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that, under this saving clause, "a right sanc-
tioned by the maritime law may be enforced
through any appropriate proceeding recog-
nized at common law." And the jurisdiction
of the State courts to enforce the new com-
mon law right made a part of the maritime
law, is necessarily affirmed by the provision
contained in section 6 of the Employers' Li-
ability Act 3-plainly, we think, incorporated
in the Merchant Marine Act by the generic
reference that jurisdiction of the Federal
courts under the Act shall be concurrent with
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that of the courts *of the several States, and
no case arising thereunder when brought in
any State court of competent jurisdiction shall

ly to enforce the liability of the owner of the
vessel to indemnity for injuries caused by a
defective appliance, without regard to negli-
gence, for which an action of law could have
been maintained prior to the Merchant Ma-
rine Act, Carlisle Packing Co. v. Sandanger,
42 S. Ct. 475, 259 U. S. 255, 66 L. Ed. 927;
and we need not determine whether if it had
been thus brought under the old rules, the
state statute of limitations would have been
applicable. See Western Fuel Co. v. Garcia,
42 S. Ct. 89, 257 U. S. 233, 66 L. Ed. 210.
Here the complaint contains an affirmative
averment of negligence in respect to the ap-
pliance. And, having been brought after the
passage of the Merchant Marine Act, we
think the suit is to be regarded as one found-be removed to any Federal court. Nor is the
ed on that Act, in which the petitioner, in-
stead of invoking, as he might, the relief ac-
corded him by the old maritime rules, has
elected to seek that provided by the new rules
in an action at law based upon negligence-diction "shall be under the court of the dis-
in which he not only assumes the burden of
proving negligence, but also, under section 3
of the Employers' Liability Act, subjects him-
self to a reduction of the damages in propor-
tion to any contributory negligence on his
part. This conclusion is in harmony with
the Panama Railroad Case, 44 S. Ct. 391, 264
U. S. 382, 383,2 in which the complaint charged

*37

jurisdiction in suits under section 33 of the
Merchant Marine Act limited to the Federal
courts-as has been sometimes held in the
District Courts-by its provision that juris

trict" in which the employer resides or his
principal office is located. This, as was held
in the Panama Railroad Case, 44 S. Ct. 391,
264 U. S. 385,2 was not intended to affect the
general jurisdiction of the Federal courts,
but only to prescribe the venue of actions
brought in them under the Act.

[5] 3. This brings us to the question wheth-
er a suit brought in a State court to enforce
the right of action granted by the Merchant
Marine Act may be commenced within two
years after the cause of action accrues, or
whether a State statute fixing a shorter pe-

that the *injuries resulted from negligence in
providing a defective appliance and in other
respects; and it is not in conflict with the
Carlisle Packing Co. Case, in which, as shown
by the original record, the suit was com-riod of limitation will apply. Section 6 of the
menced in 1918, prior to the Merchant Marine
Act. And see Lorang v. Steamship Co. (D. C.)
298 F. 547, and Lynott v. Transit Corporation,
195 N. Y. S. 13, 202 App. Div. 613.

Employers' Liability Act provides that "no action shall be maintained under this Act unless commenced within two years from the vision is one of substantive right, setting a day the cause of action accrued." This prolimit to the existence of the obligation which the Act creates. Atlantic Coast Line v. Burnette, 36 S. Ct. 75, 239 U. S. 199, 201, 60 L. Ed. 226. And it necessarily implies that the acRe East River Co., 45 S. Ct. 114, 266 U. S. 355, tion may be maintained, as a substantive 368, 69 L. Ed. 324, and expressly held in Ly-right, if commenced within the two years.

[2] 2. It is clear that the State courts have jurisdiction concurrently with the Federal courts, to enforce the right of action established by the Merchant Marine Act as a part of the maritime law. This was assumed in

nott v. Transit Corporation, supra, affirmed, without opinion, in 138 N. E. 473, 234 N. Y. 626. And it has been implied in various decisions in the District Courts involving the question of the right to remove to a Federal

court a suit that had been commenced in a State court.

