author: CAVANAH, District Judge.

text:
    UNITED STATES v. LADLEY (STATE OF IDAHO, Intervener).
    No. 1147.
    District Court, D. Idaho, S. D.
    Aug. 13, 1931.
    See, also, 42 F.(2d) 474.
    . H. E. Ray, U. S. Dist. Atty., and W. H. Langroise, Asst. U. S. Dist. Atty., both of Boise, Idaho.
    R. I. Keator, of Bonners Ferry, Idaho, for defendant.
    Fred J. Babcock, Atty. Gen., of Idaho, and Maurice H. Greene, Asst. Atty. Gen., for intervener.
   CAVANAH, District Judge.

The United States brings this action, as trustee for certain Indian allottees of the Kootenia Indian Tribe, against the defendant to quiet title to property formerly the bed of Mission Lake in Boundary county, Idaho, upon the theory that the lake at the time of statehood was nonnavigable and therefore belonged to the riparian lands of the Indians, while on the other hand the contention of the defendant is that the lake was navigable and that by virtue thereof the title to the bed of the lake was in the state of Idaho, and that he, having complied with the laws of the state, has acquired title to the state’s rights. The state files its petition in intervention and asserts that it claims title to the bed of the lake in opposition to the defendant and the United States on the ground that the lake was navigable so far as the United States is concerned, and that the defendant has not succeeded to' the state’s interest.

The only questions to be determined at this time are: (1) Whether the state should be permitted to intervene; and (2) if so, would the court lose jurisdiction of the cause after the state becomes a party?

Bearing in mind that as this action is an equitable one to quiet title to real estate, the statutes of the United States and Equity Rules adopted by the Supreme Court govern in disposing of the two questions.

Equity Rule No. 37 (28 USCA § '723) provides:

“Any person may at any time be made a party if his presence is necessary or proper to a complete determination of the cause. •* * *
“Anyone claiming an interest in the litigation may at any time be permitted to assert his right by intervention, but the intervention shall be in subordination to, and in recognition of, the propriety of the main proceeding.”

Equity Rule 39 (28 USCA § 723) provides : “In all eases where it shall appear to the court that persons, who might otherwise be deemed proper parties to the suit, cannot be made parties * * * because their joinder would oust the jurisdiction of the court as to the parties before the court, the court may, in its discretion, proceed in the cause without making such persons parties; and in such eases the decree shall be without prejudice to the rights of the absent parties.”

1.2, 3] It will be observed that Equity Rule 37 grants to any person whose presence is necessary or proper to a complete determination of the cause the right to be made a party, and, when permitted to do so by intervention, he cannot challenge the propriety of the main litigation, but must accept it, Adler v. Seaman et al. (C. C. A. 8th) 266 E. 828, while Equity Rule 39 relates only to proper parties and not indispensable parties, and the court may under that rule in its discretion proceed without making such persons parties, and the decree will not prejudice the rights of the absent parties. The inquiry then, is, Do the facts disclosed by the pleadings and the petition in intervention show that the state is a proper or necessary party? If a necessary party it comes in under Equity Rule 37: “In subordination to, and in recognition of, the propriety of the main proceeding.” The pleadings and the petition in intervention seem to agree that the main contest is between the United States and the state, as the only issue relating to their possession is whether the bed of the lake was navigable or nonnavigable. If the lake was nonnavigable, then the title of the staté falls which carries with it .the claim of the defendant who bases his claim upon the title of the state. So it is apparent that under Equity Rule 37, where the state is a necessary party and is permitted to intervene, which I think it has a right to and should be permitted to intervene, the court does not lose jurisdiction, because coming in voluntarily under that rule the state cannot object to the jurisdiction of the court. This construction of Equity Rule 37 and the state being a necessary party removes the objeation as to the jurisdiction which might be made under Equity Rule 39. Of course the rights of all persons interested in the subject-matter of the suit should be decided in the present litigation, and parties having an immediate interest in the subject ought to be made parties to the suit. The state is so situated in respect to this litigation that the court ought not to proceed in its absence, and, when brought in, the ease would be between the United States on the one hand and the state on the other, with the defendant, one of the citizens of the state, contesting both the rights of the United States and the state. The interest of the state is of such a nature that a final decree could not be made in the action without affecting that interest, and it would be improper for a court of equity in the exercise of a fair discretion to proceed without it. State of California v. Southern Pacific Co., 157 U. S. 229, 15 S. Ct. 591, 39. L. Ed. 683; New Mexico v. Lane et al., 243 U. S. 52, 37 S. Ct. 348, 61 L. Ed. 588; Louisiana v. Garfield, 211 U. S. 79, 29 S. Ct. 31, 53 L. Ed. 92; Percy Summer Club v. Astle et al. (C. C.) 119 F. 486. The state then having been permitted to intervene, we approach the second proposition: Does this court lose jurisdiction thereby under section 2 of article 3 of the Constitution of the United States, and under sections 41 and 341 of title 28 USCA, because of the state becoming a party to the action ? The provision of the Constitution grants to the Supreme Court original jurisdiction in actions in which the state shall be a party. Under this provision exclusive jurisdiction is not granted to the Supreme Court when a state is a party, and it has no application to claims of a state against the United States, Ames v. Kansas, 111 U. S. 449, 4 S. Ct. 437, 28 L. Ed. 482; United States v. Louisiana, 123 U. S. 32, 8 S. Ct 17, 31 L. Ed. 69; and we must then look, therefore, to the statute in order to determine whether exclusive jurisdiction is vested in the Supreme Court.

By section 41 of the statute the original jurisdiction of the District Court among others, is: “Of all suits of a civil nature, at common Jaw or in equity, brought by the United States/-’ This section gives to District Courts concurrent jurisdiction over suits brought by the United States with the jurisdiction of the Supreme Court of the United States which is original. The United States under this section could maintain an action in the District Court against the state, as° there are no exceptions. Referring then to section 341 of the statute so far as applicable here, we find that there is defined both the original and exclusive jurisdiction of the Supreme Court, as it is there declared that “the Supreme Court shall have exclusive jurisdiction of all controversies of a civil nature where a State is a party, except between a State and its citizens, or between a State and citizens of other States, or aliens, in which latter eases it shall have original, but not exclusive, jurisdiction.” While it is true that this clause declares “the Supreme Court shall have exclusive jurisdiction of all controversies of a civil nature where a State is a party,” yet the Supreme Court has held that it has no application to suits against the United States and bases its decision upon the conclusion that Congress had authorized the United States to be sued in the Court of Claims, and for the reason “there could, then, be no controversies of a civil nature against the United States cognizable by any court where a state was a party. The Act of March 2, 1875, in extending the jurisdiction of the circuit court to all cases arising under the constitution or laws of the United States, does not exclude any parties from being plaintiffs. Whether the state could thereafter prosecute the United States upon any demand in the circuit court or the court of claims depended only upon the consent of the United States, they not being amenable to suit except by such consent. Having consented to be sued in the court of claims upon any claim founded upon a law of congress, there is no more reason why the jurisdiction of the court should not be exercised when a state is a party than when a private person is the suitor. The statute makes no exception of this kind, and this court can create none.” United States v. Louisiana, 123 U. S. 32, 36, 8 S. Ct. 17, 19, 31 L. Ed. 69. In the ease we have here Congress has authorized the United States to bring this suit under section 41, title 28, USCA, and, when it did so, consent was given to any one who may have an interest in the litigation of such a nature as to become a necessary party to appear and have his rights determined. Therefore the clause in the statute granting exclusive jurisdiction to the Supreme Court in cases brought by the United States, and in which the state is a party, only applies where there is no authority of law to sue the United States or the right to appear where the United States brings suit in the inferior courts of the United States.

In the ease of Ambs v. Kansas, supra, the conclusion was reached that the original jurisdiction of the Supreme Court, in cases where a state is a party, is not made exclusive by the Constitution, and that Congress had authority to authorize suits by a state to be brought in the inferior courts of the United States. And the court further stated in referring to the statute that its practical effect was to give to the Supreme Court exclusive original jurisdiction in suits against a state begun without its consent, and to allow the state to sue for itself in any tribunal that could entertain the ease. Authority then having been given to the United States to bring this suit in the District Court, it appears clear that, when it did so it had authority to, and did, consent, to any adverse claimant to the property in controversy to appear and assert his claims.

The general statement is made by the Supreme Court in a recent decision that the state can sue in the District Court where the United States is a party and has consented to be sued there. That was a ease of the State of North Dakota v. Chicago & Northwestern Railway Co. et al., 257 U. S. 485, 42 S. Ct. 170, 171, 66 L. Ed. 329, where the state brought a bill in equity against certain railroad companies to prevent the enforcement of an order of the Interstate Commerce Commission, and the court said: “The main contention of the State is that if in the opinion of the Court it has a substantial right that is infringed by what the defendants are doing Congress neither can take that right away nor prevent the State from proceeding in this Court for such remedy as law or equity may afford. But if these premises were granted, it would not follow that the bill should he maintained. It is a proceeding in equity in which the requirements of complete justice and of public policy must be taken into account. When they are considered it seems to us pretty clear that the State should be remitted to the remedy offered by the statutes — a suit in the District Court in which the United States is made a party. * * *

“There is no doubt that a State can sue in the District Court when the United States is a party and has consented to be sued there and has not “expressed its consent to be sued elsewhere. United States v. Louisiana, 123 U. S. 32, 8 S. Ct. 17, 31 L. Ed. 69; Ames v. Kansas, 111 U. S. 449, 4 S. Ct. 437, 28 L. Ed. 482.”

