1918, c. 25, 40 Stat. 457, § 12 (Comp. St. 1918, § 311534). In suits arising on causes of action occurring since December 31, 1917, and growing out of the possession, control, and operation of any railroad by the Director General, service of process is made "upon operating officials operating for the Director General of Railroads." General Orders No. 50 and 50-A. These orders in effect designate the officials of a railroad company engaged in the operation of the railroad as the agents of the government. It has been held by the Supreme Court of Georgia that an agent employed in the operation of a railroad under a receiver, who has possession of the road, in consequence of a seizure by the Governor for nonpayment of interest on bonds which the state had indorsed, is not the agent of the corporation. Cherry v. North & South Railroad. Co., 59 Ga. 446; Steamship Co. v. Wilder, 107 Ga. 226, 33 S. E. 179. The agents sought to be served in these cases had ceased to act for the corporation in the operation of the railroad. The corporation was out of control of the railroad, was out of possession, and had nothing for a superintendent or station agent to do. The former agents had ceased to be agents of the corporation pending federal control, and had become agents of the government. Hence service on the government's agents was not service on the corporation's agents, and the corporation has not been served under the Georgia statute, which permits service on a corporation by serving its agent. An appropriate order will be taken in each case In re THOMPSON. (District Court, W. D. Washington, S. D. September, 1918.) BANKRUPTCY 320-CLAIMS PROVABLE-CONTINGENT CLAIM-SUBSCRIPTION FOR CORPORATE STOCK. Where a corporation had made an assignment for benefit of creditors before the petition in bankruptcy was filed against a stockholder, the latter's liability for the difference between the amount of his stock subscription and the value of property transferred in payment thereof had ceased to be contingent, though not yet liquidated, since the corporate debts for which a subscription would be a trust fund were then capable of determination, and the receiver of the corporation can prove a claim for such liability against the bankrupt's estate. In Bankruptcy. In the matter of the bankruptcy of Peter ThompOn petition to review referee's order sustaining a demurrer to a claim. Order reversed, and demurrer overruled. son. See, also, 242 Fed. 602. Leopold M. Stern, of Seattle, Wash., for receiver. CUSHMAN, District Judge. Proof of debt was offered on account of the unpaid stock subscription of the bankrupt in Peter Thompson Company, a corporation, as evidenced by an order in the state court, making a call and assessment upon Peter Thompson For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes (257 F.) in the receivership proceeding, pending in that court, of Peter Thompson Company, a corporation. The order shows that Peter Thompson appeared at the hearing, which consummated in the court's finding his stock subscription unpaid in that company to the amount of $8,500.00, for which the receiver of that company now makes claim against the bankrupt estate of Peter Thompson. No question is made of the method pursued in the state court in determining the question of liability on such stock subscription. The referee, upon demurrer of the trustee to the proof of debt, concluded: "That Thompson's contract for his subscription was complete, that his contract was fully executed, and that this claim must rest upon the judgment of a court declaring the contract of subscription not performed. When a claim must depend upon the action of a court for its very existence, as this does, the referee was of the opinion that it fell within the rule of contingent claims and was not provable against this estate. On the point that a claim must be owing at the date of adjudication or of filing the petition in bankruptcy, trustee's counsel cites Zavelo v. Reeves, 227 U. S. 627, 33 Sup. Ct. 365, 57 L. Ed. 676, Ann. Cas. 1914D, 664, 29 Am. Bankr. Rep. 493, which holds that the claims must be in existence at that time to be provable under section 63 (Act July 1, 1898, c. 541, 30 Stat. 562 [Comp. St. § 9647])." The subscription of Peter Thompson for stock in the Peter Thompson Company, a corporation, prior to his bankruptcy, was the creation of a debt. Whether it was fully paid or not by the property which he turned over to the corporation was a question to be determined upon the liquidation of the claim on account of the stock subscription, and the only thing in the nature of a contingency involved would be the amount, if any, of the debts of the corporation, for the payment of which the stock subscription would be a trust fund. This, as shown by the referee's certificate, had ceased to be a contingency incapable of determination prior to Peter Thompson's going into bankruptcy-ceased by reason of the assignment for the benefit of creditors of Peter Thompson Company, a corporation, which assignment was, without interruption, followed by the receivership proceeding, all antedating the bankruptcy of Peter Thompson. It had ceased to be "contingent," in the sense of liable to occur, at the time of filing the petition. It had occurred, and already had come to pass, and all that was left was to determine that which had already occurred. The referee is reversed, and the demurrer overruled. In re BIG PINES LIME & TRANSPORTATION CO. No. 3264. 