author: WELSH, District Judge.

text:
    In re N. H. DEVELOPMENT CO.
    No. 10737.
    District Court, N. D. California, N. D.
    Oct. 15, 1945.

      Charles A. Christin, of San Francisco, Cal., and Joseph D. Taylor, of Los Angeles, Cal., for debtor.
    G. D. Schilling and S. J. Tosi, both of San Francisco, Cal., for Bank of America Nat. Trust & Savings Ass’n, creditor.
   WELSH, District Judge.

Debtor above named filed a petition herein on the 6th day of August, 1945, praying that proceedings be had in accordance with the provisions of Section 75 of the Bankruptcy Act, 11 U.S.C.A. § 203. Said petition was filed at the hour of 3:23 o’clock P. M.

It was so filed within the time it took counsel to cross the hall from the courtroom to the office of the Clerk, immediately following a ruling by this Court denying a petition for rehearing and motion for new trial in case No. 10414, wherein the same corporation had filed a similar petition asking for similar relief. This Court had thereby reaffirmed its ruling that said petitioner was not a farming corporation, that its president and alleged owner of 75% of its stock was not a farmer, and that said corporation was not entitled to the benefits of said Section 75.

Counsel for Bank of America National Trust and Savings Association, the principal creditor of petitioner listed in both petitions, made a motion at approximately 3:35 o’clock P. M. of said day to dismiss the above numbered case, which motion was argued by him and the same counsel who had filed said petition and represented the petitioner in the earlier case. The Court granted the motion and ordered the case dismissed.

Said corporation now makes motions which it calls (1) for a new trial and petition for rehearing, (2) for relief from judgment of dismissal, and (3) to vacate purported sale and petition to quiet title.

It is ordered that all of said motions be denied.

Petitioner makes the claim that it was entitled to have this case referred to a Commissioner for hearing and report. This point was decided adversely in Re Iden, D.C., 35 F.Supp. 1020, 1022, wherein it was said with reference to granting a similar motion dismissing a petition on the ground that a petitioner was not a farmer: “Actually such motion is one which goes to the jurisdiction of the court and if well taken the court is without authority to refer the proceeding to a conciliation commissioner for hearing and report.”

If the petition herein had not been dismissed promptly, before formal notice could be given, the N. H. Development Company would have perpetrated a fraud upon its creditors and this Court. It could have blocked the trustee’s sale of the real estate which it lists in its schedules in both cases as an asset. The whole tenor of the conduct of the petitioner in this, and in the earlier case, convinces the Court that one of its main purposes was to do just that. It has not impressed the Court with a compliance with the equitable requirement of coming into court with clean hands.

Reasons for denying the motion to set aside the sale which was held are set forth in the opinion this day rendered in case No. 10414, 62 F.Supp. 726. Reasons which impel the denial of petitioner’s other motions are the following:

Petitioner utterly failed to meet the requirements which, as the Court said in Re Byrd, D.C., 15 F.Supp. 453, 456, “must start with and be based upon the premise that there is in fact some probabil-sty of the debtor’s rehabilitation along reasonable lines, consistent with the rights of his creditors.”

This Court concluded from the testimony of Noel Newton, similarly as did the Court there, that he and the N. H. Development Company “invoked the provisions of subsection (s) not in good faith for his (its) own bona fide rehabilitation, but rather for the purpose of trifling both with his (its) creditors and the Court, in the hope that thereby he (it) may ultimately avoid his (its) just debts or the major portion thereof.”

The facts stated in the second petition did not show a changed condition such as more property and less debts. As held in Re Suzuki, D.C., 20 F.Supp. 900, 901, there is, therefore, no occasion to vacate the order dismissing the later petition herein.

The situation here closely parallels that in Re Putnam, D.C., 27 F.Supp'. 812, 813, wherein a second substantially similar petition was filed after a prior one had been dismissed, and the Court found “no new proposals of a practical nature are made. The whole matter is purely res adjudi-cata.”

This Court adheres to its conclusions as did Judge John W. Delehant in Re Mulligan, D.C., 45 F.Supp. 763, 764, 765, that there had been no actual change in the status of the debtor since the institution of the first case and “that the debtor is not a farmer within the reasonable definition of the law.” Tested by the standard laid down by Mr. Justice Cardozo in First National Bank v. Beach, 301 U.S. 435, 57 S.Ct. 801, 803, 81 L.Ed. 1206, that in determining a petitioning debtor’s status by the definition of a farmer in the amendment “in every case the totality of the facts is to be considered and appraised,” Noel Newton and the N. H. Development Company both failed to qualify. The burden of proof was on the petitioner upon the issue of its status for jurisdictional purposes. It did not sustain that burden. It is also considered that its presentation of a petition for relief in this second case is tainted with bad faith. In re Mulligan, supra.

Petitioner is attempting to have the ■same matters retried, re-argued and reviewed. It offers nothing new but a different number for the case.

Noel Newton is the individual’principally interested in these proceedings. His desperate attempts to convert himself into a farmer so as to obtain the benefit of the protective provisions of Section 75, went too far. He, after instituting the original proceedings, No. 10414, obtained an authorization from the Commissioner of Corporations of the State of California for the issuance to himself of certain stock of the N. H. Development Company. Said authorization was conditional that said stock could be issued for cash.

Cash appears to have been the scarcest commodity in Mr. Newton’s various operations, however. As no cash passed from him to the corporation, he obtained an amended order from the said 'Corporation Commissioner approving the appointment of an escrow holder. Said amended order was not obtained until the 1st day of September, 1945.

It is, therefore, evident that the issuance of any stock by the N. H. Development Company to Noel Newton prior to said 1st day of September, 1945, was unauthorized under the corporation laws of the State of California. He therefore was not the owner of 75% of the stock of the said N. H. Development Company. Said corporation therefore did not qualify as a farming corporation on the 6th day of August, 1945, when the said second petition was filed in this court.

Mr. Newton was not qualified to take advantage of the provisions of said Section 75 for still another reason.

He executed an assignment to his wife, Edna Mills Newton, on the 25th day of January, 1945. Said assignment “sets over, assigns, transfers and conveys to said Edna Mills Newton all of his right, title and interest in and to all shares of stock and all other interest of every kind and character which the undersigned has in the N. H. Development Company.” So, if he did not own any stock in said corporation which he could assign he divested himself of “all other interest of every kind and character” which he had in said N. H. Development Company long prior to the filing of said second petition herein.

Even if he were the equitable owner of 75% of the stock of said N. H. Development Company on, and prior to, said 25th day of January, 1945, said Noel Newton disqualified himself to carry the N. H. Development Company into this court under the provisions of said Section 75, as he was no longer such owner after the execution of said assignment.

That Noel Newton’s attempt to convert himself into a farmer cannot be given the stamp of approval is indicated by the case In re Carter, D.C., 38 F.Supp. 726. It was therein held that bad faith appeared in instituting proceedings under Section 75, and that it was not the intention of Congress that said section be used as an instrumentality by which a person might deliberately set out to make use of property as a farm in order to seek the benefits of said section.

In Re Ripley, D.C., 40 F.Supp. 850, 852, this pertinent language was used:.

“One who purchases the naked title to an encumbered farm in which there is no equity on the eve of a foreclosure, for the purpose of thereby bringing himself within the Act is not a ‘farmer’ as to that land and is not entitled to the benefits of the Act.”

In Re Christin, 50 F.Supp. 78, 81, the District Court for the Southern District -of California, Central Division, said:

“There is a duty in the courts to see that the provisions of the Bankruptcy Act are not abused and that its privileges are extended only to those who are within its contemplation. * * * it * * * has no application where a subterfuge has been created by one not a farmer whose obvious purpose it is to circumvent and evade the statutory essentials and thereby temporarily escape liability upon his obligations.”

The attempts to qualify the petitioner for the extensions under the Act are similar to those of some parents who purchased “farms” for their sons in endeavors to keep them from entering the Armed Forces on the plea that they were “engaged in an agricultural occupation.”

There was, fundamentally, no jurisdiction to entertain proceedings pursuant to this second petition. The Court’s inherent power to determine its own jurisdiction is well stated in 15 C.J. 851, §§ 170 and 171:

“Every court has judicial power to hear and determine the question of its own jurisdiction, both as to parties and as to subject matter. * * * When at any time or in any manner it is- in good faith represented to the court by a party or an amicus curiae that it has not jurisdiction, the court will examine the grounds of its jurisdiction before proceeding further. * * * A court may on its own motion, even though the question is not raised by the pleadings or is not suggested by counsel, recognize the want of jurisdiction, and it is its duty to act accordingly by staying proceedings, dismissing the action, or otherwise noticing the defect, at any stage of the proceedings. * * * ” See, also, 21 C.J.S., Courts, §§ 113, 114.

This Court had freshly in mind the testimony in case No. 10414 wherein it had held that the debtor N. H. Development Company was not entitled to classification as a farming corporation when its attention was called to the forthwith filing of a second petition upon the pronouncement from the bench that a motion for a new trial and a petition for rehearing were denied.

Counsel for said N. H. Development Company and his client Noel Newton were both then present in court, but they neither offered nor introduced any new evidence to show any changed condition of the status of N. H. Development Company with reference to its claim of being a farming corporation, or of Mr. Newton with respect to his claim of being a farmer.

The Court took judicial notice of its own records in ordering the dismissal of this case, No. 10737.

That it would have been justified in doing so on its own motion is evident from this language used in Re Kelsey, D.C., 43 F.Supp. 812, 813: “The court had a right, and it was its duty, to consider at any time when the issue was raised, in any fashion, the question of jurisdiction.”

