"Tepee Apples [or Blackberries, as the case might be]. Packed by C. H. Godfrey & Son, Benton Harbor and Watervliet, Michigan." There was evidence that Michigan apples and blackberries were better than those grown in Arkansas. Held, that the labels indicated that the fruit was grown in Michigan, and that claimants were therefore guilty of misbranding, in violation of Food and Drug Act Cong. June 30, 1906, c. 3915, 34 Stat. 768 (U. S. Comp. St. Supp. 1909, p. 1187).

[Ed. Note. For other cases, see Food, Dec. Dig. § 15.*]

Action by the United States of America to forfeit 100 Cases of Tepee Apples and 172 Cases of Tepee Blackberries for alleged violation of the food and drug act, because of misbranding. Judgment of forfeiture.

A. S. Van Valkenburgh, U. S. Atty., and L. J. Lyons, Asst. U. S. Atty.

Kelly, Brewster & Buckholz and Thomas E. Lannen, for C. H. Godfrey & Son.

SMITH MCPHERSON, District Judge. This case is by information filed by the United States attorney, charging that Ridenour-Baker Grocery Company, of Kansas City, Mo., has in its possession cases of apples and blackberries in original unbroken packages which are misbranded within the meaning of the act of Congress approved June 30, 1906 (Act June 30, 1906, c. 3915, 34 Stat. 768 [U. S. Comp. St. Supp. 1909, p. 1187]), entitled "Food and Drugs." The fruits were thereupon seized by the marshal, and notice thereof given. In due time C. H. Godfrey & Son, of Benton Harbor, Mich., appeared and made defense. A jury was waived, and the case tried to the court. The evidence consists of an agreed statement of facts and the deposition of C. H. Godfrey. And these are the facts:

Godfrey & Son pack and can fruits, with their factory at Benton Harbor, Mich., and such has been their business for several years, with their principal office at that place, the fruits grown there, as well as in other states. Their only post office address was there. The apples and berries in suit were grown at and near Springdale, Ark., and by Godfrey & Son there bought and canned, and by them later on sold and shipped to the Ridenour-Baker Company at Kansas City. Each can of apples was labeled with a blue paper about ten inches long and five inches wide, with a picture of a red apple, an Indian tent, or "tepee," with the words "Tepee Apples. Packed by C. H. Godfrey & Son, Benton Harbor and Watervliet, Mich." The berry cans had the same label in all respects, except the picture was of a cluster of blackberries and the words "Tepee Blackberries."

The opinion of the Secretary of Agriculture was that such words, to the exclusion of Springdale, Ark., where the fruit was grown and packed, misleads the public. Evidence is offered that Godfrey & Son did not know of such opinion, and that they believed the cans were properly labeled. Such evidence is not admissible and is ruled out. The evidence shows that Michigan and Northern apples are of a better quality and flavor than are Arkansas apples, and that is a matter of common information. As to the berries, the evidence is not *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

so certain, although the deposition of Mr. Godfrey fairly shows that Michigan blackberries, with one variety excepted, are better than those of Arkansas.

Adulteration of goods and false labeling had become so common that it was well-nigh impossible to purchase pure goods, or that which was called for. The same was true as to medicines. Congress undertook to remedy it. The one purpose was to prevent the sale of adulterations. The other purpose was to enable a purchaser to obtain what he called for and was willing to pay for. And under this latter view it is immaterial whether Michigan fruits are better than those grown in Arkansas. A purchaser of canned goods may prefer Michigan fruits. He may believe them to be better than Arkansas fruits. He has the right to call for them, and when he pays or is debited for them he has the right to have Michigan fruits. The purchaser has the right to determine for himself which he will buy and which he will receive and which he will eat. The vendor cannot determine that for the purchaser. He, of course, can make his arguments, but they should be fair and honest arguments.

In this case the label is very attractive to the eye, and of course its only purpose is to sell the fruit. But for that the label would not be on the can. That is what the purchaser at retail looks for, and that is what, more than any other statement or argument, induces the purchase. That the evidence shows that to be misleading, because the words thereon, "Packed by C. H. Godfrey & Son, Benton Harbor and Watervliet, Mich.," is understood by all adults and children as not only being there packed, but fruits grown in that vicinity. Of course it is idle to insist, as Mr. Godfrey does, that the fruits could not have been raised within the city of Benton Harbor. The term "misbranded," as used in the statute, as defined by the statute, is:

"The package or label of which shall bear any statement designed or device regarding such article * ** which shall be false or misleading in any particular, and to any food which is falsely branded as to the state, territory, or country in which it is manufactured or produced."

