209, 219, 49 Atl. 766, 767, 86 Am. St. Rep. 712, the Supreme Court of Pennsylvania said:

"As between two corporations exercising similar franchises upon the same streets, priority carries superiority of right. Equity will adjust the conflicting interests as far as possible and control both so that each company may exercise its own franchises as fully as is compatible with the necessary exercise of the other's. But, if limitation or interference of one or the other are unavoidable, the later must give way, and the fact that it is under contract with the city for work of a public nature does not alter its position, or give it any claim to preference."

By the same token, the fact that the later corporation is the city itself, instead of being "under contract with the city for work of a public nature," would create no rights superior to those of the earlier occupant of the field. This case was approved by the same court in Edison Electric Co. v. Citizens' Electric Co., 235 Pa. 492, 507, 84 Atl. 438. See, also, Bell Telephone Co. v. Belleville Electric Co., 12 Ont. Rep. (Queen's Bench Div.) 571; Western Union Tel. & Tel. Co. v. Los Angeles Electric Co. (C. C.) 76 Fed. 178.

If, on the grounds of necessity urged, the city could rightfully under the law assert the power to compel the removal and relocation of complainant's instrumentalities, in order that its own instrumentalities might be installed in accordance with its predetermined plans, it would seem to me to be equally true that, similar conditions of necessity respecting its ability to maintain the system existing, the city could lawfully enact that no resident of the municipality along the line of its lighting system should be furnished with electrical energy from any system save the municipal system. This would be a most effective way of furthering the interests and welfare of the city if the success of its municipal system is to be taken as an index of its welfare, but at the same time, obviously, it would be in complete and utter disregard of the rights of complainant and others situated like it. I cannot see, however, that such a course of action would present any substantially different legal problem from that now before the court.

[7] Of course it is to be assumed in this controversy that, in all its actions to be had and taken under and pursuant to this ordinance, if valid, the city will be actuated only by motives of necessity, in so far as they may be thought to exist, and that it will enforce as little inconvenience and expense upon complainant in the matter of the readjustment of its poles and wires as is compatible with the proper and satisfactory installation of the municipal system. Be that as it may, yet, in so far as the city intrenches upon the superior right acquired because of prior location by complainant, and in so far as it requires complainant to relocate its instrumentalities at its own expense, not as a matter of genuine "public necessity" and justified by consid erations of public welfare under the police power, but merely in order that the instrumentalities of the city may be located in their place, its action is, in my judgment, arbitrary, unreasonable, and in violation of the superior right of location belonging to complainant, and is, in effect, an appropriation of plaintiff's property without compensation (Woodward v. Central Vermont Ry. Co., 180 Mass. 599, 62 N. E. 1051; concurring opinion of Mr. Justice Holmes, C., B. & Q. Ry. Co.

v. Drainage Commissioners, 200 U. S. 561, 595, 26 Sup. Ct. 341, 50 L. Ed. 596, 4 Ann. Cas. 1175), and is also an impairment of the contractual right accorded to complainant in virtue of its compliance with the constitutional provision hereinabove referred to and its acquisition and acceptance of the constitutional franchise enabling it to perform the public service in which it is now engaged (Walla Walla v. Walla Walla Water Co., 172 U. S. 1, 17, 19 Sup. Ct. 77, 43 L. Ed. 341; Grand Trunk Ry. Co. v. South Bend, 227 U. S. 544, 553, 33 Sup. Ct. 303, 57 L. Ed. 633, 44 L. R. A. [N. S.] 405).

Defendant, in support of its asserted right to enact and enforce the ordinance in question, has cited to the court no case which seems to stand in any wise as a precedent to the action herein taken. The arguments advanced by counsel are not persuasive for the reasons adverted to hereinabove. The cases cited by counsel, however, which it is claimed do lend support to the contention of defendant, are C., B. & Q. Ry. Co. v. Illinois, 200 U. S. 561, 26 Sup. Ct. 341, 50 L. Ed. 596, 4 Ann. Cas. 1175; New Orleans Gas Co. v. Drainage Commissioners, 197 U. S. 453, 25 Sup. Ct. 471, 49 L. Ed. 831; Union Bridge Co. v. United States, 204 U. S. 364, 27 Sup. Ct. 367, 51 L. Ed. 523, and many other cases of similar trend and nature. Obviously, however, as the merest reading of those cases will show, they announce no doctrine different from that accepted herein, to wit, that a public service corporation like the plaintiff, in the performance of its duty to the public under franchise or other similar contract, has no right to any particular location in or upon the public streets or highways, but that it is at all times subject to the police power of the state and subject to such general regulations as may arise from and spring out of the necessities of the public welfare and convenience. Neither of these cases, however, and none that have been cited or to which the attention of the court in its labors has been directed, may be said to go to the extent that a city or other sovereign functionary, having embarked upon a business venture, may assert its sovereign power merely for the purpose of enabling it successfully to install its own properties and in violation of superior rights of location belonging to a competitor because of priority of installation.

As indicated hereinabove, assuming the necessity, propriety, and expediency of such course to have been satisfactorily determined by those in authority, I am in entire harmony with a plan of municipal improvement such as has been projected in the city of Los Angeles and as is here under consideration. I am, however, also firmly of the belief. that until the city, by purchase, appeal to eminent domain, or otherwise, has lawfully and properly and justly eliminated competition, it must meet its competitors as any other private agency would be compelled to meet them, and must stand with them in the same relation to the law, and let its success be measured by its ability satisfactorily to serve the public, rather than by its power through the exertion of public functions to occupy a position of supremacy in the field which it deliberately has chosen to invade.

A decree will be entered, declaring the ordinance void and enjoining its enforcement.

In re COLWELL LEAD CO.

(District Court, S. D. New York. March 9, 1917.)

No. 60.

1. COURTS 365-DECISIONS OF STATE COURT-INTERPRETATION BY FEDERAL COURT-VALIDITY OF ASSIGNMENT.

In a proceeding involving the validity of the bankrupt's assignment for creditors, the bankruptcy court will treat the matter as undecided by the state court, where the judge of the state court, in making an order involving such premises, filed no opinion showing that he adjudged the assignment invalid, and the parties were disagreed as to that fact.

[Ed. Note.-For other cases, see Courts, Cent. Dig. §§ 950, 952, 955, 969-971.]

2. ASSIGNMENTS FOR BENEFIT of CREDITORS 66, 68-VALIDITY.

Stock Corporation Law (Consol. Laws N. Y. c. 59) § 66, declares that no corporation which shall have refused to pay any of its notes or other obligations when due shall transfer any of its property to any of its of ficers on any other consideration than the full value of the property paid in cash. Debtor and Creditor Law (Consol. Laws N. Y. c. 12) § 3, declares that every conveyance or assignment made by a debtor of his estate shall be in writing, and shall state the residence and business carried on by the debtor, that such conveyance or assignment shall be acknowledged before an officer authorized to take the acknowledgment of deeds, and shall be recorded in the county clerk's office in the county where such debtor shall reside, etc., and that the assent of the assignee, subscribed and acknowledged by him, shall appear in writing embraced in, or at the end of, or indorsed upon, the assignment before it is recorded. A corporation which was indebted executed an assignment of a mortgage to one of its officers as trustee for the benefit of its creditors; but the same was not acknowledged, nor did the purported assignment contain any assent by the trustee. Held that, as the trustee performed no acts under the assignment which could make it effective, the assignment is invalid; there having been no compliance with the statute.

[Ed. Note. For other cases, see Assignments for Benefit of Creditors, Cent. Dig. §§ 167, 261-270.]

One named as assignee for the benefit of creditors is not an adverse claimant, and the bankruptcy court can in a summary proceeding dispose of the validity of the assignment.

[Ed. Note.-For other cases, see Bankruptcy, Cent. Dig. § 411.]

4. BANKRUPTCY 154-SET-OFF-RIGHT TO CLAIM.

Bankr. Act July 1, 1898, c. 541, § 68b, 30 Stat. 565 (Comp. St. 1916, § 9652), declares that a set-off or counterclaim shall not be allowed any debtor of the bankrupt which is not provable against the estate or was purchased by or transferred to him after the filing of the petition, or within four months before such filing, with a view to such use, and with knowledge or notice that the bankrupt was insolvent, or had committed an act of bankruptcy. The owner of the equity of redemption in property against which a bankrupt had a mortgage by one of its officers acquired a judgment against the bankrupt more than six months before the filing of the petition. It did not appear that such judgment was acquired with a view to use as a set-off against the claim of the bankrupt on the mortgage. Held, that such judgment might be offset against interest due on the mortgage; section 68a declaring that, in all cases of mutual debts or mutual credits between the estate of the bankrupt and a creditor, the account shall be stated, and one debt set off against the other.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 451-455.] For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

5. BANKRUPTCY 154-SET-OFFS-PERSONS ENTITLED TO SET-OFF.

The owner of the equity of redemption in property subject to a mortgage, though not liable on the bond of the mortgage, may offset against interest due a judgment against the mortgagee which had become bankrupt.

[Ed. Note.-For other cases, see Bankruptcy, Cent. Dig. §§ 451-455.] In Bankruptcy. In the matter of the bankruptcy of the Colwell Lead Company. On petition of the American Enameling Company to set off as against interest due on a mortgage a judgment rendered against the bankrupt. Petition granted.

R. B. Honeyman and Albert J. Baruth, both of New York City, for Colwell Lead Co.

Herbert McKennis, of New York City, for Grace E. Walker.

