the word under which it is sold is, as applied to such product, false and deceptive, since the provision of the act requiring the marking of the product must be harmonized with the sul sequent provision that no such product shall be sold or offered for sale under any false and deceptive name. Thus, the courts will not disturb the determination of the Secretary of Agriculture, fairly arrived at and having substantial evidence to support it, that the use of the word " sausage in connection with the manufacture and sale in interstate commerce of a product which contained cereal in excess of two per cent and water or ice in excess of three per cent is calculated to deceive purchasers and consumers, and hence will be prohibited, where the Act forbids sales of meat or meat food products under a false or deceptive name, and empowers the Secretary to make rules and regulations for the efficient execution of that Act. Houston v. St. Louis Independent Packing Co., (1919) 249 U. S. 479, 39 S. Ct. 332, 63 U. S. (L. ed.) -, reversing (C. C. A. 8th Cir. 1917) 242 Fed. 337, 155 C. C. A. 113, which reversed (E. D. Mo. 1916) 231 Fed. 779.

Vol. 1, p. 400. [Marking, etc.]

[First ed., 1909 Supp., p. 48.] Conclusiveness of decision of Secretary of Agriculture as to deception in use of name.— The determination of the Secretary of Agriculture, fairly arrived at, and having substantial evidence to support it, that the use of the word "Creamo" as a trademark for

oleomargarine which contains skimmed milk, but no cream, is false and deceptive, within the meaning of the prohibition of the Meat Inspection Act against the use of such names, and will only be sanctioned if not less than 10 per cent of cream be used, and then only if the trade name be changed to "Creamo Brand," will not be disturbed by the courts, notwithstanding the previous departmental approval of "Creamo as a trade name, given at a time when the manufacturer used 30 per cent of cream in its product, and declared that it and other ingredients were "churned in an abundance of richest cream, resulting in a perfect substitute for butter." Brougham . Blanton Mfg. Co., (1919) 249 U. S. 495, 39 S. Ct. 363, 63 U. S. (L. ed.) --, reversing (C. C. A. 8th Cir. 1917) 243 Fed. 503, 156 C. C. A. 201.

Effect of registration of trade name under Trademark Act. The sanction of the Patent Office to the use of the word "Creamo " as an appropriate trade name for oleomargarine under the Trademark Act (see vol. 9, p. 746) does not render inapplicable the provisions of the Meat Inspection Acts requiring inspection of meat food products and prohibiting the sale of such products in interstate commerce under any false or deceptive name, provided, however, that established trade names which are usual to such products, and which are not false and deceptive, and which shall be approved by the Secretary of Agriculture are permitted. Brougham . Blanton Mfg. Co., (1919) 249 U. S. 495, 39 S. Ct. 363, 63

U. S. (L. ed.) —, reversing (C. C. A. 8th Cir.

1917) 243 Fed. 503, (156 C. C. A. 201).

Vol. I, p. 492, sec. 1020. [First ed.,

vol. I, p. 492.]

Failure of defendant to appear on advice of attorney. Under this section a court may exercise discretion in remitting the penalty of a forfeited recognizance only when there has been no wilful default of the defendant, and the fact that a defendant fails to appear on the advice of his attorney does not change the character of his default or make it any the less wilful. U. S. v. Fabata, (N. D. N. Y. 1918) 253 Fed. 586, wherein the court said: "In United States v. Robinson et al., 158 Fed. 410, 85 C. C. A. 520, the Circuit Court of Appeals (Fourth Circuit) said, and accordingly held:

Among other things, the foregoing section provides that the court may, in its diseretion, remit the whole or a part of the penalty, whenever it appears that there has "been no willful default of the party," etc. While in a case like the one at bar a surety may suffer a hardship, owing to the provisions of this statute, nevertheless its terms

are plain and unmistakable. It clearly de

fines the circumstances under which the court may exercise its discretion, and remit the whole or a part of the penalty, to wit, when there has been no willful default; and inasmuch as the court in this case found as 2 fact that the default was willful, it necessarily follows that it was not within the discretion of the court to vacate or modify the judgment in question.'