Again, the statute recites:

"If it be labeled or branded so as to deceive or mislead the purchaser, it should be considered as misbranded."

There can be no doubt, as it seems to me, that any purchaser from this label would be deceived, in that he would be receiving Arkansas fruits instead of Michigan fruits. Deception is seldom practiced by a literal falsehood, but is usually joined with some truth, so that the entire statement will deceive. And so in this case. Of course the statement is true that Godfrey & Son reside and do business at Benton Harbor; but that one true statement is used in conjunction with the packing of the fruits, and I repeat that I would believe from that, as would all others, that it is Michigan fruit within the cans. And if Godfrey & Son believe, and if it be true, that Arkansas fruits are as good or better than Michigan fruits, let that fact be disclosed by labels and otherwise. This statute is to protect consumers, and not producers. It is a most beneficent and righteous statute, and within the powers of Congress to legislate concerning, and should be en

forced. It cannot be enforced if it is to be emasculated, as is sought in the present case. The order will be that the fruits and cans under seizure will be sold by the marshal after being properly branded. This will be done, instead of destroying them, as the fruits are not deleterious.

But this order may be avoided under the statute if Godfrey & Son will pay the costs and give bond to properly brand the goods in accordance with this opinion, and sell them in all respects in conformity to law.

PAGE v. MOORE.

(District Court, E. D. Pennsylvania. June 10, 1910.)

No. 1.

1. BANKRUPTCY (§ 186*)-ADMINISTRATION OF ESTATE-PreferenCES-"PERSON BENEFITED."

Where a mortgage payable to a corporation was assigned as collateral security to the first indorser of notes of the corporation, the first indorser being financially responsible, a president of the corporation as second indorser of the notes, having received no part of the funds derived from the notes, was not a "person benefited" by the assignment within the bankruptcy law (Act July 1, 1898, c. 541, § 60b, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445]), so as to render him liable for the amount or value of the mortgage.

[Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 186.*]

2. BANKRUPTCY (§ 303*)-ACTION BY TRUSTEE-EVIDENCE.

In an action by a trustee in bankruptcy of a corporation for a reassignment to the corporation of a mortgage payable to it or a money decree for its value on the ground that the original assignment was a preference, evidence held insufficient to show that the president of the corporation procured the assignment for the purpose of relieving him of a personal obligation as surety on a bond of the corporation as building contractor. [Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 303.*] Suit by Howard W. Page, trustee in bankruptcy of Moore & Co., Incorporated, against William G. Moore. Bill dismissed.

Thomas Raeburn White, for complainant.

Henry P. Brown, for respondent.

J. B. MCPHERSON, District Judge. This is a suit to avoid a preferential transfer, and it has been brought in equity because the property transferred was a mortgage, and the relief prayed for is in the alternative either a reassignment of the mortgage, or a money decree for its value. The facts are, briefly, these: Moore & Co., Incorporated, the bankrupt, was engaged in the business of constructing buildings. It was insolvent on January 15, 1908, and the defendant, who was its president, knew its financial condition. On that day the bankrupt assigned a mortgage to Henry D. Moore, the defendant's father, as collateral security to protect his indorsement of the bankrupt's notes for $10,000. These notes were discounted for the bankrupt's benefit. The proceeds went into its treasury, and were afterwards paid out in the For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

usual course of business to laborers and materialmen and in the discharge of current liabilities. Henry D. Moore has paid the notes and still holds them as a liability of the bankrupt; but he is fully protected by the assignment of the mortgage.

The ground upon which it is sought to hold the defendant liable is that he was a "person benefited" by the assignment, and his counsel concedes that this is the only question for decision. The defendant was also an indorser upon the notes referred to; but, as Henry D. Moore was the first indorser, it is manifest that the assignment of the mortgage did not relieve the defendant from any liability upon his indorsement to which he would otherwise have been exposed. If the holder of the notes had called upon him to make his indorsement good, he could have compelled the first indorser, whose financial responsibility is ample and unquestioned, to reimburse him, and therefore the assignment of the mortgage to protect the first indorser did not relieve the defendant. Neither did he benefit directly by the assignment. The proceeds of the notes were not applied to any other obligations of the bankrupt upon which he was liable, and none of the money went into his pocket in any way. The trustee seeks to charge him upon a different ground altogether. I may note in passing that some stress is laid in the complainant's brief upon the averment that the defendant had agreed to indemnify his father against liability upon the latter's indorsement; but I do not think the evidence sufficiently supports the allegation, and I find the disputed fact in favor of the defendant. Laying this matter aside, therefore, it remains to consider the reason that is most insisted upon for holding the defendant to have been a “person benefited" within the meaning of the act (Act July 1, 1898, c. 541, § 60b, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445]). The further facts are these:

It appeared that the defendant had been a member of a partnership whose business was taken over by the bankrupt corporation. The partnership and the corporation had each entered into certain building contracts, and had been obliged to give bonds for the faithful execution of these agreements. The surety was an indemnity company, and the defendant had given counter security to protect the company. The amount was large, $120,000. The buildings were still incomplete when the mortgage was assigned. The bankrupt was in financial difficulties and needed money to go on with the contracts, and, if the bankrupt had been obliged to abandon the buildings, the indemnity company would have been compelled to make good whatever damage might thus have been caused to the owners of the buildings, and the defendant would thereupon have been liable over to the surety. In this situation the trustee contends, to state his position in the language of his counsel:

"But in any aspect of the matter respondent was the party to be benefited, for it is not disputed that the whole purpose of raising the $40,000 was to enable the bankrupt to gain further credit, and by this means to complete the buildings then under contract, and which respondent was under a personal liability to complete. Even if respondent's view of the assignment of the mortgage be taken in its entirety-that it was executed and delivered in January to his father, and that he was under no obligation of any kind to reimburse him-yet how can it be doubted that respondent was the real party to

be benefited by the transaction? By causing the bankrupt to assign away its mortgage, it was enabled to raise money sufficient to increase its credit and complete the buildings then under contract, and thereby relieve respondent of a personal obligation amounting to $120,000. The whole transaction was in pursuance of a plan to escape an impending disaster at the expense of innocent third parties, and an essential and necessary part of the scheme was the withholding of this mortgage from record until this could be done. The evidence clearly shows the whole thing was engineered by respondent to gain his own ends."

I am not advised of any decision which carries the doctrine of "benefit" as far as this. Assuming, however, that a trustee might maintain the legal position successfully, he must first of all establish the underlying facts, and in my opinion the evidence in the present case is not sufficient. As I look at the matter, the trustee has not proved that the part taken by the defendant in the assignment of the mortgage to his father had the object described in the foregoing quotation. The defendant knew that the bankrupt was financially embarrassed and needed money to carry on its contracts; but I see no ground to believe that he devised and helped to carry out such a scheme as the trustee supposes. It is much more likely-and I think the evidence so indicates— that he believed the need for money to be the not unusual situation of any business venture, and that if funds could be raised by an adequate loan the contracts could be finished without ultimate loss, and perhaps even at a profit. It seems clear that the present unfortunate condition of affairs is due to the sanguine anticipations of comparatively inexperienced builders, who undertook much more than they could manage, and after suffering some unexpected disasters ended in a court of bankruptcy. As a consequence, losses large in the aggregate have fallen upon a number of persons-among them, upon the defendant himself-but the misfortune of one man cannot be shifted to the shoulders of another unless the latter has been to blame. A decree may be entered dismissing the bill, with costs.

In re CLEARY.

(District Court, E. D. Pennsylvania. June 25, 1910.)

No. 3,659.

BANKRUPTCY (§ 89*)-PETITION-AMEndment-EFFECT.

Where, after answer to a bankruptcy petition, it was amended so as to charge another act of bankruptcy, consisting of a preferential payment to a different creditor than that mentioned in the answer, which the bankrupt admitted, and declared his willingness to submit to adjudication on that ground, the answer would be regarded as raising moot questions only, and the adjudication would be entered on the amendment. [Ed. Note. For other cases, see Bankruptcy, Dec. Dig. § 89.*]

In the matter of George Cleary, alleged bankrupt. On motion to strike off the answer, on demurrer to the answer, and on motion for adjudication. Motion for adjudication granted, and motion to strike off answer refused.

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes