BOURQUIN, District Judge. In this action, brought in a state court, the complaint of one count alleges (1) that in part is failure of the consideration for certain notes and mortgages executed by plaintiff to defendant May Murray, and (2) that by various means in conspiracy defendants have wrongfully deprived plaintiff of certain property including that subject to the mortgages. The prayer is (1) cancellation of notes and mortgages, and (2) damages.

By reason of the separable controversy, May Murray removed the cause hither. Thereupon plaintiff amended and excluded the separable controversy, but included the allegations respecting notes and mortgages as part of the means to execute the conspiracy. May Murray then filed answer, including a counterclaim to recover upon the notes, to which plaintiff filed a defensive reply; and now plaintiff moves to remand upon the ground that, she having eliminated the separable controversy from her complaint, the cause is withdrawn from the jurisdiction of this court.

In that behalf plaintiff relies upon section 37, Jud. Code (section 1019, Comp. Stat.), which provides that if, in any suit commenced in or removed to a District Court, "it shall appear to the satisfaction of the said District Court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said District Court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this chapter, the said District Court shall proceed no further therein, but shall dismiss the suit or remand it to the court from which it was removed, as justice may require, and shall make such order as to costs as shall be just," and thereto cites Torrence v. Shedd, 144 U. S. 527, 12 S. Ct. 726, 36 L. Ed. 528, and Texas, etc., Co. v. Seelingson, 122 U. S. 519, 7 S. Ct. 1261, 30 L. Ed. 1150. Defendants contra cite Kirby v. Fountain Co., 194 U. S. 141, 24 S. Ct. 619, 48 L. Ed. 911.

The Torrence Case holds that, the separable controversy settled after removal, the court's jurisdiction of other controversies is ousted, and remand is required by the statute; the Seelingson Case holds that plaintiff's dismissal of the defendant of the separable controversy after the removal operates likewise; and the Kirby Case holds that, al

though plaintiff dismisses his bill after removal, jurisdiction continues of defendant's cross-bill for less than the jurisdictional amount. Thus it appears that of these cases, the Torrence and Seelingson seem to ignore the rules that jurisdiction acquired is not ousted by changed conditions, that of a case removed, not only the separable controversy, but all other controversies are "properly within the jurisdiction of the district court," and that implied repeals are disfavored; while the Kirby gives effect to these rules in so far as applicable, but ignores the statute and with it the Torrence and Seelingson Cases.

The great weight of authority is with the Kirby Case, and it is believed to be consistent with the statute aforesaid. Since plenary jurisdiction is made up of several elements, any one of which is as vital as any other, it is not readily perceptible why it should be held that by reason of the statute a change in the separable nature of the controversy will oust jurisdiction, and a change in citizenship or amount of plaintiff's claim, or shift of the entire controversy from plaintiff's bill to defendant's cross-bill will not operate likewise.

The statute's language and spirit do not require the distinction. Really, the statute is but declaratory of the law before and without it, viz. dismiss or remand, if no jurisdiction.

[1] Be that as it may, however, the instant case is distinguishable from the Torrence and Seelingson Cases. For, unlike these latter, the case at bar has not been settled nor dismissed in respect to the defendant of the separable controversy; and that controversy is still involved in the case by the amended complaint's allegations of partial failure of consideration for the notes and mortgages and the proper, if not necessary, cross-complaint or counterclaim to recover upon the notes. Hence, the case yet does "really and substantially involve a dispute or controversy properly within the jurisdiction" of this court, and within the words and spirit of section 37. Within the words, for the statute does not distinguish between controversies whether initiated by complaint or by cross-complaint, no more than does the Kirby Case, and within the spirit, for the object of removal is to afford the noncitizen a federal forum for his separate controversy with plaintiff.

[2, 3] If, for the sake of argument, it be conceded that there was an interval between the filing of the amended complaint and that of the cross-complaint, when the rule of the

Torrence and Seelingson Cases might have been successfully invoked, plaintiff did not bring it to the court's attention as was her duty (Gilbert v. David, 235 U. S. 567, 35 S. Ct. 164, 59 L. Ed. 360), the parties and case were yet within the jurisdiction of the court, in the main were appropriate to that jurisdiction, and a separable controversy supplied by the cross-complaint, and appropriate for trial with the complaint, cured any temporary defect in one element of jurisdiction. For, although a mere answer cannot confer jurisdiction theretofore absent (Ayres v. Wiswall, 112 U. S. 190, 5 S. Ct. 90, 28 L. Ed. 693), a cross-complaint like a new action can or may. See Merchants', etc., Co. v. Clow, 204 U. S. 290, 27 S. Ct. 285, 51 L. Ed. 488; American, etc., Co. v. Winzeler (D. C.) 227 F. 324.

Federal jurisdiction, removal, and remand often are questions of difficulty. That to remand is safer than to retain has not contributed to a settled and consistent course of precedent. Too often has overcaution ceded jurisdiction which ought to be jealously maintained-within valid statutory limits. That much is due, not only to litigants, but also to the co-ordinate and equal judicial branch of government, to people, and government as a whole. Remand is denied.

BELLAH v. PHENIX UTILITIES CO.

3. Waters and water courses 171(2)-De

fendant held without right to build railroad embankment deflecting flood waters of stream.

Defendant held without legal right to throw back flood waters of a river on premises of railroad, in view of Gen. St. Kan. 1915, § 4050, plaintiff by building of an embankment for a where embankment was constructed for defendant's private convenience in such manner as to impound the water on plaintiff's land and

to deflect the current of stream over it, irrespective of whether the flood waters of the river constituted surface water and not a part of a natural water course.

E. L. Burton and Carl V. Rice, both of Parsons, Kan., for plaintiff.

Kimball & Osgood, of Parsons, Kan., and McCune, Caldwell & Downing, of Kansas City, Mo., for defendant.

POLLOCK, District Judge. The facts in this case, as pleaded, are, in substance, as follows:

Plaintiff is and for many years has been the owner of a tract of about 60 acres of land lying on the bank of the Neosho river in Labette county, this state. Defendant constructed an embankment or grade for a railroad from 2 to 8 feet in height, for the purpose of forming a grade for its line of railway. This grade or embankment is so constructed as to cause the greater part of

December 19, 1924.)

No. 612.

1. Waters and water courses 171 (2)-Proprietor without right to turn back flood waters of stream on land of adjoining proprietor.

If water flowing down a stream, which com

monly in flood times of the year rises so high

as to overflow its banks, within which the water is usually confined, spreads out over the low bottom lands while seeking its outlet down the stream, it may be regarded as part of the natural water course, and one proprietor is without legal right to turn back or impound such waters on land of an adjoining proprietor.

2. Courts 365-Rights of riparian owners governed by local laws; local law as declared by highest state judicial tribunal binding on federal courts sitting in such state.

Question of rights of riparian owners having lands along course of streams of the state are governed by local laws of the several states, and local law as declared by the highest judicial tribunal of the state is binding on the federal courts sitting in such state, especially

river. By reason of the construction of this grade or embankment, the flood waters coming down the river in time of high water in June, 1923, the water was not allowed to flow back from the river onto the lowlands lying outside of the grade of the road, and, of plaintiff to a greater depth and for a in consequence, the water stood on the land longer period of time than it would have done in the absence of the grade. Further, by reason of this embankment or grade, the channel of the river during the high-water period was deflected and turned over the land of plaintiff to the great injury of plaintiff in the loss of his crops then growing on the land and damage to his land.

To the petition so declaring, the defendant has demurred. This demurrer is based on the theory that the flood waters of the river are a common enemy, and each land proprietor has the right to fence against the encroachment of the same on his proper

ty or premises, and that any injury or damage done an adjoining proprietor by reason of turning back the water upon his premises, or turning back or impounding such waters on the land of an adjoining proprietor is damnum absque injuria.

[1] An examination of the law of surface waters, in the absence of a controlling statute is as is contended by defendant in behalf of the demurrer. The question here, however, presented is: Is water flowing down a stream, such as the Neosho river, which commonly in flood times of the year rises so high as to overflow the banks of the stream within which the water is usually confined, and spreads out over the low bottom lands while seeking its outlet down the stream, as is the case with the many streams of this state, surface water, as that term is usually employed in the law of waters? For, it is equally well settled, if such water so flowing be regarded as a part of a natural water course, then the very reverse of the common-law rule, in the absence of statute relating to surface waters, applies for the obstruction of such a natural water

course.

Defendant, in support of its demurrer, cites and relies upon three cases emanating from the Supreme Court of the nation as decisive of this case, to wit, Jackson v. United States, 230 U. S. 1, 33 S. Ct. 1011, 57 L. Ed. 1363, Hughes v. United States, 230 U. S. 24, 33 S. Ct. 1019, 57 L. Ed. 1374, 46 L. R. A. (N. S.) 624, and Cubbins v. Miss. River Commission, 241 U. S. 351, 36 S. Ct. 671, 60 L. Ed. 1041.

Each and all of these cases grew out of the building of levees under authority of the United States or of the several states in attempt to confine the waters of the Mississippi river within bounds for the advantage of shipping on the river and to prevent the spread of flood waters over the entire low valley lands lying along said river. In all of these cases the authority under which the work was being prosecuted, and the public necessity for the doing of this work, and the great advantage to the public benefited, appears to have influenced the decisions made. However, in the present case the embankment built by defendant was constructed, not in any attempt to confine the waters of the river within its ordinary banks, but the grade or embankment of defendant was constructed for its private convenience in such manner as to throw the land of plaintiff between this embankment and the river bank. In this condition of affairs this embankment serves not alone to impound

the water on the land of plaintiff, but, as pleaded in the petition, to deflect the current of the stream upon and over plaintiff's land.

A statute of this state would seem to have some bearing upon the question presented. Section 4050, Gen. Stat. 1915, same being section 2, c. 175, Laws of 1911, reads as follows:

"A lower owner or proprietor shall not construct or maintain a dam or levee for the purpose of obstructing the flow of surface water onto his land to the damage of the adjacent upper owner or proprietor; but nothing herein shall be construed as preventing an owner of land from constructing a dike or levee along the bank of a natural water course to repel flood water from such natural water course: Provided, that the provisions of this act shall apply only to lands used for agricultural purposes and highways lying wholly outside the limits of any incorporate city."

This act is a part of the general and comprehensive drainage law of this state. The Supreme Court of the state, in construing this act in State ex rel. v. Zerbe, 87 Kan. 300, 124 P. 160, said:

"Prior to the legislation of 1911, a landowner in this state was permitted to maintain upon his own premises an embankment to prevent storm waters from flowing upon his land from that of another, while following the natural drainage but not running in a natural water course, although in many states the common law is interpreted otherwise. 3 Farnham, Waters and Water Rights, § 889c; note, 22 L. R. A. (N. S.) 789, 794."

[2] The question of the drainage of the lands of the state, the rights of riparian owners having lands along the course of streams of the state, and kindred questions, are governed by local laws of the several states, and in all such cases the local law as declared by the highest judicial tribunal of the state is binding upon the federal courts sitting in such state, and more particularly is this true where the rule of decision is controlled or affected by a decision made by the state court in construing a statute of the state on the subject.

Considering the question, therefore, as one of local law of the state, there can be no doubt but that the demurrer here presented must be overruled and denied. See Thompson v. McDougal, 103 Kan. 373, 175 P. 157; Lynch v. Payne, 117 Kan. 5, 230 P. 85; Jefferson v. Hicks, 23 Okl. 684, 102 P. 79, 24 L. R. A. (N. S.) 214.

[3] It follows, therefore, even if the flood waters of the Neosho river in this case shall be regarded as surface water and not a part of a natural water course, the defendant would be without legal right to throw back the flood waters upon the premises of the plaintiff by the building of the embankment in question.

The demurrer must therefore be overruled. It is so ordered.

GAUTIERI v. SHELDON, Federal Prohibition

Director, et al.

for $3,000 duly filed in pursuance of Regula tions, art. 114, it became duty of collector under article 115, Regulations No. 61, to promptly approve applications so that they should become permits for withdrawal of specially denatured alcohol.

6. Intoxicating liquors 72-Plaintiff held entitled to maintain bill in equity to review denial of his permit to withdraw specially denatured alcohol.

Plaintiff held entitled to maintain bill in equity under National Prohibition Act, tit. 2, §§ 5, 6 (Comp. St. Ann. Supp. 1923, §§ 101381bb, 101382c), to review commissioner's denial of his permit to withdraw specially denatured alcohol in quantities desired.

In Equity. Bill by John Gautieri against

1925.) No. 221.

2. Constitutional law 318-Denial of permit to use denatured alcohol, without a hearing, is not due process of law.

Denial of the right to have a permit to use or to purchase specially denatured alcohol under National Prohibition Law, tit. 2, §§ 5, 6 (Comp. St. Ann. Supp. 1923, §§ 101382bb, 101382c), without a hearing, is not due process of law.

3. Intoxicating liquors 101-Permit to use specially denatured alcohol not shown to be limited to 50 gallons in 30 days.

Permit, authorizing plaintiff to use specially denatured alcohol for the purposes specified in his application of certain date (toilet preparations), held not limited to 50 gallons of alcohol in 30 days, though application for 600 gallons had been changed by deputy collector to read 50 gallons; it being immaterial whether plaintiff authorized the change as long as he did not voluntarily abandon his estimate of requirements, and his bond was adequate for such quantity.

4. Intoxicating liquors 101-Application for

permit to use specially denatured alcohol held not to limit quantities.

Application for permit to use denatured alcohol, providing that "it is estimated that wine gallons of denatured alcohol will be used * * during a period of 30 days," held not to define or limit quantities.

5. Intoxicating liquors 71-Collector requir: ed to promptly approve applications so that they should become permits for withdrawal of

specially denatured alcohol.

On presentation of permit to use specially denatured alcohol issued to plaintiff, and bond

rector for the State of Rhode Island, and others. Decree for plaintiff.

Francis I. McCanna, of Providence, R. I., for plaintiff.

Providence, R. I., for defendants.
Harold A. Andrews, Asst. U. S. Atty., of

BROWN, District Judge. [1] This is a bill in equity under section 6, title 2, of the National Prohibition Act which provides: "In the event of the refusal by the Commissioner of any application for a permit, the applicant may have a review of his decision before a court of equity in the manner provided in section 5 hereof." Comp. St. Ann. Supp. 1923, § 10138/2c.

Section 5 provides: "The manufacturer may by appropriate proceeding in a court of equity have the action of the Commissioner reviewed, and the court may affirm, modify, or reverse the finding of the Commissioner as the facts and law of the case may warrant," etc. Comp. St. Ann. Supp. 1923, § 101382bb.

[2] These provisions indicate clearly that the right to have a permit to use or to purchase specially denatured alcohol cannot be denied arbitrarily, but that a denial must be upon findings of fact and law so definite that a court of review may determine what It is they were in order to review them. clear that a denial without a hearing is not due process of law. See McGill et al. v. Mellon et al. (D. C.) 5 F. (2d) 262. See, also, Vollmer Beverage Co. v. Blair (D. C.) 2 F. (2d) 469.

The plaintiff complains that, although he desires a permit to withdraw 600 gallons of specially denatured alcohol, he is denied the right to purchase more than 50 gallons per 30 days. It appears, however, that the petitioner has procured a permit in the following form:

is a conflict between the plaintiff and the deputy collector as to whether this change was authorized, but I regard this as imma

under Title III of the National Pro

hibition Act. "Office of Collector of Internal Revenue, District of Rhode Island.

"March 13, 1925.

"Permit is hereby granted to John Gautieri doing business as Ideal Perfume Mfg. Co. located at 226 Manton Ave., Prov., R. I., to use for the purposes specified in an application dated 2d December, 1924, specially denatured alcohol manufactured in accordance with authorized formula No. 39-B. "This permit shall be in effect from the date hereof until surrendered by the holder or canceled by the Commissioner of Internal Revenue for violation of the provisions of title III of the National Prohibition Act or the regulations made pursuant thereto. "This permit is not transferable. "[Signed] Frank A. Page, Collector. "Note.-Whoever violates any of the provisions of law or regulations relating to denatured alcohol shall be liable, for the first offense, to a penalty of not exceeding $1,000, or imprisonment not exceeding thirty days, or both, and for a second or cognate offense to a penalty of not less than $100, nor more than $10,000, and to imprisonment of not less than thirty days nor more than one year. It shall be lawful for the Commissioner of Internal Revenue in all cases of second or cognate offense to refuse to issue for a period of one year a permit for the use of such alcohol upon the premises of any person responsible in any degree for the violation."

[3, 4] It is contended for the Commissioner, Prohibition Director, and Collector that this permit is limited to 50 gallons in 30 days. The words, "to use for the purposes specified in an application dated 2nd December, 1924," are the only reference in the permit from which is inferred a limitation upon the amount to be used, but I find in them no limitation of quantity. The application was for a permit to use on certain premises, "in the manufacture of toilet preparations, high grade toilet waters, and perfumes." Though the plaintiff's original estimate of quantity to be used was 600 gallons during a period of 30 days, this estimate was changed by a deputy collector to 50 gallons 39-B, and the application was marked by the Prohibition Director, "Approved for 50 gallons 39-B only." There

abandon his estimate, but gave bond in the sum of $3,000, which is the amount specified in article 114 of Regulations No. 61 to cover 426 to 650 wine gallons, and made a new application with the original estimate of 600 gallons, which was denied.

The only express limitation upon the petitioner's right to purchase contained in the provisions of article 114 is: "Manufacturers shall file bonds amply sufficient to cover their needs, and under no circumstances will they be permitted to purchase or receive specially denatured alcohol in excess of the quantity covered by the bond on file."

[5] While it may have been the intention to define or limit quantities in the application, the words contained in application form 1479, "it is estimated that wine gallons of denatured alcohol will be used in the manner indicated during a period of 30 days," are insufficient to accomplish this, and the reference to the application to determine the purposes is also insufficient to constitute a limitation of the permit to use to a definite quantity.

[6] A departmental practice involving so important a matter as the use of alcohol in industries should not be hampered by inaccurate or loosely written instruments. Upon presentation of the permit to use, No. 72, issued to the plaintiff, which in my opinion has not been revoked, and the bond for $3,000 duly filed in pursuance of article 114, it became the duty of the Collector under article 115, Regulations No. 61, to promptly approve applications on form 1477 so that they should become permits for withdrawal of specially denatured alcohol.

Upon the assumption that the Collector, in issuing the permit to use and in refusing permits to withdraw, is performing acts which he has been authorized by the Commissioner to perform, and which in legal effect are decisions or findings of the Commissioner, the plaintiff is entitled to maintain his bill.

In view of the long delay, and of the arbitrary denial of the permit without a hearing, I am of the opinion that the plaintiff has an immediate right to a withdrawal permit to cover the difference between the amount of 50 gallons, which he has already withdrawn, and 600 gallons, which he applied for, and which he has covered by bond in accordance with regulations. A draft decree may be presented accordingly.