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Where a contractor agreed to indemnify plaintiff against claims of third persons arising out of the work, but the records in suits brought on such claims did not identify the contractor either by name or description as causing the injury, and it affirmatively appeared that a part of the injuries for which recoveries were had occurred after the contractor had left the work, such records, being offered as a whole in an action against the contractor's surety, were properly excluded.
Motion for New Trial.
A. T. Freedley, for plaintiff.
John Hampton Barnes, for defendant.
J. B. McPHERSON, District Judge. This controversy arises upon the following facts: In March, 1896, Patricius McManus entered into a contract with the plaintiff to dredge and widen a section of the Dismal Swamp Canal. He continued at work until the latter part of the year 1898, when, in consequence of disputes between him. and the company, he gave up the contract. These disputes were settled by an agreement dated December 3, 1898, of which the following is the only passage that is now relevant:
"(3) The said McManus hereby further covenants and agrees to duly and promptly protect and save harmless the company [plaintiff] from all claims of any sort or description which may be advanced against the company by anyone on account of or by reason of work done or omitted to be done under the said contracts of March 23, 1896, and March 28, 1898, and at his own cost and expense to defend all suits which may be brought against the company on such claims."
The defendant became the surety of McManus upon this agreement, binding itself for "the prompt and faithful performance of all the covenants, warranties, and agreements of Patricius McManus as set forth in the foregoing contract." During the period between June 29, 1900, and May 25, 1901, eight suits were brought against the canal company in North Carolina by owners of land bordering upon the canal along the section where McManus had been at work. In these suits it was charged that the canal company, its agents, employés, and contractors, deposited large quantities of mud, sand, and water upon the lands of the plaintiffs, filled up the drainage ditches, and caused water to accumulate or pond upon the surface, thereby injuring the productive capacity of the soil, and doing much damage both to the annual crops and also to the freehold. Recovery was had in each case, the judgments were affirmed by the Supreme Court of North Carolina, and an aggregate sum of more than $10,000 was paid by the canal company in satisfaction of the claims. Both McManus and the defendant were notified of the suits as they were brought, and were asked to defend them, but these requests were either ignored or refused. The present suit is brought to recover from the surety the sums thus paid by the defendant, the averment being that all these suits were founded upon the negligent or other improper conduct of McManus, and that he had bound himself by the agreement of December 3, 1898, to save the canal company harmless from all litigation that might grow out of work done by him. At the trial the plaintiff offered in evidence certified copies
of the North Carolina records, but they were excluded by the court, and this exclusion is the principal subject of complaint under the present motion.
It is undoubtedly true that under the facts above stated the records would have been not only evidence, but conclusive evidence, against the surety (Washington Gas Co. v. District of Columbia, 161 U. S. 329, 16 Sup. Ct. 564, 40 L. Ed. 712), if they had disclosed with sufficient certainty that the suits were founded upon the negligent or other improper conduct of McManus. The difficulty, in my mind, during the trial, however, was that they did not show with the needful precision this important fact. McManus' name does not appear in them at all; neither is he so described as to be definitely pointed out. The acts complained of are described as the acts of the canal company, its agents, employés or contractors, and the only way in which McManus can be connected with the injuries is by other evidence in the case, coupled with the averment in five of the records that the harm was done when the canal was being widened in 1898. Even this help is not to be found in three of the records-the suits of Norris, Burnham, and Edney-for in each of these cases the injury is averred to have been done in part during the year 1899, after McManus had retired from the work, and the company alone was carrying it on. These records afforded no means of separating the damage done in the year 1899 from the damage done in 1898, the judgments being for lump sums; yet for the first item McManus could not be held liable. So, also, with regard to the items making up the sums recovered. In several of the cases it affirmatively appears that awards were made for damages to the crops of 1899, 1900, and 1901, for which the canal company would be liable, if the injury was done by its failure to open the drainage ditches that McManus may have left filled up; and this is specifically charged against the company as one of the grounds for recovery. Surely, if the canal company found that a nuisance had been left on its hands by McManus, it was bound to abate it, and if it failed to do so, and thereby became liable in damages, it cannot recover such damages from the person who may have been equally guilty of the wrong. Because of this lack of definiteness and precision in the records, they did not seem to me to be competent, and I am still of the same opinion.
