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George J. Shaffer, of Pittsburgh, Pa., for plaintiff in error.

Charles H. Kline and C. A. Waldschmidt, both of Pittsburgh, Pa., for defendant in error.

Before BUFFINGTON, McPHERSON, and WOOLLEY, Circuit Judges.

PER CURIAM. This was an action for damages for false imprisonment. The case was heard in the court below on the pleadings alone, and a judgment was entered thereon in favor of the defendant. The questions involved concern the police powers of a large municipality in times of widespread disorder. Without, at present, expressing any opinion whatever on the important and far-reaching questions discussed by counsel, we are of opinion the case could be far more intelligently and wisely disposed of by this court when the evidence has been heard and is before us.

Without, therefore, indicating any view upon the subject, and solely with

view of having the light of the proofs to hereafter aid us, we reverse this judgment, and remand the cause to the court below for the further procedure indicated; the costs in this court to await the further order of this court on the final disposition of the cause.

VAN CHOATE V. GENERAL ELECTRIC CO.

(District Court, D. Massachusetts. March 13, 1917.)

No. 7.

1. COURTS C363-FEDERAL COURTS-SURVIVAL OF ACTIONS-LAW GOVERN

ING.

There being no federal statute defining what causes of action survive, a cause of action arising under the common law or under the statute of a state is governed by the lex loci, and causes of action arising under the

laws of the United States by the principles of the common law. 2. ABATEMENT AND REVIVAL Cw57-SURVIVAL OF ACTIONS-ACTIONS FOR

PENALTIES.

Under Rev. St. § 4919 (Comp. St. 1916, § 9164), providing that damages for the infringement of any patent may be recovered by action on the case, and that the court may enter judgment for any sum above the amount found by the verdict as the actual damages, according to the circumstances of the case, not exceeding three times the amount of the verdict, the additional compensation given by the statute has no relation to the infringer's profits, but is based solely on the patentee's damages, and is therefore in the nature of a penalty, and the claim does not survive;

causes of actions for penalties not surviving at common law. 3. ABATEMENT AND REVIVAL 57--SURVIVAL OF ACTIONS--STATUTORY AC

TIONS.

A claim for actual damages for the infringement of a patent, under Rev. St. Š 4919 (Comp. St. 1916, § 9161), does not survive the death of the patentee. At Law. Action by one Van Choate against the General Electric Company. On motion by Georgiana C. Van Choate, administratrix, for leave to appear and prosecute the action. Motion disallowed.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

S. A. Fuller, W. E. Bowden, Linville H. Wardwell, and Nason & Proctor, all of Boston, Mass., for plaintiff.

Robert T. Herrick, for defendant.

MORTON, District Judge. This is an action of tort to recover damages for infringement of the plaintiff's patent, "together with such additional amount, not exceeding in the whole three times the amount of such actual damage, as to this honorable court may seem meet and just under the circumstances.” It is brought under Rev. St. $ 4919 (Comp. St. 1916, § 9464), and is an "action on the case" within that statute.

Several motions were made to amend the declaration. One of them was heard and disallowed by Judge Lowell on February 26, 1907. No action appears to have been taken on the others. The case stands on the original declaration, filed on July 22, 1903, and on the original answer, filed December 26, 1907, which begins with a plea of not guilty. On March 29, 1910, the plaintiff died. Georgiana C. Van Choate, representing herself to be his administratrix, has filed a suggestion of his death, and has moved for leave to appear and prosecute the action. The motion is resisted, upon the ground that the cause of action did not survive, and that the action abated on the death of the plaintiff,

[1] There is no United States statute defining what causes of action survive. Rev. St. $ 955 (Comp. St. 1916, § 1592), provides only that, “in case the cause of action survives by law,” the representative of the deceased party may come in. What those causes are is left to be determined by state statutes when those are applicable, and by common law when they are not.

Where the cause of action arises under the common law or under the statute of a state, its survivorship is governed by the lex loci. Martin v. B. & O. R. R., 151 U. S. 673, 691, 14 Sup. Ct. 533, 38 L. Ed. 311; B. & O. R. R. Co. v. Joy, 173 U. S. 226, 19 Sup. Ct. 387,43 L. Ed. 677. In causes of action which arise solely under the laws of the United States, survivorship is determined according to the principles of the common law. Schreiber v. Sharpless, 110 U. S. 76, 3 Sup. Ct. 423, 28 L. Ed. 65. At common law, actions ex delicto did not survive, except in a few instances, in which the injured party had the right to waive the tort and sue in assumpsit. Patton v. Brady, Ex'x, 184 U. S. 608, 614, 22 Sup. Ct. 493, 46 L. Ed. 713; Phillips v. Homfray, 24 Ch. D. 439; U. S. v. Daniels, 6 How. 11, 12 L. Ed. 323. Actions for mere injuries not resulting in profit to the wrongdoer did not survive either his death or that of the injured party. Henshaw v. Miller, 17 How. 212, 219, 222, 15 L. Ed. 222. Penal actions, for obvious reasons, come within the class which are abated by death. Schreiber v. Sharpless, supra.

