15 F. (2d) 559 as to those in which the ceiling does not figure. Kessler v. Eldred, 206 U. S. 285, 27 S. Ct. 611, 51 L. Ed. 1065. [2] After the decree in the Third circuit the interveners had the right in respect to the articles before the court to require the plaintiff to leave their customers alone and it was the plaintiff's duty to leave them alone. This right and this duty was that of the plaintiff and of the interveners and theirs alone, and it extended only to those things which the interveners furnished the defendant. The defendant was not a party to the litigation in the Third circuit, and in its own right could claim no immunity thereunder. The plaintiff was entitled to proceed against it. There was no res adjudicata between them. Unless the infringing device was furnished by the interveners, the decree upon which they seek to rely does not prevent the plaintiff's suing the defendant for making or using an identical thing, however much its chances of ultimate victory may be thereby diminished. Moreover, it would be immaterial that the defendant had obtained from the interveners some or perhaps all of the raw material out of which it itself made the article said to infringe. Rubber Tire Wheel Co. v. Goodyear Tire & Rubber Co., 232 U. S. 413, 34 S. Ct. 403, 58 L. Ed. 663; Seim v. Hurd, 232 U. S. 420, 34 S. Ct. 406, 58 L. Ed. 667; Woodward v. Hurd, 232 U. S. 428, 34 S. Ct. 409, 58 L. Ed. 670. From what has been said, it is obvious that the right of the plaintiff to proceed with its suits so far as concerns the claims in which a wire mesh ceiling is an element turns on whether on any substantial sense the defendant independently made the combination of which mesh ceiling was a part. The cases already cited from 232 U. S. grew out of the litigation over the Grant tire patent. There were three elements in the patented combination, every one of them old: (1) A channel or groove with tapered sides; (2) a rubber tire with a described shape, adapted to fit into the channel; and (3) a fastening device consisting of independent retaining wires, which passed through the rubber tire and were placed in a particular position. The defendants in those cases bought the rubber from persons whose legal position was the same as that of the interveners now before us. They apparently obtained the channeled tire and the fastening wire elsewhere. They certainly themselves did the work of bringing the three elements together into the precise and careful relation upon which the value and validity of the patent depended. [3] In the instant case everything that required any nicety of manufacture or adjustment was furnished by the interveners. All that the defendant supplied were the rolls of chicken wire which the patent said when put in place would constitute the ceiling. There is no hint in the specifications or claims that, in putting this wire in position any special care was required. It is stipulated that the interveners gave whatever instructions for its erection were needed. Under all the circumstances, we think that the patented device was in every substantial sense furnished by the interveners, and that therefore the case is ruled by Kessler v. Eldred,' supra, and not by the Rubber Tire & Wheel Co. v. Goodyear Tire & Rubber Co., and its associated cases. Affirmed. BALTIMORE ACCEPTANCE CORPORA- In re DORSEY & MILLER CO. Bankruptcy No. 2487. 165(4)—$2,500, previously loaned bankrupt and included in later $10,000 loan within four months preceding bankruptcy held not a preference, where security for $10,000 was worth only $4,000. Where security for $10,000 loan to bankrupt within four months preceding bankruptcy included $2.500 then owing and secured by unrecorded chattel mortgage, trustee may not recover $2,500 as preferential payment, particularly since security on $10,000 loan was worth only $4,000. In Error to the District Court of the United States for the District of Maryland, at Baltimore; Morris A. Soper, Judge. Action by Henry Zoller, Jr., trustee of the Dorsey & Miller Company, bankrupt, against the Baltimore Acceptance Corporation. Judgment for plaintiff, and defendant brings error. Reversed. James Thomas, of Baltimore, Md. (Knapp, Tucker & Thomas, of Baltimore, Md., on the brief), for plaintiff in error. John Henry Skeen, of Baltimore, Md. (Reuben Foster and Emory, Beeuwkes & Skeen, all of Baltimore, Md., on the brief), for defendant in error. Before WADDILL, ROSE and PARKER, Circuit Judges. ROSE, Circuit Judge. The Baltimore Acceptance Corporation, the plaintiff in er ror, was defendant below, and will be so styled here. The