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566; Rouse v. Hornsby, 161 U. S. 588, 16 Sup. Ct. 610, 40 L. Ed. 817; Pope v. Louisville, etc., Ry., 173 U. S. 573, 577, 19 Sup. Ct. 500, 43 L. Ed. 814.

ville v. Cumberland Tel. Co., 231 U. S. 652, 34 Sup. Ct. 260, 58 L. Ed. 419.

[4] In support of the contention that the final decrees had the effect of discharging The proceeding out of which the decree the complainants and their sureties from linow in question arose was not merely an- ability upon the bonds by reason of previous cillary, but was in effect a part of the main overcharges, it is pointed out that this part causes, taken for the purpose of carrying of the decrees was not appealed from, nor into effect the decrees of this court, revers- was error assigned to the court's action in ing the final decrees in the main causes, and, vacating the bonds and releasing the sureat the same time, for the purpose of giving ties. Whether, under the circumstances, the effect to a reservation of jurisdiction by the action of this court in reversing the decrees court below as contained in those final de-in respect of their main provisions granting crees. The supplementary decree that is now permanent injunctions had the effect of rebefore us, since it simply brings to a conclu- versing also that portion which discharged sion those former suits pursuant to our de- the liability upon the injunction bonds is a crees therein, must be treated as involving question upon which we need not pass. For, the construction and application of the Con- irrespective of this, those clauses of the final stitution of the United States and as being decrees by which the District Court retained made in a case in which a state law was jurisdiction for the purpose of making such claimed to be in contravention of the federal further orders and decrees as might become Constitution, within the meaning of section necessary, coupled with the subsequent mandates of this court permitting further pro238, Judicial Code.

Therefore the motions to dismiss must be ceedings to be taken in conformity with our denied.

Upon the merits, it will be convenient to take up first the case of the Southern Cotton Oil Company, appellee in Nos. 94 and 95, in whose favor claims were allowed by *the master as against each of the two railways and for each of the periods referred to. The railways excepted upon two grounds: (1) Because the final decrees of May 11, 1911, discharging the injunction bonds, and releasing the makers thereof from liability had the effect to relieve the railways and their sureties from all liability by reason of the granting of the injunctions; and (2) as to such claims for overcharges as accrued subsequent to the date of the final decrees, on the ground that upon the rendition of those decrees the injunction bonds ceased to be operative and created no further liability, and that the railways incurred no liability to the claimants under the final decrees. The District Court overruled the exceptions and sustained the claims of the Oil Company as against the railway companies and the sureties with interest at 6 per cent. per annum from the respective dates that the overcharges were made.

opinion and decrees and according to right and justice, empowered the District Court to set aside so much of its final decrees as released the railways and their sureties from liabilities theretofore incurred under the injunction bonds. This is what the District Court in effect did when it ordered the reference and sustained the claims of the Oil Company so far as they accrued prior to the final decrees.

[5] It is argued that the condition of the bonds-that if it should eventually be decided that the order inhibiting the enforcement of the commission rates should not have been made the complainant should refund, etc.never was broken because it was not at any time adjudged that the allowance of the temporary injunctions was improper. But this is to construe the bonds according to the letter and not according to the substance. The state statute and the orders of the Railroad Commission entitled shippers to the benefit of the rates thereby established; and they were thus entitled at all times except as it became necessary to stay the operation of the rates by equitable process in order to permit of a judicial investigation into the question of their adequacy. The burden of proof to show them inadequate was upon the railway companies; and when they failed to sustain this burden they at the same time showed that the injunctions ought not to have been allowed.

[3] We deal first with so much of the overcharges as accrued prior to the final decrees. In St. Louis, Iron Mountain & Southern Ry. Co. v. McKnight, 244 U. S. 368, 373, 37 Sup. Ct. 611, 61 L. Ed. 1200, doubt was expressed whether, in view of the form of the mandate, there was any power in the District Court [6] *As to that portion of the claims which to determine the liability of the railway com- accrued after the final decrees, this, as we panies upon the bonds. But at that time already have held in the McKnight Case, 244 our attention was not called to the fact that U. S. 368, 374, 37 Sup. Ct. 611, 61 L. Ed. 1200, the mandates contained a provision author- was not recoverable upon the injunction izing further proceedings-a provision that bonds, nor against the sureties therein. On removes all question of the power of the Dis- a fair construction of the conditions of those trict Court. In re Louisville, 231 U. S. 639, instruments, their obligation expired by lim645, 34 Sup. Ct. 255, 58 L. Ed. 413; Louis-itation when the suits were brought to a final

39 SUP.CT.-16

conclusion. Hence, to the extent that the [typical case for the application of the princisupplemental decree now under review ple of restitution; and the District Court awards a recovery against the sureties for claims accruing after the final decrees, it must be modified.

[10] In behalf of the railways, it is argued that the reversal of the decrees of May 11, 1911, "without prejudice," left the rights of the parties still in doubt, and thus rendered it improper for the District Court to award damages against the railways, either on the basis of a breach of the injunction bonds or on the basis of restitution. *But it seems to us that the rights of the present shippers were so clear as to make an allowance of damages upon the injunction bonds and restitution upon the reversal of the decrees manifestly their due. That the reversal was "without prejudice" did not deprive the decrees of conclusiveness as to past transactions, but only prevented them from being a bar to future suits for injunction upon a showing of changed conditions. Missouri v. C., B. & Q. R. R., 241 U. S. 533, 539. 36 Sup. Ct. 715, 60 L. Ed. 1148.

properly held the commission to be the representative of the shippers for this purpose. [9] The suggestion that the order of refer[7] But, in our opinion, this portion of the ence was made under a rule of court that reclaims is allowable against the railway com-lated only to damages recoverable on injuncpanies themselves upon the principle, long tion bonds, and furnished no foundation for established and of general application, that a decree against the railways on the theory a party against whom an erroneous judgment of restitution, is without weight. The comor decree has been carried into effect is en-panies were fully heard upon the merits, and titled, in the event of a reversal, to be restored there is no question about the facts. by his adversary to that which he has lost thereby. This right, so well founded in equity, has been recognized in the practice of the courts of common law from an early period. Where plaintiff had judgment and execution, and defendant afterwards sued out a writ of error, it was regularly a part of a judgment of reversal that the plaintiff in error "be restored to all things which he hath lost by occasion of the said judgment"; and thereupon, in a plain case, a writ of restitution issued at once, but if a question of fact was in doubt, a writ of scire facias was first issued. Anonymous, Salk. 588, citing Goodyere v. Ince, Cro. Jac. 246; Sympson v. Juxon, Cro. Jac. 699; Vesey v. Harris, Cro. Car. 328. See, also, Lil. Ent. 641, 650; Arch. Append. 195, 200. The doctrine has been mostly fully recognized in the decisions of this court. Bank of the United States v. Bank of Washington, 6 Pet. 8, 17, 8 L. Ed. 299; Erwin v. Lowry, 7 How. 172, 184, 12 L. Ed. 655; Northwestern Fuel Co. v. Brock, 139 U. S. 216, 11 Sup. Ct. 523, 35 L. Ed. 151. That a course of action so clearly consistent with the principles of equity is one proper to be adopted in an equitable proceeding goes without saying. It is one of the *equitable powers, inherent in every court of justice so long as it retains control of the subject-matter and of the parties, to correct that which has been wrongfully done by virtue of its process. Northwestern Fuel Co. v. Brock, 139 U. S. 216, 219, 11 Sup. Ct. 523, 35 L. Ed. 151; Johnston v. Bowers, 69 N. J. Law, 544, 547, 55 Atl. 230.

