Macnhaut vs. The City of New Orleans.

security, held that the new mortgagees were entitled to follow their money so far as it had been erroneously applied, and to stand in place of the old paid off mortgagees as against the other property of the corporation.

So in Attorney General v. Dublin, supra, it was held that where there is any fund created for the purpose of being applied to some public purpose, which fund is vested in a corporation, the court of chancery has, by its original inherent jurisdiction, a right to see to the due application of the fund.

The court of chancery will always lay hold of any breach of trust in relation to the administration of property, let the party guilty of it be either in a public or private capacity. Charitable Corporation v. Sutton, 2 Atk., 406; see also Attorney General v. Eastlake, 21 Eng. Law and Eq., 43; Sturge v. Eastern Railway Co., 7 DeG., M. & G., 158.

On these and many other authorities that might be cited, I feel justified in holding that the tax collected and deposited under the act of 1852, to pay the interest on the consolidated bonds, is a trust fund in the hands of the city authorities to be applied to that purpose and no other, and that, if there is any danger that the fund will be diverted to other purposes, the complainants are entitled to their injunction to restrain such diversion.

On consideration of the pleadings and affidavits in this case, I cannot shut my eyes to the fact that there is danger of the application of this fund to purposes other than that for which the law authorized it to be collected.

It seems, however, that some of the holders of the consolidated bonds have consented to receive half the interest on their bonds, and to allow the city to use the other half for other purposes. It is their right to make this agreement, and the court will not interfere with it. The city ought to be restrained only from diverting so much of the fund as may be necessary to pay the interest on the bonds, the holders of which do not consent to the terms of ordinance No. 3190, administration series. A preliminary injunction must issue accordingly. It will be also ordered that should there be any further default, the complainants may renew their motion for a receiver.

In the argument upon the motion for injunction, it was claimed

Miltenberger et al., Assignees, vs. Phillips.

by counsel for the city that the act of 1852 was in violation of the constitution of 1845, which was in force when that act was passed, and which declared (art. CXXVII)" that taxation shall be equal and uniform throughout the state." The provision of this act of 1852, which is deemed to contravene this constitutional requirement, is this: "The rate per cent. of said tax (tax to pay interest on consolidated debt) in each municipality shall be in proportion to the indebtedness of each." I cannot see any conflict between the law and the constitution. As at present advised, I do not think the objection to the law well founded.

MILTENBERGER and NORTON, Assignees, vs. EDWARD PHILLIPS.

A suit brought by the assignees in bankruptcy of a bank, to recover money paid as counsel fees by persons acting without authority, as commissioners for the liquidation of the bank under the state law, is barred unless brought within two years from the time the cause of action therefor accrued in favor of the assignees.

Heard upon peremptory exception to the plaintiff's petition. Mr. Thomas Hunton, for plaintiffs.

Mr. Edward Phillips, in pro. per.

WOODS, Circuit Judge. The petition was filed on the 2d of April, 1875, and alleges that on the 2d of June, 1871, the plaintiffs were appointed assignees in bankruptcy of the Bank of Louisiana, and were thereby entitled to possess and administer all the assets which were of the bank on the date of the filing of the petition in bankruptcy, which was on the 20th of May, 1869.

The petition further alleges that on and before the 20th of April, 1870, the defendant received, as counsel fees, various sums of money, amounting in the aggregate to a large sum, which were assets of the bank, and were paid to him by certain persons pretending to act as commissioners of the bank, under authority of a court of the state of Louisiana, but in fact without any authority whatever.

Miltenberger et al., Assignees, vs. Phillips.

The purpose of the suit is to recover back the sums so paid to Phillips, as having been illegally paid.

The defendant Phillips excepts peremptorily to the petition, among other grounds, because the action is barred by the two years limitation provided in sec. 5057, Revised Code, which declares that "no suit, either at law or in equity, shall be maintainable in any court between an assignee in bankruptcy and a person claiming an adverse interest touching any property or rights of property transferable to, or vested in such assignees, unless brought within two years from the time when the cause of action accrued for or against such assignee."

The money sued for was received by the defendant before the assignees were appointed, and more than two years transpired between this appointment and the bringing of this action.

Therefore, if the section just quoted applies to cases like this, the action is barred.