defendant in error, Henry Zoller, Jr., as trustee for the Dorsey & Miller Company, a bankrupt corporation, was plaintiff below. He will be called the trustee, and the bankrupt will be referred to as such. He sought to recover from the defendant the sum of $2,500, which he says was preferentially paid it by the bankrupt within four months next preceding the filing of the involuntary petition against it. In view of the verdict of the jury, it must now be held that, at the time the payment is said to have been made, the bankrupt was insolvent, and the defendant had reasonable cause to believe that anything it then received on account of a pre-existing indebted ness would be a preference. On the 29th of September, 1923, and more than four months before the filing on February 19, 1924, of the petition for adjudication, the bankrupt borrowed $2,500 from the defendant, and to secure its repayment gave a chattel mortgage, which was duly executed and delivered, but was never recorded. About six weeks later, on November 10, which was less than four months before the institution of the proceedings in bankruptcy, the bankrupt, having need of $7,500, again sought the assistance of the defendant. It was agreed that the defendant should lend it in all $10, 000, taking a new chattel mortgage for that amount upon the property covered by the former mortgage. It was part of the understanding that $2,500 of this new loan was to be applied to the extinguishment of the old. Thereupon the unrecorded mortgage was canceled, the note secured by it marked paid, and the bankrupt received $7,500 of new money, $500 of which it applied to its pay roll, and the remaining $7,000 it gave to a banking creditor then pressing it for cash. In the argument at our bar it was stated that the trustee had recovered this $7,000 as a voidable preference from the bank which received it. The property covered by the new mortgage, which was duly recorded, has been sold by the trustee and brought $4,000. In the instant case the trustee obtained a judgment below against the defendant for the $2,500, said to have been paid the latter when the old mortgage was canceled and the new one given. We shall not follow the parties in their learned discussion as to whether the first or unrecorded mortgage was, as against the trustee, altogether void, and in that connection what is the effect of what we held in Millikin v. Second National Bank, 206 F. 14, 124 C. C. A. 148, of the various decisions of the Court of Appeals of Maryland there cited, and of the subse quently decided case of Roberts v. Robinson, 141 Md. 37, 118 A. 198. We do not believe that in any substantial sense the bankrupt within the four months period paid $2,500 or any other sum to the defendant. It is true that for bookkeeping convenience the transaction, which was in its essence an increase of a loan of $2,500 to one of $10,000, was given the form of a payment of the $2,500 and a new loan of $10,000; but we do not think that the substantial rights of the parties can in the circumstances of this case be made to depend upon such purely modal matters. It is true that only $7,500, of the $10,000 to secure which the recorded mortgage was given, represented then present consideration; but that is unimportant here, because the mortgaged property turned out to be worth only $4,000, or not much more than half the defendant at the time advanced upon it. We are dealing only with the facts of the case before us. We do not say that the form which the parties give to their transactions may not often be decisive of their rights. In re Waite (D. C.) 223 F. 853, 857. But we are satisfied that it is not so in the present instance. The learned court below erred in refusing the request of the defendant for an instructed verdict. Reversed. In re JEFFRIES. MAYFIELD CO. v. DOROUGH. (Circuit Court of Appeals, Fifth Circuit. November 18, 1926.) No. 4876. Bankruptcy 340-Consignor's claim to proceeds of fire policy on goods consigned to bankrupt, with title retained in consignor, held properly disallowed where evidence fail. ed to show what goods were then in stock. Where goods were consigned to bankrupt under contract retaining title in consignor, and requiring bankrupt to insure for consignor's benefit until paid, held that consignor's claim to proceeds of fire policy was properly disallowed, where evidence failed to show what goods remained in stock at time of fire. Appeal from the District Court of the United States for the Eastern District of Texas; W. Lee Estes and Benjamin C. Dawkins, Judges. In the matter of Earl Jeffries, bankrupt, in which R. P. Dorough was appointed trustee. From a decree of the District Court, confirming an order of the referee disallow 15 F.