author: MARTIN, Chief Justice.

text:
    COLLINS v. DISTRICT OF COLUMBIA et al.
    No. 5039.
    Court of Appeals of District of Columbia.
    Argued March 5, 1931.
    Decided April 6, 1931.
    Fred B. Rhodes and Marcus Borehardt, both of Washington, D. C., for appellant.
    Edmund L. Jones, Richmond B. Keech, and Robert E. Lynch, all of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, and GRONER, Associate Justices.
   MARTIN, Chief Justice.

An appeal from a judgment for defendants in a personal injury case.

The appellant as plaintiff below claimed damages from the Capital Traction Company and the District of Columbia for personal injuries sustained by her in an accident when an automobile in which she was riding as a passenger, going eastward over the Calvert street bridge in the District of Columbia, suddenly turned to the left, crossed the bridge at a right angle, and plunged through the railing and over the side, of the bridge, falling a distance of about 50 feet into the valley , below, killing the driver of the car, a Mrs. Standish, and seriously injuring appellant. It is charged by appellant that the accident was caused by the negligent manner in which the bridge was maintained at the time by the appellees.

The issue went to trial before the court and jury. After hearing all the evidence, the court directed a separate verdict for the Capital Traction Company, and submitted the issue relating to the District of Columbia to the jury. The jury returned a verdict in favor of the District, and judgment was entered accordingly. This appeal was then taken.

The Calvert street bridge upon which the accident happened is part of the public highways of the District of Columbia. It is 750 feet long; the roadway for vehicular traffic on the bridge is 26 feet wide; this is flanked on either side by sidewalks for pedestrians which are 6 feet 10 inches in width and are 6 inches above the level of the roadway; a wooden guard or curb 11% inches high extends on either side for the length of the bridge between the roadway and the sidewalks; along each outer side or edge of the bridge there is an iron railing. The bridge is traversed by double tracks of the Capital Traction Company, and the distance from each of the outer rails to the near curb is 5 feet 6% inches.

On February 10, 1926, the day preceding the accident, there was a heavy fall of snow at this locality, which ceased between 9 and 10 o’clock at night. Appellant charges that the Capital Traction Company, together with the District of Columbia, carelessly and negligently swept the snow from its tracks upon the bridge in such a manner as to form a sloping embankment of snow along either side of the roadway next to the curb, with its slope facing the roadway, and that this snow became packed or frozen so as to be a source of great danger to automobiles when crossing the bridge, and caused the car in which appellant was riding to turn or skid to the left of its course and run off the bridge. Appellant’s claim is that this sloping bank of snow along the curb created a ramp or runway over which the automobile in which appellant was riding passed, before running across the roadway and over the side of the bridge.

We find no evidence in the record tending in any degree to show that the traction company caused the alleged bank of snow to be formed alongside of either of the curbs. It is established by uncontradicted evidence that, soon after the snow ceased falling, the snow sweepers of the company cut a path or swath through the snow extending about 18 inches beyond the outer tracks, that the sweepers swept the snow in front of them and did not pile it up, and that later the snowplows of the District of Columbia picked up the snow where the sweepers had left off, and pushed or shoved it over against the curbing. In other words, the evidence shows without contradiction that the traction company was not responsible for the alleged emhankment of the snow next to the curbing. Inasmuch as this fact refutes the sole charge of negligence alleged against the company, the lower court was right in directing a verdict in its favor. Pleasants v. Fant, 22 Wall. 122, 22 L. Ed. 780; Marion County v. Clark, 94 U. S. 278, 24 L. Ed. 259; Patton v. Texas & Pacific Railroad Company, 179 U. S. 658, 21 S. Ct. 275, 45 L. Ed. 361.

Appellant charges the District of Columbia with negligence similar to that charged against the traction company in the treatment of the snow upon the bridge, and also charges negligence in respect to the iron fence or railing at the sides of the bridge, alleging that it was unsafe. The defendant denied these charges, and in turn charged that the automobile was driven upon the bridge at a reckless and negligent rate of speed, constituting contributory negligence upon the part of the driver of the car and of plaintiff, who, although a passenger, was alleged to be engaged at the time in a joint enterprise with the driver. The issues were ftdly tried, and we think that the verdict and judgment for the District are fully sustained by the evidence.

The plaintiff presents three assignments of error. The first and second challenge defendant’s requested instructions 4 and 5 relating to contributory negligence, which were granted, and the third assigns error to the granting of a directed verdict for the traction company.

We need not discuss these assignments in detail, for in our opinion there is no evidence in the record tending to prove that the snowbank at either curb was the cause of the sudden turn made by the automobile upon the bridge, or contributed in any manner to such a result. The testimony, including photographs of the locality taken the day after the aeeident, show that there was but a thin covering of snow, such as had escaped the sweepers, upon the roadway, except for the banks on either side. Accordingly there was a cleared and level roadway about 20 feet wide the entire length of the bridge. The banks of snow flanked the sides of this roadway, and were of course in plain view of the driver of the automobile. The automobile had safely traveled a distance of about 70 feet upon the bridge, and it was unnecessary at the time of the accident for it to be driven over or against the bank to the right of its travel. Moreover there is no evidence tending to show that the wheels of the car ever touched the snowbank, but it is in evidence that the automobile was traveling upon the street car tracks at the moment when it made the sudden skid to the left. It is needless to say that, if the wheels of the ear did not come in contact with the bank of snow, the accident must have happened from some other cause. There is a great preponderance of the evidence to the effect that the automobile at the time it skidded was traveling at a speed of 25 miles an hour, but, so far as the evidence goes, the cause of the accident remains a subject of mere conjecture. There is some testimony to the effect that the iron railing through which the ear ran after - crossing the roadway was in an unsafe condition, but there is a decided preponderance of testimony to the contrary. It is plain, however, that the railing was constructed for the safety of pedestrians, and was not designed to resist the impact of a moving automobile.

The burden of proof at the trial was upon the plaintiff, in order to recover against either defendant, to establish by the preponderance of the evidence that the accident was in fact caused by the negligent act or omission of such defendant. The causal connection between the accident and the negligence of the defendant'must not be left to mere conjecture or supposition. There is a complete failure of proof in the present record upon this vital point, and this fact defeats appellant’s appeal in this court.

In Bennett v. Washington Terminal Co., 55 App. D. C. 111, 2 F.(2d) 913, 915, Mr. Justice Van Orsdel, speaking for this court, said: “Negligence is a matter of proof to be established by competent evidence. The burden of establishing negligence is upon the complaining party. The mere fact that an accident occurred creates no presumption of negligence bn the part of the defendant company. It is an affirmative fact, incumbent upon the plaintiff to prove and establish by such direct and positive evidence that the jury may reasonably infer the facts upon which negligence may be predicated.”

These principles apply with equal force to the necessity for affirmative proof of the causal relation between the alleged negligence; and the accident in question.

“An inference cannot be drawn from a presumption, but must be founded upon some fact legally established. This court has repeatedly held that when liability depends upon carelessness or fault of a person, or his agents, the right of recovery depends upon the same being shown by competent evidence, and it is incumbent upon such a plaintiff to furnish evidence to show how and why the accident occurred — some fact or facts by which it can be determined by the jury, and not be left entirely to conjecture, guess, or random judgment, upon mere supposition, without a single known fact.” C. & O. Ry. Co. v. Heath, 103 Va. 64, 48 S. E. 508; Va. Iron, etc., Co. v. Hughes, 118 Va. 731, 740, 88 S. E. 88.

In view of the failure of evidence as aforesaid, the judgment of the lower court is affirmed.

HITZ, Associate Justice, took no part in the consideration or decision of this case.


source: Caselaw Access Project

license: Public Domain

text:
    SPUND v. CAFRITZ CONST. CO.
    No. 5079.
    Court of Appeals of District of Columbia.
    Argued March 11, 1931.
    Decided April 6, 1931.

      Chas. Linkins, of Washington, D. C., for appellant.
    Louis Ottenberg, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB and GRONER, Associate Justices.
   MARTIN, Chief Justice.

An appeal from a judgment entered against appellant in an action brought by appellee to recover upon an alleged contract for the payment of money.

The appellee, the Cafritz Construction Company, as plaintiff below, filed a declaration alleging that it was a licensed real estate broker in the District of Columbia and as such negotiated a sale of certain described real estate to the defendant, Jacob Spund, at and for the price of $30,500; that defendant then agreed to pay plaintiff the sum of 5 per cent, upon the purchase price, to wit, the sum of $1,525, as a broker’s commission in the transaction, but that defendant had since failed and refused to pay the same, wherefore plaintiff prayed judgment. The defendant answered alleging that he had 'purchased the described property for the sum' of $30,500, by means of a contract made directly between himself and the owner of the premises, to wit, the Kay-Sehnider-Kay Company; and defendant denied that plaintiff had negotiated the sale, or that defendant had agreed to pay plaintiff any sum whatever as a commission in the transaction.

The issue accordingly was one of fact, which was tried upon the evidence. The jury returned a verdict for the plaintiff, and judgment was entered accordingly. This appeal was then taken.

The record discloses that the Kay-Sehnider-Kay Company, a corporation, was the owner of the property in question, and had listed it for sale with various real estate agents including the plaintiff; that the property was sold to defendant for $30,500-; and that the regular commission for such a sale when negotiated by a real estate broker would be $1,525. The evidence strongly supports the claim that the sale was negotiated through the agency of the plaintiff company, and that ordinarily the vendor would have been compelled to pay the commission. However, it is testified by two witnesses that in the course of the negotiations the defendant offered to pay $30,500 for the property, provided the vendor would build two garages and make certain minor repairs upon the premises, but the owner refused to aceept these terms unless he should be released from the payment of the broker’s commission, and that thereupon the defendant said “he would take care of the commission,”’ and “agreed with Mr. Schnider that he would stand for a five (5%), per cent, commission.” These statements were made in the presence of plaintiff’s agent while he was negotiating the transaction. It is in evidence that immediately thereafter a written contract of sale was executed between the buyer and seller, the plaintiff not being a party thereto. The written contract contained no specific provision relative to the payment of the commission, but it contained the clause, “The price above is net.” It was contended by plaintiff that this was inserted in order to confirm the agreement that the defendant was to pay the commission.

It is true that the testimony relative to defendant’s agreement to pay the commission was contradicted by other witnesses, but we accept the verdict of the jury as final upon that point.

The principal contention of the appellant is that the lower court erred in admitting oral evidence to prove the defendant’s alleged agreement to pay the commission. Appellant claims that such evidence had the effeet of varying the terms of the written contract of sale by parol. This contention, however, is not tenable, for the written contract was between the buyer and seller only, and the plaintiff was not a party to it. Nor did it provide for. the payment of the commission; which subject rested in parol. Therefore there is no contradiction between the plaintiff’s evidence and the terms of the written, instrument. But even if such contradiction existed the plaintiff-would not have been precluded from introducing evidence as to the issue in the ease.

“The rule that parol testimony may not be given to contradict a written contract, is applied only in suits between the parties to „the instrument or their privies.” 10 R. C. L. 1020, § 213.

“Third persons, who are not precluded from proving the truth, however contradictory to the vratten statements of others. Strangers to the instrument, not having come into this agreement, are not bound by it, and may show that it does not disclose the very truth of the matter. And as, in a contention between a party to an instrument and a stranger to it, the stranger may give testimony by parol differing from the contents of the instrument, so the party to it is not to be at a disadvantage with his opponent, and he, too, in such case, may give the same kind of testimony.” McMaster v. Insurance Co., 55 N. Y. 222, 14 Am. Rep. 239; Lowell Mfg. Co. v. Safeguard Fire Ins. Co., 88 N. Y. 591; Sigua Iron Co. v. Greene (C. C. A.) 88 F. 207.

Appellant also assigns as error the “reopening” of the case with permission to the plaintiff to introduce certain rebuttal testimony. This was not error, for such authority rests in the discretion of the trial court, and that was not abused in this case. The appellant also complains of the court’s refusal to give to the jury the instructions requested by him. This complaint is not substantial, for the court clearly and correctly instructed the jury in its own language in the general charge.

We find no error in the record; and the judgment is affirmed with costs.

HITZ, Associate Justice, took no part in the consideration or decision of this ease.


text:
    PECKHAM v. UNION FINANCE CO. et al.
    No. 5052.
    Court of Appeals of District of Columbia.
    Argued March 6, 1931.
    Decided April 6, 1931.
    W. Bissell Thomas, of Washington, D. C., for appellant.
    James S. Easby-Smith and Francis W. Hill, Jr., both of Washington, D. C., for appellees.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   MARTIN, Chief Justice.

An appeal from an order dismissing a petition claiming damages for malicious prosecution of a civil ease.

The appellant as plaintiff below filed a declaration containing in substance the following allegations, to wit: That in February, 1925, plaintiff was the owner of lots 31, 32, 33, and 34 in square 1749', in a subdivision of Washington, and conveyed the same to the Century Homes Corporation, receiving as consideration the promissory note of the corporation for $8,000 secured by a deed of trust upon the lots, and an agreement that lot 34 should be reeonveyed to her after the erection of a house thereon; that the Century Homes Corporation fraudulently induced plaintiff to withhold the deed of trust from record, and thereupon fraudulently and without consideration delivered its promissory note for $5,000' with a deed of trust on lot 31, to a “straw man,” who in turn delivered the same to the defendant the Union Finance Company as the principal in the fraudulent transaction; that defendants Ward, Brayshaw, Hurst, Roth, and Hill were officers and agents of the Union Finance Company, and promoted the fraud; that in January, 1926, plaintiff discovered the fraud, and induced the Century Homes Corporation to convey the four lots to Kinnear and Smoot as trustees to carry out the terms of the original contract; but before the trustees could proceed with this duty the defendant the Union Finance Company fraudulently caused a sale of lot 31 to be made under the deed of trust securing the $5,000 promissory note aforesaid, whereby nominally the sum of about $1,150 was credited upon the note; and that afterwards, to wit, on August 3, 1926, the Union Finance Company commenced a suit in equity in the Supreme Court •of the District of Columbia against the plaintiff together with the Century Homes Corporation, Kinnear and Smoot, trustees, and others as defendants; that in its bill of complaint the Union Finance Company set out the execution of the $5,000 promissory note and deed of trust aforesaid by the Century Homes Corporation, and the amount remaining due and unpaid upon the note, and also set out the subsequent conveyance of the four lots by that corporation to Kinnear and Smoot, trustees, as aforesaid, stating also that the Century Homes Corporation was hopelessly insolvent and that the trustees aforesaid were unable to carry out the provisions of the trust; that the prayer of the bill was that a receiver be appointed to take over, conserve, and liquidate the assets of the Century Homes ' Corporation, that the trust agreement between the company and Kinnear and Smoot, trustees, be set aside, and that the real estate conveyed thereby be conveyed to the receiver, and that the plaintiff the Union Finance. Corporation and other creditors who may intervene may be allowed to prove their just claims against the Century Homes Corporation to be allowed by the receiver. The declaration further discloses that a decree was thereupon entered by the court sustaining the allegations of the bill and finding the several amounts due from the Century Homes Corporation to the Union Finance Company and other intervening creditors; and that after the lapse of several years the suit was dismissed as to the present plaintiff. It was also alleged in the declaration that the suit commenced by the Union Finance Company on August 2, 1925, as aforesaid, was fraudulent, malicious, without probable cause, and was begun with intent to injure plaintiff and impair the value of her interest in her property, and that it had the effect of preventing a profitable refinancing of the transaction because of the cloud which it cast upon the title of the lots; all to plaintiff’s damage, for which she prayed judgment.

The declaration was rightly dismissed, for the reason that the suit brought by the Union Finance Company against the appellant did not seek or cause an arrest of her person, or a seizure of her property, or placing her in bankruptcy, or any similar proceeding. The declaration sought no special relief against the appellant, but prayed the court to appoint a receiver who would administer the assets and equities of the insolvent Century Homes Corporation under the directions of the court. In fact, the appellant possessed no legal title to the lots in question at that time, for this was vested in Kinnear and Smoot as trustees. It is true that appellant had an equitable interest in the rightful performance of the trust by them, and accordingly was a proper party in the case, but under the circumstances this may be said also of the Union Finance Company and the other creditors of the Century .Homes Corporation. Moreover, the decree of the lower court rendered in the equity case, wherein appellant was a "party, found that the claim of the Union Finance Company against the Century Homes Corporation upon the $5,000 promissory note was valid. Its validity cannot now be impeached collaterally by appellant. Under the circumstances disclosed by the declaration, an action for malicious prosecution cannot be maintained against appellees.

In respect to such actions in general the following statement appears in 18 R. C. L. 13, § 3: “In this country, while the institution of á civil suit maliciously and without probable cause is generally considered to constitute a sufficient basis for an action for malicious prosecution at the instance of one who has suffered special damage, the authorities are in hopeless conflict as to whether the malicious prosecution of a civil action without probable cause is a legal wrong for which the law will afford redress, without reference to any inquiry touching the seizure of property, the arrest of the person, or other special circumstances.”

In our opinion the greater weight of authority in this country and the better reasoning support the view that no action will lie for the recovery of damages sustained by the prosecution of a civil action with malice, and without probable cause, when there has been no arrest of the person or seizure of the property of the defendant, and no special injury sustained, which would not necessarily .result in all suits prosecuted to recover for like causes of action. “This doctrine is supported by the following consideration: The courts are open and free to all who have grievances and seek remedies therefor, and there should be no restraint upon a suitor, through fear of liability resulting from failure in his action, which would keep him from the courts. He ought not, in ordinary cases, to be subject to a suit for bringing an action, and be required to defend against the charge of malice and the want of probable cause. If an action may be maintained against a plaintiff for the malicious prosecution of a suit without probable cause, why should not a right of action aeerue against a defendant who defends without probable cause and with malice? The doctrine surely tends to discourage vexatious litigation, rather than to promote it.” Wetmore v. Mellinger et al., 64 Iowa, 744, 18 N. W. 870, 871, 52 Am. Rep. 465.

“If every suit may be retried on an allegation of malice, the evils would be intolerable, and the malice in each subsequent suit would be likely to be greater than the first.” 1 Cooley on Torts, p. 350 (Ed. 1906).

In Cincinnati Daily Tribune Co. v. Brack, 61 Ohio St. 489, 56 N. E. 198, 76 Am. St. Rep. 433, the Supreme Court of Ohio held that as a general rule no suit will lie for the malicious prosecution of a civil action, where there has been no arrest of the person or seizure of property. In that ease a stockholder of an incorporated newspaper company, maliciously and without probable cause, commenced a suit against the company for dissolution and the appointment of a receiver, to the great injury of the company. The application was denied and the suit was dismissed. The court held that these facts did not constitute a cause of action, entitling the defendant to relief by way of damages, as there was no arrest of the person or seizure of property.

This view is sustained by many authorities, among whieh are McNamee v. Minke, 49 Md. 122; Supreme Lodge American Protective League of Baltimore City v. Unverzagt, 76 Md. 104, 24 A. 323; Pye v. Cardwell, 110 Tex. 572, 222 S. W. 153; Muldoon v. Rickey, 103 Pa. 110, 49 Am. Rep. 117; Smith v. Michigan Buggy Co., 175 Ill. 619, 51 N. E. 569, 67 Am. St. Rep. 242; Bitz v. Meyer, 40 N. J. Law, 252, 29 Am. Rep. 233; Peterson v. Peregoy, 180 Iowa, 325, 163 N. W. 224; Abbott v. Thorne, 34 Wash. 692, 76 P. 302, 65 L. R. A. 826, 101 Am. St. Rep. 1021; Luby v. Bennett, 111 Wis. 613, 87 N. W. 804, 56 L. R. A. 261, 87 Am. St. Rep. 897.

The judgment of the lower court is affirmed, with costs.


text:
    WHITE v. HESSE, Major and Superintendent of Police.
    No. 5021.
    Court of Appeals of District of Columbia.
    Argued March 4, 1931.
    Decided April 6, 1931.
    W. J. Dow, H. S, Barger and Wm. E. Leahy, all of Washington, D. C., for appellant.
    Neil Burkinshaw, R. B. Keech, and V. E. West, all of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ and GRONER, Associate Justices.
   MARTIN, Chief Justice.

An appeal from an order denying appellant’s motion for a preliminary injunction and granting the motion of appellees to dismiss the bill of complaint.

The bill alleges that the plaintiff (now the appellant) is the owner of a large number of automatic vending machines constructed especially for the automatic vending of candy mints and designed to be stationed in public places in the District of Columbia; that in the operation of such a machine the customer places a niekle coin in a slot and automatically receives in return an ordinary 5-eent package of candy mints. In addition, the customer may or may not receive certain brass disks from two to twenty in number, depending from the chance action of the machinery. The disks may in turn be placed severally in the same slot without causing the delivery of a mint package, but causing the operation of an attachment to the machine thereby automatically exposing to view certain “fortune-telling” legends such as “You will yet live in splendor and plenty,” or “You need travel to seek pleasure,” or other amusing sentiment. The machine when put in operation by the deposit of a disk may automatically deliver other like disks which in turn may be used to operate the “fortune-telling” part of the machine, b.ut will not deliver another package of mints. When the customer deposits his nickel coin in the slot he is bound to receive the conventional nickel package of mints, but it is a matter of chance whether he will at the same time receive any brass disks or the number he may receive. It is also certain that the machine will expose the fortune-telling legends if a brass disk be placed in the slot, but it is likewise a matter of chance whether at the same time the mar chine will deliver other brass disks or the number of them. The brass disks have no cash value and are not redeemable in either money or goods, and the only use they can be put to is to set in operation the attachment to the vending machine. They are considered to be mere equipment of the machine and are not to be taken away by the customer, although this is not prevented in any way. The bill alleges that the machines are not gambling devices and cannot be used as such, but are in fact conducted in strict compliance with the law, and are licensed to be operated in the District of Columbia. The plaintiff complains that nevertheless the defendants, the major and superintendent of police and the United States Attorney for the District of Columbia have ordered the police officers of the District to seize and confiscate all such machines if exposed at any place,of business within the District, and arrest the owner of such place, and threaten to prosecute such persons upon a charge of maintaining gambling devices contrary to law. Plaintiff alleges that this order and the execution of it by the police officers will cause him irreparable injury, wherefore he prays for an injunction pendente lite and for a final peremptory injunction to prevent such action on their part.

Defendant Leo A. Rover filed an answer to the bill, and defendant Edwin B. Hesse filed a motion to dismiss the bill; and, upon a consideration of the pleadings, the court refused to grant a temporary injunction and dismissed the bill, whereupon this appeal was taken.

We do not disagree with the ruling of the lower court. The machines in question are not mere vending machines whereby a predetermined commodity is sold and delivered to a customer at a fixed price; they are something more than that. For, in addition to the vended merchandise, they offer to the customer a chance for an additional advantage, that is, a chance without further charge to play the machine for entertainment and amusement. This may seem to be an unimportant consideration, but such machines are patronized mostly by children, and it is not consistent with sound publie policy to encourage in, immature minds a love of even such a limited adventure in chance.

A court of equity in such case may well decline to exercise its extraordinary powers to assist such an enterprise, and may properly leave it to the law courts to determine, in event of an arrest, whether the use of such machines under the circumstances of the ease is a violation of the criminal statutes.

-The remedy by injunction is summary, peculiar, and extraordinary, and the granting of it rests in the sound discretion of the court governed by the nature of the case. 14 R. C. L. 307, § 5.

“Except in cases where a statute gives an absolute right to an injunction, an injunction, whether temporary or permanent, cannot as a general rule be sought as a matter of right, but its granting or refusal rests in the sound discretion of the court under the circumstances and the facts of the particular case, unless perhaps in cases where facts on which the injunction is asked present questions of law only.” 32 C. J. 29 § 11.

In this view of the case we affirm the decree of the lower court.


author: PER CURIAM.

text:
    MUTUAL BEN. LIFE INS. CO. OF NEWARK, N. J., v. FLYNN.
    No. 5056.
    Court of Appeals of District of Columbia.
    Argued March 6, 1931.
    Decided April 6, 1931.
    Petition for Rehearing Denied April 25, 1931.
    Frederic D. McKenney, John S. Flannery, and G. Bowdoin Craighill, all of Washington, D. C., for appellant.
    L. Robinson Maddox and Marie A. Flynn, both of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   PER CURIAM.

The record in this appeal shows that July 11, 1928, one Marland Wesly Townsend, on his voluntary petition, was duly adjudicated a bankrupt. Thereafter, on the following May 2, after a hearing in court, an order was entered by the judge having jurisdiction of the proceedings directing the bankrupt to deliver to his trustee a certain policy of life insurance theretofore claimed by the wife of the bankrupt, and taxing in favor of the creditor, at whose instance the order was passed, and against the bankrupt, an attorney’s fee of $50. On the same day, on objection by the same creditor, the bankrupt’s petition for discharge was denied, and an additional amount of $50 as counsel fee allowed the objecting creditor as costs.

On June 5 following, on the, surrender thereof, appellant (insurance company) paid to the trustee the full cash value of the policy, but a few days later was served with notice on a writ of attachment issued against the goods, chattels, and credits of the bankrupt at. the suit of the objecting creditor (appellee) requiring appellant to appear on a day certain and answer under oath what property, if any, of the bankrupt it had in its possession, the objeet of this proceeding being to recover from appellant assets of the bankrupt alleged to be in its possession out of which appellee expected to realize on its judgment for costs. On the return day of the writ, appellant not having answered or appeared, judgment was entered against it, but, on its subsequent motion, for good cause, it was set aside, and leave given it to file its answer within two days. This appellant did, but, on the ground that the answer was not in the manner and form required by law, the Supreme Court of the District rejected it, and entered judgment against appellant for $116, or “such an amount as will satisfy plaintiff’s (appellee’s) claim.”

It is. from this judgment that this appeal is taken.

We do not stop to inquire as to the regularity of the order of the lower court in-awarding counsel fees, as costs, to an objecting creditor in a bankruptcy ease in which obviously the trustee rather than the creditor was the proper party in whose name the proceedings should have been prosecuted, nor are we willing that our silence in this, regard should be taken as approving this practice, but, since the orders in the respects mentioned are not objected to, we pass to-the consideration of the only question involved, and this we think may he disposed of in a few words.

The answer of appellant executed in its corporate name was subscribed and sworn to in its behalf “By Jay Ten Eyck, Associate Counsel,” and this, it was successfully claimed, did not comply with Code, § 447 (31 Stats. 1259, c. 854 [D. C. Code 1929, T. 24, § 123]) providing that “the garnishee shall file his answers under oath.” The lower court presumably was of opinion that the answer was not under oath, because, being in the name of the corporation, which could not as such make an oath, it would not bind the officer purporting to act for it, or make him amenable to a prosecution for false swearing, because it purported to be the oath of the corporation rather than his own, and perhaps also because the official title of the affiant of* ficer did not show upon its face that he was such an officer as ordinarily would be authorized to answer for the corporation.

In our view, the lower court was without power to enter judgment by default against the garnishee unless it failed to appear and show cause, or to answer. Code, §§ 467 and 1098; 31 Stats. 1263, 1361, c. 854 (D. C. Code 1929, T. 24, §§ 143, 295). That it did appear there can be, we think, no question; neither can it be successfully urged, we think, that it failed to answer under oath. The most that can be said is that the title of the officer acting in its behalf, unlike that of president or Secretary or treasurer, failed to show prima facie that the affiant virtute officii had power to bind the corporation, but on the other hand, as we said in International Seal Co. v. Beyer, 33 App. D. C. 172, “it neither appears that he was not acting within the scope of his authority, nor that any effort was made by the plaintiff to require the garnishee to appear in court and be examined orally under oath.”

In these circumstances, we think the lower court erred in summarily rejecting the answer and rendering judgment, and this we think is especially true, in view of the fact that at the final hearing appellant tendered, and a few days later, with leave of court, filed, affidavits of its president showing, not only that the officer signing the corporation’s answer was so authorized by the by-laws of the corporation, but, by the same token, that he was directly charged with that duty and responsibility.

For these reasons, the judgment of the lower court is reversed, with costs, and the cause remanded to the Supreme Court of the District, with instructions to allow the answer to be filed, and for such further proceedings as may be proper in the circumstances.

Reversed.


text:
    PERRY et al. v. WlLSON.
    No. 5312.
    Court of Appeals of District of Columbia.
    Argued March 2, 1931.
    Decided April 6, 1931.
    Ernest C. Dickson, of Washington, D. C., for appellants.
    C. H. Doherty, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.
   MARTIN, Chief Justice.

In administration.

The record discloses that on January 6, 1930, Nellie Wilson Perry, a resident of the District of Columbia, died intestate without living issue, leaving her husband and certain brothers and sisters as her next of kin and heirs at law.

The deceased left an estate of real and personal property approximating $16,000 in value, and on January 20, 1930, her surviving husband, Theodore J. Perry, was appointed and qualified as administrator of the estate.

On April 22,1930, said Theodore J. Perry, on behalf of himself, brought suit inequity in the Supreme Court of the District of Columbia against himself as administrator and the heirs of decedent as defendants, claiming of his own right to be the owner by way of a resulting trust of a large part of the decedent’s property.

On May 1, 1930, a petition was filed by one of the heirs praying for the removal of the administrator because of this suit. On June 5, 1930, the court after a bearing removed the administrator, appointed Zaekary Wilson as administrator d. b. n., and ordered the former administrator to forthwith account and transfer the assets of the estate to his successor in office. The removed administrator noted an appeal from the court’s order, and also filed a motion for a rehearing. This motion was stricken from the files on July 9, 1930, and an appeal was again noted.

On July 22, 1930, the removed administrator filed a petition for the removal of his successor as administrator d. b. n., upon the ground that, prior to his appointment, to wit, on June 17,1926, he had been convicted in the police court of the District of Columbia of a violation of the National Prohibition Act (27 USCA), and that, under section 261, D. C. Code (D. C. Code 1930, T. 29, § 71), he was disqualified to serve as an administrator. A motion to dismiss this petition was sustained by the court on July 30, 1930.

On July 29,1930, Theodore J. Perry filed his first and final account as administrator of decedent’s estate, showing a balance of assets in his hands in the sum of $3,483.14, which he claimed in his own right as set out in the equity suit aforesaid. In the account, the administrator claimed credit for $1,046 funeral expenses, $250 attorney fee, $12 premium on bond, and $257 commission. Exceptions to these items or parts thereof were filed by the administrator d. b. n., and on August 7, 1930, the exceptions were sustained by the Court. On August 26, 1930, the claims for attorney fee and administrator’s commission being again considered by the court, the former ruling disallowing them was sustained and reaffirmed. Whereupon an appeal was noted.

In this court the appellant presents 14 assignments of error.

Assignments 1, 2, 3, 4, 5, 7, 8, and 9 refer to the order of June 5, 1930, whereby appellant was removed as administrator. These assignments are overruled because that order was a final order and appealable, and no appeal was perfected until August 26, 1930, too late to be effective. Assignment 6 relates to the order of the court refusing to remove the administrator d. b. n. upon appellant’s motion. This is likewise overruled because the appeal from the order was not perfected in time. Assignments 10, 12, and 13 relate to the disallowance in appellant’s account of the credits taken for attorney fee, commission, and bond premium. These are overruled, inasmuch as no bill of exceptions was settled preserving the evidence upon which the court acted. Assignment 11 is frivolous. Assignments 10,12,13, and 14, moreover, are not sustained by the record.

Appeal in so far as it relates to the orders of June 5, 1930, and July 9,1930, is dismissed for want of jurisdiction; and the orders of August 7,1930, and August 26,1930, are affirmed.

Mr. Justice HITZ took no part in the consideration or decision of this case.


text:
    McCARL, Comptroller General, et al. v. ROGERS.
    No. 4727.
    Court of Appeals of District of Columbia.
    Submitted Feb. 5, 1931.
    Decided April 6, 1931.
    Peyton Gordon, Leo A. Rover, and H. O. Hoagland, all of Washington, D. C., for appellants.
    John W. Price, Henry C. Lank, and Rees A. Gillespie, all of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.
   PER CURIAM.

Appeal from a decree in the Supreme Court of the District restraining appellants from interfering to prevent the payment of $610 alleged by appellee to have been improperly withheld from his pay and allowances as an officer of the United States Navy to and including November 30, 1925, and enjoining and commanding appellant Secretary of the Navy “and his subordinates in the United States naval service” to cause to be paid and to pay to appellee any and all sums withheld from appellee’s pay and allowances by reason of “disputed claims.”

In McCarl v. Walters, 59 App. D. C. 237, 38 F.(2d) 942, we ruled that, under the Act of May 26, 1926 (44 Stat. 654), validating payments for commutation of quarters, heat, and light, and of rental allowances on account of dependents, the Comptroller General is vested with jurisdiction to determine whether pay of a naval officer, withheld prior to July 1, 1923, on account of allowances for dependent mother, should he refunded. We further ruled that, where a statute vests discretion in an executive officer, the exercise of that discretion, unless arbitrary or capricious, is not subject to control by mandamus or mandatory injunction.

The facts in the present case are substantially similar to those in the Walters Case. For reasons stated in the opinion in that case, the decree in this case must be reversed, and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed.


text:
    RIEGEL v. PUBLIC UTILITIES COMMISSION OF DISTRICT OF COLUMBIA.
    No. 5037.
    Court of Appeals of District of Columbia.
    Argued March 4, 1931.
    Decided April 6, 1931.
    Petition for Rehearing Denied April 25, 1931.
    E. C. Riegel, pro se.
    R. E. Lynch and Wm. A. Roberts, both of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.
   PER CURIAM.

This is an appeal from a deeree ’of the Supreme Court of the District dismissing the bill of complaint.

The suit was begun for the purpose of having declared unlawful an order of the Public Utilities Commission of the District of Columbia authorizing and approving the rules and practice of certain of the utilities companies operating in the District in requiring a small deposit from customers who were not able to establish financial responsibility when .applying for service.

The order is challenged on the ground that the rule is discriminatory and therefore contrary to certain sections of the law creating the Public Utilities Commission (37 Stats. 974 [D. C. Code 1930, T. 26, § 1 et seq.]). We ttnnk this contention wholly without merit. The only purpose of the rule i.s to assure payment by the customer or subscriber for the service which he gets. This the utility, like any other business organization, has a right to demand in advance if it wishes (Southwestern Telegraph & Telephone Co. v. Danaher, 238 U. S. 482, 35 S. Ct. 886, 59 L. Ed. 1419, L. R. A. 1916A, 1208; Vaught v. East Tenn. Telephone Co., 123 Tenn. 318, 130 S. W. 1050, 31 L. R. A. (N. S.) 315, Ann, Cas. 1912C, 132), or, if it should not, to impose reasonable conditions .as a basis of credit. If the customer meets the conditions, he receives the service in advance of payment. If he neglects or refuses to do so, he is required to deposit with the company the ordinary equivalent of the anticipated cost for one or two months, and, while the deposit remains in the hands of the company, interest at 5 per cent, in one case and 6 per cent, in another is allowed and paid, and, wlfen the service is terminated, the deposit and interest is applied to the final indebtedness or refunded, as the case may be, and, since there is no claim that the rule is not impartially enforced, or that its terms are oppressive or unreasonable, we think it not discriminatory.

The action of the lower court in dismissing the bill of complaint is therefore right, and should be and is affirmed.

Affirmed.


author: SAWTELLE, Circuit Judge.

text:
    DA ROZA v. UNITED STATES.
    No. 6310.
    Circuit Court of Appeals, Ninth Circuit.
    April 6, 1931.
    Rehearing Denied May 11, 1931.
    Ernest Spagnoli, of San Francisco, Cal., for appellant.
    Geo. J. Hatfield, U. S. Atty., and A. E. Bagshaw, Asst. U. S. Atty., both of San Francisco, Cal.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
   SAWTELLE, Circuit Judge.

The defendant below pleaded guilty to an ■indictment charging the manufacture of intoxicating liquor in violation of the National Prohibition Act. The indictment charged that the defendant at a certain time and place mentioned “knowingly and wilfully committed a prohibited and unlawful act by the manufacture of certain intoxicating liquor fit for use for beverage purposes, to-wit: 117 gallons of whiskey.” Upon his plea, he was adjudged guilty as charged and sentenced to be imprisoned for the period of nine months in the county jail of San Francisco county, Cal. Thereafter defendant filed his petition for appeal to this court, which was duly allowed.

The only errors assigned are as follows:

“1. That said judgment of conviction pronounced and rendered was and is absolutely void and of no effect, and that said Edward da Roza is now confined and deprived of his liberty in violation of the inalienable rights secured and guaranteed to him by the Constitution of the United States, in that the District Court of the United States denied to sáid Edward da Roza due process of law within the meaning of the due process of law clause of the Fifth Amendment to the Constitution of. the United States, and denied to said Edward da Roza the rights and privileges extended to him by article 11, § 2, el. 1, of the Constitution of the United .States for the following reason:
“That said judgment of conviction is erroneous because the indictment upon which in turn said judgment is rested does not inform the said Edward da Roza of the cause and nature of the accusation against him within the meaning of the Sixth Amendment to the Constitution of the United States for the following reasons, namely:
“That the first count contained in said indictment does not allege that the manufacture of certain intoxicating liquor fit for use for beverage purposes, to-wit: 117 gallons of whiskey, was for beverage purposes, that is to say, that the manufacture of said liquor was intended for beverage purposes — -that intention being an essential element of the offense charged.”

The defendant neither demurred to the indictment nor filed a motion in arrest of judgment. He insists here for the first time that the indictment was so defective as to affect his substantial rights, and that in eonse^ quence the judgment is void.

The sole question presented to this court is whether the indictment charges an offense against the United .States. It is contended that the indictment is fatally defective,’ in that it fails to allege that the intoxicating liquor, which the defendant by his plea of guilty admits having manufactured, was intended for beverage purposes, and that, the intention or purpose is an essential element of the offense attempted to be charged. We find no merit in this contention, in the contention that the defendant has been deprived of any right under the Fifth Amendment to or any other section of the Constitution of the United States, or in the contention that the judgment is erroneous because it does not inform the defendant of the “nature and the cause of the accusation” against him, as required by the Sixth Amendment to the Constitution.

Section 3, title 2, of the National Prohibition Act (27 USCA § 12), provides that: “No person shall manufacture, sell, barter, transport, import, export, deliver, furnish or possess any intoxicating liquor except as authorized in this chapter. * * * Liquor for nonbeverage purposes and wine for sacramental purposes may be manufactured, purchased, sold, bartered, transported, imported, exported, delivered, furnished and possessed, but only as herein provided, and the commissioner may, upon application, issue permits therefor/' * * *” (Italics our own.)

It has been held that under this section the manufacture of intoxicating liquor for beverage purposes and sacramental purposes without a permit is unlawful. Weinstein v. United States, 293 F. 388 (C. C. A. 1st).

Section 29, title 2, of said act (27 USCA § 46), provides that any person who manufactures or sells liquor in violation of this chapter shall be punished for a first offense by a fine of not more than $1,009, or imprisoned not exceeding ■ six months; and for a second or subsequent offense shall be fined not less than $200 nor more than $2,000, and be imprisoned not less than one month nor more than five years. There are other provisions in the act authorizing the manufacture of any beverage containing less than one-half of 1 per cent, by volume on making -application and giving such bond as the Commissioner shall prescribe, and places the burden of proof upon the manufacturer to show that the liquor so manufactured contains less than the said one-half of 1 per cent, of alcohol by volume.

Section 6, title 2 of said act. (27 USCA § 16), provides that no one shall manufacture, sell, purchase, transport, or prescribe any liquor without first obtaining a permit from the Commissioner so to do, except under certain conditions therein contained.

It will thus be seen that nowhere in any of the quoted sections or in any other sections of the act does the act provide or make the intention of the manufacturer an ingredient of the offense of manufacture. Congress undoubtedly was conscious of the fact that there were many exceptions contained in the statute, such as, for instance, the exception allowing the manufacture of intoxicating liq-' uor under certain conditions and the use of such liquor for scientific and medicinal purposes, and consequently inserted in the act the following provision: “It shall not be necessary in any affidavit, information, or indictment to give the name of the purchaser or to include any defensive negative averments, but it shall be sufficient to state that the act complained of was then and there prohibited and unlawful, but this provision shall not be construed to preclude the trial court from directing the furnishing the defendants bill of particulars when it deems it proper to do so.” Section 32, tit. 2 of act (27 USCA § 49):

There is nothing in the latter quoted section which is in conflict with any provision of the Constitution of the United States or any amendment thereof.. Congress certainly had the right to provide for the procedure to be followed under the act and to make the act of manufacturing intoxicating liquor a criminal offense without reference to the intention qf the manufacturer. There are many crimes against the United States in which the intention is not an element of the offense.

In the case of Leonard v. United States, 18 F.(2d) 208, 211 (C. C. A. 6th), not cited by counsel, the question presented was as to -the sufficiency of the information. The information charged that the defendant did unlawfully and knowingly manufacture intoxicating liquor; said act being then and there prohibited and unlawful. In that case the defendant demurred to the indictment, pointing out with great particularity every claim of insufficiency. The court said :

“We have, then, section 32, declaring that it shall be sufficient to state that the act comr plained of was then and there prohibited and unlawful, and an information which charges the act of manufacturing intoxicating liquors, and says that this act was then and there prohibited and' unlawful. It was then for the government to prove that defendant had manufactured intoxicating liquor, and for him to prove, if he could, that his acts of manufacture (if any) were not prohibited and unlawful. We think these considerations, without more, justify sustaining this information. * * *
“A charge that defendant manufactured intoxicating liquor is a charge, in the words of the statute, of the complete offense named in the statute. The ease is not one where some acts of a given class are prohibited and others are not; everything of that class- is absolutely forbidden, save for the exceptions and permissions which, in view of section 32, constitute 'defensive negative averments,’ and need not be mentioned.”
In tbe case of Young v. United States, 272 F. 967, 968 (C. C. A. 9th), a ease involving the sufficiency of, an information charging the defendant with maintaining a public nuisance in violation of the National Prohibition Act, this court said: “The charge follows the language of the statute with sufficient description to inform the defendant of the nature of the offense charged and the cause of the accusation, and with such certainty that he could prepare his defense and plead the judgment in bar of any subsequent prosecution for the same offense. This is sufficient. United States v. Simmons, 96 U. S. 360, 24 L. Ed. 819.”
It is our opinion that the indictment is not defective either in form or substance, and that it properly charges ah offense against the United States.
Judgment affirmed.


text:
    Edward Da ROZA, Appellant, v. UNITED STATES of America, Appellee.
    No. 6309.
    Circuit Court of Appeals, Ninth Circuit.
    April 6, 1931.
    Rehearing Denied May 11, 1931.
    Ernest Spagnoli, of San Francisco, Cal., for appellant.
    Geo. J. Hatfield, U. S. Atty., and A. E. Bagshaw, Asst. U. S. Atty., both of San Francisco, Cal.
    Before RUDKIN, WILBUR, and SAWTELLE, Circuit Judges.
   SAWTELLE, Circuit Judge.

