IN BE B,A.N GAnRIEL BANATOIUUM 00.
be done under these circumstances would, hi the opinion of the court, be clearly against equity and good conscience, and therefore will not be allowed. Thedechihm of the referee will be affirmed, at the costa of theaboye creditors. So ordered.
Inre SAN GABRIEL SANATORIUM: 00. (District Court; S. D.Callfornia.. June 26, 1899.)
A corporation which owns and maintains a prlvatehoepltal for con· sumptlves, conducting Its buslneslJ' f()l' profit,and not 8.8 a charity, furnish· Ing to Its patients the usual accommodations of a hotel, and treating their diseases chiefly by the Inhalation of an antiseptic vapor, chemically prepared on the premises, though not a "manufacturing" corporation, within the meaning of section 4 of the bankruptcy act (30 Stat. 547), Is a corporation' "engaged principally In trading or mercantile pursuits," and may be ad· judged bankrupt oli involuntary proceedings against It.
In Bankruptcy. ,On for adjudication in ruptcy. Dillon & Dunning, for petitioning credit6rs. D. P. Hatch, for bankrupt.
WELLBORN, District Judge. The court having heretofore announced its findings in favor of· petitioners, so far as concerns the acts of bankruptcy charged iii the petitioq, the only 9uestion now to be disposed of is whether or not respondent is sucb. a cotiporation as may be adjudged an involuntary bankrupt; or, more specifically, whether or not respondent is a corporation "engaged principally in manufacturing, trading, printing"publishing, or mercantile pursuits." The which respondent ,was formed are set forth in its articles of incorporation as follows;
"(1) To acquire by construction, purchase;'exehange, 01' other means, and thereafter to'own, maintain, operate,a:nd oarry' on, or to sell or'otherwlsedlBpose of ,sanatoriums andotherestabUshments 'SUitable for the care and treatment of the sick. (2) To aequlre by purchase 'or other means, and thereafter use and employ, or to seHor otherwise disPOfleOf pneumo-chemlc and other systems for .the treatment of . persona atlHcted, with tuberculosis and'other diseases. (8) To acquire, own, hold, sell, convey; and mortgage lueh real and perlonal property as may' 'be necessary, proper, or convenient In carrying on the business of the eorporatlon."
A circular letter issued and distributed by respondent contains the following statement as to its location:
'The San Gabriel Sanatoi'lutn 18 delightfully loeatedbetween the cities of Los Angeles and Pasadena. It Issul'rQunded, With siX acres of flne lawn, shaded with live oak, orange, palm, tropical and semitropical trees and shrubs In' 'profusion. The, building. has one hundred' eomfortable, furnished:'rooms, heated by l!lteam and lighted with gas, together with a cllmai» that Iii unsurpassed, making: an Ideal spot for a health-seeker." .
The circular letter already mentioned describes the character of respondent's business; ,as follows: :., .'
system of treatment is tMt of filling the ,apartments of each patient' antiseptic an evaporat()t.Wh,ich. har'! Hi to satu,rate In addii,ion to through a battery of cyliriders 'containing the antlseptit germicidal fiuid, consisting of oil of tar,. oil of e'ticalyptus, ,thymol,' :menthol,. pineia±', ller-' manganate of potash, and carbolic acid. After passing through the fiuid, the moisture is extracted. This gives .us practically a dry, medicated air, which is conveyed to the apartment of each patient in sufficient quantities to maintain the normal amount o(oxy.gen pi the,nutritive function. In this atmosphere the'patierit 'is asked to!lractice forced inhalations and forced exhalations, und!:!r ,prpper direction!!, and sQqp the fQllowlng results are observed: The physical examinationshows'that the lungs are clearing up, the respirations approaching normal," etc. ''The treatment of phthisical patients by inhalation is not only rational and practicable, but it is strictly in harmony with thElrapevtic law. By this means of administration it is not irritating, and tlletllr;1s Mthoroughly"impregn,ated thRtthemedicaments must reach every portion lung tissue that air in any form can reachY' , ,
In another publication made by it, respondent refers to its location, and characterizes its business thus:
"This pf treatment is the db.·ectionof the National Pulmonary Company, and is in 9Plilration at San Gabriel .Sanatorium, San Gabriel, California, near Los Angeles, and at other points. The San Gabriel Sanatorl111\1'1S Q:wned and operated by the San Gabriel Sanatorium Company. The san'atoriilm is lighted with gas arid' heated by steam and open fires. The rooms, over one hundred in number, are cheerful, sunny, and well furnished. Man3' suiteS have private ';Ijhe, sanatorium is delightfully located, surrounded by twelve acres of land, fruit trees, and shrubs. , A billiard room, lawn tennis court, and croquet grounds are free for the use of patients. ,. · ·'Ve desire to call particular attention to the salutary influence of the stilimlatlnglantise])tlc 'l'apor on the'ull!eration consequent t6 the tubercular process. Every phy·sician must have noticed. ,the rapid decline. of. phthisical patients where a, quantity. of matter was proof