Volume 42 — Federal Reporter, Second Series

In the libel, after setting out that it was a New Jersey corporation engaged in operating and chartering steamships and was' the owner pro hae vice of the steamer Surico, and that the Pore River Coal Company was a Massachusetts corporation, the libelant alleged: (1) That on or about the 31st day of January, 1927, it chartered to the coal company “the full coal-carrying capacity of the steamer Surico for two consecutive voyages from Hampton Roads, Virginia, to discharging…

Bill of complaint filed by three plaintiffs, the appellants here, charging defendants with infringement of patents. A motion to dismiss for misjoinder of parties was granted, with leave to the plaintiffs to amend within twenty days, and, no amendment having been filed within the time limited, a final order of dismissal was thereafter entered. Reversed. The patents in suit are owned by the appellant American Telephone and Telegraph Company.

The plaintiffs will be called Rankin and Ramsay, respectively. The business of Rankin comprised soliciting and placing advertising in newspapers, magazines, and street ears, as well as on billboards and other structures on which it eould be displayed out of doors. Ramsay solicited and placed bill posting and painted display advertising exclusively. Neither owned or controlled any billboards.

<p>Riggi Bros. Co., Inc., a New York corporation doing business in Vermont, filed its voluntary petition in bankruptcy on the 8th day of November, 1926, in the District Court for the District of Vermont, and was duly adjudicated a bankrupt. A trustee in bankruptcy was elected and qualified. On April 13, 1929, the court, after notice and hearing, approved a compromise agreement the trustee had made with three banks who claimed to be in part secured creditors by virtue of a chattel mortgage covering certain property of the bankrupt given to one of them as trustee. At the time the compromise agreement was made, the property óf the bankrupt had all been sold under a stipulation by which the trustee held the proceeds of the sale subject to the respective rights of all parties in interest to the same effect as though the property had not been sold. The chattel mortgage had been given more than four months before bankruptcy, but its validity was in dispute, both on the ground that it had not been authorized by a vote of at least two-thirds of the stockholders of the mortgagor as required by the New York law, and on the ground that the affidavit attached to it was insufficient under the law of Vermont, where the mortgage was executed and where the property was located, although it did appear that the mortgagee had taken possession of the property under the mortgage before the petition in bankruptcy was filed. The sufficiency of the description in the mortgage was questioned, and in addition to this the trustee claimed to be entitled to have certain attachment liens on the property preserved for the benefit of the estate and had filed a petition for that purpose. Petitions had been filed by the banks for various purposes relating to their claims upon the property of the bankrupt estate and in general had for their ultimate object deficiency allowances as unsecured creditors after the proceeds of the property on which security was claimed had been exhausted.</p> <p>The compromise agreement provided for the waiver of any claims for such deficiencies; for the waiver of any claim to security except on the excess of the proceeds of the sale of all property in the bankrupt estate after the expenses of administration, all preferred claims, and 10 per cent, on each unsecured claim proved and allowed had been paid; that the trustee should waive all claim to any balance of the funds in his hands over that required to pay as above stated and should not contest the validity of the mortgage.</p> <p>This mortgage was executed on May 3, 1926, to secure three notes — one for $7,500 of like date with the mortgage, one for $10,--000, dated April 10, 1926, and one for $7,-500, dated April 1, 1926, and also any subsequent indebtedness. It was given with the consent and approval of Joseph A. Riggi and Joseph A. Riggi, 2d, who together then owned 1,001 shares of the common stock of the corporation. There were outstanding 1,500 shares of common stock and 10 shares of preferred stock.</p> <p>Section 16 of the Stock Corporation Law of New York (Consol. Laws, c. 59) in force at the time provided that:</p> <p>“Power to borrow money and mortgage property. 