e has, as previously stated, given his name and assent to the obectionable policy of the trust company, which policy has undoubtedbeen the chief cause of its downfall, and, if required by his position > antagonize the interests thus built up, or the parties really concerned 1 their promotion, it would be gravely questioned whether he would r could act altogether indifferently.

Being thus involved, I am of the opinion that he should be relieved f the trust; and such will be the order of the court.

BROWN v. PALMER et al.

(Circuit Court, E. D. Pennsylvania. December 16, 1907.)

No. 3.

DISCOVERY-BILL AGAINST PARTNER-TRANSACTIONS OF COPARTNER.

The surviving member of a firm of brokers which purchased stock of a corporation for a customer, and caused the same to be transferred to a clerk in its office, may be compelled to disclose the name of the true owner on a bill of discovery filed by a receiver for the corporation who has been ordered by the court to collect an assessment on such stock, and cannot evade such discovery on the ground that he did not personally conduct the transaction.

[Ed. Note.-Persons against whom production and inspection of books or writings may be obtained, see note to Cassatt v. Mitchell Coal & Coke Co., 81 C. C. A. 96.]

In Equity. On bill of discovery and answer.

Burr, Brown & Lloyd, for complainant.
A. H. O'Brien, for respondents.

HOLLAND, District Judge. This is a bill in equity filed by Arthur Brown, receiver of the American Alkali Company, against Stephenon Bros., stock brokers of Philadelphia. The alkali company was a orporation organized under the laws of the state of New Jersey for manufacturing purposes. The certificate of incorporation is dated April 29, 1899. The capital was $30,000,000, divided into 600,000 hares of the par value of $50 each, of which 120,000 shares were referred stock and 480,000 shares were common stock. The preerred stock was all issued, and $10 per share paid on account of the ar value by the original stock subscribers thereto, leaving a balance f $10 per share, subject to call. The entire common stock was isted full paid. The company became insolvent, and on the 9th day September, 1902, receivers were appointed in the United States Court for the District of New Jersey, and on September 11, 1902, the ame receivers were appointed in this district in ancillary proceedings rstituted here, one of whom died before the bringing of this suit. On July 17, 1905, the Circuit Court of New Jersey directed the asessment of $2.50 per share on the preferred stock for the purpose of paying the debts of the company and expenses of receivership. The receivers, in pursuance of these directions, did, on September 19, 1905, levy an assessment of $2.50 per share on the holders of the preferred stock, payable in 15 days from that date. Among the registered

holders of the preferred stock on the 19th day of September, 1905, was one R. M. Palmer, in whose name there was registered 400 shares of stock. The bill alleges that the said R. M. Palmer is not and never was the owner of these 400 shares of preferred stock, but that Stephenson Bros., stock brokers, had purchased this stock for account of persons unknown, and placed the same in the name of R. M. Palmer, who was a clerk in the employ of the said Stephenson Bros., for the purpose of concealing the name of the real owner, that R. M. Palmer has no knowledge as to the names of the persons owning the same, and that it is proposed to bring suit against such persons when their identity is ascertained, for the purpose of recovering the amount of the assessment. The answer of George H. Stephenson admits that R. M. Palmer, in whose name the stock was registered, is not the owner of the stock, and that the respondent and his brother, Walter B. Stephenson, were engaged in the business of buying and selling stock on the Philadelphia Stock Exchange at the time of the issuance of the certificates of stock in question, but avers since that time the firm has been dissolved by the death of Walter B. Stephenson, and has had no existence as a firm since March, 1901. The respondent further denies :

"That said certificate or shares of stock were purchased by him or by the late firm of Stephenson Bros., or that he, or said late firm, by or through him or his instructions, ordered, requested, or directed the agents of the American Alkali Company to place said certificate in the name of R. M. Palmer, or to is sue new certificates in the name of said Palmer, and the defendant further answers and says that neither he nor the late firm of Stephenson Bros. is or was the owner of any of the said shares or certificate of stock in said bil mentioned."

It will be noticed there is no denial that the firm of Stephenson Bros. caused the stock to be placed in the name of Palmer, nor is there any denial that the respondent, George H. Stephenson, is possessed of the knowledge of the present ownership. The respondent is the surviving member of the firm of Stephenson Bros., and his answer only denies that he did not cause the stock to be placed in the name of Palmer, nor cause the firm to so place the stock "by or through himself or his instructions." The answer is based upon the proposition of law that a bill of discovery will not lie against a mere stranger who casually discovers the identity or liability of another, and the respondent seeks, by his answer, to put himself in that position by denying that he personally gave any direction in regard to the stock by the firm of which he was a member, while at the same time he knew of the transaction and is now in possession of informa tion as to the ownership of the stock. Assuming, then, that the firm of Stephenson Bros. did, through the instructions of a member of the firm other than the respondent, attend to this stock transaction for a client of the firm and place the same in the name of Palmer, it is plain that the firm was brought into confidential relation to the persons for whom the stock was registered and for whom it was held and whether the firm be dissolved or not at the present time the persons composing that firm at the time the transaction took place and the stock placed in the name of Palmer acquired their information a

to the present ownership of the stock through the confidential relation created by the employment of the firm to register and hold it. Respondent at the time of the registration of the stock stood in the confidential relation of broker or agent to the owner, and as such broker or agent acquired his knowledge of ownership. He is not, therefore, in the position of a stranger who casually obtains information and who can be called as witness, but is clearly a party possessing information against whom discovery is sought that brings him within the principle Laid down in the case of Brown v. McDonald, 133 Fed. 897, 67 C. c. A. 59, 68 L. R. A. 462.

That George H. Stephenson cannot divest himself of the responsibility of discovery of whatever information he may possess which was obtained while a member of the firm through his confidential relationship with his client is so obvious as not to require any elaborate discussion or the citation of authorities. The sole object of partnership is to invest each partner with the power to charge the others, and the liability of each partner for the acts of the others done in the course of the firm's business follows as a matter of course. It is, of course, elementary law that a partner is liable for the contracts made for the firm by a single partner. It is equally well settled that:

"A firm is liable for any loss or injury caused to any person not a member of the firm, or for any penalty incurred by any wrongful act or omission of a partner acting in the ordinary course of the business of the firm, or with the uthority of his copartners. The extent of the firm's liability is the same as That of the partner so acting or omitting to act." 22 Amer. & Eng. Ency. of Law (2d Ed.) 166.

All the members of a firm have been held liable for the misrepresentations of one of its members in the transaction of firm business. Castle v. Bullard, 64 U. S. 172, 16 L. Ed. 424. This personal liaility has not been extended, by these authorities, to a discovery of niormation obtained as a member of a copartnership, but there is every reason to hold each member of a firm to answer when possessed of knowledge of firm transactions. He obtained the information through the confidential relation arising out of his connection with the firm, and he participated with his partner in the transaction of the business, received his share of the profit, and shared the responsibility to the real owner. The transaction was effected with the knowlige and evident assent of the respondent, and there is no substantial reason why he should not answer the plaintiff's bill, and inform him as to the present owner of the stock.

Counsel for the plaintiff will therefore prepare a decree accordingly.

THE ST. CUTHBERT.

(District Court, D. New Jersey. October 9, 1907.)

RELEASE-LIABILITY OF VESSEL FOR INJURY TO STEVEDORE-SETTLEMENT WITH JOINT TORT-FEASOR.

Libelant, while in the employ of stevedores engaged in discharging a vessel, was injured by the falling upon him of a bale of goods being hoisted by the winch, caused by the slipping of the gear of the winch, which was furnished by the vessel, but was being operated by the stevedores. There

was testimony tending to show that the slipping was the result of using a rusty nail to hold the lever in place, instead of a proper pin, and that the nail was jarred from its place. Such testimony also showed that the nail was observed by the winchman on the day before. Libelant settled with the stevedores for his injury and gave them a release. Held that, accepting such testimony as true, the vessel and the stevedores were joint tort-feasors, the one for furnishing, and the other for knowingly using, an unsafe appliance, and the release of one released both from liability and precluded recovery against the vessel for the injury.

[Ed. Note. For cases in point, see Cent. Dig. vol. 42, Release, §§ 64-71.) In Admiralty. Suit for damages.

Wilford H. Smith, for libelant.

John M. Woolsey, for claimant.

LANNING, District Judge. The libelant was injured on July 26, 1906, while working for T. Hogan & Sons, the stevedores who, under a contract with the steamship St. Cuthbert, were discharging her cargo. While the libelant was in the hold of the steamship, a winch slipped its gear and allowed a bale of rags, which with the use of the winch was being hoisted out of the hold, to fall on him. The winch was being operated by another employé of T. Hogan & Sons, and not by any employé of the steamship. The libelant claims that the proximate cause of his injury was the use of a rusty nail to hold in its place a certain lever by which the gearing of the winch was controlled. He insists that a round pin of proper size should have been used, that the nail was easily jarred from the hole in which it was inserted, that in fact it was jarred from its place while the winch was being operated, and that in consequence of its displacement the lever moved, the gearing slipped, and the bale of rags fell.

The man who operated the winch, an employé of the stevedores as above stated, testifies that he saw the rusty nail in the lever the night before the accident. Two other employés of the stevedores also say that they saw it the night before the accident. Although the steamship's witnesses deny that any rusty nail was used for the purpose stated, the testimony of the libelant's witnesses upon that point may for the purposes of the present case, be assumed to be true. If true and if the use of the rusty nail was an act of negligence, the steamship and the stevedores were joint tort-feasors. The steamship furnished it and the stevedores used it. But the proofs show that the libelan has received satisfaction from the stevedores for the injury he com plains of in the present libel, and has given them a general release from all claims arising therefrom. The release of one joint tort-feaso releases all of them. Furthermore, the libelant's own proofs show con clusively that, if any one was negligent, the winchman was. Th winchman was the libelant's fellow servant.

Whatever view of the case we take, the libelant is without a lega claim against the steamship, and his libel must be dismissed.

AMERICAN WOOD WORKING MACHINERY CO. et al. v. NORMENT et al. (Circuit Court of Appeals, Fourth Circuit. November 6, 1907. On Rehearing, February 8, 1908.)

No. 717.

1 BANKRUPTCY-LIENS-MORTGAGE BY CORPORATION.

A deed of trust executed by a corporation within four months prior to its bankruptcy to secure notes which were issued direct to creditors of its principal stockholder and managing officer to secure his personal indebtedness is in their hands fraudulent and void as against its creditors, under Bankr. Act July 1, 1898, c. 541, § 67e, 30 Stat. 564 [U. S. Comp. St. 1901, p. 3449].

2 SAME-PROVABLE CLAIMS-ULTRA VIRES NOTES OF CORPORATION.

Notes authorized to be issued by the stockholders of a corporation, and secured by a trust deed on its property, which were issued by its managing officer direct to his personal creditors as collateral security for a prior Indebtedness of his own, are ultra vires and void as against the creditors of the corporation in bankruptcy.

& SAME-LIENS-CONDITIONAL SALE.

A receiver purchased machinery under a contract of conditional sale by which the seller retained title until full payment should be made therefor, but on receipt of the machinery the receiver turned it over to another corporation of which he was the principal stockholder, vice president, and general manager. Such corporation after making partial payments through the receiver became bankrupt. The seller, although having knowledge of the transfer of the machinery, did not recognize the transferee as a purchaser, nor did it record its contract until a short time before the bankruptcy, when it instituted an action in replevin for the machinery, but the same was not removed from the mill in which it had been placed, and was sold by the bankrupt's trustee as a part of its plant. Held, that the bankrupt was not a bona fide purchaser of the property within the protection of the North Carolina statute, which provides that contracts of conditional sale shall be valid against creditors or innocent purchasers without notice until they shall be recorded, nor could it acquire any rights by attaching the machinery to its realty, but that the seller had a valid lien thereon for the unpaid portion of the purchase price.

Pritchard, Circuit Judge, dissenting in part.

Appeal from the District Court of the United States for the Eastern District of North Carolina, at Wilmington.

For opinion below, see 148 Fed. 244.

Charles A. Douglas and J. G. McCormick (E. B. Sherrill, on the Erief), for appellants.

M. C. Woods and Iredell Meares (R. E. Lee and Meares & Ruark, the brief), for appellees.

Before PRITCHARD, Circuit Judge, and MORRIS and DAYTON, District Judges.

DAYTON, District Judge. Upon petition filed April 15, 1905, by The United Lumber Company, the S. U. Price Machinery Company, and Omohundro Brothers, unsecured creditors, the Builder's Lumber Company, a North Carolina corporation, was on May 3, 1905, by the urt below, adjudged a bankrupt. In the course of the proceeding ree matters of controversy arose which constitute the foundation for

157 F.-51