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of the father should constitute strong and convincing proof of the acknowledgment of a natural child by a father, have found that the testimony was sufficient. The district court said of it that it satisfactorily proved the cause of action, save only the allegation of the fourth count regarding the existence of properties; and the Supreme Court characterized it as "strong and convincing as required in cases of the acknowledgment of natural children." The finding of two courts familiar with the local law, upon the testimony and involving the findings of mixed law and fact, should not be disturbed by us unless plainly wrong.

We do not think that it is, but, on the other hand, that the evidence is plenary; that in many ways Charles M. Boerman publicly treated the appellee as his daughter, manifesting a deep interest in her education, and being willing that she should bear his surname. This disposes of the first assignment of error.

The fifth assignment of error, relied upon, is that the court erred in not ruling that the appellee could not be the natural child of Charles M. Boerman, for the reason that article 119 of the Civil Code, in force in Porto Rico in 1901, provides as follows:

"Art. 119. Only natural children can be legitimized. Natural children are those born out of wedlock of parents who, at the time of the conception of the child, could have married with or without dispensation."

[3, 4] Both the Porto Rican courts have held that the prohibition in the decree of divorce granted by the Supreme Court of New York in 1900 had no extraterritorial force and constituted no bar to the marriage of Boerman with the mother of Amelia at the time of her conception and birth. This ruling was clearly right and is not seriously attacked; but it is contended that, under the law in force in Porto Rico, Amelia was not the “natural child” of Boerman, because he could not then have married her mother, and therefore she could not be legitimized. While under the Code in force in Porto Rico at the time of the American occupation, in 1899, a divorce did not release from the bonds of matrimony, but only created a suspension of the marital relation, as did at common law a decree a mensa et thoro, and it also provided that those who were already bound in marriage could not contract marriage, this was materially changed by a general order issued March 17, 1899, by Maj. Gen. Guy V. Henry, which provided that marriage could be contracted by divorced persons, with certain exceptions, which do not include Boerman. This general order had the force of law in Porto Rico and superseded the old Spanish Code.

We find no error in the ruling of the Supreme Court of Porto Rico that the prohibition in the decree of divorce granted by the Supreme Court of New York had no extraterritorial force, and that, because of this general order, there was no bar to the marriage of Boerman with the mother of the appellee at the time of the conception and birth, and therefore no legal reason why she could not be the natural child of Boerman and legitimatized by him.

[5] The fifteenth assignment of error relates to the jurisdiction of the district court of Ponce to render judgment when there was only notice by publication to one of the defendants, Ester Bessie Boerman. While service by publication and by mail was ordered upon the mother

(273 F.) of Boerman, who was alleged to be a citizen and resident of Russia, a letter addressed to her was not delivered, because of the unsettled conditions in Russia owing to the war, and it does not appear that she had any notice of the pendency of the suit. The order of notice upon her was authorized by the statute in force in Porto Rico in the case of nonresident defendants, and this order was strictly complied with. As this was a proceeding to determine the status of the plaintiff in a suit of filiation, it was a proceeding in rem, and if her status was found to be that of an acknowledged natural child, then the law would determine her right in the estate of the acknowledging father.

Upon questions involving the status of its citizens every state is sovereign. Porto Rico has, with the sanction of the United States, enacted laws in regard to the acknowledgment of illegitimate children, and in the execution of these laws it exercises the powers of a sovereign state, and a judgment rendered by its courts in their execution can only incidentally affect nonresidents. Such a judgment, if not strictly a judgment in rem, is one quasi in rem, as is a decree of divorce, which only dissolves a marriage, and does not contain any provision for the payment of alimony. As there is no suggestion that the order of notice upon the absent defendant, Ester Bessie Boerman, was not strictly complied with, we think the district court of Porto Rico had jurisdiction to enter her default.

[6] The sixteenth assignment of error, relating to the failure to, make the sisters of Charles M. Boerman parties, was not argued below. It was only in the event of the death of the mother of the testator that his sisters would take under his will. Her death was not proven, and they were not necessary parties.

[1] The last assignment of error is that Judge Sepulveda was without jurisdiction to try the case. The Supreme Court found that there was no evidence that the appointment of Judge Sepulveda had not been confirmed when he heard the case, and in this we concur. It is true that he announced that he had received notice of his appointment, but had not been notified that the appointment had been confirmed; but, if it had not been confirmed, this could have been easily proven. This was not done, and the presumption must stand that he had been legally appointed and confirmed.

