author: ROBB, Associate Justice.

text:
    JOURNAL CO. v. FEDERAL RADIO COMMISSION.
    Nos. 5095, 5163, 5268, 5269.
    Court of Appeals of District of Columbia.
    Argued Feb. 5, 1931.
    Decided March 2, 1931.
    Motion for Specific Directions in Mandate, etc., Denied March 21, 1931.

      Louis G. Caldwell and Elisha Hanson, both of Washington, D. C., for appellant in all the cases.
    Paul D. Spearman, Arthur W. Scharfeld, Thad H. Brown, and D. M. Patrick, all of Washington, D. C., for appellee in No. 5095.
    Thad H. Brown, A. W. Scharfeld, and D. M. Patrick, all of Washington, D. C., for appellee in No. 5163.
    Thad H. Brown, D. M. Patrick, Ben S. Fisher, and A. W. Scharfeld, all of Washington, D. C., for appellee in Nos. 5268 and 5269.
    Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.
   ROBB, Associate Justice.

Appeals from decisions of the Federal Radio Commission.

Appellant, a Wisconsin corporation, is the publisher of the Milwaukee Journal, a leading newspaper in Wisconsin. It is the owner and operator of broadcasting station WTMJ at Milwaukee, which operates full time on a frequency of 620 kc., with authorized use of 1,000 watts power nighttime, and 2,500 watts daytime. This station and its predecessors in interest have been operating .since 1922, under licenses from the Secretary of Commerce and later under licenses from the Radio Commission. The station represents an investment of over $300,000. More than $160,000 has been expended for major station equipment alone. The total gross cost of operating the station is approximately $300,000 per annum, the greater portion of which being for program expenses. It has 48 full-time employees, including an operating staff of 10 skillful technicians, a musical director who devotes all his time to the station’s programs, an organist, and a permanent 16-piece orchestra. The pay roll for the year 1929 was $122,796.62.

The evidence clearly establishes (indeed, there is no suggestion to the contrary) that appellant’s equipment is modern and satisfactory in every way and that its service has been of a very superior character. Prior to the decisions complained of, its normal and effective service area covered Wisconsin, most of Michigan, portions of Minnesota, Iowa, Illinois, and Indiana, and reached a population of approximately 3,500,000 persons.

On November 11, 1928, when appellant was assigned its present frequency and power (620 kc., with 1,000 watts nighttime and 2,500 watts daytime power), the following stations were assigned the same frequency: Station WLBZ, Dover-Foxcroft, Me., with 250 watts nighttime and 500 watts daytime power; WDAE, Tampa, Fla., and WDBO, Orlando, Fla., dividing time, with 1,000 watts power; KFAD, Phoenix, Ariz., with 500 watts power; and KGW, Portland, Or., with 1,000 watts power. The use of this frequency by the other-stations named, owing to the limited power and the location of those stations, did not materially affect the efficiency or restrict the area of service of appellant’s station. In reliance upon the conditions thus created'and existing, appellant materially improved its equipment and increased its weekly outlay for programs.

Early in April, 1929, appellant learned that station WLBZ (Me.) had applied for an increase of evening power from 250 to 500 watts. The commission’s chief engineer wrote appellant that he had opposed the increase because he “did not want the possibility of this station causing a heterodyne in the service area of WTMJ,” and inquired as to appellant’s views. On April 22, 1929; appellant replied that it was convinced that an increase of WLBZ’s power would cause serious heterodyne interference, and appellant therefore protested against the granting of the application on the ground that it would “unduly restrict the service area of WTMJ and damage the one good regional channel which the state of Wisconsin has.” Later appellant wrote the commissioner from the Fourth Zone protesting against the granting of any application for privileges on 620 kc. without hearing, and particularly asking to be heard with reference to the application of WLBZ. On August 24, 1929, appellant again wrote the commission regarding a hearing, and the commission replied that the application of WLBZ was to be scheduled for hearing “if the applicant requests a hearing.” On October 22, 1929, without notice or opportunity for hearing to appellant, the commission granted the application of WLBZ and authorized the use of 500 watts nighttime power “for remainder of license period provided no interference arises.” Appellant learned of this through the press, filed a formal protest, and requested that before the license should he renewed appellant be given an opportunity to be heard. On October 28, 1929, appellant ¡Sled with the commission a formal petition under oath asking that WLBZ’s application for renewal with increased power be either' denied or, if not denied, designated for hearing. In this petition appellant represented that the increase of power was causing interference in the area served by appellant’s station and constituted a radical reduction of its service area. The commission took no action on this petition.

During the summer of 1929, appellant learned that the commission was considering a shift in the Florida broadcasting stations assigned to 620 ke., and by letter of July 29, 1929, to the commission, requested that “before any change is made in the Florida stations, WTMJ be given an opportunity to make the necessary investigation and to be heard.” On or about October 23, 1929, without giving appellant any notice or opportunity for hearing, a shift was made in the Florida stations, under which WDAE, at Tampa, was taken off 620 ke. and WFLA-WSUN, at Clearwater, Fla., was assigned to that channel, with an evening power of 1,000 watts and daytime power of 2,500 watts. On November 15, 1929, WFLA-WSUN commenced operation on 620 ke. Almost immediately, in thousands of letters and telephone calls from listeners throughout Wisconsin and surrounding states, complaint was made to appellant of the resulting interference. Thereupon, appellant sent skilled observers throughout the state, into Iowa and Northern Illinois. The evidence adduced by appellant overwhelmingly establishes that the simultaneous evening operation of station WFLA-WSUN has resulted in almost ruinous interference, and reduced appellant’s service area to a radius of approximately 20 miles from the transmitter.

On November 11, 1929, appellant noted its appeal to this court in No. 5095. This appeal was from a decision of the commission rendered October 25, 1929, on appellant’s application for a renewal of its license. It is conceded that the commission renewed the license in its former terms, but it is contended that by an increase in power to another station already assigned to the channel, the commission had in effect refused appellant’s application for renewal. Section 16 of the Radio Act of 1927 (44 Stat. 1162, 1169, U. S. G. Supp. 3, tit. 47, § 96 [47 USCA § 96]) authorized appeals as follows: “Any applicant for a construction permit, for a station license, or for the renewal or modification of an existing station license whose application is refused by the licensing authority * * *; and any licensee whose license is revoked by the commission. * * *” Appellant was prejudiced, pot by a refusal to renew its application, but by the commission’s action with respect to other stations. Under the Act of 1927 no appeal was allowed in such circumstances. Recognizing this apparent defect in the statute, Congress in the Act of July 1, 1930 (46 Stat. 844 [47 USCA § 96], amending section 16 of the 1927 Act, provided for appeals by “any other person, firm, or corporation aggrieved or whose interests are adversely affected by any decision of the commission granting or refusing any such application or by any decision of the commission revoking, modifying, or suspending an existing station license.” It results that the appeal in No. 5095 must be dismissed.

We have determined that radio transmission, being a form of interstate commerce, is subject to regulation. Technical Radio Lab. v. Fed. Radio Comm., 59 App. D. C. 125, 36 F.(2d) 111, 66 A. L. R. 1355; City of New York v. Fed. Radio Comm., 59 App. D. C. 129, 36 F.(2d) 115; Chicago Fed. of Labor v. Fed. Radio Comm., 59 App. D. C. 333, 41 F.(2d) 422; KFKB Broadcasting Ass’n, Inc., v. Fed. Radio Comm., 60 App. D. C. 79, 47 F.(2d) 670, decided this term. The purpose of this regulation obviously is to prevent chaos and to insure satisfactory service. The installation and maintenance of broadcasting stations involve a very considerable expense. Where a broadcasting station has been constructed and maintained in good faith, it is in the interests of the public and common justice to the owner of the station that its status should not be injuriously affected, except for compelling reasons. Chicago Fed. of Labor v. Fed. Radio Comm., 59 App. D. C. 333, 41 F.(2d) 422. Unless such a policy is maintained, the public will not receive the character of service which we are convinced the Radio Act was intended to insure. No station that has been operated in good faith should be subjected to a change of frequency or power or to a .reduction of its normal and established service area, except for compelling reasons.

After the commission had increased the power of the Maine station and shifted the Florida stations, appellant, apparently being doubtful of its right of appeal in No. 5095, filed its application in No. 5163 seeking a modification of its existing license so as to permit the operation of its station with 5,000 watts power, full time, on the same frequency, 620 ke. This application was refused, the commission being of the view that to increase the power of appellant’s station from its then assignment of 1,000 watts to 5,000. watts would ruin reception of all the other stations on the frequency. As .already observed, appellant’s station had already suffered similar harm by the action of the commission with respect to such other stations on the same frequency; moreover, this action was taken without notice to appellant.

Appeals in Nos. 5268 and 5269 were taken after the effective date of the amendment of July 1, 1930 (46 Stat. 844 [47 USCA § 96]), and involved the action of the commission in renewing the license of WFLA-WSUN, Clearwater, Fla., and the action of the commission in renewing the license of WLBZ, Bangor, Me. In each instance, as already noted, the action of the commission was taken without notice to appellant, and greatly to its prejudice.

In our view, it clearly appears that appellant is entitled to some form of relief. The commission was in error as a matter of law in increasing the power of the Maine station and shifting the Florida stations without notice to appellant and an opportunity for appellant to be heard. Courier-Journal Co. v. Fed. Radio Comm., 60 App. D. C. 33, 46 F.(2d) 614, decided this term. The finding of the commission in No. 5163 that there are “four stations besides appellant’s assigned to the frequency of 620 kilocycles, whose geographical separation permits simultaneous operation without intolerable interference” is “manifestly against the evidence.” Ansley v. Fed. Radio Comm., 60 App. D. C. 19, 46 F.(2d) 600, 601, decided this term; KFKB Broadcasting Ass’n, Inc., v. Fed. Radio Comm., 60 App. D. C. 79, 47 F.(2d) 670, decided this term. Theory must give way to fact. Recognizing that the commission is better equipped than this court to work out an equitable solution of the problem, we are reluctant to direct the particular form of relief. In our view, the interests of justice will be subserved by a reversal of the decisions in Nos. 5163, 5268, and 5269, with directions to the commission to afford appellant, after notice and opportunity to be heard, such relief as will measurably re-establish appellant in the position occupied by it prior to the acts complained of.

No. 5095 dismissed.

Nos. 5163, 5268, 5269, reversed.


source: Caselaw Access Project

author: REEVES, District Judge.

license: Public Domain

text:
    UNITED STATES v. DE ARMOND.
    No. 8972.
    Circuit Court of Appeals, Eighth Circuit.
    March 11, 1931.
    Bay less L. Guffy, Atty., U. S. Veterans’ Bureau, of Washington, D. C. (William L. Vandeventer, U. S. Atty., and Harry L. Thomas, Asst. U. S. Atty., both of Kansas City, Mo., William Wolff Smith, Gen. Counsel, United States Veterans’ Bureau, of Washington, D. C., Robert D. Durst, Atty. U. S. Veterans’ Bureau, of Springfield, Mo., and Vergil E. Willis, Regional Atty., U. S. Veterans’ Bureau, of Kansas City, Mo., on the brief), for the United States.
    Lawrence E. Goldman, of Kansas City, Mo. (Frank R. Daley and Goldman & Daley, all of Kansas City, Mo., on the brief), for appellee.
    Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
   REEVES, District Judge.

This is an aetion on a policy of war risk insurance. Appellee, as the plaintiff in the trial court, recovered judgment, and the government has appealed.

Gail W. Stubbs was a soldier of the World War, and there was granted to him insurance in the sum of $10,000. It was undisputed that all premiums were paid up to and including September, 1921. Suit was originally filed by the assured in March, 1928, but he died during that year, and his executor was substituted as plaintiff.

It is alleged in an amended petition that the assured became totally and permanently disabled on June 1, 1920, from tuberculosis which affected his lungs, hips, and legs, and caused a disturbance of his entire nervous system.

The original petition fixed the date of his incapacity as June 20, 19191. The appellant objected to the amendment which changed the date to June 1, 1920, on the twofold ground that it was a departure, and that it was unfairly made on the moment of beginning the trial. Motion was duly made to strike out such amendment. Being overruled, an application for a continuance was made on the ground that the appellant' did not have “a sufficient and reasonable time in which to prepare for trial.” The latter motion was also overruled. Answer to the amended petition was then filed, and the cause proceeded- to trial.

The evidence tended to show that, when the assured was discharged from the army in June, 1919, he appeared to be “sort of tired out.” His face was flushed, he walked with a limp, he could not bend over, had to be helped on street cars, his left hip was affected, and his condition continued to grow worse.. In February, 1920-, he went to a hospital at St. Louis, where he remained confined to- his bed for four months. During that time he wore braces, which he continued to wear after leaving the hospital. He could not walk without assistance, and had to be bathed and dressed by his wife. Doctors who examined him said that he had tuberculosis of the lumbar spine.

Some of the witnesses said that he was unable to work when examined in March, 1921. The prognosis as to his recovery was “not so very good.” In fact he was pronounced as “suffering from an incurable condition.”

At the conclusion of the evidence both parties requested a directed verdict. There were no reservations; hence such requests had the effect to waive the jury and submit all questions of fact to the court. The court found the issues for the appellee.

Appellant complains that the evidence did not support the findings of the court, that the court abused its discretion in denying the application for a continuance, and that the amendment to the petition above set out was a departure, and that by such amendment a new cause was stated and a new demand made concerning which there was no disagreement so as to confer jurisdiction upon the court. These will be noted and discussed in the course of the opinion.

1. When both parties requested a peremptory instruction, they, came within the rule approved in Williams v. Vreeland, 250 U. S. 295, loc. cit. 298, 39 S. Ct. 438, 439, 63 L. Ed. 989, 3 A. L. R. 1038, as follows: “ ‘Where both parties request a peremptory instruction, and do nothing more they thereby assume the facts to be undisputed and, in effect, submit to the trial judge the determination of the inferences proper to be drawn therefrom.’ And upon review a finding of fact by the trial court under such circumstances must stand if the record discloses substantial evidence to support it.” See, also, Clapper v. Gamble (C. C. A.) 28 F.(2d) 755.

It will be observed that the evidence as above set out was substantial and sufficient to support the finding of fact made by the trial court. Malavski v. United States (C. C. A.) 43 F.(2d) 974; Vance v. United States (C. C. A.) 43 F.(2d) 975; Mulivrana v. United States (C. C. A.) 41 F.(2d) 734.

2. The matter of granting a continuance is within the sound discretion of the trial court. It is only subject to review if such discretion has not been soundly exercised. Appellant’s counsel was notified of the proposed amendment five days before trial. The only effect of the amendment was to change the date of the alleged accrual of incapacity of the .assured from Juné 20,1919, to June 1, 1920. In order to recover, it was necessary for the appellant to prove that the assured not only became totally disabled, but that such condition was reasonably certain to continue.

In making preparation for the defense, the government would properly prepare to show by evidence that the assured was not totally disabled, but, if so, that same was not permanent. Instead of imposing a greater burden on the appellant, the amendment to the petition reduced the burden. There was a shorter period over which it was necessary to make survey and inquiry and obtain proof as to the true condition of the .assured. There was no abuse of discretion in denying the application for a continuance.

3. The last point urged by appellant is that the amendment was not only a departure, but that the new date fixed was not involved in any disagreement with the Director of the Veterans’ Bureau.

Under date of July 27, 1927, counsel for the assured wrote the Director of the Veterans’ Bureau, in reference to the physical condition of the assured, in part, as follows: “He was discharged with S. C. D. .and from and after the date of discharge, he has been totally incapacitated. Because of his physical condition he is unquestionably permanently and totally unfit to carry on any substantial, gainful occupation.”

Demand was made in that letter for the benefits of the policy “from the date of the inception of his disabilities to the present time.” Under date of March 14, 1928, the Director wrote the assured’s, and now appellee’s attorney, in part as follows:

“Reference is made to previous correspondence in which you stated that the above named veteran has been permanently and totally disabled since his discharge from the service and requested payment of insurance benefits.
“You .are informed that after, considering the ease the Director has decided that the evidence was not sufficient to warrant a permanent and total rating prior to September 12, 1922. In view of the fact that the veteran’s insurance lapsed for nonpayment of premiums due long prior to the effective date of the permanent and total rating, the insurance claimed cannot be paid.”

The foregoing was tantamount to a denial of total and permanent disability at any time prior to September 12, 1922. This would amount to a disagreement as to' the total and permanent disability of the assured on June 1, 1920.

The amendment was not a departure, and neither did the amended petition attempt to state a cause of action where there had been no disagreement with the Director of the Veterans’ Bureau so as to deny jurisdiction of the court.

The case of Bernsten v. United States (C. C. A.) 41 F.(2d) 663, cited by appellant, does not support its contention. In that case the date when disability accrued was fixed in the demand upon the Director of the Veterans’ Bureau as of February 24, 1924, whereas the suit was based upon an alleged disability accruing at a much earlier date.

In discussing the right of the soldier to maintain his action, the court employed language which supports the jurisdiction in the instant case: “If the appellant had presented a claim such as he now presents to the court for determination by the Bureau as to whether or not he was entitled to monthly payments under his War Risk Insurance by reason of total and permanent disability occurring during the life of the policy, the reply of the Bureau herein might appropriately be considered a rejection of that claim because it fixed a later date for the accrual of the total and permanent disability.”

It should be noted that the claim in the case at bar, and as presented to the Veterans’ Bureau, is based entirely upon the allegation that permanent and total disability occurred while the soldier’s war risk insurance was still in force and effect. It was within the right of the appellee to amend his petition so as to have fixed a still later date as the policy continued in force until late in the year 1921.

The judgment of the trial court was amply supported by the evidence. There was no abuse of discretion in permitting the amendment to the petition, and the evidence shows a disagreement between the appellee and the defendants so as to confer jurisdiction upon this court.

The judgment of the trial eourt is affirmed.


author: STONE, Circuit Judge.

text:
    BAXTER v. CONTINENTAL CASUALTY CO.
    No. 9001.
    Circuit Court of Appeals, Eighth Circuit.
    March 13, 1931.

      Douglas H. Jones, of St. Louis, Mo., for appellant.
    Arnot L. Sheppard, of St. Louis, Mo. (M. F. Watts and William R. Gentry, both of St. Louis, Mo., on the brief), for appellee.
    Before STONE and GARDNER, Circuit Judges, and WOODROUGH, District Judge.
   STONE, Circuit Judge.

