through the breaking of two planks. The stone was large enough, so that it remained imbedded in the planking and could not be removed by the captain. The boat proceeded to sea, where the cargo of mud was dumped, and came back to the upper harbor, when she was taken to the dry dock and the stone removed by four or five men, who. put it back on the boat after she was repaired. It was then taken to sea with the next load of mud and dumped into the Atlantic Ocean. We must take the evidence of its size from those who saw it at the dry dock, and it evidently was a stone of considerable weight.

The contract between the Moran Company and the Cranford Company was to the effect that the Moran Company would furnish seaworthy boats and that the Cranford Company should dump from the dumping board no stones larger than what is called two-man size; that is, those which could be handled by two rather than three or more men. According to the testimony, the stones which could pass through the bottom of the dump wagon and through the hopper of the hoisting apparatus, would not be greater than two-man size. If this particular stone exceeded, to some extent, the average size, it is possible that it had been placed in the material through the fault of some of the Cranford Company's servants, and in that case they would be liable. But if the stone was not larger than the prescribed size, then the Cranford Company was still responsible for the manner of delivering the material into the scows. The provision with respect to the size of stone was an additional obligation for the security of the Moran Company, but did not absolve the Cranford Company from careless conduct with respect to material which was proper in size. If any obligation to dump soft earth, as a bed for stony material, rested upon any one in connection with the use of the scow, the Cranford Company would be bound to see that the material was in position before stones, even of small size, were deposited where they might do damage. In the case of the Olympia, the occurrences which have been described in the previous action are also alleged as faults against the Cranford Company, and in two instances, viz., the occurrences upon September 9th and 22d, the dumping of stones which would seem not to have been larger than two-man size, but which were apparently dumped under circumstances indicating negligence of the Cranford Company, caused the damage in question. Upon the third occasion, when the bottom planks of the boat had to be replaced, the testimony shows that a small stone was wedged under the end of one of these bottom planks. It is apparent that such a stone could not have reached this position from being . dumped into a pocket, and in the absence of other explanation it is necessary to conclude that this stone was forced into the seam from the outside; that is, when the boat was aground.

It is also apparent that the leakage in the corners of the pockets and the opening of the seams, which had to be repaired, was caused by excessive strain. It appears from the testimony that upon the 14th day of September, the Olympia went aground when under the Ninth street dump, that notice of this was given to the Moran office, and a tug was sent to pull the boat off the ground. The testimony of the men making the survey and the repairs is to the effect that the boat's inju

ries had been caused by strain when she was resting upon the bottom. The contract of the Cranford Company called for the loading of boats in deep water, and no other situation from which the injury might have resulted has been suggested.

It would appear, therefore, that the Cranford Company was liable for the unsafe condition of its berth. This they seek to avoid by showing that the Olympia and the Atlanta were old, that their bridle chains broke, and that part of the load was lost in the slip upon several occasions, and that one of these dumpings of material occurred while the Olympia was under the dump, upon the day before she stranded. The Moran Company terminated the charter after the third claim of damage from the dumping of stones into the boats, and it is apparent from the correspondence and testimony of the witnesses that much dispute arose over the alleged responsibility of the Cranford Company for what happened to the boats which the Moran Company had furnished.

It is evident that the Moran Company had the option to supply other and stronger boats, and thus to avoid dispute, even if the Olympia and the Atlanta were seaworthy and strong enough to comply with the terms of the contract between the Moran Company and the Cranford Company. It should be noted that these boats were furnished to the Cranford Company under an extension of contract, made partly by letter and partly by oral agreement, and that the terms of the contract were contained in a previous written agreement, which was changed only as to the price. It is contended by the Cranford Company that the new oral agreement embodied no restrictions, but the evidence indicates that the understanding of both parties was that the terms of the previous written contract were included in the new arrangement.

It would seem that, if the Olympia went aground while being loaded, the duty would rest upon the Cranford Company to keep watch of the conditions in their slip, and, even if the obstruction in the slip came from the very boat which went aground, it would not relieve the Cranford Company from its duty to remove the boat, instead of subjecting it to the strain produced as the tide fell, or as the boat was further loaded. In fact, the testimony shows that the Cranford Company, prior to dredging out the berth, did remove the loaded boats at low tide and put in empty boats for loading until the tide raised to a point where a sufficient depth of water could be had. If the grounding of the Olympia was sufficient to cause damage, the Cranford Company cannot allege as a fault that the Moran Company towed the boat into deep water, instead of waiting for the Cranford Company to procure a tug for this purpose. Nor is there any evidence in the case that the method of towing was negligent, or that the tugboat caused the damage, in dragging the scow from the bottom.