That no formal notice of hearing at a subsequent time was needed is indicated by Massey v. Farmers and Merchants Bank, 4 Cir., 94 F.2d 526, 530:

“The debtor charges that it was error on the part of the court to affirm the findings of the conciliation commissioner and dismiss the petition in case No. 4292 without notice to her. * * * it was shown therein that the debtor’s petition had not been filed in good faith. * * * The court was therefore justified in putting an end to the proceeding * *

Additional reasons for the dismissal herein are stated in Re Archibald, D. C., 14 F.Supp. 437, 440:

“The farmer-debtor, by the first proceeding, had his day in court and the controversy between him and his creditors was adjudicated. I think the doctrine of res judicata applies. * * * Res judicata is a rule of universal law pervading every well regulated system of jurisprudence, and is put upon two grounds, embodied in various maxims of the common law; the one, public policy and necessity, which makes it to the interest of the state that there should be an end to litigation — interest re publicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for the same cause — nemo debet bis vexari pro eadem causa.”

That this proceeding falls in the category of “the same cause” as case No. 10414 is apparent from the schedules filed in both cases. Much of the material set forth therein is directly copied from the first petition into the second. Schedule B-l, Statement of all Property of Bankrupt, Schedule B-l, Real Estate, is a photostatic copy of the same in the first case. Schedule B-2, Personal Property, herein is also a direct copy from that in the first case. The only exception is Item J, wherein the value of machinery, tools, etc., is given herein as $1200, and in the first case as $700. The items are identical; petitioner simply estimated them as being worth almost twice as much more than three years later.

N. H. Development Company and Noel Newton had the advantages of the protection of this court against creditors from the filing of the petition in case No. 10414, on the 16th day of June, 1943, to the 6th day of August, 1945. The length of that time was due to various causes over which the Court had no control. It is unfortunate that the creditors have been subjected to that delay, inconvenience and expense. It would be unreasonable, unfair and unjustifiable to subject them to further harassment. There should indeed “be an end to litigation.”

That the creditors should not “be vexed twice for the same cause,” is shown by the opinions rendered in case No. 10414. That the career of Noel Newton was such that he could not qualify as a bona fide farmer under the provisions of the Bankruptcy. Act is substantiated by the testimony before the Conciliation Commissioner and before this Court in said case. Reference is hereby made to the opinion filed therein on the 27th day of June;' 1945, and reported in 61 F.Supp. 352.

“The law neither does nor requires idle acts.” California Civil Code, sec. 3532. It was accordingly unnecessary to hold a hearing on notice or to take any further testimony on what had already been decided by this Court.

“The district court is without jurisdiction of a proceeding for an agricultural composition or extension unless the debtor is engaged in farming operations within the meaning of § 75, sub. r, as amended.” Mulligan v. Federal Land Bank, 8 Cir., 129 F.2d 438, 440.

This Court, therefore, cannot be used by petitioner for the purpose of gaining further extensions as against its creditors.


source: Caselaw Access Project

license: Public Domain

text:
    In re N. H. DEVELOPMENT CO.
    No. 10414.
    District Court, N. D. California, N. D.
    Oct. 15, 1945.

      Charles A. Christin, of San Francisco, Cal., and Joseph D. Taylor, of Los Angeles, ■Cal., for debtor.
    G. D. Schilling and S. J. Tosi, both of .San Francisco, Cal., for Bank of America Nat. Trust & Savings Ass’n, creditor.
   WELSH, District Judge.

This Court rendered an opinion herein which is reported in 61 F.Supp. 352. Subsequent thereto, a temporary restraining order was issued which restrained the sale of •the real property involved until the hearing on an order to show cause and a motion for new trial and petition for rehearing.

Both of said motions were denied, and the order to show cause dismissed on the afternoon of August 6, 1945. The records ■do not show the exact time of the ruling, but briefs of counsel appear to concede that it was made at about the hour of 3:20 o’clock P. M.

N. H. Development Company now seeks to set aside the sale of said real property by the trustee under the deed of trust. Such sale was held at the hour of five o’clock P. M. on said 6th day of August, 1945, according to the testimony of Floyd Humphrey who conducted the sale.

The testimony also shows that ‘S. F. Tosi, counsel for the Bank of America, who appeared on its behalf at the hearing of said motions, was present at said sale. The Court can take judicial notice of the fact that Mr. Tosi had to travel a distance of approximately ninety miles from the courtroom in Sacramento to the Court House at Oroville. This physical fact establishes that the sale took place more than an hour after the motions were determined and the restraining order was void and of no further force or effect.

This Court is not concerned with the manner in which said sale was conducted. It having been made subsequent to the effective time of the restraining order there is no reason why the Court should make any further order with respect to it.

Said N. H. Development Company, in connection with its present motion, makes no offer to meet the obligation of the deed of trust. It therefore fails to meet the requirement specified in Annapolis Co. v. Wardman, 59 App.D.C. 321, 41 F.2d 115, wherein it was held that owners of property covered by a deed of trust, until tender of the payment of the debt was made, were without standing in equity in an attempt to set aside a trustee’s sale.

It is claimed that, as the sale was made at a time after the filing of another petition by N. H. Development Company, similar to the one herein, in proceeding No. 10737, 62 F.Supp. 722, the property was again under the jurisdiction of this Court. This is not tenable for the reason that this Court made an order dismissing said last numbered proceeding as soon as the filing thereof was called to its attention. Such dismissal was made before the sale of the real property took place.

It then was, and still is, our view that the N. H. Development Company was, and is, not a farming corporation and no jurisdiction was, or can be, shown to exist to justify again vexing the creditors of said corporation in another proceeding under Section 75, 11 U.S.C.A. § 203. We agree with the reasoning of the Court in Re Schwartz, D.C., 248 F. 841, 843, to the effect that creditors should not be compelled to expend money and time to defend an unnecessary and futile proceeding and be otherwise vexed and harassed without reason or necessity.

Additional reasons for the denial of petitioner’s motion are set forth in the opinion this day filed in case No. 10737, which is hereby made a part hereof.

It is, therefore, hereby ordered that the motion to vacate the sale of said real property be, and the same is hereby denied.


author: ABRUZZO, District Judge.

text:
    UNITED STATES v. 25.88 ACRES OF LAND, MORE OR LESS IN BOROUGH OF BROOKLYN, KINGS COUNTY et al.
    No. M-598.
    District Court, E. D. New York.
    Aug. 17, 1945.
    See, also, D.C., 49 F.Supp. 250.
    Harry T. Dolan, Sp. Asst, to Atty Gen. of United States (Mario M. DeOptatis, of Brooklyn, N. Y., of counsel), for petitioner-plaintiff.
    Shiland, Hedges & Pelham, of New York City (Charles Lamb, of New York City, of counsel), for Beard’s Erie Basin, Inc.
   ABRUZZO, District Judge.

The petitioner-plaintiff moves for an order confirming the report of the Commissioners of Appraisal appointed by this Court, which report is dated and filed March 14, 1945.

The Commissioners were appointed to find and determine the fair value and just compensation which should be paid by th'e petitioner for the taking in condemnation of the .land described in the petition and Declaration of Taking. They found that Beard’s Erie Basin, Inc., was entitled to $800,657.60.

The defendant, Beard’s Erie Basin, opposes the confirmation of this report and has filed objections to the findings and determination of the report of the Commissioners. Beard’s contention is: First, that the award is inadequate and insufficient; second, that petitioner’s witnesses did not apply the “before and after” method of valuation in arriving at their opinion of the value of- the property taken; third, that petitioner’s witnesses were permitted to testify as to the sales of other properties which they considered comparable to the property taken by the petitioner; fourth, that the petitioner’s witnesses were permitted to testify concerning the income derived from the property remaining after the taking and business earnings as disclosed by the defendant’s income tax returns.

The Declaration of Taking and petition in condemnation describes the property taken. Substantially, the area condemned approximately is 975,068 square feet (22.38 acres) and forms a part of what is commonly known and referred to as Beard’s Erie Basin located along the Brooklyn waterfront; the area consisting of some. 359,800 square feet of upland and 615,268 square feet of land under water. There were two open piers on the property and several small buildings. Beard’s originally owned and developed approximately 157 acres of waterfront property. Not all of the Beard’s property was condemned, a great deal of it still remains in the possession of the defendant who operates, the record indicates, at a very substantial profit since the taking in condemnation of the part at issue in this proceeding.

The Commission had to base their findings in their report upon the testimony of expert witnesses. Beard’s Erie Basin called one, Partridge, who testified to a total damage caused by the talcing in the sum of $1,535,805. He allocated $1,100,632 as the fair market value of the property taken and the sum of $435,173 as consequential or severance damage. Schlichta, an expert called by the petitioner, opined the fair market value of the property taken in the sum of $738,500, and Morrison, another expert called by the government, opined the value of the property as $704,-000. Both of these experts considered and testified that no permanent damage to the remainder resulted from the taking, either on the basis of sale or lease.

After the Commission devoted many hours to the hearing of evidence and proof submitted by the respective parties, as well as viewing the property, their finding was made as just and adequate compensation to the defendant. The amount awarded is well within the scope and range of the evidence submitted and I find no errors of law which would justify my refusal to confirm and adopt the findings and determinations of the Commission.

I see no error in permitting experts to testify to, as well as of, comparable properties in the vicinity of the property taken in condemnation. The Federal rule is undoubtedly different from the State rule but the Commission was bound by the Federal rule as laid down in United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55; United States v. Certain Parcels of Land in City of Philadelphia, 3 Cir., 144 F.2d 626, 155 A.L.R. 253; United States v. Certain Tracts of Land in Los Angeles County, Cal., D.C., 57 F.Supp. 739. I am in thorough accord with the rule laid down by these cases.

I see no merit to the contention of the defendant that the Commission should have valued the property in its entirety before the taking and then to revalue it after the taking. The method utilized by the Commission was well within the scope of the authorities in this Court and I do not see any other rule which the Commission could have adopted.

