author: HOUGH, Circuit Judge.

text:
    CORNELIUS v. C. C. PICTURES, Inc.
    (Circuit Court of Appeals, Second Circuit.
    January 5, 1925.)
    No. 229.
    1. Courts <@=363, 366(18) — Federal court determining validity of chattel mortgage held bound by statute and decisions of state wherein transaction took place.
    Federal court, determining validity of chattel mortgage, transactions concerning which took place in New York, held obliged to follow Lien Law N. Y. § 230, and decisions of New York courts.
    2. Chatte! mortgages <@=191 — “Actual and continued change of possession” not accomplished, where chattels remain in possession of tenant or successor in title.
    Under Lien Law N. Y. § 230, declaring unrecorded chattel mortgages invalid unless accompanied by immediate delivery and change of possession, where third person, in whose physical possession mortgaged chattels remain, is tenant of mortgagor or his successor in title, there is not an actual and continued change in possession.
    [Ed. Note. — For other definitions, see Words and Phrases, First arid Second Series, Actual and Continued Change of Possession.]
    3. Chattel mortgages <@=191 — Actual and con- ■ tinned change of possession of mortgaged chattels validating unrecorded mortgage held established.
    Where firm with which cinema films were stored was notified of mortgage and told to make prints only on mortgagee’s orders, and indorsed on its records a notation to that effect, heldi, that there was an actual and continued change of possession within Lien Law N. Y. § 230, sufficient to validate mortgage though not recorded.
    Appeal from the District Court of the United States for the Southern District of New York. .
    Suit by Harold A. Cornelius against C. C. Pictures, Inc., wherein Jacob Wener intervened, claiming chattel mortgage Jien on certain cinema negatives. From an order sustaining the validity of intervener’s mortgage, Harold Harper and another, receivers, appeal.
    Affirmed.
    See, also, 296 F. 487, 296 F. 490, 297 F. 444.
    This ease was here before in 297 F. 444. We there affirmed an order denying the motion of Wener to sell certain property said to be in the possession of the receivers appointed under this creditor’s bill. Under the mandate thereafter issued, Wener, however, was permitted to take evidence in support of his petition in order to show if he could that he held an enforceable mortgage given by the defendant herein and covering a large quantity of cinema negatives.
    This he proceeded to do, and sh'owed (what had not been proven when the.case was here before) that defendant company owned said cinema negatives, which were stored with a concern doing an independent business, i. e., the Evans Company. This storage was necessary because such negatives are highly inflammable, and Evans Company had lawful conveniences for storing them, which the defendant herein had not.
    Furthermore it was the business of Evans Company to make prints from these negatives, and it had apparently done so, upon orders given by defendant herein, and received pay for so doing. A formal instrument of mortgage was executed by defendant and delivered to Wener. A copy of said mortgage was filed with Evans Company, and that concern was fully advised of the transaction between Wener and defendant, and informed that thereafter no prints should be made by it from the negatives except, as ordered and to the extent of order by Wener.
    Thereupon Evans Company entered in its own records the fact that these negatives were “to be released on order of J. Wener only.”
    But Wener never filed for record his aforesaid mortgage.
    On these facts the court below held that under section 230 of the New York Lien Law (Consol. Laws N. Y. e. 33) the hypothecation to Wener was a mortgage of goods and chattels, and that it had been accompanied by an immediate delivery and followed by an actual and continued change of possession of the things mortgaged, i. e., the negatives aforesaid.
    Wener’s mortgage was therefore upheld as against the receivers in equity and they took this appeal.
    Mark Eisner, of New York City (Irwin M. Berliner, of New York City, of counsel), for Wener.
    Wing & Russell, of New York City (Burt D. Whedon, of New York City, of counsel), for receivers.
    Before ROGERS, HOUGH, and MANTON, Circuit Judges.
   HOUGH, Circuit Judge.

The question at bar is whether, considering that the mortgaged chattels were at the time of mortgage given, and thereafter continued, in the physical possession of a third person, the facts proven constitute or are equivalent to that immediate delivery and actual and continued change of possession required by the law of New York.

Since all the transactions took place in that state, it is admitted that we are obliged to follow the New York law if the rule thereof can be discovered from the decisions of the state’s highest court; and further it is admitted that any rule must be evolved from the statute which is at present section 230 of'the Lien Law.

Statutes, like men, have a life story, and their significance may sometimes be as- ' eertained by a study of heredity.

' One of the most important ancestors, if not the immediate progenitor of the present Lien Law, is 2 R. S. 136, § ,5, of which the words now material read as follows: “Every assignment of * * ■ * chattels, by way of mortgage * * * unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession, of the things * * * mortgaged, * * * shall be presumed to be * *' * void, as against the creditors of the1 * * * person making such assignment.”

This statute in respect of chattel mortgages was supplemented by chapter 279 of 1833, but was not repealed nor (so far as the language above quoted is concerned) changed. See Karst v. Gane, 136 N. Y. 316, 32 N. E. 1073.

While the law stood thus, Nelson, C. J., held that “as the property mortgaged was not left in the possession of the mortgagors, but remained with a third person, * * * the case did not fall within the statute, 2 R. S. 136, § 5, and nothing short of actual fraud could invalidate it.” Nash v. Ely, 19 Wend (N. Y.) 523.

• And this interpretation of the statute was followed in Goodwin v. Kelly, 42 Barb. (N. Y.) 194; Smith v. Post, 1 Hun (N. Y.) 516; National, etc., Bank v. Chaskin, 28 App. Div. 311, 51 N. Y. S. 64.

In Beskin v. Feigenspan, 32 App. Div. 29, 52 N. Y. S. 750, the opinion was expressed that Judge Nelson’s holding was either no longer “in point on the question of change of possession” or “must be considered as overruled by the later eases.” But we are unable to discover that any .later decisions by the highest court of the state have impaired the value of Judge Nelson’s interpretation of the statute so far as the present point is concerned.

It is we think true that the New York law is at present clear to the effect that where the third person in whose physical possession the mortgaged chattels remain is a tenant of the mortgagor or his successor in title, there is not and cannot be an actual and continued change of possession within the meaning of the statute. Beskin v. Feigenspan, supra; Wild v. Porter, 59 App. Div. 350, 69 N. Y. S. 839, affirmed 173 N. Y. 614, 66 N. E. 1118. With the reason for this rule we are not concerned, though it seems to us fundamentally to rest on some idea that a tenant is a species of representative if not an agent of 'the landlord — a concept that will not bear much discussion under the law of tenures.

It may be granted that in New York no method yet discovered of making the mortgagor the agent or representative of the mortgagee will suffice under the statute. Steele v. Benham, 84 N. Y. 634, and cases cited.

It is also clear that the possession of the mortgagee must be “to the exclusion” of the mortgagor, and this may be a question of fact. Hall v. Sweet, 40 N. Y. 98; Sieden-bach v. Riley, 111 N. Y. 567, 19 N. E. 275.

But where the facts are so plain that no jury question can arise, and the third person is neither a tenant nor an agent of the mortgagor, we discover in the local eases no general principle opposed to the interpretation of language very like that of Lien Law 230, as laid down by Nelson, C. J., supra.

