26 F.(2d) 79 claimed $1,504 as expenses which he had incurred in prosecuting a contested application for a patent on one of his inventions, which by the contract he was bound to assign, and $875 for traveling expenses incident to that transaction. The learned trial court allowed the former sum and required its payment by the complainant as a condition precedent to the assignment of the letters patent and pat-. ent application but disallowed the latter sum. The respondent appealed and inter alia assigns this disallowance as error. The complainant, evidently satisfied with the decree in its favor on the main issue, did not appeal but by a procedure quite unknown to this court-which it terms "cross-assignments of error"—charges error to the court in allowing the larger sum and making specific performance conditioned on its payment. Of course the complainant cannot in this manner hold fast to the decree for what is favorable to it and attack that which is unfavorable and obtain a review without cost or risk. [2] As to the assignment that the court erred in disallowing the item of $875 for expenses we say that if the respondent had proved this item by evidence substantially like that by which he proved the larger item, he would have a serious hearing; but he produced no evidence of these expenditures by book entries, memoranda, or even oral testimony beyond his own by no means certain statement that "as far as I can make up" they amount to "about $875." Disbursements necessarily incurred may be recovered when, as in the case of the larger item, it is necessary to balance equities; but disbursements, even when so incurred, to be validly allowed must be proved. An allowance of expenses as a condition precedent to specific performance when guessed at would be wrong. The decree is in all respects affirmed. RATLIFFE et al. v. MEYERS et al.* Adverse possession 114(1)-Evidence held Evidence held not to show adverse possession in plaintiffs' lessors to land on which plaintiffs claim oil and mineral rights by virtue of lease. Appeal from the District Court of the United States for the Eastern District of Texas; William I. Grubb, Judge. "Rehearing denied June 18, 1928. Suit by J. E. Ratliffe and others against Joe E. Meyers and others, wherein Fred Pierce and wife intervene. Decree for defendants, and plaintiffs appeal. Affirmed. W. D. Gordon and L. J. Benckenstein, both of Beaumont, Tex., for appellants. Will E. Orgain, R. E. Masterson, and Beeman Strong, all of Beaumont, Tex. (Crook, Lefler, Cunningham & Murphy, J. L C. McFaddin, Howth, Adams & Hart, and Orgain & Carroll, all of Beaumont, Tex., on the brief), for appellees. Before WALKER, BRYAN, and FOSTER, Circuit Judges. FOSTER, Circuit Judge. Appellants J. E. Ratliffe, L. Siess, R. D. McMahon, and W. S. Green brought suit against appellees to quiet their title to five acres of land, more or less, in the Humphreys survey, Jefferson county, Tex., on which they claimed the oil and mineral rights by virtue of a lease from Fred Pierce and his wife, Lillie Pierce, and to establish an easement over the lands of appellees by which the said five acres is entirely surrounded. The bill also prayed for an inlants' drilling on the said land and otherwise junction to prevent interference with appeldeveloping it. Mr. and Mrs. Pierce intervened to establish title in fee to the said land, claiming adverse possession of 10 and 25 years under the law of Texas. A decree was entered in favor of appellees. It appears that in 1902 the land in controversy formed part of a large tract owned by W. P. McFaddin and his associates, and on April 17, 1902, they conveyed the surface title to three acres to the Apex Oil Company, defull reservation of the oil and mineral rights. scribing it by metes and bounds, and with The Apex Company erected a pumping station on the land, with tanks and other paraphernalia, and built a house which was intended to be occupied by its engineer. Fred Pierce was employed by the Apex Company as a laborer, and he and his wife were permitted to occupy the house. The Apex Company failed, and Pierce went to some other oil field in pursuit of his vocation. He was away from home most of the time, and had not been on the place for approximately five years at the time the suit was tried. Mrs. Pierce continued to live on the land, cultivated a small garden patch, and eked out a living in some way by selling garden truck, eggs, and chickens. The land around the three acres was cultivated in rice for a number of years, and a levee was built around the three acres to protect it from the irrigation water. Later on a fence was added to keep hogs and other stock belonging to Mrs. Pierce from going into the rice fields. The Apex Company