author: DUNCAN, District Judge.

text:
    ST. LOUIS AMUSEMENT CO. et al. v. PARAMOUNT PICTURES, Inc., et al.
    No. 3158.
    District Court, E. D. Missouri, E. D.
    Aug. 6, 1945.
    Mat J. Holland, of St. Louis, Mo. (Russell Hardy, of Washington, D. C., of counsel), for plaintiff.
    Jacob M. Lashly and Israel Treiman, of Lashly, Lashly, Miller & Clifford, all of St. Louis, Mo., and Whitney North Seymour, of Simpson, Thatcher & Bartlett, Albert C. Bickford, and Armand F. Macmanus, all of New York City, for moving defendants (Julius H. Drucker, of St. Louis, Mo., of counsel), for moving defendant Paramount Film Distributing Corporation and others.
    S. Mayner Wallace, of St. Louis, Mo., for defendants American Arbitration Association and Harold D. Conner.
    Rene J. Lusser, of St. Louis, Mo., for defendant Harry G. Erbs.
    Mortimer A. Rosecan, of St. Louis, Mo., for defendants Adolph Rosecan, Joseph Litvag, and Apollo Theatre Corporation.
   DUNCAN, District Judge.

The plaintiffs are motion picture exhibitors in the City of St. Louis and ask for an injunction and treble damages against the defendants for alleged violation of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note.

The defendants Paramount Film Distributing Corporation, RKO Radio Pictures, Inc., Twentieth-Century-Fox Film Corporation and Warner Bros. Pictures Distributing Corporation are -distributors of motion pictures.

The defendants Adolph Rosecan, The Princess Theatre, Joseph Litvag and The Apollo Theatre, are moving picture exhibitors in the City of St. Louis.

The defendants Harry Erbs and Harold D. Conner, are employes and representatives of the American Arbitration Association.

Plaintiffs seek to enjoin defendants from continuing or participating in arbitration proceedings relative to clearance with respect to the theatres of the plaintiffs, and from making or observing any award, decision or judgment in any arbitration proceedings and from in any manner limiting or restricting themselves in or refraining from making contracts, licenses or other agreements with plaintiffs for motion pictures upon such terms and conditions as the plaintiffs and defendants may independently, freely and voluntarily agree to and as may be satisfactory to themselves.

The matter is before the court on motions of the defendants to dismiss the complaint and for summary judgment.

On July 20, 1938, the United States filed a petition in equity in the United States District Court for the Southern District of New York, entitled “United States of America vs. Paramount Pictures Incorporated et al.,” wherein it charged various defendants, including the defendants Paramount Film Distributing Corporation, RKO Radio Pictures, Inc., Twentieth-Century-Fox Film Corporation and Warner Bros. Pictures Distributing Corporation, with violating the Sherman Anti-Trust Act.

In its petition the Government among other things, attacked certain trade practices in the motion picture industry, and among those practices was that of “clearance,” and sought relief against the continuance of such practice. During the consideration of that action, a decree was consented to by all of the parties to the suit, and such consent decree was entered on the 14th day of November, 1940.

The consent decree is quite long and apparently was intended to cover every phase of the relations between distributors and exhibitors, in the moving picture industry.

Paragraph I of the decree provides:

“The Court has jurisdiction of the parties hereto; and for the purposes of this decree and of proceedings for the enforcement thereof, and for no other purpose, the Court has jurisdiction of the subject matter hereof and the complaint states a cause of action against the defendants under the Act of Congress of July 2, 1890 entitled ‘An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies.’ ”

Paragraph II provides:

“Each consenting defendant, its successors, officers, directors, agents and employees, and all persons and corporations acting under, through, or for it, hereby is and are enjoined from doing the acts prohibited by this decree, and is and are directed to do the acts thereby required.”

A rather elaborate system of arbitration was provided for in the decree in the event of disputes between the distributors and the exhibitors, and the American Arbitration Association of New York City, one of the defendants herein, was named as administrator. A Board of Appeals from such arbitration is also provided and large sums of money are made available for the payment of the expenses of the administrator. The country is divided into various arbitration districts wherein the administrator maintains offices and tribunals before which proceedings may be filed and arbitration had.

It is provided in the Decree that it shall operate for a trial period of three years from the date of its entry, and that jurisdiction is retained for the purpose of enabling any of the parties to the decree to apply to the court at any time for such orders and directions as may be necessary and appropriate for the construction of, or carrying out of the decree, and for the punishment of the violators thereof.

Paragraph (d) of Section XXIII provides that any of the parties may apply to the court at any time more than three years after the date of the entry for any modification thereof.

The American Arbitration Association as the administrator, has been carrying out its duties in the City of St. Louis under the provisions of the decree since the entry thereof, and has been arbitrating such disputes as have been submitted to, it.

Section VIII is the section of the decree applicable to “Clearance” and in this section it is stated:

“It is recognized that clearance, reasonable as to time and area, is essential in the distribution and exhibition of motion pictures.”

The section then proceeds in seven paragraphs, to define certain conditions and circumstances which are to be taken into consideration by the arbitrator in.matters referred to it under this section.

Plaintiffs charge in their complaint that the moving defendants, and the defendants American Arbitration Association and its officers, who are parties to this action, have entered into a conspiracy and are engaged in a combination in restraint of trade and commerce under the Act of Congress of July 2, 1890, and that as a part of such combination and conspiracy, the defendants have arranged and agreed that they will refuse to enter into contracts to supply moving pictures to any and all exhibitors (except exhibitors in whose theatres the distributors have' an interest) against whom awards have been made by the American Arbitration Association other than upon the terms and conditions provided in such awards.