[8] It is argued that the claimant is not in a position to invoke the principle of restitution in this proceeding because it was not a party to the original proceedings, but came in by intervening before the master. This point is unsubstantial. The Railroad Commission, in defending the rate schedules against the attack of the railway companies, represented all shippers; the permanent injunctions that were awarded by the final decrees restrained all shippers from taking advantage of the commission rates; and during the time that those decrees remained unreversed the railway companies obtained the benefit of the injunction by exacting from this claimant, among others, in addition to the commission rates, those excess charges that form the basis of the present claims. It is a

[11] The contention that there was error in allowing interest upon the amount of the overcharges is unsubstantial. The damage was complete when the overcharges were made, and as they were wrongfully made and without consent of the shippers, interest ran from that date on general principles.

For these reasons, the decree in favor of the Southern Cotton Oil Company, modified so as to relieve the sureties from that part of the claims which accrued after the final decrees of May 11, 1911, will be affirmed.

The claims of both the Arkadelphia Milling Company (No. 92) and Hasty & Sons (No. 93) were based upon the difference between rates charged on rough lumber from the forest to milling points and the rates provided in the commission tariff on such movements. The tariff contained certain maximum rates on iumber of this character applicable generally, and in addition certain "rough material rates" much lower than the others, conditioned upon a certain percentage of the manufactured product being shipped over the same line that brought in the rough material. The railway companies excepted to the allowance in favor of each of these appellants upon the ground that the "rough material rates" were discriminatory against shippers who did not reship the specified percentages of the finished product. As to the Hasty claim, there was an additional exception based upon the *ground that the movement of rough material to milling

points in the state and the subsequent for- State of Missouri ex rel. Jones, 238 U. S. 41, warding of the finished product to market | 54, 35 Sup. Ct. 671, 59 L. Ed. 1192; Cusack points outside of the state constituted in- Co. v. City of Chicago, 242 U. S. 526, 530, 37 terstate commerce, so that the rough materi- Sup. Ct. 190, 61 L. Ed. 472, L. R. A. 1918A, al rates prescribed by the state commission 136, Ann. Cas. 1917C, 594. were not applicable. The court sustained the exceptions on both grounds.

[12, 13] To take up first the question of discrimination: The tariff gave the benefit of the rough material rates only where the shipper transported over the line of the carrier a certain percentage of the product manufactured from the rough material. The master found that the condition was complied with by these shippers and sustained the allowances accordingly.

The District Court sustained the defense of discrimination upon the authority of Lake Shore, etc., Ry. Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed. 858, and Cotting v. Kansas City Stockyards Co., 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. 92.

We assume, without deciding, that, notwithstanding the general result adverse to the railway companies in the main suits, they were still at liberty to dispute the validity of the rate schedule as it related to particular shippers. See Chicago, etc., Co. v. Minnesota, 134 U. S. 418, 460, 10 Sup. Ct. 462, 702, 33 L. Ed. 970, concurring opinion of Mr. Justice Miller; St. Louis & San Francisco Ry. v. Gill, 156 U. S. 649, 659, 666, 15 Sup. Ct. 484, 39 L. Ed. 567; Ex parte Young, 209 U. S. 123, 28 Sup. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764; Missouri v. C., B. & Q. R. R., 241 U. S. 533, 538, 36 Sup. Ct. 715, 60 L. Ed. 1148.

In our opinion, however, the District Court erred in its ruling. The rough material rates were but parts of a general schedule that covered a wide field. This schedule was established in the exercise of the legislative authority of the state, and could not be set aside by the court on the ground of discrimination unless it amounted to a denial of the equal protection of the laws guaranteed by the Fourteenth Amendment.

Lake Shore, etc., Ry. Co. v. Smith, 173 U. S. 684, 19 Sup. Ct. 565, 43 L. Ed. 858, did not set aside this established principle. The discrimination in favor of certain patrons, there referred to, was laid hold of rather as showing the unreasonable character of the regulation. The authority of that case is not to be extended. Louisville & Nashville R. R. Co. v. Kentucky, 183 U. S. 503, 511, 22 Sup. Ct. 95, 46 L. Ed. 298; Pennsylvania R. R. Co. v. Towers, 245 U. S. 6, 38 Sup. Ct. 2, 62 L. Ed. 117, L. R. A. 1918C, 475.

Cotting v. Kansas City Stockyards Co., 183 U. S. 79, 22 Sup. Ct. 30, 46 L. Ed. 92, is not at all in point. While the opinion of Mr. Justice Brewer covers a wide range of discussion, a majority of the court (183 U. S. 114, 22 Sup. Ct. 30, 46 L. Ed. 92) placed the decision upon the ground that the statute of Kansas applied only to a single company, and not to others engaged in like business in the state, and thereby denied to that company the equal protection of the laws.

[14] There remains the question whether the shipments by J. F. Hasty & Sons of rough material from the forest to the milling point, followed by the forwarding of the finished product to points outside of the state, constituted inter*state commerce. If they did, it is obvious that the state tariff was not applicable to them.

The following statement, taken from the record, shows the admitted facts as to the course of business:

"When the rough material reached the mills, it was manufactured into finished staves, headings and hoops, and in this condition shipped to whoever purchased them. The purchaser uses them in making barrels, casks, etc. The wastings in the finishing of said articles from the rough material were either disposed of for firewood, or destroyed. When the rough ma*But there is nothing to show that the terial left the woods, a bill of lading was issued rough material rates wrought any discrimina- from the woods to the mill. When the rough tion against the railway companies. They material reached the mill, it was finished into were applicable upon all railways alike. If some or all of the articles described, when it there was not in the least intimating that was stacked in the yards or placed in kilns to there was undue discrimination as against dry. The process of manufacturing and drysmall shippers or those who had no occasion to obtain transportation for the manufactured product over the line of the same carrier, this was not a matter of which the railways could complain. It is most thoroughly established that before one may be heard to strike down state legislation upon the ground of its repugnancy to the federal Constitution he must bring himself within the class affected by the unconstitutional feature. Plymouth Coal Co. v. Pennsylvania, 232 U. S. 531, 544, 34 Sup. Ct. 359, 58 L. Ed. 713; Jeffrey Mfg. Co. v. Blagg, 235 U. S. 571, 576, 35 Sup. Ct. 167, 59 L. Ed. 364; Mallinckrodt Works v.

The

ing occupied several months, or on an average this process would be gone through with, the finished products sold and shipped to the purchaser, in about five months from the date the rough material was received at the mill. claimants classified the different parts after they came from the mill completely finished, and made sales from such stock. The markets for the manufactured articles were almost altogether in other states than Arkansas, or in forein countries, and about 95 per cent. of the sale of finished articles, that is, of the total outbound shipments, were made for delivery at points outside the state of Arkansas, the remaining 5 per cent. being sold and delivered, or shipped to points within the state of Arkansas. At the

time the rough material was shipped to the mills, the mills did not know to whom they would sell the finished product, or to what points it would be shipped, but did know that there was little market for the finished articles in the state of Arkansas, and expected that they would sell 95 per cent. of said finished articles and ship them to points outside the state of Arkansas.

"It was the intention of all the claimants herein, at the time they shipped the rough material into the milling points, to mill said rough material with the object of selling the said finished product and shipping it out as soon as practicable, and all of them knew and intended at the time they brought the rough material into the mill, on account of previous course of dealings in the business, that 95 per cent. of the finished product would be by them shipped to points outside the state of Arkansas.

"The claimants paid the usual property tax to the state of Arkansas on their stock of materials on hand at the milling point, whether said stock was in the rough or finished, the amount of the tax being arrived at according to the methods in use in the state of Arkansas by the use of an average basis."

Upon the facts as stated, it is our opinion that the District Court erred in treating the movement of the rough lumber from the woods to the milling point as interstate commerce. It is not merely that there was no continuous movement from the forest to the points without the state, but that when the rough material left the woods it was not intended that it should be transported out of the state, or elsewhere beyond the mill, until

it had been subjected to a manufacturing process that materially changed its character, utility, and value. The raw material came to rest at the mill, and after the product was manufactured it remained stored there for an indefinite period-manufacture and storage occupying five months on the average for the purpose of finding a market. Where it would eventually be sold no one knew. And the fact that previous experience indicated that 95 per cent. of it must be marketed outside of the state so that this entered into the purpose of the parties when shipping the rough material to the mill, did not alter the character of the latter movement. The question is too well settled by *previous decisions to require discussion. Coe v. Errol, 116 U. S. 517, 525, 6 Sup. Ct. 475, 29 L. Ed. 715; Bacon v. Illinois, 227 U. S. 504, 515-516, 33 Sup. Ct. 299, 57 L. Ed. 615; McCluskey v. Marysville & Northern Ry. Co., 243 U. S. 36, 37 Sup. Ct. 374, 61 L. Ed. 578.

The distinction between these cases and those cited to sustain the decision of the District Court (Swift & Co. v. United States, 196 U. S. 375, 398, 25 Sup. Ct. 276, 49 L. Ed. 518; Ohio R. R. Commission v. Worthington, 225 U. S. 101, 32 Sup. Ct. 653, 56 L. Ed. 1004; Texas & N. O. R. R. Co. v. Sabine Tram Co., 227 U. S. 111, 33 Sup. Ct. 229, 57 L. Ed. 442; Louisiana R. R. Commission v. Texas & Pa

cific Ry. Co., 229 U. S. 336, 33 Sup. Ct. 837, 57 L. Ed. 1215) is so evident that particular analysis may be dispensed with.

Court to the claims of the Arkadelphia MillThe exceptions sustained by the District ing Co. and Hasty & Sons having been found to be untenable, it results that these claims should be allowed as against the railway companies and their sureties, so far as they arose before the final decrees, and as against the railway companies only, so far as they arose after the final decrees.

Nos. 92 and 93, decree reversed; Nos. 94

and 95, decree modified and affirmed; and the cause remanded for further proceedings in conformity with this opinion.

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Agreement for loan by bank held rightly canceled by bank, preventing it being a source of obligation against it, its conditions not being complied with, and forged collateral being fraudulently furnished.

3. BANKS AND BANKING 178 FRAUDULENT ENTRY OF DEPOSIT OF CHECK-LIABILITY OF OTHER BANK.

The making by C., cashier of the M. Bank, of a fraudulent and false deposit slip purporting to show deposit by W. of his check for $30,000 on the H. Bank, and payment by the M. Bank of check for $35,000 in favor of T. purporting to be drawn by W., all before the H. Bank, which had agreed to make a loan of $30,000 to W., afterwards rightly canceled for noncompliance with conditions, had received the collateral note or made any entries on its books concerning it, gave the M. Bank no right of action against the H. Bank.

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

In Error to the United States Circuit Court [ and written on the letter head of the Mercanof Appeals for the Second Circuit.

Action by Harry H. Seldomridge, receiver of the Mercantile National Bank of Pueblo, against the Harriman National Bank. Judgment for plaintiff was affirmed by the Circuit Court of Appeals (240 Fed. 111, 153 C. C. A. 147), and defendant brings error. Reversed and remanded, with instructions.

Messrs. Charles E. Hughes and Henry B. Wesselman, both of New York City, for plaintiff in error.

tile Bank, purporting to be from W. B. Slaughter, whose signature was affixed by a writer, after referring to his ownership and rubber stamp. By this letter its assumed

control of the Silverton National, stated his purpose to buy out the interest of Thatcher

in the First National Bank of Silverton and after doing so to consolidate the two banks, and requested a loan of $30,000 to enable him to accomplish the purpose. It was stated that it was proposed to evidence the loan by a note at 60 days, to be signed by the writer, W. B. Slaughter, and by his son C. C. Slaughter, if the bank so desired, and to secure the note by the pledge of 500 shares of the Mercantile and 400 shares of the First *Mr. Chief Justice WHITE delivered the National of Silverton. The Harriman Bank opinion of the Court.

Messrs. Stuart G. Gibboney and William A. Barber, both of New York City, for defendant in error.

Following the failure in March, 1915, of the Mercantile National Bank of Pueblo, Colo., the receiver appointed by the comptroller commenced this suit to recover from the Harriman National Bank of New York City $30,000 alleged to be due to the Mercantile Bank. On issue joined before a jury, the' court, after refusing a request of the Harriman National Bank for a peremptory instruction directing a verdict in its favor, granted a request of like character made by the receiver, and a judgment on the resulting verdict for the amount claimed was entered.

[1] The case is before us on error to the judgment of the court below affirming that of the trial court, our jurisdiction to review resulting because the case from its inception involved the enforcement of the National Banking Act, and therefore, was not dependent in the trial court solely upon diversity of citizenship. Auten v. *United States National Bank, 174 U. S. 125, 141, 19 Sup. Ct. 628, 43 L. Ed. 920; International Trust Co. v. Weeks, 203 U. S. 364, 366, 27 Sup. Ct. 69, 51 L. Ed.

224.

The case is this: W. B. Slaughter, through stock ownership, controlled the Mercantile National Bank of Pueblo, Colo. He was president and his son, C. C. Slaughter, was cashier. Prior to 1915, Slaughter, the president, removed his residence from Pueblo to Texas, engaging there in the cattle business and leaving his son, the cashier, in complete control of the Mercantile Bank and of all its affairs. W. B. Slaughter was also the president of the Silverton National Bank of Silverton, Colo., and controlled the affairs of that bank by the ownership of a majority of its stock. At Silverton there was another national bank carrying on business, the First National, the majority of whose stock was owned by one Thatcher.

The correspondent of the Mercantile Bank in New York City was the Harriman National, with which it had a checking account. On January 28, 1915, C. C. Slaughter, the cashier of the Mercantile, dictated a letter to the Harriman which was dated at Pueblo

received this letter on the 1st of February and at once telegraphed W. B. Slaughter, president of the Mercantile Bank at Pueblo, *that, whenever desired, the Harriman would be willing to make the loan, as requested. On the same day the bank wrote a letter to W. B. Slaughter, president at Pueblo, but marked it personal, repeating and confirming the telegram, and inclosing a blank form of collateral note to be executed and sent to the bank with the collateral when the money was desired.

The telegram of the 1st of February announcing the willingness of the Harriman Bank to make the loan having come into the hands of C. C. Slaughter on the day it was sent, he ordered a seal to be made which he said was intended as the seal of the First National Bank of Silverton, and on the 5th of February bought from a printer blank forms of certificates of stock. On the next day, Saturday, the 6th, purporting to act as agent of W. B. Slaughter, C. C. Slaughter bought from Thatcher his interest in the First National of Silverton, and gave a check in the name of W. B. Slaughter and as his representative, on the Mercantile National, for $35,000 in part payment. On Sunday, February 7th, C. C. Slaughter caused a letter to be prepared falsely purporting to be written and signed by W. B. Slaughter, acknowledging the receipt of the telegram sent by the Harriman Bank on the 1st and asking that the loan be consummated. In this letter there was returned the collateral note which the bank had sent for execution, along with the promised collateral, that is, certificates for 400 shares of the First National of Silverton and 500 shares of the Mercantile at Pueblo. The signature of W. B. Slaughter to the note was forged and the collaterals were also forged, the first, the certificates of the Silverton Bank stock, because they were fabricated by the use of the printed certificates and seal which had been acquired a few days before and described shares which had no existence, and the second, the Mercantile Bank stock, because, although the certificates represented stock standing in the

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