liens of the creditors is not disputed. The rule of comity that obtains between the federal and the state courts where the litigation involves the same subject-matter has been so frequently announced by the decisions of both that an extended citation of them is unnecessary. We will only refer to them so far as seems advisable for laying the foundation of our conclusion in the case under consideration. In Covell v. Heyman, 111 U. S. 182, 4 Sup. Ct. 358, 28 L. Ed. 392, the doctrine is thus clearly and forcibly declared, Justice Matthews delivering the opinion of the court:

"The forbearance which courts of co-ordinate jurisdiction, administered under a single system, exercise towards each other, whereby conflicts are avoided, by avoiding interference with the process of each other, is a principle of comity, with, perhaps, no higher sanction than the utility which comes with concord; but between state courts and those of the United States it is something more. It is a principle of right and of law, and, therefore, of necessity. It leaves nothing to discretion or mere convenience. These courts do not belong to the same system, so far as their jurisdiction is concurrent; and, although they co-exist in the same space, they are independent, and have no common superior. They exercise jurisdiction, it is true, within the same territory, but not in the same plane; and when one takes into its jurisdiction a specific thing, that res is as much withdrawn from the judicial power of the other as if it had been carried physically into a different territorial sovereignty. To attempt to seize it by foreign process is futile and void. The regulation of process and the decision of questions relating to it are part of the jurisdiction of the court from which it issues."

There have been numerous decisions of the supreme court involving the same question, but none has held differently from the rule stated in the case just cited. The principle is of ready application to the facts in the case before us. The chancery suits in the state court, instituted in 1894, were pending when D. W. C. Benbow was adjudged a bankrupt. A receiver had been appointed several years before by the state court to take charge of his real and personal property. No order had been entered discharging the receiver, and the record shows that he was performing his duties at the special May term, 1899, of the court. A decree was entered directing a sale of the property, and appointing a commissioner to sell the same. The property had been duly advertised for sale by the commissioner when the restraining order was applied for by the trustee in bankruptcy to prevent the sale of the property under the decree of the state A temporary restraining order was granted, forbidding the sale under the decree of the state court until the further order of the bankrupt court, and an order was entered to show cause why an injunction should not be granted. On the return of the order to show cause the bankrupt court entered a decree directing the bankrupt to comply with the demands of the trustee to deliver to it, the trustee, all of the property surrendered by the bankrupt or alleged to be in his possession. This included all of the real estate directed to be sold by the decree of the state court. The bankrupt court decreed the property to be sold by the trustee, and that the proceeds realized from the sale should stand as a substitute in the hands of the trustee for the land and property sold, subject to the future order of the bankrupt court. By this decree entered on an order to show cause why an injunction should not be awarded, the district

court assailed the jurisdiction of the state court, took from it the property in its possession and under its control, annulling its proceedings, revoking its decree of sale, and inhibiting its officer, the special commissioner, from executing its orders. This proceeding by the bankrupt court is directly in conflict with the ruling of the supreme court in Eyster v. Gaff, 91 U. S. 521, 23 L. Ed. 403. The doctrine stated in that decision so completely covers the case before us that we cannot more clearly express our view than to quote from it. The court says:

"It is a mistake to suppose that the bankrupt law avoids of its own force all judicial proceedings in the state or other courts the instant one of the parties is adjudged a bankrupt. There is nothing in the act which sanctions such a proposition. The court, in the case before us, had acquired jurisdiction of the parties and of the subject-matter of the suit. It was competent to administer full justice, and was proceeding according to the law which governed such a suit, to do so. It could not take judicial notice of the proceedings in bankruptcy in another court, however seriously they might have affected the rights of parties to the suit already pending. It was the duty of that court to proceed to a decree as between the parties before it, until by some proper pleadings in the case it was informed of the changed relations of any of those parties to the subject-matter of the suit. Having such jurisdiction, and performing its duty as the case stood in that court, we are at a loss to see how its decree can be treated as void. It is almost certain that if, at any stage of the proceedings, before sale or final confirmation, the assignee had intervened, he would have been heard to assert any right he had, or set up any defense to the suit."

The judge of the district court, while recognizing the doctrine as just quoted, seeks to draw a distinction between that case and the one at bar. He says:

"It will be observed, in Eyster v. Gaff, and in all other cases above cited, that the property of the bankrupt was in the actual possession of the state courts or adverse claimants. Where the property in question is not covered by litigation, or is not in possession of the state courts, the jurisdiction of the bankrupt courts will not be ousted. It is the interference with the possession of another court that would ensue if jurisdiction was taken that prevents it from attaching."

