author: McCLINTIC, District Judge.

text:
    NITRO DEVELOPMENT CO. v. UNITED STATES.
    (District Court, S. D. West Virginia.
    March 28, 1925.)
    1. Courts <@=>278 — Jurisdiction is determined by allegations of pleadings.
    If the allegations of the petition or declaration state a cause of action within the jurisdiction of the court, that jurisdiction is not affected by failure of proof of such allegations.
    2. Evidence <@=>83 (1) — Official acts presumed authorized.
    In taking possession of land and using the same in connection with the operation of a government explosives plant during the war, which was authorized by statute, the assistant director in charge will be' presumed to have acted with due authority.
    3. Eminent domain <@=>2(l), 270 — Requisition ■ of land for war purposes in effect condemnation; nature of suit for additional compensation determined.
    The taking of land by the government for war purposes under the Lever Act, § 10 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%ii), is in effect a condemnation, and a suit by the owner for additional compensation above that awarded is not an original action against the United States, but a part of the procedure expressly authorized by said section, and may appropriately be in form an action in assumpsit.
    4. War <@=>4 — Acts conferring war powers to be broadly construed.
    The war acts, passed to enable the President to conduct the war, should be liberally and brogdly construed so as to cover every necessary emergency and necessity.
    5. Eminent domain <@=>130 — Measure of just compensation for property taken for war purposes, -stated.
    Just compensation for property taken by the Executive Department under the powers conferred for war purposes is the fair value of the property when taken, with interest at the legal rate of the state from that time.
    6. Eminent domain <@=>270’ — Owner of land -requisitioned for war purposes held entitled to recover its value with interest as just compensation.
    Where the United States, through the assistant director in charge of an explosives plant operated by the government during the war, requisitioned adjoining land owned by plaintiff, built and used large storage warehouses thereon, maintained guards around the property until long after the Armistice, notified plaintiff that it would condemn the property, and later made an award of compensation under Lever Act, § 10 (Gomp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%ii), which plaintiff refused to accept, the effect was a taking of the land under the power of eminent domain, which divested plaintiff of the title and vested it in the United States, though condemnation suit was not brought in court, and plaintiff is entitled in proceedings brought under said section to recover the value of the land when taken, with interest, as just compensation.
    At Law. Action by the Nitro Development Company against the United States.Trial by the court, and judgment for plaintiff.
    E. B. Dyer and H. D. Rummel, both of Charleston, W. Va., for plaintiff.
    Elliott Northcott, U. S. Atty., of Huntington, W. Va., and B. J. Pettigrew, Asst. U. S. Atty., of Charleston, W. Va.
   McCLINTIC, District Judge.

Plaintiff, a West Virginia corporation, brings this suit to recover from the defendant damages in the way of just compensation for the taking of its 245 acres of land at Nitro, Kanawha county, W. Va., in the year 1918.

The suit is one in assumpsit brought under the act passed by Congress, commonly known as the Lever Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, §§ 3115%e-3115%kk, 3115%Z-3115%r). Defendant interposed a demurrer to the declaration, which was overruled.

The defendant then filed two pleas challenging the court’s jurisdiction in this ease, which pleas the plaintiff moved to strike from the record, which motion was sustained.

Plaintiff in its declaration alleges and avers that the defendant in 1918 was the owner, in fee, of 245 acres of land adjoining the Nitro Powder & Explosives Plant, owned and operated by defendant in Kanawha county, W. Va.; that the President, through his agents and officers duly authorized there-, unto, did take by requisition plaintiff’s said 245 acres of land which plaintiff then owned and which was situated at and adjoining Nitro ; that said land was so taken in fee by the defendant for storage for war supplies and other purposes and as part of the permanent plant at Nitro; that said 245 acres was aotually taken by defendant into its possession and for its sole permanent use in the late summer of 1918, and at once occupied by the defendant for the purposes aforesaid, and that plaintiff was excluded therefrom; that defendant placed guards on said property, and no one could go thereon without a permit from the defendant; that immediately on taking possession defendant caused to be erected on said land a number of large storage sheds and did store therein large quantities of building material and supplies; that said supplies remained stored on said land until long after the Armistice was declared; that the armed guards were maintained-by defendant on said land so taken from the time it was taken until late in the year 1919; that the defendant never officially or otherwise turned said land back to plaintiff; that a short time after the Armistice M. S. Ketehum, assistant director for defendant at Nitro, informed the plaintiff’s president that the defendant would not proceed further with the condemnation of said land; that defendant would not need it; that there was created by the President an Appraisal Board, whose duty it was to ascertain damages and pay just compensation for all property taken by the government.

Plaintiff further alleges that it purchased said 245 acres for the purpose of reselling the same as a whole or subdividing the same and selling the lots for profit; that there was great demand for such lots; that said land immediately adjoined the town of Nitro; that said Nitro was a government explosive plant for the purpose of making powder and other explosives; that said land when so taken by the government had a present ac'tual market value of $150,000.

Plaintiff further alleges that in 1920 it did file its claim for just compensation before the War Department Claim Board at Washington, D. C., and that finally the said hoard allowed plaintiff the sum of $945.85, .specifying it was for actual physical damage to said property that had been committed by the defendant; that plaintiff refused said allowance but elected to take from the defendant 75 per cent, of said amount, which was the sum of $709.40; that defendant did on the 22d day of March, 1921, pay to said plaintiff the said 75 per cent, of said amount, which was designated as Award 1861 War Department Claim Board, Appraisal Section; that plaintiff did take said sum, being 75 per cent, of the amount so fixed by the President as just compensation, and did elect and did bring this suit for the residue of just compensation in the sum of' $100,000.

Section 10 of the Lever Act.

“See. 10. That the President is authorized, from time to time, to requisition foods, feeds, fuels, and other supplies necessary to the support of the Army or the maintenance of the Navy, or any other public'use connected with the common defense, and to requisition, or otherwise provide, storage facilities for such supplies; and he shall ascertain and pay a just compensation therefor. If the compensation so determined be not satisfactory to the person entitled to receive the same,- such person shall be paid seventy-five per centum of the amount so determined by the President, and shall he entitled to sne the United States to recover such further sum as, added to said seventy-five per centum will make up such amount as will be just compensation for such necessaries or storage space, and jurisdiction is hereby conferred on the United States District Courts to hear and determine all such controversies. *■ « a Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115i/8ii.

Considering the averments and allegations in plaintiff’s declaration to be true, then in the light of the Lever Act, and especially the tenth section thereof, as well, also, other acts of Congress, regarding the exercise of eminent domain, enacted primarily as war measures, and as well also the right of trial by jury and the guaranty of just compensation under the federal Constitution, this court’s jurisdiction to try and determine this action cannot be successfully challenged.

The law seems to be settled that if the petition or declaration alleges facts which would be good on demurrer and entitle plaintiff to judgment viewed in the light of the law or statute under which the action is brought, that would be the test of jurisdiction, not whether, at last, the evidence proves the fact. Mere failure to prove the facts by no means shows a want of jurisdiction.

“Jurisdiction always depends upon allegations, never upon the facts. When a party alleges that a certain right is denied him, and the law has given the tribunal power to enforce that right, it must proceed to determine the truth or falsity of his allegation. The truth of the allegation does not constitute jurisdiction. The tribunal must have jurisdiction before it can take any adverse step; its jurisdiction is tested, necessarily, from the allegations, assuming them to be true.” Van Fleet Coll. Attack, § 60. United States Supreme Court says in U. S. v. Arre-dondo, 6 Pet. 709, 8 L. Ed. 547, that if the petition states such a ease that on demurrer the' court would give judgment for plaintiff, it is an undoubted ease of jurisdiction to hear and determine. That is the test. Hawks, Jur. § 3; Wells, Jr. § 4.

The plaintiff and the defendant, in writing, waived trial by jury and agreed that the court should try, hear, and determine this cause in lieu of a jury, which agreement was properly filed in the office of the clerk of this court.

The facts conclusively proven show that plaintiff, Nitro Development Company, did own the 245 acres of land in fee; that it adjoined the then explosive plant at Nitro which was owned and being operated by the government for the manufacture of powder and explosives, and that the defendant was urgently in need of more ground for the extension of its plant, and that M. S. Ketehum was the Assistant Director of the United States Government Explosive Plants, resident at Nitro, in absolute charge of the plant for the defendant; that he had been so appointed by D. C. Jaekling, Director United States Government Explosive Plants.

The evidence shows that on December 15, 1917, Newton D. Baker, Secretary of War, issued an order creating an administrative unit of all explosive plants, and appointed D. C. Jaekling director, which appointment of said Jaekling is as follows:

“Orders: The Secretary of War directs that an administrative unit be created in the office of the Secretary of War for the construction and operation of smokeless powder and other explosive plants. This office will be known as ‘United States Government Explosive Plants,’ and will be conducted by D. C. Jaekling, Director, and Major Séley M. Mudd, Assistant Director.”

Subsequently Major Mudd resigned or was transferred to another department, and M. S. Ketehum was appointed Assistant Director in his stead.

On the same date as above, the Secretary of War, in communication to D. C. Jaekling appointing him director of all explosive plants, says as follows:

“In appointing you to build and operate the proposed new government powder plants, I wish to say you will be given entirely freehand and full authority in the matter, except where it is necessary for legal reasons that you conform to certain government methods, such for instance as government forms of accounting, which must be followed.”

On January 23, 1918, Irving E. Burdick, 'Esq., attorney at law, New York City, was appointed by D. C. Jaekling, acting as director of and in charge of all explosive plants, as general counsel, with specific instructions as to his duties, which included all condemnation proceedings, etc., and on February 15,1918, Irving E. Burdick, as general counsel, wrote to Messrs. Davis, Davis & Hall, local counsel at Charleston, W. Va., introducing M. S. Ketehum, Assistant Director to Mr. Jaekling, and asked that they would confer and advise with Ketehum in regard to matters at Nitro.

Mr. Ketehum states that there was urgent need for more land at Nitro, and he negotiated with plaintiff in regard to its 245 aeres; advised them not to sell any lots when they were about ready to proceed with the sales, stating that. the government would want the property for its uses. He could not agree on the price with the plaintiff as to its property, and advised the plaintiff through its president that the government would condemn the property, saying that they would take immediate possession thereof, and hoped that plaintiff would not make any objection. The plaintiff said it would not, and early in September of 1918, M. S. Ketehum, as such director, took over the property and at once placed the property under guards of defendant, and material was then moved thereon ; storage sheds were built and vast quantities of material were stored on said property. M. S. Ketehum, acting as such director, says that in taking over the land he acted under his superior officers, D. C. Jaekling, and Irving E. Burdick as general counsel; that he did nothing without their approval. Mr. Burdick, general counsel, says that he was instructed by the Secretary of War to condemn plaintiff’s property, or so much thereof as might be necessary, and he advised Davis, Davis & Hall, local counsel, that the property of the plaintiff would be condemned, and also advised Davis, Davis & Hall to so notify, the plaintiff to that effect, which was done by letter.

The proof is clear that M. S. Ketehum did take plaintiff’s land for defendant’s use, and the proof seems just as clear that he was properly authorized to do as he did, yet if there has been no proof on his authorization, he would be entitled to the presumption that he acted with authority.

In the ease .of American Railway Co. v. Lindenburg, 260 U. S. 584, 43 S. Ct. 206, 67 L. Ed. 414, decided by the Supreme Court at the October term, 1922, in the opinion rendered by Mr. Sutherland the court says:

“It is a rule of general application that ‘where an act is done which cannot be done legally' only after the performance of some prior act, proof of the later carries with it a presumption of the due performance of the prior act.’”

It is shown' by the evidence that before or just at the time the defendant took over this property, it advised the plaintiff, through its president that it would condemn the property and pay therefor. This information was given through M. S. Ketehum to the president of the plaintiff’s company.

D. C. Jaekling, Director of Explosive Plants, called on the Secretary of War by written letter, asking that $150,000 be allotted by the Chief of Ordnance to purchase the property requested to be taken by Ket-chum at Nitro. The Secretary of War requested the Ordnance Department to so allot the $150,000 with which to make such purchases and the Ordnance Department did make such allotment. The $150,000 asked to be and so allotted to make the purchases at Nitro of plaintiff’s land included also the purchase of other lands, as some 350 acres of land reported needed by M. S. Ketehum, Assistant Director.

It would seem that this land was acquired, or intended to be acquired,, just as the government had acquired other lands at Nitro, for M. S. Ketehum, Assistant Director, in his evidence says:

“The method of handling this tract of land is very much the same as that used in obtaining several other tracts of land during the construction of the plant. The original plant area for which options were obtained by the Dupont Powder Company and turned over to the United States government did not contain sufficient land for all plant purposes. Where possible, additional lands were obtained by agreement, and if the price would not be agreed upon, the land was taken over and the price was determined by court proceedings. In every ease where new land was acquired, either by purchase or otherwise, the Assistant Director followed the instructions of the legal department, of which Mr. I. E. Burdick was head, in taking over the property and beginning work.”

By Act of Congress of April 11, 1918, c. 51, 40 Stat. amending the act passed July 2, 1917, the Secretary of War was specifically authorized to acquire land by condemnation or otherwise to be used for the construction and operation of plants for the construction of nitrates and other compounds, and the manufacture of explosives and other munitions of war, and that this proceeding if by condemnation might be instituted in the name of the United States in any court having jurisdiction of such proceedings for the acquirement by condemnation of 'any land. . '

So that the government, by the President, could take the land over as provided by section 10 of the Lever Act, or the Secretary of War could take the land over for the defendant by purchase or by court proceedings by condemnation. In the present case it seems that both procedures were adopted simultaneously. In this case it is clear that there was no-purchase, but it is equally clear that the land was taken by the President through the Secretary of War, with full promise and determination to condemn by court proceedings and pay for the property. It is true no proceedings were ever taken in court, but the proceedings that were adopted and ratified were just as effective for all purposes as if court proceedings for condemnation of the land had been- instituted.

While the evidence shows that when M. S. Ketehum first contemplated taking the property over it was to be used for the construction of houses for war workers, as a matter of fact it appears that no houses were ever begun or built on the property except houses for storing war material and war supplies, ánd that such material and supplies were stored on this property for some months; so reasoning from what was actually done with the property, it seems that there was at least an equal necessity for storage space as for any other puipose, and why no residence buildings were placed upon the property we are left entirely in the dark, as no information is given in the evidence as to why such residences were not erected or begun.

Let us assume that 50 or 100 dwellings, or more, had been erected on this property for the war workers before the date of the Armistice, could not and would not the defendant have claimed title, and would not the law have upheld the title under the facts and law in this ease? The initial action of taking and occupancy; the requisitioning. In fact, the exercise of its right of eminent domain by defendant would have been conclusive. It is true no houses were built; but the result in damage to the plaintiff was just as effectual and material as if the land had been covered by houses built by the defendant.

In Filbin Corporation v. U. S. (D. C.) 265 F. 354, it was held:

“Although the word ‘requisition’ is used, in the opinion of the court the proceeding authorized by section 10 of the statute is in effect a condemnation,” etc.

The Filbin Corporation Case was brought to recover just compensation for taking a large body of land by the government.

The recent case of Campbell v. U. S., 45 S. Ct. 115, 69 L. Ed. -, is, in the manner of taking, identical with the case at bar.

In 1918, the United States, to aid in the prosecution' of the war, had determined to build a nitrate plant at Ancor, near Cincinnati, and the government needed more land, and in August of that year, an Army officer, acting under the direction of the Secretary of War, and without obtaining plaintiff’s consent, or instituting condemnation proceedings, or making any compensation therefor, took possession of part of plaintiff’s land, which was separated from the remainder by a public road, and the court decided, in the suit to recover just compensation, that the taking was under the sovereign power of eminent domain, and the court held that he was entitled to the value of the land taken and the damages inflicted to the residue by. the taking, in such sum as would put him in as good a position as he would have been if his property had not been taken.

The Manufacturers’ Land & Improvement Co. v. United States Shipping Board Emergency Fleet Corporation, 264 U. S. 250, 44 S. Ct. 314, 68 L. Ed. 664, in effect upholds the principle that while the Emergency Fleet Act gave the President the power to requisition land for building houses, the land could be taken and used for other purposes, and in the opinion the court says: “The act was intended to be susceptible of practical application in varying situations.”

In other words, the war acts passed to enable the President to conduct the war should be liberally and broadly construed so as to cover every necessary emergency and necessity.

In the ease of Benedict v. United States (D. C.) 271 F. 714, which was a suit brought to recover from the defendant a very large amount of money for real estate taken under section 10 of the Lever Act, the court held that a requisition like a taking by eminent domain is not a taking umder agreement, and that acquiescence on the part of the owner was not an entering into of an agreement, and that whether the protest by the owner be made or not there is obligation to pay just compensation, and the court says “that just compensation is the fair value of the property when taken, with interest at the legal rate of the state from that time.”

This present action should not be treated as an original suit against the United States. It is simply the completion of an action begun by the United States in the exercise of its right of eminent domain to acquire plaintiff’s property by condemnation, and this should be treated as the winding up of that action, and the court in the Filbin Corporation Case very accurately stated just what the proceeding is under section 10 of the Lever Act:

“This proceeding, under section 10, is not an original suit against the United States, to institute which needed express legislative permission. It is a part of the proceeding for condemnation originally instituted by the United States itself, and in which the United 'States is the actor; this being only the de-. fensive answer of the property holder to assert his right to just compensation. No other interpretation consistent with the Constitution appears a reasonable one.”
“It seems to be perfectly clear that the taking and method of ascertainment of value and payment prescribed by section 10 is a condemnation proceeding instituted by the government. The Congress has in one section prescribed an exclusive and complete scheme of condemnation to be instituted by the government. Each successive step prescribed by the statute — the taking, the tentative ascertainment of value, the payment of 75 per cent, of such valuation, the suit by a dissatisfied landowner — is a part of one condemnation proceeding instituted by the United States.”

The defendant, impliedly at least, asserts that this was not legal taking; that no one in authority was authorized to act for the President; that Eetehum in so taking and holding, committed a tort, a trespass. This position, in view of the proof and the acts of Congress and the adjudicated eases, is entirely untenable.

The defendant would contest the form of action brought by the plaintiff, that assump-sit would not lie.

There seems to be no prescribed form of action; probably a petition would do. As-sumpsit seems to fully cover the situation. The defendant took the land from plaintiff, promised to institute condemnation proceedings, and at the end pay such just compensation to plaintiff as might in that proceeding be ascertained; notwithstanding this promise, no actual court proceedings were taken by defendant, although it just as certainly condemned the land by taking, by requisition through its sovereign power of eminent domain. Then why does not the plaintiff, when full and just compensation, as promised, or, to say the least, impliedly promised, is not paid, have a right of action, on promises — assumpsit?

There is a very potent reason why defendant, at this late day, should not be allowed to claim a trespass, a tort, by its officers and agent.

It is admitted or conclusively proven that the defendant took the land; that it used and occupied the property; that the necessity was imminent for taking the property; that it stored vast quantities of war supplies on the property; that it built storage houses thereon; that it placed guards on said properly preventing other people from going on without a government permit; that it promised to condemn and pay a just compensation for the property; that it heard the plaintiff’s claim by petition before its own Appraisal Board, appointed by the President; that it went into details in the ascertainment of damages; that it found plaintiff had been damaged and fixed the damage as some $900; that plaintiff objected to this as a full compensation, but that it did pay the plaintiff something over $700 — being 75 per cent, of the award — and that plaintiff was left to its right of action to recover whatever residue it deemed was due it as just compensation.

Then if all of this is true, ought not the law of estoppel apply and the defendant be prohibited from raising the legality of the taking and occupancy of the property?

In the very recent case of United States v. Rogers, 255 U. S. 163, 41 S. Ct. 281, 65 L. Ed. 566, the court says: “Having taken the lands of defendant in error, it was the duty of the government to make just compensation as of the time when the owners were deprived of their property” — citing Monongahela Navigation Co. v. United States, 148 U. S. 317, 13 S. Ct. 622, 37 L. Ed. 463: “In a proceeding to condemn land, the owner is entitled, as part of his just compensation, to interest on the confirmed award from the time when the government took actual possession.”

.There seems to be no reasonable question why the plaintiff is not entitled to be paid a fair and just compensation for the taking of this land by the government in 1918 at Nitro; and the exact date of taking and entering plaintiff's property by the government is now fixed as the 12th day.of April, 1918. The court finds that the evidence is conclusive that defendant did take the plaintiff’s 245 acres by its sovereign right of eminent domain; that the taking and condemnation was effected and perfected and concluded as to the whole 245 acres. It is true, there is some evidence that plaintiff might not have been in pressing need of all of the 245 acres at that particular time, but it did take all of it, occupied it, used it, and placed guards around and completely excluded the owner therefrom, and therefore is the present owner of the 245 acres, and there is no attempt in the evidence to show that the property was ever reeonveyed to the plaintiff, or that the plaintiff was ever by any manner reinvested with title to said property; therefore, it is assumed that the United States of America is the owner of said 245 acres.

The court is compelled to come to this conclusion, as no other in its mind under the law can be reached. Practically all of the federal decisions since the Armistice dealing with this question have decided that the taking of land by the defendant was the condemnation in itself, and nothing remained but to pay the just compensation to the owner. The Emergency Fleet C^se, as before cited, fully bears this out, the Filbin Case cited herein bears this out, and the late ease decided by the Supreme Court of Campbell v. United States, 45 S. Ct. 115, 69 L. Ed. -, seems conclusive on this question, and the taking of the land in that case was identical with the taking in the ease at bar.

The still later ease of A. W. Duckett & Co., Inc., v. United States, 45 S. Ct. 38, 69 L. Ed. -, decided by the Supreme Court of the United States on November 17, 1924, was a case where certain terminal docks and warehouses were taken by requisition for wrar purposes in 1918 for such time as it might be necessary for the government to have the use of the same, and the court decided that a party who had a lease on one of the piers was entitled to just compensation for taking it from him, and in the opinion rendered by Justice Holmes the court says:

“Ordinarily an unqualified taking in fee by eminent domain takes all interest and as it takes the res is not called upon to specify the interest that happened to exist. Whether or not for some purposes the new takers may be given the benefit or privity with the former holder, the accurate view would seem to be that such an exercise of eminent domain grounds a new title and extinguishes all previous rights. * ° * In such a case we no more should expect to hear it argued that leaseholds were not to be pai,d for than that the former fee simple should not be, on the ground that it was gone and a new fee begun.”

The only thing, it seems, left undone by the defendant in the case at bar, was the payment of a just compensation for said property.

The proof as to the market value of the land when taken is conclusive to the court’s mind by a pronounced preponderance of testimony ; that is, that the actual market value of the whole 245 acres when so taken and requisitioned by the defendant on the 12th day of September, 1918, was the sum of $100,000. It is true that the evidence as to the market value varied between $75,000 and $150,000, but from offers made at the time, and from evidence considered the most valuable by which the court could be governed, $100,000 is fixed as the market value of said property as of the 12th day of September, 1918, when the property was actually taken into possession by the defendant, and that the plaintiff is entitled to interest at the rate of 6 per cent, on that sum from that date until judgment herein.

It is uniformly held in West Virginia by the'highest court, and in fact by the federal authorities, that the true measure of damages in all condemnation proceedings is the actual value of the property at the time of the taking, with interest until paid. See Compton v. County Court of Marshall County, 83 W. Va. 745, 99 S. E. 85.

“The date of the actual taking [for public use] is that to which reference should be made by Commissioners or Jury in assessing damages.” Northern Railway Co. v. Coal Co., 75 W. Va. 423, 83 S. E. 1031.

“Nor is it proper to view the property only from the standpoint of farm values. It has immediately prospective uses for residence purposes, owing to the rapid growth and development of the community where it was situated, and much higher valúe in market for such purpose than for any other.” Id., 75 W. Va. 423, 83 S. E. 1031.

“In an action against the United States, under Act Aug. 10, 1917, § 10 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115%ii), to recover just compensation for property requisitioned by the government, ‘just compensation’ is the fair value of the property when taken, with interest at the legal rate of the state from that time.” United States et al. v. Benedict (C. C. A.) 280 F. 76.

Therefore, judgment will be entered for the plaintiff for the sum of $100,000 as just compensation, with interest added at 6 per cent, per annum from the 12th day of September, 1918, to date of judgment (less $709.40 paid by the defendant to the plaintiff heretofore, with like interest from the 22d day of March, 1921), which judgment shall draw interest at the rate of four per cent, per annum until paid.


source: Caselaw Access Project

author: JONES, District Judge.

license: Public Domain

text:
    In re BISSINGER CO.
    (District Court, N. D. Ohio, E. D.
    May 16, 1925.)
    No. 8306.
    1. Bankruptcy <@=>318(4) — Proceedings are anticipatory breach of executory contract, lease to bankrupt, relative to jjrovable claim.
    Bankruptcy proceedings amount to an anticipatory breach of bankrupt’s executory contract, giving right to have the damages liquidated and proved against the estate, nothing in the conduct of the parties or the terms of the contract precluding it; and this though it is a lease of real estate to bankrupt, the trustee electing not to assume the léase, and the lessor doing nothing to forfeit it under its clause authorizing it for default of lessee, and taking no steps to re-enter or repossess the property.
    2. Bankruptcy <S=>316(2) — Claim for anticipatory breach of lease held not contingent, but provable.
    Lease to bankrupt giving him no option to terminate it at any time, or under any condition, but he being bound to pay the rent over the entire period, without regard to continued occupancy, so that it is a fixed liability, claim for damages for the anticipatory breach, by reason of the bankruptcy proceedings, is not contingent, but provable.
    In Bankruptcy. In the matter of the Bes-singer Company, bankrupt. On exceptions to the report of the special master on liquidation of the claim of the Twenty-First Street Bealty Company.
    Exceptions overruled.
    The report of the Special Master follows:
    “This matter is before me upon liquidation of the claim of the Twenty-First Street Bealty Company and the objection-of the trustee to the allowance thereof.
    “The Twenty-First .Street Bealty Company, hereafter called claimant, pursuant to an order of liquidation made by the district judge, filed its claim against the -bankrupt herein.
    “The claim is based upon breach by reason of bankruptcy of a lease between claimant and bankrupt.
    “The trustee objects to consideration of the claim primarily "on the ground that the claim is not provable; in other words, that it is contingent and not subject to liquidation.
    “Claimant asks for $34,600; alleges that the claim arises out of a lease which for three years beginning October 1, 1922, provided for payment of a rental of $17,000 the year; for five years beginning October 1, 1925, provided for payment of rental of $17,500 the year. It further alleges that owing to the bankruptcy and winding up of bankrupt, it will be unable to rent the premises for more than $13,300 the year for the entire remainder of the term, thus losing for the first three years $11,100 and for the next five years $23,500 (should probably be $21,-000), making a total of $34,600 which it will lose in rental.
    “There seems to me to be no question but that the claimant does in fact, as it intended no doubt to do, claim $34,600 damages because of the breach alleged.
    “The lease, as appears from the copy attached to the proof, was made September 30, 1920, covering premises to be used only for commercial and garage purposes. The date of expiration stipulated was September 30, 1930. The Bissinger Company 1%, seventeen thousand five hundred dollars ($17,-500), was paid to lessor as advanced payment to be applied in reduction of rental for the tenth year, and, further, 6 per cent, thereon was to be computed and applied yearly as payments upon the rental.
    “There was a covenant against assignment, but no clause providing for forfeiture by bankruptcy.
    “The only other provision in the lease pertinent to this hearing is the following:
    “ ‘It is further expressly agreed between the parties hereto that if default be made in the payment of the rent above reserved or any part thereof, at the time when the same shall become due and payable, or if lessee shall make default in any of the covenants and agreements herein contained to be kept by the said lessee, the lessor may, after thirty (30) days( written notice to said lessee, and unless lessee makes good such default within said thirty (30) days, terminate said lease and re-enter the said premises, and remove all person's and property therefrom, using such force as may be necessary, and sue for and recover all rent due at the rate aforesaid up to the time of such entry and the remainder of the term hereof, together with all amounts paid as advanced rent, shall be forfeited to the lessor as liquidated damages. -Every demand for rent made after it falls due shall have the same effect in law as if made on the day and at the time it falls due, any law of the land to the contrary notwithstanding, and no waivnr of any such default shall have the effect of excusing any such subsequent default.’
    “Upon bankruptcy the trustee for a time occupied the premises, but did not adopt the lease; it was abandoned as not a valuable asset.
    “The claimant did nothing to forfeit the lease; it was entirely inactive until the lease was abandoned by the trustee.

