text:
    CARROLL ELECTRIC CO. v. FREED-EISE-MANN RADIO CORPORATION.
    No. 5140.
    Court of Appeals of District of Columbia.
    Submitted May 7, 1931.
    Decided June 1, 1931.
    Chas. A. Douglas and Edmund D. Campbell, both of Washington, D. C., for appellant.
    Max L. Rosenstein, of Newark, N. J., for appellee.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   MARTIN, Chief Justice.

An appeal from an order quashing service of summons upon a foreign corporation.

The Carroll Electric Company, a District of1 Columbia corporation, plaintiff below, sued the Freed-Eisemann Company, a New York corporation, for damages because of the alleged breach of a contract existing between'them relating to certain dealings in radio equipment.

A writ of summons was issued for the defendant, which was returned by the United States Marshal for the District of Columbia with the following indorsement, to wit, “served copies of the declaration, affidavit, and this summons, on the Defendant Corporation within named by serving Fred McCarthy, Salesman, in charge personally, July 18, 1929.”

Thereupon, by special appearance) the defendant moved to quash this service, alleging in substance that it was a foreign corporation and was not doing or transacting business in the District of Columbia at the date of the alleged service, and did not have or maintain an office or an agent therein, and that McCarthy upon whom service was made was not a “salesman in charge,” nor doing or transacting business for defendant in the District, except for assistance rendered'in soliciting orders for merchandise.

This motion was heard upon affidavits and was sustained. The service was quashed, and the present appeal was taken.

This-subject is governed by section 373, c. 15, tit. 24, of the Code of the District of Columbia 1929, .reading as follows:

“Service on foreign corporations. — In actions against foreign corporations doing business in the District all process may be served on the agent of such corporation or person conducting its business, or, in case he is absent and can not be found, by leaving a copy at the principal place of business in the District, or, if there be no such place of business, by leaving the same at the place of business or residence of such agent in said District, and such service shall be effectual to bring the corporation before the court.
“When a foreign corporation shall transact business in the District without having any place of business or resident agent therein, service upon any officer or agent or employee of such corporation in the District shall be effectual as to suits growing out of contracts entered into or to be performed, in whole or in part, in the District of Columbia or growing out of any tort committed in the said District.” ’

The relations between the two corporations were created by a written contract called a “Distributor’s Franchise” entered into by them in New York City on May 1, 19291, wherein the Freed-Eisemann Radio Corporation is designated as the “Manufacturer” and the Carroll Electric Company as the “Distributor.” The following stipulations, among others, appear in the contract.

“1. The Manufacturer agrees to and does hereby grant to the Distributor a Freed-Eise-mann Distributor- Franchise for the term and subject to the conditions of this Agreement, in the following described territory; District of Columbia, Virginia, Maryland, Part of West Virginia, Part of Delaware.

“2. The Distributor agrees to earry at all times a representative stock of the products of the Manufacturer, and to exert every reasonable effort to sell the products of the Manufacturer at wholesale within said territory, and to secure an adequate number of dealers to sell said products at retail within said territory.

“3. The Distributor agrees to purchase the products of the Manufacturer in accordance with the Manufacturer’s formal acknowledgment of orders at a discount of 50% and 10% from list price, F. O. B. factory at Clifton, New Jersey, payment less 2% to be made on or before the 10th of the following month.

“4. The Distributor agrees to have every new dealer to whom the Distributor sells the Manufacturer’s products, approved by the Manufacturer, and to have said dealer execute in triplicate the Manufacturer’s “Authorized Dealer Contract”, a specimen of which is annexed hereto, and to forward the same in triplicate to the Manufacturer. If approved and executed by the Manufacturer, one copy of said contract shall be kept by it, one copy shall be returned to the Distributor and one copy shall be sent by the Manufacturer to the dealer.”

“10. The Distributor agrees to act as a wholesale Distributor of the Manufacturer within the territory specified in paragraph ‘1’ hereof, and to maintain at the Distributor’s expense an office and show-room within the territory hereby assigned, with an efficient service department and sales force adequately equipped to service and sell at wholesale the Manufacturer’s products.

“11. The Distributor agrees not to sell, advertise, offer or display for sale any radio sets, speakers, parts or tubes other than those furnished by the Manufacturer during the term of this Agreement.”

It appears that the contract between the two corporations was terminated prior to the beginning of this ease, but that a contract identical in form with this was then in exist-tenee between the manufacturer and the Oriole Phonograph Company, a corporation of the District of Columbia, and consequently the termination of the former contract is not important in this particular.

The terms of the contract between thq parties have the effect of creating a limited agency in the distributor, under which- the latter discharged various obligations for the manufacturer in disposing of its products within the specified area. The distributor was not an independent merchant dealing with the manufacturer upon its own initiative, but conducted its business in the District of Columbia in conformity with the stipulations contained in the contract. The activities thus provided for constituted the transaction of business by both parties not only in New York City, where the contract was made, but also in the District of Columbia, within which it was in part carried out. The ease thus falls within the provisions of the second paragraph of section 373 supra, and the service of summons on McCarthy, who was an employee of the manufacturer, was valid under that paragraph. Toledo Computing Scale Co. v. Miller, 38 App. D. C. 237; Hoffman v. Washington-Virginia Railway Co., 44 App. D. C. 418; Eastman Kodak Co. v. Southern Photo Materials Co., 273 U. S. 359, 47 S. Ct. 400, 71 L. Ed. 684; Wilson v. Hudson Motor Car Co. (D. C.) 28 F.(2d) 347; La Porte Heinekamp Motor Co. v. Ford Motor Co. (D. C.) 24 F.(2d) 861.

The order of the lower court quashing the service of summons is reversed, with costs, and the cause is remanded for further proceedings not inconsistent herewith.


source: Caselaw Access Project

author: GRONER, Associate Justice.

license: Public Domain

text:
    WALTERS v. BAER et al.
    No. 5133.
    Court of Appeals of District of Columbia.
    Argued May 7, 1931.
    Decided June 1, 1931.
    Charles Dinkins and Iredell Meares, both of Washington, D. C., for appellant.
    Stanley H. Fischer, Norman Fischer, G. P. McGlue, Thos. F. Burke, H. Winship Wheatley, and L. S. Bendheim, all of Washington, D. C., for appellees.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   GRONER, Associate Justice.

Appellees Baer and Scholz owned certain real estate in Washington City subject to a first deed of trust not here involved. They executed a second deed of trust to secure the payment of four notes aggregating $50,000. The bill alleges that, at the time of the execution of this trust, 'they became the holders of the notes secured therein, and continued as such holders until after the events out of which this suit grows. Subsequently they sold and conveyed the property, to one Burroughs by deed with special warranty and assurances of title, but without reference to the subsisting deed of • trust,' and this deed was recorded. Simultaneously they entered into a written sealed agreement with Burroughs which also was recorded, and in which the deed of trust was referred to and its terms so changed as to make the payments thereunder amount to $1,200 per month, rather than $520 per month as provided therein, and conditioned that “in the event of failure to comply with the terms' of this contract, which contract, for the purpose of this agreement shall be considered as supplementary to the second trust previously referred to, then, and in that event, the failure so to comply shall be considered a breach of the second trust agreement above referred to, and the trustees under the said second deed of trust shall upon notice” etc., be authorized to sell, foreclose, etc. Shortly thereafter, Burroughs conveyed the property to appellant by deed with special warranty and assurances of title, without mention of the' deed of trust and agreement. But appellant, at the time of the conveyance to her from Burroughs, had notice of the deed of trust, and thereafter complied for a time with its terms as changed and supplemented by the recorded agreement referred to. Subsequently, upon her default in the stipulated payments, Baer and Scholz, as holders of the notes, called on the trustees under the deed of trust to foreclose in accordance with its terms, and appellant, thereupon filed her bill for an injunction to restrain this action. Appellees appeared and moved to dismiss, and, after hearing, the lower court entered an order refusing an injunction pendente lite and dismissing' the bill, and it is from this decree that this appeal is taken.

Appellant’s contentions are twofold. First, she says that because of the ownership by Baer and Scholz.of the notes secured by the second deed of trust, their deed to Burroughs and the deed of Burroughs to herself, with warranties and without reservation of incumbrances, extinguished the trust deed and vested in Burroughs, and afterwards in herself, the fee in the property subject only to the first trust, which, as has already been stated, is not here involved; in other words, that the deed of Baer and Scholz, in the circumstances mentioned, passed all their interest in the property, and operated to extinguish the deed of trust, and to vest in her -their entire interest. And,- secondly, that Baer and Scholz, as owners of the notes secured in the deed of trust, are estopped to claim under the deed of trust because of the warranty in their deed to Burroughs, who conveyed to appellant with like warranty, which is to say that appellant had a right to rely on the warranty to Burroughs without regard to the fact that she had both actual and constructive notice of the deed of trust. From what has already been said, it will be seen that Baer and Scholz conveyed the property involved in trust to secure the promissory notes of a third party, aggregating $50,-000, which notes they then and there acquired. Thereafter they sold the property to Burroughs with special warranty deed and without mention of the mortgage in the deed to Burroughs, and simultaneously entered into an agreement with Burroughs in which, although not binding himself to pay the mortgage notes, he agreed that the terms of the mortgage should be changed by increasing the payments provided therein, and he in turn sold the property to appellant by deed with warranty and without’reference to the mortgage. Both the agreement and the mortgage were duly recorded, and both Burroughs and appellant had actual notice of the terms of the mortgage and of the supplemental agreement in relation thereto; notwithstanding which, appellant now contends that, when Baer and Scholz sold to Burroughs, they being then the beneficiaries under the deed of trust, the effect of their deed to Burroughs was to merge the trust in the fee, and that Burroughs’s subsequent conveyance to appellant transferred the fee to her discharged of the mortgage. We think the correctness of this contention depends wholly upon the intent and purpose of the parties when the transaction occurred. The rule for which appellant contends, that where an equitable and legal estate are outstanding in the same person, the former becomes merged in the latter, is, we think, subject to the qualification that, where the intention of the holder is otherwise, no merger occurs, and this is true because the reason of the rule is that when the entire equitable and legal estates are united in the same person, there is ordinarily no- reason or occasion to keep them distinct; but where it is the intention of the party in whom they unite, or in his interests, or in the protection of his rights, that they should be kept separate, the rule is no longer applicable. 21 C. J. 1037. And the qualification is stronger in the ease of an owner of real estate who is also the holder of a note or bond secured by a mortgage on the land. In such a ease, upon transfer of the legal title, the showing that it was the intention of the parties, when they dealt with relation to the lands, that the mortgage should be kept alive is sufficient to justify a court of equity in preserving it, and evidence of the circumstances in which the parties dealt is admissible in equity for the puipose of discovering the true intention. “The settled rule of Equity is, that the intention of the one acquiring the two interests then controls. If this intention has been expressed by taking the transfer to a trustee, or by language inserted in the instrument, it will, of course, be followed. If the intention has not been thus expressed, it will be sought for and ascertained in all the circumstances of the transaction. If it appears from all these circumstances to be for the benefit of the party acquiring both interests that a merger shall not take place, but that the equitable or lesser estate shall be kept alive, then his intention that such a result should follow will be presumed and equity will carry it into execution by preventing a merger.” Pom-eroy (3d Ed.) vol. 2, § 788.

In appellant’s bill, she states that the property acquired by her from Burroughs was of the value of $160,000, and that there was then outstanding a first mortgage of $95,-000. She paid and promised to pay altogether $13,000 for the property, which, added to the $95,000, would make $108,000, and, if this were the basis ,on which the parties dealt, there was an apparent profit to her in the transaction of $52,000, or, in other words, the sale from Burroughs to her of an equity of $65,000 for $13,000. Stated thus, the pi’esumptions Would all be against appellant’s contention that the parties intended to ignore the mortgage, but it is not necessary to indulge in presumptions, because when appellant acquired the property, she executed a deed of trust to secure a part of the purchase price, and on its face describes it as a third deed of trust, and, after acquiring the property, on at least two occasions prior to .the default under which the sale was made, she paid on account of the second deed of trust, as supplemented by the agreement between Baer and Seholz on the one hand and Burroughs on the other, the stipulated monthly payment provided for therein. This, we think, is ample to show that the sale to her was intended by the seller, and understood by her, to be subject to the $50,000 trust, and, in this view, we think it should be held that she duly ratified the terms of the second deed of trust as modified by the agreement, and, in such circumstances, it seems to us a court of equity should prevent the merger, and keep the incumbrance alive. But, as we have already seen, appellant contends that she has a right to rely upon the warranty contained in the deed from Baer and Seholz to Burroughs, and upon the warranty in the deed from Burroughs to herself, regardless of the fact that she possessed knowledge, both actual and constructive, of the existence of the incumbrances upon the property, and that, therefore, having so relied, Baer and Seholz, as holders of the notes secured under the second mortgage, axe estopped to set up its validity as against their warranty to Burroughs, which inured to her benefit. The Supreme Court in Brant v. Virginia C. & I. Co., 93 U. S. 326, 337, 23 L. Ed. 927, states the doctrine of equitable estoppel as follows: “It is also essential for its application with respect to the title of real property that the party claiming to have been influenced by the conduct or declarations of another to his injury was himself .not only destitute of knowledge of the true state of the title, but also of any convenient and available means of acquiring such knowledge. Where the condition of the title is known to both parties, or both have the same means of ascertaining the truth, there can be no estoppel.”

As we have already pointed out, when Burroughs took title to the property, the deed to him contained no reservation of the mortgage, but then and there he made an agreement under seal with Baer and Seholz, which agreement was admitted to record simultaneously with the deed, in which he agreed, among other things, to increase the monthly payments due under the deed of trust, and stipulated “in the event of failure to comply with the terms of this contract, which contract, for the purpose of this agreement shall be considered as supplementary to the second trust previously referred to, then and in that event, the failure so to comply shall be considered a breach of the second trust agreement above referred to, and the trustees under the said second deed of trust shall upon notice” etc., foreclose the property. We think it perfectly clear that Burroughs could not, under these circumstances, have set up the warranty in his deed in avoidance of the terms of the agreement or the trust, and we do not think that appellant, with knowledge of the deed and the increased payments under it, as provided in the agreement, was in any better plight than Burroughs would have been. She was certainly not an innocent party without notice, nor can it be contended, we think, that if in the deed from Burroughs to her there had been a recital of the facts just above enumerated, that is to say, that there was a second deed of trust outstanding on the property, the conditions of which had been changed by agreement between the then owner of the property and the holder of the notes secured, she would be heard to say she did not take subject to both deed of trust and agreement, and we cannot see any difference between such a recital in the deed and actual knowledge of the facts on her part when she took the property. In the case instanced, that is to say, in a deed of conveyance which in terms recites the execution of an incumbrance, whether the conveyance be made subject to it or not, the grantee will be held to take subject to the incumbrance, and, if this is true, as we think it is (See Drury v. Holden, 121 Ill. 130, 13 N. E. 547), the same rule would apply where the deed contains no notice of the incumbrance, but the parties as between themselves are full-handed with knowledge of the same, and deal in respect thereto.

This leaves for consideration only the point made by appellant, that the court erred in denying her leave to file a supplemental bill: The circumstances with relation to this are that, after the motion to dismiss and the hearing, appellant offered to file a supplemental bill, but withdrew the same, and, after the decision of the court, on the motion to dismiss, was announced, tendered the supplemental bill now made a part of the reeord, which the court refused to allow to be filed. The rule with relation to filing supplemental pleadings is too well established to require more than brief mention. The allowance or refusal is addressed to the discretion of the trial court, which discretion ordinarily will not be interfered with, except upon a showing of gross abuse, but we have examined the supplemental bill and have reached the conclusion that, without regard to the rule, there is nothing in the supplemental bill which would compel a different conclusion than that reached by the lower court on the ease made in the original bill, which we think was correct, and, in these circumstances, the decree below should be, and is, affirmed.

Affirmed.


author: GRONER, Associate Justice. MARTIN, Chief Justice,

text:
    CORONADO OIL & GAS CO. v. BURNET, Commissioner of Internal Revenue.
    No. 5115.
    Court of Appeals of District of Columbia.
    Argued April 7, 1931.
    Decided June 1, 1931.
    MARTIN, Chief Justice, dissenting.
    T. P. Gore, of Washington, D. C., for appellant.
    G. A. Youngquist, Asst. Atty. Gen., and J. L. Monarch, A. D. Sharpe, and C. M. Charest, all of Washington, D. C., for ap-pellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.
   GRONER, Associate Justice.

This is a petition to review a decision of the Board of Tax Appeals.

By Act of Congress approved June 16, 1906 (34 Stat. 267), the people of the territory of Oklahoma were authorized to form a Constitution preliminary to -admission to statehood. In section 3 of the act, Congress required as a condition of admission that “provisions shall be made (in the constitution) for the establishment and maintenance of a system of public schools, which shall be open to all the children of said State .and free from sectarian control”; and by section 7 Congress granted to the state, for the use and benefit of the common schools, the sections of land numbered 16 and 36 in every township in Oklahoma territory, and provided (section 8) that all lands granted by the act valuable for minerals, gas, and oil should not be sold by the state prior to January 1, 1915, but might be leased for periods not exceeding five years, the proceeds from the land so leased to be covered into the school fund. The Constitution as adopted provided for the establishment of a public free school system, and pledged the faith of the state to preserve such lands and moneys “as a sacred trust,” and to keep the same for the uses and purposes for which they were granted or donated, and provision was made for an executive department, to be known as “commissioners of land office,” to which was given the management of the school lands and of the funds derived therefrom. After admission to statehood, the Legislature (Statutes of 1921, § 9415 et seq.) provided by law for the leasing of the lands containing oil and gas for a first •term of five years with the right of renewal for a second term of five years at a fixed royalty to be determined by the commissioners of the land office, but in no event less than 12% per cent, of the total output of such oil and gas. The conditions of the leases are prescribed by statute, and, when made, are subject to all lawful rules which the commissioners may adopt. The right of the lessee to assign is .forbidden except with the written consent of the commissioners, and provision is made for a sufficient bond to secure faithful performance. The leases provide that the state under certain circumstances shall have the preference right to purchase and take the entire output of oil and gas produced at the then market value of the same.

Appellant is an Oklahoma corporation. Its entire income during 1917, 1918, 1919, was derived from its operations as a lessee of the state of Oklahoma under two oil and gas leases executed to it by the state upon portions of the public school lands of the state. Appellant agreed to pay a royalty of 50 per cent, of the gross production of oil in consideration of the leasing of the land to it. The question which we have to decide is whether the income derived by appellant from the sale of its share of the oil and gas obtained from such leased lands is taxable as income under the federal income statutes. Revenue Act of 1916, 39 Stat. 756; Rev. Act 1917, 40 Stat. 300; Rev. Act 1918, 40 Stat. 1057. These acts in terms include the character of income in question, but appellant insists that it is an agency or instrumentality of the state of Oklahoma for development and operation of its state school lands, and that, under the Constitution, the United States cannot tax such agency or instrumentality. ■ .

