author: WOOLLEY, Circuit Judge.

text:
    PENNINGTON, Prohibition Administrator, et al. v. BARR MFG. CORPORATION.
    No. 4341.
    Circuit Court of Appeals, Third Circuit.
    July 14, 1931.

      Louis E. Graham, U. S. Atty., W. J. Aiken, Asst. U. S. Atty., and James H. Dil-ley, all of Pittsburgh, Pa., for appellants.
    E. Lowry Humes and Humes & Prather, all of Pittsburgh, Pa., for appellee.
    Before WOOLLEY and DAVIS, Circuit Judges, and KIRKPATRICK, District Judge.
   WOOLLEY, Circuit Judge.

This appeal is from a decree of the District Court ordering that the revocation of two permits to the Barr Manufacturing Corporation for the withdrawal of specially denatured alcohol and grain alcohol be vacated and the permits re-instated.

The matter arose before the administrator, went to the District Court and has reached this court under section 9, title 2, of the National Prohibition Act (27 USCA § 21), which provides:

“ * * * If the commissioner has reason to believe, that any person who has a permit is not in good faith conforming to the provisions of this chapter, * * * the commissioner or his agent shall immediately issue an order citing any such person to appear before him 4 “,” for a hearing in revocation proceedings.

The Administrator thought, and has contended all along, that he issued the citation seasonably — that is “immediately” — after finding a “reason to believe” that the permittee was violating the law. The trial court held the contrary. We think the case turns not so much on the time at which the Administrator conceived his reason to believe violations, or on the promptness with which he “issued the citation, as on his justification for doing so, that is, on the existence or soundness of a “reason to believe” that the per-mittee was “not in good faith conforming to the provisions” of the act, for, After all, a permittee may in entire good faith fail precisely to conform to the act with respect to formulae and when that happens it is not a ground for citation and revocation of the permit; it is an occasion for administrative correction. Citation and revocation without a reason would be arbitrary and capricious. On the other hand, when a permittee fails to conform to the law by deviating from a prescribed formula, that fact viewed in the light of questionable circumstances may constitute a valid reason for the Administrator to believe that the permittee is not acting in good faith and may require that he issue a citation. But until the essential ingredient of bad faith in the reason moving the Administrator to action is determined, a question whether he has moved “immediately” within the meaning of the act does not arise. Therefore in order to decide this case we shall look into the question of good faith and bad faith by reviewing in bare outline several occurrences disclosed in this large record.

They began October 1, 1927, and extended to October 31, 1928. A few days later, the Administrator first conceived that he had reason to believe that the permittee was not acting in good faith under the denatured alcohol permit, issued a citation and later revoked both permits. This belated arrival at a reasonable belief of misconduct was not due to lack of information on the part of the Administrator because throughout the whole of these thirteen months Barr, the president of the permittee-company, was in constant correspondence and communication with the Administrator, and was acting seemingly in good faith and certainly with entire frankness. Some of the things which came to the attention of the Administrator were communicated to him by Barr himself. In other words, Barr was conducting a large business under two permits and apparently had every reason to observe the law, and when deviations from formulae were, from time to> time, found under different circumstances, he and •the Administrator worked together to correct them, and when Barr’s product was found in the hands of “suspicious” people, though not sold directly to them, again there seemed to be accord between the Administrator and Barr, as indicated by the willingness and promptness with which Barr stopped sales in those directions and generally did what the Administrator asked.

The trouble had its start in October, 1927, when the Barr Manufacturing Corporation applied for increased alcohol withdrawals under one of its permits. On the usual preliminary investigation in such ease it was found that alcohol in the company’s toilet water — one of its products — was higher and' the 'essential oils lower than were re^ quired by the formula. Barr, the managing officer of the permittee, stated that he was under the impression that quantitative formulas were necessary only under grain alcohol permits and not under permits for use of denatured alcohol, and was somewhat induced to this belief by the ensuing correspondence with the Commissioner of Prohibition who said:

“You are advised that before any action can be taken thereon it will be necessary for you to submit eojnplete quantitative formula for the flavoring extracts and sufficient of the formula for the remaining preparations to show that they are unfit for use as beverages.”

The Administrator nevertheless enlarged the permit as requested by the permittee for the withdrawal of 4,500 extra gallons a month, reports showing that the company’s equipment was adequate and Barr’s reputation excellent. Things went on until copies of quantitative formula were sent to Barr; no serious complaint in the meantime being made by the Administrator and a perfectly sensible administrative effort being made on his part to straighten out things.

In April, 1928, toilet water manufactured by the permittee was found in possession of another concern containing an excess quantity of alcohol, and in May, 1928, two fifty gallon drums of the permittee’s product in the hands of a third person were seized in New York, showing deviations from the formula. In these instances the product was being re-distilled for unlawful purposes. No connection betiveen the permittee and those engaged in that work was proved or charged. Analy-ses of these products were made from samples acquired elsewhere and from the Barr Manufacturing Corporation itself and sent to the Administrator. During all this time the Administrator did not charge the permit-tee with bad faith,- for, indeed, as the trial court found, there was no evidence of wilful violation of the permit requirements. Then, on November 1, the Administrator says that for the first time he had reason to believe that the permittee was not operating in good faith under the permit in question and, after issuing a citation, revoked both permits. If the several acts followed by- conferences and correspondence between the Administrator and the Barr Manufacturing Corporation,, running through thirteen months, did not suggest to the Administrator a “reason to believe” that the permittee was violating the-law, it must be that they did not suggest lack of good faith on the part of the permittee. We are unable to distinguish bad faith in the doings at the end of the period from bad faith in the doings at the beginning, and if, during the period, ending October 31, 1928, there was, as we think, no reason for the Administrator to believe that the permittee was not in good faith complying with the law, there was none early in November and therefore none to justify the issuance of a citation. This brings us back to the point with which we started, namely; that before the-Administrator can cite a permittee for violation of a permit as the first step in its revocation, he must at least have “reason to believe”' bad faith of the permittee.

Assuming that throughout the Administrator conscientiously performed his duty, we are of opinion that his failure, until about November 1, 1928, to form a reason for believing bad faith of the permittee from acts, transactions and conferences extending over a year, must be because those acts and transactions were separately regarded by him to involve good faith and, if so, it is difficult to see how they could cumulatively and suddenly involve bad faith. We find that the evidence, as well as the Administrator’s long-continued conduct, does not support a reason for belief on his part that the permittee in this ease was not in good faith conforming to the provisions of the aet.

We therefore hold that where a permit-tee has deviated from a formula, the Administrator, in order validly to issue a citation and revoke the permit on that ground under section 9, title 2 of the act, must also have, as an ingredient to his right of action, a reason to believe that the deviation was not made in good faith. But here we stop and that is the extent of this decision. We are anxious that the law of this case should not be confused with the law of the Jean Chemical Company Case. Stein v. Doran, Pro. Com. (C. C. A.) 46 F.(2d) 738. Here we are dealing with deviations from a formula and the Administrator’s reason to believe bad faith of the per-mittee as a condition precedent to the issuance of a citation. There we were dealing with a situation in which these preliminary essentials had been met and a valid citation had been issued and where, accordingly, the Administrator at the hearing had only to prove a violation of the regulations by proving a ■deviation from the formula, whereupon the burden of proving good faith in the devia^ tion shifted to and rested upon the permittee.

One ground for revocation, occurring about the time the citation issued, on which the Administrator insistently relied was a circumstance involving, as he says, misconduct of Barr which indicated unfitness of his company longer to have permits for the withdrawal of alcohol. It was briefly as follows:

On November 17, 1928, Barr learned that the Administrator intended to revoke his company’s permits. He at once went to Pittsburgh for the purpose of seeing the Assistant Prohibition Administrator about it. He called him by telephone and succeeded in making an appointment for the next day. In this telephone conversation Barr told the Assistant Administrator that on that night he was going to have a conference at his hotel with a young attorney who was retiring from the prohibition office, which had been arranged by a mutual friend. He did not know his name. The Assistant Administrator; thereupon secured a room next to the room which Barr occupied in the hotel and installed agents to listen in relays at the keyhole to all conversations which should occur in Barr’s room. In due course the young attorney, who, though he had resigned, was still connected with the Administrator’s office, came in and, after being introduced, offered Barr his professional services in the matter of the citation, which after some conversation Barr definitely declined. It is plain from the testimony that the interview was solicited by the attorney, not by Barr, and that Barr did not avail himself of the attorney’s imprudent offer. Indeed, we find nothing sinister in this transaction, particularly as Barr himself had apprised the Assistant Administrator of the proposed conference. Unfortunately for Barr, however, he expressed to the young attorney his views about the Assistant Administrator which were heard by the man at the keyhole and reported to that official. When one secretly listens or causes others to listen to a private conversation, he should not complain if it is not complimentary to him. At all events, Barr’s personal opinion of the Assistant Administrator,'while offensive to that officer, was not an offense against the National Prohibition Act, nor was it a ground for the revocation of the company’s permits.

The decree of the District Court is affirmed.


source: Caselaw Access Project

author: THOMPSON, Circuit Judge.

license: Public Domain

text:
    LAPP v. PENNSYLVANIA R. CO.
    No. 4544.
    Circuit Court of Appeals, Third Circuit.
    July 17, 1931.
    Coult, Satz & Tomlinson, of Newark, N. J. (De Voe Tomlinson, of Newark, N. J., of counsel), for appellant.
    John A. Hartpence, of Jersey City, N. J., for respondent.
    Before WOOLLEY, DAVIS, and THOMPSON, Circuit Judges.
   THOMPSON, Circuit Judge.

This is an appeal from a judgment of nonsuit entered in a suit by the plaintiff to recover damages for the death of her husband alleged to have been caused by the negligence of the defendant. The accident occurred on a dark night in the North River near Hoboken, N. J. The decedent, Harold Lapp, was employed as a seaman by the defendant and his duties were in connection with the transfer, by means of a tug, of ear-floats of the defendant from one dock to another. On the night in question, the decedent was acting mate on the tug and the service to be performed by the tug was to push a car-float loaded with cars into a slip and then to pull out another ear-float also loaded with cars, which was to be towed to another slip.

There was testimony showing that Lapp -went aboard the float, which was to be taken out, for the purpose of seeing that the lines tying it up to the dock were cast off before the tug commenced to back out with the float. The tug was made fast at its bow to the outgoing float and, after the float had started to move, a scream was heard and, when search was made, the decedent’s cap was found floating in the water and later his dead body was recovered.

There was proof, under objection, of a custom among the employees of the defendant that the tug should not start to pull upon the outgoing float until the mate (in this instance, Lapp) on board the outgoing float, after the lines attaching the float to the dock had been thrown off, gave a signal by calling to those on the tug, “She is all gone,” and by blowing two whistles, thereby indicating that the float had been loosed and was ready to be moved.

As the plaintiff’s ease developed at the trial, the only ground set up in the complaint charging negligence on the part of the defendant, supported by the evidence, was violation of the custom in that the float was moved by the tug without first receiving a signal or other notice from Lapp that it was safe and proper to shift or move it.

The testimony of the plaintiff’s witness Ryan, an employee of the defendant, was to the effect that he was on duty on the float lying to the right of the one that was to be pulled ,out; that his duty was to take a line and stand on the float until the tug came back; that, while he was doing this, Lapp was.on the float which was to be pulled out. He testified that the float started to come back, got about thirty feet back toward the river, out from the shore.

“It got about thirty feet back and I heard a scream and the float stopped, and I started to walk up toward the tug. * * *

“The comer of the float hit something going out and give like a lurch, like when two boats come together, they banged together going out, shoved the float.

“Q. Now, was that before you heard the scream or after you heard the scream? A. Well, it hit several times before I heard the scream.

“Q. And what sort of a lurch was it, a slight lurch or a heavy lurch? A. Heavy.”

The trial judge, after considerable discussion, sustained an objection to proof of the custom, in view of the testimony of the witness that the float was moving back and had already moved about thirty feet when the scream was heard.

It appears from the record that the attorney for the plaintiff, during recess of the court, asked the witness about the length of time that elapsed between the time the float left the dock and the time of the scream, and that the witness voluntarily stated to him that he had been misunderstood about the thirty feet, and that what he had meant to say was that the barge had moved thirty feet before it was stopped.

After this conversation with the plaintiff’s attorney and after recess when the witness was again put upon the stand, he was asked as follows:

“Q. How do-you wish to clarify it now? A. The boat stopped at about thirty feet out. I heard the scream before that, before the float stopped.”

Finally, upon being asked by the trial judge whether he wanted to change his testimony, he said:

“I would say I heard the scream as soon as the float started out, within one or two seconds after.
“Q. Then you want to change your testimony? A. Yes, sir.”

. The witness was then permitted to testify as follows:

“The Court: What was done with respect to these warnings? What warnings were given and when, for how long and in whosfe presence? A. When the boat comes in to get a float or barge or anything out, the mate or floatman goes out on the float, lets all the lines go, and if they are going to shift the float, the mate generally stays out there. If they are going to pick it up, he goes back on the boat. The floatman lets it go and hollers 'She is all gone.’ When they are going to shift it, the mate stays out there and he hollers, ‘It’s all gone.’ He blows two whistles to come back or go ahead, whatever he wants done.”

Being further questioned by the court, he testified as follows:

“Q. Who does give the signal? A. The man that is out there gives the signal to the tug or barge. He signals to the tug, it is all right to take it away.
“Q. In this particular ease, was there anybody on the float besides Mr. Lapp ? A. The last time I saw him, the other floatman was on the float, too.
“Q. What is Ms name ? A. His name was Collins.
“Q. Was he the man who was supposed to give the signal? A. Why, no. When the mate is out there he gives the signal.
“Q. Who was the mate? A. Harold Lapp was the mate.
“Q. Then the man himself was supposed to have given the signal; is that it? A. Yes, sir.”

Upon the point whether he heard any signal given by Lapp, he testified as follows, under questioning by the court :

“Q. What did you hear other than thé scream of Mr.' Lapp that evening, if anything? A. Well, the only thing I heard was the bells of the tug. The captain of the tug gives a signal to the engineer to come back. I heard the bells of the tug. I heard the scraping of the float, and then the float stopped and I knew something happened and I started to walk up to see what happened.
“Q. Were the bells any louder than the whistle or less loud? A. I know the whistle is louder outside.
“Q. How far away from the boat where Mr. Lapp was were you, how many feet? A. Well, if he was where I think he was, I was 50 feet away from him.
“Q. And you heard the bells? A. I heard the bells when the tug was about 100 feet away.
“Q. Well, the bells would mean to you, wouldn’t they, that she was going ahead? A. It would mean it was going back.
“Q. Pushing the float. You mean the bells were to push the float on or to push it back? A. Well, you can hear the bells. You know they are going to move. You don’t know what they are going to do but you can hear them. You can hear the bell on the tug.”

It was within the proper discretion of the trial judge to admit the testimony of Ryan, contradicting or changing his testimony concerning the distance the float had been towed before the scream was heard, so that the case would properly have gone to the jury if the changed testimony, together with the testimony of custom, was sufficient to establish negligence on the part of the defendant.

It is contended, however, on behalf of the defendant that, even with the changed testimony before the jury, it was not sufficiently established by the evidence either that Lapp’s death was caused by the premature starting of the tug, or that no signal was given by Lapp to the men on the tug.

We think that on either of these contentions the trial judge did not err in entering a nonsuit. No one saw Lapp fall overboard. Ryan, the only witness called to show how the accident occurred, was on the other float, and his estimate of the distance between Lapp and himself, when the tug started back with the float, was based entirely on where he thought Lapp was. He testified that he heard no signal, not that no signal was given. He testified that there was ice on the deck between the ears upon the float and its side.

The jury could not determine from his testimony how the decedent came to his death, excepting through mere guess and speculation. They might guess that he fell overboard because of the premature start of the float, or because he slipped on the ice, or because of a jar from striking another float. The evidence does not show that the signal under the custom had any purpose except to indicate that the lines had been east off. Among those several theories, there was no sufficient evidence upon whieh they could reach a definite conclusion concerning the cause of his death.

A verdict based upon mere speculation and theories not supported by the evidence cannot be allowed to stand. This court has so held in a number of eases. Reading Co. v. Boyer, 6 F.(2d) 185; Phila. & Reading Ry. Co. v. Bartsch, 9 F.(2d) 858; Dobbyn v. Boat Repairing Corporation, 25 F.(2d) 283; Szczepanski v. Penna. R. R. Co., 36 F.(2d) 1022. See, also, N. Y. C. R. Co. v. Ambrose, 280 U. S. 486, 50 S. Ct. 198, 74 L. Ed. 562.

The judgment is affirmed.


author: THOMSON, District Judge.

text:
    UNITED STATES v. ENGELSBERG.
    No. 4304.
    Circuit Court of Appeals, Third Circuit.
    June 30, 1931.

      W. Denning Stewart and B. Robert Aver-bach, both of Pittsburgh, Pa., for appellant,
    Raymond D. Evans, George Wasser, and Charles B. Prichard, all of Pittsburgh, Pa., for the United States.
    Before BUFFINGTON and WOOLEY, Circuit Judges, and THOMSON, District Judge.
   THOMSON, District Judge.

The defendant, appellant, was tried on four counts of an indictment charging him with conspiracy with Charles Berger, to sell, manufacture, possess, and transport intoxicating liquor between certain named dates. He was convicted on the counts charging conspiracy to sell and possess, and was acquitted on the counts charging conspiracy to manufacture and transport. The motion for a new trial and in arrest of judgment being overruled, the defendant presented a petition for a reargument on the motion for a new trial, alleging that the chief witness for the government had given false testimony at the trial. On the hearing of the rule, Berger was called and admitted that he had committed perjury, and denied the material parts of his former testimony which tended to incriminate the defendant. The court discharged the rule and sentenced the defendant to pay a fine and be imprisoned in the Allegheny county jail for a period of six months. From the sentence so imposed this appeal is taken.

The appellant raises three questions by his assignments of error. The first is: “Should the case have been submitted to the Jury on the uncorroborated testimony of a discredited co-conspirator?” This could hardly be considered an open question, in view of the case of Caminetti v. United States, 242 U. S. 470, 37 S. Ct. 192, 61 L. Ed. 442, L. R. A. 1917F, 502, Ann. Cas. 1917B, 1168. The real question is whether the ease was properly submitted, with such instruction by the court as to properly caution the jury in accepting the testimony of a eoconspirator. On this question we think the' court gave proper instructions to the jury.

The third question (passing the second question for the present) is whether the court abused its discretion in refusing a new trial When the chief witness for the government admitted that the testimony which he gave at the trial was false. Berger admitted that he was guilty of perjury at the trial, but the real question for the court was whether perjury was committed at the trial or on the hearing on the motion for a new trial. The court found that the perjury committed was on the motion for the new trial. The testimony on this question was directly in conflict, and the only person authorized by law to decide the question is the trial judge who hears the witnesses and passes upon the conflicting evidence. In passing upon this question, the court must exercise its sound discretion; and the ease should be clear to justify an appellate court in reversing the judgment for an abuse of that discretion. We find this assignment to be without merit.

The important question is raised in the second assignment, viz.: “Does the sale of intoxicating liquor subject the seller to indictment for conspiracy?” The question, as propounded, was perhaps intended to raise the broad question: “Does the sale of intoxicating liquor in any case, subject the seller to an indictment for conspiracy?” The situation as disclosed by this record is not the same as it was in the ease of Norris v. United States (C. C. A.) 34 F.(2d) 839. There we held that the sale of liquor which involved such transportation as is necessary to effect delivery to the purchaser does not subject the purchaser to indictment for conspiracy to transport. At the same time, we said, in substance, that we could conceive of a set of facts, which, if established, would sustain such an indictment, notwithstanding the arrangement existed between the seller and buyer. If the question were directly involved here, we would hold, consistently with the Norris decision, that the mere sale of intoxicating liquor, not associated with incidents giving the transaction a breadth greater than a mere sale, does not subject the seller to an indictment for conspiracy. It would appear that in such restricted case where the buyer does not eommit a substantive crime, as the Supreme Court has held, he is not guilty of a conspiracy to commit that'crime. As the sole substantive offense is that of the seller, it is hard to conceive how an interposed transaction of sale, not associated with outside incidents, could constitute conspiracy. The real question before the court is whether this case involves, not a conspiracy arising from the mere sale, but involves a transaction between seller and buyer in which there is something more than a mere sale, thus falling within what we conceived in the Norris Case might be a set of facts, which, if established, would sustain an indictment for a conspiracy between the seller and buyer.

We are of opinion that this case, as made by the evidence, distinguished from the case as made by the indictment, is sufficient to sustain the conviction. The buyer here was something more than the buyer in an ordinary ease, who buys liquor for his own personal use, which is not forbidden by the law. Berger was a retail bootlegger, and appears to have arranged with the seller, who was a wholesale bootlegger, for the sale and purchase of liquor openly intended by the buyer for resale in illicit traffic. The buyer was broke financially, and the seller, by extending credit, knowingly set him up in the illicit business. R. 25, 26. There was also in the case the continued business on a large scale on credit, indicating an intended illicit resale, and, when the buyer was held up in one of the communities in which he was operating, he resorted to the seller for protection, which protection the seller promised and apparently succeeded in effecting. It is not to be doubted that a conspiracy may lie between the buyer and the seller for the disposition or resale of the liquors which are the subject of the original transaction.

In view of the faets as disclosed by the record, we think the second assignment should also be overruled. The judgment is therefore affirmed.


author: SAWTELLE, Circuit Judge.

text:
    DEAN v. UNITED STATES.

    No. 6350.
    Circuit Court of Appeals, Ninth Circuit.
    Aug. 10, 1931.

      S. J. Bischoff, of Portland, Or., for appellant.
    George Neuner, U. S. Atty., of Portland, Or.
    Before RUDKIN, WILBUR, and SAW-TELLE, Circuit Judges.

       Rehearing denied Oct. 13, 1931.

   SAWTELLE, Circuit Judge.

This is an appeal from a conviction on two counts of an indictment charging the appellant with knowingly and fraudulently concealing certain assets, to wit, a diamond ring and a diamond stickpin, valued at approximately $1,500-, from his trustee in bankruptcy, and making a false oath in connection with his schedule of assets, in that he failed to include therein the aforesaid ring and stickpin. Appellant’s motion for a directed verdict, was granted as to another count charging the fraudulent concealment or transfer of assets of a bankrupt corporation, the Charles J. Dean, M. D., Inc.

The second and third counts, upon which conviction was had, were drawn under subdivisions 1 and 2, respectively, of title 11 USCA § 52(b), and the first count under subdivision 6. The material parts of the act are as follows:

“A person shall be punished * * * upon conviction of the offense of having knowingly and fraudulently * * * (1) concealed from the * * * trustee * * * any property belonging to the estate of a bankrupt; or (2) made a false oath or account in, or in relation to any proceeding in bankruptcy; or * * * . (6) having' been an officer or agent of any person or corporation, and in contemplation of the bankruptcy of such person or corporation, or with intent to defeat the operation of this title, concealed or transferred any of the property of the debtor.” ,

The main issue is the ownership of the articles of jewelry in question, the government contending they were the property of the appellant, and the appellant contending he gave them to his wife about seven months prior to filing his petition in bankruptcy. The numerous assignments of error relate chiefly to the joinder of the several counts in the indictment; rulings on the admission of evidence; refusal of motion for directed verdict; and refusal to give certain requested instructions.

The first count charged that appellant, while president of Charles J. Dean, M. D., Inc., in contemplation of bankruptcy, and for the purpose of concealing the assets of the corporation, transferred a note and mortgage of the corporation to a corporation which had been dissolved. Appellant moved to quash the indictment on the ground of mis-joinder and to require the government to elect whether it would go to trial on count 1 or on counts 2 and 3, which motions were denied.

Appellant filed his petition in bankruptcy and schedule of assets on February 3, 1928. For several years prior thereto he had been the owner of the ring and stickpin in controversy. In July, 1927, he married his present wife. Both he and his wife testified that they had become engaged in the spring of 1927; that at that time appellant promised to give the jewelry to her; that he did so on the night of their marriage; that it was their intention to have the diamonds remounted into a dinner ring suitable to be worn by a woman, but this was not done because the cost of resetting was prohibitive at the time; that appellant had possession of, and continued to wear, the ring and stickpin after their marriage and up until the latter part of January, 1928; that on January 26,1928, a verdict was returned against appellant in a civil suit in the state court, and on that day he returned the jewelry to the possession of his wife. The testimony of these witnesses as to their intention of having the diamonds remounted was corroborated to some extent by that of jewelers whom they had interviewed for that purpose. But the jewelers were unable to fix the date at which the conversation took place, except that it was after the marriage. A witness for the government testified that the appellant wore the ring and stickpin but a week before filing his petition in bankruptcy, and this is admitted by appellant. It is true that proof of possession merely raised a presumption of ownership. But the uneontradicted testimony of the witness for the government that the appellant wore the ring and stickpin within a week of filing his petition in bankruptcy, the admission of the appellant and his wife that appellant had possession of and wore the jewelry after the time of the alleged gift in'July, and the admitted fact that appellant did not actually return possession of .the jewelry to his wife until the day a judgment was rendered against him in the civil suit, which was but a week before filing the petition in bankruptcy, together with the other facts proved, were sufficient to justify the jury in finding, as they must have found, that the alleged gift to the wife was not made as claimed. The issue as to the actual ownership of the articles, or as to the date when the gift was in fact made, if at all, was clearly for the exclusive determination of the jury, from their consideration of the testimony as a whole and the credibility to be accorded the witnesses before them.

Appellant contends that count 1 was improperly joined with counts 2 and 3, because the charges did not arise out of the same transaction, nor were they connected together. The statute permitting the joinder of counts in an indictment is as follows: “When there are several charges against any person for the same act or transaction, or for two or more acts or transactions connected together, or for two or more acts or transactions of the same class of crimes or offenses, which may be properly joined, instead of having several indictments the whole may be joined in one indictment in separate counts; and if two or more indictments are found in such eases, the court may order them to be consolidated. (R. S. § 1024).” 18 USCA § 557.

As said by the court in United States v. Jones (D. C.) 69 F. 973, 980: “There are three separate subdivisions in the statute, under either of which authority is given to unite several counts in the same indictment: (1) When there are several charges against any person for the same act or transaction; (2) when there are several charges against any person for two or more acts or transactions connected together; (3) when there are several charges against any person for two or more acts or transactions of the same class of crimes or offenses.” See, also, Foster v. United States (C. C. A. 9) 11 F.(2d) 100.

Manifestly the indictment here charged “acts or transactions of the same class of crimes or offenses.” The various offenses in violation of the act are included in the same section or paragraph, and are punishable by the same sentence.

It is unnecessary to consider at length the merits, per se, of assignments of error Nos. 1 and 2, which set forth that the court erred in overruling defendant’s motion to quash and motion to elect, since, if any error was committed, it was subsequently cured by the withdrawal of count 1 from the consideration of the jury.

We may, however, in passing, eall attention to the ease of Williams v. United States, 168 U. S. 382, 390, 391, 18 S. Ct. 92, 95, 42 L. Ed. 509, in which the Supreme Court used the following language:

“The accused having been charged with different acts or transactions 'of the same class of crimes or offenses,’ it is scarcely necessary to say that the transactions referred to in the indictments, being of the same class of crimes, could properly — that is, consistently with the essential principles of criminal law — be joined in one indictment against a single defendant without embarrassing him or confounding him in his defense. Pointer v. U. S., 151 U. S. 396, 400, 14 S. Ct. 410 [38 L. Ed. 208]. * * *
“Nothing in the record shows that the consolidation of these cases worked or could have worked any prejudice to the defendant.”

See, also, Dolan et al. v. United States (C. C. A.) 133 F. 440, 446, 447, and Olson v. United States (C. C. A.) 133 F. 849, 851, 852.

Furthermore, the language of the court, in instructing the jury to find the defendant not guilty as to count 1, was explicit, and we must assume that the instruction was regarded by the jurors: “In determining the questions submitted to you under Counts 2 and 3, you will disregard any impressions you have as to the guilt or innocence of the defendant on the charge preferred in Count 1. You will determine the questions submitted to you under Counts 2 and 3 as if there were no Count 1 in the indictment.”

In Beaux Arts Dresses, Inc., et al. v. United States (C. C. A. 2) 9 F.(2d) 531, 533, the court used the following language: “Since the defendant below has been acquitted of sending the false statement through the mails in furtherance of a scheme to defraud, we must assume such finding by the jurors represents a disbelief by them of the charge.”

It is true in that case the court referred to the evidence admitted under the count upon which the defendant had been acquitted, and held that such evidence, which was claimed to be prejudicial, was competent to prove the guilt of the defendant of the charge of which he was convicted. But the general principle of law above quoted remains the same.

In the ease of Weinhandler v. United States (C. C. A. 2) 20 F.(2d) 359, 362, the court, citing the Beaux Arts Dresses Case, supra, said: “Error is alleged in the mis-joinder of the counts of the indictment charging embezzlement of the blankets with the embezzlement of .the money, but the acquittal by the jury of the counts dealing with the embezzlement of the blankets cured the misjoinder, if any.” ■

Certiorari in the Weinhandler Case, supra, was refused by the Supreme Court, 275 U. S. 554, 48 S. Ct. 116, 72 L. Ed. 423.

Assignments 3 and 4 assert that the court erred in denying defendant’s motions to dismiss the indictment and for a directed verdict. It is contended that, at the time the petition was filed’ and the schedules verified, the legal title to the property in question was not in the bankrupt, and had hot been for some time theretofore; and that, further, to establish the offense set forth in the first count, it must appear that the property belonged to the bankrupt’s estate, and that the transfer was merely “a temporary expedient to place the property beyond the reach of the trustee, the title to be resumed by the bankrupt as soon as prudence will permit.” In other words, it is urged that it must be proved that a secret trust exists in his favor, and that his wife is under agreement, express or implied, to reconvey or return the property to him when the. danger of attack by creditors has passed.

Even if we assume this to be a correct statement of the law on the subject, we think that there was ample evidence from which the jury might have concluded that the defendant was guilty of concealing the property mentioned in count 2 of the indictment.

We find no error in the court’s overruling the defendant’s objection to the testimony referred to in assignment 5, nor do we think the court erred in sustaining the government’s objections to the testimony referred to in assignments 6, 7, 8, and 9, or in refusing, on its own motion, to permit the defendant to ask the question referred to in assignment 10.

Manifestly, the question of whether or not the trustees filed any complaint against the defendant, charging the commission of any offense against the Bankruptcy Act, the question of whether or not there had come to the referee’s knowledge or attention any circumstances or facts indicating that a criminal offense had been committed by the bankrupt, whether or not the referee filed any complaint or made any report to the United States Attorney with reference to any such offenses, and the report of the findings of fact and conclusions of law of the special, master and the circumstances under which such report was made, were irrelevant and immaterial.

The requested instructions forming the subjects of assignments 11 and 12, in so far as they were proper, were substantially given by the court. The instructions as given were full and explicit, and it seems to us that the jury could not have failed to understand them. With reference to the ownership of the jewelry, the court said:

“You are instructed that even if you should find that the intended gift of the jewelry from the defendant to his wife was not legally consummated, that of itself would not warrant a verdict of guilty. If you find from the evidence"that the defendant believed that he had made a consummated gift to his wife, and because of such belief omitted to list the jewelry in his schedules, the defendant would be entitled to a-verdict even if his belief was erroneous.
“If a gift by a husband to his wife has been consummated by actual delivery, it is not required that the wife should subsequently continue in the sole possession of the property. Mere possession and use of the property by the husband does not divest the wife of title.”

As regards assignments 13 and 14, we find that the court fully and fairly gave instructions on the question of reasonable doubt and the presumption of innocence, and we think that the instructions correctly state the law. Egan v. United States, 55 App. D. C. 306, 5 F.(2d) 267, 268, citing Allen v. United States, 164 U. S. 492, 17 S. Ct. 154, 41 L. Ed. 528. This being so, the trial court was not required to employ the language used by counsel in the requested instructions.

In his opening brief, on pages 80, 81, appellant makes the following concession : “If the delivery to his wife was merely a sham, and the delivery was made with the understanding that she was to hold the articles for the defendant merely, that he would have the right to demand them back as his own at any time, the defendant would be guilty of concealment, for the wife would in law be merely the bailee for the bankrupt.”

Not only was there evidence sufficient to justify the court in submitting the case to the jury, but there was sufficient to justify a finding of “sham,” and undoubtedly the jury did so find.

Mrs. Dean’s evidence was contradictory, and Dean’s testimony lacks candor and consistency. The jury evidently decided that he had never given her the jewelry at all. Having heard the testimony and being required to pass upon its credibility, it must be assumed that the jury gave it the weight to which it was entitled.

We find no error in the record, and the judgment is affirmed.

WILBUR, Circuit Judge, Concurs.


author: GARDNER, Circuit Judge.

text:
    NEW YORK TITLE & MORTGAGE CO. v. FIRST NAT. BANK OF KANSAS CITY, MO., et al.
    No. 9100.
    Circuit Court of Appeals, Eighth Circuit.
    Aug. 13, 1931.
    George S. Parsons, of New York City, and Henry S. Conrad, of Kansas City, Mo. (L. E. Durham and Hale Houts, both of Kansas City, Mo., on the brief), for appellant.
    Paul R. Stinson, of Kansas City, Mo. (Phillips, Trammell, Chizum & Price and Samuels, Foster, Brown & McGee, all of Port Worth, Tex., I. P. Ryland, Arthur Mag, Roy B. Thomson, and Leslie C. Thurman, all of Kansas City, Mo., on the brief), for appellees.
    Before STONE and GARDNER, Circuit Judges, and MARTINEAU, District Judge.
   GARDNER, Circuit Judge.

In this ease, the appellant, as plaintiff in the lower court, brought suit against the Pirst National Bank of Kansas City, Mo., and the Parm & Home Savings & Loan Association of Nevada, Mo., on two causes of action. The New York Title & Mortgage Company is a corporation engaged in the' business of insuring titles for compensation. The parties will be referred to as they appeared in the lower court.

Plaintiff issued two title insurance policies to the Parm & Home Savings & Loan Association, guaranteeing the loan company against loss by reason of defects in title of the mortgagors to the real estate described in the mortgages or deeds of trust involved in this suit. The mortgages and the notes, one for $40,000 and the other for $8,000, which they were given to secure, were in fact forged. When the forgeries were discovered, the plaintiff, on demand, reimbursed the loan company for the money advanced on the loans, with certain immaterial reductions. The policies contained provision for sub-rogation, in the event of payment by the plaintiff.

In these transactions, one Charles E. Smith, operating as a loan broker in Port Worth, Tex., submitted to the loan company applications for these two loans, the applications being submitted separately and at different times. The first application purported to be signed by D. W. Smith, who was said to be the father of Charles E. Smith, but who, in fact, was a fictitious person. The second application purported to be signed by Charles W. Poe, who was also a fictitious person. The property was inspected by the loan company and found to be satisfactory as security for the loans. Smith agreed to furnish title insurance to protect the loans, and this he did in each case by securing a policy from, the plaintiff. In securing the policies he furnished plaintiff with the purported opinion or certificate of a title examiner, to the effect that applicant had good title. This Smith accomplished by forging the name of plaintiff’s approved attorney to the certificate of title. The applications so prepared were presented to and approved by the loan company, and cheeks were drawn and delivered, to its local agent at Port Worth, Tex., the cheeks in each case being drawn jointly to its agent and the supposed borrower. On receipt of the checks, the local agent for the loan company, for the purpose of enabling Smith to clear title to certain of the property, procure the title insurance, and make delivery to the borrower, indorsed and delivered them to him without securing the indorsement of the borrower. Smith then forged the names of the supposed borrowers on the back of the cheeks, deposited them in his own account in banks in Port Worth, Tex., and converted the proceeds. These cheeks were drawn on the defendant Pirst National Bank of Kansas City, and, after passing through several banks, were ultimately paid by the defendant bank, and charged to the loan company’s account. The loan company is a nominal party, no relief being sought as against it, and the real controversy is between the plaintiff and the defendant bank.

Plaintiff bottoms its right of recovery on the equitable principles of subrogation, and urges that the defendant bank was required, at its peril, to pay the loan company’s cheeks only upon valid indorsements, and that its payment of the two checks in question, upon forged indorsements, rendered it liable to the loan company, and that these erroneous payments were the proximate cause of plaintiff’s loss.

The lower court found, among other things, that the bank, in paying the checks, was guilty of no negligence; that Charles E. Smith was plaintiff’s agent in the transactions, and that the frauds committed by him were so committed within the scope of his employment; that plaintiff was negligent in the transactions in the issuance of its title policies, in that it did not see. the property described in the mortgages, the supposed borrower or the lender, in that it saw no abstract of title, obtained no attorney’s preliminary opinion, and did not see nor examine the purported original mortgages or trust deeds; that the attorney’s certificates attached to the applications, purporting to bear the signature of Marvin H. Brown, were obviously forgeries of Brown’s signature, which would have been revealed if plaintiff had made examination and compared them with the genuine signatures on file in its office; that these acts of negligence, among many others found by the court, ‘ individually and collectively contributed to the loss of the loan company and to the loss of the plaintiff; that the primary, direct, and proximate cause of the loan company’s loss was the forgery of the application, the fraudulent alterations of the preliminary opinions, the forgery of the mortgages, notes, and other loan papers by Smith, and that the acts of the bank in honoring and paying the cheeks were not the proximate cause of the loss. The court also found that the loan company had been negligent in these transactions; but, in the view we take of the issues, it will not be necessary to consider the details of the alleged acts of negligence of the loan company found by the lower court.

There can be no doubt of the general rule of law that the implied contract between a bank and its depositor is that the bank will pay the depositor’s cheeks from his deposits to the persons to whom he orders payments made, and the corollary of this rule is likewise sound, that the bank will not pay the checks of its depositor upon forged indorsement of the payee’s name. This was an obligation which the bank owed the loan company because of its contract with that company, and in this connection it is to be observed that there are involved in these transactions two independent contracts, the contract between the loan company and the bank, just adverted to, and the contract between the loan company and the plaintiff. Plaintiff’s payment to the loan company was a discharge of its primary contract liability.

Here, then, we have separate liabilities growing out of separate contracts, the liability of the bank to the loan company, because, in violation of its contract, the bank paid forged cheeks, and the liability of the insurance company, because of its contract guaranteeing titles. Both of these liabilities were primary liabilities to the loan company. The accidental fact that the fraud of Smith involved both the procuring of the loans upon property, the title to which was defective, and the forging of cheeks of the loan company upon the bank, would not seem to be material. The plaintiff paid the loan company only what it contracted primarily to do, but now, retaining the premiums or benefit of its contract, it seeks reimbursement from the bank, on the theory that the bank, under a wholly separate and independent contract, was liable to the loan company for having paid cheeks on forged indorsements. The plaintiff here did not insure against the forgery of indorsements on these eheeks, but its contract was confined to the titles of the purported borrowers.

It is doubtful whether the mere faet that the loan company may have had two sources to which it might look for reimbursement would confer on the plaintiff the right of subrogation as to one of such sources. If we assume that neither the plaintiff nor the bank was the wrongdoer, but, by independent contract obligation, each was liable to the loan company, then the satisfaction of such primary liability by the plaintiff would not give rise to a right to recover against the bank under the doctrine of subrogation, the bank not being a wrongdoer. United States Fidelity & Guaranty Co. v. Wooldridge, 268 U. S. 234, 45 S. Ct. 489, 69 L. Ed. 932, 40 A. L. R. 1094; Underwood v. Metropolitan Natl. Bank, 144 U. S. 669, 12 S. Ct. 784, 36 L. Ed. 586; Plate Glass Underwriters’ Mut. Ins. Co. v. Ridgewood Realty Co., 219 Mo. App. 186, 269 S. W. 659.

But if there were any doubt as to the soundness of this position, we think it clear that plaintiff is not entitled to invoke the remedy of subrogation, because that right is an equitable one, and is applicable in cases in which one party is required to pay a debt for which another is primarily answerable, and which, in equity and good conscience, ought to be discharged by the latter. It is the method which equity employs to require the payment of the debt by him who in good conscience ought to pay it, and to relieve him whom none but the creditor could ask to pay. It cannot, as a matter of right, be invoked in all eases without regard to circumstances, but only in cases in which justice demands its application, and the rights of one asking subrogation must have a greater equity than those who oppose him. As said by this court' in American Surety Co. v. Citizens’ National Bank, 294 F. 609, 616: “The right of sub-rogation is an equitable right, and where equities are equal the right does not exist and there can be no relief.”

It is to be borne in mind that, not only did the court find that the defendant bank was guilty of no negligence in the transactions involved, but the bill of complaint, as amended, contained no allegations charging the defendant bank with such negligence. The primary cause of plaintiff’s loss was the forgeries committed by Smith, and we think the case is ruled by National Surety Co. v. Arosin (C. C. A.) 198 F. 605, 609, and National Surety Co. v. State Savings Bank (C. C. A.) 156 F. 21, 14 L. R. A. (N. S.) 155, 13 Ann. Cas. 421.

In the Arosin Case, under the doctrine of subrogation, it was sought to hold the bank because it had paid out county funds on instruments forged by the county treasurer. The instruments were spurious, and the in-dorsements thereon were forgeries. The lower court held that there was no negligence on the part of the bank, and for that reason the plaintiff was not entitled to recover, and on this ground this court sustained the lower court. In the course of the opinion in that ease, it is, among other things, said:

“The ease as to the other defendants and appellees is this: Bourne made certain false redemption warrants in much the same way that he manufactured the refunding orders. The names inserted in these warrants were with two exceptions fictitious. He wrote the names of the fictitious persons on the backs of the warrants, presented them to the county treasurer, Arosin, defendant and appel-lee, who paid them. This payment was sometimes made by the treasurer in cash, but more frequently by cheek to the order of the fictitious person on the defendant and appellee the National German-Ameriean Bank which was a depository of the county funds. When the payment was made by cheek, Bourne indorsed the name of the fictitious payee thereon and collected the cheek, sometimes by presenting it directly to the National German-Ameriean Bank, but more frequently by presenting it to some other bank. In all cases, however, the National German-Ameriean Bank eventually paid the checks and charged the amount thereof to the county. * * *
“It seeks to hold the National German-Ameriean Bank on the ground that it wrongfully paid out money of the county on forged indorsements.
“The same rule, however, must be applied to these three defendants as was applied to the State Savings Bank. The primary cause of the loss was the manufacture by Bourne of the false warrants and orders. For his official misconduct the plaintiff was liable. The evidence does not show any negligence on the part either of Arosin or of the National- German-Ameriean Bank. There can be therefore no recovery against either of them.”

Here, as in National Surety Co. v. Aro-sin, supra, the bank paid the checks on which the indorsements were forged, without negligence, and the circumstances surrounding the transactions involved do not give rise to any superior equities in- favor of the plaintiff; nor can it be said that in good conscience the defendant bank ought to stand the loss.

Many other questions have been elaborately briefed and ably presented by counsel for either party, but, in our view, the equities in favor of the defendant bank constitute an insuperable barrier to plaintiff’s right of recovery, and we refrain from discussing the many other questions presented.

The judgment of the lower court is therefore affirmed.


author: LINDLEY, District Judge.

text:
    J. D. WALLACE &. CO. v. PORTABLE POWER TOOL CORPORATION.
    No. 4475.
    Circuit Court of Appeals, Seventh Circuit.
    June 16, 1931.
    Rehearing Denied Sept. 22, 1931.
    Fred M. Davis, Wm. E. Anderson, and Wm. R. Rummler, all of Chicago, Ill., for appellant.
    Walter F. Murray and Frank L. Zugelter, both of Cincinnati, Ohio, and George E. Waldo, of Chicago, Ill., for appellee.
    Before ALSCHULER and SPARKS, Circuit Judges, and LINDLEY, District Judge.
   LINDLEY, District Judge.

Appellant appeals from a decree dismissing its bill of complaint for infringement of letters patent No. 1,314,291 issued to- Wallace. The district court found that appel-lee does not infringe.

Wallace described and claimed a combination of elements intended to produce, over the prior art, an improved circular sawing device and accompanying appliances. Claim 12, said to be typical of all claims in suit, is as follows: “The combination with a saw-table having a slot and a circular saw projecting through the slot, of a guard substantially concentric with the saw and also projecting through the slot and presenting a nose normally disposed for engaging the stop in advance of the saw, means for simultaneously adjusting the positions of the axis of the saw and of the guard with respect to the table, and means for normally maintaining the nose of the guard in its position regardless of the said adjustment.”

Thus Wallace adopted the teachings of the art in mounting a circular saw upon a fixed table, having a slot in which the saw moved as it worked, covered by an automatic guard. He provided means for tilting the saw in various angles, so that the work could be performed satisfactorily in the variously tilted positions. Other patentees (such as Grosvenor No. 96,224) had previously provided for similarly tilting the saw, while others (such as Evans No. 1,163,517) had provided efficient automatic guards. It remained for Wallace to unite these two functions in one combination. Apparently he accomplished nothing more, unless it be the additional advantage of a narrow slot. Consequently, if we are to concede validity to his patent, it follows that in view of the scope of the prior art his invention must be narrowly limited to the specific device described and claimed.

Wallace, aeording to his specifications, was attempting to improve circular saws operating on fixed tables by making them adjustable and providing for them automatic guards. The statements in the patent concerning the difficulty in tilting the table and, in proper lighting of the work when such tilting occurs, the limitation upon the size of the material to be handled upon a saw table and the displacement of waste by the guard after the material has moved past the saw disc, are applicable not to a comparatively light portable saw such as appellee’s, but to one operating upon and through a slotted eompara-tively heavy fixed table. In view of the operation described in the patent by the saw-table specified in the claims, the patentee manifestly had in mind a stationary table upon which the material was placed for manual movement and manipulation, a stationary base upon which material could be supported, advanced toward, and fed into, the saw. Wallace’s file wrapper contents indicate that the mere mounting of an automatic guard, shown in the prior art, was not sufficient to achieve invention, but that he relied upon being able to achieve tilting, likewise old, while using a comparatively narrow slot, a result he claimed not possible under the teachings of the prior art. Such narrow slot had the advantage of additional safety in the operation of a saw upon a supporting table, — an advantage that does not apply to the portable type, such as defendant’s device which runs over the material. We believe, therefore, that Wallace’s invention, if any, lay in the specific combination of an automatically guarded saw, affixed to and operating upon a substantial supporting table, operating through a narrow slot therein, capable of adjustment in various angles through tilting means provided for that purpose. The language of the court in Majestic Electric Appliance Co. v. Hicks, 24 F.(2d) 165, 166, is pertinent in this connection. There we said: “In brief, all the elements of the appellee’s combination are found in the prior art. What he added was a skillful arrangement of the elements, an increase in the size and number of members of the hollow electric heating element, an improvement in the form of the reflector and the back plate, all of which conduced to the efficiency of his heater, made it acceptable to the trade, and resulted in its extensive adoption for heating purposes. But in view of the prior art it must be held that he is entitled to but a narrow construction of his claims, and is substantially limited to his details of construction.” If Wallace’s claims are not so limited, we would be forced to conclude that they are invalid as any advance upon the prior art, and that they do not patentably distinguish the device described from the prior art.

Appellee’s portable saw, alleged to infringe, is manufactured under and in accordance with the Billingsley reissue patent No. 17,087 which is a part of the art covering portable species of power sawing and cutting devices. Presumptively this patent is valid and does not infringe, and the burden of proof was upon appellant to overcome that presumption. Fore Electrical Co. et al. v. St. Louis Electrical Works et al., 280 F. 49 (C. C. A. 8); Boyd v. Tool Co., 158 U. S. 260, 15 S. Ct. 837, 39 L. Ed. 973.

Examining the facts in this connection, we find that appellant’s patent is within the art covering heavy stationary sawing devices, and "appellee’s within that covering light portable types. In the first, the saw is fixed to a heavy table upon whieh the work advances to the saw. In the second, an artisan pushes the saw over stationary material, usually a part of a larger structure, such as a floor. Such portable devices make use of no slotted saw tables or material-bearing support. In them the saw is placed upon and operates through a wide slotted foot base whieh is held parallel to and upon the material and slides over the latter as the work progresses. The heavy table type supports the material upon the stationary table, and the lumber advances thereon. The portable device rests and advances upon the material, whieh does not change position.

Finding as we do that the claims of the patent relied upon are limited, as above indicated, and that appellee’s' device does not cerne within the teachings thereof, but rather within the teachings of the presumptively valid Billingsley patent above referred to, it follows that there is no infringement, and that the decree of the district court should be, and is, affirmed.


author: HUTCHESON, Circuit Judge.

text:
    SOUTH FLORIDA LUMBER MILLS v. BREUCHAUD.
    No. 6080.
    Circuit Court of Appeals, Fifth Circuit.
    June 30, 1931.
    Rehearing Denied Aug. 5, 1931.
    N. B. K. Pettingill and Howard P. Macfarlane, both of Tampa, Fla. (Macfarlane, Pettingill, Macfarlane & Fowler, of Tampa, Fla., of counsel), for appellant.
    G. E. Mabry, O. K. Reaves, and Morris E. White, all of Tampa, Fla., and Geo. W. Scofield, of Inverness, Fla. (E. C. Johnson and Mabry, Reaves & White, all of Tampa, Fla., of counsel), for appellee..
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.
   HUTCHESON, Circuit Judge.

