art. deni STATE BANK & TRUST CO. v. UNITED STATES 16 F. (2d) 439 STATE BANK & TRUST CO. v. UNITED STATES et al. (Circuit Court of Appeals, Sixth Circuit. December 9, 1926.) No. 4586. 1. Courts 342-Action by guardian of illegitimate son of deceased soldier on war risk insurance policy, in which widow and legitimate children intervened, held properly cognizable in equity. Action by guardian of illegitimate son of deceased soldier to recover proceeds of war risk insurance policy, in which widow and legitimate children are permitted to intervene, held in effect a bill of interpleader, properly tried as a suit in equity. 2. Army and navy 512, New, vol. 12A Key-No. Series Rights under war risk insurance, as between illegitimate son of deceased soldier and widow and legitimate children, held determinable as other controversies between insurer and insured (War Risk Insurance Act [40 Stat. 409]). Rights to proceeds of war risk insurance policy, as between illegitimate son of deceased soldier and widow and legitimate children, held determinable as any other controversy between insurer and insured, in view of War Risk Insurance Act (40 Stat. 409). 3. Army and navy 512, New, vol. 12A KeyNo. Series-Illegitimacy of claimant held not material on question of right to proceeds of war risk insurance, in view of father's ex pressed acknowledgment (War Risk Insurance Act [40 Stat. 401]). Illegitimacy of claimant of proceeds to war risk insurance, held not material, in view of War Risk Insurance Act (40 Stat. 401), and father's expressed acknowledgment of claimant. 4. Bastards 4-Intervening widow and children held to have burden of proof that claimant of war risk insurance was not illegitimate son of insured. In action by guardian of illegitimate son of deceased soldier to recover proceeds of war risk insurance policy, intervening widow and legitimate children held to have burden of proof that claimant was not son of insured, in view of insured's expressed acknowledgment. 5. Army and navy 512, New, vol. 12A Key: No. Series-Costs ordinarily not awarded against United States may be allowed in action on war risk insurance policy, where bureau has fund to cover such expenses. Costs held recoverable by plaintiff in action on war risk insurance policy, if properly payable out of fund maintained by Bureau of War Risk Insurance, though costs are not ordinarily awarded for or against the United States. Appeal from the District Court of the United States for the Middle District of Tennessee; John J. Gore, Judge. Action by the State Bank & Trust Company, as guardian for Donald Light, a minor, against the United States and the Bureau of War Risk Insurance, in which cer 439 tain others intervened. From a decree for interveners, plaintiff appeals. Reversed. Charles H. Rutherford, of Nashville, Tenn. (K. T. McConnico, of Nashville, Tenn., on the brief), for appellant. H. B. Shofner and Norman Farrell, both of Nashville, Tenn. (A. V. McLane, U. S. Atty., of Nashville, Tenn., on the brief), for appellees. Before DENISON, DONAHUE, and MOORMAN, Circuit Judges. DENISON, Circuit Judge. This suit involves the beneficial interest under a war risk insurance policy, issued on the life of Donald O. Pons, who died in France while a private soldier in the American Expeditionary Force. The policy was payable to his estate, and hence he had the right by his will, and within the permitted limits of relationship, to name the beneficiary. His will, duly probated after contest, bequeathed this insurance to "Eva Light, to be held in trust for the care and education of her son Donald J. Light, who is my son." In due course, the Bureau of War Risk accepted this child as the proper beneficiary, and began specified monthly payments to the State Bank & Trust Company, the child's duly appointed guardian. After about 10 payments had been made, it was represented to the bureau, in behalf of the widow of the deceased soldier, that this child was not in truth his son, and therefore was not entitled to receive the payments. When the bureau declined to continue the payments, the guardian filed a bill upon the equity side of the court below, setting out the facts, and insisting that the child was the lawful beneficiary and praying a decree adjudging the liability of the government, represented by the Bureau of War Risk, to pay the remainder of this policy to the guardian, and praying also a decree for such sums as States and the bureau filed an answer, stating were matured and unpaid. The United the positions taken by both claimants to the fund, and that the bureau had concluded that this child was not the rightful beneficiary, and asking a decree that the guardian return the amounts already paid. Defendants also asked that their answer be treated as a cross-bill, so far as to entitle them to such a decree for repayment. The plaintiff answered the cross-bill, reiterating its claims. Shortly thereafter, the soldier's widow and three minor children filed in the case their petitions to intervene as claimants to this fund, so that they might file answers and have relief. Their petitions were granted, and they answered, adopting as their own the answer which had been filed by the origi- find no difficulty in treating the so-called bill nal defendants. of exceptions, with its statement that it contained the substance of all the evidence, as fully equivalent to a narrative statement of evidence settled in an equity case under rule 75. The case came on and was tried as an equity case in open court. After the judge had announced his opinion, which was in favor of the defendants and the interveners, the plaintiff moved for a rehearing, which motion was granted. Plaintiff then moved to transfer the case to the law side of the court, under the authority of Law v. U. S., 266 U. S. 494, 45 S. Ct. 175, 