(257 F.) stock were carried on over a considerable period, were complicated in character, involved a very large sum of money, and must have required much of her time and attention, and I am of the opinion that they were of the character contemplated by Congress as "incurred in trade." The wording of Treasury Decisions, T. D. 1989, dated June 2, 1914, bears out this view: "Losses actually sustained during the year incurred in trade are limited by the language of the act itself. In trade is synonymous with business; business has been defined as that which occupies and engages the time, attention and labor of any one for the purposes of livelihood, profit, or improvement; that which is his personal concern or interest; employment, regular occupation, but it is not necessary that it should be his sole occupation or employment. The doing of a single act incidental or of necessity not pertaining to the particular business of the person doing the same will not be considered engaging in or carrying on the business. It is therefore held that no losses are deductible in a return of income save and only those losses permitted and provided for by the statute, viz. those actually sustained during the year, which are incurred in trade." In overruling the demurrer, the question of the amount of, or method of arriving at, the proper deduction, is not decided. Demurrer overruled, with leave to answer in 20 days from the service of the order to be entered herein. In re FRANKLIN BREWING CO. (District Court, E. D. New York. March 26, 1919.) 1. BANKRUPTCY 293(4)—JURISDICTION OF COURT-ESTOPPEL. Parties denying a bankruptcy court's jurisdiction over them and answering to the merits at the same time are estopped from raising the jurisdictional question. 2. BANKRUPTCY 288(1)—MOTION-WHEN PROPER. A motion is not the proper procedure for a bankruptcy trustee to recover mortgage interest payments made by the bankrupt before the mortgage was set aside, where various defenses are made to the recovery. In Bankruptcy. In the matter of Franklin Brewing Company, bankrupt. On motion by the trustees in bankruptcy for an order directing the payment of certain moneys to the trustees. Motion denied without prejudice. See, also, 254 Fed. 910. Samuel Evans Maires, of Brooklyn, N. Y., for trustees. Conrad S. Keyes, of New York City, for respondent People's Trust Co. Cullen & Dykman, of Brooklyn, N. Y. (Edward J. Byrne, of Brooklyn, N. Y.), for respondent Engel. Henry F. Cochrane, of Brooklyn, N. Y., for other respondents. GARVIN, District Judge. This is a motion by Louis Karasik, Christopher L. Meyerdirks, and Thomas W. Maires, as trustees in bankruptcy, for an order directing John, Henry, and Charles Doscher, Gesine Engel, Mathilda C. Behre, and Caroline Candidus, all of whom are children of Claus Doscher, deceased, and hereinafter for convenFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes : ience described as the Doschers, to each pay over to said trustees the sum of $3,000, making $18,000 altogether, and for a further order directing the People's Trust Company to pay over to said trustees so much of the said sum of $18,000 as the said Doschers shall fail to pay over to the said trustees. The Franklin Brewing Company, bankrupt herein, on August 10, 1915, made an instrument in writing, purporting to be a trust mortgage, for $450,000, designating the People's Trust Company as trustee, securing a bond issue of $450,000, consisting of 450 coupon bonds, of $1,000 each. The holders of these bonds were the said Doschers who held 75 each. On January 23, 1917, an involuntary petition in bankruptcy was filed against the Franklin Brewing Company, it was adjudicated a bankrupt by this court March 5, 1917, and thereafter the trustees were duly elected and appointed. Subsequently the trustees brought an action against the said People's Trust Company, individually and as trustee under said mortgage, to set aside and cancel the mortgage on the ground that the same was illegal, invalid, and void as against the trustees in bankruptcy of the Franklin Brewing Company, bankrupt, and the creditors of the said bankrupt, represented by the said trustees. As a result of said action the court set aside the mortgage. Thereafter the trustees made a motion in this court for an order directing the said Doschers to surrender and deliver for cancellation to said trustees the said 450 bonds. The motion was granted, and the bonds surrendered accordingly. On August 8, 1916, the Franklin Brewing Company delivered to the People's Trust Company $18,000 in cash as and for interest from August 10, 1915, to August 10, 1916, upon the said 450 bonds, which sum the People's Trust Company paid over in amounts of $3,000 each to the said Doschers. The trustees claim that the payment of this $18,000 to the People's Trust Company and the distribution of that sum by the latter in the manner described were illegal, because the mortgage has been set aside and the bonds canceled, and they have therefore made this application. [1] The Doschers and the People's Trust Company challenge the jurisdiction of the court to compel them by summary order to turn over this money; but, inasmuch as they have at the same time answered to the merits, they are estopped from questioning the court's jurisdiction over them. In re Kornit Mfg. Co. (D. C.) 192 Fed. 392. This makes it unnecessary to pass upon various other questions involving jurisdiction raised by the parties. [2] It is the contention of the Doschers, however, that the trustees should have included the present demand in their action to set aside the mortgage, and they allege that they, the Doschers, have a counterclaim, and that the trustees have another proceeding pending in which they seek to have allowed the same payment here attempted to be recovered, and the People's Trust Company alleges that it acted in good faith as a mere banker, and without notice of any fraud, when it received and paid out the money. Claims of this character should not be disposed of on a motion. The motion is therefore denied, without prejudice to a plenary action or actions by the trustees. (257 F.) In re BASS et al. In re TRIANGLE CLOAK & SUIT CO. (District Court, E. D. Pennsylvania. April 10, 1919.) 1. BANKRUPTCY No. 5267. 136(2)—SHORTAGE OF ASSETS-BURDEN TO EXPLAIN. Where the books of a bankrupt firm showed a credit balance of over $29,000, the burden of proof shifted to the bankrupts to present some evidence beyond the vague statements of one of the firm as to how such an amount dwindled to the $50 worth of merchandise which came into the hands of the receiver. 2. BANKRUPTCY 228-FINDINGS OF REFEREE-REVIEW. Where the referee has considered carefully the evidence on the issue of whether the bankrupts are concealing assets, his findings should not be disturbed, in the absence of a demonstration that a plain mistake has been made. 3. BANKRUPTCY DENCE. 136(2)—CONCEALMENT OF ASSETS-SUFFICIENCY OF EVI Evidence held to sustain the findings of a referee in bankruptcy that the bankrupts were fraudulently concealing and withholding some $17,000 of assets; he having allowed a reduction of $12,000 from the value of goods on hand, as shown by the firm's books at a prior date. In Bankruptcy. In the matter of Isaac B. Bass, Herman M. Bass, and Louis Abramowitz, individually and trading as the Triangle Cloak & Suit Company, bankrupts. On certificate of review. Petition for review dismissed, and order of referee affirmed. Harry S. Mesirov, of Philadelphia, Pa., for trustee. THOMPSON, District Judge. A petition in bankruptcy was filed against the present petitioners on October 17, 1914, and on November 25, 1914, they were adjudged bankrupts. The record shows that the merchandise which came into the hands of the receiver did not exceed in value $50. The receiver was elected trustee, and, as a result of an examination of the books of the bankrupts, presented a petition to the referee for an order upon the bankrupts to turn over to him the sum of $32,107.87, alleging that they were fraudulently concealing and withholding the same from him. The referee examined Herman Bass, one of the partners, and an accountant who had made an examination of the firm's books. From the evidence derived from the books, the accountant found that, on January 1, 1914, only nine months before the petition was filed, the firm had on hand merchandise valued at $20,267.37. Adding to that the cost, as shown by the books, of merchandise purchased from January 1 until October 1, 1914, and the amounts expended for labor upon the goods purchased in making it up into salable merchandise, and giving credit for the sales, less goods returned, and less 10 per cent. for overhead expenses, 10 per cent. for discounts and commissions, and 10 per cent. for profits, the accountant showed there was unaccounted for upon the firm's own books a balance of $29,442.79. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes The accountant, in making the 30 per cent. charge for the items above referred to, based his calculations upon experience in the cloak and suit trade for 20 years, as well as his experience as an accountant. The bankrupts attacked the item of $20,267.37; Herman Bass testifying that in his opinion the value of merchandise on hand on January 1, 1914, did not exceed $8,000. The referee accepted this testimony on behalf of the bankrupts as an admission upon their part that they had merchandise of the value of $8,000 on hand at that date, and found, making a liberal allowance in their favor, that at the time of the filing of the petition in bankruptcy they had in their possession or under their control the sum of $17,000 belonging to the estate in bankruptcy. No explanation of the disposition of the money since the filing of the petition having been made, he found that it was still in their possession or under their control, and entered an order that it be paid over to the trustee. [1-3] I fail to discover any error in the findings of fact of the learned referee. He resolved the doubt in favor of the bankrupts in allowing a reduction of over $12,000 in the value of the merchandise which their books showed was on hand on January 1, 1914. He allowed every other item actually proved in favor of the bankrupts. Surely the books upon which a merchant relies in the case of original entries to prove his account against his debtor, and which show upon their face that they are kept in a regular way, present the strongest kind of evidence against the party for whose benefit the accounts are kept. The burden of proof was shifted to the bankrupts to present some evidence beyond the vague statements of one of the firm to explain how an apparent balance on their books of over $29,000 dwindled to the paltry $50 worth of merchandise which came into the hands of the receiver. If there was any error in the case, it was in favor of the bankrupts in accepting as credible their contention that the books were in error in showing the value of merchandise on hand on January 1, 1914. The referee has considered the evidence carefully, and his findings ought not to be disturbed, in the absence of a demonstration that a plain mistake has been made. Epstein v. Steinfeld, 32 Am. Bankr. Rep. 6, 210 Fed. 236, 127 C. C. A. 54. The petition for review is dismissed, and the order of the referee affirmed. SOUTHERN COTTON OIL CO. v. ATLANTIC COAST LINE R. CO. WADE v. SEABOARD AIR LINE RY. CO. (District Court, S. D. Georgia, E. D. May 2, 1919.) Nos. 1116, 1108. RAILROADS 5%, New, vol. 6A Key-No. Series-SERVICE OF PROCESS-CONTROL BY GOVERNMENT. Under the presidential proclamation assuming control of the railroads and the general orders of the Director General, the employés of the railway companies who continued in the service became the employés of the govFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes (257 F.) ernment, and service cannot be made on them as agents of the corporation in actions for injuries caused while the railroads were privately operated. At Law. Separate actions by the Southern Cotton Oil Company against the Atlantic Coast Line Railroad Company, and by W. H. Wade, as administrator of James Henry Petit, against the Seaboard Air Line Railway Company. On traverse of the entry of service. Entries of service set aside. Geo. W. Owens, of Savannah, Ga., for plaintiff Southern Cotton Oil Co. Oliver & Oliver, of Savannah, Ga., for plaintiff Wade. Osborne, Lawrence & Abrahams, of Savannah, Ga., for defendant Atlantic Coast Line R. Co. Anderson, Cann, Cann & Walsh, of Savannah, Ga., for defendant Seaboard Air Line Ry. Co. BEVERLY D. EVANS, District Judge. These cases were heard on the same day, and, as the point for present decision is identical, they will be considered together. That point arises on a traverse of the entry of service, wherein service on the defendant corporation is stated as having been made by serving a designated individual as an agent of the defendant corporation. I find as a conclusion of fact, based on an agreement in the first case and upon a consideration of the evidence submitted in the other, that the cause of action in each case originated prior to the Act for Federal Control of Railroads (Act March 21, 1918, c. 25, 40 Stat. 451 [Comp. St. 1918, §§ 311534a to 311534p]), and each suit was brought after the passage of that act and the taking over of the railroads thereunder by presidential proclamation, and service was had on an agent in the employment of the government of the United States at the time of the service. The legal question presented is whether service on the agent of the government, engaged in the operation of the railroad of the carrier, under the facts stated above, constitutes service on the defendants, because of their former employment by them. Under the presidential proclamation of December 26, 1917, the possession, control, and operation of the railroads shall be exercised by and through William G. McAdoo as Director General. When the Director General assumed control, the acts of the former officers and employés, who retained their positions and conducted the details of operation of the railroads, were the acts of the Director General. Rutherford v. Union Pac. R. Co. (D. C.) 254 Fed. 880. Their employment by the Director General made them exclusively the servants or agents of the employer. There could be no divided allegiance as agents of the railroad corporation and of the Director General, so as to accomplish the purpose of Congress. The acts of Congress, the proclamation of the President, and the general orders of the Director General neither expressly nor by implication contemplated a dual agency of employés engaged in the operation of the railroads. All moneys derived from the operation of carriers during federal control was declared to be the property of the United States. Act March 21, |