Thus it is said arguendo in Wild v. Porter, supra: “Mere words and inspection cannot effect a change of possession. There must be an actual possession by the mortgagee; a possession in fact.” And in Steele v. Ben-ham, supra, quoting from Camp v. Camp, 2 Hill (N. Y.) 628, it is said: “Actual change of possession imports at least something more than a mere legal or fictitious change, to be worked by the operation of the mortgage itself.”

We feel justified in saying that the facts before us present a problem quite different from any considered by the New York courts. Let it be admitted that actual possession means more than a paper transfer, something more than an effect produced by the mortgage instrument itself. But with these assumptions the question is pertinent: What can a mortgagee do when the chattels mortgaged to him are in the possession of a third person who is neither the agent nor tenant of the mortgagor, more than to make that third person his bailee as he had been the bailee of the mortgagor? Short of choosing another bailee, often at very material expense, no other method of effecting an actual and continued change of possession occurs to us, nor has any other method been suggested in argument.

No New York decision being produced specifically applicable to this situation, we feel justified in turning to general interpretation of similar laws (and statutes more or less like the New York Lien Law are common enough) for enlightenment.

The language of Holmes, J., in Union Trust Co. v. Wilson, 198 U. S. 530, 536, 25 S. Ct. 766, 767 (49 L. Ed. 1154), is directly applicable. That learned judge remarks: “It always is recognized that if the bailee of the owner, by direction of the latter, assents to becoming bailee for another to whom the owner has sold, mortgaged or pledged the goods, the change in the character of the bailee’s holding satisfies the requirement of a change of possession to validate the sale or pledge.” This it seems to us is the real test, viz.: Was there a change in the character of the bailee’s holding?

In this instance there assuredly was, for on the records of the Evans Cdmpany, which in the view most favorable to the appellants was no more than the mortgagor’s bailee, absolute dominion over these cinema negatives passed to Wener, in that Wener alone was recognized by Evans Company as having authority to release the films producible from the negatives. The text-writers unanimously recognize similar doctrine, which is summed up in 11 C. J. 585, declaring in substance that the rule as enunciated by Holmes, J., supra, “is applied by the weight of authority to cases where the property is in the possession of a bailee of the mortgagor.” The citations for this pronouncement are extended and sufficient, and the only New York ease cited — and that contra— is Beskin v. Feigenspan, supra, which, as above pointed out, goes entirely upon what is apparently the New York concept of tenancy and has no relation to a ease* of bailment where the bailee contemporaneously with the execution of the mortgage “attorns” (as the phrase is) to the mortgagee.

We conclude that, there being no controlling decision in the highest court of the statt of New York on this particular point, the general law should he followed, and that law leads to an- affirmance of the order below.

Affirmed, with costs.


source: Caselaw Access Project

author: BRYAN, Circuit Judge.

license: Public Domain

text:
    KYNERD v. HULEN et al.
    (Circuit Court of Appeals, Fifth Circuit.
    April 2, 1925.
    Rehearing Denied April 29, 1925.)
    No. 4339.
    1. Railroads <@=>69 — Right of way in fee simple may be acquired by purchase.
    ■ ' In Texas a railroad company by condemnation of right of way secures only an easement, but it may acquire fee-simple estate by purchase, in which event its right to use land is as absolute and unrestricted as is that of individual, at least so long as state does not eompláin.
    2. Contracts <@=>147(I) — Deeds <@=>93— Intent of parties governs; rule as to intent applies to deeds.
    In construing any contract, intent of parties governs, and this rule applies to deeds.
    3. Deeds <@=>90, 97 — Every part given effect, if possible; in case of conflict, granting clause prevails over other clauses.
    Every part of deed must be given effect, if possible; but, in ease of conflict, granting clause prevails over other clauses.
    4. Railroads <@=>69 — Deed to land held to convey fee and not mere easement; “over”; “through.”
    Under Vernon’s Sayles’ Ann. Oiv. St. 1914, Tex., art. 1106, warranty deed to railroad which did not,-in any part thereof, in terms purport to convey a right' of way, but conveyed strip of land 100 feet wide “upon, over and across” grantor’s tract, and provided that it was understood that land conveyed is strip “through and over” premises described, held to convey fee-simple title and not mere easement; word “over” being synonymous with “through.”
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Through; Second Series, Over.]
    5. Evidence <@=>390(4) — Where deed clearly conveyed fee, it was not error to sustain demurrer to complaint based on theory that deed conveyed mere right of way.
    Where deeds clearly and unambiguously conveyed fee, it was not error to sustain demurrer to complaint based on theory that deeds conveyed mere easement, notwithstanding allegations of petition as to circumstances under which they were executed. ’
    6. Costs <@=>256(1) — Cost of printing matter unnecessary for writ of error taxed against parties at whose request it was incorporated in record.
    Where plaintiff in error’s direction for making up record did not include answers of defendants in error, who insisted on incorporating answer’s in record, causing printing of over 125 pages of matter unnecessary to writ of error, costs of printing such matter should be taxed against successful defendants in error in solido.
    Walker, Circuit Judge, dissenting.
    In Error to tbe District Court of the United States for tbe Northern District of Texas; William H. Atwell, Judge.
    Action by W. D. Kynerd against John A. Hulen, receiver of the Trinity & Brazos Valley Railway Company, and others. Judgment for defendants, and plaintiff brings error.
    Affirmed.
    Joseph Manson McCormick, of Dallas, Tex. (Francis Marion Etheridge, Henri Louie Bromberg, and Paul Carrington, all of Dallas, Tex., on the brief), for plaintiff in error.
    J. H. Barwise, Jr., G. W. Wharton, and H. S. Garrett, all of Fort Worth, Tex., and Alex S. Coke, of Dallas, Tex. (Cruce & Potter, of Ardmore, Okl., Thompson, Barwise & Wharton, of Fort Worth, Tex., and Coke & Coke, of Dallas, Tex., on the brief), for defendants in error.
    Before WALKER and BRYAN, Circuit Judges, and DAWKINS, District Judge.
   BRYAN, Circuit Judge.

This is an action of trespass to try title under the Texas' practice, by which the plaintiff, Kynerd, seeks to recover the value of oil extracted from two parcels or strips of land forming f)arts of a railroad right of way, and to establish his right to extract oil therefrom in the future.

The petition sets out a separate deed of each of the two parcels of land in controversy, executed in 1903 by the then owners to the defendant railway company. One of the deeds recites a cash consideration bf $129.25, and conveys: “All that certain tract, lot or parcel of land lying and being situate in the county of Limestone in the state of Texas, being a part of what is known as Pedro Varola original grant in said county and being more particularly described as follows, to wit: A strip of land one hundred feet wide being fifty feet on each side, of the center of the main line track of said Trinity & Brazos Valley Railway Company as the same may hereafter be constructed, laid and fixed by said company upon, over and across the following tract of land owned by us which said tract owned by us is described as follows,” etc.

