, and only to be enjoyed after its satisfaction or enforcement. It is a continuously enjoyed ‘incorporeal right.’ ”

There is an implication in these words that one cannot properly be said to be in possession of an ordinary debt or claim. But that was said in distinguishing the case from a suit by the trustee to collect a. debt from a resisting debtor, which must certainly be by plenary action. A similar distinction may be made in the case at bar. Were the trustee attempting to collect the accounts from the bankrupt’s debtors, he would have to resort to a plenary suit; he could not claim to be in “possession of the property,” for existence of the property, i. e., a valid chose in action, is the issue in dispute. But where, as here, the debtor is not in an adverse attitude toward the bankrupt and the dispute is between the bankrupt’s trustee and the claimant of a lien upon the debt, we think the debtor may be deemed to hold the debt for the bankrupt in the same sense that the Board of Trade held the seat for the bankrupt, and “possession” of the chose in action may be deemed to pass to the trustee in the one case as much as in the other. So the bankruptcy court may draw to itself the summary determination of which claimant is the proper ob-ligee of the chose in action. This we suggested, though it was not decided, in Re Roman, supra.

The case of Copeland v. Martin, 182 F. 805 (C. C. A. 5) might, at first sight, appear to be opposed to this conclusion; but it differs in important respects. It involved an outright assignment rather than one'for security, the debtor had been notified of the assignment, and no right to collect was' reserved to the assignor. It would seem that complete title and “possession” of the chose in action had been transferred to the as-signee before the bankruptcy. In re Paramount Fireproof Door Co., 43 F.(2d) 558 (D. C. E. D. N. Y.), relied upon by the appellant, was also a case where the debtor had been notified of the assignment, and apparently the assignor had not retained the right to collect for his own use. These cases are not, therefore, inconsistent with the views we have expressed.

Having found that the bankruptcy court had jurisdiction to determine claims to the accounts outstanding on the date of the petition in bankruptcy, we pass to the validity of the assignment to Mayerson. Under the doctrine of Benedict v. Ratner, 268 U. S. 353, 45 S. Ct. 566, 69 L. Ed. 991, the assignment was void and ineffective to create a lien on the accounts receivable. There is no dispute that the assignor retained complete dominion over them. It is argued that he was obligated to substitute new accounts for those collected, but neither the terms of the agreement nor the conduct of the parties bear out any such contention. It is futile to talk of substitution where the assignor had agreed to assign, and did assign weekly, all newly created accounts without regard to how much he had collected on those previously assigned. Hence the order appealed is correct in so far as it requires the appellants to turn over to the trustee the uncollected assigned accounts and to account for moneys collected subsequent to the filing of the bankruptcy petition.

But the ease is otherwise as to moneys (including proceeds of -customers’ cheeks) paid to Mayerson by Borok. The latter had no possession of these when the petition was filed. The accounts as ehoses in action had ceased to exist, and the money into which they had been converted was held by an adverse claimant. Hence there was no summary jurisdiction unless Mayerson’s claim was no more than colorable. In re Gottlieb & Co., supra; Harrison v. Chamberlin, 271 U. S. 191, 46 S. Ct. 467, 70 L. Ed. 897; In re Dailey, 255 F. 529 (C. C. A. 2).

Whether the money turned over by Borok was intended as a partial payment on the notes, which were not yet due, or as a delivery of security in substitution for the collected accounts does not appear; nor would it seem to matter. In either case the sum would be recoverable only if the payment were a voidable preference or a fraudulent transfer. There is no evidence that Mayer-son knew or had reason to know of Borok’s insolvency or the impending bankruptcy, unless such an inference may be drawn from the making of a voluntary payment so contrary to the prior methods of business between the parties. The special master drew this inference and concluded that Mayerson’s claim of a right to retain the money was so unsubstantial as to be merely colorable. The inference of fact may be. justifiable, but with ,the conclusion that the adverse claim was merely colorable we cannot agree. As is said in Harrison v. Chamberlin, 271 U. S. 191, 194, 46 S. Ct. 467, 468, 70 L. Ed. 897, “An actual claim may be adverse and substantial even though in fact ‘fraudulent and voidable.’ ” Whether Mayerson knew of Borok’s insolvency or the impending bankruptcy were disputed questions of fact which the adverse claimant was entitled to have determined in a plenary suit unless he consented to its summary determination. Accordingly so much of the order as relates to moneys received prior to the bankruptcy petition must be reversed, with directions to dismiss the proceeding as to this part of the relief sought, but without prejudice to the trustee’s right to bring a plenary suit.

Error is assigned to the order in so far as it'charged against appellants fees of the special master, stenographic fees, and attorneys’ fees. By virtue of section 2 (18) of the Bankruptcy Act, 11 USCA § 11 (18), the court has power to tax costs “whenever they are allowed by law.” Rule 68 of the Equity Rules (28 USCA § 723) provides that the compensation to be allowed a special master shall be fixed by the court and charged against such of the parties in the cause as the court shall direct. Bankruptcy Rule 15 of the District Court also provides for fees of special masters. The practice of taxing such fees as costs against the unsuccessful party in appropriate cases is too well known to require the citation of authorities. Whether the master’s fees should be apportioned in the present ease, since we have determined that the receiver and trustee must fail as to part of the relief sought, will be open for consideration by the District Court when the cause is remanded.

Section 38 of the Bankruptcy Act (11 USCA § 66) gives the referee discretion to authorize the employment of stenographers for reporting the proceedings,, and Judge Brown considered this authority for taxing such fees as costs against an unsuccessful claimant. In re Todd, 109 F. 265 (D. C. S. D. N. Y.). But this section of the act is not applicable to hearings before a special master. In re Stark, 155 F. 694 (D. C. E. D. N. Y.). Authority for taxing as costs stenographic fees incurred on such a hearing is to be found in Equity Rule 50. See Ex parte Peterson, 253 U. S. 300, 315, 40 S. Ct. 543, 64 L. Ed. 919; In re Weissman, 267 F. 588 (D. C. Conn.).

The appellee has advanced neither reason nor authority to sustain charging against the appellants counsel fees for the attorneys of the receiver and trustee. This was clearly error. In re Rome, 162 F. 971 (D. C. N. J.); In re Ghiglione, 93 F. 186 (D. C. S. D. N. Y.).

The order is reversed, and the cause remanded for entry of an order in conformity with this opinion.


author: MANTON, Circuit Judge.

text:
    COMMISSIONER OF INTERNAL REVENUE v. GODFREY. SAME v. FIRST NAT. BANK OF BRIDGEPORT, CONN.
    Nos. 201, 202.
    Circuit Court of Appeals, Second Circuit.
    May 18, 1931.
    G. A. Youngquist, Asst. Atty. Gen., and Sewall Key and Norman D. Keller, Sp. Assts. to Atty. Gen. (C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and Stanley Suydam, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., of counsel), for petitioner.
    Harvey K. Zollinger, of New York City (Marion W. Ripy, of New York City, of counsel), for respondents.
    Before MANTON, L. HAND, and CHASE, Circuit Judges.
   MANTON, Circuit Judge.

These eases will be considered in one opinion. In 1918, the Yalelms Corporation’s income and profits tax was $95,580, a claim for which is asserted against the respondents, ■ stockholders, officers, and transferees of the property of the corporation. Section 280, Revenue Act of 1926, 44 Stat. 9, 61 (26 USCA § 1069). The question presented on this appeal is whether or not the statute of limitations has barred the assessment of the taxes, or any part thereof, against the respondents as such transferees, under the act. The First National Bank of Bridgeport, Conn., is executor of the estate of Charles G. Waldo, deceased, and Godfrey is an. individual; both were distributees of the Yalelms Corporation on its dissolution. Before its dissolution, the Yalelms Corporation was organized and existed under the laws of Connecticut, engaged in a manufacturing business, at Bridgeport, Conn. It was originally incorporated as the Compressed Paper Box ® Company. It filed its corporation tax returns for the year .in question. It charged its corporate name to the Yalelms Corporation and after the abandonment of its original name a new corporation was organized under the name of the Compressed Paper Box Company which became the purchaser of the assets of the Yalelms Corporation. This corporation assumed the debts of the older corporation and gave promissory notes secured by a pledge of preferred stock of the Compressed Paper Box Company. It caused to be published, according to the Connecticut statute, in a Bridgeport newspaper, the following notice:

“Notice is hereby given that it is proposed to dissolve the Yalelms Corporation, a Connecticut Corporation having its principal office in Bridgeport, Connecticut. The time within which claims against said Corporation may be presented is hereby limited to January 1st, 1923. All claims shall be presented in writing to the Yalelms Corporation, % Hubbard and Hall, Attorneys, 608 Security Building, Bridgeport, Connecticut. All claims not so presented within said period will be barred.
“The Yalelms Corporation, “By Its Board of Directors, “Per Hubbard & Hall, Attys.”

On December 16, 1922, the Board of Directors filed in the office of the secretary of state of Connecticut a preliminary certificate of dissolution by agreement of stockholders entered into on August 26, 1922. The corporation’s board consisted of Godfrey, president, Waldo, treasurer, and Hayward, secretary. Godfrey and Waldo owned 59 and 36 per cent., respectively, of the capital stock of the corporation.

The Compressed Paper Box Company filed its return for 1918 and paid a tax as shown therein. The petitioner reaudited the return and made an additional assessment in November, 1925, of $83,682.40. On May 22, 1926, the-petitioner by letter notified the respondent Godfrey that he had determined a liability assessment against him, as transferee, of the income tax due from the corporation for the year 1918. On January 18, 1924, the Compressed Paper Box Company signed and delivered a waiver effective for one year only as to the statutory limitations on the time within which the assessments based upon such liability might be entered. On January 6, 1925, it executed another waiver to remain in effect until December 31, 1925.

The Board of Tax Appeals held that, while the petitioner’s determination respecting the respondent’s liability as transferee of, the assets was correct, still such liability was barred by the statute of limitations. Has the statute run against the assessment of liability of $83,682.40 made in November, 1925, as extended by the waivers ? This assessment was made after the enactment of the Revenue Act of 1924 (43 Stat. 253), and is not affected by the decision in Russell v. United States, 278 U. S. 181, 49 S. Ct. 121, 73 L. Ed. 255, and could have been collected from the transferee within six years after the assessment, or prior to November, 1931. This period of six years had not expired prior to the enactment of the Revenue Act of 1926 or prior to the date of the respondent’s notice, and collection was not barred under pri- or acts at the time such notice was mailed. The first waiver, given January 18,1924, was within the statutory period of limitation for assessment and extended the time to January 18, 1925. It was signed by Godfrey as president. On January 6, 1925, within the statutory time for assessment, as extended by the waiver, a second waiver was given, signed by Godfrey, “president, trustee in liquidation,” and remained in effect until December 31, 1925. If the second was valid, it was sufficient to extend the period beyond the date of the actual assessment, since a waiver given after the statute has expired is valid and effective.

The Yalelms Corporation was a continuation of the Compressed Paper Box Company, and, at the time the first waiver was .signed, the corporation was in the process of dissolution by consent of its stockholders. Sections 3446, 3447, 3451 of the General Statutes of Conn., 1918 Revision. Under these sections, the directors of the corporation became trustees charged with the duty of closing up the business of the corporation. General Statutes of Conn. 1918 Revision, §§ 3451-3453; Reilly v. Pepe Co., 108 Conn. 436, 143 A. 568. Under these statutes, the corporation’s existence continued until the corporate, affairs were closed. These instruments were properly executed. At the time both waivers were signed, the corporate existence continued with the corporate affairs in the hands of the directors as trustees. Godfrey was the principal stockholder. Waldo died on April 12, 1923, and the trust company qualified as his executor. The board of directors of the corporation acts as a body in managing the corporate affairs, but a tax waiver signed by one, an authorized corporate officer, is sufficient. Jaffee v. Com’r, 45 F.(2d) 679 (C. C. A. 2), decided Dec. 8, 1930; Philip Carey Co. v. Dean, 43 F.(2d) 369 (D. C. S. D. Ohio); Liberty Baking Co. v. Heiner, 37 F.(2d) 703 (C. C. A. 3); United States v. Kemp, 12 F.(2d) 7 (C. C. A. 5).

Prior to the first waiver, the company had issued a certificate stating that claims might be filed with Godfrey at his attorneys’ address. Godfrey thus had become the representative of the corporation in receiving claims of creditors. The petitioner, in filing his claim and obtaining the waivers as executed, was acting on a tax liability — a debt.

We think that the waivers were executed with authority; the assessment was made in time and is not barred by the limitation period.

Order reversed as to the November 1925 assessment.


text:
    WILSON & CO., Inc. v. LOCKE, Deputy Commissioner, Employees’ Compensation Commission.
    No. 335.
    Circuit Court of Appeals, Second Circuit.
    May 18, 1931.
    Single & Single, of New York City (James D. Cooney, of Chicago, 111., and Paul D. Compton, and W. Harry Stromenger, both of New York City, of counsel), for appellant.
    George Z. Medalie, U. S. Atty., of New York City, (Walter H. Sehulman, Asst. U. S. Atty., of New York City, of counsel), for appellee.
    Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
   SWAN, Circuit Judge

(after stating the facts as above).

The first assignment of error presents two important questions with respect to the Longshoremen’s and Harbor Workers’ Compensation Aet (33 USCA § 901 et seq.), one involving a problem of statutory interpretation, the other involving a problem of constitutional law. Stated specifically, the questions are: (1) Does the statute contemplate a trial de novo by the District Court;. (2) if it does not, must it be held unconstitutional under the Fifth Amendment?

The general object of the statute under consideration was to provide compensation to employees included within its provisions and engaged in maritime employment for disability or death resulting from injury occurring upon navigable waters of the United States where recovery through workmen’s compensation proceedings could not validly be provided by state statutes. Nogueira v. N. Y., N. H. & H. R. Co., 281 U. S. 128, 131, 50 S. Ct. 303, 74 L. Ed. 754. It sets up administrative machinery similar to that provided by workmen’s compensation laws, and specifies procedural details with respect to a hearing by the deputy commissioner at which the claimant and the employer may each present evidence, and an order may be made rejecting the claim or awarding compensation; a copy thereof being sent by registered mail to both claimant and employer. Section 19 (33 USCA § 919). In conducting a hearing the deputy commissioner is not to be bound by common-law or statutory rules of evidence or by technical or formal rules of procedure, but is to so conduct the hearing as to best ascertain the rights of the parties. Section 23(a), 33 USCA § 923(a). The hearings are to be open to the public and are to be steno-graphically reported, and “the commission shall by regulation provide for the prepara-tion of a record of the hearings and other proceedings before the deputy commissioners.” Section 23(b), 33 USCA § 923(b). The deputy commissioners have authority to compel the attendance of witnesses, to administer oaths, to examine witnesses, etc. Section 27, (33 USCA § 927). A compensation order becomes final within thirty days after it is filed in the office of the deputy commissioner unless proceedings to set it aside are instituted. Section 21(a), 33 USCA § 921(a). To colleQt defaulted payments of compensation and to enforce any compensation order which has become final, resort, may be had to the federal courts pursuant to sections 18 and 21(e), 33 USCA §§ 918 and 921(c). Section 21(b) provides for “review of compensation orders”: “(b) If not in accordance with law, a compensation order may be suspended or set aside, in whole or in part, through injunction proceedings, mandatory or otherwise, brought by any party in interest against the deputy commissioner making the order, and instituted in the Federal district court for the judicial district in which the injury occurred. * * *” 33 USCA § 921(b).

Having regard to the general purpose of the act as well as to provisions which expressly diselose an intention to secure promptness in the payment of compensation to an injured employee and those respecting hearings before the deputy commissioner, particularly the waiver of ordinary rules of evidence and the requirement of a stenographic transcript of testimony, we entertain no doubt that the judicial review contemplated by section 21(b) was not to be a trial de novo, but a review on the record made before the deputy commissioner to determine whether his order was “not in accordance with law.” Such has been the construction adopted by the courts with almost complete unanimity. Wheeling Corrugating Co. v. McManigal, 41 F.(2d) 593 (C. C. A. 4); Northwestern Stevedoring Co. v. Marshall, 41 F.(2d) 28 (C. C. A. 9); W. J. McCahan Sugar, etc., Co. v. Norton, 43 F.(2d) 505 (C. C. A. 3); Obrecht-Lynch Corp. v. Clark, 30 F.(2d) 144 (D. C. Md.); Merchants’ & Miners’ Transp. Co. v. Norton, 32 F.(2d) 513 (D. C. E. D. Pa.); Joyce v. U. S. Deputy Commissioner, 33 F.(2d) 218 (D. C. Me.); Grays Harbor Stevedore Co. v. Marshall, 36 F.(2d) 814 (D. C. W. D. Wash.); contra, Crowell v. Benson, 45 F.(2d) 66 (C. C. A. 5).

