tures of its funds are open to inquiry. If it | MISSION. 1917.) No. 340. (245 U. S. 48) Appeal from the Supreme Court of the District of Columbia. mission to compel George W. Jones to answer Proceeding by the Interstate Commerce Comcertain questions. From an order requiring him to answer such questions, defendant appeals. Affirmed. may not rest inactive and suffer injustice, JONES v. INTERSTATE COMMERCE COMit may not on the other hand use its funds and its power in opposition to the policies of (Argued Oct. 2 and 3. 1917. Decided Nov. 5, government. Beyond this generality it is not necessary to go. The questions in the case are not of broad extent. They are quite special, and we regard them, as the learned judge of the court below regarded them, as but incident to the amount of expenditures and to the manner of their charge upon the books of the companies. This, we repeat, is within the power of the Commission. The purpose of an investigation is the penetration of disguises or to form a definite estimate of any conduct of the carriers that may in any way affect their relation to the public. We cannot assume that an investigation will be instituted or conducted for any other purpose or in mere wanton meddling. Messrs. Helm Bruce and Edward S. Jouett, both of Louisville, Ky., for appellant. Mr. Joseph W. Folk, of Washington, D. C., for appellee. Mr. Justice MCKENNA delivered the opinion of the court. This case was submitted with Smith v. Interstate Commerce Com'n, 245 U. S. 33, 38 Sup. Ct. 30, 62 L. Ed., and Id., 245 U. S. 47, 38 Sup. Ct. 34, 62 L. Ed. (Nos. 337 and 339). Like them it is a proceeding to compel appellant to answer certain questions asked him COMMERCE by the Interstate Commerce Commission. was based on a petition like the petitions in those cases to which there was a like reply. The court entered an order requiring appellant to answer the following questions asked by counsel for the Commission: (Argued Oct. 2 and 3. 1917. Decided Nov. 5, It "I will ask you if you distributed in the state Appeal from the Supreme Court of the Dis- of Alabama on behalf of the Louisville & Nashtrict of Columbia. ville Railroad, campaign funds favoring the Proceeding by the Interstate Commerce Com-election of a certain candidate? mission to compel Addision R. Smith to answer certain questions. From an order requiring the defendant to answer such questions, he appeals. Affirmed. Messrs. Helm Bruce and Edward S. Jouett, both of Louisville, Ky., for appellant. Mr. Joseph W. Folk, of Washington, D. C., for appellee. Mr. Justice MCKENNA delivered the opinion of the court. This case was heard with Smith v. Interstate Commerce Com'n, 245 U. S. 33, 38 Sup. Ct. 30, 62 L. Ed. (No. 337), just decided. Like the latter case it was based on a proceeding brought by the Interstate Commerce Commission in the Supreme Court of the District of Columbia to enforce answers to certain questions asked of appellant by the Commission and which he refused to answer upon the advice of counsel. The petition and reply thereto are the same as in No. 337 and present for decision the same propositions. The court entered an order requiring appellant to answer questions to the following effect: First, whether he had personal knowledge of funds of the Louisville & Nashville Railroad used for political campaign purposes in the state of Tennessee and charged on the books of the carrier to operating expenses or construction account; and, second, whether he had personal knowledge of funds of the Louisville & Nashville Railroad used for campaign purposes in the state of Kentucky and charged on the books of the carrier to construction account or operating expenses. It will be observed that the questions are limited, as some of the questions in No. 337 were, to the allocation upon the books of the company, of the funds expended, if any. They are within the reasoning of the opinion in No. 337 and on the authority of that case the order is Affirmed. "I show you Ledger H, folio 454, from the records of the Louisville & Nashville Railroad, showing certain vouchers sent you in Alabama for various amounts, and will ask you how you expended the money represented by these vouchers, taking the first voucher as a beginning. "I will ask you whether or not you have personal knowledge of funds of the Louisville & Nashville Railroad and of the Nashville, Chattanooga & St. Louis Railway used to the extent of thousands of dollars for political campaign purposes in the state of Alabama. "I will ask you do you know of any campaign funds being expended by the Louisville & Nashville Railroad and the Nashville, Chattanooga & St. Louis Railway in the state of Alabama through any attorney under a subterfuge of paying the attorney a bill for professional services? "Do you know of any funds of the Louisville & Nashville Railroad expended in the state of Alabama for political purposes and charged on the books of the carrier to operating expense? "I will ask you if you know of any funds of the Louisville & Nashville Railroad or the Nashville, Chattanooga & St. Louis Railway expended in the state of Alabama for political purposes and charged on the books of these carriers or, on the books of either carrier to construction. "I will ask you if you have any knowledge of funds of the Louisville & Nashville Railroad or the Nashville, Chattanooga & St. Louis Railway used for political campaign purposes in the state of Tennessee. "Do you know of any funds of the Louisville & Nashville Railroad expended in the state of Tennessee for political campaign purposes and charged on the books of that carrier to operating expense or construction account?" The questions are similar to those passed on in the other two cases, and the order is Affirmed. (245 U. S. 20) CONTRIBUTORS TO PENNSYLVANIA HOSPITAL v. CITY OF PHILA DELPHIA et al. managers of the hospital memorialized the Legislature on that subject and this resulted in the passage of a law specially forbidding the opening of any street or alley through (Argued Oct. 16, 1917. Decided Nov. 5, 1917.) the grounds in question without the consent No. 349. 1. CONSTITUTIONAL LAW 118-EMINENT 2. COURTS 394(9) FEDERAL SUPREME COURT REVIEW OF DECISIONS OF STATE COURTS IMPAIRING OBLIGATIONS OF CON TRACTS. The contention that the opening of a street through such grounds was in violation of the contract clause of the federal Constitution was so absolutely devoid of merit as to justify the dismissal of a writ of error to a state court for want of jurisdiction. In Error to the Supreme Court of the State of Pennsylvania. Suit by the Contributors to the Pennsylvania Hospital against the City of Philadelphia and others. Judgment for defendants was affirmed by the Supreme Court of Pennsylvania (254 Pa. 392, 98 Atl. 1077), and the plaintiff brings certiorari. Affirmed. Mr. Owen J. Roberts, of Philadelphia, Pa., for plaintiff in error. Mr. John P. Connelly and Mr. Ernest Lowengrund, both of Philadelphia, Pa., for defendants in error. of the hospital authorities. The act was conditioned upon the hospital making certain payments and furnishing ground for a designated public street or streets and these terms were accepted by the hospital and complied with. In 1913 the city, within the authority conferred upon it by the state, took the necessary preliminary steps to acquire by eminent domain land for the opening of a street through the hospital grounds and to prevent the accomplishment of this result the present suit was begun by the hospital to protect its right of property and its alleged contract under the act of 1854 (P. L. 385). As the result of proceedings in the state court the purpose of the city was so shaped as to cause it to seek to take under the right of eminent domain, not only the land desired for the street, but the rights under the contract of 1854 and there was a judgment against the hospital and in favor of the city in the trial court which was affirmed by the Supreme Court by the judgment which is under review on this writ of error. 254 Pa. 392, 98 Atl. 1077. The conclusions of the court were sustained in a per curiam opinion pointing out that there was no question involved of impairing the contract contained in the act of 1854 since the express purpose of the city was to exert the power of eminent domain not only as to the land proposed to be taken, but as to the contract itself. The right to do both was upheld on the ground that the power of eminent domain was so inherently governmental in character and so essential for the public welfare that it was not susceptible of being abridged by agreement and therefore the action of the city in exerting that power was not repugnant either to the state Constitution or to the contract clause of the Constitution of the United States. [1] It is apparent that the fundamental question, therefore, is, did the Constitution of Mr. Chief Justice WHITE delivered the the United States prevent the exertion of the opinion of the Court. Whether