69 L. Ed. 401. This motion for transfer was granted. Later the court concluded that this was an error, set aside the order of transfer and the order granting a rehearing, and entered a decree in equity in accordance with the first announced opinion. The plaintiff has brought the case here by appeal, but with a record containing what is called a bill of exceptions, and which is certified to contain, in narrative form, all the evidence in the case. [1] Appellant's first contention is that the case was really one at law, and that it was entitled to have the case remain upon the law side of the court and be tried by a jury. In this respect we think the case is controlled by Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232. Whatever might have been the situation while the original bill and the answer presented only a controversy at law, the Liberty Oil Case teaches that, when the widow and children intervened and, by adopting existing answers, alleged that the funds belonged to them and then prayed general relief, the whole controversy became, in substance, a bill of interpleader. True, it lacks the customary elements that the stakeholder initiates the proceeding and is impartial; but we see no substantial difference, respecting the equitable jurisdiction, between a case where a stakeholder initiates the interpleader proceedings and one where he is at first made the defendant; indeed, the Liberty Oil Case is of the latter class. Nor does it seem to be material that the bureau did not expressly offer to pay the money into court or as the court might direct; to do so, in the existing situation, was its plain duty, and, if the pleadings had been more formal after the interveners were admitted, such a declaration by the bureau would have been most natural; its absence is an informality. Hence we conclude that the District Judge was wrong in his first action in transferring the case to the law side, and was right in his final conclusion that the controversy was, at that stage, a suit in equity. It follows that the proceeding in this court for review was to be taken by appeal, as it was; and we Upon the merits of the controversy, the case is unusual, in that the legal question as to placing the burden of proof is, in our judgment, determinative. There is an abundance of testimony on both sides, but most of it is thoroughly uncredible. Such proof as comes from apparently credible witnesses is not controlling, even if of any substantial importance on the direct issue. We interpret the opinion of the District Judge as indicating that he did not undertake to decide definitely which witnesses should be believed, but relied mainly upon the placing of the burden of proof, for he says: "I am of the opinion that the burden was upon the plaintiff to establish that fact, and it failed to do so." Some inferences as to where the burden should be are rested upon the idea that the soldier was here attempting "to defeat his legitimate children" of something that ought not to be taken from them. This reasoning assumes that such insurance as this is property, in the ordinary sense, which would pass to children unless diverted; but in truth it is nothing which ever existed for their contingent future benefit; the taking of it by the soldier was voluntary on his part; he created it for the purpose of benefiting this plaintiff. This is not only true generally with regard to all such insurance, but the proofs here make it clear that he never would have taken this policy for the benefit of his legiti mate children. To take its proceeds away from the intended beneficiary and give them to the other children is to thwart the soldier's purpose, and to compel the application of his premium payments against his will. These results may follow, because they must if the law is sufficiently clear; but there is no reason for any particular liberality in construction or in application of legal rules to accomplish them. [2] It is also urged that the insurance was a gratuity by the government, and hence that its limitations, as indicated by the statute, should be more strictly enforced, and with the minimum of regard for the soldier's intent. This claim does not impress us as justifying any peculiar rules of construction. These policies were gratuitous only in that they exacted a smaller cash premium than was required in standard policies; but this element of gratuity may well be considered to 16 F. (2d) 441 be compensation to the soldier, in addition to the monthly cash payments, for the services rendered and the risks incurred by him to or for the government. We are inclined to approach the controversy as we would any other between insurer and insured. By the terms of the act (40 Stat. p. 409), and the rules and forms adopted by the bureau, the policy might have been made payable on its face for the benefit of plaintiff's ward. The will, by which the boy was so designated, was executed simultaneously with the taking of the policy. The two documents must be considered together, and we think the situation is materially the same as it would have been if the policy had been, on its face, payable to or for this particular beneficiary. [3] In considering the burden of proof, under the facts here existing, it makes no difference that this claimant is illegitimate. The act permits a "child" to be a beneficiary, and defines "child" as including illegitimates on one of two conditions-a voluntary acknowledgment by the father or that involuntary acknowledgment flowing from a judgment for support. 40 Stat. p. 401. The existence of either of these conditions puts the child upon the same basis, for this purpose, as if legitimate; and in this case there was a complete and voluntary acknowledgment in writing. [4] Thus we find that we have in substantial effect the question whether, when one of these policies is payable to a specified individual beneficiary purporting to be within the permitted class, a suit is brought upon the policy, and the plaintiff identifies himself as the named beneficiary, he must also initially demonstrate his relationship, or else fail to recover. We may take as an example an ordinary life policy of standard form, which is made upon its face payable to "my wife, Mary Smith." Unless she is in fact the wife of the insured, the policy is invalid because of her lack of insurable interest, just as war risk insurance would be invalid because she was not of the permitted class. In a suit on such a policy, after she established the contract and the death and her identity, we think she would be entitled to recover, unless the defendant then proved that there had been no valid marriage, and that therefore the contract of insurance was invalid. A contrasting example, in ordinary life insurance, would be a policy payable to "my children"; quite clearly one who claimed to be of the specified class could not recover until he proved his membership. We see no imperfection in the analogy between the first supposed case and the present one; the policy and the designation make a contract to pay The same result is reached if we consider We think our conclusion consistent with If A fud $75 W 25 7 725 MA No. 4691. 1. Commerce 34-As respects freight rates, As respects freight rates, interstate move- *Certiorari granted 47 S. Ct. 475, 71 L. Ed. —-. 2. Commerce 33-Shipper's intent determines where interstate commerce ends. Intent of those engaged in interstate commerce determines whether interstate commerce ends at particular point. 3. Commerce 34-Interstate movement of gasoline held not to end on delivery to storage tanks at entry port, awaiting further ship. ment to other points from which distributed to consumers. As respects freight rates, interstate movement of gasoline and kerosene held not to end when temporarily stored in tanks at port of entry awaiting distribution to shipper's "bulk stations" in interior points, from which distributed to consumers, notwithstanding title did not pass from producer until delivery at entry port. 4. Commerce 72-State's right to tax is not dependent on rules applicable to federal regulation of transportation rates. Right of state to tax articles does not depend on same considerations applicable to federal regulation of transportation rates. 5. Commerce 34-Interstate movement held Before DENISON and MOORMAN, Circuit Judges, and HOUGH, District Judge. DENISON, Circuit Judge. The Standard Oil Company of Kentucky (hereafter called the "company"), sells oil throughout Florida. It is not a producer. It buys its fuel oil from Tampico, Mexico, and its gasoline, kerosene, and lubricating oils from Baten Rouge, La. These oils are shipped from the point of purchase to Florida by boat across or along the Gulf of Mexico. These interstate or foreign shipments enter Florida at two points-Port Tampa, about eight miles from the city of Tampa, and the St. John's river terminal, in the city of Jacksonville. At each of these points the company maintains a group of large tanks, severally used for the different kinds of oil, and into which the oil is pumped from the tank steamers which bring it in. From these tanks the oil to end at port of entry from which oil was dis- is pumped out into the tank cars in which it tributed to local consumers. Interstate movement of lubricating oil, as respects freight rates, held to end at port of entry in state from which it was to be distributed to local consumers. 6. Commerce 34-Interstate movement of gasoline held to end on delivery into storage tanks, from which 13 per cent. was used locally. Interstate movement of gasoline and kerosene, as respects freight rates, held to end on delivery into storage tanks at port of entry, where 13 per cent. of quantity received into tanks was used locally. 7. Carriers 202-Shipper held entitled to interest on excess of interstate rates over intrastate rates improperly collected from date of each payment. Successful plaintiff in suit to restrain enforcement of interstate rates, and for accounting and refund of excess over intrastate rates improperly collected, held entitled to interest on each excess payment from its date. Appeal from the District Court of the United States for the Western District of Kentucky; Charles I. Dawson, Judge. Suit by the Standard Oil Company of Kentucky against the Atlantic Coast Line Railroad Company. Decree for plaintiff (13 F.[2d] 633), and defendant appeals. Affirmed in part, and in part modified and re manded. Helm Bruce, of Louisville, Ky. (Thomas W. Davis, of Wilmington, N. C., and Bruce & Bullitt, of Louisville, Ky., on the brief), for appellant. Charles G. Middleton, of Louisville, Ky. (Humphrey, Crawford & Middleton, of Louisville, Ky., on the brief), for appellee. is shipped to various interior points. Sometimes oil is flowing into and out of the storage tanks-from steamer to car-simultaneously; sometimes some oil is held in the tanks as long as 60 days. The question in this case is whether this further shipment, from Port Tampa or Jacksonville to the interior points of consumption or of secondary distribution, continues to be that interstate or foreign commerce in the course of which the oil comes in, or is predominantly local commerce, and in its nature intrastate. The question arises in this way. The Florida Railroad Commission has fixed rates for the intrastate shipment of these various oils from Port Tampa and Jacksonville to the interior points. The Atlantic Coast Line Railroad Company (hereafter called the "railway") filed with the Interstate Commerce Commission its proposed rates for these same items of transportation upon the theory that they were interstate or foreign commerce, and, there being no objection, these rates became, in effect, established by the Interstate Commerce Commission, and properly applicable for all items of transportation that were within the jurisdiction of that Commission. Thereupon the company filed a bill in the court below to enjoin the railway from continuing to collect these interstate rates, to compel an accounting from the railway, and for a refund of such of these rates as had been received in excess of the Florida domeztic schedule. The jurisdiction of the court below sufficiently rested upon the diverse citizenship of the parties. A decree was made in favor of the company and the rail 16 F. (2d) 441 way appeals. It is not necessary to decide whether the decree was interlocutory or final; either theory sufficiently sustains the appeal. [1] We consider, first, the situation at Port Tampa, and severally with regard to the four kinds of oil, the status of which is not necessarily the same, though all four have two characteristics in common. All enter from outside the state and all are intended for further common carrier shipments-none for use at Port Tampa. First, of fuel oil. This is substantially all sold by the company to various manufacturers the ultimate users-upon annual contracts to supply them with stated quantities or with their needs during the period.1 The incoming stream from Mexico is brought into the tanks rapidly enough to supply the outgoing demand-generally in accordance with the predetermined fixed amounts, but somewhat varied by the developing fluctuations in that demand. In our judgment, this oil travels on a substantially continuous trip from Tampico to the interior points in Florida, and the Port Tampa tanks are a pond or equalizing reservoir, which merely accommodates the supply to the outgo, and which furnishes essentially nothing but storage in transit. Upon the question whether, for rate control purposes, commerce is interstate or intrastate, the decisions of the Supreme Court furnish no universal rule; each case has been decided on its facts. The Sabine Tram Case (Texas Co. v. Sabine Tram Co., 227 U. S. 111, 33 S. Ct. 229, 57 L. Ed. 442) is an application of the principle which we think now controlling, and an application which is not easy to distinguish from the present case. It declares that domestic gathering together of property for the purpose of foreign shipment and sale must be treated only as an incident of the entire transaction and takes the character of the whole. The flow of commerce in the present case is in the opposite direction, but the principle seems to be wholly analogous. It is suggested that there is distinction in the fact that there the gathering together was only a preparatory incident of the contemplated foreign shipments and sale, while here the contemplated distribution and sale in Florida make up the primary object involved, and the bringing in 1 Ninety-five per cent. is so sold. That 5 per cent. is sold later may be disregarded, not because 5 per cent. is a negligible fraction (that we do not decide), but because the 5 per cent. was also always destined for further shipment, and the 95 per cent. stamps the whole mass as not intended for miscellaneous public sale, here, there, or anywhere. from the outside is the preparatory incident; but we can see no sufficient reason for saying that either part of such transaction is primary and the other incidental. As Justice Holmes said in Davis v. Virginia, 236 U. S. 697, 699, 35 S. Ct. 479, 59 L. Ed. 795: "From the point of view of commerce the business was one affair." It is as accurate to say that the local distribution in Florida was merely in aid of the Tampico purchase, and to provide an outlet for the Mexican wells, as to say the converse; probably neither way of putting it is complete. [2] We cannot say that the mere power of the company to make a diversion at Port Tampa, or to use the oil there or in the immediate vicinity without any substantial further transportation, furnishes any reason for distinguishing from the Sabine Tram Case; for there Powell & Co. had full power and right to send shiploads of the collected lumber up and down the Texas coast, instead of sending it across the ocean. We take the controlling thought of the Sabine Tram Case to be that where there is, both in expectancy and in fact, a clear and established stream of foreign commerce, the intent of the one engaged in that commerce that the items destined therefor are to be considered a part thereof from their origin to their destination is the thing which stamps the whole transaction as foreign commerce; and this reasoning applies as well to the branches of the tree, through which the sap is distributed after passing up the trunk, as to the roots, in which it is made ready for the upward passage. That this intent to make a continuous interstate shipment is the determinative thing is illustrated by B. & O. Ry. Co. v. Settle, 260 U. S. 166, 43 S. Ct. 28, 67 L. Ed. 189. The initial trip terminated at Oakley. Settle there took possession of the car and had power to sell it locally, or to reship it as he pleased; but his intent from the beginning had been that the journey should continue to Madisonville, with a temporary stop at Oakley, merely long enough to make arrangements for forwarding. When this constant intent was observed, it was thought that the stop at Oakley, and possession there by Settle, and reshipment from there, did not interrupt the continuity of the journey. The parallel with the present case seems perfect. Settle's motive, to get a lower rate, cannot have been the basis of the decision. This motive was lawful, if the law permitted him to tack these two rates. His intent to make a really through shipment, not his reason for this intent, was the vital thing. |