"This entry should not have been allowed; the contest for this land was between the railway company and the heirs of Jerry Hickey; but before the final action on the case, and the rejection of the company's application to select, the claim of the heirs of Hickey was relinquished and their homestead cancelled, which left the land subject to the application of the company.

"You will, therefore, notify the company in accordance with instructions of February 18, allowing it thirty days from notice in which to perfect its selection.

"The entry of Donohue will be held suspended, subject to the action of the company; and should it perfect the selection, the entry will be held for cancellation."

The railway company perfected its selection of the lands in controversy, and the "entry of Donohue was held for cancellation, subject to appeal." Donohue appealed; but in an opinion dated December 16, 1904, the action of the Commissioner was approved, and this decision was reaffirmed in an opinion dated March 17, 1905, ruling adversely upon a motion to review. The selection made by the railway company was approved by the Secretary of the Interior, and a patent was issued for the land.

The Secretary of the Interior, in ruling upon the effect of the relinquishment of Mrs. Hickey and in passing upon the claim of Donohue procceded upon the hypothesis that the controversy presented by the appeal of Donohue was really a prolongation or extension of the original contest, and that the relinquishment of Mrs. Hickey constituted an abandonment of the homestead application, and, being made during the contest, conclusively established that the settlement of Hickey was not made in "good faith," and that such relinquishment operated to make the settlement of Hickey inefficacious to initiate a claim to the land, thereby validating the selection made by the railway company.

But the assumptions upon which these conclusions were based clearly disregarded the fact of the long possession by Hickey and his heir of the land during the pendency of the

contest and disregarded the previous and final ruling of the Secretary, made in February, 1903, which maintained the validity of the settlement of Hickey and decided that by such settlement he had validly initiated a claim to the land. When this is borne in mind it is clear that the ruling rejecting the Donohue claim and maintaining the selection of the railway company was erroneous as a matter of law, since by the terms of the act of August 5, 1892, c. 382, 27 Stat. 390, the railway company was confined in its selection of indemnity lands to lands. non-mineral and not reserved, "and to which no adverse right or claim shall have attached or have been initiated at the time of the making of such selection. "When the selection and supplementary selection of the railway company was made the land was segregated from the public domain and was not subject to entry by the railroad company. Hastings & Dakota Ry. Co. v. Whitney, 132 U. S. 357; Whitney v. Taylor, 158 U. S. 85; Oregon & California R. R. Co. v. United States, 190 U. S. 186.

Further, the decision refusing recognition to the Donohue entry, and awarding the land to the railway company, disregarded the statutory right of Mrs. Hickey to relinquish and of Donohue to make application for the land conferred by the first section of the act of May 14, 1880, c. 89, 21 Stat. 140, reading as follows:

when a preemption, homestead, or timber-culture claimant shall file a written relinquishment of his claim in the local land office, the land covered by such claim shall be held as open to settlement and entry without further action on the part of the Commissioner of the General Land Office."

Affirmed.

THE CHIEF JUSTICE, MR. JUSTICE BREWER and MR. JUSTICE MOODY dissent.

210 U.S.

Statement of the Case.

GAZLAY v. WILLIAMS, TRUSTEE OF BROWN,

BANKRUPT.

APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE SIXTH

CIRCUIT.

No. 164. Argued March 11, 1908.-Decided May 18, 1908.

Where the trustee can only sell a lease subject to the claim of the lessors that the transfer of the bankrupt's interest in the lease gives a right of reëntry under a condition therein, the bankruptcy court has jurisdiction of a proceeding, initiated by the trustee and to which the lessors are parties, to determine the validity of the lessor's claim and remove the cloud caused by the lessor's claim.

The passage of a lease from the bankrupt to the trustee is by operation of law and not by the act of the bankrupt nor by sale, and a sale by the trustee of the bankrupt's interest is not forbidden by, nor is it a breach of, a covenant for reëntry in case of assignment by the lessee or sale of his interest under execution or other legal process, where, as in this case, there is no covenant against transfer by operation of law. 147 Fed. Rep. 678, affirmed.

JUNE 16, 1902, W. A. Gazlay, Hanna F. Gazlay, Hulda G. Miller, Emma G. Donaldson, Julia G. Stewart and Clara G. Kuhn entered into a written agreement as lessors with one J. D. Kucny, whereby, in consideration of the rents to be paid and the covenants to be performed by said lessee, his heirs and assigns, they leased to said Kueny certain premises situate on the cast side of Vine street, south of Sixth street, Cincinnati, Ohio, for a period of ten years, with the privilege of ten years additional.

The lease contained the following condition:

"Provided, however, that if said lessee shall assign this lease or underlet said premises, or any part thereof, or if said lessee's interest therein shall be sold under execution or . other legal process, without the written consent of said lessors, their heirs or assigns, is first had, or if said lessee or assigns shall fail to keep any of the other covenants of this lease by

said lessee to be kept, it shall be lawful for said lessors, their heirs or assigns, into said premises to reënter and the same to have again, repossess and enjoy as in their first and former estate, and thereupon this lease and everything therein contained on the said lessors' behalf to be done and performed, shall cease, determine, and be utterly void."

On the ninth of April the lessors filed a petition in the Superior Court of Cincinnati, Ohio, against J. D. Kueny for the recovery of rent due under the lease. In their petition the lessors asked that a receiver be appointed to take charge of all the property of said J. D. Kueny, including said leasehold estate, and that said leasehold premises and the unexpired term be sold, "subject, however, to all the terms, covenants and conditions contained in the lease from said plaintiffs to said J. D. Kueny." The court thereupon appointed receivers to take charge of and manage said property, and later made an order directing said receivers to sell all of the personal property of said J. D. Kueny, including the leasehold estate, and under said order all of said property, including said leasehold estate, was sold to H. D. Brown, who took possession of the same, made extensive improvements thereon and paid to the lessors the rent reserved under said lease, from the time he took possession, July, 1905, to January, 1906, when proceedings were begun against him in the District Court of the United States for the Southern District of Ohio, Western Division, to have him adjudged a bankrupt.

Pending the adjudication, a receiver was appointed, who took charge of all of Brown's property, including said leasehold estate, and who, as such receiver, paid to said lessors the rent reserved in said lease for the month of January, 1906.

In February, 1906, the appellee herein, Fletcher R. Williams, was elected as trustee in bankruptcy of the estate and effects of said Brown, and on March 1, 1906, he filed in the bankruptcy proceedings an application for the sale of said leasehold estate, making the lessors parties thereto, and asking that they be required to set up any claim they might have upon the same.

Process was issued and served upon all but one of the lessors on March 5, 1906, and on that one on March 9, 1906.

On March 6, 1906, said trustee paid to W. A. Gazlay rent for the month of February, 1906, the amount paid being the monthly sum named in the said lease. Thereupon said lessors, coming in for the purposes of the motion only, filed a motion to be dismissed from the proceedings on the ground that the court had no jurisdiction over their persons, which motion was overruled by the referee in bankruptcy. Thereupon the lessors filed an answer "and without intending to enter their appearance herein, but acting under protest and the direction of the court," alleged that the lease contained the condition, among others, "that if said lessee should assign the lease or underlet said leased premises or any other part thereof, or if said lessee's interest therein should be sold under execution or other legal process without the written consent of said lessors, their heirs or assigns first had; or if said lessee or assign should fail to keep any of the other covenants of the lease by lessee to be kept, it should be lawful for said lessors, their assigns or heirs, into said premises to reënter and the same to have again, repossess and enjoy, as in the first and former estate; and thereupon this lease and everything therein contained on said lessor's behalf to be done and performed, should cease, determine and be utterly void. They further say that said lease and the premises thereby leased passed into the possession of Harry D. Brown, the bankrupt herein, without the written consent of said lessors, but with their acquiescence only, and that said condition in said lease is still in full force and effect as against said Harry D. Brown and his trustee in bankruptcy herein. That at the time of filing of the application herein, so far as they know or are informed, the said lessors had no claim in said leasehold premises adverse to said trustee in bankruptcy."

The case was submitted to the referee upon these pleadings, an agreed statement of facts, and the arguments and briefs of counsel.