author: CUSHMAN, District Judge.

text:
    MASON et al. v. SAMS, Superintendent of Indian School, etc.
    (District Court, W. D. Washington, S. D.
    April 9, 1925.)
    No. 252.
    1. Indians <@=>3 — Indians held to have exclusive fishing rights on reservation under Treaty.
    Under the rule that treaties with the Indians are to be construed in favor of the Indians, the provision of the Treaty of 1855 with the Quinaielt or Taholah Indians that a tract of land to be selected should be “reserved, for the use and occupation of the tribes and bands aforesaid, * * * and set apart for their exclusive use, and no white man shall be permitted to reside thereon without permission of the tribe and of the superintendent of Indian affairs or Indian agent,” gives to the Indians an exclusive right of fishing on the reservation.
    2. Indians <@=>3 — Department held, under treaty with Indians, without authority to make regulations with common right to fish.
    Under Treaty of 1855 with Quinaielt or Taholah Indians, the right to fish is common to all members of the tribe, and the Secretary of the Interior or Commissioner of Indian Affairs is without authority to make regulations under which particular locations on Quinaielt river are assigned to individual members with exclusive rights therein, and requiring them to pay royalty on fish sold for the benefit of other members of the tribe.
    In Equity. Suit by William Mason and others against W. B. Sams, personally and as Superintendent of the Quinaielt or Taho-lah Indian School Agency or Reservation. On motion to dismiss bill.
    Denied.
    Stuart H. Elliott and H. G. & Dix H. Rowland, all of Tacoma, Wash., for plaintiffs.
    Thos. P. Revelle, U. S. Atty., of Seattle, Wash., and Wallace W. Mount, Asst. U. S. Atty., of Tacoma, Wash., for defendant.
   CUSHMAN, District Judge.

The plaintiffs are members of the Quinaielt Tribe of Indians, residing on the Quinaielt Reservation, sometimes called the Taholah Reservation. They bring this suit to establish their right to fish in the Quinaielt river without payment of a royalty on the fish caught, and the right to sell their fish to whom they please. The bilLprays that the superintendent of the Quinaielt agency be enjoined from enforcing regulations made by the Commissioner of Indian affairs, and the Secretary, requiring the payment of a royalty; and that he be enjoined from designating fish buyers to whom alone, under such regulations, plaintiffs would be allowed to sell their fish; and from enforcing all fishing regulations. The defendant moves to dismiss the bill for want of necessary parties.

The Quinaielt river rises in Quinaielt Lake, which lake forms part of the reservation boundary; the lake is fed by streams without the reservation. The Quinaielt river throughout its entire course, flows through the reservation, emptying into the Pacific Ocean. The regulations of which complaint is made were approved by the Assistant Secretary, December 13, 1924; they contain a recital of the purpose of their adoption:

“In order to provide for the conservation and preservation of the salmon supply of the Quinaielt river, and to allow a safe percentage of the fish to reach their spawning grounds in the Upper Quinaielt river and in Quinaielt Lake, and to protect them while spawning, all of which are necessary for the protection of the salmon fishing interests of the Quinaielt Tribe of Indians, the following rules are promulgated in lieu of the rules approved January 3, 1917, and April 9, 1919.”

The regulations are applicable to all persons holding, claiming, or operating fishing locations on the Quinaielt river; they provide for fishing locations on both sides of the river, and the distance they are required to be apart. Provision is therein made for marking the channel of the river with stakes and buoys, which stakes are the outside stakes of the respective fishing locations. Eishing gear in the channel of the river,' or in front of its mouth, is prohibited. The character and amount of fishing gear (cross-nets, leads and pockets) allowed on the reservation locations is prescribed. The operator of a fishing location, with certain exceptions, is required to fish it in person, and the assistance allowed him is restricted. In certain eases leases by the holder of a location are permitted for a period not exceeding one year. Reservation Indians,- alone, are entitled to fishing locations. The assignment of a location is subject to cancellation by the Commissioner of Indian Affairs. Two or more Indians may be assigned one location, but only one allowed to operate at a time; no Indian is allowed to operate more than, one location. Transfers of locations are under the exclusive control of the Commissioner. Failure to work a location in a proper manner subjects the location to transfer. Provision is made for a closed period each week. Nets must be lifted at least once in 24 hours. Fishing gear must bear the brand of the owner. Fishing in Lake Quinaielt is prohibited except with hook and line, and that only in accordance with state law. The catching of salmon above the last set-net location approved by the office of Indian Affairs is prohibited at all times. Provision is made for closed seasons for all kinds of net fishing, except during certain hours two days each week for home consumption of the party fishing. The size of the mesh of the nets which may be used is prescribed. The regulations contain the following provisions:

“(21) In the interest of the tribe to whom fishing rights on the Quinaielt Reservation belongs, and for the reason that only a comparatively small number of Indians can be assigned fishing locations, the following percentage of the fishing receipts shall be collected and placed to the credit of the tribe as a royalty. The funds so received to be used for the care of the aged and destitute members of the tribe when authorized By Congress, or for other general agency purposes. The royalties to be collected shall Be as follows: All receipts up to $500 to be exempt from royalty. On receipts from $500 up to, and including $1,000, a royalty of 5 per cent, to go to the tribe. On receipts between $2,000 and $3,000, a royalty of 20 per cent. On receipts over $3,000, a royalty of 25 per cent.

“(22) To enable the superintendent to collect the royalties above proposed, all fishermen shall be required to sell their fish to licensed buyers, and each and every licensed buyer shall be required to furnish to the superintendent, at any time upon demand, a sworn statement setting forth the number of fish purchased from each fisherman. Each licensed buyer shall also withhold from the amount due to the fisherman for fish sold and delivered, a sum sufficient to meet the royalty provided for in paragraph 21 hereto, and shall pay over the same to the superintendent in charge of the Quinaielt Reservation on demand. Any violation of the conditions of this paragraph shall be deemed cause to suspend from fishing any fisherman who fails to deliver his fish to a licensed buyer and to suspend from buying any licensed trader who may fail to furnish the information demanded under oath,, or who shall fail to withhold sufficient funds to pay the royalty as provided in paragraph 21, or who shall fail to pay over the same to the superintendent on demand. The rendition of a false report or statement as to the number of fish purchased from an Indian fisherman by a'licensed buyer shall work an immediate forfeiture of the license of such buyer.

“(23)' Violations of any of the foregoing rules shall, upon conviction therefor, be punished-by withdrawal of fishing privileges as follows:

“(a) Eor the first such offense, the fishing privilege of the violator may be withdrawn for a period of not less than one week nor more than one month.
“(b) Eor the second offense, or for conviction for three or more violations at the same trial, all fishing privileges of the violator shall be withdrawn for not less than one month nor more than one season.
“(c) For the third offense, or for numerous flagrant violations, all fishing privileges of the violator shall be withdrawn for the remainder of the season and the fishing privileges of such holder at said location may be forfeited.
- “(d) Where the circumstances justify such action, violations of the above regulations may also be punished by a, fine for each offense in addition to the withdrawal of fishing privileges, as provided in sections A, B, and C. Failure to pay fines so assessed shall be deemed cause for - withdrawal of fishing privileges within the discretion of the superintendent. '
“(e) All gill-nets, set-nets, or other fishing appliances used or employed in the capture of salmon within the prohibited area, as herein set forth, shall be confiscated.”

It is also provided that for a violation of the regulations, representatives of the Taho-lah (Quinaielt) Reservation, and of the Bureau of Fisheries, are authorized to arrest and prosecute accused persons before the court, of Indian offenses, subject to review ■by the superintendent of the reservation and the Commissioner of Indian Affairs. The superintendent is also authorized to commute sentences of a court, under certain conditions. The sole jurisdiction of the streams entering Lake Quinaielt, declared to be salmon spawning grounds, is recognized as being in the Bureau of Fisheries; joint jurisdiction by the officers of the reservation with the Bureau of Fisheries is asserted over the waters of the lake, and the Quinaielt river above the last set-net location.

The bill is directed against the provisions of sections 21, 22, and 23 above quoted, providing for payment of a royalty on the fish caught and requiring sales of fish caught only to licensed buyers, and the penalties provided to insure the enforcement of this provision. These regulations are asserted to be a violation of the fishing rights granted by the Treaty of 1855 (12 Stat. at Large, 971). Articles II and III of this treaty provide:

"Art. II. There shall, however, be reserved for the use and occupation of the tribes and bands aforesaid, a tract or tracts of lands sufficient for their wants within the territory of Washington, to be selected by the President-of the United States, and hereafter surveyed or located and set apart for their exclusive use, and no white man shall be permitted to reside thereon without permission of the tribe and of the superintendent of Indian affairs or Indian agent. And the said tribes and bands agree to remove to and settle upon the same within one year after the ratification of this treaty, or sooner if the means are furnished them. In the meantime it shall be lawful for them to reside upon any lands not in the actual claim and occupation of citizens of the United States, and upon any lands’ claimed or occupied, if with the permission of the owner or claimant. If necessary for the public convenience, roads may be run through said reservation, on compensation being made for any damage sustained thereby.
“Art. III. The right of taking fish at all usual and accustomed grounds and stations is secured to said Indians in common with all citizens of the territory, and of erecting temporary houses for the purpose of curing the same; together with the privilege of hunting,- gathering roots and berries, and pasturing their horses on all open and unclaimed lands. Provided, however, that they shall not take shellfish from any beds staked or cultivated by citizens; and provided, also, that they shall alter all stallions not intended for breeding, and shall keep up and confine the stallions themselves.”

The court has not had an opportunity to examine the wording of the executive order creating the reservation contemplated by the treaty, but it must be presumed that it did not restrict, in any respect, rights under the treaty.