contract obligations were impaired in violation of rights of the plaintiff in error protected by the Constitution of the United States as the result of the decision below, is the sole question we are called upon to decide on this record. It thus arises: The plaintiff in error, a charitable institution was organized under the laws of Pennsylvania and in 1841 it established on a tract of land in the city of Philadelphia a hospital for the care and cure of the insane. Solicitous lest the opening of streets, lanes and alleys through its grounds might injuriously affect the performance of its work, in 1854 a committee of the right of eminent domain to provide for the street in question because of the binding effect of the contract previously made excluding the right to open the street through the land without the consent of the hospital. We say this is the question, since if the possibility were to be conceded that power existed to restrain by contract the further exercise by government of its right to exert eminent domain, it would be unthinkable that the existence of such right of contracte. could be rendered unavailing by directing proceedings in eminent domain against the contract, for this would be a mere evasion of the assumed power. On the other hand, if there can be no right to restrain by contract For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes COHEN v. SAMUELS. No. 359. (245 U. S. 50) BANKRUPTCY 143(12)-PROPERTY VESTING Bankruptcy Act July 1, 1898. c. 541, § 70a, that the trustee is vested by operation of law 30 Stat. 565 (Comp. St. 1916, § 9654), provides with title to all property not exempt, all powers which the bankrupt might have exercised for his own benefit, and property which prior to the filing of the petition he could by any means have transferred, or which might have been levied upon and sold under judicial process against him, provided that, when any bankrupt shall have any insurance policy having a cash surrender value payable to himself, his estate, or his personal representative, he may pay or secure to the trustee the cash surrender value as ascertained and stated, and continue to hold, own, and carry such policy free from the claims of creditors, and that otherwise the policy shall pass to the trustee as assets. Held, that insurance policies having cash surrender values pass to the trustee, though naming persons other bankrupt was given the absolute right to change than the bankrupt as beneficiaries, where the the beneficiary without the consent of the beneficiary. the power of eminent domain, it must also | 187 U. S. 308, 314, 23 Sup. Ct. 123, 47 L. Ed. of necessity follow that any contract by 190; Consolidated Turnpike Co. v. Norfolk, which it was sought to accomplish that re- etc., Ry. Co., 228 U. S. 596, 600, 33 Sup. Ct. sult would be inefficacious for want of power. 605, 57 L. Ed. 982; Manhattan Life InsurAnd these considerations bring us to weigh ance Co. v. Cohen, 234 U. S. 123, 137, 34 Sup. and decide the real and ultimate question; Ct. 874, 58 L. Ed. 1245. In view, however, that is, the right to take the property by emi- of the course of the proceedings below and nent domain, which embraces within itself, the aspect which the case took as resulting as the part is contained in the whole, any from those proceedings, without departing supposed right of contract limiting or re- from the rule settled by the cases referred to. straining that authority. We are of opinion we think our decree may well be one, not of that the conclusions of the court below in so dismissal, but of affirmance. far as they dealt with the contract clause of Affirmed. the Constitution of the United States were clearly not repugnant to such clause. There can be now, in view of the many decisions of this court on the subject, no room for chal- (Argued Oct. 17, 1917. Decided Nov. 5, 1917.) lenging the general proposition that the states cannot by virtue of the contract clause be held to have divested themselves by contract of the right to exert their governmental authority in matters which from their very nature so concern that authority that to restrain its exercise by contract would be a renunciation of power to legislate for the preservation of society or to secure the performance of essential governmental duties. Beer Co. v. Massachusetts, 97 U. S. 25, 24 L. Ed. 989; Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079; Butchers' Union Co. v. Crescent City Co., 111 U. S. 746, 4 Sup. Ct. 652, 28 L. Ed. 585; Douglas v. Kentucky, 168 U. S. 488, 18 Sup. Ct. 199, 42 L. Ed. 553; Manigault v. Springs, 199 U. S. 473, 26 Sup. Ct. 127, 50 L. Ed. 274; Texas & New Orleans R. R. Co. v. Miller, 221 U. S. 408, 31 Sup. Ct. 534, 55 L. Ed. 789. And it is unnecessary to analyze the decided cases for the purpose of fixing the criteria by which it is to be determined in a given case whether a power exerted is so governmental in character as not to be subject to be restrained by the contract clause, since it is equally true that the previous decisions of this court leave no doubt that the right of government to exercise its power of eminent domain upon just compensation for a public purpose comes within this general doctrine. Charles River Bridge v. Warren Bridge, 11 Pet. 420, 9 L. Ed. 773; West River Bridge Co. v. Dix, 6 How. 507, 12 L. Ed. 535; New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650, 6 Sup. Ct. 252, 29 L. Ed. 516; Long Island Water Supply Co. v. Brooklyn, 166 U. S. 685, 17 Sup. Ct. 718, 41 L. Ed. 1165; Offield v. Railroad Company, 203 U. S. 372, 27 Sup. Ct. 72, 51 L. Ed. 231; Cincinnati v. Louisville & Nashville R. R. Co., 223 U. S. 390, 32 Sup. Ct. 267, 56 L. Ed. 481. On Writ of Certiorari to the United States Circuit Court of Appeals for the Second Circuit. Voluntary bankruptcy proceeding by Elias W. Samuels. An order of the District Court, refusing the petition of Samuel C. Cohen, trustee, that the bankrupt be compelled to pay him the cash values of certain life insurance policies or surrender the policies, was affirmed by the Circuit Court of Appeals for the Second Circuit (237 Fed. 796, 151 C. C. A. 38), and the trustee brings certiorari. versed and remanded. Re Mr. Lawrence B. Cohen, of New York City, for petitioner. Mr. Samuel Sturtz, of New York City, for respondent. Mr. Justice MCKENNA delivered the opin ion of the Court. On May 13, 1915, Elias W. Samuels filed a voluntary petition in bankruptcy and was [2] The principle then upon which the contention under the Constitution rests having been, at the time the case was decided be-adjudicated a bankrupt. On the same day low, conclusively settled to be absolutely de- Cohen, petitioner herein, was duly elected void of merit, it follows that a dismissal for his trustee. Samuels at the time of the adwant of jurisdiction might be directed. judication held five life insurance policies in Equitable Life Assurance Society v. Brown, various life insurance companies. For other cases see same topic and KEY-NUMPER in all Key-Numbered Digests and Indexes On September 16, 1915, Cohen made motions before the referee in bankruptcy to require Samuels to deliver to him, Cohen, the policies or pay to him the cash surrender value of them as of the date of the adjudication. The motions were denied. Subsequently Cohen filed petitions to review the rulings of the referee as to three of the policies, which petitions came on for hearing before the United States District Court for the Southern District of New York February 14, 1916. The policies were respectively for the sums of $3,000, $3,000, and $1,000, and had respectively a cash surrender value of $193.85, $753, subject to a deduction of a loan of $555 and interest, and $396, The policies were payable to certain relatives of Samuels as beneficiaries and it was provided in each that Samuels reserved the absolute right to change the beneficiary without the latter's consent. The District Court affirmed the orders of the referee, following what the court conceived to be the ruling in In re Hammel & Co., 221 Fed. 56, 137 C. C. A. 80. Cohen petitioned the Circuit Court of Appeals to revise the ruling of the District Court as provided in section 24b of the Bankruptcy Act (Comp. St. 1916, § 9608) and for such other and further relief as might be proper. The Circuit Court of Appeals affirmed the ruling of the District Court, one judge dissenting. 237 Fed. 796, 151 C. C. A. 38. Regarding the section in its entirety there would seem to be no difficulty in its interpretation, but we are admonished by the deci sion of the Circuit Court of Appeals and its reasoning and also by the argument of counsel that there are considerations which give particular control to the proviso and distinguish between insurance policies and other property which the bankrupt can transfer or which can be levied upon and sold under judicial process against him (subdivision 5). We have given attention to those considerations and feel their strength, but they are opposed by other considerations. It might indeed be that it would better fulfill the protection of insurance by considering the proviso alone and literally, regarding the policy at the moment of adjudication, and, if it be not payable then in words to the bankrupt― no matter what rights or powers are reserved by him, no matter what its pecuniary facility and value is to him-to consider that he has no property in it. But we think such construction is untenable. The declaration of subdivision 3 is that "powers which he might have exercised for his own benefit" "shall in turn be vested in the trustee," and there is vested in him as well all property that the bankrupt could transfer or which by judicial process could be subjected to his debts, and especially as to insurance policies which have a cash surrender value payable to himself, his estate or personal representative. It is true The facts are not in dispute. The policies the policies in question here are not so payhad a cash surrender value at the time San-able, but they can be or could have been so uels was adjudicated a bankrupt which the companies were willing to pay to him and in all of them he had the absolute right to change the beneficiaries. The question in the case is the simple one of the construction of section 70a (section 9654). By it the trustee of the bankrupt is vested by operation of law with title to all property of the bankrupt which is not exempt; "(3) all powers which he might have exercised for his own benefit, but not those which he might have exercised for some other (5) property which prior person; to the filing of his petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him: Provided, that when any bankrupt shall have any insurance policy which has a cash surrender value payable to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company is suing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own, and carry such policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets. payable at his own will and by simple declaration. Under such conditions to hold that there was nothing of property to vest in a trustee would be to make an insurance policy a shelter for valuable assets and, it might be, a refuge for fraud. And our conclusions would be the same if we regarded the proviso alone. tens, 205 U. S. 202, 27 Sup. Ct. 488, 51 L. Ed. 771, we gave a bankrupt the benefit of the V. redemption of a policy from the claims of creditors, though a cash surrender value was not provided by it but was recognized by the insurance company. In Burlingham Crouse, 228 U. S. 459, 472, 33 Sup. Ct. 564, 568 (57 L. Ed. 920, 46 L. R. A. [N. S.] 148), we said that it was the purpose of Congress to pass to the trustee that sum which was available to the bankrupt at the time of bankruptcy as a cash asset; otherwise to leave to the insured the benefit of his life insurance." See also Everett v. Judson, 228 U. S. 474, 33 Sup. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154. Judgment of the Circuit Court of Appeals affirming the order of the District Court is reversed and the case remanded to the District Court for further proceedings in accordance with this opinion. RUPTCY. as Appeal from the District Court of the United States for the Southern District of California. Suit by S. F. Kelley, trustee of the Gibraltar Investment & Home Building Company, bankrupt, against Thomas Gill. From a decree dismissing the bill (Kelley v. Aarons [D. C.] 238 Fed. 996), complainant appeals. Affirmed. Mr. William B. Ogden, of Los Angeles, Cal., for appellant. Mr. William Ona Morton, of Los Angeles, Cal., for appellee. *Mr. Justice BRANDEIS, delivered the opinion of the Court. Bankruptcy Act July 1, 1898, c. 541, § 2, cl. 7, 30 Stat. 545 (Comp. St. 1916, § 9586), gives courts of bankruptcy jurisdiction to cause the estates of bankrupts to be collected, reduced to money and distributed, and to determine controversies in relation thereto, except therein otherwise provided. Section 23b (Comp. St. 1916, § 9607), with certain exceptions, forbids the trustee from prosecuting a suit without the consent of the proposed defendant in a court other than that in which the bankrupt might have brought it. Section 47a (2), as amended by The Gibraltar Investment & Home Building Act June 25, 1910, c. 412, § 8, 36 Stat. 840 Company, a California corporation with a (Comp. St. 1916, § 9631), authorizes trustees to reduce the property of the estate to money under capital stock of $2,000,000 divided into 20,the direction of the court and close up the es-000,000 shares of ten cents each, was adjuditate as expeditiously as is compatible with the cated a bankrupt in the Southern district best interests of the parties, and vests trustees of that state. Its debts were about $150,000. as to all property in the custody or coming into the custody of the bankruptcy court with all the rights and remedies of a creditor holding a lien by legal or equitable proceedings, and as to all other property with the rights and remedies of a judgment creditor holding execution duly returned unsatisfied. Held that, where the liability of stockholders of a bankrupt corporation on their unpaid stock subscriptions was unconditional, and an order of the bankruptcy court for payment of the subscriptions was not a condition precedent to liability, the trustee could not bring a suit in the bankruptcy court against the stockholders on the theory that the cause of action was not one which the corporation could have brought, but one arising under the amendment of 1910 to section 47, as the elements essential to jurisdiction in equity to avoid multiplicity of actions at law were lacking, and the appropriate remedy was a separate action at law against each stockholder, and moreover, if there had been equity jurisdiction the cause of action would still have been the same cause of action on which the bankrupt could have sued, though he could not have brought the particular suit. Its assets consisted of amounts aggregating $480,921.25 unpaid and overdue on subscriptions to its stock. The subscription of each stockholder was contained in a separate contract which provided for payment unconditionally at specified dates. The court of bankruptcy found that a large majority of the subscribers were nonresidents of the district or were insolvent, and that the full amount due from resident solvent stockholders would be required to pay the claims of creditors and cost of administration. It ordered payment of all unpaid subscriptions and directed the trustee in bankruptcy "to institute a suit in equity" to enforce collection thereof. Such a suit was brought in that court against Gill and about 3,000 other residents of the district. A motion to dismiss for want of jurisdiction was sustained; and a decree was entered dismissing the bill. Kel 2. BANKRUPTCY 287(3)-ACTIONS BY TRUS-ley v. Aarons (D. C.) 238 Fed. 996. The case TEE-JURISDICTION OF EQUITY. Where the liability of stockholders of a bankrupt corporation on their corporate stock subscriptions was unconditional, an order of the bankruptcy court directing the trustee to institute a suit in equity to enforce collection thereof was insufficient to confer equity jurisdiction. 3. BANKRUPTCY ~293(1)—ACTIONS BY TRUSJURISDICTION OF COURT OF BANK TEE comes here on appeal under section 238 of the Judicial Code (Comp. St. 1916, § 1215). The question presented is of importance in the administration of bankrupt corporations. To enable the trustee, by means of a single suit in the court of bankruptcy, to determine and enforce payment of all amounts due from stockholders would obviously promote the Where the liability of stockholders of a effective administration of the bankrupt esbankrupt corporation on their unpaid stock sub- tate; but the aggregate burden thereby cast scriptions was unconditional, and an order of upon the individual stockholders might be the court of bankruptcy for payment thereof was correspondingly heavy. Whether the right to not a condition precedent to the existence of liability, the jurisdiction of the court of bankrupt- choose the court and the place in which litcy over a suit by the trustee to collect such igation shall proceed, should be conferred subscriptions could not be maintained on the upon the trustee or upon the defendant, is aground that it was a suit brought to determine legislative question with which Congress a controversy concerning property in the trus- has dealt in the Bankruptcy Act (1898, c. tee's possession. 4. BANKRUPTCY 293(1)—ACTIONS BY TRUS-541, 30 Stat. 544). Section 2, clause 7, confers TEE JURISDICTION OF COURT OF BANK RUPTCY. That an alleged debtor of a bankrupt corporation is a stockholder or even an officer does not enable the trustee to sue him in the court of bankruptcy. upon the court of bankruptcy jurisdiction to "cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided." But section For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |