In this case there is considerable evidence of a previous inventive idea on the part of Leighton, even as early as 1892, and some evidence that there was a reduction to practice as early as 1895; but this testimony is not corroborated by actual constructions brought before us, and is not otherwise sustained in such a manner as to make it convincing to the court. The burden which rested upon the defendant in the · first instance to show that Mallet's invention was made at an earlier date than that of the Leighton patent in suit is now transferred to the complainant, who, in order to prevail, must prove that the anticipation has been anticipated. In our opinion, no such proof has been furnished by the complainant. We, therefore, in the case of both Mallet and Leighton, place the time of the invention at the time of the actual reduction to practice. The result of this is that we are compelled to hold that Mallet made an invention identical in inventive thought to that of Leighton, and that he made this invention in the fall of 1898, about a year prior to the time of the actual invention by Leighton, which was embodied in the patent in suit. In this view of the case, it is unnecessary for us to examine further the testimony in regard to other anticipatory devices which have been brought before us, both in the patented and the unpatented art. It is unnecessary, too, to pass upon the other questions which have been raised by counsel, both orally and in their very able and exhaustive briefs. It is sufficient for the decision of the cause to say that, in our opinion, the invention of Leighton, embodied in the patent in suit, has been anticipated by Adrian De Piniec-Mallet. The decree must be: Bill is dismissed, with costs. MUNICIPAL TELEGRAPH & STOCK CO. v. WARD, Collector. (Circuit Court, N. D. New York. April 2, 1904.) 1. INTERNAL REVENUE-WAR REVENUE ACT-TAX ON CONTRACTS FOR PURCHASE AND SALE OF STOCKS. Plaintiff corporation was engaged in business as a stockbroker in conducting transactions respecting the purchase and sale of stocks to be settled with reference to the public market quotations of prices, within subdivision 3 of Schedule A of the War Revenue Act of July 13, 1898, c. 448, § 25, 30 Stat. 458, as amended by Act March 2, 1901, c. 806, § 8, 31 Stat. 943 [U. S. Comp. St. 1901, p. 2302]. Its business was transacted with numerous correspondents, on whose telegraphic orders it would report a purchase or sale, and forward the correspondent a memorandum such as is required by the statute. The correspondents were also dealing with customers, and their orders to plaintiff generally represented orders from their own customers, to whom they delivered a memorandum of each purchase or sale bearing a stamp as required by the act, but stating the transaction between the correspondent and the customer only. The customer was not named or known in the transaction between the correspondent and plaintiff. Held, that such transactions were transactions between principals, separate and distinct from those between the correspondents and their customers, and that plaintiff was subject to the tax on each memorandum given thereon. Action to Recover Internal Revenue Taxes Paid. John A. Delehanty, for complainant. Taylor L. Arms, Asst. U. S. Atty., for defendant. WALLACE, Circuit Judge. This is an action to recover the sum of $16,696.17, with interest from October 15, 1902, paid by the plaintiff to the defendant, as collector of internal revenue, under protest, and which the plaintiff claims was illegally exacted. The defense is that the sum exacted was the amount of a tax and penalties accruing to the government from the plaintiff pursuant to the provisions of subdivision 3 of Schedule A of the War Revenue Act of June 13, 1898, c. 448, § 25, 30 Stat. 458, as amended by Act March 2, 1901, c. 806, § 8, 31 Stat. 943 [U. S. Comp. St. 1901, p. 2302]. Subdivision 3 imposes a stamp tax upon every person who or corporation which engages in the business of making contracts or transactions respecting the purchase or sale, or purchase and sale, of stocks, bonds, or other securities, contemplating that the same may be closed or settled with reference to the public market quotations of prices made upon any exchange upon which the securities are dealt in, "and without a bona fide transaction on such exchange," of 2 cents on each $100 of the face value of all stocks or securities covered by each and all of such contracts or transactions; and it imposes the same tax upon every person who or corporation which shall conduct "what is commonly known as a bucket shop." It further requires every such person or corporation to deliver to the other party at the time of making the same a written memorandum containing a complete specification of the contract, to which the proper stamp shall be affixed before delivery. Between July 24, 1901, and July 1, 1902, the plaintiff was a corporation engaged in the business of making contracts and transactions of the class described in subdivision 3; but, so far as appears by the proofs, it was not engaged in conducting a bucket shop. Its business of this character was transacted with numerous brokers, who were engaged in business similar to that of the plaintiff, or in conducting bucket shops, located in various parts of the country, called "correspondents," and the course of the business