over the assets of a partnership to carry on the same does not thereby make the corporation responsible for the partnership debts. Culberson v. Alabama Construction Co., 127 Ga. 599, 56 S. E. 765, 9 L. R. A. (N. S.) 411, 9 Ann. Cas. 507; Greenberg-Miller Co. v. Everett Shoe Co., 138 Ga. 729, 75 S. E. 1120. The better rule, when no consideration has been paid to the partnership for the transfer of its assets other than the issuance of stock of the corporation, and where the corporation has no other assets except those acquired from the partnership, is to the contrary, and is sustained by ample authority. It is a rule of the common law that a corporation which succeeds to the business of a copartnership or a corporation, organized for the purpose of continuing the business, and takes over the assets thereof, by so doing assumes the debts and liabilities of the partnership or corporation which it succeeds to the extent of the property so received. 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; Austin v. Bank, 49 Neb. 412, 68 N. W. 628, 35 L. R. A. 444, 59 Am. St. Rep. 543; Reed Bros. v. Bank, 46 Neb. 175, 64 N. W. 701; Baker Furniture Co. v. Hall, 76 Neb. 88, 107 N. W. 117, 118, 111 N. W. 129, 113 N. W. 267. This view is sustained by the following, among other, cases: Sanger v. Upton, 91 U. S. 56, 64, 23 L. Ed. 220; Chicago, etc., Ry. v. Chicago Bank, 134 U. S. 276, 10 S. Ct. 550, 33 L. Ed. 900; Grenell v. Detroit Gas Co., 112 Mich. 70, 70 N. W. 413414; DuVivier & Co. v. Gallice, 149 F. 118, 80 C. C. A. 556 (Second Circuit); Booth v. Bunce, 33 N. Y. 139, 88 Am. Dec. 372.

This question is to be determined by general rather than local law. Under the latter above-referred to rule the result would be that, independent of any agreement or corporate action affirmatively assuming the obligation to pay all liabilities of the partnership, such obligation would nevertheless ex

ist.

[5] 3. It is further urged that, because the assessment of the amount of the tax had not been made until subsequent to the organization of the corporation and to its bankruptcy, the claim therefor cannot be set up now as against the creditors of the corporation. The reasons justifying a conclusion adverse to this contention are set forth in United States v. General Inspection Co. (D. C.) 192 F. 223. See, also, Penn. Cement Co. v. Bradley (D. C.) 274 F. 1003; United States v. Proctor (D. C.) 286 F. 272; New Jersey v. Anderson, 203 U. S. 483, 27

S. Ct. 137, 51 L. Ed. 284; Savings Bank v. United States, 19 Wall. 227, 22 L. Ed. 80. It is to be borne in mind that the corporation was not a bona fide purchaser for value. 4. The priority of the claim of the United States is upheld in principle in In re E. J. Hibner Oil Co. (C. C. A.) 264 F. 667; Davis v. Pullen (C. C. A.) 277 F. 650; In re Tidewater Coal Exchange (C. C. A.) 280 F. 648. It is not apparent from the record as to whether there is any issue as to the amount of the tax. If there be no such issue, the tax should be paid in full, as having priority before the payment to the creditors, and the referee may act accordingly. If there be such issue, let the referee determine such issue.

The decision of the referee is overruled, and it is held that the government is entitled to prior payment of the full amount of the tax that either has been or may be ascertained.

THAYER et al. v. MALLEY.

(District Court, D. Massachusetts. March 28, 1921.)

No. 1235.

Internal revenue 25-Succession taxes paid to state deducted before assessment of federal estate tax.

Under Estate Tax Act Sept. 8, 1916, § 203 (Comp. St. § 63362d), providing that for the purpose of the tax imposed the net value of the estate shall be determined by deducting * such other charges against the estate as are allowed by the laws of the jurisdiction * * under which the estate is being administered," such taxes as in fact have to be paid to the state of administration on the succession are to be deducted before the federal tax is assessed.

*

At Law. Action by Ruth S. Thayer and others, executors of the will of Bayard Thayer, deceased, against John F. Malley, formerly Collector of Internal Revenue. Judgment for plaintiffs.

Putnam, Putnam & Bell and Francis J. Good, all of Boston, Mass., for plaintiffs. The United States Attorney, for defendant.