In my judgment it does apply, not only in terms but in spirit. In a recent case decided by the supreme court of the United States, Bailey, Assignee, v. Glover, 21 Wall., 342, it was held that the section under consideration was "a statute of limitation. It is precisely like other statutes of limitation, and applies to all judicial contests between the assignees and other persons touching the property or rights of property transferable to or vested in the assignee where the interests are adverse, and have so existed for more than two years from the time when the cause of action accrued for or against the assignee."

This authority, it seems to me, is decisive of this case. See also Norton, Assignee, v. De la Villebeauve, 1 Woods, 163. This action is barred, and cannot be maintained, and the exception setting up the bar is sustained.

It is unnecessary to notice the other grounds of exception.

Lewis vs. Smythe.

ROBERT N. LEWIS VS. GEORGE A. SMYTHE.

1. The trial before which application must be made for the removal of a case from the state to the federal court, in order to warrant such removal under section 3 of the act of March 3, 1875 (18 Stat., 470), is such a trial upon either the law or facts of the case, or both, as settles and concludes the controversy between the parties.

2. When such a trial has been commenced, though not concluded, the application for removal comes too late.

IN EQUITY.

The bill stated, in substance, that the defendant G. A. Smythe, a citizen of Mississippi, brought an action against the complainant Lewis, a citizen of Louisiana, in the fourth district court of the parish of Orleans, on the 28th of November, 1874, to recover the sum of $3,518. Lewis, desiring to remove the cause to this court, by virtue of the provisions of the act of congress, approved March 3, 1875 (18 Stat., 470, secs. 2 and 3), on the 2d day of July, 1875, filed his petition and bond for that purpose in said fourth district court, as required by the statute. The court refused to permit the case to be removed or to grant an order of removal. Nevertheless, Lewis procured a copy of the record of the case so far as it had progressed, and on the first day of November, 1875, filed the same in this court. The fourth district court after this proceeded with the case and afterwards rendered judgment in favor of Smythe, against Lewis, for $3,800. On this judgment, Smythe, it is alleged, threatened and intended to issue execution, and the bill averred that the property of Lewis would be seized by virtue thereof, to his great and irreparable injury. The prayer of the bill was, that Smythe might be restrained from proceeding to enforce the judgment. The theory of complainant was, that after the filing of the petition and bond for removal, the case was thereby removed, and the fourth district court had no further jurisdiction of the case, and its judgment was a nullity.

The case came on for hearing upon the motion for the allowance of an injunction as prayed in the bill.

The defendant resisted the injtinction, claiming that the case

Lewis vs. Smythe.

had never been removed to this court, but that the fourth district court remained in possession of the case till the rendition of the judgment. The ground of this claim was that the trial of the suit had commenced in the fourth district court before any attempt made to remove the case to this court. That this was the fact is shown by the record filed in this court, as appears by the following extracts therefrom: "May 21st. This case came on this day for trial. * When, after hearing the pleadings and evidence, the hour of adjournment having arrived, it is ordered that this case be continued to May 31st, at 10 o'clock A. M., for argument. May 31st. This case came on this day for argument, when by agreement of counsel it is ordered by the court that this case be continued indefinitely, to be fixed on motion."

*

It was after this that the petition was filed for removal. Messrs. Samuel R. and C. L. Walker, for complainant. Messrs. G. A. Breaux and Charles E. Fenner, for defendant.

WOODS, Circuit Judge. The act of congress, prescribing how causes may be removed from the state to the federal courts (18 Stat., 470), declares: Sec. 3. That "whenever either party or any one or more of the plaintiffs or defendants, entitled to remove any suit mentioned in the next preceding section, shall desire to remove such suit from a state court to the circuit court of the United States, he or they may make and file a petition in such suit in such state court, before or at the term at which said cause could be first tried, and before the trial thereof for the removal of such suit into the circuit court."

By the word "trial," as used in this statute, I do not understand the argument, investigation or decision of a question of law merely, unless it is decisive of the case, and the decision results ia a final judgment or decree. The decision of the court on a demurrer, for instance, or on exceptions to the sufficiency of a plea, which is followed by amendments or new pleadings, and which does not end the case, is not the trial meant by the statute.

Blackstone defines a trial to be "the examination of the matter of fact in issue in a cause." 4 Black. Com., 322. See also 2 Hale P. C., 216, ch. 28.