(269 F.). method, provided it makes no payments to remitting banks for services in remitting. Plaintiffs' cause of action was the alleged wrong asserted by them to be caused by such collections. One ground upon which the wrong was urged is that the Reserve Bank is forbidden by the Reserve Act to make collection of checks and drafts in this manner. This presents for decision the proper construction of the quoted provisions of the Federal Reserve Act, and it was presented in the plaintiffs' own statement of their cause of action in the amendment to the bill, and not as a suggested or anticipated defense which the defendants might be expected to set up as an answer to the plaintiffs' cause of action. The solution of this question depends upon the construction to be given sections 13 and 16 of the Federal Reserve Act (Comp. St. §§ 9796, 9799), and not merely to a chartered power of the defendant bank. The plaintiffs having injected this federal question into their statement of their cause of action, the case was thereby made removable, as one arising under the laws of the United States. We think the District Court of the United States properly entertained jurisdiction for both reasons. [3] Coming to the merits, the appellants' cause of action is the prevention by injunction of the Federal Reserve Bank of Atlanta from collecting checks drawn on appellants' banks, in any other way than by correspondence and the remitting of the proceeds of the check by the bank on which it was drawn. The usage of the complaining banks had been to make a deduction from the amount of the check in remitting the proceeds to cover the so-called "exchange" or cost of remitting. This charge could only be applied in cases in which the check was forwarded through the mails to the drawee bank. If the check was presented over the counter of the drawee bank, either by the payee or his agent, the full amount of the check was required to be paid, and the drawee bank was defeated in its endeavor to collect exchange on it. The purpose of the bill was to prevent the Federal Reserve Bank from handling checks on appellants and on other nonmember state banks, except through the regular channel of correspondence or clearing. Section 13 of the Federal Reserve Act, as amended, prohibited the Federal Reserve Bank from paying for the cost of remission. Consequently it was disabled from collecting through the regular channel from all banks which insisted on deducting for the cost of remission. In the case of all such banks it had the alternatives of not handling their checks at all, or of presenting them for collection over the counters of the drawee banks by agents, express companies, or the postal authorities. One contention of the appellants is that the Federal Reserve Act prohibited the reserve banks from handling any checks, the collection of which entailed any expense, to whomsoever payable, and that their endeavor to collect checks by presenting them at the counter of the drawee was ultra vires, because expense was necessarily incident to that method. Another contention of appellants is that, though the Federal Reserve Bank had the lawful right to handle such checks, it was making or intending to make an oppressive use of its right, by so exercising it as to amount to coercion or duress and with a wrongful and malicious motive. If the Federal Reserve Bank had availed itself of the services of the complaining banks in the remission of the proceeds of checks sent them for collection through the mails, in view of their known usage to deduct for exchange, it would have been liable for the reasonable value of such services, except for the statutory inhibition against it. The purpose of the bill, however, is not to collect compensation for services rendered and to which the banks had a property right, but to compel the Federal Reserve Bank to avail itself of services which it was unwilling to and disabled from accepting, by restraining it from using any method which did not require the use of such services. Complaining banks had no property right that was infringed by the refusal of the Federal Reserve Bank to avail itself of their services in remitting, or that a court of equity could be called upon to protect. It was under, no legal duty to accept the services of the complaining banks, even had there been no statutory obstacle to its doing so. It also had the legal right to present the checks of the complaining banks to them for payment singly or in numbers over their counters, and it was the absolute duty of the complaining banks to pay the full amount of such checks without deduction, when so presented. This is disputed by appellants only because of the statutory prohibition against the federal reserve banks paying the cost of remission of the proceeds of checks collected by it. It is contended that this provision not only prohibited the reserve banks from paying exchange to remitting banks on which the checks were drawn, but also from paying expense of any kind or to any person for collecting checks, and that as a consequence the federal reserve banks were without power to handle any checks for collection, where such collection was attended with expense of any kind. If so, it would follow that the endeavor to collect checks over