the main contention, that there was no consideration for the notes of December, 1901. Having already found that there was consideration, further discussion of this point is unnecessary. (4) The other contention of the trustee may be quickly disposed of. Even conceding consideration, the notes of December 23, 1901, if not intra vires as to the payee, which still holds them, must fail. The trustee claims that the transaction was out of the ordinary course of business. The present bankrupt was insolvent, on the verge of bankruptcy, and known to be such by the claimant. While in that condition it issued to the claimant notes for over $149,000. These notes, it is asserted, were executed and delivered without action thereon by the stockholders or even the directors of the corporation. Thus the corporation created a large apparent indebtedness, as is claimed, on the sole authority of its president, assisted by another officer acting under his direction. But even so, what followed? The consideration given was immediately transferred by the bankrupt to the holding company, and by it mortgaged or pledged to the present claimant as trustee, and later from time to time sold, and the money realized therefrom paid to the bankrupt's creditors. As a result, immediate bankruptcy was avoided, and the corporation continued in active business for nearly two years. What it wanted was a chance to recover its fortunes. It is apparent that, as the circumstances then were, this chance could only be won by securing possession of the Boston stock. Even granting that the bankrupt might have recovered this stock after action was brought, what would such recovery have availed? The corporation would have been in bankruptcy years before final judgment. Will such corporation now be heard to assert that the issue of these notes was unauthorized? The contract is executed, not executory. There was no bad faith on the part of the payee of the notes. The bankrupt reaped the benefits of the arrangement. Woodruff v. Erie Ry. Co., 93 N. Y. 609; Linkhauf v. Lombard, 137 N. Y. 417, 33 N. E. 472, 20 L. R. A. 48, 33 Am. St. Rep. 743. It makes no difference that the chance thus gained did not have a successful issue. The corporation and the trustee representing it are therefore now estopped to set up ultra vires. So, it seems to me, is the trustee as the representative of creditors. It is elementary that he stands in no better position than they did. But creditors postdating December 23, 1901, would have no standing in an action on these notes. Earlier creditors, so far as this record shows, have either all been paid in full, or were parties to the extension agreement. The latter have received, largely from the avails of the Boston stock, 20% of their claims. To be sure, it does not appear that they had notice that the Boston stock was the property of their debtor. On the whole case, however, I do not believe they could overcome a plea of estoppel, were the issue between them and the claimant in another court. The trustee, as their representative, is therefore also estopped. Further, under the rule of Rider Life Raft Co. v. Roach, 97 N. Y. 378, it may be suggested that it was incumbent on the trustee to show affirmatively that the issue of the notes was without the authority of the corporation. This he has not done. So far as this record goes, they were therefore not ultra vires. The claimant also asserts the well-settled rule that, where a party seeks to rescind a contract, it must offer to restore the other party to its position before the contract was made. I do not understand, however, that there is any issue of actual fraud here. This is not a case founded on rescission. Surely it would be unjust to permit one party to an ultra vires contract to defeat an action based on that informity by proof that the other party could not restore him to the position he occupied before. The numerous authorities on rescission cited by the claimant are not, therefore, in point. On the whole case, therefore, I hold with the claimant. It may be that all the facts, if capable of proof, would warrant the rather sweeping inferences and conclusions stated in the trustee's brief. They are not proven-perhaps are beyond his reach. The difficulty with which he and his counsel have labored is one of time. Two years have elapsed since the transactions he complains of. Evidence then available may be scattered. Rights then existing may have been lost by neglect. If, as he claims, the bankrupt's president converted the Boston stock to his own use, the trustee has his remedy elsewhere. The issue here is simply as to the validity of these notes. For the reasons stated, I think that validity established. The trustee will therefore pay the second dividend to the claimant, together with such interest on the amount ($9,419.85) as it has earned in the depository since the date of declaration. From what goes before it will be seen that in reaching this conclusion only the following evidence received tentatively has been excluded: (a) The testimony of the witnesses Wedder, Burnet, and Perkins, by deposition taken in New York, so far as the same relates to what was done with the stock given by the claimant for the notes after the same were delivered to the bankrupt; thus sustaining the claimant's objection on page 3 of proceedings on July 8, 1904, with an exception to the trustee. (b) The testimony of the same witnesses as to what was received for such stocks when they were subsequently disposed of by the holding company, except so far as such testimony tends to establish their value; thus sustaining, in part, the claimant's objection on the same page, with exception to both the claimant and the trustee. (c) The testimony of the witness Vedder in the same deposition as to whether any of such stocks came into his hands as treasurer; thus sustaining the claimant's objection, with exception to the trustee. (d) The testimony of the witness Aldrich as to the transaction whereby he, as receiver, disposed of certain stock of the Manistique Company, save so far as such testimony tends to establish its value; thus in part sustaining the claimant's objection on pages 3 and 4 of the proceedings of July 6, 1904, with exception to both the claimant and the trustee. (e) The testimony of the witness Aldrich as to the claimant receiving more than dollar for dollar of the holding company's bonds, thus sustaining the claimant's objection on page 7 of the proceedings of July 6, 1904, with exception to the trustee. (f) The testimony of any other witnesses, or of these witnesses elsewhere in the record, to the effect indicated in “a,” “b,” “c,” “d," and "e," above, if duly objected to, with, in that event, exception to the party against whom the ruling is given. Fred D. Corey, for trustee. Cox, Kernan & Kimball, for claimant. HAZEL, District Judge. The facts are sufficiently set forth in the opinion of the referee in bankruptcy, and I concur in the conclusions therein stated. Mr. Burnett, witness for claimant, substantially testified at the hearing that the sight drafts which were subsequently secured by the transfers of stock in the Boston Car Wheel Company, and evidenced by the promissory notes upon which the claim herein is based, were given in renewal of previous bills of exchange drawn in the same manner. Prior bills of exchange had been accepted by the bankrupt in London, and, according to the proofs, were received or discounted by the claimant in the ordinary course of business dealings. It had become a custom in the course of dealings between the North American Trust Company and the P. H. Griffin Machine Works for a number of years to draw on the bankrupt at its London office. The bills of exchange drawn in the manner indicated by the proofs were sight drafts in renewal of the original drafts. In the circumstances presented, which are mentioned more in detail in the opinion of the referee, it is difficult to conceive of any substantial reason why the trust company should have been suspicious when the original bills of exchange were drawn. True, a party to whom negotiable paper is presented for discount or sale before maturity by an officer of a corporation is bound to exercise caution and circumspection in order to escape the charge of bad faith when a defect in his title is urged. Cheever v. Pittsburgh Railway Co., 150 N. Y. 59, 44 N. E. 701, 34 L. R. A. 69, 55 Am. St. Rep. 646. The title of the trust company, however, in the sight drafts, in view of the unchallenged original transactions, is not subject to attack unless it acted in bad faith. The mere negligent acceptance or purchase of the bills of exchange does not impute to the claimant a presumptive knowledge of any unlawful diversion of the proceeds by Mr. Griffin. The situation of the parties at the beginning of their relations was such that the trust company could rightfully presume that the drafts were drawn on the bankrupt pursuant to bona fide transactions existing between the drawer and drawee. The subsequent arrangements to secure the payment of the indebtedness are wholly dependent upon the original transaction, and upon a course of business dealing which the parties themselves adopted prior to the purchase of the sight drafts in question. Nothing occurred before the failures of the City National Bank and the Niagara Bank to put the claimant upon inquiry. There were no suspicious circumstances attached to the initial transaction to warrant the claimant in refusing the renewal drafts which evidently were a continuation of the original indebtedness. As the evidence falls short of showing the drafts in the beginning of the relations with the trust company to have been without consideration, it necessarily follows that the contention of the trustee that the transfer of the Boston stock was ultra vires must fail. Having concluded that, upon the main issues involved, the referee has correctly decided the questions submitted for review, a further discussion will not be necessary. The question submitted, whether the claim of the North American Trust Company hitherto allowed by the referee should be expunged, is answered in the negative. WHITE-SMITH MUSIC PUB. CO. v. APOLLO CO. (two cases). Nos. 8,126, 8,127. 1. COPYRIGHT-SUIT FOR INFRINGEMENT TITLE TO Support. Where the composer of a piece of music has placed it in the hands of a publishing company for publication and sale, it may reasonably be inferred that he intended to authorize the company to copyright the same; and where it does so in its own name, and he afterward ratifies its action, it is vested with the legal title to the copyright, which will support an action for its infringement. [Ed. Note. For cases in point, see vol. 11, Cent. Dig. Copyrights, § 68.] 2. SAME-INFRINGEMENT MUSICAL COMPOSITION. A musical composition, as an idea or intellectual conception, is not subject to copyright, but only its material embodiment in the form of a writing or print may be copyrighted; and a copyright of such a printed composition is not infringed by a perforated record or sheet designed for use with mechanism to play the composition on a musical instrument. [Ed. Note. For cases in point, see vol. 11, Cent. Dig. Copyrights, § 63. Matters subject to copyright, see note to Cleland v. Thayer, 58 C. C. A. 273.] In Equity. Suits for infringement of copyrights. Dickerson, Brown, Raegener & Binney (Charles E. Hughes, Edwin H. Brown, and Alexander P. Browne, of counsel), for complain ant. Wilcox & Brodek (Charles S. Burton and Munday, Evarts & Adcock, of counsel), for defendant. HAZEL, District Judge. These actions were brought to restrain the alleged infringement of copyrights in the musical compositions "Little Cotton Dolly" and "Kentucky Babe