In Bankruptcy. In the matter of the Boston-West Africa Trading Company, alleged bankrupt. On review of the referee's report in favor of an adjudication in involuntary bankruptcy. Report confirmed, and adjudication ordered. Putnam, Putnam & Bell, Louis G. De Rochemont, and Jacobs & Jacobs, all of Boston, Mass., for petitioning creditors. Swift, Friedman & Atherton, of Boston, Mass., for alleged bankrupt. MORTON, District Judge. The question is whether the respondent should be adjudicated on an involuntary petition. The facts are as stated in the referee's report. The only points which require discussion are: (1) Whether the respondent owed debts to the amount of $1,000 at the time when the petition was filed; and (2) whether the payment to Argous was an act of bankruptcy. The complete facts are rather complicated, and only such of them will be referred to as are necessary to the discussion of the questions stated. [1] As to (1), whether the debts amounted to $1,000: There were less than 12 creditors, and for present purposes the petition may be regarded as if brought by only one, viz. the Quaker City Morocco Company. Its claim, as stated by the referee, amounted to less than $1,000. The only other indebtedness of the respondent, which is here established, is that to Argous, on which the payment was made which is alleged in the petition as the act of bankruptcy. The contention for the respondent is that the payment extinguished the debt, and that therefore there was less than the amount of indebtedness required in bankruptcy proceedings. It has, however, been decided in this district, and upon what seem to me sound grounds, that in computing total indebtedness claims paid by preferential transfers, which are found to have been acts of bankruptcy, are to be counted. "A debt, even if paid in full within four months of an involuntary petition, may be counted as a debt owing at the date of the petition, if the payment has been preferential or in fraud of creditors." Dodge, J., In re Jacobson (D. C.) 24 Am. Bankr. Rep. 927, 931, 181 Fed. 870, 873. There is no question that the debt to Argous, if counted, was more than enough to make up $1,000. It follows that the petitioner established a sufficient indebtedness. [2, 3] As to (2), whether the payment to Argous was a preference or fraudulent conveyance: Argous had supplied practically all the capital to the respondent, and was the person most heavily interested in it. It had shipped hides in the course of its business from Africa to this country and had been paid for them. It owed no indebtedness, except to Argous, and the claims by the petitioner, who had bought hides of it, for overcharges and inferior quality; the alleged claim of the Bank of British West Africa is not considered in the present controversy. On December 5, 1917, at Boston, Argous, as treasurer, paid himself about $12,000 from the respondent's funds, on a claim of like amount which he held against the respondent. At the same time he transferred to himself all the rest of the cash belonging to the respondent, about $6,500, and gave the respondent his personal note therefor. The statement of the transaction sounds fraudulent, but the learned referee did not so regard it. Argous was, as stated, practically the only person interested in the company; he was evidently somewhat dissatisfied with the way its affairs were being handled; its active business was being reduced or given up; and he apparently took over its cash for his own protection. At that time, although he knew of the claim by the Morocco Company against it, he had been advised that the claim was unfounded, and he did not have in mind to gain any advantage over the Morocco Company by transfers to himself. Schroeter, who was president of the company, and whose place of business was in New York, had been notified of the claim, and regarded it as better founded than did Henkel, who advised Argous about the matter. The cash transferred to Argous constituted the entire substantial assets of the respondent. A few hundred dollars was left, but not sufficient to pay the petitioner's claim. If the respondent is to be held to the combined knowledge of Schroeter and Argous, it knew that the transfer to Argous would tend to hinder, delay, and defraud its other creditors. Such inevitably would be the effect of any conveyance by a debtor of all its property without arranging to pay its debts. Wilson v. Mitchell-Woodbury Co., 214 Mass. 514, 102 N. E. 119. The respondent is a corporation. The alleged act of bankruptcy was the act of the corporation. I do not think that it can be heard to say that, although Schroeter knew of the claims, he did not know of the transfer, and that Argous, although he knew of the transfer, did not believe the claims to be well founded, and that therefore no act of bankruptcy was committed, because no intent to prefer existed in any person's mind. If a corporation has creditors to the knowledge of any of its officials or agents, by whose knowledge it would in ordinary business affairs be bound, it is held to that knowledge, and is presumed to act in the light of it, in matters of this sort. Cohen, Trustee, v. Tremont Trust Co. (D. C. Dec. 11, 1918) 256 Fed. 399. Report confirmed. UNITED STATES v. HOYT. (District Court, S. D. New York. November 9, 1917.) 1. POISONS 2-HARRISON ANTI-NARCOTIC ACT-VALIDITY. The Harrison Anti-Narcotic Act (Comp. St. §§ 6287g-6287q) is not unconstitutional. 2. POISONS 9-HARRISON ANTI-NARCOTIC ACT-INDICTMENT. Though Harrison Anti-Narcotic Act, § 2 (Comp. St. § 6287h), declares that nothing in the section shall apply to registered physicians who distribute narcotics in their professional practice, held, that an indictment, though averring that defendant was a registered physician, charged a violation of section 2, in that he sold and dispensed heroin not in his professional practice, and in that the sale was not made in pursuance of a written order on a blank issued by the Commissioner of Internal Revenue. 3. INDICTMENT AND INFORMATION 71, 125(3)-POISONS 9-CERTAINTY— DUPLICITY. An indictment charging a violation of Harrison Anti-Narcotic Act, § 2 (Comp. St. § 6287h), in that defendant sold and dispensed heroin, not on a written order on a blank issued by the Commissioner of Internal Revenue, held not uncertain, ambiguous, and duplicitous, though it was averred that the defendant was a registered physician. Daniel J. Hoyt was indicted for violating the Harrison Anti-Narcotic Law, by selling less than an ounce of heroin, which sale was not made in pursuance of a written order, etc., on a form issued in blank for that purpose by the Commissioner of Internal Revenue. On demurrer to the indictment. Demurrer overruled. John E. Walker, Asst. U. S. Dist. Atty., of New York City, for the United States. Carl E. Whitney, of New York City, and N. L. Johnson, for defendant. MCCALL, District Judge. Stripped of its technical verbiage, the offense charged in the indictment is that Daniel J. Hoyt was a dealer in and dispenser of opium, coca leaves, and their salts, derivatives, and compounds, and that he sold, bartered, dispensed, and distributed to J. B. Williams less than an ounce of heroin, which sale was not made in pursuance of a written order from the person to whom the heroin was sold, bartered, dispensed, and distributed, on a form issued in blank for that purpose by the Commissioner of Internal Revenue; that is to say, it is charged that the defendant sold, bartered, dispensed, and distributed heroin on an order therefor, other than on an order made on the form issued by the Commissioner of Internal Revenue. A demurrer is filed to the indictment, and the following grounds are assigned: (1) That Act Dec. 17, 1914, c. 1, 38 Stat. 785, is unconstitutional. (2) and (3) That there is no offense charged in either count of the indict ment. (4) That the indictment is uncertain, ambiguous, and duplicitous. [1] I deem it unnecessary to say more of the first ground than that it is overruled. [2] As to the second and third grounds, the question for decision is: Did the Harrison Anti-Narcotic Law (Act Dec. 17, 1914, c. 1, 38 Stat. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 785 [Comp. St. §§ 6287g-6287q]) permit Hoyt, on the facts alleged in the indictment, to sell, barter, dispense, or distribute heroin upon any order other than one written on a blank form issued for that purpose by the Commissioner of Internal Revenue? It is insisted for the defendant that the indictment also charges that he was a "physician registered with the collector of internal revenue as the law requires, and therefore paragraph 1 of section 2 of the act, on which the indictment is based, does not apply to him, since subsection (a) of section 2 (Comp. St. § 6287h) provides that nothing contained in section 2 shall apply to physicians registered under the act, who dispense and distribute narcotics in the course of their professional practice only, provided the physician does certain other things not material here. This is true, and is important, in that it might be fatal to the indictment, if the pleader has not worded it so as to render the exception inapplicable. As we understand paragraph 1, § 2, it does not apply to registered physicians who dispense or distribute narcotics in the course of their professional practice only. But that is the precise thing the defendant is charged with not having done. The legal presumption in favor of the defendant, as a registered physician, that he complied with the law, in that he dispensed and distributed narcotics in the course of his professional practice only, is expressly negatived by the charge that he did not limit his operations to the course of his professional practice only. [3] In the fourth ground of demurrer it is said that the indictment is uncertain, ambiguous, and duplicitous. True, it is averred that the defendant was, at the time of the commission of the alleged offense, a "registered physician," and it is insisted, from the language used, that it is not certain whether he is being prosecuted for violating the law as it relates to him as a physician dispensing and distributing narcotics, as contradistinguished from him as an individual engaged in selling, bartering, exchanging, and giving away the drug. We think if the language used by the pleader is confusing in the slightest degree it may and should be treated as surplusage. To us it is clear that, although a physician may be properly registered, that fact would not necessarily prevent him from violating paragraph 1, § 2, of the act, for he might and could use the fact that he was registered as a cloak to do the very things charged against him in this case; that is, notwithstanding he was a registered physician, he sold, bartered, dispensed, and distributed the drug while not acting in the course of his professional practice only. This case is clearly distinguishable from United States v. Friedman (D. C.) 224 Fed. 276, cited by defendant. There are other questions raised by the demurrer, but I need not discuss them. I understand the ruling in this case goes, also, in United States v. Hoyt, No. 4283. The demurrer is overruled. JOHNSON v. GRAND FRATERNITY. (Circuit Court of Appeals, Eighth Circuit. February 4, 1919.) No. 4989. 1. INSURANCE 695-AGENCY CONTRACTS-CONSTRUCTION. A contract between a fraternal insurer and agents held not to include and provide for commissions on certificates designated as stipulated premium and annuity certificates. 2. CONTRACTS 147(2)-CONSTRUCTION-INTENTION. A court can seek outside of the written contract for the intention of the parties only when it is not clearly expressed. 3. CONTRACTS 166-EXHIBITS-CONSTRUCTION. Where exhibits attached to a contract relating to commissions were subordinate, and merely explanatory of details dealt with in general terms in the contract, only such portions thereof as perform that function can be regarded as intended to be operative. 4. INSURANCE 695-FRATERNAL INSURANCE CONTRACTS-CONSTRUCTION. A contract between a fraternal insurer and agents held unambiguous, and not to allow compensation on certificates designated in exhibits attached merely for illustration as stipulated premium and annuity certificates. The mere statement that an exhibit is made a part of the contract is not controlling in determining whether the terms of the contract can be violated by the exhibit. Appeal from the District Court of the United States for the District of Colorado; Robert E. Lewis, Judge. Suit by D. E. Johnson against the Grand Fraternity. From an order confirming the report of a special master in an accounting, plaintiff appeals. Affirmed. George P. Steele, of Denver, Colo., for appellant. William A. Jackson, of Denver, Colo. (Charles W. Waterman, of Denver, Colo., on the brief), for appellee. Before SANBORN, CARLAND, and STONE, Circuit Judges. STONE, Circuit Judge. Appeal, in an accounting under a contract, from the order of the District Court confirming the report of the special master. Appellant had sued the appellee on account of certain commissions earned by him and his assignors for procuring insurance contracts for the United Moderns, a fraternal insurance organization later absorbed by appellee. As the appellee in connection with this absorption contemplated the assumption of the agency contracts of the United Moderns and as it objected to certain exclusive territory features in the contracts under which appellant and his assignors were working, the United Moderns and these agents replaced the existing agency contracts with others. These new contracts were not only prospective in effect but defined existing commission liabilities. Thereafter appellee contracted concerning these later agency contracts as follows (omitting address and signatures): For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 255 F.-59 |