be formed should need the proceeds thereof for its corporate purposes. From the proceeds of the bonds, amounting to say $6,000,000, was to be deducted say approximately $2,500,000, which was to be paid to the Clinchfield Corporation in discharge of Carter's obligations to it, and the residue, $3,500,000, was then to be expended in improving and developing the properties. The actual sum of $6,000,000 would then really be invested in the property, which, under such circumstances, it seems to me, as it doubtless did to Carter's vendees, would be ample security for the payment of the bonds or notes so issued; especially so if the properties were to have the careful management that would come from cautious and capable owners.

The Union Trust Company, as syndicate manager, had during the time the properties were under its control received no offer for the same approximating in value the price paid by Carter, and as I understand the proposition submitted by that company on December 29, 1904, its terms were not near so favorable to the stockholders of the Clinchfield Corporation as were those contained in the proposition of Carter, on which the sale of December 19th was based. The directors of the Clinchfield Corporation, all men of high character, of business experience, and of financial responsibility, six in number, who were familiar with all of the properties involved, and fully acquainted with their values, both present and prospective, and also thoroughly informed as to the condition and necessities of the Clinchfield Corporation, after due consideration, and after full consultation with their stockholders, accepted Carter's proposition, selling and delivering the properties to him. The case made by the complainant does not justify me in decreeing that they have acted either improvidently or improperly, but, as I see and understand it, requires me to say that they have done exceedingly well under embarrassing circumstances, and that they are entitled to the commendation of those whose interests they represented and protected.

Under ordinary circumstances there would be force in the argument of counsel for complainant that a board of directors cannot sell all of the property of a corporation. There are, I think, two reasons why the directors of the Clinchfield Corporation could sell all of the property of that company: First, by the provisions of the charter of that company, and with the assent of all the stockholders, the directors were authorized to sell all of its property; second, while it is true that under the law applicable to such matters a corporation during the time it is a going concern, sound financially and able to carry on the business for which it was organized, cannot ordinarily, through its board of directors, dispose of all of its property, still nevertheless it is well settled that a corporation, when in financial distress, and unable to meet its obligations, may, with the consent of a majority of its stockholders, sell all of its property. That the Clinchfield Corporation was at the time of the sale to Carter greatly involved, and unable to meet its liabilities, let alone provide for the expenditures necessary to

keep it a going concern, is fully demonstrated by the affidavits. and exhibits filed in this case. All of the stockholders, speaking through the directors by virtue of the charter, recognized this condition of affairs, and not only consented to, but directed, a sale. of all the properties of the company. The effect of the provision of the charter thus referred to was to ratify by the stockholders every act of the board of directors not fraudulent in character, such ratification having the same effect as is given to the action of stockholders of companies whose charters have not such provisions, when they meet after the action of the directors and confirm the same.

While Carter, as a director, in one sense occupied a fiduciary relation to the stockholders, he was not a trustee in the technical meaning of that word, and he was not prohibited from purchasing the property of the Clinchfield Corporation, as a trustee is from purchasing at a sale made by him. As a director he was not prohibited by the law from purchasing the property of the Clinchfield Corporation, if the sale to him was authorized by the other six directors of that company, and the transaction was fair, made in good faith, and for an adequate consideration. A court will closely scrutinize such a sale, and the burden of proving good faith and adequate compensation will be placed on the party purchasing under such circumstances. That rule I have not overlooked in the consideration of this case. So far as the acceptance of Carter's offer to purchase was concerned, the Clinchfield Corporation was represented by the other six directors, no one of whom has ever had any interest in the contract made with him. The courts of the United States and many of the courts of the states hold that a contract made between a corporation and a director thereof, under the circumstances shown to have existed in this case, will be upheld, except in instances where actual fraud is proven. I find no evidence of fraud in this case. The stockholders were fully advised as to all material points affecting their interests, and a large majority of them not only approved of the sale to Carter, but insisted that it be made. The remonstrance made by complainant against the sale represented relatively a small number of the shares of stock (stock that had constructively, at least, already consented), and was not mainly because of unfairness and inadequacy of price, for virtually its offer, so far as the amount thereof was concerned, differed but little from the one made by Carter, but was really because its interests would be best subserved by the taking over of the Clinchfield properties by those who now insist that the sale to Carter should be declared void.

In the view that I have taken of the law of this case, it follows that the meeting purporting to be of the stockholders of the Clinchfield Corporation held at Bristol, Va., on the 23d day of January, 1905, was not a legal meeting of said stockholders, and that the parties claiming to be then elected as directors and officers of said company are not the legal representatives of the same, but that the officials thereof acting and in charge of the properties, assets, and

books of said company immediately prior to said 23d day of January, 1905, are still the officers thereof, and should be recognized as such. Therefore the motion made by complainant to strike from the files of this case the answer of the Clinchfield Corporation, verified by James Clark as the president of said company-he being designated as such official in the charter of said corporation-is refused, and the same will remain as the answer of the Clinchfield Corporation to complainant's bill. It follows that the motion to substitute the names of other counsel in the place of those filing said answer will also be denied.

Reaching the conclusion on both the law and the facts that I have indicated, I find myself compelled to direct that the restraining order issued in this cause on the 13th day of January, 1905, be dissolved, that the receivers appointed at the same time be discharged, and that the injunction asked for be refused.

The court at this time does not dispose of the questions raised by the defendants relating to the good faith of the complainant, the Union Trust Company of Maryland, in instituting and prosecuting this suit.

LEA V. NEW HOME SEWING MACH. CO.

(Circuit Court, E. D. New York. June 8, 1905.)

TRADE-MARKS-LICENSE TO USE-VALIDITY.

A contract purporting to license the use of a trade mark or name for a sewing machine is invalid, and will not support an action to recover royalties reserved thereby, where the only thing granted is the right to sell machines made by defendant, with which plaintiff has, and has had, no connection, under a name previously used by him in connection with different machines.

At Law. On motion for judgment on pleadings.

Bushby & Berkeley, for plaintiff.

Charles F. Dane, for defendant.

THOMAS, District Judge. The complaint, among other things, shows: (1) That plaintiff, for many years prior to 1882, sold in foreign countries dry-thread sewing machines labeled "National"; (2) that plaintiff, by his long experience and great care in his sale of said machines, and the expenditure of large sums of money, established a market for said machines bearing such label; (3) that the machines so labeled became widely known as reliable, valuable. and useful articles, and acquired a high reputation as such, and commanded an extensive sale; (4) that such machines so labeled were and are known to the public and to buyers and users by the name of "National," with or without prefix or suffix; (5) that in 1882 the plaintiff licensed the defendant to sell to plaintiff's customers, and all others, said sewing machines, under said name or names and label, and defendant agreed, in consideration thereof, to manufacture and sell said sewing machines to plaintiff's said cus

tomers and others, with said name, names, or label applied thereto, and to pay plaintiff the sum of 50 cents for each sewing machine bearing said name or label so manufactured and sold by defendant; (6) that from and since 1892 defendant has manufactured and sold machines, under said agreement, to the number of 15,000 annually, but, although often requested to pay the plaintiff pursuant to the agreement, has refused, etc.

It will be observed, so far as the complaint discloses, (1) that the plaintiff never manufactured a machine; (2) that he sold no machines made by a particularized person or at a specified factory; (3) that he sold to defendant no machines, no place of business, nor does it appear that he ever had any; (4) that he granted no exclusive or irrevocable right to sell to plaintiff's customers; (5) that the plaintiff did not agree to forbear selling to such customers, or elsewhere, for a limited time or otherwise; (6) that the plaintiff did not agree to inspect, select, or approve the machines sold; (7) that he did not agree to aid the sale in any manner.

