text:
    PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA v. DAVIN.
    (Circuit'Court of Appeals, Fourth Circuit.
    April 14, 1925.)
    No. 2330.
    Insurance @=>349(1) — Policy held lapsed1 for nonpayment of premium.
    A provision of a life policy that, on default in payment of a premium, the policy should lapse, and, in the absence of other election by insured, the cash surrender value, less any indebtedness of insured to the company, should be applied as a premium to pay for extended insurance in the amount of the face of the policy, less any such indebtedness, held valid, and where, when a premium became due and was not paid, insured was indebted on a note given for a prior premium which, with interest, exceeded the surrender value, the policy automatically terminated on expiration of the time of grace allowed for payment of the premium.
    In Error to the District Court of the United States for the Southern District of West Virginia, at Huntington; George W. Me-Clintic, Judge.
    Action at law by John W. Davin, administrator of the estate of William J. Quinn, deceased, against the Pacific Mutual Life Insurance Company of California. Judgment for plaintiff, and defendant brings error.
    Reversed.
    Douglas W. Brown, of Huntington, W. Va. (Fitzpatrick, Brown & Davis, of Huntington, W. Va., on the brief), for plaintiff in error.
    Connor Hall, of Huntington, W. Va. (Dee-gan & Hall, of Huntington, W. Va., on the brief), for defendant in error.
    Before WOODS, WADDILL, and ROSE, Circuit Judges.
   ROSE, Circuit Judge.

This is a suit against the Pacific Mutual Life Insurance Company of California, plaintiff in ' error, brought by the defendant in error, John W. Davis, as administrator of William J. Quinn, deceased, suing for his own use and benefit as such administrator and for Andrew’ J. Dalton and John A. Kelly, upon a policy of insurance, issued by the plaintiff in error, upon the life of Quinn. Dalton and Kelly were creditors of the deceased for something over $9,000, and as security for their debt he had, during his lifetime, assigned the policy to them.

Dor clearness and brevity, the plaintiff in error, the defendant in error, the deceased, and Dalton and Kelly, will be referred to as the company, the administrator, the insured, and the assignees, respectively.

While the trial below was to a jury, no issue of fact was there, or is here, in dispute as was recognized by each party moving for a directed verdict in its favor and asking for no other instructions.

On the 2d of June, 1920, the company issued to the insured, who was then 26 years old, the policy sued on. It was for $25,000, and the annual premium upon it was $420, payable annually in advance on the 2d day of June of each year. The premium for the first year was paid in cash at the time the policy was issued, and on the 2d of June, 1921, the second premium was met in like manner. The third premium fell due on June 2, 1922. No payment was then made on it, but on the 1st of August of that year the e.ompany accepted from the insured his promissory note payable on September 2, 1922, for $437.50, with interest at 6 per dent, from June 2, 1922. The amount of the note covered not only the premium on his life insurance policy, but an additional sum of $17.50 as premium on an accident annexed to it. By the terms of the policy, either party could terminate the accident provision, and with it, the right to receive and the obligation to pay $17.50 of the amount promised and subsequently it was terminated, but after the $17.50 included in the note had been earned by the company. This note was not paid at maturity, and, indeed, nothing was done as to it until the 2d day of January, 1923, when the company received $35 on its account reducing the amount then due upon it, principal and interest, to $417.81. It is stated that this payment was made by the assignees for the purpose of reducing the amount due on the note below the cash surrender value of the policy so that the company could safely continue the policy in force for a while longer.

On June 2,1923, another premium of $420 fell due. It was not paid and no payment was ever made on the note except the. $35 already mentioned. On the 2d of June, 1923, the amount owed the company on the note, principal and interest, was $428.27, and the premium due in advance on that day amounted to $420 more. The cash surrender value of the policy was then $425, so exclusive of the premium due June 2, 1923, the deceased then owed the company $3.27 more than the amount of its then cash surrender value. The insured died on May 13, 1924, without he or anybody else having made further payments on account of the note or the policy, or, indeed, without anybody, so far as the record discloses, having since January 2, 1923, communicated with the company concerning it. The company regarded the policy as having lapsed months before the death of the insured. The administrator contended that the policy was in force at the time of the insured’s death, and that he was entitled to collect the face of it less the sum due on the note, and the premium overdue since June 2, 1923, with interest on the balance, making $24,850.82. The court agreed with the administrator and instructed a verdict accordingly.

The company bases its claim that the policy had lapsed before the death of the insured upon certain provisions of it. They in substance provide that upon default in the payment of a premium, the company was to be under no liability except such, if any, as was set forth in certain paragraphs of the policy headed’ “Nonforfeiture and Automatic Nonforfeiture.” By those provisions, the insured was given the right to elect within three months after the default in payment of the premium, but not later, any one of three options with the? further provision that in the event of no such election, the insurance was to be automatically continued as provided in option three. The insured made no election, nor did any one for him, so that his rights under the policy are governed solely by option 3, which reads: “That the insurance for the face amount of this policy, less any indebtedness thereon to the company, will be continued in force from date of default for such term as is hereinafter provided, but without the right to loans.” It defines cash surrender value as “equal to the entire reserve on the face amount of this policy, computed according to the American Experience Mortality Table and interest at the rate of 3% per cent, per annum. Any indebtedness hereon shall be deducted from the cash surrender value.” “The amount of the paid-up life insurance, or the term of the paid-up term insurance, shall he such as the amount of the cash surrender value reduced by the amount of any indebtedness thereon to the company will purchase or buy, as the net single premium at the attained age of the insured based on the American Experience Mortality Table, and interest at the rate of 3% per cent, per annum.”

Now, the note of the insured had been given for the third annual premium. If it had been paid, as it was not, the cash surrender value on June 2, 1923, of the policy would have been $425, which would have bought extended term insurance for 2 years and 50 days; but there was an indebtedness, and that indebtedness exceeded, by $3.27, the amount of the cash surrender value. The provision is clear that the policy was to be continued for only such term as the amount of the cash surrender value reduced by the amount of any.indebtedness, due on the policy, would purchase. There was nothing with which to buy any extended insurance whatever, so that the policy automatically terminated at the end of the 31 days’ grace given by its terms; that is, at the close of July 3, 1923. So the company then assumed, and still insists.

The administrator says that even if the provisions of the policy relied on by the company are valid and are to receive the construction which the company puts upon them, nevertheless the policy was still in force, because it provides that failure to repay a loan or interest thereon “shall not avoid this policy unless the total indebtedness thereon to the company shall exceed the ■ cash surrender value at the time of such failure, nor until thirty-one days after notice of such fact shall have been mailed by the company to the last known address of the insured and of the assignee, if any, from the home office of the company.” It is admitted that no notice of forfeiture for the nonpayment of the note was ever sent, nor was any required. The policy was not forfeited for the nonpayment of the note. What happened was that the premium fell due on the 2d of June, 1923. It was not paid at that time, nor during the 31 days of grace. Entirely irrespective of whether a note was outstanding or not, the insured had the right to elect any one of the three options given him by the policy, and upon his failure so to elect, automatically the policy for itself elected the third option, and then for the first time the fact that he owed any money on the note properly entered into consideration. His policy was to be extended for such time as could be paid for by the cash surrender value after all indebtedness due by him was deducted from it. It so happened that when the indebtedness due by him was deducted from the cash surrender value of his policy, the result was a minus quantity, and he was not entitled to any extension at all. This is a very different situation from that contemplated by the policy provision relied on by the administrator.

The main stress of the latter’s argument to sustain the judgment below, however, rests upon his contention that option 3 does not appear to mean what the company says it does mean, and being ambiguous, the ambiguity must be resolved against the company; secondly, even if it is to be construed as meaning what the company says it does, it is so unfair as to be invalid. We can see nothing uncertain in the provision. To us, it seems perfectly clear. It says in effect that when the option No. 3 is chosen by the insured or automatically comes into force because of his failure to elect either of the others, certain things shall happen. From the cash surrender value of his policy at the time shall be deducted the amount of any indebtedness he owed the company. The balance shall be used in buying for him insurance in the amount of the face of his policy less the indebtedness he owed the company for such length of time as at his age, in accordance with certain definitely described tables, the balance is sufficient to pay. This is perfectly clear, and it means just what it says, and it cannot be understood as meaning anything else.

It is to be remembered that the policy is forfeited for nonpayment of premium, or would be, except for the provision in it with which we are now concerned. In the absence of statute, the parties may agree for whatever grace, be it great or small, the company may be willing to give and the assured is willing to accept. It is a pure matter of contract. Moreover, whether the company shall agree that the extended term insurance shall be for the amount of the face of the policy, or for an amount less than the face, does no harm to the insured. The provision is that he is to get paid-up term insurance for so long as the net amount to the credit of his cash reserve will suffice to pay. That is to say, if the face of his policy was $20,000 and he owed the company $10,000 and the amount to the credit of its cash reserve would presumably buy paid-up term insurance for $20,000 for-one-half the time, it would buy it for $10,000, so that whatever the insured lost in the amount of the paid-up policy he gained in the length of time during which it would be in force. The provision made by the company is more favorable to the insured than is required by the statute law of West Virginia. Barnes Code, chapter 34, § 34 A.

It is said, however, that in this way the company received a double payment of its indebtedness: First, by deducting the indebtedness from the cash reserve; and, second, by again deducting it from the face of the policy as has already been pointed out. Deduction from the face of the policy is an altogether immaterial matter, for, as already pointed out, what the insured loses in the amount of the policy he gains in the time for which it is extended. Quite obviously, for the protection of the company, it must deduct any indebtedness due the company from the cash reserve before it can apply the cash reserve to buying extended insurance, for if it did not do so, the insured would get insurance for which he had not paid, and for which, if he did not happen to die, within the period of extension, he never would pay and never could be compelled to pay.

What we have said disposes of the further contention of the administrator that in some way the company is charging the insured upwards of 6 per cent, on his loan. It i's doing nothing of the kind. There is no foundation that we can see for this contention. In accordance with the plan agreed upon between the company and himself when he took the policy, the net cash reserve is used to buy its ordinary value in extended term insurance in the manner prescribed in the policy, and that i's all there is to it.

It follows that the learned court below should have instructed the jury to find for the company and not for the administrator.

Reversed.'


source: Caselaw Access Project

author: PAGE, Circuit Judge.

license: Public Domain

text:
    In re BENGSTON. CHICAGO TITLE & TRUST CO. v. KIEFER.
    (Circuit Court of Appeals, Seventh Circuit.
    January 27, 1925.)
    Nos. 3492, 3493.
    I. Bankruptcy <§=>196 — Bankrupt’s equitable interest in land conveyed to his attorney held subject to judgment lien.
    Judgment obtained against bankrupt more than four months before bankruptcy held lien, under Hurd's Rev. St. 111. 1917, c. 77, on land which had been conveyed to bankrupt’s attorney, pursuant to agreement, to which judgment creditor did not assent, made at meeting of bankrupt’s creditors, providing for surrender of bankrupt’s lien claim in other property, in consideration for property so conveyed to attorney and certain amount in cash.
    2. Bankruptcy <§=>217(3) — Order on petition to 'restrain suit in state court held mere restraining order.
    Order of bankruptcy court, upholding bankrupt’s petition to restrain judgment creditor from prosecuting bill in state court in aid of execution,- held not 'conclusive as to whether judgment was lien on real estate, on judgment creditor’s prayer for preference, being merely a restraining order.
    Petition for Revision of Proceedings of the District Court of the United States for the Eastern Division of the Northern District of Illinois.
    In the matter of Harry Bengston, bankrupt. On petition of the Chicago Title & Trust Company, trustee, to review and revise, and appeal from order of District Court in favor of Ben P. Kiefer, claimant of judgment lien on real estate.
    Affirmed.
    Ralph E. Brown, of Chicago, Ill., for appellant.
    Millard Rl Powers, of Chicago, Ill., for appellee.
    Before ALSCHULER, EVANS, and PAGE, Circuit Judges. r -
   PAGE, Circuit Judge.

Bankrupt took in payment for a debt real estate in Cook county, 111., with deed therefor in the name of his attorney, Sayers. In the circuit court of Cook county, more than four months before adjudication in bankruptcy, appellee obtained judgment against bankrupt, and the question here is whether the holding by the District Court, that it was a lien upon that real estate, should be reversed.

Appellant concedes that judgments become liens under the Illinois statute upon all equitable interests in real estate (sections 1 and 3, chap. 77, Cahill’s Ill. Revised Stats. 1921, p. 2104; Hurd’s Revised Stats. Ill. 1917, p. 1801; Jones & Addington’s Ill. Stats. Ann. pars. 6747 and 6749), but urges: (a) That where there is a conveyance by a debtor to a third party, fraudulent as to creditors, a judgment lien does not attach; and (b) that no equitable interest which cannot be enforced by the judgment debtor is subject to the lien of a judgment.

The first proposition is fully sustained by many Illinois authorities. See Jones & Addington’s Ill. Stats. Ann. vol. 4, p. 3679; Union Natl. Bank v. Lane, 177 Ill. 171, 52 N. E. 361, 69 Am. St. Rep. 216.

The second proposition is in substance the •same as the first, because both are based upon what may be called a legal fact in Illinois, namely, that under those circumstances there is nothing remaining in the debtor.

There is no evidence or claim that the conveyance to Sayers was in fraud of creditors. Do the facts show that bankrupt had divested himself of all interest? The referee certified to the court the following facts, viz.:

“It was decided upon a meeting of bankrupt’s creditors that it would be advisable to trade the bankrupt’s right to claim a lien in the property owned by the third party for the property in question and $4,000 in cash, and that the title to the new property was to be taken in the name of Glenn P. Sayers. Kiefer” (appellee) “took no affirmative action either for or against such procedure. Sayers at that time was the attorney for the bankrupt. The legal title * * * was held by Sayers in his name and he paid off some creditors of the bankrupt. * * * The bankrupt did not have possession at any time. * * *
“Sayers has stated that he has paid Beng-ston” (bankrupt) “moneys and himself for services as attorney and collected the rents.”

The referee then told the court that the basis of his holding, adverse to appellee, was Union National Bank v. Lane, supra. The opinion there expressly states that the decision is based upon the fact that the conveyance there in question had been made “fraudulently to hinder and delay creditors.” As there is no evidence here of such a fraudulent intent or purpose, that ease is not in point. Who the creditors in the meeting were, whether all the creditors were present, how much the claims of those present were, are things which do not appear. The purpose of placing the title in Sayers was not made the subject of any writing, and the terms of any agreement relating thereto, if such there was, are not disclosed. We must look, for a solution of the question, to the relations between the parties and what «they did.

“He” (Sayers) “paid off some creditors,” but under what arrangement or by whose order does not appear. ' From what source he got the money does not appear. “Sayers has stated that he has paid Bengston moneys and himself for services as attorney and collected the rents.” Under what authority or agreement he paid Bengston or himself money does not appear, and unless we are warranted in finding that both Sayers and Bengston were paid from rents, the source of the money does not appear. If Bengston was then insolvent, as the referee found, then we must assume that Bengston was being paid from the $4,000, if that went to Sayers, or from the rents, - either of which would tend to show that there had been no such absolute disposition of his property as would make a common-law assignment. Wiggins v. Hummel, Rec., 295 F. (7th C. C. A.) 510. Those are all the things done by Sayers before the filing of the bankruptcy petition. Payments to Bengston were inconsistent with the theory that he had no interest in the property.- Sayers was acting as attorney for Bengston when he filed his voluntary petition anql schedule, wherein the real estate in question was scheduled as bankrupt’s property, without any claim that Sayers had any interest in the property or owed any one other than bankrupt any duty. Two days later Sayers, as attorney for bankrupt, filed a petition in the bankruptcy court asking the court to restrain appellant from prosecuting his suit in the state court in aid of execution issued on the judgment in question. The statement on the schedule that “the title of above property in Glenn P. Sayers * * * in trust for the benefit of creditors,” if it amounts to anything, is nothing more than an admission that, although the title was held'by Sayers, it was in trust for the creditors in bankruptcy.

The acts of bankrupt and Sayers were inconsistent with any theory that bankrupt had no interest in the property. At all times, as the record shows, Sayers was bankrupt’s attorney, and there is nothing to show that at any time he represented any one else.

We are of opinion that bankrupt had an interest to which the lien of the judgment attached.

On the petition, supra, to restrain appel-lee from prosecuting his bill in the state court, in aid of execution, the order of March 10,1924, was made much broader than the prayer of the petition, and it is claimed that that order, which has not been appealed from, was adverse to and determinative of appellee’s rights. Three days thereafter ap-pellee filed, his petition, setting up the fact that he had been restrained, and also setting out all the facts pertaining to his judgment and asking the court to decree his judgment to be a prior lien on the real estate or on the proceeds of any sale thereof. Later, a formal proof of claim was filed, which set out the facts and prayed a preference. The trustee (appellant) set up a claim that the order of March 10th was final and adverse to ap-pellee. On May 2, 1924, the referee found that appellee was not entitled to a preference.

In. that order he referred to the order of March 10th merely as a restraining order. In the referee’s certificates on petition to review, he stated what his holding had been under the order of May 2d, and that he had so decided on authority of Union Natl. Bank v. Lane, supra, making no reference to the order of March 10th. We are of ' opinion that the referee and the court very properly treated the order of March 10th as merely a restraining order.

The order of the District Court is affirmed.


author: ROSE, Circuit Judge. WADDILL, Circuit Judge

text:
    In re LEE. OPPENHIMER v. FINANCE & GUARANTY CO.
    (Circuit Court of Appeals, Fourth Circuit.
    May 4, 1925.)
    No. 2323.
    Bankruptcy ©=^165(2) — Action of automobile finance company in repossessing itself of automobiles sold under recorded ¡conditional sales contracts held to effect voidable preference.
    Under Virginia Traders’ Act (Code Va. 1919, § 5224), making property of another forming part of stock of person who transacts business in own name liable for debts of such person, automobile finance company, by taking possession within four months prior to dealer’s bankruptcy of automobiles sold to dealer under recorded contract reserving title in finance company, effected voidable preference.
    Waddill, Circuit Judge, dissenting.
    In Error to the .District Court of the United States for the Eastern District of Virginia, at Richmond; D. Lawrence Groner, Judge.
    Action by Henry W. Oppenhimer, trustee in bankruptcy of W. A. Lee, trading as the National Motor Company, against the Finance & Guaranty Company. Judgment of dismissal, and plaintiff brings error.
    Reversed.
    Joseph M. Hurt, Jr., of Richmond, Va., for plaintiff in error.
    S. M. Brandt, of Norfolk, Va., for defendant in error.
    Before WOODS, WADDILL, and ROSE, Circuit Judges.
   ROSE, Circuit Judge.

The parties below occupied the same position they do in this court; that is to say, Henry W. Oppenhi-mer, as trustee in bankruptcy for one W. A. .Lee, trading as the National Motor Company, was there plaintiff and is plaintiff in error here, and the Finance & Guaranty Company, defendant in error here, was defendant there. For brevity, they will be referred to as the trustee and the vendor, respectively.

The bankrupt, one W. A. Lee, traded as the National Motor Company. No one else was interested in the business, which was that of buying and selling automobiles. The vendor financed the purchase of automobiles for Lee and was the vendor of the ears to him. The sale was made on the installment plan, and by the agreement^ between the parties, which were duly recorded, the legal and equitable title to the automobiles was to, remain in the vendor until the final payment of the last installment of the purchase money and the performance by thé bankrupt of the other terms of the agreement. These contracts contained other provisions, such as that the bankrupt could not mortgage, rent, pawn, dispose of, or sell the property, without the «permission of the vendor, first obtained in writing. There is no question, however, that the bankrupt bought the automobiles to sell again and that the vendor was at all times aware of this intention. The agreements, all ' substantially identical in form, bore date at various times from the 28th of April, 1921, to the 6th of August, in the same year.

On the 26th of December, 1921, Lee left Richmond, for parts unknown, and, so far as the record discloses, has not been heard of since. On the 10th of January, the vendor instituted suit in detinue in the law and equity court of the city of Richmond, and in the initial affidavit its duly authorized agents swore that there was good reason to believe that Lee was insolvent. In execution of the writ issued in the ease, the sheriff of Richmond on the same day seized the automobiles and delivered them to the vendor. Ten days later, on the 20th of January, an involuntary petition in bankruptcy was filed against Lee, and he was on the 25th of February adjudicated a bankrupt.

