.0'
nDEBALJUilPORTER,
vot'S.
with, perhaps, additional force; but no new proposition, either' oHaw' or fact; has been advanced. 41 Fed. Rep. 163. It is again argued that the complainant's insolvency is a bar to relief, but the authorities cited Seem hardly applicable to the present facts. I cannot find that it has ever been held that mere insolvency, even occurring after the agreement, is a sufficient answer to a bill like this. Such doctrine would, therefore, be quite out of place in a cause where there is neither concealment nor fraud, and where the defenda.ntvoluntarily made the contract with full knowledge of the complainant's financial condition. Surely, no case has gone to,the extent of holdingLinsolvency a barrier where such facts concur. The :defendant was under no obligation to' continue its business with an insolvent party,"but having chosen to do so it 'cannot now take advantage of a fact which was as obvious when the renewal was made as it is t().;,day. T.hecourt at niwi prius used its -best endeavors to untangle a compUcatedcontroversy. As the situation remainsuncha.nged the ca.se may be one for an appeal, but not for a. rehearing. The motion is denied.
NATIONAL PARK BANK Oll' NEW. YORK tl. REMSEN.
{Of,rcwU Court, S. D. NetW York: JulyBl,'1890.) 1.
s: "X. (8th Ed.) p. 1957,1 12,i provides tb!lot, f,or faUure to file the an,nual o:t.tbe capital and iDdeotedness of any wrporation, as therein prescribed', tlle trUstees 'shall be liable for all debts of the' corporation then existing, or . contraCted before such report shllJll be .(!led. Ueld, t'l;Ulot .the trustees cannot be sub, jeoted 'for'an allege'd liability of the cOrporation accruing on an accommodation indorsement, which, under its oharter, it had noauthoritty to make, and which OOl:1Se- . quently did not bind it. NEGOTIABLE INSTRUMENTS-AcOOMMODATION INDORSEMBNT-NoTICE.
OORPORiflOtfi-'l1lUSTEES-LuBJLITY ','!'OR CoRPOiu;TB' DBBTs.
9.
The fact that a Dote is presented for discount by the maker is notice to the diacounter that the indorsement thereon is an accommodation indorsement.
Jitanci8 O. Barlow, for plaintiff. WiUiam H. IngersoU; for (JOXE,J;, This action is to' olthe defendant, as trustee of the German-AmericaIi; Mutual Warehousing & Security Company, the amount due upon two notes, indorsed by it, upon the ground that the trustees are liable for the :debtsofthe corporation because no annual report of its financial conditibn was filed, as reqUired by the general manufacturing act of :1848. Section 12 provides that for failure to file, the trustees "shall be jointly and severally liable Jor an the debts of the company then existing, and for all that shall be contracted before such rapOrtshaIH>emRde." BRev. St. ,N. Y. (8th Ed.) 1957. Fiistin the order of proof it -is necessary for the plaintiff to establish that the amount
AtLaw."i
i
NATIoNAL pARK: BA'NK:' t1.RJ!lMSEN.