What, then, did he attempt to confer on the defendant? He said in effect to the defendant, "You make machines, stamp them 'National,' sell to persons to whom I am selling and have sold drythread machines labeled 'National,' and give me 50 cents on each machine," and to this the defendant agreed. The defendant already had the right to make dry-thread machines; it had the right to sell them to plaintiff's customers. Hence the plaintiff by license attempted only to allow defendant to stamp the word "National" on machines it made and sold. But what did the word "National" stamped on such a machine say to purchasers from the defendant? It assured purchasers that the machines so sold by defendant had been made, selected, or inspected by the plaintiff, or that the plaintiff had some other relation to them that was of value to the purchasers, or that the machines were made or sold by a person or concern with which the plaintiff had to do, or had had to do, or assured that the plaintiff had or had had some similar relation to the machines. In fact, the plaintiff had not, and never had, anything to do with the machines so offered and sold by defendant. The assurance that was given to purchasers when the plaintiff sold to them was intended to be continued, but, as to machines sold under the license, such an assurance would be a falsehood. Neither as to the origin of the article, the place of manufacture, the concern, corporation, firm, or person by whom manufactured, or the transferee thereof, or the connection of the plaintiff therewith, did the label state to purchasers, when used under the license, what it was capable of stating when used by the plaintiff. It was a license to use a stamp, dissociated and stripped of truth and of its former significance, for the purpose of falsely inducing purchasers to believe that what it meant when used by the plaintiff it meant when used by the defendant. At the earlier time the stamp meant that the plaintiff had contributed something of value to the article; at the later time it purported to mean the same thing, but spoke falsely. It is considered that the facts alleged in the complaint do not

show a valid license to use a trade-mark. Falk v. American West Indies Trading Co., 180 N. Y. 445, 73 N. E. 239; Hoxie v. Chaney, 143 Mass. 592, 593, 10 N. E. 713, 58 Am. Rep. 149; Kidd v. Johnson, 100 U. S. 620, 25 L. Ed. 769; Matter of Swezey (N. Y.) 62 How. Prac. 215.

It is understood that the motion for judgment was regarded by counsel upon the argument as properly bringing up the sufficiency of the complaint. The motion is granted, and it becomes unnecessary to consider the demurrer to the affirmative defenses set up in the answer.

' HUTTON ▾. HOLDROOK, CABOT & DALY CONTRACTING CO.

(Circuit Court, S. D. New York. June 9, 1905.)

MASTER AND SERVANT-INJURY TO SERVANT-LIABILITY FOR UNSAFE SCAFFOLD UNDER NEW YORK STATUTE.

The provisions of the New York labor law (Laws 1897, p. 467, c. 415, §§ 18, 19, as amended by Laws 1899, p. 350, c. 192) relating to scaffolding, which prohibit an employer from furnishing to workmen engaged in the erection of a building or structure any scaffolding, ladder, or other me chanical structure which is unsafe, unsuitable, or improper, impose an imperative obligation on an employer, when it is his duty to furnish a scaffold, to furnish a safe one, without exception on account of the carelessness of his servants; but they do not mean that his obligation shall be imperative, when he has furnished a safe one to his workmen, to see that they use proper care in moving it and in re-erecting it from time to time as the nature of their work requires, nor that when he has furnished proper materials for a safe scaffold to workmen, who, in the usual course of their employment, are to build it, he shall be liable to them in the event that, by their neglect or misconduct in its erection, it proves unsafe, and an injury results. In such case the general rule as to the negligence of fellow servants applies.

At Law. On motion for new trial.

Arthur C. Palmer, for plaintiff.
Benj. Patterson, for defendant.

WALLACE, Circuit Judge. This is a motion by the plaintiff for a new trial, a verdict having been directed upon the trial for the defendant.

The plaintiff was one of a gang of five men employed by the defendant in doing mason work in the subway in the course of construction at New York City in November, 1901. He and two others of the five were masons, and the other two were helpers. The masons worked upon a scaffold, which, from time to time, as the work was finished by them at the place where it had been put up, was taken down by the helpers, and put up again by them at an adjacent place, when the masons again mounted the scaffold and resumed their work. It was the duty of the helpers to assist the masons generally in the work, and they were under the directions of the masons. The plaintiff's action was brought to recover for injuries received by him by the falling of the scaffold, and the