author: ALSCHULER, Circuit Judge.

text:
    ADAMS et al. v. MELLON, Director General of Railroads.
    No. 4462.
    Circuit Court of Appeals, Seventh Circuit.
    July 27, 1931.
    Rehearing Denied Sept. 22, 1931.
    Franklin J. Stransky, of Savanna, Ill., and Clair R. Hillyer and James P. Carey, Jr., both of Chicago, Ill., for appellants.
    Sidney F. Andrews, of Washington, D. C., and A. A. McLaughlin, of Des Moines, Iowa, for appellee Mellon.
    Frank H. Towner, Ralph M. Shaw, and Silas H. Strawn, all of Chicago, Ill., for appellee Union Stock Yard Co.

      Before ALSCHULER and SPARKS, Circuit Judges, and LINDLEY, District Judge.
   ALSCHULER, Circuit Judge.

The appeal is from a judgment of the District Court given in an action there brought to enforce an order for reparation awarded by the Interstate Commerce Commission against the Director) General of • Railroads and the Union Stock Yard & Transit Company in the sum of $140,001.25, with interest and attorneys’ fees. The order for reparation was based on the collection of a charge of 25 cents per car for loading and unloading live stock at the Union Stock Yard in Chicago during the period of federal control of the railroads. At the close of all the evidence the court, upon motions of defendants, directed the jury to return a verdict for defendants.

The Stock Yard'Company was organized in 1865 to construct and operate stockyards, and railway tracks connecting the yards with the several railroads entering Chicago. Its, capital stock was then held by or in the interest of the line-haul railroads. In 1867 the Stock Yard Company established a charge of 50 cents for loading and 25 cents for unloád-ing each ear of live stock,"which charge was assumed and paid by the several line-haul railroads. The railroads moved the ears with their own power over the tracks of the Stock Yard Company to its unloading platforms, and the stock was unloaded by the stockyard employees.

In 1894 the Stock Yard Company’s tracks were transferred to the Chicago Junction Railway Company. A through tariff was then published by the railroads, whieh included a switching charge of $2 for each car moved between the termini of the railroads and the stockyard. Out of this charge grew a controversy as to whether the Stock Yard Company was a common carrier engaged in interstate commerce, and subjeet'to the provisions of the act to regulate commerce. The Commission determined that it was such a common carrier. The eohtroversy reached the Supreme Court on an appeal from the United States Commerce Court, and in 1912 the Supreme Court decided that the Stock Yard Company was a common carrier engaged in interstate commerce, and subject to the provisions of the act. United States v. Union Stock Yard & Transit Co., 226 U. S. 286, 33 S. Ct. 83, 57 L. Ed. 226.

The Stock Yard Company thereupon duly published its tariff, fixing the charge of 50 cents for loading and 25 cents for unloading each ear, and the line-haul railways, in their published tariffs, absorbed these charges in the stated amount of 50 cents for loading and 25 cents for unloading each car, the absorbing words of the tariffs being:

“Carriers as Shown Will Pay the Union Stock Yards & Transit Co.’s Charges as Hollows:
“In Cents Per Car — Loading Charges 50 Unloading Charges 25”

The Stock Yard Company filed with the Interstate Commerce Commission, effective May 21, 1917, a tariff increasing these loading and unloading charges by 25 cents per car, whieh increase the line-haul carriers declined to absorb. The railroads did not amend their tariffs, but the charge of 25 cents increase per ear was indorsed on the freight bills, and paid by the yards commission merchants — to whom the shipments were consigned — and ultimately received by the Stock Yard Company. When the railroads passed into federal control (December 28, 1917), the Director General of Railroads likewise declined to absorb the 25 cents per car increase, and without publication of any further tariff the additional 25 cents per car continued to be collected and paid as before.

The Stock Yard Company, contending that by reason of certain changes in its relation with the Chicago Junction Railway Company it was no longer a common carrier of interstate commerce, filed with the Interstate Commerce Commission its tariff, effective September 1, 1917, canceling its previously filed loading and unloading tariff charged The Commission suspended the effectiveness of the notice of cancellation from time to time until the expiration of government control, so that it never beeame effective. The suspension of the cancellation left in force the last previously published tariff, whieh had increased the loading and unloading charge by 25 cents per car.

November 17, 1917, the Chicago Live) Stock Exchange, composed of commission merchants at the Chicago stockyard, filed complaint with the Interstate Commerce Commission against the Stock Yard Company and the line-haul carriers, against the 25 cents loading and unloading increase, and charged that its collection violated sections 1 and 3 of the Interstate Commerce Act (49 USCA §§ 1, 3). This complaint was consolidated with the controversy respecting cancellation of the 25 cents per ear increase, and the 'matters were heard by the Commission.

Respecting the complaint of the Chicago Live Stock Exchange, its demand for cessation of the increased unloading charge and for reparation involved the question of whose duty it was to load and unload the live stock at the Chicago yard. The proposition was discussed in the Commission’s report and opinion (52 I. C. C. 209, February 11,1919), and the conclusion was announced that: “3. The loading and unloading of live stock, in carloads, at the Chicago stockyards is a duty of the shipper.”

March 31,1919, the Exchange filed a petition for rehearing, and the Commission reopened the case, then, for the first time, naming the Director General of Railroads as a respondent. There was further hearing, and on July 15,1920, the Commission filed an opinion, wherein it is stated, inter alia: •

“For the reasons stated we are of opinion that our finding that it is the duty of the shipper to load and unload live stock in the stockyards at Chicago was error, and it is therefore reversed. And we now find that it was the duty of the carriers to unload and load live stock at that point.”
“We further find that shippers who paid and bore charges for unloading and loading live stock at the stockyards in addition to the rates to and from the stockyards and who are parties of record herein have been damaged in the amount of such charges and are entitled to reparation, with interest from the date of such payment. The exact amount of reparation due each shipper can not be determined on this record, and they should comply with rule V of the Rules of Practice.” Chicago Live Stock Exchange v. A. T. & S. F. Ry. Co. et al., 58 I. C. C. 164.

Thereupon the Exchange, on behalf of its members, whom it named, petitioned to have ascertained and awarded the amount of reparation to which each of such members is entitled. Under date of June 2, 1925, the Commission filed its report of the further hearing thereon, in which it found that the various named individuals, corporations, and firms constituting such members are entitled to reparation for the increased loading and unloading charges paid, and directed preparation of statements of thé' particular amounts, separated-as to the participating carriers. 100 I. C. C. 266. Subsequent statements were filed with the 'Commission specifying the payments as to the various carriers, and the various members of the Ex¿ change, and reparation was ordered accordingly.

During the course of the proceedings there was also filed a statement of the various shippers, and of the shipments to the different members, and of the carriers over whose lines the different shipments moved.

The reparation order directed the payments to be made to the several commission merchants, whom the Commission found to be entitled thereto, and the suit in the District Court upon the award was brought by these various commission merchants, corporations, firms, and individuals — 103 of them.

Appellees contend that, while appellants 'physically paid the bills, they did not ultimately “bear” them, but that they were borne by the shippers of the live stock, and that therefore the several commission merchants had no such interest in the claims for reparation as entitled them to maintain suit thereon.

The general course of practice was this: The consignors shipped to the commission merchants. Upon arrival of the ears at the stockyard, the stock was unloaded by stockyard employees and placed in the pens of the different commission merchants, who generally sold the consignment the same day, receiving the purchase price before night. Upon arrival of the ear, the waybills, with the 25 cents unloading charge indorsed upon each, were delivered to the employees of the Stock Yard Company, who turned them over to a joint agent of the carriers and the Stock Yard Company. The agent cheeked the weights and delivered the corrected bills to the Stock Yard Company, which then advanced to the line-haul carriers, for the consignees, the full amount of the bills, including the 25 cents additional unloading charge, and the carriers later paid the Stock Yard Company its part of the charges.

The commission merchants promptly accounted to their shippers for the amount realized from sale of their live stock, deducting commissions, freight charges, and other proper outlays of the commission merchants; and twice weekly the Stock Yard Company collected from the commission merchants the amount of such advances to the carriers.

It would be seldom indeed that the commission merchants would advance their own money in payment of freight charges; but in case they did so they would be reimbursed promptly through realizing upon the shipment. To the extent that this may be an influential fact, it may be said that, in general, the commission merchants made no advances for the shippers, but paid the transportation charges out of the shippers’ funds in their possession. But, regardless of the precise order of the payments, it is clear that, at the time of the proceedings for reparation, the commission merchants had been long and fully reimbursed by the shippers for any such outlay, and it is not apparent how it can be said that the 25 cents charge was in fact “borne” by them, or by any one other than the shipper. .

, In the opinion of the District Court [Adams et al. v. Mellon, Director General, et al., 39 F.(2d) 80], there was considered only the question whether appellants had sueh interest, or sustained sueh injury through payment of the increased charge, as entitled them to maintain this action. The opinion exhaustively and interestingly treats the question, and many cases are cited.

It appears that up to and including the time when the Commission made the decisions herein, reported at 52 I. C. C. 209, and 58 I. C. C. 164, it had held in a long line of cases that a consignee who did not actually bear alleged unlawful charges was not entitled to reparation therefor, notwithstanding he had in the first instance made payment to the carrier. That question was not discussed in either of those opinions; indeed, in that of 58 I. C. C. 164, it was not undertaken to adjudge who in fact was entitled to the reparation, except to conclude that “shippers who paid and bore charges for unloading and loading live stoek at the stockyards in addition to the rates to and from the stockyards and who are parties of record herein have been damaged in the amount of sueh charges and are entitled to reparation, * * But in the decision made June 2, 1925, reported in 100 I. C. C. 266, 270, it was found that the various commission merchants therein named (who are the same as appellants here) “made the shipments” and “paid the charges thereon,” and have been damaged and are severally entitled to reparation in their own names to the amount of the charges “as factors and agents for the shippers.”