I may add that the records were offered as a whole, and the ruling of the court was upon them as a whole, and not separately. The motion for a new trial is refused.
In re O'DONNELL et al.
(District Court, D. Massachusetts. July 22, 1904.)
1. BANKRUPTCY-ACTS OF BANKRUPTCY-TRANSFER WITH INTENT TO PREFER CREDITOR.
An assignment by an insolvent to a creditor of earnings to become due under a building contract, where recording was essential to the validity of such assignment under the laws of the state, and it was so recorded within four months prior to the filing of a petition in bankruptcy against the assignor, was a transfer with intent to prefer the creditor, which constituted an act of bankruptcy, and warrants an adjudication under Bankr. Act, July 1, 1898, c. 541, § 3b, 30 Stat. 546 [U. S. Comp. St. 1901, p. 3422]. 2. SAME-CREDITOR-ACCOMMODATION INDORSER.
An accommodation indorser of notes, even before payment, is a creditor of the maker, and a transfer of property to him as security by such maker while insolvent constitutes an act of bankruptcy.
In Bankruptcy. Hearing on involuntary petition.
LOWELL, District Judge. Involuntary petition filed February 6, 1904, against O'Donnell and Ferguson as partners. The acts of bankruptcy alleged were (1) a conveyance to hinder, delay, and defraud creditors, and (2) a conveyance with intent to prefer Reichenbacher. I find the facts as follows: The firm had a contract to build a house. On July 11, 1903, O'Donnell assigned the payments coming due thereunder to Reichenbacher. At that time Reichenbacher had indorsed for accommodation the firm notes for $1,265. On October 2d, O'Donnell disputed the validity of the assignment. Another was signed by both partners, expressly recognizing and confirming the first. At that time the firm was indebted to Reichenbacher by way of his indorsement of their paper and otherwise to the amount of $3,090. The assignments were recorded October 6th and 9th respectively. When the petition was filed the firm owed Reichenbacher about $3,763, and he held as security from $3,500 to $3,800 by virtue of the above-mentioned assignments of moneys coming due under the contract. At the time the assignments were made the respondents were insolvent. The writings and agreements of the respondents shown in evidence establish the existence of a partnership, and I find accordingly. The first act of bankruptcy alleged was not proved. The second assignment of earnings, made October 2, 1903, and recorded October 9th, can hardly be treated as a superfluous recognition of the validity of the first assignment. There was admitted doubt of its validity, and payment had been refused thereunder. Even if the later assignment be disregarded, however, the decision is not affected, for the earlier assignment was no less invalid as a preference. The assignments required record. Rev. Laws Mass. c. 189, § 34; Somers v. Keliher, 115 Mass. 165; Tracy v. Waters, 162 Mass. 562, 39 N. E. 190. In Chester v. McDonald (Mass.) 69 N. E. 1075, the Supreme Court of Massachusetts said, indeed, that the cases first cited cannot be sustained if they cover the price to be
paid for the construction of a building into which enters no service by way of manual labor or of personal supervision, direction, or control of the assignor. In the case at bar the contract calls for no supervision from the contractors, and O'Donnell was not fitted to give any, but Ferguson became a partner expressly to give this supervision, and so Chester v. McDonald must be deemed inapplicable. It follows that the giving of these conveyances was an act of bankruptcy if either gave a preference to the assignee. Bankr. Act July 1, 1898, c. 541, §§ 3b, 60a, 30 Stat. 546, 562 [U. S. Comp. St. 1901, pp. 3422, 3446] as amended by Ray Bill (Act Feb. 5, 1903, c. 487) § 13, 32 Stat. 799 [Supp. U. S. Comp. St. 1901, p. 416].
Was Reichenbacher a creditor preferred by the assignments? He was then an indorser of the respondents' paper. His liability was contingent. In Moch v. Market Bank, 107 Fed. 897, 47 C. C. A. 49, a noteholder was held to have a provable claim against a bankrupt indorser, and in Swarts v. Siegel, 117 Fed. 13, 54 C. C. A. 399, it was said that an accommodation indorser, even before payment, is a creditor of the bankrupt debtor whose paper he has indorsed. See pages 17, 18, 117 Fed., and pages 404, 405, 54 C. C. A. Reichenbacher was, therefore, the bankrupt's creditor at the time of both assignments. If the assignments stand, Reichenbacher will receive a greater percentage of his debt than other creditors. Whether he can hold the assignments by paying to the estate the amount he has been preferred, need not now be determined.
Adjudication to be made.
In re COLEMAN.
(District Court, S. D. New York. June 10, 1904.)
1. MANDAMUS-FEDERAL COURTS--JURISDICTION.
Federal courts can only grant a writ of mandamus in aid of an existing jurisdiction.
2. SAME-BANKRUPTCY-EXECUTIVE OFFICERS Where a receiver in bankruptcy was authorized to carry on the business of publishing a newspaper with a view to preserving its good will as an asset of the bankrupt's estate, but pending such publication the postmaster, by direction of the Postmaster General, prohibited the circulation of the paper through the mails as unmailable matter, mandamus would not be granted to reverse such determination, though the question whether the publication was objectionable might be the subject of a difference of opinion.
Michel Kirtland, for petitioner.
Charles D. Baker, Asst. U. S. Atty., opposed.
HOLT, District Judge. It is well settled that the United States courts can only grant a mandamus in aid of an existing jurisdiction. It is usually granted to enforce the collection of a judgment. In this case this court, as a court of bankruptcy, has made an order authorizing
1. See Courts, vol. 13, Cent. Dig. § 803.
a receiver in bankruptcy to carry on for a short time the business of publishing a newspaper, with a view of preserving its good will as an asset of the bankrupt estate. Under these circumstances I should hesitate to hold without further consideration that this court would have no power in a proper case to issue a mandamus in furtherance of the order in bankruptcy to carry on the business. But I think in this case the general principle applies that a mandamus will not be issued to interfere with the legitimate discretion of an executive officer. The postmaster, by direction of the Postmaster General, under the statute, has prohibited the circulation through the mails of the paper in question as unmailable matter. The question whether the contents of the publication in question come within the prohibition of the statute is one upon which there might be a difference of opinion, but the articles and pictures in the paper which are objected to are of such a character that, in my opinion, it cannot be said that the postmaster, in deciding that it is unmailable, has abused his discretion.
I think, under these circumstances, that the motion must be denied.
STOCKWELL v. BOSTON & M. R. CO.
(Circuit Court, D. Vermont. June 30, 1904.)
1. DEATH-FEDERAL COURTS-JURISDICTION.
The federal courts have jurisdiction of an action for death of a servant only where it is between citizens of different states or between citizens and aliens.
2. SAME JURISDICTIONAL FACTS-AVERMENT.
In an action in the federal courts for the wrongful killing of a servant, an averment that the defendant is a corporation organized under the laws of the commonwealth of Massachusetts, and that the plaintiff was "of Brattleboro, in the county of Windham and state of Vermont, executrix" of the will of the deceased, late of Brattleboro, was insufficient to show diversity of citizenship, since the allegation of plaintiff's residence did not negative the fact that she was only temporarily residing in the state of Vermont, and was not a citizen of the same state as the defendant.
Clarke C. Fitts, for plaintiff.
Wm. B. C. Stickney, for defendant.
WHEELER, District Judge. This cause has been heard upon a demurrer to the plaintiff's declaration. A declaration that does not set forth a cause of action within the jurisdiction of the court is insufficient. This court has jurisdiction of suits of this nature only when they are between citizens of different states, or between citizens and aliens. The declaration should, therefore, show by direct allegation, without ambiguity, either in itself or in connection with the writ, the required diversity of
12. Averments of citizenship to show jurisdiction in federal courts, see note to Shipp v. Williams, 10 C. C. A. 261.