in the state court. The Trust & Deposit Company held the title to the property in trust to secure the bonds held by him-it was made a party before he filed his bill. Schrader, one of the bondholders, was also made a party. This was in accordance with the rules of practice in chancery.

The judgment creditor was not required to ascertain and bring into the record all of the bondholders. They were, for the purposes of the suit, represented by the trustee. It was its duty, upon the notice by the commissioner, to protect the interest of the holders of the bonds, or to furnish a list of them, and notify them of the proceedings. To the suggestion that, upon the allegations of the bill, the court had no power to appoint a receiver, it may be said that jurisdiction of the property was not dependent upon the appointment of a receiver. If, however, the interest of the lienholders required that one be appointed, an amendment of the bill by any lienholder, setting forth the essential facts with an appropriate prayer, would have met the conditions. The court had ample power to protect the property. The sole purpose of the suit was to bring to sale, after bringing in all lienholders, the specific property described in the bill, upon which the Telephone Company held a judgment constituting a lien. To enforce the only decree which the court had the power to render a sale was necessary, and to effectuate the sale, the court had the power and it would have been its duty by proper process to put the purchaser in possession. The case comes within the reason upon which, as held in the cases cited, the state court should have been permitted to retain control of the property. That court, in the exercise of its equitable powers, could have rendered full and adequate relief to all persons interested in the title to, and disposition of, the property. There is evidence in the record that the president of the Railway Company filed the bill as attorney for H. M. Jackson and was attorney for the receiver in the suit pending in the federal court. We confine our decision to the single question presented upon the transcript before us-the decrees of the District Judge enjoining the receiver of the state court from selling the property, and the Telephone Company from further prosecuting its suit in the state court, and directing the receiver of the federal court to proceed with the sale.

Appellee insists that, conceding the state court acquired jurisdiction, the plaintiff in that suit, by its failure to prosecute it from October, 1909, until May 8, 1911, when Jackson filed his bill, abandoned the suit. This position cannot be sustained. The state court had control of the suit, and in it alone was vested the power to dismiss the suit for failure to prosecute. It is further insisted that, by its failure to prosecute the suit until June 27, 1913, during which period the federal court, by its receiver, took possession of the property, and by the sale of receiver's certificates, now held by the bank, petitioner herein and other bona fide purchasers completed the road, the Telephone Company is estopped to interfere with the sale of the property. This unfortunate delay is explained by the correspondence set out in the record between the attorney for the receiver and the Telephone Company. It appears that, immediately upon receiving notice of

the institution of the suit by Jackson, the attorney for the Telephone Company wrote the receiver, calling his attention to the suit in the state court, and asking for information. The attorney for Jackson, who, it appears, is also president of the Railway Company, answered the letter, explaining the reasons for the suit, and promising to secure a second issue of certificates with which to pay the judgment. After further correspondence and the failure to pay the judgment, the prosecution of the suit in the state court was pressed to a decree. The learned District Judge did not rest his opinion upon the alleged estoppel.

We fail to find any conduct, or representation, on the part of the Telephone Company, or its officers, which estops it from asserting its legal and equitable rights. It is proper to say that it is admitted in the record that the pending of the suit in the state court was first brought to the attention of the District Court by the filing of the petition by the bank for the injunction against the receiver of the state court. While we hold that there is error in the decrees appealed from, we are of the opinion that the District Court had jurisdiction of the parties and of the subject-matter, and that, except in so far as its proceedings interfered with the procedure of the state court, its action is not before us for review. Whether the holders of the bonds will be permitted by the circuit court of Tyler county to file the bonds and assert their rights under the mortgage is a question for that court to decide. Other questions respecting the status of the receiver's certificates are suggested in the transcript which are not before us. If the judgment of the Telephone Company and the other small claims found by the report of the commissioner and adjudged by the decree to be the only liens on the property and the costs are discharged, we perceive no valid reason why the District Court may not proceed to dispose of the property, pursuant to its decree. These questions, however, are not before us, and the parties will proceed as they may be advised. This opinion will be certified to the District Court, to the end that further proceedings may be had in accordance therewith.

Reversed.

SWAYNE & HOYT, Inc., v. EVERETT.

(Circuit Court of Appeals, Ninth Circuit.

January 6, 1919)

No. 3032.

1. AMBASSADORS AND CONSULS 6-UNITED STATES COURT FOR CHINA-JuRISDICTION.

Under Act June 30, 1906, § 1 (Comp. St. § 7687), giving the United States Court for China exclusive jurisdiction of all cases and judicial proceedings which had previously been exercised by consuls and ministers, except as qualified by section 2 (section 7688), that court has jurisdiction of suits between citizens of the United States in controversies which arose in China.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

2. CARRIERS 45-REFUSAL TO ACCEPT SHIPMENT-DEFENSES.

A common carrier has the burden of affirmatively pleading and proving any fact which will exonerate it from liability for refusing to receive and carry goods tendered to it for shipment.

3. SHIPPING 105-REFUSAL TO ACCEPT SHIPMENT-LIABILITY.

An American shipowner, operating a vessel between Chinese and American ports when England and Germany were at war, but the United States was neutral, was not exonerated from liability for refusing to accept lawful goods tendered by an American citizen for shipment to a German consignee at an American port, because its Shanghai agent was a British subject, and forbidden by his government to receive such shipments, nor because it did not know of such regulation.

In Error to the District Court of the United States for China; Charles S. Lobingier, Judge.

Action at law by Leonard Everett against Swayne & Hoyt, Incorporated. Judgment for plaintiff, and defendant brings error. firmed.

Af

Ira A. Campbell and McCutchen, Olney & Willard, all of San Francisco, Cal., and Jernigan & Fessenden, of Shanghai, China, for plaintiff in error.

Fleming & Davies, of Shanghai, China, and Garret W. McEnerney, of San Francisco, Cal., for defendant in error.

Before GILBERT, ROSS, and HUNT, Circuit Judges.

ROSS, Circuit Judge. This case comes here from the United States Court for China. It is a writ of error sued out by the defendant to an action there brought by the present defendant in error to recover damages for the refusal of the plaintiff in error, a common carrier, to receive, without lawful excuse, certain cargo offered it by the plaintiff to the action for shipment from Shanghai by the steamer Yucatan, which had been advertised to be on the berth at Shanghai for freight to San Francisco. The facts are practically undisputed, and are, briefly, these:

Swayne & Hoyt was a California corporation having its principal place of business at San Francisco, and was therefore an American citizen, and was a common carrier of freight between the Orient and that among other places. It had as its agent at Shanghai a British corporation, styled Jardine, Matheson & Co., Limited, and had under charter the said steamship for a voyage from San Francisco to China and Japan and return to San Francisco and other Pacific coast ports of the United States.

Prior to the arrival of the Yucatan at Shanghai, the plaintiff in the case applied to the agent of the defendant thereto for space in the ship in which to ship certain goods, in response to which application, after one denial of it, the agent agreed to provide the requested space upon condition that the application be approved by the British consul at Shanghai. That conditional acceptance was refused. The cargo offered for shipment by the plaintiff was being handled by him for German subjects, by reason of which fact he was blacklisted by the British government, and all British subjects, including the agent

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

of the defendant corporation, inhibited from dealing with the plaintiff respecting this particular shipment as well as all other such shipments. The defendant through its British agent having refused to accept the cargo offered by Everett, the action was brought, resulting in the judgment of the court below in his favor for $2,720.20, with costs.

But two questions of law are involved: First, whether the court below had jurisdiction of the subject-matter of the action; and, if so, then, secondly, its merits.

[1] By section 1 of the Act of June 30, 1906, creating the court below (34 Stat. 814, c. 3934 [Comp. St. § 7687]), that court is given "exclusive jurisdiction in all cases and judicial proceedings whereof jurisdiction may now be exercised by United States consuls and ministers by law and by virtue of treaties between the United States and China, except in so far as the said jurisdiction is qualified by section. 2 of this act." The qualification specified in section 2 of the act (section 7688) has no bearing upon the present case, and therefore no further mention of it need be made.

At the time of the passage of the Act of June 30, 1906, there were in force the provisions of sections 4083, 4084, and 4085 of the Revised Statutes (Comp. St. §§ 7633-7635), by which certain judicial authority was conferred upon United States ministers and consuls in certain countries, including China, which jurisdiction embraced all controversies between citizens of the United States or others, provided for by its treaties. The treaty with China bearing upon the present question was that of June 18, 1858 (12 Stat. 1029), and conferred upon the United States the right to appoint consuls in various parts of China. Its 27th article is as follows:

"All questions in regard to rights, whether of property or person, arising between citizens of the United States in China, shall be subject to the jurisdiction and regulated by the authorities of their own government; and all controversies occurring in China between citizens of the United States and the subjects of any other government shall be regulated by the treaties existing between the United States and such governments, respectively, without interference on the part of China."

It is the contention of the plaintiff in error that the words "in China," in the foregoing article, qualify the word "citizens," and not the word "arising"; in other words, that a residence of the parties in China is essential to the existence of any jurisdiction in the court. We think it obvious that such a construction of the provision is wholly inadmissible, for the subject-matter thereby dealt with is controversies arising in China. The first clause of the provision relates to controversies in regard to rights, whether of property or person, there arising between citizens of the United States, and declares that they shall be subject to the jurisdiction and be regulated by the authorities of their own government; and by its second clause it is declared that all such controversies there arising between citizens of the United States and the subjects of any other government shall be regulated by the treaties existing between the United States and such governments, respectively-in each instance without interference on the part of China. We regard it as clear that this is the very plain meaning of the article in question. As said by counsel for the defendant in error,

the bare reading of its second clause is all that is necessary to show that the words "in China," there used, fixes, as the basis of the jurisdiction of the court, the place of the origin of the controversy, and not the residence of the parties thereto. No sound reason is suggested why a like construction should not be placed upon the first clause. To adopt the view urged by the plaintiff in error would be, in effect, to hold a consular court in China vested with jurisdiction of a controversy between American citizens arising in the United States if they happened to be residents of China.

[2] Upon the merits we think the case equally clear. It does not admit of doubt that a common carrier, with certain well-established exceptions, is under legal obligation to carry the goods of any member of the public who may tender them for carriage. That such a carrier, subject to such legal obligation, may show that it was prevented from performing it by act of God or a public enemy, or by some other cause over which it had no control, is readily conceded, but in all such cases the defense is an affirmative one, and the burden is upon the carrier to both plead and prove it. 1 Michie on Carriers, § 381; Chicago, etc., R. R. Co. v. Wolcott, 141 Ind. 267, 39 N. E. 451, 50 Am. St. Rep. 320.

[3] At the time of the occurrences in question, England and Germany were at war, but the United States was not; on the contrary, this country was then observing strict neutrality beween those belligerents. How, then, can it be properly held that the performance of the clear legal duty of an American carrier to receive and transport goods tendered for carriage by an American citizen is excused on the ground that the British government had forbidden its citizens and corporations, one of which happened to be the agent of the American carrier, from receiving the tendered freight and providing for its transportation? Such is not the law as we understand it. See Richards & Co., Inc., v. Wreschner, 174 App. Div. 484, 156 N. Y. Supp. 1054, 158 N. Y. Supp. 1129, and the numerous cases there cited.

It is contended on behalf of the carrier that there was no evidence to show that it knew that its agent at Shanghai was inhibited by the British government from shipping the goods of the plaintiff in time to have employed an agent not under such disability. Whether or not the carrier knew of the inhibition at all, or was apprised of it in time to have employed another agent, the fact remains that the agent it did appoint, acting within the scope of his employment, deprived the plaintiff of his legal right. For that wrong we think the carrier was properly adjudged liable, even assuming that it was ignorant of its agent's disability. See Chesapeake & Ohio R. Co. v. Francisco, 149 Ky. 307, 148 S. W. 46, 42 L. R. A. (N. S.) 83. The judgment is affirmed.