in question'twas a debt of the corporation. It it was not a debt M; the corporation, of course, the trustees are not liable. In October, ,1889, the court of appeals of New York, in an action brought against the warehousing company upon these identical notes, held that there was no ability, for the reason that an accommodation indorsement by the housing ctimpany was ultra vireoS Bnd that the plaintiff was chargeable with notice' of the character of the indorsement, because the notes were presented for discount by the makers, who received the avails thereof. National Park Bank v. German-American, etc., Co., 116 N.Y. 281, 22 N; E. Rep. 567. This decision sets at rest forever the question of the liability of the warehousing company upon these notes.' They can never be enforced against that company and it is certainly a grave question whether, in any view, a trustee can be heM upon an obligation from which his corporation is, in fact, Teleased. But the highest tribunal of this state has decided that tho notes never were an obligation of the war&" housing company. In order to hold the defendant liable it is necessary for this court to disregard that decision. Although the power to do this may be conceded, it is only in exceptional cases, where there is a conflict between federal and state authority or where important public COllsiderations are at issue, that it should be exercised. Even where the question is one of general commerical law considerations of comity and the orderly administration of justice are against the assertion of the power. No decision of the supreme court Ilf the United States OJ' Ilf the circuit court of this circuit is cited which conflicts with the rule Of the court of appeals, and were there a likelihood that the doctrine contended for by the plaintiff would ultimately be accepted by the United States courts it is, in the circumstances referred to, appropriate and decorous that the supreme court of the United States andnot the circuit court should pronounce the judgment of dissent. Although the foregoing considerations are sufficient to dispose of the case I have examined the questions involved in the decision of the court of appeals and the authorities cited to sustain the propositions of law there enunciated, in the light of the able and elaborate brief submitted for the plaintiff, and am constrained to say that I see no reason to anticipate a conflict of authority upon these questions. The argument is plain, and, if the premises. are correct, is conclusive. Firat. The indorsements 'were accommodation indorsements. Second. The warehousing company had no' power under its charter to make these indorsements. Third. A party who discounts such paper cannot recover of the indorser if he has knowledge of the fact that the indorsement was made for the accommodation of the maker. Fourth. Where the makers of the note present it for discount it is notice to the disconnterof the character of the indorsement. The first of these propositions is supported by the proof, the others are, it is thought, amply sustained by authority. They are reaffirmed. Every fact necessary to the decision was considered by the court ofltppeaJs. The circumstance that a consideration was paid for the indorsements was not overlooked. It is three times referred to in the opinioriandthe .conclusion reached 'that the warehousing company
FEDER4L"REPORTER, vol. {S., no power "to bind itself by making or indorsing promissory notes for theaQcommodation of the makers for a consideration oaid." Nor was the court in error in holding that the plaintiff had notice of the fact that the notes were not indorsed in the usual course of business. The presentation, for discount, by the makers was something more than a circumstance. There was notice direct and explicit upon the notes themselves that the indorsements were invalid. The discounter when confronted with such facts cannot protect himself by inaction. If thei'e a possible explanation he must seek it, but where, as in this case, nothing of the kind is required and no statement is made inconsistent with the pl/l.in provisions of the notes; the unerring presumption attaches., As the non-liability of the warehousing company defeats the plaintiff's aotion at the threshold it is, of course, unnecessary to pass upon the difficult but interesting questions relating to the liability of the defendant as trustee. ,There must be a judgment for the defendant.
AI,LEN ex rei. SPICKLER v. BI,ACK, Sheriff. (Gircuit Gourt, S. D. Iowa, G. D. August 11, 1890.) INToxiCATING LIQUOR-ILLEGAL SALE-oRIGINAL PACKAGE.
, A box containing Whisky iIi bottles was shipped from lllinois to Iowa, and while in the latter state the box was opened by a resident of Iowa, who sold one of the bottles of whiskY, contrary to the Iowa statute. For this he was convicted by a justice; and he applied to be released on habeas corpus, because his sale was protected Under the' interstate ,commerce clause of the' national constitution. Held, that he should not be released. since the question whether the bottle or the box was the original package was suftlcilmtly doubtful to make the proper remedy an appeal, rather than an applicatipnfor habeas corpus.
At ,pnpetition for habeas corpUlJ. B. J. Sg,linger, and P. A. Charles, for petitioner. F. A.qhurch, for respondent. ", SHIRAS; J. Upon the petition, of E. E. SpiQkler, averring that one Ed. Allen waE!illegally restrained of his liberty by the sheriff of Greene county, Igwa, ,a writ of habeas corp'us was issued, and due return has been made thereto by the sheriff,setting forth that said Allen is in castody of said sheriff by virtue of a commitment issued by one R. P. Mora of the peace in Greene county, Iowa, and the counsel for t,he respective parties have agreed on the facts of the case, in substance as follows: That the relator, E. E. Spickler, resides in the state of Iowa, s,nd is engaged in the business of acting as agent of parties residing in the; states of Nebraska and :Wisconsin in the selling of intoxicating liquors in the .state of Iowa, shipped to him by them from said states; that said Allen was the clerk of said relator, employed to sell such liquors for relator Cooper, in said county of Greene, Iowa, at a place provided fOJ( purpose byrelatorj that said relator, Spickler, had, authority