So far as the first and third are concerned, we have said all that need be said.

The protection of trusts and the following of trust properties have given rise to a class of cases in which the rules which govern this appeal have been pushed farther than we have any occasion to push them here. The leading authority in this direction is In re Hallett's Estate, 13 Ch. Div. 696, which relates to the misapplication of funds which were strictly trust assets. The result of this line of cases is, perhaps, well stated by a citation by the supreme court in Central Nat. Bank of Baltimore v. Connecticut Mut. Life Ins. Co. (already referred to), at page 67, 104 U. S., page 699, 26 L. Ed., to the effect that, if a man mixes a trust fund with his own, the whole will be treated as trust property, except so far as he may be able to distinguish what is his own. This reverses the rule of presumption which we have applied in the present case, where Le Roy has taken the burden, and has shown specifically that there was in the hands of the Beacon Trust Company, to which his equitable lien applied, a fund not needed to discharge its debt, and which, on the equitable rules of marshaling, and the common-law rules as to the application of payments, remained his specific assets. It is true that this summary statement cited by the supreme court was not intended by it, nor is it represented by us, as covering the entire range and effect of In re Hallett's Estate; but it is nevertheless true that, as the development of that decision, the chancery courts may have afforded more ample protection to funds strictly trust assets than is involved in the principles which solve the case at bar.

There is another class of cases, where an implied fraud is involved, which is equally as far-reaching, though in another direction, as in re Hallett's Estate. We refer to those of the class of Railway Co. v. Johnston, 133 U. S. 566, 576, 10 Sup. Ct. 390, 33 L. Ed. 683, where it is held that funds which had been received on deposit by a bank which had become hopelessly insolvent, so known to its officers, may be followed in equity.

The case at bar, however, is solved by the simple rule that where the property of any person has been, without his consent, and sometimes even with his consent, converted into money, the money may be followed in equity so far as it is possible to earmark it, provided the rights of innocent strangers who have given value are not prejudiced. This rule is so strongly fortified by the plainest principles of equity jurisprudence, and has been so constantly and uniformly applied for so many years, that the difficulty in drawing out the views herein stated comes less from the apprehension of it, and the certainty that it applies to the case at bar, than from the force and earnestness with which the various distinctions sought to be made by the trustee, and the line of reasoning by which he attempts to make them practically available, has been urged upon us.

No formal motion has been made to dismiss the appeal for lack of jurisdiction, and therefore no costs should be allowed thereon. In re Dickson, 49 C. C. A. 574, 111 Fed. 726.

In No. 386, Hutchinson v. Le Roy, the appeal is dismissed, without costs to either party.

In No. 390, Hutchinson, Trustee, Petitioner, the decree of the district court is affirmed, with interest; the costs on the petition are awarded to the respondent, Le Roy; and the district court is directed to give effect to this decree, both as to debt and costs.

(113 Fed. 210.)

In re NEELY.

(Circuit Court of Appeals, Second Circuit. January 7, 1902.)

No. 46.

1. BANKRUPTCY-REPLEVIN-JUDGMENT AGAINST TRUSTEE - DAMAGEs for DeTENTION-PRORATING-ACT OF BANKRUPT.

Plaintiff sold books to N., and on October 17, 1899, brought replevin in a state court to recover possession for false representations as to solvency. Part of the books were in storage, and under the state statute possession could not be given plaintiff except by consent or order of court after proof of title. Four days later, N. was adjudged bankrupt, and the suit restrained by the federal court. His trustees qualified November 15th, but took no steps to defend until the court, on plaintiff's petition, in March, 1900, authorized them to do so, and vacated the restraining order. It being apparent that the cause could not be reached for trial until autumn, plaintiff offered to refer the cause, or to sell the books for the benefit of the action, if the trustees would permit their removal; but both offers were declined. The case came on for trial February 11, 1901, and plaintiff recovered judgment for possession, with $1,080 damages for detention, and $647 costs. Held error

for the federal court to enjoin the judgment and direct the damages to be treated as a claim against the bankrupt and prorated with other claims, while permitting the costs to be paid in full, the detention not being the bankrupt's act except for four days, but the act of his trustees, and plaintiff being, therefore, entitled to payment in full.

2. SAME-WANT OF ACTUAL POSSESSION-EFFECT.

The fact that the trustees never had actual possession of the books was not ground for prorating the damages, it being their action and that of the federal court which prevented plaintiff from getting possession.

3. SAME-REFUSAL BY PLAINTIFF TO TRY TITLE BEFORE REFEREE IN BANKRUPTCY EFFECT.

The fact that plaintiff refused to try title before the referee in bankruptcy was not ground for prorating the damages, there being no reason why plaintiff should consent to such proceeding.

4. SAME-REFUSAL TO GIVE ADDITIONAL REFLE IN BOND-EFFECT.

The fact that plaintiff declined to give an additional replevin bond to the trustees as a condition precedent to putting the books on the market for the benefit of the action was not ground for prorating the damages, the law not requiring any additional bond.

5. SAME-VALUE OF PROPERTY-EFFECT.

The fact that the books were of considerable value, and the case such as to justify the trustees in requiring plaintiff to prove title, was not ground for prorating the damages.

Petition to Review an Order of the District Court of the United States for the Southern District of New York.

This is a petition to review an order enjoining petitioner from issuing execution on a judgment entered in the supreme court of the state of New York March 13, 1901, against the trustees in bankruptcy of F. Tennyson Neely.

See 108 Fed. 371.

Henry W. Taft, for petitioner.
Duncan Edwards, for trustees.

Before WALLACE and LACOMBE, Circuit Judges.

LACOMBE, Circuit Judge. On October 17, 1899, the Syndicate Publishing Company, a Pennsylvania corporation, brought an action of replevin in the supreme court of the state of New York against Neely to recover possession of 2,000 sets of a book called the "Encyclopædia Dictionary," upon the ground that they had been obtained on credit by false and fraudulent statements made by the defendant concerning his financial condition, and that upon discovering such facts the plaintiff had rescinded the credit and sale. The summons, complaint, affidavit, and requisition on replevin, including a bond in the sum of $13,000, were placed in the hands of the sheriff. That officer took into his own possession from Neely's actual possession 272 sets. There were 1,300 sets on deposit with a storage warehouse company, which the sheriff also levied on by serving a notice under the state act of 1895 (chapter 633). By the terms of that act, goods thus levied on could not be removed from the warehouse except by consent or by the order of the court after proof of title. Four days after such levy, and on October 21, 1899, Neely filed his petition, and was adjudged a bankrupt. On October 23, 1899, the district judge made an ex parte order restraining the prosecution of the action of replevin and various other actions pending against the bankrupt, and enjoining the sheriff from in any manner interfering with the property in question, which order was duly served on the plaintiff's attorneys and on the sheriff. On November 15, 1899, trustees of the bankrupt's estate were appointed and qualified. They took no steps to intervene or defend the suit until after the plaintiff in such suit had petitioned the court to direct them to do something, when an order was made March 20, 1900, authorizing them to intervene and defend if so advised, and thereupon vacating the order restraining the prosecution of the replevin suit. The trustees did intervene, and served an answer to the complaint in such suit denying all of its allegations and challenging the validity of the levy in replevin. At the same time they served a separate notice demanding the return of all goods replevied, or for the sum of $8,000 damages for their detention. The restraining order being vacated, petitioner's counsel placed the cause on the calendar, and took the necessary steps to secure a preference on the trial calendar (pursuant to state statute). When it was apparent that the cause could not be reached for trial before autumn, petitioner made an offer to refer the cause, which was declined, and also offered, if defendants would consent to an order under the warehouse act, to take the goods and place them on the market for the benefit of the action. This also was declined. The replevin suit came on for trial in the state court February 11, 1901. The plaintiff's right to recover was vigorously disputed by the attorney for the trustees, but a verdict was rendered in plaintiff's favor awarding plaintiff possession of 1,572 sets of books, valued at $7,948.50; also $1,080 damages for detention thereof (being the

amount of storage thereon from October 17, 1899, to the time of trial, $450, with interest at the rate of 6 per cent. per annum, amounting to $630, and to $1,080 in all), besides $647.31 costs and disbursements; amounting in all to $1,727.31. The district court thereupon enjoined the plaintiff in that suit from enforcing this judgment against the trustees. It directed that the costs $647.31-should be paid in full, but as to the $1,080 directed that it should be treated as a claim against the bankrupt, and paid pro rata with the claims of other creditors.

Why the costs should be paid in full if the damages were to be prorated is not apparent. There is no logical difference between the two items. The various reasons suggested in the opinion and in brief and argument here for making such disposition of the case do not seem to us persuasive. It is said that the detention was the act of the bankrupt. This is inaccurate. This is inaccurate. For a period of four days from October 17th to October 21st he was responsible for their detention. Had he admitted the rightfulness of plaintiff's claim, the state court could have disposed of the cause so that the warehouse company would have delivered the books to the true owner. After Neely became a bankrupt, however, he could no longer control the situation. Nothing that he could do would release the books. His creditors, represented by trustees, and protected and controlled by the district court, were the only ones who could, by ceasing further to oppose a just claim, put a stop to the running up of a bill for expenses. It is said the trustees never had possession of the goods, and never detained them. Whether they had actual possession is immaterial. Their action and the action of the district court prevented the owner from getting them when he was entitled to them. It is said that the plaintiff in the replevin suit refused to consent to become a party to some proceeding before a referee in bankruptcy to try the title. We know no reason why it should. It had brought a proper action in a proper court, which had jurisdiction, to which action the trustees, with the assent of the district judge, had been made parties, and in which all the issues could be fully determined. It is also said that plaintiff declined to give an additional bond to the trustees as a condition precedent to their consent to a delivery of the books to be put on the market for the benefit of the action. But no law required them to give any other bond than the one in replevin.

It is said that the property claimed was of considerable value, and the case was such as to justify the trustees in requiring the plaintiff in the replevin suit to show title. This is a perfectly good argument in support of the proposition that, as between the bankrupt's creditors and the trustees, the latter are entitled to charge the estate for any expenses they have incurred in the litigation, without being surcharged for any items on the theory that they were improvident. But it is difficult to see how it can be supposed to support the proposition that the individual who all along had good title to the property should be required to contribute to the expenses of the estate in conducting a litigation in which that individual was successful. And there would be such a contribution, if

the damages sustained by reason of a delay caused by the trustees' defense of the suit were not paid wholly by them, but were left to be borne in part by the successful party.

Reference is made to Norton v. Switzer, 93 U. S. 355, 23 L. Ed. 903, but in that case the judgment was on a claim against the bankrupt himself. Here no part of the $1,080 represents any claim against the bankrupt (except the proportionate part for four days' detention). It is an amount awarded to reimburse the owner of the property for expenses which the conduct of the trustees has caused him to incur.

It is no doubt true that out of the 472 days during which the books were detained (October 17, 1899, to February 11, 1901) 4 days' detention was attributable to the bankrupt; but the case seems one for the application of the maxim "De minimis non curat lex," especially in view of the litigation which the petitioner has had to persist in since it established its title to the property.

Because we have discussed and disposed of this cause on the merits, it is not to be assumed that we have decided all the propositions of law which it presents in favor of the respondents, nor that we are prepared to hold that, when a suit is pending against a bankrupt in a state court of competent jurisdiction, and, with the assent of the bankruptcy court, the trustees intervene, and are made parties in his place, and thereafter contest the suit to final judgment adverse to themselves in the state court, the bankruptcy court may thereafter enjoin execution, open the judgment, and alter the verdict.

The order of the district court is reversed, and the trustees ordered to pay the $1,080, with interest.

(113 Fed. 213.)

GRAY v. UNITED STATES.

(Circuit Court of Appeals, Second Circuit. January 14, 1902.)

Tariff Act 1897, § 32, provides that, if the appraised value of any imported article subject to an ad valorem duty shall exceed the declared value in the entry, there shall be levied and collected an additional duty, proportionate to the excess, but not exceeding 50 per cent. of the appraised value; and by a proviso it is declared that if the appraised value shall exceed the declared value by more than 50 per cent., except when arising from a manifest clerical error, the entry shall be held presumptively fraudulent, and the collector shall seize the goods and proceed as in case of forfeiture. Held, that the fact that a case is within the terms of the proviso, and that the government has proceeded thereunder for the forfeiture of the goods, does not relieve the importer from liability for the duties imposed by the previous portion of the section.

In Error to the District Court of the United States for the Southern District of New York.

Action by the United States against Herbert W. Gray to recover additional customs duties. From a judgment in favor of the United States (107 Fed. 104), defendant appeals. Affirmed.