the counter through paid agents was within the prohibition of the Federal Reserve Act as amended and ultra vires. Whether appellants' construction of the prohibiting clause is correct depends upon the purpose it was intended to subserve. Appellants' contention is that its purpose was to conserve the assets of the Reserve Bank. Appellees' contention is that it was to aid in accomplishing a uniform par clearance system. In view of the purpose of Congress to effect the latter object, we think the appellees' construction is the correct one, and that the prohibition is limited to a charge against and payment of the charge to a remitting bank, and does not prevent the federal reserve banks from expending money for collection of checks in any other way in an endeavor to accomplish a uniform system of par clearance. It follows that the acts of the Federal Reserve Bank complained of are within its legal powers. Conceding that they were ultra vires solely because entailing an unauthorized disposition of the banks' assets, the appellants and interveners, who were neither stockholders nor creditors of the Reserve Bank, would have no standing to complain of such a disposition, because of a collateral injury to them. The right to make complaint on (269 F.) that ground would be confined to the United States or to individuals who were injured by the depletion of the banks' assets. If the purpose of the prohibition was altogether to save expense to the federai reserve banks, and if the statute evinced no policy to prevent the reserve banks from handling checks of nonmembers and nondepositing banks, if it incurred no expense, the mere incidental injury that appellants suffered from the handling of such checks would give it no right to complain of an expenditure from which it could suffer no injury. The Federal Reserve Act does not only not evince a purpose to deny to the Reserve Bank the power to collect checks of nonmember and nondepositing banks, but exhibits a general policy to encourage a uniform and universal system of par clearance, which would only be accomplished by conferring power upon the Reserve Bank to handle checks drawn on all banks upon any terms that might be essential, except the payment to the remitting bank of compensation for remitting. [4] The appellants contend further that, even if the Federal Reserve Bank had the right to handle checks of nonmember banks by presenting over the counter, it could not exercise that right oppressively; that it was threatening to do so, and should therefore have been enjoined. The prayer of the bill is not limited to an oppressive use of the method complained of, but extends to any use of it whatsoever. The bill seeks to enjoin the appellee bank "from collecting or attempting to collect any check against petitioners, or against any other bank in like condition, who may become a party hereto, except in the usual and ordinary channel of collecting checks through correspondent banks or clearing houses; said channels being well established and well understood by defendants and all others familiar with the banking business." Appellants' complaint is of the method, and not of an abuse of it. The effect of the writ prayed for would be to entirely prevent the appellee bank from collecting checks in any other way than by transmission to the drawee bank, and the remission of the proceeds by the drawee bank through the mails, and so to prevent their collection by presentation over the counter, even though presented regularly and without accumulation. The right to the relief sought is also based upon the doctrine of conspiracy. An illegal conspiracy is not predicable upon the doing of a lawful thing by lawful means, even when done in concert or combination. The bill fails to show a concert or combination that would amount to a conspiracy in law, though its object or the means by which it was to be accomplished were unlawful. The acts complained of were those of the defendant the Federal Reserve Bank. No legal conspiracy could exist between it and its officers, the other defendants. The amended bill charges a conspiracy between the Federal Reserve Bank of Atlanta and the federal banks of other districts, upon the theory that all the federal reserve banks are under control of the Federal Reserve Board. The federal reserve banks of other districts have no power to act upon the petitioners or the interveners. Their jurisdiction in that respect is confined to their own districts. Being without power to injure the complaining banks, they could not be members of a conspiracy against such banks. The members of the Federal Reserve Board are not charged as conspirators. That other federal reserve banks had taken coercive steps against state banks in their districts to enforce the par clearance policy, as charged on hearsay information in the amended bill, has no bearing on the cause of action relied upon by appellants in this case. Appellants can take nothing from the doctrine of conspiracy. The principle that one must so use his property as not to unnecessarily and maliciously injure his neighbor, even though his act is otherwise lawful, is also invoked. Conceding that the accumulating of checks, and their presentation, when accumulated, with the intent to embarrass and injure the drawee bank, might constitute an actionable wrong and one that might be prevented by injunction; we do not think the amended bill presents any such case. There is no specific charge in the bill of any threat to present the checks in any accumulated or oppressive manner, on which a court of equity would be justified in acting. Nor does the bill charge the appellee bank with acting from a merely malicious motive, if that is material. It does aver that the purpose of the appellee was to compel the appellants to accept the lesser of two evils and to remit at par for checks drawn upon it. If this charge was borne out by the exhibits, which it is not, it would not constitute legal duress, on which a legal complaint could be predicated. The exhibits show that the adoption of a system of universal par clearance was advocated in good faith by the appellee bank as a proper banking policy, and as well by Congress and the Federal Reserve Board. The adoption of appropriate means by the appellee bank to accomplish this end cannot with any propriety be attributed to malice on its part against appellants and other banks in like condition. Nor does the adoption of the method of presenting checks over the counters of the drawee bank imply an attempt to coerce them into becoming member or depositing banks. The Federal Reserve Bank was interested to supply a universal clearance at par for its member and depositing banks. It could accomplish this only by accepting from its member and depositing banks all checks tendered it by them upon whatever banks drawn. If drawn upon a nonmember and nondepositing bank, which refused to remit at par, it was disabled under the statute from handling such checks through the method of transmission of the checks and remittance of the proceeds through the mails. It could only collect such checks by presentation in person to the drawee bank. It is therefore reasonable to suppose that its declared purpose of making such presentations was in furtherance of its policy of furnishing complete clearing facilities to its member banks, and was not for the purpose of injuring or destroying the drawee banks, or of coercing them into becoming member or depositing banks with it. It constituted an essential step, without which universal par clearance was not possible of accomplishment. We conclude that the District Court had jurisdiction, and that its decree dismissing the bill for want of equity was without error, and it is therefore affirmed. (269 F.) DENDY et al. v. SOUTHERN PINE LUMBER CO. et al. (Circuit Court of Appeals, Fifth Circuit. December 7, 1920.) No. 3481. 1. Appeal and error -849 (2)-Review in cases tried without jury. Where an action at law is tried by the court by stipulation, and a general finding only is made, only rulings made during the trial and excepted to at the time are reviewable. 2. Judgment 517-Not subject to collateral attack for matter of defense in original suit. A judgment for taxes in favor of the state against the unknown owners of a tract of land, under which the land was sold as a single tract, cannot be collaterally attacked by the owners of a part of the tract on the ground that a part of the taxes for which their land was sold was against other land, which was a matter of defense in the original suit. In Error to the District Court of the United States for the Eastern District of Texas; William R. Smith, Judge. Action at law by Alfred Dendy and others against the Southern Pine Lumber Company and others. Judgment for defendants, and plaintiffs bring error. Affirmed. B. B. Perkins, of Rusk, Tex., for plaintiffs in error. R. E. Minton, of Groveton, Tex., for defendants in error. KING, Circuit Judge. The plaintiffs in error, who were all of the heirs at law of James M. Dendy, except Jesse Dendy, filed a statutory action of trespass to try title against the Southern Pine Lumber Company in the United States District Court for the Eastern District of Texas. They claimed title to 200 acres of land out of a tract of 320 acres, known as the Harmon Ellis survey. They alleged that this survey was patented to J. H. Dendy, who died leaving two heirs, J. M. Dendy and Larkin Dendy. Larkin died, leaving J. M. Dendy as his sole heir. Administration of the estate of J. M. Dendy was had in the probate court of Cherokee county, Tex. Two hundred acres of said land were by order set apart as the homestead of the children of the deceased, and 120 acres were by order of court sold to L. M. Allen, to whom the administrator of Dendy made a deed. On May 14, 1898, pursuant to proceedings had in the district court. of Cherokee county, a judgment was rendered in favor of the state of Texas for the taxes due it for the years 1884 to 1896, inclusive, on the tract of land described by the courses and distances contained in the patent to J. H. Dendy, and it was ordered sold to pay said taxes. A sale was had pursuant to said judgment. The land was purchased by Laura A. Sloan. The deed described the land by courses and distances identically as described in said judgment. By mesne conveyances the land has been conveyed from Mrs. Sloan to the defendant. It was stipulated that each purchaser since Mrs. Sloan has paid an For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes |