14 F. (2d) 874 last ground was abandoned by the proctor for the government at the hearing. This course was objected to by proctor for claimant. I see no objection to this proceeding, as there was no election by the government to proceed under the Prohibition Act, as in the case of The Spray (D. C.) 6 F.(2d) 414. Nor has there been any conviction of any one under the Tariff Act or the Prohibition Act. It is admitted under the stipulation that the claimant sold the car to one Maripou under a retained title contract in good faith, and had no knowledge of any illegal use; that the payments have not been made, and the car will not bring the amount due under the contract. So there is no question of mala fides on the part of the claimant. [2] The forfeiture is sought under provisions of section 3062 of the Revised Statutes. That section provides for the seizure and forfeiture of all vessels used in conveying illegally imported merchandise. Section 3063 of the Revised Statutes (Comp. St. § 5765), provides when vehicles, etc., used as common carriers may be forfeited. It seems to be the uniform opinion of the courts that since Congress passed the Act of November 23d, 1921 (42 Stat. 222), amendatory of the National Prohibition Act, laws providing penalties other than those provided in the Prohibition Act are still in force, the same as though they had been re-enacted in that act, unless they are in direct conflict with the Prohibition Act or the amending act. Those decisions settle the question in favor of the government as to whether a proceeding for forfeiture may be maintained for a violation of the customs or revenue acts. [3] The Tariff Act was passed in 1922 (chapter 356, § 593b), and provides that if any person fraudulently imports any merchandise into the United States, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, etc., of such merchandise, knowing the same to have been imported contrary to law, he shall be subject to the penalties therein prescribed of fine or imprisonment, or both. Section 594 of the act (Comp. St. 8 5841h14) provides that, whenever a vessel or vehicle, or the owner or master, conductor, driver, or other person in charge thereof, has become subject to a penalty for the violation of the customs revenue laws, such vessel or vehicle shall be held for the payment summarily by libel to recover the same. It is provided in this section, as in section 3062 of the Revised Statutes, that vessels and vehicles engaged as common carriers are exempt from the provisions, unless it appears that the owner, etc., were privy to the illegal use. It seems to me that the words used in section 3062 work an absolute forfeiture of the vehicle in which any merchandise illegally imported is found, except in the case of vehicles used in common carriage of freight or passengers, and is now existing law, unless repealed by Tariff Act 1922, § 594. The innocent owner or lienor is protected by section 613, title 4, of chapter 356, Act September 21, 1922 (Comp. St. § 5841h33), by the provision for an application for a return of the proceeds of the sale of seized property to administration officers. Repeals by implication are not favored, and the intent of the law-making power to repeal must be apparent from a proper construction of the acts. As before said, section 3062 works a forfeiture of the vehicle in which the merchandise is found, regardless of the ownership, or the guilt or innocence of such owner of wrongdoing, except in the case of common carriers; whereas, section 594 of the Tariff Act provides that, in case a penalty is assessed against the person in charge, the vehicle can be held to pay said penalty. It does not seem to me that there is such conflict in the two sections as would justify the courts to hold that section 3062 was repealed by implication by the provisions of section 594 of the Tariff Act. If section 3062 is in force, the good faith of the claimant can have no effect to prevent a forfeiture, if the government has sustained its libel by proof. The burden of doing this is placed upon the government by the libel and answer thereto. [4] To sustain this burden, the government introduced one witness, a customs inspector, who testified that he found the car parked on a street, and in a valise in said car found a bottle partly full of whisky, with a label of "Black and White Whisky" on it. He said, further, that he understood this label to be a label found on Scotch whisky, but would not say it contained imported whisky when he found it. He testified that, at a time previous to his seizing the car, he had seen bags unloaded from a boat, which he believed contained whisky, and placed in this same car to be carried to some place; his belief being based upon the similarity of such packages to others which he had seen which contained whisky. Also the proctor for the government introduced in evidence over the objection of claimant certain bills for liquor which he had found in a place of Maripou's which he had searched-said bills apparently being from a liquor dealer in the Bahama Islands, but not made out to Maripou. I do not think said bills were admissible in evidence to prove the importation, nor do I think the fact that the bottle of whisky found in the suit case in the parked car sufficient to prove importation. It must be borne in mind that this proceeding is to forfeit the car as the offender, irrespective of the ownership, and, while it is a civil proceeding, yet is for the commission of a criminal offense, and partakes, therefore, somewhat of a criminal procedure. Surely something more than a suspicion, however well grounded in the mind of the customs inspector from his investigations, must appear in evidence before the court can by its decree deprive the citizen of his property. And yet that is all that I find in this case. others deposited securities, without authority to repledge, but with knowledge that such was the custom of the bankrupt. The bankrupt did business through Logan & Bryan, New York, with whom it pledged securities belonging to its customers. It likewise did business with the First National Bank, Seattle, with whom it deposited other securities for advances obtained. Claimants filed claims, or petitions, asserting equities and praying preferential status in a fund obtained from the sale by the state court receiver of securities pledged to Logan & Bryan. Other creditors filed like claims and petitions, praying preferential I am constrained, therefore, to dismiss the status from funds remaining in the First Nalibel in this case. It will be so decreed. In re JAMES MACFARLANE & CO. (District Court, W. D. Washington, N. D. September 21, 1926.) No. 7427. 1. Bankruptcy 140 (3)-Status of claimants of securities, pledged by bankrupt, a broker, determined. Securities of customers of bankrupt, a broker, which, at the time its property came into legal custody, were in pledge to a bank to secure its own indebtedness either with the consent of the owners or with their knowledge, whether sold afterward to pay the indebtedness or remaining unsold in possession of the bank, stand on the same footing and should contribute ratably to the loss. 2. Bankruptcy 474-Costs and expenses of hearing to determine rights of the several claimants in a special fund, except fees of special master and counsel, held chargeable to the fund. Costs and expenses of a hearing to determine rights of the several claimants in a fund produced by securities owned by claimants, but pledged by bankrupt, a broker, held chargeable to the special fund except fees of the special master and counsel, which were charged to the general estate. In Bankruptcy. In the matter of James Macfarlane & Co., bankrupts. On exceptions to report of special master. Sustained in part, and matter referred back to referee. The bankrupt was conducting a brokerage business. A receiver was appointed in the state court; thereafter bankruptcy proceedings were instituted and a decree of adjudication entered. In the brokerage business a number of persons bought on margins, and others bought for cash; some pledged stocks to secure margins, with authority to repledge; tional Bank of Seattle after the bank claim was satisfied. Other creditors claimed priority in moneys without identity of securities in which their funds were invested, and others demanded return of securities which had been disposed of by the bankrupt long prior to adjudication and never were in the possession of the trustee. A special master was appointed to examine into the issues raised and claims asserted, and has made his report, classifying the creditors in two classes, A and B-class A, those who had securities pledged to Logan and Bryan by bankrupt to secure its indebtedness, which were sold on the order of the receiver; and those creditors that had no claims in such funds class B-and also defined the relation of creditors to the funds and securities in the possession of the First National Bank, and adjudicated the rights of the several creditors, recommending the distribution thereof, after paying the expense of the hearing, including the attorney's fees, special master's fees, and accountants' charges. Exceptions have been filed to the report of the special master in his definitions of status, and also to the burden of expense placed upon that fund. Objection is made to the conclusion of the special master by some of the claimants, in not returning the securities which have been placed with and are now in the possession of the First National Bank. It is asserted that the securities traced are always returned. Edwin G. Dobrin, of Seattle, Wash., for claimant Hack. George E. Mathieu, of Seattle, Wash., for claimants Whitney, Nelson, Horrigan, and Sussman. Farrell, Meier & Hess, of Seattle, Wash., for claimants Greening, Russell, and Huiskamp. E. C. Demoss, of Seattle, Wash., for claimant Krupp. 14 F. (2d) 877 Bullitt & Kahin, of Seattle, Wash., for testimony is voluminous, and has taken much claimant Logan Securities Co. time, and while this amount is much less than Geo. G. Hannan, of Seattle, Wash., for has been suggested by counsel, I think this claimant Hall. amount is ample. Daniel B. Trefethen, of Seattle, Wash., for claimant Patten. The matter is referred back to the referee to carry out the conclusions here announced Ned Roney, of Seattle, Wash., for claim- and to fix the fees of the accountant and exant Fuller. penses of the administration of the estate in the manner provided by law. Earl G. Rice and James Walter Redden, both of Seattle, Wash., for trustee. NETERER, District Judge (after stating the facts as above). [1] I think the master's report, in so far as it defined the status and allowed claims, should be affirmed. The legal status of the parties must be determined as of the time that the property came into legal custody, and from this status Greening, knowing of the custom to repledge securities, is rightfully placed in class A, as likewise Sussman, and all of the securities pledged by the bankrupt to the First National Bank should bear the same legal status, whether it was actually sold or not, and bear the pro rata burden with the securities sold. PACIFIC TELEPHONE & TELEGRAPH CO. No. 530. 1. Injunction 118(2). Complaint in suit to restrain city from taking possession of telephone property in its streets, pursuant to rights asserted under expired franchise, held to state a cause of action, good as against motion to dismiss. 2. Injunction 64-Telephone company's suit to restrain city from taking possession of property in its streets held within equity jurisdiction. Telephone company's suit to restrain city from taking possession of property in its jury and inadequacy of remedy at law. piration of franchise to enjoin city from taking As telephone company, suing before ex [2] Without further discussing any of the claims, I think the findings and conclusions of the special master should be approved, with the exception that these special funds should not be impressed with a lien for the expense of the special master's fees and compensation to the attorneys. In re Wilson (D. C.) 252 F. 631, at page 656; In re Toole (D. C.) 294 F. 975. In view of the condition of the estate and the claims which have been filed, I think it would be inequitable to charge the common fund with the expense of disclosing the status of these special claims. The claimants should have so presented the history and facts as to advise the trustee and special master as to the rights asserted; not Equitable jurisdiction is not lost because having done so, it was necessary to engage an legal remedy subsequently may become availaccountant for such able. This expense, purpose. I think, should be borne by these claimants, and should be made a charge against these special funds in proportion as the funds may bear to the expense. The attorney's fees and the special master's fees should be paid from the common fund. While suggestions have been made to the court in the argument on these exceptions and review, I do not think at this time the court should give expression as to attorney's fees to be allowed, other than to say that the Bankruptcy Act (Comp. St. §§ 9585-9656) specifically provides that only one attorney's fee can be allowed, irrespective of the number of attorneys employed. As to the special master's fees, I think $1,500 will amply compensate him for the services rendered. While the is determined as of time Jurisdiction 6. Evidence 25(2). Courts judicially know that city of Seattle not engage in business of telephone may 3. One of essential functions of equity is to anticipate and prevent injury, where damage would be irreparable. 8. Equity 44. To exclude a concurrent remedy in equity, a remedy at law must be complete, practical, and efficient, and meet the ends of justice. 9. Constitutional law 54-City cannot delegate judicial power to superintendent of public utilities to adjudicate title to telephone property in streets. City cannot delegate or impose judicial power to and on its superintendent of public Plaintiff seeks to enjoin the city from taking possession of, or attempting so to do, certain telephone properties held under city franchises. The plaintiff in substance alleges corporate capacity and relation and granting by the defendant city franchises over its streets, alleys, etc., to construct and maintain telephone poles, wires, etc., for a period of years, under Ordinance 4985 to the Sunset Telegraph & Telephone Company, and Ordinance 6498, to John S. McGroaty and George C. Blanker, assigned May 16, 1901, to the Independent Telephone Company; Ordinance No. 6498, among other things, providing: "The rights, privileges, and franchise herein granted shall continue to be in force for a period of 35 years from and after the date of its passage; if said poles, wires, and conduits, or any thereof, erected by said grantees, their successors or assigns, be not removed within a period of 3 months from and after the expiration of said 25 years, they shall become in that event the property of the city of Seattle'; Ordinance 7143, amending Ordinance 6498, and acceptance by the Independent Company, October 7, 1901; that on the 30th of January and March 9, 1912, the Independent Company assigned to the Sunset Company the franchise granted by Ordinance No. 6498, as amended; that on January 8, 1907, the Sunset Company sold and transferred to the plaintiff all of the properties owned by it in the city of Seattle, including the franchises granted by Ordinance 4985 and Ordinance 6498, as amended; that on the 3d of May, 1923, the plaintiff transferred to one F. H. Crosby the franchise granted by Ordinance 6498, as amended; that Ordinance No. 16081 of the defendant city requires a permit to do work under franchise, and provides how to be obtained and how issued, and designation of ordi nance under which permit is sought, and that ordinance 34508 fixes penalties for doing work upon public streets without permit; that application for permit to install property in the streets, etc., has to specify and designate the franchise under which applicant is operating. Plaintiff states that at no time between the 8th day of March, 1912, and the 9th day of May, 1923, did it apply for and obtain permit to install poles, wires, etc., under Ordinance 6498, as amended, but as the holder of the franchise under Ordinance 4985, and that at no time prior to October 3, 1924, did the defendant city demand that the plaintiff make application for permits under Ordinance 6498, as amended; that no property was installed by permit under Ordinance 6498, as amended, subsequent to March 9, 1912; that by the provisions of section 12, Ordinance 6498, and section 8, article 12, of the Constitution of the state, the property installed under the provisions of Ordinance 6498, as amended, by the Independent Company, will become the property of the defendant city, and "it is not the intention of the plaintiff herein to remove" the same. It is then alleged that on the 29th of March, 1926, the defendant, through its council, passed Ordinance No. 50715, by which the superintendent of public utilities is directed to seize, on April 21, 1926, not only the property installed by the Independent Telephone Company, a list of which is attached to the complaint, "but also all property installed by the plaintiff herein in the streets, alleys, and public highways of the city of Seattle between March 8, 1912, and January 21, 1926," and that, unless restrained, the said superintendent will take possession of all poles, wires, conduits, etc., and deprive this plaintiff of their possession and use, to its great and irreparable damage; that the portions of Ordinance 50715, asserting title to all poles, etc., of the plaintiff, contravene article 5 and the Fourteenth Amendment to the Constitution, and are depriving the plaintiff of its property without due process of law. Ordinance 50715, section 1, provides: "That the city of Seattle does hereby assert title to any and all poles, wires, and conduits of the Pacific Telephone & Telegraph Company, located in the public streets, the ownership of which accrues to the city under section 12 of Ordinance No. 6498, as amended; if not removed therefrom within a period of three months from and after January 21, 1926, that the superintendent of public utilities be, and he is . 