656
FEDERAL REPORTER,
vol. 50.
orsto 'account and charge the profits made by them with aI1 implied trust. But the present bill does not proceed for a rescission. Itstheory is tbalt the Brooklyn Company, while retaining the benefits of the agreeme:dtsentered into, is entitled to reclaim some of the fruits which are in the hands of the defendant Barrett. None of the profits made by the directors are represented by, the stock which was distributed to the defendant Barrett. That stock represents the profits made by the Wingate party, Of whom none of the members stood in any fiduoiary relation to the Brooklyn Company; and although they acquired it with knowledge offactsientitlingthe Brooklyn Company to rescind, or compel its directors to Mcount. the stooknevertheless represents their share of the value of tbefranchises and property of the Union Company. Even though they obtained an inordinate price from the Brooklyn Company for what they transferred, their stOck could not be confiscated, or their right to it annulled, without restoring to them what they parted with. But they ,did not obtain, aslt seems to me, more than a fair equivalent. It is 'said by a recent commentator: "Because a'directot of a'company may have sold to the company, at an tortionate'valuation, property which they supposed he was purchasing for them from another·. but which really' belonged to hhnself, it does not follow that the c\>l)lwnymay .oonfillcate the property altogether, and not pay him anything for it. He willpe entitled to retain what it was really worth, and ,Will be obliged to the profit which he has received. Nor will what he IIlll.y have given fOl' the property beutaken as a conclusive standard of its value;" rrhomp. Liab. Off. 361. Certainly a severer rule oBght not to be applied towards Barrett than towards the directors. Yet the directors are not pursued by the present bill. They are not named 11.8 parties, and their conduct is apparently condoned by the plaintiffs. Clearly, it would not be equity to allow them to retain their profits, and charge the amount upon the stock of Barrett. on theory of a trust. The motion. is denied.
GILMOUR '11. EWING
et al. 1 May 4,1892.)
WIn'C1J/tt Cou'rt, D. Wa8Mngton, W. D.
Ail insolvent debtor cannot by his vol\lIi\;ary assignment defeat the right o1'a lIlortgagee to whom he hail exeouted a mortgage to foreolose the mortgage after , .· FEDER.AL
1!'0R BENEFIT OFCREDlTORB-RIGHTS OF MORTGAGEE,
The pendency of an action in a state court.will not bar an aotion in a United States oourt to same question between the same parties.
011' CAUSE IN STATE COURT.
B. INSOLVENOy-ApPOINTMENT OF ASSIGNEE.'
Under the insolvent act of W..shington, oontained in the Code of 1881, the title of the debtor's property:· d,id not pass out 'of the debtor until an assignee had been. appointed, and was authoriied to receive the property. by T. W. Hammond, Esq., of the Tacoma bar.
1 Reported
GILMOUR V. EWING. 4. B.um-REPEAL 011' ACT-PENDING PROCEEDINGS.
657
The aot of 1890, providing for voluntary assignments by insolvent debtors, operated to repeal the old insolvent law of Washington, and proceedings pendinl{ in court under the old law when the new law went into effect fell with the old law, unless an assignee had actually been appointed and qualified, so as to divest the debtor of the title to his property.
&.
SAME.
'fhe appointment of an assignee under the old law, after the new law went into efl'ec,t, is void. 6. PLEADING-AsSIGNMENT FOR BENEFIT OF CREDITORS.
An allegation in a pleading that a party was "duly appointed assignee by a court of competent jurisdiction" is insufficient in a court of equity of the United States, although sufficient in the state courts under a Code.
InEquity Exceptions to answer of Coke Ewing. Exceptions tained. This was a suit in equity to foreclose a mortgage. Coke Ewing, claiming to be the assignee in insolvency of the mortgagors, answered in the cause, and insisted-(1) That the plaintiff could not maintain her action because the mortgagors had made an assignment of all their property for the benefit of their creditors, under the insolvent laws contained in the Code of 1881 of the state of Washington, and that by such assignment the property became custodia legis in the state court, and that this court could not interfere with it. (2) That a suit brought and pending in the state court by Ewing to set aside the mortgage as fraud ulent, as against the creditors of the mortgagors, was a bar to the action in the, circuit court. (3) He set forth in his answer facts tending to show the invalidity of the mortgage as against creditors, and sought to have it decreed void. It appeared that, after executing the mortgage, the mortgagors instituted proceedings in the state court to procure a discharge from their debts, under an insolvent law then in force in the state', (Code Wash. 1881, § 2014 et seq.,) which provided that the debtor might petition the court for leave to surrender his property for the benefit of his creditors, and, upon such petition being filed in court, the creditors might choose an assignee. or, in the event of their failing to do so. that the court might appoint one to receive the property of the debtor, and administer the trust. The law also provided for the appointment of a receiver to take charge of the property pending the selection and appointment of an assignee. The petition was filed. and, the creditors baving failed to select an assignee. the court appointed a receiver to take charge of the property, but did not appoint an assignee until some time after a new assignment law had been passed by the legislature of the state, and gone into effect. Laws Wash. 1889-90, p. 83. The other facts sufficiently appear in the opinion of the court. Orowley & Sullivan, for complainant. Ebert T. Dunning and W. H. Pritchard, for defendant Ewing. HANFORD, District Judge, (orally.) The insolvent law and the assignment law, both provide only for voluntary surrenders of property by debtors, and the initiation of proceedings under either statute is necessarily the voiuntary act of the debtor. A mortgagor of property must be without power to defeat his mortgage by any voluntary act of his own subsev.50F.no.8-42
FEDERAL'REPORTER;
vot 50. no more by his
,to foreclose
the mor.tgage ,atter default than he can
'rights,
clear of tM, to person. He cannot, by any voluntary act, defeat thellen or the rIght of the mortgagee to proceed, whenever the debt is due, to foreclose the mortgage,and subject the secutltY"to the'payment of 'the debt. The insolvent proceeding or assignmeQtmade by the debtods no bar to this suit to forth these proceedings REI a bar'toth1s suit is" for .reason, insufficient. The second plea, which sets forth the pendency of another action involving the,ivalidity of thisroortgltge in the superior court of Pierce county, is also insufficient, for the reason that this court has concurrent jurisdictidnwith the suweriol',cGurt',ofthe county for the determination of thisverY.question,and the suit in one court is no barto the litigationof:1thesatne question betwellnthe same parties in another court. I am aware of ,the ,difficulty which may sometimes arise from a collision of jurisdiction,b.llt the authorities have settled the question, beyond the power of this court to hold othe:wise, that two suits may proceedat the !lame ,time. between the same parties, for the determination of the sarna in a national. court and one in a state court, if the conditionswbichgive the bational colirt jurisdiction exist. There may be two distinct judgments, only one of ,which can be executed i and, according to thEtdecision. of ,the :cIrcuit court for this circuit, in the case of Sharon v. :Tmv·· 3b Fed. Rep., 337 j1tbe decision of the court which first ll.Qqqires jUDisdiction of the pa,rties will prevail, although rendered atter the decision pf the oourt which last assumed jurisdiction. That case is ·directly .in J)oint as to theq,uestion concerning' the jurisdiction of the two courts to determine the. '[alidity of this mortgage. It is exactly the same in pri,nc:iple. It was, a proceeding to determine the validity of a pll@er wtiting alleged to .bea marriage contract. . Sharon first brought an action in the United States cou'ftalleging that Miss HilJ had possession ,of a .paper writing purporting to be a marriage contract with him.self,.W:hich Ilhewas proposing to.use for the purpose of proving the fact ofa valid :marriage, and under whioh she proposed to claim a wife's interest in his pray,ed for an injunction to prevent her fromasserting,any rights undElrtbat.alleged contract, and to compel her tostlrrenderjt to be canceled on the :ground that it was a forgery and a the defendantin,.that case brought a suit in the superior¢ouft' of, San Francisco against Sharon,. based UpC,)ll this same allegedmarmgecontract, alleging her marriage, and praying a divotce and division of property; and, using tbatpaper as evidence of the marriage, obtained,adoore.ein }j,el'favot that she was .married to Sharon, and should be divorced, and giving her a share of his estate. After that judgment was' rendered in,ihe 'state court, the case proceeded to final judgment;inthe UnitedStates.courtjand it was .there decided· and adjudged that the paper wllSadorgery and void,; and an injunction was issued as' prayed fur, and ,the paper decreed to be 'canceled. Subs6having beeQ reversed by the supreme court of
tiILMOUR ". EWING.
659
CalifOl'nia, (22 Pac. Rep. 26,) upon a ground not affecting the validity of the paper, on a second trial the state court refused to receive the paper in evidence, or to regard it for any purpose whatever, holding itself to be bound by the decision of the United States court upon the question of its validity. Here the validity of the paper evidence of flo contract is the thing in issue. It is the issue which is attempted to be raised by the assignee in this Case. He alleges that there is a suit pending in the superior court of Pierce county for the determination of the vali.dity (If this mortgage. I do not think that the pendency of a suit in one .court is any bar to a proceeding involving the same matter in another court having concurrent jurisJiction. If there should happen to be a variance in the decisions of the courts, the judgment of the court which first acquired jurisdiction would prevail. It seems hardly worth while for parties to go to the trouble and expense of litigating the same question twice, but if they choose to do so th'e court has no right to deny them that privilege. The remaining question, as to t1;1e right of this assignee to contest the in this court, depends upon whether he is in validity of the fact an assignee. On the facts stated. I think that he is not. He alleges that he was duly appointed by a court of competent jurisdiction. If this were an action at law, that would be sufficient under the Code of this state; but this is a suit in equity, and the Code rules have no application. I think enough is alleged here to show that there has been no valid appointment of the assignee by the superior court. The plea does not set up a cummon-Iaw assignment; it is an assignment under the statute. While it says an assignment was made on January 22, 1890, that cannot be true. The only statute in force at that time pr0\1ided for such a series of proceedings that the assignment could not have been completed until a date later than that. The act provided for the making of an assignment, but the assignment was not the first thing the debtor had to do. He had to make his petition to surrender his property, and the assignment was not complete until there had been an actual surrender of his property into the hands of some one authorized to receive it. Under that law the debtor did not name the assignee, but simply petitioned the court for leave to surrender his estate to his creditors, and be discharged of his debts. Then the creditors could meet and choose an assignee, and, in the event of their failing to choose one, the court could appoint. The assignee was the person I\uthorized to receive the surrendered property and to handlethe assets. Section 2046 provided that, from and after the surrender of the property of the insolvent debtor, all property of such insol vent should be fully vested in his assignee or assignees for the benefit of creditors. Thl::re was no change of property; that is, the title was not transferred until the surrender. A surrender could not take place until there was SOJne one to receive it. After the title went out of the insolvent debtor it passed to and became vested in the assignee. Under section 2022, the court was authorized to appoint a receiver, but the receiver was not vested with the authority, and could not perform the functions, of an
FEDERAL REPORTER.
assignee. His app0intrnent was merely of a temporary character, to preserve the property from being wasted pending the appointment of an assignee; alld of course the title would remain in the insolvent debtor until the assignee was appointed. So there conld not have been an assignment on January 22. 1890, the day the petition was filed by the debtor. The order of the court authorizing Mr. Ewing to serve as assignee was made in April, 1891, after the new law had been passed and gone into effect. The new law contains provisions which are inconsist with the old law. Under the present law, the oniy way in wl;lich nt all assignment can be made is by an in;3trument in writing, (a deed,) filed in the office of the county auditor. The new law repealing all laws inconsistent with itself supplants the provisions of the Code, in relation to assignments.. The proceedings begun under the Code, if carried to a point where a transfer of title occurred, would I think authorize the court to complete the execution of the trust under the provisions of the Code; but, the power to appoint the the Code having been cut off by the new law, no assignee having been appointed while the old law was in force, and no transfer of the title having therefore taken place, the proceeding fell with the repeal ofthe· old law. The pleading does not show an assignment made in writing to any person named, or any such complianC'ewith the provisions of the new law as to give the assignment any validity, so I think the assignee, Mr. Ewing, has no such interest in the subject-matter of this mortgage as gives him a right to contest its validity.
GRAF:t et
al. v.
BOESCH et
01,.
(Oirouil.Ootwl, N. D. Oali/arnitJ" May 9, 1892.) ApPEAL-DBOISION-PROCEEDINGS BELOW-INFRINGEMENT OF PATENT.
In a suit for infringement the supreme .court, reversing the decree below, said, in itllopinion: "The complainants must be content with the IJrotection of an tiol1, and a recovery of the profits realized from the infringing sales." HeZd that, on the return of the cRse,nothilig could be allowed by way of damages, nor could a recovery of the profits be preventc:l on the assumption that thl' couri did not mean what it said.
In Equity. Bill by Albert Graff and J. F. Dun11ell against Emile Boesch and Martin Bauer, for infringement of letters: patent No. 671, issued December 4, 1883, to Carl Schwintzer and Wilhelm Graff, of Berlin, Germany, who assigned one half thereof to .1. F. Donnell & Co. of New York. Infringement was found by the trial court, (33 Fed. Rep. 279,) and a decree was afterwards entered for damages. This decree was reversed by the supreme court, on the questions of damages. 10 Sup. Ct. 'Rep. 378.: ,On the receipt of the mandate the cause was referred to a master, and the question is now on his report. John H. Miller, for complainants. John L. BO(ine, for respondents.