The parties in writing waived a jury trial, and the court found against the defendant. Judgment was rendered in favor of plaintiff for $9,000 and interest from September 30, 1920, the date when the assessment became due and payable.

It appears from the testimony that the Northern Fish Company, a Minnesota corporation, was organized to deal in the fresh fish business; that defendant was actively connected with R. B. Boak & Co., a corporation engaged in the salt fish business. Defendant's father was the president and principal stockholder in the latter company.

Negotiations were had between defendant and one McDougall, president of the Northern Fish Company, whereby either the defendant or R. B. Boak & Co. advanced money to and received stock from the Northern Fish Company. This stock was issued to one Thompson, McDougall's secretary, who in turn immediately assigned the certificates in blank and mailed them to defendant, who deposited them with the treasurer of R. B. Boak & Co. Thompson never paid anything for the stock, and her name was used to satisfy Boaks' desire to avoid any record disclosure of their interest in the fresh fish business. The checks for the stock were issued by R. B. Boak & Co., and were paid from its

funds.

Counsel for defendant has made a persuasive argument in support of his urge that the stock was transferred to and belonged to R. B. Boak & Co. rather than to defendant. But after reading all of the evidence, including numerous letters, we are convinced that the court's finding that "defendant became the legal and actual owner of said 90 shares of stock" is supported by competent evidence.

[1] It would unnecessarily prolong this opinion to refer in detail to such evidence. Keeping in mind the rule applicable where the jury is waived-viz. that the findings should not be disturbed, if there be any evidence to support them (Law v. United States, 266 U. S. 494, 45 S. Ct. 175, 69 L. Ed. 401; Fleischmann Co. v. United States, 270 U. S. 349, 46 S. Ct. 284, 70 L. Ed. 624)-we need only observe that this issue was a controverted one.

[2] Defendant further contends that, prior to the commencement of the receivership proceedings, the certificates of stock were surrendered to the company or turned over to McDougall, and defendant's liability as a stockholder terminated. The testimony upon

this issue is more certain, and less free from doubt. Some time in 1919, when it was learned that the Northern Fish Company was financially embarrassed, defendant and McDougall met to talk over its future. McDougall was optimistic and expressed confidence in his ability to make the company a success. Defendant was pessimistic, and wanted the company liquidated. Nothing definite was determined upon, except that McDougall asked defendant to send him his stock and said he would endeavor to sell it to local parties in Duluth. The stock was forwarded to McDougall, but he was evidently unable to sell it.

Whatever may have been the hopes or expectations of defendant and McDougall, it is apparent from this statement of facts that Boak never parted with his title to the stock. Doubtless defendant, as the owner of this stock, could have avoided future loss through a liquidation of the company. But he did not so proceed. He hoped, no doubt, that McDougall might sell his stock for him, or that the affairs of the company would improve. McDougall, likewise, hoped for an improvement in the company's business, and he manifested this confidence by numerous substantial loans to the company. He never agreed to sell defendant's stock, but merely offered to render such friendly assistance as was within his power to negotiate a sale. We conclude that defendant never parted with the title to the stock, and that McDougall did nothing to prevent the levying of the assessment here sued upon.

[3] Respecting the item of interest, it appears that the court ordered a 100 per cent. assessment on the 30th day of August, 1920. By the terms of this order the assessment was payable in 30 days. Upon the oral argument it was admitted that there was no proof of a demand for the payment of this assessment prior to the commencement of this action, to wit, March 23, 1922. Upon this showing interest should have been allowed from this latter date rather than from August 30, 1920. This difference is $844.50.

The plaintiff is hereby given the privilege of remitting the sum of $844.50 from its judgment within the 30 days of the date hereof, in which case the judgment will be affirmed. In case such remittitur is not made. within 30 days, the judgment will be reversed, with directions to grant a new trial. Plaintiff in error shall recover his costs in this court.

tempted to dissolve, was dissolved, and had no further corporate existence in the state of Texas other than is permitted to corporations to liquidate and wind up their affairs after dissolution, and that Wright and Shaw had no power or authority to revoke the power of attorney to Stennis or grant a new power of attorney to Townsend. On these findings the referee ordered the trustee to pay the dividend to Stennis and this order was affirmed by the court.

[1] Except that it is admitted that the corporation had ceased doing business and some of its assets had been distributed to the stockholders, it does not appear from the record that any steps were taken towards liquidation or to dissolve the corporation. There is no doubt that when Wright and Shaw attempted to revoke the power of attorney to Stennis the corporation was a legal entity, although part of its assets may have been distributed. Wright was its duly elected and authorized president and Shaw was its secretary. These were the only officers it had. Furthermore, they constituted a majority of the stockholders and if there was a board of directors, which is not shown, they constituted a majority of those eligible to serve on that body. There can be no doubt that they were authorized and empowered to represent the corporation.

[2] The rule is that the contract of employment of attorney at law may be terminated at any time by either party, and regardless of this, a principal usually has the right to put aside his agent and demand payment of a claim direct to himself. There is nothing to take this case out of the general rule. Missouri v. Walker, 125 U. S. 339, 8 S. Ct. 929, 31 L. Ed. 769. No doubt Mr. Stennis was actuated by what he considered proper motives in demanding that the dividend be paid to him, in order that he might distribute the money as he believed to be right and just, and there should be no reflection on his conduct as unethical; but the fact remains that petitioner had the absolute right to receive the dividend through its proper officers subject to any lien that Stennis might have upon the fund arising from his services in the bankruptcy proceedings.

It is admitted that under the law of Texas attorney's fees stipulated in a note become the property of the attorney employed to collect it and do not in any way go to the holder of the note. In addition to that the referee found that Mr. Stennis was entitled

to the fees set out in his petition amounting to $1,000 and that the total fees of $2,500 claimed by him were reasonable.

[3, 4] We have no disposition to disagree with the referee's findings as to the reasonableness of the fees but the fees due for services in other cases could not be a lien on the dividend. It is different with regard to the ten per cent. attorney's fee stipulated in the notes, and we think that in order to end the controversy this fee might be properly paid to Mr. Stennis by the trustee.

The judgment of the District Court will be reversed, and the case remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

PENN-NATIONAL HARDWARE MUTUAL et al. v. GENERAL FINANCE CORPORATION.

(Circuit Court of Appeals, Fifth Circuit.
December 10, 1926.)

No. 4792.

1. Insurance ~668 (4)-Evidence that Insured finance company knew of automobile dealer's fraud in issuing worthless obligations securing loans held sufficient to go to jury.

In action on insurance policy to indemnify finance corporation for losses in financing automobile dealers in purchase and sale of auto

mobiles resulting from fraud, evidence that insured had actual knowledge of dealer's fraud in issuing worthless obligations on which insured made loans held sufficient to go jury. 2. Insurance 430-Indemnity policy cover

ing losses in financing automobile dealers held not to insure against loss of profits.

Policy to indemnify finance company for losses in financing automobile dealers in purchase and sale of automobiles held not to insure against loss of profits to finance company on worthless obligations.

3. Insurance 430-Finance company sustained no loss within indemnity policy by exchanging fictitious obligations issued before date of policy for equally worthless obligations thereafter.

Finance company sustained no loss, within

indemnity policy insuring it against loss by fraud, by exchange of fictitious obligations issued by automobile dealers securing loans, issued prior to date of policy in exchange for equally worthless obligations issued after such date.

4. Insurance 332 (2)—Writing of letters by finance company to dealers, stating amount of obligations held and requesting confirmation held insufficient checking with indemnity policy.

Mere writing of letters by finance company to automobile dealers, stating amount of obli

gations on which it had loans and requesting reply admitting or denying that amount stated was correct, held insufficient checking of such obligations, within policy insuring finance com

of the fraudulent and fictitious character of the obligations. The defenses interposed included the following: (1) That plaintiff did have such knowledge-in fact, was a participant in the fraudulent scheme and should be denied any recovery whatever; (2) that recovery for the face of the obligations could not be had for the reasons (a) that, at the time the policy became effective, plaintiff had in its possession fraudulent and fictitious obligations of the Cooke Motor Company aggregating about $52,000, and worthless paper bringing the total up to nearly $100,000, which fraudulent, fictitious, and worthless paper was exchanged for equally worthless paper issued subsequently to the date of the policy; (b) that a substantial part of the money advanced by plaintiff was upon obligations accepted by it after the date of the first monthly checking which plaintiff was required to make, and that, as to such obligations thereafter issued, defendant was relieved from liability by the terms of the policy; and (c) that in any event defendant could not be held bound for plaintiff's profits of about $16,000, but was only liable for the actual amount lost by plaintiff in its dealings with the Cooke Motor Company.

[1] Plaintiff was engaged in the business of financing automobile dealers in the purchase of automobiles from the factory, and in selling them on the installment plan to individual purchasers, and had been dealing with the Cooke Motor Company for some time. As early as January, 1924, it applied for insurance which would protect it against loss upon acceptance of obligations of automobile dealers and individual purchasers by reason of fraudulent and fictitious sales. Up to the time of issuance of policy in suit, it had on hand fraudulent and fictitious obligations amounting to about $52,000, which it had accepted from the Cooke Motor Company. In addition, it held paper of that company of the face value of $54,000, all of which, except about $12,000, proved to be worthless on account of having been signed by accommodation indorsers or irresponsible parties.

to such address, stating that it had acquired the purchaser's obligation and was entitled to future payments thereon, and requesting a recognition by such purchaser of its rights. Many of these letters were returned unclaimed. More than 40 of the supposed purchasers of the 93 retail obligations involved in this suit were represented as living in El Paso, where both the plaintiff and Cooke Motor Company had their places of business; but 49 of the 93 notices were returned as unclaimed by the addressees.

Some payments were made on these contracts, but in every instance they were made by the Cooke Motor Company, which, in some unexplained manner, received some of the notices mailed to supposed purchasers. Plaintiff was a subscriber to, and received each morning, the Commercial Recorder, a publication giving information of courthouse records, including records of automobile licenses and mortgages. During the period covered by the policy, licenses were issued for only 6 Paige cars and only 7 Jewett cars. A director of the plaintiff corporation, who, however, was not active in the conduct of its business, testified that its president, Mr. Cunningham, told him that investigations were being made of the license records of automobiles. That testimony was not denied by Cunningham, although he testified that no investigation of courthouse records was in fact made.

The only effort made by plaintiff to make a checking of the Cooke Motor Company's wholesale obligations was to write a letter on the 1st of each month, stating simply the amount of such obligations, and requesting a reply stating whether that amount was correct. At the close of all the evidence the trial court, over defendant's objection and exception, instructed a verdict for plaintiff for the full amount represented by the face of the obligations.