It would seem that the small stone which was found in the bottom seam might have gotten in during this grounding; but there is nothing from which a finding could be made that the proximate cause of the leak resulting from the opening of the seam into which this stone was forced could be negligent hauling off of the boat by the Moran tug. On the contrary, the pressure of the boat when aground, and the consequent opening of seams, show the presence of an obstruction for

243 F.-16

which the Cranford Company was responsible. The boats were evidently seaworthy, and even under the terms of the written contract between the Moran Company and the Cranford Company, if the Cranford Company found that their methods were likely to cause damage, they should have refused to use the scow and held the Moran Company for breach of contract, rather than to have so loaded the scows which were furnished as to cause damage through employment of methods in their control, from which the damage would be expected to result.

The libelant, therefore, should recover damages for the injuries to both boats against the Cranford Company, and should have his costs as well. The Moran Company brought in the Cranford Company, and was then forced to defend itself against the charge that it had furnished unseaworthy boats; but, inasmuch as the libelant recovers costs against the Cranford Company directly, no other costs will be allowed in the second action.

In re MILLER et al.

(District Court, E. D. New York. May 14, 1917.)

1. BANKRUPTCY 484-COMPENSATION OF RECEIVER-EFFECT OF COMPOSITION. Under Bankruptcy Act July 1, 1898, c. 541, § 48d, 30 Stat. 557 (Comp. St. 1916, § 9632), providing that receivers shall receive commissions not exceeding those therein specified, but that in case of the confirmation of a composition such commission shall not exceed one-half of 1 per cent. of the amount to be paid creditors, and section 48e, providing for additional compensation to trustees or receivers for conducting the business, but further providing that, in case of the confirmation of a composition, such commissions shall not exceed one-half of 1 per cent. of the amount to be paid creditors, if a composition is offered after the appointment of a trustee, the receiver, who has completely earned the amount of his compensation, may be allowed such amount as the court sees fit to allow, up to the regular percentage.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 895, 896.]

2. BANKRUPTCY 272-COMPOSITION-SECURITY FOR COSTS.

After an offer of composition by the bankrupt, the expense of conducting the bankruptcy proceeding for the purpose of the composition, instead of for the liquidation of the estate, should be secured by the bankrupt, and, if necessary, paid out of the amount deposited for the purposes of the composition; the creditors being entitled to a distribution of the amount available for that purpose without diminution by the bankrupt in his efforts to effect a composition, unless they consent to or approve of expenses for rent, wages, etc.

[Ed. Note.-For other cases, see Bankruptcy, Cent. Dig. §§ 572, 573.] 3. BANKRUPTCY 484-FEES OF RECEIVERS EFFECT OF COMPOSITION.

If a receiver has already accounted, and his allowance has been fixed or paid, before composition is offered, the confirmation of the composition will not reduce his allowance, nor compel the restoration of any of that already paid.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 895, 896.] 4. BANKRUPTCY 484-FEES OF RECEIVERS EFFECT OF COMPOSITION.

Under Bankruptcy Act, § 2, subd. 5 (Comp. St. 1916, § 9586), empowering courts of bankruptcy to authorize the business of bankrupts to be conductFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

ed for limited periods by receivers, "if necessary in the best interests of the estates," and sections 48d and 48e, limiting the fees of receivers in case of a composition, though, upon presentation of an offer of composition while the estate is in the hands of a receiver, the amount of his commissions as receiver may be immediately reduced, so far as the possible maximum is concerned, to one-half of 1 per cent., he can be called upon to do nothing thereafter, except to hold the property, and if, for the benefit of the bankrupt, he continues to conduct the bankrupt's business, the expense of so conducting it is a legitimate disbursement to be paid by the bankrupt, and not compensation to the receiver, within section 72 (Comp. St. 1916, § 9656), providing that the receiver shall not receive, nor shall the court allow, any other or further compensation for his services than that expressly authorized and prescribed therein.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 895, 896.] 5. BANKRUPTCY 474-COSTS AND FEES-PERSONS OR FUNDS LIABLE. Where a bankrupt, offering a composition, has made a deposit for his attorneys, the amount thereof will be used to meet the expenses of the composition and of the bankruptcy proceedings, if necessary.