Neither a state nor the United States can tax the property, governmental functions, agencies, or instrumentalities of the other, or the means by which they are exercised. “As ■the states cannot tax the powers, the operations, or the property of the United States, * * * so it has been held that the United States have no power under the Constitution to tax either the instrumentalities or the property of a state.” Pollock v. Trust Co., 157 U. S. 429, 584, 15 S. Ct. 673, 690, 39 L. Ed. 759. But it frequently happens that cases arise in which “the limitation upon the taxing power of each, so far as it affects the other, must receive a practical construction which permits both to function with the minimum of interference each with the other,” Metcalf & Eddy v. Mitchell, 269 U. S. 514, 523, 46 S. Ct. 172, 174, 70 L. Ed. 384, and hence the limitation, as applicable to both state and nation, has been the subject of discussion in numerous cases in the Supreme Court, and that court has adjusted the general principle to the limitation in the differing facts of each case, though in many the line of separation is sometimes so faint as to be difficult to follow, or, as Mr. Justice Stone remarked in Metcalf & Eddy v. Mitchell (page 523 of 269 U. S., 46 S. Ct. 172, 174), “Experience has shown that there is no formula by which that line may be plotted with precision in advance.” Nothing, however, appears in any opinion to which we have had access which would indicate any distinction between state taxation of federal agencies and federal taxation of state agencies, except that in South Carolina v. U. S., 199 U. S. 437, 26 S. Ct. 110, 50 L. Ed. 261, 4 Ann. Cas. 737, where the state was shown to have engaged in a private business, an excise tax was held valid, and presumably the profits or income of the business taxable, but the decision was placed on the ground that the thing in which the state was engaged was not governmental. In many of the eases in which tax laws were held invalid, the tax was sought to be applied to some governmental activity. Bank of New York v. New York County, 7 Wall. 26, 19 L. Ed. 60; Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429, 15 S. Ct. 673, 39 L. Ed. 759; Owensboro National Bank v. Owensboro, 173 U. S. 664, 19 S. Ct. 537, 43 L. Ed. 850. In other casos, taxes which imposed “incidental” burdens were regarded as not impinging the general principle of exemption. Home Ins. Co. v. New York, 134 U. S. 594, 10 S. Ct. 593, 33 L. Ed. 1025. But in South Carolina v. U. S., supra, it was held that, though the state received substantial profits which were devoted to public purposes, the business was taxable. Some more recent decisions of the Supreme Court have carried the doctrine of exemption farther than it was, by many, originally thought to extend. Thus sales of commodities to the government by a retailer have been held not subject to excise taxes, Panhandle Oil Co. v. Mississippi, 277 U. S. 218, 48 S. Ct. 451, 72 L. Ed. 857, 56 A. L. R. 583, as has also income from royalties from the use of patents, Long v. Rockwood, 277 U. S. 142, 48 S. Ct. 463, 72 L. Ed. 824. On the other hand, in Baltimore Shipbuilding Co. v. Baltimore, 195 U. S. 375, 25 S. Ct. 50, 49 L. Ed. 242, state taxation of profits derived by a private corporation engaged in work for the government was held valid; and in Fidelity & Deposit Co. of Maryland v. Pennsylvania, 240 U. S. 319, 36 S. Ct. 298, 60 L. Ed. 664, it was held that contracts between private corporations and the United States do not render the corporation an essential governmental agency, or confer freedom from state taxation. And so it is insisted here on behalf of the Commissioner that, whatever exemption the state of Oklahoma may enjoy, from federal taxation of its oil lands, this exemption does not extend to appellant, because, though the state may be engaged in the business of maintaining the schools, and thus in performing a governmental duty, 1 Dillon on Municipal Corporations (5th Ed.) § 37; 4 Dillon on Municipal Corporations (5th Ed.) § 1658; Claybrook v. City of Owensboro (C. C.) 23 F. 634; Attorney General ex rel. McRae v. Thompson, 168 Mich. 511, 134 N. W. 722, 725; Freel v. School, 142 Ind. 27, 41 N. E. 312, 37 L. R. A. 301; Bissell v. Davison, 65 Conn. 183, 32 A. 348, 29 L. R. A. 251; Howard v. Tacoma, 88 Wash. 167, 152 P. 1004, 1005, Ann. Cas. 1917D, 792, appellant is not, but, as a private corporation, is engaged in producing and selling oil and gas; that is to say, in a private business and not a governmental activity. And so it is insisted that the imposition of the tax does not interfere with or impose a burden upon the state; that it is not a tax upon the lands or upon the oil or the gas, or the proceeds of the same which the state is entitled to receive, but is confined solely to-that portion of the value of the gas and oil produced which appellant as a private corporation is entitled to have and use for its own account. In this aspect it is said that the case is much like Metcalf & Eddy v. Mitchell, supra, in which it was held that, where “the tax is imposed on the income of one who is neither an officer nor an employee •of government and whose only relation to it is that of contract, under which there is an obligation to furnish service, for practical purposes not unlike a contract to sell and deliver a commodity,” the tax is valid; and there is much strength and force in this argument, and, if the question were not, as we think, foreclosed, we are inclined to think we might feel impelled to adopt that view, but, as we see it, the Supreme Court has laid down the rule in Gillespie v. Oklahoma, 257 U. S. 501, 42 S. Ct. 171, 172, 66 L. Ed. 338, and Jaybird Mining Co. v. Weir, 271 U. S. 609, 46 S. Ct. 592, 70 L. Ed. 1112, by which we are controlled. In the Gillespie Case, the state of Oklahoma sought to impose a tax upon the net income derived by the lessee from leases of restricted Indian lands. Admittedly the lessee was an instrumentality used by the United States in carrying out their duties to the Indians, and therefore it was insisted the income derived by the lessee was not subject to taxation by the state. The state court held that, since the tax was not levied upon the Indians’ income or share of the proceeds, the private share of the lessee was taxable. The Supreme Court reversed the state court, and Mr. Justice- Holmes, speaking for the court, and quoting in pari from Indian Territory Illuminating Oil Co. v. Oklahoma, 240 U. S. 522, 530, 36 S. Ct. 453, 60 L. Ed. 779, said:

“ ‘A tax upon the leases is a tax upon the power to make them, and could be used to destroy the power to make them.’ The step from this to the invalidity of the tax upon income from the leases is not long.
“In cases where the principal is absolutely immune from interference an inquiry is allowed into the sources from which net income is derived and if a part of it comes from such a source the tax is pro tanto void, Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429, 15 S. Ct. 673, 39 L. Ed. 759; Id., 158 U. S. 601, 15 S. Ct. 912, 39 L. Ed. 1108; a rule lately illustrated by Evans v. Gore, 253 U. S. 245, 40 S. Ct. 550, 64 L. Ed. 887, 11 A. L. R. 519; and applied in a case somewhat like the present by the Supreme Court of Hawaii, Oahu Ry. & Land Co. v. Pratt, 14 Hawaii, 126. Whether this property could be taxed in any other form or not, it cannot be reached as profits or income from leases -such as those before us. The same considerations that invalidate a tax upon the leases invalidate a tax upon the profits of the leases, and; stopping short of theoretical possibilities, a tax upon such profits is a direct hamper upon the effort of the United States to make the best terms that it can for its wards.”

We are unable to observe any difference in fact, or to perceive any distinction in principle, between the Gillespie Case and that under consideration. In both there were oil lands. In the one case they were held by the federal government for the benefit of the Indians ; in the other by the state for the benefit of its school children, white and Indian. In each there was a lease on a royalty basis; in each the lessee was a corporation or private person; and in each the tax imposed sought to reach alone its or his profits from the operation of the lease. It is obvious, therefore, that the only difference in the facts is that in the one case the person sought to be taxed was an instrumentality of the federal government and in.the other of the state government. If the tax was invalid in the one, it seems to us it must'be invalid in the other, for, as we have already seen, the two governments stand upon an equality in the right of exemption of their respective instrumentalities from taxation. Unless, therefore, there is a higher and different obligation on the federal government in the protection of the interests of the Indians than is on a state in the education of its youth, the principle as it applies to the one must, we think, apply equally to the other. There can be no doubt that the school lands held by the state of Oklahoma in trust for the education of the youth of that state are as immune from taxation by the federal government as the lands held by the federal government for the Indians are immune from state taxation. If, therefore, the lessee of restricted Indian lands is a governmental instrumentality, it seems to us necessarily to follow that the lessee of school lands of the state, under identical conditions, is a governmental instrumentality, and since, as the Supreme Court said in the Gillespie Case, the principle that invalidates a tax upon the leases likewise invalidates a tax upon the profits of the lessee, it must follow, we think, that the income from the leases cannot be taxed in the one case any more than in the other. But it was argued at the bar of this court that, while the analogy of the two cases seems so nearly perfect, there is a difference growing out of the fact that the United States, being a government of restricted or granted powers, has no right to engage in private business, and therefore whatever it does is in pursuit of a governmental function, but that this is not also true of a state which is without restrictions upon its right to enter private business, and therefore it is contended, when a state undertakes to exploit its mineral or oil lands and sell the product thereof, it enters business as much as the state of South Carolina did when it engaged in the liquor business, but we are not convinced by this argument. While it may be true the United States has no right to transact private business, and while it may also be true that when it enters into competition with private business, as it has in the operations of the Shipping Board and the Housing Corporation, all its acts in connection therewith are of a governmental character, and.while it may be equally true that a state may engage in private business, the fact is that, in the exploitation of oil lands, like those in this and the Gillespie Case, both the state and federal governments axe using property earmarked with a governmental purpose, in the pursuit of a duty enjoined upon each equally to create and preserve a fund in the one ease for the Indians as wards of the nation, and in the other for the school children as wards of the state. It is, we think, the purpose, rather than the thing, which controls, but, if this is not correct, then the thing, i. e. the sale of the oil, is, in the case of the federal government, identically like that in the ease of the state government, and it cannot be said that the one government can engage in what is ordinarily designated commerce and insist that because of its restricted powers it .is engaged in the performance of a governmental function, and deny to a state in the same circumstances the same character, or classify its identical activity, because of its less limited powers, in a different category.

Unless, therefore, there is something in Group No. 1 Oil Corp. v. Bass, Collector Int. Rev. (April 13, 1931) 51 S. Ct. 432, 75 L. Ed. -, which modifies or changes the principle pronounced in the Gillespie Case, supra, or which limits the immunity, there declared, solely to Indian lands under administration by the federal government, we shall feel impelled to hold, as we indicated, that the Gillespie Case controls this. The main facts in Group Oil Case in relation to its background and machinery are essentially like the facts in the Gillespie Case and the case now under consideration. There, as here, the dispute arose over federal income taxes on profits derived by a private corporation from the sale of oil and gas produced under leases to it by a state (Texas). There, as here, immunity was claimed as an instrumentality of the State for the development of its public domain. There the land from which the oil was taken had been set apart for the benefit of the state university; here for the benefit of the school children of the state under a constitutional provision adopted pursuant to mandate of Congress in the grant of statehood. There, as here, the grant to the corporation was designated a lease, and there, as here, the return to the state was measured by a percentage of the oil produced. The distinction or difference between the Group Oil Case on the one hand and this ease and the Gillespie Case on the other arises out of the fact that in Texas the Constitution of that state, as interpreted by the highest court of the state, “requires the Legislature to dispose of the University lands by sale only,” Theisen v. Robison, 117 Tex. 489, 502, 8 S.W.(2d) 646, 648, and accordingly it was held in that case that leases like the one in Group Oil Co. Case were present sales to the lessees of the oil and gas in place without restriction and without retention of interest in the vendor or lessor; in other words, that, though denominated a lease, the transaction was in fact a sale of all the oil and gas in the particular land conveyed. And the Supreme Court in the Oil Group Case, adopting this construction of the Texas Constitution as binding, held the tax valid solely on that ground. But the same thing is not true of this ease, for here, there not only was no sale, but a congressional prohibition, accepted by the state, against one, and instead there was a lease with an agreed division of profits in all respects like that in the Gillespie Case where the tax was held invalid. And so we have to conclude that, unless we are mistaken in thinking there is no difference in the immunity from taxation of income derived from tribal lands of Indians and immunity from taxation of income derived from school lands of a state, where the income in each case arises under the same conditions, the principle applied in the Gillespie Case is applicable in ' this ease, and the Board of Tax Appeals was wrong in holding otherwise, and its decision should be and is reversed, and the ease remanded for further proceedings not- inconsistent with this opinion.

Reversed.

MARTIN, Chief Justice,

dissents from the foregoing decision, upon grounds- which are fully stated in the majority opinion of the Board of Tax Appeals, included in this record, and also reported in 14 B. T. A. 1214.


text:
    BLISS v. BLISS.
    No. 5128.
    Court of Appeals of District of Columbia.
    June 1, 1931.
    Julius I. Peyser and Milton Strasburger, both of Washington, D. C., for appellant.
    George P. Hoover, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, and GRONER, Associate Justices.
   GRONER, Associate Justice.

-Appellant (who was plaintiff below and whom we shall call plaintiff) was married in Washington, D. C., to appellee (whom we shall call defendant) February 7, 1920. They lived together as husband and wife in the city of Washington for a period of three months, when plaintiff went to Reno in the state of Nevada, where, in 1921, she obtained a decree of divorce. In 1929, she filed in the Supreme Court of the District of Columbia her bill against defendant in which she prayed that the Nevada divorce be declared, void; that certain contracts entered into between herself and her husband, in which she waived her dower and, marital rights, be canceled and annulled; and that a decree pass requiring defendant to pay “maintenance and support.” She alleged that she was, and had been for more than three years, a resident of the District of Columbia. Summons was issued and returned, “Not found,” and, upon petition and affidavit of plaintiff that defendant had property within the District of Columbia, and upon the further petition for the appointment of a sequestrator, an order allowing service by publication was passed in which the object of the suit was stated to be to obtain a decree for maintenance and support, to restore to plaintiff her marital rights in her husband’s property in the District of Columbia, and for the appointment of a sequestrator for the property. Defendant, in apt time, appeared specially, and moved to vacate and set aside the order of publication, and a month later the lower court granted defendant’s motion and quashed the order of publication on the ground that the suit was one in personam and that the court had no power to authorize substituted service of process in the absence of a statute permitting it, and that section 378, title 24, D. C. Code 1929; which authorizes substituted service in suits for divorce, does not apply in suits for maintenance; and from the order entered accordingly this appeal is taken. Stated briefly, therefore, the question for decision is whether a" suit for maintenance is a proceeding in personam or a proceeding in rem.

Section 75 of title 14, Code D. C. 1929; provides: “Whenever any husband shall fail or refuse to maintain his wife and minor children, if any, although able so to do, the-court, on application of the wife, may decree that he shall pay her, periodically, such sums as would be allowed to her as permanent alimony in case of divorce for the maintenance of herself and the minor children committed to her care by the court, and the payment thereof may be enforced in the same manner as directed in regard to such permanent alimony.”

And, by reference to the paragraph in ■ relation to permanent alimony, we find there a provision that in case of the husband’s failure to pay alimony after decree for same is passed, the court may enter an order to sequestrate his property, and apply the income thereof to the payment of such alimony as the court shall have decreed. Section 70, of title 14, D. C. Code 1929. It is insisted on behalf of plaintiff that we have already held (Thompson v. Tanner, 53 App. D. C. 3, 287 F. 980) that in a proceeding for divorce where the defendant is a nonresident of the District, the court, under the provisions of the quoted section of the laws of the District of Columbia, acquires jurisdiction to render a judgment essentially in rem notwithstanding the nonresidence of the owner of the res. But we do not think that case goes so far. What we said there was that where a husband, in order to avoid the serviee of process, temporarily absconded, his property within the jurisdiction of the court might be sequestrated to the payment of a valid order entered in a suit for divorce. The difference between that case and this is twofold. There the action was for divorce, which is a proceeding in rem and in which a valid decree may be rendered without jurisdiction of the person of the defendant. Here the suit is for maintenance, that is to say, for a personal decree for money which, as we pointed out in the Tanner Case supra, is essentially a proceeding in personam. And, secondly, in the Tanner Case, the defendant was a resident of the District, but had gone into hiding to avoid the service of process; whereas in this ease, so far as we glean from the record, the defendant is a bona fide resident of Florida, and, inferentially at least, has resided there since the termination of the marital relation ten years ago. We find nothing in the Tanner Case to sustain the position of the plaintiff here. It is quite true that it has been held in a number of states that n suit for maintenance is a proceeding quasi in rem, but, in all such cases, the right to seize the husband’s property without per-, sonal service has been sustained by reason of local statutes in the jurisdiction in which the suit is brought. Many such eases will be found cited in the opinion in Shipley v. Shipley, 187 Iowa, 1295, 175 N. W. 51; but in the District of Columbia neither in the statutes in relation to marriage and divorce npr in the statute in relation to substituted service of process is there any authority for a proceeding of that nature. The claim for maintenance is different frpm a suit to enforce a contract or a lien, and, under the Code provisions, there can be ho attachment, seizure, or taking of the property until after the decree has passed, and, in this respect, the local statute is not unlike that in Michigan construed in Bunnell v. Bunnell (C. C.) 25 F. 214, 217. There the statute declared: “In all cases where alimony or other allowance shall he decreed to the wife or children * * * the court may award execution for the collection of the same, or the court may sequestrate his real or personal estate, and may appoint a receiver thereof, and may cause such personal estates, and the rents and profits of such real estate, to be applied to the payment thereof.” Judge Brown (subsequently of the Supreme Court), in construing this statute, said: “In terms, the act applies to all eases where alimony is decreed; but it ought to be construed in harmony with the general principle above stated, that a personal decree can only be supported by a personal service of process. The act makes no provision for .proceeding against the property pending the suit for divorce, and the sequestration can only take place after the decree is rendered.” And, continuing, he said: “The distinction between cases where jurisdiction is acquired by a seizure of the res at the time the suit is begun, and those where* in a personal judgment against a party not served with process is attempted to be enforced against property within the reach of the court, is clearly stated in Pennoyer v. Neff, 95 U. S. 714 [24 L. Ed. 565].”

In the last-named ease, the Supreme Court rejected the suggestion that, if the defendant has property within the state, it is of nó consequence whether it is taken under attachment and afterwards applied to the satisfaction of a judgment against the owner, or whether the judgment be first obtained in a personal action and the property after-wards seized and sold on execution, and held that if the judgment is invalid because of failure to have personal service on the defendant, it cannot be made valid by the subsequent discovery of property of the defendant and its seizure.