It is observable that no exclusive right of taking fish upon the reservation, or in the streams running through it, or in the waters by which it is bounded, is expressly- secured to the Indians by this treaty, as was done in the case of the treaty with the Yakimas. United States v. Winans, 198 U. S. 371-378, 25 S. Ct. 662, 49 L. Ed. 1089; Seufert Bros. Co. v. United States as Trustee, etc., 249 U. S. 194-196, 39 S. Ct. 203, 63 L. Ed. 555. It has been held that treaties with Indians are to be construed as “that unlettered people” understood them, and as justice and reason demand. Construction of treaties should favor the Indian. United States v. Winans, supra, at page 380, 25 S. Ct. 662, 49 L. Ed. 1089; Seufert Bros. Co. v. United States as Trustee, etc., supra; Jones v. Meehan, 175 U. S. 1, 20 S. Ct. 1, 44 L. Ed. 49. Cherokee Intermarriage Cases: Red Bird et al., Citizens of the Cherokee Nation by Blood, v. United States; Fite et ah, Intermarried White Pe'rsons, Claiming to be Entitled to Citizenship in the Cherokee Nation, v. United States; Persons Claiming Rights in the Cherokee Nation by Intermarriage v. United States, 203 U. S. 76, 89, 94, 27 S. Ct. 29, 51 L. Ed. 96.

Under this rule of interpretation the words of article II of the Quinaielt treaty: “Reserved for the use and occupation of the tribes and bands aforesaid * * * and set apart for their exclusive use, and no white man shall be permitted to reside thereon without permission of the tribe and of the superintendent of Indian affairs or Indian agent” — should be construed as giving a like exclusive right of fishing upon the reservation to these Indians. Indeed, the regulations are, in part, made up of provisions which insure to them such exclusive privilege. One reason re-enforcing this conclusion is that the court takes judicial knowledge of the fact that at the time of making the treaty these Indians were particularly dependent for a living upon fishing — more so than were the Yakimas or any of the Plains Indians. That this was obvious to the framers of the treaty, and eoncededly ’ so, may have been the reason that no express provision was made for exclusive fishing rights upon the reservation.

The question for determination is whether, under the treaties and laws affecting Indians, Indian Tribes, and tribal rights, the Commissioner of Indian Affairs and Secretary are vested with a discretion in this matter. If they are so vested, they are necessary parties and the bill must be dismissed. Webster v. Fall, 45 S. Ct. 148, 69 L. Ed. —; Gnerieh et al. v. Rutter, 265 U. S. 388, 391, 393, 44 S. Ct. 635, 68 L. Ed. 1068; Warner Valley Stock Co. v. Smith, 165 U. S. 28, 33, 35, 17 S. Ct. 225, 41 L. Ed. 621. However, if the Commissioner and Secretary are not so vested with the authority exercised by them in promulgating these regulations, the motion to dismiss should be denied. Waite et al. v. Macy et al., 246 U. S. 606, 38 S. Ct. 395, 62 L. Ed. 892; Caldwell v. Robinson (C. C.) 59 F. 653, 660, affirmed Robinson v. Caldwell, 67 F. 392, 14 C. C. A. 448; Baker v. Swigart (D. C.) 196 F. 569-571, affirmed Swigart v. Baker, 229 U. S. 187, 33 S. Ct. 645, 57 L. Ed. 1143.

These Indian plaintiffs have been, by the Act oí June 2,1924 (43 Stat. at Large, 1923-1924, part 1, page 253, c. 233), made citizens of the United States, with this proviso:

“That the granting of such citizenship shall not in any manner impair or otherwise affect the right of any Indian to tribal or other property.”

Under the rule favoring the Indians in the interpretation of treaties and laws affecting them, already alluded to, any fishing rights of plaintiffs under the treaty are preserved by this proviso.

By the Constitution, art. 1, § 8, cl. 3, Congress is given power to regulate commerce with the Indian tribes. Section 463, R. S. (Comp. Stat. § 716), makes it the duty of the Commissioner of Indian Affairs, under the direction of the Secretary of the Interior and presidential regulations, to manage .all Indian affairs and matters arising out of Indian relations. The allotting of the lands of a reservation in severalty while the title is still held by the United States for the Indians, and the conferring of citizenship upon them, does not extinguish the power conferred, nor the duty imposed, by these provisos. Heckman v. United States, 224 U. S. 413, 32 S. Ct. 424, 56 L. Ed. 820; United States v. Sandoval, 231 U. S. 28, 34 S. Ct. 1, 58 L. Ed. 107; United States v. Mullin (D. C.) 71 F. 682.

The legality of the regulations attacked by the bill depends upon the correctness of certain findings and conclusions recited therein. In section 21 of the regulations it is stated:

“‘In the interest of the tribe to whom the fishing rights on the Quinaielt Reservation belongs, and for the reason that only a comparatively small number of Indians can be assigned fishing locations, the following percentage of the fishing receipts shall be collected and placed to the credit of the tribe as a royalty. * * * ”

It is plain that there are only a comparatively small number of fishing locations upon the river within the reservation, and that, broadly speaking, the fishing rights upon the river belong to the tribe; but there can be fishing in the river without granting exclusive rights to defined locations.

It does not follow, from the described conditions, that the individual Indian who wants to fish in that stream can be denied in order that, to his exclusion, fishing may be carried on for commercial purposes, in part, for the benefit of Indians of the tribe who do not care or who are not able to fish. The treaty was with the tribe; but the right of taking fish at all places within the reservation, and usual and accustomed grounds and stations outside the reservation, was plainly a right common to the members of the tribe — a right to a common is the right of an individual of the community.

Under articles II and III of this treaty the right to take fish was in the individual Indian — as much so as the right to pick berries, to gather roots, to hunt, or to pasture his ponies upon the open and unclaimed lands. The treaty can mean no less. Its language — and a common knowledge of the Indian’s way of life — render it plain that the Indian must have understood by this treaty substantially as found by the court. Seufert Bros. Co. v. United States, as Trustee, etc., 249 U. S. 194, 197, 39 S. Ct. 203, 205 (63 L. Ed. 555):

“ * * * That neither claimed exclusive control of the fishing places on either side of the river or the necessary use of the river banks, but used both in common. One Indian witness, says the court, “likened the river to a great table where all the Indians came to partake.’ ”

No intention is shown, nor implication warranted, that the Indian who fished should pay, from his fishing, the Indian who did not care to fish but chose, rather, to hunt, pick berries, gather roots, or run his ponies upon the public domain. It may be that in a case of tribal lands, or other property in excess of those required by individual members of the tribe, a different rule would obtain; but in the present suit it appears that part of the trouble is that there is not enough set-net locations to go around. The inconvenience arising from such a condition does not warrant a warped interpretation of the treaty. There are less arbitrary ways of meeting such a situation.

Clubs of limited membership have a waiting list; upon a crowded golf course, players await their turn; the whale belongs to the one whose harpoon first strikes1 him. There is no analogy in this matter between the power of the government, and the authority of the state over the fish in its streams. The state owns the fish and the game of the state, and may regulate or license the right to take them, or forbid it entirely. But the fish in the waters of this stream do not belong to the state, nor to the United States; but to the Indians of this reservation.

While particularly complaining of regulations 21 to .23, the bill attacks the regulations as a whole. From this it might be surmised that the plaintiffs were interested in set-net locations, designated under the regulations; but the biR discloses nothing of the kind. Plaintiffs’ rights have been herein considered solely under the treaty. If the plaintiffs are holders of set-net locations, or the Commissioner in designating such locations acted pursuant to any tribal agreement, questions other than those here considered would have to be taken into account.

Having reached this conclusion, it is not necessary to determine the Commissioner’s authority, under other conditions, to license buyers; for it is plain, by the foregoing regulations, that the licensing of buyers is contemplated as a means of securing the payment of the royalties, the imposition of which and the designation of set-net locations, the court has held not warranted under the treaty.

Tile motion to dismiss is denied.


source: Caselaw Access Project

author: DAWSON, District Judge.

license: Public Domain

text:
    In re GREEN RIVER JOCKEY CLUB. Petition of RASH.
    (District Court, W. D. Kentucky.
    May 1, 1925.)
    I. Bankruptcy @=346 — Rule of priority as between tax claims, other liens, and general creditors of bankrupt, stated.
    Under Bankruptcy Act, § 64 (a), being Comp. St. § 9648, tax claim of national or state taxing unit against bankrupt is entitled to preference over general creditors, regardless of whether tax is made lien on bankrupt’s property by law which imposes it; but, where statute imposing tax does not make it lien, it is not entitled to priority over other valid and subsisting liens.
    '2. Bankruptcy @=346 — Person who paid license tax for bankrupt held not subrogated to state’s right of priority.
    Interested party, who paid license tax, imposed on bankrupt club prior to its bankruptcy, for conducting racing meet under Acts Ky. 1920, c. 19, which did not give state any lien, was not subrogated to rights of state under Bankruptcy Act, § 64 (a), being Comp. St. § 9648, so as to have priority over general creditors.
    3. Bankruptcy @=346 — State court cannot add to provisions of Bankruptcy Act relating to priority of tax claims.
    Order of Kentucky circuit court purporting to substitute person who, pending suit in that court, paid license tax imposed-on bankrupt, under Acts Ky. 1920, c. 19, to all rights and priorities of state could not add to provisions of Bankruptcy Act, § 64 (a), being Comp. St. § 9648, relating to priority to tax claims.
    4. Taxation @=531 (2> — Taxing unit cannot assign Its claim for taxes to citizen, and1 thereby subrogate him to its collecting rights, unless statute expressly so provides.
    State tax is not ordinary debt and is not subject to party’s control, and taxing unit cannot assign its tax claim to citizen, and thereby subrogate him to its collecting rights, unless law expressly confers such power.
    5. Taxation @=550 — Kentucky revenue agent has only such authority as is expressly conferred on him, and cannot assign tax claim nor subrogate assignee to rights of state.
    Inferior officers and agents of state of Kentucky, such as revenue agents, have only such authority as is expressly conferred on them and such incidental authority as may be necessary to carry out powers expressly given, and revenue agent has no power to assign tax claim nor subrogate assignee to rights of state.
    6. Bankruptcy @=3421/2 — On petition to review referee’s findings, bankruptcy court has power to review and revise entire ruling of referee.
    On petition to review findings of referee denying claim to priority, bankruptcy court has power to review and revise entire ruling of referee and disallow claim.
    7. Bankruptcy @=346 — Person who borrowed money to pay bankrupt’s taxes prior to bankruptcy held general creditor of bankrupt.
    Person who borrowed money to pay bankrupt jockey club’s license tax under Acts Ky. 1920, c. 19, prior to bankruptcy, on strength of resolution of bankrupt’s board of directors authorizing him to do so and attempting to sub-rogate him to supposed lien of state, helé bankrupt’s creditor entitled to file claim as general creditor.
    In Bankruptcy. In the matter of the Green River Jockey Club, bankrupt. On petition of O. W. Rash to review an order of the referee declining to allow petitioner’s claim as preferred claim. Claim dismissed, with leave to file claim as general creditor.
    Vanee & Heilbronner, of Henderson, Ky., for petitioner.
    Dorsey & Dorsey, of Henderson, Ky., for trustee.
   DAWSON, District Judge.

This matter is before me on petition of O. W. Rash to review the order of the referee, declining to allow as preferred a claim against the bankrupt estate for $29,300, with interest from April 2, 1923, filed by O. W. Rash, and allowing as an unsecured claim against the estate $28,800 of said claim, with interest thereon at the rate of 6 per cent, per an-num from April 2,1923.

The facts out of which this claim grows, as shown by the record, are as follows:

The bankrupt, Green River Jockey Club, is a corporation, organized under the laws of the state of Kentucky, with authority to own and operate a race course, and in the month of July, 1922, it operated and conducted, for a period of 10 days, a race meet at Dade Park, near Henderson, Ky. This meeting was held under the jurisdiction and supervision of the Kentucky State Racing Commission, and under the provisions of chapter 19, p. 103, of the Acts of 1920, it became obligated to pay to the state of Kentucky a license taz of $2,500 for each day of said 10-day race meet, or a total of $25,000.

In conformity to the law, the bankrupt, prior to December 1, 1922, reported to the auditor of public accounts of the commonwealth of Kentucky the fact that it had conducted said race meeting for 10 days, and thereupon, in due course, the auditor notified the bankrupt that it owed the state of Kentucky $2,500 for each day of said 10 days’ meeting, and made demand upon the bankrupt for a total tax of $25,000. • This tax was not paid, and on the 19th day of March, 1923, the revenue agent for the state at large, W. O. Mays, instituted suit in the Franklin circuit court against the Green River Jockey Club to recover the amount of the tax, with interest thereon at the rate of 6 per cent, per annum from December 1, 1922, together with a penalty of 20 per cent, of the amount of said license tax and interest.

One of the moving spirits in the organization and conduct of the Green River Jockey Club was Lee Baskett, who was a large stockholder, director, and president of the corporation. At a meeting of the board of directors, held on March 24, 1923, Baskett proposed to the board of directors that he would furnish the money to pay off this claim of the state for license taxes, provided the company would reimburse him, and that he could be substituted to all the rights, priorities, and liens of the state of Kentucky in the premises. This proposition was accepted by the board of directors, by resolution regularly adopted on that date; the acceptance of the proposition being in this language:

“On motion duly seconded, it was unanimously resolved that Mr. Lee Baskett be requested to advance the money for the payment of said tax, penalty and interest to the state of Kentucky, and that he be substituted, upon the payment thereof, to all the rights, priorities, and liens of the state of Kentucky.”

Baskett did not have the money with which to pay this claim of the state, and the claimant, O. W. Rash, agreed to lend to Baskett. the money, upon his note, with J. H. Bas-kett, Thomas Baskett, and G. W. Ragan as sureties, and C. C. Crafton as indorser thereon. It developed later, however, that Mr. Rash did not find it convenient to lend the entire amount necessary. It was thereupon arranged that Mr. Rash would lend to Bas-kett $20,000 of the sum, to be evidenced by two notes of Lee Baskett, each for the sum of $10,000 with Thomas Baskett, G. W. Ra-gan, and J. H. Baskett as sureties, and with C. C. Crafton as indorser thereon, and that the remainder of the money necessary to be raised should be borrowed from the Farmers’ Bank & Trust Company, of Henderson, Ky., upon the note of Lee Baskett, Thomas Bas-kett, G. W. Ragan, and J. H. Baskett to C. C. Crafton, which was to be discounted by said Crafton to the Farmers’ Bank & Trust Company, of Henderson, Ky., and that the money received on this note should be turned over to the claimant, O. W. Rash, and this sum, together with the sums realized on the two $10,000 notes executed by the parties above named to O. -W. Rash, should be by said Rash paid to Lee Baskett, with the understanding that he would use this sum in satisfying the claim of the commonwealth above referred to.

This arrangement was carried out, and the tax claim of the commonwealth was satisfied by Lee Baskett paying to the commonwealth of Kentucky the sum of $25,000, together with penalty and interest, aggregating in all the sum of $29,300. Thereupon the following order was entered upon the records. of the Franklin circuit court in the suit which-had been filed to collect said license tax:

“Franklin Circuit Court, April Term.
April 2, 1923.
“The Commonwealth of Kentucky, by Vm. O. Mays, Revenue Agent for the State at Large, Plaintiff, v. Green River Jockey Club, a Corporation, Defendant.
“Order.
“This day came the plaintiff by W. O. Mays, revenue agent for the state at large, and stated to the court that the tax and penalty in this ease had been paid by Lee Bas-kett, president of the Green River Jockey Club, out of his individual funds and, on his motion, the said Baskett is substituted to all the rights and priorities of the state of Kentucky for its claim of ($25,000.00) twenty-five thousand dollars, license tax for the fall meeting 1922 of the said jockey club and 20 per cent, penalty thereon, and this proceeding is dismissed without prejudice to the rights of the said Baskett to proceed against the said Green River Jockey Club and recover of it the demand sued on herein in any proceeding and this cause is stricken from the docket.”

Subsequent to the entry of this' order, Lee Baskett undertook to assign his rights thereunder to O. W. Rash, by the following in-dorsement :

“Whereas, I have borrowed from O. W. Rash the sum of $29,300.00, evidenced by three different notes on which Thomas Bas-kett, George W. Ragan, C. C. Crafton and J. H. Baskett are bound to said Rash either as sureties, makers or indorsers—
“Now, in order to further protect said Rash against loss, and to provide additional security for the said loan and the interest that may accrue thereon, or any renewal of any of said notes, in whole or in part, I hereby transfer and assign to the said Rash the above judgment.
“This assignment is made with the full knowledge and consent and at the instance of the said Thomas Baskett, George W. Ragan, C. C. Crafton and J. H. Baskett.
“[Signed] Lee Baskett.”

Relying upon this assignment, the claimant, O. W. Rash, asserts priority for the claim of $29,300, by virtue of section 64(a) of the Bankruptcy Act (Comp. St. § 9648), which provides:

“The court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district, or municipality in advance of the payment of dividends to creditors, and upon filing the receipts of the proper public officers for such payment he shall be credited with the amount thereof, and in case any question arises as to the amount or legality of any such tax the same shall be heard and determined by the court.”

Under this section of the Bankruptcy Act, a valid and subsisting claim of a taxing unit, either national or state, against the bankrupt for taxes due it, is entitled to preference over general creditors, regardless of whether the tax asserted by the taxing unit is made by the law which imposes it a lien on the bankrupt’s property or not. But where the statute imposing a tax does not make same a lien upon the property of the bankrupt, such tax, even when asserted by the .taxing authority, is not entitled to priority over other valid and subsisting liens. City of Richmond v. Bird, 249 U. S. 174, 39 S. Ct. 186, 63 L. Ed. 543.

Under the law of Kentucky, the tax of $2,500 a day exacted for conducting racing meetings under the jurisdiction of the Kentucky State Racing Commission is not a lien upon the property of the person or organization liable for the tax. The only way the state has of enforeing such a tax, in event of its nonpayment, is to bring suit, obtain judgment, and issue execution against the property of the person liable, in the sanie way as any other unsecured creditor may make his debt. Therefore, if the state of Kentucky were asserting its claim for this license tax, it would be entitled to preference only over the general creditors. Inasmuch as the state itself had no lien for this license tax, this ease does not fall within the gen-r erally recognized rule that one who has an interest in property which is in lien for taxes may pay such taxes to avoid distraint and sale, and be subrogated to the lien of the taxing unit. The question therefore arises whether or not even an interested party may pay taxes which are not a lien upon the property of the bankrupt, and by such payment become subrogated to the rights given to the taxing unit under section 64(a) of the Bankruptcy Act. It seems to the court very clear that the language of the act itself precludes any such right. By its terms it is specifically confined to taxes legally due and owing by the bankrupt to the-United States, state, county, district, or municipality. Tf the taxes have already been paid to the taxing unit, then the taxes are not due to the taxing unit, and section 64(a) cannot apply.

The order of the Eranklin circuit court entered on April 2, 1923, heretofore quoted, and the assignment thereof to Rash, cannot in any way add to the provisions of section 64(a), supra. This is true: First, because a state court is obviously powerless by any order it may enter to either add to or detract from the provisions of that section. In the second place, in so far as the order attempts to assign any rights, that the state had, to Lee Baskett and to subrogate him to the rights of the state, it is absolutely void. It is an elementary principle, of law that- a tax due a taxing unit is not a debt, in the ordinary sense of the word, and is not therefore subject to the control of the parties, and that the taxing unit cannot assign its claim to a citizen and thereby subrogate the citizen to the collecting rights of the taxing unit, unless the law expressly confers such power. Gibson v. Western & Southern Life Insurance Co., 161 Ky. 810, 171 S. W. 390, L. R. A. 1915D, 697. It is also elemental that inferior officers and agents of the state of Kentucky, such as was the revenue agent, have only such authority as is expressly conferred upon them, and such incidental authority as may be necessary to earry out the powers expressly given. The statute of Kentucky nowhere gives to a revenue agent the power to assign a tax claim and to subrogate the person to whom such assignment is made to the rights of the commonwealth, and the attempt of Mays, in the order referred to, to so assign the claim of the state to Baskett and to subrogate Baskett to the rights of the state, was and is an absolute .nullity. Therefore Baskett got nothing by the assignment or attempted assignment contained in the order of the Franklin circuit Court. This being true, it necessarily follows that Rash secured no rights by the attempted assignment of this order to him by Baskett. As the assignment of this order to him by Baskett is the only authority exhibited by Rash upon which to base his proof of claim, it seems to the court to necessarily follow that Rash is not a creditor of the bankrupt, either preferred or general, for any portion of the money secured from him and used by Baskett in the payment of the license tax referred to.

The matter is specifically before this court on petition of Rash to review the finding of the referee, denying his claim priority over the general creditors; hut the court has the power to review and revise the entire ruling of the referee as to this-claim, and, being of the opinion that Rash’s claim should not have been allowed, either as a preferred or a general one, it is ordered that same he wholly disallowed. It is very apparent, however, that Lee Baskett borrowed the money to pay the tax claim referred to, upon the strength of the resolution of the board of directors of the bankrupt, authorizing him so to do and attempting to subrogate him to the supposed lien of the state. While this resolution cannot he construed as giving Baskett a lien on the property of the bankrupt for the amount paid by him in taxes, yet the transaction undoubtedly created the relation of debtor and creditor between the bankrupt and Baskett, and he should yet he allowed to file and prove his claim as a general creditor for the full amount of the taxes, interest, and penalty paid by him.


author: ANDERSON, Circuit Judge.

text:
    McGILL et al. v. MELLON et al.
    (District Court, D. Massachusetts.
    March 18, 1925.)
    No. 2132.
    I. Intoxicating liquors <@=108(4) — Government must plead derelictions on which it relies to justify revocation of permit for use of industrial alcohol in proceeding against it to reinstate permit.
    In equitable proceeding against government to reinstate permits for use of alcohol for manufacturing purposes under National Prohibition Act, tit. 2, §§ 5, 9 (Comp. St. Ann. Supp. 1923, §§ 10138%bb, 10138%dd), the government should plead clearly and specifically the derelictions on which it relies to justify and sustain the revocation, in view of sections 1 (7), 4, 5, 6, 9, 22, 29 (sections 10138%, 10138%b, 10138%bb, 10138%c, 10138% dd, 10138%k, 10138%p).
    2. Intoxicating liquors <@=13 — Eighteenth Amendment does not empower Congress to . prohibit use of alcohol for industrial purposes.
    Const. Amend. 18, does not empower Congress to prohibit use of alcohol for industrial purposes.
    3. Intoxicating liquors <@=72, 108(10) — Scope of review of refusals to grant permits and orders of revocation, stated.
    Review of refusals to grant permits for use of alcohol for manufacturing purposes under National Prohibition Act, tit. 2, § 6 (Comp. St. Ann. Supp. 1923, § 10138%c), or orders of revocation under sections 5, 9 (sections 10138%bb, 101'38%dd), by court of equity “as the facts and law of the case may warrant,” requires a trial of the case and not a trial of the administrative trial.
    4. Constitutional law <@=277(l) — Right to use alcohol for nonbeverage purposes protected by due process.
    The right to use alcohol for nonbeverage purposes is protected by due process of law, and can be taken away only as a penalty for wrongdoing tried and determined as other penalties of law are determined.
    5. Intoxicating liquors <@=106(4) — Permit of one who has acted in good faith, but erroneously has failed to conform to act, not subject to revocation. ■ -
    Under National Prohibition Act, tit. 2, § 9 (Comp. St. Ann. Supp. 1923, § 10138%dd), providing for revocation of permit to use alcohol for manufacturing purposes where permittee is “not in good faith” conforming to the provisions of the act, or has violated the laws of any state relating to intoxicating liquor, a permit should not be revoked where permittee has acted in good faith but erroneously failed to conform to the act.
    6. Intoxicating liquors <@=106(4) — Failure of employees of' permittees to comply with instructions as to removal of label from barrels which had contained denatured alcohol-held not ground for revocation of permits.
    Failure, not in bad faith, of employees of manufacturers of toilet preparations and perfumes to conform to instructions for removal of labels on barrels which had contained denatured alcohol bought and used by manufacturers in perfumery business, held not ground for revocation of manufacturers’ permits under National Prohibition Act, tit. 2, § 9 (Comp. St. 'Ann. Supp. 1923, § 10138%dd).
    In Equity. Bill by A. A. McGill and others against Andrew W. Mellon and others. Decree for plaintiffs.

      Harold Goldman, of New York City, and Parsons, Wadleigh & Crowley, of Lynn, Mass., for plaintiffs.
    Harold P. Williams, U. S. Atty., of Boston, Mass., and Edward R. Hale, Asst. U. S. Atty., of Haverhill, Mass., for defendants.
   ANDERSON, Circuit Judge.

This is a bill in equity brought under section 9 of title 2, of the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 10138%dd). The plaintiffs seek a reinstatement of their revoked permits for the use of industrial alcohol in toilet preparations and perfumes.

The case is, in most of its controlling legal aspects, on all fours with O’Sullivan v. Potter, 290 E. 844. The opinion of this court in that ease seems to be the only written analysis, so far made by any court, of the applicable statutory provisions. The views expressed in that opinion are adhered to and applied to the facts now at bar.

The bill, as originally filed, utterly failed to conform to the views expressed in that opinion. As amended, it is approximately, but very awkwardly, conformable. Nor was the answer consistent either with the views expressed in that opinion or with any standards of sound pleading. In the O’Sullivan Case, this court held that the judicial review provided in sections 5 and 9 (Comp. St. Ann. Supp. 1923, §§ 10138%bb, 10138%dd) was, “for most practical purposes, a trial de novo”; also, that permittees “invoking judicial revision of an order of revocation, should be prepared, on proper pleadings, to meet in court every charge of violation of state and national law sufficient to disentitle [them] to the relief sought.” 290 F. 847.

It follows that to such a bill the government should plead, clearly and specifically, the derelictions on which it relies to justify and sustain the revocation. This it has failed to do.

It is important to note that Congress has not undertaken to prohibit the industrial use of alcohol. It is at least doubtful whether Congress would have power to prohibit such use. Certainly there is nothing in the Eighteenth Amendment grounding such power. It is unnecessary to discuss the constitutional question; for the National Prohibition Act shows clearly that Congress had no purpose of attempting to prohibit the use of alcohol in manufacturing perfumés, or otherwise in the industrial arts. Refusals to grant permits (section 6 [Comp. St. Ann. Supp. 1923, § 10138%c]) or orders of revocation (sections 5 and 9 [sections 10138%bb, 10138%dd]) are all reviewable by a court of equity “as the facts and law of the case may warrant.” This means a trial of the case, not a trial of the administrative trial, as in habeas corpus reviews of immigration proceedings. Compare Colyer v. Skeffington (D. C.) 265 F. 17, 23-30, and cases cited. The use of alcohol, for nonbev-erage purposes, is a right protected by due process of law. It can be taken away only as a penalty for wrongdoing, tried and determined as other breaches of law are determined.

' But it is also clear that regulation of the use of alcohol for industrial purposes is recognized as an essential part of the task of prohibiting its use for beverage purposes. To that end, inter alia, the commissioner was authorized to provide regulations (title 2, § 1[7], being Comp. St. Ann. Supp. 1923, § 10138%), and to issue permits (sections 4, 5, 6, 9 [sections 10138%b, 10138%bb, 10138%c, 10138%dd]), with bonds to insure compliance with the terms of the permits.

Section 9 provides:

“If at any time there shall be filed with the commissioner a complaint under oath setting forth facts showing, or 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 act, or has violated the laws of any state relating to intoxicating liquor, the commissioner or his agent shall immediately issue an order citing such person to appear before him,” etc.

For present purposes, the significant language is that proceedings for revoking permits must be on the issue that the permittee is “not in good faith conforming to the provisions of this act. * * * ” The words “not in good faith” obviously, by fair implication, mean that if a permittee has, acting in good faith but erroneously, failed to conform, the permit should not, for that reason, be revoked.

The plaintiff’s permits involved the use of denatured alcohol, which is not, or at any rate is not supposed to be, usable for beverage purposes; and also alcohol (or “grain alcohol”) which is commonly used for beverage purposes.

In article 114 of “Regulations No. 61 Relative to Production, etc., of Industrial Alcohol and Denatured Alcohol,” is a provision for a bond to be given by the manufacturer, conditioned in general terms for faithful performance of the obligations of the permit for the use of specially denatured alcohol.

Compare, also, Regulations No. 60, § 322, which provides that bonds given for permits to use alcohol “shall be conditioned upon the payment of 25 per cent, of the penal sum thereof as liquidated damages for any breach thereof, together with the payment, in addition thereto, of all taxes, assessments and penalties' payable by the permittee under the National Prohibition Act,” etc. The bonds put before the court do not seem to contain this provision for liquidated damages. Obviously interesting questions as to the rule of damages might be raised. No question has been mooted in' this case as to the government’s remedy by action on the bonds. The provision for such bonds gives the government a species of double security; it emphasizes the view that forfeiture of permits should not be enforced if a less drastic remedy is contemplated by the law. Section 29 Of title 2 of the Act (Comp. St. Ann. Supp. 1923, § 10138%p) also provides criminal penalties for violating the provisions of any permit, and for subsequent offenses both fines and imprisonment.

Article 116 d'eals with manufacturers’ records and reports, of their use of denatured alcohol, and is as follows:

“Bach manufacturer using specially denatured alcohol shall, on or before the 10th day of each month, file with the collector of his district transcript of monthly report, Form 1482, in duplicate, covering hib transactions for the preceding month. Such report must show all alcohol on hand, received, used, or recovered. Failure to file this report promptly as above provided will result in the revocation of the manufacturer’s permit.
“On receipt of the monthly report from the manufacturer, the collector, before transmitting one copy of the same to the Commissioner of Internal Revenue, will carefully examine the same, and will see that all alcohol shown by shippers’ memorandum slips, Form 1473, has been accounted for by the manufacturer.”

An official from the prohibition office testifies that the petitioners have fully complied with all official requirements relative to the use of denatured alcohol.

.“Regulations 60, Relative to Intoxicating Liquor,” § 174, deals with the records and reports required of permittees authorized, as were the plaintiffs, to receive in excess of 100 gallons per quarter of grain alcohol. That section is as follows:

“See. 174. Permittees authorized to receive in excess of 100 proof gallons of alcohol or other intoxicating liquor per quarter for manufacturing purposes are required to keep the following records:

“1. Amount of alcohol or other intoxicating liquor received.
“2. Amount of alcohol or other intoxicat-nig liquor on hand at all times.
“3. Name of products in which alcohol or other intoxicating liquor is used.
“4. Number of gallons, or amount however expressed, of each product manufactured.
“Where permittees keep such commercial records as will contain the above information and are willing at all times during regular business hours to open such records to the inspection of prohibition officers, such records shall be accepted in lieu of similar records on official forms and no other records shall be required. It shall be the duty of directors to submit to the prohibition commissioner the names of all persons who keep such commercial records and who indicate a willingness to open them to official inspection. Should any permittee fail to keep records as above indicated that fact should be reported to'the prohibition commissioner.”

No breach of this section has by the government been pleaded; and of course no evidence was offered or admitted to show failure to conform to the requirements of this section.

It is difficult to deduce the attitude of the prohibition officials from the wordy and ambiguous answer, and from’their testimony at the trial. Perhaps it is a fair inference that they are under the erroneous view that manufacturers, having permits to use industrial and other alcohol as an ingredient of their manufacturing process, hold their economic life at the will of the inspectors and other officials of the prohibition bureau. It is contended, in a rather loose and general way, that such manufacturers “must be at all times prepared to show the prohibition inspectors that they are acting in good faith.”

No such doctrine can be sustained by the eourt. We have not yet abandoned the theory that we live under “a government of laws and not of men.” Manufacturers have a right to use alcohol — under permits, issued as a necessary regulation of nonbeverage use —ancillary to the prohibition of the use of alcohol for beverage purposes. Permittees do not hold their permits at the mere whim or will of prohibition officials. To hold otherwise would be to put into the hands of individuals, who happen for the moment to be commissioners or inspectors, a power of economic life and death over a considerable number of innocuous or useful industries. Proceedings for revocation, of these permits are highly penal in their nature and result. They are so in the case at bar; it appears that the plaintiffs cannot carry on their perfumery business without obtaining a supply of alcohol. It follows, to repeat the ruling in the O’Sullivan Case, supra, that all derelictions relied upon by the government must be pleaded, and that the facts must be “determined by the court * * * as they would be determined in any ordinary equity case!” 290 F. 847.

These proceedings are analogous to proceedings penalizing real estate owners found guilty of permitting their tenants to maintain liquor nuisances. Compare United States v. Schwartz (D. C.) 1 F.(2d) 718; Chase v. Revere House, 232 Mass. 88, 122 N. E. 162.

In section 9 of title 2 of the act (Comp. St. Ann. Supp. 1923, § 10138%dd) it is provided that on the revocation of a permit “no permit shall be granted to such person within one year thereafter.” This is plainly a penalty, just as the padlock provision for one year in section 22 (section 10138%k) is a penalty.

Turning again to the pleadings in this case, the gist of the original answer was that the plaintiffs had not “acted in good faith in the conduct of their business.” The court required amendment, in the nature of specifications. Thereupon, the prohibition officials drafted and filed an amendment containing twelve paragraphs. Most of these paragraphs the plaintiffs sought to have struck out, as setting out no legal cause for revocation. It is unnecessary to deal in detail with that motion. It is enough now to say that under paragraph 1 it is alleged that on or about November 1,1922, the permittees diverted to beverage use two barrels of denatured alcohol. Apart from the fact that that transaction was not sought to be availed of by the government until some two years after it discovered it, on all the evidence I find it unsustained.

At most, the evidence might warrant a finding that some employee of the plaintiffs failed to comply with the regulations for removing the labels on two barrels, which had contained denatured alcohol, bought and used by plaintiffs in their perfumery business. The plaintiffs testify that their instructions and general practice were to have the marks and serial numbers obliterated as ,soon as the barrels were emptied. The barrels in question, after being emptied, were sold tó a local dealer. Perhaps there was failure on the part of some employee of the plaintiffs to conform to their instructions in that regard. Such failure (if it occurred), not in bad faith, is, as matter of law, no adequate basis for the revocation of a permit.

It is unnecessary to review the other eleven paragraphs of this amendment to the answer. They are either bad as matter of law or unsustained as matter of fact.

On the entire record before this court, the plaintiffs are clearly entitled to permits, for the use of alcohol to carry on, in lawful fashion, their business of manufacturing perfumes and toilet articles.

Decree for the plaintiffs.


author: DAWKINS, District Judge.

text:
    UNITED STATES v. BROCK, State Bank Com’r of Louisiana, et al.
    (District Court, W. D. Louisiana, Shreveport Division.
    March 18, 1925.)
    No. 1508.
    Banks and banking <§=80 (8)— Claim against insolvent bank based on cashier’s checks purchased with government funds held entitled to priority.
    A claim against an insolvent bank, based on cashier’s checks purchased by a postmistress with funds belonging to the government, helé one in favor of the United States with right to priority of payment under Rev. St. § 3466 (Comp. St. § 6372), which right was not affected by the fact that the claim was filed by, and allowed to, the postmistress and afterward assigned to the United States.
    At Law. Action by the United States against J. S. Brock, State Bank Commissioner of Louisiana, and W. L. Perritt, spe-. cial agent and liquidator. Judgment for plaintiff.
    Philip H. Mecom, U. S. Atty., and F. O. Chavez, Asst. U. S. Atty., both of Shreveport, La.
    Lee & Lindsey, of Minden, La., for defendants.
   DAWKINS, District Judge.

The jury has been waived in writing and this ease submitted upon an agreed statement of facts together with an admission of the correctness of the facts alleged in the pleadings.

The record shows that Miss Anna M. Shadow, postmistress at Sibley, La., purchased with government funds some five cashier’s cheeks from the Sibley State Bank at said point payable to the postmaster at New Orleans, La., to whom she was required to remit said .funds, as follows:

On April 6, 1923, cashier check No. 1775, $10.

On April 14, 1923, cashier cheek No. 1934, $16.

On April 7, 1923, cashier check No. 1783, $47.50.

On April 11, 1923, cashier cheek No. 1911, $17.50.

Protest fees, $10.50.

These cheeks were drawn upon the Exchange National Bank of Shreveport, but payment thereof was refused by the drawee, and all of them protested except one dated April 6, 1923, for $10. The Sibley State Bank closed its doors and went into voluntary liquidation on May 18, 1923. Claims were filed by the postmistress at Sibley upon the several cheeks, and a certificate was issued by the liquidators for the full amount of $101.50 which was assigned by her to the government. Since that time, a dividend of 30 per cent., or $30.45, has been paid upon the debt, and this suit is to recover the balance of $71.05 as a preferred claim against the liquidators under section 3466 of the Revised Statutes (Comp. St. § 6372), and in event the said officials have distributed the assets and put it beyond their power to pay the petitioner in full from the funds in their possession, then for a personal judgment against them under section 3467 of the Revised Statutes (Comp. St. § 6373).

It is conceded that the defendants still have in their hands sufficient funds to pay the claim as recognized in full; hence it will not be necessary to consider the alternative demand.

The only point of dispute appears to be as to whether the debt was one due to Miss Shadow and subsequently assigned to the government, in which event it is contended that the latter could claim only such rights as were enjoyed by its assignor; or whether the obligation is one due the government as for funds belonging to it, had and received by the bank. I am convinced that the debt is one due the government. The postmistress was merely the agent intrusted with the collection and transmission of the postal funds which at all times belonged to the government, and when she bought the cashier’s checks and paid to the bank the money arising from that source, it became legally obliged to account therefor .either by seeing that the cheeks were paid or by returning the money to the government when demand was made therefor. I do not think that the fact that the postmistress filed the claim and received the certificate which was later assigned to the government can change the situation. This was merely the form used for collecting the debt, and the government might in its own name have filed the claim in the first instance, for the money as above stated belonged to it from the moment of its collection by the postmistress — so much so that she might have been prosecuted for any improper use thereof.

My conclusion is that the plaintiff should have judgment for the amount claimed and should be recognized as a privileged creditor to be paid by preference out of the funds in the hands of defendants as required by section 3466 of the Revised Statutes. United States v. Bank of North Carolina, 6 Pet. 29, 8 L. Ed. 12; Bramwell v. United States (C. C. A.) 299 F. 705; Allen et al. v. United States (C. C. A.) 285 F. 678; Beaston v. Farmers’ Bank, 12 Pet. 104, 9 L. Ed. 1017.

Decree: It is therefore ordered that there be judgment accordingly.


author: ROBB, Associate Justice.

text:
    EGAN v. UNITED STATES.
    (Court of Appeals of District of Columbia.
    Submitted March 3, 1925.
    Decided April 6, 1925.)
    No. 4239.
    1. Criminal law <®=»88( (4) — Receipt of general verdict of guilty in prosecution under indictment in two counts held not error.
    Where one count of indictment charged defendant as an officer with receiving compensation for services in connection with claim against United States, in violation of Criminal Code, § 113 (Comp. St. § 10283), and with accepting bribe in violation of section 117 (Comp. St. § 10287), it was not error for court to accept general verdict of guilty; the two offenses being such as were properly charged in single indictment.
    2. Criminal law <®=»798(l) — Instruction as to necessity that each juror be convinced of defendant’s guilt beyond reasonable doubt held properly denied.
    Requested instruction that the law contemplates concurrence of 12 minds in conclusion of guilt before conviction can be had, that each juror must be satisfied beyond a reasonable doubt before he can consent to verdict of guilty, and that if any individual juror, after considering all the evidence and after consultation with his fellow jurors, should entertain reasonable doubt of defendant’s guilt, it was his duty not to surrender his own conviction, because balance of the jury might entertain different convictions, helé properly denied.
    Appeal from the Supreme Court of the District of Columbia.
    William P. Egan, otherwise called W. P. Egan, was eonvieted of violation of Criminal Code, §§ 113, 117, and he appeals.
    Affirmed.
    See, also, 52 App. D. C. 384, 287 E. 958.
    T. M. Wampler, of Washington, D. C., for appellant.
    Peyton Gordon and J. H. Burnett, both of Washington, D. C., for the United States.
    Before MARTIN, Chief Justice, ROBB, Associate Justice, and SMITH, Judge of the United States Court of Customs Appeals.
   ROBB, Associate Justice.

This is an appeal from a judgment of conviction in the Supreme Court of the District of Columbia under an indictment charging the defendant, appellant here, with a violation of sections 113 and 117 of the Penal Code of the United States (35 Stat. 1088, 1109 [Comp. St. §§ 10283, 10287]). This is the second trial under the same indictment, a former conviction having been set aside by this court. See Egan v. United States, 52 App. D. C. 384, 287 F. 958.

The first question presented by this appeal is based upon the contention that two distinct and inconsistent offenses were charged in the indictment and that the trial court erred in accepting a general verdict of guilty. In our prior opinion it was ruled that, since the crimes defined in the two sections belonged to the same class and might be separately charged in a single indictment, a general verdict of guilty on all counts would be sustained if any count was good and sufficient to support the judgment. The question was there raised by motion to require the district attorney to elect upon which counts of the indictment he would go to trial.

We said:

“This motion was based upon the theory that the indictment included two separate offenses under the Penal Code. This is permissible, and election will not be required, where the offenses charged are not distinct and inconsistent. The crimes defined in sections 113 and 117 belong to the same class, and may.be separately charged in a single indictment. In such a case a general verdict of guilty on all the counts will be sustained in error, if any count is good and sufficient to support the judgment. Claassen v. United States, 142 U. S. 140, 12 S. Ct. 169, 35 L. Ed. 966; Evans v. United States, 153 U. S. 584, 14 S. Ct. 934, 38 L. Ed. 830; Davis v. United States, 37 App. D. C. 126, 133.”

. It thus appears that it was distinctly ruled that the crimes denounced in these two sections are not inconsistent. There is no contention here that either count is defective in itself. The sentence being less than might have been imposed under a single count, it is unnecessary to determine whether sentence might have been imposed as for two offenses.

The second assignment of error relates to the refusal of the court to grant the following instruction: “The court instructs the jury that upon the trial of a crimina] case by a jury the law contemplates the concurrence of 12 minds in the conclusion of guilt before conviction can be had. Each individual juror must be satisfied beyond a reasonable doubt of the defendant’s guilt before he can, under his oath, consent to a verdict of guilty. Each juror should feel the responsibility resting upon him as a member of the jury, and should realize that his own mind must be convinced beyond a reasonable doubt of the defendant’s guilt before he can consent to a verdict of guilty. Therefore, if any individual member of the jury, after having considered all of the evidence in the case, and after consultation with his fellow jurors, should entertain such reasonable doubt of defendant’s guilt, it is his duty not to surrender his own conviction simply because the balance of the jury may entertain different convictions.”

In Allen v. United States, 164 U. S. 492, 17 S. Ct. 154, 41 L. Ed. 528, after the case had been submitted to the jury under the general charge of the court, and the jury had returned, apparently for further instructions, the court charged the jury that in a large proportion of cases absolute certainty could not be expected; “that although the verdict must be the verdict of each individual juror, and not a mere acquiescence in the conclusion of his fellows, yet they should examine the question submitted with, candor and with a proper regard and deference to the opinions of each other; that it was their duty to decide the case if they could conscientiously do so; that they should listen, with a disposition to be convinced, to each other’s arguments; that, if much the larger number were for conviction, a dissenting juror should consider whether his doubt was a reasonable one which made no impression upon the minds' of so many men, equally honest, equally intelligent with himself. If, upon the other hand, the majority was for acquittal, the minority ought to ask themselves whether they might not reasonably doubt the correctness of a judgment which was not concurred in by the majority.”

The Supreme Court, after stating that these instructions were taken literally from a eharge approved by the Supreme Judicial Court of Massachusetts, said: “While, undoubtedly, the verdict of the jury should represent the opinion of each individual juror, it by no means follows that opinions may not be changed by conference in the jury room. The very object of the jury system is to secure unanimity by a comparison of views, and by arguments among the jurors themselves. It certainly cannot be the law that each juror should not listen with deference to the arguments and with a distrust of his own judgment, if he finds a large majority of the jury taking a different view of the ease from what he does himself. It cannot be that each juror should go to the jury room with a blind determination that the verdict shall represent his opinion of the ease at that moment, or that he should close his ears to the arguments of men who are equally honest and intelligent as himself. There was no error in these instructions.”

, In the present ease, no instruction had been given the jury as to the extent to which one juror should be influenced by the, views of his fellow jurors. The effect of the proposed instruction was to invite one juror practically to . disregard the views of the other eleven. In other words, the instruction offered was inconsistent with the views expressed by the Supreme Court in the Allen Case, and, as ruled in Horton v. United States, 15 App. D. C. 310, 329, did “not correctly state the duty and obligations of a juryman, and was properly refused.”

The judgment is affirmed.

Affirmed.


text:
    OSTERMOOR & CO., Inc., v. ROSE SPRING & MATTRESS CO.
    (Court of Appeals of Columbia.
    Submitted March 11, 1925.
    Decided April 6, 1925.
    Rehearing Denied April 24, 1925.)
    No. 1730.
    1. Trade-marks and trade-names and unfair competition <@=43 — Trade-mark may not be segregated, and each of its features separately registered, to prevent use of any of such features by another.
    One may not segregate his trade-mark, and, by registering each of its features separately, prevent another’s registration of any particular part, when such registration and use by another would cause no confusion in -trade or prejudice to first user.
    2. Trade-marks and trade-names and unfair competition <@=70(I) — Adoption of suggestive mark does not preclude another’s adoption of mark equally suggestive, which is not deceptively similar.
    Adoption of suggestive mark by one trader will not preclude another’s adoption of. mark equally suggestive, though not deceptively similar.
    3. Trade-marks and trade-names and unfair competition <@=43 — Marks in use on mattress held not so deceptively similar as to prevent registration of both.
    TradeJmark consisting of mattress opened one-half its length, with woman’s head between the sections, large rose near one corner, and label near diagonal corner, held not deceptively similar to mark consisting of circle divided into quarters, and having in two quarters thereof representations of a mattress and half figure of a woman, with legend, “Trade Mark Reg. U. S. Pat. Of.”
    Appeal from Commissioner of Patents.
    Proceeding by the Eose Spring & Mattress Company for registration of trade-mark opposed by Ostermoor & Co., Inc. Prom a decision in favor of tbe former, the latter appeals.
    Affirmed.

      H. F. Riley, of Washington, D. C., and C. C. Cousins, of New York City, for appellant.
    E. W. Bradford, of Washington, D. C., for appellee.
    Before MARTIN, Chief Justice, ?and ROBB and VAN ORSDEL, Associate Justices.
   ROBB, Associate Justice.

This is a trademark opposition proceeding, in which the tribunals of the Patent Office accorded the right of registration to the appellee of the following mark, in use since 1912:

For about 20 years appellant has used a composite mark, consisting of a label on which is a circle divided into quarters, two of the quarters containing representations of a mattress and bearing the legend %

“Trade Mark Reg. IJ. S. Pat. Of.”

In the other two quarters are similar representations of a mattress with a half figure of a woman and the same legend. Since the filing of the opposition, the two marks first mentioned have been canceled, as purely descriptive. See Int. Bedding Co. v. Oster-moor & Co., 319 O. G. 235. The correctness of this decision is apparent from an ocular inspection of these marks. It well might be questioned whether the two other alleged marks, standing alone, are not subject to the same objection, for the dominating feature of each is a mattress, and the half figure of a woman is so subordinate and incidental as not to be sufficiently distinctive to overcome this objection. See MCIlhenny’s Son v. Trappey & Sons, 51 App. D. C. 273, 275, 277 F. 615.

In Weiss & Co. v. Stuart, Keith & Co. (Patent Appeal No. 1690) 4 F.(2d) 442, at present term', we reaffirmed a prior ruling in Planten v. Canton Pharmacy Co., 33 App. D. C. 268, to the effect that a party may not segregate his trade-mark, and,, by registering each of its features separately, prevent the registration by another of any particular part of the mark as actually used, when such registration and use by another would cause no confusion in the trade or prejudice to the first user. That ruling is applicable here. Appellant’s mark obviously should be considered in its entirety, for determina-’ tion of the question whether concurrent use of the opposing marks would be likely to result in confusion, and, in determining that question, we must give due effect to the rule that the adoption of a suggestive mark by one trader will not preclude all other traders from employing another mark of equal suggestiveness, providing such other mark is not deceptively similar. Bartlett Co. v. Arbuckle Bros., 52 App. D. C. 267, 285 F. 1001.

Tested by this rule, we think it quite apparent that the Patent Office.decision was correct. This is not an attempt by one party to register the dominating feature of an adversary’s mark, as in Carmel Wine Co. v. Cal. Winery, 38 App. D. C. 1. The decision is affirmed.

Affirmed.


author: MARTIN, Chief Justice.

text:
    BRAMHALL et al. v. BROSNAN. BROSNAN v. BRAMHALL et al. SAME v. McCARTHY et al.
    (Court of Appeals of District of Columbia.
    Submitted April 7, 1925.
    Decided May 4, 1925.)
    Nos. 4243, 4276, 4277.
    1. Executors and administrators <§=>506(3)— Shares of corporate stock standing in ad- ■ ministrator’s name held not shown to have been property of decedent, for which administrator was required to account.
    Shares of corporate stock standing in administrator’s name held not shown to have been property of decedent, for which administrator was required to account.
    2. Executors and administrators <§=>93 (1)— One controlling business in his own right and as executor, and paying himself excessive salary and bonuses, held liable to distributees of estate.
    One who, in his own. right and as administrator of another, controlled practically all stock of business concern, and paid to himself excessive salary and bonuses, held) liable to account to distributees of estate.
    3. Equity <§=>39(1) — Equity favors such reme- ' dies as do complete and final justice.
    Equity favors such remedies as do complete and final justice.
    4. Executors and administrators <g=>35 (I)— Removal of administrator held warranted.
    Removal of administrator, who as such and in his own right controlled insurance business and paid himself excessive bonuses and salary, held warranted.
    5. Appeal and error <§=»1043(6) — Receipt in evidence of deposition of witness, whose personal attendance could' have been had, held not reversible error.
    Admission in evidence of depositions of witness, whose personal attendance could have been had, held not reversible error, though practice not approved.
    Appeals from Supreme Court of District of Columbia.
    Two petitions, one by Mary Bramhall, Irene McCarthy, and others against John Brosnan, Jr., praying for his removal as administrator of the estate of John Brosnan, Sr.; the other by the same petitioners against John Brosnan, Jr., individually and as administrator of the estate of John Bros-nan, Sr., deceased, and others, praying an accounting and general relief. From a decree removing defendant John Brosnan, Jr., from office of administrator and stating an account, defendant John Brosnan, Jr., prosecutes two appeals, and petitioners one.
    Decrees affirmed.
    No. 4243 ;■
    W. G. Gardiner and J. W. Tomlinson, both of Washington, D. C., for appellant.
    R. M. Parker, W. J.. Lambert, R. H. Yeat-man, and May Thorpe Bigelow, all of Washington, D. C., for appellees.
    Nos. 4276 and 4277:
    W. J. Lambert and R. H. Yeatman, both of Washington, D. C., for appellants.
    W. G. Gardiner and J. W. Tomlinson, both of Washington, D. C., for appellees.
    Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.
   MARTIN, Chief Justice.

The questions involved in these appeals arise upon petitions filed in the lower court for the removal of John Brosnan, Jr., as administrator of the estate of John Brosnan, Sr., deceased, for an accounting, between the administrator and the estate, and for the recovery of claims alleged to be due to the estate, either immediately or ultimately, from certain of the defendants. The various issues were consolidated for trial below, and .are considered together in this opinion.

John Brosnan, Sr., a resident of the District of Columbia, died intestate on May 7, 1917, leaving one son and five daughters, no widow surviving him. On September 21st of the same year the son, John Brosnan, Jr., became the administrator of his father’s estate. The chief asset of the estate consisted of 498 shares of the capital stock of the Provident Relief - Association, an insurance-company having its general offices in the city of Washington. The par value of the stock was $25 per share; the 498 shares, however, were inventoried and appraised at $15,936. At the time of decedent’s death the certificates for these shares were held by the Munsey Trust Company, a Washington bank, as collateral security for a note for $40,-000 given to that company by decedent and his son as joint obligors. The bank also held as additional collateral for the note certain certificates for 497 shares of stock of the same association, standing in the name of John Brosnan, Jr. At the time of his decease, John Brosnan, Sr., was president, and John Brosnan, Jr., was vice president and general manager, of the association, the total capital stock of which was 1,000 shares; 995 of these standing as aforesaid in the names of the two parties.

On January 18, 1918, the administrator filed his first account, listing therein the 498 shares of capital stock held by the Munsey Trust Company as aforesaid, with the statement that the debt thereby secured was an obligation owed by the decedent and John Brosnan, Jr., in equal shares. The account charged the administrator with all of the other assets of the estate, and credited him with various disbursements, showing a balance of $1,423.88 dub to him because of overpay-ments made on behalf of the estate. The account was regularly approved and passed by the court on October 25,1920. Since that time the administrator has filed no formal account, but has twice filed affidavits in lieu thereof, stating in each instance that no additional assets had come into his hands since the filing of the first account.

On April 21, 1922, the five sisters of the administrator filed a petition in the Supreme Court of the District charging him with maladministration of the estate, and praying for his removal and the appointment of a successor. Afterwards, to wit on September 27, 1922, the same parties filed a second petition against the administrator, joined with codefendants Richard M. Parker, Eunice V. Avery, the Munsey Trust Company, Julius W. Tolson, Charles D. Lancaster, Marguerite Hunt, and the Provident Relief Association, praying for an accounting and general relief in relation to the transactions of the administrator, and to their rights in said estate. These several petitions were consolidated for trial as aforesaid, and on'July 7, 1924, the court, having heard the evidence, entered a decree whereby the administrator was removed, his successor appointed, and an account stated upon the issues presented in the case.

The administrator thereupon appealed from the court’s decree removing him from said trust, and likewise appealed from the decree entered by the court upon the second petition. The petitioners also appealed from the latter decree. "We shall briefly state the various complaints presented by the several appeals, together with our views upon them.

The petitioners below claimed that the 497 shares of capital stock of the Provident Relief Association standing in the name of John Brosnan, Jr., at the time of his father’s decease, actually belonged to said decedent, and that the administrator should be required to account for them as part of decedent's estate. The lower court rightly overruled this claim. The record contains a copy of the stock certificates in question, which were issued in the name of John Brosnan, Jr., attested by John Brosnan, Sr., as president of the company, and by T. W. Bramhall as its secretary, the last one dated more than a year before the death of decedent, and all listed in the name of John Brosnan, Jr., upon the books of the Association. Moreover the certificates were delivered to the Munsey Trust Company as collateral by John Brosnan, Jr., before his father’s death, as part of the transaction aforesaid in which the latter took an active part. There is nothing in the record to sustain the claim that John Brosnan, Sr., was the owner of these shares at the time of his decease. '

The petitioners also complained that John Brosnan, Jr., came into complete control of the Provident Relief Association after his father’s death, since he then represented the shares owned by the estate as well as those standing in his own name, and that he used this authority to secure an excessive and illegal salary and bonus for himself from the association. The lower court rightly sustained this complaint, and found the sum of $29,296.79 to be due from the administrator to the estate because of such excessive and illegal payments, at the same time, however, finding him entitled to a credit of $26,462.71 because of payments made by him upon the estate’s indebtedness to the Munsey Trust Company as aforesaid, leaving a net balance due the estate from the administrator in the sum of $2,834.08, which he was ordered to pay over to his successor. We shall not review the evidence upon this subject, but content ourselves with saying that it sustains the lower court’s finding and decree upon this point.

It is true that this procedure seems anomalous, in that it sets off a debt due from John Brosnan, Jr., to the association against a" debt due to John Brosnan, Jr., from the estate. It should be remembered, however, that the two Brosnans virtually owned the association, that the rights of creditors are not in jeopardy, and that equity favors such remedies as do complete and final justice to all parties before the court. The action of the lower court is justified by this consideration.

The petitioners furthermore complained that, with the connivance‘of the administrator, the defendant Eunice "V". Avery obtained large sums of money wrongfully and unlawfully from the said association, and demanded an accounting therefor. The lower court rightly held that the evidence failed to sustain this complaint, and she was dismissed from the ease, as also were defendants Richard M. Parker, the Munsey Trust Company, Julius W. Tolson, Charles D. Lancaster, and Marguerite M. Hunt, 'whom the evidence totally failed to charge with any liability under the issues. The lower court also rightly overruled the complaint of the petitioners for an accounting from the administrator relative to the value of certain real estate conveyed by John Brosnan, Sr., to the Provident Relief Association, since the evidence upon this point was not sufficient to make out a prima facie ease. The same is true, also, concerning the charges of the petitioners relative to the miscellaneous items appearing in the accounts of the association.

We also approve of the decree of the lower court removing the administrator and appointing his successor. The reasons for this action sufficiently appear in the foregoing statement. See, also, Brosnan v. Brosnan et al., 53 App. D. C. 149, 289 F. 547.

We have considered the exceptions taken by the administrator to the admission of the depositions of C. H. Pope as evidence at the trial, when his personal attendance as a witness could have been had. We do not mean to approve of this practice, but it manifestly resulted in this instance from the confusing expressions of consent made by counsel at the trial, and under the circumstances was not reversible error.

Nor have we overlooked the claim of the administrator that he should be allowed a credit in the sum of $1,423.88, when accounting. with his successor, because of the overpayment shown by his first account. The testimony discloses, however, that the items of interest paid upon the bank debt which made up the overpayment are taken care of by the credits herein allowed the administrator as against his excessive salary aforesaid.

We find it proper, also, to add that under the decree of the lower court, as herein affirmed, it is the duty of the removed administrator, John Brosnan, Jr., to pay and deliver over without delay to his successor in said trust, the National Savings & Trust Company, each and all of the assets of said estate, and that it is the duty of the new administrator to demand from the former administrator such assets as are specifically named and provided for by the lower court’s decree as herein affirmed, and also any and all other assets of the estate which it may find, after a full investigation of all said matters, to be rightly recoverable from him for said estate.