In the meantime (April 7,1924) the Commission had decided the case of Missouri Portland Cement Co. v. Director General, 88 I. C. C. 492, wherein it reached a conclusion different from its theretofore long line of decisions, deciding that a consignee who had in the first instance paid an excessive transportation charge, though reimbursed, was a proper party to institute and maintain reparation proceedings. It -appears that four of the Commissioners participating in the reparation award of 100 I. C. C. 266, 273, did so “only as constrained thereto by the decision of the majority in Missouri Portland Cement Co. v. Director General.”

The action does not purport to be brought by appellants otherwise than in their respective individual capacities. Indeed, with attention directly challenged to their right to sue, it was contended by their counsel that they had sueh right, and, while most 'likely the shippers would have the benefit of any recovery, this was wholly within appellants’ volition.

In the District Court opinion Judge Woodward discusses the Interstate Commerce Commission decisions, and many others, 'particularly Southern Pac. Co. v. Darnell-Taenzer, 245 U. S. 531, 38 S. Ct. 186, 62 L. Ed. 451, and Louisville & N. R. Co. v. Sloss-Sheffield, 269 U. S. 217, 46 S. Ct. 73, 70 L. Ed. 242, reaching the conclusion that appellants in their own right may not maintain the suit.

Our examination of this question does not so entirely satisfy us of the correctness of the District Court’s conclusion thereon as to justify our deciding the appeal upen ground so formal and technical, if a proper result may be reached upon the merits of the cause.

In considering appellants’ motion made after judgment had been entered, for reopening the case and permitting amendment to be made to the deelaration'to the end that the plaintiffs may maintain the action as trustees for the various shippers, evidently the ground upon which the court had directed the verdict was again questioned. The court then said: “While the court, in its opinion, did not advert to the other points' argued by the defendants, yet it seems to the court that on other grounds, not referred to in the opinion, the judgment of the court may be maintained.” In our view of the ease, thére are other grounds on which the judgment may be rested.

It would greatly transcend the reasonable scope of .such an opinion to present discussion of all of the many propositions put forward by the parties in the 700 printed pages of briefs and arguments submitted to us. Our further comments will relate to the merits of the reparation claims, without regard to the right of appellants to maintain the action therefor.

For the contention that the Stock Yard Company could not lawfully impose on the shipper these increased charges, appellants place much reliance on Covington Stock-Yards Co. v. Keith, 139 U. S. 128, 11 S. Ct. 461, 35 L. Ed. 73. A decree was there affirmed finding that certain terminal charges at the Covington stockyards were for services which the carrier was bound to perform, and that a consignee would not be obliged to make use of those yards for unloading live stock unless such additional charge was waived; and, in default of such waiver of charges, the consignee might himself maintain suitably located pens at which stock consigned to him should be delivered by the carrier if he (the consignee) would keep a representative there to receive the stock. That action' was begun in 1886 — before the passage of the Interstate Commerce law — and of course was uninfluenced by published tariffs of a participant in interstate commerce, as is the case with the Chicago yard. The situation was entirely different, and in our judgment the case has little, if any, application here.

Since the passage of the Interstate Commerce Law, the right to make separate terminal charges seems clear, but with the limitation that such charges, if themselves reasonable, must not, in connection with all the other transportation rates, produce an unreasonable aggregate. Interstate Commerce Commission v. C., B. & Q. R. R. Co., 186 U. S. 320, 22 S. Ct. 824, 46 L. Ed. 1182; Interstate Commerce Commission v. Stickney et al., 215 U. S. 98, 30 S. Ct. 66, 54 L. Ed. 112.

United States v. Union Stock Yard Co., supra, also relied on to same effect, far from sustaining appellants’ contention of the impropriety of the additional charge, in our judgment does the very contrary by 'holding the yards company to be an interstate carrier, under the jurisdiction of the Commission, and required to file tariff rates for that part of the service which it performs, and to collect and receive its rates while its published tariff remains in effect.

The absorption by the line-haul carriers of the originally filed rate of 50 cents and 25 cents for loading and unloading cars was not a . gratuity on the part of the carriers. The comprehensive operations of the Stock Yard Company greatly facilitated the handling of stock at Chicago for all the line-haul carriers. It undertook the service of rapidly unloading the oars coming into that great market. Its facilities made possible that elasticity of service which tended continuously to speed the unloading of live stock, regardless of Variations in daily deliveries by the several carriers, and promptly to release the rolling stock for further movement.

Under the, law, the entire transportation service must be rendered at a reasonable rate, and the absorption of this loading and unloading charge was in fact a promulgation by the line-haul carriers of such a rate for the entire service as was then deemed reasonable. The result to the shipper would have been the same had the line-haul carriers correspondingly reduced their rates, and not absorbed the loading and unloading charges.

In our judgment, this absorption extended only to the amounts specifically named in the absorption clause; and, when the Stock Yard Company promulgated its 25 cents increase, not only did the original absorption not include this increase, but the line-haul carriers definitely refused to absorb it; and, when the carriers passed into federal control, the refusal to absorb was persisted in. But this left it none the less the lawful duty of the Stock Yard Company to collect the increased charge of 25 cents upon each car,, and failure to collect would have subjected' that company to the penalties which the law prescribes.

The ineffectual attempt to cancel its published tariff left it in continuing force until, upon the close of federal administration, section 418 of the Transportation Act, 49 USCA § 15 (1-7), definitely, and for the first time, required thereafter the line-haul carriers to load and unload all live stock offered for shipment.

If, when the cars reached the yard, and either before or after unloading, the Stock Yard Company had demanded, and the consignees had paid, the 25 cents charge, we do not think it could be said that the line-haul carrier made the collection. But it seems to us that, notwithstanding the seeming circuity, it was the Stock Yard Company which in effect collected the charge from the shipper or consignee. Upon arrival of the ears, the Stock Yard Company, for and on behalf of the consignees, advanced the entire transportation charges, including the 25 cents, and turned the entire amount over to the line-haul carriers, which turned back to the Stock Yard Company the 25 cents, together with the other yard charges. Whatever the form of the transaction, it seems to us to have been, in essence, but a collecting of the 25 cents by the Stock Yard Company, which, under its published tariff, it was bound in any event to collect. No one was taken by surprise or deceived. The rate had been duly published, and shippers or their representatives, the commission merchants, knew of this charge, and that the Stock Yard Company would be obliged in some manner to collect it.

No contention is made that the charge itself was unreasonable, or that, taken in con-neetion with the other transportation charges, the entire rate was unreasonable. The extent of the Commission’s second conclusion was that the collection of the increased 25 cents was “an unlawful and unreasonable practice.” The finding that it was an unreasonable practice is not a finding that it was an unreasonable rate.

We judicially know, even if the record did not disclose it, that the cost of such service as was rendered at the stockyard had increased very materially by the beginning of government control of the railroads, and this was the only increase in that rate since it was first fixed, many years before the World War began, notwithstanding the very substantial increase in transportation rates generally.

It seems from the record that in these tariffs themselves there is a background of authoritative rules and regulations which tend strongly to fortify the conclusion reached in the Commission’s first decision, and our views as well.

It is stipulated by the parties that “all shipments of livestock involved in this suit consisted of carloads moved on carload ratings as ordinary livestock.” It appears in Official Classification No. 44, under head of “Rules and Special Instructions”:

“Unless otherwise provided when property is transported subject to the provisions of the Official Classification, the acceptance and use are required, respectively, of the ‘Uniform Bill of Lading,’ ‘Straight’ or ‘Order,’ ‘Export Bill of Lading,’ ‘Uniform Live Stock Contract ’ * * * ”

In the Uniform Live Stock Contract it is provided that: “See. 5. The shipper at his own risk and expense shall load and unload said live stock, * * * ” and that: “8. It should be understood in receiving Live Stock of any description for transportation, that the actual delivery does not commence until the'stock has been placed in the ear, and the responsibility of the Railroad Company shall cease upon the delivery of the car at the station to which it is consigned. The consignor and the consignee are responsible for the loading and unloading of the same, the carrier assuming no liability whatever in regard to such loading and unloading.”

These provisions were in force throughout the period of federal control of railroads. Their existence is not disputed' — only their application is denied by appellants.

There is significance in the fact that the government, in taking over the transportation facilities, did not take over the stockyard. It is quite likely that this branch of the transportation was deemed in its nature quite separable from the rest, and that this highly specialized service had best continue to be carried on wholly by this agency of proved efficiency, an agency which was no doubt considered best suited to cope with the then unprecedented conditions which brought to the stockyard live stock in stupendous quantities, to feed a world at war. In those crucial months the basic live stock and packing industry could not well be hampered by tie-ups and confusions at the point of convergence in the great Chicago market of the many railroads bringing in live stock by the thousands of ears daily. The extraordinary conditions required extrar ordinary facilities to meet them. A unified and continuous unloading of these tremendous stock receipts, and their intelligent handling and disposal, manifestly conferred upon shippers as well as line-haul carriers an advantageous service more effective and satisfactory than if undertaken by each of the several line-haul carriers for the live stock which it carried.

That the transportation of live stock does not impose on the carrier all the responsibilities attendant upon the carriage of goods is logical, and has been distinctly recognized. North Penn. R. R. Co. v. Bank, 123 U. S. 727, 8 S. Ct. 266, 31 L. Ed. 287; Covington Stock-Yards Co. v. Keith, supra. The reasonable necessities of transportation at a given place or time may be entirely different from those of another place or time.

Harking back to the conditions under which this service was rendered, we cannot but conclude that the special benefit of the stockyard unloading service which then accrued to the shipper or consignee, at largely added cost to the Stock Yard Company, was properly the subject of an increased unloading charge outside of and beyond that which was otherwise included in the line-haul carriers’ published transportation rates, very much as in “Dunnage Allowances, 30 I. C. C. 538,” referred to in the opinion herein of the Commission in 52 I. C. C. 209.

