text:
    ROUSE et al. v. BURNHAM.
    No. 342.
    Circuit Court of Appeals, Tenth Circuit.
    Aug. 6, 1931.
    John S. Dean, of Topeka, Kan. (John S. Dean, Jr., Frazor T. Edmondson, and George W. Ball, all of Topeka, Kan., on the brief), for appellants.
    Tinkham Veale, of Topeka, Kan., and Chas. L. Kagey, of Beloit, Kan. (Lloyd M. Kagey, of Beloit, Kan., on the brief), for appellee.
    Before LEWIS, PHILLIPS, and McDERMOTT, Circuit Judges.
   LEWIS, Circuit Judge.

Appellee sued appellants in the state district court of Kansas for malicious prosecution. That case went to trial. After all the evidence was introduced, plaintiff took a non-suit and six months later instituted this suit on the same cause of action and recovered. The defendants then brought this appeal.

The action is bottomed on four complaints verified by appellant Mangus, wherein Bum-ham was charged with embezzlements of moneys of the Western Producers Oil and Gas, Inc., a corporation. Four complaints were filed with the Justice of the Peace of Goodland, Kansas, who issued warrants of arrest on which the sheriff arrested Burnham and put him in the county jail, where he remained for three hours and thirty-five minutes, when he gave bond for his appearance and was released. On two of the charges, Burnham had preliminary hearing and was let to bail for appearance in the district court. When these two charges came on for trial in the district court the county attorney dismissed them without trial, and he also dismissed the other two charges still pending in the justice of the peace court. Each of the four criminal charges is the basis of a separate cause of action, and the jury returned a verdict for the plaintiff on each count.

The criminal charges against Burnham came about in this way: The corporation, named above, needed about $10,000.00 to complete the drilling of a well for oil in the vicinity of Goodland; the three appellants and H. N. Slater, president of- the corporation, owned about 75,000 shares in the corporation, and they entered into a written contract with Burnham in January, 1926, by which he was appointed sales agent of the corporation’s treasury stock. He agreed to sell the stock to the amount thought to be needed to complete the well, and the other parties to the contract agreed to give Burn-ham, for his services, 12,500 shares out of their 75,000, and also to assign to him an oil lease on 160 acres. Burnham did not carry out his obligations of the contract.

There were four sales of shares of stock on which the four criminal charges were based, — one to Jane Van Donge on March 2, 1926, of 50 shares for $50.00, one to Lloyd G. De Lay on March 2, 1926, of 100 shares for $100.00, one to D. A. Laughlin on March 2, 1926, of 100 shares for $100.00, and one to Jane Van Donge on March 4, 1926, of 50 shares for $50.00. When each of the above sales was made Burnham gave the purchaser the corporation’s receipt for the named purchase price of the shares, his name appearing thereon as salesman, except he testified that he did not make the sale of the 50 shares to Jane Van Donge on March 2d, that his wife made that sale; nevertheless, the receipt to Jane Van Donge for $50.00 given in the name of the company for those 50 shares has Bum-ham’s name thereon as salesman, and is just like the receipts given when the other three sales were made. A day or so after the sales made on Mareh 2d, new certificates were issued by the corporation, one to De Lay for 100 shares, one to Laughlin for 100 shares, and one to Jane Van Donge for 50 shares, and the corporation’s records show that those reissues came out of shares privately owned by one Bane, and, of course, were not treasury stock. What has been said about sales to the parties named and other evidence relating to that subject, hereinafter to be noted, will answer the inquiry whether the plaintiff sustained the burden pf showing that he was arrested and prosecuted without probable cause to believe him guilty. This, of course, is the main issue in an action of this kind. There must be malice also, but malice may be inferred from lack of probable cause, and lack of probable cause cannot be inferred from malice. There may be malice — even express — but, if there be probable cause for the arrest and prosecution, an action of this kind must fail. Stewart v. Sonneborn, 98 U. S. 187, 25 L. Ed. 116; Wheeler v. Nesbitt, 24 How. 544, 16 L. Ed. 765; Crescent City live Stock Co. v. Butchers’ Union, 120 U. S. 141, 7 S. Ct. 472, 30 L. Ed. 614; Director General v. Kastenbaum, 263 U. S. 25, 44 S. Ct. 52, 68 L. Ed. 146; Walton Trust Co. v. Taylor (C. C. A.) 2 F.(2d) 342, 345; Daniel v. Pappas (C. C. A.) 16 F.(2d) 880; Blakely v. Greene (C. C. A.) 24 F.(2d) 676; Chapman v. Anderson, 55 App. D. C. 165, 3 F.(2d) 336.

We now point out the additional evidence bearing on the question of probable cause. Burnham testified in this ease that the stock sold to the three named persons, barring one of the sales to Jane Van Donge, was Bane’s stock; that he was helping Bane at the request of Dawson to make those sales; that Bane got the money on each sale; that he, Burnham, gave the corporation’s receipt to each purchaser because he had no other paper with him; and that soon thereafter he and Bane went to the corporation’s office and told appellant Mangus and Mr. Heston (the latter being postmaster at Goodland and secretary of the corporation) about the transactions, and that he left with them carbon copies of the receipts he had given. Bane did not testify, nor were Jane Van- Donge, De Lay, or Laughlin called as witnesses. Man-gus and Heston testified, and each denied that the transactions were reported to them as tes-tilled to by Burnham or that copies of the receipts were brought to them or left with them by him. On cross examination, Burnham admitted that on the trial of the civil case in the state court he testified that he was alone in the transaction with De Lay and that he traded 100 shares of his own stock to De Lay for a seed drill, a plow, and a harrow, and thereupon he gave to De Lay the corporation’s receipt for $100.00; that he had purchased the shares he traded to De Lay with his own money. It was also shown that Burnham testified in the ease in the state court that the 100 shares sold to Laughlin were Burnham’s stock, and that those shares were to be taken out of shares Slater had given him or out of 300 shares he had bought with his own money; that those shares were issued to him by Heston and Mangus, and he had paid the money to Heston. This testimony of Burn-ham in the state court is in direct conflict with his testimony here wherein he says he was helping Bane sell his (Bane’s) stock; that Bane got the moneys named in the receipts. That conflicting testimony, however, does not go to the issue of probable cause. It was given after the arrests were made, but it does bear heavily on the credibility and weight to be given to Burnham’s evidence in the court below when we come to consider the defendants’ challenge to the plaintiff’s case when all of the evidence was in.

But there is additional evidence on the issue of probable cause. Appellant Mangus, who verified the criminal charges, testified that on March 3,1926, Ira Bane brought his stock certificate into the oil company’s office and asked him to transfer some of said stock to De Lay, Laughlin, and Jane Yan Donge; that he made such transfers himself; Bum-ham was not present; he did not know that Burnham had anything to do with the sale of Bane’s stock, and never did know that he claimed to have anything to do with said sales until the time of Burnham’s preliminary trial; Burnham never came into the, oil company’s office and showed him any receipts concerning sales of Bane’s stock, nor did he at any time say anything about such receipts; sometime in the fore part of April, 1926, Mrs. Yan Donge came into the office and stated that she had bought some stock in the oil company; Mangus learned from her that she had bought from Burnham, and upon his request she brought in the two receipts which Burnham had given her at the time she bought; Mr. Laughlin also brought his receipt to the office; the first time he saw Mr. De Lay’s receipt was when he and the county attorney called at Mr. De Lay’s home; after obtaining these receipts, he went to see Mr. Slater, Mr. Dawson, and Dr. Rouse, and some of the other directors, showed them the receipts, and asked their advice. Their advice to him was to take the receipts to the county attorney, and see what he had to say about the matter. Whereupon, he went to see the county attorney, drove the county attorney out to Jane Yan Donga’s home, also to Mr. Laughlin’s home, and to the home of Lloyd G. De Lay. Mr. De Lay and Mrs. Yan Donge were at home and were talked to by the county attorney. Mr. Laughlin was not at home. Mr. Stewart was the county attorney, and his advice to Mangus was to go to Burnham and request that the money obtained through the sale of stock, as evidenced by the receipts, be turned over to the company. Whereupon, he went to see Burnham, told him about the receipts, and demanded the money. Burnham offered no excuse for the receipts, but merely stated that he did not owe the company a dime. After Burnham’s refusal, he went back to Mr. Stewart and told him that he had been unsuccessful in attempting to obtain the money. Whereupon, Mr. Stewart stated that he would draw up some complaints, and he (Mangus) could come back later and sign them. Mr. Stewart stated that he thought Burnham had committed a crime. Later he returnéd to the county attorney’s office and signed the complaints. That part of the evidence of Mangus, fully summarized above, relating to the issue of probable cause, is the interview that Mangus had with Burnham at the direction of the county attorney. Mangus testified that he went to Burnham, told him about the receipts and demanded the money, and that Burnham offered no excuse for the receipts, but merely stated that he did not owe the company a dime. There is no contradiction of this testimony of Mangus, by Burnham or any other witness. It shocks common sense to ask one to believe that Burnham would have contented himself with the reply he made to the demand of Mangus, if he had theretofore furnished Mangus and Heston with copies of those receipts and informed them that the receipts' represented sales of Bane’s stock. Had he or Bane done that, it is incredible that he would have failed to call Mangus’ attention to the fact. Burnham had admitted in writing over his signature that he sold the company’s stock and had received as its sales agent the purchase price. That is not rendered untrue by the fact that stock was later issued to the purchasers that had belonged to Bane or Burnham. It is just as reasonable' to infer that the sales were made as represented by Burnham’s receipts, and that it was thereafter concluded to keep the company’s money and substitute the stock of Bane or Burnham for the company’s stock. In the eases cited, supra, it will be found that the rule of law is stated thus:'

“The question of probable cause is a mixed question of law and fact. Whether the circumstances alleged to show it probable or true, and existed, is a matter of fact; but whether, supposing them to be true, they amount to probable cause, is a question of law.”