[Ed. Note. For other cases, see Bankruptcy, Cent. Dig. §§ 878-884.]

6. BANKRUPTCY484-FEES OF RECEIVERS EFFECT OF COMPOSITION. A receiver, when conducting the business of the bankrupt for the bankrupt after the offer of a composition, should be paid only in a corresponding way to what he would be paid if acting for the benefit of the estate. [Ed. Note.-For other cases, see Bankruptcy, Cent. Dig. §§ 895, 896.] In Bankruptcy. In the matter of David Miller and another, individually and as members of David Miller & Son, and the copartnership of David Miller & Son, alleged bankrupts. On application for award of compensation to a receiver. Ordered in accordance with the opinion.

CHATFIELD, District Judge. The court appointed a receiver upon the 13th day of March, 1917, and at the request of the attorney for the petitioning creditors authorized him to continue the business. The Bankruptcy Law (section 2, subd. 3) gives the court authority to appoint a receiver to take charge of the assets until election of a trustee. The compensation of such receiver is fixed at a certain percentage, unless a composition be confirmed, in which event the percentage of the receiver for taking charge of the property cannot exceed one-half of 1 per cent. of the amount paid to creditors. Section 48, subd. "d." The evident purpose of the last provision is to assist bankrupts by keeping down expenses, if they are able to take the estate out of liquidation and preserve their business name. Under section 2, subd. 5, such a receiver or trustee can be authorized to conduct the business of the bankrupt "for limited periods," and by section 48, subd. "e," compensation for these services may be allowed by way of commissions upon the money disbursed or turned over in connection wtih the conduct of the business. But, again, it is provided. that, if a composition be confirmed, such commission shall not exceed one-half of 1 per cent. of the amount to be paid creditors.

[1] It is apparent that if a composition is proposed before adjudication, and ultimately confirmed, the receiver's fees will be cut down. If a composition should be offered after the appointment of a trustee,

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

the compensation to the trustee will be cut down if the composition be confirmed. But in the latter case the receiver would have completely earned the amount of his compensation, and to such amount as the court should see fit to allow the actual services could be paid for, up to the regular percentage. Section 72 forbids the receiver or trustee from receiving in any form or guise any other or further compensation for his services than that expressly authorized and prescribed in the act, and also forbids an allowance by the court of any other compensation. This emphasizes the mandatory character of the language in the previous sections and also forbids evasion of the rule. It thus frequently happens that, in contemplation of an offer of composition, a receiver or trustee is urged to continue the business for long periods of time, and devotes his own services and business ability to the preservation of the assets as a going concern, only to be met, when the composition is offered, with the proposition that he is limited to onehalf of 1 per cent. upon the actual amount to be paid to creditors and an additional one-half of 1 per cent. on the same amount for running the business.

In the present case adjudication has been had. No trustee has been appointed as yet, but subsequent to adjudication, and while the property was still in the possession of the receiver, an offer of composition was made, and the amount to be distributed to creditors is $3,577.96. One-half of 1 per cent. is $17.89. The receiver will therefore have given his personal attention to the conduct of a business of considerable extent for a period of at least two months, and his maximum compensation, as figured by the bankrupt, would be $35.78. The receiver has performed these services at the request of the attorneys for the petitioning creditors and of other creditors, and also at the request of the attorneys for the bankrupt.

[2] It is a well-established proposition in this district that, after an offer of composition by a bankrupt, the expenses of continuing the bankruptcy proceeding for the purpose of the composition, instead of for liquidation of the estate, should be secured by the bankrupt, and, if necessary, paid out of the amount deposited for the purposes of the composition. The creditors are entitled to a distribution of the amount which is available for that purpose, without diminution by the bankrupt in his hope to effect a composition, unless the creditors consent to or approve of a reasonable amount of expenses by the bankrupt therefor. Such items as rent, wages, and the various larger expenses, where an offer of composition drags over a period of several months, are not allowed to be incurred out of the estate without notice to the creditors. In the same way, after an offer of composition is once made, the receiver does not conduct the business for the benefit of the creditors, and there certainly is still less reason why the receiver should be expected to conduct the business for the benefit of the bankrupt, at the reduced maximum compensation which the court can ailow, if the property is taken away from the receiver and turned over to the bankrupt at the termination of the composition.

[3, 4] If a receiver has already accounted, and his allowance has been fixed (and possibly paid) before composition is offered, certainly