perhaps more usually-understood between the parties that transferring the goods from the ship to the warehouse shall not be regarded as a waiver of the lien, and that the shipowner reserves the right to proceed in rem to enforce it if the freight is not paid. And if it appears by the evidence that such an understanding did exist between the parties before or at the time the cargo was placed in the hands of the consignee, or if such an understanding is plainly to be inferred from the established local usage of the port, a court of admiralty will regard the transaction as a deposit of the goods, for the time, in the warehouse, and not as an absolute delivery; and on that ground will consider the shipowner as still constructively in possession so far as to preserve his lien and his remedy in rem." Bags of Linseed, 66 U. S. 114, 115, 17 L. Ed. 35. In The Bird of Paradise, 72 U. S. 555, 18 L. Ed. 662, we find this language:

"Parties, however, may frame their contract of affreightment as they please, and, of course, may employ words to affirm the existence of the maritime lien, or to extend or modify it, or they may so frame their contract as to exclude it altogether. They may agree that the goods, when the ship arrives at the port of destination, shall be deposited in the warehouse of the consignee or owner, and that the transfer and deposit shall not be regarded as the waiver of the lien; and where they so agree, the settled rule of this court is that the law will uphold the agreement and support the lien."

We quote the language of the Supreme Court in another case-The Lottawanna, 88 U. S. 582, 22 L. Ed. 654:

"The court [the proceeding was in admiralty] has power to distribute surplus proceeds to all those who can show a vested interest therein, in the order of their several priorities, no matter how their claims originated. The propriety of such a distribution in the admiralty has been questioned on the ground that the court would thereby draw to itself equity jurisdiction. But it is a wholesome jurisdiction, very commonly exercised by nearly all superior courts, to distribute a fund rightfully in its possession to those who are legally entitled to it; and there is no sound reason why admiralty courts should not do the same. If a case should be so complicated as to require the interposition of a court of equity, the District Court could refuse to act, and refer the parties to a more competent tribunal."

Here we are in a court of equity, and the recitation of the facts which we have made are sufficient, we think, to show to the enlightened conscience of the chancellor that the appellant was entitled to the amount it claimed on the ground that it urged, namely, that the sum of $7,286.60, obtained by the receivers in the manner specified, and then and now retained by them, belongs to the steamship company in full ownership, and is not an asset of the defendant company. And, waiving any express decision of the question as to the maritime lien extended and retained by contract, we, on this latter ground, conclude that the money received by the oil company and by its receivers was and is charged in their hands with a trust in favor of the appellant. We therefore direct that the decree of the Circuit Court shall be so amended as to require that A. W. Crandell and Gustave Lemle, receivers of the Lone Star & Crescent Oil Company, pay to the Michigan Steamship Company the full amount of $7,286.60 out of the proceeds of the cargo of oil referred to herein, and now in the hands of the receivers, with its costs. in the Circuit Court and in this court.

LONDON & SAN FRANCISCO BANK, Limited, v. BLOCK, Tax Collector.

(Circuit Court of Appeals, Ninth Circuit. February 6, 1905.)

TAXATION-Credits.

No. 1,074.

Cal. Const. art. 13, § 1, declares that all property in the state not exempt under the laws of the United States shall be taxed in proportion to value, and that the word "property" shall include all moneys, credits, etc., capable of private ownership. Pol. Code, § 3617, declares that the word "credits" shall mean "those solvent debts not secured by mortgage or trust deed, owing to the person or corporation assessed." Held, that where a foreign corporation maintained branch banks in San Francisco, Portland, Or., and Tacoma, Wash., credits on the books of the San Francisco office, consisting of sums paid to the other branches for their benefit, and charged to them as mere matter of bookkeeping, without any promise or obligation on the part of the debited agencies to return the money to the San Francisco bank, were not credits arising in the state of California, or taxable therein.

Appeal from the Circuit Court of the United States for the Northern District of California.

For opinion below, see 117 Fed. 900.

Charles P. Eells, for appellant.

Percy V. Long, City Atty. (W. I. Brobeck, Asst. City Atty., of counsel), for appellee.

Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.

HAWLEY, District Judge. This is a suit in equity brought by appellant, a corporation organized and existing under the laws of the United Kingdom of Great Britain and Ireland, against appellee, the tax collector of the city and county of San Francisco, to secure an injunction restraining him from making a threatened sale of appellant's real property for the taxes alleged to be due for the fiscal year 1897. In April, 1896, the assessor of the city and county of San Francisco demanded from appellant, at its branch office in San Francisco, a statement, under oath, setting forth specifically all the real and personal property in California owned by appellant, or in its possession, or under its control, at 12 o'clock noon of the first Monday in March in the year 1896. This included the real estate, $182,040; furniture, $1,800; money, $251,462; and solvent credits, $1,599,811. The assessor added to this statement an assessment for franchise, $12,000, and divers other solvent credits, including $116,774 due by Portland branch and $428,539 due by Tacoma branch. Before delinquency, appellant tendered to appellee the sum of $7,327.51, being the amount of tax collectible on the items returned by appellant in its statement. Appellee refused to accept this tender, and proceeded to advertise appellant's property for sale for the entire tax on all the property assessed, to wit, a tax of $24,081.23. This suit was brought July 2d, the day before the sale would otherwise have been made, and the court issued a restraining order. Pending the trial, appellee received from appellant the sum of $6,086.39 in payment of the tax for real estate, furniture, and money;

and at the trial appellant admitted that, of the items added and assessed, $4,103.34 were liable to assessment, and appellee admitted that, of other items assessed, $390,973.14 were not liable to assessment. The questions submitted to the court below were as to appellant's liability as to assessment of $12,000 for its franchise; $164,576.60, amount due by J. P. Morgan & Co.; $116,774, amount due by Portland branch; and $428,539, amount due by Tacoma branch. The Circuit Court rendered its opinion, and entered a decree in favor of appellant as to the amount due by J. P. Morgan & Co., and in favor of appellee on the other items, and dismissed appellant's bill. London & San Francisco Bank, Limited, v. Block, Tax Collector (C. C.) 117 Fed. 900. From this decree the appeal herein is taken.

In this court appellant, by agreement with appellee's attorney, abandoned its claim of error as to the item of franchise, without prejudice to its appeal upon the remaining grounds.

The only question for this court to decide is whether the court erred in holding that the items due from the Portland branch and the Tacoma branch were assessable as "solvent credits" taxable in California. The testimony in the record shows that appellant has its head office in London. It has three branch offices or agencies in the United States, one at San Francisco, Cal., one at Portland, Or., and the other at Tacoma, Wash. Each of these branches is designated as "The London & San Francisco Bank, Limited." All the capital used in these branches is supplied from the office in London, and is owned by appellant. It has its board of directors and general manager in London, who control the managers of its several branches in the United States. It is represented in its branch office at San Francisco by a cashier, manager, and assistant manager, who hold a joint and several power of attorney from the directors of the corporation in London to do everything required in the carrying on of the banking business. Each manager is required to make monthly reports of the business of the bank to the head office. In relation to the general business of making loans and investments, etc., the local officers of the branch office act on their own judgment, without instructions from the head office in London. In the conduct of its business, and pursuant to instructions from the head office in London, remittances of money are made from time to time from one branch to another, or between the branch offices and the London office. For convenience of bookkeeping these advances are entered as debits charged on its books by the office sending them to the office receiving them. On the first Monday in March, 1896, the books of the San Francisco bank showed the balance due it from the Portland and Tacoma branches in the amounts above stated.

Section 3628 of the Political Code of California provides that:

"The assessor must, between the first Monday in March and the first Monday of July in each year, ascertain the names of all taxable inhabitants, and all the property in his county subject to taxation, and must assess such property to the persons who own, claim, or have the possession or control thereof."

It appears from the testimony that the assessor took the statement of the taxable property as returned by appellant, and added thereto the solvent credits as returned in the statement made to the Bank Commis

sioners of California, showing the condition of the bank's affairs on the first Monday in March, 1896.

It is undoubtedly true that if the money had been in the bank in San Francisco it would have been taxable as money on hand. Are the amounts of money previously transmitted to the Portland and Tacoma branches taxable as solvent credits due the bank in San Francisco? Section 1 of article 13 of the Constitution of the state of California declares that:

"All property in the state, not exempt under the laws of the United States, shall be taxed in proportion to its value, to be ascertained as provided by law. The word 'property' as used in this article and section, is hereby declared to include moneys, credits, bonds, stocks, dues, franchises, and all other matters and things, real, personal, and mixed, capable of private ownership

Section 3617 of the Political Code of California defines the term "credits" to mean "those solvent debts not secured by mortgage or trust deed, owing to the person, firm, or corporation assessed."

The entries as made in the books, and the statement to the Bank Commissioners, showed all the transactions with the head office and its several agencies, as well as the transactions conducted by the officers of the agency in San Francisco. No distinction was made in the books with reference to the business done with the head office or the offices of the other agencies. The accounts in the books are kept the same as the accounts with foreign banks, but under the testimony it is clearly shown that the credits under consideration, as shown in the books, are merely records of the facts that under instruction from the "head office" in London various sums of money in the agency of the bank in San Francisco, amounting in the aggregate to the sums heretofore stated, were sent to the Portland and Tacoma agencies. The agency at San Francisco did not secure a credit by these remittances of money. There was no promise or obligation upon the part of either of the agencies or the "head office" to return the money to the bank in San Francisco. The amounts of money forwarded to the agencies were not "solvent debts" owing to the agency at San Francisco. They were not investments made abroad with foreign banks, and do not come within the principles announced in Nevada Bank v. Sedgwick, 104 U. S. 111, 26 L. Ed. 703, or Pacific Coast Savings Society v. City and County of San Francisco, 133 Cal. 14, 65 Pac. 16, and other like cases cited by appellee. "The authorities generally agree," as was said by the Supreme Court in Mackay v. San Francisco, 128 Cal. 678, 686, 61 Pac. 382, 385, “that where the owner is not a resident of the state in which the credits are situated, and the credits are in the possession and control of a local agent, who holds them for the purpose of transacting a permanent business, and of investing and reinvesting the proceeds from the principal or interest in such manner that the property or credits come in competition with the capital of the citizens of the state in which the agent resides, that the credits have a situs for the purposes of taxation in the place of residence of the local agent. (New Orleans v. Stempel, 175 U. S. 318, 20 Sup. Ct. 110, 44 L. Ed. 174, and cases cited.)" But in the present case, while at one time previous to the assessment the money had been in the possession and control of the agency in Califor

nia, it had not been used in the transaction of its business, and had not been invested in such a manner as to bring appellant "in competition with the capital of the citizens of the state." At the time of the assessment it had been removed to the respective agencies in Portland and Tacoma, and the money, if on hand, would be taxable there; and, if loaned out or invested by the agencies there, the solvent debts' arising therefrom would be taxable respectively at the residence of the agencies in the states of Oregon and Washington, but was not taxable at the residence of the agency in San Francisco, Cal., because at the time of assessment the agency there neither had the money nor had used it in the ordinary transactions of the bank, either by loan or investments, and did not have at that time the possession or control of the money, or have any solvent debts created by its use while in its possession or control. The authority of every state to tax all property, real and personal, within its jurisdiction, is unquestionable; but the taxing power of the state is limited, in a case of this character, to property within the state. Under the facts of this case, our conclusion is that the court erred in holding that the two items under consideration, aggregating $545,313, upon which the tax was $7,624.56, were property assessable to appellant as solvent credits.

The decree of the Circuit Court as to the allowance of the tax and penalties on these two items is reversed, and the cause remanded to the court below to strike out this portion of the decree, and make such further order in the premises as the case may require, in accordance with the views expressed in this opinion.

EIDMAN, Collector, v. TILGHMAN et al.

(Circuit Court of Appeals, Second Circuit. February 24, 1905.)

No. 169.

INTERNAL REVENUE-LEGACY TAXES CONSTRUCTION OF REPEALING ACT. Under sections 29 and 30 of the war revenue act of July 1, 1898, c. 448, 30 Stat. 464, 465 [U. S. Comp. St. 1901, pp. 2307, 2308], as amended by Act March 2. 1901, c. 806, § 10, 31 Stat. 946, 948 [U. S. Comp. St. 1901, pp. 2307, 2308], which provided for a tax on legacies, to become "due and payable in one year after the death of the testator," and to be a lien, etc., such tax did not become a lien and was not "imposed" until one year after the testator's death; and hence legacies left by a testator who died within one year prior to July 1, 1902, at which time the act repealing such sections took effect, are not taxable thereunder, the repealing act of April 12, 1902, c. 500, § 8. 32 Stat. 97 [U. S. Comp. St. Supp. 1903, p. 279f, saving only taxes which had been "imposed" prior to its taking effect.

In Error to the Circuit Court of the United States for the Southern District of New York.

Writ of error by the defendant in the court below to review a judgment for the plaintiffs entered upon overruling a demurrer to the com-plaint.

For opinion below, see 131 Fed. 651.

Charles D. Baker, Asst. U. S. Atty., for plaintiff in error.

Edward B. Whitney, for defendants in error.

Before WALLACE, TOWNSEND, and COXE, Circuit Judges.