the owner." "He is therefore bound, unless prevented by the perils of the sea or unavoidable accident, to keep her in proper repair." 3 Parsons on Contracts (Shipping) p. 302; Work v. Leathers, 97 U. S. 379, 24 L. Ed. 1012. That this clause was intended to apply to such repairs as were necessary in running the yacht further appears from the provision for "delivery in like good order and condition to the owner, unless lost." If this clause has any bearing on the clause exempting the charterer from liability for loss or damage, the two may be well read together to the effect that, while the charterer "shall assume no responsibility for loss or damage," he agrees to so "maintain the yacht in a thoroughly efficient state, in hull and machinery, during the service," as to keep her in like good order and condition "until her delivery to the owner, unless lost.'

The decree of the District Court is affirmed, with interest and costs.

SCHWARZSCHILD & SULZBERGER CO. v. PHOENIX INS. CO. OF

HARTFORD.

(Circuit Court of Appeals, Second Circuit. July 1, 1903.)

No. 155.

1. INSURANCE-CANCELLATION OF POLICY.

Where, by the terms of a policy, the insurer was given the right to cancel the same by giving five days' notice, a telegram from its agent to the authorized agent of the insured positively directing a cancellation, followed by a letter confirming the same in unequivocal language, operated as a cancellation at the end of five days thereafter, during which no further communication was sent; and subsequent correspondence, by which the agent of the insured attempted to secure a reconsideration of such action, did not have the effect of renewing the policy.

2. SAME-EFFECTIVENESS OF NOTICE-RETURN OF PREMIUM.

Under a provision in an insurance policy giving the insurer the right to cancel the same by giving five days' notice, and requiring it to return the unearned premium in case of cancellation "on surrender of the policy," it is not essential to the effectiveness of a notice of cancellation by the insurer that the unearned premium be returned or tendered in advance of the surrender of the policy by the insured.

In Error to the Circuit Court of the United States for the Southern District of New York.

For opinion below, see 115 Fed. 653.

Writ of error from judgment entered for defendant on a trial to the court without a jury of an action removed from the Supreme Court of the state of New York to the United States Circuit Court for the Southern District of New York. The action was brought for the recovery of $50,000 on a policy of insurance in the defendant company. The facts appearing of record and the grounds of the judgment are fully set forth in the opinion of the court below and in its findings of fact and statement of conclusions of law.

Wheeler H. Peckham, for plaintiff in error.

Wm. Vanamee and Chas. E. Perkins, for defendant in error. Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

2. See Insurance, vol. 28, Cent. Dig. § 510.

TOWNSEND, Circuit Judge. The exceptions herein challenge the correctness of the finding of the trial court that the policy in suit had been canceled at the time of the fire which damaged plaintiff's property. The provision of the policy relevant to this inquiry is as follows:

"This policy shall be canceled at any time at the request of the insured, or by the company by giving five days' notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, the company retaining the customary short rate, except that where this policy is canceled by this company giving notice it shall retain only the pro rata premium."

The fire occurred on October 6, 1899. The transactions between the parties were conducted by correspondence, from which the trial court concluded that the policy in suit had ceased to be in force and effect before said date. The facts material to said conclusion are as follows: On September 20, 1899, the defendant's agent, in response to a telegram from plaintiff's agent, telegraphed: "No, our companies won't carry. Cancel Phoenix [the policy in question] $50,000." On said day defendant's agent also wrote that he had been obliged to reply "that it would be necessary for us to call for the immediate cancellation" of said policy. We are of the opinion that said peremptory, definite, and unqualified language was a sufficient compliance with the requirements of the policy as to notice. During the five days after receipt of said notice by plaintiff's agent he received no communication from defendant's agents qualifying said notice. The rights of the parties, therefore, became fixed at the expiration of said period, and the correspondence between the parties subsequent to said period, by which plaintiff sought to secure a reconsideration of said action, is immaterial to the decision herein. We conclude, furthermore, that said subsequent correspondence and the conduct of the plaintiff's agent indicate that he understood said telegram and letter of September 20th, as a notice of cancellation, and a request for the immediate return of the policy. Plaintiff's agent admitted that thereby defendant had "ordered up the policy," the letter in reply merely asked for a reconsideration of said decision; and, after this had been refused, plaintiff's agent procured a new policy in substitution for the one which had been canceled.

Plaintiff has excepted to the admission in evidence of certain letters and telegrams between the general agent of defendant and its special agent, who alone conducted the correspondence between the parties. Inasmuch, however, as this correspondence has no bearing on the evidence from which we have reached our conclusion herein, its admission is immaterial, and furnishes no ground for reversible.

error.

Plaintiff contends that tender or payment by the insurer of the unearned premium is a condition precedent to cancellation, and that, as defendant had never tendered to plaintiff the unearned premiums on said policy, it had not been canceled. The findings of the court upon this point are as follows:

"Twenty-Second. That by the course of business carried on during the year 1899 between the said Merriam and his said firm [defendant's agent] and the

said E. C. Anderson & Company [plaintiff's agent] there was an open account kept between them in which the said E. C. Anderson & Company were charged with the premiums on policies obtained by the said Merriam and his firm for the plaintiff, and were credited with the amounts of unearned premiums on canceled policies, and this account was settled by paying the balance in cash at stated intervals.

"Twenty-Third. That the unearned portion of the premium upon the said policy of the defendant upon the cancellation thereof amounted to the sum of about three hundred and twenty dollars ($320). That from the 20th day of September, 1899, to the 6th day of October, 1899, and thereafter, there remained a balance due upon the said open account between the said Merriam's firm and the said E. C. Anderson & Company in favor of said Merriam's firm and against the said E. C. Anderson & Company of over two thousand dollars ($2,000). The defendant made no other tender to the plaintiff of said unearned portion of the premium due upon said cancellation."

It would seem that, as an amount sufficient to cover said premiums was in the hands of plaintiff's agent on open account between the parties at the time of the notice of cancellation, no such suggested tender or payment would have been necessary upon any construction of said provision. But, irrespective of these facts, the language of the foregoing provision demands a construction fatal to plaintiff's claim. It provides specifically for the absolute cancellation of the policy at any time by the company by giving five days' notice thereof. It further provides in express terms that, on surrender of the policy after such cancellation, the unearned premium shall be returned. It is difficult to conceive how language more definite could have been employed to show that the right to claim such unearned premium could only accrue after cancellation by the insurer and surrender by the insured.

In support of its contention counsel for plaintiff relies upon the case of Tisdell v. The New Hampshire Fire Insurance Company, 155 N. Y. 163, 49 N. E. 664, 40 L. R. A. 765. It is true that in said case the Court of Appeals of the state of New York, by a divided court, held that such repayment was a condition precedent to cancellation. We are not unmindful of the great weight which should ordinarily be given to the decisions of said court, especially upon a question involving the construction of a form of policy fixed by the statute of said state. But in the Tisdell Case we are wholly without any sufficient or satisfactory guide as to the process of reasoning by which a majority of the court reached its conclusion. The opinion states that: "The question presented on this appeal is no longer an open one in this court. It was decided in the case of Nitsch v. American Central Insurance Company, 152 N. Y. 635, 46 N. E. 1149, affirmed in this court without an opinion." The memorandum of the decision in the Nitsch Case only shows that it affirmed a judgment. of the Supreme Court, General Term, reported in 83 Hun, 614, 31 N. Y. Supp. 1131, which affirmed a judgment in favor of plaintiff entered upon a verdict directed by the trial court. Reference to 83 Hun, 614, 31 N. Y. Supp. 1131, shows that the General Term wrote no opinion. We are, therefore, without anything in the reports to show what questions were decided, or even what issues were presented. Chief Justice Parker, however, in his dissenting opinion in the Tisdell Case, shows that the Court of Appeals was required to

affirm a judgment of the General Term in the Nitsch Case upon another and unquestioned ground of waiver by defendant. In these circumstances we are unable to accept the conclusions of the Court of Appeals in the Tisdell Case.

Upon the facts found herein we must hold that notice of cancellation was duly given by defendant, and acquiesced in by plaintiff, and that no further action on the part of defendant was necessary until after the surrender of the policy.

The judgment is affirmed, with costs.

EDWARD P. ALLIS CO. v. STANDARD NAT. BANK OF THE CITY OF NEW YORK et al.

(Circuit Court of Appeals, Second Circuit. July 1, 1903.)

No. 130.

1. EQUITY-SUIT FOR FRAUD-EVIDENCE CONSIDERED.

Evidence held insufficient to establish fraud on the part of defendant national bank in the organization or operation of a corporation which was formed by complainant and certain stockholders and officers of the bank to continue the business of two insolvent lumber companies of which both complainant and the bank were creditors, or any action of the bank which rendered it liable in equity to complainant on the contracts of such corporation.

Appeal from the Circuit Court of the United States for the Southern District of New York.

W. E. Carter, for appellant.

H. H. Bowman, for appellees.

Before WALLACE, LACOMBE, and TOWNSEND, Circuit Judges.

PER CURIAM. The following excerpt from the opinion of the Circuit Court succinctly sets forth the circumstances under which the controversy arose:

"In the early part of 1896 the complainant was the owner and in possession of a sawmill plant at Chatterton, Florida. This plant had formerly been occupied by the C. T. Snowden Cypress Mill Company, a corporation, which had abandoned it, and conveyed it to the complainant. The Snowden Company had theretofore entered into a contract with a New Jersey corporation, known as the Withlacoochee Lumber Company, by the terms of which the Snowden Company had agreed to remove to its mill and convert the same into marketable lumber the standing trees which the lumber company owned, or represented that it owned, for an agreed price per thousand feet. Both companies became financially embarrassed, and the Snowden Company transferred its property to the complainant, as above stated, in payment for the mill plant and machinery which had been furnished by the complainant. The defendant the Standard National Bank had, prior to this time, become a creditor in the sum of about $15,000 of the lumber company, for which debt it held no available security. Upon investigation it was discovered that said lumber company was without assets, the title to the lands, which it was supposed to own, being in one Paul, of Philadelphia. The bank was also a creditor of the Snowden Company. In these circumstances

the defendant the New York Lumber Company was organized, with the expectation and hope that by a reorganization of the business, with additional capital, it might prove successful, and thus enable all the creditors, the complainant included, to make themselves whole in the future."

The New York Lumber Company was incorporated November 3, 1896, pursuant to an agreement between complainant and defendants Brown, Mayer, and Lynch. Brown was vice president and a director of the bank, and Mayer was an agent whom the bank had employed to make examination into the situation in Florida, and to collect its claims against its debtors. The stock of the company was to be apportioned among the parties to this agreement, and it was part of the plan that complainant's sawmill and plant was to be leased and used by the new company in carrying on its business by converting into marketable lumber the cypress timber obtained from Paul. The bank from time to time advanced to the New York Lumber Company on its notes sums amounting in the aggregate to more than $35,000; nevertheless the enterprise turned out disastrously, and the Lumber Company failed, owing complainant for rent, insurance, damages to personal property, etc.

The Circuit Court thus epitomized the relief demanded in the complaint:

"First. That the defendants be adjudged and decreed to reassign to the complainant a judgment obtained by it against the Withlacoochee Lumber Company, and transferred to the defendants Brown, Mayer, and Lynch, September 29, 1896.

"Second. That an accounting be had between the complainant and defendants for rentals, taxes, and insurance due under the lease of the sawmill plant to the New York Lumber Company, and for damages occasioned by the improper care of the said plant.

"Third. That the defendant Brown, who, in consideration of an extension by the complainant of the time of payment of the rent due August 1st and the months following, agreed to pay $5,000 of the amount so extended on or before January 1, 1898, be adjudged and decreed to pay said amount and interest thereon.

"Fourth. That the defendant the Standard National Bank, 'by and through its said creature, said New York Lumber Company,' may be adjudged and decreed to convey to the complainant all interest which the said bank or lumber company have obtained or will obtain in the 15,000,000 feet of cypress timber agreed to be conveyed by said Paul.

"Fifth. That the defendants Brown, Mayer, and Lynch be 'decreed and directed to cause the said defendant Burrows to forthwith turn over to your orator the said $60,000 in stock so placed in his hands, as above stated.'"

The decree granted the relief prayed in the first and fifth of these paragraphs. As to the third it held that, assuming all complainant's contentions as to the facts to be true, it had an adequate remedy at law, and therefore refused relief in equity.

By the first three assignments appellant charges error (1) in refusing to find that the New York Lumber Company was in substance and effect the Standard National Bank acting under the disguise of the lumber company, and that complainant in making the agreement under which the new lumber company was organized really contracted with the bank through its authorized officers and agents, and not with the defendants Brown, Mayer, and Lynch as individuals; (2)