      “The trustee objects, first, that the claim' is precluded by the terms of the lease; that is, he claims that the provision for liquidated damages in the lease controls the amount recoverable as damages.
    “It seems to me quite plain that the provision, ‘the remainder of the term- together with all amounts paid as advanced rent shall be forfeited to lessor as liquidated damages,’ applies only when the lessor exercises his option ‘to terminate said lease and reenter the said premises.’ As stated before, the lessor took no steps to terminate the lease or to re-enter.
    “The trustee’s second objection is that ‘claims for future installments of rent or for damages for reduced rental value of leased property are contingent and not provable.’
    “At the outset it should be stated the eases upon this question are in hopeless conflict. It is true, however, that the confusion is to some extent more apparent than real. The decision in every case necessarily depends upon the provisions of the lease considered. As these are varied, every case should be examined with special observance of the lease therein considered.
    “There is practical unanimity in the cases that future rent, as rent, is not provable. Since future rent, as a rule, in the absence of a clause of acceleration, is not due at the date of bankruptcy nor becomes due by reason of the bankruptcy, it does not fall within the requirement of section 63a (Comp. St. § 9647), a fixed liability — absolutely owing at the time of filing the petition whether then payable or not; although it is a claim founded on contract. In re Mullings Clothing Co., 238 F. 58, 151 C. C. A. 134, L. R. A. 1918A, 539, 38 Am. Bankr. Rep. 189 (2 C. C. A. 1916); 2 Remington on Bankruptcy, § 793.
    “The question of acceleration of the rent, i. e. making the amount due for the balance of the term payable upon bankruptcy, is not involved in this case. There would seem to be no reason why such claim should not be provable except where the lessor, in addition, by virtue of the provisions of the lease, claims forfeiture of the lease in which case it would be regarded as a penalty and not allowable. See In re Miller Bros. Grocery Co. (6 C. C. A.) 219 F. 851, 135 C. C. A. 521, L. R. A. 1916B, 1099, Ann. Cas. 1916A, 946, 33 Am. Bankr. Rep. 704. (In this ease, involving lease of cash carrier system, lessor took possession of the property and claim rent. Court denied it on ground of failure of consideration.) See In re Mer-win & Willoughby Co. (D. C. N. Y.) 30 Am. Bankr. Rep. 485.
    “The trustee cites a number of cases that support his contention, but he cites no case, and I can find none, involving the precise question decided since the Supreme Court’s decision in Central Trust Co. v. Auditorium Association, 240 U. S. 581, 36 S. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580, 36 Am. Bankr. Rep. 679 (April, 1916).
    “In this case the. Supreme Court established the principle that damages for anticipatory breach of a contract constitutes a provable claim in bankruptcy. ' Also, that a voluntary or involuntary bankruptcy is the equivalent of an anticipatory breach of an executory contract, and while debts provable under'section 63 a (4) include only such as existed at the filing of the petition, damages for breach of contract wrought by filing of a bankruptcy petition constitute an existing debt within the meaning of the rule.
    “Since it may become necessary to examine the reasons given in the cases supporting the trustee, it will be well to quote quite fully from the Auditorium Association Case, which was decided thereafter.
    “In that ease, an involuntary petition followed by adjudication was filed against a transfer company. At the time, the transfer company had a contract with the Auditorium Association under which the Auditorium Association had, for a term of five years, granted to-the transfer company the baggage and livery business of the Auditorium Hotel. The transfer company was to pay the association in monthly installments the sum of $350 for the privilege during the term. The Auditorium Association reserved the right to revoke the privilege by six months’ notice. The association also had the option, upon 30 days’ default in payment, to terminate the contract without relieving the transfer company from liability.
    “At bankruptcy there had been no default. The trustee did not elect to assume the contract, and the association made a contract with another for $234.69 the month and filed its claim for $311.20 due prior to bankruptcy and $6,226.74 as unliquidated damages for breach by reason of bankruptcy.
    “In its opinion the court says:
    “ ‘It is no longer open to question in this court that, as a rule, where a party bound by an executory contract repudiates his obligations or disables himself from performing them before the time for performance, the promisee has the option to treat the contract as ended, so far as further perform-anee is concerned, and maintain an action at once for the damages occasioned by such anticipatory breach. The rules has its exceptions, but none that now concerns us. Roehm v. Horst, 178 U. S. 1, 18, 19. And see O’Neill v. Supreme Council, 70 N. J. L. 410, 412. There is no doubt that the same rule must be applied where a similar repudiation or disablement occurs during performance. Whether the intervention of bankruptcy constitutes such a breach and gives rise to a claim provable in the bankruptcy proceedings is a question not covered by any previous decision of this court, and upon which the other federal courts are in conflict.

      r- * *
    “ ‘The contract with which we have to deal was not a contract of personal service simply, but was of such a nature as evidently to require a considerable amount of capital, in the shape of equipment, etc., for its proper performance by the transfer company. The immediate effect of bankruptcy was to strip the company of its assets, and thus disable it from performing. It may be conceded that the contract was assignable, and passed to the trustee under section 70a, to the extent that it had an option to perform it in the place of the bankrupt (see Sparhawk v. Yerkes, 142 U. S. 1, 13; Sunflower Oil Company v. Wilson, 142 U. S. 313, 322); for although there was a stipulation against assignment without consent of the Auditorium Association, it may be assumed that this did not prevent an assignment by operation of law. Still, the trustee in bankruptcy did not elect to assume performance, and so the matter is left as if the law had conferred no such election.
    “ ‘ * * Commercial credits are, to a large extent, based upon the reasonable expectation that pending contracts of acknowledged validity will be performed in due course; and the same principle that entitles the promisee to continued willingness entitles him to continued ability on the part of the promisor. In short, it must be deemed an implied term of every contract that the promisor will not permit himself, through insolvency or acts of bankruptcy, to be disabled from making performance; and, in this view, bankruptcy proceedings are but the natural and legal consequence of something done or omitted to be done by the bankrupt, in violation of his engagement. It is the purpose of the Bankruptcy Act, generally speaking, to permit all creditors to share in the distribution of the assets of the bankrupt, and to leave the honest debtor thereafter free from liability upon previous obligations. Williams v. U. S. Fidelity Co., 236 U. S. 549, 554, 34 Am. B. R. 181. Executory agreements play so important a part in the commercial world that it would lead to most unfortunate results if, by interpreting the Act in a narrow sense, persons entitled to performance of such agreements on the part of bankrupts were excluded from participation in bankrupt estates, while the bankrupts themselves, as a necessary corollary, were left still subject to action for nonperformance in the future, although without the property or credit often necessary to enable them to perform. We conclude that proceedings, whether voluntary or involuntary, resulting in an adjudication of bankruptcy, are the equivalent of an anticipatory breach of an executory agreement, within the doctrine of Roehm v. Horst, supra.
    “ ‘The claim for damages by reason of such a breach is “founded upon a contract, express or implied,” within the meaning of section 63a4, and the damages may be liquidated under section 63b. F. L. Grant Shoe Co. v. Laird, 212 U. S. 445, 448, 21 Am. B. R. 484, 29 Sup. Ct. 332, 53 L. Ed. 591. It is true that in Zavelo v. Reeves, 227 U. S. 625, 631, 29 Am. B. R. 493, 33 Sup. Ct. 365, we held that the debts provable under section 63a4 include only such as existed at the time of the filing of the petition. But we agree with what was said in Ex parte Pollard, 2 Low. 411, Fed. Cas. No. 11,252, that it would be “an unnecessary and false nicety” to hold that because it was the act of filing the petition that wrought the breach, therefore there was no breach at the time of the petition. As was held by the same learned judge in Re Pettingill & Co. (D. C. Mass.) 14 Am. B. R. 728, 137 F. 143, 147:
    “ ‘ “The test of provability under the act of 1898 may be stated thus: If the bankrupt, at the time of bankruptcy, by disen-abling himself from performing the contract in question, and by repudiating its obligation, could give the proving creditor the right to maintain at once a suit in which damages could be assessed at law or in equity, then the creditor can prove in bankruptcy on the ground that bankruptcy is the equivalent of disenablement and repudiation. For the assessment of damages proceedings may be directed by the court under section 63b (30 Stat. 562).”
    “ ‘ * * * Of course, he could not be released unless the debt was provable. We therefore conclude that the Circuit Court of Appeals was correct in holding that the intervention of bankruptcy constituted such a breach of the contract in question as enti-tied tie Auditorium Association to prove its claim.’
    “Tie reasoning of tie court seems to me clearly applicable to a contract of lease of real property. •
    “In the instant ease, as in tie Auditorium Case, tlere was no breach prior to bankruptcy; bankrupt lad done nothing tlat could be construed as a violation, breach, or repudiation. As a corporatie entity, it survived tie bankruptcy. It miglt, after petition filed, lave obtained further capital, and proceeded to do business, .in which event it miglt lave lad use for tie premises covered by tie lease. But in tie words of tie Supreme Court: ‘The same principle tlat entitles tie promisee to continued willingness entitles him to continued ability on tie part of tie promisor. In short, it must be deemed an implied term of every contract tlat tie promisor will not permit himself, through insolvency or acts of bankruptcy, to be disabled from making perfbrmance.’
    “I can see no distinction between a contract such as tie one considered in tie Auditorium Case and a lease such as in tie instant ease, as to the applicability of tie reasoning of tie Supreme Court. In both contracts tie bankrupt agreed to pay something. If bankruptcy was a disablement from paying for a transfer privilege, why isn’t it also a disablement from paying rent? •Calling a payment required to be made ‘rent’ ■certainly establishes no difference.
    “In short, it seems to me to. follow from tie pronouncement of tie Supreme Court in tie Auditorium Case tlat bankruptcy is an anticipatory bread of every executory contract in which tie bankrupt is obligated to pay something or deliver property in tie future. Bankruptcy in such case is a repudiation of all financial obligations giving rise to a cause of action as upon anticipatory breach.
    “It is now quite well settled that bankruptcy of an employer constitutes breach of .an employment contract, permitting the employee to prove lis claim against tie bankrupt estate for damages for wrongful dis-darge, in wliel he may recover, as damages, future services less an allowance for tie reasonable value of lis prospective earnings elsewhere. Collier on Bankruptcy (13tl Ed.) p. 1411, and eases tlere cited pro and contra.
    “It is to be noted tlat Collier states tlat since tie decision in tie Auditorium Case, necessarily the employee may prove such ■claim.
    “Tlere are a number of eases, all decided prior, to Central Trust Co. v. Auditorium Association, which hold tlat bankruptcy is not an anticipatory bread of a lease of realty. Among them áre Watson v. Merrill (8 C. C. A.) 136 F. 359, 69 C. C. A. 185, 69 L. R. A. 719, 14 Am. Bankr. Rep. 453; Re Roth & Appel (2 C. C. A.) 181 F. 667, 104 C. C. A. 649, 31 L. R. A. (N. S.) 270, 24 Am. Bankr. Rep. 588; Colman Co. v. Withoft (9 C. C. A.) 195 F. 250, 115 C. C. A. 222, 28 Am. Bankr. Rep. 328.
    “In Watson v. Merrill tie claim was for damages for bread of lease of realty by reason of bankruptcy. After tie petition was filéd, lessor and lessee (bankrupt) in writing released each other; tie lessee from rent except tie sum of $2,300 which was tie amount claimed as damages. Apparently, tie trustee abandoned tie lease. Tie court denied tie claim for several reasons, among them: Tlat tie claim was in realty for rent; tlat, since tie lease contained no covenant tlat rent was to be paid after default and re-entry, tie lessor’s resumption of tie premises' constituted a termination of tie lease and a release of tie lessee from payment of future rent; tlat if entitled to damages, tlat amount was contingent upon tie future default of tie lessee, tie exercise by tie lessor, upon default, of his option to resume possession, and upon tie assumption of the lease by tie trustee in bankruptcy. The court says:
    “ ‘As tl<j lessor lad no legal claim or demand ' gainst the lessee for tie agreed rents to be paid in the future, when tie petition in bankruptcy was filed, and as tie future '■.Astenee and tie amount of such a claim were both contingent upon unforeseen future events. Watson lad no provable claim for any part of these rents. * * • Throughout tie entire field of contractual obligations tie adjudication in bankruptcy absolves from no agreement, terminates no contract, and discharges no liability. ,:i * &
    “ ‘Tie adjudication in bankruptcy did not constitute a breach of tie lease * * • at tlat date tie rent lad been paid. * * * ’
    “In re Roth & Appel, supra, tie lease contained a provision tlat if tie lessee were declared bankrupt tie lease shall terminate and tie lessor las a right to re-enter in which case tie lessee agreed to pay eael month tie difference between tie rent stipulated in tie lease and tie amount otherwise collected by tie lessor as rent. Tie lessor relet tie premises and filed a claim for tie difference. The court denied the claim because it was not ‘a fixed liability absolutely owing’ at tie date of bankruptcy; that it was contingent in its nature depending on whether the lessor under the lease would terminate it and whether there would be any loss or not.
    “In Colman Co. v. Withoft, the claim presented was for money paid by claimant to the lessor in order to secure a release from the latter of the obligation of the claimant and the bankrupt who were joint lessees.
    “The payment made by the claimant to the lessor for a release occurred after bankruptcy. The court held this a claim not absolutely owing at the date of bankruptcy.
    “The case of In re Pennewell (6 C. C. A.) 119 F. 139, 55 C. C. A. 571, is also sometimes cited in favor of the contention of the trustee. In that case a subtenant of the bankrupt, who himself was a lessee of the premises, filed a claim against the bankrupt estate. The trustee sold the lease, but apparently prior thereto the trustee dispossessed the subtenant. The court held the claim not provable. It is only necessary to quote a part of the opinion to discover that this ease is not in point:
    “ ‘It is urged further that the adjudication of bankruptcy * * * terminated his [bankrupt’s] lease * * * whereby the leases to the petitioners were defeated, and that, in consequence, they had a claim for damages against the bankrupt’s assets. * * * It may ke true that, if the trustee had elected not to adopt the lease and realize its value to the estate, the lease would have come to an end. But we need not pursue that inquiry.’
    “It is evident, leaving out of consideration the particular provisions in the leases in the above cases, that the chief objection urged by the courts to allowing damages for breach of leases is that such claims are not fixed liabilities absolutely owing at the date of bankruptcy; that they are contingent claims depending upon what the lessor or the trustee does with the lease.
    “The language of the Supreme Court in the Auditorium- Case, when examined with reference to the contract it had before it, clearly answers that argument. There was just as much uncertainty about the claim that Auditorium Association had an option to cancel upon six months’ notice, and the court refused to permit that to be considered as in any way limiting recovery to a six months’ period. ■ In that case, also, the Auditorium Association might possibly have received a larger sum from some other transfer company, or might have done any number of things that would have excused performance by the transfer company; or the trustee, as the court says, might have adopted it or perhaps sold it.
    “While not exactly in point, it may be helpful in arriving at a sound conclusion to call attention to a number of eases, where receivership of a corporation lessee, incident to wind-up proceedings, was held to be an anticipatory breach of the lease giving rise to claim for damages against the estate of the insolvent lessee. Kalkhoff v. Nelson, 60 Minn. 284, 62 N. W. 332; People v. Bank, 151 N. Y. 592, 45 N. E. 1129; McGraw v. Union Trust Co., 135 Mich. 609, 98 N. W. 390; Chicago Fire Co. v. Tait, 58 Ill. App. 293; Matter of Mullings Clothing Co., 238 F. 58, 151 C. C. A. 134, L. R. A. 1918A, 539, 38 Am. Bankr. Rep. 189 (2 C. C. A.). See, also, Elliott on Contracts, § 2042.
    “In matter of Mullings Clothing Co., supra, decided prior to Auditorium Case, a receiver for the bankrupt had been appointed in the state court incident to a dissolution of the corporation.. Thereafter, in bankruptcy, the lessor of the bankrupt corporation was held to have a provable claim for damages by reason of the anticipatory breach of the lease occasioned by the receivership. The lessee had never entered upon the term. The court said:
    “ ‘In voting to wind up, and in taking steps to dissolve * * * the corporation, lessee renounced the lease and at the same time disabled itself from performing it. * * * And the law is well settled that, where a party to an executory contract puts it out of his own power to perform it, there is an anticipatory breach, which gives the other party an immediate right of action for the damages. Black on Rescission and Cancellation, vol. 1, § 210. * * *

    “ ‘We have no doubt that, while in this case the lessor’s claim was unliquidated at the time the petition in bankruptcy was filed, it was not contingent. * *' A contingent claim is one as to which it remains uncertain, at the time of the filing of the petition in bankruptcy whether or not the bankrupt will ever become liable to pay it. * * * If one party to an executory contract renounces it without cause, or disables himself from performing it, the other party may consider the contract as broken and bring an action immediately to recover the damages. * * * ’
    “The court attempted to distinguish this ease from Roth & Appel, supra, in which case a claim for breach of the lease was not allowed because the breach had not occurred prior to bankruptcy, i. e. in the Roth & Ap-pel Case the bankruptcy itself was relied upon as the breach, not as in the Mullings Case — a repudiation and disablement prior to bankruptcy. While this may be a distinction, it is hardly a difference in view of the words of .the court in the Auditorium Case —decided, be it remembered, after the Mul-lings Case — that a breach coincident with bankruptcy is sufficient to constitute a claim absolutely owing as defined in section 63 of the act.
    “The test as to whether a claim is contingent or is simply unliquidated is this: Have all the facts necessary to be found to fasten liability already occurred ? If so, the claim is not contingent, although the amount of the liability or the extent of damages may not yet have been ascertained — nor even the full extent of damages arising been already suffered.
    “Adjudication nor the discharge affects contractual relations, unless such relations prior to bankruptcy or by virtue of the bankruptcy (i. e., by reason of bankruptcy’s being expressly or by law a breach of the contract) have become merged in a ‘debt, demand or' claim.’ 2 Remington, § 775.
    “It seems to me that courts and text-writ-ters have too often confused the words ‘contingent’ and ‘unliquidated.’ Black on Bankruptcy, § 523. The difference must constantly be kept in mind in considering claims for breach of contract.
    “If then bankruptcy is in fact an anticipatory breach of a lease or other contract, a ‘debt, demand or claim’ arises, provable against the estate because absolutely owing at the time of bankruptcy.
    “The Supreme Court held bankruptcy an anticipatory breach of an executory contract in the Auditorium Case. The contract in that case was not a lease of real property. The question then is: Is bankruptcy ever an anticipatory breach of a lease, and, if so, was it such breach in the instant ease? If it was, then it necessarily follows that it is a provable debt and hence dischargeable.
    “It is true that in its opinion in the Auditorium Case the Supreme Court refused to take into consideration or to discuss the cases that involved proofs of claim based upon leases of realty. It said:
    “ ‘Cases of the latter class [cases arising out of the relation of landlord and tenant] are distinguishable, because of the “diversity between duties which touch the realty, and the mere personalty.” Co. Litt. 292, b, § 51?.’
    “While there may be a distinction in some particulars in ‘cases arising out of the relation of landlord and tenant,’ because, besides being an executory contract, a lease also possesses the property of passing an interest, and hence partakes of the nature of an estate that we call a ‘term,’ still in so far as the lease is an agreement to pay money or to do something involving the delivery of property, it is no different than any other contract containing the same obligations.
    “I am strongly moved to this conclusion, particularly in view of the aims and purpose of the bankruptcy as stated in many decisions, and particularly in the Auditorium Case. The court said in connection with the assertion that it is an implied term of every contract that the promisor will not permit himself through insolvency to be disabled from performance, and presumably as a further reason for making claims of this kind provable and hence dischargeable:
    “‘It is the purpose of the Bankruptcy Act, generally spe'aking, to permit all creditors to share in the distribution of the assets of the bankrupt, and to leave the honest debtor thereafter free from liability upon previous obligations. Williams v. U. S. Fidelity Co., 236 U. S. 549, 554, 34 Am. B. R. 181. Executory agreements play so important a part, in the commercial world that it would lead to most unfortunate results if, by interpreting the act in a narrow sense, persons entitled to performance of such agreements on the part of bankrupts were excluded from participation in bankrupt estates, while the bankrupts themselves, as a necessary corollary, were left still subject to action for nonperformance in the future, although without the property or credit often necessary to enable them to perform.’
    “In re Neff, 157 F. 57, 84 C. C. A. 561, 28 L. R. A. (N. S.) 349, 19 Am. Bankr. Rep. 23 (6 C. C. A.), cited with approval in the Auditorium Case, a case in which bankrupt was under obligation to purchase certain stock in the future, the court held bankruptcy an anticipatory breach. The court said: “ ‘That the promisor might refuse performance until the time named is true.But if, before the time of performance one absolutely repudiate liability and disavow unequivocally any purpose to perform at any time, the other party may treat such repudiation, at his election, as a breach of the agreement and sue for his damages. * * w “ ‘Bankruptcy is a complete disablement from performance and the equivalent of an out and out repudiation, subject only to the right of the trustee, at his election, to rehabilitate the contract by performance. * * * It is sufficient that a claim becomes provable as a consequence of bankruptcy. The right to sue for and recover damages then accrues.’
    “Williston on Contracts, vol. 3, § 1985, has a very learned discussion of this question, in which it is said that a elaim for breach of lease is not provable under the present Bankruptcy Act. «He admits that it is an unfortunate situation, but says that any other, conclusion is illogical, because to hold that bankruptcy altogether terminates a lease as some eases hold, would deprive the trustee in bankruptcy of any right to assume a lease.
    “While- it may be true that to hold that bankruptcy altogether terminates a lease, i. e., severs the relation of landlord and tenant (Re Jefferson [D. C.] 93 F. 951), would result in serious consequences, it should be noted, first, that in the Auditorium Case the court held bankruptcy to be breach but with the right in the trustee to adopt the lease or to sell it. In the next place, to hold bankruptcy of tenant an anticipatory breach of the obligation to pay rent, does not necessitate a holding that bankruptcy severs the relation of landlord and tenant. It is merely a disablement and repudiation of financial obligations with which bankruptcy has concern and from which it relieves the bankrupt. .Bankruptcy of a landlord would not ordinarily constitute an anticipatory breach because his obligation in the lease is not ordinarily one to pay or deliver something in the future. He has already, by the lease, granted a term in property. If the landlord perchance in a lease had agreed to rebuild or repair or do anything involving financial outlay, his bankruptcy should be regarded as an anticipatory breach of that provision in the lease.
    “Por example, in Board of Commerce v. Security Trust Co. (6 C. C. A.) 225 F. 454, 140 C. C. A. 486, 34 Am. Bankr. Rep. 762, the bankrupt agreed with claimant to move to Ann Arbor and to maintain a pay roll to a certain amount for a number of years. The claimant agreed to furnish a site, sell bonds, etc. The court held bankruptcy an anticipatory breach of the agreement to maintain the pay roll and permitted proof of elaim to be made.
    “See, also, Heyward v. Goldsmith (3 C. C. A. 1921) 269 F. 946, 46 Am. Bankr. Rep. 722.
    “Bankruptcy has to do with debts, claims, and demands. If an executory contract obligates a bankrupt to do something of a character that impliedly requires him to maintain himself solvent, then bankruptcy is a disablement and repudiation and constitutes an anticipatory breach. This seems to me to be the logic of the situation and consonant with the purposes of the Bankruptcy Act.
    “In the instant case, if bankruptcy is held, as I think it must be held, to be the equivalent of a repudiation and abandonment by the bankrupt of its obligation to pay rent under the lease, the lessor had a right to sue for damages. There is nothing in the lease, here considered, that is in derogation of such right. There is no provision as to what the liability is to be upon bankruptcy. There can be no contention that the lessor forfeited the lease and resumed possession under circumstances negativing a right to recover damages for the rest of the term.
    “The lessor in this case can recover damages as upon abandonment outside of bankruptcy. These damages are measured by the difference between the rent agreed and the sum that he could have realized after they came into his possession; that is, the difference between the rent stipulated in the lease and the actual rental value for the balance of the term. Sutherland, Damages (4th Ed.) p. 3110; Strong v. Schmidt, 15 Ohio Cir. Ct. R. 233.
    “It is conceded by the trustee that the damage of the claimant is the amount claimed by it, viz., $34,600, from which, however, should be deducted the sum of $17,000 held by it as security for performance by the lessee.
    “I find, accordingly, that the claimant has a provable elaim against the estate, and that the amount thereof is $17,600.”
    Niman, Grossman, Buss & Holliday, and T. P. Veach, all of Cleveland, Ohio, for trustee,
    Ulmer & Berne and J. Albert Lowell, all of Cleveland, Ohio, for claimant.
   JONES, District Judge.

The special master found that the Twenty-Pirst Street Realty Company was entitled to prove and have allowed its liquidated elaim for loss and damage arising out of the breach of the lease occasioned by this bankruptcy. The trustee objected to the allowance of the claim, and has excepted to the finding of the special master on the grounds: Pirst, that the special master should have held that the elaim was precluded by the terms of the lease; and, second, that the elaim is a contingent one and not provable in bankruptcy, and that the finding-of the special master allowing the elaim is contrary to law.

The Twenty-Pirst Street Realty Company entered into the lease with the bankrupt for a term of eight years beginning October 1, 1922, providing for a rental of $17,000 per year for the first three years, and a rental of $17,500 per year for the remaining five years. The lease was executed September 30, 1920. The lessee was adjudged bankrupt in 1922, and the premises in question were occupied by the trustee in bankruptcy, who elected not to assume the lease, but abandoned it as of no value to the estate. The lessor did nothing to forfeit the lease, under clause 5 of the lease providing therefor, and took no steps to re-enter or repossess the property. After the trustee had abandoned the property, the lessor filed its claim for damages because of the breach of lease oc-curing by reason of the bankruptcy.

It has been conceded by the trustee that the measure of damage to the lessor, if its claim is to he allowed, is the sum of $34,600, less $17,000 paid by the bankrupt as security for the performance of the lease.

The question, then, is whether the lessor has a provable claim against the bankrupt estate as for damages resulting from an anticipatory breach of an executory contract.

It has been well settled that bankruptcy proceedings amount to an anticipatory breach of an executory contract, and that unliquidated damages arising out of such breach may he liquidated by the court, and proved against the bankrupt estate. Central Trust Co. v. Chicago Auditorium, 240 U. S. 581, 592, 36 S. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580. It has been suggested that Mr. Justice Pitney in that case distinguished the eases arising between landlord and tenant and those affecting personalty. No reason for the difference is given, but reference is made to authority upon that question. I see no difference between the nature of the claim arising out of a breach of a lease and one arising out of the breach of contract for personalty. The bankrupt, by insolvency, has completely disabled himself fro.m perfqrmanee, and when the trustee in bankruptcy rejects or fails to assume the lease, the right of the lessor to liquidate his damages accrues, unless in some manner the lessor has precluded the making of such claim by forfeiture of repossession or reentry. It is not a claim for rent in futuro, but a claim of damage or loss for breach of contract.

The payment of the stipulated rental over the future period of the lease was not contingent upon bankrupt’s continued occupancy. He was hound to pay the rent for the balance of the term, whether he stayed in possession or not; it was a fixed liability. If the bankrupt had had an option to terminate the lease at some time, or under certain conditions, it might not be considered a fixed liability; but there was no way out for him hut to pay the rent. It was absolutely owing, although payable in future installments.

No later pronouncement upon this subject has been offered, and I am inclined to the opinion that the decision in Central Trust Co. v. Chicago Auditorium is applicable to the controversy here presented.

The report of the special master will therefore be approved and adopted, and the exceptions thereto overruled.


author: SIBLEY, District Judge.

text:
    UNITED STATES v. ONE MARMON AUTOMOBILE.
    (District Court, N. D. Georgia.
    April 29, 1925.)
    No. 953.
    I. Internal revenue <@=39, 40 — Statute prohibiting removal or concealment of distilled liquors without payment of tax held applicable only to licensed distilleries and their warehouses.
    Rev. St. § 3296 (Comp. St. § 6038), prohibiting removal of distilled liquors to place other than distillery warehouse, or removal from warehouse in unlawful manner, or concealment when so removed, before payment of tax, is applicable only to licensed distilleries and their established warehouses.
    2. Internal revenue <@=46 — Statute providing for forfeiture of vehicles used with intent to defraud United States of tax applicable to product of illicit stills.
    Rev. St. § 3450 (Comp. St. § 6352), providing for forfeiture of vehicles used in -removal of commodities with intent to defraud the United States of tax on commodities, is applicable to illicit stills and their products.
    3. Internal revenue <@=46 — Statute providing for forfeiture of vehicles by which commodities are “removed” with intent to defraud government of tax, construed.
    Commodities are “removed,” within Rev. St. § 3450 (Comp. St. § 6352), providing for forfeiture of vehicles by which commodities are “removed” with intent to defraud United States of tax, when transported from a place at which commodities could be taxed or might be seized for nonpayment of taxes to any other place, with specified intent; the word having its ordinary and not a technical meaning.
    [Ed. Note. — For other definitions, see Words .and Phrases, First and Second Series, Remove —Removal.]

      4. Internal revenue <©=>46 — Intent to defraud government of taxes essential element of government’s right to forfeiture of automo. bile.
    Intent to defraud government of taxes on commodities is essential element of government’s right to forfeiture of vehicle used for removal or concealment of commodities under Rev.. St. § 3450 (Comp. St. § 6352).
    5. Internal revenue <®=46 — Intent to defraud government of taxes must be alleged and proved in proceeding to forfeit automobile.
    In proceeding to forfeit automobile used in transportation of liquors with intent to defraud the United States of tax thereon, under Rev. St. § 3450 (Comp. St. § 6352), the intent to defraud must be alleged and proved, notwithstanding section 3333 (section 6130), shifting burden of proof from government; such statute being applicable only to claimant of liquors.
    6. Internal revenue <©=46 — Intent to defraud government of tax may be shown by circumstantial evidence in proceeding to forfeit automobile.
    In proceeding to forfeit automobile used in transportation of liquor with intent to defraud government of tax, under Rev. St. § 3450 (Comp. St. § 6352), the .intent to defraud may be shown by circumstantial evidence.
    7. Internal revenue <©=46 — Rule ás to presumption of intent to defraud in proceeding to forfeit automobile, stated.
    Where the natural and probable result of acts intentionally done is to defraud, an intent to defraud is to be presumed in proceeding to forfeit automobile used in transportation of liquor with intent to. defraud government of tax under Rev. St. § 3450 (Comp. St. § 6352), hut the presumption may be rebutted by showing the actual absence of such intent.
    8. Internal revenue <©=46 — Evidence held to prove intent to defraud government in proceeding to forfeit automobile.
    In proceeding to forfeit automobile used in transportation of liquor with intent to defraud government of tax, under Rev. St. § 3450 (Comp. St. § 6352), evidence helé sufficient to prove such intent.
    9. Internal revenue <®=46 — Conditional seller’s innocence no defense in proceeding to forfeit automobile used with intent to defraud government of tax.
    Innocence of seller of automobile, who had parted with possession hut had retained title to secure payment of purchase price by duly recorded contract, did not save automobile from forfeiture under Rev. St. § 3450 (Comp. St. § 6352), because used in transportation of liquor with intent to defraud government of tax.

      ■ Libel by the United States to forfeit one Marmon automobile. Judgment for libelant.
    D. K. Johnston and Chas. G. Reynolds, both of Atlanta, Ga., for claimant.
    John W. Henley, Asst. U. S. Atty., of. Atlanta, Ga.
   SIBLEY, District Judge.

This libel is,, by stipulation of the parties, for decision by the court without a jury. I find the material facts to be as follows:

The libeled automobile- was sold by the intervening claimant to one Hopkins, a resident of Atlanta, Ga., on credit, with title retained to secure the purchase money by a duly recorded contract; the purchase money being still unpaid. At the time of the sale the seller did not know of any likelihood that the buyer would unlawfully transport liquors with the- car. Later it learned that he was reported to be an illicit liquor hauler, and sought to rescind the sale; but the buyer refused.' On the morning of the day the ear was seized by government officers, who were both deputy collectors of internal revenue and prohibition agents, they saw it in the mountains of Northeast Georgia, in a vicinity where many illicit stills were operated, in charge of Robinson and Hall. Suspecting that it was hauling liquor, they later struck its track and trailed it for two miles, in a direction away from the mountains and toward Atlanta, to the rear of a barn, where it was found abandoned; two unidentified men being seen going away in the distance. The ear contained, concealed under a blanket, 52 gallons of white corn whisky, in rectangular, one-gallon cans, with no stamps, marks, or brands whatsoever upon them to show that it had been lawfully bottled under the revenue laws, Act of March 3d, 1897, chap. 379 (Comp. St. §§ 6070-6077), or under the Prohibition Law, tit. 2, § 12 (Comp. St. Ann. Supp. 1923, § 10138%f). No tax had ever been paid on the whisky. I infer from the circumstances that the operators of the car had come from Atlanta to the mountains to get a load of whisky from illicit distillers, or their representatives, and to transport it to Atlanta for sale as a beverage; had procured this whisky from a person unknown, had deposited and concealed it in the ear, and had probably transported it to the place of seizure all in pursuance of this general intent. All persons concerned knew' a tax was due upon the production of the whisky, and that it had not been paid and was not intended to be paid by any one. Their active intent, however, was more taken up with escaping the penalties of the Prohibition Law than with the matter of evading the taxes. It is not shown that the whisky was gotten directly from a distiller who owed the taxes, nor that Robinson and Hall had the evasion of the taxes especially in mind in concealing and removing it in the ear, if they were the operators.

Under these facts, is the car forfeited under R. S. § 3450 (Comp. St. § 6352), providing for forfeiture of vehicles used “whenever any goods or commodities for or in respect whereof any tax is or shall be imposed * * are removed, or are deposited or concealed in any place, with intent to defraud the United States of such tax”? This section is not a liquor law, but applies to all taxed articles. Cognate provisions as to distilled liquors are found in R. S. § 3296 (Comp. St. § 6038), prohibiting the removal of them before the tax is paid to a place other than the distillery warehouse, or the concealment of them when so removed or the removal of them from a warehouse in an unlawful manner', or concealment of them when so removed. There is no specific intent required in this statute, but felony punishments are imposed for the acts denounced. No forfeiture of vehicle is provided. R. S. § 3296, seems appropriate to and should be confined to licensed distilleries and their established warehouses. R. S. § 3450, with its broader provisions and lighter penalties, may well cover illicit stills and their products, and it has so been always held in this District.

The word “removed” is not technical, but has its ordinary meaning, whether applied to whisky, tobacco, imported merchandise, or any other taxed commodity, and includes any transportation from a place at which it should be taxed or might be seized for nonpayment of the taxes to any other place, with intent to defraud the United States of the taxes. The deposit and concealment penalized may, by the words of the statute, be “in any place.”

The specific intent to defraud the United States of the taxes is, however, an essential element of the penalized acts, and must be both alleged and proved whether in a criminal prosecution or a libel for forfeiture. R. S. § 3333 (Comp. St. § 6130), cannot be relied on to shift the burden from the United States, because that section applies only to a claimant of liquors in a proceeding to forfeit them, and not to the claimant of a vehicle in a proceeding to forfeit it. The specific intent to defraud may, however, be shown, and generally must be shown by circumstances. 12 Cyc. 152, 153, 179, 18C Where the natural and probable result of acts intentionally done is to defraud, an intent to defraud is to be presumed; but the presumption may be rebutted by showing the actual absence of such intent. This was held in applying, in a criminal trial, a statute in which the specific intent to defraud was made an element of the offense. Agnew v. United States, 165 U. S. 36, 50, 17 S. Ct. 235, 41 L. Ed. 624.

In the present case the whisky was subject to a tax of $6.40 per gallon, and to seizure for its nonpayment. Any concealment of it or removal of it, with this knowledge, from the place of production, or other place where it was liable to be seized, with .no intention to pay the taxes, would presumptively be done to defraud of the taxes, for that would be the necessary consequence of the act. If one knows the tax on whisky is due and unpaid, and not intending to pay it, yet assists in passing the whisky on to a consumer, he must intend to assist in defrauding of the tax. But this imputation of fraudulent intent is not final, for another intent consistent with fair dealing may possibly be shown. If, for instance, it should be proved that the buyer had no cause to believe that the tax was unpaid, or knowing it to be unpaid that the liquor was concealed to escape thieves, or removed because of threatened .destruction by fire, and that it was intended to pay the tax before final disposition of the liquor, innocence would be established. Where the seller or remover is not the distiller who owes the tax and who must know whether or not it has been paid, the inference of fraudulent intent is less obvious; but since the liquors are seizable for nonpayment anywhere and in any one’s hands, any person interested in them has the same sort of motive for concealing or removing them, when he knows the tax to be unpaid, as the distiller has, who personally owes the tax. Before national prohibition, removal or concealment with knowledge that the tax was unpaid showed with great certainty an intent to avoid the tax, for no other motive could usually be assigned. The additional motive for concealment and removal raised by the Prohibition Act, although it may be more prominently in the mind, does not exclude the inference of an intent also to defraud of the tax, where there is knowledge that it is owing and no intent to pay appears. Concealment of imported goods on which a heavy tariff is known to be due would not be-c.&orígd.ua»-' d¡"" U. S. § 3450, because the goods in ad-»n were stolen and there was also an insi to escape detection in the theft. There is here no direct evidence of actual intent, good or bad. It is fair to infer that the persons using the ear were taking part by wholesale in the general traffic of producing, transporting, and selling liquors in defiance both of the Prohibition and Revenue Laws, and that the intent to avoid both punishment and tax was present in all who knowingly participated in it.

