tute that reasonable cause to believe that the statute requires.

The evidence may warrant, inferentially, a suspicion that she shared in the desire and intent of the husband to prefer her, but the rights of the parties must turn not upon suspicions, but upon facts established by a fair preponderance of the evidence before the court. I have been the more inclined to give the defendant the benefit of any doubts I have entertained, because, only a few days before the beginning of the four-month period, she contributed to the corporation more than she received out of it. Her transactions with the corporation, considered as a whole, enriched, rather than depleted, the estate. See Gans v. Ellison, 114 F. 734, 52 C. C. A. 366; Jaquith v. Alden, 189 U. S. 78, 23 S. Ct. 649, 47 L. Ed. 717; Yaple v. Dahl-Millikan Grocery Co., 193 U. S. 526, 24 S. Ct. 552, 48 L. Ed. 776; Joseph Wild & Co. v. Provident Life & Trust Co., 214 U. S. 292, 29 S. Ct. 619, 53 L. Ed. 1003. Remington on Bankruptcy, § 1846.

Charles J. Goldman, of Lynn, Mass., for plaintiff.

Coughlin & Jacobs, of Lynn, Mass., for defendant.

BREWSTER, District Judge. The above are suits in equity brought by the trustee in bankruptcy of the Lynn Cut Sole Company to recover preferences voidable under section 60 (b) of the Bankruptcy Act (Comp. St. § 9644).

The bankrupt was engaged in the business of manufacturing and dealing in merchandise used in the manufacture of shoes. The corporation was adjudicated bankrupt upon an involuntary petition filed December 17, 1924. The defendant Rosenthal is the father of the defendant Ross. Rosenthal was president, and Ross was treasurer, of the corporation. They were actively connected with the management of the business, and were the principal stockholders in the corporation, except that shortly before the failure Ross resigned as treasurer, but did not

of the corporation. During the four months prior to bankruptcy both defendants received sums of money from the bankrupt, and it is the aggregate of these payments that the trustee is seeking to recover in these suits. The question presented is the same in both cases, and may properly be considered in one opinion.

Neither the plaintiff nor the defendants were able to produce certain books of tho corporation at the hearing on the merits. These books would undoubtedly have thrown light upon many transactions which the evidence leaves obscure. There was, however, introduced in evidence a ledger kept by the bankrupt which contained a private account with each of the defendants showing items of debit and credit, each defendant being charged with certain sums paid to him from time to time and credited with certain sums received from each defendant, or with certain sums due for salary. Except as the evidence indicates that the books were in charge of an employee somewhat inexperienced, there is nothing in the case to warrant me in finding that the private accounts in the ledger did not substantially represent the transactions between the corporation and the defendants. Some items are capable of being verified by entries on check stubs, but such corroborative evidence unfortunately does not extend over the entire four-month period. As the evidence was left with me, I feel bound to accept these accounts as a fairly accurate statement of the sums paid and credited to each

defendant. I also find that during the entire period of four months prior to bankruptcy the corporation was insolvent within the meaning of the Bankruptcy Act, and that each of the defendants had knowledge of such insolvent condition. I also find that, notwithstanding this knowledge of insolvency, the defendants advanced from time to time money to the corporation in good faith, in the hope of improving the financial condition and ultimately averting disaster.

[1] It seems to be well established in the federal courts that, in a case of a claim based upon an open account of mutual debits and credits, the real preference under the law is the net balance in favor of the creditor "for only to the extent of such net gain does the creditor 'obtain a greater percentage of his debt than any other creditors of the same class.' And so, on the other hand, only to the amount of the net gain to the creditor is the estate of the debtor impaired." Gans v. Ellison, 114 F. 734, 52 C. C. A. 366; Remington on Bankruptcy, § 1660. This doctrine has met with approval in the Supreme Court. See Jacquith v. Alden, 189 U. S. 78, 23 S. Ct. 649, 47 L. Ed. 717; Yaple v. Dahl-Millikan Grocery Co., 193 U. S. 526, 24 S. Ct. 552, 48 L. Ed. 776; Joseph Wild & Co. v. Provident Life & Trust Co., 214 U. S. 292, 29 S. Ct. 619, 53 L. Ed. 1003.

[2] If this doctrine is to be applied in the cases at bar, the amount of the preferences received by the defendants (and I find they received preferences) would be the difference between the sums paid to them by the corporation in the four-month period and the credits extended by the defendants to the corporation during the same period. But in the cases at bar I am not at all convinced that we have such open accounts of mutual debits and credits as would permit the application of the above doctrine, especially in view of the findings in the cited cases that the payments were made in the usual course of business, and the creditor receiving them was ignorant of the insolvency of the debtor.

Very substantial payments were made to both defendants within a few days of bankruptcy. They were made under such circumstances as would compel the conclusion that the prime object of the transaction was not only to prefer a favored creditor, but to put in the hands of the Rosenthal family money that really belonged to creditors. Under section 60 (c) of the Bankruptcy Act (Comp. St. § 9644), each defendant is entitled to have set off against the sums received as preferences the sums of the credits extended to the corporation.

14 F. (2d)-16

During the same four-month period the corporation became indebted to him for money loaned or unpaid salary to the amount of $1,318, but subsequent to October 15, 1924, Ross was credited with $495, leaving a balance of $2,795, which amount the plaintiff is entitled to recover in No. 2479. [3] Second, as to the defendant Isador Rosenthal. According to the books of the bankrupt corporation, this defendant received within the four-month period numerous payments aggregating $2,825. These payments ranged all the way from $16 to $950. On the other side of the ledger, during the same period, it appears that the corporation became indebted to him for money advanced or unpaid salary to the amount of $3,538. In this sum is included $1,764.65, which the evidence leaves wholly unexplained. It appears to have been entered in the regular course of business, and there is nothing to indicate that it was not a proper credit to be given the defendant. Undoubtedly, many of the smaller items were reimbursements for expenses that the defendant had incurred on behalf of the corporation or were to reimburse him for money advanced to meet the pay roll within the four-month period. He also exchanged with others his personal checks, and some entries relate to these transactions. The bankrupt temporarily had the use of the money obtained in this way.

I find that many of the items appearing on the private ledger account with this defendant fall into one or the other of the above classes, and ought not to be regarded as preferences. I do find, however, that on November 18, 1924, the corporation paid him $950, and again on December 1, 1924, $300. I find that these payments were made to this defendant with an intent to prefer him over other creditors, and from this amount he has a right to offset the credits since November 18, 1924, which I find to be $186, leaving a balance of $1,064 which the plaintiff is entitled to recover in No. 2475 against the defendant Rosenthal.

Appropriate decrees may be entered accordingly.

This provision of the taxing laws reads, as follows:

"Capital stock, issued: On each original issue, whether on organization or reorganization, of certificates of stock, or of profits, or of interest in property or accumulations, by any corporation, on each $100 of face value or fraction thereof, 5 cents." Comp. St. § 6318p.

The question presented is: Are the plaintiff associations, as organized under the laws of this state, liable to pay the stamp tax ordained in the above act on the certificates issued to members for the purpose of designating the membership? An analysis of the act seems to indicate the amount of the tax imposed is intended to correspond with the value of the interest held by the individual shareholder in the property of the incorporated company or association. Again, the tax is imposed upon (a) corporate stock issued on original incorporation or on a reorganization of the corporation; or (b) on certificates of stock or property, or of interest in property or accumulations of property, by a corporation.

It is the contention of plaintiffs the certificates by them issued have no monetary value, but are mere evidence of membership in the association, showing merely those who are entitled to participate in its affairs. Before any member has anything of monetary value in the hands of the association, he must not alone have become a member, as shown by certificate of membership, but must further have delivered wheat to the association; that two or a dozen certificates of membership in the association are of no more actual worth or value than is one. In this view of the matter many excerpts from the act under which plaintiffs are associated together are quoted and relied upon by counsel for plaintiffs.

I have examined and read the act, and while I found no adjudicated case in point, yet in the case of Kansas Wheat Growers' Association v. Schulte, 113 Kan. 672, 216 P. 311, and in State v. Sessions, 95 Kan. 272, 147 P. 789, the statute under which plaintiffs herein became associated was by the Supreme Court of the state construed, and it was there held the associations are nonprofit organizations. Then, as the certificates of membership have no monetary value, how it may be contended they are certificates of profits in the association, or are certificates of an interest of property of the association, or are certificates of an interest in accumulations of the association, it is difficult to comprehend, more than is a certifi

cate of membership in a church, which owns a house for public worship.

Taking the entire act under which plaintiffs are associated together, as construed by the Supreme Court of this state, and the language of the act under which the taxes were laid against plaintiffs in this case, I fail to find any justification for the taxes imposed and collected from plaintiffs.

Therefore judgments must go for the plaintiffs for the recovery of the taxes imposed upon them and collected without lawful right.

THE SILVERADO.

(District Court, D. Oregon. June 21, 1926.) 1. Shipping 82-To recover from ship for personal injury sustained by falling in open hatch, libelant must be aboard at invitation of owner.

To recover from ship for personal injury sustained by falling in open hatch, libelant must be aboard at invitation of owner, either express or implied, or his agent acting within scope of authority, since trespasser or licensee takes premises as he finds them. 2. Shipping 82.

Shipowner owes no duty to trespasser or licensee except that he shall not wantonly or recklessly injure him or knowingly let him run into dangerous place.

3. Shipping 86(2)-Libel alleging that libelant injured was aboard vessel at invitation of master, without showing master's authority, held insufficient.

Libel to recover for personal injury caused by falling into open hatch, alleging that libelant was aboard vessel at invitation of master, held insufficient, since there was no showing that master acted within scope of authority.

ent.

BEAN, District Judge. This case was submitted on exceptions to libel to recover damages for personal injury. The allegations of the libel are that, while the vessel, the Silverado, was moored at a wharf in Seattle, the libelant was requested and directed by the master to come aboard, and, while moving about in the vessel, he fell into an open hatch and was injured.

[1, 2] There is no allegation in the libel as to the purpose of the libelant in going aboard the boat, nor his business there, other than the simple bald allegation that he was there at the invitation and request of the master, and it is claimed that that is not sufficient to make the boat liable. Before a ship can be held liable, it must appear that there was a breach of some duty on its part which it owed to the libelant, and therefore necessarily that he was aboard the boat at the invitation of the owner, either expressed or implied, or some person acting for the owner and within the scope of his authority. As, where one goes aboard a vessel at the invitation expressed or implied of the master of the vessel for the purpose of transacting business with the master and officers, it is of course the duty of the vessel to exercise ordinary care to see that he is not injured; and such is the ruling of the Supreme Court in the Leathers Case, 105 U. S. 626, 26 L. Ed. 1192. But a trespasser or a mere licensee takes the premises as he finds them; he enters at his own risk. The owner owes no duty to him to keep the premises in any certain condition for his benefit, only that he shall not knowingly let him run into a place of danger or shall not wantonly or recklessly injure him.

[3, 4] Now, as I said, the libelant was aboard this vessel, he says, at the invitation of the master but there is no showing that the master was acting within the scope of his authority in inviting him aboard. The master of the vessel, of course, is the representative of the owner for many purposes, but he has no authority on behalf of the owner to invite persons aboard the boat for reasons personal to himself or to them, and, if he does so, they are mere licensees, and take the boat as they find it. For the reason, therefore, that there is no allegation in this libel showing that the boat owed the libelant any duty other than not to wantonly or recklessly injure him, the exception should be allowed.

[5] There is also an exception to a portion of the libel which attempts to set out a statute of the state of Washington, and in my judg

not able to conceive any bearing a statute of the state of Washington could have upon a libel in rem upon the admiralty side of the court.

THE JAMES E. NEWSOME.

PLUMMER v. ATLANTIC TOWING CO. et al. (District Court, S. D. Florida. June 29, 1926.) No. 2434.

11(10)—Forced

1. Shipping 15-Towage removal to sea of lumber schooner, unloading where grounded in harbor, held not within authority, of harbor master, and tugs removing her were liable (Rev. Gen. St. Fla. 1920, § 2502).

Rev. Gen. St. Fla. 1920, § 2502, to order reA harbor master is not given authority by moval of lumber schooner, which grounded in a harbor and was there unloading, and tugs which removed her to sea and anchored her where claim that they acted under his direction, and she was damaged by the seas, cannot justify by

are liable for the tort. 2. Admiralty 62.

A cross-libel for damages to vessel and cargo may be required to specify the amount of damages claimed for each.

In Admiralty. Suit by the Atlantic Towing Company and others against the schooner James E. Newsome, W. F. Plummer, master and claimant, with cross-libel. On exceptions to cross-libel. Overruled in part, and sustained in part.

Warren S. Reese and J. C. Morcock, both of Miami, Fla., for libelants.

McCaskill, Taylor & McCaskill, of Miami, Fla., for claimant.

CALL, District Judge. A libel was filed by libelants, claiming towage services rendered the vessel. The facts stated in the libel may be summarized as follows: The vessel, bound from Savannah, Ga., with cargo of lumber for Miami, Fla., while entering the harbor under tow, grounded in the channel and received some damage, causing her to take in water. While in this condition, the services set out in the libel were rendered. It is claimed that these services were rendered with the consent of the owners of the vessel; this is denied in the answer. After floating the vessel, she was towed to the outside in the ocean and anchored.

The cross-libel alleges, in substance, that after the grounding of the schooner arrangements were made for, and the unloading of the vessel was proceeding with dispatch, when