The depositors of the licensee for whose benefit the money deposited is a trust fund are those depositors whom it was the duty of the state which issued the license to protect, and not depositors in other states whom it had no authority to protect. So the provision of section 29d, exempting bankers who deposit $100,000 from the other provisions of the act, point only to a business done in the state of New York. The bond is to be $100,000, "where the business is conducted in a city. having a population of one million or over, and if conducted elsewhere in the state such bond shall be in the sum of fifty thousand dollars, or in lieu thereof money or securities approved by the Comptroller." It is impossible, in my opinion, that these provisions can apply to a business done in any city of less than 1,000,000 population outside of the state. Aside from any close verbal scrutiny of the statute, it seems to me that on general principles the result is the same. Each state exercises authority over and owes a duty of protection to those within its jurisdiction. It can exercise no such authority, and it owes no such duty to those without its jurisdiction. Those persons who did business with the bankrupts in New Jersey, Pennsylvania, and Ohio must look to the law of those states for their protection. In my opinion the New York creditors are not protected by the $5,000 bond given in Ohio, at least as long as there are creditors in Ohio; and the Ohio creditors are not protected by the money deposited with the New York Comptroller, so long as there are creditors in New York. The question whether a dividend to all general creditors should be now declared depends on the provisions of section 65 of the Bankruptcy Act. The $100,000 fund should be distributed to the New York depositors without further delay. If no dividend has been declared, and there is a large enough amount on hand to pay a dividend of 5 per cent., or if there has been a dividend and there is enough to pay a dividend of 10 per cent., it should be declared without waiting for a sale of the real estate. My conclusion is that the $100,000 fund should be distributed among the New York depositors, and that a dividend should be paid at once. if there are sufficient funds to do so in conformity with section 65 of the Bankrupt Act (Act July 1, 1898, c. 541, 30 Stat. 563 [U. S. Comp. St. 1901, p. 3448]). BROWN et al. v. FLETCHER. (District Court, S. D. New York. December 20, 1912.) 1. JUDGMENT (§ 656*)-DEFENSES PREVIOUSLY DETERMINED DECISION ON DE MURRER. Defenses pleaded in an answer which were in substance determined adversely to defendant on a demurrer to the bill will not be again considered. [Ed. Note.-For other cases, see Judgment, Cent. Dig. § 1167; Dec. Dig. § 656.*] For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 2. JUDGMENT (§ 683*)-Judgment as BAR-PERSONs Bound. A judgment adjudging an assignment of a claim to be void is not binding on a second assignee, whose assignment was prior to the judgment, but who was not made a party to the suit. [Ed. Note.-For other cases, see Judgment, Cent. Dig. 1206; Dec. Dig. § 683.*] 3. APPEARANCE (§ 19*)-GENERAL APPEARANCE-JURISDICTION OF PERSON ACQUIRED. In a proceeding in a Surrogate's Court in New York by a testamentary trustee for a decree determining whether he should pay a legacy to the legatee named or to assignees of the same, where the assignees, who were nonresidents of the state, were made parties and appeared generally and attempted unsuccessfully to obtain a removal of the cause, such appearance gave the court jurisdiction over their persons, rendering its decree binding on them. [Ed. Note. For other cases, see Appearance, Cent. Dig. §§ 79-82, 8490; Dec. Dig. § 19.*] In Equity. Suit by John A. S. Brown and Frank E. Schermerhorn, as trustee under the will of Thomas Cunningham, deceased, against Austin B. Fletcher, as testamentary trustee of Conrad Morris Braker, under the will of Conrad Braker, Jr., deceased. Decree for defend ant. Frederic W. Frost, of New York City (Charles H. Burr, of Philadelphia, Pa., of counsel), for complainants. William P. S. Melvin, of New York City, for defendant. HOLT, District Judge. [1] This is a suit in equity to recover $10,-. 000 held by the defendant as testamentary trustee under a trust which directed the payment of that amount to Conrad Morris Braker upon his attaining a certain age, which he has already reached. The complainants allege in the bill that they are entitled to receive such legacy by virtue of certain assignments, one by Braker to Rabe, another by Rabe to the New York Finance Company, and another by the New York Finance Company to the complainants. The defendant originally demurred to the bill upon a number of grounds. The demurrer was heard before Judge Hand, who overruled it. In my opinion the defenses pleaded in the answer, which were passed upon in the decision of the demurrer, should be held to have been determined by that decision. The evidence taken upon final hearing does not present any different questions in regard to such grounds of defense from those which appeared on the face of the bill, and under those circumstances the presentation of those questions to be litigated again upon the final hearing simply amounts to trying the same question over before another judge. [2] The answer pleads as a defense a judgment recovered in an action brought in the New York Supreme Court by Conrad Morris Braker against the New York Finance Company, Rabe, and the defendant, holding that the assignments from Braker to Rabe and from Rabe to the New York Finance Company were usurious and void. The pendency of such action was one of the grounds of demurrer, but at the time the demurrer was interposed no judgment had been ren For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes dered. The effect of that judgment therefore was not passed upon in the decision upon the demurrer. I think that that judgment in the New York Supreme Court is immaterial in this case because the complainants Brown and Schermerhorn were not made parties to that action, and are not bound by the judgment rendered in it. [3] The principal defense relied on is the claim that a decree of the surrogate of New York county that the defendant pay the money in his hands to Braker, rendered in a proceeding brought by the defendant in that court for an accounting in respect to his liability for the said $10,000, is a bar to the complainant's recovery in this case. After this suit was brought, the defendant instituted the proceeding in the Surrogate's Court for an accounting, and in his petition joined as parties the complainants in this suit, among others. The pendency of a suit in a federal court is not a bar to a suit brought in a state court between the same parties involving the same issues. But if two suits are pending, one in a federal court and one in a state court, between the same parties, and involving the same issues, and a judgment is recovered in one of them, such a judgment is res adjudicata upon the issues raised in the other suit. In this case, therefore, the judgment in the Surrogate's Court, to the effect that the fund in question should be paid by the trustee to Braker, is a bar to the claim in this suit that the fund in question should be paid to the complainants Brown and Schermerhorn, if the Surrogate had jurisdiction to render the decree in the Surrogate's Court. The complainants claim that he had no such jurisdiction. The complainants are nonresidents of this state, and could not be served personally within this county. The cause of action in the proceedings in the Surrogate's Court related to a fund situated in this county, and was an action in rem. Substituted service on nonresidents of New York was therefore authorized by the New York Code of Procedure. Section 2524 of that Code provides that service of a citation by publication shall be made by publication of the citation in two newspapers, or at the option of the petitioner, by delivering a copy of the citation without the state to each person named in it in person, and that the order must also contain a direction that on or before the date of the first publication the petitioner deposit in a specified post office a copy of the citation, and of the order, contained in a securely closed postpaid wrapper, directed to the person to be served, at a place specified in the order. Such an order was made. The proof shows that, after the order of publication for substituted service was made, the citation was personally served upon Brown and Schermerhorn outside the state, but there is no proof that copies of the citations were sent to them by mail; and it is claimed, therefore, that the Surrogate's Court obtained no jurisdiction. This objection is highly technical, and is, in my opinion, of doubtful validity under the New York authorities (Kennedy v. Arthur [Sup.] 11 N. Y. Supp. 661; Matter of Field, 131 N. Y. 184, 30 N. E. 48; Sabin v. Kendrick, 2 App. Div. 96, 37 N. Y. Supp. 524), although undoubtedly the general rule is that the provisions of a statute authorizing service by publication must be strictly complied with in all essential respects. But whether jurisdiction over Brown and Schermerhorn was originally obtained by service of the citation seems immaterial. They subsequently appeared in the Surrogate's Court, served a general notice of appearance, and filed a petition to remove the controversy, as between the complainants and the defendant, to this court. Such removal was ordered, but subsequently, on motion, this court remanded the case to the Surrogate's Court. In my opinion the general appearance of the complainants in the Surrogate's Court, although it may have been entered solely for the purpose of obtaining the removal of the case to the federal court, conferred jurisdiction upon the Surrogate's Court over the complainants, and authorized it, after the proceedings were remanded, to proceed to a decree which would bind them. The complainants further claim that the Surrogate's Court had no jurisdiction to render a decree on the ground that it was represented to that court that the complainants had not appeared in that court, and that the surrogate entered the decree in reliance on that representation. Whatever the fact may be in that respect, such a representation, if made, in my opinion, did not destroy the jurisdiction of the Surrogate's Court. After the complainants had appeared generally in that court, that court had jurisdiction both of the subject-matter and of the persons of the complainants. If there is any ground on which that decree should be vacated and the complainants given a hearing, an application should be made to the Surrogate's Court for that purpose; but that court having rendered a decree, after it had obtained juris-` diction of the person and the subject-matter, I think that its decree is conclusive upon the complainants until set aside by that court, or reversed upon appeal. The claim that the decree entered is not final because a motion to open it has been made seems to me untenable. The decree has been entered, and has not yet been vacated. Even if it should be vacated, I think that the Surrogate's Court, having once entered its decree, will continue thereafter in sole control of the litigation. My conclusion therefore is that the bill in this suit should be dismissed, with costs. THE YANKEE. THE HUGI. (District Court, D. Rhode Island. February 19, 1913.) Admiralty, No. 286. COLLISION (§ 105*)-MOTOR AND SAILING BOATS MEETING-NEGLIGENT NAVI GATION. A collision in the bay at Fall River at the time of a yacht race between the motor launch Yankee and the small sloop Hugi, approaching on converging courses, held, on conflicting evidence, due solely to the fault of the Yankee, which was going at much higher speed, and failed to keep out of the way of the sailing vessel as she might have done with proper attention, while the Hugi kept her course and speed until in extremis. [Ed. Note. For other cases, see Collision, Dec. Dig. § 105.*] For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes In Admiralty. Suit for collision by Arthur P. Brayton, owner of the sloop Hugi, against the launch Yankee, Robert F. Chambers, claimant, and cross-libel. Decree against the Yankee. Green, Hinckley & Allen, of Providence, R. I., for libelant. BROWN, District Judge. These are cross-libels for a collision between the gasolene launch Yankee, 33 feet over all, 50 horse power, and the sloop Hugi, an 18-foot knockabout, in Mt. Hope Bay near Fall River, on the afternoon of August 22, 1912, when there was a yacht race in the bay. The launch struck bow on about the middle of the port side of the sloop, breaking her planks, so that she sank in a few minutes in about 40 feet of water. The sworn cross-libel of the owner of the launch Yankee alleges that her owner was navigating the said launch Yankee at a moderate speed across the harbor at Fall River, Mass., toward the yacht club float at the Enterprise Dock, so called, with a clear course ahead, and saw the sloop Hugi sailing close-hauled on the port tack about 100 yards distant, and approaching on a line nearly parallel to and about 50 feet to the northward of the course of the launch. When about 100 from the launch, the Hugi changed her course to port, and the claimant, in order to keep out of her way, immediately changed his course so as to pass under her stern. Almost immediately thereafter the Hugi suddenly changed her course to starboard, and thereupon the claimant immediately threw out his clutch and reversed his engine; but was unable to prevent his boat from striking said yacht Hugi at about amidships on the port side, well under the bilge. Among other particulars the Hugi is charged with fault "in not holding her course and speed, as required by law." At the trial, however, the owner of the Yankee gave evidence materially different from the sworn statements of the libel, and to the effect that he had been out to a stake boat, and was returning in a circle and then in a straight line toward the clubhouse; that he changed his course to port while the Hugi was on her starboard tack; that the Hugi came about some 50 feet, or a length and a half away, too late for him to avoid her; that he immediately put his helm over to starboard; that his helm and boat went the same way; that his reverse was on, and his propeller slack just before the Hugi bore away. He also stated that he was going 8 miles an hour, and at that speed could stop in 100 feet; that the best speed of the Yankee was 221⁄2 miles. Upon the brief for the Yankee it is insisted that the Hugi changed her course, in violation of article 21 of the Inland Rules, misleading the Yankee. It is also contended that the Yankee was not at fault for holding her speed until the Hugi came about on the port tack just prior to the collision. The inconsistency between the testimony that the Hugi came about on the port tack when but 50 feet away and the statement of the libel that she was seen close-hauled on the port tack about 100 yards dis-. tant is apparent, and is unexplained. |