But there is another rule equally well settled and not in conflict with this rule, which is this:

“It is the duty of the trial court to direct a verdict at the close of the evidence in two classes of eases: (1) That class in which the evidence is undisputed; and (2) that class in which the evidence is conflicting, but is of so conclusive a character that the court, in the exercise of a sound judicial discretion, would set aside a verdict in opposition to it.” Walton Trust Co. v. Taylor, supra.

We cannot doubt that, if all of the evidence in this ease relating to the question of probable cause is fairly considered, the ease is brought within the second class, and that the court erred in denying appellants’ request for an instructed verdict in their favor.

There is another and separate reason why the motion for instructed verdict should have been granted in favor of Rouse and Dawson. It is alleged in each count that Rouse and Dawson counseled, assisted, and conspired with Mangus in instituting prosecution of the criminal charges. We find no evidence in the record that tends to sustain that allegation. We have already noted that Mangus testified that when he obtained the receipts he went to Slater, Dawson, Rouse, and some of the other directors, showed them the receipts and asked their advice, and they advised him to take the receipts to the county attorney and see what he had to say about the matter. Rouse and Dawson confirm this. They each testified that the only talk theV had with Mangus about the issuance of these receipts was to advise him to go and consult the county attorney. There is no testimony that either of them did anything else about the matter. Rouse further • testified that the county attorney did not talk to him before Burnham’s arrest, and Dawson testified that he did not conspire or agree with anyone to have Burnham arrested. We are not unmindful of the testimony as to what occurred at a meeting on the evening of March 23, 1926. That meeting was called because Burnham had undertaken to discharge, or at least it was reported that he had undertaken to discharge, the driller at the. well, and he was notified to attend that meeting. We gather from the record that Burnham had the notion that the written contract by which he was employed to sell treasury stock also gave him the management of the company’s operations. The contract did not give him such authority. Others who attended that meeting were Rouse, Mangus, Heston, Hamilton, Slater, Gregory, Frakes, Gilbert, and Forney. Burnham’s wife, his sister, and a seventeen year old boy who lived with the Burnhams, testified that they stood at a window of the room in which the meeting was being held, and heard Dawson say they had to get rid of the Indian, and that Rouse replied they had to get rid of him behind the bars and throw the key away. They testified this occurred while Burnham was out of the room in which the meeting was being held. This was denied by Gregory, Heston, and Rouse. Furthermore, Dawson testified that,he was not at the meeting; that he had left the day before with a shipment of cattle to Kansas City and did not return for several days, and he said he had with him while testifying the bill of lading issued at Goodland on March 22d. Gregory, who is a minister at Goodland and presided over this meeting, Hamilton, Heston, and Mangus corroborated Dawson’s testimony that he was not at the meeting. This testimony about “getting rid of the Indian” was probably offered to show ill will or malice and conspiracy, but the greater weight is with the defendants that no such statements were made by anyone and that Dawson was not there. It had no bearing on the subject of probable cause. Much of the testimony as to what occurred at that meeting had no relevancy to the issues in this ease and should have been excluded as prejudicial and incompetent.

In each count the plaintiff asked for $3,000.00 actual damages and $5,000.00 as punitive damages. The court in its instructions directed the jury to state the damages, actual and punitive, separately in its verdicts in the event it found for plaintiff. This direction was not complied with. The jury returned verdicts in favor of the plaintiff on each count for $6,000.00. The defendants moved for a new trial, one of the grounds therein being that the verdicts were excessive and given under the influence of passion and prejudice. The court denied the motion for new trial on condition that plaintiff remit $9,000.00 of the amounts allowed by the jury. The plaintiff filed a remittitur reducing the total damages from $24,000.00 to $15,000.00. The motion for new trial was overruled, and judgment was entered for $15,000.00. The court in entering its order of remittitur gave no reason therefor, but its ruling in that respect appears to have been responsive only to the ground of the motion for new trial just stated. We have no doubt that the opening argument made to the jury by counsel for plaintiff aroused the jurors’ prejudices and passions and caused them to find verdicts in the amounts stated. Indeed, throughout this whole argument, which appears in full in the record, there seems to be little else in it than an appeal to .passion and prejudice. It would render this opinion too lengthy to insert it here. Appellant Rouse, who is a practicing physician at Goodland, was called a crooked doctor. Counsel said the doctor’s word was worth nothing. He intimated that the county attorney had a sinister motive in deciding that charges should be filed against Burnham. He referred to Mr. Gregory as having “all the earmarks of a common, ordinary, enthusiastic liar.” He said that Mr. Dawson lied on the witness stand, and that “they come on the witness stand and every last one of them perjures himself, in order to save these rascals and scoundrels a few dollars, every last one of them.” ' When the trial opened the witnesses were excluded from the court room; and counsel in his address to the jury stated that a young lady, who had been stenographer for one of the defendants but was not a witness and sat in the court room during the trial, repeatedly went out and talked with the defendant’s witnesses, and intimated that she had been kept at the trial by one of the defendants for that purpose. In that connection he said: “Do you believe for a minute .that this man Mangus is as poor as he pretends to be, when he can keep a stenographer like that, with a fur coat, and bring her to Topeka and keep hear here, and have her carry word to the witnesses?” We find nothing in the record to justify these remarks, and, if they had been true, they were not matters for consideration by the jury. There was no rebuke at any time from the court, and the jury must have thought that the argument was an appropriate one, else the court would not have permitted it. The verdicts of the jury in the total sum of $24,-000.00 is evidence of aroused prejudices against the defendants. Conduct of plaintiff’s counsel was not only improper, it was reversible error. It is the duty of the court of its own motion to protect litigants from abuse by opposing counsel. New York Cent. R. R. Co. v. Johnson, 279 U. S. 310, 318, 49 S. Ct. 300, 73 L. Ed. 706.

There is another serious question about the four verdicts — Were they for separate damages or were they all for the same damages, and thus quadruplicates? The only difference in the four counts is that in two of them it appears that plaintiff had'preliminary hearings on two of the changes and was bound over to the district court, and those charges were there dismissed by the county attorney. The other two criminal charges remained in justice of the peace court. The ad damnum clauses in the four counts are identical. As damages they each alleged: the arrest, imprisonment and prosecution, thereby causing injury to plaintiff’s good name and reputation, his humiliation and shame, his impaired health, and injury to his business. We think it must be conclusively presumed that a verdict on the first count included all recoverable damage, both actual and punitive. There was one arrest, one imprisonment, plaintiff had preliminary hearing on that count and there was no proof of damage separately attributable to the other counts. There was in substance but one cause of action, one wrong alleged, and only one verdict should have been rendered. The vital issues were not adhered to, and as a result much incompetent and prejudicial evidence was admitted, some of it over objection. Those errors may not occur on a second trial and will not be further noticed.

Reversed and remanded.


source: Caselaw Access Project

author: UNDERWOOD, District Judge.

license: Public Domain

text:
    WALL v. ADERHOLD, Warden.
    No. 185.
    District Court, N. D. Georgia.
    Aug. 4, 1931.
    Thomas J. Wall, in pro. per.
    Hal Lindsay, Asst. Dist. Atty., of Atlanta, Ga., for respondent.
   UNDERWOOD, District Judge.

It appears from the certified record that the petitioner was, upon a plea of guilty, sentenced by the United States District Court for the Southern District of Mississippi, on November 13, 1929, to serve three years in the National Training School for Boys at Washington, and that on the next day, November 14, 1929, during the same term, petitioner was again brought before the court and resenteneed to a term of five years to be served in the United States Penitentiary at Atlanta.

The offense charged was the unlawful transportation in interstate commerce of a stolen automobile, knowing the same to have been stolen.

Apparently the sentence was changed because, under the law, the defendant could not be admitted to the National Training School for Boys, since he was over the age of seventeen years.

In this case the designation of the institution where sentence was to be served was not a necessary part of the judgment of the court, and does not invalidate that part of the sentence which committed the defendant to a term of three years. Ex parte Waterman (D. C.) 33 F. 29; Ex parte Givins (D. C.) 262 F. 702, and bases cited.

Under authority of United States v. Benz, 282 U. S. 304, 51 S. Ct. 113, 75 L. Ed. 354, In re Graves (D. C.) 117 F. 798 (cited and approved by the Supreme Court in the Benz Case), and Price v. McGuinness (C. C. A.) 269 F. 977, the second sentence, increasing the term from three to five years, is invalid to the extent of its excess over and above the three years imposed by the first sentence, although valid as to change of the place of the execution of the sentence, because passed, at the same term of court, as a permissible modification or correction of the first sentence.

This court is therefore of opinion that defendant’s sentence is valid only for a term of three years, and that upon satisfaction of the same he should be released under the provisions of the law relating to paroles or be discharged upon the completion of the three-year term as the case may be. An order to this effect will be entered.


author: BOOTH, Circuit Judge.

text:
    SPRINGFIELD FIRE & MARINE INS. CO. v. NATIONAL FIRE INS. CO. et al.
    No. 9008.
    Circuit Court of Appeals, Eighth Circuit.
    July 20, 1931.

      Stuart S. Ball, of Des Moines, Iowa (J. L. Parrish, Thomas J. Guthrie, and Thomas Watters, Jr., all of Des Moines, Iowa, on the brief), for appellant.
    Robert J. Bannister, of Des Moines, Iowa (H. H. Stipp, D. D. Holdoegel, and Stipp, Perry, Bannister & Starzinger, all of Des Moines, Iowa, on the brief), for appel-lees.
    Before KENYON and BOOTH, Circuit Judges, and OTIS, District Judge.'
   BOOTH, Circuit Judge.

