Fire Insurance Company is a corporation of the state of Connecticut, and that the stock increase in question was made under authority of certain acts of the legislature and certain resolutions of the stockholders, by which the right to subscribe to the new issue was offered to existing stockholders upon the terms mentioned. It is evident, we think, that such a distribution, in and of itself, constituted no division of any part of the accumulated profits or surplus of the company, or even of its capital; it was in effect an opportunity given to stockholders to share in contributing additional capital, not to participate in distribution. It was a recognition [252] by the company that the condition of its affairs warranted an increase of its capital stock to double the par value of that already outstanding, and that the new stock would have a value to the recipients in excess of $150 per share; a determination that it should be issued pro rata to the existing stockholders, or so many of them as would pay that price. This privilege, of itself, was not a fruit of stock ownership in the nature of a profit; nor was it a division of any part of the assets of the company. So ly analogous to a stock dividend. But in that case it was recognized (p. 212) that a gain through sale of dividend stock at a profit was taxable as income, the same as a gain derived through sale of some of the original shares would be. In that as in other recent cases this court has interpreted "income" as including gains and profits derived through sale or conversion of capital assets, whether done by a dealer or trader, or casually by a nontrader, as by a trustee in the course of changing investments. Merchants' Loan & T. Co. v. Smietanka, 255 U. S. 509, 517-520, 65 L. ed. 751, 754-756, 15 A.L.R. 1305, 41 Sup. Ct. Rep. 386. Hence the district court rightly held The right to subscribe to the new defendant in error liable to income tax stock was but a right to participate, in as to so much of the proceeds of sale of preference to strangers, and on equal the subscription rights as represented a terms with other existing stockholders, realized profit over and above the cost in the privilege of contributing new capi- to it of what was sold. How the gain tal called for by the corporation,-an should be computed is a matter of some equity that inheres in stock ownership contention by the government in this under such circumstances as a quality court; but it admits of little doubt. To inseparable from the capital interest treat the stockholder's right to the new represented by the old stock, recognized shares as something new and independso universally as to have become axio-ent of the old, and as if it actually cost matie in American corporation law. nothing, leaving the entire proceeds of Gray v. Portland Bank, 3 Mass. 364, 3 sale as gain, would ignore the essence Am. Dec. 156; Atkins v. Albree, 12 Allen, of the matter, and the suggestion cannot 359, 361; Jones v. Morrison, 31 Minn. be accepted. The district court pro140, 152, 153, 16 N. W. 854; Eidman v.ceeded correctly in treating the subBowman, 58 Ill. 444, 447, 11 Am. Rep. 90; Humboldt Driving Park Asso. v. Stevens, 34 Neb. 528, 534, 33 Am. St. Rep. 654, 52 N. W. 568; Electric Co. v. Edison Electric Illuminating Co. 200 Pa. 516, 520-523, 526, 50 Atl. 164; Wall v. Utah Copper Co. 70 N. J. Eq. 17, 28, et seq., 62 Atl. 533; Stokes v. Continental Trust Co. 186 N. Y. 285, 12 L.R.A. (N.S.) 969, 78 N. E. 1090, 9 Ann. Cas. 738. Evidently this inherent equity was recognized in the statute and the resolution under which the new stock here in question was offered and issued. The stockholder's right to take his part of the new shares, therefore,-assuming their intrinsic value to have exceeded the issuing price,-was essential scription rights as an increase inseparable from the old shares, not in the way of income, but as capital; in treating the new shares if and when issued as indistinguishable legally and in the market sense from the old; and in regarding the sale of the rights as a sale of a portion of a capital interest that included the old shares. What would have happened had defendant in error decided to accept the new shares and pay the issuing price instead of selling the rights is of no consequence; in that event there would have been no realized profit, hence no taxable income. What resulted or might have resulted to defendant in error's retained interest in the company, depending upon whether 1921. CARLISLE PACKING CO. v. SANDANGER. the purchaser exercised his right [254], as where the old shares were acquired at That a comparison of the cost at acquisition and the selling price is proper under § 202 (a) of the act (40 Stat. at L. 1060, chap. 18, Comp. Stat. § 63361⁄4bb), where, as here, the property was ac Various suggestions, more or less in- quired and sold within the same taxing CARLISLE PACKING COMPANY, Peti tioner, Y. OLE SANDANGER. (See S. C. Reporter's ed. 255–260.) year, we understand to be conceded. Under the stipulation, the court below was warranted in finding $710 per share to have been the fair market value of the old stock when turned over to the guardian, and treating this as its cost to the trust. It was proper to add to this the $150 required to be paid to the company, and treat the total as the cost to plaintiff of each two shares, one of which was to pass to the purchaser. This in essence is the method adopted by the Treasury Department in the case of a sale of dividend stock, in Regulations Shipping 45, 1920 ed., art. 1547, which reads: con "Art. 1547. Sale of stock received as dividend.-Stock in a corporation rea dividend does not as ceived stitute taxable income to a stockholder in such corporation, but any profit derived by the stockholder from the sale of such stock is taxable income to him. [Following Eisner v. Macomber, supra.] For the purpose of ascertaining the gain or loss derived from the sale of such stock, or from the sale of the stock with respect to which it is issued, the cost (used to include also, where required, the fair market value as of March 1, 1913) of both the old and new shares is to be determined in accordance with the following rules: sick or liability of vessel seamen. marine tort injury to 2. A vessel and her owners are liable to an indemnity for injuries received by seamen in consequence of the unseaworthiness of the ship, or a failure to supply and keep [For other cases, see Shipping, V. b, in Digest in order the proper appliances appurtenant Sup. Ct. 1908.] to the ship. Shipping marine tort fellow servants. men injury to sea sustained 3. All the members of the crew, except, for injuries perhaps, the master, are, as between themselves, fellow servants, and hence seamen through the negligence of another member maintenance and cure. of the crew beyond the expense of their cannot recover Sup. Ct. 1908.] [For other cases, see Shipping, V. b, in Digest Shipping a "(1) Where the stock issued as dividend is all of substantially the same character or preference as the stock up on which the stock dividend is paid, the cost of each [255] share of both the old and new stock will be the quotient of the cost, or fair market value as of March 1, 1913, if acquired prior to that date, of the old shares of stock divided by the total number of the old and new shares. That the averaging of cost might present more administrative difficulty in a case more complicated than the present, 66 L. ed. liability of vessel injury to seaman. an indemnity for the negligence of the mas Note. On law governing limitation of liability of shipowner-see note to Oceanic Steam Nav. Co. v. Mellor, L.R.A.1916B, 646. On duty of master to provide medical & M. R. Co. v. Early, 28 L.R.A. 549; The assistance for servant-see notes to Ohio Hunicke v. Meramec Quarry Co. L.R.A. Kenilworth, 4 L.R.A.(N.S.) 49; and 1915C, 789. 927 greater damages can be recovered in a common-law action in the state court. Chelentis v. Luckenbach S. S. Co. 247 U. S. 372, 384, 62 L. ed. 1171, 1176, 38 Sup. Ct. Rep. 501, 19 N. C. C. A. 309; Knickerbocker Ice Co. v. Stewart, 253 U. S. 149, 159, 64 L. ed. 834, 838, 11 A.L.R. 1145, 40 Sup. Ct. Rep. 438, 20 N. C. C. A. 635; Tullock v. Mulvane, 184 U. S. 497, 46 L. ed. 657, 22 Sup. Ct. Rep. 372. Admiralty would have had jurisdiction, since Sandanger was a seaman. The Minna, 11 Fed. 759; Saylor v. Taylor, 23 C. C. A. 343, 42 U. S. App. 206, 77 Fed. 476; Lawrence v. The Flatboat, 84 Fed. 200; Domenico v. Alaska Packers' Asso. 112 Fed. 554; The J. S. Warden, 175 Fed. 314; The Virginia Belle, 204 Fed. 692; North Alaska Salmon Co. v. Larsen, 135 C. C. A. 661, 220 Fed. 93. By maritime law, for the injuries to Sandanger the Carlisle Packing Company was liable only to the extent of Sandanger's wages, maintenance, and cure, unless his injury was received in consequence of the unseaworthiness of the ship, or a failure to supply and keep in order the proper appliances appurtenant to the ship. The Osceola, 189 U. S. 158, 175, 47 L. ed. 760, 764, 23 Sup. Ct. Rep. 483; Southern P. Co. v. Jensen, 244 U. S. 205, 61 L. ed. 1086, L.R.A.1918C, 451, 37 Sup. Ct. Rep. 524, Ann. Cas. 1917E, 900, 14 N. C. C. A. 596; Chelentis v. Luckenbach S. S. Co. 247 U. S. 372, 62 L. ed. 1171, 38 Sup. Ct. Rep. 501, 19 N. C. C. A. 309; Knickerbocker Ice Co. v. Stewart, 253 U. Argued and submitted March 24, 1922. De- S. 149, 64 L. ed. 834, 11 A.L.R. 1145, 40 ON cided May 29, 1922. N WRIT of Certiorari to the Supreme Court of the State of Washington to review a judgment which affirmed a judgment of the Superior Court of King County, in that state, in favor of plaintiff in an action against a vessel owner to recover damages for the negligent injuries of a seaman. Affirmed. See same case below, 112 Wash. 480, 192 Pac. 1005. The facts are stated in the opinion. Mr. J. Harry Covington argued the cause, and, with Messrs. James A. Kerr, Evan S. McCord, and Joseph N. Ivey, filed a brief for petitioner: If, under the maritime law, whether found in Federal statutes or in the decisions of Federal courts, the Carlisle Packing Company is not liable for damages to Sandanger in excess of his wages and expenses incident to curing him, then, under § 24 of the Judicial Code, no Sup. Ct. Rep. 438, 20 N. C. C. A. 635. Sandanger should not have recovered more than his maintenance and cure for negligence of the master. The Osceola, supra; Chelentis v. Luckenbach S. S. Co. 247 U. S. 372, 62 L. ed. 1171, 38 Sup. Ct. Rep. 501, 19 N. C. C. A. 309. The presence of gasolene in a can supposed to contain kerosene, and used to help light a galley fire, would not render the ship unseaworthy, nor would it be a failure to supply and keep in order the proper appliances appurtenant to the ship. The New York, 123 C. C. A. 214, 204 Fed. 764; The Santa Clara, 206 Fed. 179; Hanrahan v. Pacific Transp. Co. 262 Fed..951; The Santa Barbara, 263 Fed. 369. The Carlisle Packing Company could, in no event, be liable beyond the value of the vessel and the freight money for the current voyage. The Alola, 228 Fed. 1006; Butler v. Boston & S. S. S. Co. 130 U. S. 527, 32 | L. ed. 1017, 9 Sup. Ct. Rep. 612; La Bourgogne (Deslions v. La Compagnie Générale Transatlantique) 210 U. S. 120, 52 L. ed. 985, 28 Sup. Ct. Rep. 664; Oceanic Steam Nav. Co. v. Mellor, 233 U. S. 732, 58 L. ed. 1180, L.R.A.1916B, 637, 34 Sup. Ct. Rep. 754; White v. Island Transp. Co. 233 U. S. 350, 58 L. ed. 995, 34 Sup. Ct. Rep. 589; Craig v. Continental Ins. Co. 141 U. S. 638, 35 L. ed. 886, 12 Sup. Ct. Rep. 97. Mr. Maurice McMicken submitted the cause for respondent: Conceding that the contract of Sandanger was a maritime one, it cannot, nevertheless, be disputed that he can secure an indemnity for injuries received by him in consequence of the unseaworthiness of the ship, or a failure to supply and keep in order the proper appliances appurtenant to the ship. The Osceola, 189 U. S. 158, 175, 47 L. ed. 760, 764, 23 Sup. Ct. Rep. 483; The Lizzie Frank, 31 Fed. 477; 2 Parsons Shipping & Admiralty, p. 78; Dixon V. The Cyrus, 2 Pet. Adm. 411, Fed. Cas. No. 3,930; Rice v. The Polly & Kitty, 2 Pet. Adm. 420, Fed. Cas. No. 11,754; The Moslem, Olcott, 289, Fed. Cas. No. 9, 875; The Caledonia, 157 U. S. 124, 39 L. ed. 644, 15 Sup. Ct. Rep. 537; Woolf v. Claggett, 3 Esp. 257, 6 Revised Rep. 830; Fontaine v. Phoenix Ins. Co. 10 Johns. 