make mistakes, and there was nothing in the telegram itself to put the defendant upon notice which would require it to exercise unusual care in transmission in view of the plaintiff's assent to the stipulation as to unrepeated messages. There was no evidence of willful misconduct or that entire want of care which would raise the presumption of a conscious indifference to consequences.

[3] At the argument the plaintiff raised a further contention that under section 20 of the Interstate Commerce Act (Act Feb. 4, 1887, c. 104, 24 Stat. 386 [U. S. Comp. St. 1901, p. 3170]) the stipulation under which the message was sent was an unreasonable one and therefore unlawful. Inasmuch as section 1 of the act, as amended by Act June 29, 1906, c. 3591, 34 Stat. 584 (U. S. Comp. St. Supp. 1911, p. 1288), which brings telegraph companies within its provisions, expressly provides that messages by telegraph may be classified into day, night, repeated, unrepeated, letter, commercial, press, government, and such other classes as are just and reasonable, and different rates may be charged for the different classes of messages, it is apparent that the Interstate Commerce Act expressly recognizes the right of the telegraph company to charge for repeated messages different rates from those charged for unrepeated messages.

[4] Even if the plaintiff's case were based upon an alleged unreasonable regulation, which it is not on the pleadings, it is a question which cannot be entertained primarily in this court. The question must be first raised before the Interstate Commerce Commission. Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 204 U. S. 426, 27 Sup. Ct. 350, 51 L. Ed. 553, 9 Ann. Cas. 1075; Baltimore & Ohio R. R. Co. v. United States ex rel. Pitcairn Coal Co., 215 U. S. 481, 30 Sup. Ct. 164, 54 L. Ed. 292.

The plaintiff's statement claims for the profits which the plaintiff would have realized from the advance in price, and does not claim the cost of sending the message, nor was the cost of sending the message proved upon the trial. Under the decisions in the cases above cited, I am of the opinion that the plaintiff was bound by the stipulation in relation to unrepeated messages; that the damages claimed cannot be held to have been contemplated by the parties in case of breach of the contract; that the plaintiff is not entitled to recover beyond the amount paid for transmitting the message, which has not been proved; further, that there is no proof of the gross negligence alleged as a basis of the plaintiff's claim for damages.

In view of these conclusions, it is not necessary to consider the sufficiency of the proof of damage caused by alleged loss of the contracts. The defendant's request for binding instructions should, in my opinion, have been allowed.

Judgment will therefore be entered for the defendant non obstante veredicto upon the whole record and the evidence certified and filed. An exception will be granted to the plaintiff.

203 F.-10

UNITED STATES, for Use of BRADING-MARSHAL LUMBER CO. et al., v. WELLS et al.

(District Court, E. D. Tennessee, N. E. D. January 30, 1913.)

No. 24 at Law.

1. COURTS (§ 352*)-PROCEDURE IN FEDERAL COURTS-ISSUES IN LAW ACTION -JURISDICTION TO REFER.

1

The issues in a law action in the federal court, independent of statute, may be referred by consent of parties to a referee in the character of an arbitrator, whose report, when regularly made pursuant to such reference, and duly accepted by the court, is a proper foundation of judgment.

[Ed. Note.-For other cases, see Courts, Cent. Dig. §§ 926-932; Dec. Dig. 352.*]

2. COURTS (§ 352*)-PROCEDURE IN FEDERAL COURTS-ACTIONS AT LAW-COMPULSORY REFERENCE.

Under Rev. St. §§ 648, 649 (U. S. Comp. St. 1901, p. 525), providing that in actions at law the trial of issues of fact shall be by jury, except when tried by the court pursuant to a written stipulation, a federal court has no authority to refer the issues in an action at law to a referee or other person, as an officer of the court, under a reference not intended as an arbitration, but for the purpose of having such officer determine the issues as a substitute for the trial by a jury or the court and giving his report the weight and effect of a master's report in equity, though the case involves an accounting, and though such procedure is authorized by a state statute and is consented to by the parties.

[Ed. Note. For other cases, see Courts, Cent. Dig. §§ 926-932; Dec. Dig. § 352.*

Conformity of practice in common-law actions to that of state court. see notes to O'Connell v. Reed, 5 C. C. A. 594; Nederland Life Ins. Co. v. Hall, 27 C. C. A. 392.]

3. COURTS (§ 352*)-PROCEDURE IN FEDERAL COURTS--REFERENCE-GROUNDS -PRELIMINARY INVESTIGATION.

A federal court in an action at law, either of its own motion or on the motion of either party, may refer the issues to a referee as an officer of the court, as a tentative tribunal, for the purpose merely of making a preliminary investigation, in order to simplify the issues as a necessary step incident to the preparation of the ultimate trial of the case before a jury or the court.

[Ed. Note. For other cases, see Courts, Cent. Dig. §§ 926-932; Dec. Dig. 352.*]

4. TRIAL ( 11*)-MODE OF TRIAL-LAW OR EQUITY DOCKET-Transfers. Where a suit commenced at law is of a clearly equitable nature, the court has power to transfer it, by consent of parties, to the equity side of the court for further proceedings.

[Ed. Note. For other cases, see Trial, Cent. Dig. §§ 28-30; Dec. Dig. § 11.*]

Action by the United States, for the use of the Brading-Marshal Lumber Company and others, against Mark P. Wells and others. On application for reference to a master. Denied.

This is an action at law commenced by the United States for the use and benefit of the Brading-Marshal Lumber Company and others, against Mark P. Wells and the Empire State Surety Company. The declaration alleged that the defendant Wells had entered into a contract with the United States For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

for the construction of a post-office building at Johnson City, Tennessee; that Wells, as principal, and the Surety Company, as surety, had executed bond to the United States conditioned as required by law to perform all undertakings in said contract agreed by Wells to be performed, and to pay all persons supplying labor or material in the construction of said building; that the building had been completed and final settlement made between the United States and Wells within one year before the commencement of the suit; that in the erection of said building the parties for whose benefit the suit was brought, had furnished labor and materials for which said Wells had failed to pay, and for which he then owed various sums, as alleged in the declaration; wherefore the United States sued for the benefit of said parties and of any other creditor of said Wells who had furnished labor and materials for said building which remained unpaid, who should intervene therein; and prayed judgment against Wells, as principal, and the Surety Company, as surety, for the amounts due such creditors, with interest. order of publication was subsequently made notifying creditors of Wells of their right to intervene in the suit. Pleas having been filed by the defendants and replications thereto, and one other creditor of Wells having intervened in the cause, the parties filed a stipulation agreeing that the same might be referred to a special master or commissioner to take and hear proof upon various issues in the cause and report thereon.

An

Thad A. Cox, of Johnson City, Tenn., and Susong & Biddle, of Greeneville, Tenn., for plaintiff.

Shoun & Trim, of Greeneville, Tenn., for defendants.

SANFORD, District Judge. The clerk has forwarded to me a stipulation signed by counsel for plaintiffs and defendants, which will be filed herewith, agreeing that this cause may be referred to a special master or commissioner to hear and take proof upon certain items in the nature of an accounting; in pursuance of which an order of reference is desired. It is not clear from this stipulation whether it is desired that the master merely take and hear proof on the several items referred to, or that he also report his conclusions thereon, either of fact or law, or both. Furthermore clause (5) is vague and indefinite as to the matter proposed to be referred, and might involve questions beyond the scope of the pleadings.

This suit is brought under the provisions of the act of February 24, 1905, c. 778, 33 Stat. 812 (U. S. Comp. St. Supp. 1911, p. 1071), amending the act of August 13, 1894, c. 280, 28 Stat. 278 (U. S. Comp. St. 1901, p. 2523), providing for suits on contractor's bond for public works of the United States.

There is, in my opinion, strong ground for holding that the provision of this act that only one suit shall be instituted by a creditor or creditors and for notice to other creditors of their right to intervene, with the further provision that if the recovery on the bond is inadequate to pay the amounts due all creditors judgment shall be given to each creditor pro rata of the amount of the recovery, has the effect of making the amount due on the bond a trust fund which can only be properly administered in equity and distributed among creditors in an equitable proceeding; and that, in the language of Chief justice Waite in Pollard v. Bailey, 20 Wall. 520, 525 (22 L. Ed. 376), the provision "for proportionate liability is equivalent to a provision for an appropriate form of equitable action to enforce it." See, also, Terry v. Tubman, 92 U. S. 156, 161, 23 L. Ed. 537; Hornor v. Hen

ning, 93 U. S. 228, 23 L. Ed. 879; Handley v. Stutz, 137 U. S. 366, 11 Sup. Ct. 117, 34 L. Ed. 706; Bailey v. Tillinghast (C. C. A. 6) 99 Fed. 801, 805, 40 C. C. A. 93; Alsop v. Conway (C. C. A. 6) 188 Fed. 568, 110 C. C. A. 366; Merchants' Bank v. Stevenson, 10 Gray (Mass.) 232. This view is emphasized by the fact that there is no right of intervention in a case at common law, and that a court of law has no adequate machinery for the entertainment and distribution of funds among the various beneficiaries entitled thereto. McKemy v. Supreme Lodge (C. C. A., 6) 180 Fed. 961, 966, 104 C. C. A. 117. See also 2 Bates' Fed. Proc. at Law, § 1042, p. 789. It is true, however, that on the other hand various actions at law have been maintained under this Act of 1905 in which no question as to the jurisdiction at law was suggested either by counsel or the court. Hill v. Surety Co., 200 U. S. 197, 26 Sup. Ct. 168, 50 L. Ed. 437; Mankin v. Ludowici-Celadon Co., 215 U. S. 533, 30 Sup. Ct. 174, 54 L. Ed. 315; United States v. Construction Co., 222 U. S. 199, 32 Sup. Ct. 44, 56 L. Ed. 163; United States v. Winkler (C. C.) 162 Fed. 397. See also, generally, American Surety Co. v. Cement Co. (C. C.) 96 Fed. 25, and 110 Fed. 717; United States v. Heaton (C. C. A., 3) 128 Fed. 415, 63 C. C. A. 156; Title Guaranty & Trust Co. v. Engine Works (C. C. A., 9) 163 Fed. 169, 89 C. C. A. 618. But since a demurrer has not been interposed on this ground, the question of the jurisdiction at law is not now before me for definite determination.

Passing, then, this jurisdictional question, and assuming that, at least without objection of the parties, the jurisdiction at law may properly be entertained in this case, in spite of its clearly equitable nature, the question then arises as to the authority of this court, as a court of law, to refer by consent of parties, the issues in the case to a master for a determination in the nature of a general accounting. This question is to be determined in the light of the provisions of section 4236 of the Tennessee Code (Shan. 6074), that when any suit of an equitable nature is brought in the Circuit Court and objection has not been taken by demurrer to the jurisdiction, it may, if not transferred to the Chancery Court, be heard by the Circuit Court upon the principles and with the functions of a court of equity, and with the power to order and take all proper accounts.

After careful consideration, in which I have not had the benefit of briefs of counsel, I have reached the following conclusions:

[1] 1. Under a practice well known at common law, the issues in an action at law may, in a Federal Court, independently of any statute, be referred by consent of parties, to a referee in the character of an arbitrator, whose report when regularly made pursuant to such reference and duly accepted by the court, is a proper foundation of judgment. Hecker v. Fowler, 2 Wall. 123, 131, 17 L. Ed. 759; Swift v. Jones (C. C. A., 4) 145 Fed. 489, 493, 76 C. C. A. 253, and cases cited. And see Dundee Mortgage Co. v. Hughes, 124 U. S. 157, 160, 8 Sup. Ct. 377, 378 (31 L. Ed. 357), in which such consent order of reference is termed "a reference at common law," and Shipman v. Mining Co., 158 U. S. 356, 361, 15 Sup. Ct. 886, 39 L. Ed. 1015, in which such consent reference was made to a so-called "master com

missioner." And see, also, Moore v. Webb, 6 Heisk. (Tenn.) 301, as to the submission of a cause to arbitration under section 3432 of the Code of Tennessee (Shan. 5188). As to the practice in such cases and the questions presented by a writ of error therein, see the cases above cited; also 2 Foster's Fed. Pract. (4th Ed.) § 374b, p. 1291, and cases cited in note 4.

[2] 2. Since, however, the Federal statutes provide that in actions. at law the trial of issues of fact shall be by jury, except where they are tried and determined by the court in pursuance of a written stipulation (R. S. §§ 648 and 649 [U. S. Comp. St. 1901, p. 525]), it is well settled by the great weight of authority, that, except by consent of parties, a Federal Court has no authority to refer the issues in an action at law to a referee and thus substitute a trial by referee for the statutory modes of trial by jury or court, in a matter of accounting or otherwise, and that even although such procedure be authorized by a State statute, the authority to make such reference is not, in such case, conferred upon the Federal Court by the provision of the Conformity Statute (R. S. § 914 [U. S. Comp. St. 1901, p. 684]). United States v. Rathbone, 2 Paine, 578, 27 Fed. Cas. 711 (Thompson, Circ. Justice); Howe Mach. Co. v. Edwards, 15 Blatchf. 402, 12 Fed. Čas. 708 (Blatchford, Circ. Judge); Sulzer v. Watson (D. C.) 39 Fed. 414; St. Louis Elec. Co. v. Edison Elec. Co. (C. C.) 64 Fed. 997, 1004; Swift v. Jones (C. C. A., 4) supra; 1 Bates' Fed. Proc. at Law, § 1052, p. 736. And, to the same effect, see City of Cleveland v. United States (C. C. A., 6) 127 Fed. 667, 62 C. C. A. 393, and, inferentially, United States v. Harsha (C. C.) 188 Fed. 759. In City of Cleveland v. United States, supra, in which the court below had referred the issues under a petition for mandamus to the clerk of the court as special master to hear proof and report, and in which, on writ of error, the order of reference was reversed, the Circuit Court of Appeals for this circuit, after holding that the mandamus was in the nature of a common law proceeding, said (127 Fed. at page 670, 62 C. C. A. at page 396): "For this reason we are disposed to think it was altogether irregular to make a reference to the master to report the facts and law involved in the hearing of the petition. The master's office and functions are concerned only with the equity side of the court, and it would seem to follow that the judge sitting in the law side could no more order a reference to him than to a stranger. But here the court not only made the order referring it, but throughout treated the reference in all respects like a reference in equity."

In this connection it should be noted, however, that in Davis v. Railway Co. (C. C.) 25 Fed. 786, it was held by Brewer, Circuit Judge, without the citation of authority, that in a common-law action involving the examination of a long account, the court had authority, under the old common-law practice of the English courts, to refer the account, over the objection of one of the parties, to a referee to report on the facts, so that the court could then pass on the law. This holding is, however, I think, contrary to the great weight of authority.

3. Furthermore, in Swift v. Jones, supra, in which, in conformity to a State statute authorizing such procedure and by consent of parties, an action at law had been referred to a special master with authority to pass upon the issues of fact and to report his findings to