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Appeal from the District Court of the United States for the Eastern District of New York.
On appeal from an order of the District Court for the Eastern District of New York, dated June 29, 1905, directing the distribution of a fund of $6,802.77, held by the trustee in bankruptcy, which fund represents the share of the bankrupt in the estate of his father. The referee in bankruptcy to whom, as special commissioner, the claims of the various parties were referred, reported that the following creditors had presented secured claims in the following chronological order: 1. Alfred B. Hilton, judgment for $1,097.96, docketed in Queens county, January 21, 1897. 2. William B. Hewlett, assignment for $3,000, October 8, 1897. 3. Francis Gilman, assignment for $5,000, November 8, 1901. 4. Mary R. King, assignment for $1,000, February 14, 1902. 5. William J. Jenner, assignment for $1,120, August 15, 1903.
The claims of Hewlett, King and Jenner were allowed by the referee and the court. The Hilton claim was disallowed by the referee but was allowed by the court. The Gilman claim was disallowed by the referee but was allowed by the court in the sum of $1,800. The appeal presents only the question of the validity of the Hilton and Gilman claims. If these claims are defeated the appellant, Mary R. King, will realize the full amount of her claim.
The opinion of the District Court, where the important facts are stated, is reported in 138 Fed. 606.
Edmund L. Baylies and Langdon P. Marvin, for appellant.
Horace Russell, and James S. Darcy, for executors representing the Hilton claim.
William R. Willcox and Robert D. Murray, for Gilman.
COXE, Circuit Judge (after stating the facts). The District Court found that the Hilton judgment was entitled to priority because it was a lien upon certain real estate of which the bankrupt's father died seised and out of which the fund arose. We find it unnecessary
. to add anything to the reasoning of the court below in reaching this conclusion, which, we think, is amply sustained by the authorities cited in the opinion. The Gilman claim remains to be considered.
Upon the judicial settlement of the final account of the executor of James H. L'Hommedieu, the father of the bankrupt, the surrogate of Queens county made an order, dated April 29, 1904, which recites, inter alia, that all persons interested in the estate were cited to attend the settlement of said account and on the return day of such citation Francis Gilman appeared by his attorneys and objected to the account of the executor which objection was overruled, the account settled and the estate divided. The order, after reciting that the trustee in bankruptcy of Howard A. L'Hommedieu was a party to the proceedings in the surrogate's court and that divers persons had appeared and claimed to be entitled to the share of the bankrupt in his father's estate, adjudged as follows: First. That the executor pay to the trustee in bankruptcy $6,802.77, the amount of such share, to be distributed by him as the court having jurisdiction of the bankruptcy proceedings shall direct. Second. “That the liens by mortgage, assignment, judgment or otherwise, proved, or sought to be proved in this proceeding, shall have the same force, validity and effect upon the said funds in the hands of said trustee after the same have been paid over by the said executor as the same now have or did have when they were in the hands of said executor."
On June 12, 1905, the district court made an order, on consent of all parties interested, referring it to the referee as special commissioner to hear and determine the claims, including that of Francis Gilman, and to pass upon the validity and legal effect of such claims. The consent to this order was signed by Francis Gilman “without prejudice to the position as defendant taken by him in the proceedings covered by the proposed order.” The executors owning the Hilton judgment duly proved their claim in bankruptcy and by petition to the referee asked that the lien of the judgment might be allowed as attaching to the fund transferred from the surrogate's courts. None of the other claimants appears to have filed a formal proof of claim.
The Gilman claim is based upon an assignment and a collateral agreement which are fully described in the report of the referee who says: “This assignment and agreement are alleged to be preferred claims against the funds in the hands of the trustee by said Francis Gilman, to the amount of $5,000, with interest. This claim is contested by every other creditor alleging preferred claims, particularly by the trustee, who objects to the allowance of the claim in any amount, on the ground that the same is founded upon a corrupt and usurious loan, and is utterly void in law.” The referee, after reviewing the testimony, found that the transaction was usurious and therefore void, the bankrupt receiving but $1,800 and obligating himself to pay $5,000. The District Court, in effect, confirmed the report in this respect. It is, therefore, unnecessary to discuss the testimony further than to say that the facts fully sustain this conclusion. Having found the claim void for usury the referee disallowed it in toto, but the District Court sustained it for $1,800, the amount actually received by the bankrupt on the theory that Gilman came into court in invitum in the character of a defendant at the behest of the other claimants who, without any affirmative action on his part, proved his claim for the purpose of showing its invalidity and that trustee and junior claimants must return to him the consideration received by the bankrupt before there can be a decree annulling the assignment.
The confusion which has arisen in ascertaining the legal status of the parties is largely due to the informality of the proceeding and the failure to observe the elementary rules of pleading and practice necessary to the proper presentation of such controversies. It is the opinion of the majority of the court that inasmuch as all parties consented to proceeding in this manner the hardship should be equally distributed. No one should be permitted to profit by the assertion of technical considerations based upon analogies to formal actions where the position of the parties and the burden of proof is established by proper pleadings, when, as here, all have agreed to dispense with such formalities. A majority of the court are unable to agree with the District Court in thinking that Gilman is in the position of a defendant in equity, making no claim to the fund and being forced unwillingly into a litigation in which he has asserted no interest.
The fund in question was transferred to the trustee in bankruptcy to be distributed as the District Court shall direct. Gilman either had an interest in that fund or he had not. If he had no interest and presented no claim it is not easy to see upon what theory the court fixed the amount due him at $1,800. The proposition is that the other claimants, in order to get rid of a claim, which did not exist, dragged him into court and compelled him to accept $1,800 for which he had not asked. If, on the contrary, he had a claim he must have presented it and this, we think, is what he did do. It is hardly conceivable that the referee would have received the evidence and entered upon the careful investigation, which the record shows took place, unless he and all other interested parties had understood that Gilman had presented a claim for $5,000. True, he did not actually prove his debt, but neither did the other creditors with the one exception before noted. Gilman filed a claim for $6,500 in the Surrogate's Court and a copy of the assignment had been sent by his attorneys to the executor. From the order of the surrogate, in evidence, it seems that Gilman appeared in the Surrogate's Court by his attorneys and took an active interest in the proceedings, and, as we have seen, the fund was paid over to the trustee in bankruptcy with all rights preserved. It was evidently the intention of the court and the understanding of the parties that the controversy between the claimants as it existed in he Surrogate's Court was to be transferred to the court of bankruptcy. Nothing was to be gained or lost by the change of tribunals. The claimants entered the court of bankruptcy on equal footing. Gilman had filed his assignment with the executor and as his counsel say, "He stood on his assignment and did nothing.” Naturally, so long as nothing was done the assignment was prima facie proof of his claim for $5,000 and cast the burden of proving its invalidity on those interested in defeating it. We think there can be no doubt that Gilman proved his claim in the Surrogate's Court, was an active party to the proceedings there, consented to the transfer of the controversy to the District Court without formal pleadings, appeared there and litigated the questions in dispute precisely as he would have done had they remained in the state court. In these circumstances we do not think a strained construction should be resorted to in order that a claim, found by both the referee and the judge to be usurious, may take precedence of claims concededly honest.
There is another view, not alluded to by counsel, and yet, perhaps, worthy of consideration. It is difficult to trace the sequence of events from the record, but it would seem that the trustee offered in evidence the Gilman assignment at the hearing of November 13, 1903, which, it will be observed, was five months before the surrogate's order directing the transfer and a year and seven months prior to the order of the District Court referring “the claim of Francis Gilman” and others to the referee as special commissioner. Conceding, however, that this preliminary hearing may be regarded as having taken place under the order of reference and accepting for the moment the theory that Gilman occupies the position of a defendant in a court of equity, it is manifest that the trustee in bankruptcy must occupy the position of a complainant in equity. Following the analogy still further it is apparent that Miss King, who did not initiate the proceeding, is not a complainant and must be considered as a defendant. The trustee is the only one of these claimants who stands in the shoes of the bankrupt. His interest in the fund is contingent upon defeating the other claims or reducing them below $6,802. He stands in a position of hostility to all the other claimants. It may be that if he had begun a suit in equity against Gilman to annul the assignment he, as trustee, could not obtain the fund until he had paid Gilman the amount actually received by the bankrupt. But could he thus defeat the prior lien of Miss King, who is in no way responsible for his action, even though she advanced proof in defense of her claim? Still keeping to the fiction of a suit in equity it would seem that the complainant, after having proved the assignment, abandoned the proceedings and a junior claimant, in defense of her own claim, undertook the task of proving the assignment to be usurious. In such circumstances we are inclined to think that she is entitled to defend her rights without losing them. The situation is sui generis and we have been unable to find any authority exactly in point, but, upon general principles, equity should not permit an innocent and, indeed, a helpless party to suffer from such a proceeding.
It follows that the order should be affirmed in all respects except as to the claim of Francis Gilman, which is disallowed. The appellant is entitled to costs of this court against Francis Gilman. Horace Russell and others, as executors, etc., are entitled to the costs of this court against appellant.
AMERICAN CAR & FOUNDRY CO. V. BRINKMAN.
(Circuit Court of Appeals, Seventh Circuit. May 18, 1906.)
1. MASTER AND SERVANT—INJURY TO SERVANT-FELLOW SERVANTS.
Plaintiff was employed by defendant as a stationary engineer in its car shops, where he was under the orders of a chief engineer, who called him from his regular duties to another part of the works to assist in testing a new electric motor. Plaintiff had no knowledge of such machines, but the chief engineer had and directed the work. The motor became heated, as the evidence tended to show, from the presence of water therein, which was a recognized source of danger; but the chief engineer, although having knowledge of such fact, again turned on the current, when an explosion took place, by which plaintiff was injured. Held, that the rule of fellow servants did not apply, nor did plaintiff assume the risk from such danger, which was unknown to him and not in his regular line of employment, but that the duty of seeing that the motor was free from any dangerous defect which was discoverable by reasonable inspection was a positive one of the master, which plaintiff had the right to assume would be performed, that in such respect the chief engineer was defendant's representative, for whose negligence, if proved, it was responsible to plaintiff.
[Ed. Note. For cases in point, see vol. 34, Cent. Dig. Master and
Servant, $$ 422, 616.] 2. APPEAL-RESERVATION OF OBJECTION-OBJECTION EVIDENCE-SUFFICIENCY.
A general objection to a question asked a witness as "improper and immaterial” is insufficient as a basis for an assignment of error, where
the evidence called for is not so clearly incompetent from its essential nature upon any issue in the case that further specification of objection is unnecessary.
[Ed. Note. For cases in point, see vol. 2, Cent. Dig. Appeal and Error, $ 1141; vol. 46, Cent. Dig. Trial, $$ 194–196, 199.]
In Error to the Circuit Court of the United States for the Southern District of Illinois.
Geo. F. McNulty, for plaintiff in error.
SEAMAN, Circuit Judge. The American Car & Foundry Company, plaintiff in error, was the defendant below in an action of trespass on the case for injuries suffered by the defendant in error while in its service through alleged negligence on the part of the plaintiff in error. The trial resulted in a verdict and judgment against the American Car & Foundry Company, and various errors are assigned for reversal.
The undisputed facts, in substance, are these: The corporation plaintiff in error is engaged in a large manufacturing industry at Madison, Ill., with a plant of several buildings, one portion or department for car shops and another for foundry. Brinkman, the defendant in error, was employed in the car department, as night engineer, had long general experience as a steam stationary engineer, and had charge of three engines and the engine room during his night shift. He was employed by and directly under the orders of Hiscox, the chief engineer. The general foreman of the car shops was one Shipley, while there was a general superintendent of the works and a general manager for the district. Brinkman was injured by the explosion of an electric motor, in a place distant and apart from his engine room, while performing unusual duties, upon call by and under the direction of the chief engineer, as a helper in testing the motor. This motor was obtained for pumping purposes several months prior to the accident, but had not been used. Awaiting its placing and use, it was left in the engine room, and so remained when the works were flooded by an overflow of the Mississippi river, so that the water was in the engine room for about nine days, in depth stated variously at three, four, and six feet; and the motor was lifted from the floor, by means of chain and tackle, but the testimony is inconclusive whether it was free from water. When the water subsided the motor was lowered to the floor, and thus remained for about three months prior to its removal to the pump house; and the testimony indicates that the engine room was warm and dry after the flood. Hiscox had experience in electricity and electric apparatus, including motors; but the testimony at least tends to show that Brinkman had no such experience, beyond the operation of his engine as the generating power for such appliances as were used. Hiscox proceeded to test the motor before putting it into service, called Brinkman from his usual place and duties to assist him, and Brinkman placed himself under the direction of his chief, as his servcie required. The operation included two tests at intervals, and, while the testimony