In this case, as in that of Edward Da Roza v. United States (No. 6310, C. C. A.) 48 ,F.(2d) 1025, this day decided, the defendant pleaded guilty to an indictment charging the manufacture of intoxicating liquor in violation of the National Prohibition Act (27 USCA). He was sentenced to imprisonment, the period of imprisonment to run concurrently with the period of imprisonment imposed in said case, No. 6310.

All of the errors assigned in this case have been considered and disposed of in case No. 6310, and the judgment is the same.

Judgment affirmed.


author: WEBB, District Judge.

text:
    SUTHERLAND, Allen Property Custodian, et al. v. KANAWHA VALLEY BANK et al.
    No. 3057.
    Circuit Court of Appeals, Fourth Circuit.
    April 13, 1931.

      P. H. Marcum, Sp. Asst. to Atty. Gen. (James Damron, U. S. Atty., and O'key P. Keadle, Asst. U. S. Atty., both of Huntington, W. Va., and Thomas E. Rhodes, Sp. Asst. to Atty. Gen., on the brief), for appellants.
    Fred O. Blue, of Charleston, W. Va. (Payne, Minor & Bouchelle and W. D. Payne, all of Charleston, W. Va., on the brief), for appellees.
    Before PARKER, Circuit Judge, and WEBB and GLENN, District Judges.
   WEBB, District Judge.

The appellants appealed from a decree of the District Court of the United States for the Southern District of West Virginia dated April 14, 1930, overruling the motion of the-appellants to dismiss the amended bill of complaint, in which decree it was “adjudged, ordered and decreed that the defendants, Howard Sutherland, as Alien Property Custodian, and Walter 0. Woods, as Treasurer of the United States, and each of them, do pay, or cause to be paid, to the plaintiffs or to their counsel of record in this cause, said sum of $21,000, together with the accrued interest thereon, less reasonable and necessary administrative expenses, to be applied and credited by said banks, plaintiffs herein, on the several bonds of the Becker Steel Company of America held and owned by said plaintiffs in the respective amounts as above set forth.”

It is agreed that the statement of faets as presented by counsel for appellants in their brief is correct, and therefore the court adopts the statement, which is substantially as follows:

The complainants, appellees herein, filed their bill of complaint on March 15, 1927, the complainants being the Kanawha Valley Bank, the Charleston National Bank, and the Citizens’ National Bank, under section 9 of the Trading with the Enemy Aet, as amended by the Aet of March 4, 1923 (42 Stat. 1511, c. 285 [50 USCA Appendix § 9 note]) against Howard Sutherland, as Alien Property Custodian of the United States, •and Andrew W. Mellon, as Treasurer of the United States, Becker Steel Company of America, Reinhold Becker, Stahlwerk-Becker Aetiengesellsehaft, and the Title Guarantee & Trust Company, as trustee to recover an alleged debt claimed to be due and owing to the complainants out of certain moneys and other property held by the Alien Property Custodian or the Treasurer of the United States, as belonging to, or held for the account of, Stahlwerk-Beeker Actiengesell-" sehaft.

The bill of complaint alleges, among other things, that on or before July 1, 1914, the Becker Steel Company of America issued $500,000 worth of first mortgage bonds, which were secured by a deed of trust covering its entire holdings and property in the United States. The Stahlwerk-Becker Actiengesellsehaft (which we shall hereafter refer to as the German corporation), for value received, guaranteed the payment of both principal and interest on these bonds. Said guaranty was indorsed upon the back of each of said bonds by William Peters, attorney in fact for the German corporation, which indorsement is as follows:

“For value received the Stahlwerk-Beeker Aetiengesellsehaft, of Willich, Germany, hereby guarantees to the holder hereof the payment of the principal and interest mentioned in the within bond of the Becker Steel Company of America, according to the terms, covenants and conditions thereof. In witness whereof the Stahlwerk-Beeker Aetiengesellschaft has caused its corporate name to be signed hereto by its attorney in fact, this first day of July, 1914.
“Stahlwerk-Beeker Aetiengesellsehaft,
“By Wm. Peters, Attorney in Fact.”

Each of these bonds was certified to by the Title Guarantee & Trust Company, of New York, as trustee. The complainants, appellees here, that is, the Kanawha Valley Bank, the Charleston National Bank, and the Citizens’ National Bank, became the owners and holders of certain of these bonds in the respective amounts of $5,500 each, with all coupons for interest on these bonds attached thereto, including those for July, 1926, and that the Alien Property Custodian and the Treasurer of the United States, by virtue of a seizure under the provisions of the Trading with the Enemy Act, now hold certain moneys belonging to the German corporation, out of which said debt, if found valid, may or should be paid.

On April 6, 1927, the Title Guarantee & Trust Company, as trustee, filed its motion to dismiss and answer to the bill of complaint. Thereafter, on April 7, 1927, Howard Sutherland, as Alien Property Custodian, and Prank White, as Treasurer of the United States, filed their separate motions to dismiss and answer to the bill of complaint exhibited against them by the Kanawha Valley Bank, the Charleston National Bank, and the Citizens’ National Bank, and thereafter the said Frank White was substituted in the place and stead of Andrew W. Mellon as Treasurer of the United States, and thereafter, on May 13, 1927, an order was entered by the court in the cause as follows: “This day came the complainants by counsel and tendered their amended bill in this cause, and the same is ordered filed. And it appearing that the said Alien Property Custodian and Frank White, as Treasurer of the United States, have separately and severally moved to dismiss the original bill in this cause, and no orders having been taken upon said motion to be dismissed, and the said defendants having answered said bill, on motion of the complainants the said motion and answer are hereby treated as motion and answer to the original, as well as to the amended bill, and no subpoena is required to issue thereon against the defendants, Howard Sutherland, as Alien Property Custodian, and the said Frank White, Treasurer of the United States, but nothing herein shall bar the Alien Property Custodian and the said Frank White from filing additional motion and answer to said amended bill. It is further ordered that this ease be, and the same is, dismissed as to Andrew W. Mellon, Secretary of the Treasury of the United States of America.”

On April 14,1930, by stipulation between counsel, the petition of the Kanawha National Bank, of Charleston, praying that it be made a party plaintiff in this cause, was ordered to be filed, and it thereupon became a party plaintiff for the same purpose and effect as though originally a complainant in the bill, and Walter 0. Woods was substituted as a party defendant in the place and stead of Frank White as Treasurer of the United States, and the complainants’ original bill was ordered amended in the following respect: (1) By adding the following words to paragraph 10 of said original bill: “And they aver that all of said bonds-were acquired for the value on the-day of-, 1915, and default in the payment of interest thereon was made for the first time on July 1, 1921, and that prior to Oetoher 6, 1917, all of said bonds were owing to and owned by the plaintiffs as aforesaid and the same constituted a debt of the StahlwerkBecker Aetiengesellschaft within the meaning of Section 9 of the ‘Trading with the Enemy Act’ (40 Stat. as amended by Act approved June 5, 1920.)”

The court below, having heard all the facts, entered a final decree on the merits in favor of the complainants in the bill, appellees herein. This decree' is dated April 14, 1930, and from this decree the Alien Property Custodian and the Treasurer of the United States have prosecuted their appeal to this court. The respondents in the original bill (now appellants) admit that the debt which the complainants seek to recover would be allowable under the provisions of section 9 (a), as limited by section 9 (e) of the Trading with the Enemy Act, 50 USCA Appendix § 9(a, e) had the default upon the part of Becker Steel Company of America in the payment of the interest on said bonds occurred prior to October 6,1917. The record shows that the Becker Steel Company of America did not default in the payment of the interest due the appellees, the complainants, until July 1, 1924.

