544
95 FEDERAL REPORTER.
pose of supplying the city and its inhabitants with water, and the issue of bonds to provide the necessary funds. The supreme court said, insut.stance, that the contract amounts to this: If the city should desire to establish waterworks of its own, it would do so by condemning the property of the company, and making such changes in its plant or such additions thereto as it might deem desirable, but that it would not enter into a direct competition with the company during the life of the contract; that, so long as the contract had not been avoided by a court of competent jurisdiction, as provided in the contract, but remained in force, the city had no right to establish waterworks, because it had so covenanted with the water com· pany; and the injunction was sustained. Thus we have seen that the contract, in every case to· which our attention has been called, either provided for an exclusive right in the water company to supply water to the city and its inhabitants, granted or contracted for by the city, or contained a covenant by the city that it would not erect waterw9rks of its own, and would abstain from granting the right to do so to a competing company, during the life of the contract. We have seen that the contract under consideration in this. case contains no such stipulation or agreement. We have seen that it does not attempt to grant any exclusive right to the complainant, and that it contains no provision that the complainant shall furnish water to the inhabitants of the city of Mobile, and no covenant by the city that it will not build or acquire waterworks of its own, or abstain from supplying water to its inhabitants, during the continuance of the contract. The parties might have made such a contract, but they did not do so. From the views already expressed herein, and which must dispose of this case here, it is unnecessary to decide or discuss the question of laches raised by the defendant in the fifth, sixth, and seventh grounds of demurrer. My conclusion, then, is that the complainant has shown no valid or legal grounds on which to grant it the injunction prayed for in the bill. My opinion, therefore, is that the demurrer, on the first, second, third, fourth, eighth, and ninth grounds assigned, is well taken, and that it should be sustained; and it is so ordered. NOTE. On 22d an order sustaining demurrers was entered, and allowed complainant 15 days within which to amend, etc. He did not amend, and on June 9, 1800, an order was entered dismissing bill. From these two decrees the complainant has taken an appeal to the United States supreme court. EARLE v. ART LIBRARY PUB. CO. at al. . (Circuit Court, E. D. Pennsylvania. June 30, 1899.) 1. EQUITY PRACTICE-ANSWER AS EVIDENCE AGAINST CO-DEFENDANT.
. The answer of a defendant cannot be read as evidence on the question of the existence of a partnership between such defendant and one deceased, as against the administrator of the decedent, who is a co-defendant. An answer merely denying an allegation of the bill on information and belief is sufficient to put the allegation in issue, and place the burden of
2. SAME-DENIAL ON INFORM,\TlON AND BELIEF.
J:ARLB V. ART LIBRARY PUB. CO.
545
a.
proof on the complainant, but not ttl require the testimony of two witnesses, or of one and corroborating circumstances, to establish It. PARTNERSHIP-EvIDENCIll TO ESTABLISH.
Where It 18 shown that a partnership existed between three persons, and on the retirement of one the other two Issued a statement announcing that they would contInue the business, and they did so through the same agencies, and with unchanged assets and Ilabllltles, such statement and course of deallng are sufficient to estabIlsh the existence of a partnership between them as to the property and business of the old firm.
SAME-TRANSFER OF INTEREST BY PARTNER-RIGHTS OF CREDITORS.
After a firm Is actually insolvent, a partner cannot, by a transfer of htl Interest to hIs co-partner, constitute the assets of the firm the individual property of the latter as agaInst the partnership creditors.