This is an appeal by the Springfield Fire & Marine Insurance Company (hereafter called defendant company) from a judgment on a fire insurance policy issued by it.

The action was brought against appellant by five other fire insurance companies (hereafter called plaintiff companies) as assignees of the rights of the Grimes Canning Corporation, the insured under the policy.

The. case was originally brought in the state district court of Polk county, Iowa, but was duly removed to the United States District Court.

The following facts were admitted in the pleadings or were stipulated: The Grimes Canning Corporation owned and operated a canning factory at Rockwell City, Iowa. Prior to September 7,1929, it had taken out insurance with the five plaintiff companies on its manufactured merchandise contained in its two-story warehouse at its factory plant to the amount of $100,009. On September 4,1929, it contracted with the defendant company for an additional policy of insurance on said merchandise in the amount of $30,000. The poliey was issued, but was to take effect at noon on September 7, 1929, Central Standard Time. A fire occurred on the 7th of September, 1929, which destroyed or damaged the insured stock. The total value of the insured stock at the time of the fire was $99,916.52.

A dispute arising as to the liability of defendant company under the policy issued by it, the plaintiff companies paid the Grimes Canning Company $99,916.52, as payment of the loss and purchase price for the damaged property, and in consideration of the assignment to the plaintiff companies of whatever rights the Grimes Canning Company had to recover on its policy issued by the defendant company. This settlement was effected by the payment of specific amounts by each of the plaintiff companies, and the execution of separate instruments of assignment. The plaintiff companies took over the salvage remaining from the stock of goods damaged in said fire, and realized thereon the- sum of $29,926.98. .

If the defendant is liable in this action, the extent of its liability is the sum of $16,-151.43 with interest.

The defendant company had prompt notice of the loss after the occurrence thereof. issued by the defendant company was in force at the time of the loss.

The record discloses substantial evidence tending to establish the following facts in addition to those already stated:

Exhibit 1 is a plat showing the size and location of the buildings constituting the plant of the Grimes Canning Company at Rockwell City, Iowa, prior to the fire.

On the trial in the court below, at the close of all the evidence, plaintiffs and defendant moved for a directed verdict in their favor respectively.

The court directed a verdict for the plaintiffs.

The main issue in the trial court and upon this appeal is whether the policy of insurance

The Buildings.

The principal buildings of the Grimes Company’s plant were the husking shed, the cooker house, and the factory. The latter building contained the warehouse, the boiler room, and the canning factory or process room.

The buildings are shown on the plat introduced in evidence as Exhibit 1.

The factory was of brick and frame construction, two stories high, except a small part at the north end which was three stories. The boiler room was separated from the canning factory on the north and from the warehouse on the smith by brick walls about sixteen inches thick extending two feet or more above the roof. Through the north brick wall and on the first floor, there was a door leading from the boiler room to the canning factory or process room; through the south brick wall and on the second floor, there was a door leading from the second story of the boiler room to the warehouse, and there was a smaller opening about eighteen inches square for a can track. There was also a fire door through the south brick wall leading from the cooker house to the warehouse. The boiler room contained three boilers equipped with oil burners underneath the boilers on the west end. The floor of the boiler room was of cement and was about six feet below the first floor of the canning factory adjacent on the north. There was a door in the west side of the boiler room. The roof of the boiler room and of the warehouse was of composition. Above the boiler room was a second story room used for tools, etc. The warehouse to the south of the boiler room was about 125 feet long by 65 feet broad, two stories in height. The floors were of wood. There was no door on the first floor through the brick wall between the warehouse and the boiler room. There was an elevator and a small “case” elevator leading from the first to the second floor near the north wall of the warehouse. The insured merchandise was in the warehouse at the time of the fire. It consisted of canned com and the cans were piled commencing at the south end of the warehouse and running to within 25 or 30 feet of the north end of the warehouse, on the east side of the first floor; and to within about 50 feet of the north end, on the west side of the first floor. On the second floor, cans were piled to within about 60 feet of the north end of the warehouse.

The Fire.

A few minutes before 12 o’clock noon on September 7, 1929, a fire was discovered in the boiler room. Apparently oil had escaped from the oil burners and accumulated on the floor and had caught'fire. The public fire alarm whistle was blown at two minutes before 12 o’clock. The fire chief reached the scene about four minutes thereafter. At that time, and for several minutes later, the fire had not worked out of the boiler room. The chemical and .fire trucks arrived within five to seven minutes after the alarm. Gradually the fire worked from the boiler room into the canning factory to the north; thence up to the second story of the same. It then worked back to the south and entered the warehouse either through the roof or through one of the openings in the wall which was at the north end of the warehouse. It was from twenty to thirty minutes after the fire started before it reached the warehouse. Firemen had been in the warehouse playing the hose from there in an endeavor to check the fire.

The appellant makes two contentions: First, that prior to the date when the policy issued by the defendant company was to take effect, it had become certain that the property tó be insured would be destroyed or damaged by the fire which had already started, and this situation existing, the policy of the defendant company never took effect; second, that the hazard had been very materially increased between the time when the policy was issued and the time when it was to take effect, and this situation existing, the policy of defendant company never took effect.

Obviously, the first of these contentions involves a question of fact and a question of law.

Whether, prior to the date when the policy was to take effect, it had become certain that the property to be insured would be destroyed or damaged by the fire which had alre'ady started, is clearly a question of fact. This question of fact was by the motion of defendant company withdrawn from the jury and left to the court for determination. It is a familiar doctrine that when both parties move for a directed verdict, the granting of the motion of one party carries with it a determination of all questions of fact necessary to support the verdict and judgment in favor of that party. Phenix Ins. Co. v. Kerr, 129 F. 723, 66 L. R. A. 569 (C. C. A. 8); Clapper v. Gamble, 28 F.(2d) 755, 758 (C. C. A. 8), and eases cited; Hookway v. First Nat. Bank, 36 F.(2d) 166 (C. C. A. 8); Odegard v. Gen. Cas. & Sur. Co., 44 F.(2d) 31, 40 (C. C. A. 8), and eases cited; Sena v. American, etc., Co., 220 U. S. 497, 31 S. Ct. 488, 55 L. Ed. 559; Reynolds v. Zarlengo, 22 F.(2d) 626 (C. C. A. 8). The only questions left open for the appellate court under such circumstances are whether there was any substantial evidence in favor of such necessary findings, and whether there was error in the application of the law. See eases cited supra.

A consideration of the evidence has convinced that it was not certain at 12 o’clock noon September 7,1929, that the property insured would be destroyed or even damaged by the fire. It was uncertain whether the efforts of the firemen would not sueceed in putting out thé fire and in saving the contents of the warehouse. It was not certain that closing the door and the opening in the fire wall between the warehouse and the boiler room might not prevent damage to the insured merchandise. It was not certain that the fire might not be put out by a thunder shower. The fire lasted for several days. It was not certain that the insured merchandise might not be removed in whole or in part to a place of safety. Further, the evidence shows that the insured merchandise was not entirely destroyed. There was about $30,000 salvage obtained. The aleatory element was never absent.

The decision by the trial court of this question of fact involved in the first contention of defendant company was, in our opinion, supported by substantial evidence. It becomes unnecessary, therefore, for us to determine the question of law involved in defendant company’s first contention.

The second contention above mentioned also involves a question of faet and a question of law.

The question of fact is whether the existence of the fire in the boiler room prior to 12 o’clock noon on September 7,1929, materially increased the fire hazard of the merchandise stored in the warehouse at the time.

The question of law is whether such increased hazard, if it existed, prevented the policy of insurance of defendant company from taking effect.

The question of fact here involved must, we think, have been determined in favor of defendant company. It is conceded by ap-pellees, and we think rightly so, that the existence of the fire in the boiler room prior to 12 o’clock noon on September 7, 1929, did materially increase the danger of loss or damage by fire to the merchandise stored in the warehouse.

The question of law remains: Did this increased danger prevent the policy of insurance issued by defendant company from taking effect at the time agreed upon, viz., at 12 o’clock noon September 7, 1929?

No case has been cited by counsel which is directly in point, and we have found none. Eesort must therefore be had to established principles of insurance law and to cases having more or less bearing upon the ease at bar.

It is fundamental in the law of contracts of insurance that the policy is the sole source of the obligation of the parties. Union Mutual Life Ins. Co. v. Mowry, 96 U., S. 544, 24 L. Ed. 674; El Dia Ins. Co, v. Sinclair (C. C. A.) 228 F. 833. This does not necessarily mean that the words of the policy expressly state all of the conditions accompanying and forming a part of the contract between the parties. Courts have in very many instances held that ceifain implied conditions enter into and become part of the contract as surely as if they were stated in the wording of the contract. Statutory provisions are a familiar example.

Also, in life insurance contracts, the existence of the person whose life is the subject-matter of the contract at the time the contract is to take effect is an implied condition to the validity of the contract. 37 C. J. 385, § 49; Rhodus v. K. C. Life Ins. Co., 156 Mo. App. 281, 137 S. W. 907; Dickey v. Cont. Cas. Co., 40 Tex. Civ. App. 199, 89 S. W. 436, 438; see Riegel v. Amer. Life Ins. Co., 140 Pa. 193, 21 A. 392, 11 L. R. A. 857, 23 Am. St. Rep. 225; Id., 153 Pa. 134, 25 A. 1070, 19 L. R. A. 166.

