CASES ARGUED AND DETERMINED IN THE CIRCUIT COURTS OF APPEALS AND DISTRICT COURTS OF THE DOLPHIN.* ROSS TOWBOAT CO. v. UNITED STATES. (Circuit Court of Appeals, First Circuit. January 6, 1925.) No. 1697. Customs duties 130-Tug towing barge, unladen, without permit from customs collector or naval officer, held not subject to forfeiture; "tackle, apparel, and furniture." Tug, which towed barge containing intoxicating liquor, unladen, without permit of customs collector or of naval officer, in violation of Rev. St. §§ 2872, 2874 (Comp. St. §§ 5563, 5565), was not subject to seizure or forfeiture, in view of section 2873 (Comp. St. § 5564), either on theory that barge and tug constituted one vessel, or that tug was part of "tackle, apparel, and furniture" of barge. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Ships' Tackle, Apparel, and Furniture.] Appeal from the District Court of the United States for the District of Massachusetts; Elisha H. Brewster, Judge. Libel by the United States against the ocean tug Dolphin, claimed by the Ross Towboat Company. Decree for libelant, and claimant appeals. Reversed and remanded, with directions. Albert T. Gould, of Boston, Mass. (Charles S. Bolster and Blodgett, Jones, Burnham & Bingham, all of Boston, Mass., on the brief), for appellant. Laurence Curtis, 2d, of Boston, Mass. (Robert O. Harris, of Boston, Mass., on the brief), for the United States. in admiralty, declaring the forfeiture of the tug Dolphin under the provisions of section 2874, R. S. (Comp. St. § 5565). The parties have stipulated that the statement of facts contained in the opinion of the court may be taken as proved. It is as follows: "The steamship Korona, bound for the United States, took on board at the island of Bermuda, a foreign port, a quantity of liquor, and proceeded to a point off the. coast of Rhode Island, within four leagues of the coast, where she was met by the barge William J. Lermond, which was towed by the tug Dolphin; that the liquor was there transshipped to the barge which was towed by the tug to a pier at Newton Creek, Brooklyn, N. Y., where the cases and barrels containing the whisky were unladen from the barge and brought on shore, without any permit from any collector of customs or any naval officer for said unloading, as required by section 2872 of the Revised unladen before the Korona had come to a Statutes (Comp. St. § 5563); that it was proper place for the discharge of her cargo or had been authorized to unload; that the master of the steamship Korona, of the barge, and of the tug Dolphin were all privy and consenting to all the facts alleged; that the value of said merchandise was, according to the highest market price at the port where landed, in excess of $400.” R. S. § 2872, provides in substance that, except as authorized under conditions not here material, no merchandise brought in Before BINGHAM, JOHNSON and AN- any vessel from a foreign port shall be unDERSON, Circuit Judges. laden or delivered from such vessel within the United States, except between the rising and the setting of the sun, unless special license has been granted, nor at any For opinion below, see 285 F. 881. JOHNSON, Circuit Judge. This is an appeal from a decree of the District Court, 3 F. (2d)-1 time without a permit from the collector and unload or deliver any merchandise brought naval officer, if any, for such unloading or in any vessel from a foreign port contrary delivery. to the provisions of the act; and the section Section 2874 R. S. (Comp. St. § 5565), provides that the merchandise here referred is as follows: to, which may be seized and subjected to forfeiture, must be unladen or delivered from such vessel. "Sec. 2874. All merchandise, so unladen or delivered contrary to the provisions of section 2872, shall become forfeited, and may be seized by any of the officers of the customs; and where the value thereof, according to the highest market price of the same, at the port or district where landed, shall amount to $400, the vessel, tackle, apparel, and furniture shall be subject to like forfeiture and seizure." No part of the cargo of liquors was unloaded from the tug, but the District Court held that section 2874 should be construed so as to include the tug as one of the instruments used in the violation of the statute; that, with the barge, it constituted one vessel. In its opinion the court said that, if the statute were construed strictly and confined solely to the vessel from which the merchandise was unladen, "there was not such an identity between the tug, and the barge as would justify the court in holding that the tug was the vessel from which the merchandise was unladen." In United States v. Stowell, 133 U. S. 1, 12, 10 S. Ct. 244, 245 (33 L. Ed. 555), the court said: "By the now settled doctrine of this court (notwithstanding the opposing dictum of Mr. Justice McLean in United States v. Sugar, 7 Pet. 453, 462, 463) statutes to prevent frauds upon the revenue are considered as enacted for the public good and to suppress a public wrong, and therefore, although they impose penalties or forfeitures, not to be construed, like penal laws generally, strictly in favor of the defendant; but they are to be fairly and reasonably construed, so as to carry out the intention of the Legislature. Taylor v. United States, 3 How. 197, 210; Cliquot's Champagne, 3 Wall. 114, 145; United States v. Hodson, 10 Wall. 395, 406; Smythe v. Fiske, 23 Wall. 374, 380." Applying the law of construction stated in this case, we find nowhere in the Revenue Acts any intention of Congress that any Ivessel other than the vessel from which the goods are unladen shall be forfeited under section 2874. In that section it is the vessel from which the goods are unladen which may be seized and declared forfeited. By section 2874, where the value of the merchandise shall amount to $400 at the port or district where landed, the vessel, tackle, apparel, and furniture are made subject to like forfeiture. Under section 2873 (Comp. St. § 5564), one who was knowingly concerned and aided in removing, storing or otherwise securing such merchandise is made liable to a penalty of $400, and to be disabled for holding any office of trust or profit under the United States