On Exceptions by James S. McCartney, Administrator, to Report of Special Master. The report and :findings of E. Hunn Hanson, special master, were as follows: their books of account, the following facts appeared, and they are all that are relevant and material to the matter In Issue, which have been legally establ1shed: (1) On the 16th December, 1892, a partnership was formed under the name of WlIliam Finley & Co., for the pUrPose of conducting a publishing business, chlefiy ot books for which subscrlptiolll had been obtained by general agentl; and was continued untlI 3d August, 1897. No agreement In writing was signed by the partners, but on the leaf opposite the first one ruled for entries In the day book of the firm, and which contained entries from December, 1892, to March, 1f97, and In three hundred and eighty-'tlve pages, there was the follow"PhlIadelphia, December 16, 1892. "Wm. M. Singerly, O. W. Beck, and Wm. Finley have this day formed & co-partnershlp for the pUfIJOlle of carrying on a general pUbIlshing business, etc., under the style and tltIe of Wm. Finley & Co. Each partner Is to have an equal share in the business, and the gains and losses to be divided equally. Wm. Finley is to receive fifty dollars (50) per week for his services in conducting the business. C. W. Beck is to have power to sign all negotiable paper necessary for conducting the buslnes.. Wm. M. Singerly Is to Invest five thoulSand dollars In the business, and to receive six (6) per cent. per annum on all lnvestmentl exceeding that amount. "8/17/95. W. 8. J .... This entry wa. made on the 17th March, 1895, by the bookkeeper, upon the authorIty of the three partners. In the ledger of the partnership, under the less and gain account, there are entrIes of 1st August, 1896, 1st June, 1st July, and 1st August, 1897, by whIch each partner is credited with one-third of the profits. The money capital was contributed by WlIllam M. Singerly, and by August, 1897, It amounted to $28,982.01. (2) Upon the 3d August, 1897, a written agreement was executed by the three partners, of which the following Is a copy: "This Indenture, made between WllIiam Finley, WlIIlam M. Singerly, and C. W. Beck, witnesseth: That whereas, the said WllIlam Finley, William M. Singerly, and C. W. Beck have heretofore dealt as cO"partners In the general publishing business, etc., under the style and title of WllIiam Finley & 00., and hy their joint trading many goods and wares belong to and are the prop. erty. of the said co-partnership, and debts are due unto them arising from the conduct and management of said business, wherein every of them hath aD Interest, and likewise In the conduct and management of said business the said parties as cOo-partners have become and are Hable and are indebted to divers persons concerning the saId joint trading: Now the said WilHam Finley, in consideration of the Bum of $2,750 paid to him by the said William M. Sini'95F.-35 & Co. and of the Art Library PubIlshing Company, and from the entries In
From the evidence ot WlIllam 8. Jackson, the bookkeeper of WUllam Finley
lna l
546
:95 FEDERAL REPORTER.
erly, by and with the consent of C.' W;.BElck, the reCeipt of which said sum of money the;'said William'dFlnley doth berebs acknowledge to have received from the said William Singerly, doth consent to and doth hereto by this writing sever himself froID the said joint' trading and co-partnership with the said WUliaID M. Si.ngerlyand C. W. Beck as above mentioned, and doth by these hereby grant, a'Ssign, sell, transfer, and set over unto the said 'Villium Singerly all the right;, title, property; and, interest of every'kind and character which he,.the said WillIam Finley, now hath or hereafter should have in and to, all and singular, the,goods, wares, merchandise, and debts in any wise appertaining to the pusiness,congucted as above mentioned; and .the said Wil·, liamFjnley for himself doth 'covenant, an,d agree to and with the said WiUiaru M. Singerly and C. W. Beck:thlJ,t he, the said William ]'inle,', will not, from this date, ill any Way interfere withim' attempt to interfere with, the business of said co-partnership, and that he will not receive or discharge, or attemirt tQ r,eceive or dischargjl, any of tne or debtS mentioned above, or do any act or thing to hinder the said William M. Singerly and C. W. Beck fl'OIIl same, lJ,nd condUcting alld 1panaging t4e.li111ig business, but will perniit and aid the' Mid William :\1. Singerly ,and' C. W."Beck to recover and acquire the same to their own use, benefit, and advantage, without any a<.... COllnt·topll:re,ndered therewr to hl!;u, theLS1l4Q,WHliam Finley; and that h', upQn request, will do any '1'eR\lQnableact 'Whicl\. maybe requested of him to 4ischarge or ,llJidthe said Willi&m. and C. W .. Beck to recover and rec:elve,tbea,ame; anll tl1e,Joreg(}!ng the said William M. Singerly for himself doth eovenant that he will at all times hereafter pay and dischal)Je 1111 the. eredltors "to,,' iWhomtlle,sll.ld' !WUliam Finley, now standeth chargeable· Qnd, indebted ,fOl" and .conceCll,ing all, ;tbeLaffairsanddealing .of said firmmeJ:l;t1oned 'above, and .will at .aU tlllles1:lerea:fter indemnity and save harmlesJ>t,he:1IIl1d William. Finley" his e;xecutors,' andadministratol's, from all debts and, lio.bilities, alild every pI' them, of· ;the said firm. It is a part of theconsideratiQn' of this agreement that ,the saidWil)iam :M. Singerly will guaranty,' :audhe does ,hereby covenant, p:rpmise, and agree, to pay at its maturity a certain note now held by the wife of William Finley for money loaned by her said co,partnerShlpl'or the sum of $2,,500. In testimony whereof the havl.