1. Every stoek corporation other than a moneyed corporation shall have the power to borrow money and contract debts, when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges of franchises, or for any other lawful purpose of its incorporation; and it may issue and dispose of its obligations for any amount so borrowed, and may mortgage its property and franchises to secure the payment of such obligations, or of any debt contracted for such purposes. The consent to the execution of such mortgage, except a purchase-money mortgage, by the holders of not less than two-thirds of the total number of shares outstanding entitled to vote thereon, given either in writing, or by vote at a meeting of the stockholders called for that purpose in the manner prescribed by section forty-five, shall be required. A certificate that such consent was given by the stockholders in writing, or that it was given by vote at a meeting as aforesaid, shall be subscribed, acknowledged and verified by the president or a vice-president and by the seccretary or an assistant secretary of the corporation, and shall be filed and recorded in the office of the recording officer of each county within the state in which the mortgage is filed or recorded, or, if no part of the mortgaged property be located within the state, in the office of the clerk of the county wherein the office of the corporation is located. * * * ”</p> <p>The affidavit attached to the mortgage was executed by Joseph A. Riggi, “Director and Agent Mortgagor,” and by Harvey T. Rutter, “Director and Treasurer of Mortgagee,” and set forth that “ * * * the foregoing mortgage is made for the purpose of securing the debts specified in the condition thereof, and for no other purpose whatever, and that the same are just debts honestly due and owing, and to become due, from the mortgagor to the mortgagee, as Trustee.”</p> <p>At the time, sections 2788, 2789, and 2790 of the General Laws of Vermont provided as follows:</p> <p>“Sec. 2788. Affidavit required of parties; form. A mortgagor and mortgagee, or, in the absence of the mortgagee, his agent or attorney, shall make and subscribe an affidavit in substance as follows:</p> <p>“‘We severally swear that the foregoing mortgage is made for the purpose of securing the debt specified in the conditions thereof, and for no other purpose, and that the same is a just debt, due and owing from the mortgagor to the mortgagee.’</p> <p>“Such affidavit with the certificate off the oath signed by the authority administering the same shall be appended to such mortgage, and recorded therewith.</p> <p>“See. 2789. Affidavit, when corporation is party. When a corporation is a party to such mortgage, the affidavit required may be made and subscribed by a director, trustee, cashier or treasurer thereof, or by a person authorized on the part of such corporation to make or receive such mortgage; when a partnership is a party 'to the mortgage, the affidavit may be made and subscribed by one member thereof.</p> <p>“Sec. 2790. Contract of indemnity to be specifically set forth. If such mortgage is given to indemnify the mortgagee against liability assumed, or to secure the fulfillment of an agreement other than the payment of a debt due from the mortgagor to'the mortgagee, or given to a trustee to secure bonds issued or to be issued thereunder, such liability, agreement or obligation shall be stated specifically in the condition of the mortgage; and the affidavit shall be so varied as to verify the validity and justice of such liability, agreement or obligation.”</p>

1. Plaintiff is a corporation and in August, 1919, duly filed its corporation income and profits tax return for the calendar year 1918, showing a tax to be due thereon of $58,138.49, which amount was accordingly assessed, and $43,603.86 was paid during the year 1919, $330.22 thereof was credited November 16,1925, from an overassessment for the year 1917, leaving an unpaid balance of $14,204.41, which amount was abated April 28, 1926. 2.

<summary> <p id="b548-32"> <span citation-index="1" class="star-pagination" label="516"> *516 </span> Plaintiff seeks to recover the value of store fixtures alleged to be wrongfully converted by the defendant. A trial by jury was waived. ' </p> <p id="b548-33"> The plaintiff sold to R. A. Pilcher Company, Inc., owner and operator of stores in Everett, Tacoma, Aberdeen, Monroe, and elsewhere in the state of Washington, and <span citation-index="1" class="star-pagination" label="517"> *517 </span> also various places in Oregon and California, for the Tacoma store August 28, 1925, and for Aberdeen, Everett, and Monroe stores, December 23 of the same year, all of the fixtures in issue. The Tacoma fixtures were all paid for, excepting $1,068.25. The fixtures were shipped by the plaintiff to R. A. Pilcher Company, Inc., at. the various cities named in Washington, and installed under plaintiff’s supervision. The fixtures were sold under conditional sales contracts, title to remain in the seller until paid for, with the provision that, on default, the vendor may declare all amounts unpaid due, without notice retake possession of the property, sell the same at public or private sale, and, after deducting all expenses of every kind and character, including attorney’s fees, credit the net proceeds thereof to the balance unpaid, and the vendee ágrees to pay any deficiency remaining after such sale is completed. </p> <p id="b549-4"> The contracts, executed December 23, were signed at Multnomah Hotel, Portland, Or. A stipulation in each contract says: “Accepted by the plaintiff at its place of business in Los Angeles, California.” The conditional sales contracts in issue were not filed for record in the county auditor’s office of the county to whieh the fixtures were shipped, or at all. </p> <p id="b549-5"> On the 3d day of June, 1926, on petition of creditors, a receiver was appointed for R. A. Pilcher Company, Inc., by the United States District Court for the Southern district of New York, and like proceedings were had in the Northern district of California; and, on June 15, 1926, in the Western district of Washington. The receiver operated the stores for a short time and, in the course of administration, on petition of the receiver, an order of sale was entered- on July 27, 1926, directing the receiver to sell at private sale, subject to the confirmation of the court, all of the right, title, and interest of R. A. Pilcher Company, Inc., and the receiver in and to all the merchandise and fixtures, etc., in the stores at the places named. A notice was given that bids would be received and sale made at a time stated, and in due course, pursuant to the rules of court and the law, the defendant tendered a bid in the sum of $81,-009, which was the highest and best bid; other bids were also tendered. And on the 3d day of November, 1926, application was made to the court for confirmation. The court, at the suggestion of appearing creditors and interested parties, directed that further consideration be given to the bids and an increased bid, or new bids, invited, if advisable; and the matter was continued for conference and consideration between creditors and receiver from the morning session until 2 o’clock of the same day, at whieh time the defendant increased his bid to $90,000', whieh was accepted; and, upon application of the receiver, no objection being made, the sale was approved, and the receiver directed to execute proper transfer of title upon payment of the money. Thereupon, and before confirmation, the defendant paid to the receiver the full sum of $90,000, and obtained receipt therefor. Later, after adjournment of court, at 8 o’clock p. m., the receiver tendered a bill of sale to the defendant containing this provision: “It being the understanding and agreement that the fixtures and equipment in the stores situated in Aberdeen, Everett, Monroe, Bremerton, and Tacoma, Washington, are subject to any and all existing rights of the Weber Showcase &amp; Fixture Company of Los Angeles, California.” The attorney for the defendant declined to accept it, for the reason that the defendant did not know of any existing liens and did not buy it subject to- any claims or liens, and further stated that an examination of the records in the auditor’s office in the several counties into whieh the fixtures had been shipped and in which the stores were conducted disclosed no record of lien or claim. After some discussion between the attorney for the defendant and the defendant and the receiver, the attorney for the defendant stated that by the insertion of the words, “if any,” after the word, “rights,” in view of the fact that it was after eourt hours, it would be accepted, since there was no record of any liens, and the provision in the bill of sale then read: “It being the understanding and agreement that the fixtures and equipment in the stores situated in Aberdeen, Everett, Monroe, Bremerton, and Tacoma, Washington, are subject to any and all existing rights, if any, of the Weber Showcase <em> &amp; </em> Fixture Company of Los Angeles, California.” </p> <p id="b549-8"> On December 16 following, the plaintiff, through its secretary, filed a claim with the receiver in the Northern district of California for the amount due on all the sales contracts in California, Oregon, and Washington, as follows: “I am attaching hereto Proof of Debt in the Pilcher matter, together with our statement regarding the conditions surrounding, our account, a statement showing the balance due on this account, and copies of our conditional sales contracts.” <span citation-index="1" class="star-pagination" label="518"> *518 </span> The claim: </p> <p id="b550-4"> <em> “ » </em> * * j ]j. Deering, being duly sworn, doth depose and say, that he is the Secretary of the Weber Showcase <em> &amp; </em> Fixture Company, that*the annexed statement of account of R. A. Pilcher Company, Inc., lately doing business at many cities in the states of California, Oregon, and Washington, is just, true and correct, and that there is now due the sum of $32,764.21 and interest, that no part thereof has been paid or satisfied, and that there are no set-offs or counterclaims thereto to the knowledge or belief of deponent. There is attached hereto and made a part hereof a further statement concerning the claim of the Weber Showcase <em> &amp; </em> Fixture Company. </p> <p id="b550-5"> “Sworn to before me this 15th day of December, 1926, (signed) J. P. Hoffman, Notary Public. * * * </p> <p id="b550-6"> “[Signed] J. R. Deering.” </p> <p id="b550-7"> Attached is a further statement: </p> <p id="b550-8"> “That the said Weber Showcase <em> &amp; </em> Fixture Company do not in any way by the filing of this