The defendant contends that they were entitled to some $435,173 as consequential or severance damages as testified to by their expert Partridge. The Commissioners’ report makes no allowance for consequential damage. They found: First, no proof was adduced to establish the existence or extent of the alleged severance damage; second, that the income from the remaining portion of land in the possession of Beard’s Erie Basin was greater after the taking than it had been for many years prior to the taking; third, that the proof failed to show that the income from the remainder prior to the taking was dependent upon conjunctive ownership with the part taken, or that the income which might be anticipated in the future from the remaining property would be impaired by the taking. There is no dispute that the income from the remaining portion was much greater after the taking than before. As a matter of fact, the evidence indicates clearly that in some years there was a substantial loss in the operation of this property by the defendant prior to the taking.

The conclusion reached by the Commission, to wit: that the income from the remaining portion was greater after the taking than before and that the proof failed to show the income from the remainder prior to the taking was dependent upon conjunctive ownership with-the part taken, or that the income which might be anticipated in the future from the remaining property would be impaired by the taking, is amply supported by the evidence.

The Commissioners’ report as to that feature should also be confirmed.

After the briefs were submitted to me I received a letter from the attorneys for the defendant, which, to all practical purposes, I have considered as part of their brief. This letter indicates that Robins Dry Dock Company has entered into a contract with the Navy Department which gives it the first right to purchase the property at some time in the future, presumably after the war has ended. The defendant claims that the Beard’s Erie Basin wants the property back and the record refers to an application by Beard’s to the government for the return of the property condemned.

I find nothing in the report of the Commissioners indicative that this particular feature of the case was at all considered before their report was made and filed in this Court. The record indicates that the Commissioners refused to take proof' offered by the defendant on this collateral issue (SM 713, 714). They were justified in rejecting this evidence. There would be no reason for this Court to consider what the Navy Department intends to do with the property in the future as it has nothing whatever to do with the just compensation to be paid to the defendant at the time of the taking in condemnation by the government of their property.

In view of the conclusion reached by me as to this particular feature of the case, I see no reason for setting a date for a hearing to determine whether or not the government should produce any contract or contracts relating to what the Navy Department might or might not do with this property. The defendant is entitled to just and fair compensation for the property taken by condemnation as of the date of the taking. I find nothing in the report of the Commissioners to justify the conclusion that that was not done.

The report of the Commissioners in all respects is hereby confirmed.


author: BRIGHT, District Judge.

text:
    ANDERSON v. SOUTHERN PAC. CO.
    District Court, S. D. New York.
    June 8, 1944.
    Abraham M. Fisch, of New York City, for plaintiffs.
    Buland, Minor & Waterman, of New York City (Jeremiah C. Waterman, of New York City, of counsel), for defendant.
   BRIGHT, District Judge.

Defendant moves for summary judgment, in this action to recover overtime, under Sections 6 and 7 of the Fair Labor Standards Act of 1938, 29 U.S.C.A. §§ 206 and 207, upon the ground that it is exempted from the provisions of Section 7 by Section 213(b)(2) of Title 29, in that plaintiffs are employees “of an employer subject to the provisions of sections 1-27 of Title 49,” which subject to regulation by the' Interstate Commerce Commission common carriers engaged in the transportation of passengers or property wholly by railroad, or partly by railroad and partly by water, when both are used under a common control, management or arrangement for a continuous carriage or shipment within the United States.

It is not disputed that the plaintiffs at the times for which overtime, etc., is sought, were employees of the defendant, and were engaged as lighter attendants or barge captains of lighters used for the storage or carriage of cargo in the Port of New York in furtherance of interstate commerce. It is also shown without dispute that the defendant is a common carrier by rail and water, both operated under common control and management, and having in effect an arrangement for continuous carriage or shipment between certain Atlantic ports and points on its railroad lines in the United States, in which arrangement both its railroad and steamship lines participated. It is further not disputed that the Interstate Commerce Commission has authority to and does regulate the operations of the defendant both by rail and water.

It is difficult to see, therefore, how there can be any recovery here under the Fair Labor Standards Act. This question was considered by me with reference to employees of a railroad (engaged, it is true, as building employees and, therefore, not exactly parallel in point of fact here) in the case of Brittan v. Hudson & Manhattan Railroad Co., D. C., 50 F.Supp. 37, and a conclusion was arrived at that the defendant was exempted, the plaintiff there, as here, being an “employee of an employer subject to the provisions” of the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq. I can see no reason to hold otherwise, and the defendant’s motion is, therefore, granted.


author: HOLTZOFF, Justice.

text:
    STURTEVANT v. OOMS, Commissioner of Patents.
    Civil Action No. 22403.
    District Court of the United States for the District of Columbia.
    Oct. 15, 1945.
    Bertram W. Coltman and M. Hudson Rathburn, both of Chicago, Ill., and Edwin R. Hutchinson, of Washington, D. C., for plaintiff.
    W. W. Cochran, of Washington, D. C., for defendant.
   HOLTZOFF, Justice.

This is an action by Paul A. Sturtevant under Section 4915 of the Revised Statutes, 35 U.S.C.A. § 63, against the Commissioner óf Patents to compel him to grant a reissue patent on an application filed by the plaintiff on March 16, 1943, Serial No. 479,300, for the reissue of Letters Patent No. 2,283,707, granted on May 19, 1942.

The alleged invention is a manually operated torque wrench used for the purpose of tightening bolts and similar devices. The plaintiff had previously received a patent on the same device. The application for the reissue here involved contains the same specification as the original patent but seeks broader claims than are found in the latter. It is asserted that plaintiff’s wrench has been favorably received on the market. A rival concern appears to have entered on the manufacture and sale of the same instrument in competition with the plaintiff’s assignee. Then it was that the plaintiff appears to have discovered that the claims of the original patent did not adequately protect his invention, and the present application for reissue followed.

The Patent Office having rejected this application, the present action was instituted. At the trial the plaintiff limited the case to claims 3 to 8, inclusive.

The principal ground of rejection was that the claims did not read on the disclosure. The device disclosed in the specification consists of a handle, a spring bar, and a work-engaging member, all forming a single continuous structure, to which is attached a pointer and a scale for the purpose of measuring force applied to the work. The claims refer to the work-engaging member as being pivotally supported. The Commissioner of Patents takes the position that no pivotally supported member is disclosed in the specification. This is the crux of the case.

The plaintiff counters that the claim is met by the fact that in actual operation the spring bar is flexed against the work-engaging member, and that, therefore, the spring bar pivots on the work-engaging member.

The Commissioner of Patents, in effect, argues that this is a distortion of the manifest meaning of the phrase “pivot-ally supported” as used in the claims. This phrase certainly seems to the Court to convey the concept of a pivotal connection between two members of the patented device. The meaning sought to be ascribed to this phrase by the plaintiff seems somewhat far-fetched. Under any circumstances this Court must not be unmindful of the principle that the action of the Patent Office, like that of any other administrative agency, is presumed to be correct, and that the burden is on the party asserting the contrary to overcome this presumption. This has not been done by the plaintiff in this case.

The plaintiff, however, calls attention to the fact that his claims in the reissue application were copied by him from a patent to one Zimmerman, No. 2,283,888, issued on May 19, 1942, and covering substantially the same invention. ' The Zimmerman patent, however, discloses a pivotal connection between two members of the patented structure, while the Sturtevant application does not. In one case the claims read on the disclosure. In the other they do not.

The plaintiff’s purpose in copying Zimmerman’s claims appears to have been to secure a declaration of interference between the Zimmerman patent and the plaintiff’s application. Apparently the Zimmerman patent is owned by the competing concern. It may well be that unless the claims in suit are granted to the plaintiff, he may be deprived of the opportunity, which he evidently seeks, of asserting a prior right to a patent on the wrenches manufactured by him and by his competitor. This result would undoubtedly be unfortunate from the plaintiff’s standpoint, but this possibility does not constitute a valid ground for granting him claims on something which he does not show in his specification.

The Supreme Court many years ago-observed that:

“The courts should regard with jealousy and disfavor any attempts to enlarge the scope of an application once filed, or of a patent once granted, the effect of which would be to enable the patentee to appropriate other inventions made prior to such alteration, or to appropriate that which has in the mean time, gone into public use.” N. W. Chicago & Railway Co. v. Sayles, 97 U.S. 554, 563, 24 L.Ed. 1053.

It is not intended to suggest that the plaintiff is endeavoring in this action to appropriate any invention made by anyone else than himself. This admonition is referred to, however, for the purpose of indicating the reason for strictly adhering to the principle that the scope of an application once filed or of a patent once granted should not be enlarged, lest unintentionally perhaps someone’s else invention or some device in public use may be brought within the scope of the patent.

The plaintiff calls attention to the fact that on September 25, 1945, he was granted Letters Patent No. 2,385,591 covering an improvement on the torque wrench and that in this application he was permitted to attach to the phrase “pivotally supported” the meaning which he seeks to attach to this phrase in this action. He argues that this action of the Patent Office made it 'incumbent on that Office to permit him successfully to contend that the claim reads on the disclosure in this instance. No evidence has been introduced to show why the Patent Office changed its position. This, however, is a matter of no concern to the Court. It is a well established principle of law that the Government may not be estopped by the acts of its agents or employees. Even if an estoppel could run against the Government, the elements of an equitable estoppel are not present in this case. Therefore, the Court does not deem that the Patent Office in its ruling on the reissue application was precluded from changing its position as to the proper meaning of the phrase “pivotally supported.”

In the light of the conclusion reached by the Court it does not seem necessary to pass upon the contention as to whether in this case there was present any accident, inadvertence, or mistake, within the meaning of Section 4916 of the Revised Statutes, 35 U.S.C.A. § 64, relating to reissue applications.

Judgment for the defendant. Counsel will submit draft of proposed findings of fact and conclusions of law.


author: SMITH, District Judge.

text:
    WALLING, Adm’r of Wage and Hour Division, U. S. Dept. of Labor, v. CONNECTICUT CO.
    Civil Action No. 1121.
    District Court, D. Connecticut.
    Sept. 13, 1945.
    George H. Foley, Regional Atty., U. S. Dept, of Labor, of Boston, Mass., for plaintiff.
    H. L. Filer, of New Haven, Conn., for defendant.
   SMITH, District Judge.

This action is brought by the plaintiff as Administrator of the Wage and Hour Division of the United States Department of Labor to enjoin alleged violations by the defendant of the Fair Labor Standards Act. Act of June 25, 1938, c. 676, 52 Stat. 1060, 29 U.S.C.A. § 201 et seq. The alleged ’do-tations are based upon the practice of the defendant of working some foriy-odd powerhouse employees forty-eight hours a week without paying them time and one-half for the hours worked over forty per week. The defendant is a local trolley and motor bus carrier, operating trolley lines in and about New Haven and bus lines also located solely within the State of Connecticut. It originally built, and added to, its powerhouse for the purpose of furnishing current to its electric trolley lines. It also has sold, and sells, minor amounts of current to several tenants who run amusement parks. To promote the efficient operation of the powerhouse as more and more of its lines were changed over from electric trolley to motor bus service, it has sold increasing amounts of power, which it could economically generate and which were surplus to its own needs, to the New Haven Railroad, the sole owner of the capital stock of the defendant. It also sells a small amount of electric power to the City of New Haven for the operation of its drawbridges. This drawbridge power and the power purchased by the railroad are used in the transportation of persons and goods in interstate commerce. In recent years, the proportion of power generated by the defendant which has been sold for all these purposes has averaged between twenty and thirty percent, the proportion in 1944 amounting to some nineteen and a fraction, percent.

£l] There are two questions presented: First, whether the powerhouse employees are engaged in (interstate) commerce or the production of goods for (interstate) commerce. There seems little question about this since a substantial part of the goods produced by them is produced to be used in interstate commerce, that is, the current which goes into the operation of the New Haven Railroad and the drawbridges of the city. Some of the current sold to the railroad flows across state lines. The proportion of the current produced at different hours which is produced for commerce varies greatly, but there is no time during the week when some substantial amount is not being produced for this purpose by the efforts of all the powerhouse employees then working. It is not possible to segregate the time spent by the employees into time spent producing power solely for the operation of the trolley lines and time spent producing power for sale for use in interstate commerce. It is true that this sale of power for interstate commerce amounts to less than one percent of the total revenues of the defendant. It is not, however, sporadic or occasional or insubstantial in total amount. Therefore, all employees who spend any substantial part of their time in any workweek in the production of power are engaged in interstate commerce and are, as a consequence, covered by the Act unless within one of the Act’s exemptions. New Mexico Public Service Co. v. Engel, 10 Cir., 1944, 145 F.2d 636, 640.

The second question presented is whether these powerhouse employees, even though engaged in interstate commerce or the production of goods for interstate commerce, are exempt from the Act because of Section 13(a) (9) of the Act which states that the maximum hour provisions shall not apply with respect to “any employee of a street, suburban, or interurban electric railway or local trolley or motorbus carrier.” It is conceded that the defendant is a local trolley or motor bus carrier. The plaintiff contends, however, that the exemption is to be strictly construed and is not to be held to apply to employees of the defendant engaged in any other business of the defendant than that which is strictly carriage by local trolley or motor bus. Since only about ten percent of all local trolley lines in the United States manufacture their own power, it is contended by the plaintiff that the powerhouse operation is not an essential or usual part of local trolley, or motor bus carrier business.

To support the plaintiff’s contention that vehicle operators alone are exempt, it is pointed out that the principal argument made in the Congress by proponents of the exemption for employees of local trolley and motor bus carriers was the difficulty of adapting the schedule of runs of vehicles to a rigid limitation of hours of the vehicle operators. Undoubtedly, with that argument before it, the Congress intended to exempt these operators from the coverage of the Act. It is difficult to say, however, whether the failure of the Congress more specifically to limit the exemption to those vehicle operators means that it was thought that the Congress had achieved such a limitation by the language used, or, on the other hand, that exemption of all employees including operators was intended, to avoid confusion and management difficulties which might arise through the application of the exemption to some employees of such local companies, and not to others. The latter seems more likely. Of course, it is possible that, in the consideration of the many problems involved in the final drafting of this Act, affecting so many millions of people, the effect of this language on employees other than the operators was never given any actual thought.

Since there is no specific limitation to vehicle operators, since the production or purchase of electric power is necessary to the operation of the defendant’s electric trolley lines, and since the power plant was designed as an integral part of the electric trolley system, it would appear that employees of the power plant, while engaged in the production of power for the trolley lines, are within the terms of the exemption as employees of a local trolley or motor bus carrier. Were there no other uses of the power produced than in the operation of the trolley lines, the exemption should apply.

The plaintiff also contends, however, that, even if it should be held that the exemption is not restricted to vehicle operators, the production of power for sale is not, under any circumstances, part of the operation of a local trolley business.

In answer to this contention, the defendant points out a number of instances in which the incidental sale of surpluses produced in the efficient operation of a principal business has been held not to destroy the character of that business for the purpose of various statutory powers and exemptions, and points out that, for some purposes, the production of power for the operation of trolleys has been held an integral part of that business. The defendant also points out, and in situations more closely analogous, cases construing exemptions somewhat similar to that here to be construed, as depending solely upon the principal business of the employer and reaching all employees regardless of their individual work in some other business of the employer. Three of the cases are perhaps distinguishable since one, Trustees of Columbia University v. Her-zog, 1945, 269 App.Div. 24, 53 N.Y.S.2d 617, involves an exemption of educational and charitable institutions, ever objects of special consideration by legislatures, and two of the others, Brittan v. Hudson & Manhattan Railway Co., D.C.S.D.N.Y. 1943, 50 F.Supp. 37, and Anderson v. Southern Pacific Co., D.C.S.D.N.Y.1944, 62 F.Supp. 730, involve Section 13(b) (2) of this Act — employers subject to regulation by another body under legislation designed to meet their own peculiar problems.

The remaining case cited, Soleim v. Tuverson, Cir.Ct.Wis.1943, 7 Labor Cases, par. 61825, appears to turn on the handling of the same commodity retail and in bulk by a retail service establishment and, if not so distinguished, in view of the later Supreme Court case of A. H. Phillips, Inc., v. Walling, Adm’r, 1945, 324 U.S. 490, 65 S. Ct. 807, it may be questioned whether it meets its test of narrow construction of the exemption.

In the drafting of the Act, just as it seemed proper to exempt other typically local businesses in which only a small proportion of the competitors might be within reach of Congressional power, from coverage under the Act, so coverage was withheld from local trolley and bus carriers which happened to cross state lines.

If the employer regularly and substantially engages in an otherwise non-exempt business other than the one for which the exemption was designed, however, strict construction of the exemption requires that it be not extended to that other business merely because the principal business of the employer is exempted. To do so would hardly be fair to those who must compete in that other business as their major activity.

Here a substantial proportion of the power produced is sold for use in commerce outside the trolley lines, in competition with employers whose employees are covered by the Act. Strict construction of the exemption such as is required in the interpretation of this Act (A. H. Phillips, Inc., v. Walling, Adm’r, supra) necessitates that the exemption be not extended to such collateral, not purely carrier activities, even though they are financially helpful to the carrier.

Judgment may be entered in favor of the plaintiff, enjoining the defendant from violation of the overtime provisions of the Act with regard to any powerhouse employees so long as any substantial amount of power produced is sold in interstate commerce or for the operation of instrumen-talities of interstate commerce aside from the defendant’s local carrier services. Form of judgment in accordance with this opinion may be submitted on notice.


author: CONGER, District Judge.

text:
    UNITED STATES v. FIVE CASES OF CAPON SPRINGS WATER.
    District Court, S. D. New York.
    Feb. 13, 1945.
    James B. M. McNally, U. S. Atty., of New York City (Stanley H. Lowell, Asst. U. S. Atty., of New York City, and James B. Goding, Atty., Federal Security Agency, of Boston, Mass., of counsel), for libelant.
    William M. Kilcullen, of New York City, for Andrew P. St. Thomas and Capon Spring Water Co. and Louis L. Austin and Virginia H. Austin, copartners, doing business as Capon Springs and Farms, claimants.
   CONGER, District Judge.

Libellant, the United States of America seeks herein to confiscate a certain quantity of Capon Springs Water which it has seized.

The libel states that this water, shipped in interstate commerce, was misbranded in that, in violation of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C.A. § 352 (a), the label on the bottles containing the water contained statements which were false and misleading.

The following statements appearing on the labels are alleged to be false and misleading and to constitute misbranding:

“Rebuilds as it Cleanses * * * ”
“The Indians Called It Ca-Ca-Pa-On— ‘Health Water’ * * * ”
“Known to physicians as alkaline, because it contains by nature those elements needed to counteract acidity
“ * * * beneficial in restoring the normal activity of the kidneys and bowels.”
“Use according To a Natural Law of Health * * * ”
“For the best results * * * drink 2 glasses on rising, 2 more during the morning, 2 during the afternoon and 1 or 2 at night * * * ”

The libel, after alleging that these statements are false and misleading continues— "said articles when so consumed will not exert such effect nor produce effects essentially different from those produced by the consumption of similar quantities of ordinary drinking water.”

The parties responsible for the bottling and shipment of the water have appeared and answered herein.

Tiie amended answer herein denies any misbranding.

The fact that the waters were shipped in interstate commerce is not denied.

The first and second defense in the amended answer set up the defense of res adjudicata. These defenses concern two proceedings heretofore had in connection with Capon Springs Water. There can be no question but that the water involved in those proceedings is the same water with which we are concerned here.

By these defenses, claimants allege that the truth of the statements on the label herein have been finally determined in claimants’ favor in two actions heretofore had and that said prior final decisions are res adjudicata determinative of the issues as to the truth or falsity of said statements.

The second or later proceeding (second defense) was brought on or about March 3, 1936, before the Federal Trade Commission. The respondents in that case were the same respondents, their privies or predecessors in title now before this court.

The proceeding was commenced pursuant to the provision of an Act of Congress creating a Federal Trade Commission (approved September 26, 1914) 15 U.S.C.A. § 55(a). The gravamen of the complaint in that proceeding was that Respondents were guilty of falsely advertising their product in booklets, circulars and other written matter.

The pertinent section of 15 U.S.C.A. § 55(a) reads as follows.:

“The term ‘false advertisement’ means an advertisement, other than labeling, which is misleading in a material respect; # >;c »

The precise charge is set forth in Paragraph Two and Paragraph Three of the libel. Paragraph Two in part reads as follows:

“Respondents, in the course and conduct of their business as aforesaid, distribute and circulate, among prospective purchasers of their said water, booklets, leaflets, circulars, and other written matter which contain many statements concerning the curative qualities of respondents’ said water. Many of said statements are purportedly made by doctors and laymen, and the remainder by the respondents. In said booklets, leaflets, circulars, and other written matter, respondents falsely represent and imply that said water will cure, or is beneficial in the treatment of, many of the diseases, ailments, afflictions, and conditions which may be present or exist in the human body.
“Among the diseases, ailments, afflictions, and conditions named by the respondents in their said booklets, leaflets, circulars, and other written matter, so distributed and circulated among prospective purchasers of their said water, as diseases, ailments, afflictions, and conditions which their said water will cure, or is beneficial in the treatment of, are the following * * * ” Then follows a long list of diseases too numerous to repeat, among which are kidney troubles, kidney pains, nephritis, bladder trouble, catarrhal affections of the stomach, hyper-acidity, constipation, irregular bowels.

Paragraph Three reads as follows:

“Respondents, in said booklets, leaflets, circulars, and other written matter, so distributed and circulated among prospective purchasers of their said water, falsely represent and imply that their said water acts Tike magic’; ‘cures almost everything,’ ‘aids digestion’; ‘restores energy’; is ‘beneficial to general health’; ‘keeps you fit’; ‘keeps you well’; ‘that it has eliminated tired feeling’ ; ‘maintains healthy digestive tract’; that it has ‘improved hearing”; is ‘indispensable to health’; ‘acts as a natural tonic’; ‘restores mental alertness and vigor’; ‘will help every living thing’; assures ‘All year round health and long life’; ‘supplies every one of the 16 elements in body’; and contains ‘valuable medicinal properties.’ ”
“In truth and in fact respondents’ said water not only has not acted and does not act like magic, but has not acted and does not act at all on the human body in any different manner than does any pure, potable water, nor does it contain any elements or medicinal properties in sufficient quantities to render it different from, or any of greater benefit than, any pure, potable water, and its use has not resulted and does not result in the benefits claimed for it by said respondents as above set out.”

The above allegations were put in issue by the answer of respondents. The issues were tried before a trial examiner, who made his report upon the facts to Federal Trade Commission, from which the Commission made its “Findings as to the Facts and Conclusions.”

A great deal of testimony was taken before the trial examiner. The real issue was as to the therapeutic value of this water. The Commission had as witnesses several chemists and three physicians. The conclusions of these experts was that this water had no special chemical value; that it had no therapeutic value; that it would not cure or benefit the specific diseases mentioned in the complaint; that the mineral content of this water was no greater than that of ordinary tap water; that this water would have no more effect than any good drinking water.

Respondent put in testimony of four physicians who testified among other things that the water did possess therapeutic value and qualities; that it possessed therapeutic values different from other pure potable waters. Each testified that he prescribed this water in cases of illness and disease and told of the curative and beneficial effect by its use.

There was taken in all about 600 pages of testimony.

Some of the literature used by respondent in advertising its product was put in evidence. It will not be necessary to go into the various claims made in these documents. However, a few extracts from one (Ex. 1) are pertinent. This is a small leaflet entitled “Things You Will Observe About Capon Springs Water.” I quote some extracts therefrom:

“Refreshes” * * * * * *
“Cleanses”
“* * * 5. It has prompt action on the kidneys. Capon cleanses your blood of acid and toxic poisons.”
“Rebuilds
“6. It regulates the bowels. Capon restores their normal peristaltic action (the eliminative urge).
“7. It acts as a natural tonic. Capon supplies every one of the sixteen elements in your body.”
“Why the Indians Called It Ca-ca-pa-on — ‘Healing Waters’ ”
“Capon water is known to physicians as alkaline * * * ”

These are extracts from one of the pamphlets on which the Commission based its charge of false advertising. The label which is under fire here was put in evidence.

The trial examiner in his Findings has set forth most of the statements thereon under the heading: “Respondent’s Representations, Concerning the Efficiency of Capon Water.”

Notwithstanding the broadness of the charges and the plethora of evidence, the Commission simply contented itself with a finding against respondent, “that the use of Capon Water alone either externally or internally will not cure kidney troubles

* * * ” (Then follows the long list of diseases which the Commission claims respondent advertised Capon Water would cure or be beneficial in the treatment thereof.)

This was the only respect in which the Commission found that respondent by its advertising had violated the provision of the Federal Trade Commission Act. As a result thereof an order was made by the Commission that respondent in connection with the offer for sale and distribution of its water cease and desist from representing directly or by implication “that the use of the said water alone, either externally or internally will cure kidney troubles * * *,” etc. This record indicates that this order was complied with.

It should be noted that the testimony taken before the Commission was of the same nature as that before me. Most of it was by experts (doctors and chemists). It all had to do with the chemical properties and therapeutic value of this water. The experts’ testimony taken before the Commission might very well have been substituted for and used in the case before me.

The order of the Federal Trade Commission was affirmed by the United States Circuit Court of Appeals for the Third Circuit. Capon Water Co. et al. v. Federal Trade Commission, 107 F.2d 516.

I have gone at some length into this proceeding before the Federal Trade Commission because I am of the opinion that it is the real serious defense to the issue here.

I have come to the conclusion that the decision of the Federal Trade Commission binds the Libellant here.

In the proceeding before the Commission the litigated question was the chemical and therapeutic value of this water. The Commission had before it the printed material advertising Capon Water. In it were many and rather extravagant statements extolling the virtue and healing property of the water which included the claim that the consumption of this water would cure or be beneficial in the treatment of most of the ills and sicknesses that men and women are afflicted with.

Yet, after a lengthy trial, the Commission simply placed its condemnation upon the claim that this water alone would cure.

It gave its approval, by a failure to condemn all the other claims which included those mentioned in Exhibit 1, and heretofore set forth.

I referred to those statements particularly because they are identical with or approximate the statements on the label which the Government contends are false and misleading “in that said statements represent and suggest that the article of drug when consumed according to directions will rebuild the body while cleansing it of waste matter, will exert an alkaline effect in the body and counteract acid conditions, will serve to restore improperly functioning kidneys and bowels to their normal activity and will exert benefits to health greatly in excess of those derived from the consumption of ordinary drinking water.” (Paragraph V of the Libel.)

This is exactly the issue that was tried before the Commission and decided by it as I have pointed out above.

The Government contends that proceedings before the Commission are not a bar to the successful prosecution of this action, because the label was not passed on by the Commission. I think it is correct that the label with the statements thereon was not specifically passed on. However, may it be said that certain statements in the pamphlets may be used and are not false and misleading while the same statements used on the label may not be used and are false and misleading. I think not.

As I see it the underlying issue in this action and in the proceeding before the Commission is the same. That being so, the adjudication in the proceeding before the Commission is determinative of the issue here. United States v. Willard Tablet Co., 7 Cir., 141 F.2d 141, 152 A.L.R. 1194; George H. Lee Co. v. Federal Trade Commission, 8 Cir., 113 F.2d 583.

The fact that in one proceeding we have the Federal Trade Commission as the complainant and in this case we have the United States of America does not alter the situation, neither does the fact that different remedies are sought in each proceeding affect the result. United States v. Willard Tablet Co., supra; George H. Lee Co. v. Federal Trade Commission, supra.

My opinion is fortified by another adjudication as to this same water. United States v. Ninety-Four-Dozen, More or Less, Half-Gallon Bottles Capon Springs Water, 3 Cir., 48 F.2d 378, 380. This adjudication is alleged as res adjudicata to this action and is the first defense in the amended answer herein.

In that proceeding the United States of America by a libel sought to condemn 94 cases more or less, half-gallon bottles of Capon Springs Water. The prosecution was based on the Food and Drug Act, 21 U.S.C.A. § 1 et seq.

This action was tried in the United States Eastern District of Pennsylvania. The complaint in that case was that there was a misbranding on the label. In his opinion Judge Dickinson, who tried the case, set forth the charge as follows:

“It is charged that Capon Springs Water is marketed under a label which describes it to be ‘Healing Water,’ thereby implying that the drinking of it will have curative and therapeutic results, when in fact the water is more accurately described as drinking water, having only the properties of what might be called ordinary spring water.”

The label which was objected to was in form as follows:

“ ‘Capon Springs Water known to the Catauaba Indians as “Ca-Ca-Paon” Healing Water.
“ ‘2 Quarts Net — Bottled at the Springs. (Then follows an analysis in type too small to be conveniently read.)
“ ‘Natural Mineral Spring Water Famous for Two Centuries. Capon Water Co., Capon Springs, W. Va.’ ”

Judge Dickinson in his opinion stated: “We see nothing in the label in this case which would justify a finding that it was fraudulent.” In that action the libel was dismissed. Affirmed by the Circuit Court of Appeals for the Third Circuit, 51 F.2d 913.

If the adjudication in this case is not determinative of the entire issue here, it is at least determinative of the charge of misbranding as applied to the phrase on the label “The Indians Called it Ca-Ca-Pa-On Health Water.” The fact that in this one case have the words “Healing Water” and in the other “Health Water” has no significance. The words are synonymous.

For the reasons which I have given above, I find that the libel should be dismissed.

Settle decree on notice.


author: MOORE, District Judge.

text:
    FLARSHEIM v. UNITED STATES.
    No. 77.
    District Court, E. D. Missouri, E. D.
    July 27, 1945.
    Milton H. Tucker, of St. Louis, Mo., for plaintiff.
    Harry C. Blanton, U. S. Atty., of Sikes-ton, Mo., Russell Vandivort, Asst. U. S. Atty., of St. Louis, Mo., Samuel O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe, Wm. B. Waldo, and A. Barr Com-stock, Sp. Assts. to the Atty. Gen.,'for defendant.
   MOORE, District Judge.

This case, involving tax for the year 1933, was submitted to the Court upon the pleadings and the stipulation of facts which were filed herein. Briefs of the parties have been received and considered and now the Court being fully advised makes the following findings of fact:

Findings of Fact.

Jennie C. Flarsheim, hereinafter referred to as the “Plaintiff,” resides at the Park Plaza Hotel in the City of St. Louis, State of Missouri. She is the widow of Milton Flarsheim, hereinafter referred to as “Milton.” The said Milton Flarsheim was an employee, at the time of his death, of Seavey & Flarsheim Brokerage Company, hereinafter referred to as the “corporation.” The corporation was and is a Missouri corporation with its principal office at Kansas City, Mo.

On March 14, 1934, the plaintiff filed an individual federal income tax return for the calendar year 1933 with the Collector of Internal Revenue in the' City of St. Louis, Mo., disclosing gross income in the amount of $13,641.14, net income in the amount of $13,074.16, and a tax liability in the amount of $862.85, which tax liability was paid during the year 1934. Plaintiff in reporting gross income of $13,641.14 included under Item I the following:

Salaries, Wages, Commis- 'Amount sions, Fees, etc. received

Seavey & Flarsheim Brokerage Co., Kansas City, Missouri $12,000.00

On November 18th, 1935, plaintiff filed a claim for refund in the amount of $862.-85 on Treasury Form 843 as revised June, 1930. The claim was signed by the plaintiff and sworn to before a notary public and demanded refund of $862.85 plus interest. Attached to the claim was a typed sheet giving the alleged reasons that the claim for refund should be allowed, which sheet read as follows:

“Because $12,000.00 of the gross income of the taxpayer was reported under Item I as salaries, wages, commissions, fees, etc., received from Seavey & Flarsheim Brokerage Company, Kansas City, Missouri. In connection with the review of the Income Tax Return of Seavey & Flarsheim Brokerage Company for 1932 wherein this item of $12,000.00 paid to this taxpayer was deducted as a payment of salaries, wages, commissions, fees, etc., the Commissioner has disallowed this deduction by the Seavey & Flarsheim Brokerage Company. If it should be finally held that this payment by Seavey & Flarsheim Brokerage Company is a capital expenditure by Seavey & Flarsheim Brokerage Company as has been indicated, in such event the amount of $12,000.00 received by Jennie C. Flarsheim would not constitute taxable income to her. The difficulty is that before that question is finally and conclusively determined, the time within which this claim for refund may be legally filed will probably have expired. Therefore, this claim for refund is accordingly filed at this time in order to avoid the bar of the Statute of Limitations against the claim for refund in the event it should appear from the decision in the matter of the Seavey & Flarsheim Brokerage Company 1932 Income Tax Return, wherein the deductibility of this item is in question, that the payment of $12,000.00 made by Seavey & Flarsheim Brokerage Company to Jennie C. Flarsheim, the taxpayer herein, should not be considered as income by her.
“The principles decided in connection with the Seavey & Flarsheim Brokerage Company 1932 Income Tax Return as to the status of this $12,000.00 payment, i.e., whether a capital or an expense item, will necessarily determine the taxability or non-taxability to Jennie C. Flarsheim of the payment of $12,000.00 to her in 1933 as reported in Item 1 of her 1933 Federal Income Tax Return. Therefore, this claim for refund is filed at this time so as to be within the time provided by law for filing claims for refund of 1933 income taxes.”

On September 30th, 1936, plaintiff was advised by letter of that date of the proposal of the Commissioner of Internal Revenue to disallow the claim. The text of said letter was as follows:

“Reference is made to your claim for refund in the amount of $862.85 income taxes for the taxable year 1933.
“Your claim is based on the statement that the salary reported by you as having been received from Seavey and Flar-sheim Brokerage Co. of $12,000.00 should be eliminated as not being taxable income to you.
“You are advised that careful consideration has been given to the basis of your claim in connection with information on file in this office, and the evidence at hand discloses the sum paid to you in excess of the amount allowed as a deduction to the corporation did not represent a gift to you nor could it constitute a dividend to you, since you were not a stockholder, nor was the amount a return of capital for payment of property as neither you nor your husband had an interest in the corporation capable of being valued. Therefore, the entire amount received in 1933 is held to represent taxable income to you as reported in your return.
“For the foregoing reasons it is proposed to disallow your claim. If you do not acquiesce in this action and desire a hearing in Washington, and propose to rely on the facts and data presented in your claim, your request for such hearing, addressed to the Commissioner of Internal Revenue, Washington, D. C., should contain a statement to that effect.
“In the event you desire to present additional facts, you should file with the internal revenue agent in charge a brief, in triplicate, under oath, containing the following :
(a) the date and symbols of this letter;
(b) your mailing address, if changed from that stated in this letter;
(c) the additional facts;
(d) a request for a hearing, if desired.
“Upon receipt of the recommendation of that official, you will be advised of the determination of the Income Tax Unit at Washington.
“If no response is received within fifteen days, official notice of the disallowance of your claim will be issued by registered mail in accordance with section 1103(a) of the Revenue Act of 1932.” 26 U.S.C.A. Int.Rev.Acts, page 652.

On December 1st, 1936, the plaintiff was advised by registered letter of that date by the Commissioner of Internal Revenue of the rejection of the claim for refund. The text of said letter was as follows:

“Reference is made to Bureau letter dated September 30, 1936 wherein you were informed that the claim for refund indicated above would be disallowed. The letter also stated the reasons for the proposed dis-allowance.
“The claim having been disallowed or rejected on Schedule numbered 23006, this notice of disallowance is sent to you by registered mail as required by Section 1103 (a) of the Revenue Act of 1932.”

The corporation of which Milton was an employee at the time of his death was, and now is, engaged in the food brokerage business and acts as selling agent for numerous principals and clients, and also sells food and similar merchandise at wholesale on its own account. It has numerous branch offices located in important cities in the middle west portion of the United States, through which its business is transacted. These offices are under the control of managers responsible to the home office at Kansas City. Milton entered the employ of the corporation’s predecessor partnership about 1901. He was made manager of the branch office at St. Louis, Mo., and continued to manage this office for the corporation up to and including the year 1915. About that time an oral agreement was entered into between the corporation and Milton whereby beginning in 1916 Milton operated the St. Louis office as his own and retained all the profits and stood the losses from the business conducted in that office. Under this agreement, i.he St. Louis office was operated under the corporation’s corporate name but none of (he profits accrued to the corporation. Milton had his own bank account in St. Louis from which the expenses of the office were paid by him. All employees were hired and discharged by him. He managed the business as his own. Billings from the St. Louis office were made in the corporation’s name and remittances were made to the corporation’s principal office at Kansas City, Mo. These remittances were credited to Milton and paid over to him by the corporation. The corporation maintained complete statistical and transportation departments which were used by Milton; he paying an overhead for ■these services as well as interest on any funds advanced to him by the corporation. In 1928 Milton, who was then 60 years of age, became dissatisfied with the terms of the agreement under which he was working and contemplated severing his connection with the corporation and going into business for himself. The officers of the corporation were advised and authorized negotiations with Milton, as a result of. which the parties on September 13, 1928, entered into an agreement. After the execution of the aforesaid agreement Milton agreed orally with the officers of the corporation that the services contemplated in said agreement were for his lifetime and he continued to be connected with the corporation’s business until the time of his death on April 27, 1931. The corporation has paid the plaintiff the sum of $12,000 each and every year since Milton’s death. The important provisions of the above agreement were as follows:

“This Agreement, entered into this 13th day of September, 1928, by and between Seavey & Flarsheim Brokerage Company, a Missouri corporation, hereinafter designated as first party, and Milton J. Flar-sheim, of the City of St. Louis, hereinafter designated as second party,
“Witnesseth:
“Whereas, the second party has been in the employ of the first party for a period of many years, in charge and in control of their St. Louis Office, and
“Whereas, the first party is desirous of having the second party continue to manage and conduct the St. Louis office of the first party, and the second party is willing to so do if monetary provision is made for the care of second party’s wife for her lifetime subsequent to the death of the second party and similar provision is made for second party in the event of his disability;
“Now, Therefore, in consideration of the premises, it is covenanted and agreed by and between the parties hereto as follows, to-wit:
“First: That the second party will continue to manage and conduct the office of the first party in the City of St. Louis under the terms and conditions under which he has heretofore operated and conducted said office.
“Second: When the second party shall, because of disability, be no longer able to operate said office, there shall be paid to the said second party all of the net earnings of the St. Louis office, computed in the same manner as heretofore.
“Third: In the event of the death of the said second party, there shall be paid by the first party to the wife of the said second party, Jennie C. Flarsheim, out of the net earnings of the said St. Louis office, computed as heretofore, the sum of Twelve Thousand Dollars ($12,000.00) per annum, payable in equal monthly instal-ments of One Thousand Dollars ($1,000.00) each, on the first day of each and every calendar month. In the event the net earnings of said St. Louis office do not total the sum of Twelve Thousand Dollars ($12,-000.00) per annum, then the said Jennie C. Flarsheim shall receive all of said earnings, but nothing herein shall be construed as entitling the said Jennie C. Flarsheim to receive more than Twelve Thousand Dollars ($12,000.00) per annum, if the earnings of the said St. Louis office shall exceed said sum.
“It is further understood and agreed that in the event the said Jennie C. Flar-sheim shall receive less than the sum of Twelve Thousand Dollars ($12,000.00) in any one year because of the fact that the earnings of the St. Louis office for such year do not equal the sum of Twelve Thousand Dollars ($12,000.00), then and in that event, if in any subsequent year the earnings of said St. Louis office shall exceed Twelve Thousand Dollars ($12,000.00) she shall receive during such subsequent year if earned so much of the earnings in excess of Twelve Thousand Dollars ($12,-000.00) as will equal the deficit between the sum of Twelve Thousand Dollars ($12,000.-00) and the sum received by Jennie C, Flar-sheim during any prior year, it being the intention hereby to give to the said Jennie C. Flarsheim the sum of Twelve Thousand Dollars ($12,000.00) per annum as long as she may live and as long as the total earnings during her lifetime and subsequent to the death of the said second party shall be equivalent to said sum, whether or not the earnings of the St. Louis office of first party for any particular calendar year or years shall fall below said sum.”

During the period when Milton operated the Saint Louis office as his own, he also performed other valuable services for the corporation. He enjoyed the confidence of the trade and was outstanding as a salesman and contact man. He was instrumental in obtaining for the corporation many valuable clients and was regularly consulted by the officers of the corporation in connection with its business and in planning sales campaigns. He made frequent trips to Kansas City on behalf of the corporation and was in daily contact with its Kansas City office by telephone. The corporation and its officers regarded him as one of the most valuable men in the food industry and used him as one of its principal contact men with food manufacturers. He was particularly expert in handling some commodities in which the corporation dealt. At the time above referred to, when he was thinking of going into business for himself he gave as one of his reasons the building up of an estate which he could leave to his wife. Neither then nor afterwards did Milton or plaintiff own any of the corporation’s stock.

Conclusions of Law.

From the Findings of Fact it is concluded as a matter of law:

That the plaintiff taxpayer’s claim for refund is sufficient in form and content to satisfy the Revenue Laws.

That there is no material variance between the grounds as relied on in this action and those set forth in the plaintiff taxpayer’s said claim for refund.

That the amount paid to plaintiff taxpayer by Seavey & Flarsheim Brokerage Company in the calendar year 1933 was income taxable to her as defined in Section 22 (a) Revenue Act of 1932, 26 U.S.C.A. Int.Rev.Acts, page 487.

That the plaintiff is not entitled to any recovery against the defendant and that the defendant is entitled to judgment in its favor and for its costs.


text:
    Jennie C. FLARSHEIM, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 1927.
    District Court, E. D. Missouri, E. D.
    July 27, 1945.
    See, also, 62 F.Supp. 740.
    Milton H. Tucker, of St. Louis, Mo., for plaintiff.
    Harry C. Blanton, U. S. Atty., of Sikes-ton, Mo., Russell Vandivort, Asst. U. S. Atty,. of St-. Louis, Mo., Samuel O. Clark, Jr., Asst. Atty. Gen., and Andrew D. Sharpe, Wm. B. Waldo, and A. Barr Com-stock, Sp. Assts. to the Atty. Gen., for defendant.
   MOORE, District Judge.

This case involving tax for the year 1934 was submitted to the Court upon the pleadings and stipulation of facts which were filed herein.

With the exception of the difference in tax years, the facts and conclusions involved herein are practically identical with Flarsheim v. United States, D.C., 62 F. Supp. 740, handed down on this date, and for the reasons stated therein the plaintiff is not entitled to any recovery against the defendant, and defendant is entitled to judgment in its favor and for its costs.


author: TIMMERMAN, District Judge.

text:
    Ex parte FILLIBERTIE et al. and nine other cases.
    Nos. 327, 360, 351, 366, 352, 359, 361, 363, 365, 355.
    District Court, E. D. South Carolina, Aiken Division.
    Sept. 5, 1945.
    No attorneys of record.
   TIMMERMAN, District Judge.

The petitions for naturalization on behalf of the above-named petitioners were considered and naturalization refused on' August 22, 1945. This opinion is now being filed to show the reasons for the action then taken.

The facts upon which the Court acted, briefly stated as to each petitioner are as follows:

Marino Fillibertie, No. 327: This petitioner, along with a group of one hundred other Italian subjects, entered the United States on or about April 25, 1940. They were admitted as representatives of the Italian government at the World’s Fair in New York for the duration of the Fair, and thirty days thereafter, pursuant, as it is said, to the provisions of Section 203 (Classification 2), 8 U.S.C.A., and the last proviso attached to and constituting a part of Section- 136(h), 8 U.S.C.A. The petitioner overstayed his time and was taken into custody under a departmental warrant of arrest on January 23, 1941. He was granted a deportation hearing and ordered deported on the ground that he had remained in the United States beyond the permissible period. Before deportation was accomplished the petitioner was interned until November 27, 1941, and then released on bond. He was inducted into the United States Army on February 10, 1945, but between that time and the time of his release on bond he filed an application for relief from the deportation order and sought permission to depart the United States voluntarily under the provisions of Section 155(c), 8 U.S.C.A., as Amended by Act of June 28, 1940. In consequence of this request the deportation hearing was reopened but no final decision on the request has ever been made so far as the Court is advised. The petitioner in his testimony before the Court stated that while he entered the United States on a temporary basis, he really never intended to leave when his time was up. His conduct lends color to that statement.

Ku Sun Ling, No. 360: The petitioner was born in China, and is a Chinese citizen. He entered the United States on September 2, 1939, as a student. He stated that it was his intention to return to China when he entered, but that he afterwards changed his mind and decided to live in the United States if he could. He was inducted into the United States Marine Corps on May 22, 1945. He entered the United States on a non-quota immigration visa to attend Purdue University as a student. His permissive stay in the United States ended August 31, 1941. The permit was granted pursuant to the provisions of Section 204 (e), 8 U.S.C.A. Later his permissive stay in the United States was extended until September 20, 1945, and thereby his status was changed to that specified in Section 203 (Classification 2), 8 U.S.C.A.

Bo-Erling Jonsson, No. 351: The petitioner is a native of Sweden and was a citizen of that country when he entered the United States on May 19, 1941, as a member of the crew on the M/V Kung-holm, a ship of foreign registry. Before arrival in the United States he applied to the American Consul at Colon, Panama, for a visa for permanent residence in the United States, but did not receive it due, as he says, to lack of time. He further states that while he was admitted as a seaman it was his intention to remain in the United States as a resident, but that he withheld knowledge of that intention from the examining inspector. He was arrested by the Immigration and Naturalization Service in 1942 under deportation proceedings and was released on a bond of $500. He was admitted as a seaman under Section 203 (Classification 5), 8 U.S.C.A., for the duration of his vessel’s stay in port. He was inducted into the United States Army on June 11, 1945, and thereafter made application for citizenship.

Robert Woodleigh Westaway, No. 366: The petitioner is a native of Canada and a citizen of that country. There is no record of his admission to the United States. The petitioner says he has lived in the United States practically all of his life, coming here as a child, and that he thought he had been legally admitted for permanent residence. He was inducted into the United States Army on March 7, 1945. The records of the Immigration and Naturalization Service show that he was admitted to the United States through Niagara Falls, N. Y., as a United States soldier and citizen of Canada, born in Prince Edward Island, Canada, May 17, 1923, and destined for Camp Gordon, Georgia, to rejoin his army unit for an indefinite stay. Presumptively his category is established by Section 203 (Classification 2), 8 U.S.C.A. This petitioner was given a furlough from the army so that he might go to Canada and re-enter the United States as aforesaid so that such entry into the United States could be used as a basis for naturalization. The petitioner takes the position that notwithstanding his return to Canada and reentry into the United States as a Canadian citizen he all the time intended to reside permanently in the United States, and that his sole purpose in going to Canada and re-entering the United States was to try to establish a legal basis for his naturalization.

John Francis Hoare, No. 352: This petitioner is a citizen of Eire. He came to the United States as a member of the S. S. Vicia and he was allowed to enter the United States as a seaman in Tampa, Florida, on March 30, 1941. He states that when he entered the United States he fully intended to leave when his ship sailed, but changed his mind after he gained admittance, which was as a seaman pursuant to Section 203 (Classification 5), 8 U.S. C.A. In August 1942 he was arrested on a warrant of the Immigration and Naturalization Service charging him with a violation of the Immigration laws in overstaying the time he was allowed to be in this country legally. After a hearing on November 17, 1942, he was ordered deported. Later on April 6, 1945, due to the fact that the petitioner was the subject of a neutral country, the deportation order was withdrawn and a direction was made that he be permitted to depart voluntarily. He was inducted in the United States Army on June 13, 1945.

Lee Shu, No. 359: This petitioner was born in France but his nationality is Chinese. He was admitted into the United States in August, 1938, as a student. He states that he had no intention of remaining in the United States when he entered but that he subsequently decided to remain and live here. He was a student at Purdue University. After his entry he was granted an extension so that he might stay in the United States as a student until April 27, 1947. He was inducted into the United States Marine Corps June 11, 1945.