\ hereunto' set their <.hands ap-dseals this third dllY of, August,A. D. J89'7., ", William Finley. [L. S.] "WjIliam M.Singerly. [L. S.] , , , ,., ,"C. W. B e c k . ' I L . S.) , "Signed, sealed and delivered!n presenaeof:. "James S, McCartney. "M.F.' Hanson." ,.'''" TherenfterWilliam Flnley;s the'QPslness ended, and a business by William M. SingerlY'and C.W. 'Beck under the name of Ar('Li'brary Publishing Company. It was of a character similar to that of Wi1llaIIl Finley & Co. In Us boqlts the same credit (}f intecest was made to the capital account of Singerly of the amount in. excess of; $5,000 as had been tlWbooks of William Finley & Co. pursuant to the provisions of the agreement dated 16th Decemper, 1892. It continued the same general agencies as those & Co. On the 14th,Angust, 1897,it caused a notice of the change to be sent to those who dealt wjth it. The notice was as follows: "Kft Library Publishing Company. "Burd Building S. W. Cor. 9th & Chestnut Sts. !'Successors to William I<'inley. & Co., Market Street. "Philadelphia,August 14, 1897. "Mr. William. Finley"Withdraws. of "On August ard, 1897, the firm of William Finley delphia, was dissolved; . Mr. William Finl¢y absolutely withdrawing therefrom, and ceasing to have any interest in it whatever. The will be continued upon the same' Jines, and with new. added features, by the successors, under .theform and title of the Art IAbrary :Publishing Co. "Charles W. Beck, President. "James S. McCartney, Secretary & Treasurer."
EARJ,E V. ART LIBRARY PUB. CO.
547
It caused to be:openeda new set of books of account, and on pages 2 and 3 of the journal were the following headings: Page 2: "August, 1897. On AUgust 3, 1897; the firm of William Finley & Co., publishers, dissolved. The business'wllI be continued by the successors under the form and title of the Art Library Publishing Company. The new firm assume the res.ources and liabilities of the old firm dissolved. items aggregating $121,631.81.]" "Resources: [Then. fo1l9W Page 3: "August, 1897. Liablllties assumed by Art Library Publishing Company: [Then follow one hundred and twenty-three items, aggregating also $121,631.81.]" The'interests of William M. Singerly and C. W. Beck were not the same in the Art Library Publishing Company as they had been in William Finley & Co. The former was to receive a half of the profits, and the latter a fourth. The other fourth was to be paid James S. McCartney for taking charge of finances of the new company. The solvency of the Art Library Publishing Company was ended 'by the fallure on 23d December, 1897, of the Chestnut Street National Bank,' of which Wi1liam M. Singerly was president, and from which it had obtained its dlsconnts. At the end of 1897 the bookkeeper of the Art Library Publishing Company estimated its profits, and understood they should be credited to the account of William Singerly, C. ·W. Beck, and James S. McCartney each a third. He was instructed by W. T. McClenthen, who, as the agent of William M. Singerly, examined the books of account of the Art Library Publishing Company, that Singerly should have a half, Beck and McCartney each a fourth, and this was done accordingly, as of the close of the year 1897. 'l'he following entries appear: To the credit of C. Beck by profit and loss .....·.······.·· $1,337 69 " " James S. McCartney, profit and loss. ·. ·.. .. .· 1,337 67 2,675 40 .. .. William M; Singerly, profit and loss.... (3) Under date of February 10, 1898, in the journal of the Art Library Publishing Company (page 53), an entry appears as follows: J as. S. McCartney ,...................... $250 00 W. M.. Singerly. . . . . . . . . . · . . . . . . . . . . . . . . .· $250 00 Services as treasurer for 10 weeks from Nov. 19, 1897, to Jan. 28, 1898. On page 54, under date of 17th ]<\ibrUary, 18fl8, are these entries: Jas. S. McCartney Dr. to .........................·· $753 94 W. M. Singerly per a/c................... $753 94 Transfer as of Jany. 1st as per understanding. The explanation of the first entry is that McCartney received $250 from .personally for his services as treasurer. No explanation was made of the understanding in the second entry, and it was ·asserted that the $753.94 was turned over to Singerly's account. Upon page 34 of the same book Singerly is credited and charged with $300 services as treasurer for twelve weeks, from September 3d to 19th November, 1897. At page 69 of the last book of the Art Library Publishing Company, under date of March 19th, McCartney is charged with $175 in full for services from January 28, 1898, to date. The entries relating to the $300 were pursuant to the written request of Singerly by letter of 18th December, 1897. In the journal of the Art Library Publishing Company (page 54) there is an entry 17th February, 1898: C. W. Beck Dr. to ................··..........·· $5,342 06 W. M. Singerly personal acct................... $5,342 06 Transfer of Jany. 1st asver understanding. It was explained to mean that Beck on tbat date transferred to Singerly all of the accumulated profits standing on the books to his credit. Under date of 19th March, 1898 (page 63 of the same journal), are these entries: Wages Dr. to Sundries ....·..··.·..·..........·..... , $773 70 To close accts. of J. S. McCartney & Charles 'V. Beck for their services as officers as per understanding: Charles W. Beck (651)....................................... $313 70 Jas. S. :\fcCartney (324)...................................... 460 GO These entries. last named were made at the direction of McCartney.
548
95 FEDERAL UPORTER.
(4) William M. Singerly died February 27, 1.898. At the time of the f',uspension of the Chestnut Street National Bank the, notes held by it, and upon which the Art Library Publishing Company and Willill,m FiJIley & Co. were liable as makers or indoreers,amounted to $53,928.14. Conclusions from the Foregoing Facts, with the Legal Principles Applicable to Resolve the Matter under Consideration. The answer of Charles W. Beck to thlhimendedbilland to its interrogatories is distinctly responsive, and it admits that William M. Singerly and the respondent were co-partners under the name 01: the Art Library Publishing Company, continuing the business which, in common with William Finley, they had condu.cted under the firm name of Wm. Finley & Co. The answer of James S. McCllrtney to the same pleading of the complainant is also responsive so far as It relates to the business relations with C. W. Beck and William M. Singerly, and that which is averred in this behalf prevails as eVidence, there having been adduced none sufficient to meet and overcome it. This answer further alleges, upon understanding and belief, that Beck was not a partner, but an employe, of Singerly's in the Art Library Publishing Company, and the respondent's answer in this connection to the interrogatories to the bill aver that he is unable to speak of his own knowledge as to Beck's partnership relation. It was objected that the answer of Beck could not be read as evidence of a partnership between him and Singerly. 'rhe general rule in chancery is that the answer of one defendant cannot be read against his co-defendant, sin,ce the latter has no opportunity to There are exceptions t6 the rule, and one is that the answer of one partner may be read against his co-partner. Field v. Holland, 6 Cranch, 8; Clarke's Ex'rs v. Van Riemsdyk, {) Cranch, 153. This, however, must be understood of living partners, for, where one of the partners is deceased, the reason of the rule applies with redoubledforce. On the part of the complainant it was urged that Beck had been called by him,' and examined as a witness, and the administrator of SingerIy had the opportunity to cross-examine. Such, however, is not the cross-examination of one having detailed knowledge, nor from the source contemplated by the rule. Hence the answer of Beck, which is effective as an admission witl! respect to himself, cannot be read in evidence on the questiQnof partnership between himself and SingerIy, who is deceased. It was argued on behalf of McCartney, as administrator, that there was wanting the testimony of two witnesses, or of one with circumstances to overcome the denial of his answer with respect of the alleged partnership of SingSuch testimony is erly and Beck in the Art Library PUblishing requisite where the answer is responsive, and founded upon the knowledge of the respondent. McCartney's answer is upon information, but it omits to state from whom it came, and of what it consisted; and the belief is doubtless upon such information, or an inference from facts not set· forth. It is therefore no more than pleading, whereby the matter alleged and so denied upon belief is put in issue. Clarke's Ex'rs v. Van Riemsdyk, 9 Cranch, 153; Riegel v. Insurance Co., 153 Pa, S1. 134, 25 AtI. 1070. In the issue thus formed, the burden of showing that the property of the Art Library Publishing Company is that of a partnership is Wholly upon the complainant, but no more or different evidence is necessary to establish that fact than to prove any other. Whether or not there was created between Singerly and Beck a co-partnership after 3d August, 1897, when 'Villiam Finley retired from the firm of William Finley & Co., depends upon their intentio;n to that end; and, since there was no written agreement between them, such intention, if it existed, can be discovered in this case not otherwise than from their course of conduct and admissions with respect to the business carried on. It was not disputed, and could not have been successfully, that there did exist a partnership between Singerly, Beck, and Finley under the style of William Finley & Co. Such terms as it had are expressed in the writing dated 16th December, 1892, which, although it was not signed, was written at the Instance of the three. It existed from that date to 3d August, 1897. The partners were equally interested. Singerly contributed $5,000 as capital, upon which no interest was to be paid him. Upon his subsequent contributions interest was to be paid; and the entries in the books of account of the firm are in accordance with the provisions of the paper writing of 16th December, 1892. From these books it appeared that the business had been a successful one, and each partner was credited in
EARLE V. ART LIBRARY PUB. CO.
549
the ledger with the moneys in excess of expenses and cost of management which had accrued from its conduct. Upon the 3d August, 1897, William Finley ceased to be a member of the firm, pursuant to the paper writing of that date. Thereupon Singerly and Beck, under the style of the Art Library Publishing Company, announced themselves to those with whom the firm of William Finley & Co. had dealings theretofore as successors of that firm, and as intending to conduct the new business on the same lines as the old, with new features. In the books of account of the Art Library Publishing Company it was designated as a new "firm," and it assumed the liabilities and resources of the former one, a detailed list of each being set forth. Accordingly, the same sort of business was carried on by the Art Library Publishing Company in a similar manner to that of William Finley & Co., through the same general agents, and with unchanged resources and liabilities. Such statement and course of dealing by Singerly and Beck plainly and clearly manifest the intention inter sese to become partners in the business so conducted; and it is therefore coilcluded that on the 3d August, 1897, there existed a co-partnership between Singerly and Beck with respect to the partnership property and business theretofore of William Finley & CO.,-a conclusion not disturbed by the fact that they arranged for a distribution of expected profits differently from that which each had in the firm of William Finley & Co. On behalf of the administrator of Singerly it was urged: First. That after 3d August, 1897, Singerly was the owner of all the capital in the Art Library Publishing Company, and Beck's interest was solely in the expected proifits, and hence all the assets of the Art Library Publishing Company belonged to Singerly as his individual property. Second. Tbat, if such was not the result of the facts stated, that result was brought about by Beck's transfer to Singerly of all of the former's interest in the business, and the receipt of a weekly sum as a salary. I. It is true that all of the money capital of William Finley & Co., and of its successors, the Art Library PUblishing Company, was furnished by Singerly, or through his credit. Both concerns, however, had other property than such capital. Beck was entitled to $4,661.88 as his share of accumulations from William Finley & Co., and this was one of the liabilities assumed by the Art · Library Publishing Company, just as it assumed a liability to Singerly for $8,622.04 in addition to the $28,982.01 capital contributed by him. And there was also, it would seem, that peculiar kind of property known as "good will," which in a business of this character presumably had value. Hence all of the assets-or, in other words, all of the partnership property-did not belong to Singerly individually. II. Nor did that result from the transfers evidenced by the entries of 10th and 17th February, 1897, by which the interest in the business which theretofore stood to the credit of Beck OD the bool,s of the Art Library Publishing Company was transferred to the credit of Singerly. In the insolvent condition of the company, Beck has a right to have the debts paid out of its property other than capital, and then out of capital, before he shall contribute individually; l!nd it ought to appear much more distinctly than it does from the entries of 10th and 17th February that he abandoned such right, even were he capable of doing so. But let it be assumed that it was the purpose so to invest Singerly with all of the property of the partnership, and to give Beck no interest in it beyond a weekly salary; Beck could transfer no greater right than he had, and that which he had in his behalf, and all that he had, was such share of the property which would be disclosed to be his after the payment of the partnership debts and a settlement of the accounts between the partners as such. At the time these entries were made, the Art Library Publishing Company was insolvent, and its creditors had an equitable right of payment from its property prior to that of the other creditors of each partner; a right which has its foundation in that of the partners among themselves to have their partnership property so applied in the first instance. And while it is settled that this right can be exercised by the creditors only through that of the partners, it is thought that the latter are no more than channeis through which the rights of the creditors flow, and that in chancery the partners are powerless, by sale, transfer, or otherwise, to disappoint snch administration of partnership and individual .property. From the foregoing it is finally deter-