conveyed the three acres to the Southwestern Oil & Steamship Company in June, 1902. After that Roy N. Burgess foreclosed a trust deed against the Southwestern Oil & Steamship Company, which authorized the sale of the three acres of land. Burgess appointed M. S. Duffie as his attorney in fact, and Duffie demanded of Mrs. Pierce that she either move or buy the land she was occupying. She agreed to purchase it, and a deed was executed to her by Duffie, describing the land exactly as it was described in the deed to the Apex Company, and also reserving the mineral rights as shown in that deed. Appellees deraign title to the minerals from McFaddin et al. Fred Pierce did not testify. It is very plain from Mrs. Pierce's testimony in the record that she never claimed and did not occupy any land except the three acres belonging to the Apex Company. She did not mark the corners or run the lines on the ground of the five acres she now claims and such possession as she had was adverse to the Apex Company, which did not include the mineral rights that had been reserved to McFaddin et al. After accepting the deed she continued to reside on the land and returned only three acres for taxation. The evidence is not sufficient to show adverse possession to the five acres claimed by appellants, and hardly sufficient to show it as to the three acres. We think the title of Mr. and Mrs. Pierce must be limited to the surface rights of the three acres described in the deed. 10 R. C. L. 684, par. 14; Doty v. Barnard, 92 Tex. 104, 47 S. W. 712. The record presents no error. QUINN v. DAVIS et al.' Appeal from the District Court of the United States for the Eastern District of Texas; William I. Grubb, Judge. against B. E. Quinn.. Decree for plaintiffs, and defendant appeals. Affirmed. Suit by Rozina P. Davis and husband Oliver J. Todd and J. Austin Barnes, both of Beaumont, Tex. (Morris & Barnes, A. D. Moore, and Charles S. Pipkin, all of Beaumont, Tex., on the brief), for appellant. W. R. Blain, of Beaumont, Tex., and J. O. Davis, of Donna, Tex. (Blain & Jones, of Beaumont, Tex., on the brief), for appellees. Before WALKER, BRYAN, and FOSTER, Circuit Judges. FOSTER, Circuit Judge. Appellees brought suit in equity to cancel an oil lease of certain land owned by Mrs. Davis, on the ground that appellant, while acting as their agent for the sale of the land, had concealed material facts bearing upon its value, and had thereby induced them to execute a lease to him in the belief that the transfer was for a fair price to a third party. Appellant denied agency and relied on the transfer as in good faith to himself. A decree was entered canceling the lease and for a money judgment in favor of appellees. The record supports the following conclusions as to the material facts: Appellees, J. O. Davis and his wife, residing in California, were owners of certain interests in oil lands in what had been known as the Spindle Top field, near Beaumont, Tex. A further development of the field, after it was supposed to have been ex Circuit Court of Appeals, Fifth Circuit. May 7, hausted, by the drilling of deep wells, made. 1928. No. 5069. 1. Principal and agent ~69 (3)—Agent cannot purchase and retain land of principal, without making full disclosure of facts within his knowledge regarding value. An agent is bound to the utmost good faith, and cannot purchase and retain land of his principal, if he does not make full disclosure of all facts and circumstances within his knowledge regarding its value. it probable that their holdings were valuable. Davis inserted an advertisement in a Beaumont paper offering the land for sale, and appellant, Quinn, who is a real estate agent, wrote to him, requesting that the land be listed with him for sale, and an agreement to that effect was entered into; Quinn to receive 5 per cent. commission. The most valuable parcel of the land consisted of about 12 acres in what was known as manufacturing block No. 12. The Yount-Lee Oil Company had acquired rights in said block to said lot, which were expected to be proand were drilling wells, in close proximity Agent, purchasing oil lease from nonresident ducing. Davis and wife were in California, principal without disclosing fact that producing and were not advised as to the local deRehearing denied June 18, 1928. 2. Principal and agent 69 (3)-Agent, purchasing oil lease without disclosing to principal that producing well had been brought in nearby, held guilty of bad faith authorizing cancellation. 26 F.