Appellants earnestly urge that the collection of this charge was a tort, and that all participants therein were joint tort-feasors. We cannot believe that the Stock Yard Company committed a tortious act in collecting and receiving its tariff charge, the failure to collect and receive which would have been a breach of its statutory duty. Nor do we understand how the Director General of Railroads became a tort-feasor through his continuing the prior practice of receiving from the Stock Yard Company the entire rate, including the additional loading and unloading charges, and then turning back to the Stock Yard Company that part of the total charge to which it was entitled. Particularly is this so when there is no pretense that either the charge itself or the entire rate including this charge was excessive. But even if technically to be considered a tort, under all the circumstances, so far as the record discloses, it was at most damnum absque injuria.

The judgment awarded costs against appellants. Coneededly this contravenes the statute (§ 16 (2), Tit. 49, U. S. C., 49 USCA § 16 (2), which provides “that the petitioner shall not be liable for costs in the district court nor for costs at any subsequent stage of the proceedings unless they accrue upon his appeal.”

The judgment should be modified by eliminating therefrom the award of costs in the District Court. The District Court is directed to make such modification, and, as so modified, the judgment is affirmed, with costs of this appeal against appellants.


source: Caselaw Access Project

author: THOMPSON, Circuit Judge.

license: Public Domain

text:
    CONNOR et al. v. EXCESS INS. CO. OF AMERICA.

    No. 4455.
    Circuit Court of Appeals, Third Circuit.
    Aug. 13, 1931.
    J. A. Hartpenee and Wall, Haight, Carey & Hartpenee, all of Jersey City, N. J., and Stout & Spencer, of St. Louis, Mo. (Thomas G. Haight, of Jersey City, N. J., of counsel), for appellants.
    Lum Tamblyn & Colyer, of Newark, N. J. (Chester W. Fairlie, of Newark, N. J., and Solomon J. Rosenblum, of New York City, of counsel), for appellee.
    Before BUFFINGTON and THOMPSON, Circuit Judges, and THOMSON, District Judge.

       Rehearing denied November 4, 1931.

   THOMPSON, Circuit Judge.

The appellants, plaintiffs below, are co-partners doing business in the state of Missouri and are citizens of that state. The ap-pellee, defendant below, is a corporation of New Jersey, having its home office at Newark. The appellants recovered a judgment against the appellee in a court of record of the state of Missouri upon a policy of liability insurance issued by the appellee. They brought suit at law in the District Court for the District of New Jersey on that judgment. Upon trial by the court without a jury, judgment was entered for the defendant, whereupon this appeal was taken.

There is little controversy concerning the facts. The controversy is upon the effect to be given, as matter of law, to the facts proved.

The policy, upon which suit was brought, was negotiated through the firm of W. H. Markham & Co. On Junp 15, 1927, one O’Halloran, manager for W. H. Markham & Co., who were residents and doing business at St. Louis, Mo., wrote to Gibbs, president of defendant, inquiring whether Gibbs would be willing to write a poliey for the plaintiffs to cover liability risks for tunneling operations being performed by the plaintiffs in North Carolina. The plaintiffs had not then been approached upon the subject. Gibbs on the following day replied by telegram, and on June 21 by letter, declining to write the poliey in the form proposed, but suggested another form. After further correspondence, the terms of the poliey were agreed upon, and on July 19 Gibbs notified Markham & Co. by telegram that the risk was bound as of that day. As a result of additional correspondence, the binding date was fixed as of July 16. On July 30, Gibbs mailed the policy in triplicate to Markham & Co. who, in accordance with instructions by Gibbs, took-the policy, upon which suit was subsequently brought, to the plaintiffs in St. Louis, delivered it to one of the plaintiffs, and obtained his signature upon the duplicate which he returned to the defendant at its home office. The premium was paid by the plaintiffs to Markham & Co. who deposited the money to their credit in their bank and sent their check to the defendant for the amount of the premium less Markham & Co.’s commission of 10 per cent.

The plaintiffs claimed reimbursement under the terms of the poliey for a -loss occurring on August 8, 1927. After the loss, Markham & Co. made up the proofs of loss and sent them to the defendant, but were notified by the defendant that it refused to pay. About six months later in February, 1928, the defendant tendered a return of the premium. They mailed a eheek to Markham & Co. who turned it over to the plaintiffs’ attorneys at the plaintiffs’ request. The attempted return of premium was not accepted, and the check was returned to the defendant.

The defendant covered other insurance risks in Missouri. Through Markham & Co., it issued its poliey to the Missouri-Kansas Zine Corporation, which transacted business and had an office in Missouri. The insurance issued to that corporation was still in force at the time plaintiffs’ suit was brought in the Missouri court. One Sardius Smith of Missouri also solicited insurance business for the defendant from the Missouri-Kansas Zine Corporation. The correspondence shows those facts conclusively. The defendant also issued its insurance poliey to the Wise-Buchanan Coal Company which was doing business in Joplin, Mo. That insurance was procured through Sardius Smith. When the three copies of the poliey were sent to Smith, he, under the instructions of the defendant, had the Wise-Buehanan Coal Company sign all three copies, delivered one to the coal company, kept one for his files, and returned the other to the defendant, all in the same manner in which Markham & Co. transacted business with 'the defendant for the plaintiffs. The Wise-Buchanan Coal Company’s premium was collected by Smith in Joplin, Mo., its eheek .deposited to Smith’s account, and the premium, less 10 per cent, for commission, was sent by Smith to the defendant. Later in 1929 the defendant sent Smith a bill for $78 for excess premium upon the coal company’s property which he collected and remitted to the defendant, less his 10 per cent, commission. Meanwhile, the defendant had sent Smith an order for cancellation of the poliey with cancellation notice. The defendant, however, as a result of correspondence with Smith, issued a binder at increased rate of premium which the coal company refused to accept.

The defendant having refused to pay the plaintiffs’ loss, suit was brought on the policy in the circuit court of St. Louis. Process was served upon the members of the firm of W. H. Markham & Co. and upon Sardius Smith. Service was made under the authority of the following sections of the Revised Statutes of 1919 of the State of Missouri:

“Sec. 6310. Process against foreign companies, appointment of superintendent to receive or accept service of, — Any insurance company not incorporated by or organized under the laws of this state, desiring to transact any business by any agent or agents in this state, shall first file with the superintendent of the insurance department a written instrument or power of attorney, duly signed and sealed, appointing and authorizing said superintendent to acknowledge or receive service of process issued from any court of record, justice of the peace, or other inferior court, and upon whom sueh process may be served for and in behalf of sueh company, in all proceedings that may be instituted, against such company, in any court of this state or in any court of the United States in this state and consenting that service of process upon said superintendent shall be taken and held to be as valid as if served upon the company, according to the laws of this or any other state. Service of process as aforesaid, issued by any sueh court, as aforesaid, upon the superintendent, shall be valid and binding, and be deemed personal service upon such company, so long as it shall have any policies or liabilities outstanding in this state, although sueh company may have withdrawn, been excluded from or ceased to do business in this state, and in ease sueh process is issued by a justice of the peace or other inferior court, the same may be directed to and served by any officer authorized to serve process in the city or county where said superintendent shall have his office, at least fifteen days before the return day thereof, and sueh service shall confer jurisdiction. Every sueh instrument of appointment executed by such company shall be attested by the seal of such company, and shall recite the whole of this section, and shall be accompanied by a copy of a resolution of the board of directors or trustees of sueh company similarly attested, showing that the president and secretary, or other chief officers of such company, are authorized to execute such instrument in behalf of the company; and if any sueh company shall fail, neglect or refuse to appoint and maintain, within the state, an attorney or agent, in the manner hereinbefore described, it shall forfeit the right to do or continue business in this state. (R. S. 1909, § 7042.)”,
“Sec. 6312. Additional service. — Service of summons in any action against an insurance company, not incorporated under and by virtue of the laws of this state, and not authorized to do business in this state by the superintendent of insurance, shall, in addition to the mode prescribed in section 6310, be valid and legal and of the same force and effect as personal service on a private individual, if made by delivering a copy of the summons and complaint to any person within this state who shall solicit insurance on behalf of any sueh insurance corporation, or make any contract of insurance, or collect or receive any premium for insurance, or who adjusts or settles a loss or pays the same for such insurance corporation, or in any manner aids or assists in doing either. (R. S. 1909, § 7044.)”

It is conceded that the defendant had not filed an authorization to the superintendent of the insurance department of Missouri to accept service of process for it. Service upon Markham & Co. and upon Saxdius Smith was, therefore, made upon them as persons within the state coming within one of the fol-' lowing classes, namely: Those “who shall solicit insurance o,n behalf of any such insurance corporation, or make any contract of insurance, or collect or receive any premium for insurance, or who adjusts or settles a loss or pays the same for sueh insurance corporation, or in any manner aids or assists in' doing either.”

■ Upon service thus made, the defendant having entered no appearance, the court, upon proof of the essential facts, found that the defendant was a foreign corporation engaged in doing insurance business in Missouri and subject to the laws of Missouri, that the members of the firms of W. H. Markham & Co. and Sardius Smith, Inc., were some of the agents for the defendant within the state of Missouri soliciting insurance on behalf of defendant and collecting and receiving premiums as agents of defendant from residents of the state of Missouri. The court found the defendant liable upon the policy and contract,- and entered judgment for the plaintiffs and against the defendant in the sum of $15,311.-97 and costs.

Upon the proof of those facts ■ in the court below, the District Judge found against the plaintiffs and entered judgment for the defendant, whereupon this appeal was taken.

We have no doubt that the policy in suit in the St. Louis court was a contract made in Missouri. It did not take effect until payment of the premium. The premium was paid in Missouri and the policy was accepted by the assured in Missouri. It became a completed contract upon delivery, acceptance of the policy, and payment of the premium, all of which occurred in Missouri. Therefore, it was a Missouri contract and governed by the laws of Missouri. Equitable Life Assurance Society v. Clements, 140 U. S. 226, 11 S. Ct. 822, 35 L. Ed. 497; New York Life Insurance Company v. Cravens, 178 U. S. 389, 20 S. Ct. 962, 44 L. Ed. 1116; Northwestern Mutual Life Insurance Company v. McCue, 223 U. S. 234, 32 S. Ct. 220, 56 L. Ed. 419, 38 L. R. A. (N. S.) 57.

