in this case of the cause of the fire by amending their petition. This amendment, after describing the realty suit and the judgment therein, continued as follows:

"Plaintiffs state that the parties to said cause in said state courts are identically the same as the parties in this cause, but that said two causes of action are distinct; that the same fire, and the cause thereof, and defendant's liability therefor, and the same facts and issues there involved, save and except the ownership and destruction of the machinery, tools, equipments aforesaid, and the amount of plaintiffs' damage resulting from such destruction thereof, are involved in the case here at bar; that said facts and issues, aside from the exception aforesaid, have become and are res adjudicata and binding upon the parties herein by reason of said proceedings in said state court, that court having then and there full, complete, and general jurisdiction in that behalf of said parties and of said cause of action so determined as aforesaid; and that said defendant is by reason of the premises estopped to deny or in any manner controvert any of said facts and issues so determined as aforesaid in said state court, both of said causes of action depending upon identically the same evidence and proof, save as to the ownership of said tools, machinery, equipments, and materials and the amount of damages resulting from the destruction thereof."

To this petition defendant filed its demurrer upon five grounds, which may be summarized as insufficient statement of facts to constitute cause of action and split cause of action. This demurrer was sustained generally. Whereupon plaintiff filed a second amended petition, omitting all reference to the realty suit. To this petition defendant ultimately filed an amended answer, inter alia, pleading split cause of action, and, based upon the above demurrer ruling, res adjudicata. Plaintiffs replied, admitting filing and facts of realty suit, and saying:

"Admit that the parties to this cause are the same persons and corporation as the parties to the action for damage to the buildings tried in said Monroe court. But plaintiffs aver that they are suing herein in a different right, to wit, in joint right as equal copartners, from their several rights sued on in said other or appealed cause, and aver that this suit involves a different subject-matter, and involves as well a remedy which could not have been inIcluded in the other suit; and plaintiffs aver that said two causes of action are separate and distinct, that the said copartnership had no interest whatever in the subject-matter of said other suit, and that [his] suit involves certain issues not involved in the other."

Sustaining the demurrer to the first amended petition had no further office nor effect than declaring that pleading insufficient to support a cause of action. It left plaintiffs free to attempt another statement of their case. The ruling was not binding upon the trial court, and might have been departed from by it. In fact, if the basis of this ruling was split cause of action, it was so departed from, for the court refused to sustain a later motion for judgment on the pleadings as finally made up, although such motion and pleadings clearly presented the identical point. The demurrer ruling possessed none of these attributes of finality characterizing res adjudicata. Our conclusion is that there was no binding determination in the lower court that this suit was barred, because a single cause of action had been split, and that there was no such splitting of action.

[3] (b) Plaintiff in error urges that the record contains no substantial evidence that the fire was started by a locomotive, or that a loco

motive passed the burned property near enough the time the fire was discovered to have been the cause thereof. A careful examination of a voluminous record reveals a decided conflict in the testimony upon those points. The jury would have been amply justified in finding in favor of defendant, but we cannot say that there was not substantial testimony to the contrary.

The judgment is affirmed.

C. B. NORTON JEWELRY CO. v. HINDS.

In re JONES.

(Circuit Court of Appeals, Eighth Circuit. September 5, 1917.)

Where it was apparent from the first that a sale by the trustee in bankruptcy of chattels held by the bankrupt subject to a mortgage would result in no balance over the lien for the benefit of the general estate, but would only foreclose the lien, the trustee is not entitled to commissions and expenses for making a sale of the property, though the mortgagee consented.

Under Bankruptcy Act July 1, 1898, c. 541, 30 Stat. 544, as amended by Act June 25, 1910, c. 412, 36 Stat. 838, which permits commissions to trustees on all moneys turned over to any person, including lienholders, a trustee in bankruptcy who sells chattels subject to a mortgage is not, where it was apparent that no surplus would result to the general estate, entitled to commissions, for it was not his duty to foreclose the mortgage, and the statute obviously was not intended to allow commissions in such case.

Where a receiver in bankruptcy took possession of chattels subject to a mortgage, the amount of which exceeded their value, and the property was subsequently disposed of by the trustee, the trustee is entitled to allowances for taxes paid thereon and expenditures in preserving the property, for the receiver properly took possession of the property until the validity of the lien could be determined.

Petition to Revise Order of the District Court of the United States for the Eastern District of Oklahoma; Ralph E. Campbell, Judge. In the matter of the bankruptcy of C. L. Jones. Petition by the C. B. Norton Jewelry Company to revise an order of the District Court authorizing allowances to K. F. Hinds, trustee in bankruptcy, from the proceeds of the sale by the trustee of property covered by petitioner's mortgage. Order revised and modified.

Samuel Feller, of Kansas City, Mo., for petitioner.

William Hatch Davis, of Muskogee, Okl., for respondent.
Before HOOK, SMITH, and STONE, Circuit Judges.

STONE, Circuit Judge. This case arises on a petition by a valid chattel mortgage lien creditor of a voluntary bankrupt to revise an order of the District Court permitting the proceeds from the sale by the

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trustee of property covered by the mortgage to be reduced by certain allowances in connection with the care and disposition of that property and with the general administration of the estate.

The undisputed facts are that the petitioner herein was the holder of a valid chattel mortgage, executed long prior to the adjudication in bankruptcy and covering certain fixtures and stock in a retail jewelry store; that in the schedule filed by the bankrupt were set forth the existence of this chattel mortgage, the amount of the then existing indebtedness thereunder, which was more than $2,000, and the estimated value of the security, which was placed at $1,500; that the bankruptcy petition was filed January 5, 1915; that January 22, 1915, the respondent was appointed receiver of the property; that February 3d a receiver's sale was ordered to be made, and was made February 12th; that February 13th, at the first meeting of the creditors, the respondent was elected and qualified as trustee; that upon that date this petitioner filed a petition of intervention, claiming the mortgaged property, and the earlier sale was set aside; that with full knowledge and consent of this petitioner a resale was made by the trustee on March 1, 1915, free from the claim of this lien.

The petitioner claims that it is entitled to the entire proceeds, $655, of the trustee's sale. The claim of the respondent, allowed by the order of the District Court, was that this amount should be reduced by $217.18. This latter sum was made up of three classes of items: Balance (after exhausting all other assets) of $94.93, expenses in administering the bankrupt estate; commission of $17.30, allowed the trustee on the sum ordered paid over to this petitioner; expenditures of $104.95, in connection with the preservation and care of the chattels covered by the mortgage, composed of $12.35 expenses of the receiver, $30 compensation of the receiver, and $62.60 taxes.

[1] The controversy is over the propriety of the allowance of the above items. In so far as the allowance for general expenses in the administration of the estate and for commission to the trustee are concerned, the case of In re Harralson, 179 Fed. 490, 103 C. C. A. 70, 29 L. R. A. (N. S.) 737, decided in this court, is controlling. In that case the court refused to allow for commissions and expenses of a trustee in making sale of mortgaged property, deciding in effect that, as it was apparent from the first that there would be no balance over the lien for the benefit of the general estate, the bankruptcy official should not, as such, have taken steps which could have but the single result of enforcing the lien with no benefit to the estate. To the insistence of counsel that the present case is distinguishable upon the ground that the sale was here consented to, it may be said that in the Harralson Case the sale was in accordance with a stipulation and petition in which the claimant joined.

[2] Nor was, as urged by respondent, the amendment of 1910 (36 Stat. 838, 840), which permits commissions to trustees on all moneys turned over to any person, including lienholders, intended to cover payment of proceeds from sales of property which should not have been disposed of by the trustee, but should have been turned over to the lienholder. The principle which denied repayment of actual expenses

incurred by the trustee in sale of the lien property in the Harralson Case was that it was no part of the duty of the trustee to sell the lien property, with or without the consent of the lienholder, when there could be no benefit to the estate. When he acted outside the scope of his office, he could not make any claim at all as a trustee. We think the reasoning of that case sound, and do not believe Congress intended by the 1910 amendment to permit trustees to charge a compensation for performing acts outside their duties as such.

[3] It was found to be necessary for the preservation of this property that a receiver be appointed to take charge of it before the selection of a trustee. Under the circumstances this was a proper step until the validity of the lien revealed in the bankrupt's schedule could be properly determined. It was as much for the benefit of the mortgagee as for that of the bankrupt's general estate. Expenditures necessitated by such receivership do not come within the decision or reasoning of the Harralson Case, and should be allowed. They here consist of compensation of the receiver, $30, and expenses, such as invoicing, appraising, and incidentals in connection with the receivership, amounting to $12.35. Both of these sums, under the meager evidence, seem proper in amount. To this should be added $62.60 taxes paid on this particular property.

Our conclusion is that the order should be revised, to the effect that the trustee be directed to pay over to the petitioner the sum of $550.05, which is the sale proceeds less the above receivership items and taxes; and it is so ordered.

CONTINENTAL GIN CO. v. STOCKER et al.

(Circuit Court of Appeals, Eighth Circuit. July 23, 1917.)

No. 4867.

PRINCIPAL AND SURETY 161-ACTION ON NOTES-DEFENSES BY SURETY. Evidence held insufficient to sustain the defense by sureties on promissory notes that the payee agreed to apply the proceeds of a mortgage given by the principal, if sold on foreclosure, on such notes, in preference to other notes of the series.

In Error to the District Court of the United States for the Eastern District of Oklahoma; Martin J. Wade, Judge.

Action at law by the Continental Gin Company against W. D. Stocker and J. Oscar Howard. Judgment for defendants, and plaintiff brings error. Reversed.

For opinion of lower court, see 235 Fed. 1005.

J. L. Hull, of Muskogee, Okl. (N. A. Gibson and T. L. Gibson, both of Muskogee, Okl., on the brief), for plaintiff in error.

Malcolm E. Rosser, of Muskogee, Okl. (Geo. S. Ramsey, of Muskogee, Okl., and Edgar A. De Meules and Villard Martin, both of Tulsa, Okl., on the brief), for defendants in error.

Before SANBORN, CARLAND, and STONE, Circuit Judges.

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CARLAND, Circuit Judge. The Gin Company, hereafter called the plaintiff, sued Stocker and Howard, hereafter called defendants, on two promissory notes, dated September 6, 1911, for the sum of $1,550 each. The defendants pleaded in defense that the notes sued on were the first two of a series of four notes for the same amount given for the purchase price of a gin sold by the plaintiff to the Farmers' & Merchants' Gin Company of Stigler, Okl.; that defendants signed said notes as sureties only, and before said notes were signed one J. D. Ray, while acting as the agent of the plaintiff in making the sale of the gin, orally promised and agreed with the defendants that, in case default should be made in the payment of the notes given by the Farmers' & Merchants' Gin Company and the mortgage given to secure the purchase price of the gin should be foreclosed, the proceeds of the foreclosure sale would be first applied to the payment of the two notes sued upon in this action; that, notwithstanding this agreement, the mortgage given to the plaintiff by the Farmers' & Merchants' Gin Company upon the gin was foreclosed prior to the present suit, and all the proceeds of the sale applied upon the last two notes of the series of four which defendants did not sign. It was further alleged that the proceeds of the mortgage foreclosure would have fully satisfied the notes sued on in the present action, and therefore defendants prayed that the suit be dismissed. The case came on for trial, and, as the execution and delivery of the notes were admitted, the defendants assumed the burden of establishing their defense.

Evidence was introduced upon the question of whether any contract, as alleged, was ever made between the defendants and the plaintiff, through its agent, J. D. Ray, and upon the question as to whether said J. D. Ray had apparent authority from his principal to make the contract pleaded; it being conceded or undisputed that he had no actual authority to do so. It appeared from the evidence that the mortgage upon the gin had been foreclosed, and that the sum realized therefrom by the plaintiff after the payment of prior liens and costs was $2,713.30, which had been applied upon the two notes last becoming due in the series of four. Under the charge of the court the jury allowed this last-named sum as a credit upon the amount due upon the notes sued upon. The plaintiff sued out a writ of error from the judgment entered on the verdict.

Numerous errors have been assigned; but we have found it necessary to consider but one assignment of error, and that is the one which alleges that the court erred in refusing to direct a verdict for the plaintiff for the full amount due upon the notes. There is an interesting discussion of the validity and nature of such a contract as is pleaded in defense contained in the briefs of counsel, and also upon the question as to whether oral evidence was competent to vary the written contract of the parties entered into at the time of the purchase and sale of the gin.

A careful consideration of the evidence, however, has convinced us that there was not sufficient evidence of a contract, such as is pleaded by the defendants, to warrant the court in submitting that question to the jury. The following is all the evidence in the record bearing upon