author: NETERER, District Judge.

text:
    WALLACE v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION.
    (District Court, W. D. Washington, N. D.
    April 21, 1925.)
    No. 9093.
    1. United States @=»52!/2, New, vol. I9A Key-No. Series — Emergency Fleet Corporation subject to suit in district in which doing business.
    The Emergency Fleet Corporation is subject to action at law for injuries to employee engaged in repairs to vessel in the district where it maintained office and place of business in which it transacted business within purview of state laws.
    2. United States @=>52(/2, New, vol. I9A Key-No. Series — Service of process on district director of Fleet Corporation held sufficient.
    In view of Rem. & Bal. Code Wash. § 226, subds. 8, 9, service of process in tort action on district director of United States Shipping Board Emergency Fleet Corporation, in charge of its business within district, was sufficient; defendant being a corporate entity doing business in state and having directed particular work in which plaintiff was injured.

      3. United States <§=>521/2, New, voi. I9A Key-No. Series — Emergency Fleet Corporation not exempt from suit because of government ownership of stock.
    Ownership by United States of stock in Emergency Fleet Corporation is immaterial on question of corporation’s liability for torts, the government’s exemption from suit not extending to it.
    4. United States <§=>125 — Libel in personam not exclusive remedy against Emergency Fleet Corporation, but action at law will lie for torts.
    The remedy provided by Suits in Admiralty Act, Comp. St. Ann. Supp. 1923, §§ 1251%— 1251% l, for claims against government owned vessels by libel in personam in admiralty, is not exclusive, and plaintiff having cause of action for tort against Emergency Fleet Corporation may proceed by action at law or by libel under the act; such congressional intent being manifest when considered with relation to Tucker Act March 3, 1887, Lever Act, § 25 (Comp. St. § 3115%q), and Judicial Code, §§ 24, 146 (Comp. St. §§ 991, 1136).
    At Law. Action by William Wallace against the United States Shipping Board Emergency Fleet Corporation. On motion to quash service.
    Motion denied.
    John S. Jurey, of Seattle, Wash., for plaintiff.
    Bronson, Robinson & Jones, of Seattle, Wash., for defendant.
   NETERER, District Judge.

This is a common-law action seeking to recover damages from the defendant for personal injuries sustained while employed on board a ship, while being repaired under authorization and contract of the defendant; it being alleged that defendant was operating such vessel as a merchant vessel. The defendant, appearing specially, moves to quash the service, alleging that the defendant is a corporation organized under the laws of the District of Columbia, that at the time of the accrual of the action the defendant was not doing business in King county or the state of Washington, and that the person upon whom service was attempted to be made was not such as authorized under the laws of the state, that the Congress, by the Suits in Admiralty Act, 41 Stat. 525 (Comp. St. Ann. Supp. 1923, §§ 1251%-1251%i), provided an exclusive remedy in admiralty for adjudication of claims such as in issue here.

While I believe the dissenting opinion in the Sloan Shipyards v. U. S. Shipping Board, etc., Case, 258 U. S. 549, 42 S. Ct. 386, 66 L. Ed. 762, states the real purpose and intent of the Congress, the majority opinion is the law fixing the corporate entity of the defendant. Sloan Shipyards v. Shipping Board, 258 U. S. 549, 42 S. Ct. 386, 66 L. Ed. 762; Shipping Board v. Sullivan, 261 U. S. 146, 43 S. Ct. 292, 67 L. Ed. 577; U. S. v. Matthews (C. C. A.) 282 F. 266; Providence v. Downey (C. C. A.) 294 F. 641; Puget Sound Mch. Depot v. Shipping Board (D. C.) 293 F. 768; Mfg., etc., v. Shipping Board (C. C. A.) 284 F. 231; Gould v. U. S. Shipping Board (D. C.) 261 F. 716; Lord v. Shipping Board (D. C.) 265 F. 955; Perna v. Shipping Board (D. C.) 266 F. 896; Pope v. Shipping Board (D. C.) 269 F. 319; American, etc., v. Shipping Board (D. C.) 270 F. 296; Eichberg v. Shipping Board, 51 App. D. C. 44, 273 F. 886; Buffalo v. Shipping Board, etc. (C. C. A.) 291 F. 23; Traylor v. Shipping Board (D. C.) 277 F. 248; Ingersoll v. Shipping Board, 195 App. Div. 838, 187 N. Y. S. 695; U. S. v. Puget Sound Mch. Depot (D. C.) 298 F. 353. The defendant operating a merchant vessel and charged with a tort, is within the rule announced in the Sloan Case.

The record, I think, is conclusive that the defendant did authorize the repairs upon the ship upon which plaintiff was employed, did have charge thereof, was maintaining an office and place of business in which business of defendant was transacted, and within the purview and provisions of the law within this state. Puget Sound Mch. Depot v. Shipping Board (D. C.) 293 F. 768; Kirby v. Louismann (D. C.) 221 F. 267; Smolik v. Philadelphia, etc. (D. C.) 222 F. 148; Michigan v. Alumnus, 190 F. 879; Dungan v. Bally (D. C.) 271 F. 517; Lee v. Fidelity, etc., 51 Wash. 208, 98 P. 658; Strandall v. Alaska, etc., 73 Wash. 67, 131 P. 211; Hayworth v. McDonald, 67 Wash. 496, 121 P. 984; Grams v. Idaho, 105 Wash. 602, 178 P. 815; Smith v. Dickinson, 81 Wash. 465, 142 P. 1133; Pacific v. International, 125 Wash. 273, 216 P. 358, 32 A. L. R. 767; sections 202 and 226, Remington’s Code of Washington; 9 Fletcher on Corporations, § 5939, p. 10020.

The defendant being a corporate entity and doing business in the state, and having directed the doing of the particular work on which the plaintiff was,injured, the service upon the district director in charge of the defendant in this district was sufficient. Subdivisions 8 and 9 of section 226, Rem. & Bal. Code of Wash. See Knutson v. Campbell Mills (D. C.) 300 F. 241.

Under the Sloan Case, the Suits in Admiralty Act invoked by the defendant has no application.

“An act authorizing suits against the United States in admiralty, suits for salvage .services, and providing for the release of merchant vessels belonging to the United States from arrest and attachment in foreign jurisdictions, and for other purposes.” Act March 9, 1920, Secs. 1251í4-1251%?, Comp. St. 1923.

It is immaterial whether the United States owns any or all of the stock in the corporation, under all of the authorities. It waives its sovereignty when it enters into a commercial enterprise, and the corporate entity is amenable in the civil courts for its acts. The contention is not persuasive that the Congress could not have intended to extend the jurisdiction of the district court over the defendant, when thought of with-relation to the Tucker Act March 3, 1887, e. 359 (24 Stat. 505), and the Lever Act August 10, 19T7, 40 Stat. 276, § 25 (Comp. St. § 3115%q); the pertinent language of each respectively being: “All claims * * '* founded upon * * * any law of Congress” or “upon any regulation of an executive department,” or “upon any contract, expressed or implied, with the government of the United States,” and all claims which may be referred to it by either house of the Congress. Court of Claims Act (Comp. St. § TT36). “* * * In respect of which claims the party would be entitled to redress against the United States either in a court of law, equity, or Admiralty if the United States were suable.” Tucker Act. “ * * * And shall be entitled to sue the United States to recover such further sum as, added to said seventy-five per centum, will make up such amount as will be just compensation in the manner provided by section twenty-four, paragraph twenty, and section one hundred and forty five of the Judicial Code.” Section 25, Lever Act. Sections 24 and T45, Judicial Code (Comp. ,St. §§ 99T, 1136), incorporate, respectively, the provisions of the Tucker Act and the Court of Claims Act. Nor can any confusion which may be created by the several acts, if the Suits in Admiralty Act is not held exclusive, be controlling. This is a matter for legislation for the' Congress, and not for the courts.

The defendant is a corporate entity engaged in commerce — see U. S. v. Clallam County (D. C.) 283 F. 645, affirmed 263 U. S. 341, 44 S. Ct. 121, 68 L. Ed. 328— and is answerable for its torts in the District Court, jurisdictional facts being present, irrespective of the stock ownership of the United States. Sloan Case, supra. In Re Eastern Shore Shipbuilding Corporation (C. C. A.) 274 F. 893.

“But surely the fact that the Eleet Corporation was employed as an agency of the President does not of itself clothe the agency so employed with the immunities of his office.” In Re Eastern Shore Shipbldg. Corp. supra, at page 902.

The purpose of the Suits in Admiralty Act appears in section 1251C. S. 1923, which provides: “That no vessel owned by the United States or by any corporation in which the United States or its representatives shall own the entire outstanding capital stock or in the possession of the United States or of such corporation or operated by or for the United States or such corporation * * * shall hereafter, in view of the provisions herein made for a libel in per-sonam be subject to arrest * * * ” The sole purpose being to prohibit seizure and to substitute a proceeding in personam in lieu of the proceeding in rem, other requirements being present as provided in the act.

The plaintiff, being injured, had a remedy against the defendant, a corporate entity for any default which proximately resulted in his injury. He can invoke the common-law remedy or proceed under the Suits in Admiralty Act. Judge Hand, in John G. Wright v. Shipping Board (D. C.) 285 F. 647, so held. See, also, Rosenberg v. Shipping Board (D. C.) 295 F. 372; Banque v. Shipping Board (D. C.) 266 F. 897; Shipping Board v. Banque, 286 F. 918; Sloan Case, supra.

Motion to quash denied.


source: Caselaw Access Project

author: LINDLEY, District Judge.

license: Public Domain

text:
    SCHERRER v. FOSTER et al.
    (District Court, E. D. Illinois.
    May 8, 1925.)
    I..Removal of causes <@==»I07(4) — Competent evidence showing defendants not jointly liable must be considered in determining whether case is removable.
    Though plaintiff suing two defendants states cause of action on which they are jointly liable competent evidence showing that the 'cause of action is not one on which defendants are jointly liable, if submitted to the court, must be considered in determining whether case is removable.
    2. Master and servant <@==>313 — Employer and negligent employee not jointly liable.
    Where employer’s liability, if any, is under doctrine of respondeat superior, the employer and employee whose negligence cause! the injury are not jointly liable.

      3. Removal of causes <S=36 — Employee’s action against employee and employer, in which liability, if any, is under doctrine of re-spondeat superior, held removable to federal court.
    Where plaintiff employee was injured because of negligence of defendant employee, ■while defendant employee was acting under the orders of defendant employer and within the scope of his employment, so that the employer’s liability, if any, was under doctrine of re-spondeat superior, there was separable controversy rendering the action removable because of diversity of citizenship of plaintiff and employer, since the two defendants were not jointly liable and joinder was legal fraud on employer’s right of removal.
    At Law. Action by George B. Seherrer against A. J. Foster and tbe International Harvester Company of America. On motion to remand to state court, after removal from state to federal court.
    Motion denied.
    Kramer, Kramer & Campbell, of Fast St. Louis, Ill., and Creighton & Thomas, of Fair-field, Ill., for petitioner.
    Fowler & Rumsey, of Harrisburg, Ill., and D. A. Orebaugh, of Chicago, Ill., for respondents.
   LINDLEY, District Judge.

The plaintiff moves to remand to the state court. The' motion is submitted upon the declaration and the verified petition to remove. The declaration alleges in the first count “that the defendants employed the plaintiff to aid in raising the wheels of a tractor by means of jaekserews and directed the plaintiff to adjust the jaekscrew under; the axle; * * 5 that the defendants, by A. J. Foster, then and there the agent of the said International Harvester Company, 5' c ® without notice or warning to plaintiff, negligently and carelessly wrenched said jaekscrew with a violent jerk,” resulting in injury to plaintiff’s hand. The second count charges “that the defendants, without warning plaintiff, negligently and carelessly gave the jaekscrew a sudden jerk” and thereby caused an injury to plaintiff’s hand.

The petition to remove alleges that plaintiff and said Foster were and are citizens and residents of Illinois; that the International Harvester Company is a corporation, organized and existing under the laws of the state of Wisconsin, and a citizen of said state, having its principal office and place of business in Milwaukee; that the amount in controversy exceeds $3,000 exclusive of interest and costs; that said Foster was at the time of the alleged accident the servant and employee of the harvester company and in handling the said jaekscrew and lever was acting under the orders of his employer and within the scope of his employment; that the liability, if any, arises out of and depends upon the rule of respondeat superior; that as a result of these facts there is no joint liability; and that the joinder of Foster is a legal fraud upon the harvester company intended to prevent it from exercising its right of removal. This petition is supported by positive oath.

Though, in the absence of any evidence controverting the same, the plaintiff’s declaration would disclose a joint liability, and though the plaintiff has a right in his declaration to make his own case as to liability (Alabama G. S. R. Co. v. Thompson, 200 U. S. 206, 26 S. Ct. 161, 50 L. Ed. 441, 4 Ann. Cas. 1147), yet if competent evidence to the contrary is submitted the court must consider the same. Such evidence is submitted by the harvester company in its verified petition, which stands undisputed. From this evidence the court finds that the plaintiff’s suit is brought against the two defendants on account of the alleged negligence of Foster while acting as the employee of the harvester company within the scope of his employment and is based upon the doctrine of respondeat superior.

In some classes of cases in the state of Illinois a master and servant may be properly joined as defendants in a tort action, as shown by the case of Republic Iron Co. et al. v. Lee, 227 Ill. 246, 81 N. E. 411. It is, however, held in the ease of Herman Berghoff Brewing Co. et al. v. Przbylski, 82 Ill. App. 361, that a judgment cannot be sustained against the master and servant jointly in a case where the master is liable only upon the doctrine of respondeat superior. This is a well-considered case, and many authorities are there cited. The same doctrine is sustained in the ease of McNemar v. Cohn, 115 Ill. App. 31-36, and there is no authority in the state of Illinois to the contrary. The Republic Iron Co. Case, supra, is not an authority to the contrary. In the opinion in that ease it is stated that the employee, Worker, personally and individually owed the duty to the plaintiff not to give him any negligent order, and that the same duty rested upon the company, and that if a negligent order was given by Worker, it was an affirmative wrong done by him, in violation of a common duty owed by the company and Worker to the plaintiff, and that these facts constituted Worker and the company joint tort-feasors. And in this opinion it is also said: “In this connection a, number of authorities are cited from foreign states and two from the appellate courts of this state as sustaining the proposition that a master and servant cannot be joined as defendants in an action for personal injuries where the master can only be held liable on account of the negligence of the servant with whom he is joined as defendant under the doctrine of respondeat superior. We do not consider those cases applicable here,” thereby clearly showing that they were not deciding such a ease as we have at bar. Though some jurisdictions do not agree, the law quite generally is in accord with the eases in Illinois. See Warax v. C. N. O. & T. P. R. R. Co. (C. C.) 72 F. 637, Taft and Lurton, Judges; Gustafson v. C., R. I. & P. R. R. Co. (C. C.) 128 F. 85; Creagh v. Equitable Life Assurance Co., 88 F. 1; Schaver v. Pacific Coast Condensed Milk Co., 185 F. 316; Atlantic Coast Line R. R. Co. v. Bailey, 151 F. 891.

It follows from the evidence submitted, it being apparent that there is no joint liability of the two defendants, that there is a separable controversy, and a joinder of the local defendant is a legal fraud upon the harvester company’s right to remove. The word “fraud” used in this sense is not used in its popular or ordinary meaning, but signifies the result of plaintiff’s, either intentionally or otherwise, joining as party defendant one who cannot Under the evidence submitted be jointly liable. As said by the court in Wecker v. National Enameling Co., 204 U. S. 176, 27 S. Ct. 184, 51 L. Ed. 430, 9 Ann. Cas. 757: “In view of this testimony and the apparent want of basis for the allegations of the petition as to Wetten-gel’s relations to the plaintiff, and the un-contradieted evidence as to his real connection with the company, we think the court was right in reaching the conclusion that he •was joined for the purpose of defeating the right of the corporation to remove the ease to the federal court.”

Nor does the ease of Alabama v. Thompson, supra, militate against this conclusion. Eor in the Weeker Case, the court expressly distinguishes the Alabama Case by saying that there was nothing in that ease to suggest an attempt to commit a fraud upon the jurisdiction of the federal court. In the Alabama Case the question submitted to the court arose solely upon the case made in plaintiff’s declaration. There was no evidence to the contrary considered. In the latter case, the court found from the affidavits submitted that there could be no joint liability and that therefore the joinder was a fraud. Such is the situation in the present case, and plaintiff is in error in contending that the petition for removal includes only conclusions, for it sets up the facts upon which the liability is based, and it is upon those facts standing undisputed that the court relies and from which it draws its own conclusion that there is no joint liability.

The motion to remand will be denied.


author: ANDERSON, Circuit Judge.

text:
    Petition of BROOKS. BONDER v. JOHNSON, Commissioner of Immigration.
    (District Court, D. Massachusetts.
    April 28, 1925.)
    No. 3052.
    1. Aliens <§=>54 — Constitutional law <§=>83(l) —Alien ordered deported cannot be imprisoned indefinitely pending recognition of Soviet government by United States.
    Alien ordered deported cannot be imprisoned indefinitely pending recognition of Soviet government by United States because of inability •to deport him to Russia, since right to arrest and hold or imprison alien is merely incident of right to exclude or deport, and no court or tribunal has power to hold indefinitely any sane citizen or alien in prison, except as punishment for crime, in view of Const. Amend. 13.
    2. Aliens <§=>53 —Deportation or exclusion proceedings are not punishment for crime.
    Deportation or exclusion proceedings are not punishment for crime.
    3. Aliens <§=>54 — Alien arrested for deportation to Russia is entitled to be deported or have his freedom.
    Alien arrested for deportation to Russia is entitled to be deported or have his freedom, and he cannot be required to furnish bond and report at intervals to Immigration Commissioner until he can be deported to Russia.
    Habeas Corpus. Petition for writ by Lawrence G. Brooks, on behalf of Lew Bonder, against John P. Johnson, Commissioner of Immigration. Petitioner discharged from custody.
    Lawrence G. Brooks, of Boston, Mass., for petitioner.
    Harold P. Williams, U. S. Atty., and John W. Schenck, Asst. U. S. Atty., both of Boston, Mass., for respondent.'
   ANDERSON, Circuit Judge.

This habeas corpus case is an aftermath of Colyer v. Skeffington (D. C.) 265 F. 17. That case arose out of raids made by agents of the Department of Justice in January, 1920, when from 800 to 1,200 people were arrested in New England and several hundred after-wards incarcerated on Deer Island in Boston Harbor. The charge was that the persons thus lawlessly seized were engaged in a Red or Communistic plot to overthrow our form of government. After most of them were, for utter lack of evidence, discharged, habeas corpus proceedings were brought in this court in behalf of 20, most of whom had been held subject to deportation. In all but 4 of the eases tried it was found by this court that the proceedings lacked due process of law. But in the eases of William T. and Amy Colyer and Frank Mack, three harmless English Socialists, and of Lew Bonder, a Russian, difficult to understand, this court held the proceedings not lacking in due process; but found on all the evidence that mere membership in the Communist party, without more, did not bring them under the Act of October 16, 1918, being Comp. St. Ann. Supp. ' 1919, §§ 4289%b(l)-4289:!4b(3). That act provides that “aliens who are members of or affiliated with any organization that entertains a belief in,.teaches, or advocates the overthrow by force or violence of the government of the United States, * * * shall be excluded from admission into the United States.” And section 2 (section 4289%b[2]) provides for the deportation of such aliens, irrespective of the time of their entry. On appeal by the government, this court was, on that point alone, reversed by the Court of Appeals, January 11,1922. 277 F. 129. The mandate from the court above came down on March 23, 1922. The order of deportation of Bonder became thus valid and outstanding. Nothing remained for the government to do but to take Bonder and deport him. He, meantime, as is shown by the return in this ease, had been admitted to cash or Liberty Bond bail for $500, and was peacefully working as a roofer. Nothing was done with him until February, 1925. Then the surety On his bail bond, not unnaturally desiring to be freed from further responsibility, produced Bonder before this court, and the court ordered Bonder into the custody of the Commissioner of Immigration at Boston. There Bonder remained imprisoned from February 16 until April 21,1925. The present habeas corpus proceedings were brought to secure his freedom.

It appears, both from Bonder’s evidence given before this court and from' affidavits which have been filed, that during this period of about five years — three years since the mandate came down — he has been working at his trade, learning English, and tak-, ing music lessons; that during no part of that time has he been engaged in overthrowing our form of government or otherwise attacking our institutions, notwithstanding the treatment he has had from persons sworn to support these institutions.

Parenthetically, if should be noted that he is known as Lew Bonder, Leo Bonder, and Joe Bonder; but he is one and the same person referred to in all of the affidavits filed in the record in this case. Moreover, the evidence before this court indicates that the Communist party is now nonexistent, and that Bonder belongs to no similar organization, however named.

The issue now presented is narrow. In the original return the immigration authorities admit their utter inability to deport Bonder to Russia, but venture the suggestion that' the United States will shortly resume diplomatic relations with Russia, and that therefore this alien should be kept in imprisonment pending recognition of the Soviet government by the United States.

It is too plain for argument that the court cannot entertain any such proposition. Ex parte Matthews (D. C.) 277 F. 857; United States ex rel. Ross v. Wallis (C. C. A.) 279 F. 401; Gorovitz v. Sartain (D. C.) 1 F.(2d) 602. The right to arrest and hold or imprison an alien is nothing but a necessary incident of the right to exclude or deport. There is no power in this court or in any other tribunal in this country to hold indefinitely 'any sane citizen or alien in imprisonment, except as a punishment for crime. Slavery was abolished by" the Thirteenth Amendment. It is elementary that deportation or exclusion proceedings are not punishment for crime. Bilokumsky v. Tod, 263 U. S. 149, 154, 44 S. Ct. 54, 68 L. Ed. 221; Fond Tue Ting v. United States, 149 U. S. 698, 730, 13 S. Ct. 1016, 37 L. Ed. 905; Bugajewitz v. Adams, 228 U. S. 585, 591, 33 S. Ct. 607, 57 L. Ed. 978. But by amended return the government now takes the position that the alien should be released on his own personal bond and required to report at such intervals as the Commissioner of Immigration at Boston may deem advisable. This court knows of no power in it or in the immigration authorities to require this or any other alien to give “a personal bond and to report” to the Commissioner of Immigration, whatever this phrase may mean. He is entitled to be deported, or to have his freedom. He has already been imprisoned, for no crime, about nine weeks, for which he is apparently without remedy.

It may be added that, entirely apart from the foregoing considerations, Bonder is .very likely entitled to be set free because of tbe change in status growing out of the disappearance of the Communist party and his failure to be affiliated with any similar organization bent on destroying the Government of the United States. See U. S. v. Tod, 285 F. 523, 529, 26 A. L. R. 1316.

But there is no occasion for this court to discuss that question, for it is very plain that on the record now before the court any further detention by the immigration authorities or control of Bonder’s freedom is illegal.

As the government admits it cannot deport him, he is entitled to be set free. It is so ordered.


author: PER CURIAM.

text:
    UNITED STATES v. LAKE SHORE & M. S. RY. CO. et al.
    (District Court, S. D. Ohio, E. D.
    January 18, 1924.)
    No. 1584.
    1. Monopolies ©=>24(2) — Jurisdiction retained by decree to make further orders and decrees held to continue until combination completely dissolved.
    Jurisdiction retained by decree ordering dissolution of alleged combination to make such further orders and decrees as might be necessary held to continue until combination was completely dissolved.
    2. Judgment ©=>701 — Decree of state court that mortgage was valid lien on subsidiary’s coal lands held binding, as against claim of purchaser of subsidiary’s stock that situation was illegal.
    Where coal lands belonging to railroad’s subsidiary were mortgaged as additional security for railroad’s mortgage bonds, subsidiary agreeing to pay royalty on all coal mined into sinking fund for railroad’s mortgage bonds, held, that decree of state court that mortgage and subsidiary’s covenants were valid liens was binding adjudication, as to validity of mortgage against claim of- purchaser of subsidiary’s stock, that mortgage and royalty agreement violated decree dissolving combination under Sherman Anti-Trust Act July 2, 1890 (Oomp. St. §§ 8820-8823, 8827-8830).
    3. Monopolies ©=>24(2) — Purchaser of stock in subsidiary, sold under decree dissolving illegal combination, held not entitled) to assert illegality of mortgage on subsidiary’s coal lands securing railroad’s bonds.
    Where purchaser of stock in railroad’s subsidiary, sold under decree dissolving illegal combination under Sherman Anti-Trust Act July 2, 1890 (Comp. St. §§ 8820-8823, 8827-8830), as part of consideration recognized validity of mortgage on subsidiary’s coal lands given as additional security for railroad’s mortgage bonds, including agreement to pay royalty on coal mined into sinking fund for such bonds, he could not thereafter in proceeding in equity assert that mortgage on coal lands was illegal.
    4. Monopolies ©=>24(2) — Mortgage on coal lands of subsidiary, stock of which was sold under decree dissolving illegal combination, held not so illegal as to authorize its discharge on suit of government.
    Where purchaser of stock in railroad’s subsidiary, sold under decree dissolving illegal combination under Sherman Anti-Trust Act July 2, 1890' (Comp. St. §§ 8820-8823, 8827-8830), as part of consideration recognized validity of mortgage on subsidiary’s coal lands given as additional security for railroad’s mortgage bonds, including agreement to pay royalty on coal mined into sinking fund for such bonds, held, that, in view of provision of contract between purchaser and railroad that railroad property must first be used before resort could be had to coal lands, situation was not so clearly illegal as to justify discharge of coal lands from mortgage lien on suit of government, under existing conditions.
    In Equity. Suit by tbe United States against the Lake Shore & Michigan Southern Railway Company and others, wherein the United States filed a supplemental petition. Supplemental petition dismissed .without prejudice.
    See, also, 281 F. 1007.
    Henderson & Burr, of Columbus, Ohio, and Wm. Burry, of Chicago, Ill., for Buckeye Coal & Ry. Co. and Sunday Creek Coal Co. of Ohio.
    Benson W. Hough, U. S. Atty., of Columbus, Ohio.
    John F. Wilson, of Columbus, Ohio, for Hocking Valley Ry. Co.
    Before KNAPPEN and DENISON, Circuit Judges, and A. M. J. COCHRAN, District Judge (sitting by designation).
   PER CURIAM.

In the year 1912 the United States began suit in equity herein against six railroad companies and three coal companies, named in the margin hereof, to dissolve a combination alleged to violate the Sherman Anti-Trust Act July 2, 1890, c. 647, 26 Stat. 209 (Comp. St. §§ 8820-8823, 8827-8830). Our decree of March 14, 1914, declared the combination .to be in violation of the act, and ordered dissolution by the sale of the railway companies’ interests in the stock of the Sunday Creek Company, the disposition of stock in the Kanawha & Michigan Railway Company, and otherwise, including the enjoining of the Lake Shore & Michigan Southern, the Toledo & Ohio Central, the Hocking Valley, and the Chesapeake & Ohio Railroad Companies from owning or controlling any stock in the Sunday Creek Company, or any interest in any of the coal properties in which that company is interested. Jurisdiction of the cause was expressly retained by the decree for the purpose of making such other and further orders and decrees as might be necessary to the due execution of the decree of 1914, and the complete dissolution of the combination condemned thereby.

A detailed history of the case will be found in the opinion of this court upon which that decree was based. United States v. L. S. & M. S. Ry. Co. et al., 203 U. 295. Under that retention, orders have been made from time to time, as deemed necessary, to effectuate dissolution.

When that decree was made, the Hocking Valley Railway Company owned the entire of the capital stock of the Buckeye Coal & Railway Company (consisting of 2,500 shares), all of which except 5 qualifying .shares were held in pledge by the Central Trust Company, as trustee under the Hocking Valley Railway Company’s first consolidated mortgage of 1899, by which mortgage the Buckeye Company had conveyed certain coal lands as further security for the payment of the Hocking Valley Railway Company’s bonds secured by that mortgage, by the terms of which the Buckeye Company agreed to deliver, beginning July 1, 1900, yearly statements of coal mined, and to pay two cents per ton on such coal, to be used as a sinking fund for the purchase and cancellation to that extent of the mortgage bonds of the Hocking Valley Company.

On May 19, 1916, upon application of the United States, this court made an order that the capital stock of the Buckeye Company be sold free and clear of the mortgage lien, and that the proceeds thereof be paid to the mortgage trustee to apply on the mortgage bonds. 281 P. 1007. Under that order the Buckeye Company stock was sold to John S. Jones for $50,000 (in connection with the sale to him of the outstanding stock and bonds of the Ohio Land & Railway Company for $400,000), the sale being approved by this court upon presentation of the contract of sale between Jones, on the one part, and the Hocking Valley and Chesapeake & Ohio Railway Companies, on the other, and after taking'the testimony of witnesses in open court relating to conformity of such sale to the order of May 19,1916, the reasonableness of the price paid, and the satisfactory status of the purchaser; the mortgage trustee in connection therewith' waiving its then pending appeal to' the Supreme Court from the order of May 19, 1916. The contract between Jones and the railroad companies contained a recital of the inclusion in the Hocking Valley mortgage of the Buckeye real estate as such further security for the payment of the mortgage bonds, as well as the agreement in the mortgage for the payment by the Buckeye Company of the two cents per ton royalty on coal mined from its property so mortgaged. This recital was followed by express provision that the Hocking Valley Company should cause all the mortgaged property of that company to be first exhausted before any recourse under the mortgage to the property of the Buckeye Company; and that the Hocking Valley Company, indemnify the Buckeye Company from any loss or damage to or payment by that company under the provisions of the mortgage “save only said two cents per ton royalty above mentioned,” and that nothing contained in said agreement was intended or should be construed in any wise to limit, or affect, or impair, the several covenants or obligations of the Buckeye Coal & Railway Company contained in said mortgage.

After the purchase by Jones (who owned and owns all the Buckeye stock), the Buckeye Company failed and refused to carry out the provision for royalty payment. The mortgage trustee began suit in this court, in the year 1919, for the collection thereof, which suit is still pending and undetermined. In the same year the Buckeye Company instituted suit in a state common pleas court of Ohio to quiet its title against the claims of the mortgage trustee under the Hocking Valley mortgage. The Sunday Creek Coal Company of Ohio (not the original Sunday Creek Company), which had succeeded to the rights of the Buckeye Company in the lands, was made a party plaintiff. Upon final hearing upon issues joined, the common pleas court dismissed the petition, adjudging that the mortgage “and the covenants of the Buckeye Coal & Railway Company therein contained are valid and binding obligations, and a good and valid lien upon the real property in said mortgage * * * described.”