In marine insurance contracts, where the policy of insurance was on a vessel “at and from” a certain port, it was held in an early case that there was an implied condition that the vessel should be at the port specified “in good safety” before the policy would attach. Parmeter v. Cousins, 2 Campbell, 235. It was also held where the policy was on a vessel “at and from” a certain pert that there was an implied condition that the vessel should be at the port specified within such time that the risk should not be materially varied. De Wolf v. Archangel, etc., Ins. Co., Ltd. (1874), L. R. 9 Q. B. 451. These implied conditions have been deduced by the courts from the wording of the contract or from the nature of the contract or from the circumstances surrounding the contract. Thus in Parmeter v. Cousins and in De Wolf v. Archangel, etc., Ins. Co., the real inquiry was as to the point of time at which the policy attached, and in order to determine this question, the various matters above mentioned were given consideration. But where the words of the policy are definite and certain, they govern.

Thus in marine insurance, where the policy is to take effect on a certain date and covers a vessel “lost or not lost,” the policy takes effect on the day named, even though the vessel was lost at the time the policy was made. 38 C. J. 1016,1038, §§ 31, 93. See also Barker v. Janson (1868) L. E. 3 C. P. 303; Mercantile Ins. Co. v. Folsom, 18 Wall. 237, 251, 21 L. Ed. 827.

And in fire insurance, where a policy is executed on a given date but is antedated as to the commencement of the risk, the policy is valid, and effective even though the property covered was destroyed by fire prior to the actual making of the policy, but within the period of the antedated risk. El Dia Ins. Co. v. Sinclair, supra; Hallock v. Commercial Ins. Co., 26 N. J. Law, 268; Id., 27 N. J. Law, 645, 72 Am. Dec. 379; Security Fire Ins. Co. v. Ky. Ins. Co., 7 Bush (Ky.) 81, 3 Am. Rep. 301.

However, in the ease of marine insurance policies “lost or not lost,” and in the ease of fire insurance policies where the period of risk antedates the making of the contract, there is the implied condition that the party insured does not know at the time of procuring the policy- that the property insured has already been destroyed. Mercantile Mut. Ins. Co. v. Folsom, supra; El Dia Ins. Co. v. Sinclair, supra; Security Fire Ins. Co. v. Ky. Ins. Co., supra; see Wales v. N. Y., etc., Ins. Co., 37 Minn. 106, 109, 33 N. W. 322.

And this brings us to a second cardinal rule of insurance contracts: That they are contracts uberrimae fidei. This rule, early adopted as to marine insurance contracts, has later been adopted as to life insurance contracts. Stipcich v. Ins. Co., 277 U. S. 311, 316, 48 S. Ct. 512, 72 L. Ed. 895. As applied to fire insurance, see Blumer v. Phoenix Ins. Co., 45 Wis. 622; Columbian Ins. Co. v. Lawrence, 2 Pet. 25, 49, 7 L. Ed. 335; Id., 10 Pet. 507, 515, 9 L. Ed. 512.

It may be open to question whether in the United States the same rule has been adopted to its full extent as to fire insurance contracts. There would seem to be certain obvious distinctions between fire insurance contracts on the one hand and marine insurance contracts on the other. In the ease of fire insurance, the subject-matter of the insurance is usually open to full inspection by both parties. In marine and life insurance, the insurance company is obliged to rely to a very considerable extent on the information obtained from the insured. See Hartford Ins. Co. v. Harmer, 2 Ohio St. 452, 59 Am. Dec. 684; 32 C. J. 1271, § 487; Hanover Fire Ins. Co. v. Merchants’ Transp. Co. (C. C. A.) 15 F.(2d) 946, 948; Penn Mut. Life Ins. Co. v. Mechanics’ Sav. Bank & Tr. Co. (C. C. A.) 72 F. 413, 433, 38 L. R. A. 33; II Cooley Briefs on Insurance) p. 1204; General Reins. Corp. v. So. Surety Co., 27 F.(2d) 265, 273 (C. C. A. 8).

But it is not of vital importance in the case at bar whether or not'the rule of uberrimae fidei applies in its full extent to fire insurance contracts. We may treat the case at bar as if such rule did apply. Under that rule, it is well settled that an applicant for insurance must use due and reasonable diligence to disclose to the insurance company all facts affecting the risk which arise -after his application has been made, and before the contract has been consummated. Thus, in M’Lanahan v. Universal Ins. Co., 1 Pet. 170, page 185, 7 L. Ed. 98, which was an action on a policy of marine insurance, the court, in discussing the principle under consideration, used the f ollowing language: “ * * * Where a party orders insurance, and after-wards receives intelligence material to the risk, or has knowledge of a loss; he ought to communicate it to the agent, as soon as, with due and reasonable diligence, it can be communicated, for the purpose of countermanding the order, or laying the circumstances before the underwriter. If he omits so to do, and by due and reasonable diligence the information might have been communicated, so as to have countermanded the insurance, the policy is void.” See also Piedmont, etc., Ins. Co. v. Ewing, 92 U. S. 377, 23 L. Ed. 610; Equitable Life Assur. Soc. v. McElroy, 83 F. 631, 636 (C. C. A. 8); Cable v. United States Life Ins. Co. (C. C. A.) 111 F. 19, 26, reversed on other grounds 191 U. S. 288, 24 S. Ct. 74, 48 L. Ed. 188; Graham v. General Mut. Ins. Co., 6 La. Ann. 432.

In Equitable Life Assur. Soc. v. McElroy, supra, the court said (page 636 of 83 F.) : “The honesty, good faith, and truthfulness of the person whose life is insured form the actual foundation of the agreement of life insurance. It is for this reason that contracts of life insurance are said to be uberrimae fidei, and any material misrepresentation or concealment is fatal to them. ■ When the representation of good health and., the certificate of the surgeon have been made, and the contract is not immediately closed, but negotiations for it continue, and proposals and counter proposals are made, but for some time none are accepted, the representation and certificate continue and condition all the proposals and the ultimate contract, when it is closed.”

But the rule thus established does not-require the insured to use extraordinary diligence or to employ extraordinary means to inform the insurance company of any changes in the risk which have taken place during the negotiations and before the policy has attached.

It was held in Neptune Ins. Co. v. Robinson, 11 Gill & J. (Md.) 256, that an applicant for insurance was not required to use all possible means of acquiring information material to the risk, up to the last instant of time; and that, therefore, his failure to call at the postoffiee where a letter was received on the morning of the day that he effected insurance upon a vessel, in which letter the captain of the vessel informed him that she had been lost, did not vitiate the policy.

See also Green v. Merchants’ Ins. Co., 10 Pick. (Mass.) 402; Snow v. Mercantile Mut. Ins. Co., 61 N. Y. 160; 8 L. R. A. (N. S.) 983 note.

Turning to the case at bar, the facts are that the policy of fire insurance did not in express terms or by any fair construction of the words used provide that a material increase in the risk between September 4th and September 7th would prevent the policy from attaching. There was nothing in the nature of the contract or in the surrounding circumstances which required such a provision. There was no applicable statute which so provided. The policy by its express terms was to be effective from a definitely stated moment of time. The property insured was in existence and undamaged at the time when the policy was to take effect. There is.no evidence tending to show either lack of the highest good faith or want of due diligence on the part of the insured at anytime.

Considering these facts in the light of the principles heretofore discussed, we cannot say that the' increase of hazard, material though it was, prevented the policy from attaching. If it were true that a material increase of hazard between the commencement of negotiations f<?r insurance and the taking effect of the policy ipso facto prevented the policy from attaching, there would be no reason for the rule of due diligence and good faith on the part of the insured in making known such increase of risk to the insurance company.

Appellant, by its contention, in effect asks that the contract between it and the insured be modified by adding a new condition. We have no authority to make such a change, and we have found no case in which such action has been taken by a court, although opportunity has not been wanting. See Saul v. N. W. Nat. Ins. Co., 79 Pa. Super. Ct. 322; Day v. Hawkeye Ins. Co., 72 Iowa, 597, 34 N. W. 435. If such a condition were deemed advisable, it would have been an easy matter for the insurance company to insert it along with the numerous other conditions contained in the policy. We are not called upon to determine whether the insertion of such a condition in the policy would increase or decrease uncertainty and litigation. That question is a serious one with which we are not here concerned. What we do determine is that no such condition was a part of the contract in the case at bar.

The judgment is affirmed.


author: PER CURIAM.

text:
    HANGING ROCK IRON CO. v. P. H. & F. M. ROOTS CO. UNION FURNACE CO. v. SAME.
    Nos. 4499, 4500.
    Circuit Court of Appeals, Seventh Circuit.
    July 8, 1931.
    Rehearing Denied Oct. 1, 1931.
    Raymond L. Walker and George M. Barnard, both of Indianapolis, Ind., and Walter M. Shohl, of Cincinnati, Ohio, for appellants.
    Harvey J. Elam and Howard S. Young, both of Indianapolis, Ind., for respondent.
    Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
   PER CURIAM.

The two appeals here under consideration involved judgments dismissing appellants’ actions. In each case, a money judgment was sought because of an alleged breach of contract for the" purchase of pig iron, which was never delivered because appellee refused to accept it. Identical issues were presented in both actions, and they were tried together. The court ordered, on appellants’ motion, that the causes be consolidated. The actions were tried four times. At the conclusion of the first trial, the plaintiff dismissed its action. The second trial resulted in two small judgments for appellants, from which they appealed. The judgments were reversed, and a new trial ordered. (C. C. A.) 10 F.(2d) 154. The third trial resulted in a verdict for appellee, which was set aside by the court. The fourth trial resulted in a verdict and judgment for appellee.

When the cause was before this court on previous appeal, we said: “The court instructed the jury, ‘The breach occurred at the end of each of these months’ (meaning July to December, 1920, inclusive). This was likewise error, because, under the circumstances, it was a question of fact as to when a breach, that was relied on, occurred, and whose it was. * * * ”

This statement became the law of the case, and the District Court therefore properly submitted both questions of fact to the jury.