On the 15th of December, 1922, the trustee filed a petition in the instant proceeding against the vendor alleging that the taking and possession by it of the four automobiles in question amounted to a voidable preference and praying an order for the return of the automobiles or the payment of the money value thereof. After hearing .testimony, the learned court below was of the opinion that the vendor had acted within its rights, and accordingly dismissed the petition.

The rights of the trustee, if he has any, depend upon the so-ealled Traders’ Act of Virginia, section 5224, Code of 1919, which has been considered by this court in Chesapeake Shoe Co. v. Seldner, 122 F. 593, 58 C. C. A. 261, and in Virginia Book Co. v. Sites, 254 F. 46, 165 C. C. A. 456, and in other cases. It has many times been construed by the highest court of Virginia, as for example in Hoge v. Turner, 96 Va. 624, 32 S. E. 291; Edmunds v. Hobbie Piano Co., 97 Va. 588, 34 S. E. 472; Partlow v. Lickliter, 100 Va. 631, 42 S. E. 671; Boice v. Finance & Guaranty Co., 127 Va. 563, 102 S. E. 591, 10 A. L. R. 654; Nusbaum v. City Bank & Trust Co., 132 Va. 54; 110 S. E. 363; Capitol Motor Corporation v. Lasker, 138 Va. 630, 123 S. E. 376. By these decisions, it is clearly settled: First, that the statute applies to a trader doing business in his own name under a general merchant’s license whenever the goods of another are put in his possession with the intent on the part of the other that such goods shall form, part of his ordinary stock of merchandise and be exposed for sale as such, without any notice being given on the premises that they are not the goods of the trader. Edmunds v. Hobbie Piano Co., 97 Va. 588, 34 S. E. 472. Second, under such circumstances the goods are liable for the trader’s debts, although the creditor seeking to hold them has actual knowledge of the circumstances under which they came into the trader’s possession. Hoge v. Turner, 96 Va. 624, 32 S. E. 291. Third, that it makes no difference that the agreement between the merchant and the person intrusting the goods to him was in writing and was recorded. Boice v. Finance & Guaranty Co., 127 Va. 563, 102 S. E. 591, 10 A. L. R. 654; Partlow v. Lickliter, 100 Va. 631, 42 S. E. 671. This third proposition. seems to be the logical result of the second. Fourth, that the statute applies to automobiles and other bulky and valuable articles, susceptible of easy identification as well as to smaller articles exposed for sale by a dealer. Boice v. Finance & Guaranty Co., 127 Va. 563, 102 S. E. 591, 10 A. L. R. 654; Nusbaum v. City Bank & Trust Co., 132 Va. 54, 110 S. E. 363; Capitol Motor Corporation v. Lasker, 138 Va, 630, 123 S. E. 376. The first of the cases cited has reference to a dealer in automobiles, who, from the street numbers, appears to have occupied the store next that of the bankrupt in this case. ■ Fifth, that goods in the possession of a merchant under the circumstances above stated are quoad his creditors his property. Nusbaum v. City Bank & Trust Co., 132 Va. 54, 110 S. E. 363. Sixth, that where the vendor or owner of the goods intrusted to the merchant repossesses himself of them within four months before filing of the petition in bankruptcy, having good reason at the time to believe that his debtor is insolvent and that by repossessing himself he will obtain a payment of a larger proportion of his debt, or what would have been his debt had he not so repossessed himself, than will be obtained by other creditors, he has secured a voidable preference and is answerable to the trustee therefor. Virginia Book Co. v. Sites, 254 F. 46, 165 C. C. A. 456. Seventh, that the title of a trustee under a conventional deed of trust or assignment for the benefit of creditors does not antedate his deed, and that the vendor has good title against such trustee and creditors represented by him of property of which he has repossessed himself before the delivery of the deed of assignment. Capitol Motor Corporation v. Lasker, 138 Va. 630, 123 S. E. 376.

These propositions are decisive of the case. The fact that in Capitol Motor Corporation v. Lasker, 138 Va. 630, 123 S. E. 376, it was properly held that a trustee under a conventional assignment or a deed of trust for the benefit of creditors has no rights as against property of which the vendor or lienor repossessed himself before the delivery of the deed of trust or assignment, is in no wise in conflict with the law as it has been above stated. A conventional trustee has no power to vacate preferences.

It follows that the trustee in bankruptcy in this ease was entitled to the relief for which he asked.

Reversed.

WADDILL, Circuit Judge

(dissenting). The appellee was the holder of a duly recorded conditional sales agreement covering the automobiles the subject of this appeal. Ten days prior to the filing of the petition in bankruptcy, it repossessed itself of the automobiles by a proceeding in a state court of competent jurisdiction, and was so in possession at the 'time of the bankruptcy.

Under these conditions, I can but believe that appellee acquired title superior to that of the trustee in bankruptcy, whose "status as a lienor under section 47a, Bankruptcy Act 1910 (Comp. St. § 9631), became effective as of the date of filing the petition in bankruptcy. Martin v. Commercial Nat. Bank, 245 U. S. 513, 517, 38 S. Ct. 176, 62 L. Ed. 441; Fairbanks Shovel Co. v. Wills, 240 U. S. 642, 649, 36 S. Ct. 466, 60 L. Ed. 841; Bailey v. Baker Ice Machine Co., 239 U. S. 268, 276, 36 S. Ct. 50, 60 L. Ed. 275; Woods v. Stemple, Rt. (C. C. A. 4th Cir.) 289 F. 239; Capitol Motor Corp. v. Lasker, 138 Va. 630, 123 S. E. 376; Nusbaum v. City Bank, 132 Va. 54, 57, 110 S. E. 363.

In Virginia, it is well settled that “creditors,” within the purview of the act in question here, means “lien creditors,” that is, persons who have liens upon the property; and whatever may be the status of the trustee in bankruptcy in the enforcement of the rights of those who have such liens — that is to say, whether the title of such trustee in bankruptcy as to such lien creditors may relate back to a date antedating the time of his appointment for the purpose of enforcing such liens — still, in so far as he represents the unsecured creditors, those having no fixed lien, his status as trustee cannot relate back prior to the time of the filing of the petition in bankruptcy in the proceeding in which he was appointed, so as to enable unsecured creditors to defeat the rights of vendors or lienors who have established their claims and liens.


author: FOSTER, Circuit Judge.

text:
    CANADA et al. v. UNITED STATES.
    (Circuit Court of Appeals, Fifth Circuit.
    March 4, 1925.
    Rehearing Denied April 11, 1925.)
    No. 4401.
    1. Criminal law <§=553 — Jury is judge of credibility of testimony.
    A jury may rest a finding on the testimony of a single witness as against that of any number of others.
    2. Conspiracy <§=47 — Evidence held to sustain conviction for conspiracy to unlawfully import liquors.
    Evidence helé to sustain a conviction for conspiracy to import and conceal liquors in violation of the customs laws.
    3. Criminal law <§=394 — Defendants cannot object to evidence because unlawfully secured from third person.
    That evidence was unlawfully secured from a third person, not under indictment, does not affect its admissibility.
    In Error to the District Court of the United States for the Southern District of Texas; Joseph C. Hutcheson, Jr., Judge.
    Criminal prosecution by the United States against George E. Canada and others. Judgment, of conviction, and defendants bring error.
    Affirmed.
    D. D. McDonald and Jas. W. Wayman, both of Galveston, Tex., C. W. Howth and M. G. Adams, both of Beaumont, Tex. and John E. Jackson, of New Orleans, La., for plaintiffs in error.
    H. M. Holden, U. S. Atty., and Edwin E. Wamken, Asst. U. S. Atty., both of Houston, Tex.
    Before WALKER, BEVAN, and FOSTER, Circuit Judges.
   FOSTER, Circuit Judge.

On June 11, 1924, an indictment was returned against George E. Canada, Archie Hapiilton, Yock Adams, Jesse Dyson, and ten others, charging them with conspiring to commit offenses against the laws of the United States, namely, various customs and tariff laws and the National Prohibition Act (Comp. St. Ann. Supp. 1923, § 1013814 et seq.), by unlawfully importing, smuggling, landing, and concealing intoxicating liquor. Briefly stated, the scheme charged was that the defendants would bring large quantities of intoxicating liquor intended for beverage purposes from Grand' Cayman or other foreign countries to the territorial waters of the United States in the vicinity of Galveston, Port Arthur, and Sabine Pass, Tex., in the British auxiliary schooner Island Home, which certain named defendants were to man, the liquor to be then transported to shore in motorboats own^d and operated by others of the defendants, the liquor to be then sold, without the defendants having complied with the customs laws and regulations relative to invoicing, entry, payment of duty, etc., and also in violation of the National Prohibition Act.

The plaintiffs in error were convicted. Three of the others, the master, mate, and a member of the crew of the Island Home, all British subjects, were also convicted, but have not sued out writs of error. Verdicts of not guilty were returned as to two others, and apparently the other five were not apprehended and placed on trial.

Error is assigned to the refusal of the court to direct a verdict for defendants at the close of the ease on the grounds that the evidence was not sufficient to prove the offense nor to prove that any overt act was committed within the jurisdiction of the court.

Error is also assigned to the admission in evidence of certain documents taken from the possession of one V. Farrell, not charged in the indictment, without a search warrant, and other documents and liquor found on the schooner Island Home.

Error is also assigned to the refusal of the court to give two special charges requested, but these were not argued and require no further notice.

Although conflicting, there was ample evidence before the jury, which, if believed, would tend to show that the Island Home was engaged in the business of bringing liquor to the United States as alleged in the indictment, commonly denoted rum running, and made at least two trips. The evidence that she came within the three-mile limit on the trip alleged as an overt act is not so strong. It consists solely of the testimony of a Capt. Steinhart, who observed the vessel from the shore through a telescope. This witness, an old man, had been in the coast guard for 33 years and was thoroughly familiar with the waters and the shore in the vicinity. It is highly probable that he, through his knowledge of landmarks and maritime matters generally, was in a position to judge with reasonable accuracy the distance the Island Home was off the shore. The jury was authorized to rest its verdict on the testimony of a single witness, disregarding the testimony of other witnesses, no matter how many, and therefore the testimony of this witness was sufficient to support a finding in accordance with that testimony.

Another overt act charged within the jurisdiction of the court was the transfer of liquor, from some vessel not named, in the motorboat Lena to within the limits of the Galveston Harbor. Under the circumstances shown, the jury might well have concluded that the transportation was part of the general conspiracy.

Canada, an American citizen, residing in Texas, was the supercargo on the Island Home under the assumed name of Sanford for at least two trips, including the one in which she came within the three-mile limit. The other three plaintiffs in error are shown to have been instrumental in the building and operating of the Lena. There was evidence tending to connect all the defendants charged in the indictment with each other and with the conspiracy.

On the whole, we must conclude that the evidence before the jury was sufficient to support the verdict.

The other assignments of error are not well taken. The seizure of the Island Home was within the terms of the convention between the United States and Great Britain on the subject of the importation of intoxicating liquor and the provisions of section 581 of Act of Sept. 21, 1922, known as the Tariff Act (Comp. St. Ann. Supp. 1923, § 5841h). Consequently, any evidence found on board the ship was admissible, and, of course, none of the defendants could complain as to the method of securing evidence from a third person not under indictment. The court charged the jury fully and fairly as to the law of the ease.

No error being shown on the record, the judgment is affirmed.


author: BRYAN, Circuit Judge.

text:
    CHRISTIAN & BROUGH CO. v. ST. PAUL FIRE & MARINE INS. CO.
    (Circuit Court of Appeals, Fifth Circuit.
    March 5, 1925.)
    No. 4368.
    1. Insurance <©=>349(I) — Policy held forfeited by failure of insured to make reports and pay premiums.
    A policy of insurance on automobiles owned and kept for sale by insured, requiring it to make reports each month of the number of cars owned and sold during the preceding month and to pay the premium thereon, and providing that it should be forfeited by failure to make such report and pay the premium, held forfeited where no report was made by insured for six months and until after a loss by fire.
    2. Insurance <©=>388(I) — Waiver of past forfeiture does not require waiver of future ones.
    Waiver by an insurer of a past forfeiture does not preclude it from refusing to waive a subsequent forfeiture.
    3. Insurance <3=384 — Provision requiring waiver to be in writing attached to policy is valid and'binding on insured.
    A provision of a policy, that an agent of the insurer shall not have power to waive any of its terms unless in writing written upon or attached to the policy, is valid and binding and excludes proof of a waiver by parol or by a course of dealing with an agent.
    In Error to the District Court of the United States for the Southern District of Mississippi; Edwin R. Holmes, Judge.
    Action at law by the Christian So Brough Company against the St. Paul 'Eire So Marine Insurance Company. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    John Brunini, Robert L. Dent, and Hirsh, Dent & Landau, all of Vicksburg, Miss. (Brunini & Hirseh, of Vicksburg, Miss., on the brief), for plaintiff in error.
    T. C. Catehings and R. L. McLaurin, both of Vicksburg, Miss., for defendant in error.
    Before WALKER, BRYAN, and FOSTER, Circuit Judges.
   BRYAN, Circuit Judge.

This is a suit on a fire insurance policy to recover the value of a number of automobiles which were destroyed by fire.

The policy, which was attached to and made a part of the declaration, contains the following provisions: It was to continue in force until canceled,. and was intended to cover all automobiles which were owned and kept for sale by the assured. The assured agreed to furnish to the insurer, within 15 days after the close of each calendar month, a correct report of all automobiles owned or sold by it during that month, and to pay the insurance premiums. Any evasion in the matter of such reports or of payments of premiums, or any concealment or misrepresentation of any material fact or circumstance concerning the insurance, or the subject-matter thereof, renders the policy void; and unless the assured should fully comply with all requirements of the policy no suit ■or action is sustainable. No officer, agent, or other representative of the insurer has the power to waive any of the terms of the policy unless the waiver be written upon or attached thereto, nor should any privilege or permission affecting the' insurance exist or be claimed by the assured unless so written or attached. The policy was dated January 14, 1920. The declaration alleges that the fire occurred on August 24, 1921.

The insurance company filed pleas to the effect that it retired from business in the state of Mississippi on March 1, 1921; that the assured never paid any premiums earned thereafter, and failed to make report of the automobiles owned and sold from the date of the company’s retirement to the date of the fire; and that therefore the policy by its terms became forfeited.

Plaintiff filed replications, in which it denies that the defendant had withdrawn from business in Mississippi, but admits the other, allegations of fact set out in the pleas, and alleges that the defendant had waived any right it had to'insist upon a forfeiture by knowingly permitting its agents to enter upon a course of dealing whereby, on several occasions during the year 1920, a single report of automobiles owned and sold covered a period of two months, and that the defendant after March 1,1921, accepted premiums shown to be due upon a single report for the months of January and February, 1921. The replications admit, also, that the plaintiff was notified in March, 1921, to make payments thereafter direct to the defendant.

The district judge sustained a demurrer to the replications and held that the allegations of fact therein contained were not sufficient to show a waiver. Plaintiff declined to plead further, and judgment was entered against it.

It is clear that the failure of the plaintiff to make monthly reports of the automobiles on hand and to pay the premiums was sufficient to work a forfeiture of the policy. The withholding of information as to the number of automobiles was the concealment of a material fact, because the' amount of premiums to be paid depended upon the number of automobiles kept on hand. We are of opinion, also, that such failure constituted an evasion in the matter of payment of premiums. The policy was not intended to permit plaintiff to make reports only in the event of a fire, and to escape the payment of premiums if no fire loss occurred, but that would be the effect if it continued in force whether reports were made or not. Recovery by suit is expressly provided against unless the assured had complied with all the requirements of the policy.

It is not to be doubted that an insurance company can waive a forfeiture, but • the waiver o'f a past forfeiture does not preclude the right to refuse to waive a forfeiture occurring in the future. Thompson v. Insurance Co., 104 U. S. 252, 26 L. Ed. 765. The policy in suit provides that defendant’s agent should not have the power to waive any of its terms unless the waiver be written upon or attached thereto. That provision is binding upon the assured. Whatever may be the rule in other jurisdictions, the Supreme Court of the United States is firmly committed to the view that, where a policy of insurance requires that a waiver by the insurer’s agent be in writing, it is not permissible to show a waiver by parol agreement or course of dealing with its agent. Northern Assurance Co. v. Grand View Building Association, 183 U. S. 308, 22 S. Ct. 133, 46 L. Ed. 213; Penman v. St. Paul Insurance Co., 216 U. S. 311, 30 S. Ct. 312, 54 L. Ed. 493. The course of dealing relied on by the plaintiff, even though it was known to the defendant, was not sufficient to constitute a waiver of plaintiff’s failure to make reports of automobiles owned or sold by it from March to the date of the fire, which occurred in the latter part of August. A waiver of forfeiture for a delay of 30 days is not a waiver of forfeiture for a delay of six months. Whether the defendant continued to do business in Mississippi after March, 1921, or not, the 'plaintiff was advised that thereafter all reports and payments should be made to it and not to its agent. A failure to make such reports and payments extended far beyond any indulgence which the defendant had theretofore granted. It follows that in our opinion the order of the district judge sustaining the demurrer to the replications is correct.

The judgment is affirmed.


author: MACK, Circuit Judge.

text:
    KELSEY WHEEL CO. et al. v. HAYES WHEEL CO. et al.
    (Circuit Court of Appeals, Sixth Circuit.
    April 9, 1925.)
    No. 4092.
    1. Patents 129 — Patentee, sued for infringement, may rely on prior art.
    The fact that defendant was the patentee and assignor of the patent sued on does not preclude him from contesting the issue of infringement and relying on the prior art to construe and narrow the claims of the patent, though it requires a careful scrutiny of the evidence.
    2. Patents <®=j328 — Wagenhorst, 1,234,438, for wheel, held not infringed.
    The Wagenhorst patent, No. 1,234,428, for a wheel and method of making the same, helé not infringed.
    Appeal from the District Court of the United States for the Eastern District of Michigan; Arthur J. Tuttle, Judge.
    Suit in equity by the Kelsey Wheel Company and another against the Hayes Wheel Company and another. Decree for defendants, and complainants appeal.
    Affirmed.
    Charles Heave, of New York City (William J. Belknap, of Detroit,'Mich., Merrell E. Clark, of New York City, and Whitte-more, Hulbert, Whittemote & Belknap, of Detroit, Mich., on the brief), for appellants.
    Fred L. Chappell, of Kalamazoo, Mich. (Justin R. Whiting, of Jackson, Mich., and Melville Church, of Washington, D. C., on the brief), for appellees.
    Before DENISON, MACK, and DOHAHUE, Circuit Judges.
   MACK, Circuit Judge.

This is an appeal from a decree dismissing a bill charging defendants with infringement of claims 1, 8, and 9 of Wagenhorst patent, Ho. 1,234,428, for wheel and method of making the same, issued July 28, 1917. The claims in issue read as follows:

“1. The method of making wheels which consists in assembling an endless and substantially ¿¡.extensible and incompressible felly together with a set of compression spokes whose collective structure .is initially somewhat too large for the receiving space, and expanding the spoke set outwardly against the felly by jamming the spokes together substantially into alignment at the¿ hub portions.”
“8. A vehicle wheel comprising an endless and substantially ¿¡extensible and incompressible felly, in combination with a set of compression spokes having their outer ends rigidly stepped on the felly and the¿ hub portions jammed together substantially in the same plane, said spokes being under permanent, balanced radial compressive strains.”
“9. A vehicle wheel comprising an endless metal felly, in combination with a set of wooden spokes having their outer ends stepped in sockets on said felly and them hub portions wedged solidly together substantially in alignment, the spokes being thereby permanently stressed against each other and the felly.”

The invention was assigned by Wagenhorst prior to the issuance of the patent to appellant B. F. Goodrich Company, Wagenhorst’s then employer; appellant Kelsey Company is the exclusive licensee. The wheel made under the patent is testified to have been the first permanently tight metal felly wooden spoke wheel devised for commercial use and almost completely to have displaced for automobiles the earlier wooden spoke wooden felly wheel. Appellee Hayes Wheel Company’s alleged infringing metal felly wooden spoke wheel was also devised by Wagenhorst after he became associated with that company. While this circumstance of itself requires a most careful scrutiny of the facts, nevertheless Wagenhorst eoneededly may contest the issue of infringement and rely upon the prior art to construe and narrow the claims of the patent in suit. Westinghouse Co. v. Formica (United States Supreme Court, decided December 8, 1924), 45 S. Ct. 117, 69 L. Ed. -.

In his specifications Wagenhorst did not claim to be the first to propose a metal felly wooden spoke wheel, but asserted the belief that the invention was the first to provide a practical structure of this class, with all parts jammed or wedged together in the course of manufacture. He pointed out that in all prior wheels of which he was aware, in which the spokes were wedged together and against a performed or complete felly, no attempt had been made to jam the spokes at the outset permanently into a receiving space somewhat too small to take them, except by placing them under heavy compressive strain.

It was that attempt of Wagenhorst which clearly formed the basis of the patent in suit and in the light of which the .claims must be construed. However broadly the patent may be construed, it was not the concept of a permanently tight metal felly wooden spoke wheel, but that of the practical means of achieving this' result and of the wheel made by these means for which the patent was granted.

The means devised by Wagenhorst in the patent in suit was, as stated by him, to jam the spokes at the outset permanently into a receiving space somewhat too small to take them, except by placing them under heavy compressive strain. The usual wedge-shaped spoke ends or miters were to be jammed laterally together at the hub or center of the wheel by the exertion of strong lateral force. Wagenhorst suggests and embodies in certain claims not here in suit that the spoke ends should be not only mitered, but wedged alternately in opposite direetiQns laterally or axially of the wheel, so that when so compressed they tend to wedge or force the ends of the spoke radially outward. However useful or valuable this double wedging idea, which was not in itself new with Wagenhorst, it is not, in our judgment, a necessary part of the patent in suit. We differ thereon with the trial judge, who held that it must be read into all the claims, and that, as defendants did not employ the dou- ' ble wedge, they did not for this reason infringe.

The Hayes wheel devised by Wagenhorst is also a permanently tight, metal felly, wooden spoke wheel. But it does not, in our judgment, entrench upon the Wagen-horst patent. The mitered spoke ends which have no lateral wedge are brought into alignment by lateral pressure, but they are not jammed into alignment. They are made permanently tight or “jammed,” after having been brought into alignment, by an entirely different method. The spokes are brought into close but not tight alignment within an expanded heated rim or felly, and it is the cooling and contracting of the rim which holds them permanently tight 'and in alignment. But the wedging or jamming of the spokes into permanent, tight alignment in a rim not large enough at the outset to receive them — the essence of the Wagenhorst patent — is not present in the Hayes wheel. Wagenhorst merely -adopted another method of making a permanently- tight metal felly, wooden spoke wheel without infringing upon the method described in his earlier patent; he added, as a necessary step, the old process of shrinking on the tire.

Affirmed.


author: RUDKIN, Circuit Judge. ROSS, Circuit Judge

text:
    UNVERZAGT v. BENN, U. S. Marshal.
    (Circuit Court of Appeals, Ninth Circuit.
    May 5, 1925.)
    No. 4398.
    1. Criminal law <@=3242(8) — Accused cannot be removed to other district for trial without' hearing.
    An accused cannot be removed to other federal district for trial without hearing.
    2. Habeas corpus <@=>87 — Discharge' of writ sought to prevent removal of petitioner to other federal district for trial held proper.
    Discharge of writ of habeas corpus sought for purpose of preventing removal to other federal district for trial held proper, in view of showing, at time of hearing on petition for writ, that hearing as to removal had been had before commissioner, and that petitioner was detained to await further, hearing before court, pursuant to Rev. St. § 1014 (Comp. St. § 1674).. Ross, Circuit Judge, dissenting.
    Appeal from the District Court of the United States for the Northern Division of the Western District of Washington.
    Application for writ of habeas corpus by Charles H. Unverzagt against E. B. Benn, as United States Marshal for the Western District of Washington. From an order discharging the writ (299 F. 1015), petitioner appeals.
    Affirmed.
    Marshall B. Woodworth, of San Francisco, Cal., and John T. Casey, John F. Dore, and F. C. Reagan, all of Seattle, Wash., for appellant.
    Thos. P. Revelle, U. S. Atty., and John A. Frater, Asst. U. S. Atty., both of Seattle, Wash., for appellee.
    Before GILBERT, ROSS, and RUDKIN, Circuit Judges.
   RUDKIN, Circuit Judge.

This is an appeal from an order discharging a writ of habeas corpus. The petition for the writ averred that the petitioner was imprisoned and restrained of his.liberty by color of authority of the United States; that the sole claim and authority for ids detention was a commitment issued by a United States commissioner; that the commitment was so issued in a certain proceeding instituted on behalf of the United States District Court for the Western District of New York, for the removal of the petitioner to that district for trial, for the crime of using the mails of the United States with intent to defraud; that the petitioner did not commit the crime attempted to be charged in the indictment; that on April 24, 1924, the petitioner was, by artifice and physical violence, abducted and kidnapped from the city of Vancouver in the Dominion of Canada by certain officials of the United States; that the attorney for the petitioner, in Vancouver, had communicated the facts surrounding the abduction to the Department of Foreign Affairs at Ottawa, Canada; that the petitioner was informed and believed that the Canadian government was preparing to make a protest to the United States against the unlaw-, ful acts and removal of the petitioner from that country; and that the district attorney of the United States for the Western district of Washington planned to return the petitioner to the Western district of -- New York, without giving him an opportunity to present his ease to the court, and without giving the Canadian government time or opportunity to protest against the.removal of the' petitioner from the Dominion of Canada.

The prayer of the petition was that a writ of habeas corpus issue; that the court fix a time for hearing, at some date subsequent to May 15, 1924; that in the meantime the petitioner be permitted to remain in the county jail of Whatcom county, unless admitted to bail by the court; that all proceedings for the removal of the petitioner from the Western district of Washington be stayed until a hearing was had; and for such other relief as might be just and proper in the premises. The petition was dated May 1,1924. A copy of the commitment under which the petitioner was held was attached to the petition. From this it appeared that on April 25, 1924, the petitioner was required to give bond in the sum of $25,000 for his appearance before the United States commissioner on May 1, 1924, at the hour of 10 o’clock a. m., and from time to time as thereafter required, pending examination, and was committed to the jail of Whatcom county for failure to give such bond. On May 6, 1924, a writ of habeas corpus issued as prayed, returnable on the following day. The marshal made return that on May 1, 1924, the United States commissioner determined that there was probable cause to believe that the petitioner committed the offense charged in the exemplified copy of the indictment upon which the original warrant of arrest was predicated, and held him to abide the order of the United States District Court for the Western District of Washington, committing him to the jail of Whatcom county in the meantime.

It will be seen from the foregoing that the petition raised no question as to the validity or sufficiency of the indictment, no question as to the identity of the accused or of probable cause, and no question as to the regularity of any hearing theretofore had, or as to the sufficiency of the testimony to support any order theretofore made. The writ of habeas corpus was sought for the sole purpose of preventing the removal of the appellant from the Western district of Washington to the Western district of New York without a hearing or an opportunity to be heard. Of course, there could be no removal without a hearing as a matter of law, and there was no attempt at removal without a hearing as a matter of fact. At the time the writ was applied for the petitioner was detained in the county jail in default of bail until a hearing could be had before the United States commissioner, and at the time of the hearing in the court below a hearing had already been had before the commissioner, and the appellant was detained to await a further hearing before the court below, pursuant to section 1014 of the Revised Statutes (Comp. St. § 1674).

For these reasons, if the petition stated any grounds for the issuance of the writ in the first instance, the writ had fully accomplished its purpose at the time of the hearing in the court below.

The judgment is therefore affirmed. Mandate forthwith.

ROSS, Circuit Judge

(dissenting). I am unable to agree to the affirmance of the judgment appealed from dismissing the writ of habeas corpus. I understand the law to be well settled that, when a person is restrained of his liberty in any state to answer an indictment found against Jhim in another state for a crime alleged to have been committed therein, and is taken before a court commissioner for an order of removal to answer the charge, while the indictment constitutes prima facie evidence of pbobable cause of his guilt, it is not conclusive, but, on the contrary, that the accused person is legally entitled to rebut that presumption, and to show, if he can, that he was not in the state when and where the crime charged against him is alleged to have been committed, that he is not in fact the person so indicted, or any other fact that he is able to show tending to overcome the prima facie case made by the indictment of his probable guilt. See Tinsley v. Treat, 205 U. S. 20, 27 S. Ct. 430, 51 L. Ed. 689; Beavers v. Henkel, 194 U. S. 73, 24 S. Ct. 605, 48 L. Ed. 882; Benson v. Henkel, 198 U. S. 1, 25 S. Ct. 569, 49 L. Ed. 919; Hyde v. Shine, 199 U. S. 62, 25 S. Ct. 760, 50 L. Ed. 90; Greene v. Henkel, 183 U. S. 249, 22 S. Ct. 218, 46 L. Ed. 177; In re Burkhardt (D. C.) 33 F. 25; Erwin v. U. S. (D. C.) 37 F. 470, 2 L. R. A. 229; U. S. v. Dana (D. C.) 68 F. 886; U. S. v. Karlin (D. C.) 85 F. 963; Price v. McCarty, 89 F. 84, 32 C. C. A. 162.

To make such showing against his removal the indicted party is obviously entitled to a hearing before the commissioner. I find in the record no evidence that the appellant in the present case had such hearing before the commissioner ordering his removal to the district of the state where the indictment against him is pending, although it is contended upon.the part of his attorneys that he insisted both before the commissioner and before the court below upon such right. It is true that the “record contains the return of the marshal to the writ of habeas corpus that was issued in the case, in which it is stated that the defendant to the indictment — the present appellant — “was taken before United States Commissioner F. W. Radley, at Bellingham, Wash.,. who on May 1, 1924, determined that there was probable cause to believe” that he committed the crime charged against him in the indictment that has been mentioned. For all that appears, such determination by the commissioner may have been made upon the prima facie evidence 'afforded by the indictment. It does not at all show, in my opinion, that the indicted party was given any hearing of any character against the application for his removal, which, as I understand the law, was essential and jurisdictional.


author: GILBERT, Circuit Judge.

text:
    UNVERZAGT v. UNITED STATES.
    (Circuit Court of Appeals, Ninth Circuit.
    May 5, 1925.)
    No. 4415.
    Habeas corpus «g=>I0 — One who executed bond conditioned on appearance in other district could not maintain habeas corpus proceedings.
    Where accused against whom proceedings for removal to other district for trial had been instituted, executed bond conditioned on his personal appearance before court of other district to answer indictment, the execution and acceptance of the bond precluded his right to habeas corpus.
    Appeal from the District Court of the 'United States for the Northern Division of the Western District of Washington.
    Petition for . writ of habeas corpus by Charles H. Unverzagt against the United States. From an order denying the petition, petitioner appeals.
    Affirmed.
    Marshall B. Woodworth, of San Francisco, Cal., and John T. Casey, John F. Dore, and F. C. Reagan, all of Seattle, Wash., for appellant.
    Thos. P. Revelle, U. S. Atty., and John A. Frater, Asst. U. S. Atty., both of Seattle, Wash.
    Before GILBERT, ROSS, and RUDKIN, Circuit Judges.
   GILBERT, Circuit Judge.

The appellant appeals from the order of the court below denying his petition for a writ of habeas corpus. In the petition he set forth that he had been arrested and brought before a United States commissioner in pursuance of an indictment found in the District Court of the United States for the Western District of New York; that the commissioner denied his right to introduce testimony to disprove probable cause and to show that he was not guilty as charged in the indictment; that the United States attorney offered no evidence before the commissioner to support the allegations of the indictment; that the commissioner required the petitioner to give bond in the sum of’ $10,000 to appear before the District Court of the United States for the Western District of New York; and that, uppn the petitioner’s refusal to give said bail, he was remanded by the commissioner to custody, and was unlawfully detained and restrained, of his liberty by the United States marshal for the district of Washington. It was not alleged in the petition that a final hearing had been had before the commissioner on the question of probable cause, or that an order of removal had been made by the lower court; but upon the transcript of the record which is before us it appears that on June 27, 1924, and before an order of removal was made by the court below, and four months prior to taking the present appeal, the appellant executed and presented to that court his bond in the sum of $10,000, conditioned upon his personal appearance before the District Court of the United States for the Western District of New York on the first day of the next" term of said court to answer to the indictment, and that the bond was approved and accepted by the judge of the court below and was transmitted to said New York court.

The execution and acceptance of the bond precluded the appellant’s right to habeas corpus. He was no longer restrained of his liberty. In Stallings v. Splain, 253 U. S. 339, 343, 40 S. Ct. 537, 539, 64 L. Ed. 940, the court said: “Furthermore, by voluntarily giving bail to appear in Wyoming, the purpose of the removal proceedings had been accomplished, and all questions in controversy in the habeas corpus and in the removal proceedings terminated. Whether his arrest and detention had originally been valid was thereby rendered immaterial. In re Essel-born, 8 F. 904. And likewise the question whether there was a right then to remove him.”

The order of the court below is affirmed. In view of the unreasonable delay caused by the appellant, it is ordered the mandate from this court issue forthwith. Wong Doo v. United States, 265 U. S. 239, 44 S. Ct. 524, 68 L. Ed. 999.


author: WALKER, Circuit Judge.

text:
    SCHEUER et al. v. ST. PAUL FIRE & MARINE INS. CO.
    (Circuit Court of Appeals, Fifth Circuit.
    April 1, 1925.)
    No. 4495.
    Insurance <S==>668(5) — Evidence requiring finding that insured was not sole and unconditional owner held to warrant directed verdict for defendants.
    Evidence requiring finding that insured held title to insured property only as trustee, and that another was beneficial owner, subject to certain claims, held to warrant directed verdict for defendants, in action on policy providing that entire policy should be void if interest of insured was other than unconditional and sole ownership.
    In Error to the District Court of the United States for the Northern District of Florida; William B. Sheppard, Judge.
    Action by M. Seheuer and C. W. Cobb, trustees, and others, against the St. Paul Fire & Marine Insurance Company. Judgment for defendant, and plaintiffs bring error.
    Affirmed.
    S. Pasco, Jr., of Pensacola, Fla., W. W. Clark, of Milton, Fla., and W. H. Watson, of Pensacola, Fla. (Watson & Pasco, of Pensacola, Fla., on the brief), for plaintiffs in error.
    J. E. D. Yonge, of Pensacola, Fla., and Daniel MacDougald, of Atlanta, Ga. (R. A. MeGeaehy, of Milton, Fla., on the brief), for defendant in error.
    Before WALKER, BRYAN, and FOSTER, Circuit Judges.
   WALKER, Circuit Judge.

This ease was here on a former writ of error from a judgment in favor of the plaintiffs. St. Paul Fire & Marine Ins. Co. v. Seheuer, 298 F. 257. In the last trial, as in the former one, a principal defense relied on was based upon the provision of the policy sued on that “this entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void *' * 'i' if the interest of the insured be other than unconditional and sole ownership.” In the last trial judgment was rendered in favor of the defendant, pursuant to a verdict which the court directed.

The insured, as trustees, held the legal title to the stock of goods mentioned in the policy. The opinion rendered when the case was here before described a declaration of trust, which was executed by the insured. The evidence showed that the creditors named in that instrument were to have no beneficial interest in the property, estimated to be worth $70,000, after their debts, which aggregated $22,000, were paid. The evidence also showed that, after those debts were paid, the extent of the rights in or to the property of the two trustees was to charge against it the amount, $5,000, received by them from Mrs. H. S. Bates, to be used in buying the property, with interest thereon, and the amount of expenses, including their compensation for their services as trustees'. The evidence as to the circumstances under which the insured acquired and held the legal title convincingly points to the conclusion that, at the time the policy was issued and thereafter, H. S. Bates was the beneficial owner of the property, subject only to charges against it for the amounts furnished to buy it, with interest thereon, and the amount of the expenses, including the compensation of the trustees. Substantial support for a different finding was not furnished by testimony in the last trial as to the absence of any express agreement as to who was to be entitled to the property after the satisfaction of all the demands to which it was subject to be applied by the trustees.

The two trustees and H. S. Bates were witnesses in the last trial. In material respects the last given testimony of the trustees was not consistent with their testimony given in depositions previously taken. But testimony on the last trial shows that from the time they acquired the legal title the understand-mg between them was that H. S. Bates, who was in possession of the property, was to have it as bis own upon the payment of the above-mentioned charges against it. No evidence adduced bad any tendency to prove that from the time the trustees bought the property any one other than H. S. Bates claimed to be entitled to what might be left of it after satisfying tbe charges mentioned. In view of that fact, and of the fact that the trustees, without getting the consent of any one else, did transfer to H. S. Bates whatever title they bad, assertions by the trustees and Bates that at the time the policy was issued it bad not been agreed be-, tween the trustees and Bates that the latter was to get the property after the charges against it were satisfied, do not beep the evidence as a whole from being such as to require a finding that the interest of the insured was other than sole and unconditional ownership. The state of the evidence being such as not to warrant a verdict for the plaintiffs, it was not error to direct a verdict for the defendant. Barrett v. Virginian Railway Co., 250 U. S. 473, 39 S. Ct. 540, 63 L. Ed. 1092.

Tbe judgment is affirmed.


author: ROSE, Circuit Judge.

text:
    VIRGINIAN RY. CO. v. LAKE & EXPORT COAL CORPORATION.
    (Circuit Court of Appeals, Fourth Circuit.
    April 14, 1925.)
    No. 2316.
    Carriers <§=I00(I) — Carrier unable to fix definite amount of demurrage recoverable from shipper, member of coal exchange held not entitled to recover.
    Where, under agreement between railroad and coal exchange, cars for purpose of demur-rage charges were treated as having arrived upon exchange’s receipt of notices of arrival sent by railroad, and exchange was not required to release cars in order received and was entitled to credit early release against tardy release of others, and where through mistake of railroad’s employees no notices of arrival were sent out for some 880 cars, helé, railroad seeking to recover from shipper, member of coal exchange, its share of demurrage charges, being unable to show what sum, if any, -plaintiff owed, could not recover; nor was it entitled in adjustment of difficulty to assume that there had been neither free time nor de-murrage on the cars no notice of arrival of which had been given.
    In Error to tbe District Court of tbe United States for tbe Eastern District of Virginia, at Norfolk; D. Lawrence Groner, Judge.
    Action by tbe Virginian Railway Company against tbe Lake & Export Coal Corporation. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    W. H. T. Loyall, of Norfolk, Va. (W. C. Plunkett, of Norfolk, Va., on the brief), for plaintiff in error.
    Tazewell Taylor, of Norfolk, Va., and Karl Knox Gartner, of Washington, D. C., for defendant in error.
    Before WOODS, WADDILL, and ROSE, Circuit Judges.
   ROSE, Circuit Judge.

Tbe parties occupied tbe same position below as they do bere; that is, tbe Virginian Railway Company, plaintiff in error, was tbe plaintiff, and tbe Lake & Export Coal Corporation, defendant in error, was tbe defendant. For brevity we will refer to them respectively as tbe railway and tbe shipper.

Tbe shipper was a member of Sewell’s Point Coal Exchange and in tbe winter and spring of 1921 shipped many carloads of coal over tbe railway to tbe exchange for export. By agreement of all concerned in tbe primary calculation of the amount of demur-rage, if any, which might be due tbe railway, tbe exchange was treated 'as if it was tbe sole consignee of all tbe coal of its members, although each member signed an agreement with tbe railway becoming personally liable for all demurrage charges which upon apportionment by tbe exchange, might be assigned to him by its commissioner. At tbe time of tbe shipments, tbe railway tariffs filed with tbe Interstate •Commerce Commission provided an average of five days’ free ear time, and required notice of arrival to be sent or given to tbe consignee upon tbe arrival of a ear and billing at Sewall’s Point. It was further provided that a car should be considered as released at tbe time tbe vessel registered for cargo or for fuel supply, of which tbe coal dumped into it was a part, except that when cars were unloaded before tbe vessel registered, they were to be regarded as released when unloaded. It was further provided that to reduce switching and to prevent delays, ears might be delivered otherwise than in tbe order of their arrival. In that event tbe dates upon which tbe substituted ears were delivered were to be used in computing tbe detention of tbe ears for which they were substituted, so that as far as credit and debit days were concerned, tbe record should be the same as though tbe cars were delivered in tbe order of their arrival. It followed that the ordinary method of making up the account was to charge each car as having arrived on the day notice of arrival was given, and to enter it as having been discharged on the first day thereafter at which it would have been discharged if it had been unloaded immediately after every car which had arrived before it had been emptied and before the unloading of any car which arrived subsequently. If in this way a car was unloaded two days after notice of its arrival had been given, there was a credit of three days’ free time to be made against any charge of demurrage the railway might have on any car not unloaded until after five days.

