house, remaining there until January 16, 1920, when they were exported to Bermuda. Upon arrival, the spirits were subject to a customs duty of $2.60 per proof gallon under the Tariff Act of October 3, 1913, and as they remained in the bonded warehouse on October 3, 1917, when the War Revenue Act of 1917 became effective, they became subject to an additional duty of $2.10 per proof gallon under section 300 of that act, if and when withdrawn. The spirits were still in the bonded warehouse when the War Revenue Act of 1918 became effective on February 5, 1919, and the said collector of internal revenue demanded, and the plaintiffs paid under protest on May 6, 1919, the aforesaid tax of $3.20 per proof gallon, amounting to $480. The plaintiffs filed a refund claim, which was also rejected on March 29, 1919.

These spirits were never withdrawn from the bonded warehouse; after remaining in the warehouse less than three years, the permitted time, they were shipped to Bermuda; they were subject neither to "internal revenue tax” nor "duty." It seems to be conceded by counsel for the government that plaintiffs are entitled to a refund of this $480, and no valid reason appears to the contrary. In fact, it is difficult to understand upon what theory it was collected.

Accordingly, the motion of the United States to dismiss is denied, and judgment may be entered for plaintiffs in the amount of $4,179.20, with interest.

1. Bankruptcy 264-Action of referee approved in confirming sale and refusing to set aside sales of real estate on offer of higher bid without security.

Action of referee approved in confirming sales of real estate made at public auction by

the trustee, on objection of strangers to the proceedings, who offered a bid 10 per cent. above the sales prices, but refused to give bond to make the bid good.

2. Judicial Sales 55-Public policy requires judicial sales be not disturbed, save for substantial cause.

Public policy requires stability in judicial sales, and they are not to be disturbed, except

for substantial reasons.

In Bankruptcy. In the matter of Michael R. Hoffman and others, individually and trading as the Hoffman Leaf Tobacco Company,

bankrupts. On review of order of referee, confirming sale of real estate. Order affirmed. David Bortin, of Philadelphia, Pa., for petitioner.

Charles G. Baker, B. J. Myers, and John M. Groff, all of Lancaster, Pa., for trustee. John E. Malone and Paul A. Mueller, both of Lancaster, Pa., for purchasers.

rupts were the owners of, inter alia, a large THOMPSON, District Judge. The banknumber of farms and other real estate located in Lancaster and York counties, Pa. In the course of administration, the referee ordered certain purparts of the real estate in those counties to be sold by the trustees in bankruptcy at public sale on certain specified dates and at certain specified places. Aftcordance with the referee's order, and parcels er due public notice, sales were had in acof real estate, which had been appraised at a total of $175,500, were sold for the total of $164,983.24, being 93.4 per cent. of their total appraised value. No parcel was sold for less than 75 per cent. of its appraised value. [1] At a meeting held by the referee upon due notice, at which all but one of the purchasers were present or represented by their attorneys, Mr. Bortin appeared as attorney for Thomas E. Schadt and others unnamed, neither Schadt nor those unnamed having any interest as creditors or otherwise in the bankrupt estate, and objected to the confirmation of the properties sold on account of inadequacy of price, and offered on behalf of his clients to pay the sum of $171,000 for the purparts which had been knocked down to the highest bidders at the public sale for the total sum above named, $164,083.24.

The referee thereupon adjourned the confirmation of the sales for one week, and ordered that Mr. Bortin's clients file a bond in the sum of $171,000, conditioned on their faithful compliance with their bid. Each purchaser was duly notified of the adjournment. At the adjourned meeting Mr. Bortin declined to file a bond in accordance with the order of the referee, unless the bid was accepted. Thereupon the referee confirmed the sale of the properties to each of the purchasers at the public sale.

The attorney for the bidders again objected to the confirmation of the sales, and made individual bids for each property covered by his former bid, excepting one property appraised at $2,000 and sold for $1,505, distributing his offer, so that upon each property there was an advance over its sale price, the total of the sale prices being $162,578.24, and the offer at private sale $176,818, an

advance of $14,239.76, or 8 per cent., over the sale price. This offer was accompanied by an offer to put up the sum of 10 per cent. of the bid in cash and to make settlement in accordance with the terms of the sale by April 1, 1927. Mr. Bortin's objection to the confirmation of the sale was overruled. Mr. Bortin, on behalf of his clients, thereupon presented a petition for review of the referee's order of confirmation of sale.

In the referee's very full and able opinion accompanying his certificate for review, we find the grounds for requiring a bond in the full amount of the bid stated as follows: "(1) The purchasers at the public sales had given bonds in the full amount, and it was only fair that the advance bidders should be on an equal plane.

"(2) The amount involved was so large, and the result of an acceptance of new bids so involved and perilous to the estate, no bond in less than the total amount would adequately safeguard the interests of the estate.

"(3) A 10 per cent., or $17,100, payment was not sufficient, the former purchasers be

would have been unjust to the purchasers at public sale to deprive them of the rights they had acquired in good faith, and unjust to creditors to reject the bids of those who had made themselves responsible without anything more substantial than a possible lawsuit to compel Mr. Schadt (his associates were undisclosed) to make good his offer if, the sale having been set aside, he had failed or refused to put up the proper security. And such trifling with the results of public sales is contrary to the policy of the courts. [2] Public policy requires stability in judicial sales, to induce bidding at such sales and reliance upon them. The purpose of the law is that they should be final; they are not to be disturbed, except for substantial reasons. We think the reasonings of the learned referee are unassailable, and his conclusion correct.

The petition for review is therefore dismissed, and the order of the referee affirmed.

Inc.

(District Court, W. D. Michigan, N. D. December 21, 1926.)

The reasons thus stated by the learned referee demonstrate that the petitioners have not taken a strong position in support of their

contention that the order of confirmation should be set aside. Moreover, no creditor, nor other party having an interest in the fund derived from the sales, or in the bankrupt estate, has objected to the purchase price as being inadequate. There was nothing irregular in any respect in the conduct of the public sale, and there is no showing of such inadequacy of price as to shock the conscience. The bidders at private sale, if the confirmation had been refused, were, through their refusal to file a bond, attempting to put themselves into a position of tactical advantage, if the order of confirmation were set aside upon their mere offer without security. The bidders at the public sale would have been released from their bids, without serious risk to Schadt et al., in case they should choose to fail to comply with their bid. Their attitude was entirely unreasonable, and it

1. Courts 344-State law relative to service of process on foreign corporation held not conclusive on federal courts in determining jurisdiction (Comp. Laws Mich. 1915, § 12434).

Comp. Laws Mich. 1915, § 12434, authorizing service of process in suit against foreign corporation on any officer or agent within state, held not conclusive on federal courts in

determining question of jurisdiction.

2. Corporations 668 (15)-Foreign corpo

ration, represented within state by agent with authority to execute contracts, held doing business within state, authorizing service on agent.

Foreign corporation, represented within state by agent with authority to execute contracts and accept payments thereon, held engaged in doing business within state, so as to authorize service of process on such agent.

At Law. Action by Daniel J. Kulaszewicz against Geo. Kilgen & Son, Inc., removed from the state court. On motion to quash. Motion denied.

Jones & Patek, of Ironwood, Mich., for plaintiff.

Edward A. Macdonald, of Marquette, Mich., for defendants.

RAYMOND, District Judge. The motions to quash, filed in the state court prior to removal, have been renewed in this court.

The sole ground now relied upon is the alleged insufficiency of service of process. Proofs have been submitted relative to the nature and extent of the authority of the agent upon whom process was served and of the business being done within the state of Michigan by the defendant, a corporation foreign to Michigan.

The court is satisfied from the evidence that the agent upon whom service was made was, at the time of such service, vested with authority, not only to solicit, but to close, contracts for the installation of pipe organs by the defendant, that such contracts were not subject to approval at the home office, and that said agent had authority to and did accept payments upon such contracts. It is apparent from the testimony that he was not an agent clothed with authority merely to solicit orders. It also appears from the evidence that plaintiff is a resident of Michigan, that the contract was entered into and was to be performed within this state, and that the controversy involved in this litigation arose within the state. These facts differentiate the present case from a large number of cases involving the question of service of process upon agents of foreign corpo

rations.

The declaration in the present case contains the following averment:

"That the defendant is a corporation organized, existing, and doing business under and by virtue of the laws of one of the states of the United States, other than the state of Michigan, and engaged in the business of selling and installing pipe organs within the state of Michigan, as well as elsewhere."

It is held that in federal jurisdiction a foreign corporation can be served with process under a state statute only when it is doing business therein, and such service must be made upon an agent representing the corporation in its business. See Goldey v. Morning News, 156 U. S. 518, 15 S. Ct. 559, 39 L. Ed. 517; Mechanical Appliance Co. v. Castleman, 215 U. S. 437, 30 S. Ct. 125,

54 L. Ed. 272.

upon any officer or agent of such corporation within this state, and any person representing such corporation in any capacity, shall be deemed an agent within the meaning of this section."

