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(249 U. S. 202)
(2) Any practicable plan of sewage dispos
PEOPLE OF STATE OF NEW YORK v. al or treatment capable of being applied to STATE OF NEW JERSEY et al.
(Argued Nov. 8, 11, and 12, 1918. March 10, 1919.)
the sewage of the city of New York and the several boroughs thereof in order to lessen Decided the alleged polluting effect of said sewage
Courts 379-Original SUIT IN SUPREME
Taking of further proof, deemed proper, relative to methods of sewerage disposal and as to present degree of pollution of waters of New York Harbor, ordered in an original suit in the Supreme Court between states and sewerage commissioners; it having been begun ten years before final argument, and the taking of testimony having closed five years before such argument.
Original suit by the People of the State of New York against the State of New Jersey and the Passaic Valley Sewerage Commissioners. Taking of further testimony authorized, and cause restored to docket.
See, also, 35 Sup. Ct. 207.
Messrs. Charles E. Hughes, Maurice B. Dean, William A. McQuaid, and William J. O'Sullivan, all of New York City, and Merton E. Lewis, of Rochester, N. Y., for People of State of New York.
Messrs. Adrian Riker, Robert H. McCarter, and Chandler W. Riker, all of Newark, N. J., and John W. Wescott, of Camden, N. J., for defendants.
Mr. Chief Justice WHITE.
upon the waters of New York Harbor.
(3) Additional testimony (to the extent reasonably practicable within the time herein limited) as to the present degree of pollution of the waters of New York Harbor, including those parts affected or to be affected by the proposed Passaic Valley sewerage system and by the sewage of the city of New York; and the change, if any, in the degree of such pollution since the time to which the testimony heretofore taken relates.
The taking of the above testimony by the defendants as stated in paragraphs 1 and 2, including also any testimony which said defendants may choose to offer on the subjectmatter specified in paragraph 3, shall be concluded on or before the fifteenth day of June
The complainant shall thereupon be authorized to take the testimony of not exceeding three sanitary or engineering experts as specified in paragraphs 1 and 2, including such proof as they may elect to offer on the subject-matter covered by paragraph 3, the testimony relating to these subjects to be concluded on or before the fifteenth day of August next.
graph 3, all such testimony in rebuttal to be concluded on or before the fifteenth day of September next.
The defendants may thereupon, if they are so advised, recall in rebuttal the sanitary or engineering experts who may have been examined by them in accordance with paragraphs This cause came on to be heard at this 1 and 2, and may also introduce rebuttal eviterm and was argued by counsel; and it ap-dence relating to the subject-matter of parapearing that the suit was begun by bill filed October 17, 1908, that answer was filed January 24, 1909, and that the cause was put at issue by replication filed November 8, 1909; that the taking of testimony was begun on June 26, 1911, and closed on June 27, 1913, more than five years before the final argument of the cause in this court; and the court deeming it proper that additional and supplemental proofs should be taken for the following purposes:
It is ordered that the defendants may proceed with all convenient dispatch to take the testimony of not exceeding three sanitary or engineering experts, deemed by them best qualified, concerning the following subjectmatters:
(1) Any practicable modification of the proposed system of sewage disposal of the Passaic Valley Sewerage Commissioners, either as to construction, arrangement, or operation, and the nature and character of sanitary or engineering appliances that may be added thereto or introduced therein, in order to lessen the alleged polluting effect of the effluent upon the waters of New York Harbor.
James D. Maher, Esq., of the District of Columbia, is hereby appointed a commissioner to take and return the above-mentioned testimony, with the powers of a master in chancery as provided in the rules of this court.
This cause is hereby restored to the docket for further argument on a day to be fixed upon the coming in of the said testimony.
(249 U. S. 220) STATE OF SOUTH DAKOTA v. COLLINS. (Submitted March 4, 1919. Decided March 17, 1919.)
No. 10. Original.
76-STATE TREASURER-LIABILITY FOR INTEREST ON FUNDS.
The treasurer of South Dakota is liable to it for interest received by him on its money deposited in banks; its Constitution providing that he shall not receive any fees or perquisites for performance of any duties connected with
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his office; and Pol. Code S. D. 1903, § 333, pro- [interest upon the moneys of the state of South viding all moneys belonging to the state, de- Dakota, which was received by him as treasurer posited in banks by its treasurer, shall be deposited, not to his credit as an individual, but in his name as state treasurer.
of said state, and paid to him on deposits in the several banks above named, interest amounting to $32,094.27; that said sum was received by the defendant as interest upon the public moneys of the state of South Dakota deposited by him as such state treasurer in said banks in excess of his salary and all other sums due him from said state as state treasurer, and that the same was received and retained by him and he rendered no account thereof to the plaintiff nor any of its officers and paid no part of the same to the plaintiff or any of its officers, and that *Mr. Justice MCKENNA delivered the opin- the said defendant appropriated the said sum to ion of the Court. his own use."
Suit by the State of South Dakota against Charles B. Collins. Judgment for plaintiff. Messrs. Clarence C. Caldwell and Edward E. Wagner, both of Sioux Falls, S. D., for the State of South Dakota.
Suit by the state of South Dakota for an accounting and to recover from defendant interest received by him as treasurer of the the state upon moneys of the state deposited by him in various banks.
There is no dispute about the facts, which are detailed at very great length in the bill of complaint.
Collins was treasurer for four years, beginning January, 1903. As such he was entitled to the salary of $1,800 a year, and it is provided by the Constitution of the state that neither the treasurer nor any other officer of the state shall "receive any fees or perquisites whatever for the performance of any duties connected with his office." And there are
statutory provisions supplementing the Constitution, one of which is that:
"All moneys belonging to the state, deposited in banks by the state treasurer shall be deposited not to his credit as an individual, but in his name as state treasurer, and not other
wise." Section 333, Revised Political Code of
It is alleged that defendant received the sum of $10,000 and more, and it is prayed that he be required to make a full and correct accounting of the moneys received by him and wrongfully withheld from the state.
Defendant answered as follows:
"I hereby deny the allegation as set forth in the complaint and plead not guilty to the charge of misappropriating, withholding or converting to my personal use any money belonging to the state of South Dakota during my term of of fice."
On motion of plaintiff a referee was appointed to take the testimony on its part and that of defendant and make findings and recommendations..
On May 9, 1918, the referee made return of his proceedings, with the evidence adduced, from which he concluded as follows:
"That between January 1, 1903, and January 10, 1907, there was paid to the defendant as
And the referee recommended that judgment be entered in favor of plaintiff and against defendant in the sum of $32,094.27, with interest thereon at the rate of 7 per cent. per annum from January 1, 1907, and for plaintiff's costs and disbursements of the
The case was put down for argument and subsequently submitted on brief, the defend
ant filing none.
Counsel for the state submits quite a long argument to sustain the report, with citation of authorities to establish the liability of defendant. It is not necessary to review them. There is no doubt of defendant's li
ability. He has not appeared to contend to the contrary, and at the taking of the testimony his defense or extenuation was that he acted upon his faith in a decision of the Supreme Court of Colorado, and, to evade inal prosecution, he declined to answer in reor to withhold aid from any possible crimgard to transactions concerning the receipt of interest on the public moneys he had deposited in various banks.
Further discussion is unnecessary. The Supreme Court of the state has decided (December 4, 1917), construing *section 333, supra, and other statutory provisions, that in cases like that at bar it is state funds that are deposited and that earn the interest and not the money of the treasurer, and that, therefore, the interest becomes a mere increment of the principal fund and when it is paid to the treasurer it is in effect paid into the state treasury and the treasurer becomes liable for it. State v. Schamber et al., 39 S. D. 492, 165 N. W. 241, L. R. A. 1918B, 803.
The report of the referee is approved and judgment directed to be entered against defendant in the sum of $32,094.27 with interest thereon at the rate of 7 per cent. per annum from January 1, 1907, and for costs and disbursements of the suit.
(249 U. S. 246)
GRATIOT COUNTY STATE BANK v.
had made, while so insolvent, certain preferences. The bank was not actually a party to the bankruptcy proceedings and had taken no part therein. The trial court held
(Submitted Jan. 20, 1919. Decided March 17, that this evidence was not only admissible
but established conclusively that the debtor was insolvent throughout the four months; and it entered judgment for the trustee ADJUDICATION- which was affirmed by the Supreme Court of Michigan, Johnson v. Gratiot County State Bank, 193 Mich. 452, 160 N. W. 544. The case comes here on writ of certiorari. 243 U. S. 645, 37 Sup. Ct. 406, 61 L. Ed. 944. The only question presented is whether the state courts erred in holding that the record of the adjudication made the fact of insolvency at the time of the payments res judicata as against the bank.
Adjudication in bankruptcy, while establishing as against the world, for the purpose of administering the debtor's property, his status as a bankrupt, is, like other adjudications in rem not res judicata as to the facts or the subsidiary questions of law on which it is based, except as between the parties to the proceeding or privies thereto, and so not as to the facts found, that the debtor had been insolvent for a certain time, and while so insolvent had made certain preferences.
2. BANKRUPTCY 100(1) PARTIES BOUND.
 First. The trustee contends that adjudication in bankruptcy, being in the na· ADJUDICATION- ture of a judgment in rem, establishes not only the status of the debtor as a bankrupt,
The mere right of any creditor under Bank-but also the essential findings of fact on ruptcy Act, §§ 18b, 59f (Comp. St. §§ 9602, 9643), to intervene in the bankruptcy proceedings, and join in or contest the petition, not being exercised, is not equivalent to intervention, making him a party, but he remains a stranger thereto, and so not bound by the adjudication, except as declaring the debtor's status as a bank
which that judgment was based. The adjudication is, for the purpose of administering the debtor's property, that is, in its legislative effect, conclusive upon all the world. Compare Shawham v. Wherritt, 7 How. 627, 643, 12 L. Ed. 847. So far as it declares the status of the debtor, even strangers to the decree may not attack it collaterally. Micha
On Writ of Certiorari to the Supreme els v. Post, 21 Wall. 398, 428, 22 L. Ed. 520; Court of the State of Michigan.
Action by D. Lloyd Johnson, trustee of the St. Louis Chemical Company, bankrupt, against the Gratiot County State Bank. Judgment for plaintiff was affirmed by the Supreme Court of Michigan (193 Mich. 452, 160 N. W. 544), and defendant brings cer
*Messrs. William L. Carpenter and Elliott G. Stevenson, both of Detroit, Mich., for petitioner.
Messrs. Edward J. Moinet, of St. Johns, Mich., and William A. Bahlke, of Alma, Mich., for respondent.
Mr. Justice BRANDEIS delivered the opinion of the Court.
The trustee in bankruptcy of the St. Louis Chemical Company brought suit in a state court of Michigan against the Gratiot County State Bank to recover, as illegal preferences, payments made to it within four months before the filing of the involuntary petition. The bank denied the allegation that the Chemical Company was insolvent when the payments were made. To establish that fact, the trustee offered in evidence the adjudication together with the petition on which it was based and the special master's report which it confirmed. The latter found that the debtor had been insolvent for four months or more before the filing of the petition and
New Lamp Chimney Co. v. Ansonia Brass & Copper Co., 91 U. S. 656, 661, 662, 23 L. Ed. 336. Compare Hebert v. Crawford, 228 U. S. 204, 208, 209, 33 Sup. Ct. 484, 57 L. Ed. 800. But an adjudication in bankruptcy, like other judgments in rem, is not res judicata as to the facts or as to the subsidiary questions of law on which it is based, except as between parties to the proceeding or privies thereto. Manson v. Williams, 213 U. S. 453, 455, 29 Sup. Ct. 519, 53 L. Ed. $69.1 This court applied the *principle in Wood v. Davis, 7 Cranch, 271, 3 L. Ed. 339, where a judgment that a mulatto woman was born free was held, as between strangers, not conclusive that her children were free. The rule finds abundant illustration in cases dealing with decedents' estates, Tilt v. Kelsey, 207 U. S. 43, 52, 28 Sup. Ct. 1, 52 L. Ed. 95; Brigham v. Fayerweather, 140 Mass. 411, 5 N. E. 265; and in cases involving the marriage status, Luke v. Hill, 137 Ga. 159, 73 S. E. 345, 38 L. R. A. (N. S.) 559; Burlen v. Shannon, 3 Gray (Mass.) 387; Wilson v. Mitchell, 48 Colo. 454, 469, 111 Pac. 21, 30 L. R. A. (N. S.) 507; Corry v. Lackey, 105 Mich. 363, 63 N. W. 418; Belknap v. Stewart,
1 See, also, In re Henry Ulfelder Clothing Co. (D. C.) 98 Fed. 409, 413, 414; In re Schick, 2 Ben. 5, Fed. Cas. No. 12,455; Silvey & Co. v. Tift, 123 Ga. 804, 51 S. E. 748, 1 L, R. A. (N. S.) 386; Durant v. Abendroth, 97 N. Y. 132; Lewis v. Sloan, 68 N. C. 557, 562, 563.
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38 Neb. 304, 56 N. W. 881, 41 Am. St. Rep. 729; Gill v. Read, 5 R. I. 343, 73 Am. Dec. 73.  Second. The trustee contends, however, that since by sections 18b and 59f2 of the Bankruptcy Act any creditor is entitled to intervene in the bankruptcy proceedings, the bank should be considered a party thereto. These sections are permissive, not mandatory. They give to a creditor, who fears that he will be prejudiced by an adjudication of bankruptcy, the right to contest the petition. Whether he does so or not, he will be bound, like the rest of the world, by the judgment, so far as it is strictly an adjudication of bankruptcy. But he is under no obligation to intervene, and the existence of the right is not equivalent to actual intervention. Unless he exercises the right to become a party, he remains a stranger to the litigation and, as such, unaffected by the decision of even essential subsidiary issues. In re McCrum, 214 Fed. 207, 213, 130 C. C. A. 555; Cullinane v. Bank, 123 Iowa, 340, 342, 98 N. W. 887. The rule is general that persons who might have *made themselves parties to a litigation between strangers, but did not, are not bound by the judgment.8 Compare Western Union Tel. Co. v. Foster, 247 U. S. 105, 115, 38 Sup. Ct. 438, 62 L. Ed. 1006. No good reason exists for making an exception in the case of bankruptcy proceedings.
individual creditors, such expedition in proceedings would be impossible, if each of the many widely scattered creditors is to be afforded a fair opportunity to be heard. Furthermore, to require every creditor to acquaint himself with the issues raised in every proceeding in bankruptcy against his debtors, in order to determine whether a decision on any such issue might conceivably affect his interests; and, if so, either to participate in the litigation, or, at his peril, suffer the decision of every question therein litigated to become res judicata as against him, would be an intolerable hardship upon creditors. And the resulting volume of litigation would often so delay the adjudication as to defeat the purposes of the Bankruptcy Act.
*The unreasonableness of the rule contended for by the trustee is well illustrated in cases of alleged fraudulent preference. The claim may be made in respect to any creditor paid off within four months of the filing of an involuntary petition, that he received a fraudulent preference. Is every such former creditor to be deemed an existing creditor within the meaning of sections 18b and 59f and a party to the bankruptcy proceeding? Compare Keppel v. Tiffin Savings Bank, 197 U. S. 356, 25 Sup. Ct. 443, 49 L. Ed. 790. And shall the decision of the bankruptcy court be binding on all these former The purpose of Congress in expressly au- creditors in respect to individual claims, althorizing creditors, as well as the debtor, to though that court could not (without conanswer an involuntary petition in bankrupt- sent) obtain jurisdiction of any creditor who cy was to guard against an improvident ad- is not a resident of the district in which it judication and to protect those whose pecul- sits, Acme Harvester Co. v. Beekman Lumiar interests might be prejudiced by estab- ber Co., 222 U. S. 300, 311, 32 Sup. Ct. 96, lishing the status of bankruptcy. See Black- 56 L. Ed. 208; and would not (prior to the 'stone v. Everybody's Store, 207 Fed. 752, 756, Act of February 5, 1903, c. 487, §§ 8, 13, 32 125 C. C. A. 290; Jackson v. Wauchula Mfg. Stat. 797, 798, 800 [Comp. St. §§ 9607, 9644]) & Timber Co., 230 Fed. 409, 411, 144 C. C. A. have had jurisdiction, even as against a res551. The grant of this right of intervention | ident creditor, of a claim to recover a fraudwas harmonized with the general purpose ulent preference; such claim being enforceof Congress to secure a prompt adjudication, able (without consent) only in courts of genby requiring that the appearance and an- eral jurisdiction, Bardes v. Hawarden Bank, swers of creditors be made within five days 178 U. S. 524, 20 Sup. Ct. 1000, 44 L. Ed. after the return day on the petition. Had 1175; Wall v. Cox, 181 U. S. 244, 21 Sup. the adjudication been made determinative Ct. 642, 45 L. Ed. 845; Jaquith v. Rowley, also of claims of the several creditors against 188 U. S. 620, 23 Sup. Ct. 369, 47 L. Ed. 620; the estate or of claims of the estate against and, even now, only by plenary suit, Louisville Trust Co. v. Comingor, 184 U. S. 18, 22 Sup. Ct. 293, 46 L. Ed. 413; Babbitt v. Dutcher, 216 U. S. 102, 113, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969.
2 Act of July 1, 1898, c. 541, 30 Stat. 544. Section 18b provides: "The bankrupt, or any creditor, may appear and plead to the petition within
five days after the return day, or within such further time as the court may allow.' (As amended by the Act of February 5, 1903, c. 487, § 6, 32 Stat. 797, 798 [Comp. St. § 9602]).
Section 59f provides: "Creditors other than original petitioners may at any time enter their appearance and join in the petition, or file an answer and be heard in opposition to the prayer of the petition." (Comp. St. § 9643.)
Lee v. School District, 149 Iowa, 345, 354, 128 N. W. 533, 37 L. R. A. (N. S.) 383; Weber v. Mick, 131 Ill. 520, 529, 23 N. E. 646; State v. Johnson, 123 Mo. 43, 55, 27 S. W. 399; Hickok v. Eastman, 21 S. D. 591, 595, 114 N. W. 706; Carney v. Emmons and Van Dyke, 9 Wis. 114, 117.