for a term not exceeding seven years. It will be noted that this section makes it an offense to be concerned in removing, storing, or otherwise securing, thus making it manifest that these acts, and not the act of aiding in the transportation of, such merchandise, constitute the crime which may be punished. It is contended that the words "tackle, apparel, and furniture" may include the tugboat. The tackle referred to is evidently that of the vessel, and by no construction can it be held that the tugboat is any part of such tackle. There is no merit in this contention. It is claimed that the tug and its tow constitute one vessel, and cases are cited in which a tug and tow have been in collision with other vessels through the alleged negligence of the tug in performing a towage service; but these cannot be relied upon to govern in this case. The court cannot read into the statute what is not there by reasonable and fair inference. The customs laws, under which this forfeiture was decreed, were enacted to prevent smuggling. If, under recent legislation, it has become necessary to extend the provisions of these statutes, it should be done by Congress, and not by the courts. If the construction placed upon the statute by the District Court in this case can be sustained, a harbor tug which has docked a vessel from which merchandise brought from a foreign port has been unladen in violation of the statute would be liable to forfeiture. The decree of the District Court is reversed, and the case is remanded to that By section 2872 it is made unlawful to court, with directions to dismiss the libel. 3 F.(2d) 3 BANK OF CALIFORNIA v. BRAINARD. In re SIMON BROS. (Circuit Court of Appeals, Ninth Circuit. January 5, 1925. Rehearing Denied January 26, 1925.) Bankruptcy No. 4294. 303 (3)-Evidence held to sustain finding that deposit was not in usual course, but intended to pay bankrupt's indebtedness to bank, constituting voidable preference. Evidence held to sustain finding that checks deposited by bankrupt were not deposit in usual course of business, but intended to pay bank rupt's notes to bank under circumstances showing bankrupt's knowledge of insolvency, and constituted voidable preference. In Error to the District Court of the United States for the Southern Division of the Northern District of California; George M. Bourquin, Judge. Action by G. W. Brainard, as trustee in bankruptcy of Simon Bros., a copartnership composed of Bert Simon and another, doing business under the name of Simon Bros., and also under the name of the Hercules Cement Products Company, against the Bank of California. Judgment for plaintiff, and defendant brings error. Affirmed. Pillsbury, Madison & Sutro, and Frank D. Madison, all of San Francisco, Cal., for the plaintiff in error. Norman A. Eisner and Joseph Kirk, both of San Francisco, Cal., for the defendant in error. Before GILBERT, HUNT, and RUDKIN, Circuit Judges. GILBERT, Circuit Judge. The defendant in error as trustee in bankruptcy of Simon Bros., a partnership consisting of Bert Simon and Sam Simon, recovered a judgment against the plaintiff in error for $12,381.41 as a preference payment received from the assets of the bankrupts within four months prior to the filing of the petition in bankruptcy. The only question before this court is whether the trial court erred in denying the motion of the plaintiff in error for a directed verdict in its favor. It is contended that the motion should have been allowed on the ground that the deposit of checks with the bank whereby the payment was made was made in the ordinary course of business and was subject to set-off, and that there was no evidence that the bank knew of the insolvent condition of the bankrupts, or that it had reasonable cause to believe that the effect of the payment would be to enable it to obtain a preference void able under the provisions of the Bankruptcy Act. Examining the record, as we must to ascertain, not whether the verdict was against the weight of the testimony, but whether there was any testimony at all which, if credited by the jury, was sufficient to sustain a verdict for the trustee, we find evidence of the following facts: The bankrupts had been doing business with the bank since April, 1919. On September 24 of that year they owed the bank for borrowed money $45,000. During the year 1921 the bankrupts lost heavily in their business. In November of that year the bank expressed its dissatisfaction with the way in which the bankrupts were doing business, and from that time there was constant reduction of the debt and of loans by the bank. In 1922 there were many conferences between the bankrupts and the bank pertaining to the financial condition of the bankrupts' business, and reductions of the indebtedness to the bank were made at the latter's request. In the meanwhile, the bankrupts' business was in a failing condition. On January 1, 1922, their books showed an inventory of $296,124. On January 1, 1923, they showed $71,494. On February 28 of that year they showed $5,494. March 5, 1923, was the date of the alleged voidable preference. The bankrupts had just received $12,000, the final payment of the purchase price of real estate which they had sold. At that time the bankrupts' balance in the bank was $5.74. Sam Simon and one Marymont, the purchaser of the property, entered the bank and at the deother San Francisco banks, one on an Oakposit window deposited four checks, two on land bank, and one on a San Luis Obispo bank, amounting in the aggregate to $12,170.60. They then went to the note window, presented checks for the principal and interest of the notes, and asked for the surrender of the bankrupts' notes to the bank, on which there was due and unpaid $12,381.40. There were present at that window three note clerks of the bank, Redmond, Lyons, and Carmany. Redmond consulted Lyons concerning the surrender of the notes. Lyons answered that he would not take the responsibility, and told Redmond to consult Mr. Pentz, who was the vice president and cashier. The question was whether the checks should be taken in payment of the notes. Lyons testified that Marymont appeared to be excited and said, "You take it; you take it; don't say anything, but take it;" and |