MORTON, District Judge. This is an action against the collector to recover an estate tax which, as the plaintiffs contend, was illegally assessed. The assessment was made under the act of September 8, 1916, as amended (Compiled Stats. § 63362c). The defendant has demurred to the declara

Bayard Thayer died on November 29, 1916, a resident of Lancaster, Mass. Bayard Thayer's father, Nathaniel Thayer, who died on March 7, 1883, a resident of Massachusetts, had set up by his will a trust fund in the hands of trustees, of which Bayard Thayer was entitled to the income during his life, and over which he was given a general power of appointment by will only. Bayard Thayer exercised this power, and by his will appointed the trust fund absolutely to his wife, Ruth Thayer. The trust fund at Bayard Thayer's death amounted to about $3,000,000; his individual estate was valued by the Commissioner at something over $900,000. The total valuation on the trust estate and the individual estate, as made by the Commissioner, was $3,952,729.68.

The exact apportionment of this amount between the trust fund and the individual estate is not entirely clear, and is immaterial to the discussion of the questions of law involved.

An estate tax was assessed against the estate of Bayard Thayer upon the trust fund, as well as upon his individual estate. In computing the net value of the estate, no deductions were allowed for the sums paid to Massachusetts as inheritance or legacy taxes. The total tax collected amounted to $246,179.17. The plaintiffs paid the tax under protest and duly filed a claim for refund. On the facts stated in the declaration, the formal prerequisites to a right of action have been complied with. The plaintiff contends that the act of 1916 is unconstitutional. No such doubt was suggested in U. S. v. Field, Executor, 255 U. S. 257, 41 Sup. Ct. 256, 65 L. Ed. 617 (Feb. 28, 1921), and the court assumed that the act was constitutional. I so rule. The estate of Bayard Thayer clearly came within it, and the only question as to this estate is whether the sums paid to the state of Massachusetts as legacy or inheritance taxes should have been deducted before the federal tax was assessed.

It is contended by the government that there is a distinction between "estate" taxes and "legacy" taxes-the former being a tax upon the privilege of transmitting property by will or descent, and latter upon the privilege of receiving it; that "estate" taxes are deductible, because levied against the estate itself, but that "legacy" taxes are not deductible, because levied against the

shall be subject to a tax," and then imposes taxes varying in amount with the relationship of the beneficiary to the decedent and with the amount of the legacy or distributive share. It makes the administrator or executor personally liable for the taxes, which are paid by him and allowed in his account in the probate court. The New York statute (Transfer Tax Law [Consol. Laws, c. 60] § 220) is similar. Under it, it has been held that a legacy to the United States was taxable, because "the tax is imposed upon the legacy before it reaches the hands of the government" (U. S. v. Perkins, 163 U. S. 625, at page 630, 16 S. Ct. 1073, at page 1075, 41 L. Ed. 287), and the precise question here presented has very recently been decided in that state in favor of the plaintiff's contention (Sayre v. Brewster [D. C.] 268 F. 553). The same conclusion has also been reached under the Pennsylvania statute, which is somewhat different. Lederer, Collector, v. Northern Trust Co. (C. C. A.) 262 F. 52.

It would, I think, be a decidedly unjust result to hold that under this federal statute the state tax was deductible in one state and not deductible in another, upon a subtle legalism without practical value. The broader view seems to me the sounder one, viz. that such taxes as in fact have to be paid to the state upon the succession are to be deducted before the federal tax is assessed and come within the language of the act as "other charges against the estate

allowed by the laws of the juris

diction being administered." Comp. St. § 633611⁄2d. The Massachusetts tax ought therefore to have been deducted before the tax on Bayard Thayer's estate was computed.

under which the estate is

The most important question which was argued, viz. whether Bayard Thayer's estate had any taxable interest in the trust fund over which he held a general power of appointment by will, has been settled, since this case was submitted, by the decision of the Supreme Court in U. S. v. Field, Executor, supra. Under that case the trust fund did not constitute part of Bayard Thayer's estate, and was not taxable under the statutes here in question.

The plaintiffs may present an order for judgment.

In re SPINNELLA et ux.

The relators, if found to be returning

1924.)

1. Aliens 46-Statute relating to aliens returning from temporary visit abroad administered according to equitable principles.

Act May 26, 1924, relating to aliens previously lawfully admitted to the United States returning from temporary visit abroad, was intended to be administered on equitable principles, and should be so interpreted.

2. Aliens 512, New, vol. 16A Key-No. Se

ries-Aliens returning from temporary visit abroad held entitled to admission, though nonquota visas omitted from passports.

Where aliens returning to United States from temporary visit to Italy were entitled to nonquota visa on their passports by American consul in Italy, under Act May 26, 1924, they were entitled to admission, under maxim that equity looks on that as done which ought to have been done, though notation on their visas merely recited that it was in lieu of nonquota visa.

Petition for habeas corpus by their next friend, Francesco Cusakano, by Francesco Spinnella and wife, detained at Ellis Island, port of New York. Writ sustained, and relators discharged from custody.