The appellee has clearly brought itself within the provisions of the Missouri statute by entering into the contract with the appellant in Missouri and by transacting other business in that state. Since the appellee had not complied with the requirements of the statute by designating the superintendent of insurance as its agent or attorney to accept service for it, the Missouri court was empowered to issue process and to cause service to be made upon those soliciting insurance or making contracts of insurance or collecting or receiving premiums for insurance on its behalf.

In the case of Commercial Mutual Accident Company v. Davis, 213 U. S. 245, 29 S. Ct. 445, 447, 53 L. Ed. 782, where process was served upon a person who adjusted and settled a loss with the policyholder, it was held that the company must be presumed to have acted with knowledge of the statute, and that it could be served with process through service upon some agent within the state designated by the law of the state. Mr. Justice Day said: “It was competent for the state, keeping within lawful bounds, to designate the agent upon whom process might be served. It chose to enact a statute providing that an agent competent by authority of the company to settle and adjust losses should be competent to represent the company for the service of process. "When the company sent such an agent into Missouri, by force of the statute he is presumed to represent the company for the purpose of service, and to be vested with authority in respect to such service so far as to make it known to the foreign corporation thus coming within the state and subjecting itself to its laws. Lafayette Insurance Company v. French, 18 How. 404, 408, 15 L. Ed. 451, 453.

The service of process made in the ease before us complied with such requirements of the due process clause of the Constitution as the Supreme Court found adequate in the above ease. We conclude that the District Court erred in failing to give full faith and credit to the Missouri judgment.

The judgment is reversed, with direction that judgment be entered for the plaintiffs below for the amount claimed in the complaint, with interest and costs.


author: COTTERAL, Circuit Judge.

text:
    UNITED STATES v. HALE.
    No. 421.
    Circuit Court of Appeals, Tenth Circuit.
    July 21, 1931.

      John M. Goldesberry, U. Si Atty., of Tulsa, Okl. (A. E. Williams, Asst. U. S. Atty., of Tulsa, Okl., on the brief), for the United States.
    Wm. S. Hamilton, of Pawhuska, Okl. (Edw. C. Gross and J. I. Howard, both of Pawhuska, Okl., on the brief), for appel-lee.
    Before LEWIS and COTTERAL, Circuit Judges, and POLLOCK, District Judge.
   COTTERAL, Circuit Judge.

This suit was brought by the United States, in behalf of Pearl Bigheart, an Osage Indian ward, against Myrtie M. Hale, to quiet the title to a quarter section of land in Osage county, Okl. The District Court [39 F.(2d) 188] sustained the title of each to a half interest in the land, but the entire interest was awarded to the defendant in a final decree, from which the United States appeals.- We first review the material facts to which the parties agreed at the trial.

The land was allotted to Um-pah-to-kah, a full-blood Osage Indian, pursuant to the Allotment Act of June 28, 1906, 34 Stat. 539-545. The allottee died intestate, a minor, and the land was inherited by her father, George Bigheart, and her mother, Pah-me-she-wah, as her only heirs, by virtue of section 6 of the act, which put in force the laws of descent of Oklahoma, except where a decedent leaves no issue nor husband nor wife, when the estate goes to the father and mother equally. In May, 1912, George Bigheart, holding a certificate of competency, conveyed his half interest in the land to Alfred D. Harris. In April, 1913, Pah-me-she-wah died intestate, leaving as her sole heirs her husband, George Bigheart, and her two minor children, Charles Bigheart and Pearl Bigheart, each taking an undivided one-sixth interest in the land. George Bigheart, a year later, conveyed his one-sixth interest to one Kennedy, who conveyed the same to Harris.

In August, 1915-, the guardian of Charles and Pearl Bigheart brought a suit in the state court against Harris for a partition of the land and other tracts, involving some 660 acres. In May, 1916, partition was decreed, whereby the quarter section in dispute and 40 acres additional were set off to the two minors, in common. The Secretary of the Interior, on February 20,1917, indorsed the decree in these terms: “Approved, provided the lands set aside to Charles Bigheart and Pearl Bigheart, in common, are held by them under the same restrictions as to alienation as applied prior to the institution of this suit.”

Thereafter, in February, 1919, Charles Bigheart died a minor, intestate, survived by his father, George Bigheart, as his next of kin. The latter conveyed a one-half interest to W. K. Hale, claiming he acquired it as the sole heir of Charles Bigheart. Pearl Bigheart also claimed to have succeeded to that interest. Hale later brought a partition suit against her and her guardian, the result of which was that the entire land was conveyed to Hale, in consideration of the payment by him to the guardian of Pearl Bigheart of the appraised value of her interest in the land. Later, Hale conveyed the land to the defendant, Myrtie M. Hale.

A decree in the present case was first stayed to await approval of the second partition suit by the Secretary of the Interior. He disapproved it. The decree herein then provided that title should be vested one-half each in Pearl Bigheart and Myrtie M. Hale, on the condition that within 60 days the former should repay the latter the sum of $1,-533.76, paid to the guardian of Pearl Big-heart in the second partition suit. Her default in payment being reported, the entire interest in the land was vested in Myrtie M. Hale.

The controversy presented here is twofold: (1) Whether George Bigheart or Pearl Bigheart succeeded to the one-half interest of Charles Bigheart in the land, and (2) whether it was error to award the interest of Pearl Bigheart to Myrtie M. Hale, for the nonpayment to the latter of the amount paid to the guardian of Pearl Bigheart, in the second partition suit.

It is contended by appellant that Pearl Bigheart inherited the title to the one-half interest of Charles Bigheart in this land, by virtue of subdivision 7 of section 11301, Comp. St. Okl. 1931, -which provides as follows: “If the decedent leave several children, or one child and the issue of one or more children, and any such surviving child dies under age, and not having been married, all the estate that came to the deceased child by inheritance from such decedent, descends in equal shares to the other children of the same parent, and to the issue of any such other children who are dead, by right of representation.”

The contention would be sound if that title had come to Pearl Bigheart by inheritance. He-ah-to-me v. Hudson, 121 Okl. 173, 249 P. 138. The District Court ruled to the contrary, and to the effect that the title of Charles Bigheart had its origin in the first partition suit, and was therefore acquired by purehhse and not by inheritance. See opinion, District Court, 39 F.(2d) 188.

We think the decision was right. It was based on the fundamental doctrine sustained by the authorities that a title by purchase includes every known method of acquiring an estate except that by which it passes to an heir by operation of law. The distinction was pointed out in a controlling authority there cited, Robinson v. Fair, 128 U. S. 53, 9 S. Ct. 30, 32 L. Ed. 415, where it was held that partition is an adversary proceeding, which accomplishes a transfer of title (page 84 of 128 U. S., 9 S. Ct. 30). And the Oklahoma Supreme Court has confirmed the principle under the partition laws of the state. Lewis v. Gillard, 70 Okl. 231, 173 P. 1136.

Pearl Bigheart did not therefore take title to the one-half interest in the land of Charles Bigheart. It was not an inheritance but a title which had come to him.by purchase. It vested in George Bigheart as his father and heir, under the terms of section 6 of the Allotment Act of June 28, 1906 (34 Stat. 539, 545), and not under the state law. As a result, W. K. Hale and Pearl Bigheart each owned a one-half interest in the land at the institution of the second partition suit.

But we do not agree with the District Court in rendering the decree which vested the title to the restricted interest of Pearl Bigheart in Myrtie M. Hale. The Osage Indian lands were acquired-by and conveyed to the United States in trust for the Indians. Brewer Oil & Gas Co. v. United States, 260 U. S. 77, 43 S. Ct. 60, 67 L. Ed. 140. Thus its power of control originated. The allotments were not made in trust, but subject to restrictions, which the United States was entitled to enforce in behalf of its wards. United States v. Bowling, 256 U. S. 484, 41 S. Ct. 561, 65 L. Ed. 1054. Partition of the restricted lands was authorized by section 6 of the Act of April 18, 1912 (37 Stat. 87), only with the approval of the Secretary of the Interior. That official was entitled to annex the conditions on which it might be made effective. Drummond v. United States (C. C. A.) 34 F.(2d) 755.

The second partition suit, for want of departmental sanction, was of no force or effect for any purpose. That suit, being a nullity, accomplished no more toward divesting the restricted title of Pearl Bigheart to her half interest in the land than would result from her voluntary act. She could not alienate the land for any consideration. The United States was not a party to the suit, and there was no adjudication that could affect its power and duty to protect the interest of Pearl Bigheart. The decree could not estop the government to challenge the transfer, and a failure to return the consideration could not be required as an equitable condition of avoiding a conveyance to Myrtie M. Hale. Otherwise, the policy of the law which imposed the restriction would be frustrated. Heckman v. United States, 224 U. S. 413, 32 S. Ct. 424, 56 L. Ed. 820; Tiger v. Western Investment Co., 221 U. S. 286, 31 S. Ct. 578, 55 L. Ed. 738.

Pearl Bigheart still retains her one-half interest in the land involved in this suit, and is entitled to have it quieted. The decree of the District Court was erroneous, and it is reversed, and the cause is remanded to that court, with direction to enter another, quieting the title of Peai’l Bigheart to her half interest in the land, and denying any relief to the appellee. The costs of this appeal will be taxed to the latter.

Reversed.


author: DENISON, Circuit Judge.

text:
    ENGEL et al. v. ZURBRICK, District Director of Immigration.
    No. 5844.
    Circuit Court of Appeals, Sixth Circuit.
    June 30, 1931.
    S. G. Smith, of Detroit, Mich. (Scallen, Watson, Smith & Stevenson, of Detroit, Mich., on the brief), for appellants.
    W. G. Comb, of Detroit, Mich. (Gregory H. Frederick, of Detroit, Mich., on the brief), for appellee.
    Before DENISON, HICKS, and HICK-ENLOOPER, Circuit Judges.
   DENISON, Circuit Judge.

