same process of renewals and part payments as above stated in regard to the first note, was reduced on May 2, 1897, to $3,500, for which said Bank of Mammoth Springs executed to plaintiff its note for said amount, due ninety days after date." The defendant demurred to the complaint on the ground that it appeared on the face of the complaint that the cause of action was barred by the statute of limitations. The circuit court sustained the demurrer, and, the plaintiff declining to plead further, final judgment was rendered for the defendant, and the plaintiff sued out this writ of error. The opinion of the circuit court is reported in 107 Fed. 188.

Rhea P. Cary, for plaintiff in error.

Robert Neill (Davidson & Meeks, on the brief), for defendant in

error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges. CALDWELL, Circuit Judge, after stating the case as above, delivered the opinion of the court.

It is settled by the decision of the supreme court of Arkansas in the case of Bank v. Walsh, 68 Ark. 21, 59 S. W. 952, that the statute on which this action is founded is a remedial statute, and imposes "a statutory liability, and not a penalty," and that the three-years statute of limitations applies to actions founded thereon. The single question left for our consideration is, when did the plaintiff's cause of action against the defendant accrue? The contention of the plaintiff in error is that it did not accrue until the maturity of the last renewal notes; the contention of the defendant is that it accrued when the debts sued for were contracted, or, at the furthest, on the maturity of the notes given at the time the indebtedness was created. The complaint does not disclose when the debts sued for were contracted, but they must have been contracted on or before May 3, 1894, and September 6, 1894, the respective dates at which the first notes mentioned in the complaint were executed. As the action is barred whether the statute of limitations commenced to run from the creation of the debt or from the maturity of the notes given at its creation, it is not essential to the decision of the case to determine whether, when the plaintiff made a loan to the Bank of Mammoth Springs or otherwise became its creditor for a present consideration on an agreed term of credit and took a note accordingly, the plaintiff could the next day have brought suit for the amount of the debt against the defendant on his statutory liability to pay it as a debt of the bank "contracted during the period" of his neglect and refusal to file the required certificate. Under the statute the defendant did not sustain to the debtor bank the relation of a joint principal, surety, or guarantor. His liability was primary, and not secondary. It was created by statute, and was not contingent upon the failure or inability of the bank to pay, but was absolute and unconditional. It resulted from his dereliction of official duty, and, if he had been compelled to pay the debt, he would have had no right of reclamation or indemnity from the bank. The statute imposed upon him the obligation of a principal debtor for his refusal and neglect to perform a duty enjoined upon him by law for the protection of the public. His legal liability for the debt was fixed and perfect the moment it was contracted, without regard to the solvency or insolvency of the bank, or to any proceedings against it to enforce pay

ment. At the time when the first renewal notes were taken, the debt and the original notes given therefor had then become due and payable. The renewal of the notes operated as an extension of time for the payment of the debts by the bank, but did not release the defendant either from his statutory liability to pay the debts or from immediate action therefor. As soon as the original notes became due and payable, if not before, the defendant was liable. The defendant was unquestionably then liable to an action, and so was the bank. These two rights of action in the plaintiff were not dependent. They were concurrent and independent. The plaintiff could assert either or both. The assertion of one would not preclude the assertion of the other. Suspending the assertion of the one would not preclude the assertion of the other. Nothing but satisfaction of the plaintiff's debt by the pursuit of one would take away its right to follow the other. If, therefore, the right of action against the defendant on his statutory liability did not accrue on the creation of the debt, it unquestionably did on its maturity, and the statute, having once commenced to run, could not thereafter be suspended so far forth as concerned the defendant, by any action of the plaintiff and the bank which might have that effect as between them. Without pursuing the subject further, we may say that we concur in the opinion of Judge Folger in Jones v. Barlow, 62 N. Y. 202, 213, and have, in substance, adopted its reasoning. It seems to have been followed in later cases in that state (Hardman v. Sage, 124 N. Y. 25, 26 N. E. 354; Parrott v. Colby, 6 Hun, 55, affirmed on appeal in 71 N. Y. 597; Iron Co. v. Walker, 76 N. Y. 521) and elsewhere (Mining Co. v. Woodbury, 14 Cal. 265; Davidson v. Ranken, 34 Cal. 503; Hyman v. Coleman, 82 Cal. 650, 23 Pac. 62, 16 Am. St. Rep. 178; Young v. Rosenbaum, 39 Cal. 646).

The complaint counts on an open account also, touching which it is only necessary to say that that portion of the account contracted while the defendant was president is clearly barred, and for that portion of the account contracted after he ceased to be president he never was liable.

The judgment of the circuit court is affirmed.

(115 Fed. 112.)

MISSOURI BROOM MFG. CO. et al. v. GUYMON.
(Circuit Court of Appeals, Eighth Circuit. April 14, 1902.)

No. 1,609.