14 F. (2d) 877 hereby, authorized and directed to take trespasser, may not invoke equity jurisdictimely possession and hold the tion. This action was begun before Ordisame, subject to the further order of the nance No. 6498 expired by limitation. council: Provided, however, that Plaintiff, therefore, was not a trespasser at if said the Pacific Telephone & Telegraph the inception of this suit (see, also, Doherty Company has so commingled and confused & Co. v. Toledo Ry. & L. Co. [D. C.] 254 F. the franchise property in the streets that 597), and the jurisdiction is determined as it is impossible to segregate from the bal- of the time the suit was commenced (Dawance of said property the poles, wires, and son v. Distilleries Co., 255 U. S. 288, 41 S. conduits placed in the streets by the prede- Ct. 272, 65 L. Ed. 638). Nor is equitable cessors in interest of said company while jurisdiction lost because a legal remedy subowning the franchise granted by said Ordi- sequently may have become available. nance 6498, as amended, and by said com- Clark v. Wooster, 119 U. S. 322, 7 S. Ct. 217, pany itself from and after the acquisition 30 L. Ed. 392; Busch v. Jones, 184 U. S. of said franchise and up to and including 598, 22 S. Ct. 511, 46 L. Ed. 707. January 21, 1926, then, in such event, said [6] The court judicially knows that the superintendent of public utilities be, and defendant city may not engage in the busihe is hereby, authorized and directed to ness of telephone service; that there is no take possession of all poles ⚫ plac- concern capable of rendering efficient, or .ed in the streets on or prior to January 21, any, telephone service in the city, and that 1926. to qualify for such service would require an expenditure of large sums of money and much time in the placing of equipment; that the property in issue is an integral part of the telephone system of the plaintiff throughout the state, and to be deprived of its use, would prevent efficient service and destroy the revenues not only local, but long The defendant has moved to dismiss, because insufficient facts are stated, and has also filed a motion to transfer the cause to the law side of the court. Chadwick, McMicken, Ramsey & Rupp, of Seattle, Wash., and Pillsbury, Madison & Sutro, of San Francisco, Cal., for plain NETERER, District Judge (after stating the facts as above). [1] The motion to dismiss must be denied. Some cause of action is, I think, stated. [2] Has equity jurisdiction, or has the plaintiff a speedy and adequate remedy at law? The property in the streets of the defendant city may be classified as installed (1) by the Independent Company prior to March 9, 1912; (2) by the Sunset Company prior to January 9, 1907; (3) by the plaintiff company between March 8, 1912, and July, 1923, under the Sunset franchise; (4) by the plaintiff company since July, 1923, under temporary permits. The plaintiff admits that all property installed by the Independent Company, remaining on the streets of the defendant on April 21, 1926, became on that date the property of the defendant (a list of the property is attached to the bill of complaint). [3-5] The city contends that, all franchises having expired, the plaintiff is now a trespasser upon the streets of the city, and that it has an adequate remedy at law for damages accruing, and that the plaintiff, being a distance as well. [7] One of the essential functions of equity is to anticipate and prevent injury where the damage would be irreparable or inadequate. Vicksburg Waterworks v. Vicksburg, 185 U. S. 65, at page 82, 22 S. Ct. 585, 46 L. Ed. 808. An order directing the seizure, and consequent disruption of the plaintiff's business, where damages are uncertain and injury irreparable, will awaken the conscience of the chancellor. North v. Peters, 138 U. S. 271, 11 S. Ct. 346, 34 L. Ed. 936. See, also, United States v. Bernard, 202 F. 728, 121 C. C. A. 190. [8] Equity will not give relief where a plain and adequate remedy at law exists, but how could law compensate for the grievances of which the plaintiff complains, if consummated. Watson v. Sutherland, 5 Wall. 74, 18 L. Ed. 580. In order to exclude a concurrent remedy in equity, the remedy at law must be complete, practical, efficient, and meet the ends of justice. Stephens v. Ohio State Telephone Co. (D. C.) 240 F. 759; Walla Walla v. Walla Walla Water Co., 172 U. S. 1, 19 S. Ct. 77, 43 L. Ed. 341; Davis v. Wakelee, 156 U. S. 680, at page 688, 15 S. Ct. 555, 39 L. Ed. 578. See, also, Castle Creek W. Co. v. City of Aspen, 146 F. 8, 76 C. C. A. 516, 8 Ann. Cas. 660; Destructor Co. v. City of Atlanta (D. C.) 219 F. 996. |