The proceeding here is identical with, the proceeding adopted in the case of Brewer-Elliott Oil & Gas Co. v. United States, 260 U. S. 77, 43 S. Ct. 60, 67 L. Ed. 140, where the United States brought suit as trustee for the Osage Tribe of Indians against certain oil companies to cancel oil and gas leases granted by the state of Oklahoma covering lands constituting part of the bed of the Arkansas river within the Osage reservation. The state of Oklahoma intervened by leave of court and denied that the United States, as trustee, or the Osage Tribe owned the river bed of which the lots were a part, and averred that they were owned by the state in fee. It can hardly be said that in that ease the court or counsel overlooked the preliminary question of jurisdiction where the United States and the state were parties, for it is said in the case of Minnesota v. Hitchcock, 185 U. S. 373, 22 S. Ct. 650, 654, 46 L. Ed. 954, that: “It is the duty of every court of its own motion to inquire into the matter, irrespective of the wishes of the parties, and be careful that it exercises no powers save those conferred by law.”

These considerations require the granting permission to the state to intervene and holding that this court has jurisdiction to hear and determine the cause.


source: Caselaw Access Project

author: KENNERLY, District Judge.

license: Public Domain

text:
    FRUDENSTEIN v. FIRST NAT. BANK OF HARLINGEN, TEX.
    No. 690.
    District Court, S. D. Texas, Brownsville Division.
    Aug. 11, 1931.
    C. M. Wunderman, of Harlingen, Tex., for plaintiff.
    John C. Myrick, of Harlingen, Tex., for defendant.
   KENNERLY, District Judge.

This in an action at Law by the trustee in bankruptcy of Wallace-Shannon Company, a corporation, against the First National Bank of Harlingen, Tex., to recover an alleged preference under the Bankruptcy Act (11 USCA).

With the approval of the court, the parties entered into a stipulation that the evidence in the ease should be offered before one of the referees in bankruptcy of the court, and upon the record so made, submitted to the court. This course has been followed, and the case is now before me for decision, upon such record, with written briefs of the parties.

The material facts are substantially as follows:

The Wallace-Shannon Company, a corporation incorporated under the laws of Texas, was adjudged a bankrupt under the acts of Congress relating to bankruptcy on July 17, 1929, upon an involuntary petition filed against it June 29,1929, and trustee duly appointed August 22, 1929.

Wallace-Shannon Company (hereinafter called bankrupt) was engaged in the business of buying, selling, and shipping farm products. In December, 1928, being at that time solvent, it opened an account in its name with defendant bank. Under arrangements made at the time, bankrupt was entitled to, and did, from time to time, deposit with defendant bank, and have immediately credited to its checking abeount, moneyls, cheeks, drafts, etc., received, drawn, etc., by bankrupt in the course of its business. Defendant bank was to be, and was, paid a brokerage or commission of one-fourth of one per cent, of the amount of all such drafts for a period of six days, and after the expiration of such period, then interest thereon at the rate of 10 per cent, per annum. Such checks, drafts, etc., however, were to be deposited, and were deposited, in accordance with written stipulation upon deposit slips, reading -as follows: “All items, including checks on this bank, will be credited subject to actual payment. Cheeks on this Bank found not good at dose of business will be charged back to depositors.”

And it was further agreed that any cheeks, drafts, etc., so credited to the checking account of bankrupt, and not paid by the persons drawing same, or upon whom drawn, should be, and they were, charged off and debited to bankrupt.

Under these arrangements, bankrupt did a fairly large volume of business with defendant bank, depositing many cheeks, drafts, etc., drawn by it on customers in various parts of the country.

On, and for some months prior to, March 19, 1929, bankrupt owed defendant bank two notes, one for $1,000, whieh by renewal fell due April 17, 1929, and another for $1,500, which by renewal fell due May 8,1929. Each note contained the following language: “Eull authority is hereby given the legal holder hereof to apply hereon any funds in the possession of such holder belonging to any ob-ligor or endorser hereon to the payment of this Note, or to sell any collateral security assigned or attached, at public or private sale, without notice, at any time after maturity hereof, or at any time'before maturity, in case the holder feels insecure.”

On, and for some time prior to, March 19,1929, bankrupt was insolvent, as that term is understood and defined in the Bankruptcy Act. Defendant bank learned that bankrupt was insolvent a few days prior to March 19, 1929.

At the close of business on March 18, 1929, the account of bankrupt with defendant bank showed a credit of $1,860.88, and during the day of March 19, 1929, there were sufficient credits to swell such sum to $3,-516.60. This sum, however, was in part made up of cheeks, drafts, etc., whieh had been deposited with defendant bank by bankrupt, and which had at that time not been collected, and some of whieh were never collected. On March 19, 1929, defendant bank charged bankrupt’s account with the sum of $2,500, being the aggregate amount of said notes,' and credited said account with $21.39, the amount of unearned interest on said notes from that date to the dates of the maturity of the notes. Such debit of $2,500 and credit of $21.39 was made without the knowledge or consent of bankrupt, or any of its officers, and when bankrupt learned thereof some time later, it strenuously objected thereto.

Defendant bank’s information regarding the insolvency of bankrupt was obtained a few days prior to Maxell 19, 1929, at a meeting of several creditors of Bankrupt, called for the purpose of looking into the affairs of bankrupt. Several other similar meeting’s of creditors were held, at at least one of whieh a representative of defendant bank was present. There is some suggestion in the record and in the-briefs that defendant bank was guilty of actual or legal fraud, in failing to disclose at one or more of such meetings that it had charged the amount of these notes against bankrupt as above indicated. An examination of the record convinces me that there is no basis for any such suggestion or charge of fraud in this respect.

At the suggestion of creditors, bankrupt opened, subsequent to March 19,1929, a second account with defendant bank, known as “Wallace-Shannon Company Special,” and opened still a third account with defendant bank, known as “United Growers Exchange.” The course of dealing with respect to these two accounts was the same as with respect to the original account.

Drafts aggregating several thousand dollars deposited with defendant bank by bankrupt, and credited to the account of bankrupt, were later returned to defendant bank unpaid, and were charged and debited against the account of bankrupt. In some instances, the cheek of .bankrupt was obtained to cover such drafts.

The net result of all these transactions, including such three accounts, was that at the time of the closing of the accounts between ■defendant bank and bankrupt, bankrupt •owed defendant bank tbe sum of $2,740.03.

After the charging by defendant bank against bankrupt’s account, of the two notes, and the various unpaid drafts, defendant bank extended further large credit to bankrupt, and the above-mentioned sum of $2,-740.03 remained unpaid to defendant hank ■as a direct result of such extension of credit.

The elaim of the trustee is that the charging off, or debiting the account of bankrupt with, such unpaid drafts, and the charging of such notes against bankrupt’s account, constitute an unlawful preference under the Bankruptcy Act.

1. These are but transactions which occur every day in the business dealings bet-tween banks and their customers, and do not constitute unlawful preferences under the Bankruptcy Act. They are but offsets approved and permitted by such act. New York County National Bank v. Massey, 192 U. S. 141, 24 S. Ct. 199, 48 L. Ed. 381; Studley v. Boylston Nat. Bank, 229 U. S. 526, 33 S. Ct. 806, 57 L. Ed. 1315; American Bank & Trust Company v. Morris (C. C. A.) 16 F.(2d) 845, 846.

The fact that the notes were not due at the time of such offset does not matter. Savings Bank v. Loeb (C. C. A.) 188 F. 285; Rupp v. Commerce Guardian Trust & Savings Bank (C. C. A.) 32 F.(2d) 234. Besides, the notes themselves, in effect, permit such offset at any time the holder feels insecure.

2. Further, it is clear that at the time bankrupt opened the account with defendant bank, at which time bankrupt was solvent, it was agreed that any checks, drafts, etc., deposited with defendant bank, and credited to bankrupt, and thereafter not paid, should be charged off or debited to bankrupt’s account. The carrying out of this agreement, which is but the usual agreement between banks and customers, cannot be an unlawful preference.

3. The charging of the two notes against the account of bankrupt was done without the knowledge or consent of bankrupt. I incline to the view that under Western Tie & Timber Company v. Brown, 196 U. S. 506, 25 S. Ct. 339, 49 L. Ed. 573, and Rector v. City Deposit Company, 200 U. S. 409, 26 S. Ct. 289, 50 L. Ed. 529, this is not an unlawful preference.

It follows that the trustee cannot recover, and judgment will be entered for defendant bank.


author: NIELDS, District Judge.

text:
    AMERICAN CAN CO. v. M. J. B. CO.
    No. 786.
    District Court, D. Delaware.
    Aug. 18, 1931.
    John C. Carpenter, of Chicago, Ill., and Ward & Gray, of Wilmington, Del., for plaintiff.
    Richard J. Cook, of Seattle, Wash., and William G. Mahaffy, of Wilmington, Del., for defendant.
   NIELDS, District Judge.

This is a suit in equity brought by American Can Company against M. J. B. Company for infringement of United States patent No. I, 750,251, issued to John M. Young, March II, 1930, for a “Combination Tearing Strip and Friction Closure Can.” The defenses pleaded are invalidity and noninfringement.

The can manufactured by defendant for packaging coffee is the familiar round type of hermetically sealed tin can used as a container of food products. In order that the can may he opened, without impairing its usefulness as a container, an encircling tearing strip is set off by score lines on a collar encircling the outside of the can body near its top. After the. removal of the tearing strip the top of the can and the double seam provide a cover for the can. This collar can is a four-piece can. The top and bottom are joined to the body by double seams. The fourth piece is the collar.

To construct a practical commercial three-piece can, Young made the invention disclosed and claimed in his United States patent No. 1,586,277, issued May 25, 1926. Under this patent the material of the body of the can is deeply beaded inwardly in the form of a loop near the top of the can immediately below the lower score line of the tearing strip. The loop is then bent upwardly and flattened to the' desired degree within the can body and behind the portion of the body in which the score lines are arranged to provide the tearing strip. The top or cover has a circular depression to provide a wall adapted to engage frietionally the fold or loop. The distance of this friction wall from the rim of the cover is exactly equal to- the projection of the fold or loop within the body of the can. Before the opening of the can, this circular depression in the top of the can is located some distance above and out of engagement with the fold or loop. When the tearing strip is removed, the friction wall of the cover closely engages the loop or fold in the body wall of the can and seals the can. This was the advance step taken by Young in his patent. However, Young did not invent any new form of score lines, any new form of body fold or loop, or any new form of depression in the can cover functioning as a bung.

The earlier Young patent was the subject of a suit between the same parties in the District Court of the United States for the Northern District of California. The can manufactured by the defendant and charged to infringe in that suit is the same can manufactured by the defendant and charged to be an infringement in 'this suit. The District Court found the claims valid, but not infringed. The Circuit Court of Appeals for the Ninth Circuit found noninfringement, but did not pass on the question of validity, 48 F.(2d) 144.

What was Young’s next contribution, if any, to this art? Considering the prior art,, the inventive opportunities open to him were not great, although there may have been room for invention respecting some detail of this can. This is recognized by counsel for the plaintiff in his brief. Regarding both the earlier Young patent and the patent in suit, he states: “It is doubtless true that these inventions and improvements are of relatively narrow patentability.”

Certain spilling was incident to the use of the earlier Young patent. To eliminate this fault the patent in suit was conceived. In the specification, the patentee states: “This invention relates to tearing strip cans of the type shown in my eo-pending application Serial No. 742,999, now patent No. 1,586,277 May 25, 1926 and has for its principal object the provision of a can constructed to provide the advantages of the structure of said co-pending application and also to provide a plurality of seals between the cover and can body both sealing the can at the same time prior to the removal of a tearing strip by means of which the can is adapted to be opened.”

The patent contains three claims. The plaintiff in its bill charges infringement of all. At the trial it disclaimed infringement of claims 1 and 2 and stands upon infringement of claim 3. That claim reads: “A can comprising a body provided with encircling score lines setting off a tearing strip, the material of the body being bent upon itself to provide a friction wall within the can and of diameter less than the diameter of the portion of the body provided with said encircling score lines, and a cover seamed to the body and having a cylindrical wall engaging said portion of said body provided with said score lines and having also a substantially vertical friction seat wall inset from said first mentioned wall by the thickness of the bend and engaging within the friction seat wall of the body prior to the removal of said tearing strip.”

Defendant contends that claim 3 is invalid, relying principally upon Ginzler British patent, No. 20,059 of 1910; Peltier United States patent, No. 535,855; Larkin United States patent, No. 692,382; and the earlier Young patent. As the field of patentability between the prior art and the earlier Young patent was narrow, it necessarily follows that the field of patentability between the prior art and the patent in suit was still further limited.

The only difference between the can of the patent in suit and the can of the earlier Young patent is a lowering of the depression in the cover so that the wall of the cover frietionally engages the internal bend of the can body forming a seal before the removal of the tearing strip. Spilling was thus prevented. As the patentee states in the specification, the improvement afforded a plurality of seals prior to the removal of the tearing strip- — the plurality of seals consisting of the double seam connecting the body with the cover and the air-tight seal formed by the frictional engagement of the depressed wall of the cover with the inwardly bent portion of the body wall. The testimony of the pat-entee is not without significance on this point. In the California case he stated, in substance, that the extension of the friction wall of the cover of the earlier Young patent to engage the internal bend before the removal of the tearing strip — the distinguishing feature in the patent in suit — was an obvious thing. On the other hand, he testified in this court that such extension was not obvious, but involved invention and was a patentable improvement upon the earlier Young patent. Under well-settled principles, defendant strongly urges that such improvement, if improvement it be, did not involve invention, but only mechanical skill. I doubt the validity of claim 3 of the Young patent in suit. In view of the conclusion hereinafter reached as to infringement, it is unnecessary to consider any further the question of validity. It clearly appears that the claim is subject to a narrow and strict construction.

It is a sound general premise that all the elements of claim 3, or their mechanical equivalente, must be found in defendant’s can. W e have already found that the elaim is subject to a strict and narrow construction, and it follows that the range of mechanical equivalents must be correspondingly restricted. If the terms of claim 3 be considered as the terms of an independent grant without any explanation from the specification of the patent, what do we find? The words, “the material of the body being bent upon itself to provide a friction wall within the can” prescribe an element — an essential element of elaim 3. These terms define the direction in which the material is bent and the purpose for which the material is bent. If the material is bent at all, it must be bent laterally within or without the line of the wall of the can. Here the material is bent inwardly to provide a friction wall within the can affording a seal- with the friction wall in the depression of the cover. This characteristic element of plaintiff’s claim is wholly lacking in defendant’s can. The material of defendant’s can is bent outwardly — without and not within the can — to provide an encircling collar around the top of the can for a tearing strip and a flange with which to double seam the cover. By no stretch of the imagination can the material of defendant’s can be considered “bent upon itself to provide a friction wall within the can,” since the only friction wall in defendant’s can is the inside wall of the can which is provided before the material is bent. Moreover, defendant’s top or cover does not form a seal with the inside wall of the can, but merely engages the inside^ of the can like any other slip cover. It plainly follows from construing the terms of claim 3 in connection with the explanation contained in the specification that a distihguish-ing element of the elaim is not found in defendant’s can.

Another accepted rule is that, where a patentee places a limitation upon his invention in the prosecution of his application in the Patent Office to avoid cited prior art and to obtain the allowance of his patent, such limitation must be strictly construed against the inventor. Weber Elec. Co. v. Freeman Elec. Co., 256 U. S. 668, 41 S. Ct. 600, 65 L. Ed. 1162; Smith v. Magic City Club, 282 U. S. 784, 790, 51 S. Ct. 291, 75 L. Ed., 707.

In the Patent Office, Young found it necessary to distinguish his later invention from the Ginzler patent. He drew a distinction between a fold (which Ginzler as well as defendant has) and an “inwardly projecting and interiorly rounded bead” and a “hollow bead which is rounded and so shaped as to be elastic and having a little upward and inward spring.” As originally filed, the application contained ten claims. All were rejected on the patent to Ginzler. The patentee pointed out to the Examiner that in the Ginzler can the can body “is not bent inward to form a bead.” The claims were again rejected, the Examiner citing the earlier Young patent, No. 1,586,277, and the United States patent to Widell, No. 1,621,389, as additional references. In response to this rejection, five new claims were added and a reconsideration sought. What Young was seeking was an air-tight seal to be brought about by engagement of the internal bend in the body of the can with the friction wall of the cover both before as well as after the tearing strip was removed. To avoid the citations of the examiner, Young stated: “My present claims are for an inner and second seal formed by the friction element of the cover at the time the top is sealed to the can to form the outer seal. The improved result is that I provide •the can with two seals, so that if the outer seal should accidentally be defective, the inner seal will still protect the contents of the can. I am not aware of an inner seal having been provided heretofore in the manner which I elaim.” The claims were again rejected. Thereupon the applicant, - acquiescing in the prior rejections, canceled all claims and inserted claims 1 and 2, drawn specifically to *the structure as illustrated and described in the patent in suit. Three claims were allowed. The inventive idea supporting the claims was the provision of an inwardly •bent hollow looped flange, and. the lowering of the friction wall of the cover to engage therewith.

The. California suit had been tried in the District Court. Doubtless the plaintiff was satisfied that the defendant’s can structure, involved in that suit and likewise involved in this suit, did not embody the inwardly bent hollow looped flange. After a decree finding noninfringement had been entered in that suit, Young presented to the Patent Office an amendment embodying claim 3. This claim was evidently drawn to avoid the limitation of the hollow feature in the bend and to cover defendant’s structure. In submitting the amendment the patentee stated: “This amendment is made after a conference had today by applicant’s attorney with the principal and assistant examiners having charge of this application. The subject matter of the claim is generally that of the two allowed claims in the case. It differs from these claims, however, in that it does not require the provision of a hollow loop to form the internal friction seat wall since this seems to be an unnecessary limitation. The openness of the bends is believed unimportant to the pat-entability of the invention, the requirement being that the friction seat wall of the cover be inset from the tearing strip by the thickness of the fold or bend.” Without further correspondence between the applicant and the Patent Office, claim 3 was allowed. While the patentee was within his rights in submitting the amendment after the decree in the California, case, under the circumstances a claim so inserted must be carefully scrutinized. The claim eliminates the “hollow” feature of the loop of claims 1 and 2, but retains the qualifying clause “to provide a friction wall within the can,” which, as already found, can only mean the inwardly bent portion of the wall of the can body.

It is clear that claim 3 does not dominate defendant’s structure.

Plaintiff contends that defendant’s ean, like the ean of claim 3, is a three-piece ean consisting of a body and two ends with the two ends seamed to the can body. In a man- • ufaeturing sense defendant’s can is a three-piece ean, but in a structural sense it is a four-piece ean. Por economy and facility in manufacture defendant uses a body blank which is folded outwardly and downwardly and thence outwardly and upwardly forming a band or collar. If the collar was superimposed upon the can body, it would riot be more completely a fourth piece. The score lines of the ean of claim 3 are in the body of the ean. The score lines in defendant’s can are in the outer layer of the band or collar. In the can of claim 3 the cover is seamed to the can body. In defendant’s can the cover is seamed to the collar. The interior of the 'body wall of defendant’s ean is at all points perfectly straight, unobstructed, .and devoid of any internal bend. The cover of defendant’s can provides the well-known slip engagement with the wall of the ean body in contradistinction to the friction-tight seal sought by Young in the patent in suit. The internal bend of the Young patent, whether with or without the hollow loop, is for the definite purpose of providing a seal within the ean body. In defendant’s ean the band or collar lies on the outer face of the body wall of the can, and its folds are pressed tightly together. It has no spring or yielding action. It was not the object of the defendant and is not inherent in the structure of defendant’s can to produce a plurality of seals of any description by the addition of the band or collar upon the can body. In no sense does the band or collar on the outside of the body wall of the ean supply an internal bend in the ean corresponding structurally or functionally to the “body bent upon itself to provide a friction wall within the can.”

Therefore “the material of the body being bent upon itself to provide a friction wall within the ean” is an element of claim 3 entirely absent from defendant’s ean, when that claim is properly construed. The absence of a single element from a device that, is alleged to infringe a patented combination is fatal to the claim of infringement. Cimiotti Unhairing Co. v. Amer. Fur Ref. Co., 198 U. S. 399, 410, 25 S. Ct. 697, 49 L. Ed. 1100. It is unnecessary to consider other grounds advanced by the defendant.

The bill of complaint must be dismissed.


text:
    UNITED STATES v. BURTELL et al.
    No. 825.
    District Court, D. Delaware.
    Aug. 7, 1931.
    Leonard E. Wales, U. S. Atty., of Wilmington, Del.
    John Biggs, Jr., of Wilmington, Del., for defendants Buckley, McGowan, Weaver, and Reed.
   NIELDS, District Judge.

The United States filed its bill of complaint against Lewis Burtell, as proprietor of a business carried on at certain premises known as No: 215 East Front street, in the city of Wilmington, and against Elizabeth A. Buckley; John A. McGowan, William A. McGowan, Jane M. Weaver, and Catharine M. Reed, as owners of such premises. The owners have appeared, and answered. Burtell, the tenant, though served with process, has neither appeared nor answered.

The bill charges, in substance, that intoxicating liquor was sold, kept, and bartered on the premises, that such premises were maintained as a common nuisance, as defined by the National Prohibition Act (title 2, § 21 [27 USCA § 33] ), and that sueh nuisance was a continuing one. It seeks an injunction with a closure provision. Attached to the bill of complaint are affidavits showing the sale of intoxicating liquor upon the premises October 18, 1930, October 20, 1930, October 21, 1930, and November 5,1930, and a search of the premises under a search warrant November 7, 1930. The bill of complaint was filed November 13, 1930. The owners consented that a temporary injunction issue. The matter is now before the court after a full hearing on bill, answer, and oral evidence. Though not consenting thereto, the owners do not seriously object to the issuance of a permanent injunction, but resist the incorporation of a closure provision depriving them of the use of their property. '

It would serve no useful purpose to review the evidence tending to establish the fact that the premises in question were a common nuisance within the meaning of the National Prohibition Act at and immediately before the filing of the bill of complaint. The evidence inevitably leads to that conclusion. The sole question in the case is whether the court has reasonable grounds for apprehending from the evidence the continuance or recurrence of such nuisance.

John McGowan owned the premises for many years prior to the passing of the National Prohibition Act. There he carried on a saloon business until his death in 1908, leaving a wife and five children. The widow died in 1922. The property is now owned by the five children, defendants in this proceeding. In the summer of 1930, after the premises had been vacant for some twelve or fifteen months, one of the defendants, acting for her brothers and sisters, employed a real estate agent of good standing to procure a tenant. On September 25, 1930, the property was leased to one John Faulkowski at the rental of $35 per month, although previously rented for $75 a month. Without the knowledge of the real estate agent or of any of the owners, Faulkowski sublet the saloon portion to the defendant Burtell. From the evidence it appears that Burtell was solely responsible for the nuisance. It is also clear that the owners knew nothing of Burtell and knew nothing of the nuisance until this proceeding was instituted November 13, 1930. The owners immediately took the matter up with their counsel who formally notified the tenant to “immediately quit and leave the premises.” Within two days Faulkowski vacated the premises, and the lease was canceled.

It is perfectly true that the owner of premises whereon a nuisance is being conducted cannot defeat an injunction by showing that he did not participate in the criminal act of his tenant. Grosfield v. United States, 276 U. S. 494, 48 S. Ct. 329, 72 L. Ed. 670, 59 A. L. R. 620. It is equally true that a court of equity has power to abate a nuisance and decree a closure of premises regardless of the owner’s ignorance of the-fact that his tenant was violating the law, and it is unnecessary that the knowledge of the violation should be brought home to the owner. Farrell v. United States (C. C. A.) 21 F.(2d) 318; Engler v. United States (C. C. A.) 25 F.(2d) 37. Before the court can decree a permanent injunction, with or without a closure clause, there must be some evidence, not only of the existence of the nuisance at the time or immediately before the bill was filed, but there must be a reasonable probability that the premises will be used in the future for such unlawful purpose. The only fact connecting the owners with the transactions in question is their ownership of premises and their knowledge that they were “old saloon premises.” The mere fact that the defendants were the owners of an old saloon property leased at a low rental after a long period of vacancy, where a nuisance of this kind occurs, falls far short of furnishing a reasonable apprehension of the recurrence of a nuisance.

There .is clear and satisfactory proof of the existence of a nuisance. There is direct and uncontroverted evidence of a cessation and abatement of that nuisance without any evidence for apprehending a repetition or recurrence of such nuisance. The case resolves itself into the single question whether a closure can be supported by the single fact that the defendants were the owners of old saloon premises where violation of the National Prohibition Act has occurred. I am unable to subscribe to any such rule. Fess-ler v. United States (C. C. A. 3) 39 F.(2d) 363.

However, the government had good cause to bring suit, and the bill should not be dismissed. The terms of the final decree should be determined upon considerations of prevention and not of punishment. The owners voluntarily co-operated with the government in the abatement of the nuisance. They canceled the lease and ousted the tenant.

A decree may be submitted providing for a permanent injunction as to Burtell, denying such injunction as to Elizabeth A. Buckley, John A. McGowan, William A. McGowan, Jane M. Weaver, and Catharine M. Reed, and taxing the costs of this proceeding against the owners.


author: GLENN, District Judge.

text:
    INTERSTATE COMMERCE COMMISSION et al. v. PIEDMONT & N. RY. CO.
    No. 253.
    District Court, W. D. South Carolina.
    May 23, 1931.

      Daniel W. Knowlton and Nelson Thomas, both of Washington, D. C., for Interstate Commerce Commission.
    W. S. O’B. Robinson, Jr., and R. S. Hutchison, both of Charlotte, N. C., and H. J. Haynsworth, of Greenville, S. C., for Piedmont & N. Ry. Co.
    L. E. Jeffries and S. S. Alderman, both of Washington, D. C., and Blythe & Bonham, of Greenville, S. C., for Southern Ry. Co. and others.
    Carl H. Davis and E. B. Grier, both of Wilmington, N. C., for Charleston & W. C. Ry. Co. and for Atlantic Coast Line R. Co.
    . William C. Burger, of Louisville, Ky., for Louisville & N. R. Co.
    James J. McLaughlin, of Johnson City, Tenn., for Carolina, C. & O. Ry., for Carolina, C. & O. Ry. of South Carolina, and for Clinehfield Northern Ry. of Kentucky.
   GLENN, District Judge.

This bill in equity presents in a new form a controversy which has already been before the courts. Piedmont & N. R. Co. v. U. S. (D. C.) 30 F.(2d) 421. It grows out of the proposed extension of the lines of the Piedmont & Northern Railway. It involves one major question, although the range of investigation and consequent testimony is very wide. This question may be summed up in a few words, viz.: Does the Interstate Commerce Commission have jurisdiction over this particular railroad for the purpose of granting or refusing certificates of public convenience and necessity for proposed extensions of line? The question may be stated another way with reference to the particular statute involved, viz.: Does this particular railroad, Piedmont & Northern, come within the special exemptions which paragraph 22 of section 1 of Interstate Commerce Act as added by section 402 of Transportation Act 1920, 49 USCA § 1 (22), makes from the general powers of the Interstate Commerce Commission over abandon-ments and extensions of the lines of existing railroads?

Paragraphs 18 to 21 of section 1, title 49, United States Code Annotated, govern the Commission’s authority and the procedure thereunder with reference to proposed constructions and proposed abandonments. Paragraph 22 sets out limitations on the authority of the Interstate Commerce Commission. It provides: “The authority of the commission conferred by paragraphs (18) to (21), both inclusive, shall not extend to the construction or abandonment of spur, industrial, team, switching, or side tracks, located or to be located wholly within one State, or of street, suburban, or interurban eleetrie railways, which are not operated as a part or parts of a general steam railroad system of transportation.”

As was pointed out in the opinion of the three-judge court which heard this controversy in another proceeding [(D. C.) 30 F.(2d) 421], the question is, whether or not this particular Piedmont & Northern Railroad comes within the second group excluded from the control and authority of the Interstate Commerce Commission. That is, does it come within the phrase “interurban electric railways which are not operated as a part or parts of a general steam railroad system of transportation?” As was pointed out in the opinion of the three-judge court, a minor question of statutory construction is presented, which, in our opinion, may be very easily answered. This minor question arises under the terms of paragraph 18, which provides that the certificates of public convenience and necessity are not necessary where the particular extension was “undertaken” before the dead-line of May 28, 1920.

The history of the application for a proper certificate and the action of the commission thereon is fully set forth in the opinion of the three-judge court, which heard the former bill dealing with this controversy. While it is true that due application was made by the Piedmont & Northern Railway Company for such certificate of public convenience and necessity, this application was made with the distinct understanding that the Piedmont & Northern was not waiving its position, that it was not subject to the jurisdiction of the Interstate Commerce Commission with reference to the proposed extension. The Commission refused to grant the certificate and the matter was taken before the three-judge court as referred to above. In a very able and accurate opinion, Judge Soper, sitting as a member of the court, points out the problem of statutory construction and reviews the evidence. The decision of the three-judge court was that the Commission did have jurisdiction over the Piedmont & Northern Railway Company. This decision was founded on the principle that while the Piedmont & Northern might at first view come within' the terms of the exclusion paragraph, yet when all of the facts were considered in the light of the spirit of the whole Transportation Act (41 Stat. 456), it was clear that Congress intended to give the Interstate Commerce Commission jurisdiction over a railroad of the nature, character, and history of the Piedmont & Northern. Appeal was taken to the United States Supreme Court from the decision of the three-judge court. The United States Supreme Court, in an opinion by Mr. Justice Brandéis, decided that the three-judge court had no jurisdiction over the bill before them. This opinicjn is reported in 280 U. S. at page 473, 50 S. Ct. 192,194, 74 L. Ed. 551. There it is pointed out that the action of the Commission in refusing to give the‘desired certificate was a negative order, and one which was not subject to rbview by the three-judge court. The closing parar graphs of the opinion are:

“Since plaintiff’s bill was dismissed on the merits when it should have been dismissed for want of jurisdiction, the decree must be reversed with directions to dismiss the bill for want of jurisdiction. Smallwood v. Gallardo, 275 U. S. 56, 62, 48 S. Ct. 23, 72 L. Ed. 152; Shawnee Sewerage & Drainage Co. v. Stearns, 220 U. S. 462, 471, 31 S. Ct. 452, 55 L. Ed. 544; Blacklock v. Small, 127 U. S. 96, 105, 8 S. Ct. 1096, 32 L. Ed. 70. Compare United States v. Anchor Coal Co., 279 U. S. 812, 49 S. Ct. 262, 73 L. Ed. 971; Gnerich v. Rutter, 265 U. S. 388, 393, 44 S. Ct. 532, 68 L. Ed. 1068; Brownlow v. Schwartz, 261 U. S. 216, 218, 43 S. Ct. 263, 67 L. Ed. 620.
“Reversed with direction to dismiss the bill for want of jurisdiction.”

In the light of the opinion of the United States Supreme Court, the Piedmont & Northern concluded that it could ascertain its legal position with reference to paragraph 22 of section 1 of the Interstate Commerce Act as added by section 402 of the Transportation Act by actually starting construction. Accordingly, a meeting of the board of directors was held, and the minutes of this meeting are recorded in the following terms:

“Resolutions Adopted at Special Meeting of Board of’ Directors of Piedmont and Northern Railway Company, Held at Greenville, South Carolina, on March 10, 1930.
“Mr. W. S. Lee, the President of the Company, stated that the meeting had been called for the purpose of discussing with the Directors the opinion the United States Supreme Court delivered February 24, 1930, in the case of Piedmont & Northern Railway Co. v. United States, Interstate Commerce Commission, Southern Railway Company, and others, involving the Company’s right to complete its lines, and of advising with the Directors about the steps to be taken in view of the decision and opinion of the court. He laid before the Board a copy of the opinion, and stated that he was advised by counsel of the company that the decision of the court does not determine the Company’s right to proceed with the completion of its lines, but leaves this question for future determination in the event the right to complete the lines should be further denied and contested. He called attention to the statement in the opinion that the right of the Company to proceed with the proposed construction is not affected or controlled by the ruling of the Interstate Commerce Commission in its report of April 3, 1928, and read to the Board the following language from the Opinion: ‘Neither the assumption of jurisdiction by the Commission nor its denial of the application can operate as res judicata of the railway’s claim of immunity. If, as is contended, the Commission was without jurisdiction, the railway is as free to proceed with the construction as if the application had not been made and the Commission had not acted. Nothing done by the Commission can prejudice the railway’s claim to immunity in any other proceeding.’
“The matter was thereupon thoroughly discussed in detail by all of the Directors present.
“Upon motion of Capt. E. A. Smyth, duly seconded by Mr. A. F. McKissiek, the following resolution was unanimously adopted: ‘Be it resolved, That the completion of the lines of the company as the same were originally projected and planned to extend through the Piedmont section of North and South Carolina from Greenwood and Anderson on the South, to Durham and Winston-Salem on the North, not he abandoned, and said original plan and project is hereby reaffirmed and approved.’
“Upon motion of Mr. J. P. Gossett, duly seconded by Mr. J. H. Separk, the following resolution was unanimously adopted: ‘Be it resolved, That the officers of the company be, and they hereby are, directed and instructed to proceed toward the completion of the lines of the company as originally planned and projected, by forthwith commencing construction upon and prosecuting to completion, with due diligence and dispatch, the line from Spartanburg, South Carolina, to Gastonia, North Carolina, which will connect and join together the existing lines of the company.’
“I, J. C. McGowan, Secretary of Piedmont and Northern Railway Company, here'by certify that the foregoing is a true and correct transcript from the minutes of special meeting of Board of Directors of Piedmont and Northern Railway Company, held at Greenville, South Carolina, on March 10, 1930, and that said meeting was duly called and held in all respects in accordance with the laws of the State of South Carolina and by-laws of the Company, and that a quorum was present.
“In Witness Whereof, I have hereunto set my hand and affixed the seal of said corporation, this 11th day of March, A. D. 1930.
“[Signed] J. C. McGowan, Secretary.
[Seal.]”

Pursuant to this resolution, actual construction of the Spartanburg to Gastonia link was started, work being done at both ends. This turned the tables, and the Interstate Commerce Commission became the actor. The Commission applied to this court for leave to file its hill in equity and for a temporary restraining order restraining the Piedmont & Northern from proceeding with the construction. The bill was filed. Of course, the contention of the Commission is that the Piedmont & Northern is subject to its jurisdiction, and is not within the exclusion paragraph 22, § 1 (49 United States Code Annotated). The defendant has answered, taking substantially the same legal position which it took before.

In the meantime, the Southern Railway Company, Charleston & Western Carolina Railway Company, Atlantic Coast Line Railroad Company, Louisville & Nashville Railroad Company, Carolina, Clinehfield & Ohio Railway, Carolina, Clinehfield & Ohio Railway of South Carolina, and Clinehfield Northern Railway Company of Kentucky have, with leave of court, intervened as parties plaintiff. With the pleadings in this shape, the controversy has, in the opinion of this court, properly come before it as a bill in equity. It is conceded by all parties to the suit that the situation does not demand a three-judge court, and it seems that the controversy is now in the form of an “appropriate proceeding.”

A hearing on the merits was had at a special term of the court in Spartanburg, S. C., which lasted for two weeks. At this hearing the testimony was taken which was in many respects the same testimony which had been taken before the Commission at the time of the hearing on the original application of the Piedmont & Northern for its certificate of public convenience and necessity. The testimony developed fully the history of the defendant, its nature, its construction, its method of operation, and the classes of traffic handled. We have endeavored to summarize the evidence in independent findings of fact which we are filing along with this opinion under the terms of Equity Rule 70% (28 USCA § 723). In these separate findings of fact we have classified our conclusions according to the following classifications:

1. Corporate history of the Piedmont & Northern Railway Company from early organization up to May 28, 1920, the date when paragraph 18 of section 1 of the Transportation Act (49 USCA) became effective.

2. The type of construction of the tracks, bridges, roadbed, and terminals of the Piedmont & Northern Railway.

3. The rolling stock and other mobile equipment used by the Piedmont & Northern Railway Company.

4. An analysis of the traffic handled and the methods of operation.

5. The probable effect of the proposed extensions from Spartanburg, S. C., to Gas-tonia, N. C., and from Charlotte, N. C., to Winston-Salem, N. C., and of either one of these extensions.

6. The facts as to the threatened construction.

7. The history of the application by Piedmont & Northern Railway Company for a certificate .of public convenience and necessity under the terms of the Transportation Act, paragraphs 19 and 20 (title 49 USCA), and the resulting judicial proceedings, heretofore had, in the District Court (three judges sitting) under the terms of the Urgent Deficiencies Act, and the appeal to the United States Supreme Court.

With these facts all before the court, we come back to the same propositions which confronted the three-judge court in passing upon this matter before. We admittedly quote from the analysis of these questions as stated by Judge Soper, with one change, the word “petitioner” to the word “defendant,” in order to make the questions stand in their proper reference to the parties as they are present in this suit.

“Two substantial questions arise:

“(1) Did the defendant, within the meaning of paragraph 18, undertake the proposed extension of its lines before the expiration of 90 days after February 28, 1920, when the Transportation Act went into effect?
“(2) Is the defendant, within the meaning of paragraph 21, an interurban electric railway which is not operated as a part of. a general steam railroad system of transportation?”

This court has carefully gone over the entire testimony and attempted to make its independent decision on these questions quite apart from any influence of the decision as rendered by the three-judge court, one for which we naturally have great respect. In such investigation we come to the conclusion that we must answer these questions in the same way that they were answered before, and we therefore come to the conclusion that the Interstate Commerce Commission does have-jurisdiction over the Piedmont & Northern Railway with reference to proposed abandonments and construction.

With reference to the first question presented, viz., as to whether or not the proposed extensions had been undertaken before May 28, 1920, we agree with the statement of the evidence and the conclusions of law as stated in the opinion of the three-judge court. We point out here that the interruption in the original plans of construction as made by the Piedmont & Northern were interruptions resulting from the World War, and its effect on business generally. More definitely the World War resulted in the government operation and control of the railroads, and the defendant here was one of the systems which the government found necessary to take over. The history of the government operation and the resulting Transportation Act of 1920 are interesting matters of history which it is not necessary to review in this opinion. But from whatever cause these plans were interrupted, there is no doubt that between 1912 and 1926 the defendant had not taken such definite steps towards the construction of these proposed extensions as to come within what we take to be the meaning of the word “undertaken” as used in this act. We have examined the authorities cited by Judge Soper in his opinion, and adopt them as part of this opinion. Indeed, the defendant itself seems to have agreed that this is the proper conclusion from the facts, because on appeal to the United States Supreme Court from the previous decision it appears that it practically abandoned this contention, the opinion of the court stating: “The plaintiffs have also abandoned, in this Court, their contention that the proposed extensions are part of a project undertaken prior to the effective date of paragraph 18. Their sole contention is that the court below and the Commission erred in not holding that the railway is an interurban eleetrie railway within the exemption of paragraph 22. The defendants -renew their objections to the jurisdiction of the court.”

Before leaving this phase of the case, however, we think it well to point out that the Commission has adopted a general rule of interpretation with reference to deciding whether or not an extension was “undertaken” before the date, May 28, 1920. In these decisions they have pointed out that there must be something more than a mere intention to build a line in order to bring the proposed extension within the meaning of the word “undertaken.” A number of these cases might be cited. The standard as set by the Commission, and adhered to with reasonable certainty, was set in its order of date May 25, 1920, three days before the ninety-day limit expired.

“The Transportation Act was approved, and said paragraph took effect, on February 28, 1920, and therefore the provisions of the paragraph apply to all extensions, constructions, acquirements and operations, and to engaging in transportation under the Act after May 28, 1920, and also to abandon-ments of all or any portion of a line of -railroad, or the operation thereof, after said last mentioned date. Inquiries have been made of the Commission as to whether or not certificates of convenience and necessity are required in eases where the extension or construction has been undertaken but the work has not been completed on May 28, 1920.

“The Commission holds that if the projected extension or construction is actually undertaken in good faith on or before ninety days after the approval of the Transportation Act, 1920, by a carrier subject to the Interstate Commerce Act which will operate the line, certificate will not be required of such carrier either for extension or construction or for acquirement, operation or engaging in transportation under the Act, but the undertaking must embrace not merely purpose or intent to extend or construct, but also the actual doing in good faith of acts calculated to completely effect such purpose.

“All carriers contemplating or engaged in such work should immediately notify the Commission of all the facts and circumstances connected therewith in order that the Commission may determine whether or not the work has been actually undertaken as contemplated by the Act and whether or not a certificate of convenience and necessity will be required.

■ “The Commission further holds that the mere provision in a charter or prospectus, or the making of a preliminary survey for the extension or construction of a line of railroad, does not constitute an undertaking of such extension or construction. * . * * ”

Of course, it is clearly understood that it was not within the power of the Commission, by its administrative order, to set the standard by which a court would be governed in construing this feature of the statute. We do, however, feel that the wording of the Commission’s order is a fair, reasonable, and correct interpretation of the statute. We find, further, that it is one which has been followed by several courts, and one which we feel constrained to adopt. It appears that the United States Supreme Court has never addressed itself to the precise point of construing the word “undertake” as used in paragraph 18. So the court has not set for us a standard as to what facts would be construed as an “undertaking” prior to the time limit, such as to give a specific railroad the benefit of the freedom from the Commission’s authority. But it has fully enunciated the fundamental rules for the construction' of the Transportation Act, and it has elaborated the remedial purposes sought to be achieved by this legislation. It .has held that the true guide to the construction of the statute is found in the consideration of such purposes. This rule will be best followed when the remedial provisions of the statute are liberally construed and the express exceptions strictly construed. It would be violative of this spirit of construction if we were to give a broad and liberal meaning to the exceptions so as to remove from the absolute prohibition of the statute a definite extension on which work was actually begun many years after the time limit, merely because it may have been planned, projected, or intended prior to the time limit. Railroad undertaking's are generally more ambitious in their origin than they become in completion for decades. In this very territory is a road named Charleston, Cincinnati & Chicago, with a charter setting out fully such an ambitious undertaking. A half century has elapsed and this railroad has reached neither Charleston on the one end, nor Cincinnati and Chicago on the other. Any broad and liberal interpretation of the ambitions, past intentions, purposes, plans, and schemes of boards of directors of new railroads as constituting actual undertakings prior to the time limit, would nullify the very purposes sought to be accomplished by the Transportation Act. If such a rule of interpretation were to be uniformly adopted by the courts of the nation, the allowed extensions would be so generally permitted on this theory that the Commission would have practically no authority over the building of new lines of railroad.

It is pointed out by the defendant that the directors and other stockholders, when they purchased stock in the Piedmont & Northern, did so with the idea that the present extensions under discussion would be built. It is suggested, therefore, that the restriction of the Piedmont & Northern to its existing lines is in impairment of contract. We agree that the Transportation Act may work a hardship on these particular stockholders, and perhaps as great a hardship in the case of the Piedmont & Northern as of any other carrier, but such hardship does not mean that contracts have been impaired so as .to render the statute unconstitutional. See Louisville & N. R. Co. v. Mottley, 219 U. S. 467, 31 S. Ct. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671. There the Supreme Court held -that the contract which Motley had entered into with the Louisville & Nashville was entered into with the railroad with full knowledge that railroads were, under the Federal Constitution, subject to regulation by Congress, and that .the contract, though valid and enforceable when made, could be, and was, rendered, invalid by the subsequent regulatory act of Congress. In the same way, contracts which were entered into with the Piedmont & Northern by subscriptions to the syndicate agreement or purchases of shares of stock, which may have been made in reliance upon the intention to build a more extensive line of railroad, were entered into with full knowledge that this interstate carrier could he regulated by the Federal Congress. Not only was the Piedmont & Northern subject to be regulated by Congress, but during the war period it was actually taken over and operated by the government as a means of expediting the transportation necessary for war purposes. The Transportation Act, with the large powers which it gave to the Commission, was the death knell to many pet schemes, plans, and ambitions of railroad promoters, and this court, in construing the act, cannot deviate from a plain rule of construction because of the hardship resulting to one individual corporation. The Transportation Act fell, as the axe of the guillotine, suddenly and effectively upon many of the railroad systems of this country.

Again, in considering the history of the Piedmont & Northern, we cannot overlook the fact that it was tied up, so far as its successful construction and operation were concerned, with'the personality of Mr. James B. Duke. Mr. Duke was the man who, in the last analysis, was making the railroad possible, and without his assent and aid no construction would have been undertaken. In the specific findings of fact in this case, we have pointed out that while some of the directors were at all times anxious to extend the lines of the Piedmont & Northern, they had great difficulty in getting Mr. Duke to authorize such extension. The testimony and the written exhibits, in our opinion, fully justify the conclusion that from 1914 until 1920, Mr. Duke never had any well formed intention of beginning actual construction on either the Spartanburg-Gastonia link or the Charlotte-Winston-Salem extension. Mr. Duke died in 1925, and the fact that no actual construction was entered upon until after.his death corroborates the view that his dominating influence was never exerted in behalf of definite extension before the year 1920.

A very resourceful argument is made by the defendant, which may be briefly stated in this language, viz., that the Piedmont & Northern was an essential part of the Duke enterprises in Piedmont Carolinas; that from 1910 until 1920 active construction of some part of the Duke enterprises was constantly going on. From this we are asked to conclude and hold as a matter of law that the construction of the railroad was, therefore, never at any time abandoned; that as the construction, of the whole scheme was constantly under way, we cannot say that the construction of any integral part was ever abandoned. It is true that during the years from 1914 to 1920, the Duke Power Company and affiliated interests were building hydroelectric plants, power lines, cotton mills, and were expending millions of dollars in educational and charitable institutions. It is true that the Piedmont & Northern is owned by the same interests, and that it serves territory in which the Duke interests are located. But the facts remains that Mr. Duke, during these years, never took any very definite steps towards extending the lines of the Piedmont & Northern Railway.

We now come to the consideration of the major question involved in this case as it has been stated above. We come to the conclusion that the defendant is such a railroad as to fall without the meaning of the exception of paragraph 22, section 1, of the Interstate Commerce Act as added by section 402 of the Transportation Act. The whole problem may be summed up in a few words. Manifestly, if we construe the terms of paragraph 22 in a literal, dictionary, and etymological sense of the words used, the Piedmont & Northern would fall within such a meaning of the words as used. The statute says that the requirements of paragraphs 18 to 21 shall not apply to “interurban eleetrie railways, which are not operated as a part or parts of a general steam railroad system of transportation.” The Piedmont & Northern is certainly an interurban railway in the sense that it runs between cities. It is certainly an electric railway, in that its equipment and trains are motivated by eleetrie power. We finally conclude that while it is closely tied up by existing traffic agreements, some of them highly preferential, yet its independence of control and operation is such as to keep us from saying that it is operated as a part of any general steam railroad, system of transportation. But if we allow such a literal construction to control us, we cannot help but feel that we would be flying directly in the face of the remedial purpose of the entire Transportation Act. We feel, further, that to do so would be to disregard the rule of construction of this particular statute whieh has been laid down for us by the United States Supreme Court. Further than that, the help which we have been able to get from the reports of committees and debates in Congress when the Transportation Act was being considered, clearly indicates that Congress never intended to deprive the • Commission of jurisdiction over extensions by a major interstate carrier of such importance as the Piedmont & Northern is shown to be.

We will present first our views as to the construction of the Transportation Act by the United States Supreme Court. Manifestly, we cannot go into all of the many cases in which this important legislation has been construed by that high court, but in each instance, when the statute has been before the court for construction, the court has construed the statute in the light of the remedial purposes of this legislation.

The first ease involved the power of the Interstate Commerce Commission to remove discrimination against persons and localities. There suit was brought to enjoin state regulatory officers from interfering with the rates which were fixed by the Federal Interstate Commerce Commission. The Supreme Court sustained the injunction, and in the course of the opinion rendered by the late Chief Justice Taft, Railroad Commission of State of Wisconsin v. Chicago, B. & Q. R. Co., 25 U. S. 563, 42 S. Ct. 232, 236, 66 L. Ed. 371, 22 A. L. R. 1086, the general purposes of the act were outlined:

“From January 1, 1918, until March 1, 1920, when the Transportation Act went into effect, the common carriers by steam railroad of the country were operated by the Federal Government. Due to the rapid rise in the prices of material and labor in 1918 and 1919, the expense of their operation had enormously increased by the time it was proposed to return the railroads to their owners. The owners insisted that their properties could not be turned back to them by the Government for useful operation without provision to aid them to meet a situation in which they were likely to face a demoralizing lack of credit and income. Congress acquiesced in this view. The Transportation Act of 1920 was the result. It was adopted after elaborate investigations by the Interstate Commerce Committees of the two Houses. * * *
“It is manifest from this very condensed recital that the act made a new departure. Theretofore the control which Congress through the Interstate Commerce Commission exercised was primarily for the purpose of preventing injustice by unreasonable or discriminatory rates against persons and localities, and the only provisions of the law that inured to the benefit of the carriers were the requirement that the rates should be reasonable in the sense of furnishing an adequate compensation for the particular service rendered and the abolition of rebates. The new measure imposed an affirmative duty on the Interstate Commerce Commission to fix rates and to take other important steps to maintain an adequate railway service for the people of the United States. This is expressly declared in section 15a to be one of the purposes of the bill.” '

Another clear statement of the fundamental purposes of this legislation is found in the opinion of Mr. Justice Brandéis, in the New England Divisions Case, 261 U. S. 184, 43 S. Ct. 270, 273, 67 L. Ed. 605. There an express provision of the statute dealing with the division of rates was construed in the light of the remedial purposes of the whole legislation. Mr. Justice Brandéis said:

“Transportation Act 1920, introduced into the federal legislation a new railroad policy. Railroad Commission v. Chicago, B. & Q. R. Co., 257 U. S. 5.63, 585, 66 L. Ed. 371, 382, 22 A. L. R. 1086, 42 S. Ct. 232. Theretofore, the effort of Congress had been directed mainly to the prevention of abuses, particularly those arising from excessive or discriminatory rates. The 1920 act sought to-insure, also, adequate transportation service. That such was its purpose Congress did not leave to inference. The new purpose was expressed in unequivocal language. And, to attain it, new rights, new obligations, new machinery, were created. The new provisions took a wide range. Prominent among them are those specially designed to secure a fair return on capital devoted to the transportation service. Upon the Commission new powers were conferred, and new duties were imposed.
“The credit of the carriers, as a whole,, had been seriously impaired. To preserve for the nation substantially the whole transportation system was deemed important.”

Similar quotations might be made from many other cases, particularly Dayton-Goose Creek Railway v. United States, 263 U. S. 456, 44 S. Ct. 169, 68 L. Ed. 388, 33 A. L. R. 472. But all of these cases were referred to and discussed in the previous opinion by the three-judge court, which is reported in (D. C.) 30 F.(2d), at page 429, 430 and 431. This opinion going over the same ground, and deciding the same questions in the same way, admittedly tracks the former decision of the three judges, both in view of the law and in statement of the evidence. We respectfully submit, however, that the question as we see it, is not reducible to the single inquiry as to whether or not the Piedmont and Northern is an “interurban railway.” We think a more accurate statement of the question is whether the Piedmont & Northern, although literally an interurban electric railway, not operated as part of a general steam railroad system, possesses so many of the characteristics and functions of a great interstate carrier as to negative any conclusion that Congress ever intended to exempt a railroad of its type and magnitude from regulation by the Interstate Commerce •Commission with respect to control over abandonments and extensions. However we reason about the words “interurban” and ■“electric,” the Piedmont & Northern comes within the prima facie meaning of 'each of these words. It has been so denominated both as a matter of common designation by the public and of classification in railroad circles. It was and has been referred to as “interurban” by court and commission, state and federal. Even the Interstate Commerce Commission, itself, has for many purposes classified it as an interurban railway, and on the trial of this ease documents were introduced wherein the Commission had, in referring to the Piedmont & Northern, referred to it as an interurban railway.

It is not, as we see it, a contest to be waged over the word “interurban” and its meaning, but it is a decision of the question of whether or not paragraph 22, when construed in the light of the whole Transportation Act, can be said to include within its terms the Piedmont & Northern Railroad, when due regard is given to its history, its physical characteristics, its method of operation, the character of traffic handled, and its importance as an interstate carrier viewed from a national standpoint.

We feel that the case which gives us the most help, and the one which really has caused this court to come to the conclusion announced, is a case which construes the other clause in the particular amendment which we are here called upon to construe. The entire paragraph 22 reads as follows: “The authority of the commission conferred by paragraphs (18) to (21), both inclusive, shall not extend to the construction or abandonment of spur, industrial, team, switching, or side tracks, located or to be located wholly within one State, or of street, suburban, or interurban electric railways, which are not operated as a part or parts of a general steam railroad system of transportation.”

The Supreme Court has had occasion to ■construe the meaning of “spur, industrial, team, switching, or side tracks, located or to be located wholly within one State.” We, therefore, submit that the best authority for the construction of the remaining words of this paragraph is the construction which the United States Supreme Court has placed upon the phrase just quoted. We refer to the case of Texas & Pacific Railway Co. v. Gulf, Colorado & Santa Fe, 270 U. S. 266, 46 S. Ct. 263, 266, 70 L. Ed. 578. The court in that case laid down the true guide for the construction of paragraph 22. It held that the guide was to be found in the context in which the language was used, and in the relation of the specific provisions to the railroad policy and legislative purpose introduced by the Transportation Act. If the court in that ease had “stuck in the bark” of the particular word used, had given to that word in this exclusion provision a purely literal meaning, the track sought to be built by the Gulf, Colorado & Santa Fe would have been an “industrial track” just as much as the defendant in this ease would be an “interurban electric railway” within a strictly literal interpretation of that expression.

The Supreme Court, in the Texas & Pacific Case, did not allow their interpretation of the meaning of “industrial track” to be controlled by arguments based on the rulings of the Commission as to what were industrial tracks, or by the sense in which railroad companies had loosely employed this expression. If they had been guided by such considerations, they would assuredly have held that the proposed track of only seven and one-half miles was an industrial track. But the Supreme Court expressly repudiated these considerations, and took as its guide the real purpose which the extension would serve. They held that it was not an industrial track, but a real extension for which a- certificate had first to be procured from the Interstate Commerce Commission before construction would be allowed, because of the effect which this extension would have on the rival railroad companies. We quote fully from this case:

“A truer guide to the meaning of the terms ‘extension’ and ‘industrial track,’ as used in paragraphs 18 to 22, is furnished by the context and by the relation of the specific provisions here in question to the railroad policy introduced by Transportation Act of 1920. By that measure, Congress undertook to develop and maintain, for the people of the United States, an adequate railway system. It recognized that preservation of the earning capacity, and conservation of the financial resources, of individual carriers, is a matter of national concern; that the property employed must be permitted to earn a reasonable return; that the building of unnecessary lines involves a waste of resources, and that the burden of this waste may fall upon the public; that competition between carriers may result in harm to the public, as well as in benefit; and that, when a railroad inflicts injury upon its rival, it may be the public which ultimately bears the loss. See R. R. Com. v. C., B. & Q. R. R. Co., 257 U. S. 563, 42 S. Ct. 232; 66 L. Ed. 371, 22 A. L. R. 1086; The New England Divisions Case, 261 U. S. 184, 43 S. Ct. 270, 67 L. Ed. 605; The Chicago Junction Case, 264 U. S. 258, 44 S. Ct. 317, 68 L. Ed. 667; R. R. Com. v. Southern Pacific Co., 264 U. S. 331, 44 S. Ct. 376, 68 L. Ed. 713. The act sought, among other things, to avert such losses.
“When the clauses in paragraphs 18 to 22 are read in the light of this congressional policy, the meaning and scope of the terms ‘extension’ and ‘industrial track’ become clear. The carrier was authorized by Congress to construct, without authority from the Commission, ‘spur, industrial, team, switching or side tracks * * * to be located wholly within one state.’ Tracks of that character are commonly constructed, either to improve the facilities required by shippers already served by the carrier or to supply the facilities to others, who being within the same territory and similarly situated are entitled to like service from the carrier. The question whether the construction should be allowed or compelled depends largely upon local conditions, which the state regulating body is peculiarly fitted to appreciate. Moreover, the expenditure involved is ordinarily small. But where the proposed trackage extends into territory not theretofore served by the earner, and particularly where it extends into territory already served by another carrier, its purpose and effect are, under the new policy of Congress, of national concern. For invasion through new construction of territory adequately served by another carrier, like the establishment of excessively low rates in order to secure traffic enjoyed by another, may be inimical to the national interest. If the purpose and'effect of the new trackage is to extend substantially the line of a carrier into new territory, the proposed trackage constitutes an extension of the railroad, within the meaning of paragraph 18, although the line be short, and although the character of the service contemplated be that commonly rendered to industries by means of spurs or industrial tracks. Being an extension, it cannot be built unless the federal Commission issues its certificate that public necessity and convenience require its construction. The Hale-Cement Line is clearly an extension within this rule.”

Such is the construction placed upon one-half of paragraph 22. It is only logical to apply the same construction to the remaining portions of the same paragraph. Nosc'i-tur a sociis. Congress bracketed these phrases together, and it would be highly illogical to apply one rule of construction to one phrase and a different rule to the other.

Now, when we study the legislative history of paragraph 22, the close connection between the two groups .referred to in this paragraph of exclusion becomes even more apparent. Indeed, as the Transportation Act was first written, the phrase “wholly within one State” modified all of the other phrases in the paragraph. The “wholly within one State” was a limitation on the phrase, “street, suburban or interurban railways which are not operated as a part or parts of a general steam railroad system of transportation,” as well as upon the phrase, “spur, industrial, team, switching, or side tracks.” In other words, to make a long story short, the original purpose of paragraph 22 was to reserve to the state some rights to regulate transporta^ tion within its own borders. The state regulatory bodies organized themselves into a national organization. They sent representatives to Washington to appear before tire committees drafting the Transportation Act. Their whole purpose was, of course, to retain some authority for themselves. Likewise, the strong advocates of States’ Rights were insistent that some control of commerce, at least intrastate, be left with the state governments. Through all of these proceedings the question of location within one state was the dominating consideration, it being conceded that'where a carrier was one of national importance and seope, it was subject to regulation by Congress only, and therefore would properly fall, for all purposes, under the jurisdiction of the Interstate Commerce Commission. After studying this record, and in the greatest detail, we come to the conclusion that the reason for the transposition of the phrase “wholly within one state” from. the end of paragraph 22 to the middle thereof, is easily explained. This transposition was supported, it is seen, by the gentlemen representing certain states. A study of these states shows that in each ease they were'states where some of their territory was closely adjacent to a large city located within the borders of. another state. Indiana’s loeatiob-with reference to Chicago is a typical illustration. When this amendment is seen in the light of this history, it is clear that the purpose of the amendment was to deal with local ■situations, and it in no way evidences a ■serious intention of depriving the Interstate ■Commerce Commission of jurisdiction and its control for abandonment and construction purposes over any important interstate carrier whose general transportation of interstate freight was so large as to make it a carrier of national importance..

The Interstate Commerce Commission and the intervening railroads have in their arguments and presentation of the testimony magnified the connection of the Piedmont & Northern with certain other railways. They have furthenjiore magnified the intimacy between the Piedmont & Northern and the other Duke interest in Piedmont Carolinas. They point out in general and specific terms the extent to which traffic is controlled by an existing agreement between the Piedmont & Northern and the Seaboard Air Line Railway. This agreement governs the interchange of freight at Greenwood, S. C. The results of this agreement are no doubt felt very seriously by the Southern, the Coast Line and its affiliated lines, and even by the Louisville & Nashville. We have allowed the evidence along this line to be introduced and consider it important, in that it shows the nature of traffic handled by the Piedmont & Northern Railroad Company, and therefore goes to show its importance as an interstate carrier. The question of the extent of such injury suffered from this agreement is primarily one for the Commission to have in mind when it passes upon the wisdom of granting or denying its certificate, but we think that it is proper evidence before this court to aid it in the solution of the question as. to whether or not Congress intends to exempt a railroad of the nature and of the importance of the Piedmont & Northern Railroad Company from the requirements of paragraphs 18 to 21, of § 1 of Interstate Commerce Act as added by section 402 of the Transportation Act.

The convincing evidence also shows the ■amount of freight which the extension from -Charlotte to Winston-Salem would take away from the present railroads serving that territory. This, too, is a consideration primarily for the Interstate Commerce Commission, ■but the fact that such an- extension would ■control the earning of millions and millions ■of dollars of revenue does show that the Piedmont & Northern as it now exists is a railroad of such importance from a national standpoint as to negative any idea that its proposed extensions are matters of purely local interest. As an example of the figures involved, it is pointed out that the Southern now derives $750,000 a year in revenue from coal hauled to one of the Duke steam plants near Salisbury, N. C. Of course, if the Winston-Salem extension is built parallelling, as it will, the Southern, this freight will be handled by the Duké-owned railway, and the Southern will lose this enormous revenue. We might cite many such illustrations of the direct effect of the affiliation of the Piedmont & Northern Railway with other Duke interests.

The intervening plaintiffs also stress the intimacy between the Piedmont & Northern and the Durham & Southern. It is pointed out that although there is no physical connection between these two railroads, and although the Durham & Southern was in very bad condition until it came under the control and supervision of the corporate officers of the Piedmont & Northern, that so great had been the benefit derived from affiliation with the Piedmont & Northern that now the Durham & Southern is actually in the recapture class. We think that the intervening plaintiffs have magnified this connection to the point of making a mountain out of a mole hill, but at the same time it is just another illustration of the fact that the Piedmont & Northern is now an important factor in through freight transportation, and that with the proposed extensions it would become such an important line of railway as to injure seriously the three trunk lines now serving the Atlantic Seaboard in the handling of north and south traffic. A study of the maps will readily show that the tie-up from Winston-Salem to Charlotte, to Gastonia to Spartanburg, Greenville and Greenwood, thence via the Georgia & Florida, or by the Seaboard, would create another through line for north and south traffic. Of course, this new, through line is the real reason for the strenuous objection raised by the intervening carriers.

Finally, this court points out that it has carefully avoided the injection into this opinion, as well as into its deliberations over this case, of the economic considerations. We are not ignorant of the benefits which the Duke interests have conferred upon this section of the nation. From an industrial standpoint they have literally made the Piedmont Caro-linas to blossom as a rose. Through the vision and philanthropy of Mr. James B. Duke, carried on after his death by the terms of the Duke Endowment, hospitals, universities, schools and orphanages are benefiting this section beyond tbe dream of man, beyond anything that has ever been seen in this country before. Humanitarianism and business efficiency are joined in the development of the resources of this section, enlargement of educational and business opportunity, and in the alleviation of human suffering.

But all of these considerations have no place when we are faced with the direct problem of statutory construction, and when this problem of statutory construction arises out of a statute regulating interstate commerce, one of the fields specifically allotted to the Federal Congress by the Constitution of the United States, we must be controlled by the spirit of the Constitution, and by the spirit of the particular piece of legislation before us.

Likewise, we have divested our minds of any considerations of political philosophy. The wisdom of the Transportation Act is not for us at this time. Our problem is the construction of it, and we feel that we have followed the guide as laid down for us by the United States Supreme Court in the case of Texas & Pacific Railway Co. v. Gulf, Colorado & Santa Fe Railway Co., 270 U. S. 266, 46 S. Ct. 263, 70 L. Ed. 578.

For these reasons, which are based upon the findings of fact separately filed under the requirements of rule 70% (28 USCA § 723), it is the opinion of this court that the Interstate Commerce Commission does have jurisdiction over the Piedmont & Northern Railway Company for the purposes set out in paragraphs 18 to 21, inclusive, of section 1 of the Interstate Commerce Act as added by section 402 of the Transportation Act 1920, and that therefore this court must grant its injunction against the further prosecution of any construction on the extensions from Spartanburg, S. C., to Gastonia, N. C., or from Charlotte, N. C., to Winston-Salem, N. C.

Let an appropriate order be submitted for signature.