lieve, by all parties, that it is a medicinal preparation not containing alcohol; and, as Congress does not seem to have provided for it in any other place, it would seem to me to fall properly within paragraph 68, where it is placed. The decision of the Board of General Appraisers is reversed, and the merchandise held subject to duty as a medicinal preparation not containing alcohol, under paragraph 68 of the tariff act, as assessed by the collector. SWAN & FINCH CO. v. UNITED STATES. CUSTOMS DUTIES (§ 24*)-CLASSIFICATION-OLEIN-"WOOL GREASE"-"DIS- So-called olein, a distillate from wool grease, in the form of an oil, is not "wool grease," within the meaning of Tariff Act July 24, 1897, c. 11, § 1, Schedule G, par. 279, 30 Stat. 172 (U. S. Comp. St. 1901, p. 1652), but is dutiable as a "distilled oil," under Schedule A, par. 3, 30 Stat. 151 (U. S. Comp. St. 1901, p. 1627). [Ed. Note.--For other cases, see Customs Duties, Dec. Dig. § 24.* On Application for Review of a Decision by the Board of United States General Appraisers. Brooks & Brooks (Frederick W. Brooks, of counsel), for importers. D. Frank Lloyd, Asst. U. S. Atty. PLATT, District Judge. The article in controversy was invoiced as olein, but is shown by the testimony to be also known as wool olein or "wooleine." It is described by the Board of, General Appraisers as consisting of "a dark reddish oil distilled from wool grease." By an admitted error it was classified as an acid. The board, without approving the collector's assessment, held that it should have been classified as a distilled oil under Tariff Act July 24, 1897, c. 11, § 1, Schedule A, par. 3, 30 Stat. 151 (U. S. Comp. St. 1901, p. 1627) and overruled the importers' contention for classification under paragraph 279 as "wool grease." I am of the opinion that the board should be affirmed. For one thing, there being evidence to support their finding that the material in dispute is not wool grease, I am bound by that finding. But, aside from that consideration, I think that if I had been the board I should have decided as they have. In Movius v. United States (C. C.) 66 Fed. 734, wool grease was said to be of a "viscous consistency," while the substance at bar is an oil, and, being distilled from wool grease, should be considered as a product of that material, rather than wool grease itself. It is not the "crude raw material" referred to by the Circuit Court of Appeals in the Zinkeisen Case, 167 Fed. 312, as being the article intended by Congress to be covered by the expression "wool grease. Decision affirmed. For other cases see same topic & § NUMBER in Dec. & Am Digs. 1907 to date, & Rep'r Indexes In re BLOOMSBURG BREWING CO. (District Court, M. D. Pennsylvania. August 19, 1909.) No. 1,319, in Bankruptcy. 1. BANKRUPTCY (§ 72*)-CORPORATIONS SUBJECT TO ADJUDICATION-BRewery— NATURE OF CORPORATE BUSINESS-MANUFACTURING CORPORATION "ENGAGED PRINCIPALLY IN MANUFACTURING." A brewing company, chartered to manufacture and sell malt liquors, which has done nothing except in preparation for such business, by constructing a brewery plant at large expense, taking out a brewer's license, and hiring a brew master, although it has never made any beer, nor bought materials therefor, is a corporation engaged principally in manufacturing, and subject to proceedings in involuntary bankruptcy, under Bankr. Act July 1, 1898, c. 541, § 4b, 30 Stat. 547 (U. S. Comp. St. 1901, p. 3423). [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. § 17; Dec. Dig. § 72.* For other definitions, see Words and Phrases, vol. 8, pp. 7650-7651.] 2. BANKRUPTCY (§ 72*)—CORPORATIONS SUBJECT TO PROCEEDINGS-WHEN CORPORATION ENGAGED IN BUSINESS FOR WHICH CHARTERED. A corporation chartered for a certain purpose is to be regarded in bankruptcy as engaged in the purpose of its charter from the time it starts to put itself in shape to pursue the objects for which it is incorporated, aud takes character as a manufacturing or other corporation accordingly. [Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 72.* What persons are subject to bankruptcy law, see note to Mattoon Nat. Bank v. First Nat. Bank, 42 C. C. A. 4.] In Bankruptcy. On exceptions to report of H. A. McKillip, referee. W. H. Rhawn, for exceptions. A. W. Duy, for petitioning creditors. ARCHBALD, District Judge. The Bloomsburg Brewing Company, the alleged bankrupt, was incorporated under the laws of Pennsylvania on August 1, 1906, for the purpose, as expressed in its charter, of "brewing, manufacturing, and selling malt liquors and malt extracts." To properly equip itself for this business it purchased about 100 acres of land in the borough of Bloomsburg, Pa., in this district, and proceeded to erect thereon a brewery building, installing the necessary brewing machinery and appliances, at a cost of about $100,000. The money was principally raised by an authorized issue of first mortgage bonds of $150,000, only $90,000 of which, however, were marketed; the work and material above this which went into the brewery being secured on credit, for which mechanics' liens to the amount of $8,000 have been entered. There are also a number of tax liens which have been filed against the property, and in addition some $1,500 is due to general creditors. The company, it is admitted, is hopelessly insolvent, and has also committed an act of bankruptcy in preferring certain of its officers and creditors, provided, always, that it is liable to involuntary proceedings. It is denied, however, that this is the case; the company not being engaged, as it is claimed, in any manufacturing pursuit, within the meaning of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3418]), at the time of the filing of the petition. For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes The proceedings to have the company declared a bankrupt were instituted December 29, 1908, and there is no question that it had not at that time, nor has it since, engaged in the actual business of brewing'; the nearest it has come to it, outside of the construction and equipment of the brewery, being to engage a brew master and to take out a brewer's license. This license was obtained on due application to the quarter sessions of Columbia county April 1, 1908, and was renewed again on April 1, 1909, after these proceedings were pending. And the brew master was retained upon wages until there was no more money to pay him, just how long is not shown by the record. As already stated, however, no manufacturing or selling of ale or beer was entered upon; the company not being in funds to pay for material, and its credit being gone by reason of its financial embarrassment. By section 4 b of the bankruptcy act as amended, "any corporation engaged principally in manufacturing, trading, printing, publishing, mining, or mercantile pursuits, owing debts to the amount of one thousand dollars ($1,000) or over," may be adjudged an involuntary bankrupt; and the brewing of malt liquors, such as the respondent company was chartered to do, would, of course, be a manufacturing within the terms of the statute. It was held, however, in the case of the Toledo Cement Company (D. C.) 19 Am. Bankr. R. 117, 156 Fed. 83, that a corporation organized for the purpose of making cement, but which had never exercised its franchise and never engaged in actual manufacture, was not subject to adjudication. But, on the other hand, it was held in the case of the White Mountain Paper Company (D. C.) 11 Am. Bankr. R. 491, 127 Fed. 180, that a corporation organized for the purpose of manufacturing and selling paper from wood pulp, which had become the owner of large tracts of timber land, and had made extended expenditures in the prosecution of this purpose, was within the statute, even though there had been no actual manufacturing; it being declared that the words "engaged principally in manufacturing, trading, printing, publishing, mining or mercantile pursuits," as used in the bankruptcy act, were descriptive of the kind of the corporation that could be put into bankruptcy, and was not intended to make the operation of the law depend upon whether it was actually so engaged at the particular time when the petition was filed against it. This decision was affirmed on appeal in White Mountain. Paper Company v. Morse, 11 Am. Bankr. R. 633, 127 Fed. 643, 62 C. C. A. 369, where it was held that, having acquired lands and constructed mills for the purpose of making paper, it had become engaged in that business. "The corporation is a business corporation," says Judge Putnam. "It undertook to acquire lands and construct mills for a certain purpose, and that purpose must be presumed to be one within the four corners of its organization. It had undertaken a business, and, in view of its charter and of what facts we have stated, that business could be no other than the business of manufacturing. It was not organized for the purpose of constructing mills, so that it could be said that its business was that of constructing mills. It was permitted to construct mills only as incidental to its authorized powers, which, so far as this case is concerned, were those of manufacturing. The question being purely a question of fact, and the case addressing itself on that question so strongly to the ordinary mind, we are bound to hold that, on any fair construction of the statute, the corporation was not only principally, but wholly, engaged in manufacturing, although in the early stages of it." It is true that in that case some timber had been cut into suitable lengths for use in the contemplated making of paper. But, while alluding to it, the decision, as it will be seen, does not rest on that, but must be taken as standing for the broad view that, where a corporation is organized and makes preparation for carrying out the objects of its charter, acquiring and equipping itself with the necessary plant and appliances, it thereby engages in that which it is incorporated to do-whether manufacturing, or mining, or whatever it may be-within the meaning of the bankruptcy act, and is liable accordingly. This, in my judgment, is the correct interpretation of the law, and, if so, the proceedings were properly instituted. The respondent company was chartered to manufacture malt liquors, and at large cost it built and fitted up a brewery to do so. It even went so far as to take out a license and hire a brew master, although that is not very material. It may not have got together the necessary ingredients to begin to brew. But all that it did it did