1. BANKRUPTCY 60-ACT OF BANKRUPTCY-"APPLIED" FOR RECEIVER-CONSENT TO APPOINTMENT. Under Bankruptcy Act July 1, 1898, § 3a, cl. 4 (Comp. St. § 9587), making it an act of bankruptcy that one, being insolvent, has applied for a receiver, "applied" cannot be construed to mean applied for or consented to, so For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes as to authorize bankruptcy proceedings against one who stipulated that a receiver might be appointed in a suit brought against him by creditors. 2. EVIDENCE 318(8)-HEARSAY-STATEMENTS IN PLEADINGS. Allegations of insolvency in a complaint by creditors for the appointment of a receiver, not admitted to be true by the defendant, though he consented to the appointment of the receiver, are hearsay, and not competent to establish insolvency in bankruptcy proceedings against defendant. Proceeding to have the Big Pines Lime & Transportation Company adjudicated an involuntary bankrupt. On exceptions to the report of the special master. Exceptions sustained, and petition dismissed. Gale & Cobb, Norman A. Bailie, and Thomas A. Sanson, all of Los Angeles, Cal., for alleged bankrupt. Alfred Wright and Ovila N. Normandin, both of Los Angeles, Cal., for petitioning creditors. John O. Bender, of Los Angeles, Cal., for intervening creditors. * * TRIPPET, District Judge. [1] This case requires an interpretation of subdivision 4, par. "a," § 3, Bankruptcy Act July 1, 1898, c. 541, 30 Stat. 546 (Comp. St. § 9587). That provision provides that a person "being insolvent, applied for a receiver. In this case the alleged bankrupt did not apply for a receiver. A suit was instituted against the bankrupt by one Rickershauser, in which the appointment of a receiver was prayed. Other creditors came in and then all parties stipulated that a receiver might be appointed. No receiver, however, was appointed. So the case cannot fall under the latter part of said subdivision 4. The petitioning creditors desire the court to hold that the word “applied" means applied for or consented to the appointment of a receiver. The alleged bankrupt here did nothing in that case but consent to the appointment of a receiver. If Congress meant that, if a person consented to the appointment of a receiver, it should be made an act of bankruptcy, it might easily have so stated. The cases relied upon by the creditors are cases wherein the application for a receiver was made on behalf of the bankrupt, or where the bankrupt actually petitioned for the appointment of a receiver. [2] The proof in this case, however, fails to show that the alleged bankrupt was insolvent. The only evidence offered of insolvency was the allegations in the complaint in the case of Rickershauser against the alleged bankrupt. There was no stipulation in that case that the allegations in the complaint were true. There was no answer confessing that they were true, and there was no finding of the court that they were true. They are, therefore, but the mere assertions of a third party, and are controlled by the rule concerning hearsay evidence. The exceptions to the report of the special master will be sustained, the petition dismissed, the master allowed $35 for reporter's fees, and the special master allowed the sum of $200 for his services in this behalf, all to be taxed against the petitioning creditors. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes (257 F.) NUECES VALLEY TOWN-SITE CO. v. McADOO, Director General of Railroads, et al. 1. COURTS (District Court, W. D. Texas. April 15, 1919.) No. 215. 293-Federal CourTS-SUIT UNDER FEDERAL CONSTITUTION AND LAWS ARISING UNDER CONSTITUTION AND LAWS OF UNITED STATES." Suit against the Director General of Railroads and those under him, in control and operation of railroads pursuant to acts of Congress and proclamation of President, to enjoin change of location of certain of his employés, is one arising under the Constitution and laws of the United States, within the jurisdiction of federal courts. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Arise-Arising.] 2. RAILROADS 52. New, vol. 6A Key-No. Series-FEDERAL CONTROL-INTERFERENCE BY INJUNCTION. Control of operation of railroad by restraining order or injunction is within the prohibition of Act March 21, 1918, c. 25, § 10 (Comp. St. 1918, § 3115j), against interference with the possession of the Director General of the property by any process. 3. RAILROADS 51⁄2, New, vol. 6A Key-No. Series-FEDERAL CONTROL-"İNCONSISTENT" LAWS AND LIABILITIES. Within Act March 21, 1918, c. 25, § 10 (Comp. St. 1918, § 3115), providing that carriers under federal control shall be subject to all laws and liabilities as common carriers, except so far as inconsistent with the act or any order of the President, any law or asserted liability which would operate to take the possession and control of the railroad property out of the hands of the government would be so inconsistent. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Inconsistent.] 4. RAILROADS 51⁄2, New, vol. 6A Key-No. Series-FEDERAL CONTROL-SUIT AGAINST DIRECTOR GENERAL. A suit against the Director General of Railroads, involving his right to direct and control operation of the property in his possession, is not one against the carrier, permitted by Act March 21, 1918, c. 25, § 10 (Comp. St. 1918, § 3115j), while it is under federal control. 5. COURTS ~328(1)—FEDERAL COURTS-JURISDICTION-AMOUNT IN CONTRO VERSY. That the amount in controversy exceeds $3,000 sufficiently appears by showing that the saving to the Railroad Administration by the acts sought to be enjoined will be $400 per month; government control, unless relinquished by the President, extending by provision of Act March 21, 1918, c. 25. § 14 (Comp. St. 1918, § 31154n), till 21 months after peace is declared. 6. EVIDENCE 23(1)—JUDICIAL NOTICE-DECLARATION OF PEACE. The court judicially knows that peace has not been declared. 7. RAILROADS 5%, New, vol. 6A Key-No. Series-FEDERAL CONTROLTRANSFERRING EMPLOYÉS. Preventing the Director General of Railroads from transferring his employés from one point to another, and from regulating their duties, would to that extent be to take the control, possession, use, and operation of the properties out of his hands, in contravention of the terms of Act March 21, 1918, c. 25, §§ 10, 11 (Comp. St. 1918, §§ 31153⁄4j, 3115k), and of the entire spirit and purpose of the act. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 8. RAILROADS 52, New, vol. 6A Key-No. Series-FEDERAL CONTROL-STATE POLICE REGULATIONS. Provision of Act March 21, 1918, c. 25, § 15 (Comp. St. 1918, § 311540), that the act shall not be construed to impair lawful police regulations of states, means that ordinary police regulations shall remain effective, except in so far as they are in conflict with the express provisions of the act, and does not allow effect to any state regulation inconsistent with the control of railroads by the government, given it by the act. In Equity. Suit by the Nueces Valley Town-Site Company against W. G. McAdoo, Director General of Railroads, and others. On motions to remand to state court and to dissolve state court's restraining order. Motion to remand overruled; motion to dissolve sustained. On the 24th day of December, A. D., 1918, the Nueces Valley Town-Site Company, joined by certain residents and property owners of Atascosa county, Tex., filed suit in the state district court of that county against W. G. McAdoo, Director General of Railroads of the United States, H. F. Anderson, superintendent of the San Antonio, Uvalde & Gulf Railroad, F. L. Lewis, assistant superintendent of transportation, C. W. Ridenour, trainmaster and chief dispatcher, and M. J. Vaughan, W. W. Hoffman, and J. J. Kearns, dispatchers, alleging that during the period of war between the United States of America and the empire of Germany Congress had duly authorized the taking over and operating of the railroads under the direction of the President, and that pursuant thereto the United States Railroad Administration was organized; that the defendant W. G. McAdoo was appointed Director General of Railroads, and had taken over the operation and control of the San Antonio, Uvalde & Gulf Railroad, which railroad was being operated, managed, and controlled under the direction of the Director General; that the defendants were threatening to remove the permanent division headquarters of the San Antonio, Uvalde & Gulf Railroad from North Pleasanton, in Atascosa county, to some point outside of Atascosa county, or, if they were not threatening to remove the entire permanent division headquarters, they were threatening to remove an essential and important portion and part thereof from North Pleasanton, in Atascosa county, to some outside point, and that defendants were also threatening to remove the machine shops of said railroad from North Pleasanton to some point outside of Atascosa county. It was alleged that at a date long prior to the assumption of control of said railroad properties, to wit, on November 18, 1913, the complainant Nueces Valley Town-Site Company had conveyed certain properties in the town of North Pleasanton to the San Antonio, Uvalde & Gulf Railway Company by deed of that date, copy of which is attached to the petition, which deed recites as a consideration: "The sum of ten and no/100 dollars to us in hand paid by the San Antonio, Uvalde & Gulf Railroad Company, and in consideration of the location and establishment of the permanent division headquarters of the San Antonio, Uvalde & Gulf Railroad system, and the permanent location and operation of machine shops adequate to the maintenance of said San Antonio, Uvalde & Gulf Railroad system as now operated, embracing approximately 320 miles of main line railroad." It was alleged that this deed constituted a contract between the Nueces Valley Town-Site Company and the San Antonio, Uvalde & Gulf Railroad Company to permanently maintain the division headquarters and machine shops of that company at North Pleasanton, and that under the provisions of article 6423 of the Revised Statutes of the state of Texas this contract was binding upon the Director General of Railroads and his agents. It was further alleged that the state of war in existence at the time the railroad properties of the corporation were taken over for operation and management and control by the United States Railroad Administration and For other cases see same topic & KEY-NUMBER in all Key Numbered Digests & Indexes |