of extensive ulceration. '!',... We. recognize the Importance of creating ,vithln tile lungs lind aIr pass!iges a medium in Which the pathogenic germ cannot live or thrive; 'by the continuous 'inbalation of It sterilizing vapor, and at'the same time of .iJ;1creasing the resisting power of the body, by proper exercise, _good food, tonics, etc. rhis is accomplished under. our method as folloWS; ,First. In the of each there iSI;llaced one of our vaporizers which is of 'sufficient capacity to 'Silturate the air Of a room, night and day, by evaporation. Second. Fresh all' is drawn from the outer atinosphere,higb,above the earth's surface- by all l;I.i1' pump, and forced, under moderate of.lfiplnglutQthe room of each patient, where it is. ·into :the antiseptic fiuid:cl)ntained in the evaporizer. This fresq air beooroes thoroughly ImpJ1egnated with: tbesterillzing properties of the antlseptlc,fiuid,andis introduced into the room in quantities sufficient to maintain the.,normaI'proportlonof oxygen to meet the requirements of the system. In this atmosphere the patient sleeps, and at.intervals during' the day practices brea,-thlng, exercises as prescribed. Third. A special treatment room is prOVided where the vaporized antiseptic is more concentrated than·js 'needed in the living apartments. In this 'strong room' the patients practice qreathing exercises for twenty minutes three times a day. Fourth. Pulmonary gym'naatics and proper exercises are prescribed and practiced. In oases where there are com;treate<l according to of regularmediPiDe."
Th'eproof shows that respondent's 'iniStitution is not a charity, but condu'dedQnt,he lines, indicated intM'foregobig .and for aJ;elqdged and with, theus\lal profit. tions of a hotel-at the sanatorium, the rates charged being $25 per week, aull"llpward. ,Cigars are kept 0llsa)e at the sanatorium by the responoenffor the benefit of them. Petitioners furnished cigars and groceries to responoent for use ants sanatorium.
IN RE sAN GABRIEL SANATOR!UM CO.
Section 4 of the bankrupt act is as follows:
"Sec. 4. Who :May Become Bankrupts. a. Any person who owes debts, except a corporation, shall be entitled to the benefits of this act as a voluntary bankrupt. b. Any natural person, except a wll,ge-earner or a person engaged q.!J.iefiy intfarl\lh:lg or the tillage of the soil, any unincorporated company, and any corporatJonengaged principally in manufacturing, trading, printing, publishing, 0)" mercantile pursuits, owing debts to the amount of one thousand doUam or over, milS be' adjudged an involuntary bankrupt upon default or an impartial tMal, and shall be subject to the provisions and entitled to the benefits of ,this, act. Private bankers, but not national banks or banks incorporated under ,state or territorial laws, may be adjudged involuntary bankrupts."
While the artificial atmosphere used at respondent's sanatorium is doubtless the product of a manufacturing process, I am not prepared to hold that manufacturing is respondent's principal business. Nor is there any proof showing that respondent's business is that of printing or publishing. I am of the opinion, however, that respondent may be properly classified as a trading or mercantile corporation; is, a corporation principally engaged in trading or mercantile pursuits. To the proposition that "a corporation created for the purpose of carrying on or pursuing any lawful business defined by its charter, and clothed with power so to do for the sake of gain, is clearly a business corporation, and amenable to the provisions of the bankruptcy act," petitioners cite: Bump, Bankr. p. 773; Railroad Co. v. Jones, 1 Fed. Cas. 275; Adams v. Railroad Co., Id. 91; Rankin v. Railroad Co., 20 Fed. Cas. 274. These authorities, however, are interpretations of the bankruptcy act of 1867, of which section 37 is as follows: "Sec. 37. And be it further enacted that the provisions of this act shall apply to all moneyed, business or commercial corporations and joint stock companies," etc. (14 Stat. 535), and, of course, are not determinative of the meaning of the bankruptcy act of 1898; but the meaning of said last-mentioned act must be ascertained from its own peculiar phraseology. In construing said act, however, a. few general definitions will be helpful. The word "mercantile" is defined thus: "Pertaining to merchants, or the business of mercha,nts." 'Vebst. Dict. "A merchant" is "one whose business it is to buy and sell merchandise," and "merchandise" is "a term including all" those things which merchants sell, either wholesale or retail, as dry goods, hardware, groceries, drugs, etc." Bouv. Law Dict. ":Merchant" includes "hotel keeper." Campbell v. Finck, 2 Duv. 107. It has been held that one who keeps on livery, or boards, horses belonging to other persons, is a merchant. In re Odell, 18 Fed. Cas. 574. See, also, Black, Bankr. p. 32. '''Trader'' is thus defined:
"One who makes it his business to. buy merchandise or goods and chattels, and to sell the same for the purpose of making a profit. The quantum of dealing is immaterial, when the intention to deal generally exists." 3 Starkie, 5G; 2 Car. & P. 135; 1 Term R. 572.
