Falls. For some time prior to 1904 it had established a distributing plant at Chicago, and was shipping the water here in bulk in tank cars for distribution in Chicago and suburbs. The Chicago business, did not thrive as expected, and under date of February 1, 1904, it entered into a contract with appellants, Morand Bros., of Chicago, to take over the distribution of the water in and about Chicago; the written contract providing: (1) That for five years from its date the corporation appoints the Morands exclusive distributors of Chippewa Springs water in Chicago and suburbs; (2) that it sells to Morands its equipment of horses, wagons, storage tanks, and leasehold and other property it owned in connection with its business in Chicago at cost price; (3) agrees to furnish Morands Chippewa natural spring water at 2 cents a gallon in tank cars; (4) Morands to receive and pay for not less than 16,000 gallons monthly for each month during contract; (5) it will not during life of contract sell or distribute Chippewa Springs or other natural water in Chicago and suburbs, and transfers to Morands its "good will of said business and its trade now established thereon"; (6) Morands will assume the business and pay for the property, and purchase and distribute Chippewa Springs water in accordance with terms of contract; and (7) vigorously prosecute the sale of the water, and use every means to enlarge sale in Chicago and vicinity, and during period of contract will not deal in any other natural spring water, bulk or bottled; (8) they agree to carry on the business in the name of Chippewa Springs Company as distributors, and give company free inspection of equipment and methods for handling the water, and furnish list of their customers; (10) option to Morands to renew contract for additional five years.

The name, "Chippewa," was used in connection with sale of this water, but the name was not registered by owners of spring as a trade-mark until some years after expiration of contract. The company distributed some of its beverage products through Morands, and all its products, whether sold by itself or by Morands, were put out under the name of Chippewa, with statement upon labels and bottles referring to Chippewa Springs as the source of the water. Several years before the contract, terminated Morands began to make and distribute ginger ale and like beverages, using this water, and labeled it "Chippewa," "Made with the Waters of Chippewa Springs." At or shortly before the expiration of the contract they

had designed and used a label which contained, beside the name of Chippewa, the figure of an Indian maiden sitting at a spring or waterfall. The company used the same figure in its advertisements, but not on its labels.

There was no renewal of the contract at its termination, but it seems that occasionally thereafter Morands would order cars of water, which the company supplied, but in quantities far less than those called for by contract, the last of which there is evidence being in 1914, in the first eight months of which year about 16,000 gallons all told were shipped to Morands. But they continued to manufacture beverages and to use labels thereon employing the word, "Chippewa," and on many, if not all, of them, the picture of the Indian maiden, though omitting reference to the Chippewa Springs. But, instead of using the Chippewa Springs water, they then employed Lake Michigan water in the making of the beverages.

The court found infringement by appellant both in the use of the word, "Chippewa," and of the figure of the Indian maiden in the sale of all the beverage products of Morands into which the water from the Chippewa Springs did not enter from expiration of the contract, and decreed that appellant be enjoined from making further use thereof, and from representing thus or otherwise that its products are made from Chippewa Springs water of appellee, and that appellant account to appellee for all profits derived after August 15, 1914, from appellant's infringement of appellee's trade-mark and their unfair trading, and in addition pay damages sustained by reason thereof, referring same to master for accounting.

ALSCHULER, Circuit Judge (after stating the facts as above). [1-3] It is contended for appellant that under that part of the contract which conveyed absolutely the storage and bottling plant at Chicago, and with it the good will of the business there, any trade-mark of the goods would pass as an incident to the conveyance of the business. It is true generally that a trademark in and of itself, and apart from any business or product to which it is appurte nant, is not a subject of conveyance, and

be said that it sustained any damage there for that time; and, if during all that time they did not learn that appellant's conduct at Chicago injuriously affected its trade, or the reputation of its water and product, in any territory outside of Chicago, it cannot be said that appellant damaged them in this respect during that time.

arose.

