ferred to his trustee all of his property, including that which had formerly belonged to the partnership, the firm creditors would be permitted to share equally with the individual creditors in the assets of the estate. This conclusion was based largely upon the fact that the supreme court in Fitzpatrick v. Flannagan, 106 Û. S. 648, 1 Sup. Ct. 369, 27 L. Ed. 211, had declared the equitable rule to be as follows: "The legal right of a partnership creditor to subject the partnership property to the payment of his debts consists simply in the right to reduce his claim to judgment and to sell the goods of his debtor on execution. His right to appropriate the partnership property specifically to the payment of his debt in equity, in preference to creditors of an individual partner, is derived through the other partner, whose original right it is to have the partnership assets applied to the payment of partnership obligations. And this equity of the creditor subsists so long as that of the partner, through which it is derived, remains; that is, so long as the partner himself 'retains an interest in the firm assets, as a partner, a court of equity will allow the creditors of the firm to avail themselves of his equity, and enforce through it the application of those assets primarily to payment of the debts due them, whenever the property comes under its administration.' Such was the language of this court in Case v. Beauregard, 99 U. S. 119, 25 L. Ed. 370, in which Mr. Justice Strong, delivering the opinion, continued as follows: 'It is indispensable, however, to such relief, when the creditors are, as in the present case, simple contract creditors, that the partnership property should be within the control of the court, and in the course of administration, brought there by the bankruptcy of the firm, or by an assignment, or by the creation of a trust in some mode. This is because neither the partners Lor the joint creditors have any specific lien, nor is there any trust that can be enforced until the property has passed in custodia legis.' Hence it follows that 'if, before the interposition of the court is asked, the property has ceased to belong to the partnership, if by a bona fide transfer it has become the several property of one partner or of a third person, the equities of the partners are extinguished, and consequently the derivative equities of the creditors are at an end.'"

In view of this authoritative declaration that the equities of the partnership creditors are derived from the equity of the partners, and that it is within the power of the partners to put an end to the equities of the firm creditors, by a bona fide transfer of the firm assets to one partner or to a third party, wherein is the equity in the ruling that, in cases wherein the equity of the firm creditors has been terminated, not through their act nor with their consent, but by the act of the partners in selling the firm assets to one of their number or to a third party, and subsequently members of the firm are put into bankruptcy as individuals, the individual creditors are entitled to exclude the firm creditors from sharing in the assets until the individual debts are paid in full? In such cases there is no other fund to which the firm creditors can resort for payment, and the practical result of the rule laid down in the Wilcox Case is that, in all cases wherein the equity of the firm creditors has been destroyed by the action of the partners, in converting the firm property into individual assets by a sale thereof to one of the partners the individual creditors are entitled to be preferred, and are entitled to exclude the firm creditors from sharing in these assets, even though they were originally the property of the firm. A very large proportion of the cases brought in bankruptcy under the provisions of the present act are cases where

in the bankrupts have been members of one or more partnerships which have been dissolved long since, and in which the only assets are those belonging to the individual bankrupt; and, if it be the rule that the individual creditor is always entitled to be first paid from the individual assets, it follows that in all these cases the debts due the firm creditors are discharged, yet these creditors are barred from any share in the assets of the bankrupt.

The variant views set forth in the numerous decisions cited in the Wilcox Case serve to show that it is practically impossible to formulate a single general rule that will meet the equities of every case, but the adoption of the rule that in every instance wherein there are firm and individual creditors, but the assets are individual only, the latter class of creditors are to be paid in full to the exclusion of the firm creditors, will certainly work injustice in so many cases that I should hesitate long before accepting it in the absence of a controlling decision by an appellate court. The supreme court having decided that the firm assets may be converted into individual assets by the action of the partners, I cannot see the equity in the view that holds, in effect, that it is within the power of the partners to terminate the equity of the firm creditors in the firm assets, and that the same act which terminates the equity of the firm creditors creates a preference in favor of the individual creditors, enabling them to secure payment in full of their claims out of funds which in many cases are wholly or largely the proceeds of property which was originally firm assets.

Under the provisions of the act, courts of bankruptcy are clothed with ample equitable powers to make proper application of the equitable principles recognized by the act for the protection of all who are interested in the several estates coming up for administration. The same general questions arose under the act of 1867, and in this circuit the rule to be followed was settled by the decision of Circuit Judge Dillon in the case of In re Downing, I Dill. 33, 7 Fed. Cas. 1,005, wherein it was held that the marshaling of assets between the creditors of the firm and the separate partners was not called for except in cases wherein there were firm and separate assets, and proceedings in bankruptcy were instituted against the firm and the individual members, and that in cases wherein there were no firm assets and no solvent partner the creditors of the firm were entitled to share in the estate of the bankrupt partner. This decision of Judge Dillon was cited approvingly by the supreme court in Amsinck v. Bean, 22 Wall. 395, 22 L. Ed. 801, it being therein declared that "assets are to be marshaled between the creditors of the copartnership and the separate creditors of the partners only when there are partnership assets and separate assets of individual partners, and proceedings have been instituted against the partnership and the individual members, as provided in the thirty-sixth section of the bankrupt act." The construction thus placed upon section 36 of the act of 1867 is applicable to the provisions of section 5 of the present act, and, if this be true, then section 5 does not define the rule to be followed in cases wherein the firm is not brought into

bankruptcy, and there are no firm assets under the control of the court. It is doubtless true that in some cases wherein there are firm creditors, but the partnership is not brought into bankruptcy, the individual creditors may have equities which should be protected, but in these cases the court, having full equitable powers, can take such action as may be needed to protect the individual creditors. The court, where the facts justify it, can enforce the equitable principle that if a creditor or a class of creditors have the right to look to more than one source or fund for the payment of the debts due them, while another class can look to one only of such funds or sources for payment, the former can be required to first exhaust the resources not open to the other class, before being permitted to share in the fund common to both classes; and one application of this general principle is provided for in clause "h" of section 5, wherein provision is made for settling the affairs of partnerships not brought into bankruptcy, but in which the bankrupt is interested as a partner. Believing that the powers of the court are sufficient to fairly protect the equities of individual creditors, where the facts justify it I cannot concur in the general conclusion reached by the referee that, in cases wherein an individual is adjudged a bankrupt, parties to whom he is indebted, in connection with other persons as partners, cannot share in his estate with his individual creditors, it not appearing that there is any solvent partner from whom the debt can be collected, nor any partnership assets to which the firm creditors can look for payment of their just claims.

There is a further reason why it seems clear that the exceptions to the finding of the referee must be sustained, growing out of the nature of the claim presented by the county in this case. By the last clause of section 1317 of the Code of Iowa it is enacted that "any individual of a partnership is liable for the taxes due from the firm," and when the state and county taxes assessable against the firm of W. C. Green & Co. were levied William C. Green became individually liable therefor by reason of the statutory provision just cited; and section 64 of the bankrupt act declares that "the court shall order the trustee to pay all taxes legally due and owing by the bankrupt to the United States, state, county, district or municipality in advance of the payment of dividends to creditors." If the taxes in question are due and owing from the bankrupt, then they must be paid before any dividends are made to the creditors, and the cited provision from the Code of Iowa certainly makes the bankrupt individually liable for the taxes assessed against the firm.

The exceptions to the finding of the referee are therefore sustained, and the referee is directed to enter an order directing the trustee to pay the taxes in question in accordance with the requirements of section 64 of the bankrupt act.

THE WESTMINSTER.

(District Court, E. D. Pennsylvania. May 26, 1902.)

No. 32.

1. SHIPPING-ACTION FOR DAMAGE TO CARGO-BURDEN OF PROOF.

A ship defending against a claim for damage to cargo in shipment, under a clause in the bill of lading exempting it from liability "for any claim, notice of which is not given before the removal of the goods." has the burden of proving that the notice was not given, to bring itself within the exception; but, when it has produced sufficient testimony to justify the inference that no claim was made, it is incumbent on the libelant to rebut such inference by evidence, since, if the claim was made, it is within libelant's power to prove the fact.

On rehearing. For former opinion, see 102 Fed. 366.

J. B. MCPHERSON, District Judge. A decree in this case was entered on June 15, 1900, dismissing the libel: 102 Fed. 366. The decree was afterwards stricken off in order that further testimony might be taken upon the question whether notice of the claim for damage had been given to the respondent before removal of the goods, and for no other purpose. Three witnesses have since been examined on behalf of the respondent, and the matter comes before the court for rehearing. I agree with the libelant's position that the burden of proof is upon the carrier to establish the fact that no notice of claim for damage was given by the shipper. The carrier is defending under an exception in the bill of lading, and the burden of proof is upon him to prove satisfactorily that the facts exist which bring the exception into operation. But I do not agree with the contention that the respondent has failed to make such proof in the present case. On the contrary, I think that the affirmative testimony now before the court fully justifies the inference that no such claim was made; and this testimony is strengthened by the consideration that the libelant has offered no evidence upon the subject. If the claim had been made, it was surely within the power of the libelant to prove that fact; and, while I repeat that the libelant was not bound to offer such proof in the first instance, the obligation to offer it arose after the carrier had produced sufficient testimony to justify the inference that the claim had not been. made. I therefore, find, as a fact, that no claim was made by the libelant, or by the shipper, for the damage done to the bales of jute before they were removed from the dock. Accordingly, following the decision of the circuit court of appeals in The St. Hubert, 46 C. C. A. 603, 107 Fed. 727, a decree may be entered dismissing the libel, and directing that the respondent recover costs from the libelant.

THE JOSEPHUS (two cases).

(District Court, D. Rhode Island. June 2, 1902.)

Nos. 1,092, 1,094.

1. SALVAGE-SERVICES IN SAVING BURNING BARGE-NEGLIGENCE OF TUG IN LEAVING Tow.

The steam tug R. B. Little, having three barges in tow, owing to rough weather anchored them in Newport outer harbor, and proceeded to the dock, from a quarter to a half mile distant, for the purpose of communicating with owners, and remained there during the night, with her crew aboard, and with steam up ready to go to the sea at short notice. About midnight one of the barges took fire, and the Little at once went to her aid, and with the assistance of another tug, which arrived a little later, extinguished the fire, saving about half the valueof the barge. Held, that the service of the tugs was a salvage service, and that, under the circumstances, the Little was not chargeable with negligence in leaving her tow, which would debar her from sharing in the salvage award.

In Admiralty. Suits to recover for salvage services.

J. Stacy Brown and Herbert A. Rice, for libelants Sullivan and others.

Matteson & Healy, for libelants Tice and others.
Carpenter & Park, for claimants.

BROWN, District Judge. These libels are for salvage services rendered by the steam tugs Henry T. Sisson and R. B. Little in extinguishing a fire on the wooden barge Josephus. The barge was on her way from Providence to Philadelphia, with two other barges, in tow of the steam tug R. B. Little. The tug, on account of rough weather, anchored her tow in Newport outer harbor between 5 and 6 o'clock on the afternoon of September 15, 1901, and then went to a dock at Newport, from a quarter to half a mile distant, leaving the Josephus with her master and crew of four men aboard, who were all asleep when fire broke out on the barge not far from midnight. The fire had made such headway before its discovery that little more could be done than to strip the cabin before it became necessary to abandon the barge. Without assistance the barge would have been a total loss. With the assistance of the salvors, and of men from the Torpedo station, about half her value was saved. For the purpose of estimating the amount of the award, the value saved may be taken as about $10,000.

While it has been urged that the R. B. Little is debarred by her negligence from claiming salvage, since she was at a dock from a quarter to half a mile away from the anchorage of the barges, and not in immediate attendance, I am of the opinion that there is no sufficient evidence to show that she was guilty of negligence towards the barge. in going to the dock to communicate with owners, or in remaining there with her crew aboard, and with steam up, ready to go to sea at short notice. Upon the evidence in the case the service rendered by