matters of accommodation to plaintiff's customers. In truth, the real facts show plaintiff was not advancing the money to pay for the goods. He charged the cash to the customer as of the date the oleomargarine was sent out from his store; but he did not pay Armour & Co. until the 1st of the month, and at that time his customer paid him, so that, in fact, he advanced no money. The charge on plaintiff's books was simply to keep the matters between him and his customers correct, and that only. The proof, as before stated, shows that plaintiff made no promise to pay for the goods, although he did pay for them in the way stated. Nor did he guaranty payment. Suppose he had; did that make him a purchaser? By no means. If he did not purchase them, he did not own them; if he did not own them, he had no interest in them to sell; if he did not sell or offer to sell, he was not a dealer. Hartzell v. U. S. (D. C.) 83 Fed. 1003, is in point, in which case District Judge Allen quotes from Benjamin on Sales as follows:

"But then, in some cases, a broker, though acting as agent for a principal, makes a contract of sale and purchase in his own name. In such case he may be sued by the party with whom he has made such contract, for a nonfulfillment of it. But so, also, may his undisclosed principal; and, although the agent may be liable upon the contract, yet I apprehend nothing passes to him by the contract. The goods do not become his. He could not hold them, even if they were delivered to him, as against his principal. He could not, as it seems to me, in the absence of anything to give him a special property in them, maintain any action in which it was necessary to assert that he was the owner of the goods. The goods would be the property of his principal, and although two persons, it is said, may be liable on the same contract, yet it is impossible that two persons can each be the sole owner of the same goods. Although the agent may be held liable, as a contractor, on the contract, he still is only an agent, and has acted only as an agent. He could not be sued, as it seems to me, merely because he had made the contract of purchase and sale in his own name with the vendor, even though the contract should be in a form which passes property in goods by the contract itself by a third person, as if he (the broker) were the owner of the goods; as if, for instance, the goods were a nuisance or an obstruction, or, as it were, trespassing, he would successfully answer such an action by alleging that he was not the owner of the goods, and by proving that they were the goods of his principal, till then undisclosed. If he could not be sued for any other tort merely on the ground that he had made the contract in his own name with the vendor, it seems to me that he cannot be successfully sued merely on that ground by the real owner of the goods as for a wrongful conversion of the goods to his own use."

It thus appears that if plaintiff had been a broker and primarily liable, or equally liable with the purchaser, the result would be the same. But he was not a broker. He got no commission or compensation for anything he did. He made no promise, express or implied, to Armour & Co. to do or to be responsible for anything. His obligations were to his customers to receive and deliver the goods for them, and with that Armour & Co. had nothing whatever to do. He was under no obligation to Armour & Co. to even receive the goods from them, although by his request they were shipped to his care. He might, when they came, have said to Armour & Co., "I will notify my customers, and they will send for the goods." To do so would not have been any breach of good faith, or good morals, much less of any principle of law. Armour & Co. in fact, under the evidence, had no claim upon plaintiff at any time in regard to the goods. That plain

tiff received them and paid for them was a mere matter of accommodation for his customers.

It is said that the fact that the orders were small, and that plaintiff received nothing for his trouble, does not alter the transaction. It does not, in one sense; but it does very materially bear upon it in another. It is conceded that a man may buy goods and sell them below cost, in large or small quantities. But the purchase and sale is no less a purchase and sale on that account. But in this case the size of the transaction and the fact that no profit was made, when considered in connection with the relations of plaintiff and his customers, and the character of both, tend to make clear the bona fides of the transaction. As to both plaintiff and his customers it is proper to say that there is nothing in the transactions themselves which is not absolutely consistent with good faith and fair dealing, whatever suspicions the methods employed may suggest. As a matter of fact the whole transaction was fair, free from any bad motive, and resulted in no wrong to the United States.

The exaction and collection of the tax was unauthorized and illegal, and the plaintiff is entitled to recover of defendants the same in full, with interest.

LATHROP-SHEA & HENWOOD CO. v. INTERIOR CONST. & IMP. CO. (Circuit Court. W. D. New York. January 30, 1907.)

No. 147.

1. REMOVAL OF CAUSES-ACTION AFTER REMOVAL-QUESTIONS DECIDED BY STATE COURT.

It is a general rule that the federal courts in a case removed from a state court will not sit in review of any act done by that court prior to the removal, but where the state court acted without jurisdiction a different rule applies, and a motion to quash the service on a defendant who has not entered a general appearance, which involves the question of jurisdiction over the defendant, although overruled by the state court, may be renewed after removal.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 42, Removal of Causes, § 241.]

2. APPEARANCE-SPECIAL APPEARANCE TO OBJECT TO JURISDICTION.

The special appearance of a foreign corporation defendant in a state court for the single purpose of insisting that no valid service has been made upon it is not a submission to the claimed jurisdiction.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 3, Appearance, § 44.]

3. CORPORATIONS-SERVICE ON FOREIGN CORPORATION-NEW YORK STATUTE. Where a foreign corporation designated an agent on whom service might be made in accordance with the provision of section 16 of the general corporation law of New York (Laws 1892, p. 1806, c. 687), and complied with the other requirements of the law to entitle it to do business in the state and in fact engaged in business therein, but subsequently ceased such business, revoked the appointment of its agent, and withdrew its office and property from the state, its subsequent maintenance of an action in a court of the state, which was commenced before it withdrew therefrom and related to its business therein, does not constitute a continuance of such business so as to subject it to suit therein by making service on the Secretary of State, which is authorized

by said section 16 in case of the death or removal of the designated agent of a foreign corporation doing business in the state and a failure to appoint another.

[Ed. Note.-Service of process on foreign corporations, see note to Eldred v. American Palace Car Co., 45 C. C. A. 3.]

On motion of defendant after removal of the cause to vacate a default judgment in the state court and to set aside the service of summons on said defendant.

See 143 Fed. 687.

Bushnell & Metcalf and J. H. Metcalf, for plaintiff.

Daniel J. Kenefick and C. Walter Artz, for defendant.

HAZEL, District Judge. This application by the defendant, the Interior Construction & Improvement Company, a foreign corporation (herein called the "Construction Company"), is to vacate a judgment rendered on default in pleading and to set aside the summons and service thereof as null and void. The action was originally brought in the Supreme Court of the state of New York against the Pittsburg, Shawmut & Northern Railroad Company, a domestic corporation (herein called the "Railroad Company"), and the Construction Company, jointly, to recover money for services performed and materials furnished in the year 1902, pursuant to contract with the Construction Company; it being alleged in the complaint that the Construction Company acted as agent of the Railroad Company. Pursuant to section 16 of the general corporation law of the state of New York (Laws 1892, p. 1806, c. 687), and as a condition of doing business therein, the Construction Company designated one Mollenhauer, a resident of the city of New York, as a person upon whom process against it might be served within the state. Afterwards, on November 14, 1904, Mollenhauer, in accordance with the provisions of subdivision 2 of section 432 of the Code of Civil Procedure, filed an instrument in writing in the office of the Secretary of State consenting to the revocation of his designation. On November 16, 1904, the summons in this action was served upon the Secretary of State under said section 16 of the general corporation law, which substantially provides for substituted service upon that officer of process against foreign corporations doing business in this state in the event either of the death of the person designated or his removal from the place where the corporation has its principal office within the state, and the corporation has omitted to designate another person. Before the expiration of the time to answer or demur, and on December 6, 1904, the Construction Company, appearing specially for that purpose, made a motion to set aside the service of the summons as aforesaid, upon the ground that at the time thereof it was not doing business in this state, and that the designation of Mollenhauer had in fact been revoked. In support of such motion affidavits were read showing that in the month of August, 1904, the Construction Company discontinued its business operations in this state, and removed its office to the city of Detroit, Mich. By the opposing affidavits it was shown that the Construction Company, prior to the removal of its office and business, brought an action in the Supreme Court of the state

of New York against a firm of subcontractors for the construction of the railroad, which action was pending at the time of the purported service of the summons. In other respects the assertion of the Construction Company as to the removal of its office and the discontinuance of its business was not controverted. The motion to annul the service of the summons was denied by the Supreme Court, and its decision was subsequently affirmed by the Appellate Division without opinion. Later leave to appeal to the Court of Appeals was denied. In the meanwhile the time of the Construction Company had been extended by stipulation and order until 10 days after denial of the application to appeal and entry of the order thereon.

On February 6, 1905, a petition for removal to this court was presented to the state court in conformity with the provisions of the Revised Statutes of the United States, and, the removal being effected, a motion was made in this court to set aside the service of the summons. Thereupon the plaintiff moved to remand the case to the state court, and on March 17, 1905, the plaintiff's motion was granted on the ground that no separable controversy existed; the motion of the construction company to dismiss the substituted service being at the same time overruled. Lathrop-Shea & Henwood Co. v. Pittsburg Shawmut & Northern R. Co. (C. C.) 135 Fed. 619. Before the time to plead expired a motion was made by the Construction Company in the state court for further time to answer; it having meanwhile moved to compel the plaintiff to elect the defendant against which the action should be prosecuted. The latter motion being denied, the Construction Company later defaulted in pleading. The issues raised by the Railroad Company were sent by the state court to a referee, to hear, try, and determine, and on October 26, 1905, the action against the Railroad Company was dismissed on the report of the referee. Prior thereto, on September 27, 1905, because of the default of the Construction Company, judgment was rendered against it for the sum of $47,363.15. Following the entry of judgment a motion was made and granted by the state court dismissing the complaint against the Railroad Company in accordance with the decision of the referee, and thereafter the Construction Company, on October 31, 1905, again removed the action into the federal court and attacked the service of the process for invalidity. The plaintiff once more moved to remand on the ground that an appeal had been taken from the judgment rendered upon the decision of the referee, and accordingly it was thought that there was not a division of the action into separate controversies. Plaintiff's motion was granted. Lathrop-Shea & Henwood Co. v. Interior Const. & Imp. Co. (C. C.) 143 Fed. 687. Subsequently, on December 4, 1906, the Appellate Division of the state court sustained the referee, and, such decision being regarded as a final determination of the nonliability of the Railroad Company and a division of the controversy, the case for the third time was removed to this court, and the defendant, Construction Company, again moves to set aside the purported service upon the Secretary of State. In opposition to the motion, the plaintiff urges two grounds-that the proceedings in the state court are res adjudicata ; and that the substituted service upon the defendant, foreign corporation, is valid.

In support of the first ground plaintiff directs special attention to the cases of Mutual Reserve Ass'n v. Phelps, 190 U. S. 147, 23 Sup. Ct. 707, 47 L. Ed. 987; Bragdon v. Perkins, Campbell Co. (C. C.) 82 Fed. 338, and Allmark v. Platte S. S. Co. (C. C.) 76 Fed. 614. These adjudications, however, are not thought to be apposite. In the Phelps Case the defendant corporation concededly was doing business in the state of Kentucky, though its permission to do so had been withdrawn by the insurance commissioner, and under such circumstances, the service of the summons upon the latter pursuant to the statute providing therefor was held valid. In the Perkins-Campbell Case a general appearance was interposed by the defendant, and before the removal of the case a dispute arose as to whether the person served with process was the agent of the defendant company or merely a traveling salesman on commission. It was proven by the plaintiff that the person served was the general agent of the defendant, and upon the merits the state court dismissed the application to annul the substituted service. In this situation the case was removed and motion made in the federal court to invalidate the service. No new or different facts were elicited than those already passed upon by the state court. It was accordingly held that, as lack of jurisdiction was not disclosed by the facts, the Circuit Court was concluded by the decision of the state court. In the Allmark Case it was broadly held that after the denial by the state court of the motion to set aside service of the summons there can be no renewal of the motion in the federal court without obtaining leave to do so, and the case was taken by that court in the condition in which it left the state court. An examination of the record in the case mentioned persuasively indicates that the question decided by the state court was simply whether the service, in fact, was made upon the managing agent. Upon conflicting affidavits the state court decided that the defendant was doing business in the state, and the person served was its agent.

The case at bar does not fall within the principle enunciated in the cases mentioned. Beyond doubt, it is a general rule that the federal courts in a case removed from the state court will not sit in review of any act done by that court prior to the removal, and comity dictates that what was done by a court of co-ordinate jurisdiction before the case was removed is entitled to great respect and the decrees of such court are ordinarily regarded as correct adjudications of the questions involved. Where, however, the state court acted without jurisdiction, a different rule unquestionably applies (Loomis v. Carrington [C. C.] 18 Fed. 97), and the inaptitude of the doctrine of res adjudicata is plainly apparent in a case such as this, where the defendant, a citizen of another state having withdrawn its business and property from this state, has the absolute right to remove an action brought against it to the federal court. Such a right unless waived by general appearance, or otherwise forfeited, is founded upon the defendant's alienage or citizenship of another state and was granted by an act of Congress. Under such circumstances no state is permitted by its action to abridge or nullify a right granted pursuant to constitutional law. Tortat v. Harden Min. & Mfg. Co. (C. C.) 111 Fed. 426.