But when, early in 1919, appellee entered the Chicago market, a different situation It became a competitor in a market theretofore intentionally avoided by it, and thereby sustained damage through the use of the trade-name by appellant. The record does not disclose just when this entry was, but the first definite date is March 12, 1919, when they shipped a carload of water to Chicago, and we believe that under the very unusual circumstances here presented it would be more equitable as between these parties if the accounting begin at that time.

The decree should be affirmed in all things, save in the matters pointed out, and as to these it should be modified as follows: The injunction should not extend to the use by appellant of the picture of the Indian maiden when not used in any way in connection with the name, "Chippewa." The accounting period should begin March 12, 1919, instead of August 15, 1914, as in the decree provided. For the purpose of entering a decree modified in accordance with the views above stated the cause is remanded to the District Court. Each party shall pay one-half the costs of the appeal.

3. Bankruptcy 9(2), 43-Statute relative to dissolution of corporations held not insolvency statute, suspended by Bankruptcy Act, as applied to solvent corporations; dissolved corporation could not become voluntary bankrupt.

Comp. Laws Mich. 1915, §§ 13563, 13570, relating to dissolution of corporations, at least insolvency act, suspended by federal Bankruptas applied to solvent corporations, is not an cy Act (Comp. St. §§ 9585-9656), and where petition for dissolution alleged solvency, court had jurisdiction to enter decree of dissolution, which after it became final could not be attacked by corporation and creditors, so that ruptcy.

corporation might be placed in voluntary bank

Petition to Revise an Order of the District Court of the United States for the Eastern District of Michigan; Arthur J. Tuttle, Judge.

In the matter of the voluntary bankruptcy of the Vassar Foundry Company. On petition of creditors, the Whiting Corporation and others, the adjudication was vacated (293 F. 248), and bankrupt brings petition to revise. Petition dismissed, and order vacating adjudication affirmed.

Max Kahn, of Detroit, Mich., for petitioner.

Walter M. Nelson, of Detroit, Mich. (Fred A. Lehmann, Wm. J. Lehmann, and Mark L. Rowley, all of Detroit, Mich., on the brief), for respondents.

Before DENISON, MACK, and DONAHUE, Circuit Judges.

DENISON, Circuit Judge. The Michigan statutes (sections 13563 and 13570, C. L. 1915) provide that, if the directors of a corporation shall for any reason deem it beneficial to the stockholders that the corporation

Decision of state court that corporation dissolved under state statute is so completely nonexistent that it cannot be sued must be accepted as obligatory on federal court.

2. Bankruptcy 47-Creditors held entitled to object to voluntary proceedings on ground that there was no bankrupt in existence.

Creditors' objection to voluntary bankruptcy proceedings by corporation which has been previously dissolved under Comp. Laws Mich. 1915, §§ 13563, 13570, on ground that there is no bankrupt in existence, and that property was held by creditors through state court, whether deemed jurisdictional or not, is one on which creditors have right to be heard.

the local chancery court; that their petition shall show, among other things, all the property and all the creditors; that thereupon an order to show cause is to be made and served upon all the creditors; and that, after due hearing and upon a master's report, if it appears that for any reason a dissolu

tion will be beneficial to the stockholders and not against the public interest, a decree shall be entered dissolving the corporation and appointing a receiver to wind up its affairs, "and such corporation shall thereupon be dissolved and shall cease." Other statutes contemplate that a corporation continues in being for certain purposes even after its corporate life expires, and it has been held that dissolution proceedings under a state statute did not necessarily bar bankruptcy proceedings (Scheuer v. Smith Co. [C. C. A. 5] 112 F. 407, 50 C. C. A. 312). But the Su

preme Court of Michigan, construing these sections 13563-13570, has held that a corporation dissolved thereunder was so completely nonexistent that no suit could be maintained against it. Jacobs v. Bement's Sons, 161 Mich. 416, 126 N. W. 1043. Of course, this decision as to the construction and the effect of a statute must be accepted as obligatory upon the federal courts.

[1] The Vassar Company was dissolved under this statute by an order entered August 23, 1922, upon a petition by all the directors, showing that the company "is unable to meet all of its obligations when due, although it is perfectly solvent in the sense that the value of its assets far exceeds its liabilities," and showing assets of more than $150,000 and liabilities of about $100,000. A receiver was appointed to take possession of all the assets and proceed with the liqui

dation. On June 25, 1923, the corporation,

pursuant to a resolution of the same directors, filed a voluntary petition in bankruptcy and adjudication followed. Later, upon the petition of creditors, the adjudication was vacated. This petition is filed to review the order vacating.

[2] It is first objected that creditors cannot be heard to attack a voluntary bankruptey. See In re Ann Arbor Mach. Corp. (C. C. A. 6) 274 F. 24-29. The objection here is by creditors, and is that there was no basis for the bankruptcy, because there was no bankrupt in existence, and that all the property of the bankrupt was held by the creditors through the state court by title which the bankrupt could not dispute. Whether or not this objection is called jurisdictional, it is one upon which creditors must have a right to be heard. In re Guanacevi Tunnel Co. (C. C. A. 2) 201 F. 316, 319, 119 C. C. A. 554; In re Garneau (C. C. A. 7) 127 F. 677, 680, 62 C. C. A. 403.

[3] The only other question necessary to be noticed is the contention of the directors that the Michigan statute in question is an insolvency law, and was therefore suspended by the express terms of the Bankruptcy Act (Comp. St. §§ 9585-9656), and that hence the dissolution decree of the state court was without jurisdiction and void. So far as the statute applies to solvent corporations, it clearly is not subject to be defined as an insolvency law, nor is its existence or operation inconsistent with the purpose of the Bankruptcy Act. So far as it affects insolvent corporations, it has many of the aspects of an insolvency law, and perhaps enough of them to condemn it. As to that, we express no opinion. If there is invalidity for 2 F. (2d)-16

this reason, it is only pro tempore and pro tanto, while the Bankruptcy Law continues and so far as the state law is an insolvency law. In these proceedings, the petition alleged that the corporation was solvent; that clearly gave the state court jurisdiction, whether the allegation was true or not; all creditors were notified, no one objected and the final decree as made, although it did not expressly find solvency, yet constructively rests on that pleading basis; 10 months passed, and the decree became final, and every one was satisfied. Clearly it was then too late, if the right ever existed, for the dissolved corporation and the petitioning creditors to go into another court and say that the state court had no jurisdiction because the allegation of solvency, made by these same parties, had been untrue.

This conclusion does not leave an open

door for insolvent Michigan corporations to ccrt

escape bankruptcy. Such dissolution action as was here taken, if by a corporation then insolvent, within the Bankruptcy Act definition, would seem to be an act of bankruptcy "being insolvent, applied for a receiver." The petition to revise is dismissed, and the order vacating adjudication is affirmed.

denica

(266 MJ. 622 6.9 7 Ed 473 ect.100.

45

HILSINGER et al. v. UNITED STATES

(two cases).

(Circuit Court of Appeals, Sixth Circuit. June 10, 1924. Rehearing Denied July 30, 1924.)

Nos. 3937, 3938.

1. Intoxicating liquors 249-Searches and seizures 7-Seizure of samples of beer from brewery truck by prohibition agents without warrant held lawful.

beer at saloons from a certain brewery, purProhibition agents, who, after delivery of chased in such saloons beer containing more than the lawful percentage of alcohol, stopped a truck loaded with beer from the same brewery on the street in the daytime, without a warrant, and took therefrom four kegs of beer. Held, that such seizure was not unreasonable 2. Intoxicating liquors 249 - Prohibition

and was lawful.

agents may search licensed brewery without warrant.

Under the authority conferred by National Prohibition Act, tit. 2, § 28 (Comp. St. Ann. Supp. 1923, § 1013820) and Rev. St. § 3177 (Comp. St. $ 5900), prohibition agents may inspect in the daytime a brewery engaged in the manufacture of a taxable product, and if their inspection discloses a product made in violation of the National Prohibition Act they may take samples of the same without a warrant, to be preserved as evidence.

3. Intoxicating liquors 236 (9) - Evidence held not to support conviction for maintaining nuisance.

Evidence held insufficient to sustain conviction of the president of a brewery company,

whose brewery was being operated by a receiver, and a salesman for the product, as parties to the maintenance of a nuisance by the receiver.

In Error to the District Court of the United States for the Western Division of the Southern District of Ohio; John W. Peck, Judge.

Criminal prosecutions by the United States against Michael Hilsinger, Michael Keck, and Joseph Hermann. Judgment of conviction, and defendants bring error. Affirmed in part, and reversed in part and remanded. For opinion below, see 284 F. 585. Certiorari denied 45 S. Ct. 100.

Edward J. Dempsey and Allen C. Roudebush, both of Cincinnati, Ohio (Edw. M. Hurley and Frederick Closs, both of Cincinnati, Ohio, on the brief), for plaintiffs in

error.

Thos. H. Morrow and R. T. Dickerson, Sp. Asst. Attys. Gen. (Benson W. Hough, U. S. Atty., of Columbus, Ohio, on the brief), for the United States.

Before DENISON and DONAHUE, Circuit Judges, and SIMONS, District Judge.

DENISON, Circuit Judge. The operations of the Schaller Brewing Company, of Cincinnati, had passed into the hands of defendant Hilsinger, as receiver, appointed by

the state court. Defendant Keck had been president of the company, and continued active connection with its affairs under the receiver. Defendant Hermann was a sales

man and collector for the receiver. It appears without question that, under the receivership, the brewery was manufacturing ceivership, the brewery was manufacturing and selling two grades of beer. One grade, spoken of as "near bear," had an alcoholic content of less than one-half of 1 per cent., and there is no complaint as to the manufacture or sale of this beer. The other grade was darker in color, and it was regularly sold for $18 per barrel, while the near beer was sold for $9.20 per barrel. It is the theory of the government that the higher priced grade was beer in which the alcoholic content had not been reduced to the maximum point allowed by law, but was allowed to continue to be about 3 per cent., and these prosecutions are based on the theory that the defendants were engaged in making and selling this 3 per cent. beer. The indictment in the District Court, Case 2206, was for conspiracy to make, possess, and sell; that in 2205 for maintaining the brewery as a nui

sance.

Throughout the trial, this heavier and darker beer was commonly referred to as

"good beer," in distinction from near beer. It is apparent that the judge and witnesses and counsel, by the phrase "good beer," meant beer which approximated the alcoholic standard of the conditions before the Volstead Act (Comp. St. Ann. Supp. 1923, § 101384 et seq.); and we see no error or prejudice resulting from the use of this nomenclature.

Having in some way come to suspect that this brewery was putting out this good beer, the prohibition agents, over a period of three or four days, observed the Schaller truck delivering barrels of beer to saloons, and on applying shortly to these same saloons and asking for good beer, were served with beer which they took away with them and found to contain about 3 per cent. of alcohol. Having this measure of confirmation of their suspicions, they followed a truck load of kegs from the brewery to the point where it stopped for the first delivery. They then accosted the driver, and after some conversation took possession of four kegs out of the much larger load. Each of these kegs was found to contain about the same grade of 3 per cent. beer. Thereupon they went to the brewery and proposed to make a search, to which no objection was made. In connection with this search, their special attities of beer in two different places; they tention was attracted to relatively small quantook samples, and prevented those in charge from continuing the destruction of these two lots.

These samples turned out to be the all other evidence of the alcoholic content of same 3 per cent. quality. It is claimed that this higher priced grade of beer was inadmissible for various reasons, except the six samples taken from the four kegs on the truck and the two places in the brewery. For the purposes of this opinion we assume that such these six samples. As to them, it was insistclaim is correct, and thus come directly to ed that they were the result of unreasonable search and seizure. Upon this theory, the motion for their return to the defendants was fully considered by the court upon proofs taken, and was denied. Exceptions were saved to this denial and to the receipt of the samples in evidence.

[1] First, as to the four kegs taken from the truck: It is true that the prohibition agents had no search warrant; but this only brings us to the question whether the search and seizure were inherently unreasonable. In reaching a conclusion on that question, we place no dependence upon the fact that the event justified the suspicions. How much force that result should be given need not be