The alien, John Engel, left his home in Russia (now Poland) in 1909, and came to Montreal. He was there married in 1912 to a widow (now deceased), who was also of Russian nationality, and who had come to Canada in 1911 with her son Stanley, then two years old, who became a member of the Engel family. Their daughter Carolina was born in Montreal in 1914. All the family continued to reside there for about ten years after the marriage. In 1922 or 1923, they all came together to Detroit. They did not have any passports and they entered without inspection, although, as the evidence is, not surreptitiously. In June, 1925, four warrants of arrest were issued, and they were held for deportation. As to the father and both children, the sole charges were that they entered without inspection and were liable to become publie-charges. In December, 1925, warrants of deportation to Poland were issued in all four cases. As to the father and mother, these warrants recited the additional ground of deportation that they entered without properly visaed passports, as required by the Passport Law of 1918 (22 USCA-§§ 223-226) and the President’s Proclamation (40 Stat. 1829). The deportation was delayed on account of the difficulty of getting passports for Poland, and it was not until August, 1930, that the Polish government concluded to consent to his (John’s) repatriation to Poland, and that, accordingly, the Polish consulate issued to the immigration officers passports for the father and children, the mother having died in the meantime. This habeas corpus proceeding was then brought. The contention made before the District Judge was that the three-vear limitation statute applicable to entry without inspection (8 USCA § 155) had expired. After a hearing the writ was denied, and this appeal is brought.

According to our practice in these ea*es, we have directed that the original certified copy of the departmental proceedings be made a part of the record on this appeal, as an exhibit but without printing; and it has been done.

If we assume that the three-year statute is applicable (we have recently certified that question to the Supreme Court), we find that these aliens testified that their entry Was in March, 1922. There is no proof to the contrary, except that in his preliminary statement (on arrest and without counsel) John said it was 1923, and the wife’s similar statement tended to support this. He testifies that this date was a mistake, if he gave it, and brings some — though far from conclusive —supporting testimony. He says he went to work for the Ford Company within a few weeks after his arrival. The record contains a statement by the examining inspector that the records of the Ford Company showed that this man began work in June, 1923; and the conclusion of the inspector and the Department that he entered in 1923, and had been here less than three years, is confessedly based mainly on this supposed record of the Ford Company. No such record was put in evidence, nor did the aliens have any chance to cross-examine or explain. Their original evidence, as to date of entry, satisfied the statutory burden of proof, and, in treating the Ford record as sufficient to overcome their evidence, it is too plain for controversy that, in this respect, they did not have a fair trial, and that the warrants of deportation would have to be vacated for that reason, if for no other.

The findings that the aliens were at the time of entry likely to become public charges are without any support in the evidence, and are arbitrary. Indeed, they seem to be merely pro forma and have not been urged.

It is now conceded that the deportation cannot be justified merely because the aliens, entering in 1922 or 1923, did not have visaed passports. U. S. v. Smith (D. C. Ill.) 36 F.(2d) 503; Id. (C. C. A. 7) 46F.(2d) 229, 230.

Carolina is now seventeen years old. She was born in Canada. The impropriety of her deportation to Poland is conceded.

The father and stepson had maintained their home in Canada, with an established domicile at Montreal for more, than ten years. Beyond any doubt, and under our decision in Gorcevich v. Zurbrick, 48 F.(2d) 1054, April 7, 1931, Canada was the country “whence they came.” If Canada had refused to receive them, they might then have been sent to the country of their citizenship; but since, on March 18,1921, they were not residing in the formerly Russian territory which became Poland, thus ipso facto then beeom-ing Polish citizens, and since they did not file their option for Polish citizenship before September 24, 1924, they lost their right— until then continued — to acquire that status. Treaty of Riga, of March 18, 1921, art. 6. Doubtless Poland, by its statutes or otherwise, could permit a later acquisition, but we do not know' how it could compel them to accept. At .any rate, it would be for the deportation authorities who sent to Poland residents of the United States who had left what was now Polish territory, ten years before Poland existed, to show a clear right for this action; and this they have not done.

Under all the facts, and if we pass by the question of limitation in all its aspects, we might permit the warrants to be amended so as to direct deportation to be to Canada, as we did in the Goreevich Case; but this is hardly the “ordinary ease” there mentioned. We are inclined rather to follow the action of the Supreme Court in the Wenglinsky Case, 282 U. S. 798, 51 S. Ct. 35, 75 L. Ed. -, and discharge absolutely. To order deportation to Poland, without effort to send to Canada, was so obviously wrong, not to say oppressive, and the aliens have been kept under restraint so many years, while the children have grown up as residents of the United States and while the deporting powers were trying to overcome the reluctance of the Polish government to repatriate the aliens, that the invalid warrant does not strongly appeal for our discretionary aid. It is not without importance, in such a discretionary matter, that these aliens were not of any excluded class, but — except for the lacking passport — were entitled to enter.

The order below is reversed, and the case remanded, with instructions to discharge the aliens from custody.

       We have assumed a former residence in Russian Poland because the record apparently refers to a town near Warsaw. There is another place of substantially the same name in Galician Poland, formerly Austrian territory. If the aliens came from this place, their citizenship did not depend on the treaty of Riga; but considerable search fails to disclose any Austrian-Polish treaty, or any Polish statute which clearly affects the status of a former resident of that territory, who in 1919 had long had a foreign domicile.


text:
    THACK et al. v. ZURBRICK, District Director of Immigration.
    Nos. 5834, 5835.
    Circuit Court of Appeals, Sixth Circuit.
    June 30, 1931.
    Benjamin A. Rossin, of Detroit, Mich. (Catherine G. Herlehy, of Detroit, Mich., on the brief), for appellants.
    W. G. Comb, of Detroit, Mich. (Gregory H. Frederick, of Detroit, Mich., on the brief), for appellee.
    Before DENISON, HICKS, and HICKENLOOPER, Circuit Judges.
   DENISON, Circuit Judge.

These aliens, now husband and wife, came from Russia (territory now Poland), to the United States in 1912 or 1913. They were married at Lynn, Mass., where they continued to reside and where a child was born. They were apparently hard working and thrifty, and had supported themselves without difficulty. In February, 1921, the three went to Poland to visit relatives. They neglected to obtain a certificate, which apparently they could have had for the asking,, which would have entitled them to re-entry within a year. In the latter part of 1921, desiring to return, and knowing that passports-would be required, they went to the American consul, who told them he would give them-a visa, but that they must first get passports from the Polish government. These could, not be obtained. The reason is unknown, but it was most probably because they were not Polish citizens. After repeated failures to get these passports, or to get any papers from the American consul unless they first had passports, the husband, then called James Yafimetz, came alone to Canada, arriving there in January, 1922; and, being told that he could not be passed into the United States without any passport, he walked across the line, and, without inspection, returned to his home in Lynn. Later he sent for his wife and child, and in July, 1922, learning that they were to arrive in Quebec, he went up to meet them. Anticipating. trouble on entering Canada, he again walked across the line without challenge. He met them in Quebec and brought them back, on the train to the last Canadian station before reaching the Vermont border. Here they all disembarked and he sought advice from the American consular agent at this station, as he formerly had at another station, as to what he should do to get his family back to'their home in Massachusetts. He apparently thought that, if the circumstances were once understood, they would be admitted. He was advised to go to the immigration inspector at Newport, Vt., and take the matter up. Newport was some six miles-south of the border and was the immigration station in that neighborhood, where immigrants were inspected and passed or rejected,, excepting as far as this could be done by assistants upon the train. When he finally learned that nothing could be done excepting in this way, it was rather late in the evening and the last train had gone, so he started to walk, but some passers-by gave him a ri.de to Newport. Inquiring for and finding the immigration station, he found it closed. Shortly his wife and child also arrived. They had been told to wait, but had taken advantage of an opportunity to ride to Newport. They all stayed at the hotel there that night. Their luggage, which had been sent ahead, was then at the immigration station. In the morning he applied to the station, long before it was open, but when it was opened and he again applied he was arrested and detained as an unlawful entrant. A little later he and his wife were formally arrested upon a warrant of arrest, charging that they had entered without the passport and visa required by the act of 1918 and the President’s Proclamation, that they had entered without inspection, and that they were persons likely to become public charges.

The above is the alien’s story. He was not at first truthful as to the presence of his wife and child at Newport, but later explained that he had been afraid they would be locked up, as he was. Upon the whole, there seems no reason to doubt the substantial truth of the story, and the Board seemed willing enough to accept it as true — indeed, the only matter of doubt was whether he really intended to present himself for inspection at Newport or whether he hoped to get by unobserved.

In accordance with our practice in these ■eases, we have directed that the certified copy of the departmental record, which was used on the hearing below, be made a part of the récord on appeal, but without printing, and this has been done.

While under this detention at Newport, the aliens were indicted for the crime of having entered without the necessary passports and visa, required by the act known as the Passport Control Act, of May 22, 1918 (22 USCA §§ 223-226), and the President’s Proclamation of Aug. 18, 1918 (40 Stat. 1829). Upon examination pursuant to the departmental warrant, the inspector found them guilty of everything charged, and further found James guilty of “a felony or other crime or misdemeanor involving moral turpitude,” because he had entered in January, 1922,' in violation of the Passport Control Act. The Commissioner at Montreal reported this to Washington, and it came before the Board of Review. The Board recited the circumstances, and although not accepting the alien’s story in full, held that “in any event, both aliens are clearly in the United States illegally, having entered without visaed passports.” The Board further recited that the aliens were well thought of personally, and were not undesirable immigrants, and concluded: “It is recommended that the warrant and bond be cancelled if the State Department will waive the visa requirement.” The State Department declined to do so, and thereupon the Board reconsidered the ease and recommended deportation on the grounds that the aliens were likely to become public charges, that they had entered without inspection and in violation of the passport regulation.

We think there is no substantial evidence to support any one of these three grounds.