(2d) 81 velopments. Quinn, with full knowledge, not only concealed the true facts about the development, but wrote and wired Davis misleading statements. In March, 1926, while the development by the Yount-Lee Company was going on, Quinn induced Davis to execute a lease to him at a bonus of $400 per acre. He had previously had some negotiations with the Yount-Lee Company to transfer this lease as soon as he received it. The lease was sent to the City National Bank of Beaumont, with instructions to deliver it to Quinn on payment of the bonus. On April 11th the Yount-Lee Company brought in a producing well in close proximity to the land of appellees, which materially increased its value. Davis heard about it, and on the 21st of April wired to Quinn that all propositions were withdrawn, and that he would be in Beaumont the following Tuesday. At the same time he wired the bank to hold all the papers. April 21st was a legal holiday, and the bank did not receive the telegram. Quinn received his on the 21st, but nevertheless the next morning he went to the bank before banking hours, and before there had been an opportunity for it to receive Davis' telegram, made the payments stipulated, and took up the lease. He subsequently transferred the lease to the Yount-Lee Oil Company for a bonus of $2,000 per acre and an overriding royalty of % of all oil produced. [1,2] It is elementary that an agent is bound to the utmost good faith, and cannot purchase and retain the land of his principal, if he does not make full disclosure of all facts and circumstances within his knowledge regarding its value. The facts just stated make out a case of extreme bad faith on the part of appellant, and support the decree entered. Affirmed. CAPEHART v. UNITED STATES. Circuit Court of Appeals, Eighth Circuit. March 30, 1928. No. 7666. Criminal law 1130(4)-Writ of error to review conviction will be dismissed, where briefs are not filed in time by plaintiff in error (Rule 24). Writ of error to review conviction for possessing liquor will be dismissed under rule 24. where no briefs had been filed by plaintiff in error nor served on defendant in error on day case was set for argument. 26 F. (2d)-6 In Error to the District Court of the United States for the Northern District of Oklahoma; Franklin E. Kennamer, Judge. Lillie Capehart was convicted of possessing liquor within the limits of what formerly was the Indian Territory, and she brings error. Writ of error dismissed. D. E. Ashmore, of Earlsboro, Okl., for plaintiff in error. John M. Goldesberry, U. S. Atty., of Tulsa, Okl. Before STONE, Circuit Judge, and REEVES and OTIS, District Judges. OTIS, District Judge. Plaintiff in error on February 5, 1926, was charged in an indictment with the unlawful possession of intoxicating liquor in a place within the limits of what formerly was the Indian Territory. She was tried on that charge October 13, 1926, and, having been found guilty, on October 14, 1926, was sentenced to eight months' imprisonment and a fine of $100. Writ of error was allowed October 23, 1926. transcript of the record was certified by the clerk of the District Court December 2, 1926. The case was set for argument before this court May 16, 1927, at Kansas City, Mo. A No briefs having been' filed by the plaintiff in error or having been served on defendant in error, defendant in error on May 16, 1927, presented its motion to dismiss the writ of error; a copy of the motion and notice that it would be presented having theretofore been duly served on plaintiff in error. The motion prayed dismissal for failure to file and serve briefs as required by rule 24. To this motion plaintiff in error filed a response, setting up therein no sufficient excuse for her failure to comply with the rule, but asking a continuance, and suggesting that, if a continuance were granted, a brief would be filed, and that in that brief she would urge that the trial court erred in that part of his charge in which he commented on the evidence in the case. We have examined carefully the record and have considered the assignment of errors, and especially the complaint urged in the response to the motion to dismiss. There is no error in the record. The case might well be affirmed, and so disposed of. But the better disposition is to sustain the motion to dismiss the writ of error. Even if there had been error, that would still be the better disposition. None can complain of a strict and impartial enforcement of just rules governing the review of cases, and, on the other hand, none can justify such a relaxation of question, and was not engaged in business a rule as makes it dead letter. during any of the taxable periods except the The motion is sustained, and the writ of last. error dismissed. WESTERN PAC. R. CORPORATION v. BOWERS, Collector of Internal Revenue. The Organization and Activities of the Plaintiff Prior to June 30, 1918. On March 1, 1915, the Western Pacific Railway Company defaulted in the payment of interest on its first mortgage bonds, of District Court, S. D. New York. December 31, which $50,000,000 in face amount were out 1927. Internal revenue 9 (23)-Holding company financing subsidiary reorganized railroad corporation, and enforcing judgment of bondholders through transactions involving reorganization of entire railroad system held taxable as "carrying on business"; "doing business" (Revenue Act 1918, § 1000 [Comp. St. § 5980n]). Corporation formed on reorganization of railroad company, which took over stock of new operating company and the partially paidup bonds of the old railroad corporation as holding company, made advancements to operating corporation, and through negotiation of substantial credits and purchase of extensive properties and incorporation of new companies undertook enforcement of judgment against associated railway company, and which by such transactions accomplished reorganization of the entire railroad system, held liable for capital stock tax under Revenue Act 1918, c. 18, § 1000, 40 Stat. 1126 (Comp. St. § 5980n), as "carry ing on or doing business" during taxable period and preceding year. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Carry on Business; Doing Business.] At Law. Action by the Western Pacific Railroad Corporation against Frank K. Bowers, Collector of United States Internal Revenue for the Second District of New York. Plaintiff's complaint dismissed. Action to recover taxes alleged to have been unlawfully assessed and collected by defendant and paid under protest by plaintiff. Trial was had in December, 1926, pursuant to written stipulation waiving a jury. Final submission was delayed by counsel for various reasons until October 7, 1927. Purporting to act pursuant to section 1000 of the Revenue Act of 1918, chapter 18, 40 Stat. 1057, 1126 (Comp. St. § 5980n), the collector of internal revenue assessed against the plaintiff capital stock taxes in the sums of $24,526, for the period ending June 30, 1920, $30,374.30 for the period ending June 20, 1921, and $31,202 for the period ending June 30, 1922. Having paid these taxes under protest, plaintiff seeks recovery thereof upon the ground that it was not engaged in business during the years preceding any one of the taxable periods in standing and were secured by mortgage upon its lines of railway from San Francisco to Salt Lake City. The Equitable Trust Company of New York was the trustee under this mortgage. These bonds were not only secured by the mortgage, but were in effect guaranteed as to the payment of principal and interest by the Denver & Rio Grande Railroad Company. Equitable Trust Co. v. Denver & R. G. R. Co. (C. C. A.) 250 F. 327. The trustee filed its bill to foreclose in the United States District Court for the Northern District of California, and thereafter, on June 28, 1916, all the property and assets of the old Western Pacific Railway Company were sold under foreclosure decree for the sum of $18,000,000, and were purchased by representatives of a reorganization committee with which $47,451,500 in face amount of the first mortgage bonds had been deposited subject to the provisions of a plan and agreement of reorganization. This plan contemplated the formation of an operating company having the right of eminent domain and the formation of a corporation which should own the stock of the operating company and the claims of the bondholders participating in the reorganization against the Denver Company. It was thought necessary by the committee that the operating company should be organized under California law, so that no doubt could arise regarding its right of eminent domain. The corporation which was to hold its stock and the bondholders' claims against the Denver Company was considered necessary by the committee because under the California statutes stockholders are subject to personal liability for corporate debts, and the only effective way to enforce the claims of the bondholders against the Denver Company was through the instrumentality of a single corporation which should have full power to act with respect to all the claims. These claims in the aggregate were so large that, assuming their validity, which was contested, their collection would necessarily present difficult problems, seriously complicated by the fact that the property of the Denver Company was itself threatened by foreclosure 26 F.