claim release or intend to release or waive any of their rights or title rights given to them by reason of their conditional sales contracts attached hereto and made a part hereof. That your affiant is informed and believes that some of the stores in which the fixtures are located that are covered by these conditional sales contracts have been sold by the. receiver, sueh sales being subject to the rights of the Weber Showcase &amp; Fixture Company in and to sueh fixtures. Tour affiant further deposes and says that under the terms of said contracts and agreements, the said Weber Showcase <em> &amp; </em> Fixture Company are entitled to certain rights and options upon default of the purchaser under said agreement. That all contracts are in default. </p> <p id="b550-9"> “That said R. A. Pilcher Company, through the receiver and by sueh sales have abandoned said fixtures and have notified the said Weber Showcase &amp; Fixture Company that they can make whatever arrangements they desire with the purchasers of the stores. That under the terms of the agreements, said Weber Showcase and Fixture Company has the right to resell said fixtures and to hold the said R. A. Pilcher Company for all deficiencies. That the amount of such deficiencies has not yet been determined because said fixtures have not yet been, resold. The said A. F. Iieurenee; the joint receiver, through his attorneys has stated that in his opinion the said Weber Showcase and Fixture Company will not receive over fifty cents on the dollar for said fixtures, which would leave a deficiency of 50% plus interest as provided for in said conditional sales agreement. </p> <p id="b550-11"> “Demand is hereby made that all rights of the said Weber Showcase and Fixture Company be observed and that all such deficiencies be paid". </p> <p id="b550-12"> “[Signed] J. R. Deering.” </p> <p id="b550-13"> —To which is attached invoice on open account of all fixtures sold in California, Oregon, and Washington. </p> <p id="b550-14"> The matter was referred by the United States District Court of California to a special master, before whom it came on regularly for hearing March 29, 1927, the plaintiff appearing by its attorneys and the receiver by his attorney, and, among other things, the special master finds, upon stipulation made and entered between the respective parties: </p> <p id="b550-15"> “ 'That the claim of the Weber Showcase &amp; Fixture Company be fixed and determined at this time as a general claim to the amount of one-half of the total claim which is filed, said one-half being $16,871.61. That the balance of the claim be canceled upon the agreement and order. That any rights remaining in the R. A. Pilcher Company, Inc., to the fixtures covered by these contracts, belong to the Weber Showcase <em> &amp; </em> Fixture Company, it being the understanding that the only sales that have been made by the receivers for the R. A. Pilcher Company, Inc., they waive all their right, title and interest in and to these fixtures.’ </p> <p id="b550-16"> “Upon the oral and documentary evidence as introduced in behalf of the claimant, and in’ further view of the stipulation made and agreed by and between the said parties, I would recommend the claim of the Weber Showcase <em> &amp; </em> Fixture Company he approved as a general claim in the sum of $16,871.61.” </p> <p id="b550-17"> This report was affirmed by the court December 21, 1927. Thereafter the plaintiff repossessed itself of all fixtures sold in California and in Oregon. </p> <p id="b550-18"> The defendant did not have actual notice of the conditional sales contracts, and the evidence does not preponderate in favor of any notice of the conditional sales contracts to the defendant, the purchaser, or his attorney. There is no evidence that there were prior creditors to or that any creditors knew of the conditional sales contracts. Some six or eight creditors testified that they had claims against R. A. Pilcher Company, Inc., <span citation-index="1" class="star-pagination" label="519"> *519 </span> ranging from $500 to $2,000. Credit was extended after installation of the fixtures in the several stores upon the faith and credit of the ownership thereof in the R. A. Pilcher. Company, Inc., and they had no notice of any conditional sales contracts outstanding. </p> <p id="b551-4"> The conclusion must follow that the United States District Court for the Northern District of California could not adjudicate any right or claim with relation to the fixtures in issue, and that the receiver or his attorney had no power to stipulate or waive any right or claim of defendant with relation to any interest, title, or claim to the said fixtures; and the failure of the vendor to file for record in the auditor’s office in the county in which the fixtures were placed, within ten days after the installation thereof by the plaintiff, the sale by the receiver, carried the title free of any conditional sales contract to the defendant, who was a bona fide purchaser for value; and the filing of the claim with the receiver was an election of remedies. </p> </summary>

<p>The plaintiff, owner of a large contiguous tract of timber lying in British Columbia and the United States, northerly of a place known as Columbia Valley in the United States, in 1922 constructed a logging railroad into this land from the United States for the purpose of logging the same, and made physical connection, with the consent of the defendant, with the defendant’s railroad at Columbia. The logging road is, and was, a private carrier-. It owned a locomotive -and operated it with its own crew, and used logging trucks furnished by the defendant for bringing the logs from the forest and placing them upon the siding connected with the defendant railroad for delivery for shipment to Belling-ham, Wash. The logs delivered for shipment and shipped, taken from either side of the boundary, cannot be segregated. A bill of lading was issued by the defendant’s -agent at Sumas, transporting the logs from Columbia to Bellingham, at which point they were dumped into Bellingham Bay and delivered to the plaintiff. The plaintiff thereafter sold approximately 10 per cent, of the logs to purchasers at Bellingham, after paying import duty and obtaining export permit from the Canadian government, and by its tugs towed the unsold logs to its mill at White Rock, British Columbia, for manufacture into lumber.</p> <p>In 1924 the plaintiff made complaint to the Department of Public Works of Washington that it'was charged in excess of the local tariff rate. The plaintiff also filed complaint with the Interstate Commerce Commission, which tentatively reported that the Interstate Commerce Commission had not jurisdiction. - Upon hearing before the Department of Public Works of Washington, the department found that, instead of paying $2.19, the local tariff rate, the plaintiff had been required to pay $2.42% per thousand feet. The . defendant company thereupon sought review before the proper court of Washington, and, upon hearing, the finding of the department was affirmed. An -appeal was prosecuted to the Supreme Court of the state, where, after hearing, the judgment of the lower court was affirmed. A petition was presented to the Supreme Court of the United States for a writ of certiorari; this was denied. Thereafter, on June 30, 1929, the Department of Public Works computed the overcharge and awarded to the plaintiff the sum of $44,365.92, and $13,319.51 interest to that date, and 6% on the said principal sum from that date until paid. No payment being made, this action was instituted in the proper court of the state of Washington pursuant to the provisions of section 10433, Rem. Comp. Stat. of Washington, and was thereafter removed on defendant’s petition to this court.</p> <p>The findings and order of the Department of Public Works of Washington and the supplemental order are admitted. The defend* ant denies the jurisdiction of the Department of Public Works of Washington over the subject-matter to consider or determine the plaintiff’s complaint, for the reason that the transportation services rendered by the defendant constitute a part of commerce between a foreign country and the United States within the exclusive jurisdiction of the Congress of the United States by virtue of section 8, art. 1, of the Constitution, and that the rates charged were applicable to foreign and interstate commerce in harmony with the tariffs filed with the Interstate Commerce Commission. The plaintiff asserts that the judgment affirming the findings and order of the Department of Public Works is res adjudieata.</p> <p>At the hearings before the Department of Public Works of Washington, counsel for the railroad company objected to the jurisdiction of the department, and has consistently maintained upon the record this status.</p> <p>The review sought in the superior court of the state and the appeal from such judgment to the Supreme Court of the state of Washington were taken pursuant to the laws of the state of Washington relating to the review by the courts of the findings and orders of the Department of Public Works of Washington. Sections 10428, 10430, 1716-1722, Rem. Comp. Stat. of Washington 1922.</p> <p>Upon filing the opinion affirming the judgment of the lower court by Department 1 (State ex rel. C., M. & St. P. R. Co. v. Department of Public Works, 149 Wash. 129, 270 P. 300), a petition for rehearing en banc was filed, and this was thereafter denied.</p> <p>The pertinent sections are the sections, supra, and section 10433, which provides, on complaint of excessive charges, the commission, after investigation finding the charge exorbitant, may order that the public service company pay the amount thus overcharged with interest to date of collection, and, if not paid within the limit fixed by the order, suit may be instituted in a court of competent jurisdiction to recover the same, and the findings and order’of the commission shall be prima facie evidence of the facts therein stated, and, if complainant prevails, he shall be allowed reasonable attorney’s fees to be fixed and collected as part of the costs of the suit.</p>