There was no likelihood that they would become public charges. They were well and strong and willing workers; they had maintained themselves successfully for some years at Lynn; they had very well to do relatives and friends who would provide for any emergency; they had money enough to travel to their destination; the finding in this particular was arbitrary.

It is now conceded that they were not subject to deportation for lack of visaed passports under the Passport Control Act and the President’s Proclamation. This act expired on July 2, 1921 (42 Stat. 105). The quasi-continuation given by the Act of March 2, 1921 (22 USCA § 227) did not authorize deportation as the penalty for entering without passports. See U. S. v. Smith (D. C., Ill.) 36 F.(2d) 503, and the same case on appeal Feil v. Smith (C. C. A. 7) in 46 F.(2d) 229, 230. The entry was before the act of 1924, which provided for deportation in case of unlawful entry after that date, and which is not claimed to have retroactive effect.

The January entiy by James alone is not in question. It is not charged in either warrant, or referred to by the Commissioner or the Board. The transaction in July did not, in our judgment, constitute “entry without inspection.” Such entry cannot be, in all eases, completed by that technical entry which occurs when the international line is crossed. If such crossing were not in connection with or merged into an actual inspection at the appropriate place, “entered” might have this technical meaning, but if the alien merely follows the ordinary path from the international line to the nearest inspection point and presents himself for inspection, his action in so doing eannot be an offense for which Congress intended he should be sent to his former foreign residence and forbidden ever to try to return to this country. If the statute were to receive this literal construction, all unauthorized immigrants arriving in Detroit from Canada would be subject to deportation, having traveled in the United States half a mile or so after crossing the line; and that at Newport the distance happened to be six miles can have no substantially different effect. It seems to us entirely plain that, when the immigrant is inspected at the appropriate point, and when, because of the lack of the necessary papers, or for any other ordinary reason, he is not entitled to enter, the remedy is exclusion and not deportation.

If it were clear that the aliens had not intended to go to an inspection point, or to be inspected, but had only blundered into doing so, or had been apprehended in the effort to evade doing so, the question would be different; but that this alien had any purpose to escape inspection at Newport — beyond possibly a hasty plan abandoned while the opportunity for repentance was open — is not a reasonable conclusion upon this record; and we do not meet the question whether there was any evidence tending to support that conclusion because the Department did not make any finding to that effect, nor order deportation on that theory.

There is another reason why the warrant of deportation is bad, — at least as to the husband. In January, 1922, he entered from-Canada, went back into' Canada in July, and made the entry in question a few days later. Very clearly, upon this last entry, for which he was deported, he entered from, foreign contiguous territory, and had entered that territory from the United States. ' The applicable provision is a part of section 156, title 8, USCA (section 20 of the act of 1917). It reads: “ * * * If such aliens entered foreign contiguous territory from the United States and later entered the United States, or if such aliens are held by the country from which they entered the United States not to be subjects or citizens of such country, and such country refuses to permit their reentry, or imposes any condition upon permitting reentry, then to the country of which such aliens are subjects or citizens, or to the country in which they resided prior to entering the country from which they entered the United States.” Since, in eases like the present, “the country in which they resided prior to entering the country from which they entered the United States” was the United States, this last clause plainly can have no reference to such a ease as this; it refers only to the second alternative found in the quoted language; so that, excluding the inapplicable language, the clause reads: “If such aliens entered foreign contiguous territory from the United States and later entered the United States * * * then to the country of which such aliens are subjects or citizens.” Hence, in such a ease, the Secretary has no option, but must deport the alien to the country of which he is a citizen. The initial option to select the “country whence he came” does not reach to this particular later clause. Conf. Gorcevich v. Zurbrick (C. C. A. 6) 48 F.(2d) 1054, April 7, 1931.

For the reasons set out in the Engel Case (C. C. A.) 51 F.(2d) 632, this day decided, this alien was not a citizen of Poland. Hence, there was no authority for deportation to that country.

We do not overlook the conduct of the aliens since their entry. They) were released on bond pending .departmental hearing, and also for trial on the indictment. They forfeited these bonds, disappeared, and have only recently been found, living under changed names. They should have made their contest immediately, but this later conduct has no bearing on the decisive question. Color is added by the fact that they were indicted and suffered bond forfeiture for an offense that had no legal existence.

The order discharging the writ of habeas corpus is reversed, and the ease is remanded, with instructions to sustain the writ and discharge the aliens.


author: PER CURIAM.

text:
    REALTY ACCEPTANCE CORPORATION v. MONTGOMERY.
    Circuit Court of Appeals, Third Circuit.
    January 15, 1930.
    No. 4216.

      See, also, 51 F.(2d) 642.
    The opinion of Judge Morris was as follows:
    By this action of covenant tried to the court without the intervention of a jury under R. S. § 649 (28 USCA § 773), Henry G. Montgomery, the plaintiff, seeks to recover from Realty Acceptance Corporation, the defendant, damages for the breach of its contract under seal, of. September 23, 1924, employing plaintiff as its president and as the president of the Stuyvesant Corporation, all of whose capital stock was owned by the defendant, from the date of the contract to December 31, 1929, at a salary, from October 1, 1924, to December 31, 1929, at the rate of $25,000 a year, payable in equal monthly installments. The main breaches alleged are the removal of the plaintiff from the presidency of each corporation by the respective boards of directors in December 1926, and the nonpayment of any salary for the years 1927 to 1929, inclusive.
    Defendant, a Delaware corporation, admits the contract and that, prior to its execution, it was authorized by its board of directors. It likewise admits the ouster and the nonpayment of salary for the three years. It makes no claim that plaintiff was incompetent. It asserts, however, in avoidance of liability, that its by-laws and those of the Stuyvesant Corporation, chartered under the laws of New York, both provided, at the time the contract was made, that the president “shall be chosen annually by the Board of Directors and shall hold his office until his successor shall have been duly chosen and qualified 0r * * * he * * * shall have been removed in the manner hereinafter provided,” and “® * ® may be removed, either with or without cause, by the vote of a majority of the whole Board of Directors ; * * * ” that plaintiff’s removal by both companies was carried out in strict conformity with the by-laws; that the bylaws were valid and nullified or became by implication a part or condition of the contract; and that the contract was void for the further reason that it was against public policy.
    Plaintiff does not deny that the by-laws were in existence at the time the contract was entered into; that they were valid; that he had knowledge thereof; or that the removal proceedings were had in strict conformity therewith. He takes the position, however, that, as there was no statutory inhibition against the employment of officers of Delaware or New York corporations for a fixed term, as the by-laws were amendable, article X, “by the affirmative vote of a majority of the whole Board of Directors, * * * ” and as the making of the contract employing plaintiff for a fixed term was expressly authorized by more than a majority of defendant’s board of directors, the contract was a pro tanto supersession 'of the by-laws, and must prevail over them.
    Many eases deal with the relation of bylaws and contracts und'er varying circumstances. The Superior Court of New York ruled, in Martino v. Commerce Fire Ins. Co., 47 N. Y. Super. Ct. 520, that a contract of employment for a definite time prevailed over a by-law declaring that certain employees of the class to which plaintiff belonged should hold office during the pleasure of the board. The Appellate Division of the Supreme Court of that state decided in Reiss v. Usona Shirt Co., 174 App. Div. 181, 159 N. Y. S. 1031, 1033, that “the fact that the by-laws of the defendant, as known to the plaintiff, provided that the treasurer should be elected each year, and that he could be removed with or without cause by the directors, did not necessarily render such an agreement as was asserted by the plaintiff ultra vires the corporation.”
    Cuppy v. Stollwerck Bros., 216 N. Y. 591, 111 N. E. 249, 251, was an action to recover salary due, under a contract of employment, for one year, from which plaintiff was discharged at the end of four months under the authority of a by-law providing “the Board of Directors by a majority vote may * * * remove a director or officer and by like vote fill the vacancy. * * * ” The court held that, “while the by-law empowered the board of directors to remove a director or officer, it did not authorize them to terminate a contract with one whom they had employed for a definite term. The fact that the plaintiff had been elected a director in no way alters the situation. His election as director was in pursuance of his contract of employment. It did not supersede the contract and render his contract which was for a definite term terminable at will. Douglass v. Merchants’ Ins. Co., 118 N. Y. 484, 23 N. E. 806, 7 L. R. A. 822, upon which the respondent relies, is plainly distinguishable from this ease. In that ease one who acted as the secretary of the corporation at an annual salary was not employed for a definite term, and the decision in that ease turned upon that fact. Indeed,, in Judge Bradley’s opinion in that case, it is pointed out that in eases where the employee had been employed under a special contract it has been held that the corporation loses its general power of removal.”
    in Nelson v. James Nelson & Sons, Limited, [1913] 2 K. B. 471, the facts were that plaintiff was elected managing director of the defendant for the term of four years. Before the expiration of that term, the directors revoked the appointment. The defendant contended that the article of association providing that the directors might revoke the appointment of any managing director appointed by them became by implication a part of the contract and authorized plaintiff’s removal. The court denied this contention, saying: “Is there any prohibition , in the articles against the directors appointing a managing director for a fixed term, provided he remains a director and performs his duty satisfactorily? If there is one it is to be extracted from the words ‘and may revoke such appointment’. But I think sufficient meaning is given to these words if they are read ‘and may exercise the power of revoking the appointment when the company or directors may legally do so’. * * * Article 85 (b) is, I believe, a very ordinary one in-articles, and it would seem greatly to the prejudice of the company if, while they could employ a clerk for a fixed term, they could not offer so important an official as a managing director any security of tenure, but only an appointment at will or pleasure.”
    If the by-law may not be read into the contract of employment, it would seem to be of no importance that the by-law of the defendant provides for removal “either with or without cause. * * * ”
    The defendant, however, cites many cases .to support its contention that, where a board of directors has power to remove officers at its pleasure, a contract for' a definite period is ultra vires and void. But three of these decisions, Wright v. Warren Bros. Co. (C. C. A.) 204 F. 231, Long v. United Savings & Annuity Co., 76 W. Va. 31, 84 S. E. 1053, and Darrah v. Wheeling Ice & Storage Co., 50 W. Va. 417, 40 S. R. 373, were controlled by a statute of West Virginia (Code 1913, e. 53, § 53 [sec. 2885]), declaring “officers and agents so appointed shall hold their places during the pleasure of the board.” Van Slyke v. Metropolitan Nat. Bank, 155 Minn. 319, 193 N. W. 470, was ruled by the National Banking Law, which expressly provides that any officer of a national bank may be removed at any time by the board of directors. Llewellyn v. Aberdeen Brewing Co., 65 Wash. 319, 118 P. 30, Ann. Cas. 1913B, 667, and Murray v. MacDougall & Southwick Co., 88 Wash. 358, 153 P. 317, were governed by a statute of the state of Washington empowering boards of directors to appoint officers, agents, and servants and.to remove-them at will. In Fowler v. Great So. Tel. Co., 104 La. 751, 29 So. 271, Hunter v. Sun Mutual Ins. Co., 26 La. Ann. 13, and Walker v. Maas, 132 A. 322, 4 N. J. Misc. R. 230, affirmed 104 N. J. Law, 341, 140 A. 286, there was no contract save that arising by inference from the election or appointment, and in the Louisiana eases the boards of directors, by whom the plaintiffs were elected, were without power to amend the by-laws made by the stockholders, providing for tenure of office during the pleasure of the board. In Auburn Academy v. Strong, 1 Hopk. Ch. (N. Y.) 278, the charter expressly empowered the trustees to appoint teachers and other officers and remove them at will. None of these eases holds, either directly or by analogy, that a by-law, subject to amendment by a majority of the board, nullifies a contract expressly authorized by the board.
    The contrast, both in character and effect, between a self-imposed limitation of power that may be removed at will, as in the case at bar, and a limitation imposed upon the board by an authority to which the board is completely subordinate, as by a general statute laying down a state policy, or by the creative special act or certificate of incorporation, exemplified by all the foregoing cases that have to do with an express contract, is sharp and striking. The remainder of those eases, involving no special contract, were necessarily controlled, not by part, but by all, of the bylaws touching tenure of office. To read into a contract of employment for a definite period, expressly authorized by the board of directors, a by-law amendable by a majority of the board, and thus nullify the contract, would sacrifice substance and straightforwardness for form and procedure. Defendant’s further contention that, if the contract be upheld at the expense of the by-law, boards of directors may by contract of employment for terms of years perpetuate their business policy and deprive succeeding boards of the power to afford relief, is not convincing. It sticks in the bark, for the evil possibilities suggested have their true foundation, not in the supremacy of contract over by-law, but in the futility of a limitation which rests solely upon a by-law amendable by a majority of the board. Were there doubt of the board’s power to amend by necessary implication through solemnly authorized, inconsistent acts, the limitation would constitute no barrier to the commission of the suggested acts by a board so disposed, for the board could formally and expressly repeal the by-law containing the limitation and thereupon with all regularity authorize the contracts for terms of years.
    I am of the opinion and find that the contract made by the defendant pursuant to the express authority of its board of directors, which had express power to amend at will the by-laws of the defendant, modified, in its legal effect, all inconsistent by-laws and prevails over them. See Machen on Corporations, § 728.
    Nor was the contract one against public policy. It was not tainted with fraud. The restraint thereby placed upon the future freedom of action of defendant’s board of directors cannot be said to have been in fact or principle injurious to the public interest. The term of office therein fixed was neither permanent, unlimited nor for life, but, in view of plaintiff’s relation to defendant and his familiarity and grasp of its business, was for a reasonable period only. The contract was in conflict with no statute. In West v. Camden, 135 U. S. 507, 10 S. Ct. 838, 34 L. Ed. 254, the agreement was one made personally by a director and stockholder of a corporation that plaintiff should be permanently retained as vice president of that company. It was not an agreement by the corporation itself. Inasmuch as its breach might readily be presumed to result in personal liability for damages, the agreement was of a character to place defendant’s personal interest in possible conflict with the best interests of the corporation and its stockholders, and, as plaintiff knowingly dealt with defendant with respect to a subject-matter touching his fiduciary relation to the stockholders, the contract was manifestly void as against public policy. Such a contract bears, I think, no more than a surface resemblance to the contract between the parties to this action.
    By reason of the doctrine which attributes to the owners of a majority of the shares of a corporation a fiduciary relation towards the minority, see Fletcher Cyclopedia Corporations § 3973,' the contract in Fabre v. O’Donohue, 185 App. Div. 779, 173 N. Y. S. 472, though made with plaintiff by a majority stockholder of Fabre Corporation, was nevertheless in principle not different from that in West v. Camden.
    The remaining cases relied upon to establish a violation of public policy by the eon-tract here in suit require no separate consideration.
    A further ground upon which the contract is not even open to the attacks herein-before considered is that, before the contract with defendant was made, plaintiff had entered into an agreement with the Stuyvesant Corporation to act as its president for the same period of time and for the same salary specified in defendant’s agreement. As under the agreement with defendant plaintiff was employed as president of both companies and was to receive therefor from defendant the sum of $25,000 a year less any sums paid to plaintiff by Stuyvesant under his contract with it, the contract with defendant was in effect one by which defendant, in consideration of plaintiff’s agreeing to act also as its president without additional compensation, agreed to retain plaintiff as Stuyvesant’s president for the term of the contract, and to pay him therefor, in the event of Stuyvesant’s default, the sum of $25,000 a year. The charter powers of the defendant were sufficiently broad for this purpose, and, as defendant was acting as a stockholder and as the sole stockholder of Stuyvesant, its act was unhampered by any by-law, fiduciary relation, or invalidating principle of the law of public policy. In my opinion the contract was valid, and I so find.
    The defendant takes the . position, however, that the contract, even if valid, was subject to the implied condition that the plaintiff should remain a duly qualified director, and shows that, pursuant to the authority of the by-laws of the two companies, he was removed as a director of each by their respective boards on December 31, 1926. His salary was paid to the end of 1926. But these facts are of no avail to the defendant. The contract was breached by the defendant while plaintiff was still a director of each company. Upon defendant’s breach, plaintiff’s cause of action was complete, and he was under no obligation longer to keep himself qualified for the presidency. 6 R. C. L. 1021, 7 A. & E. (2d Ed.) 151, note. Moreover, the contract contained an implied condition that the defendant would do nothing to defeat the rights of plaintiff under the contract, would do nothing to render his performance thereunder impossible. Yet defendant, the sole stockholder of the Stuyvesant Corporation, through its representatives, the directors of Stuyvesant, removed plaintiff’s qualification for the presidency of that corporation by removing him from its board. That act constituted neither a defense to the prior breach nor a termination of defendant’s liability under the contract. If of any legal effect, it was a further breach of the contract by the defendant. 6 R. C. L. 1020; Machen on Corporations, §§ 1078, 1080.
    The contract was not only valid, it was breached by the defendant.
    As the contract was valid and as it has been broken by the defendant, the plaintiff is entitled to a judgment for his damages. The measure of damages for the breach is the contract price unpaid, less the sums, if any, shown in mitigation of damages. American Trading Co. v. Steele, 274 F. 774 (C. C. A. 9); American China Development Co. v. Boyd (C. C.) 148 F. 258; Ransome Concrete Machinery Co. v. Moody, 282 F. 29 (C. C. A. 2).
    The plaintiff diligently endeavored to find like employment, but could not. About September 1, 1927, he and Palmer & Co., a New York brokerage house, invested equal sums of money in a speculative aeeount to be managed by plaintiff. Profits and losses were to be shared equally with the exception that plaintiff was to receive monthly, from profits before their distribution, the sum of $1,000. This arrangement continued for nine months, during which plaintiff received in that manner from profits an aggregate of $9,000 in excess of the distributive share of Palmer & Co. On June 1, 1928, plaintiff became one of the partners of Palmer & Co. As such he invested'in the partnership business the same sum as each of the other partners. He, like they, also gave his time to the partnership. His profits for the five-month period ending December 1, 1928, were $31,-743.51. Of this sum between $10,000 and $11,000 was paid. The remainder was paper profit represented by securities owned by the firm. Defendant contends that its prima facie damages should be lessened by the aggregate of the sums of $9,000 and $31,-743.51, together with at least the one-fifth part of the latter sum as the estimated earnings of plaintiff for December, -1928. Plaintiff, however, takes the position that the salary to which he was entitled was a nonspeeulative income requiring no capital investment, that since the breach he has been unable to obtain an income of like nature, and contends that damages for breach of a salary contract may not be mitigated by profits derived from plaintiff’s speculation with his capital, regardless of whether such speculation has or has not been under his immediate personal supervision.

      I think this contention sound. In re Moran, 299 F. 222 (C. C. A. 6); Sutherland on Damages (4th Ed.) p. 2565; Redfield v. Boston Piano & Music Co., 183 Iowa, 194, 165 N. W. 365; Williams v. Chicago Coal Co., 60 Ill. 149. It applies with particular force to the partnership profits made by risks of capital in which risks defendant did not share. Again, if in some ventures a part of the profits may be properly attributable to the personal service rendered and the remainder to the capital employed therein, it would be difficult, if not impossible, to make such allocation of plaintiff’s partnership profits, and defendant has not attempted to do so. See Kyle v. Pou, 96 Ga. 166, 23 S. E. 114.
    Though in the distribution of profits arising from the joint speculative account of plaintiff and Palmer & Co., the former was given a bookkeeping priority over the latter in the sum of $9,000, it is elear that the one-half part of that amount arose from plaintiff’s speculation with his own capital, and that the setting aside for plaintiff from the gross profits was but a practical or bookkeeping way of enabling plaintiff to obtain compensation for his services in the management of the half interest of Palmer & Co., not a separation of profits arising from plaintiff’s half interest into those attributable to his personal efforts and those due to his capital. Moreover, it does not appear that plaintiff’s speculation could not have been carried on with equal success had the contract not been broken.
    But that the other one-half part of the sum of $9,000, or $4,500, was not a profit flowing immediately from plaintiff’s capital is equally clear. Plaintiff received it as compensation for his personal service in managing the half interest of Palmer & Co. in the joint speculative venture. Though it was not salary payable at all events, it was payment for personal services. I think it sufficiently related in character to plaintiff’s salary under the contract to enable defendant to obtain the benefit thereof in mitigation of its damages.
    On the day the contract was made, plaintiff wrote a letter to one of defendant’s officers stating that he deemed it important that every reasonable effort should be made to minimize expenses during the first year, and that by reason thereof he was “prepared to leave with the corporation $10,009 of my first year’s salary until such time as the common stockholders shall have received a dividend.” As no dividend had been paid by defendant at the time of plaintiff’s removal from office, the sum of $10,000 referred to in the letter had not been paid to plaintiff. It has not yet been paid. I find no ground upon which it may longer be withheld. If plaintiff’s suggestion was made before the contract was entered into, it did not become a part of the contract, and is here without legal effect. If, however, it was made after the contract was concluded, it was but a voluntary suggestion, supported by no consideration, and of no binding force. Furthermore, had plaintiff’s suggestion become a binding part of the contract, it would have been accompanied by the implied condition that plaintiff be allowed to act as defendant’s president for the full term of the contract. Upon the breach of this condition by defendant, the $10,000 withheld would have become immediately due and payable.
    Having charged myself with respect to the law as herein stated, I find in favor of the plaintiff and against the defendant, and assess plaintiff’s damages at the sum of $80,-500.
    Charles F. Curley, of Wilmington, Del., and R. Randolph Hicks and Lauder W. Hodges, both of New York City, for appellant.
    Robert H. Richards and Aaron Finger, both of Wilmington, Del. (Carl Ehler-mann, Jr., and Thomas J. Crawford, both of New York City, of counsel), for appellee.
    Before WOOLLEY and DAVIS, Circuit Judges, and JOHNSON, District Judge.
   PER CURIAM.

Affirmed on the findings made by Judge. Morris and on his reasoning in entering the verdict.


author: WOOLLEY, Circuit Judge.

text:
    MONTGOMERY v. REALTY ACCEPTANCE CORPORATION.
    No. 4506.
    Circuit Court of Appeals, Third Circuit.
    July 6, 1931.
    See, also, 51 F.(2d) 636.
    Robert H. Richards and Aaron Finger, both of Wilmington, Del. (Thomas J. Crawford and Carl Ehlermann, both of New York City, of counsel), for appellant.
    Charles Curley, of Wilmington, Del., and R. Randolph Hicks, of New York City, for appellee.
    Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
   WOOLLEY, Circuit Judge.

In the cycle of happenings in this litigation, this appeal, oddly enough, brings here for review an error of our own. As several errors have, necessarily or naturally, followed in the train of our original error, we shall state the case at length in our determination to straighten out the matter and end it once and for all.

Montgomery sued the Realty Acceptance Corporation for breach of a contract for hire running a term of years. A jury was waived and the case tried to the court. On the issue of damages the plaintiff proved his loss without testifying, in mitigation of damages, to money he had earned after his discharge, which, if earned, he was of course bound to state. In the District Court at its March term, 1929, he had judgment for $80,500. That judgment was final and no further action was taken with respect to, it until after the term of the judgment when the defendant appealed to this court. In January, 1930, we affirmed the judgment below and thereby disposed, adversely to the defendant, of all questions of law, with non.e of which are we presently concerned. 51 F.(2d) 636.

The defendant in due course filed a petition for rehearing which operated to stay the mandate. While that petition was pending the defendant by another petition asked leave of this court — the' appellate tribunal then having jurisdiction of the case — to apply to the District Court to set aside the judgment and grant a new trial on the single issue of damages because of newly discovered evidence. This evidence as presented by the defendant’s verified petition and not controverted by the plaintiff tended to prove that the plaintiff had since his discharge earned a substantial sum of money concerning which at the trial he did not'testify in mitigation of damages and that the discovery was made under circumstances which, as to the defendant’s diligence, brought it within the rule of after-discovered evidence. '

At the argument on the petition for leave, the question whether the trial court, after the term of the judgment, had jurisdiction to open the judgment and retry the case in whole or in part was not raised, nor, aside from the question of jurisdiction, was it shown that the ease was one in which, after judgment, a new trial can be had on a single issue. The argument, as usual in such cases, revolved around the new evidence and its after discovery and in the heat of the argument on those restricted issues every one, including ourselves, overlooked the patent fact that the petitioner was asking leave to move the trial court for a new trial after the term of the judgment, and for a new trial on a single issue without showing the ease to be of the class in which such a restricted trial is permissible. Gasoline Products Co. v. Champlin Refining Company (C. C. A.) 39 F.(2d) 521; Id., 282 U. S. 824, 51 S. Ct. 76, 75 L. Ed.-. We granted the defendant leave to ask the District Court at its option to open the judgment and admit and consider the newly discovered evidence solely on the quantum of damages, at the same time suspending the petition for rehearing and staying the mandate. In April, 1930, the learned judge of the District Court feeling that, before he should act on the defendant’s motion under our leave, the ease should be wholly out of this appellate court and wholly back in his trial court, asked this court to remand the cause and the record for the purpose indicated. In compliance with this request a Circuit Judge, who had not sat in this case on appeal, signed a per curiam order in chambers remanding the case by dismissing the appeal. Then everything was back in the District Court where, on June 30, 1930— many terms after the term of the judgment— the judge vacated the judgment and granted a new trial on the single issue of damages. Then the plaintiff appealed from that order and for the first time in this court raised the question of the District Court’s jurisdiction to open the judgment after the term, not having raised even yet the question whether the ease is one in which a new trial may be had on one of several issues. Concurrently with this second appeal the plaintiff moved this court to vacate its per curiam order dismissing the first appeal and prayed that the mandate issue, forgetting for the moment that upon vacating that order the suspended petition for rehearing would automatically be reinstated and would remain to be decided.

What is now before us? The order of the District Court opening the judgment by our leave and granting a retrial on a single issue after the term of the judgment is the order now here on the plaintiff’s appeal. The plaintiff’s motion made in this court to vacate its per curiam order dismissing the first appeal is also here. Apprehending that the defendant would lose on both questions we denied its motion to force the plaintiff to an election.

What is the law? Except to correct inaccuracies in mere matters of form, it is firmly settled in federal practice that a court cannot set aside or alter its final judgment after the expiration of the term at which it was entered, unless a proceeding for that purpose was begun during the term or the term was for that purpose extended under a general or special rule.

The authorities stating and acting upon this principle are too numerous to cite. Some of them may be found in Phillips v. Negley, 117 U. S. 665, 6 S. Ct. 901, 29 L. Ed. 1013, and United States v. Mayer, 235 U. S. 55, 35 S. Ct. 16, 59 L. Ed. 129. These two decisions — the latter citing and approving the former — would have ruled the ease at bar, on both the law and facts, against the District Court had it attempted to exercise jurisdiction by opening the judgment and allowing a retrial at a later term without our leave. And these eases we think rule the ease at bar with equal force where the District Court did the same thing by our leave, unless by giving the District Court leave to open the judgment after the term we had power to restore to the District Court the jurisdiction which it had lost when the term of the judgment ended.

It should be noted that this is not the ordinary ease of a new trial awarded after a judgment has been reversed. Here the judgment had been affirmed and with the af-firmance' still in force a new trial was ordered. Unless validated by our leave, the opening of the judgment and the ordering of a new trial stand as though no' leave had been asked or granted and fall directly within the Mayer Case. As we find this court is without power to confer original jurisdiction upon or restore lost jurisdiction to the District Court with respect to a new trial after the term, the law of the Mayer Case rules this case. It follows that in granting the defendant leave to ask the District Court to open the judgment after the term and award a new trial contrary to the rule whieh we knew perfectly well, we, quite inexcusably, committed error — the initial error — with two aspects: One, in authorizing the plaintiff to ask the District Court to do that which it could not lawfully do and the other, in authorizing the plaintiff to make a motion in the trial court for a new trial on one issue without first requiring it to show that the matter was of a kind triable on a single issue.

What followed? Two errors, necessarily or logically, followed the original error. One was the per curiam order of this court dismissing the appeal to give the trial court a free hand; the other was the action of the trial court in making the order opening the judgment and allowing a new trial on one issue.

Where does all this put the ease? Should we sustain this court’s per curiam order, the appeal would stand dismissed for, good and all and the mandate embodying the law of the ease could never go down. If, without more, we annul this order, the appeal will be reinstated but the judgment first appealed from will, remain set aside in the District Court and the mandate on the first appeal, should it go down, could give no effect to a judgment that is no longer in existence.

If, without more, we reverse the order of the District Court vacating the judgment and awarding a new trial, the original judgment of the District Court would be reinstated but not affirmed because the appeal has been dismissed. Should we sustain both the order of the District Court opening the judgment and the order of this court dismissing the first appeal we would thereby withhold our affirmance on the law and allow the District Court to go ahead and try the case on a single issue, that is, to do a doubtful thing as to retrial on a single issue and do a futile thing as to retrial after the term.

One more error in this case would not be pardonable. What, then, must be done?

We shall answer this question by working backwards and making directions as follows:

The order of the District Court opening the judgment and awarding a new trial on a single issue after the term at which the judgment was entered is on this second appeal reversed. That, on the issuance of the mandate, restores the judgment as entered. The order of the Circuit Court of Appeals dismissing the first appeal is vacated. That reinstates the first appeal in this court. It also automatically revives the suspended petition for rehearing. The petition for rehearing is now denied. That releases the order of af-firmance in the first appeal and liberates the mandate. Then the mandate shall go down in due course under the rule. When that is done the judgment below will stand affirmed as entered.

These several orders however are made without prejudice to the defendant’s right to seek relief by bill in equity.