to prevent the cars from running over them while they were at work in the smoke and darkness upon the track. They all knew that a notice by a furnaceman to the carman that men were working upon the track to clear the hopper had caused the car to stop in the past until the work was done. They inferred, and the deduction was natural and reasonable, that the same cause would again produce the same effect. The furnaceman, in order to induce the servants to proceed with the work, promised to notify the carman to stop the car, and that they were at work upon the track, and the workmen, in reliance upon this agreement, returned to their task, and the plaintiff was injured. The promise of the furnaceman was necessary to accomplish the work of the master intrusted to him. He made it. He was engaged in the service of his employer to secure the performance of that work, and it had that effect. There is therefore no escape from the conclusion that it was within both the apparent and the actual scope of the agency of the furnaceman, and there was no error in the refusal of the court to direct a verdict for the defendant. Amato v. Northern Pacific R. Co. (C. C.) 46 Fed. 561; Bradley v. New York Central R. Co., 62 N. Y. 99, 104. The judgment below is affirmed.

TILLAMOOK WATER CO. v. TILLAMOOK CITY et al.

(Circuit Court of Appeals, Ninth Circuit. October 22, 1906.)

No. 1,315.

WATERS AND WATER COURSES-CONTRACT BETWEEN CITY AND WATER COMPANY-CONSTRUCTION.

A contract between a city and a water company, by which the latter is granted a franchise to lay mains and pipes in the streets and is to furnish water to the city and its inhabitants for a term of years, but which contains no provision that the grant shall be exclusive, or that the city will not construct waterworks of its own, does not by implication bind the city not to do so, and is not violated by the city by the construction of a competing plant.

Appeal from the Circuit Court of the United States for the District of Oregon.

For opinion below, see 139 Fed. 405.

W. H. Holmes, for appellant.

Claude Thayer, for appellees.

Before ROSS and MORROW, Circuit Judges, and De HAVEN, District Judge.

ROSS, Circuit Judge. The court below sustained a demurrer to the bill, and, the complainant declining to amend, judgment followed dismissing the bill at the complainant's cost. The appeal is from that judgment, so that the sole question presented is as to the sufficiency of the bill. The suit was brought by the Tillamook Water Company against Tillamook City, a municipal corporation of the state of Oregon, its mayor, recorder, treasurer, and councilmen, and against a board

of water commissioners appointed by virtue of a statute of the state to enable the city to provide a water system of its own. The alleged ground of the suit is that the city had previously entered into a contract with the complainant's predecessor in interest, one Orchard, by which he was authorized to supply the city and its inhabitants with water for municipal and other uses for a period of 30 years, and to lay and maintain in the streets and alleys of the city water mains, pipes, and connections for that purpose. The contract specified the time in which Orchard was to commence the work, and within which he should commence to furnish water. It provided for the construction of certain specific mains, and provided that other mains and pipes should be constructed when there should be four consumers who would take water upon certain specified terms. It provided that water should be furnished to consumers at rates not exceeding those specified, and for the attaching of hydrants to certain described mains by the city, and that the city should be entitled to water for fire and municipal purposes free of charge, except that for three years from the time the water should be first furnished the city should pay the sum of $40 per month for its use, and should "have the option of so continuing to receive water at the same rate after the expiration of three years. The contract also provided that, for each hydrant located upon the mains "constructed elsewhere than on the main line along First street, and the branches along blocks 2, 8 and 4 of the city," Orchard should be "entitled to extra pay as may in the future be agreed upon, not to exceed, however, the sum of $2.50 per month for each hydrant." The contract further provided that if, at any time after the expiration of four years from its date, the city should desire to purchase the plant with its privileges, easements, and property of every kind, it should have the option to do so by paying to Orchard or his successors in interest "a sum of money amounting to ten times the net proceeds derived by the party of the second part from the sale of water during the year ending with the exercise of this option by the party of the first part, after deducing (deducting) the running expenses for said year. That is to say, from the gross proceeds of the year previous to the purchase there shall be deducted the expenses of the company for operating the water line, the remainder so obtained shall be multiplied by ten, and the product so obtained shall be the sum which the party of the first part is to pay as purchase price. Said sale is not to include any machinery or appliances for the manufacturing of pipe."