The several decrees of the lower court are affirmed in every particular; the costs to he assessed against'John Brosnan, Jr.


author: DAVIS, Circuit Judge. PER CURIAM.

text:
    YOCUM et al. v. PARRY MEDICINE CO. et al.
    (Circuit Court of Appeals, Third Circuit.
    March 5, 1925.
    Rehearing Denied May 28, 1925.)
    No. 3214.
    1. Receivers <©=3207 — Order to receiver to turn over property to foreign receiver held not erroneous.
    A court helé not precluded from directing its receiver to turn over the property of the receivership to the receiver in another jurisdiction by a previous order declining to so turn it over, where the second order was made after notice to the parties in interest.
    2. Courts <©=3493(2) — Receiver in stockholders’ suit held properly directed to turn over assets to receiver in dissolution suit.
    In a stockholders’ suit for a receivership, in which no rights of creditors were involved, a federal court properly directed the assets in the hands of its receiver turned over to the receiver subsequently appointed by a state court in its home state, in a suit for dissolution of the corporation instituted pursuant to a vote of its stockholders.
    Appeal from the District Court of the United States for the Western District of Pennsylvania; Seward Thomson, Judge.
    Suit in equity by Edward Yocum and others against the Parry Medicine Company and others. Prom a decree of the District Court directing its receiver to turn over assets, complainants appeal.
    Affirmed.
    William S. Doty and Fred C. Houston, both of Pittsburgh, Pa., for appellants.
    John C. Bane, of Pittsburgh, Pa-., and Thomas F. Turner, of Canton, Ohio, for ap-pellees.
    Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
   DAVIS, Circuit Judge.

This is an appeal from a decree of the District Court directing its receiver to turn over to the receiver appointed by a state court in Ohio in dissolution proceedings all the property of the Parry Medicine Company in her control.

This suit was begun by four stockholders, owning 13 out of 100 shares of stock, for themselves and all other stockholders of the Parry Medicine Company, a corporation organized under the laws of the state of Ohio, against the corporation, Leonard L. Party, president, Hugh Parry, secretary and treasurer; and Melvina Parry, Ethel Motter and C. L. McClellan, directors. All of the defendants are citizens and residents of the state of Ohio. The corporation was organized for the purpose of manufacturing and selling a medicine known as “Parry’s Vegetable Compound.” It was registered as a foreign corporation in Pennsylvania and owned and operated a laboratory or factory in Pittsburgh. The bill alleged a conspiracy by the majority stockholders to wreck thó corporation and remove its assets from the jurisdiction, of the District Court in Pennsylvania and transfer them to an Ohio corporation to be organized by the conspirators.

The fraud alleged in the bill is based upon a resolution of the directors of the Parry Company to sell the assets of the company to Leonard L. Parry for $125,000 and release him from an agreement which he had made with the company to manufacture exclusively for it Parry’s Vegetable Compound at a royalty of 15 cents per bottle to be paid for when the bottles were sold. Only seven votes were cast against this, resolution. Ninety-eight shares out of 100 were represented at the meeting. The sixth prayer of the bill .was for the appointment of a receiver to conserve “the assets and to. save the same from waste and mismanagement.” Upon the filing of the bill, the court entered an order in which the defendants were enjoined from removing any of the property of the company from their factory in Pittsburgh, and appointed R. L. Crawford receiver. While this litigation was going on, he died, and his wife, Francis R. Crawford, was appointed receiver in his place.

After these proceedings were had in Pennsylvania, steps were taken in the common pleas court of Richland county, Ohio, to dissolve the corporation. A decree of dissolution was entered in that court, and Robert W. Stephenson was appointed receiver to collect all the property and assets of the company and make distribution according to law. Stephenson, as directed by the decree of his court, applied to the District Court of Pennsylvania for an order requiring Francis R. Crawford to turn over to him the property in her hands belonging to the company. The court entered an order on March 9, 1923, that the receiver file her account. On April 10, 1923, she filed an account of the administration of the property belonging to the Parry Company both of herself and of her deceased husband. On May 8, 1923, Stephenson filed exceptions to -these accounts. While these exceptions were pending, Francis R. Crawford, on February 6, 1924, filed her second and final account. Stephenson and two appellants, Yocum and Craig, filed exceptions to the attorney’s fees asked in this account. On April 1, 1924, the court entered an order fixing April 2, 1924, as the time for hearing the exceptions to the final account, and Stephenson then withdrew his exceptions to the first accounts. At the hearing on the following day, the exceptions filed by Yocum, Craig, and Stephenson to the final account were withdrawn in open court, and the court thereupon entered an order directing Mrs. Crawford to turn over to Stephenson the property in her hands belonging to the Parry Company after the payment of costs and administrative expenses. The appeal was taken from this order and is based upon four principal grounds:

1. The appellants say that the court on June 18, 1923, made an order wherein it refused to direct its receiver to turn over the property and assets of the Parry Medicine Company to Stephenson; that this order, unappealed from and unexeepted to, became the law of the ease; and the court had no jurisdiction to make a contrary order without notice or reargument.

This contention embraces questions of fact and conclusions df law. If the facts are true, then the conclusions of law based upon them are correct. It is true that on June 18, 1923, the court did decline to direct its receiver to turn over the property and assets of the Parry Company to Stephenson; but, as above stated, on April 1, 1924, in open court an order was made fixing April 2, 1924, as the date for hearing the exceptions filed by Yokum, Craig, and others, and counsel for these exceptants were present and accepted service of a copy of that order. The foEowing day, the attorneys of Yokum and Craig were present at the time fixed for the hearing and in open court withdrew the exceptions. There is no contention that the attorneys exceeded their authority. The learned trial judge, stated in his memorandum opinion in allowing the appeal that, “On the .hearing of the exceptions to the account, all the exceptions were withdrawn, and the order of the court of April 2, 1924, was accordingly entered.” At the entry of this order, no reference was made to the order of June 18, 1923, by any one, and no exception was taken with reference to it. Under these circumstances, we do not think that the entry of the order was error.

2. Appellants further say that jurisdiction of the federal court having properly attached, the court could not abandon its jurisdiction and leave the questions raised before it to the determination of the common pleas court of Richland county, Ohio.

This conclusion may or may not be sound. It depends upon the facts. If there had been any rights of creditors properly before the court undetermined, the contention here made might be sound; but there were none,, and the exceptions having been withdrawn, the court pursued the proper course. This was a stockholders’, and not a creditors’, bill. The appellants in their bill of complaint expressly stated that: “There is no incum-brance against any of the real estate held by the said company, as hereinbefore stated, and no debts from the said company, whatever.” In the order directing that the property of the company be turned over to Stephenson, the court said: “No creditors’ rights or interest intervening in this cause, it is ordered by and with the consent of counsel for the receiver and for the defendant, the Pfrry Medicine Company, that the injunction hereinbefore granted, herein be, and the same is hereby, dissolved.” The rights of creditors were not brought into this case before the District Court. The ease proceeded entirely on the theory of a stockholders’ bill for preservation of assets.

Attached to the accounts filed by Mrs. Crawford were certain addenda containing several claims which had not been put in issue by the pleadings. She questioned their validity. No one appeared in court to call attention to them or ask action on them. These claims were left either with Mr. or Mrs. Crawford, and she apparently thought best to include them in the addenda. No action of the court was required on them and the court expressly stated that no adjudication was made in reference to them. These claims do not afford a foundation on which appellants can successfully stand. The rights of stockholders ’ only were before the court, and they not only can, but must be determined by the court of original juriscELetion, where the estate is being marshaled for distribution. There was therefore nothing left for the court to do but to order the' property turned over to Stephenson.

3. The appellants contend that proper practice required ancillary receivers to be appointed by the court in aid of the subsequent state proceedings.

Eighty-five per cent, of the stockholders by resolution on November 30, 1921, voted to dissolve the corporation and to sell aE its assets. This, in the absence of creditors’ rights in the federal court in Pennsylvania, left nothing for the state court to do except to complete the dissolution proceedings and. distribute the assets among the stockholders. All matters before the court in Pennsylvfnia had been completely adjudicated and there was no person other than Stephenson to whom the property could be turned over so that the state court having domiciliary jurisdiction of the dissolution proceedings could wind up the company’s affairs. The court entered the proper order and the assignment of error based thereon is without merit.

4. It is further contended that assuming the order appealed from to have been discretionary, it is reversible error because it was made under obvious mistakes as to controlling facts.

The controlling facts, which it is alleged the court misunderstood in making the order, are largely the facts upon which the foregoing three points were predicated. Without restating what we have said about them, it is sufficient to say that we do not find any evidence that the court misunderstood the facts or abused its discretion.

Therefore the decree is affirmed.

On Petition for Rehearing.

PER CURIAM.

In the petition for rehearing it is alleged that our opinion in this case was based upon an incorrect statement of controlling facts. It would apparently, if not necessarily, follow that the conclusions deduced from these facts are erroneous. In the opinion, it was stated that on April 1, 1924, an order fixing the date for hearing the exceptions filed by the petitioners was made in open court and that the petitioners and their counsel were present and accepted service of a notice of that order. It now appears, not from the record, but from affidavits submitted by petitioners, that counsel were in fact not present in court, but that they did actually accept service on that day of a copy of the order upon them. While it is doubtless true that counsel were not actually in court when the order was made, they accepted service of a copy of it that day and were fully informed of the date of the hearing.

The other statements in the opinion alleged to be incorrect are based upon statements contained in the record. The petitioners in substance charge that the record does not contain a tru.e statement of the facts as they actually occurred. However this may be, before the petition was filed no intimation whatever had come to us that the record is either incorrect, inaccurate, or incomplete. The petition does not in direct terms make such a charge, but it does allege facts as a ground for rehearing as having occurred which are not contained in the record.

We have carefully considered the petition, the record, and the opinion, but do not think that any grounds justifying a new trial have been shown.

A rehearing is accordingly denied.