"I think this the true construction of the statute, and that, to authorize a remission of any part of the penalty of the bond, it must appear there was no willful default of the party that is, of the defendant in the indictment, who failed to appear.

"In this case the claim of the Surety Company is that Fabata, the principal, went with h's attorney to the United States courthouse, but outside of same, in the city of Auburn, N. Y., at the time and place and term of court where required by the bond to appear, but that Fabata, by direction of his counsel, remained outside the courthouse; that it was arranged and agreed between them that

Fabata was to remain outside, while his attorney went inside, and remain in a position where he could observe a preconcerted signal from his attorney, the attorney telling Fabata that in the event of his considering it advisable for him, the said Fabata, to appear before the court, a certain unmistakable signal would be given, and in the event that his attendance was deemed unadvisable at the time, that another signal, which could in no event be mistaken for the other, would be given, in which latter case the said Fabata should immediately go to the railroad station and return to New York on the first possible train;' that after waiting quite a while the said attorney, a New York city lawyer, ap peared at the entrance to the courthouse and gave the agreed signal last above referred to, the one on receipt of which Fabata was to return to New York; and that Fabata, 'relying on and in compliance with the advice of his counsel, then and thereupon left Auburn on the first train and returned to New York.' The affidavit that this took place, as claimed, is not made by the attorney of Fabata, or by Fabata, but by the attorney for the Surety Company, who simply says that Fabata has so informed him. This falls short of proof that such an occurrence took place. It is the merest hearsay.

"But, even if such an arrangement was made and carried out between Fabata and his attorney from New York city, it falls far short of showing that there was no willful default on Fabata's part. On the other hand, it shows there was a willful default. Fabata and the Surety Company knew that Fabata's duty and obligation under the bond

was then and there, at Auburn, to appear and answer, and abide the order of the court. Fabata did not appear, nor did the surety produce him. He was duly called and failed to respond in person, but his attorney did appear and requested a delay or postponement, which was refused, as there had been several adjournments of the case. In open court at said time and place, as this court well remembers, and as Mr. D. B. Lucey, the United States attorney, who was present, makes affidavit, the said attorney for Fabata, when Fabata and the surety were called as set forth, stated in open court that on the preceding day he had made an engagement with the said Fabata to meet him the next morning, to wit, November 16, 1917, at the Grand Central Terminal to take a train from there to Auburn for the purpose of appearing in court (court then being in session at said place); that when O'Neill (the said attorney) arrived at the station in New York he looked around for the said Fabata, and he was unable to see or find him and that he had no knowledge of where he then was.' Fabata was not in court, and this is not disputed. The surety did not produce him, when called and required so to do, and this is not disputed. That he was not in Auburn, remaining outside the courthouse, is shown by what occurred in the courtroom at the time. Plainly, in either event, it was a willful default and failure to appear on Fabata's part, and a failure to produce the defendant on the part of the surety. Such practice, even if it occurred as now claimed, cannot be encouraged or approved, or held to be other than a willful default."

:

Vol. I, p. 504.

Supp., p. 464.]

Power of Congress.- Congress, in the exercise of its constitutional power to establish systems of bankruptcy, may impair the obligation of contracts. In re Franklin Brewing Co., (C. C. A. 2d Cir. 1918) 249 Fed. 333.

Suspension of state insolvency laws - In general. To same effect as first paragraph of original annotation, see In re Grafton Gas, ctc., Light Co., (N. D. W. Va. 1918) 253 Fed. 668.

It is only state laws which conflict with the bankruptcy laws of Congress that are suspended. Stellwagen v. Clum, (1918) 245 U. S. 605, 38 S. Ct. 215, 62 U. S. (L. ed.) 507, holding an Ohio statute in relation to transfers to prefer creditors not to be suspended by the federal Act; Irwin v. Maple, (C. C. A. 6th Cir. 1918) 252 Fed. 10, 164 C. C. A. 122, holding to the same effect.

Certain state laws not affected by Act.The Bankruptcy Act recognizes, and the

federal courts in the administration of it enforce, the laws of the states affecting dower, exemptions, the validity of mortgages, priorities of payment, and the like. This plan is not objectionable because it leads inevitably to diversity of results. Harlin . American Trust Co., (Ind. App. 1918) N. E. 20.

119

General purposes of the Act.-"The purpose of the Bankruptcy Act is: (1) To apply the property of the insolvent person or corporation to the payment of the debts with as little expense and delay as is consistent with their interests. (2) To relieve the honest and unfortunate debtor from his debts and give him another opportunity in the industrial life of the community." In re Munford, (E. D. N. C. 1919) 255 Fed. 108.

Bankruptcy courts were not created for the purpose of aiding men to delay or defraud their creditors. In re Nash, (D. C. S. D. W. Va. 1918) 249 Fed. 375.

Interpretation of Act Practical construction required. - The Bankruptcy Act, being a commercial statute, should receive a practical

construction. In re McNeil Corporation, (D. C. Mass. 1918) 249 Fed. 765. ·

Supreme Court decisions controlling.- The decisions of the United States Supreme Court on the construction of the Bankruptcy Act are controlling on the state court. Covington v. Rosenbusch, (Ga. 1918) 97 S. E. 78.

Vol. I, p. 510, sec. 1a (9). [First

ed., 1912 Supp., p. 465.]

Power conferred on agent or attorney.— Paragraph 9 of section 1 is said to have no force unless it means that the agent or attorney, as for instance one holding the legal title to a note as agent or trustee, may proceed in his own name as creditor. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Surety or indorser.-"The law is well settled that a surety or indorser is a creditor, within the meaning of the Bankruptcy Act. Stern v. Paper, (D. C.) 183 Fed. 228, 231; Kobusch v. Hand, 156 Fed. 660, 84 C. C. A. 372; Swarts v. Fourth National Bank, 117 Fed. 1, 54 C. C. A. 387; National Bank of Newport v. National Herkimer County Bank, 225 U. S. 178, 32 Sup. Ct. 633, 56 L. ed. 1042; Landry v. Andrews, 22 R. I. 597, 48 Atl. 1036; Bartholow r. Bean, 12 Wall. 635, 2 L. ed. 866." Cohen v. Golden, (C. C. A. 1st Cir. 1918) 250 Fed. 599, 162 C. C. A. 615.

Vol. I, p. 515, sec. 1a (23). [First ed., 1912 Supp., p. 515.]

The words "secured creditor."—"The definition of a secured creditor' is a creditor who directly holds as security for his debt property which would otherwise swell the assets of the bankrupt estate, or indirectly holds like property through having the debt obligation of another person who himself holds such property. The thought of there being security held by the creditor in the form of property is carried all through the provisions of the statute, and the right of the creditor to enforce the individual obligation of another person to pay the debt of the bankrupt is recognized in the provision permitting such other person to prove, in the name of the creditor, the claim against the Fankrupt's estate, if the creditor does not elect to do so on his own account." Shatz, (E. D. Pa. 1918) 251 Fed. 351.

In re

Vol. I, p. 516, sec. 2. [First ed.,

1912 Supp., p. 469.]

Not courts of limited jurisdiction.— Although a creditor may disapprove of the manner in which a trustee has been discharging his duties, he cannot stand aloof from the bankruptcy proceedings because of his dissatisfaction, for there is ample provision in the Bankruptcy Act for his protection, and the jurisdiction of the federal courts in bankruptcy matters is exclusive. DeMuth v. Faw, (1918) 103 Wash. 279, 174 Pac. 18.

Equitable jurisdiction.- To same effect as original annotation, see In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633, 161 C. C. A. 543; Bridgeton Nat. Bank v. Way, (C. C. A. 4th Cir. 1918) 253 Fed. 731, 165 C. C. A. 325.

"It is now universally conceded that the District Court, being a court of equity in bankruptcy matters, is a court of equity for all purposes in such matters, and all the principles and rules of equity apply, and the proceedings in bankruptcy are of an equitable nature. It has been further established beyond cavil that valuable privileges are accorded bankrupts under this act, and those who desire to avail themselves of the benefits and privileges thus given must act speedily; at least, they must conform strictly to the rules and regulations governing the administration of the act." In re Association Dairy Co., (D. C. Conn. 1918) 251 Fed. 749.

Suit for accounting. A trustee in bankruptcy may recover, in an action for an accounting where general relief is prayed, property taken from the bankrupt under

a

forfeiture clause in a contract in excess of that provided for thereby. Stennich v. Jones, (C. C. A. 9th Cir. 1918) 252 Fed. 345, 164 C. C. A. 259, wherein the court said: "The appellees, however, take the position that even if property outside the contract was taken, there can be no recovery for such property in this suit, which is for accounting, and that the trustee's remedy is by an action at law for conversion. With this proposition we cannot agree. The suit being for accounting and general relief, and the issue as to what property was affected by expenditure under the contract having been testified to as one involved, the court may retain the cause, and require that an accounting be made by the defendants to the trustee for any and all property taken by them or any of them not embraced in the contract as we have construed it."

Jurisdiction by consent.-- Where a creditor voluntarily submits his claims to a bankrupt's property to the jurisdiction of the bankruptcy court, agrees to allow the referee to determine his rights to the proceeds of the sale thereof, voluntarily appears and participates in the hearing before the referee concerning the dispute in question and fails to raise the question of jurisdiction until after an adverse decision by the referee, he will be regarded as having consented to such jurisdiction and to have waived his right to object thereto. In re Drag, (E. D. Mich. 1918) 254 Fed. 474.

Where the petition in an involuntary proceeding alleged that the debtor had admitted in writing its inability to pay its debts and its willingness to be adjudged a bankrupt, although such written admission does not appear by the record to have been made at that time, yet such omission is not material so far as it affects the validity of the adjudi-: cation where it appears that in due course the debtor by its written answer consented to

jurisdiction. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

A trustee in bankruptcy waives his right to have claims against the interest of the bankrupt in a decedent's estate adjudicated in the federal court by consenting to the exercise of control over the estate by the state court. Tripplehorn v. Cambron, (C. C. A. 6th Cir. 1918) 250 Fed. 605, 162 C. C. A. 621. The practice and procedure of the bankruptcy courts are prescribed exclusively by the Bankruptcy Act and the general orders and regulations pursuant thereto. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

The Conformity Act (R. S. § 914; 6 Fed. Stat. Ann., 2d ed., p. 21) does not make the state rules of procedure apply to bankruptcy courts. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Vol. I, p. 518, sec. 2 (1). [First ed.,

1912 Supp., p. 470.]

Jurisdiction as dependent on residence or domicile within the district - Removal prior to filing petition. Where a member of a firm has sold his interest, removes from the state and resides in another state for more than three months prior to the commencement of proceedings, he is not subject to the jurisdiction of a bankruptcy court of the state from which he removed. In re Fackelman, (S. D. Cal. 1918) 248 Fed. 565.