The principal question is whether the person has the intention of getting a living by his trading.' If this is proYed, the extent or duration of the trading is not material. 3 Camp. 233; 2 Bouy. Law. Diet. 741; In re Cowles, 6 Fed. Cas. 672. A baker who buys flour and makes it into bread for sale is a trader. In re Cocks, 5 Fed. Cas. 1154. A stairbuilder is a trader. In re Garrison, ·10 Fed. Cas. 49.
These authorities, I think, faJdy of, a: l&erc'hant or t11lder,. withi-n the Uleaning of the bankruptcy h,t;w,j l:I-J.though there are some cases which.give to the words as Inre !22Fed. 'Cas. .·', , , . !', , " " ,:Respondentc-ontends that, , as the. ulti¢a,M :o"fYject of its business of consumptives, it is not a principally engaged in trading or mercantile pursuits, resting'itsal1gument largely on the word used' in section 4 of 'the bankruptcy ,act above quoted. This word "principally," it seems'to me;, does not denote the object or end of a pursuit, as claimed by respondent, but is employed here to distinguish a calling, usual occupation, from an isolated single transaction. Thus, if an incorporated charity-a public free hospital, for instanc --'-should buy a horse to be used in conveying patients to and from the hospital, and, finding the horse unfWful' such use, should sell it, this one purchase and sale would not bring tli.ehospital within the classification of a corporation principally engaged, in trading or' mercantile' pursuits; but if an incorporated compl1l1ysuch as a private haspitl:tlbe conducted in a business way for prOfit, and not on charitable lines, iUs, Ithink, a trading or mercantilecorporation, within the meaning of the present bankruptcy law,n6 Ihatter what may be the result or effects it purposes to accomplish with or upon its patrons. A decree adjudging, respondent a bankrupt will be entered.
InreOTT. :' -Court, S., D. Iowa, E. D. July 5, 1899.)
1. BANx'll.uPTCY-PRTORITY OF "MULCT TAX."
tax" imposed by Code Iowa 1897;: §, 2432, on all persons caJTyiJilgijoll"the ,business of selling into,xicating li,quors;, although it is Idenolllh.}ated an tax," and Is and ,qatlected iPBubstantlally the same manner, bythe same officers, and for the sll.lne:· uses" as' taxell' in general, is nevertheless merely a charg/l' of 'li-cense exactlld for the ,privilege of carrying on the business. described Smith v. 'Skow, 66. N. W. 893,97 :Ipwa, 640), and Is ;th!!re, nQt,1t:jtax," witWn the meanipgof Bankrupt0y .Act, § 64, ,cl.a, requiriiIgtru!ltees in, bankrjiptcy to pay "all taxes legally dlle .'and owing by the bankrttpt"l iii allvance of the payment of dividends ,'to 2. SAME-Fin,:i.O'WJNGSTATE DECISIONS. " , lndetermining whether II cha;rge or mulct imposed by a .state statute upon liquor sellers is a "tax," within,the meaning of that term as used In the bankruptcy act, a court of bankruptcy will follow the deCisions ot thE! highest court'of the stateconstruini; the statute.
In Bankruptcy. On· certificate of review from John M. Helmick, Esq., referee in bankruptcy. Julius :Usher; for Scott county. Wm. Theophilus, for Jacob Gadient Isaac Petersberger and A.· P. Murphy, for opposing creditors. ,
WOOLSON,District Judge. Louisa Catharine Ott having been duly a.djudicated a bankrupt, the county of Scott filed its verified