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THOMAS, District Judge. With the burden of proof on the respondents, it is not sufficiently clear that the failure of the Lockwood to luff contributed to the collision. The master testified:

"I was just getting on deck about the time she struck—getting on deck-an! she struck pretty near the time I got on deck.

Q. When did you see the steamer? A. * About two points on the port bow.

She was slowing her green lights then. Q. How far distant was she then? A. I guess perhaps a quarter of a mile, when I saw her. I don't know. An eighth of a mile I guess.

Q. When you were called on deck, tell me what was said by the person who called you? A. The mate says, "There is a steamer coming.' I came on deck, and I says, What is the matter?' He says, “That fool of a steamer is putting his wheel up, and is sheering across our bow, and he will be into us. Q. When you got on deck, did you see the steamer? A. Yes. Q. Did you see her hull? A. Yes, sir. Q. See the whole of her? A. * I guess she was about an eighth of a mile (away). She was pretty close to us. Q. And she was then sheering under a starboard wheel? A. Yes, sir."

It appears that the schooner was going three or four knots per hour and the steamer at full speed. Although the schooner was on a course northeast one-half north, with the wind north-northwest, and the steamer was going at full speed, and changing from southwest by south one-half south, until at the time of the collision she was heading south one-half east, yet it is apparent that the time for change of course on the part of the schooner was very limited. Whether the mate at the wheel, not called as a witness, saw the steamer sheering before he summoned the captain, or before the captain same on deck, does not clearly appear, although it is inferable that the steamer had begun to sheer before the captain arrived. Just how much time the mate had to luff is in doubt. It does seem that it would have been better had the schooner luffed, but it is not sufficiently clear that either the mate or captain were guilty of culpable negligence in not luffing aiier the steamer had made the gross error of starboarding across the schooner's bow; or that, if the schooner had luffed, she would have cleared the steamer, although it seems probable that such maneuver would have caused the vessels to clear. In any case it is regarded as a mere mistake of judgment, that should not condemn the schooner.

The cargo should contribute in general average. The amount will be determined on a reference, but salvage will be excluded.

In re WILKA.

(District Court, N. D. Iowa, W. D. August 26, 1904.) 1. BANKRUPTCY-JURISDICTION OF COURT-SALE OF PROPERTY OUTSIDE OF Dis.

TRICT.

A trustee in bankruptcy is vested with title to the bankrupt's property wherever situated ; and when he has taken actual possession thereof, although it may be in another state, it is in the custody of the court of bankruptcy administering the estate, and a referee has jurisdiction to order its

sale free from liens. 2. SAME-RESIDENCE OF CREDITOR.

The fact that a mortgagee of a bankrupt's property resides in another state, where the property is also situated, does not affect the jurisdiction of the bankruptcy court administering the estate to order it sold free from the lien of the inortgage on proper notice to the mortgagee.

In Bankruptcy. Syhuitted on petition of the Granite City Bank of Dell Rapids, South Dakota, for review of order of referee directing the trustee to sell personal property of the bankrupt free from the mortgage liens of said bank.

From the certificate of the referee it appears that the trustee presented a petition to the referee alleging: That certain property of the bankrupt, to wit, live stock and grain, situate in Moody county, S. D., was covered by liens and mortgages, one of which was to the Granite City Bank of Dell Rapids, S. D., for over $15,000, made by the bankrupt June 27, 1903, shortly after said bank had attached said property in an action against the bankrupt; that said mortgage was a preference within the meaning of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 544 (U. S. Comp. St. 1901, p. 3418]), and that the amount due the bank thereon from the bankrupt, if anything, is uncertain; that the property is of a perishable nature, and will be lost if not soon sold; and praying that he be authorized to sell the property free from the mortgage and other liens thereon. The referee fixed a time for the hearing of said petition, and gave to all creditors notice thereof by mail, and notice was also served personally upon the Granite City Bank of such hearing, in Dell Rapids, S. D. At the time fixed for such hearing the Granite City Bank appeared specially to object to the jurisdiction of the court, and did object thereto upon the grounds, in substance, that neither the property referred to in the petition of the trustee nor the Granite City Bank were within the territorial jurisdiction of the court, and for that reason the court had no authority to order a sale of the property free from the lien of the bank's mortgage. The referee found that the trustee was in the actual possession of the property, and ordered that it be sold free from the liens thereon, and that the proceeds be applied to the payment of the liens as they may be established. The Granite City Bank petitions for a review of this order.

Aiken & Judge, for Granite City Bank.
C. J. Miller, for trustee.

REED, District Judge (after stating the facts). The sole objection urged in argument to the jurisdiction of the referee is that, because the property covered by the liens of the bank's mortgage and the bank itself were without the territorial jurisdiction of the court, it had no jurisdiction to make the order for the sale. The referee finds, however, that the trustee was in the actual possession of the property. If this is true, though the property may then have been situated in South Dakota, the court was in the actual custody and possession of the property through its trustee. Section 70 of the bankruptcy act vests the trustee, by operation of law, as of the date of the adjudication, with the title to the property of the bankrupt not exempt to him, wherever it may be situated. Such title authorizes the trustee to reduce such property to his actual possession, and when he has done so the property is then in the actual custody and control of the bankruptcy court administering the estate. The Granite City Bank is a creditor of the bankrupt, Wilka, and therefore a party to the bankruptcy proceedings in such sense that it is bound by the orders of the court made with reference to property in its actual custody. Hanover Nat. Bank v. Moyses, 186 U. S. 181, 22 Sup. Ct. 857, 46 L. Ed. 1113; In re Pekin Plow Co., 112 Fed. 308, 50 C. C. A. 257.

Section 58 of the bankruptcy act of July 1, 1898, c. 541, 30 Stat. 561 [U. S. Comp. St. 1901, p. 3444] provides “that creditors shall have ten days notice by mail

(1) of all proposed sales of

*

property.”. The bankruptcy court may, if circumstances require, order a sale of the property of the bankrupt free from the liens of mortgage creditors or other lienholders, so that the purchaser will take the title free from said liens: the liens being remitted to the proceeds of the property. In re Worland (D. C.) 92 Fed. 893. In this case the Granite City Bank was given the notice required by the bankruptcy act, and by personal service of such notice upon it at Dell Rapids, S. D., as well. The conclusion is that the referee had jurisdiction to make the order of sale. This, of course, does not preclude the bank from establishing its claim, if it can do so, to the proceeds of the property covered by its mortgage. It may propound its claim thereto before the referee. In fact, the referee should require it to do so before making any order for the distribution of such proceeds. Upon the bank's presenting its claim to such proceeds, the trustee may take issue thereon, if he so elects, and the referee will then determine the matter upon evidence taken under his directions. Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814; In re Rochford, 124 Fed. 182, 59 C. C. A. 388; In re Worland (D. 92 Fed. 893.

The order of the referee, upon the issues and facts shown by his certificate, is approved.

UNITED STATES V. ASTORIA & C. R. R. CO.

(Circuit Court, D. Oregon. August 12, 1904.)

No. 2,847.

1. UNITED STATES-ARMY SHIPMENTS-RIGHT TO REDUCED RATES.

The act of Congress of July 2, 1864, c. 217, 13 Stat. 370, $ 11, requiring land-grant railroads to carry freight for the army at not exceeding 50 per cent, of the tariff rates charged the general public, does not entitle the goverument to a reduced rate for the carriage of freight between two points by a railroad company which received no land grant, merely because its trains run for a part of the distance over the track of a land-grant road.

In Equity. Suit for injunction.
John H. Hall, U. S. Atty.
C. W. & G. C. Fulton, for defendant.

BELLINGER, District Judge. The railroad of the Northern Pacific Company is a land-grant road. The act of Congress of July 2, 1864, c. 217, 13 Stat. 370, § 11, by which the company is incorporated, provides that said railroad, “or any part thereof, shall be a post route and a military road, subject to the use of the United States for postal, military, naval and all other government service, and also subject to such regulations as Congress may impose restricting the charges for such government transportation.” By subsequent enactments it is provided, in effect, that land-grant roads shall be paid for army transportation not more than 50 per centum of the tariff rates for like transportation performed for the public at large. The defendant, the Astoria & Columbia River Rail. road Company, owns and operates a line of road between Astoria and Goble, a point on the line of the road of the Northern Pacific Company 40 miles distant from Portland. The defendant, under a contract with the latter company, runs its trains over the track of that company between Goble and Portland. By the terms of this contract, the defendant is not permitted to carry passengers or freight from Portland to Goble or intermediate points. The freight rate of the Northern Pacific Company from Portland to Goble is 14 cents per 100 pounds. The rate of the defendant company is 25 cents from Portland or Goble to Astoria. The United States brings this suit to enjoin the defendant from charging for army supplies from Portland, destined for Fort Stevens, a point beyonil Astoria, more than 20 cents per 100 pounds; the contention being that two-fifths of the Portland-Astoria rate is on account of the haul on the land-grant road to Goble, and that of this two-fifths the defendant is only entitled to receive 50 per cent. of its regular rate.

The defendant's use of the Northern Pacific Railroad track between Portland and Goble does not affect the transportation due from the latter company to the plaintiff. It is still open to the latter to have its freight carried over every part of the railroad of the land-grant company at 50 per cent. of the regular rate. This is the extent of its right. And this right, as already appears, has not been affected by the use of a part of that company's track by the defendant company. It is a matter of no consequence to the plaintiff how many railroads use this particular track of the Northern Pacific Company, nor what their tariff rates are, so long as the latter company continues to afford all the facilities for transportation over every part of its road required by the plaintiff. As a matter of fact, the plaintiff seeks to compel the defendant, which is not a land-grant or otherwise government aided road, to transport its supplies over the defendant's road from Goble to Astoria at a less rate than that charged the general public, by the device of apportioning a part of the Goble-Astoria rate to the Portland-Goble route, and compelling a reduction in the part so apportioned. The defendant makes no charge between Portland and Goble, and is not permitted to do so, under its contract with the Northern Pacific Company. The plaintiff is entitled to one-half of the rate between these points established by the Northern Pacific Company, and can obtain it by applying therefor to that company. But this it does not want. It wants, in fact, a reduction of the defendant's rate between Goble and Astoria, although there is no complaint as to this rate, and the defendant owes no duty to the plaintiff respecting it.

The case does not appear to admit of doubt. The plaintiff must pay the established rate over the defendant's road for transportation from Goble to Astoria. It cannot complain that it is charged the same rate for the longer haul from Portland. The application for an injunction is denied.

END OF CASES IN VOL. 131.

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