No sufficient reason has been advanced to cause us to change the views we thus expressed on the previous appeal respecting these two fact issues.

Two vital questions, both of fact, were presented. The time of the breach, if any, was of importance because of the changing market price of the ore. For a considerable period of time covered by appellee’s alleged breach, the price of pig iron was as high as, or higher than, the price specified in the contract.

Moreover, it was, and is, the contention of appellee that the agents of appellants could have sold, and did in fact sell, all the ore manufactured during this period at a price which equaled or exceeded the contract price, and therefore appellants suffered no damages. Respecting this issue, the evidence presented a jury question. We think the jury could have found, and doubtless did find, that the ore manufactured by appellants for appellee was resold, without loss to appellants.

The judgment is affirmed.


text:
    BIG DIAMOND MILLS CO. v. UNITED STATES.
    No. 9038.
    Circuit Court of Appeals, Eighth Circuit.
    July 31, 1931.

      Leland W. Scott, of Minneapolis, Minn. (Junell, Oakley, Driscoll & Fletcher, of Minneapolis, Minn., on the brief), for appellant.
    Ralph E. Smith, Sp. Atty., Burean of Internal Revenue, of Washington, D. C. (Lewis L. Drill, U. S. Atty., of St. Paul, Minn., and M. W. Goldsworthy, Sp. Asst, to U. S. Atty., C. M. Charest, Gen. Counsel, Bureau of Internal Revenue, and R. P. Hertzog, Sp. Atty., Bureau of Internal Revenue, all of Washington, D. C., on the brief), for the United States.
    Before KENYON and BOOTH, Circuit Judges, and OTIS, District Judge.
   BOOTH, Circuit Judge.

This is an appeal from a judgment dismissing on the merits an action brought by the appellant against the United States to recover $3,356.88, with interest from January 28,1925, representing an amount paid by appellant to the collector of internal revenue as interest on unpaid income and excess profits taxes for the year 1917, which were erroneously assessed against appellant.

The ease was tried to the court without a jury (a jury having been duly waived) on an agreed statement of facts, which included the following: March 27, 1918, the appellant company (hereafter called the company) filed its income and excess profits tax return for 1917, disclosing a tax liability of $74,-260.02. June 25, 1918, it filed an amended return, disclosing a tax liability of $64,292.-74; and on the same date it filed a'claim for the abatement of the difference, $9967.28. On June 26, 1918, it paid the tax disclosed on the amended return. On or about January 23, 1923, the company signed a waiver of the statute of limitations. After an examination and audit, the Commissioner, on March 5,1923, notified the company that the total income and excess profits taxes assessed on the original income and excess profits tax return were due and payable. On May 24, 1923, the Commissioner rejected the claim for abatement, and, on October 26,1923, the collector of internal revenue made demand for the payment of the balance of $9,967.28, together with interest thereon at the rate of 1 per cent, per month from July 6, 1918, to November 23, 1921 (the date when the Revenue Act of 1921 was passed), amounting to $4,043.39; and interest at the rate of one-half of 1 per cent, per month from November 23, 1921,' to May 22,1923, in the amount of $897.06, making a grand total of $14,907.-73. Accompanying this demand was a letter from the collector suggesting that the interest might be made the subject of a compromise offer, inclosing a form for the making of such offer, and stating that the Commissioner had, in similar cases, considered an offer equal to 6 per cent, per annum. The letter is as follows:

“Treasury Department
“Internal Revenue Service
“St. Paul, Minn., Oct. 26,1923.
“Big Diamond Flour Mills Co. 922 Exchange Bldg., Minneapolis, Minn.
“In explanation of the enclosed notice and demand for tax, you are advised that this represents the unpaid balance of an additional assessment of Income Tax for the year 1917, and is the result of an audit by the Commissioner of Internal Revenue in connection with a claim for abatement filed by you on 7/3/18. Interest is computed in accordance with section 14 (a) of the Revenue Act of 1916, which remains in force under section 1400 (b) of the Revenue Act of 1918 until that act was superseded by the present law on November 23,1921.
“However, you are advised that your liability to this interest at 1% per month may at your option be made the subject of an offer in compromise. The Commissioner of Internal Revenue has in similar eases considered an offer equal to interest at the rate of 6% per annum on the balance of tax from the due date to date of payment. The due date in your case was 7/16/18.
“Should you desire to take advantage of your compromise privilege as above explained, you should execute the enclosed Forms 656 and 'forward the same to this office in duplicate accompanied by a certified check or post office money order in the amount of your offer.”

November 1, 1923, the company paid the balance of the taxes demanded; and submitted a compromise offer as to the interest, which, by inadvertence in computation, was too small; and it then submitted an additional compromise offer for the balance, and these compromise offers were accompanied by remittances of the amounts offered to the Commissioner. The total interest thus paid by the company was $3,190. With the letters transmitting this interest was sent Treasury Form 656, which is set out in the margin, together with the first letter of transmittal from the collector to the Commissioner.

January 17, 1924, Commander Mill Company filed a claim for refund of $200,000 for the year 1917 for itself and affiliated eompa-ni es, which included the appellant company. The basis for this claim was the contention that the claimants were entitled to have their excess profits tax liability for the year 1917 determined under the special assessment provisions of section 210 of the Revenue Act of 1917.

Subsequently, the company received a letter dated January 19, 1925, reading as follows:

“Jan. 19, 1925.
“Big Diamond Mills Company, Minneapolis, Minnesota.
“Sirs: You are advised that under date of January 3, 1925, the Commissioner of Internal Revenue, with the advice and consent of the Secretary of the Treasury, has accepted the amount of $3190.00, tendered as an offer in compromise of liability to the interest which accrued on a rejected claim for abatement of a portion of the tax assessed on your return of the annual income for the year 1917.”

In a letter from the office of the Commissioner dated January 28, 1925', the company was advised that an overassessment of $9,-902.24 had been made for 1917, and on June 22, 1925, this amount was refunded, together with $813.33 interest, covering a period from November 1, 1923, to March 14, 1925. The amounts so refunded did not include the amount of interest here m controversy. On June 27, 1925, the company filed a claim for a refund of the interest which had been paid under the compromise offer. May 5, 1927, this claim was rejected in a letter which read as follows:

“Reference is made to the conference held with your representative in the office of the General Counsel in support of the brief submitted by you to the Income Tax Unit relative to the refund of offers in compromise accepted in settlement of the liabilities incurred to interest accrued on the rejected portions of claims for abatement for the year 1917 tendered by the Commander Mill Company, Big Diamond Mills Company and the Empire Milling Company, Minneapolis, Minnesota.
“Due consideration has been given to the arguments presented and the cases cited by you. In accordance with the decision made by the office of the General Counsel, you are advised that there is no authority in law by ¡vhieh an amount tendered in compromise of ¿nterest can be refunded where, subsequent to the formal acceptance of the offer, the tax upon which interest accrued is refunded to the taxpayer.”

Following the rejection of the claim for refund of the interest, the present suit was commenced.

The action is for money had and received; in form, an action at law, but governed by equitable principles; and it is the contention of appellant that it is entitled in equity, justice, and good conscience to the money involved and in appellee’s possession.

It is conceded that the money involved is interest based upon a tax which was paid by appellant and which was afterward refunded by appellee as having never been due from appellant, but as having been wrongfully collected by reason of an erroneous assessment.

It would seem that under these facts, and in the absence of countervailing circumstances, if the tax itself was refunded, the interest based upon the tax should also be refunded as a matter of justice and equity; but the appellee contends that there is a conclusive countervailing circumstance, to wit, the making of the compromise agreement.

The trial court held that the compromise of the interest was valid and binding upon the parties, and could not be disturbed.

The main question involved in this appeal is whether, in view of the compromise agreement, the appellant company can recover the amount paid as interest under said compromise agreement.

A compromise is a contract, and, like other contracts, it requires, among other things, parties capable of making, and authorized to make, the contract, a subject-matter, and a consideration. 12 C. J. 316 et seq.; 5 R. C. L. p. 876 et seq.; Hunt on Accord & Satisfaction Compromise, p. 167; Board of Health of State of La. v. Teutonia, etc., Co., 137 La. 422, 68 So. 748, Ann. Cas. 1916B, 1251; 5 R. C. L. p. 881, § 6; Elliott on Contracts, § 235; 25 L. R. A. (N. S.) 275, note; Skinner v. Cromwell (C. C. A.) 40 F.(2d) 241, 245; City Street Improvement Co. v. Pearson, 181 Cal. 640, 185 P. 962, 20 A. L. R. 1317.

Compromises are favored in the law (12 C. J. p. 336, § 32; 5 R. C. L. p. 878, § 3; 25 L. R. A. [N. S.] 287, note; Daly v. Busk, etc., Ry. Co., 129 F. 513, 521 [C. C. A. 8]) ; but, nevertheless, the contract is subject to construction at the hands of the court as to its meaning and validity and consideration, in view of the language used, and in view of the circumstances surrounding the making of the contract. See 12 C. J. pp. 335, 367.

• In the case at bar, the validity, the construction, and the consideration of the contract of compromise are each, the subject of controversy.

The statute relevant to the situation is section 158, title 26, USCA, which is section 3229, Rev. St., and reads as follows:

“§ 158. Compromises. The Commissioner of Internal Revenue, with the advice and consent of the Secretary of the Treasury, may compromise any civil or criminal case arising under the internal-revenue laws instead of commencing suit thereon; and, with the advice and consent of the said Secretary and the recommendation of the Attorney General, he may compromise any such ease after a suit thereon has been commenced. Whenever a compromise is made in any case there shall be placed on file in the office of the commissioner the opinion of the Solicitor of Internal Revenue, or of the officer acting as such, with his reasons therefor, with a statement of the amount of tax assessed, the amount of additional tax or penalty imposed by law in consequence of the neglect or delinquency of the person against whom the tax is assessed, and the amount actually paid in accordance with the terms of the compromise.”

Section 158 on its face indicates that the authority of the Commissioner to compromise is limited to a “civil or criminal ease arising under the internal-revenue laws.”

The record on the present appeal shows that the tax for the year 1917 and the interest thereon constituted the •civil case. The interest was merely a part of the tax made so by section 14 (a) of the Revenue Act of 1916 (39 Stat. 756, 772), which remained in force under the Revenue Act of 1917 (40 Stat. 300); and by section 250(e) of the Revenue Act of 1921 (42 Stat. 227, 264, 266), being the act in effect when the interest payments were made. The liability was single. See Ely & Walker, etc., Co. v. United States, 34 F.(2d) 429 (C. C. A. 8), where the tax and a penalty were held to be a single liability. See, also, United States v. Childs, 266 U. S. 304, 45 S. Ct. 110, 69 L. Ed. 299; San Bernardino County v. So. Pac. R. R. Co., 118 U. S. 417, 6 S. Ct. 1144, 30 L. Ed. 125 ; C. B. 1-2, p. 220; C. B. II-2, p. 221. There being but a single liability covering the tax and the interest, it would seem to follow, first, that there is no authority in the statute for compromising the interest only, and retaining the sum offered, when the tax itself is thereafter found to be unwarranted, and is therefore refunded. No case is cited by the government to support the contention that the interest may be compromised separately. All of the cases that are cited involve both a tax and a penalty, or a tax alone, or a fine alone. The second result which would seem to follow from the holding that the tax and the interest constitute a single liability is that the compromise agreement, if on its face relating to the interest alone, must, in order to be valid under the statute, be read and considered in connection with the whole matter in controversy; that is, with the whole case and the proceedings relative to the tax, including the claim for refund filed January 17, 1924.

The compromise agreement, when thus read and considered in connection with all the facts relating to the controversy, carries with it the implied condition that, if the tax itself is returned as unwarranted, the interest paid under the compromise agreement will also be returned. If this were not so, the position of the government necessarily Would be that it had two separate, independent claims: one for a tax; one for interest; and that the one for interest could be compromised without regard to the validity of the tax on which it was computed. Such a position is neither reasonable in itself, nor does it comport with the wording and purpose of the statute.

There is no question that the government had the power to return both the tax and the interest, if wrongfully assessed. See section 252, Revenue Act of 1921, as amended by the Act of March 4, 1923 (42 Stat. 1504); see, also, section 149, title 26, USCA; section 284, Revenue Act of 1926 (44 Stat. 9, 66), and section 1065. and note, title 26, USCA.

It would also necessarily be the position of the government that the taxpayer, while vigorously contesting the validity of the tax, was willing to concede that interest on the tax could rightfully be collected, whether the tax was valid or otherwise. We do not think such an illogical conclusion can properly be attributed to the taxpayer.

A further contention of the appellant company is that there was no consideration for the compromise agreement. This contention has a twofold basis:

The first is that the claim of the government that interest was properly computed at 1 per cent per month from July 6, 1918, to November 23, 1921, was without foundation in law, because section 14 (a) of the Revenue Act of 1916 (39 Stat. 772) and section 1400 (b) of the Revenue Act of 1918 (40 Stat. 1149) were superseded by sections 250 (e)' and (h) of the Revenue Act of 1921 (42 Stat. 264) and that these sections of the act of 1921 are retroactive.

An examination of the various provisions of the statutes involved has not convinced that sections 250 (e) and (h) are retroactive. The ordinary rule is that a statute is prospective in its operation unless the intention that it be retroactive is clearly expressed. Flint v. Stone Tracy Co., 220 U. S. 107, 31 S. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312. We, accordingly, hold sections 250 (e) and (h) prospective only.

The second basis is that the demand for the tax itself was wholly without legal foundation ; that, when the tax itself fell, the interest necessarily fell with it; that, accordingly, there was and could be no consideration for the compromise of a matter that had no legal foundation.

The weakness of this basis is that it assumes that, at the time the compromise offer was made, it was known that the tax itself had no legal foundation. The evidence fails to show this. The trial court found as a fact that, even when the compromise offer was accepted, it was not known that the tax itself was without legal foundation. We shall later show that this finding was not warranted. We think it equally unwarranted to hold that the evidence shows that, at the time the compromise offer was made, it was known that the tax itself was without legal foundation. We think the evidence shows that there was an honest dispute as to the validity of the tax. The result is that we cannot hold that the compromise agreement was without consideration. We do hold, however, that the compromise agreement must be construed as conditional upon the establishment of the validity of the tax itself; that otherwise the compromise agreement was invalid as unauthorized by the statute.

As above stated, the trial court, among its findings of fact, included the following:

“7. At the time the plaintiff’s offer in compromise was accepted by the Commissioner [January 3, 1925] it was not known that the claim for refund filed on behalf of the plaintiff by the Commander Mill Company on January 17, 1924, would be allowed in whole or in part, or that a reaudit of the plaintiff’s returns for the year 1917, as a result of the filing of said claim for refund, would result in the determination of the over-assessment and/or overpayment of the plaintiff’s tax for that year, in the amount of $9,-902.24, or any other amount.”

' This finding is challenged as without support in the evidence. The record shows that there was an agreed statement of facts, and that no other evidence was token. The finding in question was not included in the statement of facts, nor can it, in our opinion, be properly inferred therefrom. Where the facts are agreed upon, the trial court is not authorized to make additional findings except such as are proper inferences from the agreed facts, or such as the court may take judicial notice of. 1 R. C. L. p. 779, § 6; 38 Cyc. 1934; 1 Encyc. Pl. & Pr. 393; Binney’s Lessee v. C. & O. Canal Co., 8 Pet. 214, 8 L. Ed. 921; Saltonstall v. Russell, 152 U. S. 628, 14 S. Ct. 733, 38 L. Ed. 576; Byam v. Bullard, 4 Fed. Cas. 934, No. 2262; 11 Ann. Cas. 148, note; see Federal Trade Com’n v. Cassoff (C. C. A.) 38 F.(2d) 790.

We think it was error on the part of the court to make the challenged finding.

Our conclusion is that the trial court erred in holding that the compromise agreement as to interest was unconditional, valid, and binding without regard to the legality of the tax itself; and erred in holding that appellant company was not entitled, in equity and good conscience, to recover the sum demanded.

The judgment of dismissal is reversed and the cause remanded for further proceedings not inconsistent with the views herein expressed.

       “Treasury Department
      Internal Revenue Service
      Form 656 Revised November, 1922
      Collector of Internal Revenue
      District of Minnesota
      Oct. 31, 1923
      St. Paul Main Office
      Offer in Compromise
      (This side to be filled in by taxpayer)
      Collector of Internal Revenue,
      Minneapolis, Minnesota
      St. Paul, Minnesota
      (City and State)
      (Address)
      October 30, 1923
      The following offer in compromise is submitted to you for transmittal to the Commissioner of Internal Revenue.
      Big Diamond Mills Company,
      (Signature of taxpayer)
      Commissioner of Internal Revenue,
      Washington, D. C.
      Charges of violation of law have been made against the undersigned as follows:
      Income and Profits Tax liability for the year 1917 understated
      Date and place of alleged violation Minneapolis, Minnesota, 1918
      The alleged violation is due to the following cause or causes:
      Paid U. S. Int. Rev.
      Coll. St. Paul
      Error in computation of tax liability
      (Nov.
      1050 1
      1923)
      Having been advised of the privilege of submitting an offer in compromise of the liability incurred, the sum of........................is hereby tendered voluntarily with request that it be accepted as a compromise offer and that release be granted the undersigned from all liability resulting from the violation, specified, excepting
      It is* understood that this offer does not afford relief from the liability incurred unless and until it is actually accepted, and that the offer can not be considered as having been accepted until the date on which formal notice of acceptance thereof is signed by the Commissioner.”
      “Collector's Recommendation
      Commissioner of Internal Revenue, Washington, D. C.
      Herewith is an offer made by Big Diamond Mills Co., of Minneapolis, Minn.
      (Insert complete address)
      on 10/30/23, in compromise of..............................liability incurred because of Compromise interest accrued on rejected claim at the rate of 1% per month on $9,967.28 from 7/6/18 to 11/23/21 $4,043.39 and at 6% per year from 11/23/21 to 5/22/23 $897.06.
      in violation of......................................................................
      (Sections, Acts, etc. of laws.)
      The period of liability is.............................Return was filed on Form No».*,,,»,.....................
      Received in
      Aug. 13, 1928
      •General Counsel's Office
      Bureau of Internal Revenue
      This case is (not) in suit. for 1917 on..........................
      (Period) (Date)
      The amounts of tax, penalties, etc. heretofore assessed and paid follow:
      Tax Amount . Amount Assessment made
      assessed paid on Line Page
      Month & Yr.
      Tax 74,260.02 6/26/18 64,292.74 Apr. 1918, p. 468
      11/ 1/23 9,967.28 Cons. List. 12-4
      Additional Tax
      Per cent penalty
      Per cent penalty
      Interest
      Compromise offer 2917.09
      Costs incurred if any.
      Amount paid
      Total 74,260.02 74,260.02 2917.09
      This compromise item appears on page...........................line ...........................................
      (or Serial No. N-540004) of Income Tax list for Nov. 1923 and the amount actually paid ($2917.09)
      (Month and year)
      is included in certificate of deposit No..............................bearing date of.............................
      I recommend that the offer be accepted for the following reasons:
      Date signed..........................................................192
      Collector Minnesota District”


text:
    BUCK et al. v. JEWELL-LASALLE REALTY CO.
    No. 8680.
    Circuit Court of Appeals, Eighth Circuit.
    July 23, 1931.