(2d) 561 ing in part its claim against bankrupt, the disallowed. We think there is no occasion to Mayfield Company appeals. Affirmed. set out or discuss that evidence. The decree is affirmed. H. E. Lasseter and Gordon Simpson, both of Tyler, Tex., for appellant. J. A. Bulloch, of Tyler, Tex. (J. A. Bulloch and Bulloch & Ramey, all of Tyler, Tex., on the brief), for appellee. Before WALKER, BRYAN, and FOSTER, Circuit Judges. WALKER, Circuit Judge. In March, 1922, the appellant delivered to Earl Jeffries a stock of goods and certain fixtures under a consignment contract, which provided that the goods and fixtures should remain the property of the appellant until the amount of a note given therefor should be paid, that Jeffries should pay appellant all moneys derived from the sale of such goods until the debt should be settled, and that the goods and fixtures should be insured in favor of the appellant until that debt should be paid in full. Those goods, and other goods bought by Jeffries on open account from appellant and others, from time to time between March, 1922, and February 16, 1925, went into the stock used by Jeffries during that period in carrying on a mercantile business. The fixtures and the stock of merchandise then possessed by Jeffries were destroyed by fire on February 16, 1925, and Jeffries was adjudged bankrupt in March, 1925. The trustee of his estate in bankruptcy collected $8,500 on the fire insurance policies in favor of the bankrupt on the stock and fixtures, $2,145 of which was paid on the fixtures. The appellant asserted the claims that it was entitled to the amount collected on the fixtures, and also to $6,000 of the total collected, on the ground that appellant's consigned goods worth that sum remained in the stock at the time of the fire. By the decree appealed from appellant's claim to the amount collected for the loss of the fixtures was sustained, and its claim to $6,000 of the amount collected on the stock was disallowed, on the ground that the evidence failed to show what goods of those received by the bankrupt under the above-mentioned consignment contract remained in the stock at the time of the fire, or to prove the amount or value of such of those goods as were identified. In disallowing the $6,000 claim the court approved a conclusion reached by the referee. We concur in the conclusions of the referee and the court as to the insufficiency of the evidence to support the claim which was 15 F.(2d)-36 الله Decision of Supreme Court that Anti-Narcotic Act, § 2, as amended (Comp. St. § 6287h), is constitutional, so long as it is not departed from by that court, is binding on lower courts. Appeal from the District Court of the United States for the Northern District of Georgia; Samuel H. Sibley, Judge. John W. Snook, Warden of the United States Habeas corpus by Frank Sofge against Penitentiary. From an order discharging the writ, relator appeals. Affirmed. Hooper Alexander, of Atlanta, Ga., and Thomas W. Hardwick, of Dublin, Ga., for appellant. J. W. Henley, Asst. U. S. Atty., of Atlanta, Ga., for appellee. Before WALKER, BRYAN, and FOSTER, Circuit Judges. WALKER, Circuit Judge. This is an appeal from an order discharging a writ of habeas corpus, sued out by the appellant, who was imprisoned in the United States penitentiary at Atlanta, pursuant to a sentence imposed, following his entering a plea of guilty to a count of an indictment which charged him with a violation of section 2 of the AntiNarcotic Act, as amended. Comp. Stat. §8 6287g, 6287h. The right to a discharge was claimed on the ground that that act is unconstitutional. The Supreme Court of the United States has decided that that act is constitutional. United States v. Doremus, 249 U. S. 86, 39 S. Ct. 214, 63 L. Ed. 493; Webb v. United States, 249 U. S. 96, 39 S. Ct. 217, 63 L. Ed. 497; United States v. Wong Sing, 260 U. S. 18, 43 S. Ct. 7, 67 L. Ed. 105; United States v. Jin Fuey Moy, 241 U. S. 394, 36 S. Ct. 658, 60 L. Ed. 1061, Ann. Cas. 1917D, 854. We are bound to follow those decisions, so long as they have not been departed from by the court which rendered them. Teter v. United States (C. C. A.) 12 F.(2d) 224. The order appealed from is affirmed. In re BROWARD COUNTY LUMBER CO. (District Court, S. D. Florida. October 6, 1926.) No. 3064. 