author: LINDLEY, District Judge.

text:
    BANNING v. HARTMAN FURNITURE & CARPET CO.
    No. 182-D.
    District Court, E. D. Illinois.
    May 4, 1931.
    Cromwell, Greist & Warden, of Chicago, HI., for plaintiff.
    George E. Mueller, of Chicago, HI., for defendant.
   LINDLEY, District Judge.

Plaintiff complains of infringement of patents Nos. 1,680,370, 1,682,492, and 1,682,-778. Defendant, a dealer, admits the sale of the alleged infringing article, a Majestic radio manufactured by Grigsby-Grunow Company, and asserts as defense invalidity and noninfringement.

The first two patents have to do with the power supply unit, and the third with the chassis, of a radio receiver. Patent No. 1,-680,370, hereinafter referred to as 370, is for a combination of elements constituting a power pack for converting an alternating electric current into a constant even flow of direct current to the plate circuits and the filament circuits. The controversy herein, however, is limited to that portion of the device which has to do with the supply of current to the plates, the B- supply.

Patent No. 1,682,492 covers a specific arrangement of the choke coils in the power pack disclosed in 370, whereby, it is claimed, an improvement in thé filtering action is accomplished.

Originally B batteries were used to supply plate current to radio receivers. The present day receiver requires a eomparatively large amount of B current in order to supply a reserve power properly to utilize power tubes and loud speakers. The evidence shows that to supply the potential power of defendant’s present device would require twenty batteries, costing $85 and weighing 320 pounds, and that the cost of such battery current would be over $1 an hour, whereas the cost under defendant’s device, a power plant of such size and weight as may be easily housed in the cabinet, is approximately one cent per hour. The benefits of replacement of B batteries by such a device are obvious.

The essence of operation of radio receivers lies in the vacuum tube, which comprises three elements within a vacuum, i. e., the cathode or filament, the anode or plate, and the control electrode or grid. The latter is placed in the tube between the filament and the plate. In a simple circuit for such a three-element tube the filament is connected to one battery and the plate and one terminal of the filament to another, the B battery. The current in the plate circuit flows from the positive side of the B battery to the plate, then to the filament and back to the battery. In such a circuit there is provided an amplifier deviee of current consuming character, which produces a flow of energy in the plate circuit. The current flows in the plate circuit through the space between the cathode and the plate and is produced by the emission of electrons emanating from the filament, which strike the plate and are caused by the heat generated in the filament by the current flowing from the A battery. If the grid, which lies between the plate and the filament, is electrically charged, the flow of electrons and of current into the plate circuit is materially affected. This effect thus produced is directly related to the potential of the grid.

In using a tube in a radio receiver the impulses picked up by the aerial, feeble in character, are thrown upon the grid, and as they vary, the flow of current in the plate circuit varies; such variations of the flow of current in the plate circuit being in direct proportion to the grid charge. It follows that if the plate current from the B battery is constant we have in the amplifier current consuming device or coil thereof a current which varies directly with the variation of the impulses thrown upon the grid. Inasmuch as the plate circuit contains a local source of power, the current therein is much stronger than is that which comes from the aerial into the grid, but will possess the same characteristics. Evidently the grid circuit is properly referred to as the input circuit,, and the plate circuit, which operates the speaker, or fur-nishes current to amplifying tubes, is properly referred to as the output circuit of the tube.

The purpose of the receiver is to reproduce in the loud speaker, fed by the plate circuit of the tube, the vibrations which are broadcast from the microphone, changed to electrical energy and thereafter picked np by the receiving antenna and impressed upon the grid circuit. Exact reproduction in the loud speaker necessitates exact reproduction of the impulses received in the input circuit. Consequently, if the plate circuit current is not constant, the current in the current consuming amplifying device or coil will be affected by the fluctuations in the former and the loud speaker will produce not the pure tone that was broadcast, but a tone affected by the fluctuations in the B circuit.

The ordinary source of supply in electrical distributive systems is an alternating current of sixty cycles, in which there is a ehange of polarity or reversal of current flow sixty times per second. Obviously if alternating current is applied directly, to the plate circuit, the result in the amplifier will be completely distorted and useless from the point of view of practical audition.

Batteries furnish a substantially smooth, even, direct current for the B supply, but a direct current produced by a generator, or a rectified alternating current is not entirely smooth but is pulsating with ripples remaining upon one side of the converted alternating current. However, although pulsating, it is termed direct because all the ripples are upon the same side of the current; that is, they do not alternate from positive to negative. These variations of the ordinary rectified alternating current are retained in the reproduced impulses of the amplifier and cause well-nigh as imperfect a reproduction as does alternating current.

Edelman claims to have eliminated these difficulties by bis invention set up in tbe claims quoted in tbe margin. He takes from tbe ordinary light socket alternating current which cannot be used for radio purposes, converts it by means of rectifiers to a pulsating direct current, and then smooths out the same by means of a filter consisting of a number of choke coils and condensers, and thereby achieves a satisfactorily pure or constant flow of current. Tbe choke coils are connected in a cascade series arrangement, each succeeding coil receiving current from the preceding ■one. The filter so acts that the chokes and condensers alternately store and discharge energy so that the current is leveled out. The effect upon the current claimed is similar to that of rapids in a river, whereby the pulsating operating current of the river (at the foot of the rapids) emerges into a calmly flowing stream. The resulting operative current is free of substantial distortion and affords satisfactory reproduction of tbe original impulses. Tbe claims relied upon are set up in tbe margin.

Edelman insists also that the magnetic lines of force emanating from the transformers and chokes in the power pack must be suppressed so that they will not affect the grid circuits of the receiver and that Ms device does so successfully. If the grid circuit picks up any additional electric impulses other than those received from the input circuit, such superimposed impulses will result in distortion in the reproduced tones of the broadcast. Inasmuch as tbe choke coils and the transformers of the patent consist of iron cores upon which are wound wire, magnetic fields are thereby set np. Edelman inclosed these chokes in a metal ease so that the lines of magnetic forces will not be radiated and affect undesirably tbe grid circuit. He thus suppressed the magnetic fields around the transformers and chokes.

This metallic container, when grounded as specified in the patent, serves also to conduct electrostatic energy to the ground. Otherwise it will accumulate in the power supply and be conducted into the sensitive circuits of the receiver and speaker, thus producing an undesirable hum and preventing satisfactory reproduction.

Edelman disclosed also means for procuring different potentials necessary to the proper operation of the different tubes of the receiver. In a multituhe receiver, experience teaches that such variety of potentials is essential, for the different tubes require different voltages. Thus in defendant’s product we find that on the detector tube 45 to 90 volts are applied to the plate circuit, while in the same circuit of the tubes of first, second, and third radio frequency, and in the tube of first audio frequency a current of 144 volts is applied and in the power tube a plate voltage of 425 volts. Each of these tubes can operate only between definite ranges, which vary with the position. Edelman mentions this fact and describes a means for obtaining these various potentials from the one source of power and describes the same fully. Briefly his means consist of specified resistances of the character necessary to produce the desired result.

The patentee also discloses the necessity of raising the potential voltage of the alternating current to satisfy the requirements of higher voltage operation. He provided as a part of his device a step-up transformer which raises the potential as required.

Thus it will be seen that Edelman designed an electrical combination which furnished satisfactory means for converting alternating current to a direct current, ridding the same of pulsating variations, disturbing to proper reproduction. This he did by use of alternating current, a transformer, rectifying tubes, filter of choke coils and condensers. He prescribed means for supplying different potentials to the tubes of various potentialities and increased' the voltage of the original supply of current by a step-up transformer, to the degree necessary to furnish the necessarily higher voltage required in successful operation. Then he provided a shield against electromagnetic disturbances and grounded the same to remove electrostatic interference. By his combination substantially pure, even reproduction free of distortion or humming was made possible at a very low cost, in a very convenient manner. The presumption of validity of his patent is not overcome by the evidence but rather is supported thereby, unless we can say that the teachings of the prior art are such that he did not achieve anything new.

Pursehel, No. 1,615,098, describes a method for supplying current to both filament and plates with two sets of rectifiers and filters. The plate potential of all his tubes is the same. The same isf true of Dunmore, No. 1,-606,212; Lowell & Dunmore, No. 1,455,141; De Forrest, No. 1,201,272; Warner, British No. 167,097; the article in Electrical Experimenter, and Aeeves, No. 1,622,170. From an examination of Pursehel’s patent it is clear that the resistances he prescribes are in the filament current supply, and that their function is entirely different from that of Edelman’s resistances in the plate current supply. Furthermore, Pursehel mentions nothing concerning the suppression of the magnetic fields and makes no provision for grounding to get rid of disturbing electrostatic currents in the reproducing current.