So interpreted, the statute has been upheld in all the above cases except Crowell v. Benson. The conflicting views as to its constitutionality have been ably presented, on the one side, in the opinion of Judge Parker in Wheeling Corrugating Co. v. McManigal, and, on the other in the opinion of Judge Walker in Crowell v. Benson, now pending on certiorari before the Supreme Court. 51 S. Ct. 353, 75 L. Ed.-. Since the controversy is soon to be settled by final authority, it would serve no useful purpose for us at this time to review the opposing arguments and set forth the reasons which have led us to the conclusion that the statute is valid. It will suffice to state that we so hold in reliance upon decisions which have declared a limited review of administrative action in somewhat analogous cases to be no denial of due process of law. Hawkins v. Bleakly, 243 U. S. 210, 37 S. Ct. 255, 61 L. Ed. 678, Ann. Cas. 1917D, 637; New York Central R. Co. v. White, 243 U. S. 188, 37 S. Ct. 247, 61 L. Ed. 667, L. R. A. 1917D, 1, Ann. Cas. 1917D, 629; Federal Trade Comm. v. Eastman Kodak Co., 274 U. S. 619, 623, 47 S. Ct. 688, 71 L. Ed. 1238; Tagg Bros. v. United States, 280 U. S. 420, 443, 50 S. Ct. 220, 74 L. Ed. 524; Ma-King Co. v. Blair, 271 U. S. 479, 483, 46 S. Ct. 544, 70 L. Ed. 1046. See 40 Yale L. J. 985; 43 Harv. L. Rev. 131.

It remains to determine whether the testimony taken at the hearing before the deputy commissioner will sustain his finding that Rohman was in the employ of the appellant at the time of his injury. Coneededly he was in the general employ of Wilson & Co. But, pursuant to rule 125 of the Pennsylvania Railroad Company’s tariff, an albwanee of 15 cents per ton was made to appellant for loading the lighter, and it is contended that, while engaged in loading hides, Rohman was subject to the orders of the captain of the lighter and must bo considered to have been “loaned” to the railroad company for this special service, within the principle declared in Standard Oil Co. v. Anderson, 212 U. S. 215, 29 S. Ct. 252, 53 L. Ed. 480, and Linstead v. Ches. & Ohio Ry., 276 U. S. 28, 48 S. Ct. 241, 72 L. Ed. 453. Assuming without decision that under the Longshoremen’s and Harbor Workers’ Compensation Act this principle may be applied to relieve the general employer from the duty of compensating an injured employee furnished to another for a special service, the evidence is ample to sustain the deputy commissioner’s finding that such was not Rohman’s status.' Goins, who was the assistant foreman of the gang with which Rohman worked, testified on his first examination that Rohman was acting under his orders and that the lighter captain was not to be seen on board at the time. Three months later he testified again and said the captain always directed the men to_ take off hatch covers, and that the captain was in the hold when the accident occurred. Another witness then testified that the captain gave the order to remove the hatch cover at the time of the accident. Rohman himself, testifying through an interpreter, said that he took his orders from Goins, and that he supposed the captain was an employee of Wilson & Co. The captain was also a witness and testified that he was in sole control of the lighter and had authority to direct where freight was to be placed for the safety of the vessel and cargo, but he was not asked whether he had given any order regarding removal of the hatch cover prior to the accident. The credibility of the witnesses so far as their testimony was in conflict was for the deputy commissioner to determine. He found, as he well might, that Rohman was ordered on the boat by Goins and had taken no orders from the lighter captain. He also found that Rohman considered himself at all times under the direction and control of Wilson & Co., and he correctly applied the rule of law that a servant may not unwittingly be transferred from one master to another. Murray v. Union Railway Co., 229 N. Y. 110, 127 N. E. 907.

The conclusion that Rohman was in the employ of Wilson & Co. at the time of the accident was sustainable on the evidence and the law. Hence the decree below was correct and it is affirmed.