Section 1044 of the General Statutes, Revision of 1902, provides: "When any action shall be brought to, or pending in, any court of equitable jurisdiction, in which an application shall be made for the appointment of a receiver, either judge of such court or of the Superior Court, when such court is not actually in session after due notice given may make such order in the premises as the exigencies of the case may require and may from time to time rescind and modify the same. Under section 1044, after due notice, Judge Gager on August 4th found that "the exigencies of the case" required the immediate appointment of a temporary receiver, and, having found paragraphs 3 and 4 of said complaint true, appointed such receiver. It seems to me that upon this record alone it must be apparent to any reasonable mind that the facts found by that court show that it was "because of insolvency" that the receiver was appointed. The record certainly does not show conclusively that insolvency was not the cause, or one of the causes, which led to the appointment. It may be said to exhibit a prima facie showing of insolvency of sufficient force to put the respondent corporation in this court upon its proofs. If such a rule be adopted, no harm can come to any one hereafter. If applications shall be made to the state courts for receivers in cases where beyond question the corporation is solvent, the record in the state court will undoubtedly proclaim the fact in a convincing way. The situation is so serious that I cannot bring myself to believe that the spirit of the bankruptcy law will permit such a technical construction of section 3, subd. 4, of the bankruptcy act of July 1, 1898 (30 Stat. 546, c. 541 [U. S. Comp. St. 1901, p. 3422]), as the respondents ask for; nor can I believe that the spirit of In re Spalding commands such action, although I am bound to admit that its letter might not unreasonably be so interpreted. The exceptions to the master's report do not deal with essentials from the viewpoint which I take, and are therefore overruled. The uncriticised portions of the report present enough facts to warrant an adjudication. Let one be entered forthwith. THOMAS v. FLETCHER. (District Court, D. Maine. April 8, 1907.) No. 33. 1. BANKRUPTCY-FRAUDULENT TRANSFERS. A transfer of a merchant's stock and all his attachable property to his wife for a nominal consideration for the purpose of preventing the levy of attachments, more than four months prior to the filing of a bankruptcy petition against him was fraudulent, and subject to be set aside at the instance of the trustee. 2. FRAUDULENT CONVEYANCES-TRANSFER TO WIFE-CONSIDERATION. A bankrupt and S. acquired the right to remove the timber from certain land, each paying $500, which they obtained from a bank on their joint and several unsecured note. The last renewal note signed by the bankrupt matured October 1, 1905, a month after he transferred his interest in such timber to his wife, while insolvent. She testified that the bankrupt was desirous of surrendering to S. all right in the timber, but that she objected, and that the consideration for such transfer was her agreement to substitute her name on the note to the bank, instead of that of the bankrupt, which was subsequently done. Held, that the consideration for such transfer was insufficient to support it, but that the same was fraudulent as against the bankrupt's creditors. Albert S. Woodman, for complainant. HALE, District Judge. This suit in equity seeks to set aside certain transfers alleged to have been made by the bankrupt to his wife, Annie M. Fletcher. The facts in the case are sufficiently set forth in the report of the special master. The substantial part of the report is as follows: "Elias Thomas, Jr., and Edwin I. Littlefield, were examined as witnesses for the plaintiff, and the respondent was examined in her own behalf. The schedules filed by John W. Fletcher in bankruptcy, and the testimony of his wife in the proceedings before the referee, were admitted as evidence by agreement. It was admitted that John W. Fletcher, the bankrupt, was insolvent on the 1st day of September, 1905, that he then owed $2,700, and that on that day he conveyed all his attachable property to his wife, the respondent herein, for a nominal consideration. The property was a small stock of groceries in the store kept by him in Kennebunk, together with the book accounts due him. Of these a bill of sale was given. The other property was the equal right with one Smith to remove the growth from a lot of land in Wells, Me., at any time within three years from May 29, 1904. Howard K. Smith and John W. Fletcher bought this lot from one Towne for $1,000 cash, each paying therefor $500. It has been frequently held in this state that such conveyances are prima facie fraudulent as to creditors, and the burden of proof is placed on the transferee to show the contrary. Wheelden v. Wilson, 44 Me. 18; Robinson v. Clark, 76 Me. 493; Horner Gaylord Co. v. Miller & Bennett, 17 Am. Bankr. Rep. 257, 147 Fed. 295. "There are no circumstances connected with the case that rebut this presumption of fraud. The witness Edwin I. Littlefield, a York county sheriff, testified that about September 1, 1905, he went to the Fletcher's store with a writ to make an attachment. Mrs. Fletcher told him that the property had been transferred to her, and said it was done to prevent attachments. Fletcher paid that claim, and a few days later Littlefield went with another writ and attached the stock of goods. Mr. Fletcher gave him the key to the store, which he retained till after the adjudication in bankruptcy of Fletcher. then gave the key to