appears to have been this: Upon the order of one of these correspondents by telegram to buy or sell a specified security if the market quotations warranted the execution of the order, the plaintiff would notify him by telegram that it had bought or sold, as ordered; and on the same day would send him a memorandum such as the statute requires of this and all other purchases or sales made in execution of his orders during the day, and a statement of his debit and credit items in account. When the credit items exceeded the debit items, the plaintiff would send a check to the correspondent for the balance. If the debit items exceeded the credit items, the correspondent would be expected to deposit the balance on the next morning in a designated local bank to the credit of the plaintiff. Each transaction between the plaintiff and the correspondent was identified by a number assigned to it in the consecutive order of the dealings, and this was transcribed in the books of both. These correspondents were at the same time dealing with customers who desired to engage with them in similar contracts or transactions, and their orders to the plaintiff generally represented orders from their own customers to buy or sell securities. Upon receiving notice from the plaintiff that a given order had been filled, the correspondent would notify the customer, and, if the customer had paid to him the required "margin," would deliver to him a memorandum such as the statute requires. He would also number this memorandum with the number which had been assigned to the transaction between himself and the plaintiff. The memorandum evidenced a transaction between the correspondent and the customer only. The customer was not named or known in the transaction between the correspondent and the plaintiff; and the memorandum delivered by the plaintiff to the correspondent evidenced a contract between them only. The commissions charged by the correspondents to their customers were a quarter of 1 per cent. on the par value of the securities covered by the contracts or transactions. The commissions charged by the plaintiff to the correspondents were one-half of that amount. The correspondents placed on the memorandums delivered to their customers the stamps required by subdivision 3, and canceled the stamps. The plaintiff did not stamp the memorandums of sales or purchases sent to its correspondents. The tax in controversy was assessed by the defendant upon the transactions between the plaintiff and the correspondents which took place between July 24, 1901, and July 1, 1902. The plaintiff insists that the tax was paid by the stamps affixed by the correspondents upon the memorandums delivered by them to their customers. If this contention is correct, the plaintiff is entitled to recover; otherwise it has no cause of action. If the correspondents were agents of the plaintiff and of their customers, so that in each contract or transaction the plaintiff and the customers were the real principals, it is plain that the contract or transaction is subject to but one tax. It would be in law a single contract or transaction between the plaintiff and the customer, the correspondent being a mere intermediary, and not a dual one between the plaintiff and its correspondent on the one hand and the correspondent and its customer on the other. The evidence does not warrant this view of the relations between the correspondents, their customers, and the plaintiff. It indicates that the correspondents were principals in their transactions with their customers upon the one hand and with the plaintiff upon the other; that the plaintiff dealt with them as principals, and neither knew nor cared to know any third party in their transactions with them; and that the plaintiff relied exclusively upon the responsibility of the correspondents in its dealings with them, although it was aware of their relations with customers. In a limited sense the correspondents were agents for the customers, because they were expected to execute orders to enter into contracts of purchase and sale given to them by the customers. In no sense were the correspondents agents of the plaintiff. They stood in no fiduciary relation to the plaintiff. They had no duties to perform for the plaintiff. They were not employed or paid by the plaintiff, their relations were none other than that of principal dealing with principal. When they made a contract to buy or sell with the plaintiff, they were at liberty to treat the contract as their own, and the plaintiff understood that they were at liberty to do so. In paying the tax by stamping the memorandums delivered to their customers the correspondents were merely paying their own tax upon their own transactions. The facts materially distinguish the case from that in United States v. Clawson (D. C.) 119 Fed. 994, which is relied upon by the plaintiff. The conclusion is that the transactions between the correspondents and the plaintiff were distinct and independent transactions, upon which the plaintiff was required by the statute to pay the tax. Judgment is accordingly ordered for the defendant. In re IMPERIAL CORPORATION. (District Court, S. D. New York. October 15, 1904.) 1. BANKRUPTCY-CORPORATIONS-SETTING ASIDE DEFAULT. Where a corporation against which a petition in bankruptcy has been filed makes default, an application to be relieved therefrom and to be allowed to defend should be made to the District Court. 