Schottische," composed by Adam Geibel. The bill avers that complainant was the publisher and proprietor of both copyrights, the musical compositions having been assigned and transferred to it by the composer. The answers are denial of infringement and of complainant's title to the copyrights in question. The elicited facts, which are not in serious conflict, apply to both cases, and the records in each are substantially the same. The legal principles involved, though important, are not, in view of prior adjudications, difficult of application. Complainant contends that the copyrights mentioned have been unlawfully infringed by the defendant, which concededly has sold the copyrighted musical compositions in the form of perforated records or sheets adapted to mechanically reproduce the music upon the pianoforte, pianola, and other musical instruments. The general question raised is whether the perforated music sheets for use in connection with mechanism for playing musical instruments is an infringement of complainant's copyrighted musical composition. The proofs show that perforated music sheets corresponding to staff notations are produced in various ways by persons skilled in the art, technically called the "cutter" or "arranger." Perforated matrices are prepared either from a printed sheet of music, from a perforated music roll, or by means of an automatic recording device, which simultaneously operates to produce a matrix while music is being. played upon the piano. In the preparation of the matrices, as distinguished from a music roll prepared by a recording device, perforations or slots of varying width, are indicated; their positions and character are longitudinally and transversely arranged and accurately defined by a system of measurements correlative with the staff notations. The impracticability of reading a perforated sheet of music for the purpose of singing or playing the composition represented by the perforations is not seriously disputed, although complainant claims that the automatic records, like the staff notations, may be deciphered and learned. The evidence, however, quite conclusively establishes that the single purpose of the perforated sheets is to mechanically reproduce musical sounds, and that they are not, like the sheet music, addressed to the vision, or intended to be read. Before discussing the principal point involved, it is proper that the question of disputed title of the copyrights be first considered. The defendant contends that the musical composition "Little Cotton Dolly" was licensed to the complainant as publisher, subject to the payment of royalties, and was not transferred with the view of divesting the composer of the title therein. The court has considered this question, and the phraseology of the agreement of June 18, 1897, by which it probably might be concluded that only the right to publish the composition had been previously granted. Such an interpretation of the contract, however, in view of the oral evidence and acts of the parties, is not warranted. The proofs show, inter alia, that the composer authorized the copyrighting of the musical composition in the name of the complainant. The composition was delivered to the complainant by the composer in May, with the understanding that it should be published, and subsequently, in writing, he expressly authorized complainant to copyright the same. At this time, however, the composition had already been copyrighted by complainant in accordance with the laws of the United States respecting copyrights. Giving consideration to all the facts and surrounding circumstances, no repugnancy is perceivable between the agreement mentioned and any prior arrangement or understanding that complainant should possess the composition as its proprietor. The question is whether in fact there was such an assignment or transfer of the musical composition before copyrighting as to carry with it the privilege given by the statute to the composer. As the testimony upon this point is not entirely free from indefiniteness, we must look to the acts of the parties to ascertain their intention. It is not a strained presumption, giving effect to the transaction and the proofs, that complainant or its agent, Mr. White, who afterwards assigned the same to the complainant, was vested with the legal title as proprietor of the composition. It may reasonably be inferred that the composer, having placed the composition with the publisher for publication and distribution, intended to authorize him to obtain a copyright in his name, or in that of the corporation in whose behalf the assignment appears to have been taken. Mifflin v. White, 190 U. S. 263, 23 Sup. Ct. 769, 47 L. Ed. 1040; Belford v. Scribner, 144 U. S. 505, 12 Sup. Ct. 734, 36 L. Ed. 514. It was held in Callaghan v. Myers, 128 U. S. 658, 9 Sup. Ct. 177, 32 L. Ed. 547, that a written assignment may be necessary to convey title after obtaining a copyright, but a publisher undoubtedly may become the owner by parol transfer of the rights of the author or composer. Moreover, it clearly appears that the composer, Geibel, had knowledge of the copyrighting by the complainant prior to the agreement for royalties, and acquiesced therein. The later agreement contained nothing derogatory to the prior transaction or transfer of the composition, and would seem, in view of the facts, to be a ratification of that which had gone before. Hence it is sufficiently established by the evidence that the complainant had the exclusive right, as proprietor, to multiply copies of the copyrighted musical composition, and to expose the same for sale. As stated, the important question for consideration is whether defendant's method of representing and reproducing the musical compositions infringed the copyrights of the complainant. The principle thought to control, based upon the Revised Statutes, is |