Counsel for appellants, in their brief, correctly state that the only question involved in this appeal is: Did the German corporation, as the guarantor of the bonds of the Becker Steel Company of America, by its act of guaranty, create a debt, such as was “owing to and owned by” the complainants pri- or to October 6, 1917?

We are therefore called upon to construe the meaning of a part of section 9 (a) of the Trading with Enemy Act, which is as follows : “Any person not an enemy or ally of enemy claiming any interest, right, or title in any money or other property which may have been conveyed, transferred, assigned, delivered, or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United .States, or to whom any debt may be owing from an enemy or ally of enemy, whose property or any part thereof shall have been conveyed, transferred, assigned, delivered or paid to the Alien Property Custodian or seized by him hereunder and held by him or by the Treasurer of the United States may file with the said Custodian a notice of his claim under oath and in such form and eontaining such particulars as the said custodian shall require,” etc.

Section 9 (e) of said act provides: “No money or other property shall be returned nor any debt allowed under this section to any person who is a citizen or subject of any nation whieh was associated with the United States in the prosecution of the war, unless such nation in like ease extends reciprocal rights to citizens of the United States; nor in any event shall a debt be allowed under this section unless it was owing to and owned by the claimant prior to October 6, 1917,” etc.

Was the guaranty of the German corporation a debt owing to and owned by the complainants prior to October 16, 1917? We think it was. Whatever other objects the Congress may have had in passing the Trading with the Enemy Act,-it can be boldly and truthfully said that its purpose was not to punish American citizens who had valid claims, debts, or obligations against alien enemies. It is also perfectly clear that Congress intended to stop trading with alien enemies after October 6, 1917. All alien enemy property was to be taken over in order to weaken the enemy, hut not to injure friendly citizens of the United States, or to relieve alien enemies of just obligations.

Mr. Justice Butler, in the case of Miller v. Robertson, 266 U. S. 248, 45 S. Ct. 73, 75, 69 L. Ed. 265, tersely says: “The purpose of section 9 was to prevent or lessen losses and inconvenience liable to result to non-enemy persons. This provision is highly remedial and should be liberally construed to effect the purposes of Congress and to give remedy in all cases intended to be covered. * * * The just purpose of the section is not to be defeated by a narrow interpretation or by unnecessarily restricting the meaning of the word within technical limitations. * * * The meaning of the word ‘debt/ as used in many statutes, is not restricted to demands enforceable in actions of debt. * * * There is nothing in the language of the act or the reasons for its enactment to indicate a purpose to restrict the right to institute suits in equity as authorized in section 9 to causes of action cognizable in debt under technical procedural rules. The words of a statute are to be read in their natural- and ordinary sense, giving them a meaning to their full extent and capacity, unless some strong reason to the contrary appears.”

We think Congress intended to use the word “debt” in the popular sense — a sense in whieh it is understood by the average person, and not that restricted, technical, common-law sense in whieh the word debt is often used. Webster defines debt as “that whieh one person is bound to pay to another, or to perform for his benefit; that of which payment is liable to be exacted; due; obligation ; liability.”

Undoubtedly this guaranty on the part of the German corporation was an obligation or a liability. “Obligation” and “liability” are broader terms than either “guaranty” or “surety.” It is admitted that, had default in the payment of the bonds taken place pri- or to October, 1917, the German corporation would have been required to malee the bonds good out of its moneys and property.

The obligation whieh the German corporation entered into continued until the failure on the part of the Becker Steel Company of America, and it seems to us that the funds derived from the seizure and sale of the German corporation should be impressed with the liability or obligation of the corporation. Congress certainly never intended to destroy such an obligation or liability as this guaranty furnished, or to withdraw from the reach of citizens of this country property belonging to alien enemies whieh could have been subjected by such citizens to the satisfaction of claims held by them, even though liability on such claims may have been contingent at the time of the sequestration of the property. No doubt these complainant banks would never have bought the bonds in question had it not been for this guaranty of the German corporation, and it would seem to be a strained interpretation of the statute to hold that Congress intended virtually to destroy this security whieh the banks held from the corporation.

Whether the indorsement of the German corporation on the back of these bonds was a surety or a guaranty, it seems to us, makes no difference, since it should be construed that the indorsement called a guaranty was a valid obligation or liability, and it would be too technical to hold that this obligation cannot be enforced against an alien enemy, or the property of an alien enemy in the hands of the Custodian of Alien Property. The validity of this guaranty or liability or obligation did not depend upon the time when the Becker Steel Company of America should default.

There is no way by whieh the German corporation could have been relieved of its liability, except by the consent of the complainant bondholders. The default brought about the collectibility, if we might use that expression, of the guaranty or obligation, but by no construction of language can we hold that such default constituted a “trading with the enemy.” At the time of the default wo believe the German corporation’s property had already been taken over and probably converted by the Alien Property Custodian. We must therefore hold that this guaranty was a continuing and valid obligation on the part of the German corporation, which Congress did not intend to abrogate and which was as valid to all intents and purposes after the passage of the act of October 6, 1917, as before. We think the obligation or liability created by the guaranty on the back of each of the bonds was such a “debt”, as to come within the meaning of the section of the statute in question.

The decree of the District Court is affirmed.


author: FITZHENRY, District Judge.

text:
    JOHNSON v. BURKE MANOR BLDG. CORPORATION et al.
    No. 4419.
    Circuit Court of Appeals, Seventh Circuit.
    April 13, 1931.

      Millard R. Powers, of Chicago, Ill., for appellant.
    Adolph S. Froehlich and Edmund W. Froehlich, both of Chicago, Ill., for appellee Burke Manor Bldg. Corporation.
    Sylvanus George Lee, of Chicago, Ill., for appellee Wenzel.
    Before ALSCHULER and SPARKS, Circuit Judges, and FITZHENRY, District Judge.
   FITZHENRY, District Judge.

Appellant’s bill, to recover a preference, was dismissed for want of equity by the District Court. The Burke Manor Building Corporation owned, and leased to the bankrupt, a hotel property. In the lease there was a conveyance to the building corporation of all the furniture, furnishings, fixtures, and other equipment, and all renewals or replacements thereof, installed by the lessee, as security and pledge to the building corporation that the hotel company would meet its obligations under the lease. The hotel company defaulted in the payment of its rent after July I, 1928.

The building corporation sued and recovered judgment for the rent for the months of July, August, and September. In November it instituted a second suit for rent, for the months of October and November, and also recovered a judgment. A creditors’ bill was filed in the superior court of Cook county. On December 15, 1928, the Union Bank of Chicago was appointed receiver.

Prior thereto, October 10, 1928, a bill was filed in the superior court of Cook county by the building corporation against the hotel company and Erwin L. Wenzel to establish and foreclose its contract or equitable lien upon the pledged property of the hotel company in the leased premises. The receiver attempted to operate the hotel business, found it unprofitable, and, on February 2, 1929, petitioned the superior court for leave to cease operation of the business.

On February 4, 1929, the building corporation, appellee, filed its sworn petition in the creditors’ suit, reciting its lease and the provisions thereof, the' default of the hotel company, and the pendency of the foreclosure suit instituted October 10, 1928, and prayed that it be awarded the possession of the property, both real and personal, in the hands of the receiver. Both the receiver and the hotel company were ruled to answer the petition and duly served with notice. Later, the hotel company filed its demurrer thereto, which was overruled, and on February 14, 1929, the receiver was ordered by the court to deliver possession of the real and personal property in question to the building corporation.

On March 18 following, the master to whom had been referred the foreclosure suit filed his report, sustaining the contentions of the complainant therein in every particular. Three days thereafter, March 21, 1929, the petition in bankruptcy herein was filed. A temporary restraining order was issued by the referee, restraining the further prosecution of the foreclosure proceeding, which' was later dissolved, and the foreclosure suit set for hearing in the superior court October 10, 1929. Appellant was elected trustee in bankruptcy.

The day prior to the hearing, appellant’s bill in this case was filed in the District Court. An injunction, preventing the further prosecution of the foreclosure suit in the superior court, was prayed, and a motion for a temporary injunction was argued, but no order was made thereon. The foreclosure suit went to a hearing, and on October 15, 1929, a final decree was entered therein, declaring the lien of the building corporation and ordering a sale of the property to satisfy it, holding that the lien was superior to all liens, rights, titles, and interest in the property involved of the hotel company or Erwin L. Wenzel, and all parties claiming by, through, or under them, or either of them," and ordering that a sale be made; that the Wenzel chattel mortgage be set aside and the defendants and all persons claiming by, through, or under them, or either of them, subsequent to the commencement of this suit, be forever barred and foreclosed of and from any right, title, or equity of redemption or claim of, in, and to the property sold. The sale took place, the property was purchased by the building corporation,' and the sale approved by the court.

October 21, 1929, the building association filed its answer to appellant’s bill in this case, denying the jurisdiction of the court, and reciting the facts substantially as above outlined, and subject to its reservation upon the question of jurisdiction.

The lease in question was executed August 14, 1925. The bankrupt hotel company was organized July 25, 1925. The building involved and contracted for under the lease was completed early in 1927. There were some claims of breaches by the respective parties, but on March 10, 1927, a definite written agreement was entered into, settling all controverted questions, and the hotel company went into possession of the building and furnishings, as contemplated under the contract.

Appellee Erwin L. Wenzel was the controlling spirit and president of the hotel company from its beginning, and later, prior to September 12, 1928, became the sole equitable owner of the entire capital stock of the hotel company. The master in the superior court ease, the foreclosure suit, found that Wenzel ordered his brother, the manager of the hotel, to cease paying any further rent to the building corporation, in an effort to force a voluntary reduction in the rent reserved. He was unsuccessful in this, then resigned as president, had the secretary resign, other officers elected, and caused the hotel company to execute a chattel mortgage to him, covering the furniture, furnishings, and fixtures of the hotel company in the building corporation’s building, to secure the payment to him, the said Wenzel, of the sum of $44,466.62. The chattel mortgage was executed and acknowledged in due form and filed for record.

In the foreclosure suit, instituted October 10,1928, the building corporation sought to set aside this chattel mortgage as fraudulent, in violation of the express provisions of the lease and the assignment and pledge sections thereof.

The equitable lien of the building corporation grew out of the written indenture of lease executed more than two and a half years prior to the filing of the petition in bankruptcy. The furniture, furnishings, and equipment of the hotel company were free and clear of liens of every kind and character until the equitable owner of the hotel company’s entire property attempted to secure a lien for his own benefit, and, undoubtedly, for the purpose of forcing a reduction in the rent; and the property of the hotel company was regarded by the respective parties, and preserved, as security to the building corporation, according to the terms of the pledge; and it was considered there existed a valid, subsisting, binding lien, as between the building corporation and the hotel company, upon the property in question. The actual physical possession of the property was delivered to the building corporation on February 14, 1929, before the filing of the petition in bankruptcy herein on March 21.

Section 60b of the Bankruptcy Act, 11 USCA § 96(b), authorizing the recovery or setting aside of unlawful preferences, contains this provision: “And for the purpose of such recovery any court of bankruptcy, as hereinbefore defined, and.any State court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.”

There can be no question as to the jurisdiction of the superior court of Cook county over the parties and the subject-matter from and after October 10, 1928.

The foreclosure suit of October 10, 1928, and the creditors’ bill to dissolve the corporation and for the appointment of a receiver, of December 15, 1928, were prosecuted for the purpose of lawfully aiding the building corporation in securing the benefit of its pledge of the property of the hotel company. These two pieces of litigation were, in effect, consolidated on February 3, 1929, when the building corporation filed its petition in the creditors’ suit, asking the court to direct its receiver to turn over the property in question to it. The hotel company appeared and demurred to this petition. Its contentions were adjudicated against it, and the property in question was ordered delivered to the building corporation. With the property in the hands of the building corporation, the cause proceeded to final decree. While these two causes were not suits concerning an alleged preference, they did involve the assertion by the building corporation of substantial equitable rights. The hotel company was properly in court as a defendant in both of the suits, and was at liberty to assert any rights or to interpose any defense it had to the equitable rights sought to be asserted by the complainant.

Once the jurisdiction of the state court attaches, the federal court is without jurisdiction. Harkin v. Brundage, 276 U. S. 36-55, 48 S. Ct. 268, 72 L. Ed. 457; Farmers’ Loan & Trust Co. v. Lake Street Ry. Co., 177 U. S. 51, 20 S. Ct. 564, 44 L. Ed. 667. And this is true, notwithstanding the res was not in the actual custody of the state court or its receiver. Kline v. Burke Const. Co., 260 U. S. 226, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077; Covell v. Heyman, 111 U. S. 176, 182, 4 S. Ct. 355, 28 L. Ed. 390. However, in this case the state court, either itself or through the corporation into whose possession the state court had committed it, had the custody of the res, whereby the state court had exclusive jurisdiction. Lion Bonding Co. v. Karatz, 262 U. S. 77, 88, 43 S. Ct. 480, 67 L. Ed. 871.

It is contended that, this being a bill to recover an unlawful preference, the District Court had full jurisdiction to proceed to determine the question of a preference. More than a year before the filing of the bill of the trustee herein, and more than five months before bankruptcy, the litigation in the superior court of Cook county was started. The bankrupt hotel company was a party defendant in the litigation concerning the property and property rights affected. The rights of the trustee could not be greater than the rights of the hotel company prior to the institution of the bankruptcy proceeding. In re Abell (C. C. A.) 19 F.(2d) 965, 968. In that ease Judge Page quoted from Everett v. Judson, 228 U. S. 474, 479, 33 S. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154, construing the amendment of 1910 to the Bankruptcy Act, changing the status of the trustee in bankruptcy: “We think that the purpose of the law was to fix the line of cleavage with reference to the condition of the bankrupt estate as of the time at which the petition was filed and that the property which vests in the trustee at the time of adjudication is that which the bankrupt owned at the time of the filing of the petition.”

The final decree of the superior court making disposition of the rights of the bankrupt hotel company and Wenzel is res adjudicata of the subject-matter of this proceeding. Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, 37 S. Ct. 506, 61 L. Ed. 1148; Commercial Electric S. Co. v. Curtis (C. C. A.) 288 F. 657.

As between the lessor and lessee, the former, the building corporation, had at all times a valid, equitable lien upon the furniture, furnishings, and equipment of the hotel company, and the description of the property was such that it could readily be identified. Southern Surety Co. v. People’s Bank, 332 Ill. 362, 163 N. E. 659, 662. There the Illinois Supreme Court said: “A description which wifi enable a third person to identify the property, aided by inquiry which the instrument suggests, is sufficient. Pike v. Colvin, 67 Ill. 227. A mortgage of after-acquired property is valid, if the mortgage so provides. Where the mortgage so provides, possession of the property by the mortgagee on breach of condition validates the mortgage as to after-acquired property or property not in existence when the mortgage was executed.”

Appellant seriously contends that, because the building corporation did not possess itself of the pledged property until within four months of the filing of the petition in bankruptcy, its possession was futile under the Bankruptcy Act. This position is untenable. Burrowes v. Nimocks (C. C. A.) 35 F.(2d) 152, 156. In that case Judge Parker said, among other things: “It is true that a pledge is not good at law without delivery; but the doctrine is well established in North Carolina and elsewhere that the delivery need not he contemporaneous with the contract of pledge. If made subsequently, it relates hack to the contract and gives it validity.”

The rule in Illinois in this respect is the same as in North Carolina. So. Surety Co. v. Bank, supra.

A pledge or contract for a pledge, ineffectual for want of delivery, may be rendered valid by a subsequent delivery, even as against an intermediate creditor at large of the pledgor. Of course, such subsequent delivery would not prevail against a creditor who had, between the time of the making of the contract and taking possession under it, acquired a specific lien upon the thing pledged by attachment or levy of execution. The only other obstacle which could prevent such a transaction from being effectual would he the intervention of fraud. Jones on Pledges, § 33.

It is the settled rule in bankruptcy that, where a lien is good as between the parties, hut because of the lack of registration or possession not good against lien creditors, its registration, or in a proper case the taking of possession of the property before bankruptcy, will render it valid as against the trustee in bankruptcy, and will not be held to' be the obtaining of a preference. Finance & Guaranty Co. v. Oppenhimer) 276 U. S. 10, 48 S. Ct. 209, 72 L. Ed. 443; Bailey v. Baker Ice Machine Co., 239 U. S. 268, 36 S. Ct. 50, 60 L. Ed. 275.

The entire record before us is persuasive of the fact that the efforts of the building corporation (appellee) to avail itself of the benefit of the security and pledge, which was lawfully given it by the hotel company, have none of the essential elements of a voidable preference. The language used by the Court of Appeals of the Eighth Circuit, in First National Bank v. Live Stock National Bank, 31 F.(2d) 416, 419, is especially apt: “The whole purpose of the Bankruptcy Act is to protect against preferences and frauds, and not to defraud one who, in good faith, has advanced or loaned money ón security to one who was insolvent at the time of the transaction, or later became so, and went into bankruptcy.”

We therefore conclude that the District Court properly dismissed appellant’s bill for want of equity. Therefore the decree must be, and is hereby, affirmed.