In Lowell & Dunmore patent, No. 1,455,-141, we have a complete radio receiving circuit; but here, too, as we have observed, the plates of the tubes all operate at the'same potential. Furthermore, the patentees prescribed a crystal detector in place of the vacuum detector to overcome the effect of the residual hum from the alternating current power supply. Their description and suggestions are of benefit only in connection with operation by the use of a crystal detector, which the evidence shows is impracticable in the modem radio receiver. Nor do the patentees teach the necessity of shielding to protect the current from magnetic disturbances or' any ground connection to such shielding. Patentees approached the problem, not from Edelman’s point of view, but from that of construction of the receiver circuit. The court is of the opinion that they produced only an inefficient receiver.

De Forrest patent, No. 1,201,272, got his power supply from a direct current source. He makes use of a filter for smoothing out the ripples. But he describes only a one-tube receiver. He furnishes no teaching as to the desirability of eradication of disturbing currents from the magnetic or electrostatic sources. Moreover, under his device it is impossible to make use of a transformer for raising the potential of the current, for no transformer action is possible with a direct current.

Craft patent, No. 1,559,679, did not transform an alternating current but generated a direct current with a motor generator run by an alternating current. The direct current from the generator was then filtered through chokes and condensers. His generator weighed between 50 and 75 pounds and occupied considerable space. It could not be conveniently housed in a desirable cabinet, and unless carefully enclosed and padded would produce mechanical hum. It possessed the objection of great weight, mechanical hum, and sparking of the brushes, which set up electrostatic interference. In addition, he aecomplished a portion only of the function of the two rectifier tubes of the 370 patent, for there can he no transformer action at the output of the direct current generator. Nor does Craft contain any suggestion as to protection from disturbing electrostatic or electromagnetic forces.

In the Wireless Age of August, 1921, Bront described his method of supplying current for a transmitter. He stated he would try to suggest a possible method of obtaining a high-plate potential and adapt the single source of power to both the filament and plate circuits, and that a successful operation of such a device would greatly interest the average experimenter. The structure he described is apparently inoperative. The tube which he proposes to use is a transmitter tube, which, under the evidence, will require more current than a receiver tube. Furthermore, if a receiver tube- were substituted for a transmitter tube, the current required from the power supply would be 1,040 milliamperes. Apparently there is produced no filamentary hot cathode rectifier that would produce such a large output. Defendant’s device, for example, consumes a current of only 150 milliamperes, and the Bront device, therefore, if modified by the substitution of a receiving tube for the transmitting tube, would require eight times as much current as all of the plates of defendant’s apparatus. From an examination of his article and the testimony it appears that Bront never built any machines; that he was writing concerning experiments; that his device was probably inoperative; and that he did not teach how to build a successful radio power plant.

Hoxie, in patent No. 1,382,914, was endeavoring to prevent current from the plate circuits from feeding back to the grid circuits. Otherwise, he said, the circuit breaks into oscillations and the result is valueless, This idea is not the same as that of building a power pack for supplying current to tubes. Hoxie disclosed no current supply means. He had nothing to do with such supply, for he was dealing merely with the internal works of a receiving set. And apparently Weinberger, in patent No. 1,618,319, was dealing with the same subject matter as Hoxie, i. e., shields to prevent plate current feeding back into the grid circuit and consequent protection from oscillation. Weinberger used batteries for both circuit, supplies.

Warner’s British patent, No. 167,097, made use of a motor generator. He discloses no means for obtaining various plate potentials; his patent contains no teaching of how by use of a transformer and rectifiers to change alternating current into a direct current and provide the power pack described by Edelman.

In the Electrical Experimenter of July, 1919, White described a single tube receiver. Defendant’s expert witness apparently believed this device to be unsatisfactory for operation of a modern radio receiver. White discloses no filter; he discloses no means for obtaining various output potentials for plate current, and although he apparently realized that there would be magnetic lines of force from the transformers, he expressed no appreciation of the desirability of removal of electrostatic energy from the unit.

Levenberg patent, No. 1,670,893, was issued upon an application filed December 8, 1923, two years after the evidence shows Edelman conceived his invention and reduced it to practice. There was some testimony to the effect that a certain company sold certain sets embodying Levenberg’s device, but such defense was not pleaded and the device itself was not produced. It was said to be in the courtroom, but the patentees refused to permit the court to receive the same, and there is no blue print or dependable evidence of any character as to the exact nature of the device. I am of the opinion that the proof furnished in no wise anticipates Edelman’s conception.

Aceves patent, No. 4,622,170, is similar in many ways to that of Pursehel. His plates were all operated at the same potential. He offers no suggestion as to various'plate potentials, or about protection from magnetic or electrostatic disturbances. The Patent Office considered Pursehel’s patent before Edelman’s application was allowed.

Farrington patent, No. 1,487,451, was based upon an application filed October 16, 1922. In view of the fact that the court finds that Edelman first perfected his invention by his sketches and building of device as of April 10,1922, and Farrington’s filing date is after that date, the patent is not early enough to amount to prior publication. Farrington was a skilled engineer. He took out the hum current in the radio receiver by using a double set of tubes. The evidence indicates that this delicate arrangement might be operative in the laboratory, but not in practice, and that it was too complicated and required a special type of receiving circuit. Farrington apparently attacked the problem by designing a delicate receiver circuit instead of attempting to make a current fit for operating by transforming and filtering it separately before use.

Tbe court is-of tbe opinion that none of tbe references anticipated tbe Edelman invention, or were of such character as to invalidate any of the claims mentioned; that the prior art did not teach the solution of the problems which confronted Edelman. It furnishes rather implied support of plaintiff’s contention that though there were many working in the field endeavoring to obtain the results that Edelman recognized as desirable and which he obtained, no one of them succeeded.

It is apparent that the delvers in the art were attempting to produce a satisfactory radio receiver fed by alternating current converted into direct current. Some of them made use of motor generators, some of them transformers, but apparently none of them produced a device which accomplished the result sought, viz., a B supply current converted by means of transformers and rectifiers into a direct current; filtered, smoothed from a pulsating direct current into an even, substantially unwaivering current which produced a satisfactory reproduction of the impulses transmitted by the broadcaster, unvaried by oscillations, achieved by the use of various potentials provided for, and protected from electro magnetic and electrostatic disturbances by shielding and grounding. Edelman grappling with the problems confronting the prior art, recognizing the questions confronting his predecessors, attacked the problem from the point of view of taking the alternating current and smoothing it out. The result was a device successful in its operation. He achieved success where others failed. The claims are valid.

In defendant’s device the court finds the same means for converting alternating current to a nonpulsating direct current as is described by Edelman. The defendant transforms the alternating current by a transformer, passes it to the rectifier tubes, and then through a filter circuit comprised of a plurality of choke coils and condenser. The transformers convert an alternating current to a direct current, and the filter system smooths it out to a nonpulsating direct current. The defendant likewise achieves a magnetic shield in its box inclosing apparatus, and thereby suppresses the magnetic lines of force radiating from the transformers and chokes and prevents them from creating distortion. Electrostatic interferences are conducted from the casing to the ground'. Though defendant offered some evidence of tests for the purpose of showing that there were magnetic lines of force radiated from the power pack despite the condenser shields, that test was not satisfactory to the court as to the results claimed. Apparently there were some weak magnetic fields at certain points, but when the search coil was moved a few inches away from the pack such fields could not be detected.

Furthermore, in the court’s presence the witness'making the experiments developed a very emphatically noticeable difference to the court in the volume of sound coming from the loud speaker. The witness, in the face of that fact, said he observed no difference, although another witness for the defendant agreed there was a considerable difference. At the time of this experiment the coil was near the perforations at the bottom of the ease. The test was performed in the presence of the court, under the court’s direct scrutiny, and the conclusion was inevitable that the ease was largely effective in removing electro magnetic impulses.

Furthermore, it is apparent that whether intentionally or not the defendant by its means of assembly achieves grounding of the container. Then, too, the defendant achieves the various plate potentials in the same manner as the patentee. Defendant asserts that it uses two transformers for raising the potential, but the court is of the opinion that infringement cannot be defended upon the ground that instead of using one transformer the defendant has substituted two with the same result. In both the device of Edelman and that of the defendant current is taken from the light plug and fed to the primary of a step-up transformer, and from the secondary of the step-up transformer the current is taken to the anodes of two hot cathode rectifiers. The filaments of these rectifiers are supplied with current from the step-down secondary of the transformer. The current is thus taken from the rectifiers through a filter compromised in each case of choke coils and condensers. Then the current is taken from the choke coils and condensers and through means of resistances is provided át proper potentials for plate circuits to the various tubes. There are no substantial differences in the form of the means used or in the elements. The court is . of the opinion that each of the claims of patent 370 sued upon is:infringed by the defendant.