The judgment of the Supreme Court of Porto Rico is affirmed, with costs to the appellee in this court.

AMERICAN SURETY CO. OF NEW YORK V. AMERICAN MILLS CO. (Circuit Court of Appeals, Second Circuit. April 13, 1921.)

No. 169. 1. Principal and surety 57—Surety bond held procured by fraud.

A transaction between defendant jobber and a debtor corporation, apparently insolvent, by which the debtor contracted to deliver a quantity of bags to defendant for payment, falsely recited as received, and pro cured complainant surety company to guarantee delivery, whereby, if For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

the bond was enforced, defendant would obtain payment of its debt, held fraudulent as to the surety company, and the bond subject to cancellation

at its suit. 2. Equity m43_Bill does not lie where adequate remedy at law exists.

A bill in equity does not lie in any case where a plain, adequate, and

complete remedy may be had at law. 3. Equity 53 (1)-Objection to jurisdiction because of adequate remedy at

law may be waived.

The right to object to the jurisdiction of a federal court of equity on

the ground of adequate remedy at law may be waived. 4. Equity 53 (1)-Objection to jurisdiction waived by counterclaim,

In suit for cancellation of surety bond on ground that it was obtained by fraud, an objection in the answer to the jurisdiction in equity on the ground that complainant had an adequate remedy at law was waived by a counterclaim asking recovery on the bond, defendant insisting upon the counterclaim at the trial and offering proof to sustain it, although defendant moved for dismissal on the ground that equity had no jurisdiction in opposition to a motion for judgment on the pleadings, but did not renew such motion during the trial until the court indicated its de

termination to decide in favor of the complainant. 5. Courts 347-Jury 13 (6)—Defendant, objecting to jurisdiction, need

not plead counterclaim under equity rule.

Under rule 30 of the new Equity Rules (201 Fed. v, 118 C. C. A. V), a defendant in an equity case is not obliged to plead a purely legal cause of action as a counterclaim and offer proof thereof in an action in equity, since any such requirement would be in conflict with Const. U.

S. Amend. 7, preserving the right of trial by jury. 6. Jury 28 (11)-Defendant, asserting cause of action at law by way of

counterclaim, elects to proceed without jury.

Where defendant in an equity case asserts a cause of action at law by way of counterclaim, he elects to proceed without a jury.

Appeal from the District Court of the United States for the Southern District of New York.

Suit by the American Surety Company of New York against the American Mills Company for an injunction. Decree for plaintiff (262 Fed. 691), and defendant appeals. Affirmed.

Henry Uttal, of New York City (Herbert Haas, of Atlanta, Ga., of counsel), for appellant.

Henry C. Willcox, of New York City (Allan C. Rowe, of New York City, of counsel), for appellee.

Before WARD, HOUGH, and MANTON, Circuit Judges.

MANTON, Circuit Judge. The appellant was a jobber and a dealer in secondhand bags and burlap at Atlanta, Ga. The Hartenfeld Bag Company was in business in Chicago, Ill., as a dealer in secondhand bags and burlap. Its business was collecting secondhand bags, cleaning and repairing them, and reselling them to the bag trade. The appellant had previously, during the course of several years, purchased bags in considerable amounts from the Bag Company. Very frequently the business was conducted as follows: The appellant would secure orders from its customers, and then buy the secondhand bags and burlap necessary to fill such orders from the Bag Company. Payment was

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(273 F.) made to the Bag Company in advance as soon as the contract of purchase was made, by giving the appellant's notes, which the Bag Company discounted in Chicago, thus raising the money to finance its transactions. In 1918, owing to the war conditions, there was a shortage of burlap, and the appellant placed orders for large amounts of mer. chandise with the Bag Company, paying in advance in the manner described. However, when it came to delivery, the Bag Company failed to do so in several instances, and in some cases, where deliveries were made, the customers of the appellant to whom the bags were sent, made complaint both of shortage in quantity and inferiority in quality. In some instances it resulted in rejectment of shipments. The appellant, under contract to deliver the merchandise to its customers, for which it had already paid the Bag Company, was forced to unusual efforts in the summer of 1918 to secure from the Bag Company prompt deliveries of unfilled orders and to make good shortages and substitution of good bags and burlap for those which had been rejected. This resulted in a controversy, with extended correspondence and extensive promises, which apparently were not kept.