under the sanction and to carry out the purposes of its charter, which, while preliminary to the actual business of manufacturing and selling its products, not only stamped it as a manufacturing or brewing company, but as engaged in that pursuit from the moment that it started, under its charter, to put itself in shape to do so; every step taken necessarily having that in view. It is true that what a corporation is actually doing, and not simply what it is authorized to do by its charter, outside of that, is to determine whether it is engaged in any of the pursuits named in the statute. And where, therefore, it possesses a franchise by which it might be liable, it is not to be held if it does not use it. In re New York Water Company (D. C.) 3 Am. Bankr. R. 508, 98 Fed. 711; In re Tontine Surety Company (D. C.) 8 Am. Bankr. R. 421, 116 Fed. 401; Columbia Iron Works v. National Lead Company, 11 Am. Bankr. R. 340, 343, 127 Fed. 99, 62 C. C. A. 99, 64 L. R. A. 645. But that is altogether different; the franchise which it does, and not that which it does not, use giving character to its business. And that is all that was meant in Tiffany v. La Plume Milk Company (D. C.) 15 Am. Bankr. R. 413, 141 Fed. 444, decided by this court, where it was said that the actual business of a corporation is to be considered, and not that which it might possibly have undertaken by virtue of authorized, but unexercised, powers. It is, however, said that bankruptcy is designed to protect commercial debts, incurred in trade, where credit is asked and received, and hence the requirement that a business within those enumerated by the statute must have been entered upon before liability attaches. But this, if of any force, is not controlling, and is met by the consideration that, as already stated, a manufacturing or trading corporation to all intents and purposes engages in business when it starts to carry out the objects for which it was incorporated. And if the incurring of debts upon credit is required to satisfy the statute, there certainly was enough of that here. The exceptions are overruled, and an adjudication directed to be entered in conformity with the report of the master. FOURTH ST. NAT. BANK v. MILLBOURNE MILLS CO.'S TRUSTEE. In re MILLBOURNE MILLS CO. (Circuit Court of Appeals, Third Circuit. August 10, 1909.) No. 38, October Term, 1908. 1. BANKRUPTCY (§ 185*) - PLEDGE OF PERSONAL PROPERTY - VALIDITY AS AGAINST TRUSTEE. Unlike an assignee for the benefit of creditors, who has no rights be yond those of his assignor, by whose voluntary act the assignment was made, a trustee in bankruptcy takes title by operation of law entirely independent of the bankrupt, and is expressly invested with the rights of creditors, and with authority to avoid any transfer by the bankrupt of his property which any creditor might have avoided under which he may avoid a pledge invalid for want of delivery. [Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 234, 235; Dec. Dig. § 185.*] 2. FRAUDULENT CONVEYANCES (§ 138*)-DELIVERY OF POSSESSION-ISSUANCE OF WAREHOUSE RECEIPTS BY OWNER OF PROPERTY. A man cannot make a warehouse of himself as to his own goods, and by issuing and pledging warehouse receipts make a valid transfer as against his creditors of property which remains in his possession and under his control, without anything to distinguish it from his other property or to indicate that he is not the unqualified owner. [Ed. Note. For other cases, see Fraudulent Conveyances, Dec. Dig. § 138.*] 3. BANKRUPTCY (§ 140*)-PROPERTY PASSING TO TRUSTEE-ATTEMPTED PLEDGE OF PROPERTY. A bankrupt milling company in Pennsylvania prior to bankruptcy had issued wheat and flour certificates each calling for a certain quantity of wheat or flour stored in its grain tanks or mill, to be delivered to the holder on demand, and had indorsed such certificates as collateral security for loans. The wheat called for by such certificates was an undivided part of that contained in its grain tank, which was a shifting quantity; the wheat being run from such tank into the mill as needed for grinding. The flour certificates each called for a certain number of barrels set apart in its storage rooms, which were so set apart, but were in no way marked to indicate a pledge nor to negative the ostensible ownership of the company. Held, that there was no such delivery as to constitute a valid pledge under the settled law of the state, and that title to the wheat and flour passed to the trustee in bankrupcy, as property which might have been levied on and sold under process against the bankrupt. [Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 140.*] 4. BANKRUPTCY (§ 188*)-EQUITABLE LIENS-VALIDITY AS AGAINST TRUSTEE. A transaction intended as a pledge of property, but which for want of delivery is ineffectual as a pledge, does not create an equitable lien as against a trustee in bankruptcy, who represents the general creditors of the pledgor. [Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 188.*] Petition for Review from the District Court of the United States for the Eastern District of Pennsylvania. For opinion of court below, see In re Millbourne Mills Co., 162 Fed. 988. * *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 172 F.-12 |