[3, 4] By a provision of the Judiciary Act of 1789, now embodied in section 24, subd. 3,

[6] The adoption of an earlier statute by reference makes it as much a part of the later act as though it had been incorporated at full length. Kendall v. United States, 12 Pet. 524, 625, 9 L. Ed. 1181; In re Heath, 12

S. Ct. 615, 144 U. S. 92, 94, 36 L. Ed. 358; Interstate Railway v. Massachusetts, 28 S. Ct. 26, 207 U. S. 79, 85, 52 L. Ed. 111, 12 and section 256, subd. 3, of the Judicial Code "all that is fairly covered by the reference," Ann. Cas. 555. It brings into the later act (Comp. St. §§ 991, 1233), giving District Panama Railroad Case, 44 S. Ct. 391, 264 U. Courts original jurisdiction of civil causes S. 3922; that is to say, all the provisions of of admiralty and maritime jurisdiction, there is saved to suitors in all cases the the former act which, from the nature of right of a common law remedy where the the subject-matter, are applicable to the later act. It is clear that the provision of the Emcommon law is competent to give it. Chelentis v. Steamship Co., 38 S. Ct. 501, 247 ployers' Liability *Act as to the time within U. S. 372, 62 L. Ed. 1171, 384, where the suit which a suit may be instituted, is directly aphad been commenced in a State court and plicable to the subject-matter of the Merremoved to the Federal court, it was said

68 L. Ed. 748.

In

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Inserted by the amendment of 1910. 36 Stat. 291,

c. 143.

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(46 S. Ct.)

3. Corporations 216-Nature, extent, and conditions of stockholder's liability on account of stock not fully paid is determined by law of state or country by which corporation was created.

chant Marine Act and covered by the refer- | ruptcy court, may make any defense affecting ence. In the Panama Railroad Case, 44 S. his individual liability, but cannot attack adCt. 391, 264 U. S. 392,2 it was held that the ministrative order determining need of or levycontention that the Merchant Marine Act did ing assessment. not possess the uniformity in operation essential to its validity as a modification of the maritime law was unfounded, since the Employers' Liability Act which it adopted, had a uniform operation, which could not be deflected from "by local statutes or local views Nature, extent, and condition of stockholdof common law rules." The period of time er's liability on account of stock not fully paid, within which an action may be commenced is and question whether that liability is to corpoa material element in such uniformity of ration or to creditors, is determined by law of operation. And, plainly, Congress in incorpo-state or country by which corporation was crerating the provisions of the Employers' Liability Act into the Merchant Marine Act did | 4. Bankruptcy not intend to exclude a provision so material, and to permit the uniform operation of the Merchant Marine Act to be destroyed by the varying provisions of the State statutes of limitation.

We conclude that the provision of section 6 of the Employers' Liability Act relating to the time of commencing the action, is a material provision of the statutes "modifying or extending the common law right or remedy in cases of personal injuries to railway employees" which was adopted by and incorporated in the Merchant Marine Act. And, as

ated.

145 (2).

Stockholder's liability on account of stock not fully paid, if to the corporation, passes like other choses in action to trustee in bankruptcy. 5. Limitation of actions ~58 (4) — Under Pennsylvania law, stockholder's liability on account of unpaid stock becomes absolute, as affects running of limitations, when deficiency in assets becomes apparent; action by trustee in bankruptcy on stock assessment held barred by limitations.

Under law of Pennsylvania, stockholder's liability on account of unpaid stock subscriptions becomes absolute, as affects running of limitations, as soon as deficiency in assets becomes apparent, without any assessment by to sue, which liability is not modified or a new corporation or court, or direction for trustees one created by Bankruptcy Law, and where assessment against stockholder was not confirmed until more than six years after deficiency became apparent, held, trustee's action to enforce assessment was barred by general stat

a provision affecting the substantive right
created by Congress in the exercise of its
paramount authority in reference to the mari-
time law, it must control in an action brought
in a State court under the Merchant Marine
Act, regardless of any statute of limitations
of the State. See Arnson v. Murphy, 3 S.
Ct. 184, 109 U. S. 238, 243, 27 L. Ed. 920.
The judgment of the Supreme Court of Cal-ute of limitations.
ifornia is reversed, and the case remanded
for further proceedings not inconsistent with
this opinion.