1. Bankruptcy 114(1)-Receivers, before adjudication, are officers of court (Bankruptcy Act, § 21a [Comp. St. § 9605]). Receivers appointed before adjudication are officers of the court, and the estate in their hands is in process of administration, within the meaning of Bankruptcy Act, § 21a (Comp. St. § 9605). 2. Bankruptcy ~236-Receivers before adjudication may require witnesses to appear and testify before referee (Bankruptcy Act, 21a [Comp. St. § 9605]). On petition of receivers, witnesses may be required to appear and testify before a referee, before adjudication, concerning the "acts, conduct, or property" of bankrupt, under Bankruptcy Act, § 21a (Comp. St. § 9605). 3. Bankruptcy 235-Order for examination of witnesses not invalid because made ex parte (Bankruptcy Act, § 21a [Comp. St. § 9605]). While notice should be given bankrupt of a petition to require witnesses to appear for examination before a referee, under Bankruptcy Act, § 21a (Comp. St. § 9605), an order will not be vacated, because made without such notice, where bankrupt has not been prejudiced. In Bankruptcy. In the matter of the Broward County Lumber Company, alleged bankrupt. On motion of bankrupt to vacate order for examination of witnesses. Denied. Rogers, Morris & Adams, of Ft. Lauderdale, Fla., for bankrupt. Miller Walton, of Ft. Lauderdale, Fla., for petitioners. Herbert U. Feibelman, of Miami, Fla., for petitioning creditors. CALL, District Judge. On July 26, 1926, an involuntary petition in bankruptcy was filed against the bankrupt. On August 6th, upon petition of the petitioning creditors, two receivers were appointed, with power to continue the business of the bankrupt. On August 18th the bankrupt filed its answer, denying the acts of bankruptcy charged, and denying insolvency, and demanding a jury trial. On August 25, 1926, the receivers petitioned the court for an order requiring some five persons to appear before the referee and submit to an examination concerning the acts, conduct, and property of the bankrupt. On the same day an order was entered, requiring the persons named in the petition to appear before the referee and submit to examination as to acts, conduct, and property of the bankrupt. On August 30th a supplemental peti tion was filed by the receivers, asking that certain other persons be required to appear for examination before the referee concerning the acts, conduct, and property of the bankrupt. On the same day an order was entered granting the supplemental petition. On September 15th a second supplemental petition was filed, and an order made thereon fixing September 27th for the persons named therein to appear before the referee for examination as required in the two former orders. On October 4th the bankrupt filed its motion to vacate and set aside the order here tofore made for the examination of the witnesses before adjudication, because, first, the order was granted on the ex parte application of the receivers; second, the order was made without notice to the bankrupt; third, no extraordinary condition of the assets is rived from such examination, the only purshown, nor necessity for or benefit to be depose being to enable petitioning creditors to show the insolvency of the bankrupt; fourth, the receivers were without power to bring such proceeding. On September 23d the bankrupt filed a response to the petition of the receivers, denying the allegations in the petition for examination. On September 23d an order was entered requiring the receivers to show cause why the response filed September 23d should not be allowed, and the motion to dismiss the petition contained in said response granted. On the return day of the rule the receivers appeared through their counsel and contested the motions contained in the response and that filed October 4th. The receivers proceeded under section 21 a of the Bankruptcy Act (Comp. St. § 9605) in making application for the examination of the persons named in the petition and supplemental petitions. This section was amended by the Congress on May 27, 1926 (chapter 406 [section 9605, Supplement Compiled Statutes, August, 1926]), by adding paragraph (h), this being the only change made in the section. Said paragraph has no bearing upon the questions here involved. [1] It is contended that the receivers have no power or authority to bring such a proceeding before adjudication; that they are mere custodians of the assets. The order of appointment authorized them to conduct the business of the bankrupt, and this I understand the court had power to do; but it seems to me that this has no particular bearing upon the decision of the question here involved. The decision hinges upon the questions: Were the assets of the bankrupt in course 15 F. (2d) 563 of administration, and were the receivers officers of the court? These questions are answered in the affirmative by Cameron v. United States, 231 U. S. 710, 34 S. Ct. 244, 58 L. Ed. 448, and many other cases decided by the courts. This contention of the bankrupt is therefore not well taken. [2] Another contention urged is that the petition of the receivers does not show any necessity for such examination, and that it appears that the examination sought was for the purpose of enabling the petitioning creditors to prove insolvency. Under section 21 a, the examination allowed is for the purpose of ascertaining facts concerning the acts, conduct, or property of the bankrupt. A reading of the petition and the orders based thereon shows that the examination sought and allowed is confined to those purposes named in the act. The contention that the examination sought is a mere fishing expedition, to enable rupt at a meeting of creditors, which is not the province of section 21 a. The question then recurs: Should the orders for examination be vacated, because notice was not given the bankrupt? I think not. Has the bankrupt been injured by the failure to give notice? I think not. The sole purpose of the examination is to trace assets, which appear, by the books of the bankrupt in the possession of the receivers, to require elucidation. If such assets are discovered, the estate of the bankrupt will to that extent be benefited. And though the receivers may not be in position to bring suit to recover them, any creditor may under the Bankruptcy Act. I am of opinion that motions contained in the response, and the motion filed by the bankrupt must be denied, and the rule discharged. It will be so ordered. the petitioning creditors to prove insolvency, UNITED STATES v. 185 CASES SCOTCH is not, in my judgment, justified. I do not think that the fact that receivers have not WHISKY. 19, 1926.) No. 1837. 1. Intoxicating liquors 249. the standing to recover assets which may have (District Court, D. Rhode Island. November been fraudulently disposed of, in a plenary suit, bears upon the decision of the question here involved. They are officers of the court, appointed because necessary to conserve the assets, for the purpose of distribution among the creditors in the event there is an adjudication. It seems to me that it is one of the important duties of the receivers to seek out the assets of the bankrupt, and this is sought in the petition filed in this cause. [3] It is also urged that the motions should be granted because the order for examination was made on the ex parte application and without notice to the bankrupt. The case of Rawlins v. Hall-Epps Clothing Co., 217 F. 887, 133 C. C. A. 594, is relied upon in support of such contention. It is true, as said in that case, that the bankrupt should be given notice and an opportunity to be heard to contest the passing of the order, if he so desires; but the action of the lower court was not reversed upon the want of notice to the bankrupt in that case. That case presented other points, as pointed out in the opinion, requiring the reversal of the lower court. I do not find such matters existing in the instant case. The petitioning creditors in that case were endeavoring to pry into the business of the bankrupt, with the purpose clearly apparent to establish their involuntary petition. In fact, it was apparent that they were seeking to use section 21 a to the same end that they might make of the examination of the bank Disclaimer by occupants of knowledge of presence of liquor found on premises held sufficient to justify removal by officer without search warrant. 2. Searches and seizures ➡7. Under evidence showing occupants disclaimed knowledge of liquor found in garage in basement of dwelling, seizure by officer without formal application for search warrant held not unreasonable. 3. Intoxicating liquors 251. Claimant of liquor testifying to unlawful possession is not entitled to its return. Officer seizing property after disclaimer by occupant of dwelling in basement of which liquor was found cannot be said to have violated constitutional right of occupant. Forfeiture Libel. Proceeding by the United States against certain seized property, to wit, 185 cases of Scotch whisky. Decree of forfeiture to United States. Rosenfeld & Hagan, Daniel T. Hagan, and Charles A. Kiernan, all of Providence, R. I., for claimant. Fred B. Perkins, Asst. U. S. Atty., of Providence, R. I. BROWN, District Judge. This is a libel of information against certain seized property, to wit, 185 cases Scotch whisky. |