the trustee. An involuntary petition in bankruptcy was filed by creditors January 11, 1906. After the adjudication, Mr. Fletcher filed his schedules, properly sworn to, and in them he claims the groceries and book accounts as his own. The trustee took possession of these, and sold the goods and has collected the accounts in part. He "The respondent, called in defense, testified clearly that the sole purpose of the transfer of the property to her was to prevent attachments, that her husband was harassed by debts and attachments and could not go on with his business, and they thought the transfer to her would end the trouble. Her statement that she did not intend to defraud his creditors seems quite immaterial. "As to the transfer of the right to cut timber on the Towne lot, she testified that the consideration was the substitution of her name for that of her hushand on a note held by the Ocean National Bank. The $1,000 paid by Fletcher and Smith for that right had been hired from that bank on their joint and several unsecured note in May, 1904. This was a four-months note, and was kept alive by renewals. The last note signed by Mr. Fletcher matured October 1. 1905, a month after the date of the deed to his wife. She testified that her husband was desirous of giving up to Mr. Smith all right in the wood lot, but that she objected to it, and agreed that, if the bank would consent, she would put her name on the note together with Smith's when the next renewal came. She was uncertain whether this arrangement was made after the deed of the lot to her or before. Mr. Smith was consulted and got the consent of the bank to the substitution of Mrs. Fletcher's name for her husband's on a new note which was given and signed by her October 1, 1905. "It is impossible to come to the conclusion that this was any consideration for the transfer of the property to her when it was made; and a decree should be entered voiding that deed and the other conveyance, and the respondent ordered to transfer and convey to the complainant the property described in the conveyances free and clear from all incumbrances. "Lewis Pierce, Special Master." The principal contention in the case arises over the transfer of the interest in real estate. It is urged by the respondent that the motives of the vendor are not shown to have been fraudulent; that, in any event, the vendee did not assist in carrying into execution any fraudulent intention; and that there is no evidence of a lack of good faith in the proceedings. The case has been heard by a special master of great experience and ability. He has had before him the parties and their witnesses, and has heard their testimony. So certain did he feel of his conclusions that he ordered the respondent on the spot to make the transfers prayed for by the complainant. His opinion is entitled to great weight. I have examined the testimony with care, and fully agree with the special master. In Wheelden v. Wilson, 44 Me. 18, cited in the report, the court said: "The plaintiff presented himself as a witness upon the stand in his own behalf, and was permitted by the court, against the objection of the defendant, to answer the following interrogatory proposed by his counsel: 'What was your motive in taking the mortgage? The validity of the mortgage, with reference to which this inquiry was made, was a material fact in issue between the parties. It was assailed by the defendant on the ground of fraud. Whether it was fraudulent, so far as the plaintiff was concerned, depended entirely upon the intent or motive with which he received it. If it were received for the honest purpose of securing a debt from the mortgagor, or to protect himself from liabilities which he had assumed for the mortgagor,, and for no other purpose, the law will uphold it. But if taken by the plaintiff for the purpose of aiding or assisting the mortgagor to defraud or delay his creditors, or if such purpose constituted any part of the motive which induced him to take the mortgage, then it was fraudulent and void as to creditors. The question of motive or intention was a question of fact, to be determined by the jury." I have had occasion before, when issues of this sort have been presented, to refer to Blennerhassett v. Sherman, 105 U. S. 100, 26 L. Ed. 1080, in which the court said: "It is not enough, in order to support a settlement against creditors, that it be made for a valuable consideration. It must also be bona fide. If it be made with intent to hinder, delay, or defraud them, it is void as against them, although there may be in the strictest sense a valuable or even an adequate consideration." In Davis v. Schwartz, 155 U. S. 631, 15 Sup. Ct. 237, 39 L. Ed. 289, Mr. Justice Brown, in speaking for the Supreme Court, said: "It has been the accepted law ever since Twyne's Case, 3 Coke, 80, that good faith, as well as a valuable consideration, is necessary to support a conveyance as against creditors. In that case Pierce, being indebted to Twyne in £400, was sued by a third party for £200. Pending such suit, he conveyed. all his property to Twyne in consideration of his debt, but continued in possession, sold certain sheep, and set his mark on others. It was resolved to be a fraudulent gift, though the deed declared that it was made bona fide. Most of the cases illustrative of this doctrine, however, have been like that of Twyne, wherein a debtor, knowing that an execution was to be taken out against him, had sold his property to a vendee having knowledge of the facts, for the express purpose of avoiding a levy, or receiving a consideration which could not be reached by execution. In such cases the fact that he receives a good consideration will not validate the transaction, unless at least the creditor has obtained the benefit of the consideration." In the case at bar the questions of motive and of good faith were questions of fact, and have been passed upon by the special master. Upon a careful examination of the testimony, I am satisfied that his finding should be sustained. The questions of law arising in the case are fully covered in the citations to which I have referred. Upon an examination of the testimony of the respondent alone, and giving her the full benefit of all she has claimed, it is impossible to sustain either of the transfers to which the bill in equity is directed. The transfers and conveyances enumerated in the bill in equity must be held to be fraudulent, and intended to hinder and delay the creditors of the bankrupt. Transfers to the trustee are ordered as prayed for. The decree must be for the complainant, with costs. THOMAS G. PLANT CO. v. MAY MERCANTILE CO. (Circuit Court, E. D. Missouri, E. D. February 4, 1907.) 1. TRADE-Marks and Trade-Names-FRAUDULENT USE BY ANOTHER-INJUNCTION. A manufacturer of shoes which has adopted and uses the name "Queen Quality" as a trade-mark or name exclusively for its shoes of superior grade, selected by it and stamped with such name, is entitled to be protected in such manner of use and to an injunction restraining a purchaser of shoes of its manufacture, but which it had rejected for such grade and stamped with a different name, from advertising, offering for sale, and selling the same under the name of "Queen Quality" shoes. [Ed. Note. For cases in point, see Cent. Dig. vol. 46, Trade-Marks and Trade-Names, § 76.] 2. SAME-SUIT FOR INFRINGEMENT INJUNCTION. Where a defendant continued to make use of complainant's trade-mark after notice to desist and contested a suit brought to compel it to do so, complainant's right to an injunction is not defeated because defendant had, in fact, ceased such use before the suit was brought, which fact was not known to complainant. [Ed. Note.-For cases in point, see Cent. Dig. vol. 46, Trade-Marks and Trade-Names, §§ 110, 111.] In Equity. Geo. H. Maxwell, for complainant. Nathan Frank and Richard A. Jones, for defendant. FINKELNBURG, District Judge. Owing to the number of cases submitted at this term and other intervening and pressing duties, I find it impracticable to attempt to write opinions in full without unduly delaying litigation. I will, however, dictate an informal memorandum, indicating some of the reasons which have led me to the conclusion finally arrived at in this case. No question is raised in this case as to complainant's legal right to the trade-mark "Queen Quality" at the time of the acts here complained of. That right had been previously established in the case of the Plant Company v. May Company, reported in 105 Fed. 375, 44 C. C. A. 534, and for the purpose of this case is practically admitted by the answer. No question is raised as to the advertisement and sale of the shoes in controversy under the name of "Queen Quality" shoes; on the contrary, it is insisted by defendant that it had a right to do It will be perceived from the pleadings and evidence that the wrong complained of in this case is not that defendant has sold an article of its own under complainant's trade-mark, but that defendant has sold an inferior article of complainant's manufacture under a trade-name adopted by it to indicate a superior article of complainant's manufacture as in the case of Gillott v. Kettle, 3 Duer (N. Y.) 624, in which the defendant bought pens of one grade and sold them as a higher grade. In that case, Mr. Justice Bosworth, in granting an injunction, said: "The fraud to the extent that it may be successful is twofold. The public is defrauded by being induced to buy the inferior for the superior article. The plaintiff is defrauded by an unjust destruction of confidence that his pens are put up for sale and assorted with reference to quality indicated to dealers by the labels on the boxes which contain them." See, also, Hennessy v. White, Cox, Manual Trade-Mark Cas. 377, No. 650, and Russia Cement Co. v. Katzenstein (C. C.) 109 Fed. 314. As to the knowledge of defendant concerning the character and grade of goods here in controversy, the facts are about as follows: The first letter with which negotiations for sale began (Rosenburg to Porter, May 23, 1905) speaks of the shoes as "Wos. Queen Quality Pat. Colt. Ox." restamped "Ladies' Favorite" and as "slightly weather cracked." The letter of Rosenburg to Hamburger Bros., May 27, 1905, says: "The imperfections are very, very slight." This letter also mentions that they are restamped "Ladies' Favorite." It is admitted that each pair of shoes was packed in a carton marked "Ladies' Favorite" on the outside. Defendant's shoe buyer (Mr. Wilkinson) who made the purchase admits that he knew the character of the Plant Company's shoes, and he knew they were very particular about their Queen Quality brand of shoes. In its advertisement of June 11th, in the St. Louis Globe, defendant admits that the shoes are stamped "Ladies' Favorite." It further appears that on June 16th, when complainant had been advised of the advertisements of Queen Quality shoes which appeared in the St. Louis newspapers, it notified defendant that the use of the name "Queen Quality" was unauthorized, and that the shoes in question were not "Queen Quality," but defendant through its counsel June 20th insisted on its right to continue the use of the name, and to sell under that name, and defendant, in fact, put another advertisement in the St. Louis Post-Dispatch after that time |