"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 the same is recorded, and, if separate from the assignment, shall be duly acknowledged."

I think this alleged assignment must be construed as intended for the benefit of the creditors and must comply with the Debtor and Creditor Law. This it does not do. The assignee has not consented thereto in writing, it has not been recorded in the county of New York, and does not come within the requirements of section 3. To make a valid assignment, such as was attempted here, it was mandatory that the statutory provisions be complied with. Britton v. Lorenz, 45 N. Y. 51; Schwartz v. Soutter, 41 Hun (N. Y.) 325. The failure to obtain the written consent of the assignee renders the instrument void ab initio. Rogers v. Pell, 154 N. Y. 518, 49 N. E. 75; Young v. Stone, 61 App. Div. 364, 70 N. Y. Supp. 558; McIlhargy v. Chambers, 117 N. Y. 532, 23 N. E. 561.

It appears by the affidavits that all that Sherman ever did under this assignment was to open a bank account, and make a deposit of $2,700, which he later paid over to Brewster, the receiver in the state court. Sherman never paid the creditors anything of his receipts, and therefore the purposes for which the assignment was made were not carried out. In Doughty v. Weston, 174 App. Div. 212, 160 N. Y. Supp. 1075, Scott, J., said:

"It is well settled that in the case of an assignment or other instrument, absolute in form and actually delivered, which is executed for a particular purpose and is intended to become effective only if certain conditions are fulfilled, an inquiry may be made as to whether or not the conditions ever were fulfilled, and if it appears that they were not, the instrument will be held never to have become effective."

[3] I therefore am of the opinion that the assignment was void, and that Sherman had no claim to the interest. Sherman was served with the papers on this application. He is named as assignee for the benefit of creditors, not as an adverse claimant, and this court has jurisdiction of him in a summary proceeding. Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814; In re Stewart, 179 Fed. 222, 102 C. C. A. 348; In re Stokes (D. C.) 106 Fed. 312.

[4, 5] The judgment was obtained before the filing of the petition in bankruptcy and the assignment thereof made to the petitioner. Under section 68, subdivision "B":

A "set-off or counterclaim shall not be allowed in favor of any debtor of the bankrupt which (first) is not provable against the estate; or (second) 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 such bankrupt was insolvent, or had committed an act of bankruptcy."

From the facts shown on this application, it appears that the judgment was not purchased with a view to a set-off by the affidavits of Kupfer and Durkin, nor 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. Section 68a provides 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 shall be set off against the other, and the balance only shall be allowed or paid.

The judgment was purchased May 1, 1916, and the petition filed October 26, 1916, six months before the bankruptcy. Nor does the fact that the American Enameling Manufacturing corporation is not on the bond disentitle the petitioner to a set-off. It owns the equity of redemption. Worcester-Brooklyn Realty Co. v. Bailey, 161 App. Div. 935, 146 N. Y. Supp. 59. All the authorities are in favor of allowing this set-off. Rolling Mill Co. v. Ore & Steel Co., 152 U. S. 596, 14 Sup. Ct. 710, 38 L. Ed. 565.

The petition will be granted, with direction to pay the interest on the mortgage, less the amount of the judgment, with interest thereon, to the trustee in bankruptcy.

UNITED STATES v. ONE BLUE TAFFETA EVENING COAT et al. (District Court, S. D. New York. April 17, 1917.)

1. CUSTOMS DUTIES 133-VIOLATION OF CUSTOMS LAWS-ACTION FOR FORFEITURE.

A libel of forfeiture, filed under Customs Administration Act June 10, 1890, c. 407, 26 Stat. 131, which alleges that the articles sought to be forfeited were brought into the United States as a part of the baggage of a passenger, held not to entitle the claimant to oyer of the baggage declaration.

[Ed. Note. For other cases, see Customs Duties, Cent. Dig. §§ 316-331.] 2. CUSTOMS DUTIES 130-VIOLATION OF CUSTOMS LAWS-BAGGAGE OF PASSENGERS FRAUDULENT UNDERVALUATION.

The provisions of Tariff Act Oct. 3, 1913, c. 16, § III, H, 38 Stat. 183 (Comp. St. 1916, § 5526), for forfeiture of goods for entry by means of false invoice, declaration, or any fraudulent practice whatever, apply to the baggage of passengers, and articles therein are subject to forfeiture for fraudulent undervaluation in the declaration or otherwise.

[Ed. Note.-For other cases, see Customs Duties, Cent. Dig. §§ 296-315.] Libel of forfeiture by the United States against One Blue Taffeta Evening Coat, etc.; Charlotte A. Warren, Evelyn Byrd Burden, and Gwendolyn Dows, claimants. On exceptions to libel. Overruled. See, also, 237 Fed. 703.

This cause comes up on exceptions to a libel of forfeiture against certain wearing apparel brought by the claimant, Charlotte A. Warren, from France to this country on the 10th day of November, 1915, on the steamship Espagne. Such wearing apparel is divided in the libel into six groups, (a), (b), (c), (d), (e), and (f), of which groups (b), (e), and (f) are the property of the claimants Burden and Dows, and the groups (a), (c), and (d) are the property of the claimant Warren.

This first cause of forfeiture asserts that groups (c), (d), (e), and (f) were found as part of the baggage of the said Charlotte A. Warren upon her arrival as a passenger, and were not at the time of making entry of such baggage mentioned to the collector.

The second cause of forfeiture alleges that Charlotte A. Warren arrived as a passenger and had in her baggage certain articles mentioned in groups (a), (c), and (d), and that these she attempted to enter by means of a certain fraudulent baggage declaration and entry, in which she declared that all the

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

articles in her baggage were set forth in such baggage declaration, together with the actual market value of the same, and that all of such articles were intended for her personal use, while in fact the baggage declaration was fraudulent, because it did not contain a statement of all her personal effects, with their cost price or market value, or make reference to all such articles. The third cause of forfeiture alleges that the said Charlotte A. Warren, having in her baggage the articles mentioned in groups (b), (e), and (f), attempted to enter them by means of a fraudulent baggage declaration, setting forth all the articles contained in her baggage and the cost price and market value of the same; that all the articles were intended for her personal use, when in fact the articles were not intended for her personal use; that the declaration was fraudulent, because it did not contain a statement of all the articles, and of the cost price and market value of the same.

The fourth cause of forfeiture alleges that among the personal effects brought in by the said Charlotte A. Warren and contained in a trunk was one evening gown and one evening custume, said trunk containing other personal effects set forth; that, furthermore, among the personal effects was another trunk, containing one flame-colored evening costume and other clothes therein set forth. It alleges that said Charlotte A. Warren attempted to enter these two trunks of personal effects by falsely stating orally to certain examiners of merchandise and to certain surveyors and inspectors of customs that the flame-colored evening gown and the black costume and the flame-colored evening costume had already been imported into the United States, and the duty had been paid upon them, when the fact was untrue, and known to her to be untrue.

The fifth cause of forfeiture asserts that the said Charlotte A. Warren, having in her baggage the articles mentioned in all the groups, attempted to introduce them into the commerce of the United States by fraudulent baggage declarations, asserting the foreign cost and market value of the articles at $1,500, when the same was known to her to be largely in excess of that sum.

W. L. Wemple, of New York City, for claimant Warren. Alfred A. Wheat, of New York City, for claimants Dow and Burden.

Frank E. Carstarphen and John E. Walker, both of New York City, for United States.

LEARNED HAND, District Judge (after stating the facts as above). This is the same libel of forfeiture which I considered before, and which has since been amended. As to the first cause of forfeiture, the claimant craves oyer of the baggage declaration, insisting that, if produced, it will appear that the imported articles were mentioned. As to the second and fourth causes of forfeiture, the claimant Warren insists that the articles in question were part of her personal baggage, brought with her into the country on her arrival. As such she says that they do not fall within the Customs Administrative Act, and that the allegations of fraud are irrelevant. As to the third cause of forfeiture, the claimants Burden and Dows do not press their exceptions, and the same are overruled. As to the fifth cause of forfeiture, the claimant Warren excepts, so far as concerns groups (a), (c), and (d), upon the same ground as in the second and fourth causes of forfeiture, but the claimants Burden and Dows do not press their exception to the other groups, which is clearly bad.

Two substantial questions, therefore, arise: First, whether the case is one in which the claimant can crave oyer of the baggage declaration; second, whether goods brought in by a returning passenger and as his baggage under the Customs Administrative Act are subject to

forfeiture for a fraudulent undervaluation in a baggage declaration or for oral fraud touching their liability to customs duties.

[1] Profert at common law is never necessary unless the instrument is under seal, and even then not unless it is the foundation of the plaintiff's action. Here the baggage declaration is not the foundation of the case in the sense intended. The pleading only says that the claimant Warren did not mention the articles to the collector and that will be enough to prove. The fact is irrelevant that I may know that a baggage declaration existed and that the plaintiff will have to put it in evidence when it comes to its case. It would be quite enough under the libel to prove that the claimant had made no baggage declaration whatever and no mention of the articles to the collector. The exception is overruled.

[2] The second cause of forfeiture alleges that the claimant tried to enter her personal baggage by the use of a baggage declaration, among other things fraudulently understating the cost value of the goods. The exception is based upon the theory that paragraph H of section III of the Customs Administrative Act does not touch passengers' baggage, and, as a necessary corollary of that position, that no amount of fraud will forfeit the goods or constitute a crime so long as they are mentioned within the meaning of section 2802.

At the outset, I may say that no case decides anything of the sort, certainly not those relied upon. In United States v. One Pearl Necklace, 111 Fed. 164, 49 C. C. A. 287, 56 L. R. A. 130, the goods were forfeit because the claimant had failed to mention them to the collector at the time of entry. The language used about two systems of entry, one for baggage and one for merchandise, applied to certain sections of the Revised Statutes mentioned by the court, and was wholly in place in that connection. There is not the least reason to suppose that the court had in mind the question whether paragraph H of section III (then section 9) was or was not applicable to a passenger's baggage. In One Pearl Chain v. United States, 123 Fed. 371, 59 C. C. A. 499, the claimant succeeded, because the claimant "mentioned" her jewelry by the use of the words "wearing apparel" in the declaration. No question arose of any fraudulent device to secure an undervaluation of the goods upon their appraisal. The language on page 374 is absolutely and literally true, but it does not mean what the claimant supposes. There are, indeed, two different classes of goods arriving, baggage and merchandise, and the formalities required of the importer of each class are different. It by no means follows that, when the United States undertakes on its own account to value the goods, the importer should go scatheless, no matter by what practice he may impede the discharge of that duty. United States v. One Trunk (D. C.) 175 Fed. 1012, was a case of merchandise for sale, and has no bearing on this controversy.

I come, therefore, to the statute without any controlling decision. Until 1897 passengers' baggage was not subject to any duty at all. It was therefore necessary only to declare what one had under Revised Statutes, § 2799 (Comp. St. 1916, § 5496), and if one did "mention" everything, the United States had all the means for protection of its revenue. In that year, however, passengers' baggage became taxable,

like any other merchandise, according to its proper schedule, except that the passenger was entitled to a general deduction of $100 from the sum of the appraised valuation. This provision now appears substantially unchanged in paragraph 642 of section 1 of the Tariff of 1913 (Comp. St. 1916, § 5291). While the passenger, outside of any valid treasury regulations not here in question, was not required to make any statement of value, an appraisal at some stage of the series of acts constituting an "entry" became an inevitable necessity. Section III of the Tariff Act of 1913 deals in general with the adminis trative measures touching all imports subject to duty, and since the baggage of an incoming passenger since 1897 had become subject to duty, above the exemption in question, in it we should expect to find some provisions under which the baggage may be appraised. In the case of most merchandise the basis of the appraisal is the invoice produced by the importer and by reference made a part of his declaration. Paragraph F. However, under paragraph E, invoices are required neither for "personal effects accompanying the passenger" nor for any other merchandise over $100 in value. (The exception of "personal effects" is incidentally to be noted as bearing upon the contention. that the statute in general does not touch baggage.) The statutory provisions authorizing the appraisal of goods under $100 and of all "personal effects" are to be found in paragraph K and those immediately following, which direct the appraiser and collectors to ascertain by every reasonable means "the actual market value and wholesale price of the merchandise." Perhaps paragraph I also covers "personal effects," but I do not find it necessary to say so. Nothing in sections 2799-2802 (Comp. St. 1916, §§ 5496-5499) of the Revised Statutes contradicts this conclusion. Those sections continue to have the same use as before, since under them the personal effects can be ascertained and thereafter can be appraised. They remain the only statutory requirement for the entry of baggage, aside from such treasury regulations as would be justified under the power to make the appraisal at all.

The customs officers having this duty touching all goods, not only those which are covered by invoice, but those which are not, paragraph H of section III prohibits in the broadest possible way any fraudulent device by which they shall be prevented from reaching a true appraisal. These are the words:

"Invoice, declaration, affidavit, letter paper, * written or verbal,

any false statement * any false or fraudulent practice or appliance any willful act or omission."

It is of no consequence, therefore, whether the valuation in the claimant's baggage declaration was required by any provision of law. Certainly it was a "paper" and a "false written statement," and a "fraudulent practice." It is true that section 2799 did not require the statement of value, but she added such a statement, and since it was by hypothesis a fraud, it falls within paragraph H, being proper to obstruct the appraiser in his duties. Nor is it of any consequence whether the word "declaration," in paragraph H, covers a baggage declara

241 F.-59