The 492 patent covers an improvement upon the device shown in 370. Claims 3 and 4 in suit are presented in the margin.

The novel feature relied upon by plaintiff is the improved filtering effect resulting from the peculiar functioning of the chokes.

Edelman, in describing this, says “a further novel and desirable filtering action is had by mutually coupling with a small percentage of coupling the two choke eoils, whereby a slight residual fluctuating current flowing in the one coil choke will tend to be substantially counterbalanced by the oppositely phased induced current set up therein by reason of the small coupling.” In claim 4 we have an air gap in the choke coil effecting an increased impedance. Evidently Edelman conceived and teaches a method for securing an increased filtering action by coupling the eoils with a comparatively small amount of mutual inductance and by providing air gaps in the closed cores of the choke eoils so that effective impedance of the eoils as against an alternating current flow is increased, and thereby the current made as nearly smooth, even and direct as possible. We find a pulsating current entering from the reetifier applied to the first choke coil, where it is partially smoothed out, whence it enters the second choke coil so related to the first that a second current is induced from the first coil to the second in opposite phase relationship to the current flowing in the second coil, resulting in the alternating component in the current in the second coil being counterbalanced by the aforesaid oppositely phased induced current from the first coil. A substantially pure direct current results. Edelman points out that the current from the reetifier, a direct current with a superimposed alternating component, which must be eradicated by the filter, is partially smoothed out by the first choke coil. The condenser then by-passes part of the residual hum, that is, the alternating component, and the amount thereof in the second choke coil is less than that in the first. It is in order to eradicate the remaining alternating current component in the second coil that Edelman induces a small amount of the alternating component in the first coil to the second coil in oppositely phased relationship to the alternating current normally flowing in the second coil. This mutual inductance must be small in amount, for if there is a comparatively large percentage of mutual inductance we will have more of the undesirable alternating current component from the first coil passing to the second than is flowing in the second, so that instead of eradication of the undesirable component we retain all or part of the same from the first coil in the second. Obviously, in such situation there would be no cancelling effect upon the alternating current component. By his device Edelman produced exactly the result desired, and we find nothing in the prior art invalidating his invention.

Houck, in patent No. 1,684,703, does not disclose what Edelman teaches. He says there must be no mutual inductance between the eoils, but that mutual inductance must be avoided because it will cause hum and noises in the receiving set. Edelman taught the opposite, i. e., that there must be a small percentage of a coil inductance between the coils to effect the result hereinbefore described.

Johnson, in- patent No. 1,613,952, was dealing with carrier wave telephony, and described a device intended to permit alternating current of certain frequencies to pass, and to cut out other bands of frequencies, so that several different conversations eould he carried on over the same wire at the same time in the respective different bands of frequencies. He did not endeavor to suppress all of the alternating current frequencies, but told us how different bands could be set up over the same carrier, and the emanations made practicable by differently tuned demodulators. He had in mind a circuit properly tuned in a particular resonance in order to pass certain frequencies, and to accomplish this he made use of induction means described in his patent. The evidence discloses rather clearly that such impedance would defeat the operation of a filter such as is used in the radio receiver of Edelman, for after the alternating current compound has left the first choke coil of plaintiff a large percentage of it must be by-passed through the condenser connected between the choke eoils, and if-the choke coil should be connected ahead of the condenser the effect would be to prevent the function of the condenser. The two patentees were attacking different problems and attained different results.

The Johnson and Shea Article and the Campbell Article deal with the same subject-matter and the same problems as Johnson’s patent.

Engel patent, No. 1,732,041, cited as proof of the state of the art, prescribed three separate power packs, one each for the filaments, the plate, and the negative grid bias potential. In each he used electrolytic rectifiers, to each of which was connected a filter circuit, containing in each instance one choke coil. Manifestly it was not possible in any such single circuit to attain the relationship between the two coils disclosed by Edelman.

The Radio Article of 1925 discloses no construction for inducing current from one choke into another, although that article, as well as the Engel patent, both disclose an air gap in the choke coil.

None of the prior art del vers were concerned with exactly the same problem as Edelman or anticipated him.

Bearing upon the question of whether or not defendant infringed the claims of 492, certain oscillograph tests were explained in open court. There were likewise certain ear phone tests conducted in which the court participated. The oscillograph tests Were made by placing the testing instrument across the output of the power pack and operating the device first in the normal position and defined by the defendant’s expert as in opposition, being the condition when the receiver is sold. In the second test the coil of one choke was reversed with respect to the other. The result showed less ripple or alternating current component when the coils are in the normal position, i. e., as sold, than when they are reversed. The ear test disclosed that when the coils were in normal position there was much less alternating current component heard than when in reverse. The construction of the defendant is equivalent to that of the plaintiff and infringement results.

Though the use of air gaps and choke coils was recognized prior to the invention of Edelman, yet the latter’s combination including such was not anticipated by any of the prior art, and the inclusion of such old element as part of his working combination, resulting in the solution of his problems, does not invalidate the same.

The Chassis patent, No. 1,682,778, discloses a unitary radio chassis for the mounting of a complete radio receiver set including the power plant. Edelman accomplished a desirable result in the form of a convenient and attractive casing, but the court is unable to appreciate any element of invention in this design. There were prior patents for a radio chassis, but the court is not convinced that in any of them was invention achieved. An examination of the prior art as well as of the patent in suit is convincing to the effect that when Edelman came to develop a chassis or easing for the mounting of a radio receiving set he was confronted with the ordinary mechanic’s problem, and that what he did amounted merely to the exercise of ordinary mechanical skill. The court is of the opinion that the patent and each claim thereof are invalid for want of invention.

There will be a decree in accordance with this opinion finding the claims in suit upon patents 370 and 492 valid and infringed, and the chassis patent invalid, and for an accounting as to the first two patents mentioned. The costs of the suit shall be taxed two-thirds against the defendant and one-third against the plaintiff.

       “1. A radio power supply unit comprising a transformer, means to connect said transformer to a source of alternating current, a plate current supply fed by said transformer, a series cascaded filter connected to said plate current supply and including adjustable series resistances to adjust tbe output potential thereof and to prevent the sudden discharge of current therefrom, a filament current supply fed by said source of alternating current, and a metallic container for enclosing said plate and filament current supplies and grounded to one of said supplies.
      “2. In a radio power supply unit, the combination of a transformer, filament and plate current supplies energized from said transformer, and means for suppressing magnetic lines of force extending from said transformer and associated apparatus, comprising a metallic container for enclosing said transformer and associated apparatus, said container being connected to one of the terminals of the filament current supply.
      “3. In a radio power supply unit, the combination of a transformer, a rectifier connected thereto, a filter circuit operatively connected to said rectifier, said filter circuit having a plurality of output terminals, and means for reducing the potential' at the terminals of said filter circuit and limiting the rate of discharge of current therefrom, comprising resistances connected between the filter circuit and one or more of the output terminals/*

       “3. In a radio battery eliminator, a filter circuit including two choke coils having separate cores so placed that the mutual coupling between said coils causes ripple current flowing in one of said coils to be substantially opposed by electromagnetically induced ripple current supplied by the othér of said two coils, and'a by-pass condenser connected at the junction of said two coils.
      “4. In a radio battery eliminator, a filter circuit comprised by two choke coils one of which has a core with relatively small air gap while the other has a separate core including a plurality of distributed air gaps therein, a by-pass condenser, connected to the junction of said two coils, means to couple said two coils with a low percentage of mutual coupling sufficient to induce some ripple current from one of said coils into the other to oppose the flow of residual ripple current flowing in said other 0011.”


source: Caselaw Access Project

author: BYERS, District Judge.

license: Public Domain

text:
    UNITED STATES v. CHARPENTIER.
    No. 5264.
    District Court, E. D. New York.
    April 29, 1931.
    Howard W. Ameli, U. S. Atty., of Brooklyn, N. Y. (Francis F. Giles, of Brooklyn, N. Y., of counsel), for the United States.
    Joseph H. Wackerman, of Brooklyn, N. Y., for defendant.
   BYERS, District Judge.