2. SAME-COLLATERAL PROCEEDING-PARTIES. Where it is necessary to reform a contract in order to sustain a petition in bankruptcy against a corporation, the corporation should be made a party to the proceeding, notwithstanding its default as to the petition. which did not ask such reformation, or the assent of its board of directors to the bankruptcy. 3. SAME EVIDENCE TO SUSTAIN ADJUDICATION. An adjudication of bankruptcy against a corporation held warranted by the evidence. In Bankruptcy. Frank L. Crocker, for petitioning creditors. THOMAS, District Judge. The special commissioner finds that the Imperial Corporation "did duly pass a resolution by its board of directors, admitting its inability to pay its debts, and its willingness to be adjudged a bankrupt on that ground, and authorizing its secretary to so advise any creditor in writing, and that the secretary did so advise the petitioning creditors." It may be that the corporation, at the instance of a new board of directors, should not have been allowed to defend, provided the above resolution was duly passed, but whether it was duly passed is the very fact which the new directory of the corporation desired to contest. But the corporation was in default, and the referee properly held that the application for relief therefrom should be made to the court. There is, however, a very substantial difference between taking the corporation's default, for the purpose of adjudicating it a bankrupt, and proceeding to reform a contract without giving the corporation an opportunity to appear and defend. Hence, if it were necessary to reform the contract in order to sustain the petition, it would be necessary to remit the matter to the referee, and allow the corporation to be made a party to the proceeding to reform the contract. The petition did not ask for a reformation of the contract, but for an adjudication in bankruptcy. The fact that the corporation, by its default and the previous action of its board of directors, assented to the bankruptcy, by no means established its willingness that so important a contract should be reformed. It should be observed that the creditors defending do not appear to be the creditors of the Imperial Corporation, but of Mr. Lieb, who made the contract with the committee of the old corporation. Evidence to the effect that the Imperial Corporation assumed Mr. Lieb's obligation to pay the debts of the Magnetic Piano Company may exist, but it was not called to the attention of the court. Unless there be such assumption, the persons defending in this proceeding are without standing, but the conclusion reached renders this inquiry unimportant. The evidence shows that Lieb was a creditor of the Imperial Corporation for salary. It is understood that, aside from this, he had paid debts and made advancements amounting to $25,000 or over. This fulfills the seventh paragraph of the second contract. But in the fourth paragraph Lieb agrees "that he will purchase from the new company not less than five hundred (500) shares of its preferred stock within eighteen (18) months from the date hereof." The contention of the answering creditors is that it was Lieb's duty not only to purchase the stock, but also to pay in $25,000 in addition. He did take the stock, and he took it by virtue of the money that he paid pursuant to the seventh paragraph. It will be noticed that under the agreement Lieb took nothing except the stock that he was to receive upon payment therefor. If he agreed to pay $25,000 in addition under the seventh paragraph, it was without stipulation that he should receive anything in return therefor, and was a mere gratuity to the company. When he undertook to pay the indebtedness of the Magnetic Piano Company, and advanced money in addition for the development of the new company, such payment, in the absence of any provision for repaying or any stipulation therefor, must be regarded as a mere loan to the company, which he could justly credit upon his indebtedness for the stock which he agreed to take under the fourth paragraph. This is the meaning of the second paragraph, and the intention of the parties thereto. Upon this construction of the contract it is unnecessary to reform it, and the finding of the special commissioner, that the corporation should be adjudicated a bankrupt, is confirmed. Ex parte TOWNSEND. (District Court, D. Nebraska. November 11, 1904.) 1. COURTS-MARTIAL-REVIEW OF JUDGMENT BY CIVIL COURTS. The judgment of a court-martial regularly organized convicting and sentencing a soldier for desertion, which judgment has been confirmed as provided in the articles of war, is not subject to review by a civil court in habeas corpus proceedings on the ground that the prosecution was barred by limitation under the 103d article of war, such defense being one to the merits to be determined by the court-martial, and not affecting its jurisdiction. Application by Richard Townsend for a writ of habeas corpus. Irving F. Baxter, U. S. Atty., and Wm. G. Doane (Captain, Acting Judge Advocate U. S. Army), for respondent. MUNGER, District Judge. Under the facts in this case it appears that petitioner, Richard Townsend, enlisted as a soldier in the United States army on May 4, 1898, for a term of three years; that he deserted |