ness of buying and selling coal like the original company. But no liability for the debts of Gano Moore Company can be worked out that is not based on property received from the former, and that property, so far as disclosed, was largely, if not entirely, good will. The liability of Gano Moore Coal-Mining Company must depend upon the extent of the value, if any, of the property transferred to it. Okmulgee Window Glass Co. v. Frink (C. C. A.) 260 F. 159. We are referred to no case where a remedy to reach and apply assets, ordinarily afforded only by a creditors' bill, has been applied by a court of admiralty. It seems quite foreign to its jurisdiction, and we hold that such relief cannot properly be granted in this suit.

[18] The railway further seeks to recover indemnity from Gano Moore Company on the ground that it has proved preliminary contracts with the latter whereby Gano Moore Company agreed (1) to sell and deliver to it 25,000 tons of coal, and that "the daily discharge will be 1,000 tons on land"; (2) to sell to it a further 25,000 tons of coal, "the discharge to be made on land," and "the shipment [to be] effected by steamers during February/March, 1920, it being understood that there will be an interval of ten (10) days at least between each steamer."

The coal which the five vessels involved in this case carried was the coal sold by Gano Moore Company to the railway under the foregoing contracts. But those contracts were merely for the sale and delivery of coal on land, and were not maritime obligations. The railway contends that Gano Moore Company occasioned the congestion and consequent demurrage at the discharging port by failing to keep their agreement to maintain an interval of 10 days between each steamer. It also insists that Gano Moore Company is under obligation to indemnify it for any sums found to be due libelants for demurrage and incidental expenses, because they contracted to deliver the coal in Buenos Aires "on land." But the agreements to maintain an interval of 10 days between each steamer and to deliver the coal on land were nonmaritime, and cannot be enforced in admiralty, either directly or by remedy over under the fifty-sixth rule. The Alert (Soderberg v. Atlantic Lighterage Corp.) (C. C. A.) 19 F. (2d) 286; The Ada (C. C. A.) 250 F. 194.

The interlocutory decree should be modified, so as to hold Gano Moore Company primarily liable for loading port demurrage, as between it and the railway company, and is otherwise affirmed.

DOBSON v. UNITED STATES. EGBERT v. SAME. HASELDEN v. SAME.

Circuit Court of Appeals, Second Circuit. August 20, 1928.

Nos. 345-347.

1. United States 125(1)-Libel did not lie

against United States for death of officers of unseaworthy submarine in collision on high seas (34 USCA §§ 981, 982; 38 USCA §§ 151-206; 46 USCA §§ 688, 741-752, 761 et seq. and §§ 781-790).

Under Act March 3, 1925, §§ 1-10 (46 USCA §§ 781-790), Act June 5, 1920, § 33 (46 USCA § 688), Act March 9, 1920 (46 USCA 88 741-752), and Act March 30, 1920 (46 USCA $761 et seq.), libel suit did not lie against the United States for death of naval officers of government submarine in collision on high seas, caused by unseaworthiness of vessel without contributory negligence, in view of Act Oct. 6, 1917 (34 USCA §§ 981, 982), and 38 USCA §§ 151-206.

2. United States 125(1)-Act authorizing libel against United States for damages by public vessel refers to damages to third persons, not of ship's company (46 USCA §§ 781790).

Act March 3, 1925, §§ 1-10 (46 USCA §§ 781-790), authorizing libel in personam in admiralty against the United States for damages caused by public vessel, refers to damage caused by ship to third persons, who are not of her company, generally resulting from collision.

Appeal from the District Court of the United States for the Eastern District of New York, in Admiralty.

Separate suits by Goldye M. Dobson, administratrix of the estate of Rodney Hiram Dobson, deceased, by Tempa Russell Egbert, administratrix of the estate of Edmund Web

ster Egbert, deceased, and by Lawrence B. Haselden, executor of the estate of James United States, as owner of the submarine SDudley Haselden, Jr., deceased, against the 51. To review a judgment dismissing the libels (24 F.[2d] 529), libelant in each case appeals. Affirmed.

These three suits were alike, and were disposed of by the District Court in a single opinion. In each, the libel was filed by the legal representative (for the benefit of the widow and children) of a deceased naval officer, who lost his life by the sinking of the United States submarine S-51 in collision with the City of Rome on the high seas during the night of September 25, 1925. It alleged that the submarine was unseaworthy, in that it was so constructed that the navigational lights required by law could not be, and were not, displayed by it, and that this defect caused the aforesaid collision and

consequent loss of life, without contributory fault on the part of the deceased officer. Exceptions challenging the jurisdiction of the court were sustained, and the libel was dismissed. The libelant in each case has appealed. Affirmed.

Bigham, Englar & Jones, of New York City (T. Catesby Jones, James W. Ryan and W. J. Nunnally, Jr., all of New York City,

of counsel), for appellants.

William A. De Groot, U. S. Atty., of Brooklyn (Horace M. Gray, Sp. Asst. U. S. Atty., of New York City, of counsel), for

the United States.

10 (46 USCA § 790) directs the Attorney General to report to each session of Congress final judgments and settlements under this

act.

This statute, in conjunction with the Act of March 30, 1920 (41 Stat. 537 [46 USCA § 761 et seq.]), creating a cause of action where the death of a person is caused by wrongful act, neglect, or default occurring on the high seas, is said by appellants to justify their libels. Appellee, on the other hand, argues that the statute should be construed as limiting recovery to damages to property and not contemplating compensation for loss of life. We do not find it nec

SWAN, Circuit Judge. The libels were brought under the Act of March 3, 1925 (43 Stat. 1112). Section 1 (46 USCA § 781) provides:

"That a libel in personam in admiralty may be brought against the United States, or a petition impleading the United States, for damages caused by a public vessel of the United States, and for compensation for towage and salvage services, including contract salvage, rendered to a public vessel of the United States: Provided, that the cause of action arose after the 6th day of April,

1920."

Section 2 (46 USCA § 782) prescribes the venue of suits, and says they shall proceed in accordance with the provisions of the Act of March 9, 1920 (46 USCA §§ 741752), relating to merchant vessels belonging to the United States, "in so far as the same are not inconsistent herewith," with an exception as to the allowance of interest. Section 3 (46 USCA § 783) relates to crosslibels, in the event that the United States is the libelant. Section 4 (46 USCA § 784) forbids the service of subpoena upon an officer or member of the crew of a public vessel of the United States without the consent of the secretary of the department having control of the vessel or of the commanding officer of such vessel. Section 5 (46 USCA § 785) relates to suit by a national of a foreign government. Section 6 (46 USCA § 786) authorizes the Attorney General to settle claims arising under the act. Section 7 (46 USCA § 787) provides for payment of any final judgment. Section 8 (46 USCA § 788) denies the creation of any lien against a public vessel. Section 9 (46 USCA § 789) accords to the United States the benefits of all exemptions and limitations of liability accorded to owners of vessels. And section

ent case. The phrase "damages caused by a public vessel of the United States" would seem sufficient to include loss of life occasioned by the unseaworthy condition of the ship, even though this operates through the

intermediation of collision with another ves

sel, and it may be assumed arguendo that, were the suit brought for the death of a passenger or member of the crew of the City of Rome, caused by the collision, we would sustain it; for the purpose of the Act of March 3, 1925, was apparently to assume liability for damage done by a public vessel (at least in favor of persons not of her company) similar to that already assumed by the United States with respect to its merchant fleet by the Suits in Admiralty Act of March 9, 1920 (41 Stat. 525).

Verbally, there is nothing which excludes liability for damage to property or person of officers or crew. Seamen on the merchant fleet of the United States are given a right of action in case of injury or death, by section 33 of the Jones Act (41 Stat. 1007 [46 USCA § 688]); and this has apparently been treated as an alternative remedy, not preventing suit by their legal representatives under the general admiralty law, coupled with the Act for Wrongful Death on the High Seas. See Axtell v. United States, 286 F. 165 (D. C. N. Y.); Burke v. United States, 15 F. (2d) 573 (D. C. Or.). It must be conceded, therefore, that appellants make a strong argument in favor of liability. decision in O'Neal v. United States, 11 F. (2d) 869 (D. C. N. Y.), affirmed (C. C. A.) 11 F. (2d) 871, is not against them, for there the loss of life was caused, not by the unseaworthiness of the ship, but by the explosion of a shell, and without evidence of negligence in the handling of it.

The

[1] Nevertheless the construction contended for by appellants involves so radical a departure from the government's long-standing

policy with respect to the personnel of its naval forces that we cannot believe the act should be given such a meaning. The statute itself does not specify who may maintain suits under it. To allow suit by the officers and crew of the public vessel for damage caused by it to them would be too great a reversal of policy to be enacted by such general terms. The Act of October 6, 1917 (40 Stat. 389 [34 USCA §§ 981, 982]) directs the Paymaster General of the Navy to reimburse officers, enlisted men, and others in the naval service who suffer loss or destruction of or damage to their personal property in the naval service, due to operations of war or by shipwreck or other marine disaster, when such loss, destruction, or damage was without fault or negligence on the part of the claimant, or where the private property so lost, destroyed, or damaged was shipped on board an unseaworthy vessel by order of an officer authorized to give such order. Detailed provisions as to the character of property in respect to which the government assumes liability and as to the making and proof of claims for its loss, destruction or damage, are prescribed, and cognate provisions in the Revised Statutes (sections 288290) are repealed.

[2] Chapter 3, title 38, of the United States Code (38 USCA §§ 151-206) provides an elaborate pension system for personal injury and loss of life incurred by officers and enlisted men in the navy. These pensions may be thought an inadequate substitute for the recovery of full damages under the Public Vessels Act of March 3, 1925, but they were well known to all who entered the naval service. The policy evidenced by these statutes has existed for a great many years. If it had been the purpose to change that policy 27 F.(2d)-512

as respects officers and seamen of the navy injured by the unseaworthiness of a public vessel, or by the fault of one another, because that is what in the end it comes to, we cannot think it would have been left to such general language as is to be found in the abovequoted section 1. The more natural meaning of the act is to refer it to damage caused by the ship to third persons who are not of her company, and generally, if not universally, the damage will be the result of a collision. This conclusion is fortified by grouping "damages caused" with "towage" and "salvage services"; the two latter being causes of suit which can arise only in favor of persons outside the ship's company. Foreign nationals, referred to in section 5, would also be off the offending vessel. In the Osceola, 189 U. S. 158, 176, 23 S. Ct. 483, 487 (47 L. Ed. 760), where a state statute provided that a vessel navigating in local waters should be liable "for all damages arising from injuries done to persons or property by such ship," the court said:

"The statute was doubtless primarily intended to cover cases of collision with other vessels or with structures affixed to the land, and to other cases where the damage is done by the ship herself, as the offending thing, to persons or property outside of the ship, through the negligence or mismanagement of the ship by the officers or seamen in charge. To hold that it applies to injuries suffered by a member of the crew on board the ship is to give the act an effect beyond the ordinary meaning of the words used."

We believe that Congress meant to leave upon the members of the naval forces the same risks of injuries suffered in the service of the United States as they had before. The decrees are accordingly affirmed.

In re PACAT FINANCE CORPORATION
et al.
Circuit Court of Appeals, Second Circuit.
August 20, 1928.

No. 248.

I. Appeal and error 78 (5)-Interlocutory order, confirming master's report denying recovery on trust theory, but retaining jurisdiction, held not appealable, and no bar to claim of trust on appeal from judgment.

Order confirming report of first master, denying claimant's recovery against trustee in bankruptcy on theory of express trust, but which allowed claimant to proceed on theory of tracing money, and which expressly stated that its provisions were interlocutory only and that jurisdiction was retained until second report and action thereon, held not final, and appealable order, and does not bar claimant from urging trust theory on appeal from judgment in district court.

2. Courts 406(1)-Circuit Court of Appeals may deal with record irrespective of limitations of theory of trial judge's decision.

Circuit Court of Appeals may deal with record as it finds it, irrespective of limitations of theory on which trial judge rendered decision.

3. Bankruptcy 140(5)-Cable directing correspondent bank to transfer money to claimant, not complied with, held not to create trust fund in deposit against bankrupt's trustee.

Cable by bankrupt pursuant to contract with claimant for purchase of foreign exchange, directing correspondent bank to transfer money from its account to credit of claimant, which was not done, held not to constitute appropriation of any part of deposit to contract so as to impress deposit with trust in favor of claimant as against bankrupt's trustee appropriating deposit, where it did not appear that bankrupt intended payment to be made only out of specific credit referred to in cablegram and bankrupt's account showed overdrafts.

4. Bankruptcy 303 (1)-Creditor, to establish trust against bankrupt for lire purchased but not delivered, had burden of establishing express appropriation of specific lire.

In reclamation petition by creditor purchasing lire from bankrupt, which were not delivered by bankrupt's correspondent bank, to impress trust on funds of bankrupt in correspondent bank appropriated by trustee, creditor had burden of establishing express appropriation of specific lire out of bankrupt's deposit in correspondent bank.

5. Bankruptcy 140(5)-Direction to correspondent bank to pay customer out of general funds does not establish express appropriation against bankrupt's trustee.

Mere direction by bankrupt to correspondent bank to pay customer purchasing foreign exchange out of bankrupt's general funds is not sufficient to establish express appropriation of specific foreign exchange out of bankrupt's general funds as against bankrupt's trustee.

6. Bankruptcy 303 (3)-Evidence held not to establish express trust in specific lire by appropriation of lire by bankrupt directing correspondent bank to make payment.

Evidence that bankrupt, pursuant to contract with claimant for transfer of lire, cabled correspondent bank before bankruptcy that it would receive deposit for account of bankrupt four days after date of cable and to pay claimant certain amount of lire, that claimant was entitled to receive payments before alleged deposit, and that bankrupt was in habit of notifying correspondent of deposit and directing payment to customers in same cablegram, held not to show express trust in specific lire by reason of appropriation of lire out of bankrupt's deposit as against bankrupt's trustee.

7. Bankruptcy ~303(1)—Claimant, to establish constructive trust in funds held by bankrupt's trustee for lire purchased, was required to trace specific dollars used in purchasing lire.

In proceedings by claimant against trustee in bankruptcy to recover value in American dollars of lire purchased from bankrupt, on theory of constructive trust by reason of tracing claimant's dollars into lire and thence back into dollars held by trustee, claimant was required to prove specific dollars sought to be traced and to show which of his several contracts of purchase remained unperformed by bankrupt.

8. Bankruptcy

303 (3)—Evidence showed performance of last transactions between claimant and bankrupt rather than prior transactions for purchase of foreign exchange.

In reclamation petition by claimant purchasing foreign exchange from bankrupt to establish trust in funds of bankrupt on deposit with correspondent bank, evidence of cable sent by bankrupt to correspondent bank directing payment of foreign exchange to claimant, showed per

formance of last two transactions between

bankrupt and claimant rather than prior transactions, though value date, which is date on which interest adjustments were to be made abroad, corresponded with value date of prior transactions.

9. Bankruptcy 140(5)-Foreign exchange credits, established with proceeds of checks of claimant purchasing exchange, were held by bankrupt subject to lien for claimant pro tanto destroyed by depletion of fund.

Under evidence that claimant of trust in funds of bankrupt for foreign exchange, purchased but not delivered, paid bankrupt by check on December 13, 14, and 15 for foreign exchange, which checks were deposited by bankrupt to its general account on each of such dates, and that bankrupt drew its checks on December 14, 15, and 16, to pay for foreign exchange received and credited to bankrupt, credits of foreign exchange created by bankrupt's withdrawals when his account was composed in part of claimant's checks were held by bankrupt on constructive trust, and were in equity subject to lien or charge in favor of claimant, which would be pro tanto destroyed by depletion of fund.

10. Bankruptcy 140(5)-Deposits, not proceeds, of claimant's money could not restore trust fund previously created by purchase of foreign exchange with claimant's money.

Where bankrupt was shown to hold foreign exchange credits created in part by checks of claimant purchasing foreign exchange on constructive trust, subject to lien in favor of claimant, and credit was thereafter depleted, sub

sum in lire to Berardini's branch office in Naples. Pacat would thereupon cable its Italian correspondent, Credito Italiano, to make such payment. The aggregate of the exchange so purchased was 4,000,000 lire, and 3,250,000 lire had been paid to Berardini in Naples prior to Pacat's bankruptcy,

to have been proceeds of claimant's money, would not restore trust fund.

Appeal from the District Court of the United States for the Southern District of

New York.

In the matter of the Pacat Finance Corporation, bankrupt. The claimant, M. Berardini State Bank, a New York corporation, sought to reclaim from Stuart McNamara, trustee in bankruptcy of the Pacat Finance Corporation, bankrupt, 750,000 lire as exchanged by the trustee into American dollars, now in his possession. From an order (295 F. 394) allowing recovery of the dollar value with earned interest thereon of only 92,352.10 lire, both litigants appeal. Affirmed.

Edmund L. Mooney, of New York City (Wilber W. Chambers, of New York City, of counsel), for claimant.

Francis L. Kohlman, of New York City (Sydney Krause, of New York City, of counsel), for trustee in bankruptcy.

of the bankruptcy petition, Pacat had a credit of more than this sum on the books of Credito Italiano, which the trustee subsequently reduced to possession. On April 15, 1921, Berardini filed his reclamation petition, seeking to impress a trust upon 750,000 lire of the sum standing to Pacat's credit on the books of Credito. Other creditors also filed reclamation claims, and all such proceedings were referred to a special master, who reported in favor of certain claimants, but adversely to Berardini. The District Court modified the master's report with respect to Berardini's claim, stating in his opinion (In re Pacat Finance Corporation, 295 F. 394, 414) as follows:

"My conclusion is: I agree with the master in holding that none of the funds in Credito Italiano were appropriated in a legal sense to Berardini. The direction that such appropriation be made was dishonored, due to the overdrafts of Pacat. Upon such theory of appropriation, the claim must be disallowed. Since, however, the principle of

SWAN, Circuit Judge. The claimant, hereinafter referred to as Berardini, contends that the trustee in bankruptcy of Pacat Finance Corporation hereinafter referred to as Pacat, came into possession of 750,000 lire, which belonged to Berardini. He seeks to establish his right upon the theory of (1) an express trust in specific lire, by reason of an appropriation of them for him by Pacat prior to bankruptcy; or (2) a constructive trust by reason of tracing his own dollars into lire, and thence back into dollars held by the trustee. The trustee contends that the evidence is insufficient to prove claimant's right under either theory, and in addition asserts that the first theory is not before us on this appeal, because of a prior order from which no appeal was taken.

Prior to the filing of the petition in bankruptcy on December 30, 1920, Pacat had conducted a business of buying and selling foreign exchange. During several weeks just prior to said date, Berardini on 13 separate occasions had paid money to Pacat in New York, with directions to pay an equivalent

Berardini-Pacat contracts, and as Pacat defaulted in performance, it should be said that the moneys obtained from Berardini were held in trust by Pacat. The claim accordingly will be allowed for tracing and marshaling."

Accordingly, the order of October 10, 1923, entered in conformity with said opinion, allowed Berardini to proceed upon the theory of tracing dollars into Pacat's credit with Credito Italiano, and referred the matter to Special Master Olney to hear and report. By amendment of his petition Berardini specified that the contracts not performed by Pacat were three purchases of cable transfers, of 250,000 lire each, made on December 9, 10, and 13, 1920, for which he had paid, including cable charges, an aggregate of $26,330. The master reported against the claim in toto, but the District Court modified the report, allowing a recovery of the dollar value of 92,352.10 lire. The recovery was limited to this amount because of the subsequent depletion to that sum of the lire found to have been purchased with claimant's money. This is the decree from which both parties have appealed.