of foreign coin quarterly, instead of annually, as provided in the previous law. And then comes the proviso:

"That the Secretary of the Treasury may order the liquidation of any entry at a different value, whenever satisfactory evidence shall be produced to him, showing that the value in United States currency of the foreign money speci fied in the invoice was, at the date of the certification, at least ten per centum more or less than the value proclaimed during the quarter in which the consular certification occurred."

That frequent fluctuations in the metallic value of foreign coins led to the act of 1894 would seem to be indisputable. The law as it stood since 1873 empowered the director of the mint to make his estimate of the metallic value of foreign coin on the 1st day of January in each year, but Congress saw the necessity of having this estimate made quarterly, instead of annually, but still adhered to the metallic value as the basis of the estimate. Then where can we find a reason to conclude that it was the intention of Congress to make a departure from the metallic principle which permeated its legislation, and confer upon the Secretary of the Treasury an exclusive power to arbitrarily adopt another basis? Is it not more in accord with the language of the statute, the purposes for which it was enacted, the conditions it was intended to meet, and fair construction, to hold that the proviso was inserted in the act simply to authorize the Secretary of the Treasury, in case there should be a variation in the metallic value of the foreign coin after the director of the mint had made his estimate at the first of the quarter, and before, by the terms of the law, he could make another estimate at the beginning of the next quarter, to order liquidations when it was made satisfactorily to appear to him that such variations in the metallic value to the extent of 10 per centum had taken place? If such is not the law, then under the proviso to section 25 the Secretary of the Treasury is absolutely unrestrained. He is neither limited by the metallic value nor by the exchange value of the foreign coin, but he may, at his option, prescribe any value for foreign coin, and direct its use by officers of the customs in the invoicing of foreign goods for duty; and, following out the contention of the appellant in this case, the importer would have no remedy whatever, either through the Board of General Appraisers, or the courts. Certainly Congress did not intend to confer such unbridled power upon the head of an executive department.

This question is admirably discussed in two very learned opinions recently delivered, the one in the Circuit Court of the United States for the District of Massachusetts, in the case of The U. S. v. Beebe, 117 Fed. 670, and the other in the same case in the Circuit Court of Appeals for the First Circuit, 122 Fed. 762, 58 C. C. A. 562. It is not necessary for us to go further than to cite the opinions in these two cases, which we think declare the law as it is, and proceed upon a line of reasoning which leads irresistibly to the conclusion that, when the Secretary of the Treasury undertook to order a reliquidation of the foreign invoices for duty upon a basis other than the metallic value of the foreign coin in which such invoices were certified, he went beyond his authority, and his act had no legal effect.

We then come to the consideration of the question as to whether the decision of the Secretary of the Treasury and the subsequent ac

tion of the collector of customs thereunder can be reviewed by the Board of General Appraisers and by the courts. We cannot put this question more forcibly than by quoting from the comprehensive opinion of Judge Colt in the Beebe Case, 117 Fed. 670, the following language: "Can the secretary choose any standard of value for the foreign coin he pleases-as, for example, the exchange value-and will such action be final although it is outside of the authority and jurisdiction conferred upon him by the proviso? Can the secretary first adopt an illegal standard of value, and then make an order or finding based upon such illegal standard which cannot be impeached? If the doctrine of conclusiveness goes to this extent, then the importer is no longer governed by the laws which Congress enacts, but by the secretary's interpretation of them; and the result might be that under the form of reliquidation the pure metal rule of value in the assessment of duties, which has prevailed since the origin of the government, may to a large extent be nullified."

It is conceded that, if the ascertained metallic value of the silver rupee of India, either that made by the director of the mint at the first of the quarter and proclaimed by the secretary, or a metallic value determined by the secretary under the proviso of section 25, had been adopted by the collector, in making the reliquidation of invoices of the appellees' goods on the 12th of June, 1901, under the decisions before cited, such action by the collector would have been conclusive. But the collector did not do this. On the other hand, acting under instructions from the Secretary of the Treasury, he adopted as a basis of liquidation the commercial value of the rupee, as certified. by the American consul at Calcutta, at the date of the invoices. The instruction was the act of the secretary, but the liquidation ascertaining the dutiable value of the goods and determining the amount of duty to be paid by the importer was the act of the collector. "The action of a collector in declining to accept the proclaimed value of a foreign standard coin and in adopting another standard, thereby increasing the amount of duty on imported merchandise, does not relate to a disputed appraisement, but to the amount of duties; and under Customs Administrative Act June 10, 1890, §§ 14, 15, is reviewable on the protest of the importer by the Board of General Appraisers and the Circuit Court." U. S. v. J. Allston Newhall & Co. (C. C.) 91 Fed. 525. In the present case the collector ignored the metallic value of the rupee20.7 cents-which had been proclaimed for the quarter in which the importation of the goods was made, and adopted the exchange value of 32 cents, which appeared from the certificate of the consul, and thus increased the amount of duty upon the importation. The principle declared in the Newhall Case, which we hold to be the law, applies here, and, in our opinion, the Board of General Appraisers and the Circuit Court of the United States had jurisdiction.

As bearing upon this point, and in entire accord with the position we take, we quote again from the learned opinion of the Circuit Court of Appeals for the First Circuit in the case of The United States v. Beebe & Sons, 122 Fed. 762, 58 C. C. A. 562, in which Judge Putnam, in de livering the opinion of the court, says:

"The United States raises a question of the jurisdiction of the Board of General Appraisers. On that point we need add but very little to what was said in the Circuit Court. The act of June 10, 1890, c. 407, 26 Stat. 131, is the

law which established this tribunal. The United States rests on the words 'decision of the collector,' found in section 14, and they claim that in the case at bar the 'decision' was not that of the collector of Boston, but of the Secretary of the Treasury. This is a narrow construction of the expression, because the ultimate tribunal which reliquidated was not the secretary, but the collector; so that at common law mandamus would lie only against the latter, and not against the former. This position, moreover, begs the question, because, if the action of the secretary was unlawful-as we hold it was-the collector could rest nothing done by him on that action, and whatever he did was his own."

The judgment of the Circuit Court is affirmed.

HENNESSY et al. v. TACOMA SMELTING & REFINING CO. et al.

(Circuit Court of Appeals, Ninth Circuit.

No. 961.

March 9, 1904.)

1. RES JUDICATA-DECREE HOLDING JUDGMENT AN ESTOPPEL-EFFECT OF REVERSAL OF JUDGMENT PENDING APPEAL.

A decree based in whole or in part on a plea of res judicata will be reversed on appeal where pending such appeal the judgment held to constitute an estoppel has been reversed, the fact of such reversal being one of which the appellate court may take judicial notice.

2. FEDERAL COURTS-PENDENCY OF PRIOR SUIT IN STATE COURT-COMITY.

In a suit by minority stockholders, the Supreme Court of a state decided that a lease of its property by a corporation to a new corporation, which had acquired a majority of its stock, was ultra vires and void, and enjoined the old company from recognizing any vote cast by the lessee as a stockholder, on the ground that, under the laws of the state, it had no power to hold such stock. Thereupon it transferred its stock to individuals, by whose vote it was determined that the old corporation should dissolve and sell its property. The minority stockholders then commenced a second suit in a state court to enjoin such action, for the removal of the trustees, the appointment of a receiver, and the cancellation of the stock transferred by the new company; alleging that it was still, in fact, the owner thereof, and that the proposed action was in its interest, to enable it to obtain the property. Such suit having been dismissed by the court, the complainants commenced a second suit in a federal court, involving to some extent the same issues. Subsequently the judgment of the state court dismissing the suit therein was reversed on appeal by the Supreme Court of the state, and the cause remanded for trial. Held that, under the circumstances, the federal court should await the final action of the state courts, which had first obtained jurisdiction, before proceeding with the hearing of the case before it.

Appeal from the Circuit Court of the United States for the Western Division of the District of Washington.

On December 6, 1898, the Tacoma Smelting & Refining Company, a corportation owning and operating a smelter near Tacoma, in the state of Washington, made a lease of its entire smelting plant and all its property for a term of 10 years to the Tacoma Smelting Company, a corporation created for the purpose of taking the lease. The first company will in this opinion be designated the "old company," and the second company the "new company." The resolution to execute the lease was approved by the majority of the stockholders of the old company, but was opposed by a minority repre

2. Conflict of jurisdiction between state and federal courts, see note to Louisville Trust Co. v. City of Cincinnati, 22 C. C. A. 356.

senting from 12 to 15 per cent. of the stock, who filed a written protest against the same. Shortly after its execution the minority stockholders requested the trustees of the old company to take legal proceedings to cancel the lease on the ground that it was ultra vires and void. The request was denied. Thereafter the minority stockholders commenced an action in the superior court of the state of Washington for Pierce county, suing as stockholders and in behalf of their corporation, to set aside the lease. In that action it was finally determined by the Supreme Court of Washington that the lease was ultra vires of the old corporation and void, on the ground that, at the meeting at which the resolution was adopted authorizing the lease, the majority of the stock of the old company was held and voted by the new company, the statutes of the state giving to no corporation created under its laws the power to hold stock in another corporation; also on the ground that the articles of the old company contained no expressions of the power of that company to execute a lease of its property. The judgment of the court enjoined the old company from recognizing any vote cast by the new company, or by any one in its behalf. This decision was rendered July 12, 1901. The new company at that time held 5,669 shares of the stock of the old company, out of a total of 6.776 shares. On July 20th the certificates of the shares held by the new company were by the trustees of the old company canceled, and new certificates were issued to F. W. Bradley, William Alvord, Henry Bratnober, and W. R. Rust, who were all stockholders of the new company. On December 21, 1901, these persons assigned all of said shares to Chester Thorne. Thorne took the same with full notice of the judgment in the said action. After the decision W. R. Rust, then vice president of the new company, and at the same time secretary of the old company, bought 255 shares of the stock of the old company, and on January 20, 1902, he transferred 20 shares thereof to 20 persons; giving 1 share to each, and 235 shares to W. G. Hellar. On March 7, 1902, Hellar transferred 8 of the shares held by him to 8 persons. This distribution of shares was avowedly made for the purpose of securing a two-thirds majority in number of holders of shares in the old company, as well as two-thirds of the stock. The purpose was to effect a dissolution of the old company, and a sale of its property. It was at this point in the course of events that the minority stockholders, being the same persons who are the appellants in the case which is now before us, commenced a suit in the superior court of the state of Washington for Pierce county (Case No. 19,209) against the two corporations and the trustees of the old company, Browne, Oakes, Rust, Clark, Daily, Craig, and Heilig, alleging in their complaint, in brief, that, notwithstanding the decision of the Supreme Court of the state of Washington above alluded to, the new company still retained the possession of the leased property; that the trustees of the old company were merely its tools, and that as long as they remained in office no action would be taken to recover the property from the new company; that the stock held by Thorne still belonged to the new company; and that the transfer to him was a sham-and praying for relief as follows: That the trustees of the old company, Browne, Rust, Clark, Oakes, Daily, Craig, and Heilig, be restrained from acting as officers or trustees of that corporation, and that they be removed from office; that the new company and the aforesaid trustees of the old company be enjoined from tearing down or removing from the smelting plant or buildings of the old company any machinery then in the buildings, and from interfering with any of the old company's property; that a receiver be appointed to take charge of and manage the said property; that Thorne be enjoined from transferring his stock, and that the stock so held by him be declared void; that the old company and its officers be restrained from allowing him to vote the same; that an accounting be had with the new company, and said trustees so named, of all their doings with said property, and that they be required to restore all of the same to the old company; and that the new company account for its profits made while in possession thereof. In that suit a temporary restraining order was issued, and thereafter, on motions to extend the order pending the suit and to appoint a receiver, the court, on March 6, 1902, denied both motions and dismissed the suit for want of equity in the bill of complaint. The plaintiffs promptly

filed their motion to vacate the judgment, on the ground of irregularity in entering the same. The motion was taken under advisement, and was not decided until after the entry of the final decree in the court below in the present suit.

In the meantime, on March 7, 1902, a meeting of the stockholders of the old company was held, at which it was ordered by the holders of more than two-thirds of the stock that the corporation be dissolved, and its property sold and assets distributed. On March 19, 1902, the new company commenced an action in the superior court of Pierce county, state of Washington, against the old company, to recover judgment for $141,640.28, upon an alleged account stated on the adjustment of all matters in dispute between the two companies. Subsequently one of the minority stockholders, by leave of the court, intervened in that action, contesting the validity of the claim, and the right of the plaintiff therein to recover upon said alleged account stated. That action was still pending at the date of the entry of the decree which is appealed from in the present case. On April 25, 1903, on the motion of the plaintiff in that action, that cause was dismissed. On March 26, 1902, the stockholders who had been the plaintiffs in the action in the superior court of the state commenced the present suit in the United States Circuit Court for the District of Washington against the old company and its then directors, Browne, Oakes, Mottet, Albertson, Hellar, Thorne, and Fogg. The new company was not made a party to the suit. The bill contained many of the allegations that had been embodied in the bill of complaint in case No. 19,209 in the superior court, and it alleged that the trustees named were unfit persons to carry on the proceedings of winding up the corporation; that they were the creatures of the new company, pledged to secure it the smelting plant, and allow its claim for improvements made thereon, to which, the bill alleged, it was not entitled. It was alleged that the new company had been in the possession of the smelting plant and property of the old company under said void lease a little more than three years, and bad realized large profits therefrom; that the old company had allowed a claim in the sum of $141,640.28 in favor of the new company; that the allowance of that claim and the proceedings looking to a sale of properties were part of a scheme to avoid the effect of the judgment of the superior court in which it had been declared that the lease was void, and to enable the new company to acquire the property of the old company. It prayed that the trustees named be restrained from acting as such officers of the old company or on behalf of its creditors and stockholders, and from selling or charging with a lien any of its property, and from carrying out the sale proposed to be made; that a receiver be appointed of its property; and that a liquidation of the affairs of the corporation be had through him. On September 3, 1902, the appellants filed a supplemental bill, alleging that on August 7, 1902, the board of trustees of the old company held a meeting at which they considered two bids which they had received for the smelting plant and property-one a cash bid for $250,000, the other a bid of $250,000 made by the new company; that they had accepted the latter, and had directed that a contract of sale be executed in accordance therewith; that in the contract of sale so executed it was recited that the new company had a valid claim against the old company for $141,640.28; that the new company agreed to procure assignments from the holders of not less than 5,931 shares of the stock of the old company of all dividends that may at any time be declared thereon; and that the new company was to make payment for the said purchase by receipting its bill for $141,640.28, by receipting for dividends on said 5,931 shares of stock, and by paying the sum of $31,799.72 in cash, provided that, if it should be found that it had paid too much in cash, the balance should be refunded; and, if it had paid too little, it should pay whatever further sums should from time to time be deemed necessary by the old company.

The appellees answered, and, among other defenses, pleaded that the decree of the superior court of the state of Washington in case No. 19,209 was a judicial determination of all matters and issues stated in appellants' bill. At the commencement of the suit the appellants moved for the appointment of a receiver, and for a temporary injunction enjoining the appellees