On August 29, 1918, while this condition of affairs existed, the Bag Company sold to the appellant a carload of bags and burlap for shipment to Atlanta for $9,225. The appellant did not pay in advance for these goods, but purchased on open account, payable in 90 days. The carload was shipped to Atlanta on August 30, 1918, and on the same day, the Bag Company assigned the 90-day account against the appellant for $9,225, the purchase price of this car, to the Commercial Credit Company of Baltimore. This company makes a business of loaning money on the purchase or discount of accounts receivable. The matter of this assignment was unknown to the appellant until September 24, 1918, following. The unsatisfactory deliveries and replacement of shortages and defective bags continued until September 24, 1918. On that date, the parties met in Chicago, and it was then stated by the president of the Bag Company that he could not make some of the deliveries or replacements to which the appellant was entitled, and it was finally agreed that for such nondeliveries, shortages, and defective deliveries the Bag Company owed the appellant $11,951.41. This adjustment did not take into consideration the open account, which was assigned as aforesaid. The Bag Company was unable to pay the $11,951.41 in cash, and it was finally agreed that the Bag Company should pay the appellant $2,726.41, and give notes for $9,225, making together the $11,951.41 debt, and that the appellant should give to the Bag Company its notes for $9,225 in payment of the car of August 29, 1918, which had been sold under 90 days credit, and which account had been assigned to the Commercial Credit Company. Notwithstanding such assignment, the appellant agreed to give notes for it.

The appellant disclaims knowledge of such assignment to the Commercial Credit Company. When the parties started to draw the notes, it was then recalled that there was another small debt from the Bag Company which had been overlooked. So this indebtedness was deducted from the appellant's notes, and on September 14, 1918, the appellant gave the Bag Company one note for $4,650 due December 18,

1918, and another note for $4,485.08, due January 5, 1919, in payment of the car shipped to Atlanta on August 29, 1918, which had been sold on open account. The Bag Company discounted the appellant's notes with a banking house in Chicago, and received credit therefor. When on September 24, 1918, the appellant was requested to pay by the Commercial Credit Company, it at once communicated with the Bag Company. At this time the Bag Company owed the appellant the $9,225 in notes and other matters aggregating about $12,000, for which the appellant had no security. The president of the appellant went to Chicago, without acknowledging or answering the demand of the Commercial Credit Company, for the purpose of discussing matters and arriving at a settlement with the Bag Company. The president of the Bag Company stated that the assignment of the account to the Commercial Credit Company was due to an error, and that in his absence a "bonehead” clerk had filled out one of the blank forms and assigned the account without his knowledge to the credit company; but it was apparent that the Bag Company was in bad financial condition and this was made known to the appellant. However, the president of the Bag Company stated that, while he had no ready cash, he had considerable volume of merchandise on hand which would permit him to pay in 60 days.

The following transaction then took place: A contract was drafted, by which it was made to appear that the Bag Company should sell and deliver to the appellant merchandise therein specifically amounting to $22,100, a little more than enough to pay the appellant in full, and provided as follows: "Which the American Mills Company agrees to pay cash upon the conditions that this contract is completed within 75 days after date.” It provided that the Bag Company would secure a good surety company bond guaranteeing the performance by the Bag Company. At the time it was very apparent that the president of the appellant did not go to Chicago for any purpose other than to adjust the indebtedness then owing. Nothing indicates a desire to buy other merchandise. No satisfactory explanation is given why another purchase of bags should have been made under the circumstances. Later there was substituted in the contract the following words:

"The amount of this contract is $22,100, paid to H. B. C. [Hartenfeld Bag Company] upon the execution of this agreement, the receipt whereof is hereby acknowledged. In the event that the said H. B. Co. shall not make delivery of the said bags on or before 75 days after the date hereof, said H. B. Co. shall retain of said $22,000 only so much thereof as will pay at the contract rate for such bags, if any, as have been delivered and accepted by A. M. Co. (American Mills Company], and said H. B. Co. shall at the expiration of 75 days immediately return to A. M. Co. the difference between said $22,000 and the price of the bags delivered."

[1] This substituted a contract which called for payment on delivery into one which apparently called for an immediate advance payment and for delivery or a refund of the money. Under this change in the contract, the surety was liable, not only for damages above the contract price for failure to deliver bags, but for actual delivery of the bags or repayment of the whole recited consideration. This

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