ing this period appears, but several payments of interest do appear, the last two being particularly important.

It seems that the corporation ceased to pay interest in 1913, and did not resume payment of any kind until 6 years, when on April 8, 1919, it paid to this Henry Doscher, as trustee for these beneficiaries, who were also the stockholders, the sum of $7,811.40. At that time the suit, which afterwards was reduced to judgment, had been commenced. On November 5, 1920, very close to four months of the subsequent filing of the voluntary petition, another payment was made of $7,811.40, making a total payment of some $15,000 to this particular trustee payee, within two years of its voluntary bankruptcy. It is plain from the record before me that, assuming the note to be a valid loan, as I do for the purpose of this decision, the corporate maker of the note was hopelessly insolvent at the time it made these payments in 1919 and 1920. In fact, it would seem to have been hopelessly insolvent since it made the note. It is also plain that this insolvent condition was thoroughly well known during all this time to the trustee payee and the stockholders, for whom he was trustee.

The purpose of such payments, therefore, in 1919 and 1920, was clearly to prefer the trustee payee, or in other words themselves, to the creditor whose suit was pending during the payments, and who subsequently obtained judgment, to avoid execution on which these very people caused the corporation to be declared a voluntary bankrupt in this court. Such payments by the corporation while insolvent, and with the knowledge of such insolvency and intent to prefer on the part of both the debtor corporation and the creditor, were illegal under section 66 of the Stock Corporation Law of the state of New York (Consol. Laws, c. 59), and constituted a preference recoverable by law.

[2] No offer appears to have been made to return these preferential payments before offering the claim for allowance, and it is argued by the trustee here, properly, on the authority of Stevens v. Nave-McCord Co., 150 F. 71, at page 75, 80 C. C. A. 25, although not cited, tthat the referee was right in disallowing the claim on this ground alone. However, the Case of Wright-Dana Hard

ware Co., 212 F. 397, 129 C. C. A. 73, in our own circuit, seems to me to be controlling and provides a different method of procedure. Hence, as I assume the note to represent a loan, and the mere fact of a preference not being a bar to its allowance in the first instance, it must be allowed, if that is all there is to the matter.

[3] I believe, however, that the payments in 1919 and 1920 did not lift the bar of the statute of limitations, for the reason that I do not see how such grossly preferential payments, under circumstances showing knowledge by both creditor and debtor, not only of insolvency, but of intent to prefer, can be construed to be such payments as the law requires under section 59 of the Civil Practice Act. Along this same line is the case of In re Banks (D. C.) 31 Am. Bankr. Rep. 270, at page 273, 207 F. 662.

[4] It seems to me that money of an insolvent corporation is legally in trust for the creditors during insolvency, and any payment of such money under conditions showing, not only such insolvency, but knowledge of same and intent to prefer, simply transfers such part of the funds to a creditor also knowing the insolvency and intent to prefer, subject to this title in all the creditors, to be thereafter asserted by them and recovered for all the creditors by their trustee or other representative within the time and in the manner allowed by law. Such a creditor simply becomes a trustee of the fund received, and in no sense does he become entitled to the money, as against the other creditors, in the sense that gives him the right to keep and apply the money as a part payment of the debt, or for any purpose, except to account for and return the same when legally called on so to do.

The payment contemplated by law is a payment which the creditors can legally keep and own, and to which the debtor before payment has clear ownership at the time. Accordingly I believe the note was barred for the reason that no payment authorized by law had been made on the same since 1913, a period of over six years, and that the referee was right in disallowing the claim based on such note.

His decision is affirmed, and the motion to reverse is denied.

993

[1] The

WILKERSON, District Judge. facts stated in the bill and supporting affidavits, in my opinion, show an interference with interstate commerce. They meet the

1924.)

No. 4047.

I. Injunction ~101 (2)—Trade union and employees may be enjoined from conspiracy to obstruct interstate commerce by compelling discharge of nonunion employees.

Injunction will lie to restrain employees of telegraph company engaged in interstate business from conspiring to prevent plaintiff from performing its contracts by compelling it to discharge its employees who are not members of labor unions with which defendant employees are affiliated.

2. Injunction 101(2)—Injunction lies to restrain boycott by trade union.

Injunction will lie to restrain trade union and employees from boycotting a telegraph company, unless it discharges employees not members of labor union.

3. Injunction 101(2)-Lawful persuasion of employees to cease work is unlawful, when result of conspiracy to interrupt commerce. Notwithstanding that it is legal for employees belonging to labor union to persuade other employees from working even in interstate commerce, such acts are unlawful when made pursuant to conspiracy to obstruct interstate commerce.

4. Injunction 101 (2)-Order restraining employees from conspiring to persuade other employees to cease work held not objectionable and not within Clayton Act.

An order restraining employees and their union from inducing or persuading other employees from continuing in their employment in connection with interstate business or commerce is not objectionable as forbidding lawful acts, where it is limited only to acts done in furtherance of unlawful conspiracy to restrain interstate commerce, and such injunction is not forbidden by Clayton Act, § 20 (Comp. St. § 1243d).

5. Constitutional law 83(2)-Injunction preventing conspiracy to cease work and induce others to quit held not to impose involuntary servitude.

The right to cease work is no more absolute than any other right protected by Constitution, and injunction preventing employees from conspiring to obstruct interstate commerce by ceasing work and persuading other employees to cease work is not objectionable as imposing involuntary servitude upon defendants by preventing them from ceasing work at will; the order prohibiting only acts pursuant to unlawful conspiracy.

In Equity. Suit by the Western Union Telegraph Company against the International Brotherhood of Electrical Workers, Local Union No. 134, and others. On motion for temporary injunction. Motion granted.

West & Eckhart, of Chicago, Ill. (Wm. Rothmann and Wm. L. Bourland, both of Chicago, Ill., and Francis R. Stark, of New York City, of counsel), for complainant.

Hope Thompson and Timothy J. Fell, both of Chicago, Ill., for defendants. 2 F. (2d)-63

ing for the Supreme Court in United Mine Workers of America et al. v. Coronado Coal Co. et al., 259 U. S. 344, 408, 42 S. Ct. 570, 582 (66 L. Ed. 975, 27 A. L. R. 762). He

said:

"We have had occasion to consider the

principles governing the validity of congressional restraint of such indirect obstructions to interstate commerce in Swift & Co. v. United States, 196 U. S. 375; United States v. Patten, 226 U. S. 525; United States v. Ferger, 250 U. S. 199; Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 U. S. 563; and Stafford v. Wallace, 258 U. S. 495. It is clear from these cases that, if Congress deems certain recurring practices, though not really part of interstate commerce, likely to obstruct, restrain, or burden it, it has the power to subject them to national supervision and restraint. Again, it has the power to punish conspiracies in which such practices are part of the plan, to hinder, restrain, or monopolize interstate commerce. But in the latter case the intent to injure, obstruct, or restrain interstate commerce must appear as an obvious consequence of what is to be done, or be shown by direct evidence or other circumstances."

The plaintiff here is a public utility. A large part of its business is the transmission of messages. It is required to serve the public without discrimination. If the plaintiff is to perform its public duty, the instrumentalities for the transmission of the messages must be installed and maintained. If the purpose of the combination here shown to exist is carried out, the commerce itself is destroyed. The intent to restrain interstate commerce therefore appears as an obvious consequence of the acts of the defendants.

[2, 3] But, if it were held that the intent to obstruct interstate commerce is not estab

lished, a case for equitable relief against an unlawful boycott is made out, in my opinion, in view of the diversity of citizenship of the parties. Carlson v. Carpenter Contractors' Association, 305 Ill. 331, 338, 137 N. E. 222, 27 A. L. R. 625; Wilson v. Hey, 232 Ill. 49, 83 N. E. 928, 16 L. R. A.. (N. S.) 85, 122 Am. St. Rep. 119, 13 Ann. Cas. 82; Franklin Union v. People, 220 Ill. 355, 376, 377, 77 N. E. 176, 4 L. R. A. (N. S.) 1001, 110 Am. St. Rep. 248; Chicago, Wil

The right of plaintiff to relief being sustained, we come to consider the scope of the injunction to be granted. In this connection it is to be considered that acts lawful in themselves may be a step in the execu tion of the plan of an unlawful or criminal conspiracy. In Aikens v. Wisconsin, 195 U. S. 194, 206, 25 S. Ct. 3, 6 (49 L. Ed. 154), it was said:

"No conduct has such an absolute privilege as to justify all possible schemes of which it may be a part. The most innocent and constitutionally protected of acts or omissions may be made a step in a criminal plot, and if it is a step in a plot neither its innocence nor the Constitution is sufficient to prevent the punishment of the plot by law."

In Hitchman Coal & Coke Co. v. Mitchell, 245 U. S. 229, 253, 38 S. Ct. 65, 73 (62 L. Ed. 260, L. R. A. 1918C, 497, Ann. Cas. 1918B, 461), it was said:

"The cardinal error of defendants' position lies in the assumption that the right is so absolute that it may be exercised under any circumstances and without any qualification; whereas in truth, like other rights that exist in civilized society, it must always be exercised with reasonable regard for the conflicting rights of others."

And in Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 440, 30 S. Ct. 535, 538 (54 L. Ed. 826), the Supreme Court said: "That any one of the persons engaged in the retail lumber business might have made a fixed rule of conduct not to buy his stock from a producer or wholesaler who should sell to consumers in competition with himself is plain. No law which would infringe his freedom of contract in that particular would stand. But when the plaintiffs in error combine and agree that no one of them will trade with any producer or wholesaler who shall sell to a consumer within the trade range of any of them, quite another case is presented. An act harmless when done by one may become a public wrong when done by many acting in concert, for it then takes on the form of a conspiracy, and may be prohibited or punished, if the result be hurtful to the public or to the individual against whom the concerted action is directed. Callan v. Wilson, 127 U. S. 555, 556." [4] Objection is made to the fifth clause of the prayer for a temporary injunction on the ground that acts of persuasion are forbidden. The clause in question, however, is expressly limited to inducing or persuad

fail to perform any of their duties as such employees in connection with interstate business or commerce of said company or the transmission of messages of the government of the United States or the officials thereof. It applies only to acts which are done in furtherance of the unlawful conspiracy to restrain interstate commerce. Defendants are forbidden to induce or persuade plaintiff's employees to refuse or fail to perform any of their duties as such employees in connection with a service which it is the duty of the plaintiff to render. The duties, interference with which is prohibited, are therefore essentially public duties. Clause 5, in my opinion, is not covered by section 20 of the Clayton Act (Comp. St. § 1243d), and does not come within the reasoning in American Foundries v. Tri-City Council, 257 U. S. 184, 42 S. Ct. 72, 66 L. Ed. 189, 27 A. L. R. 360. It does not forbid defendants from persuading the employees of the Western Union Telegraph Company to terminate the relation of employment. It prohibits interference with the performance by plaintiff's employees of their duties while they continue to be employees of the plaintiff. And, as pointed out, those duties relate to a service which plaintiff is under obligation to the public to render.

[5] As to clause 1 of the prayer for a temporary injunction it is said that it prevents employees from ceasing to work, and therefore imposes involuntary servitude upon them. The right to cease work is no more an absolute right than is any other right protected by the Constitution. Broadly speaking, of course, one has the right to work for whom he will, to cease work when he wishes, and to be answerable to no one unless he has been guilty of a breach of contract. But the cessation of work may be an affirmative step in an unlawful plan. One may not accept employment intending thereby to quit work when that act will enable him to perform one step in a criminal conspiracy. The real wrong is the acceptance of the employment, with intent to make use of it for a criminal purpose. These defendants are under no compulsion to accept employment on buildings where plaintiff's equipment is being installed; and, if they do accept it, they are not permitted to make an unlawful use of it. The language of this clause, however, should be so changed that there will be no opportunity for mistake or misrepresentation as to its true meaning. The acts enjoined should be expressly limited to acts done in furtherance

of the conspiracy charged in the bill. This may be accomplished by adding the following:

"And thereby of preventing said plaintiff from performing its contracts with its customers and of compelling it to discharge its employees who are not members of labor unions which are affiliated with said defendants."

That no excuse for misrepresenting the true scope of this injunction may remain, the following should be added:

"Nothing herein shall be construed to prohibit any employee from voluntarily ceasing work unless said act is in furtherance of the conspiracy charged in the bill herein to prevent plaintiff from performing its contracts with its customers and to compel plaintiff to discharge employees who are not members of labor unions which are affiliated with said defendants."

An order in accordance with the above views may be drafted by counsel for plaintiff, and will be entered upon notice. 26821

98

6

539 Ex parte CHEUNG SUM SHEE et al. Ex parte CHAN SHEE et al.

(District Court, N. D. California, S. D. October 25, 1924.)

Nos. 18416, 18417.

1. Aliens 23(1)—Chinese wives and children of domiciled merchants not admissible as nonimmigrants.

Under Immigration Act May 26, 1924, § 3, subd. (6), and sections 5, 25, alien Chinese wives and children of domiciled alien Chinese merchants, being ineligible to citizenship, held not admissible as nonimmigrants, notwithstanding the treaty with China of November 17, 1880, giving to certain Chinese subjects all rights, privileges, immunities, and exceptions accorded to citizens and subjects of the most favored nation.

2. Aliens 23(1)-Chinese wives of citizens of Chinese descent admissible as nonimml. grants.

Under Immigration Act May 26, 1924, §§ 4, 13, alien Chinese wives of citizens of the Unit

ed States of Chinese descent held admissible as nonimmigrants.

3. Aliens 28-Consular visé necessary condition to right of entry of alien Chinese wives of citizens of Chinese descent.

Alien Chinese wives of citizens of United States of Chinese descent, though admissible as nonimmigrants, may be refused entry, if their husbands do not comply with Immigration Act May 26, 1924, § 9, subds. (b), (c), and (d), by filing with Commissioner General the petition therein specified, thereby procuring issuance of immigration visé by proper consular officer.

Habeas Corpus. Petitions by Cheung Sum Shee and others and by Chan Shee and others, to which the Commissioner of Immi

995

gration interposed general demurrers. Demurrers in all cases sustained.

Geo. A. McGowan, of San Francisco, Cal., for petitioners.

Sterling Carr, U. S. Atty., and Thomas J. Riordan, Asst. U. S. Atty., of San Francisco, Cal., for the United States.

KERRIGAN, District Judge. These cases come before the court on petitions for writs of habeas corpus by or on behalf of certain Chinese women and children seeking to enter the United States for the first time, in case No. 18416 as the wives and children of domiciled Chinese merchants, or in case numbered 18417 as alien Chinese wives of citizens of the United States of Chinese descent. They present no consular visé issued under the provisions of the Immigration Act of 1924 (43 Stat. 153), but base their claim to be entitled to enter this country upon their status as such Chinese wives or children. All of them were denied admission by the Commissioner of Immigration at the port of San Francisco upon the ground that, being persons ineligible to citizenship and not coming within any of the exceptions contained in said Immigration Act, they were excluded by its terms. Upon appeal to the Secretary of Labor, the decision of the Commissioner was upheld. In case No. 18416, upon the appeal of Cheung Sum Shee (wife) and Cheung Wai Mun (minor child), the ground of the Secretary's ruling is stated as follows:

"Neither the mercantile status of the husband and father, nor the applicants' relationship to him, has been investigated for the reason that even if it were conceded that both these elements exist the applicants would be inadmissible as a matter of law. This is made necessary because of the inhibition against their coming to the United States as found in paragraph (c) of section 13 and that portion of section 5 which reads as follows: 'An alien who is not particularly specified in this act as a nonquota immigrant or a nonimmigrant shall not be admitted as a nonquota immigrant or a nonimmigrant by reason of relationship to any individual who is so specified or by reason of being excepted from the operation of any other law regulating or forbidding immigration."

And the appeals of the other persons in the case so numbered were dismissed upon the same grounds.

In case No. 18417, upon the appeal of Ng Yeut Seung, the Secretary's statement of the reason for his action is as follows: