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over the assets of a partnership to carry on S. Ct. 137, 51 L. Ed. 284; Savings Bank v. the same does not thereby make the corpora- United States, 19 Wall. 227, 22 L. Ed. 80. tion responsible for the partnership debts. It is to be borne in mind that the corporaCulberson v. Alabama Construction Co., 127 tion was not a bona fide purchaser for value. Ga. 599, 56 S. E. 765, 9 L. R. A. (N. S.) 411, 4. The priority of the claim of the United 9 Ann. Cas. 507; Greenberg-Miller Co. v. States is upheld in principle in In re E. J. Everett Shoe Co., 138 Ga. 729, 75 S. E. Hibner Oil Co. (C. C. A.) 264 F. 667; Davis 1120. The better rule, when no considera- v. Pullen (C. C. A.) 277 F. 650; In re Tidetion has been paid to the partnership for the water Coal Exchange (C. C. A.) 280 F. 648. transfer of its assets other than the issuance It is not apparent from the record as to of stock of the corporation, and where the whether there is any issue as to the amount corporation has no other assets except those of the tax. If there be no such issue, the acquired from the partnership, is to the con- tax should be paid in full, as having priority trary, and is sustained by ample authority. before the payment to the creditors, and the

It is a rule of the common law that a cor- referee may act accordingly. If there be poration which succeeds to the business of a such issue, let the referee determine such copartnership or a corporation, organized issue. for the purpose of continuing the business, The decision of the referee is overruled, and takes over the assets thereof, by so do- and it is held that the government is entitled ing assumes' the debts and liabilities of the to prior payment of the full amount of the partnership or corporation which it succeeds tax that either has been or may be ascerto the extent of the property so received. tained. Cook, Stock and Stockholder (3d Ed.) § 671; Beach, Private Corporations, 360; Eans' Adm'r v. Exchange Bank, 79 Mo. 182; 2 Cook on Corporations (4th Ed.) 673; Aus

THAYER et al. v. MALLEY. tin v. Bank, 49 Neb. 412, 68 N. W. 628, 35 L. R. A. 444, 59 Am. St. Rep. 543; Reed

(District Court, D. Massachusetts. March 28,

1921.) Bros. v. Bank, 46 Neb. 175, 64 N. W. 701; Baker Furniture Co. v. Hall, 76 Neb. 88,

No. 1235. 107 N. W. 117, 118, 111 N. W. 129, 113 N. W. 267. This view is sustained by the fol- Internal revenue Em 25—Succession taxes paid lowing, among other, cases: Sanger v. Up

to state deducted before assessment of fed

eral estate tax. ton, 91 U. S. 56, 64, 23 L. Ed. 220; Chicago,

Under Estate Tax Act Sept. 8, 1916, $ 203 etc., Ry. v. Chicago Bank, 134 U. S. 276, 10

(Comp. St. 8 633612d), providing that for the S. Ct. 550, 33 L. Ed. 900; Grenell v. De- purpose of the tax imposed the net value of the troit Gas Co., 112 Mich. 70, 70 N. W. 413– estate shall be determined by deducting DuVivier & Co. v. Gallice, 149 F. 118,

such other charges against the es

tate as are allowed by the laws of the jurisdic80 C. C. A. 556 (Second Circuit); Booth v.


under which the estate is being Bunce, 33 N. Y. 139, 88 Am. Dec. 372. administered," such taxes as in fact have to be

This question is to be determined by gen- paid to the state of administration on the suceral rather than local law. Under the latter cession are to be deducted before the federal

tax is assessed. above-referred to rule the result would be that, independent of any agreement or corporate action affirmatively assuming the ob

At Law. Action by Ruth S. Thayer and ligation to pay all liabilities of the partner- others, executors of the will of Bayard ship, such obligation would nevertheless ex. Thayer, deceased, against John F. Malley, ist.