Rearick, Dorr & Travis, of New York City, for City of Worcester. Louis Reed, of New York City, for Virginia Kent White.

Engelhard, Pollak, Pitcher & Stern, of New York City, for petitioner American Enameling Co.

Henry W. Sykes, of New York City, for other petitioner.

Williams, Folsom & Strouse, of New York City, for creditors and

trustee.

MANTON, District Judge. The bankrupt owned a mortgage of $90,000 upon the plant of the petitioner, the American Enameling Company of Elizabethport, N. J. The Eastern Sanitary Enameling Company gave its bond and this mortgage as the predecessor in interest of the American Enameling Company. On October 26, 1916, a petition in bankruptcy was filed against the Colwell Lead Company, and it was adjudicated a bankrupt on November 9, 1916; the court appointing A. F. Ward, Esq., trustee. On April 1, 1916, the bankrupt, by an alleged assignment, transferred this mortgage to Frederick J. Sherman, an officer of the bankrupt, for the benefit of creditors. This instrument recites:

"Whereas, at a meeting of creditors this company was requested to transfer certain of its assets in trust to W. D. Campbell, of Campbell, Heath & Co., J. R. Wettstein, of the United Lead Company, and Karl Legner, of the Standard Sanitary Manufacturing Company, or such trustee as might be selected by them to secure the claims of the said creditors; and

"Whereas, at a meeting of stockholders of the Colwell Lead Company the officers and directors were authorized and directed to comply with the said request of the said creditors and to transfer assets to secure the claims of creditors, and Frederick J. Sherman having been duly selected to act as Trustee of said assets to be liquidated by and under the direction of W. D. Campbell, J. R. Wettstein, and Karl Legner.

And further recites:

"Said property is assigned and transferred as security for the payment of the indebtedness of the Colwell Lead Company to creditors shown on schedule 1 of the report of the financial condition of the said Codwell Lead Company dated December 31, 1915, made by Louis Lubin & Co., being all the known creditors of this company, and are assigned with full right, authority, and power on the part of the said W. D. Campbell, J. R. Wettstein, and Karl Legner to sell, assign, and dispose of the same at any time thereof, at such times and in such conditions as to them, or a majority of them, may seem proper in conformity with the authority conferred upon the officers of this For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

company by resolution of the stockholders passed at a meeting held on the 16th day of February, 1916, and ratified and confirmed by said stockholders on the 15th day of March, 1916."

Shortly after said alleged assignment, a receiver of the bankrupt was appointed in the state court. The petitioner purchased a judgment obtained by the German-American Stoneware Works on February 23, 1916, amounting to $677.54, and seeks to set this off as against the interest on the mortgage, which is now due.

The questions presented are: First, as to whom this payment should be made, whether to Sherman or to the trustee; and, second, is the petitioner entitled to this set-off?

[1] The assignment of the judgment was taken in the name of Joseph A. Durkin, one of the officers of the petitioner; but he, by affidavit, asserts that he held it as trustee for the benefit of the petitioner. The fact is established that it is the owner of the judgment. The trustee insists upon payment to him of the full amount of the interest, and Sherman makes the same claim. The petitioner claims that heretofore, in an action in the state court, it has been adjudicated that the assignment to Sherman is void. This the trustee denies, and argues that the order of Hon. Edward J. Gavegan in the state Supreme Court was granted upon other grounds. Since Judge Gavegan wrote no opinion, I am not informed of the reasons for his granting the order in question, and shall, therefore, not treat the subject as having been decided by the state court.

[2] The original assignment of this mortgage to Sherman has been submitted by counsel for the trustee. Its examination shows execution by the respective parties. It is not acknowledged, and therefore is not such an instrument as might be recorded. I think the alleged assignment is void. Section 66 of the Stock Corporation Law provides:

"No corporation which shall have refused to pay any of its notes or other obligations, when due, in lawful money of the United States, nor any of its officers or directors, shall transfer any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash."

Section 3 of the Debtor and Creditor Law provides:

"Requisites of general assignment: Every conveyance or assignment made by a debtor of his estate, real or personal, or both, to an assignee for the creditors of such debtor, shall be in writing, and shall specifically state therein the residence and kind of business carried on by such debtor at the time of making the assignment, and the place at which such business shall then be conducted, and if such place be in a city, the street and number thereof, and if in a village or town such apt designation as shall reasonably identify such debtor. "Every such conveyance or assignment shall be duly acknowledged before an officer authorized to take the acknowledgment of deeds and shall be recorded in the county clerk's office in the county where such debtor shall reside or carry on his business at the date thereof. An assignment by copartners shall be recorded in the county where the principal place of business of such copartners is situated. An assignment by a corporation shall be recorded in the county where its principal place of business is situated. When real property is a part of the property assigned, and is situated in a county other than the one in which the original assignment is required to be recorded, a certified copy of such assignment shall be filed and recorded in the county where such property is situated.