It then describes by metes and bounds, a tract of 122.54 acres. The remaining parts of the deed are:

“It is understood that the land herein surveyed is a strip one hundred feet wide through and over the land and premises herein last above described, said strip commencing on east side of said tract and extending through the same in a general westerly direction to the west side of said tract.
“To have and to hold the above-described land and premises, together with all and singular the rights and appurtenances thereunto belonging or in any wise appertaining unto, the said Trinity & Brazos Valley Railway Company, its successors and assigns forever, and we do hereby bind ourselves, our heirs, executors and administrators to warrant and forever defend all and singular the said premises unto the said Trinity & Brazos Valley Railway Company, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof.”

The other deed recites a cash consideration of $117.75.and in like manner describes a tract of land of 101.1 acres, “through and over” which a “strip of land” 100 feet wide is conveyed. It is identical in form with the first mentioned deed, except that in the explanatory clause appearing next after the description of the whole tract the word “conveyed” is used instead of the word “surveyed.” The petition then alleges that before the line of railway was built a committee of citizens undertook to provide a right of way for it through Limestone county, either by procuring deeds or by condemnation proceedings ; that in order to accomplish its pur'pose that committee either brought or threatened to bring condemnation proceedings against landowners; that the deeds, the interpretation of which is involved in this controversy, were executed to avoid the expense of condemnation; that the form of deed used was prepared by the- grantee, and the grantors were informed that no greater estate would be thereby conveyed than could be obtained by condemnation and that the consideration was calculated on the basis of what would be allowed in condemnation proceedings; and that the grantors and grantee believed that the deeds in question would not pass the mineral rights but would grant only a perpetual right of way, which was the only use the railway company had for the lands conveyed to it.

Finally, the petition alleges that since November, 1921, the defendants have extracted oil of great value from those portions of the right of way conveyed by the two deeds above described; and that plaintiff, in December, 1922, by oil and gas leases from the railway company’s grantors or their heirs, became entitled to all the mineral rights in the two parcels of land above described upon which the railway company has its right of .way.

The trial eourt sustained a demurrer to, and dismissed, the petition. Plaintiff assigns error and contends that the railway company acquired only an easement, whereas it is the position of defendants that each of the deeds conveyed an estate in fee simple.

In Texas, a railroad company by condemnation of a right of way secures only an easement, but it may acquire a fee-simple estate by purchase. Calcasieu Lumber Co. v. Harris, 77 Tex. 18, 13 S. W. 453; The Right of Way Oil Co. v. Gladys City Oil, Gas & Mfg. Co., 106 Tex. 94, 157 S. W. 737, 51 L. R. A. (N. S.) 268. When it acquires a fee-simple estate in land, its right to use the same is as absolute and unrestricted as is that pf an individual, at least so long as the state does not complain. Stevens v. Galveston, etc., Ry. Co. (Tex. Com. App.) 212 S. W. 639. If a fee-simple estate be acquired, it is immaterial that the land so held in extent and area constitutes the right of way or that it is so used. The Right of Way Oil Co. v. Gladys City Oil Co., supra. The deeds are therefore to be construed as they should be had the grantee been an individual. Article 1106, Vernon’s Sayles’ Texas Civil Statutes 1914, provides: “Every estate in lands which shall hereafter be granted, conveyed or devised to one, although other words heretofore necessary at common law to transfer an estate in fee simple he not added, shall be deemed a fee simple, if a less estate be not limited by express words or do not appear to have been granted, conveyed or devised by construction or operation of law.”

Each of the deeds attacked is a full warranty deed. The granting clause describes land and not an easement. There is a suggestion that the words “upon, over and across” in the granting clause refer to the land; but in our opinion they have reference to the railroad track, and there is nothing in the granting clause to sustain the theory that only an easement was intended to be conveyed. In construing any contract, the intention of the parties governs; and that rule is to be observed in construing a deed. Every part of it must be given effect, if that can be done. But sinee the purpose of the granting clause of a deed is to define and designate the estate conveyed, in ease of conflict it prevails over other clauses. 8 R. C. L. 1044. That rule was recognized by this court in the Alabama ease of Dickson v. Wildman, 183 F. 398, 105 C. C. A. 618, and prevails in Texas. Moore v. City of Waco, 85 Tex. 206, 20 S. W. 61. It is said, however, that the explanatory clause, following immediately after the description of the tract out of which the land conveyed to the railway company was taken, demonstrates that it was the intention of the parties to convey only an easement, because of the use of the word “over” therein contained. The exact expression is: “It is understood that the land herein surveyed [conveyed] is a strip 100 feet wide through and over the premises herein last above described, said strip commencing on east side of said tract and extending through the same ima general westerly direction to the west side of said tract.” It is to be noted that the granting clause conveyed a strip of land 100 feet wide, to be taken from the larger tract described in the deed, and which contained 122 acres. It is also apparent from the deed, as well as from the petition, that the location of the right of way had not been definitely determined. It appears to us that the explanatory clause was incorporated in the deed out of an abundance of caution, so as to ipake it clear that it was not intended to convey the larger tract of land. Aside from this, the intention is expressed that the land eon- . veyed should extend in an easterly and westerly direction. Again, even in the explanatory clause it is clear that it was the in.tention to convey land. It is practically conceded that the word “through” does not indicate an intention to convey an easement. Plaintiff’s whole ease is built upon the use of the one word “over.” It is argued that the use of that word demonstrates that there was something “under” which was not being conveyed, and which later turned out to be oil.. In ora opinion, “over” is synonomous . with “through," and “through and over” conveys no meaning different from what would have been expressed if the words “and over” had been left out. We think that is shown in the latter part of the clause, where it is provided that the land conveyed should extend “through” the larger tract. A similar conclusion was reached in the Eighth circuit in the ease of Gilbert v. Missouri, etc., Ry. Co., 185 F. 102, 107 C. C. A. 320, though the words there used were “running through and across my farm.” The deeds do not anywhere in terms purport to convey a right of way. That would be immaterial if there were other language of similar import; nevertheless, it is significant that words ordinarily employed to indipate the intention now contended for are lacking. The meaning of the deeds in our view is not uncertain or ambiguous, and it was therefore not error to sustain the demurrer, notwithstanding the allegations of the petition as to the circumstances under which they were executed. Taylor v. County School Trustees (Tex. Civ. App.) 229 S. W. 670; Wichita Petroleum Co. v. Winant (C. C. A.) 295 F. 67.

Plaintiff’s directions for making up the record did not include the answers of the various defendants; but the defendant railway company and its receiver, and the Old Colony Trust Company, insisted upon incorporating into the record answers which caused the printing of over 125 pages. These answers set up statutes of limitations, laches, and had attached to them as' exhibits statements in great detail of expenses of operation and earnings. They serve no purpose whatever on this writ of error and should not have been included. The clerk of this court will therefore tax against the defendants just above named, in solido, the cost of printing those portions of the transcript included at their request. ’

The judgment is affirmed.

WALKER, Circuit Judge, dissents.


author: HOUGH, Circuit Judge LEARNED HAND, District Judge

text:
    UNITED STATES ex rel. BRAZIER et al. v. COMMISSIONER OF IMMIGRATION AT PORT OF NEW YORK.
    (Circuit Court of Appeals, Second Circuit.
    December 15, 1924.)
    No. 41.
    1. Aliens <@=>54 — May be deported following conviction for violation of Espionage and Selective Service Acts, regardless of length of residence.
    Aliens convicted of offenses under Selective Service Act May 18, 1917 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 2O44a-2044k), and Espionage Act June 15, 1917, may, if found undesirable, be deported at any time under Alien Act May 10, 1920 (Comp. St. Ann. Supp. 1923, §§ 4289%b[4]-428914b[6]), regardless of period of residence in the United States.
    2. Aliens <@=>53 — Deportation exercise of fundamental right of sovereign.
    Deportation is not a punishment, but is an exercise of fundamental right of a sovereign, a right which is exercised by the Legislature, and one cannot therefore be pardoned from deportation.
    3. Aliens <@=>53 — Pardon <©=»l — President’s document held “commutation” and not “pardon,” prevénting deportation.
    Document by which the President did “hereby commute the sentence” of person who had been convicted under the Selective Service Act May S, 1917 (Comp. St. 1918, Oomp. St. Ann. Supp. 1919, §§ 2044a-2044k), and Espionage Act June 15, 1917, “to the term already served, upon condition that he be law-abiding and loyal,” etc., and which gave the President the right to revoke the “commutation” for noncompliance with conditions was not a pardon and did not preclude deportation under Alien Act May 10, 1920 (Comp. St. Ann. Supp. 1923, §§ 4289%b[4]-428914b[6]), hut merely a “commutation,” which means a change of punishment, while a “pardon” avoids or terminates punishment for crime.
    [Ed. Note. — For other definitions, see "Words and Phrases, First and Second Series, Commute — Commutation; Pardon.]
    4. Aliens <®=>53 — President by commutation of sentence cannot preclude deportation of undesirable alien.
    The President cannot under Const, art. 2, § 2, by commutation of sentence on conditions for violation of which the commutation may be revoked, preclude deportation of alien under Alien Act May 10, 1920 (Comp. St. Ann. Supp. 1923, §§ 4289%b[4]-4289]4b[6]), providing for deportation of alien who is a convict and is also undesirable.
    Learned Hand, District Judge, dissenting.
    Appeal from the District Court of the United States for the Southern District of New York.
    Habeas corpus proceedings by the United States, on the relation of Richard Brazier, Peter Green, Joe Grabner, Don Sheridan, and James Slovik, against the Commissioner of Immigration at the Port of New York. Writ dismissed, and relators appeal.
    Reversed, with directions.
    Relators are aliens. Brazier is English and has been in the United States since 1911; Green, Bohemian, here since 1894; Graber, Russian, here since 1910; Sheridan, Scotch, here since 1906; Slovik, Russian, here since 1911. ■
    They were in 1918 severally convicted in the District Court for the Northern District of Illinois, inter alia for violating statutes commonly known as the “Selective Service Act” (of May 18, 1917 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 2044a-2044k]), and the “Espionage Act” (of June 15, 1917 [40 Stat. 217]). In pursuance of sentence upon these convictions, they were all incarcerated in the United States Penitentiary at Leavenworth, Kan.
    While they were thus undergoing imprisonment, Congress passed the Alien Act of May 10, 1920 (Comp. St. Ann. Supp. 1923, §§ 4289%b[4]-4289]4b[6]).
    Thereafter and in June, 1921, the Secretary of Labor issued warrants of arrest against these relators on the ground that they were severally aliens who, after August 1, 1914, had been convicted of offenses under the Selective Service Act and/or the Espionage Act, and were therefore, under the Alien Act of May 10, 1920, deportable.
    Hearings were had at the Leavenworth Prison, and the record of such hearings having been considered, the Secretary issued warrants of deportation against all the re-lators in November, 1921.
    These warrants remained unexecuted because relators were in jail for more than a year.
    In June, 1923, the President issued to each of them what is called in the reeord a commutation.
    This document, issued over the'seal of the Department of Justice, after reciting the facts of conviction and imprisonment pursuant to sentence, continues:
    “Now, therefore, be it known, that I, Warren G. Harding, President of the United States of America, in consideration of the premises, divers other good and sufficient reasons me thereunto' moving, do hereby commute the sentence of the same Don Sheridan to the term already served upon condition that he be law-abiding and loyal to the government of the United States, and does not encourage, advocate or become willfully connected with lawlessness in any form, and upon the further condition that if he violates any of the foregoing conditions, of which fact the President shall be the sole judge, he, the President, may revoke the commutation, and it shall thereupon become null and void and of no effeet, and he may, by direction to any officer of the penitentiary where the prisoner is now confined, or to any United States marshal or deputy marshal, cause the said Don Sheridan to be apprehended and returned to the penitentiary, there to complete the service of his sentence.”
    Thereupon the relators were severally discharged from the penitentiary, were arrested under the pending warrants of deportation,, and while in New York and held under said warrants, took out this writ of habeas corpus. The lower court dismissed the writ, and relators appealed.
    Hale, Nelles & Shorr, of New York City (Walter H. Pollak, Isaac Shorr, and Carol Weiss King, all of New York City, of counsel), for appellant.
    William Hayward, U. S. Atty., of New York City (James C. Thomas, Asst. U. S. Atty., of New York City, of counsel), for appellee.

      Before ROGERS and HOUGH, Circuit Judges, and LEARNED HAND, District Judge.
   HOUGH, Circuit Judge

(after stating the facts as above). .The decision in Mahler v. Eby, 264 U. S. 32, 44 S. Ct. 283, 68 L. Ed. 549, filed some months after entry of order appealed from, settles some points.

The Secretary of Labor, proceeding under the Act of May 10, 1920. (41 Stat. 593), did not in this instance, any more than he did in the Mahler Case, make a formal finding that relators were “undesirable residents of the United States”; therefore this matter must take the same course as was directed in the decision cited.

But it is argued that because the act of 1920, does “no more than add to the list of deportable offenses,” and the “basic” act of 1917 limits the time for deportation to five •years after entry, and deportation under the 1917 statute cannot be awarded for a first offense committed after such five years, and all these relators are so far as shown first offenders, and all had been in this country upwards of five years when they severally committed the offenses for which they were convicted, it follows that the 1920 act does not apply to them.

This contention might be summarily answered by referring to the Mahler Case, which bluntly declares (page 48), “No time limitation is imposed upon proceedings under the’.’ 1920 statute.

But further it is clear from consideration of the nature of and occasion for the Espionage and Selective Service Acts, and the language of the act of 1920, that persons, who had been or might thereafter be actually convicted of offending against measures adopted only to preserve the life of the nation in time of war, were in a class by themselves, and that class was to be treated in a way of its own, not like other aliens who had not manifested aggressive hatred of the land they chose to inhabit.

Men such as these relators had had no chance in time of peace to show how they would behave in time of war. They were typical of a class, which, if not discovered only under war conditions, rendered itself so markedly harmful to the national life in 1917-1919, that its members were singled out for removal from a community they evidently wished to injure or destroy. No reason could or can be shown why the Congress should restrict removal to those who offended before they had perhaps time to become acclimated, and free those who by long residence had learned how to do the more harm. Length of years in residence only added to gravity of offense. Therefore it is reasonable to read the words of the 1920 act literally, and to hold, as we do, that aliens convicted under the statutes referred to may, if found undesirable, be deported at any time.

