"Replying telegram first will guarantee forty-two delivered New York regular terms subject our commission and discount for two inch white pine lengths six foot and up log run but with mill culls out separate lots of fifty thousand feet and no Norway pine included stop what are you doing with balance of cargo in hold confirm."

On August 4th, plaintiff sent a letter to defendant which reads in part as follows:

"Messrs. Simpson, Clapp & Co., 44 Whitehall St., New York-Dear Sirs: Deck load Schr. Joan Kielburg. I have your telegram of the 2d inst. and note where you guarantee $42 delivered New York, regular terms, subject your commission and discount for 2-inch white pine, lengths 6 feet and up, log run, with mill culls out. Separate lots of 50 M feet.

"The Joan Kielburg was loading pulp in Bridgewater, and she was offered to me for a deck load at the low rate of $5.00 per M, so I decided to take her. I agreed to furnish a minimum of 200 M, but she will probably carry 225 M or more so I will probably load her to full capacity. I have also chartered the Schr. Chautauqua, now discharging coal at Lunenberg, N. S., and she will be in Bridgewater any day to load.

"Mr. Williams, my superintendent at Caledonia, had started to load out cars for the Chautauqua, so I am transferring these to the Joan Kielburg. Immediately on receiving your telegram, I called him up and advised him how you wished this deck load in separate lots of 50 M, so he is trying to arrange this, but he advises that the first lot will probably have to be 100 M, because about that quantity has gone forward to the vessel. He however, will be in Bridgewater today and see if loading can be done in line with your requirements.

Plaintiff's first telegram contains a clear offer; defendant's answer accepts in part, but calls for two new conditions, specifying a certain quality of wood and a designated manner of loading; i. e., 50,000-foot separate lots.

Plaintiff's letter, dated August 4th, acknowledges receipt of defendant's telegram of August 2d, and agrees to furnish a minimum of 200,000 feet, and states that the first lot will probably have to be 100,000 feet. There appears to be no understanding between the parties upon that point at this time. Defendant's letter to plaintiff, dated August 7th, referred to plaintiff's letter, dated August 4th, but did not take any excep-. tion to plaintiff's proposals. The court is of the opinion that it was a duty of the defendant, upon receipt of the letter of August 4th, if he was dissatisfied, to have stopped the sailing of the schooner Joan Kielburg by telegram, for it appears that on August 5th plaintiff had telegraphed that he was consigning that boat to the defendant. It is conceivable, of course, that the boat might have started before plaintiff received such a telegram, but in that event defendant could have refused to accept the lumber when it arrived.

It seems to the court that the meeting of the minds occurred with the receipt by defendant of plaintiff's letter, dated August 7th, to which he sent no reply. There was later correspondence between the parties. Under date of August 22d, defendant wrote plaintiff as follows:

"Mr. Walter McNeil, New Glasgow, Nova Scotia, Canada-Dear Sir: We acknowledge receipt of your favor, August 19th, giving loading time of the Joan Kielburg, for which we thank you.

"I inclose you herewith one copy of charter party and will wire the specifications in general to you as soon as I have it from Mr. Williams and will also mail a complete detailed specification when received. I trust you will be able to sell this pine for $43 or $44."

"We acknowledge receipt of your favor of August 4th with inclosed copy charter

Defendant did not raise any question with

regard to the quantity, or the manner in which the boat was loaded. If he was dissatisfied with respect to either of these points, it was manifestly his duty to bring them up for discussion without further delay, even if he had the right to do so at such a late date.

It is claimed that defendant wrote a letter to plaintiff, dated August 23d, reading as follows:

"Mr. Walter McNeil, New Glasgow, Nova Scotia, Canada-Dear Sir: As wired you yesterday, schooner Joan Kielburg arrived Thursday and should be ordered to berth today. This cargo does not comply with our offer, August 2d, which specified that this cargo should be loaded in lots of 50 M ft., and was in answer to your original offer of only 200 M ft. The first lot loaded was loaded mixed up in 100 M ft. parcel, and the last lot should not be shipped at all, as it totals 239 M ft. Furthermore, this lumber was to be log run, and of same quality and manufacture as previously shipped, and it is reported to us that there is considerable bark. The grade is low, knotty, and does not contain the clear, approximating almost entirely No. 3 barn, instead of running No. 3 barn and better to average No. 2 barn. The captain further demands a berth, so that unless we hear from you to the contrary by the 27th, making some other disposition, we will have to place this in storage for your account and risk.

"Very truly yours,

"Simpson, Clapp & Co." In the opinion of the court, the fact that the writing of this letter is in dispute is of no consequence, for the reason that the minds of the parties had already met. On September 2d, defendant wrote plaintiff a letter reading in part as follows:

"As previously advised you, we had to discharge to a storage wharf the white pine ex Sch. Joan Kielburg, to give us more time, because there was no interest for it here at that time. We find that there is less use today than ever for this stock, and we are not at all enthusiastic about having 113 M ft. more on consignment, but we will do the very best we can. The trouble is that the Californian pine, both white and sugar, are put here so cheap by rail that even No. 3 barn can be bought at less than $40.00 in carload lots."

Then again, on September 8th, the defendant wrote the following letter, a part of which has no reference to the matter in dispute:

"We acknowledge receipt of your telegram, but have not wired you, as we had no opportunity yet to show these schedules, and we do not know what you think you should get. Despite your idea of price, we cannot obtain more than the market will pay, and your lumber is in competition with fir and spruce coming in from the Pacific Coast by steamer, and white pine from California and Idaho by rail. We have repeatedly advised you that values in this market are governed by competitive prices, and not by stumpage values in Nova Scotia. The writer got stuck when you offered $42 for the white pine on the Joan Kielburg, because we figured that one of the three previous customers would use it and we took a chance on getting $42 from them in order to get started again with you. The actual facts are that Bossert would not look at the schedule, that Cross Austin offered $33 for it, and Gates would not take it at any price.

"The vessel got here before her papers were complete, so that we had no opportunity to properly canvass the market, although we had three men on it, including the writer personally, and in order to save further demurrage, we finally stored the lumber in Newtown creek and will peddle it out by motor truck.

"The facts are simply as we have often and repeatedly advised you, there is very little call for log run, especially in white pine. This has to be sold to concerns which run a planing mill, making sash and blind stock,

etc.

We have canvassed every yard from New London to Philadelphia, with results as reported above. We naturally will give you $42 for the Kielburg and take what we can get; but we do not expect to get any $42 for the Chautauqua white pine. If you know anybody that will give you that, we will be very glad to turn over the white pine to them.

"We cannot help what the price for lumber is in New York, and have kept you advised monthly by market letter, and further in our correspondence with you. We can only repeat that this market does not want odd widths or lengths in any kind of lumber, yet you persist in manufacturing your lumber that way. This may sell locally, and you may get more out of the log; but as far as the American market is concerned it only reduces the value of the whole schedule more than any possible saving in log scale."

The former of these two later letters does not speak of rejecting the lumber, but rather asks for additional time. The latter letter contains nothing inconsistent with the sug

ence; on the other hand, the statement therein contained, "We naturally will give you $42," clearly indicates that the defendant understood that he was obligated to plaintiff in that amount.

The plaintiff's motion for an order striking out the amended answer and for summary judgment is granted.

Zeb MAYHEW, Plaintiff in Error, v. Walter MCNEIL, Defendant in Error.

(Circuit Court of Appeals, Second Circuit. December 17, 1925.)

No. 153.

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

Kelly, Hewitt & Harte, of New York City (D. Theodore Kelly and Howard B. Harte, both of New York City, of counsel), for plaintiff in error.

George G. Zabriskie, of New York City, for defendant in error.

Before HOUGH, HAND, and MACK, Circuit Judges.

PER CURIAM. Judgment (10 F. [2d] 393) affirmed in open court, with 5 per cent. penalty for delay.

aff'd 10-5 (d) 399.

In re ELGOT et al.

(District Court, S. D. New York. June 30, 1924.)

1. Bankruptcy 477-Evidence held insufficient to show that profitable business was conducted by alleged bankrupts, so as to entitle them to damages to good will and for loss of prospective profits.

Evidence held insufficient to show that profitable business was conducted by alleged bank rupts, so as to entitle them to damages to good will and for loss of prospective profits, under Bankruptcy Act, § 3a (Comp. St. § 9587),

on dismissal of petition.

2. Bankruptcy 477-Claims held prima facie items of damages to alleged bankrupts on dismissal of petition.

Items representing alleged bankrupts' equities in machinery and trucks, cost of hauling, freight and installation in plant, security deposited under lease, and moneys in bank, held prima facie items of damage to bankrupts corporate property, under Bankruptcy Act, §

tion.

3. Bankruptcy 474-Liability for damages to alleged bankrupts on dismissal of petition held enforceable only against creditor securing appointment of receiver.

Under Bankruptcy Act, § 3d (Comp. St. § 9587), liability for costs, expenses, and damages to alleged bankrupts from seizure, taking, or detention of property, on dismissal of petition, is enforceable only against creditor who secured appointment of receiver.

In the matter of Herbert S. Elgot and another, copartners trading as the Whistle Bottling Company of the Bronx, alleged bankrupts. On exceptions to report of special master under an order of reference made on ex parte petition of alleged bankrupts, under Bankruptcy Act, § 3a, that fees, costs, expenses, and damages of alleged bankrupt be fixed and allowed. Exceptions overruled, and report confirmed.

Affirmed in 10 F.(2d) 399.

J. G. M. Browne, of New York City, alleged bankrupts.

for

William Hauser, of Newark, N. J., for National Box & Lumber Co.

Paul Englander, of New York City, pro se and for Sheffield Glass Bottle Co.

AUGUSTUS N. HAND, District Judge. This matter comes up on exceptions to the report of John J. Townsend, special master under an order of reference "to take proof and fix the costs and expenses

and damages of the alleged bankrupts."

The petition in bankruptcy was filed against the alleged bankrupts by the Whistle Bottling Company, Inc., National Box & Lumber Company, and Sheffield Glass Bottle Company, and the creditors, Standard Porcelain Enameling Company, George Schmidt, and Paul Englander, intervening. On July 29, upon the application of one of the petitioning creditors only, viz. Whistle Bottling Company, Inc., a receiver was appointed. The issues were tried by Referee Townsend, and upon his report the petition in bankruptcy was dismissed on October 17, 1921, and the foregoing order of reference under section 3a of the Bankruptcy Act (Comp. St. § 9588) was made. The dismissal of the bankruptcy proceeding was not based upon the insolvency of the alleged bankrupts, and no finding in respect to that matter has been made.

"Whistle" is a syrup manufactured by the Whistle Company of Pennsylvania, Inc., and the product of this company was handled by licensees. The alleged bankrupts ob

who made the deliveries, and it is very questionable whether payments to so-called salesmen were not, most of them, for current expenses necessary to keep the business going, and not properly chargeable to a capital account. The only books put in evidence were for payments on account of machinery and bottles, with the exception of 16 checks, aggregating $417.49, alleged to have been payments of salaries to so-called salesmen. It seems quite unlikely that a profitable business, which, as the alleged bankrupts claim, was making net earnings at the rate of about $54,000 a year, should have been conducted with so little method, and it seems quite impossible to justify charging large amounts of damages upon third parties with such a slender foundation.

After the alleged bankrupts ceased to sell "Whistle," and went into the business of selling other syrups at a lower price of 80 cents per case, they contend that a still greater profit could have been made than on "Whistle," because they manufactured the syrup themselves, and it only cost them 8 cents per case for syrup, instead of 29 cents, which they had paid for "Whistle." During this latter experiment, as well as while they distributed "Whistle," no charge is made for bottles, breakage, or deposits (to secure the return of bottles made by customers), and there is the same failure to charge any of the activities of salesmen to income account, or to furnish any ledger, cash book or check book showing in the usual way, the disposition of moneys received and paid out.

We have in this case a new business, which Elgot testified he had never been in before, instituted with little capital, all the machinery purchased on conditional sale, the distribution of "Whistle" abandoned after one month because it was unsatisfactory, a business in general syrups then instituted in the hope that the old customers of "Whistle" would purchase other syrups, and Elgot testifying at a former hearing that the receipts of "Whistle" were eaten up by overhead expenses and "salesmen doing missionary work, painting signs, and wall boards." I think it clear that there is no sufficient proof that a profitable business was ever conducted by the alleged bankrupts. The good will and prospective profits are therefore not items of legal damage.

I think the master was entirely justified in rejecting the item of advertising expense. It will doubtless be suggested that there must have been some good will, if the witness Kopelman offered $15,000 for the business.

He testified that the Glory Bottling Company was willing to pay $15,000, "and take over the obligations of the plant," and place the alleged bankrupts on a certain salary for a certain time. He also stated that he "examined over the plant" and "found that there was-they had very little merchandise which belonged to them." This $15,000 was to be paid, $5,000 on taking possession of the plant, and the balance bimonthly. Elgot did not accept the offer, because he was dissatisfied with the salary offered.

It is true that this offer is some evidence of value of the business as a going concern to a man already in the business. If Kopelman was a good business man, he might well get some substantial advantage out of a list of customers and an assembled plant, when added to his own business. It does not follow that the business which he bought had made, or could make, any profits under the management of the alleged bankrupts. Moreover, he proposed to pay two-thirds of the purchase money by installment and to hire the bankrupts (who had been drawing, according to their books, $75 a week) for only $40. If the story of this unaccepted offer is true, it still was an offer to pay only $5,000 down, coupled with a benefit to the purchaser of officers' salaries at about half the existing rate. I think this offer can have little bearing on the value of the property and business.

We last come to the loss caused by damage to the so-called cash investment, classified in the master's report as A, items 1, 2, 3, 4 and 5. The first item of advertising expense, the master correctly disallowed. The business, in my opinion, had no value outside of its tangible property. If loss of customers was a marketable commodity, any sum which could be obtained for it would be wholly speculative. I regard a part of this so-called advertising as nothing more than payments to truckmen who were instructed to "talk up" wares while they were on the road making deliveries. A large part of them also seem to have been, in effect, current income disbursements, and whatever legal attribute they may have had, the result seems to have been a profitless business. [2] Items 2, 3, 4, and 5, in subdivision A, representing equities in the machinery and trucks, cost of hauling, freight and installation in the plant, security deposited under lease, and moneys in bank, aggregate $7,814.84, and are prima facie items of damage to the corporeal property of the alleged bankrupts. It is quite certain that machinery and