58; The Edith Godden, 23 Fed. 43; Olson v. Flavel, 34 Fed. 477; The A. Heaton, 43 Fed. 592; The Drumelton, 158 Fed. 454; The Argo, 127 C. C. A. 456, 210 Fed. 872; The Badger, 218 Fed. 81; The Julia Fowler, 49 Fed. 277; The Frank & Willie, 45 Fed. 494; Tavares v. Dewing, 33 R. I. 434, 82 Atl. 137. Petitioner cannot avail itself of the benefit of §§ 4283, 4289, of the United States Revised Statutes, Comp. Stat. §§ 8021, 8027, 6 Fed. Stat. Anno. 2d ed. PP. 336, 367. The Maria & Elizabeth, 11 Fed. 520; The Rosa, 53 Fed. 132; The Great Western, 118 U. S. 520, 525, 30 L. ed. 156, 158, 6 Sup. Ct. Rep. 1172; The Scotland (National Steam Nav. Co. v. Dyer) 105 U. S. 24, 33, 26 L. ed. 1001, 1004. Mr. Justice McReynolds delivered the opinion of the court: The supreme court of Washington affirmed a judgment against petitioner Packing Company, rendered by the trial court upon a verdict for damages on account of injuries which respondent suffered while employed upon petitioner's motor boat, afloat in navigable Alaskan waters. Respondent claimed that, prior to the departure of the boat upon a trip intended to occupy perhaps six or eight hours, petitioner or its agents negligently filled with gasolene and placed thereon a can which ordinarily contained coal oil (and was so labeled), for use according to the prevailing custom in those waters to start fires in the small stove where meals were cooked and water heated. Without knowledge of the substitution, respondent poured the gasolene upon the firewood, applied a match, an explosion resulted, and he was badly burned. He further [258] claimed that no life preservers had been placed on board, and that his injuries were aggravated by delay attending search for one before he jumped into the water to extinguish his flaming clothes. The trial court held "the basis of the action is negligence," and instructed the Jury according to the common-law rules tioner or its authorized agents negligentin respect thereto. It said that if petiit upon the boat, and if, by reason of ly filled the can with gasolene and placed such negligence, respondent suffered injury, he was entitled to recover compenhimself had not been guilty of contribusatory damages therefor, provided he tory negligence. Further, that if the insion were aggravated because no life juries resulting directly from the exploPreservers had been placed on board, awarded for such aggravation. Also that then additional compensation could be if the explosion occurred without petitioner's negligence, but the absence of life preservers caused aggravation of respondent's injuries, he would be entitled to recover for such injuries as resulted of the life preservers, but not for those directly from the negligence in respect caused solely by the explosion. We have heretofore announced the general doctrine concerning rights and crew sustains injuries while on a vessel liabilities of the parties when one of a in navigable waters. "The vessel and her owners are liable, in case a seaman falls sick, or is wounded, in the service of the ship, to the extent of his maintenance and cure, and to his wages; at least, so long as the Voyage is continued. "The vessel and her owner are, both by English and American law, liable to an indemnity for injuries received by seamen in consequence of the unseaworthiness of the ship, or a failure to supply and keep in order the proper appliances appurtenant to the ship. "All the members of the crew, except, perhaps, the master, are, as between themselves, fellow servants; and hence [259] seamen cannot recover for injuries sustained through the negligence of another member of the crew beyond the expense of their maintenance and cure. "The seaman is not allowed to recover an indemnity for the negligence of the master or any member of the crew, but is entitled to maintenance and cure, whether the injuries were received by negligence or accident." The Osceola, 189 U. S. 158, 175, 47 L. ed. 760, 764, 23 Sup. Ct. Rep. 483; Chelentis v. Luckenbach S. S. Co. 247 U. S. 372, 380, 381, 62 L. ed. 1171, 1175, 38 Sup. Ct. Rep. 501. The general rules of the maritime law apply whether the proceeding be instituted in an admiralty or common-law court. Chelentis v. Luckenbach S. S. Co. supra; Knickerbocker Ice Co. v. Stewart, 253 U. S. 149, 159, 64 L. ed. 834, 838, 11 A.L.R. 1145, 40 Sup. Ct. Rep. 438. Here the trial court did not instruct the jury in consonance with these rules, and, by failing so to do, fell into error. But mere error, without more, is not enough to upset the judgment, if the record discloses that no injury could have resulted therefrom. West v. Camden, 135 U. S. 507, 521, 34 L. ed. 254, 258, 10 Sup. Ct. Rep. 838. Considering the custom prevailing in those waters, and other clearly established facts, in the present cause, we think the trial court might have told the jury that, without regard to negligence, the vessel was unseaworthy when she left the dock if the can marked "coal oil" contained gasolene; also that she was unseaworthy if no life preservers were then on board; and that, if thus unseaworthy, and one of the crew received damage as the direct result thereof, he was entitled to recover compensatory damages. The Silvia, 171 U. S. 462, 464, 43 L. ed. 241, 242, 19 Sup. Ct. Rep. 7; The Southwark, 191 U. S. 1, 8, 48 L. ed. 65, 69, 24 Sup. Ct. Rep. 1. The verdict shows that the jury found gasolene had been negligently placed in the can, or that, through negligence, no life preservers were put on board, or that both of these defaults existed, and that, as a result of one or both, respondent suffered injury without contributory negligence on his part. In effect the charge was more favorable to the petitioner than it could have demanded, [260] and we think no damage could have resulted from the erroneous theory adopted by the trial court. The Caledonia, 157 U. S. 124, 131, 39 L. ed. 644, 646, 15 Sup. Ct. Rep. 537; Thompson Towing & Wrecking Asso. v. McGregor, 124 C. C. A. 479, 207 Fed. 209, 211. Petitioner asked an instruction that § 4283 of the Revised Statutes (Comp. Stat. § 8021, 6 Fed. Stat. Anno. 2d ed. p. 336)1 applied, and that, under it, the verdict could not exceed the value of the vessel. In a state court, when there is only one possible claimant and one owner, the advantage of this section may be obtained by proper pleading. The Lotta, 150 Fed. 219, 222; Delaware River Ferry Co. v. Amos, 179 Fed. 756. Here the privilege was not set up or claimed in the answer, and it could not be first presented upon request for a charge to the jury. The judgment below must be affirmed. Mr. Justice Clarke concurs in the result. CHARLES OLIN, Appt., V. PERRY KITZMILLER, R. C. Clanton, Carl Shoemaker, et al. (See S. C. Reporter's ed. 260–263.) Constitutional law obligations impairing contract compact between Oregon and Washington. The obligations of the compact between Oregon and Washington, ratified by the Act of Congress of April 8, 1918, that all laws and regulations for protecting and preserving fish in the Columbia river which states shall be made, changed, altered, and affect the concurrent jurisdiction of those amended, in whole or in part, only with the mutual consent and approbation of both states, were not impaired by the provision of Or. Laws 1919, chap. 292, that no fishing Note. Generally, as to what laws are void as impairing obligation of contracts see notes to Franklin County Grammar School v. Bailey, 10 L.R.A. 405; Bullard V. Northern P. R. Co. 11 L.R.A. 246; Henderson v. Soldiers & S. Monument Comrs. 13 L.R.A. 169; and Fletcher v. Peck, 3 L. ed. U. S. 162. 1 Sec. 4283. The liability of the owner of any vessel, for any embezzlement, loss, or destruction, by any person, of any property, goods, or merchandise, shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, lost, damage, or forfeiture, done, occasioned, or incurred, without the privity, or knowledge of such owner or owners, shall in no case exceed the amount or value of the interest of such owner in such vessel, and her freight then pending |