25 F.(2d) 37 was continued from time to time until April 5, 1927. The decree is attacked on the ground that, as stipulated, the owner of the premises, appellant herein, participated in no violation of the law and had no knowledge thereof except that conveyed by the notice of February 19th, and to be inferred from the facts stipulated; that, on April 6th and April 15th, Ayd, as proprietor, and Davidson, as bartender, were conducting the business; that in the same month, and before the bringing of this action, Ayd was ejected as a tenant by appellant; that on May 1, 1925, one Ryshavy went into possession as tenant and has not been charged with a violation of law. It is insisted that by the decree no existing nuisance was abated; that the decree in fact amounts to a penalty against an owner for the act of another. [1] The abatement of a nuisance under this act is a civil proceeding in rem. It is held that it is not necessary that the owner of premises be made a party to a suit against lessees to abate the nuisance; nor is it of importance whether the owner has knowledge that the premises are used for an illegal purpose, where intoxicating liquors are sold and the nuisance complained of is found to exist. Denapolis et al. v. United States (C. C. A. 5) 3 F. (2d) 722; Farrell v. United States (C. C. A. 3) 21 F. (2d) 318. [2-6] In this case the owner (appellant) was made a party. It was stipulated that he had whatever knowledge was imparted by the notice theretofore sent to him, and such as might be inferred, as a matter of law, from the facts stipulated. February 19, 1925, he was notified that in January, 1925, the premises were used for the illegal sale and possession of intoxicating liquors. At that time, appellant states, one Roberts was the occupant of the premises. On April 6, 1925, four sales of alcohol were made on these premises, and April 15, 1925, possession of such liquor was found. On these dates Ayd and his bartender, Davidson, were in charge of the business. Some time thereafter, in April, Ayd was ejected, and was succeeded by Ryshavy on May 1st. It thus appears that action by the owner, upon notice of illegal use of the premises, was confined to a formal change of tenants. The business continued as before with the same equipment. This could not deprive the government of its right to abate the nuisance. The suit is aimed at the unlawful use, irrespective of ownership. Denapolis et al. v. United States (C. C. A. 5) 3 F. (2d) 722-724. The burden was not on the government to show that the nuisance continued. The burden to establish that it That had been abated was on the owner. fact is sought to be inferred from the statement in the stipulation that the present tenant, Ryshavy, had operated a soft drink and foodstuff business on the premises since May 1, 1925, and "has never been charged with a violation of law." This falls far short of the necessary affirmative showing. It is not enough that the succeeding tenant had not been caught and charged with a violation of law. A nuisance, once shown to exist, will be presumed to continue, especially in the absence of change of environment. United States v. Budar et al. (D. C.) 9 F. (2d) 126; Shore et al. v. United States (C. C. A. 7) 282 F. 857. Even an acquittal in a prosecution under section 21 is not a bar to proceedings under section 22. Murphy et al. v. United States, 272 U. S. 630, 47 S. Ct. 218, 71 L. Ed. 446; Lewinsohn v. United States (C. C. A. 7) 278 F. 421. The object of the proceedings under section 22 is preventive in its nature, and, to effect this, the interests of innocent persons in the property may be divested. United States v. One Ford Coupé Automobile, 272 U. S. 321, 47 S. Ct. 154, 71 L. Ed. 279, 47 A. L. R. 1025, cited in Murphy v. United States, supra. The general power of sovereignty is declared in Mugler v. Kansas, 123 U. S. 623, 8, S. Ct. 273, 31 L. Ed. 205. [7,8] Of course, the suit for abatement must be seasonably brought. If this be done, that the hearing is remote from the commission of the offense will not, at least in the absence of affirmative proof of abatement, prevent decree. Farrell v. United States (C. C. A. 3) 21 F. (2d) 318. In this case the affidavits by government officers were seasonably made on April 23 and 24, 1925, shortly after the commission of the offenses charged and before the advent of Ryshavy on May 1, 1925. The district attorney filed his bill June 15, 1925. No unreasonable delay appears. Appellant places chief reliance upon the decision of this court in Webb v. United States, 14 F. (2d) 574, 49 A. L. R. 612. That case is clearly not in point. There the abatement of the nuisance had long before been effected by court decree. It was ruled that the court had exhausted its power under sections 21 and 22. That was a contempt proceeding. It concerned the continued operation of an injunctive order, and not the closing provision of the statute. The nuisance was established, the suit for abatement was seasonably brought, and the decree entered should be affirmed. It is so ordered. UNITED STATES FIRE INS. CO. OF THE CITY OF NEW YORK v. SULLIVAN. Circuit Court of Appeals, Eighth Circuit. March 16, 1928. No. 7902. Insurance 500-Insurer, accepting insured's valuation of dwelling without investigation, cannot thereafter plead that there was a fraudulent overvaluation (Comp. St. Neb. 1922, § 7809). Under Comp. St. Neb. 1922, § 7809, where insurance company accepted insured's valuation of his dwelling and issued fire policy thereon for such valuation, without making any investigation on its part, held, that it cannot, in action for full amount of policy by reason of destruction of dwelling, set up defense that insured fraudulently overvalued dwelling. In Error to the District Court of the United States for the District of Nebraska; Joseph W. Woodrough, Judge. Action by Joseph B. Sullivan against the United States Fire Insurance Company of the City of New York. Judgment for plaintiff on the pleadings, and defendant brings error. Affirmed. Frederick D. Silber, of Chicago, Ill. (Samuel Levin, of Chicago, Ill., Clinton Brome, of Omaha, Neb., and Herbert W. Hirsh, of Chicago, Ill., on the brief), for plaintiff in error. Clement L. Waldron, of Omaha, Neb., for defendant in error. Before STONE and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge. STONE, Circuit Judge. This is an action upon a policy of fire insurance for loss of a dwelling located in Nebraska. The trial court sustained a motion for judgment on the pleadings. The insurance company sues this writ of error. The petition set forth a cause of action on the policy. The amended answer admitted the policy, loss and demand. It continued as follows: "4. Further answering, and by way of affirmative defense, this defendant alleges the fact to be that on or about the 26th day of May, 1924, the plaintiff herein, Joseph B. Sullivan, was then and for a long time prior thereto had been the owner of and resided in said dwelling house located on what is described as the Southwest Quarter (SW) of Section Twenty-Four (24), Township Twenty-Nine (29), range Seven (7) in the County of Dakota, in the State of Nebraska, being more than Sixty (60) miles from the City of Omaha, Nebraska; and the plaintiff then knew and considered said dwelling house to be of the value of Twenty-Five Hundred Dollars ($2,500.00); and that said plaintiff on or about said 26th day of May, 1924, well knowing said facts, applied to the agent of the defendant, in the City of Omaha, Nebraska, for the issuance to him, the plaintiff, of a policy of insurance to indemnify theplaintiff against loss and damage by fire to said dwelling house and it then and there became and was the duty of the plaintiff to advise, inform and notify said agent of the defendant that the actual value of said dwelling house did not exceed Twenty-Five Hundred Dollars ($2,500.00), but the plaintiff, not regarding his duty in that behalf, then and there, with the intention and for the purthrough its said agent to issue to him, the pose of inducing the defendant, by and plaintiff, a policy of insurance indemnifying the plaintiff against loss and damage by fire, to said dwelling house, in the sum of Five Thousand Dollars ($5,000.00), in the event of the total destruction thereof; and with the further intention thereby to cheat and dedred Dollars ($2,500.00), in the event of loss fraud the defendant of Twenty-Five Hunand damage in the manner and to the extent aforesaid, and so intending to deceive, defraud and injure the defendant, he, the plaintiff, then and there made and delivered to said agent of the defendant, an application and statement in writing signed by the plaintiff, in and by which said application and statement the plaintiff falsely and fraudulently warranted and represented to the defendant, as a fact, that said dwelling house was then and there of the actual value of Five Thousand Dollars ($5,000.00), and wilfully refrained from informing said agent of the defendant that the actual value of said dwelling house at that time did not exceed the sum of Twenty-Five Hundred Dollars ($2,500.00), as the plaintiff then and there well knew. "5. And the defendant further avers that it did, by its said agent, then and there believe and rely upon the said written application, warranty and representation of the plaintiff, and the value of said dwelling house therein set forth as aforesaid, to be a statement of fact, and not the opinion of the plaintiff, as to said value, so that the defendant and its said agent was then and there lulled into a feeling of security as to the value of said dwelling house, by reason whereof, it did not make its own independent investigation of the value thereof, nor did its said agent or the defendant know anything 25 F.(2d) 40 relating to said dwelling house, except as then given to its said agent by the plaintiff. "6. And the defendant further avers that induced by and in sole reliance upon said false and fraudulent warranty, representation and statement of fact, by the plaintiff, it did, on the 26th day of May, 1924, by its said agent, execute and deliver to the plaintiff, the policy of insurance set forth in plaintiff's petition, in and by which the defendant indemnified the plaintiff against loss and damage by fire to said dwelling house, in the amount of Five Thousand Dollars ($5,000.00), in the event of a total destruction thereof. erty insured and the true amount of loss and measure of damages." "7. And the plaintiff further avers that said dwelling house, at the time of its said total destruction by fire, as alleged in plaintiff's petition, had not been improved since said written application was delivered to said agent of the defendant, as aforesaid; and except for ordinary wear and tear, was in the same condition at the time of said fire as at the time of the delivery of said application to said agent of the defendant, and was of the value of Twenty-Five Hundred Dollars ($2,500.00), as the plaintiff then and there well knew. "8. And the defendant further avers the fact to be that if the plaintiff, at the time of his securing said policy of insurance, had truly and honestly stated the value of said dwelling house, as he then knew it to be, said policy of insurance would not have been written, nor delivered by the defendant; and the defendant further avers the fact to be that said policy of insurance was secured by reason of the plaintiff's fraud and circumvention, in the manner and by the means hereinbefore set forth, and that said policy of insurance was and is absolutely and wholly null and void and of no effect on account thereof." The reply, in addition to denying the affirmative matter in the amended answer, pleaded that section 7809 of the Compiled Statutes of Nebraska, 1922, was "in full force and effect at all times referred to in plaintiff's petition" and set forth that section which is as follows: "Sec. 7809. Value of Policy. Whenever any policy of insurance shall be written to insure any real property in this state against loss by fire, tornado or lightning, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured or his assignee, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the prop The positions of the company are, first, that this section cannot be construed and does not preclude the insurer from showing that the insured perpetrated a fraud, in respect to value, in procurement of the insurance; second, that, if the section is construed to preclude such defense, it violates the Fourteenth Amendment. These may be treated together. It is a well-known fact that it has been the practice of some fire insurance companies to insure property at any value the insured cared to put thereon without any investigation as to such value. The natural impulse of the insured was toward amply sufficient or even over valuation. The higher the valuation, the greater the premium. If there were no loss, the insurance company profited through the high valuation. If loss occurred, the insurer would contest the value or amount of recovery and the insured might recover less than the value stipulated in the policy, although he had honestly estimated the value at the time the insurance was taken and had paid premiums on the basis of such estimated value. This situation produced dissatisfaction and litigation. It was to correct this condition, that this section was enacted. Lancashire Ins. Co. v. Bush, 60 Neb. 116, 120, 82 N. W. 313; Calnon v. Ins. Co., 114 Neb. 194, 199, 206 N. W. 765. Also, overvaluation was a temptation to commit arson, which might endanger lives or other property. The statute is not merely for the protection of the insured but "rests on considerations of public policy, and it is probable that the insured could not, even by express contract, relinquish the benefit of its provisions." Lancashire Ins. Co. v. Bush, 60 Neb. 116, 122, 82 N. W. 313, 314; also see Reilly v. Franklin Ins. Co., 43 Wis. 449, 28 Am. Rep. 552; Emery v. Piscataqua Ins. Co., 52 Me. 322; Queen Ins. Co. v. Leslie, 47 Ohio St. 409, 24 N. E. 1072, 9 L. R. A. 45; 14 R. C. L. p. 1306. The method of the section is to have the value liquidated in the policy by the parties to the contract and removed from dispute and determination "by evidence, agreement or arbitration." Lancashire Ins. Co. v. Bush, 60 Neb. 116, 121, 82 N. W. 313. The statute is confined to real property because values thereof are relatively fixed and certain. Calnon v. Ins. Co., 114 Neb. 194, 198, 206 N. W. 765. The result of this method of making the policy valuation binding was to place. on the insurer the duty to make its own in vestigation and binding determination of value before such is agreed upon and placed in the contract. Insurance Co. v. Barron, 91 Miss. 722, 727, 45 So. 875; Queen Ins. Co. v. Leslie, 47 Ohio St. 409, 24 N. E. 1072, 9 L. R. A. 45. Neither party can evade the statute by avoiding this duty. If the insurer performs its full duty, in this respect, it is bound by its estimate of value based thereon unless conditions (reducing value), not ascertainable by a reasonably careful inspection and known to the insured, are withheld by the insured. But the insurer cannot close its eyes, make no reasonable investigation, take the bare word of the insured as to value and thereafter challenge such value. To permit this would be to nullify the good effect intended by the statute. It would reinstate the very situation and condition which the statute sought to destroy and prevent. It would encourage conscious overvaluation and, possibly, resulting arson. As said in Orient Ins. Co. v. Daggs, 172 U. S. 557, 565, 19 S. Ct. 281, 43 L. Ed. 552, the presumptions of the statute "cannot be urged against fraud” but in the same connection the court says that risk to the insurer "can only come from the failure to observe care that care which it might be supposed, without any prompting from the law, underwriters would observe, and which if observed would make their policies true contracts of assurance, not seemingly so, but really so; not only when premiums are paying, but when loss is to be paid." The fraud pleaded here could not, so far as the answer alleges, have been perpetrated if the insurer had performed its statutory duty-a duty enjoined not alone for the benefit of either or both of the contracting parties but to protect and promote a public policy also beneficent to others. Under such conditions there should be no such defense permitted. The judgment should be and is affirmed. par. 20, and in which court sits as court of claims, reviewing court bases its action on findof jury; trial court being required by statute to ings of trial court, which are treated like verdict sit without jury. 2. Internal revenue 38(16)-Action for income and profits taxes paid under protest will not be remanded for findings, in absence of dispute of fact (28 USCA § 41, par. 20). On review of judgment in action to recover income and profits taxes paid under protest, brought under 28 USCA § 41, par. 20, case will which trial court neglected to make, where not be sent back for formal finding of facts, briefs and argument clearly show that there is no dispute of fact in case; conflict arising purely from difference in views as to law. 3. Internal revenue 7(22), 9(27)-In computing income and profits taxes, "invested capital" held properly estimated by making deduction from investment in buildings for depreciation, notwithstanding increased value (Revenue Act 1917, § 207 [Comp. St. § 6336h]; Revenue Act 1918, § 326 [Comp. St. § 6336ci]). In determining income and profits taxes, under Rev. Act 1917, § 207, 40 Stat. 300 (Comp. St. § 6336h), and Revenue Act 1918, § 326, 40 Stat. 1057 (Comp. St. § 63366i), "invested ings thereon, held properly estimated by deductcapital," represented by real estate with building 2 per cent. annually from investment in entire property had increased in value in amount buildings for depreciation, notwithstanding that at least equal to amount charged off as depreciation. [Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Capital Invested.] In Error to the District Court of the United States for the District of Kansas; Action by the Lee Hardware Company against the United States to recover certain income and profits taxes paid under protest. Judgment was entered, refusing recovery, except as to overpayments conceded by the United States, and plaintiff brings error. Affirmed. Justin D. Bowersock, of Kansas City, Mo. (Bowersock, Fizzell & Rhodes, of Kansas City, Mo., on the brief), for plaintiff in er LEE HARDWARE CO. v. UNITED STATES. ror. No. 7916. 1. Internal revenue 38(16)-In suit to recover income and profits taxes paid under protest, reviewing court treats trial court's findings like jury's verdict (28 USCA § 41, par. 20). In action against United States to recover income and profits taxes paid under protest, in which jurisdiction is founded on 28 USCA § 41, Al. F. Williams, U. S. Atty., and Alton H. Skinner, Asst. U. S. Atty., both of Topeka, Kan., and C. M. Charest, and T. H. Lewis, Jr., both of Washington, D. C., for. defendant in error. Before STONE and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge. STONE, Circuit Judge. This is an action at law by the plaintiff in error against the 25 F.(2d) 42 United States to recover the income and prof- "invested capital," the taxing officials deductits taxes, paid under protest, for the years ed 2 per centum each year from the invest1917 to 1920, inclusive. At the trial, defend- ment in the above buildings for depreciation ant conceded certain overpayments arising thereof. There is no dispute as to the fact from duplication on two items (equipment of physical depreciation in such buildings and automobiles) and concerning these mat- nor as to the amount thereof as estimated by ters there is no dispute here. The judgment the officials. There is no dispute that the enrefused recovery as to another character of tire property (real estate and buildings) has item and that matter is brought here on writ increased in value along with other properof error. ties in that vicinity and because of natural growth in values and of improvement of other nearby property. Also, there seems no dispute that this increase in value is at least equal to the amount charged off as depreciation. [1,2] Plaintiff in error presents only two contentions. The first is that it was the duty of the trial court to make findings of fact. The jurisdiction of the trial court in this character of cases is founded on section 41, paragraph (20) of USCA title 28 (Judicial Code, section 24, paragraph "twentieth"). In such cases, the court sits "as a court of claims." Fritch, Inc., v. United States, 248 U. S. 458, 461, 462, 463, 464, 39 S. Ct. 158, 159 [63 L. Ed. 359]. The above section requires that all suits thereunder "shall be tried by the court without a jury." The reviewing court bases its action upon the findings of the trial court which "are to be treated like the verdict of a jury." Brothers v. United States, 250 U. S. 88, 93, 39 S. Ct. 426, 428 [63 L. Ed. 859]. Obviously, the purpose of such findings is to present to the reviewing court the facts in the case to which the governing law is to be applied. Here there are no formal findings by the trial court. However, the briefs and argument are clear that there is no dispute of fact in this case. The conflict arises purely from á difference in views as to what is the law. In such a situation, it seems an idle thing to send the case back for a formal finding of facts about which no question is made here. Therefore, although the trial court should have made such findings we will not remand the case for that reason alone. [3] The second and main contention is a pure question of law. Part of these taxes were assessed under the Revenue Act of 1917 (40 Stat. 300) and part under the Revenue Act of 1918 (40 Stat. 1057). This contention involves construction of section 207 of the Revenue Act of 1917 (Comp. St. § 6336h) and section 326 of the Revenue Act of 1918 (Comp. St. § 6336ei) as to the meaning therein of the term "invested capital." There is no dispute here as to the amount of cash actually invested in the property, nor as to the surplus held, nor as to the tax, nor the amount of depreciation being within the amount of the existing surplus. The portion of the invested capital here in question was represented by real estate with buildings thereon. In estimating the The taxpayer contends that where such appreciation in value exists it may be used to offset actual physical depreciation in so far as deductions for depreciation are allowable in ascertaining "invested capital" within the meaning of the above sections. To state the matter in different words, that the "invested capital" in the buildings "should be fixed at replacement cost less depreciation, not exceeding, however, the actual cost." If this contention be correct, the relief sought must follow because the protested taxes arose only as the result of depreciating the actual investment of capital in the buildings. The case of La Belle Iron Works v. United States, 256 U. S. 377, 41 S. Ct. 528, 65 L. Ed. 998, involved the precise matter here involved in regard to section 207 of the Revenue Act of 1917 (it is not suggested that section 326 of the Act of 1918 is, in this respect different). Therein the court said (page 387 [41 S. Ct. 530]): "A scrutiny of the particular provisions of section 207 shows that it was the dominant purpose of Congress to place the peculiar burden of this tax upon the income of trades and businesses exceeding what was deemed a normally reasonable return upon the capital actually embarked. But if such capital were to be computed according to appreciated market values based upon the estimates of interested parties (on whose returns perforce the government must in great part rely), exaggerations would be at a premium, corrections difficult, and the tax easily evaded. Section 207 shows that Congress was fully alive to this and designedly adopted a term—ʻinvested capital'-and a definition of it, that would measurably guard against inflated valuations. The word 'invested' in itself imports a restrictive qualification. When speaking of the capital of a business corporation or partnership, such as the act deals with, 'to invest' imports a laying out of money, or money's worth, either by an individual |