It is further charged that there is an arrangement and agreement and conspiracy by which the defendants refuse to enter into contracts and to supply motion pictures to the plaintiffs except upon terms and conditions stated in awards of the American Arbitration Association.

Plaintiffs contend that the court in the Southern District of New York, although having jurisdiction of the parties and of the subject matter, exceeded its authority in entering a consent decree and was without power to create an authority for the arbitration of disputes arising between the distributors and exhibitors of moving pictures; that the only power of the court under the Act was to restrain and prevent the defendants from performing acts that constituted restraint of trade under the Anti-Trust Act; therefore, that the decree-conferred no jurisdiction upon the administrator, the American Arbitration Association; that under the provisions of the decree, it was for a trial period of three years, and that following that period of three years the Government filed an application for the modification of the decree, which application is- now pending, and the. decree is not.now in effect.

Those matters may be taken up in reverse order. Section XXI of the decree-provides:

“Petitioner, by its counsel, has represented to the Court that the public interest-requires that the provisions of this decree-shall operate for a trial period of three years from the date of entry hereof.”

Read alone, this sentence indicates-that it was the intention of the parties that the decree should expire at the end of' three years. However, this sentence and the section of which it is a part, must be read, in connection with the entire decree.

We find in paragraph (d) of Section. XXIII this language:

“Enabling any of the parties to this, decree to apply to the Court at any time more than three years after the date of the entry of this decree for any modification thereof; ”.

Paragraph (e) of the same section:

“Enabling any consenting defendant to-apply to the Court at any time more than three years after the date of the entry of this decree; to vacate this decree, or any modification thereof, on the ground that under the economic or competitive conditions existing at the time of such application, this decree or any modification! thereof, or any provision thereof,. % í}í sjc

It is clear from reading these sections that the decree should be in effect uninterrupted for a period of three years, and that thereafter any of the persons might move to modify it.

Therefore, the decree is now in effect, and that contention of the plaintiffs must be decided against them.

Authority is conferred upon the Attorney General to enforce the Act and to that end he is authorized to institute suits in the District Courts of the United States, and in the performance of his duties he is authorized to enter into Consent Decrees. It is admitted in this case that the court did have jurisdiction of the parties and of the subject matter, and the court had authority to enter a consent decree.

Even though a court may disagree with a court of coordinate jurisdiction as to the efficacy of the provisions of a decree, or the advisability of entering such a decree, yet, if the coordinate court has jurisdiction to enter the decree, and there is no dispute about that right here, this court may not review such decree for errors. As a matter of comity, courts of coordinate jurisdiction should respect each other’s decrees, unless, of course, a decree is void. Torquay Corporation v. Radio Corporation of America, D.C., 2 F.Supp. 841. In that case, as in this, a consent decree in a court of coordinate jurisdiction was in question. Judge Knox stated (2 F.Supp. loc.cit. 844) :

“Assuming for the moment that this court has jurisdiction of the present suit, it is clear, as a matter of comity and of the orderly administration of justice, that this court should refuse to exercise its jurisdiction to interfere with the operation of a decree of another federal court. Especially is this so where it is clear that the United States District Court in Delaware would have jurisdiction of such a suit as is now before this court. A bill to modify or restrain the enforcement of a decree of a federal court may undoubtedly be brought in the court which entered such decree. Pacific R. of Missouri v. Missouri Pacific R. Co., 111 U.S. 505, 4 S.Ct. 583, 28 L.Ed. 498. See Johnson v. Christian, 125 U.S. 642, 8 S.Ct. 1135, 31 L.Ed. 820; Sherman National Bank v. Shubert Theatrical Co., 2 Cir., 247 F. 256. See, also, Foster Federal Practice (6th Edition) §§ 51, 132. Furthermore, the consent decree stated that ‘jurisdiction is hereby expressly reserved for the purpose of enforcing or modifying this decree on application of any of the parties hereto.’ While the present plaintiff was not a party to the Delaware suit, complainant is suing as a stockholder on behalf of itself and other stockholders of the Radio Corporation. That company was a party to the decree, and complainant’s rights, if any, would seem to be more properly justiciable in the court that made the decree, out of which complainant’s grievance arises, than here.”

The plaintiffs however contend that while the New York Court had jurisdiction of the parties and of the subject matter, it exceeded its authority in setting up the rather elaborate system of arbitration; that such action was outside of the scope of authority of the Act which conferred jurisdiction on the court; that the provisions of the decree in respect of arbitration were legislative rather than judicial, and that the court had no authority whatsoever to create or set up a system for arbitration, and therefore, its decree in that respect is void.

While the court should not review a decree of a coordinate court for errors, it is not bound by a judgment or a decree of a coordinate court where that decree or judgment is void. Such a judgment is binding upon no one. Elliott v. Peirsol’s Lessee, 1 Pet. 328, 7 L.Ed. 164; San Jacinto Finance Corporation v. Perkins, Tex.Civ.App., 94 S.W.2d 1213; O’Banion v. Weaver, Tex.Civ.App., 62 S.W.2d 212.

We find in the decree at the very beginning of Section VIII the statement that:

“It is recognized that clearance, reasonable as to time and area, is essential in the distribution and exhibition of motion pictures.”

In considering this question we must start with the premise that it is necessary in the conduct of the business of distributing and exhibiting motion pictures to have some rules and regulations as to arrangement between the distributors and exhibitors with respect to clearance, or with respect to the length of time between the showing of such moving pictures in one type of theatre and in another type of theatre, in the same city, or in the same community. That situation has long been recognized in the industry as a cause of much controversy, and has resulted in expensive litigation. '

So, we must admit that we are dealing with a highly complicated, and highly controversial phase of the moving picture industry and one which cannot be solved by simple, direct methods. It being a complicated subject, it may have to be met by complicated methods.

Under the Act empowering the court to restrain or prevent the doing of things in restraint of trade, we find no yardstick or specific provisions to guide or direct the court in saying what is or what is not reasonable clearance in the moving picture industry. Certainly many consent, decrees in monopoly cases have required the doing of affirmative acts such as the divesting of ownership in certain types of stocks and securities, the disposition of property, even prescribing the method of conducting the business of those properties, so as not to result in restraint of trade.

I am willing to admit arguendo, that the Consent Decree, in setting up a Board of Arbitration, and providing for rules and regulations for the conduct of the tribunals provided for, is considerably broader than any other cases I have been able to find, yet, in view of the complicated nature of the subject with which the court was dealing, and the apparent impossibility of defining set rules by which each case may be determined, I cannot say that the District Court for the Southern District of New York, having jurisdiction, was without authority to provide in its decree for the submission of “clearance” disputes to arbitration, and providing the machinery for such arbitration. A court in considering whether or not the judgment or decree of a court of coordinate jurisdiction is void, should resolve every doubt, in favor of the validity of the decree, and of the authority of the court otherwise having jurisdiction, to enter the decree.

In this case the question, so far as these motions are concerned, is — whether the United States District Court for the Southern District of New York, exceeded its authority in entering the Consent Decree by setting up the Board of Arbitration and enjoining the parties before it from entering into any contract with respect to clearance in violation of a determination by the arbitrators.

Every jurisdictional fact necessary to enter the decree was present — it was consented to by the Attorney General, the chief law enforcement officer of the United States, the officer charged with the responsibility of enforcing the anti-trust laws, and the representative in such proceedings of the public and all who may be affected by a violation of the anti-trust laws.

I cannot say that the consent decree of the District Court of the United States for the Southern District of New York, a court of coordinate jurisdiction, is void. If it isn’t void, the parties to that action are bound by the decree and this action should be dismissed.

Movants contend, as one ground for dismissal, that the United States is a necessary party. In view of the court’s ruling, it is not necessary to pass on that question.

The motions of defendants to dismiss and for summary judgment are sustained.

       “Clearance” is defined in Section VIII of the Consent Decree as “the period of time, fixed by agreement between a distributor and exhibitor, prior to the ox-piration of which a feature licensed for prior exhibition in a theatre may not be exhibited in another theatre or theatres.”


source: Caselaw Access Project

author: RAYMOND, District Judge.

license: Public Domain

text:
    ROWEN et al. v. BROWN, Deputy Com’r.
    No. 289.
    District Court, W. D. Michigan, N. D.
    June 20, 1945.

      Findings of Fact.
    1. This is a suit under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C.A. § 901 et seq., to set aside and to enjoin enforcement of a certain award and amended award entered by respondent in favor of Julia Ziemer and her children, following the death of Elmer J. Ziemer by drowning in the Straits of Mackinac, on November 26, 1943.
    2. Following a hearing upon the original motion of respondent to dismiss the libel, an order was made on December 22, 1944, remanding the case to the Deputy Commissioner for specific findings of fact upon the controlling issue in the case, namely, whether Ziemer was or was not a member of the crew of the vessel “Industry”, within the meaning of the excepting clause in the Longshoremen’s Act, Sec. 903(a) (1), 33 U.S.C.A., and for taking additional testimony if deemed necessary.
    3. No additional evidence was presented before the Deputy Commissioner, and on January 31, 1945, he filed amended findings of fact and amended award, as follows:
    “Amended Findings of Fact
    “That on the 26th day of November, 1943, Elmer J. Ziemer, the employee herein, was in the employ of John Rowen doing business as the Roen Steamship Company, employer above named, at the Straits of Mackinac in the Tenth Compensation District established under the provisions of the Longshoremen’s and Harbor Workers’ Compensation Act, and that the liability of the employer for compensation under said Act was insured by the Employers Mutual Liability Insurance Company; that the employee herein, Elmer J. Ziemer, was hired about July 6, 1943, as a meat cutter at the cold storage unit of the employer at Sturgeon Bay, Wisconsin, to prepare meat for the use of the vessels owned or operated by the employer, and when not so occupied to work around the yards of the employer at that place; that, thereafter the employer contracted with the United States Engineers for the removal or the reduction of the wreck of the S. S. ‘George M. Humphrey’ which had sunk in the Straits of Mackinac, a mile and a half off the south shore of the Strait, was a menace to navigation, and had been abandoned by its owners; that said vessel was 600 feet long and loaded with iron ore, and the contract of the Roen Steamship Company required them to raise and remove the wreck, or cut it down to a level where it would no longer menace navigation; that in return for this service the Roen Steamship Company was to receive all salvage from the said vessel; and that this was a maritime enterprise; that to facilitate this operation the employer herein rented a meat market in Mackinaw City, Michigan, in which to keep meats for the men working thereon and to supply other vessels of the Company, as needed; that about the 16th of October, 1943, the employer had the salvage barge ‘Industry’ towed from Sturgeon Bay to tire above wreck by two tow boats, and solidly anchored over the wreck, to six concrete blocks; that the ‘Industry’ had no power of its own but was equipped with a steam wrecking crane, diving equipment and quarters for the workmen engaged on the salvage work; that these workmen consisted of a foreman who operated the .crane, two divers, two divers’ tenders, three mechanics, two laborers, a night watchman and a cook; that the ‘Industry’ was not used in navigation and had no ‘crew’ as that term is used in sections 2(3), and 3(a) (1), of the Longshoremen’s and Harbor Workers’ Compensation Act; that the employee, Elmer J. Ziemer, was taken along on this job to continue his work as a meat cutter at Mackinaw City, to supply the ‘Industry’ and other vessels with meat, and to serve as one of the laborers on board the ‘Industry’ in the salvage operation; that he had no part in the towing of the ‘Industry’ from Sturgeon Bay, Wisconsin to the Straits of Mackinac, a distance of some 150 miles, and, beginning with the 27th day of October, 1943, served as a laborer and meat cutter only; that he and the other workmen, except the, divers, slept and ate on board the ‘Industry’, and he was paid an hourly wage for his work; that there is no evidence that up to the time of his death, the work had been other than the unloading of the cargo of the ‘George M, Humphrey’, and storing it on shore and this was also a maritime enterprise; that he performed no service in connection with the navigation of any of the vessels of the employer, signed no articles, had no rating as a seaman, and was not a member of the crew of any vessel, as that term is used in sections 2(3) and 3(a) (1) of said Act; that on said 26th day of November, 1943, the employee had gone ashore in the tug ‘A. & M. Link’, to prepare meat in a cooler rented by the employer in Mackinaw City, Michigan, for use on these vessels, and was returning on board the same tug to spend the rest of the night on board the ‘Industry,’ when he fell from the tug a mile from shore and was drowned; that said injury and death arose out of and in the course of said employment; that the body of the employee has not been recovered and no burial expense incurred; that the average annual earnings of the employee amounted to $1950.00; that the employee left surviving him, claimant, Mrs. Julia Ziemer, his widow born November 16, 1900; three children, Lucille Sandra Ziemer, born June 18, 1928, James Herman Ziemer, born April 25, 1930, and Gary Elmer Ziemer, born October 16, 1934; that claimant, Mrs. Julia Ziemer, is entitled to compensation at the rate of $13.12% per week beginning with the 26th day of November, 1943, on her own behalf, and $3.75 per week for each of said children from the same date until they shall respectively reach the age of 18 years, or their dependency be otherwise terminated according to law; that the amount of compensation accrued to and including the 8th day of February, 1944, 10% weeks, is $261.16; that claimants’ attorney, Robert Branand, Jr., has performed services for them in this proceeding of the reasonable value of $250.00 and is entitled to a lien on the foregoing compensation, payable $150.00 in cash and $5.00 per week for 20 weeks.
    “Upon the foregoing findings of fact the Deputy Commissioner makes the following
    “Amended Award
    “That the employer, John Rowen, doing business as Roen Steamship Company, and the insurance carrier, Employers Mutual Liability Insurance Company, shall pay to Mrs. Julia Ziemer, $261.16, less $150.00 to-be deducted therefrom and paid to Robert Branand, Jr., 175 W. Jackson Boulevard,. Chicago, Illinois, and the further sum of $13.12% per week for her own benefit and $3.75 per week for the benefit of each of the children, Lucille Sandra Ziemer, James Herman Ziemer and Gary Elmer Ziemer, beginning with the 8th day of February, 1944, until the termination of the dependency of the respective beneficiaries according to law, less the sum of $5.00 per week to be deducted from the gross weekly payment and paid to Robert Branand, Jr., for a period of 20 weeks; subject to credit for payments made pursuant to the Compensation Order entered herein on March 6, 1944.
    “Given under my hand at Chicago, Illinois this 31st day of January, 1945
    “Leonard C. Brown
    “Deputy Commissioner”
    4. Pursuant to leave, supplemental libel and petition were filed February 24, 1945, and thereafter it was stipulated that the motion to dismiss previously filed should stand as a motion to dismiss the libel and petition and the amendment thereto as originally filed, and the supplemental libel and petition so filed.
    5. The controlling question involved is whether or not the evidence before the Deputy Commissioner showed Ziemer to have been at the time of the accident a “member of the crew” of the vessel “Industry” and therefore not within the cov-eiage of the Longshoremen’s Act. It is the claim of respondent that the motion to dismiss should be granted, for the reason that the libel does not set forth a cause of action, in that it discloses that the findings of the Deputy Commissioner are supported by evidence and are therefore conclusive.
    6. Careful review of the transcript of the testimony taken before the Deputy Commissioner establishes the fact that there is sufficient evidence to support the findings of fact to the effect that Elmer J. Ziemer was not a member of the crew of the vessel “Industry”, within the meaning of 33 U.S.C.A. § 903(a) (1).
    Conclusions of Law.
    1. This court has jurisdiction of the subject matter and of the parties.
    2. The finding of the Deputy Commissioner that Elmer J. Ziemer was not a member of the crew of any vessel on the 26th day of November, 1943, is supported by substantial evidence.
    3. The compensation order filed March 6, 1944, as amended January 31, 1945, is in all respects in accordance with law.
    4. Respondent is entitled to judgment dismissing the libel.
    5. An order will be entered accordingly.
    Eldredge & Eldredge, of Marquette, Mich., for libellant.
    Joseph F. Deeb, U. S. Atty., of Grand Rapids, Mich., for respondent.
   RAYMOND, District Judge.

The findings herewith filed clearly disclose the factual basis for the award and amended award made by the Deputy Commissioner.

His findings regarding the circumstances, nature, extent and consequences of injuries are conclusive when supported by evidence. South Chicago Coal & Dock Co. v. Bassett, 7 Cir., 104 F.2d 522. A very careful review of the record made before the Deputy Commissioner necessitates approval of the finding that deceased was not a member of the crew on the date in question. It is the view of the court that Congress, in making the exception to coverage found in section 903(a) (1), 33 U.S.C.A., did not intend to exclude from the benefits of the act those who are on board with no likelihood that then or thereafter will they be any part of a navigating crew. The “Industry” at the time of the accident was engaged in a purely salvaging operation, serving only the purpose of removing an obstruction to navigation in the Straits of Mackinac. It is clear that deceased was employed solely because of his skill in the cutting, storage, and preparation of meat for food for the crews of several vessels operated by the Rowen Steamship Company.

The court is of opinion that the following quotation correctly summarizes the law concerning the accepted meaning in ordinary parlance of the word “crew,” and that the purpose of Congress was to include in the exception only those who regularly or ordinarily are engaged in seafaring and navigation, as distinguished from those whose tasks are of such a nature that they are independent of navigation :

“In maritime law, and in a general sense, the ship’s company, embracing all the officers, as well as the common seamen. The term, however, sometimes includes the officers and the common seamen, excluding the master; and sometimes includes the common seamen only, excluding the master and the officers. When the crew of a vessel is referred to, those persons are naturally and primarily meant who are on board her aiding in her navigation,. without reference to the nature of the arrangement under which they are on board, and, in a particular connection, the term has been defined as meaning that body of men who in the common parlance make up the ship’s complement, those who regularly or ordinarily are engaged in seafaring and navigation, as distinguished from those whose tasks are of such a nature that they are independent of navigation in their scope, such as tasks which might as well have their background on shore, or at the dock, such as watchmen, etc. The word implies a definite and permanent connection with the vessel, an obligation to forward her enterprise and to protect her in emergency, and a right to look to her and her earnings for wages; also the word implies subjection to the commands of the master, if the vessel has a master. * * * ” 21 C.J.S., Crew, pages 1149, 1150.

See also, authorities cited 21 C.J.S., Crew, pp. 1149, 1150, and the 1945 Pocket Supplement thereto.


author: KIRKPATRICK, District Judge.

text:
    LEWIS v. ROTHENSIES, Collector of Internal Revenue.
    No. 3563.
    District Court, E. D. Pennsylvania
    Nov. 10, 1944.
    Frank A. Moorshead, of Philadelphia, Pa., for plaintiff.
    Gerald A. Gleeson, U. S. Dist. Atty., and Thomas J. Curtin, Asst. U. S. Dist. Atty., both of Philadelphia, Pa., for defendant.
   KIRKPATRICK, District Judge.

This action to recover an income tax paid under protest was tried to the court without a jury. The evidence consists entirely of a stipulation, and I adopt it as special findings of fact.

The sole question involved is whether royalties upon books, of which the plaintiff was the author, payable to the plaintiff under contracts with his publisher and assigned by him to his children, are taxable to the plaintiff or to his assignees.

If the royalties were income derived from compensation for personal service they would, under the rule of Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731, be taxable to the plaintiff. This because the statute was intended to tax salaries to those who earned them and its import was that the tax upon that kind of income “could not be escaped by anticipatory arrangements and contracts however skilfully devised to prevent the salary when paid from vesting even for a second in the man who earned it.” And under Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655, it would make no difference that the right to receive the income antedated the transfer.

It is certainly a close question whether the royalties involved in this case were compensation for personal service or income from income-producing property. On the whole, I think, the latter. It appears from the stipulation that the plaintiff is employed as an “editor” for the publisher, but it states that he is also an author of the books from which the royalties are derived and that he sold these works to the publisher. It does not appear that writing the books was a part of the services which he was required to render as editor under his contract of employment, a fact which, if true, might have made a difference. When an author writes a book the literary ideas embodied in the manuscript are property. When he sells it in exchange for royalties his interest in the contract by which the royalties are paid is property. Of course, the book came into being by his personal service (a term by no means restricted to services rendered by virtue of an employer-employee relationship), but so do many other kinds of income-producing property. For example, a man might build, entirely by his own labor, a boat or a wagon or a barn. If he did so and rented what he had made to others, it would hardly be contended that' the income was income derived from compensation for personal service. Granted that a lawyer who draws a will for a client does not create property and sell it to his client, and, perhaps, that an artist who paints a portrait is paid for his work rather than for the canvas and oils, still a literary work is marketable and has much more than a purely personal or sentimental value. So here, I think that the royalties were derived from income-producing property. The Circuit Court of Appeals for the Third Circuit in Nelson v. Ferguson, 56 F.2d 121, held that the sale of a patented invention in exchange for a share of the profits from its exploitation vested property rights in both parties.

Assuming then that the royalties came from income producing property, the question is whether the effect of these assignments was to accomplish a complete transfer of some interest which the plaintiff had in the property from which the income was derived. This was the basis on which the income from a trust was taxed to the assignees in Blair v. Commissioner of Internal Revenue, 300 U.S. 5, 57 S.Ct. 330, 333, 81 L.Ed. 465. That case, it seems to me, marks, the extreme limit to which the theory that a transfer of income involves also a transfer of corpus can be pushed; and it will be noted that in Blair v. Commissioner of Internal Revenue, supra, the Supreme Court followed the interpretation of the State Court to the effect that the assignments were not only of income but also of a beneficial interest in the corpus and the Court said, “it was in that aspect that petitioner’s right to make the assignments was sustained.”