Gilchrist Stewart, of New York City, for

relators.

William Hayward, U. S. Atty., of New York City (James C. Thomas, Asst. U. S. Atty., of New York City, of counsel), for respondent.

WINSLOW, District Judge. Francesco Spinnella and his wife arrived at the port of New York from Italy on August 25, 1924. From the testimony before the board of special inquiry it appears that the husband arrived in the United States prior to his last entry in 1905, and his wife in 1910. Both remained in the United States until August 10, 1922. An examination of the visas on their passports reveals that they were issued after warning. They contained the following rubber-stamped statement: "Visa insisted on after warning. Granted." There is also a notation on the visé as follows: "In lieu of nonquota visa. R. E. L." The visé was issued after the payment of the $9 fee as required by law, and contains the seal of the American consul, with the signature of Robert E. Leary, vice consul. Apparently, the initials "R. E. L." after the quotation, "In lieu of nonquota visa," are the initials of the vice consul, showing that he placed them there.

the provisions of section 4, subsection (b) of the Act of May 26, 1924 (43 Stat. 155), nonquota immigrants. The board, in excluding the aliens, found them to be nonquota immigrants, but not in possession of nonquota immigration visas, as required by section 13 (a) (1) of the act.

There is a favorite maxim in equity that equity regards as done that which ought to be done, and stated differently: "Equity looks upon that as done which ought to be done." "Equity considers that as done which ought to have been done." "Equity regards and treats that as done which in good conscience ought to be done." U. S. v. Colorado Anthracite Coal, 225 U. S. 219, 223, 32 S. Ct. 617, 56 L. Ed. 1063.

[1] We speak of the view which equity would take of the matter, because it is manifest that the Act of May 26, 1924, proceeds upon equitable principles and is intended to be administered accordingly, and this should be interpreted with appropriate regard to the spirit which prompted it. The act required aliens seeking admission into the United States, who were previously lawfully admitted to the United States, and who were returning from a temporary visit from abroad, to apply for an immigration visa. There are three kinds-the quota immigration visa, the nonquota immigration visa, and a permission to return.

[2] The record reveals from the notations on the visas that they are returning aliens, and that their visa was issued "in lieu of nonquota visa." In other words, the American vice consul in Italy did not give the alien a nonquota visa, because, apparently, he had no such forms. The act was passed on May 26, 1924, and the aliens applied for their visas on June 2, 1924, which date is indorsed on the visas.

Under the circumstances, it appears that the alien asked for a visa certificate and should have been given a nonquota visa certificate. His testimony before the board of special inquiry convinced the board that he was a nonquota immigrant. The rule, therefore, to be applied in this situation, is that this court will look upon that as done which ought to have been done, and holds that the alien had that which the law required.

The writ must therefore be sustained, and the relators discharged from custody.

UNITED STATES v. BOCKOL et al.

in the Pope Case that the fifteenth count of

1924.) No. 1.

MORRIS, District Judge. The defendants stand charged by the three counts of the indictment found against them with conspiring "to unlawfully transport," "to unlawfully possess and transport," and "to unlawfully possess" intoxicating liquor containing more than one-half of 1 per centum of alcohol by volume and fit for use for beverage purposes. The defendants have demurred to the third or last-mentioned count, upon the ground that it does not appear therefrom that the act which the defendants are alleged to have conspired to do or commit was or is an offense or crime under the laws of the United States. In support of their demurrer the defendants rely upon U. S. v. Illig, 288 F. 939, 945 (D. C.), Hilt v. U. S., 279 F. 421 (C. C. A.), and U. S. v. Dowling, 278 F. 630 (D. C.). The district attorney points out that the count of the indictment demurred to follows the language of the like count in Rulovitch v. U. S., 286 F. 315 (C. C. A. 3). He relies upon that case, and upon Zucker v. United States, 288 F. 12 (C. C. A. 3), Schliefer v. United States, 288 F. 368 (C. C. A. 3), Pope v. United States, 289 F. 312 (C. C. A. 3), Remus v. United States, 291 F. 501 (C. C. A. 6), and United States v. Jones, 298 F. 131 (D. C.).

The defendants, while conceding that the Rulovitch Case would be controlling, had the point here raised been there presented, contend that the point was not there presented, and that hence the case is not here pertinent. It is clear, however, that an indictment in the language of the count here demurred to was there upheld. It is likewise made clear from the record and briefs

the same language as the "possession" count of the Rulovitch indictment and the third count of the indictment under consideration. The briefs disclose that the precise point here presented was urged before the Court of Appeals and that in support thereof the Hilt and the Dowling Cases were cited. It is true that the point presented here was not discussed or expressly passed upon in the opinion in Pope v. U. S., 289 F. 312 (C. C. A.), but the court did say: "While we have considered all the questions insufficiently assigned as error, we feel called upon, for considerations which will presently appear, to discuss but two"-and the indictment was not held to be defective. The Rulovitch Case was cited with approval in the Zucker and the Schliefer Cases, in each of which the issue was whether the indictment sufficiently charged a crime.

