J. B. MCPHERSON, District Judge. In this case the bankrupt filed an answer to the petition, averring that he is a wage earner, and therefore not liable to be adjudged an involuntary bankrupt. The Act of July 1, 1898, c. 541, § 4, cl. "b," 30 Stat. 547 [U. S. Comp. St. 1901, p. 3423], exempts wage earners from involuntary proceedings; and section I, cl. 27, 30 Stat. 545 [U. S. Comp. St. 1901, p. 3420], defines a wage earner to be "an individual who works for wages, salary or hire, at a rate of compensation not exceeding one thousand five hundred dollars per year." The referee took testimony concerning the occupation of the bankrupt, and has found the facts to be as follows:

"At the date of the execution of said deed of conveyance the said Jacob Y. Yoder resided in the borough of Perkasie, Bucks county, in said district. He was the owner of two horses, two wagons, one plow, and one cart, with which he did hauling by the day, at the rates of $3 and $4, according to the kind of work. He was not regularly employed by any one person, but hauled logs, coal, manure, etc., for different people; and the period of his employment was generally brief, lasting from a day to a week. He was also at times without work. His income varied from $9 to $15 per week, and sometimes fell as low as a dollar per week. He employed no other person, but drove the team himself. The compensation received by him included pay for his own services and for the use of his team."

To this finding may be added the further fact that, when he was not employed as above stated, he worked by the day at whatever manual labor he could get to do. Upon these facts, I think it is clear that the bankrupt was a wage earner, and not an independent contractor. He was a servant hired by successive masters, and was always paid by the day, never by the job. The fact that he used his horses and wagons in performing the services for which he was paid by the day does not seem to me of any special importance. A carpenter or any other skilled mechanic employs tools-often his own tools-to assist him in earning his daily wages; and the bankrupt's horses and wagons stand, I think, in precisely the same category. The words "wages or hire" have so nearly the same meaning, that it is not easy to discriminate between them; but it is not necessary to make the attempt in the present case, for certainly the compensation received by the bankrupt for the kind of work that he was doing must fall within the meaning of one or the other of these two words. He was not an independent contractor, looking for his income to the profits that he might make by carrying out a contract for a lump sum, but was an ordinary day laborer, who did work with his hands, lifting logs, holding a plow, driving his team, and similar service, for which he was paid at a fixed rate by the day. I think, therefore, that he comes clearly within the exemption of section 4, and that the petition must be dismissed.

An order to this effect will be entered.

In re PHILADELPHIA & LEWES TRANSP. CO. ▸

(District Court, E. D. Pennsylvania. February 9, 1904.)
No. 1,281.

1. BANKRUPTCY-COSTS-DISMISSAL OF PETITION FOR WANT OF JURISDICTION. Where proceedings in involuntary bankruptcy against a corporation are dismissed because the defendant is not within the class of corporations which may be adjudged bankrupt, the same rule applies as in other cases where suits are dismissed for want of jurisdiction, and the court can make no order awarding costs.

In Bankruptcy. On question of costs.
See (D. C.) 114 Fed. 403.

Horace L. Cheyney, for petitioners.

Ira Jewell Williams, for alleged bankrupt.

J. B. MCPHERSON, District Judge. In this case the court dismissed the petition upon the ground that the defendant was a transportation company, and could not be adjudged a bankrupt because the act of July 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3418], does not apply to such companies: (D. C.) 114 Fed. 403. The petitioning creditors now ask that an order may be made directing the money deposited for costs to be returned to them, and the transportation company asks that an order may be made directing a docket fee of $20 to be paid to its counsel. The order is asked for under general order 34 (89 Fed. xiii), which provides:

"In cases of involuntary bankruptcy, when the debtor resists an adjudication, and the court, after hearing, adjudges the debtor a bankrupt, the petitioning creditor shall recover, and be paid out of the estate, the same costs that are allowed to a party recovering in a suit in equity; and if the petition is dismissed, the debtor shall recover like costs against the petitioner."

Under this section costs have been decided to be taxable (In re Ghiglione [D. C.] 1 Am. Bankr. Rep. 580, 93 Fed. 186, and In re Morris [D. C.] 115 Fed. 591); but these were cases where the court had jurisdiction of the parties, and the petitions were dismissed on the merits. I see no reason why the rule which denies to a court the power to award costs when a case is dismissed for want of jurisdiction (Citizens' Bank v. Cannon, 164 U. S. 319, 17 Sup. Ct. 89, 41 L. Ed. 451) should not prevail in a court of bankruptcy as well as in other tribunals. The order asked for by the plaintiffs may be entered.

COULTER, Auditor, v. WEIR.

(Circuit Court of Appeals, Sixth Circuit. February 13, 1904.)

No. 1,224.

1. CORPORATIONS FRANCHISE TAX INJUNCTION-STATE ERAL COURTS JURISDICTION.

OFFICERS FED

Ky. St. 1903, § 4077 et seq., provides for the imposition of a franchise tax on the intangible property of certain corporations, a part of which is payable directly into the state treasury and the balance made apportionable to certain counties and cities; the value of such franchise being fixed by a board consisting of state officers. Section 4084 requires the State Auditor, after 30 days from the valuation of the franchise, to certify to the county clerk of the counties, etc., the portion apportionable to them as therein provided; and section 4091 requires the auditor to give final notice of the tax assessed for state purposes, which becomes due 30 days thereafter, but the auditor has no authority to coerce the payment of the tax. Held, that where the valuation of a corporation's franchise had been made by the state board, and the auditor had given final notice thereof before suit was brought against him in his official capacity to restrain the collection of such tax, the bill was not maintainable as to the part of the tax due the state, since as to it the bill was, in effect, against the state, which was not subject to suit without its consent under Const. U. S. Amend. 11.

2. SAME-MULTIPLICITY OF SUITS.

Where it was alleged that the tax was void, and that, unless restrained, the auditor would certify the tax to the various counties and municipalities in the state, which would result in a multiplicity of suits by defendant to restrain the collection of the tax, the bill was maintainable against the auditor, as an official, to restrain such act.

8. SAME-STATUTES-CONSTITUTIONAL LAW-INTERSTATE COMMERCE.

Ky. St. 1903, § 4077 et seq., imposing an alleged franchise tax on corporations which, in effect, is not a franchise tax, but a tax on the intangible property of the corporation not otherwise taxed, is not unconstitutional in its application to an interstate express company as an unwarrantable interference with interstate commerce.

4. SAME-CONSTRUCTION.

Ky. St. 1903, §§ 4078-4080, making it the duty of corporations mentioned in section 4077 to furnish certain data by which the value of their intangible property may be ascertained for taxation, and declaring that, when the value of the capital stock is ascertained, the value of all tangible property otherwise taxable shall be deducted, is applicable as well to corporations and companies organized under the laws of other states as those existing under the laws of Kentucky.

5. SAME DEDUCTION OF TANGIBLE TAXABLE PROPERTY.

Under Ky. St. 1903, § 4079, providing that in the determination of the amount of a corporation's intangible property for franchise taxation the value of all tangible property otherwise taxable shall be deducted from the value of the corporation's capital stock ascertained by including every element contributing to value, whether tangible or intangible, the tangible taxable property to be deducted is not limited to such as is situated within the state of Kentucky, but includes all tangible property belonging to the corporation wherever located.

6. SAME ERRONEOUS VALUATION-REMEDIES.

Where it was contended in a suit to restrain the collection of a corporate franchise tax that, if the board of valuation and assessment, in making the assessment in the method pursued in taxing the corporation's intangible property assessable in the state, followed the statute, the stat

¶ 1. Federal jurisdiction of suits against state, see note to 13 C. C. A. 165. 127 F.-57

ute was unconstitutional, and that, if they did not follow the statute, the corporation had a remedy to correct the error, the question was not a mere question of excessive valuation within the exclusive jurisdiction of the board, and was subject to review by the courts.

7. SAME.

Where, in determining the value of an express company's intangible property legally taxable in Kentucky, the board of valuation ignored, in valuing the company's shares, the existence of intangible property outside of Kentucky, consisting of an outside investment of surplus earnings, which the company offered to prove was not used in, and did not constitute a part of, its general express business, which investment consisted of railroad bonds, etc., actually held in New York, the valuation

was erroneous.

8. SAME.

An express company having accumulated a surplus of more than $12,000,000, separated such amount from its business, and invested it in bonds, stock, etc., which the company transferred to a trust company in New York, and then issued to its stockholders, as a distributive share thereof, bonds of the express company at par, payable only out of the securities so deposited as a special dividend, the express company retaining certain property rights in the securities, by which, in certain contingencies, creditors might reach them. Held, that such bonds and stocks so transferred to the trust company constituted an outside investment of surplus earnings which could not be included in an estimate of the value of the express company's intangible property taxable in Kentucky.

Appeal from the Circuit Court of the United States for the Eastern District of Kentucky.

This is a bill challenging the validity of a tax assessment made by the state of Kentucky against a joint-stock company in the nature of a co-partnership doing business in the state of Kentucky under the name and style of the Adams Express Company. The taxes assessed were for three years, 1899, 1900, and 1901. The valuations and assessments complained of were made by a board of valuation and assessment, created under section 4077, Ky. St. 1903, consisting of the Auditor, Treasurer, and Secretary of State. To this board is committed the sole duty of assessing certain corporations and companies in the nature of corporations, such as the complaining express company. These assessments were made under color of an act passed November 11, 1892, being chapter 108, § 4019 et seq., Ky. St. 1903.

Section 4020 subjects to taxation all property within the state, whether belonging to individuals or corporations, "including intangible property, which shall be considered and estimated in fixing the value of corporate franchises as hereinafter provided," unless exempted by the state Constitution. The bill avers that in accordance with this provision all of the tangible property of complainants within the state had been assessed, and the taxes paid, and that no complaint is made thereof.

Section 4077 subjects a large class of corporations, companies, or associations, including express companies, to further taxation by providing that every "corporation, company or association having or exercising any special or exclusive privilege or franchise not allowed by law to natural persons, or performing any public service, shall, in addition to the other taxes imposed on it by law, annually pay a tax on its franchise to the state, and a local tax thereon to the county, city, town and taxing district, where its franchise may be exercised." The Auditor, Treasurer, and Secretary of State are then constituted a board for valuing and assessing said franchise, and for apportioning to the several municipalities in which such franchise is situated their respective shares in the taxable value so ascertained.

In view of the fact that the construction of the law under which these assessments were made is involved, we set out below sections 4078 to 4083, inclusive, of the Kentucky Statutes of 1903:

"Sec. 4078. In order to determine the value of the franchises mentioned in the next preceding section, the corporations, companies and associations men

tioned in the next preceding section, except banks and trust companies, whose statements shall be filed as hereinafter required by section four thousand and ninety-two of this article, shall annually between the fifteenth day of September and first day of October, make and deliver to the Auditor of Public Accounts of this state a statement, verified by its president, cashier, secretary, treasurer, manager, or other chief officer or agent, in such form as the auditor may prescribe, showing the following facts, viz.: The name and principal place of business engaged in; the amount of capital stock, preferred and common; the number of shares of each; the amount of stock paid up; the par and real value thereof; the highest price at which such stock was sold at a bona fide sale within twelve months next before the fifteenth day of September of the year in which the statement is required to be made; the amount of surplus fund and undivided profits, and the value of all other assets; the total amount of indebtedness as principal, the amount of gross or net earnings or income, including interest on investments, and incomes from all other sources for twelve months next preceding the fifteenth day of September of the year in which the statement is required; the amount and kind of tangible property in this state, and where situated, assessed, or liable to assessment in this state, and the fair cash value thereof, estimated at the price it would bring at a fair voluntary sale, and such other facts as the auditor may require. "Sec. 4079. Where the line or lines of any such corporation, company or association extend beyond the limits of the state or county, the statement shall, in addition to the other facts hereinbefore required, show the length of the entire lines operated, owned, leased or controlled in this state, and in each county, incorporated city, town or taxing district, and the entire line operated, controlled, leased or owned elsewhere. If the corporation, company or association be organized under the laws of any other state or government, or organized and incorporated in this state, but operating and conducting its business in other states as well as in this state, the statement shall show the following facts, in addition to the facts hereinbefore required: The gross and net income or earnings received in this state and out of this state, on business done in this state, and the entire gross receipts of the corporation, company or association in this state and elsewhere during the twelve months next before the fifteenth day of September of the year in which the assessment is required to be made. In cases where any of the facts above required are impossible to be answered correctly, or will not afford any valuable information in determining the value of the franchises to be taxed, the said board may excuse the officer from answering such questions: provided, that said board, from said statement, and from such other evidence, as it may have, if such corporation, company or association be organized under the laws of this state, shall fix the value of the capital stock of the corporation, company or association, as provided in the next succeeding section, and from the amount thus fixed shall deduct the assessed value of all tangible property assessed in this state, or in the counties where situated. The remainder thus found shall be the value of its corporate franchise subject to taxation as aforesaid.

"Sec. 4080. If the corporation, company or association be organized under the laws of any other state or government, except as provided in the next section, the board shall fix the value of the capital stock as hereinbefore provided, and will determine from the amount of the gross receipts of such corporation, company or association in this state and elsewhere, the proportion which the gross receipts in this state, within twelve months next before the fifteenth day of September of the year in which the assessment was made, bears to the entire gross receipts of the company, the same proportion of the value of the entire capital stock, less the assessed value of the tangible property assessed, or liable to assessment, in this state, shall be the correct value of the corporate franchise of such corporation, company or association for taxation in this state.

"Sec. 4081. If the corporation organized under the laws of this state or of some other state or government be a railroad, telegraph, telephone, express, sleeping, dining, palace or chair-car company, the lines of which extend beyond the limits of this state, the said board will fix the value of the capital stock as hereinbefore provided, and that proportion of the value of the capital stock, which the length of the lines operated, owned, leased or controlled in this