19 F.(2d) 645 Company, and this court may determine the liability of Gano Moore Company, as well as the Central Argentine Railway Company, to the libelants. Luckenbach S. S. Co. v. Central Argentine Ry. Co. (D. C.) 298 F. 344. [15] "The cesser clause does not say, nor does it mean, that the liabilities of the charterer which have accrued prior to the signing of bills of lading are to be extinguished, but only that the charterer is to be relieved from such charter obligations as arise after the bills of lading have been signed." The Marpesia (C. C. A.) 292 F. 957. Gano Moore Company, therefore, remained liable for demurrage sustained at the loading port by the Seifuku Maru and Kofuku Maru. The cesser clause, however, released Gano Moore Company from all obligations to the libelants after the bills of lading were signed. The Hans Maersk (C. C. A.) 266 F. 806; The Marpesia (C. C. A.) 292 F. 957; Luckenbach v. Central Argentine Ry. Co. (D. C.) 298 F. 344. [16] Relying on Crossman v. Burrill, 179 U. S. 100, 21 S. Ct. 38, 45 L. Ed. 106, and Dewar v. Mowinckel (C. C. A.) 179 F. 355, 362, and the principle that the cesser clause is to be construed as inapplicable to a liability with which the lien is not commensurate, the railway company contends that the laws of Argentine prohibit a ship from retaining possession of the cargo, that therefore the lien conferred by the cesser clause was not commensurate with the charterer's liability, and that the cesser clause accordingly did not release Gano Moore Company from liability for demurrage. In neither of these two cases was the lien given the shipowners on the cargo by the cesser clause preserved against the indorsee of the bills of lading by incorporation of the lien provision in the bills of lading. As has heretofore been stated, the Argentine laws not only recognize a lien on transported goods, but they provide remedies and impose on the consignee a liability in personam for demurrage fully commensurate with the liability of the charterer. To hold the charterer liable, notwithstanding the liability imposed on the railway company by the laws of Argentine, would violate the intention of the charterer and the shipowner, expressed in the cesser clause, relieving the charterer from all liability. The principle that the cesser clause will not exonerate the charterer, unless another commensurate remedy is given by the charter, as by a lien upon the goods which would otherwise not exist, because it will not be presumed that the shipowner intended to re linquish his rights against the charterer without adequate consideration (see Carver, §§ 607, 649, 650), does not apply because liens were given to libelants and the libelants did possess remedies commensurate with those surrendered by the cesser clause. The contention of the railway company that the cesser clause did not release Gano Moore Company is also inconsistent with its contention that the cesser clause did release Gano Moore Company, and that the railway company, as the assignee of Gano Moore Company, had the benefit of the release of Gano Moore Company. [17] A court of admiralty has no jurisdic- [19] Nor can a court of admiralty retain The libelants, therefore, are entitled to a decree against the railway company and Gano Moore Company for the demurrage sustained by the Kofuku Maru and Seifuku Maru at the loading port, and against the Central Argentine Railway Company for de murrage and extra expenses incurred by all the vessels at the discharging port, in accordance herewith, the amount thereof to be computed by a commissioner. SEARS et al. v. GREATER NEW YORK DEVELOPMENT CO. District Court, D. Massachusetts. May 25, 1927. No. 2688. 1. Corporations 473-Principal sum of bond held due on date payable, notwithstanding provision for interest payments only as authorized by directors. Principal sum of bond payable in 1921 held to become due on such date, notwithstanding provisions therein relative to interest payments only at times and in amounts as authorized by board of directors. 2. Courts 371(8), 372(7)-Federal law governs on matters affecting validity of commercial instruments, while local law governs rate of interest on default. On matters affecting validity or essential characteristics of a commercial instrument, the federal law governs, while the rate of interest on default will depend on local law of place where interest is payable. 3. Interest 37(1)-Interest on past-due bond payable in Massachusetts was recoverable at rate fixed in bond. Where bond was payable in Massachusetts, rate of interest recoverable by owner after due remained the same as that authorized in bond, and not the legal rate of 6 per cent. 4. Courts 372(1)-Federal courts, on matters of commercial law, are bound by federal Supreme Court decisions. Federal courts, on matters of commercial law, are bound by the decisions of the United States Supreme Court. 