which to seek redress, that complaint filed in the Court of Claims will find a welcome jurisdiction. The first paragraph of Section 145 of the judicial act, Fifth Federal Statutes Annotated, page 649, provides:

"All claims (except for pensions) founded upon the Constitution of the United States or any law of Congress, upon any regulation of an Executive Department, upon any contract, express or implied, with the Government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect of which claims the party would be entitled to redress against the United States either in a court of law, equity or admiralty if the United States were suable."

So, clearly would it appear, that if the contract hereinafter referred to were breached by the Government, to the carrier's injury, an action would lie properly lodged in the Court of Claims; also, would it lie, if the claim is founded on the Constitution (which it probably may be), under the subject herein involved, if it amounts to the taking of property in any of its various phases without due compensation, or even without a contract, if the application of this law resulted in an injury to the aggrieved party. It is quite probable that the language above quoted is quite broad enough to proffer the redress. Certainly, if the injury grows out of the plain violation of the express contract, the remedy is defined (Chicago Northwestern Ry. Co. v. United States, supra), unless it should be determined that, by the express provisions of the Federal Centrol Act, a different tribunal was designated for the adjudication of all questions of damage arising under the operation of the Act; for it seems to be settled that a statute "by providing a particular remedy or tribunal, manifests an intention to prohibit other remedies or tribunals."s

It does not appear that such separate tribunal was established by the Act in ques

(8) The Dollar Savings Bank V. United States, 19 Wal. 227.

tion. Section 3 thereof provides a special tribunal, called a board, and provides that it shall be created or constituted by appointinents made by the Interstate Commerce Commission. But a careful reading of the statute discloses that the only power of this board is to determine the question of compensation to be paid to the road, in the sense in which that term is used in the statute, and no other power or jurisdiction that we can ascertain is confined to such board. All other matters of dispute or difference which may arise between the Government and the railroad, in effect seems to be left to agreement, and if not so settled, the method seems undetermined, except as above mentioned, by action through the Court of Claims; and, even though it be conceded that the remedy of suit through the Court of Claims is preserved, yet how far it will avail a railroad company that signs one of the forms of contract provided under the direction of the Director General is a very serious question. Almost every source of damage that could possibly be anticipated was, in general terms, mentioned in Paragraph A, Section 3, to said contract, and the carrier required to waive any injury which might result through any of the agencies mentioned.

The contract is ostensibly an agreement for the compensation which the carrier. should receive for the use of the transportation system taken from it by the Government, but the language of the preamble does not so limit the scope of the contract. It describes it as

"such agreements as may be necessary and expedient with the several carriers, or other persons in interest, respecting compensation in every other matter concerning which it may be necessary or expedient to deal, etc.;"

then Section 3 of the contract provides:

"The Company accepts all the terms and conditions of the Federal Control Act and any regulation or order made by or through the President under authority of said act

or of that portion of the act approved August 29, 1916, referred to in paragraph (a) of the preamble to this agreement which authorizes the President in time of war to take possession, assume control and utilize systems of transportation; and the Company further and expressly accepts the covenants and obligations of the Director General in this agreement set out and the rights arising thereunder in full adjustment, settlement, satisfaction, and discharge of any and all claims and rights, at law or in equity, which it now has or hereafter can have, otherwise than under this agreement, against the United States, the President, the Director General, or any agent or agency thereof, for compensation under the Constitution and laws of the United States for the taking possession of its property, and for the use, control, and operation thereof during Federal control, and for any and all loss and damage to its business or traffic by reason of the diversion thereof or otherwise which has been or may be caused by said taking or by said possession, use, control and operation."

Certain elements of anticipated damage shall be submitted under the terms of the contract to adjustment by the Director General, and if the carrier is not satisfied with this determination of it, he has his appeal to the Interstate Commerce Commission, whose decision shall be final. As to such elements of damage, it is quite probable that the method agreed upon by the contracting parties will be held to be exclusive, if presented to the courts. Just how far the contract constitutes an indorsement by the carrier of all the terms and provisions of the Federal Control Act, and likewise the recitations in the President's proclamation of December 269 is a matter which the courts in some way may probably be called upon to determine or define. If such recitations are so completely drafted by reference into the contract as seemed to have been contemplated, it is difficult to promise much to the carrier as fruition for any legal proceedings which it. may institute.

(9) Supra.

The first paragraph of the preamble refers to the several proclamations, and congressional enactments involved in the act of taking over the roads, and providing for the contract.10

"The Company accepts all the terms and conditions of the Federal Control Act, and any regulation or order made by or through the President under authority of said act, or of that portion of the act approved August 29, 1916, etc."

Now, the proclamation purports to have been made in pursuance of this act, and the resolutions above referred to. The proclamation recites as reasons for the taking over of the roads as follows:

"First, to enable the railways to handle. more traffic; second, to save the railway companies from bankruptcy, and thereby prevent a national financial catastrophe which the bankruptcy of the railroads would cause; and, third, to solve the railroad labor problem."

Should it be conceded that the deplorable condition recited existed at the time, and in the manner therein stated, and that the catastrophe therein alluded to really impended, and further, conceded that the taking over by the Government did avert the threatened disaster to the railroad companies, then proof of injury in the face of such confessed conditions is a matter difficult to conceive. But that question is rather beyond the scope of this paper, and Congress itself seems not to have considered it seriously, or as binding, because by the recent Transportation Act it recognizes the possibility of certain injuries not yet provided for, or compensated for, and seems to recognize the probable call for recompense in line of such injuries, and the revolving fund created by the Federal Control Act for the relief of crippled or needy railroads is continued, and practically made permanent by the Transportation Act last above referred to.

It is to be hoped that a wise and businesslike administration of the Transportation

(10) By Section 3, supra.

Act will largely remove the necessity of any forensic action for the recovery of damages contemplated by the subject title of this paper, and that the carriers may have unbounded confidence in the fairness, justness and magnanimity of the Government, acting through its properly constituted authorities, in making full and complete satisfaction for any injury which may have resulted in the exercise of what was believed to be, and which unfolding evidence in time may disclose to have been, wise and necessary precaution for the conservation and perpetuity of the stability and prosperity of the nation.

Denver, Col.

JESSE G. NORTHCUTT.

BILLS AND NOTES-DIRECTORS AS INDORSERS.

KEISER v. BUTTE CREEK CONSOL. DREDGING CO. et al. (two cases).

District Court of Appeal, Second District, Division 1. California. June 1, 1920.

191 Pac. 552.

The fact that defendants, indorsers of corporation's notes, were also directors or officers with full knowledge of the corporate affairs and of the failure to pay the note does not excuse lack of notice of presentment and dishonor.

JAMES, J. Separate appeals were taken in the two actions the titles of which appear first above. As precisely the same questions of law were involved, the parties stipulated to present both cases upon one record and one set of briefs. The appeals were taken by the plaintiff from a judgment entered in favor of respondents, the latter being indorsers upon two promissory notes executed by the defendant corporation in favor of the plaintiff. All of the respondents except Ira D. McCoy, as well as the plaintiff, were, at the times the two promissory notes were executed, directors of defendant corporation. McCoy was secretary of the same corporation. All of the respondents were at all times familiar with the transactions having to do with the execution of the two notes, and had

actual knowledge of the fact that the notes were not paid at maturity. It is admitted that no formal presentment and demand for payment of the obligations was made upon the makers of the notes, and no notice given to the indorsers of dishonor thereof.

The first point made on behalf of appellant is that the directors and McCoy the secretary (the indorsers) at all times had full knowl edge of the fact that the corporation had not satisfied its obligations to the plaintiff, relieved him of the duty of making demand upon the payor and giving notice of dishonor to the indorsers. Appellant cites to this point a decision from another state which supports that view, the case being Hull v. Myers, 90 Ga. 674, 16 S. E. 653. Respondents make question with the soundness of that decision, claiming that its reasoning is illogical, and refer to the case of Hudson Furniture Co. v. Harding, 70 Fed. 468, 17 C. C. A. 203, 30 L. R. A. 513. In the latter decision the federal court distinctly decides the question the other way, and refers pointedly to Hull v. Myers, with this observation:

"The case of Hull v. Myers, 90 Ga. 674, 16 S. E. 653, is urged upon our attention in support of this contention. The decision of the court upon this question is bottomed, as we think, upon incorrect reasoning, and is without the support of authority."

Upon an examination of the two decisions, we prefer the determination as made in the federal case as representing a more careful consideration of the question and better logic in its reason. Respondents also cite McDonald v. Luchenbach, 170 Fed. 434, 95 C. C. A. 604, and Houser v. Fayssoux et al., 168 N. C. 1, 83 S. E. 692, Ann. Cas. 1917B, 835, both of which give support to the proposition that the fact that an indorser on a note of a corporation is also a director, with full knowledge of the corporate affairs, does not excuse the lack of notice of presentment and dishonor. In this case it was shown that the various indebtednesses of the defendant corporation, including that to the plaintiff, were discussed at different meetings of the board of directors, both before and after the particular obligation sued upon here became due. In so far as those discussions showed familiarity of the indorsers with the true situation as to nonpayment of the obligations, they add nothing to the statement of fact already made herein and conceded by respondents, that the indorsers at all times were possessed of such knowledge.

Appellant further argues, however, that after the maturity of the two notes and at a meeting of the directors at which all of the indorsers were present, a statement was made by one of

the directors which was in itself of potent effect in establishing a waiver of the notice to the indorsers. This statement was testified by plaintiff to have been made by respondent Hubbard in which Hubbard said to the plaintiff:

""Can't you just wait? You are taking no risk whatever; we are all responsible on that note on those notes.' Nobody said anything to the contrary. That statement was made in the presence and hearing of each of the parties whose names appear on the back of the notes."

The secretary and several of the directors testified that they were present at the meeting, and did not hear any one request the plaintiff to forbear payment of the note. This testimony created a conflict as to a portion at least of the statement made by plaintiff attributing the words quoted to Hubbard. It left lacking categorical contradiction of the words, "You are taking no risk whatever; we are all responsible on that note-on those notes." There is merit in the argument of respondents that the court in drawing its deductions had the right to conclude that no part of the statement attributed to Hubbard was made. However, conceding that the contradiction which in express terms only covered a portion of the Hubbard statement left without denial the assertion of Hubbard that plaintiff was taking no risk, that "we are all responsible," we do not believe that this expression was of such positive scope as to entitle it to be conidered as evidence of a waiver of the presentment and notice of dishonor. Strict proof is required, and statements to bear the import attempted to be attached to those here made must be clear and unequivocal. Keyes v. Fenstermaker, 24 Cal. 329. In that case it is said that the law is settled that a promise to pay by an indorser, made after maturity with full knowledge of the payee's neglect to make demand and give notice, must be established by 'clear and distinct evidence. To the same effect is another case cited by respondents, to-wit, Glidden v. Chamberlin, 167 Mass. 486, 46 N. E. 103, 57 Am. St. Rep. 479.

The points discussed are the principal ones argued upon this appeal. Under the evidence shown, we think that the court was justified in each of the findings made. We conclude also that the rulings upon the admission of evidence were without prejudicial error. The judgments are affirmed.

the same so long as they are not sundered violently by legislation or ignorantly by judicial error. * * * We can and do hold that accommodation indorsers who represent their insolvent principal in procuring a loan of money for the principal's use, upon a promissory note which they cause to be made in his name and which they indorse in their own names, they having at the time full control of his business and all his assets, and their relation to him being such as to make it their duty to see that the note is provided for and paid at maturity, are not entitled to notice of its dishonor."

It seems to me this would not be the case if the principal were an individual, instead of a corporation, for an individual might have other means than those in possession of his effects, and then the control that was existing at the time a note is given might be temporary in its nature. And so far as a corporation being the principal the controllers might lose their control at maturity of the note.

The Hull case has some support for the principle it lays down. Thus Mercantile Bank v. Busby, 120 Tenn. 652, 113 S. W. 390, it was argued that the negotiable instruments law made indorsement merely prima facie evidence of liability, citing McMoran v. Lange, 49 N. Y. Supp. 310, 25 App. Div. 11, and the Tennessee Court, says it is not necessarily true that indorsement imparts absolute liability, but "the real contract can be shown now as fully as before the passage of the negotiable instruments act," but "as to innocent holders for value, the rule, of course, would be otherwise and the statute would apply," therefore the Court concluded in an action between original parties, there was no necessity to give stockholder indorsers, where there was an understanding they would be bound equally, this understanding constituting them joint makers. This ruling was applied in Georgia on a Tennessee contract. Burke v. Rutland, 15 Ga. App. 26, 82 S. E. 580.

And in New York it has been ruled knowledge of an officer of a corporation of the nonpayment of a note indorsed by him is sufficient without formal notice of its dishonor. Merrell Chem. Co. v. Root, 152 N. Y. Supp. 366.

In Gleason v. Lichty, 62 Wash. 656, 114 Pac. 518, it was said: "Appellant argues that the note was in possession of Mr. Lichty or under his control at the time it became due. When the note was made Mr. Lichty was an officer of the insurance company, the maker of the note. He was also her agent to collect the note. He was the person to whom Mrs. Gleason looked for payment of the note. At the time the note matured, the insurance company was in the hands of a receiver, and Mr. Lichty was not in control of the affairs of the company. *** He had the note in his possession on the day it should have been paid. He knew that it was not paid. He was not entitled to further notice as an indorser."

Similarly it was concluded in a case where the indorser was president of a corporation maker, and it had been adjudged a bankrupt. This was held conclusively to show waiver of