In view of the foregoing facts, I think that the conclusion cannot be escaped that the Circuit Court of Appeals has not only

held that a count of an indictment in the

language of the count demurred to is valid, but also that it is valid, notwithstanding the point here urged to show invalidity. The demurrer must be overruled.

In Bankruptcy. In the matter of the Union Paint Company, Inc., bankrupt, in which Stewart H. McIntosh filed claim for salary as president of the bankrupt corporation. On motion for order reversing referee's order expunging claim. Motion denied.

Henry Caplan, of New York City, for claimant.

Robert P. Levis, of New York City, for trustee.

GARVIN, District Judge. This is an application to review an order made by the referee expunging the claim of Stewart H. McIntosh for salary as president of the

bankrupt from October 1, 1921, to December 1, 1922, at the rate of $100 per month. McIntosh was elected treasurer of the bankrupt, and his salary was fixed at $4,000 per annum, which he drew until he was elected president. At that time, according to his contention, he voluntarily reduced his salary to $100 per month. It needs no argument to demonstrate that he could neither increase nor decrease a salary paid to him as treasurer when he assumed the office of president and have such action apply to the salary of the latter office. Any salary paid to him as president had to be fixed by the board of directors.

by the referee so unconvincing that he gave it little probative force. The referee had before him the witnesses and heard their testimony. He has evidently considered that they are not to be believed upon the point in issue when other circumstances of the case are taken into account-the disappearance of the minute book, the filing of schedules without mention of this claim and the delay of the alleged creditor in filing his claim.

The motion for an order reversing the referee's order is denied.

MILLER & PARDEE, Inc., v. LAWRENCE A. SWEET MFG. CO. et al.

"Q. Do you know whether a resolution was passed fixing your salary as president of the company? A. I think it was.

"Q. Do you know? A. To the best of my recollection, it was.

"Q. What was it fixed at? A. $100 a

month.

"Q. At what meeting was a resolution passed? A. Somewhere about November,

1918.

"Q. Was it a directors' meeting or stockholders' meeting? A. I think it was a directors' meeting.

"Q. Do you recall who was present at that meeting? A. Mr. Nichols, Mr. Donovan, Mr. Hartfield, I believe, and Mr. T. E. Burnes; that is all I remember just now.

"Q. Who was the secretary of the corporation at that time? A. Thomas Robinson. "Q. Do you know whether he made an entry in the minute book of the corporation? A. I should say he did; yes.

"Q. Do you know when you became president of the corporation? A. About November, 1918.

"Q. Was it November, 1918, that you became president of the corporation? A. I think so; I am not positive."

William Hartfield, a director of the bankrupt, in response to a question as to the amount of salary Mr. McIntosh was receiving as president replied: "I am not sure, about $100 a month." He later testified even less positively.

Lee Hartshorn, director and treasurer of the bankrupt, testified that the minutes showed that the president's salary was fixed at $100 a month; but his testimony is by no means clear, and evidently was considered

ary 6, 1925.)

1. Courts 351-Interrogatories should be of character that answer will state or illustrate material fact.

be of such character as that, by examining the

Interrogatories under equity rule 58 should

issues proposed or made up, it can be seen that answers required will reasonably state or illustrate a material fact, and should not go to the length of examination and cross-examination eral investigation, to ascertain if party interon evidentiary matter, nor yet be a mere genrogated knows something that will aid cause or defense.

2. Patents 292-Defendants' denial of assignment to plaintiff held not to authorize interrogation of plaintiff as to other assignments.

An allegation of assignment of patent to plaintiff in infringement suit does not authorize defendants, under a mere denial of that assignment, to interrogate plaintiff as to whether at any other time he has made any other assignment.

3. Discovery 9-Interrogatories narrowly limited, where issues not clearly stated in pleadings.

Where issues are not clearly and sufficiently stated in pleadings, interrogatories should be scrutinized and narrowly limited to things that court is able to see will constitute material matter.

4. Patents 292-Answers not sealed and deposited with court, unless by consent of parties.

Order in infringement suit, requiring answers to interrogatories to be sealed and de

posited with clerk until both parties have committed themselves as to facts, should be made only on consent of parties.

In Equity. Suit for patent infringement by Miller & Pardee, Inc., against Lawrence A. Sweet Manufacturing Company and others. On plaintiff's objections to interroga