5. Courts 372(7)—Whether Interest coupons payable to bearer are interest-bearing is question of general commercial law, local law not being controlling. Federal courts are not bound by state rule as to right of holder of interest coupons to interest thereon; the question being one of general commercial law. Choate, Hall & Stewart, F. H. Nash, and Herbert Schnare, all of Boston, Mass., for plaintiffs. French & Smith, Clarence F. French, McLellan, Brickley & Sears, and Howard W. Cole, all of Boston, Mass., for defendant. MORTON, District Judge. This is an action at law to recover interest on a bond. The present questions arise on a demurrer to the declaration. The facts alleged by the plaintiffs may be briefly summarized: The plaintiffs' testatrix owned $12,500, face value, of the income bonds of the defendant, dated June 2, 1901, with 40 (i. e., all) interest coupons attached. The provisions of the bonds material to the present controversy were as follows: The defendant company promised to pay to the bearer on June 1, 1921, at its agency in Boston, a specified sum ($500 or $1,000), "with interest at the rate of 5 per cent. per annum from December 1, 1902, come due and payable, on the 1st day of June and until the principal of this bond shall beand December, in such installments as the board of directors of the company from time to time shall ascertain, determine, and declare to be payable pro rata on the bonds of the 'series of which this is one, out of the receipts from profits of the company, when and as such payments may seem safe in the judgment of the directors." "The interest on this bond at the rate of 5 per cent. per annum shall be cumulative from December 1, 1902." Then follow provisions relative to the amount and payment of interest, including, inter alia, "such installments of interest as and when ascertained, determined, and declared by the board of directors shall be payable to holders of respective coupons," etc., and further provisions for drawing the bonds for payment before maturity. The bond then says: "After the date fixed for payment interest shall cease upon this bond." There are other provisions not material to the present questions. 6. Interest 17-Interest at legal rate held cipal, was made upon the bond until January No payment, either of interest or of prin recoverable on interest coupons after date bond became due. Owner of interest coupons payable to bearer held entitled to interest at legal rate on amount of coupons after principal became due, since interest represented by coupons becomes an independent obligation separate from principal. At Law. Action by Annie L. Sears and others, as trustees, against the Greater New York Development Company. Judgment for plaintiffs. 5, 1926, when the defendant paid the plaintiff the principal sum of each bond, with interest from December 1, 1902, to the date of payment, amounting in all to $2,155 for each $1,000 bond. The plaintiff contends that on the face of the bonds themselves all unpaid interest became due on June 1, 1921, according to the tenor of the bond; i. e., a total of $1,925 on each $1,000 bond, and that interest thereon should have been computed from that date 19 F.(2d) 654 to the date of payment, at the rate, not of 5 per cent., as stated in the bond, but at 6 per cent., which is the legal rate. The defendant contends that the bonds did not become due until so declared by the board of directors; that, even if they did become due on June 1, 1921, interest on them would continue, not at 6 per cent., but at the rate specified in the bonds, viz. 5 per cent.; and that no interest should be allowed on unpaid interest. These are the questions presented for decision by the demurrer. [1] The first two questions depend upon the interpretation of the bond. It contains a direct and unconditional promise to pay to the bearer, on the date stated, the principal sum named. There are definite and elaborate provisions that no interest shall become payable until declared so by the directors; there is no such provision with respect to the principal. I discover nothing in the language of the bond which modifies the promise to pay above referred to. In my opinion, the principal sum of the bond became due on the date therein stated. The obligation is to pay that sum, "with interest at the rate of 5 per cent. per annum from December 1, 1902, and until the principal of this bond shall become due and payable in such installments as the board of directors from time to time shall ascertain, determine, and declare to be payable," etc. This is the basic contract. The intention was, I think, that on June 1, 1921, the face of the bond, with all unpaid interest, should become due, and that before that date the holders could not claim interest as of right. The provision relied on by defendant, viz. "the determination of the board of directors whether any payment of interest can be safely made at any time, and as to the amount of such payment, shall be conclusive and binding upon the company and upon the holders of this bond," relates to installments of in terest before the bond became due. It fol lows that the sum of $1,925 was due upon each $1,000 bond on June 1, 1921. The remaining questions are whether interest on the principal sum of the bond continued at 5 per cent., or at 6 per cent., and whether any interest is recoverable on the accumulated interest which became due on June 1, 1921. By the law of the federal courts the plaintiff is right on both points. In Holden v. Trust Co., 100 U. S. 72, 25 L. Ed. 567, it was held that on a promissory note, which carried interest at 10 per cent., but was silent as to the rate of interest after maturity, the holder was entitled only to the legal rate (6 per cent.) thereafter. "Here the agreement of the parties extends no further than to the time fixed for the payment of the principal. As to everything beyond that it is silent. If payment be not made when the money becomes due, there is a breach of the contract, and the creditor is entitled to damages. Where none has been agreed upon, the law fixes the amount according to the standard applied in all such cases. It is the legal rate of interest, where the parties have agreed upon none. If the parties meant that the contract rate should continue, it would have been easy to say so. In the absence of a stipulation, such an intendment cannot be inferred." Swayne, J., at page 74. In Pana v. Bowler, 107 U. S. 529, 2 S. Ct. 704, 27 L. Ed. 424, it is said: "Lastly, it is assigned for error that, in computing the amount due upon the coupons described in the declaration, the court allowed 7 per cent. interest, the legal rate in New York, where the coupons were payable, instead of 6 per cent., the legal rate in Illinois, where they were made. There was no error in this. The coupons, after their maturity, bore interest at the rate fixed by the law of the place where they were payable. Gelpcke v. City of Dubuque, 1. Wall. 175 [17 L. Ed. 520]." Woods, J., in 107 U. S. at page 546 (2 S. Ct. 718). Apparently these decisions are not in accord with the law of Massachusetts. In Lamprey v. Mason, 148 Mass. 231, 19 N. E. 350, it is said: "The rate of interest named in a contract to be paid for the use of money when it is due is impliedly agreed between the parties to be the rate which shall be paid by way of damages for the detention of the money after it is due." Knowlton, J., at page 235 (19 N. E. 352). See, too, Brannon v. Hursell, 112 Mass. 63, 71. In Shaw v. Norfolk County Railroad Co., 16 Gray, 407, it is terest upon the interest coupons, after paysaid: "The disallowance by the master of inment demanded thereof, was correct. Interest upon interest which has accrued upon contracts upon which interest is by its terms payable at stated periods, before the principal becomes due, is never allowed in making up judgment in suits thereon. This has often been determined, and must now be considered as the settled law in this commonwealth upon that subject" (citing cases). Merrick, J., at page 416. [2, 3] The final question, then, is how far the case is to be determined by federal law, and how far by local law. There is an explicit dictum in Holden v. Trust Co., supra, in which, after stating the federal rule, the opinion con tinues: "Where a different rule has been established, it governs, of course, in that locality. The question is always one of local law." In Presidio County v. Noel-Young Bond Co., 212 U. S. 58, 29 S. Ct. 237, 53 L. Ed. 402, it was held that the validity of a Texas county bond would be determined according to the federal law, and that a state decision adverse to that view would be disregarded. This decision was followed in this circuit in Citizens' Savings Bank v. Newburyport (C. C. A. 1st) 169 F. 766. The rule thus appears to be that, on matters affecting the validity or essential characteristics of a commercial instrument, including bonds, the federal law governs, while the rate of interest on default will depend on the local law of the place where the instrument is payable. It follows that the plaintiff is entitled to interest at only 5 per cent. on the principal sum of the bond, although the rule might well be, I think, that all nonstatutory questions on bonds should be treated in the federal courts as matters of general commercial law. The coupons became due for the full amount on June 1, 1921, as I construe the bond. As to them, the contract contains no provision, either express or implied, fixing a rate of interest. It is perhaps doubtful, even under Massachusetts law, whether on the circumstances here presented-i. e., where the principal of a bond has become due, and coincidentally the entire accumulation of interest upon it represented by coupons-the coupons do not carry interest. In Shaw v. Norfolk County R. R. Co., supra, the rule is carefully limited to interest which becomes payable "before the principal becomes due." [4-6] It is, however, unnecessary to decide this question, because, in my opinion, the point is one of commercial law, on which this court is bound by the decisions of the United States Supreme Court. Interest represented by coupons stands on a very different footing from that not so represented. It becomes an independent obligation, separate from the principal. The present coupons are payable to bearer, and are equally good, whether presented by the holder of the bond or by some other person. The Massachusetts rule denying interest on them altogether-if it be the Massachusetts rule-affects the essential character of the obligation. It is much more basic than the mere rate of interest, and how far interest is to be treated as an accretion on principal. It denies an important right upon a common sort of commercial instrument. It follows that the plaintiffs are entitled to interest on the amount of the coupons at 6 per cent. per annum from June 1, 1921. Judgment accordingly; i. e., declaration adjudged good as to claim for interest on the coupons, and bad as to claim for interest at 6 per cent. on the principal. DOBBIE v. UNITED STATES. District Court, S. D. Texas, at Houston. May 6, 1927. No. 811. 1. Army and navy 512-Action may be maintained on, war risk insurance claim when director of bureau refuses to act thereon. Under the provision of World War Veterans' Act, § 19 (Comp. St. § 91272-19), authorizing action on a claim in the event of disagreement between the bureau and claimant. the director cannot defeat the jurisdiction of the court to entertain such an action by persistently and unreasonably refusing to act on the claim. 2. Army and navy 512-Successful suitor for war risk insurance is entitled to costs and interest after judgment. On recovery on a claim for war risk insurance, plaintiff is entitled to costs and interest after judgment. 3. Army and navy 512-Representation by holder of policy of war risk insurance to obtain reinstatement held not to create estoppel to make inconsistent claim in subsequent suit. The holder of a policy of war risk insurance, who, in an application on which the policy was reinstated after lapse for nonpayment of totally disabled, held not thereby estopped in a a premium, represented that she was not then subsequent suit on the policy to claim total disability from a time prior to the reinstatement, since if such fact was proved, she did not owe the premium for which the lapse was declared, but her claim had matured, the gov ernment was not prejudiced and there was no ground of estoppel, nor was such representation, made for the purpose of keeping the policy in force, an election of remedies, where it was made through mistake. 4. Election of remedies not arise out of mistake. 10-"Election" can An act done on a mistaken hypothesis will not constitute an "election" of remedies. [Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Election.] At Law. Action by Amy C. Dobbie against the United States. Judgment for plaintiff. Y. D. Mathes and Baker, Botts, Parker & Garwood, all of Houston, Tex., for plaintiff. H. M. Holden, U. S. Atty., and Howell Ward, Asst. U. S. Atty., both of Houston, 19 F.(2d) 656 Tex., and B. L. Guffy, U. S. Veterans' Bureau, of Washington, D. C., for the United States. HUTCHESON, District Judge. This is a suit under the World War Veterans' Act, plaintiff claiming total permanent disability from and after October 31, 1919. [1] In limine defendant presented a motion to dismiss for want of jurisdiction, alleging that there had been no disagreement between the complainant and the director under the terms of section 19 of the act (Comp. St. § 91272-19) so as to give this court jurisdiction. While it is true the evidence shows no action on the part of the director in fully allowing or rejecting the claim, it does show a persistent and determined effort on the part of the plaintiff for a long period of time to obtain action from the director, and a persistent deferring of that action so long continued and so unreasonable as to defeat the very purpose and intent of the act. While it is true the act contemplates, and very properly, that it should be administratively applied, and that resort should be had to the courts only where the administrator has failed to grant relief, it is the height of unreason to say that the director can unreasonably delay action on a claim and thus oust the courts of jurisdiction until he is ready to confer it on them. Such a contention finds no support either in morals, common sense or law. Holmes Co. v. Burton Construction Co. (C. C. A.) 267 F. 769. After the overruling of the motion to dismiss for want of jurisdiction, the director caused the plaintiff to be again examined, and as of November 20, 1926, made an award of total permanent disability from that date, denying the claim retrospectively. Plaintiff, not content with this award, insisted upon and proceeded to trial, which trial resulted in a verdict in her favor finding her totally and permanently disabled from and after November 1, 1919, as contended by her. Among the defenses asserted was that plaintiff had, by the failure to remit one of the monthly payments promptly, caused the policy to lapse, and on May 14, 1924, in her application for reinstatement of her lapsed insurance, made the representation that she was not then totally and permanently disabled; that upon the faith of such representation her policy was reinstated; that therefore and thereby plaintiff became estopped to claim disability back of May 14, 1924; and that the jury could only consider the question of her disability from and after 19 F. (2d)-42 that date. An instruction to this effect was disallowed, and the matter submitted to the jury to determine as an issue of fact, whether the plaintiff was, prior to November 20, 1926, totally and permanently disabled, and when that condition arose. No request was made by either the plaintiff or the defendant to submit to the jury as a question of fact whether plaintiff was estopped by the representations made in the application statement; both plaintiff and defendant contending as a matter of law, one that there could not, the other that there could, be an estoppel. After the coming in of the verdict on motion to enter judgment on it, the matter was again raised; plaintiff presenting a judgment for the return of all premiums paid from and after November 1, 1919, and for installments from and after November 1, 1919, and defendant insisting that the time for the return of premiums and permanent disability should be fixed as of date May 14, 1924. In addition, plaintiff contends for the allowance of costs, as provided in the Court of Claims Act (Comp. St. § 1127 et seq.), and for interest after judgment, while defendant denies the liability of the United States for either. Plaintiff contends for judgment, not only for installments accrued, but directing the continuance of payments in the future, subject to the provisions of law providing for re-examination of plaintiff's condition and a reaward, with the jurisdiction reserved in this court over the cause in the event of any future disagreement. Defendant opposes any such entry. [2] As to the costs and interest, it is sufficient to say that, while the law is well settled that prior to judgment interest is not allowed on claims against the United States, and that in the absence of statutory authority neither interest after judgment nor costs are allowed, in every statute called to my attention allowing suit against the United States provision has been made for interest after judgment, and in a qualified way for costs. Specifically is such provision made in the Tucker Act (24 Stat. 505), to which, except where otherwise specifically provided, the present suit is required to conform. I therefore concur in plaintiff's view that she should have both costs and interest after judgment at 4 per cent., as allowed in the Tucker Act. U. S. v. Cress, 243 U. S. 321, 37 S. Ct. 380, 61 L. Ed. 746. As to the recovery of future installments, since the decree expressly provides that this shall not prejudice the right of the board |