It is next urged that the document above quoted, and handed each relator in June, 1923, was a pardon, perhaps conditional, but still something which forbade any deportation while executive clemency permitted the men to go free of imprisonment, and they were living under a possibility of recall to jail. Such removal would be either a denial of the lawful effect of a pardon, or a violation of the President’s constitutional right to extend clemency to offenders.

There are two quite distinct parts to this proposition. If the paper was a pardon, duly accepted, the question is vital — of what were they pardoned? Plainly of certain offenses under the Espionage and Selective Service Acts. They were not, and could not be, pardoned from deportation. A pardon is for a crime (with exceptions here wholly unimportant); inter alia, it avoids or terminates punishment for that crime, but deportation is not a punishment, it is an exercise of one of the most fundamental rights of a sovereign (Mahler Case, supra, page 39), a right which under our form of government is exercised by legislative authority.

If it be assumed that this was a pardon, could it not only terminate punishment for crime, but prevent Congress from expelling an undesirable alien from this country? This assuredly would be a singular extension of presidential power, and an enlargement of the function of a pardon hitherto un-thought of.

The reply made for respondent to this first branch of the above-stated proposition is that the executive document of 1923 did not pretend to be a pardon, was not a pardon, and was no more than what it called itself, a commutation during good behavior, or “with a string tied to it.”

But this reply, if well made, brings one face to face with the second branch of relator’s argument: Por if the President intended to watch the men’s conduct and again incarcerate them if they misbehaved in ways specified in his commutation, is it unlawful to send them out of the country, where his arm cannot (conveniently, at all events) reach them?

We decline to hold that President Harding inadvertently pardoned these offenders, either conditionally or otherwise; for assuredly it was done inadvertently, if at all. It would require the plainest misuse of words of very rigid meaning, to hold that the statement “we do hereby commute” means we do hereby pardon.

It is not necessary to enlarge upon the historic theory or concept of a “pardon.” It has an alliance with the conception of corruption of blood that lies very deep. It is enough now to observe that the effect of a pardon is “to relieve the offender of all unenforced penalties annexed to the conviction.” Roberts v. State, 160 N. Y. 217, 54 N. E. 678. The documents under consideration did not profess to do this, and did not in fact do it. The men were practically turned loose on parole, and they were not relieved from the unexpired portion of their sentences.

We hold that the relators were given a “commutation.” The word is a term of art and means, and long has meant, the change of one punishment for another and different punishment. A punishment by imprisonment for one year is a different punishment from the fulfillment of a two-year sentence, and this is true even though the change is made when the two-year sentence is half served. So the sentences of these men were changed by substituting for their whole term of imprisonment the performed portion thereof, plus existence under executive observance.

Thus the question raised by the above-outlined second branch of argument must be answered, and we inquire: (1) Can any intention be discerned, on the President’s part, to interfere with the operation of a law in legal theory wholly unrelated to the offense, the punishment of which he commuted? And (2) if such intent is reasonably discernible, was it within the executive power so indefinitely to avoid the operation of an act of Congress?

We fail to discover in the act or language of the Executive any intent to avoid or even to consider the operation of the act of, 1920.

The relators were told that if they became “willfully connected with lawlessness in any form,” the President would send them back to jail. If they had all united in a burglary, they might and probably would have gone to a state penitentiary; but no one would have thought of sending them back to the United States prison until after they had paid the burglar’s penalty. In other words, they were turned loose to take their chances with other residents, and if they transgressed the terms of their commutations, the Executive would have to lay hands on them as best it could. And if some other law wholly unconnected with the President, and entirely outside of his pardoning power, removed them from his grasp, it tvould be no more than a life sentence in a state penitentiary would do.

But answering our second query, the pardoning power of the President embraces the power of commutation, as the whole contains all its parts. Yet the whole power has its constitutional limitations. It extends only to “offenses against the United States.”

Under the act of 1920, an alien, to be deportable, must be, first, a conviet, and, second, undesirable.

It would perhaps be arguable that a pardon, full and free, not only wiped out the punishment but expunged even from existence the crime; so that one who is pardoned is no convict, he is not even a criminal. Therefore one of the two requisites would be nonexistent.

But as no such extinguishing pardon was attempted, we feel assured that no commutation of sentence or liberation on parole can be held to prevent the operation of a general law.

If these men had served their sentences in full, they would plainly, “if undesirable,” be subject to deportation; and we hold that if the Executive by the device of shortening their sentences, subject to executive pleasure at all times, wished by this “cat and mouse” procedure to keep undesirable aliens in this country, it would be beyond. Executive power; because such substantial regulation of the status of aliens bears no relation whatever to the constitutional pardoning power as described in article 2, § 2, United States Constitution. If the power, or the effect of the power, here contended for, is not found positively or by necessary implication in that constitutional grant, it does not exist.

The judgment of the lower court is reversed, with directions not to discharge the relators until the Secretary of Labor shall have had reasonable time in which to correct and perfect his findings on the evidence produced at the original hearing, if he finds it adequate, or to initiate other proceedings against them.

LEARNED HAND, District Judge

(dissenting). I agree that the order must be reversed, but I go further than the majority and believe that the relators should be unconditionally ‘ discharged. My reáson is that I think the President’s order of June 19, 1923, must be considered as a conditional pardon, which, while outstanding, prevents the aliens’ deportation under the second proviso of section 19 of'the Act of 1917. It is quite true that the order uses the word “commute” and that we must take this as deliberate. But the word “commute” is not conclusive, Lee, Sergeant, v. Murphy, 22 Grat. (Va.) 789, 12 Am. Rep. 563, and if we treat the order as a commutation it is not valid throughout. I think we should not so read it if we can help; ut res magis valeat. Its invalidity as a commutation arises because the President even under his power to commute may not change the lawful sentence of a court except by reducing it. None of these relators was sentenced to serve a term which was not continuous, and no one could impose a different sentence upon him. To let him out and put him back after an interval was to divide 'his sentence piecemeal which made it quite another punishment. Nor is this in the least a formal difference. To be released, to re-establish one’s life in the world, and then to be retrapped, is a vastly different matter from enduring at a stretch the pains of full execution. While I know of no case on the point, it seems hardly necessary to labor the reasoning upon so plain a matter.

On the other hand, it is abundantly settled in the books that a pardon may be conditional, and that the condition may be subsequent. Ex parte Wells, 18 How. 307, 15 L. Ed. 421; Lee, Sergeant, v. Murphy, supra; Arthur v. Craig, 48 Iowa, 264, 30 Am. Rep. 395; Woodward v. Murdock, 124 Ind. 439, 24 N. E. 1047; Crooks v. Sanders, 123 S. C. 28, 115 S. E. 760, 28 A. L. R. 940; Alvarez v. State, 50 Fla. 24, 39 So. 481, 7 Ann. Cas. 88, 111 Am. St. Rep. 102; Ex parte Rice, 72 Tex. Cr. R. 587, 162 S. W. 891. Bishop recognizes the same law (1 Bish. New Cr. Law [9th Ed.] 658). The apparent antinomy arises because a pardon, like a, deed, must be accepted to be valid at all, U. S. v. Wilson, 7 Pet. 150, 8 L. Ed. 640; Burdick v. U. S., 236 U. S. 79, 35 S. Ct. 267, 59 L. Ed. 476, though acceptance will be presumed if the convict do not reject it. But his consent is necessary, for he may prefer to suffer execution than to perform the condition. In the ease at bar, these relators, presumably confident of their ability to satisfy the President in their deportment, were willing to run the risk of rearrest and of serving out what remained of their sentences. That willingness, and that only, makes possible the validity of the whole order of June 19, 1923.

So we are faced with the alternative of treating the order as in part void, or as a conditional pardon. We have no right, I submit, merely from the use of the word “commute,” to say that the President would have released the relators at all,-if he had supposed that the condition was invalid. We should look to the substance rather than the form; to what he meant to do, than to the language he chose. It is argued that their release was intended only for the purpose of deportation, but such a conclusion is palpably erroneous. The deportation order had actually passed before the release was given. I own I find it hard to see on what theory it can be supposed that in such a posture we' are free to treat the condition as idle surplusage. All the President need do was to commute the sentences absolutely and the deportation warrants waited at the prison door. To override so clearly expressed a purpose on the strength of an inapposite word, or because we assume that the President must have regarded the crimes as too heinous to be paltered with, appears to me unjustified. Finally, we should, I think, remember that we are dealing in any view with an act'of grace on which we are admonished to look with an auspicious eye and whose conditions we should not narrowly construe. Osborn v. U. S., 91 U. S. 474, 478, 23 L. Ed. 388.

These men may yet be subject to deportation, if, the condition falling in, they serve their sentence and are then released. For the condition would in that ease have invalidated the pardon ab initio and they would be in the same case as though it had never been granted. But while it is outstanding they ..seem to me to have the status of pardoned convicts, and as such the second proviso of section 19 protects them.


author: HOUGH, Circuit Judge

text:
    FLEISCHMANN MFG. CO. v. IRWIN, Collector of Internal Revenue.
    (Circuit Court of Appeals, Second Circuit.
    December 8, 1924.)
    No. 27.
    1. Evidence <§=>550 (I) — Expert’s testimony as to whether gin was rectified, based on what witness said, held proper.
    In action to recover tax imposed by Revenue Act 1917, § 304 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c), on gin rectified under Rev. St. § 3244 (Comp. St. § 5971), involving issue as to whether plaintiff’s gin had been rectified within such statutes, it was not improper to permit expert to characterize or interpret plaintiff’s method of making gin, basing his characterization on what plaintiff’s own witness said.
    2. Evidence <§=>519 — Evidence as to conduct of substances admissible in action involving issue as to whether gin was rectified.
    In action to recover tax imposed by Revenue Act 1917, § 304 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c), on rectified gin, evidence as to conduct of substances well known to chemists held admissible, in order to base thereon an argument as to conduct of substances confessedly used by plaintiff.
    3. Stipulations <§=>18(8) — Parties who stipulate that they may be deemed to have moved for a directed verdict are concluded by court’s finding, if supported by any evidence.
    Where case was tried pursuant to a stipulation that both parties would be deemed at the conclusion of the case to have moved for n verdict, the parties are concluded by court’s finding if there ,is any evidence in support thereof.
    4. Appeal and error <§=> 1010(1) — Internal revenue <§=>38 — Question whether plaintiff’s gin was produced by redistillation of pure spirit over juniper berries and other aromatics, held question of fact.
    In action to recover tax imposed by Revenue Act 1917, § 304 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c), on rectified gin, whether plaintiff’s gin was produced by the “redistillation of a pure spirit over juniper berries and other aromatics,” within proviso exempting such gin, held question of fact, on which court’s finding was conclusive when sustained by some evidence, in view of stipulation for directed verdict.
    5. Internal revenue <§=>12 — Gin, rectified in or- ' der to restore chemical stability, subject to tax, though produced in manner specified by proviso.
    Plaintiff’s gin held subject to tax as rectified gin under Revenue Act 1917, § 304 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c), even if “produced by the redistillation of a pure spirit over juniper berries and other aromatics,” within proviso exempting gin so produced, where, after distillation was complete, it was rectified in order to restore chemical stability.
    ■ In Error to the District Court of the United States for the Southern District of New-York.
    Action by the Eleisehmann Manufacturing Company against Roscoe Irwin, Collector of Internal Revenue. Judgment for defendant (293 E. 267), and plaintiff brings error.
    Affirmed.
    Action to recover a tax exacted by defendant. Plaintiff is a distiller, manufacturing, among other articles, gin. Subsequent to 1917 it made a large quantity of gin, its method being to heat the pure spirits containing the juniper berries and aromatics necessary for the gin flavor, then the heat vaporized the spirits, the vapor passed into the cooling coils, was thereby condensed, and came out flavored as gin.
    This liquid was somewhat reduced in strength by the addition of distilled water and then stored in barrels lined with paraffin for some time, its “proof” in the barrels being 140. Beverage gin is 95 proof; and when the time came to prepare it for sale as a beverage it was found that the paraffin had plainly flaked off into the gin. Except for these flakes, the gin was as clear as when it had been put in the barrels.
    It was then poured into a tank and mixed with enough distilled water to reduce it to beverage proof, and “in that procedure we found that the gin became cloudy, which necessitated the use of a filter to take out the paraffin particles.” It was accordingly passed through a Kiefer filter, and on emerging from this filter was clear, unclouded, marketable beverage gin.
    There is a well-known method of making gin other than that pursued by plaintiff. It consists in vaporizing the pure spirits and passing the vapor through the necessary aromatics. This is a distillation, and it is sometimes repeated in order to strengthen the flavor.
    The use by plaintiff of a Kiefer filter for the purposes aforesaid was treated by the defendant as a rectifying of the gin, and as such subject to a tax levied by section 304 of the Revenue Act of 1917 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c). The tax was paid under protest and this action brought to recover.
    The only statutory definition of “rectification,” or of a “rectifier,” is found in R. S. § 3244 (Comp. St. § 5971), to wit (omitting immaterial matter) : “Every person who * * * purjües * * * distilled spirits * * * by any process other than by original and continuous distillation from mash * • * through continuous closed vessels and pipes, until the manufacture thereof is complete * * * shall be regarded as a rectifier, and as being engaged in the business of rectifying.”
    The tax in question levied under the act of 1917 must rest upon the following language (again omitting immaterial words; : “See. 304. That in addition to the tax now imposed * * * on distilled spirits there shall be levied * * * a tax of fifteen cents on each * * *. gallon * * * on all distilled spirits * * * rectified, purified, or refined in such [i. e., as in Rev. St. § 3244 (Comp. St. § 5971)] manner * * * provided, that this tax shall not apply to gin produced by the redistillation of a pure spirit over juniper berries and other aromatics.” Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 5986c. •
    At trial plaintiff contended that the filtering of the gin at 95 proof was solely for the purpose of removing the paraffin particles, a process long permitted by the Internal Revenue Department and by it not regarded as rectification. Wherefore there had been no rectification of this gin within the statutes, and the ease was governed by Mayes v. Paul Jones & Co. (C. C. A.) 270 F. 121.
    The government offered evidence, however to the effect that the addition of water to the gin at 140 proof “threw the essential oils out of solution” and so produced a cloudiness which required the very careful filtration of the Kiefer machine for the removal of said oils. Such a process was claimed to be rectification.
    The government also offered evidence to the effect that the words of the proviso, section 304, viz., “the redistillation of a pure spirit over juniper berries,” ete., referred to a particular style of gin-making, viz., substantially the second of the above-described methods; so that plaintiff’s method did not fall within the language of the exception.
    Some of defendant’s evidence consisted in taking the opinions of experts básed upon their experiments with specimens of spirits not taken from plaintiff’s gin, but the qualifications of the expert witnesses were not successfully questioned.
    The court below directed verdict for defendant, and plaintiff took this writ.
    Levi Cooke, of Washington, D. C., and George B. Lester, of New York City, for plaintiff in error.
    William Hayward, U. S. Atty., and Victor House, Asst. U. S. Atty., both of New York City, Charles T. Hendler, Sp. Atty., for internal Revenue Department, and Nelson T. Hartson, both of Washington, D. C., for defendant in error.
    Before ROGERS and HOUGH, Circuit Judges, and LEARNED HAND, District Judge.
   HOUGH, Circuit Judge

(after stating the facts as above). Plaintiff’s exceptions to the admission of testimony are not well taken. It was not improper to permit an expert to characterize or interpret plaintiff’s method of making gin, basing his' characterization on what plaintiff’s own witness had said. Nor is there any rule against what has been called at bar “empirical” testimony, by which we understand to be meant evidence as to the conduct of substances well known to chemists, in order to base thereupon an argument as to the conduct of substances confessedly used by plaintiff.

This case was tried pursuant to a stipulation that both parties would be deemed at the conclusion of the ease to have moved for a verdict.

The effect of this practice is too w.ell known to require extended citation. The leading ease is Beuttell v. Magone, 157 U. S. 154, 15 S. Ct. 566, 39 L. Ed. 654, holding that when “both parties ask the court to instruct a verdict, both affirmed that there was no disputed question of fact which could operate to deflect or control the question of law. This was necessarily a request that the court find the facts, and the parties are therefore concluded by the finding made by the court, upon which the resulting instruction of law was given. The facts having been thus submitted to the court, we are limited in reviewing its action, to the consideration of the correctness of the finding on the law, and must affirm if there be any evidence in support thereof.” This rule has been applied so frequently in this circuit that it is necessary to cite only one of the latest cases, American, etc., Corp. v. Spielberg (C. C. A.) 262 F. 492.

As shown above, there was evidence for the plaintiff that all that the Kiefer filter did was to mechanically remove certain particles of paraffin, which (it was argued) was not rectification; on the other hand, there was evidence that prior to insertion in the filter the admixture of water had disturbed the chemical stability of the gin, and to restore such stability by filtration was rectification. In this point the court found in favor of the defendant, and it is impossible to say that there is no evidence to support the finding.

There was another question presented below and acutely argued here, viz.-, whether at any time from the beginning of process to the completion of the potable beverage gin, the plaintiff had produced gin by “a redistillation of a pure spirit over juniper berries,” etc.

The question is: Does the quoted phrase reasonably apply to what the plaintiff did, or is it limited substantially to a process (confessedly known to the art) by which the vapor of spirits (not yet gin) becomes gin by passing through or over the aromatic substances intended to flavor the finished article?

In the light of the testimony herein, the majority of this court incline to regard this as a question of fact, and so regarded, the trial judge distinctly found against plaintiff; and again it is impossible to say that there was no testimony in support of the finding.

If, however, this second question be regarded as one of law, on the ground (as must be the case) that there is no real contradiction about the facts, we are unanimously of the opinion that the proviso of section 304 should not be regarded as singling out gin made by one particular method and relieving that article from the taxation laid upon gin made by other methods.

One presumed object of a tax statute is to produce equality of burden. If gin be produced by exposure of vapor to aromatics, i. e., by the second of the methods above indicated, there may be an incidental rectification (within part of the technical definition of R. S. § 3244) of the vaporized spirit, but such exposure is a portion of that “original and continuous distillation” which is recognized by R. S. § 3244, as something that the mere rectifier does not do; for one “sense” of that statute is that one who ree--tifies is a different legal entity from one who distills.

If one who purified gin, or vapor that would condense into gin, as a part of the distillation process, were compelled to pay tax only on distillation, then one who purchased pure spirit and redistilled it over aromatics would under the body of section 304 be at a disadvantage of 15 cents per gallon. The resulting gin would in one ease bear the distiller’s tax only, and the other the rectifier’s tax in addition.

This inequality was avoided by the proviso, under which one who made gin by re-distillation of pure spirit over aromatics was as free of the rectification tax, as one who incidentally rectified during an original and continuous distillation was free of the brand of being a rectifier — under R. S. § 3244.

Thus while most of us think that it was a question of fact whether the way in which plaintiffs made gin ever at any time involved the redistillation of a pure spirit over aromatics, and are of the opinion that the determination of that fact against plaintiff cannot be reviewed here on this record, we further think that assuming that plaintiff’s process did involve such distillation as is shortly. described in the proviso of section 304, yet the gin that resulted from that process was a finished article; it was too strong, but it was gin. It then, as it were, became contaminated or changed by chemical action or decomposition (a finding of fact binding on us), and so required treatment with the Kiefer filter. Since that treatment was more than the mechanical removal of extraneous particles of paraffin, the Mayes Case, supra, does not apply; it was a technical rectification not within the proviso of section 304, and the tax was incurred.

Doubtless it was a misfortune unanticipated; it was perhaps as if some malicious person had dumped a foreign chemical in the gin, which could be removed by a process of purification, but purification of that kind is rectifying by statute. It is not unknown that business misfortune involves the unfortunate in additional taxes — and this may be such a ease. At all events, we cannot avoid the statutory result.

Judgment affirmed, with costs.


text:
    HARTFORD FIRE INS. CO. v. TATUM.
    (Circuit Court of Appeals, Fifth Circuit.
    April 15, 1925.)
    No. 4469.
    1. Insurance <§=>131 (I) — Unless prohibited by statute, valid contract of insurance can be made by parol.
    Unless prohibited by statute, valid contract of insurance can be made by parol.
    2. insurance <§=>131 (I) — Duration of and premium payable under parol insurance contract held sufficiently established.
    Duration of and amount of premium payable under parol contract of insurance helé sufficiently established, where it was obvious that parties intended contract should be same as prior builder’s risk insurance contract between same parties and at same rate.
    3. Insurance <g=>65l (I)— Prior written contract held properly admitted In evidence in action on oral contract.
    In action on parol insurance .Contract, where it was obvious that terms of such contract were to be same as prior written contract between same parties, such prior contract was properly admitted in evidence.
    4. Insurance ©=>645(3) — Evidence as. to defendant’s offer to insure held properly admitted under pleadings in action on parol policy.
    In action on parol insurance contract, allegation of petition, to effect that defendant’s agent solicited plaintiff to take out a policy in sum of $9,000, and that she took matter under advisement and following day called at agent’s office to accept insurance for $8,000, held sufficiently broad to render admissible proof that defendant’s agent had offered to insure not only for $9,000 but for any less sum,' and that plaintiff’s authorization of insurance for $8,000 was acceptable.
    5. Insurance ©=3651 (2) — Proof of custom of local agent to keep possession of policies held admissible in action on parol policy.
    In action on parol insurance policy, evidence that defendant’s local agent customarily kept 90 per cent, of policies written by him in his safe held admissible in explanation of plaintiff’s failure to call for and insist on possession of her policy.
    6. Insurance ©=3624(5) — Building contractor held not neeessa'ry or proper party to action
    ' on parol builder’s risk insurance policy.
    In action on parol builder’s risk insurance policy, where it did not appear that building contractor had any interest in insurance, he was not necessary or proper party.
    ■ In Error to the District Court of the United States for the Western District of Louisiana; Benjamin C. Dawkins,' Judge.
    Action by Mrs. Marguerite L. Tatum against the Hartford Fire Insurance Company. Judgment for plaintiff (2 F.[2d] 275), and defendant brings error.
    Affirmed.
    J. S. Atkinson and Alex F. Smith, both of Shreveport, La., for plaintiff in error.
    Jos. D. Barksdale, of Shreveport, La. (H. B. Warren, of Shreveport, La., and W. D. Goff, of Arcadia, La., on the brief), for defendant in error.
    Before WALKER and BRYAN, Circuit Judges, and BARRETT, District Judge.
   BRYAN, Circuit Judge.

This is an action on an oral contract of fire insurance. A jury was waived in writing, and the district judge made special findings of fact in accordance with provisions of sections 649 and 700 of the Revised Statutes. The defendant insurance company also tested the question whether the entire evidence was sufficient by requesting a judgment in its favor. The district judge denied the request and entered judgment for plaintiff in the sum of $8,000, with interest.

About the 1st of May, 1922, plaintiff let a contract for the erection of a building for $10,725; the contractor to furnish the labor and materials. On May 21 the general agent of defendant wrote to the local agent to make an effort to secure insurance on the building for defendant. The local agent called upon plaintiff, and she accepted from him a policy for $2,500, dated June 21, which ran for a period of 60 days, or until August 21.- This policy provided what is called builder’s risk insurance, loss payable to the contractor as his interest might appear. During the construction of the building, this first policy expired, and no new insurance was taken until the latter part of September, when defendant’s special representative and its local agent solicited further insurance. They made an examination, and offered to insure the building in its then uncompleted condition for any amount up to $9,000. Plaintiff informed the agents that she would advise them the amount of insurance she would need, and within a day or two she went to the office of the local agent, but not finding him in left on his desk a note, dated September 29, reading as follows: “Please write policy on my hotel building for amount of $8,000. I called at your office and you were not in, so left this note so you will attend to it when you come in.” When the agent returned to his office, he found plaintiff’s note, and stated that it was his intention to issue a policy, but that he neglected to do so. The building was destroyed by • fire on October 3, and the plaintiff learned# shortly thereafter that the policy had not been issued.

The petition contained an allegation to the effect that the agents solicited the plaintiff to take out a policy in the sum of $9,000, that she took the matter under advisement, and during the next day called at the local agent’s office to accept' insurance for $8,000.

The local agent testified, over objection, that it had been his custom to retain in his safé 90 per cent, of the policies of his customers. Notice of the loss was promptly given. There was no evidence that the building contractor had any claim or right to receive any part of the insurance.

The contentions in support of the assignments of error are: (1) That the contract of insurance was unenforceable because not in writing; (2) that the parties did not agree upon the time during which the insurance was to be in force, or upon the premium to be paid; (3) that the court erred in admitting in evidence the policy for $2,500 which had expired; (4) that evidence was inadmissible to prove, first, that defendant’s agents agreed that the contract of insurance should be consummated upon the amount thereof being stated by plaintiff, because the petition did not contain an allegation to that effect, and to prove, secondly, that defendant’s local agent usually kept in his safe insurance policies belonging to his customers; and (5) that the building contractor was an indispensable party to the action.

1. It is well settled that unless prohibited by statute a valid contract of'insurance can be made by parol. Relief Eire Insurance Co. v. Shaw, 94 U. S. 574, 24 L. Ed. 291. To sustain its contention that the contract is required to be in writing, defendant relies upon the rule announced by this court in Evans v. Marr, 298 F. 288, where it is held that, “if the parties contemplate a reduction to writing of their agreement before it can be considered complete, there is no contract until the writing is signed.” But in the case last cited it is also said: “The ease would have been mai terially different if there had been findings, supported by evidence, that Marr and Shaw orally made a completed sale contract, that they further agreed that that contract was to be reduced to writing,” etc. And the same distinction is taken in the other cases cited by defendant between a completed oral contract and one which it was not the intention of the parties to make binding until their agreement was reduced to writing and signed.

2. A policy of insurance between the parties had recently expired. It was in the New York standard form, adopted in Louisiana, Laws 1898, Act 105, art. 3, § 22. It provided for braider’s risk insurance for a period of 60 days on the same building which had not been completed', and stated the premium rate. It is perfectly obvious that the parties understood that the insurance contracted for in September would continue until the building should be completed, or for a like period of 60 days, and at the same premium rate. In Eames v. Home Insurance Co., 94 U. S. 621, 24 L. Ed. 298, where a similar objection was being considered, the Supreme Court said:

“If no preliminary contract would be valid unless it specified minutely the terms to be contained in the policy to be issued, no such contract could ever be made or would ever be of any use. The very reason for sustaining such contracts is, that the parties may have the benefit of them during that incipient period when the papers are being perfected and transmitted. It is sufficient if one party proposes to be insured, and the other party agrees to insure, and the subject, the period, the amount, and the rate of insurance is ascertained or understood, and the premium paid if demanded. It will be presumed that they contemplate such form of policy, containing such conditions and limitations as are usual in such cases, or have been used before between the parties. This is the sense and reason of the thing, and any contrary requirement should be expressly notified to the party to be affected by it.”

3. It follows that the policy for $2,-500 which had expired was properly admitted in evidence.

4. It is insisted that the agreement to consummate the insurance upon the designation by plaintiff of the amount was not sufficiently alleged. We have set out the substance of that part of the petition which it is claimed was not broad enough to permit the introduction of evidence of such agreement. We think the criticism is highly technical. It surely was permissible under the allegations of the petition to prove that defendant’s agents offered to insure for not only the exact sum of $9,000, but in any less sum, and that plaintiff’s authorization of insurance of $8,000 would be acceptable, and would make a completed contract. Proof of the local agent’s custom to keep insurance policies in his safe was admissible, as an explanation of plaintiff’s failure to call for or to insist upon having the policy in her possession before the fire.

5. The building contractor is not shown to have had any interest in the insurance, and therefore it does not appear that he was even a proper party.

The judgment is affirmed.

       Comp. St. §§ 1587, 1668.