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2. Bankruptcy

On Writ of Certiorari to the Supreme Court of the State of Pennsylvania.

Action by Frank A Harrigan, trustee in bankruptcy of the Louis J. Bergdoll Motor Company, against Louis J. Bergdoll, now known as Louis J. Bergson. Judgment for defendant was affirmed by the Supreme Court of Pennsylvania (126 A. 269, 281 Pa. 186), and plaintiff brings certiorari. Affirmed.

Messrs. F. A. Harrigan and Joseph W. Catharine, both of Philadelphia, Pa., for petitioner.

*561

*Messrs. W. B. Gibbons and Harry C. Kohlhas, Jr., both of Philadelphia, Pa., for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

Harrigan, trustee in bankruptcy of the Louis J. Bergdoll Motor Company, brought this suit in a state court of Pennsylvania, on July 13, 1921, to recover $155,571.79 and interest from Bergdoll, a stockholder in the company. The defendant, a resident of the

250(1)-Stockholder, in suit to enforce stock assessment made by bankruptcy court, may make any defense affecting his individual liability, but cannot attack administrative order making assessment. Stockholder, as defendant in plenary action to enforce stock assessment made by bank-state, pleaded the general six-year statute of

268 L. Ed. 748.

limitations. The claim sued on is the assess

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until October, 1917.

The application then made was strenuously opposed by Bergdoll. The order for the assessment was entered by the referee in February, 1918, but was not confirmed by the District Court until July, 1919. In re Bergdoll Motor Co., 260 F. 234. That was more than six years after the deficiency had become apparent. The judgment of the District Court, besides making the assessment, ordered Bergdoll to pay the same. On this ground, among others, Bergdoll appealed to the United States Circuit Court of Appeals. In March, 1920, that court affirmed the judg

ment, in so far as it adjudicated the necessity for an assessment, fixed the rate and levied the same upon those who appear prima facie to be subject thereto, but reversed the judgment in so far as it had adjudged the personal liability of Bergdoll and the amount thereof. Bergdoll v. Harrigan (C. C. A.) 263 F. 279, 281, 283. Thereafter this suit was brought in the state court. The trial court ruled that the statute of limitations had run before the suit was instituted. Its judgment was affirmed by the highest court of the state. 126 A. 269, 281 Pa. 186. This court granted a writ of certiorari. 45 S. Ct. 123, 266 U. S.

598, 69 L. Ed. 460.

*563

810, 162 U. S. 329, 336-337, 40 L. Ed. 986; In re Remington Automobile & Motor Co., 153 F. 345, 82 C. C. A. 421; In re Munger Vehicle Tire Co., 168 F. 910, 91 C. C. A. 314; In re M. Stipp Construction Co., 221 F. 372, 137 C. C. A. 180. The District Court recognized this rule. It erred, as the Court of Appeals held, in concluding that Bergdoll had consented to the exercise by the bankruptcy court of jurisdiction to determine whether he was personally liable.

The decision of the Supreme Court of the had run was said to be an application of the state holding that the statute of limitations state law, settled at least since Swearingen v. Sewickley Dairy Co., 47 A. 941, 198 Pa. 68, 53 L. R. A. 471, decided in 1901, that the liability of a shareholder in a Pennsylvania business corporation to creditors of the company on account of stock not full-paid becomes fixed at the time it is definitely ascertained that the company is insolvent and will be obliged to call unpaid stock subscriptions in order to satisfy its obligations; that, as soon as the deficiency of assets becomes apparent, it becomes the duty of creditors, if they desire to obtain payment of their claims, to take the necessary steps to bring about a formal determination of the extent of the assessment on unpaid stock subscriptions necessary to liquidate the indebtedness and also to begin proper action to collect such amount from the respective stockholders within the time limited by the general statute of limitaThe sole question for decision is whether the state law governs in view of the proceedings had in bankruptcy.

tions.

*564

[3-5] The trustee contends that the statute of limitations did not begin to run until March 27, 1920, the date of the judgment of the Circuit Court of Appeals which confirmed the order making the assessment and authorized suit to collect it. This contention rests upon the assumption that Bergdoll's liability remained contingent until the entry of that judgment and, hence, that the cause of action arose then. The highest court of Pennsylvania has held that assessment was not a condition precedent to the existence of the cause of action, and that the liability became ab. solute without an assessment, either by the corporation or by any court, as soon as the need of this asset for paying debts became apparent. Compare Potts v. Wallace, 13 S. Ct. 196, 146 U. S. 689, 36 L. Ed. 1135; Kelley V. Gill, 38 S. Ct. 38, 245 U. S. 116, 121, 62 L. Ed. 185. The nature, the extent, and the conditions of the liability of a stockholder on account of stock not full-paid depend primarily upon the law of the state or country by which the corporation was created. Glenn v. Liggett, 10 S. Ct. S67, 135 U. S. 533, 548, 34 L. Ed. 262. Compare Benedict v. Ratner, 45 S. Ct. 566, 268 U. S. 353, 359, 69 L. Ed. 991.1

[1.2] The reversal by the Circuit Court of Appeals of the judgment of the District Court, in so far as it adjudged the liability of Bergdoll, was in accord with the rule, settled in the Third circuit and elsewhere, that the order of assessment and levy is a purely administrative proceeding preliminary to the institution of a suit, that in the absence of consent there is no jurisdiction in the bankruptcy court to fix the personal liability of a stockholder, and that any person whose stock is assessed may when sued in a plenary action on such assessment in any court of competent jurisdiction make any defense thereto affecting his individual liability, but may not attack the administrative order of the District Court in determining the need of an assessment, or in levying the same. Great 1 See Maryland Rail Co. v. Taylor, 231 F. 119, 120, Western Telegraph Co. v. Purdy, 16 S. Ct. 145 C. C. A. 307; Enright v. Heckscher, 240 F. 863,

(46 S. Ct.)

That law determines whether the liability is | 2. Courts

394 (3).

to the corporation or is to creditors.2 Com- Supreme Court will follow decisions of pare Converse v. Hamilton, 32 S. Ct. 415, 224 state courts as to meaning and proper appliU. S. 243, 253, 56 L. Ed. 749, Ann. Cas. 1913D, cation of state Transfer Tax Law. 1292; Selig v. Hamilton, 34 S. Ct. 926, 234 U. S. 652, 658, 58 L. Ed. 1518, Ann. Cas. 1917A, 101. If the liability is to the corporation, it passes like other choses in action to the trus-tratrix of the estate of John B. Johnson, detee in bankruptcy. The Bankruptcy Law (Comp. St. §§ 9585-9656) does not modify this right of action against the stockholder or create a new one. It merely provides that the right created by the state law shall pass to the trustee and be enforced by him for the

*565

benefit of creditors. The order *of assessment and the direction that the trustee sue

to recover were appropriate administrative proceedings in bankruptcy. See In re Miller Electrical Maintenance Co. (D. C.) 111 F. 515. But it was for the court of Pennsylva

nia to say whether they were indispensable to the enforcement of the stockholder's liability.

Scovill v. Thayer, 105 U. S. 143, 26 L. Ed.
968, upon which the trustee relied, is not in-
consistent with the conclusion stated. That
was a suit brought in the federal court for
Massachusetts to enforce the liability of a
stockholder in a Kansas corporation.
courts of Kansas had not settled when the
cause of action created by its law arose. The
trial court and this court were, therefore,
obliged to decide that question of state law.
See Burgess v. Seligman, 2 S. Ct. 10, 107 U.

S. 20, 33, 27 L. Ed. 359.
Affirmed.

(271 U. S. 1)

KEITH V. JOHNSON.

The

Writ of Certiorari to the United States Circuit Court of Appeals for the Second Circuit. Action by Emma B. Johnson, as adminisceased, against Henry P. Keith, late Collector of United States Internal Revenue. Judgment for plaintiff was affirmed by the Circuit Court of Appeals (3 F.[2d] 361), and the defendant brings certiorari. Affirmed.

*2

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*Mr. Justice BUTLER delivered the opinion of the Court.

[1] In 1917, John B. Johnson, a resident of New York, died intestate. Respondent was appointed administratrix, and in that year paid to the state $233,044.20, the transfer tax imposed pursuant to article 10, Tax Law (chapter 60, Consolidated Laws). When respondent made the income tax return for the estate for 1917 (Revenue Act 1916, c. 463,.39 Stat. 756, 757 [Comp. St. § 6336a et seq.]), she claimed that the state transfer tax paid in that year was deductible; but, yielding to the regulations of the Treasury Department, she did not make the deduction, and under protest paid to the United States an income tax

(Argued Jan. 6, 1926. Decided April 12, 1926.) calculated on $164,958.00, amounting to $30,

No. 295.

1. Internal revenue 7-State transfer tax paid by administratrix is deductible in deter. mining taxable income of estate of decedent (Revenue Act 1916, §§ 2[b], 5[a], 8[c], being Comp. St. §§ 6336b, 6336e, 6336h); Tax Law N. Y. §§ 220, 221 [a], 224, 236).

In determining taxable income of estate of a decedent during administration, under Revenue Act 1916 (Comp. St. § 6336a et seq.), transfer tax paid by administratrix, under Tax Law N. Y. art. 10, is deductible, in view of sections 2 (b), 5 (a), 8 (c) of act of 1916 and sections 220, 221 (a), 224, and 236 of Tax Law.

985.53. If the deduction had been made there would have been no taxable income. This ac

tion was brought to recover the amount paid. The District Court gave respondent judgment which was affirmed by the Circuit Court of Appeals.

Under the Revenue Act of 1916, the income of the estate for 1917 during administration was subject to a tax to be assessed against the administratrix. She was required to pay the tax and was indemnified against claims of beneficiaries for the amount paid. Section 2 (b). It is provided that in computing net income, in the case of a citizen or resident of the United States, for the purpose of the tax there shall be allowed as deductions the taxes imposed by the authority of the United States or of any state and paid within the Administrators year. Section 5 (a) Third. and other fiduciaries are subject to all the 42, 49, 50, 149 C. C. A. 252; Courtney v. provisions which apply to individuals. Sec

878, 153 C. C. A. 549; In re Manufacturers' Box & Lumber Co. (D. C.) 251 F. 957; Wallace v. Weinstein, 257 F. 625, 168 C. C. A. 575; Johnson v. Louis

ville Trust Co. (C. C. A.) 293 F. 857, 36 A. L. R. 785. 2 See In re Jassoy Co., 178 F. 515, 101 C. C. A. 641; Babbitt v. Read (D. C.) 215 F. 395; Id., 236

F.

Georger, 228 F. 859, 143 C. C. A. 257; Courtney v.
Croxton, 239 F. 247, 152 C. C. A. 235; Petition of
Stuart (C. C. A.) 272 F. 938; In re Pipe Line Oil
Co. (C. C. A.) 289 F. 698.

tion 8 (c).

*In United States v. Woodward, 41 S. Ct.

615, 256 U. S. 632, 65 L. Ed. 1131, it was held | amount may be handed over to the state, the that the federal estate taxes imposed by the tax is in effect an appropriation by the state Revenue Act of 1916 are deductible in ascer- of a part of the property of the deceased at taining net taxable income received by estates the time of death, and the state's portion is of deceased persons during the period of ad- deductible from the legacy and does not pass ministration or settlement. Revenue Act to the legatee. If money is transferred the 1918, title 2 (Comp. St. Ann. Supp. 1919, § tax is withheld; property other than money 6336a et seq.). The court said (41 S. Ct. passes subject to the transfer tax. Cf. Matter 616, 256 U. S. p. 635): of Estate of Swift, 32 N. E. 1096, 137 N. Y. 77, 83, 18 L. R. A. 709. In Matter of Merriam, 36 N. E. 505, 141 N. Y. 479, a bequest to the United States was held subject to the tax. The court said (36 N. E. 506, 141 N. Y. 484): "This tax, in effect, limits the power of tes

*

*6

"It [the estate tax] is made a charge on the estate and is to be paid out of it by the administrator or executor substantially as other taxes and charges are paid. * * It does not segregate any part of the estate from the rest and keep it from passing to the administrator or executor for purposes of administra- | tamentary disposition, and legatees and devition, but is made a general charge on the gross estate and is to be paid in money out of any available funds or, if there be none, by converting other property into money for the purpose."

*

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sees take their bequests and devises subject to this tax imposed upon the succession of property. This view eliminates from the case the point urged by the appellant that to collect this tax would be in violation of the wellestablished rule that the state cannot tax the property of the United States. Assuming this legacy vested in the United States at the mo

The government contends that the state transfer tax is not imposed on the estate and is not deductible in calculating the federalment of testator's death, yet in contemplation tax on the income of the estate.

of law the tax was fixed on the succession at the same instant of time. This is not a tax

imposed by the state on the property of the United States. The property that vests in the United States under this will is the net amount of its legacy after the succession tax is paid."

The transfer tax law imposes a tax "upon the transfer of property" from the deceased (section 220) at rates graduated, according to the amount transferred to each beneficiary and the relationship, or absence of any, between the deceased and beneficiaries. SecThat case was brought to this court on tions 221, 221 (a). Until paid the tax is a lien writ of error. United States v. Perkins, 16 upon the property of the deceased. The per- S. Ct. 1073, 163 U. S. 625, 41 L. Ed. 287. Folson to whom the property is transferred is lowing the decisions of the New York court made personally liable for the tax. The per- it was held that the transfer tax is not imsonal representatives of the deceased are per-posed on property but on the transfer, and sonally liable for the tax until its payment; they are authorized to sell the property of the estate to obtain money to pay the tax in the same manner as they may to pay debts of

*5

The

the deceased. Section 224.1 *They are not entitled to discharge until the tax is paid. Section 236. The law plainly makes it their duty to pay the tax out of the estate. property remaining passes to the beneficia ries. When property is transferred without the deduction of the tax the beneficiary is required to pay. But, by whomsoever the

1 Lien of Tax and Collection by Executors, Administrators and Trustees. Every such tax shall be and remain a lien upon the property transferred until paid and the person to whom the property is 80 transferred, and the executors, administrators and trustees of every estate SO transferred shall be personally liable for such tax until its payment. Every executor, administrator or trustee shall have full power to sell SO much of the property of the decedent as will enable him to pay such tax in the same manner as he might be entitled by law to do for the payment of the debts of the testator or intestate. Any such executor, administrator or trustee having in charge or in trust any legacy or property for distribution subject to such tax shall deduct the tax therefrom and shall pay over the same to the state comptroller or county treasurer, as herein provided. If such legacy or property be not in money, he shall collect the tax thereon upon the appraised value thereof from the person entitled thereto. He shall not deliver or be compelled to deliver any specific legacy or prop

that the property does not pass to the heirs or legatees until, by the enforced contribution to the state, it has suffered diminution to the amount of the tax. And see Prentiss v. Eisner (D. C.) 260 F. 589, affirmed (C. C. A.) 267 F. 16; People v. Fraser, 40 N. E. 165, 145 N. Y. 593, affirming 26 N. Y. S. 814, 74 Hun, 282.

The government cites New York Trust Co. v. Eisner, 41 S. Ct. 506, 256 U. S. 345, 65 L. Ed. 963, 16 A. L. R. 660. In that case there was involved the amount of the federal estate tax under section 201 of the Revenue Act of 1916, 39 Stat. 756, 777 (Comp. St. §

erty subject to tax under this article to any person until he shall have collected the tax thereon. If any such legacy shall be charged upon or payable out of real property, the heir or devisee shall deduct such tax therefrom and pay it to the executor, administrator or trustee, and the tax shall remain a lien or charge on such real property until paid; and the payment thereof shall be enforced by the executor, administrator or trustee in the same manner that payment of the legacy might be enforced, or by the district attorney under section two hundred and thirty-five of this chapter. If any such legacy shall be given in money to any such person for a limited period, the executor, administrator or trustee shall retain the tax upon the whole amount, but if it be not in money, he shall make application to the court having jurisdiction of an accounting by him, to make an apportionment, if the case require it, of the sum to be paid into his hands by such legatees, and for such further order relative thereto as the case may require.

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