      See, also, 51 F.(2d) 730.
    Thomas G. Haight, of Jersey City, N. J. (Maurice J. O’Sullivan, of Kansas City, Mo., Nathan Burkan, of New York City, E. S. Hartman, of Chicago, Ill., and Louis D. Frohlich, of New York City, on the brief), for appellants.
    Charles M. Blackmar and Kenneth E. Midgley, both of Kansas City, Mo. (Meservey, Michaels, Blackmar, Newkirk & Eager, of Kansas City, Mo., on the brief), for appellee.
    Before BOOTH and GARDNER, Circuit Judges, and SANBORN, District Judge.
   BOOTH, Circuit Judge.

Suit was brought in the United States District Court for the Western District of Missouri by Gene Buck, as president of the American Society of Composers, Authors, and Publishers, and DeSylva, Brown & Henderson, Ine., a corporation, plaintiffs, v. Wilson Duncan, operating Radio Station KWKC, and Jewell-LaSalle Realty Company, a corporation, defendants, for an injunction and damages for infringement of the copyright of a musical production. It was stipulated by the parties that the facts stated in the bill of complaint were true; and certain additional facts were, also stipulated. From the bill and the stipulation the following facts have been gathered:

I. The American Society of Composers, Authors, and Publishers (hereinafter referred to for brevity’s sake as the society) is an unincorporated association organized and existing under and by virtue of the laws of the state of New York and has its principal place of business in the Southern district of New York. The membership of the society exceeds 700, and is comprised of authors, composers, and publishers of musical works. Said society was organized and is now operating for the purpose of protecting the performing rights in musical works, copyrighted by its members respectively, against infringement because of the public performance thereof for profit.»

Gene Buck is president of said society. Because said membership is exceedingly numerous and it would be impracticable to join all the members of said society as parties plaintiff, and the issues and questions involved here are of common and general interest to all of the members of the society, the said society has duly authorized and empowered the said Gene Buck, as president thereof, to institute and prosecute this suit in its behalf; and this suit is accordingly brought by plaintiff Gene Buck, as president of the American Society of Composers, Authors, and Publishers, for and on behalf of said society.

II. The plaintiff DeSylva, Brown & Henderson, Inc. (hereinafter for brevity’s sake called the publisher), is a corporation organized under the laws of the state of New York, having its principal place of business in the Southern district of New York, and at all times hereinafter mentioned was engaged in the business of printing, publishing, and vending of eopyrighted musical works.

III. The defendant Wilson Duncan is an individual and a resident of the Western district of Missouri; and defendant Jewell-LaSalle Realty Company is a corporation organized and existing according to law having an office and its chief place of business in the Western district of Missouri.

IY. At all of the times herein mentioned, defendant Jewell-LaSalle Realty Company (hereinafter for convenience called the company) owned and operated a certain hotel in Kansas City, Mo., known as the LaSalle Hotel, for the entertainment of its guests and the public generally. Said guests were guests for hire, and said hotel was operated as a commercial enterprise for profit. For the entertainment of the guests in said hotel, and of the public generally, and to promote the business of the company, and to make said hotel an attractive and desirable place, and to attract trade and custom thereto, and in order that renditions of musical compositions might be heard in the hotel daily by the guests, .the company, among other instruments and devices, caused to be installed and maintains in said hotel a master radio receiving set, which receives and converts radio waves transmitted from radio broadcasting stations into sound. Said receiving set was equipped with wires leading therefrom to all parts of the hotel, including the public rooms, parlors, and lobby, as well as into about two hundred private rooms. Loud speakers were attached to the wires leading from the receiving set, so that any musical composition picked up by said receiver could be and is simultaneously heard throughout the hotel.

Y. At all of the times herein mentioned, defendant Wilson Duncan was the owner of and operated a certain radio station in Kansas City, Mo., known and designated as KWKC. Said defendant was licensed by the government of the United States to operate such radio station as a commercial station. Such license was issued to said defendant on an application filed by him with the department having jurisdiction, stating that said radio station was operated and was to be operated for business and commercial purposes. Said defendant operated the station for profit and for hire, and received rent and income therefrom from persons engaging the facilities of the station, who desired their names or business to be mentioned over it, so that the same might be heard by the general public for the purpose of advertising such names or business. As a, part of the business of said defendant and to make the station profitable to said defendant, and to attract .others to engage the facilities of the station and pay therefor, said defendant caused musical compositions to be performed and rendered in and broadcast from the radio station. Such renditions and performances were public and were made available to the public, and were for the purposes of profit, both for said defendant and for others using the station or procuring their names or business to be mentioned over it.

VI. Prior to the 15th day of August, 1927, B. Gr. DeSylva, Lew Brown, and Ray Henderson, citizens of the United States, created and wrote the words and lyrics of a new and original musical composition; and also prior to that date they composed and set original music to the words and lyrics, constituting a musical composition entitled “Just Imagine.”

VII. Prior to the 15th day of August, 1927, the authors and composers assigned such composition to the publisher, including all rights therein and the right to secure copyright therein.

VIII. On the 15th day of August, 1927, the publisher duly copyrighted such composition by publishing the same and offering the same to the general public with the following notice of copyright on the first page of music, to wit: “Copyright 1927 by DeSylva, Brown and Henderson, Inc.”

IX. After publication of such composition with such notices of copyright, the publisher promptly on the 16th day of August, 1927, deposited in the office of the Register of Copyrights, Washington, D. C., two complete copies of the best edition thereof then published, accompanied by a claim of copyright, and paid to the Register of Copyrights the fee required by law for the registration of the said work; and said work was duly registered by the said Register of Copyrights, who thereupon issued his certificate of copyright registration therefor as class E, XXc., No. 670767.

X. Since August 15, 1927, such composition has been published by the publisher; and upon each copy of such composition so published, there has been inscribed on the first page of the music the copyright notice required by law, in the words and figures set forth in paragraph VIII hereof.

XI. Prior to the 1st day of January, 1926, the publisher, for a valuable consideration, by an instrument in writing, duly assigned, transferred, and set over to the society the exclusive nondramatie performing rights in and to any and all musical compositions, the copyright of which was then owned by the publisher, for the term commencing January 1,1926, .and ending January 1,1931, as well as the exclusive nondramatie performing rights in and to any and all .musical compositions to be thereafter acquired and copyrighted by the publisher for such term,

XII. The publisher is now the proprietor of the copyright in and to the musical composition mentioned and described in paragraph VI hereof, and all the rights secured under such copyright, except as to the rights assigned to the society as set forth in paragraph XI. The society is now the owner of the exclusive nondramatie performing rights of such musical composition, pursuant to the assignment mentioned in paragraph XI hereof, up to and including the 1st day of January, 1931, and by virtue of such assignment the publisher holds in trust for the society the exclusive nondramatie performing rights of said musical composition secured by said copyright down to and including the 1st day of January, 1931.

XIII. Said composition has been used in connection with the manufacture of parts of instruments serving to reproduce mechanically said musical work, and the publisher has filed a notice thereof, accompanied by the proper recording fee, in the office of the Register of Copyrights, and said notice is on file and is recorded therein, and the recording fee therefor has been paid to the Register of Copyrights.

XIV. On the 4th day of October and on the 7th day of October, 1928, and at other times prior and subsequent thereto, without the previous knowledge or consent of the society or of the publisher, and without subsequent ratification or consent of either the society or the publisher, and with full knowledge of said society’s rights in such work and of such copyright belonging to the publisher, the defendant Duncan, by means of his radio broadcasting station, gave and caused to be given public performances and renditions for profit of said musical composition; and the defendant realty company, by means of its radio receiving set and other devices owned and controlled by it, enabled and caused its guests in the LaSalle Hotel to hear said musical production so performed and rendered by said defendant Duncan by means of his radio broadcasting station:

XV. No prearrangement existed between the defendant Duncan and the defendant company with respect to what music should be broadcasted by Duncan or received by the company other than what might be said to be the usual prearrangement between any broadcaster and any person commercially operating a receiving set. The defendant Duncan operated his radio broadcasting station without any connection whatsoever with the company. He selected his own programs and broadcasted them for the benefit of himself and whoever chose to tune in and receive, them.

XVI. On May 29, 1928, there was addressed to said defendant company by registered mail a letter, advising it generally of the terms of the Copyright Act (17 USCA § 1 et seq.). Inclosed therewith was a list of the members of the American Society of ■Composers, Authors, and Publishers. The name of the plaintiff DeSylva, Brown & Henderson, Inc., was included in said list of members. Defendant company was informed that, unless and until license was obtained from said American Society, it should strictly avoid the rendition or performance in its hotel of any musical compositions copyrighted by any member of said society, under any circumstances.

An order pro eonfesso for failure to answer was entered against the defendant Duncan; later, a final decree was entered granting an injunction and damages against him, and dismissing the bill as to defendant Jewell-LaSalle Realty Company for lack of equity.

Appeal was taken to this court by Gene Buck, as president, et al.

The contention of appellants was that the Jewell-LaSalle Realty Company, through the use of its receiving set and loud speakers on the dates above mentioned, gave a public performance for profit of the musical composition in question within the meaning of 17 USCA § 1(e).

The contentions of the appellee were: (a) That the Jewell-LaSalle Realty Company was not a performer within the meaning of the statute cited; (b) that the alleged performance in the hotel was not “for profit” within the meaning of those words as used in the statute.

This court, being in doubt on the question of “performance” and desiring the instruction of the Supreme Court, certified to that court the following question: Question I. Do the acts of a hotel proprietor, in making available to his guests, through the instrumentality of a radio receiving set and loud speakers installed in his hotel and under his control and for the entertainment of his guests, the hearing of a copyrighted musical composition which has been broadcast from a radio transmitting station/ constitute a performance of such composition within the meaning of 17 USCA § 1(e) f

The question certified has now been answered by the Supreme Court in the affirmative. Buck v. Jewell-LaSalle Realty Co., 283 U. S. 191, 51 S. Ct. 410, 75 L. Ed.-.

It having been thus determined that the specified acts of the hotel proprietor constituted a performance, we are of the opinion that the record discloses that the performance was a public one and was for pro-fit. The words “public performance for profit” have received a liberal interpretation. See Herbert v. Shanley Co., 242 U. S. 591, 37 S. Ct. 232, 61 L. Ed. 511; Remick v. Am. Auto. Accessories Co. (C. C. A.) 5 F.(2d) 411, 40 A. L. R. 1511. That the broadcasting of a musical composition constitutes a public performance, see Messager v. British Broadcasting Co., Ltd., 137 L. T. R. 810, [1927] 2 K. B. 543, reversed on another point, [1928] 1 K. B. 660, [1929] A. C. 151.

Furthermore, in the ease at bar, the bill alleges “ * * * that such renditions and performances were public, and for profit, and for the purposes of profit; that same was for the purpose of making the business of each defendant well and favorably known, and attractive to the public generally, and to encourage the public to engage the respective services and facilities furnished for profit by each defendant, and to pay for the same, for the purpose of ultimate profit of each defendant,” and the “statement of evidence” admits that these allegations are true.

It follows from the foregoing that the trial court erred in dismissing the bill as to the defendant Jewell-LaSalle Realty Company.

The decree is reversed in so far as it dismisses the bill as to the defendant Jewell-LaSalle Realty Company, and the cause is remanded for further proceedings not inconsistent with the opinion of the Supreme Court hereinabove referred to, and not inconsistent with the views herein expressed.

Costs in this court to be divided equally.


text:
    BUCK et al. v. JEWELL-LASALLE REALTY CO. JEWELL-LASALLE REALTY CO. v. BUCK et al.
    Nos. 8681, 8689.
    Circuit Court of Appeals, Eighth Circuit.
    July 23, 1931.
    See, also, 51 F.(2d) 726.
    Thomas G. Haight, of Jersey City, N. J. (Maurice J. O’Sullivan, of Kansas City, Mo., Nathan Burkan, of New York City, E. S. Hartman, of Chicago, Ill., and Louis D. Frohlich, of New York City, on the brief), for Gene Buck and Leo Feist, Inc.
    Charles M. Blackmar and Kenneth E. Midgley, both of Kansas City, Mo. (Meservey, Michaels, Blackmar, Newkirk & Eager, of Kansas City Mo., on the brief), for Jewell-LaSalle Realty Co.
    Before BOOTH and GARDNER, Circuit Judges, and SANBORN, District Judge.
   BOOTH, Circuit Judge.

Suit was brought in the United States District Court for the Western District of Missouri by Gene Buck, as president of the American Society of Composers, Authors, and Publishers, and Leo Feist, Inc., a corporation, plaintiffs, v. Jewell-LaSalle Realty Company, a corporation, defendant, for an injunction and damages for infringement of -the copyright of certain musical compositions, 32 F.(2d) 366.

The first and seventh counts of the bill are here involved.

The first count alleged facts similar to those recited in appeal No. 8680, 51 F.(2d) 726 (opinion in which is filed at the same time with this), exeept that the hotel company alone was made defendant.

The seventh count differed from the first mainly in this: That the infringement alleged was that the hotel company, by means of an orchestra, caused the production in the hotel of a musical composition protected by a copyright — the rights under which were owned by plaintiffs — no consent to such production having been obtained by defendant.

There was no proof of actual damages.

The deeree dismissed the first count for lack, of equity; but awarded damages to-plaintiff on the seventh count in the sum of $250.

The plaintiffs appealed to this court (No. 8681) from that part of the deeree which dismissed the first count.

The defendant appealed (No. 8689) from that part of the decree whieh awarded damages on the seventh count.

The contentions of the parties in appeal No. 8681 are the same as in appeal No. 8680.

The contention of the appellant in appeal No. 8689 is that the court adopted the wrong statutory measure of damages; that instead of adopting the amount in the “no other case” clause of section 25(b) of the Act of March 4, 1909 (35 Stat. 1081, chap. 320), as amended 37 Stat. 489 (17 USCA § 25), it should have adopted the amount fixed by section 25(b) Fourth.'

This court, being in doubt as to the questions involved, and desiring the instruction of the Supreme Court, certified to that court the following questions:

Question I. Do the acts of a hotel proprietor, in making available to his guests, through the instrumentality of a radio receiving set and loud speakers installed in his hotel and under his control and for the entertainment of his guests, the hearing of a copyrighted musical composition which has been broadcast from a radio transmitting station, constitute a performance of such composition within the meaning of 17 USCA § 1(e) ? (The same as the question certified in appeal No. 8680.)

Question II. In a ease disclosing infringement of a copyright covering a musical composition, there being no proof of actual damages, is the court bound by the minimum amount of $250 set out in the so-called ■“no other case” clause of section 25(b) of the Copyright Act (17 USCA § 25), reading: “And such damages shall in no other case exceed the sum of $5,000 nor be less than the sum of $250, and shall not be regarded as a penalty”?

Question III. Is section 25(b) Fourth of the Copyright Act (17 USCA § 25) applicable, in the discretion of the court, to a case disclosing infringement of "a copyright covering a musical composition, there being no proof of actual, damage ?

Question IV. In section 25(b) of the Copyright Act (17 USCA § 25) is the clause reading, “nor shall the limitation as to the amount of recovery apply to infringements occurring after the actual notice to a defendant,” confined in its scope to the particular eases of infringement theretofore specifically mentioned in said section 25(b) ?

Question I has now been answered, as in appeal No. 8680, in the affirmative.

Question II has been answered in the affirmative.

Question III has been answered in the affirmative subject to a certain limitation.

The certificate as to question IV was dismissed, the Supreme Court holding that the question was not properly raised upon the facts presented in the certificate. Jewell-LaSalle Realty Co. v. Buck, 283 U. S. 202, 51 S. Ct. 407, 75 L. Ed. 978.

In disposing of question n, the Supreme Court said (page 206 of 283 U. S., 51 S. Ct. 407, 409):

“We are of opinion that the maximum and minimum provisions were intended to be applicable alike to all types of infringement except those for which the section makes other specific provision.
“It is urged, however, that under such interpretation the suggested measure of $10 a performance, scheduled in the fourth subdivision of section 25, would not be applicable unless more than twenty-five infringing performances were proved. This appears to be the meaning of the section, read as a whole, particularly since the amounts in the scheduled subdivisions appear to have been inserted merely as an aid to the court in awarding such damages as ‘shall appear to be just.’ ”

In disposing of question m, the Skpreme Court said (page 208 of 283 U. S., 51 S. Ct. 407, 409): “This question has in part been necessarily answered by our discussion of question II, for, unless the number of infringing performances of a copyrighted musical composition exceeds twenty-five, the minimum allowance of $250 must be made. Where more than twenty-five infringing performances are proved, and there is no showing as to actual loss, the court must allow the statutory minimum, and may, in its sound discretion, employ the scheduled $10 a performance as a basis for assessing additional damages. See Westermann v. Dispatch Printing Company, 249 U. S. 100, 106, 39 S. Ct. 194, 63 L. Ed. 499. Subject to this limitation, question III is answered in the affirmative.”

It having been thus determined that the specified acts of the hotel proprietor constituted a performance, and the applicability of the statutory provisions as to damages having been made clear, we hold, upon the record, as in No. 8680, that the performance was a public one and was for profit.

We hold, further, that the trial court erred in dismissing the first count; but decreed correctly the damages against defendant under the seventh count.

The decree is accordingly reversed in so far as it dismissed the first count of the bill; and is affirmed in so far as it adjudged damages against defendant under the seventh count of the bill; and the causes are remanded for further proceedings not inconsistent with the opinion of the Supreme Court hereinabove referred to, and not inconsistent with the views herein expressed.

Costs in this court to be divided equally.

       The relevant statutory provisions are as follows:
      “That if any person shall infringe the copyright in any work protected under the copyright laws-of the United States such person shall be liable: * ** *
      “(b) To pay to the copyright proprietor such damages as the copyright proprietor may have suffered due to the infringement, * * * or in lieu of actual damages and profits such damages as to the court shall appear to be just, and in assessing such damages the court may, in its discretion, allow the amounts as hereinafter stated, but [here follow limitations applicable specifically to newspaper reproductions of photographs, and certain motion picture infringements of undramatized or nondramatic work and of copyrighted dramatic or dramatiao-musical work], and such damages shall in no other case exceed the sum of $5,000 nor be less than the sum of $250, and shall not be regarded as a penalty. But the foregoing exceptions shall not deprive the copyright proprietor of any other remedy given him under this law, nor shall the limitation as to the amount of recovery apply to infringements occurring after the actual notice to a defendant, either by service of process in a suit or other written notice served upon him.”
      Then follows the so-called schedule of which the “Fourth” item is:
      “In the case of dramatic or dramatico-musical or a choral or orchestral composition, $100 for the first and $50 for every subsequent infringing performance ; in the case of other musical compositions $10 for every infringing performance.”