The decisions of the lower federal courts upon which the state court relied in hold
Cook v. Robinson, 194 Fed. 785, 114 C. C. A. 505; In re American Brewing Co., 112 Fed. 752, 50 C. C. A. 517; Bear v. Chase, 99 Fed. 920, 40 C. C. A. 182. See, also, Lazarus v. Eagen (D. C.) 206 Fed. 518. In re Hecox, 164 Fed. 823, 90 C. C. A. 627, also relied upon, is a case of a different character. There, as in Shawham v. Wherritt, 7 How. 627, 643, 12 L. Ed. 847, one not actually a party to the proceeding sought to attack the legislative effect of the adjudication-and it was properly held to be conclusive. Hackney v. Hargreaves Bros. (Hackney v. Raymond
Messrs. John N. Sebrell, Jr., of Norfolk, Va., and Bynum E. Hinton, of Washington, D. C., for appellant.
Mr. H. R. Pollard, of Richmond, Va., for appellee.
ing that sections 18b and 59f made all credi- [ dismissed, and complainant appeals. Aftors parties to the proceeding so as to render firmed. *the adjudication binding on them as to all essential issues clearly misconceived the intention of Congress. The allegation in the involuntary petition that the bank was among those who had received preferences did not impose upon it the duty to appear and answer; and, since it did not do so, even a finding to that effect by the bankruptcy court would not have bound it. The Supreme Court of Michigan erred in holding that the adjudication in bankruptcy established conclusively as against the bank that the debtor was insolvent at the time the payments were made. We have no occasion to consider whether the record introduced was admissible merely as evidence of insolvency. Reversed.
(249 U. S. 252)
*Mr. Justice CLARKE delivered the opinion of the Court.
The appellant, the Telegraph Company, in its bill filed in the District Court of the United States for the Eastern District of Virginia, sought to enjoin the city of Richmond and its officers from collecting an annual license tax of $300 imposed upon the company by ordinance "for the privilege of doing business within the city of Richmond, but not including business done to or from points without the state, and not including any business done for the government of the United States, its officers or agents," and also from attempting to collect an annual fee of $2, imposed by another ordinance, for each telegraph pole Decided March 17, which the company maintained or used in the streets of the city.
POSTAL TELEGRAPH-CABLE CO. v.
LOCAL TELEGRAPH BUSINESS.
A city, so authorized by the state, may, as against federal constitutional limitations of power, impose on a telegraph company a license tax, restricted to right to do business within it, where the tax does not burden, or discriminate against interstate business, and the local business is so substantial that it does not clearly appear the tax is a disguised attempt to tax interstate commerce; such tax not being an inspection measure, limited in amount to cost of issuing license or supervising the business, but being an exercise of the police power of the state for revenue purposes, restricted to internal commerce, and therefore within the state's taxing power.
The allegations of the voluminous bill essential to be considered are: That the company accepted the act of Congress of July 24, 1866 (14 Stat. 221, c. 230 [Comp. St. §§ 1007210077]), entitled, "An act to aid in the con. struction of telegraph lines," etc., and is engaged in transmitting messages by telegraph, intrastate and interstate-this is admitted; and the following which are denied, viz. that the cost of doing the intrastate business transacted by the company at Richmond is greater than the receipts from it, and that since both taxes must be paid, if at all, from receipts from interstate commerce they constitute such a burden upon that commerce of the company as to render them unconstitutional and void.
The evidence introduced on the trial was largely in the form of affidavits, together with a transcript of the evidence taken in a former case, which was stipulated into the record.
The District Court held the taxes valid and dismissed the bill. On the constitutional questions involved a direct appeal brings the case into this court for review.
Except for the contention that this record shows affirmatively and clearly that the taxes complained of are necessarily unreason
the case could well be disposed of, without
Appeal from the District Court of the Unit-able and a burden upon interstate commerce, ed States for the Eastern District of Virginia. Suit by the Postal Telegraph-Cable Company against the City of Richmond. Bill
Bros. Clarke Co.) 68 Neb. 633, 639, 94 N. W. 822, 99 N. W. 675, involved only the admissibility of the schedule of liabilities as evidence tending to prove insolvency.
discussion, on the authority of decided cases.
 That the city of Richmond has authority, under the statutes of Virginia and its charter, to impose an occupation or license tax on the business of the telegraph company done within the city is clear enough. Virginia Code, § 1042; Charter of the City of
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