550
95
""I
FEDERAL REPORTER. ' ,.. - . , -, -<'
mIned that the proceeds of the sale of the assets of the Art Library Publishing Oompany by the receiver 'are the property MIhe partnership of Singerly and Bkk, who coIiducted their business under the name of that company; that the petitioIiing creditor of the company is entitled, throngh the equitable right of to have such assets so -adtninis,tered that they shall first .discharge the debts owing by the company; and that the property from the sale of which I!1lch assets were obtained was ilOt the Individual property of Willi11m 1\{' SingI.'rly during his life. A forD;! of decree in conformity with this conclusion is I'espectfilily submitted. '
The' exceptions to the foregoing report were referred to the special master, who reported thereon as follows: The raise threll matters First. The alleged partnershIp ..betweelJ, and :Seck after 3d August, 18l.l7. Second. 'rhe imputed the two that Beck should be a partner (if one at all) in profits only. Third. The .assignment or transfer b;y Beck of all of his right in the of the business, so that Singerly bec'Ume and was, when he died, its sole owner. (l}The faets with respect to the alleged partnership between Singerly and Beck after 3d August, 1897, are scarcely questioned. They are not denied, and are set forth in detail in. the report. From these, and from these alone, it was al\d is inferred that ;the two intended the partnership relation inter sese. Tbe; infereljlce is believed to be a strictly. logical one. In the absence of a written pa+tner$ip agreenWl1t (and in this case there was none), it is not easy to imagiue ll. case in which the facts more demand this conclusion. (2) WhCll'lI-partnership relation is toundto exist, the presumption is that the partners\laveegual rights and duties, and, if the right of one is simply in profits, that is to be established by some evidence, or there are some facts to be found frOnt which it may; be logically concluded. There was no evidence of any kind that Beck was a partner sinWly in the profits, and there were no capital had facts from which this was inferable. It is true that all been contributed by Singerly, but all, or-,the greater part, of the busines8 managemel/.twas that of Beck. The bUl\iness was apeculiar one, unO. an element qt. very· great value it was good will. In tbis ;Beck was equally interested with Singerly, alld Beck took into the pusiness an a.ccumulntion of profit from that Imsili\ess which preceded it, and.wl1ich was not named capital, but in the bookkeeping treated a.s SUCh. Hence it was, and ,still is, thought that, if Bee1\: were a .partner in profits, it was not mllde so to !fPpear. . (3) The book entries of 17th February, 1898, are referred to as manifesting the transfer. py Beck of all of his right in the a£sets of the business. It is not doubted. that· a partner may devest himself of all right in the assets, and invest his pllrtnel'Swith them, so thatcre\iltors who otherwise would be entitled to payment from partnership assets cannot so claim, because that claim must .be advance<l through thl! equity which a partner has to have joint assets applied to partnership debts in. the first place. But this transfer must be in gllOd ffrith, not alone fre.e from fraud,but in such conscience that the partnership .creditors shall not be disappointed. in the marshaling Qf the assets. And it is not either in good faith or conscience when made on tlw verge of insolvency, still less after actual tholilghnot declared insolvency. It has been found as a fact that the solvency of the Art Library Publishing Company "ended by the failure on 230. December, 1897, of the Chestnut Street )/ational Bank, of which' ,\\Tillillm M. Singerly was president, and from wllich it had obtained its discounts." The transfer relied· upon with ·so much ·confidence took place nearly two months after the. s(}lvency of t)lepartnership. $0 'ended. At another time and place it might be not unpleasant, and even pl'ofitable, to follow the review of the case£ to which the undersigned was inv.ite\i for the pqrpose of discovering. a principle of general application. But the matter in hand does not call for this. There is no well-considered· case in which, on. the eve of insolvency, a tJ)!lnsfer .of the ldnd under consideration has beell deemed such an act of good faith to partnership creditors as to: be uplwid by a chancellor. In this connection the expression of WOOdward, J., in Backus v. 39 Pa. St. 397, commends itself as in a proper cause maintaining not only the right or equity of a partner, but the right of a partnership creditor. He saJ's (page
U:-1rfED STATES V. FLINT & P. M. RY. CO.
551
402):
"That is to say, whilst any partnership property remained, either partner might apply it or compel its application to the film debts, and for this purpose might avail himself of the equity powers of the courts. And, possibly, creditors might compel him to allow them to use his name for this purpose if he were backward in protecting their rights." Hitherto this matter has been treated as though Beck actnally assigned or intended to assign to Singerly, but the entries relied upon fall short of manifesting such an assignment. Above all, Beck's answers to the specific interrogatories filed, while not evidence against Singerly, are evidence against himself, and he has answered to the tifteenth interrogatory that by the transfers in the books of the Art Library Publishing Company he made no sale of any interest in the partnership assets to Singerly. None of the exceptions are sustained.
Asa W. Waters and W. H. Addicks, for receiver. J. Howard Gendell, for exceptions. McPHERSON, District Judge. I have considered carefully the reports, arguments, and testimony in this case, and am of opinion that the exceptions of Mr. as administrator of William Singerly, must be overruled. I agree entirely with the learned master's findings of fact, with the inferences of fact that he draws therefrom, and with his conclusions of law. It would be superfluous to restate what he has already put so convincingly, and accordingly I shall content myself with adopting his reports as the opinion of the court. The exceptions are dismissed.
U:\'ITED STATES v. FLI:\'T & P. :\1. RY. CO. et aI. (Circuit Court of Appeals, Sixth Circuit. No. 582. 1. PUBUC LANDS-FORFEITURE OF RAILUOAD QUANT-BONA FIDE PURCHASERS.
July 5, 1899.)
The effect of the acts of March 8, 1887 (24 Stat. 55(;), and of :March 2, 1800 (29 Stat. 42), providing for the adjustment of railroad land grants, was to confirm in bona fide purchasers from a railroad company the title to lands which, when certified under the grant, were public lands of the United States,and not subject to individual daims, although at the time the grant attached they had been withdrawn from its operation, where they were subsequently restored to the public domain, were within the limits of the grant, and were earned by the company. 'Vhere a railroaCl company to which a land grant was made, and to whirh lands were certified thereunder as earned, conveyed the legal title to such lands in trust for its bondholders, and on the foreelosure of a subseqllt'nt mortgage its eqUity of rpdemption was sold, leaVing the title in the trustees, and suhject to the rights of the first bondholders, such sale operated to extinguish all title and interest of the original grantee in the lands, and took the trustees out of the proviso of tIre act of ]\[urch 3, 1887 (24 Stat_ 55(;), excppting mortgagees from the provision in favor of bona tide purchasers, and the trustees and purchaser of the equity of redemption beC!lm2 bona fide purchasers, within the meaning of such provision and of section 1 of the act of March 2, 189(; (29 Stat. 42). OF EQUITY OF REDEMPTION TO MORTGAGEE-CONSlDEHATlON. FIDE PUHClIASERS-EFFECT 01' SALE IN FOlmCI,osURE.
2.
SAME-WHO AHE
3.
A deed made by a railroad company to trustees, to whom it had preViously conveJ-ed the legal title to lands to secure its bonds, purporting to convey to such trustees the equitj' of redemption for the benefit of the