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This he would have done at once when the money was paid. Furthermore, no agent or employé of the bank has been called to testify concerning the initial agreement; nor have the persons who executed the assignation for the bank, nor the witnesses thereto. Beyond even this, the agreement between Frank Waterhouse and Frank Waterhouse, Limited, in which company McNab was interested as a stockholder, has some bearing. By that agreement, the London indebtedness was to be taken care of, to the relief of the defendant. McNab was undoubtedly cognizant of this, and hence the direct inducement on his part to request Gill to pay the Frank Waterhouse, Limited, demand at the bank.

[1-3] In the light of all the circumstances and conditions attending the transactions, there can scarcely remain two opinions relative to whether Gill purchased the account of Frank Waterhouse, Limited, or so much of it as the Frank Waterhouse guaranty would pay, from the bank, or simply made payment to that amount upon the account. The most natural thing for men of business affairs to have done, if it were a purchase of the account, was to take an assignment of it at once, together with all the guaranties, and if it were not a purchase, simply to do as they did, pay the money, and let it be applied on the account, as was done. When, therefore, the money was paid, the account was satisfied to the extent of the payment, and a subsequent assignment by the bank could not revive it; and, of course, the account being satisfied, the guaranty was satisfied also, and Gill has his recourse only against McNab, at whose request he made the payment. The conclusion thus reached is borne out by the following analogous cases: Lee v. Field, 9 N. M. 435, 54 Pac. 873; Penwell v. Flickinger, 46 Mont. 526, 129 Pac, 323; Moran v. Abbey, 63 Cal. 56; Day v. Humphrey et al., 79 Ill. 452.

[4] But it is urged that the court should have submitted the case to the jury. If the court is satisfied, conceding all the inferences which the jury can justifiably draw from the testimony, that the evidence is insufficient to warrant a verdict, it is the duty of the court to withhold the case from them. Sloss Iron & Steel Co. v. South Carolina & G. R. Co., 85 Fed. 133, 29 C. C. A. 50.

The proposition has been stated in another way: That where the evidence as to material facts is contradictory, or where the facts are admitted or undisputed and are such that reasonable men can fairly draw opposite conclusions from them, the question is for the jury; but where there is no dispute about the facts, and they are such that but one conclusion can be fairly drawn from them by reasonable men, then the question is not for the jury. Northwestern Fuel Co. v. Danielson, 57 Fed. 915, 6 C. C. A. 636.

But the most common way of stating the proposition is that adopted by the Court of Appeals in this circuit, namely, that "the trial court may direct a verdict in any case where the evidence is of such conclusive character that the court, in the exercise of a sound judicial discretion, would be compelled to set aside a verdict returned in opposition to it.” Shoup v. Marks, 128 Fed. 32, 62 C. C. A. 540. See, also, Pat

ton v. Texas & Pacific Railway Co., 179 U. S. 658, 21 Sup. Ct. 275, 45 L. Ed. 361.

We think that, applying the rule under either statement, the trial court properly refused to submit the cause to the jury, and was right in directing a dismissal.

Exception was taken to the allowance of objections to the introduction of certain testimony on the ground that it was hearsay. This testimony is in line with certain of that upon which we have commented. In the view we have taken, it can have no practical effect whether the testimony objected to is in or out. The result must be the same in either event. It only emphasizes the state of mind of the trial court upon the subject, in which we concur. If it be conceded that there was error in rejecting the testimony, it was, in the light of the record, harmless.

Another assignment of error relates to the introduction of the agreement between Frank Waterhouse and Frank Waterhouse, Limited, touching the formation of the American company. This document was attached to cross-interrogatory No. 5 propounded to the witness McEwen, and was marked as an exhibit thereto, and went in as such. Although objection was made to the introduction of the paper, there was no ruling by the court, and no exceptions were saved.

The next assignments of error insisted upon relate to the rejection of a copy of the accounts between Frank Waterhouse, Limited, and the bank. Again, under the view which we have taken of the case, these accounts are rendered wholly immaterial; and, if error was committed in rejecting them, it was harmless.

Judgment affirmed.

KNUDSEN et al. v. FIRST TRUST & SAVINGS BANK et al.

(Circuit Court of Appeals, Ninth Circuit. August 20, 1917.)

No. 2878.

1. COURTS ww493(1)—JURISDICTION-CONCURRENT JURISDICTION.

Where the controversy is the same in actions pending in courts of concurrent jurisdiction and the parties are the same, ordinarily that court first acquiring jurisdiction will retain it to the exclusion of the other,

though possession of the res is not taken through a receiver or otherwise. 2. COURTS 493(3)—JURISDICTION-FEDERAL COURTS.

Pendency of an action in a state court is no bar to proceedings con.

cerning the same matter in a federal court having jurisdiction. 3. COURTS O 493(3) JURISDICTION--FEDERAL COURT.

Appellants, who purchased land from an irrigation company, filed in the state court an action wherein it was alleged that the irrigation company was the owner of large quantities of land ; that as an inducement to purchasers it represented to appellants and others that an irrigation system was to be formed; that water would be supplied and the rights maintained in perpetuity for an annual payment; that it collected the payment, but had not been paying the water charge for a large acreage; that it dissipated the funds arising from such payment, so that there was an immediate demand for the expenditure of a large sum of money For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

245 F.-6

for the restoration of the system; and that therefore appellants and other purchasers haò a first and prior lien on all of the assets of the company. Subsequently the company filed a voluntary petition in bankruptcy, and a trustee was appointed. Thereafter respondents filed a bill in the federal court to foreclose a trust deed given by the irrigation company, and a receiver was appointed. Held, that as the federal court first acquired possession of the irrigation company's property, it would, even though the state court had co-ordinate jurisdiction and appellants' suit therein

was the first filed, retain jurisdiction. 4. COURTS 493(3)—JURISDICTION—FEDERAL COURT,

As the issues in the two suits were different, that one in the federal court being the foreclosure of a trust deed, while the one in the state court was evidently designed for the maintenance of the irrigation company as a going concern and to require some sort of a readjustment so that purchasers of land might reap the benefits of their purchase, the federal court will retain jurisdiction, despite the prior institution of proceedings in the state court.

Appeal from the District Court of the United States for the District of Montana; Geo. M. Bourquin, Judge.

Suit by the First Trust & Savings Bank and another, trustees, against the Bitter Root Valley Irrigation Company and Hans B. Knudsen and another. From an order sustaining plaintiffs

' motion to strike a defense (237 Fed. 733), the last-named defendants appeal. Affirmed.

The appellees, who were the complainants below, on April 8, 1916, instituted a suit to foreclose a trust deed given by the Bitter Root Valley Irrigation Company upon its property, both then held and subsequently to be acquired, to secure the payment of a large amount of bonds.

The defendants and appellants here, Hans B. Knudsen and Caroline Knudsen, appearing made answer to the bill, in effect, that on June 24, 1915, they commenced an action in the District Court for the Fourth Judicial District of the state of Montana, county of Ravalli, against the Bitter Root Valley Irrigation Company, the First Trust and Savings Bank, and other persons and corporations interested in the affairs and property of the irrigation company, wherein it was alleged in effect that the irrigation company was the owner of large quantities of real property; that it had assumed the construction and operation of an irrigation district, comprising such real property; that as an inducement to purchase such lands from the company it had repre sented to plaintiffs therein and others that an irrigation system of 40,000 acres was to be formed, and that water therefor would be supplied and the rights therein maintained in perpetuity for the sum of $1.25 per acre, payable annually; and that, to the accomplishment of that end, it proposed to assess the irrigable lands the sum of $1.25 per acre, the money to be so realized to be used only for the upkeep of the system; and wherein it was further alleged that the irrigation company had contracted for the sale of 22,000 acres of said lands to a large number of persons and had been collecting from such purchasers for a number of years $1.25 per acre, but had not been paying the water charge for a large acreage that the company itself had been using and cultivating, nor had it been paying the water charge as it pertained to the unsold lands; that the said irrigation company had squandered and dissipated the funds arising from the $1.25 assessment, had failed to acquire water rights sufficient for the performance of its covenants to the purchasers, and had failed to maintain the system in proper condition for the service contemplated, and that, by reason thereof, there was an immediate demand for the expenditure of large sums of money for the restoration of the system, and for completing the same as originally contemplated by the scheme; that it was further alleged in said action that the irrigation company was insolvent, and unable to pay its obligations or to make needed repairs, or to complete the system, or to

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

replenish the wasted and squandered funds, "which constituted a trust fund

for the maintenance and upkeep of said system”; that it did not intend to carry out or perform further any of its covenants and obligations; that the plaintiff in said action, and others similarly situated, “had by virtue of the premises and by operation of law and equity a first and prior lien and claim upon all of the assets of every kind, character, and description of the Bitter Root Valley Irrigation Company," and that the lien created by the deed of trust of the bank and Boisot, trustee, is inferior in point of time and right to the lien claimed by the plaintiffs in said action; that it was alleged that it was necessary that said irrigation system be completed as contemplated, and that, to that end and to secure the enforcement of the lien claimed by the plaintiffs thereon, it was requisite that a receiver of the properties and assets of the company be appointed, and that receiver's certificates be issued, and that the assets of the company be marshaled and placed in the custody of the court for the purpose of completing the irrigation system. And it was further alleged by the answer that it appears from the complaint filed in that action that "it is probable or possible that at some stage of the litigation therein the appointment of a receiver will be necessary to accomplish the execution of the judgment and decree of said state court, and that the receiver so to be appointed must be one of the selection of said state court and subject alone to its jurisdiction;" that on January 3, 1916, the irrigation company filed its voluntary petition in bankruptcy, and on February 23 F. O. Webster was appointed trustee.

This same trustee in bankruptcy was appointed receiver by the District Court of the United States on the filing of the bill to foreclose complainants' deed of trust. The possession of the property went into the hands of the trustee, and is now held by the receiver,

The prayer of the answer was that the federal court proceed no further, but permit the suit pending therein to remain in statu quo, or that it proceed so far only as to determine the rights of the complainants against the irrigation company, but not with reference to any of the claimed rights of the answering defendants, and that the trustee in bankruptcy be required to enter an appearance in the suit in the state court.

A motion was interposed to strike the affirmative answer. This was allowed, and the defendants appeal.

R. F. Gaines, of Butte, Mont., D. S. Wegg, of Chicago, Ill., and Geo. T. Baggs, of Stevensville, Mont, for appellants.

Winston, Payne, Strawn & Shaw, of Chicago, Ill., and Henry C. Stiff, of Missoula, Mont. (Silas H. Strawn, Garrard B. Winston, and R. S. Tuthill, Jr., all of Chicago, Ill., of counsel), for appellees.

Before GILBERT and HUNT, Circuit Judges, and WOLVERTON, District Judge.

WOLVERTON, District Judge (after stating the facts as above). The central question presented by this appeal is whether, by the rules of law relating to conflicting jurisdiction of courts or by reason of the comity existing between the federal and state courts, the District Court of the United States ought to entertain and maintain jurisdiction through its receiver of the res, which is the property subject to the trust deed of complainants.

[1] Where the controversy is the same in actions pending in courts of concurrent jurisdiction, and the parties are the same, the general rule, supported by the weight of authority, seems to be that the court first acquiring jurisdiction of the controversy will retain it to the exclusion of the other, though possession of the res be not taken,

through a receiver or otherwise. In re Lasserot, 240 Fed. 325, --- C. C. A. —; Gluck & Becker on Receivers, 67, 68 (2d Ed. 89, 91), cited in Empire Trust Co. v. Brooks, 232 Fed. 641, 646, 146 C. C. A. 567.

[2] Nevertheless it is true that the pendency of an action in a state court is no bar to proceedings concerning the same matter in a federal court having jurisdiction. McClellan v. Carland, 217 U. S. 263, 30 Sup. Ct. 501, 54 L. Ed. 762.

[3] The possession of the res vests the court which has first acquired jurisdiction with the power to hear and determine all controversies relating thereto, and this to the exclusion of other courts of co-ordinate jurisdiction assuming to exercise like power. Farmers' Loan, etc., Co. v. Lake St. Rd. Co., 177 U. S. 51, 20 Sup. Ct. 564, 44 L. Ed. 667; Palmer v. Texas, 212 U. S. 118, 29 Sup. Ct. 230, 53 L. Ed. 435.

"Nor," says the court in the Farmers' Loan Company Case, supra, “is this rule restricted in its application to cases where property has been actually seized under judicial process before a second suit is instituted in another court, but it often applies as well where suits are brought to enforce liens against specific property, to marshal assets, administer trusts, or liquidate insolvent estates, and in suits of a similar nature where, in the progress of the litigation, the court may be compelled to assume the possession and control of the property to be affected. The rule has been declared to be of especial importance in its application to federal and state courts."

In this case the Farmers' Loan & Trust Company commenced its suit to foreclose in the federal court, on January 30, 1896, at 10:35 a. m. On the same day, but shortly after the bill had been filed, the Lake Street Elevated Railroad Company filed its bill to restrain and enjoin the loan company from prosecuting any suit to foreclose, and a writ of injunction was forthwith issued and served. It was held that the federal court first obtained jurisdiction of the res by reason of the filing of its bill, notwithstanding the injunction in the state court was first issued and served, the court saying:

"The bill filed in the federal court looked to the enforcement of the trusts declared in the mortgage, the control of the railroad through a receiver, the sale of the railroad, and the final distribution of the assets of the company."

The Palmer Case was a proceeding in the state court of Texas too forfeit a permit of the oil company to do business in that state. The receiver had been appointed and qualified, and process served, although he had not taken actual possession of the property, and it was held that the state court had acquired constructive possession of the res as against the propriety of the federal court assuming possession through a receiver appointed by it.

These cases are illustrative of the application of the doctrine stated in the above-quoted paragraph.

A case also quite apposite for illustration of the principle is McKinney v. Landon, 209 Fed. 300, 126 C. C. A. 226. The state of Kansas, through its Attorney General, instituted quo warranto proceedings against a group of gas companies, with prayer for ouster and the appointment of receivers to take charge of the property and business. Tho cause was tried in the state court, and taken under advisement.

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