cause at any time, sustain or incur, or be put to, for or by reason or in consequence of said company having entered into or executed said bond." On the faith of the foregoing covenant, the complainant executed with the defendant, as its surety, an undertaking to procure a temporary restraining order. The defendant had brought a suit in this court against the city of Peru for the purpose of obtaining a restraining order, to be immediately granted, prohibiting the city, and its officers, agents, and employés, and all other persons, from in any way enforcing, or attempting to enforce, any of the provisions of the ordinance dated October 5, 1897, until a hearing could be had of an application for a permanent injunction, and that upon such hearing a temporary injunction should be granted, continuing in force this restraining order until the final hearing of the cause, and that upon the final hearing the city, and its agents, officers, and employés, and all other persons, should be perpetually restrained and enjoined from enforcing or attempting to enforce any of the provisions of the ordinance, and praying for other and proper relief. The ordinance complained of was assailed by the gas company on the ground that it reduced the price to be charged for natural gas furnished to the city of Peru and its inhabitants to a rate so low as to constitute a taking of property without just compensation, and was a denial of the equal protection of the law secured to it by the fourteenth amendment of the constitution of the United States. To secure the granting of such temporary restraining order, the defendant as principal, and the complainant as surety, executed an undertaking as follows:

"The Logansport and Wabash Valley Gas Company, complainant in the above-entitled cause, as principal, and the American Bonding and Trust Company of Baltimore City, as surety, undertake to pay to the defendant in said cause, the city of Peru, all sums of money which.said complainant may collect in excess of the rates prescribed by the ordinance adopted in the common council of the city of Peru described in the bill of complaint in said cause, after the taking effect of said ordinance, and while the restraining order granted in said cause, or any preliminary injunction granted therein, shall be in force, if it shall be adjudged that said temporary restraining order or preliminary injunetion be wrongful."

A trial of said cause was had in this court, and a decree was rendered in favor of the defendant, ordering the dismissal of the bill of complaint. But it was also made a part of the final decree in this court that the operation of the decree should be suspended until a final hearing should be had in the supreme court, if an appeal should be taken to that court within 90 days after the entry of such decree. The cause has been appealed to the supreme court, and is now pending there, undecided.

The bill does not show that the complainant has paid anything on account of its having executed said undertaking as surety, nor that any liability has been finally adjudged by the supreme court of the United States against the principal in said undertaking. Whenever

a surety signs an obligation with a principal, the law raises an implied agreement to indemnify the surety against all loss and damage by reason of his suretyship. The covenant relied upon in this case, which is "to indemnify and keep indemnified" the complainant "from and against any loss," etc., is no broader in its legal effect than the obliga

tion implied by law in the absence of such special covenant. Nothing is added to the force of the covenant by the words "and keep indemnified," because one cannot be "indemnified" unless he is "kept indemnified." As soon as the contract of suretyship was entered into, it is firmly settled that the law raised an implied promise on the part of the principal to indemnify the surety against any loss to which he may be subjected by reason of the contract, and it is equally well settled that the surety cannot recover from the principal until a loss has been actually incurred by the surety. The city of Peru has no present right of action against the principal in the undertaking, and the surety has not been compelled to pay any sum, and, for aught that appears in the complaint, it may never be called upon to pay anything, or be put to any loss whatever, on account of its suretyship. The complainant has simply incurred, and is still incurring, a risk as surety which it contracted with the defendant to incur, and for which it charged and has received a premium. A bill in equity certainly cannot be maintained on the covenant set up until the city of Peru has obtained a decree by virtue of which it has a present right to recover of the principal and surety the moneys stipulated to be paid by the terms of the undertaking. When the liability of the principal to make such payment has been finally established by the judgment of the supreme court, it will be time enough to pay, or to give indemnity to pay. As was observed by Sir G. M. Giffard, V. C., in Wooldridge v. Norris, L. R. 6 Eq. 410:

"Now, as regards the right of a plaintiff to file a bill quia timet, the principle is clearly laid down by Lord Redesdale in these terms: A court of equity will also prevent injury in some cases by interposing before any actual injury has been suffered, by a bill which has been sometimes called a bill "quia timet," in analogy to proceedings at the common law, where in some cases a writ may be maintained before any molestation, distress, or impleading. Thus, a surety may file a bill to compel the debtor on a bond in which he has joined to pay the debt when due, whether the surety has been actually sued for it or not, and, upon a covenant to save harmless, a bill may be filed to relieve the Covenantee under similar circumstances.""

At present it is not certain whether any such liability will ever accrue, and certainly the mere apprehension on the part of the surety that it may incur such liability gives it no right to maintain a suit upon a mere covenant to indemnify against loss, either requiring the principal to place money or security in its hands, or to put up security which may never be required.

The demurrer to the bill will be sustained, with leave to the complainant to amend, if so advised, within 20 days, and, if not amended within 20 days, the bill of complaint shall stand dismissed, at the costs of the complainant.

CRONENWETT v. BOSTON & A. TRANSP. CO.

(Circuit Court, D. Washington, N. D. June 26, 1899.)

MARITIME LIENS-INSOLVENCY OF OWNER-EFFECT OF RECeivership-ProCEEDS OF INSURANCE.

Where a court of equity, by its receiver, has taken possession of a vessel in proceedings against the insolvent owner, thus rendering it impossible for the holders of maritime liens against the vessel to enforce the same by proceedings in rem in a court of admiralty, and the vessel during a voyage on which she is sent by the receiver is wrecked, the insurance placed thereon by the receiver and collected by him after her loss will be treated as standing in place of the vessel, and will be disbursed in the same manner as though it were the proceeds of the vessel; the creditors entitled to maritime liens being first paid therefrom.

Suit in equity by creditors against an insolvent steamship company. Hearing on application of the receiver of the defendant cor poration for an order to disburse money collected upon an insurance policy covering a steamship lost while prosecuting a voyage upon which she was dispatched by the receiver.

Wm. H. Gorham, for receiver.

J. H. Allen, John B. Allen, and Richard A. Ballinger, for preferred creditors.

Fred Bausman, for general creditors.

HANFORD, District Judge. The defendant corporation, while carrying on a general transportation business, and having possession of and operating ocean-going steamships and river boats between Seattle and points in Alaska, and upon the Yukon river, and after having incurred a large number of debts in the conduct of said business, became unable to maintain itself as a going concern, and in consequence this suit was commenced, and at the instance of the plaintiff this court appointed a receiver to take charge of said corporation and possession of all its assets, and authorized said receiver, so far as practicable and for the best interests of all concerned, to complete the performance of contracts for the transportation of freight and passengers which said corporation had undertaken, and, so far as it could be done without special danger of sacrificing the assets of the corporation, to continue the operation of said vessels. At the time of appointing the receiver, the steamship Brixam, then owned by the defendant corporation, was at sea on her return passage to Seattle from St. Michaels, in Alaska, and immediately upon her arrival within the jurisdiction of this court the receiver took her into his custody. At that time the Brixam was subject to maritime and statutory liens for mariners' wages earned by her crew upon her voyage from Seattle to St. Michaels and return, and for supplies and materials furnished in this state, and which were necessary to furnish and equip her for said voyage, and her owner, the Boston & Alaska Transportation Company, was also indebted generally on account of a great variety of transactions. Those creditors entitled to proceed in rem against the Brixam in a court of admiralty, by reason of having maritime liens upon said vessel, were hindered and

prevented from proceeding in that manner to collect the money due to them, because, while the vessel was in the custody of the receiver appointed by this court, she could not be seized by the marshal, and it was impossible for a court of admiralty to obtain jurisdiction. While they were thus restrained, the receiver, believing that it would be for the advantage of all concerned, and benefit the estate, dispatched the Brixam on another voyage to ports in Alaska, and while on this voyage she was wrecked and became a total loss. Previous to sending her away, however, the receiver obtained a policy of marine insurance upon the vessel in the sum of $40,000, and, having no money on hand with which to pay the premium for said policy, he obtained credit for the amount of said premium upon a certificate of indebtedness which he issued. The loss having been adjusted, there was paid to the receiver, on account of said policy, the sum of $33.876.88, being the net amount due upon the policy after deducting the amount of the receiver's certificate issued in payment for the premium, and certain other deductions which the receiver had to allow in order to collect the insurance money without litigation. The receiver has applied to the court for an order authorizing the payment, out of the insurance money so received, of the sums due to the seamen who served on board the Brixam for their unpaid wages, and otherwise to disburse the funds according as the court shall find the priorities and rights of the different creditors. The various creditors have appeared before me, some supporting, and others opposing, this application made by the receiver, according as their interests lie. Creditors opposing the allowance of any preference to those creditors who were entitled to claim maritime liens upon the Brixam have cited the decision of this court in the case of The Rapid Transit, 52 Fed. 320, and the supreme court decisions which were therein followed, holding that a policy of insurance in favor of the owner of a vessel is a collateral contract, and that, in case of loss, the insurance money does not become a substitute for the vessel, and that the insurance is not any part of an owner's interest in a ship. That rule, having been established by a line of decisions of the supreme court, must be applied in all cases wherein the res or subject of litigation consists of the property or interest of an owner in a ship. But in this case I hold that, consistently with the principles of equity, the receiver took the Brixam into his custody as the representative, not only of her owner, but of all creditors as well, and that existing maritime liens are not to be deemed to have been destroyed; for it was the duty of the court to protect all creditors in their rights, and to preserve, as far as possible, existing liens. Pratt v. Coke Co., 168 U. S. 259, 18 Sup. Ct. 62. It is contrary to the most elementary principles to presume that a court of equity will extend its jurisdiction over property as a shield against judicial process, and then consume the property, or expose it to destruction, without in any way making provision for compensating the creditors who may be defeated. I hold that the receiver took the policy of insurance on the steamer Brixam, not as owner, nor for the benefit of the owner, but as in duty bound he obtained the insurance for the benefit of the owner and creditors, according to their respective interests. The vessel having been lost and all mari

time liens upon her thereby extinguished, the court must now face the creditors who were entitled to enforce maritime liens against her before she was sent away on her fatal voyage, and say to them: "We have devested you of your rights by the mere exertion of power, and you must submit to the deprivation of your rights merely because the court has the power to trample upon them, and has seen fit to exert that power at the instance of other creditors, whom the law has not regarded with such favor as to give them liens of equal rank, or else the insurance money which has come into the hands of the receiver, as the consequence of the loss of the steamship and the destruction of the maritime liens upon her, must be applied first to the payment of the debts which were secured by those liens." In my opinion, the latter alternative is consonant with the rules of equity practice, and the first is not. A decree will be entered directing the receiver to disburse the insurance money in practically the same manner as if it had come into his hands as the proceeds of the sale of the vessel.

THOMPSON NAT. BANK OF PUTNAM, CONN., v. CORWINE et al.

(Circuit Court, S. D. Ohio, E. D. April 19, 1899.)

FRAUDULENT CONVEYANCE-RIGHTS OF SUBSEQUENT MORTGAGEE.

One who in good faith, and without notice of facts to put him on inquiry, makes a loan on the security of a mortgage of real estate, as against others having a right to set aside the conveyance of such real estate to the mortgagor as fraudulent occupies the position of a bona fide purchaser for value, although a part of the proceeds of the loan was paid to him in satisfaction of an obligation of a third person, which was fully satisfied and surrendered.

On Rehearing as to the Issue between Complainants and Defendants Hayes, Jones & Company. For former opinion, see 89 Fed. 774.

TAFT, Circuit Judge. This was a bill to set aside certain conveyances made by John W. Corwine to his children, on the ground that they were made in fraud of creditors. The case, on its merits, was considered and decided by this court November 9, 1898, in an opinion reported in 89 Fed. 774. Upon application of the parties, a single and collateral issue between the complainants in the bill and the banking firm of Hayes, Jones & Co. was reopened, and new testimony allowed to be introduced, on the ground that it was not expected by the complainants that the court would dispose of this collateral issue on the main hearing. Additional evidence has now been taken, and the case has been submitted for final decision upon this issue. The facts upon which the issue arises are as follows: Corwine made a deed to Barger of the undivided one-third of 318 acres of bottom land in Ross county, Ohio, for the recited consideration of $10,000, without the payment of money or other valuable thing whatever. Barger withheld the deed from record from May until November. On the 9th day of November-the day after the fire which destroyed the cotton seed oil plant in Memphis--Barger went to Hayes, Jones & Co., and, presenting the unrecorded deed from Cor