This decree was affirmed by the state Court of Appeals, the Supreme Court of Ohio declining to order the case certified for its review. Thereupon the Buckeye Company and the Sunday Creek Coal Company filed their petitions in this court, asserting that the situation created by the Hocking Valley trust mortgage, ineluding especially the two cents per ton royalty provision, was in violation of the decree of dissolution previously made by this court; and asking that the demand or collection of the two cents per ton royalty be enjoined, the lands of the Buckeye Company released from the mortgage, .and particularly from section 9 thereof (which contains the royalty provision), or that all interests of the railway company and the mortgage trustee in the Buckeye property be sold, or such other and appropriate order as will “effectively carry out the purpose and effect” of the decree of 1914. After issues joined on the petition, and before decision thereon, the United States filed its supplemental petition herein, asking that the Buckeye coal lands be released from the lien of the Hocking Valley mortgage and the Buckeye Company discharged from its obligation to pay the two cents per ton royalty, upon payment by the Buckeye Company, or its successors in interest, to the Hocking Valley’s mortgage trustee the reasonable value of the rights of the trustee, to be judicially ascertained ; and on the ground that the situation created by such lien and royalty provision violates the Anti-Trust Act and contravenes the original decree of dissolution made herein. It will be observed that the substantial difference between the petitions of the coal companies and the government, respectively, is that the one asks such release without the other upon compensation to the mortgage trustee.

So far as concerns the petition of the Buckeye Company and the Sunday 'Creek Company, we think it clear that relief should be denied. While our jurisdiction generally to make such further orders and decrees as should be necessary to the due execution of our main decree, and the complete dissolution of the condemned combination, continued without abatement until such complete dissolution should be effected (United States v. L. S. & M. S. Ry. Co. et al., supra), there is perhaps substantial force in the thought that the order of this court of May 19, 1916, and the sale of the Buckeye Company’s stock thereunder, exhausted the jurisdiction of this court over the specific question whether the situation created by the lien of the Hocking Valley mortgage upon the Buckeye Company’s lands, given to secure the railroad’s indebtedness, in connection with the tonnage royalty provision, wás so far unlawful'as to require its elimination. This court approved the sale of the stock to' Jones with full knowledge of the fact situation now complained of, and presumably without its occurring to either court or government’s counsel that the situation created a substantial interference with the free competition aimed at by the original decree. The action taken might not improperly be thought to carry a tacit implication that the situation here presented was not then regarded open to criticism. But wholly apart from this consideration, and without passing upon its merits, we think relief forbidden by these further considerations: In the first place, assuming, for the purposes of this opinion, that the petitioning coal companies have a legal interest in the elimination of the alleged unlawful feature, we see no reason to doubt that, as between the two original petitioners and the Hocking Valley Company and its mortgage trustee, the decree of the state court binds both the Buckeye Company and the Sunday Creek Company as an adjudication of the complete validity of the mortgage as against the attacks now made upon it. Again, this is a proceeding in equity, and it is manifestly inequitable that" either Jones or those standing in his right escape liability for a situation assumed by them, and, as we must find, then recognized as of binding force, and whose assumption seems fairly to have'been part of the consideration paid by Jones for the Buckeye stock. In the situation presented, we think, the petitioning coal companies cannot be heard to say that payment of the royalty, or the continuance of the mortgage lien upon the lands of the Buckeye Company, would violate the law. The fact that the government did not answer or take issues upon the coal companies’ petition cannot alter the result otherwise reached. The petition of the coal companies must be denied.

The government’s supplemental petition rests upon a different foundation. It is conceded that the decision of the Supreme Court in the Reading case (Continental Coal Co. v. United States, 259 U. S. 156, 42 S. Ct. 540, 66 L. Ed. 871), announced about six years after the sale to Jones of the Buckeye stock, and shortly before the filing of the government’s supplemental petition before us, suggested to government’s counsel the invalidity of the situation we are considering. It was eminently proper that the government bring this situation before the court, and afford opportunity for such action, if any, as should seem to be called for. But we are not impressed that the situation calls for the relief asked. Again passing without decision the question of the exhausting of jurisdiction of this court over the subject-matter of the supplemental petition, by the action had in the sale to Jones, it seems plain that even in view of the Reading decision the criticized situation is not so clearly improper, nor so substantial, as to justify the action which the government now asks. Whatever theoretically potential interference with free competition might otherwise be created by the railroad-mortgage lien upon the Buckeye lands in connection with the royalty tonnage provision, we think such interference practically reduced to a minimum by the fact that by the contract between Jones and the railroad companies the railroad property must first be exhausted before resort can be had to the coal lands, in connection with the fact that no suggestion is made that the railroad property is not entirely adequate to meet the payment of the mortgage in full, and the payment of the mortgage puts an end to the royalty. Indeed, an affirmative inference, more or less strong, in favor of the adequacy of the railroad security, seems fairly dedueible from the record presented to us. We therefore think that it will be time enough to question the invalidity of the situation we are discussing when, if ever, it becomes acute.

We are accordingly constrained to dismiss the government’s supplemental petition. The dismissal, however, will be without prejudice to its right to make further application for relief when, if ever, the situation may be thought to justify it, in view of the considerations we Rave stated.

       The Lake Shore & Michigan Southern Railway -Company, the Chesapeake & Ohio Railway Company, thg Hocking Valley Railway Company, the Toledo & Ohio Central Railway Company, the Kanawha & Michigan Railway Company, the Zanesville & Western Railway Company, the Sunday Creek Company, the Continental Coal Company, the Kanawha & Hocking Coal & Coke Company.


author: HUTCHESON, District Judge.

text:
    Ex parte KAZAN et al.
    (District Court, S. D. Texas, Laredo Division.
    May 2, 1925.)
    No. 312.
    1. Aliens <S=54 — Person claiming citizenship held entitled to have claim determined in advance of deportation proceedings.
    Person detained for deportation as alien has right to have question of claim of citizenship determined in advance of deportation proceedings.
    2. Aliens <@=61 — Aliens in excluded class cannot be allowed to obtain permanent foothold in United States.
    Aliens belonging to any excluded class could not be allowed to enter and take permanent foothold in United States so as to acquire citizenship.
    3. Aliens <@=53 — Minor children of citizen, not in any excluded class, held not subject to deportation because they entered via Mexico without residing therein 2 years.
    Minor children of naturalized citizen, not in any excluded class, who by permission entered and resided in United States for more than 16 months and complied with every provision of Act March 2, 1907, § 5 (Comp. St. § 3962), except that they came immediately into United States via Mexico without having resided therein for 2 years, could not be deported as aliens under Act Feb. 1917, § 19 (Comp. St. 191S, Comp. St. Ann. Supp. 1919, § 42891/ijj), merely because they were admitted by mistake of law or fact.
    Habeas Corpus. Application for writ by Charles Kazan and Mentaldo Kazan. Writ granted provisionally.
    Hicks, Hicks, Dickson & Bobbitt, of San Antonio, Tex., for relators.
    H. M. Holden, Dist. Atty., and E. R. Warnken, Asst. Dist. Atty., both of Houston, Tex., for the United States.
   HUTCHESON, District Judge.

Respondent in his answer to the writ justifies the detention of relators on the ground that they axe aliens held in deportation proceedings, and asserts that not the relators, but the writ, should be discharged because issued prematurely; there being not only no order for deportation entered, but no hearing as yet had.

Relators reply, making the contention very seriously that the immigration authorities are without jurisdiction to detain them for that they are citizens, being children of a naturalized citizen and having entered the United States while yet minors, and having for more than 16 months resided here. Ng Fung Ho v. White, 259 U. S. 278, 42 S. Ct. 492, 66 L. Ed. 938.

Respondent concedes that they are children of a naturalized citizen, that they entered the United States with the intention of permanently residing here, and that they have resided here for the period claimed; but he denies that they thereby became citizens, and asserts that they entered illegally, in that they came immediately into the United States via Mexico without having the two years’ residence there required by the statutes of aliens entering that way, and, having entered illegally, they cannot be considered as having commenced permanently to reside here within the meaning of the law so as to be'eome citizens. That they therefore are and remain aliens, and subject to deportation under section 42891/^jj, Comp. St. 1919, Supp., as aliens who shall have entered or shall be found in the United States in violation of this act, citing Kaplan v. Tod, 45 S. Ct. 257, 69 L. Ed. -, March 2, 1925; United States ex rel. De Rienzo v. Rodgers, 185 F. 334, 107 C. C. A. 452; United States ex rel. Patton v. Tod (C. C. A.) 297 F. 385; Zartarian v. Billings, 204 U. S. 170, 27 S. Ct. 182, 51 L. Ed. 428.

The facts in this case are brief and simple. They are:

1. The relators are the children of a naturalized American citizen, who returned to his native country in 1923 while the relators were still minors, returning to the United States via Mexico and entering at the port of Laredo, bringing the children in question with him.

2. His American citizenship being unquestioned then and now, the father was admitted, and the children, as children of a naturalized citizen, were also admitted with him; they intending to become citizens of the United States and intending to reside permanently here, and having since resided here.

3. On the hearing Mr. Trout, the immigration inspector in charge, testified that he admitted the children because he was under the impression, gained from the statements of the father, and from an inspection of a decree of the court admitting the father to citizenship, that the children were living in the United States at the time of the father’s naturalization. The father and children testified that they made no such statement at the time of admission, but that they stated positively, upon examination, that the children had never been in the United States before.

4. I find that no misstatement of facts was made, and I further find that the children were admitted as citizens either upon a mistake of law as to their status, or upon a mistake of fact as to their former residence.

5. I find, however, that neither petitioners nor their father had any fraudulent intent or purpose, and that they did not intentionally deceive or mislead the immigration officers.

6. Petitioners do not belong to any of the classes excluded by law, and are in every way eligible for citizenship.

7. The only ground against their admission in 1923 was that, coming through Mexico, they had not been in that country the two years required of aliens coming that way, before offering for entry.

8. That relators had the right to have the question of their citizenship determined in advance of deportation proceedings under the claim here made is settled by the authorities, Ng Fung Ho v. White, 259 U. S. 278, 42 S. Ct. 492, 66 L. Ed. 938; that at the time they entered the United States in 1923 they were aliens subject to be excluded as such, and if they belonged to any of the excluded classes could not be allowed to enter again or take up a permanent foothold here, is settled by the authorities cited on behalf of the government above referred,to. ~ .