Appellee issued a policy insuring against liability arising from injury caused by automobiles. The assured named in the poliey was Southwest Motor Sales Company. In one portion of the poliey, Harry Shields is named as an executive officer of the above sales company. . The poliey provided that a person so injured might recover on the policy if an execution on a judgment for such injuries was returned unsatisfied and the insured was insolvent. Appellant brought suit for such an injury, in a state court of Missouri against the Southwest Motor Sales Corporation and Shields. Personal service was had on Shields and constructive service (as hereafter described) on the company. Neither defendant appearing, default judgment was entered for $10,000. Execution was returned unsatisfied. Thereafter, appellant filed this action on the above policy, alleging the above facts in more detail; that the policy covered both the company and Shields and the insolvency of both. Appellee answered, inter alia, that the poliey did not cover Shields and that the service on the sales company in the damage suit was void. The case was submitted to the court upon an agreed statement of facts. From a judgment for appellee, this appeal is brought.

Two questions are presented here. The first is whether valid service was secured upon the corporation. The second is whether Harry Shields was covered by the poliey. If there was either valid service on the company or Shields was covered by this policy, the judgment should be reversed.

I. Service.

This contention involves two matters relating respectively to the validity of the attempted foreign personal service on the sales company and to the sufficiency of the publication service on that company to authorize a judgment in personam against it.

The company was a Missouri corporation. No service could be obtained upon it in Missouri. The service was made personally upon its president who was then in Illinois. The service was in compliance with a Missouri statute (section 1192, R. S. Mo. 1919). The question here as to this personal service is the validity of that statute. The Supreme Court of the state has'squarely decided the statute invalid as applied to Missouri corporations. McMenamy Inv. & R. E. Co. v. Stillwell Catering Co., 267 Mo. 340, 184 S. W. 467. It may be added that the Missouri court has also determined that a general (personal) judgment cannot be entered upon foreign personal service since such is “constructive” service. Givens v. Harlow, 251 Mo. 231, 241,158 S. W. 355; Moss v. Fitch, 212 Mo. 484, 497, 111 S. W. 475, 126 Am. St. Rep. 568.

The method of service hy publication is not challenged. The contention is that the decisions of the state have confined service by publication to judgments and decrees affecting a res within the State and do not permit judgments in personam to be entered thereon. This claim is sustained by Priest v. Capital, 236 Mo. 446, 457,139 S. W. 204; Moss v. Pitch, 212 Mo. 484, 497, 111 S. W. 475, 126 Am. St. Rep. 568, and numerous other cases in Missouri. Therefore, the trial court correctly ruled that the foreign personal service on the Sales Company was invalid and that the service by publication could not support the judgment in personam entered thereon.

II. Coverage of Policy.

The judgment in the damage ease was against both the company and Harry Shields (personally). There is no question but that Shields was properly served within the state of Missouri. If the policy covers the personal liability of Shields, then the liability of appellee may be made out through Shields, irrespective of the sales company. This depends'upon the meaning of the policy.

Portions of the policy material to this matter are as follows:

The appellee:
“Hereby Agrees
“To indemnify the herein named Assured against loss from the liability imposed by law upon the Assured for damages on account of bodily injuries, including death resulting therefrom, accidentally suffered or alleged to have been suffered within the policy period by any person or persons not employed by the Assured:
“(1) while within the limits of the United States of America or the Dominion of Canada by reason of the ownership, maintenance or use (including loading or unloading), of any of the automobiles covered by this policy as described in the Schedule:
“(2) while within or upon the premises described in the Schedule or upon the sidewalk or other ways immediately adjacent thereto by reason of the maintenance and operation of the business described in the Schedule. * * *
“This insurance is subject to the following conditions and failure on the part of Assured to comply therewith shall forfeit the right to recovery hereunder. * * *
“3. Premium. The premium for this policy other than for elevator and livery coverage shall be calculated at rates specified in the Schedule as applied to entire remuneration earned during the policy period by all employes of the Assured. Such entire remuneration shall include all wages, salaries, commissions, bonuses and other remunerations. The remuneration of each active executive officer and each proprietor, including Assured if an individual and members of the firm if a co-partnership, shall be included in the payroll at an agreed amount of $2,000 each per annum. The entire remuneration of each general manager and automobile salesman shall be included not to exceed, however, $2,000 for each per annum. The remuneration of all other employes shall be included at the actual amount earned. If this policy also covers livery operations the premium for that portion of the risk shall be calculated at the rates named in the Schedule and upon total gross livery earnings charged by the Assured, whether collected or not, for the renting of. automobiles covered hereby. The advance premium has been determined on the Assured’s estimate of entire remuneration and/or total gross livery earnings as stated in the Schedule. At the end of the policy period the actual amounts of such remuneration and/or livery earnings shall be determined by an audit of the Assured’s books and records. If such actual amounts when so determined exceed such estimates, the Assured shall immediately pay to the Company the corresponding additional premium. If they are less, the Company shall return the unearned premium when ascertained, but the Company shall retain not less than the minimum premium stated in the Schedule. The Company shall have the right to require of the Assured at any time within the policy period or one year thereafter, a sworn statement of the amount of such remuneration and/or livery earnings for the whole or any specified part of the policy period and the Assured shall furnish said statement within ten days after request. Any authorized representative of the Company shall have the right and opportunity to examine the books and records of the Assured pertaining thereto at any time during the policy period or within one year thereafter. The rendering of any estimate or statement or the making of any previous settlement shall not bar such examination nor the Company’s right to additional premium. The premium for elevator coverage shall be a specific charge applicable to each elevator covered, which premium shall be included in the advance premium payable at the beginning of the policy period. * * ' *
“10. Schedule. The Assured by the acceptance of this policy warrants all statements of the following Schedule to be full, complete and true excepting those which purport to be estimates only.
Statement 1. Name oí Assured Southwest Motor Sales Company. Address 3660-64 Gravois Avenue. Saint Louis, Missouri. The Assured is Corporation......................................................................... (State whether individual, co-partnership, corporation, estate or trustee.)
Statement 2. The policy period shall be from April 21st, 1921, to< April 21st, 1922, commencing and ending at 12 o’clock noon, Standard Time, at place of issue.
Statement 3. The location of the building containing the premises referred to in this policy is 3600-64 Gravois Ave.
(Street and Number)
Saint Louis....................................Missouri
(City) (County) (State)
Statement 4. The automobiles covered by this policy are and will be principally maintained and garaged in the city or town of Saint Louis, Missouri and Vicinity.
Statement 5. The automobiles covered by this policy are and will he principally u&ed in the city or town of St. Louis, Missouri, and Vicinity.
Statement 6. None of the automobiles covered by this policy are or will he rented to others or used to carry passengers or property for a consideration, actual or implied, except as follows: No Exceptions.
Statement 7. The automobiles covered by this policy shall he all automobiles used by Assured in connection with the business operations of Assured as below described.
Statement 8. The description of the business operations of Assured, estimated number of employes, estimated total remuneration and gross livery earnings, elevators covered, premium rates and advance premium are as follows:

The above quotations from the policy are clear that the only assured named in the pol-' icy is the company; that the policy protects only the assured named therein; that such policy would not protect that assured from liability because of acts of an executive officer of assured unless that officer was named and his compensation included in the pi-emium base; that the only purpose of expressly naming Harry Shields (an executive officer) in this policy was to gain the above protection for the company (the assured) from liability it might incur through his acts; that there was no insurance protecting Shields from personal liability.

Appellant claims the policy is, at least, ambiguous in this respect and, therefore, should be construed against the company. The rule invoked would apply if the policy were ambiguous, but it is not. Appellant introduced certain evidence to show that the parties themselves have placed a construction upon the policy which construction, he contends, is that the personal liability of Shields was to be covered thereby. Passing over the matters of whether and how far parties may thus vary the clear meaning of a written contract, the evidence introduced does not have the contended for effect. That evidence consisted of rules of organizations of insurers of which this company was a member. One set of rules (of the “National Workmen’s Compensation Bureau”) covered the period when this policy was issued. The other (of the “National Bureau of Casualty and Surety ■Underwriters”) was not until months later. As to both, it may be said that there is no pretense that insured or Shields had any •knowledge thereof at any time, hence they can be no basis for a claim of construction by the parties of the policy. The only bearing they might have would be as admissions of the insurer against interest. Obviously, the last set of rules could have no such force, as it was not in existence at the time the policy was issued and is intended to operate prospectively and hot retroactively. As to the first set of rules there is no force as an admission for two reasons. Hirst, there is no evidence that insurer ever was governed by or even followed it — these rules were merely “suggestions for the use of the members of the Association, in the transaction of their insurance business” (italics ours). Second, this rule set forth that, “The personal interest of any officer, partner, member of the firm or employee is not covered under a garage policy written on the payroll basis” (as this policy was) but “may be extended, however, under limitations as defined in the following endorsement, to cover the personal liability of such persons whose salary is included in the' payroll upon which the premium for the policy is based, for the additional charges provided in the Bate Section for ‘Additional Assureds — Employee and others’ ” and a form for such endorsement is set out which is as follows:

“In consideration of the additional premium of $...... this policy is extended to cover the legal liability as defined therein of ......whose salary is included in the payroll upon which the premium for this policy is based, while any automobile is being operated by the said......(or by any person when accompanied by him, or while any automobile of the Assured garage is being operated with his consent), for the purposes described in the policy and for private and pleasure purposes.”

This rule is much stronger evidence for the appellee than for the appellant. However, it has no place in the construction of a policy which is in itself clear.

The judgment should be, and is, affirmed.

       It is stipulated that the Southwest Motor Sales Corporation and the Southwest Motor Sales Company is the same, company.


text:
    UNITED STATES v. VANCE et al.
    No. 8931.
    Circuit Court of Appeals, Eighth Circuit.
    March 11, 1931.

      Bayless L. Guffy, Atty., U. S. Veterans’ Bureau, of Washington, D. C. (William L. Vandeventer, U. S. Atty., and Harry L. Thomas, Asst. U. S. Atty., both of Kansas City, Mo., on the brief), for the United States.
    George F. Anderson, of Kansas City, Mo., for appellees.
    Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
   REEVES, District Judge.

This is an action on a policy of war risk insurance. Appellees, as plaintiffs in the trial court, recovered, and the government has appealed.

James D. Vance became a soldier in the World War in July, 1917. He was honorably discharged February 1, 1919. There was granted to him war risk insurance in the sum of $10,000 while engaged in said military service. His death occurred May 14, 1923, from tuberculosis.

It was alleged by appellees in their petition that the insured paid no premiums subsequent to the month of May, 1919. They seek to avoid lapsation, however, by an averment that at the time the said Vance was discharged from the service he was suffering from a' compensable disability and was so rated by the Veterans’ Bureau, and that the compensation awarded to him on account of said disability was not paid to or received by him until April, 1921.

In the meantime, it is asserted the said Vance became totally and permanently disabled, to wit, on or about July 1, 1920; that the uncollected compensation then due and unpaid was in excess of the premiums remaining unpaid on said insurance; and that therefore appellees were entitled to recover the amount of the said policy less such unpaid premiums.

The government by amended answer challenged the jurisdiction of the court; denied the permanent and total disability of the veteran; alleged estoppel because of the collection of compensation without allowing deduction for premiums in default; and denied that Nina Vance Winn was a proper party.

By stipulation a jury was waived, and the cause was tried to the court.

The evidence on behalf of the appellees tended to show that the assured was not in good health when he was discharged from the Army on February 1,1919; that at that time he had lost weight; was suffering from a cough; looked pale and had little appetite; that he grew worse; continued to lose weight, and his cough persisted. He was not confined to his bed until late in the summer of 1920, although he was not able to follow continuously his profession as a veterinary surgeon.

The physician who treated him from the time of his discharge from the Army, until late in the year 1920, diagnosed his affliction as tuberculosis. Early in the year 1920 a sputum test was made, which confirmed the diagnosis of his physician. He was unable to attend to any part of his professional work after September, 1920.

There was evidence in support of the allegation that the soldier had been rated as suffering from a compensable disability from the date of his discharge, and that the compensation awarded was not received by him until April, 1921, and that this compensation was adequate to discharge his premium obligations.

The government offered in evidence an application executed by the assured for a policy of insurance in the Prudential Life Insurance Company, dated June 16, 1919. Neither this application nor the statement made to the examining physician, nor the confidential report of the medical examiner, disclosed any of the ailments with which it is claimed the assured was afflicted. On the contrary, these documents showed a complete disclaimer of such affliction. The government also offered the application of the assured for compensation dated November 20, 1920. In that application the assured claimed disability “almost total.” Efe stated that his income as a veterinary surgeon from February 1, 1919; to November 1, 1920, had been $200 per month. He claimed that his disability began in April, 1918.

Upon the evidence the trial judge found that the assured became totally disabled on July 1, 1920; applied provisions of section 305, World War Veterans’ Act (section 516, title 38, United States Code [38 USCA § 516] ) and held that the insurance in the full amount should not be treated as lapsed because of the uncollected compensation at the date total and permanent disability accrued to the assured; declined to apply estoppel because of the failure of assured to pay the defaulted premiums when his compensation Was collected, and entered judgment on the policy less unpaid premiums from May, 1919; to the 1st of July, 1920, with interest at 5 per cent. Provision was also made for the allowance of certain credits to- the government on account of previous payments admittedly made to the appellees.

1. The finding of the trial judge that the assured was totally and permanently disabled on the 1st day of July, 1920; was fully supported by the evidence. In fact it is not seriously contended by the government that such finding is error. Such finding could properly be made, even though there was-eonfiicting evidence and inconsistent statements of the assured. United States v. Meserve (C. C. A.) 44 F.(2d) 549.

2. The principal contention of the government is that the court had no right to apply the provisions of section 305, World War Veterans’ Act (section 516, title 38, United States Code [38 USCA § 516]) so as to make said insurance effective at the date it was found the assured became totally and permanently disabled. Pertinent portions of said section are as follows: “Where any person has, prior to June 7, 1924, allowed his insurance to lapse while suffering from a compensable disability for which compensation was not collected * * * becomes or has become permanently and totally disabled and at the time of such * * * permanent total disability was or is entitled to compensation remaining uncollected, then and in that event so much of his insurance as said uneolleeted compensation, computed in all eases at the rate provided by section 302 of the War Risk Insurance Act as amended December 24,1919; chapter 16, Forty-first Statutes, page 371, would purchase if applied as premiums when due, shall not be considered as lapsed.”

While the matter of rating for a compensable disability is wholly within the proper and wisely exercised discretion of the Veterans’ Bureau, Armstrong et al. v. United States (C. C. A.) 16 F.(2d) 387, yet, when such rating has been made and compensation awarded, it becomes a question of fact for the court whether the award remained uneolleeted at the time total and permanent disability occurs.

In the instant ease there was no controversy but that.the assured was rated by the Bureau as having a compensable disability at the time of his discharge from the military service) and that his compensation was not paid to him until April, 1921, and that the amount of such compensation was adequate to pay all premiums accruing on said insurance from the time the assured ceased to pay premiums until the court found upon the evidence that he became totally and permanently disabled. This was sufficient to invoke the provisions of said section 305, World War Veterans’ Act (section 516, title 38 U. S. Code) as above set out.

By section 19 of the act, as amended (section 445, title 38, United States Code [38 USCA § 445]), jurisdiction is conferred upon the District Court to hear and determine all controversies between the policyholder and the government “in the event of disagreement as to claim under a contract of insurance.”

By said section 305, World War Veterans’ Act (section 516, title 38, United States Code [38 USCA § 516]), the Congress has declared that the insurance' “shall not be considered as lapsed,” where there is uncollected compensation under conditions therein specified. Clearly there was a disagreement' as to the claim under the contract of insurance. This was sufficient to confer jurisdiction upon the court. In the exercise of such jurisdiction the court could not determine the question of compensable disability. The findings of the Bureau,.however, are admissible evidence on the particular essential fact as to whether the soldier had such a compensable disability as to continue his insurance in force because of the failure of the government to pay compensation before permanent and total disability accrued. Armstrong et al. v. United States, supra.

Counsel for the government seek to apply the principle of Meadows v. United States, 281 U. S. 271, 50 S. Ct. 279, 74 L. Ed. 852. That case is not applicable for the reason that it was there sought to reinstate a lapsed policy. The court held that the right of reinstatement was statutory, and whether the assured was eligible under the statute was purely a question of fact to be determined by the Director of the Veterans’ Bureau, and when so determined his decision became final and conclusive. Section 305, World War Veterans’ Act (section 516, title 38, supra) became a part of the insurance contract. White v. United States, 270 U. S. 175, 46 S. Ct. 274, 70 L. Ed. 530. The court had jurisdiction of the cause, and this point must be ruled against the appellant.

3. Neither can the doctrine of estoppel be invoked. against appellees. Said section 305, World War Veterans’ Act (section 516, title 38, supra) does not contemplate that premiums in default shall be deducted from compensation awarded the assured because of a compensable disability. It is specifically provided in said statute that “the United States Veterans’ Bureau is authorized and directed to pay to said soldier, or his beneficiaries as the ease may be the amount of said insurance less the unpaid premiums and interest thereon at 5 per centum per annum compounded annually in installments as provided by law.”

It was undoubtedly contemplated by the Congress that the full amount of compensation awarded to the soldier should be paid, but that delay in its payment would prevent his insurance being “considered as lapsed,” if total and permanent disability intervened, and in such ease the defaulted premiums should be collected from the insurance and not from his compensation.

4. The remaining question is whether Nina Vance Winn is a proper party. The evidence shows that she was made the beneficiary at the time the veteran applied for his insurance. In his application for compensation in November, 1920, the assured confirms this designation, although at that time he was married.

By an amendment approved July 2, 1926 (section 16), the Congress limited the beneficiaries under insurance revived, under said section 305, World War Veterans’ Act (section 516, title 38, supra) to the widow, child, or children, or dependent mother or father of the assured. When the assured died on May 14, 1923, the rights of the parties attached under the law as it then stood. Subsequent amendments would not affect such rights. Moreover, the widow and the designated beneficiary have joined in this action, and their allegations as to their respective rights would be conclusive upon them.

The judgment of the trial court is affirmed.


text:
    UNITED STATES v. CROWELL.
    No. 8948.
    Circuit Court of Appeals, Eighth Circuit.
    March 11, 1931.
    Bayless L. Guffy, Atty. U. S. Veterans’ Bureau, of Washington, D. C. (Ross R. Mowry, U. S. Atty., of Newton, Iowa, Frank F. Wilson, Asst. U. S. Atty., of Mount Ayr, Iowa, and James T. Brady, Acting Gen. Counsel, U. S. Veterans’ Bureau, of Washington, D. C., on the brief), for the United States.
    George F. Anderson, of Kansas City, Mo., for appellee.
    Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
   REEVES, District Judge.

This is an action on a policy of war risk insurance. The appellee, who was plaintiff in the trial court, recovered judgment on $8,000 of his war risk policy, originally granted in the sum of $10,000; and the government has appealed.

Admittedly, the appellee was a soldier of the World War and was granted insurance in the sum of $10,000. He ceased to pay his premiums in April, 1919, and his policy unless revived became ineffective. He reinstated $2,000 of said insurance and is now carrying same as a valid contract with the government. This portion of his insurance is not involved in this controversy. He had a right to sue for the balance. Watson v. United States (C. C. A.) 45 F.(2d) 589.

Appellee alleged in his petition that at the time of his discharge from the military service on March 24, 1919, he was suffering from a compensable disability, and that the award made therefor by the government was not collected until after he became totally and permanently disabled. It is averred that the amount of such compensation was in excess of his premium obligations on the residue of his insurance, and that perforce section 305 of the World War Veterans’ Act or section 516, title 38, United States Code (38 USCA § 516), said insurance should “not be considered as lapsed” while his compensation remained uncollected. He says that he became permanently and totally disabled on or about January 1,1920, whereas his compensation was not paid to or received by him until in May, 1922. The maladies, with which appellee complains that he was afflicted, were thyroid, cardiac, nervous and digestive disorders, neurasthenia, and general weakness.

The defendant denied that plaintiff was entitled to recover, but admitted, that he had been granted the policy of insurance sued on. There was a denial also that appellee was totally and permanently disabled on the 1st of January, 1920. It was affirmatively asserted that at a subsequent date, to wit, January 16, 1920, appellee in his application for reinstatement of $2,000 of his wax risk insurance maintained his own capacity and ability, as otherwise such reinstatement could not have been effected. Moreover, the applicability of section 305 of the World Wax Veterans’ Act or section 516, title 38 United States Code (38 USCA § 516), was challenged.

A jury was waived by stipulation of the parties, and the case was tried to the court.

There was evidence tending to support the finding of the trial judge that the appellee was totally and permanently disabled on and after January 1, 1920. Appellee was examined by a physician on June 2,1920, and was found suffering with nervousness, a weak heart, and serious thyroid disorders. At that time the opinion was expressed by his physician that the appellee was not able to follow continuously any substantially gainful occupation and that his prognosis was not favorable.

He was examined by another physician on January! 18, 1920, and at the time was found to be suffering from a “toxic condition due to thyroid trouble.” The opinion was then expressed by the physician that “he was not in a fit condition * * * to follow continuously any substantially gainful occupation.”

Testimony of other physicians who examined and treated him at approximately the same time was to similar effect. The appellee, testifying in' his own behalf, said that, while in the military service in France during October, 1918, he was ill; was confined in the hospital and received a certificate of disability and a promise to be sent home. At the time of his discharge his physical condition “wasn’t very good. I didn’t feel like working * * * I was awarded compensation by the Bureau of War Risk Insurance at the rate of temporary total from the date of my discharge, from March 26, 1919, up to and including May 1st, and at the rate of 33%% from May 2, 1919.”

Appellee was afflicted -with heart trouble and sinking spells which “would just leave me limp and weak” during the entire'period between his discharge from the Army and the trial of the case.

Although there was conflicting and contradictory evidence, the above and foregoing was sufficient to support the finding of the trial court to the effect that he became totally and permanently disabled on January 1,1920. United States v. Meserve (C. C. A.) 44 F. (2d) 549; United States v. Rasar (C. C. A.) 45 F.(2d) 545.

The serious contention made by the government is that the court had no jurisdiction of the subject-matter and was without power to apply the provisions of said section 305 World War Veterans’ Aet (section 516, title 38, United States Code [38 USCA § 516]).

The case is governed in all respects by the opinion this day filed in case entitled United States of America, appellant, v. Laura P. Vance, Administratrix of the Estate of James D. Vance, deceased, and Nina Vance Winn, appellees, 48 F.(2d) 472. The same contention is made in both eases, and the same principles of law are made applicable by the similarity of facts. Under such circumstances, the principles of law applied in the Vance Case, supra, are applicable and controlling in this ease.

The judgment of the trial eourt is affirmed.


text:
    FIDELITY & DEPOSIT CO. OF MARYLAND v. CENTRAL BANK et al.
    No. 8979.
    Circuit Court of Appeals, Eighth Circuit.
    March 11, 1931.
    Rehearing Denied May 4, 1931.
    Horaee Chamberlin, of Little Rock, Ark., for appellant.
    George B. Rose, of Little Rock, Ark., D. H. Cantrell, J. F. Loughborough, A. W. Dobyns, A. F. House, and Wallace Townsend, all of Little Rock, Ark., on the brief), for appellees.
    Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
   REEVES, District Judge.

The appellant, as plaintiff below, sought to enforce an equitable lien. Its bill was dismissed for want of equity, and it has appealed.

Appellant became surety on two separate bonds of a contractor. Two contracts had been let which involved the improvement of the streets, curbs, and gutters within a prescribed district in the city of Little Rock, Ark. For the purpose of this improvement two municipal corporations had been formed under the laws of Arkansas, and were called improvement districts. They were managed by a board of commissioners.

The contracts were similar and contained provision for the payment of 90 per cent, to the contractor during the course of the improvements upon estimates of the work done. The contracts also contained a provision that “the balance will be retained by the board until the final estimate is allowed.” Full or complete payments upon said contracts were to be made upon final inspection of the engineer. Such payments were to be made after the engineer had certified in writing “as to said completion and shall further certify as to the entire amount of each class of work performed and as to the value thereof.”

There was a provision that upon receipt of such certificate notice should be given to “the contractor and his surety of the acceptance of the work and shall make final payment of same, all previous payments being deducted.”

In the application for the bond, the contractor assigned to the appellant “as collateral, to secure the obligations herein,” certain properties, tangible and intangible, including “any and all percentages retained on account of said contract and any or all sums that may be due under said- contract at the time of said abandonment, forfeiture or breach, or that thereafter may become due.”

It was stipulated in said assignment that it should “become effective as of the date of said contract bond, but only in the event of any such abandonment, forfeiture or breach of said contract or of a breach of any of said bonds, or of any of the agreements herein contained.” The contracts and the applications to the surety were all dated December 4, 1926. When accepted, the contractor immediately began the improvements. Payments were made from time to time upon the estimates furnished by the engineer for the districts as the work progressed.

The appellee bank made loans to the contractor in January , and February, 1927. These loans were in the sum of $5,000 each, but only two are involved in this controversy. About the 1st of August, 1927, the work had been completed to the satisfaction of the improvement districts, and final estimates were certified by the engineer. Notice was thereupon given to the local agent of appellant. He approved final payment to the contractor. At approximately the same time advances were made to the contractor out of the balance of 10 per cent, retained by the official boards of the districts, but final payment was not made, as the contractor was not satisfied with the estimates. The contractor thereupon paid one of the $5,000 notes due the appellee bank. It may be inferred that such payment was made "in part at least out of moneys advanced to the contractor from the retained 10 per cent. The officers of the improvement districts thought further notice should be given to the appellant, and on September 30, 1927, caused a notice to be given to the gener al agent of the appellant.

Upon the objections of the contractor, a new inspection was made. The engineer’s report and certificate covering his resurvey was made and delivered on October 12,1927. The final estimate as thus made was satisfactory to the contractor and the improvement districts. Even then they did not make final settlement with the contractor, although they had heard nothing from the appellant. On November 12, 1927, final settlement was made, and the balance of the retained percentages paid. Shortly thereafter the contractor paid a balance due on the second note of $5,000 involved in this controversy. The same inference may be drawn as to the source of funds used in such- payment.

Appellant’s suretyship involved an obligation for material as well as labor in the improvements. Late in December, 1927, and early in January, 1928, demands were made upon appellant by two creditors of the contractor who had furnished material. These demands were in the sum of $6,005.87 and $498.96, respectively. Both were paid by the appellant late in December, 1927, and early in January, 1928. In this proceeding appellant claims that the appellees knew of its rights in respect of the retained percentages, and, notwithstanding such knowledge, paid out and appropriated same for other purposes.

Appellant, by its bill, sought to have certain books, records, and accounts exhibited by the appellees. It also complains here that the trial court erred in overruling its application for the. production of such documents and accounts. Other facts, as they become pertinent, will be stated in the course of the opinion.

