GOODLANDER-ROBERTSON LUMBER CO. et al. v. ATWOOD.
(Circuit Court of Appeals, Fourth Circuit. April 9, 1907.)

No. 694.

BANKRUPTCY-ACTS OF BANKRUPTCY-PAYMENT OF DEBTS-INTENT TO PREFER. Defendant, at the time he made certain alleged preferential payments in order to continue in business and avoid suit, was indebted to about $20,000, and his salable property did not exceed $1,500. Much of his indebtedness was not due, and he possessed a knowledge of a rather technical business and a custom or good will which was valuable. He did not regard himself as doomed to failure but expected to continue in business and meet his obligations as they matured. The payments were of $160 and $121.15, respectively, made to bona fide creditors in the ordinary course of business. Held, that such payments were not made with intent to prefer, required by Bankr. Act 1898, c. 541, 30 Stat. 544, § 3, cl. 2 [U. S. Comp. St. 1901, p. 3422], and did not therefore constitute acts of bankruptcy.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy, §§ 72, 73.]

Appeal from the District Court of the United States for the Eastern District of Virginia, at Norfolk.

James G. Martin and W. H. T. Loyall (Edward R. Baird, Jr., Allan G. Burrow, and Robert W. Shultice on the brief), for appellant. G. A. Hanson and Daniel Coleman, for appellee.

Before GOFF and PRITCHARD, Circuit Judges, and McDOWELL, District Judge.

MCDOWELL, District Judge. On March 27, 1906, three of the creditors of W. J. Atwood, a dealer in lumber in Norfolk, Va., filed a petition, praying that Atwood be adjudicated an involuntary bankrupt. The alleged act of bankruptcy was the payment by Atwood to the Hardwood Lumber Company, a creditor, of $160 on February 27, and of $121.15 on March 6, 1906, being then insolvent, with intent. to prefer the said lumber company over his other creditors. The plea of the bankrupt to the petition consisted of a denial of the commission of the act of bankruptcy alleged in the petition. A jury trial was not demanded, and the evidence was adduced orally before the trial court, whereupon an order was entered dismissing the petition. The petitioning creditors have appealed.

It appears that the Hardwood Lumber Company sustained no relation to the alleged bankrupt other than that of one of several creditors, and that no sort of reason existed why Atwood should have desired or intended to prefer such creditor to any other creditors. The collections were made by an attorney, and the payments were made in the ordinary course of business and to avoid suit. At the time the payments were made Atwood was insolvent in the sense in which the word is used in the bankrupt act (Act July 1, 1898, c. 541, 30 Stat. 544, § 1, cl. 15 [U. S. Comp. St. 1901, p. 3419]. He was indebted to about the sum of $20,000—but much of this was not then due, and his salable property did not exceed $1,500. He did have, however, a knowledge of a rather technical and not easily learned

business and a custom or "good will" which has been apparently disregarded by counsel for appellants. The question in the case is whether or not the payments were made (Bankr. Act. § 3, cl. 2) with intent to prefer. From a careful reading of the evidence we are satisfied that Atwood did not regard himself as insolvent; that he made the two payments in question, as he had been doing previously, in the ordinary course of business, and without intent to prefer the creditor. He did know that his cash receipts were not at all times sufficient to enable him to meet the bills against him promptly. But he did not regard himself as doomed to failure. In fact the evidence leads us to believe that he expected to continue in business, to meet his obligations as they fell due and that he had by no means lost hope of ultimate success. The sums which he paid were just debts, then due, rather trifling in amount when considered in connection with the business he was doing, and they were paid in order to be able to continue in business and to avoid suit. If Congress had intended that a payment made under such circumstances as we have here should be an act of bankruptcy, the language of section 3, cl. 2, of the act would have been very different. As it is written, the law makes such payments acts of bankruptcy only when made with "intent to prefer."

It is argued that every man is presumed to intend the necessary consequences of his acts. But the defendant had no reason to suppose that such consequences would be an involuntary petition in bankruptcy, the seizure of his property by a receiver and the consequent ruin of his credit and destruction of his business. The consequences of making the payments in question reasonably to be expected were a continuance in business with the prospect of an ultimate payment of all of the creditors in full. An intent to prefer is an intent that some particular creditor shall receive a greater percentage of his debt than the other creditors of the same class. In the case at bar the evidence negatives the existence of such intent. The judgment of the trial court is affirmed

GINTY v. NEW HAVEN IRON & STEEL CO.

(Circuit Court of Appeals, Second Circuit. March 25, 1907.)

No. 180.

MASTER AND SERVANT-INJURIES TO SERVANT-DUTY TO WARN-QUESTION FOR JURY.

In an action for injuries to a servant by the explosion of certain molten iron he was assisting to roll, evidence held to require submission to the jury of defendant's negligence in failing to properly warn plaintiff of the danger.

[Ed. Note. For cases in point, see Cent. Dig. vol. 34, Master and Servant, §§ 1044-1050.]

In Error to the Circuit Court of the United States for the District of Vermont.

See 143 Fed. 699.

This cause comes here upon appeal from a judgment of the Circuit Court, District of Connecticut, in favor of defendant in error, which was defendant

below. The action was brought to recover damages for personal injuries sustained in defendant's mill, while plaintiff was employed in the handling, with an iron hook, of some hot iron which had been taken from a furnace and run through the roughing rolls. At the close of plaintiff's testimony, defendant put in no testimony, but moved for a direction of verdict in its favor. The motion was granted.

J. T. Smith, David E. Fitzgerald, and Walter J. Walsh, for plaintiff in error.

P. W. Chase and R. J. Woodruff, for defendant in error.

Before WALLACE, LACOMBE, and COXE, Circuit Judges.

PER CURIAM. The operation which was being conducted was the heating and rolling of a box pile. A box pile apparently consists of a collection of pieces of scrap iron inclosed by four slabs so as to form a sort of boxlike structure held together by wires. This is heated in a furnace, and when nearly molten is brought out and run, one or more times, through rollers, which operate to transform it into a sheet or bar. The plaintiff testified that on the occasion in question, after the iron had been through the rolls for the first time, and while he was about to lift it to put it back again, "the iron exploded" and "he got burned all over and lost his eye.' The plaintiff, a young man of 19, had been employed in similar mills for a considerable time, but in rolling box piles for five weeks only. For five months prior to that he had worked at rolling puddle balls, which consist of iron in a different condition from that of box piles.

The complaint contained two different specifications of negligence. It averred that it "was a reasonable precaution for the safety of the men employed in handling the molten mass to have a very careful and rigid inspection made of the scrap iron while it was being formed into the piles, and before it was put into the furnace, in order to detect the presence of any substance which, when coming in contact with the rollers after coming from the furnace, would be likely to cause the molten iron to explode." The answer, referring to this part of the complaint, admitted "that it might be considered a reasonable precaution, for the safety of the men employed in the same occupation as was the plaintiff, to have an inspection made of the scrap iron,"

The complaint further averred that on the date of the accident defendant failed to make a reasonably careful inspection of the scrap iron, and failed to discover the existence in the molten mass of dirt, slag, cinder, or other foreign substances, and failed to make any inspection whatever of the pile of scrap iron. These averments were denied in the answer, which averred specifically that defendant “did take such reasonable precaution to inspect the scrap iron at all times, and did at the time the plaintiff claims to have received his injuries." The evidence did not show any failure to provide for an inspection of the scrap iron, and the court's attention at the time motion for verdict was made seems to have been entirely directed to the charge of "negligence, in that there was no inspection." If this were all of the case, we should be inclined to affirm the judgment; but there is another branch of it which seems to have been overlooked. It is conceded by the answer that, in the rolling of box piles, it will sometimes occur

that the molten mass will explode and scatter about. The answer avers that plaintiff well knew that such result might happen. The complaint avers that he was inexperienced in the business, and was "never informed, warned, or instructed concerning the same," which latter averment is denied in the answer.

Upon a careful examination of the testimony, we have reached the conclusion that there was sufficient, in the absence of further proof, to warrant the jury in finding that there was a liability to some misbehaviour of the iron when box piles were being rolled, which was more serious than the ordinary spark throwing which would be observed in a few hours experience at the work. That there was some hidden imperfection which only manifested itself occasionally, and which, a man who had worked elsewhere in the mill might not discover in a brief experience at the box-pile rolls, and of which he might take precautions to avoid the consequences, if warned that it might be expected. Plaintiff testified he had not been warned or instructed. We think it best not to discuss the testimony at any greater length, because upon a new trial the case may present an entirely different aspect. The two witnesses to the accident were unintelligent, and proof was taken under such a multitude of objections, many of them quite unimportant, that it must have been difficult at the close of the case for any one to tell what had, and what had not, been proved. Had the defendant put in its own testimony, and explained by older, more experienced, and intelligent workmen the various processes, experiences, and results in the treatment of box piles, puddle balls, and other varieties of molten iron, a different situation might have been shown. It is sufficient to say that, when defendant elected not to put in any testimony, there was evidence, unsatisfactory indeed, and not especially persuasive, but sufficient to call upon defendant for an explanation of the conditions existing at the time of the accident.

The judgment is reversed.

THE ELLIS.

THE GALICIA.

(Circuit Court of Appeals, Fifth Circuit. April 15, 1907. Rehearing Denied May 20, 1907.)

No. 1,599.

COLLISION-STEAM VESSELS MEETING-VIOLATION OF SIGNAL RULES.

Two steamships meeting in the Mississippi both held in fault for a collision, the descending vessel for giving the first passing signal contrary to the statutory rule, and after it had been accepted in giving a contrary signal, intended for another vessel astern of the first, but which was mistaken by the latter and acted on, directly contributing to the collision, the ascending vessel for so mistaking the second signal and acting on it, instead of sounding a danger signal and stopping until the signals were fully understood.

[Ed. Note.-Signals of meeting vessels, see note to The New York, 30 C. C. A. 630.]

Appeal and Cross-Appeal from District Court of the United States. for the Eastern District of Louisiana.

J. D. Rouse and Wm. Grant, for appellant.
Edgar H. Farrar, for appellees.

Before PARDEE, MCCORMICK, and SHELBY, Circuit Judges

PER CURIAM. The collision in this case resulted from a confusion and misunderstanding of signals. The first signal was given. by the descending steamer Ellis, and was in violation of the letter of statutory rule 1 governing pilots on western rivers, which provides, among other things, that the pilot of the ascending steamer shall be the first to indicate the side on which he desires to pass, and that the descending steamer is entitled to the right of way. This violation, however, did not directly contribute to the collision, because it was fully understood and accepted by the ascending steamer Galicia. The second signal of two blasts given by the Ellis and intended for the ascending transfer steamer, then somewhere astern of the Galicia, was also in violation of the said rule, and led directly to the collision, for the Galicia misunderstood it, and changed her course so as to run directly across the course intended and maintained by the Ellis, rendering a collision extremely probable, if not inevitable. At the time this signal was given by the Ellis, the transfer steamer for which it was intended, if outside of its slip at all and in the river, was over 1,200 yards distant from the Ellis, and therefore such signal was premature, even if under a fair construction of rule 1 the descending steamer may signal when the ascending steamer has failed to signal, and the vessels have come near to or within the 800-yard limit. If the rule had been followed and the transfer steamer astern of the Galicia had signaled for passing by one or two blasts of its steam whistle, the Galicia, although having no special lookout astern, would have been charged with knowledge that the two blasts signals from the Ellis were in answer to and intended for another steamer, and no confusion would have resulted, except at the sole fault of the Galicia. The actual violation at the time of the collision of a statutory rule intended to prevent collisions is presumably a fault, and, if not the sole cause of the collision, at least a contributory cause. The Pennsylvania, 19 Wall. (U. S.) 136, 22 L. Ed. 148. When, after the passing signals had been given and accepted between the Ellis and the Galicia, the Ellis followed after more or less interval with a two blast signal, the Galicia should have taken it as intended for some steamer astern, but, if understanding it as intended to change the course of passing already arranged betwen the two steamers, the Galicia should have sounded the danger signal, stopped her engines, and backed if the vessels were in close proximity until the passing signals were fully understood. The Galicia did neither. She accepted the signals as intended for herself, and so changed her course as to make the collision next to certain. In this we are clear that she was in fault.

The judge of the District Court found that the faults of the Ellis