Motion to dismiss an amended bill of complaint in an equity proceeding under USCA title 27, § 34, for abatement of an alleged nuisance, upon the ground that there ifi an insufficiency of fact to constitute a valid cause of action in equity against the defendant.

The said statute in part provides: “ “' * * Such action shall be brought and tried as an action in equity and may be brought in any court having jurisdiction to hear and determine equity eases. * * * ”

Manifestly equity actions in this court are governed by the Equity Rules promulgated by the Supreme Court as of February 1, 1913. Rule 25 (28 USCA § 723) is, in part:

“Hereafter it shall be sufficient that a bill in equity shall contain, in addition to the usual caption: * * *
“Third, a short and simple statement of> the ultimate facts upon which the plaintiff asks relief, omitting any mere statement of evidence.”

Paragraph IV of the amended bill alleges that the defendant is the occupant of the premises and that he is the owner or elaims to have some interest in the title.

Paragraph V is as'follows:

“The complainant is informed and verily believes and therefore alleges on information and belief that intoxicating liquor as defined in Section I, Title II, of the National'Prohibition Act is manufactured, sold and kept for beverage purposes upon the said premises in violation of the provisions-of said title; that said premises and the property therein are being used and maintained for the purpose of selling intoxicating liquor for beverage purposes; that said premises and all intoxicating liquor and property kept and used in maintaining the same are a common nuisance ' as defined by Section 21, Title II, of the National Prohibition Act; and that said nuisanee is a continuing nuisance.”

The “ultimate facts,” as defined by authority, are the facts in issue. In 7 Words and Phrases, Third Series, 666, the principle is stated thus:

“Ultimate facts which are to be pleaded are the issuable, constitutive, or traversable facts essential to the statement of the cause of action, and legal conclusions cannot be pleaded as ‘ultimate facts’ ”• — citing Musser v. Musser, 281 Mo. 649, 221 S. W. 46, at page 50.

The subject is discussed in Universal Oil Products Co. v. Skelly Oil Co. (D. C.) 12 F.(2d) 271, at page 272, as follows:

“The long-standing fundamental rule of pleading embracing all bills in equity is that they must be sufficiently specific to inform the defendant of the nature of the claim made against him and of what he is called upon to answer. Garrett v. Louisville & Nashville R. R., 235 U. S. 308, 35 S. Ct. 32, 59 L. Ed. 242; Story’s Equity Pleading, § 241. But this rule forbids the pleading of conclusions of law upon the one hand and of evidence upon the other (save for purposes not necessary here to be considered). Pleading conclusions of law, or, otherwise expressed, conclusions of mixed law and faet, would leave the minor premise of the pleader’s syllogism wholly undefined, and furnish to the adversary no guide or information with respect to the facts by which the conclusion is to be supported. To pass to the other extreme and cover in the pleading the wide areas of circumstantial detail in which the ease has its roots would make vague the major, as well as the minor, premise of the syllogism, and thus leave the conclusion wandering and uncertain. Plainly, therefore, the facts which must be alleged in order to obtain the benefit of a rule or principle of law are those — termed ‘ultimate facts’ — found in that vaguely defined field lying between the evidential facts on the one side and the primary issue or conclusion of law on the other. See Brumbaugh’s Legal Reasoning and Briefing, pp. 65-73, 386, 387. This principle was codified by the Supreme Court (Bayley & Sons, Inc., v. Braunstein Bros. Co. [D. C.] 237 E. 671) in equity rule 25 thus:
“ ‘Hereafter it shall be sufficient that a bill in equity shall contain, * * * third, a short and simple statement of the ultimate facts upon which the plaintiff asks relief,, omitting any mere statement of evidence.’ ”

Paragraph V of this bill will be seen to be deficient in that it pleads a conclusion — a paraphrase of the statute — without alleging the factual premise; probably the plaintiff would not contend that the alleged intoxicating liquor manufactures, sells, or keeps itself; or that the premises and property automatically use and maintain themselves; or that in and of themselves they constitute a nuisance. Therefore, the averments quoted do not charge the offense against which the statute is aimed, for such requires proof of something which has not been alleged, namely, that some individual has so manipulated or operated the inanimate items of property that the result denounced by the statute has come to pass.

Thus it should be apparent that an affirmative act of the defendant must be alleged as a fact, in order that issue in respect there of may be joined, if the defendant be so advised. The determination of that issue will establish as well the truth or falsity of the conclusions of law which have been pleaded, as the right of the plaintiff to the injunction sought.

In the absence of an averment of such an issuable, i. e., ultimate, faet, the bill of complaint is insufficient on its face, and the objection taken by the defendant’s motion must prevail.

This was clearly indicated in U. S. v. Butler et al. (D. C.) 278 E. 677, followed in H. S. v. Simonetti et al. (D. C.) 44 F.(2d) 553, because it was decided in this court in 1922, and apparently was not appealed by the Government, and has never since been questioned in this or any other circuit. In the latter case, the United States seems also to have acquiesced.

If Equity Rule 25 is to be interpreted as sanctioning the employment of conclusions of law, or of mixed law and fact, as meeting the requirement of “a short and simple statement of the ultimate facts upon which the plaintiff asks relief,” such interpretation should proceed from a higher court than that in which the Butler Case was decided.

Motion granted. Settle order.


author: McCORMICK, District Judge.

text:
    DURKEE v. WELCH, Collector of Internal Revenue.
    No. 2928-M.
    District Court, S. D. California, S. D.
    March 25, 1931.

      A. L. Weil, of San Francisco, Cal., for plaintiff. ■
    Samuel W. MeNabb, U. S. Atty., and Ignatius F. Parker, Asst. U. S. Atty., both of Los Angeles, Cal., and Alva C. Baird, Sp. Atty., Bureau of Internal Revenue, of Washington, D. C., for defendant.
   McCORMICK, District Judge.

Plaintiff sues defendant collector to recover $4,097.25, that was paid under protest as and for income taxes for the year 1925. Plaintiff filed a elaim for refund which has been disallowed by the defendant collector. The pertinent facts may be epitomized as follows: On December 15, 1922, the General Petroleum Company, a corporation, by whom the plaintiff was employed at that time, authorized plaintiff to subscribe for 1,000 shares of its common capital stoek at the par value of $25 per share. It was agreed that plaintiff should pay said purchase price of $25 per share in installments running over a period of eight years or less under certain optional rights of plaintiff, the payments of the purchase price to be made by deduction from the semimonthly salary pay checks issued to plaintiff by the oil company for seriees rendered to it by the plaintiff. The dividends declared on the stoek during the process of installment payments were to be credited to plaintiff, and it appears that as to such dividends plaintiff accounted for the same in his annual income tax returns. The stock purchase arrangement further provided that plaintiff should be charged interest on all unpaid balances of the purchase price of the stoek at the rate of 6 per cent, per annum.

On May 19, 1925, the full purchase price of the shares having been paid by plaintiff, certificates for 1,000 shares of stoek in the company were delivered to him. On that day the market value of the stoek was $52.25 per share. The plaintiff did not sell his stock, but continued to hold it all during the year 1925 and did not actually realize and take any profits thereon.

The collector of internal revenue held that plaintiff must account for an alleged profit measured by the difference between what he paid for the stoek and the market value thereof on the day the certificates were delivered to him. In other words, the commissioner has treated the difference between the cost of said stock ($25' per share) and its market value ($52.25 per share) on the day of delivery of the certificates of stoek to plaintiff in 1925, as a taxable income to him in that year, although plaintiff has not sold the stoek and has not actually and physically realized this profit.

The defendant collector offered in evidence, subject to objection of plaintiff, three earlier plans wherein the General Petroleum Company had offered to all its employees opportunities to subscribe for its stoek. In such other plans, the employee was given a bonus by the company to apply on the subscription price which was measured by the years of service of the employee with the company. It is clear that these other plans are disassociated with the plan of December 15,1922, and are immaterial to the issue now before the court. The consideration of such earlier plans does not illuminate the question submitted for decision herein. The objection of plaintiff to evidence of such other, earlier, and different plans than that set out in the complaint herein is therefore sustained and an exception is hereby noted for defendant. In the decision of this case no consideration, weight, or effect is given to sueh prior transactions.

The plan involved in this case does not present any question of bonus or profit sharing as sueh terms are used in income tax matters. The corporation offered an opportunity to its employees, in order to arouse their interest in the welfare of the company and to increase their efficiency, as workers therein, to become participants in its prosperity by purchasing its common capital stock and by paying the full par value thereof out of their own money. There was no gift of the stock and there was no distribution of it as a bonus. The right or privilege conferred upon sueh employees, was substantially the same as corporate transactions whereby stockholders are permitted to subscribe at par for stock which is worth more than par in the market. Sueh transactions result in no taxable income to the purchasing stockholders until they shall have sold their stock and actually realized a profit thereon. Miles v. Safe Deposit Co., 259 U. S. 247, 42 S. Ct. 483, 66 L. Ed. 923. I see no reason for discriminating between stockholders of a corporation who are thus permitted to purchase stock at par and employees of a corporation who are permitted "to do the same thing.

In the arrangement under consideration there was no profit sharing as that term is employed in income tax legislation and particularly in section 219(f) of the Revenue, Act of 1924 (26 USCA § 960 note), under which the defendant assumed to assess and collect the income tax from plaintiff. Profit sharing ordinarily signifys the participation of employees with their employer in a given' share of the profits of an enterprise by reason of their labor and not by reason of their capital investment therein. Moreover, the term “profit sharing” does not imply the idea that the employee is to bear any part.yof the losses. In this plan, however, the employee subjected himself to the burden of loss just as much as he enabled himself to enjoy the benefit of profit. The general understanding of a profit-sharing arrangement between employers and workers is that the worker shall share in earnings and profits of his employer, but is not accountable or liable for losses or deficits in the business, and there is also generally present in profit-sharing transactions the element of contribution by the employer to the project. This latter element is missing in the plan involved in this case. It is incorrect to state that the plaintiff received his stock as part of a profit-sharing plan in the nature of compensation for service rendered as an employee of long standing, because under the terms of the arrangement plaintiff could have paid the full amount of the purchase price the day after he made his subscription and could have taken his stock at that time and could have left the employ of the company. Under such circumstances, it cannot be said that the stock is in reality compensation for future services, or that any value of the stock in excess of the amount paid for it was additional compensation.

The only decided ease that I have found that involved income tax questions similar to those in this action is Schaefer v. Bowers (D. C.) 41 F.(2d) 803, 805. That was a case that involved a stock acquisition plan, the general purpose of which was to enable employees to become stockholders on favorable terms where ai certain amount was deducted from their compensation and placed in a fund to their credit to which the company added a sum equal to 50 per cent, of the deposit of the employee as additional compensation. This fund was to be applied to purchase of capital stock at a price fixed by the directors of the corporation. The participating employee remaining in the service of the company until the termination of the plan was entitled to receive capital stock and cash from the fund as his interest might then appear. Judge Bondy, in ruling upon a motion to dismiss a complaint whereby an employee sought to recover a sum of money paid to the collector of internal revenue as tax on income on account of said stock distributions made to him under sueh an arrangement, said:

“The complaint and the plan state that the purpose of the plan was to enable employees to become stockholders on the terms stated. No statement made in the complaint or in the plan is inconsistent with such purpose. Participation in the plan constituted the acceptance of an offer, and created a contract for the acquisition of .stock by the participating employee on the terms and conditions and in the manner stated in the plan, irrespective of the market value of the stock at the time the plaintiff became entitled to the possession thereof or acquired any interest therein. He acquired the stock at the time when, and at a price at which, the company agreed to sell it. The mere fact that he acquired it at a price less than that for which he could have sold it when it was delivered to him, under the terms of the agreement, did not constitute any profit or income subject to a tax.
“Appreciation in the value of property is not income within the meaning of the Constitution and Revenue Acts until actually realized by sale or other disposition of the property. Eisner v. Maeomber, 252 U. S. 189, 207, 40 S. Ct. 189, 64 L. Ed. 521, 9 A. L. R. 1570.
“The trustees were not authorized to sell any of the stock acquired by them for the fund. The stock in kind was distributable, not the proceeds thereof.
“Section 219(f) of the Revenue Acts of 1924 and 1926 (26 USCA § 960 note), exempting from taxation under that section trusts created for the purpose of distributing to employees the earnings and principal of the fund accumulated by the trust, provides: ‘The amount actually distributed or made available to any distributee shall be taxable to him in the year in which so distributed or made available to the extent that it exceeds the amounts paid in by him.’ This provision has no reference to unrealized enhancement of the value of specific property bought with such amounts.
“The words ‘amount actually distributed’ mean the amount of money consisting of the earnings and principal of the fund distributed, and not the current market value of stock purchased with such earnings and principal.
“In accordance with the provisions of this statute, the dividends, interest, withdrawal accruals, and the company’s contributions were not taxable until the year when distributed.
“The legal effect of the plan was the same as if amounts contributed by the company had been actually received by the employee, and,, together with his own savings, had been invested in stock of the company. The fact that the investment was accomplished through the instrumentality of the trust plan did not affect the nature of the investment.”

It seems to me that if the plan under consideration by the District Court in the above case did not justify the imposition or collection of an income tax on the increased value of the stock over the purchase price paid by the employee, it is clear that the action of the defendant collector in this case is wholly unjustifiable. I find all of the facts as contended for by plaintiff. It is ordered that he have judgment for the amount sued for according to the prayer of the complaint.

. There is one further matter submitted for decision by the stipulation of facts herein-that has not been adverted to or ruled upon. The objection of plaintiff as to that portion of the stipulation of facts on page 4 thereof reciting the number of shares of common stock of the company that were subscribed for by its employees under the plan of December 15, 1922, is overruled, and an exception is noted to the aforesaid ruling.

Attorneys for plaintiff will prepare, serve, and present findings and judgment as prayed for in the complaint.


author: NETERER, District Judge.

text:
    In re McFARLAND.
    No. 30598.
    District Court, W. D. Washington, N. D.
    Dec. 6, 1930.

      Tbe defendant, a mill hand, was adjudicated bankrupt on November 5, 1929. The schedules showed no assets in the nature of wage claims or savings account. At the first meeting of creditors, the bankrupt voluntarily disclosed a small savings account of $5; that he was working as a mill hand, earning $4 per day, averaging about five days per week. The record discloses some difficulty on the part of a bookkeeper in arriving at the amount due, and at one time $15.99 was reported, and later disclosure showed $56.12. It was also disclosed at the time of adjudication the bankrupt had 25 cents in his pocket, which was not scheduled. When the disclosures were made, the bankrupt immediately applied for leave to amend the schedule, which was granted by the referee, and the wages were claimed as exempt.
    Voluminous exceptions are filed to the exemption claims.
    Concisely stated, they are: (1) That he failed to schedule the 25 or 30 cents he had in his pocket; (2) that he failed to schedule the savings account of $5; (3) that he failed to schedule $15.99 wages, and likewise disclaimed an equity in a Whippet auto, which was returned as an asset; the disclaimer was because the auto had been reclaimed by the automobile agency for default in installment payments; (4) that the schedule amending the $15.99 item was not true; and (5) that there is confusion between the $56.12 amount of wages due for. October and the $15.99 earning in November; (6), (7), and (8) are largely repetitions; and, because of the discrepancies and the bad faith disclosed, the bankrupt is-not entitled to any exemption upon the face of the record; and it being shown that the bankrupt and Ms wife are divorced, and that, although the bankrupt is by decree of court ordered to pay $25 a month for the support of two minor children in the custody of the mother, he is not thereby a householder nor the head of a family, nor having á family dependent upon him for support.
    From an order allowing the exemption, a review is sought.
    Benjamin W. Sherwood, of Everett, Wash., for objecting creditor.
    Chas. A. Turner, of Everett, Wash., for bankrupt.
   NETERER, District Judge.

Under a fair consideration of the testimony and the record, I think it is made to appear that the bankrupt mill hand acted fairly, in so far as his intelligence and knowledge directed him, and there was no intent or purpose at any time to mislead or defraud the creditors or to withhold any of his assets with fraudulent intent. Fraud is never presumed. The bankrupt states that the entire matter arose from a misunderstanding between him and his lawyer and from the information received from the employer as to the amount of wages due. The omission could more reasonably be credited to the attorney than the bankrupt.

The administration of the bankruptcy laws must be liberally construed, and not by strict interpretation deprive the unfortunate of the benefits permitted by wise and humane public policy. The attorney for the trustee has filed a closely typewritten brief covering some nine or ten pages of manuscript paper, and a supplemental and reply brief, largely repetition of former briefs, and citing many cases having no bearing whatever on, and not elucidating, the issue here.

Section 703, Remington’s Compiled Statutes 1927 Supp. (section 1, c. 287, p. 703, Laws of Washington, 1927), provides: “Twenty dollars out of each week’s wages or salary for personal services, rendered by any ' person having a family dependent upon Mm for support, shall be exempt. * * •» ”

A man may have a family, whether it is living with him or not. A family has been defined as a “collective body of persons in one home under one head or management,” and the general exemption laws of Washington use the term “householder”; the head of a family shall have exempt certain personal property, and, likewise, a homestead of given .value, but this special statute exempts to a person “having a family dependent upon him for support.”

The exemption laws of the state of Washington have uniformly been liberally construed. In re Crook (D. C.) 219 F. 979; Hills v. Joseph (C. C. A.) 229 F. 865; Lemagie v. Acme Stamp Works, 98 Wash. 34, 167 P. 60.

The family is said to be the greatest moral phenomenon in the history of the human race, and under the Roman law included father, mother, children, slaves, moneys, lands, houses, etc. The welfare of the unfortunate and the need for immediate means of subsistence have modified this all-inclusive rule. A widow, though her children are all of age (Aultman, Miller & Co. v. Price, 68 Kan. 640, 75 P. 1019), or a widow without children (Moore v. Parker, 13 S. C. 490), or a deserted wife without children (Berry v. Hanks, 28 Ill. App. 51) have been held heads of a family.

Bequests to a family include parents and children, whether living together or not. Higgins v. Safe Deposit & Trust Co. of Baltimore, 127 Md. 171, 96 A. 322. See, also, Hall v. Stephens, 65 Mo. 670, 27 Am. Rep. 302; Taylor v. Watson, 35 Md. 519. And by the same token the minor children of the bankrupt, in the custody of his divorced wife, upon the reeord in this ease, is a family dependent upon him for support within the purview of this statute; all of the money in issue being wages, except the savings account.

The order of the referee is affirmed.


author: MOSCOWITZ, District Judge.

text:
    UNITED STATES v. RANDELL et al.
    No. 28220.
    District Court, E. D. New York.
    March 30, 1931.
    Howard W. Ameli, U. S. Atty., of Brooklyn, N. Y. (Emanuel Bublick, Asst. U. S. Atty., of Brooklyn, N. Y., of counsel), for the United States.
    Louis Halle, of New York City, for defendants.
   MOSCOWITZ, District Judge.

Defendants have demurred to the indictment.

The indictment contains two counts. The first count charges a violation of title 27, U. S. Code, §§ 12 and 40, 27 USCA §'§ 12, 40 (title 2, §§ 3 and 26, Act of October 28, 1919, and the acts amendatory thereto and supplemental thereof), charging that the defendants transported intoxicating liquor on the 27th day of December, 1930, at Gardeners Bay, within the territorial waters and the territorial limits of the United States and of this court; that said transportation occurred aboard the British crude oil screw Eleanor Joan. The second count charges possession, alleging the same facts, to wit, that the possession of the said liquor was aboard the said vessel.

The grounds of the demurrer are that the indictment does not affirmatively allege that the boat and cargo do not come within the saving clauses of article 3 of the Treaty between the United States and Great Britain. The government, in its brief, admits for the purposes of this demurrer “that the convention between Great Britain and the United States, 43 Statutes at Large, page 1761, January 23rd, 1924, modifies the effect of the case of Cunard S. S. Co. v. Mellon, 262 U. S. 100, 43 S. Ct. 504, 67 L. Ed. 894, 27 A. L. R. 1306 (April 3rd, 1923) in certain respects, and is self-executing.”

The defendants contend that the indictment in each count fails to set forth an offense, for the reason that there are no facts alleged showing that the transportation and possession aboard a British vessel was illegal.

Article 3 of the Treaty between the United States and Great Britain is as follows: “No penalty or forfeiture under the laws of the United’ States shall be applicable or attach to alcoholic liquors or to vessels or persons by reason of the carriage of such liquors, when such liquors are listed as sea stores or cargo destined for a port foreign to the United States, its territories or possessions on board British vessels voyaging to or from ports of the United States, or its territories or possessions or passing through the territorial waters thereof, and such carriage shall be as now provided by law with respect to the transit of such liquors through the Panama canal, provided that such liquors shall be kept under seal continuously while the vessel on which they are carried remains within said territorial waters and that no part of such liquors shall at any time or place be unladen -within the United States, its territories or possessions.”

There are certain instances where British vessels are protected in the transportation of liquors as provided by article 3 of the treaty. The liquors must be listed as sea stores or cargo destined for a port foreign to the United States, its territories or possessions. It must be a British vessel voyaging to or from ports of the United States. The port of the United States, or its territories, or the territorial waters through which the ship passes, must be a part of the planned route of the vessel. The liquors must be carried in a manner provided by law with respect to the transit of such liquors through the Panama Canal.

If the vessel does not comply with article 3 of the treaty, it is not entitled to the benefits of the treaty. The requirements are that the liquors shall be kept under seal continuously, and that the said liquor shall not be unladen.

Sections 3 and 26 of title 2 of the National Prohibition Act (27 USCA §§12 and 40) provide that the possession or transportation of intoxicating liquor within the United States or its territorial waters is a crime. The necessary elements of the crime are fully set forth in the indictment.

If the defendants are claiming any rights under the treaty, it is a matter of defense. It would have to be shown, not only that the vessel in question is a British vessel, but that it is a British vessel voyaging to or from a port of the United States, its territories, or possessions, or passing through its territorial waters, and that the liquors are listed as sea stores or cargo destined for a port foreign to the United States, and that the carriage of the liquor is as provided by law in respect to the transit of liquor through the Panama Canal.

If these facts are shown by the defendants, the government will be required to prove that the liquors were not kept under seal continuously or that some part of the liquor had been unladen within the United States.

An indictment need not negative the existence of an exception created by the same or any other statute. McKelvey v. United States, 260 U. S. 359, 43 S. Ct. 132, 67 L. Ed. 301; Sehlemmer v. Buffalo, Rochester, & Pittsburg Railway Co., 205 U. S. 1, 27 S. Ct. 407, 51 L. Ed. 681; Weare v. United States (C. C. A.) 1 F.(2d) 617.

The use of the word “British” in the indictment does not require the government to prove that the vessel does not come within the provisions of the treaty.

Demurrer overruled.


author: NETERER, District Judge

text:
    In re KAYS et ux.
    No. 30858.
    District Court, W. D. Washington, N. D.
    Dec. 17, 1930.
    This is a petition to review the order of the referee setting aside .to the bankrupt four lots, Lake Park addition to Seattle.

      It is shown that he acquired the property for the purpose of making a home. He cleared part of the property, worked every Sunday and holidays, built a cabin, tent top, to live in, also a small storage house, and lived there for periods during 1927, 1928, and 1929. The property fronts 70 feet on Lake Washington and extends back 400 feet. He cultivated a garden on the lots during the entire productive season for his own use since he acquired the property; also had upon the property 60 holly trees, numerous berry bushes, two peach trees, and has 3,000 bulbs. He has a mail box upon the.end of the property facing the highway where his mail is directed, except such as comes from his immediate family or friends to a special address where he resides. He has consulted with the state horticulturist as to the advisability of removing the holly trees and putting the land to other purposes, has planted some 60 or 70 additional holly trees, has consulted with a lumberman with relation to securing lumber to build a house, had floor plans drawn, and went with the lumberman to inspect another house which they thought might be suitable; likewise consulted with a number of persons about financing a new house with security upon the property; likewise endeavored to get-a loan from'what he understood to be a “special loan for soldiers,” and was advised to see the Farm Loan Board, but was unable to make financial arrangements for the building of the house. In December, 1928, he consulted with a party about putting in a water system on the place. His intention was to move onto the place as soon as he could provide living quarters, and cultivate on the place holly trees and bulbs, and likewise raise chickens on the land, and geese and ducks.
    The bankrupt was engaged in the business of buying an old house, repairing and furnishing it, and then selling it furnished, and to effectuate that purpose, lived in the house until sold. In this way he has purchased and sold some ten or fifteen different houses, living in the house from a few days to two or three months. For the last year he has been working for the Bon Marche as clerk. His wife was ill a year or such a matter ago with flu, ■ which developed into pneumonia, and that required that she be specially cared for, and she is now an expectant mother, and until conditions improve the bankrupt is unable to make provision for living on the property, but has acquired it, and has intended, and does intend, to use it as a homestead. In addition to the homestead he claims exemption for household furniture, wearing apparel, keepsakes, wages $500, military uniform, and 1926 Chandler valued at $200, in lieu of otter' property, under section 561, Rem. Comp. Stat. of Washington.
    Declaration for homestead was filed January 28, 1920, that “the premises were purchased * * * for a homestead, and that * * * he and his family intend to reside thereon. * * * ”
    Murphy & Kumm, of Seattle, Wash., for bankrupts.
    Eggerman & Rosling, of Seattle, Wash., for trustee.
   NETERER, District Judge

(after stating the facts as above).

The homestead may be selected not to exceed $2,000 in value, but “must be actually intended and used for a home.” Section 552, Rem. Comp. Stat. Declaration of homestead must be executed and acknowledged in the same manner as a grant of real estate is acknowledged, and filed for record. Section 558, supra. Declaration inter alia must contain a statement that the declarant is residing thereon, or has purchased the same for a homestead and intends to reside thereon, and claims the same as a homestead (section 559, supra), and must be recorded (section 560, supra). From and after the time declaration is filed for record, the premises thereon described constitute a homestead. Section 561, supra. .

It is obvious from the examination of the bankrupt and his witnesses that he did purchase the land for the purpose of making a home — -a permanent residence where he intended to reside — that he devoted all of his spare time, etc., in improving- the property; that he did select a site for a house, secured floor plans, consulted the lumberman for lumber, and sought a loan from various parties and concerns.for the purpose of financing the building; that he did construct on the place a cabin with a tent top, a place in which to live ’during the summer time, and has in that place some cots and two or three articles of furniture, and has cultivated a garden thereon for his own use during each summer; that the general improvements made upon the place since acquiring it are such as would contribute to the beneficence of a home and be useful as a homestead, and has lived upon the place during each year since acquiring the property, except at the time when his wife’s health did not permit, and had his general mail delivered at the mail box upon this property. He had no other permanent place of abode. He was flitting from house to house, as he acquired, repaired, furnished, and sold them, remaining in each house from two or three days to two or three months until sold, living in twelve or fifteen houses within two years.

In view of the liberal construction of tbe homestead laws by the state Supreme Court and this court, and construing all of the provisions of the act together, the mere failure to consummate the purpose, while attempting in good faith to effectuate the beneficent object of the statute, should not defeat the legislative purpose. After an examination of the record, I think, in view of the continued activity of the bankrupt to carry forward the intent as to the use of this property, that the court cannot say that Ms failure to date should defeat his good faith and the purpose and intent of the statute in providing the exemption.

The order of the referee is approved.


text:
    THORNTON v. PUGET SOUND POWER & LIGHT CO.
    No. 20390.
    District Court, W. D. Washington, N. D.
    Oct. 17, 1930.
    The plaintiff, as administratrix, alleges her appointment, the corporate relation of the defendant, and the employment of deceased by defendant; that on August 11, 1929, while employed as master of the yacht Olive, acting under the direction of the managing agent of the defendant, an explosion occurred which totally destroyed the vessel, and deceased suffered painful injuries from which he died August 21 following; that during deceased’s employment as master, he was in close and continuous contact with the managing agent and beeame friendly and had a feeling of loyalty and admiration which was reciprocated by the managing agent; that succeeding the death, plaintiff was depressed and suffering from bereavement and was without funds, dependent upon the bounty of the managing agent, who procured from the company her husband’s wages; that she appreciated the managing agent’s counsel; had full confidence in him, and that he represented to her that the cause of the explosion was wholly unknown, and advised and promised to use his influence with the company to procure a sum of money for her as a donation; that there was no liability on the part of the company, and that said statements were not true, and that she relied upon such advice, being unskilled, and was advised by him not to consult an attorney and “threatened that no payment of any kind would be made if she took any steps to enforce collection”; that she was unacquainted with the liability of a vessel owner for damage in the ease of the death of a seaman by wrongful act, and believed the $1,500, the amount offered, was a donation from the defendant; and that thereafter such steps were taken by and through the suggestion and agency of the defendant that $1,500 was paid to her and she executed a release of all claims and demands of every kind for the death of her husband while on board and operating as master of the gasoline launch Olive, owned by the defendant company.
    Plaintiff alleges that the explosion was caused solely by the defective, unsafe, and unseaworthy condition of the vessel, and enumerates the acts of omission and commission, and that his death was caused solely by and through the negligence of the defendant company; that deceased was 35 years of age, healthy, able-bodied and capable of earning $150 a month; and that by his death his estate was damaged in the sum of $50,000; and prays that the compromise and settlement entered into be set aside, and that she have judgment for $50,000.
    The defendant moves to separately state the two causes of action in the complaint, and also to strike “by reason of said pain and suffering of the deceased” in paragraph X.
    Without waiving the motions, defendant demurs to the complaint on the ground that not sufficient faets are stated to constitute a cause of action.'
    Douglas T. Ballinger, of Seattle, Wash., for plaintiff.
    Bullitt, Kennedy & Schramm, of Seattle, Wash., for defendant.
   NETERER, District Judge

(after stating the facts as above).

The motions may be considered together.

Pain and suffering introduces no new cause of action. It is but an elaboration of the statement of the injury. Washington Railway & Electric Co. v. Scala, Adm’x, 244 U. S. 630, 37 S. Ct. 654, 61 L. Ed. 1360. See, also, Luckenbach S. S. Co. v. Campbell (C. C. A.) 8 E.(2d) 223; St. Louis, Iron Mountain & S. Ry. Co. v. Craft, 237 U. S. 648, 35 S. Ct. 704, 59 L. Ed. 1160. Nor is Lewis v. Texas & Pacific Railway Co., 146 La. 227, 83 So. 535, to the contrary.

The Merchant Marine Act (section 688, title 46, USCA) gives the right of action for death of any seaman, as a result of personal injury, to the personal representative of such seaman, and gives to such seaman the right of railway employees, by the Federal Employers’ Liability Act (section 51, title 45, US CA), or to his personal representatives, for the benefit of his surviving widow and children, etc. The estate does not benefit, but the representative acts solely as trustee for the designated beneficiaries. Lindgren v. United States, 281 U. S. 38, 50 S. Ct. 207, 74 L. Ed. 686.

The motions are denied.

May the plaintiff prosecute this action without repayment or tendering repayment and bringing into court the amount received?

The plaintiff relies upon Bjorklund v. Seattle Electric Co., 35 Wash. 439, 77 P. 727, 1 Ann. Cas. 443.

This court in Johnson v. Chicago M. & St. P. Ry. Co., 224 F. 196, at page 200, said:

“The Washington court is not in harmony with the federal courts upon this issue. The rule adopted by the United States courts, however, must prevail. The Circuit Court of Appeals of this circuit, in Tweeten v. Railway Co., 210 F. 828, at page 830, 127 C. C. A. 378, in applying the fellow servant doctrine, stated that the rule adopted by the United States courts must control in personal injury eases, and said:
“ ‘Here is a situation which seems to demand remedial legislation; for, while the courts of the United States will follow the decisions of the courts of the state in which they are held when, in construing the state law, those decisions establish a rule of property, they must ignore them when they establish no more than a rule of liability for personal injuries.’ ”

Since- the creation of the Ninth Circuit in March, 1891, and beginning with Hill v. N. P. Railway Co. (C. C. A.) 113 F. 914, McKenna, later Justice McKenna, Gilbert, and Ross, Circuit Judges, it has been the rule . that, to avoid a release for personal injury for fraud, the money received must be returned or tendered and brought into court. While the release agreement may 'not be a contract- under seal and would not require a proceeding in equity to set it aside, and could be presented in the trial of this issue if the consideration was returned or tendered and brought into court, as said by Judge Gilbert in Great Northern Ry. Co. v. Fowler (C. C. A.) 136 F. 118, where it was held that misrepresentation or fraud on the part of the releasee may be effective to avoid a release induced thereby. In that case the appellee brought into court the tendered repayment of the money received, with interest thereon.

In Price et al. v. Conners (C. C. A.) 146 F. 503, 504, the trial court had instructed the jury that, if they believed that the plaintiff received $500 and found that the release was fraudulently obtained, it would not be necessary for the plaintiff to tender back the money or repay the same, but the jury, in case they returned a verdict for the plaintiff, should deduct the money from the damages assessed. The jury found for the plaintiff and deducted the amount. The ease was appealed. Judge Ross (with whom sat Gilbert, C. J., and Hawley, D. J.) said: “* * * The court below ruled that it was not necessary that the plaintiff should, have repaid or tendered the money received by him, as a condition precedent to avoiding the release. That such is not the law upon such a state of facts was distinctly held by this court in the case of Hill v. Northern Pacific Railway Co., 113 F. 914, 51 C. C. A. 544” — and reversed the judgment.

In Mahr v. Union Pac. R. Co. (C. C. A.) 170 F. 699, the court (Gilbert, Morrow, and Ross) again expressly held that, to annul a previous settlement and release obtained by mistake or fraud, the money received must be returned or tendered before an action can be maintained at law. In Miles v. Lavender (C. C. A.) 10 F.(2d) 450, at page 454, the court (Hunt, Rudkin, and Morrow) again referred with approval to • the decided cases. This court in the Thomas P. Beal, 298 F. 121, followed these decisions and held that a party seeking relief from a fraudulent release must first offer to return the money, received as a consideration for the release. These decisions • are binding on this court.

The demurrer must therefore be sustained.


author: NETBRER, District Judge

text:
    Ex parte CHING UNG.
    No. 20428.
    District Court, W. D. Washington, N. D.
    Nov. 12, 1930.
    The petitioner, alien, of the Chinese race, seeks admission as holder of Chinese laborer’s certificate dated March 27, departing March 29,1929, Seattle, Wash., and returning May 31, 1930, and denial of admission by the Board of Special Inquiry for the reason that his certificate had expired and had not been extended, affirmed by the Secretary of Labor.
    He alleges that he was detained by reason of sickness. On January 10, 1930', he wrote to the American Consul General at Hongkong, as follows:
    “I obtained a Laborer’s Return Certificate in Seattle on March 27, 1929, and departed therefrom for a visit to China by an Empress boat on March 29, 1929. Unluckily my wife died of miscarriage last month and at present there is no one to look after the family affairs so I am compelled to remain here to get remarried in order that my family will properly be looked after before returning to the United States to earn my living. I am writing this letter to inform you of the above circumstances and shall be very much obliged if you will kindly extend my certificate for a few months. I shall return to the United States when I have my family affairs put in proper order.
    “[Signed] Chan Tung.”
    On the first of May he applied for Chinese overtime certificate, and the following was issued by the vice consul of the United States:
    “Chinese Overtime Certificate
    “Hong Kong, May 1, 1930.
    “I, Perry N. Jester, American Vice Consul at Hong Kong hereby certify that Chin Ung, holder of Chinese Laborer’s Return Certificate No. 32/3621 dated March 27,1929, at Seattle, Washington, who departed from said port on March 29, 1929, appeared at this Consulate General on April 30,1930, and stated that he had been unable to return to said port within the period of one year allowed by the Return Certificate mentioned, by reason of a disability beyond his control, namely: the death of his wife, as described in his letter to this office dated January 10, 1930, translation of which is attached hereto. No further proof of his wife’s death has been offered.
    “This certificate is now being issued to enable him to proceed to the port of Seattle, Washington, by the S. S. President Pierce, leaving here on May 13, 1930, where he will apply to the Commissioner of Immigration for permission to re-enter the United States,.
    “[Signed] Perry N. Jester,
    “Vice Consul of the United States of America.
    “[Seal — American Consulate General.]”
    The testimony shows that his wife died on the 19th day of January, 1930, after an illness of about two weeks. The ineonsisten- . cy between the letter of January 10th and date of wife’s death will not be commented upon. The cause of the wife’s death was the probable premature birth of a child. The death of wife and child left the petitioner with no family. In his testimony he says “I wanted a little more time in China to get married.” During all of the time he was in good health. He married within a month.
    He also claims that he purchased a $2,000 interest in a $25,000 truck farm near Portland -from a native Chinaman and paid $1,-000, and $1,000 to be paid in four years, and, unless paid, the $1,000 paid will be forfeited, and that to pay it he must earn it in the United States.
    Hugh C. Todd and Fred H. Lysons, both of Seattle, Wash., for petitioner.
    Anthony Savage and Hamlet P. Dodd, both of Seattle, Wash., for United States.
   NETBRER, District Judge

(after stating the facts as above).

The facts are not in dispute. The right of the petitioner to enter is controlled by the Acts of May 6,1882 (22 Stat. 58); September 13,1888 (25 Stat. 476); May 5,1892 (27 Stat. 25); November 3, 1893 (28 Stat. 7); April 29, 1902 (32 Stat. 176); and April 27, 1904 (33 Stat. 428).

Section 7, Act Sept. 13,1888 (title 8, § 277, USCA), limits the right to return under the certificate to one year, unless extended “by reason of sickness or other cause of disability beyond his control.” (Italics supplied.) The cause of detention was not sickness or anything beyond his control. The letter written asking' for extension and, no doubt, an acknowledgment thereof in the ordinary course of official courtesy, is not an extension, and the certificate issued in May precludes any possibility of extension by reason of the recitals therein. Getting married was a matter, not of sickness, but of his election and pleasure. Nor does property interest in the United States enlarge his statutory privilege. He had a fair trial.

The writ is denied.


text:
    UNITED STATES v. CARSTENS PACKING CO. et al.
    No. 810.
    District Court, W. D. Washington, N. D.
    April 17, 1931.

      Anthony Savage, U. S. Atty., and Cameron Sherwood, Asst. U. S. Atty., both of Seattle, Wash.
    Kerr & McCord and Hartman & Hartman, all of Seattle, Wash., for defendants.
   NETERER, District Judge.

In this sort of a proceeding, the owner and the building are two distinct entities. It is immaterial whether the owner knows that the building violates the law.- The building is vulnerable, and, if the liquor traffic is conducted in the building, it is subject to the abatement proceeding, .and, unless the owner abates it himself, the government has a right to invoke equity to abate it.

The owner must know what the property is used for if he desires the building to escape the penalty, and a stipulation in a lease that the building shall not be. used for the unlawful purpose can be of no avail as a defense; nor is the government required to notify the owner of the violations within the building. I think it would be a laudable act on the part of the Prohibition Bureau to do so, where this may be done; many own-era might abate the nuisance and thus save the court’s time. And that is all the law requires and what the provision is for.

The complaint charges eight arrests from the 18th of December, 1930, to the 24th of January, 1931, inclusive, and on the following 26th a raid was made on the premises. The building was leased on the 1st day of December, 1930. It had been standing empty for eighteen months. The forepart of February the building was locked up. All of the fixtures, etc., were moved from the building. It has since been locked. This action was commenced on the 11th day of March, 1931, approximately .a month after the building was locked up.

The complaint charges that a common nuisance exists, and verily believes that defendant will keep, maintain, and use the premises for a place where intoxicating liquor is manufactured, kept, sold, or bartered in violation of the National Prohibition Act, and is a common nuisance; and that plaintiff has no other remedy except for a court of equity to abate the nuisance. If no nuisance existed at the time the complaint was filed, equity has no jurisdiction.

In Kennedy v. United States (C. C. A.) 4 F.(2d) 486, 488, the court held that the general atmosphere of the place, its location, fittings, furnishings, p'atrons, tenants, etc., are matters to be taken into consideration with relation to the final disposition. In this ease the testimony shows that, this building, while it originally comprised two storerooms, upon being leased, the partition was removed, the plumbing taken from the middle of the building to the comer, and the walls redecorated, and rented at $100 a month for twelve months, payable monthly in advance. The expense of repairing was $400. It is conceded at bar by the counsel for the government that the owners of the premises are reputable citizens, nothing to be said against their character, and, likewise, the firm through whom the lease was made is of good repute. The testimony of the agent is that the company is 100 per cent, for enforcement of this law.

Judge Rudkin in the Kennedy Case, in referring to presumptions, says: “The presumption is that the fact or relation once proved to exist continues as long as it is usual for facts or relations of such a nature to continue.”

And then quotes Wharton on Criminal Law, and says, the presumption we are discussing means little more than the shifting of the burden of proof. And again says in this case: “Appellant offered no testimony as to either cessation or abatement, nor has he availed himself of the privilege of so doing, even after final judgment, as permitted by the decree. Under such circumstances, it cannot be said that the decree of the court below works injustice or is without-support in the testimony.”

I am convinced, not by a mere preponderance of the evidence, but to a moral certainty, that the nuisance was abated, and, since this has been abated by the owner, it has had opportunity to rent it to a like concern, but declined to do so. There was no nuisance to abate when the action was commenced, and the environment of the place, the location, and the sentiment and conduct of the owners, under the disclosed facts, would not, under any circumstances that I can conceive, warrant a finding that a nuisance does exist, or did exist at the time the action was commenced, or that the environment and conditions and circumstances would give the court any sort or color of right to enter an order that a nuisance exists, and require even the posting of a bond.

The motion to dismiss is granted.

In all these eases, as is apparent from what I said, before an action is commenced, the government should know that a nuisance exists at the time.