1. The court properly denied the application of the appellant for the production of documents. This being a proceeding in equity, appellant would be required to secure the production of documents under rule 58 of the Equity Rules (28 USCA § 723). That rule requires the annexation of interrogatories to the facts pleaded as a basis for the discovery. Pressed Steel Car Co. v. Union Pacific R. Co. (D. C.) 241 F. 964. The appellant did not observe this rule. Moreover, it was not made to appear that the appellee? were in a position to produce the documents requested. Also the production of such documents would have been apparently cumulative evidence. Galion Iron Works v. Ohio Corrugated Culvert Co. (C. C. A.) 244 F. 427.

2. That the appellant had an equitable lien upon the retained percentages in the hands of the improvement districts cannot be denied. Exchange State Bank v. Federal Surety Co. (C. C. A.) 28 F.(2d) 485. And, if said funds had been retained by said district, there is no question of the right of the appellant to have enforced the priority of its lien. However, its right to enforce such lien under its contract would only accrue,to it “in •the event of any such abandonment, forfei-' ture or breach of said contract or a breach of any said bonds, or any of the agreements herein contained.”

It was the agreement that upon a final survey and estimate by the engineer of the. districts, final payment should then be made to the contractor. In order that the surety might have an opportunity to assert the happening of contingencies which would enable it to enforce its lien, notice to it was provided for. The districts endeavored to give such notice -when, the work was completed early in August, 1927. On the 30th of September, 1927, said districts again caused notice to be served. It was served this time upon appellant’s general agent.

On October 12, after a resurvey by the engineer of the districts, the parties were satisfied. The contractor was then entitled to receive the retained percentages. This wás in accordance with the contracts. However, the districts did not make final settlement until November 12, 1927. In the meantime, there had been no response from appellant, although its general agent had written on October 1, 1927, “I am referring the entire matter to my Home Office today asking that they advise me by wire regarding the matter. Immediately upon receipt of their reply, I will advise you.”

The question is whether under the circumstances the appellant would be entitled to have a judgment against the appellees for sums disbursed by it to satisfy claims of materialmen. The appellant lost its lien when it neglected to assert same at the time final estimates were made and certified to the districts. The contract upon which it became surety provided that final payment should be made when the improvements were completed and final estimates made. It was duly notified. Appellant’s local agent was first notified and assented to the payment. Its general agent, in reply to a notice given him on September 30, 1927, said:

“I am not in a position to release the retained percentages in connection with the above numbered bonds. ■* * *
“I am referring the entire matter to my Home Office today asking that they advise me by wire regarding the matter. Immediately upon receipt of their reply, I will advise you.”

The districts received no further communications from the appellant or its agents. Under such circumstances, they were not called upon to hold the funds indefinitely. The rule is that “an equitable lien may be lost by negligent and unreasonable delay in proceeding to enforce it.” 37 C. J. 338; Atlantic Coast Line R. R. Co. v. Burnette, 239 U. S. 199, 36 S. Ct. 75, 60 L. Ed. 226; Landrum v. Union Bank of Missouri et al., 63 Mo. 48, loc. cit. 56; Rankin v. Scott, 12 Wheat. 177, 6 L. Ed. 592; Townsend v. Vanderwerker, 160 U. S. 171, 186, 16 S. Ct. 258, 40 L. Ed. 383.

The eases cited by appellant are not applicable to the facts in this ease. They either were cases where the fund remained in the hands of one of the contracting parties or where such funds had been disbursed under circumstances which enabled the claimant to invoke the principles of a preference in bankruptcy.

While» the foregoing disposes of thi3 appeal, yet there was evidence that appellant had obtained other security from the contractor. This fact, with the further circumstances of uncertainty as to the identity of the funds paid out, makes the enforcement of the lien doubtful at least, even if it had continued to exist. •

The decree of the trial chancellor is affirmed.


author: BRYAN, Circuit Judge.

text:
    HERMAN v. UNITED STATES.
    No. 5988.
    Circuit Court of Appeals, Fifth Circuit.
    April 7, 1931.
    Rehearing Denied May 1, 1931.

      W. D. Girand, of Lubbock, Tex., and Cleo G. Clayton, of Amarillo, Tex., for appellant.
    Norman A. Dodge, U. S. Atty., and Morrow H. Boynton, Asst. U. S. Atty., both of Fort Worth, Tex.
    Before BRYAN and FOSTER, Circuit Judges, and HUTCHESON, District Judge.
   BRYAN, Circuit Judge.

Appellant was convicted of violations of the National Prohibition Act (27 USCA) as charged in the third and fourth counts of the indictment. The third count charged him with unlawfully having in his possession 362 gallons of whisky for beverage purposes; the venue being laid in Lamb county, Tex., which it was alleged was in the Amarillo Division of the Northern District of Texas. The fourth count charged .appellant with maintaining a common nuisance. According to the evidence for the government, appellant’s son, on April 22, 1930, sold at one time to two purchasers two half-gallon jars of liquor which were taken out of the cellar of appellant’s home. One of the purchasers w.as a Texas State Ranger, who returned with a search warrant on April 25, and, upon a search of the cellar, found and seized the quantity of liquor described in the third count of the indictment. The whole 362 gallons were concealed behind a false wall, the secret door to which was electrically locked, and at the time of the seizure were acknowledged by appellant to he his property. The defense to the charge of unlawful possession was that the liquor had been put in appellant’s cellar during his absence from home and without his knowledge or consent. In support of this claim, the sheriff’s son was called as a witness, and testified that on April 24 appellant came to the home of the sheriff, who was absent at the time, and reported to his mother, the sheriff’s wife, that there was some whisky at his (.appellant’s) house. Appellant offered to prove by this witness that he said he objected to having •the whisky left on his premises, and wanted the sheriff to come and get.it, hut the court refused to let in that part of the proffered testimony.

A variance is claimed because it is said the indictment charged appellant with the unlawful possession of liquor in the Amarillo division, whereas the possession proved was in the Lubbock division. The indictment also charged that the offense was committed in Lamb county, Tex., which we take judicial notice is in the Lubbock division. 28 USCA § 189a. The inadvertent, erroneous allegation that Lamb county is in the Amarillo division is not descriptive of the offense, and is therefore to he treated as surplusage. 2 Bishop’s Criminal Procedure, § 45.

Appellant was permitted to prove that he reported to the sheriff’s wife the fact that there was liquor on his premises as indicating a consciousness of innocence. Wigmore on Evidence, §§ 174, 293. There was no error in refusing to allow him to go further and prove the self-serving declaration that he did not want the liquor on his premises, but desired the sheriff to come and get it. It is argued that the evidence was insufficient to support a conviction under the fourth count for maintaining a nuisance; but the sufficiency of the evidence under this count was not raised at the trial, and therefore is not properly presented for consideration here. We are of opinion, however, that there was evidence enough to prove the maintenance of a nuisance when it is considered that the two sales proved were made from a large supply of liquor which the jury were authorized to find appellant was keeping in his cellar for sale. Lewinsohn v. United States (C. C. A.) 278 F. 421; Denapolis v. United States (C. C. A.) 3 F.(2d) 722.

It is also complained that the court failed to give a charge on the law of circumstantial evidence. The case did not depend entirely on evidence of this character, since there was direct evidence of the admission by appellant that the liquor found in the cellar belonged to him. It is not error to refuse to charge a jury upon the insufficiency of a part of the testimony. Blanton v. United States (C. C. A.) 213 F. 320, Ann. Cas. 1914D, 1238; 16 C. J. 1008. Besides, there was no request for a specific instruction on the law of circumstantial evidence; hence the court cannot he put in error for failing to give an instruction on that subject of its own motion. Gilmore v. United States (C. C. A.) 39 F.(2d) 897. Such charges as were requested upon the weight of the evidence were in substance given by the court in its general charge to the jury.

The judgment is affirmed.


author: WALKER, Circuit Judge.

text:
    LAUDERDALE v. UNITED STATES.
    No. 5926.
    Circuit Court of Appeals, Fifth Circuit.
    April 9, 1931.
    J. L. Roberson and Sam C. Cook, Jr., both of Clarksdale, Miss. (Roberson & Cook, of Clarksdale, Miss., on the brief), for appellant.
    Lester G. Pant, U. S. Atty., of Holly Springs, Miss.
    Before BRYAN, POSTER, and WALKER, Circuit Judges.
   WALKER, Circuit Judge.

The appellant was convicted under an indictment containing nine counts. The first, third,, fifth, and eighth counts each charged that appellant on a stated date, at the town of Ruleville, in Sunflower county, Miss., did knowingly and unlawfully possess intoxicating liquor, to wit, whisky, for beverage purposes; the dates stated in the several counts being different, and the dates stated in each of the nine counts being later than the date of the enactment of the Jones Act, 45 Stat. 1446 (27 USCA §§ 91, 92). The second, fourth, and sixth counts each charged that appellant, on a stated date, at the town of Ruleville, in Sunflower county, Miss., did knowingly, willfully, unlawfully, and feloniously sell intoxicating liquor, to wit, whisky, for beverage purposes; the dates stated in the several counts being different. The seventh count charged that appellant on a stated date, at said town of Ruleville, did knowingly, willfully, unlawfully, and feloniously transport intoxicating liquor, to wit, whisky, for beverage purposes. The ninth count charged that appellant on a stated date, at said town of Ruleville, did knowingly, willfully, and unlawfully maintain a common and public nuisance on described premises located in said town of Ruleville, in that he then and there knowingly, willfully, and unlawfully did maintain said premises as a place where intoxicating liquors, to wit, whisky, for beverage purposes, was unlawfully kept for sale and sold. The appellant demurred to the indictment and to each of its counts. As to all the counts the demurrer raised the question of the sufficiency of the allegations as to the place of the commission of the offense attempted to be charged. The counts charging possession were challenged on the grounds that they failed to allege that the whisky mentioned was fit for use for beverage purposes, or that the possession of it was with the intention of using it in violation of the National Prohibition Act. The counts charging sales were challenged on the ground that they failed to allege to whom the sale was made. The transportation count was attacked- because it did not allege how the transportation was effected, and that it failed to state the place from, or the place to which, the whisky was transported. The demurrer was overruled. On a verdict finding the appellant guilty as charged, the court adjudged that he pay a fine of $250 and that he be imprisoned in jail for a period of twenty-four months. Assignments of error were based on the overruling of the demurrer to the indictment, on rulings on evidence, and on the court’s refusal to direct a verdict of not guilty.