In each of these eases the person claiming exemption from classification as an alien and a right as a citizen was within one of the definitely excluded classes, and none of these cases control a ease like this, where the claim against the alien is merely that he entered, though in good faith and openly, contrary to some formal requirement of the law.

I have no doubt that if these applicants had entered surreptitiously or deliberately in defiance of law, or belonged to any of the excluded classes, their entry into and residence in the United States would not confer the citizenship which they claim.

On the other hand, I am of the opinion that while the point is a close one, it ought to be held that petitioners having come into the United States, not secretly and clandestinely, but openly, and by permission, and having in every way, except in the matter of compliance with a formal condition of entry, complied with the provisions of section 5, Act of March 2,1907 (Comp. St. § 3962), by residing permanently in the United States since their entry, it -cannot be said that the mere fact that they were admitted under a mistake,, either of law or fact, is sufficient to suspend the operation of the statute above referred to.

While the cases above cited contain general expressions with reference to the necessity of a legal entry, I have found no ease discussing the precise question involved here, but see Ex parte Lalime (D. C.) 244 F. 279, in which it was held that the mere fact that an alien made a misstatement as to where he was intending to proceed is no ground for deportation, after admission, and Howe v. United States, 247 F. 292, 159 C. C. A. 386, holding that a person having been given a pass to enter the United States, such entry was not illegal, and the alien could not .be deported.

■ Let the petitioners remain in their present custody for 10 days, at which time, if no appeal is taken from this order, counsel for relators may present an order discharging petitioners. If during-that period an appeal is taken, then the order presented should provide as a condition to the discharge for petitioners’ making bond to answer to tbe final ■disposition of the appeal and of the deportation proceedings, if this judgment is reversed.


author: BUFFINGTON, Circuit Judge.

text:
    NEW YORK TELEPHONE CO. v. BOARD OF PUBLIC UTILITY COM’RS.
    (District Court, D. New Jersey.
    May 2, 1925.)
    1. Telegraphs ant! telephones @=>33(1) — On application for interlocutory injunction, findings of Public Utility Commissioners as to value of telephone company’s property assumed correct..
    On application for interlocutory injunction pending telephone company’s suit to enjoin Board of Public Utility Commissioners from enforcing order denying increase in rates, where only facts before court were those shown by conflicting ex parte affidavits, held, findings of commission as to value of property and amount of depreciation would be assumed correct.
    2. Telegraphs and telephones @=>33(1) — Public Utility Commissioners without authority to say with retroactive effect that telephone company’s charges for depreciation were excessive.
    Board of Public Utility Commissioners, having authority under P. L. N. 3. 1911, p. 376, § 16, to investigate telephone company’s charges, and which for over 10 years failed to correct excessive depreciation charges, by fixing reasonable rates, held without authority to thereafter say with retroactive effect that past charges for depreciation were excessive.
    3. Telegraphs and telephones @=>33(1) — Telephone company entitled to nonconfiscatory rate on property as of time of inquiry.
    Property on which telephone company is entitled to a nonconfiscatory rate is property (not part of it) that is being used in service as of time of inquiry regarding rates.
    4. Telegraphs and telephones @=>33(1)— Public Utility Commissioners may not fix rate which is inadequate, on theory that past excessive charges for depreciation must be absorbed.
    New Jersey Board of Public Utility Gommissioners cannot base1 future rates chargeable by telephone company, on a rate of return obtained by allowing to company as a depreciation expense a sum less than board itself finds to be actual, normal, and currently accruing depreciation, on theory that past charges for depreciation have been excessive and must be absorbed.
    5. Telegraphs and telephones @=>33(1) — Return of only 4.93 per cent, on property confiscatory.
    A return of only 4.93 per cent, on telephone property is confiscatory.
    In Equity. Suit by tbe New York Telephone Company against Board of Public Utility Commissioners and Harry Y. Osborne and others, constituting said Board, On application for temporary injunction, Application granted, with directions to file copies of decree.
    Wall, Haight, Carey & Hartpence, of Jersey City, N. J., for plaintiff. Thomas Brown, of Perth Amboy, N. J., for defendant.
    Before BUFFINGTON, Circuit Judge, and RELLSTAB and MORRIS, District Judges.
   BUFFINGTON, Circuit Judge.

Tbe plaintiff, New York Telephone Company, owns and operates a telephone system located in New York, Connecticut, and the northeasterly section of the state of New Jersey. It furnishes both interstate and intrastate telephone service. Its rates for “exchange” service within the state of New Jersey having remained substantially the same for about ten years and its expenses having greatly increased, the plaintiff requested the defendant the Board of Publie Utility Commissioners of the state of New Jersey, the body having jurisdiction over that matter (page 374, e. 195, Laws of 1911), to be permitted to increase its rates for service of that character. To that end it filed, on March 6, 1924, with the board a schedule of increased rates for such service. A hearing was ordered by the ‘defendant to determine whether the rates submitted were just and reasonable. Pending the hearing and determination, the new rates were suspended by orders of the board and stipulation of the; parties. By its decision and order, filed on December 31, 1924, the board disallowed the increase, directed that the plaintiff carry its depreciation account in a specified manner, and that the schedule of rates then in force be continued. Thereupon the plaintiff filed its bill of complaint herein,- alleging, in effect, that the board in making such order had exceeded its jurisdiction, in that, among other things, the rates to which the plaintiff became thereby restricted are so inadequate, unfair, and unreasonable as to be confiscatory, and hence in violation of the Constitution of the United States. It prays that the defendants be enjoined from enforcing the order and, likewise, from interfering with the plaintiff’s putting into effect the schedule of rates disallowed by the board. The present application, made under section 266 of the Judicial Code (Comp. St. § 1243), is for an interlocutory injunction pending the trial and comes before the court on bill, answer, and affidavits.

The plaintiff bases its allegation of confiscation mainly upon the contention -that even if-it be assumed that a rate of return of 7.53 per centum, found by the board to be fair and reasonable and seemingly obtainable by the plaintiff under the board’s order, is in fact, fair, reasonable, and non-confiscatory, yet the truth is that, under that order, the maximum rate of return actually permitted the plaintiff is far less than 7.53 per centum. In support of this main contention, the plaintiff urges: (1) That the value of plaintiff’s property, as fixed by the board and upon which it based the rate, is substantially less than the actual value of the property; (2) that the amount fixed by the board to be charged as an expense for depreciation is substantially less than the loss sustained by plaintiff by reason of actual normal depreciation; and (3) that the board, acting upon a finding made by it that the plaintiff had in the past made excessive charges for depreciation and upon its view of the law that such excessive charges in the past could be offset by correspondingly inadequate depreciation charges'in the future, denied to the plaintiff the right to charge as an expense the amount representing the actual current depreciation loss, even as ascertained by the board, and required the plaintiff to deduct frohi such actual depreciation, until such time as such past excess charges shall have been absorbed, “an amount sufficient to allow the net telephone earnings for a given period (month or year) to equal a fair return on the value of the property in service” as found by the board.

The solution of plaintiff’s first and seeond subordinate contentions turns mainly upon matters of fact. The only facts before us are those disclosed by the ex parte affidavits filed in this cause. As the affidavits are conflicting it is not possible for us, upon this preliminary hearing, to determine what is the proper valuation of plaintiff’s property or what is the proper amount to be charged as a depreciation expense. Consequently, for the purpose? of this motion, we must assume that the valuation of the property and the normal depreciation charge as shown by the defendant’s affidavits are correct. It follows that the first and seeond subordinate contentions of the plaintiff cannot be sustained.

Passing to the plaintiff’s third subordinate contention, it is manifest that the questions thereby presented are two: First, whether the board may now be heard to say with retroactive effect that the charges made in the past by the plaintiff were excessive; and, seeond, even if it be conceded that they were, whether that fact would confer upon the defendant the right and power to base an order with respect to future rates upon a result or rate of return obtained by allowing to fhe plaintiff as a depreciation expense a sum less than the board itself finds to be the actual, normal, currently accruing depreciation.)' We think the former of these two questions must be answered in the negative. Since 1912 the intrastate rates of the plaintiff in the state of New Jersey have been subject to the supervision of the board. During all that time the board has had the power to investigate plaintiff’s rates,' ascertain whether plaintiff’s charges to expense for depreciation were excessive and, by fixing a just and reasonable rate, correct any excessive rates or charges that it might find. Chapter 195, § 16, Laws of 1911. The board did not act. The presumption now is that all profits from plaintiff’s business were lawfully acquired (Newton v. Consolidated Gas Co., 258 U. S. 165, 175, 42 S. Ct. 264, 66 L. Ed. 538), and became a lawful part of plaintiff’s property. Even if such presumption be a rebuttable one, which we do not decide, the evidence before us is not sufficient to overcome it.

In considering the seeond of the immediately foregoing questions it is essential to remember that the property upon the value of which the plaintiff is entitled to a nonconfiscatory return is the property (not part of it) that is being used in the service as of the time the inquiry regarding the rates is made. Willcox v. Consolidated Gas Co., 212 U. S. 19, 52, 29 S. Ct. 192, 53 L. Ed. 382, 15 Ann. Cas. 1034, 48 L. R. A. (N. S.) 1134. The Supreme Court has also expressly held that, “when * * * a public regulation of its prices comes under question, the true value of the property then employed for the purpose of earning a return cannot be enhanced by a consideration of the errors in management which have been committed in the past.” Knoxville v. Water Co., 212 U. S. 1, 14, 29 S. Ct. 148, 152, 53 L. Ed. 371. The principle and result would seem to be the same whether the value of the property has been diminished by past inadequate rates or enhanced by past excessive rates. It has, in effect, been so held. Garden City v. Garden City Telephone, Light & Mfg. Co., 236 F. 693, 150 C. C. A. 25; Monroe Gaslight & Fuel Co. v. Michigan P. U. Commission (D. C.) 292 F. 139. Such being the property upon whose value the plaintiff is entitled to a nonconfiscatory rate of return, it inevitably follows, as we see it, that a confiscatory rate of return thereon cannot be converted into a nonconfiscatory one merely by ignoring depreciation losses or expenses or by considering such itejn to be less than it actually is. Obviously, if the property upon which a plaintiff is entitled to a nonconfiscatory rate must be absorbed in whole or in part in order to provide such rate, there is confiscation.

The rate of return afforded by the present order of the defendant, even if defendant’s own valuation of plaintiff’s property and defendant’s own estimate of actual and normal depreciation be used, is, as shown by an affidavit filed by the defendant, only 4.93 per centum. The authorities are unanimous in holding that such a rate for telephone property is confiscatory. Moreover, the defendant makes no contrary contention. It appears to be clear from the evidence that the rate of return upon the property employed by the plaintiff in its intrastate business in New Jersey is even less than the rate of return upon the value of the property there used in the interstate and intrastate business combined. It follows that the order of the defendant is confiscatory and invalid, and the enforcement of same must be enjoined.

Counsel for the respective parties are directed to file with the clerk of this court at 12 o’clock noon Eastern Standard time, on Thursday, the 7th day of May, 1925, four copies of such order or decree as they will suggest to the court for entry, and Tuesday, the 12th day of May, 1925, at 9 o’clock in the forenoon, Eastern Standard time, at Trenton, N. J., is set for a hearing with respect to the order to be entered.


author: WEBSTER, District Judge.

text:
    Application of CAMPBELL.
    (District Court, E. D. Washington, S. D.
    March 30, 1925.)
    No. 849.
    Aliens <§=>65 — Soldier loses special privilege as to naturalization, unless exercised within time prescribed by statute.
    An alien, who at the time of the passage of Act May 9, 1918, was in the-military service of the United States overseas, and who executed his petition for naturalization in the manner prescribed by section 4, subd. 7, of such act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 4352) and delivered the same to a representative of the naturalization service, but the latter failed to file it in the office of the clerk of a court, loses the special rights given by such section, unless he himself files his petition within one year after March 3, 1923, the official date of the return of the last troops, as required by Act July 19, 1919, § 1 (Comp. St. Ann. Supp. 1923, § 4352aaa).
    On petition of Joseph Edgar Campbell for naturalization. Dismissed without prejudice.
    Joseph Edgar Campbell, in pro. per.
    R. W. Thomas, Naturalization Examiner, for the United States.
   WEBSTER, District Judge.

The question presented for decision in this ease may be stated as follows: May an alien who, at the time of the passage of the Act of May 9, 1918 (40 Stat. 542), was in the military service of the United States, and who at such time was overseas, and consequently not within the jurisdiction of any court authorized to naturalize aliens, but who executed in the manner prescribed by subdivision 7 of section 4 of that act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 4352) the necessary petition for citizenship and delivered the same to a representative of the naturalization service, who failed to file the petition in the clerk’s office, himself file such petition in the proper office after the period limited by the Act of July 19, 1919 (41 Stat. 222 [Comp. St. Ann. Supp. 1923, § 4352aaa]), has expired, and upon such filing claim the benefits of subdivision 7 of section 4 of the Act of May 9, 1918?

The pertinent portion of subdivision 7, § 4, of the act reads:

“Any alien, who, at the time of the passage of this act, is in the military service of the United States, who may not be within the jurisdiction of any court authorized to naturalize aliens, may file his petition for naturalization without appearing in person in the office of the clerk of the court and shall not be required to take the prescribed oath of allegiance in open court. The petition shall be verified by the affidavits of at least two credible witnesses who are citizens of the United States, and who shall prove in their affidavits the portion of the residence that they have personally known the applicant to have resided within the United States. The time of military service may be established by the affidavits of at least two other citizens of the United States, which, together with the oath of allegiance, may be taken in accordance with the terms of section seventeen hundred and fifty of the Revised Statutes of the United States after notice from and under regulations of the Bureau of Naturalization. Such affidavits and oath of allegiance shall be admitted in evidence in any original or appellate naturalization proceeding -without proof of the genuineness of the seal or signature or of the official character of the officer before whom the affidavits and oath of allegiance were taken, and shall be filed by the representative of the government from the Bureau of Naturalization at the hearing as provided by section eleven of the act of June twenty-ninth, nineteen hundred and six.”

This section also provides:

“During the time when the United States is at war no clerk of a United States court shall charge or collect -a naturalization fee from an alien in the military service of the United States for filing his petition or issuing the certificate of naturalization upon admission to citizenship.”

The Act of July 19, 1919 (41 Stat. 222), provides:

“Any person of foreign birth who served in the military or naval forces of the United States during the present war, after final examination and acceptance by the said military or naval authorities, and shall have been honorably discharged after such acceptance and service, shall have the benefits of, the ■ seventh subdivision of section 4 of the act of June 29, 1906, thirty-four Statutes at Large, part 1, page 596, as amended, and shall not be required to pay any fee there.for; and this provision shall continue for the period of one year after all of the American troops are returned to the United States.”

The official date of the return of all American troops is March 3,1923, and consequently the benefits carried by the act of July 1$, 1919, expired on March 3, 1924. Under date of August 21,1924, the Comptroller General of the United States rendered a decision on the question of the collection of fees by the clerks of the United States District Courts upon petitions for naturalization executed overseas by veterans of the World War, where the petition was not actually filed in the clerk’s office until after March 3, 1924, wherein he ruled as follows:

“The act of May 9, 1918, supra, provided that the alien, without the jurisdiction of any court authorized to naturalize aliens, ‘may file his petition for naturalization without appearing in person in the office of the clerk of the court.’ That provision clearly contemplated a filing in the office of the clerk of a court having jurisdiction to naturalize; therefore, a petition executed overseas and handed to a designated representative of the Bureau of Naturalization, but which has not been filed ‘in the office of the clerk of the court’ having jurisdiction to naturalize aliens, has not been filed within the intent of the act of May 9, 1918.
“Had the overseas petitioner, upon his return to the United States and within the time specified in the act of July 19, 1919, supra, taken-the necessary steps to perfect his naturalization, or had such steps been taken for him by a filing of his petition with the clerk of a court having jurisdiction to naturalize aliens, he would have received his certificate of citizenship, if found to be eligible, without the payment of a fee, either for filing and docketing the petition and for final hearing thereon, or for the entering of the final order and the issuance of the certificate-of naturalization thereunder; that is, unless-the proceedings were in a state court and the laws of the particular state required that a fee be charged. Not having taken the-necessary steps to perfect his naturalization within the time specified in the act of July-19, 1919, and the initial steps not having-been taken for him within that time, no reason appears why he should be in a more-favorable situation than the person of foreign birth who served in the military forces of the United States and who did not make-his petition overseas. The former as well as the latter, after the time specified in the-act of July 19, 1919, are required to pay the-fees provided in the act of July (June) 29, 1906, supra, and the decision is accordingly.”

While this opinion of the Comptroller-General, is not a judicial interpretation of’ the law, it is nevertheless the opinion of a. high executive official exercising quasi judicial functions and is entitled to great respect. Upon a careful study of the question, I am satisfied that the views expressed by the Comptroller General are sound, and that this application cannot be maintained. - Obviously, if the petitioner is not entitled to-be exempt from the payment of fees because of the belated filing of the petition, he is not entitled to the other benefits of’ subdivision 7 for precisely the same reasons. If it should be held that the words “this provision” in the Act of July 19, 1919, refer to-the provision made by that act for the class of beneficiaries therein defined and do not. refer to the provision made by subdivision 7’ of section 4 of the Act of May 9, 1918, the-’situation of the petitioner is not improved,, for at the time of filing the petition in the-clerk’s office the petitioner was not without, the jurisdiction of a court authorized to naturalize aliens.

• For the foregoing reasons, the petition-, will be dismissed without prejudice.


author: KERRIGAN, District Judge.

text:
    BRAINARD v. SCHAINMAN et al. In re STEIN.
    (District Court, N D. California, S. D.
    May 2, 1925.)
    No. 1411.
    1. Bankruptcy <©=>11 — Bankruptcy courts have not general jurisdiction at law or in equity except by consent.
    Under Bankruptcy Act (Comp. St. §§ 9585-9650) as originally enacted or as amended, bankruptcy courts have not general jurisdiction at law and in equity over adverse claimants except by consent.
    2. Bankruptcy <©=>293(1) — Bankruptcy court . held without jurisdiction in trustee’s suit to grant recovery against transferee of bankrupt’s property in excess of the value of such property.
    Bankruptcy court, in suit by trustee under Bankruptcy Act, § 70e (Comp. St. § 9654), to recover property fraudulently conveyed, or its value, held without jurisdiction to grant a recovery against any particular defendant in an amount in excess of value of property received by him, on theory that he was liable as joint tort-feasor for value of all property fraudulently conveyed, particularly in view of sections 60b, 67e (sections 9644, 9651).
    Suit by G. W. Brainard, trustee in.bankruptcy of Nathan Stein, against Paul Schainman, Henry Cohn, and others. On •exception to master’s report. Decree for plaintiff granting partial relief only, and •discharging temporary restraining order in part.
    Henry Ach, Joseph Kirk, Hiram E. Casey, and Dinkelspiel & Dinkelspiel, all of San Francisco, Cal., for plaintiff.
    William Klein, of San Francisco, Cal., for defendants.
   KERRIGAN, District Judge.

This is a suit in equity brought by the trustee of the estate of Nathan Stein, a bankrupt, who conducted business at San Francisco under the style of the People’s Department Store. Plaintiff charges that the bankrupt and defendants, for the purpose of defrauding creditors of bankrupt, conspired to make fraudulent sales from bankrupt’s stock of general merchandise, and that sales amounting to at least $38,000 were so fraudulently made; that such sales to' defendant Sehain-man amounted to approximately $20,000, and to defendant Cohn approximately $7,-000. It is alleged that Schainman and Cohn commingled such merchandise with other stocks of merchandise of the same general character, and that it is not possible for plaintiff to locate or point out the merchandise so received. Plaintiff prays that said transfers be set aside, that defendants be decreed to account for all property so received, and for judgment against defendants and each of them for $38,000, and for such other relief as is proper in the premises. Restraining orders pendente lite are sought restraining defendants Schainman and Cohn from disposing of the stocks of merchandise with which the alleged fraudulently transferred merchandise has been commingled.

A preliminary restraining order was issued upon the trustee giving an indemnifying bond in the sum of $25,000, and the hearing on the order to show cause why such order should not be made to continue pending the hearing herein was referred to A. B. Kraft, referee in bankruptcy, as special master, to ascertain and report the facts with his conclusions therein, subject to full consideration by this court.

The matter now comes up on exceptions to the master’s report after argument thereon. Defendant Schainman has appealed. The report concerns only the rule against defendant Cohn. The master recommends that the order be continued over merchandise of the value of about $3,700, which he reports Cohn admits was received from the bankrupt and which has been identified by Cohn and inventoried, but that the restraining order covering other merchandise at Cohn’s place of business at 3236 Mission street be discharged. He expresses no opinion upon the merits of the case further than to state it has not been shown that Cohn received more than $7,000 worth of merchandise, being the amount stated in the complaint as the approximate amount received by Cohn. For the purpose of determining the matter of the restraining order, he assumes that plaintiff can prove the averments of conspiracy, but concludes, as a matter of law, that plaintiff can recover no more from Cohn in this suit than the value of property received by him, although he may be a party to the conspiracy under which $38,000 in value of merchandise was fraudulently transferred, and may be liable to the trustee in that amount before a court having jurisdiction to award judgment for damages; but that this court has no jurisdiction to decree a larger recovery against any of the defendants than the value of the merchandise actually received by such defendant. He further states that if plaintiff may be entitled to judgment of $38,000 against Cohn, he would recommend the continuance of the restraining order over all merchandise in Cohn’s store.

A ruling at this time on the question'of the extent of relief cannot he avoided.. The master, in my opinion, did not exceed his authority under the reference rin considering that question. Plaintiff is not entitled to a restraining order on the basis of a possible recovery of $38,000, if as a matter of law, on the face of his complaint and the showing made on the hearing of the order, his recovery cannot exceed approximately $7,000.

This case falls under section 70e of the Bankruptcy Act (Comp. St. § 9654), which reads as follows:

“The trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value. Por the purpose of such recovery any court of bankruptcy as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.”

Relief here is limited to recovery of particular property transferred, or the value of that property, from the person who received it. General jurisdiction at law and in equity over adverse claimants, without consent of defendants, is not conferred on the United States courts under the Bankruptcy Act as originally enacted, nor has such jurisdiction been conferred by the amendments thereto. This subject is fully considered by the master, from whose report I quote the following:

“It may be said, and its sounds plausible, that if the trustee is entitled to recover the value of the goods, the court haying acquired jurisdiction of the subject-matter and the persons, the trustee is entitled to recover that value from any defendant -before the court who is liable to him therefor. And as, on proof of a conspiracy, all joint tort-fea-sors are individually liable in full to the injured party, the trustee is therefore entitled in this action to judgment for the value against each defendant shown to be a party to the conspiracy.,
“I again call attention to the wording of section 70e, under which provision alone this court has jurisdiction here to award a judgment for value.
“ ‘Such property may be recovered (which, of course, refers to some particular property transferred) or its value collected from whoever may have received it.’ This is not a grant of authority to award a judgment against every person who may be liable to the trustee on the same cause of action, but only authority to award a judgment against the person who actually, received the value. Very good reasons may exist for limiting'the concurrent jurisdiction of United States courts to recovery of the property or the value from the person who received it. The act shows a clear intent not to bring into United States courts controversies over debts, guaranties and damages, in which a bankrupt’s estate may be involved, but to leave these matters to the courts which would have jurisdiction if bankruptcy had not intervened. This clearly appears in the pointed opinion of the Supreme Court in Bardes v. Bank, supra, 4 Am. Bankr. Rep. 163, 178 U. S. 524, 537, 20 S. Ct. 1000, 1005, 44 L. Ed. 1175, from which I make the following quotation:
“ ‘The Bankrupt Acts of 1867 and 1841, as has been seen, each contain a provision conferring in the clearest terms on the Circuit and District Courts of the United States concurrent jurisdiction of suits at law or in equity between the assignee in bankruptcy and an adverse claimant of property of the bankrupt. We find it impossible to infer that when Congress, in framing the act ofd 1898) entirely omitted any similar provision, and substituted the restricted provisions of section 23, it intended that either of those courts should retain the jurisdiction which it had under the obsolete provision of the earlier acts.
“ ‘On the contrary, Congress, by the second clause of section 23 of the present Bankrupt Act, appears to this court to have clearly manifested its intention that controversies, not strictly or properly part of the proceedings in bankruptcy, but independent suits brought by the trustee in bankruptcy to assert a title to money or property as assets of the bankrupt against strangers to those proceedings, should not come within the jurisdiction of the District Courts of the United States, “unless by consent of the proposed defendant,” of which there is no pretense in this ease.
“ ‘One object in inserting this clause in the act may well have been to leave such controversies to be tried and determined, for the most part, in the local courts of the state, to the greater economy and convenience of litigants and witnesses. See Shoshone Mining Co. v. Rutter, 177 U. S. 505, 511, 513.
“In view of this decision and the fact that subsequent thereto Congress has on two occasions enlarged the concurrent jurisdiction of the United States courts, as shown (referring to the amendments of 1903 and 1910 to section 23 [Comp. St. § 9607] with reference to sections 60b, 67e and 70e [Comp. _ St. §§ 9644, 9651, 9654]), but has not included a general jurisdictional provision over adverse claimants, such as existed under the Bankruptcy Laws of 1841 and 1867 (5 Stat. 440; 14 Stat. 517) there is no room for the contention that general equity powers exist under which relief not contemplated by the amendments can be given.
“The point I desire to here reinforce is that where the trustee asserts a cause of action within the amendments, the limits of his action are confined by the provisions of such amendments and the court is without power to grant him relief beyond the provisions thereof- — and such provisions must be strictly construed.
“In this ease it is not alleged and has not been proved that Henry Cohn has received more than $7,000 in value of the property so fraudulently transferred. To render a further judgment is to award against Henry Cohn damages beyond the value received by him as a result of this conspiracy for which, in my opinion, there is no authority.
“An action sounding in damages only would not be an action within section 70e or within any provision of the law giving the United States courts jurisdiction of suits between the trustee and adverse claimants, without the consent of the defendants, and a mixed cause of action for recovery of property or its value and for damages, in my opinion, is not within the statute. As showing that these jurisdictional amendments are strictly construed, see Harris v. First Nat. Bank, 216 U. S. 382, 30 S. Ct. 296, 54 L. Ed. 528, 23 Am. Bankr. Rep. 632; Flanders v. Coleman (D. C.) 249 F. 757, 41 Am. Bankr. Rep. 727; Newcomb v. Biwer (D. C.) 199 F. 529, 29 Am, Bankr. Rep. 15.”

I agree with this construction of the law as applied to the facts here. I see no way in which this complaint can be construed to support a ]arger recovery than that indicated by the master. Defendants did not each receive $38,000 in merchandise or the value thereof. To the extent that plaintiff seeks to recover from any defendant an amount exceeding the value received by such defendant the action is nothing more nor less than an action for damages. Clearly there is no jurisdiction here to grant such relief. In the case of Lynch v. Bronson (D. C.) 177 F. 605, 24 Am. Bankr. Rep. 513, it was held that the court had no jurisdiction under section 67e of a suit by a trustee to recover damages for a conspiracy with 'the bankrupt, whereby the bankrupt, known by the defendants to be insolvent, transferred goods on credit and turned them over to defendants for less than their value — which is substantially this suit, so far as plaintiff seeks a recovery beyond the value received by each defendant. The jurisdiction given by the amendment of 1910, of suits under section 70e, is no different than the jurisdiction given by the amendment of 1903, of suits under section 67e, excepting that the action is not limited by the four months’ period, and that where the property cannot be recovered judgment for the value thereof can be given against the person who received it. This cannot be extended to recovery of the value from a person who did not receive it.

The trustee may present an order restraining defendant Cohn, pendente lite, from removing or disposing of any of the merchandise received from the bankrupt, set out in the inventory referred to in the master’s report.

The temporary restraining order against Cohn as to other merchandise in said store or elsewhere is discharged.


author: INCH, District Judge.

text:
    EL ORIENTE.
    (District Court, E. D. New York.
    March 9, 1925.)
    1. Admiralty <S=>69— Jurisdiction must be affirmatively shown on face of iibei.
    Jurisdiction in admiralty must be affirmatively shown on the face of the libel, and it is not sufficient that it may be inferred argumentatively from the averments.
    2. Admiralty 12 — Contract held not maritime.
    A through bill of lading issued by a railroad company for the carriage of merchandise, which could be made wholly by rail, is not converted into a maritime contract because by action of one of the connecting carriers a part of the transportation is made by water.
    3. Admiralty <§=»I0 — 'To give jurisdiction, contract must be essentially maritime.
    To give a court of admiralty jurisdiction of a suit on a contract, the whole contract must be maritime in its character, and when performance is partly maritime and partly ter-rene, a court of admiralty will not assume jurisdiction unless the nonmaritime features be inconsiderable.

      4. Admiralty <§=>60 — Libel held not to state cause of action within the admiralty jurisdiction.
    A libel, based on a through bill of lading issued by a railroad company, which alleges that the initial carrier delivered the goods to a connecting railroad carrier in good condition, that such carrier forwarded them by steamship, and that when delivered some of them were damaged, but which does not clearly allege that the damage was caused on shipboard, held' not to state a cause of action within the admiralty jurisdiction.
    In Admiralty. Suit by Samuel C. Mur-fitt against the steamship El Oriente and the Southern Pacific Company. On exceptions to libel. Exceptions sustained, and libel dismissed.
    Theodore L. Bailey, of New York City, for libelant.
    Charles Franklin, of New York City, for respondent.
   INCH, District Judge.

This is a motion to dismiss a libel and complaint in admiralty. It is based on exceptions duly filed. The exceptions are: (1) That it appears upon the face of the libel that this court is without jurisdiction of the cause of action. (2) That the bill of lading referred to in said libel is not a contract and agreement civil and maritime, and that a suit for damages for breach thereof is therefor not within the admiralty and maritime jurisdiction of this court.

The libel, after setting forth the corporate entity of the respondent Southern Pacific Company and the nature of the business in which the steamship El Oriente was engaged, and similar allegations as to the Southern Pacific Company, proceeds to state: “On information and belief on or about the 23d day of September, 1924, Charles Schreiner Bank delivered to the San Antonio & Ar-ansas Pass Railway Company, in good order and condition at Eerrville, Tex., 256 bags of mohair, marked K. V. and No. 257-512, inclusive, consigned to order of Charles Schreiner Bank at Boston.”

The libel then states, on information and belief: That the said railway company duly issued a certain bill of lading “wherein it acknowledges the receipt of said bags of mohair in apparent good order and condition, and whereby it. undertook for itself and connecting carriers the carriage and delivery of said goods.” The libel then sets forth that the said railway company undertook for itself and connecting carriers to safely carry, transport, and deliver the mohair in the same good order and condition as when received.- (The bill of lading is not set forth nor annexed to the pleading.) That said bill of lading acknowledged receipt of said-bags of mohair in apparent good order and condition. The following paragraph then, follows: “Seventh. Upon information and 'belief that thereafter at Galveston, Tex., the said bags of mohair in good order and condition and clear and free of stains from water or rust were delivered to the respondent Southern Pacific Company as' a connecting carrier and shipped on board the steamship El Oriente.” That libelant is informed and believes that the said steamship sailed with said mohair on board, and when she got to-New York and discharged her cargo 12 of said bags were found stained with water and rust. The libel then alleges that the libel-ant and the shipper performed all the terms. and conditions of the contract imposed on, them, and that libelant has thus been damaged in the sum of $466.

It is thus seen that there is no allegation-in this libel usually found in a tort action.. On the contrary, it appears to be a suit based on contract. Nor is there any allegation expressly or by necessary inference as to. where the rust and water damage, if any,, was actually occasioned* to the said twelve-bags of mohair.

To be sure, libelant claims that this appears in the aforesaid paragraph seventh, where it is alleged that at Galveston, Tex., the bags were in good order and condition and free and clear of stains from water or rust: This allegation is made on information and belief, and even here such delivery-in such condition is not expressly alleged to have been to the ship, but is alleged to have been made to “respondent as connecting carrier, and shipped.”

Accordingly, a careful reading of the libel and complaint seems to show no allegation that the damage, if any, occurred exclusively on a ship. The original delivery was made to a railroad company and then to a connecting carrier at Galveston, Tex. (all on land), nor is there present words such as stqwage, etc., or other allegations from which the necessary or reasonable inference would arise that the damage, if any, must have occurred on board the ship.

Under such circumstances, the mere discharge from the ship at New- York of 12 bags out of 256 bags in a stained condition would not seem in itself a sufficient basis without allegations of other facts to support a fair inference as to where the damage was occasioned.

I am not unmindful of the dissenting opinion of Judge Morrow in California Co. v. Lumber Co., 206 F. 5, at page 12, 124 c. C. A. 139, at page 146, as to a presumption arising in regard to the last carrier, but it seems to me that the facts in that case were not only different from the facts here, but also that such alleged presumption was not followed by the majority of that court.

We have to decide this motion on the allegations of the libel, and I do not consider that it is proper for me to consider terms of the bill of lading not alleged in the libel, for in effect this motion is in the nature of a demurrer to the jurisdiction of a court of admiralty before answer and must stand or fall on the allegations on the face of the libel.

“When goods are delivered to a carrier, there is a contract either expressed or implied that the carrier will carry them with safety. For negligence in carrying them resulting in loss or damage thereto an action will lie either for breach of contract or for tort.” Cooley on Torts, 157. “Admiralty will determine cases upon equitable principles.” “It is never made a point of pleading whether the case rests upon contract or tort.” Borden v. HieRN, 1 Blatch. & H. 293, Fed. Cas. No. 1,655; Pacific Coast. Steamship Co., 94 F. 182, 193, 36 C. C. A. 135.

“We have to inquire, therefore, whether upon either view of the cause of action here pleaded facts are alleged which show affirmatively that there is jurisdiction in admiralty.

“In cases of tort the jurisdiction in admiralty depends entirely upon locality. There can be no other test The tort must have been committed on the high seas or navigable waters.” California Atlantic S. S. Co. v. Central Door & Lumber Co., 206 F. 5, 124 C. C. A. 137.

There is an entire absence of allegations in this libel which would be necessary to indicate that it was an action in tort. Nor, following the rule above mentioned, is there an express allegation or sufficient basis for a fair inference that the damage here, if any, must have occurred on ship board.

No presumptions "arise in favor of the jurisdiction of the federal court. Ex parte Smith, 94 u. S. 455, 24 L. Ed. 165.

Jurisdiction must be affirmatively shown on the face of a libel. Robertson v. Cease, 97 U. S. 646, 24 L. Ed. 1057. “It is not sufficient, that jurisdiction inav be inferred, argumentatively, from its averments.” Brown v. Keene, 8 Pet. 112, 8 L. Ed. 885. I fail to see therefore in this libel how jurisdiction is shown, so far as any alleged action in tort is concerned.

“If a contract is maritime in itself it carries always its incidentals with it and the latter, though nonmaritime in themselves will, unless separable, be held and decided. But where the principal subject-matter of a contract belongs to the jurisdiction of a court of common law or equity, the whole contract belongs there and admiralty will not take jurisdiction, even though incidental matters connected with the contract might in themselves be cognizable in the admiralty. The distinction in many eases will undoubtedly seem shadowy; still, in a large class of cases, it will be readily perceived and its importance fully appreciated.” Benedict on Admiralty (5th Ed. [MeCloskey]) at page 83.

The true criterion is the nature of the contract. Northern Pacific S. S. Co. v. Hall Co., 249 U. S. 119, at page 125, 39 S. Ct. 221, 63 L. Ed. 510.

Analogies are of little value, but as a homely illustration of the essential nature of a contract take the case of a coat. This has sleeves, pockets, bottonholes, etc., but a contract to make a coat for a man or a woman would be essentially different, not necessarily in the details above mentioned or -in the labor and material, but one contract would be to make a man’s coat and the other to make a woman’s coat. This essential nature of the contract would always exist. Supposing therefore that the law was that all contracts for the making of men’s coats and injury sustained pursuant thereto should be tried out in a common-law or equity court, while all such matters in the making of a woman’s coat must be tried out in an admiralty court, there would be little difficulty experienced. If, however, after the coat had been made and delivered, whether for a man or for a woman, it had been damaged by negligence and the law made the selection of the court dependent on the place where such damage was occasioned, there would still be no conflict and the proper court easily selected. Where, however, the negligent act occasioning damage occurred as a part of and incidental to the contract for the making and delivery of the coat, the essential nature of that contract would still control.

It seems to me that this is the essential nature of the contract which the decisions refer to in distinguishing jurisdiction and nonjurisdiction. It can only be determined by taking a broad view of the purpose, the parties, and circumstances of each ease. The difference is not in the details, which are often similar. The question is: Is the contract essentially a land contract or a water contract? If essentially a land contract, it and all incidental matters must be tried in common law or equity. If essentially a water contract, it and all incidental matters must be tried in admiralty. If plainly neutral and separable, each- can be tried in its proper forum. If neutral but not separable, the discretion of the court will prevail.

This suit appears to me to be fundamentally a suit bn contract. It is based on a bill of lading issued by a railroad company. The essential nature of the entire engagement' between the libelant, his shipper, and the railway company was the carrying of certain merchandise from Texas to Boston, all of which could, if desired, be accomplished on land and by rail, in which ease there would be no claim made of admiralty jurisdiction, nor is a sea trip necessarily involved.

The mere fact or incident that a portion of the trip was selected by the carriers, or the parties, to be by water, or that such portion could be and was made by water, is not such a material part of the fundamental nature of the contract between the parties, as to change its nature from one substantially a nonmaritime contract to one substantially maritime.

This is not holding that in no ease negligence, alleged to have occurred on an intermediate carrier ship, in stowing, handling, and carrying merchandise, and occasioning damage, may not be sued for in a proper action in admiralty and on proper allegations, provided that, within the decisions, such breach of duty can be readily separated from and otherwise shown to arise independently of an essentially non-maritime contract; but where this cannot reasonably be done, then the remedies for injury arising from, or involved in, a breach of such nonmaritime contract, and thus incidental to it, must be sought in a common-law or equity court, even though a particular injury considered by itself might under other conditions and circumstances be cognizable by an admiralty court.

Treating therefore this libel as setting forth a suit on a contract essentially non-maritime and treating the tort, if any, as incidental thereto, it seems to me that this court of admiralty has no jurisdiction.

It is not necessary for me to quote from the many eases presented in the hriefs or elsewhere located by me and examined. Suffice it to say that in this circuit the settled law seems to be that- — -“Contracts of a mixed nature are not cognizable in the admiralty courts, and, where the principal subject-matter of a controversy belongs to the jurisdiction of a court of common law or of equity, the incidental matters must also be relegated to the appropriate jurisdiction, although of themselves they might be cognizable in admiralty.” The Pennsylvania, 154 F. 9, 83 C. C. A. 139. To the same effect, California Co. v. Central Lumber Co., supra; Pacific Coast S. S. Co. v. Ferguson, 76 F. 993, 22 C. C. A. 671; A. O. Anderson Co. v. S. S. Co. (D. C.) 275 F. 989.

“In such matters the whole contract must be maritime in its character, and, when the performance is partly maritime and partly terrene, a court of admiralty will not assume jurisdiction over it, unless the non-maritime features be inconsiderable.” Luekenbach S. S. Co. v. Gano Moore Co. (D. C.) 298 F. 343. Also, from statement in briefs made by counsel of each party. Grosvenor-Dale Co. v. Davis (S. D. no opinion filed).

The eases cited by libelant do not seem to conflict. The ease of Gowanus Storage Co., Inc., v. U. S. Shipping Board (D. C.) 271 F. 528, seems rather to sustain the decision here. The mere fact that it refers to a separable contract is not applicable to the allegations of this libel.

The case of The Thomas P. Beal (D. C.) 295 F. 877, was based on a contract the very opposite of the contract here. There the court held the contract was essentially maritime with incidental nonmaritime matters.

The ease of Dominion Combing Mills v. Canadian Railway Co. (D. C.) 300 F. 992, sets forth an action based on a contract to ship goods across the ocean from England to Canada, and there is indication that the goods were damaged by reason of “heavy weather” at sea. It does not seem to me that this decision was intended to change or modify in any way the established rule laid down by the authorities.

Accordingly, I sustain the exceptions and dismiss the libel on the ground that the allegations of the libel and complaint show no jurisdiction in a court of admiralty.