Here, the plaintiff’s literary property had been transmuted into a chose in action — a contract with his publisher. The assignments do not purport to convey any interest in the contracts, whereas in the Blair case as pointed out in Helvering v. Horst, supra [311 U.S. 112, 61 S.Ct. 148], “the right to income from the trust property was thought to be so identified with the equitable ownership of the property, from which alone the beneficiary derived his right to receive the income and his power to command disposition of it, that a gift of the income by the beneficiary became effective only as a gift of his ownership of the property producing it.” The principle upon which Helvering v. Horst, supra, was decided is broad and. sweeping and it would require an exceptional case to avoid it. The ruling was that when income is the subject of a gift, no matter by what sort of assignment, the donor has really enjoyed the income because “even though he never receives the money, he derives money’s worth from the disposition of [it] * * * in a real sense he has enjoyed compensation for money loaned or services rendered. * * * ”

To the same effect was the recent case of Duran v. Commissioner of Internal Revenue, 10 Cir., 123 F.2d 324, in which Judge Bratton summarized and applied the rule governing Helvering v. Horst, supra, in a case covering the assignment of monthly payments to which the assignor was entitled from his employer under a retirement plan.

The assignments in the present case amount to little more than a direction to pay the royalties to the assignees. The contracts under which they are due from the publisher do not appear in the stipulation and from the mere statement of the stipulation I am unable to find the exceptional condition which existed in Blair v. Commissioner of Internal Revenue, supra, namely, that by reason of the nature of the property an assignment of the income necessarily carried with it an interest of some kind in the property itself.

The conclusion, therefore, is that whether the royalties upon these books be income derived from personal services or from income-producing property, they are properly taxable to the plaintiff assignor.

Judgment for the defendant.


author: PAUL, District Judge.

text:
    Ex parte ROBERTS.
    Civil Action No. 167.
    District Court, W. D. Virginia, at Harrisonburg.
    July 3, 1945.

      E. J. Roberts, pro se.
   PAUL, District Judge.

The petition for the issuance of a writ of habeas corpus which has been filed by one E. J. Roberts alleges that petitioner is unlawfully restrained of his liberty by the Superintendent of the Virginia State Penitentiary, who holds him under a sentence pronounced by the Circuit Court of Wise County, Virginia, in August, 1940, and that petitioner is now in custody at the lime-grinding plant operated by the State of Virginia at Staunton, a place within this district.

Numerous exhibits are filed with the petition and from these, together with the allegations of the petition, it appears that petitioner, after trial before a jury, was convicted upon two indictments, for forgery and grand larceny respectively and that he received a sentence of eight years on the former and of five years on the latter charge; and was committed to the State penitentiary for service of these sentences with the provision that they were to be served concurrently.

A considerable part of the petition as well as of the exhibits is directed to petitioner’s claim that he is innocent of the charges brought against him and relates to the nature or sufficiency of the evidence upon which he was convicted. Allegations of this nature are, of course, no foundation for the issuance of a writ of habeas corpus. Nothing is more well settled than that habeas corpus cannot be used as a substitute for an appeal or writ of. error to review the sufficiency of the evidence upon which a conviction has been obtained. The cases in which this principle has been announced are numberless, and only a few need be cited. See Woolsey v. Best, 299 U.S. 1, 57 S.Ct. 2, 81 L.Ed. 3; Grant v. Richardson, 4 Cir., 129 F.2d 105, 106; Sanderlin v. Smyth, 4 Cir., 138 F.2d 729, 730.

However, the petitioner further alleges that his conviction was obtained in violation of rights guaranteed to him by the XIV Amendment to the Constitution of the United States; that he was deprived of his liberty without due process of law; that his rights and privileges as a citizen of the United States were abridged, and that he was denied equal protection of the law. Specifically he charges that he was forced into trial without the assistance of counsel for his defense and without an opportunity to produce witnesses in his behalf; that he was tried before a jury none of whose names were called in the presence of petitioner and who were not sworn in his presence; and that the court never pronounced sentence upon him in his presence.

While some of these allegations are denied by the recitals in the court records which are presented with the petition, it might well be considered that they are sufficient to justify the use of habeas corpus for an inquiry into the validity of petitioner’s detention. However, there are other considerations which must be taken into account before the issuance of such a writ by this court would be justified. These considerations arise not only from certain settled principles applying to applications of this sort, but from facts set out in the petition here filed. It appears that following petitioner’s conviction he was committed to the state penitentiary at Richmond in the Eastern District of Virginia. Petitioner did not apply for a writ of error following his conviction but in December, 1940, a few months after his conviction and sentence, he was permitted to and did file in the Supreme Court of Appeals of Virginia his petition for a writ of habeas corpus. He alleges that this petition was heard in that Court and on January 15, 1941, was dismissed. He does not allege the contents of that petition nor state the grounds of its dismissal. It is reasonable to assume, I think, that the grounds on which his petition was based were the same as now asserted. And inasmuch as the Supreme Court of Appeals of Virginia has original jurisdiction to issue writs of ha-beas corpus Va.Const. Sect. 88; Code of Va. § 5865, and consented to hear petitioner’s application, it is fair to presume that its dismissal was after a hearing on the merits and not upon jurisdictional or other formal grounds.

Thereafter in February, 1943, petitioner, who was then in custody within the Eastern District of Virginia, filed a petition for a writ of habeas corpus in the United States District Court for that district at Richmond. The petition then filed was upon the same grounds and embodied the same allegations of fact as that now before this court. The writ issued and after a hearing before Judge Pollard of the Eastern District, at which evidence was heard upon the merits of petitioner’s claims, the court discharged the writ and remanded the petitioner to the penitentiary upon the ground that the evidence was not sufficient to support the allegations of the petition. From this action of the District Court petitioner applied to the judges of the United States Circuit Court of Appeals for the Fourth Circuit for a certificate of probable cause for an appeal 28 U.S.C.A. § 466. This was denied on the ground that the facts shown by the record did not justify allowance of an appeal.