But we think we need not stop to reconcile the conflict of authority in the various states on the subject, nor to lay down any exact rule which may embarrass us in the future when it shall become necessary to decide the question first suggested, for obviously this is not such a ease. Plaintiff is ngt now the wife of the defendant, and is not entitled in her present state to invoke the provisions of section 70, supra. She was divorced by her own act ten years ago in a court which presumably had jurisdiction of the parties and of the suit. It is true she sets out in her present bill that the divorce was procured at- the demand of her husband, and as a result of his coercion, but, as long as the condition brought about by her own act continues, she cannot claim to be the wife of defendant, or entitled to any marital rights as such, or that the marriage relation which ceased ten years ago will constitute a res for jmjsdictional purposes. When she shall have established the invalidity of her divorce, it will then be time enough to invoke the statute providing maintenance and support for a deserted wife.

In her bill filed below, she asks that the decree of divorce obtained in Nevada be declared null and void, but in her affidavit and petition for service by publication, she states the object of her suit to be to obtain a decree for maintenance and support. While we do not mean to say .that the two objects may not be sought in the same proceeding, we are very clear that in a ease such as this, a divorced woman may not, by charging fraud in the procurement of the divorce, avail of the statute for maintenance, and, by the seizure of the property of her nonresident former husband, create jurisdiction in a court where none otherwise exists. Obviously, we think, plaintiff’s suit to set aside the Nevada divorce decree may not be maintained in the District without personal service on the defendant, for the marital relation was severed by the divorce, and the matrimonial domicile by the removal of the parties, the one to Nevada and the other to Florida, and the fact that the parties originally entered into the marriage state here will not in itself support the jurisdiction where each acquired subsequently another residence which, in, the case of the husband, continues. And so we are of opinion that, while the status of the parties is as admittedly it is, seizure of the'husband’s property in the District through the maintenance statute may not bé availed of to create jurisdiction. But, even if this were not true, there is still another objection to the prosecution of this suit. The bill shows that the things which plaintiff seeks to accomplish, namely, the annulment of the divorce and the cancellation of the contracts made by her coineidently ■ therewith, occurred nine years before the filing of her bill, and she fails to show any reason or excuse for the delay in seeking relief therefrom. Courts always discourage stale demands in the interest of the peace of so- . eiety, or, as was said by Mr. Justice Gray in Speidel v. Henrici, 120 U. S. 377, 387, 7 S. Ct. 610, 612, 30 L. Ed. 718: “Independently of any statute of limitations, courts of equity uniformly decline to assist a person who has slept upon his rights, and shows no excuse for his laches in asserting them.” It is quite true none of the grounds stated above was argued here or below, and properly could not be without a general appearance, but courts sometimes, wisely we think, look beyond the shadow to the substance, and, when convinced that a cause is without basis or merit, act on their own initiative.

Order affirmed.


author: PER CURIAM.

text:
    FULTON TRUST CO. OF NEW YORK et al. v. BANK OF AMERICA OF CALIFORNIA.
    No. 5153.
    Court of Appeals of District of Columbia.
    Argued May 8, 1931.
    Decided June 1, 1931.
    P. D. McKenney, J. S. Flannery, G. B. Craighill, and R. D. Quinter, all of Washington, D. C., for appellants.
    W. F. Norman, of Washington, D. C., and J. J. Lynch, of Chattanooga, Tenn., for ap-pellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, and GRONER, Associate Justices.
   PER CURIAM.

This is an appeal from a decree directing the appellants, as trustees under the last will and testament of James McDonald, Sr., deceased, to deliver over to appellee as ancillary guardian of James McDonald, III, and Robert Alexander McDonald, minors, certain accumulated income, together with income still accruing upon the share of the minor wards in the estate of their grandfather, James McDonald, Sr., deceased.

James McDonald, Sr., the testator, was a resident of the District of Columbia, and departed this life on January 13, 1915, leaving a large estate consisting entirely of personal property, survived by a widow, who was his second wife, and by a son by his first wife, James McDonald, Jr., who had one son James McDonald, III, bom September 10, 1913, and a second son, Robert Alexander McDonald, bom May 12,1915, soon after his grandfather’s death. The decedent left no other child or grandchild surviving him, and the surviving widow of decedent, being spe-' eially provided for, does not figure in this case.

The last will of decedent bears date of June 26, 1913, with k codicil dated April 14, 1914, and was duly admitted to probate on January 20, 1915, by the Supreme Court of the District of Columbia, holding a probate court.

By the provisions of the will and codicil, the testator gives to his son, James McDonald, Jr., an annuity of $15,000 until he becomes 26 years of age, $18,000 from that age until the age of 30 years, and $20,000 from that age, until the estate is divided according to the terms of the will. James is also given an annual allowance of $2,500’ for each of his children (these minors) until they reach the age of 15 years, and $3,000 annually until they reach the age of 21 years. Each grandchild, after reaching the age of 21 years, shall receive an annuity of $4,000 until the oldest surviving child shall reach the age of 30 years, when, if James is still living, the estate shall be divided as follows: to wit, One-half shall go to James, the remaining one-half shall be divided between his children share and share alike; the share of a child who has reached the age of 30 years shall be made over to him at once, but the shares of any who have not reached that age shall be held in trust by the executors, ancf shall be made over to them as they severally become 30 years of age.

The two grandchildren of James McDonald, Jr., living at the decease of their grandfather, are still living. The oldest of them is now about 18 years of age. The fund now demanded by the ancillary guardian is the accrued and accruing interest upon one-half of the estate which was bequeathed to them by the will,. and which is to be divided between them when the oldest reaches the age of 30 years. It is claimed by the ancillary guardian that at the death of the testator the minor grandchildren took a present vested interest in the one-half of the estate, to be divided between them in equal shares when the oldest grandchild reaches the age of 30 years, and that until that time they are entitled to receive the income upon such vested interest as the same has accrued, and will continue to accrue, until the distribution of the estate. The trustees of the estate have refused to pay the income to the minors or to their guardian, and the ancillary guardian prays for an order requiring them to do so.

This claim was sustained by the lower court, and an order was entered directing the payment by the trustees of the accrued and accruing income, as aforesaid, to the ancillary guardian.

We do not agree with the conclusion reached by the lower court. It is plain from the terms of the will that the testator intended and understood that he was providing for his grandchildren during their minority by means of the allowance to their father of $2,-500 for each child until he became 15 years of age, and $3,000 for each child until reaching the age of 21 years, which sums were bequeathed to their father, James McDonald, Jr., in addition to the personal allowances bequeathed to him; and that the annuity of $4,000 for each child, after becoming 21 years of age and continuing until the division of the estate, was to be the exclusive provision for them during that period. Accordingly; it was not the will of the testator that the accruing income from their one-half interest in the estate should be paid to either of the minors before reaching the age of 30 years.

On May 6, 1922, James McDonald, Jr., commenced a suit in the Supreme Court of the District of Columbia, against the executors and legatees under testator’s will, claiming that the legacies above set out and certain others in the will were null and void under the statute against perpetuities, and that claimant, as sole heir and next of kin of testator, was vested with the absolute title to all that portion of the estate so affected ,including the one-half interest in the estate bequeathed to these minors. He accordingly prayed immediate possession of all such parts of decedent’s estate. The lower court held against his claim, and an appeal was taken to this court. McDonald v. Maxwell et al., 56 App. D. C. 287, 12 F.(2d) 822. It is insisted by the appellees in this case that our decision in that ease directly sustains their present contention.

We do not agree with this view. Our finding and order in that ease, respecting these minor grandchildren, reads as follows: “(3) That upon the death of the testator, James McDonald, the infant defendants and appellees, James McDonald, 3d, and Robert Alexander McDonald, took a present vested interest in the remaining one-half of the estate of said testator after the payment of debts, specific legacies, annuities and cost of administration, the same to be divided between them share and share alike, such division and distribution to be made when the oldest of said children shall reach the age of 30 years, and otherwise provided by the terms of the Will.”

This finding and order plainly recognizes that the distribution to the grandchildren is to be made subject to the preceding provisions of the will, which, as already stated, plainly provide that they are to receive only the specific legacies granted to them by the will, until the general distribution shall be made when the oldest becomes 30 years of age.

The decree of the lower court is reversed, with costs, and this cause is remanded, with directions to dismiss the plaintiff’s petition.


author: ROBB, Associate Justice.

text:
    MELLON, Secretary of the Treasury, et al. v. UNITED STATES ex rel. ORONO PULP & PAPER CO.
    No. 5366.
    Court of Appeals of District of Columbia.
    Argued May 4, 1931.
    Decided June 1, 1931.
    Leo A. Rover, John W. Fihelly, 0. R. McGuire, and Chas. T. Hendler, all of Washington, D. C., for appellants.
    J. Robert Sherrod, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRO-NER, Associate Justices.
   ROBB, Associate Justice.

Appeal from a judgment in the Supreme Court of the district sustaining the demurrer of appellee to the answer of appellants to the rule to show cause and petition for mandamus to compel appellants to approve for payment and pay to appellee interest on certain judgments.

On June 15, 1929’, judgments were rendered in the District Court of the United States for the Southern District of Maine in a suit for the recovery of overpayments of federal taxes for the years 1917, 1918, and 1919. These judgments included interest to their respective dates. Thereupon appellee filed claim for refund of the aggregate amount of the judgments, together with interest thereon from the date of the judgments to a date not more than 30 days prior to the date of the refund checks. Appellants paid the amounts of the respective judgments by checks dated January 25,1930, and February 5, 1930, but refused payment of the interest claimed.

Section 614 (a) of the Revenue Act of 1928, approved May 29, 1928 (45 Stat. 791, 876 [26 USCA § 2614 (a)], entitled, “Interest on Overpayments,” provides in part that; “Interest shall be allowed and paid upon any overpayment in respect of any internal-revenue tax, at the rate of 6 per centum per annum, as follows: (1) 5 * * (2) In the case of a refund, from the date of the overpayment to a date preceding the date of the refund cheek by not more than 30 days, such date to be determined by the commissioner.”

Section 615 (a) (28 USCA § 284 (b) entitled, “Interest on Judgments,” amending section 177 (b) of the Judicial Code, reads in part as follows: “In any judgment of any court rendered * * * for any overpayment in respect of any internal-revenue tax, interest shall be allowed at the rate of 6 per centum per annum upon the amount of the overpayment, from the date of the payment or eolleetion thereof to a date preceding the date of the refund check by not more than thirty days, such date to be determined by the Commissioner of Internal Revenue.”

It will be observed that, whether the faet of overpayment has been determined by the Commissioner of Internal Revenue or by the court, interest is allowable from the date of the overpayment to a date preceding the date of the refund cheek by not more than 30 days. This is conceded by appellants. They further concede that had the court, in entering the judgments in the present case, added “with interest according to law,” the over-payments would have borne interest to a date within 30 days of the refund cheeks.

Appellants insist, however, that the words in section 615 (a) “In any judgment •6 * interest shall be allowed,” require the court to add to the judgment, “with interest according to law.” They contrast this provision with the provision in section 614 (a) that “interest shall be allowed and paid upon, any overpayment.” Section 615 (a) does not provide for payment of interest on a judgment, but upon the overpayments in-eluded in the judgment; henee, the use of the word “in” instead of “upon” in that seetion. Both seetion 614 (a) and seetion 615 (a) provide that interest shall be allowed on over-payments.- In the present case, interest was computed on the overpayments from their date to the date of the judgments. Had the judgments been paid within 30 days, there would have been a literal compliance with the terms of the statute. The ease, therefore, narrows down to this: May the accounting officers, by delaying the payment of a judgment that does not expressly provide for interest beyond its date, defeat the obvious intent of the statute and deprive the taxpayer of interest, not on the judgment, but on the overpayment from the date of the judgment to within 30 days of the date of payment? We think not.

The statute clearly contemplates that where there is a delay of more than 30 days in the payment of a judgment, interest shall be computed upon the overpayment from its date to within 30 days of the refund. In the present case, it is a simple matter of computation to determine the interest on the overpayments from the date of the judgment to a date within 30 days of the payment of the refund.

The court below directed the payment of interest on the judgments. This was error, as neither section 614 (a) nor seetion 615 (a) authorize interest on judgments, but they do authorize interest on overpayments. Since interest has been paid up to the date of the judgments, the order of the court below should be modified so as merely to direct the payment of interest on the ascertained over-payments from the date of the respective judgments to within 30 days of January 25, 1930, and February 5, 1930, respectively, the dates of the refund checks.

• As modified, the judgment is affirmed.

Affirmed, as modified.


author: MARTIN, Chief Justice.

text:
    JAMES STEWART & CO., Inc., et al. v. LIBERTY TRUST CO., et al.
    No. 5108.
    Court of Appeals of District of Columbia.
    Argued May 6, 1931.
    Decided June 1, 1931.
    Geo. E. Sullivan, Edward Stafford, Walter C. Clephane, J. Wilmer Latimer, Chas. S. Baker, Benj. L. Tepper and H. Winship Wheatley, all of Washington, D. C., for appellants.
    J. Harry Covington, Spencer Gordon, B. 5. Minor, H. P. Gatley, A. P. Drury, Guy Mason, W. W. Spalding, George E. Hamilton, George E. Hamilton, Jr., John J. Hamilton, Henry K.. Gower, and Edmund Brady, all of Washington, D. C., for appellees.

      Before MARTIN, Chief Justice, and ROBB and GRONER, Associate Justices.
   MARTIN, Chief Justice.

This appeal relates to. a decree foreclosing a mortgage upon real estate and determining the relative rights and obligations of lienholders.

It appears that on July 10, 1925, the Washington Central Trust was organized in Boston for the purpose of purchasing eeitain lands in the city of Washington and erecting an extensive business and office building thereon. The members of the trust were not to bo held personally liable for any of the obligations of the trust. In order to finance the enterprise, the trust on the same day executed a first mortgage for $3,300,000 upon the premises to the National Shawmut Bank of Boston as trustee, and a second mortgage for $800,000 to the Liberty Trust Company as trustees. These mortgages were written to secure certain issues of promissory notes in denominations suitable for sale to the public, and were duly filed for record on July 17, 1925. The trust then agreed with Coffin & Burr, Inc., dealers in investment bonds, that the latter should dispose of the mortgage notes for a stipulated commission. At the same time a “completion bond” in the sum of $1,200,000 was executed and delivered by the trust to the National Shawmut Bank, as trustee in the first mortgage, to assure the completion of the building upon which the mortgage was written; and concurrently therewith a like completion bond in the sum of $300,000 was given to the Liberty Trust Company as trustee in the second mortgage. In both of the completion bonds the Hartford Accident & Indemnity Company, the Maryland Casualty Company, and the Metropolitan Casualty Insurance Company of New York bound themselves as sureties.

On September 15, 1926, after the mortgages had been recorded and the notes secured thereby had been sold to the public, the trust entered into a written contract with appellants Stewart & Co. to erect the proposed building upon the premises. It was provided in the contract that the trust should pay the contractor monthly upon the architect’s certificate a sum equal to 90 per cent, of the value of the labor and materials furnished and installed in the building during the preceding month; and that, in ease of default of any such payment, the contractor, after written notice, might stop work or terminate the contract and recover for all work executed and for any loss sustained upon any plant or materials, and reasonable profits and damages.

Stewart & Co. thereupon proceeded with the performance of their contract, and fully completed it in all respects on or before December 29, 1927. However, .on "October 8, 1927, the trust defaulted in the payments due to the company upon the architect’s certificate for the preceding month; the amount of the shortage being $7,706.17. On November 5, 1927, a second default occurred in the sum of $188,154.95. The company did not avail itself of the remedies afforded in such ease by the contract, but faithfully completed the building and paid in full for all labor and materials employed by them in so doing. On November 30, 1927, the company duly filed a statutory notice of mechanic’s lien upon the premises for the amount remaining due to it.

The present case was begun in the lower court by the Liberty Trust Company, as trustee under the second mortgage, for a foreclosure of that mortgage and an accounting of the liens upon the property. Afterwards in the same case the property was sold under a foreclosure of the first mortgage, and the proceeds were not sufficient to pay the mortgage indebtedness and the mechanic’s lien of Stewart & Co.

It was thereupon claimed by Stewart & Co. that under the facts in the case it is entitled in a court of equity to the “protection” of the surety bond for $1,200,000, which was given by the surety companies to the National Shawmut Bank, trustee in the first mortgage, as security for the completion of the building upon the mortgaged premises. Stewart & Go. contend that “the mortgagees should have been required to exhaust their remedies against the surety companies as a condition to the foreclosure of their mortgages.”

The lower court ruled against these claims, and we think the ruling is correct.

It is conceded that Stewart & Co. could not recover in an action at law against the surety companies upon the completion bonds, for there is no privity of contract between the parties. Sun Indemnity Co. v. American University, 58 App. D. C. 184, 26 F.(2d) 556. It is a general rule that equity follows the law. However, it is contended that under the present circumstances the interests of justice require that this rule shall not apply. An examination of the record does not sustain the contention.

The completion bond for $1,200,000 securing the first mortgage is executed by the trust'as principal and the surety companies as-sureties, and designates as sole obligee the National Shawmut Bank of Boston as trustee under the mortgage. It is conditioned that the trust as principal therein shall erect the building described in the mortgage, and pay the cost thereof as the same shall become due and payable, complete the'same free from liens, and save the obligee harmless on account of any and all claims, liens, expenses, or damages which may be incurred or suffered by the obligee arising against the building. The bond, moreover, expressly provides that all and singular the terms of the mortgage are made part of the bond as fully to all intents and purposes as if specifically set out in the body of the bond.

Section 2 of article XIII of the Mortgage thus secured reads as follows: “Section 2. Nothing in this indenture, express or implied, is intended or shall be construed to confer upon or to give to any person or corporation, other than the parties hereto and the holders and registered owners of the Bonds, any right, remedy or claim under or by reason of this indenture or any covenant, condition, stipulation or agreement hereof; and all the covenants, conditions, stipulations, promises and agreements in this indenture contained by or on behalf of the Mortgagors shall be for the sole and exclusive benefit of the parties hereto and of the holders and registered owners of the Bonds.”

According to the specific provisions of these cognate instruments, the obligations of the surety companies run to the holders of the mortgage notes only, and not to the holders of liens upon the building as such. These restrictions are not illegal, nor in any sense inequitable, and they should be respected in equity as well as at law. Stewart & Co. paid no part of the consideration for the surety bonds, they are not named as obligees therein, and, if they relied upon the bonds as a guaranty running to them, as is claimed, they mistook the legal effect of the bonds, and the surety companies are not responsible for the error.

It is contended on behalf of Stewart & Co. that under the circumstances the holders of the mortgage notes possess two forms of security for the protection of their claims; first, the mortgage upon the property; and, second, the obligations assumed in behalf of their notes by the surety companies in the completion bond. It is contended that under the equitable principles governing the marshaling of liens the mortgagees should' be compelled “to exhaust their remedies against the surety companies as a condition to the foreclosure of their mortgages.” In such event, it is claimed, the surety' companies would be required to pay the lien of Stewart & Co., and the proceeds of the sale of the mortgaged premises would be sufficient to pay the mortgage notes in fhll.