The circumstances in this case justify and require condemnation of this ear. The innocence of the claimant does not save it. Goldsmith-Grant Co. v. United States, 254 U. S. 505, 41 S. Ct. 189, 65 L. Ed. 376.

Judgment may be taken accordingly.


author: CALL, District Judge.

text:
    CENTRAL UNION TRUST CO. OF NEW YORK et al. v. MARTIN, Governor of Florida, et al.
    (District Court, S. D. Florida.
    April 14, 1925.)
    No. 345.
    1. Public lands @=>103(4)— Courts may not decide questions pending before Land Department.
    Courts may not take cognizance of and decide questions committed to Land Department by Congress prior to decision of question submitted to it by the acts, except in exceptional cases.
    2. Public lands @=>103(4) — Court will not decide right to patent under land scrip where question is before Land Office.
    Court will not decide question of whether land can be taken for certain land scrip and whether patent will issue where such question is before and has not been decided by Land Office, on application for patent.
    At Law. Action by the Central Union Trust Company of New York and others against John W. Martin, as Governor of Florida, and others, as Trustees of the Internal Improvement Fund of Florida, and Willis M. Wilson. On motion of defendant Wilson to dismiss bill of complaint as to him.
    Motion granted.
    Shutts & Bowen, of Miami, Fla., for complainants.
    Fred R. Hooker, of Ocala, Fla., for defendant Wilson.
   CALL, District Judge.

This cause comes on for a hearing upon the motion of the defendant Willis M. Wilson to dismiss the bill of complaint as to him, upon the ground, among others, that it appears from the bill that the. matter sought to be. adjudicated as to,this defendant is before the Land Office and not yet decided by that department of the government.-

The allegations of the bill as to this defendant show that he is an applicant before the Land Office for a patent to a portion of the lands involved in the suit, under certain land scrip held by him, and the question of whether the land can be taken for said scrip and whether a patent will issue is as yet undecided by that office.

Under this showing it seems to me that the decisions in the Supreme Court, wherein this question is involved, clearly sustain the contention of the defendant. The principle, as I understand the decisions, is that courts may not take cognizance of and decide the questions committed to the Land Department by Congress prior to a decision of the question submitted'to it by the acts, except in exceptional cases, of which the present ease is not one. Among the cases deciding this principle are Ehrhardt v. Hogaboom, 115 U. S. 67, 5 S. Ct. 1157, 29 L. Ed. 346; Humbird v. Avery, 195 U. S. 480, the opinion by Mr. Justice Harlan at page 498 et seq., 25 S. Ct. 123, 124 (49 L. Ed. 286); Oregon v. Hitchcock, 202 U. S. 60, the opinion by Mr. Justice Brewer, page 68, 26 S. Ct. 568, 569 (50 L. Ed. 935).

The language of Mr. Justice Harlan in Humbird v. Avery, supra, is peculiarly applicable to this case.

It does not seem to me that the Florida statute eited in complainants’ brief is applicable to the question here to be decided on this motion.

The motion will be granted.


author: MARTIN, Chief Justice.

text:
    PLOUGH CHEMICAL CO. v. BULLION.
    (Court of Appeals of District of Columbia.
    Submitted January 16, 1925.
    Decided April 6, 1925.)
    No. 1693.
    1. Trade-marks and trade-names and unfair competition <@=>43 — Word-mark “Black and White” not deceptively similar to word-mark “Red and White.”
    Word-mark “Black and White” held not deceptively similar to word-mark “Red and White.”
    2. Trade-marks and trade-names and unfair competition <@=>43 — Trade-marks held not deceptively similar.
    Trade-mark consisting of square divided into four equal triangles, two of which were bright red, alternating with two white ones, held not deceptively similar to label design divided by a diagonal line into two parts, one white and the other black, with the words “Black and White” printed thereon.
    Appeal from Commissioner of Patents.
    Application by Isadore Bullion for registration of trade-marks, opposed by the Plough Chemical Company. Prom a decision dismissing the opposition, opposer appeals.
    Affirmed.
    E. W. Bradford, of Washington, D. C., for appellant.
    C. L. Parker, of Washington, D. C., and J. W. Parley, of Memphis, Tenn., for ap-pellee.
    Before MARTIN, Chief Justice, ROBB, Associate Justice, and BARBER, Judge of the United States Court of Customs Appeals.
   MARTIN, Chief Justice.

This appeal relates to two several applications filed by the party Bullion for the registration of certain trade-marks, and the oppositions of the 'Plough Chemical Company thereto. The two issues are similar in character, and were submitted together.

In one case, the trade-mark for which the applicant sought registration consists of the words “Red and White,” while the trade-mark of the opposer is composed of the words “Black and White.” In the other case, the mark sought to be registered consists of a square divided by two diagonal lines into four equal triangles, two of which are bright red in color, alternating with two white ones. The opposer’s trade-mark in that case is a label design, divided by a diagonal line into two parts, one white, the other black, with the words “Black and White” printed thereon. The respective trademarks are used upon the same general class of goods, consisting of skin ointments, hair dressing, cold cream, talcum powder, liniments, tonics, and similar articles.

The present decision, of course, must depend upon whether there is a sufficient resemblance in point of sight, sound, or sense, between the competing trade-marks, as to be likely to deceive others, especially ordinary purchasers buying under usual conditions, so as to pass the goods of one party oil as the goods of the other. This is almost exclusively a question of fact, and the record accordingly contains considerable testimony upon the subject. The Assistant Commissioner held in favor of the applicant in each ease, and dismissed the oppositions.

We shall not enter into a detailed discussion of the evidence in the ease, since this would amount to no more than a repetition of the views set out in the decision of the Assistant Commissioner. We content ourselves with saying that the opposer’s word-mark, “Black and White,” should not prevent a registration of the applicant’s word-mark, “Red and White.” The respective terms naturally suggest contrast, rather than identity, when applied to articles of merchandise. As to the figured marks, we may say that the marks themselves furnish convincing proof of the absence of a deceptive resemblance between them. They differ materially in color and design, and are not likely to deceive or mislead anybody.

The decisions in question are affirmed.


text:
    Application of GRIGSBY.
    (Court of Appeals of District of Columbia.
    Submitted March 10, 1925.
    Decided April 6, 1925.)
    No. 1728.
    Patents <@=>28 — Automobile glare visor and weather shield held possessed of ornamental features and structural improvements, entitling it to design patent.
    Automobile glare visor and weather shield held to possess improved and distinctive ornamental features, which together with structural improvements entitled it to design patent.
    Appeal from Commissioner of Patents.
    Application for patent by Owen E. Grigs-by. Prom a decision denying the application, applicant appeals.
    Reversed.
    J. H. Milans and C. T. Milans, both of Washington, D. C., and G. E. Mueller, of Chicago, Ill., for appellant.

      T. A. Hostetler, of Washington, D. C., for Commissioner of Patents.
    Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.
   MARTIN, Chief Justice.

The appellant applied for a design patent for a device known as a weather shield and glare visor. The article consists of an aluminum frame having a central dividing rib, and carrying two translucent sections or panes. It is of the type to be mounted above the wind shield at the front of an automobile, in order to protect the wind shield from rain and sleet, and to shield the driver from the glare of the sun.

The application was rejected by the Acting Examiner, upon the ground that the design was not new, original, and ornamental, in view of certain prior design patents, and particularly that it exhibited no invention over former designs. This decision was successively affirmed by the Examiners in Chief and the Assistant Commissioner of Patents.

The device in question is referred to by the appellant as a triple-curve or three-are visor, and the feature upon which the application rests is to be. found in its uniformly curved lines, extending from front to rear, thereby forming three several ares. These constitute a distinctive characteristic of the article, and distinguish it from the visors described in the references; the latter showing plain ,arcuate curves or so-called ogee curves. The present design is novel and abs-tractive in appearance, and when conspicuously mounted in its place upon the car the visor is very ornamental. The design is a distinct departure from the plain or irregularly curved visors of the former- construction, and marks an advance in the style of such articles. These statements find support in the testimonials contained in the record, and by proof of the enormous sales of the article as compared with those of other designs. It seems clear that the popular demand for it is caused by its attractive appearance, rather than by utilitarian consideration's. It is true that this design presents also certain structural improvements over former visors; but, while that fact alone does not furnish ground for granting a design patent, it does not militate against such action.

It is suggested that the difference in appearance between the present visor and former ones results from comparatively slight changes in form, and that these do not have the quality of invention. It should be noted, however, that a visor is composed of few and simple elements, and invention with respect to its design must necessarily deal with features which are of minor consequence, if taken alone. Such changes, however, may greatly affect the appearance of the article as an entirety, when judged by the taste and fancy of an average man, and this has been accomplished in the present instance. We hold, therefore, that the applicant was entitled to a patent as sought by him, and that it was error to reject his application.

The decision in‘question is reversed.