[2] The additional compensation mentioned by the statute has no relation to profits made by the infringer, but is based solely on damages sustained by the patentee. It may largely exceed any gains which the infringer actually made from his wrongdoing. It is therefore in the nature of a penalty, and the claim for it does not survive. F. Speidel Co. v. Barstow Co. (D. C. R. I.) 232 Fed. 618.

[3] But the plaintiff claims, not only the additional (or penal) compensation referred to, but also actual damages; and the two are evi

dently separable. If the action for such damages survives, the administratrix ought to be allowed to come in and prosecute, and the motion before me ought to be allowed. I rule that the claim for damages does not survive, and that no cause of action which survives the plaintiff's · death is stated in the declaration. Cases supra. I therefore disallow the motion of the administratrix for leave to appear and prosecute.

Motion disallowed.

INTERCONTINENTAL RUBBER CO. v. BOSTON & M. R. R.

(District Court, D. Massachusetts. February 26, 1917.)

No. 744.

1. RAILROADS 206_POWER OF DIRECTORS-PROCEEDINGS FOR RECEIVERSHIP.

The board of directors of a railroad company, with the approval of a majority of the stockholders, has power to initiate proceedings looking to a receivership, by procuring the filing of a bill by a bona fide creditor, the allegations of which are admitted for the company, and there is no impropriety in such proceeding, where the directors act in good faith, solely for the interests of the company, and in view of its duty to the public as

a common carrier. 2. RAILROADS Ow205—"INSOLVENCY"-RECEIVERS.

By "insolvency" of a railroad company is meant inability to meet its obligations as they mature in the ordinary course of business, and at the same time to carry on its business in a proper way, and perform its public duties.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Insolvency.] In Equity. Suit by the Intercontinental Rubber Company against the Boston & Maine Railroad. On application for appointment of permanent receiver. Granted.

Boyd B. Jones, of Boston, Mass., for plaintiff.
George L. Mayberry, of Boston, Mass., for defendant.

MORTON, District Judge. At the conclusion of the hearing I orally stated my findings of fact substantially as follows:

"There are but two issues which have been heard here. They have been very clearly outlined. The first is whether the receivership was brought about by fraud on the part of the board of directors as at present constituted. That issue was not raised by the interests represented by Mr. French; their contention being, as I understand it, less as to the facts than as to the law. It was raised by the minority interests, represented by Mr. Crooker, who have been allowed to present all relevant evidence upon that question which they desired to offer.

"It seems to me that the long hearing which we have been through has served one useful purpose. It must have satisfied everybody who followed the case that there is not the slightest foundation for the charges of fraud made against the present board of directors. It must be clear to everybody who has followed the evidence that the present board of directors has acted with integrity and ability, for the best interests of the Boston & Maine Railroad as they saw them. There is no necessity for further comment on the evidence on this point. That disposes of the first of the questions raised by the inter-ests represented by Mr. Crooker.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

"It follows that the answer admitting the allegations of the bill was not, as those petitioners to intervene allege, a fraudulent answer, made in bad faith, and not adequately representing or speaking for the interests of the corporation itself, but that it was an answer filed in good faith for the defendant corporation by its officers honestly acting for it. As such, if the officers acted within their authority, a question which I shall take up later, it is the act of the respondent corporation, and constitutes a sufficient and binding admission of the allegations in the bill of complaint. Those being established, it would follow that a receiver ought to be appointed, if the allegations in the bill are sufficient. They plainly are. Indeed, no question that they are not sufficient, when taken in connection with the answer, has been raised. The receivership ought, therefore, to be continued, and a receiver ought to be appointed for all purposes prayed for in the bill, if the respondent's officers and directors had power and authority to do what they did. The parties represented by Mr. French deny that the officers and directors had such power and authority, and desire to submit briefs. So I will not decide that question of law at present.

“I decide now that there is no evidence warranting any finding of fraud, or bad faith, or any imputation of that sort, against the present board of directors, and that their acts, so far as they had the power and authority, are binding upon the Boston & Maine Railroad.

[2] "As to the other question which has been heard before me, viz, whether the respondent is insolvent, the finding which I have just made, that the answer is valid, establishes the allegations of insolvency in the bill, along with its other allegations. However, as the petitioner Green was allowed to present and did present a great deal of evidence upon this point, I may say that I think it clear that the property of the Boston & Maine Railroad, at a fair valuation, largely exceeds its debts. Indeed, no contention to the contrary is made. Speaking in the bankruptcy sense, the road is plainly not insolvent. But we are not dealing with insolvency here in that sense. What we mean by "insolvency" in this proceeding is the road's inability to meet its obligations as they mature in the ordinary course of business, and at the same time to carry on its business in a proper way and perform its public duties. This involves an examination of its salable assets (meaning those which could be sold without impairing its ability to carry on its business) and its borrowing power. The salable assets were by no means sufficient to provide for its maturing indebtedness. That could have been done only by borrowing.

“The evidence discloses differences of opinion about the respondent's borrowing capacity. As to whether the notes could have been again extended by a united effort, I think there is fair ground for difference of opinion. We have, however, the unanimous, deliberate judgment of the board of directors, concurred in by such financial men as they consulted, that it was not possible for the road to renew the notes in any satisfactory way, and that, if it did renew them, it would be simply temporizing with a situation which needed permanent relief. Upon that question I think that the honest judgment of the men in charge of the property is entitled to greater weight than the contrary opinion, expressed by persons not charged with any responsibility to make their forecast good. I think and I find—that the allegations of insolvency in the bill are established, not only by the admission in the answer, but by the decided weight of the evidence.

"I will hold the case upon this question of law, whether the directors had the right and authority to do what they did in bringing about the receivership, which, as I understand it, is the question on which Mr. French desires to be heard. Upon that question the effect of the ratification by the stockholders and any other significant facts will be considered."

Those findings disposed of the disputed questions of fact. In connection with the law questions raised by the petitioners Streeter and Lawrence, certain other facts as to which there was little or no dispute should be stated.

For a period of at least two years preceding the filing of this bill it had been generally recognized that the financial structure of the Boston & Maine was unsound, and its financial position somewhat precarious. A radical reorganization was believed to be necessary by most of the persons in interest. Efforts had been made to obtain legislation for that purpose in the northern New England states and in Massachusetts. During this period the corporation was carrying a large floating debt, evidenced by outstanding notes of comparatively short terms. From time to time various issues of these notes fell due and were extended by the holders at the request of the respondent. Payments on account of the principal were made from the sale or exchange of securities owned by the respondent, transactions which showed a substantial loss to it. An important consideration in obtaining from the note holders the necessary extensions of their notes had been the fact that the management of the Boston & Maine was actively engaged in the effort to reorganize it. Under date of February 11, 1916, the stockholders were informed, in substance, that if the reorganization plans failed a receivership would probably be necessary. In the early summer of 1916 it became certain that the legislation necessary to a reorganization could not be obtained in the immediate future. There had been some difficulty before that in getting extensions on the notes becoming due, and it had been impossible for the management to be certain, much in advance of the dates when the notes actually became payable, whether enough of them would be extended to enable the company to continue.

In order to be ready for ernergencies, a bill of complaint, praying for the appointment of receivers, had been prepared by counsel for the company in conference with Hon. Marcus P. Knowlton, the chairman of the federal trustees, and had lain in the files of the company. In August, 1916, this bill was taken from the files, the figures in it were brought up to date, and it was in other ways perfected and made ready for filing in court. The Intercontinental Rubber Company was requested to become complainant in the bill and to file it. It did so, upon the understanding that it would not be put to substantial expense by reason thereof. The request to the complainant was made with the knowledge and assent of the respondent's counsel, but no vote authorizing it was ever passed by the board of directors. The directors believed that a receivership was unavoidable, and those of them who were familiar with legal matters supposed that it would be brought about by a friendly suit filed in this court by a creditor residing outside of Massachusetts. The course taken was similar to that frequently, if not generally, adopted in receivership proceedings. It accords with the "silent practice of the court" (Illinois Central R. R. Co. v. Turrill, 110 U. S. 304, 4 Sup. Ct. 5, 28 L. Ed. 154), and was approved in the Metropolitan Railway Receivership Case, 208 U. S. 90, at page 110, 28 Sup. Ct. 219, 52 L. Ed. 403. It is objected to by the parties represented by Mr. French, but I see nothing to criticize in it. The directors of the respondent company unanimously voted that an answer be filed, admitting the allegations in the bill. The Rubber Company is a bona fide creditor of the respondent, as stated in the bill, upon notes held by it since 1913, which were not acquired

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