Wong Lip King, No. 361: The petitioner is a native of Shanghai, China, and his nationality is Chinese. He entered the United States in September, 1936, as a student to attend the University of Illinois. After his entry his time to remain here as a student was extended to September 22, 1945. He was inducted into the United States Marine Corps on June 15, 1945. He stated at the hearing that when he entered the United States he fully intended to return to his native land when he finished his studies but that he later decided to live permanently here.

Using Min Uy, No.. 363: The petitioner is a native of Peiping, China, and a citizen of China. He was admitted to the United States on September 16, 1939, for the purpose of attending Purdue University as a student. He, like other Chinese nationals mentioned herein, had a non-quota immigration visa for two years, Section 204(e), 8 U.S.C.A. Later his status was changed from that of student to temporary visitor for business, under Section 203 (Classification 2), 8 U.S.C.A., and his permissible stay in this country under that status terminated August 11, 1945. He says that he entered the United States fully intending to return to China, but that he afterwards decided that he wished to remain here permanently. He was inducted into the United States Marine Corps on April 23, 1945.

Kee Sing Yee, No. 365: The petitioner was born at Shanghai, China, and is a citizen of China. He came to the United States as a member of the crew of the S. S. Tamaha. He entered the United States as a seaman and, while his ship was in port, he jumped his ship and remained in the United States. He was reported by the Master of his ship as a deserter on August 14, 1943. He was inducted into the United States Army on February 14, 1945.

Aron Smucler alias Albert Smucler, No. 355: The petitioner was born in Chisinau, Bessarabia, Rumania, and is a Rumanian citizen. He entered the United States as a seaman in August, 1940. The Immigration and Naturalization Service ordered the detention and deportation of the petitioner on August 5, 1940. Ten days later he was reported as a deserter by the Master of his ship. He was inducted into the United States Army on November 7, 1942. The Army gave him a furlough and he went to Canada and re-entered the United States on May 14, 1945, as a United States soldier, a Rumanian citizen, destined for Fort Jackson, S. C. Petitioner’s visit to Canada and re-entry were to aid him in securing naturalization.

None of the petitioners have seen military or naval service beyond the continental limits of the United States.

From the foregoing it is seen that four of the petitioners entered the United States as alien students for stated periods and that their permissible stays were extended on the ground that they were alien visitors or on the ground that they were aliens temporarily here for allowable reasons of business or pleasure, 8 U.S.C.A. § 203(2). Four of the petitioners entered as seamen, jumped their ships and illegally remained in the United States. One came as the representative of a foreign government and was allowed to stay here during the World’s Fair and for thirty days thereafter; and the other, a native of Canada, was unable to show lawful admission to this country. Deportation proceedings were commenced in the cases of several of the petitioners and some were ordered deported and another or others were allowed to depart voluntarily. In what capacities the petitioners who were originally admitted as students were allowed to remain in the United States is not made clear, but that makes little difference for the purposes of this opinion.

The pertinent provisions of Section 701 of the Nationality Act of 1940, 8 U.S.C.A. § 1001, as amended by the Act of December 22, 1944, 58 Stat., Part I, pp. 886, 887, reads as follows: “Notwithstanding the provisions of sections 303 and 326 of this Act, any person not a citizen, regardless of age, who has served or hereafter serves honorably in the military or naval forces of the United States during the present war and who shall have been at .the time of his enlistment or induction a resident thereof and who (a) was lawfully admitted into the United States, including its Territories and possessions, or (b) having entered the United States, including its Territories and possessions, prior to September 1, 1943, being unable to establish lawful admission into the United States serves honorably in such forces beyond the continental limits of the United States or has so served, may be naturalized upon compliance with all the requirements of the naturalization laws except that (1) no declaration of intention, no certificate of arrival for those described in group (b) hereof, and no period of residence within the United States or any State shall be required; * *

It thus appears that in order for a non-citizen to be naturalized several conditions must be made to appear, to-wit: (1) that he has served honorably in the military or naval forces of the United States during the present war; (2) that he shall have been at the time of his enlistment or induction into the military or naval forces of the United States a resident thereof; (3) he must have been lawfully admitted into the United States or one of its Territories or possessions. There is an exception as to lawful admission for those who entered the United States prior to September 1, 1943. If they are unable to establish lawful admission, but can show honorable service in some branch of the armed forces of the United States beyond the continental limits thereof, they may nevertheless be naturalized if the other conditions are met; but none of .the petitioners fall in this class or group. If the petitioners meet the foregoing requirements, they need not show the filing of a declaration of intention.

It may be accepted as a fact that all of the petitioners have served honorably in some branch of the armed forces of this country during the present war, within but not without the continental limits of the United States; but i.t cannot be accepted as a fact, under the showings made, that any of the petitioners were lawful residents of the United States at the time of the filing of their petitions for naturalization. No hard and fast rule can be laid down as a guide for the interpretation of such words as “resident”, “domicile”, etc., but surely Congress in passing the Nationality Acts did not have in mind both legal and illegal residence in the United States. Many of the petitioners were not lawfully admitted into the United States. They gained entrance illegally. Another gained legal entrance but overstayed his time, thereby making his presence here illegal and himself subject to deportation. There are but four petitioners who were legally here at .the time of filing their petitions for naturalization, and they were first admitted as immigrant students, and later temporarily as tourists or for reasons of business or pleasure, all of which conditions negative the idea of legal residence.

Congress undoubtedly intended that those applying for naturalization, especially those who had not served honorably in the armed forces of this country without the continental limits of the United States, should be able to establish legal residence as is evidenced by the supporting phrase, “who * * * was lawfully admitted into the United States.”

It is the right of Congress — not •the right of the Courts — to say what non-citizens of the United States may become citizens thereof. Const. Art. I, Secs. 1 and 8. So when Congress prescribes the requirements for naturalization, it is beyond the power of any court or .the authority of any administrative agency to extend or to constrict the requirements so established. The important words of the Act here brought into question are “resident thereof” and “lawfully admitted into the United States”. The latter phrase complements the first. It emphasizes that Congress intended a residence founded on lawful entry. Since an unlawful entry gives rise to the right, if not the duty of the government to expel such an entrant, Sec. 154, 8 U.S.C.A., it is hardly conceivable that Congress intended that legal residence could be predicated on either an illegal entry or an illegal stay in the United States. As said by Mr. Justice Field, in United States v. Kirby, 74 U.S. 482, 483, 486, 19 L.Ed. 278, “All laws should receive a sensible construction. General terms should be so limited in their application as not to lead to * * * an absurd consequence.” It would be imputing to Congress absurd and contradictory purposes to hold that it intended •to guard against the illegal entry of aliens into this country and at the same time to encourage such illegal conduct by allowing it as a condition of legal residence or as a requisite for naturalization.

It has been suggested that the phrase “lawful entry for permanent residence” appearing in Section 329(b) and other sections of the Nationality Act, 8 U.S.C.A § 729(b) et seq., should be distinguished from the word “residence” used in the section here under consideration; that “A change of phraseology creates a presumption of a change in intent.” It is not plain what distinction, if any, Congress intended by using the words “permanent residence” in one place and the single word “resident” in another, but to accept the suggestion made would amount to striking from the amendment of 1944 the word “resident”. It is not to be presumed that Congress used the word “resident” in the sense of “visitor” or “trespasser”, for surely they are not synonymic.

It was also suggested that “Comparison with other legislation relating to the naturalization of persons in the armed forces lends support to the -fact that a liberal interpretation of the requirements for lawful entry was intended” by Congress. This amounts to no more than a request to strike from the Act the words “who was lawfully admitted” and to insert in lieu thereof the words “who gained entry by whatever means.”

It was further suggested that “Although the certificate of arrival requirement is waived only for persons who have served beyond the' continental limits of the United States, the history and purpose of the Act indicate an intention on the part of Congress not to require lawful admission for permanent residence in the type of naturalization proceedings under discussion.” (Emphasis added.) That is only another way of saying that Congress while prescribing specific requirements for naturalization expected that the Courts and the Naturalization Service would disregard them. The Court cannot lend itself to such an interpretation of the congressional intent.

Another suggestion is that under the Act of 1944 “the privilege of naturalization is extended to those not racially eligible to naturalization under the general provisions of the law. However, a person racially ineligible to citizenship is barred under the immigration laws from entering the United States for permanent residence (Section 13(c), Immigration Act of 1924).” Here we have a play on the word “permanent”. If the applicant was a resident of .the United States “at the time of his enlistment or induction” and if he “was lawfully admitted into the United States”, he meets the requirements of the Act, regardless of his race.. When Congress lifted the ban against those who because of race previously had been excluded from consideration for naturalization, effective the date of the Act, that did not vest in the Courts power to make the Act retroactive so as to cover previous illegality with a cloak of legality. Congress might have done so, but it didn’t.

Lastly it has been suggested that the Immigration and Naturalization Service has promulgated certain regulations which in effect construe the Act to mean that lawful admission into the United States is not a requisite for naturalization, notwithstanding the plain language of the Act to the contrary; that after the publication of such interpretation “Congress amended the Act by waiving the certificate of arrival requirement for certain persons serving honorably in the military and naval forces beyond the continental limits of the United States”, although “the phrase ‘lawfully admitted’ applying to those not exempted from the certificate of arrival requirement remained unchanged.” The implication of this suggestion is that Congress by silence approved an utterly illogical and contradictory administrative construction of the Act. A copy of -the referred to regulation is not before the Court Hence no opinion can be expressed as to its meaning, but if it goes as far as the suggestion indicates, then it is a palpable effort on the part of an administrative agency to usurp the legislative powers of Congress.

For the reasons stated naturalization was denied to the named petitioners; and an order to that effect was entered as of August 22, 1945.