The answer to this is that there can be no marshaling of liens in this case, because the mortgagees hold but a single lien as security for their notes, to wit, the mortgage. They have no lien upon the completion bond or its contents. The surety companies did not become sureties for the payment of the mortgage debts, but only for the completion of the building. The building having been completed according to contract, the surety companies are not indebted to the mortgagees in any sum whatever. The facts in the ease accordingly form no basis for a decree in .favor of Stewart & Co., nor in favor of Coolidge, Shepley, Bulfinch & Abbott, the architects, whose ease rests upon similar grounds.

The orders and decrees appealed from are affirmed, with costs.


author: HITZ, Associate Justice.

text:
    HURLEY, Secretary of War, et al. v. CRAWLEY.
    No. 5336.
    Court of Appeals of District of Columbia.
    June 1, 1931.

      Leo A. Rover, of Washington, D. C., for appellants.
    W. E. Miller, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, VAN ORSDEL, HITZ, and GRONER, Associate Justices.
   HITZ, Associate Justice.

This is an appeal by the Secretary of War and the United States Civil Service Commission from an order of the Supreme Court of the District of Columbia granting a writ of mandamus commanding that petitioner there, who is appellee here, be given the preferential status provided by Civil Service Rule VI (as amended by Executive Order of March 2,1929), which follows:

“Examination papers shall be rated on a scale of 100, and the subjects therein shall be given such relative'weights as the commission may prescribe. Honorably discharged soldiers, sailors, and marines shall have five points added to their earned ratings in examinations for entrance to the classified service. Applicants for entrance examination who, because of disability, are entitled either to a pension by authorization of the Bureau of Pensions or to compensation or training by the Veterans’ Bureau, and widows of honorably discharged'soldiers, sailors and marines, and wives of injured soldiers, sailors, and marines who themselves are not qualified, but whose wives are qualified for appointment, shall have, ten points added to their earned ratings. * * *
“All competitors rated at 70 or more shall be eligible for appointment, and their names shall be placed on the proper register according to their ratings; but the names of disabled veterans, their wives, and the widows of honorably discharged soldiers, sailors, and marines shall be placed above all others. * *

The petitioner was a resident of the District of Columbia, and on August. 26, 1918, he was ordered by the local draft board to report on September 2, 1918, for military duty at a place and hour named.

Under the procedure of the draft, based upon acts of Congress and Executive Orders of which the court takes judicial notice, Crawley must have theretofore made two appearances in connection with his military service:

First, when he registered before the local board.

Second, when he appeared for preliminary physical examination.

As a result of these appearances, he was classified; and as a result of his classification, he was inducted by the following order:

“Order of Induction into Military Service of the United States
“The President of the United States to Howard Lacy Crawley.
(Christian name) (Surname)
“Order Number 155. Serial Number 59. “Greeting:
“Having submitted yourself to a local board composed of your neighbors for the purpose of determining the place and time in which you can best serve the United States in the present emergency, you are hereby notified that you have been selected for immediate military service.
“You will, therefore, report to the local board named below at city post office, at
(Place of reporting)
8 p. m., on the 2nd day of September, 1918,
(Hour of reporting)
for military duty.
“From and after the day and hour just named you will be a soldier in the'military service of the United States.
“J. Rozier Biggs,
“Member of Local Board for Division No. 4, “District of Columbia.
“Report to local board' for-.
“Local Board for Division No. 4, District of Columbia, Room 405,
“District Building, Washington, D. C.
“Date, August 26, 1918.”

Crawley duly received and obeyed this order; he reported at the time and place named, and was sent by train to Camp Lee in Virginia, where he arrived on September 3.

On. September 4th he was admitted to the base hospital" for treatment of an infected thumb; was discharged from the hospital on September 26; was again admitted to the base hospital October 3, and remained there until November 9, when he was examined, found physically disqualified for military service, and on that day discharged from the hospital, the draft, and the military service.

The petitioner alleges that on September 26, when he was discharged from the hospital after treatment for his thumb, he was ordered back to duty, and influenza being epidemic in the camp, his duties included the moving of cots which had been occupied by influenza patients, and similar services until he was taken ill with influenza and sent to the hospital for treatment thereof on O'etober 3.

The answer of the Secretary states that from September 26 to October 3, the petitioner was with the 155th Depot Brigade awaiting his turn for physical examination for acceptance or rejection as a soldier.

The record is silent as to the nature of the physical disqualifications for which he was finally discharged on November 9, but ..the Secretary of War in his answer admits “that petitioner was in the military service of the United States from the date of his induction to the date of his discharge from the draft, and that his separation from the military service was under honorable conditions,” but denies that ijie petitioner ever was a soldier of the United States.

The question thus presented for decision is whether a man so inducted into the military service of the United States and remaining there for nine weeks becomes a soldier of the United States within the meaning of the law.

The Selective Service Act was early held by the Supreme Court to be constitutional and valid, Selective Draft Law Cases, 245 U. S. 366, 38 S. Ct. 159, 62 L. Ed. 349, L. R. A. 1918C, 361, Ann. Cas. 1918B, 856.

And in several eases between public authorities and alleged delinquents of the draft it has been decided that while a man not lawfully inducted into the military service could not be subject to military punishment by military courts, such induction could be lawfully accomplished for purposes of punishment by orders similar to the one in question here, even though actual receipt of the order was not shown.

It is sufficient to show the mailing of an unregistered postal card bearing the order.

And even the mailing of such a card need not be shown as a fact within the knowledge of any witness, but merely the existence of an official record of such a mailing, and this even to a man who after registering for the draft left the country with the knowledge and permission of the military authorities. In re Bergdoll (D. C.) 274 F. 458; U. S. v. Bullard (C. C. A.) 290 F. 704; U. S. v. McIntyre (C. C. A.) 4 F.(2d) 823.

“As the orders required by law to be given essential to the induction of petitioner into the service of his country as a soldier, under the act and rules made in pursuance thereof, are shown' to have been duly made and mailed to him at his post office address as by him given to the authorities, I am convinced the same must be presumed to have been by him received, in the absence, at least, of any positive showing to the contrary.” Bergdoll’s Case, supra, 274 F. at page 466.

If a drafted man ordered by mail to report for duty, who contends the order was never received, and the receipt of which is not established, can be punished by court-martial as a deserting soldier, surely such a man who receives such an order, and obeys it, reports for duty, and performs whatever duty is assigned until discharged for physical disqualification, is entitled to be treated as a soldier, ad interim.

Can the military authorities demand and obtain a wide and liberal construction of penal provisions, incidentally necessary to the execution of a great purpose, and, at the same time, a narrow and exclusive construction of remedial provisions created by Congress and the President in their mercy?

We think not.

And, furthermore, it is conceded that after the war this petitioner was held to be entitled from the Veterans’ Bureau to both vocational training and disability compensation, while it is denied that he is entitled to a place on the veterans’ preferential list for employment.

But we cannot think the nice distinction attempted here is within the intention of Congress in its legislation for veterans’ relief ; for this would be to pay a man for disability incident to his service, train him at government expense to earn his living, but deny him the preference which might enable him to utilize the very training so provided.

And this military preference to civil employment goes to appointment only, and not to retention in the civil service.

For an appointee from the preferred list is always subject to removal for inefficiency or other cause, as other appointees are, and consequently the efficiency of the civil service is not endangered by the system. Keim v. U. S., 177 U. S. 290, 20 S. Ct. 574, 44 L. Ed. 774.

In our opinion the order of the trial court was right, and it is consequently affirmed.

Affirmed. .


text:
    DOUGHERTY et al., Commissioners of District of Columbia, v. KEANE.
    No. 5123.
    Court of Appeals of District of Columbia.
    Argued May 6, 1931.
    Decided June 1, 1931.
    William W. Bride, of Washington, D. C., for appellants.
    H. I. Quinn, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   ROBB, Associate Justice.

Appeal from a decree in the Supreme Court of the District overruling a motion by appellants (defendants below) to dismiss the bill, and directing appellants specifically to perform the contract to purchase certain land in Reservation Ten in the District.

The material averments of the bill are as follows: On September 16, 1929, appellants contracted to pay appellee $62,500 in cash for his land, and appellee agreed to deliver the property free of all incumbrances. Examination of the title disclosed that there was a lease, dated November 1, 1928, of part of the land; the lease being for the term of seven years and two months. One of the provisions of the lease is as follows: “It is understood and agreed by and between the parties to this lease that should the Government, at any time during the existence of said lease and before its expiration, condemn or buy said property, that the lease is null and void.” Appellee is advised that the lease is terminated by reason of this provision, but that appellants refuse to pay because of the outstanding lease.

The motion to dismiss was based, inter alia, on want of necessary parties; that the lessee was not made a party to the cause; that the owner was not in a position to convey “free from all incumbrances”; and that the property is not being acquired by the “government,” but by the District of Columbia.

It is settled law that a court of equity will not enter a decree in a cause until all necessary parties are before the court. Foltz v. Payne, 50 App. D. C. 155, 269 F. 671; Hyman v. Rudolph, 52 App. D. C. 105, 281 F. 1017. A decree “should terminate and not instigate litigation.” Caldwell v. Taggart, 4 Pet. 190, 202, 7 L. Ed. 828.

In the present case, only one year of the seven-year term of the lease had expired. Counsel for appellants in their brief frankly state that, but for the failure to make the lessee a party, appellants would have been satisfied with the decree. ' Not being a party, the lessee of. course is not bound by the decree. Should the decree be affirmed, the District would be put to the hazard and expense of another suit to obtain possession of the property, a burden that in equity should be borne by appellee.

We think, therefore, that the decree should be reversed, with directions to the court below to permit appellee, if so advised, to make the lessee a party.

Reversed.


text:
    WELLER v. WOLF et al.
    No. 5138.
    Court of Appeals of District of Columbia.
    June 1, 1931.
    Leo P. Harlow, of Washington, D. C., for appellant.
    William L. Houston, Alexander Wolf, Wm. B. Wolf, Simon Fleishman, and Charles H. Houston, all of Washington, D. C., for appellees.
    Before MARTIN, Chief Justice, and ROBB and GRONER, Associate Justices.
   ROBB, Associate Justice.

Appeal from a decree in the Supreme Court of the District overruling exceptions by appellant to a special master’s report disallowing appellant’s claim against the. assets of the New Masonic Hall Corporation.

In December, 1918, there was incorporated the New Masonic Hall Corporation for the purpose of acquiring, providing, and furnishing a suitable building in the District of Columbia for the use and accommodation of several branches of the Masonic Order (colored). The corporation acquired real estate located at Tenth and U streets, in this city, commenced the construction of a building, became financially embarrassed, and on April 15,1926, a bill was filed to dissolve it. By decree dated November 3, 1927, the corporation was dissolved, and receivers appointed to collect the assets.

Thereafter, on August 6, 1928, the cause was referred to the special master to state the account of the receivers, the order of reference directing, inter alia, “that he report his findings upon the claims presented by creditors and stockholders, both common and preferred, against the New Masonic Hall Corporation, or against the Receivers in this cause.” Ón September 17, 1929, the special master made his report, in which he found appellant’s claim to be “without merit,” and therefore rejected it. Appellant filed exceptions to the report, contending that it “is contrary to the evidence and to the weight of the evidence adduced in support of said claim.”

'Appellant’s claim was filed March 24, 1927, and alleges that on the 23d day of April, 1925-, he was solicited by officers and directors of the New Masonic Hall Corporation “to assist * * * in the financing- and construction of a certain building then in course of erection” by the corporation; that he undertook, in good faith, to assist “in the financing and construction of said building * * * and did procure the agreement of the Weller Construction Company, a corporation doing business in the District of Columbia, to subscribe to twenty per cent (20%) of the first trust loan proposed to be made on the said building, which agreement, and deponent’s recommendation, were instrumental in obtaining the approval of the firm of Glover and Flather, real estate brokers of the District of Columbia, of the application of the New Masonic Hall Corporation for a First Trust loan of one hundred and twenty-five thousand dollars ($125,000.00) on the said building”; that appellant also rendered service in endeavoring to arrange a second trust loan on the building, and in other ways endeavored to assist the corporation in the financing and construction of the building; that his services were of the value “of at least Two Thousand Five Hundred Dollars.”

Appellant, Mr. Weller, a building contractor and engineer, testified that he first came in business contact with the corporation in the latter part of 1921, through the architects, who asked him if he “would care to help build this building and finance it.” Almost immediately thereafter, he met Mr. Mitchell, the president of the corporation. As a result of these interviews, he took the building plans and, after consulting several institutions in Washington, made several trips to New York, trying to negotiate a bond issue, but was unsuccessful in obtaining it; made trips to Philadelphia and also- to Baltimore on the same -mission; paid his own expenses, and has never been reimbursed. In 1922 he suggested modifying the building plans. “Following that, the matter passed but of my hands Horn that time until possibly a year or two years ago, about two years ago, (1925) and Mr. Mitchell again approached me, and Captain Gore also-, to see what we could do towards financing the building.” Appellant and Gore thereupon negotiated with Glover & Flather for a first trust of $125,009, of which appellant and Gore were to subscribe for $25,000 themselves. In order to obtain this loan, Glover & Flather had to be convinced that the building would be completed. “The subsequent law suit, however, threw tilings in a terrible mess, and that is where the proposition finally stood on the appointment of the committee of the Court when we tried to evolve schemes for going ahead with the completion of the building, all of which were unsuccessful, and the building was sold.”

The witness was asked whether Glover & Flather’s commitment to make the loan was based on any services performed by him, and he replied, “Yes, entirely based on assurances that I was going to be the contractor, and that the money was to be paid directly to the contractor by them, on the authorization of the architect or committee.” The witness was asked, “what, if any understanding, verbal or otherwise,” he had with the company (corporation) with regard to compensation or reimbursement, and answered: “I had a verbal understanding, whether or not it is in the record I do not know, that my compensation, in the event of my building, was a builder’s profit, and, in the event of obtaining the finances, my compensation would be that, and in the event of all negotiations failing, I was to be reimbursed for my services and expenses at a fair and reasonable rate.” Asked the date of this verbal understanding, witness replied: “This was made when we first started in 1921. It was the understanding, in the event of my building the building, that my commission and charges would be absorbed in that — my expenses in obtaining the loan and expenses I had been put to. In the. event of only obtaining the loan, I would have compensation for that; also, in the event of the entire plan falling through, I was to be reimbursed for my expenses and the time I spent on it — a reasonable charge.” That this agreement was made “at the very beginning, when I was doing all this traveling.” Asked whether that was before “they began td build,” witness replied, “Yes, in 1921,” and that he “never made any charge until now.” The witness was also asked to state the amount of his expenses, and replied that it was hard at that date to itemize them.

Jesse H. Mitchell, president of the corporation in 1921 and subsequently, testified that he was “familiar with the fact of Mr. Weller having come into business contact with the Association, in regard to erecting the new building, in about 1921,” and, as a result of interviews with Mr. Weller, went over the building plans and figured plans on the cost of changes “and the cost of construction as the plans were originally drawn. He (Weller) went so far as to get some bids from sub-contractors, in order to determine what the cost of construction would be, and in order to check up on him, I independently got bids from other Construction Companies; Lipscomb Company, the Fuller Construction Company and several others, and I may say now that his bid was the best we were able to obtain.”

Witness was asked: “What, if any, understanding did Mr. Weller have with the Company in connection with the work that ha did for it?” He replied: “The general understanding of the Board of Directors was that no man would work and give his services for nothing. We did not expect it, in the first place, and, in order to interest Mr. Weller, we made the proposition to him that we would expect to pay him for his time and labor, and we had a gentleman’s agreement that his charge for services would be fair and reasonable if he failed to obtain the loan; if successful, naturally his compensation would be obtained by his profits in the construction of the building.” The witness, upon being asked what period of time was covered by his interviews with Weller, answered: “From some time in the ■ Spring of 1921 until the Spring of 1925, covering a period of four years.”

The only minutes of the board of directors introduced in evidence and having any possible pertinency were the minutes of July 26, 1923, which “authorized the committee to negotiate the loan.”

In Hutchins v. Munn, 209 U. S. 246, 250, 28 S. Ct. 504, 506, 52 L. Ed. 776, affirming 28 App. D. C. 271, the court said: “The appellants alleged various exceptions to the auditor’s report, which are directed to the findings of facts upon which the liability was based and of the amount of damages, and here, apparently, argue those exceptions on the theory that this court is at liberty to consider the evidence de novo, weigh and balance it, and draw such inferences and conclusions as seem proper. But this theory overlooks the proper function of an auditor, which was correctly appreciated by the court below. The findings should not be set aside unless it is shown that there has been an error in law or a conclusion of fact unwarranted by the evidence.” See, also, Dillman v. Hastings, 144 U. S. 136, 12 S. Ct. 662, 36 L. Ed. 378; Davis v. Schwartz, 155 U. S. 631, 15 S. Ct. 237, 39 L. Ed. 289; Smith v. Trust Co., 12 App. D. C. 192.

An auditor or master, like a jury, has the advantage of hearing the testimony and of observing the demeanor of the witnesses on the stand. Huttig Sash & Door Co. v. Fuelle (C. C.) 143 F. 363; Des Moines Water Co. v. City of Des Moines (C. C.) 192 F. 193.

Was the finding of the master in this ease “unwarranted by the evidence”? Mr. Weller was a building contractor, and it is apparent from the evidence that his primary interest was to finance the enterprise that he might construct the building. It is significant that although he testified that ho had a “verbal understanding” as to compensation in 1921, his verified claim states the date as of April, 1925. It is further significant that he kept no account of his expenditures, although he testified that he always expected to be reimbursed. He was particularly active in 1923 and 1922, but permitted the matter to pass out of his hands until 1925, and filed no claim until 1927. Having in mind the functions of an auditor or master and the limitations of a reviewing tribunal, we conclude, without further analysis of the evidence, that the master’s report was not unwarranted.

The decree, therefore, is affirmed, with costs.

Affirmed.


text:
    LEAPLEY v. MATTHEWS.
    No. 5111.
    Court of Appeals of District of Columbia.
    Submitted May 6, 1931.
    Decided June 1, 1931.
    Wm. F. Kelly and P. J. J. Nicolaides, both of Washington, D. C., for plaintiff in error.
    G. Lyle Hughes, of Washington, D. C., for defendant in error.
    Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
   HITZ, Associate Justice.

The only error assigned to which exception was taken in the court below is the third: “The Court erred in overruling the plaintiff’s motion for new trial, because the finding of fact is contrary to the evidence, the weight of the evidence and the law.”

“According to federal practice this is not assignable as error.” Whelan v. Welch, 50 App. D. C. 174, 269 F. 689, 690, and eases cited; Preleau v. U. S., 50 App. D. C. 287, 271 F. 361; Hill v. U. S., 22 App. D. C. 396.

The judgment is therefore affirmed, with costs.

Affirmed.