Appellant, plaintiff below, brought its suit to charge defendant on an oral promise to pay the first maturing of several notes executed by Breuchaud as president of Inverness Company, dated November 18, 1926, and due January 1,1928,1929, et seq. Plaintiff offered the note and the oral testimony of Rankin and Fechtig, officers and owners of the plaintiff company. It proved that during the land boom in Florida plaintiff through Fechtig had sold Inverness Company, Breu-ehaud, president and owner, a tract of land there subject tó a first mortgage for $25,000, taking back notes secured by second mortgage on the land and indorsed by Breuchaud for $250,000; that, the boom breaking, the fictitious values suddenly collapsing, Breu-chaud, realizing that he had tremendously overbought himself, commenced' negotiations to bring the notes into relation to the real value of the property purchased.

Rankin testified, in substance: That at a meeting in New York City between him, Fechtig, and Breuchaud, Breuchaud demanded that the obligation on the notes be cut in half. “Also we were to allow him to leave his name off the new notes. The reason for his asking this was he wanted to borrow money at the Bank and to be able to make a statement to the bank that he was not liable on the notes. If he were on the notes he could not make the statement. He offered me personally if I would let him have the notes that he endorsed, he would pay the new notes. He told me that time and time again. He said that he would not have to show the $150,-000 liability to the bank though he was going to pay it. His words were “If you will relieve me of my endorsement on the $250,-000 and accept my personal promise to pay these new notes, it will relieve me from having to put them in my statement to the bank and will enable me to borrow money that I need to borrow.” Further testifying, he said: “At the time the notes for $250,000 were surrendered to him, he (Breuchaud) did say that he would pay "the $150,000 worth of notes that were taken in lieu. But this was not the reason of the exchange. I was induced to make the exchange by Dr. Fechtig who was a long time friend of Breuchaud’s; if it had not been for Feehtig’s insistence I would never have consented. In making it 1 relied upon Breuehaud’s promise to pay the $150,000 of notes but that promise was not the inducement for the exchange because I already had his endorsement on the $250,-000. Dr. Fechtig told me that he knew Breu-ehaud would carry out what he had agreed to do as he was a man of honor. Breuchaud said he would be embarrassed by showing this liability in going to the Bank. He also said he wanted to go to the Bank to get the money to pay the $25,000 which was the note that he paid on November 18, 1926, on the first mortgage. He said that though he agreed to pay the $150,000 he would not have to show that to the Bank as that was the kind of obligation that did not have to go into the bank statement.”

Dr. Fechtig testified: “The agreement was that Mr. Breuchaud was to be released from his personal warranty because he said he could not go to the bank with all those signatures out and borrow any money. Mr. Rankin turned over the old notes and Mr. Breuchaud again stated that he would pay the amount of the new ones. The only reason Mr. Breuchaud said his obligation should be reduced and his signature released was that he could not go to the bank and get the money with his signature on $250,000 worth of notes. He said if Rankin would make this arrangement he would pay these notes himself. There was nothing said in conversation about paying the first mortgage or giving South Florida Lmbr. Mills other mortgages.” He also testified that, after Breu-ehaud said he would pay these notes, the papers were exchanged, new notes were given, and the old notes surrendered.

Defendant proved by Rankin and by Fechtig that, after the conversation with Breuchaud had taken place in New York, they concluded to make substantially the concession first required by defendant that the notes be reduced in amount and Breu-chaud released from liability on them, and that Rankin, made out a slip which, among other things, contained these words, “$25,-000 a year; 7%; Release from notes; $25,-000 mortgage 7% ; $8000 on garage; $4000 on three houses; $2500 on other two houses”; that the matters -were to be finally closed in Florida.

These negotiations, begun in New York, concluded in Florida, resulted in the execution at Tampa on November 18, 1926, of the following papers:

An indenture which, after describing the property and reciting the execution of the original notes for $250,000, provided that the clause in the mortgage with reference to these notes should be modified to show $150,-000 in lieu of $250,000; that new notes with new terms should be substituted for the old notes. It further provided that interest should be paid to January 1, 1927, on the original $250,000 of notes, and that the proceeds of the first note, due January 1, 1927, were to be applied to the discharge of the first mortgage note, and in lieu of that note, the proceeds of which were to be so used, Inverness would make six other notes aggregating the sum of $25,000 secured on other property owned by Inverness Company.

A letter from defendant to plaintiff agreeing that the first mortgage was to be paid off, not on January 1, 1927, as stated in the contract, but immediately, and the first maturing note was to be surrendered at the time, and then the Inverness notes for $250,000 to be surrendered upon delivery of the smaller notes called for in the agreement.

Also a letter from defendant to plaintiff containing his personal agreement to furnish the abstracts securing the new small notes, to deliver the insurance policies paid in advance for three years, and to be personally responsible for the payment of interest on the $250,000 on January 1,1927. The defendant, to show plaintiff’s own understanding that not Breuehaud, but Inverness alone, was responsible on the notes, offered a letter from Rankin to Inverness, dated December 8,1927, demanding payment of the notes, and a telegram from Rankin reading in part, “South Florida Lbr. Mills asked only assurance from Breuehaud that adjusted payments should be met which assurance was given in consideration of their reducing the payments and relieving him from personal liability.”

At the conclusion of its proof the defendant filed its motion to strike the testimony of plaintiff’s witnesses that the defendant had orally promised to pay, because (1) the parties having finally integrated their negotia^-tions into writing, these writings constituted their agreement; (2) because the testimony presented an effort in violation of the statute of frauds, section 5779, Comp. Gen. Laws Fla. 1927 (a) to charge defendant with the debt and default of another (b) to charge him upon an agreement not to be performed within one year from its making. The motion was sustained upon the first ground, and the testimony stricken.

Thereafter plaintiff, in support of its position that the writings were not constitutive of the entire agreement, offered by Rankin, its president, to orally explain and limit the purpose and effect of the Breuehaud letters executed contemporaneously with and as a part of the contract of November 18, 1926. Defendant objecting, the offer was properly rejected. Cargill v. Swartwood, 159 Minn. 1, 198 N. W. 586; Fentress v. Steele, 110 Va. 578, 66 S. E. 870; Chute Co. v. Latta, 123 Minn. 69, 142 N. W. 1048; Note 70 A. L. R. page 754. Thereupon the witness testified that he had refused to accept the documents executed by the plaintiff and the Inverness Company until the two letters had been written and executed by Breuchaud. This concluding the testimony, the court upon motion instructed a verdict for the defendant. From the judgment following, this appeal is prosecuted. Appellant here vigorously presents that the issue tendered by its pleadings and its evidence, that defendant orally promised to pay the note, should have been sent to the jury; that neither is the case one within the statute of frauds nor one of an attempt to orally impeach a written contract.

As to the statutory defense, it maintains that the promise sued on is direct and immediate, not collateral and mediate, Mein-rath Brokerage Co. v. Collins (C. C. A.) 298 F. 377; Cincinnati Traction Co. v. Cole et al. (C. C. A.) 258 F. 169, and that the fact of the delivery up by plaintiff of the original notes which defendant had indorsed constituted such performance on its part as to change the contract from an executory to a partly executed one, and therefore to take it out of the time section of the Florida statute. Wilson v. American Co. (C. C. A.) 33 F.(2d) 812, to which defendant makes reply: (1) If the claimed promise of Breuehaud has any import other than a mere moral assurance that he would see the debt paid, it was merely a collateral agreement; that Breuchaud’s saying of it, “though he agreed to pay it he would not have to show that to the Bank as that was the kind of obligation that did not have to go into p, bank statement,” was merely a collateral assurance that Inverness would pay it. (2) (a) That, if it was a direct obligation it was within the time section of the statute, McKeany v. Black, 117 Cal. 587, 49 P. 710; and that, while many authorities do hold that it is only to contracts still executory on both sides that the statute applies, this is not a correct statement of the law. 25 R. C. L. § 40, pages 463, 464; Page on Contracts, vol. 2, § 1295; Jackson Iron Co. v. Negaunee (C. C. A.) 65 F. 298; Mills v. Joiner, 20 Fla. 479. (b) Further that, conceding that part performance may serve sometimes to take this kind of promise out of the statute, it cannot do it here because the part performance claimed here is not referable, as the law requires, entirely to the oral contract. Cooper v. Colson, 66 N. J. Eq. 328, 58 A. 337, 105 Am. St. Rep. 660, 1 Ann. Cas. 997; Kratzer v. Day (C. C. A.) 12 F.(2d) 724; Broadway Hospital, etc., v. Decker, 47 Wash. 586, 92 P. 445; Horton v. Stegmyer (C. C. A.) 175 F. 756, 20 Ann. Cas. 1134.

