crease of which the defendants complain, and which plaintiffs seek to have maintained by the process of this court, was within the purview of section 762b33. Was the requirement complied with? The plaintiffs claim that by the filing of the copy of the notice of the increase made by the rating bureau through its manager it was complied with. Such filing, however, was not intended as a compliance therewith. The claim is that there was no agreement, and hence that the statute did not have to be complied with. Such filing, therefore, can hardly be treated as a compliance with the statute. But, whatever may be the truth as to this, it was not filed with the auditor before the agreement took effect. It was filed after it took effect, though on the same day. The provision does not say how long the written agreement shall be filed before it takes effect. Inasmuch as it provides that upon its being filed the auditor may, after due notice and hearing, disapprove of the agreement, it would seem that it should be filed sufficiently long before it is to take effect to afford the auditor a reasonable opportunity to have a hearing after due notice as to whether it should be approved and determine whether it should be approved.

There was ample time between the end of the disastrous five-year period and August 2d last for this, had plaintiffs availed themselves of it. But the question as to how long the written agreement is to be filed before it takes effect is not necessarily before us for determination. It is sufficient that what plaintiffs claim answers thereto was filed after, and not before, it took effect. The provision limits the hearing, if the written agreement is filed, to whether it is contrary to law or to public policy. It would seem that an agreement calling for an increase which yields more than a reasonable profit is contrary to public policy, if not contrary to law. Rates that yield such a profit are condemned by the preceding section.

The plaintiffs cite the decision of the Supreme Court of the United States in the case of Interstate Commerce Commission v. Cincinnati Ry. Co., 167 U. S. 479, 17 S. Ct. 896, 42 L. Ed. 243, and other authorities, in support of the position that power on the part of state officials to fix or regulate rates is not to be implied. It must be expressly conferred. Our conclusion that the auditor has power to pass on an agreement calling for an increase in rates is not based on an implication, but on the express requirement of the statute. [3] Taking the meaning of this provision to be as we have construed it, is it valid? It is essential that it be so, in order that noncom

pliance therewith shall effect the legality of the increase. In the case of German Alliance Ins. Co. v. Lewis, 233 U. S. 289, 34 S. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915C, 1189, it was held that the business of fire insurance is so far affected with a public interest as to justify legislative regulation of its rates. See, also, the case of Merchants' Liability Co. v. Smart, 267 U. S. 126, 129, 45 S. Ct. 320, 69 L. Ed. 538. Such being the law, we know of no reason why a statutory provision requiring that an agreement entered into by insurance companies, calling for an increase in their rates from what they have theretofore been, which is to be put into effect by a special agency created by them for that purpose, shall, before they are so put in effect, be filed with a state official, is not valid.

We do not understand plaintiffs to contend otherwise. In their bills plaintiffs claim that, if the statutory provision in question leaves the making of an increase to the arbitrary disapproval of the auditor, without process, hearing, or right of plaintiffs to be heard, it is in violation of the first section of the Fourteenth Amendment. This is undoubtedly true. But such is not its character. It does not permit of an arbitrary disapproval, and it provides for notice and hearing before there can be a disapproval. It must be taken that the auditor will give a fair hearing after due notice, and that he will not disapprove unless the facts require that he should do so, and his action is subject to court review. The plaintiffs are entitled to rates which will yield a reasonable profit, and there should be no disposition anywhere to deny them such rates.

It is suggested that the provision that the agreement shall not be in force and no right shall be based thereon after service of a copy of the order as therein provided is unconstitutional, notwithstanding the provision for a court review of the order, in that it contemplates that the rates called for in the agreement may not be charged and collected pending such review, and if they are charged and collected during that time plaintiffs and their agents would be subject to the penalties imposed by section 762b34, which are so severe as to deter them from charging and collecting them.

The decision in the case of Oklahoma Operating Co. v. Love, 252 U. S. 331, 40 S. Ct. 338, 64 L. Ed. 596, is cited in support of this position. Assuming this to be a true construction of the provision, and that such is the law, it does not follow therefrom that the requirement that a copy of the written agreement shall be filed with the auditor before it

goes into effect is also unconstitutional. It is, at least, legally possible that the auditor may not disapprove the agreement. He may approve it or he may let it go into effect by not disapproving it. Plaintiffs will not suffer any injury unless he does disapprove it.

The motions for interlocutory injunctions are therefore overruled. As to windstorm insurance they are overruled, because defendants concede that plaintiffs are entitled to the increased rates as to such insurance, and disclaim any intention to interfere with them.

THE ERMA S.

(District Court, S. D. Florida. July 24, 1926.) No. 2160.

1. Evidence 158 (28)-Testimony of workmen's employer and superintendent that work was done and bill correct held inadmissible, in absence of foundation.

Where workmen repairing tug made out and filed time cards from which entries in their employer's books were made, and no foundation for secondary evidence was laid, testimony of the employer and his superintendent that work was done and bill sued on correct was inadmissible.

2. Equity 71(1).

while one Swartz was in possession and control of the tug, and operating her in the towing business in and around Miami, he took her to libelant's boat yard for certain repairs; that subsequent to the doing of the work a partial payment was made by Swartz; that subsequently the tug sunk, was raised and placed in a canal, where she again sunk, and while in this sunken condition was purchased by claimant, raised, repaired, and sold after attachment. It is established law that one furnishing labor and material for repairs acquires a maritime lien on the vessel repaired. It is equally well established law that a maritime lien, once acquired, follows the vessel into whosesoever hands she comes, unless it is lost through laches.

[1] In the instant case, the libelant, for some reason, failed to produce his books to sustain the account attached to and made a

part of his libel, but contented himself with having his superintendent swear that the work was done and the bill correct, and swearing to it himself, and this in the face of claimant's objection, entered at the time, and the further fact shown that time cards were made out by the workmen and filed with the bookkeeper, from which the entries in the books were made. No ground was laid to introduce secondary evidence, and the objections of claimant are well taken.

3. Maritime liens

Repairer of a tug, which was afterward sunk within five miles of its yard, who waited until after it was bought by a bona fide purchaser, who raised and repaired it, held barred by laches from asserting a lien thereon.

In Admiralty. Suit by the Fogal Boat Yard against the tugboat Erma S. Decree dismissing libel.

C. L. Brown, of Miami, Fla., for libelant. Hooks & Lohmeyer, of Miami, Fla., for respondent.

CALL, District Judge. This cause comes on for a final hearing upon the libel, answer, and testimony taken before the commissioner. The libel is filed to recover the amount of $490 for work done and materials furnished in repair of the tug by libelant. The claimant in his answer puts in issue the furnishing of the materials and doing the work, as well as stating affirmatively the circumstances of his becoming the owner.

From the testimony it appears that,

without any testimony to support his claim, but in admiralty I do not think a decree dismissing the libel would be proper, without giving libelant the opportunity to prove his case by competent testimony. I therefore will proceed to consider the defense of laches made by the answer. [2] It appears that the last work was done about April 5th and a payment of $150 on account made some two weeks after. After that time the tug was sunk, some five miles away from libelant's boat yard, and lay in that condition until bought, raised, and repaired by claimant. Admiralty administers equity as far as may be in its decrees. It is well settled that laches is not so much a matter of time elapsed as of one's opportunities to act.

[3] Here the contest is between a bona fide purchaser and the claim of one furnishing materials and labor in repairs to a vessel exposed to the elements. Therefore a short delay may constitute laches under the circumstances of this case. A tugboat, engaged in towing in and around Miami harbor, with a repair bill amounting to $490, disappearing from the knowledge of libelant

from about the 20th of April, and no effort made to ascertain her whereabouts, the boat in the meantime sunk. Is it using due diligence by the holder of a secret lien, like admiralty, to sit quietly by until this sunken boat is purchased, raised, and repaired, before asserting the lien? I think not. I am of opinion that the libelant was guilty of such laches as will displace his lien in favor of the claimant.

AUGUSTUS N. HAND, District Judge. This is an application by the owner of the motorboat Lynx II, libelled for violation of Rev. Stat. U. S. §§ 3450, 4337, and 4377 (Comp. St. §§ 6352, 8086, 8132), as well as the National Prohibition Act (Comp. St. § 101384 et seq.), and sections 587, 593 (a), and 593 (b), and section 594 of the Tariff Act of 1922 (Comp. St. §§ 5841h6, 5841h12 -5841h14), to release her on bond.

THE LYNX II.

(Comp. St. § 1564) provides for bonding in cases where a vessel is seized "under any law respecting the revenue from imports or tonnage, or the registering and recording, or the enrolling and licensing of vessels."

1926.)

1. Customs duties 126-Vessel seized under

customs laws releasable on bond (Comp. St. S$ 1564, 1567).

A vessel seized "under any law respecting the revenue from imports or tonnage or the registering and recording, or the enrolling or licensing of vessels," on application to the court, is releasable on bond, under Rev. St. § 938 (Comp. St. § 1564); the exception in section 941 (Comp. St. § 1567) of vessels "seized for forfeiture" being limited to release on bond by the marshal as therein provided.

2. Admiralty 57-Vessel seized for violation of internal revenue law may be released on bond (Comp. St. §§ 5841h6, 5841h12-5841h14,

6352, 8086, 8132).

A vessel seized, under Rev. St. §§ 3450,

4337, 4377 (Comp. St. §§ 6352, 8086, 8132) and Tariff Act 1922, §§ 587, 593 (a)-594 (Comp. St. §§ 5841h6, 5841h12-5841h14), for transporting merchandise with intent to defraud the revenue may be released on bond under the

general practice in admiralty covered by Admiralty Rule 12.

excepts "cases of seizure for forfeiture under any law of the United States," evidently is limited to filing a bond with the marshal in cases of suits for penalties in double the amount claimed where no forfeiture is sought.

[2] I cannot see how the exception of 'seizure for forfeiture" in section 941 can be regarded as excluding all cases of forfeiture from the provisions for bonding in section 938. Such a construction makes an exception in one statute equivalent to affirmative legislation against the release of a vessel in cases generally covered by the language of another. Moreover it derogates by implication from the general practice of courts of admiralty in cases covered by the broad terms of a rule laid down by the Supreme Court.

[3] The fact that section 26 of title 2 of the National Prohibition Act (Comp. St. § 101382mm), makes bonding mandatory, and that vessels have long been released on bond in this and the Eastern district, when seized for violation of the revenue laws, is an additional reason for adhering to the settled practice.

The dictum in The Three Friends, 166 U. S. at page 68, 17 S. Ct. 495, 41 L. Ed. 897, involved a filibustering statute with special considerations of public policy, and that decision, as well as that of Judge Brown in The Mary N. Hogan (D. C.) 17 F. 813, was made when the admiralty rule did not, as the present rule 12, contain mandatory lan

The motion is granted.

NEW YORK HARBOR DRY DOCK CORPORATION v. UNITED STATES et al. (District Court, S. D. New York. March 27,

Maritime liens

1926.) 30-Reconditioner of vessel, under charter from Shipping Board, held not entitled to a lien.

The United States, through the Shipping Board, chartered a vessel to a steamship company under a contract requiring the company to recondition it at its own expense, and prohibiting the imposition of liens thereon. Libelant contracted with the company to recondition the vessel, in which it was encouraged by officers and the local representative of the Shipping Board. It had full knowledge of the contract and charter party under which the company held the vessel, but undertook and completed the work in good faith in the belief and under advice of counsel that it was entitled to a lien therefor. Before full payment for the work, the Shipping Board retook possession of the vessel under right reserved in the contract. Held, that, in view of the provisions of the contract and charter, it was not entitled to a lien in the absence of any evidence that the officers of the Shipping Board had authority to in any way bind the United States.

In Admiralty. Suit by the New York Harbor Dry Dock Corporation against the United States and the United States Mail Steamship Company, Inc. Decree dismissing

libel.

Duncan & Mount, of New York City (by Russell T. Mount and Cecil Page, both of New York City), for libelant.

Emory R. Buckner, U. S. Atty., of New York City (by Walter Schaffner, of New York City), for the United States.

GRONER, District Judge. This is a suit in admiralty in personam against the United States under the Act of March 9, 1920 (Comp. St. §§ 12514-12511). The United States Mail Steamship Company was originally joined as a respondent, but its insolvency has eliminated it as a factor in the situation. For convenience it will be spoken of hereafter as the steamship company.

The contract between the steamship company and the United States, which is involved here, is the same contract construed by the Circuit Court of Appeals of this Circuit in Morse Dry Dock Co. v. United States, 1 F. (2d) 233, and the charter party for the vessel, for the costs of whose reconditioning this suit is brought, is in all respects identical with those examined in that case except as to dates, names, and perhaps some minor matters of pure inconsequence. A reference to the opinion of the court in the Morse Case will therefore supply details as to these mat

ters and make unnecessary any extended reference to them in what may hereafter be said in this case. It is very earnestly insisted on behalf of the libelant that the resemblance of this case to the Morse Case is limited to the matters just referred to, and that, because of this fact, the conclusions of the court in the Morse Case are neither applicable nor binding in this. The facts by which it is claimed this result is accomplished are briefly these: Libelant is, or perhaps it is more accurate to say was, a dry dock and ship repair corporation, organized a few years ago with the active encouragement of the Shipping Board to compete for government work and thus furnish what apparently had been previously lacking in the New York situation; that is to say, active competition in bidding. It had been the low bidder for reconditioning a number of Shipping Board vessels, but had either failed to get the contract or the work had been postponed.

In January, 1920, the Antigone, which had some time previously been chartered to the Steamship Company (with an option to purchase) was ready for reconditioning. Libelant was encouraged by Shipping Board officials to become a bidder for the work and was invited to appear before the Board in Washington and submit its claims. This it did, and in addition furnished the local-that is to say, the New York-representative of the Shipping Board with a copy of its schedule of prices and actively sought the work at the hands of the steamship company.

On January 18 libelant received a letter from the steamship company confirming an oral agreement to recondition the Antigone, having first, as I have already intimated, had a number of personal interviews with the officers of that company, and having likewise received an intimation from Commander Gatewood, then a representative of the Shipping Board, that it would be awarded the contract for reconditioning the Antigone. The letter was brief, and confirmed the agreement to do the work, and fixed the dates of payment for the work in several installments covering the period of a little more than three months after the completion of the work. Apparently in order to secure a somewhat more formal contract, the libelant on January 19 wrote the steamship company the following letter:

"We are in receipt of your letter of the 18th instant, stating the terms of payment for work to be done on the steamship Antigone. In view of the unusual charter conditions, etc., we would like to have a statement from you something like the form of letter inclosed. Should the form be at variance with your

The form of letter inclosed with the one just read was substantially like the answer which was received in due course, which was as follows:

"In response to your letter of January 19th, 1921, I beg to reply as follows:

"As charterers of the steamship Antigone, owned by the U. S. Shipping Board, under an agreement which gives us full power and authority to recondition this vessel, subject to the approval of the United States Shipping Board, we hereby authorize you to proceed to recondition the steamship Antigone as a passenger vessel, and to perform any service to or for said vessel, performing said reconditioning according to the rates which have been submitted to us.

"In consideration of your agreement that you will not exact payment in full for said reconditioning, upon progress of the work, we agree to make partial payments to you as outlined below, upon approval of your bills and estimates by our vice president in charge of construction and repairs, under whose supervision this work is to be done; such work to be carried out in accordance with his instructions, said amounts being payable at our of fice, at 120 Broadway, New York, as follows." Then follows a list of the installment con

tracts with their dates of maturity and this sentence, viz.: "It being understood and agreed that you shall not lose your maritime lien against the steamship Antigone in any way by reason of the deferring of payments for such work."

The letter concluded with a statement of the person who is designated to authorize the work and approve it.

As I recall the evidence, the correspondence which is read was submitted in its entirety to the libelant's board of directors, and at the suggestion of a member of the board counsel were employed to advise the board specifically whether the contract as proposed would create a lien on the vessel for the work done. The report of counsel after examination of the contract and charter party between the Shipping Board and the steamship company was that the company might safely proceed with the work, and, in the event of nonpayment by the steamship company, might legally assert its lien against the vessel.

The work was accordingly completed, the

in the payment of some of the installments. There was a considerable amount of correspondence, in which the chairman of the Shipping Board participated, all in an endeavor to clear the matter in default, which was unsuccessful, and thereafter the Shipping Board, for reasons which appeared to it satisfactory and as it had a right to do, canceled the contract and retook possession of the vessel. A number of letters and likewise details of a number of conversations between the officers of the libelant and the chairman of the Shipping Board and the latter's New York representative, Capt. Gatewood, were introduced and admitted in evidence, it should be said over the objection of counsel for the government. These both oral and documentary tend to show that both Admiral Benson and Capt. Gatewood were impressed with the bona fides of libelant's claim and believed it should be assumed and paid by the United States. Doubtless the reason for this is that both of these gentlemen recognized that the libelant was largely influenced by their encouragement to bid for the work and also by the fact that, in repossessing itself of the vessel, the United States had gotten the benefits and should therefore in good conscience assume the burdens. But, in spite of this and in spite also of Capt. Gatewood's testimony that in conversations with the president of the libelant company about coincident with the making of the contract for the work, he had informed the latter that the steamship comUnited States and the latter was responsible pany was in his opinion the agent of the for the debts-I say, in spite of all of this—

it is not contended on behalf of the libelant

that anything either in the correspondence or in the conversations, either at time the contract was made or after the default in payment of the contract price, created either a ratification by the United States of the contract of the steamship company or bound the United States either as agent or guarantor to discharge that company's indebtedness. No other position than this would in my judgment be tenable, in the absence of some evidence showing authority on the part of these individuals to bind the United States in any respect. Apparently the purpose of the introduction of the evidence was to complete the picture and to demonstrate the fact upon which the claim is urged, viz. that libelant did all that a reasonably prudent man could or should have done to ascertain the facts upon which its rights depended and having acted in good faith, with prudence and diligence, its