The bill shows that, immediately after the execution of this contract, Orchard and his associates commenced the construction of the works contemplated and provided for, and expended, in carrying out the terms of the contract, more than $15,000, and after the completion thereof conveyed all of their rights to the complainant corporation. It is alleged that the city paid to the complainant $40 a month for the use of its water during the four years mentioned in the contract, and that after the expiration of the period the city "elected to continue the contract and exercise the option mentioned therein," however, with the understanding that thereafter it should pay only $30 per month for the use of water furnished by the complainant, instead of $40 per month,

as before expressed. It is alleged that the city and its inhabitants are being supplied with water by the complainant, as provided for in the contract, at a large profit to the complainant and its stockholders, and that the value of the complainant's said property is more than $14,000. The bill further alleges that the city, by virtue of an ordinance of the city and an act of the Legislature of the state, which are specifically referred to, is proceeding to establish a water system of its own for the purpose of supplying the city and its inhabitants with water from another source than that of the complainant, the result of which will render the complainant's said property entirely valueless, which action on the part of the city, and which legislation of the state authorizing such action, it is alleged in the bill are in violation of the complainant's contract. The purpose of the suit was to enjoin this alleged

wrong.

The plain and complete answer to the appellant's contention is that, by the contract upon which it relies, the city did not agree not to establish a water system of its own for the supplying of the city and its inhabitants with water. Not only is there no express agreement to that effect, but there is not a word or a syllable in the contract even tending in that direction; and, even if there was, the law is that a municipality cannot exclude itself from competition in such a matter by mere implication, for "we are to remember," said the Supreme Court, in the very recent case of Vicksburg v. Vicksburg Water Co., United States Supreme Court Advance Sheets, July 1, 1906, 26 Sup. Ct. 660, "the well-established rule in this court which requires grants of franchises and special privileges to be most strongly construed in favor of the public, and that, where the privilege claimed is doubtful, nothing is to be taken by mere implication as against public rights. This rule has been applied to a series of contracts in waterworks and land cases, and we have no disposition to detract from its force and effect, and, unless the city has excluded itself in plain and explicit terms from competition with the waterworks company during the period of its contract, it cannot be held to have done so by mere implication."

There is not in the contract here in question any exclusive privilege granted to the predecessor in interest of the complainant, even as against any other individual, company, or corporation. The case above cited, and those of Helena Waterworks v. Helena, 195 U. S. 383, 25 Sup. Ct. 40, 49 L. Ed. 245; Joplin v. Light Co., 191 U. S. 150, 24 Sup. Ct. 43, 48 L. Ed. 127; Škaneateles Water Company v. Skaneateles, 184 U. S. 354, 22 Sup. Ct. 400, 46 L. Ed. 585; Bienville Water Supply Co. v. Mobile, 175 U. S. 109, 20 Sup. Ct. 40, 44 L. Ed. 92; and Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685, 17 Sup. Ct. 718, 41 L. Ed. 1165-are conclusive against the appellant, and leave nothing more to be said.

The judgment is affirmed.

MORROW, Circuit Judge, took no part in this decision.

In re SPALDING.

(Circuit Court of Appeals, Second Circuit. November 24, 1906.)

No. 50.

BANKRUPTCY-RECEIVERSHIP-BOND FOR COSTS-LIABILITIES.

Bankr. Act July 1, 1898, c. 541, 30 Stat. 547, § 3e [U. S. Comp. St. 1901, p. 3423], requiring petitioners in an involuntary proceeding, where application is made to take charge of the property of the alleged bankrupt pending the hearing, to give a bond to the respondent conditioned, in case the petition is dismissed, for the payment of all costs, expenses, and damages occasioned by such seizure and detention, and providing that in case of such dismissal or the withdrawal of the petition the respondent or respondents shall be allowed all such costs, damages, etc., is to be construed together, and the only liability for such costs is upon the bond, which runs only in favor of the respondent or respondents who were such when it was given; any persons subsequently becoming respondents, if they desire to be protected, being required to move for an additional bond. Petition for Review of Proceedings of the District Court of the United States for the Southern District of New York, in Bankruptcy. The following is the opinion of HOLT, District Judge:

I am unable to concur with the claim of counsel for W & J. Sloane, that section 3e of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 547 [U. S. Comp. St. 1901, p. 3423]), contains two separate provisions; one embodying a liability on the part of the obligors in such bond, and one upon the petitioning creditors irrespective of the bond. I think that section 3e of the Bankruptcy Act, July 1, 1898, c. 541, 30 Stat. 547 [U. S. Comp. St. 1901, p. 3423], creates only a liability under the bond.

The argument that the second paragraph creates a different liability from the first seems to me untenable. The fact that the second paragraph provides that all costs, etc., shall be allowed is based upon the assumption that a bond will be taken large enough to cover all costs. The fact that the second paragraph provides for counsel fees is immaterial. Counsel fees are merely an amplification of the term "costs, expenses, and damages," as used in the first paragraph, and would have been included in the same language in the second paragraph if the term "counsel fees" had been omitted. The use, in the second paragraph, of the term "the respondent or respondents" refers to those who were such when the bond was given. Any persons subsequently becoming respondents, who wish to be protected, can move for a new bond. The fact that the first paragraph provides only for a case where the petition is dismissed, while the second paragraph provides also for a case where it is withdrawn by the petitioner, seems to me immaterial. A petition cannot be withdrawn by the petitioner without an order of the court dismissing it. I think that the whole section is to be construed together, and that the concluding words of the second paragraph, providing that the costs, etc., authorized by it shall be paid by the obligors in such bond, conclusively show that that is the correct construction. I entirely concur with the general reasoning of the referee in his report that, as the bond did not provide for an indemnity to W. & J. Sloane, they cannot collect any costs under section 3e, and that, in fact, there was no seizure, taking, or detention of the property of the bankrupt by the receiver in bankruptcy, but as such property remained in the custody of the receiver appointed in the state court no damage was caused to W. & J. Sloane, or to any one else, by any seizure or detention of the property by the receiver. I do not understand that the question is involved, upon the referee's report, whether W. & J. Sloane, as respondents, are entitled to the ordinary trial costs and disbursements as the successful party in the litigation.

The referee's report is confirmed.

Selden Bacon, for petitioner.

E. J. Myers, for respondent.

Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

PER CURIAM. Order affirmed on opinion of Judge HOLT.

MARSH v. CORTIS.

(Circuit Court of Appeals, First Circuit. January 23, 1907.)

No. 680.

CANCELLATION OF INSTRUMENTS-FRAUD-MEASURE OF PROOF REQUIRED. The rule applied that on a bill in equity for the cancellation of an instrument on the ground of fraud, the complainant cannot ordinarily maintain his case by his own testimony alone, or by a mere preponderance of evidence, but must satisfy the court that he is entitled to the relief asked. [Ed. Note. For cases in point, see Cent. Dig. vol. 8, Cancellation of Instruments, §§ 102, 103.]

Appeal from the Circuit Court of the United States for the District of Massachusetts.

For opinion below, see 144 Fed. 132.

Frederick N. Wier and George A. Sanderson, for appellant.
Robert W. Light, for appellee.

Before PUTNAM and LOWELL, Circuit Judges, and ALDRICH, District Judge.

PER CURIAM. The court is content with the conclusions reached by the Circuit Court and the reasons given therefor by the learned judge of that court. We may, however, properly refer to the wellknown rules that, on a bill in equity of this class, the complainant cannot ordinarily maintain his case by his own testimony, or by mere preponderance of proofs, and that he cannot have relief unless he satisfies the court that he is entitled to it. This complainant fails in all these respects.

The decree of the Circuit Court is affirmed, and the appellee recovers his costs of appeal.

UNITED STATES v. GUEST.

(Circuit Court of Appeals, Fourth Circuit. December 14, 1906.)

On rehearing. Affirmed.

No. 610.

For former opinion, see 74 C. C. A. 590, 143 Fed. 456.

Thomas W. Bacot, Asst. U. S. Atty.

Before GOFF and PRITCHARD, Circuit Judges, and WADDILL, District Judge.