text:
    TRICE v. TRICE.
    (Court of Appeals of District of Columbia.
    Submitted April 9, 1925.
    Decided May 4, 1925.)
    No. 4179.
    Divorce <§=>130 — Evidence of cruelty held insufficient to warrant divorce a mensa et thoro.
    Evidence of cruelty helé insufficient to warrant divorce a mensa et thoro, under Code, § 966.
    Appeal from Supreme Court of District of Columbia.
    Suit for divorce by Lydia May Trice against Wade H. Trice. Decree for plaintiff, and defendant appeals.
    Reversed and remanded, with directions to dismiss.
    T. H. Patterson, J. A. Thompson, and Crandal Mackey, all of Washington, D. C., for appellant.'
    Campbell Howard and I. R. Richards, both of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB and vAN ORSDEL, Associate Justices.
   ROBB, Associate Justice.

Appeal from a decree in the Supreme Court of the District granting a divorce a mensa et thoro to the plaintiff, and awarding her the custody of the two children of the parties, with alimony.

The parties were married in 1904, and in February of 1923 the wife, refusing longer to live with her husband, filed her bill for divorce. In her direct testimony she stated that her married life had been unpleasant, “but was worse during last three years; that defendant was given to exhibitions of temper such as slamming doors and kicking chairs, cursing and swearing”; that on one occasion defendant “brandished his revolver in her presence,” and that she was afraid he would do her bodily harm; that she thought he was running around with other women; that one night defendant told her he would throw her out of the window; that on another occasion, several years ago, she saw him, while on duty as a policeman, “talk to a red headed woman on the street”; that she objected to his visiting the home of a former policeman, because it was her belief that this man had been divorced by his wife on the ground of adultery; that there was no possibility of a reconciliation, although the defendant, “since the separation, had written her a letter asking her to become reconciled to him, but she had declined.”

On cross-examination, plaintiff admitted “that the defendant had at all times during their married life brought his salary home to her and turned it over to her in its entirety, and that she gave him a small allowance for personal needs”; that defendant objected to her running bills or establishing credit at different stores; and that, at the time defendant inserted a notice in newspapers that he would not be responsible for debts contracted by any person other than himself, “he was still turning over his salary to her. * * * Plaintiff admitted that defendant had never actually brandished a revolver or threatened her with one; that what she termed ‘brandishing a revolver’ on the occasion referred to in her direct testimony was on one occasion when, after words with her, defendant suddenly put his hand in his hip pocket and drew out his handkerchief, plaintiff having thought his pistol was in that pocket; * * * that what she meant, on direct examination, to the effect that defendant once threatened to throw her out of the window, was on the occasion referred to defendant had returned from work and gone to bed, and she went into the room, and while there, defendant had said that he felt so wrought up, she made him feel like throwing her out of the window.” Plaintiff further admitted that part of their domestic trouble was over their son; that plaintiff “had been nagging or complaining at defendant for 10 years about association” with a certain policeman; “that defendant during all their 19 years of married life had never struck her or laid violent hands on her in any way, and had never actually threatened her with violence.”

The son, a lad of 18 years, testifying for the plaintiff, stated that his father was in the habit of cursing and swearing in the presence of his mother, and “was given to violent exhibitions of temper by slamming doors”; that his father charged him with staying out late at night; and that “his mother had objected to the father saying anything to him about it.”

The only other testimony on behalf of the wife that need be noticed is found in a deposition by a Mrs. Pumphrey. The testimony of this witness may be summarized in her own language as follows: “Witness said it was not from Mr. Trice’s (defendant’s) talk; it was from his looks that caused her to go all to pieces and to fear him; that she diq¡ not believe he would do her bodily harm, huí was afraid he would do Mrs. Trice bodily harm; that she never heard defendant utter any word indicating that he would do the witness or Mrs. Trice bodily harm. .‘It was the looks of the man.’ * • * * That all she had against Mr. Trice was his constant nagging and fussing; that what she called nagging was defendant failing ever to agree with Ms wife on anytMng in the way he did; ■* * * that the only two things which witness thought should entitle Mrs. Trice to a legal separation and custody of the children were Mr. Trice’s looks and what the witness had described as nagging; that was all witness knew about the case.”

The evidence for the defendant tended to show that he is a member in good standing of a church, bears an excellent reputation for morality, and is generally regarded as a man of Mndly disposition and courteous demeanor. The former police officer, mentioned by the wife in her testimony, stated that he was not divorced from Ms wife but separated from her, and that the juvenile ■court, after due hearing, had held that his wife was not a proper person to have the custody and control of their infant children and had placed them in his control.

Testifying in his own hehalf, defendant stated that his reason for inserting the newspaper notice was that Ms wife had become improvident and would contract bills without his knowledge and consent, and that it worried him to be in debt; that he had objected to the son running around with boys whose reputation for morals and deportment were not of the best. He further testified that he was ready to resume marital relations with the plaintiff.

“Marriage, as creating the most important relation in life, as having more to do with the morals and civilization of a people than any other institution, has always been subject to the control of the Legislature. That body prescribes the age at which parties may contract to marry, the procedure or form essential to constitute marriage, the duties and obligations it creates, its effects upon the property rights of both, present and prospective, and the acts wMeh may constitute grounds for its dissolution.” Maynard v. Hill, 125 U. S. 190, 205, 8 S. Ct. 723, 726, 31 L. Ed. 654.

In this jurisdiction, there is but one ground for absolute divorce, adultery, but “legal separation from bed and board may be granted for drunkenness, cruelty, or desertion.” Code, § 966. The ground for the present action is cruelty.

In Waltenberg v. Waltenberg, 52 Wash. Law Rep. 423, 54 App. D. C. 383, 298 F. 842, this court expressed the' view that, in the absence of physical violence, a case will be brought-witMn the statute if the evidence establishes conduct creating a state of mind which, operating upon the physical' system, produces bodily injury, and that in determining this question all the circumstances of the case will be considered. We have also ruled that where there is a conflict in the testimony, and the trial court has had opportunity to observe the demeanor of the witnesses, and therefore has been in a better position to determine their credibility, a finding by that court will be disturbed here only when palpably wrong. McClaren v. McClaren, 45 App. D. C. 238; Cole v. Cole, 52 App. D. C. 302, 286 F. 764.

But in the present ease there is practically no conflict in the testimony, and, even if we accepted the testimony on behalf of the plaintiff at its face value, the ease made by the wife falls far short of establishing cruelty within the rule announced in the cases to wMch we have referred. We cannot escape the conviction that this wife has permitted her imagination to outrun her discretion; that she has looked as through a magnifying glass at incidents really trivial and so treated by those recognizing the reciprocal obligations of husband and wife. To grant a divorce in circumstances such as these would be to encourage disregard of those obligations and to weaken the ties that bind together not only the home but society itself. A husband who, for 19 years, turns over to Ms wife Ms entire earnings and receives from her “a small allowance for personal needs,” whose character and industry stand unchallenged, certainly may not be said to be cruel to his wife because he has not, at all times and in all circumstances, conducted himself in a gentlemanly and agreeable manner. His desire that his wife keep within their means or income, and that their son have no objectionable companions, hardly is to be condemned. In short, a reading of the entire record indicates that this wife and not her husband dominated the home; and, while she undoubtedly was a faithful wife, that she permitted herself .to take an unjustifiable step in filing tMs bill.

The decree must be reversed, with costs to be paid by the appellant, and the cause remanded, with directions to dismiss the'bill.

Reversed.


source: Caselaw Access Project

author: HUNT, Circuit Judge

license: Public Domain

text:
    BUCKLEY v. OCEANIC S. S. CO.
    (Circuit Court of Appeals, Ninth Circuit.
    May 18, 1925.
    Rehearing Denied June 22, 1925.)
    No. 4369.
    1. Limitation of actions @=28(1) — Seamen @= 33 — Seaman’s suit for double wages is for wages and not for penalty, and must be brought within two-year period of limitation.
    Double wages recoverable by seaman, under Rev. St. § 4529 (Comp. St. § 8320), during wrongful delay in payment of wages due, are considered as wages and not as penalty, and claim therefor in law court held governed by two-year statute of limitation (Code Civ. Proe. Cal. § 339), rather than by Rev. St. § 1047 (Comp. St. § 1712), permitting suits to recover penalty to be commenced within five years after accrual.
    2. Seamen @=33 — Seaman suing in law court for wages is bound to conform to statute which by lex fori regulates means to enforce right.
    Seaman, availing himself of right under Admiralty Act to bring action in law court for wages claimed, is bound to conform to statute which by the lex fori regulates the means to enforce the right.
    3. Seamen @=7 — Seaman, who shipped under written articles as steward’s helper, held not shipped in violation of statute, though he served as able seaman.
    Seaman, who shipped as steward’s helper at rate of 25 cents per month and signed shipping articles to that effect, held: not shipped in violation of Rev. St. § 4511, as amended Act March 3, 1897 (Comp. St. § 8300), and section 4516 as amended by Act Dee. 21, 1898, and Act March 4, 1915 (Comp. St. § 8306), requiring master to make agreement in writing with every seaman whom he carries as one of crew,, though lie actually served as able seaman rathei: than as steward’s helper.
    4. Seamen @=17 — Letter given by first officer hsid but recommendation, and not admission of liability for able seaman's pay.
    Where seaman, who shipped as steward’s helper, actually served as able seaman, and on discharge was given letter by first officer to shipping commissioner stating that he had been so employed and bad performed his duties satisfactorily, held, letter only amounted to recommendation of plaintiff as seaman, and was not construable as acknowledgment in writing of liability for able seaman’s pay.
    In Error to the District Court of the United States for the Southern Division of the Northern District of California; John 5. Partridge, Judge.
    Action by George A. Buckley against the Oceanic Steamship Company. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    This action, commenced on July 16, 1923, was for seaman’s wages, and doubles wages. Sections 8314 and 8320, U. S. Comp. St.
    Plaintiff set forth that on May 29, 1921, he signed shipping articles agreeing to serve the defendant on the ship Ventura on a voyage from Sidney, Australia, to San Francisco, Cal., as a steward’s helper at the rate of 25 cents per month; that after signing the articles he was ordered to do the duties of an able seaman without any new agreement being made in writing, and that he continued as an able seaman until the ship arrived at San Francisco; that when the ship arrived in San Francisco, plaintiff had served as- an able seaman for 21 days; that in order to get his wages the first officer gave him a letter to the shipping commissioner, stating that he had been employed on deck as an able seaman and had performed his duties satisfactorily; that he went to the commissioner to obtain bis discharge and to receive his money, and signed a release in full expecting to get the money, but that he was paid only 17 cents, as a steward’s helper, and was refused any further payment. He asks for general relief and recovery of not less than $100 per month from June 27, 1921, to date of trial. Demurrer to the complaint was sustained, and judgment entered for the defendant. The District Court held that as the action was on the law side of the court, the state statute of limitations (Cal. Code Cr. Proe. § 339) was applicable.
    The statute cited provides that an action upon a contract or obligation not founded upon an instrument in writing (other than that mentioned in subdivision 2, § 337, of the Code) must be commenced within two years.
    S. T. Hogevoll, of San Francisco, Cal., for plaintiff in error.
    Irving H. Frank and Nathan H. Frank, both of San Francisco, Cal., for defendant in error.
    Before- GILBERT, HUNT, and RUDKIN, Circuit Judges.
   HUNT, Circuit Judge

(after stating the facts as above). Plaintiff in error contends that in suing for two days’ pay for each day’s delay in payment of wages claimed to be due to him as an able seaman (section 4529, Rev, St. [Comp. St. § 8320]) his action is for a penalty, and therefore governed by section 1047, Revised Statutes (Comp. St. § 1712), which provides that no suit for any penalty accruing under the laws of the United States shall be maintained except where otherwise specially provided, unless the same is commenced within five years from the time when the penalty accrued.

Section 4529 of the Revised Statutes provides: “* * * Every master or owner who refuses or neglects to make payment in the manner hereinbefore mentioned without sufficient cause shall pay to .the seaman a sum equal to two days’ pay for eaeh and every day during which payment is delayed beyond the respective periods, which sum shall be recoverable as wages in any claim made before the court. * * * ” The nature of that statute (section 4529), whether it is remedial or penal, has been considered by this and other courts, which have held that sums recoverable under its provisions are treated as wages — compensation to seamen, rather than punishment of the master. Gerber v. Spencer (C. C. A.) 278 F. 886; Coz v. Lykes Brothers, 237 N. Y. 376, 143 N. E. 226.

Plaintiff, having availed himself of the right given by the Admiralty Act to bring his action in the law court, is bound to conform to the statutes which by the lex fori regulate the means to enforce the right. Michigan Ins. Bank v. Eldred, 130 U. S. 693, 9 S. Ct. 690, 32 L. Ed. 1080; Bonam v. Southern Menhaden Corporation (D. C.) 284 F. 360; McGrath v. Panama R. Co. (C. C. A.) 298 F. 303.

It is said that plaintiff below was shipped in violation of sections 8300, Compiled Statutes (R. S. § 4511, as amended by Act of March 3, 1897), and 8306 (R. S. § 4516, as amended by Act of December 21, 1898, and Act of March 4, 1915). Section 8300 requires a master, before proceeding on a voyage, to make an agreement in writing or print with every seaman whom he carries as one of the crew, which shall contain, among other things, number and description of the crew, specifying their respective employments, the capacity in which eaeh seaman is to serve, and the amount of wages eaeh seaman is to receive. Section 8306 provides that in ease of desertion or casualty resulting in the loss of seamen, the master must ship, if obtainable, a number equal to the number of those of whose services he has been, deprived, who must be of the same or higher grade or rating with those whose places they fill. But as the plaintiff Buckley was employed as a steward’s helper, by section 8392 of the Compiled Statutes he is deemed and taken to, be a seaman, and therefore he shows by his own pleading that the statutes cited (sections 8300 and 8306) were complied with when; on May 29, 1921, he signed the shipping articles. "We see no reason and find no authority for holding that when his position was changed from that of seaman to an able seaman, it was required that he sign again.

Inasmuch as the claim for the two days’ pay under section 4529, supra, 'is for extra wages as incidental to the wages proper, it stands upon no .different basis than does the claim for wages proper. The letter of the first officer can only be regarded as a recommendation of plaintiff as a seaman. By no possibility can it be held to he an acknowledgment of the debt In writing.

We are constrained to decide that the remedy plaintiff seeks is barred by the statute of limitations.

The judgment is affirmed.


author: GILBERT, Circuit Judge.

text:
    WHITAKER v. UNITED STATES.
    (Circuit Court of Appeals, Ninth Circuit.
    May 11, 1925.)
    No. 4345.
    1. Criminal law <§=>13 — Statute making it crime to transport stolen motor vehicles in interstate commerce held constitutional.
    National Motor Vehicle Theft Act, § 3 (Comp. St. Ann. Supp. 1923, § 10418d), making it crime to transport or cause to be transported in interstate commerce a motor vehicle knowing it to have been stolen, is constitutional.
    2. Receiving stolen goods <S=s7(I) — Indictment for transporting stolen moto'r vehicle need not allege owner’s name, value of automobile, or that it was stolen.
    Under National Motor Vehicle Theft Act, § 3 (Comp. St. Ann. Supp. 1923, § 10418d), indictment for transporting stolen motor vehicle need not allege owner's name, value of automobile, or directly that it was stolen.
    3. Receiving stolen goods <§=>9(2) — Instruction defining “commerce” and “interstate commerce” within National Motor Vehicle Theft Act held correct.
    Instruction that “commerce,” within National Motor Vehicle Theft Act, § 3 (Comp. St. Ann. Supp. 1923, § 1041Sd), means passing to and fro, and that “interstate commerce” meáns the transportation or causing to be moved from one state, territory, or District of Columbia, to another state, territory, or District of Columbia, and. that vehicle is transported when it is shipped by common carrier or moved on its own wheels, TieltL correct, and it was not error to refuse to instruct that meré transportation of automobile from state to state without view to pecuniary gain does not constitute transportation in interstate commerce.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Commerce; Interstate Commerce.]

      4. Receiving stolen goods i@=»l — Driving stolen automobile from state to state is in itself “interstate commerce.”
    Driving stolen-automobile from one state to another on its own power is in itself “interstate commerce,” within National Motor Vehicle Theft Act, § 3 (Comp. St. Ann. Supp. 1923, § 10418d), notwithstanding it carries no freight or passengers for hire.
    5. Criminal law <®=^l l70i/2(3) — Accused held not prejudiced by question asked of, but not answered by, codefendant testifying for government as to> other crimes committed by co-defendant.
    Where accused’s codefendant testifying for government was asked whether he committed any crimes other than those recounted, but accused’s objection thereto was sustained and jury instructed to imply nothing from question, held, that impression produced was favorable rather than prejudicial to accused, since evidence of other crimes committed by witness would tend to discredit him and would not incriminate accused.
    6. Criminal law <§=>l 170!/2 (3)— Accused held not prejudiced by question asked of, but unanswered by, codefendant testifying for government.
    In prosecution under National Motor Vehicle Theft Act, | 3 (Comp. St. Ann. Supp. 1923, § 10418d), for transporting stolen automobile in interstate commerce, accused was not prejudiced by question asked of, but not answered by, his codefendant testifying for government as ■'to whether codefendant took part in burning' certain automobile and whether he knew he was committing crime, where court admonished jury to imply nothing from question.
    7. Criminal law <§=M 169(2) — Testimony imputing additional crimes to accused held not prejudicial, where evidence of his guilt strong.
    In prosecution under Natipnal Motor Vehicle Theft Act, § 3 (Comp. St. Ann. Supp. 1923, § 10418d), for transporting stolen automobile, testimony of accused’s eodefendant, from which jury could imply that accused had illicit relations with anmarried woman of party, which court struck out and instructed jury to disregard, held not prejudicial, where evidence of accused’s guilt of offense charged was strong.
    In Error to the District Court of the United States for the Southern Division of the Southern-District of California; William P. James, Judge.
    Norman T. Whitaker was convicted of knowingly, willfully, unlawfully, and felo-niously transporting a stolen automobile in interstate commerce, and he brings error.
    Affirmed.
    McDonald & Thompson, of Los Angeles, Cal. (E. M. Van Meter, of Washington, D. C., and Chas. L. Smyth, of Philadelphia, Pa., of counsel), for plaintiff in error.
    Samuel W. McNabb, U. S. Atty., and John R. Layng, Sp. Asst. U. S. Atty., both of Los Angeles, Cal.
    Before GILBERT, HUNT, and RUDKIN, Circuit Judges.
   GILBERT, Circuit Judge.

The plaintiff in error and five others were indicted for violation of section 3 of the Act of Congress of October 29, 1919, known as the National Motor Vehicle Theft Act (Corqp. St. Ann. Supp. 1923, § 10418d), and were charged with knowingly, willfully, unlawfully, and feloniously transporting and causing to be transported a certain motor vehicle (describing the same), in interstate commerce from Ocean City, N. J., to Los Angeles, Cal., “they, and each of them, then and there well knowing the said motor vehicle to have been stolen, being not then and there the property of the said defendants or either of them.” The indictment further alleged that there was no consent of the owner of the motor to take, transport, or cause the same to be transported from Ocean City to Los Angeles. The plaintiff in error was found guilty as charged.

The contention that the act under which the conviction was had is unconstitutional is met and answered by the recent decision of the Supreme Court in Rae Brooks v. United States, 45 S. Ct. 345, 69 L. Ed. -. The contention that the indictment was insufficient, in that it failed to allege the ownership of the motor vehicle or the value thereof and contained no direct averment that the vehicle was stolen, is answered by the recent decision of this court in the ease of Poster v. United States, 4 F.(2d) 107, where it was held that such matters need not he set forth in the indictment; that the indictment is sufficient if it expressly and distinctly alleges every element entering into the offense as set forth in the statute and contains a specific description of the vehicle alleged to have been stolen.

Exception was taken to an instruction to the jury concerning the provisions of the statute, in which it was said: “Commerce means a passing to and fro; interstate commerce means the transportation (that is, causing to be moved) from one state, territory or the District of Columbia, to another state, territory or the District of Columbia. A vehicle is transported when it is shipped by common carrier or moved on its own wheels.” We are unable to see wherein the instruction is contrary to the meaning of “commerce” and “interstate commerce” as defined by the Supreme Court in Gibbons v. Ogden, 9 Wheat. 1, 6 L. Ed. 23, and other decisions of that court which are cited. In Hoke v. United States, 227 U. S. 308, 320, 33 S. Ct. 281, 283 (57 L. Ed. 523, 43 L. R. A. [N. S.] 906, Ann. Cas. 1913E, 905), it was said: “Commerce among the states, we have said, consists of intercourse and traffic between their citizens and includes the. transportation of persons and property.” There can be no question but that the driving’ of a stolen automobile from one state to another on its own -power is in itself interstate commerce notwithstanding that it carries no freight or passengers for hire. Whitaker v. Hitt, 52 App. D. C. 149, 285 F. 797, 27 A. L. R. 951; Kelly v. United States (C. C. A.) 277 F. 405. There was no error, therefore, in the instruction as given; nor was it error to refuse to instruct as requested that the mere transportation of an automobile from state .to state without a view to financial or pecuniary gain or benefit does not constitute a transportation in interstate commerce as intended in the use of that term in the Dyer Act (Comp. St. Ann. Supp. 1923, §§ 10418b-10418f).

The assignments of error principally relied upon are directed against the admission of certain testimony. The plaintiff in error, together with Harry Drexel and four young women, started out to go from Pennsylvania to Los Angeles in two automobiles, one of which was the property of the plaintiff in error, and the other was the automobile which was alleged to have been stolen. On the trial Drexel testified for the government. There was evidence of the changing of numbers on the stolen automobile and various devices to prevent detection of the theft by means of forged bills of sale made at different points on the journey westward. Drexel was asked: “Have you committed any crimes other than those which are recounted?” To that question the court sustained an objection and instructed the jury that they should imply nothing from the question. It is urged that notwithstanding the instruction of the court, the impression produced by the question was prejudicial to the plaintiff in error. To us' it seems plain that the impression produced must have been favorable to the plaintiff in error rather than prejudicial. If Drexel committed crimes other than those which he had detailed, evidence of that fact would tend to discredit him as a witness; but we cannot see that it would tend to incriminate the plaintiff -in error. Nor do we think that there was reversible error in the fact that Drexel was asked whether at any time he took part in the burning of an automobile, and “Did you know at the time you burned Pranklin No. 2 automobile that you were committing a crime ?” Neither question was answered, and the court admonished the jury that they were to imply nothing from them.

Again, Drexel testified that at the various places where they lodged he and one of the unmarried women of the party registered as Mr. and Mrs. Drexel and as man and wife occupied the same room. He was, then asked: “Did any other persons of the party, not married, occupy the same relationship?” An' objection to that question was sustained. Later Drexel was asked: “Were you the only member of the party who had the same relation toward a woman as you did?” to which he answered: “No, sir.” On the objection and motion of counsel for the . plaintiff in error, the answer was struck out and the jury were instructed to disregard it. It is urged that notwithstanding the instruction to disregard it, the answer of the witness was highly prejudicial to the plaintiff in error, since the jury must necessarily have inferred he was the member of the party referred to as also having illicit relations with a woman of the party. But the evidence of the guilt of the plaintiff in error of the offense charged in the indictment is so' strong and convincing that we cannot see how the imputation of one or more additional crimes could have affected the verdict. Testifying in his own behalf, he admitted that while in Illinois, on the way, he prepared and signed a forged bill of sale purporting to transfer the stolen automobile from one C. H. Thomas, a fictitious person, to Harry E. Drexel, to which bill of sale the plaintiff in error signed the name G. H. Thomas as owner and assignor. He admitted also that after arriving in California he assisted in preparing a fictitious bill of sale from Drexel to Bruce Chesser, the name which Drexel had then assumed. He admitted further that at that time he suspected that the ear had been stolen by Drexel, and that Drexel soon thereafter told him that such was the fact, and that thereafter he urged Drexel to sell the automobile in order to raise funds with which to pay a debt which Drexel owed him. He testified also that after he returned to Washington he received several letters and telegrams from Drexel, who remained in California, that he sent Drexel $25 and wired, “Suggest accepting twelve fifty as we both need cash,” and concluded with the caution, “Very careful. about communicating with me.” Again he telegraphed: “By all means don’t have trouble with Ben. Everything O. K. unless he interferes. Better put in winter storage if still unsold.” The “Ben” so referred to, as the plaintiff in error admitted, was the stolen automobile. All these admissions, and others tending to incriminate the plaintiff in error, were received in evidence in addition to the testimony of Drexel which directly implicated the plaintiff in error with the theft of the automobile and with the alteration of the number of the engine and the change of the plates.

We find no error.

The judgment is affirmed.


author: LEWIS, Circuit Judge.

text:
    TIBBITTS-HEWITT GROCERY CO. v. S. E. LUX, JR., MERCANTILE CO.

    (Circuit Court of Appeals, Eighth Circuit.
    April 30, 1925.)
    No. 6728.
    1. Sales <§=>383 — Trial <§=>252(20) — Evidence held to show market for rejected sugar at place and time of rejection; instruction permitting consideration of market value at another place than place, of delivery held error in view of evidence.
    In action for breach of contract to purchase sugar, evidence held sufficient to show a market for sugar at place of delivery at time of rejection, and render erroneous instruction permitting jury to consider on question of damages price obtained for sugar when sold at another place and freight charges to that place.
    2. Witnesses <§=>255(3) — Use of memorandum to refresh witness’ recollection unwarranted, unless memorandum made by witness contemporaneously with transaction.
    Use of memorandum to refresh recollection of witness, who then testifies to facts as matters of present knowledge, is unwarranted, unless memorandum was made by witness and contemporaneously with transaction involved.
    3. Trial <§=>253(10) — Instruction as to purchaser’s duty to aecept sugar, if of quality indicated by words having accepted trade meaning, held erroneous.
    Where sale and purchase of “Hong Kong refined granulated sugar” was made “subject contract with original seller,” which contract referred to sugar as “white Hong Kong' refined granulated sugar,” instruction that, if words “Hong Kong refined granulated sugar” had acquired a definite trade meaning, indicating particular character and quality, and sugar was of that quality, it was duty of purchaser to aecept it, held erroneous for failure to include descriptive word “white” as contained in contract with original seller. ‘
    4. Evidence <§=>457 — Ora! representations as to quality of sugar sold held to have no place in case, in view of written contract to purchase “white Hong Kong refined graduated sugar.”
    In action for breach of contract to purchase “white Hong Kong refined granulated sugar,” which language evidence indicated had a definite trade meaning, held oral representations as to quality of sugar, claimed to have been made by brokers negotiating sale and pleaded as defense, had no place in case.
    In Error to the District Court of the United States for the Eastern District of Missouri; Charles B. Faris, Judge.
    Action by the S. E. Lux, Jr., Mercantile Company against the Tibbitts-Hewitt Grocery Company. Judgment for plaintiff, and defendant brings error.
    Reversed and remanded.
    David Goldsmith and M. N. Sale, both of St. Louis, Mo., for plaintiff in error.
    D. R. Hite, of Topeka, Kan., for defendant in error.
    Before SANBORN and LEWIS, Circuit Judges, and POLLOCK, District Judge.

      Rehearing denied July 31, 1925.

   LEWIS, Circuit Judge.

The defendant in error, herein called the Lux Co., a corporation of Kansas, recovered a judgment as for its damages on account of alleged breach of contract by appellant, herein called Tibbitts Co., a Missouri corporation. The complaint alleges that on or about May 3, 1920, the Lux Co. sold to the Tibbitts Co. 1,000 bags of Hong Kong granulated sugar weighing 1Ó0 pounds each at $24.75 per ewt. f. o. b. San Francisco, that the Tibbitts Co. agreed to pay for said sugar on receipt of bill of lading, that on or about July 20, 1920, the sugar was shipped to St. Louis from San Francisco, that thereafter bill of lading showing shipment on board railroad ears consigned to St. Louis was presented to the Tibbitts Co. and it refused to pay for said sugar and to accept the same. The answer alleges that about May 3, 1920, the Mein-rath Brokerage Co., brokers in merchandise, having an office at Chicago, called up the Tib-bitts Co. at its office in St. Louis over the telephone and stated that the Meinrath Co. had for sale 1,000 bags of Hong Kong white granulated sugar and offered it to Tibbitts Co., that the Meinrath Co., acting as the agent of Lux Co., represented that the sugar so offered for sale was dry, fine, white granulated sugar of a quality as good as standard American white granulated sugar, that Tib-bitts Co. thereupon orally agreed in said conversation to purchase 1,000 bags of said Hong Kong white granulated sugar provided it was of the quality stated, viz.: as good as standard American white granulated sugar, that thereafter Meinrath Co. sent to Tibbitts Co. a document called a “sales memorandum,” which did not describe the sugar as agreed to be purchased over the telephone but described it simply as “Hong Kong granulated sugar,” and also contained the further provision, “Shipment June-July from Hong Kong subject contract with original seller, sugar entered for shipment during June-July from Hong Kong but subject to some delay,” which, it is alleged, was not part of the oral agreement, and because thereof defendant refused to' sign the memorandum. But it is further alleged that Tib-bitts Co. was at all times ready and willing to accept 1,000 bags of Hong Kong white granulated sugar of the kind and quality so agreed to be sold by the Meinrath Co. at the price stated, that thereafter the sugar was shipped to St. Louis, that Tibbitts Co. refused to pay the draft without inspection, that it inspected and examined the sugar and ascertained that it was not Hong Kong dry, fine, white granulated sugar and was not equal to or as good as standard American white granulated sugar, that it was so inferior to the quality and standard of American refined white granulated sugar that it could not be sold as white granulated sugar, and it thereupon refused to accept and pay for the same. The reply alleges that Tibbitts Co. requested permission to inspect the sugar. It does not allege that Lux Co. granted that permission, but the evidence establishes that it did.

The sugar arrived at St. Louis on August 5th. Under permission from the Lux Co. the car containing the shipment was at once opened, samples of the sugar taken from the sacks by Tibbitts Co., and on that day it wired the Lux Co. at Topeka, Kansas, its place of business, that it would not accept the sugar because it did not grade up to seller’s representations. The telegram was received the next morning. Mr. S. E. Lux, president of the Lux Co., immediately instructed the Meinrath Brokerage Co. to get Tibbitts Co. to accept the sugar or to sell it. Por that purpose Mr. Kean, of the Mein-rath Co., arrived in St. Louis on August 9th. He first called on Mr. George W. Boswell, Meinrath Co.’s representative at St. Louis, and these two called on several wholesale grocers in St. Louis and tried to sell the ear of sugar. They represented it as white granulated sugar. He was there for three days and could not get an offer. While there he took samples and sent some of them to the Meinrath offices at Chicago and Kansas City, and some to the Lux Co. at Topeka. Sugar had suffered a decline in price within a month preceding this time, and it continued to sharply decline throughout the remainder of the year. Mr. S. E. Lux went to St. Louis and first saw the sugar on August 12th. He instructed the Hutchinson Brokerage Co. of St. Louis to sell it. That company advised him they could not sell it. He visited Tibbitts Co. and told Mr. Tibbitts that he was unable to sell the sugar in St. Louis and that he was going to take it to Topeka to sell. Mr. Tibbitts told him he could do whatever he wanted with the sugar. Mr. Lux then had the sugar shipped to Topeka and it arrived there on August 18th. It was then sold in small lots by the Lux Co. in Topeka and at other places in the State of Kansas. About half of it was disposed of in Topeka and the remainder throughout the state.

During the trial, when the question of the measure of damages came up, it was contended by counsel for plaintiff, Lux Co., that there was no market for the sugar in St. Louis and that the nearest market was at Topeka, Kansas. To sustain that contention the unsuccessful efforts that were made to sell the carload of sugar in St. Louis were relied upon, together with additional proof that it was difficult' to make sales of that quantity anywhere, due to declining prices; and we find no proof in the record that sales in carload lots could be made in Topeka during the forepart of August, nor is there any proof of the market price at Topeka in carload or less quantities during that time, further than the" testimony of Mr. Lux giving the total amount that he claimed his company received for the sugar disposed of in the manner stated. And there is no evidence in the record' as to the different dates on which the lots were sold in Topeka and at other points in Kansas, except a sale of 50 sacks made in Topeka on August 20th, at $18 per cwt., 35 of which were returned by the buyer as being in damaged condition. The total amount received for the sugar, according to the testimony of Mr. Lux, was $16,798, slightly under $17 per cwt. On the part of defendant six witnesses, all residents of St. Louis, some of them wholesale grocers and the others jobbers in sugar, all having many years’ experience in handling that commodity, testified that they were selling sugar every day throughout August to the retail trade, some as much as 500 bags per day, and some in much less amount. There were about forty of such business concerns handling sugar to the retail trade in St. Louis. These witnesses testified that from the 5th to the 12th of August they were selling sugar at from $20 to $22 per cwt. They were also constantly buying sugar to supply, that trade. One large wholesale gro-eery was buying daily throughout August about 1,500 sacks, and around August 5th, 6th and.7th was paying therefor around $20 per ewt. Its representative testified that he would have offered around $18 per ewt. fora thousand bags' of white granulated sugar on August 6th or 7th, and that they were paying around $20 between the 5th and 12th in 1,500-bag lots. On the measure of damages the court instructed the jury:

“Now, if you shall find the issues for the plaintiff you may assess its damages at the difference between the price at which the sugar was bought, to-wit, 24.75 cents per pound, and the price of sugar of the kind you find this to be, on the 6th day of August, 1920, plus freight from San Francisco to St. Louis, and you are to use this measure of damages only in case that you find that at that time there was a market in St. Louis for this sort of sugar. ' If, however, you shall find that on the date mentioned, namely, August 6, 1920, there was no market in the City of St. Louis for this sugar, then you may consider the market price of this sugar at Topeka, Kansas, if you shall find that Topeka, Kansas, was the next nearest market where the sugar could be sold. If you shall find that it was sold at 17 cents a pound at Topeka, and that Topeka was the next nearest place at which an advantageous market could be found, you are entitled to find the difference between the price at which it was sold, provided you find that that was a fair and reasonable market price, and the price for which it was bought. The sale price was 17 cents. The bought price was 24.75 cents, or 24% cents. The difference between those two amounts, plus the freight from here to Topeka, is the measure of damages, in that event.”

Defendant’s counsel contended that the evidence showed a market at St. Louis, that it did not show that there was a market for the sugar at Topeka, that in no event could a market elsewhere than at St. Louis be considered unless the evidence showed there was no market at St. Louis; and saved an exception to the instruction. We think the objection to the instruction well taken. The evidence, in our opinion, showed a market for the sugar at St. Louis. There was some evidence that the entire carload, if of the quality claimed by plaintiff, could have been disposed of there at $18 per ewt. There was no evidence of a market for the carload at Topeka. There was conclusive evidence of a market for it at St. Louis in lots of 100 bags or more, which was the way in which it was disposed of at Topeka. Furthermore, the market in lots of 100 bags or more at St. Louis was shown as of the time of the breach of the contract, and there is an entire failure to disclose the dates of the separate sales made at Topeka and throughout Kansas. We think it was clearly error on the facts to permit the jury to consider what the Lux Co. got for the sugar,' and to instruct it to charge the plaintiff with $353.-29 freight from St. Louis to Topeka. The evidence having established a market at St. Louis on the basis on which the plaintiff disposed of the sugar, the market price in lots there was controlling. Gaunt v. Purina Co., 198 F. 60, 117 C. C. A. 168; Salmon v. Helena Box Co., 147 F. 408, 77 C. C. A. 586; Grand Tower Co. v. Phillips, 23 Wall. 471, 23 L. Ed. 71. Plaintiff’s books and records showing sales of the sugar in Topeka and in Kansas had been lost or inadvertently destroyed. When Mr. Lux was testifying on direct examination as a witness for plaintiff this occurred:

“Q. Have you in your possession any memorandum made by you from data in regard to-the lots that this sugar was sold in and the amount received for the lots ?
“A. I have.
“Q. You may, if .you desire, refresh your recollection from your memorandum if it was made by you.
“Mr. Sale: I object to his refreshing his memory from a memorandum that he made unless the memorandum was made contemporaneously with the transactions which were supposed to take place.”

The objection was overruled.

“Q. Mr. Lux, will you please state to the jury the amount that you received from the proceeds of the sale of this sugar?
“A. $16,798.”

There was no other evidence of the amount that had been received for the sugar by the Lux Co.

Where a witness uses a memorandum to refresh his recollection he does not testify from the memorandum, but his recollection of the transaction being refreshed by the memorandum he then testifies to the facts as a matter of present knowledge; and that the memorandum may be reliable for that purpose, it must have been made contemporaneously with the transaction. When the objection was made the court should not have permitted the use of the memorandum by the witness until its reliability had been first shown. It was thus error to permit the witness to answer without that prerequisite. Putnam v. United States, 162 U. S. 687, 16 S. Ct. 923, 40 L. Ed. 1118.

Belying apparently upon the well-known principle announced by this court in Union Selling Co. v. Jones, 128 F. 672, 63 C. C. A. 224, the court instructed the jury:

“Now, if you shall find and believe that the term or name of ‘Hong Kong refined granulated sugar’ had on or before the 1st day of May, 1920, acquired a definite meaning in the sugar trade, then there was a meeting of minds between the broker representing plaintiff, and the defendant, and, therefore, between plaintiff and defendant, and therefore a contract between plaintiff and defendant; and, regardless of the quality of this sugar, any failure to accept this sugar so offered would constitute a breach of this contract, and you ought to find for the plaintiff. That, of course, means, gentlemen, that the words ‘Hong Kong refined granulated ’sugar1 were known generally in the sugar trade as designating a particular sort of sugar, and that when one with this knowledge, and with the knowledge of the trade about this term, bought that sort of sugar he was bound to take that sort of sugar.”

The conversation over the telephone with Mr. Tibbitts on May first resulted, as claimed, in the sale of the sugar by Lux Co. to Tibbitts Co. Immediately thereafter, and of date May 3rd, Meinrath Co. made out a sale memorandum of the transaction, signed it and sent it to Tibbitts Co. At the same time a memorandum of like character was made out by Meinrath Co. and sent to Lux Co. In each of these memoranda the sugar was described as “1,000 Bags Approx. 100# each Hong Kong Granulated Sugar.” It will be observed that the court, in addition to the description thus given of the sugar, used the Word “refined.” We think, .however, another important word was omitted in the instruction quoted above, and that the sugar sold should have been described as “white Hong Kong refined granulated sugar” ; and our reason for that is this: The broker’s memorandum contained the clause, “Shipment June-July from Hong Kong subject contract with original seller.” When Tibbitts Co. discovered this clause in the memorandum it wrote Meinrath Co. calling attention to it, and asked to see a copy of the original contract, which was furnished. The plaintiff, in making its case, took up that subject. It showed that the 1,000 bags in question were part of a shipment of 2,-BOO bags made from China Sugar Refining Company, Ltd., of Hong Kong, to Otis Mc-Allister & Company of San Francisco, and that the cargo- reached its destination July 16, 1920. McAllister sold the 1,000 bags in question to E. L. Moseley & Company of San Francisco, and Moseley & Co., through Meinrath Co., sold them to Lux Co. on April 19th. Moseley & Co. signed a contract evidencing the sale to Lux Co., in which the sugar was described as 1,000 bags, each about 100 lbs., “White Hong Kong Refined Granulated Sugar.” The sale from Lux Co. of this sugar to Tibbitts Co., ten or twelve days later, was “subject contract with original seller,” and the contract of sale by Moseley & Co. was furnished to Tibbitts Co. and introduced by plaintiff in evidence as the contract referred to in the broker’s memorandum. Plaintiff also introduced the bill of lading of the shipment from San Francisco to St. Louis, in which the cargo was described as “1,000 bags white sugar.” Throughout the plaintiff’s case as presented'to the jury counsel interrogated the witnesses about the sugar being white. Mr. Lux testified that when the car reached Topeka from St. Louis it had in it white granulated sugar. Mr. Moseley was asked if it was white Hong Kong refined granulated sugar. Mr. Bonds, of San Francisco, testified that the invoice of the shipment of 2,500 bags covered white Hong Kong refined granulated sugar, that the bags were marked G. D. over F., which was classified as dry, finely granulated white sugar. Mr. Kean of Meinrath Co., testified that when he offered the sugar for sale in St. Louis after Tibbitts Co. had refused it, he offered it as white granulated sugar. Mr. Stewart, vice president of Meinrath Co., testified that when Tibbitts Co. rejected the sugar it was put in the hands of his company for sale as a car of Hong Kong white refined sugar. Mr. Hutehinson, of the Hutchinson Brokerage Co., which was asked to sell the sugar after it was rejected by Tibbitts Co., testified that they tried to sell it as white Hong Kong granulated sugar. One of the objections made to the sugar by Tibbitts Co. was that it was not white, but had a yellowish tint, and the defendant’s witnesses so testified. Mr. Menzies, who has represented the China Sugar Refining Co. at San Francisco for 30 years, testified for defendant. He said that its standard grade of sugar was marked G. D. over F. On being shown samples that the defendant claimed it took from the car of sugar while at St. Louis, he said those samples were not of that grade, that he would not call the samples white, that the Hong Kong refined sugar was equally white, equally eiystal and bright to the domestic refined sugar, that the samples were not white Hong Kong sugar, that they had a very strong molasses smell which white Hong Kong sugar never has, and that the sample in the jar marked Exhibit B would not be accepted by the trade as white Hong Kong refined sugar. Mr. Cohen, of St. Louis, purchased and sold 14,000 bags of Hong Kong granulated sugar during the summer of 1920, and be testified that the samples taken from the ear shipped to Tibbitts Co. did not compare to the Hong Kong granulated sugar which he handled, that it was not white enough. There was also controversy over other qualities, which appear to inhere in the general descriptive term “white refined granulated sugar.”

Accepting, as we do, the rule announced in the Union Selling Co. Case, supra, applicable to the sale and purchase of commodities which are to be taken as known in their quality and character from general descriptive terms, we think the omission by the court of the word “white”- from that general description was, under reference in broker’s sale memorandum, “subject contract with original seller,” and the way in which the case was presented by plaintiff prejudicial to the defendant. It appears to us also that there are other erroneous expressions in the instruction prejudicial to the defendant. The court appears to have intended to say to the jury that if “Hong Kong refined granulated sugar” had acquired in the trade a definite meaning as to its character and quality, and this sugar was of that character and quality, it was the duty of the defendant to accept it, and a failure to do so was a breach of the contract on its part; but the instruction advised the jury that a refusal to accept it was a breach by defendant “regardless of the quality of this ■sugar”; i. e., there was breach although its quality was different from that known to the trade. No specifications of error are made on these particular points, other than they may be found as embodied in some of defendant’s requests for instructions which were denied, but as there must be another trial these comments may be helpful. Adhering to the rule in Union Selling Co. v. Jones, supra, the oral representations as to the quality of the sugar, claimed to have been made by Meinrath Co. while negotiations for the sale were on, and pleaded in the answer as a defense, seem to us to have no place in the case. The contract contained no representation as to quality, and if the sugar as described therein and by reference had theretofore acquired in the trade a definite meaning as to its kind and quality, and on this record we think it had (testimony Menzies and Bonds), the only issue would then be, whether the 1,000 bags was of that kind and quality.

The judgment will be reversed and the case remanded for a new trial.


author: WOODS, Circuit Judge.

text:
    In re BALTIMORE PEARL HOMINY CO. GUARANTY TRUST CO. OF NEW YORK v. McKENRICK et al. (two cases).
    (Circuit Court of Appeals. Fourth Circuit.
    April 14, 1925.)
    Nos. 2207, 2227.
    1. Internal revenue <@=26 — Expression of government’s expectation and requirement held sufficient “demand” to create lien for tax.
    Where government reduced tentative claim for income and excess profits taxes to a formal assessment, which it agreed to settle for smaller amount, held, that government’s expression of expectation and requirement of payment, made known to taxpayer, was in effect a demand sufficient to make tax a lien under Comp. St. § 5908; “demand” signifying a request addressed to a person that he will do some act which he is legally bound to do after request.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Demand.] .
    2. Internal revenue <©=26 — Demand required to create lien for tax may be waived by taxpayer.
    Purpose of Comp. St. § 5908, in requiring demand as condition precedent to tax becoming lien, is for protection of taxpayer, and such right may he waived by taxpayer.
    3. Internal revenue <©=26 — Demand required to create lien for tax held waived by taxpayer.
    Where government reduced tentative claim for income and excess profits taxes to formal assessment, which it agreed to settle for smaller amount, helé, that transactions between revenue officers and taxpayer proved taxpayer’s waiver of demand required by Comp. St. § 5908, to create lien for taxes.
    4. Bankruptcy <©=346 — Creditors advancing money to pay bankrupt’s tax prior to bankruptcy held entitled to priority.
    Creditors, who paid government’s tax lien on bankrupt’s property before bankruptcy to prevent seizure and sale of property thereun'der, under agreement with bankrupt that, if possible, they should be subrogated to government’s rights of priority, held entitled by sub-rogation to same preference that government would have had but for payment.
    5. Bankruptcy <@=440 — Order denying creditors’ claim to priority of undisputed debt held reviewable by petition to superintend and revise and not by appeal.
    Order denying creditors’ claim to priority for advances to pay bankrupt’s taxes due United States before bankruptcy is reviewable by petition to superintend and revise, and not by appeal, where amount is undisputed; question being proceeding in bankruptcy and not controversy arising in bankruptcy proceedings.
    On Petition to Superintend and Revise and Appeal from the District Court of the United States for the District of Maryland, at Baltimore,' In Bankruptcy; Morris A. Soper, Judge.
    In the matter of the Baltimore Pearl Hominy Company, bankrupt; Carl R. MeKenriek and another, trustees in bankruptcy. The Guaranty Trust Company of New York petitions to superintend and revise, and also appeals from, an order of the' District Court (294 F. 921) denying its claim to priority and allowing said claim as unsecured debt.
    Appeal dismissed; order reversed.
    George Weems Williams and James Mor-fit Mullen, both of Baltimore, Md., for petitioner and appellant.
    Edgar Allan Poe, of Baltimore, Md. (Bartlett, Poe & Claggett and Morris A. Rome, all of Baltimore, Md., on the brief), for respondents and appellees.
    Before WOODS and WADDILL, Circuit Judges, and McDOWELL, District Judge.
   WOODS, Circuit Judge.

The Baltimore Pearl Hominy Company was notified on July 10, 1920, by the Commissioner of Internal Revenue of a claim for additional income and excess profits taxes for the years 1916, 1917, and 1918, amounting to $359,899.54v The letter of notification contained the following statement:

“This is not a notice of assessment, and no payment is required in connection herewith until you receive formal notice from the collector of internal revenue for your district.”

Some time between the receipt of the notice and February, 1921, the Hominy Company employed the firm of Humphreys, Day & Co., income tax specialists, to attempt to secure a reduction in the assessment. After negotiations with the government by Humph-reys, Day •&. Co., the claim was reduced to $72,192.34. '

On February 11, 1921, five banks, including the appellant, unsecured ureditors of the Hominy Company, to the amount of'$233,000, became concerned because of the inability of the company to meet its obligation to the government and offered to advance a sufficient sum to compromise the tax claim for $42,000 or 'less and to pay Humphreys, Day '& Co., their charge of $20,000. Each bank agreed to contribute to the sum' advanced in' proportion to its unsecured claim. The letter written j.ointly by the banks and the Hominy Company to Humphreys, Day & Co., expressing the proposition outlined, contained the following:

“It is distinctly understood that in so far as the parties hereto are able to do so, the undersigned banks shall be entitled to be subrogated to all of the rights of the government, as to a prior lien for such amounts" paid to the government for said taxes, and further that we shall receive notes of the Baltimore Hominy Company covering such advances as may be made under this agreement.”

On its books the assets of the Hominy Company at this time were largely in excess of its liabilities. In fact, its liabilities were very largely in excess of its assets.

A settlement with the government was arranged by Humphreys, Day & Co. for $35,-000. The Union Trust Company, one of the five banks mentioned, collected from each of the banks its proportionate share of the sum advanced to cover the amount of the compromise and the counsel fee of $20,000, each bank taking the note of the Hominy Company for the amount it contributed. On February 23, 1921, the Union Trust Company drew its check for $35,000 in favor of the Hominy Company, and that company indorsed it to the order of the Commissioner of Internal Revenue. The government’s representatives refused to accept this check and returned it. On March 17, 1921, the collect- or of internal revenue at Baltimore received an assessment list from the Commissioner of Revenue at Washington, upon which list appeared an assessment against the Hominy Company of $72,192.34. On the next day, March 18, 1921, a new cheek was made out by the Union Trust Company for the amount agreed upon to the order of Joshua W. Miles, collector, dated as of February 23, 1921. This check was accepted, being acknowledged as final settlement in .a letter from a deputy commissioner under date of March 22, 1921.

On April 4, 1921, the circuit court of the city of Baltimore appointed receivers for the Hominy Company, and on May 6, 1921, it was adjudicated a bankrupt. The unsecured debts of the corporation amounted to $591,-000, and its principal assets were sold for $178,000. The referee allowed the tax payment as a preference in favor of the banks who had made it. Upon the hearing of petition of one of the trustees of the bankrupt estate, the District Judge made an order disallowing the preference and directing the re-speetive claims of the banks for the amounts advanced to be allowed only as unsecured claims. This, as we understand, is a test ease to determine the rights of the banks claiming preference by way of subrogation to the government’s alleged prior lien, brought to this court on petition to superintend and revise and on appeal from the decree of the District Court.

We think the government had a lien for the tax on March 18, 1921, at the time of payment. The applicable statutory provision is:

“If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount shall be a lien in favor of the United States from the time when the assessment list was received by the collector, except when otherwise provided, until paid, with the interest, penalties, and costs that may accrue in addition thereto upon all property and rights to property belonging to such person: Provided, however, that such lien shall not be valid as against any mortgagee, purchaser, or judgment creditor until notice of such lien shall be filed by the collector in the office of the clerk of the District Court of the district within which the property subject to such lien is situated. * * ” U. S. Compiled Statutes, § 5908.

The tax fixed by the government at $72,-192.34 was on the assessment list received by the collector of internal revenue on March 17, 1921. No payment had then been made, for the collector had refused the cheek tendered. It is true no demand in formal terms was made of the Hominy Company because of the voluntary agreement of the taxpayer to pay $35,000 which the government had agreed to accept. The statute prescribes no form and no kind of demand. The whole course of dealing shows that the government had reduced its original tentative claim of $359,899.54 to a formal assessment of $72,-192,34, that it was expecting and requiring payment of $35,000 in settlement of the assessment, and that it had made known to the Hominy Company that expectation and requirement. The expression of this expectation and requirement that the Hominy Company should pay the amount agreed upon was in effect a demand and all that was requisite to make the tax a lien. The accepted definitions support this view: “A demand signifies a request addressed to a person that he will do some act which he is legally bound to do, after the request has been made.” R. & L. Law Dictionary, p. 369. In 18 C. J. 479, a “demand” is defined as: “The assertion of a legal right; the assertion of a right to recover a sum of money; a calling for a thing due or claimed to be due; a claim; a preemptory claim to a thing of right; a request to pay; a requisition or request to do a particular tiling specified under a claim of right on the part of the person requesting.”

If, however, the transactions between the revenue officers and the Hominy Company did not amount to a demand, they clearly proved waiver by the company of demand for payment. The purpose of requiring a demand as a condition precedent to the tax becoming a lien is protection of the taxpayer; and any such right of protection may be waived by the person interested. Shutte v. Thompson, 15 Wall. 151, 21 L. Ed. 123; 6 R. C. L. p. 93; 27 R. C. L. p. 906. Surely if the Hominy Company had written to the collector expressly waiving demand and promising to pay the tax, it would be idle for the collector to go through the form of making the demand in order to create the lien. The expressed waiver would have been equivalent to the demand. Here the waiver by conduct was just as effective.

Having paid the lien of the government at the request of the debtor and thus preventing the seizure and sale of the property thereunder under an agreement with the debtor that if possible they should be substituted, the banks and trust companies have a very strong equity to subrogation in the distribution of the bankrupt’s assets. They were in no sense volunteers, but creditors surprised by the government’s large claim for taxes in arrears. They knew the Hominy Company was in danger of failure, but they hoped that the corporation’s new method of extracting sugar from com would biiñg success. Under these circumstances, believing it to be advantageous to themselves and other creditors, they paid the taxes to prevent destructive enforcement of payment. In doing so we think they brought themselves clearly within the principle and rule of subrogation thus stated in Ætna Life Insurance Co. v. Middleport, 124 U. S. 534, 548, 549, 8 S. Ct. 625, 629, 31 L. Ed. 537:

“These propositions are very clearly stated in a useful monograph on the Law of Subrogation, by Henry N. Sheldon, and are well established by the authorities which he cites. The doctrine of subrogation is derived from the civil law, and ‘it is said to be a legal fiction, by force of which an obligation extinguished by a payment made by a third person is treated as still subsisting for the benefit of this third person, so that by means of it one creditor is substituted to the rights, remedies, and securities of another. * * * It takes place for the benefit of a person who, being himself a creditor, pays another creditor whose debt, is preferred to his by reason of privileges or mortgages, being obliged to make the payment, either as standing in the situation of a surety, or that he may remove a prior incumbrance from the property on which . he relies to secure his payment. ' Subrogation, as a matter of right, independently of agreement, takes place only for the benefit of insurers; or of one who, being himself a creditor, has satisfied the lien of a prior creditor; or for the benefit of a purchaser who has extinguished an incum-brance upon the estate which he has purchased; or of a coobligor or surety who had paid the debt which ought, in whole or in part, to have been met by another.’ Sheldon on Subrogation, §§ 2, 3. * * *
“ ‘The doctrine of subrogation is not applied for the mere stranger or volunteer, who has paid the debt of another, without any assignment or agreement for subrogation, without being under any legal obligation to make the payment, and without being compelled to do so for the preservation of any rights or property of his own.’ [Sheldon on Subrogation, § 240.]”

. See, also, MacGreal v. Taylor, 167 U. S. 688, 701, 17 S. Ct. 961, 42 L. Ed. 326; 5 Pomeroy’s Equity, § 2347.

It is not contended that the trustees occupied the superior position of judgment creditors without notice of the circumstances which we have held created the lien for taxes in favor of the government.

There is a labyrinth of decisions on the subject of subrogation. We shall not undertake to go through it. Our conclusion is that the government had a lien for the taxes, and when the banks, and trust companies, unsecured creditors, paid it, they were entitled by subrogation to the same preference in the distribution of the'assets of the bankrupt that the government would have had but for the payment. One who pays taxes may in a proper ease be subrogated to the rights of the government in the distribution of the assets of a bankrupt estate. Dayton, Trustee, v. Stanard, 241 U. S. 588, 36 S. Ct. 695, 60 L. Ed. 1190. The question of the right of the person subrogated to the government’s lien for a tax to enforce its collection by all the means available to the government as a sovereign is not before us. The other grounds upon which the claim for subrogation is made need not be considered.

The doctrine of subrogation has advanced since the decision of this court in Montgomery v. City Council of Charleston, 99 F. 825, 40 C. C. A. 108, 48 L. R. A. 503. To the extent that .the opinion in that case is inconsistent with the views here expressed, we decline to follow it.

The amount of the debt is not in dispute. The sole question is whether the debt is entitled to preference as a lien in the distribution of the assets of the bankrupt. Such a question is a proceeding in bankruptcy and npt a controversy arising in bankruptcy proceedings. It is therefore reviewable by a petition to superintend and revise and not by appeal. Hutchinson v. Otis, 190 U. S. 552, 556, 23 S. Ct. 778, 47 L. Ed. 1179; Matter of Loving, Trustee, 224 U. S. 183, 32 S. Ct. 446, 56 L. Ed. 725; 8 Remington on Bankruptcy, §§ 3682, 3728.

It follows that the ease being here properly on a petition to superintend and revise, the appeal is dismissed and the judgment of the District Court, in the matter brought up for review, is reversed.

Case No. 2207, reversed.

Case No. 2227, dismissed.


text:
    FRIEDEN et al. v. UNITED STATES.
    (Circuit Court of Appeals, Fourth Circuit.
    April 14, 1925.)
    No. 2317.
    1. Criminal law @=>619 — Indictments for conspiracy to conceal assets and for concealment of same assets held properly consolidated for trial.
    Two indictments, one charging conspiracy to conceal the assets of a bankrupt, and the other charging concealment of the same assets, held properly consolidated for trial.
    2. Conspiracy @=>47 — Bankruptcy @=>495 — Evidence held to sustain conviction of bankrupts for conspiracy to conceal,and for concealment of assets.
    Evidence held to sustain conviction of the members of a bankrupt partnership and em-, ployees of conspiracy to conceal its assets and concealment of assets.
    In Error to the District Court of the United States for the Eastern District of Virginia, at Norfolk; D. Lawrence Groner, Judge.
    Criminal prosecution by the United States against Harry Erieden and others. Judgment of conviction of certain defendants, and they bring error.
    Affirmed.
    Tazewell Taylor, of Norfolk, Va., Robert H. Talley, of Richmond, Va., and S. M. Brandt, of Norfolk, Va. (Ernest S. Merrill and H. A. Sacks, both of Norfolk, Va., on the brief), for plaintiffs in error.

      L. S. Parsons, Asst. U. S. Atty., of Norfolk, Ya. (Paul W. Kear, U. S. Atty., and Alvah H. Martin, Asst. U. S. Atty., both of Norfolk, Va., on the brief), for the United States.
    Before WOODS and WADDILL, Circuit Judges, and McDOWELL, District Judge.
   WOODS, Circuit Judge.

The defendants, Harry Frieden, Samuel Frieden, Louis Frieden, Ellis Frieden, and Charles Seher, were convicted on all of the counts of two indictments which were consolidated on trial. Hyman Frieden, indicted with them, was acquitted. One indictment charged the partners Harry Frieden, Samuel Frieden, and Louis Frieden with conspiracy to conceal the assets of a partnership known as the Frieden Company, adjudicated bankrupt on December 17, 1923. Ellis Frieden and Charles Seher, two employees of the copartnership, were charged with aiding and abetting the conspiracy. The first count set out a conspiracy in anticipation of bankruptcy; the second count laid the charge after bankruptcy.

Both counts of the other indictment charged the members of the partnership with concealment of assets after bankruptcy, and the other defendants with aiding and abetting the crime.

There was no error in consolidating the indictments: They related to the same transactions; the evidence was practically the same; and separate trials would have been a waste of time. Showalter v. United States, 260 F. 719, 171 C. C. A. 457.

The motion to direct a verdict of acquittal for lack of evidence was without foundation. The evidence of guilt of all the convicted defendants was strong.

On or about April 1, 1923, Harry Fried-en, Samuel Frieden, and Louis Frieden, three brothers, formed a copartnership under the name of the Frieden Company. Harry and Samuel Frieden had been associated for some years before that date as partners in the manufacturing business in Waynesboro, Pa., under the firm name of “Cumberland Yalley Shirt Manufacturing Company.” The ostensible plan of the new partnership was to continue the manufacturing business in Waynesboro and to operate a system of chain stores handling men’s furnishing goods in the cities of Norfolk, Richmond, and Roanoke, Va. Ellis Frieden, a son of Louis Frieden, was employed in the firm’s Roanoke store, and Charles Seher was manager of one of the Richmond stores. The net worth of the new firm at the commencement of business, according to its statement to a commercial credit agency, was $174,185.52. At first all obligations were paid promptly by the Fried-en Company, and thus high credit rating was established. Later, long terms of credit were secured on large orders.of goods, and after a while creditors were unable to obtain payment for large bills overdue. In this situation the copartnership and the individuals composing it were thrown into bankruptcy. When a receiver was appointed, he had difficulty in getting the books and records of the bankrupts, and finally was furnished with an incomplete set.

The trustee, Alfred Anderson, testified that after making every fair allowance, which he fully explained to the jury, in favor of the defendants and crediting them with goods on hand at cost prices, the assets appearing from the books and vouchers unaccounted for amounted to $242,660.61. There was no evidence of extraordinary disaster attending the business; none of the defendants charged the others with conversion or breach of trust against the copartnership; nor was there any evidence that any of them made a complaint to the others that the business was going wrong. The inference might well have been drawn by the jury that the partners had failed to show where this very large deficiency of assets had gone, that $242,000 had not been lost in the business, which lasted only 8% months, that its disappearance was not satisfactorily explained, and that the defendants had by agreement concealed it for their own benefit. This would have been sufficient; basis for the conviction of all the copartners without other testimony. But there was much more.

Lords Frieden and Ellis Frieden, his son, were in charge of the Roanoke store. Sallis, an employee of the Roanoke store, testified that large quantities of goods were shipped from that store under fictitious names, and to fictitious consignees, and that the bills of lading were in the handwriting of Ellis. Frieden. B. Miller testified that goods were shipped to him in a fictitious name contrary to his request that his own name be used; that cash was required of him; and that -he several times paid in thousand-dollar bills. Express agents testified that Ellis Frieden paid for C. O. D. shipments on three occasions with thousand-dollar bills. There was evidence that Ellis Frieden kept his bank account in his wife’s name and deposited funds of the partnership in that account; that he opened a bank account in Scher’s name, and after the adjudication deposited in it a thousand-dollar bill, and drew cheeks in Scher’s name, receiving by his request bills o£ the same denomination. A letter from Harry Erieden to Ellis Erieden indicated that he was receiving goods from Ellis. In the letter he said that he was obliged to sell clothing at 55 per cent, of cost; that “things would be cleaned up pretty good”; that “I don’t think we ought to keep balances in banks.” Samuel Erieden, in charge of the Waynesboro business, received there large quantities of goods in packages which he immediately unpacked, and repacked in different cases and sent to the Roanoke and Richmond stores. Tending to show his purpose to make large purchases in anticipation of bankruptcy, was the evidence that Samuel Erieden made rapid increases in purchases and decreases in payments as bankruptcy approached. In May, 1923, purchases were nothing and payments $1,563.59; June, purchases $2,859.73, payments $2,696.-42; July, purchases $4,409.52, payments $4,-342.42; August, purchases $3,254.28, payments $50.00; September, purchases $10,-818.05, payments $3,245.17; October, purchases $31,813.25, payments $2,100.79; November, purchases $20,093.96, payments $1,-944.11. Corresponding increases in purr chases and decreases in payments appeared at the other places of business. The purchases in October, November, and December, on the eve of bankruptcy, were over $200,000.

Large quantities of goods were shipped from the Richmond store by Seher under assumed, names to fictitious persons. After bankruptcy, Seher bought in his own name the goods in the Richmond . and Roanoke stores for $10,000, paid in thousand-dollar bills. There was evidence from A. Friedman that Seher told him he had bought the Roanoke store for Louis Erieden. Further details of incriminating testimony seem unnecessary to show that, the ease was one for the. jury.

Exception was taken to the first paragraph of the following charge of the District Judge:

. “Consider the evidence that has been adduced, start at the beginning when those men went into business, their course of dealing from that time as it has been disclosed on the witness stand by the evidence, finally winding up with a shortage or shrinkage as you may call it, their explanation of how it occurred, and if you are convinced as a result of a fair consideration of all of that evidence that that shrinkage has not been accounted for, that their explanation is not reasonable and does not commend itself to you, that this property which they had and which they now owe money for is unaeeountr ed for, and that those circumstances irresistibly lead your minds to conclude that the whole thing was a guilty scheme to defraud their creditors, then I am sure you won’t hesitate to find them guilty.
“On the other hand, if you think that this unfortunate ending of their business venture was due to ignorance, was due to the larceny on the part of their clerks if there was larceny unknown to them, was due -to their inability to handle a large concern of this kind, was due to their inaccuracy in bookkeeping, was due to their extensive overhead charges, was due to their improvidently paying out money to creditors created prior to this indebtedness as in the case of $30,000 claimed to have been paid out to Louis Frieden, and that it was paid out in good faith, if you are satisfied as I say, as a result of that evidence, that those things are the responsible cause of this trouble and failure, then, of course, gentlemen of the jury, they are entitled to be acquitted.”

This instruction seems to vindicate itself. The government has proved beyond dispute a very large apparent shrinkage of assets unaccounted for on the books of the firm which had gone somewhere. The defendants had undertaken to account for the shrinkage in the manner indicated in the instruction. The real practical issue in the ease was whether they had succeeded. If they had not, there was no escape from the inference that they had concealed the assets unaccounted for.

The evidence of West as to the correctness of his account of goods sold was under the circumstances admissible, although he did not himself make the book entries. Du Pont v. Tomlinson (C. C. A. Fourth Circuit) 296 F. 634.

A. Lee Rawlings, an expert accountant, was asked: “Should there, from the evidence and from the knowledge you have of this case and from your experience as a certified public a'ecountant, be any proper deductions therefrom in arriving at the transactions of this firm?” This indefinite question was excluded. But the court ruled the witness could testify fully as to anything in the books tending to explain the shortage of assets. Counsel declined to press the matter further. We perceive no ground for saying that any competent evidence of the witness was excluded.'

The evidence tended t,o show that the defendants conspired to defraud creditors by concealing assets in anticipation of bankruptcy, by the continuation of the conspiracy after bankruptcy, the making of false sehed-ules, and false oaths after bankruptcy; the concealment of assets before bankruptcy and the continuation of the concealment after bankruptcy. There was no error in the exclusion and rejection of testimony or in the instructions to the jury. It follows that there is no ground to disturb the verdict and judgment.

Affirmed.


author: DENISON, Circuit Judge

text:
    TENNESSEE MINING & MFG. CO. v. NEW RIVER LUMBER CO.
    (Circuit Court of Appeals, Sixth Circuit.
    May 16, 1925.)
    No. 4130.
    1. Injunction <®=>l 13 — Plaintiff’s dismissal of former suit, to enjoin second cutting over of land, held not to show laches.
    That former suit to enjoin second cutting over of land by purchaser of timber was dismissed by landowner to encourage expected good relations between parties helé not to show lach-es depriving owner of right to equitable relief, in absence of any action by purchaser in reliance thereon.
    2. Injunction <§=198— Landowner held not entitled to accounting of damages accruing pri- or to filing suit to restrain second cutting over of land.
    Where second cutting over,of land by purchaser of timber was acquiesced in by owner and results of rightful and wrongful cutting would be difficult to distinguish, accounting of damages prior to filing of suit to restrain second cutting will be denied.
    3. Evidence <§=>450(8) — Contract granting right to remove timber held ambiguous, justifying resort to surrounding circumstances; “cut over”; “cut”; “cutting.”
    Contract, granting “all standing and down timber of all sizes of (certain) trees which may be upon the.land at time of cutting thereof” for 25 years, helé ambiguous, justifying resort to surrounding circumstances and general considerations for its construction; land from which desired timber has been removed being “cut over” or “cut,” and “cutting” referring either to land or to trees.
    TEd. Note. — For other definitions, see Words and Phrases, First and Second Series, Cut— Cutting.]
    4. Logs and logging <§=>3(I0) — Contract grant, ing timber held not to grant right to cut over land second time.
    Under contract granting “all standing and down timber of all sizes of (certain) trees which may be upon the land at the time of cutting thereof” for 25 years, where purchaser had taken out all desired trees from any particular tract without indicating that it was not intending to exercise its full privilege, privilege as to that particular tract helé exhausted and no right of recutting existed, but such inference should not be drawn as to tract on which it ceased operations in expectation of compromise purchase thereof, which was never made, or as .to substantial tracts of timber left untouched, etc.
    Appeal from the District Court of the United States for the Eastern District of Tennessee; Xenophon Hicks, Judge.
    Suit by the Tennessee Mining & Manufacturing Company against the New River Lumber Company. Bill dismissed, and plaintiff appeals.
    Reversed and remanded.
    In 1905, appellant’s predecessor, hereinafter called, with appellant, the Land Company, owned a 54,000-aere tract of land in Eastern Tennessee. The Lumber Company, appellee, desired to cut the lumber, and a contract was made by which the timber was sold to the Lumber Company, with the privilege of cutting. By this instrument the Land Company granted to the Lumber Company “all the standing and down timber, of all sizes, of hickory, ash and persimmon, linden and dogwood trees which may be upon the land hereinafter mentioned at the time of cutting thereof, and all the standing and down timber, of all varieties of trees, of a diameter of twelve inches or over at the point of cutting at the time of cutting thereof, cut or down within twenty-five years from the date hereof, and all timber of ah varieties under twelve inches in diameter required by the party of the second part to build and maintain its lumber camps, stables, necessary buildings, dams, roads, railroads, slides, ways, tramways and other requirements, in connection with the cutting, transporting, utilizing and manufacturing said timber.” The habendum clause was “for a period of twenty-five years.” The tract comprised the valley of a river with a rough and mountainous country on each side, and included many tributary valleys which came into the main’one. The approved method of lumbering, which was in the minds of all parties, contemplated building a sawmill near the lower end of the tract, building a railroad from the sawmill up the main valley, and then building branch railroads up some of the tributary valleys. It was also the usual practice, and was doubtless in contemplation, that when the lumber in the secondary valley had been, cut as far as the Lumber Company eared to cut it, the branch railroad therein would be pulled up and would be laid down again in another one, where the next section of the lumbering operation would be continued. It was also a part of the understood and contemplated situation that the lands were valuable, or supposed to be valuable, for coal mining, that the building of the railroad by the Lumber Company would aid in the development of the tract as mining property, and that the timber under 12 inches whieh the Lumber Company was to leave upon the land would furnish the mining timber necessary for that development.
    The controversy is as tó the right of the Lumber Company to go back and cut over a second time land which it had once cut over. It is the contention of the Lumber Company that at any time before the expiration of the 25 years it may cut anywhere upon the tract any tree whieh at that moment is more than 12 inches in diameter. It is the contention of the Land Company that when the privilege of cutting has been once exercised upon any particular sub-tract, it is exhausted, and there is no remaining future right to cut the trees which the Lumber Company then elected not to cut, or whieh may' within the remainder of the 25 years reach the prescribed minimum size.
    The bill was filed by the Land Company to enjoin the Lumber Company from a continuance of the second cutting over. The court below dismissed the bill-.
    J. A. Fowler and N. B. Morrell, both of Knoxville, Tenn. (J. A. Fowler, Lindsay, Young & Young, and Fowler & Fowler, all of Knoxville, Tenn., on the brief), for appellant.
    L. D. Smith, of Knoxville, Tenn., and E. G. Foster, of Huntsville, Tenn. (Anderson & Word and L. D. Smith, all of Knoxville, Tenn., on the brief), for appellee.
    Before DENISON, MACK, and DONAHUE, Circuit Judges.
   DENISON, Circuit Judge

(after stating the facts as above). 1. We are not convinced that there has been sufficient laches to prevent the aid of equity in protecting whatever rights the Land Company has. It is true that a former suit of the same general character as this, after pending for some time, was voluntarily dismissed by the Land Company; but this dismissal was by way of encouraging expected good relations between the parties; and we do not see that the Lumber Company has depended upon that dismissal in taking any action whieh will be affected by - our. conclusion. However, we conclude that in so far as there had been by the Lumber Company before this suit any violation of the Land Company’s rights, as we find such rights to have existed, there has been such acquiescence by. the Land Company and there will be such difficulty in distinguishing between the results of rightful and those of wrongful cutting, that the case is, in our judgment, not suitable for any accounting of damages prior to the filing of this bill.

2. We find in the contract a distinct ambiguity justifying resort to the surrounding circumstances and to general considerations in order to get the true construction. The case is so unique in its precise determinative facts that we get no specific help from the decisions that have been cited to us; the general principles of construction involved are entirely familiar.

Where a tract of timber land is subjected to a “lumbering operation” by which the desired trees are cut and the logs removed, the land is said to be “cut over”; it is also common to. speak of the land merely as “cut,” and for the operator to say, for example, that he cut 200 acres last year and will cut the same amount this year. The word “cutting” may therefore refer to the trees or to the land; and when we find this contract referring to “all the standing and down timber of all sizes of (certain) trees whieh may be upon the land hereinafter mentioned at the time of cutting thereof,” the word “thereof” may refer either to the precedent “land”, or to the precedent “trees.” Perhaps, in strictness, it would be taken to refer' to the nearest precedent word to it to which it might relate, and therefore to “land.” In the next clause, referring to all kinds of trees over 12 inches at the time of the cutting thereof, there is not the same alternative antecedent, hut the word “thereof” can hardly be thought to be used in different senses in adjacent clauses. Hence, our conclusion that there is an ambiguity.

It was known to both parties that it was the customary method of lumbering, and made almost necessary by considerations of efficiency and economy, to cut a particular sub-tract clean and finish the operation while engaged in it; that such lumbering must be done, and this was to be done, by temporary branch railroads, extended up the creek valleys and by numerous “snake roads” to be built up the sides of the hills; that the building of these temporary roads would consume large amounts of' the small timber under 12 inches; that after tearing up the railroad and removing it to another creek valley and abandoning all the other temporary work done in the first valley, it would be an un-, heard of and rather absurd thing to come back again later, do the temporary work over again, and get a rather trifling amount of timber; that mining operations whieh would require all the timber under 12 inches ■which had not been used for roadways, etc., in lumbering operations, were expected to follow; and it was obvious that since mining operations could not be carried on without timber, and since even though the Lumber Company had cut over a tract of land and seemingly finished with it, if a mining company could not use the remaining timber, because within 25 years it might grow to be 12 inches in diameter and the Lumber Company might come back and cut it, all future mining operations would be embarrassed, if not prevented, for 25 years. It was apparent, too, that large quantities of this smaller stuff would be used for roadways, etc., and that to do this slashing a second time, in connection with a second cutting, might leave the land almost denuded of timber.

In this situation, an intent that the Lumber Company, after having completely cut over a well-defined and limited sub-tract, and after having taken therefrom all the timber which it was entitled to take and desired to take, should nevertheless have the right to come back again in 5 years and again in 10 years and again in 20 years, and again use small trees for roadways, etc., while it cut the trees which it had deliberately left or which had, in the meantime, grown over the limit, and where such right to recut could have no economic value to the Lumber Company but only a “nuisance value” — any such intent would be so abnormal that it could be inferred only from the clearest and most unambiguous language; and we do not find this intent so stated.

The true intent of the- contract, in our judgment, was to give the Lumber Company the privilege of cutting over this land in successive steps in the usual way during the prescribed period, and not to give an arbitrary right to cut all individual trees that grew to the prescribed limit within 25 years, regardless of all other considerations. We think that whenever, the circumstances justify the inference, as to any particular subtract, that the Lumber Company had cut it over and had taken all the trees it desired to take, and without indication that it was not intending to exercise its full privilege, the privilege should be considered, as to that special sub-tract, exhausted, and that no further or general right of reeutting existed. We intend to state this inference of exhaustion in carefully restricted terms. The inference should not be drawn in an instance like the one which chiefly provoked this bill. While the original cutting was in progress in one creek valley, a controversy arose between the Lumber Company and a mining company as to the extent of the cutting right upon a certain tract of 600 acres (or perhaps the tract was a larger one). In the expectation, if not with the understanding, that the mining company would buy at a compromise figure the claimed cutting rights, this particular lumbering operation was abandoned and the branch railroad pulled up and moved to another valley. Later it developed that there was a misunderstanding and the expected purchase never was made. Under these circumstances, this cutting privilege was not exhausted, and the Lumber Company had the right, some years later, to go back and finish that operation from the point where it had been stopped — regardless of whether or not it could make a profit by doing so — but not the right to cut over again those same acres which it had once cut over and finished during the progress of its former incompleted operation. Further, our interpretation is not intended to disparage but to concede the right of the Lumber Company, in its first operation, to leave untouched any substantial body of timber, like that over the summit of a ridge which might later be better reached from the other side, or to leave untouched all trees of a certain kind for which the market at that time was bad, and for which great increases in value might be anticipated; but in order to justify any right to go back and get such trees, they must have been of sufficient number and importance to form a reasonable basis for concluding that there was a reserved intent to go and get them later. For an illustrative example, we may say — without intending to intimate a conclusion — that it might be that the hickory trees would have such an individual or class value, even if they were left during the general lumbering operation, as to indicate an expectation of taking them out later individually, even not in connection with any general operation.

Further, we would not disparage but would concede the right of the Lumber Company to cut some trees and leave others (and take these later), much more arbitrarily, along the immediate line of its permanent railroad and not thereby to create any inference that it had finished and exhausted its privilege of such cutting in that locality.

The opinion of the trial'court forcefully presents the extreme illustrations of difficulties flowing from the Land Company’s full contention; most of these difficulties disappear by application of the intermediate construction we have adopted. True, the Lumber Company had the right to delay its cutting, in any particular locality, until nearly the end of the period, and thereby get all the increased growth; but the Land Company knew that to meet practical conditions the cutting must ,be begun promptly and continued diligently during nearly the whole time, dr else the territory could not be covered; it took its chances that the general average would be about 12% years.

Our conclusion as to the right interpretation of the contract is confirmed by the proofs as to the actual intent of the parties at the time. Both parties understood that no right of general recutting was given.

The record does not give sufficient data for a final disposition of the ease according to the principles of construction of the contract which we have stated. Since the contract was otherwise interpreted by the court below and the ease was not viewed in what we think the right aspect, we have not considered whether the Land Company makes out any case for relief, or, if so, how much. But we conclude that the decree should be reversed, and the case remanded for further proceedings in accordance with this opinion. Whether the District Court will think proper to enter a decree upon the present record, or to take further proofs in order to get more accurate data, will be determined by that court in its discretion.