As to the defense of parol variance, appellant says: That, while it is true enough that as between Inverness and plaintiff the whole contract was put in writing, such is not the case as between the defendant and plaintiff. That the evidence establishes that not one, but three, agreements were contemporaneously made: (1) An agreement between plaintiff and Inverness Company evidenced by the written contract of date November 18, 1926, changing the amount of the mortgage notes and providing for the discharge of the first mortgage and the execution by Inverness of the small notes secured on the other property; (2) an agreement between Breuehaud and plaintiff evidenced by the letters of November 18, 1926; (3) the oral contract sued on. That the first instrument effected a change and novation of the contract theretofore existing between Inverness and South Florida, the second and third effected changes in the contract between plaintiff and Breuchaud theretofore evidenced by Breuehaud’s indorsement on the $250,000 notes. That the oral contract being entirely independent of the other two, proof of it does not run counter to the rule. Cohn v. Dunn, 111 Conn. 342, 149 A. 851, 70 A. L. R. 740; Danielson v. Bank of Scandinavia, 201 Wis. 392, 230 N. W. 83, 70 A. L. R. 746; Atlanta Motor Co. v. Duncan (Tex. Civ. App.) 1 S.W.(2d) 749; Miller v. Shelby Co. (Tex. Civ. App.) 30 S. W.(2d) 668.

Appellee replies there were not three contracts, there was one; that there were indeed negotiations concerning the subject-matter in which many discussions were had, but that they were all integrated into one agreement providing for the reduction of the indebtedness and the better securing of the reduced amount; that this integration was accomplished by the agreements in-writing for the reduction in and the exchange of the notes, the bettering of the Security of the reduced principal by payment of the first mortgage and the giving by Inverness of additional land as security, and the better securing of the agreement to pay the interest on the existing indebtedness to January 1, 1927, by taking defendant’s written promise to pay it; that the documents and letters executed by Inverness, Breuchaud, and plaintiff on November 18, 1926, completely integrated all of the preliminary negotiations into one agreement between plaintiff, defendant, and Inverness, and thereafter constituted the contract, and that the oral evidence offered was wholly ineffective. Bryant v. Bryant, 295 Pa. 146, 144 A. 904; Support v. Singhi, 243 N. Y. 156, 153 N. E. 33; Milton v. Burton, 79 Fla. 266, 84 So. 147; Mitchill v. Lath, 247 N. Y. 377, 160 N. E. 646, 68 A. L. R. 239; 2 Williston on Contracts, § 631; 5 Wigmore, §§ 2425, 2426; 70 A. L. R. 752 et seq., though it was received without objection, Mears v. Smith, 199 Mass. 319, 85 N. E. 165; Butterick Pub. Co. v. Fisher, 203 Mass. 122, 89 N. E. 189, 190, 133 Am. St. Rep. 283; O’Malley v. Grady, 222 Mass. 202, 109 N. E. 829; Mitchill v. Lath, 247 N. Y. 377, 160 N. E. 646, 68 A. L. E. 240, especially as defendant raised the point in the trial court by motion to strike, Brady v. Nally, 151 N. Y. 258, 45 N. E. 547.

We agree with appellee that the statements attributed to Breuchaud have, if made as claimed, no contractual force; that this is not a ease, as appellant would have it appear, of an oral promise which, while relating to the subject-matter with which the main contract is concerned, is collateral to and independent of it and constitutes a separate contract binding defendant separately and immediately to plaintiff. It is a case where if the words relied on were uttered with contractual intent, they were uttered as a part of negotiations which in their final constitution took a different form, and therefore are not merely improvable, but if proved are wholly immaterial to the issue, for “a legal transaction when reduced to writing is now conceived of as constituted, not merely indisputably proved, by the writing.” 5 Wigmore, § 2426; Mears v. Smith, 199 Mass. 319, 85 N. E. 165; Milton v. Burton, 79 Fla. 266, 84 So. 147.

There is no difficulty whatever in stating the general principles controlling the decision of questions of the nature here presented. The books are full of oases illustrating the difficulty and uncertainty in result which spring from their attempted application. The whole matter is presented in an authoritative way in 5 Wigmore) § 2426, and excellently summarized, in 2 Williston on Contracts, § 631, p. 1221 et seq. while a note to Danielson v. Bank of Scandinavia, 70 A. L. R. 746, itself a well considered case, in an exhaustive and thorough way further interestingly discusses the matter.

It is settled law that under the rule applicable to a situation of this kind it was the duty of the trial court primarily to determine whether the matter sought to be orally proven has been integrated in the written agreement, by ascertaining from the conduct and language of the par-ties, and the surrounding circumstances, what was their intent. 5 Wigmore, § 2430. The difficulty arises in applying the rule.

Onó of the best statements of the rule, and the test for applying it is this from Bryant v. Bryant, 295 Pa. 146, 144 A. 904, 906; “It is undoubtedly true that, where it is conceded or proven that a writing does not properly or fully state the agreement between the parties upon any given point, the written provisions in regard thereto may be explained or supplemented, and -the true state of facts established by parol evidence. * * * If the terms of the covenant are put in a writing, complete within itself, and couched in such terms as to disclose a complete legal obligation, without any uncertainty as to the object or extent of the engagement, it-is conclusively presumed to represent the whole contract of the parties and the extent and manner of their undertaking. Gianni v. Russell, 281 Pa. 320, 126 A. 791. The test, to determine whether an alleged parol agreement, by which it is proposed to modify the expressed understanding, comes within the field embraced by the writing, is to compare the two and determine whether parties, situated as were the ones to the contract, would naturally and normally include the one in the other, if it were made. Wagner v. Marcus, 288 Pa. 579, 136 A. 847.” Bryant v. Bryant, supra.

Turning to. the facts of the ease in an effort to apply the rule to its solution, we easily reach the conclusion, in the light of the history of the negotiations, beginning in New York and concluding in Florida, of the demand of Breuchaud that he be released from his personal warranty so that he could borrow money from the bank, of the written memorandum made by Rankin, showing ““release from notes,” the insistence of Rankin that he would not let the trade go through except Breuchaud wrote the contractual letter of November 18,1926, of the telegram of Rankin, in which he declares that the agreement involved a release of Breuehaud’s personal liability, that the parties intended to embrace and did embrace, to integrate and did integrate in the writings 'of November 18 all of the legal and binding agreements which they desired to make.

We are the more confirmed in the view that the court below was right in refusing contractual import to the oral evidence of the plaintiff, for we think that, conceding all the legal effect which the language under the circumstances of its utterance could possibly carry, it amounts to no more than the moral assurance of plaintiff that he would see that the debt was paid, and that it was never intended by the parties to have any other or different effect.

To find a legal agreement fixing a direct and enforceable liability against Breuchaud upon facts of this kind would be to find that plaintiff and defendant had in effect agreed that the notes should be "indorsed with invisible ink, and to give effect to a conspiracy to deceive by arranging for a secret indebtedness to be concealed from creditors who would lend to him on the faith of a correct statement of his liabilities, but to be disclosed whenever necessary to defeat advances thus induced.

While our view that no enforceable agreement was ever made makes it unnecessary to determine whether the promise, if made, falls within the statute, we think we should say that it does, for, if what was done can be erected into a promise to pay, it was at most a collateral assurance or guaranty of the company’s payment, and the part performance relied upon to take it out of the statute, the surrender of the notes to Breuchaud, is referable not only nor even mainly to the oral promise' of Breuchaud, but was a necessary result of the carrying out of the agreement between the plaintiff and Inverness.

The judgment of the court below is affirmed.