None of the counts was subject to demurrer because of the insufficiency of its allegations as to the place of the commission of the charged offense. The particular location in the town of Ruleville of the alleged unlawful conduct was not of the substance of the offense charged. If additional information in that regard had been deemed by the appellant to be necessary to enable him to make preparation to meet the charges made, it could have been called for by an application for a bill of particulars. Adamson v. United States (C. C. A.) 296 F. 110; Leonard v. United States (C. C. A.) 18 F. (2d) 208; United States v. Luther (D. C.) 260 P. 579; Day v. United States (C. C. A.) 28 F.(2d) 586. The counts charging unlawful possession of whisky, an intoxicating liquor, were not defective by reason of the suggested omission of allegations, which were not required to show the commission of the crimes attempted to be charged. Hodgson v. Vermont, 168 U. S. 262, 18 S. Ct. 80, 42 L. Ed. 461; Middlebrooks v. United States (C. C. A.) 23 F.(2d) 244. For like reason the suggested omission from the counts charging unlawful sales of whisky, and from the count charging unlawful transportation of whisky of descriptive allegations of the details of such sales and transportation, did not constitute defects in those counts making them subject to demurrer. Husty v. United States, 51 S. Ct. 240, 75 L. Ed.-, Feb. 24, 1931; Karger v. United States (C. C. A.) 46 F.(2d) 302.

The court overruled an objection to the jury being permitted to smell the contents of a bottle of whisky which had been identified by a witness as one sold by the appellant. The effect of overruling that objection being to permit the jurors merely to examine or scrutinize a thing produced before them as part of the evidence in the case on trial, that ruling was not erroneous. Driskill v. United States (C. C. A.) 24 F.(2d) 525.

It is not necessary to pass on the contention that a verdict of not guilty under the nuisance count should have been directed, because of the insufficiency of evidence to support its allegations, as the punishment im-, posed was warranted by the conviction under other counts, the material allegations of which were supported by evidence.

The record showing no reversible error, the judgment is affirmed.


author: FOSTER, Circuit Judge.

text:
    BOYETT v. UNITED STATES.
    No. 6098.
    Circuit Court of Appeals, Fifth Circuit.
    April 8, 1931.

      Wm. C. Pierce and W. K. Zewadski, Jr., both of Tampa, Fla., for appellant.
    W. P. Hughes, U. S. Atty., and William A. Paisley, Asst. U. S. Atty., both of Jacksonville, Fla.
    Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.
   FOSTER, Circuit Judge.

Appellant was convicted of unlawful manufacture of intoxicating liquor and possessing liquor and apparatus designed for manufacture of same, and was sentenced to serve two years in the penitentiary. No other person was indicted with him. Not a single exception w.as reserved at the trial, but we are asked to notice plain error appearing on the record. Of course, we may do so, in a proper case, under the provisions of our rule 11 and under the provisions of 28 USCA § 391. It is but fair to say that appellant was not represented in the District Court by the same counsel who appeared on this appeal. As to the occurrences that we are asked to notice as plain error, we quote literally from the bill of exceptions as follows:

“The jury retired to the jury room and after apparently an hour came hack into the Court and through their Foreman, asked additional instructions from the Court as to whether the defendant would be guilty of the charges in the indictment if he (the defendant) knew that the still described by the government witnesses w.as on the defendant’s property, and he (the defendant) made no effort to stop it.
“Whereupon, the Court further charged the jury:
“ ‘If the defendant knew that the still was in this house, on his property, as stated by the Government witnesses, and in operation there, and took no steps to stop it, he would he equally guilty with the person, or persons, so operating the distillery, under the charge the Court has previously given you in regard to principal and accessory.’
“Whereupon the jury retired for some time and returned into Court and reported that they were unable to agree upon a verdict. Whereupon, the Foreman stated:
“ ‘Your Honor, it may be that if we had further instructions, we might be able to reach a verdict.’
“Whereupon, the Court replied:
“ ‘I am afraid there are some of you who do not want instructions, and are not willing to follow the instructions given by the Court.
“ ‘It does not seem to the Court that there should be any great difficulty in arriving at a verdict in this case.
“ ‘Mr. Marshal (addressing the Marshal of the Court): You can prepare supper for this jury and a place for them (to be made confortable) for the night, and after supper you may permit them to consider their verdict until bedtime, and then permit them to retire until morning, and after they have had breakfast, return them to their jury room for further consideration of their verdiet. Be sure and see that they are made comfortable.’
“Whereupon, the jury again retired and in about five minutes thereafter returned to the Court and announced that they had agreed upon a verdict. * * * ”

The government depended for conviction entirely upon circumstantial evidence. A still in full operation was found on appellant’s farm in Pasco county, Fla., together with a quantity of mash and liquor, in a building situated about 60 yards from his residence, but inclosed by a barbed-wire fence, which ran across a path leading to appellant’s door. Appellant took the stand and testified he had rented the building where the still was discovered to a man named J. Q. Smith and that he had nothing to do with the still and did not know it was there. He was corroborated as to having rented the building by two witnesses, and three other witnesses testified to having seen Smith in and about the building. There was no one in charge of the still when it was discovered and no arrests were made at that time.

It may be conceded that when a still is in operation upon the premises of a person and facts are disclosed to the jury clearly indicating his knowledge and consent, a presumption of guilt as .an accessory may arise, in the absence of other evidence sufficient to exonerate him or to create a reasonable doubt. However, mere knowledge that an offense is being committed is not equivalent to participation with criminal intent. Consent is a necessary element and must also be shown. While this may be inferred from all the circumstances disclosed, it is always a question for the jury. In this case a close question of fact was presented, and it is evident that there was considerable doubt in ,the minds of some of the jurors as to appellant’s guilt. He was entitled to the benefit of any reasonable doubt existing, not only in the minds of all the jurors, but also in the mind of any individual juror.

A federal judge is vested with considerable discretion in commenting on the facts before the jury and in reviewing the evidence, provided he does so fairly and presents both sides of the ease, and also makes it clear to the jury that they are the sole ultimate judges of the facts, of the credibility of the witnesses, and of the weight and sufficiency of the evidence. However, when it is apparent that doubt exists in the minds of the jury, after having received the charge of the court and retired to deliberate, in delivering .additional charges the judge should exercise caution and refrain from indicating to the jury his own opinion as to the guilt or innocence of the defendant. It is also his duty to refrain from any intimidation or coercion of the jury. Kesley v. U. S. (C. C. A., 5th Circuit) 47 F.(2d) 453, decided March 5, 1931; Garst v. U. S. (C. C. A.) 180 F. 339; Oppenheim v. U. S. (C. C. A.) 241 F. 625; Lewis v. U. S. (C. C. A.) 8 F. (2d) 849.

The charge of the court above quoted took aw,ay from the jury any question as to appellant’s consent to the .operation of the still and made it imperative that a verdict of guilty should be returned if the jury believed he had knowledge of the still and took no steps to prevent it. Consent is not necessarily to be implied from the fact that one having knowledge that an. offense is being committed does not report it to the proper authorities or take other steps to prevent it. There are many reasons that might be stated, sufficient no doubt to the mind of a person so situated, that would prevent his taking action although he objected instead of consented. The question of knowledge .and consent was for the jury. Furthermore, when the jury came into court the second time the judge made it very clear to them that he believed some of them were derelict in their duty and that he intended to punish them by keeping them sequestered indefinitely until they had reached a verdict. This tended to intimidate and coerce them.

The charges and remarks of the court, above quoted, had a tendency to deprive appellant of a fair trial and present plain error on the record, requiring a reversal, which we feel compelled to notice.

Reversed and remanded.


author: HUTCHESON, District Judge.

text:
    MARSHALL FIELD & CO. et al. v. PEARSON. CITIZENS’ NAT. BANK OF LUBBOCK v. SAME.
    No. 5861.
    Circuit Court of Appeals, Fifth Circuit.
    April 8, 1931.
    Rehearing Denied May 1, 1931.
    Allen Wight, of Dallas, Tex., and Robt. A. Sowder and E. L. Klett, both of Lubbock, Tex., for appellants.
    Richard L. Douglas, of Lubbock, Tex., and L. S. Kinder, of Plainview, Tex., for appellee.
    Before BRYAN and FOSTER, Circuit Judges, and HUTCHESON, District Judge.
   HUTCHESON, District Judge.

Bob Barrier, Paul Barrier, Mike Barrier, and Clifton Barrier, constituting the partnership of Barrier Bros., and each individual composing the partnership, were upon their voluntary petition adjudicated bankrupt in May, 1929.

The appellant Marshall Field & Co., five other mercantile creditors, and the Citizens’ National Bank, the latter prosecuting a separate appeal, filed proofs of claim against the partnership; the mercantile creditors claiming upon guaranties given by Barrier Bros, the partnership, and certain deeds of trust and chattel mortgages given by the partnership to secure the same; the Bank claiming upon three notes of'Barrier Bros., Inc., two of them indorsed by the partnership, and all of the notes, as they claimed, secured by ■deed of trust.

These claims, contested by the trustee, were disallowed by the referee as either secured or unsecured claims against the partnership. The District Judge approved the action of the referee in disallowing all the claims as secured, and his action in disallowing them as unsecured, except that he allowed the claim of the Citizens’ National Bank on the two notes indorsed by the partnership, ,and the claims of Marshall Field & Co., Perkins Dry Goods Company, and Keith Bros. & Co. on a small portion of their claimed indebtedness as unsecured. From the action of the District Judge this appeal is prosecuted.

By a frictional approach to the consideration of this case begun before the referee through and as the result of an effort to disqualify him because of his statutory commissions, and maintained throughout, which has generated more heat than light, the issues in it have assumed aspects of difficulty which a less intense approach to it discloses are more apparent than real.

Simply stated, this ease is one in which four brothers, who had for many years been partners in a mercantile business, desiring to expand that business, formed a corporation, and turned over to it their mercantile business. The partnership, which had acquired real estate and other assets in the name of one of the partners, not dissolving, but continuing thereafter to exist as such, retired from the active conduct of the business, but continued to give its credit and the activities of its members to building up the’ corporation’s business.

Some of the appellants, mercantile creditors, had in 1928, almost immediately after the corporation had taken over the partnership business, secured from the partners instruments guaranteeing or agreeing to guarantee the corporation’s debts, while on November 3, 1928, Bob Barrier, as president of Barrier Bros., Inc., wrote Marshall Field & Co., in reply to its complaint that the business had been incorporated without its knowledge, that what they had in effect done was to segregate their merchandising operations from their other businesses, concluding, “Legally you have not released one single piece of real estate, notes or any part of our merchandising operations, and the same assets which we (referring to the partnership) listed on January 1st are still intact.”

Perceiving on too large a scale the opportunities which lay before them, the partnership enlarged its periphery of distribution at the expense of its center of gravity, credit, to such an extent that though remaining solvent, credit difficulties began to confront them, and in the early part of 1929 extended negotiations were begun and carried on by the Barriers, through Bob Barrier, the president and guiding spirit of the corporation and partnership, looking to a reorganization of the business, but on a sounder and more reliable basis of capitalization.

In the course of and to carry out their agreements made while these' negotiations were going on, Barrier Bros., on the 11th of April, executed to George R. Bean, trustee, for the use ,and benefit of the appellánts, merchandise creditors, two chattel mortgages and one real estate mortgage, and on the 25th of April executed a real estate mortgage on additional property.

The real estate mortgages, as they appeared in the proofs of claims showed as grantee, in addition to the six merchandise creditors, appellants, the name of the Citizens’ National Bank. The testimony showed as to the mortgage of April 11 that the bank’s name was inserted as grantee while the instrument was in the clerk’s office after its filing for but before its recordation. This insertion was made with the express consent of Paul, in whose name the land stood, and of Bob Barrier, the managing partner who had general authority to sign Clifton’s name.

Clifton testified that he knew when he signed the schedules that the bank was included in the deed of trust. The other partner, Mike Barrier, testified that he had not been told and did not know that the bank’s-name had been added to the deed of trust.

The referee finding that 'the guaranties were the guaranties of the individuals composing the partnership and not of the partnership, allowed the claim primarily against the individual estates and only secondarily against the partnership estate. He also found that, if intended to be executed by the partners, they were invalid for want of consideration moving to the partnership.

He also disallowed the securities on the ground that they were invalid as voluntary conveyances under the Texas statutes and also they were invalid as unlawful preferences under section 60b of the Bankruptcy Act (11 USCA § 96(b).

These conclusions were in substance sustained by the District Judge, and the action of the referee, except as above noted, was confirmed.

In this we think the court erred. On the first point as to the intention of the guarantors, it is perfectly clear that they intended to place the partnership credit and the partnership assets back of the corporation’s debts. The corporation derived from them; it was their creature, and, as to the merchandise business, their alter ego. They had assured Marshall Field & Co. in the letter above referred to, and the other creditors in the instruments they gave them, that every asset of the partnership was back of the corporation, and as to this Bob Barrier testified: “I felt like on November 3rd that Mr. Williams still had his claim intact against the partnership assets, and that was what we intended for him to have, but Mr. Williams was not satisfied with the letter. He knew that we kept this property in the names of the individuals but operated as a partnership. We wanted to satisfy Marshall Field & Co. as best we could and we prepared the statement of the partnership assets and signed the guaranty. In executing the guaranty we did it so that Marshall Field & Co. could have the benefit of the partnership and be protected by the partnership property, that was the purpose of it. We knew that that was Mr. Williams’ idea at that time.”

It is perfectly plain that in executing all of these instruments the partners intended to pledge the credit and assets of the partnership to insure the carrying on of its business now being transacted in the name of the corporation, whose entire stock the partnership owned, as fully and to the same extent as though the partnership were still conducting the business, and that what they did was effective to carry out this intention. .

As to the securities, we think it equally plain that there is no basis for the finding of the referee either that these mortgages were void as voluntary conveyances, or that they constituted preferences. They were given as part of the plan then on foot for the handling and conduct of the business, supported by the valuable consideration of the promise to help by the extension of the debts then due, and the providing of further credit, and, while there is ample evidence that the corporation was in an embarrassed condition for want of funds, the evidence wholly fails to sustain the conclusion that the corporation and the partnership were insolvent within the meaning of the law, or, if they were, that the creditors securing th.e mortgages received them under such circumstances as that it eould.be found that they had reasonable cause to believe that a preference would be effected. Grant v. First National Bank, 97 U. S. 80, 24 L. Ed. 971; In re Gaylord (D. C.) 225 F. 234.

The notes on which the bank claimed were notes of the corporation, two of them guaranteed by the partners, one not, and the bank stands in the same case as to the right to the securities claimed as the other creditors, except for the point made against it by the trustee, that it was not an original grantee in the mortgages, but its name was inserted therein after the instruments had been executed and delivered to the grantees. [3,4] The proof does establish that as to the mortgage of April 11th the bank’s name was inserted as grantee after execution and delivery and filing for record, and, while as to that of April 25th the proof is wanting in certainty, there is sufficient evidence to sustain the finding that this instrument was' also executed and delivered, though not filed for record, before the bank’s name was inserted in it. In order then for the bank to avail itself of the securities, it must have sustained the burden thus cast upon it of proving that, though inserted after execution and delivery, it was done with the consent of the partners in such manner as to make it their act and deed. This we think the bank has done.

There is no question here of fraudulent spoliation as in Bowser v. Cole, 74 Tex. 222, 11 S. W. 1131; rather this is a case like that of Otto v. Halff, 89 Tex. 384, 34 S. W. 910, 59 Am. St. Rep. 56, where the insertion was innocently made by the bank with the knowledge and consent of the partner in whose name the’ land stood, the managing partner and moving spirit of both corporation and partnership, and, if not in service, it was certainly not in disservice of the partnership, as it merely had the effect of including in the instrument another creditor who had advanced money to the corporation on the faith and confidence in its managing owners, the partners themselves.

That an instrument, though changed after filing and before recordation, will stand as recorded when the change is made with the consent of the grantor is settled law in Texas. Henke v. Stacy, 25 Tex. Civ. App. 272, 61 S. W. 509. Nor is there any question but that, though one partner has no implied general power to sell or mortgage real estate of a firm, a conveyance so made will be good against the interest of the partners making it and against the interest of the other partners, upon, proof from which, either authorization or ratification may be inferred. Allen v. Meyer (Tex. Civ. App.) 65 S. W. 645; Williams v. Meyer (Tex. Civ. App.) 64 S. W. 66, 69.

The record in this case shows affirmatively that Bob Barrier, the managing partner, Paul Barrier, in whose name the greater part of the land stood, and Clifton Barrier, all agreed to the insertion of the bank’s name in the instruments. While there is no direct evidence that Mike Barrier either authorized or ratified the act of the other partners in including the bank in the instruments, in -view of the nature of the partnership, its relation to the corporation, the fact that its properties stood in the name of the individual partners who did assent to the inclusion of the bank, the negotiations that had been going on for some time, to which the bank was a party, which negotiations were conducted by Paul and Bob Barrier, the fact that the inclusion was in line with the general purpose of the instruments, to protect creditors who had made advances to the corporation upon the faith of the credit of the partnership, and to secure an extension of time on that indebtedness and further credit, the evidence is sufficient to support the finding that the insertion of the bank’s name was the act and deed of the partners which their trustee cannot disaffirm, and that the claim of the bank, as well as the other appellant creditors, should be approved as a secured claim against the partnership estate.

The judgment of the court below is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.