(2d) 82 of liens prior to the claims arising upon the agreement of guaranty, and requiring the exercise of business judgment and the ne gotiation and execution of financial plans and agreements in their solution. Pursuant to this plan, the plaintiff corporation was organized under the laws of Delaware on June 29, 1916. The nature of its business and the objects and purposes proposed to be transacted, promoted, and carried on by it are defined in its certificate of incorporation as follows: "To purchase, subscribe for, or otherwise acquire and own, hold, use, sell, assign, transfer, mortgage, pledge, exchange, or otherwise dispose of real and personal property of every kind and description, including shares of stock, bonds, debentures, notes, evidences of indebtedness and other securities, contracts, or obligations of any corporation or corporations, association or associations, domestic or foreign, and to pay therefor, in whole or in part, in cash or by exchanging therefor stocks, bonds, or other evidences of indebtedness or securities of this or any other corporation, and while the owner or holder of any such real or personal property, stocks, bonds, debentures, notes, evidences of indebtedness, or other securities, contracts, or obligations, to receive, collect, and dispose of the interest, dividends, and income arising from such property and to possess and exercise in respect thereof all the rights, powers, and privileges of ownership, including all voting powers on any stocks so owned." "To aid, either by loans or by guaranty of securities or in any other manner, any corporation, domestic or foreign, any shares of stock or any bonds, debentures, evidences of indebtedness, or other securities whereof are held by this corporation or in which it shall have any interest and to do any acts designed to protect, preserve, improve, or enhance the value of any property at any time held or controlled by this corporation or in which it at that time may be interested." "To enter into, make, perform, and carry out contracts of any kind for any lawful purpose with any persons, firms, associations, or corporations." "To purchase, acquire, lease, own, and enjoy any and all such other property, real and personal, as may be reasonably necessary for the carrying on of the business of the corporation." As originally drawn, the certificate of incorporation authorized the directors to enforce, and, with the approval of two-thirds of the stockholders, to compromise or settle, claims which it might acquire arising out of the agreement of the Denver & Rio Grande Railroad Company, by which it guaranteed payment of the old Western Pacific bonds, but required that the proceeds of these claims should either be distributed to its stockholders, or, if not distributed, paid over to the operating company upon such lawful consideration, or without consideration, as agreed. This provision was amended on November 29, 1920, so as to permit, as an additional alternative, the retention of the proceeds of such claims as corporate assets, but only upon issuing to the stockholders in proportion to their holdings paid-up stock to the amount of the fair value of the assets so retained. The authorized capital of the plaintiff company was $75,000,000, consisting of $47,500,000 par value of common stock and $27,500,000 par value of 6 per cent. preferred stock. The operating company was organized with the same capital. The properties purchased on foreclosure were transferred to the operating company in exchange for its entire capital stock of $75,000,000, and this stock was transferred and assigned to the plaintiff corporation in exchange for $74,996,400 par value of its capital stock, which was distributed among the former owners of the first mortgage bonds of the old Western Pacific, who had deposited their bonds with the reorganization committee, and to underwriters of a new issue of $20,000,000 face amount of first mortgage bonds of the operating company. The reorganization committee also transferred and assigned to the plaintiff corporation the $47,451,500 face amount of the partially paid first mortgage bonds of the old Western Pacific, together with all the rights inhering in said bonds to recover from the Denver Company the balance remaining unpaid thereon after crediting the amount realized upon the foreclosure sale. In 1916 the trustee instituted an action in this court against the Denver Company to recover damages suffered by the bondholders of the old Western Pacific by reason of the Denver Company's breach of its contract of guaranty. The trustee recovered judgment in that suit for the sum of $38,270,343.17, which judgment was affirmed by the United States Circuit Court of Appeals for the Second Circuit on January 3, 1918 (250 F. 327). On April 15, 1918, the Supreme Court of the United States (246 U. S. 672, 38 S. Ct. 423, 62 L. Ed. 932) denied the Denver Company's petition for a writ of certiorari to. review this judgment. In October, 1917, the trustee received $3,003,562.52 in partial satisfaction of this judgment by means of an ex |