given and granted to the town of Eustis, shall be liable for all present or future indebtedness of the said town of Eustis, whether evidenced by bonds or otherwise, without prejudice, however, to the rights of the holders of any of the present bonded indebtedness of said town of Eustis.

"Sec. 5. All laws or parts of laws in conflict with the provisions of this act be and the same are hereby repealed.

"Sec. 6. This act shall take effect immediately upon its passage and approval by the Governor or upon its becoming a law without his approval."

The bill alleges that the special act was accepted by the corporate authorities of Eustis and thereby subjected the property of the complainants to a bonded indebtedness of $350,000 of the bonded indebtedness of the town theretofore incurred, which had already been expended in improvements in the original territory of the town; that the town, before the special act, covered an area of 1,320 acres, which by the special act was increased to 9,028 acres. It then alleges that the annexed area was not necessary or required for the expansion of the town, nor would it be required for many years to come, and would not receive any benefits, etc. Allegations are made showing the want of knowledge of the complainants that any such extension was contemplated. The sections of the Revised General Statutes of Florida about the extension of corporate limits is referred to, and it is claimed that by the passage of the special act the complainants are deprived of any voice in their local government. It is claimed that the It is claimed that the act is inoperative because not advertised. It is also alleged that sections 2 and 4 of the act violate section 10, art. 1, of the Constitution of the United States; that these two sections violate the Fifth Amendment and the Fourteenth Amendment of said Constitution; that said act violates the reserved rights to local self-government, and not to be taxed without benefit and representation, referring to the Ninth Amendment to the Constitution of the United States and section 24 of the Bill of Rights of the Constitution of the state of Florida. The fourth paragraph of the bill alleges that the defendants are threatening to irreparably injure and damage the complainants in various sums of money ranging from $5,000 to $200,000. The value of the holdings of some of the parties in the annexed territory is also stated.

The defendants moved to dismiss the bill on various grounds.

The theory of the bill seems to be that. the special act seeks to take private property without due process of law, as protected in the Fifth and Fourteenth Amendments to the Constitution of the United States, as well as that the special act is an ex post facto law, violating section 10 of article 1.

[1] One ground of the motion to dismiss is that the bill does not show jurisdiction in this court. It is apparent that the jurisdiction of this court is not sought on diversity of citizenship, but is sought on the ground that the special act violates the rights of the complainants secured by the Constitution of the United States. It is contended that in this view the bill fails to allege the jurisdictional amount. In passing upon this contention, it must be borne in mind that it is not a tax levied sought to be set aside, where the complainants must show that the damage to be suffered by each is the jurisdictional amount, but rather the unlawful incumbering of the property of the complainants with the pre-existing debts of the municipality, and I think, viewing the bill from this angle, that the allegations of the bill do show the jurisdictional amount.

[2] Do the provisions of section 2 and 4 of the act result in taking private property without due process of law? According to the decisions, I do not think those sections do. Under the Constitution of the state of Florida, the Legislature is vested with power to establish municipalities, to provide for their government, to prescribe their jurisdiction and powers, and to alter or amend the same at any time. The Supreme Court of the state of Florida construing this section has decided that the Legislature has the power to pass special laws without advertisement as required in the proviso of section 21 of article 3 of the Constitution. I find in that instrument no provision restricting the power of the Legislature to make the annexed territory subject to taxation to pay pre-existing municipal indebtedness, and, in the absence of such restriction, this power exists. This doctrine is laid down in Dillon on Municipal Corporations in section 355 of the fifth edition, and I think is supported by the adjudications.

[3] Section 24 of the Bill of Rights of the state Constitution and Amendment 9' of the federal Constitution, which provides that the enumeration of certain rights shall not be construed to deny others retained by the people, and the complainants claim that the right to have a voice in local self-government and to be represented in taxation is one of these rights reserved, and which has

No. 1255.

1. Equity 362-Replication seeking to bring in new parties held subject to motion to dis

miss as to them.

Under Judicial Code, § 274b (Comp. St. 1251b), authorizing equitable defenses without filing bill on equity side of court, in action on notes, in which defendants filed plea on equitable grounds, replication, attempting to bring in new parties on matters amounting to counterclaim, is subject to motion to dismiss as to such parties.

2. Equity 115-Defendant, filing cross-bill, may not bring in new parties.

In equity practice, defendant, filing crossbill, may not bring in new parties.

On

the defense that H. Mason had not indorsed the indorsed notes, and had not made the one on which he appeared as maker. February 12, 1923, a plea was filed, alleging that the receiver had sold and transferred all his title and interest in said notes. Thereupon a motion was made and granted to amend the declaration, by making the receiver the nominal plaintiff for the use of Norman D. Suttles, the assignee of the notes in suit, and an amendment duly filed pursuant to the order February 26, 1923.

To this declaration, as amended, the defendants filed 11 pleas to the first 7 counts and 3 to the eighth count. They at the same time filed a plea to all the counts on equitable grounds, setting out that the use plaintiff had purchased from the receiver two judgments, recovered by the receiver against George H. Mason, individually, on these notes, together with certain obligations of Harry Mason including the notes in suit, for a certain amount. It is then alleged that Suttles, on January 1, 1923, after his said purchase, filed his bill in chancery in the state court against these defendants and other defendants, naming them, seeking to recover equitable assets belonging to George H. Mason, individually, alleging the existence of a joint adventure beginning in 1911 between George H. Mason and Harry Mason, for the purpose of conducting a hotel business and the development of properties in that behalf, and that such joint adventure remained in force throughout and until the death of Har

ry Mason; that George H. Mason had equitable interests in the properties known as the Everett Hotel and the Mason Hotel in Jacksonville, by reason of such alleged joint venture; that, in his effort to avoid all that had transpired with respect to said properties, particularly the vesting of the title thereto in five designated trustees, as well as the last will and testament of said Harry Mason, and all deeds and documents which the said Harry Mason had executed with respect to said properties since November, 1915, to the date of his death, so as to leave the way clear for the assertion of the claim that some interest still remained in George Mason, individually, which might be reached by judgment creditors, averred to the following effect: That during the year 1914, and 1915, and prior thereto, said Harry Mason was of such feeble and impaired body and mind that he did not possess sufficient mental power to know or appreciate what he was doing; that he was in fact, if not all the time, at least the greater part of the time, during the years 1914 and 1915, and subsequent thereto, an imbecile, both in body and mind, and suffered with, not partial, but complete, loss of memory as to all business obligations; that during the years 1913 and 1914 he suffered various illnesses which completely incapacitated him for the most ordinary and trivial business, and this condition continued from 1913 to the time of his death. (This is a mere outline of what the plea alleges as the contents of the bill of complaint.)

The plea then alleges the signing of the bill by complainant Suttles and his solicitor, and that the bill was sworn to by the complainant. It then alleges that the position taken in the bill of complaint is inconsistent with the position taken in the action on the promissory notes. It then is alleged that the four notes dated May 15, 1916, were the individual notes of George H. Mason; that H. Mason did not sign or indorse either of said four notes, or have any knowledge thereof, until suit was brought upon them, and that the same is true of each of the other four notes sued upon in this case, dated November 9, 1916; that said notes were individual obligations of George H. Mason, and that said notes included all the indebtedness of George H. Mason called for by the notes of May 16, 1916, both principal and interest. The plea then alleges that George H. Mason, desiring to secure his indebtedness to the Heard National Bank on the notes of May 16, 1916, did on June 12, 1916, execute

to J. J. Heard, as trustee for said bank, a deed of trust of mortgage upon such interest as he or his wife might acquire in property under the will of Harry Mason, or as his heir at law, describing specifically certain properties, including the Everett Hotel and Mason Hotel properties; that said mortgage has never been recorded, but is attached as an exhibit to the Suttles bill of complaint in the state court; that after giving the four notes on November 9, 1916, said George H. Mason and his wife, did on June 10, 1917, execute a further mortgage to J. J. Heard, trustee for the Heard National Bank, upon such property as he or his wife might ac quire under the will of Harry Mason, or as his heirs at law, and also upon the same property as described in the first mortgage, which last mortgage was recorded in the public records of Duval county, and are two of the alleged securities purchased by the use plaintiff from the receiver; that subquent to the recording of said last mortgage Harry Mason executed a last will and testament, disposing of all his property, leaving to George H. Mason $300, payable $25 per month, and leaving nothing to the wife of said George H. Mason.

The plea then alleges the sale of various pieces of property to certain individuals; that subsequently Bessie Mason, the widow of Harry Mason, made a last will and testament, but left no property to George H. Mason or his wife. It then proceeds to show the due appointment and qualification of the defendants as administrators; that by reason of the foregoing allegations said mortgages have no validity as a lien upon the respective properties described therein; that substantial parts of the properties described are still included in the estates of Harry Mason and Bessie Mason, being administered by the defendants, as administrators, and constitute clouds upon the title of the property being administered.

The plea then prays: (1) That the use plaintiff be enjoined from proceeding with the action of law on the ground of estoppel; (2) that the notes sued on may be declared not an obligation of Harry Mason; (4) that the mortgages may be delivered up for cancellation and the record of the one canceled; (5) that so much of the properties described in the mortgage as remained parts of the estates of Harry Mason and Bessie Mason, his widow, be declared free of the cloud created by the two mortgages.

After the disposition of the motion to strike said equitable plea and certain parts thereof,

the plaintiff filed his replication, admitting the allegations in the plea of filing the bill in the state court and the contents thereof, as set out in the plea, but denying the inconsistency of the positions of plaintiff in the action at law and the chancery suit, and that the remaining allegations of the paragraph are denied, and then proceeded in answer to the paragraph to allege that said chancery suit referred to in the plea is still pending and undisposed of, and the position taken in the equity suit has not been successfully maintained; that the positions taken in said equity suits were as to the capacity of Harry Mason to make a will in 1917, and not as to the notes in suit, or their validity, either as to the execution of same or subsequent ratification, or as to any estoppel of the said Harry Mason as to such execution. It then proceeds to allege that Harry Mason, in his lifetime, by acts and conduct set forth, became estopped to deny the execution of the notes in suit. He admits the making of the mortgages, but denies that George Mason did not have an interest in said property mortgaged in lot 1 and west half of lot 2, in block 41, and lot 3, in block 46, of Jacksonville. The replication then proceeds to set out the reasons why George H. Mason was interested in those lots as a counterclaim, setting out substantially, I imagine, the allegations of his bill in the state court of a joint adventure between George H. Mason and Harry Mason, and allegations of the dealings with these three properties, claiming that the conveyances, etc., were invalid as against creditors, reiterating the charges of mental incapacity of Harry Mason, and seeking to bring other parties, to whom conveyances, etc., had been made by Harry Mason in his lifetime, and praying for injunction, accounting, etc.; that George H. Mason and Harry Mason may be declared to have each held an undivided interest in the three properties; that certain deeds of trust executed by Harry Mason, certain detainer proceedings, and the last will and testament of Harry Mason, may be declared null and void, and other prayers looking to the collection of the judgments and notes assigned to the use plaintiff. [1] The defendants in the common-law action set down the plea and replication for a hearing upon the allegations of the plea and replication. The new parties sought to be brought in moved to dismiss as to them. The motion to dismiss, it seems to me, must be granted. Section 274b of the Judicial Code, as amended, provides (Comp. St. § 1251b): "That in all actions at law equi7 F. (2d)-10

table defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defence seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject-matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal, the appellate court shall have full power to render such judgment upon the records as law and justice shall require."

The Supreme Court in Liberty Oil Co., v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232, had occasion to construe this section. As I understand the decision, the court decided that the equitable issue raised by the plea must first be decided according to equitable rules and procedure, and, if a legal issue remained to be decided, such legal issue must be decided according to legal rules and procedure. Now, so far as these additional parties are concerned, the claims set out are in the nature of a counterclaim allowed by the equity rules to be set up in the answer performing the function of a crossbill.

[2] As I understand equity practice, a defendant filing a cross-bill may not bring in new parties. This is what that portion of the replication attempts to do. Again, the act authorizing the interposition of equitable pleas in common-law actions provides for the plaintiff filing a replication in cases where relief is prayed by the plea. I cannot conceive that Congress used the word "replication" in any other sense than such word is well understood in equitable pleading and practice. To construe the language used as authorizing what is attempted in this case would enlarge that meaning beyond all bounds, and change the replication into, in effect, a cross-bill. The new parties sought to be brought in are necessary to the relief sought, and, the plaintiff not having the right to make them parties to this proceeding, the motions to dismiss as to them will be granted, but without prejudice to such rights as they may have.

[3] I now come to the consideration of the plea and replication thereto, touching the relief sought in the common-law action. If I was correct in denying the motion to strike,

it seems to me that the decree must be in favor of the defendants, enjoining further proceedings on the promissory notes as against the administrators of Harry Mason. I have re-examined the questions raised by the plea, and am still of opinion that the plea states an equitable defense. The facts upon which such defense is grounded in the plea are admitted in the replication, and not avoided, in my judgment, by the other facts set out. In fact, the mental state of Harry Mason from 1913 to the time of his death is reiterated in said replication, and, if such mental state existed during the time of the execution of the notes sued on, there could have been no estoppel, adoption, or authorization. An order will be entered enjoining the use plaintiff from proceeding further in the action at law.

case.

[4] There is one further question in the The defendants pray for the cancellation of two certain mortgages, executed by George H. Mason and his wife, covering three pieces of property in the city of Jacksonville. The right to this relief depends upon the question and upon the fact whether Harry Mason had such sound and disposing mind at the time of making his will and the codicil thereto. This was one of the questions sought to be litigated in the part of the replication seeking to bring in new parties. Under the circumstances of this case, it seems to me that this question ought not to be decided in this litigation, and I therefore will enter a decree denying this relief, but without prejudice to the parties litigating the question in a proper proceeding, with the necessary parties present.

It will be so ordered.

FIDELITY & COLUMBIA TRUST CO. v. LUCAS, Collector of Internal Revenue. (District Court, W. D. Kentucky. July 9, 1925.)

1. Internal revenue 25, 38-Decisions of commissioner in assessment of tax are not conclusive on courts; federal district court has jurisdiction to try de novo suits for recovery of excess payment of federal estate

tax.

Decisions of the Commissioner of Internal Revenue in assessment of federal estate taxes are not conclusive on courts, but federal District Court has jurisdiction to try de novo suits for recovery of excess payments of federal estate tax, after taxpayer has taken necessary steps before appealing to courts, in view of Rev. St. §§ 3220, 3224, 3226, 3227 (Comp. St. §§ 5944, 5947, 5949, 5950) and Jud. Code, § 24,

2. Internal revenue 8-Insurance policies, taken out and assigned prior to federal estate tax act, not taxable thereunder.

Act Feb. 24, 1919, § 402, subhead f (Comp. St. Ann. Supp. 1919, § 63364c), purporting to place federal estate tax on proceeds of certain life insurance policies, not being declared retroactive, does not apply to life insurance policies taken out and assigned by insured before passage of act.

3. Internal revenue 8-Transfer of properties, held in trust by decedent, not subject to federal estate tax.

Where properties were held in trust for others by decedent under instrument executed him authority to appoint a trust company as long prior to Act Feb. 24, 1919, which gave trustee in his stead, his conveyance to trust company on same trusts, held not subject to federal estate tax imposed thereby.

4. Internal revenue 8-Trust deed for benefit of grantor's children held not transfer to take effect at death, notwithstanding income was payable to grantor for benefit of beneficiaries of trust.

Deed conveying property in trust for grantor's children and their issue until a definite date, when trust was to terminate, and property was to be conveyed to beneficiaries, except those then minors, held not a transfer to take effect in possession or enjoyment at death within Act Feb. 24, 1919, establishing federal estate tax, notwithstanding net income was to be paid by trustee to grantor, during his life or until he otherwise directed to be disposed of by him in interest of beneficiaries.

5. Internal revenue ~8-Trust deed for benefit of grantor's children held not transfer to take effect in possession or enjoyment at death.

Trust deed for benefit of grantor's children and their issue, providing for payment of income directly to beneficiaries, and for termination of trust in 15 years, when property was to pass to beneficiaries, or, if none were then living, to others designated, held not a transfer to take effect in possession or enjoyment at or after death of grantor, within Act Feb. 24, 1919, establishing a federal estate tax.

6. Internal revenue 8-Trust deed for benefit of grantor's children held not in contemplation of death.

A trust deed for benefit of grantor's children, executed more than 2 years prior to death of grantor, and which had been conceived and negotiated while grantor was vigorous, apparently well, and in active charge of his business affairs, held not made in contemplation of death within Act Feb. 24, 1919, establishing federal estate tax, especially when executed prior to act.

In Equity. Suit by the Fidelity & Columbia Trust Company, executor of the will of Milton H. Smith, deceased, against Robert H. Lucas, Collector of Internal Revenue for