formerly Collector of Internal Revenue. [5] 3. It is further urged that, because Judgment for plaintiffs. the assessment of the amount of the tax had Putnam, Putnam & Bell and Francis J. not been made until subsequent to the or- Good, all of Boston, Mass., for plaintiffs. ganization of the corporation and to its The United States Attorney, for defendbankruptcy, the claim therefor cannot be ant. set up now as against the creditors of the corporation. The reasons justifying a con- MORTON, District Judge. This is an acclusion adverse to this contention are set tion against the collector to recover an esforth in United States v. General Inspection tate tax which, as the plaintiffs contend, Co. (D. C.) 192 F. 223. See, also, Penn. was illegally assessed. The assessment was Cement Co. v. Bradley (D. C.) 274 F. 1003; made under the act of September 8, 1916, United States v. Proctor (D. C.) 286 F. 272; as amended (Compiled Stats. § 63361/20). New Jersey v. Anderson, 203 Ū. S. 483, 27 The defendant has demurred to the declara



3 F.(20) 194 tion. The facts admitted by the demurrer legatee; and that the Massachusetts tax is are as follows:

a legacy tax. The Massachusetts statute Bayard Thayer died on November 29, (G. L. C. 65, § 1) provides that “all prop1916, a resident of Lancaster, Mass. Bay- erty

which shall pass by will ard Thayer's father, Nathaniel Thayer, who

shall be subject to a tax," and died on March 7, 1883, a resident of Massa- then imposes taxes varying in amount with chusetts, had set up by his will a trust fund the relationship of the beneficiary to the de-' in the hands of trustees, of which Bayard cedent and with the amount of the legacy Thayer was entitled to the income during or distributive share. It makes the adminhis life, and over which he was given a istrator or executor personally liable for the general power of appointment by will only. taxes, which are paid by him and allowed Bayard Thayer exercised this power, and by in his account in the probate court. The his will appointed the trust fund absolutely New York statute (Transfer Tax Law to his wife, Ruth Thayer. The trust fund [Consol. Laws, c. 60] $ 220) is similar. at Bayard Thayer's death amounted to Under it, it has been held that a legacy to about $3,000,000; his individual estate was the United States was taxable, because "the valued by the Commissioner at something tax is imposed upon the legacy before it over $900,000. The total valuation on the reaches the hands of the government” (U. trust estate and the individual estate, as S: v. Perkins, 163 U. S. 625, at page 630, made by the Commissioner, was $3,952,729.- 16 S. Ct. 1073, at page 1075, 41 L. Ed. 287), 68. The exact apportionment of this and the precise question here presented has amount between the trust fund and the in- very recently been decided in that state in dividual estate is not entirely clear, and is favor of the plaintiff's contention (Sayre v. immaterial to the discussion of the questions Brewster (D. C.] 268 F. 553). The same of law involved.

conclusion has also been reached under the An estate tax was assessed against the Pennsylvania statute, which is somewhat estate of Bayard Thayer upon the trust different. Lederer, Collector, v. Northern fund, as well as upon his individual estate. Trust Co. (C. C. A.) 262 F. 52. In computing the net value of the es- It would, I think, be a decidedly unjust tate, no deductions were allowed for the result to hold that under this federal statsums paid to Massachusetts as inheritance ute the state tax was deductible in one state or legacy taxes. The total tax collected and not deductible in another, upon a subamounted to $246,179.17. The plaintiffs tle legalism without practical value. The paid the tax under protest and duly filed a

broader view seems to me the sounder one, claim for refund. On the facts stated in viz. that such taxes as in fact have to be the declaration, the formal prerequisites to paid to the state upon the succession are to a right of action have been complied with. be deducted before the federal tax is as

The plaintiff contends that the act of sessed and come within the language of the 1916 is unconstitutional. No such doubt act as “other charges against the estate was suggested in U. S. v. Field, Executor,

allowed by the laws of the juris255 U. S. 257, 41 Sup. Ct. 256, 65 L. Ed. diction

under which the estate is 617 (Feb. 28, 1921), and the court assumed being administered.” Comp. St. § 633612d. that the act was constitutional. I so rule. The Massachusetts tax ought therefore to

The estate of Bayard Thayer clearly came have been deducted before the tax on Baywithin it, and the only question as to this es

ard Thayer's estate was computed. tate is whether the sums paid to the state of

The most important question which was Massachusetts as legacy or inheritance tax- argued, viz. whether Bayard Thayer's eses should have been deducted before the tate had any taxable interest in the trust federal tax was assessed.

fund over which he held a general power of It is contended by the government that appointment by will, has been settled, since there is a distinction between “estate” tax- this case was submitted, by the decision of es and "legacy” taxes—the former being a

the Supreme Court in U. S. v. Field, Extax upon the privilege of transmitting prop- ecutor, supra. Under that case the trust erty by will or descent, and latter upon the fund did not constitute part of Bayard privilege of receiving it; that "estate” tax- Thayer's estate, and was not taxable under es are deductible, because levied against the the statutes here in question. estate itself, but that “legacy” taxes are The plaintiffs may present an order for not deductible, because levied against the judgment.

la re SPINNELLA et ux.

The relators, if found to be returning (District Court, 8. D. New York. October 31, from a temporary visit abroad, are under 1924.)

the provisions of section 4, subsection (b) 1. Aliens 46—Statute relating to aliens re

of the Act of May 26, 1924 (43 Stat. 155), turning from temporary visit abroad admin- nonquota immigrants. The board, in existered according to equitable principles. cluding the aliens, found them to be non

Act May 26, 1924, relating to aliens previ- quota immigrants, but not in possession of ously lawfully admitted to the United States

nonquota immigration visas, as required by returning from temporary visit abroad, was intended to be administered on equitable prin

section 13 (a) (1) of the act. ciples, and should be so interpreted.

There is a favorite maxim in equity that 2. Aliens Om5142, New, vol. 16A Key-No. Se.

equity regards as done that which ought ries Aliens returning from temporary visit

to be done, and stated differently: "Equiabroad held entitled to admission, though ty looks upon that as done which ought to nonquota visas omitted from passports. be done." "Equity considers that as done

Where aliens returning to United States which ought to have been done." “Equity from temporary visit to Italy were entitled to

regards and treats that as done which in nonquota visa on their passports by American consul in Italy, under Act May 26, 1924, they

good conscience ought to be done.” U. S. were entitled to admission, under maxim that v. Colorado Anthracite Coal, 225 U. S. 219, equity looks on that as done which ought to

223, 32 S. Ct. 617, 56 L. Ed. 1063. have been done, though notation on their visas merely recited that it was in lieu of nonquota

[1] We speak of the view which equity visa.

would take of the matter, because it is

manifest that the Act of May 26, 1924, proPetition for habeas corpus by their next ceeds upon equitable principles and is infriend, Francesco Cusakano, by Francesco tended to be administered accordingly, and Spinnella and wife, detained at Ellis Is- this should be interpreted with appropriate land, port of New York. Writ sustained, regard to the spirit which prompted it. The and relators discharged from custody. act required aliens seeking admission into

Gilchrist Stewart, of New York City, for the United States, who were previously lawrelators.

fully admitted to the United States, and William Hayward, U. S. Atty., of New

who were returning from a temporary visit York City (James C. Thomas, Asst. U. S. from abroad, to apply for an immigration Atty., of New York City, of counsel), for

visa. There are three kinds--the quota imrespondent.

migration visa, the nonquota immigration

visa, and a permission to return. WINSLOW, District Judge. Francesco [2] The record reveals from the notations Spinnella and his wife arrived at the port on the visas that they are returning aliens, of New York from Italy on August 25, and that their visa was issued "in lieu of 1924. From the testimony before the board nonquota visa.” In other words, the Amerof special inquiry it appears that the hus- ican vice 'consul in Italy did not give the band arrived in the United States prior to alien a nonquota visa, because, apparently, his last entry in 1905, and his wife in 1910. he had no such forms. The act was passed Both remained in the United States until on May 26, 1924, and the aliens applied August 10, 1922. An examination of the for their visas on June 2, 1924, which date visas on their passports reveals that they is indorsed on the visas. were issued after warning. They contain- Under the circumstances, it appears that ed the following rubber-stamped statement: the alien asked for a visa certificate and "Visa insisted on after warning. Granted.” should have been given a nonquota visa There is also a notation on the visé as fol- certificate. His testimony before the board lows: "In lieu of nonquota visa. R. E. L." of special inquiry convinced the board that The visé was issued after the payment of he was a nonquota immigrant. The rule, the $9 fee as required by law, and contains therefore, to be applied in this situation, is the seal of the American consul, with the that this court will look upon that as done signature of Robert E. Leary, vice consul. which ought to have been done, and holds Apparently, the initials "R. E. L.” after the that the alien had that which the law requotation, “In lieu of nonquota visa,” are quired. the initials of the vice consul, showing that The writ must therefore be sustained, and he placed them there.

the relators discharged from custody.

8 F.(20) 197 UNITED STATES V. BOCKOL et al. in the Pope Case that the fifteenth count of (District Court, D. Delaware. December 31, the Pope indictment was substantially in 1924.)

the same language as the "possession" No. 1.

count of the Rulovitch indictment and

the third count of the indictment unConspiracy Om 43(6)—Indictment for conspir. der consideration. The briefs disclose

acy to unlawfully possess liquors held sufficient.

that the precise point here presented An indictment for conspiracy to unlawfully was urged before the Court of Appeals possess intoxicating liquor containing more and that in support thereof the Hilt than one-half of 1 per centum of alcohol by and the Dowling Cases were cited.

It volume and fit for beverage purposes held sufficient to charge an offense.

is true that the point presented here was

not discussed or expressly passed upon in Criminal prosecution by the United States the opinion in Pope v. U. S., 289 F. 312 against John L. Bockol and others. On de- (C. C. A.), but the court did say: "While murrer to third count of indictment. Over- we have considered all the questions insufruled.

ficiently assigned as error, we feel called David J. Reinhardt, U. S. Atty., of Wil- upon, for considerations which will presentmington, Del.

ly appear, to discuss but two”—and the inAaron Finger, of Wilmington, Del., for dictment was not held to be defective. The defendants.

Rulovitch Case was cited with approval in

the Zucker and the Schliefer Cases, in each MORRIS, District Judge. The defend- of which the issue was whether the indictants stand charged by the three counts of ment sufficiently charged a crime. the indictment found against them with

In view of the foregoing facts, I think conspiring “to unlawfully transport," "to that the conclusion cannot be escaped that unlawfully possess and transport,” and “to the Circuit Court of Appeals has not only unlawfully possess” intoxicating liquor con

held that a count of an indictment in the taining more than one-half of 1 per centum language of the count demurred to is valid, of alcohol by volume and fit for use for but also that it is valid, notwithstanding beverage purposes. The defendants have the point here urged to show invalidity. demurred to the third or last-mentioned

The demurrer must be overruled. count, upon the ground that it does not appear therefrom that the act which the de fendants are alleged to have conspired to do or commit was or is an offense or crime un

in re UNION PAINT CO., Inc. der the laws of the United States. In support of their demurrer the defendants rely (District Court, E. D. New York. August 21,

1924.) upon U. S. v. Illig, 288 F. 939, 945 (D. C.), Hilt v. U. S., 279 F. 421 (C. C. A.), and Bankruptcy Cw340_Evidence held insufficient U. S. v. Dowling, 278 F. 630 (D. C.). The

to prove salary of president authorized by

board of directors. district attorney points out that the count

Evidence in support of claim of president of the indictment demurred to follows the

of bankrupt corporation for salary held insuffilanguage of the like count in Rulovitch v. cient to prove that payment of salary was auU. S., 286 F. 315 (C. C. A. 3). He relies thorized by board of directors. upon that case, and upon Zucker v. United States, 288 F. 12 (C. C. A. 3), Schliefer v. In Bankruptcy. In the matter of the UnUnited States, 288 F. 368 (C. C. A. 3), ion Paint Company, Inc., bankrupt, in which Pope v. United States, 289 F. 312 (C. C. Stewart H. McIntosh filed claim for salary A. 3), Remus v. United States, 291 F. 501 as president of the bankrupt corporation. (C. C. A. 6), and United States v. Jones, On motion for order reversing referee's or298 F. 131. (D. C.).

der expunging claim. Motion denied. The defendants, while conceding that the

Henry Caplan, of New York City, for Rulovitch Case would be controlling, had claimant. the point here raised been there presented, Robert P. Levis, of New York City, for contend that the point was not there pre- trustee. sented, and that hence the case is not here pertinent. It is clear, however, that an in- GARVIN, District Judge. This is an apdictment in the language of the count here plication to review an order made by the demurred to was there upheld. It is like- referee expunging the claim of Stewart H. wise made clear from the record and briefs McIntosh for salary as president of the bankrupt from October 1, 1921, to Decem- by the referee so unconvincing that he gave ber 1, 1922, at the rate of $100 per month. it little probative force. The referee had beMcIntosh was elected treasurer of the bank- fore him the witnesses and heard their tesrupt, and his salary was fixed at $4,000 per timony. He has evidently considered that annum, which he drew until he was elected they are not to be believed upon the point president. At that time, according to his in issue when other circumstances of the contention, he voluntarily reduced his salary case are taken into account the disappearto $100 per month. It needs no argument ance of the minute book, the filing of schedto demonstrate that he could neither increase ules without mention of this claim and the nor decrease a salary paid to him as treas- delay of the alleged creditor in filing his urer when he assumed the office of presi- claim. dent and have such action apply to the sal- The motion for an order reversing the refary of the latter office. Any salary paid to eree's order is denied. him as president had to be fixed by the board of directors.

The referee has found that the proof produced was not sufficient to satisfy him that action authorizing payment of Mr. McIn- MILLER & PARDEE, Inc., v. LAWRENCE tosh's salary as president was duly taken by

A. SWEET MFG. CO. et al. the board of directors. The following appears in the record when Mr. McIntosh (District Court, S. D. California, S. D. Janutestified:

ary 6, 1925.) “Q. Do you know whether a resolution 1. Courts na 351-Interrogatories should be was passed fixing your salary as president of character that answer will state or illusof the company? A. I think it was.

trate material fact. "Q. Do you know? A. To the best of my be of such character as that, by examining the

Interrogatories under equity rule 58 should recollection, it was.

issues proposed or made up, it can be seen that "Q. What was it fixed at? A. $100 a

answers required will reasonably state or illusmonth.

trate a material fact, and should not go to the Q. At what meeting was a resolution length of examination and cross-examination passed? A. Somewhere about November,

on evidentiary matter, nor yet be a mere gen

eral investigation, to ascertain if party inter1918.

rogated knows something that will aid cause “Q. Was it a directors' meeting or stock- or defense. holders' meeting? A. I think it was a di- 2. Patents 292_Defendants' denial of asrectors' meeting.

signment to plaintiff held not to authorize "Q. Do you recall who was present at that interrogation of plaintiff as to other assignmeeting? A. Mr. Nichols, Mr. Donovan,

ments. Mr. Hartfield, I believe, and Mr. T. E.

An allegation of assignment of patent to Burnes; that is all I remember just now.

plaintiff in infringement suit does not author

ize defendants, under a mere denial of that as"Q. Who was the secretary of the corpo- signment, to interrogate plaintiff as to whether ration at that time? A. Thomas Robinson. at any other time he has made any other as

“Q. Do you know whether he made an en- signment. try in the minute book of the corporation? 3. Discovery ow9Interrogatories narrowly A. I should say he did; yes.

limited, where issues not clearly stated in “Q. Do you know when you became presi

pleadings. dent of the corporation? A. About Novem

Where issues are not clearly and sufficient.

ly stated in pleadings, interrogatories should ber, 1918.

be scrutinized and narrowly limited to things “Q. Was it November, 1918, that you be- that court is able to see will constitute material came president of the corporation ? A. I matter. think so; I am not positive.”

4. Patents @ 292—Answers not sealed and deWilliam Hartfield, a director of the bank- posited with court, unless by consent of par. rupt, in response to a question as to the ties. amount of salary Mr. McIntosh was receiv

Order in infringement suit, requiring an. ing as president replied: _“I am not sure, posited with clerk until both parties have com

swers to interrogatories to be sealed and deabout $100 a month." He later testified mitted themselves as to facts, should be made even less positively.

only on consent of parties. Lee Hartshorn, director and treasurer of the bankrupt, testified that the minutes In Equity. Suit for patent infringement showed that the president's salary was fixed by Miller & Pardee, Inc., against Lawrence at $100 a month; but his testimony is by no A. Sweet Manufacturing Company and othmeans clear, and evidently was considered ers. On plaintiff's objections to interroga

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