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In the matter of John D. Dailey and De Witt C. Ivins, individually and as copartners as Dailey & Ivins, bankrupts. On petition by the City of New York to revise order of District Court. Reversed.
This cause comes here from the United States District Court for the Southern District of New York, on petition to revise an order requiring the city of New York to deliver certain property of the bankrupts to their trustee.
On August 12, 1913, a contract was entered into between the city of New York and John D. Dailey and De Witt C. Ivins, doing business under the firm name of Dailey & Ivins. The contract provided for the removal and final disposition by Dailey & Ivins of ashes, street sweepings, and rubbish collected in the boroughs of Manhattan and the Bronx, as well as from Blackwell's and Randall's Islands and from steam tugs and other vessels in the harbor. The contract was commenced on January 2, 1914, and was to run for a period of three years, with a right to renew for another period of two years. In January, 1916, the contract was renewed for a period of two years, which was to begin on January 2, 1917, and end January 1, 1919. In carrying on the work under their contract Dailey & Ivins furnished a certain plant, scows, and other means of transportation and final disposition of the ashes, etc.
On March 2, 1918, Dailey & Ivins abandoned the contract and refused to proceed thereunder, and on the same day between 11 a. m. and 11:30 a. m. there was served on John D. Dailey, one of the members of the firm of Dailey & Ivins, a notice by the commissioner of street cleaning of the city of New York which read as follows: "Under and by virtue of the powers and provisions contained in your contract, dated August 13, 1913, the street cleaning commissioner hereby 'takes possession of the plant, scows, and other means of transportation and final disposition of the ashes, the street sweepings and rubbish, etc.,' belonging to or heretofore used by you."
On the same day that this notice was given the commissioner of street cleaning took physical possession through the employés of his department of the plant before mentioned belonging to Dailey & Ivins and used by them in carrying out work under the contract, all of said plant being located within the city of New York. On the same day, March 2, 1918, at 2:30 p. m., an involuntary petition in bankruptcy was filed against Dailey & Ivins, alleged bankrupts, in the United States District Court for the District of New Jersey, and simultaneously an order was made appointing temporary receivers of the property. And on that day at 10:05 p. m. the commissioner of street cleaning was served with a copy of an order made by Judge Mayer, of the Southern District of New York, appointing George G. Tennant and Charles H. Smith ancillary receivers of Dailey & Ivins. This order contained a provision restraining, among others, the city of New York, its agents, servants, and employés, from removing, transferring, or otherwise interfering with the property, assets, and effects of Dailey & Ivins. The receivers, shortly after their appointment, informed the commissioner that they could not and would not carry out the provisions of the contract which Dailey & Ivins had made with the city of New York.
On May 4, 1918, District Judge Augustus N. Hand, of the Southern district of New York, entered an order requiring the city of New York and its street cleaning commissioner, and their respective agents, employés, and representatives to deliver to George G. Tennant, as trustee, possession of all the property of the bankrupts in its and their possession within ten days after service of a copy of the order. It is this order which the city of New York seeks to have revised. At the hearing prior to the making of the order the city of New York and the commissioner filed with the District Court a written objec tion to the court's entertaining jurisdiction of the matter, on the ground that the court was without jurisdiction.
Alexander & Ash, of New York City (Mark Ash, of New York City, of counsel), for trustee in bankruptcy.
William P. Burr, Corp. Counsel, of New York City (Terence Far
ley, William E. C. Mayer, and Joseph L. Pascal, all of New York City, of counsel), for the city of New York.
Before WARD, ROGERS, and HOUGH, Circuit Judges.
ROGERS, Circuit Judge (after stating the facts as above). The fact cannot be disputed that at the time this order was made the property here in controversy was in the actual possession of the city of New York, and that it claimed then, as it claims now, the right to retain it in its possession, basing its right on the provisions of the contract which it made with the bankrupts. This claim is an adverse one, and it is advanced against the trustees of the bankrupts. It does not rest upon pretense and sham, but is real and not colorable. It raises a serious question of law. The question, therefore, is whether the District Court had jurisdiction to dispose of it in a summary proceeding, or whether the petitioner as a matter of right is entitled to have the matter disposed of in a plenary action.
The Supreme Court in Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405, declared that a bankruptcy court has jurisdiction in a summary proceeding to compel a surrender to a trustee in bankruptcy of property in the hands of a third party which the latter holds as the agent of the bankrupt and to which he asserts no adverse claim. It went on, however, to say that the court must decline to finally adjudicate on the merits if the respondent asserted that he had the right to possession by reason of a claim adverse to the bankrupt, which claim. is not merely colorable, but real, even though fraudulent and voidable.
And we held in Re Midtown Contracting Co., 243 Fed. 56, 155 C. C. A. 586, that whether a claim is real or colorable does not depend upon whether it turns upon a question of fact or upon a question of law. If the claim rests upon mere pretense of fact or of law, it is colorable. But it is not colorable if it is put forth in good faith and is real. In the latter event we said the trustee must institute an independent action in a court having jurisdiction of the subject-matter and have the claim regularly adjudicated, as the bankrupt himself would have done if bankruptcy proceedings had not been pending and he desired to obtain possession of the property. The Supreme Court in Wilds v. Department of Education, 245 U. S. 654, 38 Sup. Ct. 12, 62 L. Ed. 532, declined to grant a writ of certiorari to review the decision in the Midtown Case, and it remains the law in this circuit. and is decisive of the question herein presented.
The claim arises under a contract entered into under section 544 of the Greater New York Charter (Laws 1901, c. 466). It is a public contract authorized by law, and relates to the performance of an important and well-established public duty. It involves a public work of great magnitude and necessity, which the public interests demand should be performed speedily and without interruption. Dailey v. City of New York, 170 App. Div. 267, 279, 156 N. Y. Supp. 124.
Prior to the abandonment of the contract by the bankrupts they had been paid by the city of New York under the contract over the sum of $2,775,000; and upon the abandonment of the contract the commissioner of street cleaning advertised for bids to complete the work,
but the bids were rejected, as the prices demanded were deemed excessive. The city claims that paragraphs O and Q of the contract authorized and empowered it to take possession of the property "pending proceedings to cancel and annul" the contract, and that it is entitled to retain the possession until either the contract is relet or the contract is completely performed by the city itself. Whether it is right or wrong in this contention is not the question before us. It is sufficient for the present purpose to say that the claim is not colorable, and therefore must be determined in a plenary action. The order under review is reversed.
SLIGO FURNACE CO. v. DALTON.
(Circuit Court of Appeals,, Eighth Circuit. January 15, 1919.)
1. TENANCY IN COMMON 55(3)-TITLE TO SUPPORT ACTION.
An action at law may not be maintained by one tenant in common for trespass on realty.
2. PLEADING 418(2)—DEMURRER-WAIVER BY PLEADING TO MERITS. Under the law of Missouri, pleading over after overruling of a demurrer to the petition is not a waiver of the point made by the demurrer that the petition does not state a cause of action.
3. COURTS-339-FEDERAL COURTS-CONFORMITY TO STATE PRACTICE.
Federal courts are not required by the conformity statute (Rev. St. § 914 [Comp. St. 1916, § 1537]) to follow the rules of practice of the state courts, if in conflict with the well-settled rules of the national courts.
4. PLEADING 433(5)—DEFECTIVE PLEADING-AIDER BY VERDICT.
A petition which states no cause of action is not cured by verdict. 5. PLEADING 418(1)-DEMURRER-WAIVER BY PLEADING OVER.
Where exception is reserved to the overruling of a demurrer, although the party answers over, the question whether the demurrer was properly overruled is open on writ of error to the final judgment.
In Error to the District Court of the United States for the Eastern District of Missouri; David P. Dyer, Judge.
Action at law by Richard P. Dalton against the Sligo Furnace Company. Judgment for plaintiff, and defendant brings error. Reversed.
This was an action of trespass for willfully cutting timber on the lands of the defendant in error, asking treble damages under the statutes of the state of Missouri. For convenience the parties will be referred to as they were in the court below-the defendant in error as the plaintiff, and the plaintiff in error as the defendant. It appears from the petition that the plaintiff was a tenant in common, owning an undivided half interest in the lands on which the trespass is alleged to have been committed.
The defendant filed a demurrer to the petition, upon the grounds that there was a misjoinder of parties and that the petition failed to state a cause of action in the plaintiff. The demurrer was by the court overruled, and thereupon an answer was filed, in which the fact that the plaintiff was only a tenant in common, owning an undivided interest, was pleaded as a defense. At the close of the evidence the defendant asked for a peremptory instruction upon several grounds, among them that the plaintiff cannot maintain the action, as he was only a tenant in common with others, not parties to the action. The motion was by the court denied. Proper exceptions were saved to the over
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ruling of the demurrer to the petition, as well as the refusal to direct a verdict in favor of the defendant. A verdict was returned in favor of the plaintiff, and this writ of error is prosecuted by the defendant.
William R. Gentry, of St. Louis, Mo. (M. F. Watts and Edwin W. Lee, both of St. Louis, Mo., and William R. Edgar, Sr., and William R. Edgar. Ir.. both of Irontown, Mo., on the brief), for plaintiff in error. Vance J. Higgs, of St. Louis, Mo., for defendant in error.
Before SANBORN, Circuit Judge, and TRIEBER, District Judge.
TRIEBER, District Judge (after stating the facts as above). [1,2] That an action at law may not be maintained by one tenant in common for a trespass on realty is well settled. 15 Enc. Pl. & Pr. 544; 21 Enc. Pl. & Pr. 805, 1 Corp. Juris, 1120; 1 Rul. Case Law, 342; Cochran v. Brannan (D. C.) 196 Fed. 219, 222. And this rule prevails in the state of Missouri. Muldrow v. Railway Co., 62 Mo. App. 431; Lumerate v. Railroad Co., 149 Mo. App. 47, 130 S. W. 448. In fact this rule of law is not seriously questioned by the learned counsel for defendant in error. But it is claimed that it is the settled rule of law of the state of Missouri, as determined by the highest court of that state, that when a defendant answers, after a demurrer to the petition has been overruled, the demurrer is waived. And it is claimed that under the Conformity Act (section 914, Rev. St. [Comp. St. § 1537]), the national courts are bound to follow the decisions of the highest court of the state. A careful examination of the decisions of the courts of Missouri does not sustain the contention of counsel, when the demurrer to the petition is upon the ground that no cause of action is stated. Paddock v. Somes, 102 Mo. 230, 235, 14 S. W. 746, 748 (10 L. R. A. 254). In that case the court held:
"If a defendant pleads to the merits, he waives everything in the petition but two points: First, that the petition does not state facts sufficient to state a cause of action; second, that the court has no jurisdiction over the subjectmatter of the action."
This has been reaffirmed in many cases. White v. St. Louis & M. R. R. R. Co., 202 Mo. 554, 561, 101 S. W. 14, and authorities there cited. A petition or complaint, showing that the plaintiff has no right to maintain the suit, clearly fails to state a cause of action.
 But aside from this, even if the highest court of the state of Missouri should have held that pleading over after the demurrer is overruled, is a waiver thereof, the national courts would not be bound by it, under section 914, Rev. St. That statute only requires the national courts to conform "as near as may be to the practice, pleadings and forms, and modes of proceeding existing at the time in like causes in the courts of record of the state within which such courts are held." In City of St. Charles v. Stookey, 154 Fed. 772, 778, 85 C. C. A. 494, this question was fully discussed by this court, and it was held that rules of practice of the state courts are not to be followed by the national courts, if in conflict with the well-settled rules prevailing in the national courts. Indianapolis, etc., R. R. Co. v. Horst, 93 U. S. 291, 300, 23 L. Ed. 898; Mexican Central Ry. v. Pinkney, 149 U. S. 194,
200, 13 Sup. Ct. 859, 37 L. Ed. 699; Boatmen's Bank v. Trower Bros. Co., 181 Fed. 804, 104 C. C. A. 314.
 It is the well-settled rule of the national courts, as established by the Supreme Court, that only such pleas are cured by verdict, which although they would be bad on demurrer, because wrong in form, yet still contain enough of substance to put in issue all the material parts of the declaration. Garland v. Davis, 45 U. S. (4 How.) 131, 11 L. Ed. 907. But a verdict will not cure a petition which states no cause of action, and which, therefore, could be taken advantage of by motion. in arrest of judgment. McDonald v. Hobson, 48 U. S. (7 How.) 745, 12 L. Ed. 897.
 By reserving an exception to the overruling of a demurrer, although answering over, the question, whether the demurrer was rightly overruled, is open on writ of error on the final judgment. Teal v. Walker, 111 U. S. 242, 4 Sup. Ct. 420, 28 L. Ed. 415; Southern Pacific Co. v. Denton, 146 U. S. 202, 13 Sup. Ct. 44, 36 L. Ed. 942.
The facts in this case show how great an injustice would be inflicted upon a party, if the rule of practice contended for on behalf of the plaintiff would be the law. The plaintiff in his declaration claimed the value of the timber cut to be $5,000, and that his undivided half interest is worth $2,500, and he asked judgment for $7,500, treble the amount of the alleged value of his interest in the timber cut. The verdict of the jury found the value of his interest to be $300, and final judgment was rendered for $900. Had the defendant rested on its demurrer to the petition, judgment by default would have been rendered against it for $7,500. The law does not thus intend to punish litigant, even if he erroneously invokes the judgment of the court on the legal sufficiency of a petition.
The court below erred in overruling the demurrer to the petition, and also in refusing to direct a verdict in favor of the defendant, upon the ground that the plaintiff, being the owner of an undivided interest in the land only, could not maintain this action.
The cause is reversed, with directions to set aside the verdict and proceed in conformity with this opinion.
D. B. GORE CO. v. PERRIN.
(Circuit Court of Appeals, Fifth Circuit. No. 3286. MASTER AND SERVANT 153(3), 245(7)—MASTER'S LIABILITY FOR INJURY TO SERVANT CONTRIBUTORY NEGLIGENCE.
An employer was not under duty to warn an employé 18 years old of the danger in using a riveting hammer having oval faces in driving a steel wedge into wood, which was obvious, and, although required to use it, the employé is also chargeable with negligence in so using it as to cause the wedge to fly out and injure him.
January 27, 1919.)
In Error to the District Court of the United States for the Northern District of Alabama; Wm. I. Grubb, Judge.
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