1. SALE UNDER FALSE REPRESENTATIONS-RECOVERY OF PROPERTY-FORM OF ACTION.

Where a bill averred that a firm purchased broom corn in controversy with intent not to pay for the same, that the sale was induced by fraud, and that immediately after discovering the fraud complainant elected to rescind the sale and reclaim the property sold, the action must be

considered as an action to recover personal property, and the buyer and his vendees with notice be treated as trustees for the complainant. 2. SAME-BILL-MULTIFARIOUSNESS-RIGHT TO OBJECT.

Where a bill to recover personal property claimed to have been sold and delivered through the buyer's fraud alleged that one of the stockholders of the buyer had not paid for his stock, and had received money from the buyer, which he should refund, such allegations, though improper, where not prejudicial to other defendants, and the bill having been dismissed as to such stockholder, such other defendants could not claim that the bill was multifarious.

3. SAME-JUDGMENT OR LIEN CREDITOR.

In a proceeding to establish a constructive trust of personal property claimed to have been sold and delivered under false representations, and to compel the trustee to restore the trust property or account for its proceeds, it is immaterial that plaintiff is not a judgment or lien creditor, and has not established his demand at law.

4. Same-RepLEVIN—ADEQUate Remedy at Law.

In an action to enforce a constructive trust in broom corn claimed by complainant to have been sold and delivered under false representations of the buyer, it was alleged that part of the broom corn, which had not been worked up by the buyer, had been mingled with other corn, and was difficult of identification; that the property had been twice sold, and the rights of the alleged purchaser would be the subject of investigation; and that part of the corn had been manufactured and assigned to third persons, who were acting in collusion with the alleged trustees. Held, that plaintiff did not have an adequate remedy at law by an action of replevin, and hence equity was entitled to assume jurisdiction. 5. SAME-BONA FIDE PURCHASERS-CONSIDERATION-EXTENSION OF TIME-PREEXISTING DEBT.

Where a fraudulent purchaser of personal property gave a deed of trust to secure pre-existing debts, covering the property purchased which was not paid for, and such deed entitled the mortgagee to take possession of the property at once, and inventory and sell the same at public or private sale, such mortgagee was not entitled to claim, as against the defrauded seller of the goods, that he was a bona fide purchaser on the ground that the mortgage also granted the mortgagor a definite extension for the payment of the debts as a consideration of the mortgage.

6. SAME-DAMAGES.

Where a seller sued in equity to enforce a constructive trust of the goods on the ground that the sale had been made by fraud, and that defendant was chargeable as trustee, and pending the suit the purchasers from the fraudulent vendee were allowed to dispose of the property, and hold the proceeds to await the result, and they sold the same at a larger price by reason of an advance in the market, the plaintiff was entitled to the actual value of the property at the time it was sold by such vendees, and was not limited to the original contract price.

Appeal from the Circuit Court of the United States for the Western District of Missouri.

E. T. Guymon, the appellee, exhibited an amended bill of complaint, on which this case was eventually tried, against the Missouri Broom Manufacturing Company, David Loewen, the Exchange Bank of Jefferson City, William A. Dallmeyer, William Q. Dallmeyer, H. Clay Ewing, and Arthur M. Hough, the appellants, which contained, in substance, the following allegations: That in June, 1897, the complainant was induced, by certain false and fraudulent representations made by A. Loewen, who was the president of the Missouri Broom Manufacturing Company (hereafter termed the "Broom Company"), to ship and sell to the latter company a large quantity of broom corn of the value of $3,812.21, which the company received not intending to pay for it; that by the terms of the sale one-third of the purchase money was to be paid in cash and the balance in 60 days, but that 53 C.C.A.-2

the complainant, after the shipment and delivery of the broom corn, was induced, by certain other fraudulent representations, to accept the broom company's notes dated September 4, 1897, one due in 6 days, one in 16 days, and the other on October 2, 1897, for the entire purchase price; that on September 28, 1897, the broom company, which was engaged in the manufacture of brooms in the Missouri penitentiary at Jefferson City, Mo., executed a deed of trust to A. M. Hough, as trustee for the Exchange Bank of Jefferson City, and David Loewen, which deed of trust conveyed all of the broom company's property of every kind and description, and was made to secure the payment of alleged debts of the broom company, specified therein, to the amount of $9,212.25; that a part of the complainant's broom corn had been manufactured into brooms, and mingled with other brooms, prior to September 28, 1897, and that the residue thereof was at the time mingled with other broom corn belonging to the broom company, and was stored in warehouses in Jefferson City, Mo., when the deed of trust was executed, and was covered by that conveyance; that Hough, as trustee, took possession of all of the property of the broom company on the execution of the deed of trust, including the broom corn which belonged to the complainant and was then in warehouses at Jefferson City, and that he did so with full knowledge of all the facts and circumstances under which it had been obtained by the broom company from the complainant. The bill further alleged, in substance, that in pursuance of the powers conferred by the aforesaid deed of trust, Hough, as trustee, on October 7, 1897, sold all of the property thereby conveyed to the defendants H. Clay Ewing, William Q. Dallmeyer, and William A. Dallmeyer, ostensibly for the sum of $3,000; that in said transaction the vendees last named acted merely as agents of the Exchange Bank of Jefferson City, paying nothing for the property which they acquired, and at the time of the purchase were well aware that the complainant had filed his original bill, praying for a restraining order and the appointment of a receiver; that said vendees, on October 9, 1897, sold all of said property to the defendant David Loewen, and agreed to assign to him the debts which were secured by the aforesaid deed of trust, on condition that he pay to the vendees the sum of $6,000, evidenced by six promissory notes, which were executed by David Loewen and I. J. Ringolsky; that in and by said contract of sale said vendees retained the title to the property which they pretended to sell until the purchase money evidenced by said notes had been fully paid; that at the time of said alleged sale to David Loewen and at the time of the execution of the deed of trust to Hough, and long prior thereto, said David Loewen was fully cognizant of the fraud that had been perpetrated on the complainant, and was well aware of his right to rescind the sale; that David Loewen and A. Loewen, the president of the broom company, were copartners in business, and transacted business at the city of St. Louis, Mo., under the name of David Loewen & Son; that said firm had an account with the broom company on its books, the style of which account was, for some unexplained reason, changed about the date of the transactions aforesaid; that in August and September, 1897, the broom company shipped many brooms that had been made out of the material purchased from the complainant to David Loewen & Son at St. Louis, Mo., for the fraudulent purpose of selling them, and defrauding the creditors of the broom company, and that a large part of the receipts of the broom company during said months was turned over to David Loewen & Son by collusion with that firm, to defraud the complainant and other creditors of the broom company. The complainant further alleged in his bill that he discovered the fraud which had been practiced upon him, and that the aforesaid purchase was made with no intent on the part of the broom company of paying him for the commodity purchased, only a week prior to the filing of his original bill herein, which appears to have been exhibited on October 8, 1897; that on discovering the fraud he went immediately from the state of Kansas, where he resided, to Jefferson City, Mo., for the purpose of surrendering the notes which he had received and rescinding the fraudulent sale, but that he was unable to find any officer or agent of the broom company to whom he could make the tender; that he accordingly tendered the notes in court on the filing of his bill; and that by virtue of the facts aforesaid, the complainant

was entitled to recover from the defendants the broom corn which he had sold, and the proceeds of such as had been manufactured into brooms, but that, in view of all the circumstances, he was without an adequate or sufficient remedy at law to fully redress the wrong. He accordingly prayed for the appointment of a receiver of the property which remained in specie; that the part thereof to which he was entitled might be determined; that David Loewen and A. Loewen might be compelled to account for the property, or the proceeds thereof, which they had received from the broom company; and for general relief.

When the original bill was exhibited, and the application for an injunction and the appointment of a receiver was heard, the lower court, in lieu of appointing a receiver, made an order, in substance, directing that the persons then in charge of the property in controversy should continue in charge thereof, with power to sell the same and manufacture it into brooms, rendering accounts to the court at intervals of all their doings in that behalf. Acting under this order, which practically constituted the defendants, or some of them, receivers, the property, as it seems, had been sold before a final decree was reached, and the proceeds were in the custody of the Exchange Bank at Jefferson City, and held by it for distribution, pursuant to the provisions of such decree as might be entered. By the provisions of the decree, from which the defendants below have appealed, the deed of trust of date September 28, 1897, the sale thereunder by Hough, and the sale by his vendees to David Loewen were each set aside and annulled in so far as they undertook to convey the broom corn that was sold by the complainant to the broom company, and the funds in the hands of the Exchange Bank were impressed with a trust in favor of the complainant in the sum of $3,000, that being the ascertained value of the 60 tons of broom corn which were sold by the complainant. The Exchange Bank was further directed to pay to the complainant, out of the funds remaining in its hands. the sum of $402.68, being that portion of the fund which David Loewen would be entitled to receive from it pursuant to the provisions of the aforesaid deed of trust.

Edwin Silver (F. M. Brown, on the brief), for appellants Exchange Bank, H. Clay Ewing, William A. Dallmeyer, William Q. Dallmeyer, and Arthur M. Hough.

I. J. Ringolsky, for appellant David Loewen.

Henry M. Beardsley (Alfred Gregory and Charles H. Kirshner, on the brief), for appellee.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER, Circuit Judge, after stating the case as above, delivered the opinion of the court.

It is manifest, we think, from an inspection of the bill, the substance of which has been stated above, that the proceeding at bar must be characterized as an action to recover personal property and the proceeds thereof, which property the complainant below was induced to sell and ship to the Missouri Broom Manufacturing Company (hereafter termed the "Broom Company") by means of false and fraudulent representations that were made by certain officers of that corporation to induce the sale. The bill distinctly avers that the broom company made the purchase of the broom corn in controversy with no intent to pay for the same; that the sale was induced by statements which were false and misleading; that the complainant was thereby deceived, and induced to part with his broom corn; and that immediately after the discovery of the fraud the complainant elected to rescind the contract of sale and reclaim the property sold, and that