It will be seen, therefore, that the matters now presented in the petition before this Court have been previously considered by (1) The Supreme Court of Appeals of Virginia, (2) the United States District Court for the Eastern District of Virginia, and (3) the United States Circuit Court of Appeals for this circuit; each of which has in turn held adversely to the petitioner. It is true that the present application alleges that since the action of the Circuit Court of Appeals in September, 1943, the petitioner has come into possession of new or additional evidence to support his contentions, the nature of which he indicates. However, this new evidence, with one exception, is pertinent only, if at all, on the question of defendant’s guilt or innocence of the charges on which he was convicted; that is, it bears only on the sufficiency of the evidence to prove the charges against him. And this, as has been pointed out, is something which cannot be inquired into or reviewed on habeas corpus. The one exception is an affidavit in support of and cumulative to petitioner’s own statements as to his lack of counsel at the trial and that the jury trying him was not sworn.

There is still considerable confusion and some diversity of opinion in the decided cases as to the principles which should govern the federal courts in passing upon applications for writs of habeas corpus designed to procure the release of persons confined under judgments of the state courts and who claim the violation of rights guaranteed them by the Federal Constitution. Some of the guiding rules, however, are well settled. One-of these is that the federal courts should be hesitant about any interference with the administration of justice in the state courts and, except in cases presenting exceptional circumstances of peculiar urgency, should not entertain petitions for habeas corpus questioning the validity of state custody, so long as the petitioner has any remedy through the courts of the state. United States ex rel. Kennedy v. Tyler, 269 U.S. 13, 17, 46 S.Ct. 1, 70. L.Ed. 138; Frank v. Mangum, 237 U.S. 309, 328, 35 S.Ct. 582, 59 L.Ed. 969; Ex parte Hawk, 321 U.S. 114, 118, 64 S.Ct. 448, 88 L.Ed. 572.

Another settled principle closely related to the one just stated is that in the ordinary case the writ of habeas corpus should not issue from a federal court unless it clearly appears that the petitioner has exhausted his remedies in the courts of the state and that no adequate remedy remains to him under state law. Robb v. Connolly, 111 U.S. 624, 637, 4 S.Ct. 544, 28 L.Ed. 542; Mooney v. Holohan, 294 U.S. 103, 115, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406; Ex parte Hawk, 321 U.S. 114, 117, 64 S.Ct. 448, 88 L.Ed. 572; Sanderlin v. Smyth, 4 Cir., 138 F.2d 729, 731; Jones v. Dowd, 7 Cir., 128 F.2d 331; Ex parte Williams, 317 U.S. 604, 63 S.Ct. 431, 87 L.Ed. 491.

But there is still some seeming confusion in the decisions as to what procedure is available to the petitioner after he has pursued his way through the state courts. In Andrews v. Swartz, 156 U.S. 272, 276, 15 S.Ct. 389, 39 L.Ed. 422; there is language implying that where the matters of which petitioner complains have been raised and decided adversely to him in the state courts, they may not be reviewed by habeas corpus in the federal courts. In Whitten v. Tomlinson, 160 U.S. 231, 242, 16 S.Ct. 297, 301, 40 L.Ed. 406; it is said: “Except in such peculiar and urgent cases, the courts of the United States will not discharge the prisoner by habeas corpus in advance of a final determination of his case in the courts of the state; and, even after such final determination in those courts, will generally leave the petitioner to the usual and orderly course of proceeding by writ of error from this court.” (Emphasis supplied.) This statement is repeated in Frank v. Mangum, 237 U.S. 309, 328, 35 S.Ct. 582, 59 L.Ed. 969. To the same effect is the case of Sanderlin v. Smyth, 4 Cir., 138 F.2d 729, 731, where it is said: “Ordinarily, adjudications made by the state courts in connection with applications made to them will be binding on the federal courts; and, if the prisoner is not satisfied with state court action, his remedy, after exhausting the rights of review provided by state law, is to apply to the Supreme Court of the United States for writ of certiorari to review the state court proceedings, not to seek such review through application to a lower federal court or judge for a writ of habeas corpus.” (Emphasis supplied.)

Urquhart v. Brown, 205 U.S. 179, 27 S.Ct. 459, 51 L.Ed. 760, was a case where the highest court of the state had, after a hearing on the merits of an application for habeas corpus, denied the right of the petitioner to be discharged. Petitioner then made application to a Circuit Court of the United States which, after a hearing, discharged him from custody. 139 F. 846. On appeal to the Supreme Court of the United States the action of the lower federal court was reversed. The opinion by Mr. Justice Harlan points out that, except in a case of peculiar urgency, the lower federal courts are not justified in interfering by habeas corpus with state custody and indicates the proper procedure in these words [205 U.S. 179, 27 S.Ct. 460]:

“After the highest court of the state, competent under the state law to dispose of the matter, has finally acted, the case can be brought to this (the U. S. Supreme Court) court for reexamination. * * * “If the applicant felt that the decision, upon habeas corpus, in the supreme court of the state, was in violation of his rights under the Constitution or laws of the United States, he could have brought the case by writ of error directly from that court to this court.” And see Reid v. Jones, 187 U.S. 153, 23 S.Ct. 89, 47 L.Ed. 116.

Much of the apparent contradictions in the cases would seem to be dissolved by keeping in mind the distinction between reviewing the action of a state court by appeal or writ of certiorari to the United States Supreme Court on the one hand, and an original application to the latter court for habeas corpus on the other hand. And also by a recognition of the fact that state remedies are not to be considered as exhausted until an effort has been made to review the action of the state court by appeal or certiorari to the Supreme Court of the United States. At least I take it that this distinction and this course of procedure are indicated by the language of the opinion in Ex parte Hawk, 321 U.S. 114, 115, 117, 64 S.Ct. 448, 450, 88 L.Ed. 572, where the Supreme Court of the United States, in denying leave to file a petition for habeas corpus in that court said:

“Ordinarily an application for habeas corpus by one detained under a state court judgment of conviction for crime will be entertained by a federal court only after all state remedies available, including all appellate remedies in the state courts and in this Court by appeal or writ of certiorari have been exhausted. (Emphasis supplied.) * * *
“And where those remedies have been exhausted this Court will not ordinarily entertain an application for the writ before it has been sought and denied in a district court or denied by a circuit or district judge.”

And in the recent Supreme Court case of White v. Ragen, 65 S.Ct. 978, 981, it is said:

“Where the highest state court in which a decision could be had, considers and adjudicates the merits of a petition for ha-beas corpus, state remedies, including appellate review, are not exhausted so as to permit the filing of a petition for habeas corpus in a federal District Court, unless the federal question involved is presented to this Court on certiorari or appeal from the state court decision.”

In the case, therefore, of a person held in custody under a judgment of a state court, I take these decisions to mean:

(1) That, before applying to a federal court for a writ of habeas corpus, the applicant must have sought all available remedies through the courts of the state and must have sought to have the adverse action of the highest state court reviewed by the Supreme Court of the United States on appeal or certiorari. And not until he has pursued this course has he so far exhausted the remedies available under state law as to permit the filing of a petition for habeas corpus in the federal court.

(2) That the above is true regardless of whether the applicant has gone to the highest state court on appeal or writ of error upon the merits of his conviction or whether he has sought habeas corpus in the state court. In either event he must have sought to have the adverse action of the state court reviewed by the Supreme Court of the United States before filing an original petition for habeas corpus in a federal district court.

To the above should be added the observation in Ex parte Hawk, supra, 321 U.S. at page 118, 64 S.Ct. at page 450, 88 L.Ed. 572 that:

“Where the state courts have considered and adjudicated the merits of his contentions, .and this Court has either reviewed or declined to review the state court’s decision, a federal court will not ordinarily reexamine upon writ of habeas corpus the questions thus adjudicated. Salinger v. Loisel, 265 U.S. 224, 230-232, 44 S.Ct. 519, 521-522, 68 L.Ed. 989. But where resort to state court remedies has failed to afford a full and fair adjudication of the federal contentions raised, either because the state affords no remedy, see Mooney v. Holohan, supra, 294 U.S. 115, 55 S.Ct. 343, 79 L.Ed. 791, 98 A.L.R. 406, or because in the particular case the remedy afforded by state law proves in practice unavailable or seriously inadequate * * * a federal court should entertain his petition for habeas corpus, else he would be remediless. In such case he should proceed in the federal district court before resorting to this Court by petition for habeas corpus.”

The net result of these decisions, as I read their meaning, is that where the remedy of habeas corpus is readily available in the courts of the state, as it is in Virginia, a federal district court is not justified in issuance of the writ to question state custody. The reasons for this are that the applicant must first seek habeas corpus in the state courts and if this is denied he must seek to have the action of the state court reviewed by the Supreme Court of the United States. Urquhart v. Brown, supra, and White v. Ragen, supra. If the action of the latter court is adverse to the applicant, it may be that he has the right to apply to a federal district court for, and that the latter has the power to issue, a writ of habeas corpus, but it would hardly be justified in doing so in the face of the fact that the state court has denied the writ and that this action has received the approval of the Supreme Court of the United States. It. would require most unusual circumstances to justify a federal district court in proceeding upon an independent inquiry into questions already passed on by the highest courts of both state and federal jurisdiction.

What has been said above relates, of course, to cases where the custody is by state authority and is alleged to be in violation of some federal right. Only the existence of the latter condition permits resort to the federal courts in any event. Nor does it refer to that vague and undefined class of cases described as presenting “exceptional circumstances of peculiar urgency.”

In the instant case there appear several reasons why the petition should be denied. In the first place, the petitioner, having had his application for habeas corpus denied by the Supreme Court of Appeals of Virginia, should have sought review of this action by the Supreme Court of the United States before resorting to an original petition for the writ in a federal court. Urquhart v. Brown, supra, and White v. Ragen, supra. In the second place, a writ of habeas corpus based upon the same grounds, has already been sought •by petitioner in another federal court in this state which, after a hearing upon the facts, refused to discharge the petitioner; and from this action the Circuit Court of Appeals declined to grant an appeal. This court would not be justified in reopening for another hearing matters already thus acted on.

It is true that petitioner now claims that since the denial of his petition in the Eastern District of Virginia he has an additional witness to certain of the facts alleged in his petition. It is extremely doubtful that this merely cumulative evidence could bring about a result which the former hearings failed to achieve; but if it were possible that it could it is clear that this renewed application should first be presented to the state courts before the petitioner comes here. An applicant for habeas corpus cannot seek'the writ in the federal court claiming to have exhausted his remedies in the state court where it appears that the matters presented are in any respect materially different. Not until he has presented the full strength of his contentions to the state court has he exhausted his remedies there. Hawk v. Olson, 8 Cir., 130 F.2d 910.

The application for the issuance of a writ of habeas corpus will have to be denied and the petition dismissed.