The district court seems to have been of the opinion, and it is the contention of counsel for the respondent in this court, that the receiver must be in the actual possession of the property in order to place it in the custody of the court. This position is erroneous. "A court of equity, by its order appointing a receiver, takes the subject-matter of the litigation out of the control of the parties and into its own hands, and ultimately disposes of all questions, legal or equitable, growing out of the proceeding." High, Rec. § 4. As stated by the supreme court of appeals of Virginia in Beverley v. Brooke, 4 Grat. 187, "A decree appointing receivers levies upon the property an equitable execution." "The possession of the receiver is that of the court, of which he is the ministerial officer. Thus it is that, inasmuch as the receiver is merely an officer of the court appointing him, property in his possession is said to be in the custody of the law. And it is said to be immaterial in this respect that the receiver appointed declines to act, the property being, notwithstanding, in the custody of the law." Beach, Rec. § 221. Nor is it necessary for a court of equity to take possession of the property in

litigation, or to attempt to do so by the appointment of a receiver, where the object of the suit is to set aside a fraudulent conveyance, and enforce judgment liens against the land of the debtor. If proceedings have been commenced more than four months before the adjudication in bankruptcy, jurisdiction of the state court cannot be devested by the bankrupt court. This was the case in Kimberling v. Hartly (C. C.) 1 Fed. 571, and the court held:

"Where an action is pending in a state court of competent jurisdiction to enforce a specific lien on property of the debtor, the subsequent bankruptcy of the debtor does not devest the state court of its jurisdiction to proceed to a final decree in the cause, and execute the same. The assignee in bankruptcy may intervene in such action, but the jurisdiction of the state court and the validity of its decree is not affected by his failure to do so."

The class of decisions relied on by counsel for the respondents to sustain the proposition that a court of bankruptcy can enjoin proceedings in a state court in a case such as we have here does not support that contention. On examination it will be found that they do not go to the extent of holding that a bankrupt court can enjoin proceedings in a state court where the jurisdiction of the latter had been invoked more than four months before the adjudication in bankruptcy. Reference to a few of them will show this. In re Smith (D. C.) 92 Fed. 135, was a case where the bankrupt executed a deed of general assignment under the statute law of Indiana within four months before he was adjudicated a bankrupt. The court held: "Where an insolvent debtor makes an assignment for creditors in pursuance of the terms of a state statute, the operation of which is suspended by the national bankruptcy law, and is afterwards adjudged a bankrupt, the court of bankruptcy has power, on a summary petition, to order the assignee to surrender the property in his possession to a receiver appointed by a court of bankruptcy."

Carter v. Hobbs (D. C.) 92 Fed. 594, is another case relied on by counsel for respondent. In this case, the bankrupt, within four months before adjudication in bankruptcy, had executed a mortgage. The trustee filed a petition in the bankrupt court alleging that the mortgage was executed with the fraudulent intent of giving one creditor a preference over his other creditors and to hinder, delay, and defraud them. The court held that the mortgage creditor, though he had not proved his claim, was a party to the proceedings in bankruptcy, and that the trustee seeking to set aside the mortgage might proceed by petition in the bankruptcy court, and need not resort to the state or federal circuit court.

In Re Brooks (D. C.) 91 Fed. 508, the trustee in bankruptcy filed a petition in the bankrupt court for an order directing the restoration to him of property of the bankrupt, unlawfully sold on foreclosure of a chattel mortgage after the adjudication in bankruptcy, and be.fore the appointment of a trustee. The court held that it had jurisdiction of such a petition. The sale had been made by a constable under the statute laws of Vermont, and this was relied on as a defense to the petition. The court said:

"The petitioner sets up proceedings under the laws of the state for foreclosure of his mortgage in justification. These are not judicial proceedings in any court drawing to it jurisdiction of the subject-matter, but are merely pro

ceedings for a public sale by an officer, in a specified way, as agent for the mortgagee."

In re Christy, 3 How. 292, 11 L. Ed. 603, Norton v. Boyd, 3 How. 426, 11 L. Ed. 664, and Houston v. City Bank of New Orleans, 6 How. 504, 12 L. Ed. 526, are also cited in support of the action of the district court. These cases all arose under the bankrupt act of 1841, which conferred more extensive powers on the bankrupt court than does the act of 1898. Yet these decisions do not go to the extent of taking from the possession of a state court property which has been in its custody for years before the adjudication in bankruptcy, and of enjoining its officer in the execution of its decree for a sale of the property under its control.

One further question requires examination. It is insisted in the petition of the trustee filed in the court below that the decree of the state court, the execution of which was enjoined, was procured by fraud and collusion; that Charles D. Benbow was not the bona fide holder of the judgments assigned to him by certain judgment creditors of the bankrupt, but that he held the same for the benefit of the bankrupt himself. The proceedings in the state court, the record shows, were regular in every respect. If the assignment of the judg ments in the state court were not for the benefit of Charles D. Benbow, but he in reality held them in trust for the benefit of the bankrupt, because the judgments had been paid for by the bankrupt, the trustee could have set this matter up in the state court. The bankrupt act provides that he may, by order of the bankrupt court, enter his appearance, and defend any pending suit against the bankrupt. As said by the supreme court in Eyster v. Gaff, supra:

"If there was any reason for interposing, the assignee could have had himself substituted for the bankrupt, or made a defendant on petition."

The importance of this case will justify us in making a further quotation from the same decision. It is as applicable to the present as to the former bankrupt act:

"In the absence of any appearance by the assignee, the validity of the decree can only be impeached on the principle that the adjudication of bankruptcy devested the other court of all jurisdiction whatever in the foreclosure suit. The opinion seems to have been quite prevalent in many quarters at one time that the moment a man is declared bankrupt, the district court which has so adjudged draws to itself by that act not only all control of the bankrupt's property and credits, but that no one can litigate with the assignee contested rights in any court except in so far as the circuit courts have concurrent jurisdiction, and that other courts can proceed no further in suits of which they had at that time full cognizance; and it was a prevalent practice to bring any person who contested with the assignee any matter growing out of disputed rights of property or of contracts into the bankrupt court by the service of a rule to show cause, and to dispose of their rights in a summary way. This court has steadily set its face against this view."

For the reasons stated, we hold that, the state court having acquired jurisdiction of the subject-matter and taken possession of the property more than four months before the adjudication in bankruptcy, it must be allowed to remain in control of the same, and to dispose of it under its own decrees. The order awarded by the district court restraining the commissioner of the state court from executing the decree of sale entered by that court must be dissolved.

The order directing a sale of said property by the trustee of Benbow, the bankrupt, must be revoked, and the petition of the trustee dismissed, without prejudice to his right to proceed in the state court as he may be advised.

UNITED STATES v. GABRIEL.

(Circuit Court, S. D. New York. January 18, 1900.)

No. 2,793.

CUSTOMS DUTIES-CLASSIFICATION-GROUND TALC.

Ground talc is dutiable under section 6 of the tariff act of 1897, as a nonenumerated article partly manufactured, and not under paragraph 97.

This is an application by the collector of customs at New York for a review of the decision of the board of general appraisers.

The merchandise was classified and assessed for duty at 35 per cent. ad valorem, as an article composed wholly or in chief value of earthy and mineral substance, under paragraph 97 of the act of congress of July 24, 1897. The importers claim it should be assessed at 20 per cent. ad valorem, as an article manufactured in whole or in part not provided for in said act, under the provision of section 6 thereof. The board of general appraisers decided the material was dutiable at 20 per cent., for the reasons that this ground talc is not a French chalk; that it is not an article composed of a mineral substance, not decorated in any manner; that it is a ground mineral; that it is a nonenumerated, partly manufactured article.

Curie & Smith, for importers.

D. Frank Lloyd, Asst. U. S. Atty.

WHEELER, District Judge. This ground talc is a mineral substance, but not such as can be decorated, and does not appear to fall under paragraph 97 of the act of 1897, as claimed. Dingelstedt v. U. S., 33 C. C. A. 395, 91 Fed. 112. Decision affirmed.

AMERICAN SUGAR-REFINING CO. v. UNITED STATES (two cases).

(Circuit Court of Appeals, Second Circuit. January 24, 1900.)

Nos. 34, 35.

CUSTOMS DUTIES-APPRAISAL-SUGARS - INCREASED VALUE FROM DRAINAGE DURING SHIPMENT. In the appraisal for duty, under the tariff act of 1894, of Brazilian sugar bought and shipped when green, and which necessarily loses weight and increases in value per pound, by drainage during the voyage, such increase in value may properly be taken into account. The provision of section 19 of the customs administrative act of 1890, that, where merchandise is subject to an ad valorem duty, the duty shall be assessed upon its value in the principal markets of the country from whence imported, "and in the condition in which such merchandise is there bought and sold for exportation," is not intended to limit the appraiser to a condition which existed at the time of the purchase, but was immediately to become altered until a new condition and value were reached, but, as shown by the context, is intended to apply to the condition of preparedness for shipment of the merchandise when bought; it being further provided that to its value in the condition bought shall be added the cost of coverings, and all other costs, charges, and expenses incident to placing it in condition for shipment.