[1] This statute is not conclusive upon the federal courts in determining questions of jurisdiction. Such a statute may be held valid when applied to certain circumstances and invalid when applied to different circumstances. The Supreme Court of the United States, in the case of Davis v. Farmers' Co-Operative Co., 262 U. S. 312, 316, 43 S. Ct. 556, 558 (67 L. Ed. 996) in referring to a similar statute, said:

"It may be that a statute like that here assailed would be valid, although applied to suits in which the cause of action arose elsewhere, if the transaction out of which it arose had been entered upon within the state, or if the plaintiff was, when it arose, a resident of the state."

Efforts to state a general rule applicable to this class of cases have met with no success. Each case must be determined upon its own peculiar facts. The difficulties involved in determining questions of this nature are clearly set forth and a thorough review of the authorities is found in the case of Farmers' & Merchants' Bank v. Federal Reserve Bank (D. C.) 286 F. 566. [2] It appears from the evidence that the business of the defendant was the installation of pipe organs in pursuance of written contracts; that its agent was present in the state of Michigan for the purpose not only of contracting with plaintiff but with others for such installations. It must be assumed

from this evidence that the defendant had begun what was designed to be a continuous and permanent business in the state of Michigan. It was not confined to a single transaction. It is therefore the conclusion of the court that process in this case was served on an authorized agent, that the defendant was then engaged in doing business in the state, and that it would be unreasonable to hold that defendant had not by its course of con

"In all cases where suit is brought against a foreign corporation, process may be served

in this jurisdiction.

The motion to quash will be denied, and an order will be entered accordingly.

DETROIT TRUST CO. v. SCHANTZ et al. (District Court, E. D. Michigan, S. D. January 31, 1923.)

No. 527.

1. Bankruptcy 288 (2)-Trustee's suit to recover property from state court receiver is

plenary suit, and not summary proceeding, in bankruptcy court.

Suit by trustee in bankruptcy to recover property in possession of receiver appointed by state court must be brought as a plenary suit, rather than a summary proceeding, in court of bankruptcy.

2. Courts 500-Property in possession of receiver appointed by one court is withdrawn from control of court of co-ordinate jurisdiction.

Where one court has appointed receiver of property, so that such property is in custodia legis, that property is thereby withdrawn from power of possession, custody, or control of all other courts of co-ordinate jurisdiction. 3. Bankruptcy

20(2)-Trustee's complaint

respecting state court receiver's possession of bankrupt's property should be presented to such state court.

Complaints by trustee in bankruptcy relative to failure of receiver appointed by state court to keep proper possession of bankrupt's property should be presented to court in which such receiver was appointed, and to which he is accountable.

In Equity. Suit by the Detroit Trust Company, trustee in bankruptcy of the Theatre Academic, against Henry B. Schantz, receiver, and others. On plaintiff's application for a temporary receiver. Application denied, and order to show cause discharged.

See, also, 291 F. 915; 14 F. (2d) 225; 16 F. (2d) 943.

Lee E. Joslyn, of Detroit, Mich., for plaintiff.

Charles Bowles and Bela J. Lincoln, both of Detroit, Mich., for defendants.

TUTTLE, District Judge. This is a suit in equity, brought in this court as a court of equity, by a trustee in bankruptcy (elected as such in a bankruptcy cause also pending in this court), to recover certain property alleged by plaintiff to have been fraudulently obtained by the defendant individuals from the plaintiff's bankrupt, in violation of sections 67e and 70e of the Bankruptcy Act (Comp. St. §§ 9651, 9654), and to be claimed by said defendants adversely to the bankrupt and to its said trustee. This cause is now before this court on application by plaintiff trustee for the appointment herein of a temporary re-. ceiver of said property during the pendency of this suit. In response to an order to show cause the defendants have appeared special

ly to object to such appointment of a receiver, on the ground that such property is now, and for about a year prior to the commencement of the bankruptcy proceedings on which this plaintiff was elected trustee was, in the legal custody and legal possession of the defendcircuit court for the county of Wayne, a court ant receiver, duly appointed as such by the of record of the state of Michigan, in a suit pending therein relating to said property. The sole question now presented for decision is whether, under these circumstances (which are not disputed by plaintiff trustee), this court should appoint the temporary receiver thus sought in this cause.

[1] As already indicated, the present suit is not pending in this court as a court of bankruptcy and is not a summary or other bankruptcy proceeding, but is an independent suit brought for the purpose of recovering the menced as a plenary equitable suit in this property in question. It is properly comcourt as a court of equity, rather than as a summary proceeding in this court as a court of bankruptcy, for the reason that the defendants, or at least the defendant receiver, occupies the status of an adverse claimant with respect to plaintiff trustee (as already decided by this court in its opinion previously filed in said bankruptcy cause). This renders it necessary for the trustee to commence a plenary suit, in this or some other court, rather than a summary proceeding in a court of bankruptcy. The suit, therefore, is to be considered and treated as one between private individuals, and as having the same incidents, and being subject to the same rules and principles, as if the plaintiff were not an officer of this court. Nor is this court to be regarded as a court of bankruptcy for the purposes of the present cause.

[2] Now it is an elementary rule of law that when one court has appointed a receiver of property, thereby establishing its jurisdiction thereover, so that such property is in custodia legis, that property is thereby withdrawn from the power of possession, custody, or control of all other courts of co-ordinate jurisdiction, and no other such court is entitled to assume such possession, custody, or control, either through the medium of a receiver appointed by it or otherwise, at least in the absence, as here, of any statute or rule to the contrary. This principle is too fundamental and well settled to warrant the citation of authorities, and is, in my opinion, clearly applicable to the present case. [3] Certain complaints are made in the bill to the effect that the defendant receiver has not been keeping proper possession of the

The application for the temporary receiver sought will be denied, and the order to show cause discharged. An order to that effect will be entered.

DETROIT TRUST CO. v. SCHANTZ et al. (District Court, E. D. Michigan, S. D. January 10, 1927.)

No. 527.

Judgment 828 (3)-Trustee is bound by own property claimed to have been preferentially and fraudulent transferred.

state court decree adjudging bankrupt did not

Trustee in bankruptcy is bound by decree in state court proceedings adjudging that bankrupt did not own property claimed to have been preferentially and fraudulently transferred, in absence of showing that decree was procured by fraud or collusion.

On rehearing. Rehearing denied.

For former opinion, see 14 F.(2d) 225. Joslyn, Joslyn & Joslyn, of Detroit, Mich., for complainant.

Clark, Emmons, Bryant & Klein and Charles Bowles, all of Detroit, Mich., for defendants.

TUTTLE, District Judge. Three written opinions have already been filed herein, at different stages and on various phases of the proceedings (291 F. 915; 14 F. (2d) 225; 16 F. (2d) 942), and it is unnecessary to here review or discuss the facts and matters described and set forth in the said opinions and in the pleadings and proofs submitted by the parties hereto. In the last opinion filed (after the final hearing) I reached and expressed the conclusion that the bill of complaint should be dismissed. Plaintiff trustee now presents further argument in support of its contention that the prayer of said bill should

The circuit court for the county of Wayne, Michigan, a court of record of that state, in and by its final opinion and decree (referred to in my opinion last mentioned), duly filed (before the commencement of the bankruptcy proceedings in which the present plaintiff was elected trustee) in a suit properly pending in said court, to which the bankrupt in said bankruptcy proceedings was a party, judicially found and determined that said bankrupt did not own, and never had owned, the property which the plaintiff in the present case, as trustee in bankruptcy of said bankrupt, claims was preferentially and fraudulently transferred by said bankrupt to the defendants herein. Not only must it be presumed that the proceedings in said state court resulting in its said decree were regular and free from fraud or collusion on the part of said bankrupt, but the plaintiff in the present cause has not shown that such decree was obtained by means of any such fraud or collusion by such bankrupt, and I must, and do, find that said decree was not so obtained.

The decree just mentioned was an adjudication, binding, under the principles of the doctrine of res judicata, on the bankrupt corporation and on those in legal privity with said corporation, to the effect that it was not the owner of the property here involved, and therefore could not have transferred such property as here claimed by plaintiff. The plaintiff trustee in bankruptcy of that corporation stands in the shoes, and succeeds to the position, of that corporation with respect to that decree, and is bound thereby, at least in the absence, as here, of a showing that such decree was procured by fraud or collusion on the part of said corporation. Rader v. Star Mill & Elevator Co., 258 F. 599 (C. C. A. 8); O'Sullivan's Trustee v. Douglass, 124 Ky. 243, 98 S. W. 990; 34 Corpus Juris, 1024.

A decree will be entered dismissing the bill.