It so happened that in the winter and spring of 1921, by a mistake of a clerk of the railway, notices of arrival were never sent out for some 880 cars. Some months later, the error was discovered, and then the railway undertook to adjust it by assuming that there had been neither free time nor de-murrage upon any of these 880 cars. There was an attempt made to support this way of dealing with the problem by setting up the legal theory that a notice of arrival had to be given before the cars could be regarded as entitled to free days or subject to demur-rage. It is quite obvious, however, that the rights of shippers could not be dependent on the failure, accidental or intentional, of the employee of the railway to give the notice to which they were entitled. The evidence raised a serious question as to whether, had the dates of arrival been actually ascertained, the exchange would not have been entitled to credit for many more free days than were actually given it, and in that event, of course, the shipper would have had its proportion of such credits.

In this state of the proof, the court properly instructed the jury that the railway had not shown, by any eonpetent evidence, what sum, if any, the shipper owed it, and therefore that their verdict must be for the latter. Put in another way, the railway’s employees had blundered. As a consequence of their blunder, it was impossible to tell whether the shipper owed it anything and, if it did, how much. The trouble was of its making, and the loss, if any, must be borne by it. There is no suggestion of any collusion between the employees of the railway and the shipper, and therefore no question of any favoritism exhibited to the latter.

The conclusion we have reached renders unnecessary the consideration of several other defenses set up by the shipper.

Affirmed.


text:
    HOUSTON v. UNITED STATES.
    (Circuit Court of Appeals, Fifth Circuit.
    March 3, 1925.)
    No. 4333.
    1. Criminal law <§=>l 134(10)— Ruling bn motion in arrest reviewable.
    The ruling on a motion in arrest of judgment, for defects apparent on the face of the record, may be assigned as error.
    2. Poisons <®=»4 — Only persons required to register are punishable for having narcotics in their possession.
    Only persons required by Harrison Narcotic Act, § 1 (Comp. St. § 6287g), to register and pay tbe special tax, and who have failed to do so, are punishable under section 8 for having narcotic drugs in their possession.
    3. Criminal law <§=>875 (I) — Partial verdict held a nullity as without basis.
    Under an indictment based on Narcotic Act, § 8 (Comp. St. § 6287n), charging that defendant was a dealer in opium or its derivatives, required by section 1 to register and pay the special tax, that being unregistered she had morphine sulphate unlawfully in her possession, where both issues were contested on conflicting evidence, a verdict finding defendant “guilty of possession” was only a partial verdict, and lacking the essential finding on the other issue, was a nullity.
    4. Criminal law <S=»168 — Ineffective verdict not former jeopardy.
    Where the verdict of the jury on a first trial was a nullity, defendant cannot plead former jeopardy in bar of a second trial.
    In Error to tbe District Court of the United States for the Eastern District of Louisiana; Rufus E. Foster, Judge.
    Criminal prosecution by the United States against Mrs. Lucille Houston. Judgment of conviction, and defendant brings error.
    Reversed and remanded.
    Maurice R. Woulfe, of New Orleans, La., for plaintiff in error.
    Louis H. Burns, U. S. Atty., and Edwin H. Grace, Asst. U. S. Atty., both of New Orleans, La.
    Before WALKER and BRYAN, Circuit Judges, and HUTCHESON, District Judge.
   BRYAN, Circuit Judge.

This is a prosecution under section 8 of the Harrison Narcotic Law, 38 Stat. 789 (Comp. St. § 6287n). The indictment charges that the defendant, Lucille Houston, being a person who deals in opium and its derivatives, and as such being required to register and pay the special tax imposed by law, unlawfully had in her possession 60 grains of morphine, to which appropriate tax-paid stamps were not attached, and which was not in the original stamped package. The evidence was in conflict, both as to whether the defendant sold or dealt in morphine and therefore was required to register and pay the special tax, and as to whether she had morphine in her possession. ■ The defendant in her testimony denied that she ever sold or dealt in morphine, and also denied possession. The verdict of the jury is as follows: “We, the jurors, find the defendant guilty of possession.” The defendant filed a motion in arrest of judgment on the ground that the verdict is a nullity; but the District Court denied the motion and sentenced the defendant to a term in the penitentiary.

[J] The government contends that error cannot be assigned on a motion in arrest-of judgment, and cites Street Railroad Co. v. Hart, 114 U. S. 654, 5 S. Ct. 1127, 29 L. Ed. 226, and Andrews v. United States, 224 F. 418, 139 C. C. A. 646. The Supreme Court decision only held that the motion in arrest in the ease then before it amounted to no more than a motion for' a new trial. It was not there decided that a motion in arrest of judgment could not be assigned as error for defects apparent on the face of the record, although that seems to be the view in the Andrews Case. A motion in arrest has long been in use and is well recognized as a proper method of attacking void or defective verdicts or other errors apparent on the face of the record. 2 Bishop’s New Criminal Procedure, ch. 87. In Blitz v. United States, 153 U. S. 308, 14 S. Ct. 924, 38 L. Ed. 725, the Supreme Court sustained an assignment of error based on such a motion. See, also, Rosen v. United States, 161 U. S. 29, 16 S. Ct. 434, 480, 40 L. Ed. 606. There is no other way by which error based upon a defective or void verdict can be reviewed.

The persons punishable for possession under section 8 are not all persons, but only those who are required by section 1 (section 6287g) to register and pay the special tax. United States v. Jin Fuey Moy, 241 U. S. 394, 36 S. Ct. 658, 60 L. Ed. 1061, Ann. Cas. 1917D, 854. Therefore the allegations in the indictment that the defendant belonged to the class of persons required to register and pay the special tax were essen-tial allegations, without which the averment of possession would not have stated an offense under the act. As it was necessary to allege in the indictment, so it was necessary to show by the evidence, that the defendant sold or dealt in opium or its derivatives. But the verdict of the jury leaves this disputed question undetermined, whereas it would have to be decided in the affirmative in order to authorize the jury to find the defendant guilty of unlawful .possession. A verdict which finds the defendant guilty of only a part of the charge included in the indictment is well described as a partial one. 2 Bishop’s New Criminal Procedure, § 1009. A partial verdict is good if it finds anything upon which judgment can be entered. Id. §§ 1005a, 1011; 1 Bishop on Criminal Law, § 1006; O’Neal v. State, 54 Fla. 96, 44' So. 940. We are of opinion that it is impossible to determine from the entire record, including the evidence, whether the jury intended to find that the defendant was one who sold or dealt in opium or its derivatives, and that therefore the verdict is a nullity.

It is proper to say in this connection that, in our opinion, the defendant cannot plead former jeopardy, but may be tried again. 1 Bishop on Criminal Law, § 998(3).

The judgment is reverséd, and the cause remanded for a new trial. - .


author: GILBERT, Circuit Judge

text:
    UNITED STATES CASUALTY CO. v. DREW.
    (Circuit Court of Appeals, Ninth Circuit.
    May 11, 1925.)
    No. 4550.
    1. Appeal and error @=31040(10)— Action of court in overruling demurrer to insured’s complaint against insurer, if erroneous, held not prejudicial.
    Even if complaint in action on automobile liability policy, alleging that “on or about the 4th day of September” insured executed note in payment of judgment, and that insurer denied liability in notice bearing date September 6th, was demurrable in view of policy provision that insured would make no settlement without written consent of insurer, insurer was not prejudiced by order overruling demurrer, where there was evidence from which jury must have found that insurer’s denial of liability preceded execution of note.
    2. Insurance @=>665(3) — Evidence held not to show insured’s bad faith or failure to co-operate with insurer in defending action.
    Evidence held not to show insured’s bad faith or failure to co-operate with liability insurer in defending action for death of his son’s wife in automobile collision while riding as guest in insured’s automobile, so as to require instructed verdict.
    In Error to the District Court of the United States for the Northern Division of the Southern District of California.
    Action by A. M. Drew against the United States Casualty Company. Judgment for plaintiff, and. defendant brings error.
    Affirmed.
    The defendant in error was insured by an automobile liability policy in the sum of $10,000. His son’s wife, while riding with him in the automobile, was killed in a collision with a railroad train. The son brought in a state court an action for damages against the defendant in error charging him with negligence. The insurance company, on receiving notice of the action, sent its attorneys to defend the same. On September 4, 1923, trial in that case resulted in a judgment against the defendant in error for $13,-099.50. On September 6, 1923, the insurance company gave the defendant in error notice that it denied liability on the policy, and that it had instructed its attorneys to withdraw from the case. The defendant in error executed a note to his son in payment of the judgment, .and on October 2, 1923, the judgment was satisfied of -record. Thereafter the defendant in error obtained in the court below a judgment against the insurance company in the amount of the policy. To review that judgment the ease is brought to this court on writ of error.
    Warren Gregory, Allen L. Chickering, Evan Williams, and Donald Y. Lamont, all of San Francisco, Cal., for plaintiff in error.
    Arthur H. Drew, of Fresno, Cal., for defendant in error.
    Before GILBERT, HUNT, and RUD-KIN, Circuit Judges.
   GILBERT, Circuit Judge

(after stating the facts as above). Error is assigned to the order of the court below overruling the demurrer to the complaint. It is contended that from the complaint it appears that one of the conditions of the policy was that the insured should make no settlement of any claim arising thereunder without the written consent' of the company, and that the complaint shows that before liability under the policy was denied by the insurance company the defendant in error executed his note in payment of the judgment. Reference is made to the specific allegations of the complaint, “that on or about the 4th day of September, 1923,” the defendant in error executed his note in payment of the judgment, and the further allegation that by a notice bearing date September 6th, the insurance company denied its liability. From those allegations, however, it did not necessarily follow that the execution of the note by the defendant in error preceded the in-' suránce company’s denial of liability. And even if on account of the allegations so phrased the complaint was subject to demurrer, there was no prejudice to the plaintiff in error in the fact that it was overruled, for on the trial there was evidence from which the jury must have found that the note was not executed until after the defendant in error had received notice of the insurance company’s denial of liability and the withdrawal of its attorneys, and evidence that when made and delivered the note was dated back to September 4, 1923, in order that it might draw interest from the date of the judgment. Although the charge of the court, to the jury is not contained in the bill of exceptions, we are authorized in assuming that, in response to appropriate instructions on the subject the jury determined by their verdict that the execution of the note was subsequent to the insurance company’s denial of liability.

Error is assigned to the denial of the motion of the plaintiff in error for an instructed verdict in its favor. The grounds of the motion were the failure of the defendant in error to exercise good faith toward the insurance company and his failure to-co-operate with it on the trial of the action in the state court. Reference is made to-testimony of one of the attorneys who were conducting the defense in that court, who said that the defendant in error never spoke to him about the-ease during the entire trial, and never assisted him. But he did not testify that he ever called upon the defendant in error for assistance, nor did he testify to anything that the latter could have done to assist him. Nor do we think that evidence of bad faith or lack of co-operation is to be found in the fact that in the action in the state court the attorney for the plaintiff was the plaintiff’s brother, or in the fact that the railroad company was not made a party 'defendant in that action; the insurance company’s attorneys having, as they did, sole charge of the defense.

The judgment is affirmed.


author: PER CURIAM.

text:
    MUTUAL OIL CO. et al. v. EMPIRE PETROLEUM CO.
    (Circuit Court of Appeals, Sixth Circuit.
    May 5, 1925.)
    No. 4322.
    1. Courts <$=>274 — District Court held to have jurisdiction of cause of action against'foreign corporation and of parties.
    Where verified complaint, copy of contract annexed thereto, and admissions and allegations of answer showed that defendant was Michigan corporation doing business in Ohio, and corporation was legally served with summons in Northern district of Ohio, District Court of such district had jurisdiction of cause and of parties.
    2. Appeal and error @=>954(1) — When order granting or denying preliminary injunction reversed stated-.
    Order granting or denying preliminary injunction will not be reversed, unless it clearly appears that court exercised its discretion on wholly wrong conception of facts or law, or that grant or refusal of preliminary injunction is contrary to some rule of equity, or is result of improvident exercise of judicial discretion.
    3. Injunction <$=>136(2) — When temporary Injunction or restraining order requiring affirmative action,will issue stated, especially as to taking wrongful possession of property.
    Temporary injunction or restraining order requiring affirmative action will issue on preliminary hearing, where facts show that such relief is necessary to protect complainant’s rights, especially where defendant has taken forcible, wrongful, or unlawful possession of property in dispute, or suddenly or secretly changed existing status for purpose of securing an unfair advantage, or of forestalling order restraining such action.
    Appeal from the District Court of the United States for the Western Division of the Northern District of Ohio; John M. Kil-lits, Judge.
    Suit in equity by the Empire Petroleum Company against the Mutual Oil Company and others. From an order and decree granting a preliminary injunction, and refusing to modify same, defendants appeal.
    Affirmed and remanded.
    C. A. Seiders, of Toledo, Ohio (Charles L. Robertson, of Adrian, Mich., on the brief ), for appellants.
    Harold W. Fraser, of Toledo, Ohio (Fraser, Hiett & Wall, of Toledo, Ohio, on the brief), for appellee.-
    Before DONAHUE, MOORMAN and KNAPPEN, Circuit Judges.
   PER CURIAM.

It clearly appears from the verified bill of complaint, the copy of the contract attached thereto as an exhibit, and the admissions and averments in the answer that the appellant, the Mutual Oil Company, is and was at the time this action was commenced a Michigan corporation doing business in Ohio. People’s Tobacco Co., Ltd. v. American Tobacco Co., 246 U. S. 79, 38 S. Ct. 233, 62 L. Ed. 587, Ann. Cas. 1918C, 537; Philadelphia & Reading Railway Co. v. McKibbin, 243 U. S. 265, 37 S. Ct. 280, 61 L. Ed. 710. It further appears from the record that it was legally served with summons in the Northern district of Ohio, Western division. St. Louis Southwestern Ry. Co. v. Alexander, 227 U. S. 218, 33 S. Ct. 245, 57 L. Ed. 486, Ann. Cas. 1915B, 77. It necessarily follows that the District Court had jurisdiction of the cause and parties.

An order granting or denying a preliminary injunction will not be reversed by an appellate court, unless it clearly appears that the court has exercised the discretion vested in it on a wholly wrong conception of the facts or the law of the case, or that the granting or refusal to grant a preliminary injunction is contrary to some rule of equity or the result of improvident exercise of judicial discretion. Meccano, Ltd., v. Wanamaker, 253 U. S. 136, 141, 40 S. Ct. 463, 64 L. Ed. 822; Blackmore v. Collins et al. (C. C. A. 6) 290 F. 204; Rousso v. First Nat. Bank of Detroit (C. C. A. 6) 287 F. 273, and cases there cited.

A temporary injunction or restraining order, mandatory in effect and requiring affirmative action, will issue upon a preliminary hearing, where it appears from the facts proven or admitted that such relief is necessary for the protection of complainant’s rights, and particularly where it appears that the defendant has taken forcible wrongful, or unlawful possession of the property in dispute, or suddenly and secretly changed an existing status for the purpose of securing an unfair advantage, or forestalling an order of court restraining suqh action. The facts of this ease, as they were made to appear by the verified bill of complaint and the admission in the answer, fully sustain the order and decree of the District Court granting this injunction and its refusal to modify the same. Hay et al. v. Association of Collegiate Alumnæ, 273 F. 351, 352, 353, 50 App. D. C. 387, and cases there-cited; Love et al. v. A., T. & S. F. Ry. Co., 185 F. 321, 333, 107 C. C. A. 403; Western Union Telegraph Company et al. v. Postal Telegraph Co., 217 F. 533, 539, 133 C. C. A. 385; Bishop’s Equity, § 400.

Affirmed and remanded.


text:
    EVERETT v. LAROCCA et al.
    (Circuit Court of Appeals, Fifth Circuit.
    March 6, 1925.
    Rehearing Denied April 6, 1925.)
    No. 4444.
    Bankruptcy <@=302(l)— Bill by trustee held to state a cause of action for relief against a fraudulent transfer.
    A bill hy a trustee to set aside a conveyance of real estate by bankrupt within four months prior to bankruptcy held sufficient to charge that the conveyance was not made in good faith for a present fair consideration, but with intent to defraud creditors, and complainant held entitled to relief, under the evidence, on that ground, and the further ground that it effected a preference to the grantee as a creditor.
    Appeal from the District Court of the United States for the Eastern District of Louisiana; Benjamin C. Dawkins, Judge.
    Suit in equity by C. J. Everett, trustee in bankruptcy of Josephine Primo, against Sal-vadore Laroeea and others. Decree for defendants, and complainant appeals.
    Reversed and remanded.
    L. L. Dubourg, of New Orleans, La. (Dart & Dart and Leo L. Dubourg, all of New Orleans, La., on the brief), for appellant.
    Herman Winsberg and B. B. Howard, both of New Orleans, La., for appellees.
    Before WALKER, BRYAN, and POSTER, Circuit Judges.
   WALKER, Circuit Judge.

By this suit the trustee in bankruptcy of Josephine Pri-mo, who was adjudged a bankrupt on the 15th day of August, 1919, attacked an act of sale or conveyance of described real estate executed by the bankrupt to Salvadore La-rocea on the 31st day of July, 1919, for a purported consideration of $3,300, part in cash and part on time. The petition or bill, after alleging that such conveyance was made by the bankrupt when she was insolvent, and with intent to defeat or hinder her creditors, contained the following allegations :

“Petitioner shows that at no time did the said Salvadore Laroeea pay unto the said Mrs. Primo any sum of money or any portion of the cash price alleged in the said act, nor were any mortgage notes or any other security given for the purported balance due under the terms of said act. That at the time of the transfer aforesaid, said Salva-dore Laroeea knew that” his sister-in-law, Mrs. Primo, was insolvent and had no property with which to pay her. creditors, and that in accepting this transfer without any payments of the same being made he knew it would not inure to the benefit of the other creditors, but, on the contrary, would prejudice her creditors to such an extent as to reduce the possibility of a material payment to them. That his purpose in joining with the said Mrs. Primo was to deprive and defraud her creditors of their claims on said property. That prior to said transfer, at that time, and subsequent thereto, defendant was indebted to various unsecured in a sum exceeding $1,-000, all as will appear more fully by reference to the schedules of debts filed by her herein, none of which have been paid by her.”

The prayers of the bill included one for .general relief. Larqeea’s answer to the bill put in issue the above-mentioned averments. Evidence adduced was to the following effect: Prior to the conveyance of said property in January, 1919, by its former owner, orle Collins, to the bankrupt, Laroeea contracted for the purchase of it, but agreed that the title be made to the bankrupt. Laroeea supplied most of the cash paid on that purchase, and had not been repaid the advances he had made when the attacked conveyance was executed.

The bill was dismissed. The opinion rendered by the district judge shows that this action was the result of the conclusion that the allegations of the bill showed a simulation or conveyance without any consideration at all, and that the evidence adduced did not support those allegations. We are not of opinion that the averments of the bill showed a simulation or transaction unsupported by any consideration. Those allegations show that the recitals as to consideration were untrue, but are consistent with an inference that the conveyance was supported by a valuable consideration moving from Laroeea, and that he was a creditor of the bankrupt. The aver-ments of the bill show a conveyance of property by the bankrupt within four months prior to the filing of the petition, with the intent or purpose on her part to hinder, delay, or defraud her creditors, and that the grantee in that conveyance was not a purchaser in good faith and for a present fair consideration; and the evidence adduced supported the allegations to this effect, and further showed that the transaction effected a preference which was voidable at the instance of the trustee. We, are of opinion that the allegations and the proof showed a state of facts entitling the trustee to relief (Bankruptcy Act, §§ 60 and 67e, as amended [Comp. St. §§ 9644, 9651]); and that the court erred in dismissing the bill.

The decree is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.

Reversed.