Corporation's principal place of business A question of fact.- In In re Worcester Footwear Co., (D. C. Mass. 1918) 251 Fed. 760, the facts in substance were as follows: The alleged bankrupt company was organized under the law of Maine in February, 1916, to act as a selling company for the Worcester Felt Shoe Company, a Massachusetts corporation, which manufactured shoes and had its principal place of business in Worcester, Mass. It had no place of business of its own. Until the autumn of 1916 all its business, except selling its goods, was done in the offices of the shoe company in Worcester. One Pevear was treasurer of both companies until October of that year, when he was succeeded as treasurer of the respondent by one Russell. Following Mr. Russell's election as treasurer, he removed the record books and stock book to his own law office in New York; but the books of account remained in Worcester in the office of the shoe company, kept, as formerly, by one of its employees, who was also connected with the respondent. At this time Mr. Russell notified the clerk of the corporation in Maine and the internal revenue collector that the corporation had removed to New York. The court said:

"The re

spondent's letter heads never gave any other address than that in Worcester. It never had any other post office address, and never held itself out to its trade as doing business anywhere else. So far as appears, orders for goods and remittances in payment for them were always sent to the respondent in Worcester. No business of the respondent was ever

carried on in New York, except that in connection with its bank account and its stock and corporate record. Its treasurer, who was its controlling official, resided and had his personal office there; but it does not appear that any directors' meetings were ever held there. The keeping of the record and stock books in New York was of little practical importance, because apparently there were few or no transfers of the stock, and no meetings during the period on question. . . . It is not easy, nor is it required, to lay down any general rule for determining which one of several places at which a corporation does business is its principal place of business. It is not necessarily where the manager happens to be located, or the stockbook and record book to be kept, although those are significant facts. It is to be gathered from a general survey of the corporation's activities. The decision depends upon a comparison of the activities at each place in respect to their character, importance, and amount."

Collateral attack.- An adjudication is, in a collateral proceeding, conclusive as to the jurisdiction of the bankruptcy court. Riggs v. Price, (Mo. 1919) 210 S. W. 420.

Vol. I, p. 522, sec. 2 (3). [First ed.,

1912 Supp., p. 472.]

Appointment of receivers or marshals, in general - Paramount jurisdiction of bankruptcy court.-Although the paramount jurisdiction and right of possession of goods of the bankrupt are in the federal court, yet where the goods are in the possession of the state court there still exists, in the necessary change of possession, the rule of comity between courts, the application of which must be left to the good sense and good conduct of those controlling such comity related courts. Gealey v. South Side Trust Co., (C. C. A. 3d Cir. 1918) 249 Fed. 189.

Appointment must be necessary for preservation of estate. To the same effect as the original annotations, see In re Independent Mach., etc., Corp., (C. C. A. 2d Cir. 1918) 251 Fed. 484, 163 C. C. A. 478.

Receiver's powers and duties in general — Sales by receivers.- Where mortgaged property which was in the bankrupt's possession at the time the petition against him was filed was taken possession of by the mortgagee for the purpose of foreclosure, prior to the appointment of the receiver, the court may in its discretion make an order restraining the mortgagee from proceeding with his foreclosure and allowing the receiver to take and sell the property, the proceeds of such sale to be held subject to the same valid liens that the property itself was subject to. Charak .* Durphee, (D. C. Mass. 1918) 252 Fed. 885.

Previous receivership proceedings in state court. Where a stockholder of a corporation applies to a state court for a receivership of the corporation, not, however, on the ground of insolvency, and a receiver is appointed, but not until the filing of a petition

in a federal court to have the corporation declared a bankrupt, the state court has jurisdiction to enter a decree allowing the accounts of the receiver, fixing his compensation and ordering payment of the fee for the surety upon his bond. And a subsequent adjudication in bankruptcy does not relate back and affect the decree. But upon such adjudication and the appointment and qualification of a trustee it becomes the duty of the state court upon proper proceedings and in an orderly manner to see that the property of the bankrupt in the hands of its officers is transferred to the trustee appointed by the federal court. Shannon v. Shepard Mfg. Co., (1918) 230 Mass. 224, 119 N. E. 768.

Receiver's powers and duties - Custodian of property. A receiver is merely a custodian and is not vested with title. In re Rice, (S. D. N. Y. 1919) 256 Fed. 858.

Property in the hands of a receiver in the state court is in custodia legis. He has no power to make a surrender of it though proceedings in bankruptcy are subsequently commenced and as a rule of comity in such cases it remains for the state court to provide for a surrender. Gealey v. South Side Trust Co., (C. C. A. 3d Cir. 1918) 249 Fed. 189.

The bankrupt is not divested of the title to his property by the appointment of a receiver. Vaughn-Carlton Co. v. Studebaker Corporation, (Ga. App. 1918) 97 S. E. 99.

Where property is sold under a contract by which title is retained in the vendor until payment of the purchase money, the vendor's title is not lost by a seizure of the property by a receiver in bankruptcy of the vendee. Vaughn-Carlton Co. v. Studebaker Corporation, (Ga. App. 1918) 97 S. E. 99.

Remedy against adverse claimant. The claim of a postmaster as against the receiver to the possession of a bankrupt's mail, which has been impounded by order of the Post Office Department and is being held awaiting a decision by the department as to whether or not a fraud order should issue, is an adverse one which cannot be disposed of by summary motion. In re Rice, (S. D. N. Y. 1919) 256 Fed. 858.

Right of receiver to maintain suits.- The right to recover for injuries to the estate pending the receivership vests in the receiver when he is appointed. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Liability of receiver.- A receiver who has incurred debts in excess of the authority conferred on him by the court, is liable to the creditors personally and their only recourse is against him. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Payment of necessary disbursements. If the alleged bankrupt consents to the appointment of a receiver without bond, he cannot object, if the petition be dismissed, to the payment of necessary disbursements out of the funds in the receiver's custody. In Independent Mach., etc., Corp., (C. C. A. 2d Cir. 1918) 251 Fed. 484, 163 C. C. A. 478.

re

Termination of receivership.- Where the appointment of receivers has been procured by misrepresentation by which the court has been misled, the order of appointment may be set aside. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Liability for wrongful procurement of receivership. Where it appears that there has been a wrongful procurement of a receivership, it has been said that a complaint or petition by the trustee, addressed to the bankruptcy court in the exercise of its equity powers, asking an accounting for the damages caused to the estate by the wrongful acts committed after the filing of the petition and asking for judgment against those responsible therefor, would not go beyond the jurisdiction of the court of bankruptcy, according to the familiar principles of ancillary proceedings in equity; nor would it violate anybody's right to a jury trial, and it would enable the issues to be decided by the court personally familiar with the whole situation - unless, indeed, his personal knowledge and participation in the matter involved might appear to the judge sufficiently embarrassing to justify him in asking that another judge take charge. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Where the district judge becomes suspicious that he has been imposed on in making his appointment of a receiver, it is not only his clear right, but his duty, to proceed upon his own motion into a thorough inquiry upon the subject. In such a situation two courses are open to the trial judge: The first is to direct some procedure for the framing of issues, by which the parties charged with misconduct or liability may know the charge and have suitable opportunity to try the fact. The second is to proceed with a summary, more or less ex parte, inquiry, in order to satisfy himself whether a proceeding of the first class should be instituted. In such a case an ex parte inquiry undertaken on the motion of the court and pursued without the formulation or service of any charges or issues does not furnish the kind or degree of hearing to which the parties are entitled. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Where it appears that there was no objection to the appointment of a receiver into whose hands the entire estate came, and the court authorized the incurring of debts by him to become a charge on the property, and credit was given on the faith of this authority, it is said that when, in such a situation, it develops that the order appointing a receiver should be and is vacated, there is no principle on which the creditors petitioning for receivership can be held directly liable for the debts which the receiver incurs. In re Veler, (C. C. A. 6th Cir. 1918) 249 Fed. 633.

Where what occurred on the presentation to the district judge of an oral application for the appointment of a receiver does not appear, although the statement or certificate